AMENDED AND RESTATED URANIUM SUPPLY CONTRACT BETWEEN ITOCHU CORPORATION AND URI, INC.

 

TABLE OF CONTENTS

 

	Page
Preamble – Object of the Contract	1
RECITALS:	1
Article I – Definitions	2
Article II – Annual Quantities and Delivery Schedule of Concentrates	4
Article III – Delivery	5
Article IV – Specifications	6
Article V – Warranty and Limitation of Liability	6
Article VI – Price of Concentrates	6
Article VII –   Contract Terms Upon Occurrence of a Condition Subsequent Specified in Section 7.3	8
Article VIII – Taxes	8
Article IX – Invoicing and Payment	8
Article X – Force Majeure	9
Article XI – Non Compliance	10
Article XII – Governing Law And Arbitration	11
Article XIII – Governmental Permits	13
Article XIV – Safeguards-Use of Concentrates	13
Article XV – General and Notices	13

 

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Preamble – Object of the Contract

 

This Amended and Restated Contract is for the sale of Uranium Concentrates and is made and entered into this        day of March, 2006, to be effective as of this 1st day of March 2006 (the “Effective Date”).

 

Between:                                               ITOCHU Corporation having its principal office at 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo 107-8077, JAPAN (hereinafter in this Contract called “Buyer”) on the one part.

 

And:                                                                     URI, Inc. , a wholly-owned subsidiary of Uranium Resources, Inc. ( hereinafter in this Contract called “Seller’s Parent Company”) and a corporation incorporated in the state of Delaware, and having its principal office at 650 South Edmonds Lane, Suite 108, Lewisville, TX, USA 75067 (hereinafter in this Contract called “Seller”) on the other part.

 

Each of Seller and Buyer is hereinafter referred to sometimes as a “Party” and collectively as the “Parties.”

 

RECITALS:

 

Whereas:                                             Seller and Buyer have heretofore entered into an Amended and Restated Uranium Supply Contract dated as of June 7, 2005, as amended by Amendment #1 dated December 28, 2005, and a second Uranium Supply Contract dated as of June 15, 2005 (copies of the originals of each of which having been initialled by the parties and identified as the contracts referenced hereby) (collectively the “Original Contracts”), pursuant to which Seller has agreed to sell to Buyer and Buyer has agreed to purchase Concentrates (as hereinafter defined) from Seller on the terms and conditions set forth therein;

 

Whereas:                                             Seller and Buyer desire to incorporate the Original Contracts and further amendments into one document by amending and restating the Original Contracts in their entirety to incorporate the amendments effected hereby;

 

Whereas:                                             The Parties have executed the Term Sheet regarding the establishment of a Joint Venture to produce uranium through in situ leach (ISL) mining at HRI’s Churchrock property in New Mexico (the “Churchrock Joint Venture”); and

 

Whereas                                                The Parties desire to amend the Original Contracts to provide for revised quantity, delivery and price terms, in accordance with the Term Sheet, prior to execution of the definitive agreements regarding the Churchrock Joint Venture.

 

Now in consideration of the mutual covenants and agreements herein contained it is hereby agreed as follows:

 

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Article I – Definitions

 

1.1                        In this Contract unless the context otherwise requires:

 

(a)                                   “Agreed Rate” means a rate per annum that is equal to two percentage points (2%) in excess of the prime rate of interest per annum announced by JPMorganChase Bank, at New York, New York, as its prime rate of interest for U.S. Dollar commercial loans;

 

(b)                                  “Book Transfer” is the transfer of U ₃ O ₈ in the records of the Converter from the Concentrates account of Seller to the Concentrates account of Buyer;

 

(c)                                   “Business Day” means a day other than a Saturday, Sunday and any other day on which commercial banks are authorized or required to close for business in Texas, New York, Tokyo, or (so long as any of Buyer’s executive, treasury or administrative functions with respect to this Agreement are conducted in Hong Kong) in Hong Kong;

 

(d)                                  “Concentrates” means natural uranium concentrates containing U ₃ O ₈ , which will be supplied from Texas Properties Owned by Seller;

 

(e)                                   “Contract” means this Contract as the same may be modified or amended from time to time in accordance with its terms and expressions “herein,” “hereto,” “hereunder,” “hereof” and similar expressions refer to in this Contract;

 

(f)                                     “Converter” means Honeywell International’s facility at Metropolis, Illinois, U.S.A.;

 

(g)                                  “Delivery Certificate” means a document including the information regarding delivery date, delivered quantity and origin by which the Converter confirms Book Transfer of Concentrates for the account of and on behalf of Buyer, and which has been signed by an authorised person of the Converter;

 

(h)                                  “Delivery Year” means the calendar year during which delivery of a quantity of Concentrates is made or scheduled to be made pursuant to this Contract;

 

