Exhibit 10.36


 


FEASIBILITY STUDY FUNDING AGREEMENT


 


This AGREEMENT (“Agreement”) is made as of March     ,
2006 (“Effective Date”), by and between ITOCHU CORPORATION,
a Japanese corporation, having its principal offices in Tokyo, Japan (“Itochu”);
and URANIUM RESOURCES, INC., a
Delaware corporation, having its principal offices in Lewisville, Texas (“URI”),
and URI’s wholly-owned subsidiary, HYDRO RESOURCES, INC.,
a Delaware corporation, having its principal offices in Albuquerque, New Mexico
(“HRI”) (together, “URI/HRI”).


 


W I T N E S S E T H


 


WHEREAS,
Itochu desires to enter into this Agreement with URI and HRI, both of which
agree that they are jointly and severally responsible for performing the
obligations of URI and HRI pursuant to this Agreement, to provide for payments
by Itochu as contributions to the cost of a feasibility study of developing and
conducting in situ leach (“ISL”) uranium mining
operations at the Churchrock Property in New Mexico (“Churchrock Property”) to
be performed by URI/HRI (“Feasibility Study”).


 


WHEREAS,
the Churchrock Property is the subject of a Term Sheet dated as of March 2,
2006, as executed by Itochu and URI/HRI (“Term Sheet”), which will serve as the
basis for a joint venture agreement (“Joint Venture Agreement”) for such
uranium mining (“Transaction”).


 


WHEREAS,
the Feasibility Study is described in greater detail on Exhibit A as appended hereto, and the terms,
conditions, and definitions, found on Exhibit A,, shall be part of
this Agreement.


 


WHEREAS,
Itochu, URI, and HRI are collectively referred to as the “Parties.”


 


WHEREAS,
the Parties desire for the Feasibility Study to be commenced by URI/HRI before
execution of the Joint Venture Agreement that is the subject of the Term Sheet.


 


NOW,
THEREFORE, in consideration of the premises and mutual
covenants contained herein and intending to be legally bound to the extent
provided below, the Parties agree as follows:


 


ARTICLE I


GENERAL
PROVISIONS


 


1.1.                              The
matters set forth in Article 2 are not intended to and do not constitute a
binding agreement of the Parties with respect to the Transaction; any such
binding agreement will arise only upon the negotiation, execution and delivery
of mutually satisfactory definitive agreements and the satisfaction of the
conditions set forth therein, including, without limitation, obtaining all
required third party consents, regulatory approvals, and approvals


 

















 


of such definitive agreements and the
Transaction by the respective governing authority of each Party.


 


1.2                                 The matters set forth in Article 3
and Article 4 shall constitute binding agreements of the Parties.


 


ARTICLE 2


THE
TRANSACTION


 


2.1                                 Development of the Proposed
Project. The Parties will make good faith efforts to enter into the
Joint Venture Agreement. The Parties intend to complete the Joint
Venture Agreement on or before July 1, 2006. This July 1, 2006, date
supersedes the June 1, 2006, date in the Term Sheet.


 


ARTICLE 3


FUNDING OF
FEASIBILITY STUDY


 


3.1                                 To
defray the cost of the Feasibility Study, Itochu agrees to pay URI/HRI a total
of $675,000 (“Funding”), in four equal installments (each, an “Installment”)
pursuant to the following schedule:


 


(a)                                  The
first Installment (“First Installment”) shall be paid by Itochu to URI within
seven (7) business days from the date of execution of this Agreement. Upon
receipt of the First Installment, URI/HRI shall notify Itochu of such receipt
of payment, and URI/HRI shall immediately commence the Feasibility Study.


 


(b)                                 The
second, third, and fourth Installments shall be paid by Itochu to URI on May 1,
June 1 and July 1, 2006,
respectively.


 


3.2                                 The Funding shall be used
solely to fund URI/HRI’s overhead and third-party costs incurred in the
Feasibility Study and for no other purpose without Itochu’s written consent.


