LIMITED LIABILITY COMPANY
AGREEMENT
OF
THE TETON CLUB, LLC
TABLE OF CONTENTS
Page
ARTICLE I ORGANIZATION OF THE COMPANY.....................................................................1
1.1 Formation.......................................................................................1
1.2 Name............................................................................................1
1.3 Continuation and Term...........................................................................1
1.4 Purpose.........................................................................................1
1.5 Offices.........................................................................................1
ARTICLE II DEFINITIONS.....................................................................................2
ARTICLE III MANAGEMENT AND OPERATION OF THE PROJECT
AND THE COMPANY.................................................................................7
3.1 Responsibilities and Duties of RRI under the Development Plan...................................7
3.2 Management of the Project.......................................................................8
3.3 Matters Requiring Approval of the Members......................................................11
3.4 Duties on Sale.................................................................................13
3.5 Reliance by Third Parties......................................................................13
3.6 Compensation and Reimbursement of Members......................................................13
3.7 Outside Activities; Conflicts..................................................................14
3.8 Contracts with Members, Affiliates and Third Parties...........................................14
3.9 Management Fee.................................................................................14
3.10 Indemnification................................................................................15
3.11 Other Matters..................................................................................16
ARTICLE IV MEMBERSHIP INTERESTS, CAPITAL CONTRIBUTIONS,
DEFICIT LOANS AND OTHER OBLIGATIONS............................................................16
4.1 Membership Interests...........................................................................16
4.2 Capital Contributions..........................................................................16
4.3 Capital Accounts...............................................................................18
4.4 Interest.......................................................................................18
4.5 No Withdrawal of Capital.......................................................................18
ARTICLE V OTHER OBLIGATIONS OF THE MEMBERS...............................................................18
5.1 Obligations of JHSC............................................................................18
5.2 Obligations of RRI.............................................................................19
5.3 Ownership of Intervals.........................................................................20
ARTICLE VI DEVELOPER'S FEE................................................................................20
ARTICLE VII DISTRIBUTIONS AND ALLOCATIONS.......................................................................20
7.1 Income and Loss................................................................................20
7.2 Tax Allocations................................................................................22
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7.3 Distribution of Net Cash Flow..................................................................23
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES.....................................................................24
8.1 Events of Default..............................................................................24
8.2 Remedies.......................................................................................24
8.3 Equitable Remedies.............................................................................24
ARTICLE IX BOOKS, RECORDS AND ACCOUNTING..................................................................25
9.1 Records and Accounting.........................................................................25
9.2 Fiscal Year....................................................................................25
ARTICLE X TAX MATTERS....................................................................................25
10.1 Preparation of Tax Returns.....................................................................25
10.2 Tax Elections..................................................................................25
10.3 Tax Matters Partner............................................................................25
10.4 Organizational Expenses........................................................................26
10.5 Taxation as a Partnership......................................................................27
ARTICLE XI TRANSFER OF INTERESTS..........................................................................27
11.1 Transfer.......................................................................................27
11.2 Transfer to Affiliate..........................................................................27
11.3 Restrictions on Other Transfers................................................................27
11.4 Right of First Refusal to Purchase Membership Interest.........................................27
ARTICLE XII PURCHASE RIGHTS OF PARTNERS.........................................................................28
12.1 Permitted Sale of Project......................................................................28
12.2 Closing........................................................................................29
12.3 Project Failure................................................................................29
12.4 Indemnification................................................................................29
ARTICLE XIII ADMISSION AND WITHDRAWAL OF MEMBERS................................................................29
13.1 Admission of Members...........................................................................29
13.2 Admission of Transferee Affiliate as Successor Member..........................................30
13.3 Withdrawal of Members..........................................................................30
13.4 Amendment of this Agreement....................................................................30
ARTICLE XIV DISSOLUTION AND LIQUIDATION.........................................................................30
14.1 Dissolution....................................................................................30
14.2 Bankruptcy.....................................................................................31
14.3 Liquidation....................................................................................31
14.4 No Distribution in Kind........................................................................32
14.5 Termination of Company.........................................................................32
14.6 Return of Capital..............................................................................32
ARTICLE XV AMENDMENT OF THIS AGREEMENT..........................................................................32
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ARTICLE XVI GENERAL PROVISIONS..................................................................................32
16.1 Addresses and Notices..........................................................................32
16.2 Titles and Captions............................................................................33
16.3 Pronouns and Plurals...........................................................................34
16.4 Construction of Term "Includes.................................................................34
16.5 Exhibits.......................................................................................34
16.6 Further Action.................................................................................34
16.7 Binding Effect.................................................................................34
16.8 Integration....................................................................................34
16.9 Creditors......................................................................................34
16.10 Waiver.........................................................................................34
16.11 Counterparts...................................................................................34
16.12 Applicable Law.................................................................................34
16.13 Invalidity of Provisions.......................................................................34
16.14 Nature of Company Interest.....................................................................35
16.15 Waiver of Partition............................................................................35
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LIMITED LIABILITY COMPANY AGREEMENT
OF
THE TETON CLUB, LLC
This Limited Liability Company Agreement of The Teton Club, LLC is made and
entered into by and between Raintree Resorts International, Inc., a Nevada
corporation ("RRI") and JHSC Properties, Inc., a Wyoming corporation and a
wholly owned subsidiary of Xxxxxxx Hole Ski Corporation ("JHSC"), as the initial
Members and any additional Persons who become Members of the Company in
accordance with the provisions hereof. In consideration of the covenants,
conditions and agreements contained herein, the Members hereby agree as follows:
ARTICLE I
ORGANIZATION OF THE COMPANY
I.1 Formation. The Company is a limited liability company organized under
the provisions of the Delaware Act. The Certificate has been filed with the
Secretary of State of the State of Delaware. The parties to this Agreement are
Members of the Company. The Company will be managed by its Members and no Member
shall be deemed to be a "manager" as such term is defined under the Delaware
Act.
I.2 Name. The name of the Company is, and the business of the Company
shall be conducted under the name of "The Teton Club, LLC" The name of the
Company may be changed from time to time by amendment of the Certificate. The
Company may transact business under an assumed name by filing an assumed name
certificate in the manner prescribed by applicable law.
I.3 Continuation and Term. The Company was formed upon the filing with
the Secretary of State of the State of Delaware of the Certificate for the
Company. The Company shall continue in existence until the close of the
Company's business on December 31, 2049, or until the earlier termination of the
Company pursuant to the provisions of this Agreement.
I.4 Purpose. The Company shall develop and operate the Project on the
Land and sell Fractional Ownership Intervals in accordance with the Development
Plan and take such other actions as the Members determine may be necessary to
complete the Project. The Company may engage in any other lawful business
permitted under the Delaware Act.
I.5 Offices. The registered office of the Company required by the
Delaware Act to be maintained in the State of Delaware shall be the office of
the initial registered agent named in the Certificate or such other office
(which need not be a place of business of the Company) as the Members may
designate in the manner provided by law. The registered agent of the Company in
the State of Delaware shall be the initial registered agent named in the
Certificate or such other Person or Persons as the Members may designate in the
manner provided by Law. The principal office of the Company shall be at 00000
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 or such other
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place as the Members may designate, which need not be in the State of Delaware.
The Company may have such other offices as the Members may designate.
ARTICLE II
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth below. A defined term has its defined meaning throughout this Agreement
and in each exhibit, attachment and schedule attached to this Agreement
regardless of whether it appears before or after the place where it is defined.
"Accepting Member" is defined in Section 12.1.
"Affiliate" means (a) when used with reference to any partnership, any
partnership in which a Member directly or indirectly owns or controls more than
50% of either the capital or profit interests of such partnership, (b) when used
with reference to any corporation or other entity, any corporation or other
entity of which a Member, directly or indirectly, owns or controls more than 50%
of the outstanding voting rights of such corporation or other entity or is a
director, officer or employee of such corporation or other entity and (c) when
used with reference to any individual, any person that is a lineal descendant or
spouse of such individual or is a lineal descendant of such spouse or is a xxxx,
guardian, employer or employee of such individual or such spouse or is a trust
or estate in which such individual owns a more than 50% beneficial interest or
of which such individual serves as trustee, executor or in any similar capacity.
In addition, the term "Affiliate,"when used with reference to any Person, shall
also mean any other Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person. As used in the
preceding sentence, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
decisions and policies of the entity referred to, whether through ownership of
voting securities, by contract or otherwise, and the terms "controlling" and
"controls" shall have meanings correlative to the foregoing.
"Agreement" means this Limited Liability Company Agreement, as it may be
amended or restated from time to time.
"Allocation Regulations" means Treas. Reg. SS1.704-1(b) et seq. as such
regulations may be amended and in effect from time to time and any corresponding
provisions of succeeding regulations.
"Approve,""approved,""approval" or "approved by the Members or the Company"
means to approve or to have been approved expressly in writing by all Members,
which writing may include the duly adopted minutes of any meeting of the
Members, including action taken by unanimous consent without a meeting.
"Assignee" is defined in Section 11.3.
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"Business Day" means any day, excluding Saturdays and Sundays, that is
not a federal holiday.
"Capital Account" means the capital account maintained for a Member
pursuant to Section 6.3 hereof.
"Capital Contribution" means the cash or other property contributed to
the Company pursuant to Section 4.2 hereof.
"Certificate" means the Certificate of Formation of the Company, as
amended.
"Closing Date" means the date on which the Loan is first funded.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, and any successor to such statute.
"Company" means The Teton Club, LLC.
"Defaulting Member" is defined in Section 8.1.
"Delaware Act" means the Delaware Limited Liability Company Act, as
amended.
