Attached files
| file | filename |
|---|---|
| 8-K - URANIUM ENERGY CORP | f8k01202012.htm |
| EX-10 - URANIUM ENERGY CORP | f8k01202012ex10-4.htm |
| EX-10 - URANIUM ENERGY CORP | f8k01202012ex10-3.htm |
| EX-10 - URANIUM ENERGY CORP | f8k01202012ex10-1.htm |
__________
TARGET DISCLOSURE LETTER
Pursuant to
ARRANGEMENT AGREEMENT
From:
CUE RESOURCES LTD.
To:
URANIUM ENERGY CORP.
Uranium Energy Corp.
500 North Shoreline, Ste. 800N, Corpus Christi, Texas, U.S.A., 78401
__________
January 20, 2012
Uranium Energy Corp.
Suite 320, 1111 West Pender Street
Vancouver, British Columbia
Canada, V6E 2J3
Attention: Amir Adnani, Chief Executive Officer
Dear Sirs/Mesdames:
Re: Arrangement Agreement dated January 20, 2012 between Uranium Energy Corp. and Cue Resources Ltd. - Disclosure Letter
This letter, together with the attached schedules, constitutes the Target Disclosure Letter referred to and defined in the Arrangement Agreement (the "Arrangement Agreement") between Uranium Energy Corp. ("UEC" or "Purchaser") and Cue Resources Ltd. ("Cue" or "Target") dated as of the date hereof.
The purpose of the Target Disclosure Letter is to disclose to UEC in the attached schedules the qualifications, modifications or exceptions to certain representations, warranties and covenants of Cue contained in the Arrangement Agreement. The Target Disclosure Letter constitutes an integral part of the Arrangement Agreement.
The numbering of the attached schedules corresponds to the articles, sections or other portions of the Arrangement Agreement. For greater clarity, any introductory language and headings in the Target Disclosure Letter are inserted for convenience of reference only and will not create or be deemed to create a different standard for disclosure than the language set forth in the Arrangement Agreement. Information disclosed in any schedule of the Target Disclosure Letter shall be deemed disclosed with respect to such other article, sections or other portions of the Arrangement Agreement or the Target Disclosure Letter to which such written information, on its face, would obviously pertain in light of the form and substance of the disclosure made.
No item in the Target Disclosure Letter relating to any possible breach or violation of any agreement, law or regulation shall be construed as an admission or indication that any such breach or violation exists or has actually occurred, and nothing in the Target Disclosure Letter constitutes an admission of any liability or obligation of Cue to any third party or shall confer or give to any third party any remedy, claim, liability, reimbursement, cause of action, or other right. The Target Disclosure Letter is qualified in its entirety by reference to the provisions of the Arrangement Agreement, and is not intended to constitute, and shall not be construed as constituting, any representation, warranty, undertaking, assurance, covenant, indemnity, guarantee or other commitment of any nature whatsoever not expressly given in the Arrangement Agreement. The inclusion of any item in the Target Disclosure Letter shall not be construed as an admission or opinion by Cue of the materiality of such item.
The Target Disclosure Letter is deemed to include the following, all of which are to be regarded as having been disclosed to UEC:
1. all matters contained or referred to in the Target Disclosure Letter and in any document annexed to or referred to in the Target Disclosure Letter and all matters apparent from the information disclosed in the Target Disclosure Letter or in any document annexed to or referred to herein; and
2. all matters and documents contained or referred to in the Arrangement Agreement (including the schedules attached thereto) or any document which may be entered into or executed and delivered between the parties pursuant to the Arrangement Agreement and the transactions contemplated therein.
UEC acknowledges that the information in the Target Disclosure Letter is confidential, proprietary information of Cue and, if disclosed would be seriously prejudicial to the interests of Cue. UEC shall not, without the prior written consent of Cue (such consent not to be unreasonably delayed, conditioned or withheld), disclose all or any portion of the Target Disclosure Letter.
All capitalized terms used in the Target Disclosure Letter shall have the meanings attributed thereto in the Arrangement Agreement, unless otherwise stated, and all references to dollars, unless otherwise specifically indicated, are to Canadian dollars. The Target Disclosure Letter shall be governed by, and be construed in accordance with, the laws of the Province of British Columbia and the laws of Canada applicable therein but the reference to such laws shall not, by conflict of laws rules or otherwise, require the application of the law of any jurisdiction other than the Province of British Columbia.
Yours truly,
Cue Resources Ltd.
Per: /s/ Robert Tyson
Robert Tyson
Chief Executive Officer
We hereby acknowledge receipt and accept the contents of this letter this 20th day of January, 2012.
