Exhibit 10.2
SECOND AMENDED AND RESTATED
MEMBERS' AGREEMENT
of the Members of
TONKIN SPRINGS LLC
A Delaware Limited Liability Company
TABLE OF CONTENTS
ARTICLE I -- DEFINITIONS AND CROSS REFERENCES
1.1 Definitions
1.2 Cross References
ARTICLE II -- OWNERSHIP, SALE OF INTEREST AND
BACTECH INITIAL CONTRIBUTION
2.1 Ownership and Sale of Interest
2.2 BACTECH Initial Contributions
2.3 Withdrawal or Deemed Withdrawal Prior to the
Funding Obligation Date
2.4 BACTECH Payments to TSVLP
ARTICLE III -- REPRESENTATIONS AND WARRANTIES;
TITLE TO ASSETS; INDEMNITIES
3.1 Representations and Warranties
3.2 Disclosures
3.3 Loss of Title
3.4 Limitation of Liability
3.5 Indemnification
ARTICLE IV - INTERESTS OF MEMBERS
4.1 Interest of Members
4.2 Continuing Liabilities Upon Adjustments of
Ownership Interests
4.3 Continuing Obligations and Environmental
Liabilities
4.4 Grant of Lien and Security Interest
4.5 Subordination of Interests
ARTICLE V - RELATIONSHIP OF THE MEMBERS
5.1 Transfer or Termination of Rights
5.2 Abandonment and Surrender of Properties
5.3 No Third Party Beneficiary Rights
ARTICLE VI - ACQUISITIONS WITHIN AREA OF INTEREST
6.1 General
6.2 Notice to Non-Acquiring Members
6.3 Option Exercised
6.4 Option Not Exercised
6.5 Non-Compete Covenants
ARTICLE VII - GOVERNING LAW
7.1 Governing Law
ARTICLE VIII - GENERAL PROVISIONS
8.1 Notices
8.2 Gender
8.3 Currency
8.4 Headings
8.5 Waiver
8.6 Modification
8.7 Force Majeure
8.8 Rule Against Perpetuities
8.9 Further Assurances
8.10 Entire Agreement; Successors and Assigns
8.11 Counterparts
SECOND AMENDED AND RESTATED
MEMBERS' AGREEMENT
of the Members of
TONKIN SPRINGS LLC
A Delaware Limited Liability Company
This Second Amended and Restated Members'
Agreement (the Agreement) is made effective as of
July 31, 2003 (Effective Date) among TONKIN
SPRINGS VENTURE LIMITED PARTNERSHIP, a Nevada
limited partnership (TSVLP), U.S. ENVIRONMENTAL
CORPORATION, a Colorado corporation (USEC), both
with addresses of 0000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000-0000, and BACTECH NEVADA
CORPORATION, Nevada corporation the address of
which is 0 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx,
Xxxxxx 00000.
RECITALS
A. TSVLP and USEC are parties to the Operating
Agreement and Members Agreement of Tonkin Springs
LLC (the Company), both as amended October 18,
2001 (the Original Operating Agreement and the
Original Members' Agreement, respectively).
B. TSVLP has agreed to sell to BACTECH an
undivided fifty five (55%) equity Ownership
Interest in the Company for a cash purchase price
of $1,750,000 (the Purchase Price) and certain
funding obligations of BACTECH to the Company, as
well as the obligation of BACTECH, upon election
by TSVLP and USEC, to advance on behalf of TSVLP
and USEC any cash calls related to funding
requirements of TSVLP and USEC to the Company
after BACTECH has funded its Funding Obligation
(as defined in the Operating Agreement) to the
Company.
C. TSVLP, USEC and BACTECH wish to continue the
Company as a limited liability company under the
Delaware Limited Liability Company Act, 6 Del. C.
Paragraph 18-101 et. seq. (the Act) to own and
operate the Properties and Assets. TSVLP, USEC
and BACTECH 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.
D. This Agreement amends and restates in its
entirety the Original Members' Agreement of the
Company.
E. Concurrently with the execution of this
Agreement, the parties hereto are executing a
Second Amended and Restated Operating Agreement
(the Operating Agreement) which amends and
restates the Company's Original Operating
Agreement in its entirety.
