Document:

EXHIBIT 10-3

                                   _________

                              URANIUM MINING LEASE

                                     AMONG:

                              URANIUM ENERGY CORP.

                                  AND EACH OF:

                                 JOHN G. JEBSEN

                                      AND:

                                  JOHN TRIANTIS

                              URANIUM ENERGY CORP.

        9801 Anderson Mill Road, Suite 230, Austin, Texas, U.S.A., 78750

                                   _________

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                              URANIUM MINING LEASE

         THIS URANIUM MINING LEASE is made and dated for reference  effective as
at May 1, 2006 (the  "EFFECTIVE  DATE") as fully  executed  on this _____ day of
June, 2006.

AMONG:

         URANIUM  ENERGY  CORP.,  a company  incorporated  under the laws of the
         State of Nevada,  U.S.A., and having an executive office and an address
         for notice and delivery  located at 9801 Anderson Mill Road, Suite 230,
         Austin, Texas, U.S.A., 78750

         (the "LESSEE");
                                                               OF THE FIRST PART

AND EACH OF:

         JOHN G.  JEBSEN,  businessperson,  having an  address  for  notice  and
         delivery located at 1111 Barcelona Lane, Santa Fe, New Mexico,  U.S.A.,
         87505 as the owner of 75% of the AB 1-41 unpatented mining claims

         ("MR. JEBSEN");
                                                              OF THE SECOND PART

AND:

         JOHN  TRIANTIS,  businessperson,  having  an  address  for  notice  and
         delivery located at 6128 Kantor Street, San Diego,  California,  U.S.A.
         as the owner of 25% of the AB 1-41 unpatented mining claims

         ("MR. TRIANTIS");
                                                               OF THE THIRD PART

         (Mr. Jebsen and Mr. Triantis being hereinafter collectively referred to
         as the "LESSOR" as the context so requires); and

         (the Lessee and the Lessor being  hereinafter  singularly also referred
         to as a "PARTY" and  collectively  referred to as the  "PARTIES" as the
         context so requires).

         WHEREAS:

A.       The Lessee  is a  reporting company  incorporated under the laws of the
State of  Nevada,  U.S.A.,  has its  common  shares  listed  for  trading on the
Over-the-counter  Bulletin  Board  market  in the  United  States  and is in the
principal  business of  acquiring,  exploring  and  developing  various  mineral
resource properties of merit;

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                                      -2-

B.       Messrs. Jebsen and Triantis,  as the joint Lessor  hereunder,  are  the
legal and beneficial co-owners of each of those certain lode mining claims which
are located in Carbon County,  Wyoming;  and which are better know and described
as the "Jebsen AB Claim Group (collectively,  the "LEASED LAND" hereunder);  and
which  mineral   property   interests   comprising  the  Leased  Land  are  more
particularly  described  in  Exhibit  "A"  which  is  attached  hereto  and more
particularly described in Exhibit "C" which is attached hereto;

C.       Since  the  introduction  of the  Parties  hereto  the  Parties  hereby
acknowledge and agree that there have been various  discussions and negotiations
between them relating to the terms and  conditions  of the proposed  granting by
the Lessor to the  Lessee of a ten year lease in respect of the Leased  Land for
the  purposes  of  investigating,  exploring,  prospecting,  drilling,  solution
mining,  producing,   extracting,  milling,  treating,  processing,   upgrading,
removing,  transporting,  stockpiling  and  storing  uranium,  thorium and other
fissionable  or  spatially  associated  substances  similar to and  produced  in
conjunction  with  those  mentioned  above  (collectively,   the  "LEASE")  and,
correspondingly,  that it is their intention by the terms and conditions of this
Lease  to  hereby  replace,  in their  entirety,  all  such  prior  discussions,
negotiations,  understandings and agreements with respect to the proposed Lease;
and

D.       The Parties hereto have agreed to enter into this Lease which replaces,
in its entirety,  all such prior discussions,  negotiations,  understandings and
agreements,  and,  furthermore,  which  necessarily  clarifies their  respective
duties  and  obligations  with  respect  to  the  within  Lease  to be  provided
hereunder, all in accordance with the terms and conditions of this Lease;

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

1.       GRANT OF THE LEASE.  In  consideration  U.S. $50,000 and other good and
valuable  consideration now paid by the Lessee to the order and the direction of
the Lessor;  the receipt and sufficiency of which is hereby  acknowledged by the
Lessor;  and in future  consideration of the proposed  "Production  Royalty" (as
hereinafter defined) herein provided for and the agreements of the Lessee herein
contained,  the Lessor  hereby  grants,  leases  and lets unto the  Lessee  (the
"LEASE"),  to the extent  that the Lessor has said  rights now or in the future,
the land covered  hereby  (hereinafter  collectively  referred to as the "LEASED
LAND") for the purposes  hereinafter  specified;  and the Leased Land being more
particularly  described in Schedule "A" which is attached hereto and which forms
a material part hereof;  and which Leased Land  consists of 41  unpatented  lode
mining claims located in sections 5, 6 and 7, T27N, R77W and sections 31 and 32,
T28N, R77W 6th P.M. in Carbon Country, Wyoming, U.S.A.

2.       PURPOSES OF THE LEASE.  It is hereby  acknowledged  and agreed that the
Lease  and  the  said  Leased  Land  is  being   leased  for  the   purposes  of
investigating,  exploring,  prospecting,  drilling,  solution mining, producing,
extracting,  milling, treating, processing,  upgrading, removing,  transporting,
stockpiling  and storing  uranium,  thorium and other  fissionable  or spatially
associated  substances  similar  to  and  produced  in  conjunction  with  those
mentioned  above  (hereinafter  referred to  individually or collectively as the
"LEASED  SUBSTANCES") by methods deemed  desirable by the Lessee;  but excluding
sand, gravel and caliche unless produced in connection with those mentioned; and
specifically  excluding  oil,  gas and  associated  hydrocarbon  substances.  In
addition,  subject to any restrictions or requirements of federal or state laws,
rules and  regulations,  the Lessor hereby further grants,  leases and lets unto
the Lessee the Leased Land for the purposes of:  injection  gas,  water or other
fluids commonly  associated with solution  mining  practices,  air and any other
substance into the subsurface  strata;  conducting all types of solution  mining
recovery operations for the Leased Substances; establishing and using facilities

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                                      -3-

for the disposition of solution,  tailings and other waste materials produced in
the  extraction  of the Leased  Substances;  laying  pipeline,  building  roads,
bridges,  tanks, power and telephone lines,  electric and distribution lines and
other utilities and together with the maintenance and removal thereof; and mills
or processing structures or facilities deemed reasonably necessary by the Lessee
to conduct solution mining,  recovery and restoration  operations  granted under
this Lease.

         Notwithstanding,  however,  the  general  provisions  of the  foregoing
paragraph,  it is further agreed and stipulated that the facilities to be placed
on the Leased  Land shall be  confined  to those  facilities  reasonably  deemed
necessary  or  convenient  by the Lessee  for  exploring,  prospecting,  mining,
stockpiling,  storing, processing, treating upgrading, removing and transporting
the Leased  Substances.  In this  regard the  Lessee,  to the extent  allowed by
federal  and state laws,  rules and  regulations,  is hereby  granted the right,
without any further  consideration or payment,  to use the Leased Land and other
improvements and facilities on, in or under the Leased Land for or in connection
with the mining, removing, transporting,  preparation and treatment of minerals,
metals  and  materials  (and  disposal  of waste  materials  into a waste  water
disposal well at a site of the Lessee's  choice),  from adjacent lands and lands
in the areas of interest,  and to construct and use additional facilities on the
Leased Premises for said purposes, and these rights shall survive termination of
this Lease for so long a period of time as the Lessee has need for all or any of
them.

