Document:

ex4-22.htm

    
      

      

    

    
      
        EXHIBIT
4.22

      

       

      
        
           

        

      

    

     

     

    LIST
OF SUBSIDIAIRIES OF

    CROSSHAIR
EXPLORATION & MINING CORP.

    as
at April 30, 2009

    

     

    
 

    
      	
                
      Name of Subsidiary

               

            	
                
      Jurisdiction of Incorporation

            	
                
      Business Name(s)

            
	
                
      Target Exploration and Mining Corp.

            	
                
      British Columbia

            	
                
      Target Exploration and Mining Corp.

            
	
                   
      448018 Exploration, Inc.*

            	
                
      Nevada

            	
                     448018
      Exploration, Inc.

            
	
                
      Gemini Metals Corp.

            	
                
      British Columbia

            	
                
      Gemini Metals Corp.

            

    

     

    
 

    *a
wholly-owned subsidiary of Target Exploration and Mining Corp.ex4-23.htm

    
      
        

        

      
EXHIBIT 4.23

      

      

      THE
BOOTHEEL PROJECT, LLC

      

      EXPLORATION,
DEVELOPMENT &

      MINE
OPERATING AGREEMENT

      

      AMONG

      

      448018
EXPLORATION INC.

      

      AND

      

      NFUR
BOOTHEEL, LLC

      

      AND

      

      TARGET
EXPLORATION & MINING CORP.

      

      AND

      

      UR-ENERGY
USA INC.

      

      AND

      

      NFU
WYOMING, LLC

      

      DATED the
7th day of June, 2007

       

       

      
        
          
            50538524.8

          

        

        
           

          
            

          

        

        
           

        

      

      

      TABLE
OF CONTENTS

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          	 
      	 
      
	
                                                                  ARTICLE I DEFINITIONS AND
      CROSS-REFERENCES

                                                                	
                                                                  2

                                                                
	
                                                                  1.1
      Definitions

                                                                	
                                                                  2

                                                                
	
                                                                  1.2
      Cross-References

                                                                   

                                                                   

                                                                	
                                                                  8

                                                                
	
                                                                  ARTICLE
      II NAME, PURPOSES AND TERM

                                                                	
                                                                  8

                                                                
	
                                                                  2.1
      General

                                                                	
                                                                  8

                                                                
	
                                                                  2.2
      Name

                                                                	
                                                                  8

                                                                
	
                                                                  2.3
      Purposes

                                                                	
                                                                  8

                                                                
	
                                                                  2.4
      Limitation

                                                                	
                                                                  9

                                                                
	
                                                                  2.5
      Term

                                                                	
                                                                  9

                                                                
	
                                                                  2.6
      Registered Agent/Registered Office

                                                                   

                                                                   

                                                                	
                                                                  9

                                                                
	
                                                                  ARTICLE
      III REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS;
    INDEMNITY

                                                                	
                                                                  9

                                                                
	
                                                                  3.1
      Representations and Warranties of All Parties

                                                                	
                                                                  9

                                                                
	
                                                                  3.2
      Representations and Warranties of NFUR, UR-Energy and NFU

                                                                	
                                                                  10

                                                                
	
                                                                  3.3
      Disclosures

                                                                	
                                                                  12

                                                                
	
                                                                  3.4
      Record Title

                                                                	
                                                                  12

                                                                
	
                                                                  3.5
      Loss of Title

                                                                	
                                                                  13

                                                                
	
                                                                  3.6
      Royalties, Production Taxes and Other Payments Based on
      Production

                                                                	
                                                                  13

                                                                
	
                                                                  3.7
      Indemnities/Liabilities as Between Members

                                                                	
                                                                  13

                                                                
	
                                                                  3.8
      Limitation of Liability

                                                                	
                                                                  14

                                                                
	
                                                                  3.9
      No Waiver of Limited Liability or Reliance by Third
Parties

                                                                	
                                                                  14

                                                                
	
                                                                  3.10
      Company Indemnification

                                                                   

                                                                   

                                                                	
                                                                  15

                                                                
	
                                                                  ARTICLE
      IV RELATIONSHIP OF MEMBERS

                                                                	
                                                                  15

                                                                
	
                                                                  4.1
      Limitation on Authority of Members

                                                                	
                                                                  15

                                                                
	
                                                                  4.2
      No Partnership

                                                                	
                                                                  15

                                                                
	
                                                                  4.3
      Federal Tax Elections and Allocations

                                                                	
                                                                  15

                                                                
	
                                                                  4.4
      State Income Tax

                                                                	
                                                                  15

                                                                
	
                                                                  4.5
      Tax Returns

                                                                	
                                                                  15

                                                                
	
                                                                  4.6
      Other Business Opportunities

                                                                	
                                                                  15

                                                                
	
                                                                  4.7
      Waiver of Rights to Partition or Other Division of Assets

                                                                	
                                                                  16

                                                                
	
                                                                  4.8
      Bankruptcy of Member

                                                                	
                                                                  16

                                                                
	
                                                                  4.9
      Implied Covenants

                                                                	
                                                                  16

                                                                
	
                                                                  4.10
      No Third-Party Beneficiary Rights

                                                                	
                                                                  16

                                                                
	
                                                                  4.11
      Agreements with Third Parties

                                                                	
                                                                  16

                                                                
	
                                                                  4.12
      No Certificate

                                                                	
                                                                  16

                                                                
	
                                                                  4.13
      Covenants

                                                                	
                                                                  16

                                                                
	 	 
	 	 
	
                                                                  ARTICLE
      V CONTRIBUTIONS BY AND INTERESTS OF MEMBERS

                                                                	
                                                                  16

                                                                
	
                                                                  5.1
      Membership Interests

                                                                	
                                                                  16

                                                                
	
                                                                  5.2
      Initial Membership Interests

                                                                	
                                                                  16

                                                                
	
                                                                  5.3
      NFUR Initial Contribution

                                                                	
                                                                  16

                                                                
	
                                                                  5.4
      Right to Acquire Membership Interest

                                                                	
                                                                  17

                                                                
	
                                                                  5.5
      Schedule of Eligible Exploration Expenditures

                                                                	
                                                                  17

                                                                
	
                                                                  5.6
      Overpayment of Eligible Exploration Expenditures

                                                                	
                                                                  17

                                                                
	
                                                                  5.7
      Schedule of Share Issuances

                                                                	
                                                                  18

                                                                
	
                                                                  5.8
      Cash Payment in lieu of Eligible Exploration Expenditures

                                                                	
                                                                  18

                                                                

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	
                                                5.9
      Extension

                                              	
                                                18

                                              
	
                                                5.10
      Additional Contributions

                                              	
                                                18

                                              
	
                                                5.11
      Changes in Membership Interest

                                              	
                                                18

                                              
	
                                                5.12
      Elimination of Minority Interest

                                              	
                                                19

                                              
	
                                                5.13
      Continuing Liabilities upon Adjustments of Membership
      Interests

                                              	
                                                19

                                              
	
                                                5.14
      Documentation of Adjustments to Membership Interests

                                              	
                                                20

                                              
	
                                                5.15
      Grant of Lien and Security Interest

                                              	
                                                20

                                              
	
                                                5.16
      Subordination of Interests

                                                 

                                                 

                                              	
                                                20

                                              
	
                                                ARTICLE
      VI MANAGEMENT COMMITTEE

                                              	
                                                20

                                              
	
                                                6.1
      Organization and Composition

                                              	
                                                20

                                              
	
                                                6.2
      Decisions

                                              	
                                                20

                                              
	
                                                6.3
      Meetings

                                              	
                                                21

                                              
	
                                                6.4
      Action Without Meeting in Person

                                              	
                                                21

                                              
	
                                                6.5
      Matters Requiring Approval

                                              	
                                                22

                                              
	 	 
	 	 
	
                                                ARTICLE
      VII MANAGER

                                              	
                                                22

                                              
	
                                                7.1
      Appointment

                                              	
                                                22

                                              
	
                                                7.2
      Powers and Duties of Manager

                                              	
                                                22

                                              
	
                                                7.3
      Standard of Care

                                              	
                                                26

                                              
	
                                                7.4
      Resignation; Deemed Offer to Resign

                                              	
                                                26

                                              
	
                                                7.5
      Payments To Manager

                                              	
                                                27

                                              
	
                                                7.6
      Transactions With Affiliates

                                              	
                                                27

                                              
	
                                                7.7
      Activities During Deadlock

                                              	
                                                27

                                              
	 	 
	 	 
	
                                                ARTICLE
      VIII PROGRAMS AND BUDGETS

                                              	
                                                27

                                              
	
                                                8.1
      Initial Program and Budget

                                              	
                                                27

                                              
	
                                                8.2
      Operations Pursuant to Programs and Budgets

                                              	
                                                27

                                              
	
                                                8.3
      Presentation of Programs and Budgets

                                              	
                                                28

                                              
	
                                                8.4
      Review and Adoption of Proposed Programs and Budgets

                                              	
                                                28

                                              
	
                                                8.5
      Election to Participate

                                              	
                                                28

                                              
	
                                                8.6
      Recalculation or Restoration of Reduced Interest Based on Actual
      Expenditures

                                              	
                                                29

                                              
	
                                                8.7
      Pre-Feasibility Study Program and Budgets

                                              	
                                                30

                                              
	
                                                8.8
      Completion of Pre-Feasibility Studies and Selection of Approved
      Alternatives

                                              	
                                                31

                                              
	
                                                8.9
      Programs and Budgets for Feasibility Study

                                              	
                                                32

                                              
	
                                                8.10
      Development Programs and Budgets; Project Financing

                                              	
                                                33

                                              
	
                                                8.11
      Expansion or Modification Programs and Budgets

                                              	
                                                33

                                              
	
                                                8.12
      Budget Overruns; Program Changes

                                              	
                                                33

                                              
	
                                                8.13
      Emergency or Unexpected Expenditures

                                              	
                                                34

                                              
	 	 
	 	 
	
                                                ARTICLE
      IX ACCOUNTS AND SETTLEMENTS

                                              	
                                                34

                                              
	
                                                9.1
      General Accounting and Monthly Statements

                                              	
                                                34

                                              
	
                                                9.2
      Cash Calls

                                              	
                                                34

                                              
	
                                                9.3
      Failure to Meet Cash Calls

                                              	
                                                34

                                              
	
                                                9.4
      Cover Payment

                                              	
                                                35

                                              
	
                                                9.5
      Remedies

                                              	
                                                35

                                              
	
                                                9.6
      Audits

                                                 

                                                 

                                              	
                                                37

                                              
	
                                                ARTICLE
      X DISPOSITION OF PRODUCTION

                                              	
                                                38

                                              
	
                                                10.1
      No Taking In Kind

                                              	
                                                38

                                              

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
       

      
        
          
            	
                    ARTICLE
      XI RESIGNATION, DISSOLUTION AND TERMINATION

                  	
                    38

                  
	
                    11.1
      Termination and Dissolution

                  	
                    38

                  
	
                    11.2
      Termination of Right to Acquire

                  	
                    38

                  
	
                    11.3
      Resignation

                  	
                    38

                  
	
                    11.4
      Disposition of Assets on Termination

                  	
                    39

                  
	
                    11.5
      Filing of Statement of Dissolution

                  	
                    39

                  
	
                    11.6
      Non-Compete Covenants

                  	
                    39

                  
	
                    11.7
      Right to Data After Termination

                  	
                    39

                  
	
                    11.8
      Continuing Authority

                  	
                    39

                  
	
                    ARTICLE
      XII ACQUISITIONS WITHIN AREA OF INTEREST

                  	
                    40

                  
	
                    12.1
      General

                  	
                    40

                  
	
                    12.2
      Notice to Non-Acquiring Member

                  	
                    40

                  
	
                    12.3
      Option Exercised

                  	
                    40

                  
	
                    12.4
      Option Not Exercised

                  	
                    41

                  
	
                    ARTICLE
      XIII ABANDONMENT AND SURRENDER OF PROPERTIES

                  	
                    41

                  
	
                    13.1
      Abandonment and Surrender

                  	
                    41

                  
	
                    ARTICLE
      XIV SUPPLEMENTAL BUSINESS AGREEMENT

                  	
                    41

                  
	
                    14.1
      Supplemental Agreements

                  	
                    41

                  
	
                    ARTICLE
      XV TRANSFER OF INTEREST; PRE-EMPTIVE RIGHT

                  	
                    41

                  
	
                    15.1
      General

                  	
                    41

                  
	
                    15.2
      Limitations on Free Transferability

                  	
                    42

                  
	
                    15.3
      Pre-emptive Right

                  	
                    43

                  
	
                    ARTICLE
      XVI DISPUTES

                  	
                    44

                  
	
                    16.1
      Governing Law

                  	
                    44

                  
	
                    16.2
      Arbitration

                  	
                    44

                  
	
                    ARTICLE
      XVII CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF
      INFORMATION

                  	
                    45

                  
	
                    17.1
      Business Information

                  	
                    45

                  
	
                    17.2
      Member Information

                  	
                    45

                  
	
                    17.3
      Permitted Disclosure of Confidential Business Information

                  	
                    45

                  
	
                    17.4
      Disclosure Required By Law

                  	
                    46

                  
	
                    17.5
      Public Announcements

                  	
                    46

                  
	
                    17.6
      Applicability to Affiliates

                  	
                    46

                  
	
                    ARTICLE
      XVIII  GENERAL PROVISIONS

                  	
                    46

                  
	
                    18.1
      Notices

                  	
                    46

                  
	
                    18.2
      Guarantee

                  	
                    49

                  
	
                    18.3
      Number/Gender

                  	
                    49

                  
	
                    18.4
      Currency

                  	
                    49

                  
	
                    18.5
      Headings

                  	
                    49

                  
	
                    18.6
      Waiver

                  	
                    49

                  
	
                    18.7
      Modification

                  	
                    49

                  
	
                    18.8
      Force Majeure

                  	
                    49

                  
	
                    18.9
      Rule Against Perpetuities

                  	
                    50

                  
	
                    18.10
      Further Assurances

                  	
                    50

                  

          

        

      

      
 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      
        
          
            	
                    18.11
      Entire Agreement; Successors and Assigns

                  	
                    50

                  
	
                    18.12
      Counterparts; Facsimile/Electronic Transmission

                  	
                    50

                  
	
                    18.13
      Survival

                  	
                    50

                  

          

        

      

       

       

       

      
        
          
            	 
      	 
      
	
                    EXHIBITS

                  	 
      
	 
      	 
      
	
                    Exhibit
      A

                  	
                    Initial
      Company Properties and Area of Interest

                  
	
                    Exhibit
      B

                  	
                    Permitted
      Encumbrances

                  
	
                    Exhibit
      C

                  	
                    Net
      Proceeds Calculation

                  
	
                    Exhibit
      D

                  	
                    Pre-emptive
      Rights

                  
	
                    Exhibit
      E

                  	
                    Tax
      and Accounting Matters

                  

          

        

      

      

      

      

      

      
        
          
            50538524.8

          

           

        

        
           

          
            

          

        

        
           

        

      

      EXPLORATION,
DEVELOPMENT & MINE OPERATING AGREEMENT

       

      THIS
AGREEMENT dated as of the 7th day of June, 2007 (“Effective Date”).

       

      AMONG:

       

      448018
EXPLORATION INC., a body corporate duly incorporated under the laws of
Nevada and having its principal place of business at Suite 1240-1140 West Pender
Street, Vancouver, British Columbia V6E 4G1

       

      (hereafter
referred to as “TargetSub”)

       

      AND:

       

      NFUR BOOTHEEL, LLC, a limited
liability company duly organized under the laws of Colorado and having its
principal place of business at 10758 W. Centennial Road, Littleton, Colorado,
USA, 80127.

       

      (hereafter
referred to as “NFUR”)

       

      AND:

       

      TARGET EXPLORATION & MINING
CORP., a body corporate duly incorporated under the laws of British
Columbia and having its principal place of business at Suite 1240-1140 West
Pender Street, Vancouver, British Columbia V6E 4G1

       

      (hereafter
referred to as “Guarantor”)

       

      AND:

       

      UR-ENERGY USA INC., a body
corporate duly incorporated under the laws of Colorado and having its principal
place of business at 10758 W. Centennial Road, Littleton, Colorado, USA,
80127.

       

      (hereafter
referred to as “Ur-Energy”)

       

      AND:

       

      NFU WYOMING, LLC, a limited
liability company duly organized under the laws of Wyoming and having its
principal place of business at 10758 W. Centennial Road, Littleton, Colorado,
USA, 80127.

       

      (hereafter
referred to as “NFU”)

       

      W H E R E A S:

       

      A.           Ur-Energy
and NFU are companies engaged in the exploration for uranium and associated
minerals and are the sole Members of NFUR;

       

      B.           The
Guarantor is a Canadian public company, focused on mining exploration, with its
shares listed on the TSX Venture Exchange.  TargetSub is a
wholly-owned subsidiary of the Guarantor;

       

      
        
          
            50538524.8

          

           

        

        
          - 1
-

          
            

          

        

        
           

        

      

      

       

      C.           NFUR
or its constituent members control a 100% interest in certain unpatented mining
claims and state leases, known as the Bootheel Property and the Buck Point
Property (“Initial Company
Properties”), located in the Shirley Basin, Wyoming, USA (“Shirley Basin”), as more
particularly described in Exhibit A hereto, and certain exploration data and
information pertaining to the area of common interest (“Area of Interest”), as
depicted in Exhibit A;

       

      D.           NFUR,
Ur-Energy, NFU, TargetSub and the Guarantor wish to conduct exploration,
evaluation, and, if warranted, development and mining operations for uranium and
associated minerals in the Area of Interest through a U.S. Company in the form
of a Colorado limited liability company titled The Bootheel Project, LLC (“Company”), to be
established;

       

      E.           NFUR
wishes to contribute the Initial Company Properties to the Company, such that
the Initial Company Properties shall be titled in the name of the Company;
and

       

      F.           NFUR
wishes to grant TargetSub the exclusive right and option to acquire a 75%
interest in the Company and to enter into this Agreement with the primary
objective of exploring for, evaluating, and, if warranted, developing and mining
uranium and associated minerals in the Area of Interest, and the Parties wish to
enter into this Agreement to provide for such right and option and other matters
relating to the Exploration and Development of the Initial Company Properties
and possibly other Company Properties in the Area of Interest.

       

      NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants
and agreements contained herein the Parties agree as follows:

       

      ARTICLE
I

       

      DEFINITIONS
AND CROSS-REFERENCES

       

      
        	
                1.1

              	
                Definitions.  In
      this Agreement and in the Exhibits and the Recitals hereto, unless the
      context otherwise requires, the following expressions will have the
      following meanings:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                “Act” means the Colorado
      Limited Liability Company Act, CRS § 7-80-101 et
  seq.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                “Affiliate” means any
      person, partnership, limited liability company, joint venture,
      corporation, or other form of enterprise which Controls, is Controlled by,
      or is under common Control with a
Member;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                “Agreement” means this
      Exploration, Development and Mine Operating Agreement, including all
      amendments and modifications, and all Exhibits, all of which are
      incorporated by this reference;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                “Approved Alternative”
      means a Development and Mining alternative selected by the Management
      Committee from various Development and Mining alternatives analyzed in the
      Pre-Feasibility Studies;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                “Area of Interest” means
      the area on the ground outlined on the attached Exhibit A
      (A-1);

              

      

       

      
        	
                 
      

              	
                (f)

              	
                “Assets” means the
      Initial Company Properties, Products, Business Information, and all other
      real and personal property, tangible and intangible, including existing or
      after-acquired Company Properties and all contract rights held for the
      benefit of the Company hereunder;

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 2
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                (g)

              	
                “Budget” means a detailed
      estimate of all costs to be incurred and a schedule of Eligible
      Exploration Expenditures to be made by TargetSub or cash advances to be
      made by the Members with respect to a
Program;

              

      

       

      
        	
                 
      

              	
                (h)

              	
                “Business” means the
      conduct of the business of the Company in furtherance of the purposes set
      forth in Section 2.3 and in accordance with this
      Agreement;

              

      

       

      
        	
                 
      

              	
                (i)

              	
                “Business Account” means
      the account maintained by the Manager for the Business of the
      Company;

              

      

       

      
        	
                 
      

              	
                (j)

              	
                “Business Information”
      means the terms of this Agreement, and any other agreement relating to the
      Business, the Existing Data, and all additional Data, information,
      knowledge and know-how, in whatever form and however communicated
      (including, without limitation, Confidential Information), developed,
      conceived, originated or obtained by either Member in performing its
      obligations under this Agreement.  The term “Business Information”
      shall not include any improvements, enhancements, refinements or
      incremental additions to Member Information that are developed, conceived,
      originated or obtained by either Member in performing its obligations
      under this Agreement;

              

      

       

      
        	
                 
      

              	
                (k)

              	
                “Capital Account” means
      the account maintained for each Member in accordance with Exhibit
      E;

              

      

       

      
        	
                 
      

              	
                (l)

              	
                “Commercial Production”
      means the commercial exploitation of Ore but does not include
      milling for the purpose of testing or milling by a pilot plant or during
      the initial tune-up period of a plant.  Commercial Production
      will be deemed to have commenced:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                if
      a plant is located on a Company Property, on the first day of the month
      following the first period of thirty (30) consecutive days during
      which Ore has been processed through such plant at an average rate of not
      less than 80% of the initial rated capacity of such plant,
    or

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                if
      no plant is located on a Company Property, on the first day of the month
      following the first period of thirty (30) consecutive days during which
      Ore has been shipped from the Company Property at the rate of not less
      than 80% of the milling rate specified in a Feasibility Study recommending
      placing the Company Property into Commercial
  Production;

              

      

       

      
        	
                 
      

              	
                (m)

              	
                “Company” means a
      Colorado limited liability company to be formed by NFUR and TargetSub as
      its initial Members as provided in this
  Agreement;

              

      

       

      
        	
                 
      

              	
                (n)

              	
                “Company Properties”
      means those interests in real property described in Exhibit A and all
      other interests in real property within the Area of Interest that are
      acquired and held subject to this Agreement from time to time and “Company Property” means
      any one of such Company Properties;

              

      

       

      
        	
                 
      

              	
                (o)

              	
                “Confidential
      Information” means all information, Data, knowledge and know-how
      (including, but not limited to, formulas, patterns, compilations,
      programs, devices, methods, techniques and processes) that derives
      independent economic value, actual or potential, as a result of not being
      generally known to, or readily ascertainable by, third parties and which
      is the subject of efforts that are reasonable under the circumstances
      to

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 3
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      maintain
its secrecy, including without limitation all analyses, interpretations,
compilations, studies and evaluations of such information, Data, knowledge and
know- how generated or prepared by or on behalf of either Member;

       

      
        	
                 
      

              	
                (p)

              	
                “Continuing Obligations”
      mean obligations or responsibilities that are reasonably expected to
      continue or arise after Operations on a particular area of the
      Company  Properties have ceased or are suspended, such as future
      monitoring, stabilization, or Environmental
  Compliance;

              

      

       

      
        	
                 
      

              	
                (q)

              	
                “Control” used as a verb
      means, when used with respect to an entity, the ability, directly or
      indirectly through one or more intermediaries, to direct or cause the
      direction of the management and policies of such entity through (i) the
      legal or beneficial ownership of voting securities or membership
      interests; (ii) the right to appoint managers, directors or corporate
      management; (iii) contract; (iv) operating agreement; (v) voting trust; or
      otherwise; and, when used with respect to a person, means the actual or
      legal ability to control the actions of another, through family
      relationship, agency, contract or otherwise; and “Control” used as a noun
      means an interest which gives the holder the ability to exercise any of
      the foregoing powers;

              

      

       

      
        	
                 
      

              	
                (r)

              	
                “Cover Payment” shall
      have the meaning as set forth in Section 9.4 of this
Agreement;

              

      

       

      
        	
                 
      

              	
                (s)

              	
                “Data” means maps, drill
      logs and other drilling data, core tests, pulps, reports, surveys, assays,
      analyses, production reports, operations, technical, accounting and
      financial records, and other material information either acquired or
      developed in Operations on the Company Properties after the Effective
      Date;

              

      

       

      
        	
                 
      

              	
                (t)

              	
                “Development” means all
      preparation (other than Exploration) for the removal and recovery of
      Products, including construction and installation of a mill or any other
      improvements to be used for the mining, handling, milling, processing, or
      other beneficiation of Products, and all related Environmental
      Compliance;

              

      

       

      
        	
                 
      

              	
                (u)

              	
                “Effective Date” means
      the date set forth in the preamble to this
  Agreement;

              

      

       

      
        	
                 
      

              	
                (v)

              	
                “Eligible Exploration
      Expenditures,” during the time
      TargetSub is earning the 75% Membership Interest, shall mean all
      exploration expenditures for geological studies, geological database
      compilations, drilling, geophysical logging, geophysical surveys,
      hydro-engineering testing, land reclamation, land surveys, laboratory
      studies, environmental studies and engineering feasibility studies,
      maintaining insurance for the Company pursuant to Subsection 7.2(i) and directive of the Management
      Committee, maintaining all property, including appropriate county or BLM
      or other filing and maintenance fees, rental payments and royalty payments
      in relation to the Company Properties, including expenditures not to
      exceed $750,000 of Eligible Exploration Expenditures for new acquisitions
      of Company Properties in the Area of Interest or any additional amount for
      such acquisitions as may be approved by the Management
      Committee;

              

      

       

      
        	
                 
      

              	
                (w)

              	
                “Encumbrance” or “Encumbrances” means all
      interests, mortgages, deeds of trust, charges, royalties, security
      interests, pledges, liens, encumbrances, net profits interests, royalties
      or overriding royalty interests, other payments out of production,
      actions, claims, other burdens, demands or equities of any nature
      whatsoever or however arising

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 4
-

          
            

          

        

        
           

        

      

      

       

      and any
rights or privileges capable of becoming any of the foregoing, other than
Permitted Encumbrances;

       

      
        	
                 
      

              	
                (x)

              	
                “Environmental
      Compliance” means actions performed during or after Operations to
      comply with the requirements of all Environmental Laws or contractual
      commitments related to reclamation of the Company Properties or other
      compliance with Environmental Laws;

              

      

       

      
        	
                 
      

              	
                (y)

              	
                “Environmental Laws”
      means Laws aimed at reclamation or restoration of the Company Properties;
      abatement of pollution; protection of the environment; protection of
      wildlife, including endangered species; ensuring public safety from
      environmental hazards; protection of cultural or historic resources;
      management, storage or control of hazardous materials and substances;
      releases or threatened releases of pollutants, contaminants, chemicals or
      industrial, toxic or hazardous substances as wastes into the environment,
      including without limitation, ambient air, surface water and groundwater;
      and all other Laws relating to the manufacturing, processing,
      distribution, use, treatment, storage, disposal, handling or transport of
      pollutants, contaminants, chemicals or industrial, toxic or hazardous
      substances or wastes;

              

      

       

      
        	
                 
      

              	
                (z)

              	
                “Environmental
      Liabilities” means any and all claims, actions, causes of action,
      damages, losses, liabilities, obligations, penalties, judgments, amounts
      paid in settlement, assessments, costs, disbursements, or expenses
      (including, without limitation, attorneys’ fees and costs, experts’ fees
      and costs, and consultants’ fees and costs) of any kind or of any nature
      whatsoever that are asserted against either Member, by any person or
      entity other than the other Member, alleging liability (including, without
      limitation, liability for studies, testing or investigatory costs, cleanup
      costs, response costs, removal costs, remediation costs, containment
      costs, restoration costs, corrective action costs, closure costs,
      reclamation costs, natural resource damages, property damages, business
      losses, personal injuries, penalties or fines) arising out of, based on or
      resulting from (i) the presence, release, threatened release, discharge or
      emission into the environment of any hazardous materials or substances
      existing or arising on, beneath or above the Company Properties and/or
      emanating or migrating and/or threatening to emanate or migrate from the
      Company Properties to off site properties; (ii) physical disturbance of
      the environment; or (iii) the violation or alleged violation of any
      Environmental Laws;