NOW THEREFORE, in consideration of the covenants
and conditions contained herein, TSVLP, USEC and
BACTECH agree as follows:
ARTICLE I
DEFINITIONS AND CROSS-REFERENCES
1.1 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 Operating Agreement of the Company,
as amended this date or Exhibit D, Definitions
thereto.
1.2 Cross References. References to exhibits are
to Exhibits of the Operating Agreement. 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
OWNERSHIP, SALE OF INTEREST AND BACTECH INITIAL
CONTRIBUTION
2.1 Ownership and Sale of Interest. Immediately
prior to the Effective Date, TSVLP and USEC
collectively owned one hundred percent (100%) of
the Ownership Interest of the Company. As of the
Effective Date, TSVLP has sold to BACTECH a fifty-
five percent (55%)Ownership Interest in the
Company for consideration including but not
limited to certain cash consideration and certain
funding and other obligations of BACTECH to the
Company and to TSVLP and USEC as contained in this
Agreement. As of the Effective Date of this
Agreement the adjusted dollar value of TSVLP's
equity account balance of the Company is
($5,100,870), USEC's dollar value of its equity
account balance of the Company is ($133), and
BACTECH's dollar value of its equity account
balance of the Company is $260,000.
2.2 BACTECH Initial Contributions. Subject only
to BACTECH's right of withdrawal as set forth in
Section 2.3, BACTECH agrees to contribute to the
Company (a) the use at Tonkin Springs of any
proprietary technology owned by BACTECH or its
Affiliates and determined by the Manager to be
necessary or desirable for the operations of the
Properties at no expense to the Company, and (b)
as the Funding Obligation and in accordance with
approved Programs and Budgets, from time to time,
(i) the interim funding for the Company paid by
BACTECH prior to the Effective Date in the amount
of $70,000, (ii) direct costs incurred by BACTECH
for additional activities at the Tonkin Springs
Properties prior to the Effective Date in the
amount of $190,000, and (iii) pursuant to the
provisions of the Operating Agreement, including
the budget for calendar year 2003 and for
subsequent years for which an approved Program and
budget has yet to be finalized by the Manager and
approved by the Members herewith, one hundred
percent (100%) of all costs of Operations,
including but not limited to costs of holding and
maintaining the Properties, permits and bonds for
Operations, expenditures in respect of Exploration
and, if warranted, Development and Mining, capital
costs and working capital until BACTECH has
contributed an aggregate of $12 million. All
contributions to the Company by BACTECH prior to
the Funding Obligation Date shall be credited to
BACTECH's Capital Account in accordance with
Exhibit C of the Operating Agreement. Subsequent
to the Funding Obligation Date, the Members,
subject to any election by TSVLP, on behalf of
itself and USEC, permitted by Section 10.5 of the
Operating Agreement, and to the obligation of
BACTECH to advance funds to TSVLP and USEC as
provided in Section 10.6 of the Operating
Agreement, shall be obligated to contribute funds
to adopted Programs and Budgets pursuant to Cash
Calls under Section 11.2 of the Operating
Agreement in proportion to their respective
Ownership Interests.
2.3 Withdrawal or Deemed Withdrawal Prior to the
Funding Obligation Date. In the event that
BACTECH (i) fails to pay TSVLP the amount of six
hundred thousand dollars ($600,000) before October
31, 2003 pursuant to Section 2.4 or (ii) fails to
satisfy any portion of its Funding Obligation
within thirty (30) days after its receipt of
written notice from TSVLP setting forth in detail
the specifics of such failure, BACTECH shall be
deemed to have withdrawn from this Agreement and
from the Company. At any time prior to the
Funding Obligation Date, BACTECH may also withdraw
from this Agreement and the Company by providing
to TSVLP and USEC not less than thirty (30) days
prior written notice of withdrawal, which notice
shall set forth the effective date of BACTECH's
withdrawal. Upon either such withdrawal or deemed
withdrawal, BACTECH shall have no further right,
title or interest in the Assets or the Company and
its Ownership Interest shall be deemed transferred
to TSVLP and USEC in proportion to their
respective Ownership Interests. BACTECH's deemed
withdrawal shall be effective upon its failure to
make the required payment to TSVLP on or before
October 31, 2003 or its failure to cure an alleged
default within the aforementioned thirty (30) day
period and BACTECH's withdrawal shall be effective
on the date set forth in BACTECH's notice.
