LIMITED LIABILITY COMPANY AGREEMENT

Exhibit 99.1

LIMITED LIABILITY COMPANY AGREEMENT

OF

CHURCHROCK VENTURE LLC

A DELAWARE LIMITED LIABILITY COMPANY

Effective Date:  December 5, 2006

TABLE OF CONTENTS

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ii

SCHEDULE

Schedule of Members

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LIMITED LIABILITY COMPANY AGREEMENT

CHURCHROCK VENTURE LLC

A Delaware Limited Liability Company

This Limited Liability Company Agreement (this " Agreement ") is made as of December 5, 2006 ("Effective Date") between HRI-Churchrock, Inc., a Delaware corporation, the address of which is PO Box 888, Crownpoint, New Mexico 87313 ("HRI") and ITC Nuclear Fuel Service (New Mexico) Inc., a Delaware corporation ("ITOCHU") , the address of which is 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo 107-8077 Japan.

RECITALS

A.            HRI owns or controls certain properties in McKinley County, State of New Mexico, known as the Churchrock Property, which properties are described in Exhibit A and defined in Exhibit C .

B.            ITOCHU wishes to participate with HRI in the development and mining of uranium within the Properties.

C.            HRI and ITOCHU wish to form and operate a limited liability company under the Delaware Limited Liability Company Act, 6 Del.C. § 18-101 et seq. (the "Act" ), to conduct the operations on the Properties contemplated by Recital B and, if development is undertaken, to own the Properties.

NOW THEREFORE, in consideration of the covenants and conditions contained herein, HRI and ITOCHU agree as follows:

ARTICLE I
DEFINITIONS AND CROSS-REFERENCES

1.1          Definitions .  The terms defined in Exhibit C and elsewhere herein shall have the defined meaning wherever used in this Agreement, including in Exhibits.

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          Formation .  The Company has been duly organized pursuant to the Act and the provisions of this Agreement as a Delaware limited liability company by the filing of its Certificate of Formation (as defined in the Act) in the Office of the Secretary of the State of Delaware.

2.2          Name .  The name of the Company is "Churchrock Venture LLC" and such other name or names complying with the Act as the Manager shall determine. The Manager shall accomplish any filings or registrations required by jurisdictions in which the Company conducts its Business.

2.3          Purposes .  The Company is formed for the following purposes and for no others, and shall serve as the exclusive means by which each of the Members accomplishes such purposes:

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(a)           to evaluate the possible Development and Mining on the Properties and, subject to the required consents of the Members as provided herein, to engage in Development and Mining on the Properties,

(b)           to hold the Assets,

(c)           to engage in Operations on the Properties,

(d)           to engage in marketing and sale of Products,

• • (e)           to borrow money on a secured or unsecured basis to finance any of the foregoing,

    (f)            to complete and satisfy all Environmental Compliance obligations and Continuing Obligations affecting the Properties,

    (g)           to acquire additional interests in real property or minerals, if any, within the exterior boundaries of the Properties, and

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

2.4          Limitation .  Unless the Members otherwise unanimously agree in writing, the Business of the Company shall be limited to the purposes described in Section 2.3, and nothing in this Agreement shall be construed to enlarge such purposes.  Without limiting the generality of the foregoing, the Company shall not (i) borrow money for any purpose other than specifically permitted herein or (ii) acquire or develop any other business or assets except as specifically permitted herein.  Further,  prior to a Positive Final Investment Decision, the Business of the Company shall be limited to pursuit of the necessary Permits in the name of Hydro Resources, Inc., obtaining bids for activities to be conducted if there is a Positive Final Investment Decision after Permit Approval, obtaining letters of intent or contracts as to the purchase of Products (subject to the commencement of Mining Operations), such other activities to which the Members may unanimously consent in writing and such Operations as are reasonably necessary in connection with the foregoing.

2.5          Term.

• • (a)           The term of existence of the Company shall begin on the Effective Date and shall continue for twenty (20) years from the Effective Date and for so long thereafter as Products are produced from the Properties on a continuous basis, and thereafter until all materials, supplies, equipment and infrastructure have been salvaged and disposed of, and any required Environmental Compliance is completed and accepted, unless the Company is earlier dissolved and Operations terminated as herein provided.  For purposes hereof, Products shall be deemed to be produced from the Properties on a " continuous basis " so long as production in commercial quantities is not halted for more than thirty (30) full consecutive calendar months.

    (b)           If the Members shall not have approved a Positive Preliminary Investment Decision on or before the date that is 90 days after delivery to ITOCHU of the Feasibility Study, then unless the Members otherwise unanimously agree, the term of existence of the Company shall thereupon end, subject to such actions and obligations as are required in connection with dissolution of the Company.

    (c)           If the Members shall not have approved a Positive Final Investment Decision on or before the earlier of (i) 120 days following Permit Approval and (ii) the fifth anniversary of the Effective Date, the term of existence of the Company shall thereupon end, subject to such actions and obligations as are required in connection with dissolution of the Company; provided that if the Permit Approval occurs within 120 days prior to such fifth anniversary, then the termination date shall be 120 days from the date of Permit Approval.

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2.6          Registered Agent; Offices .  The name of the Company’s registered agent in the State of Delaware is The Corporation Trust Company 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 Delaware shall be located at 1209 Orange Street, Wilmington, New Castle County, Delaware 19801 or at any other place within the State of Delaware at which The Corporation Trust Company shall maintain an office at which it acts as registered agent or such other office as the Members may unanimously agree. The principal office of the Company shall be at P.O. Box 888, Crownpoint, New Mexico 87313, or any other location to which the Members may unanimously agree.

2.7          Conditions Precedent to Effective Date.   The effectiveness of this Agreement shall be conditioned upon execution and delivery hereof by the Members and the simultaneous execution and delivery of a Parent Guaranty in the form attached as Exhibit E-1 by Itochu Corporation and as Exhibit E-2 by Uranium Resources, Inc.

ARTICLE III
CONTRIBUTIONS BY MEMBERS

3.1          Members’ Mandatory Contributions .

(a)           HRI Contributions :

• • • • (i)            HRI, as its initial contribution, shall contribute the Feasibility Study upon a Positive Preliminary Investment Decision.

        (ii)           Following a Positive Preliminary Investment Decision, subject to agreement on the relevant Budgets from time to time as provided herein, HRI shall contribute all costs required in connection with the Properties and Permits (other than the portion of such costs that ITOCHU is obligated to fund as provided below) until the Final Investment Decision;

        (iii)          If a Positive Final Investment Decision is made by the Members, HRI shall, at Financial Closing and simultaneously with ITOCHU’s contribution under Section 3.1(b)(ii):

        • • (A)          contribute the Assets described in Exhibit A (other than the Permits described in Section 3.1(a)(iii)(B) below) to the capital of the Company, free and clear of all liens and encumbrances other than Approved Title Exceptions; and

            (B)           contribute to the capital of the Company all Permits issued to HRI to the extent applicable to the Properties and Operations thereon (including arranging for segregation and, to the extent allowed by Governmental Authorities,  transfer or reissuance of the Permits to the Company solely as to the Properties).

Upon contribution of all such Assets, including the rights in the Permits, the amount of Eight Million Dollars ($8,000,000) shall be credited to HRI’s Capital Account as of the date so contributed.

(b)           ITOCHU Contributions :

• • • • (i)            If a Positive Preliminary Investment Decision is made, ITOCHU shall, (x) reimburse HRI for 50% of the costs of pursuing Permits expended by HRI during the period from November 1, 2005 through the Effective Date, up to a maximum ITOCHU contribution of $180,000, provided evidence of the amount and nature of such costs in reasonable detail is submitted to ITOCHU, and (y) subject to agreement on the relevant Budgets from time to time as provided herein, contribute to the Company or reimburse HRI 50% of all costs required to be funded hereunder from time to time after the Effective Date in connection with the  Permits, pending the Final Investment Decision.

