Confidential

 

Limited Liability Company Members' Agreement

of

CIBOLA RESOURCES LLC

 

A Delaware Limited Liability Company

 

 

 

 

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LIMITED LIABILITY COMPANY MEMBERS' AGREEMENT

OF

CIBOLA RESOURCES LLC

                      This Limited Liability Company Members' Agreement (this
"Agreement" or this "LLC Members' Agreement") is made as of April 26, 2007 (the
"Effective Date"), by and between Neutron Energy, Inc., a Wyoming corporation
("NEI"), the address of which is 5320 N. 16th Street, Suite 114, Phoenix,
Arizona 85016-3421, and Uranium Energy Corporation, a Nevada corporation
("UEC"), the address of which is 6100 Indian School, N.E., Suite 225,
Albuquerque, New Mexico 87110.

RECITALS

          A.          NEI leases certain properties (the "Properties") in Cibola
County, New Mexico, which properties (1) as of the Effective Date are described
in Exhibit A and (2) are defined in Exhibit D, both Exhibits to the Limited
Liability Company Operating Agreement, by and between NEI and UEC, made as of
the Effective Date (the "LLC Operating Agreement").

          B.          UEC wishes to participate with NEI in the exploration,
evaluation and, if justified, the development and mining of mineral resources
within the Properties.

          C.          NEI and UEC wish to form and operate a limited liability
company under the Delaware Limited Liability Company Act, 6 Del.C. Section
18-101 et seq. (as amended from time-to- time heretofore and hereafter, the
"Act"), to hold the Properties and to conduct the operations thereon
contemplated by Recital B. The name of the limited liability company shall be
Cibola Resources LLC and its affairs shall be governed by this LLC Members'
Agreement and by the LLC Operating Agreement. All references in this LLC
Members' Agreement to "Agreement" shall refer to both the LLC Operating
Agreement and this LLC Members' Agreement unless the context requires otherwise.

NOW THEREFORE, in consideration of the covenants and conditions contained in the
Agreement, NEI and UEC agree as follows:

ARTICLE I

DEFINITIONS AND CROSS-REFERENCES

                    1.1          Definitions. Terms defined in this LLC Members'
Agreement shall have the defined meaning wherever used herein. Capitalized terms
used but not defined in this LLC Members' Agreement shall have the meanings
given thereto in the LLC Operating Agreement, including but not limited to
Exhibit D thereto.

                    1.2          Cross References. Unless otherwise indicated,
references in this LLC Members' Agreement to Exhibits are to Exhibits to the LLC
Operating Agreement. References in this LLC Members' Agreement to "Articles,"
"Sections" and "Subsections" are to Articles, Sections and Subsections hereof.
References herein to "Paragraphs" and "Subparagraphs" are to paragraphs and
subparagraphs of the Exhibits.

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ARTICLE II

CERTAIN MATTERS CONCERNING
CONTRIBUTIONS BY MEMBERS

                    2.1          Contributions. The Members, subject to any
elections permitted by the Agreement, shall be obligated to contribute funds to
the Company to fund adopted Programs and Budgets in proportion to their
respective Ownership Interests.

                    2.2          Emergency Expenditures. In case of emergency,
the Manager may take any reasonable action it deems necessary to protect life or
property, to protect the Assets or to comply with Law. The Manager may make
reasonable expenditures on behalf of the Company and the Members for unexpected
events that are beyond its reasonable control and that do not result from a
breach by it of Section 9.3 of the LLC Operating Agreement. The Manager shall
promptly notify the other Member of the emergency expenditure and the Members
shall promptly reimburse the Manager in proportion to their respective Ownership
Interests for all of the Manager's costs and expenses incurred pursuant to this
Section 2.2.