 


3.3                                 URI/HRI shall use reasonable
efforts to complete the Feasibility Study and deliver it to Itochu within eight
(8) months from the date of URI’s receipt of the First
Installment and shall in any event deliver the Feasibility Study within nine (9) months
from the First Installment (the “Outside Date”); provided, however, that if
URI/HRI is unable to complete the Feasibility Study by the Outside Date due to
the loss of the services of Craig S. Bartels (the “Local Manager”),  URI/HRI shall not be deemed in default
hereunder but shall consult with Itochu to set a new Outside Date. If the
Parties cannot agree on a new Outside Date, Itochu shall have the right to
terminate this Agreement, at which time URI will refund to Itochu, within seven
(7) business days of receipt of written notice from Itochu of such
termination, or any later date that is mutually agreed, the aggregate amount of
the Installments paid by Itochu in respect of the Funding.


 


3.4                                 If, for whatever reason, the
Joint Venture Agreement is not executed by the Parties by July 1, 2006, or any later date
that is mutually agreed by the Parties in writing, URI will


 


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refund
to Itochu, within seven (7) business days following July 1, 2006, or any later date
that is mutually agreed, the aggregate amount of the
Installments paid by Itochu in respect of the Funding.


 


3.5                                 HRI
shall, within five (5) business days following the end of every month,
submit to Itochu a written monthly progress report, which shall include an
estimate of the progress  toward
completion of each of the items shown on Exhibit A and a good faith
approximation of the aggregate amount expended during such month and to date
for each such item. Each such report shall be signed by the Local Manager, who
is an officer of both URI and HRI.


 


3.6                                 At Itochu’s request, the
Local Manager shall meet with Itochu in Albuquerque, New Mexico, or in Dallas,
Texas (such location to be determined by HRI), every month to discuss the
progress on the Feasibility Study. No such meeting shall last more then eight (8) hours.
The dates of such meetings shall be set at least 10 days in advance and no such
meeting shall occur sooner than four (4) business days following the
delivery of the report described in Section 3.5 above with respect to the
preceding month.


 


3.7                                 Upon the completion of the
Feasibility Study, URI/HRI shall submit a final written report to Itochu and
meet with Itochu, upon Itochu’s request, to discuss the Feasibility Study and
respond to Itochu’s questions and requests.


 


ARTICLE 4

OTHER BINDING AGREEMENTS


 


4.1                                 Exclusivity.                                   URI and HRI shall not
directly or indirectly solicit, pursue, negotiate for, commit to, or engage in
any business arrangements with any third party relating to the Transaction
(excluding in furtherance of the Feasibility Study) or otherwise relating to
the disposal of any assets contemplated to be part of the Joint Venture in
accordance with the Term Sheet, during the period from the date of execution of
this Agreement through and including July 1, 2006, or such later date
mutually agreed upon by Itochu and URI/HRI (“Exclusivity Period”).


 


4.2                                 Confidentiality. The Parties have
heretofore entered into a confidentiality agreement dated February 24,
2005 (the “Confidentiality Agreement”). The terms of the Confidentiality
Agreement will continue to apply with respect to the Parties’ negotiations
concerning the Transaction and the Joint Venture Agreement and are incorporated
herein by reference.


 


4.3                                 Ownership of the Feasibility
Study. All property rights to the Feasibility Study shall be owned by
URI/HRI and upon execution of the Joint Venture Agreement will be conveyed to
the Joint Venture, under such terms and conditions as are established in the
Joint Venture Agreement.


 


 


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4.4                                 Events of Default. The following shall
constitute events of default:


 


(a)                                  Itochu shall be in default
for its failure to pay the Funding in the manner specified in this Agreement;
provided, that Itochu shall not be in default if it withholds payments as a
result of any default on the part of URI/HRI.


 


(b)                                 URI/HRI shall be in default
upon its (i) failure to submit a monthly written progress report as
required by Section 3.5 above, unless Itochu has given its prior and
written consent to such non-submission; (ii) failure to consent to or
attend a monthly progress meeting with Itochu as required by Section 3.6
above; (iii) breach of the exclusivity provisions in Section 4.1
above; (iv) insolvency or inability
to make payments to its creditors as and when payment of such sums become due; (v) becoming
bankrupt or, going into liquidation; or (vi) failure to perform its
other material obligations specified in this Agreement. URI/HRI shall not be
deemed in default hereunder if it is unable to deliver the Feasibility Study
due to Itochu’s own default in making the payments required hereunder.


