Document:

ex10-1.htm

 

NORTHERN DYNASTY MINERALS LTD.

 

15th Floor, 1040 West Georgia St, Vancouver, BC  V6E 4H1

Telephone: 604-684-6365 / Facsimile:  604-684-8092

 

November 13, 2012

 

Liberty Star Uranium & Metals Corp.

Big Chunk Corp.

5610 E. Sutler Lane

Tucson, AZ  85712

 

Attention:  James Briscoe, President and Director

 

Dear Mr. Briscoe

 

RE:           Loan Settlement by Mining Claims Sale and Transfer

 

This letter agreement when signed by Liberty Star Uranium & Metals Corp. and Big Chunk Corp. (together herein for convenience “Liberty Star” or “you”), will constitute our agreement to settle the loan owing by Liberty Star to Northern Dynasty in the principal amount of $3,730,174 plus all accrued interest thereon (collectively the “Loan”).  As of November 13, 2012, interest in the amount of $872,543 has accrued on the principal amount of the Loan.  The Loan will be settled in consideration for the transfer by you to U5 Resources Inc. or such other subsidiary or affiliate of Northern Dynasty as Northern Dynasty may direct (“NDM Subsidiary”), of the Alaska mining claims described on Schedule A hereto (the “Settlement Claims”).  The Loan was advanced by a letter agreement dated June 29, 2010, as amended on July 15, 2010, September 8, 2011 and November 14, 2011, and upon Closing (as defined below) of this letter agreement, those agreements and all negotiations between us will terminate.  This letter agreement is binding on each of us upon timely acceptance hereof by you.  All dollar amounts herein are United States dollars.

 

	
1.  

	
Closing of Loan Settlement by Purchase and Transfer of Settlement Claims

 

On the completion date of the transactions described herein (the “Closing”), which is to be November 16, 2012 or such other date prior to December 1, 2012 as determined by Northern Dynasty (the “Closing Date”), Northern Dynasty will release and discharge the Loan (including all accrued interest on the Loan to the Closing Date) and all Security for the Loan against delivery to Northern Dynasty of registerable claim transfers for all of the Settlement Claims.  The Closing will occur at 11:00 a.m. (Vancouver time) on the Closing Date at our offices unless we otherwise agree in writing.  At Closing, Liberty Star will deliver:

 

	
(a)  

	
such registerable mining claim transfers, deeds and quitclaims (“Transfers”) as may be required by Northern Dynasty to convey good title to the Settlement Claims to NDM Subsidiary;

 

  

 

  

	
(b)  

	
an opinion of its counsel stating that Liberty Star has taken all necessary corporate actions and proceedings to deliver the Transfers and transfer the Settlement Claims to NDM Subsidiary; and

 

	
(c)  

	
copies of all filings evidencing the filing and application by Liberty Star of sufficient assessment work conducted by it during 2012 against the Settlement Claims in order to maintain the Settlement Claims in good standing until September 1, 2013, such filings to have been completed and filed to the satisfaction of Northern Dynasty acting reasonably.

 

Upon Closing, Northern Dynasty will deliver to Liberty Star a general release of the Loan and related security and will attend to discharge the UCC filings against Liberty Star and/or its assets.

 

	
2.  

	
Liberty Star Representations

 

Northern Dynasty’s obligation to accept the Settlement Claims in satisfaction of the Loan is subject to the following representations of Liberty Star being true on the date hereof and at Closing:

 

	
(a)  

	
Liberty Star shall have all necessary corporate power and shall have taken all necessary corporate and other actions and proceedings to execute and deliver this letter agreement as a legal binding obligation.  No third party consents shall be required to deliver title to the Settlement Claims hereunder;

 

	
(b)  

	
no shareholder or regulatory approvals are required in order for it to enter into, and complete, the transactions contemplated under this letter agreement;

 

	
(c)  

	
this letter agreement and the obligations assumed by Liberty Star herein do not conflict with any agreement, law, court judgement or order or governmental order to which Liberty Star is subject;

 

	
(d)  

	
the Settlement Claims duly located, validly recorded and registered in the name of Big Chunk Corp., Big Chunk Corp. is the registered and beneficial owner of a 100% of the Settlement Claims, no third party has any financial or legal interest in the Settlement Claims whatsoever, and there are no royalty, lien, or other interests reserved in the Settlement Claims to Liberty Star or any other person;

 