ARTICLE III

REPRESENTATIONS AND WARRANTIES; TITLE; LIMITATIONS OF LIABILITY; INDEMNITIES

                    3.1          Representations and Warranties of Each Member.

As of the Effective Date, each Member warrants and represents to the other that:

                                   (a)          it is a corporation duly
organized and in good standing in its state of incorporation and it is qualified
to transact business and is in good standing in New Mexico;

                                   (b)          it has the capacity to enter
into and perform the Agreement and all transactions contemplated by the
Agreement and all corporate, board of directors, shareholder, surface and
mineral rights owner, lessor, lessee and other actions and consents required to
authorize it to enter into and perform the Agreement have been properly taken or
obtained;

                                   (c)          it will not breach any other
agreement or arrangement by entering into or performing the Agreement;

                                   (d)          it is not subject to any
governmental order, judgment, decree, debarment, sanction or Law that would
preclude the permitting or implementation of Operations under the Agreement; and

                                   (e)          the Agreement has been duly
executed and delivered by it and is valid and binding upon it and enforceable
against it in accordance with its terms.

                    3.2          Representations and Warranties of NEI.

NEI represents and warrants to UEC that:

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                                   (a)          with respect to the Properties:
(i) NEI is in exclusive possession of a mineral leasehold interest in the
Properties identified in Paragraph 1.1 of Exhibit A; (ii) NEI has not received
any notice of default of any of the terms or provisions of the Mining Lease (as
defined in Section 2.6 of the LLC Operating Agreement); (iii) NEI has authority
under the Mining Lease to perform fully its obligations under the Agreement;
(iv) to NEI's knowledge, title to the mineral estate in the Property and title
to the Mining Lease is valid and in good standing, subject only to the matters
set forth in the title opinion of Rodey, Dickason, Sloan, Akin & Robb, P.A. to
NEI dated March 11, 2007 (the "Title Opinion"); (v) to NEI's knowledge, there
has been no act or omission or there exists no condition on the Properties which
could be considered or construed as a default under the Mining Lease; and (vi)
to NEI's knowledge, the mineral interest in such Properties is free and clear of
all Encumbrances or defects in title except any specifically identified in
Paragraph 1.1 of Exhibit A;

                                   (b)          NEI has provided and made
available to UEC the Title Opinion;

                                   (c)          NEI has delivered to or made
available for inspection by UEC all Existing Data in its possession or control
relating to the Properties and a true and correct copy of the Mining Lease;

                                   (d)          to NEI's knowledge, there are no
pending or threatened actions, suits, claims or proceedings, except that NEI
makes no representation or warranty with respect to the St. Anthony pits in
Sections 19 and 30, Township 11 North, Range 4 West, New Mexico Principal
Meridian, and there have been no previous transactions affecting its interests
in the Properties, which have not been for fair consideration; and

                                   (e)          except as to any matter that may
have been disclosed in writing to UEC prior to the Effective Date, NEI has not
received inquiry or notice of a pending investigation relating to the Properties
from any governmental agency or of any administrative or judicial proceeding
concerning the violation of any Law affecting the Properties.

                    The representations and warranties set forth in Sections 3.1
and 3.2 of this LLC Members' Agreement shall survive the execution and delivery
of any documents of Transfer provided under the Agreement. With respect to a
representation or warranty made to a Member's "knowledge," the term "knowledge"
means actual knowledge on the part of the officers of the representing Member.

                    3.3          Disclosures. Each Member represents and
warrants to the other Member that it is unaware of any material facts or
circumstances that have not been heretofore disclosed to the other Member which
should be so disclosed in order to prevent the representations and warranties in
set forth in the Agreement from being materially misleading. Each Member has
disclosed to the other Member all information the disclosing Member believes to
be relevant concerning the Assets and has provided to or made available for
inspection by the other Member all such information, but does not make any
representation or warranty, express or implied, as to the accuracy or
completeness of any such information (except as provided in Section 3.2) or as
to the boundaries or value of the Assets. Each Member represents to the other
Member that in negotiating and entering into the Agreement, it has relied solely
upon its own (i) judgment, (ii) evaluation of the Assets and (iii) geologic and
engineering interpretations related to the Assets.

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                    3.4          Loss of Title. Any failure or loss of title to
the Assets, and all costs of defending title thereto, shall be charged to the
Company, except that in the event of costs or losses arising out of or resulting
from any breach of the representations and warranties of a Member as to title,
the breaching Member shall indemnify the non-breaching Member for such costs and
losses. Neither Member shall have any obligation to reimburse the Company with
respect thereto except as may be otherwise expressly provided in the Agreement.