However, notwithstanding BACTECH's withdrawal or
deemed withdrawal pursuant to this Section 2.3,
BACTECH shall remain obligated to TSVLP and USEC:
(i) to fund Operations up to the amount of
BACTECH's agreed contribution to the remaining
balance of the adopted Program and Budget in
effect on termination; and (ii) to fund and
satisfy all unfunded liabilities to third parties
(whether such accrued before or after such
withdrawal) arising out of Operations conducted
subsequent to the Effective Date but prior to
BACTECH's withdrawal or deemed withdrawal in
connection with Operations or in connection with
this Agreement (whether pursuant to this Section
2.3 or otherwise). Upon BACTECH's withdrawal or
deemed withdrawal pursuant to this Section 2.3,
BACTECH shall have no further liabilities or
obligations whatsoever with respect to, under or
arising out of the Assets, the Company,
Operations, the Operating Agreement or this
Agreement, including without limitation any
obligation to make any payment or contribution or
to perform any covenant. Upon BACTECH's
withdrawal or deemed withdrawal pursuant to this
Section 2.3, the Company shall not be entitled to
use any proprietary technology owned by BACTECH or
its Affilitates unless otherwise agreed between
BACTECH and the Company.
2.4 BACTECH Payments to TSVLP. Upon execution
of this Agreement, BACTECH shall pay TSVLP One
Hundred Fifty Thousand Dollars ($150,000) as
partial payment of the Purchase Price for its 55%
Ownership Interest in the Company. TSVLP
acknowledges that Two Hundred Fifty Thousand
Dollars ($250,000) of the Purchase Price has been
paid prior to July 31, 2003, as an advance on the
Purchase Price. Six hundred thousand dollars
($600,000) of the balance on the Purchase Price
shall be paid by BACTECH to TSVLP on or before
October 31, 2003 and the remaining balance of the
Purchase Price of Seven Hundred Fifty Thousand
Dollars ($750,000) shall be paid by BACHTECH to
TSVLP upon Commencement of Commercial Production
(as defined in Exhibit D to the Operating
Agreement) or, if the Commencement of Commercial
Production has not been achieved within twelve
months of the Effective Date, then that balance
shall be paid to TSVLP at the rate of Sixty Two
Thousand Five Hundred Dollars ($62,500) per month
for twelve (12) months commencing on the first
anniversary of the Effective Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
TITLE TO ASSETS; INDEMNITIES
3.1 Representations and Warranties.
(a) Capacity of the Members. As of the Effective
Date of this Agreement, 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 formation 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;
(2) it has the capacity to enter into and perform
this Agreement and all transactions contemplated
herein and all 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.
(b) Representations and Warranties of TSVLP and
USEC.
(1) The Company owns no Properties in fee simple.
(2) With respect to those Properties in which the
Company holds an interest under leases or other
Contracts, and to the best of TSVLP's and USEC's
knowledge and belief, and except as set forth in
Exhibits A or J of the Operating Agreement: (i)
the Company is in exclusive possession of such
Properties; (ii) no event, condition or occurrence
exists which, after notice or lapse of time or
both, would constitute a breach or default under
any of the foregoing; (iii) such leases and
Contracts are valid, enforceable and are in good
standing; and (iv) the title of the Company's
lessor in such Properties covered thereby are free
and clear of all defects, Liens, Encumbrances and
Contracts, except for those specifically
identified in Exhibit A of the Operating Agreement
or in such leases or Contracts. With respect to
those Properties in which the Company holds an
interest under leases or other Contracts: (i) the
Company has not received any notice of breach or
default of any of the terms or provisions of such
leases or Contracts; and (ii) the Company's
leasehold interest therein is free and clear of
all defects, Liens, Encumbrances and Contracts
except for those specifically identified in
Exhibit A of the Operating Agreement or in such
leases or Contracts. The Company will make
available to BACTECH all information concerning
title to the Properties in the Company's
possession or control, and has delivered to
BACTECH true, correct and complete copies of all
leases and other Contracts relating to the
Properties, together with all amendments,
supplements and exhibits thereto, of which the
Company, TSVLP or USEC has knowledge.