(i)                                      “HRI” means Hydro Resources, Inc., a Delaware corporation and a subsidiary of Seller’s Parent Company;

 

(j)                                      “Joint Venture Agreement” shall mean the definitive agreements for the Churchrock Joint Venture;

 

(k)                                   “Kingsville Production” means all Concentrates, other than Vasquez Production, processed to U ₃ O ₈ at the Kingsville Dome processing facility and whose source is Texas Properties Owned by Seller until operations are ceased and the processing facility is placed in decommissioned status by either or both U.S. Federal and State of Texas Authorities;

 

(l)                                      “Month” means calendar month;

 

(m)                                “Pound (lb)” means 1 pound avoirdupois;

 

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(n)                                  “Production Certificate” shall mean a certificate prepared by Seller, for the purpose specified in Article 2.3, in certifying the final annual production for Kingsville Production, Rosita Production and Vasquez Production;

 

(o)                                  “Rosita Production” means all Concentrates, other than Vasquez Production, processed to U ₃ O ₈ at the Rosita processing facility and whose source is Texas Properties Owned by Seller until operations of the processing facility are ceased and the processing facility is placed in decommissioned status by either or both U.S. Federal and State of Texas Authorities;

 

(p)                                  “Term Sheet” means the non-binding letter of intent signed by both the Parties effective March 2, 2006; and

 

(q)                                  “Texas Properties Owned by Seller” means properties located in Texas currently owned by Seller or Seller’s Parent Company or any of its subsidiaries and properties located in Texas acquired by any of them in the future, excluding any production from two large ranches, which Seller has identified to Buyer in a letter dated the date hereof and initialed by the parties as establishing the identity of such ranches;

 

(r)                                     “Specifications” means the requirements of the Converter in effect for each delivery of Concentrates in order to convert from U ₃ O ₈ to UF ₆ without any penalty or surcharge or the like imposed by the Converter;

 

(s)                                   “U ₃ O ₈ ” means natural triuranium octoxide, the quantity of the element uranium in Concentrates being established by assay and converted to U ₃ O ₈ by multiplying the quantity of uranium by 1.1792;

 

(t)                                     “UF ₆ ” means natural uranium hexafluoride;

 

(u)                                  “Vasquez Production” means all Concentrates from the Vasquez mine located in Duval County, Texas operated by Seller that is processed to U ₃ O ₈ at the Kingsville Dome processing facility or Rosita processing facility until operations at the Vasquez mine are ceased and the Vasquez mine is placed in decommissioned status by either or both U.S. Federal and State of Texas Authorities;

 

(v)                                  “Year” means a period of 12 consecutive calendar months commencing on 1 ^st January and ending on 31 ^st December and “Annual” has a corresponding meaning.

 

1.2                                The following general rules of construction and calculation shall apply to this Contract:

 

(a)                                             In this Contract, unless the contrary intention appears, words importing the singular shall include the plural and vice versa, and words importing any gender shall include any other gender;

 

(b)                                            In this Contract, unless the context requires otherwise, a reference to any statute, statutory rule or regulation shall means that which is amended or substituted if such is amended or substituted during the term of this Contract;

 

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(c)                                             The Article headings shall not affect the interpretation of this Contract and are used solely for reference purposes;

 

(d)                                            In making calculations in accordance with the terms of this Contract, unless defined elsewhere, any figure shall be calculated to the nearest second decimal place. Whenever pursuant to this Contract a numerical figure is to be rounded or calculated to fewer digits than the number of digits available, then unless otherwise specified herein, the following procedures shall be applied;

 

(i)                                       If the first digit discarded is less than 5, the last digit retained shall not be changed;

 

(ii)                                    If the first digit discarded is equal to or greater than 5, the last digit retained shall be increased by 1.

 

Article II – Annual Quantities and Delivery Schedule of Concentrates

 

2.1                                  Commencing March 1, 2006 and subject to the terms and conditions of this Agreement, Seller shall deliver to Buyer, and Buyer shall purchase, quantities of Concentrates from each of the following sources (a) on a monthly basis, one half (50%) of Vasquez Production; (b) on a monthly basis, one-half (50%) of the Kingsville Production and (c) on a monthly basis, one-half of the Rosita Production, until the earlier to occur of the following events with respect to each facility: (a) the facility ceases to operate; or (b) the licences necessary to operate such facility are terminated by the Nuclear Regulatory Commission or the State of Texas, subject to Section 2.3.

 

Seller has simultaneously herewith furnished to Buyer an estimated production schedule. Seller will periodically, but not less frequently than on the last day of each calendar quarter, update the estimated production schedule in writing to Buyer. It is understood that the estimate is only an estimate and that Seller shall have no liability to Buyer if it fails to meet the estimated production schedule. Seller shall make reasonable efforts to achieve the production schedule as originally furnished by Seller.

