Exhibit 10.48

 

URANIUM MINING LEASE OPTION

 

STATE OF TEXAS

§

 

§

COUNTY OF KENEDY

§

 

THIS URANIUM MINING LEASE OPTION AGREEMENT (“this Agreement”), made and entered
into effective December 1, 2010 (the “Effective Date of this Agreement”), by and
between The John G. and Marie Stella Kenedy Memorial Foundation, herein called
“Grantor”, and URI, Inc., a Delaware corporation, its successors and assigns,
whose address is 641 East FM 1118, Kingsville, Texas, 78363, herein called
“Grantee”.

 

WITNESSETH

 

WHEREAS, upon the terms and conditions hereinafter set forth, Grantee desires to
secure the right to perform exploration activities on and to acquire an option
to acquire an In-Situ Uranium Mining Lease covering the lands located in Kenedy
County, described on Exhibit “A”, attached hereto and made a part hereof (the
“Option Premises”).

 

NOW, THEREFORE, for and in consideration of Ten ($10.00) dollars in hand paid,
and in consideration of and subject to the terms, conditions, covenants,
limitations and reservations contained in this agreement, the receipt and
sufficiency of which are acknowledged, Grantor and Grantee agree as follows,
to-wit:

 

1.  Definitions.  When used in this Option, the following capitalized terms have
the meaning specified:

 

“Adverse Environmental Event”  means any spill, release, discharge, or storage,
treatment, disposal, or any underground injection of any “Polluting Substance”,
or the violation of any “Environmental Protection Law”.  Such term also includes
any contamination of air, surface water, ground water, soil, subsurface or any
other natural resource.

 

“Affiliate” or “Affiliates” shall mean any person or entity that is a parent,
subsidiary, affiliate, venturer, partner, member of or with or otherwise related
to Grantee or whose ownership, operation, control or management is to any extent
in common with or related to Grantee.

 

“Drilling Operations” shall mean actual drilling operations with a drilling rig
rigged up and on location on the Option Premises, together with all attendant
equipment needed to drill an Exploration Well to the intended depth, where the
drill bit is below the surface of the ground.

 

“Environmental Protection Laws” means any and all applicable local, state, and
federal environmental laws; any regulations promulgated under such statutes; or
any other environmental statutes or regulations administered by the U.S.
Environmental Protection Agency, the U.S. Department of Transportation, the U.S.
Coast Guard, the U.S. Army Corps of Engineers, the U.S. Fish & Wildlife Service,
the National Oceanic and Atmospheric

 

1

--------------------------------------------------------------------------------

 

Administration, the Department of Commerce, the Department of the Interior, the
Council on Environmental Quality, the Texas Parks & Wildlife Department, the
Texas General Land Office, the Texas Water Commission, the Texas Air Control
Board, the Texas Railroad Commission, the Texas Department of Health, the Texas
Commission on Environmental Quality, or any successor to any such governmental
agency, and further including without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), the
Resource Conservation and Recovery Act of 1976 (“RCRA”), the Federal Water
Pollution Control Act (“Clean Water Act”), the Safe Drinking Water Act, the
Clean Air Act, the National Environmental Protection Act (“NEPA”), the Emergency
Planning and Community Right to Know Act, the Hazardous Materials Transportation
Act, the Uranium Mill Tailings Act, the Texas Water Code, the Texas Soil and
Waste Disposal Act, Railroad Commission of Texas Surface Mining and Reclamation
rules and regulations, and all Texas Commission on Environmental Quality
rules and regulations pertaining to uranium mining and exploration activities
and to the protection of natural resources, as those laws, rules and regulations
presently are in effect or are hereafter enacted or amended or interpreted by
legislative, judicial or administrative authority during the term of this
Agreement.

 

“Exploration Program” shall mean a staged drilling program designed to evaluate
a property for the presence of an economically recoverable uranium ore body. 
This program may encompass drilling, logging, access, reclamation and
restoration work, data analysis, geological and engineering evaluation,
permitting and any other associated activities necessary for evaluation of the
Option Premises.

 

“Exploration Well” shall mean any well drilled for the purposes of determining
the existence of favorable geologic environments for the formation of uranium
ore bodies or the existence of the ore bodies themselves.

 

“Lease Option”  shall mean Grantee’s option to enter into one or more In-Situ
Uranium Mining Leases as described in Section 4.

 

“Leased Substances”  shall mean uranium, uranium oxide, thorium, molybdenum,
vanadium and other fissionable or spatially associated substances similar to and
produced in conjunction therewith, and specifically excluding oil, gas and
associated hydrocarbon substances and coal, lignite, sand, gravel, rock and
caliche.

 

“NGO” shall mean any non-governmental organization.

 

“Option Premises” means the land upon which the Exploration Program will be
conducted as described in Exhibit A to this Agreement.  The land comprises all
of the Rita Division and a portion of the Jaboncillos Division of the lands of
the John G. and Marie Stella Kenedy Memorial Foundations lands in Kenedy County,
Texas.  Said lands are out of the Juan N De La Garza Survey, Abstract 36, “Los
Finados”, comprising 52, 024 acres, more or less, and a 1,500 acre tract
adjacent to its south side described as a portion of the Sarita Kenedy East, for
a total of 53,524 acres, more or less.

 

“Polluting Substance” means: a) any “hazardous substance” as defined by CERCLA;
b) any “hazardous waste” as defined in the RCRA; c) any petroleum, or petroleum
product or by-product; d) any polychlorinated biphenyl; e) any other pollutant
or contaminant or hazardous,

 

2

--------------------------------------------------------------------------------

 

dangerous or toxic chemical, material, waste or substance of any kind or
character regulated or within the meaning of any other Environmental Protection
Laws.

 

“RCT” shall mean the Railroad Commission of Texas.

 

“TCEQ” shall mean the Texas Commission on Environmental Quality.

 

“Water Supply Well” shall mean any Well that is used to supply water for
domestic, livestock, agricultural, or industrial purposes that is not used or
intended for use in uranium recovery or groundwater restoration operations as
provided for in this Agreement.

 

“Well” shall mean any excavation that is drilled, cored, bored, washed,
fractured, driven, dug, jetted, or otherwise constructed for the intended use of
locating, monitoring, dewatering, depressurizing, observing, diverting, or
acquiring groundwater, or for conducting pumping or aquifer tests.

 

2.  Exploration Rights.  Grantor does hereby GRANT UNTO Grantee and its
successors and assigns, to the extent, but only to the extent that Grantor has
the right and power to do so, the exclusive and irrevocable permit, right and
privilege, but only for the express purposes set out herein, for a period of 36
months, commencing as of the date appearing above, and ending at 5:00 p.m.
Corpus Christi time, on November 30, 2013 (the “Election Date”), to explore for
Leased Substances and to conduct or have conducted geological, geophysical, core
hole drilling and core analysis or other survey evaluation techniques of a
similar nature selected by Grantee to determine the possibility of the presence
of one or more deposits, structures and/or reservoirs favorable for the
accumulation and production of Leased Substances, insofar as said Leased
Substances are located in, under, or on all or any portion the Option Premises.

 

3.        Minimum Exploration Obligation.  Subject to relief granted under the
Force Majeure clause in Section 9, Grantee agrees to drill or cause to be
drilled a minimum of one hundred (100) Exploration Wells on the Option Premises
or to expend at least One Million Dollars ($1,000,000), whichever first occurs,
in conducting the Exploration Program prior to the first anniversary date of the
Effective Date of this Agreement.  Likewise, Grantee agrees to drill or cause to
be drilled an additional two hundred (200) Exploration Wells on the Option
Premises or to expend at least an additional One Million Five Hundred Thousand
Dollars ($1,500,000), whichever first occurs, in conducting the Exploration
Program prior to the second anniversary date of the Effective Date of this
Agreement.  Finally, Grantee agrees to drill or cause to be drilled an
additional two hundred (200) Exploration Wells on the Option Premises or to
expend at least an additional Two Million Dollars ($2,000,000), whichever first
occurs, in conducting the Exploration Program prior to the Election Date. 
Exploration Wells drilled in excess of the yearly requirements, and dollars
expended in excess of the yearly requirements shall count towards the next
year’s requirements.  Unless the Grantee has exercised the Lease Option as
provided for in Section 4 below, at each anniversary date following the
Effective Date of this Agreement, and subject to the following paragraph of this
Section, this Agreement, and all of Grantee’s rights hereunder, will
automatically terminate if Grantee has not met the minimum Exploration Well
drilling or dollar expenditure obligations set forth in this Section, provided

 

3

--------------------------------------------------------------------------------

 

however, that if Grantor agrees in writing that Grantee is actively advancing
the Exploration Program to Grantor’s satisfaction, this Agreement shall not
terminate.  Before each anniversary date of the Effective Date of this
Agreement, Grantee will evaluate the results of the Exploration Program, and
Grantee will furnish to Grantor a detailed statement identifying the number and
location of Exploration Wells drilled, along with all other expenditures
incurred attributable to the Exploration Program.  Grantee retains the right to
terminate this Agreement at any time, and in the event of such termination,
Grantee shall have no further obligation to drill any Exploration Wells or to
expend any additional amounts for the Exploration Program other than those
commitments for the year in which termination occurs, provided that Grantee’s
obligations to restore the Option Premises will survive termination of this
Agreement until and unless Grantee is fully released by the regulatory agency
having jurisdiction for restoration.  In the event of termination under the
provisions of this Section, Grantee will immediately furnish to Grantor a
release of this Agreement and will cause such release to be recorded in the
Official Records of Kenedy County, Texas.

 

If, as of any anniversary date of the Effective Date of this Agreement, a
shortfall in the required minimum drilling or monetary expenditure is
identified, and Grantee does not dispute the same, Grantee shall have thirty
(30) days to remedy such deficiency, either by completing the commitment or by
paying to Grantor the difference between the monetary amount required to meet
the commitment and the monetary amount actually expended on the Option Premises
for the applicable annual period.

 

4. Lease Option.  If Grantee is not in breach of any term, covenant or condition
of this Agreement, then Grantee shall have the right, but not the obligation, to
make an election at any time on or before the Election Date, to acquire one or
more In-Situ Uranium Mining Leases covering not less than 1000 acres each of the
Option Premises in the form of the In-Situ Uranium Mining Lease attached hereto
as Exhibit “B”, by (a) designating in writing the portion or portions of the
Option Premises to be included in the In-Situ Uranium Mining Lease(s),
(b) paying or tendering to Grantor the sum of Two Hundred Dollars ($200.00) per
acre for each acre included in the In-Situ Uranium Mining Lease(s) by cashier’s
check or by wire transfer (c) delivering a fully completed In-Situ Uranium
Mining Lease or Leases in the form as is attached hereto as Exhibit “B”,
complete with all blanks properly filled in and with a property description
containing a legal metes and bounds description for the portion of the Option
Premises to be covered by each Lease and (d) delivering a form of memorandum of
each In-Situ Uranium Mining Lease for recording, as provided in Section 23.3 of
Exhibit “B” (“Memorandum”) and a duly executed recordable release describing the
Option Premises not being leased.  If Grantee exercises the Lease Option, it
will be released from any further minimum exploration requirements as outlined
in Section 3 above.  It is agreed that the acreage to be included and covered in
each In-Situ Uranium Mining Lease shall be formed in such a manner so as to
include contiguous lands and not leave any strips or gores of unleased acreage. 
Furthermore, the acreage to be covered by each distinct In-Situ Uranium Mining
Lease must correspond to Grantee’s good faith assessment of one or more distinct
Production Areas capable of being developed under a unified and coordinated mine
plan or logical mining unit.  Grantee agrees to consult in advance with Grantor
in the designation of acreage to be assigned to any In-Situ Uranium Mining
Lease(s) acquired hereunder, so that the lease or leases acquired hereunder are
designated in a manner that prohibits Grantee from “warehousing” acreage without
conducting actual

 

4

--------------------------------------------------------------------------------

 

development and production of Leased Substances.  The written designation shall
be by instrument prepared and signed by Grantee, stating that Grantee has
elected to exercise the Lease Option to obtain one or more In-Situ Uranium
Mining Leases and containing such other statements, terms, covenants and
conditions as are appropriate to such election.  Such designation and the
payment of such sum of money may be either hand delivered to Grantor or mailed
to Grantor at the address provided above by Certified Mail, Return Receipt
Request, postage prepaid, deposited with the U.S. Postal Service, or delivered
by reputable overnight courier.  Upon such timely and proper election by
Grantee, that includes (a) designation in writing of the portion of the Option
Premises to be included in the In-Situ Mining Lease, and (b) the proper and
timely payment of the full bonus money required, (c) the delivery of the In-Situ
Uranium Mining Lease(s)  and Memoranda thereof that are fully and completely
filled out with a proper metes and bounds legal description, Grantor shall
immediately execute said In-Situ Uranium Mining Lease(s)  and Memoranda, dated
as of the date Grantor receives all of the four above-required items required to
elect to exercise this Lease Option and deliver same to Grantee.

 

5.  Damages to Pasture Lands.  Grantee shall pay to Grantor the sum of One
Hundred Dollars ($100.00) for each Exploration Well drilled on any portion of
the Option Premises as damages for surface damages caused by the drilling of
each Exploration Well, including, without limitation, subsidence and any damage
to pasture resulting from such operations.  In addition to the above, Grantee
shall, as much as is reasonably possible, restore the land back to its original
condition within sixty (60) days of the drilling of each Exploration Well.  In
the event Grantee fails to restore the land as required, Grantee shall pay
Grantor any actual damages it incurs as the result of the failure to restore.
Such payment shall be in addition to any other payment required above in this
Section.

 

6.  Damages to Crop Lands.  In addition to the damages described in Section 5
above, Grantee shall pay to the Grantor the sum of Two Hundred Fifty Dollars
($250.00) for each acre, or a proportionate amount for each fraction of an acre,
of then-growing crops which are damaged by virtue of Grantee’s operations in
drilling any such Exploration Well.  “Crops” shall mean planted and cultivated
crops to be harvested from the Option Premises, such as, but not limited to,
wheat, corn, milo, hay and alfalfa, but excluding naturally growing vegetation
used solely for onsite livestock grazing or ground cover.  Such crop damages
shall be reduced by the amount of Exploration Well damages that have already
been paid within the crop damage acreage.  In addition to the above, Grantee
shall, as much as is reasonably possible, restore the land back to as near its
original condition as is reasonably possible within sixty (60) days of the
drilling of each Exploration Well.  In the event Grantee fails to restore the
land as required, Grantee shall pay Grantor any actual damages it incurs as the
result of the failure to restore. Such payment shall be in addition to any other
payment required above in this Section.

 

7. INDEMNITY, RELEASE, INSURANCE AND WAIVERS

 

7.1 INDEMNITY. GRANTEE SHALL INDEMNIFY AND HOLD HARMLESS GRANTOR, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, REPRESENTATIVES, SUCCESSORS, AND ASSIGNS (THE
“INDEMNIFIED PERSONS”), AGAINST ANY AND ALL EXPENSES, CLAIMS, DEMANDS, CAUSES OF
ACTION, JUDGMENTS, LIABILITIES, FINES, LIENS, PENALTIES, AND

 

5

--------------------------------------------------------------------------------

 

CAUSES OF ACTION OF ANY NATURE OR INJURY TO OR DEATH OF PERSONS (INCLUDING
DEATHS OF OR INJURIES TO EMPLOYEES, AGENTS, CONTRACTORS,
SUBCONTRACTORS, INVITEES AND PERMITEES OF GRANTEE) AND/OR LOSS OR DAMAGE TO
PROPERTY INCLUDING, WITHOUT LIMITATION, ATTORNEY’S FEES, EXPERT’S FEES, AND
COURT COSTS (“INDEMNIFIED LIABILITIES”) DIRECTLY OR INDIRECTLY ARISING OUT OF,
CAUSED BY, OR RESULTING FROM (IN WHOLE OR IN PART) THE FOLLOWING ACTS OR
OMISSIONS INCLUDING NEGLIGENCE AND WILLFUL MISCONDUCT, ON THE GRANTOR’S PROPERTY
DURING OR UNDER THE TERMS OF THIS AGREEMENT:

 

(A) THE CONDITION OF THE OPTION PREMISES,

 

(B) ANY ACTS OR OMISSIONS OF GRANTEE, OR OF GRANTEE’S SUCCESSORS OR ASSIGNS, OR
OF EMPLOYEES, AGENTS, INVITEES, OR CONTRACTORS OF ANY OF SUCH PERSONS,

 

(C) ANY VIOLATION OF ANY LAWS, RULES OR REGULATIONS BY GRANTEE, OR BY GRANTEE’S
SUCCESSORS OR ASSIGNS, OR BY EMPLOYEES, AGENTS, INVITEES, OR CONTRACTORS OF ANY
OF SUCH PERSONS,

 

(D) THE VIOLATION BY GRANTEE OF THE RIGHTS OF HOLDERS OF RIGHTS OR INTERESTS IN
THE OPTION PREMISES, OR

 

(E) THE DISCLOSURE BY GRANTEE OF DATA, ANALYSES OR INFORMATION PERTAINING TO THE
OPTION PREMISES OBTAINED BY, THROUGH, OR UNDER GRANTEE, OR OF INTERPRETATIONS
THEREOF, BY, THROUGH OR UNDER GRANTEE, EVEN IF THE INDEMNIFIED LIABILITIES ARE
CAUSED IN PART BY OR DUE TO THE PARTIAL OR CONCURRENT NEGLIGENCE OR STRICT
LIABILITY OF AN INDEMNIFIED PERSON.  GRANTEE’S OBLIGATION TO INDEMNIFY THE
INDEMNIFIED PERSONS DOES NOT COVER LIABILITIES RESULTING FROM THE SOLE
NEGLIGENCE OR SOLE WILLFUL MISCONDUCT OF AN INDEMNIFIED PERSON.

 

GRANTOR SHALL ADVISE GRANTEE IN WRITING OF ANY ACTION, ADMINISTRATIVE OR LEGAL
PROCEEDING OR INVESTIGATION AS TO WHICH THIS INDEMNIFICATION MAY APPLY WITHIN 10
DAYS OF GRANTOR’S RECEIPT OF NOTICE OF ANY SUCH ACTION, PROCEEDING OR
INVESTIGATION.  HOWEVER, THE INDEMNIFIED PERSONS’ FAILURE TO NOTIFY GRANTEE
WITHIN SUCH 10 DAY PERIOD WILL NOT AFFECT THE INDEMNIFIED PERSONS’ RIGHTS, NOR
THE GRANTEE’S OBLIGATIONS, PROVIDED THE INDEMNIFIED PERSONS USE THEIR GOOD FAITH
EFFORTS TO GIVE GRANTEE NOTICE.  GRANTEE, AT GRANTEE’S EXPENSE, SHALL ASSUME ON
BEHALF OF THE INDEMNIFIED PERSONS AND CONDUCT WITH DUE

 

6

--------------------------------------------------------------------------------

 

DILIGENCE AND IN GOOD FAITH, THE DEFENSE THEREOF WITH COUNSEL SATISFACTORY TO
GRANTOR; PROVIDED, HOWEVER, THAT THE INDEMNIFIED PERSONS SHALL HAVE THE RIGHT,
AT ITS OPTION, TO BE REPRESENTED THEREIN BY ADVISORY COUNSEL OF SUCH PERSON’S
SELECTION AND AT SUCH PERSON’S OWN EXPENSE.  IN THE EVENT OF THE FAILURE BY
GRANTEE TO FULLY PERFORM IN ACCORDANCE WITH THIS INDEMNIFICATION, THE
INDEMNIFIED PERSONS MAY SO PERFORM, BUT ALL COSTS AND EXPENSES SO INCURRED BY
THE INDEMNIFIED PERSONS IN THAT EVENT SHALL BE REIMBURSED BY GRANTEE TO THE
INDEMNIFIED PERSONS, TOGETHER WITH INTEREST ON THE SAME FROM THE DATE ANY SUCH
EXPENSE WAS PAID BY AN INDEMNIFIED PERSON UNTIL REIMBURSED AT THE RATE OF 18%
PER ANNUM OR THE MAXIMUM RATED PROVIDED BY LAW, WHICHEVER IS LESS.  THIS
INDEMNIFICATION SHALL NOT BE LIMITED TO DAMAGES, COMPENSATION OR BENEFITS
PAYABLE UNDER INSURANCE POLICIES, WORKERS’ COMPENSATION ACTS, DISABILITY BENEFIT
ACTS OR OTHER EMPLOYEES’ BENEFIT ACTS.  THIS SECTION SHALL SURVIVE THE
TERMINATION OR RELEASE OF THIS AGREEMENT IN WHOLE OR IN PART.

 

7.2       RELEASE.

 

A.                                    GRANTEE RELEASES GRANTOR, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, TENANTS, SUCCESSORS AND ASSIGNS (“RELEASED
PERSONS”) FROM ALL LIABILITY FOR ANY DAMAGE OR INJURY GRANTEE, GRANTEE’S
SUCCESSORS OR ASSIGNS, OR ANY EMPLOYEES, AGENTS, INVITEES, OR CONTRACTORS OF ANY
OF SUCH PERSONS, MAY SUSTAIN FROM ANY AND ALL SOURCES OR CAUSES EXCEPT TO THE
EXTENT, SUCH DAMAGE OR INJURY IS PROXIMATELY CAUSED BY THE SOLE GROSS NEGLIGENCE
OR SOLE WILLFUL MISCONDUCT OF A RELEASED PERSON.  GRANTEE WAIVES ALL RIGHT TO
RECOVER FOR CONSEQUENTIAL, PUNITIVE AND/OR EXEMPLARY DAMAGES, UNLESS SUCH WAIVER
IS SPECIFICALLY PROHIBITED BY STATUTE, WITH RESPECT TO ANY CAUSES OF ACTION
WHICH MAY ARISE AGAINST A RELEASED PERSON OR ON OR AFTER THE DATE HEREOF. THIS
SECTION SHALL SURVIVE THE TERMINATION OR RELEASE OF THIS AGREEMENT IN WHOLE OR
IN PART.

 

7.3 ENVIRONMENTAL INDEMNITY. GRANTEE SHALL COMPLY WITH ALL APPLICABLE LAWS NOW
IN EFFECT OR HEREINAFTER ENACTED, INCLUDING ENVIRONMENTAL PROTECTION LAWS. 
GRANTEE TAKES FULL RESPONSIBILITY FOR ALL CLEANUP COSTS AND DAMAGES AS A RESULT
OF ANY AND ALL “ADVERSE ENVIRONMENTAL EVENTS” ARISING OUT OF THE ACTS OR
OMISSIONS OF GRANTEE, OR OF GRANTEE’S SUCCESSORS OR ASSIGNS, OR OF EMPLOYEES,
AGENTS, INVITEES, CONTRACTORS OR SUBCONTRACTORS OF ANY SUCH PERSONS.