3.       PRIMARY TERM AND RENEWAL TERMS OF THE LEASE. Subject to the  provisions
herein  contained,  this Lease shall remain in force for a term of 10 years from
the Effective Date first written above (hereinafter  referred to as the "PRIMARY
TERM") and so long  thereafter as uranium or any of the other Leased  Substances
are produced in paying  quantities  from the said Leased Land or land with which
said  Leased  Land is  pooled,  and/or as long  thereafter  as this Lease may be
maintained  in  force  and  effect  under  any of the  other  provisions  herein
contained;  in this regard  paying  quantities  being  defined as  production in
quantities  sufficient  to yield a profitable  return to the Lessee in excess of
drilling,  development and operational costs set solely at the discretion of the
Lessee (in each such instance being a "RENEWAL TERM" herein if applicable).

4.       PRODUCTION ROYALTY.  The Lessee shall pay to the Lessor a royalty  (the
"PRODUCTION ROYALTY") for uranium or other Leased Substances mined by the Lessee
from the Leased Land or land pooled  therewith  and saved and removed  therefrom
and sold, or processed  and sold, by or for the Lessee.  The total amount of the
Production Royalty shall be as follows:

         (a)      in the event  that the  actual  sales  price to the Lessee for
                  uranium or other  Leased  Substances  mined by the Lessee from
                  the Leased Land or land pooled therewith is less than U.S. $50
                  per  pound,  then  the  Lessee  shall  pay  to  the  Lessor  a
                  Production  Royalty  in the  amount of 5% of the net  proceeds
                  received  by the  Lessee  for such  uranium-bearing  solution,
                  yellowcake,  U3O8,  slurry or other  Leased  Substances  after
                  deducting   the   cost,   if   any,   of   transporting   such
                  uranium-bearing  solution,  yellowcake,  U3O8, slurry or other
                  Leased   Substances  from  the  Leased  Land  or  land  pooled
                  therewith to the point of sale; and

         (b)      in the event  that the  actual  sales  price to the Lessee for
                  uranium or other  Leased  Substances  mined by the Lessee from
                  the  Leased  Land or land  pooled  therewith  is  equal  to or
                  greater than U.S. $50 per pound,  then the Lessee shall pay to
                  the Lessor a Production Royalty in the amount of 6% of the net
                  proceeds  received  by the  Lessee  for  such  uranium-bearing
                  solution,  yellowcake, U3O8, slurry or other Leased Substances
                  after  deducting  the  cost,  if  any,  of  transporting  such
                  uranium-bearing  solution,  yellowcake,  U3O8, slurry or other
                  Leased   Substances  from  the  Leased  Land  or  land  pooled
                  therewith to the point of sale.

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                                      -4-

         All Production  Royalties  which are due and payable under the terms of
this Lease shall be paid within 30 calendar  days after the end of the  calendar
month within  which the Lessee  receives the proceeds of the sale of the uranium
or other Leased Substances; and which payment shall be subject to adjustment, by
addition to or deduction from the Production  Royalty due, as a result of actual
sales assays.  The Lessee's failure to pay or tender or timely pay or tender any
sum as a Production  Royalty  shall render the Lessee  liable for the amount due
plus simple interest  accrued  thereon at the rate of 12% per annum,  compounded
semi-annually.

         The Lessee shall use reasonable diligence to sell the uranium or Leased
Substances  and any of them, on which a Production  Royalty is payable under the
terms of this Lease,  but in the exercise of such diligence the Lessee shall not
be  obligated  to sell the same,  or any of them,  under  terms,  conditions  or
circumstances  which, in the Lessee's judgment,  exercised in good faith, is not
in its best interests.

5.       MINIMUM ADVANCE ROYALTIES AND  SET-OFF  FOR  PRODUCTION  ROYALTIES.  In
addition  to any other  payments  required by this Lease and until this Lease is
terminated  by the Lessee or expires in  accordance  with its terms,  the Lessee
shall pay to the order and direction of the Lessor the following minimum advance
royalties (each a "MINIMUM ADVANCE ROYALTY"):

         (a)      U.S. $30,000 on or before September 15, 2006;

         (b)      U.S. $30,000 on or before January 1, 2007;

         (c)      U.S. $50,000 on or before June 1, 2007;

         (d)      U.S. $500,000 on or before December 1, 2007;

         (e)      U.S. $500,000 on or before December 1, 2008; and

         (f)      U.S.  $50,000 on or before December 1, 2009 and a further U.S.
                  $50,000 on or before  December 1st of every year subsequent to
                  December  1, 2009 and as long  thereafter  as uranium or other
                  Leased Substances are being produced in commercial  quantities
                  from the leased land or land pooled therewith.

         The Minimum Advance Royalty  Payments shall be paid as follows:  75% to
John G.  Jebsen;  25% to John  Triantis.  Any Minimum  Advance  Royalty  paid or
payable will be credited  against up to 60% of a 5% Production  Royalty or up to
66.67% of a 6% Production Royalty due as hereinafter provided for the uranium or
Leased  Substances  actually  produced  from  the  Leased  Land or  land  pooled
therewith  during the year for which such  Minimum  Advance  Royalty was paid or
payable (in each  instance  being a  "SET-OFF").  Lessee shall apply the Set-off
amount against such Minimum Advance Royalty until it has been fully recouped.

6.       AREA OF INFLUENCE.  The  Parties  hereby  acknowledge  and  agree that,
subject to the following existing  limitations  respecting the Lessee, they have
hereby  established an area of influence (the "AREA OF INFLUENCE") in respect of
the  Leased  Land for  which  the  Production  Royalty  for any  uranium-bearing
solution,  yellowcake,  U3O8,  slurry or other Leased Substances mined from only
pre-Tertiary  formations  within the Area of Influence by the Lessee,  or by its
respective partners,  co-adventurers,  assignees or affiliates, will also be due
and payable by the Lessee to the Lessor hereunder. The Area of Influence,  while
generally  applicable to a three mile boundary  surrounding  the Leased Land, is
hereby expressly limited to any existing  contractual  relationships having been
entered into by the Lessee  within the Area of  Influence;  the  particulars  of
which having already been provided by the Lessee to the Lessor and accepted; and

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                                      -5-

such area within the Area of Influence being so limited having been  highlighted
in Exhibit "B" which is attached hereto.

         The Lessee shall pay to the Lessor a  Production  Royalty in the amount
of 2% of the net  proceeds  received  by the  Lessee  for  such  uranium-bearing
solution,  yellowcake, U3O8, slurry or other Leased Substances mined or produced
from the Area of Influence.  The Production  Royalty shall be subject to cost of
transporting deduction set forth in paragraph 4.

7.       LEASED LAND MAINTENANCE  - INTENT TO HOLD AFFIDAVIT.  The Lessee  shall
be  responsible  for all fees and  requirements  to maintain  the  validity  and
ownership of the claims making up the Leased Land.  The Lessee agrees to pay the
annual Bureau of Land  Management  claim  maintenance  fees  associated with the
Leased Land at least 60 calendar days prior to September 1st of each year during
the  continuance  of the Lease and to file  Intent to Hold  Affidavits  with the
Carbon  County  Clerk  within 30  calendar  days  prior to the  required  filing
deadline  with a copy to be provided to the Lessor  together  with a copy of the
maintenance  fee payments and Intent to Hold  Affidavit in  connection  with the
same.

