ex10_7.htm


     

    
      MINERAL BUY AND SELL
AGREEMENT

      


      This
Mineral Buy and Sell Agreement (hereinafter referred to as the “Mineral
Agreement”) made and entered into as of this 4th day of February, 2010, by and
between Russell B. Pace, Jr. (hereinafter referred to as the “Seller”), and
Future Gas Holdings, Ltd (hereinafter referred to as the “Buyer”)

      


      WITNESSETH:

      


      WHEREAS,
by Quit Claim Deed dated March 1, 1965 and recorded in Book 156, Page 186 at the
Judith Basin County Clerk and Recorder office, a copy of which is attached to
this Mineral Agreement as Exhibit 1 and by this reference made a part hereof,
Giffen Coal Mines Company, a Montana corporation, did convey, remise and forever
quit claim unto Seller mineral rights located under real property in Judith
Basin County, Montana as described in the aforesaid Quit Claim Deed,
and

      


      WHEREAS,
Seller desires to sell to Buyer and Buyer desires to purchase from Seller, on
the terms and conditions set forth below, all of the oil, gas, iron ore and all
other minerals of whatever nature, except coal, as described in the aforesaid
Quit Claim Deed (hereinafter referred to as the “mineral property”)

      


      NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and
conditions hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:

      


      
        	
                1.  

              	
                PROPERTY

              


      

      
        	
                a.  

              	
                Seller
      agrees to convey to Buyer by quit claim deed all of its right, title and
      interest in and to the mineral property it acquired from Giffen Coal Mines
      Company as described above, together with all easements, rights-of-way,
      tenements, hereditaments, appurtenances and surface use rights owned by
      Seller and used or connected with the beneficial use or enjoyment of the
      mineral property.

              


      

      
        	
                b.  

              	
                Seller
      shall convey the mineral property free and clear of all mortgages, liens,
      claims, charges, encumbrances, leases, security interests and pledges, of
      any kind or nature, except for the royalty interest retained by Seller as
      provided in paragraph 3.a. below.

              


      

      
        	
                c.  

              	
                Attached
      hereto as Exhibit 2 and by this reference made a part of this Agreement is
      a Map entitled "Mineral Rights Owned by Russell B. Pace, Jr. and JBM
      Energy Company, LLC, Judith Basin County, Montana" showing the location of
      all the coal and other minerals owned by Pace and JBM in Judith Basin
      County, Montana.

              


      

      


      
        	
                2.  

              	
                PURCHASE
      PRICE

              


      

      
        	
                 
      

              	
                Seller
      agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the
      Mineral Property as described above and all rights referred to in
      paragraph 1.a. above, for a total purchase price of One Million Nine
      Hundred Fifty Thousand U.S. Dollars ($1,950,000), payable to Seller, in
      cash, in the following manner.

              


      

      
        	
                a.  

              	
                The
      purchase price of $1,950,000 shall be paid by Buyer executing and
      delivering to Seller on the dosing date Buyer's negotiable Promissory Note
      in the above principal amount payable to Seller on the following terms and
      schedules:

              


      

      i. $200,000
180 days following closing

      ii. $200,000
360 days following closing

      
        	
                iii.  

              	
                $100,000
      90 days following completion of Reserve Study and Mining
    Plan

              


      

      
        	
                iv.  

              	
                $200,000
      180 days following completion of Reserve Study and Mining
    Plan

              


      

      
        	
                v.  

              	
                The
      Note shall bear interest at the rate of five percent (5%) per annum, but
      no interest shall be due and payable by Buyer during the first two (2)
      years following the Closing Date
hereunder.

              


      

      
        	
                vi.  

              	
                Interest
      only payments shall be made quarterly during the third and fourth years
      following the Closing Date
hereunder.

              


      

      
        	
                vii.  

              	
                Commencing
      the fifth year following the Closing Date, the principal of One Million
      Two Hundred Fifty Thousand U.S. Dollars ($1,250,000) shall be paid in
      eight (8) equal quarterly installments, plus accrued interest on unpaid
      principal balance to date of each principal
  payment.

              


      

      
        	
                viii.  

              	
                Buyer
      shall have the right to prepay all or any part of the principal balance at
      any time without penalty.

              


      

      
        	
                ix.  

