Exhibit 99 (i)
Amended and Restated Operating Agreement
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
MOUNTAIN SPRINGS RESORTS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Amended and Restated Operating Agreement (the "Agreement") shall be
effective as of October 24, 2002, and replaces and supercedes the Operating
Agreement of Mountain Springs Resort, LLC, dated as of October 15, 1999 by and
among Mountain Springs Resorts, LLC (the "Company"), ▇▇▇▇ Nevada Partners
Limited, a Nevada limited partnership, and EFG/Kirkwood LLC, a Delaware limited
liability company (the "Initial Operating Agreement"). The undersigned members
("Members") have, through their authorized persons, formed a limited liability
company pursuant to and in accordance with the Delaware Limited Liability
Company Act, 6 De. C. 18-101, et seq. (the "Act"). The Members hereby declare
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the following to be the Operating Agreement of such limited liability company:
1. Definitions1.9 Definitions. For purposes of this Agreement, the
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following terms shall have the meanings ascribed to them below.
(a) "Adjusted Cost" shall mean as set forth on Exhibit 6.1 the dollar
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amount paid by a Member prior to the date of this Agreement as adjusted for the
effect of the Capital Contributions made on the date of this Agreement and as
expressed in terms of equivalent units of ownership interest in the Company.
(b) "AffiliateAffiliate" of any specified Person shall mean any other Person
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directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person and, for an individual shall
include without limitation, (i) upon death of any such individual, such
individual's heirs, executors or administrators, (ii) the members of such
individual's immediate family, (iii) any trust established by or on behalf of
such individual for estate planning purposes, (iv) upon incapacity of such
individual, such individual's guardians. For purposes of this definition,
"control" when used with respect to any specified Person, shall mean the power
to direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" shall have
meanings correlative to the foregoing. With respect to EFG (as defined herein),
any Person directly or indirectly controlled by or under direct or indirect
common control with EFG or any subsidiary or affiliate of EFG, including,
without limitation, Semele Group, Inc., Equis Financial Group Limited
Partnership, Equis II Corporation, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, AFG
Investment Trust A, AFG Investment Trust B, AFG Investment Trust C, AFG
Investment Trust D, and Equis Financial Group, Inc., a rollup entity proposed to
be formed by Equis Financial Group Limited Partnership, shall be and constitute
"Affiliates" as used herein.
(c) "AgreementAgreement" shall mean this Amended and Restated Operating
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Agreement, as the same may be amended from time to time (including by the
addition of Counterparts).
(d) "Alternate ManagerAlternate Manager" shall mean a person designated by a
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Manager as his or her Alternate Manager as provided for in Section 11.1.
(e) "ApprovalApproval" shall mean consent by the Members to an action by
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the affirmative vote of Members holding a majority of the Percentage Interests
entitled to vote with respect to such matter, or such other percentage as may be
expressly stated herein, which vote may be obtained either at a meeting of
Members duly noticed (to the address of each Member shown on the Company's
records at least ten (10) days prior to the date set forth in such notice or
waiver thereof) or by a written consent executed and delivered by such Members;
provided, however, that if Approval is obtained by written consent, the Company
must send written notice of the action so taken to each non-consenting Member
within three (3) days after the taking of such action. The failure of the
Company to provide such written notice to the non-consenting Members shall not
invalidate the action so taken so long as such failure was inadvertent.
(f) "BankruptcyBankruptcy" shall mean with respect to any person, being the
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subject of an order for relief under Title 11 of the United States Code, or any
successor statute in any foreign jurisdiction having like import or effect, or
that such person shall have made an assignment for the benefit of its creditors
generally or a receiver shall have been appointed for substantially all of the
property and assets of such person.
(g) "BoardBoard" shall mean the Board of Managers of the Company, designated
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in accordance with Section 11.1.
(h) "Book ValueBook Value" shall mean, as of any particular date, the value
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at which the Company's assets are properly reflected on the books of the Company
as of such date in accordance with the provisions of Treasury Regulations
Section 1.704-1(b). The Book Values of all Company assets shall, if the Board
in its sole discretion deems it appropriate, be adjusted to equal their
respective gross fair market values, as determined by the Board, at the times
specified in those regulations.
(i) "Capital AccountCapital Account" shall mean the individual capital
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account of a Member maintained in accordance with Section 6.8 hereof.
(j) "Capital ContributionsCapital Contribution" shall have the meaning set
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forth in Section 6.2 hereof, and shall include Deemed Capital Contributions as
defined in Section 6.5(d) hereof.
(k) "CodeCode" shall mean the Internal Revenue Code of 1986, as amended.
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(l) "CompanyCompany" shall mean Mountain Springs Resorts, LLC, a Delaware
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limited liability company organized pursuant to the Act.
(m) "CounterpartCounterpart" shall mean an additional document executed and
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delivered by (i) any new Member admitted to membership in the Company after the
original date of this Agreement, and (ii) such existing Members having the right
under this Agreement to approve the admission of such new Member, which
document shall set forth the new Member's Percentage Interest, the resulting
Percentage Interests of all other Members, and any other terms and conditions as
shall apply to such Members' membership in the Company. Each Counterpart shall
be attached to, and shall become part of, this Agreement.
(n) "Fair Market ValueFair Market Value" shall mean the price a willing
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seller would pay a willing buyer neither acting under compulsion for a sale of
one hundred percent (100%) of the Membership Interests as determined by the
Board in its sole and absolute discretion. Fair Market Value shall not take
into consideration any discounts for lack of control or marketability.
(o) "Hurdle Value" shall have the meaning as set forth in Section 15.3, the
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dollar amount reflecting a value that meets or exceeds a return of the dollar
investment by each Member plus a 12% annual return.
(p) "Initial Operating Agreement" shall mean the first operating agreement
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of the Company adopted as of October 15, 1999.
(q) "Involuntary TransferInvoluntary Transfer" means any transaction,
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proceeding or action by or in which any Member shall be involuntarily deprived
or divested of any right, title or interest in or to any of the Membership
Interests, including, without limitation, any seizure under levy of attachment
or execution, transfer in connection with bankruptcy or other court proceeding
to a trustee in bankruptcy or receiver or other officer of agency, any transfer
to a state or to a public officer or agency pursuant to any applicable statute
pertaining to escheat or abandoned property or any court-ordered transfer to a
spouse or former spouse of a Member, and shall include the transfer of
Membership Interests by a Member's legal representative following his death
(testate or intestate) or incompetence to any person other than a Permissible
Transferee of such deceased or incompetent Member.
(r) "Liquidity ClosingClosing" shall have the meaning set forth in 15.3 (b).
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(s) "Liquidity Offer" shall have the meaning set forth in 15.3 (a).
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(t) "ManagerManager" shall mean a person elected to the Board of Managers in
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accordance with Section 11.1.
(u) "MemberMember" shall mean the Members and each other person or entity
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admitted to membership in the Company whose names, Capital Contributions and
Percentage Interests are set forth on Exhibit 6.1 and all Counterparts.
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(v) "Membership Interests" means a Person's share of the Profits and Losses
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of, and the right to receive distribution from the Company.
(w) "Percentage InterestPercentage Interest" shall have the meaning set
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forth in Section 6.1.
(x) "Permissible Transferee" shall have the meaning set forth in Section
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13.1(a).
(y) "PersonPerson" means any individual natural person, estate, legal
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representative, trust, partnership, association, limited liability company,
organization, firm, company or corporation, joint venture, any other business
entity unincorporated or incorporated, any nation or any state or territory
thereof or any public officer, agency, board or instrumentality thereof.
(z) "ProfitProfit" or "LossLoss" shall mean for each taxable year, the
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Company's taxable income or taxable loss for such taxable year, as determined
under Section 703(a) of the Code and Section 1.703-1 of the Treasury Regulations
(for this purpose, all items of income, gain, loss or deduction required to
be stated separately pursuant to Section 703(a)(1) of the Code shall be included
in taxable income or taxable loss), but with the following adjustments: (i) any
tax-exempt income or Company expenditures described in Section 705(a)(2)(B) of
the Code shall be taken into account in computing such taxable income or taxable
loss; (ii) any item of income or gain required to be allocated specially to a
Member under Section 6.2 hereof shall not be taken into account in computing
such taxable income or taxable loss; and (iii) in lieu of the depreciation,
amortization, gain or loss taken into account in computing such taxable income
or loss, the Company shall compute such items based on the Book Value of Company
property rather than its tax basis, in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv)(g)(3).
(aa) "Related Person" shall mean as set forth in Section 11.5.4, any Member,
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Manager or an Affiliate (or any member of a Member's, Manager's or Affiliate's
immediate family).
(ab) "Subsidiary" - any entity which the Company directly and indirectly has
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an equity interest in, and which at the date of this Agreement includes Durango
Resort, LLC, DSC/Purgatory, LLC and Durango Mountain Land Company, LLC.
(ac) "Treasury RegulationsTreasury Regulations" shall mean the Income Tax
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Regulations issued by the Department of the Treasury.
2. Name. The name of the limited liability company formed hereby is
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Mountain Springs Resorts, LLC (the "Company").
3. Purpose and Powers. The purpose of the Company is to operate and
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maximize its investment in the Durango Colorado real estate and resort business.
The Company shall have the authority to enter into all contracts and agreements
in connection therewith, expressly including all financing and/or refinancing
documents, and to engage in all activities incidental or related thereto. The
Company shall possess and may exercise all of the powers and privileges granted
by the Act or by any other law or by this Agreement, together with any powers
incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business purposes or
activities of the Company as set forth in this Section 2.
