ADDENDUM
Exhibit
10.31(b)
ADDENDUM
This
Addendum is dated as of September 1, 2002 by the between heavenly Valley,
Limited Partnership (“HEAVENLY”) and Xxxxxx Xxxxxx (“Executive”).
RECITALS
A. HEAVENLY
and Executive are parties to that certain Employment Agreement dated as of
September 1, 2002 (“Employment Agreement”), whereby Executive agreed to render
certain services and serve in the employ of HEAVENLY under the terms and
conditions provided for in the employment Agreement; and
B. HEAVENLY
and Executive wish to amend certain terms and conditions of the Employment
Agreement as hereinafter provided. All terms not defined herein shall
have the meaning given in the Employment Agreement.
COVENANTS
NOW
THEREFORE, the parties agree hereto as follows:
Should
Executive purchase a primary residence in the greater Lake Tahoe area (the
"Residence"), HEAVENLY shall make a contribution toward the purchase price of
the same up to fifty percent of the purchase price (excluding any personal
property associated with the purchase), not to exceed Six Hundred Thousand
dollars ($600,000.00). Upon making such contribution, HEAVENLY shall hold a
proportionate undivided interest in the Residence in co-tenancy (as "tenants in
common") with Executive. Executive may resell the Residence at his election at
any time during the term of the Employment Agreement by providing HEAVENLY
thirty (30) days advance written notice. Executive agrees to list the Residence
for sale with a real estate brokerage designated by HEAVENLY ("Broker") at a
fair market value ("Listing Price") as Executive and HEAVENLY mutually determine
in their reasonable judgment, which Listing Price may be changed from time to
time with HEAVENLY's consent, which consent shall not be unreasonably withheld
or delayed. Upon any sale or transfer of the Residence, HEAVENLY shall be
entitled to receive its proportionate share of the re-sale price, net of normal
and customary closing costs (e.g. brokers' commission, title insurance premiums,
transfer taxes, etc.) and material home improvements made in excess of Five
Thousand dollars ($5,000) on a non-aggregated basis. For
example:
Executive
purchases the Residence in 2002 for $1,200,000;
HEAVENLY
contributes $600,000;
Accordingly,
HEAVENLY's undivided interest is 50%. Executive sells the Residence in 2005 for
$1,600,000;
Closing
costs equal $120,000;
No
material home improvements made;
Accordingly,
HEAVENLY would receive $740,000 on the re-sale.
Should
Executive undertake any material home improvements or significant remodeling,
not to include ordinary maintenance and repair (e.g. painting, re-carpeting,
etc.) to the Residence in excess of $5,000 (e.g. addition of a spa/jacuzzi),
Executive may deduct the net excess cost of the same from the re-sale price.
Executive shall keep adequate records to verify such expenditures and shall
notify HEAVENLY in writing when any such work is being undertaken. Executive and
HEAVENLY acknowledge that while any material home improvements to the Residence
may increase the value of the Residence, the parties acknowledge that it would
be difficult to attribute any appreciation in the Residence value directly to
any material home improvement(s). Accordingly, due to such uncertainty, the
parties agree that the re-sale price of the Residence and any appreciation
recognized thereby shall only be net of (i) the normal and customary closing
costs and (ii) the expenditures made by Executive for any material home
improvement(s) in excess of $5,000.
As in the
previous example, assume HEAVENLY’s interest is 50%;
Executive
sells the Residence in 2005 for $1,600,000;
Closing
costs equal $120,000;
A $40,000
material home improvement has been made;
Accordingly,
HEAVENLY would receive $720,000 on the re-sale
If the
Residence has not been previously sold or transferred, no later than six (6)
months after the termination of the Employment Agreement for any reason (without
regard to any time period of salary continuation thereunder), Executive agrees
to list the Residence for sale with HEAVENLY’s designated Broker, at a Listing
Price as HEAVENLY and Executive mutually determine in their reasonable judgment,
which Listing Price may be changed from time to time with HEAVENLY's consent,
which consent shall not be unreasonably withheld or delayed. If the Residence
has not sold (and is not under contract with a ready, willing and able buyer)
within one (1) year after being listed, HEAVENLY and Executive shall each retain
an appraiser at their respective expense. The two selected appraisers shall
select one additional appraiser who shall be paid for equally by HEAVENLY and
Executive. Each of the appraisers will prepare an appraisal on the Residence.
Thereafter, HEAVENLY shall have the right to require that Executive buyout
HEAVENLY's interest, in full with good funds, in the Residence by paying
HEAVENLY its proportionate share based on the average of the three appraisals.
For example:
As in the
previous examples, assume HEAVENLY's interest is 50%;
The first
appraisal is $1,610,000;
The
second appraisal is $1,650,000;
The third
appraisal is $1,630,000;
Accordingly,
Executive would purchase HEAVENLY's interest in the Residence for
$815,000.
If
HEAVENLY elects to require that Executive purchase HEAVENLY’s interest in the
Residence, the closing of such transaction shall occur within ninety (90) days
after the three appraisals have been prepared. If HEAVENLY elects not to require
that Executive purchase HEAVENLY’s interest in the Residence, the Residence
shall again be listed HEAVENLY’s designated Broker, at a Listing Price as
HEAVENLY and Executive mutually determine in their reasonable judgment, which
Listing Price may be changed from time to time with HEAVENLY's consent, which
consent shall not be unreasonably withheld or delayed. If the Residence has not
sold with one (1) year thereafter, HEAVENLY and Executive agree to have the
three previously named appraisers update their respective appraisals and
HEAVENLY and Executive shall equally share in the costs thereof. Based on the
average of the three appraisals, Executive shall buy-out HEAVENLY's interest in
the Residence within ninety (90) days after the updated appraisals have been
prepared.