              	
                The
      entire principal balance and all accrued interest shall be accelerated and
      became immediately due and payable if the Buyer sells or transfers the
      coal property or the mineral
property.

              


      

      
        	
                x.  

              	
                All
      of the above payments will be secured by a mortgage on the coal property
      and the other mineral property being conveyed by Seller and Russell B.
      Pace, Jr. to Buyer at Closing.  The form and substance of the
      Promissory Note and Mortgage shall be acceptable to
  Seller.

              


      

      
        	
                b.  

              	
                All
      payments made by Buyer hereunder shall be made by bank cashier’s checks or
      by bank wire to an account designated by Seller, as directed by
      Seller.

              


      

      


      
        	
                3.  

              	
                ADDITIONAL
      PAYMENTS

              


      

      
        	
                a.  

              	
                Seller
      will be paid a royalty equal to twenty percent (20%) of all royalties or
      other payments received by Buyer as a result of any lease of the mineral
      property being conveyed to Buyer hereunder, or any portion thereof, and
      twenty percent (20%) of all net cash proceeds and/or other considerations
      received by Buyer from the sale or other disposition of the mineral
      property being conveyed to Buyer hereunder, or any portion
      thereof.

              


      

      
        	
                b.  

              	
                At
      closing, Buyer will execute and deliver to Seller a document in form and
      substance acceptable to Seller establishing Seller’s right to the royalty
      described above, which document will be recorded in the office of the
      Judith Basin County Clerk and Recorder.  Upon any subsequent
      leasing, sale or other disposition of all or any part of the Mineral
      Property, Buyer will take all appropriate steps to notify the acquirer of
      any of the mineral rights of Seller’s royalty interest therein and to
      protect Seller’s royalty interest.

              


      

      
        	
                b.  

              	
                Seller
      shall have the right to require Buyer at Buyer’s expense to give an
      accounting of all information needed to support Seller’s right to the
      royalty payments due hereunder.

              


      

      
        	
                c.  

              	
                If
      the minerals are sold by the Buyer, other than after being mined by Buyer,
      Seller will receive ten percent (10%) of the net proceeds or other
      considerations received by Buyer after deducting the Buyer's total
      investment in the minerals and a 15% annualized return on Buyer's
      investment.

              


      

      
        	
                d.  

              	
                If
      the minerals are not sold but are transferred as an equity contribution in
      any development project, Seller will receive an equity interest equal to
      ten percent (10%) of the equity interest which Buyer receives in such
      projects as a result of the contribution of the minerals or any portion
      thereof, or ten percent (10%) of any other interests or considerations
      which Buyer receives as a result of such transfer of the
      minerals.

              


      

      


      
        	
                4.  

              	
                DOCUMENTATION PROVIDED
      BY SELLER

              


      

      
        	
                 
      

              	
                Seller
      has provided Buyer with certain documents, maps, reports and information
      concerning Seller’s coal and other mineral rights and its envisioned coal
      gasification facility in Montana, as well as other matters such as
      transmission possibilities, and CO2 use
      for enhanced oil recovery and sequestration.  Buyer agrees that
      it will conduct its own independent investigation of the mineral property
      and enters into this Mineral Agreement in full reliance thereon, and that
      there are no other agreements, verbal or otherwise modifying the terms of
      this Mineral Agreement, and that it has not relied upon any oral
      representations made by Seller.  Seller does not warrant the
      accuracy of any of the information or data contained in any of the
      documents or materials delivered, or to be delivered, by Seller to
      Buyer.

              


      

      


      
        	
                5.  

              	
                TRANSFER OF
      TITLE

              


      

      
        	
                a.  

              	
                Seller
      had Stephan R. Granzow of Meadowlark Search search title on the mineral
      property.  Seller has delivered to Buyer title reports,
      abstracts and memoranda of title, prepared by Stephen R. Granzow, showing
      the chain of title to Seller’s coal and other minerals.  Seller
      has also delivered to Buyer a letter dated November 21, 2008 from Stephen
      R. Granzow, wherein Granzow states his opinion that under the Quit Claim
      Deed dated March 1, 1965, from Giffen Coal Mines Company to Russell B.
      Pace, Jr., recorded on October 15, 1969 in Book 156, page 186 in the
      Judith Basin Clerk and Recorder’s Office, Russell B. Pace, Jr. acquired
      100% of all the coal and other mineral interests conveyed to him under
      said Quit Claim Deed, with the exception of 480 acres which may be owned
      by the Federal Government and 160.9 acres which may be owned by the State
      of Montana.