4. Registered Office and Registered Agent. The registered office of the
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Company in the State of Delaware is located at ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name and address of the registered agent of the Company for
service of process on the Company in the State of Delaware is Incorporating
Services, Ltd. ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
5. Admission of Members; Names and Addresses. Simultaneously with the
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execution and delivery of this Agreement the Members are admitted as the members
of the Company. The name and address of the Members are as follows:
▇▇▇▇ Nevada Partners Limited Partnership ("CNPLP")
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
EFG/Kirkwood LLC ("EFG")
One Canterbury Green
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Temple")
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6. Capital.
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6.1 Capital Contributions2.2 Capital Contributions. Upon execution
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of the Initial Operating Agreement and through the date of this Agreement, the
Members contributed to the Company cash and property in the respective amounts
as set forth on item nos. 1-7 of Exhibit 6.1. The contributions made by the
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Members under this Section 6.2 and the subsequent Capital Contributions by
Members to the Company as set forth on item 8 of Exhibit 6.1 and under Sections
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6.4, 6.5 and 6.6 are hereafter referred to as "Capital Contributions."
6.2 Percentage Interests2.1 Percentage Economic Interests. Each Member
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shall have a percentage interest equal to the percentage set forth next to such
Member's name on Exhibit 6.1, attached hereto and made a part hereof (or, after
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admission of new Members, on the most recently adopted Counterpart) as such
interest may be adjusted from time to time for additional Capital Contributions
("Percentage Interest"). A new Counterpart shall be prepared after each new
additional Member and each additional Capital Contributions.
6.3 Member Advances2.3 Member Advances. In addition to the Capital
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Contributions provided for under Section 6.2 and without limiting the provisions
of Sections 6.4, 6.5 and 6.6, the Members or an Affiliate may, if the Board
in its discretion deems it appropriate, make cash advances in such amounts and
upon such commercially reasonable repayment, interest and other terms as the
Board and the Member or Affiliate providing such advance shall agree. Any such
cash advances shall be treated as loans to the either the Company or its
subsidiaries as the case may be, rather than Capital Contributions and shall
therefore not affect a Member's Capital Account. Such Advances may become
Capital Contributions subject to the provisions of this Agreement.
6.4 Additional Capital Contributions2.4 Additional Capital
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ContributionsNoNo Member shall be obligated to make any other Capital
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Contributions, and no Member shall make any such further Capital Contributions
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except as otherwise provided in this Agreement.
6.5 Discretionary Capital Contribution2.6 Discretionary Capital
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Contribution.
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(a) After April 7, 2004, the Board may from time to time determine in
its sole and absolute discretion that a significant shortfall exists in working
capital and that the Company is unable to obtain adequate third party financing
on a reasonable and timely basis to cover such shortfall. In such event the
Company shall notify the Members of such determination in writing (the
"Shortfall NoticeShortfall Notice") and the reasons therefore and may raise
additional capital from the Members to cover such shortfall.
(b) The Members or an Affiliate shall have the right, but not the
obligation, to make additional Capital Contributions of their pro rata share of
any such capital to be raised pursuant to this Section 6.5. For purposes of
this Section 6.5, a Member's pro rata share shall mean such Member's Percentage
Interest (as of the date of the Shortfall Notice) of the additional Capital
Contributions.
(c) Within thirty (30) days after the date of the Shortfall Notice, the
Members or Affiliates who participate ("Contributing Member") may make such
additional Capital Contributions, pro rata, for the amount any Member fails to
make Capital Contributions (a "Non-Contributing MemberNon-Contributing Member")
pursuant to this Section 6.5, based on the Percentage Interests of all such
participating Members who have elected to so contribute.
(d) Each Member or Affiliate making additional Capital Contributions
pursuant to this Section 6.5 shall be deemed to have made a capital contribution
(the "Deemed Capital Contribution") in an amount equal to the greater of either:
(i) twice the amount actually contributed as adjusted for the equivalent
ownership units shown at Exhibit 6.1, if Fair Market Value is less than or equal
to the total dollar amount of all Capital Contributions made by Members prior to
making the additional Capital Contribution, or
(ii) if Fair Market Value is greater than the total dollar amount of all
Capital Contributions made by Members prior to making the additional Capital
Contribution, twice the Capital Contribution's Percentage Interest as determined
by the additional capital contribution (including any additional capital
contributed by a Contributing Member to make up for an amount not contributed by
a Non-Contributing Member) divided by the Fair Market Value, adjusted for the
equivalent ownership units shown at Exhibit 6.1 .
(e) Fair Market Value shall be determined by the Board, as of the date
of the Shortfall Notice. The Percentage Interest of each Member shall be
adjusted after additional Capital Contributions are made pursuant to this
Section 6.5, with the adjusted Percentage Interest obtained by dividing:
(X) A Member's Percentage Interest at the greater of Fair Market Value
or Adjusted Cost without giving effect to the Deemed Capital Contribution plus
the amount of the Member's Deemed Capital Contribution as determined in
accordance with Section 6.5(d) above.
by
(Y) The greater of Fair Market Value or Adjusted Cost of all Members'
Percentage Interests without giving effect to the Deemed Capital Contribution
plus the amount of all Members' Deemed Capital Contribution as determined in
accordance with Section 6.5(d) above.
(f) Examples. A summary follows of examples as set forth on Exhibit
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6.5(f) assuming a $2 million capital call and beginning with 10,492,424
equivalent ownership units from Exhibit 6.1. Where any inconsistencies exist
between the examples set forth herein and the provisions of this Section 6.5,
the examples shall prevail:
(i) No increase in Fair Market Value. A $2 million Capital Contribution
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shall be treated as a 4,453,018 Deemed Capital Contribution for a total
equivalent ownership of 14,945,442 after the Capital Contribution. The
Member(s) contributing $2 million will be acquiring 4,453,018 Deemed Capital
Contribution divided by the 14,945,442 of equivalent ownership units or 29.7952%
ownership interest.
(ii) $4,000,000 increase in Fair Market Value. A total of $13,425,000
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fair market value or $1.27949 per equivalent ownership unit. A $2 million
Capital Contribution shall be treated as a 3,126,234 Deemed Capital Contribution
(2,000,000 divided by 1.27949 equals 1,563,117 equivalent units; these units
would be multiplied by two) for a total equivalent ownership of 13,618,658 after
the Capital Contribution. The Member(s) contributing $2 million will be
acquiring 3,126,234 Deemed Capital Contribution divided by the 13,618,658 of
equivalent ownership units or 22.9555% ownership interest.
(f) For purposes of this Section 6.5, the Percentage Interest of a
Non-Contributing Member shall be decreased by the increase in the Percentage
Interest of the Contributing Member. In order to give effect to such dilution,
the decrease in the Percentage Interest of the Non-Contributing Member under
Section 6.5, shall be deemed to be assigned to the Contributing Member, without
additional consideration, and the Contributing Member's Percentage Interest
shall be correspondingly increased, and the Board is hereby authorized and
directed to reflect such assignment on the books of the Company. On the date
the adjusted Percentage Interest is determined as provided for in this Section
6.5, each Member shall be considered as of such date, solely for purposes of
further calculations and adjustments of each Member's invested capital to have
made Capital Contributions, as determined by this Section 6.5.
(g) After the date of this Agreement, the Company may raise in the aggregate
up to and including on a cumulative basis no more than Two Million Dollars
($2,000,000) of additional Capital Contributions and no more than a 29.7952%
interest in the Company may be issued pursuant to this Section 6.5.
(h) With respect to any Capital Contribution made by an Affiliate,
such Affiliate's Capital Contribution when combined with the Member to which
such Affiliate is an Affiliate, shall not exceed the Capital Contribution
otherwise permitted if made solely by the Member.
6.6 Preemptive Rights2.7 Preemptive Rights. Except as set forth in
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Section 6.5, each Member has the pro rata right (but not the obligation), in
proportion to such holder's proportionate ownership of the then outstanding
Percentage Interest ("Preemptive RightPreemptive Right"), to subscribe to any or
all issues of new Membership Interest (the "New IssueNew Issue"). Each
Member may exercise its Preemptive Right with respect to a New Issue within a
reasonable period of time established by the Board after the giving of notice of
the New Issue by the Board. New Issues shall not include any equity incentive
plan approved by the Board and holders of seventy percent (70%) of the then
outstanding Percentage Interest.
In the event that portions of a New Issue remain unsubscribed ("Unsubscribed
InterestUnsubscribed Interest") after the pro rata exercise of Preemptive Rights
referenced above, then each Member who exercised its Preemptive Right to
the fullest extent provided in this Section 6.6, shall have the right to
subscribe to its pro rata share of the Unsubscribed Interest.
6.7 Return of Capital; Partition2.9 Return of Capital; Partition.
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Except as otherwise provided herein, no Member shall have any right to (a)
withdraw from the Company, (b) demand the return of all or any part of such
Member's Capital Account during the term of the Company or (c) receive a return
of such Member's Capital Account from any specific assets of the Company. Each
Member irrevocably waives any right which such Member may have to cause a
partition of all or any part of the Company's assets. No Member shall be
entitled to receive any interest with respect to a Capital Contribution.