                    3.5          Limitations of Liability. Except as otherwise
expressly provided in the Agreement, neither Member shall (i) be required to
make any contribution to the capital of the Company nor (ii) in its capacity as
a Member or as Manager be bound by or liable for any debt, liability or
obligation of the Company, whether arising in contract, tort or otherwise. The
immediately foregoing sentence shall not limit any obligation of a Member to
indemnify the other Member as expressly provided in the Agreement. Neither
Member shall be under any obligation to restore a deficit Capital Account upon
the dissolution of the Company or the liquidation of its Ownership Interests.
Any obligation under the Agreement to contribute capital to the Company may be
changed by the written agreement of the Members, including but not limited to an
agreement by a Member to make payments directly to the other Member.

                    3.6          Indemnities. Subject to the limitations of the
Act, the Company shall indemnify, defend, save and hold harmless each Member,
each member of the Management Committee and the Manager (individually and
collectively, the "Indemnitee or Indemnitees") from and against all third party
claims, loss, cost, expense, damage or liability (including but not limited to
legal fees and other expenses) arising as a result of any act or omission,
except for willful misconduct or gross negligence, of such Indemnitee or
Indemnitees believed by such Indemnitee or Indemnitees in good faith to be
within the scope of authority conferred in accordance with the Agreement.

(a)          The rights granted pursuant to this Section 3.6 shall be deemed
contract rights, and no amendment or modification of this Section 3.6 shall have
the effect of limiting or denying any such right with respect to any act,
omission or proceeding prior to any such amendment or modification. Each Member
understands and acknowledges that the indemnities provided in this Section 3.6
could involve indemnification for negligence or strict liability.
Indemnification pursuant to this Section 3.6 shall apply only to matters not
otherwise compensated by insurance.

(b)          The rights to indemnification conferred in this Section 3.6 shall
include but are not limited to the right to be paid or reimbursed by the Company
for reasonable expenses incurred by the Indemnitee or Indemnitees who is, are or
were threatened to be made a defendant or respondent in a proceeding, in advance
of the final disposition of such proceeding, without any determination as to
such Indemnitee's or Indemnitees' ultimate entitlement to indemnification;
provided, however, that the payment of such expenses incurred in advance of
final disposition of a proceeding shall be made only upon delivery to the
Company of a written affirmation and agreement by such Indemnitee or Indemnitees
(i) of his, her or its good faith belief that he, she or it has met the standard
of conduct necessary for indemnification under this Section 3.6 and (ii) to
repay all amounts so advanced if it should ultimately be determined that such
Indemnitee or Indemnitees is or are not entitled to be indemnified under this
Section 3.6 or otherwise.

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(c)          The rights to indemnification and the advancement and payment of
expenses provided for in this Section 3.6 shall not be exclusive of any other
right which any Indemnitee or Indemnitees may have or hereafter acquire under
any Law, provision of the Agreement, vote of the Members or otherwise.

(d)          If this Section 3.6 or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, the Company shall
nevertheless indemnify and hold harmless any Indemnitee or Indemnitees for
costs, charges and expenses (including but not limited to legal fees and other
expenses), judgments, fines, and amounts incurred or paid in settlement of any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, to the full extent permitted by any part of this Section 3.6 that
shall not have been so invalidated and to the fullest extent permitted by Law.

(e)          To the extent the Company's assets are insufficient to fund any
indemnity to which any Indemnitee or Indemnitees is or are entitled pursuant to
this Section 3.6, the Members shall make capital contributions to the Company
(or if the Company has been terminated, directly to the Indemnitee or
Indemnitees) in proportion to their respective Ownership Interests to fund any
such indemnification obligations. In the case of Continuing Obligations, for
purposes of this Section 3.6, Ownership Interests shall be determined in
accordance with Section 4.2. Nothing in this Section 3.6 shall be deemed to
waive or diminish the limitations of liability provided by the Act.

