Document:

Exhibit 10.1 Exclusivity Agreement with sxr "Uranium One" Inc..

    
      

    

     

     

    

    EXCLUSIVITY
      AGREEMENT

    

    THIS
      EXCLUSIVITY AGREEMENT (“Agreement”)
      is
      made as of this 10th
      day of
      July, 2006 (the “Effective
      Date”)
      by and
      between U.S. Energy Corp, a Wyoming corporation (“USEG”),
      Crested Corp., a Colorado corporation (“CBAG”
and
      together with USEG the “Sellers”),
      and
SXR
      Uranium One Inc., a
      Canadian corporation (the “Buyer”).
      

     

     

    Recitals

     

    
      	
              A.

            	
              The
                Sellers are in the natural resource business and carry on, directly
                and
                through subsidiary and affiliated entities, a uranium exploration
                and
                development business with the goal of creating a United States uranium
                mining and milling business (the “Business”).
                

            

    

     

    
      	
              B.
                

            	
              In
                accordance with a term sheet dated June 22, 2006 signed by the Parties
                (the “Term
                Sheet”),
                the Sellers wish to sell, and the Buyer directly or through one or
                more
                wholly-owned subsidiaries thereof wishes to purchase, the uranium
                assets
                of the Sellers used in the Business listed in Schedule A to the Term
                Sheet, as amended on the date hereof (the “Assets”)
                for the consideration and on the terms and conditions described therein.
                

            

    

     

    
      	
              C.
                

            	
              The
                purchase and sale of the Assets is subject, among other things, to
                the
                successful completion by the Buyer of a detailed due diligence
                investigation of the Assets, to the preparation and execution of
                a
                mutually satisfactory definitive acquisition agreement (the “Definitive
                Agreement”)
                containing terms and conditions consistent with the Term Sheet and
                the
                provisions hereof, to the receipt of all required regulatory and
                shareholder approvals and to the approval of the boards of directors
                of
                each party hereto. 

            

    

     

    
      	
              D.
                

            	
              In
                connection therewith, the Sellers have agreed to grant the Buyer
                exclusive
                rights as more particularly set forth herein to negotiate the Definitive
                Agreement and to conduct its due diligence investigation of the Assets.
                

            

    

     

    
      	
              E.
                

            	
              Concurrently
                herewith, the parties have entered into a confidentiality and
                non-disclosure agreement (the “Confidentiality
                Agreement”)
                to replace and supersede the confidentiality agreement dated November
                18,
                2005 between USEG and Aflease Gold and Uranium Resources Limited.
                

            

    

     

    Agreement

     

    NOW
      THEREFORE
      for good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Sellers and the Buyer (collectively,
      the “Parties”
and
      individually, a “Party”)
      intending to be legally bound, agree
      as
      follows:

     

    1.  Exclusivity.
      

     

    
      	(a)  	
              In
                consideration of the receipt of the Fee (as hereinafter defined),
                the
                Sellers hereby grant to the Buyer for the Term (as hereinafter defined)
                the exclusive right, at the Buyer’s sole cost and expense, to review all
                information and data in the control or possession of the Sellers
                relating
                to the Assets and to perform all investigations, inquiries and studies
                with respect to the Assets as the Buyer may reasonably require for
                

            

    

     

    
 

    
      
        
           

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

     

    the
      purposes of its due diligence, all on the terms and subject to the conditions
      set forth herein and in the Confidentiality Agreement. 

     

    
      	(b)  	
              During
                the Term, the Sellers (i) will not, and will not permit any other
                person
                or company to, directly or indirectly through any director, officer,
                agent, affiliate, employee or otherwise: (A) solicit, initiate or
                encourage the submission of any proposal or offer, or have discussions,
                engage in negotiations or enter into any understanding, agreement
                or
                commitment with, or accept any proposal from, any person other than
                the
                Buyer relating to the acquisition or purchase of the Assets or the
                Business; or (B) furnish or agree to furnish to any other person
                any
                information regarding the Assets or the Business except as required
                by law
                for reporting, permitting or conducting business in the ordinary
                course or
                as required by any existing agreement; (ii) will inform any person
                making
                inquiry with respect thereto of the existence of this Agreement;
                and (iii)
                will inform the Buyer of any such inquiry.