6.8 LIABILITY OF MEMBERS2.10 LIABILITY OF MEMBERS. NOTWITHSTANDING
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ANYTHING TO THE CONTRARY HEREIN CONTAINED, NO MEMBER SHALL BE LIABLE FOR ANY
DEBTS, EXPENSES, LIABILITIES OR OBLIGATIONS OF THE COMPANY EXCEPT AS OTHERWISE
AGREED IN WRITING BY SUCH MEMBER OR AS PROVIDED BY LAW.
The Members may but are not required to make any contribution of property or
money to the Company in excess of their Capital Contribution.
7. Tax Characterization and Returns.
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(a) Tax Treatment. The Members declare that it is the intention of the
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Company to be treated as a "partnership" for federal and all relevant state tax
purposes and the Company shall make all available elections to be so treated.
All provisions of the Company's certificate of formation and this Agreement are
to be construed so as to preserve that tax status under those circumstances.
(b) Tax Information. In accordance with Section 7(a) (Tax Treatment)
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hereof, then no later than the dates the federal, state or local income tax (or
information) returns, as the case may be, are due as they may be extended, the
Company will cause to be delivered to each person who was a member at any time
during such fiscal year a Form K-1 and such other information, if any, with
respect to the Company as may be necessary for the preparation of each member's
federal, state or local income tax (or information) returns, including a
statement showing each member's share of income, gain or loss, and credits for
the fiscal year.
(c) Section 754 Election - If such election has no adverse impact
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on any other Member, the Company shall make an election under Section 754 of the
Internal Revenue Code (the "754 Election") when requested by a Member. Any
discretion to be exercised by the Company in connection with any adjustments to
the Capital Account of a Member following the 754 Election, and the allocation
of such adjustment among the assets of the Company, shall be reasonable and
determined by the Tax Matters Partner in the exercise of reasonable discretion,
after consultation with the Board of Managers and such professional advisors as
the Tax Matters Partner considers appropriate.
8. Capital Accounts2.8 Capital Accounts.
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(a) A separate capital account (a "Capital AccountCapital Account")
shall be maintained for each Member strictly in accordance with the rules set
forth in Treasury Regulations Section 1.704-1(b)(2)(iv). Subject to the
preceding sentence, each Member's Capital Account shall be (i) increased by the
amount of Capital Contributions made by such Member to the Company and
allocations to such Member of Company Profits and other items of book income and
gain; and (ii) decreased by the amount of money and fair market value of
property (net of liabilities secured by such distributed property that such
Member is considered to assume or take subject to under Section 752 of the Code)
distributed to it by the Company and allocations to such Member of Company Loss
and other items of book loss and deductions; and (iii) otherwise adjusted in
accordance with the additional rules set forth in Treasury Regulations Section
1.704-1(b)(2)(iv).
(b) In the event the Book Values of Company assets are adjusted pursuant to
Treasury Regulations Section 1.704-1(b) and Section 1.9(g), the Capital Accounts
of all Members shall be adjusted simultaneously to reflect the allocations of
income, gain, loss or deduction that would be made to the Members if there were
a taxable disposition of the Company's property for its fair market value. If
any assets of the Company are to be distributed in kind, such assets shall be
distributed on the basis of their fair market values after the Members' Capital
Accounts have been adjusted to reflect the manner in which any unrealized income
gain, loss or deduction with respect to such assets (that have not been
reflected in the Capital Accounts previously) would be allocated between the
Members if there were a taxable disposition of the property for its fair market
value.
(c) If any interest in the Company is transferred in accordance with the
provisions of this Agreement, the transferee Member shall succeed to that
portion of the Capital Account of the transferring Member as relates to such
transferred interest.
(d) It is the intent of the Company that the Capital Accounts of all Members
be determined and maintained in accordance with the principles of Treasury
Regulations Section 1.704-1 at all times throughout the full term of the Company
and the foregoing provisions of this Section 2.5 shall be interpreted in
accordance with such intention.
9. Percentage Interest and Allocations of Profits and Losses. On the
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date hereof, the Member's interest in the Company shall be as set forth as the
"Percentage Interest" on Exhibit 6.1 hereto. As of the date hereof, all of the
Company's Profits and Losses shall be allocated to the Members in accordance
with the Percentage Interest. In the event additional members are admitted to
the Company, the Company's Profits and Losses shall thereafter be allocated in
accordance with the Percentage Interests of the members, respectively.
10. Distributions. Except to the extent restricted by Sections 18-607
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(Limitations on Distributions) or 18-804 (Distribution of Assets) of the Act,
the Board may cause the Company to distribute any cash or other assets held by
it to the Members at any time. In the event additional members are admitted to
the Company, and except as set forth in Section 16 (Distribution Upon
Dissolution) hereof, cash or other assets available for distribution shall be
distributed to the members in accordance with their respective Percentage
Interests.
11. Management. The Company shall be managed by the Board. The Board shall
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have all powers as set forth herein and such powers which may be delegated to
officers duly elected by the Managers.
11.1 Board of Managers3.1 Board of Managers.
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(a) The Board shall consist of eight (8) Managers, or such higher or
lower number of persons determined by Approval of Members holding seventy
percent (70%) of all then outstanding Percentage Interests. The largest holder
of the outstanding Percentage Interests (the "Largest MemberLargest Member"),
shall have the right to nominate four (4) Managers. Any Member (other than the
Largest Member) holding at least thirty-three percent (33%) (the "33% Member")
shall have the right to nominate three (3) Managers. Any Member (other than the
Largest Member or the 33% Member) holding at least twenty-five percent (25%) of
the outstanding Percentage Interests shall have the right to nominate two (2)
Managers. As long as ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("TempleKlein") or EFG, or their
Affiliates, shall each own five percent (5%) or more Percentage Interest, such
5% Member (Temple or EFG) each shall be entitled to nominate one Manager. Each
of the Members agrees to cast its votes for the election of Managers in a manner
so as to elect the nominees for Manager as set forth above and to elect the same
Members to the Board(s) of any Subsidiaries of the Company. Each Member agrees
not to make any nominations for the Board inconsistent with the provisions
hereof. The Board may also have Alternate Managers, who shall take the place of
Managers, should Managers be unavailable. Each Manager may designate an
Alternate Manager who shall be a substitute for such Manager and shall not be in
addition to the number of Managers on the Board. An Alternate Manager
designated as Alternate Manager by a Manager may not serve as an alternate to
another Manager, unless also designated an Alternate Manager by such other
Manager. The Board shall meet no less often than annually.
(b) Board actions shall be valid only if made (i) at a meeting held in
person or by conference telephone upon at least ten (10) business days' prior
notice unless waived (by telephone, courier or electronic mail confirmed by
courier), at which at least a majority of all Managers (including any then
serving as an Alternate Manager) then in office are present and a majority of
those Managers (including any then serving as an Alternate Manager) present at
the meeting approve the Board action; or (ii) by a writing signed by a majority
of the Managers. Such actions, when evidenced in a writing certified by any
person appointed to serve as Secretary or Chairman of the Board of the Company
may be relied upon by third parties for all purposes with respect to their
dealings with the Company.
11.2 Control by Board3.2 Control by Board. Subject to the
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provisions of this Agreement, and except as may be otherwise expressly stated in
this Agreement, the Board shall have full and exclusive responsibility and
authority for the management, supervision and conduct of the business and
affairs of the Company and the Board is hereby granted the right, power and
authority to do on behalf of the Company all things determined thereby to be
necessary or desirable to carry out such duties and responsibilities, including
(without limitation) the right, power and authority from time to time to do the
following:
(a) to borrow money in the name and on behalf of the Company, and to
secure any such loans by a mortgage, pledge or other encumbrance upon any assets
of the Company;
(b) to cause to be paid all amounts due and payable by the Company to any
person or entity;
(c) to employ such agents, employees, managers, accountants, attorneys,
consultants and other persons necessary or appropriate to carry out the business
and affairs of the Company, to delegate by express Board action any powers of
the Board enumerated herein, and to pay to such persons such fees, expenses,
salaries, wages and other compensation as it shall in its sole discretion
determine;
(d) to pay, extend, renew, modify, adjust, subject to arbitration,
prosecute, defend or compromise, upon such terms as it may determine and upon
such evidence as it may deem sufficient, any obligation, suit, liability, cause
of action or claim, including taxes, either in favor of or against the Company;
(e) to pay any and all fees and to make any and all expenditures which it
deems necessary or appropriate in connection with the organization of the
Company, the management of the affairs of the Company and the carrying out of
its obligations and responsibilities under this Agreement;
(f) to the extent that funds of the Company are, in the Board's judgment,
not immediately required for the conduct of the Company's business, temporarily
to deposit the excess funds in such bank account or accounts, or invest such
funds in such interest-bearing taxable or nontaxable investments, as the Board
shall deem appropriate;
(g) to acquire, prosecute, maintain, protect and defend or cause to be
protected and defended all patents, patent rights, trade names, trademarks,
copyrights and service marks, all applications with respect thereto and all
proprietary information which may be held by the Company;
(h) to enter into, execute, acknowledge and deliver any and all
con-tracts, agreements or other instruments necessary or appropriate to carry on
the business of the Company as set forth herein;
(i) to acquire interests in such other entities as the Board may deem
appropriate to conduct the planned business activities of the Company on such
terms as the Board deems in the Company's interests;
(j) to cause to be paid any and all taxes, charges and assessments that
may be levied, assessed or imposed upon any of the assets of the Company, unless
the same are contested by the Company;
(k) to make all elections and decisions of a tax and accounting nature
required or permitted on behalf of the Company, including without limitation the
election provided for by Section 754 of the Code; and
(l) to exercise all other powers conferred by the Act or other applicable
law on, or not prohibited to, a "Manager" of the Company from time to time (as
such term in defined in the Act).