"Development Plan" means the plan of development of a multi-story
building on the Land, substantially in the form attached hereto as Exhibit
A, which includes (i) design plans for the Project, (ii) a development
budget for the construction phase of the Project allocated by specified
categories, (iii) annual operating budgets for the Project following
completion of construction allocated by specified categories and (iv) a
marketing plan for the marketing and sale of Fractional Ownership Intervals
within the Project, as the same may be revised from time to time. The
Development Plan will be considered complete upon the sale of the last
Fractional Ownership Interval originally owned by the Company.
"Effective Date" means November 3, 1998.
"Election Notice" is defined in Section 11.4.
"Event of Default" is defined in Section 8.1.
"Final Valuation" is defined in Section 4.2(b)(ii).
"Fractional Ownership Interval" means the exclusive right to use a
residential unit of at least 1,400 square feet, together with associated
amenities, for a period of at least three weeks per year.
"Immediate Family Member" means an individual and his or her spouse
and their lineal descendants and the spouses of such lineal descendants.
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"Land" means the tract of land containing approximately 2.0 acres in
Teton Village, Teton County, Wyoming, known as the "Site H-2,"as more
specifically described on Exhibit B attached hereto, subject to matters of
record and an easement to be reserved for ski tram use, operation and
maintenance (including tree trimming) and for skiers to cross the Land from
the ski tram easement, which will be determined by a survey within 90 days
from the date hereof.
"Lender" means the Person or Persons providing the Loan.
"Liquidator" means the Person designated pursuant to Section 14.3
hereof.
"Loan" means the construction loan referred to in Section 5.2, the
proceeds of which will be used to fund the development of the Project.
"Member" means RRI or JHSC and "Members" means RRI and JHSC.
"Membership Interest" means the interest of a Member in the Company.
"Net Agreed Value" means (a) in the case of any property contributed
to the Company, the fair market value of such property reduced by any
indebtedness either assumed by the Company upon such contribution or to
which such property is subject when contributed and (b) in the case of any
property distributed to a Member, the fair market value of such property at
the time of such distribution reduced by any indebtedness either assumed by
such Member upon such distribution or to which such property is subject at
the time of distribution.
"Net Cash Flow" means, for any period, the amount by which (i) Project
Revenues plus (a) amounts taken out of Reserves (whether or not used to pay
Operating Costs), (b) net loan proceeds and (c) Capital Contributions
during such period, exceed (ii) Operating Costs, plus any amounts added to
Reserves, during such period.
"Net Income" means, for any taxable period, the excess, if any, of the
Company's items of income and gain over the Company's items of loss and
deduction for such taxable period, as such items are determined in
accordance with Section 4.3 hereof.
"Net Loss" means, for any taxable period, the excess, if any, of the
Company's items of loss and deduction over the Company's items of income
and gain for such taxable period, as such items are determined in
accordance with Section 4.3 hereof.
"Net Profit Interest" as of the date of this Agreement means (a) as to
RRI, sixty percent (60%), and (b) as to JHSC, forty percent (40%).
"Nonaccepting Member" is defined in Section 12.1.
"Offering Member" is defined in Section 11.4.
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"Operating Costs" means all cash expenditures by or on behalf of the
Company in accordance with the Development Plan, including without
duplication costs and expenses incurred in the operation of the Project,
including, but not limited to, cost of sales, sales commissions, operating
expenses (including management fees pursuant to Section 3.9) and payments
of principal and of interest (including late charges or other penalties or
fees not arising upon the failure to pay when due such principal and
interest if funds were available to make such payments on a timely basis)
made in satisfaction of all current debts and liabilities of the Company,
including the Loan and any principal and/or interest owed to third parties
related to the funding of pre-development costs, taxes (except taxes of a
Member), insurance and maintenance and repairs.
"Other Business Entity" is defined in Section 3.3(y).
"Owners Association" is defined in Section 3.9.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Pre-Development Phase" means that period of time prior to the funding
of the Loan and the start of construction of the Project, during which JHSC
and RRI will work together on preliminary market analysis, coordination of
the design and engineering of the Project, development of the architectural
plans and specifications, establishment of sales and marketing programs,
collateral, locations and personnel, establishment of theme store
locations, and other due diligence and pre-development responsibilities as
are necessary in order to develop the Project.
"Project" means the development of the Land in accordance with the
Development Plan.
"Project Failure" is defined in Section 12.3.
"Project Costs" means the total costs for developing and constructing
the Project, including any offsite requirements for employee housing,
utilities, roads, drainage and the like, except the cost or value of the
Land, the cost of golf memberships and ski privileges and the amount of any
financing fees and interest paid.
"Project Offer" is defined in Section 12.1.
"Project Offer Notice" is defined in Section 12.1.
"Project Purchase Notice" is defined in Section 12.1.
"Project Revenues" means all Company cash actually received from
operations of the Company (including Project Sales Proceeds but excluding
Capital Contributions and loan proceeds).
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"Project Sales Proceeds" means proceeds received by the Company from
sales of Fractional Ownership Intervals in the Project.
"Projected Project Sales Proceeds" means, as of the date of
determination thereof, actual Project Sales Proceeds accrued as of such
date plus projected Project Sales Proceeds for all unsold Fractional
Ownership Intervals in the Project, such determination being subject to
approval by the Members.
"Purchasing Member" is defined in Section 11.4.
"Recapture Income" means any gain recognized by the Company (but
computed without regard to any adjustment required by Section 734 or 743 of
the Code) upon the disposition of any property or assets of the Company
that is not capital gain because such gain represents the recapture of
deductions previously taken for federal income tax purposes with respect to
such property or assets.
"Reserves" means funds retained out of gross receipts of the Company
for working capital and repairs as established by RRI in accordance with a
budget approved by the Members.
"Retail Space" is defined in Section 5.1.
"Right of Refusal Purchase Price" is defined in Section 12.1.
"Transferee Affiliate" means (a) when used with reference to any
partnership, any partnership in which a Member directly or indirectly owns
or controls more than 50% of either the capital or profit interests of such
partnership and (b) when used with reference to any corporation or other
entity, any corporation or other entity of which a Member, directly or
indirectly, owns or controls more than 50% of the outstanding voting rights
of such entity. As used in the preceding sentence, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management decisions and policies of the entity referred
to, whether through ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controls" shall have meanings
correlative to the foregoing.
"Valuation Termination Date" is defined in Section 4.2(b)(i).
"Winding-Up" means the period during which the affairs of the Company
are terminated and the liquidation and sale of the assets of the Company is
accomplished, such process commencing when the Company is dissolved for any
reason.
ARTICLE III
MANAGEMENT AND OPERATION OF THE PROJECT AND THE
COMPANY
6
III.1 Responsibilities and Duties of RRI under the Development Plan. RRI
shall manage and supervise the construction and completion of the Project, as
well as any renovation, improvement, alteration or reconstruction project
carried on by the Company with respect to the Project. Such services shall
include taking bids and negotiating contracts with contractors, reviewing the
plans, specifications and working drawings and generally supervising,
coordinating and managing the construction and completion of the Project. RRI
shall carry out its duties in accordance with (i) the Development Plan, (ii)
good real property development practices and (iii) in all material respects, all
laws and in a diligent, good and workmanlike manner and shall use reasonable
efforts to employ, engage and supervise qualified Persons to assist RRI in the
construction and completion of the Project in accordance with the Development
Plan. Without limiting the foregoing, RRI shall:
(1) use all reasonable efforts to implement the Development Plan as
the same may be amended or modified from time to time after review and
approval by the Members using all reasonable efforts to ensure that the
Development Plan calls for and the Land is developed and Fractional
Ownership Intervals are marketed in compliance with all requirements of
governmental authorities having jurisdiction of the Land;
(2) prepare and present to the Members quarterly (or at more frequent
intervals as a Member shall determine) any changes or amendments to the
Development Plan recommended by a Member and implement any changes to the
Development Plan as may be approved by the Members;
(3) prepare reasonably detailed operating budgets for review and
approval by the Members and, after approval thereof, implement the
operating budgets; provided, however, in the event the Members fail to
approve a proposed operating budget submitted by RRI, RRI shall be
authorized to continue the payment of debt service on liabilities of the
Company, payment of other contractual or legal obligations of the Company
which have been duly authorized by the Members and maintenance of Company
properties and assets under the previously approved operating budget until
a new operating budget is approved by the Members. RRI may make a
modification within the general parameter of categories within an operating
budget, e.g., change one line item in a category to another line in the
same category, provided such modification in no event exceeds ten percent
(10%) of such line item as long as the aggregate changes for all line items
does not exceed $10,000.00; provided, however, RRI may expend funds in
excess of such limitation if such expenditure is necessary to pay any
contractual or legal obligations of the Company which have been duly
authorized by the Members. Any modification in excess of such limitation on
the line item within a category shall require the consent of the Members
unless authorized pursuant to the preceding sentence. For the avoidance of
doubt, cost savings from one line item may not be utilized for another line
item without the consent of the Members unless authorized in accordance
with this subparagraph;
(4) execute contracts, agreements, leases and other documents, by
itself on behalf of the Company, as may be authorized in the Development
Plan or approved by the Members;
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(5) employ or engage Persons to assist in the business of the Company,
including design professionals and consultants, attorneys, accountants,
real restate brokers and sales agents; provided that such employment or
engagement is within the scope of the Development Plan or such retention
and employment has been previously approved by the Members;
(6) coordinate the work of the professionals and others throughout all
phases of the Project from the commencement thereof, through marketing to
the final completion;
(7) bring to the notice of the Members without delay any substantial
or material difficulties or problems relating to the development of the
Project of which RRI becomes aware and which, in the reasonable opinion of
RRI, are likely to cause delay or increase costs, including any item that
might reasonably cause the Company to require additional funds in excess of
those available to the Company;
(8) verify and pay all costs incurred in connection with the Project,
including all Operating Costs, and insure that these costs are in
conformity with the Development Plan; and
(9) coordinate the sales activities for the Project, involving
offering for sale all available Fractional Ownership Intervals in the
Project, in accordance with the Development Plan.
