EXPLORATION,DEVELOPMENT AND MINEOPERATING AGREEMENT ByAnd Between U.S.ENERGY CORP. And THOMPSONCREEK METALS COMPANY USA Lucky Jack Project, ColoradoUSA August19, 2008

1.1

Definitions

1

1.2

Cross References

1

2.1

General

2

2.2

Option Period and Joint Venture Period

2

2.3

Purposes

2

2.4

Limitation

2

3.1

Representations and Warranties of all Parties

3

3.2

Representations and Warranties of USE

3

3.3

Knowledge of Parties

5

3.4

Disclosures

5

3.5

Loss of Title

6

3.6

Royalties, Production Taxes and Other Payments Based on Production

6

3.7

Confidentiality of Agreement

6

4.1

No Partnership or Fiduciary Relationship

6

4.2

Tax Matters

6

4.3

Other Business Opportunities

6

4.4

Waiver of Rights to Partition or Other Division of Assets

7

4.5

Implied Covenants

7

4.6

No Third Party Beneficiary Rights

7

5.1

Option Consideration

7

6.1

Option

7

6.2

Option Stages

9

6.3

Failure to Make Expenditures and Termination

9

6.4

Obligations Upon Termination During Option Period

10

6.5

Exercise of Option and Acquisition of Additional Interest in Property

10

6.6

Royalty

11

7.1

Manager During Option Period

12

7.2

Management Committee

12

7.3

Water Treatment Facility

12

7.4

Reports During Option Period

13

7.5

Transferring Interests in Property and Dealing With Unpatented Mining Claims

13

7.6

Permit Obligations of TCM During Option Period

13

7.7

Access to Property During Option Period

13

7.8

Maintenance of Property During Option Period

13

7.9

Management of Existing Underground Mine Conditions During Exploration

14

7.10

Indemnification of Manager During Option Period

14

7.11

Programs and Budgets

15

7.12

Presentation of Programs and Budgets

15

7.13

Review and Adoption of Proposed Programs and Budgets

15

7.14

Budget Overruns; Program Changes

16

7.15

Assignment During Option Period

16

7.16

Other Provisions

16

8.1

Purpose

16

8.2

Manager

16

8.3

Initial Participating Interests and Contributions

17

8.4

Changes in Participating Interests

17

8.5

Deemed Expenditures

17

8.6

Conversion of Minority Interest.

18

8.7

Continuing Liabilities Upon Adjustments of Participating Interests

19

8.8

Documentation of Adjustments to Participating Interests

19

8.9

Grant of Lien and Security Interest

19

8.10

Subordination of Interests

20

8.11

Indemnification of Manager

20

8.12

Holding of Property

20

8.13

Holding of Joint Venture Property

20

8.14

Management Committee

20

8.15

Water Treatment Facility

21

9.1

Operations Pursuant to Programs and Budgets

21

9.2

Presentation of Programs and Budgets

21

9.3

Review and Adoption of Proposed Programs and Budgets

21

9.4

Election to Participate

23

9.5

Recalculation or Restoration of Reduced Interest Based on Actual Expenditures

24

9.6

Budget Overruns; Program Changes

25

9.7

Emergency or Unexpected Expenditures

25

10.1

Monthly Statements and Applications of this ARTICLE

26

10.2

Cash Calls

26

10.3

Failure to Meet Cash Calls

26

10.4

Cover Payment

26

10.5

Remedies

26

10.6

Audits

29

11.1

Purchase and Sale of Products

30

12.1

Supplemental Business Agreement

31

13.1

General

32

13.2

Limitations on Free Transferability

32

14.1

Meetings of Management Committee

34

14.2

Action Without Meeting in Person

35

14.3

Matters Requiring Approval

35

15.1

Powers and Duties of Manager

35

15.2

Standard of Care

39

15.3

Resignation; Deemed Offer to Resign

40

15.4

Administrative Charges and Services Agreement

41

15.5

Transactions With Affiliates

41

16.1

Termination

41

16.2

Withdrawal

41

16.3

Continuing Obligations and Environmental Liabilities

42

16.4

Disposition of Assets on Termination

42

16.5

Non-Compete Covenants

42

16.6

Right to Data After Termination

42

16.7

Continuing Authority

42

17.1

General

43

17.2

Notice to Non-Acquiring Party

43

17.3

Election to Acquire

43

17.4

Election to Acquire Not Exercised

44

18.1

Abandonment and Surrender of Property - Option Period

44

18.2

Abandonment and Surrender of Property – Joint Venture Period

44

19.1

Governing Law

45

19.2

Dispute Resolution

45

19.3

Mediation

45

19.4

Arbitration

45

20.1

Business Information

47

20.2

Party Information

47

20.3

Permitted Disclosure of Confidential Business Information

48

20.4

Disclosure Required By Law

48

20.5

Permitted Disclosure

49

20.6

Public Announcements

49

21.1

Notices

50

21.2

Currency

51

21.3

Headings

51

21.4

Waiver

51

21.5

Modification

51

21.6

Force Majeure

51

21.7

Rule Against Perpetuities

52

21.8

Further Assurances

52

21.9

Entire Agreement; Successors and Assigns

52

21.10

Memorandum

53

21.11

Counterparts

53

A.

USE owns 100% of certain property in Gunnison County, Colorado, known as the “Lucky Jack Project” (the “Property”), previously known as the Mt. Emmons Project, which Property is described in Exhibit A.

B.

The Parties have negotiated the basic terms of an agreement whereby USE will grant TCM an exclusive option to acquire certain interests in the Property and provide TCM with the right to conduct exploration and, if justified, development and mining operations on the Property.

C.

The Parties wish to formalize the terms of their agreement by entering into this Agreement which defines the relationship of the Parties for two distinct periods: (1) the Option Period, during which TCM may choose to make certain expenditures that shall entitle TCM to acquire up to a 50% interest in the Property; and (2) the Joint Venture Period during which TCM may enter into a joint venture with USE to have the opportunity to acquire an additional 25% interest in the Property.

 

(a)

to conduct all permitting studies, work, and governmental submissions to allow the Property to be explored, developed and if appropriate produced;

 

(b)

to conduct Exploration within the Property and Area of Interest;

 

(c)

to evaluate the possible Development and Mining of the Property, and, if justified, to engage in Development and Mining;

 

(d)

to engage in Operations on the Property;

 

(e)

to engage in marketing Products, to the extent provided by this Agreement;

 

(f)

to complete and satisfy all Environmental Compliance obligations affecting the Property; and

 

(g)

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

 

(a)

it is a body corporate duly incorporated and validly existing under the laws of its incorporating jurisdiction;

 

(b)

it has full power and authority to own its property and assets and to carry on its business and to enter into this Agreement;

 

(c)

neither the execution and delivery of this Agreement nor any of the agreements referred to herein or contemplated hereby shall result in the breach of, or accelerate the performance required by, any other agreement or arrangement to which it is a party;

 

(d)

it is not subject to any governmental order, judgment, decree, debarment, sanction or Laws that would preclude the Permitting or implementation of Operations under this Agreement; and

 

(e)

this Agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms.

 

(a)

USE owns a 100% interest in the Property and the Property is properly described in Exhibit A;

 

(b)

USE is in exclusive possession of the Property, has good and marketable title to the patented mining claims which are part of the Property, and has Good Mining Title to the unpatented lode and millsite claims which are part of the Property, and has the right to dispose of the Property, or any interest therein, as contemplated in this Agreement;

 

(c)

USE has delivered to or made available for inspection by TCM all Existing Data in its possession or control, and true and correct copies, to the extent requested by TCM, of all permits, licenses, leases or other contracts relating to the Property;

 

(d)

with respect to unpatented lode claims and millsite claims located by USE that are included within the Property, except as set forth in the Title Opinion and subject to the paramount title of the United States:  (i) the unpatented mining claims were properly laid out and monumented; (ii) all required location and validation work was properly performed; (iii) location notices and certificates were properly recorded and filed with appropriate governmental agencies; (iv) all assessment work required to hold the unpatented mining claims has been or will be performed and all Governmental Fees have been or will be paid in a manner consistent with that required of the Manager pursuant to Section 15.1(j) through the assessment year ending September 1, 2008; (v) all affidavits of assessment work, evidence of payment of Governmental Fees, and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; and (vi) USE has no knowledge of conflicting mining claims from any third parties.  Nothing in this Section, however, shall be deemed to be a representation or a warranty that any of the unpatented mining claims contains a valuable mineral deposit;

 

(e)

with respect to unpatented lode claims and millsite claims not located by USE but which are included within the Property, except as set forth in the Title Opinion and subject to the paramount title of the United States: to the knowledge of USE (i) all assessment work required to hold the unpatented mining claims has been or will be performed and all Governmental Fees have been or will be paid in a manner consistent with that required of the Manager pursuant to Section 15.1(j) through the assessment year ending September 1, 2008; (ii) all affidavits of assessment work, evidence of payment of Governmental Fees, and other filings required to maintain the claims in good standing have been properly and timely recorded or filed with appropriate governmental agencies; (iii) the claims are free and clear of Encumbrances or defects in title; and (iv) USE has no knowledge of conflicting mining claims.  Nothing in this Section, however, shall be deemed to be a representation or a warranty that any of the unpatented mining claims contains a valuable discovery of minerals;

 

(f)

solely with respect to ownership of the Property, since the acquisition of the Property from Phelps Dodge Corporation and Mt. Emmons Mining Company (collectively “PD/MEMCO”), there are no pending or threatened actions, suits, claims or proceedings, and there have been no previous transactions affecting its interests in the Property which have not been for fair consideration;

