Document:

Unassociated Document

    
      

      

    

    

      CLEAR
        LAKE PROPERTY OPTION AGREEMENT

      

      

      THIS
        AGREEMENT
        dated
        for reference May 31, 2005.

      

      

      BETWEEN:

      

      THOMAS
        VON CARDINAL, P.O.
        Box.
        58, Latchford, Ontario, P0J 1N0;

      

      ("Cardinal")

      

      OF
        THE
        FIRST PART

      

      AND:

      

      NEW
        INVERNESS EXPLORATIONS, INC,
        a body
        corporate, duly incorporated under the laws of the State of Nevada and having
        its head office at 18 Patricia St., Pickle Lake, Ontario, P0V 3A0;

      

      ("New
        Inverness")

      

      OF
        THE
        SECOND PART

      

      W
        H E R E
        A S :

      

      A.         
Cardinal
        is the registered and beneficial owner of the one mineral property claim
        located
        in Coleman Township, Larder Lake Mining Division, Ontario, which claim is
        more
        particularly described in Schedule "A" attached hereto which forms a material
        part hereof (collectively, the "Claim");

      

      B.          
        Cardinal
        has agreed to grant to New Inverness the sole and exclusive right, privilege
        and
        option to explore the Claim together with the sole and exclusive right,
        privilege and option to purchase the Claim upon the terms and conditions
        hereinafter set forth;

      

      NOW
        THEREFORE THIS AGREEMENT WITNESSETH
        that in
        consideration of the mutual covenants and provisos herein contained,
THE
        PARTIES HERETO AGREE AS FOLLOWS:

      

      1.           
        OPTIONOR’S
        REPRESENTATIONS

      

      1.1         
Cardinal
        represents and warrants to New Inverness that:

      

      
        	 	
                (a)

              	
                Cardinal
                  is the registered and beneficial owner of the Claim and holds the
                  right to
                  explore and develop the Claim;

              

      

      

      
        	 	
                (b)

              	
                Cardinal
                  holds the Claim free and clear of all liens, charges and claims
                  of others,
                  and Cardinal has a free and unimpeded right of access to the Claim
                  and has
                  use of the Claim surface for the herein
                  purposes;

              

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        	 	
                (c)

              	
                The
                  Claim has been duly and validly located and recorded in a good
                  and
                  miner-like manner pursuant to the laws of the Province of Ontario
                  and are
                  in good standing in Ontario as of the date of this
                  Agreement;

              

      

      

      
        	 	
                (d)

              	
                There
                  are no adverse claims or challenges against or to the Cardinal's
                  ownership
                  of or title to the Claim nor to the knowledge of Cardinal is there
                  any
                  basis therefor, and there are no outstanding agreements or options
                  to
                  acquire or purchase the Claim or any portion
                  thereof;

              

      

      

      
        	 	
                (e)

              	
                Cardinal
                  has the full right, authority and capacity to enter into this Agreement
                  without first obtaining the consent of any other person or body
                  corporate
                  and the consummation of the transaction herein contemplated will
                  not
                  conflict with or result in any breach of any covenants or agreements
                  contained in, or constitute a default under, or result in the creation
                  of
                  any encumbrance under the provisions of any indenture, agreement
                  or other
                  instrument whatsoever to which Cardinal is a party or by which
                  he is bound
                  or to which he is subject; and

              

      

      

      
        	 	
                (f)

              	
                No
                  proceedings are pending for, and Cardinal is unaware of any basis
                  for, the
                  institution of any proceedings which could lead to the placing
                  of Cardinal
                  in bankruptcy, or in any position similar to
                  bankruptcy.

              

      

      

      1.2       The
        representations and warranties of Cardinal set out in paragraph 1.1 above
        form a
        part of this Agreement and are conditions upon which New Inverness has relied
        in
        entering into this Agreement and shall survive the acquisition of any interest
        in the Claim by New Inverness .

      

      1.3       Cardinal
        will indemnify New Inverness from all loss, damage, costs, actions and suits
        arising out of or in connection with any breach of any representation, warranty,
        covenant, agreement or condition made by Cardinal and contained in this
        Agreement.

       

      1.4       Cardinal
        acknowledges and agrees that New Inverness has entered into this Agreement
        relying on the warranties and representations and other terms and conditions
        of
        this Agreement and that no information which is now known or which may hereafter
        become known to New Inverness shall limit or extinguish the right to indemnity
        hereunder, and, in addition to any other remedies it may pursue, New Inverness
        may deduct the amount of any such loss or damage from any amounts payable
        by it
        to Cardinal hereunder.

      

      2.        
        NEW
        INVERNESS' REPRESENTATIONS

      

      New
        Inverness warrants and represents to Cardinal that it is a body corporate,
        duly
        incorporated under the laws of the State of Nevada with full power and absolute
        capacity to enter into this Agreement and that the terms of this Agreement
        have
        been authorized by all necessary corporate acts and deeds in order to give
        effect to the terms hereof.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      

      3.        
        GRANT
        OF OPTION

      

      Cardinal
        hereby gives and grants to New Inverness the sole and exclusive right and
        option
        to acquire a l00% undivided right, title and interest in and to the Claim
        (the
        "Option"), subject to a 3% net smelter returns royalty and a 2% gross overriding
        royalty on diamond production on the Claims, as described respectively in
        Schedules B and C attached to this Agreement, by performing the acts and
        deeds
        and paying the sums provided for in paragraph 4.