III.2 Management of the Project. Subject to the terms and conditions of
this Agreement, RRI shall be responsible for the day-to-day management,
maintenance and operation of the Project following completion of the Development
Plan, and is authorized to take such steps as are necessary and appropriate to
preserve and maintain, and provide for services to, the Project. RRI shall carry
out its duties in managing the Project in accordance with (i) customary and
reasonable real property management practices and (ii) in all material respects,
all laws and in a diligent, good and workmanlike manner and shall use reasonable
efforts to employ, engage and supervise qualified Persons to assist RRI in the
management of the Project. Without limiting the foregoing, RRI shall perform, or
cause and supervise the performance of, the duties set forth and as limited
below:
(10) use of such executive and administrative staff, on a full- or
part-time basis, as may be reasonably required to provide proper
supervision and management of the Project;
(11) supervise the work of, and, subject to Section 3.3(j), hire and
discharge, employees of the Project, using reasonable care in hiring and
discharging such employees. Such employees shall include all employees
reasonably necessary for the marketing, operation and maintenance of the
Project in a professional manner. All such employees shall be employed by
the Company, but may, if determined by RRI in its reasonable discretion, be
employed by RRI, its Affiliates or a third party hired by RRI;
(12) such ordinary maintenance and repairs to the Project as shall be
required by law and as shall be necessary to maintain the Project in a
professional manner. In connection with such maintenance, RRI is authorized
to purchase such supplies and to make such service contracts as are
necessary and appropriate therefor;
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(13) provide, cause to be provided, or contract to have provided,
electricity, gas, water, telephone, cleaning, repairs, maintenance and
other similar services, to the extent such services are necessary for the
proper maintenance of the Project in a professional manner and otherwise in
accordance with the terms of this Agreement or are required to be furnished
by the Company under any agreement for the sale of a Fractional Ownership
Interval in the Project; provided, however, that all such services rendered
shall be provided in a professional manner;
(14) prepare and file, or cause to be prepared and filed, when due,
all reports relating to the Project required by law, and, in accordance
with Section 10.1, federal, state and local tax returns required to be
filed by or on behalf of the Company or any Member thereof;
(15) notify the Members, promptly after RRI becomes aware of such
occurrence, of any substantial damage to the Project or any material
personal injury or substantial property damage suffered or claimed to have
been suffered by any Person on or with respect to the Project, and about
all summonses, subpoenas and other like legal documents relating to actual
or alleged liability of the Company, RRI or Persons employed by RRI (to the
extent the same affect or are applicable to the Project, the Company or the
performance or nonperformance by RRI or such other Persons of their
obligations relating to the Company or the Project) or the Project,
together with its recommendations with respect thereto;
(16) notify the Members promptly of any information received with
respect to any proposed zoning changes, condemnation proceedings,
environmental actions or laws, requests for easements or sales proposals
and such other matters as shall require the notification or consent of the
Members pursuant to this Agreement;
(17) promptly collect all monies due from owners of Fractional
Ownership Intervals in the Project (including but not limited to dues,
maintenance and management fees) and any sums otherwise due to the Company
with respect to the Project by requesting, demanding (verbally or in
writing, as RRI deems appropriate), collecting, receiving and receipting
for all such charges and instituting legal proceedings in the name of the
Company at law or in equity and at the expense of, or as an expense
reimbursable by, the Company in the collection thereof and for the eviction
of owners of Fractional Ownership Intervals in the Project and other
persons from the Project. All monies received for or on behalf of the
Company shall be and remain in the property of the Company and shall be
deposited in demand deposit accounts to be established by RRI, one or more
of which shall be deemed to be an operating account;
(18) pay promptly when due, and in any event before the date on which
interest and/or any penalty becomes payable with respect thereto, all taxes
on the Project; provided, however, that, to the extent holders of deeds of
trust or mortgages on the Project require the deposit by the Company of
monies with such holders so as to permit such holders to pay taxes on
behalf of the Company, the obligation hereunder shall be to pay, when due,
the required sum to such holder or holders in respect of such taxes;
(19) make all necessary disbursements for payment of debt service in
connection with the Loan;
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(20) use reasonable efforts to cause to be fulfilled, performed and
observed the Company's obligations under the Loan;
(21) maintain at the principal office of the Company, in accordance
with the provisions hereof, accurate and complete books and records in
respect of the Project, including cash receipt and disbursement journals
reflecting all sales of Fractional Ownership Intervals in the Project,
maintenance fees and dues paid by owners of Fractional Ownership Intervals
in the Project and other income received, all costs and expenses incurred
with respect to the Project, all bills received and paid and any and all
other disbursements made with respect to the Project. The original copies,
if available, or photocopies of all notices, requests or other
communications or documents received with respect to the Project shall be
retained. Such records shall be maintained on a current basis and shall be
available for examination by any Member at any time during normal business
hours for a minimum period of four (4) years. All records maintained in
connection with the Project shall be the property of the Company;
(22) coordinate the performance of the Company's obligations under any
agreement for the sale of a Fractional Ownership Interval in the Project
and enforce such owner's obligations thereunder; and
(23) obtain and maintain all insurance relating to the Project.
JHSC shall have no duties or obligations with respect to the
day-to-day management of the Company, except as provided in this Agreement
or the Development Plan. RRI may only be removed from its position as the
Member responsible for day-to-day operating decisions relating to the
Project (i) upon a finding, pursuant to the process set forth in
Section 8.2 hereof, that RRI has been grossly negligent in the performance
of, or has willfully neglected its duties under, this Agreement, (ii) if
RRI is in default under this Agreement beyond the applicable cure period
(if any), except where such default would not be considered material or
(iii) RRI ceases to be a Member. RRI may not delegate any of its
responsibilities, rights or powers under this Agreement except as otherwise
expressly provided herein.
III.3 Matters Requiring Approval of the Members. Notwithstanding the
provisions of Sections 3.1 and 3.2, the following acts or powers of the Company
shall be exercised only with the unanimous consent of all the Members:
(24) granting any lien or other encumbrance on the Land, the Project
or other assets of the Company material to the operation of the business of
the Company or the development, construction or management of the Project
or agreeing to sell the Project in its entirety;
(25) agreeing to pay any fee to any Member or any Affiliate of any
Member, except as described in any agreement approved by all Members;
(26) admitting any additional Member or substituting a Person as a
Member, except as otherwise permitted in this Agreement;
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(27) selling the Project, distributing the Project in kind or leasing
any portion of the Project or Land other than as provided for in the
Development Plan;
(28) selection or discharge of the architect or general contractor for
the Project, approving architectural plans and specifications related to
the design and construction of the Project, approving the contractors who
will perform material portions of the construction of the Project and
approving the contracts of the architects and contractors;
(29) requesting any change in the zoning of the Land;
(30) changing the principal use of the Land in any material respect;
(31) resolving any disputes concerning boundaries of the Property and
the rights of adjoining owners;
(32) amending the Development Plan;
(33) approving key personnel for accounting, management, construction,
marketing and sales positions with the Company, including a project
director and a hospitality director;
(34) approving all advertising materials for the Project, including
sales and marketing brochures and any materials containing the name and/or
logo of "Xxxxxxx Hole."
(35) causing the Company to make payments or reimbursements directly
or indirectly to any Member for the purchase of goods or performance of
services or for any other purpose or permitting or causing the Company to
enter into a contract with or to make any loan to any Member or any
Affiliate of a Member, except as otherwise explicitly provided herein;
(36) permitting any Member to receive any third-party rebate or
give-up or permit any third party to participate in any reciprocal business
arrangements with any Member which would have the effect of increasing the
aggregate amounts otherwise permitted to be paid or reimbursed to any
Member;
(37) except as otherwise expressly permitted hereby, causing the
Company to invest in any program, partnership, joint venture or any other
transaction or arrangement in which any Member has a direct or indirect
material beneficial interest;
(38) permitting the Company to operate in such manner as to be
classified as an "investment company" for purposes of the Investment
Company Act of 1940, as amended;
(39) extending the term of the Company;
11
(40) doing any act in contravention of this Agreement or which would
make it impossible to carry on the business of the Company;
(41) confessing a judgment against the Company in connection with any
threatened or pending legal action;
(42) causing the Company to incur, refinance, renew or extend any
material indebtedness, including the Loan;
(43) approving, except to the extent the actual terms of the Loan are
approved in the Development Plan, the Loan, the provisions of the Loan and
all Loan documents; provided, however, that neither Member shall
unreasonably withhold such approval;
(44) signing any material amendment to, or waiving any material
condition of, any contract relating to the sale of the Project;
(45) distributing or using the proceeds from the sale of the Project
in any manner not consistent with Article VII hereof;
(46) acquiring property or making capital improvements not approved in
the Development Plan;
(47) amending the Certificate;
(48) merging or consolidating the Company with any corporation,
business trust or association, real estate investment trust, common-law
trust, or any other incorporated or unincorporated business entity (an
"Other Business Entity");
(49) converting to an Other Business Entity; or
(50) amending this Agreement.
III.4 Duties on Sale. Upon a determination by the Members to sell the
Project, RRI shall use all reasonable efforts to find a purchaser on the terms
required and/or approved by the Members. Such services shall include offering
the Project for sale, preparing and negotiating all contracts or agreements
relating thereto and generally coordinating all matters in connection with the
sale, provided that the contracts and agreements shall be subject to final
approval by JHSC.