              


      

      
        	
                b.  

              	
                At
      the closing on the date hereinafter
provided,

              


      

      
        	
                i.  

              	
                Seller
      will execute a Quit Claim Deed to Buyer of the mineral property being sold
      hereunder, conveying the property free and clear of all mortgages, liens,
      claims, charges, encumbrances, leases, security interests and pledges, of
      any kind or nature except for the royalty interest retained by Seller as
      provided in paragraph 3.a. above.  The Quit Claim Deed shall be
      in the same form and substance as the Quit Claim Deed which Seller
      received from its Seller, except that it will also include a provision
      reserving the royalties provided in paragraph 3.a.
  above.

              


      

      
        	
                ii.  

              	
                Buyer
      will execute a mortgage on the coal property and the other mineral
      property being conveyed by Seller and Russell B. Pace, Jr. to Buyer at
      closing, securing the payments due from Buyer to Seller and Pace under the
      Coal Agreement, Mineral Agreement, and the Consulting Agreement, and the
      delivery of the Stock under the Stock Agreement referred to in
      subparagraph 9.c. below, and all of the obligations of Buyer under all of
      the aforesaid Agreements.

              


      

      
        	
                c.  

              	
                Both
      the Quit Claim Deed executed by Seller and the mortgage executed by Buyer,
      as referred to in subparagraph 5.b.i. and ii. above, shall be placed in
      escrow under an Escrow Agreement containing terms and conditions
      acceptable to both Seller and Buyer.  When Buyer completes the
      drilling and produces the studies and mining plan as provided in paragraph
      2 of the Coal Buy and Sell Agreement, and makes timely all payments
      provided for in subparagraph 3.a., 3.b. and 3.c.i. through 3.c.iii. of the
      Coal Buy and Sell Agreement, and all payments due under the Mineral
      Agreement and the Consulting Agreement, and delivers the stock under the
      Stock Agreement as provided, the Quit Claim Deed will be delivered to
      Buyer and recorded, and the mortgage will be delivered to Seller and
      recorded.  If there is any breach or default by Buyer as
      provided in paragraph 9 below, the Quit Claim Deed will not be delivered
      to Buyer but will be delivered back to Seller and not recorded, and the
      mortgage will be delivered back to Buyer and not
  recorded.

              


      

      
        	
                d.  

              	
                Buyer
      shall have until 5 PM, PDT, March 31, 2010 to complete Buyer’s due
      diligence and to review all title documents and reports, and to advise
      Seller by email whether it accepts title, and commits to proceed to
      closing on the closing date hereafter provided.  If Buyer fails
      to give the email notice at the time provided above or fails to accept
      title, Seller may terminate this Agreement, in which event this Agreement
      shall be null, void and of no further force and effect.  Buyer
      is not obligated to proceed to closing unless it accepts title, and is
      satisfied with Buyer’s due
diligence.

              


      

      


      
        	
                6.  

              	
                CLOSING
      DATE

              


      

      The
Closing Date shall be on or before April 9, 2010, or at such other date as the
parties may mutually agree.  The closing shall be at Great Falls,
Montana, or at such other place as the parties may mutually
agree.  Seller shall pay the cost of preparing the deed, and the
royalty document and the costs of recording the royalty
document.  Buyer shall pay the cost of recording the deed and all
other closing costs.

      


      
        	
                7.  

              	
                REPRESENTATION AND
      WARRANTIES OF SELLER

              


      

      
        	
                a.  

              	
                Seller
      is an individual who has the power to own his properties and to carry on
      his business as it is now being
conducted.

              


      

      
        	
                b.  

              	
                There
      are no liabilities and there is no indebtedness of Seller which, in any
      way, would impair the right of Seller to enter into this Mineral Agreement
      or to perform under it.

              


      

      
        	
                c.  

              	
                There
      are no pending or threatened claims, made on behalf of anyone against
      Seller, or the mineral property, nor are there pending or threatened
      actions, suits, proceedings or investigations against or affecting seller,
      or the mineral property, at law or in equity, before any federal, state or
      local court, board or other governmental or administrative
      agency.

