Attached files
| file | filename |
|---|---|
| 10-Q - AMERICAN SIERRA GOLD CORP. | v178119_10q.htm |
| EX-10.8 - AMERICAN SIERRA GOLD CORP. | v178119_ex10-8.htm |
| EX-32 - AMERICAN SIERRA GOLD CORP. | v178119_ex32.htm |
| EX-31.1 - AMERICAN SIERRA GOLD CORP. | v178119_ex31-1.htm |
| EX-10.6 - AMERICAN SIERRA GOLD CORP. | v178119_ex10-6.htm |
| EX-10.5 - AMERICAN SIERRA GOLD CORP. | v178119_ex10-5.htm |
| EX-31.2 - AMERICAN SIERRA GOLD CORP. | v178119_ex31-2.htm |
LIMITED
LIABILITY COMPANY AGREEMENT
OF
GOLD
RUN ENTERPRISES, LLC
A
California Limited Liability Company
OPERATING
AGREEMENT
OF
GOLD
RUN ENTERPRISES, LLC
A
California Limited Liability Company
This Operating Agreement of GOLD RUN
ENTERPRISES, LLC (this “Agreement”)
is entered into as of December 4, 2009 (the “Effective
Date”) by TRINITY ALPS RESOURCES, INC., a Nevada domestic corporation
(“Trinity
Alps”), AMERICAN SIERRA GOLD CORP., a Nevada domestic corporation (“American
Sierra”), and the Manager identified in Section 2.8 below (whether one
or more, hereinafter referred to as the “Manager”),
with respect to the limited liability company identified in Section 2.2 below. Trinity and
American Sierra may sometimes be collectively referred to hereinafter as the
“Initial
Members” or singly as an “Initial
Member.” The Members and the Manager may be sometimes collectively
referred to hereinafter as the “Parties”
and individually as a “Party.”
A. Pursuant
to the terms and conditions of that certain Joint Venture Agreement, dated
October 19, 2009, entered into by the Members identified above (the “Initial
Agreement”), the Members have formed a California limited liability
company (as identified below) under the Beverly-Killea Limited Liability Company
Act, for purposes of developing and operating the Claims (as defined
below).
B. As a
condition precedent to Trinity Alps’ agreement to form the Company (as defined
herein) and perform certain other obligations (including, without limitation,
formation of a second limited liability company to own and hold the Claims),
American Sierra paid Trinity Alps a non-refundable and non-contingent Signing
Fee (as defined in the Initial Agreement), issued certain of its common stock to
Trinity Alps and granted to Trinity Alps certain warrants to purchase additional
shares of its common stock.
C. Trinity
Alps and American Sierra also entered into that certain Voting Agreement,
dated December 4, 2009 (the “Voting
Agreement”), relating to certain voting rights associated with the
Company and other entities.
D. Concurrently
herewith, Trinity Alps and American Sierra are forming a separate California
limited liability company to hold the Claims (as defined herein) (the “Holding
Company”).
E. The
Members enter into this Operating Agreement in order to provide for the
governance of the Company and the conduct of its business and to specify their
relative rights and obligations.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in consideration of the mutual promises and covenants set forth below, the
Parties, each intending to be legally bound, covenant and agree as
follows:
1.0 DEFINITIONS
The
following capitalized terms used in this Agreement shall have the meanings
specified in this article or elsewhere in this Agreement and when not so defined
shall have the meanings set forth in California Corporations Code section
17001:
1.1 “Act” means
the Beverly-Killea Limited Liability Company Act (California Corporations Code
sections 17000-17705), including amendments from time to time and any successor
acts or provisions.
1.2 “Affiliate”
of a Member means any Person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with a
Member. The term "control"
(including the terms "controlled
by" and "under common
control with") 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 membership, ownership of voting securities, by contract, or
otherwise.
1.3 “Agreement”
means this Operating Agreement, as originally executed and as amended from time
to time.
1.4 “Articles of
Organization” is defined in California Corporations Code section
17001(b), as applied to this Company.
1.5 “Assignee”
means a Person who has acquired a Member's Economic Interest in the Company, by
way of a Transfer in accordance with the terms of this Agreement, but who has
not become a Member.
1.6 “Assigning
Member” means a Member who by means of a Transfer has transferred an
Economic Interest in the Company to an Assignee.
1.7 “Capital
Account” means, as to any Member, a separate account maintained and
adjusted in accordance with Section 3.3
below.
1.8 “Capital
Contribution” means, with respect to any Member, the amount of money
and/or the Fair Market Value of other assets and/or the agreed value of services
contributed to the Company (as a Capital Contribution), whether as an initial
contribution or an additional contribution required by this Agreement, in
consideration of a Percentage Interest held by such Member. Loans to
the Company shall not be deemed Capital Contributions.
1.9 “Capital
Event” means a sale or disposition of any of the Company's capital
assets, the receipt of insurance and other proceeds derived from the involuntary
conversion of Company property, the receipt of proceeds from a refinancing of
Company property, or a similar event with respect to Company property or
assets.
2
1.10 “Claims”
means the mining claims described in Exhibit A attached hereto, and
any and all rights, duties, obligations, and other items incidental and/or
ancillary thereto.
1.11 “Code” or
“IRC” means
the Internal Revenue Code of 1986, as amended from time to time, and any
successor acts or provisions.
1.12 “Company”
means the limited liability company named in Section 2.2 of this
Agreement.
1.13 “Economic
Interest” means a Person's right to share in the income, gains, losses,
deductions, credit or similar items of, and to receive distributions from, the
Company, but does not include any other rights of a Member, including, without
limitation, the right to Vote or to participate in management.
1.14 “Encumber”
means the act of creating or purporting to create an Encumbrance, whether or not
perfected under applicable law.
1.15 “Encumbrance”
means, with respect to any Membership Interest, or any element thereof, a
mortgage, pledge, security interest, lien, assignment as security, proxy coupled
with an interest (other than as contemplated in this Agreement), option, or
preferential right to purchase.
1.16 “Fair Market
Value” means the cash price that a willing buyer would pay to a willing
seller when neither is acting under compulsion and when both have reasonable
knowledge of the relevant facts on the date of the event that triggered the need
for the fair market value determination (“Valuation
Date”). The Parties having a direct financial interest in the outcome of
that determination (the “Interested
Parties”) shall mutually agree on the Fair Market Value. If the
Interested Parties cannot agree on Fair Market Value within thirty (30) days of
the Valuation Date, then the Fair Market Value shall be determined by an
appraisal performed by an independent, duly licensed appraiser experienced in
appraising the type of property being appraised, who shall be selected by the
mutual consent of all the Interested Parties.
1.17 “Initial
Members” means those Persons whose names are set forth in the
introductory paragraph of this Agreement.
1.18 “Involuntary
Transfer” means, with respect to any Membership Interest, or any element
thereof, any Transfer or Encumbrance pursuant to court order, foreclosure of a
security interest, execution of a judgment or other legal process, by operation
of law or otherwise, including a purported transfer to or from a trustee in
bankruptcy, receiver or assignee for the benefit of creditors.
3
1.19 “Involuntary
Withdrawal” means, with respect to any Member or the Manager, the
occurrence of any of the following events: (i) the Member or Manager
makes an assignment for the benefit of creditors; (ii) the member or Manager
files a voluntary petition in bankruptcy; (iii) the Member or Manager is
adjudicated bankrupt or insolvent or there is entered against the Member or
manager an order for relief in any bankruptcy or insolvency proceeding; (iv) the
member or Manager files a petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation; (v) the member of Manager seeks, consents to or
acquiesces in the appointment of a trustee or receiver for, or liquidation of
the Member or Manager or of all or any substantial part of such Member’s or
Manager’s properties; (vi) the Member or Manager files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the Member or Manager in any proceeding described in clauses (i)
through (v) hereof; (vii) any proceeding against the Member or Manager seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, continues for 120 days
after the commencement thereof, or the appointment of a trustee, receiver or
liquidator for the Member or Manager or all or any substantial part of the
Member’s or Manager’s properties without the Member’s or Manager’s agreement or
acquiescence, which appointment is not vacated or stayed for 120 days or, if
stayed, for 120 days after expiration of the stay during which period the
appointment is not vacated; (viii) if the Member or Manager is a corporation,
the dissolution of the corporation or the revocation of its charter; or (ix)
breach of this Agreement by the member or Manager.