 

GRANTEE SHALL BE RESPONSIBLE FOR AND SHALL INDEMNIFY AND

 

7

--------------------------------------------------------------------------------

 

HOLD THE INDEMNIFIED PERSONS HARMLESS FOR ALL COSTS, EXPENSES, AND LIABILITY
RELATING OR ARISING IN ANY WAY WHATSOEVER FROM AN ADVERSE ENVIRONMENTAL EVENT
AFFECTING THE OPTION PREMISES OR ADJACENT LAND ARISING OUT OF THE ACTS OR
OMISSIONS OF GRANTEE, OR OF GRANTEE’S SUCCESSORS OR ASSIGNS, OR OF EMPLOYEES,
AGENTS, INVITEES, CONTRACTORS OR SUBCONTRACTORS OF ANY SUCH PERSONS. SUCH
INDEMNIFICATION INCLUDES ALL ACTIONS, LIABILITIES, CLAIMS, DAMAGES (INCLUDING
CONSEQUENTIAL DAMAGES), FINES, LIENS, PENALTIES, FORFEITURES, ADMINISTRATIVE AND
JUDICIAL PROCEEDINGS, AND THE COSTS AND EXPENSES INCIDENT THERETO (INCLUDING
COSTS OF DEFENSE, SETTLEMENT, AND REASONABLE INVESTIGATION AND EXPERT WITNESS
AND ATTORNEY’S FEES), CHARGES, ORDERS, REMEDIAL ACTIONS, REQUIREMENTS, AND
ENFORCEMENT ACTIONS OF ANY KIND, WHETHER FORESEEABLE OR UNFORESEEABLE, WHICH
GRANTOR MAY HEREINAFTER INCUR OR BE PARTY TO, BECOME RESPONSIBLE FOR OR PAY OUT
AS A RESULT OF DEATH OR BODILY INJURY TO ANY PERSON, DESTRUCTION OR DAMAGE TO
ANY PROPERTY, CONTAMINATION OF OR ADVERSE EFFECTS ON THE ENVIRONMENT, ANY
VIOLATION OF ANY APPLICABLE LAW, RULE OR REGULATION PROMULGATED BY ANY LOCAL,
STATE OR FEDERAL AGENCY OR ENTITY HAVING JURISDICTION OVER SUCH
MATTERS, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL PROTECTION LAWS.

 

THIS INDEMNITY SHALL FURTHER APPLY TO ANY RESIDUAL CONTAMINATION RESULTING FROM
THE ACTIVITIES OF GRANTEE, GRANTEE’S SUCCESSORS OR ASSIGNS, OR OF EMPLOYEES,
AGENTS, INVITEES, CONTRACTORS OR SUBCONTRACTORS OF ANY SUCH PERSONS, OR OTHER
PERSONS ON THE OPTION PREMISES OR ADJACENT LANDS ACTING ON BEHALF OF GRANTEE, OR
AFFECTING ANY NATURAL RESOURCES THEREIN, AND TO ANY CONTAMINATION OF ANY PART OF
THE GRANTOR’S LAND, THE OPTION PREMISES, LANDS ADJACENT TO THE OPTION PREMISES,
OR NATURAL RESOURCES.

 

GRANTOR SHALL NOTIFY GRANTEE OF ANY CLAIMS OR DEMANDS ASSERTED AGAINST GRANTOR
FOR WHICH GRANTOR MAY SEEK INDEMNITY FROM GRANTEE HEREUNDER WITHIN 10 DAYS OF
GRANTOR’S RECEIPT OF NOTICE OF ANY SUCH CLAIM OR DEMAND.  HOWEVER, THE
INDEMNIFIED PERSONS’ FAILURE TO NOTIFY GRANTEE WITHIN SUCH 10 DAY PERIOD WILL
NOT AFFECT THE INDEMNIFIED PERSONS’ RIGHTS, NOR THE GRANTEE’S OBLIGATIONS,
PROVIDED THE INDEMNIFIED PERSONS USE THEIR GOOD FAITH EFFORTS TO GIVE GRANTEE
SUCH NOTICE.  THIS SECTION SHALL SURVIVE THE TERMINATION OR RELEASE OF THIS
AGREEMENT IN WHOLE OR IN PART.

 

7.4  Insurance. Grantee agrees to obtain and maintain at Grantee’s sole cost and
expense, commercial general liability insurance; business auto liability
insurance; and workman’s compensation insurance and employers liability
insurance on its employees.  Such commercial

 

8

--------------------------------------------------------------------------------

 

general liability insurance shall be written on an ISO occurrence most current
form (or a substitute form providing equivalent coverage), and shall cover
liability from premises, operations, independent contractors, products-completed
operations, personal injury and advertising injury, and liability assumed under
an insured contract; shall provide for insured limits for bodily injury or death
of not less than $10,000,000 per occurrence limit (if such commercial general
liability insurance contains a general aggregate limit, it shall apply
separately to the Option Premises); and shall name Grantor as an additional
insured using an ISO additional insured endorsement (or a substitute providing
equivalent coverage).  Such business auto liability insurance shall cover
liability arising out of any auto (including owned, hired, and non-owned autos)
and shall be written on ISO form (or a substitute form providing equivalent
liability coverage), and, if necessary shall be endorsed to provide contractual
liability coverage equivalent to that provided in the 1990 and later editions of
CA 00-01.  Workman’s compensation insurance shall be for the statutory limits.

 

Grantee shall furnish to Grantor, prior to conducting any activities on the
Option Premises certificates of such insurance issued by insurance companies
reasonably acceptable to Grantor, which companies shall be licensed to do
business in the State of Texas.

 

The policies shall contain severability of interest endorsements, state that the
insurance is primary insurance as regards any other insurance carried by
Grantor, and shall include a waiver of subrogation in favor of Grantor and its
officers, directors, employees, tenants, and agents. Such insurance shall state
that Grantor will be notified in writing 30 days prior to cancellation, material
change, or non-renewal of insurance.  Grantee shall provide to Grantor a
certified copy of any and all applicable insurance policies upon request of
Grantor. Timely renewal certificates will be provided as the coverage renews. 
Grantee agrees that if such insurance policies are not kept in force during the
entire term of this Agreement, Grantor may, but is not obligated to, procure the
necessary insurance and pay the premiums therefor.  Grantee agrees that such
premiums shall be repaid to Grantor on demand.

 

All contractors hired by Grantee that will enter on the Option Premises shall
also provide insurance complying with these insurance coverage requirements,
including providing Grantor with a certificate of insurance verifying coverages
required hereby and naming Grantor as additional insured prior to entering upon
the Option Premises.  Alternatively, Grantee shall provide Grantor with written
evidence from its insurance carriers that Grantee’s required insurance
adequately covers the actions and property of such contractors, and supports all
of Grantee’s indemnification obligations with respect to the actions of such
contractors.

 

7.6  Waiver of Subrogation. Grantee will have no right or claim against Grantor
or its officers, directors, employees, tenants, for any matter covered by
Grantee’s insurance (whether caused by negligence of any of such persons or the
condition of the Option Premises) by way of subrogation or assignment.  Grantee
hereby waives any such right. Grantee shall require its insurance carrier to
endorse all applicable policies waiving the carrier’s right of recovery under
subrogation or other right or claim that might be asserted against Grantor, and
to provide Grantor a certificate of insurance verifying this waiver.

 

9

--------------------------------------------------------------------------------

 

8.0  Miscellaneous.

 

8.1                                 Timeliness.  Time is of the essence for all
purposes of this Agreement and its attachments.

 

8.2                                 Payments.  All payments remain hereunder to
Grantor, including the option payment, shall be paid to Grantor at 555 North
Carancahua, Suite 1700 Tower II, Corpus Christi, Texas 78478.

 

8.3                                 Notices.  All notices and documents required
to be delivered hereunder shall be delivered in person, by reputable overnight
courier service (such as FedEx or UPS) or by registered U.S. Mail, return
receipt requested, postage prepaid, to the following addresses:

 

If to Grantor:

 

The John G. and Marie Stella Kenedy Memorial Foundation

555 North Carancahua, Suite 1700 Tower II

Corpus Christi, Texas 78401

Attn:  Marc A. Cisneros,

CEO/Executive Vice President

 

If to Grantee:

 

URI, Inc.

641 East FM 1118

Kingsville, Texas  78363

Attn:  Richard A. Van Horn

Senior Vice President — Operations

 

with a copy to:

 

Uranium Resources, Inc.

405 State Highway Bypass 121,

Building A, Suite 110

Lewisville, TX  75067

Attn:  Corporate Secretary

 

or to such other address as the parties may designate by notice in accordance
therewith; and such notices may be effective when received or five (5) days
after mailing to the last known correct address, proper postage prepaid,
whichever is earlier.

 

8.4                                 Other Leases and Easements.  This Agreement
is subject to all existing valid and effective oil, gas and/or minerals leases,
easements, wind easements, restrictions, liens and encumbrances burdening the
Option Premises regardless of whether or not visible on the ground and/or shown
and reflected by instruments of record in Kenedy County, Texas, to which, where
applicable, reference is here made for all purposes.

 

10

--------------------------------------------------------------------------------

  

8.5                                 Roads. All travel by Grantee and its agents,
employees, contractors, sub-contractors, invitees and permittees, shall be as
much as possible on current ranch roads unless instructed otherwise. Grantee
shall be responsible for any damages to ranch roads and agrees to make repairs
and restore all roads promptly following any damage.  Grantor reserves the right
to fully use and enjoy said lands and roads.  Immediately after Grantee has
completed its operations on the surface of the lands, it shall restore the
surface of the ground to as near as practicable the original condition. 
Grantee, to the extent it is necessary to travel off-road, shall have the right
to construct temporary roads as necessary and shall use every reasonable effort
not to pack, compress or rut the ground and shall restore same to as near as
practicable its original condition. In conducting clearing operations for
temporary roads, Grantee shall clear senderos with a hydro-axe (wood gator)
capable of mulching all brush cleared, and Grantee may use no other equipment
for such activities.  All cleared limbs and scrub brush will be stack mulched
and the windrows of mulched material shall be spread evenly over all such
cleared areas in an effort to control erosion.  No windrowing of brush and
debris along the edge of the cleared lines shall be allowed.  Grantee agrees to
restore the surface of the portion of the Option Premises used by Grantee as
nearly as reasonably practicable to the same condition as it was in before the
commencement of such operations.

 

8.6                                 Fences.  Grantee will not cut or go over any
fence or fences of Grantor at any time or in connection with any operation under
this Agreement without first obtaining Grantor’s express consent thereto in
writing.  If Grantor consents to the cutting of any fence, the cut must be made
in the place and manner designated by the Grantor and prior to the cutting of
any fence of Grantor, Grantee will brace the existing fence adequately on both
sides of the proposed cut so there will no slack in any of the wires.  Promptly
after making such cut Grantee shall and maintain an adequate metal gate in such
opening. In the event any gate required to be installed by Grantee is located on
an outside fence of Grantor, Grantee shall keep it locked at all times. Grantee
shall promptly close all gates, which Grantee, its agents, servants, employees,
permittees, contractors, sub-contractors or licensees may use in Grantee’s
operations on the Option Premises to prevent the escape of any cattle or other
livestock (or wildlife if high fenced) through any open gates. Grantee further
agrees to comply with all reasonable rules and regulations proposed by Grantor
regarding the opening, closing and locking of all such gates.

 

8.7                                 Well Offset.  No exploratory test well,
development test well or production hole shall be drilled within one thousand
(1,000) feet of any house, barn or any other structure situated on the Option
Premises as of the date of Grantee’s operations, or within one thousand (1,000)
feet of any water well or similar improvement or corrals on said lands without
Grantor’s prior written consent.

 

8.8                                 Maps.  Grantee shall furnish to Grantor a
map (including GPS coordinates) showing the location and depth of all
exploratory test holes, electronic copies of all test hole data, well logs, and
any other tests or core analysis taken as well as any and all technical
information, analysis, reports and summaries thereof.  Grantor acknowledges that
Grantee makes no representation or warranty as to the accuracy, correctness or
completeness of any data supplied to Grantor pursuant to this Section.

 

11

--------------------------------------------------------------------------------

 

8.9                                 Confidential Information.  To the extent any
information obtained by Grantor in connection with this Agreement is
“Confidential Information” as described herein, the Confidential Information
will be kept confidential until the occurrence of the earlier of: (a) the point
in time such information is released by Grantee into the public domain; or
(b) termination of Grantee’s rights to all or any portion of the Option
Premises, provided that in the event Grantee’s rights terminate as to some, but
not all of the Option Premises, Grantor will preserve the confidentiality of all
Confidential Information attributable to that portion of the Option Premises
where Grantee retains rights under this Agreement or any In-Situ Uranium Mining
Lease acquired by Grantee hereunder until such time as Grantee’s rights
terminate as to such lands.  During said period of time the Confidential
Information shall not, without Grantee’s prior written consent, be disclosed by
Grantor to third parties in any manner whatsoever, in whole or in part, other
than by Grantor to its board of directors, officers, attorneys, agents,
representatives, consultants or employees, except as specifically allowed or
authorized under the terms of this Agreement.  Grantor shall be obligated to
require authorized recipients of Confidential Information pursuant to the
foregoing sentence to maintain such information as confidential in accordance
with this Section.

 

The term “Confidential Information” shall include all information required to be
delivered to Grantor under this Agreement that pertains to the Option Premises,
except it shall not include any information or any portion of the such
information that: (i) is now or hereafter becomes available to Grantor or anyone
else on a non-confidential basis; (ii) is already in Grantor’s possession and
not subject to a confidentiality agreement with Grantee or a third party;
(iii) is not held as confidential by Grantee; (iv) is filed with or is required
to be filed with a governmental or regulatory agency, commission or department;
or (v) is obtained pursuant to discovery under the Texas or Federal Rules of
Evidence in any future lawsuit.

 

In the event that Grantor or any of its attorneys, agents, representatives,
consultants or employees becomes legally compelled, or required by law, rule or
regulation to disclose any of the Confidential Information, said person or
entity being legally compelled or required to provide such Confidential
Information, will, to the extent reasonably possible or practicable, provide
Grantee with prompt notice so that a protective order or other remedy may be
timely sought.  In the event that such protective order or other remedy is not
obtained on or before two (2) days prior to the date the Grantor is required to
furnish said Confidential Information, Grantor will only furnish that portion of
the Confidential Information that Grantor is advised by opinion of counsel is
legally compelled or required to be provided.

 

Notwithstanding anything to the contrary stated elsewhere herein, it is agreed
and controllingly provided that this Section 8.9 does not restrict legal
discovery under the Texas Rules of Civil Procedure or the Federal Rules of Civil
Procedure, nor does it require the exclusion of any evidence otherwise
discoverable or admissible under the Texas Rules of Evidence or the Federal
Rules of Evidence in any subsequent proceeding merely because documents and/or
information were obtained under the terms of this Section.

 

8.10                           Warranty.  Grantee stipulates that Grantee has
inspected and is familiar with the Option Premises and except as specifically
set forth in this Section 8.10, Grantor makes no warranty of any kind under this
Agreement, including without limitation warranties as to title, the condition or
fitness for any particular purpose of the Option Premises or the Agreement

 

12

--------------------------------------------------------------------------------

 

hereby entered into.  Grantee expressly stipulates it has made its own
independent investigation and determination of all facts deemed relevant by
Grantee before entering into this Agreement.  Before commencing operations,
Grantee shall obtain and fully comply with all necessary governmental permits
and secure written permission from all necessary parties or owners. GRANTEE
ACCEPTS THE CONDITION OF THE OPTION PREMISES “AS IS” WITHOUT WARRANTY OF TITLE,
FITNESS OR ANY IMPLIED WARRANTIES. Grantor represents and warrants that it has
taken all steps and obtained all board of director and other approvals necessary
to duly authorize Grantor to enter into this transaction and that the person
executing this Agreement on behalf of the Grantor is duly authorized to do so as
the lawful and valid act of the Grantor.  Grantor covenants and agrees that,
promptly after execution of this Agreement, it shall take reasonable measures in
an effort to supply Grantee with copies of all unrecorded agreements it has
entered into or to its knowledge is subject to (or relevant excerpts therefrom)
that may materially and adversely affect Grantee’s operations hereunder. 
Furthermore, Grantor shall apprise Grantee of any new agreements it enters into
with third parties that may materially and adversely affect Grantee’s operations
under this Agreement.

 

8.11                           Staging Area.  Grantee shall have the right to
establish and utilize a maximum of two (2) temporary staging areas, each of
which will not exceed three (3) acres, for temporary storage of drilling
materials, equipment, and supplies, dry work and office areas, restroom
facilities, and yard area.  The temporary staging areas will be located within
the exploration area in a location that must be approved by both Grantee and
Grantor.  The staging areas shall be fenced and gated with the ground surface
being surfaced with caliche.  All equipment, materials, temporary building, and
the like, as well as fencing and surfacing material shall be removed upon
termination of this Agreement, and Grantee will restore the surface of any lands
affected thereby in the manner contemplated in this Agreement, unless Grantor
agrees in writing that such staging area or areas may be utilized for future
operations associated with any In-Situ Uranium Mining Lease acquired by Grantee
hereunder.

 

8.12                           Restoration of Damage.  The consideration paid by
Grantee to Grantor for this Agreement and for the initial damages set forth
above shall not be considered liquidated damages, and Grantee will remain liable
for any actual damages suffered by Grantor by reason of Grantee, its agents,
employees, servants, contractors, subcontractors, invitees or permittees
(i) exercising its rights hereunder, including, but without limitation, damages
to roads, crops, water wells, tanks, fences, cattle guards, and any other
improvements located on the Option Premises or injury or death to any livestock
and/or (ii) breaching the terms, conditions or covenants of this Agreement,
including but not limited to Grantee’s failure to restore the surface of the
Option Premises as required.  Grantee shall disc the surface and reseed all
surface areas where Grantee’s operations have caused any significant
disturbance, including but not limited to all temporary roads and senderos
constructed by Grantee. In such reseeding, Grantee shall use only grass seed
native to the Option Premises as directed by Grantor, and Grantee shall obtain
prior consent from Grantor as to the timing and manner of any reseeding. 
Restoration and reclamation by Grantee as required hereunder shall be deemed
sufficient if the reclamation and restoration are to the standards imposed by
applicable laws, regulations or permit conditions pertaining to such
disturbances or as otherwise set forth in this Agreement.  If Grantor considers
that Grantee has not completed restoration or reclamation in accordance with
requirements of this Agreement, Grantor shall so notify Grantee and Grantee
shall have thirty (30) days from receipt of such

 

13

--------------------------------------------------------------------------------

 

notice within which to remedy the matter before being liable for additional
damages hereunder.  Grantee shall not be required to perform restoration or
reclamation that is in violation of applicable laws, rules, regulations,
licenses or permit conditions.

 

8.13                           Payment of Fees.  If either party pays any
expenses, including reasonable attorneys fees, court costs or expert fees
necessarily incurred in instituting, prosecuting or defending any action or
proceedings instituted by reason of any default of the other party or its
agents, employees, servants, contractors, subcontractors, invitees or permittees
hereunder, or as a result of any other dispute under this Agreement, the sum or
sums to be paid by the prevailing party in any such proceedings, together with
all interest, costs and damages shall be paid by the other party.

 

8.14                           Inspection.  Upon completion of its operations
hereunder, Grantee shall notify Grantor of such completion so that a joint
inspection of the Option Premises and the operations hereunder can be made to
see that all of the terms of this Agreement are met.

 

8.15                           Default.  Grantor shall be entitled to terminate
this Agreement by written notice to Grantee in addition to all of the remedies
available at law or in equity as follows:

 

A.                                   If Grantee fails to make any payments when
due hereunder, Grantor may at Grantor’s option give Grantee written notice of
such failure and Grantee shall have fifteen (15) days from the date it receives
notice to pay the amounts owed to Grantor.  If Grantee fails to pay the past due
amounts to Grantor within the fifteen (15) day period, Grantor may at Grantor’s
option declare Grantee in default and terminate this Agreement.

 

B.                                     If Grantee defaults in the performance of
any obligation hereunder other than the obligation to make payments when due,
Grantor may at Grantor’s option give written notice of such default to Grantee,
and Grantee shall have thirty (30) days from the date it receives such notice to
cure the default or such longer time as is reasonably required to effect a cure
of the default if the nature of the default is such that cure cannot be effected
in 30 days, provided that Grantor commences cure of the default within 30 days
and thereafter pursues cure diligently.  If Grantee fails to cure the default
within the cure period, Grantor may at Grantor’s option terminate this
Agreement; provided, however, that if the default is minor and the default can
be fully compensated for in damages, then such default shall not be a basis for
cancellation or forfeiture of this Agreement or any of Company’s rights
hereunder if Grantee pays the full amount of damages within thirty (30) days
after demand by Grantor.

 

C.                                     If Grantee in good faith disputes the
existence of a default, then this Agreement shall not be terminated and Grantee
shall not be barred from the Option Premises until a final non-appealable
judgment finding such a default is entered by a court of competent jurisdiction
and Grantee shall not have cured such default within 30 days after the judgment
becomes final and non-appealable.  No good faith dispute between Grantor and
Grantee shall be the basis for Grantor barring Grantee from conducting
operations pursuant to this Agreement until such dispute is resolved adversely
to Grantee and Grantee fails to cure any default as allowed hereunder.

 

14

--------------------------------------------------------------------------------

 

8.16                           Protection of Trees.  All operations on the
Option Premises shall be conducted in a good workmanlike manner so as to
minimize damage to any Oak trees located on the Option Premises and no Oak tree
having a trunk with a diameter of six inches (6”) or more measured at two feet
(2’) above ground level shall be damaged or destroyed by Grantee without the
written consent of the Grantor.

 

8.17                           Hunting Prohibition.  Neither Grantee nor its
agents, employees contractors, subcontractors, licensee or permittee, nor their
agents or employees, shall have any right or privilege whatsoever to hunt or
fish on the Option Premises, nor shall it, they or any of them, carry onto the
Option Premises firearms, fishing equipment or other articles ordinarily used
for hunting or fishing.  Grantor or Grantor’s duly authorized representatives,
shall have the right at all reasonable times, at Grantor’s expense, to inspect
vehicles entering upon the Option Premises for the purpose of ascertaining that
no such articles are being brought onto the Option Premises.

 

8.18                           General Housekeeping.  Grantee shall keep the
Option Premises clean from trash during its operations.

 

8.19                           Plugging and Abandonment.  Grantee agrees that
within sixty (60) days after any Exploration Well or any other Well dug by
Grantee has served its purpose, it shall be plugged in accordance with existing
permit requirements as issued by the appropriate regulatory agencies having
jurisdiction over such matters. If such holes are cased, the casing shall be cut
off at least three (3) feet beneath the surface of the ground after plugging. 
While excavating the pit around the cased hole, top soil shall be scraped off
and saved and shall be placed back on top of the fill after backfilling.
Additionally, with respect to any such Exploration Well or other Well, Grantee
will provide to Grantor copies of any reports filed with the RCT, TCEQ or other
governmental agency having jurisdiction over such matters, such copy to be
delivered within thirty (30) days of filing same.