              


      

      
        	
                d.  

              	
                Seller
      is not in violation of any law, regulation or rule, or of any writ,
      judgment, injunction, order or decree of any court or government
      authority.

              


      

      
        	
                e.  

              	
                Seller
      has the requisite authority to execute, deliver and  perform
      this Mineral Agreement and all other agreements or instruments to be
      executed by Seller pursuant to this Mineral Agreement.  This
      Mineral Agreement constitutes, and such other agreements and instruments
      will constitute, the legal, valid and binding obligation of Seller which
      are or will be enforceable against Seller in accordance with their
      respective terms.

              


      

      
        	
                f.  

              	
                The
      execution, delivery and performance of the Mineral Agreement will not
      result in the violation of any statute, regulations, judgment, writ,
      injunction or decree of any court or other
  agency.

              


      

      
        	
                g.  

              	
                The
      representations and warranties contained in the Paragraph 7 shall be true,
      on and as of the closing date, with the same force and effect as though
      made on and as of the closing date, and shall survive and remain in effect
      following the closing date.

              


      

      


      


      
        	
                8.  

              	
                REPRESENTATIONS AND
      WARRANTIES OF BUYER

              


      

      
        	
                a.  

              	
                Buyer
      hereby incorporates into this Mineral Buy and Sell Agreement, and by this
      reference makes as a part hereof, all of the Representations and
      Warranties of Buyer as set forth in paragraph 9 of the Coal Buy and Sell
      Agreement between Buyer and JBM Energy Company, LLC executed of even date
      herewith.

              


      

      


      
        	
                9.  

              	
                BREACH;
      REMEDIES

              


      

      
        	
                a.  

              	
                Buyer’s
      Breach:  In the event that Buyer fails to timely pay to
      Seller any installment payment of the Purchase Price as set forth in
      paragraph 2 above, or fails to perform any agreement, covenant,
      representation or warranty under this Mineral Agreement, which failure
      (other than the failure to make timely payments where no notice is
      required) is not cured within thirty (30) days after written notice
      thereof by Seller to Buyer, Seller may at Seller’s option (i) deem this
      Mineral Agreement terminated, null, void and of no further force and
      effect at which time Buyer shall have no further rights or liabilities
      under this Mineral Agreement and all payments made by Buyer shall be deem
      forfeited and non-refundable, or (ii) initiate action for any other remedy
      at law or in equity permitted under Montana law including, without
      limitations, an action for specific performance.  In the event
      the Buyer defaults under or breaches this Mineral Agreement, it will
      deliver to Seller all of the drill hole records, maps, reports, core hole
      tests, feasibility studies, reserve studies and evaluations, mining plans,
      permits, applications, and all other information and data gathered or
      developed by Buyer or on its behalf with respect to the coal and other
      minerals.  Any permits, licenses or other authorizations
      obtained will be assigned or transferred from Buyer to Seller if permitted
      by law.

              


      

      
        	
                b.  

              	
                Seller Breach:
      In the event the Seller fails to perform any agreement, covenant,
      representation or warranty under this Mineral Agreement, and Buyer is at
      that time ready, willing and able to perform all obligations by Buyer to
      be performed, Buyer may at Buyer’s option: (i) deem this Mineral Agreement
      terminated, null, void and of no further force or effect, at which time
      Seller shall have no further rights or liabilities under this Mineral
      Agreement, or (ii) initiate action for any other remedy at law or in
      equity permitted under Montana law including, without limitation, an
      action for specific performance.

              


      

      
        	
                c.  

              	
                Sale
      Contingency: JBM Energy Company, LLC (JBM) and Buyer have entered
      into a Coal Buy and Sell Agreement of even date herewith whereby Buyer is
      purchasing all the coal owned by JBM and acquired under Quit Claim Deed
      from Russell B. Pace, Jr. dated July 8, 2005 (“Coal Property”), and Pace
      and Buyer have entered into a Consulting Agreement and a Stock Agreement,
      both of even date herewith.  If Buyer does not close the
      purchase of the Coal Property on the Closing Date set forth in paragraph 6
      above, or fails to timely make the payments due under this Mineral
      Agreement, the Coal Agreement and the Consulting Agreement, and fails to
      make timely delivery of the stock under the Stock Agreement, or fails to
      perform any agreement, representation or warranty under these Agreements,
      the Seller hereunder has the option to (i) terminate this Mineral
      Agreement in which event it will be null, void and no further force or
      effect, and all payments made by Buyer and stock delivered by Buyer shall
      be deemed forfeited and non-refundable, or (ii) initiate action for any
      other remedy at law or in equity permitted under Montana law including,
      without limitation, an action for specific
  performance.