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• • • • (ii)           If a Positive Final Investment Decision is made, ITOCHU shall, at the Financial Closing and simultaneously with HRI’s contribution under Section 3.1(a)(iii):

        • • (A)          contribute to the capital of the Company the amount of $8,000,000 to fund the Development Program and Budget as provided in Section 12.4 (the " Commitment Amount "), which shall be credited to ITOCHU’s Capital Account as of the date so contributed;

            (B)           subject to agreement of the Members on the form of such loan documents and the conditions precedent to funding thereunder, deliver to the Company for execution a binding loan agreement and related loan and security documents (collectively, the " Loan Agreement ") consistent with the terms set forth on Exhibit G , providing a secured loan of $24,000,000 (or such greater or lesser amount as may be unanimously agreed by the Members in connection with a Positive Final Investment Decision) for Development and Operations (such financing, the " Project Financing "); provided, however, that the Members may unanimously determine to obtain the Project Financing on a limited recourse basis from a third party not affiliated with ITOCHU if more favorable commercial terms are available.

3.2          Additional Contributions .  The Members, subject to the special provisions applicable to funding the Feasibility Study under the Feasibility Study Funding Agreement and ITOCHU contributing the Commitment Amount and supplying the Project Financing if a Positive Final Investment Decision is made by the Members, shall be obligated to contribute funds to the Company to fund adopted Programs and Budgets in proportion to their respective Ownership Interests.  Without limiting the foregoing, to the extent that the Company does not otherwise have sources of funds to do so, the Members shall each be obligated to contribute funds in proportion to their respective Ownership Interests to pay the cost of any Environmental Compliance required by applicable Environmental Laws or ordered by any Governmental Authority, whether or not such expenditures occur during the term of this Agreement or thereafter as a result of Operations under this Agreement; provided, that the maximum amount for which each Member shall be liable pursuant to this sentence shall not exceed the sum of all distributions received by such Member hereunder minus any amount previously funded for Environmental Compliance by such Member as additional Capital Contributions or by such Member’s parent under the Parent Guaranty; and provided, further, that no Member shall be required to fund its proportionate share of any such cost of Environmental Compliance cost if the other Member is not simultaneously funding its proportionate share.  The obligations in the preceding sentence shall survive the termination of this Agreement and the withdrawal of any Member or Members; provided, that no Member shall have any liability with respect to funding Environmental Compliance with respect to any contamination or non-compliance with Environmental Law that does not relate to the period that such Member was a Member of the Company.

3.3          Record Title.  Until title to the Assets described in Section 3.1(a)(iii) is contributed to the Company by HRI, such title shall be held by HRI, free and clear of all liens and encumbrances other than Approved Title Exceptions.  HRI hereby consents to the recording in the appropriate land records of, and the Company shall so record, a memorandum reflecting the Company’s interest in the Properties.  Until title to such Assets has passed to the Company as provided herein, the Company shall not be obligated to pay any costs of ownership or maintenance or other costs related to such Assets except (i) as expressly provided herein or (ii) costs to which the Members shall unanimously agree in writing.

3.4          Failure to Convey Property.   If HRI shall fail to convey the Assets  to the Company if and when required hereunder, in addition to any other remedy of the Company or the other Member available hereunder, at law or in equity, ITOCHU shall have the right to equitable relief in the form of specific performance (or any similar equitable remedy) to require HRI to convey such Assets.  HRI acknowledges that the Assets are unique and that monetary damages for the failure of HRI to convey such Assets shall not be an adequate remedy and HRI hereby waives, to the maximum extent permitted by applicable Law, and agrees not to assert as a defense in any such action seeking equitable relief that money damages are a sufficient remedy.

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ARTICLE IV
CAPITAL ACCOUNTS AND ALLOCATIONS

4.1          Capital Accounts .

• • (a)           Establishment and Maintenance of Capital Accounts .  A separate capital account (" Capital Account ") shall be established for each Member on the books of the Company initially reflecting an amount equal to such Member’s Initial Capital Contribution.  Each Member’s Capital Account shall be:

    • • (i)            increased by any additional Capital Contributions made by such Member pursuant to the terms of this Agreement and such Member’s share of Net Gain and other items of income and gain allocated to such Member pursuant to Section 4.2;

        (ii)           decreased by such Member’s share of Net Loss and other items of loss, deduction and expense allocated to such Member pursuant to Section 4.2 and the aggregate amount of all Distributions made to such Member; and

        (iii)          maintained in all respects in accordance with section 704(b) of the Code and the Treasury Regulations issued thereunder.

Any references in this Agreement to the Capital Account of a Member shall be deemed to refer to such Capital Account as the same may be increased or decreased from time to time as set forth above.

• • (b)           Negative Capital Accounts .  Except as may be required by the Act or any other applicable Law, no Member shall be required to pay to the Company or any other Member any deficit or negative balance which may exist from time to time in such Member’s Capital Account.

    (c)           Company Capital .  No Member shall be paid interest on any Capital Contribution to the Company or on such Member’s Capital Account, and no Member shall have any right (i) to demand the return of such Member’s Capital Contribution or, except as otherwise provided in this Agreement, any other distribution from the Company (whether upon resignation, withdrawal or otherwise), except upon dissolution of the Company pursuant to ARTICLE XVI hereof, or (ii) to cause a partition of the Company’s assets.

    (d)           Capital Account Adjustment .  If the Members so agree, upon the occurrence of an event described in Treas. Reg. § 1.704-1(b)(2)(iv)(f)(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 Section 4.1(a). For purposes of Section 4.1(a), a Member shall be treated as contributing the portion of the book value of any property that is credited to the Member’s Capital Account pursuant to the preceding sentence.

    (e)           Accounting for Distribution in Kind .  For purposes of maintaining Capital Accounts when the Company property is distributed in kind: (a) the Company shall treat such property as if it had been sold for its fair market value on the date of distribution; (b) any difference between such fair market value and the Company’s prior book value in such property for Capital Account purposes shall constitute Net Gain or Net Loss, as the case may be, for the Allocation Period ending on and including the date of such distribution and shall be allocated to the Capital Accounts of the Members pursuant to Section 4.2; and (c) each Member’s Capital Account shall be reduced by the fair market value of the property distributed to such Member (net of any liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Code).

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4.2          Allocations of Net Gains and Net Losses.

• • (a)           Except as otherwise provided in Section 4.2(b), Net Gains and Net Losses for each Fiscal Year (or other Allocation Period) shall be allocated in a manner such that the Capital Account of each Member, immediately after making such allocation, and after taking into account actual distributions made during, or with respect to, such Fiscal Year (or Allocation Period) is, as nearly as possible, equal (proportionately) to the distributions that would be made to such Member pursuant to Section 16.2(b) if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their book value, all Company liabilities were satisfied (limited with respect to each nonrecourse liability to the book value of the assets securing such liability) and the net assets of the Company were distributed in accordance with Section 16.2(b) to the Members immediately after making such allocation.  Subject to the other provisions of this ARTICLE IV, an allocation to a Member of a share of Net Gain or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Gain or Net Loss.  For the avoidance of doubt, to the extent that HRI has a disproportionate right to distributions pursuant to ARTICLE V below, it is the intent of this Section 4.2(a) that the allocation of Net Gains and Net Losses to the Members reflect such disproportionate right to distributions.