              

      

       

      
        	
                 
      

              	
                (aa)

              	
                “Equity Account” means
      the account maintained for each Member by the Manager in accordance with
      Subsection 7.2(o) of the
      Agreement;

              

      

       

      
        	
                 
      

              	
                (bb)

              	
                “Existing Data” means
      maps, drill logs and other drilling data, core tests, pulps, reports,
      surveys, assays, analyses, production reports, operations, technical,
      accounting and financial records, and other material information acquired
      or developed in operations within the Area of Interest prior to the
      Effective Date;

              

      

       

      
        	
                 
      

              	
                (cc)

              	
                “Expansion” or “Modification” means (i)
      a material increase in mining or production capacity; (ii) a material
      change in the recovery process; or (iii) a material change in waste or
      tailings disposal methods.  An increase or change shall be
      deemed “material” if it is anticipated to cost more than 10% of original
      capital costs attributable to the Development of the mining or production
      capacity, recovery process or waste or tailings disposal facility to be
      expanded or modified;

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 5
-

          
            

          

        

        
           

        

      

      

       

      
        	
                 
      

              	
                (dd)

              	
                “Exploration” means all
      activities directed toward ascertaining the existence, location, quantity,
      quality or commercial value of deposits of Products, including but not
      limited to additional drilling required after discovery of potentially
      commercial mineralization, and including related Environmental
      Compliance;

              

      

       

      
        	
                 
      

              	
                (ee)

              	
                “Feasibility Contractors”
      means one or more engineering firms approved by the Management Committee
      for purposes of preparing or auditing any Pre-Feasibility Study or
      Feasibility Study;

              

      

       

      
        	
                 
      

              	
                (ff)

              	
                “Feasibility Study” means
      a report to be prepared following selection by the Management Committee of
      one or more Approved Alternatives.  The Feasibility Study shall
      include a review of information presented in any Pre-Feasibility Studies
      concerning the Approved Alternative(s).  The Feasibility Study
      shall be in a form and of a scope generally acceptable to reputable
      financial institutions that provide financing to the mining
      industry;

              

      

       

      
        	
                 
      

              	
                (gg)

              	
                “Governmental Fees”
      means all location fees, mining claim rental fees, mining claim
      maintenance payments and similar payments required by Law to locate and
      hold unpatented mining claims;

              

      

       

      
        	
                 
      

              	
                (hh)

              	
                “Initial Contribution”
      means that contribution by NFUR pursuant to Section 5.3 of this
Agreement;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                “Initial Company
      Properties” means all properties as more particularly described in
      Exhibit A;

              

      

       

      
        	
                 
      

              	
                (jj)

              	
                “Law” or “Laws” means all
      applicable federal, state and local laws (statutory or common), rules,
      ordinances, regulations, grants, concessions, franchises, licenses,
      orders, directives, judgments, decrees, and other governmental
      restrictions, including permits and other similar requirements, whether
      legislative, municipal, administrative or judicial in
    nature;

              

      

       

      
        	
                 
      

              	
                (kk)

              	
                “Management Committee”
      means the committee established under Article VI of this
      Agreement;

              

      

       

      
        	
                 
      

              	
                (ll)

              	
                “Manager” means the
      person or entity appointed under Article VII of the Agreement to manage
      the Company, its Business and Operations, or any successor
      Manager;

              

      

       

      
        	
                (mm)

              	
                “Member” means either of
      TargetSub or NFUR and their respective successors and permitted assigns
      that own a Membership Interest in the Company from time to time and “Members” means together
      TargetSub and NFUR and their respective successors and permitted assigns
      that own a Membership Interest in the Company from time to
      time;

              

      

       

      
        	
                 
      

              	
                (nn)

              	
                “Member Information”
      means all information, data, knowledge and know-how, in whatever form and
      however communicated (including, without limitation, Confidential
      Information but excluding the Existing Data), which, as shown by written
      records, was developed, conceived, originated or obtained by a Member: (a)
      prior to entering into this Agreement, or (b) independent of its
      performance under the terms of this
Agreement;

              

      

       

      
        	
                 
      

              	
                (oo)

              	
                “Membership Interest”
      means the percentage interest representing the ownership interest of a
      Member in the Company, and all other rights and obligations arising
      under

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 6
-

          
            

          

        

        
           

        

      

      this
Agreement, as such interest may from time to time be adjusted
hereunder.  Membership Interests shall be calculated to two decimal
points.  The initial Membership Interests of the Members are set forth
in Section 5.2 of this Agreement;

       

      
        	
                 
      

              	
                (pp)

              	
                “Mining” means the
      mining, extracting, producing, beneficiating, handling, milling or other
      processing of Products regardless of the method of extraction mining or
      processing the same, whether known to exist or hereafter discovered,
      invented or developed;

              

      

       

      
        	
                 
      

              	
                (qq)

              	
                “Net Proceeds” means
      certain amounts calculated as provided in Exhibit C, which may be payable
      to a Member under Subsections 5.12(a)
      and 9.5(b)(ii) or otherwise in this
      Agreement;

              

      

       

      
        	
                 
      

              	
                (rr)

              	
                “Operations” means the
      activities carried out by the Company under this
  Agreement;

              

      

       

      
        	
                 
      

              	
                (ss)

              	
                “Ore” means all
      materials from a Company Property, the nature and composition of which, in
      the reasonable judgment of the Manager, justifies mining or removing from
      place and shipping and selling such material, or delivering such material
      to a plant for further processing;

              

      

       

      
        	
                 
      

              	
                (tt)

              	
                “Party” means each of the
      Members, Ur-Energy and NFU, and the Guarantor and their successors and
      permitted assigns, and “Parties” means,
      together, the Members, Ur-Energy and NFU and the Guarantor and their
      successors and permitted assigns and shall be read to be understood as the
      NFUR/Ur-Energy/NFU parties or the TargetSub/Guarantor parties,
      respectively, as may be appropriate in the
  context;

              

      

       

      
        	
                 
      

              	
                (uu)

              	
                “Payout” means the date
      on which the Equity Account balance of each of the Members has become zero
      or a negative number, regardless of whether the Equity Account balance of
      either or both Members subsequently becomes a positive
      number.  If one Member’s Equity Account balance becomes zero or
      a negative number before the other Member’s, “Payout” shall not occur
      until the date that the other Member’s Equity Account balance first
      becomes zero or a negative number;

              

      

       

      
        	
                 
      

              	
                (vv)

              	
                “Permitted Encumbrances”
      means the Encumbrances described on Exhibit B attached
    hereto;

              

      

       

      
        	
                (ww)

              	
                “Pre-Feasibility Studies”
      means one or more studies prepared to analyze whether economically viable
      Mining Operations may be possible on the Company Properties, as described
      in Section 8.7;

              

      

       

      
        	
                 
      

              	
                (xx)

              	
                “Prime Rate” means the
      interest rate quoted and published as “Prime” as published in The Wall Street
      Journal, under the heading “Money Rate,” as the rate may change
      from day to day;

              

      

       

      
        	
                 
      

              	
                (yy)

              	
                “Products” means all Ore,
      minerals and mineral resources produced from the
      Company  Properties through Mining or other
    means;

              

      

       

      
        	
                 
      

              	
                (zz)

              	
                “Program” means a
      description in reasonable detail of Operations to be conducted and
      objectives to be accomplished by the Manager as approved by the Management
      Committee pursuant to Section 8.4 for a specified
  period;

              

      

       

      
        	
                 
      

              	
                (aaa)

              	
                “Program Period” means
      the time period covered by an adopted Program and
  Budget;

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 7
-

          
            

          

        

        
           

        

      

      

       

      
        	
                (bbb)

              	
                “Project Financing” means
      any financing approved by the Management Committee and obtained by the
      Company and/or the Members for the purpose of placing a mineral deposit
      situated on the Company Properties into Commercial Production, but shall
      not include any such financing obtained individually by either Member to
      finance payment or performance of its obligations under this
      Agreement;

              

      

       

      
        	
                 
      

              	
                (ccc)

              	
                “Recalculated Membership
      Interest” means the reduced Membership Interest of a Member as
      recalculated under Sections 8.5, 8.6 or 9.5;

              

      

       

      
        	
                (ddd)

              	
                “Reduced Member” means a
      Member whose Membership Interest is reduced under Sections 8.5 or 9.5;

              

      

       

      
        	
                 
      

              	
                (eee)

              	
                “TargetSub’s Initial
      Contribution” means full satisfaction of the obligations of
      TargetSub in Sections 5.4, 5.5, 5.7 and
      5.8 to be permitted to acquire the 75%
      Membership Interest which may be earned by TargetSub in accordance with
      Section 5.4;
  and

              

      

       

      
        	
                 
      

              	
                (fff)

              	
                “Transfer” means, when
      used as a verb, to sell, grant, assign, create an Encumbrance, pledge or
      otherwise convey, or dispose of or commit to do any of the foregoing, or
      to arrange for substitute performance by an Affiliate or third party
      (except as permitted under Subsection 7.2(k) and Section 7.6 of this Agreement), either directly or
      indirectly; and, when used as a noun, means such a sale, grant,
      assignment, Encumbrance, pledge or other conveyance or disposition, or
      such an arrangement.

              

      

       

      
        	
                1.2

              	
                Cross-References.  References
      to “Exhibits”,
      “Articles”, “Sections” and “Subsections” refer to
      Exhibits, Articles, Sections and Subsections of this
      Agreement.  References to “Paragraphs” and “Subparagraphs” refer to
      paragraphs and subparagraphs of the referenced
  Exhibits.

              

      

       

      ARTICLE
II

       

      NAME,
PURPOSES AND TERM

       

      
        	
                2.1

              	
                General.  The
      Parties hereby enter into this Agreement for the purposes hereinafter
      stated.  All of the rights and obligations of the Parties in
      connection with the Company, its Business, Assets and the Area of Interest
      and all Operations shall be subject to and governed by this
      Agreement.

              

      

       

      
        	
                2.2

              	
                Name.  The
      Assets shall be managed and operated by the Manager under the name of The
      Bootheel Project, LLC, a Colorado limited liability company, on terms
      consistent with this Agreement.  The Manager shall
      accomplish any registrations required by jurisdictions in which the
      Company conducts Business.

              

      

       

      
        	
                2.3

              	
                Purposes.  This
      Agreement is entered into for the following purposes and for no others,
      and shall serve as the exclusive means by which each of the Members
      accomplishes such purposes:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                to
      conduct Exploration within the Area of
Interest;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                to
      acquire additional real property and other interests within the Area of
      Interest;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                to
      evaluate the possible Development and Mining of the Company Properties,
      and, if justified, to engage in Development and
  Mining;

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 8
-

          
            

          

        

        
           

        

      

      

       

      
        	
                 
      

              	
                (d)

              	
                to
      engage in Operations on the Company
Properties;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                to
      engage in marketing Products, to the extent provided by Article
      X;

              

      

       

      
        	
                 
      

              	
                (f)

              	
                to
      complete and satisfy all Environmental Compliance obligations and
      Continuing Obligations affecting the Company Properties;
    and

              

      

       

      
        	
                 
      

              	
                (g)

              	
                to
      perform any other activity necessary, appropriate, or incidental to any of
      the foregoing.

              

      

       

      
        	
                2.4

              	
                Limitation.  Unless
      the Members otherwise agree in writing, the Operations shall be limited to
      the purposes described in Section 2.3,
      and nothing in this Agreement shall be construed to enlarge such purposes
      or to change the relationships of the Members as set forth in
      Article IV.

              

      

       

      
        	
                2.5

              	
                Term.  The
      term of this Agreement shall be for twenty-five (25) years from the
      Effective Date and for so long thereafter as Products are produced from
      the Company Properties on a continuous basis, and thereafter until all
      materials, supplies, equipment and infrastructure have been salvaged and
      disposed of, any required Environmental Compliance is completed and
      accepted and the Members have agreed to a
      final accounting, unless the Business is earlier terminated as herein
      provided.  For purposes hereof, Products shall be deemed to be
      produced from the Company Properties on a “continuous basis” so long as
      production in commercial quantities is not halted for more than 365
      consecutive days. 

              

      

       

      
        	
                2.6

              	
                Registered Agent/Registered
      Office.  The name of the Company’s registered agent in
      the State of Colorado is NFUR Bootheel, LLC or such other person as the
      Manager may select in compliance with the Act from time to
      time.  The registered office of the Company in the State of
      Colorado shall be located at 10758 West Centennial Road, Littleton,
      Colorado, 80127, or at any other place within the State of Colorado which
      the Manager shall select from time to time, with the unanimous approval of
      the Management Committee.  The principal office of the Company
      shall be at any other location which the Manager shall select from time to
      time with the unanimous approval of the Management
    Committee.

              

      

       

      ARTICLE
III

       

      REPRESENTATIONS
AND WARRANTIES;

       

      TITLE
TO ASSETS; INDEMNITY

       

      
        	
                3.1

              	
                Representations and Warranties
      of All Parties.  As of the Effective Date, each Party
      warrants and represents to the others
that:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                it
      is a corporation or limited liability company duly organized and in good
      standing in its jurisdiction of incorporation or organization and is
      qualified to do business and is in good standing in those jurisdictions
      where necessary in order to carry out the purposes of this
      Agreement;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                it
      has the capacity to enter into and perform this Agreement and all
      transactions contemplated herein and that all corporate, board of
      directors, shareholder, company, member or manager, surface and mineral
      rights owner, lessor, lessee and other actions required to authorize it to
      enter into and perform this Agreement have been properly taken, except for
      approval by the State of Wyoming for the assignment of the two (2) state
      leases listed on Exhibit A;

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 9
-

          
            

          

        

        
           

        

      

      

       

      
        	
                 
      

              	
                (c)

              	
                neither
      the execution of this Agreement nor the consummation of the transactions
      contemplated herein will conflict with, result in a breach of or
      accelerate the performance required by any agreement to which it is a
      party;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                neither
      the execution of this Agreement nor the consummation of the transactions
      contemplated hereby result in a breach of the Laws of any applicable
      jurisdiction or the Party’s constituting
  documents;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                it
      is not subject to any governmental order, judgment, decree, debarment,
      sanction or Laws that would preclude the permitting or implementation of
      Operations under this Agreement;
and

              

      

       

      
        	
                 
      

              	
                (f)

              	
                this
      Agreement has been duly executed and delivered by it and is valid and
      binding upon it in accordance with its
terms.

              

      

       

      
        	
                3.2

              	
                Representations and Warranties
      of NFUR, Ur-Energy and NFU.  As of the Effective Date,
      each of NFUR, Ur-Energy and NFU make the following representations and
      warranties to TargetSub and the
Guarantor:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                NFUR,
      Ur-Energy or NFU controls the Initial Company Properties free and clear of
      all Encumbrances, other than the Permitted Encumbrances as listed on
      Exhibit B and has the right to transfer the Initial Company Properties to
      the Company.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Exhibit
      A accurately sets out all the lands, unpatented mining claims, state
      leases and other interests that comprise the Initial Company
      Properties.  NFUR, Ur-Energy and NFU have taken all steps and
      made all taxes, assessments, rental levies and other payments necessary to
      maintain the Initial Company Properties in good standing under applicable
      Laws.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                With
      respect to those Initial Company Properties in which NFUR, Ur-Energy or
      NFU hold an interest under leases or other contracts: (i) NFUR, Ur-Energy
      or NFU are in exclusive possession of such Initial Company Properties;
      (ii) NFUR and/or Ur-Energy and/or NFU has received no notice of default of
      any of the terms or provisions of such leases or other contracts; (iii)
      subject to the approval of the State of Wyoming, NFUR and/or Ur-Energy
      and/or NFU have the authority under such leases or other contracts to
      perform fully their obligations under this Agreement; (iv) to NFUR’s,
      Ur-Energy’s and NFU’s knowledge, such leases and other contracts are valid
      and are in good standing; (v) NFUR and/or Ur-Energy and/or NFU have no
      knowledge of any act or omission or any condition on the Initial Company
      Properties which could be considered or construed as a default under any
      such lease or other contract; and (vi) to NFUR’s, and/or Ur-Energy’s
      and/or NFU’s knowledge, such Initial Company Properties are free and clear
      of all Encumbrances or defects in title except for those specifically
      identified in Exhibit B.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                NFUR,
      Ur-Energy or NFU have either provided or will make available for
      inspection to TargetSub and the Guarantor true and complete copies of all
      agreements in their possession material to the Initial Company Properties
      and to any other mining claims or interests in mining properties within
      the Area of Interest currently owned or controlled by NFUR, Ur-Energy and
      NFU and all such agreements to which they are a party are valid and in
      full force and effect and there are no existing defaults by NFUR,
      Ur-Energy or NFU or, to their knowledge, by the other parties to such
      agreements.

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 10
-

          
            

          

        

        
           

        

      

      

       

      
        	
                 
      

              	
                (e)

              	
                The
      Existing Data provided by Ur-Energy and NFU, in turn to NFUR, and then to
      TargetSub and the Guarantor is provided for use by the Company “as-is” and
      NFUR, Ur-Energy and NFU expressly disclaim any representations or
      warranties as to its accuracy, reliability, quality or completeness, its
      fitness or suitability for any particular purpose or use, the presence or
      absence of commercial quantities of uranium or other valuable minerals in
      any of the Initial Company Properties or Area of Interest.  The
      Existing Data is specifically not contributed to the Company as an Asset
      of the Company.  TargetSub and Guarantor agree they shall rely
      on the Existing Data at their own
risk.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                With
      respect to unpatented mining claims located by Ur-Energy and NFU that are
      included within the Initial Company Properties, except as to the Permitted
      Encumbrances set forth in Exhibit B and subject to the paramount title of
      the United States: (i) to their knowledge the unpatented mining claims
      were properly laid out and monumented; (ii) to their knowledge all
      required location and validation work was properly performed; (iii)
      location notices and certificates were properly recorded and filed with
      appropriate governmental agencies; (iv) all assessment work required to
      hold the unpatented mining claims has been performed and all Governmental
      Fees have been paid in a manner consistent with that required of the
      Manager pursuant to Subsection 7.2(l)
      through the assessment year ending at Noon on September 1, 2007; (v) all
      affidavits of assessment work, evidence of payment of Governmental Fees,
      and other filings required to maintain the claims in good standing have
      been properly and timely recorded or filed with appropriate governmental
      agencies; (vi) the claims are free and clear of Encumbrances or defects in
      title; and (vii) Ur-Energy and NFU have no knowledge of conflicting mining
      claims.  Nothing in this Subsection, however, shall be deemed to
      be a representation or a warranty that any of the unpatented mining claims
      contains a valuable discovery of minerals or that any such discovery may
      be economically mined by any specific mining procedure or technology
      whether known or unknown as of the Effective
  Date.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                With
      respect to unpatented mining claims not located by Ur-Energy and NFU but
      which are included within the Initial Company Properties, except as to the
      Permitted Encumbrances set forth in Exhibit B and subject to the paramount
      title of the United States: (i) all assessment work required to hold the
      unpatented mining claims has been performed and all Governmental Fees have
      been paid in a manner consistent with that required of the Manager
      pursuant to Subsection 7.2(l) through
      the assessment year ending at Noon on September 1, 2007; (ii) all
      affidavits of assessment work, evidence of payment of Governmental Fees,
      and other filings required to maintain the claims in good standing have
      been properly and timely recorded or filed with appropriate governmental
      agencies; (iii) the claims are free and clear of Encumbrances or defects
      in title; and (iv) Ur-Energy and NFU have no knowledge of conflicting
      mining claims.  Nothing in this Subsection, however, shall be
      deemed to be a representation or a warranty that any of the unpatented
      mining claims contains a valuable discovery of minerals or that any such
      discovery may be economically mined by any specific mining procedure or
      technology whether known or unknown as of the Effective
    Date.

              

      

       

      
        	
                 
      

              	
                (h)

              	
                With
      respect to the Initial Company Properties, there are no pending or to the
      knowledge of Ur-Energy or NFU threatened actions, suits, claims or
      proceedings, and there have been no previous transactions affecting its
      interests in the Initial Company Properties which have not been for fair
      consideration.

              

      

       

      
        	
                 
      

              	
                (i)

              	
                Except
      as to matters otherwise disclosed in writing to TargetSub and the
      Guarantor prior to the Effective
Date,

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 11
-

          
            

          

        

        
           

        

      

      

       

      
        	
                 
      

              	
                (i)

              	
                to
      the knowledge of Ur-Energy or NFU the conditions existing on or with
      respect to the Initial Company Properties and their ownership and
      operation of the Initial Company Properties are not in violation of
      any Laws (including without limitation any Environmental Laws), nor
      causing or permitting any damage (including Environmental Damage, as
      defined below) or impairment to the health, safety, or enjoyment of any
      person at or on the Initial Company Properties or in the general vicinity
      of the Initial Company Properties;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                to
      the knowledge of Ur-Energy or NFU there have been no past violations by
      them or by any of their predecessors in title of any Environmental Laws or
      other Laws affecting or pertaining to the Initial Company Properties, nor
      any past creation of damage or threatened damage to the air, soil, surface
      waters, groundwater, flora, fauna, or other natural resources on, about or
      in the general vicinity of the Initial Company Properties (“Environmental Damage”);
      and

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                to
      the knowledge of Ur-Energy or NFU, Ur-Energy and NFU are in material
      compliance with all applicable Laws pertaining to the Initial Company
      Properties including all Environmental Laws and have obtained all
      necessary licenses, permits and approvals necessary for their operations
      pertaining to the Initial Company Properties under all applicable
      Environmental Laws and to their knowledge there are no environmental
      audits, evaluation, assessments or studies relating to them or any of
      their subsidiaries pertaining to the Initial
      Company  Properties;

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                Ur-Energy
      and NFU have not received inquiry from or notice of a pending
      investigation from any governmental agency or of any administrative or
      judicial proceeding concerning the violation of any
  Laws.

              

      

       

      
        	
                3.3

              	
                Disclosures.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Each
      of the Parties represents and warrants that it is unaware of any material
      facts or circumstances that have not been disclosed in this Agreement,
      which should be disclosed to the other Party (-ies) in order to prevent
      the representations and warranties in this Article from being materially
      misleading.  NFUR, Ur-Energy and NFU have disclosed to TargetSub
      and the Guarantor all information each believes to be relevant concerning
      the Initial Company Properties and Area of Interest and has provided to or
      made available for inspection by TargetSub and the Guarantor all such
      information, but does not (except as provided in Section 3.2) make any representation or warranty,
      express or implied, as to the accuracy or completeness of the information
      or as to the boundaries or value of the Initial Company Properties and
      Area of Interest.  Each Party represents to the others that in
      negotiating and entering into this Agreement it has relied solely on its
      own appraisals and estimates as to the value of the Initial Company
      Properties and Area of Interest and upon its own geologic and engineering
      interpretations related thereto.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      representations and warranties hereinbefore set out in Sections 3.1 through 3.3 are
      conditions on which the Parties have relied in entering into this
      Agreement and each of the Parties will indemnify and save the other
      harmless 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 it and contained in this
      Agreement.  The representations and warranties set forth above
      shall survive the execution and delivery of any documents of Transfer
      provided under this Agreement.

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 12
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                3.4

              	
                Record
      Title.  Title to the Assets shall be held by the
      Company.

              

      

       

      
        	
                3.5

              	
                Loss of
      Title.  Except as provided in Article VII, any failure or
      loss of title to the Assets, and all costs of defending title, shall be
      charged to the Business Account, except that all costs and losses arising
      out of or resulting from breach of the representations and warranties of
      NFUR, Ur-Energy and NFU as to title to the Initial Company Properties
      shall be charged to NFUR.

              

      

       

      
        	
                3.6

              	
                Royalties, Production Taxes and
      Other Payments Based on Production.  All required
      payments of production royalties, taxes based on production of Products,
      and other payments out of production to private parties and governmental
      entities shall be determined and made by the Company, and the Manager
      undertakes to make such payments timely and otherwise in accordance with
      applicable Laws and agreements. The Manager shall furnish to the Members
      evidence of timely payment for all such required
  payments.

              

      

       

      
        	
                3.7

              	
                Indemnities/Liabilities as
      Between Members.  The Members shall not be required to
      make any contribution to the capital of the Company except as provided in
      this Agreement.  Any obligation herein to contribute capital to
      the Company may be compromised by the Members, including by payments by an
      obligated Member directly to the other Member(s), as may be
      agreed.  Further, the Members agree as follows to indemnify one
      another:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Each
      Member shall indemnify the other Member, its directors, officers, members,
      managers, employees, agents and attorneys, and Affiliates (collectively,
      “Indemnified
      Parties”) from and against the entire amount of any Material
      Loss.  A “Material Loss” shall
      mean all costs, expenses, damages or liabilities, including attorneys’
      fees and other costs of litigation (either threatened or pending) arising
      out of or based on a breach by a Member (“Indemnifying Party”) of
      any representation, warranty or covenant contained in this Agreement,
      including without limitation:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                any
      failure by the Manager to determine accurately and make timely payment of
      required royalties, production taxes and other payments out of production
      to third parties as required by Section 3.6;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                any
      action taken for or obligation or responsibility assumed on behalf of the
      Company or another Member by a Member, any
      of its directors, officers, employees, agents and attorneys, and
      Affiliates, in violation of Section 4.1;

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                failure
      of a Member or its Affiliates to comply with the non-compete or Area of
      Interest provisions of Section 11.6 or
      Article XII;

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                any
      Transfer that causes a liability to the Company against which the
      transferring Member shall indemnify the non-transferring Member as
      provided in Article V of Exhibit E;
and

              

      

       

      
        	
                 
      

              	
                (v)

              	
                any
      Transfer that causes termination of the tax partnership established by
      Section 4.3, against which the
      transferring Member shall indemnify the non-transferring Members as
      provided in Section 3.7 and Exhibit
      E;

              

      

       

      
        	
                 
      

              	
                (vi)

              	
                failure
      of a Member or its Affiliates to comply with the pre-emptive right under
      Section 15.3 and
      Exhibit D.

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 13
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      A
Material Loss shall not be deemed to have occurred until, in the aggregate, an
Indemnified Party incurs losses, costs, damages or liabilities in excess of
$50,000 relating to breaches of warranties, representations and covenants
contained in this Agreement.  Notwithstanding any other provisions of
this Agreement, NFUR, UR-Energy and NFU shall be responsible for, and shall
indemnify and hold TargetSub and the Guarantor harmless from, any claim or
liability resulting from breaches of Environmental Laws as such Environmental
Laws exist as of the date of this Agreement in respect of any Initial Company
Property prior to such time as it became or becomes subject to this
Agreement.

       

      
        	
                 
      

              	
                (b)

              	
                If
      any claim or demand is asserted against an Indemnified Party in respect of
      which such Indemnified Party may be entitled to indemnification under this
      Agreement, written Notice of such claim or demand shall promptly be given
      to the Indemnifying Party.  The Indemnifying Party shall have
      the right, but not the obligation, by notifying the Indemnified Party
      within thirty (30) days after its receipt of the Notice of the claim or
      demand, to assume the entire control of (subject to the right of the
      Indemnified Party to participate, at the Indemnified Party’s expense and
      with counsel of the Indemnified Party’s choice) the defense, compromise,
      or settlement of the matter, including, at the Indemnifying Party’s
      expense, employment of counsel of the Indemnifying Party’s
      choice.  Any damages to the assets or business of the
      Indemnified Member caused by a failure by the Indemnifying Party to
      defend, compromise, or settle a claim or demand in a reasonable and
      expeditious manner requested by the Indemnified Party, after the
      Indemnifying Party has given notice that it will assume control of the
      defense, compromise, or settlement of the matter, shall be included in the
      damages for which the Indemnifying Party shall be obligated to indemnify
      the Indemnified Party.  Any settlement or compromise of a matter
      by the Indemnifying Party shall include a full release of claims against
      the Indemnified Party which has arisen out of the indemnified claim or
      demand.

