LETTER OF INTENT
THIS LETTER OF INTENT is made and entered into this 8th day of May, 1998,
by and between EUROGAS, INC., a Utah corporation ("EuroGas"), and BELMONT
RESOURCES, a publicly-held Canadian corporation organized under the laws of the
Province of British Columbia ("Belmont"), based on the following:
Recitals
A. EuroGas is a publicly held company that owns mineral interests in
Slovakia through a subsidiary in a project hereinafter known as Danube.
EuroGas' interest in the project is described in more detail in its annual
report filed with the United States Securities and Exchange Commission on Form
10-K for the period ended December 31, 1997.
B. In connection with the participation in the project, title questions
have been raised concerning Danube's rights to certain concession areas and
EuroGas' corresponding right to indemnity against certain parties known as the
Danube shareholders, all which is more particularly described in EuroGas' annual
report filed with the United States Securities and Exchange Commission on Form
10-K for the period ended December 31, 1997.
C. Maseva, s.r.o. ("Maseva"), a company registered in the business
registry of the district court in Slovakia, currently has the contract on this
disputed property and also has certain other rights which are of interest to
EuroGas ("Maseva Concession").
D. Belmont currently owns 90% of the Maseva Concession and has the right
to acquire the remaining 10%.
E. Subject to the terms and conditions set forth, this Agreement shall
allow EuroGas to acquire all of Belmont Resources' interest currently held and
to be acquired in Maseva and its underlying properties as described in Exhibit A
attached hereto.
Agreement
NOW THEREFORE, based upon foregoing recitals, which are incorporated herein
by this reference, and the information currently known to EuroGas, the parties
agree to enter into this Letter of Intent on the following principal terms and
conditions:
1. Exchange. In exchange for the all of Belmont's right, title and
interest in Maseva Concession and subject to the terms and conditions set forth
herein, EuroGas shall deliver to Belmont
(a) 2,500,000 shares of restricted common stock bearing the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). NO OFFER OR SALE OF THESE SECURITIES MAY BE
MADE IN THE UNITED STATES OR FOR THE BENEFIT OF A UNITED STATES PERSON
WITHOUT FURTHER REGISTRATION OR OTHER COMPLIANCE WITH THE SECURITIES
ACT."
(b) Warrants to purchase 2,500,000 shares of EuroGas common stock at
$5.00 per share for two years.
(c) Piggyback Registration Rights Agreement with volume restrictions
in a form to be agreed upon at closing.
(d) An agreement reserving to Belmont a 25% working interest in the
Maseva Concession with a provision that EuroGas carry Belmont's share of
the costs on the first two xxxxx drilled by EuroGas or assigns.
2. Conditions Precedent to the Completion of the Acquisition. Set forth
below are the conditions precedent that must be met prior to the completion and
closing of the agreement.
(a) EuroGas shall satisfactorily complete a legal due diligence
review of Belmont's ownership interest in Meseval and its right to assign
such interest.
(b) The execution of a definitive exchange agreement.
(c) The necessary approval of the Board of Directors of each company
and, if required, any regulatory approvals.
(d) The execution of a definitive registration rights agreement.
(e) Belmont has secured the remaining 10% of the Maseva Concession or
has made appropriate provisions for its future acquisition.
3. Date of Closing. The parties commit to work in good faith toward the
due diligence work, the negotiation, drafting, and execution of definitive
agreements on or before May 15, 1998, and to complete the closing on or before
June 15, 1998. If closing has not been completed by the 15th day of July, 1998,
this Agreement, unless the time for closing is extended in writing by EuroGas,
shall terminate.
4. Due Diligence Investigation. Subject to the terms of confidentiality
set forth in paragraph 5, Belmont agrees to afford EuroGas' employees, auditors,
investment advisors, legal counsel, and other authorized representatives
reasonable access to the properties, records, and personnel of Belmont as it
relates to this matter in order to review and investigate the business records
and legal documents of Belmont at the cost and expense of EuroGas.
5. Confidentiality. During the course of the legal due diligence review,
both EuroGas and Belmont may receive confidential and proprietary information
about the other. The parties agree that each of them shall at all times take
all reasonable and necessary steps to safeguard the confidentiality of
proprietary information of the other party disclosed by or on behalf of that
party in connection with the proposed transaction; that such information will be
used solely for the purposes of evaluating the proposed transaction; and that
such information will not be disclosed to any third party without the prior
written consent of the disclosing party. In the event the transaction is not
consummated, both parties agree to return all documents (and copies thereof)
containing such confidential information to each other (or certify to each other
as to the destruction of such documents and copies) and to continue to maintain
the confidentiality of all disclosed information.
6. Third Party Offers. In consideration of EuroGas' commitment to
immediately begin expending funds for the legal due diligence investigation, and
the negotiation and preparation of a definitive agreement respecting the
transaction in order to complete the transaction as quickly as practicable,
neither Belmont, nor its board of directors, officers, or affiliates will enter
into any agreement, solicit or encourage submission of proposals or offers, or
provide further information to any party with respect to the sale of the Project
without the consent of EuroGas, for a period of 75 days subsequent to the date
of this letter agreement. Belmont will immediately notify EuroGas of any offer
or proposal it receives, including the identity of the other party and the
specific terms of the offer or proposal.
7. Costs. Whether or not the transaction is consummated, each of the
parties will pay its respective costs and expenses associated with the
negotiation, preparation, execution, and delivery of the definitive agreements
and the consummation of the transaction.
8. Press Releases. No press releases shall be issued by Belmont without
the prior written consent of EuroGas which shall have the ability to review not
only the timing of any such press release also the content set forth therein.
The parties intend that the provision of this paragraph be fully binding
regardless of whether or not the transaction is consummated.
DATED as of the date first above written.
EuroGas:
By /s/ Xxxx Hinterthur
Duly Authorized Officer
Belmont:
BELMONT RESOURCES
By /s/ Vojetech Agyagos
Duly Authorized Officer
