October 13, 2009
Delivered and via
e-mail
Everest Exploration Inc.
P.O. Box 1339
Corpus Christi, Texas 78409
Attention:
Mr. James T. Clark
Re:
Proposed Purchase of Texas Assets of Everest Exploration Inc.
by Uranium Energy Corp.
This letter agreement (the "
Agreement ") is intended to set out the basis upon which
Uranium Energy Corp. (the " Purchaser ") is prepared to
negotiate for the purchase from Everest Exploration Inc. (the "
Vendor ") of substantially all of the assets of the Vendor
(collectively, the " Purchased Assets ", as set forth
herein).
Specifically, we wish to set out
the basic terms in this Agreement, if accepted by the Vendor, upon
which the Purchaser is prepared to enter into a formal purchase
agreement (the " Purchase Agreement ", as set forth herein)
between the Vendor and the Purchaser with respect to the purchase
by the Purchaser of the Purchased Assets.
1. Description
of Purchased Assets . The Purchaser will purchase substantially
all of the assets (the " Purchased Assets ") of the Vendor
as at the Closing Date (as herein defined) which are described as
listed in Appendix "A", which is attached hereto, and which is
considered an integral part of this Agreement.
For the avoidance of doubt, the
parties hereto understand and agree that the Purchased Assets shall
include, but are not limited to, the following:
(a) all the real property
owned or leased by the Vendor which shall include, without
limitation, all uranium mining leases for the Tex-1 Uranium Project
(the " TUP ") and the Mt. Lucas Uranium Project (the "
MLUP ");
(b)
(i) the purchase of
all of the furniture, fixtures, equipment and fixed assets owned by
the Vendor (collectively, the " Owned Assets ") as described
as listed in Appendix "A-6", which is attached hereto, and which is
considered an integral part of this Agreement; and
(ii) the right of the
Purchaser to use, during the period of Mt. Lucas Reclamation (as
herein defined), provided Purchaser shall maintain the lease and
rental payments during the period of such use, the leased and
rent-to-own equipment controlled by
the Vendor (collectively, the " Leased and Rented Assets ")
as also described as listed in Appendix "A-6";
(c) all rights of the
Vendor under all contracts, agreements and leases of whatever
nature in respect of the South Texas Mining Venture, LLP (the "
STMV "), the TUP and the MLUP, and all equipment leases as
listed in Appendix "A"; and
(d) all licenses,
permits, approvals, consents, registrations and other
authorizations issued to or held by the Vendor in respect of the
STMV, the TUP and the MLUP.
Any and all assets of the Vendor which
are excluded from the Purchased Assets are described as listed in
Appendix "A-1", which is attached hereto, and which is considered
an integral part of this Agreement.
2.
Liabilities . At and subject to closing, the Purchaser shall
assume, and indemnify and hold Vendor harmless from and against,
all of the liabilities of the Vendor which are described as listed
in Appendix "B", which is attached hereto, and which is considered
an integral part of this Agreement.
3. Purchase
Price Consideration . Subject to section 4 below, in
consideration for purchasing the Purchased Assets the Purchaser
shall provide the following purchase price consideration
(collectively, the " Purchase Price Consideration ") to and
for the benefit of the Vendor in the following manner and at the
following times:
(a) arrange to provide
the Vendor with an aggregate of U.S.$300,000 in secured funds prior
to the Closing Date (as herein defined; and each being an "
Initial Cash Payment " herein) in the following manner: (i)
U.S.$150,000 on the acceptance date of this Agreement; and (ii) an
additional U.S.$150,000 within 30 calendar days of the acceptance
of this Agreement; representing the parties' mutually agreed upon
and documented direct and indirect expenditures on reclamation work
currently being conducted and to be conducted by the Vendor on the
TUP and the MLUP (collectively, the " Mt. Lucas Reclamation
") since the acceptance date of this Agreement and up to including
the Closing Date;
(b) pay and issue to the
Vendor the following amounts on the Closing Date (as herein
defined):
(i) pay to the
Vendor a cash payment equal to U.S.$1,000,000 less the final and
cumulative Initial Cash Payments made under subsection 3(a) above
prior to the Closing Date (the " Further Cash Payment ");
and which Further Cash Payment shall be used by the Vendor to
ensure that all current, secured indebtedness of the Vendor has
been satisfied and
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released, to the sole and absolute
discretion of the Purchaser, as at the Closing Date; and
(ii) issue to the Vendor
200,000 fully paid and restricted common shares from the treasury
of the Purchaser (each a " Share "). The restrictions
applicable to the Shares are disclosed by Purchaser in Appendix
"D", which is attached hereto, and which is considered an integral
part of this Agreement. In this respect the parties hereto
understand, acknowledge and agree that the issuance of any said
Shares is subject to the prior approval of NYSE Amex Equities stock
exchange (the " NYSE Amex "); and
(c) if, as and when the
Texas Commission on Environmental Quality (the " TCEQ ")
provides either the Vendor, the Purchaser, and/or their respective
successors or assigns as the case may be, with clearance
certificates in respect of the Mt. Lucas Reclamation (each a "
Clearance Certificate "), and there is then a positive
balance between: (i) U.S.$2,200,000.00; and (ii) less the sum of
the aggregate direct expenditures then made or incurred by
Purchaser from and after the Closing Date for Mt. Lucas Reclamation
(collectively, the " Direct Reclamation Expenditures ") in
order to obtain the Clearance Certificates, issue and pay to the
Vendor, within 30 calendar days after the date of the last issued
Clearance Certificate, an amount in cash equal to such positive
balance. During the Mt. Lucas Reclamation after the Closing Date
the Purchaser will provide the Vendor, within 30 calendar days
after the first day of each calendar month, statements as to the
amount of Direct Reclamation Expenditures expended for the prior
month. The Vendor shall have reasonable access, during normal
business hours, to the Purchaser's books and records to audit any
and all of the Purchaser's Direct Reclamation Expenditures from the
Closing Date until the last issued Clearance Certificate is
received.