	
(e)  

	
there are no existing environmental remediation obligations relating to any of the Settlement Claims and no operations have taken place on them which were contrary to environmental or other applicable laws; and

 

	
(f)  

	
Liberty Star has provided Northern Dynasty with a copy of all information about the Settlement Claims that is in its possession;

 

	
(g)  

	
there are no tangible assets belonging to Liberty Star located on the Settlement Claims;

 

	
(h)  

	
Liberty star has neither committed an act of bankruptcy, nor has been alleged to be insolvent by any creditor and is now and will be under no legal impediment from dealing with the Settlement Claims; and

 

  

2

  

	
(i)  

	
no litigation or other proceeding or inquiry exists, or is pending or threatened against Liberty Star or which may affect the Settlement Claims, no party has alleged any basis to sue Liberty Star, and no party has threatened to do so.

 

	
3.  

	
Liberty Star Covenants

 

Liberty Star agrees from execution hereof that:

 

	
(a)  

	
it will not encumber the Settlement Claims in any way and will forthwith execute registerable transfer forms for the Settlement Claims;

 

	
(b)  

	
it shall take all necessary steps to convey good title to the Settlement Claims to NDM Subsidiary on Closing and following Closing; and

 

	
(c)  

	
it shall duly observe the terms of this letter agreement.

 

	
4.  

	
Northern Dynasty Conditions to Closing

 

The conditions to which Northern Dynasty’s obligations hereunder are subject are as follows (each of which may be waived by Northern Dynasty in whole or in part):

 

	
(a)  

	
as of acceptance hereof by Liberty Star and as of Closing, all of the representations of Liberty Star will be true and all of its covenants shall have been fulfilled;

 

	
(b)  

	
Liberty Star shall have applied against the Settlement Claims all assessment work conducted by it during 2012 on the Settlement Claims, and Northern Dynasty shall have been provided with copies of all filings evidencing the application of such work, completed and filed to Northern Dynasty’s satisfaction acting reasonably;

 

	
(c)  

	
Northern Dynasty shall have been provided with valid Transfers for the Settlement Claims; and

 

	
(d)  

	
no litigation shall have been initiated or threatened by any person or governmental authority to enjoin or inhibit the transactions contemplated hereby or which may, in the opinion of Northern Dynasty acting in its sole discretion, affect the Settlement Claims.

 

	
5.  

	
General and Miscellaneous

 

 

	
(a)  

	
This letter agreement will be deemed to have been made in British Columbia and will be enforceable in the Courts of British Columbia.

 

	
(b)   

	
This letter agreement shall enure to the benefit of and shall be binding upon the parties hereto and their successors according to law.

 

	
(c)   

	
Northern Dynasty may assign its rights under this letter agreement in whole or in part and from time to time provided that Northern Dynasty shall remain liable for its obligations hereunder.

 

  

3

  

	
(d)   

	
This letter agreement may be executed in counterpart and by electronic transmission of a recognizable manual signature.

 

	
(e)   

	
Each party shall both before and after Closing, execute such further documents and assurances and do such further acts, as may reasonably be required by the other party to effect the terms hereof and to ensure the valid transfer of good title to the Settlement Claims and the due extinguishment of the Loan and security related thereto.

 

	
6.  

	
Execution

 

If the foregoing reflects your agreement, please execute this letter agreement where indicated below and return a copy to us by 5:00 p.m. PST on November 13, 2012.

 

Yours truly,

 

Northern Dynasty Minerals Ltd.

 

Per:

 

/s/ signed                                                           

Authorized Signatory

 

 

The foregoing is agreed this 13th day of November, 2012.

 

 

Liberty Star Uranium & Metals Corp.

 

/s/ James Briscoe                                                           

Authorized Signatory

 

Big Chunk Corp.

 

/s/ James Briscoe                                                           

Authorized Signatory

 

cc Bernard Pinsky

 

cc Bernhard Zinkhofer

 

  

4

  

 

SCHEDULE A

 

SETTLEMENT CLAIMS

 

	
CLAIM NAME

	
ADL NO.