1.20 “Member”
means an Initial Member or a Person who otherwise acquires a Membership
Interest, as permitted under this Agreement, and who remains a
Member.
1.21 “Membership
Interest” means a Member’s entire interest in the Company (including,
without limitation, the Member’s Economic Interest and voting
rights).
1.22 “Notice”
means a written notice required or permitted under this Agreement and conforming
to the provisions of Section
11.1.
1.23 “Person”
means a natural person, partnership, limited partnership, trust, estate,
association, corporation, limited liability company, or other entity, whether
domestic or foreign.
1.24 “Profits and
Losses” means, for each fiscal year or other period specified in this
Agreement, an amount equal to the Company's taxable income or loss for such year
or period, determined in accordance with IRC section 703(a), as such section may
be amended from time to time, and including corresponding provisions of
applicable successor acts or sections thereof.
1.25 “Regulations”
(or “Reg.”)
means the income tax regulations promulgated by the United States Department of
the Treasury and published in the Federal Register for the purpose of
interpreting and applying the provisions of the IRC, as such Regulations may be
amended from time to time, including corresponding provisions of applicable
successor regulations.
1.26 “Successor in
Interest” means an Assignee, a successor of a Person by merger or
otherwise by operation of law, or a transferee of all or substantially all of
the business or assets of a Person.
1.27 “Transfer”
means, with respect to a Membership Interest, or any element of a Membership
Interest, any sale, assignment, gift, Involuntary Transfer, or other disposition
of a Membership Interest or any element of such a Membership Interest, directly
or indirectly, other than an Encumbrance that is expressly permitted under this
Agreement.
1.28 “Triggering
Event” means any of the events set forth in Section 8.4.
4
1.29 “Trust
Account” means an escrow account established by American Sierra for the
benefit of the Company, with the Trust Account Administrator, pursuant to an
escrow agreement satisfactory to both of the Initial Members and incorporating
the pertinent terms and conditions of this Agreement and the Initial
Agreement.
1.30 “Trust Account
Administrator” means an attorney-at-law or other fiduciary agent to be
selected by American Sierra and approved by Trinity Alps in its sole but
reasonable discretion, who shall administer the Trust Account according to the
terms of the escrow agreement establishing the Trust Account.
1.31 “Unanimous
Vote” means the vote of the Member or Members whose Voting Interests,
individually or in the aggregate (as the case may be), constitute one hundred
percent (100%) of the Voting Interests of all the Members.
1.32 “Vote”
means a written consent or approval, a ballot cast at a meeting, or a voice
vote.
1.33 “Voting
Interest” means the right of a Member to Vote on matters coming before
the Members by the terms of this Agreement or applicable law, and shall be
equivalent to the Member’s Membership Interest, subject to the terms of the
Voting Agreement entered into by and between the Members.
2.0 ARTICLES
OF ORGANIZATION
2.1 Articles of
Organization. The Manager shall cause the Company’s Articles
of Organization to be filed with the California Secretary of State.
2.2 Company Name. The
Company’s name shall be GOLD RUN ENTERPRISES, LLC.
2.3 Principal
Office. The principal executive office of the Company shall be
at such place or places as the Manager may determine from time to
time.
2.4 Agent for Service of
Process. The initial agent for service of process on the
Company shall be BHB Legal Services, Inc. The Manager may from time
to time change the Company's agent for service of process.
2.5 Business
Purposes. Not withstanding the general statement of company
purpose included in the Articles of Organization, the Company is formed for the
sole purpose of exploiting and developing the Claims and operating mines on and
under the Claims.
2.6 LLC. The Members
intend the Company to be a limited liability company under the
Act. No Member shall take any action inconsistent with the express
intent of the Parties to this Agreement.
5
2.7 Term. The Company’s
existence shall commence on the effective date of filing of Articles of
Organization with the California Secretary of State, and shall continue
perpetually or until terminated pursuant to the provisions of this Agreement or
as provided by law.
2.8 Manager. The
initial Manager shall be American Sierra. The Manager’s business address is 200
S. Virginia, 8th Floor,
Reno, Nevada 89501. American Sierra shall serve as Manager for an
initial term commencing on the Effective Date and continuing until such time as
set forth in Section 1.4 of the Initial Agreement, as amended (as applicable,
the “Initial
Management Term”), at which time the Members holding an aggregate of 51%
or more of the Voting Interests shall elect a new manager. American
Sierra shall be eligible to be elected as the new manager. The
Manager shall at all times be a Member of the Company.
2.9 Nature of Members’
Interests. The interests of the Members in the Company are
personal property for all purposes. All property owned by the
Company, whether real or personal, tangible or intangible, shall be owned by the
Company as an entity, and no Member shall have any direct ownership of all or
any portion of such property or any right to use such property for any purpose
other than a purpose of the Company.
3.0
CAPITALIZATION
3.1 Initial Capital Contributions of
Trinity Alps. As its initial Capital Contribution, Trinity
Alps shall assign, transfer, convey and deliver to the Company any and all of
its rights relating to the exploitation and operation of all or any part of the
Claims, including, without limitation, all equipment, permits, leases,
easements, rights of way, licenses, options, agreements, contracts, books,
records, engineering studies or reports, environmental reports, feasibility
studies, geologic data, maps, surveys, operating equipment, warranties, water
rights, pipelines, reclamation and/or performance bonds, insurance policies,
orders, tanks, pumps, power lines, logs, chemicals, solutions, tools,
communication systems, roads, inventories, warehouse stock, plants and all other
pertinent personal property, systems, information, apparatus and facilities
relating in any way to the exploitation and/or development of the Claims and/or
appurtenant or attributable thereto, whether similar or dissimilar to the
foregoing (collectively, the “Operating
Assets”). Trinity Alps shall assign, transfer and convey the
Operating Assets to the Company “AS IS,” “WHERE IS” and in their present
condition. Trinity Alps hereby expressly disclaims any warranties of title,
merchantability, serviceability, adequacy for operations and fitness for a
particular use or purpose of any and all of the Operating Assets.
3.1.1 Value of Contributions. The
agreed value of the Operating Assets is Six Hundred Sixty-Seven Thousand Dollars
($667,000 US).
3.1.2 Claims not Contributed.
Trinity Alps is not contributing all or any part of the Claims and/or the
fixtures and improvements currently existing on the Claims, except to the extent
that any part of the Operating Assets is deemed to be a part of the
Claims.