Uranium Energy Corp.
Per: /s/ Amir Adnani
Amir Adnani
Chief Executive Officer
Schedule (B)
CAPITALIZATION
1. Cue has an authorized share capital consisting of an unlimited number of Target Shares without par value;
2. As of the close of business on January 20, 2012, Cue has an aggregate 119,808,067 Target Shares issued and outstanding; and
3. Reference is made to the summary of issued and outstanding Target Options and Target Warrants entitling the holders thereof to purchase additional Target Shares in the attached Appendix 1 hereto.
Appendix 1
To Schedule (B)
Summary of Target Options and Target Warrants
I. Target Options
As at January 20, 2012, the following Target Options are outstanding:
|
Year Issued |
Number of Options |
Exercise Price |
Expiry Date |
|
2007 |
125,000 |
$0.45 |
March 5, 2012 |
|
2008 |
200,000 |
$0.45 |
July 15, 2013 |
|
2009 |
100,000 |
$0.10 |
June 19, 2014 |
|
2010 |
500,000 |
$0.10 |
May 1, 2015 |
|
2011 |
250,000 |
$0.10 |
Aug. 3, 2016 Aug. 3, 2016 |
|
Total Target Options |
|
The aggregate Target Options outstanding as at January 20, 2012 is 3,125,000 as summarized above and detailed below.
|
Name and Address of Optionholder |
Number of Purchase Options |
Option No. |
Date Granted |
Exercise Price |
Expiry Date |
|
Christopher Healey |
125,000 |
n/a |
March 5, 2007 |
$0.45 |
March 5, 2012 |
|
John Icke |
200,000 |
n/a |
July 15, 2008 |
$0.45 |
July 15, 2013 |
|
Robert Tyson |
200,000 |
n/a |
October 30, 2008 |
$0.20 |
October 30, 2013 |
|
John Icke (JRI Strategy Consultants Inc.) |
300,000 |
n/a |
November 10, 2008 |
$0.22 |
November 10, 2013 |
|
Esteban Burt |
100,000 |
n/a |
June 19, 2009 |
$0.10 |
June 19, 2014 |
|
Peter Leighton |
250,000 |
n/a |
June 19, 2009 |
$0.10 |
June 19, 2014 |
|
Jane-Marie Glynn |
25,000 |
n/a |
December 8, 2009 |
$0.10 |
December 8, 2014 |
|
Robert Tyson |
500,000 |
01-2010 |
May 1, 2010 |
$0.10 |
May 1, 2015 |
|
Peter Leighton |
125,000 |
06-2010 |
May 12, 2010 |
$0.10 |
May 12, 2015 |
|
John Icke (JRI Strategy Consultants Inc.) |
300,000 |
02-2010 |
May 12, 2010 |
$0.10 |
May 12, 2015 |
|
Esteban Burt |
100,000 |
07-2010 |
May 12, 2010 |
$0.10 |
May 12, 2015 |
|
Jane-Marie Glynn |
50,000 |
10-2010 |
May 12, 2010 |
$0.10 |
May 12, 2015 |
|
Christopher Healey |
200,000 |
05-5010 |
May 12, 2010 |
$0.10 |
May 12, 2015 |
|
Esteban Burt |
100,000 |
14-2010 |
November 23, 2010 |
$0.115 |
November 23, 2015 |
|
Andrew Bell |
250,000 |
02-2011 |
August 3, 2011 |
$0.10 |
August 3, 2016 |
|
Karoline Monkvik |
25,000 |
07-2011 |
August 3, 2011 |
$0.10 |
August 3, 2016 |
|
Jasmine Currington |
50,000 |
05-2011 |
August 3, 2011 |
$0.10 |
August 3, 2016 |
|
Christina Boddy |
75,000 |
04-2011 |
August 3, 2011 |
$0.10 |
August 3, 2016 |
|
David McAdam |
150,000 |
03-2011 |
August 3, 2011 |
$0.10 |
August 3, 2016 |
|
Total Target Options |
3,125,000 |
II. Target Warrants
As at January 20, 2012, the following Target Warrants are outstanding:
|
Description |
Number of Warrants |
Exercise Price ($) |
Expiry Date |
|
Series "H" Target Warrants from March 2010 debt conversion (each, a "Debt Conversion Target Warrant" and collectively, the "Debt Conversion Target Warrants") |
9,456,020 |
0.15 |
April 19, 2012 |
|
Series "H" Target Warrants from November 2010 private placements (each, a "Private Placement Target Warrant" and collectively, the "Private Placement Target Warrants") |
34,732,744 |
0.12 |
November 10, 2012 |
|
Series "I" Target Warrants under agent options from November 2010 private placement (1) (each, a "Agent Target Warrant" and collectively, the "Agent Target Warrants") |
1,988,423 (1) |
0.12 |
November 10, 2012 |
|
Total Target Warrants |
46,177,187 |
(1) The Agent Target Warrants are exercisable under options which are exercisable, at an exercise price of $0.07, into "Units" (as more particularly described below) consisting of one Target Share and Target Warrant with an exercise price of $0.12, exercisable for 2 years.