ARTICLE IV

INTERESTS OF MEMBERS

                    4.1          Continuing Liabilities Upon Adjustments of
Ownership Interests. Any actual or deemed resignation of a Member or any
reduction of a Member's Ownership Interest shall not relieve such Member of its
share of any liability, whether accruing before or after such withdrawal or
reduction, arising out of Operations conducted or any other matter occurring
prior to such resignation or reduction, including without limitation,
Environmental Compliance and other Continuing Obligations. Should the cumulative
cost of satisfying any Continuing Obligation be in excess of cumulative amounts
accrued or otherwise charged to the Environmental Compliance Fund provided for
in Paragraph 2.14 of Exhibit B and should any Member be found liable therefore,
the Members shall make capital contributions to the Company (or if the Company
has been terminated, make payment directly to the Member found liable), in
proportion to their respective Ownership Interests, to fund any such Continuing
Obligations. For purposes of this Section 4.1, a Member's share of such
liability shall be equal to its Ownership Interest at the time that the
Operations or other matter giving rise to such liability occurred, after first
taking into account any prior reduction, readjustment and restoration of
Ownership Interests pursuant to Sections 4.4, 10.5, 10.6 or 11.5 of the LLC
Operating Agreement and notwithstanding that either Member has previously
resigned or been deemed to have resigned from the Company or that its Ownership
Interest has been reduced or converted to an interest in Net Proceeds pursuant
to Subsection 4.4(a) of the LLC Operating Agreement. Nothing in this Section 4.1
shall be deemed to waive or diminish the limitations of liability provided for
by the Act.

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                    4.2          Continuing Obligations Upon Termination. After
the dissolution, liquidation or termination of the Company, each Member shall
remain liable to the other Member, and shall indemnify such other Member for,
its proportionate share of any Continuing Obligations, including but not limited
to Environmental Liabilities, incurred by the liable and indemnifying Member
arising out of or relating to the Company and for any liability, whether
accruing before or after the dissolution, liquidation or termination of the
Company, arising out of Operations conducted or any other matter occurring prior
thereto. For purposes of this Section 4.2, a Member's share of such liability
shall be equal to its Ownership Interest at the time that the Operations or
other matter giving rise to such liability occurred, after first taking into
account any prior reduction, readjustment and restoration of Ownership Interests
pursuant to Section 4.4, 10.5, 10.6 or 11.5 of the LLC Operating Agreement and
notwithstanding that either Member has previously resigned or been deemed to
have resigned from the Company or that its Ownership Interest has been reduced
or converted to an interest in Net Proceeds pursuant to Subsection 4.4(a) of the
LLC Operating Agreement. Nothing in this Section 4.2 shall be deemed to waive or
diminish the limitations of liability provided for by the Act.

                    4.3          Grant of Lien and Security Interest.

                                   (a)          Subject to Section 4.4, each
Member grants the other Member a lien upon and a security interest in its
Ownership Interest, including but not limited to all of its rights, titles and
interests in the Assets, whenever acquired or arising, and proceeds from and
accessions to the foregoing.

                                   (b)          The liens and security interest
granted by Subsection 4.3(a) shall secure every obligation and liability under
the Agreement of the Member granting such liens and security interests to the
other Member, including but not limited to the obligation to repay a Cover
Payment pursuant to Section 11.4 of the LLC Operating Agreement. Each Member
shall take all action necessary to perfect and maintain such liens and security
interests and hereby appoints the other Member its attorney-in-fact to execute,
file and record all financing statements and other documents necessary or
appropriate to perfect or maintain such liens and security interests.

                    4.4          Subordination of Interests. Each Member shall
from time to time take all necessary or appropriate actions, including but not
limited to execution of appropriate agreements, to pledge and subordinate its
Ownership Interest, any liens and security interests it may hold created under
this Agreement other than those created pursuant to Section 4.3, and any other
rights or interests it holds with respect to the Company and the Assets (other
than any statutory lien of the Manager) to any secured borrowings approved by
the Management Committee, including but not limited to any secured borrowings
for Operations relating to Project Financing and any modifications or renewals
thereof.

ARTICLE V

RELATIONSHIP OF THE MEMBERS

                    5.1          Transfer or Termination of Rights. Neither
Member shall Transfer all or any part of its rights or obligations under the
Agreement except in conjunction with a Transfer or termination of such Member's
Ownership Interest permitted by the Agreement. Any such permitted Transfer shall
be subject to the consent requirements of Section 7.2 of the LLC Operating
Agreement. Nothing in this Section 5.1 requires that a Member's rights and
obligations under this Agreement be assigned in connection with the Transfer of
its Ownership Interest.

