Document:

a50196192ex10_4.htm

Exhibit 10.4

 

Execution Version

 

 

INVESTMENT AGREEMENT

This INVESTMENT AGREEMENT (this “Agreement”) is made and entered into as of March 1, 2012, by and among, URANIUM RESOURCES, INC., a Delaware corporation, having a place of business at 405 State Highway 121 Bypass, Building A, Suite 110, Lewisville, Texas 75067 (the “Company”), NEUTRON ENERGY, INC., a Nevada corporation having a place of business at 9000 E. Nichols Avenue, Suite 225, Englewood, Colorado 80112 (“Neutron”), and RESOURCE CAPITAL FUND V L.P., an exempt limited partnership formed under the laws of the Cayman Islands (the “Purchaser”).

 

W I T N E S S:

 

WHEREAS, contemporaneously herewith, the Company has entered into an Agreement and Plan of Merger (the “Merger Agreement”) with URI Merger Corporation, a Nevada corporation and an indirect wholly-owned subsidiary of the Company (“Merger Corp.”), and Neutron under which Neutron would merge with Merger Corp. and become an indirect wholly-owned subsidiary of the Company (the “Merger”);

 

WHEREAS, in connection with the Merger, the Purchaser desires to purchase and the Company desires to sell $20,000,000 of the Company’s common stock, $0.001 par value per share (the “Common Stock”) (the “Merger Financing”), concurrent with the closing of the Merger (the “Merger Closing”), with the proceeds of such purchase to be used by the Company to partially repay a loan due to RMB Australia Holdings Limited (“RMB”) by Neutron (the “RMB Loan”); and

 

WHEREAS, the Purchaser desires to purchase and the Company desires to sell up to an additional $15,000,000 in Common Stock, for the purpose of funding the Neutron Budget and the Company Budget, both as defined below;

 

NOW, THEREFORE, in consideration of the promises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

“Acquisition Shares” shall have the meaning provided in Section 2.2.

 

“Affiliate” means, with respect to any Person, any other Person that directly, or through one or more intermediaries, controls or is controlled by or is under common control with such Person. For purposes of the foregoing, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. For the avoidance of doubt, a Subsidiary of any Person shall be deemed to be an Affiliate of such Person, and such Person shall be deemed to be an Affiliate of such Subsidiary.

 

“Agreement” shall have the meaning provided in the Preamble.

 

  

  

  

 

“Alternate Share Price” means the lower of (i) the Share Price or (ii) the VWAP for the twenty (20) Trading Days preceding the Merger Closing.

 

“Cebolleta Agreement” means the amendment of mining lease and agreement, dated as of February 12, 2012, among the Company, Neutron and the other parties thereto, documenting certain changes to the Cebolleta property agreements and the payments related thereto.

 

“Closing Dates” shall mean the Tranche I Closing Date, the Tranche II Closing Date, if applicable, and the Merger Financing Closing Date.

 

“Common Stock” shall have the meaning provided in the Recitals.

 

“Company” shall have the meaning provided in the Preamble.

 

“Company Budget” means a detailed 12-month budget for calendar year 2012 for the Company, including pre-Merger and post-Merger operation of the Company, which covers with specificity the exploration, development, management and operation of the Company’s properties and the detailed budget relating to such activities, prepared by the Company and approved by the Board of Directors of the Company and Purchaser.

 

“Company Stockholder Approval” means the affirmative vote in favor of the Merger and the issuance of Acquisition Shares by the Company in connection therewith, by the holders of a majority of the outstanding shares of Common Stock.

 

“Estimates” shall have the meaning provided in the definition of “Material Adverse Effect.”

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

“GAAP” means United States generally accepted accounting principles.

 

“Initial Private Placement” shall have the meaning provided in Section 2.1.

 

“Material Adverse Effect” means, with respect to the Company or Neutron, any fact, circumstance, change, event, occurrence or effect that is or would reasonably be expected to be materially adverse to the business, condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise), operations or results of operations of such party, its Subsidiaries and its material joint ventures, taken as a whole, other than any such fact, circumstance, change, event, occurrence or effect relating to (i) the announcement of the execution of the Merger Agreement or the transactions contemplated thereby, (ii) changes, circumstances or conditions generally affecting the international or national uranium mining industry, (iii) actions taken or omitted to be taken with the prior written consent of the Company (in the case of actions or omissions taken by Neutron) or Neutron (in the case of actions or omissions taken by the Company) (iv) changes in general economic conditions in the United States, (v) changes in generally applicable laws or regulations (other than orders, judgments or decrees against such party, any of its Subsidiaries or any of its material joint ventures), (vi) changes in GAAP, (vii) any change in the trading price or volume of a party’s equity securities, either (A) related to the Merger Agreement or the announcement thereof, or (B) primarily resulting from a fact, circumstance, change, event, occurrence excluded from this definition of Material Adverse Effect, (viii) any failure by a party to meet any internal or published projections, forecasts or revenue or synergy or earnings predictions (collectively “Estimates”) (it being understood that the foregoing shall not prevent a party from asserting that any fact, circumstance, change, event, occurrence or effect that may have contributed to such change in trading prices or Estimates independently constitutes a Material Adverse Effect), or (ix) with respect to Neutron, (1) the fact that Neutron has substantially no cash, current assets or sources of revenue, and has significant liabilities and obligations under the Existing Senior Loan Documents (as defined in the Neutron Funding Agreement) and the Budget (“Current Financial Condition”); (2) the change in the financial condition of Neutron from the date of the Most Recent Balance Sheet to the Current Financial Condition (as such terms are defined in the Merger Agreement); and (3) the effect of any additional liabilities incurred pursuant to transactions contemplated by the Neutron Funding Agreement and the other Transaction Agreements; provided, however, that such fact, circumstance, change, event, occurrence or effect referred to in clauses (ii) or (iii) above does not: (A) primarily relate only to (or have the effect of primarily relating only to) such party, its Subsidiaries and its material joint ventures, taken as a whole, or (B) have a materially disproportionate adverse effect on such party, its Subsidiaries and its material joint ventures, taken as a whole, compared to other companies of similar size operating in the industry in which such party, its Subsidiaries and its material joint ventures operate.

 

  

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“Merger” shall have the meaning provided in the Recitals.

 

“Merger Agreement” shall have the meaning provided in the Recitals.

 

“Merger Closing” shall have the meaning provided in the Recitals.

 

“Merger Corp.” shall have the meaning provided in the Recitals.

 

“Merger Financing” shall have the meaning provided in the Recitals.

 

“Merger Financing Closing Conditions” shall mean the conditions to closing set forth in Section 6.2.

 

“Merger Financing Closing” shall mean the closing of the purchase and sale of the Acquisition Shares.

 

“Merger Financing Closing Date” shall mean the date of the Merger Financing Closing.

 

“NASDAQ” shall mean the NASDAQ Stock Market.

 

“Neutron” shall have the meaning provided in the Preamble.

 

“Neutron Budget” means a detailed 8-month budget for Neutron for the period beginning January 1, 2012, which covers with specificity the exploration, development, management and operation of Neutron’s properties and the detailed budget relating to such activities,  prepared by Neutron and approved by Purchaser and the Company.

 

  

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“Neutron Funding Agreement” means the Credit and Funding Agreement, dated as of the date hereof, between the Company and Neutron.

 

“Offerings” shall mean the Initial Private Placement and the Merger Financing.

 

“Person” means any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company, unlimited liability company or joint stock company), firm or other enterprise, association, organization, entity or governmental entity.

 

“Purchaser” shall have the meaning provided in the Preamble.

 

“Registration Rights Agreement” means the registration rights agreement dated the date hereof with respect to the Shares between the Company and Purchaser.

 

“RMB” shall have the meaning provided in the Recitals.

 

“RMB Agreement” means the Forbearance and Debt Conversion Agreement, dated as of the date hereof, among the Company, Neutron and RMB.

 

“RMB Loan” shall have the meaning provided in the Recitals.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Share Price” shall mean $0.9747 (which is equal to the VWAP for the forty (40) Trading Days prior to February 24, 2012, up to, and including, February 24, 2012).

 

“Shares” means the Tranche I Shares, the Tranche II Shares and the Acquisition Shares.

 

“Stockholders’ Agreement” means the stockholders’ agreement dated the date hereof between the Company and the Purchaser.

 

“Subsidiary” shall mean, when used with reference to any Person, any Person of which such Person (either alone or through or together with any other Subsidiary) either owns, directly or indirectly, fifty percent (50%) or more of the outstanding capital stock or other equity interests the holders of which are generally entitled to vote for the election of directors or members of any other governing body of such Person or, in the case of a Person that is a partnership, is a general partner of such partnership, or any Person the accounts of which such party is required to consolidate in its own financial statements under the generally accepted accounting principles applicable to such Person.

 

“Trading Day” means a day on which the public stock exchange on which the shares of Common Stock are principally traded is open and on which shares of Common Stock are traded.

 

“Tranche I Closing” shall have the meaning provided in Section 2.1(a).

 

  

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“Tranche I Closing Conditions” shall mean the conditions to closing set forth in Section 6.1 with respect to the Tranche I Closing.

 

“Tranche I Closing Date” shall mean the closing date of the Tranche I Closing.

 

“Tranche I Shares” shall have the meaning provided in Section 2.1(a).

 

“Tranche II Closing” shall have the meaning provided in Section 2.1(b).

 

“Tranche II Closing Date” shall mean the closing date of the Tranche II Closing.

 

“Tranche II Shares” shall have the meaning provided in Section 2.1(b).

 

“Transaction Agreements” shall mean this Agreement, the Stockholders’ Agreement, the Registration Rights Agreement, the Merger Agreement and the various other agreements related to the Merger and the transactions contemplated by the Merger Agreement, including the RMB Agreement, the Neutron Funding Agreement, the Transaction Cost Settlement Agreements and the Cebolleta Agreement.

 

“Transaction Cost Settlement Agreements”  means the agreements, dated as of the date hereof, among the Company, Neutron and those parties identified therein which obligate the Company, subject to the terms and conditions set forth therein, to issue not more than 1,000,000 shares of Common Stock in full satisfaction of Neutron’s obligations to such parties.

 

“VWAP” means Volume-Weighted Average Price, being the price per share of Common Stock calculated by dividing (x) an amount equal to the total value of shares of Common Stock traded during a particular time period, by (y) an amount equal to the total volume of shares of Common Stock traded over that particular time period, which shall be based on the price and volume quotes provided by the applicable public stock exchange and published by Bloomberg, which amount shall be calculated by the Purchaser and deemed to be accurate absent manifest error.

 

ARTICLE II

AGREEMENT TO PURCHASE AND SELL INITIAL SHARES AND ACQUISITION SHARES

 

2.1           Initial Private Placement.  The Purchaser hereby agrees to purchase and the Company hereby agrees to sell, subject to the terms and conditions set forth herein, up to $15,000,000 in Common Stock (the “Initial Private Placement”), with the transaction to be made in two tranches as follows:

 

(a)           Upon satisfaction of all Tranche I Closing Conditions and within ten (10) business days after the date of this Agreement, Purchaser shall purchase that number of shares of Common Stock equal to: (i) $10,000,000 divided by (ii) the Share Price (the “Tranche I Shares”).  Closing of the purchase and sale of the Tranche I Shares (the “Tranche I Closing”) shall occur within ten (10) business days after the execution of this Agreement or, if later, satisfaction of all Tranche I Closing Conditions; provided, however, that the number of Tranche I Shares shall not exceed, and shall be capped, at 19.9% of the total number of shares of Common Stock outstanding prior to giving effect to the issuance of the Tranche I Shares unless and until the Company Stockholder Approval has been obtained.

 

  

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(b)           Upon satisfaction of all Merger Financing Closing Conditions and upon receipt of the written request of the Company, which request may or may not be made at the option of the Company in its sole discretion, Purchaser shall purchase that number of shares of Common Stock equal to (i) $5,000,000 divided by (ii) the Alternate Share Price (the “Tranche II Shares”).  Closing of the purchase and sale of the Tranche II Shares (the “Tranche II Closing”) shall occur within ten (10) business days after the later of the Merger Financing Closing Date and the receipt of the Company’s written offer to sell the Tranche II Shares to Purchaser.

 

2.2           Merger Financing.  The Purchaser hereby agrees to purchase and the Company hereby agrees to sell, subject to the terms and conditions set forth herein, upon satisfaction of all Merger Financing Closing Conditions and concurrent with the Merger Closing, that number of shares of Common Stock equal to: (i) $20,000,000 divided by (ii) the Share Price; provided however, that in no event shall the number of such shares of Common Stock  purchased by the Purchaser in the Merger Financing equal less than 24,638,673 shares or more than 33,000,000 shares, regardless of the Share Price (the “Acquisition Shares”).

 

2.3           Closings.  The Tranche I Closing, the Merger Financing Closing, and the Tranche II Closing (if any), each as contemplated under this Agreement, will take place at the offices of Davis Graham & Stubbs LLP, 1550 Seventeenth Street, Suite 500, Denver, Colorado 80202 in accordance with the terms and conditions, and subject to the satisfaction or waiver (to the extent permitted by this Agreement and applicable law) of the conditions set forth in Article VI, or at such other place, date and time as the Purchaser and the Company shall agree in writing.

 

ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS BY PURCHASER

 

The Purchaser hereby represents and warrants to, and covenants with, the Company that the following are true and correct as of the date of this Agreement and will be true and correct as of the Tranche I Closing Date, the Tranche II Closing Date, if applicable, and the Merger Financing Closing Date as though made as of such dates, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

 

3.1           The Purchaser recognizes that: (i) the purchase of the Shares involves a high degree of risk, is speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and/or the Shares; (ii) the Purchaser may not be able to liquidate its investment; (iii) transferability of the Shares is limited; and, (iv) in the event of a disposition of the Shares, the Purchaser could sustain the loss of its entire investment.

