Exhibit 10.7
------------
Members' Agreement of the Members of Tonkin Springs
LLC as Amended by and between Tonkin Springs
Venture Limited Partnership and U.S. Environmental
Corporation dated October 18, 2001
MEMBERS' AGREEMENT AS AMENDED
of the Members of TONKIN SPRINGS LLC, a Delaware Limited Liability Company
TABLE OF CONTENTS
Page
No.
-----
ARTICLE I DEFINITIONS AND CROSS-REFERENCES................................. 1
1.1 Definitions........................................................ 1
1.2 Cross References................................................... 1
ARTICLE II REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES.... 1
2.1 Representations and Warranties..................................... 1
2.2 Limitation on Liability............................................ 2
2.3 Indemnification.................................................... 2
ARTICLE III INTERESTS OF MEMBERS........................................... 3
3.1 Continuing Liabilities Upon Adjustments of Ownership Interests..... 3
3.2 Continuing Obligations and Environmental Liabilities............... 3
3.3 Grant of Lien and Security Interest................................ 3
3.4 Subordination of Interests......................................... 3
ARTICLE IV RELATIONSHIP OF THE MEMBERS..................................... 3
4.1 Transfer or Termination of Rights.................................. 3
4.2 Abandonment and Surrender of Properties............................ 3
4.3 Implied Covenants.................................................. 4
4.4 No Third Party Beneficiary Rights.................................. 4
ARTICLE V ACQUISITIONS WITHIN AREA OF INTEREST............................. 4
5.1 General............................................................ 4
5.2 Notice to Non-Acquiring Member..................................... 4
5.3 Option Exercised................................................... 4
5.4 Option Not Exercised............................................... 4
5.5 Non-Compete Covenants.............................................. 4
5.6 Xxxxxxxx-Xxxxxxx Lease............................................. 5
ARTICLE VI GOVERNING LAW.................................................. 5
6.1 Governing Law...................................................... 5
ARTICLE VII GENERAL PROVISIONS............................................. 5
7.1 Notices............................................................ 5
7.2 Gender............................................................. 5
7.3 Currency........................................................... 5
7.4 Headings........................................................... 5
7.5 Waiver............................................................. 6
7.6 Modification....................................................... 6
7.7 Force Majeure...................................................... 6
7.8 Rule Against Perpetuities.......................................... 6
7.9 Further Assurances................................................. 6
7.10 Entire Agreement; Successors and Assigns........................... 6
7.11 Counterparts....................................................... 6
i
AGREEMENT
This Amended Members' Agreement (the Agreement) is made effective as of October
18, 2001 (Effective Date) between TONKIN SPRINGS VENTURE LIMITED PARTNERSHIP, a
Nevada limited partnership (TSVLP), the address of which is 0000 Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000-0000, and U.S. ENVIRONMENTAL CORPORATION, a
Colorado corporation (USEC), the address of which is 0000 Xxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxx 00000-0000.
RECITALS
X. Xxxxxx Springs Holding Inc., a Colorado corporation (TSHI) and TSVLP were
parties to the Members' Agreement of Tonkin Springs LLC, dated February 26,
1999 (the 1999 Agreement). Pursuant to the 1999 Agreement, TSHI withdrew
from the TSLLC effective October 18, 2001 and the equity interest of TSHI
in TSLLC was thereby transferred to TSVLP as provided under Section 2.3 of
the 1999 Agreement.
B. Immediately prior to the withdrawal of TSHI from TSLLC, TSVLP sold and
transferred to USEC a 1/2 of 1 percent equity interest in TSLLC. After such
transfer and the withdrawal of TSHI, TSVLP shall own 99.5 percent equity
interest in TSLLC and USEC shall own 0.5 percent equity interest in TSLLC.
TSVLP and USEC are affiliates of each other.
C. TSVLP and USEC amended the Operating Agreement of Tonkin Springs LLC
effective as of October 18, 2001 (the LLC Agreement as Amended.)