            

    

     

    
      	
              (c)  
                

            	
              Notwithstanding
                Section 1(b), the Sellers may continue to pursue the acquisition
                of
                additional uranium assets that Sellers have been in pursuit of as
                of the
                date hereof or wish to pursue and in either such case the Buyer will
                have
                the right to review and approve, or decline to approve, the acquisition
                by
                the Sellers of any such assets during the Term. If the Buyer approves
                such
                acquisition and the purchase and sale of the Assets is completed,
                the
                Buyer will on the closing thereof pay to the Sellers the reasonable
                costs
                they have incurred in pursuing such acquisition plus 5%, such payment
                to
                be made in addition to the purchase price payable for the Assets
                on such
                closing. If the Buyer declines to approve such acquisition, the Sellers
                may make the acquisition for their own account or otherwise deal
                in such
                assets without the Buyer’s further consent or participation, and the Buyer
                will have no obligation or liability to reimburse the Sellers for
                any of
                the costs incurred by them in connection with such pursuit or acquisition.
                

            

    

     

    2.  Fee.
      As
      consideration for the exclusive rights granted by the Sellers to the Buyer
      pursuant to Section 1, within five days of the execution of this Agreement
      the
      Buyer will pay to the Sellers by wire transfer in immediately available funds
      the sum of US $750,000 as a non-refundable fee (the “Fee”);
      provided, however: 

     

    
      	
              (a)

            	
              if,
                prior to the end of the Term, the Parties enter into a Definitive
                Agreement, the Fee will be credited to, and subtracted from, the
                purchase
                price due from the Buyer to the Sellers pursuant to the terms thereof;
                

            

    

     

    
      	
              (b)

            	
              if,
                on or before the end of the Term, (i) the Parties do not enter into
                a
                Definitive Agreement, (ii) the Buyer determines in its sole discretion
                that it does not desire to acquire the Assets, or (iii) subject to
                Section
                2(c), this Agreement is terminated pursuant to Section 7, the Fee
                automatically will be deemed earned by the Sellers and will not be
                reimbursable to the Buyer; and 

            

    

     

    
      	
              (c)

            	
              if
                this Agreement is terminated by the Buyer pursuant to Section 7(a)
                by
                reason of the material breach hereof by the Sellers or either of
                them, or
                by reason of the Sellers’ inability to obtain a required third party
                consent or approval before the end of the Term, the Fee will be
                reimbursable by the Sellers to the Buyer forthwith on receipt by
                the
                Sellers of the Buyer’s notice of termination.

            

    

     

     

    

    
      
        
           

          
          

        

        
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    The
      Parties agree that, absent fraud or willful breach of this Agreement by a Party,
      in the event this Agreement is terminated by reason of the material breach
      hereof by such Party, the sole and exclusive remedies of the Party or Parties
      not in breach will be as set out in Sections 2(b) or (c) hereof, as the case
      may
      be. Without limiting the foregoing, no Party shall be liable to any other Party
      for consequential, incidental, punitive, reliance, exemplary or indirect
      damages, lost profits or business interruption damages, whether by statute,
      in
      tort or contract. 

     

    3.  Term.
      This
      Agreement will commence on the Effective Date and, unless terminated earlier
      by
      a Party under Section 7, will continue until 180 days after the date hereof
      unless prior thereto the Buyer requests by written notice to the Sellers a
      three
      month extension of the exclusivity rights granted hereunder, in which event
      this
      Agreement will continue until 270 days after the date hereof (the “Term”).
      