8.       DEFAULT OF PAYMENTS UNDER THE LEASE.   If  at any time the Lessee is in
default  in the  performance  of the terms and  conditions  of this  Lease to be
performed by it, and if,  within 45 calendar  days after  written  notice of the
default is given by the  Lessor to the  Lessee,  the  Lessee  has not  commenced
activities  which will cure the default if pursued  diligently,  then the Lessor
may terminate this Lease by written notice to the Lessee.

9.       LACK OF PRODUCTION UNDER THE LEASE. If at the expiration of the Primary
Term or any  Renewal  Term  uranium  or other  Leased  Substances  is not  being
produced  from said  Leased  Land or land  pooled  therewith,  but the Lessee is
engaged in operations  directed toward the establishment or  reestablishment  of
production  therefrom,  this  Lease  shall  remain  in  force  so  long  as such
operations are prosecuted with no cessation of more than 90 consecutive calendar
days; and if the operations result in production,  so long thereafter as uranium
or other  Leased  Substances  is  produced  from said Leased Land or land pooled
therewith.  If production of uranium or other Leased Substances from said Leased
Land or land pooled therewith has been obtained, and such production shall cease
for any cause, whether on one or more occasions,  this Lease shall not terminate
if  the  Lessee   commences   or  resumes   operations   directed   towards  the
reestablishment  of  production  from said Leased Land or land pooled  therewith
within 90  calendar  days after  cessation  of  production  and such  operations
continue  with no cessation of more than 90 calendar  days until  production  is
reestablished,  or if it  be  within  the  Primary  Term  or  any  Renewal  Term
production  commences or resumes the payment or tender of the Production Royalty
or commences operations directed towards the reestablishment of production on or
before the Production Royalty payment date next ensuing. In the event production
ceases,  the Lessee shall within 45 days of such cessation of production  notify
the Lessor of such cessation of production.  Further, the Lessee shall within 45
days of resumption of production, notify the Lessor of resumption of production.

10.      POOLED LAND.  The Lessee is hereby granted the right to pool all or any
part of said Leased Land with any other  land,  lease or leases in the  vicinity
thereof when in the Lessee's  judgment it is necessary or advisable to do so for
the purpose of exploring or developing and operating the Leased Land for in situ
leach or solution mining operations whether owned by the Lessor or a third party
at any time and from time to time to explore, drill, solution mine, operate for,
produce,  extract,  remove and  transport  uranium or other  Leased  Substances;
provided,  however,  that the area so pooled shall be determined by the ore body
delineated  by  exploration  and  development  drilling at the economic  cut-off
grade,  and the pooled area shall cover only the  delineated ore body from which
production  attributable  to the pooled  area is  concerned.  For the purpose of
determining  the  Production  Royalty  hereunder,  any  uranium or other  Leased
Substances  produced  from the land so pooled  shall be allocated to said Leased

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Land on the basis  that the  surface  acreage  within  the  delineated  ore body
contributed by said Leased Land relates to the total surface  acreage within the
delineated  ore body of the land so pooled.  It shall be  conclusively  presumed
that the uranium or other Leased  Substances  produced  from such pooled land is
produced  uniformly within the boundaries of the pooled land both as to quantity
and quality, and the amount allocated to the Leased Land shall, for all purposes
hereunder, be presumed to have been produced from said Leased Land.

11.      COMMINGLING  URANIUM OR LEASED  SUBSTANCES.  The  Lessee shall have the
right  from time to time and at any time to mix or  commingle  uranium  or other
Leased  Substances  from the  Leased  Land or land  pooled  therewith  with like
substances produced from other land for transporting,  treating,  processing and
storing prior to or for the purpose of sale. Prior to such mixing or commingling
the uranium  content or other  Leased  Substances  content  where such are being
processed  for sale,  of the raw ore or the amount  thereof in solution  (as the
case may be),  shall be assayed or otherwise  determined  by periodic  sampling,
using sound  engineering  principles,  and the volume of all solutions  produced
shall be  determined  by  adequate  metering  devices.  For  Production  Royalty
purposes, the uranium or other Leased Substances attributable to the said Leased
Land where such mixing or commingling has occurred, shall be a percentage of the
total  uranium or other  Leased  Substances  sold by the Lessee  (including  the
Lessor's  share from  pooled land in  accordance  with  section 9 above),  which
percentage  shall be determined by the  relationship  of uranium or other Leased
Substances  content in the production  from said Leased Land,  multiplied by the
volume  thereof  (including  the  Lessor's  share from pooled land) bears to the
total uranium or other Leased Substances content, multiplied by the total volume
of the  mixed  or  commingled  production  from  all  land  for  the  applicable
production period.

12.      RELEASE UPON TERMINATION. The Lessee, its successors and assigns, shall
execute  and  deliver to the  Lessor,  or to the  depository  Bank,  or file for
record,  a release or releases of this Lease within 90 calendar days of the date
of termination of that portion or interval affected,  in whole or in part of the
Leased Land, Leased Substances, subsurface interval or any depth thereunder, and
the Lessee shall  thereby be released  from all future  obligations  owed to the
Lessor as to the released land, substances, horizon, zone or formation as of the
date of release.

13.      RIGHT OF ENTRY AND ACCESS TO DATA AND INFORMATION.

         (a)      The Lessor, or its duly authorized representatives, shall have
                  the right at all  reasonable  times and at theirs  own risk to
                  enter into and upon said premises and workings thereon for the
                  purposes of examining and inspecting the same and ascertaining
                  whether  the  terms  and  conditions  of this  Lease are being
                  carried  out  and  performed  by the  Lessee,  so long as such
                  access or inspection does not interfere with the operations of
                  the Lessee.

         (b)      The Lessee shall  provide the Lessor,  or its duly  authorized
                  representatives, a copy of all data and information created by
                  or on behalf of the Lessee and including,  but not limited to,
                  logs,  cores,  samples  and  analyses,   (including  operation
                  analyses)  related  to  the  Leased  Lands  and  the  Area  of
                  Influence.  Such information and data will include, but is not
                  limited to, logs, cores, samples,  analyses,  drill hole maps,
                  grade thickness maps and  calculations,  redox maps,  geologic
                  maps (which  include,  but are not limited to, sand  thickness
                  maps),  reserve  calculations,  lab  tests,  hydrologic  data,
                  environmental reports and all other factual and interpretative
                  data and  information  relating to any  processing  plant (and
                  including,  but not limited to, lab and pilot plant  studies).
                  The Lessee  shall also  provide  the Lessor  with  information
                  pertaining to the reclamation of drill holes.  The Lessor,  or
                  its duly authorized representatives, shall also have access to
                  production records,  assays and evaluations of ore records and

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                                      -7-

                  to   all   other   records   pertinent   and   necessary   for
                  substantiating   the   compliance   of  the  Lessee  with  the
                  provisions of this Lease.

         (c)      The Lessor shall receive copies of the data and information at
                  not less than six month intervals  during the pendency of this
                  Lease. In the event that this Lease is terminated,  the Lessee
                  shall deliver to the Lessor a copy of all data and information
                  compiled  relating  to  the  Leased  Lands  and  the  Area  of
                  Influence and not previously provided.