11.3 Extent of Manager's Obligations3.4 Extent of Manager's
---------------------------------- ---------------------
Obligations. Each Manager shall devote such time and attention to the
----
activities of the Company as are reasonably necessary and appropriate to carry
--
out the Manager's duties hereunder. It is expressly acknowledged and understood
that the Managers may also devote time to the affairs of other entities and to
other business activities.
11.4 Standard of Care; Indemnification3.5 Standard of Care;
------------------------------------ -------------------
Indemnification. No Manager shall be liable, in damages or otherwise, to the
------
Company or to any of the Members for any act or omission performed or omitted by
such Manager pursuant to the authority granted by this Agreement, except if
such act or omission results from gross negligence, willful misconduct or bad
faith. The Company shall save, indemnify, defend and hold harmless each Manager
to the fullest extent permitted by the Act, including without limitation, from
and against any and all claims or liabilities of any nature whatsoever,
including, but not limited to, reasonable attorneys' fees, arising out of or in
connection with any action taken or omitted by such Manager pursuant to the
authority granted by this Agreement, except where attributable to the gross
negligence, willful misconduct or bad faith of such Manager or such Manager's
agents. Each Manager shall be entitled to rely on the advice of counsel, public
accountants or other independent experts experienced in the matter at issue, and
any act or omission of such Manager in reliance on such advice shall in no event
subject such Manager to liability to the Company or any Member. Each Member
expressly acknowledges and agrees that other Members and Managers may engage in
activities competitive with those of the Company, and may pursue business
opportunities that may also be available to the Company; and except as otherwise
provided herein or any other written agreement among Members, and except for any
liability relating to the misuse or improper disclosure of the Company
confidential or proprietary information, no Member or Manager shall have any
liability as a fiduciary or otherwise in connection with the pursuit of such
activities.
11.5 Rights of MembersARTICLE IV - RIGHTS OF MEMBERS
-------------------
11.5.1 No Authority to Manage4.1 No Authority to Manage. It is
------------------------- -----------------------
expressly understood that no Member, in such Member's capacity as such, other
than the Managers, shall take part in the management or control of the business,
transact any business for the Company, have the right to vote on any Company
matter, or have the power to sign for or bind the Company to any agreement or
document. Notwithstanding the foregoing, Members may participate in the
management of the Company if and to the extent so contemplated by the terms of
any employment relationship with the Company.
11.5.2 Approval Rights of Members4.2 Approval Rights of Series A
----------------------------- ---------------------------
Members. Notwithstanding any provision of this Agreement, or the Operating
-----
Agreements of any Subsidiary, the Company or Board shall not make a Major
--
Decision, nor shall it permit any Subsidiary to make a Major Decision, as
--
defined herein without first obtaining the Approval (by vote or by written
--
consent) of the holders of seventy percent (70%) of the then outstanding
--
Percentage Interests. A major decision (a "Major DecisionMajor Decision") is
--
one where the Company, or its Subsidiaries, will:
(1) amend the Agreement, or permit the amendment of any Subsidiary
operating agreement or its equivalent,
(2) sell, offer to sell, convey or otherwise dispose of all or any
significant portion of its property or business, except for sales, conveyance or
other disposals in the ordinary course of business; or effect any merger,
consolidation (in each case where it is not the surviving entity)
reorganization, recapitalization or similar transaction;
(3) register any of its securities under the Securities Act of 1933, as
amended, in connection with the public offering of such securities;
(4) admit new Members;
(5) incur indebtedness in excess of two million Dollars ($2,000,000) on a
consolidated basis at any one time or in the aggregate in a fiscal year period
or alter any written commitment existing on the date hereof with respect
thereto;
(6) commit to any capital project requiring an aggregate expenditure for
capital projects in excess of two million dollars ($2,000,000) on a
consolidated basis (the "Capital Expenditure LimitCapital Expenditure Limit");
(7) enter into any joint venture or partnership agreement, or acquire
the securities of any other company,
(8) adopt any equity incentive plan for the benefit of directors, officers,
managers, employees or consultants or grant any options to acquire equity
securities of the Company to such directors, officers, managers, employees or
consultants.
(9) make any property investments that are not located within the
confines of the resort and real estate owned by the Company or its Subsidiaries
as of the date of the Agreement.
(10) take any action that would change the Board members of any
Subsidiary
(11) pay compensation to any Member or its Affiliate.
11.5.3 Records of the Company4.4 Records of the Company. The Company
------------------------- ----------------------
shall make available for inspection at its principal place of business, upon
reasonable request for purposes reasonably related to the interest of a person
as a Member, any of the following records of the Company: (a) a current list of
the full name, last known business or residence address, Capital
Contribution and Percentage Interests owned by each Member; and (b) such other
books and records as may be required to be provided to the Members pursuant to
the Act or other applicable law. The Members acknowledge that the records of
the Company constitute valuable trade secrets, and any information or records so
obtained or copied shall be kept and maintained in strictest confidence and
shall in no event be disclosed to any other parties without the written consent
of the Company.
11.5.4 Transactions with Affiliates or Related Persons. All
----------------------------------------------------
transactions between the Company, or any of its Subsidiaries, and any Related
Person or Affiliate shall be bona fide transactions entered into in good faith
and on terms and conditions at least as favorable to the Company, or any of its
Subsidiaries, as could be obtained from persons who are not Related Persons or
Affiliates. Any Related Person shall mean any Member, Manager or an Affiliate
(or any member of a Member's, Manager's or Affiliate's immediate family).
12. Compensation. The Members, Managers or Alternate Managers may
------------
receive compensation for services rendered to the Company as determined by the
Board and approved by the Members in accordance with 11.5.2 (12). A Manager or
Alternate Manager shall be entitled to reimbursement of reasonable, normal and
customary business expenses incurred in attending meetings in the performance of
the Manager's or Alternate Manager's duties.
13. Assignments. Any Member may assign all or any part of its
-----------
Membership Interest only as set forth herein.
13.1 Limitations on Transfers of Membership Interests7.1 Limitations on
------------------------------------------------- --------------
Transfers of Series A Membership Interests.
-----------------------------------------------
(a) A Member may transfer its Membership Interest at any time to a
"Permissible TransfereePermissible Transferees." As used in this Section 13.1,
"Permissible Transferee" with respect to a transferor means an entity that
succeeds to the Member with substantially similar beneficial owners (including a
liquidating trust), spouse, parent, child, brother or sister of such Member,
including a trust for the benefit of such persons and Affiliates of such
persons. Any such Permissible Transferee shall execute a copy of and agree to
be bound by this Agreement.
(b) In order that the intention of the parties with respect to the transfer
of Membership Interest shall not be frustrated, impaired or restricted by any
proceeding resulting from or otherwise in respect of the encumbering of any
Membership Interest, except with the prior written consent of holders of seventy
percent (70%) of the outstanding Percentage Interests, no Member shall at any
time encumber any Membership Interest unless in connection therewith the person
to whom such Membership Interest is encumbered (the "Secured PartySecured
Party") agrees that upon foreclosure upon such Membership Interest following any
default with respect to the indebtedness or other obligation secured
thereby, the Secured Party will promptly make or obtain from a third party a
bona fide offer for such Membership Interest, and the other Members and the
Company shall have the first right to purchase such Membership Interest at the
price offered by such third party all of the encumbered Membership Interest upon
such terms and conditions as if such third party had made an offer to purchase
all of such Membership Interest at such price pursuant to the provisions of
Section 13.2. The purchase price for such Membership Interest shall be paid
thirty percent (30%) in cash at closing, with the balance being paid in five
equal annual installments on the anniversary of the closing. Such outstanding
balance shall be represented by a promissory note bearing interest at a variable
rate of the 5-Year Treasury ▇▇▇▇ rate (as set forth in the Wall Street Journal)
plus three percent (3%) and shall be secured by the Membership Interest being
acquired.
13.2 Rights of First Offer with Respect to Membership Interests7.2
---------------------------------------------------------------
Rights of First Refusal with Respect to Series A Membership Interests; Take
--------------------------------------------------------------------------------
Along/Bring Along.
------------------
(a) If any Member (the "OfferorSeries A Offeree") decides to sell any
portion of the Membership Interest, either directly or indirectly, the Member
shall first offer to sell such Membership Interest to the Members who are not
Offerors (the "Offeree Members") by sending a "Notice of Intent to Sell
Membership Interests" to the Offeree Members. The Offeree Members shall then
have ten (10) business days in which to make a bona fide written offer (the
"OfferOffer") Offerorto purchase the Membership Interests owned by the Offeror
and if the Offeror proposes to accept the Offer, the Offeror must comply with
the provisions of this Section 13.2. Within ten (10) business days of the
receipt of the Notice of Intent to Sell Membership Interests, the Offeree shall
send to the Offeror a statement in writing addressed to the Offeror and signed
by the Offeree in as many counterparts as may be necessary (the
"StatementStatement") setting forth (i) the date of the Statement (the
"Statement DateStatement Date"); (ii) the amount of Membership Interest covered
by the Offer, the price to be paid by the Offeree (the " Offeree PriceThird
Party Price") and the terms of payment of such Offeree Price; (iii) the
Offeree's willingness to be bound by the terms of this Agreement; (iv) the
Offeree's name, address and telephone number; and (v) the Offeree's willingness
to supply any additional information about himself or itself as may be
reasonably requested by any of the Offeror MembersOther Series A Members.