 

8.20                           Water Supply Well Takeover. Any Water Supply Well
drilled by Grantee upon the Option Premises shall, at Grantor’s option, become
the property of Grantor upon the termination of this Agreement as to the portion
of the Option Premises upon which such Water Supply Well is located, if, in the
judgment of Grantee, such Water Supply Well is no longer needed in connection
with Grantee’s development or clean-up or restoration operations on the Option
Premises.  The casing in any such Water Supply Well or wells shall not be
removed by Grantee, and Grantor shall thenceforth assume all risks and
obligations attendant to Grantor’s ownership and use of such Water Supply Well
or wells, and Grantee is relieved from any further liability and Grantor shall
indemnify Grantee against and hold Grantee harmless from any and all liability
and claims with respect to such Water Supply Well or wells.  Grantee may not use
any surface water or water from any Water Supply Well owned by the Grantor or
any surface owner on the Option Premises without the express written permission
of the Grantor.  Grantee shall use no more water than is reasonably necessary
for its operations on the Option Premises.  Grantee shall not use or sell water
for use on any lease or land other than the Option Premises.  Grantee shall
comply with all rules and regulations promulgated by the Kenedy County
Groundwater Conservation District, and any other agency having jurisdiction over
Water Supply Wells that may be drilled by Grantee on the Option Premises,
including without limitation, requirements to

 

15

--------------------------------------------------------------------------------

 

register such Water Supply Wells and to measure and report all water produced
from such Water Supply Wells.

 

8.21                           Water Usage.  Grantee shall have use of water
from any Well or Water Supply Well drilled by Grantee on the Option Premises for
the limited purposes authorized in this Agreement.  Grantee shall have the use
of water from any Water Supply Well owned by Grantor prior to the execution of
this Agreement, subject to the grant of prior written permission and subject to
payment to Grantor of a water usage fee in the amount of $3.00 per 1,000 gallons
of water used as provided by Grantee’s metering and/or truck tallies.
Additionally, Grantee shall test water from Grantor’s existing Water Supply
Wells and from any Water Supply Wells drilled by Grantee prior to using any
water in, on or under the Option Premises.  All operations under this Agreement,
including exploration, solution mining and restoration operations wherever
situated on the Option Premises shall be conducted so not to damage, contaminate
or destroy any Water Supply Well or appurtenances constructed or owned by
Grantor. In the event for any reason such activity should result in damage to,
contamination or destruction of any such water supply, Grantee shall repair,
restore, remediate, decontaminate or replace any such Water Supply Well, tank,
above or below ground reservoir or strata or other water facility so damaged,
contaminated or destroyed, with reasonable diligence and dispatch, weather
permitting.  If such repair, restoration, remediation or replacement is not
feasible, then Grantee shall pay to Grantor a reasonable compensation for any
such damage so sustained or the loss in value of Grantor’s and/or surface
owner’s property, whichever is the highest. Any such Water Supply Well, tank,
above or below ground reservoir or strata or other water facility so repaired,
restored, decontaminated, remediated or replaced shall be of a capacity and
quality equal to that which was damaged or destroyed.

 

8.22                           Assignment.  The rights of either party hereunder
and the provisions hereof shall be binding upon and inure to the benefit of
Grantor, its heirs, executors, successors, and administrators, and upon Grantee,
its legal representatives, successors and permitted assigns. Grantee
acknowledges that this Agreement has been executed by Grantor based on the
unique qualifications of Grantee, and Grantor has an expectation of dealing
solely with Grantee with respect to operations on the Option Premises.  As such,
Grantee may not assign this Agreement, or any of its rights hereunder, in whole
or in part, without the prior written consent of Grantor, which may be withheld
for any reason or for no reason in Grantor’s sole discretion.

 

8.23                           Recording.  Grantor, without the prior written
approval of Grantee, shall not file this Agreement for recording with the County
Clerk of Kenedy County, Texas.  Grantor upon request of Grantee, shall sign,
acknowledge and deliver a recordable Memorandum of Uranium Mining Lease Option
upon a form prepared by Grantee for the purpose of evidencing this Agreement in
the Records of the County Clerk of Kenedy County, Texas, which recordable
Memorandum of Uranium Mining Lease Option shall not modify, amend or impair this
Agreement in any respect.  Further, in the event Grantee elects to exercise its
option to obtain one or more In-Situ Uranium Mining Leases in the form attached
hereto as Exhibit “B”, in the manner herein provided, then upon Grantee’s
request, Grantor shall execute, acknowledge and deliver the In-Situ Uranium
Mining Lease(s) in said form to Grantee.  Grantor, without the prior written
approval of Grantee, shall not file a copy of such In-Situ Uranium Mining Lease
for recording with the County Clerk of Kenedy County, Texas, and Grantor shall,
upon request of

 

16

--------------------------------------------------------------------------------

 

Grantee, sign, execute and acknowledge a recordable Memorandum of In-Situ
Uranium Mining Lease upon a form prepared by Grantee for the purpose of
evidencing such In-Situ Uranium Mining Lease in the Records of the County Clerk
of Kenedy County, Texas, which recordable Memorandum of In-Situ Uranium Mining
Lease shall not modify, amend or impair the In-Situ Uranium Mining Lease in any
respect.

 

9.0                               Force Majeure.  It is understood and agreed
that if Grantee is prevented through no fault of Grantee from complying with any
express or implied covenant of this Agreement including conducting drilling of
Exploration Wells thereon: a) by reason of or as a result of any Federal or
State law, or any order, ruling or regulation of governmental authority or delay
in obtaining any required authorization or permit from any governmental
authority despite diligent efforts to do so, other than as a result of a failure
to comply with Environmental Protection Laws or this Agreement; or b) due to
hurricane, flooding, tornado, earthquake or similar act of God; or (c) due to
interference or legal action brought by any NGO or other private party; or
(d) as the result of the unavailability of qualified drilling contractors (each
event under (a), (b), (c) and (d) being referred to herein as a “Force Majeure
Event”), then while and so long as such Force Majeure Event exists, Grantee’s
obligation to comply with such covenant shall be suspended and Grantee shall not
be liable in damages for failure to comply therewith, and this Agreement shall
be extended while and so long as such Force Majeure Event exists. In the event
of the occurrence of a Force Majeure Event, Grantee must provide written notice
to Grantor specifying the nature and cause of such Force Majeure Event.
Furthermore, Grantee must use diligence in removing the cause of the Force
Majeure Event, and Grantee may not suspend obligations arising under this
Agreement due to any one or more Force Majeure Events for a time period or
periods exceeding one (1) year in the aggregate.

 

10.0                        Title Opinions. If Grantee shall have the title to
the Option Premises or any part thereof examined by an attorney, Grantee agrees
to furnish Grantor with a copy of such attorney’s Title Opinion upon receipt. 
If Grantee causes an Abstract of Title or Supplements thereto to be prepared, it
shall notify Grantor of same, shall make same available at all reasonable times,
and shall furnish same to Grantor free of charge upon termination of this
Agreement, Grantor agrees, upon request from Grantee, to furnish to Grantee any
Title Opinions and/or abstracts of title in Grantor’s possession, covering all
or part of the Option Premises.  Grantor acknowledges that Grantee makes no
representation or warranty as to the completeness, accuracy or correctness of
any Title Opinion or Abstract or Supplement supplied to Grantor pursuant to this
Section.

 

11.0                        Property Taxes.  Grantor shall pay all ad valorem
taxes and assessments on the Option Premises attributable to its ownership or
use of the Option Premises and its operations thereon.  Grantee shall pay all
such taxes or any increases in taxes payable by the Grantor to the extent such
taxes or increases are attributable to Grantee’s operations or equipment and
materials, or to the exercise of Grantee’s rights under this Agreement.

 

12.0                        Permit Cooperation.  Grantor agrees to reasonably
cooperate with Grantee, at no cost to Grantor, with respect to any permits or
applications by Grantee necessary for Grantee’s operations hereunder, and
Grantor shall not contest or oppose such applications and permits

 

17

--------------------------------------------------------------------------------

 

provided that they are consistent with the rights of and requirements imposed
upon Grantee by this Agreement.

 

13.                               Limitation of Rights.  Grantee is not
acquiring any rights in and to oil, gas or associated hydrocarbons underlying
the Option Premises, or to any other minerals or substances other than the
Leased Substances, and then only to the extent expressly contemplated in this
Agreement.  During the term of this Agreement, Grantor shall enjoy any and all
rights and privileges attributable to the surface estate not specifically
granted herein, along with the right and authority to execute oil and gas
leases, seismic permits or similar agreements contemplating oil and gas
exploration and/or development of all or any portion of the Option Premises,
provided that in the exercise of such rights, Grantor will not unduly interfere
with the rights of Grantee under this Agreement.

 

IN WITNESS WHEREOF, this instrument is executed effective as of the 1st day of
December, 2010.

 

GRANTOR:

 

The John G. and Marie Stella Kenedy Memorial Foundation

 

 

 

 

 

By:

 

 

Marc A. Cisneros, CEO/Executive Vice President

 

 

 

 

 

GRANTEE:

 

URI, Inc.

 

 

 

 

 

By:

 

 

Donald C. Ewigleben, President/ Chief Executive Officer

 

 

18

--------------------------------------------------------------------------------

 

ACKNOWLEDGEMENTS

 

STATE OF TEXAS

 

§

 

 

 

COUNTY OF NUECES

 

§

 

This instrument was acknowledged before me this the 30th day of December, 2010,
by Marc A. Cisneros, CEO/Executive Vice President of The John G. and Marie
Stella Kenedy Memorial Foundation, a Texas non-profit corporation, on behalf of
said corporation.

 

 

 

 

 

Notary Public, State of Texas

 

 

STATE OF TEXAS

 

§

 

 

 

COUNTY OF Nueces

 

§

 

This instrument was acknowledged before me this the 30th day of December, 2010,
by Donald C. Ewigleben, President of URI, Inc., a Texas corporation, on behalf
of said corporation.

 

 

 

 

 

Notary Public, State of Texas

 

19

--------------------------------------------------------------------------------

 

EXHIBIT “A”
to
Uranium Mining Lease Option

 

ATTACHED TO AND MADE A PART OF THAT CERTAIN IN-SITU URANIUM MINING LEASE OPTION
BY THE JOHN G. AND MARIE STELLA KENEDY MEMORIAL FOUNDATION, AS GRANTOR, AND
URI, Inc. AS GRANTEE, DATED EFFECTIVE December 1, 2010.

 

OPTION PREMISES DESCRIPTION

 

The land comprises all of the Rita Division and a portion of the Jaboncillos
Division of the lands of the John G. and Marie Stella Kenedy Memorial
Foundations lands in Kenedy County, Texas.  Said lands are out of the Juan N De
La Garza Survey, Abstract 36, “Los Finados”, comprising 52,024 acres, more or
less, and a 1,500 acre tract adjacent to its south side described as a portion
of the Sarita Kenedy East, for a total of 53,524 acres, more or less.

 

(Note:  See ATTACHMENT “A”)

 

20

--------------------------------------------------------------------------------

 

EXHIBIT “B”

to

Uranium Mining Lease Option

 

ATTACHED TO AND MADE A PART OF THAT CERTAIN IN-SITU URANIUM MINING LEASE OPTION
BY THE JOHN G. AND MARIE STELLA KENEDY MEMORIAL FOUNDATION, AS GRANTOR, AND
URI, INC., AS GRANTEE, DATED EFFECTIVE December 1, 2010.

 

IN-SITU URANIUM MINING LEASE

 

STATE OF TEXAS

§

 

§

COUNTY OF KENEDY

§

 

THIS AGREEMENT, sometimes hereinafter referred to as this “Lease”, is entered
into by and between The John G. and Marie Stella Kenedy Memorial Foundation, a
Texas non-profit corporation, (hereinafter referred to as “Lessor”), and
URI, Inc., a Delaware Corporation, (hereinafter referred to as “Lessee”).

 

This Lease and all of the rights, titles and interests granted herein to Lessee
and reserved herein to Lessor are subject to the terms, agreements,
reservations, conditions, covenants, limitations and exceptions contained in
this Lease.  Each of Lessor and Lessee, for itself and its successors and
assigns, agrees to comply with and be bound by this Lease.

 

ARTICLE I

DEFINITIONS

 

The following terms, when used throughout this Lease, shall have the meanings
assigned to such terms below:

 

“11e.(2) Byproduct Material” shall mean solid or liquid tailings or wastes
produced by the extraction or concentration of uranium from any ore processed
for its source material content as defined at 42 USC 2014§11e.(2).

 

“Adverse Environmental Event” means any spill, release, discharge, or storage,
treatment, disposal, or any underground injection of any “Polluting Substance”,
or the violation of any “Environmental Protection Law”.  Such term also includes
any contamination of air, surface water, ground water, soil, subsurface or any
other natural resource.

 

21

--------------------------------------------------------------------------------

 

“Affiliate” or “Affiliates” shall mean any person or entity that is a parent,
subsidiary, affiliate, venturer, partner, member of or with or otherwise related
to Lessee or whose ownership, operation, control or management is to any extent
in common with or related to Grantee.

 

“Allowable Taxes” shall mean severance taxes, and similar taxes imposed, levied,
assessed, or measured by or on the value of Leased Substances produced and sold
from the Leased Premises.

 

“By-Products” shall mean all Leased Substances other than uranium, such as
thorium, vanadium, molybdenum and any fissionable materials, whether in the form
of ores, mine waters, leachates, pregnant liquors, pregnant slurries,
concentrated slurries, precipitates, whether in dry or slurry state,
concentrates, or products beneficiated, upgraded, or refined further than
concentrates, occurring in intimate depositional relationship with uranium and
recovered as secondary values during the mining, extraction, processing, or
treatment of Uranium-bearing Products (as hereinafter defined).

 

“Central Plant Facility” shall mean any off-site facility owned by the Lessee or
an Affiliate with whom Lessee has entered into a contractual relationship for
processing at which (a) the uranium is stripped or eluted from the IX resin
forming an high-grade uranium eluate, (b) the uranium values are then
precipitated from the slurry to produce yellowcake slurry which is washed and
filtered, and (c) the resulting yellowcake is dried and packaged for shipment to
the converter.

 

“Commercial Production” shall mean the diligent and continuous conduct of all
actions and operations necessary to effect production of Leased Substances in
commercially salable quantities, including the injection of leaching solutions
and recovery of such solutions for processing at the Remote IX Facility. 
Commercial Production shall be deemed to have ceased for all purposes under this
Lease at any point in time in which total actual sales of Uranium-bearing
Products for any consecutive three (3) year period are less than 90,000 pounds.

 

“Delay Rentals” shall mean payments made during the Primary Term to hold the
Leased Premises on an annual basis until Production in Paying Quantifies begins.

 

“Drilling Operations” shall mean actual drilling operations with a drilling rig
rigged up and on location on the Leased Premises, together with all attendant
equipment needed to drill a Production Well to the intended depth and the drill
bit is below the surface of the ground.

 

“Effective Date” is defined in the last paragraph of this Lease.

 

“EPA” shall mean the United States Environmental Protection Agency.

 

“Environmental Protection Laws” means any and all applicable local, state, and
federal environmental laws; any regulations promulgated under such statutes; or
any other environmental statutes or regulations administered by the U.S.
Environmental Protection Agency, the U.S. Department of Transportation, the U.S.
Coast Guard, the U.S. Army Corps of Engineers, the U.S. Fish & Wildlife Service,
the National Oceanic and Atmospheric

 

22

--------------------------------------------------------------------------------

 

Administration, the Department of Commerce, the Department of the Interior, the
Council on Environmental Quality, the Texas Parks & Wildlife Department, the
Texas General Land Office, the Texas Water Commission, the Texas Air Control
Board, the Texas Railroad Commission, the Texas Department of Health, the Texas
Commission on Environmental Quality, or any successor to any such governmental
agency, , and further including without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), the
Resource Conservation and Recovery Act of 1976 (“RCRA”), the Federal Water
Pollution Control Act (“Clean Water Act”), the Safe Drinking Water Act, the
Clean Air Act, the National Environmental Protection Act (“NEPA”), the Emergency
Planning and Community Right to Know Act, the Hazardous Materials Transportation
Act, the Uranium Mill Tailings Act, the Texas Water Code, the Texas Soil and
Waste Disposal Act, Railroad Commission of Texas Surface Mining and Reclamation
rules and regulations, and all Texas Commission on Environmental Quality
rules and regulations pertaining to uranium mining and exploration activities
and to the protection of natural resources, as those laws, rules and regulations
presently are in effect or are hereafter enacted or amended or interpreted by
legislative, judicial or administrative authority during the term of this Lease.

 

“Exploration Well” shall mean any well drilled for the purposes of determining
the existence of favorable geologic environments for the formation of uranium
ore bodies or the existence of the ore bodies themselves.

 

“Gross Value” shall mean in a sale of Uranium-bearing Products, By-Products or
Other Mineral Products to a person or entity that is not an Affiliate, the gross
proceeds received by Lessee from the sale of such Uranium-bearing Products,
By-Products or Other Mineral Products. However, in a sale of Uranium-bearing
Products, By-Products or Other Mineral Products to an Affiliate, the Gross Value
shall be the higher of: (i) the gross proceeds received by Lessee in the first
sale by Lessee of such Uranium-bearing Products, By-Products or Other Mineral
Products; (ii) the average of the most recently published month-end TradeTech
Spot Price Indicator for U3O8 in the NUCLEAR MARKET REVIEW and the UX U3O8 Price
in the UX Weekly (herein “Indicators”) for the month immediately preceding the
transaction date. In the event that one of the foregoing Indicators should cease
to be published, then the price shall be determined using the remaining
Indicator that is then-published and calculated using the same method of
calculation.  In the event that both Indicators should cease to be published or
are materially altered in definition or method of calculation, then the Lessor
and Lessee shall select a replacement Indicator, with the intent of reproducing
as closely as possible the pricing being replaced.  For purposes of determining
Gross Value, the taking of Leased Substances in kind by one or more parties to a
joint venture or entity formed to operate the Leased Premises as Lessee shall
not be deemed a sale, and, in such case, the Gross Value and means for
calculating Gross Value and Production Royalty shall be determined by reference
to the first disposition of Leased Substances by the party or parties so taking
in kind.  Gross value will include the proceeds received by Lessee in any
hedging transaction or similar financial arrangement to the extent such proceeds
are directly or indirectly attributable to Uranium-bearing Products, By-Products
or Other Mineral Products produced from the Leased Premises.  “Hedging
transactions or similar financial arrangement” shall mean agreements entered
into by Lesssee with the purpose of managing fluctuations in the price of
Uranium-bearing Products, By-Products or Other Mineral Products produced from
the Leased Premises.

 

23

--------------------------------------------------------------------------------

 

“Lease” shall mean this in-situ uranium mining lease.

 

“Lease Year” shall mean the annual period commencing at 12:01 a.m. on the
Effective Date or its anniversary and ending at 11:59 p.m. of the last day of
such annual period as long as the Lease is in existence.

 

“Leased Premises” means the lands and depths covered by this Lease, all as more
particularly described on Exhibit “A” attached hereto and made a part hereof.

 

“Leased Substances”  shall mean uranium, uranium oxide, thorium, molybdenum,
vanadium and other fissionable or spatially associated substances similar to and
produced in conjunction therewith, and specifically excluding oil, gas and
associated hydrocarbon substances and coal, lignite, sand, gravel, rock and
caliche.

 

“Mine Permit Area” means a distinct, contiguous area of land, reasonably
determined to encompass a sufficient amount of acreage to allow for the economic
production of Leased Substances.  A Mine Permit Area may encompass one or more
Production Areas, and multiple Wellfields, but only to the extent multiple
Production Areas are situated within one (1) mile of each other.  A Mine Permit
Area shall also mean the area within which the Lessee is licensed to operate an
in-situ mining operation by the TCEQ as defined at 30 TAC 331.2(10).

 

“Minimum Royalty” Shall mean the minimum payment due to Lessor on each
anniversary of this Lease as further defined in Section 5.10.

 

“Monitor Well”  shall mean any Well that is named in a government issued
license, permit or authorization that is used to monitor uranium recovery or
groundwater restoration operations as provided for in this Lease.

 

“NGO” shall mean any non-governmental organization

 

“Other Mineral Products” shall mean all Leased Substances mined or extracted
primarily for values derived from their content of minerals other than uranium
and By-Products in the form of ores, mine waters, leachates, pregnant liquors,
pregnant slurries concentrated slurries, precipitates, whether in dry or slurry
state, concentrates, or products beneficiated, upgraded or refined further than
concentrates.

 

“Polluting Substance”means: a) any “hazardous substance” as defined by CERCLA;
b) any “hazardous waste” as defined in the RCRA; c) any petroleum, or petroleum
product or by-product; d) any polychlorinated biphenyl; e) any other pollutant
or contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance of any kind or character regulated or within the meaning of any other
Environmental Protection Laws.

 

“Primary Term” shall mean the period commencing on the Effective Date and ending
at Midnight at the end of the last day of the eighth (8th) Lease Year as further
defined in Section 3.1 of this Lease.

 

24

--------------------------------------------------------------------------------

 

“Production Area” means a contiguous area of land where actual production of
Leased Substances will occur, and shall comprise an area within the Mine Permit
Area, which after the establishment of a monitor well ring and baseline wells,
allows for the injection and extraction of solutions under a Class III permit
setting specific conditions for the production and restoration of the
groundwater.

 

“Production Royalty” is defined in Section 5.1.

 

“Production Well” shall mean any Well that is an injection or extraction well
installed for use in uranium recovery or groundwater restoration operations as
provided for in this Lease.

 

“Remote IX Facility” shall mean any on-site facility containing Ion Exchange
(“IX”) columns, piping and valves, pumps, filters, concrete pads, retention
ponds or other equipment necessary to extract the Leased Substances from the
water being returned from the Production Wells or equipment necessary to
complete groundwater restoration.  For the purposes of this Lease, the Remote IX
Facility shall only load uranium values onto the IX resin from pregnant
solutions coming in from the Wellfield.  Other processes necessary to produce a
Saleable Product shall be conducted at an off-site Central Plant Facility of
Lessee.

 

“Reworking Operations” shall mean the actual re-entry of an existing Production
Well on the Leased Premises (or, if authorized, on lands pooled therewith), with
the equipment necessary on location to conduct such reworking of such Well and
actual operations in the hole in a good and workmanlike manner and prosecuted
with reasonable diligence with the good faith intent to establish or reestablish
production therefrom or to establish or reestablish the injection of solution
materials for the purposes of in-situ mining.

 

“Royalty Percentage” is the percent of Gross Value payable as royalty as defined
in Section 5.1.1(b).

 

“Saleable Product” means any Uranium-bearing Product, By-Product, or Other
Mineral Product for which there exists an active market where any of such
products can be purchased and sold.

 

“Separate Tract” shall mean any tract with royalty and/or mineral ownership
differing, now or hereafter, either as to parties or amounts, from that as to
any other part of the Leased Premises.

 

“Uranium-bearing Products” shall mean uranium ore, uranium oxide (U308),
uranium-bearing mine waters, leachates, pregnant liquors, pregnant slurries,
concentrated slurries, precipitates, whether in dry or slurry state, uranium
concentrates in the form commonly known as “yellowcake,” or uranium compounds
upgraded, beneficiated, or refined further than yellowcake.