    (b)           Prior to the making of any allocation under Section 4.2(a), the following allocations shall be made in the following order:

    • • (i)            Any non-recourse deduction (within the meaning of Treasury Regulation Section 1.704-2(b)(1)) for an Allocation Period of the Company shall be allocated to the Members in accordance with their respective Capital Accounts at the beginning of such period.  If there is a net decrease in the Company’s minimum gain (as defined in Treasury Regulations Section 1.704-2(d)) during a Fiscal Period of the Company, then items of income and gain for such Fiscal Period (and, if necessary, for subsequent periods) shall be allocated to the Members in the manner and to the extent required by Treasury Regulations Section 1.704-2(f).  This clause is intended to constitute a "minimum gain chargeback" as provided by Treasury Regulations Section 1.704-2(f), and this clause shall be construed accordingly.

        (ii)           Any partner nonrecourse deduction (within the meaning of Treasury Regulations Section 1.704-2(i)(2)) shall be allocated in the manner specified in Treasury Regulations Section 1.704-2(i)(1), and, subject to the exceptions set forth in Treasury Regulations Section 1.704-2(i)(4), if there is a net decrease in partner nonrecourse debt minimum gain (within the meaning of Treasury Regulations Sections 1.704-2(i)(2) and 1.704-2(i)(3)) during a Fiscal Period attributable to a partner nonrecourse debt (within the meaning of Treasury Regulations Section 1.704-2(b)(4)), then each Member with a share of partner nonrecourse debt minimum gain attributable to such partner nonrecourse debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(5), shall be specially allocated items of income and gain for such Fiscal Period (and, if necessary, for subsequent periods) in an amount equal to such Member’s share of the net decrease in partner nonrecourse debt minimum gain for such period attributable to such partner nonrecourse debt (which share of such net decrease shall be determined under Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(g)(2)).  This clause is intended to constitute a "chargeback of partner nonrecourse debt minimum gain" as provided by Treasury Regulations Section 1.704-2(i)(4), and this clause shall be construed accordingly.

        (iii)          In the event that a Member unexpectedly receives any adjustment, allocation or distribution described in Treasury Regulations Sections 1.704-1 (b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain (consisting of a pro rata portion of each item of Company income, including gross income, and gain) shall be specially allocated to such Member in the manner required by Treasury Regulations Section 1.704-1(b)(2)(ii)(d) to eliminate, to the extent required by such regulation, the deficit in the Adjusted Capital Account of such Member as quickly as possible.  This clause is intended to constitute a "qualified income offset" as provided by Treasury Regulations Section 1.704-1(b)(2)(ii)(d), and this clause shall be construed accordingly.

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• • • • (iv)          If the allocation of any item of income, gain, deduction or loss under this Agreement (A) does not have substantial economic effect under Treasury Regulations Section 1.704-1(b)(2) and (B) is not in accordance with the Member’ interests in the Company within the meaning of Treasury Regulations Section 1.704-1(b)(3), then such item shall be reallocated in such manner as (1) either to have substantial economic effect or to be in accordance with the Members’ interests in the Company and (2) to result as nearly as possible in the respective balances of the Capital Accounts that would have been obtained if such item had instead been allocated under the provisions of this Agreement without giving effect to the provisions of this clause (iv).

        (v)           If any amount is allocated pursuant to clause (i), (ii), (iii) or (iv) of this Section 4.2(b), then, notwithstanding anything to the contrary in this Agreement (but subject to the provisions of clauses (i), (ii), (iii) and (iv) of this Section 4.2(b)), income, gain, deduction and loss, or items thereof, thereafter shall be allocated in such manner and to such extent as may be necessary so that, after such allocation, the respective balances of the Capital Accounts as nearly as possible shall equal the balances that would have been obtained if the amount allocated pursuant to such clause (i), (ii), (iii) or (iv) and the amount allocated pursuant to this clause (v) instead had been allocated under the provisions of this Agreement without giving effect to the provisions of such clause (i), (ii), (iii) or (iv) or this clause (v).

4.3          Allocation of Taxable Income and Loss.

• • (a)           Except as otherwise provided in this Section 4.3, the taxable income or loss of the Company (and items thereof) for any Allocation Period shall be allocated among the Members in proportion to and in the same manner as Net Gain, Net Loss and separate items of income, gain, loss and deduction are allocated among the Members for Capital Account purposes pursuant to the provisions of Section 4.2.  Except as otherwise provided in this Section 4.3, the allocable share of a Member for tax purposes in each specified item of income, gain, deduction and loss of the Company comprising Net Gain, Net Loss or an item allocated pursuant to Section 4.2 shall be the same as such Member’s allocable share of Net Gain, Net Loss or the corresponding item for such Fiscal Period.

    (b)           In accordance with Sections 704(b) and 704(c) of the Code and applicable Treasury Regulations, including Treasury Regulations Section 1.704-1(b)(4)(i), items of income, gain, deduction and loss with respect to any Book Property of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of the Book Property to the Company for federal income tax purposes and its book value.  In making allocations pursuant to this Section 4.3(b), Company shall apply the "traditional" method provided by Treasury Regulations Section 1.704-3(b).

    (c)           To the extent of any recapture income resulting from the sale or other taxable disposition of assets of the Company, the amount of any gain from such disposition allocated to a Member (or a successor in interest) for federal income tax purposes pursuant to the above provisions shall be deemed to be recapture income to the extent that such Member has been allocated or has claimed any deduction directly or indirectly giving rise to the treatment of such gain as recapture income.

    (d)           The items of income, gain, deduction and loss for tax purposes allocated to the Members pursuant to this Section 4.3 shall not be reflected in the Members’ Capital Accounts.

    (e)           Pursuant to Treasury Regulations Section 1.752-3(a)(3), the Members hereby agree to allocate excess nonrecourse liabilities of the Company in accordance with their respective Ownership Interests.

4.4          Allocations to Transferred Interests.   Income, gains, losses, deductions and expenditures allocated to an Ownership Interest that is Transferred during a Fiscal Year shall be allocated to each Person who was

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the holder of such Ownership Interest during such Fiscal Year in a manner which takes into account the varying interests of the Members in the Company during such Fiscal Year, including by an allocation in proportion to the number of days that each such holder was recognized as the owner of such Ownership Interest during such Fiscal Year or by an interim closing of the books, or in any other manner permitted by Section 706 of the Code, as determined by the transferee and the transferor in their sole discretion; provided , however , that any expenses incurred by the Company in allocating such items shall be borne by the transferee and the transferor.

ARTICLE V
DISTRIBUTIONS

5.1          General .  The Company shall make distributions to its Members as provided in this ARTICLE V and may make other distributions as determined unanimously by the Management Committee in accordance with this Agreement; provided, that the Company shall not make a distribution to any Member on account of such Member’s Ownership Interest if such distribution would violate Section 18-607 of the Act or other law or the terms of the Project Financing (including any contributions to debt service reserves or capital expenditure reserves that are due at the time of such distributions).  Any distribution that is prevented from being made as a result of any such violation may be made in the future when such violation no longer exists and shall be made in the same proportions as were applicable to the Distribution Period in which it would have been made but for the violation.

5.2          Timing and Allocation of Distributions .  Distributions of cash not in conjunction with the liquidation and dissolution of the Company shall be made commencing with the First Distribution Period to the Members as follows:

• • (a)           70% of all Excess Cash Flow, if any, shall be distributed on each Distribution Date (or as promptly as practicable thereafter)  to URI and 30% to ITOCHU.

    (b)           100% of all Pro Forma Cash Flow shall be distributed on each Distribution Date (or as promptly as practicable thereafter), 50% to URI and 50% to ITOCHU.

5.3          Amount and Procedure for Distributions .  The amount of cash distributable to each Member for any Distribution Period shall be determined as follows:

• • (a)           The Manager shall certify in writing to the Members at least ten days prior to any distribution (A) the average price per pound of Product sold by the Company during such Distribution Period, (B)  the gross revenue from Product sold by the Company during such Distribution Period, (C) an itemized statement of deductions from revenue applied to determine cash available for distribution for such Distribution Period, (D) a cash flow statement for such quarter prepared in accordance with generally accepted accounting principals consistently applied and (E) a calculation of the Actual Cash Flow, Pro Forma Cash Flow and Excess Cash Flow for such Distribution Period.