The aggregate Target Options outstanding as at January 20, 2012 is 46,177,187 as summarized above and detailed below.
(a) Debt Conversion Target Warrants
As at January 20, 2012, the following Debt Conversion Target Warrants are outstanding:
|
Name and Address of Warrant Holder |
Number of Series "H" Share Purchase Warrants |
Warrant No. |
Notes |
|
Environment Consulting S.A. |
569,420 |
1 |
|
|
United Logistical S.A. |
2,608,120 |
2 |
|
|
Empire Drilling S.A. |
2,896,850 |
3 |
|
|
Canaccord Genuity Corp. |
1,000,000 |
4 |
|
|
Uranium Power Corp. |
2,381,630 |
5 |
|
|
Total Debt Conversion Target Warrants |
9,456,020 |
Notes:
Close date: April 19, 2010
Expiry date: April 19, 2012
Hold period expiry date: August 20, 2010
Exercise price: $0.15
Each Debt Conversion Target Warrant is exercisable to purchase one Target Option.
(b) Private Placement Target Warrants
As at January 20, 2012, the following Private Placement Target Warrants are outstanding:
|
Name and Address of Warrant Holder |
Number of Series "H" Share Purchase Warrants |
Warrant No. |
Notes |
|
CANARY CAPITAL CORP. |
245,000 |
1 |
|
|
HAYWOOD SECURITIES INC. |
1,200,000 |
2 |
|
|
GLOBAL SECURITIES CORPORATION ITF NICK SEGOUNIS |
200,000 |
3 |
|
|
PI FINANCIAL CORP. ITF STEFAN STUPARU |
90,000 |
4 |
|
|
PI FINANCIAL CORP. ITF DAVE ACHTEMICHUK |
85,000 |
5 |
|
|
PI FINANCIAL CORP. ITF JACEK JASTRZEBSKI |
100,000 |
6 |
Re-registered as warrant #72 |
|
PI FINANCIAL CORP. ITF PERRY MEIKLE |
90,000 |
7 |
|
|
PI FINANCIAL CORP. ITF LEADER RESOURCES |
130,000 |
8 |
|
|
PI FINANCIAL CORP. ITF SPIKE HOLDINGS |
140,000 |
9 |
|
|
PI FINANCIAL CORP. ITF TIM CAMPBELL |
80,000 |
10 |
|
|
PENTOR CAPITAL CORP. |
214,285 |
11 |
|
|
JAYCO HOLDINGS INC. |
350,000 |
12 |
|
|
BRIAN K.S. ROSS |
70,000 |
13 |
|
|
DIG MEDIA INC. |
300,000 |
14 |
|
|
UNION SECURITIES LTD. IN TRUST FOR MALCOLM GRAVE |
100,000 |
15 |
|
|
BRIAN KASK |
300,000 |
16 |
|
|
BRIAN D. KASK |
125,000 |
17 |
|
|
BOON SIM |
75,000 |
18 |
|
|
HAYWOOD SECURITIES INC. |
200,000 |
19 |
|
|
HAYWOOD SECURITIES INC. |
200,000 |
20 |
|
|
HAYWOOD SECURITIES INC. |
150,000 |
21 |
|
|
SCOTIA CAPITAL ITF ALPHA NORTH OFFSHORE INC. |
3,200,000 |
22 |
|
|
SCOTIA CAPITAL ITF value preservation fund in respect of cell b |
800,000 |
23 |
|
|
UNION SECURITIES LTD. ITF 1242564 ONTARIO INC. |
200,000 |
24 |
|
|
INVESTOR COMPANY C/O PARKWOOD |
900,000 |
25 |
|
|
INVESTOR COMPANY |
600,000 |
26 |
|
|
NBCN Inc. ITF Pasquale Di Capo RRSP Account 118H21S |
3,000,000 |
27 |
|
|
NBCN INC. ITF PINETREE RESOURCE PARTNERSHIP - 26TS03V |
4,000,000 |
28 |
Re-registered as warrant #73 |
|
Luciano Fiorini |
400,000 |
29 |
Re-registered - See Cert #71 |
|
MACQUARIE PRIVATE WEALTH INC. IN TRUST FOR MIKE MANSFIELD |
200,000 |
30 |
|
|
RICHARD PATRICIO |
500,000 |
31 |
Re-registered - See Cert #60 |
|
DAVID D'OROFRIO |
200,000 |
32 |
Re-registered - See Cert #66 |
|
ALBERT CONTARDI |