 

“Waste Disposal Well” shall mean any Class I non-hazardous Well permitted by the

 

25

--------------------------------------------------------------------------------

 

TCEQ or other regulatory agency that is constructed for the disposal of liquid
wastes from Lessee’s uranium extraction and reclamation operations on the Leased
Premises.

 

“Water Supply Well” shall mean any Well that is used to supply water for
domestic, livestock, agricultural, or industrial purposes that is not used or
intended for use in uranium recovery or groundwater restoration operations as
provided for in this lease.

 

“Well” shall mean any excavation that is drilled, cored, bored, washed,
fractured, driven, dug, jetted, or otherwise constructed for the intended use of
locating, monitoring, dewatering, depressurizing, observing, diverting, or
acquiring groundwater, or for conducting pumping or aquifer tests.

 

“Wellfield” shall mean an area within the Production Area in which the
Production Wells are installed and the actual mining takes place.  Each
Wellfield is wholly within a Production area and is enclosed by fence capable of
turning away livestock.

 

“Withdrawn Area” shall mean any area that is fenced for regulatory or safety
reasons with fencing able to turn livestock which causes Lessor to lose the use
of the land for grazing, hunting or other purposes.  Typical situations where
fencing would have to be employed would include the fencing required by
regulation around Wellfields, Remote IX Facilities, retention ponds and Waste
Disposal Well installations.

 

ARTICLE II.
GRANTING CLAUSE

 

2.1 Lease. Lessor, in consideration of Ten ($10.00) Dollars in hand paid, of the
royalties herein provided for, and of the agreements of Lessee herein stated,
subject to the terms, conditions, covenants, limitations and reservations
contained in this Lease, hereby GRANTS, LEASES and LETS exclusively unto Lessee
for the sole purposes hereinafter specifically set forth in Section 2.3 below,
the land and depths situated in Kenedy County, of the State of Texas, which are
more particularly described on Exhibit “A”, which is attached hereto and
incorporated herein for all purposes. The lands and depths covered by this Lease
are sometimes hereinafter referred to as the “Leased Premises.”

 

2.2 Acreage. Subject to the following paragraph, for purposes of calculating the
payments hereinafter provided for, said land shall be considered to comprise
                     (Note: Fill in acres leased), whether it actually comprises
more or less.  Lessor may own adjacent lands to the above-described Leased
Premises.  However, this Lease only covers the above-described Leased Premises. 
Additionally, in the event this Lease now or hereafter covers any Separate
Tract, no pooling or unitization of royalty interests or any other apportionment
of royalties as between any such Separate Tract is intended or shall be implied
or result merely from the inclusion of any such Separate Tract within this
Lease, nor shall the inclusion of any Separate Tract within this Lease be
considered as an offer to pool to any nonparticipating royalty owner or any
nonexecutive mineral or royalty owner.

 

2.3 Limited Purposes. Said Leased Premises are hereby granted, leased and let
for the

 

26

--------------------------------------------------------------------------------

 

sole purposes of:

 

(a)           investigating, exploring, prospecting, drilling, solution or
in-situ mining, operating for, producing, extracting, milling, treating,
processing, upgrading, removing, transporting, stockpiling, storing and selling
Uranium-bearing Products, By-Products and Other Mineral Products.  
Notwithstanding anything to the contrary stated elsewhere herein, it is
controllingly provided that Leased Substances shall exclude sand, sulfur,
gravel, caliche, coal, lignite, oil, gas, condensate, casinghead gas,
distillate, and other hydrocarbon substances, and also any mineral or substance
of any kind or character that is produced on the Leased Premises by any method
other than In-Situ leaching solution mining methods.  Other than In-Situ mining
methods, no or other methods including open pits and strip mining shall be
utilized on the Leased Premises;

 

(b)           injecting and reinjecting gas, water, other fluids, air and any
other substances or fluids commonly associated with generally accepted In-Situ
mining practices into subsurface strata, and conducting all types of generally
accepted solution mining recovery operations for Leased Substances, and to the
extent legally allowed by all requisite Federal, State and local authorities,
law and administrative rules establishing and using facilities for the
acquisition, disposition or disposal of Leased Substances, salt, water, In-Situ
leaching solutions, tailings and other waste materials produced or generated in
the extraction of the Leased Substances;

 

(c)           laying pipelines, building roads, bridges, tanks, power lines,
telephone lines, Remote IX Facilities, together with the maintenance and removal
thereof, and any other improvements, structures and facilities thereupon that
are necessary to conduct In-Situ Leaching Solution mining recovery, and
restoration operations under this Lease; and

 

(d)           reclaiming and restoring the Leased Premises pursuant to the terms
of this Lease and any governmental rules and regulations; together with such
rights and easements in the Leased Premises which are necessary or useful in
Lessee’s operations on the Leased Premises to carry out the limited purposes of
the Lease.

 

ARTICLE III.
TERM

 

 

3.1 Primary Term. Subject to the other provisions herein contained, this Lease
shall be for a term of eight (8) years from the Effective Date ending at 11:59
o’clock p.m. on the          day of                 , 20     (called “Primary
Term”), and as long thereafter as Commercial Production is occurring on the
Leased Premises or this Lease is expressly maintained by virtue of another
written provision hereof.

 

3.2 Delay Rentals.  If a) Commercial Production is not occurring, or b) the
Gross Value attributable to total sales of Uranium-bearing Products is less than
$20,000.00 upon commencement of the third Lease Year, i.e., on the        day of
                  , 20    , this Lease shall terminate unless on or before such
date Lessee shall pay or tender to Lessor or to the credit of Lessor or any bank
designated in writing by Lessor, the sum of One Hundred Dollars ($100.00)

 

27

--------------------------------------------------------------------------------

 

(hereinafter referred to as “Delay Rental”) per acre of Leased Premises, which
shall cover the privilege of deferring commencement of Commercial Production of
Leased Substance (and actual sales of Uranium-bearing Products) from said Leased
Premises for a period of twelve (12) months.  In like manner and upon like
payment or tender annually, the commencement of Commercial Production of Leased
Substances (and actual sales of Uranium-bearing Products) from said Leased
Premises may be further deferred for successive periods of twelve (12) months
each during the Primary Term.  The payment or tender of Delay Rental under this
paragraph or of any other payment coming due under the terms of this Lease may
be made by wire or check of Lessee mailed, hand-delivered or wired to the
parties entitled thereto or to said bank on or before the due date of such
payment.  Such bank or its successor, is hereby designated as Lessor’s agent to
receive from Lessee all payments by Lessee to Lessor under the terms of this
Lease and shall continue as depository for all payments hereunder regardless of
changes of ownership of the Leased Premises and/or Leased Substances.  Lessee’s
obligations to Lessor as to the payment of money under the terms of this Lease
shall end upon payment of the correct amounts to Lessor or said bank, as set
forth in this paragraph, and Lessee in no manner shall be responsible for any
disposition or distribution of moneys so paid or deposited.  In the event that
such bank (or any successor bank) should fail, liquidate or be succeeded by
another bank, or for any reason fail or refuse to accept payment, or should
Lessor or any assignee or assignees desire to designate another depository bank,
the Lessee shall not be held in default for failure to make payment or tender
payment until thirty (30) days after Lessor, or Lessor’s assignees, shall
deliver to Lessee a proper recordable instrument, naming another bank as agent
to receive such payments or tender. No payment made by check shall be considered
made unless the funds are currently available in Lessee’s bank at the time of
Lessor’s presentation to its bank.

 

ARTICLE IV.
RELEASE

 

4.1 Release Option.  Lessee may, at any time or times, execute and deliver to
Lessor or may file for record in the county in which the Leased Premises are
situated, a release or releases covering all or any portion or portions of the
Leased Premises and thereby surrender this Lease as to such portion or portions
and may be relieved of all non-accrued obligations as to the acreage
surrendered; provided that any such release or releases shall cover all depths
leased herein under each released tract and also the whole, and not less than
the whole, of each of the separate tracts comprising the Leased Premises, as
described above, to be included in such release, and provided further that no
such release shall be effective unless the lands remaining subject hereto after
taking such release into account shall form a single contiguous block.  For
purposes hereof, tracts having only a common corner shall not be deemed
contiguous.  If this Lease is released as to all the minerals and horizons under
a portion of the land covered by this Lease, any payments that are computed on
an acreage basis pursuant to express terms set forth in this Lease shall be
reduced in the proportion that the Leased Premises is reduced by such release or
releases, provided that such payments will not be reduced as to any portions of
the Leased Premises where all necessary restoration obligations have not been
completed as contemplated herein, which restoration obligations (and any payment
obligations associated therewith) will survive termination of this Lease until
all restoration contemplated herein has been completed in its entirety.

 

28

--------------------------------------------------------------------------------

 

ARTICLE V
ROYALTIES

 

5.1 Reservation of Royalty. Lessor reserves and Lessee shall pay, a landowner’s
production royalty on Leased Substances produced from the Leased Premises
(“Production Royalty”) that shall be determined and computed as follows:

 

5.1.1                        Uranium-bearing Products; By-Products or Other
Mineral Products.

 

(a)                                  In the event Uranium-bearing Products,
By-Products or Other Mineral Products which are produced from the Leased
Premises, are sold by or for Lessee, on the basis of weight determination,
Lessee shall pay to Lessor a royalty on such Uranium-bearing Products,
By-Products or Other Mineral Products sold which is equal to the product of the
following calculation: (i) the weight of the Uranium bearing Products,
By-Products or Other Mineral Products sold (calculated in pounds and measured in
dry weight); multiplied by the (ii) Gross Value; multiplied by (iii) the Royalty
Percentage applicable to such Gross Value as set forth below: less (iv) the
Allowable Taxes attributable to Lessor’s proportionate share of such
Uranium-bearing Products, By-Products or Other Mineral Products.

 

(b)                                             The Royalty Percentage
contemplated by the calculation in this Section 5.1.1 for Uranium-Bearing
Products shall be determined as follows:

 

Royalty

 

 

Percentage

 

 

Gross Value

 

 

10.0

%

 

$ 0.00 to $50.00 per pound

 

 

11.5

%

 

$50.01 to $75.00 per pound

 

 

12.5

%

 

$75.01 to $90.00 per pound

 

 

13.5

%

 

$90.01 to $105.00 per pound

 

 

14.5

%

 

$105.01 to $115.00 per pound

 

 

15.5

%

 

$115.01 to $125.00 per pound

 

 

16.5

%

 

$125.01 to $135.00 per pound

 

 

17.5

%

 

$135.01 to $145.00 per pound

 

 

18.5

%

 

$145.01 to $155.00 per pound

 

 

19.5

%

 

$155.01 to $175.00 per pound

 

 

20.5

%

 

$175.01 per pound and above

 

 

and

 

the Royalty Percentage for By-Products or Other Mineral Products shall be 15.0%,
without adjustment to the percentage for unit Gross Value.

 

5.1.2 Disposed of Without Sale.   In the event (i) Lessee takes the
Uranium-bearing

 

29

--------------------------------------------------------------------------------

 

Products, the By-Products or the Other Mineral Products without selling it;
(ii) Lessee delivers any Uranium-bearing Products, By Products or Other Mineral
Products in kind to itself or any of its Affiliates; or (iii) otherwise disposes
of any Uranium-bearing Products, By Products or Other Mineral Products without a
sale; or (iv) any Leased Substance is lost or wasted and royalties are payable
to Lessor pursuant to Section 5.13 below; such Uranium-bearing Products,
By-Products or Other Mineral Products shall be deemed to be “Disposed of Without
Sale” and Lessee shall pay to Lessor a royalty on such Uranium-bearing
Production, By-Product Production or Other Mineral Products that are Disposed of
Without Sale, which royalty shall be equal to the product of the following
calculation: (a) the weight of the Uranium-bearing Products, By-Products or
Other Mineral Products Disposed of Without Sale (calculated in pounds and
measured in dry weight); multiplied by the (b) Gross Value of such
Uranium-bearing Products, By-Products or Other Minerals Products Disposed of
Without Sale, which for the purposes of this subsection 5.1.2(b) shall be
defined based on the Indicators in clause (ii) of the definition of Gross Value;
multiplied by (c) the Royalty Percentage as set forth in subsection
5.1.1(b) above which is applicable to such Gross Value arrived at in accordance
with subsections 5.1.2(b) and (c) above, less (d) the Allowable Taxes
attributable to Lessor’s proportionate share of such Uranium-bearing Products,
By-Products or Other Mineral Products.  For purposes of this Section, the taking
of Leased Substances in kind by one or more parties to a joint venture or entity
formed to operate the Leased Premises as Lessee shall not be deemed a
disposition without sale, and, in such case, the determination of whether Lessee
has disposed of Leased Substances without sale shall be made by reference to the
first disposition of Leased Substances by the party or parties so taking in
kind.

 

5.2   Royalty Deductions. Notwithstanding anything to the contrary stated
elsewhere herein or at law, it is controllingly provided and agreed that all
royalties payable under this Lease shall be “free royalty” and shall not bear
any costs; including but not limited to any costs of lifting, operating,
producing, gathering, treating, separating, processing or transporting the
Leased Substances. Lessor’s royalties payable under this Lease shall bear its
proportionate share of all Allowable Taxes. If any contract for the sale of
production from this Lease or lands pooled therewith includes any reduction for
a non-deductible expense, then such deduction shall be added to the price and/or
the monies received by Lessee and such contracts for the purpose of determining
the Gross Value and for calculating and paying Lessor’s royalties payable under
this Lease. It is additionally understood and agreed that in the event Lessee is
entitled to any additional price increments or credits, such as severance tax or
other price increments under any purchase and/or sales agreement, or by law,
such price increment(s) or credit(s) shall be added to the price and/or monies
received by Lessee for the purposes of determining the Gross Value for
calculating and paying Lessor’s royalties under this Lease.  In the event the
Royalty Percentage is not determinable for the purposes of supplementing
Lessor’s royalty payment pursuant to the terms of this Section 5.2 for any such
addition of non-deductible expenses, or as to such price increment or credit,
the Royalty Percentage shall be deemed to be the average Royalty Percentage paid
by Lessee to Lessor during the prior six (6) month period.

 

5.3 Market Value or Gross Value. In the event the provisions of Section 5.2 are
in conflict, or are deemed to be in conflict, with any other provisions in this
Lease, including, without limitation, any provisions which contain the phrase,
“market value or Gross Value”, it is the intention of Lessor and Lessee that the
provisions of Section 5.2 shall prevail. Specifically, it

 

30

--------------------------------------------------------------------------------

 

is the intention of the parties that the provisions of Section 5.2 are to be
fully effective and enforceable and that such provisions are not to be construed
as “surplusage” under the principles set forth in Heritage Resources, Inc. vs.
NationsBank, 938 S.W.2d 118 (Texas, 1997).

 

5.4 Duty to Market. Notwithstanding anything to the contrary stated elsewhere
herein, it is controllingly provided that the parties hereto agree and
acknowledge that Lessor is dependent upon and reliant upon Lessee’s actions
under this Lease on behalf of Lessor. Therefore, Lessee owes to Lessor the duty
to operate the Leased Premises for the common good of both parties and to act
prudently and in accordance with industry standards, considering all relevant
circumstances at the time any particular sales arrangement is entered into, and
to exercise good faith and fair dealing with due regard for the interests of
Lessor, including without limitation the Production Royalty, in the sale and
marketing of the products of Leased Substances from the Leased Premises.

 

In the event Lessee or any of its Affiliates own a plant or mill that processes
Uranium-bearing Products, By Products or Other Mineral Products from the Leased
Premises and also Uranium-bearing Products, By Products or Other Mineral
Products from other properties located off of the Leased Premises, Lessee shall
assure that sales of the Uranium-bearing Products, By Products or Other Mineral
Products owned by Lessee and processed in its (or its Affiliates’) plant or mill
are on a first-in/first-out basis.  By way of example, if there are 3 leases,
the A lease, the B lease and the this Lease that have Leased Substances
processed at such plant or mill, and the production arrived at the plant or mill
from this Lease first, the B Lease second and the A lease third, Lessee must
sell the Uranium-bearing Products, By Products or Other Mineral Products
produced from this Lease first, and the  A Lease and B Lease thereafter, without
regard to the royalty burden or lease burdens affecting any such production. 
Lessee shall take all necessary precautions and operations in order to keep
track of the first in/first out basis of accounting for royalties and it shall
follow all sampling, assaying, measurement, testing and analysis required in
this Lease and in the laws and regulations of the State of Texas and the United
States and their regulatory agencies and commissions.

 

Lessee will not enter into any contract for the sale of Leased Substances with a
term greater than two (2) years, unless Lessee provides to Lessor a copy of the
proposed contract in advance.  Lessor will have a period of fifteen (15) days
from receipt of any contract provided to it by Lessee within which to accept or
reject such contract by written response, and the failure to respond will be
deemed acceptance of the relevant contract.  In the event Lessor accepts a
contract proposed in accordance with this Section, the Gross Value for purposes
of calculating Production Royalty with respect to Leased Substances sold under
such contract shall be the price indicated in the contract for the duration of
the contract.  In the event Lessor rejects the contract, the Gross Value for
purposes of calculating Production Royalty with respect to Leased Substances
sold under such contract shall be determined based on the Indicators in clause
(ii) of the definition of Gross Value.

 

Lessee shall be deemed to have satisfied its duty to market under this
Section to the extent Lessee delivers any contract or contracts for the sale of
Leased Substances to Lessor as provided for in the paragraph above, and Lessee
thereafter delivers Production Royalties in accordance with the results of
Lessor’s acceptance or rejection of such contract.

 

31

--------------------------------------------------------------------------------

 

Lessee will not sell or offer for sale any Uranium-bearing Products, By-Products
or Other Mineral Products produced from the Leased Premises to any person,
government or entity when Lessee knows or reasonably should have known that such
products will be utilized by such purchaser in the development, manufacture or
production of weapons or as a fuel source for weapons.

 

5.5 Royalty Payments. Royalties shall accrue at the time of sale or at the time
Leased Substances are Disposed of Without Sale and in the amount as provided in
this Article V. Royalty payments shall become due and payable no later than
sixty (60) days after the first sale or after any Leased Substances attributable
to the Leased Premises are Disposed of Without Sale. Thereafter, Royalty
payments shall be due and payable to Lessor by Lessee no later than the
thirtieth (30th) day of the month following the month in which the same is sold
or Disposed of Without Sale. Royalty payments shall be made by Lessee’s check
and shall be accompanied by a settlement sheet showing the quantities and grades
of Leased Substances produced from the Leased Premises and saved and removed for
sale or processing, proceeds of sale, allocable taxes, and other pertinent
information in sufficient detail to explain the calculation of the royalty
payment.

 

5.6 Depository Bank. Upon written request of Lessee, Lessor shall designate a
bank within the State of Texas to act as Lessor’s agent to receive from Lessee
all payments payable under the terms hereof, and all such payments may be made
by paying or tendering the same to Lessor, or to said bank for Lessor’s credit,
which bank shall continue as the depository for all royalty payments hereunder
regardless of changes of ownership of the Leased Premises, or rights to receive
payments hereunder, subject only to the subsequent provisions in this
Section 5.6.  All charges of such depository bank shall be for Lessor’s
account.  A single payment or tender to said depository bank shall be shall be
made by mailing or by delivering a check to it, and such a payment shall
effectively and for all purposes whatsoever constitute full payment of the
amount thereof to Lessor to the same extent as if made directly.  In the event
Lessor fails to name said bank upon the request of Lessee, or in the event such
bank (or any successor bank) should fail, liquidate or be succeeded by another
bank, or for any reason fail or refuse to accept royalties, or should the owners
of all rights to payments hereunder desire to designate another depository bank,
then Lessee shall not be held in default for failure to make payment or tender
of payments until thirty (30) days after said persons shall deliver to Lessee a
proper, recordable instrument naming a bank as agent to receive such payments or
tenders.

 

5.7 Late Payment. Any amount of money owed under this Lease to Lessor, including
but not limited to Royalty Payments, Minimum Royalties, Shut-in Royalties, Delay
Rentals and surface damages that are not paid when due shall bear interest from
the due date until paid at the lesser of (a) fifteen percent 15%) per annum, or
(b) the maximum legal interest rate allowed by law, if less. If royalty or any
other payment due under this Lease is not paid by its due date, Lessor may give
Lessee written notice of such non-payment.  If within thirty (30) days after
Lessee’s receipt of Lessor’s written notice of such non-payment, Lessee fails to
either: (i) make full payment of such amount due to Lessor (including accrued
but unpaid interest); or (ii)  dispute in good faith and with particularity the
existence of a default, as provided in Section 22.1.C., Lessor may elect to
terminate this Lease as provided in Section 22.1.

 

32

--------------------------------------------------------------------------------

 

In the event this Lease terminates pursuant to the provisions of this
Section and Section 22.1, Lessor shall be entitled to all subsequent production
from this Lease after such termination date and may enforce its security
interest under Section 5.15 on all equipment situated on the Leased Premises to
secure amounts due and unpaid.

 

5.8 Royalty Audit. Lessor shall have the right, personally or by
representative,  at all reasonable times and as shall not unreasonably hinder or
interrupt operations of  Lessee, to enter into and upon the Leased Premises and
workings thereon and Lessee’s offices for the purpose of examining and
inspecting same in order to ascertain whether the terms of this Lease are being
complied with.  Such inspections and examinations shall include the right to
review, inspect and copy the books, accounts, contracts, settlements, records
and data of Lessee pertaining to the development, production, assay records,
tests and evaluations of the ore records and production records, exploration,
savings and transportation of the Leased Substances and other products produced
from or attributable to the Leased Substances.  Lessor’s right to inspect is
limited to an inspection of Lessee’s records only insofar as those records
pertain to or in any way affect Lessor’s Production Royalty interest in the
Leased Premises or the Leased Substances and unless it affects Lessor’s
Production Royalty interest, does not extend to the working interest or net
revenue interest owned by parties other than Lessee in the Leased Premises or
the Leased Substances except to the extent any Leased Substances from the Leased
Premises have been commingled with Leased Substances from other property. 
Lessor shall have the right to require Lessee to furnish Lessor with a copy of
any sales agreement(s), processing agreement(s) or transportation
agreement(s) concerning the disposition of the Leased Substances produced from
the Leased Premises, and full information as to all Leased Substances and other
products produced and at the time sold from, or used on, the Leased Premises and
acreage pooled therewith.  Lessor shall also have the right to review in
Lessee’s offices any sales contract, meter records, meter maintenance and repair
records, assay records, ore body tests and reports, engineering and geological
tests and reports, marketing agreement or processing contract of Lessee and all
amendments thereto, covering the exploration, mining, producing, sales or
processing of the Leased Substances from the Leased Premises.  In the event such
information is not public, Lessor agrees, and if so requested by Lessee, any
representative of Lessor shall agree in writing, to hold confidential any
material or data furnished hereunder pursuant to Section 17.2.  Additionally, it
is understood and agreed that, as to any area of the Lease that is still held
under the terms of the Lease, Lessor’s right to enter upon any area of the
Leased Premises that is still held by the Lease at such time of inspection, in
order to inspect any tangible property owned or operated by Lessee in connection
with its operations under the terms of this Lease, shall be subject to: (i) all
reasonable and applicable safety rules of Lessee and also any rules or
regulations of any governmental authorities having jurisdiction over such
property; and (ii) the requirement that such access or inspection does not
unreasonably interfere with Lessee’s operations on the Leased Premises.