6
3.2 Initial Capital Contributions of
American Sierra. As its initial Capital Contribution, American Sierra
shall pay and deliver to the Company for deposit in the Trust Account, One
Hundred Fifty Thousand Dollars ($150,000 USD) in immediately available
funds (the “First
Payment”) on the Effective Date, such First Payment entitling American
Sierra to its initial Membership Interest of seven percent (7%) as set forth in
Section 3.6
below. Thereafter, American Sierra shall pay and deliver to the
Company for deposit in the Trust Account, on or before December 4, 2011
(the “Final
Contribution Date”), the aggregate sum of One Million Seven Hundred
Twenty-Five Thousand Dollars US ($1,725,000 USD), including the Miscellaneous
Contributions (defined below) (the “Aggregate Cash
Contribution”), payable as follows:
3.2.1 One
Hundred Fifty Thousand Dollars US ($150,000 USD) in immediately available
funds (the “Second
Payment”) on or before March 4, 2010;
3.2.2 Three
Hundred Thousand Dollars US ($300,000 USD) in immediately available funds (the
“Third
Payment”) on or before June 4, 2010;
3.2.3 One
Million Two Hundred Seventy-Five Thousand Dollars US ($1,275,000 USD) in
immediately available funds (the “Fourth
Payment”) on or before the Final Contribution Date; and
3.2.4 Amounts
sufficient to cover any and all operating expenses of the Company incurred prior
to American Sierra’s contribution of the entire First, Second, Third and Fourth
Payments, including, but not limited to, those expenses set forth in Sections
1.7 and 9 of the Initial Agreement, and which are not covered by such payments
(the “Miscellaneous
Contributions”). The Miscellaneous Contributions shall be
credited toward, and accordingly reduce, the Fourth Payment.
3.3 Cash Contributions Deposited into
Trust Account. American Sierra shall deposit each installment
payment of the Aggregate Cash Contribution into the Trust Account, to be held in
trust for the benefit of the Company pursuant to Section 5.4 and disbursed
according to Section
5.5.
3.4 Additional Capital
Contributions. From time to time after payment in full of the
Aggregate Cash Contribution, the Manager may determine that Capital
Contributions in addition to the Members’ initial Capital Contributions are
needed to enable the Company to conduct its business. On making such a
determination, the Manager shall give notice thereof to all Members and seek the
consent of the Members to such additional Capital Contributions. The
notice shall set forth the amount of additional capital needed, the purpose for
which it is needed, and the date by which the Members shall contribute. Upon
approval of such additional Capital Contributions by Unanimous Vote, each Member
shall make, within seven (7) days of the date such approval is obtained, an
additional Capital Contribution in an amount that bears the same proportion to
the total additional Capital Contribution that such Member’s Capital Account
balance bears to the total Capital Account balances of all
Members. No Member may voluntarily make any additional Capital
Contribution or loan to the Company.
7
3.5 Resulting Membership Interests in the
Event of Non-Contribution by a Member. If Trinity Alps or American Sierra
fails to make its initial Capital Contributions according to Section 3.1 or Section 3.2, respectively, or
if a Member fails to make an additional Capital Contribution when required under
Section 3.4, the
respective Membership Interests of American Sierra and Trinity Alps shall
initially remain unchanged as of the date of the failure to contribute, subject
to additional revisions as set forth below.
3.5.1 In
the event such failure to contribute either the initial Capital Contribution or
additional Capital Contribution (the “Capital
Shortfall”) is attributable to American Sierra, American Sierra’s 75%
Ownership Option, as set forth in the Initial Agreement, shall be
forfeited. Further adjustments, if any, to American Sierra’s
Membership Interests shall occur pursuant to the Intermediate Ownership Interest
calculation as set forth in the Initial Agreement or as further set forth
herein. Further, in the event the Capital Shortfall is attributable to American
Sierra, any amounts advanced by Trinity Alps to offset such Capital Shortfall
shall enable Trinity Alps to increase its Membership Interests via the
Intermediate Ownership Interest formula set forth in the Initial
Agreement.
3.5.2 In
the event Trinity Alps fails to contribute its Initial Capital Contribution
pursuant to Section 3.1
above, all fees contributed by American Sierra and currently in the Trust
Account, as defined in the Initial Agreement, shall be returned to American
Sierra without interest or penalty. Further, it is agreed and understood by the
Parties that Trinity Alps’ failure to make its Initial Capital Contribution,
namely, contribution of the Operating Assets, will effectively undermine and
eliminate the intended purpose of the transaction of which this Agreement is a
part. Trinity Alps, therefore, agrees to use its best commercially
reasonable efforts to take those steps as are necessary to effectuate the
transfer and contribution of the Operating Assets to the Company as set forth in
Section 3.1 as soon as
reasonably practicable, and so long as it has taken such steps and effected such
transfer and contribution within two (2) weeks of the Effective Date, except for
in the event of an act of Force Majeure, as defined herein, the provisions of
this Section 3.5.2 shall
not apply. For purposes hereof, an event of “Force
Majeure” shall include, but not be limited to, those acts or events set
forth in Section 14.7 of that certain Mining Claims License and Operations
Agreement entered into simultaneously herewith between the Company and the
Holding Company.
All
subsequent changes to a Member’s respective Membership Interest shall occur
pursuant to Section 3.6
herein.
3.6 Membership Interests. On and
as of the Effective Date, the Initial Members’ respective Membership Interests
shall be as follows:
|
Member
|
Membership
Interest
|
||
|
Trinity
Alps
|
93.0%
|
||
|
American
Sierra
|
7.0%
|
||
8
Thereafter,
for each incremental Capital Contribution of Forty Thousand Dollars US ($40,000
USD) made by American Sierra according to Section 3.2, the Membership
Interest of American Sierra shall increase by one percentage point (1.0%) and
the Membership Interest of Trinity Alps shall decrease by one percentage point
(1%), up to a maximum of American Sierra holding a Membership Interest of forty
percent (40.0%) and Trinity Alps holding a Membership Interest of sixty percent
(60.0%); provided, however, that at such time as American Sierra contributes the
Aggregate Cash Contribution in full, the Membership Interests shall
automatically convert to the following:
|
Member
|
Membership
Interest
|
||
|
Trinity
Alps
|
25.0%
|
||
|
American
Sierra
|
75.0%
|
||
3.7 Capital Accounts. A
separate Capital Account shall be maintained for each Member consisting of that
Member's Capital Contribution (i) increased by that Member's share of Profits,
(ii) decreased by that Member's share of Losses, (iii) decreased by the amount
of withdrawals and distributions, and (iv) otherwise adjusted as required in
accordance with applicable provisions of this Agreement and/or the IRC and
Regulations.
3.8 No Right to
Withdraw. A Member shall not be entitled to withdraw any part
of the Member's Capital Contributions or to receive any distributions, except as
provided in this Agreement.
3.9 No Interest. No
interest shall be paid on funds or property contributed to the capital of the
Company or on the balance of a Member's Capital Account.
3.10 No Priority. Except
as may be provided in this Agreement, no Member shall have priority over any
other Member, with respect to the return of a Capital Contribution, or
distributions or allocations of income, gain, losses, deductions, credits, or
items thereof.
4.0 ALLOCATIONS
AND DISTRIBUTIONS
4.1 Allocation of Profits and
Losses. The Profits and Losses of the Company and all items of
Company income, gain, loss, deduction, or credit shall be allocated, for Company
book purposes and for tax purposes, to a Member in accordance with the Member's
Membership Interest on the date of such allocation, unless otherwise provided in
this Agreement.
4.2 Qualified Income
Offset. If any Member unexpectedly receives any adjustment,
allocation, or distribution described in Reg. sections 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) resulting in a deficit
balance in such Member’s Capital Account, items of Company gross income and gain
shall be specially allocated to that Member in an amount and manner sufficient
to eliminate any such deficit balance in the Member's Capital
Account. Any special allocation under this Section 4.2 shall be taken
into account in computing subsequent allocations of Profits and Losses so that
the net amount of allocations of income and loss and all other items shall, to
the extent possible, be equal to the net amount that would have been allocated
if the unexpected adjustment, allocation, or distribution had not
occurred. The provisions of this Section 4.2 and the other
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Reg. sections 1.704-1(b) and 1.704-2 and shall be
interpreted and applied in a manner consistent with such
Regulations.