 

3.2           The Purchaser represents that the Purchaser is an “accredited investor”, as indicated by the Purchaser’s responses to the questions contained in Appendix A, attached hereto.

 

3.3           The Purchaser represents and warrants that the Purchaser has been furnished by the Company during the course of this transaction with all information regarding the Company and Neutron which the Purchaser, as well as its investment advisor, attorney and/or accountant, has requested or desired to know, and has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company and Neutron concerning the terms and conditions of the Offerings, and has received any additional information which the Purchaser has requested concerning the terms and conditions of the Offerings, the Company and Neutron.

 

  

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3.4           The Purchaser has relied solely upon the information provided by the Company and Neutron in making its decision to invest in the Shares and has not relied upon any other representation or other information (whether oral or written) from any other third party.

 

3.5           The Purchaser represents that no Shares were offered or sold to it by means of any form of general solicitation or general advertising, and in connection therewith the Purchaser did not:  (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

 

3.6           The Purchaser understands that the Shares have not been registered under the Securities Act by reason of a claimed exemption under the provisions of the Securities Act which depends, in part, upon the Purchaser’s investment intention.  In this connection, the Purchaser hereby represents that the Purchaser is purchasing the Shares for its own account for investment purposes only and not with a view toward the resale or distribution to others and has no contract, undertaking, agreement or other arrangement, in existence or contemplated, to sell, pledge, assign or otherwise transfer the Shares to any other person.

 

3.7           The Purchaser consents to the placement of a legend on any certificate or other document evidencing the Shares substantially as set forth below, that such Shares have not been registered under the Securities Act or any state securities or “blue sky” laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement.  The Purchaser is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of the Shares.

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER ANY BLUE SKY” OR STATE SECURITIES LAWS, AND THE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

  

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3.8           The Purchaser agrees to supply the Company, within five (5) business days after the Purchaser receives the request therefore from the Company, with such additional information concerning the Purchaser as the Company deems necessary or advisable.

 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

 

The Company hereby represents and warrants to, and covenants with, the Purchaser that the following are true and correct as of the date of this Agreement and will be true and correct as of the Tranche I Closing Date, the Tranche II Closing Date, if applicable, and the Merger Financing Closing Date as though made as of the such dates, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

 

4.1           The Company agrees that the representations, warranties and covenants made by the Company and the Merger Corp. to Neutron in the Merger Agreement are repeated herein to and for the benefit of Purchaser as if fully set forth herein.  The Purchaser may rely on such representations, warranties and covenants as fully as if they were set forth herein.  Such representations, warranties and covenants shall form an integral part of this Agreement and shall survive the Closing Dates.

 

4.2           The Tranche I Shares to be issued at the Tranche I Closing and the issuance thereof have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will have been validly issued and will be fully paid and nonassessable.  The Tranche II Shares and the Acquisition Shares and the issuance thereof have been duly authorized, subject to the receipt of the Company Stockholder Approval, and, when issued and delivered in accordance with the terms of this Agreement will have been validly issued and will be fully paid and nonassessable.  The Shares are issued free and clear of any lien or other encumbrance, and the issuance of the Shares will not be subject to any preemptive or other similar right.

 

4.3           The Company has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder and, with respect to the Tranche II Shares and the Acquisition Shares, subject to the receipt of the Company Stockholder Approval, to consummate the transactions contemplated hereby.  The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions so contemplated, other than, with respect to the Tranche II Shares and the Acquisition Shares, the Company Stockholder Approval.  This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the Purchaser, constitutes a valid, legal and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors’ rights generally.

 

  

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4.4           The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby, do not and will not, subject to obtaining the Company Stockholder Approval with respect to the issuance of the Tranche II Shares and the Acquisition Shares, (i) contravene, conflict with or result in a violation or breach of any provision of the Company’s Certificate of Incorporation and bylaws or the organizational documents of any of the Company’s Subsidiaries, (ii) contravene, conflict with or result in a violation or breach of any provisions of any law applicable to the Company or any of its Subsidiaries or by which its or any of their respective properties is bound or affected, (iii) require any consent or other action by any Person under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or cause or permit the termination, amendment, acceleration, triggering or cancellation or other change of any right or obligation or the loss of any benefit to which the Company or any of its Subsidiaries is entitled under any provision of any contract binding upon the Company or any of its Subsidiaries, or (iv) result in the creation or imposition of any lien on any asset of the Company or any of its Subsidiaries, other than such exceptions in the case of clause (ii) or (iii) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Company.

 

4.5           The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not, and shall not, require any approval, action by or in respect of, filing with or notification to, any governmental entity, to be made or obtained by the Company or its Subsidiaries, except for (i) any filing with the SEC by the Company required to be made by the Company pursuant to the Exchange Act in connection with the Merger and the Offerings and the transactions contemplated thereby, (ii) such other filings, authorizations, decisions or orders as may be required by the rules and regulations of NASDAQ or any state securities or blue sky laws, (iii) such other filings specified in the Merger Agreement, and (iv) any other approvals or permits, which, if not obtained, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Company.

 

4.6           The Company and its Subsidiaries have not incurred, nor will they incur, directly or indirectly, any liability for brokerage or finder’s fees or agent’s commissions or any similar charges in connection with the Merger Agreement or this Agreement or any transaction contemplated hereby.

 

4.7           Neither the Company nor its Subsidiaries nor any agent acting on behalf of the Company or its Subsidiaries has taken or will take any action which might cause the Merger Agreement or this Agreement to violate applicable laws, as in effect on the Closing Dates.  All offers and sales of capital stock, securities and notes of the Company in the past two (2) years have been conducted and completed by the Company in compliance with applicable laws in all material respects.

 

4.8           There is no action, suit, proceeding, judgment, claim or investigation pending or threatened against the Company or any of its Subsidiaries which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay any of the transactions contemplated by the Merger Agreement or this Agreement, and to the knowledge of the Company there is no basis for the assertion of any of the foregoing.  Neither the Company nor any Subsidiary is subject to any order which would reasonably be expected to have a Material Adverse Effect on the Company.

 

  

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4.9           The Company and its Affiliates have not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Shares or affect the price at which the Shares may be issued or resold.

 

4.10           The Shares are being offered and sold pursuant to the registration exemption provided by Section 4(2) of the Securities Act as a transaction not involving a public offering and the requirements of any other applicable state securities laws and the respective rules and regulations thereunder.  The Company has not taken nor will it take any action that conflicts with the conditions and requirements of, or that would make unavailable with respect to the Offering, the exemption(s) from registration available pursuant to Regulation D or Section 4(2) of the Securities Act and knows of no reason why any such exemption would be otherwise unavailable to it. Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offer of the Shares pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable stockholder approval provisions, including, without limitation, under any applicable listing rules and regulations which would impair the exemptions relied upon in the Offerings or the Company’s ability to timely comply with its obligations hereunder, nor will the Company nor any of its Affiliates take any action or steps that would cause the offer or issuance of the Shares to be integrated with other offerings which would impair the exemptions relied upon in the Offerings or the Company’s ability to timely comply with its obligations hereunder.  The Company will not conduct any offering other than the transactions contemplated hereby that will be integrated with the offer or issuance of the Shares, which would impair the exemptions relied upon in the Offerings or the Company’s ability to timely comply with its obligations hereunder.

 

4.11           The proceeds from the Initial Private Placement shall be used by the Company solely for the purpose of funding the Neutron Budget and the Company Budget.  The proceeds of the Merger Financing shall be used, concurrent with the Merger Closing, to partially repay the RMB Loan.

 

4.12           The Company shall not materially amend, modify, supplement or revise the Company Budget or otherwise deviate from the Company Budget by more than ten percent with respect to any one line item or by more than five percent in the aggregate, in each case at any time, without the prior consent of the Purchaser, not to be unreasonably withheld or delayed.  The Company shall provide to the Purchaser from time to time such data, reports and information regarding the condition or operations, financial or otherwise, of the Company and its properties as well as the Company’s compliance with the Company Budget as the Purchaser may from time to time reasonably request.

 

4.13           The Company’s executive officers and directors understand the nature of the Shares being sold hereby and recognize that the issuance of the Shares will have a potential dilutive effect on the equity holdings of other holders of the Company’s equity or rights to receive equity of the Company.  The board of directors of the Company has concluded in its good faith business judgment that the issuance of the Shares is in the best interests of the Company.  The Company specifically acknowledges that its obligation to issue the Tranche I Shares and the Acquisition Shares, is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company or parties entitled to receive equity of the Company.

 

  

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4.14           There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise between the Company and the accountants and lawyers presently employed by the Company, including but not limited to disputes or conflicts over payment owed to such accountants and lawyers, nor have there been any such disagreements during the two years prior to the closing of the Offerings.

 

4.15           Neither the Company, nor to the knowledge of the Company, any director, officer, employee, agent, representative or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses or payments related to foreign, domestic or tribal political activity, (ii) made, authorized, offered or promised any unlawful payment to foreign, domestic or tribal government officials, employees or representatives or to any foreign, domestic or tribal political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is  in violation of law, or (iv) violated in any respect any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

 

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF NEUTRON

 

Neutron hereby represents and warrants to, and covenants with, the Purchaser that the following are true and correct as of the date of this Agreement and will be true and correct as of the Tranche I Closing Date, the Tranche II Closing Date, if applicable, and the Merger Financing Closing Date as though made as of the such dates, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

 

5.1           Neutron agrees that the representations, warranties and covenants made by Neutron to the Company and the Merger Corp. in the Merger Agreement are repeated herein to and for the benefit of Purchaser as if fully set forth herein.  The Purchaser may rely on such representations, warranties and covenants as fully as if they were set forth herein.  Such representations, warranties and covenants shall form an integral part of this Investment Agreement and shall survive the closing of the purchase and sale of the Shares.

 

5.2           There is no action, suit, proceeding, judgment, claim or investigation pending or threatened against Neutron or any of its Subsidiaries which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay any of the transactions contemplated by the Merger Agreement or this Agreement, and to the knowledge of the Company there is no basis for the assertion of any of the foregoing.  Neither Neutron nor any Subsidiary is subject to any judgment, injunction, or order which could reasonably be expected to have a Material Adverse Effect on Neutron.

 

  

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5.3           Neutron and its Subsidiaries have not incurred, nor will they incur, directly or indirectly, any liability for brokerage or finders fees or agent’s commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby, other than fees and expenses payable to Roth Capital Partners, LLC in connection with the Merger.

 

5.4           Neutron shall not materially amend, modify, supplement or revise the Neutron Budget or otherwise deviate from the Neutron Budget by more than five percent at any time without the prior consent of the Purchaser, not to be unreasonably withheld or delayed.  Neutron shall provide to the Purchaser from time to time such data, reports and information regarding the condition or operations, financial or otherwise, of Neutron and its properties as well as Neutron’s compliance with the Neutron Budget as the Purchaser may from time to time reasonably request.

 

ARTICLE VI

CONDITIONS TO CLOSING

 

 

6.1           Tranche I Closing.

 

(a)           Conditions to Obligations of Purchaser.  The obligation of the Purchaser to effect the Tranche I Closing shall be subject to the satisfaction at or prior to the Tranche I Closing, of each of the following conditions:

 

(i)           The representations and warranties of the Company and Neutron contained in this Agreement shall be true and correct as of the date of this Agreement and the Tranche I Closing Date as if made on such date, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties shall be true and correct as of such date);

 

(ii)           The Company shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by it prior to the Tranche I Closing;

 

(iii)           Between the date of this Agreement and the Tranche I Closing, nothing shall have occurred that has had or would be reasonably expected to have a Material Adverse Effect on the Company or Neutron;

 

(iv)           All Transaction Agreements shall have been duly executed and delivered by each party thereto, shall be in form and substance satisfactory to Purchaser, and shall remain in full force and effect; and, no default, event of default or breach shall be outstanding or alleged under any Transaction Agreement;

 

(v)           Purchaser shall have approved the Neutron Budget and the Company Budget;

 

  

12

  

 

(vi)           RMB shall have extended the expiry of the RMB Loan to the Merger Closing and shall have agreed to forebear from declaring a default or event of default or foreclosing on the RMB Loan, all on terms and conditions satisfactory to the Purchaser;

 

(vii)           The Company shall have received all approvals and consents necessary to consummate the Tranche I Closing, including the approval of the Tranche I Shares for trading on NASDAQ, subject to official notice of issuance;

 

(viii)           The Company shall deliver or cause to be delivered to the Purchaser certificates evidencing the Tranche I Shares, duly authorized, issued, fully paid and non-assessable, registered in the name of the Purchaser or as the Purchaser shall otherwise designate;

 

(ix)           The Company shall have provided a favorable legal opinion of counsel to the Company, in a form satisfactory to the Purchaser, which shall include opinions in respect of customary corporate and securities laws matters;

 

(x)           The Company shall have provided certificates of a senior officer of each of the Company and Neutron, in form and substance satisfactory to the Purchaser, certifying as follows:

 

(A)           that attached to such certificate is a true and complete copy of the certificate of incorporation and bylaws, as amended, of the Company and each of its Subsidiaries or Neutron and each of its Subsidiaries, as applicable, including any and all certificates of designation;

 

(B)           that attached thereto are true and complete copies of the resolutions of the board of directors of the Company or Neutron, as applicable, authorizing the execution, delivery and performance of this Agreement and the other Transaction Agreements to which it is a party, instruments and certificates required to be executed by it in connection herewith and approving the consummation of the transactions in the manner contemplated hereby and thereby including, with respect to the Company, the authorization and issuance of the Shares; and

 

(C)           the names and true signatures of the officers and directors of the Company or Neutron, as applicable, signing this Agreement and all other Transaction Agreements to which it is a party;

 

 

(xi)           The Company shall have provided to Purchaser a certificate of the Chief Executive Officer and the Chief Financial Officer of the Company dated as of the Tranche I Closing Date certifying that the Company has complied in all material respects with its covenants herein and that the Company is in compliance with all laws and regulations (including with respect to corporate and securities matters) except as would not reasonably be expected to have a Material Adverse Effect on the Company;

 

(xii)           Neutron shall have provided to Purchaser a certificate of two officers dated as of the Tranche I Closing Date certifying that Neutron has complied with its covenants herein, that Neutron is in compliance with all laws and regulations (including with respect to corporate and securities matters) except as would not reasonably be expected to have a Material Adverse Effect on Neutron; and

 

  

13

  

 

(xiii)           Each of the Company, Neutron and RMB shall have performed and complied in all material respects with all covenants and agreements required by any Transaction Agreement to which any of them is a party to be performed or complied with by it prior to the Tranche I Closing.