	
TOWN-SHIP

	
RANGE

	
SECTION

	
QUARTER

SECTION

	
QUARTER-QUARTER

SECTION

	
BC 338

	
642826

	
3S

	
35W

	
6

	
SW

	  
	
BC 339

	
642827

	
3S

	
35W

	
6

	
SE

	  
	
BC 351

	
642839

	
3S

	
35W

	
6

	
NW

	  
	
BC 352

	
642840

	
3S

	
35W

	
6

	
NE

	  
	
BC 353

	
642841

	
3S

	
35W

	
4

	
NW

	  
	
BC 354

	
642842

	
3S

	
35W

	
3

	
NE

	  
	
BC 355

	
642843

	
3S

	
35W

	
3

	
NW

	  
	
BC 367

	
642855

	
2S

	
35W

	
31

	
SW

	  
	
BC 368

	
642856

	
2S

	
35W

	
31

	
SE

	  
	
BC 369

	
642857

	
2S

	
35W

	
32

	
SW

	  
	
BC 370

	
642858

	
2S

	
35W

	
32

	
SE

	  
	
BC 371

	
642859

	
2S

	
35W

	
33

	
SW

	  
	
BC 372

	
642860

	
2S

	
35W

	
33

	
SE

	  
	
BC 373

	
642861

	
2S

	
35W

	
34

	
SW

	  
	
BC 374

	
642862

	
2S

	
35W

	
34

	
SE

	  
	
BC 386

	
642874

	
2S

	
35W

	
31

	
NW

	  
	
BC 387

	
642875

	
2S

	
35W

	
31

	
NE

	  
	
BC 388

	
642876

	
2S

	
35W

	
32

	
NW

	  
	
BC 389

	
642877

	
2S

	
35W

	
32

	
NE

	  
	
BC 390

	
642878

	
2S

	
35W

	
33

	
NW

	  
	
BC 391

	
642879

	
2S

	
35W

	
33

	
NE

	  
	
BC 392

	
642880

	
2S

	
35W

	
34

	
NW

	  
	
BC 393

	
642881

	
2S

	
35W

	
34

	
NE

	  
	
BC 405

	
642893

	
2S

	
35W

	
30

	
SW

	  
	
BC 406

	
642894

	
2S

	
35W

	
30

	
SE

	  
	
BC 407

	
642895

	
2S

	
35W

	
29

	
SW

	  
	
BC 408

	
642896

	
2S

	
35W

	
29

	
SE

	  
	
BC 409

	
642897

	
2S

	
35W

	
28

	
SW

	  
	
BC 410

	
642898

	
2S

	
35W

	
28

	
SE

	  
	
BC 411

	
642899

	
2S

	
35W

	
27

	
SW

	  
	
BC 412

	
642900

	
2S

	
35W

	
27

	
SE

	  
	
BC 424

	
642912

	
2S

	
35W

	
30

	
NW

	  
	
BC 425

	
642913

	
2S

	
35W

	
30

	
NE

	  
	
BC 426

	
642914

	
2S

	
35W

	
29

	
NW

	  
	
BC 427

	
642915

	
2S

	
35W

	
29

	
NE

	  
	
BC 428

	
642916

	
2S

	
35W

	
28

	
NW

	  
	
BC 429

	
642917

	
2S

	
35W

	
28

	
NE

	  
	
BC 430

	
642918

	
2S

	
35W

	
27

	
NW

	  
	
BC 431

	
642919

	
2S

	
35W

	
27

	
NE

	  
	
BC 444

	
642932

	
2S

	
35W

	
19

	
SW

	  
	
BC 445

	
642933

	
2S

	
35W

	
19

	
SE

	  
	
BC 446

	
642934

	
2S

	
35W

	
20

	
SW

	  
	
BC 447

	
642935

	
2S

	
35W

	
20

	
SE

	  
	
BC 448

	
642936

	
2S

	
35W

	
21

	
SW

	  
	
BC 449

	
642937

	
2S

	
35W

	
21

	
SE

	  
	
BC 450

	
642938

	
2S

	
35W

	
22

	
SW

	  
	
BC 451

	
642939

	
2S

	
35W

	
22

	
SE

	  
	
BC 459

	
642947

	
2S

	
38W

	
24

	
NW

	  
	
BC 460

	
642948

	
2S

	
38W

	
24

	
NE

	  
	
BC 461

	
642949

	
2S

	
37W

	
19

	
NW

	  
	
BC 462

	
642950

	
2S

	
37W

	
19

	
NE

	  
	
BC 463

	
642951

	
2S

	
37W

	
20

	
NW

	  
	
BC 464

	
642952

	
2S

	
37W

	
20

	
NE

	  
	
BC 465

	
642953

	
2S

	
35W

	
19

	
NW

	  
	
BC 466

	
642954

	
2S

	
35W

	
19

	
NE

	  
	