D. TSVLP and USEC desire to continue TSLLC and to thereby participate in the
exploration, evaluation and, if justified, the development and mining of
mineral resources within the Properties or any other properties acquired
pursuant to the terms of this Agreement.
E. TSVLP and USEC wish to continue to operate the limited liability company
under the Delaware Limited Liability Company Act, 6 Del. C.18-101 et. seq.
(the Act) to own and operate the Properties and Assets. The name of the
limited liability company shall continue to be Tonkin Springs LLC (the
Company) and its affairs shall be governed by that certain Operating
Agreement as Amended of Tonkin Springs LLC of even date herewith. TSVLP and
USEC desire to enter into this Agreement to provide, amongst themselves,
for their respective contributions to the Company and for certain other
matters, all as set forth herein.
NOW THEREFORE, in consideration of the covenants and conditions contained
herein, TSVLP and USEC agree as follows:
ARTICLE I
DEFINITIONS AND CROSS-REFERENCES
I.1 Definitions. The terms defined herein shall have the defined meaning
wherever used in this Agreement. Capitalized terms used but not defined in this
Agreement shall have the meanings given thereto in the LLC Agreement as Amended.
I.2 Cross References. References to exhibits are to Exhibits of the LLC
Agreement as Amended. References to Articles, Sections and Subsections refer to
Articles, Sections and Subsections of this Agreement unless indicated otherwise.
References to Paragraphs and Subparagraphs refer to paragraphs and subparagraphs
of the referenced Exhibits.
ARTICLE II
REPRESENTATIONS AND WARRANTIES;
TITLE TO ASSETS; INDEMNITIES
II.1 Representations and Warranties.
(a) Capacity of the Members. As of the Effective Date, each Member warrants
and represents to the other that:
(1) it is a corporation or limited partnership, as the case may be,
duly organized and in good standing in its state of incorporation or
partnership organization 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;
1
(2) it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and all corporate, partnership
and other actions and consents required to authorize it to enter into
and perform this Agreement have been properly taken or obtained;
(3) it will not breach any other agreement or arrangement by entering
into or performing this Agreement; and
(4) this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms.
II.2 Limitation of Liability. The Members shall not be required to make any
contribution to the capital of the Company except as otherwise provided in this
Agreement, nor shall the Members in their capacity as Members or Manager be
bound by, or liable for, any debt, liability or obligation of the Company
whether arising in contract, tort, or otherwise. The foregoing shall not limit
any obligation of a Member to (i) indemnify the other Member as expressly
provided by this Agreement, (ii) restore a deficit Capital Account as required
by Section 4.2 (b) of Exhibit C of the LLC Agreement as Amended or (iii) satisfy
liabilities arising under Article IV or Section 5.2 of this Agreement. Any
obligation herein to contribute capital to the Company may be compromised by
written agreement of the Members, including by agreements providing for payments
by an obligated Member directly to the other Member.
II.3 Indemnification.
(a) Each Member shall indemnify the other Member, and its Affiliates and
their respective directors, officers, employees, agents and attorneys,
(collectively Indemnified Party) from and against all direct and indirect
costs, expenses, damages, obligations, claims, demands, actions or
liabilities, including reasonable attorneys' fees and other costs of
litigation (either threatened or pending) arising out of or based on a
breach by a Member (Indemnifying Party) of any representation, warranty or
covenant contained in this Agreement or the LLC Agreement as Amended,
including without limitation:
(i) any action taken for or obligation or responsibility assumed on
behalf of the Company or another Member by a Member or any of its
directors, officers, employees, agents and attorneys, or Affiliates,
in violation of Section 5.1 of the LLC Agreement as Amended;
(ii) failure of a Member or its Affiliates to comply with the
non-compete or Area of Interest provisions of Article V hereof;
(iii) any Transfer that causes termination of the tax partnership
established by Section 5.2 of the LLC Agreement as Amended, against
which the transferring Member shall indemnify the non-transferring
Member as provided in Subsection 7.2(e) of the LLC Agreement as
Amended and Article V of Exhibit C; and
(iv) failure of a Member or its Affiliates to comply with the
preemptive right under Section 7.3 of the LLC Agreement as Amended and
Exhibit H of the LLC Agreement as Amended.