(3) With respect to unpatented mining and mill
site claims previously located by TSVLP or an
agent or Affiliate of TSVLP that are included
within the Properties (whether held directly or
under lease or other Contract), except as provided
in Exhibit A of the Operating Agreement and
subject to the paramount title of the United
States: (i) the unpatented claims were properly
laid out and monumented; (ii) all required
location and validation work was properly and
timely performed; (iii) location notices and
certificates were properly and timely recorded and
filed with appropriate governmental agencies; (iv)
to the best of TSVLP's knowledge and belief, all
assessment work required to hold the unpatented
claims has been performed in a manner consistent
with that required of the Manager pursuant to
Section 9.2(k) of the Operating Agreement through
the assessment year ending September 1, 2002; (v)
to the best of TSVLP's and USEC's knowledge and
belief, all affidavits of assessment work, notice
of intent and other filings and holding,
maintenance and rental fees and payments required
to maintain the mining claims in good standing
have been properly and timely recorded, filed or
paid with appropriate governmental agencies; (vi)
the claims are free and clear of defects, Liens,
Encumbrances and Contracts arising by, through or
under the Company or TSVLP, and, and to the best
of TSVLP's and USEC's knowledge and belief, are
free and clear of all other defects, Liens,
Encumbrances and Contracts; (vii) the Company
holds the entire undivided right, title and
interest in and to the claims; and (viii) TSVLP
and USEC have no knowledge of conflicting claims.
Nothing in this Section 3.1 (b)(3), however, shall
be deemed to be a representation or a warranty
that any of the unpatented claims contain a
discovery of minerals. With respect to those
unpatented mining and mill site claims that were
not located by TSVLP or one of its Affiliates, but
are included within the Properties (whether held
directly or under lease or other Contract), TSVLP
makes the representations and warranties set forth
in clauses (3)(i), 3(ii) and 3(iii) above to the
best of its and USEC's knowledge and belief.
(4) There are no pending or, to the best of
TSVLP's and USEC's knowledge and belief,
threatened actions, suits, claims or proceedings
with respect to the Assets, the Company or the
Operations, except as expressly set forth in
Exhibit J of the Operating Agreement.
(5) (i) All of the Assets are identified in
Exhibit A of the Operating Agreement, (ii) the
Company owns the entire undivided title to the
Assets, free and clear of all defects, Liens,
Encumbrances and Contracts except those
specifically identified in Exhibit A of the
Operating Agreement; and (iii) except with respect
to unpatented claims, the Company has good and
marketable title to all of the Assets, except as
expressly set forth in Exhibit A of the Operating
Agreement. The Assets are free and clear of all
defects, Liens, Encumbrances and Contracts arising
by, through or under the Company except for those
specifically identified in Exhibit A of the
Operating Agreement.
(6) To the best of TSVLP's and USEC's knowledge
and belief, the Properties and the Assets and all
Operations and activities conducted thereon and
all conditions with respect thereto have been and
are in material compliance with all Environmental
Laws and with all other Laws, except as expressly
set forth in Exhibit F of the Operating Agreement.
(7) The Company, TSVLP and USEC have made
available to BACTECH all information in TSVLP's
and USEC's possession regarding Permits and Bonds
required to hold and operate the Assets.
(8) The Company has not used or permitted to be
used, except in compliance with all Environmental
Laws, any of the Assets or other facilities which
the Company currently owns and operates or
previously owned or leased, to generate,
manufacture, process, distribute, use, treat,
store, dispose of, transport or handle any
Hazardous Substance, except as expressly set forth
in Exhibit F of the Operating Agreement.
(9) To the best of TSVLP's and USEC's knowledge
and belief, no building, structure or improvement
located on the Properties is or ever has been
insulated with urea formaldehyde insulation, and
none of such buildings or structures contain
asbestos or PCBs, except as expressly set forth in
Exhibit F of the Operating Agreement.
(10) The Company has never received any notice
of, or been prosecuted for, non-compliance with
any Environmental Laws or other laws, nor has the
Company settled any allegation of non-compliance
prior to prosecution, except as expressly set
forth in Exhibit F of the Operating Agreement.