BC 467

	
642955

	
2S

	
35W

	
20

	
NW

	  
	
BC 468

	
642956

	
2S

	
35W

	
20

	
NE

	  
	
BC 469

	
642957

	
2S

	
35W

	
21

	
NW

	  
	
BC 470

	
642958

	
2S

	
35W

	
21

	
NE

	  
	
BC 471

	
642959

	
2S

	
35W

	
22

	
NW

	  
	
BC 472

	
642960

	
2S

	
35W

	
22

	
NE

	  
	
BC 476

	
642964

	
2S

	
38W

	
15

	
SE

	  
	
BC 477

	
642965

	
2S

	
38W

	
14

	
SW

	  
	
BC 478

	
642966

	
2S

	
38W

	
14

	
SE

	  
	
BC 479

	
642967

	
2S

	
38W

	
13

	
SW

	  
	
BC 480

	
642968

	
2S

	
38W

	
13

	
SE

	  
	
BC 481

	
642969

	
2S

	
37W

	
18

	
SW

	  
	
BC 482

	
642970

	
2S

	
37W

	
18

	
SE

	  
	
BC 483

	
642971

	
2S

	
37W

	
17

	
SW

	  
	
BC 484

	
642972

	
2S

	
37W

	
17

	
SE

	  
	
BC 485

	
642973

	
2S

	
37W

	
16

	
SW

	  
	
BC 486

	
642974

	
2S

	
37W

	
16

	
SE

	  
	
BC 487

	
642975

	
2S

	
37W

	
15

	
SW

	  
	
BC 488

	
642976

	
2S

	
35W

	
18

	
SW

	  
	
BC 489

	
642977

	
2S

	
35W

	
18

	
SE

	  
	
BC 490

	
642978

	
2S

	
35W

	
17

	
SW

	  
	
BC 491

	
642979

	
2S

	
35W

	
17

	
SE

	  
	
BC 492

	
642980

	
2S

	
35W

	
16

	
SW

	  
	
BC 493

	
642981

	
2S

	
35W

	
16

	
SE

	  
	
BC 494

	
642982

	
2S

	
35W

	
15

	
SW

	  
	
BC 495

	
642983

	
2S

	
35W

	
15

	
SE

	  
	
BC 499

	
642987

	
2S

	
38W

	
15

	
NE

	  
	
BC 500

	
642988

	
2S

	
38W

	
14

	
NW

	  
	
BC 501

	
642989

	
2S

	
38W

	
14

	
NE

	  
	
BC 502

	
642990

	
2S

	
38W

	
13

	
NW

	  
	
BC 503

	
642991

	
2S

	
38W

	
13

	
NE

	  
	
BC 504

	
642992

	
2S

	
37W

	
18

	
NW

	  
	
BC 505

	
642993

	
2S

	
37W

	
18

	
NE

	  
	
BC 506

	
642994

	
2S

	
37W

	
17

	
NW

	  
	
BC 507

	
642995

	
2S

	
37W

	
17

	
NE

	  
	
BC 508

	
642996

	
2S

	
37W

	
16

	
NW

	  
	
BC 509

	
642997

	
2S

	
37W

	
16

	
NE

	  
	
BC 510

	
642998

	
2S

	
37W

	
15

	
NW

	  
	
BC 511

	
642999

	
2S

	
35W

	
18

	
NW

	  
	
BC 512

	
643000

	
2S

	
35W

	
18

	
NE

	  
	
BC 513

	
643001

	
2S

	
35W

	
17

	
NW

	  
	
BC 514

	
643002

	
2S

	
35W

	
17

	
NE

	  
	
BC 515

	
643003

	
2S

	
35W

	
16

	
NW

	  
	
BC 516

	
643004

	
2S

	
35W

	
16

	
NE

	  
	
BC 517

	
643005

	
2S

	
35W

	
15

	
NW

	  
	
BC 518

	
643006

	
2S

	
35W

	
15

	
NE

	  
	
BC 520

	
643008

	
2S

	
38W

	
10

	
SE

	  
	
BC 521

	
643009

	
2S

	
38W

	
11

	
SW

	  
	
BC 522

	
643010

	
2S

	
38W

	
11

	
SE

	  
	
BC 523

	
643011

	
2S

	
38W

	
12

	
SW

	  
	
BC 524

	
643012

	
2S

	
38W

	
12

	
SE

	  
	
BC 525

	
643013

	
2S

	
37W

	
7

	
SW

	  
	