 

The foregoing conditions precedent are for the exclusive benefit of Purchaser and may be waived, in whole or in part, by Purchaser in writing at any time, in which event the Parties shall have no further liability. If any of the said conditions shall not be complied with or waived by Purchaser on or before March 15, 2012, then the Purchaser may rescind and terminate its obligations to purchase the Shares pursuant to this Agreement by written notice to the Company.

 

(b)           Conditions to Obligations of the Company.  The obligations of the Company to effect the Tranche I Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived, in writing, by the Company:

 

(i)           The representations and warranties of the Purchaser contained in this Agreement shall be true and correct as of the date of this Agreement and as of the date of Tranche I Closing as if made on such date, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties shall be true and correct as of such date);

 

(ii)           The Purchaser shall have performed and complied in all material respects all covenants and agreements required by this Agreement to be performed or complied with by it prior to the Tranche I Closing; and

 

(iii)           At or prior to the Tranche I Closing Date, the Purchaser shall deliver or cause to be delivered to the Company payment of the purchase price for the Tranche I Shares, by wire transfer of immediately available funds to an account designated in writing by the Company at least three (3) business days prior to the Tranche I Closing Date; and

 

(iv)           The Tranche I Shares shall have been authorized for trading on NASDAQ, subject to official notice of issuance.

 

The foregoing conditions precedent are for the exclusive benefit of the Company and may be waived, in whole or in part, by the Company in writing at any time, in which event the Parties shall have no further liability.  If any of the said conditions shall not be complied with or waived by the Company on or before March 15, 2012, then the Company may rescind and terminate this Agreement by written notice to Purchaser.

 

6.2           Merger Financing Closing and Tranche II Closing.

 

  

14

  

 

(a)           Conditions to Obligations of Purchaser.  The obligations of the Purchaser to effect the Merger Financing Closing and the Tranche II Closing shall be subject to the satisfaction at or prior to the Merger Financing Closing and the Tranche II Closing, respectively, of each of the following conditions:

 

(i)           The representations and warranties of the Company and Neutron contained in this Agreement shall be true and correct as of the date of this Agreement and the Merger Financing Closing Date or the Tranche II Closing Date, as applicable, as if made on such date, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties shall be true and correct as of such date);

 

(ii)           The Company shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by it prior to the Merger Financing Closing or Tranche II Closing, as applicable;

 

(iii)           Between the date of this Agreement and the Merger Financing Closing Date or Tranche II Closing Date, as applicable, nothing shall have occurred that has had or could be reasonably expected to have a Material Adverse Effect on the Company or Neutron;

 

(iv)           All conditions to the closing of the Merger under the Merger Agreement shall have been satisfied and fulfilled and the Merger shall have closed and been consummated by the parties thereto;

 

(v)           All Transaction Agreements shall remain in full force and effect and the Company and Neutron shall not be in default of any obligation thereunder;

 

(vi)           All warrants to acquire common stock of Neutron held by RMB, whether issued or not, shall have been cancelled;

 

(vii)           The Company shall have received all approvals necessary to consummate the Merger and the Merger Financing, including the approval of the Board of Directors of the Company, the Company Stockholder Approval and the approval of the Acquisition Shares or the Tranche II Shares, as applicable, for trading on NASDAQ, subject to official notice of issuance;

 

(viii)           The Company shall deliver or cause to be delivered to the Purchaser certificates evidencing the Acquisition Shares or the Tranche II Shares, as applicable, duly authorized, issued, fully paid and non-assessable, registered in the name of the Purchaser or as designated by the Purchaser;

 

(ix)           The Company and Neutron shall be in compliance with the Company Budget and the Neutron Budget, respectively.

 

  

15

  

 

(x)           The Company shall have provided a favorable legal opinion of counsel to the Company, in a form satisfactory to Purchaser, which shall include opinions in respect of customary corporate and securities laws matters;

 

(xi)           The Company shall have provided certificates of a senior officer of each of the Company and Neutron, in form and substance satisfactory to the Purchaser, certifying as follows:

 

(A)           that attached to such certificate is a true and complete copy of the certificate of incorporation and bylaws, as amended, of the Company and each of its Subsidiaries or Neutron and each of its Subsidiaries, as applicable, including any and all certificates of designation;

 

(B)           that attached thereto are true and complete copies of the resolutions of the board of directors of the Company or Neutron, as applicable, authorizing the execution, delivery and performance of this Agreement and the other Transaction Agreements to which it is a party, instruments and certificates required to be executed by it in connection herewith and approving the consummation of the transactions in the manner contemplated hereby and thereby including, with respect to the Company, the authorization and issuance of the Shares; and

 

(C)           the names and true signatures of the officers and directors of the Company or Neutron, as applicable, signing Transaction Agreements to which it is a party in connection with the Merger Financing Closing or Tranche II Closing, as applicable;

 

(xii)           The Company shall have provided to Purchaser a certificate of the Chief Executive Officer and the Chief Financial Officer of the Company dated as of the Closing Date certifying that the Company has so complied in all material respects with its covenants herein, that the Company is in compliance with all laws and regulations (including with respect to corporate and securities matters) except as would not reasonably be expected to have a Material Adverse Effect on the Company, and that, with respect to the Company, all material information regarding the Company, the Merger and related transactions has been disclosed to Purchaser and has been publicly disclosed;

 

(xiii)           Neutron shall have provided to Purchaser a certificate of two officers dated as of the Merger Financing Closing Date or the Tranche II Closing Date, as applicable, certifying that Neutron has complied with its covenants herein, that Neutron is in compliance with all laws and regulations (including with respect to corporate and securities matters) except as would not reasonably be expected to have a Material Adverse Effect on Neutron, and that, with respect to Neutron all material information regarding Neutron, the Merger and related transactions has been disclosed to Purchaser and has been publicly disclosed;

 

(xiv)           Each of the Company, Neutron and RMB shall have performed and complied in all material respects with all covenants and agreements required by any Transaction Agreement to which any of them is a party to be performed or complied with by it prior to the Merger Financing Closing or Tranche II Closing, as applicable;

 

  

16

  

 

(xv)           Any consents, waivers, permits, orders and approvals of any governmental authority and the expiry of any waiting periods, in connection with, or required to permit, the consummation of the transaction contemplated by the Merger Agreement and this Agreement, shall have been obtained or satisfied; and

 

(xvi)           The RMB Loan shall be repaid and terminated in accordance with the RMB Agreement and all liens and encumbrances on property or assets of Neutron shall be terminated and released.

 

The foregoing conditions precedent are for the exclusive benefit of Purchaser and may be waived, in whole or in part, by Purchaser in writing at any time, in which event the Parties shall have no further liability. If any of the said conditions shall not be complied with or waived by Purchaser on or before August 22, 2012, then the Purchaser may rescind and terminate its obligations to purchase the Acquisition Shares and the Tranche II Shares pursuant to this Agreement by written notice to the Company.

 

(b)           Conditions to the Obligation of the Company.  The obligations of the Company to effect the Merger Financing Closing and the Tranche II Closing shall be subject to the satisfaction at or prior to the Merger Financing Closing and the Tranche II Closing, respectively, of each of the following conditions, any of which may be waived, in writing, by the Company:

 

(i)           The representations and warranties of the Purchaser contained in this Agreement shall be true and correct as of the date of this Agreement and as of the date of Merger Financing Closing or the Tranche II Closing, as applicable, as if made on such date, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties shall be true and correct as of such date);

 

(ii)           The Purchaser shall have performed and complied in all material respects all covenants and agreements required by this Agreement to be performed or complied with by it prior to Merger Financing Closing or the Tranche II Closing, as applicable;

 

(iii)           All warrants to acquire common stock of Neutron held by RMB, whether issued or not, shall have been cancelled;

 

(iv)           At or prior to the Merger Financing Closing Date or the Tranche II Closing Date, as applicable, the Purchaser shall deliver or cause to be delivered to the Company payment of the purchase price for the Acquisition Shares or the Tranche II Shares, as applicable, by wire transfer of immediately available funds to an account designated in writing by the Company;

 

(v)           Company Stockholder Approval has been obtained; and

 

  

17

  

 

(vi)           The Acquisition Shares or the Tranche II Shares, as applicable, shall have been authorized for trading on NASDAQ, subject to official notice of issuance.

 

The foregoing conditions precedent are for the exclusive benefit of the Company and may be waived, in whole or in part, by the Company in writing at any time, in which event the Parties shall have no further liability.  If any of the said conditions shall not be complied with or waived by the Company on or before August 22, 2012, then the Company may rescind and terminate this Agreement by written notice to Purchaser in circumstances where the failure to satisfy any such condition is not the result, directly or indirectly, of the Company’s breach of this Agreement.

 

ARTICLE VII

MISCELLANEOUS

 

7.1           Any notice or other communication to a party given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, or delivered by hand against written receipt therefore.  Notices shall be deemed to have been given or delivered on the date of mailing, except notices of change of address, which shall be deemed to have been given or delivered when received.  The address for such notices and communications shall be as follows:

 

	
If to the Company:

	
Uranium Resources Inc.

405 State Highway 121 Bypass,

Building A, Suite 110

Lewisville, Texas 75067

Attn.:  President

Fax: (505) 842-8123

	
With a copy to:

	
Baker & Hostetler LLP

303 East 17th Avenue, Suite 1100

Denver, Colorado 80203-1264

Attn:           Alfred C. Chidester

Fax: 303-861-7805

	  	  
	
If to Neutron:

	
Neutron Energy, Inc.

9000 E. Nichols Avenue

Suite 225

Englewood, Colorado 80112

Attn.: Edward M. Topham

Fax: 303-531-0519

	
With a copy to:

	
Hogan Lovells US LLP

One Tabor Center, Suite 1500

1200 Seventeenth Street

Denver, Colorado 80202

Attention: Paul Hilton

Fax: (303) 899-7333

	  	  
	
If to the Purchaser:

	
Resource Capital Fund V L.P.

1400 Sixteenth Street, Suite 200

Denver, Colorado, 80202

Attn: Catherine J. Boggs

Fax:           720-946-1450

	
With a copy to:

	
Davis Graham & Stubbs LLP

1550 Seventeenth Street, Suite 500,

Denver, CO 80002

Attn:         Joel Benson

Fax:           303-893-1379

 

  

18

  

 

7.2           Except as otherwise provided herein this Agreement shall not be changed, modified or amended except by a writing signed by all of the parties hereto, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged.

 

7.3           This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns.  This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

 

7.4           NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE EXCLUSIVE FORUMS FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT ARE EITHER THE COURTS OF THE STATE OF COLORADO IN AND FOR THE COUNTY OF DENVER OR THE FEDERAL COURTS FOR SUCH STATE AND COUNTY.  THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.

 

7.5           The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect.  If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.

 

7.6           It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party.

 

  

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7.7           Each party waives the right to trial by jury with respect to any disagreement, dispute or claim between or among the parties or their Subsidiaries with respect to this Agreement or the transactions contemplated hereby or thereby, and each party agrees to pursue and resolve any such disagreement, dispute or claim in accordance with the terms and provisions set forth in Schedule 7.7 hereto, including resolution by binding arbitration as described in Schedule 7.7.  Interim, provisional and other judicial measures and remedies shall be available to the parties as described in Schedule 7.7.

 

7.8           The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

 

7.9           This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.  This Agreement may be validly executed and delivered by facsimile, portable document format (.pdf) or other electronic transmission, and a signature by facsimile, portable document format (.pdf) or other electronic transmission shall be as effective and binding as delivery of a manually executed original signature.

 

7.10           The parties hereto agree not to issue any public statement with respect to the Purchaser’s investment or proposed investment in the Company or the terms of any agreement or covenant between them without the prior written consent of the other party, except such disclosures as may be required under applicable law or under any applicable order, rule or regulation, so long as the other party is given an opportunity to first review and comment on such disclosure.  If the Company or Neutron will refer to the Purchaser or any of its Affiliates in any public disclosure document, including any press release or any disclosure document to be filed with any governmental authority, including, without limitation, any disclosure relating to this Agreement or the Purchaser’s investment in the Company, the Company or Neutron, as applicable, shall first provide the Purchaser with a copy of such disclosure three days prior to release, and the Company or Neutron, as applicable, shall use its good faith efforts to incorporate the comments provided by the Purchaser into such disclosure.