 

(g)

except as to matters otherwise disclosed in writing to TCM prior to the Agreement Date as set out in Exhibit E:

 

(i)

since the acquisition of the Property from PD/MEMCO activities on the Property with respect to the Property and its ownership and operation have not been in violation of any Laws (including without limitation any Environmental Laws), nor caused or permitted any damage (including Environmental Damage, as defined below) or impairment to the health, safety, or enjoyment of any person at or on the Property or in the general vicinity of the Property;

 

(ii)

since the acquisition of the Property from PD/MEMCO there has been no material spill, discharge, leak emission, ejection, escape, dumping, or any release or threatened release of any kind, of any toxic or hazardous substance or waste (as defined by any applicable Laws) from, on, in, or under the Property or into the environment, except releases permitted or otherwise authorized by applicable Laws;

 

(iii)

USE has not received inquiry from or notice of a pending investigation from any governmental agency or of any administrative or judicial proceeding concerning the violation of any Laws;

 

(iv)

USE has no interest in any mineral interest located within two miles of the outermost boundary of the Property, with the exception of the Property itself; and

 

(v)

since the acquisition of the Property from PD/MEMCO, the water treatment facility (the “Facility”) located on the Property at all times has been operated within the terms of any and all permits and licenses that it is required to be operating under and has been operated in accordance with all applicable Laws;

 

(h)

except for patented land within the exterior boundaries of the Property, and except as set forth in the Title Opinion all of the land within the Property is covered by at least one mining or millsite claim of the correct nature for the deposit being located or the use being contemplated (e.g., a lode claim was used to locate a lode deposit, a placer claim was used to locate a placer deposit, and a millsite claim was used to locate the ground for mine facilities) which the mining claim records of the United States Department of Interior, Bureau of Land Management (LR-2000 system) show as being an “active” claim as of August 13, 2008;

 

(i)

except for the Permitted Encumbrances, the Property is clear of all Encumbrances;

 

(j)

no consent or approval of any third party or governmental agency is required for the execution, delivery or performance of this Agreement by USE or the transfer or acquisition of any interest in the Property; and

 

(k)

no proceedings are pending for and USE is not aware of any basis for the institution of any proceedings leading to the dissolution or winding-up of USE or the placing of USE into bankruptcy or subject to any other laws governing the affairs of insolvent persons.

 

(a)

On the Agreement Date, TCM shall pay USE $500,000 as consideration for the Option.  Such amount shall be non-refundable.  However, such amount shall be credited toward the Expenditures required under Section 6.1(a)(i)(A) if TCM incurs such Expenditures in accordance with Section 6.1(a)(i)(A).

 

(b)

Additionally, on January 1, 2009, and on January 1 each year thereafter up to and including January 1, 2014 (i.e., for a period of six years), TCM shall pay USE $1,000,000 (i.e., $6,000,000 over the six-year period).  Such payments shall be credited toward the Expenditures required under Section 6.1.

 

(a)

USE grants to TCM the exclusive option (the “Option”) to acquire up to an undivided 50% interest in the Property (in two stages as detailed in Section 6.2) in exchange for incurring Expenditures totaling $50,000,000.  TCM, in its sole discretion, may exercise the Option according to the following requirements and schedule:

 

(A)

At any time before but no later than December 31, 2008, TCM shall incur at least $2,500,000 in Expenditures on or related to the Property.  If TCM incurs such Expenditures, the $500,000 consideration provided under Section 5.1(a) shall be credited toward this amount.

 

(B)

At any time before but no later than December 31, 2009, TCM shall incur at least $5,000,000 in additional Expenditures (for a minimum aggregate of $7,500,000) on or related to the Property.

 

(C)

At any time before but no later than December 31, 2010, TCM shall incur at least $5,000,000 in additional Expenditures (for a minimum aggregate of $12,500,000) on or related to the Property.

 

(D)

At any time before but no later than June 30, 2011, TCM shall incur at least $2,500,000 in additional Expenditures (for a minimum aggregate of $15,000,000) on or related to the Property.

 

(ii)

Additional Project Expenditures.  By July 31, 2018, TCM shall incur additional Expenditures on or related to the Property in an amount equal to the difference between the total Expenditures incurred under Section 6.1(a)(i) and the $50,000,000 amount required to acquire a 50% interest in the Property.

 

(b)

Any excess Expenditures completed in advance of a due date specified in Section 6.1(a) shall be carried over and shall qualify, and be accounted for, as Expenditures completed by the subsequent due date.  Further, the Expenditure deadlines described above establish only the maximum period of time within which TCM must make such Expenditures; nothing in this Agreement will preclude TCM from making, in its sole discretion, any or all such Expenditures at any time or from time to time ahead of such deadlines.  In this respect, TCM may, in its sole discretion, make any or all such Expenditures in advance by paying any or all of the amounts required under Section 6.1(a) to an interest bearing escrow account maintained by TCM for the benefit of the Property.  Such payments shall be referred to as “Advance Payments.”  If this Agreement is terminated before TCM acquires any interest in the Property under Section 6.2, USE shall be entitled to all such Advance Payments and interest, if any, remaining in escrow.  If this Agreement is terminated after TCM has acquired an interest in the Property under Section 6.2, all such Advance Payments and interest, if any, remaining in escrow shall be considered Business capital.  Such Advance Payments, including interest, may be withdrawn and applied as necessary only towards future Expenditures by TCM on or related to the Property; provided, however, such amounts may not be used to meet other Expenditure requirements of TCM hereunder or in any way reduce the aggregate Expenditures that TCM must incur by a deadline in Section 6.1(a) in order to acquire any interest in the Property.

 

(c)

TCM may elect to pay to an interest bearing escrow account on or before a due date specified in Section 6.1(a) the dollar amount equal to any shortfall in Expenditures required to be completed by TCM by such due date in lieu of completing such Expenditures, and such amounts shall thereupon be deemed to have satisfied such requirement for the completion of Expenditures by a deadline in Section 6.1(a), as applicable.  Such payments shall be referred to as “Shortfall Payments.”  If this Agreement is terminated, USE shall be entitled to all such Shortfall Payments and interest, if any, remaining in escrow.  So long as this Agreement remains in effect, such Shortfall Payments, including interest, may be withdrawn and applied as necessary only towards future Expenditures by TCM on or related to the Property; provided, however, such amounts may not be used to meet other Expenditure requirements of TCM hereunder or in any way reduce the

 

 

(a)

Upon TCM incurring at least $15,000,000 in Expenditures as described in Section 6.1(a)(i), TCM may, in its sole discretion, elect to acquire a 15% interest in the Property upon written notice to USE at any time within thirty-six months after the last day of the month in which TCM has incurred the $15,000,000 in Expenditures as described in Section 6.1(a)(i).  (By way of example, if TCM incurs the full $15,000,000 on August 12, 2010, it would then have thirty-six months from August 31, 2010, or until August 31, 2013, to exercise its election.)  Failure by TCM to make such election within the required thirty-six months shall be deemed to be an election by TCM to acquire such 15% interest in the Property.

 

(b)

If TCM incurs the additional Expenditures as described in Section 6.1(a)(ii) by July 31, 2018 (which amount, combined with the Expenditures incurred under Section 6.1(a)(i), shall equal $50,000,000), TCM may, in its sole discretion, elect to acquire an additional 35% (or aggregate 50%) interest in the Property, with such election being made by written notice to USE within 30 days after the date of the TCM accounting statement that shows that TCM has incurred all such Expenditures, and a failure to make such election shall be deemed to be an election by TCM to acquire such additional 35% (aggregate 50%) interest in the Property.

 

(a)

Failure by TCM to make all Expenditures required under Section 6.1(a)(i) (or Advance Payments or Shortfall Payments in lieu thereof) by the applicable due dates for such Expenditures (subject to Section 21.6) shall be deemed to be a termination of this Agreement by TCM under Section 6.3(b) if, within 30 days after receipt of written notice from USE regarding such failure, TCM does not cure such failure.

 

(b)

TCM may by written notice to USE terminate this Agreement at any time during the Option Period prior to electing to acquire (pursuant to Section 6.2(a)) a 15% interest in the Property.  Upon such termination, the provisions of Section 6.4 shall apply; ****.

 

(c)

TCM may by written notice to USE terminate this Agreement at any time during the Option Period after having elected to acquire (pursuant to Section 6.2(a)) a 15% interest in the Property.  Upon such termination, the provisions of Section 6.4 shall apply.  ****.

 

(a)

Within six months of electing to acquire a 50% interest in the Property as provided in Section 6.2(b), TCM shall, in its sole discretion, choose one of two options:

 

(i)

Form a Joint Venture on the terms set out in PART III; or

 

(ii)

Form a Joint Venture on the terms set out in PART III but continue to fund 100% of all Expenditures on or related to the Property up to an additional $350,000,000, with the opportunity to acquire up to an additional 25% interest in the Property (for an aggregate 75% interest) upon incurring such additional $350,000,000 (which amount, combined with the initial $50,000,000 in Expenditures under Section 6.1(a), totals $400,000,000).  Upon incurring $70,000,000 in additional Expenditures pursuant to this Section 6.5(a)(ii) (which amount, combined with the initial $50,000,000 in Expenditures under Section 6.1(a), totals $120,000,000), TCM’s interest in the Property shall increase by 2.5% to 52.5%.

