Tomco Energy (NCS)- the next Cadence?

5.2 Information on the TomCo Leases

The TomCo Leases comprise a collection of oil shale claims which overlie
portions of the Green River formation. The Green River formation, located in
north-western Colorado, eastern Utah and south-eastern Wyoming, is a geological
region which contains the largest known oil shale deposit in the world.

The TomCo Leases give the right to prospect, mine, drill and remove oil shale
from the land subject to the TomCo Leases. The TomCo Leases are for a term of 20
years until 31st December 2024 and continue after this initial term provided
that the land is being mined or drilled or TomCo is paying a production royalty
or TomCo is diligently engaged in operations, exploration, research or
development activity and TomCo is paying a Minimum Royalty (as described below).

Rent of US$1 is payable per acre each year and such rent shall be increased to
US$4 per acre per year for the 21 st to 25th year of the TomCo Leases, US$5 per
acre per year for the 26th to 30th years of the TomCo Leases and US$10 per acre
per year thereafter. In order for the TomCo Leases to continue beyond the
initial 20 year period, TomCo must pay a minimum royalty of US$10 per acre per
year ("Minimum Royalty") from the 21 st to 25th year, US$15 per acre per year
from the 26th to 30th year and thereafter US$20 per acre per year. This Minimum
Royalty is in addition to other rental payments due under the TomCo Leases. The
Minimum Royalty will be adjusted annually in line with any increase of the US
Consumer Price Index.

TomCo is also required to conduct all operations in a lawful manner and to post
a bond or give other security to the State of Utah to assure appropriate
reclamation and restitution for any damage to the surface of the land.

If the rent is not paid within 30 days of falling due, the TomCo Leases may be
forfeited.

In addition to the payment of rent, TomCo must pay a production royalty of 5 per
cent. of the market value of the first marketable products produced and sold.
The production royalty may be increased at the discretion of the State of Utah
after the first 5 years of production by up to 1 per cent. per annum subject to
a maximum production royalty of 12.5 per cent. However, no royalty is payable on
the first 200,000 barrels of oil from shale produced within a 12 month period.

The TomCo Leases will not be affected by any change in control of TomCo and do
not contain any specific work commitments.

The State of Utah Institutional Trust Lands Administration has issued oil and
gas leases on some of the land subject to the TomCo Leases and TomCo is under an
obligation to cooperate in relation to such operations, if they occur.