     

    4.  Definitive
      Documentation.
      The
      Parties will use their reasonable commercial efforts to settle and sign during
      the Term one or more Definitive Agreements consistent with the Term Sheet and
      the applicable provisions of this Agreement. Completion of the purchase and
      sale
      of the Assets will be subject to the receipt on terms acceptable to the Buyer
      of
      all governmental and regulatory approvals required under applicable laws, all
      required stock exchange, shareholder and third party approvals and to the
      transfer to the Buyer of all required licenses, permits and other approvals
      required in connection with the acquisition, ownership and operation of the
      Assets. In connection with the foregoing, the Sellers will use their reasonable
      commercial efforts to obtain, prior to the execution of Definitive Agreements,
      all third party consents and approvals which are required in connection with
      the
      completion of the purchase and sale of the Assets, including without limitation
      all consents and approvals from third parties having any interest or potential
      interest in the Assets. 

     

    5.  Conduct
      of Business.
      Until
      execution of the Definitive Agreement or termination of this Agreement, the
      Sellers (a) will conduct the Business or cause the Business to be conducted,
      in
      the usual and ordinary course and (b) will not, and will not permit any of
      their
      respective affiliates to, directly or indirectly, without the Buyer’s prior
      consent, (i) dispose of any of the Assets except in the ordinary course of
      business, (ii) reorganize the Business, (iii) terminate or amend any existing
      material contract or enter into any new material contract relating to the
      Business except contracts contemplated by Section 1(c); or (iv) take any
      material action that would cause the approval of the shareholders of any Seller
      to be required in connection with the transactions contemplated herein.

     

    6.  Development
      Expenditures.
      During
      the Term, it is anticipated that the Sellers will continue to develop certain
      of
      the Assets in accordance with the development and holding budgets indicated
      in
      Schedule A as amended on the date hereof. Such budgets were provided at the
      Buyer’s request to define the potential expenditures to be incurred thereon
      during the Term. Both the Buyer and the Sellers agree that (i) Sellers have
      certain contractual developmental expenditures that must be met in 2006 and
      2007
      to hold the Assets and that Sellers will meet those obligations and notify
      the
      Buyer in advance of such estimated expenditures before any of the same are
      incurred; (ii) the Sellers will notify and seek the approval of the Buyer for
      any anticipated expenditures relating to the Assets outside of any contractual
      or holding cost obligations before any of the same are incurred; and (iii)
      the
      Sellers will have the ultimate determination as to whether expenditures will
      be
      made on the Assets. 

     

    
 

    
      
        
           

          
          

        

        
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    To
      the
      extent such expenditures shall have been approved in advance by the Buyer and
      incurred during the Term, then, provided the acquisition and the purchase and
      sale of the Assets is completed, the Buyer will on the closing thereof provide
      the Seller with a payment equal to the aggregate amount of all such approved
      and
      incurred expenditures, such payment to be made in addition to the purchase
      price
      payable for the Assets on such closing. If such closing does not for any reason
      occur, the Buyer shall have no liability to provide the Sellers with any
      reimbursement on account of such expenditures, even if the Buyer shall have
      approved, and the Sellers shall have incurred, the same. 

     

    7.  Termination.
      

     

    
      	
              (a)

            	
              The
                Buyer may terminate this Agreement at any time during the Term by
                giving
                written notice to the Sellers of such termination, whether or not
                the
                Sellers or either of them are in material breach hereof, and, subject
                to
                Section 7(c), such termination will become effective upon the Sellers’
                receipt of such notice, without further action by either
                Party.

            

    

     

    
      	
              (b)

            	
              The
                Sellers may terminate this Agreement at any time during the Term
                by giving
                written notice to the Buyer of such termination if the Buyer is in
                material breach hereof and, subject to Section 7(c), such termination
                will
                become effective upon the Buyer’s receipt of such notice, without further
                action by either Party. 

