PURCHASE AND SALES AGREEMENT
BETWEEN
THE PURCHASER:
BELL COAST CAPITAL CORP.
(“BCCC”)
AND
THE SELLERS:
U.S. ENERGY CORP. AND USECC, A JOINT VENTURE
BETWEEN U.S. ENERGY CORP. AND CRESTED CORP. (“the USE
PARTIES”)
DECEMBER 8, 2004
PURCHASE AND SALES AGREEMENT
This Purchase and Sales Agreement ("Agreement"
) is made and en-tered into on this the 8th day of
December, 2004, by and between the purchaser: Bell Coast Capital
Corp., a British Columbia corporation ("BCCC"), and the sellers:
U.S. Energy Corp., a Wyoming corporation (“USE”) and a
joint venture between USE and Crested Corp., a Colorado corporation
(“Crested”), such joint venture referred to as
(“USECC”), the sellers hereinafter collectively
referred to as the “USE Parties”.
1.
Statement of Purpose . The USE Parties own
or control through contract, a block of unpatented mining claims
(“Claims”) and a Wyoming State Lease
(“Lease”) in the Sheep Mountain and Crooks Gap Mining
Districts, Fremont County, Wyoming, as generally described in
Exhibit A-1, which is incorporated by this reference. Such
properties interests are hereinafter collectively referred to as
the “Properties”. The Properties contain uranium
deposits, shafts for underground mining, head frames, open pits
from previous mining operations, tunnels, roads, buildings,
equipment and utilities.
2.
Sale of Interests by the USE Parties.
Subject to the terms and conditions of this Agreement and for the
consideration herein set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the USE Parties hereby agree to sell, transfer and
assign to BCCC the right to purchase a 50% undivided interest in
and to the Properties described on Exhibit A-1, subject to the
royalties and burdens or third party interests described in Exhibit
A-2.
3.
Purchase of Interests by BCC. Subject to
the terms and conditions of this Agreement and for the
consideration herein set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, BCCC agrees to purchase from the USE Parties a 50%
undivided interest in and to the Properties described on Exhibit
A-1, subject to the royalties and burdens or third party interests
described in Exhibit A-2
4.
Purchase Price. BCCC agrees to purchase a
50% undivided interest in and to the Properties described in
Exhibit A-1 by paying the USE Parties the following consideration
in U.S. Dollars and issuing shares of BCCC common stock (all stock
issues will be subject to the antidilution provisions provided for
in Exhibit B) as follows:
(i) October 29,
2004
$175,000
P a id
$100,000 to the USE Parties, which is
non-refundable and $75,000
paid into
escrow, which is also non-refundable
and was released to the USE Parties
on December 3, 2004.
November 29, 2004
$175,000
To be paid into escrow and to be released
to the USE Parties 5 days after TSX Venture
Exchange (“the Exchange”) approval of the
purchase by BCCC, provided however,
such approval by the Exhange
shall
not exceed 6 months from the date of the
October 29, 2004 Letter Agreement.
June 29, 2005
$500,000
and
1,000,000 common shares of BCCC
stock subject to regulations of the Exchange.
June 29, 2006
$800,000
and 750,000
common shares of BCCC stock
subject to regulations of the Exchange.
December 29, 2006
$800,000
and 750,000 common shares of BCCC stock
subject to regulation of the Exchange.
June 29, 2007
$800,000
and
750,000 common shares of BCCC stock
subject to regulations of the Exchange.
Total (Cash)
$4,050,000
(Shares) 4,000,000 common shares of
BCCC stock subject to regulations of the
Exchange.
(ii) The
payment to the USE Parties by BCCC of $3 million in two $1.5
million installments after the Ux price reported in Ux Weekly for
the long term indicator for U 3 O 8 is at $30.00/lb for four (4)
consecutive weeks (“Price Benchmark”), then payment
shall be as follows: 1) if the Price Benchmark occurs during the
first 18 months after the execution of the October 29, 2004 Letter
Agreement, then the first installment of $1.5 million payment shall
be 6 months from such date, but no sooner than 18 months after
execution of the October 29, 2004 Letter Agreement and 2) if the
Price Benchmark occurs after the first 18 months from the execution
of the October 29, 2004 Letter Agreement, then the first
installment of $1.5 million shall be paid 6 months from the date
such Price Benchmark occurs. The second installment of $1.5 million
shall be paid 6 months after the first installment. The obligation
for such payments shall survive closing and shall extend through
the term of the Venture. If either payment is not timely made, BCCC
will forfeit any and all interest in the Properties or the
Venture.
(iii)
Within 3 months of the date of this Agreement, BCCC will make
available and commit $500,000 for an exploration and development
program for the Properties.
5.