9
4.3 Allocations Respecting Asset
Distributions. Any unrealized appreciation or unrealized
depreciation in the values of Company property distributed in kind to all the
Members shall be deemed to be Profits or Losses realized by the Company
immediately prior to the distribution of the property and such Profits or Losses
shall be allocated to the Members' Capital Accounts in the same proportions as
Profits are allocated under Section 4.1. Any
property so distributed shall be treated as a distribution to the Members to the
extent of the Fair Market Value of the property less the amount of any liability
secured by and related to such property. Nothing contained in this
Agreement is intended to treat or cause such distributions to be treated as
sales for value. For the purposes of this Section 4.3, "unrealized
appreciation" or "unrealized
depreciation" shall mean the difference between the Fair Market Value of
such property and the Company's basis for such property.
4.4 Allocations Between Assignor and
Assignee. In the case of a Transfer of an Economic Interest
during any fiscal year, the Assigning Member and Assignee shall each be
allocated the Economic Interest's share of Profits or Losses based on the number
of days each held the Economic Interest during that fiscal year.
4.5 Distributions. All
cash resulting from the normal business operations of the Company and/or from a
Capital Event shall be distributed among the Members in proportion to their
Membership Interests. The Manager shall make to Members (i) quarterly
distributions of available cash from operations of the Company’s business, and
(ii) such other distributions, at such times, as it may deem
appropriate. Notwithstanding the foregoing, the Manager shall at all
times ensure that the Company has sufficient working capital in such account(s)
as established by the Manager in the name of the Company pursuant to Section 5.10 as would be
sufficient to pay the preceding two (2) months’ aggregate operating
expenses.
4.6 Non-cash
Proceeds. If the proceeds from a sale or other disposition of
a Company asset consist of property other than cash, the value of such property
shall be as determined by the Manager. Such non-cash proceeds shall
then be allocated among all the Members in proportion to their Membership
Interests. If such non-cash proceeds are subsequently reduced to
cash, such cash shall be distributed to each Member in accordance with Section 4.5.
4.7 Liquidating
Proceeds. Notwithstanding any other provisions of this
Agreement to the contrary, when there is a distribution in liquidation of the
Company, or when any Member’s interest is liquidated, all items of income and
loss first shall be allocated to the Members’ Capital Accounts under this Article 4.0, and other credits
and deductions to the Members’ Capital Accounts shall be made before the final
distribution is made. The final distribution to the Members shall be made as
provided in Section 9.2
below. The provisions of this Section 4.7 and Section 9.2 shall be construed
in accordance with the requirements of Reg. section
1.704-1(b)(2)(ii)(b)(2).
10
5.0 MANAGEMENT
AND OPERATIONS
5.1 Manager. American
Sierra is hereby designated and appointed as the sole and exclusive Manager of
the Company and its business. The Manager shall have full, exclusive
and complete discretion, power and authority, subject in all cases to the other
provisions of this Agreement (including, but not limited to, those set forth in
Section 5.2) and the
requirements of applicable law, to manage, control, administer and operate the
business and affairs of the Company for the purposes herein stated, and to make
all decisions affecting such business and affairs, including, without
limitation, for Company purposes, to:
5.1.1 Acquire
by purchase, lease or otherwise, any real or personal property, tangible or
intangible, and/or any interests therein;
5.1.2 Construct,
operate, maintain, finance, and improve, and/or to own, sell, convey, assign,
mortgage or lease any real estate and any personal property;
5.1.3 Sell,
dispose, trade or exchange Company assets in the ordinary course of the
Company’s business;
5.1.4 Enter
into agreements and contracts, and give receipts, releases and
discharges;
5.1.5 Purchase
liability and other insurance and/or performance bonds to protect the Company’s
properties and business;
5.1.6 Borrow
money for and on behalf of the Company and, in connection therewith, execute and
deliver instruments providing for security thereof;
5.1.7 Execute
or modify leases with respect to all or any part of the Company’s
assets;
5.1.8 Prepay,
in whole or in part, refinance, amend, modify or extend mortgages or deeds of
trust that may affect any asset of the Company and in connection therewith to
execute for and on behalf of the Company any extensions, renewals or
modifications of such mortgages or deeds of trust;
5.1.9 Execute
any and all other documents and instruments that may be necessary or, in the
opinion of the Manager, desirable to carry out the intent and purpose of this
Agreement;
5.1.10 Specifically
subject to Section 5.2,
make any and all expenditures which the Manager, in its sole discretion, deems
necessary or appropriate in connection with the management of the affairs of the
Company and carrying out is obligations and responsibilities under this
Agreement, including, without limitation, all legal, accounting and other
related expenses incurred in the Company’s organization and its financing and
operation;
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5.1.11 Enter
into any kind of activity necessary to, in connection with or incidental to
accomplishing the purposes of the Company; and
5.1.12 Invest
and reinvest Company reserves in short-term instruments or money market
funds.
5.2 Extraordinary
Transactions. Notwithstanding anything to the contrary
contained in this Agreement, the Manager shall not, for two (2) years from
Effective Date, undertake any of the following without the Unanimous Vote of the
Members:
5.2.1 Any
Capital Event;
5.2.2 Incurring
any Company debt with principal in excess of Twenty Thousand Dollars US ($20,000
USD) on any one (1) occasion or in excess of an aggregated Fifty Thousand
Dollars US ($50,000 USD) by reason of two (2) or more transactions in any fiscal
year aggregating more than such amount;
5.2.3 A
loan of Company money in an amount more than Twenty Thousand Dollars US ($20,000
USD) on any one (1) occasion or in excess of an aggregated Fifty Thousand
Dollars US ( $50,000 USD) by reason of two (2) or more transactions in any
fiscal year aggregating more than such amount;
5.2.4 The
admission of additional members of the Company;
5.2.5 The
Company’s sale or purchase of any asset with a purchase price in excess of
Twenty Thousand Dollars US ($20,000 USD), or in excess of an aggregated Fifty
Thousand Dollars US ($50,000 USD) by reason of two (2) or more such purchase
transactions aggregating more than such amount in any fiscal year, or the
Company’s exercise of any purchase option involving the expenditure of material
funds;
5.2.6 Assign
rights in Company property, for other than a Company purpose;
5.2.7
Permit the Company to engage in any
activities inconsistent with or in addition to the stated purposes of the
Company;
5.2.8 Do
any act in contravention of this Agreement;
5.2.9 Sell
or agree to sell all or substantially all of the assets of the Company outside
the normal course of business;
5.2.10 Dissolve
and/or wind up the Company or merge, consolidate or otherwise combine with
another Person, or agree to do the same, regardless of whether the Company is
the surviving entity as a result of any such event;
5.2.11 Enter
into the Operating Agreement or amend or terminate, or agree to amend or
terminate, the same;
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5.2.12 Amend
the Articles of Organization; and/or
5.2.13 Take
any action or engage in any conducts, or refrain from taking any action or
engaging in any conduct, with respect to which the Members have the right to
Vote under the Act or other applicable California law.
5.3 Limitation on Authority of
Members. No Member is an agent of the Company solely by reason
of being a Member, and no Member has authority to act for the Company solely by
virtue of being a Member. Any Member who takes action or binds the Company in
violation or breach of this section shall be solely responsible for any loss
and/or expense incurred by the Company as a result of such unauthorized action
and shall indemnify, defend and hold harmless the Company with respect to such
loss and/or expense.
5.4 Trust
Account. Notwithstanding the foregoing, American Sierra shall
open and establish the Trust Account with the Trust Account Administrator, such
Trust Account Administrator selected by American Sierra and approved by Trinity
Alps. The Trust Account shall be established for a term beginning on the
Effective Date and continuing through and including the later of (i) American
Sierra’s full contribution of the Aggregate Cash Contribution, and (ii)
disbursement of all of the funds in the Trust Account pursuant to Section 5.5. All
costs and expenses of the Trust Account and its administration shall be paid
from the Aggregate Cash Contribution and the Company shall indemnify, defend and
hold harmless Trinity Alps from liability for any and all of such costs and
expenses.