    (b)           All distributions shall be subject to year-end audit adjustments and any distribution for the last quarter of each Fiscal Year shall be increased or decreased or reallocated between the Members as necessary so that the total of all distributions of Pro Forma Cash Flow and Actual Cash Flow for each Distribution Period during such year shall be based on the audited operating cash flow for each such Distribution Period.  If there is not sufficient Actual Cash Flow for such final fiscal quarter to permit a sufficient increase, decrease or reallocation as provided in the preceding sentence, the distributions for subsequent quarters shall also be subject to such increase, decrease or reallocation.

    (c)           Upon release of the Environmental Compliance Fund or any reserve funds required under the Project Financing the amount so released shall be distributed 70% to HRI and 30% to ITOCHU; provided, that if the weighted average price per pound of Product sold during the period from CPC until such release is less than $30 per pound, such amount shall be distributed to HRI and Itochu in the same

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• • ratio as the aggregate of all previous distributions were made to HRI and ITOCHU during such period from CPC until such releases were made to HRI and Itochu.

5.4          Distributions Upon Dissolution .  Distributions upon dissolution of the Company shall be as provided in ARTICLE XVI.

5.5          Distributions upon Sale or Salvage .  Distributions in the scenario described in Section 14.2 shall be made as provided therein.

ARTICLE VI
INTERESTS OF MEMBERS

6.1          Initial Ownership Interests .  The Members shall have the following Ownership Interests (which are independent from the Voting Interests set forth in Section 10.2):

HRI                 —                    50%

ITOCHU        —                    50%

6.2          Changes in Ownership Interests .  The Ownership Interests shall be eliminated or changed as follows:

• • (a)           Upon Transfer by either Member of part or all of its Ownership Interest in accordance with ARTICLE X; or

    (b)           Upon acquisition by either Member of part or all of the Ownership Interest of the other Member, however arising.

6.3          Admission of New Members .  Except in the event of a transfer permitted pursuant to ARTICLE IX, a new Member may be admitted only with the unanimous written approval of the Members.

6.4          Elimination of Minority Interest Voting Rights.

• • (a)           A Member whose Ownership Interest becomes less than ten percent (10%) shall cease to have a vote or the right to consent to any matter hereunder (regardless of whether any provision herein shall require the unanimous consent or vote of the Members or of the members of the Management Committee), but shall retain the right to distributions hereunder subject to ARTICLE XIII.

    (b)           If a Parent Guaranty is revoked, the Member whose obligations were guarantied by such revoked Parent Guaranty shall thereupon cease to have any right to vote on any matter hereunder, either as a Member or as a member of the Management Committee (regardless of whether such matter is expressly subject to unanimous consent) and shall cease to have any right to distributions hereunder except upon dissolution and after payment of all obligations of the Company.

6.5          Documentation of Adjustments to Ownership Interests .  Each Member’s Ownership Interest and related Capital Account balance shall be shown in the accounting records of the Company and any adjustments thereto shall be made monthly. The Schedule of Members attached hereto shall be amended from time to time to reflect such changes.

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ARTICLE VII
RELATIONSHIP OF THE MEMBERS

7.1          Limitation on Authority of Members .  No Member is an agent of the Company solely by virtue of being a Member, and no Member has authority to act for the Company solely by virtue of being a Member.  This Section 7.1 supersedes any authority granted to the Members pursuant to the Act.  Any Member that takes any action or binds the Company in violation of this Section 7.1 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.  Nothing in this Section 7.1 shall limit the power and authority of the Manager, as provided herein.

7.2          Federal Tax Elections and Allocations .  The Company shall be treated as a partnership for federal income tax purposes, and no Member shall take any action to alter such treatment.

• • (a)           In addition, the Company shall make the following elections for purposes of all partnership income tax returns.

(i)            To use the accrual method of accounting.

• • • • (ii)           Pursuant to the provisions at Section 706(b)(1) of the Code, to use as its taxable year the year ending July 31 , or such other taxable year as required by applicable laws.  In this connection, HRI represents that its taxable year as of the date hereof is the year ending July 31 and ITOCHU represents that its taxable year as of the date hereof is the year ending December 31.

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

        (iv)          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 or, at the election of the Manager, using the units of production method of depreciation.

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

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

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

    (b)           Each Member shall elect under Section 617(a) of the Code to deduct currently all exploration expenses.

    (c)           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.

7.3          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.

7.4          Tax Returns .  The Manager will supervise, and provide necessary information to, an accounting firm agreed to by ITOCHU and HRI to prepare the tax returns required to be filed by or with respect to the Company and shall cause such returns to be filed.  At least thirty (30) calendar days prior to the due date for any

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U.S. federal income tax return, or material state income tax return, filed on behalf of the Company, including extensions, the Manager shall provide ITOCHU with a draft of such tax return, along with related workpapers and, upon request, access to personnel so as to enable ITOCHU to understand such draft tax return.  The consent of ITOCHU is required for the filing of any U.S. federal income tax return, and any material state income tax return, including any amendments to any such tax returns.  Failure by ITOCHU to notify HRI no later than 72 hours prior to the filing deadline of its objection to the filing of the return shall constitute ITOCHU’s consent to such filing.

7.5          Other Business Opportunities .  Except as to activities or operations concerning the Properties, 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 Business or to any other activity or operation of any Member. No Member shall have any obligation to the Company or any other Member with respect to any opportunity to acquire any property outside the exterior boundaries of the Properties at any time or within the Properties after dissolution of the Company and the termination of this Agreement.  Unless otherwise unanimously agreed by the Management Committee in writing, neither the Manager nor any Member shall mill, beneficiate or otherwise treat any Products in any facility not owned by the Company.  Neither the Manager nor any Member shall have the obligation to mill, beneficiate or otherwise treat any Products in any facility owned by the Manager or such Member unless such Manager or Member agrees to conduct such milling, beneficiation or other treatment for the Company.  Unless otherwise unanimously agreed by the Management Committee in writing, the Company shall not mill, beneficiate or otherwise treat any uranium solutions, suspensions, ores or similar products not owned by the Company.

7.6          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.

7.7          Bankruptcy of a Member or Parent .  A Member shall cease to have any power as a Member or Manager or any voting rights or rights of approval hereunder upon the occurrence of an Insolvency Event with respect to 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 9.2, 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 the requirements of Section 9.2 are satisfied.  Any Insolvency Event with respect to any direct or indirect parent company of Manager shall not affect the Manager’s rights hereunder; provided, that if such parent insolvency materially impairs the ability of Manager to perform its obligations hereunder or results in withdrawal of any material Permit or any additional condition being placed on any Permit which materially adversely affects the ability of the Company to develop and mine the Properties, the non-Manager Member shall have the right to replace the Manager in accordance with Section 11.5.

7.8          Implied Covenants .  There are no implied covenants contained in this Agreement.  The covenants of good faith and fair dealing generally implied in contracts are incorporated herein as express covenants of each Member and of the Company.

7.9          No Certificate .  The Company shall not issue certificates representing Ownership Interests or Voting Interests in the Company.

7.10        Disposition of Production .  All Products produced by Operations shall be sold or otherwise disposed of by means of contracts entered into by the Company.  No Member shall have any right to take Products in kind or separately dispose of Products except pursuant to a separate contract with the Company unanimously approved by the Management Committee as provided herein.

