AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF EUREKA MOLY, LLC BETWEEN NEVADA MOLY, LLC AND POS–Minerals CORPORATION
Exhibit
10.21
Execution
Version
AMENDED AND RESTATED
OF
EUREKA
MOLY, LLC
BETWEEN
NEVADA
MOLY, LLC
AND
POS–Minerals
CORPORATION
THE
INTERESTS DESCRIBED AND REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS (THE “SECURITIES LAWS”) AND MAY BE RESTRICTED
SECURITIES AS THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES LAWS.
TO THE EXTENT THE INTERESTS CONSTITUTE SECURITIES UNDER THE SECURITIES LAWS,
THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC;
SOLO
COVER PAGE
TABLE
OF CONTENTS
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Page
No.
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ARTICLE
I DEFINITIONS
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1
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1.1
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Definitions
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1
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1.2
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Interpretation
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11
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ARTICLE
II NAME, PURPOSES AND TERM
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12
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2.1
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General
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12
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2.2
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Name
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12
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2.3
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Purposes
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12
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2.4
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Limitation
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12
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2.5
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Term
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13
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2.6
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Registered
Agent; Offices
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13
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ARTICLE
III RELATIONSHIP OF THE MEMBERS
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13
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3.1
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No
State-Law Partnership
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13
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3.2
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Federal
Tax Elections and Allocations
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13
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3.3
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State
Income Tax
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13
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3.4
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Tax
Returns
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13
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3.5
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Other
Business Opportunities
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13
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3.6
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Waiver
of Right to Partition
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13
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3.7
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Implied
Covenants; No Additional Duties
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14
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3.8
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Liabilities;
Indemnification.
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14
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ARTICLE
IV CONTRIBUTIONS BY MEMBERS
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15
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4.1
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Initial
Contributions
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15
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4.2
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Failure
of POS-Minerals to Make the
Second
and Third Contribution Installments
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17
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4.3
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Operating
Loan from Nevada Moly
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17
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4.4
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Valuation
of Nevada Moly Capital Contributions
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18
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4.5
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Catch-Up
Contributions
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18
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4.6
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Additional
Cash Contributions
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19
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4.7
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Return
of Contributions
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19
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ARTICLE
V PERCENTAGE INTERESTS
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20
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5.1
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Initial
Percentage Interests
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20
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5.2
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Changes
in Percentage Interests
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20
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5.3
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Voluntary
Reduction in Percentage Interest
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20
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5.4
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Default
in Making Contributions.
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21
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5.5
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Continuing
Obligations and Liabilities
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23
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5.6
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Elimination
of Minority Interest
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23
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5.7
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Grant
of Security Interest
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24
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ARTICLE
VI MANAGEMENT COMMITTEE
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25
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6.1
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Organization
and Composition
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25
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AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC;
TABLE
OF
CONTENTS – Page 1
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6.2
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Powers
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25
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6.3
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Decisions
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26
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6.4
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Major
Decisions.
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26
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6.5
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Meetings
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28
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6.6
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Action
Without Meeting
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28
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6.7
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Matters
Requiring Approval
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29
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ARTICLE
VII MANAGER
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29
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7.1
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Appointment
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29
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7.2
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Powers
and Duties of Manager
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29
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7.3
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Standard
of Care
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33
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7.4
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Resignation;
Removal; Replacement
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33
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7.5
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Payments
To Manager
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34
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7.6
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Transactions
With Affiliates
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35
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7.7
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Activities
During Deadlock
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35
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ARTICLE
VIII PROGRAMS AND BUDGETS
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36
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8.1
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Initial
Program and Budget
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36
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8.2
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Operations
Pursuant to Programs and Budgets
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36
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8.3
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Presentation
of Programs and Budgets
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36
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8.4
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Approval
of Proposed Programs and Budgets
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36
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8.5
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Election
to Participate
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37
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8.6
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Deadlock
on Proposed Programs and Budgets
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37
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8.7
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Budget
Overruns; Program Changes
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37
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8.8
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Emergency
or Unexpected Expenditures
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37
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ARTICLE
IX ACCOUNTS AND SETTLEMENTS
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38
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9.1
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Monthly
Statements
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38
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9.2
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Monthly
Capital Calls
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38
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9.3
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Failure
to Meet Cash Calls
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38
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9.4
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Audits
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38
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ARTICLE
X DISTRIBUTIONS; DISPOSITION OF PRODUCTION
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39
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10.1
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Distributions
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39
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10.2
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Disposition
of Products
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40
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10.3
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Excess
Nevada Moly Products
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41
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10.4
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Failure
of Member to Remove Product
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42
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ARTICLE
XI RESIGNATION AND DISSOLUTION
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42
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11.1
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Dissolution
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42
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11.2
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Resignation
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42
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11.3
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Liquidation
and Termination After Dissolution
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43
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11.4
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Non-Compete
Covenants
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43
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11.5
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Right
to Data After Termination
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43
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11.6
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Continuing
Authority
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43
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ARTICLE
XII ACQUISITIONS WITHIN AREA OF INTEREST
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44
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AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC;
TABLE
OF
CONTENTS – Page 2
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12.1
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General
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44
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12.2
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Notice
to Nonacquiring Member
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44
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12.3
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Option
Exercised
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44
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12.4
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Option
Not Exercised
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44
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ARTICLE
XIII ABANDONMENT AND SURRENDER OF PROPERTIES
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45
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13.1
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Surrender
or Abandonment of Property
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45
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13.2
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Reacquisition
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45
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ARTICLE
XIV TRANSFER OF INTEREST
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45
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14.1
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General
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45
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14.2
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Limitations
on Free Transferability
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45
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14.3
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Right
of First Refusal
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46
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14.4
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Exceptions
to Right of First Refusal
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47
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14.5
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Right
to Purchase Before Foreclosure
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47
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14.6
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Sale
Right
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49
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14.7
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Substitution
of a Member
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50
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14.8
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Conditions
to Substitution
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50
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14.9
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Admission
as a Member
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50
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ARTICLE
XV DISPUTES
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51
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15.1
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Dispute
Resolution
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51
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15.2
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Executive
Mediation
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51
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15.3
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Arbitration.
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51
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ARTICLE
XVI GENERAL PROVISIONS
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53
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16.1
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Entire
Agreement; Successors and Assigns
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53
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16.2
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Governing
Law; Language
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53
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16.3
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Force
Majeure
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53
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16.4
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Confidentiality
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53
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16.5
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Headings
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54
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16.6
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Notices
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54
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16.7
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Severability
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54
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16.8
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Amendment;
Waiver
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54
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16.9
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Further
Assurances
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54
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16.10
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No
Benefit to Others
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55
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16.11
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Counterparts
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55
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16.12
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Rules
of Construction
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55
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16.13
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Currency
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55
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16.14
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Project
Lease
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55
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16.15
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Survival
of Terms and Conditions
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55
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AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC;
TABLE
OF
CONTENTS – Page 3
EXHIBITS
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Property
Description
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Exhibit
B
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Accounting
Procedure
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Exhibit
C
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Tax
Matters
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Exhibit
D
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Insurance
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Exhibit
E
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Initial
Program And Budget
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Exhibit
F
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Major
Permits
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Volume
I of Bankable Feasibility Study
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Exhibit
H
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Example
Calculation of Catch-Up
Contribution
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AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC;
TABLE
OF
CONTENTS – Page 4
AMENDED
AND RESTATED
OF
EUREKA
MOLY, LLC
This
Amended and Restated Limited Liability Company Agreement is made as of February
26, 2008 (the “Execution
Date”)
between Nevada Moly, LLC, a Delaware limited liability company (“Nevada
Moly”),
and
POS-Minerals Corporation, a Delaware corporation (“POS-Minerals”).
RECITALS
A. The
Company (as defined below) was formed by the filing of the certificate of
formation of the Company by an authorized person with the Delaware Secretary
of
State on December 21 2007, and has been governed by the Limited Liability
Company Agreement of the Company, dated as of January 1, 2008 (the “Original
LLC Agreement”),
by
General Moly (as defined below), as the sole member.
B. The
Company owns or controls certain Properties (as defined below) in Eureka County,
Nevada.
C. POS-Minerals
desires to participate with the Company in the evaluation, development, mining
and processing of mineral resources within the Properties or any other
properties acquired pursuant to the terms of this Agreement.
D. Pursuant
to the Contribution Agreement (defined below), (i) POS-Minerals has agreed
to
make certain capital contributions to the Company, and (ii) General Moly has
assigned and transferred its remaining interest in the Company to Nevada Moly,
such that POS-Minerals and Nevada Moly shall have the Membership Interests
to be
held by each such Member as provided in this Agreement.
E. Nevada
Moly and POS-Minerals now desire to amend and restate the Original LLC Agreement
pursuant to this Agreement to reflect POS-Minerals and Nevada Moly as Members
and to make the other changes to the governance of the Company as set forth
herein.
AGREEMENT
In
consideration of the covenants and agreements contained herein, Nevada Moly
and
POS-Minerals agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Definitions.
As used
in this Agreement, the following terms have the meanings indicated:
“Accounting
Procedure”
means
the procedures set forth in Exhibit
B.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 1
“Act”
means
the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et
seq.
“Affiliate”
means
with
respect to a Person, any other Person that directly, or indirectly through
one
or more intermediaries, controls, or is controlled by, or is under common
control with, such Person. As used in this definition, the word “control” (and
its derivatives) means the possession, directly or indirectly, of the power
to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing sentence, for purposes of this Agreement, the
Company shall not be considered an Affiliate of Nevada Moly, POS-Minerals or
any
of their respective Affiliates.
“Agreement”
means
this Amended and Restated Limited Liability Company Agreement and all Exhibits
hereto, which hereby are incorporated herein by this reference.
“Area
of Interest”
means
(a) the land area within the exterior perimeter of the Project boundary as
described in Section
2.F.1
of the
Plan of Operations, and (b) the land area within the five (5) mile area beyond
the exterior perimeter of the Project boundary as described in clause
(a)
above.
“Assets”
means
the Properties, Products and all other real and personal property, tangible
and
intangible, held by the Company, plus all existing permits, permit applications,
bonds, financial sureties, studies, data, core samples, information, supplies
and equipment contributed to the Company by General Moly or otherwise owned
or
controlled by the Company or subsequently acquired by the Company to develop
and, if applicable, construct and operate the Project.
“Assumed
Liabilities”
means
the “Assumed Liabilities” as such term is defined in the Contribution
Agreement.
“Bankable
Feasibility Study”
means
the Mount Hope Project Molybdenum Mine and Process Plant Bankable Feasibility
Study, dated August 29, 2007, numbered M3-PN06236 and prepared by M3
Engineering & Technology Corp. for Idaho General under Canadian Standard
NI 43-101 format, consisting of a Volume I, a copy of which is
attached as Exhibit
G,
and a
Volume II, a copy of which has been provided to each Member and is incorporated
herein by reference.
“BLM”
means
the U.S. Bureau of Land Management.
“Budget”
means
a
detailed estimate of all costs to be incurred by the Company with respect to
a
Program and a schedule of cash capital contributions to be made by the Members
with respect to such Program.
“Business
Account”
means
the account maintained in accordance with the Accounting Procedure.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 2
“Business
Day”
means
any day other than Saturday, Sunday or a day on which banks in Denver, Colorado,
U.S. or Seoul, Republic of Korea are required or permitted by Law to
close.
“Capital
Account”
means
the capital account maintained for each Member in accordance with Treas. Regs.
§
1.704-1(b)(2)(iv)
and
Article IV of Exhibit
C.
“Change
of Control”
means:
(a) with
respect to General Moly, the completion of any transaction or series of
transactions that results in both:
(i) any
“person” or “group” (in each case within the meaning of Sections 13(d) of the
Exchange Act) becoming the “beneficial owner” (within the meaning of Rule 13d-3
and Rule 13d-5 under the Exchange Act) of more than 35% of the aggregate voting
power of all outstanding classes of General Moly’s voting stock; and
(ii) a
majority of the board of directors of General Moly ceasing to be Continuing
Directors at the end of any period of twelve (12) consecutive months following
the Execution Date; and
(b) with
respect to Nevada Moly, Nevada Moly ceasing to be an Affiliate of General
Moly;
provided
that
for
purposes of this definition:
(1) for
purposes of clause
(b)
above,
the completion of any transaction or series of transactions between or among
any
of General Moly, Nevada Moly and their respective Affiliates shall not be deemed
to be or result in a “Change of Control”;
(2) a
“person” or “group” shall not be deemed the “beneficial owner” of (A) any
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such “person” or “group” until such tendered securities are accepted for
purchase or exchange thereunder or (B) any securities the “beneficial
ownership” of which (x) arises solely as a result of a revocable proxy
delivered in response to a proxy or consent solicitation and (y) is not
then reportable on Schedule 13D (or any successor schedule) under the Exchange
Act; and
(3) “Continuing
Directors”
means,
with respect to any period of twelve (12) consecutive months following the
Execution Date, (A) individuals who at the beginning of any such period
constituted the board of directors of General Moly and (B) any new
directors whose election or appointment by the board of directors of General
Moly or whose nomination for election by the stockholders of General Moly was
approved by a vote or consent of a majority of directors then still in office
who were either directors at the beginning of such period or whose election
or
nomination for election was previously approved and any new directors designated
in or provided for in any agreement regarding such transaction.
“Closing
Date”
has
the
meaning set forth in the Contribution Agreement.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 3
“Code”
means
the Internal Revenue Code of 1986.
“Commercial
Production”
means
the first date on which the output of roasted Products from Operations in
accordance with the specifications for a consecutive thirty (30) day period
equals or exceeds 1,939,000 pounds (which amount the parties agree equals
seventy percent (70%) of the average monthly production of roasted Product
based
on the annual planned production for the first year of production at the Project
as set forth in the Bankable Feasibility Study), as such planned production
has
been increased or decreased as set forth in any Program and Budget approved
by
the unanimous approval of the Management Committee hereunder. As used in this
definition, the “specifications”
for
Product shall be the following: (i) minimum of 57% molybdenum;
(ii) maximum of 0.50% copper; (iii) maximum of 0.10% sulfur; (iv) maximum
of 0.10% carbon, (v) maximum of 0.05% phosphorus; (vi) maximum of 1.5%
silicon; (vii) maximum of 0.05% lead; and (viii) maximum 2.0%
moisture.
“Company”
means
Eureka
Moly, LLC,
the
Delaware limited liability company governed by this Agreement.
“Confidential
Information”
means
the terms of this Agreement and the other Project Documents, and all
information, data, knowledge and know-how (including formulas, patterns,
compilations, programs, devices, methods, techniques and processes) that derive
independent economic value, actual or potential, as a result of not being
generally known to, or readily ascertainable by, third parties and which are
the
subject of efforts that are reasonable under the circumstances to maintain
their
secrecy, including all analyses, interpretations, compilations, studies and
evaluations of such information, data, knowledge and know-how generated or
prepared by or on behalf of either Member, the Manager or the
Company.
“Continuing
Obligations”
means
obligations or responsibilities with respect to a particular area of the
Properties that are reasonably expected to, or actually, continue or arise
after
Operations on such particular area of the Properties have ceased or are
suspended, including future monitoring, stabilization or Environmental
Compliance.
“Contributed
Assets”
means
the “Contributed Assets” as such term is defined in the Contribution
Agreement.
“Contributed
Assets Value”
is
defined in Subparagraph 4.1(b) of Exhibit
C.
“Contribution
Agreement”
means
the Contribution Agreement, dated as of the date hereof, among Nevada Moly,
General Moly, POS-Minerals and the Company, together with all exhibits and
schedules thereto.
“Default
Rate”
means
a
rate per annum equal to LIBOR plus
eight
percentage points (8%).
“Default
Trigger Event”
means,
with respect to a Member, the date that such Member (a) has failed to make
all
or any portion of its required capital contribution under Section 4.5,
4.6
or
Section
4.7
by the
date such capital contribution is required to be made pursuant to Section 4.5
or
4.6
or by
the date required to allow for the distribution by the date required pursuant
to
Section 4.7,
as
applicable, and (b) has not cured such failure within 30 days after the date
such capital contribution was required to be made.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 4
“Development”
means
all preparation for the removal and recovery of Products, including the
construction or installation of a mill and a roasting facility, together with
any other improvements to be used for the mining, handling, milling, processing
or other beneficiation of Products,
together with all activities directed toward ascertaining the existence,
location, quantity, quality or commercial value of additional deposits of
Products, if any, within the Area of Interest.
“Effective
Date”
means
January 1, 2008.
“Emergency”
means
a
sudden occurrence or event determined by the Manager in accordance with Standard
Mining Industry Practices to require immediate response or action to avoid
or
minimize loss of life, limb or property, including the following: collapse
of
the pit wall; failure of the tailings dam; mine worker fatality; acts of God;
acts of war or terrorism or conditions arising out of or attributable to war
or
terrorism, whether declared or undeclared; riot, civil strife, insurrection,
insurgency or rebellion; fire, explosion, earthquake, storm, flood, sink holes,
drought, hurricane, tsunami or other adverse weather condition; or release
of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
as wastes into the environment.
“Encumbrance”
means
mortgages, deeds of trust, security interests, pledges, liens, net profits
interests, royalties or overriding royalty interests, other payments out of
production, or other burdens of any nature.
“Environmental
Compliance”
means
action performed during or after Operations to comply with the requirements
of
all Environmental Laws or contractual commitments related to reclamation of
the
Properties or other compliance with Environmental Laws.
“Environmental
Laws”
means
Laws aimed at reclamation or restoration of the Properties; abatement of
pollution; protection of the environment; protection of wildlife, including
endangered species; ensuring public safety from environmental hazards;
protection of cultural or historic resources; management, storage or control
of
hazardous materials and substances; releases or threatened release of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
as wastes into the environment, including ambient air, surface water and
groundwater; and all other laws relating to the manufacturing, processing,
distribution, use, treatment, storage, disposal, handling or transport of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes.
“Environmental
Liabilities”
means
any and all claims, actions, causes of action, damages, losses, liabilities,
obligations, penalties, judgments, amounts paid in settlement, assessments,
costs, disbursements, or expenses (including attorneys’ fees and costs, experts’
fees and costs, and consultants’ fees and costs) of any kind or of any nature
whatsoever that are asserted against the Company, either Member or the Manager,
by any Person other than the other Member, alleging liability (including
liability for studies, testing or investigatory costs, cleanup costs, response
costs, removal costs, remediation costs, containment costs, restoration costs,
corrective action costs, closure costs, reclamation costs, natural resource
damages, property damages, business losses, personal injuries, penalties or
fines) arising out of, based on or resulting from (a) the presence, release,
threatened release, discharge or emission into the environment of any hazardous
materials or substances existing or arising on, beneath or above the Properties
or emanating or migrating or threatening to emanate or migrate from the
Properties to off-site properties; (b) physical disturbance of the environment;
or (c) the violation or alleged violation of any Environmental
Laws.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 5
“Equity
Interest”
means
any Membership Interest or similar security, including warrants, options or
other rights to acquire Membership Interests directly or indirectly, securities
containing equity features and securities containing profit participation
features, or any security or instrument convertible or exchangeable directly
or
indirectly, with or without consideration, into or for any Membership Interest
or similar security (including convertible notes), or any security carrying
any
warrant or right to subscribe for or purchase any Membership Interest or similar
security, or any such warrant or right.
“Exchange
Act”
means
the U.S. Securities Exchange Act of 1934.
“Exxon
Assignment”
has
the
meaning set forth in the Contribution Agreement.
“Force
Majeure”
means,
with respect to a Member or Manager, any cause, whether foreseeable or
unforeseeable, beyond its reasonable control, including labor disputes (however
arising); acts of God; Laws of any Governmental Authority the intent or affect
or absence of which is to prohibit or delay Operations; acts of war or terrorism
or conditions arising out of or attributable to war or terrorism, whether
declared or undeclared; riot, civil strife, insurrection, insurgency or
rebellion; fire, explosion, earthquake, storm, flood, sink holes, drought,
hurricane, tsunami or other adverse weather condition; unless caused by the
intentional or grossly negligent acts or omissions of such Member or Manager,
delay or failure by suppliers or transporters of materials, parts, supplies,
services or equipment or by contractors’ or subcontractors’ shortage of, or
inability to obtain, labor, transportation, materials, machinery, equipment,
supplies, utilities or services; accidents; or breakdown of equipment, machinery
or facilities not caused by the intentional or grossly negligent acts or
omissions of such Member or Manager.
“GAAP”
means
generally accepted accounting principles as used in the U.S., applied on a
consistent basis.
“General
Moly”
means
General Moly, Inc., a Delaware corporation, successor-by-merger to Idaho
General.
“Governmental
Authority”
means
any domestic or foreign national, regional, state, tribal, or local court,
governmental department, commission, authority, central bank, board, bureau,
agency, official, or other instrumentality exercising executive, legislative,
judicial, taxing, regulatory, or administrative powers or functions of or
pertaining to government.
“Governmental
Fees”
means
all location fees, mining claim rental fees, mining claim maintenance payments
and similar payments required by Law to locate and hold unpatented mining
claims.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 6
“Idaho
General”
means
Idaho General Mines, Inc., that by corporate merger and name change effective
October 8, 2007 became General Moly.
“Indebtedness”
means,
without duplication, (a) all obligations created, issued, or incurred for
borrowed money (whether by loan, the issuance and sale of debt securities,
or
the sale of property to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such property from such other Person);
(b) all obligations to pay the deferred purchase price or acquisition price
of property or services (other than accrued expenses and trade accounts payable
incurred in the ordinary course of business); (c) all obligations to pay
money evidenced by a note, bond, debenture, or similar instrument; and
(d) all reimbursement obligations in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions.
“Initial
Contribution”
means
(a) with respect to Nevada Moly, the Nevada Moly Initial Contribution, and
(b)
with respect to POS-Minerals, the POS-Minerals Initial
Contribution.
“Kobeh
Valley Ranch”
means
Kobeh Valley Ranch, LLC, a Nevada limited liability company and a wholly-owned
subsidiary of General Moly.
“KVR
Water Lease”
means
the Water Rights Lease Agreement, dated as of the Effective Date, among Kobeh
Valley Ranch, General Moly and the Company attached as Exhibit
E-6
to the
Contribution Agreement.
“Law”
means
all applicable federal, state and local laws (statutory or common), rules,
ordinances, regulations, grants, concessions, franchises, licenses, orders,
directives, judgments, decrees, proclamations, instructions, requests and other
governmental restrictions, including permits and other similar requirements,
whether legislative, municipal, administrative or judicial in nature.
“LIBOR”
means,
as of the date of determination, a rate per annum equal to the London interbank
offered rate for deposits in dollars having a maturity of three months that
appears on Telerate Page 3750 on or about 11:00 a.m. London time on the date
of
determination; provided
that if
the date of determination is not a Business Day or a date that the London
interbank market for leading banks does not give quotations in dollars, then
LIBOR shall be determined on the next succeeding Business Day or date that
the
London interbank market for leading banks gives quotations in
dollars.
“Major
Permits”
means
the permits, licenses and authorizations from Governmental Authorities listed
on
Exhibit
F.
“Management
Committee”
means
the committee established under Article
VI.
“Manager”
means
the Person appointed under Article
VII
from
time to time as the manager of the Company.
“Member”
mean
Nevada Moly and POS-Minerals and any other Person admitted as a substituted
or
additional Member of the Company under this Agreement.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 7
“Membership
Interest”
means,
with respect to any Member: (a) that Member’s status as a Member; (b) that
Member’s Capital Account and share of the profits, losses and other items of
income, gain, loss, deduction and credits of, and the right to receive
distributions (liquidating or otherwise) from the Company under the terms of
this Agreement; (c) all other rights, benefits and privileges enjoyed by that
Member in its capacity as a Member, including that Member’s rights to vote,
consent and approve those matters described in this Agreement; and (d) all
obligations, duties and liabilities imposed on that Member under this Agreement
in its capacity as a Member.
“Mining”
means
mining, extracting, producing, handling, milling or other processing of
Products.
“NMO
Products”
means
Nevada Moly’s share of the Products as determined pursuant to Section
10.1(c).
“Operations”
means
the activities carried out by the Company under this Agreement.
“Percentage
Interest”
means
the percentage interest of a Member in certain allocations of profits and losses
and other items of income, gain, loss or deduction and certain distributions
of
cash or property, representing the Membership Interest of a Member in the
Company, as such interest may from time to time be adjusted hereunder.
Percentage Interests shall be calculated to three decimal places and rounded
to
two (e.g., 1.519% rounded to 1.52%). Decimals of .005 or more shall be rounded
up. Decimals of less than .005 shall be rounded down. The initial Percentage
Interests of the Members are set forth in Section
5.1.
“Person”
means
a
natural person, corporation, joint venture, partnership, limited liability
partnership, limited partnership, limited liability limited partnership, limited
liability company, trust, estate, business trust, association, Governmental
Authority or any other entity.
“Plan
of Operations”
means
the Mount Hope Project Plan of Operations and Reclamation Permit Application
prepared by SRK Consulting for Idaho General, dated June, 2006, revised
September, 2006, and revised again June, 2007, and as revised from time to
time.
“POSCO
Competitor”
means
a
Person and its Affiliates (other than a Member or an Affiliate of a Member
as of
the Execution Date) that is engaged in the manufacture
of steel, including
hot
rolled and cold rolled products,
plates,
wire rods, silicon steel sheets or stainless steel products.
“POS-M
Products”
means
POS-Mineral’s share of the Products as determined pursuant to Section
10.1(c).
“Products”
means
molybdenum and all other ores, minerals and mineral resources produced from
the
Properties for sale or distribution to the Members under this
Agreement.
“Program”
means
a
description in reasonable detail of Operations to be conducted and objectives
to
be accomplished by the Manager for a year or, with respect to the Initial
Program and Budget, from the Effective Date through Commercial
Operations.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 8
“Project”
means
the molybdenum mine and process plant described in the Plan of
Operations.
“Project
Documents”
means
the Transaction Documents and each other document, agreement or instrument
attached as an Exhibit or Schedule to this Agreement or to the Contribution
Agreement.
“Project
Lease”
means
the Lease Agreement, dated effective October 19, 2005, between Mount Hope Mines,
Inc. and Idaho General, together with the Memorandum of Agreement that was
filed
for recording on January 6, 2006 in Book 430 at Page 307 in the Official Records
of Eureka County, Nevada, as amended by the Amendment to Lease Agreement, dated
November 20, 2007, between Mount Hope Mines, Inc. and General
Moly.