 

7.11           Nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to this Agreement.

 

7.12           The representations and warranties of the parties hereto contained in this Agreement shall survive the Closing and the consummation of the transactions contemplated hereby.

 

(a)           The Company agrees to indemnify and protect the Purchaser, its directors, partners, managers, members, owners, principals, shareholders, officers, employees, agents, consultants, attorneys and representatives and its successors and assigns, and to defend and hold them harmless from and against, any and all losses, liabilities, costs and expenses (including reasonable attorneys’ fees) incurred as a result of (a) the breach by the Company of any of its representations, warranties or covenants contained in this Agreement or (b) any cause of action, suit or claim brought or made against the Purchaser by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement, any other Transaction Agreements or any other certificate, instrument or document contemplated hereby or thereby.  To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the losses, liabilities, costs and expenses (including reasonable attorneys’ fees)  which is permissible under applicable law.

 

  

20

  

(b)           Neutron agrees to indemnify and protect the Purchaser, its directors, partners, managers, members, owners, principals, shareholders, officers, employees, agents, consultants, attorneys and representatives and its successors and assigns, and to defend and hold them harmless from and against, any and all losses, liabilities, costs and expenses (including reasonable attorneys’ fees) incurred as a result of (a) the breach by Neutron of any of its representations, warranties or covenants contained in this Agreement or (b) any cause of action, suit or claim brought or made against the Purchaser by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement, any other Transaction Agreements or any other certificate, instrument or document contemplated hereby or thereby.  To the extent that the foregoing undertaking by Neutron may be unenforceable for any reason, Neutron shall make the maximum contribution to the payment and satisfaction of each of the losses, liabilities, costs and expenses (including reasonable attorneys’ fees)  which is permissible under applicable law. 

 

 

[The rest of this page is left intentionally blank.]

 

  

21

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

	 	
RESOURCE CAPITAL FUND V L.P.

	  
	 	  	  	  	  
	 	  	  	  	  
	 	
By:

	  	
Resources Capital Associates V L.P.,

	  
	 	  	  	
General Partner

	  
	 	  	  	  	  
	 	
By:

	  	
RCA V GP Ltd., General Partner

	  
	 	  	  	  	  
	 	  	  	  	  
	 	  	  	  	  
	 	
By:

	  	  	  
	 	  	  	
Catherine J. Boggs

	  
	 	  	  	
General Counsel

	
 

	 	
 

	  	  	  
	 	  	  	  	  
	 	  	  	  	  
	 	  	  	  	  
	 	
URANIUM RESOURCES, INC.

	  
	 	  	  	  	  
	 	  	  	  	  
	 	  	  	  	  
	 	
By:

	  	  	  
	 	
 

	  	
Donald C. Ewigleben

	
 

	 	  	  	
President and Chief Executive Officer

	  
	 	  	  	  	  
	 	  	  	  	  
	 	  	  	  	  
	 	  	  	  	  
	 	
NEUTRON ENERGY, INC.

	  
	 	  	  	  	  
	 	  	  	  	  
	 	  	  	  	  
	 	
By:

	  	  	  
	 	  	  	
Gary C. Huber

	
 

	 	  	  	
President and Chief Executive Officer

	  

 

  

22

  

 

APPENDIX A

 

CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

The Purchaser, who desires to invest in the Company through the purchase of the Shares, as contemplated in the Investment Agreement of which this Appendix is a part, must carefully and accurately complete this questionnaire. The purpose of this questionnaire is to allow the Company to make a reasonable determination as to whether the Purchaser is qualified under applicable securities laws to purchase the Shares.

1.           ACCREDITED INVESTOR.   The Purchaser represents and warrants that he, she or it is an ‘Accredited Investor” and comes within one category marked below, and that for any category marked, Purchaser has truthfully set forth, where applicable, the factual basis or reason the Purchaser comes within that category.  ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL except as otherwise required by law.  The undersigned agrees to furnish any additional information which the Company deems necessary in order to verify the an­swers set forth below.

	
Category A__

	
The undersigned is an individual (not a partnership, corporation, etc.), whose individual net worth, or joint net worth with his or her spouse, pres­ently exceeds $1,000,000.

	
  

	
Explanation.  In calculating net worth, (i) the person’s primary residence shall not be included as an asset, (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability.

	
Category B__  

	
The undersigned is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000.00 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000.00 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.

	
Category C__

	
The undersigned is a director or executive officer of the Company which is issuing and selling the Shares.

 

  

23

  

 

	
Category D__

	
The undersigned is a bank; a savings and loan association; insurance company; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or (c) is a self directed plan with investment decisions made solely by persons that are accredited investors. (describe entity)

	
  

	
 _________________________________________________________ .

 

	
Category E__

	
The undersigned is a private business development company as defined in section 202(a) (22) of the Investment Advisors Act of 1940. (describe entity)  ____________________________________________________ .

	
Category F__

	
The undersigned is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Shares and with total assets in excess of $5,000,000.  (describe entity) _________________________________

	
  

	
___________________________________________________________

	
Category G__

	
The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares where the purchase is directed by a “sophisticated investor“ as defined in Regulation 506(b)(2­)(ii) under the Act.

	
Category H__

	
The undersigned is an entity (other than a trust) in which all of the equity owners are “accredited investors” within one or more of the above categories.  If relying upon this Category alone, each equity owner must complete a separate copy of this questionnaire.  (describe entity)

	
Category I __

	
The undersigned is not within any of the categories above and is therefore not an accredited investor.

The Purchaser agrees to notify the Company at any time on or prior to the purchase and issuance of the Shares in the event that the representations and warranties herein shall cease to be true, accurate and complete.

 

2           MANNER IN WHICH TITLE IS TO BE HELD (circle one)

 

 

	  	
(a)

	
Individual Ownership

	  
	  	
(b)

	
Community Property

	  
	  	
(c)

	
Joint Tenant with Right of

	  
	  	  	
Survivorship (both parties must sign)

	  
	  	
(d)

	
*Partnership

	  
	  	
(e)

	
Tenants in Common

	  
	  	
(f)

	
*Company

	  
	  	
(g)

	
*Trust

	  
	  	
(h)

	
*Other ___________________ .

	
 

 

  

24

  

 

*If the Purchaser is an entity asterisked above, please complete the attached Certificate of Signatory.

3           FINRA AFFILIATION

Are you affiliated or associated with an FINRA member firm (please check one):

Yes _________                                           No __________

If Yes, please describe:

_________________________________________________________

_________________________________________________________

 

 

25a50196192ex10_5.htm

Exhibit 10.5

 

 

CREDIT AND FUNDING AGREEMENT

 

dated as of

 

March 1, 2012

 

among

 

NEUTRON ENERGY, INC.,

 

as Borrower,

 

CIBOLA RESOURCES LLC,

 

as Subsidiary Guarantor

 

and

 

URANIUM RESOURCES, INC.,

as Lender

 

 

  

  

  

 

 

	
TABLE OF CONTENTS

	  	  	  
	
Page

	  	  	  
	ARTICLE 1           DEFINITIONS AND RULES OF CONSTRUCTION	
1

	
    Section 1.1

	
    Defined Terms

	
1

	
    Section 1.2

	
    Terms Generally

	
8

	
    Section 1.3

	
    Accounting Terms; GAAP

	
8

	
    Section 1.4

	
    References to Time

	
9

	
    Section 1.5

	
    Resolution of Drafting Ambiguities

	
9

	 	 
	ARTICLE 2           THE CREDITS	
9

	
    Section 2.1

	
    Funding Commitment

	
9

	
    Section 2.2

	
    Funding

	
9

	
    Section 2.3

	
    Termination and Reduction of Funding Commitment

	
9

	
    Section 2.4

	
    Repayment of Loans; Evidence of Debt

	
9

	
    Section 2.5

	
    Voluntary Prepayment of the Funding Loans

	
10

	
    Section 2.6

	
    Payments Generally

	
10

	
    Section 2.7

	
    Borrower Operating Budget

	
10

	 	 
	ARTICLE 3           INTEREST	
10

	
    Section 3.1

	
    Interest

	
11

	 	 
	ARTICLE 4           REPRESENTATIONS AND WARRANTIES	
11

	
    Section 4.1

	
    Organization; Powers

	
11

	
    Section 4.2

	
    Authorization; Enforceability

	
11

	
    Section 4.3

	
    Governmental Approvals; No Conflicts

	
11

	
    Section 4.4

	
    Compliance with Laws and Agreements

	
12

	
    Section 4.5

	
    Security Documents

	
12

	
    Section 4.6

	
    OFAC

	
12

	
    Section 4.7

	
    Incorporation of Representations and Warranties

	
13

	 	 
	ARTICLE 5           CONDITIONS	
13

	
    Section 5.1

	
    Closing Date

	
13

	
    Section 5.2

	
    Extensions

	
14

	 	 
	ARTICLE 6           AFFIRMATIVE COVENANTS	
15

	
    Section 6.1

	
    Financial Statements and Other Information

	
15

 

  

  

  

 

 

	
TABLE OF CONTENTS

	
(continued)

	 
	
Page

	 
	
    Section 6.2

	
    Notices of Material Events

	
16

	
    Section 6.3

	
    Existence; Conduct of Business

	
16

	
    Section 6.4

	
    Maintenance of Properties

	
16

	
    Section 6.5

	
    Books and Records; Inspection Rights

	
16

	
    Section 6.6

	
    Compliance with Laws

	
16

	
    Section 6.7

	
    Use of Proceeds

	
17

	
    Section 6.8

	
    Information Regarding Collateral

	
17

	
    Section 6.9

	
    Insurance

	
17

	
    Section 6.10

	
    Insurance Proceeds

	
18

	
    Section 6.11

	
    Further Assurances

	
18

	 	 	 
	ARTICLE 7           NEGATIVE COVENANTS	
19

	
    Section 7.1

	
    Indebtedness

	
19

	
    Section 7.2

	
    Liens

	
19

	 	 	 
	ARTICLE 8           EVENTS OF DEFAULT	
19

	
    Section 8.1

	
    Events of Default

	
19

	
    Section 8.2

	
    Remedies Upon Event of Default

	
20

	
    Section 8.3

	
    Application of Funds

	
20

	 	 
	ARTICLE 9           GUARANTEE	
21

	
    Section 9.1

	
    Guarantee; Fraudulent Transfer, Etc.; Contribution

	
21

	
    Section 9.2

	
    Obligations Not Waived

	
22

	
    Section 9.3

	
    Security

	
22

	
    Section 9.4

	
    No Discharge or Diminishment of Guarantee

	
22

	
    Section 9.5

	
    Defenses of the Borrower Waived

	
23

	
    Section 9.6

	
    Agreement to Pay; Subordination

	
23

	
    Section 9.7

	
    Information

	
23

	
    Section 9.8

	
    Termination

	
24

	 	 
	ARTICLE 10           MISCELLANEOUS	
24

	
    Section 10.1

	
    Notices

	
24

	
    Section 10.2

	
    Waivers; Amendments

	
25

	
    Section 10.3

	
    Expenses; Indemnity; Damage Waiver

	
25

	
    Section 10.4

	
    Successors and Assigns

	
26

 

 

  

- ii -

  

 

 

	
TABLE OF CONTENTS

	
(continued)

	 
	
Page

	  	  	  
	
Section 10.5

	
Survival

	
27

	
Section 10.6

	
Counterparts; Integration; Effectiveness; Electronic Execution

	
27

	
Section 10.7

	
Severability

	
27

	
Section 10.8

	
Right of Setoff

	
27

	
Section 10.9

	
Governing Law; Jurisdiction; Consent to Service of Process

	
28

	
Section 10.10

	
WAIVER OF JURY TRIAL

	
28

	
Section 10.11

	
Headings

	
29

	
Section 10.12

	
Intercreditor Agreement

	
29

 

 

  

- iii -

  

 

 

SCHEDULES:

 

 

	Schedule 7.2	Existing Liens

 

EXHIBITS:

 

	
Exhibit A

	
Compliance Certificate

	
Exhibit B

	
Intercreditor Agreement

	
Exhibit C

	
Note

	
Exhibit D

	
Security Agreement

 

 

  

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This CREDIT AND FUNDING AGREEMENT (this “Credit Agreement”), dated as of March 1, 2012, is by and among NEUTRON ENERGY, INC., a Nevada corporation, as the Borrower, CIBOLA RESOURCES LLC, a Delaware limited liability company, as the Subsidiary Guarantor, and URANIUM RESOURCES, INC., a Delaware corporation, as the Lender.

 

WHEREAS, this Credit Agreement is being entered into in connection with that certain Agreement and Plan of Merger (“Merger Agreement”) by and among the Lender, URI Merger Corporation, a Nevada corporation and an indirect wholly owned subsidiary of the Lender (“Merger Sub”), and the Borrower, that provides for, among other things, a merger of Merger Sub with and into the Borrower.

 

WHEREAS, the Lender’s obligation to make Funding Loans under this Credit Agreement is conditioned on the Lender having received funding pursuant to that certain Investment Agreement by and between the Lender and Resource Capital Fund V L.P. (the “Investment Agreement”).

 

The parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS AND RULES OF CONSTRUCTION

 

Section 1.1   Defined Terms.  As used in this Credit Agreement, the following terms have the meanings specified below:

 

“Actual Assigns” means with respect to the Lender at any time (a) the Lender’s successor person or (b) another person to the extent that the Lender assigned (pursuant to the terms of this Credit Agreement) all or part of the Lender’s interest in the Funding Loans to such other party.