(b) If any claim or demand is asserted against an Indemnified Party in
respect of which such Indemnified Party may be entitled to indemnification
under this Agreement, written notice of such claim or demand shall promptly
be given to the Indemnifying Party. The Indemnifying Party shall have the
right, but not the obligation, by notifying the Indemnified Party within
thirty (30) days after its receipt of the notice of the claim or demand, to
assume the entire control of (subject to the right of the Indemnified Party
to participate, at the Indemnified Party's expense and with counsel of the
Indemnified Party's choice) the defense, compromise or settlement of the
matter, including, at the Indemnifying Party's expense, employment of
counsel of the Indemnifying Party's choice. Any damages to the assets or
business of the Indemnified Party caused by a failure by the Indemnifying
Party to defend, compromise or settle a claim or demand in a reasonable and
expeditious manner requested by the Indemnified Party, after the
Indemnifying Party has given notice that it will assume control of the
defense, compromise or settlement of the matter, shall be included in the
damages for which the Indemnifying Party shall be obligated to indemnify
the Indemnified Party. Any settlement or compromise of a matter by the
Indemnifying Party shall include a full release of claims against the
Indemnified Party which have arisen out of the indemnified claim or demand.
2
ARTICLE III
INTERESTS OF MEMBERS
III.1 Continuing Liabilities Upon Adjustments of Ownership Interests. As between
the Members, any reduction or elimination of either Member's Ownership Interest
under the LLC Agreement as Amended or pursuant to a withdrawal or resignation of
a Member from the Company, this Agreement or the LLC Agreement as Amended shall
not relieve such Member of its share of any arising out of Operations conducted
during the term of this Agreement but prior to such reduction or elimination,
regardless of when any funds may be expended to satisfy such liability. For
purposes of this Section and as between the Members, such Member's share of such
liability shall be equal to its Ownership Interest at the time the act or
omission giving rise to the liability occurred. Should the cumulative cost of
satisfying Continuing Obligations be in excess of cumulative amounts accrued or
otherwise charged to the Environmental Compliance Fund as described in Paragraph
3.14 of Exhibit B of the LLC Agreement as Amended, each of the Members shall, as
between the Members, be liable for its proportionate share (i.e., Ownership
Interest at the time that the act or omission giving rise to such liability
occurred) of the cost of satisfying such Continuing Obligations, notwithstanding
that either Member has previously resigned from the Company or that its
Ownership Interest has been reduced or eliminated pursuant to the LLC Agreement
as Amended.
III.2 Continuing Obligations and Environmental Liabilities. On dissolution of
the Company under Section 14.1 of the LLC Agreement as Amended, each Member
shall, as between the Members, remain liable for its respective share of
liabilities to third parties (whether such arises before or after such
dissolution), including Environmental Liabilities and Continuing Obligations. In
the event of the resignation of a Member pursuant to Section 14.2 of the LLC
Agreement as Amended, the resigning Member's share of such liabilities shall be
equal to its Ownership Interest at the time such liability was incurred (or, as
to liabilities arising prior to the Effective Date, its initial Ownership
Interest).
III.3 Grant of Lien and Security Interest.
(a) Subject to Section 3.4 hereof, each Member grants to the other Member a
lien upon and a security interest in its Ownership Interest, including all
of its right, title and interest in the Company and the Assets, whenever
acquired or arising, and the proceeds from and accessions to the foregoing.
(b) The Liens and security interests granted by Subsection 3.3(a) hereof
shall secure every obligation or liability of the Member granting such lien
or security interest to the other Member created under this Agreement or
the LLC Agreement as Amended. Each Member hereby agrees to take all action
necessary to perfect such lien and security interest and hereby appoints
the other Member its attorney-in-fact to execute, file and record all
financing statements and other documents necessary to perfect or maintain
such lien and security interest.