         (d)      The Lessor agrees to keep all data and information received by
                  the   Lessor,   or  its   duly   authorized   representatives,
                  confidential  during  the term of the  Lease  pursuant  to the
                  requirements  set forth in  paragraph  28 of this  Lease.  The
                  Lessee shall not be deemed to have made any representations or
                  warranties,  express or implied, regarding the accuracy of any
                  factual or interpretative data and information, and the Lessor
                  may rely on such data and  information  solely at the Lessor's
                  own risk.

         (e)      It is agreed and stipulated  that neither the Lessee,  nor any
                  of  its   agents,   assignees,   employees,   contractors   or
                  subcontractors,  their agents or employees,  shall at any time
                  hunt or fish on the premises,  nor shall they, or any of them,
                  carry onto the premises  firearms or other equipment  designed
                  or  adapted  for  such  purpose.   The  Lessor,  or  its  duly
                  authorized representatives,  shall have the right at all times
                  to inspect vehicles entering upon or leaving said premises for
                  the purpose of  ascertaining  whether the  provisions  of this
                  section are being carried out.

14.      MINING  OPERATIONS.   The  Lessee  agrees  to  conduct  its  operations
hereunder in a good and minerlike  manner and in compliance  with all applicable
laws and regulations of any governmental  entity having  jurisdiction  over such
operations  on the Leased Land and on the Area of Influence and  including,  but
not limited to,  those  federal,  state and local  laws,  rules and  regulations
pertaining to mine safety and health,  environmental and operational permits and
consents.

15.      COMPLIANCE WITH LAW.  The Lessee's use of the  Leased  Lands,  and  any
exploration,  development,  mining or reclamation or other  activities on, in or
under such lands,  shall be undertaken by the Lessee in full compliance with all
applicable  federal,  state and local laws, rules and regulations  applicable to
such use and activities  and including,  without  limitation,  those  concerning
mining methods,  environmental matters and reclamation.  At a minimum the Lessee
shall fully reclaim all  disturbances,  occasioned by the Lessee,  in accordance
with the reclamation and performance  standards required by the State of Wyoming
and Bureau of Land Management,  as well as in regulations adopted thereunder, or
under the federal Atomic Energy Act, Uranium Mill Tailings Radiation Control Act
or other applicable state, local or federal law and regulations. Any termination
of this Lease  notwithstanding,  and unless  otherwise  agreed in  writing,  the
Lessee  agrees,  during  and  after  the  term  of  this  Lease,  to  take  full
responsibility  for such  compliance and reclamation and for any legal liability
(whether  related to  environmental,  reclamation  or otherwise) or  enforcement
proceedings  arising from the Lessee's  activities or conditions on, in or under
such lands to the extent such  conditions  were created or caused by the Lessee,
its employees, contractors, affiliates, venture partners, assignees, permittees,
agents or other  representatives.  In addition, all activities or work performed
or caused to be  performed  by the Lessee on such lands  shall be  performed  in
accordance with the best practices in the mining and reclamation  fields. In the
event the Lessee is released by any federal, state or local regulatory agency of
any mining,  environmental or reclamation obligation, the Lessee shall be deemed
to have fully complied with that obligation under the Lease.

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                                      -8-

16.      DRILL HOLE LOCATION.  The  Lessee agrees to mark all drill holes on the
Leased Lands and Area of Influence in such a manner so that such drill holes can
be relocated with a metal detector.

17.      INDEMNIFICATION.

         (a)      Except to the extent  prohibited  by law, the Lessee agrees to
                  indemnify,  protect,  defend and hold the Lessor harmless from
                  and  against  any and all  environmental  (including,  without
                  limitation,  environmental  protection or reclamation-related)
                  or  non-environmental   claims,  losses,  demands,   lawsuits,
                  citizen    suits,     proceedings,     enforcement    actions,
                  administrative orders, liabilities, costs, damages, injury and
                  litigation expenses (including, without limitation, attorneys'
                  and experts' fees), arising in any way and at any time for any
                  reason from the Lessee's use, exploitation or other activities
                  on, in or under the Leased Land and the Area of Influence,  or
                  from  conditions on, in or under such lands to the extent such
                  conditions   were  created  or  caused  by  the  Lessee,   its
                  employees,   contractors,   affiliates,   successors,  venture
                  partners,    assignees,    permittees,    agents    or   other
                  representatives.

         (b)      This  agreement  to  indemnify  does not extend to  liability,
                  claims, damages, losses or expenses,  including attorney fees,
                  caused  by  or  resulting  from,  in  whole  or in  part,  the
                  negligence,  act or omission  of the Lessor,  or the agents or
                  employees of Lessor,  in its  performance as stated in Wyoming
                  Statutes 1977, ss.  30-1-131.  This limitation on the Lessee's
                  agreement to  indemnify is intended  solely to ensure that the
                  agreement satisfies Wyoming's anti-indemnification  provision,
                  W.S. 1977 ss. 30-1-131.

18.      INSURANCE.

         (a)      The Lessee  agrees to carry and maintain in full effect during
                  the term of this Mining  Lease,  and during any  extension  or
                  renewal thereto,  adequate  insurance  coverage to prevent the
                  Lessor from  suffering  damages of any nature by virtue of the
                  Lessee's utilization of the Property.

         (b)      To meet its  obligation  to the Lessor,  the Lessee  agrees to
                  carry and maintain the following minimum insurance coverage:

                  (1)      Worker's  compensation  coverage  on  all   employees
                           engaged in operations on the Property; and

                  (2)      General  liability  insurance  covering bodily injury
                           and property  damage  liability in a recognized  form
                           with a reputable  insurance company with a reasonable
                           combined  single  limit per  occurrence.  The  Lessee
                           shall   cause   the   Lessor   to  be   named  as  an
                           additional-named insured on such policy of insurance,
                           and shall deliver proof thereof to the Lessor.

                  (c)      During the term of the Mining Lease or any extensions
                           or renewals  thereto,  the Lessee  shall  provide the
                           Lessor  continuing   evidence  of  ongoing  insurance
                           coverage  in  the  form  of  valid   certificates  of
                           insurance.

                  (d)      The Lessee shall require any  contractor  employed by
                           the Lessee to  perform  any manner of work on, in, or
                           under the Property,  to carry and maintain  insurance
                           coverage as set forth above. The Lessee shall require

<PAGE>

                                      -9-

                           any  such   contractor  to  obtain   additional-named
                           insured  coverage  for the Lessor under its policy of
                           liability insurance prior to commencing work.

19.      RIGHT TO REMOVE PROPERTY.  The Lessee  shall have the right at any time
during or within one year after the  termination  or expiration of this Lease to
remove all property and  fixtures  placed by the Lessee on said Leased Land.  In
the event the Primary  Term and any Renewal  Term of said Lease have expired and
complete  restoration has not been accomplished by the Lessee,  the Lessee shall
have the right of  ingress  and  egress  over  existing  roads,  to the  acreage
containing plant, well field, monitor wells and other facilities associated with
the Lessee's  operations,  to complete the required  restoration  of said Leased
Land,  without  additional  compensation,  in accordance  with federal and state
laws, rules and regulations.