 

Any inspection of the Leased Premises shall be at Lessor’s sole risk and in
compliance with applicable laws and Lessee’s normal safety rules and
regulations.

 

Lessor shall have the right not more frequently than once each Lease Year, and
to the extent necessary to determine the calculation of Lessor’s Production
Royalty, to audit Lessee’s

 

33

--------------------------------------------------------------------------------

 

relevant books and records at Lessee’s offices and during Lessee’s normal
business hours.  Such audit shall be limited to matters relevant to Production
Royalty paid or due in the Lease Year in which the audit is made and the
immediately preceding Lease Year.  Lessee shall have no obligation to retain or
submit to inspection records for Production Royalty other than for the present
and immediate past Lease Year.

 

5.9 Shut-In Royalty.  In the event this Lease has been continued in force and
effect beyond its Primary Term by Commercial Production or by Drilling
Operations or Reworking Operations pursuant to Article VI of this Lease or
pursuant to any other provision of this Lease, and all Production Wells on said
Leased Premises are shut-in or thereafter shut-in, then Lessee may pay as
shut-in payments to Lessor herein, commencing on or before ninety (90) days
following the expiration of the Primary Term of this Lease or ninety (90) days
after all such Production Wells have been shut-in for ninety (90) consecutive
days (whichever date is the latest), the sum of Fifty Thousand Dollars
($50,000.00) for the Leased Premises, and annually thereafter on or before the
anniversary date of such initial payment, subject however to the limiting
provisions hereafter stated; and such payments (as hereinabove provided) when
made, shall (for such annual period) be considered as though Commercial
Production of Leased Substances is occurring from the Leased Premises; provided,
however, that after production and marketing of Leased Substances, all of such
Production Wells on the Leased Premises may thereafter be temporarily shut-in to
negotiate a more favorable price or a market therefore by payment of such
shut-in payments to Lessor. It is controllingly provided, however, that the
payment of shut-in royalty pursuant to the terms of this paragraph will not
perpetuate this Lease as to the acreage allocated to the Leased Premises for a
period of more than seven hundred and thirty (730) days, calculated on a
cumulative basis. The timely and proper payment of this shut-in payment is a
condition of the continued validity of this Lease.

 

Payments under this Section 5.9 shall not be considered as a credit upon Minimum
Royalty payments payable to Lessor during such annual or semi-annual period,
(whichever is applicable), and shall in no manner reduce such obligation of
Lessee.  No payments under this Lease, including, but not limited to, royalties,
minimum royalties and shut-in royalties shall relieve Lessee from the express or
the implied covenants contained in this Lease or implied under the law.

 

5.10 Minimum Royalty. Notwithstanding anything to the contrary stated elsewhere
herein, it is specifically agreed that once there is actual production of Leased
Substances from the Leased Premises or lands pooled therewith (if authorized),
the sum or sums of all of the royalties (excluding shut-in royalty and
production taxes paid by Lessee on behalf of Lessor) actually paid to Lessor
during each Lease Year for production from the Leased Premises or lands pooled
therewith (if authorized) shall never be less than the sum of One Hundred Fifty
Thousand Dollars ($150,000.00)(“Minimum Royalty”). However, it is agreed that
for the first Lease Year in which there is actual production of Leased
Substances, the guaranteed Minimum Royalty shall be reduced to equal the sum of
Twelve Thousand Five Hundred Dollars ($12,500.00) times the number of months
elapsed in such Lease Year since the first production of Leased Substances. If
the payment of actual Production Royalty during a Lease Year does not at least
equal the guaranteed Minimum Royalty, the difference shall be made up on or
before sixty (60) days after the end of the Lease Year and it is not recoupable
out of future production.  Following the end of

 

34

--------------------------------------------------------------------------------

 

each Lease Year, Lessee shall calculate the Production Royalty actually received
by Lessor during the Lease Year and if such sum is less than such Minimum
Royalty amount, then Lessee shall pay the difference to Lessor within such sixty
(60) day period.  Notwithstanding anything to the contrary contained elsewhere
herein, Lessee’s proper and timely payments of Minimum Royalty in excess of
actual Production Royalty payments are merely contractual payment obligations
and the proper payment of same in no way perpetuates or extends the Lease. 
Drilling Operations shall not extend the time for computation or payment of any
Minimum Royalty under the terms of this paragraph.  Also no tender or payment of
any Minimum Royalty as herein provided shall be construed as Commercial
Production unless derived from actual Production Royalty.  No payment paid or to
be paid under this Lease, including, but not limited to, Minimum Royalty
payments, royalty payments, or shut-in royalty payments shall relieve Lessee
from the obligations expressed in this Lease, nor shall any express provisions
of this Lease relieve Lessee from any implied covenant, duty or obligation
arising by law, under this Lease or at equity.

 

5.11 Commingling.  As a material consideration for the execution of this Lease,
Lessee agrees that Leased Substances produced from the Leased Premises may not
be commingled with Leased Substances produced from any other lands at any time
prior to completion of processing at Lessee’s Central Plant Facility, unless
Lessor consents to earlier commingling in writing in advance of any such
commingling.  Furthermore, and without limiting the foregoing, except in the
event of pooling (if authorized herein), Lessee shall not commingle and shall
keep Leased Substances produced from any lands not covered by this Lease
separate and apart from any Leased Substances (including any ore, solutions,
pregnant liquors, pregnant slurries, or yellowcake) mined and/or removed from
the Leased Premises until such Leased Substances produced from the Leased
Premises, and any other property in which the Leased Substances are to be
commingled with have been sampled, measured, assayed, tested and analyzed in
accordance with Section 5.12 below in order that payments of royalties to Lessor
may reflect the correct quantity and quality of the Leased Substances, including
the solution volume of each Leased Substance mined and removed from the Leased
Premises.  Furthermore, except in the event of pooling, (if authorized herein),
Lessee shall not commingle and shall keep Leased Substances produced from any
Withdrawn Area or Separate Tract separate and apart from any Leased Substances
(including any ore, solutions, pregnant liquors, pregnant slurries or
yellowcake) mined and/or removed from any other Withdrawn Area or Separate Tract
until such Leased Substances produced from each Withdrawn Area or Separate Tract
have been sampled, measured, assayed, tested and analyzed pursuant to
Section 5.12 below.

 

After proper sampling, measurement, assaying, testing and analyzing have been
done in accordance with this Section and Section 5.12 below, Lessee may
commingle Leased Substances produced from Withdrawn Areas and Separate Tracts
(if any) with Leased Substances produced elsewhere on the Leased Premises for
the purpose of subsequent processing or shipment to a plant or place of sales. 
Additionally, Lessee may commingle Leased Substances produced from lands off the
Leased Premises with Leased Substances produced from this Lease for the purposes
of subsequent processing or sales off the Leased Premises if and only if Lessee
has first conducted proper and accurate sampling, measurement, assaying, testing
and analysis (pursuant to the terms of this lease, including Section 5.12) of
the Leased Substances that were produced from the Leased Premises and also of
the Leased Substances produced from other lands off the

 

35

--------------------------------------------------------------------------------

 

Leased Premises that are to be commingled with the Leased Substances produced
from the Leased Premises.  However, notwithstanding anything to the contrary
stated elsewhere herein, it is controllingly provided that in no event shall any
Leased Substances produced from lands outside of the Leased Premises be brought
onto the Leased Premises.

 

5.12 Sampling, Assaying, Measurement, Testing and Analysis. All sampling,
assaying, measurement, testing and analysis of wet weight and volume, dry weight
and volume, moisture content, amenability, pay metal content, and any sampling
procedures, assaying, testing, measurement and analysis shall be made in
accordance with sound mining and metallurgical practices and sound industry
standard sampling and analysis procedures prevailing in the uranium mining and
milling industry.  In this regard, it is imperative that Lessee use practices
and procedures that are necessary to produce accurate determinations,
measurements, allocations and results so that Lessor is accurately paid its
royalties for all Leased Substances produced from the Leased Premises.  Lessor
shall have the right to have a representative at the times any samples are taken
and to monitor any testing or assaying of the samples at reasonable times and on
reasonable prior notice.  Lessor shall have no right to take possession of any
samples or other radioactive material unless and until such possession is by a
laboratory, person or entity that is properly licensed to possess such
materials.  Detailed records shall be kept by Lessee showing the results of all
sampling, assaying, measurements, metering, testing, analysis and computation
required in this Agreement necessary to properly and accurately calculate and
pay Lessor’s royalties and so that Lessor and its representatives will be able
to verify that the royalty payments have been paid to Lessor accurately and in
order to recreate Lessee’s methodology and calculation of Lessor’s royalty
payments.  Sampling, assaying, measurement, testing and analysis pursuant to
this Section and Section 5.11 are for purposes of attribution or allocation of
production of Leased Substances to or among the Leased Premises or properties as
to which commingling occurs.  Production Royalty shall be calculated on the
basis of Leased Substances actually recovered from the processed products, using
sound mining and metallurgical engineering practices.

 

5.13 Waste Rock, Spoil, Tailings and Lost Production. It is expressly provided
that Lessee shall be liable to Lessor for the royalty on any Leased Substances
which may be lost or wasted due to leakage, fire, theft or other reasons to the
extent they are lost or wasted are the result of Lessee’s negligence,
intentional acts, or the negligence  or intentional acts of its agents,
independent contractors, contractors, subcontractors, employees, assigns or any
other party connected with operations on this Lease or under the direction of or
at the request of Lessee. Lessee shall not be liable for royalties on Leased
Substances lost in mining or processing, such as Leased Substances caked on
production or processing facilities and are not reasonably and economically
obtainable, or waste rock, spoils, tailings, or any other mine waste or residue,
to the extent and only to the extent that such Leased Substances were lost while
using sound mining and metallurgical engineering practices.

 

5.14 Payment Instructions. Unless required to be paid to a depository bank under
Section 5.6 above, all payments of royalties and other monies payable under this
Lease by Lessee to Lessor shall be payable to the credit of Lessor at their
offices located at 555 N. Carancahua, Suite 1700 Tower II, Corpus Christi, Texas
78478.

 

36

--------------------------------------------------------------------------------

 

5.15 Lessor’s Lien.  In addition to any other rights of Lessor hereunder, Lessee
agrees that all sums due as royalty shall be secured by a lien on the Leased
Premises, the Leased Substances, all proceeds attributable to the production and
sale of Leased Substances, and any and all equipment, goods, and fixtures of
Lessee placed on the Leased Premises  (the “Collateral”). A memorandum of this
lease filed for record in the county in which the Leased Premises are situated
is intended to serve as perfection of the lien on Collateral described herein,
and such memorandum will also be deemed a financing statement under applicable
law.

 

5.16 Most Favored Nations.  If during the Primary Term of this Lease, Lessee
enters into or acquires from a third party an in situ uranium mining lease taken
on behalf of Lessee, covering any mineral interest of at least 1000 gross acres
within fifteen (15) miles of the Leased Premises, which instrument provides for
royalty provisions that are more favorable or of greater value than the terms or
payments provided for in this Lease, then Lessor shall ipso facto receive such
greater and more favorable terms as if same had been incorporated in this Lease
at the time of its execution. Lessee shall promptly execute and deliver to
Lessor an amendment to this Lease in recordable form to reflect the increase in
royalty, and payment shall be made to reflect any difference in royalty. Said
amounts shall be payable under the more favorable terms as if such terms had
been in force from the inception of the Lease.

 

ARTICLE VI.

DRILL OR REWORK

 

6.1 Drill or Rework. In addition to the right to maintain this Lease in effect
by the payment of Shut-in Royalties pursuant to Section 5.9, if, after discovery
and production of Leased Substances, the production thereof should cease from
any cause, this Lease shall not terminate if Lessee commences Drilling
Operations or Reworking Operations directed towards the establishment or
reestablishment of production from the Leased Premises within ninety (90) days
after the cessation of production and such operations continue with no cessation
of more than ninety (90) days until Commercial Production is established,
re-established or if such cessation occurs during the Primary Term, commences or
resumes, the payment or tender of Delay Rentals or commences Drilling Operations
or Reworking Operations directed towards re-establishment of Commercial
Production on or before the Delay Rental payment date next ensuing.  If, at the
expiration of the Primary Term,  Leased Substances are not being produced on the
Leased Premises but Lessee is at that specific time then engaged in Drilling
Operations or Reworking Operations directed towards the establishment or
reestablishment of production there from, this Lease shall remain in force so
long as Drilling Operations or Reworking Operations are prosecuted with no
cessation of more than ninety (90) consecutive days, and if they result in the
production of Leased Substances, so long thereafter as Commercial Production of
Leased Substances is occurring on the Leased Premises.

 

All Drilling Operations and/or Reworking Operations shall be conducted in
compliance with all applicable laws and regulations including any and all
Environmental Protection Laws, in good faith, with reasonable diligence, with
adequate equipment, and in a good and workmanlike manner and the failure to
comply with this provision where such operations are relied upon by Lessee to
extend this Lease shall operate as a limitation on this Lease to the same extent
as though no such operations were conducted.

 

37

--------------------------------------------------------------------------------

 

ARTICLE VII.

WATER RIGHTS

 

7.1 Water Supply Well Takeover. Any Water Supply Well drilled by Lessee upon the
Leased Premises shall, at Lessor’s option, become the property of Lessor upon
the termination of this Lease as to the portion of the Leased Premises upon
which such Water Supply Well is located, if, in the judgment of Lessee, such
Water Supply Well is no longer needed in connection with Lessee’s development or
clean-up or restoration operations on the Leased Premises.  The casing in any
such Water Supply Well or wells shall not be removed by Lessee, and Lessor shall
thenceforth assume all risks and obligations attendant to Lessor’s ownership and
use of such Water Supply Well or wells, and Lessee is relieved from any further
liability and Lessor shall indemnify Lessee against and hold Lessee harmless
from any and all liability and claims with respect to such water Supply Well or
wells.  Lessee may not use any surface water or water from any Water Supply Well
owned by the Lessor or any surface owner on the Leased Premises.  Lessee shall
use no more water than is reasonably necessary for its operations on the Leased
Premises.  Lessee shall not use or sell water for use on any lease or land other
than the Leased Premises.  Lessee shall comply with all rules and regulations
promulgated by the Kenedy County Groundwater Conservation District, and any
other agency having jurisdiction over Water Supply Wells that may be drilled by
Lessee on the Leased Premises, including without limitation, requirements to
register such Water Supply Wells and to measure and report all water produced
from such Water Supply Wells.

 

7.2 Water Usage.  Lessee shall have use of water from any Well, Water Supply
Well, Monitor Well or Production Well drilled by Lessee on the Leased Premises
for the limited purposes authorized in this Lease.  Lessee shall have the use of
water from any Water Supply Well owner by Lessor prior to the execution of this
lease, subject to the grant of prior written permission and subject to payment
to Lessor of a water usage fee in the amount of $3.00 per 1,000 gallons of water
used as provided by Lessee’s metering and/or truck tallies. Additionally, Lessee
shall test water from Lessor’s existing Water Supply Wells and from any Water
Supply Wells drilled by Lessee prior to using any water in, on or under the
Leased Premises.  All operations on this Lease, including exploration, solution
mining and restoration operations wherever situated on the Leased Premises shall
be conducted so not to damage, contaminate or destroy any water supply
constructed or owned by Lessor. In the event for any reason such activity should
result in damage to, contamination or destruction of any such water supply,
Lessee shall repair, restore, remediate, decontaminate or replace any such Water
Supply Well, tank, above or below ground reservoir or strata or other water
facility so damaged, contaminated or destroyed, with reasonable diligence and
dispatch, weather permitting.  If such repair, restoration, remediation or
replacement is not feasible, then Lessee shall pay to Lessor a reasonable
compensation for any such damage so sustained or the loss in value of Lessor’s
and/or surface owner’s property, whichever is the highest. Any such Water Supply
Well, tank, above or below ground reservoir or strata or other water facility so
repaired, restored, decontaminated, remediated or replaced shall be of a
capacity and quality equal to that which was damaged or destroyed.  Prior to
beginning operations on the Leased Premises, Lessee will establish baseline
groundwater parameters for the entirety of the Leased Premises and test all
water from all Water Supply Wells and open tanks on the Leased Premises in order
to determine

 

38

--------------------------------------------------------------------------------

 

pre-mining groundwater quality.  As part of testing requirements, Lessee will
comply with all applicable RCT and TCEQ in-situ mine permitting processes,
including all reclamation requirements.  Lessee agrees to provide Lessor with
water test data conducted prior to the beginning of operations as required
above, and also all water test data consistent with periodic reporting
requirements of the TCEQ, the EPA, the RCT, or otherwise as provided for in this
Lease.  For purposes of this Lease, the term “baseline groundwater parameters”
means water quality parameters that are naturally occurring which are measurable
and quantifiable as identified by TCEQ and EPA, and identifying certain chemical
or physiological conditions and properties, which if such conditions and
properties are altered, may be harmful to human health and/or the environment.

 

7.3 Adjacent Surface Owners. In the event that the boundary of a Withdrawn Area 
is located within 5,000 feet of the perimeter boundary of lands owned by Lessor,
prior to beginning operations on the Leased Premises, Lessee will, to the extent
authorized by the adjacent surface owner, test the adjacent surface owner or
owner’s groundwater supply in order to establish baseline groundwater
parameters.  Lessee will communicate and negotiate directly with the applicable
adjacent surface owner(s) regarding this provision. During the conduct of
operations in any such Withdrawn Area, to the extent authorized by the adjacent
surface owner, Lessee will drill and maintain not less than one (1) Monitor Well
on the lands of each affected adjacent surface owner (or such number of Monitor
Wells as may be required under any Environmental Protection Laws), and Lessee
will provide such adjacent surface owner(s) with copies of all data obtained
during such monitoring operations. In the event for any reason the monitoring
data indicates the occurrence of an Adverse Environmental Event affecting an
adjoining surface owner’s groundwater supply, Lessee will take all steps
necessary to immediately prevent further damage to the groundwater supply,
together with all steps necessary to remediate any damage to, or contamination
of the water supply revealed by monitoring operations.  Lessee will provide
Lessor with copies of all data obtained pursuant to this subsection within ten
(10) days of the date such data is obtained by or on behalf of Lessee. 
Inability of Lessee to obtain adjacent landowner consent to drill and/or test a
monitor well on the adjacent landowner’s property, despite Lessee’s diligent
efforts to do so, shall not affect Lessee’s right to conduct exploration,
development or extraction operations within 5000 feet of the referenced
perimeter.

 

ARTICLE VIII

ENVIRONMENTAL MANAGEMENT SYSTEMS/INDEPENDENT

THIRD PARTY REVIEW

 

It is of the utmost priority to the Lessor for the Leased Premises to be
reclaimed and restored to as near its original state as reasonably possible.  If
Lessor considers that Lessee has not completed restoration or reclamation in
accordance with requirements of this Lease, Lessor shall so notify Lessee and
Lessee shall have a reasonable period of time to remedy the matter before being
liable for additional damages hereunder.  In no event shall Lessee be required
to undertake any action or remediation that is in violation of applicable laws,
rules, regulations, licenses or permit conditions.  The groundwater underlying
the Leased Premises will be reclaimed and restored to as near its original state
as possible and consistent with its previous use as defined by regulatory
permits and licenses.  The groundwater underlying adjacent lands will be free
from contamination as a result of operations being performed under this Lease. 
As such, during the

 

39

--------------------------------------------------------------------------------

 

term of this Lease, Lessee agrees to establish and maintain an environmental
management system compatible with the International Organization for
Standardization (“ISO”) 14001 standards as such standards may be revised from
time to time by ISO.  Furthermore, Lessor, in consultation with the Lessee, but
at Lessor’s sole discretion and at Lessor’s cost, may engage an independent
third party expert (the “Expert”) of its choosing to assist in reviewing (1) all
filings and plans provided to regulatory agencies, (2) all testing to determine
baseline groundwater parameters, and all water quality monitoring and
restoration activities, (3) all actions taken by Lessee with respect to the
Leased Premises, including but not limited to daily operations, establishment,
review, and maintenance of baseline wells and Monitor Wells, excursion detection
and correction, remediation, restoration, reclamation, (4) reviewing the form
and amount of the financial environmental protection security tendered with the
TCEQ as adjusted from time to time, and (5) any other action relating to or
arising out of the terms and provisions of this Lease or the Leased Premises. 
If Lessor deems it necessary or advisable, the Expert may be engaged to propose
and assist in the implementation of measures and procedures deemed necessary by
the Expert to prevent or remedy damages to the Leased Premises, groundwater
supply or the environment occurring while operations are being conducted under
this Lease. Lessee agrees to implement any and all environmental protection
measures, groundwater testing and monitoring procedures, environmental and/or
groundwater or surface restoration and remediation procedures as may be
recommended by the Expert (collectively the “Expert Recommendations”) during the
conduct of Lessee’s operations under this Lease. Lessee will bear all costs
associated with implementation of the Expert Recommendations. Notwithstanding
the foregoing, Lessee will not be required to implement the applicable Expert
Recommendations to the extent all of the following conditions exist:

 

1.               The Expert Recommendations exceed the requirements under
Environmental Protection Laws as applicable to Lessee’s Permits and Licenses;
and

 

2.               The costs of implementation of the Expert Recommendations are
excessive and would substantially affect the profitability of Lessee’s
operation.

 

In the event the Expert Recommendations meet conditions 1. and 2. above and
Lessee and the Expert cannot agree regarding an alternative to the Expert
Recommendations, Lessee may retain its own expert (a “Lessee Expert”) at
Lessee’s sole cost.  The Lessee Expert and Lessor’s Expert will meet in an
effort to reach an agreement as to the implementation of Lessor’s Expert
Recommendations or an alternative thereto.  In the event the Lessor Expert and
the Lessee Expert cannot reach an agreement, such parties will select a third
expert (the “Neutral”), the cost of which will be shared equally by Lessor and
Lessee.  The Neutral will make one of the following decisions: a) implementation
of the Expert Recommendations; b) implementation of an alternative to the Expert
Recommendations, whether or not the alternative was proposed by Lessee; or c)
rendering of a decision in writing that Lessee’s operations are in compliance
with all Environmental Protection Laws, and that the Expert Recommendations are
unreasonable and that no reasonable alternative to such recommendations exists.
The decision of the Neutral will be binding upon Lessor and Lessee.