BC 526

	
643014

	
2S

	
37W

	
7

	
SE

	  
	
BC 527

	
643015

	
2S

	
37W

	
8

	
SW

	  
	
BC 528

	
643016

	
2S

	
37W

	
8

	
SE

	  
	
BC 529

	
643017

	
2S

	
37W

	
9

	
SW

	  
	
BC 530

	
643018

	
2S

	
37W

	
9

	
SE

	  
	
BC 531

	
643019

	
2S

	
37W

	
10

	
SW

	  
	
BC 532

	
643020

	
2S

	
37W

	
10

	
SE

	  
	
BC 533

	
643021

	
2S

	
37W

	
11

	
SW

	  
	
BC 534

	
643022

	
2S

	
37W

	
11

	
SE

	  
	
BC 535

	
643023

	
2S

	
37W

	
12

	
SW

	  
	
BC 536

	
643024

	
2S

	
37W

	
12

	
SE

	  
	
BC 537

	
643025

	
2S

	
36W

	
7

	
SW

	  
	
BC 538

	
643026

	
2S

	
36W

	
7

	
SE

	  
	
BC 539

	
643027

	
2S

	
36W

	
8

	
SW

	  
	
BC 540

	
643028

	
2S

	
36W

	
8

	
SE

	  
	
BC 541

	
643029

	
2S

	
36W

	
9

	
SW

	  
	
BC 542

	
643030

	
2S

	
36W

	
9

	
SE

	  
	
BC 543

	
643031

	
2S

	
36W

	
10

	
SW

	  
	
BC 544

	
643032

	
2S

	
36W

	
10

	
SE

	  
	
BC 545

	
643033

	
2S

	
36W

	
11

	
SW

	  
	
BC 546

	
643034

	
2S

	
36W

	
11

	
SE

	  
	
BC 547

	
643035

	
2S

	
36W

	
12

	
SW

	  
	
BC 548

	
643036

	
2S

	
36W

	
12

	
SE

	  
	
BC 549

	
643037

	
2S

	
35W

	
7

	
SW

	  
	
BC 550

	
643038

	
2S

	
35W

	
7

	
SE

	  
	
BC 551

	
643039

	
2S

	
35W

	
8

	
SW

	  
	
BC 552

	
643040

	
2S

	
35W

	
8

	
SE

	  
	
BC 553

	
643041

	
2S

	
35W

	
9

	
SW

	  
	
BC 554

	
643042

	
2S

	
35W

	
9

	
SE

	  
	
BC 555

	
643043

	
2S

	
35W

	
10

	
SW

	  
	
BC 556

	
643044

	
2S

	
35W

	
10

	
SE

	  
	
BC 558

	
643046

	
2S

	
38W

	
10

	
NE

	  
	
BC 559

	
643047

	
2S

	
38W

	
11

	
NW

	  
	
BC 560

	
643048

	
2S

	
38W

	
11

	
NE

	  
	
BC 561

	
643049

	
2S

	
38W

	
12

	
NW

	  
	
BC 562

	
643050

	
2S

	
38W

	
12

	
NE

	  
	
BC 563

	
643051

	
2S

	
37W

	
7

	
NW

	  
	
BC 564

	
643052

	
2S

	
37W

	
7

	
NE

	  
	
BC 565

	
643053

	
2S

	
37W

	
8

	
NW

	  
	
BC 566

	
643054

	
2S

	
37W

	
8

	
NE

	  
	
BC 567

	
643055

	
2S

	
37W

	
9

	
NW

	  
	
BC 568

	
643056

	
2S

	
37W

	
9

	
NE

	  
	
BC 569

	
643057

	
2S

	
37W

	
10

	
NW

	  
	
BC 570

	
643058

	
2S

	
37W

	
10

	
NE

	  
	
BC 571

	
643059

	
2S

	
37W

	
11

	
NW

	  
	
BC 572

	
643060

	
2S

	
37W

	
11

	
NE

	  
	
BC 573

	
643061

	
2S

	
37W

	
12

	
NW

	  
	
BC 574

	
643062

	
2S

	
37W

	
12

	
NE

	  
	
BC 575

	
643063

	
2S

	
36W

	
7

	
NW

	  
	
BC 576

	
643064

	
2S

	
36W

	
7

	
NE

	  
	
BC 577

	
643065

	
2S

	
36W

	
8

	
NW

	  
	
BC 578

	
643066

	
2S

	
36W

	
8

	
NE

	  
	