(b) Within five (5) business days following the Statement Date, the Offeror
shall give written notice (the "NoticeNotice") to the Company and the Offeree
Members stating its intent either to accept the Offer or to decline the Offer.
If the Offeror intends to accept the Offer, the Offeror shall deliver written
notice thereof together with evidence reasonably satisfactory to the Company as
to the Offeror's due authorization to consummate the proposed purchase (the
"Acceptance Notice").
(c) If the Offeror intends to accept the Offer, each of the Offeree Members
shall have an option ("OptionOption") to purchase its pro rata portion of the
Membership Interest that the Offeror has proposed to sell to the Offeree (the
"Subject InterestSubject Series A Interest") at the Closing referred to in
Section 13.2 (d) below and for the purchase price and on the terms set forth in
Section 13.2(e) below; provided that, if such Option is exercised, all but not
less than all, of the subject Membership Interest must be purchased by the
Offeree Members in the aggregate. To the extent that some, but not all, of the
Offeree Members wish to exercise the Option, such Offeree Members wishing to
exercise the Option (the "Exercising MembersExercising Series A Members") shall
have the option to purchase the unpurchased subject Membership Interest pro rata
according to the respective Percentage Interests of the Exercising Members.
The Option shall be exercised by the Offeree Members or the Exercising Members,
as the case may be, by giving written notice ("Option NoticeOption Notice") to
the Offeror within fifteen (15) Business Days following the date of receipt of
the Acceptance Notice. Upon giving the Option Notice, the Offeree Members or
the Exercising Members, as the case may be, shall have the obligation to
purchase the subject Membership Interest on and subject to the terms and
conditions hereof. The failure of the Offeree Members or the Exercising
Members, as the case may be, to provide an Option Notice pursuant to the
foregoing terms shall be deemed an election not to exercise such option.
(d) If all subject Membership Interests are purchased by the Offeree Members
pursuant to Section 13.2 (c) above, then such purchases shall, unless the
parties thereto otherwise agree, be completed at a closing (the
"ClosingClosing") to be held at the principal office of the Company at 10:00
a.m. local time or at a mutually agreeable place and time not later than the
thirtieth (30th) business day following the exercise of the Option. If the
Option is not exercised pursuant to this Section 13.2, the Offeror may market
the Membership Interest to others for a period of time not to exceed six months
in order to sell the subject Membership Interest to a bona fide buyer (the
"Third Party").
(e) The purchase price for any Membership Interest sold pursuant to the
Option shall be an amount equal to the Offeree Price. The purchase and sale
shall otherwise be on the applicable terms and conditions contained in the
Statement.
(f) In the event the Offeror does not accept the Offer, the Offeror may
market the Membership Interest to others for a period of time not to exceed six
months in order to sell the subject Membership Interest to the Third Party at
the same price or greater and on the same terms as contained in the Statement.
If such sale does not occur within six months after the expiration of the five
(5) business day period specified above, or if the Offeror attempts to sell its
Membership Interest to a Third Party at a price that is less or on other terms
that are less favorable than the Offer, such Membership Interests shall be
reoffered to the Offeree Members in accordance with the provisions of Section
13.2 (a).
13.3 Involuntary Transfers7.3 Involuntary Transfers
---------------------- ----------------------
(a) The provisions of this Section 13.3 shall apply to any Membership
Interests that at any time become subject to an Involuntary Transfer (the
"Transfer InterestTransfer Interest") and the Company, the Member owning the
Transfer Interest (the "Affected MemberAffected Member") and any person to whom
the Transfer Interest is proposed to be transferred (a "Proposed
TransfereeProposed Transferee") shall be bound by the provisions of this
Agreement.
(b) Promptly upon obtaining knowledge of the occurrence of any Involuntary
Transfer or the occurrence of any event that will result in an Involuntary
Transfer, the Company, the Affected Member and any Proposed Transferee shall
give written notice (the "Involuntary Transfer NoticeInvoluntary Transfer
Notice") to the other Members (the "Unaffected MembersUnaffected Members")
stating the circumstances allegedly requiring the Involuntary Transfer, when the
Involuntary Transfer occurred or is to occur, the number of the Transfer
Interest and the name, address and capacity of the Proposed Transferee.
(c) Each of the Unaffected Members shall have an option, but not the
obligation (the "Second OptionSecond Option"), to purchase any or all of the
Transfer Interest at the Closing referred to in Section 13.3 (d) and for the
purchase price and on the terms set forth in Section 13.3(e). To the extent
that some, but not all, of the Unaffected Members wish to exercise the Second
Option, such Unaffected Members wishing to exercise the Second Option (the
"Second Exercising MembersSecond Exercising members") shall have the option to
purchase the Transfer Interest pro rata according to the Percentage Interests of
the Second Exercising Members. The Second Option shall be exercised by an
Unaffected Member by the giving of written notice of interest to exercise such
Second Option (the "Second Member Option NoticeSecond Member Option Notice") to
the Affected Member and any Proposed Transferee with fifteen (15) business days
following the date of receipt of the Involuntary Transfer Notice. Upon exercise
of the Second Option, each Second Exercising Member shall have the obligation to
purchase such Transfer Interest on and subject to the terms and conditions
hereof. Failure by any Unaffected Member to give a Second Member Option Notice
shall be deemed an election by the Member not to exercise the Second Option.
(d) If any Transfer Interest is purchased pursuant to this Section 13.3,
then such purchases shall, unless the parties thereto otherwise agree, be
completed at a closing (the "Involuntary Transfer ClosingClosing") to be held at
the principal office of the Company at 10:00 local time or at a mutually
agreeable place and time on the tenth (10th) business day following the earlier
to occur of (i) the exercise of the Second Option with respect to the Transfer
Interest or (ii) the expiration of the fifteen (15) business day period referred
to in Section 13.3 (c).
(e) The purchase price to be paid for each Transfer Interest sold pursuant
to this Section 13.3 shall be an amount equal to the Fair Market Value of such
Transfer Interest as of the end of the most recent fiscal year prior to the
Involuntary Transfer, as determined by the Board in its sole and absolute
discretion. The purchase price shall be paid thirty percent (30%) in cash at
the Involuntary Transfer Closing, with the balance being paid in five equal
annual installments on the anniversary of the closing. Such outstanding balance
shall be represented by a promissory note bearing interest at a variable rate of
the 5-year Treasury ▇▇▇▇ rate (as set forth in the Wall Street Journal) plus
three percent (3%) and shall be secured by the Transfer Interest being acquired.
(f) If on any date specified for an Involuntary Transfer Closing under
Section 13.3 (d) the Fair Market Value of the Transfer Interest required to
determine the applicable purchase price has not been ascertained, then the
Involuntary Transfer Closing to be held pursuant to Section 13.3(d) shall be
held on the tenth (10th) business day following the delivery to the parties to
the proposed sale of copies of such Fair Market Value.
14. Additional Members. Additional Persons (as defined in the Act) may
------------------
be admitted as members in the Company, without the sale, assignment, transfer or
exchange by the Members of all or any part of their Membership Interests, upon
the terms and conditions as members holding 70% of the Percentage Interests may
provide, from time to time, as this Operating Agreement may be amended by the
Members, from time to time. In such event, the Percentage Interests of the
Members and such additional members shall be adjusted pro rata, as the case may
be, to reflect the capital contribution, if any, of such additional members. If
an additional member makes no capital contribution, the existing Members shall
assign a Percentage Interest to the additional member and the Percentage
Interests of the existing Members shall be adjusted accordingly.
15. Dissolution. Unless otherwise provided herein, upon the determination
-----------
of the Board and Approval of the holders of seventy percent (70%) of the
outstanding Percentage Interests, the Company will be dissolved and the assets
shall either be liquidated forthwith or the property shall be distributed in
kind to the Members after payment of the debts of the Company as determined by
the Board. The Company shall not dissolve upon the death, incompetence,
Bankruptcy, retirement, resignation or expulsion of any Member except as set
forth herein.