The Company has never received any notices, orders
or directions relating to environmental matters
requiring, or notifying the Company that it is or
may be responsible or liable in whole or in part,
for, any containment, clean-up, remediation,
responses, corrective action or damages to natural
resources or any work, repairs, construction or
capital expenditures to be made under
Environmental Laws or other Laws, except as
expressly set forth in Exhibit F of the Operating
Agreement.
(11) To the best of TSVLP's and USEC's knowledge
and belief, the Company has not caused or
permitted, nor has there been any Release of any
Hazardous Substance on, in, around, from or in
connection with any of the Assets, or their use,
or any such Release on or from a facility which it
previously owned or leased, or any such Release on
or from a facility owned or operated by any third
party but with respect to which the Company is or
may reasonably be alleged to have liability,
except as expressly set forth in Exhibit F of the
Operating Agreement. All Hazardous Substances and
all other wastes and other materials and
substances used in whole or in part by the Company
have been disposed of, treated and stored by the
Company in compliance with all Environmental Laws,
except as expressly set forth in Exhibit F of the
Operating Agreement.
(12) The Company has made available to BACTECH
true and complete copies of all environmental
audits, evaluations, assessments, studies or tests
relating to the Assets and their use which are
within the possession or control of the Company,
TSVLP and USEC.
(13) All Contracts are set forth in Exhibit I of
the Operating Agreement. The Company has
performed all of the obligations required to be
performed by it and is entitled to all benefits
under, and is not in default or alleged to be in
default in respect of, any Contract to which it is
a party or by which it is bound; all such
Contracts are in good standing and in full force
and effect, and, to the best of TSVLP's and USEC's
knowledge and belief, no event, condition or
occurrence exists which, after notice or lapse of
time or both, would constitute a breach or default
under any of the foregoing, except as set forth in
Exhibits A-4 and I to the Operating Agreement.
There are no Contracts in effect arising by or
through TSVLP or USEC, except as set forth in
Exhibit I to the Operating Agreement.
(14) There are no commitments or Contracts for
the disposition, sale, hedging, forward sales, or
marketing of Products.
(c) Survival and Construction of Representations
and Warranties.
(1) Where a representation or warranty in this
Agreement is made to the best of TSVLP's and
USEC's knowledge and belief or of which TSVLP or
USEC has knowledge, that means to the actual
knowledge of Xxxxxxx X. Xxxx, Xxxxx X. Xxxx or
Xxxxxxx X. Pass, after due inquiry, provided that
such individuals shall conclusively be charged
with actual knowledge of all matters disclosed by
files, documents, materials, computer programs and
other information in the possession or under the
control of such individuals, the Company, TSVLP or
USEC.
(2) In the event that any of the Assets are
subject to any defects, Liens, Encumbrances or
contacts arising by, through or under the Company,
TSVLP or USEC and such circumstance constitutes a
breach of any of TSVLP's and/or USEC's
representations or warranties under this
Agreement, BACTECH shall have the right, but not
the obligation, to cure or attempt to cure any
such defects, or to pay off and discharge, in
whole or in part, any such Liens or Encumbrances,
in which case, without limiting any other remedies
otherwise available to BACTECH, BACTECH may deduct
and recover amounts paid by it in connection with
such actions from any or all amounts payable to
TSVLP under this Agreement or under the Operating
Agreement (provided that such amounts deducted by
BACTECH shall nevertheless be deemed paid by
BACTECH to TSVLP for all purposes of this
Agreement and the Operating Agreement). TSVLP
shall be subrogated to the rights of the holders
of any such Liens or Encumbrances that BACTECH
pays off or discharges pursuant to the preceding
sentence. Except as set forth above, an
allegation or claim by BACTECH of a breach of any
representation of warranty of TSVLP and/or USEC
hereunder that is disputed in writing and good
faith by TSVLP shall not be justification for
withholding any payments otherwise due TSVLP
pursuant to Section 2.4 of this Agreement unless
and until BACTECH's claim of a breach of
representation or warranty is upheld by a court of
competent jurisdiction.