200,000 |
33 |
Re-registered - See Cert #63 |
|
JENNIFER GOLDMAN |
200,000 |
34 |
|
|
GMP SECURITIES LP |
400,000 |
35 |
|
|
DAVID SCHMIDT V6C 1LG |
200,000 |
36 |
|
|
PENSON FINANCIAL ITF A/C 6YA 610A |
200,000 |
37 |
Re-registered as warrant #74 |
|
JAMIE LEVY |
200,000 |
38 |
Re-registered - See Cert #68 |
|
MICHAEL GESUALDI |
200,000 |
39 |
Re-registered - See Cert #62 |
|
VITO RUZZUTO |
200,000 |
40 |
Re-registered - See Cert #64 |
|
RICCARDI FAMILY TRUST |
200,000 |
41 |
Re-registered - See Cert #65 |
|
DINA RICCARDI |
500,000 |
42 |
Re-registered - See Cert #61 |
|
JOHN ICKE |
1,000,000 |
43 |
Re-registered - See Cert #69 |
|
RED ROCK RESOURCES PLC |
397,934 |
44 (2) |
|
|
RED ROCK RESOURCES PLC |
1,700,000 |
45 |
|
|
RED ROCK RESOURCES PLC |
1,200,000 |
46 |
|
|
B2B TRUST ITF MOHAMMED ELSAGHIR |
500,000 |
47 |
|
|
MENG GAN |
250,000 |
48 |
|
|
DAVID O'BRIEN |
150,000 |
49 |
|
|
GESTION MARC BLAIS INC. |
142,857 |
50 |
Re-registered - See Cert #70 |
|
JAYVE & CO. |
600,000 |
51 |
|
|
GENDER TRUST REG. |
1,000,000 |
52 |
Re-registered - See Cert #67 |
|
MACQUARIE PRIVATE WEALTH INC. ITF ARNI JOHANNSON |
150,000 |
53 |
|
|
RESINCO CAPITAL PARTNERS INC. |
2,202,382 |
54 (1) |
|
|
CANACCORD GENUITY CORP. |
2,931,000 |
55 |
|
|
B2B TRUST IFT TARIK ELSAGHIR |
700,000 |
56 |
|
|
CANACCORD GENUITY CORP IN TRUST FOR MATT KUHN |
100,000 |
57 |
|
|
CANACCORD GENUITY CORP IN TRUST FOR DELORES TAM |
50,000 |
58 |
|
|
CANACCORD GENUITY CORP IN TRUST FOR DIANE ALEXANDER |
714,286 |
59 |
|
|
INVESTOR COMPANY ITF RICHARD PATRICIO, A/C 7H1204E |
500,000 |
60 |
|
|
INVESTOR COMPANY ITF DINA RICCARDI, A/C 8T5641E |
500,000 |
61 |
|
|
INVESTOR COMPANY ITF MICHAEL GESUALDI, A/C 7X8608E |
200,000 |
62 |
|
|
INVESTOR COMPANY ITF ALBERT CONTARDI, A/C 8F2630E |
200,000 |
63 |
|
|
INVESTOR COMPANY ITF VITO RIZZUTO, A/C 7X0467E |
200,000 |
64 |
|
|
INVESTOR COMPANY ITF RICCARDI FAMILY TRUST, A/C 8D4057A |
200,000 |
65 |
|
|
VALEURS MOBILIERES DESJARDINS INC. ITF DAVID D'OROFRIO, A/C 7APK334 |
200,000 |
66 |
|
|
ROYTOR & CO. for GENDER TRUST REG. |
1,000,000 |
67 |
|
|
INVESTOR COMPANY ITF JAMIE LEVY, A/C 17J852E |
200,000 |
68 |
|
|
MACQUARIE PRIVATE WEALTH INC ITF JOHN ICKE |
1,000,000 |
69 |
|
|
INVESTOR COMPANY ITF GESTION MARC BLAIS INC., A/C 33RM95A |
142,857 |
70 |
|
|
INVESTOR COMPANY ITF LUCIANO FIORINI, A/C 7U1273E |
400,000 |
71 |
|
|
Dundee Securities Corp. ITF Jacek Jastrzebski, A/C 14M-F33SN |
100,000 |
72 |
|
|
NESBITT BURNS ITF PINETREE RESOURE PARTNERSHIP A/C 402-20952-20 |
4,000,000 |
73 |
|
|
Dundee Securities Ltd. ITF Donato Sferra A/C 125689EN |
200,000 |
74 |
|
|
Total Private Placement Target Warrants |
34,732,744 |
Notes:
Close date: November 10, 2010
Expiry date: November 10, 2012
Hold period expiry date: March 11, 2011
Exercise price: $0.12
Each Private Placement Target Warrant entitles the holder thereof to purchase one Target Option.