III.5 Reliance by Third Parties. Notwithstanding any other provision of
this Agreement, no Person acting in good faith, including any purchaser of
property from the Company or any other Person dealing with the Company, shall be
required to look to the application of proceeds hereunder or to verify any
representation by RRI as to the extent of the interest in the assets of the
Company that RRI is entitled to encumber, sell or otherwise use. Any such lender
or purchaser shall be entitled to rely exclusively on the representations of RRI
as to its authority to enter into such financing or sale arrangements and shall
be entitled to deal with RRI as if it were the sole party in
12
interest therein, both legally and beneficially. In no event shall any Person
dealing with RRI or its representative with respect to any business or property
of the Company be obligated to ascertain that the terms hereof have been
complied with, or to inquire into the necessity or expedience of any act or
action of RRI or its representative. Each contract, agreement, deed, mortgage,
security agreement, promissory note or other instrument or document executed by
RRI or its representative with respect to any business or property of the
Company shall be conclusive evidence in favor of any and every Person relying in
good faith thereon or claiming thereunder that (a) at the time of the execution
and delivery thereof this Agreement was in full force and effect, (b) such
instrument or document was duly executed in accordance with the terms and
provisions of this Agreement and is binding upon the Company and (c) RRI or its
representative was duly authorized and empowered to execute and deliver any and
every such instrument or document for and on behalf of the Company. Nothing
contained in this section shall reduce, alter or affect RRI's duties and
obligations under this Agreement to the Company or any Member.
III.6 Compensation and Reimbursement of Members.
(51) Compensation. A Member shall not be entitled to receive any
compensation for serving as a Member except as otherwise set forth herein.
(52) Reimbursements. Each Member shall be reimbursed for all
reasonable out-of-pocket expenses, disbursements and advances incurred or
made by it on behalf of the Company to the extent such expenses,
disbursements or advances are consistent with the approved budgets of the
Project contained in the Development Plan. The Company shall not reimburse
any Member for costs incurred by such Member in connection with the
negotiation and preparation of this Agreement.
III.7 Outside Activities; Conflicts.
RRI, JHSC, any Affiliate of either of them and any director, officer,
partner or employee of a Member or any Affiliate of either of them shall be
entitled to and may have business interests and engage in business
activities in addition to those relating to the Company, including business
interests and activities in direct competition with the Company, for their
own account and for the account of others without having or incurring any
obligation to offer any interest in such businesses or activities to the
Company or any Member. Notwithstanding the foregoing, until the earlier of
(i) two years from the date of this Agreement and (ii) such time as
seventy-five percent (75%) of the Fractional Ownership Intervals in the
Project have been sold, the Members hereby agree that they will not
undertake in Teton Village, Wyoming, by any other means, to develop other
real estate projects where the properties being sold are comprised
principally of fractional ownership interests that entitle the purchaser to
the exclusive right to use a residential unit containing at least 1,400
square feet for a period of at least three weeks per year, it being
understood that the foregoing provision shall not restrict the development
and sale by JHSC or RRI of Fractional Ownership Intervals of less than
three weeks, apartments or condominiums. Neither the Company nor any of the
Members shall have any rights by virtue of this Agreement or the
partnership relationship created hereby in any business ventures of any
such Person.
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III.8 Contracts with Members, Affiliates and Third Parties.
(53) Unless approved by the Members pursuant to Section 3.3, a Member
may not itself, nor may an Affiliate of a Member, enter into an agreement
to render services to the Company. Any such services rendered shall be on
the terms that are fair and reasonable to the other Member and that are
comparable to terms that would be charged by third parties.
(54) Unless specifically approved pursuant to Section 3.3, a Member or
any Affiliate thereof shall not sell, transfer or convey any property to,
or purchase any property from, the Company, directly or indirectly, except
pursuant to a transaction the terms of which are fair and reasonable to the
Company and comparable to terms that would be charged by third parties.
(55) RRI may employ or contract with an unrelated third party or an
Affiliate of RRI or JHSC (subject to Section 3.8(a)) to perform any or all
of the services required to be performed by RRI pursuant to this
Article III. Any fees payable to such Person to perform the services
described in this Section shall be payable by the Company.
III.9 Management Fee. As compensation for RRI's project management
services described above, RRI shall receive a fee equal to a 15% of the dues
paid by owners of Fractional Ownership Intervals in the Project to the owners
association for the Project (the "Owners Association"). RRI shall contract with
JHSC or its Affiliates to provide certain of such property management services
(as determined by RRI) for which JHSC (or such Affiliate) will be compensated at
the market rate received by third parties for providing similar project
management services in Teton County, Wyoming. Any expenses which are incurred by
RRI in performing the services described in this Article III shall be paid by
the Company or, if paid by RRI, reimbursed by the Company; provided, however,
that in no event shall RRI be reimbursed for any expenses for which third
parties providing project management services are not being reimbursed under the
terms of standard project management services agreements being entered into in
Teton County, Wyoming.
III.10 Indemnification.
(56) A Member shall not be liable to the Company or any other Member
for any act or omission performed in good faith and in accordance in all
material respects with the provisions of this Agreement based upon errors
of judgment or other fault in connection with the business or affairs of
the Company if the Member's conduct shall not have constituted gross
negligence or willful neglect or misconduct.
(57) To the fullest extent permitted by law, each Member (for all
purposes of this Section 3.10(b) and Section 3.10(c), the term "Member"
shall include the officers, directors, employees, agents and stockholders
of a Member) shall be indemnified and held harmless by the Company from and
against any and all losses, claims, damages, settlements and other amounts
(collectively, "Losses') arising from any and all claims (including
attorneys' fees and expenses, as such fees and expenses are incurred),
demands, actions, suits or proceedings (civil, criminal, administrative or
investigative), in which it may be involved, as a party or otherwise, by
reason of the management of the affairs of the Company performed in good
faith and in accordance in all
14
material respects with the provisions of this Agreement, whether or not it
continued to be a Member or involved in management of the affairs of the
Company at the time any such liability or expense is paid or incurred;
provided that the Member shall not be entitled to the foregoing
indemnification if a court of competent jurisdiction shall have determined
that such Losses resulted primarily from the gross negligence or willful
neglect or misconduct of such Member. The termination of a proceeding by
judgment, order, settlement or conviction under a plea of nolo contendere,
or its equivalent, shall not, of itself, create any presumption that such
Losses resulted primarily from the gross negligence or willful neglect or
misconduct of the Member or that the conduct giving rise to such liability
was not in the best interest of the Company. The Company shall also
indemnify a Member who was or is a party or is threatened to be made a
party to any threatened, pending or completed action by or in the right of
the Company to procure a judgment in its favor by reason of the fact that
such Member is or was an agent of the Company, against any Losses incurred
by such Member in connection with the defense or settlement of such action;
provided that no Member shall be entitled to the foregoing indemnification
if a court of competent jurisdiction shall have determined that any such
Losses resulted from the gross negligence or willful neglect or misconduct
of such Member or a material breach of this Agreement by such Member. The
Company may advance the Member any expenses (including, without limitation,
attorneys' fees and expenses) incurred as a result of any demand, action,
suit or proceeding referred to in this paragraph (b) provided that (i) the
legal action relates to the performance of duties or services by the Member
on behalf of the Company; and (ii) the Member provides a written
undertaking to repay to the Company the amounts of such advances in the
event that the Member is determined to be not entitled to indemnification
hereunder.
(58) The indemnification provided by paragraph (b) of this section
shall not be deemed to be exclusive of any other rights to which a Member
may be entitled under any agreement, as a matter of law, in equity or
otherwise, and shall continue as to a Member who has ceased to have an
official capacity and shall inure to the benefit of the heirs, successors
and administrators of the Member.
(59) Any indemnification pursuant to this Section 3.10 will be payable
only from the assets of the Company.
III.11 Other Matters. Subject to the duties prescribed in Sections 3.1
and 3.2, whenever in this Agreement or any other agreement contemplated herein a
Member is permitted or required to make a decision in its "good faith" or under
another express standard, such Member shall be subject to only such express
standard and shall not be subject to any other or different standards imposed by
this Agreement or any other agreement contemplated herein.
ARTICLE IV
MEMBERSHIP INTERESTS, CAPITAL CONTRIBUTIONS,
DEFICIT LOANS AND OTHER OBLIGATIONS
IV.1 Membership Interests. The Membership Interests of the Company shall
initially be of one class, which shall be referred to herein as Membership
Interests. Except as may otherwise be
15
required by law, no Membership Interest shall have any preferences or relative,
participating, optional or special rights, other than those specifically set
forth herein (as such may be amended from time to time).
IV.2 Capital Contributions. The Members shall contribute to the Company,
in exchange for their respective Membership Interests, the following amounts:
(60) RRI. RRI shall be responsible for the first One Million Dollars
($1,000,000) in cash of costs during the Pre-Development Phase. The amount
of these costs actually paid by RRI in accordance with the Development Plan
will serve as RRI's initial Capital Contribution.
(61) JHSC.
16
(1) As its initial Capital Contribution, JHSC shall contribute to
the Company the Land. The parties agree that the Net Agreed Value of
the Land at any date of determination for purposes of this Agreement
is equal to 7.5% of Projected Project Sales Proceeds as of such date
of determination.
Further, the parties agree that the Net Agreed Value of JHSC's
Capital Contribution shall be adjusted at the end of each calendar
quarter of the Company to reflect any change in Projected Project
Sales Proceeds during that quarter. Such adjustments shall be made
each calendar quarter until such time as JHSC shall have received all
distributions due it pursuant to Section 7.3(c) (the "Valuation
Termination Date"). Any increase or decrease in Net Agreed Value shall
affect the calculation of preferred returns pursuant to Section 7.3(c)
only from the end of the last calendar quarter of the Company.