“Properties”
means
(a) those interests in real property described in Exhibit A
and all
other interests in real property within the Area of Interest that are acquired
and held by the Company, and (b) the rights to use the Water Rights acquired
or
to be acquired and held by the Company.
“Record
of Decision”
means
the Record of Decision of the BLM approving Nevada Moly’s 43 CFR § 3809 Plan of
Operations for the Project.
“Spot
Price”
means
(a) the average of the Xxxxx’x
Metals Week
published prices for TMO Dealer Oxide for the month prior to the applicable
month of sale or delivery as determined under Section
10.1(c),
or (b)
in the event Xxxxx’x
Metals Week
ceases
to publish prices for TMO Dealer Oxide or Xxxxx’x
Metals Week
ceases
to be published, and for minerals other than molybdenum, a commercially
reasonable spot price for Products unanimously agreed by the Representatives
on
the Management Committee.
“Standard
Mining Industry Practices”
means,
with respect to the performance of any act or activity, that such act or
activity is performed in a good, workmanlike and efficient manner, in accordance
with sound mining and other applicable industry standards and practices
generally engaged in or observed by experienced owners and operators in the
mining and mineral processing industries in the U.S.
“Third
Installment Value Adjustment”
means
(a) if the Third Contribution Conditions have been satisfied on or before
December 31, 2009, zero ($0); or (b) if the Third Contribution
Conditions have not been satisfied on or before December 31, 2009, (i)
if POS-Minerals has made a Third Installment Election to utilize Section
4.1(c)(i),
Eighty
Million Seven Hundred Sixty Nine Thousand Two Hundred Thirty One Dollars
($80,769,231); or (ii) if POS-Minerals has made a Third Installment Election
to
utilize Section
4.1(c)(ii),
Seventy
Million Dollars ($70,000,000).
“Transaction
Document”
means
a
“Transaction Document” as such term is defined in the Contribution
Agreement.
“Transfer”
means,
with respect to any asset, including any Membership Interest or any interest
therein, including any right to receive distributions from the Company or any
other economic interest in the Company, a sale, assignment, transfer,
conveyance, gift, exchange or other disposition of such asset, whether such
disposition be voluntary, involuntary or by merger, exchange, consolidation
or
other operation of Law, including the following: (a) in the case of an asset
owned by a natural person, a transfer of such asset upon the death of its owner,
whether by will, intestate succession or otherwise, (b) in the case of an asset
owned by a Person that is not a natural person, a distribution of such asset,
including in connection with the dissolution, liquidation, winding up or
termination of such Person (other than a liquidation under a deemed termination
solely for tax purposes), and (c) a disposition in connection with, or in lieu
of, a foreclosure of an Encumbrance on such asset; provided,
however,
that an
Encumbrance on an asset shall not constitute a Transfer of such
asset.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 9
“Treasury
Regulations”
or
“Treas.
Regs.”
means
regulations issued by the United States Department of Treasury under the
Code.
“Unpaid
Contribution Amount”
is
defined in Subparagraph 3.3(c) of Exhibit
C.
“Water
Rights”
means
those water interests and permits leased to the Company pursuant to the KVR
Water Lease or leased to the Company pursuant to the Project Lease.
“U.S.”
means
the United States of America and its territories and possessions, including
the
District of Columbia.
In
addition to the terms defined above, the following terms are defined in this
Agreement as indicated below:
|
Term
|
Section
|
|
|
AAA
|
Section
15.3
|
|
|
Accounting
Arbitrator
|
Section
9.4(c)
|
|
|
Additional
Catch-Up Contribution
|
Section
4.5
|
|
|
Agent
Member
|
Section
10.4
|
|
|
Annual
Forecast
|
Section
10.2(b)
|
|
|
Appraisal
Procedure
|
Section
14.5(d)
|
|
|
Appraiser
|
Section
14.5(d)
|
|
|
Arbitration
Panel
|
Section
15.3(a)
|
|
|
Catch-Up
Contribution
|
Section
4.5
|
|
|
Default
Amount
|
Section
5.4(a)
|
|
|
Delinquent
Member
|
Section
5.4(a)
|
|
|
Dispute
|
Section
15.1
|
|
|
Dispute
Party
|
Section
15.1
|
|
|
Execution
Date
|
Preamble
|
|
|
Encumbered
Interest
|
Section
14.5(a)
|
|
|
Encumbered
Member
|
Section
14.5(a)
|
|
|
Excess
Nevada Moly Contribution
|
Section
4.3
|
|
|
Fair
Market Value
|
Section
14.5(c)
|
|
|
First
Contribution Installment
|
Section
4.1(b)(i)
|
|
|
Foreclosure
Notice
|
Section
14.5(a)
|
|
|
Funded
Program Amount
|
Section
5.3
|
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 10
|
Initial
Catch-Up Contribution
|
Section
4.5
|
|
|
Initial
Program and Budget
|
Section
8.1
|
|
|
Major
Decision
|
Section
6.4(a)
|
|
|
Monthly
Capital Call
|
Section
9.2
|
|
|
Nevada
Moly
|
Preamble
|
|
|
Nevada
Moly Initial Contribution
|
Section
4.5
|
|
|
Nevada
Moly NSR Royalty
|
Section
5.6(b)
|
|
|
Non-Defaulting
Member
|
Section
5.4(a)
|
|
|
Non-Encumbered
Member
|
Section
14.5(a)
|
|
|
Notice
of Capital Requirements
|
Section
9.2
|
|
|
Notified
Member
|
Section
14.3(a)
|
|
|
NSR
Election Notice
|
Section
5.6(b)
|
|
|
Offer
Notice
|
Section
14.3(a)
|
|
|
Offered
Interest
|
Section
14.3(a)
|
|
|
Offered
Price
|
Section
14.3(a)
|
|
|
Offered
Terms
|
Section
14.3(a)
|
|
|
Original
LLC Agreement
|
Recitals
|
|
|
Percentage
Program Amount
|
Section
5.3
|
|
|
Plant
|
Section
2.3
|
|
|
POS-Minerals
|
Preamble
|
|
|
POS-Minerals
Initial Contribution
|
Section
4.5
|
|
|
Pre-Excess
Nevada Moly Initial Contribution
|
Section
4.5
|
|
|
Pre-RD
Advances
|
Section
4.3
|
|
|
Put
Notice
|
Section
14.6(a)
|
|
|
Put
Price
|
Section
14.6(b)
|
|
|
Recipient
Member
|
Section
10.4
|
|
|
Representative
|
Section
6.1
|
|
|
Resigning
Member
|
Section
5.6(a)
|
|
|
Second
Contribution Installment
|
Section
4.1(b)(ii)
|
|
|
Selling
Member
|
Section
14.3(a)
|
|
|
Surviving
Entity
|
Section
14.6(a)
|
|
|
Third
Contribution Conditions
|
Section
4.1(b)(iii)
|
|
|
Third
Contribution Deadline
|
Section
4.1(c)
|
|
|
Third
Contribution Installment
|
Section
4.1(b)(iii)
|
|
|
Third
Contribution Installment Date
|
Section
4.3
|
|
|
Third
Installment Election
|
Section
4.1(c)
|
|
|
Voting
Interest
|
Section
6.3
|
1.2 Interpretation.
As used
herein, except as otherwise indicated herein or as the context may otherwise
require: (a) the words “include,” “includes,” and “including” are deemed to be
followed by “without limitation” whether or not they are in fact followed by
such words or words of like import, (b) the words “hereof,” “herein,”
“hereunder,” and comparable terms refer to the entirety of this Agreement,
including the Exhibits hereto, and not to any particular article, section,
or
other subdivision hereof or Exhibit hereto, (c) any pronoun shall include the
corresponding masculine, feminine, and neuter forms, (d) the singular includes
the plural and vice versa, (e) references to any agreement or other
document are to such agreement or document as amended, modified, supplemented,
and restated now or hereafter from time to time, (f) references to any
statute or regulation are to it as amended, modified, supplemented, and restated
now or hereafter from time to time, and to any corresponding provisions of
successor statutes or regulations, (g) except as otherwise expressly provided
in
this Agreement, references to “Article,” “Section,” “preamble,” “recital,” or
another subdivision or to an “Exhibit” are to an article, section, preamble,
recital or subdivision hereof or an “Exhibit” hereto, and (h) references to any
Person include such Person’s respective successors and permitted assigns. Any
reference herein to a “day” or number of “days” (without the explicit
qualification of “Business”) shall be deemed to refer to a calendar day or
number of calendar days. If interest is to be computed under this Agreement,
such interest shall be computed on the basis of a 360-day year of twelve 30-day
months. If any action or notice is to be taken or given on or by a particular
calendar day, and such calendar day is not a Business Day, then such action
or
notice may be taken or given on the next succeeding Business Day. Any financial
or accounting terms that are not otherwise defined herein shall have the
meanings given thereto under GAAP.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 11
ARTICLE
II
NAME,
PURPOSES AND TERM
2.1 General.
The
Company has been duly organized pursuant to the Act by the filing of its
certificate of formation in the office of the Delaware Secretary of State by
an
authorized Person. The Members agree that all of their rights with respect
to
the Company shall be subject to and governed by this Agreement. To the fullest
extent permitted by the Act, this Agreement shall control as to any conflict
between this Agreement and the Act or as to any matter provided for in this
Agreement that is also provided for in the Act.
2.2 Name.
The
name of the Company shall continue to be Eureka Moly, LLC. The Manager shall
accomplish any filings or registration required by Laws where the Company
conducts any Operations.
2.3 Purposes.
This
Company is formed for the following purposes and for no others, and shall serve
as the exclusive means by which the Members, or either of them, accomplish
such
purposes: (a) to acquire Assets, including the Contributed Assets; (b) to engage
in Development and Mining on the Properties; (c) to engage in the Operations;
(d) to construct and operate a roasting facility to roast the molybdenum
concentrates produced on the Properties (the “Plant”);
(e)
to complete and satisfy any Environmental Compliance obligations and Continuing
Obligations affecting the Properties; (f) to perform any other activities
necessary, appropriate, or incidental to any of the foregoing; and (g) to
perform any other activities approved by Representatives to the Management
Committee holding one hundred percent (100%) of the Voting
Interests.
2.4 Limitation.
Unless
the Members otherwise agree in writing, the activities of the Company shall
be
limited to the purposes described in Section
2.3,
and
nothing in this Agreement shall be construed to enlarge such
purposes.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 12
2.5 Term.
The
term of the Company shall be perpetual, unless earlier dissolved pursuant to
Section
11.1.
2.6 Registered
Agent; Offices.
The
initial registered office and registered agent of the Company shall be as set
forth in the Company’s certificate of formation. The Manager may from time to
time designate a successor registered office and registered agent and may amend
the certificate of formation of the Company to reflect any such change. The
location of the principal place of business of the Company shall be at such
location within the United States as the Manager shall from time to time
select.
ARTICLE
III
RELATIONSHIP
OF THE MEMBERS
3.1 No
State-Law Partnership.
Nothing
contained in this Agreement shall be deemed to constitute either Member the
partner of the other, or to create any mining, commercial or other partnership
(other than a partnership for federal and state tax purposes). Except pursuant
to the authority expressly granted herein or as otherwise agreed in writing
between the Members, neither Member shall have any authority to act for the
Company or another Member or to assume any obligation or responsibility on
behalf of the Company or the other Members, solely by virtue of being a
Member.
3.2 Federal
Tax Elections and Allocations.
The
Company shall be treated as a partnership for federal income tax purposes.
Tax
elections and allocations shall be made as set forth in Exhibit
C.
3.3 State
Income Tax.
The
Members also agree that, to the extent permissible under Law, their relationship
shall be treated for state income tax purposes in the same manner as it is
for
Federal income tax purposes.
3.4 Tax
Returns.
The
TMP, as defined in Exhibit
C,
shall
prepare and shall file, after approval of the Management Committee, any tax
returns or other tax forms required.
3.5 Other
Business Opportunities.
Except
as provided in Article
XII,
in the
KVR Water Lease, or as otherwise expressly provided in this Agreement, each
Member and the Manager shall have the right independently to engage in and
receive full benefits from business activities, whether or not competitive
with
the Operations, without consulting the other. The doctrines of “corporate
opportunity” or “business opportunity” shall not be applied to any other
activity, venture, or operation of either Member or the Manager, and neither
Member nor the Manager shall have any obligation to any Member with respect
to
any opportunity to acquire any property outside the Area of Interest at any
time, or within the Area of Interest after the termination of the Company.
Unless otherwise agreed in writing, no Member shall have any obligation to
mill,
beneficiate or otherwise treat any Products in any facility owned or controlled
by the Manager or any other Member.
3.6 Waiver
of Right to Partition.
The
Members hereby waive and release all rights of partition, or of sale in lieu
thereof, or other division of Assets, including any such rights provided by
statute.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 13
3.7 Implied
Covenants; No Additional Duties.
There
are no implied covenants contained in this Agreement other than those of the
contractual covenant of good faith and fair dealing. No Member shall have any
fiduciary or other duties to the Company except as specifically provided by
this
Agreement, and the Members’ duties and liabilities otherwise existing at law or
in equity are restricted and eliminated by the provisions of this Agreement
to
those duties and liabilities specifically set forth in this Agreement.
Notwithstanding any contrary provision of this Agreement, in carrying out any
duties hereunder, the Members shall not be liable to the Company nor to any
Member for breach of any duty for any such Member’s good faith reliance on the
provisions of this Agreement. The preceding sentence shall in no way limit
any
Person’s right to rely on information to the extent provided in Section 18-406
of the Act.
3.8 Liabilities;
Indemnification.
(a) No
Member
or Manager of the Company, or any combination of the foregoing, shall be
personally liable under any judgment of a court, or in any other manner, for
any
debt, obligation or liability of the Company, whether such liability or
obligation arises in contract, tort or otherwise, solely by reason of being
a
Member or Manager of the Company or any combination of the
foregoing.
(b) The
Company shall indemnify, defend and hold harmless each Member (including in
such
Member’s capacity as the Manager), and their respective Representatives,
directors, officers, employees, agents and attorneys, from and against any
and
all third party losses, claims, damages and liabilities arising out of or
relating to (i) the Company or the Operations, including Environmental
Liabilities and Continuing Obligations, and (ii) any reimbursement by one Member
to the other Member of any losses, claims, damages and liabilities pursuant
to
Section
5.5,
except
in each case of clause
(i)
and
(ii)
to the
extent such losses, claims, damages or liabilities (A) arise out of or result
from any breach by such Member of any covenant contained in this Agreement
(or
any action or omission by the Manager in connection with its management of
the
Company) that constitutes fraud, willful misconduct or gross negligence or
(B)
constitute Losses (as such term is defined in the Contribution Agreement) that
give rise to a claim for indemnification under Article V of the Contribution
Agreement, which indemnification provisions under such Article V of the
Contribution Agreement shall be the sole and exclusive remedy with respect
to
any such Losses. In all cases of this Section
3.8(b),
indemnification shall be provided only out of and to the extent of the net
assets of the Company and no Member shall have any personal liability whatsoever
on account thereof. Notwithstanding the foregoing provisions of this
Section
3.8(b),
the
Company’s indemnification pursuant to this Section
3.8(b)
as to
third party claims shall be only with respect to such loss, liability or damage
that is not otherwise compensated by insurance carried for the benefit of the
Company.
(c) To
the
extent that the Company and/or any of its employees participates in any employee
benefit plan sponsored by a Member or an Affiliate of a Member, (i) such Member
shall indemnify, defend and hold harmless the Company from and against all
losses, claims, damages and liabilities arising out of or relating to any
non-Company employees under any such plan, and (ii) without limiting in any
way
the rights of any Person or the obligations of the Company under Section
3.8(b),
the
Company shall indemnify, defend and hold harmless such Member and/or Affiliate
of such Member from and against all losses, claims, damages and liabilities
arising out of or relating to any Company employees under any such
plan.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 14
(d) NOTWITHSTANDING
ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO PERSON OTHER THAN A MEMBER OR
THE
COMPANY SHALL HAVE THE RIGHT TO ENFORCE ANY OBLIGATION OF A MEMBER TO CONTRIBUTE
CAPITAL, TO FUND CONTINUING OBLIGATIONS OR TO REIMBURSE ANY OTHER MEMBER
HEREUNDER, AND SPECIFICALLY NO LENDER OR OTHER THIRD PARTY SHALL HAVE ANY SUCH
RIGHT, IT BEING EXPRESSLY UNDERSTOOD THAT THE CAPITAL CONTRIBUTION OBLIGATIONS,
CONTINUING OBLIGATIONS, AND REIMBURSEMENT OBLIGATIONS OF THE MEMBERS HEREUNDER
SHALL BE ENFORCEABLE ONLY BY A MEMBER OR THE COMPANY AGAINST ANOTHER MEMBER
(WHICH, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ARE IN
ALL
SUCH CASES FOR THE BENEFIT OF THE COMPANY AND THE MEMBERS, AS APPLICABLE).
ANY
MEMBER MAY BRING A DIRECT ACTION AGAINST ANY OTHER MEMBER WITH RESPECT TO ANY
OBLIGATION OF SUCH OTHER MEMBER TO CONTRIBUTE CAPITAL, TO FUND CONTINUING
OBLIGATIONS OR FOR REIMBURSEMENT HEREUNDER WITHOUT THE REQUIREMENT TO BRING
A
DERIVATIVE ACTION OR TO OTHERWISE SATISFY THE REQUIREMENTS OF SECTIONS 18-1001
THROUGH 18-1004 OF THE ACT OR OTHER SIMILAR REQUIREMENTS.
ARTICLE
IV
CONTRIBUTIONS
BY MEMBERS
4.1 Initial
Contributions.
The
Members have or shall make the capital contributions in the form and manner
set
forth in this Section
4.1.
(a) Pursuant
to the Contribution Agreement, General Moly has contributed the Contributed
Assets to the Company, and the Company has assumed from General Moly the Assumed
Liabilities. General Moly has assigned its interest in the Company to Nevada
Moly such that Nevada Moly has the Membership Interests in the Company described
in this Agreement.
(b) POS-Minerals
has or shall contribute up to an aggregate of One Hundred Seventy Million
Dollars ($170,000,000.00) on the terms and at the times set forth in this
Section
4.1(b),
which
capital contributions shall be used by the Company to fund the Initial Program
and Budget and additional Programs and Budgets approved pursuant to Article
VIII.
(i) the
first
installment of Fifty Million Dollars ($50,000,000.00) (the “First
Contribution Installment”)
has
been paid by POS-Minerals to the Company by wire transfer of immediately
available funds as of the Closing Date pursuant to the Contribution
Agreement;
(ii) the
second installment of Fifty Million Dollars ($50,000,000.00) (the “Second
Contribution Installment”) shall be paid by POS-Minerals to the Company by
wire transfer of immediately available funds on or before July 1, 2008, to
an
account designated in writing by the Manager at least fifteen (15) days prior
to
such date; and
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 15
(iii) subject
to Sections
4.1(c)
and
4.1(d),
the
final installment of Seventy Million Dollars ($70,000,000.00) (the “Third
Contribution Installment”)
shall
be paid by POS-Minerals to the Company by wire transfer of immediately available
funds within fifteen (15) days after the satisfaction of the following
conditions (the “Third
Contribution Conditions”):
(A)
the Record of Decision has become effective, and any administrative or judicial
appeals with respect thereto are final, and (B) all Major Permits have been
obtained. POS-Minerals may waive in writing any of the Third Contribution
Conditions in its sole discretion.
(c) The
Members anticipate that the Third Contribution Conditions shall be satisfied
on
or before February 28, 2009. If the Third Contribution Conditions have not
been
satisfied on or before December 31, 2009 (the “Third
Contribution Deadline”),
then
POS-Minerals shall have the right, but not the obligation, by written notice
of
its election to Nevada Moly (a “Third
Installment Election”)
delivered at any time before January 31, 2010, to either:
(i) not
make
the Third Contribution Installment, in which case the Percentage Interest of
POS-Minerals shall immediately upon delivery of the Third Installment Election
be reduced from twenty percent (20%) to thirteen percent (13%) (and the
Percentage Interest of Nevada Moly shall be increased from eighty percent (80%)
to eighty-seven percent (87%)); or
(ii) reduce
the amount of the Third Contribution Installment from Seventy Million Dollars
($70,000,000.00) to Fifty-Six Million Dollars ($56,000,000.00) without any
corresponding reduction to its Percentage Interest, in which case the reduced
Third Contribution Installment shall continue to be payable by POS-Minerals
on
the date such contribution is required to be made under Section
4.1(b)(iii);
or
(iii) resign
from the Company as a Member, but only in the case of this clause
(iii),
if the
Third Contribution Condition has not been satisfied because of (A) the failure
of Nevada Moly, as the Manager, to use Standard Mining Industry Practices to
cause the Third Contribution Conditions to have been satisfied, (B) a material
breach by Nevada Moly of its covenants contained in this Agreement, or
(C) a material breach by Nevada Moly or General Moly of any of their
respective representations, warranties or covenants contained in the
Contribution Agreement. If POS-Minerals elects to resign from the Company as
a
Member pursuant to this clause
(iii),
then
the Company shall distribute to POS-Minerals, within five (5) Business Days
of
the date of the Third Installment Election, an amount equal to the sum of (1)
all amounts previously contributed by POS-Minerals to the Company, plus
(2) an
amount calculated like interest at a rate of ten percent (10%) per annum on
amounts contributed by POS-Minerals to the Company, determined from the date
of
each such contribution to the date distributed to POS-Minerals pursuant to
this
clause
(iii).
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 16
The
remedies available to POS-Minerals under this Section
4.1(c)
shall be
the sole and exclusive remedies available to POS-Minerals for the failure of
the
Third Contribution Conditions to be satisfied before the Third Contribution
Deadline. THE MEMBERS AGREE THAT THE LIQUIDATED DAMAGES DESCRIBED IN THIS
SECTION
4.1(c)
ARE A
FAIR AND ADEQUATE MEASURE OF THE DAMAGES THAT WILL BE SUFFERED BY POS-MINERALS
AS A RESULT OF THE FAILURE OF THE THIRD CONTRIBUTION CONDITIONS TO BE SATISFIED
BEFORE THE THIRD CONTRIBUTION DEADLINE AND NOT A PENALTY.
(d) If
the
Company dissolves pursuant to Section
11.1
before
POS-Minerals has contributed the Second Contribution Installment or the Third
Contribution Installment to the Company, then without limiting the application
of Subparagraphs 3.3(c) and 4.2(b) of Exhibit
C,
POS-Minerals shall be permitted, but not required, to contribute such Second
Contribution Installment and Third Contribution Installment to the Company
and
the amount of any Catch-Up Contribution before the liquidation of the Company
pursuant to Section
11.3.
4.2 Failure
of POS-Minerals to Make the Second and Third
Contribution
Installments.
(a) If
POS-Minerals fails to make the Second Contribution Installment pursuant to
Section
4.1(b)(ii),
it
shall be deemed to have immediately resigned from the Company as a Member,
and
its entire Membership Interest in the Company shall be automatically redeemed
by
the Company in exchange for the obligation of the Company to pay to POS-Minerals
Twelve Million Five-Hundred Thousand Dollars ($12,500,000.00), representing
twenty-five percent (25%) of the First Contribution Installment. POS-Minerals
shall not be entitled to any additional consideration for its Membership
Interest in connection with its resignation under this Section
4.2(a),
including the return of any remaining portion of its First Contribution
Installment.
(b) If
POS-Minerals fails to make the Third Contribution Installment pursuant to
Section
4.1(b)(iii)
after
application of Section
4.1(c),
the
Percentage Interest of POS-Minerals shall be reduced from twenty percent (20%)
to ten percent (10%), the Percentage Interest of Nevada Moly shall be increased
from eighty percent (80%) to ninety percent (90%) and the obligation of
POS-Minerals to make the Third Contribution Installment shall be
extinguished.
4.3 Operating
Loan from Nevada Moly.
If the
Company fully expends the First Contribution Installment before July 1, 2008,
Nevada Moly shall make advances to the Company to fund Programs and Budgets
(“Pre-RD
Advances”),
without interest, and as soon as practicable after July 1, 2008, the amount
of
the Second Contribution Installment shall be applied by the Company to repay
such advances. From the date that the Company has fully expended the First
Contribution Installment and the Second Contribution Installment until the
date
POS-Minerals is required to make the Third Contribution Installment (or, if
the
obligation to make the Third Contribution Installment is eliminated pursuant
to
Section
4.1(c)(i)
or
4.2(b),
the
date that POS-Minerals would have been obligated to make such Third Contribution
Installment under Section
4.1(b)(iii)
or
4.2(b)
if such
obligation had not been eliminated) (the “Third
Contribution Installment Date”),
Nevada Moly shall make additional Pre-RD Advances to fund Programs and Budgets,
without interest. Provided that POS-Minerals makes the Third Contribution
Installment or the Initial Catch-Up Contribution, on the Third Contribution
Installment Date the amount of such Third Contribution Installment and the
amount of the Initial Catch-Up Contribution shall be applied by the Company
to
repay to Nevada Moly the amount of any Pre-RD Advances made by Nevada Moly.
If
the sum of the amount of the Third Contribution Installment and the amount
of
the Initial Catch-Up Contribution is less than the amount of Pre-RD Advances
made by Nevada Moly under this Section
4.3,
the
excess amount (the “Excess
Nevada Moly Contribution”)
shall
be deemed to be a capital contribution to the Company by Nevada Moly on the
Third Contribution Installment Date and shall increase the Capital Account
of
Nevada Moly. The Members anticipate as a projection and estimate only that
expenditures with respect to the Project from the Effective Date until the
Record of Decision has become effective will range between approximately One
Hundred Fifty Million Dollars ($150,000,000) and approximately Two Hundred
Million Dollars ($200,000,000), plus the amount of any reclamation, bonding,
royalties and payments to lessors.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 17
4.4 Valuation
of Nevada Moly Capital Contributions.
For
purposes of maintaining the Capital Accounts of the Members and for purposes
of
calculating the Catch-Up Contribution under Section
4.5,
the
value of the capital contribution of Nevada Moly under Section
4.1(a)
shall be
determined and adjusted as set forth in Subparagraph 4.1(b) of Exhibit
C.
4.5 Catch-Up
Contributions.