(3) Disclosures made under Exhibit F to the
Operating Agreement (Environmental Matters) shall
not be deemed to be disclosures for purposes of
any other Exhibit and shall not qualify or limit
any representations, warranties, or covenants of
the Company, TSVLP or USEC in this Agreement or
the Operating Agreement other than those
representations, warranties and covenants which
are expressly made subject to Exhibit F to the
Operating Agreement.
3.2 Disclosures. Each of the Members represents
and warrants that it is unaware of any material
facts or circumstances that have not been
disclosed in this Agreement or the Operating
Agreement which should be disclosed to the other
Member in order to prevent the representations and
warranties in this Article or Article VI of the
Operating Agreement from being materially
misleading.
3.3 Loss of Title. Any failure or loss of title
to the Assets, and all costs of defending, curing
or perfecting title, shall be charged to the
Business Account.
3.4 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 or in the Operating
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 provided in Section
4.2 (b) of Exhibit C of the Operating Agreement 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.
3.5 Indemnification.
(a) Each Member shall indemnify the other Member,
and its Affiliates and their respective directors,
officers, managers, 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 Operating
Agreement, 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 Operating Agreement;
(ii) Failure of a Member or its Affiliates to
comply with the non-compete or Area of Interest
provisions of Article VI hereof;
(iii) Any Transfer that causes termination of the
tax partnership established by Section 5.2 of the
Operating Agreement, against which the
transferring Member shall indemnify the non-
transferring Member as provided in Subsection
7.2(e) of the Operating Agreement and Article V of
Exhibit C of the Operating Agreement; and
(iv) Failure of a Member or its Affiliates to
comply with the preemptive rights under Section
7.3 of the Operating Agreement and Exhibit H of
the Operating Agreement.
(b) If any claim or demand is asserted against an
Indemnified Party in respect of which such
Indemnified Party may be entitled to
indemnification under this Agreement, written
notice of such claim or demand shall promptly be
given to the Indemnifying Party. The Indemnifying
Party shall have the right, but not the
obligation, by notifying the Indemnified Party
within thirty (30) days after its receipt of the
notice of the claim or demand, to assume the
entire control of (subject to the right of the
Indemnified Party to participate, at the
Indemnified Party's expense and with counsel of
the Indemnified Party's choice) the defense,
compromise or settlement of the matter, including,
at the Indemnifying Party's expense, employment of
counsel of the Indemnifying Party's choice. Any
damages to the assets or business of the
Indemnified 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.
ARTICLE IV
INTERESTS OF MEMBERS
4.1 Interests of Members. As of the Effective
Date the Ownership Interest of the Members in the
Company are as follows:
BACTECH fifty-five percent (55%)
TSVLP forty-four and one half percent (44.5%)
USEC one half of one percent (.5%)
Adjustment of the Interest of Members shall be
governed by Article III of the Operating
Agreement.
4.2 Continuing Liabilities Upon Adjustments of
Ownership Interests. As between the Members, any
elimination of any Member's Ownership Interest
pursuant to a withdrawal or resignation of a
Member from the Company, this Agreement or the
Operating Agreement shall not relieve such Member
of its share of any liability, including, without
limitation, Continuing Obligations, Environmental
Liabilities and Environmental Compliance, arising,
before or after such reduction or elimination, out
of acts or omissions occurring or conditions
existing prior to the Effective Date, or out of
Operations conducted during the term of this
Agreement but prior to such reduction or
elimination, regardless of when any funds may be
expended to satisfy such liability. For purposes
of this Section 4.2 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 Operating
Agreement, 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
eliminated pursuant to Section 3.2 of the
Operating Agreement.
4.3 Continuing Obligations and Environmental
Liabilities. On dissolution of the Company under
Section 14.1 of the Operating Agreement, 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 Operating Agreement, 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 Ownership
Interest immediately prior to such date).
4.4 Grant of Lien and Security Interest.
(a) Subject to Section 4.5 hereof, each Member
grants to the other Member(s) 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 4.4(a) hereof shall secure every
obligation or liability of the Member granting
such lien or security interest to the other
Member(s) created under this Agreement or the
Operating Agreement, including the obligation of
the Member(s) to repay an Elected Loan. 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.
4.5 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 the Company and the Assets (other than
any statutory lien of the Manager) to any secured
borrowings for Operations approved by the
Management Committee, including any secured
borrowings relating to Project Financing, and any
modifications or renewals thereof.