BC 579

	
643067

	
2S

	
36W

	
9

	
NW

	  
	
BC 580

	
643068

	
2S

	
36W

	
9

	
NE

	  
	
BC 581

	
643069

	
2S

	
36W

	
10

	
NW

	  
	
BC 582

	
643070

	
2S

	
36W

	
10

	
NE

	  
	
BC 583

	
643071

	
2S

	
36W

	
11

	
NW

	  
	
BC 584

	
643072

	
2S

	
36W

	
11

	
NE

	  
	
BC 585

	
643073

	
2S

	
36W

	
12

	
NW

	  
	
BC 586

	
643074

	
2S

	
36W

	
12

	
NE

	  
	
BC 587

	
643075

	
2S

	
35W

	
7

	
NW

	  
	
BC 588

	
643076

	
2S

	
35W

	
7

	
NE

	  
	
BC 589

	
643077

	
2S

	
35W

	
8

	
NW

	  
	
BC 590

	
643078

	
2S

	
35W

	
8

	
NE

	  
	
BC 591

	
643079

	
2S

	
35W

	
9

	
NW

	  
	
BC 592

	
643080

	
2S

	
35W

	
9

	
NE

	  
	
BC 593

	
643081

	
2S

	
35W

	
10

	
NW

	  
	
BC 594

	
643082

	
2S

	
35W

	
10

	
NE

	  
	
BC 1171

	
649923

	
2S

	
37W

	
15

	
NE

	  
	
BC 1172

	
649924

	
2S

	
37W

	
14

	
NW

	  
	
BC 1173

	
649925

	
2S

	
37W

	
14

	
NE

	  
	
BC 1174

	
649926

	
2S

	
37W

	
13

	
NW

	  
	
BC 1175

	
649927

	
2S

	
37W

	
13

	
NE

	  
	
BC 1176

	
649928

	
2S

	
37W

	
15

	
SE

	  
	
BC 1177

	
649929

	
2S

	
37W

	
14

	
SW

	  
	
BC 1178

	
649930

	
2S

	
37W

	
14

	
SE

	  
	
BC 1179

	
649931

	
2S

	
37W

	
13

	
SW

	  
	
BC 1180

	
649932

	
2S

	
37W

	
13

	
SE

	  
	
BC 1187

	
649939

	
2S

	
37W

	
24

	
NW

	  
	
BC 1188

	
649940

	
2S

	
37W

	
24

	
NE

	  
	
BC 1196

	
649948

	
2S

	
37W

	
24

	
SW

	  
	
BC 1197

	
649949

	
2S

	
37W

	
24

	
SE

	  
	
BC 1001

	
643432

	
3S

	
35W

	
7

	
NW

	
NW

	
BC 1002

	
643433

	
3S

	
35W

	
7

	
NW

	
NE

	
BC 1003

	
643434

	
3S

	
35W

	
7

	
NE

	
NW

	
BC 1004

	
643435

	
3S

	
35W

	
7

	
NE

	
NE

	
BC 1005

	
643436

	
3S

	
35W

	
4

	
SE

	
NW

	
BC 1006

	
643437

	
3S

	
35W

	
4

	
SE

	
NE

	
BC 1007

	
643438

	
3S

	
35W

	
3

	
SW

	
NW

	
BC 1008

	
643439

	
3S

	
35W

	
3

	
SW

	
NE

	
BC 1009

	
643440

	
3S

	
35W

	
3

	
SE

	
NW

	
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5ex10-1.htm

 

 

OIL AND GAS PURCHASE AND DEVELOPMENT AGREEMENT

 

Definitive Short Form Agreement

 

THIS (the “Definitive Short Form Agreement”), dated effective as of October 30, 2012, by and among EGPI FIRECREEK, INC., a Nevada corporation, through its wholly owned subsidiary Energy Producers, Inc., located at 6564 North Smoke Tree Lane, Scottsdale Arizona 85253 (“FIRECREEK”, “Assignor”, “Rights Holder”, “Option Holder”), and CUBO Energy, PLC’s nominee / assignee, Mondial Ventures Inc., a public limited corporation organized under the state of Nevada, USA, with its principal place of business located at 6564 North Smoke Tree Lane, Scottsdale Arizona 85253  (“MNVN”, “Assignee”, or
“Participant”), (Firecreek, MNVN are collectively referred to herein as the “PARTIES”).