On the
Third Contribution Installment Date, POS-Minerals shall make a capital
contribution to the Company (the “Initial
Catch-Up Contribution”)
in an
amount equal to the difference of (a) the product of (i) the
Percentage Interest of POS-Minerals, multiplied
by
(ii) the quotient of (A) the aggregate capital contributions made by
Nevada Moly through and including the Third Contribution Installment Date
(including the Contributed Assets Value of the capital contribution of Nevada
Moly under Section
4.1(a)
as
determined under Subparagraph 4.1(b) of Exhibit
C,
reduced
by the Third Installment Value Adjustment, but not including the Excess Nevada
Moly Contribution) (such aggregate capital contributions as adjusted are
referred to herein as the “Pre-Excess
Nevada Moly Initial Contribution”);
divided
by
(B) the Percentage Interest of Nevada Moly as of the Third Contribution
Installment Date, minus
(b) the sum of the aggregate capital contributions made by POS-Minerals
through and including the Third Contribution Installment Date (including the
First Contribution Installment, the Second Contribution Installment and the
Third Contribution Installment, if any) (such aggregate capital contributions,
together with the Catch-Up Contribution, are referred to herein as the
“POS-Minerals
Initial Contribution”).
On
the Third Contribution Installment Date, POS-Minerals shall make a capital
contribution to the Company (the “Additional
Catch-Up Contribution”
and,
collectively with the Initial Catch-Up Contribution, the “Catch-Up
Contribution”)
in an
amount equal to the difference of (a) the product of (i) the
Percentage Interest of POS-Minerals, multiplied
by
(ii) the quotient of (A) the sum of (I) the Pre-Excess Nevada Moly
Initial Contribution, plus (II) the amount of any Excess Nevada Moly
Contribution (such sum is referred to herein as the “Nevada
Moly Initial Contribution”);
divided
by
(B) the Percentage Interest of Nevada Moly as of the Third Contribution
Installment Date, minus
(b) the sum of (I) the POS-Minerals Initial Contribution plus (II) the
Initial Catch-Up Contribution, if any. The Members intend that immediately
after
the Catch-Up Contribution pursuant to this Section
4.5,
the
Percentage Interest of each Member shall equal the ratio of the aggregate
capital contributions made by such Member to the Company (i.e., with respect
to
Nevada Moly, the Nevada Moly Initial Contribution, and, with respect to
POS-Minerals, the POS-Minerals Initial Contribution), divided
by
the
aggregate capital contributions made by all Members to the Company (i.e., the
sum of the Nevada Moly Initial Contribution and the POS-Minerals Initial
Contribution). An example of this calculation is attached as Exhibit
H.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 18
4.6 Additional
Cash Contributions.
From
and after the date POS-Minerals makes the Catch-Up Contribution pursuant to
Section
4.5,
subject
to any election permitted under Section 5.3,
the
Members shall be obligated to contribute funds pursuant to adopted Programs
and
Budgets and to pay emergency expenditures pursuant to Section
8.8 in
proportion to their respective Percentage Interests.
Contributions of additional capital to fund Programs and Budgets shall be made
pursuant to Monthly Capital Calls in accordance with Section
9.2.
Contributions, if any, to fund emergency expenditures pursuant to Section
8.8
shall be
made to the Company within five (5) Business Days after receipt of a written
notice from the Manager of the amount required to be contributed by each Member
based on such Member’s Percentage Interest to pay the expenditures with respect
to any such emergency.
4.7 Return
of Contributions.
(a) Except
as
provided in Sections
4.1(c)(iii),
4.2(a),
4.7(b),
and
14.6,
no
Member
shall be entitled to the return of any part of its capital contributions or
to
be paid interest in respect of either its Capital Account or its capital
contributions. No unrepaid capital contribution shall constitute a liability
of
the Company, the Manager or any Member. The provisions of this Section
4.7
shall
not limit a Member’s rights or obligations under Article
XI.
(b) If
Commercial Production at the Project is delayed beyond December 31, 2011, for
any reason other than an event of Force Majeure, the Company shall make a
distribution to POS-Minerals within twenty (20) Business Days after such date
equal to (i) if the Third Contribution Conditions have been satisfied on or
before the Third Contribution Deadline and POS-Minerals has timely made the
Third Contribution Installment in accordance with Section
4.1(b)(iii)
after
the application of Section
4.1(c),
Fifty
Million Dollars ($50,000,000.00); (ii) if the Third Contribution Conditions
have
been satisfied on or before the Third Contribution Deadline, but POS-Minerals
has not timely made the Third Contribution Installment in accordance with
Section
4.1(b)(iii)
after
the application of Section
4.1(c),
Zero
Dollars ($0); (iii) if POS-Minerals has made a Third Installment Election to
utilize Section
4.1(c)(i),
Thirty-Three Million Dollars ($33,000,000.00); (iv) if POS-Minerals has made
a
Third Installment Election to utilize Section
4.1(c)(ii)
and has
made the Third Contribution Installment as adjusted pursuant to Section
4.1(c)(ii),
Thirty-Six Million Dollars ($36,000,000.00); and (v) if POS-Minerals has made
a
Third Installment Election to utilize Section
4.1(c)(ii)
but has
not made the Third Contribution Installment as adjusted pursuant to Section
4.1(c)(ii),
Zero
Dollars ($0); provided,
that
the Members acknowledge that the Percentage Interest of POS-Minerals shall
not
be reduced as a result of any such distribution. Nevada Moly shall make a timely
capital contribution to the Company in the amount of such distribution to be
utilized to make such distribution. In the event Nevada Moly fails to make
the
capital contribution required pursuant to the previous sentence, Nevada Moly
shall be subject to the provisions of Section
5.4.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 19
ARTICLE
V
PERCENTAGE
INTERESTS
5.1 Initial
Percentage Interests.
As of
the Execution Date, the Members have the following initial Percentage
Interests:
Nevada
Moly – eighty percent (80%)
POS-Minerals
– twenty percent (20%).
5.2 Changes
in Percentage Interests.
A
Member’s Percentage Interest shall be adjusted as follows:
(a) As
provided in Section
4.1(c)(i)
or 4.2(b);
or
(b) Upon
an
election by a Member pursuant to Section
5.3
to
contribute less to an adopted Program and Budget than the percentage reflected
by its Percentage Interest; or
(c) In
the
event of a default by a Member in making its agreed-upon contribution pursuant
to Section
4.7
or to an
adopted Program and Budget pursuant to Section
4.6
or for
emergency expenditures pursuant to Section
4.6,
followed by an election by the other Member to invoke Section
5.4;
or
(d) Upon
the
Transfer by a Member of all or less than all of its Membership Interest pursuant
to Article
XIV;
or
(e) Upon
the
issuance of additional Membership Interests in the Company with the approval
of
the Management Committee pursuant to Section
6.4(a)(xi).
5.3 Voluntary
Reduction in Percentage Interest.
After
POS-Minerals makes its Catch-Up Contribution pursuant to Section
4.5,
a
Member may elect, as provided in Section
8.5,
to
limit its contributions to an adopted Program and Budget to some lesser amount
with respect to such Member (the “Funded
Program Amount”)
than
the amount that would otherwise be required to be contributed by such Member
with respect to such Program and Budget in accordance with its Percentage
Interest (the “Percentage
Program Amount”).
If a
Member elects to make capital contributions with respect to a Program and Budget
in a Funded Program Amount that is less than the Percentage Program Amount
for
such Member, the Percentage Interest of such Member at the time of such election
shall be reduced by an amount (expressed as a percentage) equal to (a) 1.25,
multiplied
by
(b) the
excess of the Percentage Program Amount less the Funded Program Amount;
divided
by
(c) the
sum of (i) all capital contributions made or deemed made before such date by
all
Members (including the Initial Contributions and any additional contributions
made under Sections
4.5,
4.6
or
4.7) and
(ii)
the aggregate amount of capital contributions required to be contributed by
the
Members for the adopted Program and Budget that is the subject of the election.
The Percentage Interest of the other Member shall be increased by the reduction
in the Percentage Interest of the Member making the election to contribute
the
lesser amount with respect to the Program and Budget.
To
illustrate the foregoing, if a Program and Budget requires aggregate capital
contributions of One-Hundred Million Dollars ($100,000,000), a Member with
a
twenty percent (20%) Percentage Interest elects to contribute Ten Million
Dollars ($10,000,000) instead of Twenty Million Dollars ($20,000,000) with
respect to such Program and Budget Dollars, and the aggregate capital
contributions prior to such date are One Billion Sixty-Two Million, Five Hundred
Thousand Dollars ($1,062,500,000), then the Percentage Interest of such Member
shall be reduced by an amount (expressed as a percentage) equal to (1) 1.25,
multiplied
by
(2)
Twenty Million Dollars ($20,000,000) minus Ten Million Dollars ($10,000,000),
divided
by
One
Billion One Hundred Sixty-Two Million, Five Hundred Thousand Dollars
($1,162,500,000), which equals 1.075%, and the Percentage Interest of the other
Member shall be increased by 1.075%. The electing Member will have a Percentage
Interest of 18.925% after such election and the other Member will have a
Percentage Interest of 81.075% after such election.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 20
5.4 Default
in Making Contributions.
(a) Subject
to an election properly made under Section
5.3,
if,
after the occurrence of a Default Trigger Event with respect to a Member, a
Member (the “Delinquent
Member”)
has
not contributed all or any portion of one or more capital contributions that
such Member is or was required to contribute under Sections
4.5,
4.6
or
4.7
(the
“Default
Amount”),
then
the other Member (the “Non-Defaulting
Member”)
may
make an election on or before the tenth (10th)
day
after, (i) in the case of a Member that is the Manager, the occurrence of the
Default Trigger Event, or (ii) in the case of any other Member, the receipt
of
written notice of the occurrence of the Default Trigger Event, to exercise
its
rights under Section
5.4(b)
or
5.4(c).
If the
Non-Defaulting Member makes such an election, the Non-Defaulting Member shall
send a written notice to the Delinquent Member of such election on or before
such tenth (10th)
day.
(b) If
the
Non-Defaulting Member makes an election under this Section
5.4(b),
within
thirty (30) days after its election, the Non-Defaulting Member shall advance
to
the Company an amount equal to the entire Default Amount, which advance shall
constitute a loan from the Non-Defaulting Member to the Delinquent Member and
a
capital contribution of that amount to the Company by the Delinquent Member
pursuant to the applicable provisions of this Agreement, with the following
results:
(i) the
amount of such loan shall bear interest at the Default Rate from the date that
the Non-Defaulting Member makes such loan until the date that such loan,
together with all interest accrued and unpaid thereon, is repaid to the
Non-Defaulting Member;
(ii) all
distributions or sales of Products by the Company pursuant to Section
10.2
and
distributions of proceeds of such sales pursuant to the last two sentences
of
Section
10.1(a)
that
otherwise would be made to the Delinquent Member after the date of the default
(whether before or after the dissolution of the Company) instead shall be made
to the Non-Defaulting Member until such loan and all accrued and unpaid interest
thereon shall have been paid in full to the Non-Defaulting Member (with payments
being applied first to accrued and unpaid interest and then to
principal);
(iii) the
principal balance of such loan and all accrued and unpaid interest thereon
shall
be due and payable in whole within five (5) Business Days after written demand
to the Company by the Non-Defaulting Member, which demand may be made at any
time after the date that is six (6) months after the date of such
loan;
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 21
(iv) after
the
default in the payment of the principal of or interest on such loan, the
Non-Defaulting Member shall be entitled to exercise the rights of a secured
party under the Uniform Commercial Code of the State of Delaware, as more fully
set forth in Section
5.7,
and any
other rights and remedies granted to it pursuant to this Agreement or available
to it at law or in equity as the Non-Defaulting Member may deem appropriate
in
its sole discretion to obtain payment by the Delinquent Member of such loan
and
all accrued and unpaid interest thereon, all at the cost and expense of the
Delinquent Member; and
(v) during
the period that any such loan is in default, all rights of such Delinquent
Member to vote, veto or consent to any matter with respect to the Company,
or
for any member of the Management Committee designated by such Member to vote,
veto or consent to any matter with respect to the Company, including any Major
Decision or any other matter pursuant to this Agreement or the Act, shall be
suspended, and the Percentage Interest of the Delinquent Member shall be deemed
not outstanding for purposes of determining whether a quorum exists at any
meeting of the Management Committee or whether any specified percentage of
votes
required to adopt, consent to or approve any Major Decision or any other matter
has been obtained.
(c) If
the
Non-Defaulting Member makes an election under this Section 5.4(c),
on the
date of such election, the Percentage Interest of the Delinquent Member shall
be
reduced by an amount (expressed as a percentage) equal to (i) 1.50, multiplied
by
(ii) the
Default Amount; divided
by
(iii)
the sum of (A) all capital contributions made or deemed made before such date
by
all Members (including the Initial Contributions and any additional
contributions made under Sections
4.5,
4.6
and
4.7) and
(B)
the aggregate amount of capital contributions that were required to be
contributed by all of the Members with respect to the Monthly Capital Calls
relating to the default. The Percentage Interest of the Non-Defaulting Member
shall be increased by the reduction in the Percentage Interest of the Delinquent
Member.
To
illustrate the foregoing, if a Monthly Capital Call requires aggregate capital
contributions of One Hundred Million Dollars ($100,000,000), a Member with
an
eighty percent (80%) Percentage Interest defaults on the entire amount of its
required Eighty Million Dollars ($80,000,000) capital contribution, and the
aggregate capital contributions prior to such date are One Billion Twenty
Million Dollars ($1,020,000,000), then the Percentage Interest of the Delinquent
Member shall be reduced by an amount (expressed as a percentage) equal to
(1)
1.50,
multiplied
by
(2)
Eighty Million Dollars ($80,000,000), divided
by
(3) One
Billion One Hundred Twenty Million Dollars ($1,120,000,000), which equals
10.714%, and the Percentage Interest of the Non-Defaulting Member shall be
increased by 10.714%. The Delinquent Member will have a Percentage Interest
of
69.286% after such election and the other Member will have a Percentage Interest
of 30.714% after such election.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 22
(d) If
the
Non-Defaulting Member makes an election under this Section
5.4 with
respect to the default by the Delinquent Member in making its capital
contribution with respect to a Monthly Capital Call under Section
4.6,
the
provisions of this Section
5.4
shall be
the sole and exclusive remedy for the failure by the Delinquent Member to make
such required capital contribution. THE MEMBERS AGREE THAT THE LIQUIDATED
DAMAGES DESCRIBED IN THIS SECTION
5.4
ARE A
FAIR AND ADEQUATE MEASURE OF THE DAMAGES THAT WILL BE SUFFERED BY THE
NON-DEFAULTING MEMBER AS A RESULT OF A BREACH BY A MEMBER OF ITS OBLIGATION
TO
MAKE CAPITAL CONTRIBUTIONS UNDER SECTION
4.6
AND NOT
A PENALTY.
5.5 Continuing
Obligations and Liabilities.
Each
Member shall be liable to the other Member (including in its capacity as a
Manager) to reimburse and pay to such other Member its respective share, based
on Percentage Interests, of any and all third party losses, claims, damages
and
liabilities arising out of or relating to any Environmental Liabilities and
Continuing Obligations incurred by such other Member, but only with respect
to
Environmental Liabilities or Continuing Obligations arising out of, relating
to
or in connection with activities and Operations conducted during the period
that
such Member held a Membership Interest. Subject to the foregoing, the
reimbursement obligation of a Member under this Section
5.5
shall
apply whether or not any such losses, claims, damages or liabilities accrue
before or after the resignation or deemed resignation of such Member, the
Transfer by such Member of all or any portion of its Membership Interest, the
dissolution or liquidation of the Company, or any reduction of such Member’s
Percentage Interest, but in each case only to the extent not indemnified by
the
Company pursuant to Section
3.8(b).
For
purposes of this Section
5.5,
such
Member’s share of such liability shall be equal to its Percentage Interest at
the time such liability was incurred (or as to any such liabilities arising
or
existing prior to the Execution Date, such Member’s initial Percentage
Interest). Any resignation or deemed resignation of a Member, any Transfer
by
such Member of all or any portion of its Membership Interest, or any adjustment
of a Member’s Percentage Interest under this Article
V or
otherwise shall not relieve such Member of its share of any such liability
accruing before such resignation, Transfer or reduction. Notwithstanding the
foregoing provisions of this Section
5.5,
the
provisions of this Sections
5.5
shall
apply only in the case that the Member requesting reimbursement is finally
determined to be personally liable for such losses, claims, damages or
liabilities, and shall not be construed as a waiver or reduction of the
limitations under the Act or other Law of the liability of a Member or the
Manager for Company obligations.
5.6 Elimination
of Minority Interest.
(a) Upon
the
reduction of its Percentage Interest to an amount that is equal to or less
than
five percent (5%), a Member (the “Resigning
Member”)
shall
be deemed to have resigned from the Company as a Member under Section 18-306(2)
of the Act and to have relinquished its entire Membership Interest. Subject
to
Section
5.6(b),
the
Resigning Member shall be entitled to no consideration whatsoever for its
Membership Interest, other than an economic right to continue to receive
payments of Products in kind from the Company at the times that Products are
distributed or sold to the remaining Members in the Company and in the aggregate
amounts that such Resigning Member would have received as distributions or
sales
from the Company pursuant to Section
10.2
(based
on the Percentage Interest of the Resigning Member at the time of the
resignation) if the Resigning Member had remained a Member in the Company,
but
only until the Resigning Member has received aggregate payments or Products
in
kind after the date of such resignation equal to the sum of (i) the Resigning
Member’s Capital Account as of the date of such resignation, plus (ii) interest
at a rate of LIBOR, plus three percent (3%) on the outstanding amount that
remains unpaid under clause (i) above from the date of the resignation until
the
date paid. Payment in kind of Products to such Person shall be credited to
such
deferred payment obligation based on the Spot Price of Products delivered to
the
Resigning Member after the date of the resignation. Upon any such resignation,
the Resigning Member shall take such action as the other Member may request
to
evidence the relinquishment to the Company of its entire Membership Interest,
free and clear of any Encumbrances arising by, through or under the Resigning
Member. Any such resignation under this Section
5.6
shall
not relieve the resigning Member of its obligations under Section
5.5
(whether
any liability with respect thereto accrues before or after such resignation)
arising out of Operations conducted prior to such resignation.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 23
(b) If
POS-Minerals is the Resigning Member under Section
5.6(a),
the
Resigning Member may elect to convert its right to payment in kind of Products
under Section 5.6(a)
to the
Nevada Moly NSR Royalty by delivering written notice (an “NSR
Election Notice”)
of
such election to Nevada Moly within thirty (30) days after the date of such
resignation. Upon receipt of the NSR Election Notice, Nevada Moly shall execute
and deliver to POS-Minerals an agreement whereby it will irrevocably agree
to
pay to POS-Minerals an amount (the “Nevada
Moly NSR Royalty”)
equal
to the product of (i) an amount expressed as a percentage, the numerator of
which equals the Percentage Interest of the Resigning Member at the time of
the
delivery of its NSR Election Notice, and the denominator of which equals five
(5); multiplied
by
(ii) the
amount of any gross revenue received by Nevada Moly or any of its Affiliates,
successors or assigns, from the sale of Products produced in Operations and
distributed to Nevada Moly; divided
by
(iii)
the Percentage Interest of Nevada Moly and its Affiliates in the Company. The
Nevada Moly NSR Royalty shall be paid monthly within thirty (30) days after
the
end of the month during which any gross revenue is received by Nevada Moly
or
any of its Affiliates. Nevada Moly shall cause General Moly to be jointly and
severally liable for the Nevada Moly NSR Royalty, but the Company shall not
have
any liability or responsibility therefor, and the Nevada Moly NSR Royalty shall
not constitute an Encumbrance on any of the Assets or Properties of the
Company.
(c) Notwithstanding
anything herein to the contrary, the provisions of this Section
5.6
shall be
the exclusive remedies of the Company and the other Member (including in its
capacity as Manager) for the Resigning Member’s failure to maintain a Percentage
Interest of five percent (5%) or more.
5.7 Grant
of Security Interest.
Each
Member hereunder grants to the other Member a security interest in its
Membership Interest, and any accessions thereto and any proceeds and products
therefrom, to secure each and every obligation of such Member to contribute
capital, to repay advances made to such Member and to reimburse the other Member
for Continuing Obligations hereunder. Each Member hereby authorizes the other
Member to file and record all financing statements, continuation statements
or
other instruments necessary or desirable to perfect or effectuate the provisions
hereof. In connection with any foreclosure, transfer in lieu, or other
enforcement of rights in the security interest granted in this Section
5.7,
notwithstanding any contrary provision in Article XIV,
the
acquiring Person shall, at the election of the remaining Member, automatically
be admitted as a Member in the Company without any further action of the
defaulting Member, and the defaulting Member shall take all action that the
non-defaulting Member may reasonably request to effectuate the admission of
the
transferee as a Member of the Company. Notwithstanding the foregoing provisions
of this Section
5.7,
the
security interest granted pursuant to this Section
5.7
shall be
subordinate to any security interest granted by a Member in all or any portion
of its Membership Interest to secure the Indebtedness of such Member or any
Affiliate of such Member that is permitted under Section
14.4(b),
and
each Member hereby agrees to execute such subordination agreements as the other
Member or its lender may reasonably request to evidence such agreement to
subordinate.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 24
ARTICLE
VI
MANAGEMENT
COMMITTEE
6.1 Organization
and Composition.
The
Members hereby establish a Management Committee consisting of four members
(each
referred to as a “Representative”):
(a)
two Representatives appointed by Nevada Moly and (b) two Representatives
appointed by POS-Minerals. A Representative of Nevada Moly shall serve as chair
of the Management Committee. Each Member may appoint one or more alternate
Representatives to act in the absence of a regular Representative. Appointments
of Representatives shall be made or changed by notice to the other Member.
Representatives shall not be considered managers under the Act, but derive
all
of their right, power and authority from the Members. No Member or
Representative shall have the power to bind the Company, except in such Member’s
capacity as the Manager. All documents and instruments executed on behalf of
the
Company shall be signed by the Manager or by an officer or employee to whom
the
Manager has delegated the general or specific authority.
6.2 Powers.
The
Management Committee shall have exclusive authority and power to determine
all
management matters, overall policies, objectives, procedures, methods and
actions under this Agreement related to the Company. This power shall include
the powers to:
(a) exercise
overall direction and control of the Manager;
(b) make
the
Major Decisions set forth in Section
6.4;
(c) approve
annual financial statements, reports and production projections; approve capital
appropriation requests (i) set forth in an approved Program and Budget in excess
of $5,000,000, and (ii) not set forth in an approved Program and Budget in
excess of $125,000, in each case on an individual basis;
(d) approve
any contract recommended by the Manager (i) set forth in an approved Program
and
Budget that provides for an aggregate cost to the Company of more than
$5,000,000, and (ii) not set forth in an approved Program and Budget that
provides for an aggregate cost to the Company of more than $125,000;
and
(e) approve
budgets for community, charitable and other contributions that have not already
been approved in an approved Program and Budget.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 25
6.3 Decisions.
Each of
Nevada Moly and POS-Minerals, acting through its Representatives, shall have
a
number of votes on the Management Committee (a “Voting
Interest”)
equal
to the ratio of (a) its Percentage Interest; divided
by (b)
the
aggregate Percentage Interests of Nevada Moly and POS-Minerals; multiplied
by
(c) one
hundred (100%). The Representatives appointed by Nevada Moly shall vote as
a
group, and the Representatives appointed by POS-Minerals shall vote as a group.
If one but not both Representatives appointed by a Member is not present at
a
meeting of the Management Committee, the Representative appointed by such Member
that is present shall have the entire Voting Interest of the appointing Member.
Whenever any provision of this Agreement requires or permits the vote, consent
or approval of the Members or the Management Committee, such provision shall
be
deemed to require or permit, as applicable, the vote, consent or approval of
Representatives with a Voting Interest of greater than fifty percent (50%),
unless such provision requires the vote, consent or approval of all of the
Members or the entire Management Committee, in which case such provision shall
be deemed to require or permit, as applicable, the vote, consent or approval
of
Representatives with one hundred percent (100%) of the Voting
Interests.
6.4 Major
Decisions.
(a) Notwithstanding
Sections
6.1,
6.2
or
6.3,
or
Article
VII,
neither
the Manager nor any agent of the Company shall have any authority to bind or
take any action on behalf of the Company with respect to any Major Decision
unless such Major Decision has been approved by Representatives holding one
hundred percent (100%) of the Voting Interests. Each of the following matters
shall constitute a “Major
Decision”:
(i) approval
of a Program and Budget (other than approval of the Initial Program and Budget,
which is deemed approved, but including approval of any updates to the Initial
Program and Budget), including any Program and Budget for capital costs to
be
incurred prior to Commercial Production at the mine that are not within the
scope of the Bankable Feasibility Study;
(ii) cost
overruns in excess of fifteen percent (15%) of an approved Program and
Budget;
(iii) any
amendment or modification to any Program and Budget; provided,
that
cost overruns that do not exceed fifteen percent (15%) of the applicable Program
and Budget and expenditures with respect to emergencies shall be deemed to
automatically amend such Program and Budget;
(iv) expansion
or contraction of the average tons per day planned production schedule of the
mill at the Project of twenty percent (20%) or more of the relevant tons per
day
throughput schedule in the Bankable Feasibility Study (as such planned
production has been increased or decreased as set forth in any Program and
Budget approved hereunder), in each case for reasons other than regular
maintenance or an event of Force Majeure;
(v) termination
of the Project;
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 26
(vi) dissolution
of the Company or any event that will cause the liquidation of the Company
under
the Code or Treasury Regulations;
(vii) decisions
to cease production for a period greater than three (3) months for reasons
other
than regular maintenance or an event of Force Majeure;
(viii) acquisition
or disposition of significant real property, water rights or real estate assets
(including acquisition or disposition of significant patented and unpatented
mining claims under Section
7.2(n))
other
than in the ordinary course of business;
(ix) conduct
of businesses other than the Development, construction, Operations and financing
of the Project;
(x) other
than purchase money security interests or other security interests in Company
equipment to finance the acquisition or lease of Company equipment used in
the
Operations, the incurrence by the Company of any Indebtedness that requires
any
of the following as security for the obligations arising under or with respect
to such Indebtedness: (A) an Encumbrance on all or any material portion of
the
Assets; (B) the pledge by any Member of its Membership Interest; or (C) the
guaranty by any Member or any Affiliate of any such Member of the obligations
of
the Company with respect to such Indebtedness; provided,
that
nothing in this clause
(x)
shall be
deemed to prohibit or restrict the right of a Member to pledge all or any
portion of its Membership Interest pursuant to Section
14.4(b)
as
security for any Indebtedness incurred by such Member;
(xi) the
issuance of an Equity Interest to any Person other than a Member, or the
admission of any Person as a new Member of the Company; provided,
that
this clause
(xi)
shall
not be deemed to prohibit or restrict the adjustment of the Percentage Interests
of the Members in accordance with this Agreement;
(xii) a
decision to construct and open an additional mine within the Project that would
be a new mine not included in the Bankable Feasibility Study;
(xiii) a
decision for the Company to construct a ferromoly converter facility either
on
or off the Properties;
(xiv) a
decision to grant authorization for the Company to file a petition for relief
under any chapter of the U.S. Bankruptcy Code, Title 11 U.S.C. or to consent
to
such relief in any involuntary petition filed against the Company by any third
party, or to admit in writing any insolvency of the Company or inability to
pay
its debts as they become due or to consent to any receivership (or similar
proceeding) of the Company;
(xv) a
contract between the Company
and
any
Member
or
any
Affiliate
of
a
Member
or
any other Person to
allow
roasting of ore at the Company’s
roasting facility from such Member’s
or its
Affiliate’s
or
such other Person’s other properties,
including
the
Hall-Tonopah
project
owned by an Affiliate
of
Nevada
Moly;
AMENDED
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(xvi) execution
by the Company of any contract or other agreement or arrangement between the
Company and any Member (including in its capacity as a Manager) or Affiliate
of
a Member, including under Section
7.6;
(xvii) determination
of the price at which the Company shall sell Products to the Members in
accordance with Section
10.2(b);
and
(xviii) replacement
of the Manager under Section
7.4(c).