 

(b)

If TCM elects to proceed under Section 6.5(a)(ii), then TCM shall reimburse USE for any Expenditures incurred by USE between the time that TCM elects to acquire a 50% interest in the Property as provided under Section 6.2(b) and the time that TCM elects to proceed under Section 6.5(a)(ii), and any such reimbursements shall count towards TCM’s Expenditure obligations under Section 6.5(a)(ii).  At any time prior to incurring the entire $350,000,000 required to earn an additional 25% interest in the Property under Section 6.5(a)(ii), TCM may in its sole discretion determine that upon the beginning of the next Program and Budget adopted pursuant to ARTICLE IX it shall cease funding 100% of all Expenditures on or related to the Property and the Parties shall thereafter share such Expenditures in proportion to their respective Participating Interests; provided, however, TCM shall provide written notice to USE of such decision at least 90 days prior to the expiration of the current Program and Budget.

 

(a)

Subject to Section 6.6(b), Section 8.6(a) and the Permitted Encumbrances, any interest in the Property that TCM acquires under this Agreement shall not be subject to any overriding royalty.

 

(b)

TCM shall pay any Production Royalty (as defined under the **** to the Grantee (as defined under the ****) or any successor-in-interest to the Grantee as may be required under the ****.  Any and all such Production Royalty payments, plus administrative costs and third party costs necessarily incurred by TCM in relation thereto, for a given month shall be offset against the total amount payable by TCM to USE (based on the Final Price as defined in Section 11.1) pursuant to ARTICLE XI for that same month; provided, however, to the extent that Production Royalty payments and related administrative costs and third party costs for a given month exceed the total amount payable by TCM to USE pursuant to ARTICLE XI for that same month, TCM shall bear that excess amount entirely without compensation or reimbursement from USE.

 

(a)

The transfer of any interest in the Property from USE to TCM shall be effected through a special warranty deed substantially in the form of that provided in Exhibit J.

 

(b)

TCM and USE shall cooperate and do all things mutually determined to be necessary or advisable to:

 

(i)

convert any unpatented mining claims contained in the Property to unpatented millsite claims; and

 

(ii)

amend or abandon any unpatented claims that overlap with other unpatented claims as set out in the Title Opinion,

 

(a)

Indemnification of Manager.  During the Option Period, USE and TCM shall in equal proportion mutually hold harmless, release, indemnify and defend TCM (including TCM’s Affiliates and their respective directors, officers, employees, agents and consultants) from and against any and all claims, demands, liabilities or losses (including legal fees) arising from or relating to TCM’s acts as Manager, except to the extent that such claims, demands, liabilities or losses arise from TCM’s gross negligence or willful misconduct.

 

(b)

Indemnification of TCM by USE for Pre-Existing Conditions.  Until TCM elects to acquire an interest in the Property pursuant to Section 6.2, USE shall be solely responsible for and shall hold harmless, release, indemnify and defend TCM (including TCM’s Affiliates and their respective directors, officers, employees, agents and consultants) from and against any and all claims, demands, liabilities or losses (including legal fees) arising from or relating to conditions on the Property in existence as of the date of this Agreement, including Environmental Liabilities and Environmental Damage, except that USE’s duty to hold harmless, release, indemnify and defend TCM (including TCM’s Affiliates and their respective directors, officers, employees, agents and consultants) from and against such claims, demands, liabilities or losses shall be proportionately reduced to the extent, if any, that such claims, demands, liabilities or losses are caused or aggravated by TCM’s activities on the Property, either as Manager or as a Party to this Agreement.  The indemnification of TCM by USE pursuant to this Section 7.10(b) shall cease and be of no further effect at the time that TCM elects to acquire an interest in the Property pursuant to Section 6.2.  At the time that TCM elects to acquire an interest in the Property pursuant to Section 6.2, the Parties shall share liabilities arising from or relating to conditions on the Property at any time, including Environmental Damage, in equal proportion, provided, however, that should TCM acquire an interest in the Property in excess of 50 percent, the Parties shall share liabilities arising from or relating to conditions on the Property at any time, including Environmental Liabilities and Environmental Damage, in proportion to their respective interests in the Property.

 

(c)

Indemnification of TCM by USE relating to the Facility.  Until TCM elects to acquire an interest in the Property pursuant to Section 6.2, USE shall be solely responsible for and shall hold harmless, release, indemnify and defend TCM (including TCM’s Affiliates and their respective directors, officers, employees, agents and consultants) from and against any and all claims, demands, liabilities or losses (including legal fees) arising from or relating to the Facility.  The indemnification of TCM by USE pursuant to this Section 7.10(c) shall cease and be of no further effect at the time that TCM elects to acquire an interest in the Property pursuant to Section 6.2.  At the time that TCM elects to acquire an interest in the Property pursuant to Section 6.2, the Parties shall share liabilities arising from or relating to the Facility in equal proportion, provided, however, that should TCM acquire an interest in the Property in excess of 50 percent, the Parties shall share liabilities arising from or relating to the Facility in proportion to their respective interests in the Property.

 

(a)

Within 20 days after submission of a proposed Program and Budget, the Management Committee must approve, reject or modify the proposed Program and Budget.

 

(b)

Until a new Program and Budget is adopted, the Program and Budget from the prior year shall govern Operations on the Property.

 

(c)

If no Budget has been adopted within **** after the expiration of the latest adopted Program and Budget, either USE or TCM may elect to terminate the Agreement by giving 30 days notice of termination to the other Parties and complying with the termination procedures specified in Sections 6.3 and 6.4.

 

(a)

Upon TCM’s incurring $ 50,000,000 in Expenditures under Section 6.1 and its electing to acquire a 50% interest in the Property under Section 6.2 and the formation of the Joint Venture pursuant to Section 6.5(a), the JV Participants shall have the following initial Participating Interests:

 

 (b)

If TCM elects under Section 6.5(a)(ii) to fund 100% of all Expenditures on or related to the Property, TCM’s Participating Interest shall increase (and USE’s Participating Interest shall correspondingly decrease) according to the provisions of Section 6.5(a)(ii).

 

(c)

Subject to TCM’s election to fund 100% of all Expenditures in accordance with Sections 6.5(a)(ii), the JV Participants shall contribute funds to adopted Programs and Budgets in proportion to their respective Participating Interests.

 

(a)

upon withdrawal or deemed withdrawal as provided in Section 8.6, Section 10.5(b)(ii) and ARTICLE XIV;

 

(b)

upon an election by either JV Participant pursuant to Section 9.4 to contribute less to an adopted Program and Budget than the percentage equal to its Participating Interest, or to contribute nothing to an adopted Program and Budget;

 

(c)

in the event of default by either JV Participant in making its agreed-upon contribution to an adopted Program and Budget, followed by an election by the other JV Participant to invoke any of the remedies in Section 9.4;

 

(d)

upon Transfer by either JV Participant of part or all of its Participating Interest in accordance with ARTICLE XIII; or

 

(e)

upon acquisition by either JV Participant of part or all of the Participating Interest of the other JV Participant, however arising;

 

(a)

Subject to Section 8.5(c), upon the formation of a Joint Venture hereunder for the purpose of calculating dilution before the presentation of the first Program and Budget after the formation of the Joint Venture:

 

(i)

TCM’s deemed expenditures to the Joint Venture shall be its initial Participating Interest under Section 8.3(a) multiplied by its aggregate actual Expenditures incurred prior to the formation of the Joint Venture; and

 

(ii)

USE’s deemed expenditures to the Joint Venture shall be its initial Participating Interest under Section 8.3(a) multiplied by TCM’s aggregate actual Expenditures incurred prior to the formation of the Joint Venture.

 

(b)

After the presentation of the first Program and Budget after the formation of the Joint Venture, and subject to Section 8.5(c), the provisions of Section 8.6, 9.4, 9.5 and 10.5 shall control the calculation of interests for dilution.

 

 (c)

If TCM elects to fund 100% of all Expenditures under Section 6.5(a)(ii), then the provisions of Section 8.6, 9.4, 9.5 and 10.5 shall not apply, and USE shall not be subject to dilution, until such time as TCM has earned a 75% interest pursuant to Section 6.5(a)(ii) or, prior to earning such 75% interest, has ceased funding 100% of all Expenditures on or related to the Property as provided in Section 6.5(b).

 

(a)

If a JV Participant’s Participating Interest becomes less than **** such Participating Interest shall convert to a **** Net Profits Interest as provided in Exhibit I and that JV Participant (the “Reduced Participant”) shall be deemed to have withdrawn from the Business. Such relinquished Participating Interest shall be deemed to have accrued automatically to the other JV Participant.  The Capital Account of the Reduced Participant shall be transferred to the remaining JV Participant.  The Reduced Participant shall thereafter have no further right, title or interest in or to the Assets or under this Agreement, with the exception of the **** Net Profits Interest detailed above, and any tax partnership that may have been created shall dissolve.  In such event, the Reduced Participant shall execute and deliver an appropriate conveyance of all of its right, title and interest in and to the Assets to the remaining JV Participant.