5.5 Year
One and Year Two Work Plans
5.5.1 Year One Work
Plan. The Initial Members have approved the budget and work
plan for the first year (the “Year One Work
Plan”). A copy of the Year One Work Plan is attached hereto as Exhibit B.
5.5.2 Year Two Work
Plan. Not later than ninety (90) days before the Year One Work
Plan ends, American
Sierra shall prepare and submit to Trinity Alps for review and approval a budget
and work plan for the second year of operations on, under or about the Claims,
including, without limitation, a description, identification and estimate of all
costs and expenses relating to operations on, under or about the Claims, and
applicable taxes, Bureau of Land Management fees and costs, insurance premiums,
other fees, security deposits, other deposits, reclamation and/or performance
bonds, employee salaries, contractor and consultant fees, costs of maintaining
the Company and all legal and accounting fees related to the negotiation,
documentation, adoption and implementation of such budget and plan (the “Year Two Work
Plan”). Trinity Alps shall notify American Sierra within
fifteen (15) days after receipt of such proposal whether it approves or
disapproves of such proposal. If Trinity Alps does not communicate
its approval or disproval of the proposal within such 15-day period, then
Trinity Alps shall be deemed to have accepted the proposal without
change. If Trinity Alps disapproves such proposal and notifies
American Sierra of that fact within the 15-day period, the Initial Members, in
good faith, shall meet and attempt to resolve the issues raised by Trinity
Alps. If resolution thereof has not been achieved within ten (10)
days after American Sierra’s receipt of the disapproval notice, the matter shall
be resolved pursuant to Section
10.2. The approved Year Two Work Plan shall be delivered to
the Trust Account Administrator at least thirty (30) days before the Year One
Work Plan ends. The approved Year Two Work Plan shall not be amended,
altered or otherwise changed without the written consent of all of the Initial
Members. A copy of the Year Two Work Plan shall be promptly attached
hereto as Exhibit C
after it is approved by Trinity Alps and adopted by the
Members.
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5.5.3 Disbursements from Trust
Account. The Trust Account Administrator shall release funds
attributable to the First Payment and the Second Payment only upon the Manager’s
presentment of one or more invoices for expenditures authorized in the approved
Year One Work Plan or Miscellaneous Contributions, as applicable. The Trust
Account Administrator shall release funds attributable to the Third Payment and
the Fourth Payment only upon the Manager’s presentment of one or more invoices
for expenditures authorized in the approved Year Two Work Plan or Miscellaneous
Contributions, as applicable.
5.6 Compensation of
Manager. The Manager shall not be entitled to compensation for
its services as Manager.
5.7 Time Devoted to
Company. The Manager shall devote such time to the conduct of
the business of the Company as is reasonable and necessary. Nothing in this
Agreement shall limit in any manner the right of the Manager to carry on
separate, additional businesses or activities, as long as such businesses or
activities do not interfere unreasonably with the conduct of the Company’s
business and activities.
5.8 Standard
of Care and Duty of Loyalty
5.8.1 Manager. The Manager shall not
be liable, responsible or accountable to the Company or to any Member, in
damages or otherwise, for any action taken or any failure to act on behalf of
the Company within the scope of the authority conferred on the Manager by this
Agreement or by applicable law and which it reasonably believes to be in the
best interest of the Company, unless the action was taken or omission made
fraudulently, intentionally or in bad faith, or unless the action or omission
constituted gross negligence.
5.8.2 Compensation and
Fees. With respect to operating the Company’s business, the
Manager shall only pay wages, salaries, fees and other compensation to Company
employees, independent contractors, consultants and other third party service
providers that are reasonably competitive with the wages, salaries, fees and
other compensation that are reasonably available in the marketplace pertinent to
the Company’s operations.
5.8.3 Members. Except as
may be expressly set forth in Subsection 5.8.3, nothing in
this Agreement shall be deemed to restrict in any way the rights of any Member,
or of any Affiliate of a Member, to conduct any other business or activity
whatsoever, and no member shall be accountable to the Company or to any other
Member with respect to that business or activity even if the business or
activity competes with the Company’s business. Each Member waives any rights
that such Member might otherwise have to share or participate in such other
interests or activities of any other Member or such member’s
Affiliates.
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5.8.4 Conflicts of
Interest. Each Member acknowledges that the conduct of the
Company’s business may involve business dealings and undertakings with Members
or their Affiliates. In any such cases, the dealings and undertakings shall be
at arm’s length and on commercially reasonable terms.
5.9 Title to
Assets. All assets of the Company, whether real or personal,
shall be held in the name or for the benefit of the Company.
5.10 Banking. Except to
the extent of the Aggregate Cash Contributions held in the Trust Account, all
funds of the Company shall be deposited in one or more accounts with one or more
recognized financial institutions in the name of the Company, at such locations
as shall be determined by the Manager. The Manager, acting singly,
shall have the authority to withdraw funds and write checks or drafts against
such account(s).
5.11 Removal of Manager. If any one
or more of the following events occurs, the Members may remove the Manager and
elect a new manager, by the Members holding an aggregate of 51% or more of the
Voting Interests: (i) the Manager’s willful or intentional violation or reckless
disregard of the Manager’s duties to the Company; (ii) the Manager’s Involuntary
Withdrawal, or (iii) the Manager’s breach or violation of its duties and/or
covenants hereunder and/or under the Initial Agreement, the Voting Agreement the
operating agreement of the Holding Company and/or any other related contract or
agreement. Any
Member then acting as the Manager shall not be entitled to Vote its Voting
Interest in any matter relating to its removal as Manager.
6.0 ACCOUNTS
AND RECORDS
6.1 Accounts. The
Manager shall maintain, or cause to be maintained, complete books of account of
the Company's business, in which each Company transaction shall be fully and
accurately entered. The Manager shall keep such books of account at the
Company's principal executive office. The Company’s books of account shall be
open to inspection and copying by each Member or the Member's authorized
representatives on reasonable notice to the Manager and during normal business
hours. The costs of any such inspection and copying shall be borne by the
Member.
6.2 Accounting. Financial
books and records of the Company shall be kept on the cash method of accounting,
which shall be the method of accounting followed by the Company for federal
income tax purposes. The manager shall prepare, or cause to be prepared, a
balance sheet and income statement of the Company promptly following the close
of each fiscal year in a manner appropriate to and adequate for the Company's
business and for carrying out the provisions of this Agreement. Each fiscal year
of the Company shall end on December 31.
6.3 Mandatory
Records. In addition to the books of account referenced in
this Article 6.0, the Manager, at all times during the term of existence of the
Company, shall keep or cause to be kept at the Company’s principal executive
office, the following:
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6.3.1 A
current list of the full name and last known business or residence address of
each Member, together with the Capital Contribution and the Membership Interest
in Profits and Losses of each Member;
6.3.2 A
copy of the Articles of Organization, as such Articles of Organization may be
amended and/or restated from time to time;
6.3.3 Copies
of the Company's federal, state, and local income tax or information returns and
reports, if any, for the six (6) most recent tax years;
6.3.4 Executed
counterparts of this Agreement, as it may be amended and/or restated from time
to time;
6.3.5 Any
powers of attorney under which the Articles of Organization or any amendments
and/or restatements thereof were executed;
6.3.6 Financial
statements of the Company for the six (6) most recent fiscal years;
and
6.3.7 The
books and records of the Company as they relate to the Company's internal
affairs for the current and past four (4) fiscal years.
6.4 Income Tax
Returns. Within seventy-five (75) days after the end of each
tax year of the Company, the Manager shall send to each of the Members all
information necessary for the Members to complete their federal and state income
tax or information returns, and a copy of the Company's federal, state, and
local income tax or information returns for such year.