(b) If
a
Person other than Nevada Moly or POS-Minerals (or a permitted transferee of
the
entire Membership Interest of Nevada Moly or POS-Minerals that is an Affiliate
of Nevada Moly or POS-Minerals) is admitted to the Company as a Member, unless
otherwise agreed by Nevada Moly and POS-Minerals and set forth in an amendment
to this Agreement, such Person shall have no right to appoint a Representative
to the Management Committee, shall have no Voting Interest, and the vote of
such
Person shall not be required for any decision of the Members or the Management
Committee hereunder.
6.5 Meetings.
Management Committee meetings shall be held at least (a) monthly during
Development, (b) every other month during the first 12-month period after
commencement of Commercial Production and (c) quarterly thereafter, at such
times as the Management Committee shall determine. Management Committee meetings
shall be held in Lakewood, Colorado at the principal office of Nevada Moly,
or
at such other place in the United States as Nevada Moly and POS-Minerals shall
agree. Except for regularly scheduled meetings as agreed by the Members, the
Manager or any Representative may call a special meeting of the Management
Committee upon fifteen (15) days’ written notice. In case of emergency,
reasonable notice of a special meeting shall suffice. There shall be a quorum
if
at least one Representative appointed by each Member is present. Each notice
of
a meeting shall include an itemized agenda prepared by the Manager in the case
of a regular meeting, or by the Manager or Representative calling the meeting
in
the case of a special meeting, but any matters may be considered with the
approval of one or more Representatives appointed by each Member. Meetings
of
the Management Committee may be held by means of conference telephone or other
communications equipment by means of which all Persons participating in the
meeting can hear each other, and participation in a meeting by such
communications equipment shall constitute presence in person at the meeting.
The
Manager shall prepare minutes of all meetings and shall distribute copies of
such minutes to the Representatives within seven (7) Business Days after the
meeting. The minutes, when approved by one or more Representatives appointed
by
each Member, shall be the official record of the decisions made by the
Management Committee and shall be binding on the Management Committee, the
Manager and the Members. Reasonable costs incurred in connection with attendance
shall be a Company cost.
6.6 Action
Without Meeting.
Any
action required or permitted to be taken at a meeting of the Management
Committee may be taken without a meeting and without prior notice if the action
is evidenced by a written consent describing the action taken, signed by
Representatives having the requisite Voting Interest to take such action at
a
meeting at which all of the Representatives were present and voted; provided
that
written notice of all actions taken by Representatives with less than one
hundred percent (100%) of the Voting Interests shall be provided to all
Representatives (other than Representatives executing such consent) not later
than ten (10) days after the taking of such action. Action taken under this
Section
6.5
shall be
effective when Representatives holding the requisite Voting Interest have signed
the consent, unless the consent specifies a different effective
date.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 28
6.7 Matters
Requiring Approval.
Except
as otherwise delegated to the Manager in Section
7.2,
the
Management Committee shall have exclusive authority to determine all management
matters related to the Company.
ARTICLE
VII
MANAGER
7.1 Appointment.
The
Members hereby appoint Nevada Moly as the Manager with overall management
responsibility for Development and Operations. Nevada Moly hereby agrees to
serve unless and until it resigns or is removed as provided in Section
7.4.
7.2 Powers
and Duties of Manager.
Subject
to the terms and provisions of this Agreement, the Manager shall have the
following powers and duties by and on behalf of the Company, which shall be
discharged in accordance with adopted Programs and Budgets:
(a) The
Manager shall manage, direct and control Operations, including mining,
processing, stockpiling and delivering Products.
(b) The
Manager shall implement the decisions of the Management Committee, shall make
from Company funds all expenditures necessary to carry out adopted Programs
and
Budgets, and shall promptly advise the Management Committee if the Company
lacks
sufficient funds for the Manager to carry out its responsibilities under this
Agreement.
(c) The
Manager shall prepare and transmit to each Member proposed Programs and Budgets
in accordance with Section
8.3.
(d) The
Manager shall: (i) purchase or otherwise acquire all material, supplies,
equipment, water, utility and transportation services required for Operations,
such purchases and acquisitions to be made 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 Project free and clear of all Encumbrances, except for those
existing at the time of, or created concurrent with, the acquisition of such
Asset, or landlord’s, mechanic’s or materialmen’s liens (which shall be released
or discharged in a diligent manner), or Encumbrances specifically approved
by
the Management Committee.
(e) The
Manager shall conduct such title examinations and cure such title defects as
may
be advisable in the judgment of the Manager acting in accordance with Standard
Mining Industry Practices. The Manager shall acquire in the name of the Company
all necessary water rights, surface rights, rights-of-way and other real
property interests required for the Properties.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 29
(f) 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 Member’s sales revenue or net income); and
(iii) shall do all other acts reasonably necessary to maintain the Assets.
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.
(g) The
Manager shall, in accordance with the Accounting Procedure, engage, hire and
train the necessary personnel to perform the work required for the
Project.
(h) The
Manager shall: (i) apply for all necessary permits, licenses and approvals;
(ii)
comply with Law; (iii) notify promptly the Management Committee of any
allegations of substantial violation thereof; and (iv) prepare and file all
reports or notices required for Operations. The Manager shall not be in breach
of this provision if a violation has occurred in spite of the Manager’s efforts
to comply with Standard Mining Industry Practices, and the Manager has timely
cured or disposed of such violation through performance, or payment of fines
and
penalties (provided that any such payment of fines or penalties shall be without
reimbursement from the Company to the extent arising from the fraud, gross
negligence or willful misconduct of the Manager).
(i) The
Manager shall prosecute and defend, but shall not initiate without consent
of
the Management Committee, all litigation or administrative proceedings arising
out of Operations; provided,
however,
without
the consent of the Management Committee, the Manger may prosecute and defend
(i)
all actions arising out of or relating to the perfection of the Water Rights
for
use at the Project, and (ii) all actions against the Manager or any Member
arising out of the Operations or the performance by the Manager or any such
Member of its obligations under this Agreement or the Contribution
Agreement.
(j) The
Manager shall obtain insurance for the benefit of the Company as provided in
Exhibit
D
or as
may otherwise be determined from time to time by the Management
Committee.
(k) The
Manager may dispose of Assets, whether by abandonment, surrender or Transfer
in
the ordinary course of business, except that Properties may be abandoned or
surrendered only as provided in Article
XIII.
Without
prior authorization from the Management Committee, however, the Manager shall
not: (i) dispose of Assets in any one transaction having a value in excess
of
$100,000 (other than the distribution of Products hereunder); (ii) enter into
any sales contracts or commitments for Product, except as provided in
Section
10.3;
or
(iii) dispose of all or a substantial part of the Assets that are necessary
to
achieve the purposes of the Company.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 30
(l) The
Manager shall have the right to carry out its responsibilities hereunder through
agents, Affiliates or independent contractors.
(m) The
Manager shall timely pay all Governmental Fees required to hold and maintain
the
unpatented mining claims held as a part of the Assets. To the extent required
by
Law, the Manager shall perform or cause to be performed during the term of
this
Agreement all assessment and other work required by law in order to maintain
the
unpatented mining claims included within the Properties. The Manager shall
have
the right to perform the assessment work required hereunder pursuant to a common
plan of 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 in accordance with the adopted Program and Budget and, to the extent
consistent with the adopted Program and Budget, Standard Mining Industry
Practices. The Manager shall timely record with the appropriate county and
file
with the appropriate United States agency, affidavits in proper form attesting
to the performance of assessment work or notices of intent to hold in proper
form, and allocating therein, to or for the benefit of each claim, at least
the
minimum amount required by law to maintain such claim or site.
(n) Subject
to Section
6.4(a)(viii),
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 U.S. rights
to
the ground covered thereby; (v) abandon any unpatented mill sites for the
purpose of locating mining claims or otherwise acquiring from the U.S. rights
to
the ground covered thereby; (vi) exchange with or convey to the U.S. any of
the
Properties 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 one or more leases or other forms of mineral tenure pursuant to any Federal
law hereafter enacted.
(o) The
Manager shall keep and maintain all required accounting and financial records
pursuant to the Accounting Procedure and in accordance with customary cost
accounting practices in the mining industry.
(p) The
Manager shall keep the Management Committee advised of all Operations by
submitting in writing to the Management Committee: (i) monthly progress reports
which 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 forty-five
(45) 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 the Management
Committee may reasonably request. At all reasonable times the Manager shall
provide to the Members and its agents and representatives, upon the written
request of any Representative of such Member, access to, and the right to
inspect and copy all maps, drill logs, core tests, reports, surveys, assays,
analyses, production reports, operations, technical, accounting and financial
records, and other information acquired in Operations. In addition, the Manager
shall allow the Member that is not the Manager and its agents, at the latter’s
sole risk and expense, and subject to reasonable safety regulations, to inspect
the Assets and Operations at all reasonable times, so long as the inspecting
or
auditing Member does not unreasonably interfere with
Operations.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 31
(q) The
Manager shall ensure that POS-Minerals will have adequate office space at the
Project site headquarters (when constructed), including telephone and internet
access, and that POS-Minerals shall be provided reasonable overnight
accommodations to the extent housing is provided for the Manager’s officers and
employees, the expenses of which shall be borne by the Company.
(r) The
Manager shall maintain Capital Accounts of the Members in accordance with
Exhibit
C.
(s) The
Manager shall prepare an Environmental Compliance plan for all Operations
consistent with the requirements of any 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 Law or contractual obligation pertaining to Environmental
Compliance. To the extent practical, the Environmental Compliance plan shall
incorporate concurrent reclamation of Properties disturbed by
Operations.
(t) The
Manager shall undertake to perform Continuing Obligations when and as economic
and appropriate, whether before or after termination of Commercial Production.
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
Management Committee fully informed about the Manager’s efforts to discharge
Continuing Obligations. Each Member and its authorized agents and
representatives shall have the right from time to time to enter the Properties
to inspect work directed toward satisfaction of Continuing Obligations and
audit
books, records and accounts related thereto.
(u) 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 money market investments and money market funds,
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 Properties, and for other Environmental
Compliance requirements.
(v) The
Manager may cause the Company to become a member of the Nevada Mining
Association, or with the approval of the entire Management Committee, other
national, state or local mining or other trade associations to the extent the
Manager determines that membership in any such trade associations will benefit
the Company.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 32
(w) The
Manager shall prepare or cause to be prepared the engineering and design plans
and specifications for the Project.
(x) The
Manager shall, in accordance with the Exhibit
C,
prepare
and file with Governmental Authorities all tax and other returns required by
Law
pertaining to the Project.
(y) Subject
to the availability of funds under Sections
6.4(a)(ii)
and
(iii),
and
except for the permissible acquisition and disposition of assets hereunder,
the
Manager shall maintain in good working condition and replace when necessary
all
machinery, plant and equipment and other Assets.
(z) The
Manager shall undertake all other activities reasonably necessary to fulfill
the
foregoing.
Notwithstanding
anything in this Agreement to the contrary, the Manager shall not be in default
of any duty under this Section
7.2
if its
failure to perform results from the failure of the Member that is not the
Manager or its Representatives or Affiliates to perform acts or to contribute
amounts required under this Agreement.
7.3 Standard
of Care.
The
Manager shall perform its duties under this Agreement in accordance with
Standard Mining Industry Practices, or in accordance with the terms and
provisions of leases, licenses, permits, contracts and other agreements
pertaining to the Assets. Notwithstanding anything in this Agreement to the
contrary, the Manager shall not be liable to the Members or the Company for
any
breach of this Agreement or other act or omission resulting in damage or loss
except to the extent caused by or attributable to the Manager’s fraud, willful
misconduct or gross negligence.
7.4 Resignation;
Removal;
Replacement.
(a) The
Manager may voluntarily resign upon six (6) months’ prior written notice to the
Representatives of the other Member, in which case Representatives holding
one
hundred percent (100%) of the Voting Interests shall designate a replacement
Manager. If any of the following shall occur with respect to the Manager, the
Manager shall be deemed to have offered to resign, which offer may be accepted
by the other Member in its sole discretion within thirty (30) days following
such deemed offer:
(i) The
Percentage Interest of the Manager and its Affiliates becomes in the aggregate
less than fifty percent (50%); or
(ii) The
Manager fails to perform a material obligation imposed upon it under this
Agreement in a manner that constitutes fraud, willful misconduct or gross
negligence and such failure continues for a period of sixty (60) days after
notice from the other Member or its Representatives demanding performance;
or
(iii) A
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for a substantial part of the Manager’s assets is appointed and such
appointment is neither made ineffective nor discharged within sixty (60) days
after the making thereof, or such appointment is consented to, requested by,
or
acquiesced in by the Manager; or
AMENDED
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(iv) The
Manager commences a voluntary case under any applicable bankruptcy, insolvency
or similar Law now or hereafter in effect; 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;
makes a general assignment for the benefit of creditors; fails generally to
pay
its debts as such debts become due; or takes corporate or other action in
furtherance of any of the foregoing; or
(v) Entry
is
made against the Manager of a judgment, decree or order for relief affecting
a
substantial part of its 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.
(b) The
Manager may be removed at any time by the holders of a majority of the Voting
Interests (including the Voting Interests of the Manager and its Affiliates).
The Manager may also be removed by the holders of a majority of the Voting
Interests (exclusive of the Voting Interests of the Manager and any Affiliate
of
the Manager) after the occurrence of a final non-appealable judgment or
determination of a court of competent jurisdiction or arbitration panel finding
that the Manager has committed gross negligence, willful misconduct or
fraud.
(c) In
the
event the Manager resigns, is deemed to resign or is removed pursuant to this
Section
7.4,
a
Member may propose a replacement Manager that has reasonably sufficient
financial resources and experience in the molybdenum mining and beneficiation
industry to conduct the Operations in a commercially reasonable manner. Such
a
replacement Manager shall be subject to the approval of Representatives holding
one hundred percent (100%) of the Voting Interests, such approval not to be
unreasonably withheld or delayed; provided,
that if
the Manager is removed pursuant to Section
7.4(b),
(i) if
any individuals who are Representatives of Nevada Moly were responsible for
all
or any part of the conduct giving rise to the removal of the Manager, such
individuals shall immediately be removed and replaced by Nevada Moly as
Representatives, (ii) any replacement Manager proposed by Nevada Moly shall
be
subject to an absolute veto right of POS-Minerals, which right may be exercised
by POS-Minerals in its sole and absolute discretion, and (iii) any individual
proposed as the general manager for the Operations shall be subject to an
absolute veto right of POS-Minerals, which right may be exercised by
POS-Minerals in its sole and absolute discretion.
(d) Notwithstanding
anything herein to the contrary, the resignation or removal of a Person as
the
Manager shall not require or result in the resignation or removal of such Person
as a Member, reduce the Percentage Interest or Voting Interest of such Member
or
its Representatives, or restrict the right of such Member to appoint
Representatives to the Management Committee.
7.5 Payments
To Manager.
The
Manager shall be compensated for its services and reimbursed for its costs
hereunder in accordance with the Accounting Procedure.
AMENDED
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7.6 Transactions
With Affiliates.
(a) Subject
to Sections
7.6(b)
and
7.6(c),
the
Company shall not enter into any agreement or contract (including the payment
of
any fees or other compensation) with the Manager, any Affiliate of the Manager
or any Member, or any material modification or amendment to any such agreement
or contract, except (a) on terms that have been approved by Representatives
of
the Member that is not the Manager (including as may have been approved in
a
Program and Budget) or (b) that are specifically set forth in this
Agreement.
(b) Notwithstanding
Section
7.6(a)
or any
other provision of this Agreement to the contrary, the Members acknowledge
and
agree that the services and duties to be performed by the Manager hereunder
may
be delegated to any Affiliate of the Manager and performed by any such
Affiliate, or any of its officers, employees, contractors or agents, and the
costs and charges of such Affiliates in the performance of such duties shall
be
reimbursed by the Company and subject to the other charges to the Business
Account to the same extent as if such costs were incurred directly by the
Manager, but in all cases subject to the requirements of the Accounting
Procedure. The delegation by the Manager of any of its duties or obligations
hereunder shall not relieve or release the Manager from any such duties or
obligations, including the cost to account for any such reimbursements or costs
incurred by Affiliates of the Manager as and to the extent provided in the
Accounting Procedure.
(c) If
a
Dispute or question shall arise relating to the application of this Section
7.6
or any
other conflict of interest between the Manager or any of its Affiliates, on
the
one hand, and the Company or any other Member, on the other hand, any action
taken by the Manager, in the absence of bad faith, fraud, willful misconduct
or
gross negligence, shall not constitute a breach of this Agreement or any other
Transaction Document or a breach of any standard of care or duty imposed herein.
Notwithstanding anything to the contrary in this Agreement, (i) if it is
determined that the Manager or any of its Affiliates received an Administrative
Charge or other payment beyond that to which they were entitled, the Manager
shall, or shall cause its Affiliate to, reimburse the Company for such
overpayment, regardless of whether such overpayment was the result of any bad
faith, fraud, willful misconduct or gross negligence, and (ii) if it is
determined that the Manager or any of its Affiliates is entitled to receive
an
Administrative Charge or other payment beyond that which it actually received,
the Company shall promptly pay to the Manager or such Affiliate of the Manager
such underpayment.
7.7 Activities
During Deadlock.
If the
Management Committee for any reason fails to adopt a Program and Budget, subject
to the contrary direction of the Management Committee and to the receipt of
necessary funds, the Manager shall continue Operations at levels substantially
comparable with the last adopted Program and Budget and as necessary to protect
the interests of the Members and maintain the integrity of the Project. For
purposes of determining the required contributions of the Members, the last
adopted Program and Budget shall be deemed extended and Article
IV
shall
continue to apply.
AMENDED
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ARTICLE
VIII
PROGRAMS
AND BUDGETS
8.1 Initial
Program and Budget.
The
initial Program and Budget, covering the entire period from the Effective Date
through commencement of Commercial Production (the “Initial
Program and Budget”),
a
copy of which is attached as Exhibit
E,
shall
hereby be deemed to have been adopted by the Management Committee. The Initial
Program and Budget contains a monthly Budget through December 31, 2008, and
annual Budgets thereafter through the commencement of Commercial Production.
The
Initial Program and Budget shall be updated annually through the commencement
of
Commercial Production.
8.2 Operations
Pursuant to Programs and Budgets.
Except
as otherwise provided in Section
8.8
and
Article
XII,
Operations shall be conducted, expenses shall be incurred, and Assets shall
be
acquired only pursuant to approved Programs and Budgets. Each Program and Budget
adopted pursuant to this Agreement shall (a) provide for accrual of reasonably
anticipated Environmental Compliance expenses for all Operations contemplated
under the Program and Budget and (b) shall provide for the payment of all
obligations of the Company under real property and equipment lease
obligations.
8.3 Presentation
of Programs and Budgets.
Proposed Programs and Budgets (including any updates to the Initial Program
and
Budget) shall be prepared by the Manager for calendar year periods. Not later
than November 1 of each calendar year, a proposed Program and Budget for the
succeeding calendar year shall be prepared by the Manager and submitted to the
Management Committee. The
proposed Program and Budget shall be accompanied by a notice of the date and
time of the meeting to be held pursuant to Section
8.4
to
consider the proposed Program and Budget, which date shall not be less than
twenty (20) days after the submission of the proposed Program and Budget to
the
Management Committee. Pursuant to a written request to the Manager, the
Representatives of a Member shall be entitled to review during normal business
hours of the Manager all working papers and other reasonable documentation
prepared by the Manager or in the possession of the Manager that support any
proposed or adopted Program and Budget.
8.4 Approval
of Proposed Programs and Budgets.
On or
before December 1 of each year after submission of a proposed Program and Budget
(including any updates to the Initial Program and Budget) at a meeting of the
Management Committee to be held at the principal office of the Manager, or
at
such other place as the Representatives shall agree, the Representatives of
each
Member shall submit to the Management Committee: (a) that the Representatives
of
such Member approve the proposed Program and Budget, (b) proposed modifications
to the proposed Program and Budget; or (c) that the Representatives of such
Member reject the proposed Program and Budget. If the Representatives of a
Member do not approve the proposed Program and Budget, then the Management
Committee shall seek to develop a Program and Budget acceptable to the
Representatives of each Member. If one or more Representatives of a Member
fail
to attend any meeting of the Management Committee the purpose of which is to
review and approve a Program and Budget, then such meeting shall be postponed
to
the same place and time on a date that is not less than five (5) Business Days
after that date of the original meeting, and written notice of such postponed
meeting shall be provided by the Company to the Representatives of each Member.
If one or more Representatives of a Member fail to attend any such postponed
meeting, then the Representatives of the Members at such postponed meeting
may
approve the proposed Program and Budget; provided,
that no
other action may be taken at such postponed meeting.
AMENDED
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8.5 Election
to Participate.
By
notice to the Management Committee within twenty (20) days after the final
vote
adopting a Program and Budget, if the first sentence of Section
4.6
is
applicable, a Member may elect to contribute to such Program and Budget (other
than the Initial Program and Budget) in some lesser amount than the amount
that
would otherwise be required to be contributed by such Member based on its
Percentage Interest, or may elect not to contribute any amount, in which cases
its Percentage Interest shall be adjusted as provided in Section
5.3.
If a
Member fails to so notify the Management Committee, the Member shall be deemed
to have elected to contribute to such Program and Budget in proportion to its
respective Percentage Interest. Notwithstanding the foregoing provisions of
this
Section
8.5,
a
Member shall be subject to the provisions of Section
5.5
if such
Member does not contribute to a Program and Budget a sufficient amount to
maintain its Percentage Interest at five percent (5%) or greater after the
application of Section
5.3.
Notwithstanding the election by a Member not to participate or to participate
in
a lesser amount in any Program and Budget, such Member shall make the capital
contributions required by Section
8.8
to fund
emergency expenditures.
8.6 Deadlock
on Proposed Programs and Budgets.
If the
Management Committee does not approve a Program and Budget (or any updates
to
the Initial Program and Budget) by the beginning of the period to which the
proposed Program and Budget relates, the provisions of Section
7.7
shall
apply.
8.7 Budget
Overruns; Program Changes.
The
Manager shall immediately notify the Management Committee of any material
departure from an adopted Program and Budget. If the Manager causes or increases
budget overruns by more than fifteen percent (15%) of the expenditures called
for in such Budget for any year, then, unless otherwise agreed by the Management
Committee by unanimous vote or ratification of the Representatives, any excess
expenditures over such fifteen percent (15%) ceiling, unless directly caused
by
an Emergency expenditure made pursuant to Section
7.7
or
8.8,
shall
be at the sole cost and expense of the Manager. Budget overruns of fifteen
percent (15%) or less and expenditures for Emergencies in accordance with
Section
8.8
shall be
a cost and expense of the Company and subject to Monthly Capital
Calls.
8.8 Emergency
or Unexpected Expenditures.
In case
of Emergency, the Manager shall have the right and obligation to take such
actions as the Manger deems necessary to protect life, limb or property, to
protect the Assets, to comply with Law and to minimize losses to the Company,
in
each case in accordance with Standard Industry Practice. The Manager may also
make expenditures in accordance with Standard Industry Practice for unexpected
events that are beyond its reasonable control and that do not result from a
breach by it of its standard of care; provided
in
the
case of unexpected events that are not Emergencies, such expenditures do not
cause or increase budget overruns of the approved Budget by fifteen percent
(15%) or more. The Manager shall promptly notify the Representatives of any
such
Emergency or unexpected event, and, to the extent the expenditures with respect
to such Emergency or unexpected event cause or increase budget overruns of
the
approved Program and Budget of greater than fifteen percent (15%), shall seek
ratification of any such expenditures by the unanimous vote of the Management
Committee. If expenditures incurred by the Manager with respect to an Emergency
or unexpected event cause or increase budget overruns of the approved Program
and Budget of greater than fifteen percent (15%), the Manager shall be
reimbursed for such expenditures, (a) in the case of an Emergency, whether
or
not approved or ratified by the unanimous vote of the Management Committee,
or
(b) in the case of an unexpected event that is not an Emergency, only if
approved or ratified by the unanimous vote of the Management
Committee.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 37
ARTICLE
IX
ACCOUNTS
AND SETTLEMENTS
9.1 Monthly
Statements.
The
Manager shall submit to the Management Committee monthly statements of account
reflecting in reasonable detail the charges and credits to the Business Account
within seven (7) Business Days after the end of each such month.
9.2 Monthly
Capital Calls.