 

(b)

The relinquishment, withdrawal and entitlements for which this Section 8.6 provides shall be effective as of the effective date of the recalculation under Sections 9.4 or 10.5.  However, if the final adjustment provided under Section 9.5 for any recalculation under Section 9.4 results in a Participating Interest of 5% or more:  (i) the Participating Interest shall be deemed, effective retroactively as of the first day of the Program Period, to have automatically revested; (ii) the Reduced Participant shall be reinstated as a JV Participant, with all of the rights and obligations pertaining thereto; (iii) the right to a Net Profits Interest under Section 8.6(a) shall terminate; and (iv) the Manager, on behalf of the JV Participants, shall make any necessary reimbursements, reallocations of Products, contributions and other adjustments as provided in Section 9.5(d).  Similarly, if such final adjustment under Section 9.5 results in a Participating Interest for either JV Participant of less than **** for a Program Period as to which the provisional calculation under Section 9.4 had not resulted in a Participating Interest of less than ****, then such Participant, at its election within 30 days after notice of the final adjustment, may contribute an amount resulting in a revised final adjustment and resultant Participating Interest of ****.  If no such election is made, such JV Participant shall be deemed to have withdrawn under the terms of Section 8.6(a) as of the beginning of such Program Period, and the Manager, on behalf of the JV Participants, shall make any necessary reimbursements, reallocations of Products, contributions and other adjustments as provided in Section 9.5(d), including of any Net Profits Interest to which such JV Participant may be entitled for such Program Period.

 

(a)

Subject to Section 8.10, each JV Participant may grant to the other JV Participant a lien upon and a security interest in its Participating Interest, including all of its right, title and interest in the Assets, whenever acquired or arising, and the proceeds from and accessions to the foregoing.

 

(b)

The liens and security interests granted by Section 8.9(a) shall secure every obligation or liability of the JV Participant granting such lien or security interest created under this Agreement, including the obligation to repay a Cover Payment in accordance with Section 10.4.  Each JV Participant hereby agrees to take all action necessary to perfect such lien and security interest and hereby appoints the other JV Participant 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.

 

(a)

From the date of the formation of the Joint Venture, during the term of the Joint Venture, the Property must be transferred to and held in the names of the JV Participants in proportion to their respective Participating Interests from time to time.

 

(b)

Each JV Participant must promptly at its own cost do all things (including executing and if necessary delivering all documents) necessary or desirable to give full effect to Section 8.12(a) or the formation of the Joint Venture.

 

(a)

When TCM bears all operating and financing costs of the Joint Venture pursuant to Section 6.5(a)(ii) or when TCM holds a Participating Interest greater than 50%, within 30 days after submission of a proposed Program and Budget, each JV Participant shall submit in writing to the Management Committee:

 

(i)

notice that the JV Participant approves any or all of the components of the proposed Program and Budget;

 

(ii)

modifications proposed by the JV Participant to the components of the proposed Program and Budget; or

 

(iii)

notice that the JV Participant rejects any or all of the components of the proposed Program and Budget.

 

(b)

When TCM and USE each hold a Participating Interest of 50% and TCM is not bearing all operating and financing costs of the Joint Venture pursuant to Section 6.5(a)(ii) (in other words, the Parties are each funding Programs and Budgets in proportion to their respective Participating Interests), within 30 days after submission of a proposed Program and Budget, each JV Participant shall submit in writing to the Management Committee:

 

(i)

notice that the JV Participant approves any or all of the components of the proposed Program and Budget;

 

(ii)

modifications proposed by the JV Participant to the components of the proposed Program and Budget; or

 

(iii)

notice that the JV Participant rejects any or all of the components of the proposed Program and Budget.

 

(a)

By notice to the Management Committee within 20 days after the final vote adopting a Program and Budget, and notwithstanding its vote concerning adoption of a Program and Budget, a JV Participant may elect to participate in the approved Program and Budget:

 

(i)

in proportion to its respective Participating Interest.  If USE elects to participate in proportion to its respective Participating Interest, USE may request that TCM bear the initial cost and receive reimbursement of such amount, plus interest at a rate to be agreed upon by the Parties, out of production.  The election to bear such initial costs is within the sole discretion of TCM, which shall accept or deny the request within 10 Business Days of the request by USE, and is subject to the Parties’ agreement on the interest rate to be applied to such amounts borne by TCM hereunder;

 

(ii)

in some lesser amount than its respective Participating Interest, or

 

(iii)

not at all.

 

(b)

In case of an election under Sections 9.4(a)(ii) or 9.4(a)(iii), its Participating Interest shall be recalculated as provided in Section 9.4(c) below, with dilution effective as of the first day of the Program Period for the adopted Program and Budget.  If a JV Participant fails to so notify the Management Committee of the extent to which it elects to participate, the JV Participant shall be deemed to have elected to contribute to such Program and Budget in proportion to its respective Participating Interest as of the beginning of the Program Period.

 

(c)

If a JV Participant elects to contribute to an adopted Program and Budget some lesser amount than in proportion to its respective Participating Interest, or not at all, and the other JV Participant elects to fund all or any portion of the deficiency, the Participating Interest of the Reduced Participant shall be provisionally recalculated as follows:

 

(i)

for an election made before Payout, by dividing: (A) the sum of (1) the total of all of the Reduced Participant’s contributions under Section 8.3(b), and (2) the amount, if any, the Reduced Participant elects to contribute to the adopted Program and Budget by (B) the sum of (1) and (2) above for both Participants, and then multiplying the result by one hundred; or

 

(ii)

for an election made after Payout, by reducing its Participating Interest in an amount equal to two times the amount by which it would have been reduced under Section 9.4(a)(i) if such election were made before Payout.

 

 (d)

Whenever the Participating Interests are recalculated pursuant to this Section 9.4, (i) the Equity Accounts of both JV Participants shall be revised to bear the same ratio to each other as their recalculated Participating Interests; and (ii) the portion of Capital Account attributable to the reduced Participating Interest of the reduced JV Participant shall be transferred to the other JV Participant.

 

(a)

If a Participant makes an election under Sections 9.4(a)(ii) or 9.4(a)(iii), then within 30 days after the conclusion of such Program and Budget, the Manager shall report the total amount of money expended plus the total obligations incurred by the Manager for such Budget.

 

(b)

If the Manager expended funds or incurred obligations that were more or less than the adopted Budget, the Participating Interests shall be recalculated pursuant to Section 9.4(b) by substituting each JV Participant’s actual contribution to the adopted Budget for that JV Participant’s estimated contribution at the time of the reduced JV Participant’s election under Section 9.4(a).

 

(c)

If the Manager expended funds or incurred obligations of less than 80% of the adopted Budget, within 30 days of receiving the Manager’s report on Expenditures, the reduced JV Participant may notify the other JV Participant of its election to reimburse the other JV Participant for the difference between any amount contributed by the reduced JV Participant to such adopted Program and Budget and the reduced JV Participant’s proportionate share (at the reduced JV Participant’s former Participating Interest) of the actual amount expended or incurred for the Program, plus interest at two percentage points above the Prime Rate.  The reduced JV Participant shall deliver the appropriate amount (including interest) to the other JV Participant with such notice.  Failure of the reduced JV Participant to so notify and tender such amount shall result in dilution occurring in accordance with this ARTICLE XI and shall bar the reduced JV Participant from its rights under this Section 9.5(c) concerning the relevant adopted Program and Budget.

 

 (d)

All recalculations under this Section 9.5 shall be effective as of the first day of the Program Period for the Program and Budget.  The Manager, on behalf of both JV Participants, shall make such reimbursements, reallocations of Products, contributions and other adjustments as are necessary so that, to the extent possible, each JV Participant shall be placed in the position it would have been in had their Participating Interests as recalculated under this Section been in effect throughout the Program Period for such Program and Budget.  If the JV Participants are required to make contributions, reimbursements or other adjustments pursuant to this Section, the Manager shall have the right to purchase or sell a JV Participant’s share of Products in the same manner as under Section 11.1and to apply the proceeds of such purchase or sale to satisfy that JV Participant’s obligation to make such contributions, reimbursements or adjustments.

 

(e)

Whenever the Participating Interests are recalculated pursuant to this Section 9.5, (i) the JV Participants’ Equity Accounts shall be revised to bear the same ratio to each other as their recalculated Participating Interests; and (ii) the portion of Capital Account attributable to the reduced Participating Interest of the reduced JV Participant shall be transferred to the other JV Participant.

 

(a)

The defaulting JV Participant grants to the non-defaulting JV Participant a power of sale as to all or any portion of its interest in any Assets or in its Participating Interest that is subject to the lien and security interest granted in Section 8.9 (whether or not such lien and security interest has been perfected), upon a default under Sections 10.3 or 10.4.  Such power shall be exercised in the manner provided by applicable Law or otherwise in a commercially reasonable manner and upon reasonable notice.  If the non-defaulting JV Participant elects to enforce the lien or security interest pursuant to the terms of this Section, the defaulting JV Participant shall be deemed to have waived any available right of redemption, any required valuation or appraisal of the secured property prior to sale, any available right to stay execution or to require a marshalling of assets, and any required bond in the event a receiver is appointed, and the defaulting JV Participant shall be liable for any deficiency.

 

(b)

The non-defaulting JV Participant may elect to have the defaulting JV Participant’s Participating Interest diluted or eliminated as follows:

 

(i)

For a default occurring before Payout relating to a Program and Budget covering in whole or in part Permitting or Exploration Operations, the reduced JV Participant’s Participating Interest shall be recalculated by dividing: (A): (1) the total of all of the reduced JV Participant’s contributions under Section 8.3(b) and (2) the amount, if any, the reduced JV Participant contributed to the adopted Program and Budget with respect to which the default occurred by (B) the sum of (1) and (2) above for both JV Participants, and then multiplying the result by one hundred.  For such a default occurring after Payout, the reduced JV Participant’s Participating Interest shall be reduced in an amount equal to two times the amount by which it would have been reduced if such default had occurred before Payout.  For such a default, whether occurring before or after Payout, the Participating Interest shall then be further reduced for a default relating exclusively to an Exploration Program and Budget by multiplying the recalculated Participating Interest by the following percentage: 150%.