6.5 Manager as Tax Matters
Partner. The Manager shall act as the “Tax Matters
Partner” of the Company pursuant to IRC section 6231(a)(7).
6.6 Tax Matters Partner’s
Authority. The Tax Matters Partner is hereby authorized to do
the following:
6.6.1 Keep
the Members informed of administrative and judicial proceedings for the
adjustment of Company items (as defined in IRC section 6231(a)(3)) at the
Company level, as required under IRC section 6223(g) and the implementing
Regulations;
6.6.2 Enter
into settlement agreements under IRC section 6224(c)(3) and applicable
Regulations with the Internal Revenue Service or the Secretary of the Treasury
(the “Secretary”)
with respect to any tax audit or judicial review, in which agreement the Tax
Matters Partner may expressly state that such agreement shall bind the other
Members, except that such settlement agreement shall not bind any Member who
(within the time prescribed under the IRC and Regulations) files a statement
with the Secretary providing that the Tax Matters Partner shall not have the
authority to enter into a settlement agreement on behalf of such
Member;
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6.6.3 On
receipt of a notice of a final Company administrative adjustment, file a
petition for readjustment of the Company items with the Tax Court, the District
Court of the United States for the district in which the Company’s principal
place of business is located, or the United States Court of Federal Claims, all
as contemplated under IRC section 6226(a) and applicable
Regulations;
6.6.4 File
requests for administrative adjustment of Company items on Company tax returns
under IRC section 6227(b) and applicable Regulations; and, to the extent such
requests are not allowed in full, file a petition for adjustment with the Tax
Court, the District Court of the United States for the district in which the
Company’s principal place of business is located, or the United States Court of
Federal Claims, all as contemplated under IRC section 6228(a); and
6.6.5 Take
any other action on behalf of the Members or the Company in connection with any
administrative or judicial tax proceeding to the extent permitted by law or
regulations, including retaining tax advisers (at the expense of the Company) to
whom the Tax Matters Partner may delegate such rights and duties as deemed
necessary and appropriate.
7.0 MEMBERS’
RIGHTS AND VOTING
7.1 Members’ Voting
Rights. There shall be only one class of membership and no
Member shall have any rights or preferences in addition to or different from
those possessed by any other Member. Subject to the Voting Agreement,
each Member shall Vote in proportion to the Member's Voting Interest as of the
governing record date, determined in accordance with Section 7.3.
7.2 Subjects of Members’ Voting
Rights. The only matters upon which the Members have the right
to Vote are set forth in Section 5.2. As to all other
matters, the Members have no voting rights and the Manager, in its sole
discretion, shall make all decisions regarding such other matters.
7.3 Record Date. The
record date for determining the Members entitled to notice of any Meeting (as
defined below), to Vote, to receive any distribution, or to exercise any right
in respect of any other lawful action, shall be the date set by the Manager,
provided that such record date shall not be more than sixty (60) nor less than
ten (10) days prior to the date of the Meeting, nor more than sixty (60) days
prior to any other action.
7.4 Meetings. The
Members are not required to hold meetings, and decisions (except for those
decisions to be made by the Manager as provided in this Agreement) may be
reached through one or more informal consultations followed by a written consent
signed by all Members, provided that all Members are consulted (although all
Members need not be present during a particular consultation). In the
event that Members wish to hold a formal meeting (a “Meeting”)
for any reason, the following procedures shall apply:
7.4.1 Notice of Meeting. Any Member
may call a Meeting of the Members by giving notice to each of the other Members
and to the Manager of the time and place of the Meeting at least 48 hours prior
to the time of the Meeting. The notice need not specify the purpose
of the Meeting, or the location if the Meeting is to be held at the principal
executive office of the Company.
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7.4.2 Quorum. Sixty
percent (60.0%) of the Voting Interests shall constitute a quorum for the
transaction of business at any Meeting of the Members.
7.4.3 Other Transactions Valid. The
transactions of the Members at any Meeting, however called or noticed, or
wherever held, shall be as valid as though transacted at a Meeting duly held
after call and notice if a quorum is present and if, either before or after the
Meeting, each Member not present signs a written waiver of notice, a consent to
the holding of the Meeting, or an approval of the minutes of the
Meeting.
7.4.4 Action Without Meeting. The
Members may take any action under this Agreement without a Meeting if all of the
Members individually or collectively consent in writing to such
action.
7.4.5 Remote Participation. Members
may participate in any Meeting through the use of a conference telephone or
similar communications equipment, provided that all Members participating in the
Meeting can hear one another.
7.4.6 Minutes. The Manager shall
keep or cause to be kept with the books and records of the Company full and
accurate minutes of all Meetings, notices, and waivers of notices of Meetings,
and all written consents in lieu of Meetings.
7.5 Proxy. At all
meetings of Members, a Member may Vote in person or by proxy. A
Member who intends to Vote by proxy shall file a written proxy instrument with
the Manager before or at the time of the Meeting. A Member may file such proxy
instrument by facsimile transmission to the Manager at the principal executive
office of the Company.
8.0 TRANSFERS
OF MEMBERSHIP INTERESTS
8.1 No Right to
Withdraw. A Member may not withdraw from the Company without
the written consents of all remaining Members. Any attempt by a
Member to withdraw in violation of this section shall be void and of no force or
effect, and shall not release the Member from any obligations and liabilities
under this Agreement, whether already accrued or incurred, or to be accrued or
incurred in the future.
8.2 Restrictions on
Transfer. Except as expressly provided in this Agreement, a
Member shall not Transfer any part of the Member’s Membership Interest in the
Company, whether now owned or later acquired, unless (a) the other Members, by
Unanimous Vote, approve the transferee’s admission to the Company as a Member
upon such Transfer, and (b) the Membership Interest to be transferred, when
added to the total of all other Membership Interests transferred in the
preceding twelve (12) months, will not cause termination of the Company under
the IRC. No Member may Encumber or permit or suffer any Encumbrance
of or against all or any part of the Member’s Membership Interest in the Company
unless such Encumbrance has first been approved in writing by the Manager within
its sole discretion. Any Transfer or Encumbrance of a Membership
Interest without such approval shall be void and of no force or
affect.
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8.3 Right of First
Refusal. Except as otherwise expressly provided in this
Agreement, if a Member (“Transferring
Member”) wishes to Transfer any or all of its Membership Interest
pursuant to a Bona Fide Offer (as defined below), the Transferring Member shall
give notice to the Manager at least 150 days in advance of the proposed
Transfer, indicating the terms of the Bona Fide Offer and the identity of the
offeror, together with all material information relating to the offeror (“Transfer
Notice”). The term “Bona Fide
Offer” means an offer in writing setting forth all relevant terms and
conditions of purchase from an offeror who is ready, willing, and able to
consummate the purchase (as indicated by the offeror’s signature thereto) and
who is not an Affiliate of the Transferring Member. If the price for
the Membership Interest is other than cash, the fair value in dollars (“Fair Dollar
Value”) of the non-cash consideration shall be as established in good
faith by the Manager. For thirty (30) days after the Transfer Notice
is effectively given, the Company shall have the right to purchase all or any
portion of the Membership Interest offered, on the terms stated in the Transfer
Notice, for the price stated in the Transfer Notice (or the cash portion of the
price plus the Fair Dollar Value of the non-cash consideration, as the case may
be). If the Company does not exercise the right to purchase all of
the Membership Interest, then, with respect to the portion of the Membership
Interest that the Company does not elect to purchase, that same right shall be
given to the other Members for an additional 30-day period, beginning on the day
that the Company’s right to purchase expires or, if earlier, on the date the
Company gives notice of its election not to purchase. Each of the
other Members shall have the right to purchase, on the same terms, a part of the
Membership Interest of the Transferring Member in the proportion that the
purchasing Member’s Membership Interest bears to the total Membership Interests
of all of the Members who choose to participate in the purchase; provided,
however, that the Company and the participating Members may not, in the
aggregate, purchase less than the entire Transferring Member’s Membership
Interest. If the Company and the other Members do not exercise their
rights to purchase all of such Membership Interest, the Transferring Member may,
within ten (10) days from the expiration date of the Members’ right to purchase,
and on the terms and conditions stated in the Transfer Notice, sell or exchange
that Membership Interest to the offeror named in the Transfer
Notice. Unless the requirements of Section 8.2 are met, the
offeror under this section shall become an Assignee, and shall be entitled to
receive only the share of Profits or other compensation by way of income and the
return of Capital Contribution to which the Transferring Member would have been
entitled. Any modification, alteration, supplementation or other change in the
terms and conditions stated in the Transfer Notice shall constitute a new,
separate and distinct Bona Fide Offer that shall be subject to the requirements
and rights of this section.
8.4 Triggering
Events. Except as otherwise provided in this Agreement, on the
happening of any of the following events (“Triggering
Events”) with respect to a Member, the Company and the other Members
shall have the option to purchase the Membership Interest of such Member (“Selling
Member”) at the Fair Market Value and on the terms provided in Section 8.8
below:
8.4.1
The Involuntary Withdrawal of a Member, or the winding-up and dissolution of a
corporate Member, or merger or other corporate reorganization of a corporate
Member as a result of which the corporate Member does not survive as an entity;
and/or
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8.4.2 The
occurrence of any other event that is, or that would cause, a Transfer in
contravention of this Agreement.
Each
Member shall give prompt notice to the Manager of the occurrence of a Triggering
Event affecting such Member.
8.5 Option Periods. On
the Manager’s receipt of notice under Sections 8.3 and/or 8.4 (the date of such receipt
is hereinafter referred to as the “Option
Date”), the Manager shall promptly cause a copy of such notice to be sent
to all Members. The Company shall then have the option, for a period
ending thirty (30) calendar days following the determination of the Fair Market
Value (the “Company’s
Purchase Option Period”), to purchase the Membership Interest to which
the option relates (the “Option Membership
Interest”). Said purchase shall be at the Fair Market Value
and on the terms set forth in Section 8.7
below. If the Company does not purchase all or any portion of the
Option Membership Interest, then the Members shall each have that same option,
in the same proportion that such Member’s Membership Interest bears to the total
Membership Interests of all of the Members who choose to participate in that
purchase, for a period of thirty (30) days following the expiration of the
Company’s Purchase Option Period, to purchase the Option Membership Interest not
purchased by the Company, on the same terms and conditions as apply to the
Company; provided, however, that the Company and the participating Members may
not, in the aggregate, purchase less than the entire Option Membership
Interest. All transferees of Membership Interests shall hold such
Membership Interests subject to all of the provisions of this
Agreement.
8.6 Non-participation of Interested
Member. Neither the Member whose interest is subject to
purchase under this article, nor such Member’s Affiliate, shall participate in
any Vote or discussion of any matter pertaining to the disposition of the
Member’s Membership Interest.
8.7 Option Purchase
Price. The purchase price of the Option Membership Interest
shall be at its Fair Market Value. For purposes of this calculation,
the Option Date shall be substituted for the Valuation Date (under the Fair
Market Value definition). The Fair Market Value as so determined shall be
payable in cash in accordance with the time deadlines set forth in Section 8.5
above.
8.8 Substituted Member. A
prospective transferee (other than an existing Member) of a Membership Interest
may be admitted as a Member with respect to such Membership Interest (“Substituted
Member”) only (a) on a Unanimous Vote in favor of the prospective
transferee’s admission as a Member; (b) on such prospective transferee’s
execution of a counterpart of this Agreement as a Party hereto; (c) on the
Manager’s receipt of a duly executed and acknowledged written instrument of
Transfer, being either a certificate evidencing the interest in the Company
owned by the transferring Member prior to such Transfer or some other instrument
approved by the Manager, setting forth the intention of the transferring Member
that the transferee become a Substituted Member in its place, and; (d) on the
execution of such additional documents and instruments by the transferee as the
Manager may reasonably require to confirm the transferee as a Substituted Member
and the transferee’s agreement to be bound by the terms and conditions
hereof. Any prospective transferee of a Membership Interest shall be
deemed an Assignee, and, therefore, the owner of only an Economic Interest until
such prospective transferee has been admitted as a Substituted
Member. Except as otherwise permitted in the Act, any such Assignee
shall be entitled only to receive allocations and distributions under this
Agreement with respect to such Membership Interest and shall have no right to
Vote or exercise any rights of a Member until such Assignee has been admitted as
a Substituted Member. Until the Assignee becomes a Substituted
Member, the transferring Member will continue to be a Member and to have the
power to exercise any rights and powers of a Member under this Agreement,
including the right to Vote in proportion to the Voting Interest that the
transferring Member would have had in the event that the Transfer had not been
made.
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8.9 Duties of Substituted
Member. Any Person admitted to the Company as a Substituted
Member shall be subject to all provisions of this Agreement that apply to the
Member from whom the Membership Interest was transferred, provided, however,
that the transferring Member shall not be released from liabilities as a Member
solely as a result of the Transfer, both with respect to obligations to the
Company and/or to third parties incurred prior to the Transfer.
8.10 Charging Orders and Similar
Matters. In the event a Membership Interest is taken or
distributed by levy, foreclosure, charging order, execution, or other similar
proceeding:
8.10.1 The
Company shall not dissolve;
8.10.2 The Assignee
of any Member’s interest shall in no event have the right to interfere in the
management or the administration of the affairs of the Company or to act as a
Member of the Company. The Assignee shall have only the right to
receive distributions, Profits and Losses attributable to the Assigning Member’s
Economic Interest in the Company;
8.10.3 An
Assignee of any Membership Interest shall receive the federal and all relevant
state Forms K-1, and report all income and loss on his/her income tax returns
each year in accordance with Rev. Rul. 77-137, 1977-1 C.B. 178; and
8.10.4 The
Manager (if other than the Member whose Membership Interest is the subject of
the levy, foreclosure, charging order, execution or other proceeding) may
terminate a Member’s Membership Interest, or any portion thereof, if the
Member’s Membership Interest, or any portion thereof, becomes subject to a
charging order, foreclosure or legal proceedings.
9.0 DISSOLUTION
AND WINDING UP
9.1 Events of
Dissolution. The Company shall be dissolved on the first to
occur of the following events:
9.1.1 The
occurrence of an event that makes it unlawful or impossible to carry on the
business of the Company;
9.1.2 The
sale of all of the Company’s assets or the Company’s business;
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9.1.3 A
Unanimous Vote; or
9.1.4 Entry
of a decree of judicial dissolution pursuant to California Corporations Code
section 17351.
9.2 Winding Up. On the
dissolution of the Company, the Company shall engage in no further business
other than that necessary to wind-up the business and affairs of the
Company. The Manager shall wind up the affairs of the
Company. The Manager shall give written notice of the commencement of
winding up by mail to all known creditors and claimants against the Company
whose addresses appear in the records of the Company. After paying or adequately
providing for the payment of all known debts of the Company (except debts owing
to Members) the remaining assets of the Company shall be distributed or applied
in the following order of priority:
9.2.1 To
pay the expenses of liquidation (including, without limitation, all costs
relating to the disposition of the Company’s assets, if any);
9.2.2 To
the establishment of reasonable reserves for contingent liabilities or
obligations of the Company (upon the Manager’s determination that such reserves
are no longer necessary, such reserves shall be distributed as provided in this
Section
9.2);
9.2.3 To
repay outstanding loans, including accrued and unpaid interest, made to the
Company, including, without limitation, any outstanding loans made to the
Company by any Member.