7.11        Limitation of Liability .  The Members shall not be required to make any contribution to the capital of the Company except as otherwise expressly 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 Members shall

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be under no obligation to restore a deficit Capital Account upon the dissolution of the Company or the liquidation of any of their Ownership Interests.

7.12        Indemnities .  The Company shall and does hereby agree, to the fullest extent permitted by law, to defend, indemnify, and hold harmless the Members, the Manager and the Company’s officers, employees and agents (the " Indemnified Persons "), from and against any and all liability, cost, expense, or damage incurred or sustained by reason of any act or omission in the conduct of the business of the Company, regardless of whether acting pursuant to their discretionary or explicit authority hereunder; provided, however, the Company shall not indemnify an Indemnified Person or hold him harmless with respect to any of the foregoing incurred in connection with such an Indemnified Person’s willful misconduct or gross negligence.

7.13        No Third Party Beneficiary Rights .  This Agreement shall be construed to benefit the Members 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.

7.14        Meetings of Members.  Meetings of the Members for such purposes as are required by the Act or otherwise authorized by this Agreement shall be held as follows:

• • (a)           Annual Meetings .  An annual meeting of the Members shall be held each year in Washington, D.C. or Albuquerque, New Mexico (alternating sites in alternate years), within 90 days after the close of the immediately preceding Fiscal Year of the Company for the purpose of conducting such proper business as may come before the meeting.  The date, time and place of the annual meeting shall be as set forth in Section 10.4 for the Management Committee.

    (b)           Special Meetings .  Special meetings of Members may be called for any purpose and may be held at such time (not more frequently than twice per year) and place, within or without the State of Delaware, as shall be stated in a notice of meeting or in a duly executed waiver of notice thereof.  Such meetings may be called at any time by either Member or by the Manager.  Such meetings will occur in Albuquerque, New Mexico, or Washington, D.C., as determined by the Member calling such meeting.

    (c)           Consecutive/Concurrent Meeting .  Any meeting of the Members may be held concurrently as part of a Management Committee meeting or consecutively with the Management Committee Meeting, provided each Member is duly represented in accordance with the Act or this Agreement (which representative may also be the Member’s designated voting representative on the Management Committee).  An action that may be taken by the Management Committee may also be taken by the Members at a duly called meeting of the Members.

    (d)           Notice .  Whenever Members are required or permitted to take action at a meeting, written or printed notice stating the place, date, time, and, in the case of special meetings, the purpose or purposes, of such meeting, shall be given to each Member entitled to vote at such meeting not less than thirty (30) nor more than sixty (60) days before the date of the meeting.  Attendance of a Member at a meeting shall constitute a waiver of notice of such meeting, except when the Member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.  Each Member shall appoint a designated representative for that Member’s interest in the same manner as is provided in Section 10.1.  An agenda for such meeting shall be provided by the Manager or the Member calling the Meeting, as the case may be, at least 15 days prior to the scheduled meeting and any documents, budgets, or other written matter to be approved at such meeting shall be provided a reasonable time in advance of such meeting to permit advance review.

    (e)           Quorum .  A quorum for a meeting of the Members shall require the presence of a representative from each Member, 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 duly represented, 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.

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    (f)            Vote Required .  When a quorum is present, the affirmative vote of the Members holding a majority Voting Interest (as defined in Section 10.2) present in person or represented by proxy at a duly called meeting and entitled to vote on the subject matter shall be the act of the Members unless the question is one upon which by express provisions of the Act or of this Agreement a different vote is required, in which case such express provision shall govern and control the decision of such question.   Notwithstanding the foregoing, no action for which a unanimous vote of the Management Committee is required by Section 10.3 shall be effective as an action of the Members unless there is a unanimous vote for such matter at the Member meeting.  In addition to the matters listed in Section 10.3, amendment of this Agreement shall require unanimous vote of the Members.

    (g)           Proxies .  Each Member entitled to vote at a meeting of Members or to express consent or dissent to any action in writing without a meeting may authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon (i) after 90 days from its date or (ii) in any meeting other than a single meeting specified in such proxy.  At each meeting of Members, and before any voting commences, all proxies filed at or before the meeting shall be submitted to and examined by the Manager, acting as Secretary, or a person designated by the Secretary, and no Voting Interest may be represented or voted under a proxy that has been found to be invalid or irregular.

    (h)           Action by Written Consent .  Any action required to be taken at any annual or special meeting of Members, or any action that may be taken at any annual or special meeting of such Members, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken and the date of signature of such consent, shall be signed by Members holding not less than the minimum Voting Interest that would be necessary to authorize or take such action at a meeting at which all Members entitled to vote thereon were present and voted and shall be delivered to the Company by delivery to the Manager or the agent of the Company having custody of the book or books in which proceedings of meetings of the Members are recorded.  If action is so taken without a meeting by less than unanimous written consent of the Members, a copy of such written consent shall be delivered promptly to all Members, who have not consented in writing.  Any action taken pursuant to such written consent or consents of the Members shall have the same force and effect as if taken by the Members at a meeting of the Members.

    (i)            Audio/Video Conferences .  In lieu of meetings in person, any meeting of the Members may be conducted by telephone or video conference in the manner described in Section 10.5.  Any action taken in such a conference call shall be deemed action taken at a meeting of the Members.

    (j)            Record Dates .  For purposes of determining the Members entitled to notice of or to vote at a meeting of Members, the Manager may set a record date, which shall not be less than two nor more than 60 days before (a) the date of the meeting or (b) in the event that approvals are sought without a meeting, the date by which Members are requested in writing by the Manager on behalf of the Members to give such approvals.

ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

8.1           As of the Effective Date, each Member warrants and represents to the other that:

• • (a)           It is a corporation duly organized and in good standing in its jurisdiction of incorporation and is qualified to do business and is in good standing in those states 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, surface and mineral rights

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    owner, lessor, lessee and other actions and consents required to authorize it to enter into and perform this Agreement have been properly taken or obtained;

    (c)           It will not breach any other agreement or arrangement by entering into or performing this Agreement;

    (d)           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;

    (e)           This Agreement and the Parent Guaranty have been duly authorized, executed and delivered and are legal, valid and binding obligations in accordance with their terms;

    (f)            It has good and marketable present title to any property that it is required to contribute to the Company hereunder, subject to no liens or encumbrances except as expressly permitted herein and is party to no agreement that restricts or conditions its right to make such contribution; and

    (g)           It has the economic resources necessary to perform its obligations hereunder.

ARTICLE IX
TRANSFER OF INTEREST; PREEMPTIVE RIGHT

9.1          General .  A Member shall not have the right to Transfer to a third party its Ownership Interest, or any beneficial interest therein, except as provided in this ARTICLE IX.  Any purported or attempted transfer not complying with this ARTICLE IX shall be void.