 

(ii)

For a default relating to a Program and Budget covering in whole or in part Development or Mining, at the non-defaulting JV Participant’s election, the defaulting JV Participant shall be deemed to have withdrawn and to have automatically relinquished its interest in the Assets to the non-defaulting JV Participant; provided, however, the defaulting Participant shall have the right to receive only from **** of Net Profits, if any, and not from any other source, an amount up to **** of the defaulting JV Participant’s Equity Account balance at the time of such default.  Upon receipt of such amount the defaulting JV Participant shall thereafter have no further right, title or interest in the Assets, but shall remain liable to the extent provided in Section 8.7.

 

(iii)

Dilution under this Section 10.5(b) shall be effective as of the date of the original default, and Section 9.5 shall not apply.  The amount of any Cover Payment under Section 10.4 and interest thereon, or any interest accrued in accordance with Section 10.3, shall be deemed to be amounts contributed by the non-defaulting JV Participant, and not as amounts contributed by the defaulting JV Participant.

 

(iv)

Whenever the Participating Interests are recalculated pursuant to this Section 10.5(b), (A) the Equity Accounts of both JV Participants shall be adjusted to bear the same ratio to each other as their recalculated Participating Interests; and (B) the portion of Capital Account attributable to the reduced Participating Interest of the reduced JV Participant shall be transferred to the other JV Participant.

 

(c)

If a JV Participant has defaulted in meeting a cash call or repaying a loan, and if the non-defaulting JV Participant has made a Cover Payment, then, in addition to a reduction in the defaulting JV Participant’s Participating Interest effected pursuant to Section 10.5(b), the non-defaulting JV Participant shall have the right, if the indebtedness arising from a default or Cover Payment is not discharged within 10 days of the default and upon not less than 30 days advance notice to the defaulting JV Participant, to elect to purchase all the right, title, and interest, whenever acquired or arising, of the defaulting JV Participant in and to the Assets, including but not limited to its Participating Interest or a Net Profits Interest, together with all proceeds from and accessions of the foregoing (collectively the “Defaulting JV Participant’s Entire Interest”) at a purchase price equal to **** of the fair market value thereof as determined by a qualified independent appraiser appointed by the non-defaulting JV Participant.  If the defaulting JV Participant conveys notice of objection to the person so appointed within 10 days after receiving notice thereof, then an independent and qualified appraiser shall be appointed by the joint action of the appraiser appointed by the non-defaulting JV Participant and a qualified independent appraiser appointed by the defaulting JV Participant; provided, however, that if the defaulting JV Participant fails to designate a qualified independent appraiser for such purpose within 10 days after giving notice of such objection, then the person originally designated by the non-defaulting JV Participant shall serve as the appraiser; provided further, that if the appraisers appointed by each of the JV Participants fail to appoint a third qualified independent appraiser within 5 days after the appointment of the last of them, then an appraiser shall be appointed by a judge of a court of competent jurisdiction in the state in which the Assets are situated upon the application of either JV Participant.  There shall be withheld from the purchase price payable, upon transfer of the Defaulting Participant’s Entire Interest, the amount of any Cover Payment under Section 10.4 and unpaid interest thereon to the date of such transfer, or any unpaid interest accrued in accordance with Section 14.3 to the date of such transfer.  Upon payment of such purchase price, the defaulting JV Participant shall be deemed to have relinquished all of the Defaulting JV Participant’s Entire Interest to the non-defaulting Participant, but shall remain liable to the extent provided in Section 8.7.

 

(a)

During the Joint Venture Period, within 60 days after the end of each calendar year an audit shall be completed by certified public accountants selected by, and independent of, the Manager.  The audit shall be conducted in accordance with GAAP and shall cover all books and records maintained by the Manager pursuant to this Agreement, all Assets and Encumbrances, and all transactions and Operations conducted during such calendar year, including production and inventory records, Expenditures and all costs for which the Manager sought reimbursement under this Agreement, together with all other matters customarily included in such audits.  All written exceptions to and claims upon the Manager for discrepancies disclosed by such audit shall be made not more than 3 months after receipt of the audit report, unless either JV Participant elects to conduct an independent audit pursuant to Section 10.6(b) which is ongoing at the end of such 3 month period, in which case such exceptions and claims may be made within the period provided in Section 10.6(b).  Failure to make any such exception or claim within such period shall mean the audit is deemed to be correct and binding upon the Participants.  The cost of all audits under this subsection shall be charged to the Business Account.

 

(b)

Notwithstanding the annual audit conducted by certified public accountants selected by the Manager, each JV Participant shall have the right to have an independent audit of all Business books, records and accounts, including all charges to the Business Account.  This audit shall review all issues raised by the requesting JV Participant, with all costs borne by the requesting JV Participant.  The requesting JV Participant shall give the other JV Participant 30 days’ prior written notice of such audit.  Any audit conducted on behalf of either JV Participant shall be made during the Manager’s normal business hours and shall not interfere with Operations.  Neither JV Participant shall have the right to audit records and accounts of the Business relating to transactions or Operations more than 24 months after the calendar year during which such transactions, or transactions related to such Operations, were charged to the Business Account.  All written exceptions to and claims upon the Manager for discrepancies disclosed by such audit shall be made not more than 3 months after completion and delivery of such audit, or they shall be deemed waived.

 

(a)

Price.  The price of all Products sold pursuant to this Section 11.1 (the “Price) shall be calculated as follows: ****.  The Price shall be calculated and expressed in accuracy to three decimal places.

 

(b)

Sulfide Discount Cap and Floor.  From the Agreement Date until January 1, 2014, the Sulfide Discount shall be no greater than **** (the “Discount Cap”) and no less than **** (the “Discount Floor”).  On January 1, 2014, and every five years thereafter, the Discount Cap and the Discount Floor shall be adjusted so that they increase or decrease to reflect changes in the Gross Domestic Product (“GDP”) published by the United States Department of Commerce, Bureau of Economic Analysis, using a GDP implicit price deflator (“GDP Deflator”) measured against the first year of the new five year period, and the first year of the last five year period.

 

(c)

Changes in Indices.  If the MW Price or the GDP Deflator has been permanently discontinued or materially modified, the Parties shall agree to a substitute index (being an index or price series or combination of indices or price series as close as possible in effect to the discontinued index or indices, with only such adjustments thereto as may be necessary to reflect more closely the movements of the index which has been discontinued).  If they Parties cannot agree to a substitute index, then the dispute shall be resolved by arbitration pursuant to Section 19.4 of this Agreement.  During the pendency of the dispute, the Price shall be set by the arbitrator, and subject to adjustment and reimbursement or setoff upon resolution of the dispute.

 

(d)

Point of Sale.  The purchased Product shall be molybdenum concentrate, with payable metal equal to **** of contained molybdenum in the concentrate.  The point of sale shall be FCA mine site as loaded on a truck for shipment as arranged by TCM.  TCM shall covenant to use its commercially reasonable efforts to deliver Product pursuant to this Section 11.1, and, except for commercially reasonable purposes, shall not deliver from other properties owned or controlled by TCM in preference to this mine site.

 

(e)

Payment Terms.  Payments made during a calendar month for delivery of Product FCA mine site (“Delivery”) during that month shall be paid at the Price calculated for the preceding month (the “Provisional Price”).  TCM shall pay USE the Provisional Price within 20 days of Delivery.  ****.  Final payment between TCM and USE shall be made promptly upon determination of the Final Price.

 

(f)

Audit Rights.  USE shall have the right, at its expense, to engage an independent third party to audit the procedures and inspect the equipment by which TCM weighs and assays Product for Delivery upon giving reasonable notice to TCM, provided that (a) such independent third party auditor is reputable, (b) in any such audit, USE shall not be obligated to disclose to TCM any confidential information relating to any such transaction, and (c) in any such audit, TCM shall not be obligated to disclose to the independent auditor any confidential information unless and until such auditor first agrees with TCM to be bound by a confidentiality agreement on terms and conditions reasonably satisfactory to TCM.  USE shall give TCM at least one month’s notice of its intent to audit and appoint independent auditors.  If such independent auditor finds a material error or material incorrectness in the procedures or equipment by which TCM weighs and assays Product for Delivery, TCM shall reimburse USE for the cost of that audit.

 

(g)

Assays.  The Parties shall resolve all disputes concerning assays of Products through negotiations to the greatest extent possible, and shall make adjustments to future invoices to reflect such adjustments.  Disputes concerning assays that cannot be resolved through negotiation shall be subject to dispute resolution pursuant to Section 19.4.