            

    

     

    
      	
              (c)

            	
              Notwithstanding
                any other provision of this Agreement, if the Buyer or the Sellers
                give
                written notice of termination under Section 7(a) or 7(b) by reason
                of a
                material breach hereof, such termination will not become effective
                unless
                the Party giving such notice (the “notifying party”):
                

            

    

     

    
      	 	
              (i)
                

            	
              sets
                out in such notice of termination the basis for its belief that a
                material
                breach has occurred; 

            

    

     

    (ii)       
      provides
      the Party alleged to be in material breach (the “receiving party”) with a period
      of 30 business days from the receipt of such notice of termination to give
      a
      written notice of reply to the notifying party; and  

     

    
      	 	
              (iii)
                

            	
              declines,
                in a written notice given to the receiving party within 10 business
                days
                of receiving such notice of reply, to accept such notice of reply;
                

            

    

     

    in
      which
      event, the Agreement will be terminated effective upon the receipt by the
      receiving party of the notice referred to in Section 7(c)(iii); provided,
      however, that, notwithstanding the foregoing, if the receiving party shall
      fail
      to deliver a written notice of reply within the period of 30 business days
      referred to in Section 7(c)(ii), the Agreement will be deemed to have been
      terminated in accordance with the notice of termination. 

     

    
      	
              (d)

            	
              Notwithstanding
                any other provision of this Agreement, the Confidentiality Agreement
                and
                the provisions of Sections 2, 9, 11 and 13 of this Agreement, will
                survive
                any termination of this Agreement.

            

    

     

     

     

    
      
        
        

      

      
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    8.  Due
      Diligence
      Activities.
      During
      the Term, the Buyer will have the following rights and obligations with respect
      to its due diligence investigations and activities:

     

    (a)  
      the
      Sellers will give Buyer and its authorized representatives such access to the
      employees, properties, assets, books and records of the Sellers and their
      affiliates relating to the Assets and the Business and all information and
      data
      relating thereto as the Buyer may reasonably require to carry out and complete
      its due diligence review of the Assets; 

     

    (b)  
      upon
      reasonable advance written notice to the Sellers, the Buyer and its authorized
      representatives will have the right to enter upon any lands and premises
      included in the Assets to conduct such inspections as may be necessary and
      appropriate for the purposes of its due diligence;

     

    (c)  
      all
      information furnished or made available to the Buyer pursuant to this Agreement
      will be deemed to be Confidential Information (as defined in the Confidentiality
      Agreement) and will be subject to the terms of the Confidentiality Agreement;
      and 

     

    (d)  
      the
      Buyer
      will conduct all activities hereunder in a reasonable and prudent manner and
      in
      full compliance with all applicable laws and regulations, and with all
      applicable site safety rules of the Sellers which have been communicated to
      the
      Buyer. 

     

    9.  No
      Representation
      or Warranty Regarding Completeness or Accuracy of Data.
      

     

    (a)  
      The
      Sellers represent and warrant that they have full right, power and authority
      to
      disclose or make available the information and data to be disclosed or made
      available to the Buyer pursuant to this Agreement and the Confidentiality
      Agreement without the violation of any contractual, legal or other obligation
      to
      any entity or person. 

     

    (b)  
      The
      Sellers make no representation or warranty, expressed or implied, as to the
      accuracy or completeness of any such information, data, reports and other
      material. 

     

    10.  Disclosure.
      Each
      Party may upon execution of this Agreement issue a news release disclosing
      this
      Agreement and the subject matter hereof. Any Party intending to issue such
      release shall first provide the other Parties with a reasonable opportunity
      to
      review and comment thereon prior to the issuance thereof. Each Party will
      provide the other Parties with a reasonable opportunity to review and comment
      on
      all subsequent public announcements, news releases or other disclosure by such
      Party relating to this Agreement or the subject matter hereof prior to the
      issuance thereof except where the disclosing Party, in its reasonable opinion,
      believes that such public announcement, news release or other disclosure is
      required by law and such advance disclosure to the other Party would not be
      practicable. 