(2) When the final Fractional Ownership Interval in the Project
is sold, the Net Agreed Value of JHSC's Capital Contribution shall be
adjusted to reflect the valuation of the Land at 7.5% of actual
Project Sales Proceeds (the "Final Valuation"). If on the Valuation
Termination Date, use of the Final Valuation at all relevant times
would have resulted in an increase in the amount of preferred return
to JHSC pursuant to Section 7.3(c), then any distribution to JHSC
pursuant to Section 7.3(e) shall be increased by such amount. If on
the Valuation Termination Date, use of the Final Valuation at all
relevant times would have resulted in a decrease in the amount of
preferred return to JHSC pursuant to Section 7.3(c), then any
distribution to JHSC pursuant to Section 7.3(e) shall be decreased by
such amount.
(62) Additional Equity Contributions--Pre-Development Phase. In the
event the Members agree that the Company, at any time during the
Pre-Development Phase, requires funds in excess of RRI's initial Capital
Contribution pursuant to Section 4.2(a), any such funds, together with any
additional equity required by the Lender as a condition of the Loan, shall
be funded in equal amounts by RRI and JHSC as additional Capital
Contributions. To the extent an amount of permissible additional Capital
Contributions is included in the Development Plan, the Members shall be
deemed to have agreed to fund such amounts equally and no further agreement
by the Members shall be required. RRI shall give notice of any such
additional Capital Contribution to each Member, which notice shall specify
in reasonable detail the purposes for which any such additional Capital
Contributions are to be used. Each Member unconditionally agrees to make
any such additional Capital Contribution on or following the 15th Business
Day following the date on which such notice is mailed. The obligations of
the Members to make additional Capital Contributions as provided herein
shall not inure to the benefit of, or be enforceable by, any Person other
than the Company and the other Member.
(63) Other Additional Equity Contributions. In the event the Company,
at any time after the Pre-Development Phase, requires funds in excess of
the funds otherwise available to the Company (including Project Revenues,
cash receipts from whatever source derived, all Reserves, Capital
Contributions made by the Members and proceeds available to the Company
pursuant to the Loan) to pay Operating Costs, then or reasonably
anticipated thereafter to become due and owing within thirty (30) days, RRI
shall be obligated to make additional Capital Contributions in such
17
amounts as are, from time to time, required to permit the Company to pay
such Operating Costs. The obligation of RRI to make additional Capital
Contributions as provided herein shall not inure to the benefit of, or be
enforceable by, any Person other than the Company and the other Member.
JHSC may, but shall not be obligated to, make additional Capital
Contributions to the Company on the same terms and conditions as shall
apply to RRI.
IV.3 Capital Accounts. The Company shall maintain for each Member a
separate Capital Account. Such Capital Account shall be increased by (i) the
cash amount or Net Agreed Value of all Capital Contributions made by such Member
and (ii) all items of Company income and gain computed in accordance with this
Section 4.3 and allocated to such Member pursuant to Section 7.1 hereof. Such
Capital Account shall be decreased by (x) the cash amount or Net Agreed Value of
all actual and deemed distributions of cash or property made to such Member
pursuant to Sections 7.3(a), (c), (d) or (e), 14.3 or 14.4 and (y) all items of
Company deduction and loss computed as provided in this Section 4.3 and
allocated to such Member pursuant to Section 7.1 hereof. For purposes of
computing the amount of any item of income, gain, deduction or loss to be
reflected in the Members' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including any
method of depreciation, cost recovery or amortization used for this purpose)
subject to such adjustments or other methodologies as may be permitted or
required by the Allocation Regulations as interpreted and applied by RRI,
subject to the approval of JHSC. It is the intent of the Members that the
Capital Accounts of the Members shall be maintained in accordance with and as
provided in the Allocation Regulations.
IV.4 Interest. No interest shall be paid by the Company on Capital
Contributions or on balances in Capital Accounts.
IV.5 No Withdrawal of Capital. No Member shall be entitled to withdraw
any part of its Capital Contribution or its Capital Account or to receive any
distribution from the Company, except as provided in Sections 7.3 and 7.4 hereof
and Article XV.
ARTICLE V
OTHER OBLIGATIONS OF THE MEMBERS
V.1 Obligations of JHSC. JHSC will contribute to the Project, at a charge
equal to $42,000 per each residential unit in the Project, two ski passes per
each residential unit in the Project. The cost of the ski passes for each unit
will be allocated among each Fractional Ownership Interval associated with such
unit. Payment for the allocated cost of the ski passes will be due and payable
to JHSC upon the closing of the sale of each Fractional Ownership Interval. In
addition, the Owners Association will be charged an annual fee of $95,000 for
each year, increased or decreased by a percentage equal to the annual percentage
change, after 1999, in the price of a one-day ski lift pass in Teton Village,
Wyoming, such fee to be allocated among the owners of Fractional Ownership
Intervals. The ski passes are to be made available to the owner of record of
each Fractional Ownership Interval and/or their Immediate Family Members while
they are in residence
18
within the Project. On an annual basis, the designated ski pass users will be
identified by the owner of the Fractional Ownership Interval. These ski passes
will not be transferable to anyone other than the owners of record of the
Fractional Ownership Interval or their Immediate Family Members; provided,
however, the interval use of ski passes will be transferred upon the transfer of
the Fractional Ownership Interval to the new owner of record upon payment of a
transfer fee of $1,000 to JHSC. The Company will administer and account for the
ski pass distribution, which may be audited by JHSC. The ski passes will be
valid for a period of the earlier of 40 years from the initial purchase date of
a Fractional Ownership Interval from the Company or January 1, 2045.
During the Pre-Development Phase of the Project, JHSC will cooperate
with RRI to determine the available key off-site and on-site sales
locations and theme store locations around Teton Village and the town of
Jackson, Wyoming. If the preferred locations are owned or controlled by
JHSC, then JHSC agrees to rent such locations to the Company at reasonable
market rates, on an as available basis, during the marketing phase of the
Project or until January 1, 2001, the use of which (except with respect to
the theme stores) shall be limited to the sale of Fractional Ownership
Intervals.
JHSC will make available to the Company all mailing lists and will
allow for Project advertising in all JHSC corporate mailings. Any mailing
lists will be the property of JHSC and cannot be used for any other purpose
than marketing the Project. Such lists shall be maintained in confidence.
Xxxxxxx Hole Realty shall be the primary offsite real estate company
for purposes of selling Fractional Ownership Intervals in the Project in
accordance with the terms of a written agreement approved by the Members.
It is contemplated by the Members that as part of the Project, a
retail space of approximately 2,000 square feet (the "Retail Space") will
be built. It is agreed by the Members that this Retail Space will be built
at the southeast end of the main Project building. The exact location,
configuration and use of the Retail Space will be mutually determined by
the Members, it being agreed that such use as a restaurant is hereby
approved by the Members. JHSC shall have the right to purchase the Retail
Space from the Company at a price equal to that portion of the cost of the
Land that is proportionate to the Land value contribution made by JHSC.
Additionally, JHSC will pay for the cost directly attributable to the
construction and development of the Retail Space, as well as any additional
Project Costs that are directly attributable to the Retail Space.
V.2 Obligations of RRI. RRI will, upon completion of construction of the
Project, place the Project in the Raintree Owners Club, which will allow the
owners of Fractional Ownership Intervals in the Project exchange privileges with
other Raintree Owners Club Resorts. Exchange privileges will be available and
provided with respect to the existing Raintree Vacation Club properties in
Mexico and Canada, which include the Club Xxxxxx and Whiskey Xxxx properties, as
well as any other Raintree Vacation Club projects owned, acquired or developed
in the United States, Canada or Mexico.
19
RRI will attempt to obtain a commitment to make the Loan by a target
date of February 1, 1999; however, JHSC will participate in the Loan
negotiations and must approve the terms of the Loan. To the extent the
terms of the Loan are within the parameters set forth in the Development
Plan and JHSC has participated in the Loan negotiations, JHSC shall be
deemed to have agreed to the terms of the Loan and no further approval by
JHSC shall be required. If approval by JHSC is required, such approval
shall not be unreasonably withheld. If necessary and only to the extent
necessary to procure the Loan on favorable terms, Raintree Resorts
International, Inc. will provide a guarantee to the Lender in support of
the Loan. If there is additional capital required by the Lender to be
contributed to the Venture in excess of the initial Capital Contributions,
then such additional capital will be contributed by RRI and JHSC on an
equal basis in accordance with Section 4.2(c). Subject to any restrictions
in the Loan, any Capital Contributions may be repaid with the proceeds of
the Loan.
V.3 Ownership of Intervals. Each Member shall be entitled to own one
five-week "gold" level Fractional Ownership Interval at such costs, if any, as
shall be agreed with the Owners Association.
ARTICLE VI
DEVELOPER'S FEE
For services rendered in connection with the development of the
Project, RRI and JHSC shall receive a Developer's Fee to be paid from the
proceeds of the Loan in an amount equal to 4% and 1% of Project Costs,
respectively. To the extent the proceeds of the Loan are not sufficient to
complete the Project and pay all of the Developer's Fees, any remaining
amounts due shall be paid pursuant to the provisions of Article VII hereof.
ARTICLE VII
DISTRIBUTIONS AND ALLOCATIONS
VII.1 Income and Loss. For purposes of maintaining the Capital Accounts
and determining the rights of the Members among themselves, after giving effect
to the special allocations set forth in Section 7.1(c), any remaining Net Income
or Net Loss for any taxable year (or portion thereof) shall be allocated among
the Members as follows:
(64) Net Income. For each taxable year of the Company, Net Income
shall be allocated:
(1) First, to the Members in proportion to the aggregate
distributions made pursuant to Section 7.3(a) in satisfaction of the
preferred return contained therein until the aggregate Net Income
allocated to the Members pursuant to this Section 7.1(a)(i) for the
current and all previous taxable years is equal to the aggregate
distributions made to the Members pursuant to Section 7.3(a) in
satisfaction of the preferred return for the current and all previous
taxable years;
20
(2) Second, to the Members in proportion to the aggregate
distributions made pursuant to Section 7.3(c) until the aggregate Net
Income allocated to the Members pursuant to this Section 7.1(a)(ii)
for the current and all previous taxable years is equal to the
aggregate distributions made to the Members pursuant to Section 7.3(c)
for the current and all previous taxable years, and
(3) Thereafter 60% to RRI and 40% to JHSC.