              

      

       

      
        	
                3.8

              	
                Limitation of
      Liability.  The Members shall not be required to make any
      contribution to the capital of the Company except as otherwise provided in
      this Agreement, nor shall the Members in their capacity as Members or
      Manager be bound by, or liable for, any debt, liability or obligation of
      the Company whether arising in contract, tort, or otherwise, except as
      expressly provided by this Agreement.  The foregoing shall not
      limit any obligation of a Member to indemnify the other Members as
      expressly provided by this Agreement.  The Members shall be
      under no obligation to restore a deficit Capital Account upon the
      dissolution of the Company or the liquidation of any of their Membership
      Interests.   NFUR, however, shall be responsible to any
      third party, not a Party to this Agreement, for and shall hold TargetSub
      and the Guarantor harmless from any claim or liability resulting from
      breaches of Laws prior to the Effective Date relating to the Initial
      Company Properties.  Any other liability to third parties shall
      be the responsibility of the
Company.

              

      

       

      
        	
                3.9

              	
                No Waiver of Limited Liability
      or Reliance by Third Parties.  Notwithstanding anything
      in this Agreement to the contrary, nothing contained herein shall be
      deemed a waiver or reduction of the limitations of liabilities of the
      Members as provided by the Act and other applicable
      Law.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
      CONTRARY, NO PERSON OR ENTITY OTHER THAN A MEMBER SHALL HAVE THE RIGHT TO
      ENFORCE ANY OBLIGATION OF A MEMBER TO CONTRIBUTE CAPITAL HEREUNDER,
      WHETHER TO FUND CONTINUING OBLIGATONS OR FOR ANY OTHER PURPOSE, AND
      SPECIFICALLY NEITHER THE COMPANY NOR ANY LENDER OR OTHER THIRD PARTY SHALL
      HAVE ANY SUCH RIGHTS, it being the intention of
  the

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 14
-

          
            

          

        

        
           

        

      

      Members
that the contribution, reimbursement and indemnification obligations specified
herein are enforceable only by a Member against another Member.

       

      
        	
                3.10

              	
                Company
      Indemnification.  The Company shall indemnify and hold
      harmless any Member (present or past) from and against any and all claims
      and demands whatsoever arising from or related to the Business, the
      Company or a Member’s Membership Interest in the Company.  The
      Company shall indemnify and hold harmless any Manager (present or past)
      from and against any and all claims and demands whatsoever arising from
      and related to the Manager’s duties and performance under this Agreement
      which were performed in compliance with the Manager’s Standard of Care set
      forth in Section 7.3.

              

      

       

      ARTICLE
IV

       

      RELATIONSHIP
OF MEMBERS

       

      
        	
                4.1

              	
                Limitation on Authority of
      Members.  No member is an agent of the Company solely by
      virtue of being a Member.  Except as provided in this Agreement,
      no Member shall take part in the control, management, direction or
      operation of the Business of the Company, and shall have no power to bind
      the Company in its capacity as a Member.  This Section 4.1 supersedes any authority granted to Members
      pursuant to the Act.  Any Member that takes any action or binds
      the Company in violation of this Section 4.1 shall be solely responsible for any loss and
      expense incurred by the Company as a result of the unauthorized action and
      shall indemnify and hold the Company harmless with respect to the loss or
      expense.

              

      

       

      
        	
                4.2

              	
                No
      Partnership.  The Members intend that the Company not be
      a partnership (including, without limitation, a limited partnership) or
      joint venture, and that no Member is a partner or joint venturer of any
      other Member, other than as part of any tax partnership created hereunder
      for federal and state tax purposes, and this Agreement may not be
      construed to suggest otherwise.

              

      

       

      
        	
                4.3

              	
                Federal Tax Elections and
      Allocations.  Without changing the effect of
      Section 4.2, the Company shall be
      treated as a partnership for federal income tax purposes and no Member
      shall take any action to alter such treatment.  Tax elections
      and allocations shall be made as set forth in
    Exhibit E.

              

      

       

      
        	
                4.4

              	
                State Income Tax.  To the
      extent permissible under applicable law, the relationship of the Members
      shall be treated for state income tax purposes in the same manner as it is
      for federal income tax purposes.

              

      

       

      
        	
                4.5

              	
                Tax
      Returns.  After approval of the Management Committee, any
      tax returns or other required tax forms shall be filed in accordance with
      Exhibit E.

              

      

       

      
        	
                4.6

              	
                Other Business
      Opportunities.  Except as expressly provided in this
      Agreement, each Member shall have the right to engage in and receive full
      benefits from any independent business activities or operations, whether
      or not competitive with the Company, without consulting with, or
      obligation to, the other Member or the Company.  The doctrines
      of “corporate opportunity” or “business opportunity” shall not be applied
      to the Company or to any other activity or operation of either
      Member.  Neither Member shall have any obligation to the other
      with respect to any opportunity to acquire any property outside the Area
      of Interest at any time, or, except as otherwise provided in
      Section 11.6, within the Area of
      Interest after the Member’s resignation or deemed resignation from the
      Company.  Unless otherwise agreed in writing, neither Member
      shall have any obligation to mill, beneficiate or otherwise treat any
      Products in any facility owned or controlled by such Member or the
      Company.

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 15
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                4.7

              	
                Waiver of Rights to Partition
      or Other Division of Assets.  The Members hereby waive
      and release all rights of partition, or of sale in lieu thereof, or other
      division of Assets, including any such rights provided by
    Law.

              

      

       

      
        	
                4.8

              	
                Bankruptcy of
      Member.  A Member shall cease to have any power as a
      Member or Manager or any voting rights or rights of approval hereunder
      upon bankruptcy, insolvency, dissolution or assignment for benefit of
      creditors of such Member, and its successor upon the occurrence of any
      such event shall have only the rights, powers and privileges of a
      transferee enumerated in Section 15.2
      and shall be liable for all obligations of the Member under this
      Agreement.  In no event, however, shall a personal
      representative or successor become a substitute Member unless all the
      requirements of Section 15.2 are
      satisfied.

              

      

       

      
        	
                4.9

              	
                Implied
      Covenants.  There are no implied covenants contained in
      this Agreement other than those of good faith and fair
      dealing.

              

      

       

      
        	
                4.10

              	
                No Third-Party Beneficiary
      Rights.  This Agreement shall be construed to benefit the
      Parties and their respective successors and assigns only, and shall not be
      construed to create third-party beneficiary rights in any other party or
      in any governmental organization or agency, except to the extent required
      to permit indemnification of a non-Party Indemnified Party pursuant to
      Section 3.7 and to the extent required
      by Project Financing.

              

      

       

      
        	
                4.11

              	
                Agreements with Third
      Parties.  All transactions, contracts, employments,
      purchases, operations, negotiations with third parties and any other
      matter or act undertaken on behalf of the Company in connection with the
      Assets and Business will be done, transacted, undertaken or performed in
      the name of the Company only and no Member will do, transact, perform or
      undertake anything related to the Business of the Company in the name of
      any other Member or in the joint names of the
  Members.

              

      

       

      
        	
                4.12

              	
                No
      Certificate.  The Company shall not issue certificates
      representing Membership Interests in the
  Company.

              

      

       

      
        	
                4.13

              	
                Covenants.  Each
      of NFUR and TargetSub will devote such efforts and resources as may be
      required to fulfill any obligation assumed by them
      hereunder.  NFUR hereby covenants to provide or make available
      for inspection to the Company true and complete copies of all Data and
      Business Information in its possession and all Data and Business
      Information that comes into its possession regarding the Initial Company
      Properties and the Area of Interest.  TargetSub hereby covenants
      to provide or make available for inspection to the Company true and
      complete copies of all Data and Business Information in its possession and
      all Data and Business Information that comes into its possession regarding
      the Area of Interest.

              

      

       

      ARTICLE
V

       

      CONTRIBUTIONS
BY AND INTERESTS OF MEMBERS

       

      
        	
                5.1

              	
                Membership Interests.  The
      Members will have
      such Membership
      Interest in the Company as is determined from time to time in accordance
      with this Article V.

              

      

       

      
        	
                5.2

              	
                Initial Membership Interests.  Upon
      the execution of this Agreement NFUR will have a 100% Membership Interest
      and TargetSub will have a 0% Membership Interest in the
      Company.

              

      

       

      
        	
                5.3

              	
                NFUR Initial
      Contribution. NFUR, as its
      Initial Contribution, shall contribute, directly or through its
      constituent members, the Initial Company Properties to the Company for
      the

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 16
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      purposes
of this Agreement; transfer of such Initial Company Properties shall be
effectuated within 120 days after the Effective Date.  The amount of
$1,000,000 shall be credited to NFUR’s Equity Account on the Effective Date with
respect to NFUR’s Initial Contribution.

       

      
        	
                5.4

              	
                Right to Acquire Membership
      Interest.  NFUR hereby grants to TargetSub the exclusive
      right and option to acquire a 75% Membership Interest in the Company, in
      accordance with the terms of this Agreement.  In order to
      acquire the 75% Membership Interest in the Company, TargetSub shall (i)
      make Eligible Exploration Expenditures, pursuant to the terms of this
      Article V, on the Area of Interest of $3,000,000 over a four-year period
      commencing on the Effective Date of this Agreement, and (ii) shall cause
      the Guarantor to issue to NFUR a total of 125,000 common shares of the
      Guarantor.  At such time as TargetSub has made the Eligible
      Exploration Expenditures and the Guarantor has issued the common shares,
      as set forth below, TargetSub shall earn the 75% Membership Interest in
      the Company.

              

      

       

      
        	
                 
      

              	
                TargetSub’s failure to make its
      Initial Contribution in accordance with the provisions of Article V and
      Section 11.3, or its election to terminate
      the Agreement pursuant to Section 11.2 shall be deemed to be a
      resignation of TargetSub from the Company, and a termination of its
      membership and Ownership Interest, as well as a termination as
      Manager.  Upon such resignation, TargetSub   shall have no
      further right, title or interest in the Company or the Assets and it shall
      take such actions as are necessary to ensure that all Assets are free and
      clear of any Encumbrances arising by through or under it, except for such
      Encumbrances to which the Members have agreed. For greater certainty, it
      is acknowledged and agreed that TargetSub’s Capital Account will be
      transferred to NFUR in the event of any such resignation prior to the
      completion of TargetSub’s Initial Contribution, or if for any other reason
      at any other time the Company is dissolved prior to the completion of
      TargetSub’s Initial
Contribution

              

      

       

      
        	
                5.5

              	
                Schedule of Eligible
      Exploration Expenditures.  In order to keep the Agreement
      in good standing and earn the 75% Membership Interest, TargetSub shall
      fund and incur from the Effective Date a minimum of $3,000,000 of Eligible
      Exploration Expenditures on or prior to the fourth anniversary of the
      Effective Date as follows (except as provided in Section 18.8
herein):

              

      

       

      
        	
                 
      

              	
                (a)

              	
                $750,000
      on or before the first anniversary of the Effective Date (as a firm and
      binding commitment);

              

      

       

      
        	
                 
      

              	
                (b)

              	
                an
      additional $750,000 on or before the second anniversary of the Effective
      Date;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                an
      additional $750,000 on or before the third anniversary of the Effective
      Date; and

              

      

       

      
        	
                 
      

              	
                (d)

              	
                an
      additional $750,000 on or before the fourth anniversary of the Effective
      Date.

              

      

       

      
        	
                 
      

              	
                All
      payments of Eligible Exploration Expenditures shall be spent in accordance
      with the approved Programs and Budgets of the Management
      Committee.

              

      

      

      
        	
                5.6

              	
                Overpayment of Eligible
      Exploration Expenditures.  For purposes of the
      calculation of minimum Eligible Exploration Expenditures in
      Section 5.5, to the extent that
      TargetSub funds any expenditures in excess of the relevant minimum amount,
      such excess amount shall be carried forward and credited towards the
      amount TargetSub is required to fund in a subsequent year if such overage
      is either expended pursuant to an approved Program and Budget or is
      approved by the Management Committee thereafter as an allowable expense
      and overage.

              

      

       

      
        
          
            50538524.8

          

           

        

        
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                5.7

              	
                Schedule of Share
      Issuances.  In order to keep the Agreement in good
      standing and earn a 75% Membership Interest, the Guarantor shall issue and
      TargetSub shall cause to be issued to NFUR or its designated assignee(s)
      an aggregate 125,000 common shares of the Guarantor as
      follows:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                50,000
      common shares within five business days of the receipt of approval of this
      Agreement by the TSX Venture
Exchange;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                25,000
      common shares on or before the first anniversary of the Effective
      Date;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                25,000
      common shares on or before the second anniversary of the Effective Date;
      and

              

      

       

      
        	
                 
      

              	
                (d)

              	
                25,000
      common shares on or before the third anniversary of the Effective
      Date.

              

      

       

      
        	
                5.8

              	
                Cash Payment in lieu of
      Eligible
      Exploration Expenditures.  TargetSub may, at its option,
      meet any of the minimum Eligible Exploration Expenditures specified in
      Section 5.5 by making a cash payment to
      NFUR by wire transfer or certified check made payable to NFUR within the
      time periods specified in Section 5.5. 

              

      

       

      
        	
                5.9

              	
                Extension.  Notwithstanding
      anything else in this Agreement, if TargetSub fails to fund the minimum
      Eligible Exploration Expenditures specified in Section 5.5 predominantly through the failure of NFUR to
      act or predominantly as a result of actions taken by NFUR, then TargetSub
      shall have such longer period of time as is reasonable under the
      circumstances to meet its minimum Eligible Exploration
      Expenditures.

              

      

       

      
        	
                5.10

              	
                Additional
      Contributions.  After such time as TargetSub acquires the
      75% Membership Interest in the Company, the Members, subject to any
      election permitted by Subsection 8.5(a),
      shall be obligated to contribute funds to adopted Programs and Budgets in
      accordance with their respective Membership
  Interests.

              

      

       

      
        	
                5.11

              	
                Changes in Membership
      Interests.  In addition to any of the foregoing, the
      Membership Interests shall be eliminated or changed as
      follows:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Upon
      resignation or deemed resignation as provided in Article
    XI;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Upon
      an election by either Member pursuant to Section 8.5 to contribute less to an adopted Program and
      Budget than the percentage equal to its Membership Interest, or to
      contribute nothing to an adopted Program and
  Budget;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                In
      the event of default by either Member making its agreed upon contribution
      to an adopted Program and Budget, followed by an election by the other
      Member to invoke any of the remedies in Section 9.5;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Upon
      Transfer by either Member of part or all of its Membership Interest in
      accordance with Article XV; or

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Upon
      acquisition by either Member of part or all of the Membership Interest of
      the other Member, however arising.

              

      

       

      
        
          
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                5.12

              	
                Elimination of Minority
      Interest. 

              

      

       

      
        	
                 
      

              	
                (a)

              	
                A
      Reduced Member whose Recalculated Membership Interest becomes less than
      10% shall be
      deemed to have withdrawn from the Company and shall relinquish its entire
      Membership Interest free and clear of any Encumbrances arising by, through
      or under the Reduced Member, except any Permitted Encumbrances to which
      the Members have agreed.  Such relinquished Membership Interest
      shall be deemed to have accrued automatically to the other
      Member.  The Reduced Member’s Capital Account shall be
      transferred to the remaining Member.  Thereafter, subject to
      Section 5.13, the Reduced Member shall
      thereafter have no further right, title, or interest in the Company or
      under this Agreement.  In such event, the Reduced Member shall
      execute and deliver an appropriate conveyance of all of its right, title
      and interest in the Company to the remaining Member.  The
      Reduced Member shall, however, have the right to receive 5% of Net Proceeds,
      if any, upon
      the then-existing Company Properties and Operations up to an amount equal
      to the Reduced Member’s Equity Account balance as of the effective date of
      the withdrawal, such royalty payment to run with title to the
      then-existing Company Properties, and the Members hereby agreeing to
      execute such documents as shall be necessary to evidence such
      intent.  Such royalty shall be paid quarterly, if there are no
      Continuing Liabilities or other continuing obligations of the Reduced
      Member which are not then current; if there are unpaid Continuing
      Liabilities or other continuing obligations to the Company or other Member
      outstanding at the time of any otherwise scheduled quarterly payment, the
      5% Net Proceeds payment shall not be made to the Reduced Member, but shall
      be made to the remaining Member or the Company at the choosing of the
      remaining Member.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      relinquishment, withdrawal and entitlements for which this Section
      provides shall be effective as of the date of the recalculation under
      Sections 8.5 or 9.5.  However, if the final adjustment
      provided under Section 8.6 for any
      recalculation under Section 8.5 results
      in a Recalculated Membership Interest of 10% or more: (i) the
      Recalculated Membership Interest shall be deemed, effective retroactively
      as of the first day of the Program Period, to have automatically revested;
      (ii) the Reduced Member shall be reinstated as a Member, with all of the
      rights and obligations pertaining thereto; (iii) the right to Net Proceeds
      under Subsection 5.12(a) shall
      terminate; and (iv) the Manager, on behalf of the Members, shall make any
      necessary reimbursements, reallocations of Products, contributions and
      other adjustments as provided in Subsection 8.6(d).  Similarly, if such final
      adjustment under Section 8.6 results in
      a Recalculated Membership Interest for either Member of less than 10% for a Program
      Period as to which the provisional calculation under Section 8.5 had not resulted in a Membership Interest of
      less than 10%, then such Member, at its election within thirty (30) days
      after notice of the final adjustment, may contribute an amount resulting
      in a revised final adjustment and resultant Recalculated Membership
      Interest of 10%.  If no such election is made, such Member shall
      be deemed to have withdrawn under the terms of Subsection 5.12(a) as of the beginning of such Program
      Period, and the Manager, on behalf of the Members, shall make any
      necessary reimbursements, reallocations, contributions and other
      adjustments as provided in Subsection 8.6(d), including any Net Proceeds to which such
      Member may be entitled for such Program
Period.

              

      

       

      
        	
                5.13

              	
                Continuing Liabilities upon
      Adjustments of Membership Interests.  Any reduction or
      elimination of a Member’s Membership Interest under this Agreement shall
      not relieve such Member of its share of any liability to the Company,
      whether arising before or after such reduction or elimination, out of acts
      or omissions occurring or conditions existing prior to
  the

              

      

       

      
        
          
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      Effective
Date or out of Operations conducted during the term of this Agreement but prior
to such reduction or elimination, regardless of when any funds may be expended
to satisfy such liability.  For purposes of this Section, such
Member’s share of such liability shall be equal to its Membership Interest at
the time the act or omission giving rise to the liability occurred, after first
taking into account any reduction, readjustment and restoration of Membership
Interests under Sections 5.12, 8.5, 8.6 and 9.5 (or, as to such liability arising out of acts or
omissions occurring or conditions existing prior to the Effective Date, equal to
such Member’s Initial Membership Interest).  For purposes of this
Section 5.13, TargetSub’s Membership Interest
prior to completion of making the TargetSub Initial Contribution shall be deemed
to be 75%.

       

      
        	
                5.14

              	
                Documentation of Adjustments to
      Membership Interests.  Adjustments to the Membership
      Interests need not be evidenced during the term of this Agreement by the
      execution and recording of appropriate instruments, but each Member’s
      Membership Interest and related Equity Account balance shall be shown in
      the accounting records of the Company, and any adjustments thereto,
      including any reduction, readjustment, and restoration of Membership
      Interests under Sections 5.12, 8.5, 8.6 and 9.5, shall be made monthly.  However,
      a Member, at any time upon the request of another Member, shall execute
      and acknowledge instruments necessary to evidence such
      adjustments.

              

      

       

      
        	
                5.15

              	
                Grant of Lien and Security
      Interest. Subject to
      Section 5.16, each Member grants to the
      other Member a lien upon and a security interest in its Membership
      Interest.  The lien and security interest granted pursuant to
      this Section 5.15 shall secure every
      obligation or liability of the Member to the Member granting such lien or
      security interest created under this Agreement, including the obligation
      to repay a Cover Payment in accordance with Section 9.4.  Each Member hereby agrees to
      take all action necessary to perfect such lien and security interest and
      hereby appoints the other Member its attorney-in-fact to execute, file and
      record all financing statements and other documents necessary to perfect
      or maintain such lien and security
interest.

              

      

       

      
        	
                5.16

              	
                Subordination of
      Interests. Each Member shall, from time to time, take all necessary
      actions, including execution of appropriate agreements, to pledge and
      subordinate its Membership Interest, any liens it may hold which are
      created under this Agreement other than those created pursuant to
      Section 5.14 hereof, and any other right
      or interest it holds with respect to the Company and the Assets (other
      than any statutory lien of the Manager) to any secured borrowings for
      Operations approved by the Management Committee, including any secured
      borrowings relating to Project Financing, and any modifications or
      renewals thereof.

              

      

       

      ARTICLE
VI

       

      MANAGEMENT
COMMITTEE

       

      
        	
                6.1

              	
                Organization and
      Composition.  The Members hereby establish a Management
      Committee to determine overall policies, objectives, procedures, methods
      and actions under this Agreement.  The Management Committee
      shall consist of two members appointed by NFUR and two members appointed
      by TargetSub.  Each Member may appoint one or more alternates to
      act in the absence of a regular member.  Any alternate so acting
      shall be deemed a member.  Appointments by a Member shall be
      made or changed by notice to the other Members.  TargetSub shall
      designate one of its members to serve as the chair of the Management
      Committee.

              

      

       

      
        	
                6.2

              	
                Decisions.  From
      the Effective Date until such time as TargetSub earns the 75% Membership
      Interest, NFUR and TargetSub, acting through their appointed member(s) in
      attendance at the meeting, shall each have votes representing a 50%
      Membership Interest with (a)

              

      

       

      
        
          
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      NFUR
having the casting vote in the event of a tie for the two years immediately
following the Effective Date, and (b) TargetSub having the casting vote
thereafter.  After TargetSub has earned its 75% Membership Interest,
each Member, acting through its appointed member(s) in attendance at the
meeting, shall have the votes on the Management Committee in proportion to its
Membership Interest.

       

      
        	
                6.3

              	
                Meetings.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                The
      Management Committee shall hold regular meetings at least quarterly in
      Denver, or at other agreed places.  The Manager shall give sixty
      (60) days notice to the Members of such meetings.  Notice may be
      waived upon mutual consent received in writing.  Additionally,
      either Member may call a special meeting upon thirty (30) days notice to
      the other Member.  In case of an emergency, reasonable notice of
      a special meeting shall suffice.  There shall be a quorum if at
      least one member representing each Member is present; provided, however,
      that if a Member fails to attend two consecutive properly called meetings,
      then a quorum shall exist at the second meeting if the other Member is
      represented by at least one appointed member, and a vote of such Member
      shall be considered the vote required for the purposes of the conduct of
      all business properly noticed even if such vote would otherwise require
      unanimity.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                If
      business cannot be conducted at a regular or special meeting due to the
      lack of a quorum, either Member may call the next meeting upon ten
      (10) days
      notice to the other Member.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Each
      notice of a meeting shall include an itemized agenda prepared by the
      Manager in the case of a regular meeting or by the Member calling the
      meeting in the case of a special meeting, but any matters may be
      considered if either Member adds the matter to the agenda at least twenty
      (20) days before the meeting or with the consent of the other
      Member.  The Manager shall prepare minutes of all meetings and
      shall distribute copies of such minutes to the other Member within thirty
      (30) days after the meeting.  Either Member may electronically
      record the proceedings of a meeting with the consent of the other
      Member.  The other Member shall sign and return or object to the
      minutes prepared by the Manager within thirty (30) days after receipt, and
      failure to do either shall be deemed acceptance of the minutes as prepared
      by the Manager.  The minutes, when signed or deemed accepted by
      both Members, shall be the official record of the decisions made by the
      Management Committee.  Decisions made at a Management Committee
      meeting shall be implemented in accordance with adopted Programs and
      Budgets.  If a Member timely objects to minutes proposed by the
      Manager, the members of the Management Committee shall seek, for a period
      not to exceed thirty (30) days from receipt by the Manager of notice of
      the objections, to agree upon minutes acceptable to both
      Members.  If the Management Committee does not reach agreement
      on the minutes of the meeting within such thirty (30) day period, the
      minutes of the meeting as prepared by the Manager together with the other
      Member’s proposed changes shall collectively constitute the record of the
      meeting.  If personnel employed in Operations, in addition to
      those who are already the representative member(s) of the Management
      Committee, are required to attend a Management Committee meeting,
      reasonable costs incurred in connection with such attendance shall be
      charged to the Business Account.  All other costs shall be paid
      by the Members individually.

              

      

       

      
        	
                6.4

              	
                Action Without Meeting in
      Person.  In lieu of meetings in person, the Management
      Committee may conduct meetings by telephone or video conference, so long
      as minutes of such

              

      

       

      
        
          
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      meetings
are prepared in accordance with Subsection 6.3(c).  The Management Committee may also
take actions in writing signed by all of its members.

       

      
        	
                6.5

              	
                Matters Requiring
      Approval.  Except as otherwise delegated to the Manager
      in Section 7.2, the Management Committee
      shall have exclusive authority to determine all matters related to overall
      policies, objectives, procedures, methods and actions under this
      Agreement, and to establish Programs and
  Budgets.

              

      

       

      ARTICLE
VII

       

      MANAGER

       

      
        	
                7.1

              	
                Appointment.  The
      Members hereby appoint TargetSub as the Manager with overall management
      responsibility for Operations until such time as TargetSub resigns as
      provided in Section 7.4 or defaults in
      the performance of its obligations set forth in Sections 5.4, 5.5, 5.7 or 5.8.  TargetSub shall resign as
      Manager if its Membership Interest (after TargetSub’s Initial Contribution
      is completed) is reduced below 50%.

              

      

       

      
        	
                7.2

              	
                Powers and Duties of
      Manager.  Subject to the terms and provisions of this
      Agreement, and in addition to other duties specified in this Agreement,
      the Manager shall have the following powers and duties, which shall be
      discharged in accordance with adopted Programs and
  Budgets.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                The
      Manager shall manage, direct and control Operations, and shall prepare and
      present to the Management Committee proposed Programs and Budgets as
      provided in Article VIII.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      Manager shall implement the decisions of the Management Committee, shall
      make all expenditures necessary to carry out adopted Programs, and shall
      promptly advise the Management Committee if it lacks sufficient funds to
      carry out its responsibilities under this
  Agreement.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Subject
      to the limitations of the Eligible Exploration Expenditures during the
      period of completing the TargetSub Initial Contribution (and, during that
      same period, the terms, form and substance of any contract subject to
      Management Committee approval), the Manager shall use reasonable efforts
      to purchase or otherwise acquire additional properties in the Area of
      Interest, the business and financial terms for such acquisition or
      purchase which shall be subject to unanimous approval by the Management
      Committee.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                The
      Manager shall use reasonable efforts to: (i) purchase or otherwise acquire
      all material, supplies, equipment, water, utility and transportation
      services required for Operations, such purchases and acquisitions to be
      made to the extent reasonably possible on the best terms available, taking
      into account all of the circumstances; (ii) obtain such customary
      warranties and guarantees as are available in connection with such
      purchases and acquisitions; and (iii) keep the Assets free and clear of
      all Encumbrances, except any Permitted Encumbrances and those existing at
      the time of, or created concurrent with, the acquisition of such Assets,
      or mechanic’s or materialmen’s liens (which shall be contested, released
      or discharged in a diligent matter) or Encumbrances specifically approved
      by the Management Committee.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                The
      Manager shall conduct such title examinations of the Company Properties
      and cure such title defects pertaining to the Company Properties as may be
      advisable in its reasonable
judgment.