      

      4.        
        CONSIDERATION
        FOR THE GRANT OF OPTION

      

      4.1       In
        order
        to keep the Option in respect of the Claim in good standing and in force
        and
        effect, New Inverness shall be obligated to:

      

      Cash
        Payment

      
         

      

      
        	
              	
                (a)

              	
                Pay
                  to Cardinal a total of $33,000
                  as follows:

              

      

      

      
        	
              	(i)	
                $3,000
                  immediately upon execution of this agreement by all parties;
                  

              

      

      

      
        	
              	(ii)	
                an
                  additional $5,000 by May 25, 2006; 

              

      

      

      
        	
              	(iii)	
                an
                  additional $10,000 by May 25, 2007;
                  and

              

      

      

      
        	
              	(iv)	
                an
                  additional $15,000 by May 25, 2008.

              

      

      

      Expenditure
        Commitments

      

      
        	 	
                (b)

              	
                Incur,
                  or cause to be incurred, exploration work on the Claims totalling
                  at least
                  $200,000 by May 25, 2008, which work shall be conducted by New
                  Inverness
                  under the direction of a qualified geologist or project engineer,
                  as
                  follows:

              

      

      

      
        	
              	(i)	
                $5,000
                  in
                  expenditures on the Claim by Dec 31, 2005. New Inverness’ completion of
                  these expenditures is mandatory;

              

      

      

      
        	
              	(ii)	
                No
                  less than a further $15,000
                  of
                  expenditures to be incurred on the Claim by May 25, 2006;

              

      

      

      
        	
              	(iii)	
                No
                  less than a further $30,000 of expenditures to be incurred on the
                  Claim by
                  May 25, 2007; 

              

      

      

      
        	
              	(iv)	
                No
                  less than a further $50,000 of expenditures to be incurred on the
                  Claim by
                  May 25, 2008; and

              

      

      

      
        	
              	(v)	
                No
                  less than a further $100,000 of expenditures to be incurred on
                  the Claim
                  by May 25, 2009. 

              

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      

      Advance
        Royalty Payments

       

      
        	 	
                (c)

              	
                Stonechurch
                  agrees to pay to Cardinal advance net smelter returns royalty payments
                  on
                  the Claim of $10,000 per year. Advance net smelter return royalty
                  payments
                  shall be due on the May 25 each year commencing May 31, 2010, and
                  continuing on May 25 of each calendar year thereafter until this
                  Agreement
                  is terminated. All such advance net smelter returns royalty payments
                  that
                  New Inverness makes to Cardinal shall be fully credited toward
                  any monies
                  due under the provisions of paragraph
                  10.

              

      

      

      Assessment
        Work

      

      
        	 	
                (d)

              	
                Pay,
                  or cause to be paid, to Cardinal, or on Cardinal's behalf, as New
                  Inverness may determine, all Claims payments and assessment work
                  required
                  to keep the Claim and this Option in good standing during the term
                  of this
                  Agreement.

              

      

      

      4.3       New
        Inverness shall deliver all consideration due to the Cardinal under paragraph
        4.1
        directly in his name.

      

      5.        
        PERIPHERAL
        INTEREST

      

      New
        Inverness agrees that any other right or interest acquired in any mineral
        property claim group within a two kilometer distance of the boundaries of
        the
        Claim will form part of the Claim for the purpose of this agreement. Any
        additional mineral property right or interest that New Inverness may acquire
        shall be included under the provisions of paragraph 6.1.

      

      6.        
        RIGHT
        TO ABANDON PROPERTY INTERESTS

      

      6.1       Should
        New Inverness, in its sole discretion, determine that any part of the Claim
        no
        longer warrants further exploration and development, then New Inverness may
        abandon such interest or interests without affecting its rights or obligations
        under this Agreement, so long as New Inverness provides Cardinal with 30
        days
        notice of its intention to do so. Upon receipt of such notice, Cardinal may
        request New Inverness to retransfer the title to such interest or interests
        to
        him, and New Inverness hereby agrees to do so, and upon expiry of the 30
        days,
        or upon the earlier transfer thereof, such interests shall cease to be part
        of
        the Claim for the purposes of this Agreement.

      

      6.2       Any
        Claim
        that New Inverness returns to Cardinal in accordance with paragraph 6.1 shall
        have a minimum of one year of assessment work credited against it at the
        time of
        return.

      

      7.        
        TERMINATION
        OF OPTION

      

      7.1       Subject
        to paragraph 7.2, the Option shall terminate if New Inverness fails to make
        the
        required cash payments, advance royalty payments or, fails to complete the
        required assessment work in accordance with paragraph 4.1 herein within the
        time
        periods specified therein.

      

      7.2       If
        New
        Inverness shall be in default of any requirement set forth in paragraph 4.1
        herein, Cardinal shall give written notice to New Inverness specifying the
        default and New Inverness shall not lose any rights granted under this
        Agreement, unless within 30 days after the giving of notice of default by
        Cardinal, New Inverness has failed to take reasonable steps to cure the default
        by the appropriate performance.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

      7.3       If
        the
        Option is terminated in accordance with paragraphs 7.1 and 7.2 herein, New
        Inverness shall have no interest in or to the Claim, and all share issuances,
        expenditures and payments made by New Inverness to or on behalf of Cardinal
        under this Agreement shall be non-refundable by Cardinal to New Inverness
        for
        which New Inverness shall have no recourse. Within 60 days of such termination,
        New Inverness shall transfer the Claim back to Cardinal, failing which, Cardinal
        shall have the right to act as attorney for New Inverness for the purpose
        of
        such transfer.