20.      ASSIGNMENT.

         (a)      The rights of the Lessor hereunder may be assigned in whole or
                  in part, and the provisions  hereof shall extend to the heirs,
                  executors,  administrators,  successors  and  assigns,  but no
                  change  or  division  in  ownership  of  the  Leased  Land  or
                  Production  Royalty,  however  accomplished,  shall operate to
                  enlarge the obligation or diminish the rights of the Lessee or
                  be binding  upon the Lessee for any purpose  until 60 calendar
                  days after such person  acquiring  any interest has  furnished
                  the  Lessee  with the  instrument,  instruments  or  certified
                  copies  thereof,  constituting  their  chain of title from the
                  original  Lessor.  In the  event of the  death  of any  person
                  entitled to any  payment  under the  provision  of this Lease,
                  including the Production Royalty, the Lessee may pay or tender
                  any such payment to the credit of the deceased,  or the estate
                  of the  deceased,  until such time as the Lessee is  furnished
                  with proper evidence of the appointment and  qualification  of
                  an executor  or  administrator  of the estate,  or if there be
                  none,  then  until  the  Lessee  is  furnished  with  evidence
                  satisfactory  to  it as to  the  heirs  and  devisees  of  the
                  deceased and that all debts,  taxes,  state  inheritance taxes
                  and federal estate taxes of the estate have been paid.

         (b)      The Lessee may assign its rights hereunder in whole or in part
                  as to the Leased Land, or any Leased  Substances or subsurface
                  interval or any depth  thereunder,  upon obtaining the written
                  consent of the Lessor.  Such consent shall not be unreasonably
                  withheld.  In the event of an assignment of this Lease as to a
                  segregated  portion of said Leased Land or Production  Royalty
                  due  hereunder,  it shall be  proportioned  among the  several
                  leasehold  owners  ratable  according to the surface  areas of
                  each in the Leased  Land,  and default in payment of one shall
                  not affect the rights of the other leasehold owners hereunder.
                  The  provisions of this Lease shall extend to such  assignees,
                  however,  an  assignment  by  the  Lessee  shall  relieve  and
                  discharge  the  Lessee of any  obligation  hereunder  accruing
                  after the date of such  assignment.  If the Lessee or assignee
                  or part or parts  hereof shall fail or make default in payment
                  of the  proportionate  part of the Production  Royalty payment
                  due from such Lessee or  assignee,  or fail to comply with any
                  other  provision of the Lease,  such default  shall not affect
                  the entire  Lease  insofar as it covers a part of said  Leased
                  Land upon which the Lessee or any assignee  thereof shall make
                  payment of said Production Royalty.

21.      FORCE MAJEURE.  The  Lessee  shall not be liable for delays or defaults
in its performance of any agreement or covenant  hereunder due to force majeure.
The term "FORCE  MAJEURE,"  as  employed  herein,  shall  mean:  any act of God,

<PAGE>

                                      -10-

including  but  not  limited  to  storms,  floods,   washouts,   landslides  and
lightening;  acts of the public enemy; wars, blockades,  insurrections or riots;
strikes or lockouts; epidemics or quarantine regulations;  laws, acts, orders or
requests of federal,  state,  municipal or other governmental officers or agents
acting under color of authority;  freight embargoes or failures;  or exhaustion,
unavailability  or delays of any product,  labor,  service or  material.  If the
Lessee is prevented  from  conducting or required to cease  operations  directed
toward establishment or reestablishment of production or producing operations by
any order, decree, direction, inaction or denial of permit by any federal, state
or municipal  law,  executive  order,  rule,  regulation  or request  enacted or
promulgated  under  color of  authority  on said  Leased  Land or on land pooled
therewith,  or if the Lessee by other types of force  majeure is prevented  from
conducting  operations  directed  toward  establishment  or  reestablishment  of
production or producing  operations,  then until such time as law, order,  rule,
regulations,  request or other force  majeure is terminated or the permit issued
and for a period of 90 calendar days after such  termination  of issuance,  each
and every  provision  of this Lease that might  operate to  terminate  it or the
estate conveyed by it shall be suspended and  inoperative,  and this Lease shall
continue in full force and effect. If any period of suspension occurs during the
Primary Term or any Renewal  Term,  the time thereof shall be added to such term
with  continuing  payment of the annual  Minimum  Advance  Royalty or Production
Royalty  consistent with the applicable term for such period of suspension,  and
this Lease shall remain in full force
and effect in such term until force majeure is lifted or suspended.

22.      TERMINATION BY THE LESSEE. The Lessee shall have the right to terminate
this  Lease at any time or times  during  the  term  hereof,  as to the  subject
minerals underlying all or any one or more parts of the premises,  by delivering
or mailing to the Lessor  written notice stating such intention to terminate and
describing  the  parts of the  premises,  if less  than  all,  as to  which  the
termination  applies.  The termination shall take effect upon the date specified
in the notice,  or, if no date is  specified  upon the date on which the date is
given. Upon such termination,  all right, title, interest and obligations of the
Lessee hereunder in and to the premises specified in the notice shall terminate,
except  obligations which then have accrued under the express provisions of this
Lease and which the Lessee has not paid or  performed.  If the notice  specifies
that this Lease is hereby being terminated as to the subject minerals underlying
a part, and less than all, of the premises,  this Lease shall continue in effect
as to the subject minerals  underlying all parts of the premises except the part
or parts so specified.  Forthwith  after delivery of the notice of  termination,
the Lessee shall execute and record,  or deliver to the Lessor for recording,  a
formal  release of this Lease as to the parts of the  premises  described in the
notice.

         Upon termination of this Lease the Lessee shall provide the Lessor with
all data and including,  but not limited to, drill logs, reserve information and
other information relating to the existence of uranium resources or other Leased
Substances  on the Leased Lands  developed by the Lessee  during the term of the
Lease to the Lessor within 30 calendar days of the termination.

         Termination  of the Lease  shall  not  extinguish  any of the  Lessee's
obligations  for  remediation or  reclamation  of the Lessee's  activities on or
involving  the Leased  Lands.  The Lessee  shall  comply  with and  satisfy  all
remediation  and reclamation  requirements  established by Federal or State law,
rules or regulations  and shall  indemnify and hold the Lessor harmless from any
and all  environmental  or other  claims or actions  arising  from the  Lessee's
activities during the term of the Lease.

23.      ENCUMBRANCES.   The  Lessor  hereby  warrants,  with  special  warranty
covenants  having been provided to the Lessee  respecting the status of title to
the Leased  Land,  the title of said Leased Land and agrees that the Lessee,  at
its option,  may discharge any tax, mortgage or other lien upon the Leased Land,
and in the event Lessee does so, it shall be  subrogated  to such liens with the
right to enforce the same and apply any Minimum  Advance  Royalty or  Production

<PAGE>

                                      -11-

Royalty  payments  accruing   hereunder  toward  satisfying  the  same.  Without
impairment  of  warranties  contained  in this  Lease,  it is agreed that if the
Lessor owns an interest in said Leased Land less than the amount  claimed by the
Lessor, the Minimum Advance Royalty and the Production Royalty to be paid to the
Lessor shall be proportionately reduced accordingly.

24.      TAXES.   Any  tax based  on  production  of  the  herein  named  Leased
Substances  shall be borne by the Lessor  and the Lessee in the same  proportion
that each Party shares in the ownership of such Leased Substances hereunder.