              

      

       

      
        
          
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                (f)

              	
                The
      Manager shall: (i) make or arrange for all payments required by leases,
      licenses, permits, contracts and other agreements related to the Assets;
      (ii) pay all taxes, assessments and like charges on Operations and Assets
      except taxes determined or measured by a Member’s net income and shall
      otherwise promptly pay and discharge expenses incurred in Operations;
      provided, however, that if authorized by the Management Committee, the
      Manager shall have the right to contest (in the courts or otherwise) the
      validity or amount of any taxes, assessments or charges if the Manager
      deems them to be unlawful, unjust, unequal or excessive, or to undertake
      such other steps or proceedings as the Manager may deem reasonably
      necessary to secure a cancellation, reduction, readjustment or
      equalization thereof before the Manager shall be required to pay them, but
      in no event shall the Manager permit or allow title to the Assets to be
      lost as the result of the non-payment of any taxes, assessments or like
      charges; and (iii) do all other acts reasonably necessary to maintain the
      Assets.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                The
      Manager shall: (i) apply for all necessary permits, licenses and
      approvals; (ii) comply with all Laws; (iii) notify promptly the Management
      Committee of any allegations of substantial violation thereof; and (iv)
      prepare and file all reports or notices required for or as a result of
      Operations.  The Manager shall not be in breach of this
      provision if a violation has occurred in spite of the Manager’s good faith
      efforts to comply consistent with its standard of care under
      Section 7.3.  In the event of
      any such violation, the Manager shall timely cure or dispose of such
      violation on behalf of the Company through performance, payment of fines
      and penalties, or both, and the cost thereof shall be charged to the
      Business Account.

              

      

       

      
        	
                 
      

              	
                (h)

              	
                The
      Manager shall prosecute and defend, but shall not initiate without consent
      of the Management Committee, all litigation or administrative proceedings
      arising out of Operations.  A non-managing Member shall have the
      right to participate, at its own expense, in such litigation or
      administrative proceedings.  Any non-managing Member shall
      approve in advance any settlement involving payments, commitments or
      obligations in excess of $50,000 in cash or
      value.

              

      

       

      
        	
                 
      

              	
                (i)

              	
                The
      Manager shall, at all times, provide for the benefit of the Company,
      appropriate employment and workers’ compensation insurance and insurances
      under standard form insurance policies with companies acceptable to the
      Management Committee (specifically, with a Best’s Financial Rating of A-7,
      or higher) for comprehensive public liability and property damage with
      combined limits of not less than One Million Dollars ($1,000,000) per
      single occurrence, and Two Million Dollars ($2,000,000) in the aggregate
      for bodily injury and property damage; and for automobile insurance with
      combined limits of not less than One Million Dollars ($1,000,000) per
      single occurrence, and Two Million Dollars ($2,000,000) in the aggregate;
      and adequate and reasonable insurance against risk of fire and other risks
      ordinarily insured against in similar operations; and, additional
      insurances as may otherwise be determined from time to time by the
      Management Committee.  The Manager shall require of all
      third-party service providers similar insurance requirements, including
      proof of insurance and certificates of additional insured, for the
      Company, as may be required by the Management Committee.  The
      Manager shall not be permitted to implement self-insurance funding for the
      Company unless unanimously approved by the Management
      Committee.

              

      

       

      
        	
                 
      

              	
                (j)

              	
                The
      Manager may dispose of Assets, whether by abandonment, surrender, or
      Transfer in the ordinary course of business.  Without prior
      authorization from the Management Committee, however, the Manager shall
      not: (i) dispose of or transfer to itself or
an

              

      

       

      
        
          
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      Affiliate
Assets of any value, (ii) dispose of Assets in any one transaction (or in any
series of related transactions) having a value in excess of $50,000; (iii) enter
into any sales contracts or commitments for Product; (iv) begin a liquidation of
the Company; or (v) dispose of all or a substantial part of the Assets necessary
to achieve the purposes of the Company.

       

      
        	
                 
      

              	
                (k)

              	
                The
      Manager shall have the right to carry out its responsibilities hereunder
      through agents, Affiliates or independent contractors, for whose conduct
      the Manager will be responsible pursuant to its obligations of its
      standard of care.

              

      

       

      
        	
                 
      

              	
                (l)

              	
                The
      Manager shall perform or cause to be performed all assessment and other
      work, and shall pay all Governmental Fees required by Law in order to
      maintain the unpatented mining claims, mill sites and tunnel sites
      included within the Company Properties.  The Manager shall have
      the right to perform the assessment work required hereunder pursuant to an
      adopted Program and Budget.  The Manager shall not be liable on
      account of any determination by any court or governmental agency that the
      work performed by the Manager does not constitute the required annual
      assessment work or occupancy for the purposes of preserving or maintaining
      ownership of the claims, provided that the work done is pursuant to an
      adopted Program and Budget and is performed in accordance with the
      Manager’s standard of care under Section 7.3.  The Manager shall timely record
      with the appropriate county and file with the appropriate State, United
      States or other agency any required affidavits, notices of intent to hold
      and other documents in proper form attesting to the payment of
      Governmental Fees, the performance of assessment work or intent to hold
      the claims and sites, in each case in sufficient detail to reflect
      compliance with the requirements applicable to each claim and site and
      shall provide to Members sufficient documentation as proof of completion
      of such work, filings and payments at least thirty (30) days prior to the
      time such obligations are due in order to keep such claims in good
      standing.  The Manager shall not be liable on account of any
      determination by any court or governmental agency that any such document
      submitted by the Manager does not comply with applicable requirements,
      provided that such document is prepared and recorded or filed in
      accordance with the Manager’s standard of care under Section 7.3.

              

      

       

      
        	
                 
      

              	
                (m)

              	
                If
      authorized by the Management Committee, the Manager may: (i) locate, amend
      or relocate any unpatented mining claim or mill site or tunnel site, (ii)
      locate any fractions resulting from such amendment or relocation, (iii)
      apply for patents or mining leases or other forms of mineral tenure for
      any such unpatented claims or sites, (iv) abandon any unpatented mining
      claims for the purpose of locating mill sites or otherwise acquiring from
      the United States rights to the ground covered thereby, (v) abandon any
      unpatented mill sites for the purpose of locating mining claims or
      otherwise acquiring from the United States rights to the ground covered
      thereby, (vi) exchange with or convey to the United States any of the
      Company  Properties for the purpose of acquiring rights to the
      ground covered thereby or other adjacent ground, and (vii) convert any
      unpatented claims or mill sites into one or more leases or other forms of
      mineral tenure pursuant to any Law hereafter
  enacted.

              

      

       

      
        	
                 
      

              	
                (n)

              	
                The
      Manager shall keep and maintain all required accounting and financial
      records pursuant to the procedures of and in accordance with customary
      cost accounting practices in the mining industry and in conjunction with
      other provisions herein, including but not limited to Article IX, and
      shall ensure appropriate separation of accounts unless otherwise agreed by
      the Members.  The Manager shall keep and maintain all
      required

              

      

       

      
        
          
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      records,
make elections and prepare and file all federal and state tax returns or other
required tax forms, and perform the duties described in Exhibit E.

       

      
        	
                 
      

              	
                (o)

              	
                The
      Manager shall maintain Equity Accounts for each Member in the
      Company.  NFUR’s Equity Account shall be credited with its
      Initial Contribution, pursuant to Section 5.3 at the Effective
      Date.  TargetSub’s Equity Account shall be credited with the
      value of the contributions under Sections 5.4, 5.5 and 5.8 at the time that all such requirements
      are completed.  There shall be no credit to the Equity Account
      of TargetSub or change in its Membership Interest until all such Article V
      requirements are fulfilled, including those of Section 5.7.  Members shall be credited with
      amounts contributed by such Members under Section 5.10. Each Member’s Equity Account shall be
      charged with the cash and the fair market value of property distributed to
      such Member (net of liabilities assumed by such Member and liabilities to
      which such distributed property is subject).  Contributions and
      distributions shall include all cash contributions or
      distributions.

              

      

       

      
        	
                 
      

              	
                (p)

              	
                The
      Manager shall keep the Management Committee advised of all Operations by
      submitting in writing to the members of the Management Committee: (i)
      monthly progress reports that include statements of expenditures and
      comparisons of such expenditures to the adopted Budget; (ii) monthly
      summaries of data acquired; (iii) copies of reports concerning Operations;
      (iv) a detailed final report within sixty (60) days after completion of
      each Program and Budget, which shall include comparisons between actual
      and budgeted expenditures and comparisons between the objectives and
      results of Programs; and (v) such other reports as any member of the
      Management Committee may reasonably request. Subject to Article XVII, at
      all reasonable times the Manager shall provide the Management Committee,
      and designated representative of a non-managing Member access to, and the
      right to inspect and copy, at the Company’s cost and expense, copies of
      the Data and all maps, drill logs and other drilling data, core, pulps,
      reports, surveys, assays, analyses, production reports, operations,
      technical, accounting and financial records, and other Business
      Information, as it becomes available and to the extent preserved or kept
      by the Manager, subject to Article XVII.  In addition, the
      Manager shall allow the non-managing Member, at the latter’s sole risk,
      cost and expense, and subject to reasonable safety regulations, to inspect
      the Assets and Operations at all reasonable times, so long as the
      non-managing Member does not unreasonably interfere with
      Operations.

              

      

       

      
        	
                 
      

              	
                (q)

              	
                The
      Manager shall prepare an Environmental Compliance plan for all Operations
      consistent with the requirements of any applicable Laws or contractual
      obligations and shall include in each Program and Budget sufficient
      funding to implement the Environmental Compliance plan and to satisfy the
      financial assurance requirements of any applicable Law or contractual
      obligation pertaining to Environmental Compliance.  To the
      extent practical, the Environmental Compliance plan shall incorporate
      concurrent reclamation of Company Properties disturbed by
      Operations.

              

      

       

      
        	
                 
      

              	
                (r)

              	
                The
      Manager shall undertake to perform Continuing Obligations when and as
      economic and appropriate, whether before or after dissolution or
      termination of the Company.  The Manager shall have the right to
      delegate performance of Continuing Obligations to persons having
      demonstrated skill and experience in relevant disciplines.  As
      part of each Program and Budget submittal, the Manager shall specify in
      such Program and Budget the measures to be taken for performance of
      Continuing Obligations and the cost of such measures.  The
      Manager shall keep the other Member reasonably informed about
      the

              

      

       

      
        
          
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      Manager’s
efforts to discharge Continuing Obligations.  Authorized
representatives of each Member shall have the right from time to time to enter
the Company Properties to inspect work directed toward satisfaction of
Continuing Obligations and audit books, records, and accounts related
thereto.

       

      
        	
                 
      

              	
                (s)

              	
                The
      Manager shall undertake all other activities reasonably necessary to
      fulfill the foregoing, and to implement the policies, objectives,
      procedures, methods and actions determined by the Management Committee
      pursuant to Section 6.1.

              

      

       

      
        	
                7.3

              	
                Standard of
      Care.  The Manager shall discharge its duties under this
      Agreement and more specifically Section 7.2 and conduct all Operations in a good,
      workmanlike and efficient manner, in accordance with sound mining and
      other applicable industry standards and practices, and in accordance with
      Laws and with the terms and provisions of leases, licenses, permits,
      contracts and other agreements pertaining to the Assets.  The
      Manager shall not be liable to the other Member for any act or omission
      resulting in damage or loss except to the extent caused by or attributable
      to the Manager’s breach of covenants or obligations herein, willful
      misconduct or gross negligence.  The Manager shall not be in
      default of any of its duties under Section 7.2 if its inability or failure to perform
      results from the failure of another Member to perform acts or to
      contribute amounts required of it by this
  Agreement.

              

      

       

      
        	
                7.4

              	
                Resignation; Deemed Offer to
      Resign.  The Manager may resign upon not less than
      three (3) months’ prior
      Notice to the other Member, in which case the other Member may elect to
      become the new Manager by notice to the resigning Member within thirty
      (30) days after the Notice of resignation.  If any of the
      following shall occur, the Manager shall be deemed to have resigned upon
      the occurrence of the event described in each of the following
      Subsections, with the successor Manager to be appointed by the other
      Member at a subsequently called meeting of the Management Committee, at
      which the Manager, if a Member, shall not be entitled to
      vote.  The other Member may appoint itself or a third party as
      the Manager.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                As
      to TargetSub, as the initial Manager, if its Membership Interest after
      completing its Initial Contribution becomes less than
  50%;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      Manager fails to perform a material obligation imposed upon it under this
      Agreement and, except for the obligations of TargetSub under
      Section 5.5 or Section 5.7, such failure continues for a period of
      sixty (60) days after notice from the other Member demanding
      performance;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                The
      Manager fails to pay or contest in good faith Company bills and debts as
      such obligations become due;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                A
      receiver, liquidator, assignee, custodian, trustee, sequestrator or
      similar official for a substantial part of its assets is appointed and
      such appointment is neither made ineffective nor discharged within sixty
      (60) days after the making thereof, or such appointment is consented to,
      requested by, or acquiesced in by the
Manager;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                The
      Manager commences a voluntary case under any applicable bankruptcy,
      insolvency or similar Law now or hereafter in effect; or consents to the
      entry of an order for relief in an involuntary case under any such
      applicable Law or to the appointment of or taking possession by a
      receiver, liquidator, assignee, custodian, trustee, sequestrator or other
      similar official of any substantial part of its assets; or makes a general
      assignment for the

              

      

       

      
        
          
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      benefit
of creditors; or takes corporate or other action in furtherance of any of the
foregoing; or

       

      
        	
                 
      

              	
                (f)

              	
                Entry
      is made against the Manager of a judgment, decree or order for relief
      affecting its ability to serve as Manager by a court of competent
      jurisdiction in an involuntary case commenced under any applicable
      bankruptcy, insolvency or other similar law of any jurisdiction now or
      hereafter in effect.

              

      

       

      Under
Subsections (d), (e) or (f) above, the appointment of a successor Manager shall
be deemed to pre-date the event causing a deemed resignation.

       

      
        	
                7.5

              	
                Payments to
      Manager.  The Manager shall be entitled to an
      administrative management fee equal to 10% of all Eligible Exploration
      Expenditures made in relation to the Company Properties, with such fees
      credited as Eligible Exploration Expenditures for TargetSub immediately
      prior to each anniversary of the Effective Date during the earn-in
      period.  Following the acquisition of the 75% Membership
      Interest by TargetSub, any management or administrative fee to be paid to
      the Manager shall be a part of that year’s Program and
    Budget.

              

      

       

      
        	
                7.6

              	
                Transactions With
      Affiliates.  If the Manager engages Affiliates to provide
      services hereunder, it shall do so on terms no less favorable than would
      be the case in arm’s length transactions with unrelated
      persons.

              

      

       

      
        	
                7.7

              	
                Activities During
      Deadlock.  Exploration and
      Development: If the Management Committee for any reason fails
      to adopt an Exploration, Pre-Feasibility Study, Feasibility Study or
      Development Program and Budget, the Manager shall continue Operations at
      levels sufficient to maintain the Company Properties.  Production Start-up
      and Expansion Mining Activities: If the Management Committee
      for any reason fails to adopt an initial Mining Program and Budget or any
      Expansion or Modification Programs and Budgets, the Manager shall continue
      Operations at levels sufficient to maintain the then-current Operations
      and Company Properties.  During Mining and
      Reclamation Activities: If the Management Committee for any
      reason fails to adopt Programs and Budgets subsequent to the initial
      Mining Program and Budget, the Manager shall continue Operations at levels
      comparable with the last-adopted Mining Program and Budget.  In
      addition, the Program and Budget shall be sufficient to conduct mining
      and/or reclamation activities that allow the Company Properties and
      Operations to be maintained and reclamation to progress as required by all
      State and Federal Laws, permits and regulations.  All of the
      foregoing shall be subject to the contrary direction of the Management
      Committee and the receipt of necessary
funds.

              

      

       

      ARTICLE
VIII

       

      PROGRAMS
AND BUDGETS

       

      
        	
                8.1

              	
                Initial Program and
      Budget. The Initial Program and Budget will be voted on at the
      first Management Committee meeting to be held within thirty (30) days of
      the Effective Date.

              

      

       

      
        	
                8.2

              	
                Operations Pursuant to Programs
      and Budgets. Except as otherwise provided in Section 8.13, and Article XII, Operations shall be
      conducted, expenses shall be incurred, and Assets shall be acquired only
      pursuant to adopted Programs and Budgets.  Every Program and
      Budget adopted pursuant to this Agreement shall provide for accrual of
      reasonably anticipated Environmental Compliance expenses for all
      Operations contemplated under the Program and
  Budget.

              

      

       

      
        
          
            50538524.8

          

           

        

        
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                8.3

              	
                Presentation of Programs and
      Budgets. Proposed Programs and Budgets shall be prepared by the
      Manager for a period of one (1) year or any other period as approved by
      the Management Committee, and shall be submitted to the Management
      Committee for review and consideration.  All proposed Programs
      and Budgets may include Exploration, Pre-Feasibility Studies, Feasibility
      Study, Development, Mining and Expansion or Modification Operations
      components, or any combination thereof, and shall be reviewed and adopted
      upon a vote of the Management Committee in accordance with
      Sections 6.2 and 8.4.  Each Program and Budget adopted
      by the Management Committee, regardless of length, shall be reviewed at
      least once a year at a meeting of the Management
      Committee.  During the period encompassed by any Program and
      Budget, and at least sixty (60) days prior to its expiration, a proposed
      Program and Budget for the succeeding period shall be prepared by the
      Manager and submitted to the Management Committee for review and
      consideration.

              

      

       

      
        	
                 
      

              	
                Before
      or at the time of completion of TargetSub’s Initial Contribution, the
      Manager shall prepare and submit to the Management Committee for approval
      a schedule of charges, generally, which, pursuant to the Programs and
      Budgets, may be charged to the Business Account by the
      Manager.  Categories of expenses which should be considered for
      inclusion in such a schedule of charges may include but not be limited
      to:  property acquisition and related payments; labor;
      materials; equipment and supplies; contract services; insurances; damages
      and losses; legal and regulatory expenses and audits; taxes; accounting
      and administrative charges which shall not duplicate the management or
      administrative fee, if any, agreed upon for the Manager; and other
      categories as may be agreed.

              

      

       

      
        	
                8.4

              	
                Review and Adoption of Proposed
      Programs and Budgets. Within thirty (30) days after submission of a
      proposed Program and Budget, each Member shall submit in writing to the
      Management Committee:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Notice
      that the Member approves any or all of the components of the proposed
      Program and Budget;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Modifications
      proposed by the Member to the components of the proposed Program and
      Budget; or

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Notice
      that the Member rejects any or all of the components of the proposed
      Program and Budget.

              

      

       

      If a
Member fails to give any of the foregoing responses within the allotted time,
the failure shall be deemed to be a vote by the Member for adoption of the
Manager’s proposed Program and Budget.  If a Member makes a timely
submission to the Management Committee pursuant to Subsections 8.4(a), (b) or (c), then the Manager working with the other Member
shall seek for a period of time not to exceed twenty (20) days to develop a
complete Program and Budget acceptable to both Members.  The Manager
shall then call a Management Committee meeting in accordance with
Section 6.3 for purposes of reviewing and
voting upon the proposed Program and Budget.  Any such Program and
Budget shall require unanimous approval of the Management
Committee.

       

      
        	
                8.5

              	
                Election to
      Participate.  After TargetSub has acquired the 75%
      Membership Interest, Member elections to participate in the funding of
      Programs and Budgets shall be pursuant to the following
      procedures:

              

      

       

      
        
          
            50538524.8

          

           

        

        
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                (a)

              	
                By
      notice to the Management Committee within twenty (20) days after the final
      vote adopting a Program and Budget, and notwithstanding its vote
      concerning adoption of a Program and Budget, a Member may elect to
      participate in the approved Program and Budget: (i) in proportion to its
      respective Membership Interest, (ii) in some lesser amount than its
      respective Membership Interest, or (iii) not at all. In case of an
      election under Subsections 8.5(a)(ii) or
      (iii), and the other Member elects to fund all or any portion of the
      deficiency, its Membership Interest shall be recalculated as provided in
      Subsection 8.5(b) below, with dilution
      effective as of the first day of the Program Period for the adopted
      Program and Budget.  If a Member fails to so notify the
      Management Committee of the extent to which it elects to participate, the
      Member shall be deemed to have elected to contribute to such Program and
      Budget in proportion to its respective Membership Interest as of the
      beginning of the Program Period.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                If
      a Member elects to contribute to an adopted Program and Budget some lesser
      amount than in proportion to its respective Membership Interest, or not at
      all, and the other Member elects to fund all or any portion of the
      deficiency, the Membership Interest of the Reduced Member shall be
      provisionally recalculated as
follows:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                for
      an election made before Payout, by dividing: (A) the sum of (1) the amount
      credited to the Reduced Member’s Equity Account with respect to its
      Initial Contribution under Section 5.3
      or earned Membership Interest pursuant to Section 5.4, (2) the total of all of the Reduced
      Member’s contributions under Sections 5.10 and 8.5, and
      (3) the amount, if any, the Reduced Member elects to contribute to the
      adopted Program and Budget; by (B) the sum of (1), (2) and (3) above for
      both Members; and then multiplying the result by one hundred;
      or

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                for
      an election made after Payout, by reducing its Membership Interest in an
      amount equal to two times the amount by which it would have been reduced
      under Subsection 8.5(b)(i) if such
      election were made before Payout.

              

      

       

      The
Membership Interest of the other Member shall be increased by the amount of the
reduction in the Membership Interest of the Reduced Member, and if the other
Member elects not to fund the entire deficiency, the Manager shall adjust the
Program and Budget to reflect the funds available.

       

      
        	
                 
      

              	
                (c)

              	
                Whenever
      the Membership Interests are recalculated pursuant to this
      Subsection 8.5, (i) the Equity Accounts
      of both Members shall be revised to bear the same ratio to each other as
      their recalculated Membership Interests; and (ii) the portion of Capital
      Account attributable to the reduced Membership Interest of the Reduced
      Member shall be transferred to the other
Member.

              

      

       

      
        	
                8.6

              	
                Recalculation or Restoration of
      Reduced Interest Based on Actual
  Expenditures.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                If
      a Member makes an election under Subsection 8.5(b), then within 60 days after the conclusion
      of such Program and Budget, the Manager shall report the total amount of
      money expended plus the total obligations incurred by the Manager for such
      Budget.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                If
      the Manager expended or incurred obligations that were more or less than
      the adopted Budget, the Membership Interests shall be recalculated
      pursuant to Subsection 8.5(b) by
      substituting each Member’s actual contribution to the adopted Budget for
      that Member’s

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 29
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      estimated
contribution at the time of the Reduced Member’s election under
Subsection 8.5(a).

       

      
        	
                 
      

              	
                (c)

              	
                If
      the Manager expended or incurred obligations of less than 80% of the adopted
      Budget, within ten days of receiving the Manager’s report on expenditures,
      the Reduced Member may notify the other Member of its election to
      reimburse the other Member for the difference between any amount
      contributed by the Reduced Member to such adopted Program and Budget and
      the Reduced Member’s proportionate share (at the Reduced Member’s former
      Membership Interest) of the actual amount expended or incurred for the
      Program, plus interest on the difference accruing at the Prime Rate plus 5
      percentage points.  The Reduced Member shall deliver the
      appropriate amount (including interest) to the other Member with such
      notice.  Failure of the Reduced Member to so notify and tender
      such amount shall result in dilution occurring in accordance with this
      Article VIII and shall bar the Reduced Member from its rights under this
      Subsection 8.6(c) concerning the
      relevant adopted Program and
Budget.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                All
      recalculations under this Section 8.6
      shall be effective as of the first day of the Program Period for the
      Program and Budget.  The Manager, on behalf of both Members,
      shall make such reimbursements, reallocations of Products, contributions
      and other adjustments as are necessary so that, to the extent possible,
      each Member will be placed in the position it would have been in had its
      Membership Interests as recalculated under this Section been in effect
      throughout the Program Period for such Program and
  Budget.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Whenever
      the Membership Interests are recalculated pursuant to this Section, (i)
      the Member’s Equity Accounts shall be revised to bear the same ratio to
      each other as their Recalculated Membership Interests; and (ii) the
      portion of Capital Account attributable to the reduced Membership Interest
      of the Reduced Member shall be transferred to the other
      Member.

              

      

       

      
        	
                8.7

              	
                Pre-Feasibility Study Program
      and Budgets.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                At
      such time as either Member is of the good faith and reasonable opinion
      that economically viable Mining Operations may be possible on the Company
      Properties, the Member may propose to the Management Committee that a
      Pre-Feasibility Study Program and Budget, or a Program and Budget that
      includes Pre-Feasibility Studies, be prepared.  Such proposal
      shall be made in writing to the other Member, shall reference the Data
      upon which the proposing Member bases its opinion, and shall call a
      meeting of the Management Committee pursuant to Section 6.3.  If such proposal is adopted by
      the Management Committee, the Manager shall prepare or have prepared a
      Pre-Feasibility Study Program and Budget as approved by the Management
      Committee and shall submit the same to the Management Committee within
      thirty (30) days following adoption of the
  proposal.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Pre-Feasibility
      Studies may be conducted by the Manager, Feasibility Contractors, or both,
      or may be conducted by the Manager and audited by Feasibility Contractors,
      as the Management Committee determines.  A Pre-Feasibility Study
      Program shall include the work necessary to prepare and complete the
      Pre-Feasibility Study approved in the proposal adopted by the Management
      Committee, which may include some or all of the
  following:

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 30
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                (i)

              	
                analyses
      of various alternatives for mining, processing and beneficiation of
      Products;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                analyses
      of alternative mining, milling, and production
  rates;

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                analyses
      of alternative sites for placement of facilities (i.e., water supply
      facilities, transport facilities, reagent storage, offices, shops,
      warehouses, stock yards, explosives storage, handling facilities, housing,
      public facilities);

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                analyses
      of alternatives for waste treatment and handling (including a description
      of each alternative of the method of tailings disposal and the location of
      the proposed disposal site);

              

      

       

      
        	
                 
      

              	
                (v)

              	
                estimates
      of recoverable proven and probable reserves of Products and of related
      substances, in terms of technical and economic constraints (extraction and
      treatment of Products), including the effect of grade, losses, and
      impurities, and the estimated mineral composition and content thereof, and
      review of mining rates commensurate with such
  reserves;

              

      

       

      
        	
                 
      

              	
                (vi)

              	
                analyses
      of environmental impacts of the various alternatives, including an
      analysis of the permitting, environmental liability and other
      Environmental Law implications of each alternative, and costs of
      Environmental Compliance for each
alternative;

              

      

       

      
        	
                 
      

              	
                (vii)

              	
                conduct
      of appropriate metallurgical tests to determine the efficiency of
      alternative extraction, recovery and processing techniques, including an
      estimate of water, power, and reagent consumption
      requirements;

              

      

       

      
        	
                 
      

              	
                (viii)

              	
                conduct
      of hydrology and other studies related to any required dewatering;
      and

              

      

       

      
        	
                 
      

              	
                (ix)

              	
                conduct
      of other studies and analyses approved by the Management
      Committee.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                The
      Manager shall have the discretion to base its and any Feasibility
      Contractors’ Pre-Feasibility Study on the cumulative results of each
      discipline studied, so that if a particular portion of the work would
      result in the conclusion that further work based on these results would be
      unwarranted for a particular alternative, the Manager shall have no
      obligation to continue expenditures on other Pre-Feasibility Studies
      related solely to such alternative.