III.4 Subordination of Interests. Each Member shall, from time to time, take all
necessary actions, including execution of appropriate instruments and
agreements, to pledge and subordinate its Ownership Interest, any Liens it may
hold which are created under this Agreement and any other right or interest it
holds with respect to Tonkin Springs LLC and the Assets (other than any
statutory lien of the Manager) to any secured borrowings for Operations approved
by the Management Committee, including any secured borrowings relating to
Project Financing, and any modifications or renewals thereof.
ARTICLE IV
RELATIONSHIP OF THE MEMBERS
IV.1 Transfer or Termination of Rights. Neither Member shall Transfer all or any
part of its rights or obligations under this Agreement, except in conjunction
with a transfer or termination of the Member's Ownership Interest permitted by
the LLC Agreement as Amended. Any such permitted assignment shall be subject to
the consent requirements of Section 7.2 of the LLC Agreement as Amended.
IV.2 Abandonment and Surrender of Properties The Member that desires to have the
Company abandon or surrender all or part of the Properties pursuant to Section
12.2 of the LLC Agreement as Amended shall remain liable to the other Member for
its share (determined by its Ownership Interest as of the date of such
abandonment) of any liability with respect to such Properties, including,
without limitation, Continuing Obligations, Environmental Liabilities and
3
Environmental Compliance, whether accruing before or after such abandonment,
arising out of activities conducted subsequent to the Effective Date and out of
Operations conducted prior to the date of such abandonment, regardless of when
any funds may be expended to satisfy such liability.
IV.3 Implied Covenants. There are no implied covenants contained in this
Agreement other than those of good faith and fair dealing.
IV.4 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,
expressly including the Company, or in any governmental organization or agency,
except to the extent required to permit indemnification of a non-Member
Indemnified Party pursuant to Subsection 2.5(a) hereof.
ARTICLE V
ACQUISITIONS WITHIN AREA OF INTEREST
V.1 General. Any interest or right to acquire any interest in real property or
mineral or water rights within the Area of Interest acquired during the term of
this Agreement by or on behalf of either Member (Acquiring Member) or any
Affiliate of such Member shall, in accordance with and subject to the provisions
in this Article V, be subject to the terms and provisions of this Agreement and
the LLC Agreement as Amended. TSVLP and USEC and their respective Affiliates for
their separate account shall be free to acquire lands and interests in lands
outside the Area of Interest and to locate mining claims outside the Area of
Interest. Failure of any Affiliate of either Member to comply with this Article
shall be a breach by such Member of this Agreement.
V.2 Notice to Non-Acquiring Member. Within thirty (30) days after the
acquisition of any interest or the right to acquire any interest in real
property or mineral or water rights wholly or partially within the Area of
Interest (except real property acquired by the Manager pursuant to a Program),
the Acquiring Member shall notify the other Member of such acquisition by it or
its Affiliate; provided that if the acquisition of any interest or right to
acquire any interest pertains to real property or water or mineral rights
partially within the Area of Interest, then all such real property or water or
mineral rights (i.e., the part within the Area of Interest and the part outside
the Area of Interest) shall be subject to this Article. The Acquiring Member's
notice shall describe in detail the acquisition, the acquiring party if that
party is an Affiliate, the lands and minerals and water rights covered thereby,
the cost thereof, and the reasons why the Acquiring Member believes that the
acquisition of the interest is in the best interests of the Members under this
Agreement. In addition to such notice, the Acquiring Member shall make any and
all information concerning the relevant interest available for inspection by the
other Member.
V.3 Option Exercised. Within thirty (30) days after receiving the Acquiring
Member's notice, the other Member may notify the Acquiring Member of its
election to have the Company acquire the acquired interest. Promptly upon such
notice, the Acquiring Member shall convey or cause its Affiliate to convey to
the Company, by special warranty deed, all of the Acquiring Member's (or its
Affiliate's) interest in such acquired interest, free and clear of all
Encumbrances arising by, through or under the Acquiring Member (or its
Affiliate) other than those to which both Members have agreed. Immediately upon
such notice, the acquired interest shall become a part of the Properties for all
purposes of this Agreement and the LLC Agreement as Amended. The Company shall
promptly pay to the Acquiring Member the latter's actual out-of-pocket
acquisition costs.