      

      8.        
        ACQUISITION
        OF INTERESTS IN THE PROPERTY

      

      At
        such
        time as New Inverness has made the required cash payments and exploration
        expenditures in accordance with paragraph 4.1 herein, within the time periods
        specified therein, then the Option shall be deemed to have been exercised
        by New
        Inverness, and New Inverness shall have thereby, without any further act,
        acquired an undivided 100% interest in and to the Claim.

      

      9.        
        RIGHT
        OF ENTRY

      

      For
        so
        long as the Option continues in full force and effect, New Inverness, its
        employees, agents, permitted assigns and independent contractors shall have
        the
        sole and exclusive right and option to:

      

      
        	 	
                (a)

              	
                enter
                  upon the Claim;

              

      

      

      
        	 	
                (b)

              	
                have
                  exclusive and quiet possession of the
                  Claim;

              

      

      

      
        	 	
                (c)

              	
                incur
                  expenditure;

              

      

      

      
        	 	
                (d)

              	
                bring
                  upon and erect upon the Claim such mining facilities as New Inverness
                  may
                  consider advisable; and

              

      

      

      
        	 	
                (e)

              	
                remove
                  from the Claim and sell or otherwise dispose of mineral
                  products.

              

      

      

      10.       NET
        SMELTER RETURNS ROYALTY

      

      10.1
              On
        the
        date New Inverness commences commercial production on the Claim, Cardinal
        shall
        be entitled to receive and New Inverness shall pay to Cardinal 3% of net
        smelter
        returns. "Commercial production" shall not include milling of ores for the
        purpose of testing or milling by a pilot plant or milling during an initial
        tune-up period of a plant.

      

      10.2
               New
        Inverness shall be under no obligation whatsoever to place the Claim into
        commercial production and in the event they are placed into commercial
        production, New Inverness shall have the right, at any time, to curtail or
        suspend such production as it, in its absolute discretion, may determine.
        

      

      10.2 
              New
        Inverness shall be entitled to, but under no obligation whatsoever, purchase
        up
        to 2% of the 3% of net smelter returns held by Cardinal at a rate of $500,000
        per 0.5% of net smelter return.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      

      11.       OPERATOR

      

      11.1 
              After
        the
        execution of this Agreement, New Inverness, or at New Inverness' option,
        its
        respective associate or nominee or such other unrelated entity as it may
        determine, will act as the operator of the Claim under this Agreement. New
        Inverness, if operator, may resign as the operator at any time by giving
        30
        calendar days prior written notice to Cardinal, and within such 30 day period,
        New Inverness may appoint another party who covenants to act as the operator
        of
        the Claim upon such terms as New Inverness sees fit.

      

      11.2 
              Notwithstanding
        paragraph 11.1, Cardinal shall have the right to conduct and supervise all
        of
        New Inverness’ exploration and development work on the Claim and to be
        compensated at competitive industry rates.

      

      12.       POWER
        AND AUTHORITY OF THE OPERATOR

      

      12.1 
              After
        the
        execution of this Agreement, the Operator shall have full right, power and
        authority to do everything necessary or desirable in connection with the
        exploration and development of the Claims and to determine the manner of
        operation of the Claim as a mine. 

      

      12.2 
              Where
        possible, the Operator shall insure that all field work is conducted, and
        that
        all assay and work program results are verified, by a third party independent
        from New Inverness.

      

      13.       REGISTRATION
        OF PROPERTY INTERESTS

      

      Upon
        the
        request of New Inverness, Cardinal shall assist New Inverness to record this
        Agreement with the appropriate mining recorder and, when required, Cardinal
        shall further provide New Inverness with such recordable documents as New
        Inverness and its counsel shall require to record its due interest in respect
        of
        the Claim.

      

      14.       FURTHER
        ASSURANCES

      

      The
        parties hereto agree to do or cause to be done all acts or things necessary
        to
        implement and carry into effect the provisions and intent of this
        Agreement.

      

      15.       FORCE
        MAJEURE

      

      If
        New
        Inverness is prevented from or delayed in complying with any provisions of
        this
        Agreement by reasons of strikes, labour disputes, lockouts, labour shortages,
        power shortages, fires, wars, acts of God, governmental regulations restricting
        normal operations or any other reason or reasons beyond the control of New
        Inverness, the time limited for the performance of the various provisions
        of
        this Agreement as set out above shall be extended by a period of time equal
        in
        length to the period of such prevention and delay, and New Inverness, insofar
        as
        is possible, shall promptly give written notice to Cardinal of the particulars
        of the reasons for any prevention or delay under this section, and shall
        take
        all reasonable steps to remove the cause of such prevention or delay and
        shall
        give written notice to Cardinal as soon as such cause ceases to
        exist.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

      16.       CONFIDENTIAL
        INFORMATION

      

      No
        information furnished by New Inverness to Cardinal hereunder in respect of
        the
        activities carried out on the Claim by Cardinal, or related to the sale of
        mineral products derived from the Claim, shall be published by Cardinal without
        the prior written consent of New Inverness, but such consent in respect of
        the
        reporting of factual data shall not be unreasonably withheld. Cardinal, shall
        be
        entitled to copies of all exploration work and development data that New
        Inverness may acquire in conducting work on the Claim, in written and electronic
        format, to be provided as the data is generated

      

      17.       ENTIRE
        AGREEMENT

      

      This
        Agreement constitutes the entire agreement to date between the parties hereto
        and supersedes every previous agreement, communication, expectation,
        negotiation, representation or understanding, whether oral or written, express
        or implied, statutory or otherwise, between the parties hereto with respect
        to
        the subject matter of this Agreement.