4.
Administration of the Purchased Assets . For greater
certainty in connection with the Vendor's delivery of the Purchased
Assets, the parties hereto further understand, acknowledge and
agree as follows:
(a) all Purchased Assets
will be immediately transferrable to the sole and absolute
discretion, and to the order and direction, of the Purchaser as at
the Closing Date (as herein defined) upon the delivery of the Cash
Payment and the Shares in accordance with subsection 3(a) above;
and
(b) if for any reason the
transactions contemplated by this Agreement do not complete, any
Initial Cash Payments paid by the Purchaser to the Vendor prior to
the Closing Date (as herein defined) will be repaid in full by the
Vendor, and until such Initial Cash Payment advances are repaid in
full by the Vendor, the
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Purchaser will hold a first charge
security interest over the assets of the Vendor set forth in
Appendix "E", which is attached hereto, and which is considered an
integral part of this Agreement.
5. Purchaser Due
Diligence Investigations . The Purchaser and its duly
authorized representatives will be entitled to make such
investigations of the Purchased Assets and such other matters
relating to the transaction contemplated herein as the Purchaser
deems advisable. Without limiting the generality of the foregoing,
the Vendor will make available or cause to be made available to the
Purchaser and its duly authorized representatives all documentation
in any way relating to the Purchased Assets. In particular, the
Purchaser will engage in its independent assessment of the
condition of, and any liabilities relating to, the STMV, the TUP,
the MLUP and any equipment, licenses, permits and contracts
included in the Purchased Assets, and the Vendor's representations
and warranties relating to such assets and obligations, licenses
and permits will be restricted in the Purchase Agreement (as herein
defined) to matters relating to title only. Any obligation of the
Purchaser herein or in the Purchase Agreement will be subject to
the aforesaid investigation being to the satisfaction of the
Purchaser, in its sole discretion.
6. Negotiation
and Execution of the Purchase Agreement . While the Purchaser
is conducting the due diligence investigations described in section
5 above, the Purchaser and the Vendor intend to negotiate in good
faith to agree upon a form of purchase agreement (the " Purchase
Agreement ") setting out in detail the terms and conditions of
the sale and purchase of the Purchased Assets. The Purchase
Agreement will incorporate the terms and conditions set out in this
Agreement together with such other terms and conditions as the
parties consider necessary or desirable, including representations,
warranties and covenants, indemnities from the parties relating to
such representations, warrants and covenants, and conditions to
closing. Unless the Purchaser is dissatisfied with the results of
its due diligence investigations and notifies the Vendor
accordingly, the Purchaser and Vendor intend to complete
negotiations of the terms of the Purchase Agreement and to execute
the Purchase Agreement within 30 calendar days of the acceptance
date of this Agreement. As set forth in section 3 above, the
parties hereto understand, acknowledge and agree that the issuance
of any Purchase Price Consideration Shares is subject to the prior
approval of NYSE Amex. As such, the Purchaser agrees to use its
reasonable commercial efforts to obtain such approval within 60
calendar days of the acceptance date of this Agreement. The closing
of the purchase and sale of the Purchased Assets shall take place
on a date agreed to by the parties in the Purchase Agreement (the "
Closing Date "), which the parties hereto agree shall be a
date that is the earlier of:
(a) 60 calendar days of
the acceptance date hereof; and
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(b) the date on which the
Purchaser closes on its contemporaneous acquisition, among other
assets, of all remaining interests in STMV;
unless otherwise extended by mutual
agreement of the parties hereto.