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                    5.2          Abandonment and Surrender. A Member that
abandons or surrenders all or part of its Ownership Interest or any other
rights, titles or interests under the Agreement or in the Assets pursuant to
Section 12.2 of the LLC Operating Agreement or otherwise shall remain liable to
the other Member for its share (determined by its Ownership Interest as of the
date of such abandonment or surrender, after first taking into account any
reduction, readjustment, and restoration of Ownership Interests under Sections
4.4, 10.5, 10.6 or 11.5 of the LLC Operating Agreement) of any liability under
the Agreement or with respect to the Assets, including but not limited to
Continuing Obligations, Environmental Liabilities and Environmental Compliance,
arising or accruing prior to the date of such abandonment or surrender,
regardless of when any funds may be expended to satisfy such liability. Except
to the extent expressly and specifically provided otherwise in the Agreement,
neither Member shall have any liability to the other with respect to matters
arising or accruing after the date of such abandonment or surrender.

                    5.3          Supplemental Business Arrangement. In the event
of a Supplemental Business Arrangement pursuant to Section 10.13 of the LLC
Operating Agreement, the Agreement shall apply to such business in the same
manner as provided for in the Agreement.

                    5.4          No Partnership or Implied Duties. The liability
of each Member shall be limited as provided in the Agreement and by the Act. The
Members intend that the Company not be a partnership (including but not limited
to a limited partnership) or joint venture and that no Member be deemed a
partner or joint venturer, except in connection with the tax partnership created
under the Agreement for federal and state tax purposes, and the Agreement shall
not be otherwise construed. Except as provided in the Agreement, a Member shall
take no part in the control, management, direction or operation of the affairs
of the Company and shall have no power to bind the Company in its capacity as a
Member.

                    5.5          No Waiver of Limited Liability; No Enforcement
by Third Parties. Notwithstanding anything in the Agreement to the contrary,
nothing contained in the Agreement shall be deemed to waive or reduce the
limitations on the liabilities of the Members provided by the Act and other Law.
NOTWITHSTANDING ANYTHING IN THE AGREEMENT TO THE CONTRARY, NEITHER THE COMPANY,
ANY CREDITOR, OR ANY OTHER PERSON OR ENTITY EXCEPT A MEMBER SHALL HAVE THE RIGHT
TO ENFORCE ANY OBLIGATION WHATSOEVER OF A MEMBER OR THE MANAGER HEREUNDER,
INCLUDING BUT NOT LIMITED TO ANY OBLIGATION TO CONTRIBUTE CAPITAL OR TO FUND
CONTINUING OBLIGATIONS, it being the intention of the Members that all such
obligations shall be enforceable only by a Member against the other Member.

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ARTICLE VI

ACQUISITIONS WITHIN AREA OF INTEREST

                    6.1          General. Any interest, or right to acquire any
interest, in real property or water rights, wholly or partially within the Area
of Interest, that is acquired or proposed to be acquired during the term of this
Agreement, by or on behalf of a Member or an Affiliate of the Acquiring Member
(both referred to herein as the "Acquiring Member"), shall be subject to the
terms and provisions of the Agreement. Each Member and any Affiliate shall be
free to acquire for their respective separate accounts real property or water
rights and interests in real property and water rights, and to locate mining
claims, millsite claims and tunnel claims, outside the Area of Interest. Failure
of any Affiliate of either Member to comply with this Article VI shall be deemed
a breach by such Member.

                    6.2          Notice to Non-Acquiring Member. Within sixty
(60) days after such acquisition or proposed acquisition of any interest, or
right to acquire any interest, in real property or water rights, wholly or
partially within the Area of Interest (except real property acquired by the
Manager pursuant to a Program), the Acquiring Member shall notify the other
Member of such acquisition or proposed acquisition; provided, that if the
acquisition or proposed acquisition pertains to real property or water rights
partially within the Area of Interest, then all such real property or water
rights (i.e., both the part within the Area of Interest and the part outside the
Area of Interest) shall be subject to this Article VI. The Acquiring Member's
notice shall describe in detail the acquisition or proposed acquisition, the
name of the acquiring party if the Acquiring Member is an Affiliate, the
interest or interests covered thereby, the cost thereof, and the reasons why the
Acquiring Member believes that the acquisition or proposed acquisition is in the
best interests of the Members. In addition to giving such notice, the Acquiring
Member shall make any and all information concerning the relevant interest or
interests available for inspection by the other Member.