15.1 Triggering Event. Upon the death of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. so long as (i)
-----------------
▇▇▇▇ Nevada Partners or its Affiliates owns forty percent (40%) or more of the
Percentage Interests of the Company and (ii) EFG owns twenty-five percent (25%)
or more of the Percentage Interests of the Company (the "Triggering Event"), the
Company shall be offered for sale for a period of one year after the occurrence
of the Triggering Event (the "Sale Period"). The price for the Company shall be
determined in good faith by the Board and the Company shall be marketed
aggressively during the Sale Period. In the event an offer (the "Sale Offer")
is received for the sale of the Company during the Sale Period that is
acceptable to the Board in its good faith discretion, the Company shall be sold
at such price and on such terms as are contained in the Sale Offer. In the
event a Sale Offer is not received during the Sale Period or a Sale Offer is
received during the Sale Period that is not acceptable to the Board in its good
faith discretion, the Company shall not be sold. In such an event, CNP shall
have thirty (30) days after the expiration of the Sale Period in which to state
a price per Percentage Interest at which CNP would be willing to either buy all
of the outstanding Percentage Interests of the Company which EFG owns or to sell
its Percentage Interests of the Company (the "▇▇▇▇ Price"). EFG shall then have
thirty (30) days in which to elect in writing whether to buy all of the
Percentage Interests of the Company held by CNP at the ▇▇▇▇ Price or to sell all
of the Percentage Interests owned by EFG to CNP at the ▇▇▇▇ Price. If EFG fails
to make an election during such thirty (30) day period as provided above, it
shall be conclusively deemed that EFG has elected to sell its Percentage
Interests in the Company at the ▇▇▇▇ Price. If CNP fails to state a price
during the thirty (30) day period stated above, EFG shall state a price at which
EFG would be willing to either buy all of the outstanding Percentage Interests
of the Company owned by CNP or to sell its Percentage Interests of the Company
(the "EFG Price"). CNP shall then have thirty (30) days in which to elect in
writing whether to buy the Percentage Interests of the Company held by EFG at
the EFG Price or to sell the Percentage Interests owned by CNP to EFG at the EFG
Price. If CNP fails to make an election during such thirty (30) day period as
provided above, it shall be conclusively deemed that CNP has elected to sell its
Percentage Interests in the Company to EFG at the EFG Price. If EFG fails to
state a price during the thirty (30) day period stated above, there shall be no
purchase or sale of Percentage Interests and CNP may retain its Percentage
Interests in the Company and may transfer them in accordance with the terms of
the estate documents. Any party establishing a price pursuant to this Section
15.1 must deposit in escrow thirty percent (30%) of such price at the time of
establishing the price which is non-refundable and will be credited to the
purchaser toward the ▇▇▇▇ Price or EFG Price, as the case may be.
15.2 Closing13.2 Closing. The closing of the sale of Percentage
-------
Interests of the Company described above shall occur as expeditiously as
possible but in no event later than twenty (20) Business Days after the
expiration of the last thirty (30) day period described above. The purchase
price shall be paid thirty percent (30%) in cash at closing, with the balance
being paid in five equal annual installments on the anniversary of the closing.
Such outstanding balance shall be represented by a promissory note in
substantially the form attached hereto as Exhibit 15.2 and shall be secured by
all of the purchasers Member Interest pursuant to a pledge agreement in
substantially the form attached hereto as Exhibit 15.2. The promissory note
shall bear interest at a variable rate of the 5-Year Treasury ▇▇▇▇ rate (as set
forth in the Wall Street Journal) plus three percent (3%).
15.3 Financial Liquidity. The Company shall exert all reasonable and
--------------------
prudent business practices, wherever possible, to improve its operations and
develop its assets such that by December 31, 2006, the Company shall either:
(i) sell of all its assets or its ownership interests, or
(ii) merge with another entity which results in the Members owning shares in
a publicly traded company, or
(iii) complete a public offering of its ownership interests, or
(iv) do such other actions as are necessary, such that, the Members shall
receive financial liquidity for the Member's investment in the Company.
In furtherance of this obligation, upon receipt of the financial results for the
year ended April 30, 2006, the Company shall immediately began marketing the
Company with the objective to have received an bona fide written offer from a
Third Party (the "Liquidity Offer") to close on or about December 31, 2006. If
the Liquidity Offer is for an amount that meets or exceeds a return of the
dollar investment by each Member plus a 12% annual return (the "Hurdle Value"),
then the Company or all of its assets shall be sold and each Member agrees that
they shall take all actions necessary to accomplish such sale, unless by vote of
70% of the outstanding Percentage Interests, the Members decide to not sell the
Company.
(a) The Liquidity Offer should be in writing containing a
statementStatementStatement Date setting forth the amount of assets or
Membership Interest covered by the Offer, the price to be paid,Third Party Price
and the terms of payment (the "Liquidity Statement")Other Series A Members. If
the Liquidity Offer meets the Hurdle Value, but is for less than 100% of all the
Members Interest or it is to be paid for with other than cash, then acceptance
of the Liquidity Offer shall require approval 70% of the Percentage Interests.
(b) If the Company shall be sold pursuant to Section 15.3 (a) above, then
such sale shall, unless the parties thereto otherwise agree, be completed at a
closing (the "Liquidity ClosingClosing") to be held at the principal office of
the Company at 10:00 a.m. local time or at a mutually agreeable place and time
not later than the thirtieth (30th) business day following the acceptance of the
Liquidity Offer
(c) If the Liquidity Offer meets or exceeds the Hurdle Value or if the
holders of seventy percent (70%) of the outstanding Percentage Interests
determine that it is in the best interest of all the Members to sell the
outstanding Membership Interest at the same price and on the same terms as
contained in the Liquidity Statement, all of the Members shall sell their
Membership Interests at such price and on such terms.
16. Distributions Upon Dissolution. Upon the occurrence of an event
--------------------------------
set forth in Section 15 (Dissolution) hereof, the Members shall be entitled to
receive, after paying or making reasonable provision for all of the Company's
creditors to the extent required by Section 18-804(a)(1) of the Act, the
Members' respective positive Capital Account balances until such balances, if
any, are reduced to zero and then the balance shall be distributed to each such
Member in accordance with their respective Percentage Interests.
17. Withdrawal of Members.
-----------------------
(a) No Member may withdraw from the Company and receive a distribution
with respect to such Member's Capital Account unless such withdrawal has
received the Approval of Members holding seventy percent (70%) of the
outstanding Percentage Interests (disregarding for such purpose the Percentage
Interest of the withdrawing Member, if applicable) and the approval of the
Board.
(b) In the event of a withdrawal permitted hereunder, the Membership
Interest in the Company of such Member shall terminate as of such date and,
subject to the provisions hereof, the former Member's Capital Account (together
with such Member's allocable share of Company Profits or less such Member's
allocable share of Company Losses through the date of effectiveness of such
withdrawal) shall be paid, subject to the provisions of this Agreement, in cash
or in kind, to such former Member within thirty (30) days after the effective
date of withdrawal.
18. Indemnification. The Company may, and shall have the power to,
---------------
indemnify and hold harmless any Member or Manager or other Person from and
against any and all claims and demands whatsoever, to the fullest extent
permitted by law.
19. Amendment. This Agreement may be amended only in a writing signed by
---------
all of the Members in accordance with the terms of this Agreement.
20. Governing Law. This Agreement shall be governed by and construed under
--------------
the laws of the state of Delaware, excluding any conflicts of laws rule or
principle that might refer the governance or construction of this Agreement to
the law of another jurisdiction.
21. Severability. Except as otherwise provided in the succeeding sentence,
------------
every term and provision of this Agreement is intended to be severable, and if
any term or provision of this Agreement is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the legality or
validity of the remainder of this Agreement. The preceding sentence shall be of
no force or effect if the consequence of enforcing the remainder of this
Agreement without such illegal or invalid term or provision would be to cause
any party to lose the benefit of its economic bargain.
22. Notices. Any notice, payment, demand or communication required or
-------
permitted to be given by any provision of this Agreement shall be in writing or
by facsimile and shall be deemed to have been delivered, given and received for
all purposes (a) if delivered personally to the person or to an officer of the
person to whom the same is directed, or (b) when the same is actually received,
if sent either by a nationally recognized courier or delivery service or
registered or certified mail, postage and charges prepaid, or by facsimile, if
such facsimile is followed by a hard copy of the facsimiled communication sent
by a nationally recognized courier or delivery service, registered or certified
mail, postage and charges prepaid, addressed to the recipient party at the
address set forth for such party above.
(Signature Page Follows)
IN WITNESS WHEREOF, the undersigned the Members have duly executed this
Agreement as of October 24, 2002.