 

(a)

neither JV Participant shall Transfer any interest in this Agreement or the Assets (including, but not limited to, any royalty, profits or other interest in the Products) except in conjunction with the Transfer of part or all of its Participating Interest;

 

(b)

no JV Participant shall Transfer any interest in this Agreement or the Property until the selling JV Participant offers to the other JV Participant the opportunity to purchase the portion of the selling JV Participant’s Participating Interest it intends to sell (“Right of First Refusal”) at a price chosen by the selling JV Participant.  If the other JV Participant fails to purchase the Participating Interest within 20 days, the selling JV Participant may proceed with the sale of the Participating Interest pursuant to this Section. The sale may not be for a price less than that offered to the non-selling JV Participant.  No transferee of all or any part of a JV Participant’s Participating Interest shall have the rights of a JV Participant unless and until the transferring JV Participant has provided to the other JV Participant notice of the Transfer and the transferee, as of the effective date of the Transfer, has committed in writing to assume and be bound by this Agreement to the same extent as the transferring JV Participant;

 

(c)

neither JV Participant shall make a Transfer that shall violate any Law, or without the consent of the other JV Participant, or result in the cancellation of any permits, licenses or other similar authorization;

 

(d)

no Transfer permitted by this Article XIII shall relieve the transferring JV Participant of its share of any liability, whether accruing before or after such Transfer, which arises out of Operations conducted prior to such Transfer or exists on the Agreement Date;

 

(e)

neither JV Participant, without the consent of the other JV Participant, shall make a Transfer that shall cause termination of the tax partnership established in Exhibit C.  If such termination is caused, the transferring JV Participant shall indemnify the other JV Participant for, from and against any and all loss, cost, expense, damage, liability or claim therefore arising from the Transfer, including without limitation any **** received by the Indemnified JV Participant;

 

(f)

if the Transfer is the grant of an Encumbrance in a Participating Interest to secure a loan or other indebtedness of either JV Participant in a bona fide transaction, other than a transaction approved unanimously by the Management Committee or Project Financing approved by the Management Committee, such Encumbrance shall be granted only in connection with such JV Participant’s financing payment or performance of that JV Participant’s obligations under this Agreement and shall be subject to the terms of this Agreement and the rights and interests of the other JV Participant hereunder (including without limitation under Section 8.10).  Any such Encumbrance shall be further subject to the condition that the Chargee of such Encumbrance first enters into a written agreement with the other JV Participant in form satisfactory to the other JV Participant, acting reasonably, binding upon the Chargee, to the effect that:

 

(i)

the Chargee shall not enter into possession or institute any proceedings for foreclosure or partition of the encumbering JV Participant’s Participating Interest and that such Encumbrance shall be subject to the provisions of this Agreement;

 

(ii)

the Chargee’s remedies under the Encumbrance shall be limited to the sale of the whole (but only of the whole) of the encumbering JV Participant’s Participating Interest to the other JV Participant, or, failing such a sale, at a public auction to be held at least 30 days after prior notice to the other JV Participant, such sale to be subject to the purchaser entering into a written agreement with the other JV Participant whereby such purchaser assumes all obligations of the encumbering JV Participant under the terms of this Agreement.  The price of any pre-emptive sale to the other JV Participant shall be the remaining principal amount of the loan plus accrued interest and related expenses, and such pre-emptive sale shall occur within 60 days of the Chargee’s notice to the other JV Participant of its intent to sell the encumbering JV Participant’s Participating Interest.  Failure of a sale to the other JV Participant to close by the end of such period, unless failure is caused by the encumbering JV Participant or by the Chargee, shall permit the Chargee to sell the encumbering JV Participant’s Participating Interest at a public sale; and

 

(iii)

the charge shall be subordinate to any then-existing debt, including Project Financing previously approved by the Management Committee, encumbering the transferring JV Participant’s Participating Interest;

 

(a)

The Management Committee shall hold regular meetings at least quarterly at a location to be mutually agreed upon.  The Manager shall give 20 days notice to TCM and USE (both referred to in this ARTICLE XIV as an “MC Participant”) of such meetings.  Additionally, either MC Participant may call a special meeting upon 7 days’ notice to the other MC Participant.  In case of an emergency, reasonable notice of a special meeting shall suffice.  There shall be a quorum if at least one regular member or alternate member representing each MC Participant is present; provided, however, that if a MC Participant fails to attend two consecutive properly called meetings, then a quorum shall exist at the second meeting if the other MC Participant is represented by at least one appointed member, and a vote of such MC Participant shall be considered the vote required for the purposes of the conduct of all business properly noticed even if such vote would otherwise require unanimity.

 

(b)

If business cannot be conducted at a regular or special meeting due to the lack of a quorum, either MC Participant may call the next meeting upon 10 days’ notice to the other MC Participant.

 

 (c)

Each notice of a meeting shall include an itemized agenda prepared by the Manager in the case of a regular meeting or by the MC Participant calling the meeting in the case of a special meeting, but any matters may be considered if either MC Participant adds the matter to the agenda at least 5 days before the meeting or with the consent of the other MC Participant.  The Manager shall prepare minutes of all meetings and shall distribute copies of such minutes to the other MC Participant within 10 days after the meeting.  Either MC Participant may electronically record the proceedings of a meeting with the consent of the other MC Participant.  The MC Participants shall sign and return or object to the minutes prepared by the Manager within 30 days after receipt, and failure to do either shall be deemed acceptance of the minutes as prepared by the Manager.  The minutes, when signed or deemed accepted by both MC Participants, shall be the official record of the decisions made by the Management Committee.  Decisions made at a Management Committee meeting shall be implemented in accordance with adopted Programs and Budgets.  If a MC Participant timely objects to minutes proposed by the Manager, the members of the Management Committee shall seek, for a period not to exceed 30 days from receipt by the Manager of notice of the objections, to agree upon minutes acceptable to both MC Participants.  If the Management Committee does not reach agreement on the minutes of the meeting within such 30 day period, the minutes of the meeting as prepared by the Manager together with the objecting MC Participant’s proposed

 

(a)

The Manager shall manage, direct and control Operations, and shall prepare and present to the Management Committee proposed Programs and Budgets as provided in ARTICLE VII during the Option Period and ARTICLE IX during the Joint Venture Period.

 

(b)

The Manager shall implement the decisions of the Management Committee, shall make all Expenditures necessary to carry out adopted Programs, and shall promptly advise the Management Committee if it lacks sufficient funds to carry out its responsibilities under this Agreement.

 

(c)

The Manager shall use reasonable efforts to:  (i) purchase or otherwise acquire all material, supplies, equipment, water, utility and transportation services required for Operations, such purchases and acquisitions to be made to the extent reasonably possible on the best terms available, taking into account all of the circumstances; (ii) obtain such customary warranties and guarantees as are available in connection with such purchases and acquisitions; and (iii) keep the Assets free and clear of all Encumbrances, except any Permitted Encumbrances and those Encumbrances specifically approved by the Management Committee.

 

 

(d)

The Manager shall:  (i) make or arrange for all payments required by leases, licenses, permits, contracts and other agreements related to the Assets; (ii) pay all taxes, assessments and like charges on Operations and Assets except taxes determined or measured by a JV Participant’s sales revenue or net income and taxes, including production taxes, attributable to a JV Participant’s share of Products, and shall otherwise promptly pay and discharge expenses incurred in Operations; provided, however, if authorized by the Management Committee, the Manager shall have the right to contest (in the courts or otherwise) the validity or amount of any taxes, assessments or charges if the Manager deems them to be unlawful, unjust, unequal or excessive, or to undertake such other steps or proceedings as the Manager may deem reasonably necessary to secure a cancellation, reduction, readjustment or equalization thereof before the Manager shall be required to pay them, but in no event shall the Manager permit or allow title to the Assets to be lost as the result of the nonpayment of any taxes, assessments or like charges; and (iii) do all other acts reasonably necessary to maintain the Assets.

 

(e)

The Manager shall:  (i) apply for all necessary permits, licenses and approvals; (ii) comply with all Laws; (iii) notify promptly the Management Committee of any allegations of substantial violation thereof; and (iv) prepare and file all reports or notices required for or as a result of Operations.  The Manager shall not be in breach of this provision if a violation has occurred in spite of the Manager’s good faith efforts to comply consistent with its standard of care under Section 15.2.  In the event of any such violation, the Manager shall timely cure or dispose of such violation on behalf of both JV Participants through performance, payment of fines and penalties, or both, and the cost thereof shall be charged to the Business Account.

 

(f)

The Manager shall prosecute and defend on behalf of the Joint Venture, but shall not initiate without consent of the Management Committee, any litigation or administrative proceedings arising out of Operations.  The non-managing JV Participant shall have the right to participate if it chooses to participate individually, at its own expense, in such litigation or administrative proceedings.  The non-managing JV Participant shall approve in advance any settlement involving payments, commitments or obligations in excess of one hundred thousand Dollars ($100,000) in cash or value.

 

(g)

The Manager shall provide insurance for the benefit of the JV Participants as provided in Exhibit F or as may otherwise be determined from time to time by the Management Committee.

 

(h)

The Manager may dispose of Assets, whether by abandonment, surrender, or Transfer in the ordinary course of business, except that Property may be abandoned or surrendered only as provided in ARTICLE XVIII.  Without prior authorization from the Management Committee, however, the Manager shall not:  (i) dispose of Assets in any one transaction (or in any series of related transactions) having a value in excess of seventy-five thousand Dollars ($75,000); (ii) enter into any sales contracts or commitments for Product, except as permitted in Section 11.1; (iii) begin a liquidation of the Business; or (iv) dispose of all or a substantial part of the Assets necessary to achieve the purposes of the Business.

 

(i)

The Manager shall have the right to carry out its responsibilities hereunder through agents, Affiliates and independent contractors.

 

(j)

The Manager shall perform or cause to be performed all assessment and other work and shall pay all Governmental Fees required by Law in order to maintain the unpatented mining claims, mill sites and tunnel sites included within the Property.  The Manager shall have the right to perform the assessment work required hereunder pursuant to a common plan of exploration and continued actual occupancy of such claims and sites shall not be required.  The Manager shall not be liable on account of any determination by any court or governmental agency that the work performed by the Manager does not constitute the required annual assessment work or occupancy for the purposes of preserving or maintaining ownership of the claims, provided that the work done is pursuant to an adopted Program and Budget and is performed in accordance with the Manager’s standard of care under Section 15.2.  The Manager shall timely record with the appropriate county and file with the appropriate United States agency any required affidavits, notices of intent to hold and other documents in proper form attesting to the payment of Governmental Fees, the performance of assessment work or intent to hold the claims and sites, in each case in sufficient detail to reflect compliance with the requirements applicable to each claim and site.  The Manager shall not be liable on account of any determination by any court or governmental agency that any such document submitted by the Manager does not comply with applicable requirements, provided that such document is prepared and recorded or filed in accordance with the Manager’s standard of care under Section 15.2.