 

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“After Acquired Property” has the meaning assigned to such term in Section 6.11(c).

 

“Agreement Date” means the date of this Credit Agreement.

 

“Availability Period” means the period from and including the Closing Date to but excluding the Maturity Date.

 

“Borrower” means Neutron Energy, Inc., a Nevada corporation.

 

“Borrower Account” means the control proceeds account: U.S. Bank no. 103690235926.

 

 

  

  

  

 

 

“Borrower Operating Budget” means the “Neutron Budget” as such term is defined in the Investment Agreement.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Denver, Colorado are authorized or required by law to remain closed.

 

“Capital Lease Obligations” of any Person means any lease of Property by a Person as lessee which in accordance with GAAP is required to be capitalized on the balance sheet of such Person and the amount of such obligations shall be the amount actually capitalized on the balance sheet.

 

“Closing Date” means the date on which the conditions specified in Section 5.1 are satisfied (or waived in accordance with Section 10.2).

 

“Collateral” means any and all “Collateral” as defined in any applicable Security Document.

 

“Compliance Certificate” means a certificate, substantially in the form of Exhibit A.

 

“Contested in Good Faith” means, with respect to any matter and the Borrower, that (a) the validity or amount of such matter is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect to such matter in accordance with GAAP and (c) the failure to make any payment with respect to such matter pending such contest would not reasonably be expected to result in a Material Adverse Effect.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Credit Agreement” has the meaning assigned to such term in the preamble.

 

“Default” means any event or condition which constitutes an Event of Default or that upon notice, lapse of grace period or both would, unless cured or waived, become an Event of Default.

 

“dollars” or “$” refers to lawful money of the United States of America.

 

“Event of Default” means any of the events described in Section 8.1.

 

“Existing Senior Facility Agreement” means the Second Amendment Agreement to Facility Agreement by and among the Borrower, the Subsidiary Guarantor, the Senior Lender and RMB Resources Inc. dated July 11, 2011, as amended, modified, supplemented, restated or extended.

 

 

  

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“Existing Senior Loan Documents” means, collectively, the Existing Senior Facility Agreement and all guarantees, security agreements, control agreements, mortgages and other Transaction Documents (as defined in the Existing Senior Facility Agreement) executed and delivered in connection therewith.

 

“Financial Officer” means, with respect to any Person, the chief executive officer, chief financial officer, principal accounting officer, treasurer or comptroller of such Person.

 

“Fraudulent Transfer Laws” has the meaning assigned to such term in Section 9.1(c).

 

“Funding Commitment” means, with respect to the Lender, the commitment of the Lender to make the Funding Loans hereunder in an aggregate outstanding amount not to exceed the aggregate funding amounts set forth in the Borrower Operating Budget.

 

“Funded Indebtedness” means, with respect to any Person as of any date of determination, the sum of the following of such Person and its subsidiaries (in each case determined in accordance with GAAP) without duplication:  (a) all obligations for borrowed money; (b) all obligations evidenced by bonds, notes or similar instruments; (c) all obligations under conditional sale or other title retention agreements relating to property or assets purchased by such Person; (d) all obligations to pay deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business which are paid within 90 days of their respective due dates); (e) all indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed; (f) all Capital Lease Obligations, (g) all obligations, contingent or otherwise, as an account party in respect of letters of credit, letters of guaranty and bankers’ acceptances; (h) all indebtedness of any partnership of which such Person is a general partner except to the extent the terms of such indebtedness expressly provide that such Person is not liable therefor; and (i) all Guarantees of any of the foregoing.

 

“Funding Loans” means a loan referred to in Section 2.1 and made pursuant to Section 2.2.

 

“Funding Loans Rate” means, with respect to the Funding Loans, and for the respective interest period, a rate that equals the Funding Rate (as defined in and calculated pursuant to the Existing Senior Credit Facility), in each case as determined by the Lender.

 

“GAAP” means generally accepted accounting principles in effect from time to time in the United States of America.

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation, provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The term “Guaranteed” has a meaning correlative thereto.  The amount of any Guarantee at any time shall be deemed to be an amount equal to the lesser at such time of (i) the stated or determinable amount of the primary obligation in respect of which such Guarantee is made (or, if not stated or determinable, the maximum reasonably anticipated amount of the obligations in respect of which such Guarantee is made) and (ii) the maximum amount for which the guarantor may be liable pursuant to the terms of the instrument embodying such Guarantee.

 

 

  

- 3 -

  

 

 

“Indebtedness” of any Person means, without duplication: (a) Funded Indebtedness and (b) all obligations outstanding under any synthetic leases, off balance sheet loan or similar off balance sheet financing of such Person where such obligations are considered borrowed money indebtedness for tax purposes but the transaction is classified as an operating lease in accordance with GAAP.

 

“Indemnitee” has the meaning assigned to such term in Section 10.3(b).

 

“Intercreditor Agreement” means the Intercreditor Agreement, substantially in the form of Exhibit B, by and among the Senior Lender, the Borrower and the Lender.

 

“Interest Payment Date” means the Maturity Date.

 

“Investment Agreement” has the meaning assigned to such term in the recitals.

 

“Lender” means Uranium Resources, Inc., a Delaware corporation.

 

“Lender Operating Budget” means the “Company Budget” as such term is defined in the Investment Agreement.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

“Loan Documents” means this Credit Agreement, the Note and the Security Documents.

 

  

- 4 -

  

 

“Material Adverse Effect” means (a) a material adverse effect on the business, assets, liabilities, operations or financial condition of the Borrower and its Subsidiaries, taken as a whole, (b) the legality, validity or enforceability of any Loan Document is affected in a manner that is material and adverse to the Lender, (c) the ability of the Borrower to perform its obligations under any Loan Document is affected in a manner that is material and adverse to the Lender, or (d) the rights of or benefits available to the Lender under any Loan Document is affected in a manner that is material and adverse to the Lender.

 

“Material Real Property” means real property located in the United States of America which is owned or leased by the Borrower.

 

“Maturity Date” means the earlier of (i) the Effective Time (as defined in the Merger Agreement) and (ii) October 31, 2012.

 

“Merger Agreement” has the meaning assigned to such term in the recitals.

 

“Merger Sub” has the meaning assigned to such term in the recitals.

 

“Mortgage” means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations in form and substance reasonably satisfactory to Lender.

 

“Mortgaged Property” means each parcel of Material Real Property with respect to which a Mortgage is granted.

 

“Note” means the promissory note evidencing the Funding Loans payable to the Lender or its Actual Assigns substantially in the form of Exhibit C.

 

“Obligations” means, collectively, (a) the due and punctual payment of (i) principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Funding Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, fees, commissions, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower to the Secured Parties in each case under the Loan Documents, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrower or its Subsidiaries under or pursuant to the Loan Documents.

 

“Operating Period” means the eight-month period commencing January 1, 2012 and terminating August 31, 2012.

 

“Organizational Documents” means the Articles of Incorporation and the Bylaws, of the Borrower, each as amended, modified supplement or restated.

 

 

  

- 5 -

  

 

 

“Overdue Rate” means a rate that equals the Overdue Rate (as defined in and calculated pursuant to the Existing Senior Credit Facility), in each case as determined by the Lender.

 

“Patriot Act” means The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001  (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

 

“Permitted Encumbrances” means:

 

(a)   Liens imposed by law for taxes, assessments or other governmental charges that are not yet due or are being Contested in Good Faith;

 

(b)   landlords’, vendors’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 120 days or are being Contested in Good Faith;

 

(c)   pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

 

(d)   deposits to secure the performance of bids, trade contracts (other than contracts for the payment of money), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds (or deposits made to otherwise secure an appeal, stay or discharge in the course of a legal proceeding), performance bonds and other obligations of a like nature, in each case incurred in the ordinary course of business;

 

(e)   survey exceptions, subdivisions, easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Borrower, in each case taken as a whole, and other encumbrances disclosed in any title opinion reasonably satisfactory to the Lender issued in respect of any Mortgage;

 

(f)   any interest or title of a licensor, sublicensor, lessor or sublessor with respect to any assets under any license or lease agreement entered into in the ordinary course of business, provided that the same do not in any material respect impair the business of the Borrower or its Subsidiaries or materially detract from the value of the relevant assets of the Borrower or its Subsidiaries;

 

(g)   licenses, sublicenses, leases or subleases with respect to any assets granted to third Persons in the ordinary course of business, provided that the same do not in any material respect impair the business of the Borrower or its Subsidiaries or materially detract from the value of the relevant assets of the Borrower or its Subsidiaries;

 

(h)   customary rights of set off, bankers’ liens, refunds or charge backs, under deposit agreements, the UCC or applicable law, of banks or other financial institutions where the Borrower or any of its Subsidiaries maintains deposit, securities or commodities accounts (other than deposits intended as cash collateral) in the ordinary course of business;

 

 

 

  

- 6 -

  

 

(i)   Liens securing Indebtedness permitted under Section 7.1;

 

(j)   the filing of UCC financing statements solely as a precautionary measure in connection with operating leases;

 

(k)   any Lien on any property or asset of the Borrower or any Subsidiary existing on the Agreement Date and set forth in Schedule 7.2;

 

(l)   Liens arising under the Loan Documents or otherwise in favor of the Lender for the benefit of the Lender;

 

(m)   Liens pertaining to or arising under the Existing Senior Loan Documents; and

 

(n)   Liens not otherwise permitted hereunder in respect of obligations in an aggregate amount not to exceed $25,000 at any time outstanding.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

“Secured Obligations” has the meaning assigned to such term in the Security Agreement.

 

“Secured Parties” has the meaning assigned to such term in the Security Agreement.

 

“Security Agreement” means the Pledge and Security Agreement, substantially in the form of Exhibit D, among the Borrower and the Lender, for the benefit of the Secured Parties.

 

“Security Documents” means the Security Agreement, the Mortgages and each other security agreement, instrument or other document executed or delivered pursuant to this Credit Agreement or the Security Agreement to secure any of the Secured Obligations.

 

“Senior Lender” means RMB Australia Holdings Limited.

 

“subsidiary” means, with respect to any Person (the “parent”), as of any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power is or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held by the parent or one or more subsidiaries of the parent.

 

 

  

- 7 -

  

 

 

“Subsidiary” means any direct or indirect subsidiary of the Borrower.

 

“Subsidiary Guarantor” means Cibola Resources LLC, a Delaware limited liability company.

 

“Transactions” means (a) the execution, delivery and performance by the Borrower of each Loan Document to which it is a party, (b) the borrowing of the Funding Loans, and (c) the use of the proceeds of the Funding Loans.

 

“UCC” has the meaning assigned to such term in the Security Agreement.

 

Section 1.2   Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Credit Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Credit Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

Section 1.3   Accounting Terms; GAAP.  As used in the Loan Documents and in any certificate, opinion or other document made or delivered pursuant thereto, accounting terms not defined in Section 1.1, and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP.  If at any time any change in GAAP would affect the computation of any financial requirement set forth in this Credit Agreement, the Lender and the Borrower shall negotiate in good faith to amend such requirement to reflect such change in GAAP, provided that, until so amended, all such financial requirements, standards and terms in this Credit Agreement shall continue to be computed and construed in accordance with GAAP prior to such change.

 

 

  

- 8 -

  

 

 

Section 1.4   References to Time.  Unless the context otherwise requires, references to a time shall refer to Eastern Standard Time or Eastern Daylight Savings Time, as applicable.

 

Section 1.5   Resolution of Drafting Ambiguities.  The Borrower acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

 

ARTICLE 2

 

THE CREDITS

 

Section 2.1   Funding Commitment.  Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, the Lender agrees to make the Funding Loans to the Borrower in dollars from time to time during the Availability Period in accordance with the Operating Budget and Section 2.2.

 

Section 2.2   Funding.  Subject to Section 5.2, the Lender will make the Funding Loans available to the Borrower in accordance with the Operating Budget by promptly crediting or otherwise transferring the amounts to the Borrower Account; provided, however the Lender shall make such Funding Loans in an amount not less than the aggregate amount set forth in the Borrower Operating Budget for each month no later than one (1) Business Day prior to the first day of such month.  The Lender is not obligated to fund any amount which is not consistent with the Operating Budget and this Credit Agreement.  For freedom of doubt, in no event will the Lender have any obligation to fund any other cost, expense or liability of the Borrower or any of its Subsidiaries that is not otherwise expressly contemplated by the Operating Budget unless the Lender elects to fund any such cost, expense or liability.  The Borrower and the Lender acknowledge and agree that there is no assurance that the funding to be provided under the Operating Budget or this Credit Agreement will be sufficient to provide for all of the Borrower’s funding requirements.

 

Section 2.3   Termination and Reduction of Funding Commitment.  Unless previously terminated, the Funding Commitment shall terminate on the last day of the Availability Period.

 

Section 2.4   Repayment of Loans; Evidence of Debt.

 

(a)    Payment at Maturity.  The Borrower hereby unconditionally promises to pay to the Lender the then unpaid principal amount and interest on the Funding Loans on the Maturity Date.

 

(b)    Lender’s Records.  The Lender shall maintain an account or accounts evidencing the debt of the Borrower to the Lender resulting from the Funding Loans made by the Lender, including the amounts of principal and interest payable and paid to the Lender from time to time hereunder.

 

 

  

- 9 -

  

 

 

 

(c)       Presumptions.  The entries made in the accounts maintained pursuant to paragraph (b) of this  Section 2.4 shall, to the extent not inconsistent with any entries made in the Note, be prima facie evidence, absent manifest error, of the existence and amounts of the obligations recorded therein, provided that the failure of the Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Funding Loans in accordance with the terms of this Credit Agreement.