▇▇▇▇ NEVADA PARTNERS LIMITED PARTNERSHIP,
a Nevada limited partnership
By: ▇▇▇▇ NEVADA PARTNERS, INC.,
a Nevada corporation
Its General Partner
/s/
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Chief Executive Officer
EFG/KIRKWOOD, LLC,
a Delaware limited liability company
Its Member
By: AFG ▇▇▇▇ Corporation,
a Massachusetts corporation,
Its Manager
/s/
By: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
/s/
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Member
Exhibit 6.1
Capital Contribution. The Members Capital Contributions to the Company in the
--------------------
amounts and on the dates are as follows:
Date CNP EFG Temple Total
----------- ----------- --------- ------------
1. Upon the signing of the Purchase Agreement
between Durango Resort LLC and
DSC/Purgatory LLC dated November 24, 1999
(the "Purchase Agreement")
$ 300,000 $ 300,000 - $ 600,000
2. Upon the Quasi-closing, December 22, 1999
as defined in the Purchase Agreement
400,000 400,000 - 800,000
3. On or about March 31, 2000
150,000 150,000 - 300,000
4. Upon the Closing, May 1, 2000, as defined in
the Purchase Agreement
900,000 900,000 - 1,800,000
5. On August 1, 2000
500,000 500,000 - 1,000,000
6. On or about November 1, 2000
1,150,000 1,150,000 - 2,300,000
7. On April 30, 2002, for Option extension fee 62,500 62,500 - 125,000
----------- ----------- ------------
Sub-total $3,462,500 $3,462,500 - $ 6,925,000
Percentage Interest prior to 10/7/2002 50% 50% 0% 100%
------------------------------------------------- ----------- ----------- --------- ------------
8. On October 15, 2002 2,000,000 - 500,000 2,500,000
------------------------------------------------- ----------- ----------- --------- ------------
Total after 10/15/2002 $5,462,500 $3,462,500 $500,000 $ 9,425,000
----------- ----------- --------- ------------
Adjusted Cost and
-------------------------------------------------
Equivalent Units of Ownership Interests 6,400,379 3,462,500 629,545 10,492,424
Percentage Interest after 10/15/2002 61% 33% 6% 100%
MOUNTAINSPRINGS RESORTS LLC EXHIBIT 6.5 (f)
Dilution formula computations
Example 1:
----------
NO INCREASE IN FMV
------------------
A/B=C A B
$ 0.89827 Dollars Units Capital Call %
------- -----------
Outstanding $9,425,000 10,492,424
% of total $
Capital Call 17.5055% 2,000,000 4,453,018 29.7952%
-------------- ---------- --------- --------
Total after capital call $11,425,000 14,945,442
----------- ----------
C per unit
Capital call divided by $ 0.89827 2,226,509
2x units 4,453,018 29.7952%
-----------
Total units after capital call 14,945,442
CNP EFG Temple
PROOF (EACH PARTICIPATES IN CAPITAL CALL)
61.000% 33.000% 6.000%
------- ----------- -----------
Before capital call 6,400,379 3,462,500 629,545
Capital call $1,220,000 $ 660,000 $120,000
Units 2,716,341 1,469,496 267,181
After capital call 9,116,720 4,931,996 896,726
----------- ----------- ---------
61.000% 33.000% 6.000%
EXAMPLE 1: NO INCREASE IN FMV
------------------
CNP EFG Temple
------------ ---------- -----------
61.000% 33.000% 6.000%
------- ------------ ----------
Before capital call 6,400,379 3,462,500 629,545
Capital call $ 1,820,896 $ 179,104
CNP and Temple Only (prorata) 4,054,241 - 398,777
After capital call 10,454,620 3,462,500 1,028,322
------------ ---------- -----------
69.9519% 23.1676% 6.8805%
EXAMPLE 2: $4 MILLION INCREASE IN FMV
--------------------------
CNP EFG Temple
----------- ---------- ---------
61.000% 33.000% 6.000%
----------- ---------- ---------
Before capital call 6,400,379 3,462,500 629,545
Capital call $1,820,896 $179,104
CNP and Temple Only (prorata) 2,846,273 - 279,961
----------- ---------- ---------
After capital call 9,246,652 3,462,500 909,506
----------- ---------- ---------
67.8969% 25.4247% 6.6784%
Example 2:
-----------
$4 MILLION INCREASE IN FMV
--------------------------
D/E=F E
$1.27949 Dollars Units Capital Call %
------- -----------
Outstanding $ 9,425,000 10,492,424
Increase in FMV 4,000,000
-----------
D
Total FMV 13,425,000
% of total $
Capital Call 12.966% $2,000,000 3,126,234 22.9555%
----------------- ---------- --------- --------
Total after capital call $15,425,000 13,618,658
----------- ----------
F per unit
Capital call divided by $ 1.27949 1,563,117
---------
2x units 3,126,234 22.9555%
----------- --------
Total units after capital call 13,618,658
Total
PROOF (EACH
PARTICIPATES IN CAPITAL CALL)
100.000%
--------
Before capital call 10,492,424
Capital call $ 2,000,000
Units 4,453,018
After capital call 14,945,442
------------
100.000%
EXAMPLE 1:
Total
------------
100.000%
--------
Before capital call 10,492,424
Capital call $ 2,000,000 $
CNP and Temple Only (prorata) 4,453,018 Units
After capital call 14,945,442
------------
100%
EXAMPLE 2:
Total
------------
100.000%
------------
Before capital call 10,492,424
Capital call $ 2,000,000 $
CNP and Temple Only (prorata) 3,126,234 Units
------------ ------
After capital call 13,618,658
------------
100%
EXHIBIT 15.2
FORM OF NOTE
BALANCE OF PURCHASE PRICE FOR SALE OF MEMBER INTEREST
Mountain Springs Resorts, LLC
Note and Pledge Agreement
PROMISSORY NOTE
______________, ____
$____________ Durango, Colorado
FOR VALUE RECEIVED, the undersigned Borrower promises to pay to
_______________, ("Creditor") the principal sum of _____________________________
and __/100 dollars ($_________), together with interest from the date of this
Note on the unpaid principal balance, upon the terms and conditions specified
below.
1. TERM. The outstanding principal balance of this Note, together with all
interest accrued and unpaid to date, shall be due and payable on the date that
is five calendar years from the date hereof ("Termination Date").
2. RATE OF INTEREST. Interest shall accrue under this Note on any unpaid
principal balance at a variable rate of 3% plus the 5-Year Treasury ▇▇▇▇ rate
(as set forth in the Wall Street Journal), compounded annually.
3. PAYMENT. This Note shall be paid in annual installments, amortized on a
five-year basis. Payment shall commence on the date which is one calendar year
from the date hereof and continue thereafter on the anniversary of such date
through and including the Termination Date, at which time the remaining
principal balance and all accrued and unpaid interest due hereunder shall be due
and payable in full.
4. PREPAYMENT. Prepayment of principal and interest may be made in whole or
in part, at any time, without penalty or premium.
5. EVENTS OF ACCELERATION. The entire unpaid principal sum and unpaid
interest under this Note shall become immediately due and payable upon:
(a) The failure of the Borrower to pay when due the principal balance and
accrued interest on this Note and the continuation of such default for more than
30 days;
(b) The insolvency of the Borrower, the commission of an act of bankruptcy
by the Borrower, the execution by the Borrower of a general assignment for the
benefit of creditors, or the filing by or against the Borrower of a petition in
bankruptcy or a petition for relief under the provisions of the federal
bankruptcy act or another state or federal law for the relief of debtors and the
continuation of such petition without dismissal for a period of 90 days or more;
or
(c) The occurrence of a material event of default under the Pledge Agreement
securing this Note.
6. SECURITY. Payment of this Note shall be secured by a Pledge Agreement in
the form attached hereto as Exhibit A ("Pledge Agreement"). The Pledge
Agreement shall be executed and delivered by Borrower to Creditor on the date
hereof and shall cover the Member Interest in Mountain Springs Resorts, LLC a
Delaware limited liability company.
7. CONFLICTING AGREEMENTS. In the event of any inconsistencies between the
terms of this Note and the terms of any other document related to the loan
evidenced by the Note, the terms of this Note shall prevail.
8. AMENDMENT. This Note may be modified or amended only by a written
agreement executed by and between Creditor and Borrower.
9. ASSIGNMENT. The terms of this Note shall inure to the benefit of and
bind Borrower and Creditor to their respective heirs, legal representatives,
successors and assigns.
10. TIME OF THE ESSENCE. Time is of the essence with respect to all matters
set forth in this Note.
11. GOVERNING LAW. This Note shall be construed in accordance with the laws
of the State of Colorado without reference to conflicts of law principles.
BORROWER:
By: __________________________
Its: __________________________
Mountain Springs Resorts, LLC
Note and Pledge Agreement
EXHIBIT A
---------
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Agreement") is entered into as of ____________,
____ by and between ______________("Creditor") and ______________ ("Borrower").
BACKGROUND
WHEREAS, pursuant to that certain Amended and Restated Operating Agreement
dated as of October __, 2002 by and among Mountain Springs Resorts, LLC, a
Delaware limited liability company (the "Company"), ▇▇▇▇ Nevada Partners Limited
Partnership, a Nevada limited partnership, EFG/Kirkwood, LLC a Delaware limited
liability company and ▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual, Borrower has executed and
delivered to Creditor a promissory note ("Note") of even date herewith in the
original principal amount of _______________ dollars ($__________), which Note
Borrower delivered to Creditor in connection with the sale of a Member Interest
of the Company to Borrower by Creditor.
NOW, THEREFORE, in consideration of the foregoing and the further promises
contained herein, Borrower and Creditor agree as follows:
1. GRANT OF SECURITY INTEREST; COLLATERAL. In order to secure payment of
the Note, Borrower hereby grants to Creditor a security interest in, and
assigns, transfers and pledges to the Creditor, the following securities and
other property:
(a) _______ Percentage Interest of the Company's Member Interest (the
"Member Interest") delivered to and deposited with Creditor as collateral for
the Note; and
(b) Any and all new, additional or different securities or other property
subsequently distributed with respect to the Member Interest identified in
Subsection (a) above that are to be delivered to and deposited with the Creditor
pursuant to the requirements of Section 3 of this Agreement; and
(c) Any and all other property and money that is delivered to or comes into
the possession of Creditor pursuant to the terms and provisions of this
Agreement; and
(d) The proceeds of any sale, exchange or disposition of the property and
securities described in Subsections (a), (b) or (c) above.
All securities, property and money to be assigned to, transferred to and pledged
with the Creditor shall be herein referred to as the "Collateral" and shall be
accompanied by one or more Member Interest power assignments properly endorsed
by the Borrower. Creditor shall hold the Collateral in accordance with the
following terms and provisions:
2. WARRANTIES. Borrower hereby warrants that: (a) Borrower is the owner of
the Collateral; (b) Borrower has the right to pledge the Collateral; (c)
the Collateral is free from all liens, advance claims and other security
interests (other than those created hereby); and (d) the execution, delivery and
performance of this Agreement does not conflict with any law or any agreement or
undertaking of which Borrower is a party or by which Borrower is bound.