              

      

       

      
        	
                8.8

              	
                Completion of Pre-Feasibility
      Studies and Selection of Approved Alternatives. As soon as
      reasonably practical following completion of all Pre-Feasibility Studies
      required to evaluate fully the alternatives studied pursuant to
      Pre-Feasibility Programs, the Manager shall prepare a report summarizing
      all Pre-Feasibility Studies and shall submit the same to the Management
      Committee. Such report shall incorporate the
  following:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                the
      results of the analyses of the alternatives and other matters evaluated in
      the conduct of the Pre-Feasibility
Programs;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                reasonable
      estimates of capital costs for the Development and start-up of the mine,
      mill and other processing and ancillary facilities required by the
      Development and Mining alternatives evaluated (based on flow sheets,
      piping and instrumentation diagrams,
and

              

      

       

      
        
          
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      other
major engineering diagrams), which cost estimates shall include reasonable
estimates of:

       

      
        	
                 
      

              	
                (i)

              	
                capitalized
      pre-stripping expenditures, if an open pit or surface mine is
      proposed;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                expenditures
      required to purchase, construct and install all machinery, equipment and
      other facilities and infrastructure (including contingencies) required to
      bring a mine into Commercial Production, including an analysis of costs of
      equipment or supply contracts in lieu of Development costs for each
      Development and Mining alternative
evaluated;

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                expenditures
      required to perform all other related work required to commence Commercial
      Production of Products and, if applicable, process Products (including
      reasonable estimates of working capital requirements);
  and

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                all
      other direct and indirect costs and general and administrative expenses
      that may be required for a proper evaluation of the Development and Mining
      alternatives and annual production levels evaluated.  The
      capital cost estimates shall include a schedule of the timing of the
      estimated capital requirements for each
  alternative;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                a
      reasonable estimate of the annual expenditures required for the first year
      of Operations after completion of the capital program described in
      Subsection 8.8(b) for each Development
      alternative evaluated, and for subsequent years of Operations, including
      estimates of annual production, processing, administrative, operating and
      maintenance expenditures, taxes (other than income taxes), working capital
      requirements, royalty and purchase obligations, equipment leasing or
      supply contract expenditures, work commitments, Environmental Compliance
      costs, post Operations Environmental Compliance and Continuing Obligations
      funding requirements and all other anticipated costs of such
      Operations.  This analysis shall also include an estimate of the
      number of employees required to conduct such Operations for each
      alternative;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                a
      review of the nature, extent and rated capacity of the mine, machinery,
      equipment and other facilities preliminarily estimated to be required for
      the purpose of producing and marketing Products under each Development and
      Mining alternative analyzed;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                an
      analysis (and sensitivity analyses reasonably requested by either Member),
      based on various target rates of return and price assumptions requested by
      either Member, of whether it is technically, environmentally, and
      economically feasible to place a prospective ore body or deposit within
      the Company Properties into Commercial Production for each of the
      Development and Mining alternatives analyzed (including a discounted cash
      flow rate of return investment analysis for each alternative and net
      present value estimate using various discount rates requested by either
      Member); and

              

      

       

      
        	
                 
      

              	
                (f)

              	
                such
      other information as the Management Committee deems
      appropriate.

              

      

       

      Within
thirty (30) days after delivery of the Pre-Feasibility Study summary to the
Members, a Management Committee meeting shall be convened for the purposes of
reviewing the Pre-Feasibility Study summary and selecting one or more Approved
Alternatives, if any.

       

      
        	
                8.9

              	
                Programs and Budgets for
      Feasibility Study.  Within sixty (60) days following
      the selection of an Approved Alternative, the Manager shall submit to the
      Management Committee a

              

      

       

      
        
          
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      Program
and a Budget, which shall include necessary Operations, for the preparation of a
Feasibility Study.  A Feasibility Study may be prepared by the
Manager, Feasibility Contractors, or both, or may be prepared by the Manager and
audited by Feasibility Contractors, as the Management Committee
determines.

       

      
        	
                8.10

              	
                Development Programs and
      Budgets; Project Financing.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Unless
      otherwise determined by the Management Committee, the Manager shall not
      submit to the Management Committee a Program and Budget including
      Development of the mine described in a completed Feasibility Study until
      sixty (60) days following the receipt by Manager of the Feasibility
      Study.  The Program and Budget, which includes Development of
      the mine described in the completed Feasibility Study, shall be based on
      the estimated cost of Development described in the Feasibility Study for
      the Approved Alternative, unless otherwise directed by the Management
      Committee.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Promptly
      following adoption of the Program and Budget, which includes Development
      as described in a completed Feasibility Study, but in no event more than
      forty-five (45) days thereafter, the Manager shall submit to the
      Management Committee a report on material bids received for Development
      work (“Bid
      Report”).  If bids described in the Bid Report result in
      the aggregate cost of Development work exceeding 10% of the Development
      cost estimates that formed the basis of the Development component of the
      adopted Program and Budget, the Program and Budget, which includes
      relevant Development, shall be deemed to have been resubmitted to the
      Management Committee based on the aggregate costs as described in the Bid
      Report on the date of receipt of the Bid Report and shall be reviewed and
      adopted in accordance with Sections 6.2
      and 8.4.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                If
      the Management Committee approves the Development of the mine described in
      a Feasibility Study and also decides to seek Project Financing for such
      mine, each Member, in conjunction with the Company, shall, at its own
      cost, cooperate in seeking to obtain Project Financing for such mine;
      provided, however, that all fees, charges and costs (including attorneys
      and technical consultants fees) paid to the Project Financing lenders
      shall be borne by the Company, unless such fees are capitalized as a part
      of the Project Financing.

              

      

       

      
        	
                8.11

              	
                Expansion or Modification
      Programs and Budgets.  Any Program and Budget proposed by
      the Manager involving Expansion or Modification shall be based on a
      Feasibility Study prepared by the Manager, Feasibility Contractors, or
      both, or prepared by the Manager and audited by Feasibility Contractors,
      as the Management Committee determines.  The Program and Budget,
      which include Expansion or Modification, shall be submitted for review and
      approval by the Management Committee within thirty (30) days following
      receipt by the Manager of such Feasibility
  Study.

              

      

       

      
        	
                8.12

              	
                Budget Overruns; Program
      Changes. For Programs and Budgets adopted after completion of
      TargetSub’s Initial Contribution, the Manager shall immediately notify the
      Management Committee of any material departure from an adopted Program and
      Budget.  If the Manager exceeds an adopted Budget by more than
      20% in the aggregate, then the excess over 20%, unless directly caused by
      an emergency or unexpected expenditure made pursuant to Section 8.13 or unless otherwise authorized or ratified
      by the Management Committee, shall be the sole responsibility of the
      Manager and such excess shall not be included in the calculations of the
      Membership Interests nor deemed a contribution under this
      Agreement.  Budget overruns
of

              

      

       

      
        
          
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      20% or
less in the aggregate shall be borne by the Members in proportion to their
respective Membership Interests.

       

      
        	
                8.13

              	
                Emergency or Unexpected
      Expenditures. In case of emergency, the Manager may take any
      reasonable action it deems necessary to protect life or property, to
      protect the Assets or to comply with Laws.  The Manager may make
      reasonable expenditures on behalf of the Company for unexpected events
      that are beyond its reasonable control and that do not result from a
      breach by it of its standard of care.  The Manager shall
      promptly notify the Management Committee of the emergency or unexpected
      expenditures.  During the period of time during which TargetSub
      is earning the 75% Membership Interest, if TargetSub, as Manager, makes
      emergency or unexpected expenditures, such expenditures, if thereafter
      approved by the Management Committee, shall be treated as Eligible
      Exploration Expenditures.  After TargetSub has acquired the 75%
      Membership Interest, the Manager shall be reimbursed for all such
      emergency or unexpected expenditures made in behalf of the Company if such
      expenditures did not come from the Business
  Account.

              

      

       

      ARTICLE
IX

       

      ACCOUNTS
AND SETTLEMENTS

       

      
        	
                9.1

              	
                General Accounting and
      Monthly
      Statements.  After completion of TargetSub’s Initial
      Contribution, the Manager shall promptly submit to the Management
      Committee monthly statements of account reflecting in reasonable detail
      the charges and credits to the Business Account during the preceding
      month.  The Manager shall maintain detailed and comprehensive
      cost accounting records, including general ledgers, supporting and
      subsidiary journals, invoices, check and other customary documentation,
      sufficient to provide a record of revenues and expenditures and periodic
      statements of financial position and the results of Operations for
      managerial, tax, regulatory or other financial, regulatory, or legal
      reporting purposes related to the Company.  Such records shall
      be retained for the duration of the period allowed the Members for audit
      or the period necessary to comply with tax or other regulatory
      requirements.  The records shall reflect all obligations,
      advances and credits to Members.

              

      

       

      
        	
                9.2

              	
                Cash Calls. On the basis
      of each adopted Program and Budget after completion of TargetSub’s Initial
      Contribution, the Manager shall submit prior to the last day of each month
      a billing for estimated cash requirements for the next
      month.  Within ten (10) days after receipt of each billing, or a
      billing made pursuant to Section 8.13,
      each Member shall advance its proportionate share of such cash
      requirements.  The Manager shall record all funds received in
      the Business Account.  The Manager shall at all times maintain a
      cash balance approximately equal to the rate of disbursement for up to
      thirty (30) days.  All funds in excess of immediate cash
      requirements shall be invested by the Manager for the benefit of the
      Company in cash management accounts and investments selected at the
      discretion of the Manager, which accounts may include, but are not limited
      to, money market investments and money market
  funds.

              

      

       

      
        	
                 
      

              	
                Payment
      of any such billings by either Member, including the Manager, shall not
      prejudice such Member’s right to protest or question the correctness
      thereof for a period not to exceed six (6) months following the calendar
      year during which such billings were received by such
      Member.  All written exceptions to and claims upon the Manager
      for incorrect charges, billings or statements shall be made upon the
      Manager within such six (6) months
period.

              

      

       

      
        	
                9.3

              	
                Failure to Meet Cash
      Calls. A Member that fails to meet cash calls in the amount and at
      the times specified in Section 9.2 shall
      be in default, and the amounts of the defaulted cash call shall bear
      interest from the date due at an annual rate equal to 5 percentage points
      over the Prime

              

      

       

      
        
          
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      Rate, but
in no event shall the rate of interest exceed the maximum permitted by
Law.  Such interest shall accrue to the benefit of and be payable to
the non-defaulting Member, but shall not be deemed as amounts contributed by the
non-defaulting Member in the event dilution occurs in accordance with Article
VIII.  In addition to any other rights and remedies available to it by
Law, the non-defaulting Member shall have those other rights, remedies, and
elections specified in Sections 9.4 and 9.5, which rights and remedies and elections shall not
be duplicative or cumulative of any other rights or remedies in this Agreement,
but shall be understood to be alternatives.

       

      
        	
                9.4

              	
                Cover
      Payment.  If a Member defaults in making a contribution
      or cash call required by an adopted Program and Budget, the non-defaulting
      Member may, but shall not be obligated to, advance some portion or the
      entire amount in default on behalf of the defaulting Member (a “Cover
      Payment”).  Each and every Cover Payment shall constitute
      a demand loan bearing interest from the date of the advance at the rate
      provided in Section 9.3.  If
      more than one Cover Payment is made, the Cover Payments shall be
      aggregated and the rights and remedies described herein pertaining to an
      individual Cover Payment shall apply to the aggregated Cover Payments. The
      failure to repay such loan upon demand shall be a
  default.

              

      

       

      
        	
                9.5

              	
                Remedies. Except for
      TargetSub’s obligations pursuant to Subsections 5.5(a) and 5.7(a),
      the Members acknowledge that if either Member defaults in making a
      contribution required by Section 5.10 or
      a cash call, or in repaying a loan, as required under Sections 9.2, 9.3 or 9.4, whether or not a Cover Payment is made, it
      will be difficult to measure the damages resulting from such default (it
      being hereby understood and agreed that the Members have attempted to
      determine such damages in advance and determined that the calculation of
      such damages cannot be ascertained with reasonable
      certainty).  Both Members acknowledge and recognize that the
      damage to the non-defaulting Member could be significant.  In
      the event of such default, as reasonable liquidated damages, the
      non-defaulting Member may, with respect to any such default not cured
      within thirty (30) days after notice to the defaulting Member of such
      default, elect any of the following remedies by giving notice to the
      defaulting Member.  Such election may be made with respect to
      each failure to meet a cash call relating to a Program and Budget,
      regardless of the frequency of such cash calls, provided such cash calls
      are made in accordance with Section 9.2.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                The
      defaulting Member grants to the non-defaulting Member a power of sale as
      to all or any portion of its Membership Interest that is subject to the
      lien and security interest granted in Section 5.14 (whether or not such lien and security
      interest has been perfected), upon a default under Sections 9.3 or 9.4.  Such power shall be exercised in
      the manner provided by applicable Law or otherwise in a commercially
      reasonable manner and upon reasonable notice.  If the
      non-defaulting Member elects to enforce the lien or security interest
      pursuant to the terms of this Subsection, the defaulting Member shall be
      deemed to have waived any available right of redemption, any required
      valuation or appraisal of the secured property prior to sale, any
      available right to stay execution or to require a marshalling of assets,
      and any required bond in the event a receiver is appointed, and the
      defaulting Member shall be liable for any
  deficiency.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                The
      non-defaulting Member may elect to have the defaulting Member’s Membership
      Interest diluted or eliminated as
follows:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                For
      a default occurring before Payout relating to a Program and Budget
      covering in whole or in part Exploration, Pre-Feasibility Study or
      Feasibility Study Operations, the Reduced Member’s Membership Interest
      shall be recalculated by dividing: (X) the sum of (1) the value of the
      Reduced Member’s Initial Contribution
under

              

      

       

      
        
          
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      Section 5.3 or earned Membership Interest under
Section 5.4, (2) the total of all of the
Reduced Member’s contributions under Sections 5.10 and 8.5, and (3) the
amount, if any, the Reduced Member contributed to the adopted Program and Budget
with respect to which the default occurred; by (Y) the sum of (1), (2) and (3)
above for both Members; and then multiplying the result by one
hundred.  For such a default occurring after Payout, the Reduced
Member’s Membership Interest shall be reduced in an amount equal to two (2)
times the amount by which it would have been reduced if such default had
occurred before Payout.  For such a default, whether occurring before
or after Payout, the Recalculated Membership Interest shall then be further
reduced:

       

      
        	
                 
      

              	
                (1)

              	
                for
      a default relating exclusively to an Exploration Program and Budget, by
      multiplying the Recalculated Membership Interest by the following
      percentage: 95%; or

              

      

       

      
        	
                 
      

              	
                (2)

              	
                for
      a default relating to a Program and Budget covering in whole or in part
      Pre-Feasibility Study and/or Feasibility Study Operations, by multiplying
      the Recalculated Membership Interest by the following percentage:
      90%.

              

      

       

      The
Membership Interest of the other Member shall be increased by the amount of the
reduction in the Membership Interest of the Reduced Member, including the
further reduction under Subsections  9.5(b)(i)(1)or (2)
..

       

      
        	
                 
      

              	
                (ii)

              	
                For
      a default relating to a Program and Budget covering in whole or in part
      Development or Mining, at the non-defaulting Member’s election, the
      defaulting Member shall be deemed to have withdrawn and to have
      automatically relinquished its interest in the Company to the
      non-defaulting Member; provided, however, the
      defaulting Member shall have the right to receive only from 5% of Net
      Proceeds, if any, and not from any other source, an amount equal to
      90% of the
      defaulting Member’s Equity Account balance at the time of such default,
      payable as contemplated in Section 5.12.  Upon such default, the
      defaulting Member shall thereafter have no further right, title or
      interest in the Company except payment as set out in this
      subsection.

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                Dilution
      under this Subsection 9.5(b) shall be
      effective as of the date of the original default, and Section 8.6 shall not apply.  The amount of
      any Cover Payment under Section 9.4 and
      interest thereon, or any interest accrued in accordance with
      Section 9.3, shall be deemed to be
      amounts contributed by the non-defaulting Member, and not as amounts
      contributed by the defaulting
Member.

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                Whenever
      the Membership Interests are recalculated pursuant to this
      Subsection 9.5(b), (A) the Equity
      Accounts of both Members shall be adjusted to bear the same ratio to each
      other as their recalculated Membership Interests; and (B) the portion of
      Capital Account attributable to the reduced Membership Interest of the
      Reduced Member shall be transferred to the other
  Member.

              

      

       

      
        	
                 
      

              	
                (v)

              	
                If
      a Member has defaulted in meeting a cash call or repaying a loan, and if
      the non-defaulting Member has made a Cover Payment, then, in addition to a
      reduction in the defaulting Member’s Membership Interest effected pursuant
      to Subsection 9.5(b), the non-defaulting
      Member shall have the right, if the

              

      

       

      
        
          
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      indebtedness
arising from a default or Cover Payment is not discharged within 60 days of
the default and upon not less than thirty (30) days advance notice to the
defaulting Member, to elect to purchase all the right, title, and interest,
whenever acquired or arising, of the defaulting Member in the Company, including
but not limited to its Membership Interest or interest in Net Proceeds, together
with all proceeds from and accessions of the foregoing (collectively the “Defaulting Member’s Entire
Interest”) at a purchase price equal to 90% of the fair market value
thereof as determined by a qualified independent appraiser appointed by the
non-defaulting Member.  If the defaulting Member conveys notice of
objection to the person so appointed within ten (10) days after receiving notice
thereof, then an independent and qualified appraiser shall be appointed by the
joint action of the appraiser appointed by the non-defaulting Member and a
qualified independent appraiser appointed by the defaulting Member; provided, however, that if
the defaulting Member fails to designate a qualified independent appraiser for
such purpose within ten (10) days after giving notice of such objection, then
the person originally designated by the non-defaulting Member shall serve as the
appraiser; provided
further, that if the appraisers appointed by each of the Members fail to
appoint a third qualified independent appraiser within five (5) days after the
appointment of the last of them, then an appraiser shall be appointed by a judge
of a court of competent jurisdiction in the state in which the Company is
situated upon the application of either Member.  There shall be
withheld from the purchase price payable, upon transfer of the Defaulting
Member’s Entire Interest, the amount of any Cover Payment under Section 9.4 and unpaid interest thereon to the date of such
transfer, or any unpaid interest accrued in accordance with Section 9.3 to the date of such transfer.  Upon
payment of such purchase price, the defaulting Member shall be deemed to have
relinquished all of the Defaulting Member’s Entire Interest to the
non-defaulting Member, but shall remain liable to the extent provided in
Section 5.13.

       

      
        	
                9.6

              	
                Audits. 

              

      

       

      
        	
                 
      

              	
                (a)

              	
                After
      completion of TargetSub’s Initial Contribution, within 60 days after
      the end of each calendar year, at the request of a Member, an audit shall
      be completed by certified public accountants selected by, and independent
      of, the Manager.  The audit shall be conducted in accordance
      with generally accepted auditing standards and shall cover all books and
      records maintained by the Manager pursuant to this Agreement, all Assets
      and Encumbrances, and all transactions and Operations conducted during
      such calendar year, including production and inventory records and all
      costs for which the Manager sought reimbursement under this Agreement,
      together with all other matters customarily included in such
      audits.  All written exceptions to and claims upon the Manager
      for discrepancies disclosed by such audit shall be made not more than
      three (3) months after receipt of the audit report, unless either Member
      elects to conduct an independent audit pursuant to Subsection 9.6(b) which is ongoing at the end of such three
      (3) month period, in which case such exceptions and claims may be made
      within the period provided in Subsection 9.6(b).  Failure to make any such
      exception or claim within such period shall mean the audit is deemed to be
      correct and binding upon the Members.  The cost of all audits
      under this Subsection shall be charged to the Business
      Account.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Notwithstanding
      the annual audit conducted by certified public accountants selected by the
      Manager, each Member shall have the right to have an independent audit of
      all Company books, records and accounts, including all charges to the
      Business Account.

              

      

       

      
        
          
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      This
audit shall review all issues raised by the requesting Member, with all costs
borne by the requesting Member.  The requesting Member shall give the
other Member and the Manager thirty (30) days prior notice of such
audit.  Any audit conducted on behalf of either Member shall be made
during the Manager’s normal business hours and shall not interfere with
Operations.  Neither Member shall have the right to audit records and
accounts of the Company relating to transactions or Operations more than twenty
four (24) months after the calendar year during which such transactions, or
transactions related to such Operations, were charged to the Business
Account.  All written exceptions to and claims upon the Manager for
discrepancies disclosed by such audit shall be made not more than three (3)
months after completion and delivery of such audit, or they shall be deemed
waived.

       

      ARTICLE
X

       

      DISPOSITION
OF PRODUCTION

       

      
        	
                10.1

              	
                No Taking In
      Kind.  No Member shall have the right to take in kind or
      separately dispose of its share of all Products in proportion to its
      Membership Interest.  The Manager shall sell all Products on
      behalf of the Company.  Nothing in this Agreement shall be
      construed as providing, directly or indirectly, for any joint or
      cooperative marketing or selling of Products or permitting the processing
      of Products owned by any third party at any processing facilities
      constructed by the Company or any of the Members pursuant to this
      Agreement.

              

      

       

      ARTICLE
XI

       

      RESIGNATION,
DISSOLUTION AND TERMINATION

       

      
        	
                11.1

              	
                Termination and
      Dissolution.  This Agreement shall terminate as expressly
      provided herein, unless earlier terminated by written agreement and the
      Company shall thereafter be
dissolved.

              

      

       

      
        	
                11.2

              	
                Termination of Right to
      Acquire.  Notwithstanding
      anything to the contrary in this Agreement, TargetSub may elect to
      terminate its right to acquire a 75% Membership Interest in the Company at
      any time after the Effective Date, provided (i) the Guarantor has made the
      required payment of 50,000 common shares pursuant to Section 5.7 and (ii) TargetSub has fulfilled the firm
      commitment of incurring at least $750,000 in Eligible Exploration
      Expenditures pursuant to Subsection 5.5(a) on or before the first anniversary date
      of the Effective Date, by providing sixty (60) days written notice to
      NFUR.  In the event that the required expenditures pursuant to
      Subsection 5.5(a) have not been made,
      TargetSub shall have the option to make a cash payment to NFUR by wire
      transfer or certified check in an amount equal to the shortfall, if any,
      between $750,000 and the amount of Eligible Exploration Expenditures
      funded by TargetSub on or before the first anniversary of the Effective
      Date.  If TargetSub elects to terminate its right to acquire the
      75% Membership Interest in the Company, its only obligation shall be to
      fund costs which are incurred under the Program and Budget in effect at
      the time of such termination, including existing contractual obligations
      entered into pursuant to such Program and Budget or
      otherwise.  In the event that TargetSub fails to satisfy and
      comply with the obligations in Subsections 5.5(a) and 5.7(a),
      TargetSub shall be deemed to have resigned and withdrawn from the Company
      and shall thereafter not be a Member of the
      Company.  Notwithstanding such termination or resignation,
      TargetSub and Guarantor shall remain liable for the obligations of
      Subsections 5.5(a) and 5.7(a).

              

      

       

      
        	
                11.3

              	
                Resignation.  A
      Member may elect to resign from the Company by: (i) failing to complete
      its obligations as required by Section 5.3 or Sections 5.4, 5.5
      and 5.7, or (ii)
  giving

              

      

       

      
        
          
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      Notice to
the other Member of the effective date of resignation, which shall be the later
of the end of the then-current Program Period or thirty (30) days after the date
of the Notice.  Upon such resignation, the resigning Member shall be
deemed to have transferred to the remaining Member all of its Membership
Interest, including all of its proportionate interest in the Assets and in its
Capital Account, without cost and free and clear of all Encumbrances arising by,
through or under such resigning Member, except Permitted Encumbrances and those
to which both Members have agreed.  The resigning Member shall execute
and deliver all instruments as may be necessary in the reasonable judgment of
the other Member to affect the transfer of its interests in the Company and the
Assets to the other Member.  If within a sixty (60) day period both
Members elect to resign or withdraw, then the Company shall instead be deemed to
have been terminated by the written agreement of the Members pursuant to
Section 11.1 and the Company shall be
dissolved pursuant to Law.

       

      
        	
                11.4

              	
                Disposition of Assets on
      Termination. Promptly after termination under Section 11.1, the Manager shall take all action
      necessary to wind up the activities of the Company, in accordance with
      Exhibit E. All costs and expenses incurred in connection with the
      termination of the Company shall be expenses chargeable to the Business
      Account.

              

      

       

      
        	
                11.5

              	
                Filing of Statement of
      Dissolution.  Upon
      completion of the winding up of the affairs of the Company, the Manager
      shall promptly file a Statement of Dissolution with the Office of the
      Secretary of State of Colorado.  If the Manager has caused the
      dissolution of the Company, whether voluntarily or involuntarily, then a
      person selected by majority vote of the remaining Members to wind up the
      affairs of the Company shall file a Statement of Dissolution pursuant to
      this Section.

              

      

       

      
        	
                11.6

              	
                Non-Compete Covenants.
      Neither a Member that resigns pursuant to Section 11.3, or is deemed to have withdrawn pursuant to
      the Agreement, including but not limited to Sections 5.12 or 9.5, nor any Affiliate of such a Member, shall
      directly or indirectly acquire any interest or right to explore or mine,
      or both, on any property any part of which is within the Area of Interest
      for twenty-four (24) months after the
      effective date of resignation. If a resigning Member, or the Affiliate of
      a resigning Member, breaches this Section 11.6, such Member shall be obligated to offer to
      convey to the Company, without cost or reimbursement, any such property or
      interest so acquired (or ensure its Affiliate offers to convey the
      property or interest to the Company, if the acquiring party is the
      resigning Member’s Affiliate). Such offer shall be made in writing and can
      be accepted by the Company at any time within ten (10) days after the
      offer is received by the Management Committee, and each remaining Member.
      Failure of a Member’s Affiliate to comply with this Section 11.6 shall be a breach by such Member of this
      Agreement.

              

      

       

      
        	
                11.7

              	
                Right to Data After
      Termination.  After termination of the Company pursuant
      to Section 11.1, each Member shall be
      entitled to make copies of all applicable information acquired hereunder
      before the effective date of termination not previously furnished to it,
      but a terminating, resigning, or withdrawing Member shall not be entitled
      to any such copies after such termination, resignation or
      withdrawal.  A resigning or otherwise terminating Member shall return
      all Data to the Company.  In any event, the Existing Data of
      NFUR shall remain with NFUR and its Affiliates as the property of NFUR
      and/or its Affiliates; if TargetSub resigns or otherwise withdraws from
      the Company, it shall return all copies of Existing Data to the Company or
      to NFUR.

              

      

       

      
        	
                11.8

              	
                Continuing Authority. On
      dissolution of the Company under Section 11.1 or the deemed withdrawal of either
      Member pursuant to Section 9.5, the
      Member which was the Manager prior to such termination or withdrawal (or
      the other Member in the event of a withdrawal by
  the

              

      

       

      
        
          
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      Manager)
shall have the power and authority to do all things on behalf of the Company
which are reasonably necessary or convenient to: (a) wind up Operations and (b)
complete any transaction and satisfy any obligation, unfinished or unsatisfied,
at the time of such termination or withdrawal, if the transaction or obligation
arises out of Operations prior to such termination or withdrawal. The Manager
shall have the power and authority to grant or receive extensions of time or
change the method of payment of an already existing liability or obligation,
prosecute and defend actions on behalf of the Company and the Members, encumber
Assets, and take any other reasonable action in any matter with respect to which
the former Members continue to have, or appear or are alleged to have, a common
interest or a common liability.

       

      ARTICLE
XII

       

      ACQUISITIONS
WITHIN AREA OF INTEREST

       

      
        	
                12.1

              	
                General.  Any
      interest or right to acquire any interest in real property, Data,
      unpatented or patented mining claims, or water rights related thereto, or
      the location of mining claims within the Area of Interest either acquired
      or proposed to be acquired during the term of this Agreement by or on
      behalf of either Member (“Acquiring Member”) or
      any Affiliate of such Member shall be subject to the terms and provisions
      of this Agreement.  NFUR and TargetSub and their respective
      Affiliates for their separate account shall be free to acquire lands,
      Data, mining claims or interests in lands or mining claims outside the
      Area of Interest and to locate mining claims outside the Area of Interest.
       Failure of any Affiliate of either Member to comply with this
      Article XII shall be a breach by such Member of this
      Agreement.  