 

(d)      Notes.  The Funding Loans made by the Lender shall be evidenced by the Note.

 

Section 2.5        Voluntary Prepayment of the Funding Loans.  The Borrower shall have the right at any time and from time to time to prepay without premium or penalty any Funding Loans in whole or in part.

 

Section 2.6        Payments Generally.  The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal of Funding Loans, interest or fees, or of amounts payable under Section 10.3, or otherwise) prior to 1:00 p.m. on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of the Lender, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Lender at its office at 405 State Highway 121 Bypass, Building A, Suite 110, Lewisville, Texas 75067, or such other office as to which the Lender may notify the other parties hereto. The Lender shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.

 

Section 2.7        Borrower Operating Budget.

 

(a)       The Borrower and the Lender hereby adopt and agree to the Borrower Operating Budget.

 

(b)       Within five Business Days of the last calendar day of each month in the Operating Period, the Borrower will deliver a written comparison to the Lender that sets forth in reasonable detail the actual operations of the Borrower during such month as compared to the estimates contained in the Operating Budget.

 

(c)       Any updates or revisions to the Borrower Operating Budget will be in accordance with the Investment Agreement.

 

 

  

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ARTICLE 3

 

INTEREST

 

Section 3.1        Interest.

 

(a)       The outstanding principal of the Funding Loans shall bear interest at the Funding Loans Rate.

 

(b)       Notwithstanding the foregoing, if any principal of or interest on any Funding Loans or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at the Overdue Rate.  In addition, notwithstanding the foregoing, if an Event of Default has occurred and is continuing and the Lender so notifies the Borrower, then, so long as such Event of Default is continuing, all outstanding principal of the Funding Loans shall, without duplication of amounts payable under the preceding sentence, bear interest, after as well as before judgment, at the Overdue Rate.

 

(c)       Accrued interest on the Funding Loans shall be payable in arrears on each Interest Payment Date for the Funding Loans, provided that interest accrued pursuant to paragraph (b) of this Section 3.1 shall be payable on demand.

 

(d)      Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed.

 

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lender that:

 

Section 4.1        Organization; Powers.  The Borrower and its Subsidiaries are duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, have all requisite power and authority to carry on their business as now conducted and, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

 

Section 4.2        Authorization; Enforceability.  The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and, if required, shareholder action of the Borrower.  Each Loan Document has been duly executed and delivered by the Borrower and, assuming the due authorization, execution and delivery by the Lender, constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

Section 4.3        Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) for filings, registrations and recordings necessary to perfect Liens created under the Loan Documents or (ii) for such consents, approvals, registrations or filings that have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or any order of any Governmental Authority, (c) will not violate the Organizational Documents, (d) will not violate or result in a default under any indenture, mortgage, deed of trust, loan agreement, financing lease agreement, receivables purchase agreement to or similar securitization financing document (other than the Loan Documents) to which the Borrower or any of its Subsidiaries is a party or by which their respective properties is bound or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (e) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries (other than Permitted Encumbrances), in each case other than in connection with the Existing Senior Loan Documents.

 

 

  

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Section 4.4        Compliance with Laws and Agreements.  The Borrower and its Subsidiaries are in compliance with (a) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and the Patriot Act, (b) all other laws, regulations and orders of any Governmental Authority applicable to it or its property, and (c) all indentures, agreements and other instruments binding upon it or its property, except in each of cases (b) and (c) above where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

Section 4.5        Security Documents.

 

(a)       The Security Agreement creates in favor of the Lender a legal, valid and enforceable Security Interest (as defined in the Security Agreement) in the Collateral (as defined in the Security Agreement and including the proceeds thereof) and (i) when the Pledged Collateral (other than Uncertificated Equity Interests, as defined in the Security Agreement) are delivered to the Lender together with the proper endorsements, the Security Interest therein shall be perfected, and (ii) when each financing statement in the form attached to the Security Agreement is filed in the Applicable Filing Office (as defined in the Security Agreement), the Security Interest shall be a perfected to the extent the Security Interest may be perfected by the filing of a UCC financing statement.  The Collateral is not subject to any Lien other than Permitted Encumbrances.  The Security Interest is prior to all Liens other than Permitted Encumbrances.

 

(b)      Upon execution of the Mortgages, such Mortgages are effective to create in favor of the Lender a legal, valid and enforceable mortgage on the Mortgaged Property (as defined therein), and when such Mortgages have been recorded in the applicable recording office, such Mortgages will constitute a mortgage of record on such Mortgaged Property.  Subject to the exceptions listed in the title opinion covering the Mortgaged Property, such Mortgaged Property is not subject to any Lien other than Permitted Encumbrances.

 

Section 4.6        OFAC.  Neither the Borrower nor any of its Subsidiaries (a) is a Person whose property or interest in property is blocked or currently subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (b) knowingly engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise knowingly associated with any such person in any manner violative of such Section 2, or (c) is currently a person on the list of Specially Designated Nationals and Blocked Persons or is currently subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.

 

 

  

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Section 4.7       Incorporation of Representations and Warranties.  The representations and warranties of the Borrower contained in the Merger Agreement are hereby incorporated herein by reference and such representations and warranties were true and correct, or will be true and correct, at the time they were or are made therein.

 

ARTICLE 5

 

CONDITIONS

 

Section 5.1        Closing Date.  The initial obligation of the Lender to make the Funding Loans shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.2):

 

(a)       Deliverables. The Lender shall have received the following, each of which shall be originals or, facsimiles or electronic transmissions in .pdf format (in the case of facsimiles or other electronic transmissions, followed reasonably promptly by originals) each properly executed by an authorized officer of the Borrower in form and substance reasonably satisfactory to the Lender:

 

                  (i)          executed counterparts of this Credit Agreement;

 

                  (ii)         the Note in favor of the Lender;

 

                  (iii)        each of the Security Agreement, the Mortgages, and any other Security Document required by the Lender in its reasonable discretion, and evidence that, substantially simultaneously with the closing of this Credit Agreement, all other actions, recordings and filings under the UCC shall be taken, completed or otherwise provided in a manner reasonably satisfactory to the Lender;

 

                  (iv)        copies of a recent UCC, tax, bankruptcy, and judgment lien search in each jurisdiction reasonably requested by the Lender with respect to the Borrower;

 

                  (v)         a certificate of the President or a Vice President and the Executive Chairman, Secretary or Assistant Secretary of the Borrower, dated the Closing Date:

 

(A)      attaching resolutions of its board of directors, general partner or other managing Person authorizing the execution, delivery and performance of the Loan Documents to which it is a party and the Transactions and certifying that (x) such resolutions were duly adopted and in full force and effect and (y) no other resolutions relating to the Loan Documents or the Transactions have been adopted,

 

 

  

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(B)           certifying as to the incumbency of its officer or officers who may sign the Loan Documents, including therein a signature specimen of such officer or officers,

 

(C)           attaching certificates of good standing (or comparable certificates), certified as of a recent date prior to the Closing Date, by the Secretaries of State (or comparable official) of the jurisdiction of its incorporation or formation and each other jurisdiction in which it is qualified to do business; and

 

(D)           certifying that (x) all consents, licenses and approvals required in connection with the execution, delivery and performance by the Borrower and the validity against the Borrower of the Loan Documents to which it is a party have been obtained and are in full force and effect, or (y)  no such consents, licenses or approvals are so required;

 

                   (vi)         the Intercreditor Agreement, duly executed by the Senior Lender, and the Acknowledgment in the form annexed thereto, duly executed by the Borrower; and

 

                   (vii)         the Merger Agreement, duly executed by the Borrower, the Lender and Merger Sub.

 

(b)      Closing Date Material Adverse Effect.  Since January 1, 2012, a Material Adverse Effect shall not have occurred and the Lender shall have received a certificate, dated the Closing Date and signed by a Financial Officer of the Borrower to the foregoing effect.

 

(c)       Representations and Warranties; No Default.  Each of the representations and warranties contained in Article 4 are true and correct in all material respects (except to the extent such representations and warranties specifically relate to an earlier or later date, in which case such representations and warranties were true and correct at such earlier or later date) and no Default shall have occurred and be continuing.

 

(d)      Approvals and Consents.  All material consents and approvals of all Governmental Authorities and all other Persons required in connection with the execution, delivery and performance by the Borrower of the Loan Documents to which it is a party and the validity against the Borrower of such Loan Documents have been obtained and are in full force and effect.

 

(e)       Investment Agreement.  The Investment Agreement will be in full force and effect and the Lender will have received payments sufficient to make the Funding Loans after taking into account the Lender’s working capital needs as set forth in the Lender Operating Budget.

 

Section 5.2        Extensions.  The obligation of the Lender to make any Funding Loans is subject to the satisfaction of the conditions in Section 5.1 and the following conditions:

 

(a)       The Borrower will have complied and operated its business in accordance with, and will cause its Subsidiaries to comply and operate its business in accordance with, the Operating Budget.  The Borrower will have submitted all written comparisons required by Section 2.7(b).

 

 

  

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(b)      Each of the representations and warranties of the Borrower set forth in the Loan Documents shall be true and correct in all material respects, in each case on and as of such date as if made on and as of such date except to the extent that such representations and warranties relate to an earlier or later date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier or later date (provided that any representation and warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct in all respects).

 

(c)       At the time of and immediately after giving effect to the making of a Funding Loan, no Default shall have occurred and be continuing.

 

ARTICLE 6

 

AFFIRMATIVE COVENANTS

 

Until the principal of and interest on the Funding Loans and all fees and other amounts payable under the Loan Documents shall have been paid in full, the Borrower covenants and agrees with the Lender that:

 

Section 6.1        Financial Statements and Other Information.  The Borrower will furnish or caused to be furnished to the Lender:

 

(a)       within 45 days after the end of each of the first three fiscal quarters of each fiscal year, the consolidated and consolidating balance sheets and related statements of income and cash flows showing the financial condition of the Borrower and its Subsidiaries, as of the close of such fiscal quarter and the results of its operations during such fiscal quarter and the then elapsed portion of the fiscal year, all certified by its Financial Officer as fairly presenting in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis materially in accordance with GAAP (but without footnotes), subject to normal year-end audit adjustments;

 

(b)      within 30 days after the end of each month (exclusive of any month that is the last month of a quarter), abbreviated monthly and year-to-date consolidated and consolidating balance sheets and related statements of income and cash flows, showing in reasonable detail the financial condition of the Borrower and its Subsidiaries, as of the close of such month and the results of its operations during such month and the then elapsed portion of the fiscal year, all certified by its Financial Officer as fairly presenting in all material respects the financial condition of the Borrower and its Subsidiaries; and

 

(c)           concurrently with any delivery of financial statements under clause (a) or (b) above, a Compliance Certificate signed by a Financial Officer of the Borrower (i) containing either a certification that no Default or Event of Default exists or, specifying the nature of each such Default or Event of Default, the nature and status thereof and any action take or proposed to be taken with respect thereto, (ii) certifying that there have been no changes to the jurisdiction of organization nor legal name of the Borrower (except as permitted under the Loan Documents) since the date of the last Compliance Certificate delivered pursuant to this Credit Agreement and (iii) containing either a certification that there has been no change to the information disclosed in the Schedules to the Security Agreement or, after the delivery of the first certification delivered pursuant to this Section 6.1(c), as previously certified, or, if so, specifying all such changes.

 

 

  

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Section 6.2        Notices of Material Events.  The Borrower will furnish or cause to be furnished to the Lender prompt written notice of the following:

 

(a)       the occurrence of any Event of Default or Default, specifying the nature and extent thereof;

 

(b)       the filing or commencement of, in each case known to the Borrower, of any Person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrower or any of its Subsidiaries that would reasonably be expected to result in a Material Adverse Effect;

 

(c)       (i) any casualty or other insured damage to any portion of any property owned or held by the Borrower or on behalf of itself or any of its Subsidiaries that would reasonably be expected to result in an aggregate loss in excess of $10,000, (ii) any portion of the Collateral is damaged or destroyed that individually or in the aggregate results in loss in excess of $10,000, or (iii) the commencement of any action or proceeding for the condemnation or other taking of any such property or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding.

 

Each notice delivered under this Section 6.2 shall be accompanied by a statement of a Financial Officer of the Borrower or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

Section 6.3        Existence; Conduct of Business.  The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things reasonably necessary to preserve, renew and keep in full force and effect its legal existence and the material rights, licenses, permits, privileges, security clearances and franchises material to the conduct of its business.

 

Section 6.4        Maintenance of Properties.  The Borrower will, and will cause each of its Subsidiaries to, keep and maintain all property material to the conduct of its business and in substantially the same condition as of the date of this Credit Agreement, ordinary wear and tear excepted, except to the extent that the failure to so keep or maintain such property would not reasonably be expected to have a Material Adverse Effect.

 

Section 6.5        Books and Records; Inspection Rights.  The Borrower will, and will cause each of its Subsidiaries to, (a) keep proper books of record and account in which full and materially correct entries are made of all dealings and transactions in relation to its business and activities and (b) permit any representatives designated by the Lender and upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accounting firm, all at such reasonable times and as often as reasonably requested.

 

Section 6.6        Compliance with Laws.  The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property and maintain all permits and licenses necessary to conduct its business, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

 

  

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Section 6.7        Use of Proceeds.  The proceeds of the Funding Loans will be used only for working capital and other general corporate purposes consistent with the Operating Budget and the terms hereof.  Upon request by the Lender, the Borrower will promptly submit additional evidence satisfactory to the Lender that it is complying and operating its business in accordance with, and that its Subsidiaries are complying and operating their business in accordance with, the Operating Budget.