      

      18.       NOTICE

      

      18.1
              Any
        notice required to be given under this Agreement shall be deemed to be well
        and
        sufficiently given if delivered, or if mailed by registered mail, in the
        case of
        Cardinal addressed to him as follows:

      

      Thomas
        von Cardinal

      P.O.
        Box
        58

      Latchford,
        Ontario

      P0J
        1N0

      

      and
        in
        the case of New Inverness addressed as follows:

      

      NEW
        INVERNESS EXPLORATIONS, INC.

      18
        Patricia Street,

      Pickle
        Lake, Ontario

      P0V
        3A0

      

      Attention:
        Amanda Lamothe, President

      

      and
        any
        notice given as aforesaid shall be deemed to have been given, if delivered,
        when
        delivered, or if mailed by registered mail, on the fourth business day after
        the
        date of mailing thereof.

      

      18.2
              Either
        party hereto may from time to time by notice in writing change its address
        for
        the purpose of this section.

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      

      19.       OPTION
        ONLY

      

      Until
        the
        Option is exercised, this is an option only and except as specifically provided
        otherwise, nothing herein contained shall be construed as obligating New
        Inverness to do any acts or make any payments hereunder and any acts or payments
        made hereunder shall not be construed as obligating New Inverness to do any
        further acts or make any further payments.

      

      20.       RELATIONSHIP
        OF PARTIES

      

      Nothing
        contained in this Agreement shall, except to the extent specifically authorized
        hereunder, be deemed to constitute either party hereto a partner, agent or
        legal
        representative of the other party.

      

      21.       TIME
        OF ESSENCE

      

      Time
        shall be of the essence of this Agreement.

      

      22.       TITLES

      

      The
        titles to the respective sections hereof shall not be deemed a part of this
        Agreement but shall be regarded as having been used for convenience
        only.

      

      23.       CURRENCY

      

      All
        funds
        referred to under the terms of this Agreement shall be funds designated in
        the
        lawful currency of the United Stares of America.

      

      24.       SEVERABILITY

      

      In
        the
        event that any of the paragraphs contained in this Agreement, or any portion
        of
        thereof, is unenforceable or is declared invalid for any reason whatsoever,
        such
        unenforceability or invalidity shall not affect the enforceability or validity
        of the remaining terms or portions thereof contained in this Agreement and
        such
        unenforceable or invalid paragraph, or portion thereof, shall be severable
        from
        the remainder of the Agreement.

      

      25.       APPLICABLE
        LAW

      

      The
        situs
        of the Agreement is Cobalt, Ontario, and for all purposes this Agreement
        will be
        governed exclusively by and construed and enforced in accordance with the
        laws
        prevailing in the Province of Ontario. 

      

      26.       ENUREMENT

      

      This
        Agreement shall enure to the benefit of and be binding upon the parties hereto
        and their respective successors and assigns.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      

      

      IN
        WITNESS WHEREOF
        this
        Agreement has been executed as of the day and year first above
        written.

      

      
        	 	 	
                STONECHURCH,
                  INC.

              
	 	 	 
	 	 	
                per:

              
	 	 	 
	
                ________________________________

              	 	
                ___________________________

              
	
                Thomas
                  von Cardinal

              	 	
                Luke
                  Willis, Director

              

      

      

      

      

      

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      SCHEDULE
        "A"

      

      TO
        THAT CERTAIN AGREEMENT MADE AS OF MAY 31, 2005 BETWEEN 

      THOMAS
        VON CARDINAL AND NEW INVERNESS EXPLORATIONS, INC.

      

      

      The
        Clear
        Lake Lake claim block consists of a total of 9 claim units located in the
        Larder
        Lake Mining Division, Canada with the following record number and
        area:

      

      
        	
                Township.

              	
                Recording
                  Date

              	
                Record
                  No.

              	
                Acreage

              
	 	 	 	 
	
                Coleman

              	
                April
                  25, 2005

              	
                4203309

              	
                360

              

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

       

      

      

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      

      SCHEDULE
        “B”

      

      TO
        THAT CERTAIN AGREEMENT MADE AS OF MAY 25, 2004 BETWEEN

      THOMAS
        VON CARDINAL AND NEW INVERNESS EXPLORATIONS, INC.

      

      DEFINITION
        OF GROSS OVERRIDING ROYALTY (“GORR”)

      

      (All
        capitalized terms used herein shall have the definitions contained in the
        Agreement, unless otherwise specified.)

      

      Pursuant
        to the Agreement to which this Appendix is attached, Cardinal is entitled
        to a
        royalty (the “GORR”) equal to 2% of the Average Appraised Value (as hereinafter
        defined) of all gem and industrial diamonds recovered, sorted and graded
        from
        the Claims (the “Diamonds”), free and clear of all costs of development and
        operations.

      

      “Average
        Appraised Value”
        means
        the average of the valuations in Canadian dollars of the Diamonds determined
        by
        two independent graders, one appointed by New Inverness and one appointed
        by
        Cardinal. Such independent graders shall be duly qualified and accredited,
        and
        shall sort, grade and value the Diamonds in accordance with industry standards,
        having regard to, but without limiting the generality of the foregoing, the
        commercial demand for the Diamonds. Each independent valuator shall value
        each
        particular classification of the Diamonds in accordance with the industry
        pricebooks, standards and formulas. The parties acknowledge that the intention
        is that the GORR is to be paid to Cardinal on this basis, regardless of the
        price or proceeds actually received by New Inverness for or in connection
        with
        the Diamonds or the manner in which a sale of the Diamonds to a third party
        is
        made, and without deduction.

      

      New
        Inverness will calculate and pay the GORR to Cardinal within 30 days of the
        end
        of each calendar quarter, based on all Diamonds from the Property which were
        graded in such calendar quarter.