25.      NO DEVELOPMENT WARRANTIES.  The  Lessee  makes  no  implied covenant or
agreement relating to the exploration, development, mining or other operation of
or upon the Leased Land or the marketing or any Leased Substances therefrom, nor
as to the  conduct  or  extent  of any of the  same.  Whether  or not  any  such
exploration,  development,  mining or other operations or marketing shall at any
time be conducted,  and the nature, manner and extent thereof,  shall be matters
to be determined within the sole discretion of the Lessee.

26.      REPRESENTATIONS,  WARRANTIES  AND  COVENANTS BY  THE LESSOR  RESPECTING
THE LEASED LAND.  The Lessor hereby,  jointly and  severally,  represents to the
Lessee that, to the best of the knowledge, information and belief of the Lessor:

         (a)      the Lessor is the owner of the AB claims comprising the Leased
                  Land,  subject to the royalty interest  described in section 4
                  hereinabove,  and has located and paid maintenance fees, up to
                  and including the 2005 maintenance year, for the unpatented AB
                  mining  claims  comprising  the  Leased  Land  which  are more
                  particularly  described  in  Schedule  "A"  which is  attached
                  hereto;

         (b)      the Lessor,  to the extent  allowed by law, is  authorized  to
                  hold the right to explore and develop  each of the  unpatented
                  AB mining claims comprising the Leased Land;

         (c)      no other person,  firm or corporation  has any written or oral
                  agreement,  option,  understanding or commitment, or any right
                  or  privilege  capable  of  becoming  an  agreement,  for  the
                  purchase  from the Lessor of any interest in and to any of the
                  mineral property interests comprising the Leased Land;

         (d)      the mineral property interests comprising the Leased Land were
                  validly located by Lessor and recorded in a good and minerlike
                  manner pursuant to applicable  mining laws, and the Lessor has
                  never been notified by the Bureau of land  Management that the
                  unpatented AB mining claims were not in good standing;

         (e)      there are no  outstanding  orders or  directions  relating  to
                  environmental    matters   requiring   any   work,    repairs,
                  construction  or capital  expenditures  with respect to any of
                  the mineral property interests  comprising the Leased Land and
                  the conduct of the  operations  related  thereto,  nor has the
                  Lessor received any notice of same;

         (f)      with the exception of certain  overlaps with claims located by
                  or for Energy Metals Corporation and the AB Claims, which have
                  been  disclosed  to the Lessee,  there is no adverse  claim or
                  challenge  against or to the  ownership  of or title to any of
                  the mineral property  interests  comprising the Leased Land or
                  which  may  impede  the  development  of any  of  the  mineral
                  property interests comprising the Leased Land; and

         (g)      the Lessor is not aware of any fact or circumstance  which has
                  not been  disclosed to the Lessee which should be disclosed in
                  order to prevent the representations and warranties  contained

<PAGE>

                                      -12-

                  in this  section from being  misleading  or which would likely
                  affect the decision of the Lessee to enter into this Lease.

27.      LESSEE REPRESENTATIONS.  The  Lessee  hereby  represents  to the Lessor
that, to the best of the knowledge, information and belief of the Lessee:

         (a)      the Lessee is a corporation  duly organized and existing under
                  the laws of Nevada and is in good  standing with the Secretary
                  of State of the State of Nevada; and

         (b)      the Lessee has the necessary  corporate power and authority to
                  execute this Lease and consummate the transaction contemplated
                  by this Lease.

28.      CONFIDENTIAL INFORMATION.  Th e Lessor  hereby acknowledges  and agrees
that any and all information which the Lessor may obtain from, or have disclosed
to it,  by the  Lessee,  and about the  Leased  Land and the Area of  Influence,
constitutes valuable trade secrets and proprietary  confidential  information of
the  Lessee  (collectively,  the  "CONFIDENTIAL  INFORMATION").   Prior  to  the
termination of the Lessee, no such  Confidential  Information shall be published
by the  Lessor  without  the prior  written  consent  of the  Lessee;  provided,
however, that such consent in respect of the reporting of factual data shall not
be  unreasonably  withheld  and shall not be withheld in respect of  information
required  to  be  publicly  disclosed  pursuant  to  applicable   securities  or
corporation  laws.  Furthermore,  the  Lessor  undertakes  not to  disclose  the
Confidential  Information to any third party without the prior written  approval
of the  Lessee  and to  ensure  that any third  party to which the  Confidential
Information is disclosed  shall execute an agreement and undertaking on the same
terms as contained herein.

29.      ARBITRATION. The Parties agree that all questions or matters in dispute
with  respect to this Lease shall be submitted  to  arbitration  pursuant to the
terms  hereof.  It shall be a condition  precedent  to the right of any Party to
submit any matter to  arbitration  pursuant  to the  provisions  hereof that any
Party  intending  to refer any matter to  arbitration  shall have given not less
than 10 calendar  days' prior  written  notice of its  intention to do so to the
other  Party  together  with  particulars  of  the  matter  in  dispute.  On the
expiration  of such ten days the Party who gave such notice may proceed to refer
the  dispute  to  arbitration  as  provided  hereinbelow.   The  Party  desiring
arbitration  shall appoint one  arbitrator,  and shall notify the other Party of
such  appointment,  and the other Party  shall,  within 15  calendar  days after
receiving such notice, appoint an arbitrator,  and the two arbitrators so named,
before  proceeding to act, shall,  within 15 calendar days of the appointment of
the last appointed  arbitrator,  unanimously agree on the appointment of a third
arbitrator to act with them and be chairman of the  arbitration  herein provided
for. If the other Party shall fail to appoint an  arbitrator  within 15 calendar
days after receiving notice of the appointment of the first  arbitrator,  and if
the two  arbitrators  appointed  by the Parties  shall be unable to agree on the
appointment  of  the  chairman,  the  chairman  shall  be  appointed  under  the
provisions  of  the  Rules  of  the  American   Arbitration   Association   (the
"ARBITRATION RULES"). Except as specifically otherwise provided in this section,
the  arbitration  herein provided for shall be conducted in accordance with such
Arbitration  Rules.  The chairman,  or in the case where only one  arbitrator is
appointed, the single arbitrator, shall fix a time and place in Casper, Wyoming,
for the purpose of hearing the evidence and representations of the Parties,  and
he shall preside over the  arbitration  and determine all questions of procedure
not provided for under such Arbitration Rules or this section. After hearing any
evidence and representations that the Parties may submit, the single arbitrator,
or the arbitrators,  as the case may be, shall make an award and reduce the same
to writing,  and deliver one copy thereof to each of the Parties. The expense of
the arbitration  shall be paid as specified in the award. The Parties agree that
the  award  of a  majority  of the  arbitrators,  or in  the  case  of a  single
arbitrator, of such arbitrator, shall be final and binding upon each of them.

<PAGE>

                                      -13-

30.      NOTICE. Each notice,demand or other communication required or permitted
to be given  under this Lease  shall be in writing  and shall be sent by prepaid
registered  mail  deposited  in a Post Office  addressed to the Party or Parties
entitled to receive the same,  or  delivered  to such Party,  at the address for
such  Party or Parties  specified  above.  The date of  receipt of such  notice,
demand  or  other  communication  shall  be the  date  of  delivery  thereof  if
delivered,  or,  if given  by  registered  mail as  aforesaid,  shall be  deemed
conclusively  to be the third  business  day after the same  shall  have been so
mailed,  except in the case of  interruption  of postal  services for any reason
whatsoever,  in which  case the date of  receipt  shall be the date on which the
notice,  demand or other  communication  is actually  received by the addressee.
Either  Party may at any time and from time to time  notify  the other  Party in
writing of a change of address  and the new  address  to which  notice  shall be
given to it thereafter until further change.