              

      

       

      
        	
                12.2

              	
                Notice to Non-Acquiring
      Member.  Within
      fifteen (15) days after the acquisition, proposed acquisition or location,
      as the case may be, of any interest or the right to acquire any interest
      in real property, Data, mining claims, whether patented or unpatented, or
      water rights wholly or partially within the Area of Interest (except real
      property acquired by the Manager pursuant to a Program), the Acquiring
      Member shall notify the other Members and the Management Committee of such
      acquisition by it or its Affiliate; provided further that if the
      acquisition or location of any interest or right to acquire any interest
      pertains to real property, Data, patented or unpatented mining claims or
      water rights partially within the Area of Interest, then all such real
      property, Data, patented or unpatented mining claims or water rights
      (i.e., the part
      within the Area of Interest and the part outside the Area of Interest)
      shall be subject to this Article XII.  The Acquiring Member’s
      Notice shall describe in detail the acquisition and/or location, the
      acquiring party if that party is an Affiliate, the lands and minerals
      covered thereby, any water rights related thereto, the cost thereof, and
      the reasons why the Acquiring Member believes that the acquisition (or
      proposed acquisition) of the interest is in the best interests of the
      Company under this Agreement. In addition to such Notice, the Acquiring
      Member shall make any and all information concerning the relevant interest
      available for inspection by the other Members and the Management
      Committee.

              

      

       

      
        	
                12.3

              	
                Option
      Exercised.  Within thirty (30) days after
      receiving the Acquiring Member’s Notice, the Management Committee may
      notify the Acquiring Member of its election to accept the acquired
      interest in the Company.  Promptly upon such notice, the
      Acquiring Member shall convey or cause its Affiliate to convey to the
      Company by special warranty deed or other appropriate transfer documents
      with title held as described in Section 3.4, all of the Acquiring Member’s (or its
      Affiliate’s) interest in such acquired interest, free and clear of all
      Encumbrances arising by, through or under the Acquiring Member (or its
      Affiliate) other than those to which both the Acquiring Member and
      Management Committee have agreed.  Immediately upon such Notice,
      the acquired interest either shall be subject to a Supplemental Business
      Arrangement pursuant to Article XIV, or if conveyed to the Company, shall
      become a part of the Assets and/or

              

      

       

      
        
          
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      Company
Properties for all purposes of this Agreement.  The other Members
shall promptly pay to the Acquiring Member its/their proportionate share of the
latter’s actual out of pocket acquisition costs; provided, however, that if such
an acquisition is made prior to the completion of TargetSub’s Initial
Contribution, the acquisition costs shall be repaid to NFUR, if it is the
Acquiring Member, or made by TargetSub and in either event accepted and treated
as Eligible Exploration Expenditures.

       

      
        	
                12.4

              	
                Option Not
      Exercised.  If the Management Committee does not give
      such Notice within the thirty (30) day period set forth in Section 12.3, the Company shall have no interest in the
      acquired interests, and the acquired interests shall not be a part of the
      Assets or continue to be subject to this
  Agreement.

              

      

       

      ARTICLE
XIII

       

      ABANDONMENT
AND SURRENDER OF PROPERTIES

       

      
        	
                13.1

              	
                Abandonment and
      Surrender.  Either
      Member may request the Management Committee to authorize the Manager to
      surrender or abandon part or all of the Company Properties. If the
      Management Committee authorizes such surrender or abandonment, the Company
      shall assign to the requesting Member, by special warranty deed and
      without cost to the requesting Member, all of the Company’s interest in
      the Company Properties sought to be abandoned or surrendered, free and
      clear of all Encumbrances created by, through or under the Company other
      than those to which both the Company and the requesting Member have
      agreed.  Upon the assignment, such properties shall cease to be
      part of the Company Properties.  If the Management Committee
      does not authorize such surrender or abandonment, such properties shall
      remain part of the Company
Properties.

              

      

       

      ARTICLE
XIV

       

      SUPPLEMENTAL
BUSINESS AGREEMENT

       

      
        	
                14.1

              	
                Supplemental
      Agreements.  At any time
      during the term of this Agreement after TargetSub’s acquisition of the 75%
      Membership Interest, the Management Committee may determine by unanimous
      vote of the Members that it is appropriate to segregate the Area of
      Interest into areas subject to separate Programs and Budgets for purposes
      of conducting further Exploration, Pre-Feasibility or Feasibility Studies,
      Development, or Mining. At such time, the Management Committee shall
      designate which portion of the Company Properties will comprise an area of
      interest under a separate business arrangement (“Supplemental Business”),
      and the Members shall enter into a new agreement (“Supplemental Business
      Agreement”) for the purpose of further exploring, analyzing,
      developing, and mining such portion of the Company Properties. The
      Supplemental Business Agreement shall be in substantially the same form as
      this Agreement, with rights and interests of the Members in the
      Supplemental Business identical to the rights and interests of the Members
      in this Company at the time of the designation, unless otherwise agreed by
      the Members, and with the Members agreeing to new Capital and Equity
      Accounts and other terms necessary for the Supplemental Business Agreement
      to comply with the nature and purpose of the designation. Following
      execution of the Supplemental Business Agreement, this Agreement shall
      terminate insofar as it affects the Company Properties covered by the
      Supplemental Business Agreement.

              

      

       

      
        
          
            50538524.8

          

           

        

        
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      ARTICLE
XV

       

      TRANSFER
OF INTEREST; PRE-EMPTIVE RIGHT

       

      
        	
                15.1

              	
                General.  A
      Member shall have the right to Transfer to a third party an interest in
      its Membership Interest, or any beneficial interest therein, solely as
      provided in this Article XV.

              

      

       

      
        	
                15.2

              	
                Limitations on Free
      Transferability.  Any Transfer by either Member under
      Section 15.1 shall be subject to the
      following limitations:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Neither
      Member shall Transfer any interest in this Agreement or the Company
      (including, but not limited to, any royalty, profits, or other interest in
      the Products) except in conjunction with the Transfer of part or all of
      its Membership Interest in the
Company;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                No
      transferee of all or any part of a Member’s Membership Interest shall have
      the rights of a Member unless and until the transferring Member has
      provided to the other Member Notice of the Transfer, and, except as
      provided in Subsection 15.2(g), the
      transferee, as of the effective date of the Transfer, has committed in
      writing to assume and be bound by this Agreement to the same extent as the
      transferring Member;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Neither
      Member shall make a Transfer that shall violate any Law, or, without the
      consent of the other Member, result in the cancellation of any
      permits, licenses, or other similar
  authorization;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                No
      Transfer permitted by this Article XV shall relieve the transferring
      Member of its share of any liability, whether accruing before or after
      such Transfer, which arises out of Operations conducted prior to such
      Transfer or exists on the Effective
Date;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Neither
      Member, without the consent of the other Member, shall make a Transfer
      that shall cause termination of the tax partnership established by
      Section 4.3.  If such
      termination is caused, the transferring Member shall indemnify the other
      Member for, from and against any and all loss, cost, expense, damage,
      liability or claim therefor arising from the Transfer, including without
      limitation any increase in taxes, interest and penalties or decrease in
      credits caused by such termination and any tax on indemnification proceeds
      received by the Indemnified Party.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                In
      the event of a Transfer of less than all of a Membership Interest, the
      transferring Member and its transferee shall act and be treated as one
      Member; provided however, that in order for such Transfer to be effective,
      the transferring Member and its transferee must
  first:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                agree,
      as between themselves, that one of them is authorized to act as the sole
      agent (“Agent”) on
      their behalf with respect to all matters pertaining to this Agreement and
      the Business; and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                give
      Notice to the other Member of the designation of the Agent, and in such
      Notice warrant and represent to other Member
  that:

              

      

       

      
        	
                 
      

              	
                (1)

              	
                the
      Agent has the sole authority to act on behalf of, and to bind, the
      transferring Member and its transferee with respect to all matters
      pertaining to this Agreement , the Company and the
    Business;

              

      

       

      
        	
                 
      

              	
                (2)

              	
                the
      other Member may rely on all
      decisions of, Notices and other communications from, and failures to
      respond by, the Agent, as if given (or not given) by the transferring
      Member and its transferee; and

              

      

       

      
        
          
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                (3)

              	
                all
      decisions of, Notices and other communications from, and failures to
      respond by, the other Member to the Agent shall be deemed to have been
      given (or not given) to the transferring Member and its
      transferee.

              

      

       

      The
transferring Member and its transferee may change the Agent (but such
replacement must be one of them) by giving Notice to the other Member, which Notice must conform to
Subsection 15.2(f)(ii).

       

      
        	
                 
      

              	
                (g)

              	
                If
      the Transfer is the grant of an Encumbrance in a Membership Interest to
      secure a loan or other indebtedness of either Member in a bona fide
      transaction, other than a transaction approved unanimously by the
      Management Committee or Project Financing approved by the Management
      Committee, such Encumbrance shall be granted only in connection with such
      Member’s financing payment or performance of that Member’s obligations
      under this Agreement and shall be subject to the terms of this Agreement
      and the rights and interests of the other Member hereunder (including
      without limitation under Section 5.15).
      Any such Encumbrance shall be further subject to the condition that the
      holder of such Encumbrance (“Chargee”) first enter
      into a written agreement with the Company and the other Member in form
      satisfactory to the Company and the other Participant, acting reasonably,
      binding upon the Chargee, to the effect
that:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                the
      Chargee shall not enter into possession or institute any proceedings for
      foreclosure or partition of the encumbering Member’s Membership Interest
      and that such Encumbrance shall be subject to the provisions of this
      Agreement;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                the
      Chargee’s remedies under the Encumbrance shall be limited to the sale of
      the whole (but only of the whole) of the encumbering Member’s Membership
      Interest to the other Member, or, failing such a sale, at a public auction
      to be held at least fourteen (14) days after prior notice to the Company
      and the other Member, such sale to be subject to the purchaser entering
      into a written agreement with the Company and the other Member whereby such
      purchaser assumes all obligations of the encumbering Member under the
      terms of this Agreement. The price of any pre-emptive sale to the other
      Member shall be the remaining principal amount of the loan plus accrued
      interest and related expenses, and such pre-emptive sale shall occur
      within sixty (60) days of the Chargee’s notice to the Company and the
      other Member of its intent to sell the encumbering Member’s Membership
      Interest. Failure of a sale to the other Member to close by the end
      of such period, unless failure is caused by the encumbering Member or by
      the Chargee, shall permit the Chargee to sell the encumbering Member’s
      Membership Interest at a public
sale; and

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                the
      charge shall be subordinate to any then-existing debt, including Project
      Financing previously approved by the Management Committee, encumbering the
      transferring Member’s Membership Interest in the
  Company;

              

      

       

      
        	
                15.3

              	
                Pre-emptive Right. Any
      Transfer by either Member under Section 15.1 and any Transfer by an Affiliate in Control
      of a Member shall be subject to a pre-emptive right of the other Member to
      the extent provided in Exhibit D.  Failure of a Member’s
      Affiliate to comply with this Article XV and Exhibit D shall be a breach
      by such Member of this Agreement.  These pre-emptive rights
      shall not apply to any change of control or ownership of the Members’
      Affiliates including Ur-Energy Inc., Ur-Energy USA Inc., NFU Wyoming, LLC,
      and Target Exploration & Mining Corporation or any transfer of a
      Member or control of a Member to another
  Affiliate.

              

      

       

      
        
          
            50538524.8

          

           

        

        
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      ARTICLE
XVI

       

      DISPUTES

       

      
        	
                16.1

              	
                Governing
      Law.  Except for matters of title to the Company
      Properties or their Transfer, which shall be governed by the law of their
      situs, this Agreement shall be governed by and interpreted in accordance
      with the laws of the State of Colorado, without regard for any conflict of
      laws or choice of laws principles that would permit or require the
      application of the Laws of any other
  jurisdiction.

              

      

       

      
        	
                16.2

              	
                Arbitration.  Any
      dispute, controversy or claim arising out of or relating to this
      Agreement, including any question regarding its existence, validity or
      termination, shall be referred to and finally resolved by
      arbitration.  Prior to any Party commencing arbitration, the
      Parties shall consult and negotiate with each other in good faith and
      attempt to reach a just and equitable resolution satisfactory to all
      Parties.  If the Parties do not reach resolution of such dispute
      within thirty (30) days from the date of the act or omission out of which
      the dispute arose and Notice of the dispute, the Parties shall submit the
      matter for resolution by arbitration as provided
      herein.  Arbitration of any dispute under this Agreement shall
      be in accordance with the applicable Commercial Arbitration Rules of the
      American Arbitration Association; provided, however, that procedurally,
      the parties shall be entitled to reasonable discovery pursuant to
      applicable Colorado rules of civil procedure.  Applicable
      evidentiary rules and precedent relating to expert witnesses shall also
      control.  If there is any conflict between the provisions of
      this Agreement and the provisions of the Commercial Arbitration Rules of
      the American Arbitration Association, the provisions of this Agreement
      shall prevail.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Time
      Limitation.  Demand for arbitration must be in writing
      and given within one (1) year from the date of the act or omission out of
      which the dispute arose.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Place of Arbitration;
      Number of Arbitrators.  Unless otherwise agreed in
      writing, arbitration shall be held in Casper, Wyoming and shall be before
      three (3) Arbitrators if more than $100,000 is at issue and one (1)
      Arbitrator if less than $100,000 is at
issue.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                No Special
      Damages.  In no event shall any Party be liable for any
      consequential, special, incidental, indirect or punitive damages of any
      nature whatsoever arising from or related to this Agreement, including
      without limitation loss of revenue, loss of profit, lost opportunities,
      costs of capital, claims of clients or customers, whether the claims are
      based on contract, tort, strict liability or
  otherwise.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Costs.  If
      any arbitration or any other proceeding is brought for the enforcement of
      this Agreement, including without limitation this Article XVI, to collect
      any award or judgment entered pursuant to this Agreement or because of an
      alleged dispute, breach, default, or misrepresentation in connection with
      any of the provisions of this Agreement or Operations of the Company, the
      prevailing party shall be entitled to recover reasonable attorneys’ fees
      and other costs incurred in that arbitration, action or proceeding,
      including without limitation expert witness fees and costs and fees and
      costs associated with consultants, in addition to any other relief to
      which the Party (-ies) may be
entitled.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Judgment.  The
      award of the Arbitrator(s) shall be final and binding on the Parties, and
      judgment on the award may be entered by any court of competent
      jurisdiction.  If the Parties settle the dispute in the course
      of the arbitration, the settlement shall be approved by the Arbitrator(s)
      on request of either Party and shall become the
      award.  Arbitration fees and expenses, together with reasonable
      attorney fees as provided in

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 44
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      Subsection 16.2(d) shall be allocated and awarded as provided by
the Arbitrator(s).  Arbitrator(s) shall have no authority to award
damages against any Party in contravention of the limitations set forth in
Subsection 16.2(c).

       

      ARTICLE
XVII

       

      CONFIDENTIALITY,
OWNERSHIP, USE AND DISCLOSURE OF INFORMATION

       

      
        	
                17.1

              	
                Business
      Information.  All Business Information shall be owned by
      the Company.  Subject to the terms of this Agreement, including
      without limitation Section 11.7, both
      before and after the dissolution of the Company, all Business Information
      may be used by either Member for any purpose, whether or not competitive
      with the Company, without consulting with, or obligation to, the other
      Member.  Except as provided in Sections 17.3 and 17.4,
      or with the prior written consent of the other Member, each Member shall
      keep confidential and not disclose to any third party or the public any
      portion of the Business Information that constitutes Confidential
      Information.

              

      

       

      
        	
                17.2

              	
                Member
      Information.  In performing its obligations under this
      Agreement, neither Member shall be obligated to disclose any Member
      Information. If a Member elects to disclose Member Information in
      performing its obligations under this Agreement, such Member Information,
      together with all improvements, enhancements, refinements and incremental
      additions to such Member Information that are developed, conceived,
      originated or obtained by either Member in performing its obligations
      under this Agreement (“Enhancements”), shall be
      owned exclusively by the Member that originally developed, conceived,
      originated or obtained such Member Information. Each Member may use and
      enjoy the benefits of such Member Information and Enhancements in the
      conduct of the Business hereunder, but the Member that did not originally
      develop, conceive, originate or obtain such Member Information may not use
      such Member Information and Enhancements for any other
      purpose.  Except as provided in Section 17.4, or with the prior written consent of the
      other Member, which consent may be withheld in such Member’s sole
      discretion, each Member shall keep confidential and not disclose to any
      third party or the public any portion of Member Information and
      Enhancements owned by the other Member that constitutes Confidential
      Information.

              

      

       

      
        	
                17.3

              	
                Permitted Disclosure of
      Confidential Business Information.  Either Member may
      disclose Business Information that is Confidential Information: (a) to a
      Member’s officers, directors, partners, members, managers, employees,
      Affiliates, agents, attorneys, accountants, consultants, contractors,
      subcontractors or advisors, for the sole purpose of such Member’s
      performance of its obligations under this Agreement; (b) to any party to
      whom the disclosing Member contemplates a Transfer of all or any part of
      its Membership Interest, for the sole purpose of evaluating the proposed
      Transfer; (c) to any actual or potential lender, underwriter or investor
      for the sole purpose of evaluating whether to make a loan to or investment
      in the disclosing Member; or (d) to a third party with whom the disclosing
      Member contemplates any independent business activity or
      operation.

              

      

       

      The
Member disclosing Confidential Information pursuant to this Section 17.3 shall disclose such Confidential Information to
only those persons or entities who have a bona fide need to have access to such
Confidential Information for the purpose for which disclosure to such persons or
entities is permitted under this Section 17.3
and who have agreed in writing, enforceable by the other Member, to protect the
Confidential Information from further disclosure, to use such Confidential
Information solely for such purpose and to otherwise be bound by the provisions
of this Article XVII.  Such writing shall not preclude parties
described in Subsection 17.3(b) from
discussing and completing a Transfer with the other Member.  The
Member disclosing

       

      
        
          
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      Confidential
Information shall be responsible and liable for any use or disclosure of the
Confidential Information by such persons or entities in violation of this
Agreement and such other writing.

       

      
        	
                17.4

              	
                Disclosure Required By
      Law.  Notwithstanding anything contained in this Article
      XVII, a Member may disclose any Confidential Information if, in the
      opinion of the disclosing Member’s legal counsel; (a) such disclosure is
      legally required to be made in a judicial, administrative or governmental
      proceeding pursuant to a valid subpoena or other applicable order or
      procedural rule; or (b) such disclosure is legally required to be made
      pursuant to the rules or regulations of a stock exchange or similar
      trading market applicable to the disclosing Member or its
      Affiliates.

              

      

       

      Prior to
any disclosure of Confidential Information under this Section 17.4, the disclosing Member shall give the other
Member at least ten (10) days prior written notice (unless less time is
permitted by such rules, regulations or proceeding) and, in making such
disclosure, the disclosing Member shall disclose only that portion of
Confidential Information required to be disclosed and shall take all reasonable
steps to preserve the confidentiality thereof, including, without limitation,
cooperation with the other Member in obtaining protective orders and supporting
the other Member in intervention in any such proceeding.

       

      
        	
                17.5

              	
                Public
      Announcements.  Prior to making or issuing any press
      release or other public announcement or disclosure of Business Information
      that is not Confidential Information, a Member or its Affiliates shall
      first consult with the other Member as to the content and timing of such
      announcement or disclosure, unless in the good faith judgment of such
      Member, there is not sufficient time to consult with the other Member
      before such announcement or disclosure must be made under applicable
      Laws.  Assuming sufficient time exists, the releasing or
      disclosing Member or its Affiliates shall notify the other Member, as soon
      as possible, of the pendency of such announcement or disclosure, and
      provide a draft of such public disclosure three (3) business days prior to
      such announcement and shall consider any suggested edits; the final form
      and content, and the timing of any such announcement or disclosure shall
      be in the sole discretion of the releasing or disclosing Member or its
      Affiliate and appropriate legal counsel.  Any press release or
      other public announcement or disclosure to be issued by either Member or
      its Affiliates relating to this Business or the Company shall also
      identify the other Member.  All public announcements made by and
      in behalf of the Company shall be approved in form and content, and
      timing, by the Management Committee and legal
  counsel.

              

      

       

      
        	
                17.6

              	
                Applicability to
      Affiliates.  All obligations described in this Article
      XVII are the obligations of all Affiliates of Members.  A breach
      of any provision in this Article by an Affiliate is a breach by its
      affiliated Member and shall be treated as same for purposes of liability
      and indemnification.

              

      

       

      ARTICLE
XVIII

       

      GENERAL
PROVISIONS

       

      
        	
                18.1

              	
                Notices.  All
      notices, payments and other required or permitted communications (“Notices”) to either
      Member or any other Party shall be in writing, and shall be addressed
      respectively as follows:

              

      

       

      
        
          
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      If
to NFUR:

       

      Ur-Energy
USA Inc., Manager

       

      10758 W.
Centennial Road, Suite 200

       

      Littleton,
Colorado

       

      USA
80127

       

      Attention:
W. William Boberg, President

      Telephone:
720-981-4588

      Facsimile:
720-981-5643

       

      With a Copy to:

       

      Paul G.
Goss, Esq.

       

      General
Counsel of Ur-Energy USA Inc., Manager

       

      10758 W.
Centennial Road, Suite 200

       

      Littleton,
Colorado

       

      USA
80127

       

      Telephone:
720-981-4588

      Facsimile:
720-981-5643

       

      If
to Ur-Energy:

       

      Ur-Energy
USA Inc.

       

      10758 W.
Centennial Road, Suite 200

       

      Littleton,
Colorado

       

      USA
80127

       

      Attention:
W. William Boberg, President

      Telephone:
720-981-4588

      Facsimile:
720-981-5643

       

      With
a Copy to:

       

      Paul G.
Goss, Esq.

       

      General
Counsel of Ur-Energy USA Inc.

       

      10758 W.
Centennial Road, Suite 200

       

      Littleton,
Colorado

       

      USA
80127

       

      Telephone:
720-981-4588

      Facsimile:
720-981-5643

       

      If
to NFU:

       

      NFU
Wyoming, LLC (Ur-Energy USA Inc, Manager)

       

      10758 W.
Centennial Road, Suite 200

       

      Littleton,
Colorado

       

      USA
80127

       

      Attention:
W. William Boberg

      Telephone:
720-981-4588

      Facsimile:
720-981-5643

       

      
        
          
            50538524.8

          

           

        

        
          - 47
-

          
            

          

        

        
           

        

      

      

       

      With
a Copy to:

       

      Paul G.
Goss, Esq.

       

      General
Counsel of Ur-Energy USA Inc. (as Manager)

       

      10758 W.
Centennial Road, Suite 200

       

      Littleton,
Colorado

       

      USA
80127

       

      Telephone:
720-981-4588

      Facsimile:
720-981-5643

       

      If
to TargetSub:

       

      448018
Exploration Inc.

       

      Suite
1240 – 1140 West Pender Street

       

      Vancouver,
British Columbia

       

      V6E
4G1

       

      Attention:
Mark Morabito

      Telephone:
(604) 681-8030

      Facsimile:
(604) 681-8039

       

      With
a Copy to:

       

      Blake,
Cassels & Graydon LLP:

      Suite
2600, Three Bentall Centre

      595
Burrard Street

      Vancouver,
British Columbia V7X 1L3

      

      Attention:
Bob Wooder

      Telephone:
(604) 631-3330

      Facsimile:
(604) 631-3309

       

      If
to Guarantor:

       

      Target
Exploration & Mining Corp.

       

      Suite
1240 – 1140 West Pender Street

       

      Vancouver,
British Columbia

       

      V6E
4G1

       

      Attention:
Mark Morabito

      Telephone:
(604) 681-8030

      Facsimile:
(604) 681-8039

       

      All
Notices shall be given (a) by personal delivery to the recipient; (b) by
electronic communication, capable of producing a printed transmission, (c) by
registered or certified mail return receipt requested; or (d) by overnight or
other express courier service.  All Notices shall be effective and
shall be deemed given on the date of receipt at the principal address if
received during normal business hours, and, if not received during normal
business hours, on the next

       

      
        
          
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      business
day following receipt, or if by electronic communication, on the date of such
communication.  Any Party may change its address by Notice to the
other Parties.

       

      
        	
                18.2

              	
                Guarantee.  The
      Guarantor covenants to NFUR, UR-Energy and NFU that it will cause
      TargetSub to perform its obligations under this
  Agreement.

              

      

       

      
        	
                18.3

              	
                Number/Gender.  The
      singular shall include the plural and the plural the singular wherever the
      context so requires, and the masculine, the feminine, and the neuter
      genders shall be mutually
inclusive.

              

      

       

      
        	
                18.4

              	
                Currency.  All
      references to “dollars” or “$” herein shall mean lawful currency of the
      United States of America.

              

      

       

      
        	
                18.5

              	
                Headings.  The
      subject headings of the Sections and Subsections of this Agreement and the
      Paragraphs and Subparagraphs of the Exhibits to this Agreement are
      included for purposes of convenience only, and shall not affect the
      construction or interpretation of any of its
  provisions.

              

      

       

      
        	
                18.6

              	
                Waiver.  The
      failure of any Party to insist on the strict performance of any provision
      of this Agreement or to exercise any right, power or remedy upon a breach
      hereof shall not constitute a waiver of any provision of this Agreement or
      limit such Party’s right thereafter to enforce any provision or exercise
      any right.

              

      

       

      
        	
                18.7

              	
                Modification.  No
      modification of this Agreement shall be valid unless made in writing and
      duly executed by all Members or all Parties as is appropriate in the
      circumstances.

              

      

       

      
        	
                18.8

              	
                Force
      Majeure.  Except for the obligations to make payments and
      issue shares when due pursuant to Sections 5.5(a) and 5.7(a)
      hereunder, the obligations of a Member shall be suspended to the extent
      and for the period that performance is prevented by any cause, whether
      foreseeable or unforeseeable, beyond its reasonable control, including,
      without limitation, labor disputes (however arising and whether or not
      employee demands are reasonable or within the power of the Member to
      grant); acts of God; Laws, instructions, requests or rulings of any
      government or governmental entity; judgments or orders of any court;
      inability to obtain on reasonably acceptable terms any public or private
      license, permit, surface access or other authorization to the Company
      Properties included in the current Program and Budget; curtailment or
      suspension of activities to remedy or avoid an actual or alleged, present
      or prospective violation of Environmental Laws; action or inaction by any
      federal, state or local agency (including, for example, USNRC, EPA, BLM or
      Wyoming DEQ) that delays or prevents the timely issuance or granting of
      any required approval or authorization beyond the timeframe for such
      approvals or authorization then experienced to be the industry/agency
      norm; acts of war or conditions arising out of or attributable to war,
      whether declared or undeclared; terrorism, terrorist acts or serious
      threats to safety; riot, civil strife, insurrection or rebellion;
      epidemic; fire, explosion, earthquake, storm, flood, sink holes, drought
      or other adverse weather condition; delay or failure by suppliers or
      transporters of materials, parts, supplies, services or equipment or by
      contractors’ or subcontractors’ shortage of, or inability to obtain,
      labor, transportation, materials, machinery, equipment, supplies,
      utilities or services; accidents; breakdown of equipment, machinery or
      facilities; actions by native rights groups, environmental groups, or
      other similar special interest groups; or any other cause whether similar
      or dissimilar to the foregoing.  The affected Member shall
      promptly give Notice to the other Member of the suspension of performance,
      stating therein the nature of the suspension, the reasons therefore, and
      the expected duration thereof.  The affected Member shall resume
      performance as soon as reasonably possible.  During the period
      of suspension the obligations of Members to advance funds pursuant to
      Section 9.2 shall be
    reduced

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 49
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      to levels
consistent with then-current Operations, including specifically, but not limited
to, the obligations to maintain all Company Properties, including appropriate
County, State or BLM or other filings and payment of maintenance fees, rental
payments and the like.