 

Section 6.8        Information Regarding Collateral. The Borrower will furnish to the Lender prompt written notice of any change in (a) the legal name or jurisdiction of incorporation or formation of the Borrower, (b) the location of the chief executive office of the Borrower, its principal place of business, any office in which it maintains books or records relating to Collateral owned or held by it or on its behalf with an aggregate book value in excess of $10,000 or, except as provided in the applicable Security Documents, any office or facility at which Collateral owned or held by it or on its behalf with an aggregate book value in excess of $10,000 is located (including the establishment of any such new office or facility), (c) the identity or organizational structure of the Borrower such that a filed financing statement becomes misleading or (d) the Federal Taxpayer Identification Number or company organizational number of the Borrower.  The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Lender to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral.

 

Section 6.9        Insurance.

 

(a)       The Borrower will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurance companies, adequate insurance for its insurable properties, all to such extent and against such risks, as is customary with companies in the same or similar businesses operating in the same or similar locations and of same or similar size.

 

(b)       The Borrower will, and will cause each of its Subsidiaries to, promptly notify the Lender whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 6.9 is taken out by the Borrower.

 

(c)       In connection with the covenants set forth in this Section 6.9, it is understood and agreed that:

 

                 (i)         Neither the Lender nor any of its Related Parties shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 6.9, it being understood that (A) the Borrower shall look solely to its insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Lender or its agents or employees.  If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required, then the Borrower hereby agrees, to the extent permitted by law, to waive its right of recovery, if any, against the Lender or its Related Parties; and

 

 

  

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                 (ii)        the designation of any form, type or amount of insurance coverage by the Lender under this Section 6.9 shall in no event be deemed a representation, warranty or advice by the Lender that such insurance is adequate for the purposes of the business of the Borrower or its Subsidiaries or the protection of their properties.

 

Section 6.10      Insurance Proceeds.  All insurance proceeds (including business interruption proceeds) shall be paid to the Borrower unless an Event of Default shall have occurred and be continuing.

 

Section 6.11      Further Assurances.

 

(a)       The Borrower will grant to the Lender, for the benefit of the Secured Parties, security interests in such of its assets and properties as are not covered by the Security Documents as may be reasonably requested from time to time by the Lender.  Such security interests (i) shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Lender, (ii) shall constitute valid and enforceable perfected security interests superior to and prior to the rights of all third Persons, and subject to no other Liens, other than in connection with the Existing Senior Loan Documents and except for Permitted Encumbrances.  Such additional security documents and the other instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Lender required to be granted pursuant to such additional security documents and all fees and other charges payable in connection therewith shall have been paid in full.

 

(b)      The Borrower will, and will cause each of its Subsidiaries to, at its own expense, make, execute, endorse, acknowledge, file or deliver to the Lender from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, surveys, reports and other assurances or instruments, and take such further steps relating to the Collateral covered by any of the Security Documents as the Lender may reasonably require.  Upon the acquisition of any material assets or the acquisition or creation of a subsidiary, the Borrower shall cause to be delivered to the Lender such opinions of counsel and other related documents as may be reasonably requested by the Lender.

 

(c)       Without limiting the generality of the provisions set forth in Section 6.10 and this Section 6.11, upon the acquisition by the Borrower or any of its Subsidiaries after the date hereof of any interest (whether fee or leasehold) in any real property (each such interest being an “After Acquired Property”), the Borrower shall immediately notify the Lender, setting forth with specificity a description of the interest acquired, the location of the real property, any structures or improvements thereon and either an appraisal or the Borrower’s good faith estimate of the current value of such real property.  Within 30 days of receipt of the Borrower’s notice, the Lender shall notify the Borrower whether it intends to require a Mortgage and the other documents referred to below with respect to such After Acquired Property.  Upon receipt of such notice requesting a Mortgage, the Person which has acquired such After Acquired Property shall promptly, but in any event no later than 10 days, furnish to the Lender a Mortgage with respect to such real property and related assets located at the After Acquired Property, each duly executed by such Person and in recordable form together with the documents that would be required under Section 5.1(a)(iii) had the Mortgage been delivered on the Closing Date and such other documents or instruments as the Lender may reasonably require to effect such Mortgage.  The Borrower shall pay all fees and expenses, including reasonable attorney’s fees and expenses in connection with the Borrower’s and its Subsidiaries’ obligations under this Section 6.11.

 

 

 

  

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ARTICLE 7

 

NEGATIVE COVENANTS

 

Until the principal of and interest on the Funding Loans and all fees and other amounts payable under the Loan Documents shall have been paid in full, the Borrower covenants and agrees with the Lender that:

 

Section 7.1        Indebtedness.  The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except:

 

(a)       Obligations under this Credit Agreement and the other Loan Documents;

 

(b)       Indebtedness contemplated by the Operating Budget;

 

(c)       Indebtedness under the Existing Senior Loan Documents;

 

(d)       Indebtedness secured by Permitted Encumbrances;

 

(e)       Indebtedness of Borrower to any Subsidiary or Indebtedness of any Subsidiary to Borrower or another Subsidiary; and

 

(f)       other Indebtedness, in addition to the Indebtedness listed above, in an aggregate outstanding amount not at any time exceeding $25,000.

 

Section 7.2        Liens.  The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, except Permitted Encumbrances.

 

ARTICLE 8

 

EVENTS OF DEFAULT

 

Section 8.1        Events of Default.  Any of the following shall constitute an Event of Default under this Credit Agreement:

 

(a)       Non-Payment of Principal. The Borrower shall fail to pay any principal of the Funding Loans when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise.

 

 

  

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(b)      Other Non-Payment. The Borrower shall fail to pay any interest on the Funding Loans any fee, commission or any other amount (other than an amount referred to in clause (a) of this Section 8.1) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three Business Days.

 

(c)       Representations and Warranties.  Any representation or warranty made by the Borrower or any of its Subsidiaries on behalf of itself or any of its Subsidiaries herein or in any other Loan Document or any amendment or modification hereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to any Loan Document or any amendment or modification hereof or waiver thereunder, shall prove to have been incorrect in any material respect when made.

 

(d)       Invalidity of Loan Documents. Any Loan Document shall cease, for any reason, to be in full force and effect, other than in accordance with its terms or as otherwise permitted hereunder, or the Borrower shall so assert in writing or shall disavow any of its obligations thereunder.

 

(e)       Termination of Merger Agreement.  The Merger Agreement shall be terminated in accordance with Section 7.1 thereof.

 

Section 8.2        Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, then, and in every such event, and at any time thereafter during the continuance of such event, the Lender may by notice to the Borrower, take either or both of the following actions (whether before or after the Closing Date), at the same or different times: (i) terminate the Funding Commitment, and thereupon the Funding Commitment shall terminate immediately and (ii) declare the Funding Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Funding Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued under the Loan Documents, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

 

Section 8.3        Application of Funds. After the exercise of remedies provided for in Section 8.2, any amounts received on account of the Obligations shall be applied by the Lender in the following order:

 

First, to the payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Lender and amounts payable under Article 3), in each case payable to the Lender in its capacity as such;

 

Second, to the extent of any excess of such proceeds, to the payment of that portion of the Obligations constituting accrued and unpaid interest on the Funding Loans and other Obligations;

 

Third, to the extent of any excess of such proceeds, to the payment of that portion of the Obligations constituting unpaid principal of the Funding Loans;

 

 

  

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Fourth, to the extent of any excess of such proceeds, to the payment of all other Obligations of the Borrower owing under or in respect of the Loan Documents that are due and payable to the Lender on such date; and

 

Last, to the extent of any excess of such proceeds, the balance, if any, after all of the Obligations (other than contingent indemnification obligations) have been paid in full, to the Borrower or as otherwise required by law.

 

ARTICLE 9

 

GUARANTEE

 

Section 9.1        Guarantee; Fraudulent Transfer, Etc.; Contribution.

 

(a)       Guarantee.  The Subsidiary Guarantor unconditionally guarantees as a primary obligor and not merely as a surety, the Secured Obligations.  Subsidiary Guarantor further agrees that the Secured Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Secured Obligation.

 

(b)      Guarantee of Payment. The Subsidiary Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Lender or any other Secured Party to any of the security held for payment of the Secured Obligations or credit on the books of the Lender or any other Secured Party in favor of the Borrower or any other person.

 

(c)       Fraudulent Transfer. Anything in this Article 9 to the contrary notwithstanding, the obligations of the Subsidiary Guarantor hereunder shall be limited to a maximum aggregate amount equal to the greatest amount that would not render the Subsidiary Guarantor’s obligations hereunder subject to avoidance as a fraudulent transfer, obligation or conveyance under Section 548 of Title 11 of the United States Code or any provisions of applicable state law (collectively, the “Fraudulent Transfer Laws”), in each case after giving effect to all other liabilities of the Subsidiary Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of the Subsidiary Guarantor (a) in respect of intercompany debt owed or owing to the Borrower or Affiliates of the Borrower to the extent that such debt would be discharged in an amount equal to the amount paid by the Subsidiary Guarantor hereunder and (b) under any Guarantee of senior unsecured debt or Indebtedness subordinated in right of payment to the Secured Obligations, which Guarantee contains a limitation as to maximum amount similar to that set forth in this Section 9.1(c), pursuant to which the liability of the Subsidiary Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, contribution, reimbursement, indemnity or similar rights of the Subsidiary Guarantor pursuant to (1) applicable law or (2) any agreement providing for an equitable allocation among the Subsidiary Guarantor and other Affiliates of the Borrower of obligations arising under guarantees by such parties.

 

 

  

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(d)      Contributions. In addition to all rights of indemnity and subrogation the Subsidiary Guarantor may have under applicable law (but subject to this paragraph), the Borrower agrees that (i) in the event a payment shall be made by the Subsidiary Guarantor hereunder, the Borrower shall indemnify the Subsidiary Guarantor for the full amount of such payment, and the Subsidiary Guarantor shall be subrogated to the rights of the Person to whom such payments shall have been made to the extent of such payment, and (ii) in the event that any assets of the Subsidiary Guarantor shall be sold pursuant to any Loan Document to satisfy any claim of any Secured Party, the Borrower shall indemnify the Subsidiary Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.  Notwithstanding any provision of this paragraph to the contrary, all rights of the Subsidiary Guarantor under this paragraph and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of the Secured Obligations (other than contingent indemnification obligations).  No failure on the part of the Borrower or the Subsidiary Guarantor to make the payments required by this paragraph (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of the Subsidiary Guarantor with respect to its obligations under this paragraph, and the Subsidiary Guarantor shall remain liable for the full amount of its obligations under this paragraph.

 

Section 9.2        Obligations Not Waived. To the fullest extent permitted by applicable law, the Subsidiary Guarantor waives presentment to, demand of payment from, and protest to the Lender of any of the Secured Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.  To the fullest extent permitted by applicable law, the obligations of the Subsidiary Guarantor hereunder shall not be affected by (a) the failure of the Lender any other Secured Party to assert any claim or demand or to enforce or exercise any right or remedy against the Borrower or the Subsidiary Guarantor under the provisions of this Credit Agreement or any other Loan Document, or otherwise or (b) the failure to perfect any security interest in, or the release of, any of the security held by or on behalf of the Lender or any other Secured Party.

 

Section 9.3        Security.  The Subsidiary Guarantor authorizes the Lender and each other Secured Party to (a) take and hold security for the payment of the obligations under the provisions of this Article 9 pursuant to the Security Documents and exchange, enforce, waive and release any such security pursuant to the provisions hereof and of the Security Documents, (b) apply such security and direct the order or manner of sale thereof in accordance with the Loan Documents and (c) release or substitute any one or more endorsees, other guarantors or other obligors.

 

Section 9.4        No Discharge or Diminishment of Guarantee. The obligations of the Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the payment in full in cash of the Secured Obligations), including any claim of waiver, release, surrender, alteration or compromise of any of the Secured Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Secured Obligations or otherwise.  Without limiting the generality of the foregoing, the obligations of the Subsidiary Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Lender or any other Secured Party to assert any claim or demand or to enforce any remedy under this Credit Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Secured Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of the Subsidiary Guarantor or that would otherwise operate as a discharge of the Subsidiary Guarantor as a matter of law or equity (other than the payment in full in cash of the Secured Obligations).

 

 

  

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Section 9.5       Defenses of the Borrower Waived. To the fullest extent permitted by applicable law, the Subsidiary Guarantor waives any defense based on or arising out of any defense of the Borrower or the unenforceability of the Secured Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower, other than the payment in full in cash of the Secured Obligations.  The Lender and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or non-judicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with the Borrower or the Subsidiary Guarantor or exercise any other right or remedy available to them against the Borrower or the Subsidiary Guarantor, without affecting or impairing in any way the liability of the Subsidiary Guarantor hereunder except to the extent the Secured Obligations have been fully paid in cash.  Pursuant to applicable law, the Subsidiary Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of the Subsidiary Guarantor against the Borrower or any security.

 

Section 9.6        Agreement to Pay; Subordination. In furtherance of the foregoing and not in limitation of any other right that the Lender or any other Secured Party has at law or in equity against the Subsidiary Guarantor by virtue hereof, upon the failure of the Borrower to pay any Secured Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Subsidiary Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Lender or such other Secured Party as designated thereby in cash the amount of such due and unpaid Secured Obligations.  Upon payment by the Subsidiary Guarantor of any sums to the Lender or any Secured Party as provided above, all rights of the Subsidiary Guarantor against the Lender arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full in cash of the Secured Obligations.  In addition, any debt or Lien of the Borrower now or hereafter held by the Subsidiary Guarantor is hereby subordinated in right of payment and priority to the prior payment in full in cash of the Secured Obligations and the Liens created under the Loan Documents.  If any amount shall erroneously be paid to the Subsidiary Guarantor on account of (a) such subrogation, contribution, reimbursement, indemnity or similar right or (b) any such debt of the Borrower, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Lender to be credited against the payment of the Secured Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents.