(65) Net Loss. For each taxable year of the Company, Net Loss shall be
allocated 60% to RRI and 40% to JHSC.
(66) Required Allocations. Prior to making any allocations provided
above, the following required allocations shall be made:
(1) Allocation Regulations. Items of Company income, gain, loss
and deduction shall be allocated as necessary to cause the allocations
provided in this Agreement to have economic effect or, with respect to
nonrecourse deductions, to be deemed to be in accordance with the
Members' interests in the Company, as provided in the Allocation
Regulations. The allocations required pursuant to this Section
7.1(c)(i) are intended to constitute a "qualified income offset" and,
if necessary, a "minimum gain chargeback" as such terms are defined in
the Allocation Regulations.
(2) Curative Allocation. The allocations set forth in Section
7.1(c)(i) (the "Required Allocations") are intended to comply with the
Allocation Regulations. Notwithstanding any other provision of Section
7.1, other than the Required Allocations, the Required Allocations
shall be taken into account in allocating Net Income, Net Loss and
other items of income, gain, loss and deduction among the Members so
that, to the extent possible, the net amount of such items of Net
Income, Net Loss and other items of income, gain, loss and deduction
allocated to each Member pursuant to this Article VII, when taken
together, shall be equal to the net amount of such items that would
have been allocated to each such Member had the Required Allocations
and the curative allocations provided in this Section 7.1(c)(ii) not
otherwise been made.
(3) Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Section 734(b)
or 743(b) of the Code is required, pursuant to the Allocation
Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item
of gain or loss shall be specially allocated to the Members in a
manner consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to the Allocation Regulations.
(67) Allocations upon Winding-Up. After giving effect to the special
allocations set forth in Section 7.1(c), all items of Company income, gain,
loss and deduction recognized by
21
the Company during Winding-Up shall, before adjustment of the Capital
Accounts of the Members to reflect distributions of amounts available for
distribution pursuant to Section 14.3, be allocated among the Members in
such a manner as to cause the balance in the Capital Account of each Member
to be equal to the amount of cash such Member would be entitled to receive
if all Company assets were sold for an amount of cash equal to their
respective fair market values, all Company liabilities were satisfied to
the extent required by their terms and all remaining Company cash was
distributed to the Members in the order and priority set forth in Section
7.3.
VII.2 Tax Allocations.
(68) For federal income tax purposes, except as otherwise provided in
this Section 7.2, each item of income, gain, loss and deduction of the
Company shall be allocated among the Members in accordance with the manner
in which Net Income or Net Loss was allocated as provided in Section 7.1.
(69) With respect to any property of the Company contributed or deemed
contributed at a time when there is a variation between its fair market
value and its tax basis, RRI shall make allocations of gain, loss,
depreciation and cost recovery deductions attributable to such property
pursuant to this Section 7.2(b) and to make any adjustments to Capital
Accounts in any manner consistent with Treasury Regulation Section
1.704-3(c).
(70) All items of income, gain, loss, deduction, credit and basis
allocation recognized by the Company for federal income tax purposes and
allocated to the Members in accordance with the provisions hereof shall be
determined without regard to any election under Section 754 of the Code
that may be made by the Company; provided that such allocations, once made,
shall be adjusted as necessary or appropriate to take into account the
adjustments permitted by Sections 734 and 743 of the Code and, where
appropriate, to provide only Members recognizing gain on Company
distributions covered by Section 734 of the Code with the federal income
tax benefits attributable to the increased basis in Company property
resulting from any election under Section 754 of the Code.
(71) If any Recapture Income results from the sale or other taxable
disposition of a Company asset, the amount of any gain from such
disposition allocated to or recognized by a Member or its successor in
interest for federal income tax purposes pursuant to this Section 7.2 shall
be deemed to be Recapture Income to the extent that such Member has been
allocated or has claimed any deduction directly or indirectly giving rise
to the treatment of such gain as Recapture Income. (72) Each item of
Company income, gain, loss and deduction attributable to a transferred
Membership Interest shall, for federal income tax purposes, be determined
on a monthly or other basis, as required or permitted by Section 706 of the
Code and shall be allocated to the holder of such Membership Interest as of
the close of business on the day preceding the first day of such month or
other period; provided that gain or loss on a sale or other disposition of
all or a substantial portion of the assets of the Company shall be
allocated to the holder of the Membership Interest on the date of sale. RRI
may revise, alter or otherwise modify such methods of determination and
allocation as it deems necessary, to the extent permitted by Section 706 of
the Code and regulations or rulings promulgated thereunder.
22
VII.3 Distribution of Net Cash Flow. For each calendar quarter of the
Company, the Company shall distribute to the Members any Net Cash Flow available
at the end of such calendar quarter, not later than twenty (20) days after the
end of each such quarter, in the following order of priority:
(73) First, to the Members pari passu in proportion to the amounts
funded as additional Capital Contributions pursuant to Section 4.2(d), plus
preferred returns thereon at the rate of 12% per annum; then
(74) Second, if any amount of the Developer's Fees remains unpaid from
the proceeds of the Loan or pursuant to this Section 7.3(b), 80% to RRI and
20% to JHSC pari passu, until each Member's Developer's Fee has been paid
in full, with such amounts treated as guaranteed payments pursuant to
Section 707(c) of the Code; then
(75) Third, in a proportion to be determined on the last day of such
calendar quarter which will be determined by reference to the value of each
Member's Capital Contribution on that date in accordance with Section 4.2,
to JHSC and RRI pari passu, until cumulative preferred returns on each
Member's Capital Contribution at the rate of 12% per annum have been
distributed (taking into account the amounts of any preferred return which
is distributed pursuant to Section 7.3(a)); then
(76) Fourth, to JHSC and to RRI in proportion to the value of each
Member's Capital Contribution determined on the last day of such calendar
quarter in accordance with Section 4.2, until both parties have received an
amount equal to the value of their Capital Contributions determined in
accordance with Section 4.2, valued as of the date of such determination;
then
(77) Fifth, 60% to RRI and 40% to JHSC, such amounts being subject to
adjustment pursuant to Section 4.2(b), pari passu.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
VIII.1 Events of Default. Any one or more of the following events shall
constitute an "Event of Default" under this Agreement:
(78) If a Member (a "Defaulting Member") shall fail to pay, perform or
comply with any obligation imposed upon it under this Agreement; or
(79) If a Member (also a "Defaulting Member") shall fail to pay,
perform or comply with any material obligation imposed upon such Member
(rather than the Company) by any agreement by which the Company or the
Members (in their capacity as such) may be bound; and thereafter, the
Defaulting Member shall fail to cure such failure to pay, perform or comply
within
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thirty (30) calendar days after receiving written notice thereof from the
other Member, or if such failure shall be curable, but of a nature
requiring more than thirty (30) calendar days and less than ninety (90)
calendar days to cure, the Defaulting Member shall fail to commence to cure
such failure within such thirty (30) calendar day period or thereafter
shall fail to continue to correct such failure with due diligence until the
same has been corrected within ninety (90) calendar days.
VIII.2 Remedies. No party to this Agreement shall institute a proceeding
in any court or administrative agency to resolve a dispute arising under this
Agreement before that party has sought to resolve the dispute through direct
negotiation with the other party. If the dispute is not resolved within two
weeks after a demand for direct negotiation, the parties shall attempt to
resolve the dispute through mediation. If the parties do not promptly agree on a
mediator, the parties shall request that the Association of Attorney Mediators
(or a body serving a similar purpose) in Teton County, Wyoming, appoint a
mediator certified by the appropriate governing body of Wyoming. If the mediator
is unable to facilitate a settlement of the dispute within a reasonable period
of time, as determined by the mediator, the mediator shall issue a written
statement to the parties to that effect. Only then may a party to this Agreement
institute a proceeding in a court or with an administrative agency to resolve a
dispute arising under this Agreement. The costs and expenses, including
reasonable attorneys' fees, of the prevailing party in any dispute arising under
this Agreement will be promptly paid by the other party or parties.
VIII.3 Equitable Remedies. In the event of a breach or threatened breach
of this Agreement by any Member, the remedy at law in favor of the other Member
will be inadequate and such other Member, in addition to all other remedies
which may be available to it, and notwithstanding Section 8.2, shall have the
right of specific performance in the event of any breach of the Agreement or
injunction in the event of any threatened breach of the Agreement by the other
Member.
ARTICLE IX
BOOKS, RECORDS AND ACCOUNTING
IX.1 Records and Accounting. RRI shall keep or cause to be kept at the
principal office of the Company such records, in addition to those otherwise
required hereby, as are customary for a project such as the Project and for such
a company. The books of account of the Company shall be maintained in accordance
with the accrual method of accounting.
IX.2 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
ARTICLE X
TAX MATTERS
X.1 Preparation of Tax Returns. RRI shall arrange for the preparation and
timely filing of all returns of Company income, gains, deductions, losses and
other items necessary for federal and state income tax purposes and shall
furnish to the Members such tax information as it
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determines is reasonably required for federal and state income tax reporting
purposes. On a timely basis, JHSC shall review and either approve or comment on
all tax returns prior to their filing. The classification, realization and
recognition of income, gain, losses and deductions and other items shall be on
the accrual method of accounting for federal income tax purposes. The taxable
year of the Company shall be the calendar year.