     

    11.  Fees
      and Expenses.
      Each
      Party will be responsible for its own legal, accounting, investment banking
      and
      other fees and expenses incurred in connection with this Agreement and all
      matters related thereto. The Buyer will indemnify and hold harmless the Sellers,
      and the Sellers will indemnify and hold harmless the Buyer, from and against
      the
      claims of any brokers or finders in respect of the purchase and sale of the
      Assets. 

     

     

    
      
        
        

      

      
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    12.  Notices.
      All
      notices with regard to this Agreement will be forwarded to a Party at its
      address for notice set forth on the signature page of this Agreement. Notices
      hereunder will be in writing and will be considered given either (i) when
      delivered in person, (ii) upon receipt when delivered by a reputable overnight
      delivery service to such contact addresses, or (iii) five days after
      deposit in the U.S. or Canadian mail, registered or certified, return receipt
      requested, in a sealed envelope or container, postage and postal charges
      prepaid.

     

    13.  Law.
      This
      Agreement will be governed by and construed in accordance with the laws of
      the
      State of Wyoming without reference to the conflicts of laws principles thereof.
      Each of the Parties hereby submits to the exclusive jurisdiction of any state
      or
      federal court sitting in Wyoming in any action or proceeding arising out of
      or
      relating to this Agreement and agrees that all claims with respect to the action
      or proceeding may be heard and determined in any such court. Each Party also
      agrees not to bring any action or proceeding arising out of or relating to
      this
      Agreement in any other court. Each Party agrees to waive any defense of
      inconvenient forum to the maintenance of any action or proceeding so brought
      and
      waives any bond, surety or other security that might be required of any other
      party with respect to any such action or proceeding.

     

    14.  Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction will, as to such jurisdiction, be ineffective to the extent of
      such
      prohibition or unenforceability without invalidating the remaining provisions
      hereof, and any such prohibition or unenforceability in any jurisdiction will
      not invalidate or render unenforceable such provision in any other
      jurisdiction.

     

    15.  Agency.
      This
      Agreement is not intended to create, and will not be construed to create, a
      relationship of partnership between the Parties. This Agreement will not
      constitute any Party as the legal representative or agent of any other Party,
      nor will any Party have the right or authority to assume, create or incur any
      liability or obligation, express or implied, against, in the name of or on
      the
      behalf of any other Party.

     

    16.  General.
      

     

    
      	
              (a)

            	
              If
                any Party brings any proceedings to enforce any of the terms hereof,
                the
                prevailing Party will be entitled to recover from the other Party
                or
                Parties reimbursement for all reasonable expenses, costs and attorneys'
                and experts’ fees incurred in connection
                therewith.

            

    

     

    
      	
              (b)

            	
              No
                Party will be liable to any other Party for indirect or consequential
                damages with respect to this Agreement or in connection with the
                breach
                hereof. 

            

    

     

    
      	
              (c)

            	
              The
                Term Sheet, this Agreement and the Confidentiality Agreement contain
                the
                entire agreement of the Parties hereto with respect to the subject
                matter
                hereof and supersede all prior understandings and agreements, whether
                written or oral, with respect thereto.

            

    

     

    
      	
              (d)

            	
              No
                Party may assign this Agreement without the prior written consent
                of the
                other Parties except that the Buyer may assign this Agreement to
                one or
                more direct or indirect wholly-owned subsidiaries thereof without
                the
                prior written consent of the Sellers.

            

    

    

    
      
        
           

          
          

        

        
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              (e)

            	
              Nothing
                in this Agreement will be deemed to create rights in or benefits
                for any
                third parties. 

            

    

     

    
      	
              (f)

            	
              This
                Agreement will not be amended or modified in any way except by an
                instrument signed by each Party.

            

    

     

    17.  Counterparts;
      Facsimile.
      This
      Agreement may be executed in counterparts and by exchange of facsimile copies.
      