9.2          Limitations on Free Transferability .  Any Transfer by either Member under Section 9.1 shall be subject to the following limitations:

• • (a)           Except (i) as expressly provided in Section 9.2(i) below, and (ii) Transfers enumerated in Paragraph 1.2 of Exhibit F that are exempt from the pre-emptive right described in Section 9.3 and Exhibit F , no Member may Transfer its Ownership Interest or any part thereof without the consent of the other Member, which consent shall not be unreasonably withheld or delayed.  In connection with any such proposed Transfer, the transferring Member shall provide the other Member such financial and other information regarding the proposed transferee as the non-transferring Member may reasonably request.  Without limiting the generality of the right of a Member to withhold its consent reasonably to a Transfer by the other Member, such consent may be withheld if the Member whose consent is sought shall, in good faith, determine that a proposed transferee (and any proposed guarantor of its obligations) lacks the necessary technical expertise or financial resources to properly and timely perform its obligations under this Agreement;

    (b)           Neither Member shall Transfer any beneficial interest in the Company except in conjunction with the Transfer of part or all of its Ownership Interest and in an amount or percentage equal to such transferred Ownership Interest;

    (c)           No transferee of all or any part of a Member’s Ownership 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 Sections 9.2(g) and 9.2(h), 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;

    (d)           Neither Member shall make a Transfer that shall violate any Law, or result in the cancellation of any Permits, licenses, or other similar authorization, unless the effect of such Transfer shall have been made known to the other Member and the other Member shall have consented thereto.  Without

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    limiting the generality of the foregoing, no Member shall effect any Transfer that shall require approval by any Governmental Authority unless such approval shall have been obtained at such transferring Member’s sole cost and expense;

    (e)           No Transfer permitted by this Article shall relieve the transferring Member of any liability of such transferring Member under this Agreement to the extent arising from and relating to periods before such Transfer;

    (f)            Any Member that makes a Transfer that shall cause termination of the tax partnership established by Section 7.2 shall indemnify the other Member for, from and against any and all loss, cost, expense, damage, liability or claim therefore 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 Member;

    (g)           In the event of a Transfer of less than all of an Ownership Interest, the transferring Member and its transferee shall act and be treated as one Member under this Agreement; 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 Company; and

        (ii)           Notify the other Member of the designation of the Agent, and in such notice warrant and represent to the other Member that:

        • • (A)          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 and the Company;

            (B)           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

            (C)           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 Section 9.2(g)(ii);

• • (h)           Without the unanimous consent of the Members and, if the Project Financing remains unpaid, the lender under the Project Financing, no Transfer consisting of the direct or indirect grant of an Encumbrance on an Ownership Interest of any Member shall be effected (other than an Encumbrance to secure the Project Financing) unless and until the later of (x) CPC and (y) repayment in full of the Project Financing.  Thereafter, any Transfer consisting of the grant of an Encumbrance on an Ownership Interest shall be permitted to secure a loan or other indebtedness of either Member in a bona fide transaction, provided such Transfer shall be subject to the terms of this Agreement and the rights and interests of the other Member hereunder.  Any such Encumbrance other than in connection with the Project Financing shall be further subject to the condition that the holder of such Encumbrance ("Chargee") first enters into a written agreement with the other Member in form satisfactory to the other Member, acting reasonably, binding upon the Chargee, to the effect that:

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        (i)            The Chargee shall not enter into possession or institute any proceedings for foreclosure or partition of the encumbering Member’s Ownership 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 Ownership Interest to the other Member, or, failing such a sale, at a public auction to be held at least twenty (20) days after prior notice to the other Member, such sale to be subject to the purchaser entering into a written agreement with the other Member whereby such purchaser assumes all obligations of the encumbering Member under the terms of this Agreement.  The price of any preemptive sale to the other Member shall be the fair market value (as determined below) of the Ownership Interest securing the Encumbrance, and such preemptive sale shall occur within sixty (60) days of the Chargee’s notice to the other Member of its intent to sell the encumbering Member’s Ownership 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 Ownership Interest at a public sale.  Fair market value shall be determined by a qualified independent appraiser appointed by the non-encumbering Member.  If the encumbering 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-encumbering Member and a qualified independent appraiser appointed by the encumbering Member; provided, however, that if the encumbering 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-encumbering 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 Assets are situated upon the application of either Member; and

        (iii)          The charge shall be subordinate to any then-existing debt, including any Project Financing previously approved by the Management Committee, encumbering the transferring Member’s Ownership Interest; and

    (i)            Any Member may Transfer all of its Ownership Interest to an Affiliate, provided that any relevant Parent Guaranty remains in effect, the Affiliate assumes all of the transferor Member’s obligations hereunder and arrangements reasonably satisfactory to the non-transferring Members shall have been made to avoid any negative effect on any Permits.  Any Member may Transfer a portion of its Ownership Interest to an Affiliate, provided that any relevant Parent Guaranty remains in effect, the transferring Member shall be the agent for the transferee and both the transferor and transferee shall act in common as if they were a single Member for all purposes hereunder and such partial Transfer shall have been conducted in a manner to avoid any negative effect on any Permits.

9.3          Preemptive Right .  Any Transfer by either Member shall be subject to a preemptive right of the other Member to the extent provided in Exhibit F .  Failure of a Member’s Affiliate to comply with this Section and Exhibit F shall be a breach by such Member of this Agreement.

ARTICLE X
MANAGEMENT COMMITTEE

10.1        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 representatives appointed by HRI and two representatives appointed by ITOCHU.  Each Member may appoint one or more alternates to act in the absence of a regular representative.  Any alternate so

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acting shall be deemed an authorized representative of the Member.  Appointments by a Member shall be made or changed by notice to the other Members. HRI shall designate one of its representatives to serve as the chair of the Management Committee.

10.2        Decisions, Generally .  Each Member, acting through its appointed representatives in attendance at the meeting, shall (subject to Section 6.4) have the votes on the Management Committee as follows:

HRI -                       51%

ITOCHU -              49%

(each, the Member’s " Voting Interest ").  Prior to each meeting of the Management Committee, each Member will designate one of its representatives to cast such Member’s Voting Interest on any matter coming before the Management Committee.  Unless otherwise provided in Section 10.3 or elsewhere in this Agreement, the vote of the Member with a Voting Interest over fifty percent (50%) shall determine the decisions of the Management Committee.

10.3        Unanimous Decisions .  The following decisions shall require unanimous consent of the Management Committee:

• • (a)           Approval of any Program and Budget or any material change in or variance from an approved Program and Budget;

    (b)           Any fundamental change in the Project, such as but not limited to abandonment of the Project, a material discretionary delay in the Development schedule, a material change in capital equipment and expenditures from those in the Development Program and Budget or a change in the method of Mining or extraction;

    (c)           Incurring or committing to incur any expenditure more than 5% in excess of the total amount of any Budget (including any contingency component of such Budget);

    (d)           Incurring any Indebtedness by the Company, except Permitted Indebtedness;

    (e)           Granting or permitting to exist any Lien or Encumbrance on any of the Assets of the Company, except Permitted Liens;

    (f)            Canceling any Permit or transferring any Permit held by the Company or the Manager to a third party;

    (g)           Entering into any derivatives, swap or hedging transaction with respect to interest rates, commodities, currency or any other matter;

    (h)           Entering into the Loan Agreement;

    (i)            Entering into, materially modifying, terminating or accepting the cancellation of any sales contract for Products, except as provided in Section 12.5(a)(i);

    (j)            Entering into any other material agreement not expressly provided in a Program;

    (k)           Entering into (i) Project Construction Contracts, or (ii) any contract or group of contracts with a single vendor for construction or procurement related to Development in an aggregate amount in excess of $5,000,000;

    (l)            Entering into any contract with, or making any payment to, an Affiliate of the Manager or any Member (except for payments expressly permitted herein) or permitting any Affiliate of any Member to take Products in kind or separately dispose of Products;

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    (m)          Making any distribution to Members except as expressly permitted in ARTICLE V;

    (n)           Creation or acquisition of any subsidiaries of the Company;

    (o)           Except as contemplated in ARTICLE XVI, winding up, liquidating or disposing of substantially all of the assets of the Company;

    (p)           Merging or consolidating of the Company into any other entity, whether or not the Company is the surviving entity;

    (q)           Changing the name of the Company;

    (r)            Making any investment other than pursuant to a Program and the investment of funds of the Company in Cash Equivalents;

    (s)           Retaining, replacing or terminating the independent auditors of the company;

    (t)            Changing the Fiscal Year;

    (u)           Opening a bank account;

    (v)           Except to the extent included in an approved Plan and Budget, making any extension of credit in excess of $50,000 in the aggregate outstanding at any one time that would constitute Indebtedness on the part of the Person to which such credit is extended;

    (w)          Commencing any litigation in which the Company is the claimant or plaintiff;

    (x)            Settling any litigation or administrative proceeding (i) for an amount not covered by insurance in excess of $50,000 to any one party or an aggregate of $200,000 for all claims arising from a single occurrence, or (ii) involving relinquishment of any Permit;

    (y)           Causing any Insolvency Event to occur with respect to the Company;

    (z)            Settling any insurance claim in excess of $500,000;

    (aa)         Purchasing any Environmental Liability or Environmental Compliance insurance;

    (bb)         Any delegation or subcontracting of material duties of the Manager, except as set forth in an approved Program; and

    (cc)         Any action or omission with respect to taxes that would have a materially disproportionate effect on either Member.