(1) Resinco Capital Partners ("Resinco") has advanced to Target an aggregate of CDN $250,000 (the "Resinco Advance") pursuant to three letter agreements from Resinco to Target dated March 29, 2011, April 12, 2011 and May 17, 2011, all as more particularly detailed under Schedule (P) of this Target Disclosure Letter, constituting an advance and non-interest-bearing loan which was offset against the sum due and payable upon exercise by Resinco on January 12, 2012 of 2,083,333 Target Warrants under Target Warrant certificate number 54.
(2) Red Rock Resources PLC ("Red Rock") has advanced to Target an aggregate of CDN $312,248 (the "Red Rock Advance") pursuant to three letter agreements from Red Rock to Target dated March 23, 2011, April 27, 2011 and June 17, 2011, all as more particularly detailed under Schedule (P) of this Target Disclosure Letter, constituting an advance and non-interest-bearing loan which was offset against the sum due and payable upon exercise by Resinco on January 12, 2012 of 2,602,066 Target Warrants under Target Warrant certificate number 44.
(c) Agent Target Warrants
As at January 20, 2012, the following Agent Target Warrants are outstanding:
|
Name and Address of Warrant Holder |
Number of Series "I" Share Purchase Warrants |
Warrant No. |
Notes |
|
Canaccord Genuity Corp. |
359,623 |
1 |
|
|
Haywood Securities Inc. |
140,000 |
2 |
|
|
PowerOne Capital Markets Limited |
1,320,000 |
3 |
Re-registered - See Cert #10 |
|
PI Financial Corp. |
57,200 |
4 |
|
|
Wolverton Securities Ltd. |
40,000 |
5 |
|
|
Global Securities Corp. |
16,000 |
6 |
|
|
Union Securities Ltd. |
8,000 |
7 |
|
|
Capital Street Group |
19,600 |
8 |
|
|
Capital Street Group |
28,000 |
9 |
|
|
Fab Carella |
N/A |
N/A |
Received cash commission only. |
|
NBCN INC. ITF A/C 111QKYE |
1,320,000 |
10 |
|
|
Total Agent Target Warrants |
1,988,423 |
Note:
Close date: November 10, 2010
Expiry date: November 10, 2012
Hold period expiry date: Not applicable.
Exercise price: $0.12
Each Agent Target Warrant Holder named above holds a corresponding number of options exercisable, at an exercise price of $0.07, into "Units" of Cue. Each Unit consists of one Target Share and one transferrable Target Warrant exercisable at a price of $0.12 if exercised on or before November 10, 2012.
SCHEDULE (D)(iii)
PERMITS AND LICENSES
Prospecting Permits
The Yuty Project consists of four large mineral concessions covering a total area of 230,992 ha in southeastern Paraguay. They consist of:
1. Central Block (Block 1), covering 100,842 ha. The Prospecting Permit ("PP") was issued by Ministério de Obras Públicas y Comunicaciones ("MOPC") (MOPC File No. 16835/2006) by Resolution No. 382 dated July 7, 2006, and corrected by MOPC Resolution No. 870 dated November 17, 2006 (Burt, 2007);
2. Block No. 2, situated east of the Central Block, covering 48,200 ha. This is a PP issued by MOPC (File No. 13197/2006) Resolution No. 849 dated November 15, 2006 (Burt, 2007); and
3. Yuty Blocks No. 3 and 4, referred to earlier as Northern Block: Blocks N1, N2 and N3, and Southern Block (Block S), together covering 81,950 ha. These are PPs issued by MOPC (File Nos. 18704/2006, 18777/2006, 19141/2006, and 24574/2006). MOPC issued these PPs by Resolution No. 322 dated April 30, 2007 (Burt, 2007).