 


4.5                                 Consequences of Default.


 


(a)                                  In the event of default by
Itochu, URI/HRI shall have the right, upon written notice to Itochu and failure
by Itochu to cure its default as provided in Section 4.5(c), to (i) terminate
this Agreement or suspend its performance of the Feasibility Study; and (ii) refuse
to submit a written monthly progress report as required by Section 3.5
above, and consent to or attend a monthly progress meeting as required by Section 3.6
above. Upon termination of this Agreement pursuant to this Section 4.5(a),
the Joint Venture shall be deemed terminated and Itochu shall have no further
rights to joint venture the Churchrock property. In the
event Itochu fails to perform any of its obligation, Itochu shall
reimburse URI/HRI forthwith upon demand for all costs, attorney’s fees and
other expenses incurred by URI/HRI in the enforcement of the obligation of Itochu.


 


(b)                                 In the event of default by
URI/HRI, Itochu shall have the right, upon written notice to URI/HRI and
failure by URI/HRI to cure its default as provided in Section 4.5(c), to (i) terminate
this Agreement; and (ii) demand a full refund of the Funding; and
in such event and upon demand by Itochu, URI/HRI shall refund to Itochu all of
the Funding. In addition, in the event URI/HRI fails to perform any of
their obligations hereunder, URI/HRI shall reimburse Itochu forthwith on demand
for all costs, attorneys’ fees and other expenses incurred by Itochu in the
enforcement of the obligations of URI/HRI.


 


(c)                                  In the event of default by a
Party (“Defaulting Party”), the Party that is not in default (“Non-defaulting
Party) shall give written notice to the Defaulting Party of the default and the
Defaulting Party shall have the opportunity to cure its default within ten (10) business days of its receipt of such
notice.


 


4.6                                 Expenses. Each Party shall bear its
own costs associated with negotiating and performing under this Agreement.


 


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4.7                                 Entire Agreement. This Agreement constitutes
the entire agreement of the Parties relating to the subject matter hereof and
supersedes all prior discussions, agreements or understandings, whether oral or
written, relating to such subject matter. Except for the the Confidentiality
Agreement and the Amended and Restated Uranium Supply Contract among Itochu,
URI and URI, Inc., of even date herewith, there are no other written or
oral agreements or understandings between the Parties. In addition, the parties
acknowledge the existence of the Term Sheet. Any amendment of this Agreement
must be written and signed by all Parties.


 


4.8                                 Governing Law; Consent to
Jurisdiction. This Agreement shall be governed and construed in accordance with the
laws of the State of New York, without giving effect to any conflict of law
principles that would result in the application of the law of a jurisdiction
other than the State of New York. The Parties hereto agree that any legal
action or proceeding arising out of or in any manner relating to this Agreement
shall be brought in any court of the State of New York or in any United States
District Court in the State of New York. The Parties hereto consent and submit
to nonexclusive personal jurisdiction of any such court in any action or
proceeding.


 


4.9                                 Non-Inclusive; Non-Binding. This Agreement does not
contain all matters upon which agreement must be reached in order for the Joint
Venture Agreement and the Transaction to be completed. With
respect to the provision of Article 2, this Agreement does not
create and is not intended to create a binding and enforceable contract between
the Parties and may not be relied upon by a Party as the basis for a
contract by estoppel or otherwise. A binding commitment with respect to the
Transaction can only result from the execution and delivery of definitive
agreements. For the avoidance of doubt, Articles 3 and 4 create a binding and
enforceable contract between the Parties.


 


4.10                           Relationship of Parties. The Parties shall not be
deemed to be in a relationship of partners or joint venturers by virtue of this
Agreement, nor shall either Party be an agent, representative, trustee or
fiduciary of the other. Neither Party shall have any authority to bind the
other to any agreement.


 


4.11                           Assignment. Neither party may assign
any of its rights or obligations under this Agreement, without the prior
written consent of the other party, such consent should not be unreasonably
withheld or delayed.


 


4.12                           Severability. If any provision of this
Agreement or the application thereof to any person or circumstance is held
invalid or unenforceable in any jurisdiction, the remainder of this Agreement,
and the application of such provision to such person or circumstance in any
other jurisdiction or to other persons or circumstances in any jurisdiction,
shall not be affected thereby, and to this end the provisions of this Agreement
shall be severable. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, it is the Parties’
intention that such provision shall be reformed and construed by the court to
provide the protected party the maximum protection permissible by law. No
waiver of any provision of this Agreement shall constitute a waiver of any
other provision or of the same provision on another occasion.