On the
basis of the adopted Program and Budget, the Manager shall make monthly capital
calls (“Monthly
Capital Calls”)
after
the Third Contribution Installment Date by submitting to each Member prior
to
the last day of each month, a Notice of Capital Requirements for (a) estimated
cash requirements for the following month (plus the amount of required
reserves), less
(b)
the
aggregate amount of any capital contributions made in months prior to the date
of the Notice of Capital Requirements in excess of the amounts required to
fund
adopted Programs and Budgets for such prior months, plus
(c) the
amount by which expenditures for adopted Programs and Budgets for months prior
to the date of the Notice of Capital Requirements exceeded the amount of capital
contributions made in such prior months. The
“Notice
of Capital Requirements”
for
each Monthly Capital Call shall set forth for such Monthly Capital Call the
calculation of the aggregate amount to be contributed by the Members for such
month and the components thereof described in clauses
(a),
(b)
and
(c)
above,
and the amount to be contributed by each Member based on its Percentage
Interest, subject to any election permitted under Section
5.3.
Within
ten (10) days after receipt of each such Notice of Capital Requirements, each
Member shall pay to the Manager as a capital contribution to the Company its
proportionate share of the estimated amount. Time is of the essence of payment
of such capital contributions. The Manager shall at all times maintain a cash
balance approximately equal to the rate of disbursement for up to thirty (30)
days. All funds in excess of immediate cash requirements shall be invested
in
interest-bearing accounts for the benefit of the Business Account. The Members
shall, after Commercial Production begins, consider requiring the Manager to
make weekly capital calls in lieu of Monthly Capital Calls.
9.3 Failure
to Meet Cash Calls.
Subject
to Section
8.5,
a
Member who fails to make capital contributions in the amounts and at the times
specified in Section
9.2
shall be
in default, and the non-defaulting Member shall have those rights, remedies
and
elections set forth in Section
5.4.
9.4 Audits.
(a) The
Manager shall order an independent audit of the financial statements of the
Company for each fiscal year of the Company. The initial independent auditor
shall be PriceWaterhouseCoopers L.L.P. In the event PriceWaterhouseCoopers
L.L.P. no longer is the independent auditor for any reason, any subsequent
auditor shall be unanimously agreed upon by the Management Committee (with
each
Member’s consent to a subsequent auditor proposed by the Manager not to be
unreasonably withheld if the subsequent auditor is another nationally recognized
public accounting firm with expertise in auditing mining
companies).
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 38
(b) Upon
reasonable written notice to the Manager, each Member may appoint a second
auditor of its own selection and at its own cost within three (3) months after
receipt of the annual audit report and financial statements with respect to
any
fiscal year. Such second auditor shall (as the agent and representative of
the
appointing Member) be entitled to access to the books and records of the Company
pursuant to Section
7.2(p)
during
normal business hours, so long as such auditor does not unreasonably interfere
with or disrupt Operations. The auditing Member shall reimburse the Manager
or
the Company, as applicable, for all reasonable out-of-pocket costs and expenses
incurred by the Manager or the Company in complying with any such request.
The
auditing Member shall provide a copy of the audit report of its appointed
auditor, and shall within thirty (30) days after completion of any such audit
provide written notice to the Manager of any exceptions or discrepancies
identified in such audit.
(c) All
exceptions to and claims for discrepancies under Section
9.4(b),
disputes as to price and terms of Product under Section
10.2(b),
and
disputes regarding the most competitive price under Section
10.3(b)
shall be
resolved by an accounting arbitration before a nationally recognized public
accounting firm (other than the accounting firm that performs the Company’s
annual financial statement audit) with expertise in auditing mining companies
selected by the entire Management Committee (the “Accounting
Arbitrator”)
within
thirty (30) days after (i) in the case of Section
9.4(b),
receipt
of a notice of exceptions or discrepancies, (ii) in the case of Section
10.2(b),
a
notice from a Member to the other Member that the first Member desires to submit
a dispute under Section
10.2(b)
to this
Section
9.4(c),
and
(iii) in the case of Section
10.3(b),
receipt
by Nevada Moly from POS-Minerals of its written determination under Section
10.3(b)
that the
competitive price information was not reasonably calculated by Nevada Moly.
The
procedures for any such accounting arbitration and the evidence to be reviewed
by the Accounting Arbitrator shall be determined by the Accounting Arbitrator;
provided,
that
the scope of the accounting arbitration shall be limited to (1) in the case
of
Section
9.4(b),
the
exceptions and discrepancies set forth in the notice from the auditing Member,
(2) in the case of Section
10.2(b),
the
price and other terms of sales of Product under Section
10.2(b),
and (3)
in the case of Section
10.3(b),
the
determination of the most competitive price. To the extent practicable, the
accounting arbitration shall be completed, and the Accounting Arbitrator shall
render its written decision, within forty-five (45) days after the appointment
of the Accounting Arbitrator.
ARTICLE
X
DISTRIBUTIONS;
DISPOSITION OF PRODUCTION
10.1 Distributions.
(a) Disposition
by the Company of Products shall be governed by Sections
10.2,
10.3
and
10.4
and,
except as provided in those Sections, the Company shall not dispose of any
Products and (notwithstanding anything to the contrary elsewhere in this
Agreement) the Manager shall have no authority to bind the Company with respect
to any disposition of any Products except in accordance with this Section
10.1
and
Sections
10.2,
10.3
and
10.4.
All
cash resulting from disposition of POS-M Products shall be distributed to
POS-Minerals. All cash resulting from disposition of NMO Products shall be
distributed to Nevada Moly.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 39
(b) All
distributions to the Members shall be in cash, except as provided in
Section
10.1(d)
or
except as otherwise determined by the entire Management Committee. Except as
provided in Section
10.1(a)
and
Section
10.1(d),
(i) no Member shall have the right to demand distributions in cash or in
kind; (ii) the aggregate amount of all distributions to the Members and the
timing of such distributions shall be determined by the Management Committee;
(iii) distributions shall be made to the Members in accordance with their
respective Percentage Interests.
(c) The
Members’ respective shares of Products shall be determined on a monthly basis as
of the last day of each month, and each Member’s share of Products shall equal
the Member’s Percentage Interest multiplied by the aggregate amount of Products
produced during the month. If a Member’s Percentage Interest has changed during
the month, the Percentage Interest for purposes of this Section
10.3
shall
equal the average daily Percentage Interest for the month. Products sold to
a
Member under Section
10.2
shall be
deemed sold on the last day of the month, and Products distributed in kind
to a
Member shall be deemed distributed on the last day of the month.
(d) A
Member
may, in lieu of purchasing its share of Products, by written instruction to
the
Company, elect to receive its share of Products in kind, or to take actions
as
appropriate to cause the sale of its share of Products by the Company to a
third
party purchaser on the terms determined by the Member; provided
that the
Member shall bear directly all additional costs, expenses, losses, claims,
damages and liabilities incurred as a result of any election under this
Section
10.1(d).
Any
cash payments or other consideration received by a Member in connection with
its
share of Products sold under this Section
10.1(d)
shall be
deemed to have been received by the Company and distributed to the Member.
A
Member shall provide to the Manager all information needed to make the
determinations required under Exhibit
C
with
respect to its share of Products.
10.2 Disposition
of Products.
(a) Except
as
provided in Section
10.1(d),
each
Member shall be sold and take in kind its share of all Products. Each Member
may
thereafter separately dispose of the Products it has purchased from the Company.
Each Member shall bear directly all costs and expenses incurred in connection
with such separate disposition.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 40
(b) On
or
before the date that is sixty (60) days
prior
to
the anticipated date of
Commercial Production and
not
later than sixty (60) days
prior
to
the beginning of each calendar year thereafter, the Manager
shall
deliver to the Management
Committee an
estimate of the quantity and timing of production of Products
for
such
calendar year or other period, provided,
that
such estimate shall not be binding on the Manager.
Within
thirty (30) days
after
receipt of such estimate, the Representatives
of
each
Member
shall
deliver to the Manager
its
nomination, based on the Manager’s
estimate, of the types (i.e. powder, briquette or ferromoly) and relative amount
of each such type requested to be sold to such Member
in
kind
based on its Percentage
Interest.
The
Representatives
shall
thereafter work together in good faith to agree upon an annual forecast (the
“Annual
Forecast”)
of
monthly scheduled sales of Products
to the Members during
the relevant period based on the foregoing estimate and nominations. To the
extent of actual production, the Manager
shall
thereafter sell
or
distribute to each Member, or sell on behalf of the Company, such Member’s share
(based upon the Member’s Percentage Interest) of Products, as directed and in
the types and amounts specified by the Member, to
the
extent practicable in accordance with the Annual
Forecast,
except
to the extent such sales of such amounts and types create an unreasonable burden
on the Company
or
any
other Member.
The
Manager shall give the Members notice at least ten (10) days in advance of
the
delivery date upon which their respective shares of Products will be available
for sale. The Products shall be sold to the Members at the price determined
quarterly by the entire Management Committee; provided
that
the
price shall be a representative market price taking into consideration the
competitive market conditions, along with normal volume discounts, commissions,
and transportation differentials; and provided,
further, that
the
price shall not be higher than the price received by Nevada Moly or any of
its
Affiliates for external spot sales during the quarter. The
Manager may offset the distribution to be made to a Member pursuant to the
last
two sentences of Section
10.1(a)
against
the sales price to be paid by a Member for the Product sold to such Member.
All
disputes or disagreements concerning the price or other terms of sales of
Product under this Section
10.2(b)
shall be
resolved by the Accounting Arbitrator in accordance with Section
9.4(c),
provided
that
the
Accounting Arbitrator shall keep all information provided by a Member
confidential and shall not disclose such information to the other
Member.
(c) Any
costs
of the Company for severance taxes, net proceeds taxes, ad valorem taxes and
other taxes or royalties imposed (including any potential federal royalties
that
may be imposed in the future) in connection with the production of Products
shall be an expense of the Company subject to Monthly Capital Calls. Any
additional expenditures incurred by the Company in the selling in kind and
separate disposition thereafter by any Member of its proportionate share of
Products, including any storage, freight to final destination, insurance, and
premiums for the incremental cost of one type of Product over another type
of
Product (i.e. powder, briquette or ferromoly), shall be an expense of such
Member, and shall be reimbursed by such Member to the Company within thirty
(30)
days of receipt of an invoice for the same from the Manager. Any such
reimbursement shall not be considered a capital contribution and shall not
increase the Capital Account of the reimbursing Member.
10.3 Excess
Nevada Moly Products.
(a) If
Nevada
Moly determines in its sole discretion that it has quantities of Product that
are sold or distributed to it, or that are available for sale, by the Company
and that are unsold and uncommitted to third parties, Nevada Moly shall offer
such quantities of Product to POS-Minerals, in which case POS-Minerals shall
have the right to acquire all or any portion of such unsold and uncommitted
quantities at the most competitive price received by Nevada Moly from
third-parties for Product sales of similar quantities, with similar
specifications over similar time periods and on transportation and other similar
terms, as reasonably determined by Nevada Moly.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 41
(b) If
POS-Minerals exercises its right pursuant to the preceding sentence, upon
reasonable notice to Nevada Moly, POS-Minerals shall have the right to appoint
a
nationally-recognized independent certified public accounting firm with
experience in the mining industry to audit the records of Nevada Moly and its
Affiliates, if applicable, during normal business hours, and so long as such
auditor does not unreasonably interfere with or disrupt the operations of Nevada
Moly and General Moly, to verify that the most competitive price was reasonably
calculated in accordance with Section
10.3(a),
which
firm shall keep confidential from POS-Minerals and not disclose to any Person
the price and other information that it reviews, and shall only inform
POS-Minerals in writing whether such most competitive price information was
or
was not reasonably calculated by Nevada Moly. A copy of such determination
shall
promptly be provided to Nevada Moly. All exceptions to and claims for
discrepancies shall be resolved by the Accounting Arbitrator in accordance
with
Section
9.4(c),
provided
that
the
Accounting Arbitrator shall keep confidential from POS-Minerals and not disclose
to any Person the price and other information that it reviews, and shall only
inform the parties in writing as to its determination of a reasonably calculated
most competitive price, which shall be binding on the parties.
10.4 Failure
of Member to Remove Product.
If a
Member (the “Recipient
Member”)
fails
to remove from the Properties its share of any Products as determined under
Section
10.2
within
ninety (90) days after the determination of the Recipient Member’s share of such
Products, the other Member (the “Agent
Member”)
shall
have the right, but not the obligation, for a period of sixty (60) days after
the expiration of the foregoing ninety (90) day period, to purchase such
Products from the Recipient Member for the Agent Member’s own account or to sell
such Products as agent for the Recipient Member at a price not less than ninety
percent (90%) of the Spot Price. Any Agent Member selling Products on behalf
of
the Recipient Member pursuant to this Section
10.4
shall be
entitled to deduct from the proceeds of any such sale the reasonable expenses
of
the Agent Member incurred in such a sale.
ARTICLE
XI
RESIGNATION
AND DISSOLUTION
11.1 Dissolution.
The
Company shall be dissolved only upon the occurrence of any of the
following:
(a) upon
the
unanimous agreement of the Management Committee; or
(b) at
the
election of POS-Minerals if it has not received the distribution described
in
Section
4.1(c)(iii)
within
ten (10) Business Days after the date of the Third Installment
Election.
11.2 Resignation.
A
Member may elect to resign as a Member of the Company by giving written notice
to the other Member of the effective date of the resignation, which shall be
the
later of the end of the then current Program and Budget or at least thirty
(30)
days after the date of the notice. Upon such resignation, the Company shall
acquire the resigning Member’s entire Membership Interest for Ten Dollars
($10.00), free and clear of any Encumbrances arising by, through or under the
resigning Member, except for those Encumbrances to which both Members have
given
their written consent after the Execution Date, and such Membership Interest
shall be cancelled. The resigning Member shall not be entitled to any
distribution upon such resignation or any further consideration from the Company
whatsoever. Any such resignation under this Section
11.2
shall
not relieve the resigning Member of its obligations under Section
5.5
(whether
any liability with respect thereto accrues before or after such resignation)
arising out of Operations conducted prior to such resignation.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 42
11.3 Liquidation
and Termination After Dissolution.
Upon
the dissolution of the Company under Section
11.1,
the
Manager shall appoint in writing one or more liquidators (who may be a Member
or
Managers) who shall have the authority set forth in Section
11.6.
The
liquidator shall take all action necessary to wind up the activities of the
Company, and all costs and expenses incurred in connection with the liquidation
and termination of the Company shall be expenses chargeable to the Company.
The
liquidator may determine which assets, if any, are to be distributed in kind,
and shall sell or otherwise dispose of all other assets of the Company. All
gain
or loss with respect to the assets (including assets distributed in kind) shall
be allocated among the Members in accordance with the applicable provisions
of
Exhibit
C.
Should
a Member have a deficit balance in its Capital Account (after giving effect
to
such allocations of gain or loss), the Member shall not be obligated to make
a
contribution to the Company to restore all or any part of such Capital Account
deficit. The assets of the Company shall first be paid, applied, or distributed
in satisfaction of all liabilities of the Company to third parties (or to making
reasonable provision for the satisfaction thereof) and then to satisfy any
debts, obligations, or liabilities owed to the Members. Thereafter, any
remaining cash and all other Assets shall be distributed to the Members in
accordance with Section 4.2(b) of Exhibit
C.
Each
Member shall have the right to designate another Person to receive any property
that otherwise would be distributed in kind to that Member pursuant to this
Section
11.3.
Upon
the completion of the winding up of the Company, the liquidator shall cancel
the
certificate of formation of the Company and take such other actions as may
be
reasonably necessary to terminate the continued existence of the
Company.
11.4 Non-Compete
Covenants.
A
Member who resigns from the Company pursuant to Section
11.2
or is
deemed to have resigned pursuant to Section
5.5,
or a
Member who Transfers or forfeits its entire Membership Interest, shall not
directly or indirectly acquire any interest in property within the Area of
Interest for twenty-four (24) months after the effective date of the
resignation, forfeiture or Transfer. If a resigning, forfeiting or transferring
Member, or any Affiliate of the foregoing, breaches this Section
11.4,
such
Member or Affiliate shall be obligated to offer to convey to the other Member,
without cost, any such property or interest so acquired. Such offer shall be
made in writing and can be accepted by such other Member at any time within
forty-five (45) days after it is received by such other Member.
11.5 Right
to Data After Termination.
After
the termination of the continued existence of the Company pursuant to
Section
11.3,
each
Member shall be entitled to copies of all information acquired hereunder before
the effective date of termination not previously furnished to it, but a
resigning Member, or a Member that forfeits or Transfers its entire Membership
Interest, shall not be entitled to any such copies after any such
resignation.
11.6 Continuing
Authority.
From
and after the dissolution of the Company under Section
11.1,
the
liquidator shall have the power and authority of the Members, the Manager and
the Management Committee to do all things on behalf of the Company that are
reasonably necessary or convenient to: (a) wind up the Operations and the
Company, (b) continue to operate the Properties and other Assets of the Company
during the winding up of the Operations and the Company and (c) complete any
transaction and satisfy any obligation, unfinished or unsatisfied, at the time
of such dissolution, if the transaction or obligation arises out of Operations
prior to such dissolution. The liquidator shall have the power and authority
to
grant or receive extensions of time or change the method of payment of an
already existing liability or obligation, prosecute and defend actions on behalf
of the Company, mortgage Assets, and take any other reasonable action in any
matter with respect to the Company or the Operations.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 43
ARTICLE
XII
ACQUISITIONS
WITHIN AREA OF INTEREST
12.1 General.
Any
interest or right to acquire any interest in real property (other than water
rights, which are covered by the KVR Water Lease) within the Area of Interest
acquired during the term of this Agreement by or on behalf of a Member or any
Affiliate shall be subject to the terms and provisions of this Agreement,
subject in each case to any rights of Mount Hope Mines, Inc. under the terms
of
the Project Lease.
12.2 Notice
to Nonacquiring Member.
Within
twenty (20) days after the acquisition of any interest or the right to acquire
any interest in real property wholly or partially within the Area of Interest
(except real property acquired by or on behalf of the Company pursuant to a
Program), the acquiring Member shall notify the other Member of such
acquisition. The acquiring Member’s notice shall describe in detail the
acquisition, the lands and minerals covered thereby, the cost thereof, and
the
reasons why the acquiring Member believes that the acquisition of the interest
is in the best interests of the Company under this Agreement. In addition to
such notice, the acquiring Member shall make any and all information concerning
the acquired interest available for inspection by the other Member.
12.3 Option
Exercised.
If,
within fifteen (15) days after receiving the acquiring Member’s notice, the
other Member notifies the acquiring Member of its election to participate in
the
acquired interest, the acquiring Member or its Affiliate shall convey to the
Company (or to the other Member or another entity as mutually agreed by the
Members), by special warranty deed, its entire acquired interest (or if to
the
other Member, a proportionate undivided interest therein based on the Percentage
Interests of the Members). If conveyed to the Company, the acquired interest
shall become a part of the Properties for all purposes of this Agreement
immediately upon the notice of such other Member’s election to participate
therein. Such other Member shall promptly pay to the acquiring Member its
proportionate share based on Percentage Interests of the latter’s actual
out-of-pocket acquisition costs.
12.4 Option
Not Exercised.
If the
other Member does not give such notice within the fifteen (15) day period set
forth in Section
12.3,
neither
such Member nor the Company shall have any interest in the acquired interest,
and the acquired interest shall not be a part of the Properties or otherwise
be
subject to this Agreement.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 44
ARTICLE
XIII
ABANDONMENT
AND SURRENDER OF PROPERTIES
13.1 Surrender
or Abandonment of Property.
The
Management Committee may authorize the Manager to surrender or abandon part
or
all of the Properties. If the Management Committee authorizes any such surrender
or abandonment over the objection of a Member, the Company shall assign to
the
objecting Member, by special warranty deed and without cost to the surrendering
Member, all of the Company’s interest in the property to be abandoned or
surrendered, and the abandoned or surrendered property shall cease to be part
of
the Properties and the Company shall have no further right, title or interest
therein.
13.2 Reacquisition.
If any
Properties are abandoned or surrendered under the provisions of this
Article
XIII,
then,
unless this Agreement is earlier terminated, neither Member nor any Affiliate
thereof shall acquire any interest in such Properties or a right to acquire
such
Properties for a period of two (2) years following the date of such abandonment
or surrender. If a Member reacquires any Properties in violation of this
Section
13.2,
the
other Member may elect by notice to the reacquiring Member within forty-five
(45) days after it has actual notice of such reacquisition, to have such
properties contributed to the Company. In the event such an election is made,
the reacquired properties shall thereafter be treated as Properties, and the
costs of reacquisition shall be borne solely by the Member required to
contribute such Properties to the Company, but shall not be credited to the
Capital Account of the contributing member or taken into account for purposes
of
calculating the Members’ respective Percentage Interests.
ARTICLE
XIV
TRANSFER
OF INTEREST
14.1 General.
Subject
to Sections
14.2
and
14.3
and
14.5,
a
Member shall have the right to Transfer to any Person all or any part of its
Membership Interest or any economic interest therein (including its right to
receive distributions of cash or property from the Company).
14.2 Limitations
on Free Transferability.
The
Transfer right of a Member in Section
14.1
shall be
subject to the following terms and conditions:
(a) No
Transfer of a Membership Interest or any economic interest therein shall be
valid or recognized by the Company unless and until the transferring Member
has
provided to the other Member and the Company notice of the Transfer (including
all information required in Treas. Regs. § 1.743-1(k)(2)), and the
transferee, as of the effective date of the Transfer, has committed in writing
to be bound by this Agreement to the same extent as the transferring
Member;
(b) No
Member, without the consent of the other Member, shall make a Transfer of a
Membership Interest that shall cause the termination of the Company as a
partnership for Federal income tax purposes, including under Section
708(b)(1)(B) of the Code;
(c) So
long
as POS-Minerals is a Member, no Member shall Transfer a Membership Interest
or
any economic interest therein to a POSCO Competitor;
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 45
(d) Nevada
Moly shall not make Transfers of its Membership Interest corresponding to a
Percentage Interest of greater than twenty percent (20%) in the
aggregate;
(e) POS-Minerals
shall not Transfer its Membership Interest or any interest therein so long
as
POS-Minerals has any remaining liabilities or obligations with respect to the
POS-Minerals Initial Contribution;
(f) No
Transfer permitted by this Article
XIV
shall
relieve the transferring Member of its share of any liability, whether accruing
before or after such Transfer, that arises out of Operations conducted prior
to
such Transfer;
(g) As
provided in Exhibit
C,
the
transferring Member and the transferee shall bear all tax consequences to either
of them or to the Company of the Transfer;
(h) In
the
event of a Transfer of less than all of a Member’s Membership Interest, the
transferring Member and its transferee shall thereafter act and be treated
as
one Member, with the Member with the greater Percentage Interest hereby
appointed as the agent and attorney-in-fact of the Member with the lesser
Percentage Interest with respect to the exercise of all rights to vote, consent,
approve or otherwise make any decisions with respect to the management or
Operations or the Company;
(i) No
Member
shall enter into any sale or other commitment or agree to dispose of Products
or
proceeds from the sale of Products by such Member upon distribution to it
pursuant to Article
X
if such
sale or other commitment will create in a third party any Encumbrance on any
Products or proceeds therefrom prior to any such distribution;
(j) No
Membership Interest or any interest therein shall be Transferred to a
Governmental Authority; and
(k) No
Membership Interest or any interest therein shall be Transferred in violation
of
any Law.
14.3 Right
of First Refusal.
(a) Except
as
otherwise provided in Section 14.4,
no
Member (the “Selling
Member”)
may
Transfer all or any portion of its Membership Interest to any Person, unless
the
Selling Member first provides a written offer notice (an “Offer
Notice”)
to the
other Member (the “Notified
Member”)
stating that the Selling Member desires to Transfer all or a portion of its
Membership Interest, designating the specific portion of the Membership Interest
(the “Offered
Interest”)
that
the Selling Member desires to Transfer, and specifying the proposed purchase
price (the “Offered
Price”)
and
all of the other proposed terms and conditions of the proposed Transfer of
the
Offered Interest (the “Offered
Terms”).
(b) The
Notified Member shall have the right, but not the obligation, for a period
of
twenty (20) Business Days after its receipt of the Offer Notice, to elect to
purchase all, but not less than all, of the Offered Interest for the Offered
Price and on the other Offered Terms. Any such election shall be made by
providing written notice of such election to the Selling Member within such
twenty (20) Business Day period.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 46
(c) If
the
Notified Member timely elects to purchase the Offered Interest, the parties
shall close the sale of the Offered Interest for the Offered Price and on the
Offered Terms on the later
of
(i)
thirty (30) Business Days after the Selling Member provides the Offer Notice,
and (ii) five (5) Business Days after the receipt of all required consents
and
approvals, if any, with respect to such Transfer from all Governmental
Authorities. If the Notified Member does not elect to purchase the Offered
Interest or the Notified Member fails to close the purchase thereof within
the
time period specified above, the Selling Member may Transfer all, but not less
than all, of the Offered Interest to any third-party purchase during the
later
of (1)
the
ninety (90)-day period following the expiration of such twenty 20-Business
Day
election period, or (2) if the Notified Member elects to purchase but fails
to close within the time period specified above, the ninety (90) day period
following the expiration of such period, but only for a cash value of the
consideration received by the Selling Member that is greater than or equal
to
the Offered Price and on the Offered Terms. If the Selling Member does not
sell
the Offered Interest in accordance with the terms described above within the
foregoing ninety (90) day period, the Selling Member shall again afford the
Notified Member the purchase rights set forth in this Section 14.3
with
respect to any offer to sell, assign or dispose of all or any portion of the
Offered Interest or any other Membership Interest held by the Selling
Member.
14.4 Exceptions
to Right
of First Refusal.
Section
14.3
shall
not apply to the following:
(a) Any
Transfer by a Member of all or any part of its Membership Interest to an
Affiliate of such Member (but only for so long as the transferee and its
successors and assigns, remain an Affiliate of such Member);
(b) Subject
to Section
14.5,
the
Encumbrance by a Member of its Membership Interest to secure Indebtedness of
such Member or any Affiliate of such Member;
(c) Subject
to Section
14.6,
the
indirect transfer by any direct or indirect member, stockholder, shareholder
or
other equity owner of any Member; or
(d) A
sale or
other commitment or disposition of Products or proceeds from the sale of
Products by a Member upon distribution to it pursuant to Article
X.