 

(k)

If authorized by the Management Committee, the Manager may:  (i) locate, amend or relocate any unpatented mining claim or mill site or tunnel site, (ii) locate any fractions resulting from such amendment or relocation, (iii) apply for patents or mining leases or other forms of mineral tenure for any such unpatented claims or sites, (iv) abandon any unpatented mining claims for the purpose of locating mill sites or otherwise acquiring from the United States rights to the ground covered thereby, (v) abandon any unpatented mill sites for the purpose of locating mining claims or otherwise acquiring from the United States rights to the ground covered thereby, (vi) exchange with or convey to the United States any of the Property for the purpose of acquiring rights to the ground covered thereby or other adjacent ground, and (vii) convert any unpatented claims or mill sites into

 

(l)

The Manager shall keep and maintain all required accounting and financial records pursuant to the procedures described in Exhibit B and in accordance with customary cost accounting practices in the mining industry, and shall ensure appropriate separation of accounts unless otherwise agreed by the JV Participants.  All accounting practices and audits shall comply with the GAAP and all reports, reviews of internal controls, and related activities shall be conducted in compliance with the requirements of the Sarbanes Oxley Act of 2002.

 

(m)

After the formation of the Joint Venture, the Manager shall maintain Equity Accounts for each JV Participant.  Each JV Participant’s Equity Account shall be credited with the value of such JV Participant’s contributions under Section 8.3(b).  Each JV Participant’s Equity Account shall be charged with the cash and the fair market value of Assets distributed to such JV Participant (net of liabilities assumed by such JV Participant and liabilities to which such distributed Assets are subject).  Contributions and distributions shall include all cash contributions or distributions plus the agreed value (expressed in dollars) of all in-kind contributions or distributions.  Solely for purposes of determining the Equity Account balances of the JV Participants, the Manager shall reasonably estimate the fair market value of all Products distributed to the JV Participants, and such estimated value shall be used regardless of the actual amount received by each JV Participant upon disposition of such Products.

 

(n)

The Manager shall keep the Management Committee advised of all Operations by submitting in writing to the members of the Management Committee:  (i) monthly progress reports that include statements of expenditures and comparisons of such expenditures to the adopted Budget; (ii) periodic summaries of data acquired; (iii) copies of reports concerning Operations; (iv) a detailed final report within sixty (60) days after completion of each Program and Budget, which shall include comparisons between actual and budgeted expenditures and comparisons between the objectives and results of Programs; and (v) such other reports as any member of the Management Committee may reasonably request.  Subject to ARTICLE XX, at all reasonable times the Manager shall provide the Management Committee, or other representative of a JV Participant upon the request of such JV Participant’s member of the Management Committee, access to, and the right to inspect and, at such Participant’s cost and expense, copy the Existing Data and all maps, drill logs and other drilling data, core, pulps, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other Business Information, to the extent preserved or kept by the Manager, subject to ARTICLE XX.  In addition, the Manager shall allow the non-managing JV Participant, at the latter’s sole risk, cost and expense, and subject to reasonable safety regulations, to inspect the Assets and Operations at all reasonable times, so long as the non-managing JV Participant does not unreasonably interfere with Operations.

 

(o)

The Manager shall prepare for Management Committee approval an Environmental Compliance plan for all Operations consistent with the requirements of any applicable Laws or contractual obligations and shall include in each Program and Budget sufficient funding to implement the Environmental Compliance plan and to satisfy the financial assurance requirements of any applicable Law or contractual obligation pertaining to Environmental Compliance.  To the extent practical, the Environmental Compliance plan shall incorporate concurrent reclamation of Property disturbed by Operations.  The Environmental Compliance plan shall not be implemented until approved by the Management Committee.

 

(p)

The Manager shall undertake to perform Continuing Obligations when and as economic and appropriate, whether before or after termination of the Business.  The Manager shall have the right to delegate performance of Continuing Obligations to persons having demonstrated skill and experience in relevant disciplines.  As part of each Program and Budget submittal, the Manager shall specify in such Program and Budget the measures to be taken for performance of Continuing Obligations and the cost of such measures.  The Manager shall keep the other Participant reasonably informed about the Manager’s efforts to discharge Continuing Obligations.  Authorized representatives of each Participant shall have the right from time to time to enter the Property to inspect work directed toward satisfaction of Continuing Obligations and audit books, records, and accounts related thereto.

 

(q)

The funds that are to be deposited into the Environmental Compliance Fund shall be maintained by the Manager in a separate, interest bearing cash management account, which may include, but is not limited to, money market investments and money market funds, and/or in longer term investments if approved by the Management Committee.  Such funds shall be used solely for Environmental Compliance and Continuing Obligations, including the committing of such funds, interests in property, insurance or bond policies, or other security to satisfy Laws regarding financial assurance for the reclamation or restoration of the Property, and for other Environmental Compliance requirements.

 

(r)

If Participating Interests are adjusted in accordance with this Agreement the Manager shall propose from time to time one or more methods for fairly allocating costs for Continuing Obligations.

 

(s)

The Manager shall undertake all other activities reasonably necessary to fulfill the foregoing, and to implement the policies, objectives, procedures, methods and actions determined by the Management Committee.

 

(a)

during the Joint Venture Period, the aggregate Participating Interest of the Manager and its Affiliates becomes less than ****

 

(b)

the Manager is in Material Breach of an obligation imposed upon it under this Agreement and such failure continues for a period of 60 days after notice from the other JV Participant demanding performance;

 

(c)

the Manager fails to pay or contest in good faith its bills and Business debts as such obligations become due;

 

(d)

a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for a substantial part of its assets is appointed and such appointment is neither made ineffective nor discharged within 60 days after the making thereof, or such appointment is consented to, requested by, or acquiesced in by the Manager;

 

(e)

the Manager commences a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect; or consents to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of any substantial part of its assets; or makes a general assignment for the benefit of creditors; or takes corporate or other action in furtherance of any of the foregoing; or

 

(f)

entry is made against the Manager of a judgment, decree or order for relief affecting its ability to serve as Manager or a substantial part of its Participating Interest or its other assets by a court of competent jurisdiction in an involuntary case commenced under any applicable bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter in effect.

 

(a)

The administration charges of TCM as Manager (the “Administrative Charges”) shall be determined according to the provisions of Exhibit B.

 

(b)

TCM and USE shall enter into a Services Agreement to provide for compensation to USE for the use of its employees to perform administrative and operating functions, as further provided in Exhibit G.

 

(a)

Termination on Terms or by Agreement.  This Agreement shall terminate as provided under Sections 6.3(b), 6.3(c), 7.13(c), 21.6(c) or this ARTICLE XVI, unless earlier terminated by written agreement by the Parties.

 

 (b)

Termination by Notice.  During the Joint Venture Period, TCM may terminate this Agreement at any time by written notice to USE (including during an event of force majeure as set out in Section 21.6).  Upon termination of this Agreement under this Section, TCM must file all work and/or pay all such fees to maintain the Property in good standing for a period of three months after such termination and deliver to USE all records, reports, studies, data, computer programs and other information necessary and appropriate to carry out Permitting and other Operations on the Property in a manner consistent with industry standards and good workmanlike practices; additionally, upon such termination, USE (or a designated Affiliate of USE) ****.  Other than filing such work, paying such fees and making such deliveries and assignments under this Section, ****.

 

(a)

During the Option Period, within 30 days after receiving the Acquiring Party’s notice, the non-acquiring Party may notify the Acquiring Party of its election to include such acquired interest in the Property and make it subject to the terms of this Agreement.  Upon such election such acquired interest shall be included in the Property thereafter for all purposes of this Agreement.  If the Acquiring Party is USE, then TCM shall reimburse it for the acquisition costs that it or its Affiliate has incurred.  When paid by TCM in the first instance on acquisition, or reimbursed by TCM when acquired by USE, the acquisition costs for any acquired interests will be deemed to constitute Expenditures to the credit of TCM hereunder.

 

(b)

During the Joint Venture Period, within 30 days after receiving the Acquiring Party’s notice, the non-acquiring Party may notify the Acquiring Party of its election to accept a proportionate interest in the acquired interest equal to its Participating Interest. Promptly upon such notice, the Acquiring Party shall convey or cause its Affiliate to convey to the non-acquiring Party, in proportion to its respective Participating Interest, by special warranty deed with title held as described in Section 8.12, all of the Acquiring Party’s (or its Affiliate’s) interest in such acquired interest, free and clear of all Encumbrances arising by, through or under the Acquiring Party (or its Affiliate) other than those to which both

 

(a)

Number of Arbitrators.  The Parties shall appoint a sole arbitrator agreeable to them to resolve any dispute; provided, however, that should the Parties fail to agree upon a sole arbitrator within 30 days after the initiation of the arbitration, then there shall be 3 arbitrators. The claimant shall name the first arbitrator within thirty days after the expiration of the above-described deadline to appoint a single arbitrator.  The respondent shall appoint the second arbitrator within 30 days after the appointment of the first arbitrator.  The two Party-appointed arbitrators shall appoint the third arbitrator within thirty days after the appointment of the second arbitrator.  If (i) the respondent fails to appoint an arbitrator or (ii) the two Party-appointed arbitrators fail to appoint a third arbitrator within the above-described time limitations, then the AAA shall appoint the second and/or third arbitrator, as applicable.