 


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4.13                           Attorneys’ Fees. In the event it becomes
necessary for either Party to file a suit to enforce the binding provisions of
this Agreement, the prevailing Party shall be entitled to recover, in addition
to all other remedies or damages, reasonable attorney’s fees and costs
incurred.


 


4.14                           Counterparts. This Agreement may be
executed in counterparts, each of which, when executed and delivered, shall be
deemed to constitute an original but all of which together shall constitute one
and the same instrument.


 


4.15                           Guarantee. In
consideration of the sum of One Dollar ($1.00) and other good valuable
consideration paid by Itochu to URI, receipt of which hereby acknowledged, as
well as for the purpose of inducing Itochu to pay the Funding to defray the
cost of the Feasibility Study, URI hereby absolutely, unconditionally and
irrevocably, jointly and severally guarantees to
Itochu
the full and complete performance by HRI of any obligation of HRI under this Agreement. In the
event HRI fails to perform any obligation of HRI, URI shall forthwith,
upon demand by Itochu, perform such obligation of HRI. URI shall also
reimburse Itochu forthwith upon demand for all costs, attorney’s fees and other
expenses incurred by Itochu in the enforcement of the obligation of HRI or in
the enforcement of this guaranty. URI hereby waives any defense to its
obligations under this Section 4.15 arising from (a) a lack of
diligence on the part of Itochu in the enforcement of the obligations of
HRI, (b) Itochu’s failure to provide notice of default, protest or notice
of protest with respect to HRI’s obligations or (c) any other defense
available to a guarantor at law or in equity other than full performance of the
guaranteed obligations. URI hereby acknowledges and agrees that any waiver,
modification or amendment of HRI’s obligations shall not abrogate its
obligations hereunder, provided that is shall have the benefit of such waiver,
modification or amendment.


 


4.16                           Survival. This Agreement shall
remain in full force and effect until the Parties have fully performed their
obligations provided hereunder. The following listed provisions shall continue
and survive the expiration or termination of this Agreement: Section 4.2
(Confidentiality), Section 4.3 (Ownership of the Feasibility Study), Section 4.5
(Consequences of Default), Section 4.8 (Governing Law; Consent to
Jurisdiction), and Section 4.15 (Guarantee).


 


* * * * *


 


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IN WITNESS WHEREOF,
the Parties hereto have caused this Agreement to be executed and delivered as
of the Effective Date by their respective duly authorized representatives.


 


 


	
  ITOCHU CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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  URANIUM RESOURCES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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  HYDRO RESOURCES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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  Date:

  	
   

  	
   

  	
   

  
								



 


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Exhibit A


 


FEASIBILITY
STUDY


 


The Parties shall conduct a feasibility study and it will focus on
detailed, pre-construction, revisions to the existing designs, and to cost
estimates. All aspects of the design and materials need to be considered as follows:


 


•               review
documents pertaining to Church Rock (applications, license, culturally
sensitive areas,  FEIS, COP, SERP, RAP
(as such terms are defined below)) to ensure that regulatory commitments and
obligations are incorporated in the design and construction of the Church Rock
plant and wellfield; this is a critical part of the economic update, and
critical in the training of new engineers and others expected to be in
supervisory roles;


 


•               update
plant design with downflow versus upflow columns, and revise design to allow “satellite”
IX plant technology;


 


•               re-design
wellfield patterns with current geologic interpretation of fronts; cost
estimates will be more specific, made for particular wellfields, including
specific number of wells, depths, number of pounds under wellfield per front,
recovery by front, etc.;


 


•               determine
amount and type of instrumentation for both plant and wellfield; cost versus
operational usefulness must be evaluated;


 


•               start
preliminary discussions with engineering/construction firms to estimate costs
for actual construction (drawings, soil testing, concrete, piping, electrical,
instrumentation, ponds, etc); wellhouse and associated instrumentation &
piping, etc.).


 


FEIS means Final Environmental Impact Statement.


COP means Crownpoint Uranium Project Consolidated Operation Plan.


SERP means Safety and Environmental Review Panel.


RAP means Restoration Action Plan.


 


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