X.2 Tax Elections. The Members shall determine whether to make or revoke
any available election under the Code.
X.3 Tax Matters Partner.
(80) RRI shall be the Tax Matters Partner ("TMP") as defined in
Section 6231(a)(7) of the Code. If RRI shall cease to be a Member, then
JHSC shall act as the Tax Matters Partner. Except as expressly authorized
by this Agreement, the TMP shall not make any decision or take any action
without the prior authorization of the other Members. The TMP shall cause
each other Member to be treated as a "notice partner" within the meaning of
Section 6231(a)(8) of the Code. The TMP shall notify each Member regarding,
and each Member shall have the right to participate in, (i) any
administrative proceeding relating to the determination of Company items at
the Company level and (ii) any discussions with the Internal Revenue
Service relating to any Company related tax matters. In addition, the TMP
shall provide any Member which so requests with copies of correspondence,
work papers, documents or such other relevant tax related information as
such Member reasonably may request. The TMP shall from time to time upon
request of any other Member confer, and cause the Company's accountants and
tax attorneys to confer, with such other Member and its attorneys and
accountants on any matters relating to a Company tax item, return or
election.
(81) The TMP shall not, except with the prior approval of the other
Members, (i) initiate any action or proceeding or file any pleading, (ii)
compromise or settle any issue, (iii) extend any statute of limitations, or
(iv) take any action contemplated by Sections 6222 through 6232 of the Code
or any other action which may be legally binding on any other Member or the
Company.
(82) No Member shall file, pursuant to Section 6227 of the Code, a
request for administrative adjustment of Company items for any Company
taxable year without first notifying all other Members. If all other
Members agree with the requested adjustment, the TMP shall file the request
for administrative adjustment on behalf of the Company. If unanimous
consent is not obtained within 30 days, or within the period required to
timely file the request for administrative adjustment, if shorter, then any
Member, including the TMP, may file a request for administrative adjustment
on its own behalf.
(83) Any Member intending to file a petition under Sections 6226,
6228, or other sections of the Code with respect to any tax matters
involving the Company, shall notify the other Members of such intention and
the nature of the contemplated proceeding. If the TMP is the Member
intending to file such petition, such notice shall be given within a
reasonable time to allow the other Members to participate in the choosing
of the forum in which such petition will be filed. If the Members cannot
agree unanimously on the appropriate forum, then the TMP shall choose the
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forum. If any Member intends to seek review of any court decision rendered
as a result of a proceeding instituted under this Section 10.3, such Member
shall first notify the other Members in writing of such intended action.
(84) Any Member which enters into a settlement agreement with respect
to any Company items, as defined by Section 6231(a)(3) of the Code, shall
notify the other Members of such settlement agreement and its terms within
90 days from the date of settlement.
(85) The TMP shall not engage on behalf of the Company any legal
counsel, certified public accountants or other consultants or advisors
without the prior approval of the other Members. Any Member may engage
legal counsel, certified public accountants, or others in its own behalf at
its sole cost and expense.
(86) The provisions of this Section 10.3 shall survive the termination
of the Company or the termination of any Member's Interest, and shall
remain binding on the Members for a period of time necessary to resolve
with the Internal Revenue Service any and all matters regarding the federal
income taxation of the Company for any open tax year or years.
X.4 Organizational Expenses. The Company shall elect to deduct expenses
incurred in organizing the Company ratably over a 60-month period as provided in
Section 709 of the Code.
X.5 Taxation as a Partnership. No election shall be made by the Company
or any Member for the Company to be excluded from the application of any of the
provisions of Subchapter K, Chapter 1 of Subtitle A of the Code or from any
similar provisions of any state tax laws.
ARTICLE XI
TRANSFER OF INTERESTS
XI.1 Transfer.
(87) The term "transfer," when used in this Article XI with respect to
a Membership Interest, shall be deemed to refer to a transaction by which a
Member assigns its Membership Interest to another Person and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange and any other disposition.
(88) No Membership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this
Article XI. Any transfer or purported transfer of any Membership Interest
not made in accordance with this Article XI shall be null and void.
XI.2 Transfer to Affiliate. A Member may, after notice to the other
Members, transfer all or any part of its Membership Interest to a Transferee
Affiliate on such terms as such Member, in its sole discretion, shall determine;
provided, however, that the Transferee Affiliate is managed by
26
persons with experience and knowledge comparable to the officers of such Member.
Such Transferee Affiliate shall be admitted to the Company as a Member as
provided in Section 13.2.
XI.3 Restrictions on Other Transfers. Subject to Section 11.4, a Member
or permitted transferee of a Member shall not, directly or indirectly (including
a transfer of stock or other interests), sell, assign, pledge or encumber or
otherwise transfer its Membership Interest to another Person, other than a
Transferee Affiliate ("Assignee"), without the prior express written consent of
the other Member. If the Assignee is not already a Member, it will become a
Member of the respective class in the Company entitled to all the rights and
benefits under this Agreement only if the non-transferring Members consent to
the assignment, which consent or approval may be withheld in the absolute
discretion of such Members. An Assignee who is not a Member shall only be
entitled to distributions to which the assignor would be entitled.
XI.4 Right of First Refusal to Purchase Membership Interest.
(89) Members' Right of First Refusal. At any time after four years
from the date of this Agreement, if any Member (the "Offering Member")
shall propose to sell its Membership Interest, it shall give the other
Member (the "Purchasing Member") written notice of its intention,
describing the price and terms upon which the Offering Member proposes to
sell or otherwise transfer the same, with such price and terms supported by
a written bona fide offer of a third party which is not an Affiliate of the
Offering Member. The Purchasing Member shall then have 10 Business Days
from the date of receipt of any such notice to agree by written notice to
the Offering Member (the "Election Notice") to purchase such Membership
Interest for the price and upon the terms specified in the notice by giving
written notice to the Offering Member. Any sale to the Purchasing Member
pursuant to an exercise of its right of first refusal under this Section
11.4 shall be consummated within 20 Business Days following the 10 Business
Day notice period referred to above in this Section 11.4.
(90) Sale to Third Parties. To the extent the Purchasing Member fails
to exercise in full the right of first refusal under this Section 11.4
within the 10 Business Day period provided in Section 11.4(a), the Offering
Member shall have 90 days thereafter to sell the Membership Interest at the
price and upon terms no more favorable to the purchasers of the Membership
Interest than specified in the Offering Member's notice. In the event the
Offering Member has not sold the Membership Interest within said 90 day
period, the Offering Member shall not thereafter sell the Membership
Interest without again first offering the Membership Interest in the manner
provided in this Section 11.4.
ARTICLE XII
PURCHASE RIGHTS OF PARTNERS
XII.1 Permitted Sale of Project. In the event the Company receives a bona
fide third party offer (the "Project Offer") to purchase the Project, RRI shall
notify the other Member (the "Project Offer Notice") of the receipt of such
Project Offer as soon as reasonably practical following the receipt of the
Project Offer, which Project Offer Notice shall contain a copy of the Project
Offer and
27
a summary of the terms and conditions of the Project Offer. In the event that
one Member (the "Accepting Member") desires to accept but the other Member (the
"Nonaccepting Member") does not desire to accept the Project Offer, the
Nonaccepting Member shall have the right, within ten (10) days of receipt of the
Project Offer Notice, to purchase the Membership Interest of the Accepting
Member. The Nonaccepting Member shall exercise such right by delivering to the
Accepting Member a written notice (the "Project Purchase Notice") stating its
intent to purchase the Membership Interest of the Accepting Member. The
Accepting Member shall sell its Membership Interest to the Nonaccepting Member
for the Purchase Price determined as set forth below. The price of the
Membership Interest of the Accepting Member (the "Right of Refusal Purchase
Price") shall be equal to the amount that the Accepting Member would receive
from the Company if the Company was liquidated, the Project was sold for an
amount of cash and other terms of payment equal to the purchase price for the
Project set forth in the Project Offer, the deemed income, gain, loss and
deduction resulting from such deemed sale was allocated in accordance with
Section 7.1(d) hereof and all of the Company's liabilities were satisfied and
its remaining assets distributed to the Members in accordance with Section 14.3
of this Agreement. The closing of the sale of the Accepting Member's Membership
Interest shall occur as provided in Section 12.2. If the Nonaccepting Member
does not exercise its right to purchase the Membership Interest of the Accepting
Member within the ten (10) day period following the receipt of the Project Offer
Notice, RRI shall accept the Project Offer and endeavor in good faith to sell
the Project to the third party in accordance with the terms of the Project
Offer; provided, that if the purchase price for the Project is reduced by more
than five percent (5%) or other terms of the purchase are materially changed,
the Nonaccepting Member shall again have the right, within ten (10) days of
receipt of notice of such reduced purchase price, to purchase the Membership
Interest of the Accepting Member as provided herein.
XII.2 Closing. The closing of a purchase of an Accepting Member's
Membership Interest pursuant to Section 12.1 shall occur at a location in Texas
or Wyoming designated by the Nonaccepting Member on a date within forty-five
(45) days following receipt of the Project Purchase Notice. At any closing
referred to herein, the Nonaccepting Member shall pay to the Accepting Member
the Right of Refusal Purchase Price and each party shall execute and deliver
such appropriate and customary closing documents, including opinions of legal
counsel, as the other party may reasonably request for the purpose of
consummating the sale.
XII.3 Project Failure. In the event the Pre-Development Phase is not
completed in accordance with the material terms of the Development Plan
("Project Failure"), then JHSC may purchase the Membership Interest of RRI for a
price equal to the then existing balance of RRI's Capital Account. Upon the
occurrence of Project Failure, RRI shall promptly give written notice of such
occurrence to JHSC. JHSC shall then have 10 Business Days from the date of
receipt of any such notice (or 30 days from the date it was required to be
given) to agree by written notice to RRI to purchase RRI's Membership Interest.