 

40

--------------------------------------------------------------------------------

 

ARTICLE IX
ASSIGNMENT

 

9.1 Assignment by Lessee. This Lease is personal in nature between Lessor and
Lessee. Therefore, this Lease cannot be assigned by any Lessee without the prior
written consent of Lessor, which consent may be withheld for any reason or for
no reason in Lessor’s sole discretion.  Furthermore, no approved assignment by
Lessee, or by any assignee of Lessee, shall be valid or have any force until
Lessor shall have been furnished with a copy of the recorded assignment, and any
assignment approved by Lessor must cover and include all of Lessee’s rights
under this Lease. All leasehold estate owners and their subsequent assignees,
heirs and assigns shall be jointly and severally liable to Lessor for the
covenants, conditions and obligations under this Lease. The provisions hereof,
both express and implied, shall be considered as covenants running with the land
and binding upon any and all assignor, assignee or sub-lessee of Lessee and
shall extend to their heirs, successor and assigns.  Assignment of this Lease or
any part thereof shall not relieve any Lessee, its assignees, or any
sub-assignees of any obligations hereunder, heretofore accrued or to accrue in
the future; and any assignee of Lessee shall, by acceptance of such assignment,
be bound by and subject to all of the terms and provisions hereof. The term
“assignment” as used herein shall include, without limitation, any sublease,
farmout, operating agreement, pooling agreement, unitization agreement,
assignment or any other agreement by which any share of the operating rights
granted by this Lease are assigned or conveyed, or agreed to be assigned or
conveyed, to any other party.  Any attempted assignment by Lessee in violation
of the provisions of this Section will be void.

 

9.2 Assignment by Lessor. Lessor’s rights under this Lease are freely assignable
in whole or in part, provided that no sale or assignment by Lessor shall be
binding on Lessee unless Lessee shall have actual knowledge of or be furnished
with a copy of the recorded instrument evidencing same.

 

ARTICLE X
SURFACE RESTRICTIONS

 

10.1 Surface Use. Lessee agrees to use only so much of the surface of the Leased
Premises as is necessary to exercise its rights hereunder and Lessee’s use shall
be subject to any prior oil, gas or other mineral leases, wind leases or wind
easements or similar agreements in effect that cover all or part of the Leased
Premises, and its use shall be in compliance with all Environmental Protection
Laws.  Furthermore, Lessee shall, to the extent practicable, accommodate the use
and occupation of the Leased Premises by Lessor and its successors and assigns,
including future Lessees of water, oil, gas and/or other mineral rights, wind
rights, or hunting, grazing or other surface rights.  This clause is of material
value to Lessor in that it is important that surface rights are not unreasonably
interfered with and that other minerals (including oil and gas) and wind rights
are not devalued, and that the exploration, drilling, development, production
and other operations for the development of wind, oil and gas are not impeded
and that oil and/or gas wells are able to be drilled at optimum locations and
wind turbines are able to be sited at optimal locations.  Prior to commencing
any surface operations that would affect the Lessor’s use of any part of the
Leased Premises or damage any part of the

 

41

--------------------------------------------------------------------------------

 

Leased Premises, including wells, pipelines, roads, Drilling Operations or
seismic operations on the Leased Premises, Lessee, Lessor, and/or their
respective agents, shall, at the option of the Lessor, make a joint inspection
of the Leased Premises so that Lessor may be informed where and when surface
operations are going to be conducted on the Leased  Premises.  Lessee agrees to
notify Lessor prior to the commencement of development of or operations on each
separate Production Area, Withdrawn Area or other separate surface operation.

 

10.2 Roads. Lessee will use existing gates and roadways for entering upon and
leaving the Leased Premises, and to the extent practicable it will use such
routes, roadways, and approaches in going upon, over, or about the Leased
Premises as are designated for its use by Lessor who, in turn, agrees that
Lessor will, upon request and in consultation with Lessee, designate a
reasonable route for Lessee’s purposes consistent with terrain, preservation of
improvements, the location of Lessee’s activities, and the conduct of Lessor’s
existing or proposed land use. Lessee further agrees for itself and for all
persons entering or leaving said Leased Premises in connection with Lessee’s
operations hereunder that it shall keep all outside and interior gates along the
route or routes designated for such use securely closed (and locked when
designated by Lessor to be locked) except immediately before and immediately
after each separate use, and further agrees that it will promptly repair any
gate, fence, or other improvement that may suffer damage or injury by reason of
Lessee’s operations hereunder.  Lessee further agrees that it will maintain
approaches, gates, cattle guards, and roadways used in connection with its
operations in a good state of repair and will promptly cause to be repaired and
restored any damage thereto occasioned by or resulting from Lessee’s
operations.  Prior to the locating and construction of any road, Lessee shall
consult with Lessor with the intent being to situate said road(s) in mutually
agreeable locations, and the construction and use of such roads shall be in
compliance with all Environmental Protection Laws and the provisions of this
Lease. Lessee agrees to surface such roads in such a manner that they will
classify as “all weather” roads of gravel, caliche, or other similar material
resulting in a substantial surface (minimum 8” base, after compaction), and
further agrees to construct such diversion terraces or take such other actions
as may be reasonably necessary to reduce soil erosion and particularly to
prevent sand dune formation.  If Lessor shall desire, on all such new roads
Lessee shall also install and maintain substantial iron cattle guards capable of
turning cattle in substitution for any gates on the Leased Premises which Lessee
uses.  Lessee shall pay Lessor for the damage to the lands caused by such roads,
including loss of or interference with the use of the surface.  Lessee agrees to
maintain all roads used by Lessee in Lessee’s operation on the Leased Premises
in good condition and repair during the period of Lessee’s operations on the
Leased Premises.  Lessee’s obligation to maintain such roadways includes, but
shall not be limited to regular grading of the roads, immediate repair of any
rutting or subsidence caused or exacerbated by Lessee’s use of such roads, and
all other maintenance activities necessary to preserve the roadways in their
current condition as of the date of this Lease, or in their as built condition
in the case of new roads. When any roads constructed by Lessee are no longer
used by Lessee, if Lessee has constructed any character of topping, such as
caliche or otherwise on such roads, surface owner(s) shall have the option to
require Lessee to remove such topping from the roads or to abandon them for
Lessor’s future use and possession.  If the surface owner(s) require the road to
be removed, Lessee shall restore the surface of the land occupied by said road
and its adjacent drainage area to substantially its former condition.

 

42

--------------------------------------------------------------------------------

 

10.3 Surface Compensation and Areas Withdrawn From Lessor’s Use.  Lessee agrees
to pay Lessor reasonable compensation for all use of or damage to the surface
(or any incident of the surface estate), which use is made or which damages are
incurred in the exercise of the rights granted to Lessee by this Lease. 
Lessee’s obligations to compensate Lessor for such use or damage shall exist
whether or not such use or damage is due to the negligence of Lessee, its
agents, employees, invitees or independent contractors.  Lessee agrees to pay
for all damages to or loss of crops, cattle, livestock, wildlife, trees, surface
and subsurface water, and any other personal or real property situated on the
Leased Premises, resulting from Lessee’s operations thereon.

 

(a) Lessee shall pay Lessor the sum of One Hundred Dollars ($100.00) per
Exploration Well drilled by Lessee as full compensation for all damages to
grass, crops and land that occur during any exploration Drilling Operations. 
Lessee shall, in addition to the above, within sixty (60) days after the
drilling of such Exploration Well(s), restore the land to as near its original
condition as is reasonably possible.

 

(b) At least thirty (30) days prior to the date Lessee commences Drilling
Operations on any Production Well on the Leased Premises, or commences
construction for any Remote IX Facility, building, stockpiles or waste dumps or
other facility that is authorized under this Lease, Lessee shall construct a
fence around the area planned to be occupied by such Wellfield or Remote IX
Facilities, and Lessee shall pay Lessor a one- time payment of Six Hundred Fifty
dollars ($650.00) per each acre that is included within such fenced area, less
any payments already received for drill holes or other surface damage payments. 
Each Remote IX Facility or facilities other than production and injection grids,
shall encompass as small an area as is reasonably necessary for Lessee to safely
and prudently operate the facilities thereon.  Each Withdrawn Area for each
Wellfield shall not encompass an area that is more than one hundred (100’) feet
outside of the exterior limits of the uranium ore body that Lessee has
delineated and plans to produce by such injection well and Production Well grid
unless approved by the Lessor in writing. Other than the use of roads as set
forth elsewhere here in this Lease, the sampling of Monitor Wells and the
drilling of Exploration Wells or seismic studies pursuant to the terms of this
Lease, all other operations by Lessee shall be conducted only upon the Withdrawn
Area(s).  Except for rights, titles and estates reserved by Lessor and for
examination, inspection and/or audit purposes to insure the Lease is being
complied with and for the use of any road that runs through such Withdrawn Area
to other areas of the Leased Premises or other property owned by Lessor, Lessor
shall not use the surface of any Withdrawn Area.

 

The above consideration for each Exploration Well and each Wellfield shall be
considered as a permit fee for such operations and use and a damage payment for
the initial damages to the surface or improvements located thereon.  However,
notwithstanding anything to the contrary stated elsewhere herein, it is agreed
that the payment of any compensation under the terms of this Lease shall not
relieve Lessee of its obligation to restore the surface estate and improvements
to as near as reasonably possible to its original condition unless fully
released by the regulatory agency having oversight authority on the
restoration.  If Lessee breaches its restoration obligations, it shall owe
additional sums to Lessor as damages.

 

43

--------------------------------------------------------------------------------

 

10.4 Maintenance and Restoration of Wellfields. Once the Primary Term expires
and Commercial Production has ceased on any Production Area for more than ninety
(90) days, if Lessee has not elected to pay the Shut-In Royalty pursuant to
Section 5.9, Lessee shall immediately commence restoration and reclamation
activities on such Production Area if it has not already done so and it shall
pursue such restoration and reclamation activities in good faith and in
compliance with all Environmental Protection Laws, so that the surface and
subsurface of the area affected by the Lessee’s operations are returned to as
near the condition that existed immediately prior to the Lessee’s operation
thereon and to deep plow the area disturbed by methods common to the area. 
Lessee shall also take all actions necessary in order to comply with all
Environmental Protection Laws and in order to receive a full release from all
governing authorities pertaining to the surface and groundwater in the
Production Area and the Leased Premises. When the full releases are obtained
from all governing authorities, the Lessee shall remove the fencing it placed
thereon and return the surface of the land affected by the fencing to as near
the condition that existed immediately prior to the Lessee’s installation of
such fence.  If the acreage covered by the Wellfield is to be used for grazing
purposes, Lessee shall re-seed the area so plowed to prevent erosion with seeds
selected by Lessor that are consistent with the surrounding area. Furthermore,
Lessee agrees to maintain all fences, roads, improvements, tanks, pipelines,
wells, and wellheads in good repair at all times during the life of this Lease. 
Lessee shall keep all buildings, tanks and other fixtures, property, machinery
and equipment painted and free of rust and stains and shall keep all roads used
by Lessee free from all weeds, potholes and debris.  In the event this Lease or
any portion hereof has or may have expired or terminated, but all restoration
and reclamation activities on the Leased Premises have not been completed by
Lessee or Lessee has not received a full release from all governing authorities
pertaining to the surface, subsurface and water reservoirs located in, on, under
and around such Leased Premises within five (5) years of the termination date of
this Lease, Lessee shall pay Lessor an annual payment equal to One Hundred
Dollars ($100.00) dollars per acre for each acre included within each Withdrawn
Area not yet reclaimed as consideration for a one year period of restoration and
reclamation.  Upon such payment, Lessee will continue to have rights to
(a) possess and use water as provided for under the terms of the original Lease,
(b) easements for ingress and egress across the surface of the Leased Premises
as allowed pursuant to the Lease, to access any facility or plant, Withdrawn
Areas, and any other portion of the surface or subsurface that may require
restoration and reclamation activities, as well as any other facilities
associates with Lessee’s operations that Lessee deems necessary, (c) easements
for ingress and egress over the surface of the Leased Premises for the purposes
of removing property for a period of time, not to exceed one year after the
termination of the Lease, pursuant to the terms of the Lease.  Such annual
payment for such continued rights to conduct restoration and reclamation
activities shall be payable on or before the fifth (5th) anniversary following
the date of termination or expiration of the Lease and on or before each
successive anniversary date for as long as is necessary to receive complete
release form the regulatory agencies.  Upon such timely payment(s) for the
applicable acreage, Lessee shall acquire the above rights to conduct restoration
and reclamation activities for each one (1) year period.  Beginning with the
sixth (6th) anniversary date of the date of termination of this Lease, the
annual payments contemplated in this Section will be adjusted upward according
to the following formula (the “Annual Adjustment”): The month five (5) years
from the date the Lease terminates shall be the “base month.”  The corresponding
month in each subsequent year shall be the “anniversary month.”  The Annual
Adjustment shall be determined

 

44

--------------------------------------------------------------------------------

 

using the average of the preceding twelve (12) months Consumer Price Index — All
Urban Consumers — U.S. City Average (“CPI-U”), as published by the U.S. Bureau
of Labor Statistics.  If the CPI-U for an annual monthly average shall exceed
the average of the twelve (12) months CPI-U ending in the base month (the “Base
Annual Average”), then the payment being adjusted shall be increased by the
percentage by which the CPI-U for such annual average exceeds the CPI-U for the
Base Annual Average.  In the event the CPI-U shall hereafter be converted to a
different standard reference base or otherwise revised, the determination of the
Annual Adjustment shall be made with use of such conversion factor, formula or
table for converting the CPI-U as may be published by the U.S. Bureau of Labor
Statistics or, if not so published by the U.S. Bureau of Labor Statistics, then
with the use of such conversion factor, formula or table for converting the
CPI-U as may be published by a nationally recognized publisher of similar
statistical information, and mutually agreed between Lessor and Lessee.  If the
CPI-U shall no longer be published then, for purposes of determining the Annual
Adjustment there shall be substituted for the CPI-U such other index as Lessor
and Lessee shall agree upon. In no event will the Annual Adjustment cause a
reduction of any payment from the prior year’s  amount.

 

10.5 Pipelines; Above Ground Restrictions. Unless waived by the Lessor in
writing, Lessee will bury all pipelines that are located outside of a Withdrawn
Area so that the top of the pipeline shall remain more than three feet (3’)
below the surface of the land and shall comply with all Environmental Protection
Laws and regulations that may be implicated by any activity associated with the
construction, use, and decommissioning of any pipelines.  Lessee shall keep the
top soil separated during its excavation procedures and shall replace the top
soil on top of the excavation.  Lessee shall periodically check all pipelines to
make sure that the surface has not subsided and that the pipeline has not
created any rutting or drainage problems.  Except for wellheads, pipelines,
waterlines, equipment, tanks, buildings or other facilities located within a
Withdrawn Area or pipeline valves, meters or risers on buried pipelines lying
outside of a Withdrawn Area, there shall not be any above-ground device or
property on the Leased Premises.  Notwithstanding anything to the contrary
stated herein, it is controllingly provided that none of the following
equipment, buildings, fixtures or accessories shall be located upon the Leased
Premises: (i) any facility, improvement or equipment that produces, transports,
treats or otherwise deals with or pertains to any other Lease; (ii) any housing
facility or (iii) any plant or treatment facility other than any Remote IX
Facility wherein the uranium is loaded onto ion exchange resins that enable the
ion exchange resins to be hauled to a full plant for stripping, product
benefication, upgrading or refining.

 

10.6 Fences. All fences constructed on the Leased Premises by Lessee shall be
constructed with at least five (5) strands of wire, using all cedar posts.  Each
fence will be constructed in a good and workmanlike manner so that said fence
does not sag and is capable of turning all livestock of surface owner.  Lessee
shall install an adequate metal gate across each road leading in or out of any
Withdrawn Area, or at any cut Lessee makes in any fence to provide an opening,
and if surface owner shall desire, Lessee shall also install and maintain a
substantial iron cattle guard capable of turning cattle and horses, which
gate(s) and cattle guard(s) shall become the property of Lessor.  Lessee will
not cut or go over any fence or fences of Lessor at any time or in connection
with any operation of the Leased Premises without first obtaining Lessor’s
express consent thereto in writing.  If Lessor consents to the cutting of any
fence, the cut must be made in the place and manner designated by Lessor and
prior to the

 

45

--------------------------------------------------------------------------------

 

cutting of any fence of surface owner, Lessee will brace the existing fence
adequately on both sides of the proposed cut so that there will be no slacking
of the wires.  Promptly after making such cut, Lessee shall install and maintain
an adequate metal gate in such opening.  In the event that any gate required to
be installed by Lessee is located on an outside fence of Lessor, Lessee shall
keep it locked at all times.  Lessee shall promptly close all gates, which
Lessee, its agents, servants and/or employees may use in Lessee’s operations on
the Leased Premises to prevent the escape of any cattle or other livestock (or
wildlife if high-fenced) through any open gates. Lessee further agrees to comply
with all reasonable rules and regulations proposed by Lessor regarding the
opening, closing and locking of all such gates.

 

10.7 Well Locations. Without the express written consent of Lessor, no Well
shall be located within One Thousand Feet (1,000’) of any Water Supply Well or
water reservoir or house on the Leased Premises, or within Five Hundred feet
(500’) of any improvement or corrals on the Leased Premises, existing as of the
date of commencement of operations for such Well.

 

10.8 Removal of Property. Subject to Sections 7.1 and 7.2 above, Lessee shall
have the right at any time during the term of this Lease and the obligation
within a reasonable time (not exceeding three hundred and sixty (360) days)
after the expiration or termination of this Lease, to remove all property,
equipment and fixtures in and around such wells as are plugged and abandoned
pursuant to requirements of the regulatory agencies having jurisdiction over
such activities.  In the event that any casing or pipe is required to remain in
any wells’ bore hole upon plugging and abandonment, Lessee shall cut off such
pipe or casing hole at least three (3) feet beneath the surface of the ground
and the well shall be capped, plugged and abandoned in accordance with the
rules and regulations of the regulatory agency governing such plugging and
abandonment activities.

 

10.9 Gate Guard.  It shall not be necessary to have a gate guard unless Lessor
finds that Lessee or any of its employees, contractors, subcontractors,
officers, invitees or permittees on more than five (5) occasions, either leaves
a gate opened that should have been shut, fails to lock any gate that should be
locked, violates Section 10.10 below or allows any unauthorized person onto the
Leased Premises.  In that event, during any time operations are conducted on the
Leased Premises and two (2) or more of Lessee’s employees, contractors,
subcontractors, invitees or permittees will be entering the Leased Premises
during any consecutive period of two (2) or more days, Lessee shall provide at
its sole cost, expense and liability a 24-hour gate guard at the gate where
access is gained to the Leased Premises for such operation.  If a gate guard is
required hereunder, said gate guard shall be paid by Lessee and the gate guard
shall record the name of each person entering, the company affiliate of each
person entering, the time entered, the time exited and the license plate of each
vehicle.

 

10.10 No Hunting.  It is agreed and stipulated that neither the Lessee, nor its
agents, employees, contractors or subcontractors, their agents or employees,
shall at any time hunt or fish on the Leased Premises, nor shall they, or any of
them, carry on to the Leased Premises firearms, fishing poles, bows and arrows,
traps or other equipment designed or adapted for such purposes. Lessor, any
designated gate guard, or their duly authorized representatives, shall have the
right at all time to inspect vehicles entering upon or leaving the Leased
Premises for the purposes of ascertaining whether the terms and conditions of
this Lease are being carried out.

 

46

--------------------------------------------------------------------------------

 

10.11 Waste Disposal Well.  Lessee, requiring a way to dispose of licensed
11e.(2) By-Product Material, is granted the right to install and operate on the
Leased Premises  one or more Class I non-hazardous Waste Disposal Well(s) to the
extent permitted by TCEQ.  Such installation(s) will consist of the Waste
Disposal Well, pumps, tanks, retention ponds, filters and associated piping
necessary to inject the solutions into suitable deep brackish formations.

 

10.12 Additional Compensation.   Lessee agrees to pay Lessor reasonable
compensation for all use of or damage to the surface estate incurred in the
exercise of the rights granted to Lessee hereunder.  Lessee’s obligations to
compensate Lessor for such use or damage shall exist whether or not it is due to
the negligence of Lessee, its agents, employees, invitees, or independent
contractors, or otherwise.  In any event, the minimum compensation for Lessee’s
use of the surface of Lessor’s property shall be as follows:

 

A. Pipeline rights-of-way outside of Withdrawn Areas: $3.00 per linear foot

 

B. New Roads outside of Withdrawn Areas:  $2,000.00/Acre

 

C. Overhead power and phone line Right-of-Ways outside of Withdrawn Areas: 
$3.00 per linear foot

 

ARTICLE XI
FORCE MAJEURE

 

11.1 Force Majeure .  It is understood and agreed that if Lessee is prevented
through no fault of Lessee from complying with any express or implied covenant
of this Lease, from conducting Drilling Operations or Reworking Operations
thereon, or from producing Leased Substances therefrom: a) by reason of or as a
result of any Federal or State law, or any order, ruling or regulation of
governmental authority, or delay in obtaining any required authorization or
permit from any governmental authority despite diligent efforts to do so, other
than as a result of a failure to comply with Environmental Protection Laws or
this Lease; or b) due to hurricane, flooding, tornado, earthquake or similar act
of God; or (c) due to interference or legal action brought by any NGO or other
private party the effect of which would be to deny or revoke or enjoin
operations under any license, permit or order that authorizes Lessee to mine the
leased Premises; or (d) as the result of the unavailability of qualified
drilling contractors (each event under (a), (b), (c) and (d) being referred to
herein as a “Force Majeure Event”), then while and so long as such Force Majeure
Event exists, Lessee’s obligation to comply with such covenant shall be
suspended and Lessee shall not be liable in damages for failure to comply
therewith, and the term of this Lease shall be extended while and so long as
such Force Majeure Event exists and the time while such Force Majeure Event
exists shall not be counted against Lessee. If the Force Majeure Event occurs
during the Primary Term of this Lease, then the Primary Term shall be extended
by the number of days that the Force Majeure Event exists. Notwithstanding the
foregoing, the term of this Lease (including the Primary Term) may not be
extended by operation of this Section for any single period of time in excess of
two (2) years per Force Majeure Event, or for any periods of time exceeding five
(5) years in the aggregate.  However, it is controllingly provided that this
clause shall not excuse the timely and proper payments called for in this Lease,
including but not limited to any Production Royalty payments, Minimum Royalty
payments,

 

47

--------------------------------------------------------------------------------

 

shut-in payments, or Rental payments.  In the event of the occurrence of a Force
Majeure Event, Lessee must provide written notice to Lessor specifying the
nature and cause of such Force Majeure Event. Furthermore, Lessee must use
diligence in removing the cause of the Force Majeure Event.

 

ARTICLE XII
CONTINUOUS DEVELOPMENT

 

12.1        Continuous Development. If, at the expiration of the Primary Term,
Commercial Production is not occurring on the Leased Premises or lands pooled
therewith, (if authorized) but Lessee is then engaged in Drilling Operations or
Reworking Operations thereon, or shall have completed a dry hole thereon within
ninety (90) days prior to the end of the Primary Term, then all the acreage
covered by this Lease and all the depths under the Leased Premises shall remain
in force and effect so long as operations on said well or the Drilling
Operations or Reworking Operations on any other additional well on the Leased
Premises or on acreage pooled therewith (if authorized), are prosecuted with no
cessation of more than ninety (90) consecutive days.