Environmental Licenses
Transandes Paraguay S.A., a wholly owned subsidiary of Cue ("Transandes"), received environmental licenses to conduct exploration for minerals issued by the Secretaria del Ambiente ("SEAM") on the Yuty Project, as follows:
1. for Yuty Block 1: SEAM Resolution DGCCARN No. 1510/2009 dated August 21, 2009 for a two year period. Renewal for another two year period was filed July 14, 2011 pending approval February 2012. Under terms of Decree No. 4066/2010, environmental licenses are considered renewed with the filing until SEAM issues the definitive licenses;
2. for Yuty Block 2: SEAM Resolution DGCCARN No. 1500/2009 dated August 20, 2009 for a two year period. Renewal for another two year period was filed July 14, 2011. License is valid as of filing date per Decree 4066/10; and
3. for Yuty Blocks 3 and 4: SEAM Resolution DGCCARN No. 71509/2009 dated August 21, 2009 for a two year period. Renewal for another two year period was filed July 14, 2011. License is valid as of filing date per Decree 4066/10.
Exploration Permits
Transandes received exploration permits to carry out mineral exploration on the Yuty Project grounds issued by the MOPC Resolution No. 356 dated May 16, 2007, which authorized Transandes to initiate the exploration phase in the areas granted for mineral prospecting by MOPC Resolutions No. 382/2006, No. 849/2006, and No. 322/2007 for the Yuty 1, 2, 3 and 4 Blocks. Subsequently, Resolution No. 356/07 determined that the effective date of the exploration period was May 16, 2007.
The exploration period under the Mineral Concession Contract approved by Law 3575/08 was extended for a one year period until March 10, 2012 by MOPC Resolution No. 2645 dated December 1, 2011.
Transandes must comply with Mining Law 3180/07 and environmental laws, as well as pay the corresponding land fees and post the required bonds and insurance policies.
Schedule (E)
TARGET SUBSIDIARY
The capital of Transandes consists of Gs. 200,000,000 (two hundred million guaranies, a guarani being the national currency unit of Paraguay). The capital is represented by two hundred shares of Gs. 1,000,000 (one million guaranies) each (each, a "Transandes Share"), numbered from 1 to 200. As at January 20, 2012, Cue is the registered owner of 198 Transandes Shares, with the remaining 2 Transandes Shares registered to Longview Capital Partners.
Schedule (F)
NO VIOLATION
Cue's representation in paragraph (f) of Schedule 2 of the Arrangement Agreement is subject to the following agreements and, without limiting the foregoing, the respective provisions therein:
1. Consulting Agreement, dated effective May 1, 2010, between Cue and JRI Strategy Consultants Inc. ("JRI") a company that is wholly owned and controlled by John Icke and John Icke ("Icke") to provide the services of Icke as Cue's Executive Chairman, and Schedule B thereto, which provides, in part, that JRI is entitled to the following compensation in the event of a change of control:
"Change of Control
Should a Change of Control of the Company take place as defined in [the Agreement] then the Consultant will be compensated for twelve (12) months of base salary (12 x CDN$5,000) should the Consultant not be offered a position of similar accountability, authority and responsibility in the new entity with similar compensation within 30 days of the merger. The Consultant has the sole right to not accept the offer and claim compensation. Options not vested at the point in time of the transaction will become 100% vested on the closure of the deal."; and
2. Consulting Agreement dated effective May 1, 2010 between Cue and Transpacific Capital (Hong Kong) Limited ("Transpacific") a company that is wholly owned and controlled by Robert Tyson and Robert Tyson ("Tyson") to provide the services of Tyson as Cue's President and CEO, which provides, in part, that Transpacific is entitled to the following compensation in the event of a change of control:
"Change of Control
Should a Change of Control of the Company take place as defined in [the Agreement] then the Consultant will be compensated for twelve (12) months of base salary (12 x CDN$15,000) should the Consultant not be offered a position of similar accountability, authority and responsibility in the new entity with similar compensation within 30 days of the merger. The Consultant has the sole right to not accept the offer and claim compensation. Options not vested at the point in time of the transaction will become 100% vested on the closure of the deal.".
Schedule (O)
NO UNDISCLOSED LIABILITIES
Nil.