      

      Cardinal
        shall not be entitled to participate in the profits or be obligated to share
        in
        any losses generated by the Purchaser’s actual marketing or sales
        practices.

      

      Cardinal
        shall also at his election have the right to take their GORR in
        kind.

      

      

       

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      SCHEDULE
        “C”

      

      TO
        THAT CERTAIN AGREEMENT MADE AS OF MAY 25, 2005 BETWEEN

      THOMAS
        VON CARDINAL AND NEW INVERNESS EXPLORATIONS, INC.

      

      NET
        SMELTER RETURNS

      

      1.  In
        the
        Agreement, “Net
        Smelter Returns”
        means
        the net amount of money received by New Inverness for its own account from
        the
        sale of ore, or ore concentrates or any other products from the Claim to
        a
        smelter or other ore buyer after deduction of smelter and /or refining charges,
        ore treatment charges, penalties and any and all charges made by the purchaser
        of ore or concentrates, less any and all transportation costs which may be
        incurred in connection with the transportation of ore or
        concentrates.

      

      2.  Payment
        of Net Smelter Returns by New Inverness to Cardinal shall be made quarterly
        within 45 days after the end of each fiscal quarter of New Inverness and
        shall
        be accompanied by unaudited financial statements pertaining to the operations
        carried out by New Inverness on the Claim. Within 120 days after the end
        of each
        fiscal year of New Inverness in which Net Smelter Returns are payable to
        Cardinal, the records relating to the calculation of Net Smelter Returns
        for
        such year shall be audited and any resulting adjustments in the payment of
        Net
        Smelter Returns payable to Cardinal shall be made forthwith. A copy of the
        said
        audit shall be delivered to Cardinal within 30 days of the end of such 120-day
        period.

      

      3.  Each
        annual audit shall be final and not subject to adjustment unless the Cardinal
        delivers to New Inverness written exceptions in reasonable detail within
        one
        month after Cardinal receives the report. Cardinal, or his representative
        duly
        authorized in writing, at his expense, shall have the right to audit the
        books
        and records of New Inverness related to Net Smelter Returns to determine
        the
        accuracy of the report, but shall not have access to any other books and
        records
        of New Inverness. The audit shall be conducted by a chartered or certified
        public accountant of recognized standing. New Inverness shall have the right
        to
        condition access to its books and records on execution of a written agreement
        by
        the auditor that all information will be held in confidence and used solely
        for
        purposes of audit and resolution of any disputes related to the report. A
        copy
        of Cardinal’s report shall be delivered to New Inverness and the amount which
        should have been paid according to Cadinal’s report shall be paid forthwith. In
        the event that the said discrepancy is to the detriment of Cardinal and exceeds
        5% of the amount actually paid by New Inverness, then New Inverness shall
        pay
        the entire cost of the audit.

      

      4.  In
        the
        event smelting or refining are carried out in facilities owned or controlled,
        in
        whole or in part, by New Inverness, charges, costs and penalties with respect
        to
        such operations, excluding transportation, shall mean reasonable charges,
        costs
        and penalties for such operations but not in excess of the amounts that New
        Inverness would have incurred if such operations were carried out at facilities
        not owned or controlled by New Inverness then offering comparable custom
        services.

      

      5.  Cardinal
        shall at his election have the right to take their Net Smelter Return as
        it may
        pertain to precious metals defined as gold and platinum group elements in
        kind.

       

       

      12Exhibit 10.35

 

URANIUM RESOURCES, INC.

 

 

2004 STOCK INCENTIVE PLAN

 

General.  This
Stock Incentive Plan (the “Plan”) provides eligible employees of Uranium
Resources, Inc., (the “Company”) with the opportunity to acquire or expand
their equity interest in the Company by making available for purchase Common
Shares, par value $.001 per share, of the Company (“Common Shares”), through
the granting of nontransferable options to purchase Common Shares (“Stock
Options”).  It is intended that key
employees may be granted, simultaneously or from time to time, Stock Options
that qualify as incentive stock options (“Incentive Stock Options”) under
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or
Stock Options that do not so qualify (“Non-qualified Stock Options”).  No provision of the Plan is intended or shall
be construed to grant employees alternative rights in any Incentive Stock
Option granted under the Plan so as to prevent such Option from qualifying
under Section 422 of the Code.

 

1.                                       Purpose of the Plan.  The
purpose of the Plan is to provide continuing incentives to key employees of the
Company and of any subsidiary corporation of the Company, by encouraging such
key employees to acquire new or additional share ownership in the Company,
thereby increasing their proprietary interest in the Company’s business and
enhancing their personal interest in the Company’s success.

 

For purposes of the Plan, a “subsidiary
corporation” consists of any corporation at least fifty percent (50%) of the
voting power of all classes of the stock of which is directly or indirectly
owned by the Company.

 

2.                                       Effective Date of the Plan.  The Plan
shall become effective upon its adoption by the Board of Directors, subject to
approval by holders of a majority of the outstanding shares of voting capital
stock of the Company.  If the Plan is not
so approved within twelve (12) months after the date the Plan is adopted by the
Board of Directors, the Plan and any grants made hereunder shall be null and
void.  However, if the Plan is so
approved, no further stockholder approval shall be required with respect to the
making of grants pursuant to the Plan, except as provided in Section 10 hereof.