                    6.3          Exercise of Rights. Within thirty (30) days
after receiving the Acquiring Member's notice, the other Member may notify the
Acquiring Member of the other Member's election to accept an interest in the
interest or interests acquired or proposed to be acquired proportionate to its
Ownership Interest at that time. Promptly upon such notice, the Acquiring Member
shall convey to the Members in proportion to their respective Ownership
Interests or to the Company (if so agreed by the Members), by special warranty
deed, all of the Acquiring Member's interest in such acquired interests, free
and clear of all Encumbrances arising by, through or under the Acquiring Member
other than those to which both Members have agreed. Immediately upon such
notice, the interests acquired or proposed to be acquired either shall be
subject to a Supplemental Business Arrangement, or, if conveyed to the Company,
shall become a part of the Assets. The other Member shall promptly pay to the
Acquiring Member the other Member's proportionate share of actual out-of-pocket
acquisition costs.

                    6.4          Option Not Exercised. If the other Member does
not give such notice within the thirty (30) day period set forth in Section 6.3
and promptly pay its proportionate share of the Acquiring Member's actual
out-of-pocket acquisition costs, the other Member shall have no interest in the
interests acquired or proposed to be acquired and such interests shall not be
part of the Assets or subject to the Agreement.

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                    6.5          Non-Compete Covenants. Neither a Member that
resigns or is deemed to have resigned pursuant to the Agreement, nor any
Affiliate of such Member, shall directly or indirectly acquire any property or
interest or right to conduct any operations on any property any part of which is
within the Area of Interest for one (1) year after the effective date of the
resignation or deemed resignation. If a resigning Member or any Affiliate
breaches this Section 6.5, such Member shall in writing offer (or cause its
Affiliate to offer) to convey to the non-resigning Member, without cost or
expense, any such property or interest so acquired. Such offer may be accepted
by the non-resigning Member at any time within ten (10) days after it receives
the offer Failure of a Member's Affiliate to comply with this Section 6.5 shall
be deemed a breach of the Agreement by such Member.

ARTICLE VII

DISPUTES

                    7.1          Governing Law. Except for matters relating to
title to or Transfer of the Properties, which matters shall be governed by the
law of New Mexico, the Agreement shall be governed by and interpreted in
accordance with the Act and the law of Delaware, without regard to any conflict
of law or choice of law principles that would permit or require the application
of the law of any other jurisdiction.

                    7.2          Exclusive Forum. Each Member (i) agrees that
the exclusive forum for any legal action arising out of or relating to the
Agreement shall be in the New Mexico State District Court in Cibola County, (ii)
consents to venue in such Court, (iii) agrees not to file any such action in any
other forum and that any such action filed in any other forum shall be summarily
dismissed, and (iv) waives any right it may have to assert the doctrine of forum
non conveniens or any similar doctrine or otherwise to object to venue in such
Court.

                    7.3          Dispute Resolution. All disputes arising under
or in connection with the Agreement which cannot be resolved by agreement
between the Members shall be resolved in accordance with Law. In any legal
action or other proceeding to enforce the Agreement, or brought because of a
dispute or an alleged breach, default or misrepresentation in connection with
any provision of the Agreement, the successful or substantially prevailing
Member shall be entitled to recover reasonable attorneys' fees and other costs
incurred in such action or proceeding, in addition to any other relief to which
it may be entitled.