Schedule (p)
ABSENCE OF CHANGES
Cue's representation in paragraph (p) of Schedule 2 of the Arrangement Agreement is subject to the following:
1. Confidentiality Agreement, dated December 1, 2011, between Cue and UEC;
2. Letter Agreement, dated effective December 21, 2011, between Cue and UEC;
3. Secured Loan Agreement, and its related Schedule A - General Security Agreement, dated January 20, 2012, between Cue and UEC;
4. Loan Agreement, dated August 3, 2011, between Cue and Resinco (the "Loan Agreement"), pursuant to which Resinco has loaned to Cue up to $400,000 bearing interest at a rate of prime plus 4% per annum with a one time administrative fee of $25,000 and the issuance by Cue of 1,000,000 Target Shares as a loan bonus, which 1,000,000 Target Shares were issued at a deemed price of $0.05 per Target Share effective January 12, 2012;
5. on January 12, 2012, the following Target Shares were issued by Cue:
a. 2,083,333 Target Shares issued to Resinco pursuant to the exercise by Resinco of 2,083,333 Target Warrants at an exercise price of $0.12 per Target Share in connection with the Resinco Advance; and
b. 2,606,066 Target Share issued to Red Rock pursuant to the exercise by Red Rock of 2,606,066 Target Warrants at an exercise price of $0.12 per Target Share in connection with the Red Rock Advance; and
6. reference is made to the Material Contracts of Cue as set out in Schedule (Q) of this Target Disclosure Letter and dated as effective on or after April 30, 2011.
Schedule (Q)
MATERIAL CONTRACTS
Reference is made to the following documents and agreements:
1. the Director and Officer Indemnification Agreements referred to in Schedule (O);
2. Earn-In Agreement and Option to Participate in Transandes Paraguay S.A., and supplement thereto, dated November 3, 2006, as amended on January 31, 2007, among Transandes, Sebastian Reidl and Alex Hirtz ("R&H"), and Cue pursuant to which Cue earned a 70% interest in Transandes upon satisfaction of the final conditions therein in September 2008;
3. Shareholders Agreement, dated November 3, 2006, between Transandes, Sebastian Reidl and Alex Hirtz, and Cue;
4. Operator's Agreement, dated November 3, 2006, between Transandes and Cue;
5. Share Purchase Agreement, dated August 17, 2007, among Transandes, R&H and Cue (the "Share Purchase Agreement") pursuant to which Cue acquired 30% of the issued and outstanding shares of Transandes from R&H.
6. Letter Agreement, dated effective December 21, 2011, between Cue and UEC;
7. Letter Agreement, dated March 29, 2011, between Cue and Resinco confirming that Resinco has provided Cue with CDN$100,000;
8. Letter Agreement, dated April 12, 2011, between Cue and Resinco confirming that Resinco has provided Cue with CDN$100,000;
9. Letter Agreement, dated May 17, 2011, between Cue and Resinco confirming that Resinco has provided Cue with CDN$50,000;
10. Letter Agreement, dated March 23, 2011, between Cue and Red Rock confirming that Red Rock has provided Cue with US$200,000;
11. Letter Agreement, dated April 27, 2011, between Cue and Red Rock confirming that Red Rock has provided Cue with US$70,000;
12. Letter Agreement, dated June 17, 2011, between Cue and Red Rock confirming that Red Rock has provided Cue with US$50,000;
13. Loan Agreement, dated August 3, 2011, between Cue and Resinco (the "Loan Payment"); and
14. the following consulting agreements (collectively the "Management Contracts"):
a. Consulting Agreement, dated May 1, 2010, between Cue and JRI Strategy Consultants Inc.;
b. Consulting Agreement, dated May 1, 2010, between Cue and TransPacific Capital (Hong Kong) Limited; and
c. Consulting Agreement, dated August 1, 2010, between Cue and Resinco.
Accrued Fees and Expenses
Target and the party or parties, as applicable, to certain Material Contracts of Cue have agreed to the accrual of certain fees and expenses payable by Cue under the applicable Material Contracts, which Material Contracts and the accrued fees and expenses payable thereunder are more particularly set out below:
|
Party to Material Contract |
Accrued Fees & Expenses as at January 31, 2012 |
|
JRI Strategy Consultants Inc. |
$ 50,400 |
|
Resinco Capital Partners Inc. |
$153,440 |
|
Resinco Capital Partners Inc. (reimbursables) |
$50,666 |
|
TransPacific Capital (HK) Ltd. |
$120,000 |
|
TransPacific Capital (HK) Ltd. - to options |
$ 55,000 |
|
Tyson, Robert (expenses) |
$4,483 |
|
Resinco Capital Partners Inc. (loan payment pursuant to Loan Agreement) |
$ 260,000 |
|
Resinco Capital Partners Inc. (loan interest pursuant to Loan Agreement) |
$9,610 |
|
Resinco Capital Partners Inc. (loan premium pursuant to Loan Agreement) |
$25,000 |
|
Total |
$728,599 |
Schedule (V)
PROPERTY
Target Property and Target Mineral Rights
Yuty Property Concessions
Cue owns a 100% interest in the Yuty Project, a concession contract covering a uranium exploration property in southern Paraguay. The concession contract for exploration and exploitation was issued to Transandes in August 2008 by the government of Paraguay, in the form of an Act of Congress, under Legislative Branch Law #3575, valid for 20 years with subsequent five-year extensions.