ARTICLE V
RELATIONSHIP OF THE MEMBERS
5.1 Transfer or Termination of Rights. No 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
Operating Agreement. Any such permitted assignment
shall be subject to the consent requirements of
Section 7.2 of the Operating Agreement.
5.2 Abandonment and Surrender of Properties. A
Member that desires to have the Company abandon or
surrender all or part of the Properties shall
remain liable to the other Members 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 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.
5.3 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 3.5(a) hereof.
ARTICLE VI
ACQUISITIONS WITHIN AREA OF INTEREST
6.1 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 any
Member (Acquiring Member) or any Affiliate of such
Member shall, in accordance with and subject to
the provisions in this Article VI, be subject to
the terms and provisions of this Agreement and the
Operating Agreement. TSVLP, USEC and BACTECH 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 any Member
to comply with this Article shall be a breach by
such Member of this Agreement.
6.2 Notice to Non-Acquiring Members. 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 Members 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 Members.
6.3 Option Exercised. Within thirty (30) days
after receiving the Acquiring Member's notice, the
other Members may notify the Acquiring Member of
its or their election(s) 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 all
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 Operating Agreement. The Company
shall promptly pay to the Acquiring Member the
latter's actual out-of-pocket acquisition costs.
6.4 Option Not Exercised. If the other Members
collectively do not give such notice within the
thirty (30) day period set forth in Section 6.3
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 Operating Agreement.
6.5 Non-Compete Covenants. Neither a Member that
resigns pursuant to Section 14.2 of the Operating
Agreement, or is deemed to have resigned pursuant
to Section 9.4 of the Operating Agreement, or that
withdraws or is deemed to have withdrawn pursuant
to Section 2.3 of this Agreement, 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 Members, without
cost, any such property or interest so acquired
(or ensure its Affiliate offers to convey the
property or interest to the non-resigning Members,
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 Members
at any time within forty five (45) days after the
offer is received by such non-resigning Members.
Failure of a Member's Affiliate to comply with
this Section shall be a breach by such Member of
this Agreement.
ARTICLE VII
GOVERNING LAW
7.1 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 VIII
GENERAL PROVISIONS
8.1 Notices. All notices, payments and other
required or permitted communications (Notices) to
Members 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
With a Copy to: Xxxxx X. Parcel, Esq.
Xxxxxxx Coie LLP
0000 Xxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
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. Gold Corporation
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy to:
Xxxxx X. Parcel, Esq.
Xxxxxxx Coie LLP
0000 Xxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to BACTECH:
BacTech Enviromet Corporation
0000-000 Xxxxxxxxxx Xxx.
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy to:
Xxxxxxx Xxxxx & Xxxxxxxxx LLP
2100 Scotia Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx X. Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
With a Copy to:
Xxxxx & Xxxxxxxx LLP
1 E. Liberty St., Ste. 424
P.O. Box 40817
Xxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: 000-000-0000
Facsimile: 775-786-1180
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. Any Member may change its address
by Notice to the other Members.
8.2 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.
8.3 Currency. All references to dollars or $
herein shall mean lawful currency of the United
States of America.
8.4 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.
8.5 Waiver. The failure of any 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.
8.6 Modification. No modification or amendment
of this Agreement shall be valid unless made in
writing and duly executed by all Members.
8.7 Force Majeure. Except for the obligation to
make payments when due hereunder, the obligations
of a Member arising under this Agreement or under
the Operating Agreement 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' or
BACTECH's 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 Members 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 all Members to advance funds
pursuant to this Agreement or the Operating
Agreement shall be reduced to levels consistent
with then current Operations.
8.8 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.
8.9 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.
8.10 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 8.10 modifies or affects the
Operating Agreement 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.
8.11 Counterparts. This Agreement may be
executed in any number of counterparts, and it
shall not be necessary that the signatures of all
Members be contained on any counterpart. Each
counterpart shall be deemed an original, but all
counterparts together shall constitute one and the
same instrument.
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
Xxxxxxx X. Xxxx, President
U.S. ENVIRONMENTAL CORPORATION
By: /s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx, President
BACTECH NEVADA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, President