7. Employees
. The Purchaser shall have the right, but no obligation, to offer
employment to employees of the Vendor. In the event the Purchaser
determines to offer employment to any of the Vendor's employees,
the Purchaser shall determine the terms of any such offer(s) in its
sole discretion.
8.
Representations, Warranties and Covenants . In the Purchase
Agreement each party will:
(a) subject to the
provisions of Section 5 above, make such representations and
warranties as are standard in an asset purchase transaction having
regard to the Purchased Assets; and
(b) provide normal
covenants for an asset purchase transaction and including, without
limitation:
(i)
(A) deliver favorable legal
opinions as to all relevant matters;
(B) deliver all required
consents to the transfer of the Purchased Assets and the Purchase
Price Consideration;
(C) deliver all documentation
necessary to transfer title to the Purchased Assets to the
Purchaser and the Shares to Vendor; and
(D) take all steps to satisfy
all pre-conditions, whether statutory, contractual or otherwise, to
permit the sale of the Purchased Assets contemplated herein free
and clear of all liens, mortgages, charges, security interests,
pledges, encumbrances, restrictions, claims and demands whatsoever
and including, without limitation, taking the steps outlined in
Appendix "C", which is attached hereto, and which is considered an
integral part of this Agreement; and
(ii) covenants by the
Purchaser to deliver the Purchase Price Consideration as set forth
in sections 3 and 4 above.
In respect of the foregoing, the
Vendor shall have no responsibility (other than to use its
reasonable best efforts) regarding the securing of any third party
consents to the transfer of its 1% interest in the STMV, the
related Radioactive Mining License or any other permit, license or
asset that is part of the Purchased Assets.
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9.
Indemnities . While the Purchase Agreement will contain
usual indemnities applicable to asset purchase transactions, and
except as contemplated in section 2, the Purchase Agreement will
also contain further indemnities in favour of the Purchaser
indemnifying it from any and all liabilities which the Vendor
becomes obligated to pay arising in respect of time periods prior
to or events occurring prior to the time of closing. Any pending
litigation or claims, except as contemplated by section 2, against
the Vendor as of the Closing Date will be, and remain, the
responsibility of the Vendor.
10. Conditions of
Closing . The purchase and sale of the Purchased Assets is
subject to the usual conditions of closing in an asset purchase
transaction, all of which will be included in the Purchase
Agreement and including, without limitation, the following:
(a) all of the covenants
of the parties will have been performed;
(b) all of the
representations and warranties of the parties will be true and
correct at the time they were given and as at the Closing Date;
(c) the Purchaser will be
satisfied in its sole discretion as to the results of its due
diligence investigation with respect to the Purchased Assets;
(d) the Purchaser will be
satisfied that it is obtaining title to the Purchased Assets free
and clear of all liens, mortgages, charges, security interests,
pledges, encumbrances, restrictions, claims and demands whatsoever,
except for any permitted encumbrances to be set out in the Purchase
Agreement;
(e) all consents and
approvals to the sale and purchase of the Purchased Assets, as
reasonably determined by the parties, will have been obtained;
(f) except as
disclosed by either party, no action or proceeding will be pending
or threatened to enjoin, restrict or affect the purchase of the
Purchased Assets;
(g) no substantial damage
or material adverse change to Purchased Assets will have occurred
from the date of the Purchase Agreement to the Closing Date;
(h) the Vendor will have
complied with any applicable bulk legislation in respect of the
sale of the Purchased Assets to the Purchaser;
(i) any and all
regulatory approvals have been obtained and including, without
limitation, the approval of NYSE Amex for the issuance of the
Shares by the Purchaser to the Vendor;
(j) the transaction
shall have been approved by the vote of two-thirds of the Vendor's
shareholders;
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(k) the Purchaser shall
simultaneously close its acquisition of the remaining 99% interest
in the STMV; and
(l) James T. Clark
and Tom M. Crain, Jr. shall have executed consulting agreements or
amended consulting agreements with the Purchaser and/or the STMV at
closing.
11. Confidentiality .
All matters pertaining to this Agreement, the Purchase Agreement
and the transactions contemplated herein will be held in the
strictest confidence and no public announcement with respect to
this Agreement, the Purchase Agreement or the transactions
contemplated herein will be made by any party hereto without
consent of the other parties, except where required by law.
12. Non-Disclosure of this
Agreement; Non-Solicitation of Other Proposals . The Vendor
agrees that: (i) it will not disclose the existence of this
Agreement or any of the terms hereof to any third party who might
reasonably be expected to have interest in acquiring the Purchased
Assets; and (ii) it will not solicit or encourage any proposal from
any other person to purchase the Purchased Assets, in each case
until the transactions contemplated by this Agreement have closed
or until a date that is within 60 calendar days of the acceptance
date hereof, whichever will first occur.
13. Expenses of the
Vendor . All legal, tax and accounting expenses incurred in
co