 

12.2         Logical Mining Units.   Unless otherwise specifically provided by
the express provisions of this Lease, at the expiration of the Primary Term, or
upon the cessation of the continuous Drilling Operations or Reworking Operations
pursuant to the terms of Section 12.1 above, whichever is the later, unless the
Lessee has elected to pay Shut-In Royalties pursuant to Section 5.9, this Lease
shall ipso facto terminate and revert to Lessor, its successors and assigns,
without re-entry, except as to those portions of the Leased Premises where there
is Commercial Production, together with those related Production Areas capable
of being developed and produced under a unified and coordinated mine plan or
logical mining unit within the Leased Premises (collectively, “Qualifying
Lands”).

 

12.3         Release. Within sixty (60) days after automatic termination of this
Lease under Section 12.2 above, Lessee shall execute and deliver to Lessor an
instrument in recordable form which designates all Qualifying Lands,
acknowledges such termination and releases the Lease except as to the acreage
included within the Qualifying Lands.  In such instrument designating Qualifying
Lands, the acreage held shall be identified by field notes made by a natural
survey on the ground, using property lines, not fence lines, at Lessee’s
expense, and all acreage not held shall be released.  However, Lessee shall not
be obligated to survey the Qualifying Lands if it otherwise provides a proper
legal description of such Qualifying Lands and Lessor agrees that the
description used is a proper legal description.  After the partial release of
this Lease is properly filed of record, Lessee shall have no further liability
or obligation (other than any liability or obligation that has accrued prior to
such termination) in connection with any strata or acreage to which this Lease
shall have so terminated.  However, in the event Lessee fails to timely execute
and deliver a partial release of this Lease in accordance with the above terms
within said sixty (60) days, Lessee shall forfeit the right to file such partial
release.  Thereafter, Lessor shall have the sole right to execute such partial
release of this Lease, and any instrument so executed by Lessor shall be
effective as of the date of termination for all purposes, including the purpose
of identifying which acreage has been held and which acreage has terminated.

 

48

--------------------------------------------------------------------------------

 

12.4         Retained Rights. Regardless of a partial termination of this Lease
under any provision of this Lease, it is agreed that Lessee shall have and
retain such non-exclusive easements of ingress and egress over those lands
covered by this Lease as shall be necessary to enable Lessee to develop and
operate the portion or portions of this Lease that continue in force and effect
for the production of Leased Substances therefrom, and it is further agreed that
it shall not be necessary for Lessee to remove or relocate any pipelines, or
other surface equipment or installation from any portion of this Lease which
have terminated for so long as same continue to be used for development and
operation of such portion of this Lease that is continued in force and effect.

 

12.5         Failure to Release.  If any release is required under the terms of
this Lease and there is no bona fide dispute between Lessor and Lessee that a
release is required and Lessee fails to timely file any release required under
the terms of this Lease, Lessee shall pay to Lessor the sum of Five Hundred
Dollars ($500.00) per day for each day that such release is not timely filed,
until such release is filed of record by Lessee.  However, the above described
monetary amount shall not begin to accrue until thirty (30) days after Lessor
has made a written request to Lessee for such release. This monetary amount
shall be in addition to any other damages or remedies that Lessor shall be
entitled to at law or in equity.

 

ARTICLE XIII
RESERVED RIGHTS

 

13.1 Concurrent Rights. It is agreed that Lessor may hereafter execute leases,
easements, permits or licenses for the exploration, development and/or
production of wind, any minerals not covered by this Lease, and/or any minerals
covered by this Lease that are located within any depths not covered by this
Lease at the time of the execution of such Lease, including but not limited to
released deep oil, gas strata, uranium and other fissionable materials. 
Additionally, Lessor, or its assigns may make any use of the surface of the
Leased Premises it deems useful or advisable provided that such use does not
materially interfere with Lessee’s rights hereunder.  It is also agreed that
Lessor may hereafter grant rights to third persons to use all or part of the
surface of the Leased Premises for such purposes and to penetrate the strata and
horizons covered hereby, by drilling or seismic operations or otherwise,
provided that any penetration of strata or horizons may not unduly interfere
with or damage existing operations of Lessee hereunder or materially interfere
with Lessee’s rights hereunder.  Any such third party agreement shall require
the third party to acknowledge the existence of this Lease and agree to conduct
its operations so as not to materially interfere with Lessee’s rights
hereunder.  Lessor shall promptly supply Lessee with a copy of any such third
party agreement or excerpts therefrom that may materially and adversely affect
Lessee’s operations on the Leased Premises.  Furthermore, Lessor shall be
allowed to execute any top lease which leases all or part of the minerals,
acreage and/or depths covered by this Lease, so long as such top lease is
expressly subject to the terms of this Lease to the extent it is valid and
subsisting, provided however that the Lessor reserves the right in the top lease
to acknowledge that this Lease is in force and effect and binding upon the top
lease lessee without the top lessee joinder.  Lessor shall never be held liable
to any Lessee for any such third parties’ acts or omissions and Lessee shall not
be prohibited from receiving any actual monetary damages from such third parties
that result from the third parties’ acts or omissions in any drilling or other
operations.  No liability shall be incurred by Lessor in granting

 

49

--------------------------------------------------------------------------------

 

of rights to such a third party lessee or by reason of operations of such third
party lessee. The reserved right to explore “released” deep strata specifically
includes the right to conduct seismic operations on and through the non-released
horizons covered by this Lease and to record, store and use the seismic
information obtained by the seismic operations.

 

ARTICLE XIV
POOLING

 

14.1 No Pooling. Lessee has no right, during or after the Primary Term while
this Lease is in effect, to pool the Leased Premises, or any portion thereof
with other lands.  If Lessee desires to form a pooled unit, it should present
the reasons and justifications for forming such unit to Lessor so that Lessor
can determine whether or not it desires to consent to any such pooled unit.
However, Lessor may withhold consent to any pooling requested by Lessee for any
or no reason in Lessor’s sole discretion.

 

ARTICLE  XV
WARRANTIES

 

15.1 Warranty. This Lease is made without any warranties of title or any other
representations or warranties of any kind or character, express or implied,
except that Lessor represents and warrants that it has taken all steps and
obtained all board of director and other approvals necessary to duly authorize
Lessor to enter into this Lease and that the person executing this Lease on
behalf of the Lessor is duly authorized to do so as the lawful and valid act of
the Lessor.  This Lease is expressly made subject to the following: (a) matters
filed of record, to which reference is here made and to all terms thereof and
(b) visible and apparent easements whether of record or not. LESSEE ACCEPTS THE
CONDITION OF THE LEASED PREMISES “AS IS” WITHOUT WARRANTY OF TITLE, FITNESS OR
ANY IMPLIED WARRANTIES.  MOREOVER, LESSEE ACKNOWLEDGES THAT ALL OR A PORTION OF
THE LEASED PREMISES IS, OR MAY BE, OR MAY BECOME SUBJECT TO THREATENED OR
ENDANGERED SPECIES HABITAT DESIGNATIONS, JURISDICTIONAL WETLANDS AND OTHER
ENVIRONMENTAL RESTRICTIONS AND BURDENS, AND LESSEE ACCEPTS THE LEASED PREMISES
SUBJECT TO SUCH DESIGNATIONS, RESTRICTIONS, AND BURDENS, AS THEY NOW EXIST AND
MAY HEREAFTER EXIST.  Without impairment of Lessee’s rights under this Lease, it
is agreed that if this Lease covers a less interest in the Leased Substances in
all or any part of said Leased Premises than the entire and undivided fee simple
interest in the Leased Substances (whether Lessor’s interest is herein specified
or not), or no interest therein, then the royalties and other monies (except
bonus, surface damages, permit fees and minimum royalties) accruing from any
part as to which this Lease covers less than such fee interest in the Leased
Substances shall be paid only in the proportion which in the interest in the
Leased Substances, if any, covered by this Lease, bears to the whole and
undivided fee simple interest in the Leased Substances.  To the extent covered
by this Lease, royalty interests attributable to Leased Substances produced and
sold from the Leased Premises reserved by predecessors in title to Lessor or
granted to third parties by Lessor or any predecessor in title to Lessor shall
be payable by Lessee out of Lessor’s Production Royalty, but not in an amount in
excess of Lessor’s Production Royalty.

 

50

--------------------------------------------------------------------------------

 

ARTICLE XVI.
INDEMNITY, RELEASE, INSURANCE AND WAIVERS

 

16.1  INDEMNITY. LESSEE SHALL INDEMNIFY AND HOLD HARMLESS LESSOR, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, REPRESENTATIVES, SUCCESSORS, AND ASSIGNS (THE
“INDEMNIFIED PERSONS”), AGAINST ANY AND ALL EXPENSES, CLAIMS, DEMANDS, CAUSES OF
ACTION, JUDGMENTS, LIABILITIES, FINES, LIENS, PENALTIES, AND CAUSES OF ACTION OF
ANY NATURE OR INJURY TO OR DEATH OF PERSONS (INCLUDING DEATHS OF OR INJURIES TO
EMPLOYEES, AGENTS, CONTRACTORS, SUBCONTRACTORS, INVITEES AND PERMITEES OF
LESSEE) AND/OR LOSS OR DAMAGE TO PROPERTY INCLUDING, WITHOUT LIMITATION,
ATTORNEY’S FEES, EXPERT’S FEES, AND COURT COSTS (“INDEMNIFIED LIABILITIES”)
DIRECTLY OR INDIRECTLY ARISING OUT OF, CAUSED BY, OR RESULTING FROM (IN WHOLE OR
IN PART) THE FOLLOWING ACTS OR OMISSIONS INCLUDING NEGLIGENCE AND WILLFUL
MISCONDUCT, ON THE LESSOR’S PROPERTY DURING OR UNDER THE TERMS OF THIS
AGREEMENT:

 

(A) THE CONDITION OF THE LEASED PREMISES,

 

(B) ANY ACTS OR OMISSIONS OF LESSEE, OR OF LESSEE’S SUCCESSORS OR ASSIGNS, OR OF
EMPLOYEES, AGENTS, INVITEES, OR CONTRACTORS OF ANY OF SUCH PERSONS,

 

(C) ANY VIOLATION OF ANY LAWS, RULES OR REGULATIONS BY LESSEE, OR BY LESSEE’S
SUCCESSORS OR ASSIGNS, OR BY EMPLOYEES, AGENTS, INVITEES, OR CONTRACTORS OF ANY
OF SUCH PERSONS,

 

(D) THE VIOLATION BY LESSEE OF THE RIGHTS OF HOLDERS OF RIGHTS OR INTERESTS IN
THE LEASED PREMISES, OR

 

(E) THE DISCLOSURE BY LESSEE OF DATA, ANALYSES OR INFORMATION PERTAINING TO THE
LEASED PREMISES OBTAINED BY, THROUGH, OR UNDER LESSEE, OR OF INTERPRETATIONS
THEREOF, BY, THROUGH OR UNDER LESSEE,

 

EVEN IF THE INDEMNIFIED LIABILITIES ARE CAUSED IN PART BY OR DUE TO THE PARTIAL
OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF AN INDEMNIFIED PERSON. LESSEE’S
OBLIGATION TO INDEMNIFY THE INDEMNIFIED PERSONS DOES NOT COVER LIABILITIES
RESULTING FROM THE SOLE NEGLIGENCE OR SOLE WILLFUL MISCONDUCT OF AN INDEMNIFIED
PERSON.   LESSOR SHALL ADVISE LESSEE IN WRITING OF ANY ACTION, ADMINISTRATIVE OR
LEGAL PROCEEDING OR INVESTIGATION AS TO WHICH THIS INDEMNIFICATION MAY APPLY
WITHIN 10 DAYS OF LESSOR’S RECEIPT OF NOTICE OF ANY SUCH ACTION, PROCEEDING OR
INVESTIGATION. HOWEVER, THE INDEMNIFIED PERSONS’ FAILURE TO NOTIFY LESSEE WITHIN
SUCH 10 DAY PERIOD WILL NOT AFFECT THE

 

51

--------------------------------------------------------------------------------

 

INDEMNIFIED PERSONS’ RIGHTS, NOR THE LESSEE’S OBLIGATIONS, PROVIDED THE
INDEMNIFIED PERSONS USE THEIR GOOD FAITH EFFORTS TO GIVE LESSEE NOTICE. LESSEE,
AT LESSEE’S EXPENSE, SHALL ASSUME ON BEHALF OF THE INDEMNIFIED PERSONS AND
CONDUCT WITH DUE DILIGENCE AND IN GOOD FAITH, THE DEFENSE THEREOF WITH COUNSEL
SATISFACTORY TO LESSOR; PROVIDED, HOWEVER, THAT THE INDEMNIFIED PERSONS SHALL
HAVE THE RIGHT, AT ITS OPTION, TO BE REPRESENTED THEREIN BY ADVISORY COUNSEL OF
SUCH PERSON’S SELECTION AND AT SUCH PERSON’S OWN EXPENSE. IN THE EVENT OF THE
FAILURE BY LESSEE TO FULLY PERFORM IN ACCORDANCE WITH THIS INDEMNIFICATION, THE
INDEMNIFIED PERSONS MAY SO PERFORM, BUT ALL COSTS AND EXPENSES SO INCURRED BY
THE INDEMNIFIED PERSONS IN THAT EVENT SHALL BE REIMBURSED BY LESSEE TO THE
INDEMNIFIED PERSONS, TOGETHER WITH INTEREST ON THE SAME FROM THE DATE ANY SUCH
EXPENSE WAS PAID BY AN INDEMNIFIED PERSON UNTIL REIMBURSED AT THE RATE OF 18%
PER ANNUM OR THE MAXIMUM RATED PROVIDED BY LAW, WHICHEVER IS LESS.  THIS
INDEMNIFICATION SHALL NOT BE LIMITED TO DAMAGES, COMPENSATION OR BENEFITS
PAYABLE UNDER INSURANCE POLICIES, WORKERS’ COMPENSATION ACTS, DISABILITY BENEFIT
ACTS OR OTHER EMPLOYEES’ BENEFIT ACTS.  THIS SECTION SHALL SURVIVE THE
TERMINATION OR RELEASE OF THIS AGREEMENT IN WHOLE OR IN PART.

 

16.2 RELEASE.

 

A.            LESSEE RELEASES LESSOR, ITS DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, TENANTS, SUCCESSORS AND ASSIGNS (“RELEASED PERSONS”) FROM ALL LIABILITY
FOR ANY DAMAGE OR INJURY LESSEE, LESSEE’S SUCCESSORS OR ASSIGNS, OR ANY
EMPLOYEES, AGENTS, INVITEES, OR CONTRACTORS OF ANY OF SUCH PERSONS, MAY SUSTAIN
FROM ANY AND ALL SOURCES OR CAUSES EXCEPT TO THE EXTENT, SUCH DAMAGE OR INJURY
IS PROXIMATELY CAUSED BY THE SOLE GROSS NEGLIGENCE OR SOLE WILLFUL MISCONDUCT OF
A RELEASED PERSON.

 

B.            LESSEE WAIVES ALL RIGHT TO RECOVER FOR CONSEQUENTIAL, PUNITIVE
AND/OR EXEMPLARY DAMAGES, UNLESS SUCH WAIVER IS SPECIFICALLY PROHIBITED BY
STATUTE, WITH RESPECT TO ANY CAUSES OF ACTION WHICH MAY ARISE AGAINST A RELEASED
PERSON ON OR AFTER THE DATE HEREOF.  THIS SECTION SHALL SURVIVE THE TERMINATION
OR RELEASE OF THIS AGREEMENT IN WHOLE OR IN PART.

 

16.3 ENVIRONMENTAL INDEMNITY.  LESSEE SHALL COMPLY WITH ALL APPLICABLE LAWS NOW
IN EFFECT OR HEREINAFTER ENACTED, INCLUDING ENVIRONMENTAL PROTECTION LAWS. 
LESSEE TAKES FULL RESPONSIBILITY FOR ALL CLEANUP COSTS AND DAMAGES AS A RESULT
OF ANY AND ALL ADVERSE ENVIRONMENTAL EVENTS ARISING OUT OF THE ACTS OR OMISSIONS
OF LESSEE, OR OF LESSEE’S SUCCESSORS OR ASSIGNS,

 

52

--------------------------------------------------------------------------------

 

OR OF EMPLOYEES, AGENTS, INVITEES, CONTRACTORS OR SUBCONTRACTORS OF ANY SUCH
PERSONS.

 

LESSEE SHALL BE RESPONSIBLE FOR AND SHALL INDEMNIFY AND HOLD THE INDEMNIFIED
PERSONS HARMLESS FOR ALL COSTS, EXPENSES, AND LIABILITY RELATING OR ARISING IN
ANY WAY WHATSOEVER FROM AN ADVERSE ENVIRONMENTAL EVENT AFFECTING THE LEASED
PREMISES OR ADJACENT LAND ARISING OUT OF THE ACTS OR OMISSIONS OF LESSEE, OR OF
LESSEE’S SUCCESSORS OR ASSIGNS, OR OF EMPLOYEES, AGENTS, INVITEES, CONTRACTORS
OR SUBCONTRACTORS OF ANY SUCH PERSONS. SUCH INDEMNIFICATION INCLUDES ALL
ACTIONS, LIABILITIES, CLAIMS, DAMAGES (INCLUDING CONSEQUENTIAL DAMAGES), FINES,
LIENS, PENALTIES, FORFEITURES, ADMINISTRATIVE AND JUDICIAL PROCEEDINGS, AND THE
COSTS AND EXPENSES INCIDENT THERETO (INCLUDING COSTS OF DEFENSE, SETTLEMENT, AND
REASONABLE INVESTIGATION AND EXPERT WITNESS AND ATTORNEY’S FEES), CHARGES,
ORDERS, REMEDIAL ACTIONS, REQUIREMENTS, AND ENFORCEMENT ACTIONS OF ANY KIND,
WHETHER FORESEEABLE OR UNFORESEEABLE, WHICH LESSOR MAY HEREINAFTER INCUR OR BE
PARTY TO, BECOME RESPONSIBLE FOR OR PAY OUT AS A RESULT OF DEATH OR BODILY
INJURY TO ANY PERSON, DESTRUCTION OR DAMAGE TO ANY PROPERTY, CONTAMINATION OF OR
ADVERSE EFFECTS ON THE ENVIRONMENT, ANY VIOLATION OF ANY APPLICABLE LAW, RULE OR
REGULATION PROMULGATED BY ANY LOCAL, STATE OR FEDERAL AGENCY OR ENTITY HAVING
JURISDICTION OVER SUCH MATTERS, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL
PROTECTION LAWS.

 

THIS INDEMNITY SHALL FURTHER APPLY TO ANY RESIDUAL CONTAMINATION RESULTING FROM
THE ACTIVITIES OF LESSEE, LESSEE’S SUCCESSORS OR ASSIGNS, OR OF EMPLOYEES,
AGENTS, INVITEES, CONTRACTORS OR SUBCONTRACTORS OF ANY SUCH PERSONS, OR OTHER
PERSONS ON THE LEASED PREMISES OR ADJACENT LANDS ACTING ON BEHALF OF LESSEE, OR
AFFECTING ANY NATURAL RESOURCES THEREIN, AND TO ANY CONTAMINATION OF ANY PART OF
THE LESSOR’S LAND, THE LEASED PREMISES, LANDS ADJACENT TO THE LEASED PREMISES,
OR NATURAL RESOURCES.

 

LESSOR SHALL NOTIFY LESSEE OF ANY CLAIMS OR DEMANDS ASSERTED AGAINST LESSOR FOR
WHICH LESSOR MAY SEEK INDEMNITY FROM LESSEE HEREUNDER WITHIN 10 DAYS OF LESSOR’S
RECEIPT OF NOTICE OF ANY SUCH CLAIM OR DEMAND.  HOWEVER, THE INDEMNIFIED
PERSONS’ FAILURE TO NOTIFY LESSEE WITHIN SUCH 10 DAY PERIOD WILL NOT AFFECT THE
INDEMNIFIED PERSONS’ RIGHTS, NOR THE LESSEE’S OBLIGATIONS, PROVIDED THE
INDEMNIFIED PERSONS USE THEIR GOOD FAITH EFFORTS TO GIVE LESSEE SUCH NOTICE. 
THIS SECTION SHALL SURVIVE THE TERMINATION OR RELEASE OF THIS AGREEMENT IN WHOLE
OR IN PART.

 

53

--------------------------------------------------------------------------------

 

16.5 Insurance. Lessee agrees to obtain and maintain at Lessee’s sole cost and
expense, commercial general liability insurance; business auto liability
insurance; and workman’s compensation insurance and employers liability
insurance on its employees.  Such commercial general liability insurance shall
be written on an ISO occurrence most current form (or a substitute form
providing equivalent coverage), and shall cover liability from premises,
operations, independent contractors, products-completed operations, personal
injury and advertising injury, and liability assumed under an insured contract;
shall provide for insured limits for bodily injury or death of not less than
$10,000,000 per occurrence limit (if such commercial general liability insurance
contains a general aggregate limit, it shall apply separately to the Leased
Premises); and shall name Lessor as an additional insured using an ISO
additional insured endorsement (or a substitute providing equivalent coverage). 
Such business auto liability insurance shall cover liability arising out of any
auto (including owned, hired, and non-owned autos) and shall be written on ISO
form (or a substitute form providing equivalent liability coverage), and, if
necessary shall be endorsed to provide contractual liability coverage equivalent
to that provided in the 1990 and later editions of CA 00-01.  Workman’s
compensation insurance shall be for the statutory limits.

 

Lessee shall furnish to Lessor, prior to conducting any activities on the Leased
Premises certificates of such insurance issued by insurance companies reasonably
acceptable to Lessor, which companies shall be licensed to do business in the
State of Texas.

 

The policies shall contain severability of interest endorsements, state that the
insurance is primary insurance as regards any other insurance carried by Lessor,
and shall include a waiver of subrogation in favor of Lessor and its officers,
directors, employees, tenants, and agents.  Such insurance shall state that
Lessor will be notified in writing 30 days prior to cancellation, material
change, or non-renewal of insurance.  Lessee shall provide to Lessor a certified
copy of any and all applicable insurance policies upon request of Lessor. Timely
renewal certificates will be provided as the coverage renews.  Lessee agrees
that if such insurance policies are not kept in force during the entire term of
this Lease, Lessor may, but is not obligated to, procure the necessary insurance
and pay the premiums therefor.  Lessee agrees that such premiums shall be repaid
to Lessor on demand.

 

All contractors hired by Lessee that will enter on the Leased Premises shall
also provide insurance complying with these insurance coverage requirements,
including providing Lessor with a certificate of insurance verifying coverages
required hereby and naming Lessor as additional insured prior to entering upon
the Leased Premises.  Alternatively, Lessee shall provide Lessor with written
evidence from its insurance carriers that Lessee’s required insurance adequately
covers the actions and property of such contractors, and supports all of
Lessee’s indemnification obligations with respect to the actions of such
contractors.

