MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

6 Months Ended

Jun. 30, 2012

MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

10.MERGER AND FINANCING AGREEMENT WITH NEUTRON ENERGY

In March 2012, the Company executed a merger agreement to acquire 100% of the equity (the “Transaction”) of Neutron Energy, Inc. (“Neutron”). As part of the Transaction, Resource Capital Fund V L.P. (“RCF”) has agreed to provide $20 million in funding to retire the majority of Neutron’s outstanding debt owed to RMB Australia Holdings Limited (“RMB”). The remainder of Neutron debt owed to RCF will be converted into URI common stock, resulting in URI acquiring Neutron on a debt-free basis. The Transaction, which has been unanimously approved by the Boards of Directors of both URI and Neutron, is subject to shareholder approval of each company.  The special stockholder meetings for Neutron’s and URI’s stockholders to vote on the transaction are scheduled for August 23, and August 29, 2012, respectively.  Assuming shareholder approvals are received, the transaction is expected to close on or about August 31, 2012.

In connection with the Transaction, URI has also entered into an investment agreement with RCF pursuant to which RCF provided $10 million in funding to URI through the purchase of 10.3 million shares of the Company’s common stock. This $10 million capital infusion was completed on March 9, 2012. Upon closing of the Transaction, URI, at its option, can receive an additional $5 million in financing from RCF through the sale of additional shares of the Company’s common stock.

Under the terms of the credit and funding agreement, the Company has agreed to fund the operating and development budgets for Neutron, up to $4.5 million prior to the closing of the Transaction.  At June 30, 2012 the Company had provided $3.2 million to Neutron under the terms of the credit and funding agreement with such funding recorded as a note receivable. Repayment of the note receivable and accrued interest are due to the Company at the earliest of (i) the closing of the transaction, (ii) the termination of the merger agreement or (iii) October 31, 2012.  Interest on the amount funded accrues at the rate of LIBOR plus 7%.  Upon the closing of the transaction, the $3.2 million advanced to Neutron to date and any additional funding provided to Neutron prior to closing is expected to be recorded as an inter-company receivable by the Company and an inter-company payable by Neutron as such amounts are not projected to be repaid at the closing date.  Through August 3, 2012 the Company had provided a total of $3.2 million in funding under the terms of the credit and funding agreement.  In January and February, 2012, prior to the execution of the merger agreement, the Company purchased certain assets from Neutron for $200,000.