V.4 Option Not Exercised. If the other Member does not give such notice within
the thirty (30) day period set forth in Section 5.3 hereof, it shall have no
interest in the acquired interests, and the acquired interests shall not be a
part of the Assets or continue to be subject to this Agreement or the LLC
Agreement as Amended.
V.5 Non-Compete Covenants. Neither a Member that resigns pursuant to Section
14.2 of the LLC Agreement as Amended, nor any Affiliate of such a Member, shall
directly or indirectly acquire any interest or right to explore or mine, or
both, on any property any part of which is within the Area of Interest for
twelve (12) months after the effective date of resignation. If a resigning
Member, or the Affiliate of a resigning Member, breaches this Section, such
Member shall be obligated to offer to convey to the non-resigning Member,
4
without cost, any such property or interest so acquired (or ensure its Affiliate
offers to convey the property or interest to the non-resigning Member, if the
acquiring party is the resigning Member's Affiliate). Such offer shall be made
in writing and can be accepted by the non-resigning Member at any time within
forty five(45) days after the offer is received by such non-resigning Member.
Failure of a Member's Affiliate to comply with this Section shall be a breach by
such Member of this Agreement.
V.6 Xxxxxxxx-Xxxxxxx Lease. Notwithstanding any provision of this Agreement or
the LLC Agreement as Amended to the contrary, the Manager shall have the full
right and authority, but not the obligation, to enter into such amendments of
the Xxxxxxxx-Xxxxxxx Lease as the Manager deems appropriate, in its sole
discretion, including without limitation for the purposes of adding claims to
those leased thereunder, and to convey or quitclaim claims owned by the Company
to the lessors under the Xxxxxxxx-Xxxxxxx Lease in connection therewith, as the
Manager deems appropriate in its sole discretion.
ARTICLE VI
GOVERNING LAW
VI.1 Governing Law. Except for matters of title to the Assets Properties or
their Transfer, which shall be governed by the law of their situs, this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard for any conflict of laws or choice of laws
principles that would permit or require the application of the laws of any other
jurisdiction.
ARTICLE VII
GENERAL PROVISIONS
VII.1 Notices. All notices, payments and other required or permitted
communications (Notices) to either Member shall be in writing, and shall be
addressed respectively as follows:
If to TSVLP: Tonkin Springs Venture Limited Partnership
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: President, U.S. Gold Corporation
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to USEC: U.S. Environmental Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: President, U.S. Environmental
Corporation
Telephone:(000) 000-0000
Facsimile: (000) 000-0000
All Notices shall be given (a) by personal delivery to the Member; (b) by
electronic communication, capable of producing a printed transmission and
confirmation, (c) by registered or certified mail return receipt requested; or
(d) by overnight or other express courier service. All Notices shall be
effective and shall be deemed given on the date of receipt at the principal
address if received during normal business hours, and, if not received during
normal business hours, on the next business day following receipt, or if by
electronic communication, on the date of such communication. Either Member may
change its address by Notice to the other Member.
VII.2 Gender. The singular shall include the plural, and the plural the singular
wherever the context so requires, and the masculine, the feminine, and the
neuter genders shall be mutually inclusive.
VII.3 Currency. All references to dollars or $ herein shall mean lawful currency
of the United States of America.
VII.4 Headings. The subject headings of the Sections and Subsections of this
Agreement and the Paragraphs and Subparagraphs of the Exhibits to this Agreement
are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions. References to hereunder
are, unless otherwise stated, references to this entire Agreement.
