Exhibit 99.1
LAW OFFICES
DOUGLAS, EDEN, PHILLIPS
DeRUYTRE & STANYER
A PROFESSIONAL SERVICE
CORPORATION
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422 West Riverside Avenue, Suite
909
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Spokane, Washington
99201-0307
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Phone: (509) 455-5300
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Fax: (509) 455-5348
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Ronald P.
Douglas*
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www.depdslaw.com
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William D.
Eden
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Marc A.
Phillips
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Daniel B.
DeRuyter*
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Email:
dbderuyter@depdlaw.com
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Brent T.
Stanyer
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* Admitted in
Washington and Idaho
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_________________
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Diane J.
Kiepe
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Ryan M.
Douglas
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November 6, 2008
Offer for Settlement Protected under Evidence Rule 408
Personal and Confidential
Fred and Linda Forsberg
c/o Mine Fabrication & Machine, Inc.
P.O. Box 1081
Pinehurst, ID 83850
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Letter of Intent for the Asset Purchase
Agreement and Mutual Release and Settlement of Claims
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Dear Fred and Linda:
This letter is being written at your request
for the consideration of American West Bank in giving its written
commitment for at least $1.1 million in financing
(“Commitment”) to United Mine Services, Inc.
(“UMS”) for the asset purchases contemplated in the
balance of this letter. This letter is intended as a
non-binding Letter of Intent for an Asset Purchase Agreement
between Fred and Linda Forsberg, husband and wife (collectively
“Forsbergs”), and Mine Fabrication & Machine, Inc.
(“MineFab, Inc.”), an Idaho Corporation, and United
Mine Services, Inc. (“UMS”), an Idaho Corporation.
Based on the recitals given below and by
execution of this Letter of Intent by the parties, the parties
agree that the salient provisions of the Asset Purchase Agreement
will include the following:
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Sale by MineFab, Inc., of all of its assets
(“Assets”) to UMS, except for a policy of life
insurance on the life of Fred Forsberg and a truck used by Fred
Forsberg.
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Sale by Forsbergs of certain real property
located in Kellogg, Idaho, on which MineFab, Inc., presently
conducts its operations (“Real Property”).
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Fred and Linda Forsberg
November 6, 2008
Page 2
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The purchase price for the Assets and Real
Property will be $2.5 million (“Purchase Price”) to be
paid by UMS at Closing, and as follows:
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$1.5 million in cash at Closing.
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$1 million (subject to an inventory
adjustment) by two subordinated secured Promissory Notes of UMS,
payable as follows:
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$500,000 payable in fixed, monthly
installments, principal and interest fully amortized over a term of
not more than ninety-six (96) months from Closing, with interest to
accrue at the prime lending rate of American West Bank, plus one
percent (1%), fixed at Closing (“Interest Rate”).
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$500,000 payable with no payments due for a
term of eight (8) years, and interest accrued at the Interest Rate,
compounded annually, with a balloon payment for the full principal
balance and accrued interest becoming due and payable not more than
ninety-six (96) months from Closing, which principal balance of
said Promissory Note may be converted, all or in part, into up to
1,500,000 shares of UMS voting common stock at $0.33 per share, at
any time prior to three (3) months after the date on which UMS
stock becomes publicly traded.
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Subject only to the conversion right of the
second note provided for in subparagraph 3.B.(ii.) each Promissory
Note may be prepaid by UMS at any time, all or in part, without
penalty.
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Each Promissory Note shall be secured by the
Assets and Real Property, which security shall be subordinate only
to the financing extended by American West Bank and its
Commitment. If the American West Bank Note is personally
guaranteed by any party or par
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