       

      If
performance is suspended or prevented by an event of force majeure under this
Section 18.8 for a period of eighteen (18)
months, either Member may terminate the Agreement at any time
thereafter.

       

      
        	
                18.9

              	
                Rule Against
      Perpetuities.  The Members do not intend that there shall
      be any violation of the Rule Against Perpetuities, the Rule Against
      Unreasonable Restraints on the Alienation of Property, or any similar
      rule. Accordingly, if any right or option to acquire any interest in the
      Company Properties, in a Membership Interest, in the Assets, or in any
      real property exists under this Agreement, such right or option must be
      exercised, if at all, so as to vest such interest within time periods
      permitted by applicable rules. If, however, any such violation should
      inadvertently occur, the Members hereby agree that a court shall reform
      that provision in such a way as to approximate most closely the intent of
      the Members within the limits permissible under such
  rules.

              

      

       

      
        	
                18.10

              	
                Further
      Assurances.  Each of the Parties shall take, from time to
      time and without additional consideration, such further actions and
      execute such additional instruments as may be reasonably necessary or
      convenient to implement and carry out the intent and purpose of this
      Agreement or as may be reasonably required by lenders in connection with
      Project Financing.

              

      

       

      
        	
                18.11

              	
                Entire Agreement; Successors
      and Assigns.  This Agreement contains the entire
      understanding of the Parties and supersedes all prior agreements and
      understandings between the Parties relating to the subject matter hereof.
      This Agreement shall be binding upon and inure to the benefit of the
      respective successors and permitted assigns of the
  Parties.

              

      

       

      
        	
                18.12

              	
                Counterparts;
      Facsimile/Electronic Transmission.  This Agreement may be
      executed in any number of counterparts, and it shall not be necessary that
      the signatures of all Parties be contained on any counterpart. Each
      counterpart shall be deemed an original, but all counterparts together
      shall constitute one and the same instrument.  This Agreement
      may be delivered by facsimile or other electronic transmission evidencing
      execution and shall be effective as a valid and binding Agreement between
      the Parties for all purposes. 

              

      

       

      
        	
                18.13

              	
                Survival.  Notwithstanding
      the cancellation, expiration or termination for any reason of this
      Agreement it is acknowledged and agreed that those rights and obligations
      which are by their nature intended to survive such cancellation,
      expiration or termination shall survive and all defined terms necessary to
      understand and enforce those
Sections.

              

      

       

      
        
          
            50538524.8

          

           

        

        
          - 50
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      IN WITNESS WHEREOF the Parties
hereto have executed these presents as of the Effective Date.

      

      

      
        	 
      	
                448018
      EXPLORATION INC.

                 

                 

              
	
                Per:

              	
                “Mark
      J. Morabito

              
	 
      

      

      

      
        	 
      	
                NFUR
      BOOTHEEL, LLC

                 

                 

              
	
                Per:

              	
                “W.W.
      Boberg”

              
	
                Ur-Energy
      USA Inc. (Manager)

                W.
      William Boberg, President

              

      

      

      
        	 
      	
                TARGET
      EXPLORATION & MINING CORP.

                 

                 

              
	
                Per:

              	
                “Mark
      J. Morabito

              
	 
      

      

      

      
        	 
      	
                As
      to Representations and Warranties in sections 3.1 and 3.2:

                UR-ENERGY
      USA INC.

                 

                 

              
	
                Per:

              	
                “W.W.
      Boberg”

              
	
                President

              

      

      

      
        	 
      	
                NFU
      WYOMING, LLC

                 

                 

              
	
                Per:

              	
                “W.W.
      Boberg”

              
	
                Ur-Energy
      USA Inc. (Manager)

                W.
      William Boberg, President

              

      

      

      
        
          
            50538524.8

          

           

        

        
          - 51
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                I.

              	
                EXHIBIT
      A

              

      

       

      
        	
                II.

              	
                TO
      EXPLORATION, DEVELOPMENT & MINE OPERATING
  AGREEMENT

              

      

       

      
        	
                 
      

              	
                OF
      THE BOOTHEEL PROJECT, LLC

              

      

       

      
        	
                III.

              	
                INITIAL
      COMPANY PROPERTIES AND AREA OF
INTEREST

              

      

       

      

       

      

       

      
        	 
      	 
      
	
                A-1

              	
                  Claim
      List

              
	
                A-2

              	
                  Area
      of Interest

              
	
                A-3

              	
                  Bootheel
      Properties

              
	
                A-4

              	
                  Buckpoint
      Properties

              

      

      
        
          
            50538524.8

          

           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          
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                50538524.8

              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

        

        
          EXHIBIT
B

           

          TO
EXPLORATION, DEVELOPMENT & MINE OPERATING AGREEMENT

           

          OF
THE BOOTHEEL PROJECT, LLC

           

          PERMITTED
ENCUMBRANCES

           

          

           

          Attached to and made a part of The
Bootheel Project, LLC, Exploration, Development and Mine Operating Agreement
dated June 7, 2007, between 448018 EXPLORATION INC.
(“TargetSub”), and NFUR
BOOTHEEL, LLC (“NFUR”) and TARGET EXPLORATION AND MINING
CORP. (“Guarantor”), and UR- ENERGY USA INC.
(“Ur-Energy”), and NFU WYOMING,
LLC (“NFU”), covering the following described lands located in the County
of Albany, State of Wyoming, to-wit:

          

           

          State of Wyoming Uranium
Leases

           

          State of
Wyoming Uranium Mining Lease No. 0-40774

           

          State of
Wyoming Uranium Mining Lease No. 0-41090

           

          The above State Leases to be
transferred to The Bootheel Project, LLC are subject to the following
encumbrances:

           

          1.           No Warranty of
Title.  The State of Wyoming does not warrant title to the
property subject to any of these leases. However, there is no indication that
the State of Wyoming lacked title to any portion of the lands covered by those
leases or that there were any third parties who claimed any interest in those
lands.

           

          2.           Assignment
Requirements. The leases contain assignment provisions permitting the
assignment of the leases but only for the entire lease and only with the express
written approval of the State Board of Land Commissioners. The assignment
provisions further require that the “Lessee shall submit a signed copy of any
mining agreement entered into affecting the possessory title to any of the land
hereby leased for approval by the Lessor.” The assignment provision further
provides that all overriding royalties “to be valid” must have the approval of
the Board of Land Commissioners.

           

          3.           Royalty and Royalty in
Kind. The State of Wyoming retains a Uranium Royalty of 5% of the gross
value of the uranium-bearing ore mined and removed from the lands covered by
these leases.  The State of Wyoming reserves in each lease the right
to take its royalty in kind by taking physical delivery of uranium produced in
proportion to its royalty on 60 days’ notice.

           

          Unpatented Mining Claims As
Identified In Exhibit A

           

          A.           GENERAL COMMENTS REGARDING
ENCUMBRANCES:

           

          
            
              
                 

                DNVRDOCS
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              1 

              
                

              

            

            
               

            

          

          1.           Each
Bureau of Land Management (“BLM”) Geographic Index pertaining to the relevant
unpatented mining claims contains the following caveat or
disclaimer:

           

          Disclosure
– All information received in this Office may not yet be listed on this report.
The names and addresses are entered as they appear on the location notices or
are abbreviated to [save] space; therefore, they may not appear in the expected
sequence. A blank latest assessment year in this report does not constitute an
abandoned claim.

           

          Consequently,
it is uncertain that any BLM Geographic Index pertaining to the relevant
unpatented mining claims contains all of the “active” claims which may be
located on or adjacent to lands covered by any of the relevant unpatented mining
claims.

          

          2.           Under
the General Mining Law of 1872, as amended, a mining claim is not valid and does
not legally exist unless and until there has been a discovery of valuable
minerals on each claim.  As set forth in Section 3.2 of the
Exploration, Development and Mine Operating Agreement, none of NFUR, Ur-Energy
or NFU makes any representation or warranty that any of the unpatented mining
claims contains a valuable discovery of minerals or that any such discovery may
be economically mined in any specific mining procedure or technology whether
known or unknown at the Effective Date. A valid mining claim does not vest fee
title in the claimant but grants to him only an exclusive possessory interest
solely for the purpose of developing and mining mineral deposits such as uranium
which are subject to location under the General Mining Law.

           

          3.           Several
Sections or entire Townships where the relevant claims are located are subject
to a General Land Office Order of October 18, 1910 reserving coal to the United
States and excluding coal from location under the General Mining Law of 1872.
That coal reservation remained in effect until the Mineral Leasing Act of 1920
was passed which established a federal leasing system for coal, oil and gas and
other specified minerals. Although notes prepared by BLM personnel in certain of
the Lead Case Files listed below raise the question whether this coal
reservation or classification has any effect on the location of the relevant
mining claims, that coal classification had no effect on uranium as a locatable
mineral and did not exclude any relevant uranium deposits from location under
the general mining laws.

          

          4.           Certain
claims which are the subject of this title report are located wholly or partially within a
“Stock Driveway Withdrawal.” A Stock Driveway Withdrawal remains open to the
location of mining claims within the area withdrawn but restricts the
development and operations on any claims located within such withdrawal so that
“all prospecting and mining operations” may not cause any interference with the
use of the surface for Stock Driveway purposes “except as may actually be
necessary.” 43 C.F.R. §§3815.1 and 3815.2.

           

          

          
            
              
                 

                DNVRDOCS
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              2

              
                

              

            

            
               

            

          

          B.           SPECIFIC
ENCUMBRANCES:

           

          BH Claim Group (BH1 through
BH36 and  BH41 through BH216) Lead Case File
WMC267137

           

          1.           Portions
of the BH143 and BH144 Claims cover land owned by the State of Wyoming in
Section 36 of Townships 25 North, Range 75 West, which is subject to State of
Wyoming Uranium Mining Lease 0-40774.  To the extent that these two BH
Claims overlap State property, at least these portions of those claims are
void.

           

          2.           All
or some portion of the BH153 through BH162 Claims and the BH171 through BH180
Claims are located on the E1⁄2 of Section 12 of Township 24 North, Range 75W. That
land is subject to an Order of June 21, 1939 withdrawing that parcel as Stock
Driveway No. 255.  Portions of the same parcel (the E1⁄2 of that Section
12) are also subject to two easements for a pipeline and for an improved dirt
road running through the E1⁄2 of the E1⁄2 of that Section. The existence of those
easements may limit or prohibit the exploration and development of the mining
claims (BH31, BH32 and BH33) traversed by those easements.

           

          3.           A
block of land in Section 30 of Township 25 North, Range 75 N was “private
mineral rights.” Portions of the BH8, BH10, BH12, BH14, BH23, BH26, BH28, BH30
and BH34 Claims are partially located on that private land, and, therefore,
those portions of claims actually overlapping that private land are
invalid.

           

          4.           Attachment 1
indicates that portions of twenty-two (22) of the Claims in the BH Claim Group
extend into Sections 1, 11 and 13 of Township 24 North, Range 75 West which have
been patented without any reservation of minerals to the United States. The
portions of those claims overlapping such private land are void.

           

          5.           The
map of the BH Claim Group in Township 25 North, Range 75 West and Township 25
North, Range 76 West is attached hereto as Attachment 2. That
map indicates that portions of twelve (12) BH Claims extend into Sections 19 and
29 of that Township which have been patented without the reservation of any
minerals to the United States. That map also indicates that portions of
twenty-one (21) Claims in the BH Claim Group extend into Sections 23 and 25
which were patented without any reservation of minerals to the United States.
The portions of those claims extending into private land are void.

           

          6.           Location
Certificates for the BH 113, 114, 143 and 144 Claims requiring corrected
location descriptions will be amended prior to transfer of the claims into The
Bootheel Project, LLC.

           

          
            
              
                 

                DNVRDOCS
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              3 

              
                

              

            

            
               

            

          

          TD Claim Group (TD #9
through TD #26 and TD #31 through TD #40)(Lead Case File
WMC260873)

          

          1.           Approximately
the western one-half of TD #19, TD #20 and TD #21 lie on private lands not open
to the location of mining claims under the General Mining Law in Section 1,
Township 24 North, Range 75 West. The location certificates for each of these
claims indicate that they are only 400’ wide and that the point of discovery
lies at a location 200’ from each side of the claims. Only those portions of the
claims which lie within said Section 1 are invalid.

           

          2.           All
or a portion of each claim in the TD Claim Group lie on lands within the Stock
Driveway Withdrawal #255.  Maps depicting the extent to which the TD
Claim Group overlaps this Withdrawal are attached as Attachment
3.

           

          3.           Attachment 3 also
indicates that a 25’ wide pipeline easement or right-of-way (designated W23883)
crosses portions of the TD #17, TD #18, TD #19, TD #21, TD #31, TD #32 and TD
#33 Claims.  Depending on the mining methods used, the presence of
this easement may limit or prohibit mining within or beneath that
easement.

           

          4.           Attachment 3 also
indicates that an easement or right-of-way for a public road (designated W54943)
under Rev. Stat. 2477 traverses portions of the TD #15, TD #16, TD #17, TD #22,
TD #31 and TD #32 Claims. Depending on the mining methods used, the existence of
this easement or right-of-way for a public road may limit or prohibit mining
within or beneath that easement.

           

          5.           The
Geographic Index reviewed in April 2007 indicates that the West portion of
TD#19, #20 and #21 are listed as in Section 1 of Township 24 North, Range 74
West, when in fact, those claims are located in Section 1 of Township 24 North,
Range 75 West.  This error in the Geographic Index does not affect the
validity of those claims.

           

          

           

          Rob Claim Group (Rob 1
through Rob 36)(Lead Case File WMC278669)

           

          1.           The
southern edges of Rob 19 and Rob 20 appear to extend into Section 5 of Township
24 North, Range 74 West.  Section 5 is not open for mineral location
and therefore any portion of Rob 19 and 20 extending into Section 5 are
invalid.

           

          2.           Rob
1 through Rob 18 are located in Section 30 of Township 25 North, Range 74 West
on lands subject to a Stock Driveway Withdrawal (SD255).

           

          3.           An
easement for an improved dirt road (W54943) apparently issued by the U.S. Forest
Service and an easement for a pipeline (W23883) 25 feet in width paralleling
that road traversed portions of Rob 1, 3, 5, 7, 9, 11, 13, 15 and 17 in the E1⁄2E1⁄2
of said Section 30.  There also is an easement to maintain a corral on
the Rob 11 claim and to maintain a windmill and water trough storage facility on
the Rob 13 claim.  The existence of these surface facilities may limit
or prohibit the extraction of minerals from the affected portion of those
claims, depending on the mining methods used.

           

          
            
              
                 

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              4 

              
                

              

            

            
               

            

          

          

           

          4.           The
northern edges of Rob 17 and Rob 18 appear to extend into Section 19 of Township
25 North, Range 74 West, where the minerals are privately
owned.  Therefore, the portions on the northern edge of the Rob 17 and
Rob 18 claims, if any, which extend into Section 19 are invalid.

           

          5.           The
Lead Case File reviewed included a note from the BLM employee who reviewed the
land status of these claims that the Location Certificates for the Rob 17, Rob
19 and the Rob 20 indicated that those claims extended into quarter-sections of
adjoining sections in the same Township 25 North, Range 74 West, which were
contrary to the actual descriptions of those claims in the Location Certificates
as reflected in the map prepared by the BLM and in the map prepared by Ur-Energy
USA, Inc.  If such discrepancies do exist, the relevant Location
Certificates should be amended to correctly refer to the quarter-sections in
which those claims are actually located on the ground.  A note in the
Lead Case File reviewed indicates that a portion of the southern edge of Rob 19
extends into property in which the minerals are privately owned in Section 5 of
Township 24 North, Range 74 West.  If that comment is correct, that
portion of the Rob 19 claim would be invalid.  It does not appear from
the Location Certificate for the Rob 19 that the discovery monument for that
claim would be included in the portion that may extend into that Section
5.  Location Certificates for the Rob 17, 19 and 20 Claims requiring
corrected location descriptions will be amended prior to transfer of the claims
into The Bootheel Project, LLC.

           

          

           

          C.           ROYALTY DEED AND OVERRIDING
ROYALTY:

          

          

          Power
Resources Inc. has an Overriding Royalty on the following Property

          

          State of
Wyoming Uranium Lease Number 0-40774 covering all of Section 36, Township 25
North, Range 75 West, 6th P. M.,
Albany County, Wyoming

          

          BH Claims
Numbers 113 thru  216 located in Sections 2, 12, 14, and 24 of
Township 24 North, Range 75 West, 6th P. M.,
Albany County, Wyoming

          

          BH GAP
Claims Numbers 1 thru 4 located in Section 7, of Township 24 North, Range 74
West, and Section 12, of Township 24 North, Range 75 West, 6th  P.M.,
Albany County, Wyoming

          

          TD Claims
Numbers 9 thru 26 and 31 thru 40 located in Section 6 of Township 24 North,
Range 74 West, and Section 12 of Township 24 North, Range 75 West, 6th P.M.,
Albany County, Wyoming

          
            
              
                 

                DNVRDOCS
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              5 

              
                

              

            

            
               

            

          

          State of
Wyoming Uranium Lease Number 0-41090 covering all of Section 36, Township 25
North, Range 76 West, 6th P.M.,
Albany County, Wyoming

          

          BH Claims
Numbers 1 thru 26, 28 thru 36 and 41 thru 112 located in Section 30 of Township
25 North, Range 75 West, and Sections 24 and 26 of Township 25 North, Range 76
West, 6th P.M.,
Albany County Wyoming

          

          Rob
Claims Numbers 1 thru 36 located in Sections 30 and 32 of Township 25 North,
Range 74 West, 6th P.M.,
Albany County, Wyoming

          

          

          Which
royalty is as follows:

          

          (a) For
uranium mined and removed from the Property, 1.0% of the Market Price (as
determined below) of the contained U3O8 extracted from the
Property.  The Market Price of the U3O8 shall be the monthly “Nuexco
Spot Price Indicator Exchange Value” as published in the Nuclear Market Review
by Trade Tech, LLC for the month in which the U3O8 is removed from the
Property.  In the event the “Nuexco Spot Price Indicator Exchange
Value” is no longer published, or if, in the exercise of good faith, it is
agreed by both Grantor and Grantee that the “Nuexco Spot Price Indicator
Exchange Value” is no longer reflective of the Market Price, Grantor and Grantee
shall mutually designate a fair and reasonable alternative third party measure
of the Market Price of U3O8 in concentrate.

          

          (b) For
vanadium, other fissionable source materials, and other spatially associated
minerals and materials that are mined and removed from the Property, the 1.0%
royalty shall be payable on the fair market value of such minerals and
materials.

          

          

           

          D.           CONFLICTS WITH CLAIMS
LOCATED BY OTHER PARTIES

           

          BH Claim
Group   (Lead Case File WMC267137)

           

          1.           There
is a conflict between the TD #31 through TD #40 Claims and the BH 153 through BH
162 Claims. The BH Claims were all located in May 2005 almost one year after the
location of the TD Claim Group. If the conflicting TD Claims are based on a
valid discovery of valuable minerals and all of the acts of location have been
properly completed, the overlapping BH Claims listed in this Paragraph are
junior, at least, to the extent of the area of overlap of the TD
Claims.

           

          
            
              
                 

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            EXHIBIT
C

             

            TO
EXPLORATION, DEVELOPMENT & MINE OPERATING AGREEMENT

             

            OF
THE BOOTHEEL PROJECT, LLC

             

            NET
PROCEEDS CALCULATION

             

            1.1           Income and
Expenses.  Net Proceeds shall be calculated by deducting from
the Gross Revenue (as defined below), such costs and expenses attributable to
Exploration, Development, Mining, the marketing of Products and other Operations
as are incurred under generally accepted accounting principles and practices
consistently applied, including without limitation:

             

            
              	
                       
      

                    	
                      (a)

                    	
                      All
      costs and expenses of constructing, replacing, expanding, modifying,
      altering or changing from time to time the Mining facilities. Costs and
      expenses of improvements (such as haulage ways or mill facilities) that
      are also used in connection with workings other than the Company
      Properties shall be charged to the Company Properties only in the
      proportion that their use in connection with the Company Properties bears
      to their total use;

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      Ad
      valorem real property and unsecured personal property taxes, and all
      taxes, other than income taxes, applicable to Mining of the Company
      Properties, including without limitation all state mining taxes, sales
      taxes, severance taxes, license fees and governmental levies of a similar
      nature;

                    

            

             

            
              	
                       
      

                    	
                      (c)

                    	
                      All
      expenses incurred relative to the sale of Products, including an allowance
      for commissions at rates which are normal and customary in the
      industry;

                    

            

             

            
              	
                       
      

                    	
                      (d)

                    	
                      All
      amounts payable to the remaining Member during Mining pursuant to any
      applicable operating or similar agreement in force with respect
      thereto;

                    

            

             

            
              	
                       
      

                    	
                      (e)

                    	
                      All
      expenditures funded by the non-withdrawing Member for Exploration and
      Development on the Company
Properties;

                    

            

             

            
              	
                       
      

                    	
                      (f)

                    	
                      Interest
      on monies borrowed or advanced for costs and expenses by the Company, but
      in no event in excess of the maximum permitted by
  law;

                    

            

             

            
              	
                       
      

                    	
                      (g)

                    	
                      An
      allowance for reasonable working capital and
  inventory;

                    

            

             

            
              	
                       
      

                    	
                      (h)

                    	
                      Costs
      of any Environmental Compliance Fund, or similar funding including but not
      limited to unfunded reclamation obligations, as may be created by action
      and directive of the Management Committee at any time during the term of
      the Company;

                    

            

             

            
              	
                       
      

                    	
                      (i)

                    	
                      Actual
      costs of Operations; and

                    

            

             

            
              
                50538524.8 

              

              
                1 

                
                  

                

              

              
                 

              

            

            

             

            
              	
                       
      

                    	
                      (j)

                    	
                      Rental,
      royalty, production, and purchase
payments.

                    

            

             

            For purposes hereof, the term “Gross Revenue” shall mean the
sum of (i) gross receipts from sale of Products, less any charges for sampling,
assaying, or penalties; (ii) gross receipts from the sale or other disposition
of Assets; (iii) insurance proceeds; (iv) compensation for expropriation of
Assets; and (v) judgment proceeds. Gross receipts for sale of Products shall be
determined by the actual sales receipts.

             

            It is intended that the remaining
Member shall recoup from Gross Revenue all of its on going contributions for
Exploration, Development, Mining, Expansion and Modification, the marketing of
Products, and all Environmental Compliance and Environmental Liabilities and
related obligations before any Net Proceeds are distributed to any person
holding a Net Proceeds interest. No deduction shall be made for income taxes,
depreciation, amortization or depletion. If in any year after the beginning of
Mining of the Company Properties an operating loss relative thereto is incurred,
the amount thereof shall be considered as and be included with outstanding costs
and expenses and carried forward in determining Net Proceeds for subsequent
periods.

             

            1.2           Payment of Net
Proceeds.  Payments of Net Proceeds shall commence in the
calendar quarter following the calendar quarter in which Net Proceeds are first
realized, and shall be made forty five (45) days following the end of each
calendar quarter during which Net Proceeds are realized, and shall be subject to
adjustment, if required, at the end of each calendar year. The recipient of such
Net Proceeds payments shall have the right to audit such payments following
receipt of each payment by giving notice to the remaining Member and by
conducting such audit in accordance with Subsection 9.6 (b) of the Agreement.
Costs of such an audit shall be borne by the holder of the Net Proceeds interest
described herein.

             

            

            

            
              
                50538524.8   

              

              
                2 

                
                  

                

              

              
                 

              

            

            EXHIBIT
D

             

            TO
EXPLORATION, DEVELOPMENT & MINE OPERATING AGREEMENT

             

            OF
THE BOOTHEEL PROJECT, LLC

             

            PRE-EMPTIVE
RIGHTS

             

            1.1           Pre-emptive
Rights.  If either Member intends to Transfer all or any part
of its Membership Interest in the Company, or an Affiliate of either Member
intends to Transfer Control of such Member (“Transferring Entity”), such
Member shall promptly notify the other Member of such intentions. The notice
shall state the price and all other pertinent terms and conditions of the
intended Transfer, and shall be accompanied by a copy of the offer or the
contract for sale. If the consideration for the intended transfer is, in whole
or in part, other than monetary, the notice shall describe such consideration
and its monetary equivalent (based upon the fair market value of the
non-monetary consideration and stated in teens of cash or
currency).

             

            The other
Member shall have sixty (60) days from the date such notice is delivered to
notify the Transferring Entity (and to the Member if its Affiliate is the
Transferring Entity) whether it elects to acquire the offered interest at the
same price (or its monetary equivalent in cash or currency) and on the same
terms and conditions as set forth in the notice. If it does so elect, the
acquisition by the other Member shall be consummated promptly after notice of
such election is delivered;

             

            
              	
                       
      

                    	
                      (a)

                    	
                      If
      the other Member fails to so elect within the period provided for above,
      the Transferring Entity shall have sixty (60) days following the
      expiration of such period to consummate the Transfer to a third party at a
      price and on terms no less favourable to the Transferring Entity than
      those offered by the Transferring Entity to the other Member in the
      aforementioned notice;

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      If
      the Transferring Entity fails to consummate the Transfer to a third party
      within the period set forth above, the pre-emptive right of the other
      Member in such offered interest shall be deemed to be revived. Any
      subsequent proposal to Transfer such interest shall be conducted in
      accordance with all of the procedures set forth in this
      Paragraph.

                    

            

             

            1.2           Exceptions to Pre-emptive
Right.  Paragraph 1.l above shall not apply to the
following:

             

            
              	
                       
      

                    	
                      (a)

                    	
                      Transfer
      by either Member of all or any part of its Membership Interest to an
      Affiliate;

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      Incorporation
      of either Member, or corporate consolidation or reorganization of either
      Member by which the surviving entity shall possess substantially of the
      stock or ownership interest, and be subject to substantially all of this
      liabilities and obligations of that
Member;

                    

            

             

            
              
                 

              

              
                1 

                
                  

                

              

              
                 

              

            

            

             

            
              	
                       
      

                    	
                      (c)

                    	
                      Corporate
      merger or amalgamation involving either Member by which the surviving
      entity or amalgamated company shall possess all of the stock or ownership
      interest, and be subject to substantially all of the liabilities and
      obligations of that Member;

                    

            

             

            
              	
                       
      

                    	
                      (d)

                    	
                      the
      transfer of Control of either Member by an Affiliate to such Member or to
      another Affiliate;

                    

            

             

            
              	
                       
      

                    	
                      (e)

                    	
                      subject
      to provisions of the Agreement, the grant by either Member of a security
      interest in its Membership Interest by
  Encumbrance;

                    

            

             

            
              	
                       
      

                    	
                      (f)

                    	
                      the
      creation by any Affiliate of either Member of an Encumbrance affecting its
      Control of such Member;

                    

            

             

            
              	
                       (g)

                    	
                      a
      transfer by an Affiliate of either Member by or as a result of a Change of
      Control of such Affiliate.

                    

            

             

            
              
                 

              

              
                2 

                
                  

                

              

              
                 

              

            

            EXHIBIT
E

             

            THE
EXPLORATION, DEVELOPMENT & MINE OPERATING AGREEMENT OF THE BOOTHEEL PROJECT,
LLC

             

            TAX
AND ACCOUNTING MATTERS

             

            ARTICLE
I

             

            EFFECT OF THIS
EXHIBIT

             

            This Exhibit shall govern the
relationship of the Members and the Company with respect to the tax and other
matters addressed herein. Except as otherwise indicated, capitalized terms used
in this Exhibit shall have the meanings given to them in the Agreement. In the
event of a conflict between this Exhibit and the other provisions of the
Agreement, the terms of this Exhibit shall control.