14.5 Right
to Purchase Before Foreclosure
(b) If
a
Member shall cause or permit any Encumbrance on all or any portion of its
Membership Interest (the “Encumbered
Interest”)
to
secure Indebtedness of such Member or any Affiliate of such Member, the
Membership Interest subject to the Encumbrance shall not be Transferred in
foreclosure or in lieu of foreclosure, unless the Member that has the Membership
Interest subject to the Encumbrance (the “Encumbered
Member”)
first
provides a written offer notice (a “Foreclosure
Notice”)
to the
other Member (the “Non-Encumbered
Member”)
stating that the Encumbered Member desires to Transfer the Encumbered Interest
to the Non-Encumbered Member prior to the Transfer of the Encumbered Interest
in
foreclosure or in lieu of foreclosure. The Non-Encumbered Member shall have
the
right, but not the obligation, for a period of five (5) Business Days after
its
receipt of the Foreclosure Notice, to elect to purchase all, but not less than
all, of the Encumbered Interest for the Fair Market Value of the Encumbered
Interest. Any such election shall be made by providing written notice of such
election to the Encumbered Member within such five (5) Business Day
period.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 47
(c) If
the
Non-Encumbered Member timely elects to purchase the Encumbered Interest, the
parties shall close the sale of the Encumbered Interest for the Fair Market
Value on the later
of
(i) ten
(10) Business Days after the final determination of the Fair Market Value
pursuant to this Section
14.5,
and
(ii) five (5) Business Days after the receipt of all required consents and
approvals, if any, with respect to such Transfer from all Governmental
Authorities. The Fair Market Value shall be payable at the closing in
immediately available funds in United States dollars. If the Non-Encumbered
Member does not elect to purchase the Encumbered Interest or the Non-Encumbered
Member fails to close the purchase thereof within the time period specified
above, the Encumbered Member may Transfer the Encumbered Interest in connection
with the foreclosure or in lieu of foreclosure.
(d) As
used
herein, the term “Fair
Market Value”
means
the amount that a willing buyer would pay and a willing seller would accept
in
an arm’s-length transaction for the Encumbered Interest, determined by utilizing
a valuation that (i) assumes the Company continues with the Operations as a
going concern, (ii) takes into account any “control premium” or “minority
discount” and (iii) takes into account any “lack of marketability discount.” The
Fair Market Value shall be agreed by the Encumbered Member and the
Non-Encumbered Member within twenty (20) Business Days after the Foreclosure
Notice, or if they cannot agree within such period, as determined in accordance
with the Appraisal Procedure.
(e) As
used
herein, the term “Appraisal
Procedure”
means
the procedure set forth in this Section
14.5(d)
for the
determination of the Fair Market Value of the Encumbered Interest. If the
Encumbered Member and the Non-Encumbered Member cannot agree on the Fair Market
Value of the Encumbered Interest as provided in Section
14.5(c),
the
Fair Market Value shall be determined
by a panel of two independent investment bankers or business appraisers with
substantial experience in valuing mining companies with assets and businesses
reasonably similar to the Company (the “Appraisers”).
One
Appraiser shall be designated by the Encumbered Member and the other Appraiser
shall be designated by the Non-Encumbered Member. Each Appraiser shall be
designated as promptly as practicable, but no later than thirty (30) Business
Days after the Foreclosure Notice. The fees of each Appraiser shall be paid
by
the party designating such Appraiser. In the event one party fails to designate
an Appraiser and notify the other party in writing of such designation within
the thirty (30)-day period described above, the Fair Market Value shall be
determined by the Appraiser designated by the other party within such thirty
(30)-day period and such determination shall be binding on the parties. The
Appraisers shall be afforded full access during normal business hours to the
properties, books and records of the Company and the Company shall furnish
such
additional information as the Appraisers and their representatives shall from
time to time reasonably request.
Each
Appraiser shall deliver to the parties its written determination of the Fair
Market Value of the Encumbered Interest within sixty (60) days after the
Foreclosure Notice. If the higher determination of the Fair Market Value is
not
greater than one hundred ten percent (110%) of the lower determination, then
the
Fair Market Value of the Encumbered Interest shall be deemed to be the average
of those two determinations. If the higher determination of the Fair Market
Value is greater than one hundred ten percent (110%) of the lower determination,
then the two Appraisers shall jointly select a third Appraiser within ten (10)
Business Days after the date on which they are informed of such difference.
Such
third Appraiser shall deliver to the parties its written determination of the
Fair Market Value of the Encumbered Interests within thirty (30) days after
the
date of its retention, and the Fair Market Value of the Encumbered Interest
shall be deemed to be the average of the two closest determinations or, if
there
are not two closest determinations, the average of all three determinations.
The
costs of the third Appraiser shall be shared equally by the Encumbered Member
and the Non-Encumbered Member.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 48
(f) Notwithstanding
anything herein to the contrary, a Member shall not Encumber all or any portion
of its Membership Interest to secure any Indebtedness unless the secured party
with respect thereto acknowledges and consents to the terms of this Section
14.5.
14.6 Sale
Right.
(a) If
after
the occurrence of a Change of Control of Nevada Moly or General Moly (i) on
or
before December 31, 2010, Nevada Moly or the transferee or surviving entity
after the Change of Control of Nevada Moly or General Moly (the “Surviving
Entity”),
does
not initiate full construction of the Project as then contemplated in either
the
Bankable Feasibility Study or an approved Program and Budget by December 31,
2010, or (ii) after December 31, 2010, Nevada Moly or the Surviving Entity
fails, for a period of twelve (12) consecutive months, subject to an event
of
Force Majeure, to use Standard Mining Industry Practice in connection with
the
Development and Operation of the Project as then contemplated in either the
Bankable Feasibility Study or in an approved Program and Budget, then, in each
such case, POS-Minerals shall have the right (but not the obligation) to send
a
notice (a “Put
Notice”)
to the
Surviving Entity, in which case the Surviving Entity, or one more other Persons
designated by the Surviving Entity, shall be obligated to purchase all, but
not
less than all, of the Membership Interests of POS-Minerals for the Put Price
with respect to the applicable Membership Interests. The purchase and sale
pursuant to this Section 14.6
shall
take place at a closing in accordance with the following terms: (i) the Put
Price shall be payable at the closing in immediately available funds in United
States dollars or as provided in Section
14.6(c),
(ii)
the closing shall occur no more than sixty (60) days after the delivery of
the
Put Notice; provided
that all
necessary approvals of Governmental Authorities have been obtained, with an
effective date of the first day of the month in which the closing occurs, and
(iii) the Membership Interests of POS-Minerals shall be conveyed free and clear
of all Encumbrances created by, through or under POS-Minerals.
(b) The
“Put
Price”
for
purposes of this Section 14.6
shall be
an amount equal to the sum of (i) the aggregate amount of capital contributions
made by POS-Minerals to the Company prior to the date of closing, multiplied
by one
hundred twenty percent (120%), plus
(ii) an
amount calculated like interest at a rate of ten percent (10%) per annum on
one
hundred twenty percent (120%) of each capital contribution made by POS-Minerals
to the Company, as if one hundred twenty percent (120%) of each such capital
contribution were loaned to Nevada Moly on the date of each such capital
contribution and repaid on the closing of the purchase and sale pursuant to
this
Section
14.6.
(c) The
Put
Price for the Membership Interest of POS-Minerals pursuant to this Section 14.6
may be
paid, at the election of the Surviving Entity, twenty percent (20%) at the
time
of closing, with the balance paid within six (6) months after the time of
closing with accrued interest on the unpaid balance at a rate per annum equal
to
LIBOR, plus
three
(3) percentage points.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 49
14.7 Substitution
of a Member.
(a) Any
transferee of a Membership Interest with respect to a Transfer that is permitted
hereunder shall, subject to compliance with Sections
14.7(b),
14.8
and
14.9,
automatically be admitted to the Company as a Member. No transferee of a
Membership Interest with respect to a Transfer that is not permitted hereunder
shall become a substituted Member without the written consent of the
Representatives of the non-transferring Member, which consent may be withheld
in
the sole discretion of such Representatives. A permitted transferee of a
Membership Interest or a transferee of a Membership Interest who receives the
requisite consent to become a Member shall succeed to all of the rights and
interest of its transferor in the Company. A transferee with respect to a
Transfer that is not permitted and who does not receive the requisite consent
to
become a Member shall not have any right to be admitted to the Company as a
Member, shall be entitled only to the allocations and distributions to which
its
transferor otherwise would have been entitled and shall have no other right
to
participate in the management of the business and affairs of the Company or
to
become a Member.
(b) No
Transfer of a Membership Interest otherwise permitted under this Agreement
shall
be effective for any purpose whatsoever until the transferee shall have assumed
the transferor’s obligations to the extent of the interest Transferred, and
shall have agreed to be bound by all the terms and conditions hereof, by written
instrument, duly acknowledged, in form and substance reasonably satisfactory
to
the Manager. Without the consent of the non-transferring Member, the Transfer
by
a Member of all or any portion of its Membership Interest shall not release
such
Member from any of its obligations hereunder with respect to such Membership
Interest. Without limiting the foregoing, any transferee that has not become
a
substituted Member shall nonetheless be bound by the provisions of this
Article
XIV
with
respect to any subsequent Transfer.
14.8 Conditions
to Substitution.
As
conditions to its admission as a Member (a) any assignee, transferee or
successor of a Member shall execute and deliver such instruments, in form and
substance satisfactory to the Manager, as the Manager shall deem necessary,
and
(b) such assignee, transferee or successor shall pay all reasonable
expenses in connection with its admission as a substituted Member.
14.9 Admission
as a Member.
No
Person shall be admitted to the Company as a Member unless either (a) the
Membership Interest or part thereof acquired by such Person has been registered
under the Securities Act, and any applicable state securities laws or (b) the
Manager has received a favorable opinion of the transferor’s legal counsel or of
other legal counsel acceptable to the Manager to the effect that the Transfer
of
the Membership Interest to such Person is exempt from registration under those
Laws. The Members (excluding the transferring Member), however, may waiver
the
requirements of this Section
14.9.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 50
ARTICLE
XV
DISPUTES
15.1 Dispute
Resolution.
Except
as
provided in Sections
9.4
and
10.3
of this
Agreement or Section 2.4 of the Contribution Agreement, any controversy, claim
or dispute between or among two or more of the Members, the Manager, the Company
and any of their respective Affiliates, if any (each, a “Dispute
Party”)
(but
excluding any controversy, claim or dispute to which all of the parties thereto
are any of Nevada Moly and its Affiliates, or any controversy, claim or dispute
to which all of the parties thereto are any of POS-Minerals and its Affiliates)
arising out of, relating to or in connection with any Project Document or the
Company (a “Dispute”),
and
that is not otherwise settled by agreement between or among such parties, shall
be exclusively and finally resolved pursuant to the provisions and procedures
set forth in this Article
XV.
Without
limiting the generality of the foregoing, the following shall be considered
Disputes for this purpose: (a) all questions relating to the interpretation
or
breach of any Project Document, (b) all questions relating to any
representations, negotiations and other proceedings leading to the execution
of
any Project Document and (c) all questions regarding the application of this
Article
XV
and the
arbitration provisions contained herein or in any other Project Document to
any
Dispute. Notwithstanding the foregoing provisions of this Section
15.1,
the
Dispute Parties agree that any legal action for a preliminary injunction or
other prejudgment relief will be resolved by the Arbitration Panel appointed
in
accordance with Section
15.3;
provided,
that,
at any time before the Arbitration Panel has been appointed, any Dispute Party
may seek a preliminary injunctive or other prejudgment relief from the Delaware
Court of Chancery or other court of competent jurisdiction to the extent
necessary to preserve the status quo or to preserve a Dispute Party’s ability to
obtain meaningful relief pending the outcome of the arbitration proceeding
under
this Article
XV.
Any
Dispute Party may bring an action in the Delaware Court of Chancery or another
court of competent jurisdiction to compel arbitration of any Dispute after
the
procedure under Section
15.2
is
exhausted; provided,
that to
the fullest extent permitted by Law, each Dispute Party hereby waives and
relinquishes any right under the Act or otherwise to compel the resolution
of
any substantive issues regarding a Dispute in the Delaware Court of Chancery
or
any other court, or to request any other relief from the Delaware Court of
Chancery or any other court except as specifically set forth in this
Article
XV.
15.2 Executive
Mediation.
In the
event of any Dispute, upon written request of any Dispute Party, such Dispute
shall immediately be referred to one representative of the executive management
designated by each Dispute Party in respect of such Dispute who is authorized
to
settle such Dispute. Such representatives shall promptly meet in a good faith
effort to resolve such Dispute. If the representatives designated by the
relevant Dispute Parties pursuant to this Section
15.2
do not
resolve such Dispute within ten (10) Business Days after such written request,
such Dispute shall be exclusively and finally resolved by binding arbitration
in
accordance with the provisions and procedures set forth in Section
15.3.
15.3 Arbitration. The
arbitration shall be administered by the American Arbitration Association (the
“AAA”)
under
its Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrators may be entered in any court of competent jurisdiction. In connection
with any proceedings concerning the recognition or enforcement of the arbitral
award, each Dispute Party consents to personal jurisdiction and venue in the
federal and state courts in Denver, Colorado, and waives any objection that
it
otherwise might have as to whether these courts are a sufficiently convenient
forum.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 51
(a) The
arbitration shall be conducted before a panel of three arbitrators, each of
whom
shall be fluent in English, have experience in the mining industry, and be
neutral and independent of the parties (the “Arbitration
Panel”).
The
claimant or claimants shall appoint one arbitrator in the demand for
arbitration, and the respondent or respondents shall appoint one arbitrator
in
the answer to the demand for arbitration. The third arbitrator shall be selected
by the two arbitrators so appointed; provided,
however,
if the
two arbitrators so appointed fail to select the third arbitrator within thirty
(30) days after the date on which the last of such two arbitrators are
appointed, then the third arbitrator shall be appointed by the AAA. The third
arbitrator, regardless of how selected, shall chair the Arbitration Panel.
Once
the arbitrators are impaneled, if (i) an arbitrator withdraws after a challenge,
(ii) an arbitrator dies, or (iii) an arbitrator otherwise resigns or is removed,
then such arbitrator shall be replaced within thirty (30) days by the applicable
party or arbitrators in accordance with this Section
15.3(a).
(b) The
place
of arbitration shall be Denver, Colorado. The arbitration shall be conducted
in
English; provided that any Dispute Party, at its cost, may provide for the
translation of the arbitration proceeding into a language other than English.
(c) Unless
the Arbitration Panel orders an earlier date, not less than 30 days before
the
beginning of the evidentiary hearing, each Dispute Party shall submit to the
other Dispute Party the documents, in English, that it intends to use in the
arbitration and a list of the witnesses whom the Dispute Party intends to call
at the hearing. Each Dispute Party or its legal counsel shall have the right
to
examine witnesses and to cross-examine the witnesses of the opposing party.
(d) To
the
extent reasonably possible, the Arbitration Panel shall issue its final award
within six months after the date on which the third arbitrator is designated.
The decision of the Arbitration Panel shall be final and binding. The award
shall be in the form of written findings of fact and the conclusions of law
upon
which the decision is based. The award shall not include any indirect,
incidental, special, consequential, or punitive damages. Each Dispute Party
shall bear its own costs, expenses, and attorneys’ fees incurred in connection
with the arbitration. The claimant or claimants and the respondent or
respondents shall each be responsible for one-half of the arbitrators’
fees.
(e) Notwithstanding
the pendency of any arbitration, the obligations of the Dispute Parties under
each Project Document shall remain in full force and effect; provided,
however, that no Dispute Party shall be considered in default under any Project
Document (except for defaults in respect of the payment of money) during the
pendency of an arbitration specifically relating to such default.
(f) The
arbitrators have no authority to make any ruling, finding or award that does
not
conform to the terms and conditions of any Project Document as interpreted
under
the Law chosen by the parties to such Project Document as the Law pursuant
to
which such Project Documents is to be governed by, interpreted or construed,
without regard to any conflicts of Law provision or rule that would cause the
application of the laws of any jurisdiction other than such jurisdiction,
including in each case any applicable statute of limitations. The Arbitration
Panel shall have no authority to award exemplary, punitive, special, indirect,
or consequential damages, but shall otherwise have the power to order any remedy
available at law or in equity under the law chosen by the parties for such
Project Document that is not prohibited by the terms and provisions of the
Project Documents.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 52
ARTICLE
XVI
GENERAL
PROVISIONS
16.1 Entire
Agreement;
Successors and Assigns.
This
Agreement (together with the Exhibits hereto) contain, and are intended as,
a
complete statement of all of the terms of the agreements among the Members
with
respect to the matters provided for herein, and supersede and discharge any
previous agreements and understandings between the Members with respect to
those
matters.
This
Agreement shall be binding upon and inure to the benefit of the Members and
their respective successors and permitted assigns. In the event of any conflict
between this Agreement and any Exhibit attached hereto, the terms of this
Agreement shall control.
16.2 Governing
Law;
Language.
This
Agreement shall be governed by and construed in accordance with the Laws of
the
State of Delaware, without regard to any choice or conflicts of law provision
or
rule that would cause the application of the Laws of any jurisdiction other
than
the State of Delaware. This
Agreement has been negotiated and executed by the Parties in English. In the
event any translation of this Agreement is prepared for convenience or any
other
purpose, the provisions of the English version shall govern.
16.3 Force
Majeure.
Except
for any obligation to make payments when due hereunder, the obligations of
a
Member or the Manager shall be suspended to the extent and for the period that
performance is prevented by any event of Force Majeure. The Member or Manager
affected by the Force Majeure shall promptly give notice to the other Member
of
the suspension of performance, stating therein the nature of the suspension,
the
reasons therefor, and the expected duration thereof. The affected Member or
Manager shall resume performance as soon as reasonably possible. During the
period of suspension the obligations of the Members to advance funds pursuant
to
Section
9.2
shall be
reduced to levels consistent with Operations.
16.4 Confidentiality.
Each
Member and Manager will keep confidential and not use, reveal, provide or
transfer to any third party any Confidential Information it obtains or has
obtained concerning the Company, except (a) to the extent that disclosure to
a
third party is required by Law; (b) information that, at the time of disclosure,
is generally available to the public (other than as a result of a breach of
this
Agreement or any other confidentiality agreement to which such Person is a
party
or of which it has knowledge), as evidenced by generally available documents
or
publications; (c) information that was in its possession prior to disclosure
(as
evidenced by appropriate written materials) and was not acquired directly or
indirectly from the Company; (d) to the extent disclosure is necessary or
advisable, to its or the Company’s employees, consultants or advisors for the
purpose of carrying out their duties hereunder; (e) to banks or other financial
institutions or agencies or any independent accountants or legal counsel or
investment advisors employed by the Manager, the Company or any Member, to
the
extent disclosure is necessary or advisable to obtain financing; (f) to the
extent necessary, disclosure to third parties to enforce this Agreement; (g)
to
a Member or Manager or to their respective Affiliates; or (h) to the extent
a
Member or Manager determines in good faith that disclosure is required for
such
Member or Manager or any of its Affiliate to comply with their respective
disclosure obligations under the Exchange Act or other Laws or any listing
or
trading agreement concerning their respective publicly traded securities (in
which case of this clause
(h)
the
disclosing party will use commercially reasonable efforts to advise the other
parties prior to making such disclosure); provided,
however,
that in
each case of disclosure pursuant to clause
(d),
(e)
or
(g),
the
Persons to whom disclosure is made agree to be bound by this confidentiality
provision. The obligation of each Member and Manager not to disclose
Confidential Information except as provided herein shall not be affected by
the
termination of this Agreement or the replacement of the Manager or any
Member.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 53
16.5 Headings.
The
subject headings of the Articles, Sections and Subsections of this Agreement
and
the Paragraphs and Subparagraphs of the Exhibits to this Agreement are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.
16.6 Notices.
All
notices and other communications hereunder shall be in writing and shall be
delivered personally, telecopied (if receipt of which is confirmed by the Person
to whom sent), or sent by internationally recognized overnight delivery service
to the Dispute Parties, the Members, the Manager or the Representatives, at
their respective addresses set forth in the books and records of the Company.
Notice shall be deemed given and received upon receipt, if delivered personally,
by overnight delivery service or by telecopy, or on the third Business Day
following mailing, if mailed, except that notice of a change of address shall
not be deemed given and received until actually received.
16.7 Severability.
If at
any time any covenant or provision contained herein is deemed in a final ruling
of a court or other body of competent jurisdiction to be invalid or
unenforceable, such covenant or provision shall be considered divisible and
such
covenant or provision shall be deemed immediately amended and reformed to
include only such portion of such covenant or provision as such court or other
body has held to be valid and enforceable; and the Parties agree that such
covenant or provision, as so amended and reformed, shall be valid and binding
as
though the invalid or unenforceable portion had not been included
herein.
16.8 Amendment;
Waiver.
No
provision of this Agreement may be amended or modified except by an instrument
or instruments in writing signed by all of the Members and designated as an
amendment or modification. No waiver by any Member of any provision of this
Agreement shall be valid unless in writing and signed by the Member making
such
waiver and designated as a waiver. No failure or delay by any Member or Manager
in exercising any right, power, or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof or the exercise of
any
other right, power, or remedy preclude any further exercise thereof or the
exercise of any other right, power, or remedy. No waiver of any provision hereof
shall be construed as a waiver of any other provision.
16.9 Further
Assurances.
Each
Party agrees to take from time to time such actions and execute such additional
instruments as may be reasonably necessary or convenient to implement and carry
out the intent
and
purpose of this Agreement.
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 54
16.10 No
Benefit to Others.
Except
as expressly set forth herein, the representations, warranties, covenants,
and
agreements contained in this Agreement are for the sole benefit of the Parties
and their respective successors and permitted assigns, and they shall not be
construed as conferring and are not intended to confer any rights, remedies,
obligations, or liabilities on any other Person, unless such Person is expressly
stated herein to be entitled to any such right, remedy, obligation, or
liability.
16.11 Counterparts.
This
Agreement may be executed by the Parties in separate counterparts, each of
which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument.
16.12 Rules
of Construction.
The
Members agree that they have been represented by counsel during the negotiation,
preparation, and execution of this Agreement and, therefore, waive the
application of any Law or rule of construction providing that ambiguities in
an
agreement or other document shall be construed against the Party drafting such
agreement or document.
In the
event of any conflict between the terms of this Agreement and the terms of
the
Contribution Agreement, the terms of this Agreement shall control; provided,
that no
conflict shall exist or be deemed to exist where one agreement contains matters
(e.g. representations, conditions precedent, etc.) not contained in the
other.
16.13 Currency.
All
references to “dollars” or “$” herein shall mean lawful currency of the
U.S.
16.14 Project
Lease.
The
Members acknowledge and agree that neither Member nor the Company shall
interfere with the terms of the Project Lease, including the requirement to
pay
periodic payments or advance payments thereunder and the obligation to pay
royalties under the Exxon Assignment.
16.15 Survival
of Terms and Conditions.
The
following Sections shall survive the dissolution, liquidation and termination
of
the Company, any Transfer of a Membership Interest or other interest in the
Company to the full extent necessary for their enforcement and the protection
of
the Member, Manager or other person in whose favor they run: Sections
3.5,
3.8,
5.4,
5.5,
5.7,
9.3,
11.2,
11.3,
11.4,
11.5
and
11.6,
the
second sentence of Section
7.3,
and
Articles
XV
and
XVI.
[Signatures
on Next Page]
AMENDED
AND RESTATED LLC AGREEMENT OF EUREKA MOLY, LLC – Page 55
The
parties hereto have executed this Agreement to be effective as of the Execution
Date.
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a
Delaware limited liability company
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By:
|
/s/
Xxxxx X. Xxxxxx
|
|
Xxxxx
X. Xxxxxx,
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|
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Chief
Executive Officer
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POS-MINERALS
CORPORATION
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|
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/s/
XX Xxx
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XX
Xxx, President
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|
SIGNATURE
PAGE TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC
EXHIBIT
B
ACCOUNTING
PROCEDURE
The
financial and accounting procedures to be followed by the Manager and any of
its
Affiliates to whom the performance of any such financial and other procedures
are delegated in accordance with Section 7.6(b) of the Agreement are set forth
in this Exhibit
B;
provided,
that as
set forth in Section 7.6(b) of the Agreement, nothing herein shall relieve
the
Manager of its obligation to cause all charges to the Business Account and
all
financial and accounting procedures performed by any Affiliate of the Manager
to
be in accordance with this Exhibit
B.
References in this Accounting Procedure to the Manager shall be deemed to be
references collectively to the Manager and its Affiliates. References in this
Accounting Procedure to Paragraphs, Subparagraphs and Articles are to those
located in this Accounting Procedure unless it is expressly stated that they
are
references to the Agreement.
ARTICLE
I
GENERAL
PROVISIONS
1.1 General
Accounting Records.
The
Manager shall maintain detailed and comprehensive cost accounting records in
accordance with this Accounting Procedure, including general ledgers, supporting
and subsidiary journals, invoices, checks and other customary documentation,
sufficient to provide a record of revenues and expenditures and periodic
statements of financial position and the results of operations for managerial,
tax, regulatory or other financial reporting purposes. Such records shall be
retained for the duration of the period allowed the Members for audit or the
period necessary to comply with tax or other regulatory requirements. The
records shall reflect all obligations, advances and credits of the
Members.
1.2 Bank
Accounts.
The
Manager shall maintain one or more separate bank accounts for the payment of
all
expenses and the deposit of all cash receipts for the Company.
1.3 Statements
and Xxxxxxxx.
The
Manager shall prepare statements and make Monthly Capital Calls pursuant to
Notices of Capital Requirements as provided in Article IX of the Agreement.
Payment of any such capital contributions by any Member, including the Manager,
shall not prejudice such Member’s right to protest or question the correctness
thereof pursuant to the procedure set forth in Section 9.4
of the
Agreement.
1.4 Employee
Matters.