31.      ENTIRE AGREEMENT.  This Lease 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 with respect to the subject matter of this Lease.

32.      ENUREMENT.  This Lease will enure to the benefit of and will be binding
upon the Parties, their respective heirs, executors, administrators and assigns.

33.      TIME OF THE ESSENCE.   Time will be of the essence of this Lease.

34.      REPRESENTATION AND COSTS.  It  is  hereby  acknowledged  by each of the
Parties  hereto  that,  as between the Parties  herein,  Lang  Michener LLP acts
solely for the  Lessee,  and that the  Lessor  has been  advised by each of Lang
Michener LLP and the Lessee to obtain  independent  legal advice with respect to
the  Lessor's  review and  execution of this Lease.  In  addition,  it is hereby
further  acknowledged  and agreed by the Parties  hereto that each Party to this
Lease will bear and pay its own costs,  legal and otherwise,  in connection with
its  respective  preparation,  review  and  execution  of  this  Lease  and,  in
particular,  that the costs involved in the  preparation of this Lease,  and all
documentation  necessarily  incidental thereto, by Lang Michener LLP shall be at
the cost of the Lessee.

35.      APPLICABLE  LAW.    For  all  purposes  this  Lease  will  be  governed
exclusively  by and construed  and enforced in  accordance  with the laws of the
State of Wyoming.

36.      SEVERABILITY  AND  CONSTRUCTION.   Each  section,  paragraph, term  and
provision of this Lease, and any portion thereof, shall be considered severable,
and if, for any reason,  any portion of this Lease is  determined to be invalid,
contrary to or in conflict  with any  applicable  present or future law, rule or
regulation  in a final  unappealable  ruling  issued  by any  Court,  agency  or
tribunal with valid  jurisdiction in a proceeding to which either of the Parties
may be a party, that ruling shall not impair the operation of, or have any other
effect  upon,  such  other  portions  of  this  Lease  as may  remain  otherwise
intelligible  (all of which shall remain  binding on the Parties and continue to
be given full force and  agreement as of the date upon which the ruling  becomes
final).

37.      COUNTERPARTS.  This  Lease may be signed by the  Parties  hereto  in as
many counterparts as may be necessary,  and via facsimile if necessary,  each of
which so signed being deemed to be an original  and such  counterparts  together
constituting  one and the  same  instrument  and,  notwithstanding  the  date of
execution,  will be deemed to bear the execution  date as set forth on the front
page of this Lease.

38.      CONSENTS AND WAIVERS.  No consent  or  waiver  expressed or  implied by
either Party in respect of any breach or default by the other in the performance
by such other of its obligations hereunder shall:

<PAGE>

                                      -14-

         (a)      be valid unless it is in writing and stated to be a consent or
                  waiver pursuant to this section;

         (b)      be relied  upon as a consent to or waiver of any other  breach
                  or default of the same or any other obligation;

         (c)      constitute a general waiver under this Lease; or

         (d)      eliminate or modify the need for a specific  consent or waiver
                  pursuant to this section in any other or subsequent instance.

39.      RECORDING.  A memorandum of this Lease shall be executed by the Parties
to this Lease for the purpose of recording the same as required.

         IN  WITNESS   WHEREOF  the  Parties  hereto  have  hereunto  set  their
respective hands and seals in the presence of their duly authorized  signatories
effective as of the Effective Date first above written.

                                                 URANIUM ENERGY CORP.

                                                 By
                                                    ____________________________
                                                 Its
                                                    ____________________________

                                                 _______________________________
                                                 JOHN G. JEBSEN

                                                 _______________________________
                                                 MARY L. JEBSEN

                                                 _______________________________
                                                 JOHN TRIANTIS

                                                 _______________________________
                                                 ROSIE TRIANTIS

STATE OF                                    )
                                            ) ss.
COUNTY OF                                   )

         SUBSCRIBED AND SWORN TO before me this __________ day of  ____________,
2006 by _____________________ the ___________________ of Uranium Energy Corp.

                                                 _______________________________
                                                 Notary Public

My commission expires:

_______________________

<PAGE>

                                      -15-

STATE OF NEW MEXICO                         )
                                            ) ss.
COUNTY OF SANTA FE                          )

         SUBSCRIBED AND SWORN TO before me this __________ day of ____________,
2006 by John G. Jebsen and Mary L. Jebsen.

                                                 _______________________________
                                                 Notary Public

My commission expires:

_______________________

STATE OF CALIFORNIA                         )
                                            ) ss.
COUNTY OF _____________                     )

         SUBSCRIBED AND SWORN TO before me this __________ day of ____________,
2006 by John Triantis and Rosie Triantis.

                                                 _______________________________
                                                 Notary Public

My commission expires:

________________________

<PAGE>

                                    EXHIBIT A

         This is Exhibit "A" to that certain  Uranium  Mineral  Lease as entered
into between the Lessee and the Lessor and respecting the Leased Land.

                                   LEASED LAND

         The  mining  claims  comprising  the  Leased  Land may be  particularly
described as:

         The AB Claim  group  located in Carbon  County,  Wyoming,  and  further
described as follows:

AB Claims Nos. 1-34, BLM WMC Nos. 268812 - 268845,  located in Sections 5, 6 and
7, T27N,  R77W, 6th P.M.,  Carbon County,  Wyoming,  and filed of record in Book
1089, page 21 - 54.

AB Claims No.s 35-41, BLM WMC Nos. 273088 - 273094,  located in Section 5, T27N,
R77W, and Sections 31 and 32, T28N, R77W, 6th P.M., Carbon County,  Wyoming, and
filed of record in Book 1096, page 21 - 27.

as further described in Exhibit "C" hereto

                                   ----------

                                END OF EXHIBIT A

                                   ----------

<PAGE>

                                    EXHIBIT B

         This is Exhibit "B" to that certain  Uranium  Mineral  Lease as entered
into between the Lessee and the Lessor and respecting the Leased Land.

                  MAP OF THE LEASED LAND AND AREA OF INFLUENCE

                  SEE THE MATERIALS WHICH ARE ATTACHED HERETO.

                                   ----------

                      END OF EXHIBIT B AND END OF THE LEASE

                                   ----------Exhibit
4.1

AMENDMENT NUMBER ONE

TO

RIGHTS
AGREEMENT

Amendment
Number One (the “Amendment”), dated as of August 17, 2006, between The Pep Boys
– Manny, Moe & Jack, a Pennsylvania corporation (the “Company”), and
American Stock Transfer & Trust Company (“AST”), as rights agent (“Rights
Agent”), to that certain Rights Agreement (the “Agreement”), dated as of
December 5, 1997, between the parties.

WHEREAS,
the Company is unable to identify the current Rights Agent as a result of a
series of corporate transactions involving First Union National Bank and its
successors; and Section 21 of the Agreement authorizes the Company to appoint a
successor Rights Agent if the existing Rights Agent is incapable of acting.

WHEREAS,
the Company desires to appoint AST as the successor Rights Agent, and AST
desires to accept such appointment.

WHEREAS,
Section 26 of the Agreement authorizes the Company and the Rights Agent, if the
Company so directs, prior to the Distribution Date (as defined in the
Agreement) and subject to the penultimate sentence of such Section 26, to amend
any provision of the Agreement without the approval of any holders of
certificates representing Common Shares and Rights (each as defined in the
Agreement).