 

3.                                       Administration of the Plan.  The Plan
shall be administered by the Compensation Committee of the Board of Directors
of the Company, or by any other committee selected by such Board of Directors
by majority vote, which Compensation Committee or other committee shall be
composed solely of no fewer than two (2) members of such Board of Directors who
are “outside directors” as defined in Section 162(m) of the Code and the
Regulations thereunder (the “Committee”). 
No person shall be appointed to the Committee who, during the one-year
period immediately preceding such person’s appointment to the Committee, has
received any grants of Stock Options under the Plan or any similar stock option
or stock incentive plan, other than a formula-based plan, maintained by the
Company or any subsidiary corporation.  A
member of the Committee shall not be eligible to participate in this Plan while
serving on the Committee.

 

A majority of the Committee shall constitute
a quorum.  The acts of a majority of the
members present at any meeting at which a quorum is present (or acts
unanimously approved in writing by the members of the Committee) shall
constitute binding acts of the Committee.

 

Subject to the terms and conditions of the
Plan, the Committee shall be authorized and empowered:

 

(a)                                  To select the key employees to whom grants may be
made;

 

(b)                                 To determine the number of Common Shares to be
covered by any Grant;

 

(c)                                  To prescribe the terms and conditions of any
grants made under the Plan, and the form(s) and agreement(s) used in connection
with such grants, which shall include agreements governing the granting of
Stock Options;

 

B-1

 

(d)                                 To determine the time or times when Stock Options
will be granted and when they will terminate in whole or in part;

 

(e)                                  To determine the time or times when Stock Options
that are granted may be exercised;

 

(f)                                    To determine, at the time a Stock Option is
granted under the Plan, whether such Option is an Incentive Stock Option
entitled to the benefits of Section 422 of the Code; and

 

(g)                                 To establish any other Stock Option agreement
provisions not inconsistent with the terms and conditions of the Plan or, where
the Stock Option is an Incentive Stock Option, with the terms and conditions of
Section 422 of the Code.

 

4.                                       Employees Eligible for Grants.  Grants
may be made from time to time to those key employees of the Company or a
subsidiary corporation, who are designated by the Committee in its sole and
exclusive discretion.  Key employees may
include, but shall not necessarily be limited to, members of the Board of Directors
(excluding members of the Committee), and officers, of the Company and any
subsidiary corporation; however, Stock Options intended to qualify as Incentive
Stock Options shall only be granted to key employees while actually employed by
the Company or a subsidiary corporation. 
The Committee may grant more than one Stock Option to the same key
employee.  No Stock Option shall be
granted to any key employee during any period of time when such key employee is
on a leave of absence.

 

5.                                       Shares Subject to the Plan.  The
shares to be issued pursuant to any Stock Option granted under the Plan shall
be Common Shares.  Either Common Shares
held as treasury stock, or authorized and unissued Common Shares, or both, may
be so issued, in such amount or amounts within the maximum limits of the Plan
as the Board of Directors shall from time to time determine.

 

Subject to the provisions of the next
succeeding paragraph of this Section 6 and the provisions of Section 7(h),
the aggregate number of Common Shares that can be actually issued under the
Plan shall be seven million (7,000,000) Common Shares.  The number of shares with respect to which
options may be granted to any key employee in any calendar year may not exceed
2,000,000 shares.

 

If, at any time subsequent to the date of
adoption of the Plan by the Board of Directors, the number of Common Shares are
increased or decreased, or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation (whether as a result of a stock split, stock dividend, combination
or exchange of shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation, recapitalization or
otherwise):  (i) there shall
automatically be substituted for each Common Share subject to an unexercised
Stock Option (in whole or in part) granted under the Plan, the number and kind
of shares of stock or other securities into which each outstanding Common Share
shall be changed or for which each such Common Share shall be exchanged; and
(ii) the option price per Common Share or unit of securities shall be increased
or decreased proportionately so that the aggregate purchase price for the
securities subject to a Stock Option shall remain the same as immediately prior
to such event.  In addition to the
foregoing, the Committee shall be entitled in the event of any such increase,
decrease or exchange of Common Shares to make other adjustments to the
securities subject to a Stock Option, the provisions of the Plan, and to any
related Stock Option agreements (including adjustments which may provide for
the elimination of fractional shares), where necessary to preserve the terms
and conditions of any grants hereunder.

 

6.                                       Stock Option Provisions.

 

(a)                                  General.  The Committee may grant to key
employees (also referred to as “optionees”) nontransferable Stock Options that
either qualify as Incentive Stock Options under Section 422 of the Code or do
not so qualify.  However, any Stock
Option which is an Incentive Stock Option shall only be granted within 10 years
from the earlier of (i) the date this Plan is adopted by the Board of Directors
of the Company; or (ii) the date this Plan is approved by the stockholders of
the Company.

 

(b)                                 Stock Option Price.  The option
price per Common Share which may be purchased under an Incentive Stock Option
under the Plan shall be determined by the Committee at the time of Grant, but
shall not be less than one hundred percent (100%) of the fair market value of a
Common Share, determined as of the date

 

B-2

 

such Option is granted; however, if a key
employee to whom an Incentive Stock Option is granted, at the time of the grant
of such Option, owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any subsidiary corporation
within the meaning of Section 422(b)(6) of the Code (a “Substantial Shareholder”),
the option price per Common Share of such Option, as determined by the Committee,
shall not be less than one hundred ten percent (110%) of the fair market value
of a Common Share on the date such Option is granted.  The option price per Common Share under each
Stock Option granted pursuant to the Plan which is not an Incentive Stock
Option shall be determined by the Committee at the time of Grant.  Except as specifically provided above, the
fair market value of a Common Share shall be determined in accordance with
procedures to be established by the Committee. 
The day on which the Committee approves the granting of a Stock Option
shall be considered the date on which such Option is granted.