 

WHEREAS the parties previously entered into a “Letter of Intent”, dated as of March 31, 2012, by and among EGPI FIRECREEK, INC., a Nevada corporation, through its wholly owned subsidiary Energy Producers, Inc., located at 6564 North Smoke Tree Lane, Scottsdale Arizona 85253 and CUBO Energy, PLC and or its nominee / assignee, a public limited corporation organized under the laws of Great Britain with its principal place of business located at Thames House, Portsmouth Road Esher Surrey, KT10 9AD United Kingdom, and

 

WHEREAS the parties agree herewith that i) the Letter of Intent is effectively extended through the date of effectiveness of this Definitive Short Form Agreement and ii) CUBO Energy, PLC has elected its nominee / assignee to be Mondial Ventures, Inc.

 

RECITALS

 

Preamble: This Definitive Short Form Agreement is agreed to be expanded into the long form agreement to be completed and signed off by the parties by November 4, 3012 which may be mutually extended by the parties signed and in writing and attached for reference hereto.

 

	
  

	
1.

	
December 31, 2009, Firecreek, through its wholly owned subsidiary Energy Producers, Inc. (“Energy Producers” or “EPI”) closed an Acquisition Agreement including an Assignment of Interests in Oil and Gas Leases (the “Assignment”), with Whitt Oil & Gas, Inc., (“Whitt” or “Operator”) a Texas corporation acquiring 50% working interests and corresponding 32% net revenue interests in oil and gas leases representing the aggregate total of 240 acre leases, reserves, three wells, and equipment located in Callahan, Stephens, and Shakelford Counties, West Central Texas.

 

2.      Firecreek proposes initially to undertake with MNVN as follows:  prepare to contract for a 3-D Seismic contract covering the Boyette property in Shackelford County, Texas. The seismic study will focus on specific Barnett Shale formation characteristics that will assist in the drilling of one and possibly two Barnett horizontal wells or an equivalent of up to eight vertical wells on the Boyette lease at a proposed initial depth of approximately
5,200’ to 5,500’ feet. There have been recent Barnett wells in the area that have been productive in the oil segment or phase of the Barnett Shale that have justified the seismic study. The onsite seismic work is expected to commence within 90 days.

3.      Price contributed by MNVN for the initial 3-D Seismic study and proposed herewith to buy out 50% partnerinterests, and other costs with re engaged start up activities: $175,000 of which $10,000 has been received byFirecreek as a deposit to date thereby leaving a balance of $165,000 due.

4.      On successful seismic testing anticipated AFE for Barnet Horizonal Well program would be estimated to be$750,000 per horizontal well. A two well objective upon stabilization of the two planned wells would be 80 to100 BOPD. Firecreek to come to terms of agreement regarding financing for the proposed drilling and development should the parties agree to further move forward after the Seismic study.

5.      Miscellaneous.

Historical Information Regarding Oil and Gas Interests

On December 22, 2009, the Company through its wholly owned subsidiary Energy Producers, Inc. entered intoan Agreement for the Assignment of Interests in Oil and Gas Leases (“Assignment”), with Whitt Oil & Gas, Inc., (“Whitt”) a Texas corporation acquiring 50% working interests and corresponding 32% net revenue interests inoil and gas leases, reserves, and equipment. The leases, equipment, and a turnkey work program relate to
threewells located on the leases representing the aggregate total of 240 Acres in Shackelford, Callahan, and Stephens counties, West Central Texas. The program also includes the right but not the obligation to drill four more wells in the future. The acquired leases and the property to which they relate are identified below:

  

  

  

i.            That certain Oil, Gas and Mineral Lease dated September 17, 2007, by and between Eugene Bell,Lessor, and E & D Bell, LLC, Lessee and that certain Oil, Gas and Mineral Lease dated September 17, 2007, by and between Harold Elledge, Lessor, and E & D Bell, LLC, Lessee each covering the following two (2) parcels of land in Callahan County, Texas:

Tract I: Being 40 acres as near as is practicable in the form of a square around the LCSProduction of McWhorter #1 well, Callahan County, Texas.

Tract II: Being 40 acres as near as is practicable in the form of a square around the Ratex Energy,Inc. No. 3 Young well, Callahan County, Texas.

	
  

	
ii.            Those two certain Oil and Gas Leases dated December 18, 2009, by and between Juanita B. Boyett Trust, Jearl Silas Boyett, Executor, Lessor, and Whitt Oil  &.  Gas, Inc., Lessee,  to the extent, and to the extent only, that said lease covers all of the Southeast One-fourth (SE/4) of Section 55, B.A.L., A-2746, Stephens and Shackelford Counties, Texas.