              


      

      


      


      
        	
                10.  

              	
                INTEGRATIONS; SURVIVAL
      OF WARRANTIES; AMENDMENT

              


      

      Unless
otherwise agreed in writing, this Mineral Agreement represents the entire
understanding of the parties with respect to the subject matter referenced, and
supersedes all prior understandings and agreements heretofore made by and
between the parties; provided
that the parties’ respective warranties and representations shall
survive execution of
this Mineral Agreement.  Neither this Mineral Agreement nor any
provision hereof may be amended, waived, modified or discharged except by an
agreement in writing signed by all parties

      


      
        	
                11.  

              	
                ATTORNEY’S
      FEES

              


      

      
        	
                 
      

              	
                In
      the event of any litigation to construe and/or enforce the terms of this
      Mineral Agreement, the party prevailing in such action shall be entitled
      to recover its reasonable attorney’s fees and costs in addition to any
      other damages or relief to which such party may be
    entitled.

              


      

      


      
        	
                12.  

              	
                FACSIMILE
      SIGNATURES

              


      

      
        	
                 
      

              	
                Both
      parties agree that facsimile signatures by any party will be treated as
      original signatures for the purpose of this
  transaction.

              


      

      


      
        	
                13.  

              	
                NOTICES

              


      

      
        	
                 
      

              	
                Any
      and all notices required under this Mineral Agreement shall be in writing
      and shall be served upon the respective parties at the addresses shown
      below or to such other address as the parties may designate by written
      notice to the other.

              


      

      


      
        	
                SELLER:

              	
                BUYER:

              


      

      


      Russell
B. Pace,
Jr.                                                         Future
Gas Holdings, Ltd

      2139
Bybee’s Church
Road                                           P.O.
Box 556, Main Street

      Palmyra,
VA  22963                                                       Charletstown,
Nevis

      Director: Roger Knox

      
        	
                 
      

              	
                Any
      notice to be given under this Mineral Agreement shall be sent
      by:

              


      

      
        	
                a.  

              	
                Certified
      mail, return receipt requested, in which case notice shall be deemed
      delivered five (5) business days after deposit, postage prepaid in the
      United States Mail; or

              


      

      
        	
                b.  

              	
                a
      nationally recognized overnight courier, in which case notice shall be
      deemed delivered three (3) business days after deposit with that
      courier.

              


      

      


      
        	
                14.  

              	
                EXECUTION IN
      COUNTERPARTS; TELEFACSIMILE
SIGNATURES

              


      

      
        	
                 
      

              	
                This
      Agreement may be executed in multiple counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same
      instrument; and the parties may execute copies sent by telefacsimile, and
      return signed copies by telefacsimile.  Copies signed and
      returned by telefacsimile shall be deemed and considered executed
      counterparts, but a party executing a copy and transmitting same by
      telefacsimile shall promptly mail or overnight to the other parties copies
      bearing the transmitting party’s original
  signature.

              


      

      


      
        	
                15.  

              	
                TIME IS OF THE
      ESSENCE

              


      

      Time is of the essence in this Mineral
Agreement.

      


      
        	
                16.  

              	
                CONFIDENTIALITY

              


      

      
        	
                 
      

              	
                Seller
      and Buyer shall not disclose any terms or provisions of this Mineral
      Agreement to any other persons except to professionals who require such
      information in the performance of this Mineral Agreement, and both parties
      will treat all information disclosed to it as confidential information and
      will not make further disclosure to third parties without the consent of
      the disclosing party.

              


      

      


      


      Executed
as of this 4th day of February, 2010.

      


      


      SELLER:                                                                                           BUYER:

      


      Future Gas Holdings, Ltd

      


      ___________________                                                               ___________________

      Russell
B. Pace,
Jr.                                                                        Roger
Knox

      Individually                                                                                    
Director