ARTICLE VIII

GENERAL PROVISIONS

                    8.1          Notices. All notices, payments and other
required or permitted communications (collectively, "Notices") to a Member shall
be in writing and shall be addressed respectively as follows:

 

If to NEI:

Neutron Energy, Inc.
5320 N. 16th Street, Suite 114
Phoenix, AZ 85016-3421
Attention: Edward M. Topham, CFO
Telephone:  (602) 795-1664
Facsimile:  (602) 795-2663
Email:        etop@cox.net

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With a copy to:

Mark K. Adams
Amanda C. Sanchez
Rodey Law Firm
P.O. Box 1357
315 Paseo de Peralta
Santa Fe, NM 97504
Telephone:  (505) 954-3900
Facsimile:  (505) 954-3942
Email:  mkadams@rodey.com
             asanchez@rodey.com

 

If to UEC:

Uranium Energy Corporation
6100 Indian School Road, N.E.
Suite 225
Albuquerque, NM 87110
Attention:  Curtis O. Sealy. P.E.
Telephone:  (505) 830-7707
Facsimile:  (505) 830-6906
Email:  csealy@uraniumenergy.com

 

With a copy to:

Jon J. Indall
Joseph E. Manges
Comeau, Maldegen, Templeman & Indall
P.O. Box 669
Santa Fe, NM 87504-0669
Telephone: (505) 982-4611
Facsimile: (505) 988-2987
Email:  jindall@cmtisantafe.com
             jamanges@cmtisantafe.com

 

All Notices shall be given (a) by personal delivery to the Member or the
Manager, as the case may be; (b) by electronic communication, capable of
producing a printed record of transmission; (c) by registered or certified mail,
return receipt requested; or (d) by overnight or other express courier service.
All Notices shall be effective and shall be deemed given on the date received at
the address set forth above if received during normal business hours, and if not
received during normal business hours, on the next business day following
receipt. Either Member may change its address by Notice to the other Member.

                    8.2          Number and Gender. In the Agreement and
whenever the context so requires, the singular shall include the plural and the
plural the singular. The masculine, feminine, and neuter genders shall be
mutually inclusive.

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                    8.3          Currency. All references to "Dollars" or "$" in
the Agreement shall mean lawful currency of the United States of America.

                    8.4          Headings. The subject headings of Articles,
Sections, Subsections, Paragraphs and Subparagraphs are included in the
Agreement for convenience only and shall not affect the construction or
interpretation of any provision of the Agreement.

                    8.5          Waiver. The failure of either Member or the
Manager to insist on the strict performance of any provision of the Agreement or
to exercise any right, power or remedy upon a breach thereof shall not
constitute a waiver of any provision of the Agreement or limit such Member's or
the Manager's, as the case may be, rights thereafter to enforce any provision or
exercise any right.

                    8.6          Modification. No modification of the Agreement
shall be valid unless made in writing and duly executed by both Members.

                    8.7          Force Majeure. Except for the obligation to
make payments when due under the Agreement, the respective obligations of the
Members and the Manager shall be suspended to the extent and for the periods
that performance is prevented by any cause, whether foreseeable or
unforeseeable, beyond the reasonable control of such Member or the Manager, as
the case may be, including but not limited to labor disputes (however arising
and whether or not employee demands are reasonable or within the power of the
Member or the Manager to grant); acts of God; Laws, instructions or requests of
any government or governmental entity; decisions, judgments or orders of any
court or arbitrator; inability to obtain on reasonably acceptable terms any
public or private license, permit or other authorization; curtailment or
suspension of any activity to remedy or avoid an actual or alleged present or
prospective violation of Environmental Laws or other Law; action or inaction by
any federal, state or local agency that delays or prevents the issuance or
granting of any approval or authorization for Operations beyond the reasonable
expectations of the Member or the Manager seeking the approval or authorization
(including but not limited to a failure to complete any review and analysis
required by the National Environmental Policy Act or other Law within two (2)
years after initiation of that process); acts of war or conditions arising out
of or attributable to war, whether declared or undeclared; riot, civil strife,
insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink
holes, drought or other adverse weather or natural event; delay or failure by
suppliers or transporters of materials, parts, supplies, services or equipment
or by contractors or subcontractors; shortage of or inability to obtain labor,
transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; actions by
native rights, environmental, environmental justice, or similar groups; or any
other cause whether similar or dissimilar to the foregoing. The affected Member
or the Manager, as the case may be, shall promptly give Notice to the other
Member of the suspension of performance, stating therein the nature of the
suspension, the reasons therefor and the expected duration thereof. The affected
Member or the Manager, as the case may be, shall resume performance as soon as
reasonably practicable. During the period of suspension, the obligations of the
Members to advance funds pursuant to the Agreement shall be reduced to levels
consistent with then current Operations.