	
  

	
The following wells are located on the leases identified, above:

	
1.

	
McWhorter No. Well, Texas Lease I.D. 27348, Callahan County, Texas.

	
2.

	
Young No. 3 Well, Texas Lease I.D. 26519, Callahan County, Texas.

	
3.

	
Boyett Well, Texas, API #42-417-37567, Shackelford County, Texas.

	
  

	
 

	
  

	
 

	
  

	
A mineral interest is the ownership of rights to gas, oil, or other minerals as they naturally occur in place, at or below the surface of a tract of land. Ownership of the minerals carries with it the right to make such reasonable use of the surface as may be necessary to explore for and produce the minerals. Only the mineral owner (or fee owner) may execute an oil or gas lease conveying his interest in a tract of land. Severance: The owner of all rights to a tract of land (vertically or horizontally). In horizontal severance, for example, if he chooses to sell all or part of the mineral rights, two distinct estates are created: the surface rights to the tract of land and the mineral rights to the same tract. The two estates may change hands independently of each other. Severed minerals rights
may be restricted as to mineral type, or limited by depth, (in which case the landowner retains the rights to minerals other than those severed, and to depth intervals other than those severed.)

	
  

	
The Company attempts to maintain all of its operating wells in good working condition. Whitt Oil and Gas, Inc. (Whitt) a Texas corporation, and licensed operator, is familiar with the oil and gas business in the area. Whitt will operate the Company’s interests in the properties overseeing production and maintenance activities for its oil wells, equipment and other development activities for the leases.

	
  

	
The Material terms of the Operating Agreement with the Company include:

	
  

	
Whitt is an independent contractor and operates the subject properties on a contract basis pursuant to the AAPL form operating agreement according to our share of Working Interests (50%) with a $350 per producing well per month overhead fee and $250.00 pumper fee per well (presently for 3 wells) respectively plus electricity and other intangible repair items. All other charges whether by Whitt, an affiliate of Whitt or third parties will be the responsibility of the working interest owners of the properties. Whitt will furnish the monthly Lease Operation Expense and various activity reports to the Company’s wholly owned subsidiary Energy Producers, Inc. Upon successful commencement of production, run checks (payments) expected from future sales of oil and gas are to be sent to the
operator from the purchasers for oil and gas produced. Conoco is initially designated as the gatherer for the oil. Whitt is to administrate monthly activities, and after payment of management, consulting, and lease-operating expenses (LOE’s), it collects and compiles the Joint Interest Billing (JIB) Statements and prepares certain reports and financial statements related to production income and expenses for monthly delivery to Company’s accounting for compilation along with its share of the payment to be received according to its interests.

  

  

  

 

	 	6.	If and or where applicable, if any, the Parties are executing and delivering this LOI, as or if applicable, in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
	 	7.	Representations and Warranties to be determined and agreed by the Parties.
	 	8.	Subject to: completing due diligence, the formal and final approvals of the Board of Directors of Firecreek, MNVN, and requisite third party approvals, as and if required.
	 	9.	Capital structures for Firecreek and MNVN to be disclosed.
	 	10.	Press release allowable with consent of both Firecreek and MNVN Principle Executive Officers.
	 	11.	Current Report on Form 8-k is agreed to be filed with SEC by Firecreek on completion of the final formal Agreement, when completed.
	 	12.	Laws of the State of Nevada USA shall govern.

 

If the terms of this Definitive Short Form Agreement are understood please indicate by signing below.

EGPI FIRECREEK, INC.

By: /s/Dennis R Alexander

--------------------------------- 

Name: Dennis R Alexander

---------------------------------

Title: CEO

---------------------------------

MONDIAL VENTURES, INC. , (CUBO ENERGY, PLC NOMINEE / ASSIGNEE)

By: /s/Dennis R Alexander

---------------------------------

Name: Dennis R Alexander

---------------------------------

Title: CEO

---------------------------------

ACKNOWLEDGED AND APPROVED BY:

CUBO ENERGY, PLC., ASSIGNOR TO MONDIAL VENTURES, INC.

By:/s/Brian Kennedy

---------------------------------

Name: Brian Kennedy

---------------------------------

Title : President

---------------------------------

SCHEDULES AND EXHIBITS AS APPLICABLE [TO BE PROVIDED]

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