             

            ARTICLE
II

             

            TAX MATTERS
PARTNER

             

            2.1           Designation of Tax Matters
Partner.  The Manager is hereby designated the tax matters
partner (the “TMP”) as
defined in Section 6231(a)(7) of the Internal Revenue Code of 1986 (the “Code”) and shall be
responsible for, make elections for, and prepare and file any federal and state
tax returns or other required tax forms following approval of the Management
Committee. In the event of any change in Manager, the Member serving as Manager
at the end of a taxable year shall continue as TMP with respect to all matters
concerning such year unless the TMP for that year is required to be changed
pursuant to applicable Treasury Regulations. The TMP and the other Member shall
use reasonable best efforts to comply with the responsibilities outlined in this
Article II and in Sections 6221 through 6233 of the Code (including any Treasury
regulations promulgated thereunder) and in doing so shall incur no liability to
any other party.

             

            2.2           Notice.  Each Member
shall furnish the TMP with such information (including information specified in
Section 6230(e) of the Code) as it may reasonably request to permit it to
provide the Internal Revenue Service with sufficient information to allow proper
notice to the Members in accordance with Section 6223 of the Code. The TMP shall
keep each Member informed of all administrative and judicial proceedings for the
adjustment at the partnership level of partnership items in accordance with
Section 6223(g) of the Code.

             

            2.3           Inconsistent Treatment of
Tax Item.  If an
administrative proceeding contemplated under Section 6223 of the Code has begun,
and the TMP so requests, each Member shall notify the TMP of its treatment of
any partnership item on its federal income tax return that is inconsistent with
the treatment of that item on the partnership return.

             

            2.4           Extensions of Limitation
Periods.  The TMP shall not enter into any extension of the
period of limitations as provided under Section 6229 of the Code without first
giving reasonable advance notice to the other Member of such intended
action.

             

            2.5           Requests for Administrative
Adjustments.  Neither Member shall file, pursuant to Section
6227 of the Code, a request for an administrative adjustment of partnership
items for any taxable year of the Company without first notifying the other
Member. If the other Member agrees with the requested adjustment, the TMP shall
file the request for administrative adjustment

             

            
              
                 

              

              
                1

                
                  

                

              

              
                 

              

            

            on behalf
of the Company. If consent is not obtained within thirty (30) days after notice
from the proposing Member, or within the period required to timely file the
request for administrative adjustment, if shorter, either Member, including the
TMP, may file that request for administrative adjustment on its own
behalf.

             

            2.6           Judicial
Proceedings.  Either Member intending to file a petition under
Section 6226, 6228 or other sections of the Code with respect to any partnership
item, or other tax matters involving the Company, shall notify the other Member
of such intention and the nature of the contemplated proceeding. If the TMP is
the Member intending to file such petition, such notice shall be given within a
reasonable time to allow the other Member to participate in the choosing of the
forum in which such petition will be filed. If both Members do not agree on the
appropriate forum, then the appropriate forum shall be decided in accordance
with Section 6.2 of the Agreement.   If a deadlock results, the
TMP shall choose the forum. If either Member intends to seek review of any court
decision rendered as a result of a proceeding instituted under the preceding
part of this Paragraph, such Member shall notify the other Member of such
intended action.

             

            2.7           Settlements.  The
TMP shall not bind the other Member to a settlement agreement without first
obtaining the written consent of any such Member. Either Member who enters into
a settlement agreement for its own account with respect to any partnership
items, as defined by Section 6231(a)(3) of the Code, shall notify the other
Member of such settlement agreement and its terms within ninety (90) days from
the date of settlement.

             

            2.8           Fees and
Expenses.  The TMP shall not engage legal counsel, certified
public accountants, or others without the prior consent of the Management
Committee. Either Member may engage legal counsel, certified public accountants,
or others in its own behalf and at its sole cost and expense. Any reasonable
item of expense, including but not limited to fees and expenses for legal
counsel, certified public accountants, and others which the TMP incurs (after
proper consent by the Management Committee as provided above) in connection with
any audit, assessment, litigation, or other proceeding regarding any partnership
item, shall constitute proper charges to the Business Account and shall be borne
by the Members as any other item which constitutes a direct charge to the
Business Account pursuant to the Agreement.

             

            2.9           Survival.  The
provisions of the foregoing paragraphs, including but not limited to the
obligation to pay fees and expenses contained in Paragraph 2.8, shall survive
the termination of the Company or the termination of either Member’s interest in
the Company and shall remain binding on the Members for a period of time
necessary to resolve with the Internal Revenue Service or the Department of the
Treasury any and all matters regarding the federal income taxation of the
Company for the applicable tax year(s).

             

            ARTICLE
III

             

            TAX ELECTIONS AND
ALLOCATIONS

             

            3.1           Company Election.  It is
understood and agreed that the Members have created a limited liability
company and the Members agree that the Company will be a partnership for United
States federal and state income tax purposes, and, unless otherwise agreed to
hereafter by all Members, no Member shall take any action to change
the status of the Company as a partnership under Treas. Reg. §1.7701-3 or
similar provision of state law.  The Manager shall file with the
appropriate office of the Internal Revenue Service a partnership income tax
return covering the Operations. The Members recognize that the Agreement may be
subject to state income tax statutes. The Manager shall file with the
appropriate offices of the state agencies any required

             

            
              
                 

              

              
                2

                
                  

                

              

              
                 

              

            

            partnership
state income tax returns. Each Member agrees to furnish to the Manager the
information referenced in this Article and in Article IV, and any other
information it may have relating to Operations as shall be required for proper
preparation of such tax returns. The Manager shall furnish to the other Member
for its review a copy of each proposed income tax return at least two weeks
prior to the date the return is filed.

             

            3.2           Tax Elections.  The
Company shall make the following elections for book, accounting and/or tax
purposes of all partnership income tax returns:

             

            
              	
                       
      

                    	
                      (a)

                    	
                      To
      use the accrual method of
accounting.

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      Pursuant
      to the provisions at Section 706(b)(1) of the Code, to use as its taxable
      year the year ended May 31.  In this connection, NFUR represents
      that its taxable year is the year ending December 31, and TargetSub
      represents that its taxable year is the year ending May
  31.

                    

            

             

            
              	
                       
      

                    	
                      (c)

                    	
                      To
      deduct currently all development expenses to the extent possible under
      Section 616 of the Code.

                    

            

             

            
              	
                       
      

                    	
                      (d)

                    	
                      Unless
      the Members unanimously agree otherwise, to compute the allowance for
      depreciation in respect of all depreciable Assets using the maximum
      accelerated tax depreciation method and the shortest life
      permissible.

                    

            

             

            
              	
                       
      

                    	
                      (e)

                    	
                      To
      treat advance royalties as deductions from gross income for the year paid
      or accrued to the extent permitted by
law.

                    

            

             

            
              	
                       
      

                    	
                      (f)

                    	
                      To
      adjust the basis of property of the Company under Section 754 of the Code
      at the request of either Member;

                    

            

             

            
              	
                       
      

                    	
                      (g)

                    	
                      To
      amortize over the shortest permissible period all organizational
      expenditures and business start up expenses under Sections 195 and 709 of
      the Code;

                    

            

             

            Any other
election required or permitted to be made by the Company under the Code or any
state tax law shall be made as determined by the Management
Committee.

             

            Each
Member will keep the TMP informed of the status of its election under Section
617 (a) of the Code concerning exploration expenses.  Each Member
reserves the right to capitalize its share of development and/or exploration
expenses of the Company in accordance with Section 59(e) of the Code, provided
that a Member’s election to capitalize all or any portion of such expenses shall
not affect the Member’s Capital Account.

             

            3.3           Allocations to Members.  Allocations
for Capital Account purposes shall be in accordance with the
following:

             

            
              	
                       
      

                    	
                       (a)

                    	
                      Exploration
      expenses and development cost deductions shall be allocated among the
      Members in accordance with their respective contributions to such expenses
      and costs.

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      Depreciation
      and amortization deductions with respect to a depreciable Asset shall be
      allocated among the Members in accordance with their
      respective

                    

            

             

            
              
                 

              

              
                3

                
                  

                

              

              
                 

              

            

            contributions
to the adjusted basis of the Asset which gives rise to the depreciation,
amortization or loss deduction.

             

            
              	
                       
      

                    	
                      (c)

                    	
                      Production
      and operating cost deductions shall be allocated among the Members in
      accordance with their respective Membership
  Interest.

                    

            

             

            
              	
                       
      

                    	
                      (d)

                    	
                      Deductions
      for depletion (to the extent of the amount of such deductions that would
      have been determined for Capital Account purposes if only cost depletion
      were allowable for federal income tax purposes) shall be allocated to the
      Members in accordance with their respective contributions to the adjusted
      basis of the depletable property. Any remaining depletion deductions shall
      be allocated to the Members so that, to the extent possible, the Members
      receive the same total amounts of percentage depletion as they would have
      received if percentage depletion were allocated to the Members as
      determined by Subparagraph 3.3(e), below, as the basis for calculating the
      federal income tax deduction for percentage
  depletion.

                    

            

             

            
              	
                       
      

                    	
                      (e)

                    	
                      Subject
      to Subparagraph 3.3(g) below, gross income on the sale of production shall
      be allocated in accordance with the Members’ respective Membership
      Interests.

                    

            

             

            
              	
                       
      

                    	
                       (f)

                    	
                      Except
      as provided in Subparagraph 3.3(g) below, gain or loss on the sale of a
      depreciable or depletable asset shall be allocated so that, to the extent
      possible, the net amount reflected in the Members’ Capital Account with
      respect to such property (taking into account the cost of such property,
      depreciation, amortization, depletion or other cost recovery deductions
      and gain or loss) most closely reflects the Members’ Membership
      Interests.

                    

            

             

            
              	
                       
      

                    	
                      (g)

                    	
                      Gains
      and losses on the sale of all or substantially all the Assets of the
      Company shall be allocated so that, to the extent possible, the Members’
      resulting Capital Account balances are in the same ratio as their
      Membership Interests at the time of such
sale.

                    

            

             

            
              	
                       
      

                    	
                      (h)

                    	
                      The
      Members acknowledge that expenses and deductions allocable under the
      preceding provisions of this Paragraph may be required to be capitalized
      into production under Section 263A of the Code. With respect to such
      capitalized expenses or deductions, the allocation of gross income on the
      sale of production shall be adjusted, in any reasonable manner
      consistently applied by the Manager, so that the same net amount (subject
      possibly to timing differences) is reflected in the Capital Accounts as if
      such expenses or deductions were instead deductible and allocated pursuant
      to the preceding provisions of this
Paragraph.

                    

            

             

            
              	
                       
      

                    	
                      (i)

                    	
                      All
      deductions and losses that are not otherwise allocated in this Paragraph
      shall be allocated among the Members in accordance with their respective
      Membership Interests.

                    

            

             

            
              	
                       
      

                    	
                      (j)

                    	
                      Any
      recapture of exploration expenses under Section 617(b)(1)(A) of the Code,
      and any disallowance of depletion under Section 617(b)(1)(B) of the Code,
      shall be borne by the Members in the same manner as the related
      exploration expenses were allocated to, or claimed by,
    them.

                    

            

             

            
              
                 

              

              
                4

                
                  

                

              

              
                 

              

            

            

             

            
              	
                       
      

                    	
                      (k)

                    	
                      All
      other items of income and gain shall be allocated to the Members in
      accordance with their Membership
Interests.

                    

            

             

            
              	
                       
      

                    	
                      (l)

                    	
                      If
      a reduced Membership Interest is restored pursuant to Section 10.6 of the
      Agreement, the Manager shall endeavor to allocate items of income, gain,
      loss, and deduction (in the same year as the restoration of such
      Membership Interest or, if necessary, in subsequent years) so as to cause
      the Capital Account balances of the Members to be the same as they would
      have been if the restored Membership Interest had never been
      reduced.

                    

            

             

            
              	
                      (m)

                    	
                      If
      the Members’ Membership Interests change during any taxable year of the
      Company, the distributive share of items of income, gain, loss and
      deduction of each Member shall be determined in any manner (1) permitted
      by Section 706 of the Code, and (2) agreed by all Members. If the Members
      cannot agree on a method, the method shall be determined by the Manager in
      consultation with the Company’s tax advisers, with preference given to the
      interim closing-of-the-books method except where application of that
      method would result in undue administrative expense in relationship to the
      amount of the items to be
allocated.

                    

            

             

            
              	
                       
      

                    	
                      (n)

                    	
                      For
      purposes of this Paragraph 3.3, items financed through indebtedness of, or
      from revenues of, the Company shall be treated as funded from
      contributions made by the Members to the Company in accordance with their
      Membership Interests. “Nonrecourse deductions” as defined by Treas. Reg. §
      1.704-2 (b)(1) shall be allocated between the Members in proportion to
      their Membership Interests.

                    

            

             

            3.4           Regulatory
Allocations.  Notwithstanding the provisions of Paragraph 3.3
to the contrary, the following special allocations shall be given effect for
purposes of maintaining the Members’ Capital Accounts.

             

            
              	
                       
      

                    	
                      (a)

                    	
                      If
      either Member unexpectedly receives any adjustments, allocations, or
      distributions described in Treas. Reg. §1.704-1(b)(2)(ii)(d)(4), §1.704-
      1(b)(2)(ii)(d)(5) or §1.704-1(b)(2)(ii)(d)(6), which result in a deficit
      Capital Account balance, items of income and gain shall be specially
      allocated to each such Member in an amount and manner sufficient to
      eliminate, to the extent required by the Treasury Regulations, the Capital
      Account deficit of such Member as  quickly as possible. For the
      purposes of this Subparagraph 3.4(a), each Member’s Capital Account
      balance shall be increased by the sum of (i) the amount such Member is
      obligated to restore pursuant to any provision of the Agreement, and (ii)
      the amount such Member is deemed to be obligated to restore pursuant to
      the penultimate sentences of Treas. Reg. §§ 1.704-2(g)(1) and
      1.704-2(i)(5).

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      If
      there is a net decrease in partnership minimum gain for a taxable year of
      the Company, each Member shall be allocated items of income and gain for
      that year equal to that Member’s share of the net decrease in partnership
      minimum gain, all in accordance with Treas. Reg. §1.704-2(f). If, during a
      taxable year of the Company, there is a net decrease in partner
      nonrecourse debt minimum gain, any Member with a share of that partner
      nonrecourse debt minimum gain as of the beginning of the year shall be
      allocated items of income and gain for the year (and, if necessary, for
      succeeding years) equal to that partner’s share of the
  net

                    

            

             

            
              
                 

              

              
                5

                
                  

                

              

              
                 

              

            

            decrease
in partner nonrecourse debt minimum gain, all in accordance with Treas. Reg.
§1.704-2(i)(4).  Pursuant to Treas. Reg. §1.704-2(i)(1), deductions
attributable to “partner nonrecourse liability” shall be allocated to the Member
that bears the economic risk of loss for such liability (or is treated as
bearing such risk).

             

            
              	
                       
      

                    	
                      (c)

                    	
                      If
      the allocation of deductions to either Member would cause such Member to
      have a deficit Capital Account balance at the end of any taxable year of
      the Company (after all other allocations provided for in this Article III
      have been made and after giving effect to the adjustments described in
      Subparagraph 3.4(a)), such deductions shall instead be allocated to the
      other Member.

                    

            

             

            3.5           Curative
Allocations.  The allocations set forth in Paragraph 3.4 (the
“Regulatory
Allocations”) are intended to comply with certain requirements of the
Treasury Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of income,
gain, loss or deduction pursuant to this Paragraph. Therefore, notwithstanding
any other provisions of this Article III (other than the Regulatory
Allocations), the Manager shall make such offsetting special allocations of
income, gain, loss or deduction in whatever manner it determines appropriate so
that, after such offsetting allocations are made, each Member’s Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of the
Agreement and all items were allocated pursuant to Paragraph 3.3 without regard
to Paragraph 3.4.

             

            3.6           Tax
Allocations.  Except as otherwise provided in this Paragraph,
items of taxable income, deduction, gain and loss shall be allocated in the same
manner as the corresponding item is allocated for book purposes under Paragraphs
3.3, 3.4 and 3.5 of the corresponding item determined for Capital Account
purposes.

             

            
              	
                       
      

                    	
                      (a)

                    	
                      Recapture
      of tax deductions arising out of a disposition of property shall, to the
      extent consistent with the allocations for tax purposes of the gain or
      amount realized giving rise to such recapture, be allocated to the Members
      in the same proportions as the recaptured deductions were originally
      allocated or claimed.

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      To
      the extent required by Section 704(c) of the Code, income, gain, loss, and
      deduction with respect to property contributed to the Company by a Member
      shall be shared among both Members so as to take account of the variation
      between the basis of the property to the Company and its fair market value
      at the time of contribution. The Members intend that Section 704(c) shall
      effect no allocations of tax items that are different from the allocations
      under Paragraphs 3.3, 3.4 and 3.5 of the corresponding items for Capital
      Account purposes; provided that gain or loss on the sale of property
      contributed to the Company shall be allocated to the contributing Member
      to the extent of the built-in gain or loss, respectively, as determined
      under Treas. Reg. §1.704-3(a). However, to the extent that allocations of
      other tax items are required pursuant to Section 704(c) of the Code to be
      made other than in accordance with the allocations under Paragraphs 3.3,
      3.4 and 3.5 of the corresponding items for Capital Account purposes,
      Section 704(c) shall be applied in accordance with the method available
      under Treas. Reg. §1.704-3 which most closely approximates the allocations
      set forth in Paragraphs 3.3, 3.4, and
3.5.

                    

            

             

            
              
                 

              

              
                6

                
                  

                

              

              
                 

              

            

            

             

            
              	
                       
      

                    	
                      (c)

                    	
                      Depletion
      deductions with respect to contributed property shall be determined
      without regard to any portion of the property’s basis that is attributable
      to pre-contribution expenditures by NFUR that were capitalized under Code
      Sections 616(b), 59(e) and 291(b). Deductions attributable to
      pre-contribution expenditures by NFUR shall be calculated under such Code
      Sections as if NFUR continued to own the depletable property to which
      such deductions are attributable, and such deductions shall be reported by
      the Company and shall be allocated solely to
  NFUR.

                    

            

             

            
              	
                       
      

                    	
                      (d)

                    	
                      The
      Members understand the allocations of tax items set forth in this
      Paragraph, and agree to report consistently with such allocations for
      federal and state tax purposes.

                    

            

             

            ARTICLE
IV

             

            CAPITAL ACCOUNTS
AND
LIQUIDATION

             

            4.1           Capital Accounts.

             

            
              	
                       
      

                    	
                      (a)

                    	
                      A
      separate Capital Account shall be established and maintained by the TMP
      for each Member. Such Capital Account shall be increased by (i) the amount
      of money contributed by the Member to the Company, (ii) the fair market
      value of property contributed by the Member to the Company (net of
      liabilities secured by such contributed property that the Company is
      considered to assume or take subject to under Code Section 752) and (iii)
      allocations to the Member under Paragraphs 3.3, 3.4 and 3.5 of Company
      income and gain (or items thereof), including income and gain exempt from
      tax; and shall be decreased by (iv) the amount of money distributed to the
      Member by the Company, (v) the fair market value of property distributed
      to the Member by the Company (net of liabilities secured by such
      distributed property and that the Member is considered to assume or take
      subject to under Code Section 752), (vi) allocations to the Member under
      Paragraphs 3.3, 3.4 and 3.5 of expenditures of the Company not deductible
      in computing its taxable income and not properly chargeable to a Capital
      Account, and (vii) allocations of Company loss and deduction (or items
      thereof), excluding items described in (vi) above and percentage depletion
      to the extent it exceeds the adjusted tax basis of the depletable property
      to which it is attributable. The Members agree that the net fair market
      value of the property contributed by NFUR to the Company pursuant to
      Section 5.3 of the Agreement is
$1,000,000.

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      In
      the event that the Capital Accounts of the Members are computed with
      reference to the book value of any Asset which differs from the adjusted
      tax basis of such Asset, then the Capital Accounts shall be adjusted for
      depreciation, depletion, amortization and gain or loss as computed for
      book purposes with respect to such Asset in accordance with Treas.
      Reg. §1.704-1(b)(2)(iv)(g).

                    

            

             

            
              	
                       
      

                    	
                      (c)

                    	
                      In
      the event any interest in the Company is transferred in accordance with
      the terms of the Agreement, the transferee shall succeed to the Capital
      Account of the transferor to the extent it relates to the transferred
      interest, except as provided in Treas.
      Reg. §1.704-1(b)(2)(iv)(I).

                    

            

             

            
              
                 

              

              
                7

                
                  

                

              

              
                 

              

            

            

             

            
              	
                       
      

                    	
                      (d)

                    	
                      In
      the event property, other than money, is distributed to a Member, the
      Capital Accounts of the Members shall be adjusted to reflect the manner in
      which the unrealized income, gain, loss and deduction inherent in such
      property (that has not been reflected in the Capital Accounts previously)
      would be allocated among the Members if there was a taxable disposition of
      such property for the fair market value of such property (taking Section
      7701(g) of the Code into account) on the date of distribution. For this
      purpose the fair market value of the property shall be determined as set
      forth in Paragraph 4.2(a) below.

                    

            

             

            
              	
                       
      

                    	
                      (e)

                    	
                      In
      the event the Management Committee designates a Supplemental Business
      Agreement area within the Area of Interest as described in Article XIV of
      the Agreement, the Management Committee shall appropriately segregate
      Capital Accounts to reflect that designation and shall make such other
      modifications to the Agreement as are appropriate to reflect the manner of
      administering Capital Accounts in accordance with the terms of this
      Exhibit E.

                    

            

             

            
              	
                       
      

                    	
                      (f)

                    	
                      NFUR is
      contributing to the Agreement certain depletable properties with respect
      to which NFUR currently having an adjusted tax basis which may consist in
      part of depletable expenditures and in part of expenditures capitalized
      under Code Sections 616(b), 291(b) and/or 59(e). For purposes of
      maintaining the Capital Accounts, the Company’s deductions with respect to
      contributed property in each year for (i) depletion, (ii) deferred
      development expenditures under Section 616(b) attributable to
      pre-contribution expenditures, (iii) amortization under Section 291(b)
      attributable to pre-contribution expenditures, and (iv) amortization under
      Section 59(e) attributable to pre-contribution expenditures shall be the
      amount of the corresponding item determined for tax purposes pursuant to
      Subparagraph 3.6(c) multiplied by the ratio of (A) the book value at which
      the contributed property is recorded in the Capital Accounts to (B) the
      adjusted tax basis of the contributed property (including basis resulting
      from capitalization of pre-contribution development expenditures under
      Sections 616(b), 291(b), and
59(e)).

                    

            

             

            
              	
                       
      

                    	
                      (g)

                    	
                      The
      foregoing provisions, and the other provisions of the Agreement relating
      to the maintenance of Capital Accounts and the allocations of income,
      gain, loss, deduction and credit, are intended to comply with Treas. Reg.
      § 1.704-1(b), and shall be interpreted and applied in a manner consistent
      with such Regulations. In the event the Management Committee shall
      determine that it is prudent to modify the manner in which the Capital
      Accounts, or any debits or credits thereto, are computed in order to
      comply with such Regulations, the Management Committee, by unanimous
      consent, may make such modification, provided that it is not likely to
      have a material effect on the amount distributable to either Member upon
      liquidation of the Company pursuant to Paragraph
  4.2.

                    

            

             

            
              	
                       
      

                    	
                      (h)

                    	
                      If
      the Members so agree, upon the occurrence of an event described in Treas.
      Reg. § 1.704-1(b)(2)(iv)(5), the Capital Accounts shall be restated in
      accordance with Treas. Reg. § 1.704-1(b)(2)(iv)(f) to reflect the manner
      in which unrealized income, gain, loss or deduction inherent in the assets
      of the Company (that has not been reflected in the Capital Accounts
      previously) would be allocated among the Members if there were a taxable
      disposition of such assets for their fair market values, as determined in
      accordance with Subparagraph 4.2(a). For purposes of Paragraph 3.3, a
      Member shall be treated as contributing the
  portion

                    

            

             

            
              
                 

              

              
                8

                
                  

                

              

              
                 

              

            

            of the
book value of any property that is credited to the Member’s Capital Account
pursuant to the preceding sentence. Following a revaluation pursuant to this
Subparagraph 4.1(h), the Members’ shares of depreciation, depletion,
amortization and gain or loss, as computed for tax purposes, with respect to
property that has been revalued pursuant to this Subparagraph 4.1(h) shall be
determined in accordance with the principles of Code Section 704(c) as applied
pursuant to the final sentence of Subparagraph 3.6(b).

             

            4.2           Liquidation.  In the
event the Company is dissolved pursuant to Article XI of the Agreement then,
notwithstanding any provision of the Agreement to the contrary except for
Section 5.4 of the Agreement which provisions shall continue to
control, the following steps shall be taken (after taking into account any
transfers of Capital Accounts pursuant to this provision or any provision of the
Agreement):

             

            
              	
                       
      

                    	
                      (a)

                    	
                      The
      Capital Accounts of the Members shall be adjusted to reflect any gain or
      loss which would be realized by the Company and allocated to the Members
      pursuant to the provisions of Article III of this Exhibit if the Assets
      had been sold at their fair market value at the time of liquidation. The
      fair market value of the Assets shall be determined by agreement of the
      Members; provided, however, that in the event that the Members fail to
      agree on the fair market value of any Asset, its fair market value shall
      be determined by a nationally recognized independent engineering firm or
      other qualified independent party approved by both
  Members.

                    

            

             

            
              	
                       
      

                    	
                      (b)

                    	
                      All
      Assets shall be distributed to the Members in accordance with the balances
      in their Capital Accounts (after taking into account all allocations under
      Article III of this Exhibit, including Subparagraph 3.3(g)). Unless
      otherwise expressly agreed by both Members, each Member shall receive an
      undivided interest in each and every Asset determined by the ratio of the
      amount in each Member’s Capital Account to the total of both of the
      Members’ Capital Accounts. Assets distributed to the Members shall be
      deemed to have a fair market value equal to the value assigned to them
      pursuant to Subparagraph 4.2(a)
above.

                    

            

             

            
              	
                       
      

                    	
                      (c)

                    	
                      All
      distributions to the Members in respect of their Capital Accounts shall be
      made in accordance with the time requirements of Treas.
      Reg. §1.704-1(b)(2)(ii)(b)(2) and
(3).

                    

            

             

            Notwithstanding
the foregoing, and for greater certainty, should a liquidation or dissolution of
the Company occur as a result of TargetSub’s failure to complete its Initial
Contribution or at any time for any reason prior to the completion by TargetSub
of its Initial Contribution, TargetSub shall first transfer its Capital Account
to NFUR pursuant to Section 5.4 of the Agreement, and TargetSub shall have no
right to any proceeds as a result of a dissolution and liquidation of the
Company.

             

            4.3           Deemed
Terminations.  Notwithstanding the provisions of Paragraph 4.2,
if the “liquidation” of the Company results from a deemed termination under
Section 708(b)(1)(B) of the Code, then (i) Subparagraphs 4.2(a) and (b) shall
not apply, (ii) the Company shall be deemed to have contributed its Assets to a
new partnership in exchange for an interest therein, and immediately thereafter,
distributing interests therein to the purchasing party and the non-transferring
Members in proportion to their interests in the Company in liquidation thereof,
(iii) the new partnership shall continue pursuant to the terms of the Agreement
and this Exhibit.

             

            
              
                 

              

              
                9

                
                  

                

              

              
                 

              

            

            

             

            ARTICLE
V

             

            SALE OR
ASSIGNMENT

             

            The
Members agree that if either one of them makes a sale or assignment of its
Membership Interest under the Agreement, and such sale or assignment causes a
termination under Section 708(b)(1)(B) of the Code, the terminating Member shall
indemnify the non-terminating Member and save it harmless on an after-tax basis
for any increase in taxes to the non-terminating Member caused by the
termination of the Company.

             

             

             

            

            10

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