The Yuty Project consists of four large mineral concessions covering a total area of 230,992 ha in southeastern Paraguay. The Yuty Project is located approximately 200 km southeast and east of Asunción, the Capital of Paraguay, and is near the town of Yuty. It is situated within the Districts of Fulgencio Yegros, Yuty and Leandro Oviedo, Departments of Cazaapá and Itapua. The four Yuty Project Concessions consist of:
1. Central Block (Block 1), covering 100,842 ha, the coordinates of which are more particularly set out below:
|
Universal Transverse Mercator ("UTM") Coordinates |
||
|
Corner |
East |
North |
|
A |
540,373 |
7,070,126 |
|
B |
581,108 |
7,070,126 |
|
C |
581,108 |
7,045,456 |
|
D |
540,373 |
7,045,456 |
Topographic charts: Mbuyapey 5568; Caazapa 5668; Santa Rosa de Misiones 5667 and General Artigas 5667.
2. Block No. 2, situated east of the Central Block, covering 48,200 ha, the coordinates of which are more particularly set out below:
|
UTM Coordinates |
||
|
Corner |
East |
North |
|
A |
576,000 |
7,070,126 |
|
B |
576,000 |
7,086,000 |
|
C |
596,000 |
7,086,000 |
|
D |
596,000 |
7,070,126 |
|
E |
590,000 |
7,070,126 |
|
F |
590,000 |
7,052,000 |
|
G |
581,108 |
7,052,000 |
|
H |
581,108 |
7,070,126 |
Topographic charts: Caazapa 5568; General Artigas 5667.
3. Block No. 3, covering 53,050 ha, the coordinates of which are more particularly set out below:
|
UTM Coordinates |
||
|
Corner |
East |
North |
|
A |
588,000 |
7,038,000 |
|
B |
585,000 |
7,024,000 |
|
C |
575,000 |
7,024,000 |
|
- |
- |
- |
|
E |
572,000 |
7,034,000 |
|
F |
572,000 |
7,040,000 |
|
G |
567,000 |
7,040,000 |
|
H |
567,000 |
7,045,456 |
|
I |
581,108 |
7,045,456 |
|
J |
581,108 |
7,038,000 |
Topographic charts: Caazapa 5568; General Artigas 5667.
4. Block No. 4, covering 28,900 ha, the coordinates of which are more particularly set out below:
|
UTM Coordinates |
||
|
Corner |
East |
North |
|
A |
581,000 |
7,086,000 |
|
B |
576,000 |
7,086,000 |
|
C |
576,000 |
7,082,000 |
|
- |
- |
- |
|
E |
553,000 |
7,124,000 |
|
F |
563,000 |
7,124,000 |
|
G |
563,000 |
7,095,500 |
|
H |
566,000 |
7,095,500 |
|
I |
566,000 |
7,088,000 |
|
J |
581,000 |
7,088,000 |
Topographic charts: Caazapa 5568; General Artigas 5667.
Schedule (V)(ii)
PERMITTED ENCUMBRANCES
1. The Republic of Paraguay is entitled to receive a 2.5% royalty on any future proceeds from production in the Yuty Project.
2. Pursuant to the Share Purchase Agreement, R&H are entitled to each of the following:
a. a one-time payment of U.S.$0.15 per pound of uranium determined in a pre-feasibility study on the Yuty Project, as more particularly set out in Section 1.1.4 of the Share Purchase Agreement;
b. a one-time payment of U.S.$0.06 per pound of uranium determined in one or more feasibility studies on the Yuty Project payable on the commencement of commercial production on the Yuty Project, as more particularly set out in Section 1.1.4 of the Share Purchase Agreement; and
c. a 2.5% royalty on any future proceeds from production in the Yuty Project less any royalties or taxes payable to the Republic of Paraguay, as more particularly set out in Schedule "A" to the Share Purchase Agreement.
Schedule (AA)
ENVIRONMENTAL MATTERS
Schedule (BB)
INSURANCE
Reference is made the following insurance policy of Cue:
1. Directors and Officers Liability Insurance Policy provided by Great American Insurance Group for the term of November 3, 2010 until February 3, 2012.
Schedule (GG)
BROKERS
As at January 20, 2012, Cue is in the process of engaging the Financial Advisor and fees are expected to be approximately $22,000.
-- End of Target Disclosure Letter --
__________