 

16.6 Waiver of Subrogation. Lessee will have no right or claim against Lessor or
its officers, directors, employees, tenants, for any matter covered by Lessee’s
insurance (whether caused by negligence of any of such persons or the condition
of the Leased Premises) by way of subrogation or assignment.  Lessee hereby
waives any such right. Lessee shall require its insurance carrier to endorse all
applicable policies waiving the carrier’s right of recovery under

 

54

--------------------------------------------------------------------------------

 

subrogation or other right or claim that might be asserted against Lessor, and
to provide Lessor a certificate of insurance verifying this waiver.

 

ARTICLE XVII
INFORMATION

 

17.1 Tests and Logs. Lessor shall have the right, personally or by
representative, at Lessor’s sole risk and expense, to have access to any Well
actually drilled on the Leased Premises or on acreage pooled therewith, with the
right to observe all operations and the right to witness the taking of all
electrical and other logs, cores and other samples, and water quality analyses. 
Lessor agrees to comply with Lessee’s safety procedures and any applicable laws 
in connection with such inspections and observations.  Any inspection of or
observations on the Leased Premises shall be at Lessor’s sole risk.  Lessee
agrees, upon Lessor’s written request, to furnish Lessor with copies of all
daily drilling reports, Well logs and other tests, promptly after taking the
same; and Lessee agrees to divulge to Lessor true and correct information and
data as to the Leased Premises and the production therefrom, as well as all such
technical information concerning logs, tests, cores, samples, analysis, reports
and summaries thereof as Lessee may acquire or already have acquired or obtained
and which is readily available with respect to the sands and formations
encountered or expected to be encountered in and under the Leased Premises. 
Lessee shall furnish to Lessor one true copy of logs, tests, information
concerning cores and samples, analysis, reports and summaries thereof, mylar
prints, paper prints, stacked prints, tapes, discs and other results of all
seismic tests (and any reprocessing thereof), it has now or obtains in the
future in connection with the Leased Premises and within one mile of the Leased
Premises, including all analyses and summaries thereof.  Lessee shall not
furnish Lessor, its employees, agents, consultants, representatives or assigns
with any seismic or associated data to the extent, if any; such data is subject
to a contractual agreement which prohibits the dissemination, reproduction or
review of such data to Lessor.  However, when Lessee is negotiating any
agreement with third parties regarding such seismic or associated data, it
agrees to use its reasonable efforts to negotiate an agreement which allows the
dissemination, reproduction and review of such data to Lessor, its employees,
agents, consultants, representatives and assigns.  Lessor acknowledges that
Lessee makes no representation or warranty, other than as to production data
relevant to calculation of Production Royalty, as to the completeness, accuracy
or correctness of any data supplied to Lessor pursuant to this Section.  All
data and information obtained by or on behalf of Lessor pursuant to this
Section shall be maintained as confidential pursuant to Section 17.2.

 

17.2 Confidential Information.  To the extent any such information obtained by
Lessor in connection with this Lease is “Confidential Information” as described
herein, the Confidential Information will be kept confidential until termination
of the Lease as to that portion of the Leased Premises to which such information
pertains.  Confidential Information shall not, without Lessee’s prior written
consent, be disclosed by Lessor to third parties in any manner whatsoever, in
whole or in part, other than by Lessor to its board of directors, officers,
attorneys, agents, representatives, consultants or employees, except as
specifically allowed or authorized under the terms of this Lease.    Lessor
shall be obligated to require authorized recipients of Confidential Information
pursuant to the foregoing sentence to maintain such information as confidential
in accordance with this Section.

 

55

--------------------------------------------------------------------------------

 

The term “Confidential Information” shall include all information required to be
delivered to Lessor under any provision of this Agreement that pertains to the
Leased Premises or the Production Royalty, except it shall not include any
information or any portion of the such information that (i) is now or hereafter
becomes available to Lessor or anyone else on a non-confidential basis; (ii) is
already in Lessor’s possession and not subject to a confidentiality agreement
with Lessee or a third party; (iii) is not held as confidential by Lessee;
(iv) is filed with or is required to be filed with a governmental or regulatory
agency, commission or department; or (v) is obtained pursuant to discovery under
the Texas or Federal Rules of Evidence in any future lawsuit.

 

In the event any third party requests Lessor to produce such Confidential
Information pursuant to or as part of any judicial and/or administrative
proceeding, Lessor agrees to use reasonable efforts to give Lessee notice of
said third party request for production prior to the date said Confidential
Information is to be produced in order to give Lessee the opportunity to file a
motion for protective order or some similar objection to the requested
production.  In the event Lessee fails to timely file a motion for protective
order or similar objection, Lessee agrees that Lessor may tender the requested
Confidential Information to the requesting party or to the court or
administrative agency without any liability for disclosure hereunder
whatsoever.  Otherwise, Lessee agrees that Lessor may abide by the order of the
court or administrative agency without any risk of liability hereunder
whatsoever.  In any event, Lessor will only furnish that portion of the
Confidential Information that Lessor is advised by opinion of counsel is legally
compelled or required to be provided.

 

Notwithstanding anything to the contrary stated elsewhere herein, it is agreed
and controllingly provided that this Section 17.2 does not restrict legal
discovery under the Texas Rules of Civil Procedure or the Federal Rules of Civil
Procedure, nor does it require the exclusion of any evidence otherwise
discoverable or admissible under the Texas Rules of Evidence or the Federal
Rules of Evidence in any subsequent proceeding merely because documents and/or
information were obtained under the terms of this Sub-Section.

 

17.3         Production Meetings.  From and after the date of first sales of
production of Leased Substances produced and mined from the Leased Premises,
Lessee will hold semi-annual production meetings with Lessor for the purposes
of: a) summarizing activities and production data for the preceding six
(6) months; b) reviewing data concerning the sale of Saleable Products,
including quantities sold and prices obtained; c) apprising Lessor of planned
operations for the next six (6) months, including without limitation production
and mining activities, and where applicable, surface restoration, remediation
and groundwater monitoring activities.  All information and data disclosed
pursuant to this Section shall be treated as Confidential Information pursuant
to Section 17.2.

 

56

--------------------------------------------------------------------------------

 

ARTICLE XVIII
NOTICES

 

18.1 Notices. All notices and documents required to be delivered hereunder shall
be delivered in person, by reputable overnight courier service (such as FedEx or
UPS) or by registered U.S. Mail, return receipt requested, postage prepaid, to
the following addresses:

 

If to Lessor:

 

The John G. and Marie Stella Kenedy Memorial Foundation

555 North Carancahua, Suite 1700 Tower II

Corpus Christi, TX 78401

Attn.: Marc A. Cisneros, CEO/Executive Vice President

 

If to Lessee:

 

URI Inc.

641 East FM 1118

Kingsville, TX  78363

Attn:  Richard A Van Horn, Senior Vice President-Operations

 

with a copy to:

 

Uranium Resources, Inc.

405 State Highway Bypass 121,

Building A, Suite 110

Lewisville, TX  75067

Attn:  Corporate Secretary

 

or to such other address as the parties may designate by notice in accordance
therewith; and such notices may be effective when received or five (5) days
after mailing to the last known correct address, proper postage prepaid,
whichever is earlier.

 

ARTICLE XIX
TITLE

 

19.1 Title Opinions. If Lessee shall have the title to the Leased Premises or
any part thereof examined by an attorney, Lessee agrees to furnish Lessor with a
copy of such attorney’s Title Opinion upon receipt.  If Lessee causes an
Abstract of Title or Supplements thereto to be prepared, he shall notify Lessor
of same, shall make same available at all reasonable times, and shall furnish
same to Lessor free of charge upon termination of this Lease, or six (6) months
after the first Well on the Leased Premises begins production, whichever date is
the earlier.  Lessor agrees, upon request from Lessee, to furnish to Lessee any
Title Opinions and/or abstracts of title in Lessor’s possession, covering all or
part of the Leased Premises.  Lessor  understands and

 

57

--------------------------------------------------------------------------------

 

agrees that any title materials being delivered by Lessee pursuant to this
Section are being supplied without any warranty as to their completeness,
accuracy or correctness.

 

ARTICLE XX
PLUGGING AND ABANDONMENT

 

20.1 Plugging Requirements. Lessee agrees and obligates itself to properly plug
any unplugged Well on the Leased Premises that it owns any interest in, in
accordance with the regulations of any and all governmental agencies having
jurisdiction; and, if this Lease is assigned, Assignee, by acceptance of said
assignment, agrees and obligates itself to Lessor to also assume full and
complete obligation to properly plug any Well drilled by any Lessee under this
Lease on the part of the Leased Premises assigned to it, but no future
assignments shall relieve Lessee or Assignee of this obligation. It is the
intent of this provision that Lessee and each and every Assignee shall be
obligated to Lessor to plug every Well drilled by any Lessee under this Lease on
the acreage in which it at any time owns an interest (in accordance with the
rules of any and all governmental agencies having jurisdiction or to see that
the Well is properly plugged if such well is no longer used in connection with
the production of Leased Substances or restoration of groundwater.  If such
holes are cased, the casing shall be cut off at least three (3) feet beneath the
surface of the ground after plugging.  When excavating the pit around the cased
hole, top soil shall be scraped off and saved and shall be placed back on top of
the fill after backfilling. Additionally, with respect to any such Well, Lessee
will provide to Lessor copies of any reports filed with the RCT, TCEQ or other
governmental agency having jurisdiction over such matters, such copy to be
delivered within thirty (30) days of filing same. Lessor shall be entitled to
enforce this obligation as against Lessee or any subsequent Assignee.  Each
Lessee and each subsequent Assignee shall jointly and severally indemnify and
hold Lessor harmless from any and all plugging obligations.  This contractual
provision shall not in any way abrogate or relieve Lessee of any plugging
obligations that may be imposed by law or by any and all governmental agencies
having jurisdiction.

 

ARTICLE XXI.
SECURITY

 

21.1 Environment Protection Security.  Prior to commencement of Drilling
Operations under this Lease, and for so long thereafter until this Lease has
terminated and Lessee has satisfied all of its obligations to restore and
reclaim the Leased Premises and to remediate the results of any Adverse
Environmental Event in the manner required by this Lease or otherwise as
required by Environmental Protection Laws, Lessee shall deliver proof to Lessor
that security, satisfactory to Lessor in order to secure Lessee’s performance of
all surface, subsurface and groundwater restoration and reclamation obligations,
remediation obligations, and obligations to remove facilities and equipment as
provided for in this Lease or otherwise pursuant to Environmental Protection
Laws has been posted with the TCEQ (the “Security”).  The Security shall be form
of bond or other form of security required by law.  Prior to the initial posting
of the Security, and annually thereafter while this Lease remains in effect,
Lessee shall provide the Lessor with all correspondence, reports, modifications,
data, analyses, requests for adjustments, and any other materials that are filed
with the TCEQ as part of TCEQ’s process for determining the amount and type of
Security to be maintained by Lessee (collectively the “Security Data”).

 

58

--------------------------------------------------------------------------------

 

Lessor will have thirty (30) days to review all Security Data before such data
is delivered to TCEQ or to any other agency having jurisdiction over such
matters.  From time to time while this Lease remains in effect, Lessor, in its
discretion, may engage an Expert as defined in Article VIII to assess Lessee’s
Security Data, and to evaluate the adequacy of the Security provided for herein
in light of Lessee’s then current operations.  In the event the Expert proposes
that the amount of the Security needs to be increased, Lessor shall present such
evaluation to Lessee and Lessee shall have the right to engage its own Lessee
Expert to evaluate the conclusions.  If the Lessor’s Expert and Lessee’s Expert
cannot agree on the adequacy of the Security, the matter shall be resolved in
the same manner as other environmental compliance issues under Article VIII.

 

ARTICLE XXII
DEFAULT TERMINATION

 

22.1 Termination.  Lessor shall be entitled to terminate this Agreement by
written notice to Lessee in addition to all of the remedies available at law or
in equity as follows:

 

A.            If Lessee fails to make any payments when due hereunder, Lessor
may at Lessor’s option give Lessee written notice of such failure and Lessee
shall have thirty (30) days from the date it receives notice to pay the amounts
owed to Lessor.  If Lessee fails to pay the past due amounts to Lessor within
the thirty (30) day period, Lessor may at Lessor’s option declare Lessee in
default and terminate this Lease.

 

B.            If Lessee defaults in the performance of any obligation hereunder
other than the obligation to make payments when due, Lessor may at Lessor’s
option give written notice of such default to Lessee, and Lessee shall have
sixty (60) days from the date it receives such notice to cure the default or
such longer time as is reasonably required to effect a cure of the default if
the nature of the default is such that cure cannot be effected in 60 days,
provided that Lessor commences cure of the default within 60 days and thereafter
pursues cure diligently.  If Lessee fails to cure the default within the cure
period, Lessor may at Lessor’s option terminate this Lease; provided, however,
that if the default is minor and the default can be fully compensated for in
damages, then such default shall not be a basis for cancellation or forfeiture
of this Lease or any of Company’s rights hereunder if Lessee pays the full
amount of damages within thirty (30) days after demand by Lessor.

 

C.            If Lessee in good faith disputes the existence of a default, then
this Agreement shall not be terminated and Lessee shall not be barred from the
Leased Premises until a final non-appealable judgment finding such a default is
entered by a court of competent jurisdiction and Lessee shall not have cured
such default within 60 days after the judgment becomes final and
non-appealable.  No good faith dispute between Lessor and Lessee shall be the
basis for Lessor barring Lessee from conducting operations pursuant to this
Lease until such dispute is resolved adversely to Lessee and Lessee fails to
cure any default as allowed hereunder.

 

59

--------------------------------------------------------------------------------

 

ARTICLE XXII
MISCELLANEOUS

 

23.1 Non-Renewal, Ratification or Amendment. Neither the acceptance of
royalties, delay rentals, shut-in royalties or other payments by Lessor
(regardless of any notation thereon or instrument accompanying same), nor
Lessor’s execution of any division order or transfer order or similar
instrument, shall ever constitute or be deemed to effect (a) a ratification,
renewal or amendment of this Lease or of any pooled unit designation filed by
Lessee purporting to exercise any pooling rights (if any) granted to Lessee in
this Lease, or (b) a waiver of the rights granted to Lessor, or the obligations
imposed upon Lessee, express or implied, by the terms of this Lease, or remedies
for Lessee’s breach thereof, or (c) an estoppel against Lessor preventing Lessor
from enforcing Lessor’s rights or Lessee’s obligations hereunder, express or
implied, or from seeking damages for Lessee’s breach thereof. Lessor’s agreement
to accept royalties from any purchaser shall not affect Lessee’s obligation to
pay royalties pursuant to this Lease. No instrument executed by Lessor shall be
effective to constitute a ratification, renewal, extension or amendment of this
Lease unless the instrument is clearly titled to indicate its purpose and intent
and the instrument contains an express representation that Lessee has informed
Lessor of all relevant facts.

 

23.2 Binding Effect. By the acceptance of this Lease, Lessee agrees to all of
its terms, provisions and conditions, which shall also inure to the benefit of
and be jointly and severally binding upon Lessee’s heirs, successors and
assigns.  This Lease shall be binding upon the heirs, successors, administrators
and assigns (as herein limited) of the parties hereto.  Words of any gender used
in this Lease shall be deemed to include either gender and words in the singular
shall be deemed to include the plural, whenever required by this context.

 

23.3 Memorandum. In lieu of filing this Lease of record in Kenedy County, Texas,
Lessor and Lessee agree that a Memorandum of this Lease, making appropriate
reference hereto, shall be filed of record in said counties and that neither
party shall file this Lease of record, and that the filing of said Memorandum
shall fully bind Lessor and Lessee under the terms of this Lease the same as if
this Lease was recorded in full.

 

23.4 Applicable Law/Attorney’s Fees/Venue and Jurisdiction.  This Lease shall be
construed and interpreted in accordance with the laws of the State of Texas.
Should either party be required to resort to legal action to enforce any of its
rights under this lease, the prevailing party in any such dispute shall be
entitled to reimbursement from the other party for reasonable attorneys’ fees
actually incurred in enforcing such rights.  Furthermore, Lessee shall also
reimburse Lessor, if Lessor prevails in such dispute, for reasonable costs of
accountants, geologists, engineers, biologists, environmental consultants and
other experts actually employed by Lessor in investigating such claim,
calculating the correct amount due, and/or testifying in any proceeding
regarding such claim.  The parties hereto contractually agree that for and in
consideration of Ten and No/100ths Dollars ($10.00) and other sufficient
consideration, the exclusive venue of any case involving this Lease or any
matters related thereto shall be heard in a State District Court of Nueces
County, Texas. For and in the same consideration, the parties also agree that
(i) Lessee shall not attempt to have any case heard in or removed to any Federal

 

60

--------------------------------------------------------------------------------

 

District Court and (ii) Lessee hereby waives any right to have any case
involving or relating to this Lease heard in any Federal District Court without
Lessor’s prior written consent.

 

23.5 Multiple Counterparts. This instrument may be executed in any number of
counterparts and each counterpart shall be deemed to be an original instrument
but all such counterparts shall constitute but one instrument.

 

23.6 Terminology. Wherever the context requires, the gender of all words used
herein shall include the masculine, feminine and neuter, and the number of all
words shall include the singular and the plural.

 

23.7 Time is of the Essence. Notwithstanding anything to the contrary stated
herein, time is of the essence of all matters in this Lease.

 

23.8  Property Taxes.  Lessor shall pay all ad valorem taxes and assessments on
the Leased Premises attributable to its ownership or use of the Leased Premises
and its operations and improvements thereon.  Lessee shall pay all such taxes or
any increases in taxes payable by the Lessor to the extent such taxes or
increases are attributable to Lessee’s operations, improvements or equipment and
materials on the Leased Premises, or to the exercise of Lessee’s rights under
this Lease.

 

23.9  Permit Cooperation.  Lessor agrees to reasonably cooperate with Lessee, at
no cost to Lessor, with respect to any permits or applications by Lessee
necessary for Lessee’s operations hereunder and Lessor shall not contest or
oppose such applications and permits provided that they are consistent with the
rights of and requirements imposed upon Lessee by this Lease.

 

23.10  Headings. All headings in this Agreement are for reference purposes only
and have no binding effect on the terms, conditions or provisions of this
Agreement.

 

23.11  Severability. If one or more provisions of this Agreement is for any
reason held to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforceability does not affect any of the other provisions hereof in this
Agreement and this Agreement will be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.

 

23.12  Entire Agreement. This Agreement contains the entire agreement between
the parties hereto. This Agreement may not be modified or amended except by
subsequent written agreements signed by all of the parties.

 

23.13  Limitations Tolling.  In addition to, and not in substitution of, any
other rights or defenses available to Lessor or Lessee, whether at law or in
equity, and subject to the audit limitations of Section 5.8, Lessor and Lessee
hereby covenant and agree that the running of the applicable statute(s) or
period(s) of limitation(s), statutes or repose, or any other equitable or legal
defense based on the passage of time, whether statutory, contractual or arising
under common law, governing or affecting any claims concerning failure to timely
pay, or the underpayment of royalty or other payments provided herein shall be
suspended and shall not run

 

61

--------------------------------------------------------------------------------

 

during the term of this lease, plus an additional two (2) years beginning at the
expiration of the term of this lease (collectively, the “Tolling Period”).
Lessor and Lessee also expressly stipulate, covenant, and agree that they will
not assert as a defense to such claims that such claims are barred, in whole or
in part, by the expiration of any applicable limitations period or by any other
time-related defense, except to the extent that the alleged limitations or other
defense is based on time periods that exclude, in their entirety, the Tolling
Period. Further, Lessor and Lessee, as applicable, hereby waive any right to
use, establish or assert such time-related defense, currently existing or which
may arise in the future, against Lessor or Lessee, as applicable, concerning
such claims during the Tolling Period and thereafter during the applicable
limitations period.  Lessor and Lessee expressly stipulate and agree that the
foregoing provision does not operate to revive any potential causes of action on
which any applicable statute(s) or period(s) of limitations have already
expired, or for which any equitable defense may bar or may have already barred
recovery, in whole or in part, prior to the Effective Date hereof; provided,
however, that this provision shall not affect such parties’ right to assert the
revival or survival of claims with respect to applicable statute(s) or
period(s) of limitations arising under law or statute to the extent such right
exists or existed apart from the foregoing provision.

 

23.14  Lessee Confidentiality.  Except to the extent required by law, or as
reflected in any instrument filed for record in the public records of the county
in which the Leased Premises are situated, or filed as required by any
applicable securities laws or the rules of any stock exchange, the Lessee agrees
to refrain from disclosing the identity of Lessor or the identity of any
officer, director, agent, or employee of Lessor to any person or entity other
than Lessee’s employees, legal representatives, contractors performing work on
the Leased Premises, and co-venturers who own rights in this Lease.  Unless
agreed to in writing by Lessor, Lessee will not issue any press release
identifying any of such parties.

 

[Signatures on next page.]

 

62

--------------------------------------------------------------------------------

 

EXECUTED effective the          day of                         ,           , the
“Effective Date”.

 

 

LESSOR:

 

 

 

The John G. and Marie Stella Kenedy Memorial Foundation

 

 

 

 

 

By:

 

 

 

Marc A. Cisneros, CEO/Executive Vice President

 

 

 

LESSEE:

 

 

 

URI, Inc.

 

 

 

 

 

By:

 

 

Name: Donald C. Ewigleben,

 

President/ Chief Executive Officer

 

63

--------------------------------------------------------------------------------

 

Acknowledgements

 

STATE OF TEXAS

§

 

 

 

 

COUNTY OF NUECES

§

 

 

This instrument was acknowledged before me this the            day of
                      , 20    , by Marc A. Cisneros, CEO/Executive Vice
President of The John G. and Marie Stella Kenedy Memorial Foundation, a Texas
non-profit corporation, on behalf of said corporation.

 

 

 

 

 

Notary Public, State of Texas

 

 

STATE OF TEXAS

§

 

 

 

 

COUNTY OF                   

§

 

 

This instrument was acknowledged before me this the            day of
                      , 20    , by Richard A. Van Horn, Senior Vice President of
Operations of URI, Inc, a Delaware corporation, on behalf of said corporation.

 

 

 

 

 

Notary Public, State of Texas

 

64

--------------------------------------------------------------------------------

 

Exhibit “A”
To
In-Situ Uranium Mining Lease

 

ATTACHED TO AND MADE A PART OF THAT CERTAIN IN-SITU URANIUM MINING LEASE OPTION
BY THE JOHN G. AND MARIE STELLA KENEDY MEMORIAL FOUNDATION, AS LESSOR, AND
                                                                                            ,
AS LESSEE, DATED EFFECTIVE                                 , 2010.

 

LEASED PREMISES DESCRIPTION

 

(Note: Insert Leased Premises Description)

 

65

--------------------------------------------------------------------------------

 

[g21432kk13i001.jpg]

 

--------------------------------------------------------------------------------