All
employees engaged in Operations (“Project
Employees”),
whether full or part time, may, in the discretion of the Manager, be employees
of General Moly, the Manager, an Affiliate of the Manager and/or the Company;
provided, that the Manager shall use commercially reasonable best efforts to
cause wages paid with respect to Operations to Project Employees (other than
Project Employees with a title of General Manager or above) to be treated as
“W-2 wages” of the Company for purposes of Section 199 of the Code and the
related Treasury Regulations (including establishing reporting relationships,
policies and procedures and making reasonable amendments to benefit plans)
to
the extent the Manager can do so without causing General Moly, the Manager,
any
Affiliate of the Manager or the Company to incur significant additional
administrative, operational or other costs or liabilities, unless
POS-Minerals agrees to make a capital contribution to the Company to fund the
additional administrative, operational or other costs or liabilities incurred
by
reason of such action. A majority of the Project Employees shall devote all
of
their time to the Project. The Manager shall establish all guidelines pertaining
to the employment of the Project Employees, including guidelines pertaining
to
the term of office or employment, resignation, removal and compensation of
such
Project Employees; provided, that, unless otherwise approved by the
Representatives of the other Member, the salaries and wages of the Project
Employees included in Employee Costs shall be reasonably customary for the
industry, taking into account the duties to be performed by the Project
Employee, the seniority of the Project Employee, and the location where
Operations are to be performed by such Project Employee. The Manager shall
recruit, select, employ, promote, terminate, supervise, direct, train and assign
the duties of all Project Employees, and may change or replace any such Project
Employee at any time, in each case in the sole discretion of the
Manager.
EXHIBIT
B
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
ACCOUNTING
PROCEDURE – Page 1
1.5 Termination
of Company.
The
Company shall not be relieved from any obligations or liabilities under this
Exhibit
B
to
reimburse the Manager for costs incurred with respect to the Company to the
extent permitted hereunder, or to pay the Manager all or any Administrative
Charge, in each case accruing prior to the effective date of the termination
of
the Company. In connection with the liquidation of the assets of the Company,
such reimbursement and payment shall be made prior to the distribution of any
amounts to any Member in respect of its Membership Interest, and to the extent
the net assets of the Company are insufficient to make any such reimbursement
or
payment, such reimbursement and payment obligations shall be Continuing
Obligations and the Manager shall be entitled to call additional capital
contributions from the Members pursuant to Section 9.2 of the Agreement
notwithstanding the dissolution of the Company. Upon the termination of the
Company, the Manager shall not be relieved from any of its accounting and
financial reporting obligations hereunder.
ARTICLE
II
CHARGES
TO BUSINESS ACCOUNT
Subject
to the limitations hereinafter set forth, the Manager shall charge the Business
Account with the following:
2.1 Rentals,
Royalties and Other Payments.
All
property acquisition and holding costs, filing fees, license fees, costs of
permits and assessment work, delay rentals, production royalties, including
any
required advances, periodic payments and advance royalties, costs and royalties
under the Exxon Assignment and the Project Lease, and all other payments made
by
the Manager which are necessary to acquire or maintain title to the
Assets.
2.2 Labor
and Employee Benefits.
Any
Employee Costs to the extent incurred with respect to the Project Employees
(including the allocable portion of any such Employee Costs applicable to
Project Employees who are temporarily assigned to the Project or who are not
exclusively devoted to the Project). Notwithstanding anything contained herein
to the contrary, no Employee Costs may be reimbursed to the Manager to the
extent such Employee Costs are also included in Manager Reported G&A Costs.
To the extent any Project Employees are assigned part time to other projects
of
the Manager, the Employee Costs of such Project Employees shall be allocated
to
the Project based on a reasonable calculation by the Manager of the number
of
hours such Project Employee devotes to the Project in relation to the number
of
hours such Project Employee devotes to such other projects. As used herein,
“Employee
Costs”
means
any all of the following costs with respect to the employees of the Manager,
without duplication:
EXHIBIT
B
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
ACCOUNTING
PROCEDURE – Page 2
(a) salaries
and wages;
(b) payroll
taxes and other assessments imposed by any Governmental Authority that are
applicable to salaries, wages, bonuses and incentive compensation chargeable
under this Paragraph
2.2,
including all penalties, except those resulting from the fraud, willful
misconduct or gross negligence of the Manager;
(c) the
cost
of holiday, vacation, sickness and disability benefits, and other customary
allowances applicable to salaries and wages chargeable under this Paragraph
2.2.
Such
costs may be charged on a “when and as paid basis” or by “percentage assessment”
on the amount of salaries and wages. If percentage assessment is used, the
rate
shall be applied to wages or salaries excluding overtime and bonuses. Such
rate
shall be based on the cost experience of the Manager and it shall be
periodically adjusted at least annually to ensure that the total of such charges
does not exceed the actual cost thereof to the Manager;
(d) the
cost
of established plans for Project Employees’ group life insurance, medical,
dental, hospitalization, pension, savings, retirement, stock options, stock
grants, stock purchase, thrift, bonuses or incentives, severance pay, employee
assistance programs, cafeteria plan benefits, dependent care, health care
flexible spending and other benefit plans and programs of a like nature
applicable to salaries and wages chargeable under this Paragraph
2.2,
provided
that the
plans are limited to the extent feasible to those offered to the employees
of
the Manager generally;
(e) reasonable
out-of-pocket costs of all meals, travel, hotel accommodations, and
entertainment expenses, and reasonable, identifiable costs of vehicles
(including depreciation and amortization and operating costs); and
(f) the
cost
of workers’ compensation insurance.
2.3 Materials,
Equipment and Supplies.
The
cost of materials, equipment and supplies (herein called “Material”)
purchased from unaffiliated third parties or furnished by the Manager or any
Member as provided in Article
III
of this
Exhibit
B.
The
Manager shall purchase or furnish only so much Material as may be required
for
immediate use in efficient and economical Operations. The Manager shall also
maintain inventory levels of Material at reasonable levels to avoid unnecessary
accumulation of surplus stock.
2.4 Equipment
and Facilities Furnished by Manager.
The
cost of machinery, equipment and facilities owned by the Manager and used in
Operations or used to provide support or utility services to Operations charged
at rates commensurate with the actual costs of ownership and operation of such
machinery, equipment and facilities. Such rates shall include costs of
maintenance, repairs, other operating expenses, insurance, taxes, depreciation
and interest at a rate not to exceed ten percent (10%) per annum. Such rates
shall not exceed the average commercial rates currently prevailing in the
vicinity of the Operations.
EXHIBIT
B
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
ACCOUNTING
PROCEDURE – Page 3
2.5 Transportation.
Reasonable transportation costs incurred in connection with the transportation
of employees and material necessary for the Operations.
2.6 Contract
Services and Utilities.
The
cost of contract services and utilities procured from consultants and other
outside sources, other than services described in Paragraphs
2.9
and
2.13.
If
contract services are performed by the Manager or an Affiliate thereof, the
cost
charged to the Business Account shall not be greater than that for which
comparable services and utilities are available in the open market within the
vicinity of the Operations.
2.7 Insurance
Premiums.
Net
premiums paid for insurance required to be carried for Operations for the
protection of the Manager and the Members. When the Operations are conducted
in
an area where the Manager or the Company, as applicable, may self-insure for
Workmen’s Compensation or Employer’s Liability under state law, the Manager may
elect to include such risks in its self-insurance program and shall charge
its
costs or the Company’s costs, as applicable, of self-insuring such risks to the
Business Account provided that such charges shall not exceed published manual
rates.
2.8 Damages
and Losses.
All
costs in excess of insurance proceeds necessary to repair or replace damage
or
losses to any Assets resulting from any cause other than the fraud, willful
misconduct or gross negligence of the Manager. The Manager shall furnish the
Management Committee with written notice of damages or losses as soon as
practicable after a report thereof has been received by the
Manager.
2.9 Legal
and Regulatory Expense.
Except
as otherwise provided in Paragraph
2.13,
all
legal and regulatory costs and expenses incurred in or resulting from the
Operations or necessary to protect or recover the Assets of the Company. All
attorney’s fees and other legal costs to handle, investigate and settle
litigation or claims, including the cost of legal services provided by the
Manager’s legal staff, and amounts paid in settlement of such litigation or
claims.
2.10 Audit.
Cost of
annual audits under Section 9.4(a) of the Agreement.
2.11 Taxes.
All
taxes of every kind and nature assessed or levied upon or in connection with
the
Assets, the Transfer of the Assets to the Company (not including in connection
with the contribution of the Contributed Assets pursuant to the Contribution
Agreement) and the production of Products or Operations,
provided,
that no
taxes determined based on the income of any particular Member (e.g. income
or
franchise taxes) shall be included. For the avoidance of doubt and in accordance
with Section 4.2(a) of the Contribution Agreement, any Taxes (as defined in
the
Contribution Agreement) arising out of, with respect to or in connection with
the contribution of the Contributed Assets shall be the liability of General
Moly and shall be paid for by General Moly.
2.12 District
and Camp Expense (Field Supervision and Camp Expenses).
The
costs of maintaining and operating an office (or if approved by Representatives
of the other Member, more than one office) (herein individually or collectively
called the “Project
Office”)
for
the Project, including the cost of maintaining adequate office space at the
Project Office for POS-Minerals pursuant to Section 7.2(q) of the Agreement,
and
all necessary camps, including housing facilities for Project Employees and
overnight accommodations for representatives of POS-Minerals pursuant to Section
7.2(q) of the Agreement. The expense for the Project Office shall include
depreciation or a fair monthly rental in lieu of depreciation of the investment.
To the extent the Manager or its Affiliates are required to utilize any
additional facilities or properties of the Manager (excluding the Manger’s its
principal office, which is covered by the Administrative Charge), the total
of
such charges for such facilities or properties shall be apportioned to the
Business Account based on a reasonable estimate of the amount of time such
facilities or properties are utilized for the Operations, as compared to the
amount of time such facilities or properties are utilized for other projects
or
operations of the Manager.
EXHIBIT
B
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
ACCOUNTING
PROCEDURE – Page 4
2.13 Administrative
Charge.
(a) Administrative
Charge.
Within
thirty (30) days after the end of each calendar quarter or portion thereof
during the term of the Company, the Manager shall charge the Business Account
the Administrative Charge for the previous quarter to reimburse the Manager
for
its principal business office overhead and general and administrative expenses
incurred in support of the Project. Within five (5) Business Days after a
written request by any Representative to the Manager, the Manager shall supply
to such Representative a calculation of any Administrative Charge to the
Business Account, along with reasonable supporting documentation. The
Administrative Charge shall, unless otherwise agreed by Representatives holding
all of the Voting Interests, be in lieu of any other management fee payable
to
the Manager for performing its duties hereunder (other than the reimbursement
of
expenses for the Project from the Business Account as provided in this
Exhibit
B):
(b) Calculation
of Administrative Charge.
The
“Administrative
Charge”
for
any
calendar quarter or portion thereof shall equal the product of: (i) a ratio,
(A)
the numerator of which equals the Project Employee Costs for such calendar
quarter, and (B) the denominator of which equals the Aggregate Employee Costs
for such calendar quarter; multiplied
by
(ii)
Manager Reported G&A Costs for such calendar quarter; provided,
that
the Administrative Charge for any partial calendar quarter during the term
of
the Company shall be calculated by multiplying the amount calculated in
clauses
(i)
and
(ii)
above by
a fraction, the numerator of which is the number of days in such calendar
quarter during which the Company was in existence, and the denominator of which
equals the aggregate number of days in such calendar quarter. As used herein,
the following terms have the meanings indicated:
(i) “Project
Employee Costs”
mean,
for a particular calendar quarter, the aggregate consolidated Employee Costs
incurred with respect to the Project Employees for such quarter.
(ii) “Aggregate
Employee Costs”
mean,
for a particular calendar quarter, the aggregate consolidated Employee Costs
incurred by the Manager and its Affiliates for such quarter.
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(iii) “Manager
Reported G&A Costs”
means,
for a particular calendar quarter, (A) the aggregate consolidated general and
administrative costs incurred by the Manager and its Affiliates for such quarter
as reported by General Moly (or its successor entity) (I) in its quarterly
report on Form 10-Q filed with the U.S. Securities and Exchange Commission
for
the quarters ending March 31, June 30 and September 30 of any year and (II)
in
its annual report on Form 10-K filed with the U.S. Securities and Exchange
Commission for the quarter ending December 31 of any year, minus
(B) the
amount of any indirect marketing costs, investor relation costs or board of
directors costs included within the general and administrative costs described
in clause
(A)
above.
(c) Manager
Reported G&A Costs.
Manager
Reported G&A Costs, including the following Manager Reported G&A Costs,
are specifically covered by the Administrative Charge, and notwithstanding
anything in this Exhibit
B
to the
contrary, shall not be separately charged by the Manager to the Business
Account:
(i) administrative
supervision, accounting, auditing, data processing and information systems,
the
maintenance and establishment of the foregoing systems, human resource
administration, billing, record keeping, and governance and internal controls
in
accordance with Law applicable to the Company and the Manager, provided,
that
the direct cost of any data processing and information systems, including the
incremental cost of any hardware or software and the maintenance thereof at
the
Project Office shall not be a Covered Cost;
(ii) the
services of tax counsel and tax administrative employees for all tax matters,
except for professional fees and other charges directly relating to the
preparation of tax returns and K-1s, or other tax matters specifically relating
to the LLC or the allocation of income, gain, deduction, expense and other
items
to all of the Members (including any tax litigation, investigations,
administrative actions or similar proceedings); and
(iii) lease,
rentals, depreciation and similar charges for principal administrative office
space; and
(iv) all
of
the following that are incurred at the principal office or in connection with
the performance of the services included as Covered Costs as set forth in
Subparagraph
2(b)(i)
above:
(1) records
storage space, and routine office supplies, including forms, stationary,
ledgers, paper, files and other consumables;
(2) cleaning
and maintenance service at the principal office and conveniences provided for
employees at the principal office, such as coffee, water, etc.;
(3) computer
hardware and software, including computer storage space, copy and telecopy
machines, telephone and communications equipment, mobile communications equity
utilized by administrative staff, office furniture, and other office equipment;
and
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(4) long
distance telephone and internet communication services, and utilities, such
as
electricity, natural gas, water and waste disposal at the principal
office.
(d) The
Management Committee shall annually review the Administrative Charge and the
calculation thereof, and shall negotiate in good faith to amend the methodology
used to determine the Administrative Charge if the amount of the Administrative
Charge is inequitable to the Company or the Manager.
2.14 Environmental
Compliance Fund.
Costs
of reasonably anticipated Environmental Compliance that, on a Program basis,
shall be determined by the Management Committee and shall be based on
proportionate contributions in an amount sufficient to establish a fund, that
through successive proportionate contributions during the life of the Company,
will pay for ongoing Environmental Compliance conducted during Operations and
that will aggregate the reasonably anticipated costs of mine closure,
post-Operations Environmental Compliance and Continuing Obligations. The Manager
shall invest such amounts on behalf of the Members as provided in Section 7.2(u)
of the Agreement.
2.15 Other
Expenditures.
Any
reasonable direct expenditure, other than expenditures that are covered by
the
foregoing provisions, incurred by the Manager for the necessary and proper
conduct of Operations.
ARTICLE
III
BASIS
OF CHARGES TO BUSINESS ACCOUNT
3.1 Purchases.
Material purchased and services procured from third parties shall be charged
to
the Business Account by the Manager at invoiced cost, including applicable
transfer taxes, less all discounts taken. If any Material is determined to
be
defective or is returned to a vendor for any other reason, the Manager shall
credit the Business Account when an adjustment is received from the
vendor.
3.2 Material
Furnished by the Manager or a Member.
Any
Material furnished by the Manager from its stocks shall be priced on the
following basis:
(a) New
Material:
New
Material transferred from the Manager or Member shall be priced F.O.B. the
nearest reputable supply store or railway receiving point, where like Material
is available, at the current replacement cost of the same kind of Material,
exclusive of any available cash discounts, at the time of the transfer (herein
called, “New
Price”).
(b) Used
Material.
(1) Used
Material in sound and serviceable condition and suitable for reuse without
reconditioning shall be priced as follows:
a) Used
Material transferred by the Manager shall be priced at seventy-five percent
(75%) of the New Price;
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b) Used
Material distributed to either Member shall be priced (i) at seventy-five
percent (75%) of the New Price if such Material was originally charged to the
Business Account as new Material, or (ii) at sixty-five percent (65%) of the
New
Price if such Material was originally charged to the Business Account as good
used Material at seventy-five percent (75%) of the New Price.
(2) Other
used Material which, after reconditioning will be further serviceable for
original function as good secondhand Material, or which is serviceable for
original function but not substantially suitable for reconditioning shall be
priced at fifty percent (50%) of the New Price. The cost of any reconditioning
shall be borne by the transferee.
(3) All
other
Material, including junk, shall be priced at a value commensurate with its
use
or at prevailing prices. Material no longer suitable for its original purpose
but usable for some other purpose shall be priced on a basis comparable with
items normally used for such other purposes.
(c) Obsolete
Material.
Any
Material which is serviceable and usable for its original function, but its
condition is not equivalent to that which would justify a price as provided
above shall be priced by the Management Committee. Such price shall be set
at a
level which will result in a charge to the Business Account equal to the value
of the service to be rendered by such Material.
3.3 Premium
Prices.
Whenever Material is not readily obtainable at published or listed prices
because of national emergencies, strikes or other unusual circumstances over
which the Manager has no control, the Manager may charge the Business Account
for the required Material on the basis of the Manager’s direct cost and expenses
incurred in procuring such Material and making it suitable for use. The Manager
shall give written notice of the proposed charge to the Company prior to the
time when such charge is to be billed to the Members, whereupon any Member
shall
have the right, by notifying the Manager within ten (10) days of the delivery
of
the notice from the Manager, to furnish at the usual receiving point all or
part
of its proportionate share, based on Percentage Interests, of Material suitable
for use and acceptable to the Manager.
3.4 Warranty
of Material Furnished by the Manager or Members.
Neither
the Manager nor any Member warrants the Material furnished beyond any dealer’s
or manufacturer’s warranty and no credits shall be made to the Business Account
for defective Material until adjustments are received by the Manager from the
dealer, manufacturer or their respective agents.
ARTICLE
IV
DISPOSAL
OF MATERIAL
4.1 Disposition
Generally.
The
Manager shall have no obligation to purchase any surplus Material from the
Company. The Management Committee shall determine the disposition of major
items
of surplus Material, provided the Manager shall have the right to dispose of
normal accumulations of junk and scrap Material either by sale or by
distributing such Material to the Members as provided in Paragraph
4.2.
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4.2 Distribution
to Members.
Any
Material to be distributed to the Members shall be made in proportion to their
respective Percentage Interests, and corresponding credits shall be made to
the
Business Account on the basis provided in Paragraph
3.2.
4.3 Sales.
Sales
of Material to third parties shall be credited to the Business Account at the
net amount received. Any damages or claims by the Purchaser shall be charged
back to the Business Account if and when paid.
4.4 Marketing
Costs.
The
Manager shall not cause its own marketing costs for Product received by its
as
Member to be charged to the Business Account.
ARTICLE
V
INVENTORIES
5.1 Periodic
Inventories, Notice and Representations.
At
reasonable intervals, inventories shall be taken by the Manager, which shall
include all such Material as is ordinarily considered controllable by operators
of mining properties and the expense of conducting such periodic inventories
shall be charged to the Business Account. The Manager shall give written notice
to the Members of its intent to take any inventory at least thirty (30) days
before such inventory is scheduled to take place. A Member shall be deemed
to
have accepted the results of any inventory taken by the Manager if the Member
fails to be represented at such inventory.
5.2 Reconciliation
and Adjustment of Inventories.
Reconciliation of inventory with charges to the Business Account shall be made,
and a list of overages and shortages shall be furnished to the Management
Committee within six (6) months after the inventory is taken. Inventory
adjustments shall be made by the Manager to the Business Account for overages
and shortages, but the Manager shall be held accountable to the Company only
for
shortages due to lack of reasonable diligence.
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EXHIBIT
C
TAX
MATTERS
ARTICLE
I
EFFECT
OF THIS EXHIBIT
This
Exhibit shall govern the relationship of the Members and the Company with
respect to tax matters and the other matters addressed herein. Except as
otherwise indicated, capitalized terms used in this Exhibit
C
shall
have the meanings given to them in the Agreement. In the event of a conflict
between this Exhibit
C
and the
other provisions of the Agreement, the terms of this Exhibit
C
shall
control.
ARTICLE
II
TAX
MATTERS PARTNER
2.1 Designation
of Tax Matters Partner.
The
Manager is hereby designated the tax matters partner (the “TMP”)
as
defined in Section 6231(a)(7) of the Code and shall be responsible for, make
elections for, and prepare and file any federal and state tax returns or other
required tax forms following approval of the Management Committee. In the event
of any change in Manager, the Member serving as Manager (or, if neither Member
is serving as Manager, the Member with the largest Percentage Interest) at
the
end of a taxable year shall continue as TMP with respect to all matters
concerning such year unless the TMP for that year is required to be changed
pursuant to applicable Treasury Regulations. The TMP and the other Member shall
use reasonable best efforts to comply with the responsibilities outlined in
this
Article II
and in
Sections 6221 through 6233 of the Code (including any Treasury Regulations
promulgated thereunder) and in doing so shall incur no liability to any other
party.
2.2 Notice.
Each
Member shall furnish the TMP with such information (including information
specified in Section 6230(e) of the Code) as the TMP may reasonably request
to
permit the TMP to file tax returns on behalf of the Company and to provide
the
Internal Revenue Service with sufficient information to allow proper notice
to
the Members in accordance with Section 6223 of the Code. The TMP shall keep
each
Member informed of all administrative and judicial proceedings for the
adjustment at the partnership level of partnership items in accordance with
Section 6223(g) of the Code.
2.3 Inconsistent
Treatment of Tax Item.
If an
administrative proceeding contemplated under Section 6223 of the Code has begun,
and the TMP so requests, each Member shall notify the TMP of its treatment
of
any partnership item on its federal income tax return that is inconsistent
with
the treatment of that item on the partnership return.
2.4 Extensions
of Limitation Periods.
The TMP
shall not enter into any extension of the period of limitations as provided
under Section 6229 of the Code without first giving reasonable advance notice
to
the other Member of such intended action.
2.5 Requests
for Administrative Adjustments.
Neither
Member shall file, pursuant to Section 6227 of the Code, a request for an
administrative adjustment of partnership items for any taxable year of the
Company without first notifying the other Member. If the other Member agrees
with the requested adjustment, the TMP shall file the request for administrative
adjustment on behalf of the Company. If consent is not obtained within thirty
(30) days after notice from the proposing Member, or within the period required
to timely file the request for administrative adjustment, if shorter, either
Member, including the TMP, may file that request for administrative adjustment
on its own behalf.
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2.6 Judicial
Proceedings.
Either
Member intending to file a petition under Section 6226, 6228 or other sections
of the Code with respect to any partnership item, or other tax matters involving
the Company, shall notify the other Member of such intention and the nature
of
the contemplated proceeding. If the TMP is the Member intending to file such
petition, such notice shall be given within a reasonable time to allow the
other
Member to participate in the choosing of the forum in which such petition will
be filed. If both Members do not agree on the appropriate forum, then the
appropriate forum shall be decided in accordance with Section 7.2 of the
Agreement. If a deadlock results, the Management Committee shall choose the
forum. If either Member intends to seek review of any court decision rendered
as
a result of a proceeding instituted under the preceding part of this Paragraph,
such Member shall notify the other Member of such intended action.
2.7 Settlements.
The TMP
shall not bind the other Member to a settlement agreement without first
obtaining the written consent of any such Member. Either Member who enters
into
a settlement agreement for its own account with respect to any partnership
items, as defined by Section 6231(a)(3) of the Code, shall notify the other
Member of such settlement agreement and its terms within ninety (90) days from
the date of settlement.
2.8 Fees
and Expenses.
The TMP
shall not engage legal counsel, certified public accountants, or others on
behalf of the Company without the prior consent of the Management Committee.
Either Member may engage legal counsel, certified public accountants, or others
in its own behalf and at its sole cost and expense. Any reasonable item of
expense, including but not limited to fees and expenses for legal counsel,
certified public accountants, and others which the TMP incurs (after proper
consent by the Management Committee as provided above) in connection with any
audit, assessment, litigation, or other proceeding regarding any partnership
item, shall constitute proper charges to the Business Account and shall be
borne
by the Company and funded by capital contributions by the Members as any other
item which constitutes a direct charge to the Business Account pursuant to
the
Agreement.
2.9 Survival.
The
provisions of the foregoing paragraphs, including but not limited to the
obligation to fund fees and expenses contained in Paragraph
2.8,
shall
survive the termination of the Company or the termination of either Member’s
interest in the Company and shall remain binding on the Members for a period
of
time necessary to resolve with the Internal Revenue Service or the Department
of
the Treasury any and all matters regarding the federal income taxation of the
Company for the applicable taxable year(s).
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ARTICLE
III
TAX
ELECTIONS AND ALLOCATIONS
3.1 Partnership
Tax Status.
It is
understood and agreed that the Members intend to create a partnership for United
States federal and state income tax purposes, and, unless otherwise agreed
to
hereafter by both Members, no Member shall take any action to change the status
of the Company as a partnership under Treas. Regs. § 1.7701-3 or similar
provision of state law. It is understood and agreed that the Members intend
to
create a partnership for federal and state income tax purposes only. The Manager
shall file with the appropriate office of the Internal Revenue Service a
partnership income tax return for the Company. The Members recognize that the
Agreement may be subject to state income tax statutes. The Manager shall file
with the appropriate offices of the state agencies any required partnership
state income tax returns. Each Member agrees to furnish to the TMP any
information it may have relating to the Operations as shall be required for
proper preparation of such returns. The Manager shall furnish to the other
Member for its review and comment a copy of each proposed income tax return
(including all schedules and supporting work papers) at least two weeks prior
to
the date the return is filed. The Manager shall promptly (and, in any event,
within 30 days) provide to the other Member all information reasonably requested
by such other Member for purposes of calculating estimated tax payments and
preparing tax return extensions.
3.2 Tax
Elections.
The
Company shall make the following elections for purposes of all partnership
income tax returns:
(a) To
use
the accrual method of accounting.
(b) Pursuant
to the provisions at Section 706(b)(1) of the Code, to use as its taxable year
the year ended December 31. In this connection, Nevada Moly represents that
its
taxable year is the year ending December 31 and POS-Minerals represents that
its
taxable year is the year ending December 31.
(c) To
deduct
currently all development expenses to the extent possible under Section 616
of the Code.
(d) Unless
the Members unanimously agree otherwise, to compute the allowance for
depreciation in respect of all depreciable Assets using the maximum accelerated
tax depreciation method and the shortest life permissible or, at the election
of
the Manager, using the units of production method of depreciation.