10.4        Meetings.

• • (a)           The Management Committee shall hold regular meetings at least quarterly.  Unless otherwise agreed by the Members, the place of such meetings shall alternate between Albuquerque, New Mexico, and Washington, D.C. The Manager shall give thirty (30) days notice to the Members of such meetings. 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 representative of 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 representative, 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

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    vote would otherwise require unanimity; provided, further , that in no event shall this Agreement be amended without the written consent of both Members.

    (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 three (3) business 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 ten (10) days before the meeting or with the consent of the other Member.  The Manager shall prepare written resolutions documenting any decisions requiring a vote of the Management Committee and shall distribute such resolutions to the other Member within fifteen (15) 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 resolutions prepared by the Manager within fifteen (15) days after receipt, and failure to do either shall be deemed acceptance of the minutes or resolutions as prepared by the Manager.  The minutes and resolutions, 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 fifteen (15) 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 fifteen (15) 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 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.

10.5        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 meetings are prepared in accordance with Section 10.4(c).  The Management Committee may also take actions in writing signed by representatives on the Management Committee representing the Voting Interest required to approve such action.

10.6        Matters Requiring Approval .  Except as delegated to the Manager in Section 11.2 or undertaken at a separate meeting of the Members pursuant to Section 7.14, the Management Committee shall have exclusive authority to determine all matters related to overall policies, objectives, procedures, methods and actions under this Agreement.

ARTICLE XI
MANAGER

11.1        Appointment .  The Manager shall be elected by unanimous vote of the Members, except as provided in Section 11.4.  The Members hereby unanimously elect HRI as the initial Manager with overall management responsibility for Operations.  HRI hereby agrees to serve until it resigns as provided in Section 11.4.  HRI shall be the Manager until it resigns or is removed in accordance with this Agreement.

11.2        Powers and Duties of Manager .  Subject to the terms and provisions of this Agreement, the Manager shall have the following powers and duties, which shall be discharged in accordance with adopted Programs and Budgets; provided, that the Manager shall not take any action requiring unanimous consent of the Management Committee unless such consent has been obtained:

• • (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 XII.

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    (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, including an explanation of the cause of such insufficiency.

    (c)           The Manager shall use reasonable efforts to: (i) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Development and other 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 guaranties as are available in connection with such purchases and acquisitions; and (iii) keep the Assets free and clear of all Liens and Encumbrances, except for Permitted Liens.

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

    (e)           The Manager shall: (i) make or arrange for all payments required by leases, licenses, permits, contracts and other agreements related to the Assets; (ii) make all payments required under the Project Financing or any other debt borrowed by the Company, including any payments into reserve accounts required thereunder; (iii) pay all taxes, assessments and like charges on Operations and Assets; provided that neither the Manager nor the Company shall have any liability or obligation to pay or reimburse any Member for taxes incurred by such Member as a result of allocations of income and gain from the Company to such Member, 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 nonpayment of any taxes, assessments or like charges; and (iv) do all other acts reasonably necessary to maintain the Assets.

    (f)            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 by any agreement or by any Governmental Authority for or as a result of Development or 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 11.3.  In the event of any such violation, the Manager shall timely cure or dispose of such violation on behalf of both Members through performance, payment of fines and penalties, or both, and the cost thereof shall be charged to the Business Account.

    (g)           The Manager shall prosecute and defend all litigation or administrative proceedings arising out of Operations.

    (h)           The Manager shall obtain insurance for the benefit of the Company as provided in Exhibit D or as may otherwise be determined from time to time by the Management Committee.

    (i)            The Manager may dispose of Assets, whether by abandonment, surrender, or Transfer in the ordinary course of business.   Without prior unanimous consent of the members of the Management Committee, however, the Manager shall not: (i) dispose of Assets in any one transaction (or in any series of related transactions) having a book value in excess of One Hundred Thousand Dollars ($ 100,000) or (ii)  dispose of any  Assets necessary to achieve the purposes of the Company.

    (j)            The Manager shall have the right to carry out its responsibilities hereunder through agents, Affiliates or independent contractors; provided such agent, Affiliate or contractor is qualified to

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    perform the delegated task and provided, further, that no such delegation shall relieve Manager for responsibility for such delegated task hereunder.

    (k)           The Manager shall keep and maintain all required accounting and financial records pursuant to the procedures described in Exhibit B and in accordance with customary cost accounting practices in the mining industry, and shall ensure appropriate separation of accounts unless otherwise agreed by the Members.

    (l)            Except as otherwise expressly provided to the contrary herein, the Manager shall keep and maintain all required records, make elections regarding tax matters, and prepare and file all federal and state tax returns or other required tax forms.  HRI shall be the Company’s "tax matters partner" pursuant to section 6231(a)(7) of the Code (the " Tax Matters Partner ").  The Tax Matters Partner is authorized to represent the Company before the Internal Revenue Service and any other governmental agency with jurisdiction; provided , however , that (a) the Tax Matters Partner shall provide to ITOCHU a timely summary of each oral and written communication from or to the Internal Revenue Service or any other taxing authority relating to any material Company tax matter and shall promptly furnish to ITOCHU a copy of any significant correspondence relating thereto, (b) the Tax Matters Partner shall promptly provide to ITOCHU reasonably detailed accounts of all stages of each administrative or judicial proceeding relating to Company tax matters and shall provide ITOCHU with sufficient notice thereof to enable it to participate fully therein, and (c) the Tax Matters Partner shall not (i) sign any consent, (ii) enter into any settlement agreement or (iii) compromise any dispute with the Internal Revenue Service or any other taxing authority without the approval of ITOCHU.  Nothing in this Section 11.2(l) shall limit the ability of any Member to take any action in his individual capacity relating to Tax audit matters relating to the Company that is left to the determination of an individual Member under sections 6222 through 6232 of the Code or any similar state or local provision.  Except for failure to comply with clause (c) of the preceding sentence, HRI shall incur no liability to any other party provided HRI uses commercially reasonable efforts to carry out its responsibilities as Tax Matters Partner.

    (m)          The Manager shall keep the Members advised of all Operations by submitting in writing to the representatives on the Management Committee monthly progress reports that include (i) statements of expenditures and comparisons of such expenditures to the adopted Budget; (ii)  progress reports concerning Permitting, Development or Mining Operations (including, at least quarterly, a report on production for the trailing quarter and a projection of production during the current quarter), as applicable; (iii) a detailed final report within forty five (45) days after completion of each Program and Budget, which shall include comparisons between actual and budgeted expenditures; and (iv) such other information as any member of the Management Committee may reasonably request.  The Manager shall promptly notify the members of the Management Committee in the case of any material disruption of Development or Mining Operations.  Subject to ARTICLE XV, at all reasonable times the Manager shall provide any representative of a Member upon the request of such Member’s representative on the Management Committee, access to, and the right to inspect and, at such Member’s cost and expense, copy the Existing 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, to the extent preserved or kept by the Manager. 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.

    (n)           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 Properties disturbed by Operations.  Such Environmental Compliance Plan shall include recommendations regarding reserves to fund rehabilitation and reclamation of the Properties after cessation of mining operations.