 

(c)                                  Period of Stock Option.  The
Committee shall determine when each Stock Option is to expire.  However, no Stock Option shall be exercisable
by its terms for a period of more than ten (10) years from the date upon which
such Option is granted.  Further, no
Incentive Stock Option granted to an employee who is a Substantial Shareholder
at the time of the grant of such Option shall be exercisable by its terms after
the expiration of (5) years from the date of grant of such Option.

 

(d)                                 Limitation on Exercise and Transfer of Stock
Options.  Only the key employee to whom a Stock Option
is granted may exercise such Option, except where a guardian or other legal
representative has been duly appointed for such employee, and except as
otherwise provided in the case of such employee’s death.  No Stock Option granted hereunder shall be
transferable by an optionee other than by will or the laws of descent and
distribution.  No Stock Option granted
hereunder may be pledged or hypothecated, nor shall any such Option be subject
to execution, attachment or similar process.

 

(e)                                  Employment, Holding Period Requirements For
Certain Options.  The Committee may condition any Stock Option
granted hereunder upon the continued employment of the optionee by the Company
or by a subsidiary corporation, and may make any such Stock Option immediately
exercisable.  However, the Committee will
require that, from and after the date of grant of any Incentive Stock Option
granted hereunder until the day three (3) months prior to the date such Option
is exercised, such optionee must be an employee of the Company or of a
subsidiary corporation, but always subject to the right of the Company or any
such subsidiary corporation to terminate such optionee’s employment during such
period.  Each Stock Option shall be
subject to such additional restrictions as to the time and method of exercise
as shall be prescribed by the Committee. 
Upon completion of such requirements, if any, a Stock Option or the
appropriate portion thereof may be exercised in whole or in part from time to
time during the option period; however, such exercise right(s) shall be limited
to whole shares.

 

(f)                                    Payment for Stock Option Price.  A Stock
Option shall be exercised by an optionee giving written notice to the Company
of his intention to exercise the same, accompanied by full payment of the
purchase price in cash or by check.  The
Committee may, in its sole discretion, approve other methods of exercise for a
Stock Option or payment of the option price, provided that no such method shall
cause any option granted under the Plan as an Incentive Stock Option to not
qualify under Section 422 of the Code, or cause any Common Share issued in
connection with the exercise of an option not to be a fully paid and
non-assessable Common Share.

 

(g)                                 Certain Reissuances of Stock Options.  To the
extent Common Shares are surrendered by an optionee in connection with the
exercise of a Stock Option in accordance with Section 7(f), the Committee may
in its sole discretion grant new Stock Options to such optionee (to the extent
Common Shares remain available for grants), subject to the following terms and
conditions:

 

(i)                                     The number of Common Shares shall be equal to the
number of Common Shares being surrendered by the optionee;

 

(ii)                                  The option price per Common Share shall be equal
to the fair market value of Common Shares, determined on the date of exercise
of the Stock Options whose exercise caused such Grant; and

 

B-3

 

(iii)                               The terms and conditions of such Stock Options
shall in all other respects replicate such terms and conditions of the Stock
Options whose exercise caused such Grant, except to the extent such terms and
conditions are determined to not be wholly consistent with the general
provisions of this Section 7, or in conflict with the remaining provisions of
this Plan.

 

(h)                                 Limitation on Exercisable Incentive Stock Options.  The
aggregate fair market value of the Common Shares first becoming subject to
exercise as Incentive Stock Options by a key employee during any given calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000).  Such aggregate fair market value shall be
determined as of the date such Option is granted, taking into account, in the
order in which granted, any other incentive stock options granted by the
Company, or by a parent or subsidiary thereof.

 

7.                                       Termination of Employment.  If a key
employee ceases to be an employee of the Company and every subsidiary
corporation, for a reason other than death, retirement, or permanent and total
disability, his Stock Options shall, unless extended by the Committee on or
before his date of termination of employment, terminate on the effective date
of such termination of employment. 
Neither the key employee nor any other person shall have any right after
such date to exercise all or any part of his Stock Options.

 

If termination of employment is due to death
or permanent and total disability, then outstanding Stock Options may be
exercised within the one (1) year period ending on the anniversary of such
death or permanent and total disability. 
In the case of death, such outstanding Stock Options shall be exercised
by such key employee’s estate, or the person designated by such key employee by
will, or as otherwise designated by the laws of descent and distribution.   Notwithstanding the foregoing, in no event
shall any Stock Option be exercisable after the expiration of the option
period, and in the case of exercises made after a key employee’s death, not to
any greater extent than the key employee would have been entitled to exercise
such Option at the time of his death.

 

Subject to the discretion of the Committee,
in the event a key employee terminates employment with the Company and all
subsidiary corporations because of normal or early retirement, any
then-outstanding Stock Options held by such key employee shall lapse at the
earlier of the end of the term of such Stock Option or three (3) months after
such retirement or permanent and total disability.

 

  In
the event an employee of the Company or one of its subsidiary corporations is
granted a leave of absence by the Company or such subsidiary corporation to
enter military service or because of sickness, his employment with the Company
or such subsidiary corporation shall not be considered terminated, and he shall
be deemed an employee of the Company or such subsidiary corporation during such
leave of absence or any extension thereof granted by the Company or such
subsidiary corporation.

 

8.                                       Change of Control.  Upon the
occurrence of a Change of Control (as defined below), notwithstanding any other
provisions hereof or of any agreement to the contrary, all Stock Options
granted under this Plan shall become immediately exercisable in full.