3. RIGHTS AND POWERS. Creditor may, without obligation to do so, exercise
one or more of the following rights and powers with respect to the Collateral:
(a) Accept in its discretion, but subject to the applicable limitations of
Section 8, other property of the Borrower in exchange for all or part of the
Collateral and release Collateral to the Borrower to the extent necessary to
effect such exchange, and in such event the money, property or securities
received in the exchange shall be held by the Creditor as substitute security
for the Note and all other indebtedness secured hereunder;
(b) Perform such acts as are necessary to preserve and protect the
Collateral and the rights, powers and remedies granted with respect to such
Collateral by this Agreement; and
(c) Transfer record ownership of the Collateral to Creditor or its nominee
and receive, endorse and give receipt for, or collect by legal proceedings or
otherwise, dividends or other distributions made or paid with respect to the
Collateral, but only if there exists at the time an outstanding event of default
under Section 9 of this Agreement.
Any action by Creditor pursuant to the provisions of this Section 3 may be
taken without notice to Borrower. Expenses reasonably incurred in connection
with such action shall be payable by the Borrower and form part of the
indebtedness secured hereunder, as provided in Section 11.
So long as there exists no event of default under Section 9 of this
Agreement, Borrower may exercise all Member voting rights and be entitled to
receive any and all regular cash distributions paid on the Collateral.
Accordingly, until such time as an event of default occurs under this Agreement,
all proxy statements and other Member materials pertaining to the Collateral
shall be delivered to the Borrower at the address indicated below.
Any cash sums that Creditor may receive in the exercise of its rights and powers
under this Section 3 shall be applied to the payment of the Note and any other
indebtedness secured hereunder, in such order of application, as Creditor deems
appropriate. Any remaining cash shall be paid over to the Borrower.
4. DELIVERY OF COLLATERAL. Any new, additional or different securities that
may now or hereafter, become distributable with respect to the Collateral
by reason of (i) any dividend or distribution, Member split or reclassification
of the Member Interests of the Company or (ii) any merger, consolidation or
other reorganization affecting the capital structure of the Company shall, upon
receipt by the Borrower, be promptly delivered to and deposited with Creditor as
part of the Collateral hereunder. Such securities shall be accompanied by one
or more properly endorsed Member power assignments.
5. CARE OF COLLATERAL. Creditor shall exercise reasonable care in the
custody and preservation of the Collateral but shall have no obligation to
initiate any action with respect to, or otherwise inform Borrower of, any
conversion, call, exchange right, preemptive right, subscription right, purchase
offer or other right or privilege relating to or affecting the Collateral;
provided, however, that Creditor will notify Borrower of any such rights of
Borrower to protect against adverse claims or to protect the Collateral against
the possibility of a decline in market value. Creditor shall not be obligated
to take any action with respect to the Collateral requested by the Borrower
unless the request is made in writing and Creditor determines that the requested
action will not unreasonably jeopardize the value of the Collateral as security
for the note and other indebtedness secured hereunder.
Creditor may at any time release and deliver all or part of the Collateral
to the Borrower, and the receipt thereof by the Borrower shall constitute a
complete and full acquittance for the Collateral so released and delivered.
Creditor shall accordingly be discharged from any further liability or
responsibility for the Collateral, and the released Collateral shall no longer
be subject to the provisions of this Agreement. However, any and all releases
of the Collateral shall be effected in compliance with the applicable
limitations of Section 8(a) and (c).
6. PAYMENT OF TAXES AND OTHER CHARGES. Borrower shall pay, prior to the
delinquency date, all taxes, liens, assessments and other charges against the
Collateral, and in the event of Borrower's failure to do so, Creditor may at its
election pay any or all of such taxes and charges without contesting the
validity or legality thereof. The payments so made shall become part of the
indebtedness secured hereunder and, until paid, shall bear interest at the
minimum per annum rate, compounded annually, required to avoid the imputation of
interest income to Creditor and compensation income to Borrower under the
federal tax laws.
7. TRANSFER OF COLLATERAL. In connection with the transfer or assignment of
the Note (whether by negotiation, discount or otherwise, Creditor may transfer
all or any part of the Collateral, and the transferee shall thereupon succeed to
all the rights, powers and remedies granted Creditor hereunder with respect to
the Collateral so transferred. Upon such transfer, Creditor shall be fully
discharged from all liability and responsibility for the transferred Collateral.
8. RELEASE OF COLLATERAL. Provided (i) all indebtedness secured hereunder
(other than payments not yet due and payable under the Note) shall at the time
have been paid in full or canceled and (ii) there does not otherwise exist any
event of default under Section 9, the pledged Member Interest, together with any
additional Collateral that may hereafter be pledged and deposited hereunder,
shall be released from pledge and returned to the Borrower in accordance with
the following provisions:
(a) Upon payment or prepayment of principal under the Note, together with
payment of all accrued interest to date, one or more Member Interest held as
Collateral hereunder shall (subject to the applicable limitations of Subsections
(c) and (d) below) be released to the Borrower within three business days
after such payment or prepayment. The amount of Member Interest to be so
released shall be equal to the whole number obtained by multiplying (i) the
total number of Member Interests held under this Agreement at the time of the
payment or prepayment by (ii) a fraction, the numerator of which shall be the
amount of the principal paid or prepaid and the denominator of which shall be
the unpaid principal balance of the Note immediately prior to such payment or
prepayment. In no event, however, shall anything less than a whole number
Member Interest be released.
(b) Any additional Collateral that may hereafter be pledged and deposited
with Creditor (pursuant to the requirements of Section 4) with respect to the
Member Interests pledged hereunder shall be released at the same time the
particular Member Interest to which the additional Collateral relates are to be
released in accordance with the applicable provisions of Subsection (a) above.
Under no circumstances, however, shall any Member Interest or any other
Collateral be released if previously applied to the payment of any indebtedness
secured hereunder.
(c) In no event shall any member Interest be released pursuant to the
provisions of Subsections (a) and (b) above if, and to the extent, the fair
market value of the Member Interest and all other Collateral that would
otherwise remain in pledge hereunder after such release were affected would be
less than the unpaid balance of the Note (principal and accrued interest).
9. EVENTS OF DEFAULT. The occurrence of one or more of the following events
shall constitute an event of default under this agreement:
(a) The failure of the Borrower to pay the principal and accrued interest
when due under the Note;
(b) The failure of the Borrower to perform a material obligation imposed
upon the Borrower by reason of this Agreement within three days after receipt of
notice of such failure to perform; or
(c) The breach of any material warranty of the Borrower contained in this
Agreement.
Upon the occurrence of any such event of default, Creditor may, at its
election, declare the Note and all other indebtedness secured hereunder to
become immediately due and payable and may exercise any or all of the rights and
remedies granted to a secured party under the provisions of the California
Uniform Commercial Code (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or private sale or
to accept the Collateral in full payment of the Note and all other indebtedness
secured hereunder.
Any proceeds realized from the disposition of the Collateral pursuant to
the foregoing power of sale shall be applied first to the payment of reasonable
expenses incurred by Creditor in connection with the disposition, then to the
payment of the Note and finally to any other indebtedness secured hereunder.
Any surplus proceeds shall be paid over to Borrower. However, in the event such
proceeds prove insufficient to satisfy all obligations of the Borrower under the
Note, then Borrower shall remain personally liable for the resulting deficiency.
10. OTHER REMEDIES. The rights, powers and remedies granted to Creditor and
Borrower pursuant to the provisions of this Agreement shall be in addition
to all rights, powers and remedies granted to Creditor and Borrower under any
statute or rule of law. Any forbearance, failure or delay by Creditor or
Borrower in exercising any right, power or remedy under this Agreement shall not
be deemed to be a waiver of such right, power or remedy. Any single or partial
exercise of any right power or remedy under this Agreement shall not preclude
the further exercise thereof, and every right, power and remedy of Creditor and
Borrower under this Agreement shall continue in full force and effect, unless
such right, power or remedy is specifically waived by an instrument executed by
Creditor or Borrower, as the case may be. Nothing herein shall be construed to
limit Creditor's right to seek a deficiency judgment against Debtor.
11. COSTS AND EXPENSES. All reasonable costs and expenses (including
reasonable attorneys fees) incurred by Creditor in the exercise or enforcement
of any right, power or remedy granted it under this Agreement shall become part
of the indebtedness secured hereunder and shall constitute a personal liability
of the Borrower payable immediately upon demand and bearing interest until paid
at the rate of interest accruing on unpaid principal under the Note.
12. SUCCESSORS. The terms of this Agreement will inure to the benefit of
and bind the parties hereto and their respective successors, assigns, executors,
heirs and legal representatives.
13. SEVERABILITY. If any provision of this Agreement is held to be invalid
under applicable law, then such provision shall be ineffective only to the
extent of such invalidity, and neither the remainder of such provision nor any
other provisions of this Agreement shall be affected thereby.
14. AMENDMENT. This Agreement may be modified only by a writing signed by
Creditor and Borrower.
15. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado and shall be binding upon the
executors, administrators, heirs and assigns of Borrower.
16. ATTORNEYS FEES. In any action brought to enforce the terms of this
Agreement, the prevailing party will be reimbursed by the losing party for its
reasonable costs and expenses (including reasonable attorneys' fees) incurred in
such action, whether or not litigated to final judgment.
17. TIME OF ESSENCE. Time is of the essence of this Agreement.
18. COUNTERPARTS. This Agreement may be executed by facsimile and in any
number of counterparts, and when so executed shall have the same force and
effect as though all signatures appeared on one document.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.
CREDITOR:
BORROWER:
By: _________________________________
By: _________________________________ Its:
_________________________________
Its: _________________________________
By: _________________________________
By: _________________________________ Its:
_________________________________
Its: _________________________________
Address:
Address: