Document:

Exhibit 10.3

      SECOND AMENDED & RESTATED
            OPERATING AGREEMENT
                               OF
               TONKIN SPRINGS LLC
     A Delaware Limited Liability Company

TABLE OF CONTENTS

ARTICLE I -- DEFINITIONS AND CROSS-REFERENCES
1.1  DEFINITIONS
1.2  CROSS REFERENCES
ARTICLE II - NAME, PURPOSES AND TERM
2.1  FORMATION
2.2  NAME
2.3  PURPOSES
2.4  LIMITATION
2.5  TERM
2.6  REGISTERED AGENT; OFFICES
2.7  RECORD TITLE
ARTICLE III - INTERESTS OF MEMBERS
3.1  OWNERSHIP INTERESTS
3.2  CHANGES IN OWNERSHIP INTERESTS
3.3  DOCUMENTATION OF ADJUSTMENTS TO OWNERSHIP
INTERESTS
ARTICLE IV - TREATMENT OF CASH FLOW AND EXCLUDED
ASSET
4.1  DISTRIBUTIONS
4.2  EXCLUDED ASSET
ARTICLE V - RELATIONSHIP OF THE MEMBERS
5.1  LIMITATION ON AUTHORITY OF MEMBERS
5.2  FEDERAL TAX ELECTIONS AND ALLOCATIONS
5.3  STATE INCOME TAX
5.4  TAX RETURNS
5.5  OTHER BUSINESS OPPORTUNITIES
5.6  WAIVER OF RIGHTS TO PARTITION OR OTHER
DIVISION OF ASSETS
5.7  BANKRUPTCY OF A MEMBER
5.8  IMPLIED COVENANTS
5.9  NO CERTIFICATE
5.10 LIMITATION OF LIABILITY
5.11 INDEMNITIES
5.12 NO THIRD PARTY BENEFICIARY RIGHTS
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
6.1  CAPACITY OF THE MEMBERS
ARTICLE VII - TRANSFER OF INTEREST; PREEMPTIVE
RIGHT
7.1  GENERAL
7.2  LIMITATIONS ON FREE TRANSFERABILITY
7.3  PREEMPTIVE RIGHTS
ARTICLE VIII - MANAGEMENT COMMITTEE
8.1  ORGANIZATION AND COMPOSITION
8.2  DECISIONS
8.3  MEETINGS
8.4  TELEPHONIC MEETINGS
8.5  MATTERS REQUIRING APPROVAL
8.6  WRITTEN CONSENT
ARTICLE IX
9.1  APPOINTMENT
9.2  POWERS AND DUTIES OF MANAGER
9.3  STANDARD OF CARE; INDEMNIFICATION
9.4  RESIGNATION; DEEMED OFFER TO RESIGN
9.5  PAYMENTS TO MANAGER
9.6  TRANSACTIONS WITH AFFILIATES
ARTICLE X -- PROGRAMS AND BUDGETS
10.1  INITIAL PROGRAM AND BUDGET
10.2  OPERATIONS PURSUANT TO PROGRAMS AND BUDGETS
10.3  RESENTATION OF PROGRAMS AND BUDGETS
10.4  REVIEW AND ADOPTION OF PROPOSED PROGRAMS AND
BUDGETS
10.5  ELECTION TO PARTICIPATE
10.6  ELECTED LOANS
10.7  DEADLOCK ON PROPOSED PROGRAMS AND BUDGETS
10.8  BUDGET OVERRUNS; PROGRAM CHANGES
10.9  EMERGENCY OR UNEXPECTED EXPENDITURES
10.10 AMENDMENTS TO PROGRAMS AND BUDGETS
ARTICLE XI -- ACCOUNTS AND SETTLEMENTS
11.1  MONTHLY STATEMENTS
11.2  CASH CALLS
11.3  AUDITS
ARTICLE XII -- PROPERTIES; DISTRIBUTION OF
PRODUCTION
12.1  ROYALTIES, PRODUCTION TAXES AND OTHER
PAYMENTS BASED ON PRODUCTION
12.2 DISPOSITION OF PRODUCTS BY MANAGER
ARTICLE XIII -- CONFIDENTIALITY, OWNERSHIP, USE
AND DISCLOSURE OF INFORMATION
13.1  BUSINESS INFORMATION
13.2  PERMITTED DISCLOSURE OF CONFIDENTIAL
BUSINESS INFORMATION
13.3  DISCLOSURE REQUIRED BY LAW
13.4  PUBLIC ANNOUNCEMENTS
13.5  DURATION OF CONFIDENTIALITY
ARTICLE XIV -- RESIGNATION AND DISSOLUTION
14.1  EVENTS OF DISSOLUTION
14.2  RESIGNATION
14.3  DISPOSITION OF ASSETS ON DISSOLUTION
14.4  FILING OF CERTIFICATE OF CANCELLATION
14.5  RIGHT TO DATA AFTER DISSOLUTION
14.6  CONTINUING AUTHORITY
ARTICLE XV - GOVERNING LAW
15.1  GOVERNING LAW
ARTICLE XVI -- GENERAL PROVISIONS
16.1  NOTICES
16.2  GENDER
16.3  CURRENCY
16.4  HEADINGS
16.5  WAIVER
16.6  MODIFICATION
16.7  FORCE MAJEURE
16.8  RULE AGAINST PERPETUITIES
16.9  FURTHER ASSURANCES
16.10 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS
16.11 COUNTERPARTS

        SECOND AMENDED AND RESTATED
              OPERATING AGREEMENT
                                 OF
               TONKIN SPRINGS LLC
         A Delaware Limited Liability Company

This Second Amended and Restated Amended Operating
Agreement of Tonkin Springs LLC (the Agreement) is
made effective as of July 31, 2003, (Effective
Date) among TONKIN SPRINGS VENTURE LIMITED
PARTNERSHIP, a Nevada limited partnership (TSVLP),
U.S. ENVIRONMENTAL CORPORATION, a Colorado
corporation (USEC), both having the address of
2201 Kipling Street, Suite 100, Lakewood, Colorado
80215-1545, and BACTECH NEVADA CORPORATION
(BACTECH), the address of which is 1 East Liberty
Street, Suite 424, Reno, Nevada 89501.

RECITALS

A.  TSVLP and USEC are parties to the Operating
Agreement and Members' Agreement of Tonkin Springs
LLC (the Company), both as amended October 18,
2001 (the Original Operating Agreement and the
Original Members' Agreement, respectively), and
collectively owned one hundred percent of the
company prior to the transaction with BACTECH as
described in (B) below.

B.  TSVLP has agreed to sell to BACTECH an
undivided fifty-five percent (55%) Ownership
Interest in the Company as of the Effective Date
for a cash purchase price of One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000) (the
Purchase Price); plus certain funding obligations
of BACTECH to the Company required by the Company
as well as the obligation to advance on behalf of
TSVLP and USEC to the Company, upon election by
TSVLP and USEC, any cash calls related to funding
requirements of the Company, all as set forth
elsewhere in this Agreement and the Members'
Agreement.

C.  TSVLP, USEC and BACTECH wish to continue the
Company as a limited liability company under the
Delaware Limited Liability Company Act, 6 Del.C.
Paragraph 18-101 et seq. (the Act) to continue to
own and operate the Properties and Assets in
accordance with the terms set forth in this
Agreement and the Members' Agreement.

D.  This Agreement amends and restates in its
entirety the Original Operating Agreement of the
Company.

E.  Concurrently with the execution of this
Agreement, the parties hereto are executing a
Second Amended and Restated Members' Agreement
(the Members' Agreement) which amends and restates
the Company's Original Members' Agreement in its
entirety.

NOW THEREFORE, in consideration of the covenants
and conditions contained herein, TSVLP, USEC and
BACTECH agree as follows:

ARTICLE I
DEFINITIONS AND CROSS-REFERENCES

1.1  Definitions.  The terms defined in Exhibit D
and elsewhere herein shall have the defined
meaning wherever used in this Agreement, including
in Exhibits.

1.2  Cross References.  References to Exhibits,
Articles, Sections and Subsections refer to
Exhibits, Articles, Sections and Subsections of
this Agreement. References to Paragraphs and
Subparagraphs refer to paragraphs and
subparagraphs of the referenced Exhibits.

ARTICLE II
NAME, PURPOSES AND TERM

2.1  Formation.  The Company validly exists and
was duly organized and formed as a Delaware
limited liability company pursuant to the Act and
the Original Agreement.

2.2  Name.  The name of the Company is Tonkin
Springs LLC and such other name or names complying
with the Act as the Manager shall determine. The
Manager shall accomplish any amended filings or
registrations required by jurisdictions in which
the Company conducts its Business.

2.3  Purposes.  The Company was formed and is
continuing for the following purposes and for no
others, and shall serve as the exclusive means by
which each of the Members accomplishes such
purposes:

(a)  To conduct Exploration within the Area of
Interest,

(b)  To acquire additional real property and other
interests within the Area of Interest,

(c)  To evaluate the possible Development and
Mining of the Properties, and, if justified, to
engage in Development and Mining,

(d)  To engage in marketing Products, and

(e)  To perform any other activity necessary,
appropriate, or incidental to any of the
foregoing, including but not limited to
permitting, reclamation, closure and other
environmental compliance activities.

2.4  Limitation.  Unless the Members otherwise
agree in writing, the Business 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.

2.5  Term.  The Company was formed on January 27,
1999 and its existence shall continue for so long
as the Manger is continuing to maintain the
Properties or Products are produced from the
Properties on a continuous basis, and thereafter
until all materials, supplies, equipment and
infrastructure have been salvaged and disposed of,
and any required Environmental Compliance is
completed and accepted, unless the Company is
earlier terminated as herein provided. For
purposes hereof, Products shall be deemed to be
produced from the Properties on a continuous basis
so long as production in commercial quantities is
not halted for more than 24 months.

2.6  Registered Agent; Offices.  The name of the
Company's registered agent in the State of
Delaware is The Corporation Trust Company or such
other person as the Manager may select in
compliance with the Act from time to time. The
registered office of the Company in the State of
Delaware shall be located at c/o The Corporation
Trust Company, 1209 Orange Street, Wilmington, DE
19801 or at any other place within the State of
Delaware which the Manager shall select. The
principal office of the Company shall be at any
other location which the Manager shall select.

2.7  Record Title.  Title to the Assets are, as
set forth in Exhibit A, and shall be held by the
Company.

ARTICLE III
INTERESTS OF MEMBERS

3.1  Ownership Interests.  The Members shall have
the following initial Ownership Interests as of
the Effective Date:

BACTECH  fifty-five percent (55%)
TSVLP    forty-four and one-half percent (44.5%)
USEC     one-half of one percent (0.5%)

The Ownership Interests of the Members shall have
no relationship to their Capital Account dollar
balances, which shall be determined solely as
stated in the Members' Agreement and Exhibit C
hereto.

3.2  Changes in Ownership Interests.  The
Ownership Interests shall be eliminated or
adjusted as follows:

(a)  Upon withdrawal of BACTECH from the Company
prior to meeting its Funding Obligation, as
provided in Article 2.3 of the Members' Agreement.

(b)  Upon Transfer by any Member of part or all of
its Ownership Interest in accordance with Article
VII; or

(c)  Upon acquisition by any Member(s) of part or
all of the Ownership Interest of the other
Member(s), however arising.

3.3  Documentation of Adjustments to Ownership
Interests.  Each Member's Ownership Interest and
related Capital Account balance shall be shown in
the accounting records of the Company, as
maintained by the Manager, and any adjustments
thereto shall be made monthly and shall be
preceded by a notice to all Members with a written
explanation of the basis of such adjustments.

ARTICLE IV
TREATMENT OF CASH FLOW AND EXCLUDED ASSET

4.1 Distributions.

(a)  Prior to the Funding Obligation Date any and
all distributions of Cash Flow to the Members
shall be made according to the Ownership Interest
of the Members on the Effective Date.

(b)  After the Funding Obligation Date but prior
to BACTECH having recouped from all distributions
an aggregate of the Funding Obligation (the
Funding Obligation Account) and at any time there
remains a positive balance in the Funding
Obligation Account, BACTECH shall receive total
distributions of Cash Flow based upon the realized
price of gold by the Company during the operating
period covered by such distributions, as follows:

Averaged Realized Price of Gold  BACTECH share of
                                 Cash Flow
                                 distributions

$360 per ounce gold or over         55%
$350 per ounce gold up to $ 360     60%
$340 per ounce gold up to $ 350     65%
$330 per ounce gold up to $ 340     70%
$320 per ounce gold up to $ 330     75%
Below $320 per ounce gold           80%

The repayment schedule of the Funding Obligation
Account set forth in this Section 4.1(b) is based
on a total estimated expenditure of $16 million by
BACTECH.  In the event that actual expenditures by
BACTECH prior to the Commencement of Commercial
Production are less than $16 million, BACTECH's
incremental share of Cash Flow Distributions shall
be equal to 55% plus A multiplied by B where A is
equal to the applicable share set out above less
55% and B is equal to the amount of actual
expenditures by BACTECH divided by $16 million.

During the period when BACTECH is recovering its
Funding Obligation Account as provided above, the
remaining amount of distributions to TSVLP and
USEC shall be made with TSVLP receiving 44.5/45 of
such distributions and USEC receiving .5/45 of
such distributions.

(c)  At such time that BACTECH has recovered the
Funding Obligation Account, one hundred percent
(100%) of positive Cash Flow shall then be
distributed to BACTECH, TSVLP and USEC in
proportion to their respective Ownership
Interests.

(d)  Notwithstanding any provision of this
Agreement to the contrary, Cash Flow (and any
other distributions) otherwise due a Member
receiving an Elected Loan under this Agreement but
distributed instead to BACTECH as provided in
Section 10.6 hereof shall be deemed amounts
distributed to the borrower thereunder for all
purposes, including allocation of income for tax
purposes.

4.2  Excluded Asset.  TSVLP owns that certain
Champion/Partridge house trailer, model year 1989,
serial no. 1694706906 IDA 098337, which is parked
in the recreational vehicle park of the Company
and is intended for the exclusive use of TSVLP and
USEC personnel and guests.  The Company shall
provide, at the Company's cost, electrical, gas,
water and phone utilities and services for this
excluded asset at the recreational vehicle park
currently being utilized, until TSVLP removes the
trailer therefrom.  TSVLP shall be responsible for
all property tax, insurance, and any other costs
related to its use or ownership of this excluded
asset.

ARTICLE V
RELATIONSHIP OF THE MEMBERS

5.1  Limitation on Authority of Members.  No
Member is an agent of the Company solely by virtue
of being a Member, and no Member has authority to
act for the Company solely by virtue of being a
Member. This Section 5.1 supersedes any authority
granted to the Members pursuant to the Act. Any
Member that takes any action or binds the Company
in violation of this Section 5.1 shall be solely
responsible for any loss or expense incurred by
the Company, the other Members or the Manager as a
result of the unauthorized action and shall
indemnify and hold harmless the Company, the other
Members and the Manager with respect to all such
losses and expenses.

5.2  Federal Tax Elections and Allocations.  The
Company shall be treated as a partnership for
federal income tax purposes, and no Member shall
take any action to alter such treatment.  Tax
elections and allocations shall be made as set
forth in Exhibit C.

5.3  State Income Tax.  To the extent permissible
under applicable Law, the relationship of the
Members shall be treated for state income tax
purposes in the same manner as it is for federal
income tax purposes.

5.4  Tax Returns.  After approval of the
Management Committee, any tax returns or other
required tax forms shall be filed in accordance
with Exhibit C.  Tax returns shall be completed
and provided the Members no later than 45 days
prior to the date on which Members are required to
file their respective tax returns.

5.5  Other Business Opportunities.  Each Member
shall have the right to engage in and receive full
benefits from any independent business activities
or operations outside of the Area of Interest,
whether or not competitive with the Company,
without consulting with, or obligation to, the
other Members or the Company. The doctrines of
corporate opportunity or business opportunity
shall not be applied to the Business nor to any
other activity or operation of any Member outside
the Area of Interest. Except as otherwise provided
in Section 6.5 of the Members' Agreement, no
Member shall have any obligation to the Company or
any other Members 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, neither the
Manager nor any Member shall have any obligation
to mill, beneficiate or otherwise treat any
Products in any facility owned or controlled by
the Manager or such Members.

5.6  Waiver of Rights to Partition or Other
Division of Assets.  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 Law.

5.7  Bankruptcy of a Member.  A Member shall cease
to have any power as a Member or Manager or any
voting rights or rights of approval hereunder upon
bankruptcy, insolvency, dissolution or assignment
for the benefit of creditors of such Member, and
its successor upon the occurrence of any such
event shall have only the rights, powers and
privileges of a transferee enumerated in Section
7.2, and shall be liable for all obligations of
the Member under this Agreement. In no event,
however, shall a personal representative or
successor become a substitute Member unless the
requirements of Section 7.2 are satisfied.

5.8  Implied Covenants.  There are no implied
covenants contained in this Agreement other than
those of good faith and fair dealing.

5.9  No Certificate.  The Company shall not issue
certificates representing Ownership Interests in
the Company.

5.10 Limitation of Liability.  The Members shall
not be required to make any contribution to the
capital of the Company except as otherwise
provided in this Agreement or the Members'
Agreement, nor shall the Members in their capacity
as Members or Manager be bound by, or liable for,
any debt, liability or obligation of the Company
whether arising in contract, tort, or otherwise,
except as expressly provided by this Agreement or
the Members' Agreement.

5.11 Indemnities.  The Company may, and shall have
the power to, indemnify and hold harmless any
Member, the Manager or any other person from and
against any and all claims and demands whatsoever
arising from or related to the Business, the
Company, the Assets, Operations or a Member's
membership in the Company.

5.12 No Third Party Beneficiary Rights.  This
Agreement shall be construed to benefit the
Members and their respective successors and
assigns only, and shall not be construed to create
third party beneficiary rights in any other party
or in any governmental organization or agency.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES

6.1  Capacity of the Members.  As of the Effective
Date, each Member warrants and represents to the
other that:

(a)  It is a corporation or limited partnership,
as the case may be, duly organized and in good
standing in its state of formation and is
qualified to do business and is in good standing
in those states where necessary in order to carry
out the purposes of this Agreement;

(b)  It has the capacity to enter into and perform
this Agreement and all transactions contemplated
herein and all actions and consents required to
authorize it to enter into and perform this
Agreement have been properly taken or obtained;

(c)  It will not breach any other agreement or
arrangement by entering into or performing this
Agreement; and

(d)  This Agreement has been duly executed and
delivered by it and is valid and binding upon it
in accordance with its terms.

ARTICLE VII
TRANSFER OF INTEREST; PREEMPTIVE RIGHT

7.1  General.  A Member shall have the right to
Transfer to a third party, its Ownership Interest,
or any beneficial interest therein (including
without limitation any right or interest created
pursuant to this Agreement or the Members'
Agreement), solely as provided in this Article
VII.

7.2  Limitations on Free Transferability.  In
addition to being subject to preemptive rights as
described in Section 7.4 and Exhibit H, any
Transfer by any Member under Section 7.1 shall be
subject to the following limitations:

(a)  No Member shall Transfer any legal or
beneficial right, title or interest (i) in or to
the Company, the Properties or the Assets, or (ii)
arising under this Agreement or the Members'
Agreement (including, but not limited to, any
royalty, profits, or other interest in the
Products) except in each case conjunction with the
Transfer of part or all of its Ownership
Interest);

(b)  No transferee of all or any part of a
Member's Ownership Interest shall have the rights
of a Member unless and until the transferring
Member has provided to the other Member(s) notice
of the Transfer, and, except as provided in
Subsections 7.2(f) and 7.2(g), the transferee, as
of the effective date of the Transfer, has
committed in writing to assume and be bound by
this Agreement and the Members' Agreement to the
same extent as the transferring Member;

(c)  No Member, without the consent of the other
Member(s), shall make a Transfer that violates any
Law, or results in the cancellation of any
permits, licenses, or other similar authorization;

(d)  No Transfer permitted by this Article shall
relieve the transferring Member(s) of any
liability of such transferring Member(s) under
this Agreement or under the Members' Agreement,
whether accruing before or after such Transfer;

(e)  Any Member(s) that makes a Transfer that
shall cause termination of the tax partnership
established by Section 5.2 shall indemnify the
other Member(s) for, from and against any and all
loss, cost, expense, damage, liability or claim
therefore arising from the Transfer, including
without limitation any increase in taxes, interest
and penalties or decrease in credits caused by
such termination and any tax on indemnification
proceeds received by the indemnified Member(s);

(f)  In the event of a Transfer of less than all
of an Ownership Interest, the transferring Member
and its transferee shall act and be treated as one
Member under this Agreement; provided however,
that in order for such Transfer to be effective,
the transferring Member and its transferee must
first:

(i) agree, as between themselves, that one of them
is authorized to act as the sole agent (Agent) on
their behalf with respect to all matters
pertaining to this Agreement, the Members'
Agreement and the Company; and

(ii)  provide written notice to the other
Member(s), the Manager and the Company of the
designation of the Agent, and in such notice
warrant and represent to the other Member(s), the
Manager and the Company that:

(A)  the Agent has the sole authority to act on
behalf of, and to bind, the transferring Member(s)
and its transferee with respect to all matters
pertaining to this Agreement, the Members'
Agreement and the Company;

(B)  the other Member(s), the Manager and the
Company may rely on all decisions of, notices and
other communications from, and failures to respond
by, the Agent, as if given (or not given) by the
transferring Member(s) and its transferee; and

(C)  all decisions of, notices and other
communications from, and failures to respond by,
the other Member(s), the Manager or the Company to
the Agent shall be deemed to have been given (or
not given) to the transferring Member(s) and its
transferee.

The transferring Member(s) and its transferee may
change the Agent by giving written notice to the
other Member(s), the Manager and the Company,
which notice must conform to Section 7.2(f)(ii).

(g)   No Member shall grant any Encumbrance or
allow any Lien to arise on or with respect to its
respective Ownership Interest (or any other right,
title or interest arising under this Agreement or
the Members' Agreement), except for Encumbrances
authorized by this Agreement or the Members'
Agreement.

7.3  Preemptive Rights.  Any Transfer by any
Member(s) under Section 7.1 and any Transfer by an
Affiliate of any Member(s) shall be subject to a
preemptive right of the other Member(s) to the
extent provided in Exhibit H. Failure of a
Member's Affiliate to comply with this Section and
Exhibit H shall be a breach by such Member(s) of
this Agreement.

ARTICLE VIII
MANAGEMENT COMMITTEE

8.1  Organization and Composition.  The Members
hereby establish a Management Committee to
determine overall policies, objectives,
procedures, methods and actions under this
Agreement.  Except in the case of an emergency as
provided for in Section 10.9, all Programs,
Budgets, Project Financings and other significant
matters concerning the Operations will be subject
to the supervision of the Management Committee.
The Management Committee shall consist of one (1)
member appointed by BACTECH and one (1) member
appointed collectively by TSVLP and USEC.  Either
BACTECH or TSVLP/USEC may appoint one or more
alternates to act in the absence of a regular
member of the Management Committee.  Any alternate
so acting shall be deemed a member. Appointments
shall be made or changed by notice to the other
Members and to the Manager.

8.2  Decisions.  Each of BACTECH and combined
TSVLP and USEC, acting through its appointed
members, shall have one vote on the Management
Committee.  Unless otherwise provided in this
Agreement, the vote of the Member who has greater
than a 50% interest shall determine all decisions
of the Management Committee, except with respect
to the matters listed expressly below, which shall
require unanimous approval.

(a)  the abandonment, release, sale, exchange or
other Transfer for value of any of the Assets, as
described in Exhibit A or as acquired by the
Company subsequent to the Effective Date, in any
one transaction or series of related transactions
if the value of such Assets or the proceeds in
respect of such transaction or series or related
transactions exceeds Two Hundred Fifty Thousand
Dollars ($250,000), except for sales in the
ordinary course of business and the abandonment,
release, sale, transfer, disposition or retirement
of obsolete Assets or Assets no longer useful,
efficient or productive in connection with
Operations; provided that any sale or disposition
of the mill currently situated on the Properties
or any essential component thereof shall require
unanimous approval of the Management Committee,
unless the reclamation and/or removal of the mill
or any portion thereof is required by Law, Permits
or regulatory authorities, in which case the
Manager shall be authorized to conduct such
reclamation and/or removal without further action
of the Management Committee.  This Section 8.2(a)
shall not apply to the sale of Products, including
without limitation forward sales, future delivery
contracts, hedging transactions, metals loans and
other similar transactions;

(b)  Borrowing of money where the Assets of the
Company are used as collateral;

(c)  the termination of or the winding-up of the
Company, other than as provided in this Agreement;
and

(d)  any processing of non-Company mineral
products or materials through Company facilities.

8.3  Meetings.  The Management Committee shall
hold regular meetings at least quarterly at the
Tonkin Springs mine site, Nevada, or at other
mutually agreed places.  The Manager shall give 30
days' written notice to the Members of such
regular meetings.  Additionally, the Manager or
any Member may call a special meeting upon 14
days' notice to the Manager and the other Members.
In case of emergency, reasonable notice of a
special meeting shall suffice.  There shall be a
quorum if one or more members is present who
represent Ownership Interests of greater than 50%
of all Ownership Interests.  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 the Member calling the
meeting in the case of a special meeting, but any
matters may be considered with the consent of all
Members.  The Manager shall prepare minutes of all
meetings and shall distribute copies of such
minutes to the Members within 30 days after the
meeting.  The Manager shall reasonably consider
the recommendations for changes to the minutes
submitted by the Members within fifteen (15) days
of the receipt of the minutes.  The minutes, when
signed by all Members, shall be the official
record of the decisions made by the Management
Committee and shall be binding on the Manager and
the Members.  In the event that any Members does
not sign minutes prepared by the Manager within
fiftteen (15) days of receiving a copy of such
minutes, the minutes may be signed by a Member who
has a greater than 50% Ownership Interest.  The
non-Manager Member shall have the right to submit
exceptions and comments to signed minutes within
fifteen (15) days of receipt of such signed
minutes which shall be annexed to such signed
minutes to document same. The general manager of
the Operations appointed by the Manager shall be
entitled to attend a Management Committee meeting
at the cost of the Company.  If other personnel
employed in Operations are required to attend a
Management Committee meeting, reasonable costs
incurred in connection with such attendance shall
be a Company cost.  All other costs shall be paid
for by the Members individually.

8.4  Telephonic Meetings.  The Management
Committee may hold meetings by telephone with the
consent of the Members.  Minutes of such meetings
shall be prepared in accordance with Section 8.3
above.

8.5  Matters Requiring Approval.  Except as
otherwise delegated to the Manager in Section 9.2,
the Management Committee shall have exclusive
authority to determine all management matters
related to this Agreement and the Company's
Operations.

8.6  Written Consent.  Any action required or
permitted to be taken at a Management Committee
meeting may be taken without a meeting if a
written consent that sets forth the action taken
is signed by all the members of the Management
Committee entitled to vote on the matter.

ARTICLE IX
MANAGER

9.1  Appointment.  BACTECH shall have the right to
appoint the Manager and hereby appoints BACTECH
NEVADA CORPORATION, a Nevada corporation
(BACTECHMANAGER), the initial Manager with overall
management responsibility for Operations.  The
Manager shall serve until it resigns as provided
in Section 9.4.

9.2  Powers and Duties of Manager.  Subject to the
terms and provisions of this Agreement, the
Manager shall have the following powers and
duties, which shall be discharged in accordance
with adopted Programs and Budgets:

(a)  The Manager shall manage, direct and control
Operations.

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

(c)  The Manager shall:

(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)  Contract for services for the Exploration,
Development or Mining of the Properties,

(iii)  Obtain such customary warranties and
guarantees as are available in connection with
such purchases and acquisitions; and

(iv)  Keep the Assets free and clear of all Liens
and Encumbrances, except for those existing at the
time of, or created concurrent with, the
acquisition of such Assets, or mechanic's or
materialmen's Liens which shall be released or
discharged in a diligent matter, or Liens and
Encumbrances specifically approved by the
Management Committee or created pursuant to the
operation of this Agreement or the Members'
Agreement.

(d)  The Manager shall conduct such title
examinations and cure such title defects as may be
advisable in the reasonable judgment of the
Manager provided that the costs of curing any such
title defect existing prior to the Effective Date
and not otherwise disclosed in Exhibit A shall be
borne by TSVLP in the manner and circumstance set
forth in Section 3.1(c)(2) of the Members
Agreement.

(e)  The Manager shall:

(i)  Make or arrange for all payments required by
leases, licenses, permits, authorities, 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.  If authorized by the Management
Committee, the Manager shall have the right to
contest in the courts or otherwise, the validity
or amount of any taxes, assessments or charges if
the Manager deems them to be unlawful, unjust,
unequal or excessive, or to undertake such other
steps or proceedings as the Manager may deem
reasonably necessary to secure a cancellation,
reduction, readjustment or equalization thereof
before the Manager shall be required to pay them,
but in no event shall the Manager permit or allow
title to the Assets to be lost as the result of
the nonpayment of any taxes, assessments or like
charges; and

(iii)  Shall do all other acts reasonably
necessary to maintain the Assets.

(f)  The Manager shall:

(i)  Apply for all necessary permits, licenses and
approvals;

(ii)  Comply with applicable Laws;

(iii)  Notify promptly the Management Committee of
any allegations of substantial violation of
Permits, or applicable Laws;

(iv)  Prepare and file all reports or notices
required for Operations; and

(v)  Arrange for bonds and reclamation for both
pre-existing and new conditions and disturbances
of the Properties, at the Company's cost;

The Manager shall not be in breach of this
provision if a violation has occurred in spite of
the Manager's good faith efforts to comply, and
the Manager has timely cured or disposed of such
violation through performance, or payment of fines
and penalties.

(g)  The Manager shall prosecute and defend, but
shall not initiate without approval of the
Management Committee, all litigation or
administrative proceedings arising out of
Operations.

(h)  The Manager shall arrange for insurance for
the benefit of the Company and the Members as
reasonably determined by the Manager.

(i)  The Manager may dispose of Assets, whether
through abandonment, surrender or Transfer,
subject to the limitation set forth in Section
8.2(a).

(j)  The Manager shall have the right to carry out
its responsibilities hereunder through agents,
Affiliates or independent contractors.

(k)  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 exploration
and continued actual occupancy of such claims and
sites shall not be required.  The Manager shall
not be liable on account of any determination by
any court or governmental agency that the work
performed by the Manager does not constitute the
required annual assessment work or occupancy for
the purposes of preserving or maintaining
ownership of the claims, provided that the work
done is in accordance with the adopted Program and
Budget.  The Manager shall timely pay all fees and
record with the appropriate county and file with
the appropriate United States agency, affidavits
or other documents required by law to maintain all
such claims or sites.

(l)  If authorized by the Management Committee,
the Manager may:

(i)  Locate, amend or relocate any unpatented
mining claim or mill site or tunnel site,

(ii)  Locate any fractions resulting from such
amendment or relocation,

(iii) Apply for patents or mining leases or other
forms of mineral tenure for any such unpatented
claims or sites,

(iv)  Abandon any unpatented mining claims for the
purpose of locating mill sites or otherwise
acquiring from the United States rights to the
ground covered thereby,

(v)  Abandon any unpatented mill sites for the
purpose of locating mining claims or otherwise
acquiring from the United States rights to the
ground covered thereby,

(vi)  Exchange with or convey to the United States
any of the 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.

(m)  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.  The Manager shall respond in a timely
manner to all requests from Members for
information necessary to meet filing deadlines
imposed by Law.

(n)  The Manager shall keep the Management
Committee advised of all Operations by submitting
in writing to the Management Committee:

(i)  Quarterly progress reports which include
statements of expenditures and comparisons of such
expenditures to the adopted Budget;

(ii)  Periodic summaries of data acquired,
reasonably in advance of Management Committee
meetings;

(iii)  Copies of reports concerning Operations,
reasonably in advance of Management Committee
meetings;

(iv)  A final report within 30 days after
completion of each Program and Budget, but in no
event less often than annually, which shall
include comparisons between actual and budgeted
expenditures and comparisons between the
objectives and results of Programs;

(v)  Prepare and distribute prior to the
Commencement of Commercial Production, quarterly,
and following the Commencement of Commercial
Production, monthly, status reports summarizing
activities of the Company taken during the
previous month or quarter, as the case may be,
including an overview and the progress regarding:
1) project overview; 2) actual and budget project
schedule; 3) environmental and permitting; 4)
geology and mining; 5) processing and operations;
6) site/start-up; and 7) administrative.  The
reports regarding environmental and permitting
matters shall include copies of all written and
electronic material correspondence to and from
governmental agencies during that month.

(vi)  The proposed Program and Budget required by
Section 10.3 of this Agreement and such other
reports as the Management Committee may reasonably
request.

(vii)Prepare and provide a Member such information
reasonably requested in writing to the Management
Committee by such Member concerning the Company.

At all reasonable times the Manager shall provide
the Management Committee or the duly authorized
representative of any Member (including
representatives of any actual or potential
lenders, equity investors or purchasers of a
Member's Ownership Interest, 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, including all
computer files an databases related thereto
provided that in the case of representatives of
persons other than a Member, the person has
entered into a confidentiality agreement in
accordance with Section 13.2 hereof.  In addition,
the Manager shall allow the non-managing Member(s)
or that Member's authorized representative or
invitee, at that Member'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
Member(s) does not unreasonably interfere with
Operations provided that in the case of
representatives of persons other than a Member,
the person has entered into a confidentiality
agreement in accordance with Section 13.2 hereof.

(o)  The Manager shall undertake all other
activities reasonably necessary to fulfill the
foregoing.

(p)  The Manager shall have the right to require
the Members to fully fund the Environmental
Compliance Fund, in proportion to their respective
Ownership Interests, and in accordance with
Section 3.14 of Exhibit B, with all reasonably
anticipated costs of future reclamation, closure
and Environmental Compliance.  No Member who has
resigned or withdrawn from the Company will be
required to contribute additional funds to the
Environmental Compliance Fund unless and until all
contribution made to said Environmental Compliance
Fund prior to such withdrawal or resignation have
been spent or committed to be spent.

(q)  The Manager shall otherwise conduct
Operations as it deems appropriate in its
discretion.  The Manager shall not be obligated to
expend any of its own funds or financial resources
in the performance of its powers and duties
hereunder.

The Manager shall not be in default of any duty
under this Section 9.2 if its failure to perform
results from the failure of the Members to perform
acts or to contribute amounts required of them by
this Agreement.

9.3  Standard of Care; Indemnification.  The
Manager shall conduct all Operations in a good,
workmanlike and efficient manner, in accordance
with sound mining and other applicable industry
standards and practices, and in accordance with
the terms and provisions of leases, licenses,
permits, contracts and other agreements pertaining
to the Assets.  The Manager shall not be liable to
the non-managing Members for any act or omission
resulting in damage or loss except to the extent
caused by or attributable to the Manager's willful
misconduct or gross negligence. The Members shall
indemnify and hold harmless the Manager and its
officers, employees and agents from and against
any liabilities, obligations, claims,
responsibilities, actions, demands, losses, costs
or expenses, including but not limited to costs of
litigation and reasonable attorneys fees, arising
out of or relating to its activities as Manager,
except that any liabilities or obligations arising
directly from the Manager's gross negligence or
willful misconduct shall be excluded form this
indemnity.

9.4  Resignation; Deemed Offer to Resign.  Except
during the period following the Effective Date of
this Agreement up to and including the Funding
Obligation Date, the Manager may resign upon three
months' prior notice to the other Member, in which
case the other Member may elect to become the new
Manager by notice to the Member that is resigning
as Manager within 30 days after the notice of
resignation.  In the case of any resignation as
Manager by BACTECHMANAGER, TSVLP shall be deemed
to be the other Member and BACTECH shall be deemed
to be the resigning Member for purposes of this
Section 9.4.  If any of the following shall occur,
the Manager shall be deemed to have offered to
resign, which offer shall be accepted by the other
Member, if at all, within 30 days following such
deemed offer:

(a)  If BACTECH's Ownership Interest becomes less
than fifty percent (50%) and the Ownership
Interest of TSVLP and USEC, collectively, exceeds
BACTECH's Ownership Interest; or

(b)  The Manager fails to perform a material
obligation imposed upon it under this Agreement
and such failure continues for a period of 30 days
after notice from the other Member(s) demanding
performance provided that such failure does not
result from the failure of the Members to perform
acts or to contribute amounts required of them by
this Agreement; or

(c)  The Manager fails to pay or contest in good
faith the bills of the Company within 60 days
after they are due; or

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

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

(f)  Entry is made against the Manager of a
judgment, decree or order for relief affecting 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.

9.5  Payments To Manager.  The Manager shall be
compensated for its services and reimbursed for
its costs hereunder in accordance with the
Accounting Procedure.

9.6  Transactions With Affiliates.  If the Manager
engages Affiliates to provide services hereunder
including, without limitation, services relating
to milling or beneficiating Products, it shall do
so on terms no less favorable to the Company than
would be the case with unrelated persons in arm's-
length transactions.

ARTICLE X
PROGRAMS AND BUDGETS

10.1  Initial Program and Budget.  The Program and
Budget for the period August 1, 2003 through
October 31, 2003 shall include, at a minimum, the
holding costs of the Properties including the
claim fees payable to the Bureau of Land
Management and the County of Eureka, Nevada, due
no later than August 31, 2003, and anticipated to
be developed by the Manager and submitted to the
Members as soon as practicable but in no event
later than August 31, 2003.  It is agreed and
committed to by all Members that such 2003 budget
shall, at a minimum, fully provide for the minimum
holding and maintenance costs and for the
protection of the Assets.

10.2  Operations Pursuant to Programs and Budgets.
Except as otherwise provided in Sections 10.7,
10.8, 10.9 or 10.10 of this Agreement or in and
Article VI of the Members' Agreement, Operations
shall be conducted, expenses shall be incurred,
and Assets shall be acquired only pursuant to
adopted Programs and Budgets.

10.3  Presentation of Programs and Budgets.
Proposed Programs and Budgets shall be prepared by
the Manager for a period of one (1) year or any
shorter or longer period as determined advisable
by the Manager provided that a proposed Program or
Budget shall be for a period of at least three (3)
months unless otherwise agreed by all of the
Members.  Each adopted Program and Budget,
regardless of length, shall be reviewed at least
once a year at a regular quarterly or special
meeting of the Management Committee. During the
period encompassed by any Program and Budget, and
at least two months prior to its expiration, a
proposed Program and Budget for the succeeding
period shall be prepared by the Manager and
submitted to the Members.

10.4  Review and Adoption of Proposed Programs and
Budgets.  Until the Funding Obligation Date, any
proposed Program or Budget shall be approved
solely by BACTECH.  Following the Funding
Obligation Date, within thirty (30) days after
submission of a proposed Program and Budget, or a
proposed Amendment thereto under Section 10.10,
each Member shall submit in writing to the
Management Committee:

(a)  Notice that each Member approves any or all
of the components of the proposed Program and
Budget; or

(b)  Modifications proposed by the Member(s) to
the components of the proposed Program and Budget;
or

(c)  Notice that the Member(s) rejects any or all
of the components of the proposed Program and
Budget.

If any Member fails to give any of the foregoing
responses within the allotted time, the failure
shall be deemed to be a vote by that Member or
Members for adoption of the Manager's proposed
Program and Budget. If any Member makes a timely
submission to the Management Committee pursuant to
Subsections 10.4(a), (b) or (c), then the
Management Committee shall consult regarding the
possible development of a Program and Budget
acceptable to all Members (provided that no Member
shall be obligated to agree to any actual change
to a proposed Program and Budget in connection
with such consultations) failing which the
Management Committee shall determine the approved
Program and Budget.

10.5  Election to Participate.  Following the
Funding Obligation Date, by notice to the Manager
and BACTECH prior to the approval of a Program and
Budget, TSVLP, on behalf of itself and USEC, may
elect to contribute to such Program and Budget or
to have BACTECH fund their share as an Elected
Loan as provided in and subject to the terms and
conditions of Section 10.6, and BACTECH shall be
obligated to fund the elected portion of TSVLP's
and USEC's share of contributions thereunder as
Elected Loans.

10.6  Elected Loans.  In the event that TSVLP, on
behalf of itself and USEC, elects that BacTech
shall fund their share of a Cash Call as an
Elected Loan, BACTECH agrees and commits to
advance to the Company on behalf of TSVLP and USEC
their respective share of any Cash Call by the
Company as provided under Section 11.2 (the
Elected Loans).  Elected Loans shall bear interest
at the Interest Rate, compounded monthly.  During
any periods in which distributions are made to
TSVLP and USEC when there is a balance outstanding
for Elected Loans and accrued interest thereon,
50% of such distributions to TSVLP and USEC shall
be paid to BACTECH until the Elected Loans and
accrued interest thereon are fully repaid to
BACTECH.

10.7  Deadlock on Proposed Programs and Budgets.
If the Members, acting through the Management
Committee, fail to approve a Program and Budget by
the beginning of the period to which the proposed
Program and Budget applies, then the Manager shall
continue Operations at levels comparable with the
last adopted Program and Budget but in no event at
levels which do not fully provide for the minimum
holding costs of the Properties.

10.8  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
exceeds the expenditures set forth in an adopted
Budget by more than twenty percent (20%) then the
excess over twenty percent (20%), unless directly
caused by an emergency or unexpected expenditure
made pursuant to Section 10.9 or unless otherwise
authorized by the Management Committee or pursuant
to an Amendment under Section 10.10, shall be
attributed to the sole account of the Manager.
Budget overruns of twenty percent (20%) or less
shall be funded by the Members in the same manner
and with the same consequences and effects as the
Members provided funding for the then current
Program and Budget, including the obligation of
BACTECH to provide funding for TSVLP and USEC as
Elected Loans.

10.9  Emergency or Unexpected Expenditures.  In
case of emergency, the Manager may take any
reasonable action it deems necessary to protect
life, limb or property, to protect and preserve
the Assets or to comply with Environmental Laws or
other Laws.  The Manager may make reasonable
expenditures for unexpected events which are
beyond its reasonable control and which do not
result from a breach by it of its standard of
care.  The Manager shall promptly notify the
Members of the emergency or unexpected
expenditure, and the Manager shall be reimbursed
for all resulting costs by the Members in the same
manner and with the same consequences and effects
as the Members provided the funding for the then
current Program and Budget.

10.10  Amendments to Programs and Budgets.  An
adopted Program and Budget may be amended only
prospectively by the Manager (the Amendment) upon
30 days notice.  The procedures for review and
approval of proposed Amendments under this Section
10.10 shall be the same as the procedures for the
review and approval of proposed Budgets and
Programs under Section 10.4.

ARTICLE XI
ACCOUNTS AND SETTLEMENTS

11.1  Monthly Statements.  The Manager shall
promptly submit to the Management Committee
monthly statements of account reflecting in
reasonable detail the charges and credits to the
Business Account during the preceding month.

11.2  Cash Calls.  On the basis of each adopted or
amended Program and Budget and subject to Sections
10.5 and 10.6 of this Agreement and Section 2.2 of
the Members' Agreement and the elections of the
respective Members under such provisions, the
Manager shall submit to all Members, a billing (a
Cash Call) for estimated cash requirements for
each three month period during the term of such
Program.  Within ten (10) days after receipt of
each such Cash Call, each Member shall pay to the
Manager its share of such estimated requirements.
For greater certainty, costs and expenditures for
Operations and working capital in support of
approved Programs and Budgets shall include
funding of reasonably anticipated costs of future
reclamation, closure costs and Environmental
Compliance.  Time is of the essence of payment of
such billings.  The Manager shall at all times
maintain a reasonable working capital reserve.
All funds in excess of immediate cash requirements
shall be invested in interest-bearing accounts
with the Company's bank, for the benefit of the
Business Account.

11.3  Audits.  Unless waived by all Members in
writing, the Manager shall order an audit of the
accounting and financial records for each calendar
year (or other mutually agreed accounting period).
Such audits shall be completed in a timely fashion
and to allow inclusion of the results of such
audits into the annual audited financial
statements of the Members.  All written exceptions
to and claims upon the Manager for discrepancies
disclosed by such audit shall be made not more
than three (3) months after receipt of the audit
report. Failure to make any such exception or
claim within the three (3) month period shall mean
the audit is correct and binding upon the Members.
The audits shall be conducted by a firm of
certified public accountants selected by the
Manager, unless otherwise agreed by the Management
Committee.

ARTICLE XII
PROPERTIES; DISTRIBUTION OF PRODUCTION

12.1  Royalties, Production Taxes and Other
Payments Based on Production.  All required
payments of production royalties, taxes based on
production of Products, and other payments out of
production to private parties and governmental
entities, shall be determined and made by the
Company in a timely manner and otherwise in
accordance with applicable laws and agreements. In
the event the Company fails to make any such
required payment, any Member shall have the right
to make such payment and shall thereby become
subrogated to the rights of such third party;
provided, however, that the making of any such
payment on behalf of the Company shall not
constitute acceptance by the paying Member of any
liability to such third party for the underlying
obligation.

12.2  Disposition of Products by Manager.  The
Manager shall market and dispose of Products.
Such dispositions by Manager shall be in good
faith and in accordance with good industry
practice, with the objective of obtaining the best
possible price for the Products. The Manager shall
have the right to enter into forward sales and
hedging arrangements as approved by the Management
Committee.

ARTICLE XIII
CONFIDENTIALITY, OWNERSHIP, USE
AND DISCLOSURE OF INFORMATION

13.1  Business Information.  All Business
Information shall be owned jointly by the Members
as their Ownership Interests are determined
pursuant to this Agreement. Both before and after
the termination of the Company, all Business
Information may be used by any Member for any
purpose, whether or not competitive with the
Business, without consulting with, or obligation
to, the other Members. Except as provided in
Sections 13.3 and 13.4, or with the prior written
consent of the other Members, each Member shall
keep confidential and not disclose to any third
party or the public any portion of the Business
Information that constitutes Confidential
Information.

13.2  Permitted Disclosure of Confidential
Business Information.  Any Member may disclose
Business Information that is Confidential
Information: (a) to a Member's officers,
directors, partners, members, employees,
Affiliates, shareholders, agents, attorneys,
accountants, consultants, contractors,
subcontractors or advisors, for the sole purpose
of such Member's performance of its obligations
under this Agreement; (b) to any party to whom the
disclosing Member contemplates a Transfer of all
or any part of its Ownership Interest, for the
sole purpose of evaluating the proposed Transfer;
(c) to any actual or potential lender, underwriter
or investor for the sole purpose of evaluating
whether to make a loan to or investment in the
disclosing Member; or (d) to a third party with
whom the disclosing Member contemplates any
independent business activity or operation.

The Member disclosing Confidential Information
pursuant to this Section 13.2, shall make such
Confidential Information reasonably accessible to
only those parties that have a bona fide need to
have access to such Confidential Information for
the purpose for which disclosure to such parties
is permitted under this Section 13.2 and that have
entered into a confidentiality agreement with, and
if form and substance satisfactory to, the
Manager, the Company and the other Members to
protect the Confidential Information from further
disclosure, to use such Confidential Information
solely for such purpose.  The Member disclosing
Confidential Information shall be responsible and
liable for any use or disclosure of the
Confidential Information by such parties in
violation of this Agreement and such other
confidential agreement.

13.3  Disclosure Required By Law.  Notwithstanding
anything contained in this Article, a Member may
disclose any Confidential Information if, in the
opinion of the disclosing Member's legal counsel:
(a) such disclosure is legally required to be made
in a judicial, administrative or governmental
proceeding pursuant to a valid subpoena or other
applicable order; or (b) such disclosure is
legally required to be made pursuant to State or
Federal Securities Laws or the rules or
regulations of a stock exchange or similar trading
market applicable to the disclosing Member.

Prior to any disclosure of Confidential
Information under this Section 13.3, the
disclosing Member shall give the other Member(s)
at least three (3) business days prior written
notice (unless less time is permitted by such
rules, regulations or proceeding) and, in making
such disclosure, the disclosing Member shall
disclose only that portion of Confidential
Information required to be disclosed and shall
take all reasonable efforts to preserve the
confidentiality thereof, including, without
limitation, obtaining protective orders and
supporting the other Member(s) in intervention in
any such proceeding.

13.4  Public Announcements.  Prior to making or
issuing any press release or other public
announcement or disclosure of Business Information
that is not Confidential Information, a Member
shall first consult with the other Members as to
the content and timing of such announcement or
disclosure, unless in the good faith judgment of
such Member, there is not sufficient time to
consult with the other Members before such
announcement or disclosure must be made under
applicable Laws; but in such event, the disclosing
Member shall notify the other Members, as soon as
possible, of the pendency of such announcement or
disclosure, and it shall notify the other Members
before such announcement or disclosure is made if
at all reasonably possible. Any press release or
other public announcement or disclosure to be
issued by any Member relating to this Business
shall also identify the other Members.

13.5  Duration of Confidentiality.  The provisions
of this Article XIII shall apply during the term
of this Agreement and for two years following
termination of this Agreement pursuant to Section
14.1, and shall continue to apply to any Member
who withdraws, who is deemed to have withdrawn, or
who Transfers its Ownership Interest, for two
years following the date of such occurrence.

ARTICLE XIV
RESIGNATION AND DISSOLUTION

14.1  Events of Dissolution.  The Company shall be
dissolved upon the occurrence of any of the
following:

(a)  Upon expiration of term of the Company in
accordance with Section 2.5;

(b)  Upon the unanimous written agreement of the
Members;

(c)  Upon the sale, exchange, involuntary
conversion, or other disposition or transfer of
all or substantially all the Assets of the
Company; or

(d)  as otherwise provided by the Act.

14.2  Resignation.  A Member may elect to resign
from the Company by giving notice to the other
Members of the effective date of resignation,
which shall be the later of the end of the then
current Program Period or thirty(30)days after the
date of the notice. Upon resignation by a Member,
the resigning Member shall be deemed to have
transferred to the remaining Members on a pro rata
basis all of its Ownership Interest, including all
of its interest in the Assets and its Capital
Account, without cost and free and clear of all
Encumbrances arising by, through or under such
resigning Member, except those described in
Exhibits A, A-1 and A-2, and those to which both
Members have agreed. The resigning Member shall
execute and deliver all instruments as may be
necessary in the reasonable judgment of the other
Members to effect the transfer of its interests in
the Company and the Assets to the other Members. A
resigning Member shall have no right to receive
the fair value of his Ownership Interest pursuant
to 18-604 of the Act. If within a sixty (60) day
period all Members elect to withdraw, then the
Company shall instead be deemed to have been
terminated by the written agreement of the Members
pursuant to Section 14.1(b).

14.3  Disposition of Assets on Dissolution.
Promptly after dissolution under Section 14.1, the
Manager shall take all action necessary to wind up
the activities of the Company, in accordance with
Exhibit C. All costs and expenses incurred in
connection with the dissolution of the Company
shall be expenses chargeable to the Business
Account.

14.4  Filing of Certificate of Cancellation.  Upon
completion of the winding up of the affairs of the
Company, the Manager shall promptly file a
Certificate of Cancellation with the Office of the
Secretary of State of the State of Delaware,
together with any other certificates, reports or
documents which may be required by any other
jurisdiction in which the Company transacted
Business.  If the Manager has caused the
dissolution of the Company, whether voluntarily or
involuntarily, then a person selected by a
majority vote of the Members to wind up the
affairs of the Company shall file the Certificate
of Cancellation and such other documents as may be
required.

14.5  Right to Data After Dissolution.  After
dissolution of the Company pursuant to Section
14.1, any Member shall be entitled to make copies
of all applicable information acquired hereunder
before the effective date of termination not
previously furnished to it.

14.6  Continuing Authority.  On dissolution of the
Company under Section 14.1 the Member that was the
Manager or that appointed the Manager prior to
such dissolution (or the other Member in the event
of a resignation by the Manager) shall have the
power and authority to do all things on behalf of
all Members that are reasonably necessary or
convenient to: (a) wind up Operations (b) complete
reclamation, closure and other Environmental
Compliance activities with respect to the
Properties, 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 Manager 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 and/or all Members, encumber Assets, and
take any other reasonable action in any matter
with respect to which the former Members continue
to have, or appear or are alleged to have, a
common interest or a common liability.

ARTICLE XV
GOVERNING LAW

15.1  Governing Law.  Except for matters of title
to the Assets or their Transfer, which shall be
governed by the law of their situs, this Agreement
shall be governed by and interpreted in accordance
with the laws of the State of Delaware, without
regard for any conflict of laws or choice of laws
principles that would permit or require the
application of the laws of any other jurisdiction.

ARTICLE XVI
GENERAL PROVISIONS

16.1  Notices.  All notices, payments and other
required or permitted communications (Notices) to
either Member shall be in writing, and shall be
addressed respectively as follows:

If to TSVLP:
Tonkin Springs Venture Limited Partnership
2201 Kipling Street, Suite 100
Lakewood, Colorado 80215-1545

Attention: President, U.S. Gold Corporation
Telephone: (303)238-1438
Facsimile: (303)238-1724

With a Copy to:
Randy L. Parcel, Esq.
Perkins Coie LLP
1899 Wynkoop St., Ste. 700
Denver, Colorado 80202-1043

If to USEC:
U.S. Environmental Corporation
2201 Kipling Street, Suite 100
Lakewood, Colorado 80215-1545
Attention: President, U.S. Gold Corporation
Telephone: (303)238-1438
Facsimile: (303)238-1724

With a Copy to:
Randy L. Parcel, Esq.
Perkins Coie LLP
1899 Wynkoop St., Ste. 700
Denver, Colorado 80202-1043

If to BACTECH:
BacTech Enviromet Corporation
1450-439 University Ave.
Toronto, ON M5G 1Y8
Attention: Bradly Marchant
Telephone: (416)813-0303
Facsimile: (416)346-5529

With a Copy to:
Cassels Brock & Blackwell LLP
2100 Scotia Plaza
40 King Street West
Toronto, Ontario  M5H 3C2
Attention: Mark T. Bennett
Telephone: 416-869-5407
Facsimile: 416-350-6933

With a Copy to:
Erwin & Thompson LLP
1 E. Liberty St., Ste. 424
P.O. Box 40817
Reno, Nevada 89504
Attention: Thomas P. Erwin
Telephone: 775-786-9494
Facsimile: 775-786-1180

All Notices shall be given (a) by personal
delivery to the Member, (b) by electronic
communication, capable of producing a printed
transmission and confirmation, (c) by registered
or certified mail return receipt requested, or (d)
by overnight or other express courier service. All
Notices shall be effective and shall be deemed
given on the date of receipt at the principal
address if received during normal business hours,
and, if not received during normal business hours,
on the next business day following receipt, or if
by electronic communication, on the date of such
communication. Any Member may change its address
by Notice to the other Members.

16.2  Gender.  The singular shall include the
plural, and the plural the singular wherever the
context so requires, and the masculine, the
feminine, and the neuter genders shall be mutually
inclusive.

16.3  Currency.  All references to dollars or $
herein shall mean lawful currency of the United
States of America.

16.4  Headings.  The subject headings of the
Sections and Subsections of this Agreement and the
Paragraphs and Subparagraphs of the Exhibits to
this Agreement are included for purposes of
convenience only, and shall not affect the
construction or interpretation of any of its
provisions.  References to hereunder are, unless
otherwise stated, references to this entire
Agreement.

16.5  Waiver.  The failure of any Member to insist
on the strict performance of any provision of this
Agreement or to exercise any right, power or
remedy upon a breach hereof shall not constitute a
waiver of any provision of this Agreement or limit
such Member's right thereafter to enforce any
provision or exercise any right.

16.6  Modification.  No modification of this
Agreement shall be valid unless made in writing
and duly executed by all Members.

16.7  Force Majeure. Except for the obligation to
make payments when due hereunder, the obligations
of a Member shall be suspended to the extent and
for the period that performance is prevented by
any cause, whether foreseeable or unforeseeable,
beyond its reasonable control, including, without
limitation, labor disputes (however arising and
whether or not employee demands are reasonable or
within the power of the Member to grant); acts of
God; Laws, instructions or requests of any
government or governmental entity; judgments or
orders of any court; inability to obtain on
reasonably acceptable terms any public or private
license, permit or other authorization;
curtailment or suspension of activities to remedy
or avoid an actual or alleged, present or
prospective violation of Environmental Laws;
action or inaction by any federal, state or local
agency that delays or prevents the issuance or
granting of any approval or authorization required
to conduct Operations (including, without
limitation, a failure to complete any review and
analysis required by the National Environmental
Policy Act or any similar state law); acts of war
or conditions arising out of or attributable to
war, whether declared or undeclared; acts of
terrorism, riot, civil strife, insurrection or
rebellion; fire, explosion, earthquake, storm,
flood, sink holes, drought or other adverse
weather condition; delay or failure by suppliers
or transporters of materials, parts, supplies,
services or equipment or by contractors' or
subcontractors' shortage of, or inability to
obtain, labor, transportation, materials,
machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment,
machinery or facilities; actions by native rights
groups, environmental groups, or other similar
special interest groups; or any other cause
whether similar or dissimilar to the foregoing.
The affected Member shall promptly give notice to
the other Members of the suspension of
performance, stating therein the nature of the
suspension, the reasons therefore, and the
expected duration thereof. The affected Member
shall resume performance as soon as reasonably
possible. During the period of suspension the
obligations of all Members to advance funds
pursuant to this Agreement shall be reduced to
levels consistent with then current Operations.

16.8  Rule Against Perpetuities.  The Members do
not intend that there shall be any violation of
the rule against perpetuities, the rule against
unreasonable restraints on the alienation of
property, or any similar rule. Accordingly, if any
right or option to acquire any interest in the
Properties or Assets, in an Ownership Interest, or
the Company, or in any real property exists under
this Agreement, such right or option must be
exercised, if at all, so as to vest such interest
within time periods permitted by applicable rules.
If, however, any such violation should
inadvertently occur, the Members hereby agree that
a court shall reform that provision in such a way
as to approximate most closely the intent of the
Members within the limits permissible under such
rules.

16.9  Further Assurances.  Each of the Members
shall take, from time to time and without
additional consideration, such further actions and
execute such additional instruments as may be
reasonably necessary or convenient to implement
and carry out the intent and purposes of this
Agreement or as may be reasonably required by
lenders in connection with Project Financing.

16.10  Entire Agreement; Successors and Assigns.
This Agreement contains the entire understanding
of the Members and supersedes all prior agreements
and understandings between the Members relating to
the subject matter hereof. This Agreement shall be
binding upon and inure to the benefit of the
respective successors and permitted assigns of the
Members.

16.11  Counterparts.  This Agreement may be
executed in any number of counterparts, and it
shall not be necessary that the signatures of both
Members be contained on any counterpart. Each
counterpart shall be deemed an original, but all
counterparts together shall constitute one and the
same instrument.

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the Effective Date.

TONKIN SPRINGS VENTURE LIMITED PARTNERSHIP
By: Tonkin Springs Gold Mining Company,
as its General Partner

By: /s/ William W. Reid
William W. Reid, President

U.S. ENVIRONMENTAL CORPORATION
By: /s/ David C. Reid
David C. Reid, President

BACTECH NEVADA CORPORATION
By: /s/Bradley P. Marchant
Bradley P. Marchant, President- -,

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (the "Agreement") entered into as of the date signed by the parties below by and between Adams Golf, Inc. and its subsidiaries with its principal place of business at 2801 East Plano Parkway, Plano, Texas (the "Company") and Mr. Barney Adams (the "Chairman"); 

 

RECITALS

WHEREAS, the Company desires to employ the Chairman in the capacity of non-executive Chairman of the Board of Directors. 

WHEREAS, the Chairman desires and is willing to accept employment with the Company on the terms and subject to the conditions set forth below. 

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, the parties agree as follows: 

AGREEMENT

1. POSITION AND DUTIES

During the term of this Agreement the Company shall employ the Chairman as its Chairman of the Board of Directors.  The Chairman's duties shall be those reasonably expected of a non-executive Chairman of the Board of Directors of a similarly capitalized corporation.   Additionally, the Chairman shall actively participate in Public Relations efforts and consult on Research and Design as directed by the Chief Executive Officer and the Board of Directors.  The Chairman shall use his best efforts to promote the best interest of the Company. The Chairman shall devote his knowledge, skill and, substantially, his professional time, attention and energies (reasonable absences for vacations and illness excepted) to the Public Relations and Research and Design of Products business forof the Company in order to perform such assigned duties faithfully, competently and diligently. Notwithstanding the foregoing, it is understood and agreed between the parties that the Chairman shall have no authority or duties over operational or executive matters other than as a voting member of the Board of Directors as provided in the by-laws. 

2. TERM OF EMPLOYMENT

The Company agrees to employ the Chairman and the Chairman agrees to serve the Company pursuant to the terms and conditions of this Agreement for a term of three (3) years, commencing on January 1, 2003 and expiring on December 31, 2005, unless earlier terminated pursuant to this Agreement. Notwithstanding any contrary clause in this Agreement, the Chairman shall serve at the pleasure of the Board of Directors and may be terminated at any time in accordance with the provisions of this Agreement and/or the Company's bylaws.  The Chairman's termination shall not, in any way, prejudice the Chairman's rights under this Agreement. 

3.PLACE OF EMPLOYMENT  

The place of employment shall be at the Company's principal office currently located in Plano, Texas; provided, however, that the Company may from time to time require the Chairman to travel temporarily to other locations on Company business. 

	COMPENSATION 

The Chairman shall receive, for all services rendered to the Company as an employee, the following compensation. 

 

	Base Salary.   The Chairman shall be paid an Annual Base Salary in the amount of Two Hundred Forty Thousand ($240,000) dollars.  The Chairman's Annual Base Salary shall be payable in equal installments in accordance with the Company's general salary payment policies, but no less frequently than monthly. 

	Incentive Compensation.   Each year, the Chairman shall be eligible for an annual bonus in the amount of one-half (1/2) of his Annual Base Salary.  Each annual bonus shall be contingent upon the Company achieving positive annual net profit. If achieved, the annual bonus shall be paid no later than January 20 of the following year.

 
(c)Employee Benefit Plans. The Chairman and his "dependents," as that term may be defined under the applicable employee benefit plan(s) of the Company, shall be included in all plans, programs and policies which provide benefits for Company employees and their dependents on a basis commensurate with the Chairman's position and authorities, duties, powers and responsibilities. 

 

(d) Business Related Expenses: The Chairman is authorized to incur and shall be reimbursed by the Company for any and all approved approved business related expenses including, but not limited to, automobile, business travel, entertainment, gifts and similar matters.   All reimbursed expenses shall be monitored by the Chief Executive Officer and are subject to approval at the sole discretion of the Board of Directors.   

5.TERMINATION 

The Chairman's employment with the Company may be terminated only as follows: 

	By the Company Without Cause.  The Company may at any time terminate the Chairman's employment without Cause upon sixty (60) days' prior written notice to the Chairman. 

	By the Chairman Without Good Reason.  The Chairman may at any time terminate his employment for any reason upon sixty (60) days written notice to the Company. 

	By the Company For Cause.  The Company may terminate the Chairman's employment for Cause. In such event, the Company shall give the Chairman prompt written notice (in addition to any notice that may be required below) specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean any of the following conduct by the Chairman: 

	the deliberate and intentional breach of any material provision of this Agreement, which breach the Chairman shall have failed to cure within thirty (30) days after the Chairman's receipt of written notice from the Company specifying the specific nature of the Chairman's breach; or
	the deliberate and intentional engaging by the Chairman in gross misconduct that is materially and demonstrably harmful to the best interests, monetary or otherwise, of the Company; or 

(3)conviction of a felony or conviction of any crime involving moral turpitude, fraud or deceit. 

	By the Chairman for Good Reason.  The Chairman may terminate his employment for Good Reason upon providing thirty (30) days written notice to the Company after the Chairman reasonably becomes aware of the circumstances giving rise to such Good Reason. For purposes of this Agreement, "Good Reason" means any of the following conduct of the Company, unless the Chairman shall have consented thereto in writing: 

(1)material breach of any material provision of this Agreement by the Company, which breach shall not have been cured by the Company within thirty (30) days after Company's receipt from the Chairman or his agent of written notice specifying in reasonable detail the nature of the Company's breach; or

(2)the assignment to the Chairman of any duties inconsistent in any material respect with the Chairman's position including, but not limited to any diminution of the Chairman's status and reporting requirements, authority, duties, powers or responsibilities, excluding for this purpose any isolated, insubstantial and inadvertent action respecting the Chairman not taken in bad faith and which is remedied by the Company within thirty (30) days after receipt of written notice from the Chairman to the Company; or

	the failure of the Company to obtain the assumption in writing of its obligations to perform this Agreement by any successor not less than five days prior to a merger, consolidation or sale as contemplated in Section 10; or 
	a reduction in the Chairman's total compensation. For purposes of this subsection, a reduction in the overall level of compensation of the Chairman resulting from the failure to achieve corporate, business unit and/or individual performance goals established for purposes of incentive compensation for any year or other period shall not constitute a reduction in the overall level of compensation of the Chairman.

	Disability.  In the event that the Chairman shall be unable to perform his duties hereunder on a full time basis for a period of sixty (60) consecutive calendar days by reason of incapacity due to illness, accident, physical or mental disability or otherwise, then the Company may, at its discretion, terminate the Chairman's employment if the Chairman, within ten (10) days after receipt of written notice of termination is given (which may occur before or after the end of the entire 60 day period), shall not have returned to the performance of all of his duties on a full-time basis. 

	Death.  The Chairman's employment shall terminate upon his death. 
	 Mutual Written Agreement. This Agreement and the Chairman's employment with the Company may be terminated at any time by the mutual written agreement of the Chairman and the Company. 

	COMPENSATION IN THE EVENT OF TERMINATION 

In the event that the Chairman's employment terminates prior to the expiration of this Agreement, the Company shall pay the Chairman compensation and provide the Chairman and his eligible dependents with benefits as follows: 

	Termination By Company Without Cause or Termination By Chairman For Good Reason.  In the event that the Chairman's employment is terminated by (i) the Company without Cause  or (ii) the Chairman for Good Reason, then the Company shall continue to pay or provide, as applicable, in accordance with the Company's normal payroll practices, the following compensation and benefits to the Chairman: 

(1) the Annual Base Salary of the Chairman for one year

(2)continuing coverage for all purposes (including eligibility, coverage, vesting and benefit accruals, as applicable), for the salary continuation period described in subsection (a)(1) above, to the extent not prohibited by law, for the Chairman and his eligible dependents under all of the employee benefit plans in effect and applicable to Chairman and his eligible dependents as of the date of his termination. In the event that the Chairman and/or his eligible dependents, because of the Chairman's terminated status, cannot be covered or fully covered under any or all of such plans, the Company shall continue to provide the Chairman and/or his eligible dependents with the same level of such benefits and coverage in effect prior to termination, payable from the general assets of the Company if necessary. Notwithstanding the foregoing, the Chairman may elect (by giving written notice to the Company prior to the termination of his employment hereunder), on a benefit by benefit basis to receive in lieu of continuing coverage, cash in an amount equal to the present value (using an 8% annual discount rate) of the projected cost to the Company of providing such benefit for such continuation period. The aggregate amount of cash to which the Chairman is entitled pursuant to the preceding sentence shall be payable by the Company to the Chairman within sixty (60) days after the date of the termination of Chairman's employment hereunder; 

The Chairman's subsequent death or disability shall in no way affect or limit the Company's obligations under this Section. 

	Termination By the Company For Cause.  In the event that the Company shall terminate the Chairman's employment for Cause, this Agreement shall terminate and the obligations of the parties shall be as set forth in Section 7 of this Agreement. 

	Termination By The Chairman Without Good Reason.  In the event that the Chairman shall terminate employment hereunder other than for Good Reason, this Agreement shall forthwith terminate and the obligations of the parties shall be as set forth in Section 7 of this Agreement.  

	Disability.  In the event that the Company elects to terminate the Chairman's employment pursuant to Section 5(e), the Chairman shall continue to receive, from the date of such termination for a period of one year, one hundred percent (100%) of the Annual Base Salary, in accordance with the payroll practices of the Company for senior Chairman officers, reduced, however, by the amount of any proceeds from Social Security and disability insurance policies provided by and at the expense of the Company. 

	Death.  In the event of the death of the Chairman during the term of this Agreement, (i) the Annual Base Salary to which the Chairman is entitled shall be paid, in twelve (12) equal monthly installments following the date of death, to the last beneficiary designated by the Chairman under the Company's group life insurance policy maintained by the Company or such other written designation expressly provided to the Company for the purposes hereof or, failing either such designation, to his estate.

	Mutual Written Consent.  In the event that the Chairman and the Company shall terminate the Chairman's employment by mutual written agreement, the Company shall pay such compensation and provide such benefits, if any, as the parties may mutually agree upon in writing.

 

7. EFFECT OF EXPIRATION OF AGREEMENT OR TERMINATION OF CHAIRMAN'S EMPLOYMENT  

Upon the expiration of this Agreement by its terms or the termination of the Chairman's employment by the Company for Cause or the Chairman Without Good reason, neither the Company nor the Chairman shall have any remaining duties or obligations except that: 
(a) The Company shall: 
(1) pay the Chairman's accrued salary and any other accrued benefits through the effective date of such expiration or termination; 

(2) reimburse the Chairman for expenses already actually incurred  through the effective date of such expiration or termination;

(3) pay or otherwise provide for any benefits, payments or continuation or conversion rights in accordance with the provisions of any employee benefit plan of which the Chairman or any of his dependents is or was a participant or as otherwise required by law; 

(4) pay the Chairman and his beneficiaries any compensation and/or provide the Chairman or his eligible dependents any benefits due through the effective date of such expiration; and 

(5) continue to remain bound by the terms of Section 12 hereof. 

(b) The Chairman shall remain bound by the terms of Section 9,11 and 13. 

	COVENANTS AS TO CONFIDENTIAL INFORMATION AND COMPETITIVE CONDUCT  

The Chairman acknowledges and agrees as follows: (i) this Section 8 is necessary for the protection of the legitimate business interests of the Company, (ii) the restrictions contained in this Section 8 with regard to geographical scope, length of term and types of restricted activities are Reasonable, (iii) the Chairman has received adequate and valuable new consideration for entering into this Agreement, and (iv) the Chairman's expertise and capabilities are such that this obligation and the enforcement of it by injunction or otherwise will not adversely affect the Chairman's ability to earn a livelihood. 

 

	Confidentiality of Information and Nondisclosure. The Chairman acknowledges and agrees that his employment by the Company under this Agreement necessarily involves proprietary information pertaining to the business of the Company and its related entities. Accordingly, the Chairman agrees that at all times during the terms of this Agreement and at all times thereafter, he will not, directly or indirectly, without the express written approval of the Company, unless directed by applicable legal authority having jurisdiction over the Chairman, disclose to or use, or knowingly permit to be so disclosed or used, for the benefit of himself, any person, corporation or other entity other than the Company:

 

	any information concerning any financial matters, customer relationships, competitive status, supplier matters, internal organizational matters, current or future plans, or other business affairs of or relating to the Company or its subsidiaries
	any management, operational, trade, technical or other secrets or any other proprietary information or other data of the Company or its subsidiaries, 
	any other information related to the Company or its related entities that the Chairman should reasonably believe will be damaging to the Company or its related entities and which has not been published and is not generally known outside of the Company. 

 
The Chairman acknowledges that all of the foregoing constitutes confidential and/or proprietary information of the Company, which is the exclusive property of the Company.  Excluded from this confidential and/or proprietary information of the Company shall be (i) information known by or generally available to the public through no breach by the Chairman of this Agreement and which the public may use without any direct or indirect obligation to the Company and (ii) information that documentary evidence demonstrates was independently developed by the Chairman.

(b) Restrictive Covenant.  During the term of, and for a period of one (1) year (the "Restrictive Period") after the termination of the Chairman's employment other than by the Company Without Cause or by the Chairman With Good Reason, the Chairman shall not render, directly or indirectly, services to (as an employee, consultant, independent contractor or in any other capacity) any person, firm, corporation, association or other entity which conducts the same or similar business as the Company or its subsidiaries at the date of the Chairman's termination of employment within the states in which the Company or any of its subsidiaries is then doing business at the date of the Chairman's termination of employment hereunder without the prior written consent of the Chief Chairman Officer which may be withheld at his sole discretion. In the event that this Agreement expires after termination and is not renewed by the parties, the Restrictive Period shall not extend beyond the termination of employment unless the Company pays the Chairman an additional amount equal to one year's Annual Base Salary, in which case it shall extend for a period of one (1) year.  In the event the Chairman violates any of the provisions contained in this Section, the Restrictive Period shall be increased by the period of time in which the Chairman was in violation as determined by an Arbitrator or Court of competent jurisdiction. The Chairman further agrees that at no time during the Restrictive period will the Chairman attempt to directly or indirectly solicit or hire employees of the Company or its subsidiaries or induce any of them to terminate their employment with the Company or any of the subsidiaries. 

(c) Company Remedies.  The Chairman acknowledges and agrees that any breach of this Agreement by him will result in immediate and irreparable harm to the Company and that the Company cannot be reasonably or adequately compensated by damages in an action at law. In the event of a breach by the Chairman of the provisions of this Section 8 as determined by an Arbitrator or a Court of competent jurisdiction, the Company shall be entitled, to the extent permitted by law, immediately to cease paying or providing the Chairman or his dependents any compensation or benefits provided pursuant to Section 4, Section 6 or Section 7 of this Agreement as liquidated damages, and also to obtain immediate injunctive relief restraining the Chairman from conduct in breach of the covenants contained in this Section 8. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach, including the recovery of damages from the Chairman. 

9. AGREEMENT SURVIVES MERGER OR DISSOLUTION

This Agreement shall not be terminated by the Company's voluntary or involuntary dissolution or by any merger in which the Company is not the surviving or resulting corporation, or on any transfer of all or substantially all of the Company's assets. In the event of any such merger or transfer of assets, the provisions of this Agreement shall be binding on and inure to the benefit of the surviving business entity or the business entity to which such assets shall be transferred and to the Chairman and his heirs. 

10.OWNERSHIP OF INTANGIBLES  

All processes, inventions, patents, copyrights, trademarks, and other intangible rights that may be conceived or developed by Chairman, either alone or with others, during the term of Chairman's employment, whether or not conceived or developed during Chairman's working hours, and with respect to which the equipment, supplies, facilities, or trade secret information of the Company was used, or that relate at the time of conception or reduction to practice of the invention to the business of the Company or to the Company's actual or demonstrably anticipated research and development, or that result from any work performed by Chairman for the Company, shall be the sole property of the Company. Chairman shall execute all documents, including patent applications and assignments, required by the Company to establish the Company's rights under this Section. 

11.INDEMNIFICATION BY THE COMPANY  

The Company shall, to the maximum extent permitted by law, indemnify and hold the Chairman harmless against expenses, including reasonable attorney's fees judgements, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the Chairman's employment by the Company. The Company shall advance to the Chairman any expense incurred in defending any such proceeding to the maximum extent permitted by law. 

12. DISCLOSURE OF CUSTOMER INFORMATION AND SOLICITATION OF OTHER EMPLOYEES PROHIBITED 

In the course of his employment, the Chairman will have access to confidential records and data pertaining to the Company's customers and to the relationship between these customers and the Company's account executives.  Such information is considered secret and is disclosed to the Chairman in confidence. During his employment by the Company and for one (1) year after termination of that employment, the Chairman shall not directly or indirectly disclose or use any such information, except as required in the course of his employment by the Company. 

13.RESOLUTION OF DIFFERENCES OVER BREACHES OF AGREEMENT

Except as otherwise provided herein, in the event of any controversy, dispute or claim arising out of, or relating to, this Agreement, or the breach thereof, or arising out of any other matter relating to the Chairman's employment with the Company, the parties may seek recourse only for temporary or preliminary injunctive relief to the courts having jurisdiction thereof and if any relief other than injunctive relief is sought, the Company and the Chairman agree that such underlying controversy, dispute or claim shall be settled by arbitration conducted in accordance with this Section 14 and the Commercial Arbitration Rules of thc American Arbitration Association ("AAA"). The matter shall be heard and decided, and awards rendered by a panel of three (3) arbitrators (the "Arbitration Panel"). the Company and the Chairman shall each select one arbitrator from the AAA National Panel of Commercial Arbitrators (the "Commercial Panel") and AAA shall select a third arbitrator from the Commercial Panel. The award rendered by the Arbitration Panel shall be final and binding as between the parties hereto and their heirs, executors, administrators, successors and assigns, and judgment on the award may be entered by any court having jurisdiction thereof. Except as provided in Section 12 hereof, each party shall bear sole responsibility for all expenses and costs incurred by such party in connection with the resolution of any controversy, dispute or claim in accordance with this Section 13; provided, however, the Chairman may recover his costs and attorneys' fees in recovering compensation, stock and/or benefits to which he is entitled under this Agreement.

14.WAIVER

The waiver by a party hereto of any breach by the other party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach by a party hereto. 

15.NON RELIANCE  

Each party to this Agreement represents, warrants and acknowledges that in entering into this Agreement that it has not relied upon any act, representation, or warranty by any other party thereto, or by any of their representatives or attorneys, except as may be expressly contained in this Agreement.  Each party further represents and warrants that it has thoroughly discussed all aspects of this Agreement with his or its attorneys, that he/it has had a reasonable time to review this Agreement, that he/it fully understands the provisions of this Agreement and the effect thereof and that he/it is entering into this Agreement voluntarily and of his/its own free will.  

16.CONSTRUCTION OF AGREEMENT
(a) Governing Law. This Agreement shall be governed by and construed under the laws of the state of Texas. 

(b) Severability. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

	Headings.  The descriptive headings of the several paragraphs of this Agreement are inserted for convenience or reference only and shall not constitute a part of this Agreement. 

	ENTIRE AGREEMENT AND INTEGRATION 

This Agreement contains the entire agreement between the parties and supersedes all prior oral and written agreements, understandings, commitments, and practices between the parties, including all prior employment agreements, whether or not fully performed by the Chairman before the date of this Agreement. No amendments to this Agreement may be made except by a writing signed by both parties. 

 

18.NOTICES

Any notice to the Company required or permitted under this Agreement shall be given In writing to the Company, either by personal service or by registered or certified mail, postage prepaid, addressed to the legal department of the Company at its then principal place of business. Any such notice to the Chairman shall be given in a like manner and, if mailed, shall be addressed to his home address then shown in the Company's files. For the purpose of determining compliance with any time limit in this Agreement, a notice shall be deemed to have been duly given (a) on the date of service, if served personally on the party to whom notice is to be given, or (b) on the third business day after mailing, if mailed to the party to whom the notice is to be given in the manner provided in this section.

19.     SEVERABILITY 

If any provision of this Agreement is held invalid or unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect. If any provision is held invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances. 

 

20.EXECUTION 

Executed by the parties on February ____ 2003.  

 

 

 

The Company

 

___________________________

By:  Oliver Brewer

Chief Executive Officer and President of Adams Golf, Inc.

 

 

The Chairman

 

___________________________

By:  Barney Adams

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