 

For purposes of this Plan, a Change of
Control shall be deemed to have occurred if: 
(i) a tender offer shall be made and consummated for the ownership of
25% or more of the outstanding voting securities of the Company; (ii) the
Company shall be merged or consolidated with another corporation and, as a
result of such merger or consolidation, less than 75% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former stockholders of the Company as the same shall have
existed immediately prior to such merger or consolidation; or (iii) the Company
shall sell substantially all of its assets to another corporation which is not
a wholly owned subsidiary; or (iv) a person, within the meaning of Section
3(a)(9) or of Section 13(d)(3) (as in effect on the date hereof) of the
Exchange Act, shall acquire, other than by reason of inheritance, fifty-one
percent (51%) or more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record).  In making any such determination, transfers
made by a person to an affiliate of such person (as determined by the Board of
Directors of the Company), whether by gift, devise or otherwise, shall not be
taken into account.  For purposes of this
Plan, ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i)
as in effect on the date hereof pursuant to the Exchange Act.

 

B-4

 

Notwithstanding the provisions of
subparagraph (iv) of this Section 8, “person” is used in that subparagraph
shall not include any holder who was the beneficial owner of more than ten
percent (10%) of the voting securities of the Company on the date the Plan was
adopted by the Board of Directors.

 

9.                                       Amendments to Plan.  The
Committee is authorized to interpret this Plan and from time to time adopt any
rules and regulations for carrying out this Plan that it may deem
advisable.  Subject to the approval of
the Board of Directors of the Company, the Committee may at any time amend,
modify, suspend or terminate this Plan. 
In no event, however, without the approval of stockholders, shall any
action of the Committee or the Board of Directors result in:

 

(a)                                  Materially amending, modifying or altering the
eligibility requirements provided in Section 4 hereof; or

 

(b)                                 Materially increasing, except as provided in
Section 5 and 6 hereof, the maximum number of shares subject to Stock Options;

 

except to conform this Plan and any
agreements made hereunder to changes in the Code or governing law.

 

10.                                 Investment Representation, Approvals and Listing.  The Committee
may, if it deems appropriate, condition its grant of any Stock Option hereunder
upon receipt of the following investment representation from the optionee:

 

“I agree that any Common Shares of Uranium
Resources, Inc., which I may acquire by virtue of this Stock Option shall be
acquired for investment purposes only and not with a view to distribution or
resale, and may not be transferred, sold, assigned, pledged, hypothecated or
otherwise disposed of by me unless (i) a registration statement or post-effective
amendment to a registration statement under the Securities Act of 1933, as
amended, with respect to said Common Shares has become effective so as to
permit the sale or other disposition of said shares by me; or (ii) there is
presented to Uranium Resources, Inc., an opinion of counsel satisfactory to
Uranium Resources, Inc., to the effect that the sale or other proposed
disposition of said Common Shares by me may lawfully be made otherwise than
pursuant to an effective registration statement or post-effective amendment to
a registration statement relating to the said shares under the Securities Act
of 1933, as amended.”

 

The Company shall not be required to issue
any certificate or certificates for Common Shares upon the exercise of any
Stock Option granted under this Plan prior to (i) the obtaining of any approval
from any governmental agency which the Committee shall, in its sole discretion,
determine to be necessary or advisable; (ii) the admission of such shares to
listing on any national securities exchange on which the Common Shares may be
listed; (iii) the completion of any registration or other qualifications of the
Common Shares under any state or federal law or ruling or regulations of any
governmental body which the Committee shall, in its sole discretion, determine
to be necessary or advisable or the determination by the Committee, in its sole
discretion, that any registration or other qualification of the Common Shares
is not necessary or advisable; and (iv) the obtaining of an investment representation
from the optionee in the form stated above or in such other form as the
Committee, in its sole discretion, shall determine to be adequate.

 

11.                                 General Provisions.  The form
and substance of Stock Option agreements made hereunder, whether granted at the
same or different times, need not be identical. 
Nothing in this Plan or in any agreement shall confer upon any employee
any right to continue in the employ of the Company or any of its subsidiary
corporations, to be entitled to any remuneration or benefits not set forth in
this Plan or such Grant, or to interfere with or limit the right of the Company
or any subsidiary corporation to terminate his employment at any time, with or
without cause.  Nothing contained in this
Plan or in any Stock Option agreement shall be construed as entitling any
optionee to any rights of a stockholder as a result of the grant of a Stock
Option, until such time as Common Shares are actually issued to such optionee
pursuant to the exercise of such Option. 
This Plan may be assumed by the successors and assigns of the
Company.  The liability of the Company
under this Plan and any sale made hereunder is limited to the obligations set
forth herein with respect to such sale and no term or provision of this Plan
shall be construed to impose any liability on the Company in favor of any
employee with respect to any loss, cost or expense which the employee may incur
in connection with or arising out of any transaction in connection with this
Plan.  The cash proceeds received by the
Company from the issuance of Common Shares pursuant to this Plan will be used
for general corporate purposes.  The
expense of administering this Plan shall be borne by the Company.  The captions and section numbers

 

B-5

 

appearing in this Plan are inserted only as a
matter of convenience.  They do not
define, limit, construe or describe the scope or intent of the provisions of
this Plan.

 

12.                                 Termination of This Plan.  This
Plan shall terminate on November 11, 2014 and thereafter no Stock Options shall
be granted hereunder.  All Stock Options
outstanding at the time of termination of this Plan shall continue in full
force and effect according to their terms and the terms and conditions of this
Plan.

 

As adopted on November 12, 2004 by the Board of Directors and approved
by the stockholders on               ,
2005.

 

B-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]