(e) To
treat
advance royalties as deductions from gross income for the year paid or accrued
to the extent permitted by law.
(f) To
adjust
the basis of property of the Company with respect to a Member under Section
754
of the Code at the request of either Member.
(g) To
amortize over the shortest permissible period all organizational expenditures
and business start-up expenses under Sections 195 and 709 of the
Code.
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Any
other
election required or permitted to be made by the Company under the Code or
any
state tax law shall be made as determined by the Management
Committee.
Each
Member shall elect under Section 617(a) of the Code to deduct currently all
exploration expenses. Each Member reserves the right to capitalize its share
of
development and/or exploration expenses of the Company in accordance with
Section 59(e) of the Code, provided that a Member’s election to capitalize all
or any portion of such expenses shall not affect the Member’s Capital
Account.
3.3 Allocations
to Members.
Allocations for Capital Account purposes shall be in accordance with the
following:
(a) Except
as
otherwise provided in this Paragraph
3.3,
all
items of income, gain, loss, deduction and credit shall be determined on a
separate basis, and each such item shall be allocated among the Members in
accordance with their respective Percentage Interests. For the avoidance of
doubt, during the period from the Execution Date through
the Third Contribution Installment Date, allocations shall be made in accordance
with Percentage Interests even though the relative capital contributions of
the
Members through that date have not been in proportion to Percentage
Interests.
(b) In
the
event of a revaluation in accordance with Treas. Regs.
§ 1.704-1(b)(2)(iv)(f),
the
amount of the adjustment to the Adjusted Properties shall be allocated, first,
to cause the Members’ Capital Account balances to be in proportion to the
Members’ Percentage Interests and, second, to the Members in proportion to the
Members’ Percentage Interests.
(c) Gains
and
losses on the sale of all or substantially all the Assets of the Company
(including any distribution in kind of all or substantially all the Assets
of
the Company to the Members) shall be allocated so that, to the extent possible,
the Members’ resulting Capital Account balances are in the same ratio as their
relative Percentage Interests (“Balance
Capital Accounts”)
after
taking into account such sale; provided, that in circumstances where either
the
Third Contribution Installment or the Catch-Up Contribution are not yet due,
or
any capital contribution is due and not yet paid, for purposes of determining
Capital Account balances each Member shall be deemed to have made the Unpaid
Contribution Amount (as defined below) immediately prior to the time such
allocations are made. In making the allocations under this Subparagraph
3.3(c),
to the
extent necessary to Balance Capital Accounts, gain and loss shall be calculated
on an asset-by-asset basis, and any property contributed by a Member shall
be
treated as a separate asset from the property contributed by or created with
funds contributed by the other Member. If the Company does not have sufficient
items of gain and loss to Balance Capital Accounts, the liquidator may take
other actions, as it determines are reasonably appropriate, to Balance Capital
Accounts, including reallocating items among the Members in such year or prior
years to the extent amended tax returns for the Company can be filed. The
“Unpaid
Contribution Amount”
shall
mean, for each Member, (i) with respect to POSCO, if the Third Contribution
Conditions have not yet been satisfied and the Third Contribution Deadline
has
not yet occurred, the amount of the Third Contribution Installment and the
Catch-Up Contribution (each determined based upon the circumstances then
existing) and (ii) any other capital contribution that is then due and owing
by
such Member but has not been paid.
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(d) The
gross
income (calculated after deduction of cost of goods sold) attributable to sales
of NMO Product shall be allocated to Nevada Moly. The gross income (calculated
after deduction of cost of goods sold) attributable to sales of POS-M Product
shall be allocated to POS-Minerals.
(e) Deductions
for depletion (to the extent of the amount of such deductions that would have
been determined for Capital Account purposes if only cost depletion were
allowable for federal income tax purposes) shall be allocated to the Members
in
accordance with their respective Percentage Interests. Any remaining depletion
deduction shall be allocated to the Members (i) first by calculating for each
Member a hypothetical percentage depletion amount based upon the gross income
attributable to the Member’s share of Products determined under Section 10.1 of
the Agreement and upon reasonable allocations of costs and expenses, (ii) then
by determining the aggregate percentage depletion deduction available to the
Company, (iii) then by apportioning the Company’s percentage depletion deduction
in accordance with the Members’ respective hypothetical percentage depletion
deduction, and (iv) if the Company’s aggregate percentage depletion deduction is
less than or greater than the sum of the Members’ hypothetical percentage
depletion deductions, then to the extent the Members can determine the amount
of
such shortfall or excess attributable to the actions or arrangements of each
Member, the shortfall or excess shall be borne in such portion to such amounts,
and otherwise the shortfall or excess shall be borne in proportion to the
Members hypothetical percentage depletion amounts.
(f) Any
recapture of exploration expenses under Section 617(b)(1)(A) of the Code, and
any disallowance of depletion under Section 617(b)(1)(B) of the Code, shall
be
borne by the Members in the same manner as the related exploration expenses
were
allocated to, or claimed by, them.
(g) If
the
Members’ Percentage Interests change during any taxable year of the Company, the
distributive share of items of income, gain, loss and deduction of each Member
shall be determined in any manner (1) permitted by Section 706 of the Code,
and
(2) agreed by both Members. If the Members cannot agree on a method, the method
shall be determined by the TMP in consultation with the Company’s tax advisers,
with preference given to the interim closing-of-the-books method except where
application of that method would result in undue administrative expense in
relationship to the amount of the items to be allocated.
(h) “Nonrecourse
deductions,” as defined by Treas. Regs. § 1.704-2(b)(1) shall be allocated
between the Members in proportion to their Percentage Interests.
(i) On
the
distribution by the Company of any property other than money, (i) the
distributed property shall be deemed to have been sold on the date of the
distribution at its fair market value (which, in the case of a distribution
of
Products, shall be based upon the Spot Price) on that date (ii) gain or loss
from the deemed sale shall be allocated to the Members’ Capital Accounts as if
the distributed property had actually been sold at such fair market value,
and
(iii) Members’ Capital Accounts shall be reduced by an amount equal to the fair
market value of the property so distributed.
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(j) If
POS-Minerals makes a capital contribution pursuant to Paragraph
1.4
of
Exhibit
B,
all
deductions funded with such capital contribution shall be allocated to
POS-Minerals.
3.4 Regulatory
Allocations.
Notwithstanding the provisions of Paragraph 3.3
to the
contrary, the following special allocations shall be given effect for purposes
of maintaining the Members’ Capital Accounts.
(a) If
either
Member unexpectedly receives any adjustments, allocations, or distributions
described in Treas. Regs. § 1.704-1(b)(2)(ii)(d)(4),
§ 1.704-1(b)(2)(ii)(d)(5) or § 1.704-1(b)(2)(ii)(d)(6), which result
in a deficit Capital Account balance, items of income and gain shall be
specially allocated to each such Member in an amount and manner sufficient
to
eliminate, to the extent required by the Treasury Regulations, the Capital
Account deficit of such Member as quickly as possible. For the purposes of
this
Subparagraph 3.4(a),
each
Member’s Capital Account balance shall be increased by the sum of (i) the
amount such Member is obligated to restore pursuant to any provision of the
Agreement, and (ii) the amount such Member is deemed to be obligated to
restore pursuant to the penultimate sentences of Treas. Regs. §§ 1.704-2(g)(1)
and 1.704-2(i)(5).
(b) If
there
is a net decrease in partnership minimum gain for a taxable year of the Company,
each Member shall be allocated items of income and gain for that year equal
to
that Member’s share of the net decrease in partnership minimum gain, all in
accordance with Treas. Regs. § 1.704-2(f). If, during a taxable year of the
Company, there is a net decrease in partner nonrecourse debt minimum gain,
any
Member with a share of that partner nonrecourse debt minimum gain as of the
beginning of the year shall be allocated items of income and gain for the year
(and, if necessary, for succeeding years) equal to that partner’s share of the
net decrease in partner nonrecourse debt minimum gain, all in accordance with
Treas. Regs. § 1.704-2(i)(4). Pursuant to Treas. Regs.
§ 1.704-2(i)(1), deductions attributable to “partner nonrecourse liability”
shall be allocated to the Member that bears the economic risk of loss for such
liability (or is treated as bearing such risk).
(c) If
the
allocation of deductions to either Member would cause such Member to have a
deficit Capital Account balance at the end of any taxable year of the Company
(after all other allocations provided for in this Article III
have
been made and after giving effect to the adjustments described in Subparagraph
3.4(a)),
such
deductions shall instead be allocated to the other Member.
(d) Items
of
Company loss, deduction and expenditures described in Section 705(a)(2)(B)
of
the Code which are attributable to any nonrecourse debt of the Company and
are
characterized as partner nonrecourse deductions under Treas. Regs. §1.704-2(i)
shall be allocated to the Members’ Capital Accounts in accordance with said
Treas. Regs. § 1.704-2(i).
EXHIBIT
C
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
TAX
MATTERS – Page 6
(e) To
the
extent that an adjustment to the adjusted tax basis of any Company asset
pursuant to Section 734(b) or 743(b) of the Code is required pursuant to Treas.
Regs. § 1.704-1(b)(2)(iv)(m)(2) or § 1.704-1(b)(2)(iv)(m)(4), to be taken into
account in determining Capital Accounts as the result of a distribution to
a
Member in complete liquidation of its Membership Interest, the amount of such
adjustment to Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to
the
Members in accordance with their interests in the Company in the event Treas.
Regs. § 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such
distribution was made in the event Treas. Regs. § 1.704-1(b)(2)(iv)(m)(4)
applies.
3.5 Curative
Allocations.
The
allocations set forth in Paragraph 3.4
(the
“Regulatory
Allocations”)
are
intended to comply with certain requirements of the Treasury Regulations. It
is
the intent of the Members that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of income, gain, loss or deduction pursuant
to this Paragraph. Therefore, notwithstanding any other provisions of this
Article III
(other
than the Regulatory Allocations), the Manager shall, in a manner approved by
the
Management Committee, make such offsetting special allocations of income, gain,
loss or deduction in whatever manner it determines appropriate so that, after
such offsetting allocations are made, each Member’s Capital Account balance is,
to the extent possible, equal to the Capital Account balance such Member would
have had if the Regulatory Allocations were not part of the Agreement and all
items were allocated pursuant to Paragraph
3.3
without
regard to Paragraph 3.4.
3.6 Tax
Allocations.
Except
as otherwise provided in this Paragraph 3.6,
items
of taxable income, deduction, gain and loss shall be allocated in the same
manner as the corresponding item is allocated for book purposes under
Paragraphs
3.3,
3.4
and
3.5
of the
corresponding item determined for Capital Account purposes.
(a) Recapture
of tax deductions arising out of a disposition of property shall, to the extent
consistent with the allocations for tax purposes of the gain or amount realized
giving rise to such recapture, be allocated to the Members in the same
proportions as the recaptured deductions were originally allocated or
claimed.
(b) To
the
extent required by Section 704(c) of the Code, income, gain, loss, and deduction
(including depreciation, depletion and amortization) with respect to property
contributed to the Company by a Member and with respect to property revalued
in
accordance with Treas. Regs. § 1.704-1(b)(2)(iv)(f)
(collectively referred to as “Adjusted
Properties”)
shall
be allocated between the Members so as to take account of the variation between
the adjusted tax basis of the Adjusted Property to the Company and its fair
market value at the time of contribution or revaluation in accordance with
the
provisions of Sections 704(b) and 704(c) of the Code and Treas. Regs.
§ 1.704-3(b)(1). Any income, gain, loss or deduction attributable to an
Adjusted Property (exclusive of such items allocated to eliminate the difference
between the adjusted tax basis and the fair market value in accordance with
the
preceding sentence) shall be allocated in the same manner as such gain or loss
would be allocated under Paragraph
3.3.
To the
extent that allocations of tax items are required pursuant to
Section 704(c) of the Code to be made other than in accordance with the
allocations under Paragraphs
3.3,
3.4
and
3.5
of the
corresponding items for Capital Account purposes, allocations under this
Paragraph
3.6(b)
shall be
made in accordance with the method available under Treas. Regs. § 1.704-3
which, in the reasonable judgment of the TMP, most closely approximates the
allocations set forth in Paragraphs 3.3,
3.4
and
3.5.
EXHIBIT
C
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
TAX
MATTERS – Page 7
(c) Depletion
deductions with respect to contributed property shall be determined without
regard to any portion of the property’s basis that is attributable to
precontribution expenditures by Nevada Moly that were capitalized under Code
Sections 616(b), 59(e) and 291(b). Deductions attributable to precontribution
expenditures by Nevada Moly shall be calculated under such Code Sections as
if
Nevada Moly continued to own the depletable property to which such deductions
are attributable, and such deductions shall be reported by the Company and
shall
be allocated solely to Nevada Moly
(d) The
Members understand the allocations of tax items set forth in this Paragraph 3.6,
and
agree to report consistently with such allocations for federal and state tax
purposes.
ARTICLE
IV
CAPITAL
ACCOUNTS; LIQUIDATION
4.1 Capital
Accounts.
(a) A
separate Capital Account shall be established and maintained by the TMP for
each
Member. Such Capital Account shall be increased by (i) the amount of money
contributed by the Member to the Company, (ii) subject to Paragraph
4.1(b),
the
fair market value of property contributed by the Member to the Company (net
of
liabilities secured by such contributed property that the Company is considered
to assume or take subject to under Code Section 752) and (iii) allocations
to the Member under Paragraphs 3.3, 3.4
and
3.5 of
Company income and gain (or items thereof), including income and gain exempt
from tax; and shall be decreased by (iv) the amount of money distributed to
the Member by the Company, (v) the fair market value of property
distributed to the Member by the Company (net of liabilities secured by such
distributed property and that the Member is considered to assume or take subject
to under Code Section 752), (vi) allocations to the Member under
Paragraphs 3.3, 3.4
and
3.5
of
expenditures of the Company not deductible in computing its taxable income
and
not properly chargeable to a Capital Account, and (vii) allocations of
Company loss and deduction (or items thereof), excluding items described in
(vi) above and percentage depletion to the extent it exceeds the adjusted
tax basis of the depletable property to which it is attributable.
(b) The
Members agree that the Contributed Assets shall have a fair market value of
Eight Hundred Fifty Million Dollars ($850,000,000) (the “Contributed
Assets Value”)
and
that Nevada Moly’s Capital Account shall be credited by the Contributed Assets
Value.
(c) In
the
event that the Capital Accounts of the Members are computed with reference
to
the book value of any Asset which differs from the adjusted tax basis of such
Asset, then the Capital Accounts shall be adjusted for depreciation, depletion,
amortization and gain or loss as computed for book purposes with respect to
such
Asset in accordance with Treas. Regs.
§ 1.704-1(b)(2)(iv)(g).
EXHIBIT
C
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
TAX
MATTERS – Page 8
(d) In
the
event any interest in the Company is transferred in accordance with the terms
of
the Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred interest, except as
provided in Treas. Regs. § 1.704-1(b)(2)(iv)(1).
(e) In
the
event property, other than money, is distributed to a Member, the Capital
Accounts of the Members shall be adjusted to reflect the manner in which the
unrealized income, gain, loss and deduction inherent in such property (that
has
not been reflected in the Capital Accounts previously) would be allocated among
the Members if there was a taxable disposition of such property for the fair
market value of such property (taking Section 7701(g) of the Code into account)
on the date of distribution. For this purpose the fair market value of the
property shall be determined as set forth in Subparagraph
4.2(a)
below.
(f) For
purposes of maintaining the Capital Accounts, the Company’s deductions with
respect to contributed property in each year for (i) depletion, (ii) deferred
development expenditures under Section 616(b) of the Code attributable to
pre-contribution expenditures, (iii) amortization under Section 291(b) of the
Code attributable to pre-contribution expenditures, and (iv) amortization under
Section 59(e) of the Code attributable to pre-contribution expenditures shall
be
the amount of the corresponding item determined for tax purposes pursuant to
Subparagraph 3.6(c); multiplied
by
the
ratio of (A) the book value at which the contributed property is recorded in
the
Capital Accounts to (B) the adjusted tax basis of the contributed property
(including basis resulting from capitalization of pre-contribution development
expenditures under Sections 616(b), 291(b), and 59(e) of the Code).
(g) In
the
event the Management Committee designates a Supplemental Business Arrangement
area within the Area of Interest as described in Section 10.13 of the Agreement,
the Management Committee shall appropriately segregate Capital Accounts to
reflect that designation and shall make such other modifications to the
Agreement as are appropriate to reflect the manner of administering Capital
Accounts in accordance with the terms of this Exhibit C;
provided
that,
notwithstanding this Subparagraph
4.1(g),
only
one Capital Account shall be maintained for each Member for purposes of
complying with Treas. Regs. § 1.704-1(b)(2)(iv).
(h) The
foregoing provisions, and the other provisions of the Agreement relating to
the
maintenance of Capital Accounts and the allocations of income, gain, loss,
deduction and credit, are intended to comply with Treas. Regs.
§ 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Treasury Regulation. In the event the Management Committee shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto, are computed in order to comply with such
Treasury Regulation, the Management Committee may make such modification,
provided that it is not likely to have a material effect on the amount
distributable to either Member upon liquidation of the Company pursuant to
Paragraph 4.2.
EXHIBIT
C
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
TAX
MATTERS – Page 9
(i) Upon
the
occurrence of an event described in Treas. Regs.
§ 1.704-1(b)(2)(iv)(f)(5)
(including any adjustment to the Members’ Percentage Interests pursuant to
Section 5.2(a), 5.2(b) or 5.2(c) of the Agreement), if either (A) the Members
so
agree or (B) the Members’ Capital Account balances are not in proportion to the
Members’ Percentage Interests, the Capital Accounts shall be restated in
accordance with Treas. Regs. § 1.704-1(b)(2)(iv)(f)
to
reflect the manner in which unrealized income, gain, loss or deduction inherent
in the assets of the Company (that has not been reflected in the Capital
Accounts previously) would be allocated among the Members if there were a
taxable disposition of such assets for their fair market values, as determined
in accordance with Subparagraph
4.2(a).
For
purposes of Paragraph
3.3,
a
Member shall be treated as contributing the portion of the book value of any
property that is credited to the Member’s Capital Account pursuant to the
preceding sentence. Following a revaluation pursuant to this Subparagraph
4.1(i),
the
Members’ shares of depreciation, depletion, amortization and gain or loss, as
computed for tax purposes, with respect to property that has been revalued
pursuant to this Subparagraph
4.1(i)
shall be
determined in accordance with the principles of Code Section 704(c) as applied
pursuant to Subparagraph
3.6(b).
4.2 Liquidation.
In the
event the Company is dissolved pursuant to Section 11.3 of the Agreement
then, notwithstanding any other provision of the Agreement to the contrary,
the
following steps shall be taken (after taking into account any transfers of
Capital Accounts pursuant to Sections 5.2, 6.4, or 6.5 of the
Agreement):
(a) The
Capital Accounts of the Members shall be adjusted to reflect any gain or loss
which would be realized by the Company and allocated to the Members pursuant
to
the provisions of Article
III
of this
Exhibit
C
if the
Assets had been sold at their fair market value at the time of liquidation.
The
fair market value of the Assets shall be determined by agreement of both Members
provided,
however, that
in
the event that the Members fail to agree on the fair market value of any Asset,
its fair market value shall be determined by a nationally recognized independent
engineering firm or other qualified independent party approved by both
Members.
(b) After
making the foregoing adjustments and/or contributions, and after taking into
account all allocations under Article
III,
including Subparagraph
3.3(c) and
giving effect to all sales or distributions of production through the date
of
the final distribution, all remaining Assets shall be distributed to the Members
in proportion to their respective Percentage Interests at such time;
provided
that,
if, at the time of the distribution under this Subparagraph
4.2(b)
there is
an Unpaid Contribution Amount with respect to any Member, then for purposes
of
making the distributions under this Subparagraph
4.2(b)
(i) each
Member shall be treated as having made a capital contribution to the Company
equal to such Member’s Unpaid Contribution Amount, (ii) the aggregate proceeds
available for distribution shall be deemed to include any such Unpaid
Contribution Amount(s), and (iii) each Member with an Unpaid Contribution Amount
shall be treated as receiving, as a part of the distribution under this
Subparagraph
4.2(b)
but
prior to any other distribution of assets, an amount equal to such Member’s
Unpaid Contribution Amount, and the remaining assets to be distributed to such
Member shall be adjusted accordingly, and provided
further
that, if
the Company was dissolved upon an election by POS-Minerals pursuant to Section
11.1(b) of the Agreement, the amount distributable to POS-Minerals under Section
4.1(c)(iii) of the Agreement shall be distributed to POS-Minerals and thereafter
the remaining Assets shall be distributed to Nevada Moly. Unless otherwise
expressly agreed by both Members, with respect to any asset distributed in
kind,
each Member shall receive an undivided interest in such Asset in equal to the
Member’s portion of the total distributions made pursuant to this Subparagraph
4.2(b)
at the
time of distribution. Assets distributed to the Members shall be deemed to
have
a fair market value equal to the value assigned to them pursuant to Subparagraph 4.2(a)
above.
EXHIBIT
C
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
TAX
MATTERS – Page 10
(c) All
distributions to the Members in respect of their Capital Accounts shall be
made
in accordance with the time requirements of Treas. Regs.
§§ 1.704-1(b)(2)(ii)(b)(2) and (3).
4.3 Deemed
Terminations.
Notwithstanding the provisions of Paragraph
4.2,
if the
“liquidation” of the Company results from a deemed termination under Section
708(b)(1)(B) of the Code, then (i) Subparagraphs 4.2(a) and (b)
shall
not apply, (ii) the Company shall be deemed to have contributed its assets
to a new partnership in exchange for an interest therein, and immediately
thereafter, distributing interests therein to the purchasing party and the
non-transferring Members in proportion to their interests in the Company in
liquidation thereof, (iii) the new partnership shall continue pursuant to
the terms of the Agreement and this Exhibit C.
4.4 Withholding.
To the
extent the Company is required by applicable law or any tax treaty to withhold
or to make tax payments on behalf of or with respect to any Member (including,
by way of example and not limitation, any withholding required by Section 1446
of the Code), the Company shall withhold amounts from distributions to Members
and make such tax payments as so required. The amount of such payments shall
constitute an advance by the Company to such Member and shall be repaid to
the
Company by reducing the amount of the current or next succeeding distributions
that would otherwise have been made to such Member or, if such distributions
are
not sufficient for that purpose, such Member shall pay to the Company the amount
of such insufficiency.
ARTICLE
V
SALE
OR ASSIGNMENT
The
Members agree that if either one of them makes a sale or assignment of its
Membership Interest, and such sale or assignment causes a termination under
Section 708(b)(1)(B) of the Code, the terminating Member shall indemnify the
non-terminating Member and save it harmless on an after-tax basis for any
increase in taxes to the non-terminating Member caused by the termination of
the
Company.
EXHIBIT
C
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
TAX
MATTERS – Page 11
EXHIBIT
D
INSURANCE
The
Manager shall, at all times while conducting Operations, comply fully with
the
applicable worker’s compensation laws and purchase protection for the Company
and the Members, as additional insureds, comparable to that provided under
commercially available standard insurance policies (subject to normal
exclusions) for (i) comprehensive public liability and property damage with
combined primary limits of One Million Dollars ($1,000,000) for bodily injury
and property damage; (ii) automobile insurance with combined primary limits
of
One Million Dollars ($1,000,000); and (iii) adequate and reasonable insurance
against risk of fire and other risks ordinarily insured against in similar
operations, subject to varying levels of loss prevention. The Manager shall
have
no right to permit the Company to self-insure for the insurance provided under
clauses (i), (ii) and (iii) above. Each Member may self-insure or purchase
for
its own account such additional excess insurance as it deems
necessary.
EXHIBIT
D
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
INITIAL
PROGRAM AND BUDGET – Page 1
EXHIBIT
F
MAJOR
PERMITS
|
Permit/Approval
|
Granting
Agency
|
|
|
Plan
of Operations/Record of Decisions
|
U.S.
Bureau of Land Management
|
|
|
Explosives
Permit
|
U.S.
Bureau of Alcohol, Tobacco and Firearms
|
|
|
EPA
Hazardous Waste ID Number
|
U.S.
Environmental Protection Agency
|
|
|
Air
Quality Permit
|
NV
Division of Environmental Protection/Bureau of Air Pollution
Control
|
|
|
Reclamation
Permit
|
NV
Division of Environmental Protection/Bureau of Mining Regulation
and
Reclamation
|
|
|
Water
Pollution Control Permit
|
NV
Division of Environmental Protection/Bureau of Mining Regulation
and
Reclamation
|
|
|
Solid
Waste Class III Landfill Waiver
|
NV
Division of Environmental Protection/Bureau of Solid
Waste
|
EXHIBIT
F
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
MAJOR
PERMITS – Page 1
EXHIBIT
H
EXAMPLE
CALCULATION OF CATCH-UP CONTRIBUTION
|
Initial _ Catch – Up _ Contribution = PMPIx
|
NMC
|
– PMC
|
|
NMPI
|
PMPI
= Percentage Interest of POS-Minerals
| NMC = |
Nevada
Moly capital contributions through Third Contribution Installment
Date
(including
the Contributed Assets Value reduced by the Third Installment Value
Adjustment but excluding Excess Nevada Moly
Contribution)
|
NMPI
=
Percentage Interest of Nevada Moly
PMC
=
POS-Minerals capital contributions through Third Contribution Installment
Date
For
example, if
PMPI
=
20%
NMC
=
$850 million
NMPI
=
80%
PMC
=
$170 million
|
Initial _ Catch – Up _ Contribution = 20%x
|
$850,000,000
|
|
|
80%
|
Initial _ Catch – Up _ Contribution =
$42,500,000
|
Additional _ Catch – Up _ Contribution = PMPIx
|
NMC + ENMC
|
– (PMC + Initial _ Catch – Up _ Contribution)
|
|
NMPI
|
ENMC = Excess Nevada Moly Contribution
For example, if
ENMC = $7.5 million
|
Additional Catch −Up Contribution = 20% x
|
− ($170,000,000
+ $42,500,000)
|
|
Additional _ Catch −Up _ Contribution
=
$1,875,000
EXHIBIT
H
TO AMENDED AND RESTATED LLC AGREEMENT OF EUREKA MOLY,
LLC;
EXAMPLE
CALCULATION OF CATCH-UP CONTRIBUTION – Page 1