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                    8.8          Rule Against Perpetuities. The Members do not
intend that there shall be any violation of the Rule Against Perpetuities, the
Rule Against Unreasonable Restraints on Alienation of Property, or any similar
rule. Accordingly, if any right or option under the Agreement to acquire any
interest in the Properties, in an Ownership Interest, in the Assets, or in any
real property or water rights, such right or option must be exercised, if at
all, so as to vest such interest within time periods permitted by Law. If,
however, any such violation should inadvertently occur, the Members agree that a
court shall reform the Agreement in such a way as to approximate most closely
the intent of the Members within the limits permissible under Law.

                    8.9          Further Assurances. Each Member shall take from
time to time and without additional consideration such further actions and
execute such additional instruments as may be reasonably necessary or
appropriate to implement and carry out the intent and purpose of the Agreement
or as may be reasonably required by lenders in connection with Project
Financing.

                    8.10        Entire Agreement; Successors and Assigns. The
Agreement contains the entire understanding of the Members and supersedes all
prior agreements and understandings between the Members relating to the subject
matter thereof. The Agreement shall be binding upon and inure to the benefit of
the respective successors and permitted assigns of the Members.

                    8.11        Counterparts. The Agreement may be executed in
any number of counterparts and it shall not be necessary that the signatures of
both Members be contained on any one counterpart. Each counterpart shall be
deemed an original and all counterparts together shall constitute one and the
same instrument.

                    8.12        Indemnification and Insurance Limitations.

                                   (a) To the extent, if at all, that NMSA 1978,
Sec. 56-7-1, applies to the Agreement, including without limitation any Exhibit,
no provision requires or shall be construed or applied to require a Member or
the Manager to indemnify, hold harmless, insure or defend a Member or the
Company, or a Member's or the Company's employees and agents, or to name a
Member or the Company as an additional insured, against liability, claims,
damages, losses or expenses, including but not limited to attorney fees, arising
out of bodily injury to persons or damage to property, caused by or resulting
from, in whole or in part, the negligence, act or omission of the other Member,
the Manager or the Company, or the other Member's, the Manager's or the
Company's officers, employees or agents.

                                   (b) To the extent, if at all, that NMSA 1978,
Sec. 56-7-2, applies to the Agreement, including without limitation any Exhibit,
no agreement, covenant or promise contained in, collateral to or affecting the
Agreement, including without limitation any Exhibit, indemnifies or shall be
construed or applied to require a Member or the Manager to indemnify a Member,
the Manager or the Company against loss or liability for damages arising from
(i) the sole or concurrent negligence of the indemnitee or the agents or
employees of the indemnitee, (ii) the sole or concurrent negligence of an
independent contractor who is directly responsible to the indemnitee, or (iii)
an accident that occurs in operations carried on at the direction or under the
supervision of the indemnitee, an employee or representative of the indemnitee
or in accordance with methods and means specified by the indemnitee or employees
or representatives of the indemnitee.

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                                   (c) To the extent, if at all, that NMSA 1978,
Sec. 56-7-2 applies to the Agreement, including without limitation any Exhibit,
no provision in any insurance contract or indemnity agreement provided
thereunder naming a person or entity as an additional insured and no provision
in an insurance contract or other contract provided thereunder requiring a
waiver of rights of subrogation or otherwise having the effect of imposing a
duty of indemnification on the primary insured party, has the effect, or shall
be construed or applied to have the effect, of imposing a duty of
indemnification on the primary insured party against loss or liability for
damages arising from (i) the sole or concurrent negligence of another party or
the agents or employees of another party, (ii) the sole or concurrent negligence
of an independent contractor who is directly responsible to another party, or
(iii) an accident that occurs in operations carried on at the direction or under
the supervision of another party, an employee or representative of another party
or in accordance with methods and means specified by another party or employees
or representatives of another party.

          IN WITNESS WHEREOF, the parties hereto have executed the Agreement as
of the Effective Date.

NEUTRON ENERGY, INC.

By:       /s/ Kelsey Boltz, President               
             Kelsey Boltz, President

 

URANIUM ENERGY CORPORATION

By:       /s/ Harry L. Anthony                        
             Name: Harry L. Anthony
Title:     Chief Operation Officer

 

 

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