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY BLANK]

     

    

    
      
        
           

          
          

        

        
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    IN
      WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
      by
      its respective duly authorized representative as of the Effective
      Date.

     

    U.S.
      Energy Corp.

    

    By:
       
      /s/
      Mark Larsen  

    Name
       
      Mark
      Larsen  

    Title:
       
      President   

    

    Address
      for notices:

    

    U.S.
      Energy Corp. 

    877
      N.
      8th
      W.

    Riverton,
      Wyoming 

    USA
      82501

    Attention:
      Mark J. Larsen 

    Facsimile:
      (307) 857-3050

    

    With
      a
      copy to: 

    

    U.S.
      Energy Corp. 

    877
      N.
      8th
      W.

    Riverton,
      Wyoming 

    USA
      82501

    Attention:
      Steven R. Youngbauer, Esq. 

    Facsimile:
      (307) 857-3050

    

    Crested
      Corp.

    

    By:
       
      /s/
      Keith G. Larsen  

    Name
       
      Keith
      G. Larsen  

    Title:
       
      Co-Chairman  

    

    Address
      for notices:

    

    Crested
      Corp.

    877
      N.
      8th
      W.

    Riverton,
      Wyoming 

    USA
      82501

    Attention:
      Keith G. Larsen 

    Facsimile:
      (307) 857-3050

    

    With
      a
      copy to: 

    

    Crested
      Corp. 

    877
      N.
      8th
      W.

    Riverton,
      Wyoming 

    USA
      82501

    

    
      
        
           

          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    

    Attention:
      Steven R. Youngbauer, Esq. 

    Facsimile:
      (307) 857-3050

    

    

    Sxr
      Uranium One Inc. 

    

    By:
       /s/
      Neal J. Froneman  

    Name
       
      Neal
      J. Froneman  

    Title:
       
      President and CEO  

    

    Address
      for notices:

    

    Suite
      820-26 Wellington Street East

    Toronto,
      Ontario 

    Canada
      M5E 1S2 

    Attention:
       Jennifer
      M. Smith 

    Facsimile:
      (416) 363-6806

     

    VANSOL
      Library:737031.2

     

     

     

    
      
        
        

      

      
        9Exhibit 10.2 Settlement Agreement with Phelps Dodge Corp.

    
      
        

      

    

     

     

    

      SETTLEMENT
        AGREEMENT

       

      

       

      This
        Settlement Agreement (“Settlement Agreement”) is entered into and effective as
        of the 25th
        day of
        September 2006, by and between U.S. Energy Corp. and Crested Corp. (“USE/CC”),
        on the one hand, and Phelps Dodge Corporation, Mt. Emmons Mining Company,
        and
        Cyprus AMAX Minerals Company, (collectively “Phelps Dodge”), on the other. In
        this Settlement Agreement, USE/CC and Phelps Dodge may sometimes be referred
        to
        as “the Parties.”

      RECITALS

       

      WHEREAS,
        the Parties have been engaged in a lawsuit captioned Phelps
        Dodge Corp, et al. v. U.S. Energy Corp., et al.,
        Civil
        Action No. 02-cv-00796-LTB-PAC (D. Colo.) (“Lawsuit”) concerning,
        inter alia, the rights and duties of the Parties relating to the transfer(s)
        of
        mining properties near Crested Butte, Colorado, including duties pursuant
        to
        various agreements finalized in 1987 (collectively, the “Agreements”) entered
        into between USE/CC and Phelps Dodge’s predecessor(s); and 

       

      WHEREAS,
        on February 10, 2005, judgment on the merits in favor of Phelps Dodge was
        entered, from which USE/CC filed a timely appeal, now pending in the Tenth
        Circuit Court of Appeals as Case No. 06-1259 (the “Appeal”); and

       