Any sale to JHSC pursuant to this Section 12.3 shall be consummated within 20
Business Days following the 10 Business Day notice period referred to above in
this Section 12.3. If JHSC elects not to purchase the Membership Interest of
RRI, then the Company shall be dissolved pursuant to Article XIV hereof. Any
dispute as to the occurrence of Project Failure shall be settled pursuant to the
terms of Section 8.2 hereof.
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XII.4 Indemnification. Upon the closing of any purchase and sale of a
Membership Interest pursuant to this Article XII, the purchasing Member shall
execute an agreement pursuant to which such Member agrees to indemnify and hold
harmless the selling Member from and against any and all claims, demands,
charges, losses, damages, liabilities and obligations arising from the operation
of the Company after the consummation of such purchase.
ARTICLE XIII
ADMISSION AND WITHDRAWAL OF MEMBERS
XIII.1 Admission of Members. On the Effective Date, RRI and JHSC shall
become Members in the Company. A Person, other than an Affiliate of a Member,
may become a new Member of the Company upon (i) receiving the consent of the
then current Members to such admission and to the amount of the Capital
Contribution to be made by such new Member, (ii) making the Capital Contribution
to the Company and (iii) executing an addendum to this Agreement which by its
terms (a) binds such new Member to the terms and conditions set forth herein,
(b) recites the Capital Contribution to be made by such new Member and (c) sets
forth the Membership Interest to be received by such new Member in exchange for
its Capital Contribution.
XIII.2 Admission of Transferee Affiliate as Successor Member. A
Transferee Affiliate shall be admitted to the Company as a Member, effective
immediately prior to such transfer; provided that such transferee shall have
furnished to the other Member acceptance, in form satisfactory to the other
Member, of all the terms and conditions of this Agreement and such other
documents as the other Member shall reasonably request.
XIII.3 Withdrawal of Members. Except following the transfer of its
Membership Interest as provided in Article XII and the admission of such
transferee as a Member pursuant to Section 13.1 or 13.2, a Member may not
withdraw from the Company except with the approval of the other Members.
XIII.4 Amendment of this Agreement. Following the admission to the
Company of any successor or new Member, the Members shall take all steps
necessary and appropriate to prepare and record or file, if necessary, as soon
as practicable an amendment to this Agreement and other filings relating
thereto.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
XIV.1 Dissolution. The Company shall be dissolved upon:
(91) the expiration of its term as provided in Section 1.3;
29
(92) Project Failure and no subsequent purchase of RRI's Membership
Interest by JHSC;
(93) the failure of the Company to obtain funding for the Loan by
May 1, 1999, unless the Members agree to extend this time period; provided,
however, that if the Company is unable to obtain the Loan and the Company
determines to pursue any legal remedies available to it arising as a result
thereof, the Company shall not be dissolved until the Company and any
Member have exhausted all remedies available to them or the matter is
otherwise resolved;
(94) the sale or other disposition of all or substantially all of the
Company's assets unless such sale or other disposition involves the
acquisition of any additional property or any deferred payment of the
consideration for such sale or other disposition, in which event the
Company shall dissolve on the date the last of any such deferred payments
is received by the Company;
(95) the bankruptcy of a Member; or
(96) any other event that, under the Delaware Act, is required to
cause its dissolution.
XIV.2 Bankruptcy. For purposes of Section 14.1, bankruptcy of a Member
shall be deemed to have occurred when (i) it commences a voluntary proceeding,
or files an answer in any involuntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect; (ii) it is adjudged a bankrupt or insolvent, or
has entered against it a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect; (iii) it
executes and delivers a general assignment for the benefit of its creditors;
(iv) it files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against it in any proceeding of the
nature described in clause (i); (v) it seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for it or for all or any
substantial part of its properties; (vi) any proceeding of the nature described
in clause (i) has not been dismissed 120 days after the commencement thereof or
(vii) the appointment without its consent or acquiescence of a trustee, receiver
or liquidator for it or for all or any substantial portion of its properties has
not been vacated or stayed within 90 days of such appointment or is not vacated
within 90 days after the expiration of any such stay.
XIV.3 Liquidation. Upon dissolution of the Company, RRI, or if RRI has
withdrawn or become bankrupt as defined in Section 14.2, JHSC or a Person or
liquidating committee selected by JHSC, shall be the Liquidator. The Liquidator
(if other than RRI) shall be entitled to receive such compensation for its
services as may be approved by JHSC. The Liquidator shall agree not to resign
without 15 days' prior written notice and may be removed at any time, with or
without cause, by JHSC. Upon dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed to
all rights, powers and duties of the original Liquidator) shall within 30 days
be selected by JHSC. The right to appoint a successor or substitute Liquidator
in the manner provided herein shall be recurring and continuing for so long as
the functions and services of the Liquidator are authorized to continue under
the provisions hereof, and every
30
reference herein to the Liquidator shall be deemed to refer also to any such
successor or substitute Liquidator. Except as expressly provided in this Article
XIV, the Liquidator shall have and may exercise, without further authorization
or consent of any of the parties hereto, all of the powers conferred upon RRI
under the terms hereof (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers) to the extent
necessary or desirable in the good faith judgment of the Liquidator to carry out
its duties and functions hereunder for and during such period of time as shall
be reasonably required in the good faith judgment of the Liquidator to complete
the winding up and liquidation of the Company. The Liquidator shall liquidate
the assets of the Company, and shall apply and distribute the proceeds of such
liquidation, unless otherwise required by mandatory provisions of applicable
law, first, to the payment to creditors of the Company, including Members, in
order of priority provided by law and then, following the allocation of Company
income gain, loss and deduction as provided in Section 7.1, to the Members, in
proportion to and to the extent of the positive balances in their respective
Capital Accounts as adjusted to reflect the allocations provided in Section 7.1;
provided that the Liquidator may place in escrow a reserve of cash or other
assets of the Company for contingent liabilities in such amount determined by
the Liquidator to be appropriate.
XIV.4 No Distribution in Kind. Notwithstanding the provisions of Section
14.3, which require the liquidation of the assets of the Company, but subject to
the order of priorities set forth therein, if on dissolution of the Company the
Liquidator determines that an immediate sale of part or all of the assets of the
Company would be impractical or would cause undue loss to the Members, the
Liquidator may, in its absolute discretion, defer for a reasonable time the
liquidation of any assets except those necessary to satisfy liabilities of the
Company, including the Loan, but shall not, under any circumstances, make any
distributions in kind, other than cash or cash equivalents, to the Members
unless agreed to in writing by all Members. Notwithstanding the foregoing, the
Company shall not be terminated until all assets are reduced to cash or cash
equivalents and such cash or cash equivalents are distributed to the Members.
XIV.5 Termination of Company. Upon the completion of the distribution of
Company property as provided in Section 14.3, the Company shall be terminated,
and the Liquidator (and the other Member if necessary) shall take such other
actions as may be necessary or advisable to terminate the Company.
XIV.6 Return of Capital. No Member shall be personally liable for the
return of the Capital Contributions of the other Member, or any portion thereof.
Any such return shall be made solely from Company assets.
ARTICLE XV
AMENDMENT OF THIS AGREEMENT
This Agreement may not be amended without the Approval of all of the Members.
ARTICLE XVI
GENERAL PROVISIONS
31
XVI.1 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to a Member under this Agreement shall
be in writing and shall be deemed given or made when delivered in person or when
sent by United States registered or certified mail, return receipt requested, or
by private delivery service where a receipt for delivery is signed by a
representative of the recipient to the Member at the address described below.
Notices and other communications provided for herein shall be in writing and
shall be delivered or sent as hereinabove provided to the parties at the
following addresses:
If to RRI:
Raintree Resorts International, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx X. Xxxxxx
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxx
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
If to JHSC:
Xxxxxxx Hole Ski Corporation
P. X. Xxx 000
Xxxxx Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxx
with a copy to:
Xxxxx Xxxxx
Xxxxxxx & Xxxx LLP
X.X. Xxx 0000
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
A Member may at any time or from time to time designate, by notice to the other
Member, another address within the United States in lieu of the address
specified herein or in any previous designation pursuant to this sentence. Any
notice to the Company shall be deemed given if received by RRI at the principal
office of the Company.
32
XVI.2 Titles and Captions. All article or section titles or captions in
this Agreement shall be for convenience only, shall not be deemed part of this
Agreement and shall in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to articles and sections of this
Agreement.
XVI.3 Pronouns and Plurals. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
XVI.4 Construction of Term "Includes." The term "includes" and its
derivatives means "includes, but is not limited to,"and corresponding derivative
expressions.
XVI.5 Exhibits. All exhibits attached hereto or referenced herein are
expressly incorporated herein and made a part of this Agreement; provided,
however, that if there is any conflict or inconsistency between the body of this
Agreement and any such exhibit, the provisions of the body of this Agreement
shall prevail.
XVI.6 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
XVI.7 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
XVI.8 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
XVI.9 Creditors. Except as otherwise specifically provided herein or in
any other agreement making a reference to this Agreement, none of the provisions
of this Agreement shall be for the benefit of or enforceable by any creditors of
the Company.
XVI.10 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
XVI.11 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
XVI.12 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware.
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XVI.13 Invalidity of Provisions. If any provision of this Agreement shall
be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
XVI.14 Nature of Company Interest. The Membership Interest of each Member
shall be personal property for all purposes.
XVI.15 Waiver of Partition. Each Member hereby waives any rights to
partition of the Company property.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
3rd day of November, 1998.
RAINTREE RESORTS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President - Chief Investment Officer
JHSC PROPERTIES, INC.
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: President