 

Seller shall deliver on a monthly basis in a single shipment. Such delivery will occur during the first week of each month unless otherwise agreed to by Buyer.

 

Beginning on the date hereof, and continuing as of the first day of each month thereafter, Seller shall provide a rolling ninety-day estimated delivery schedule setting forth estimated dates of delivery and quantities to be delivered (“Estimated Delivery Schedule”). It is understood that the estimate is only an estimate and that Seller shall have no liability to Buyer if it fails to meet the estimated delivery schedule. In addition, if requested by Buyer, Seller shall meet with Buyer on a quarterly basis to review current production and delivery schedules. Such meeting will take place at a mutually agreed to location and time.

 

2.2                                  Within thirty (30) calendar days from the end of the Year, Seller shall provide a Production Certificate to Buyer, signed by a corporate officer, certifying the production quantities during that year for each of the Vasquez Production, Kingsville Production and Rosita Production.

 

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2.3                                  If Seller’s operation of the Kingsville Dome processing facility, the Rosita processing facility, or the Vasquez mine should cease and thereafter operation of any such facility shall be restarted, Seller’s obligation to deliver Concentrates to Buyer hereunder with respect to such facility shall be reinstated as of such recommencement of operations.

 

Article III – Delivery

 

3.1                                  Seller shall deliver Concentrates to Buyer, and Buyer shall take delivery of Concentrates from Seller by Book Transfer at the Converter.

 

(a)                                             The delivery shall be deemed to have been made when Concentrates containing a specified quantity of U ₃ O ₈ are transferred to Buyer’s account by Book Transfer.

 

(b)                        Seller shall notify Buyer thereof immediately upon transfer of Concentrates.

 

(c)                         Seller is responsible for all charges imposed by Converter for the Book Transfer to Buyer.

 

3.2                                  Title to, and all risks of loss in, and liability for, any personal loss or injury or any property damage caused by Concentrates delivered to Buyer shall pass to Buyer when the Concentrates are transferred to Buyer’s account by Book Transfer.

 

3.3                                  Subject to this Contract, Seller shall indemnify and hold harmless Buyer from and against all costs, expenses, claims, damages and injuries incurred or arising in respect of the ownership, storage, transportation, possession or use of Concentrates prior to Book Transfer to Buyer by Seller pursuant to this Contract. Buyer shall indemnify and hold harmless Seller from and against all costs, expenses, claims, damages and injuries arising in respect of the ownership, storage, transportation, possession or use of Concentrates subsequent to Book Transfer to Buyer by Seller pursuant to this Contract.

 

3.4                                  At its discretion, Buyer has the right to terminate a particular delivery  or deliveries, or any and all deliveries yet to be made in accordance herewith, unconditionally and without liability to Seller or Buyer for damages or losses, by providing an advance written notice not less than 180-days prior to the delivery or deliveries to be terminated. Upon receipt of such notice, Seller shall be free to sell such quantities to third parties.

 

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Article IV – Specifications

 

4.1                                  The Concentrates delivered hereunder by Seller to Buyer shall conform to the Specifications of the Converter at the time of delivery.

 

Article V – Warranty and Limitation of Liability

 

5.1                                  Seller warrants that it will give to Buyer good and marketable title to all Concentrates delivered hereunder and that such Concentrates will be delivered free and clear of all liens, claims, charges and encumbrances of any kind and type whatsoever.

 

5.2                                  THE EXPRESS WARRANTITIES SET FORTH IN SECTION 5.1 ARE EXCLUSIVE, AND NO OTHER WARRANTIES OF ANY KIND, WHETHER STATUTORY, WRITTEN, ORAL OR IMPLIED (INCLUDING WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY) SHALL APPLY.

 

5.3                                  Under no circumstances whatsoever and howsoever arising shall either party be entitled to recover indirect or consequential damages of any nature including, but not by way of limitation, any consequential loss or damage incurred by the other party.

 

Article VI – Price of Concentrates

 

6.1                                  The purchase price (“Purchase Price”) for Concentrates delivered by Seller to Buyer hereunder shall be the following (all references to prices “per pound” shall mean per pound of U ₃ O ₈ contained in such Concentrates):

 

(a)                                   Vasquez Production . For all deliveries from Vasquez Production, Buyer shall pay the Market Price less six and 50/100 dollars ($6.50) plus any applicable amounts called for by Section 6.1(c)(i).

 

(b)                                  Kingsville Production and Rosita Production . For all deliveries from Kingsville Production and Rosita Production, Buyer shall pay the Market Price less seven and 50/100 dollars ($7.50) plus any applicable amounts called for by Section 6.1(c)(ii).

 

(c)                                   Market Price . “Market Price” shall mean the simple average of 1) the average of U ₃ O ₈ Spot Price Indicator published by TradeTech f