      WHEREAS,
        on July 26, 2006, judgment awarding Phelps Dodge attorneys’ fees and costs
        was entered (“Attorneys’ Fees Judgment”), from which USE/CC filed a timely
        appeal and which was consolidated with the Appeal; and 

       

      WHEREAS,
        on September 6, 2006, Phelps Dodge filed a cross-appeal of the Attorneys’
Fees Judgment (the “Cross-Appeal”); and

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      WHEREAS,
        USE/CC and Phelps Dodge desire to settle all outstanding matters relating
        to the
        Lawsuit, the Appeal, and the Cross-Appeal, and to waive their respective
        appeal
        rights;

       

      THEREFORE,
        the Parties, in consideration of the covenants and payments herein, have
        agreed
        to the terms set out below.

       

      1.  Incorporation
        of Recitals:
        The
        foregoing recitals are material to this Settlement Agreement and are
        incorporated herein by this reference.

       

      2.  Payment
        by USE/CC to Phelps Dodge:
        It is
        agreed between the Parties that, concurrent with the delivery by Phelps Dodge
        to
        USE/CC of an executed copy of this Settlement Agreement, USE/CC shall pay
        Phelps\Dodge in immediately available funds Seven Million Dollars (US$7,000,000)
        (“Settlement Payment”). 

       

      3.  Dismissal
        of the Appeal and Cross-Appeal:
        Within
        five business days of the receipt of the Settlement Payment in accordance
        with
        Paragraph 2 above, the Parties shall file the Motion to Dismiss the Appeal
        and
        Cross Appeal with Prejudice attached hereto as Exhibit A. 

       

      4.  Attorneys’
        Fees and Other Costs:
        The
        Settlement Payment is deemed to be in full satisfaction of any and all
        attorneys’ fees, legal costs, operating costs, and any other costs or expenses
        incurred by any party, including but not limited to fees and costs relating
        to
        the Attorneys’ Fees Judgment, the Appeal, and Cross-Appeal and this Settlement
        Agreement. 

       

      5.  Execution;
        Authority:
        The
        Parties’ signatories to this Settlement Agreement expressly represent and
        warrant that they have the authority to settle outstanding matters relating
        to
        Agreements, the Lawsuit, and the Appeal and Cross-Appeal, and the Parties’
signatories to this Settlement Agreement expressly represent and warrant
        that
        they have the authority to execute the Settlement Agreement on behalf of
        the
        signing parties they represent. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      6.  Warranty
        of Non-Assignment:
        The
        Parties represent and warrant that none of them have assigned or transferred,
        or
        purported to assign or transfer, to any person or entity any claims, debts,
        liabilities, demands, rights, obligations, damages, losses, causes of action,
        costs, expenses, and attorneys’ fees subject to this Settlement Agreement.

       

      7.  Binding
        Effect:
        This
        Settlement Agreement shall inure to the benefit of and be binding upon the
        shareholders, successors, assigns, and legal representatives of the
        Parties.

       

      8.  Multiple
        Counterparts:
        This
        Settlement Agreement may be executed in multiple counterparts, each of which
        shall be deemed to be and have the same force and effect of an original,
        and all
        of which, taken together, shall constitute and be construed as a single
        agreement. A facsimile signature shall be treated as an original. The Parties
        shall promptly exchange original signatures after execution. 

       

      9.  Opportunity
        to Read and Consult:
        Each of
        the Parties to this Settlement Agreement represents that it has read it,
        has
        consulted with counsel regarding its terms, fully understands the rights
        and
        obligations described herein, and is entering into the Settlement Agreement
        freely and without duress.

       

      10.  Complete
        and Final Agreement:
        It is
        agreed that this Settlement Agreement embodies the complete and final agreement
        and release between the Parties as to the Lawsuit, the Appeal, and the
        Cross-Appeal. All previous covenants, promises, agreements, conditions or
        other
        understandings, either oral or written, with respect to the Lawsuit, the
        Appeal,
        and the Cross-Appeal are deemed superseded by this Settlement Agreement.
        This
        Settlement Agreement may be amended only by an instrument in writing executed
        jointly by the signing parties.