Closing. The closing of the transaction
contemplated by this Agreement (the “Closing”) shall
take place in Riverton, Wyoming on or before December 29, 2007. In
consideration of and after the receipt of the full payments
described in paragraph 4: the USE Parties will convey to BCCC a 50%
undivided interest in the Properties; and BCCC and the USE Parties
will form a joint venture as described in paragraph 6.
6.
Representation and Warranties of the USE
Parties. The USE Parties represent to BCCC that as of
the date of this Agreement:
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(a)
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Each of the USE Parties that exist as
corporate entities has been duly organized, validly existing and is
in good standing under the laws of the state of incorporation and
has the requisite power to own its respective interest in the
Properties.
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(b)
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Each of the USE Parties has all the requisite
power, right and authority to enter into this Agreement and to
perform its obligations under this Agreement, including the right
to convey to BCCC the interest in the Properties at Closing and the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of each of
the USE Parties.
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(c)
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This Agreement when executed and delivered
will be a valid and binding agreement of each of the USE Parties,
enforceable in accordance with its terms.
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(d)
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There are no actions, claims, investigations
or proceedings, judicial or otherwise, pending, or to the best of
the knowledge of each of the USE Parties threatened, against or
relating to any one of the USE Parties which would affect the USE
Parties’ ability to convey the purchased interest in the
Properties to BCCC or otherwise affect the USE Parties’
ability to perform the terms of this agreement.
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(e)
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The execution and delivery of this Agreement
does not and the performance of this Agreement by each of the USE
Parties will not (i) conflict with or violate the Articles of
Incorporation or Bylaws of anyone of the USE Parties, (ii) conflict
with or violate any law, rule, regulation, order, judgment or (iii)
result in any breach or constitute a default (or an event which
with notice or lapse of time, or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration, cancellation, or consent, or result in the creation
of a lien or encumbrance on any of the Properties, pursuant to any
instrument or obligation to which USE Parties is a party or by
which USE Parties is bound.
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(f)
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(i) The State of Wyoming Mineral Lease
constituting part of the Properties is valid and in good standing;
(ii) the USE Parties own or control the Properties, (iii) that with
respect to the Claims, (1) all acts of location have been performed
in accordance with all applicable federal and state laws and local
mining customs and (2) that sufficient annual assessment work has
been performed on each of the Claims and evidence of assessment
work has been filed as required by state and
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federal law through August 31, 2004 for the last
assessment year.
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(g)
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To the best of the USE Parties’
knowledge the unpatented mining claims (the "Claims") and the State
Lease constituting part of the Properties are free and clear of all
defects, liens or encumbrances except there are certain royalties
reserved to owners or former owners of the Claims and the State
Lease.
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(h) The USE Parties have the
right and ability to convey a 50% undivided interest in an to the
Properties as described in Exhibit A-1 as provided for hereunder to
BCCC free and clear of all claims, liens, security interests,
burdens and encumbrances of any nature and kind created by through
or under the USE Parties save and except as title to the Properties
may be encumbered by the royalties and burdens more particularly
described in Exhibit A-2
(i) any and all underlying
agreements related to any portion of the Properties are in good
standing.
(j) The USE Parties have not
employed any broker for finder and has not incurred any liabilities
for any brokerage fees, commissions, or finder’s fees in
connection with the transactions contemplated by this Agreement for
which BCCC shall have any responsibilities whatsoever.
(k) The USE Parties make no
representations or warranties with respect to title to the
Properties and this agreement has been entered into on the
understanding that BCCC will commission the preparation of an
independent title opinion on the Properties and in this regard the
USE Parties will make available to BCCC’s Wyoming Counsel all
of its title records. To the best of the USE Parties’
knowledge, information and belief the information contained in
Exhibit A-1 with respect to the Properties is complete and
correct.
(l) Prior to executing this
Agreement, the USE Parties made available to BCCC and its agents
and contractors certain information and data that the USE Parties
have in their control or possession relating to the Properties and
the liabilities attendant thereto, including but not limited to
drilling, exploration, mining and metallurgical test data, assays,
title information, and all information relating to possible
environmental liabilities and to the best of their respective
knowledge, information and belief the data made available is full
and complete and the USE Parties are unaware of any material fact
or circumstances which have not been made available to BCCC which
should be disclosed or made available to BCCC in order to prevent
the representations and warranties in this agreement from being
materially misleading.
7.
Representation and Warranties of BCCC. BCCC
represents to the USE Parties that as of the date of this
Agreement:
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(a)
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BCCC is a corporation duly incorporated and in
good standing in the Province of its incorporation and that it will
form a wholly owned subsidiary that will be qualified and
registered to do business in the State of Wyoming prior to the
Closing Date for the purpose of holding its interest in the
Properties.
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(b)
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BCCC has all the requisite power, right and
authority to enter into and t
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