9.2.4 Among
the Members with positive Capital Account balances as provided in Section 5.7
hereof.
9.3 Deficits. Each
Member shall look solely to the assets of the Company for the return of the
Member's investment. If, after payment or discharge of the debts and
liabilities of the Company, the remaining assets of the Company are insufficient
to return the investment of any Member, such Member shall have no recourse
against any other Members (including the Manager) for indemnification,
contribution, or reimbursement.
10.0 INDEMNIFICATION
AND ARBITRATION
10.1 Indemnification. The
Company shall indemnify, defend and hold harmless any Person who was or is a
party, or who is threatened to be made a party, to any Proceeding (defined
below) by reason of the fact that such Person was or is a Member, Manager,
officer, employee, or other agent of the Company, against expenses, judgments,
fines, liabilities, damages, settlements, and other amounts (including, without
limitation, attorneys’ fees and legal expenses) incurred by such Person in
connection with such Proceeding. “Proceeding,”
as used in this Section
10.1, means any threatened, pending, or completed action or proceeding,
whether civil, criminal, administrative, or investigative.
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10.2 Arbitration. Any
action to enforce or interpret this Agreement or to resolve disputes between or
among the Members (including the Manager) or by or against any Member shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. Any Member may commence
arbitration by sending a notice and demand for arbitration to the other
Parties. Such demand shall set forth the nature of the matter to be
resolved by arbitration. Arbitration shall be conducted at or
reasonably near the location of the Company’s principal executive office in
California or, if there is no such principal executive office in California, at
any place designated by the Manager, in its sole and absolute discretion. The
substantive law of the State of California shall be applied by the arbitrator to
the resolution of the dispute, without regard to principles of conflict of laws.
The Members shall share equally all costs of arbitration. All
decisions of the arbitrator shall be final, binding, conclusive, and
non-appealable (except as otherwise provided by statute) on all
Parties. Judgment may be entered upon any such decision in accordance
with applicable law in any court having jurisdiction thereof. The
arbitrator shall award to the prevailing Member(s) in any such arbitration
proceeding such costs and expenses, including, without limitation, attorneys’
fees, expert witness’ fees and related costs, as are permitted pursuant to this
Agreement.
11.0 GENERAL
PROVISIONS
11.1 Notices. All
notices hereunder shall be in writing and sent to the
recipient at the address provided by recipient to, and maintained by, the
Manager. Notices shall be effective (i) three (3) business days after deposited
in the United States mail, sufficient first-class postage and fees prepaid, (ii)
the next business day if sent by Federal Express, United Parcel Service, or
other comparable overnight courier service, for guaranteed overnight delivery,
all charges prepaid or charged to the sender's account, (iii) the date of
recipient’s actual receipt, if personally delivered to the recipient, or (iv) if
sent by fax, and such transmission is confirmed by a fax delivery confirmation
receipt generated by the sender’s fax machine in the ordinary course of
business, effective the date of such receipt if received before 5:00 P.M. on a
business day, otherwise effective on the next business day.
11.2 Entire
Agreement. This Agreement constitutes the whole and entire
agreement of the Parties with respect to the subject matter of this Agreement,
and it shall not be modified or amended in any respect except by a written
instrument executed by all Parties. This Agreement replaces and
supersedes all prior written and oral agreements between and among the Members
or any of them regarding the subject of this Agreement, except for the Initial
Agreement and the Voting Agreement.
11.3 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
11.4 Governing Law. This
Agreement shall be construed and enforced in accordance with the internal laws
of the State of California, without regard to principles of conflict of
laws.
11.5 Severability. If
any provision of this Agreement is determined by any court of competent
jurisdiction or arbitrator to be invalid, illegal, or unenforceable to any
extent, that provision shall, if possible, be construed as though more narrowly
drawn, if a narrower construction would avoid such invalidity, illegality, or
unenforceability or, if that is not possible, such provision shall, to the
extent of such invalidity, illegality, or unenforceability, be severed, and the
remaining provisions of this Agreement shall remain in effect.
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11.6 Burden and
Benefit. This Agreement shall be binding on and inure to the
benefit of the Parties and their trustees, successors and permitted transferees
and assigns.
11.7 Singular and Plural;
Gender. Whenever used in this Agreement, the singular shall
include the plural, the plural shall include the singular, and the neuter gender
or “his” shall
include the male and female as well as a trust, firm, company, or corporation,
all as the context and meaning of this Agreement may require.
11.8 Other Acts. The
Parties shall promptly execute and deliver any and all additional documents,
instruments, notices, and other assurances, and shall do any and all other acts
and things, reasonably necessary in connection with the performance of their
respective obligations under this Agreement and to carry out the intent of the
Parties.
11.9 Other
Activities. Except as provided in this Agreement, no provision
of this Agreement shall be construed to limit in any manner the Members’
abilities to carry on their own respective businesses or
activities.
11.10 No Agency. No
provision of this Agreement shall be construed to constitute a Member, in the
Member's capacity as such, the agent of any other Member or the
Company.
11.11 Authority. Each
Member represents and warrants to the other Members that such Member has the
capacity and authority to enter into this Agreement.
11.12 Titles and
Headings. The article, section, and paragraph titles and
headings contained in this Agreement are inserted as a matter of convenience and
for ease of reference only and shall be disregarded for all other purposes,
including the construction or enforcement of this Agreement or any of its
provisions.
11.13 Amendments by Writing
Only. This Agreement may be altered, amended, or repealed only
by a writing signed by all of the Members.
11.14 Time of the
Essence. Time is of the essence of every provision of this
Agreement that specifies a time for performance.
11.15 No Third Party
Beneficiaries. This Agreement is made solely for the benefit
of the Parties to this Agreement and their respective permitted successors,
transferees and assigns, and no other person or entity shall have or acquire any
right by virtue of this Agreement as a third party beneficiary or
otherwise.
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11.16 Interpretation. This
Agreement shall not be construed against the Party preparing the same, and shall
be construed without regard to the identity of the person who drafted such and
shall be construed as if all Parties had jointly prepared this Agreement and it
shall be deemed their joint work product. Each and every provision of
this Agreement shall be construed as though all of the Parties hereto
participated equally in the drafting hereof. Any uncertainty or ambiguity shall
not be interpreted against any one Party. As a result of the
foregoing, any rule of construction that a document is to be construed against
the drafting party shall not be applicable.
11.17 Exhibits. All exhibits now or
hereafter attached hereto are incorporated herein by this
reference.
11.18 Miscellaneous. This
Agreement’s time periods shall be computed by excluding the first day and
including the last. Except if otherwise specifically noted, all
periods referencing days shall be measured by calendar days, and, if the last
day in a given period falls on a weekend or legal holiday, then the last day
thereof shall be the next business day thereafter. Except as may otherwise be
specified herein, no action by a Party against another for breach hereof is
limited to breach of contract remedies.
IN WITNESS WHEREOF, the
Parties have executed or caused to be executed this Agreement as of the
Effective Date.
|
Member:
|
Member:
|
|||
|
TRINITY
ALPS RESOURCES, INC.
|
AMERICAN
SIERRA GOLD CORP.
|
|||
|
By:
|
/s/ Patrick A. Fagen
|
By:
|
/s/ Johannes Petersen
|
|
|
Patrick
A. Fagen, President
|
Johannes
Petersen, Chief Financial
Officer
|
|||
|
Manager:
|
||||
|
AMERICAN
SIERRA GOLD CORP.
|
||||
|
By:
|
/s/ Johannes Petersen
|
|||
|
Johannes
Petersen, Chief
Financial
Officer
|
||||
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