       

      11.  Construction:
        The
        language used in this Settlement Agreement will be deemed to be the language
        chosen by the Parties to express their mutual intent, and the Settlement
        

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      Agreement
        shall not be construed against any party because of such party’s involvement in
        the preparation or drafting of this Settlement Agreement.

       

      12.  Severability:
        If any
        provision of this Settlement Agreement or any document executed in connection
        with this Settlement Agreement is held to be illegal, invalid or unenforceable
        under present or future laws effective during the term hereof, such provision
        shall be fully severable and shall in no way affect the validity or
        enforceability of this Settlement Agreement or any other provision herein.
        Should any section, paragraph, subparagraph, or other portion of this Settlement
        Agreement or any Exhibit incorporated herein be found invalid or be required
        to
        be modified as a matter of law in a fully authorized court or by a duly
        authorized government agency, then only that portion of this Settlement
        Agreement shall be invalid or modified. The remainder of this Settlement
        Agreement, which is still valid and unaffected, shall remain in force. If
        the
        absence of the part that is held to be invalid, illegal, or unenforceable,
        or
        modification of the part required to be modified, substantially deprives
        a party
        of the economic benefit of this Settlement Agreement, the signing parties
        shall
        negotiate in good faith reasonable and valid provisions to restore the economic
        benefit to the party deprived or to balance the signing parties’ obligations
        consistent with the intent reflected in this Settlement Agreement. 

       

      13.  No
        Admission:
        The
        Parties agree that the settlement embodied in this Settlement Agreement,
        and all
        actions taken pursuant hereto, is made to compromise and settle the outstanding
        matters relating to the Lawsuit, the Appeal, and the Cross-Appeal without
        further litigation. It is not and shall not be interpreted as an admission
        of
        any liability or wrongdoing by any party. No statement appearing in this
        Settlement Agreement or in any Exhibit to this Settlement Agreement or any
        other
        document to carry out the terms of this Settlement Agreement is, or should
        be
        interpreted as, an admission or statement against interest. This 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      Settlement
        Agreement, its terms and all negotiations relating thereto shall not be used
        by
        any party in any other proceedings or otherwise for any purpose except to
        the
        extent necessary to enforce this Settlement Agreement.

       

      14.  Title
        and Headings; Enforceability:
        The
        titles and headings to the paragraphs in this Settlement Agreement are inserted
        for convenience and reference only, and are not intended to be a part of
        or to
        affect the meaning of or interpretation of this Settlement Agreement. The
        provisions of this Settlement Agreement shall, where possible, be interpreted
        in
        a manner to sustain their legality and enforceability.

       

      15.  Effect
        on Prior Agreements:
        This
        Settlement Agreement does not terminate, modify or amend the
        Agreements.

       

      16.  Choice
        of Law:
        This
        Agreement and all disputes arising hereunder shall be interpreted under and
        governed by the laws of the State of Colorado.

      

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      PHELPS
        DODGE CORPORATION

      

      

      

      By:
        /s/
        S.
        David Colton 

      Title:
        Sr. Vice President and General Counsel

      Printed
        Name: S. David Colton

      

      MT.
        EMMONS MINING COMPANY 

      

      

      

      By:
        /s/
        S.
        David Colton 

      Title:
        Sr. Vice President and General Counsel

      

      CYPRUS
        AMAX MINERALS COMPANY

      

      

      

      By:
        /s/
        S.
        David Colton 

      Title:
        Sr. Vice President and General Counsel

      

      U.S.
        ENERGY CORP. 

      

      

      

      By:
        /s/
        Mark J. Larsen 

      Title:
        President

      

      CRESTED
        CORP. 

      

      

      

      By:
        /s/
        Keith G. Larsen 

      Title:
        CEO

      

      

      

      

      

      Settlement
        Agreement Execution Page

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