5
VII.5 Waiver. The failure of either Member to insist on the strict performance
of any provision of this Agreement or to exercise any right, power or remedy
upon a breach hereof shall not constitute a waiver of any provision of this
Agreement or limit such Member's right thereafter to enforce any provision or
exercise any right.
VII.6 Modification. No modification or amendment of this Agreement shall be
valid unless made in writing and duly executed by both Members.
VII.7 Force Majeure. The obligations of a Member arising under this Agreement or
under the LLC Agreement as Amended shall be suspended to the extent and for the
period that performance is prevented by any cause, whether foreseeable or
unforeseeable, beyond its reasonable control, including, without limitation,
labor disputes (however arising and whether or not employee demands are
reasonable or within the power of the Member to grant); acts of God; Laws,
instructions or requests of any government or governmental entity; judgments or
orders of any court; inability to obtain on reasonably acceptable terms any
public or private license, permit or other authorization; curtailment or
suspension of activities to remedy or avoid an actual or alleged, present or
prospective violation of Environmental Laws; action or inaction by any federal,
state or local agency that delays or prevents the issuance or granting of any
approval or authorization required to conduct Operations (including, without
limitation, a failure to complete any review and analysis required by the
National Environmental Policy Act or any similar state law); acts of war or
conditions arising out of or attributable to war, whether declared or
undeclared; riot, civil strife, insurrection or rebellion; fire, explosion,
earthquake, storm, flood, sink holes, drought or other adverse weather
condition; delay or failure by suppliers or transporters of materials, parts,
supplies, services or equipment or by contractors' shortage of, or inability to
obtain, labor, transportation, materials, machinery, equipment, supplies,
utilities or services; accidents; breakdown of equipment, machinery or
facilities; actions by native rights groups, environmental groups, or other
similar special interest groups; or any other cause whether similar or
dissimilar to the foregoing. The affected Member shall promptly give notice to
the other Member of the suspension of performance, stating therein the nature of
the suspension, the reasons therefore, and the expected duration thereof. The
affected Member shall resume performance as soon as reasonably possible. During
the period of suspension the obligations of both Members to advance funds
pursuant to this Agreement or the LLC Agreement as Amended shall be reduced to
levels consistent with then current Operations.
VII.8 Rule Against Perpetuities. The Members do not intend that there shall be
any violation of the rule against perpetuities, the rule against unreasonable
restraints on the alienation of property, or any similar rule. Accordingly, if
any right or option to acquire any interest in the Properties or Assets, in an
Ownership Interest, or the Company, or in any real property exists under this
Agreement, such right or option must be exercised, if at all, so as to vest such
interest within time periods permitted by applicable rules. If, however, any
such violation should inadvertently occur, the Members hereby agree that a court
shall reform that provision in such a way as to approximate most closely the
intent of the Members within the limits permissible under such rules.
VII.9 Further Assurances. Each of the Members shall take, from time to time and
without additional consideration, such further actions and execute such
additional instruments as may be reasonably necessary or convenient to implement
and carry out the intent and purposes of this Agreement or as may be reasonably
required by lenders in connection with Project Financing.
VII.10 Entire Agreement; Successors and Assigns. This Agreement contains the
entire understanding of the Members and supersedes all prior agreements and
understandings between the Members relating to the subject matter hereof;
provided that nothing in this Section 7.10 modifies or affects the LLC Agreement
as Amended and the Members' obligations thereunder. This Agreement shall be
binding upon and inure to the benefit of the respective successors and permitted
assigns of the Members.
VII.11 Counterparts. This Agreement may be executed in any number of
counterparts, and it shall not be necessary that the signatures of both Members
be contained on any counterpart. Each counterpart shall be deemed an original,
but all counterparts together shall constitute one and the same instrument.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
TONKIN SPRINGS VENTURE LIMITED PARTNERSHIP
By: Tonkin Springs Gold Mining Company, as its
General Partner
By: /s/Xxxxxxx X. Xxxx, President
By: U.S. ENVIRONMENTAL CORPORATION
By: /s/Xxxxx X. Xxxx, President
7