Executive
covenants and agrees to (i) use the Residence as Executive's personal and
primary place of abode, in compliance with all ordinances, covenants and
restrictions governing the Residence, and not lease or rent the same, (ii) keep
the Residence in good order and repair, (iii) insure the Residence for full
replacement value with HEAVENLY named as a loss payee as it interests may
appear; (iv) not mortgage the Residence for more than Executive's proportionate
interest in the Residence based on the total fair market value of the Residence
established by any appraisal obtain at Executive's expense (e.g. using examples
above, Executive's interest would be 50%) and timely and fully perform all
obligations under any mortgage, including without limitation making all mortgage
and escrow payments when due; (v) timely pay or cause to be paid all real
property taxes and other assessments and/or dues affecting the Residence; (vi)
timely pay or cause to be paid all costs for work done in or to the Residence
and keep the same free and clear of all mechanics' or materialmens' liens, and
(vii) not to transfer or sell Executive's interest in the Residence except in
strict compliance with this Addendum. Notwithstanding the foregoing,
HEAVENLY shall pay, as and when due, for its proportionate share of the annual
homeowner's insurance premium attributable to insuring the Residence for full
replacement value, excluding personal property therein and homeowner/personal
liability coverage in excess of $300,000.00, and its proportionate share of the
annual real property taxes for the Residence.
In the
event Executive breaches any of the his promises, covenants or obligations
contained herein, HEAVENLY shall have the right to seek equitable relief,
including without limitation the right to seek specific performance, in addition
to all remedies available to HEAVENLY under the Employment Agreement or pursuant
to applicable State law. In addition, should Executive transfer or sell or
attempt to transfer or sell the Residence in violation of this Addendum,
HEAVENLY shall have the elective right to immediately cause Executive to
purchase HEAVENLY's interest in the Residence based on the average of three
appraisals as provided for above, except that the Residence shall not be
required to be listed for sale for any period of time as a condition
precedent. If HEAVENLY does not make such election, HEAVENLY shall
still receive its proportionate share on the unauthorized resale of the
Residence as otherwise provided for herein.
Executive
agrees to provide his cooperation and cause his spouse to provide her
cooperation should HEAVENLY desire to obtain an agreement from Executive's
lender whereby HEAVENLY obtains the right to receive notice of a mortgage loan
default and the right to cure the same, including redemption rights ("Loan
Default Cure Agreement). In the event Executive as borrower defaults
on any payment or other obligation under Executive's mortgage loan agreement and
related documents, Executive shall be deemed to have breached this Addendum. In
the event of such default HEAVENLY, in addition to the rights HEAVENLY may have
pursuant to the Loan Default Cure Agreement, shall have the elective right to
immediately cause Executive to purchase HEAVENLY's interest in the Residence
based on the average of three appraisals as provided for above, except that the
Residence shall not be required to be listed for sale for any period of time as
a condition precedent. If HEAVENLY cures the Executive's default
pursuant to the Loan Default Cure Agreement, the amount paid by HEAVENLY to cure
such default and any expenses HEAVENLY incurs to cure the default, including
without limitation reasonable attorneys fees and costs, shall be immediately
reimbursed by Executive in addition to the amount paid to purchase HEAVENLY's
interest in the Residence if HEAVENLY elects to cause Executive to purchase
HEAVENLY's interest in the Residence. Any amount paid by HEAVENLY to cure
Executive's default shall accrue interest at the rate of 18% per
annum.
Except in
connection with the sale of the Residence in accordance with this Addendum,
HEAVENLY shall not sell, transfer or otherwise dispose of its interest in the
Residence during the term the Employment Agreement, except (i) to any affiliate
of HEAVENLY which expressly assumes HEAVENLY's obligations under this Addendum,
(ii) in connection with the sale of all or substantially all of the assets of
HEAVENLY in which HEAVENLY's obligations under this Addendum are expressly
assumed by the purchaser of the HEAVENLY assets, or (iii) a result of any
pledge, mortgage, lien or other encumbrance imposed in connection with the
pledge or encumbrance of all or substantially all of HEAVENLY's assets to secure
financing for HEAVENLY and/or its affiliates.
This
Addendum shall be binding upon Executive, his spouse as acknowledged and agreed
below, and the heirs, estate and personal representatives of Executive. This
Addendum shall run with the Residence and shall survive the termination or
expiration of the Employment Agreement. This Addendum may be disclosed to all
persons and entities as necessary to enforce its terms or as may be required by
law, including without limitation proxy statements of HEAVENLY's parent company
or otherwise, and HEAVENLY, in its sole and absolute discretion, may record this
Addendum in the office of the Clerk and Recorder of the county where the
Residence is located.
All other
terms and conditions stated in the Employment Agreement shall remain in full
force and effect. To the extent there is any conflict between the terms of this
Addendum and the terms of the Employment Agreement, the terms of this Addendum
shall control.
IN
WITNESS whereof, the parties have executed this Addendum as of the day first
written above.
Executive: Heavenly Valley, Limited
Partnership
VR Heavenly I, Inc., its general
partner
/s/
Xxxxxx Carrig_______________________ By: /s/ Xxxxxx X. Xxxx
Xxxxxx
Xxxxxx Its:
President
ADKNOWLEDGED
AND AGREEMENT BY Xxxxxx Xxxxxx.
I, Xxxxxx
Xxxxxx, acknowledge that although I am not a party to the Employment Agreement
or this Addendum, I specifically agree that, in connection with any ownership
interest that I may have or hereafter acquire in the Residence, I will be bound
by the terms of this Addendum and agree to cooperate with HEAVENLY and Executive
such that the terms of this Addendum may be fully performed for the benefit of
HEAVENLY.
/s/
Xxxxxx Carrig____________________________Dated:July 28, 2002