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    (o)           The Manager shall undertake to perform Continuing Obligations when and as economic and appropriate, whether before or after termination of this Agreement and dissolution 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 Manager’s efforts to discharge Continuing Obligations.  Authorized representatives of each Member shall have the right from time to time to enter the Properties to inspect work directed toward satisfaction of Continuing Obligations and audit books, records, and accounts related thereto.

    (p)           Upon establishment by the Management Committee of reserves for the Environmental Compliance Fund (which reserves shall be in an amount sufficient to comply, or obtain letters of credit or surety bonds that comply, with applicable Law and in such additional amounts as the Management Committee may unanimously agree), the Manager shall establish a separate account and make periodic deposits of the Company’s funds into such account as required by the Environmental Compliance plan.  The funds that are to be deposited into the Environmental Compliance Fund shall be maintained by the Manager in a separate, interest bearing cash management account, which shall be invested in Cash Equivalents or, if unanimously approved by the Management Committee, in other investments. Such funds shall be used solely for Environmental Compliance and Continuing Obligations, including the committing of such funds, interests in property, insurance or bond policies, or other security to satisfy Laws regarding financial assurance for the reclamation or restoration of the Properties, and for other Environmental Compliance requirements.  In furtherance of such use of the Environmental Compliance Fund, such amounts may be pledged to secure letters of credit or other financial sureties required as conditions of any Permit.

    (q)           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.

    (r)            The Manager shall not at any time take any action that is outside the scope of the business and purposes of the Company as stated and limited in Sections 2.3 and 2.4.

11.3        Standard of Care .  The Manager shall discharge its duties under Section 11.2 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 willful misconduct or gross negligence. The Manager shall not be in default of any of its duties under Section 11.2 if its inability or failure to perform results from the failure of the other Member to perform acts or to contribute amounts required of it by this Agreement.

11.4        Resignation .  The Manager may resign upon not less than six (6) 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 ninety (90) days after the notice of resignation; provided, that the Manager may not resign while any portion of the Project Financing remains outstanding and unpaid unless the lender under the Loan Agreement shall consent to such resignation.  If the other Member does not elect to become the new Manager, then a non-Member Manager may be chosen by unanimous vote of the Management Committee; provided, that if the Management Committee has not unanimously agreed on a non-Member Manager within ninety (90) days of notice from the other Member that it does not choose to become the Manager, then such other Member shall have the right to appoint a non-Member Manager.  Resignation of the Manager shall not become effective until the later of (i) the date any Governmental Approvals required for the other Member or non-Member Manager to act as Manager shall have been obtained and (ii) if a Force Majeure event shall have occurred and be continuing, the earlier of the end of such Force Majeure event and the date six months after the commencement of such Force Majeure event.  The resigning Manager shall

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reasonably cooperate in effecting a transition to a new Manager including, without limitation, by turning over all relevant books and records in an orderly and organized manner.

11.5        Removal .

• • (a)           The Manager may be removed by the non-Manager Member in the following circumstances:

    • • (i)            If the Manager shall Transfer all or any portion of its Ownership Interest as provided herein if after such Transfer Manager owns less than 20% of the total Members’ ownership interest in the Company;

        (ii)           If a voluntary or involuntary bankruptcy case is initiated by or against Manager or Manager effects a general assignment for the benefit of creditors or a receiver is appointed for all or substantially all of the Manager’s assets or Manager admits in writing its inability to pay its debts as they come due;

        (iii)          If there is a final decision by the tribunal under which disputes are to be resolved pursuant to this Agreement that the Manager has committed a breach of the standard of care set forth in Section 11.3 or any other material obligation of Manager under this Agreement and, if such breach is curable, such breach remains uncured for a period of sixty (60) days after the final non-appealable determination of default by the tribunal;

        (iv)          If Manager fails to pay any award of any arbitral tribunal as a result of any breach described in clause (iii) above within ten (10) days of such award becoming final; or

        (v)           As provided in the final sentence of Section 7.7, upon thirty (30) days prior written notice to Manager by the other Member.

    (b)           For purposes of Section 11.5(a)(iii), the following defaults shall not be deemed curable (and any arbitration shall not determine otherwise):

    • • (i)            Entry into any contract requiring unanimous consent under Section 10.3 that is binding on the Company unless such consent shall have been obtained;

        (ii)           Unauthorized sale or transfer of any material assets of the Company; and

        (iii)          Unauthorized surrender of any material Permit or abandonment of any application for any material Permit; and

        (iv)          Any action constituting theft or conversion of assets of the Company.

    (c)           Removal of the Manager shall not be the non-Manager Member’s exclusive remedy for a breach of Manager’s obligations hereunder.  All other rights at law or in equity are hereby reserved.

11.6        Payments To Manager .

• • (a)           Management Fee .  From the CPC Date to and including the third anniversary thereof, the Company shall pay to the Manager a monthly management fee equal to $1.50 per pound of Product sold by the Company.  Thereafter, the Company shall pay to the Manager a management fee equal to $1.00 per pound of Product sold by the Company

    (b)           Reimbursement .  The Manager shall be entitled to reimbursement for its costs hereunder in accordance with Exhibit B .

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    (c)           No Distribution .  Payments to Manager under this Section in its capacity as Manager are Company expenditures and shall not be considered a distribution to Manager as a Member.

ARTICLE XII
PROGRAMS AND BUDGETS; NONCONSENT PROCESS; DEADLOCK ACTIVITIES

12.1        Preliminary Investment Decision .

• • (a)           After the Feasibility Study is completed, the Manger shall distribute a copy of it and the initial Permitting Budget to each Member and shall set a meeting of the Members to occur not less than ninety (90) days after such delivery for the purpose of making a Preliminary Investment Decision.  During this 90-day period, the Members shall review the Feasibility Study and seek any required internal approvals.  At the request of ITOCHU during this period, the Manager will meet with ITOCHU and its technical adviser to discuss technical issues and to discuss ways of reducing costs; and Manager shall consider in good faith ITOCHU’s reasonable suggestions and requests regarding the Feasibility Study and the Permitting Budget, provided that HRI shall not be required to incorporate ITOCHU’s reasonable suggestions and requests.  If the production or production cost estimates in the Feasibility Study are materially different from those included in the preliminary feasibility study previously delivered to ITOCHU, the Members shall meet and enter into good faith discussions to revise the distribution allocations in ARTICLE V; provided , that neither party shall be obligated to accept any such revision.

    (b)           At the Preliminary Investment Decision meeting (as it may be adjourned), the Members shall simultaneously exchange written ballots regarding their final decision with respect to the Preliminary Investment Decision.  If at the meeting the Members unanimously agree to pursue Development of  the Properties in accordance with the Feasibility Study and the Permitting Budget and subject to the terms and conditions of this Agreement (as this Agreement may be amended by the Members at such meeting), the Members shall be deemed to have made a " Positive Preliminary Investment Decision ."

12.2        Consequences of a Positive Preliminary Investment Decision .  If the Members make a Positive Preliminary Investment Decision, the following shall occur:

• • (a)           HRI shall contribute the Feasibility Study to the Company and the Members shall cooperate in attempting to secure Environmental Liability insurance;

    (b)           Manager shall be obligated to pursue all Permits required for Development and Mining Operations, which, following a Positive Final Investment Decision, shall to the extent feasible be issued in the name of the Company (and without limiting the generality of the foregoing, the Manager shall submit an appropriate application to the NRC seeking to obtain an NRC License in the name of the Company), and Manager shall advise ITOCHU on a regular basis of the progress towards obtaining Permit Approval and the anticipated Permit Date, to the extent the Manager is able to estimate such a date;

    (c)           Each Member shall be obligated to contribute funds i