 

(b)

Place of Arbitration.  Unless otherwise agreed in writing by all Parties to the arbitration, the situs of the arbitration under this Agreement shall be Denver, Colorado, U.S.A.

 

(c)

Language.  The arbitration proceedings shall be conducted in the English language.

 

(d)

Entry of Judgment.  Judgment on the award of the arbitral tribunal may be entered by any court of competent jurisdiction.

 

(e)

Qualifications and Conduct of the Arbitrators.  All arbitrators shall be and remain at all times wholly impartial and shall provide the Parties with a statement that they can and shall decide the case impartially.  No arbitrator shall have any financial interest (directly or indirectly) in the dispute or any financial dependence (directly or indirectly) upon any of the Parties.  All arbitrators shall be knowledgeable of the mining industry or the law applicable to such business.  The AAA’s Rules of Ethics shall be applicable to all arbitrators.

 

(f)

Interim Measures.  The arbitrators, or in an emergency the presiding arbitrator acting alone in the event one or more of the other arbitrators are unable to be involved in a timely fashion, may grant interim measures including injunctions, attachments and conservation orders in appropriate circumstances, which measures the Parties agree may be immediately enforced by the arbitrators or by court order.  Hearings on requests for interim measures may be held in person, by telephone or by video conference, and requests for relief, responses, briefs or memorials may be sent to, and orders or awards received from, the arbitrators by facsimile or other similar means which include a confirmation of delivery.  Notwithstanding the requirements for alternative dispute resolution procedures (such as negotiation and mediation), prior to the constitution of the arbitration tribunal and thereafter as necessary to enforce the arbitrators’ rulings or in the absence of the jurisdiction of the arbitrators to rule on interim measures in a given jurisdiction, any Party may apply to a court for interim measures, and the Parties agree that seeking and obtaining such measures shall not waive the right to arbitration.

 

(g)

Costs and Attorney’s Fees.  The arbitral tribunal is authorized to award attorney’s fees or allocate them between the Parties.  The costs of the arbitration proceedings shall be borne in the manner determined by the arbitral tribunal, with the exception of the arbitrators’ fees.  The Parties shall divide the cost of a single arbiter, with TCM paying 50% of the fee and the USE paying the remaining 50%.  In the event that three arbitrators are appointed, each of TCM and the USE shall pay the fee of the arbitrator it appoints and 50% of the fee of the third arbitrator.

 

(h)

Currency of Award.  The arbitral award shall be made and payable in Dollars free of any tax or other deduction.

 

(i)

Punitive Damages.  Penal, punitive, treble, multiple, consequential, incidental or similar damages may not be recovered or awarded.

 

(j)

Confidentiality.  Except to the extent necessary to enforce the arbitration, agreement or award, to enforce other rights of the Parties, or as required by law, the Parties, their employees, officers, directors, counsel, consultants, and expert witnesses, shall maintain as confidential the fact of the arbitration proceeding, the arbitral award, contemporaneous or historical documents exchanged or produced during the arbitration proceeding, and memorials, briefs or other documents prepared for the arbitration.

 

(k)

Waiver of Appeals.  To the extent permitted by law, right to appeal from or to cause a review of any arbitral award by any court is hereby waived by the JV Participants.

 

(l)

Summary Disposition.  The arbitrators are hereby authorized, if they consider it appropriate, to decide any disputes by summary disposition on the documents and written testimony without hearing oral testimony.

 

(m)

Draft of the Proposed Award.  Prior to rendering the final award, the arbitral tribunal shall submit to the Parties an unsigned draft of the proposed award and each Party, within 10 Business Days after receipt of such draft award, may serve on every other Party and file with the tribunal a written statement commenting upon any alleged errors of fact, law, computation, or otherwise.  The tribunal shall endeavor to render its final award within 10 Business Days after the receipt of the letter of the written statements of the Parties.

 

(a)

to a Party’s officers, directors, partners, members, employees, Affiliates, shareholders, agents, attorneys, accountants, consultants, contractors, subcontractors or advisors, for the sole purpose of such Party’s performance of its obligations under this Agreement;

 

(b)

to any party to whom the disclosing Party contemplates a Transfer of all or any part of its Participating Interest, for the sole purpose of evaluating the proposed Transfer;

 

(c)

to any actual or potential lender, underwriter or investor for the sole purpose of evaluating whether to make a loan to or investment in the disclosing Party; or

 

(d)

to a third party with whom the disclosing Party contemplates any independent business activity or operation.

 

(a)

such disclosure is legally required to be made in a judicial, administrative or governmental proceeding pursuant to a valid subpoena or other applicable order;

 

(b)

such disclosure is legally required to be made pursuant to the rules or regulations of a stock exchange or similar trading market applicable to the disclosing JV Participant; or

 

(c)

such disclosure is legally required to be made by the rules and regulations of any regulatory authority.

 

(a)

to another Party or the Manager;

 

(b)

with the prior written consent of all the other Parties;

 

(c)

to a bank or other financial institution considering the provision of or, which has provided financial accommodation to, a Party or an Affiliate of a Party or to a trustee, representative or agent or such a bank or financial institution;

 

(d)

to a third party for a bona fide business purpose, provided that such third party has first agreed in writing to maintain the confidentiality of the Confidential Information;

 

(e)

by a Party to legal, financial and other professional advisers, auditors and other consultants, officers and employees of a Party or a Party’s Affiliate, provided that such Party or Party’s Affiliate has first agreed in writing to maintain the confidentiality of the Confidential Information; and

 

(f)

to the extent that the Confidential Information was publicly available at the Agreement Date or becomes publicly available subsequent to the Agreement Date without breach of this Agreement.

 

(a)

Except for TCM’s obligation to make option payments under Section 5.1(b), the obligations of a Party under this Agreement, including TCM’s obligation to incur Expenditures under 6.1(a), 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 Party to grant); acts of God; Laws of any government or governmental entity; ****; acts of war or conditions arising out of or attributable to war, whether declared or undeclared; riots, protests, civil strife, insurrection or rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought or other adverse weather condition; accidents; or any other cause whether similar or dissimilar to the foregoing.  The affected Party shall promptly give notice to the other Party of the suspension of performance, stating therein the nature of the suspension, the reasons therefore, and the expected duration thereof.  The affected Party shall resume performance as soon as reasonably possible.  During a period of suspension during the Joint Venture Period, the obligations of both JV Participants to advance funds pursuant to Section 10.2 shall be reduced to levels consistent with then current Operations.  For the avoidance of doubt, this Section 21.6 does not relieve the Manager of its obligation to keep the Property in good standing.

 

(b)

If during the Option Period ****.

 

(c)

****.

 

(d)

****.

Per:

  /s/ Keith G. Larsen

Per:

  /s/ Kevin Loughrey

 

(a)

in holding the Property in good standing (including land maintenance costs and any monies expended as required to comply with applicable laws and regulations, such as for the completion and submission of assessment work and filings required in connection therewith), in curing title defects and in acquiring and maintaining surface and other ancillary rights;

 

(b)

in preparing for and in the application for and acquisition of environmental and other permits, licenses and approvals necessary or desirable to commence and complete exploration and development activities, including ancillary costs and expenses such as contributions to local public works initiatives, community programs and the like;

 

(c)

in doing geophysical and geological surveys, drilling, assaying and metallurgical testing, including costs of assays, metallurgical testing and other tests and analyses to determine the quantity and quality of Minerals, water and other materials or substances;

 

(d)

in the preparation of work programs and the presentation and reporting of data and other the results thereof including any program for the preparation of a feasibility study or other evaluation of the Properties;

 

(e)

for environmental remediation and rehabilitation;

 

(f)

in acquiring facilities, equipment or machinery, or the use thereof, and for all parts, supplies and consumables;

 

(g)

for salaries and wages, including actual labor overhead expenses, work or performance bonuses for employees assigned to Exploration, Development and Mining activities;

 

(h)

traveling expenses and fringe benefits (whether or not required by law) of all persons engaged in work with respect to and for the benefit of the Property, including for their food, lodging and other reasonable needs;

 

(i)

payments to contractors or consultants, including without limitation USE as a contractor under the Services Agreement, for work done, services rendered or materials supplied;

 

(j)

the cost of insurance premiums and performance bonds or other security;

 

(k)

all taxes levied against or in respect of the Property, or activities thereon;

 

(l)

acquisition costs of Rights acquired under ARTICLE XVII;

 

(m)

operating costs of the Facility under Section 8.15, including any capital costs associated with operation and maintenance of the Facility; and

 

(n)

the Administrative Charges.

 

(a)

Terms denoting the singular only shall include the plural, and vice versa.

 

(b)

Unless otherwise stated, a reference to a Recital, Part, Article, Section or Exhibit is a reference to a Recital, Part, Article, Section or Exhibit of this Agreement.

 

 (c)

Section numbers and headings are for convenience of reference only, and shall not affect the interpretation of this Agreement.

 

(d)

Reference to any gender includes the other.

 

(e)

Reference to “including” means including, but not by way of limitation.

 

(f)

Unless otherwise expressly provided in this Agreement, reference to an Agreement (including this Agreement), document, or instrument is the same as amended, modified, novated or replaced from time to time.

 

(g)

Reference to a statute or other legislative act, by law, rule, regulation, or order is to the same as amended, modified or replaced from time to time and to any rule, regulation or order promulgated pursuant to such law.