WHEREAS,
the Board has approved the amendment of the Rights Agreement and the execution
and delivery of this Amendment, and all acts necessary to make this Amendment a
valid agreement, enforceable according to its terms, have been performed.

NOW,
THEREFORE, in consideration of the foregoing recitals, the parties hereby agree
and the Agreement is hereby amended as follows:

1.             AST hereby represents and warrants to the Company that (i) it is a corporation organized and doing business under the laws of the State of New York, (ii) it is in good standing under the laws of the State of New York and authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by the applicable State of New York authority and (iii) it has a combined capital and surplus of at least $25 million.
2.             Section 21 of the Agreement is hereby amended to provide that, at the time of appointment, any successor Rights Agent, shall have a combined capital and surplus of $25 million, rather than $50 million.
3.             AST is hereby appointed as Rights Agent.
4.             The second sentence of Section 3(a) of the Agreement is hereby amended and restated in its entirely to read as follows:

 

“The Board of Directors of the Company may defer the date set forth in clause (ii) of the preceding sentence to a specified later date or to an unspecified later date, each to be determined by action of the Board of Directors of the Company.”.
5.             Clause (3) of Section 11(a)(ii)(A) of the Agreement is hereby amended and restated in its entirety to read as follows:
“(3) shall sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose (in one or more transactions) to, from or with, as the case may be, the Company or any of its Subsidiaries, assets, including securities, on terms and conditions less favorable to the Company in the reasonable determination of the Board of Directors of the Company than the Company would be able to obtain in arm’s-length negotiation with an unaffiliated third party,”.
6.             Clause (2) of Section 11(a)(ii)(B) of the Agreement is hereby amended and restated in its entirety to read as follows:
“(2) is an acquisition of Common Shares pursuant to a tender offer or an exchange offer for all outstanding shares of Common Stock at a price and on terms determined by the Board of Directors of the Company to be (x) at a price that is fair to shareholders (taking into account all factors which the Board of Directors of the Company deem relevant including, without limitation, prices which could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to realize maximum value) and (y) otherwise in the best interests of the Company and its shareholders, or”.
7.             Section 11(a)(iii) of the Agreement is hereby amended and restated in its entirety to read as follows:
“(iii) In the event that there shall not be sufficient treasury shares or authorized but unissued Common Shares to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Company shall take all such action as may be necessary to authorize additional Common Shares for issuance upon exercise of the Rights.  In the alternative, in such an event, if deemed desirable by the Board of Directors of the Company, the Company shall (A) determine the value of the Common Shares which each holder of a Right would have been entitled to receive upon payment of the applicable Purchase Price had there been a sufficient number of authorized but unissued Common Shares to permit the exercise in full of the Rights (except as otherwise provided herein) over the value of the Common Shares that the Company has available for issuance upon exercise of the Rights (the “Spread”), and (B) 

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make adequate provision to substitute therefor, cash, Common Shares and/or other equity securities of the Company, debt securities of the Company, other assets or any combination of the foregoing (whichever substituted, the “Substitute Consideration”).  Such Substitute Consideration shall have an aggregate value equal to the Spread, where such aggregate value has been determined by the Board of Directors of the Company, as described above.  To the extent that action is taken pursuant to this Section 11(a)(iii), the Company shall provide that such action shall apply uniformly to all outstanding Rights (except as otherwise provided herein) and may suspend the exercisability of the Rights in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to this subsection.  Notwithstanding any other provision in this Agreement, the Company shall not be obligated to pay Substitute Consideration in the event of any exercise of Rights if and to the extent a determination is made by the Board of Directors of the Company, as described above, (xxx) that such payment could be in violation of applicable law, or (yyy) that such payment could result in a decrease in fair market value per Common Share in excess of that which would have occurred if sufficient Common Shares were authorized to permit exercise in full of the Rights in accordance with Section 11(a)(ii) and such Rights were so exercised in full for such Common Shares.”.

8.             Clause
(i) of Section 13(d) of the Agreement is hereby amended and restated in its
entirety to read as follows:

“(i) such transaction is consummated with a Person or Persons (or a Subsidiary of any such Person or Persons) who acquired Common Shares pursuant to a tender offer or exchange offer for all outstanding Common Shares which was approved by the Board of Directors of the Company in the manner described in Section 11(a)(ii)(B),”.

9.             Section 23(a) of the Agreement is hereby
amended and restated in its entirety to read as follows:

“(a) The Board of Directors of the Company may, at its option, at any time prior to the close of business on the earlier of (x) the tenth day following the Shares Acquisition Date (or such later date as the Board of Directors shall determine, which determination to be made prior to the close of business on the tenth day following the Shares Acquisition Date) and (y) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a redemption price of $.01 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”).  Notwithstanding 

 3
 

 

anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of an event described in Section 11(a)(ii) until such time as the Company’s right of redemption hereunder has expired.  The Company may, at its option, pay the Redemption Price in cash, shares of Common Shares of the Company (based on the current share market price of such Common Shares at the time of redemption) or any other form of consideration deemed appropriate by the Board of Directors of the Company.”.
10.           Section 25 of the Agreement is hereby amended to provide the following Notice address for the Rights Agent:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
Attention: Corporate Trust Department.

11.           The following paragraph is hereby added
to the end of Section 26 of the Agreement.

“On a date no later than November 30, 2006 and at
least once prior to each successive three year anniversary thereof, a committee
composed of non-management members of the Board of Directors of the Company
selected by the members of the Board of Directors who have been determined by
the Board to be “independent directors” in accordance with NYSE listing
standards shall meet to review the terms and conditions of this Agreement,
including whether the termination or modification of this Agreement is in the
best interest of the Company and its shareholders, and to make a recommendation
based on such review to the full Board of Directors of the Company.  Such committee, when reviewing the terms and
conditions of this Agreement, shall have the power and authority (x) to set its
own agenda and to retain at the expense of the Company its choice of legal
counsel, investment bankers and other advisors, and (y) to review all
information of the Company and to consider all factors it deems relevant to any
such review.”

12.           Section 35 of the Agreement is hereby
amended and restated in its entirety to read as follows:

“Section 35.  Determination and Actions by the Board.  The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors of the Company or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (a) interpret the provisions of this Agreement, and (b) make all calculations 

 4
 

 

and determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement).  All such actions, calculations, interpretations and determinations (including, for purposes of clause (ii) below, all omissions with respect to the foregoing) which are done, taken or made by the Board in good faith, shall (i) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (ii) not subject the Board of Directors of the Company to any liability to the holders of the Rights.”.
13.           Any and all references to “independent directors” contained in The Summary of Rights to Purchase Common Stock previously distributed to shareholders of record of the Company as of December 31, 1997 and attached as Exhibit B to the Agreement are hereby deemed to be amended to read “Board of Directors”.

14.           Except as expressly amended hereby, the
provisions of the Agreement shall remain in full force and effect.

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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed and
their respective corporate seals to be hereto affixed and attested, all as of
the day and year first above written.

	
  /s/ ATTEST

  	
   

  	
   

  	
  /s/ THE PEP BOYS - MANNY, MOE & JACK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [SEAL]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ ATTEST

  	
   

  	
   

  	
  /s/ AMERICAN STOCK TRANSFER & TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [SEAL]

  

 

 6

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