 

Section 9.7        Information.  The Subsidiary Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Secured Obligations and the nature, scope and extent of the risks that the Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of the Lender or the other Secured Parties will have any duty to advise the Subsidiary Guarantor of information known to it or any of them regarding such circumstances or risks.

 

 

  

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Section 9.8        Termination. The guarantees made hereunder (a) shall terminate when the Funding Commitment has expired or otherwise terminated and the principal of and interest on the Funding Loans and all fees and other amounts payable under the Loan Documents shall have been finally paid in full in cash and (b) shall continue to be effective or be reinstated, as applicable, if at any time payment, or any part thereof, of any such Secured Obligation is rescinded or must otherwise be restored by any Secured Party or the Subsidiary Guarantor upon the bankruptcy or reorganization of the Borrower or otherwise.

 

ARTICLE 10

 

MISCELLANEOUS

 

Section 10.1      Notices.

 

(a)       Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:

 

	  	(i)     if to the Borrower, to it at
	 	 
	  	  	
Neutron Energy, Inc.

	  	  	
9000 E. Nichols Avenue, Suite 225

	  	  	
Englewood, Colorado 80112

	  	  	
Attention: Edward M. Topham

	  	  	
Telephone: (303) 531-0470

	  	  	
Telecopy No.: (303) 531-0519

	 	 
	  	
and a copy to:

	 	 
	  	  	
Hogan Lovells US LLP

	  	  	
One Tabor Center, Suite 1500

	  	  	
1200 Seventeenth Street

	  	  	
Denver, Colorado 80202

	  	  	
Attention: Paul Hilton

	  	  	
Telephone: (303) 899-7300

	  	  	
Telecopy No.: (303) 899-7333; and

	 	 
	  	(ii)     if to the Lender, to it at
	 	 
	  	  	
Uranium Resources Inc.

	  	  	
405 State Highway 121 Bypass,

 

 

  

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Building A, Suite 110

	  	  	
Lewisville, Texas 75067

	  	  	
Attention:  President

	  	  	
Telephone: (972) 219-3330

	  	  	
Telecopy No.: (505) 842-8123

	 	 
	  	
and a copy to:

	 	 
	  	  	
Baker & Hostetler LLP

	  	  	
303 East 17th Avenue, Suite 1100

	  	  	
Denver, Colorado 80203-1264

	  	  	
Attention:    Alfred C. Chidester

	  	  	
Telephone No.:   (303) 764-4091

	  	  	
Telecopy No.:   (303) 861-7805.

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).

 

(b)      Change of Address.  Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

 

Section 10.2      Waivers; Amendments.

 

(a)       No failure or delay by the Lender in exercising any right or power under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Lender under the Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 10.2, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of the Funding Loans shall not be construed as a waiver of any Default, regardless of whether the Borrower may have had notice or knowledge of such Default at the time.

 

(b)      Neither any Loan Document nor any provision thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Lender.

 

Section 10.3      Expenses; Indemnity; Damage Waiver.

 

(a)       Costs and Expenses.  All fees and expenses incurred in connection with the Loan Documents and the transactions contemplated thereby shall be paid by the party incurring such expense.

 

 

  

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(b)      Indemnification by the Borrower.  The Borrower shall indemnify the Lender, and each Related Party of the Lender (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable and documented out-of-pocket fees and expenses of one external counsel to all the foregoing Persons, taken as a whole, and to the extent reasonably necessary, the reasonable and documented out-of-pocket fees and expenses of one local counsel to such Persons taken as a whole in any relevant jurisdiction (and, in the event of any actual conflict of interest, the reasonable and documented out-of-pocket and expenses of one additional counsel to the affected parties taken as a whole)) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of (i) the execution or delivery of this Credit Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) the Funding Loans or the use or proposed use of the proceeds therefrom, or  (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee, or (y) result from a claim brought by the Borrower against an Indemnitee for breach of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower has obtained a final and non-appealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

 

(c)       Payments.  All amounts due under in paragraph (b) of this Section 10.3 shall be payable promptly and in no event later than ten days after demand therefor.

 

(d)      Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Borrower shall not assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Credit Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Funding Loans or the use of the proceeds thereof.  No Indemnitee referred to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Credit Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

Section 10.4      Successors and Assigns.  The provisions of this Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the other party.  Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement.

 

 

  

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Section 10.5      Survival.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Credit Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of any Loan Document and the making of the Funding Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on the Funding Loans or any fee or any other amount payable under the Loan Documents is outstanding and unpaid and so long as the Funding Commitments have not expired or terminated. The provisions of Sections 10.3, 10.5, 10.9 and 10.10 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Funding Loans and the termination of the Funding Commitments or the termination of this Credit Agreement or any provision hereof.

 

Section 10.6      Counterparts; Integration; Effectiveness; Electronic Execution.  This Credit Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Credit Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 5.1, this Credit Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Credit Agreement by telecopy or by email in .pdf format shall be effective as delivery of a manually executed counterpart of this Credit Agreement.

 

Section 10.7      Severability.  In the event any one or more of the provisions contained in this Credit Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

Section 10.8      Right of Setoff.  If an Event of Default shall have occurred and be continuing, the Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender to or for the credit or the account of the Borrower or any of its Subsidiaries against any and all of the obligations of the Borrower or such Subsidiary now or hereafter existing under this Credit Agreement or any other Loan Document to the Lender irrespective of whether or not the Lender shall have made any demand under this Credit Agreement or any other Loan Document and although such obligations of the Lender or its subsidiaries may be contingent or unmatured.  The rights of the Lender under this Section 10.8 are in addition to other rights and remedies (including other rights of setoff) that the Lender may have.  The Lender agrees to notify the Borrower promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

 

  

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Section 10.9      Governing Law; Jurisdiction; Consent to Service of Process.

 

(a)       Governing Law.  This Credit Agreement shall be governed by, and construed in accordance with, the laws of the State of Colorado.

 

(b)      Submission to Jurisdiction.  Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State of Colorado and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Credit Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that, to the extent permitted by applicable law, all claims in respect of any such action or proceeding may be heard and determined in such Colorado court or, to the fullest extent permitted by applicable law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Credit Agreement or in any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Credit Agreement or any other Loan Document against the Borrower or its properties in the courts of any jurisdiction.

 

(c)       Waiver of Venue.  Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Credit Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section 10.9.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)      Service of Process.  Each of the parties hereto irrevocably consents to service of process in the manner provided for notices in Section 10.1. Nothing in this Credit Agreement will affect the right of any party to this Credit Agreement to serve process in any other manner permitted by law.

 

Section 10.10    WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO HEREBY (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10.

 

 

  

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Section 10.11    Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Credit Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Credit Agreement.

 

Section 10.12    Intercreditor Agreement.  Notwithstanding anything herein to the contrary, the lien and security interest granted to the Lender pursuant to this Credit Agreement and the exercise of any right or remedy by the Lender hereunder are subject to the provisions of the Intercreditor Agreement, dated as of March 1, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among the Senior Lender, the Lender, the Borrower, the Subsidiary Guarantor and RMB Resources, Inc., a Delaware corporation, in its capacity as administrative agent, and certain other persons party or that may become party thereto from time to time. In the event of any conflict between the terms of the Intercreditor Agreement and this Credit Agreement, the terms of the Intercreditor Agreement shall govern and control.

 

 

[Signature pages follow]

 

 

  

- 29 -

  

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

	  	
AS BORROWER

	 
	 	 	 
	  	
NEUTRON ENERGY, INC.

	 
	 	 	 
	  	
By:                       

	 
	  	
Name:                       

	 
	  	
Title:                        

	 
	 	 	 
	  	
AS SUBSIDIARY GUARANTOR

	 
	 	 	 
	  	
CIBOLA RESOURCES LLC

	 
	 	 	 
	  	
By:                         

	 
	  	
Name:                       

	 
	  	
Title:                        

	 
	  	  	 
	  	
AS LENDER

	 
	 	 	 
	  	
URANIUM RESOURCES, INC.

	 
	 	 	 
	  	
By:                         

	 
	  	
Name:                      

	 
	  	
Title:                         

	 

 

 

Signature Page to Funding and Credit Agreement

 

 

  

 

  

 

 

 

Schedule 7.2

Existing Liens

None.

 

 

  

 

  

 

 

Exhibit A

FORM OF COMPLIANCE CERTIFICATE

 

  _____________ ___, 201_

Uranium Resources Inc.

405 State Highway 121 Bypass,

Building A, Suite 110

Lewisville, Texas 75067

Attention:  Treasurer

 

This Compliance Certificate is delivered pursuant to Section 6.1(c) of that certain Credit and Funding Agreement, dated as of March 1, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among NEUTRON ENERGY, INC., a Nevada corporation (the “Borrower”), CIBOLA RESOURCES LLC, a Delaware limited liability company, and URANIUM RESOURCES, INC., a Delaware corporation (the “Lender”).  Terms defined in the Credit Agreement and not otherwise defined in this Compliance Certificate shall have the meanings defined for them in the Credit Agreement.

 

No Default or Event of Default exists [, except as follows:]1

 

There have been no changes to the jurisdiction of organization or legal name of the Borrower (except as permitted under the Loan Documents) since the later of the Agreement Date or the date of the last Compliance Certificate delivered pursuant to Section 6.1(c) of the Credit Agreement [, except as follows:]2

 

  There has been no change to the information disclosed in the Schedules to the Security Agreement, or as previously certified in a prior Compliance Certificate [, except as follows:]3

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

 

 

1           Specify the nature and status thereof and any action taken or proposed to be taken with respect thereto.

  

2           Specify each such change.

  

3           Specify each such change.

 

 

  

 

  

 

The undersigned, a Financial Officer of the Borrower, hereby certifies to the Lender that the information contained herein is true and correct and is derived from the books and records of the Borrower and that each and every matter contained herein correctly reflects those books and records.

 

	  	
NEUTRON ENERGY, INC.

	  
	  	  	  
	  	
By:                            

	  
	  	
Name:                           

	  
	  	
Title:                            

	  

 

 

 

  

 

  

 

 

Exhibit B

Intercreditor Agreement

 

 

  

 

  

 

 

Exhibit C

Note

March 1, 2012

 

FOR VALUE RECEIVED, the undersigned, NEUTRON ENERGY, INC., a Nevada corporation (the “Borrower”), hereby promises to pay to the order of URANIUM RESOURCES, INC., a Delaware corporation (the “Lender”), or its Actual Assigns, the aggregate principal amount of and interest on the Funding Loans as required by Section 2.4(a) of the Credit Agreement (as defined below).

 

This Note is the “Note” referred to in, and is subject to, that certain Credit and Funding Agreement, of even date herewith, among the Borrower, Cibola Resources LLC, a Delaware limited liability company, and the Lender (as the same may be amended, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Terms not otherwise defined herein but defined in the Credit Agreement are used herein with the same meanings.

 

The Funding Loans evidenced by this Note are prepayable under the circumstances, and their respective maturities are subject to acceleration upon the terms, set forth in the Credit Agreement.  This Note is subject to, and shall be construed in accordance with, the provisions of the Credit Agreement and is entitled to the benefits and security set forth in the Loan Documents.

 

Except as specifically otherwise provided in the Credit Agreement, the Borrower hereby waives presentment, demand, notice of dishonor, protest, notice of protest and all other demands, protests and notices in connection with the execution, delivery, performance, collection and enforcement of this Note.

 

Whenever in this Note either party hereto is referred to, such reference shall be deemed to include the successors and assigns of such party.  The Borrower shall not have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void), except as expressly permitted by the Loan Documents.  No failure or delay of the Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  Neither this Note nor any provision hereof may be waived, amended or modified, nor shall any departure therefrom be consented to, except pursuant to a written agreement entered into between the Borrower and the Lender with respect to which such waiver, amendment, modification or consent is to apply, subject to any consent required in accordance with Section 10.2 of the Credit Agreement.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO.

 

All communications and notices hereunder shall be in writing and given as provided in Section 10.1 of the Credit Agreement.

 

The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State of Colorado and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and the Borrower hereby irrevocably and unconditionally agrees that, to the extent permitted by applicable law, all claims in respect of any such action or proceeding may be heard and determined in such Colorado court or, to the fullest extent permitted by applicable law, in such Federal court.  The Borrower, and by accepting this Note, the Lender, hereby agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Note shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Note against the Borrower, or any of its property, in the courts of any jurisdiction.

 

 

  

 

  

 

 

The Borrower, and by accepting this Note, the Lender, hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Note or the other Loan Documents in any court referred to in the preceding paragraph hereof. The Borrower, and by accepting this Note, the Lender, hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

The Borrower, and by accepting this Note, the Lender, irrevocably consents to service of process in the manner provided for notices herein.  Nothing herein will affect the right of the Lender to serve process in any other manner permitted by law.

 

THE BORROWER, AND BY ACCEPTING THIS NOTE, THE LENDER, EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT SUCH LENDER HAS BEEN INDUCED TO ACCEPT THIS NOTE AND ENTER INTO THE LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

  

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NEUTRON ENERGY, INC.

	  
	  	  	  
	  	
By:                             

	  
	  	
Name:                           

	  
	  	
Title:                             

	  

 

 

  

 

  

 

 

 

Exhibit D

 

Security Agreement

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