Exhibit 10.17
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement") is entered into as of June
15, 2000 (the "Effective Date") by and between UPK/DMB, LLC, a Delaware limited
liability company ("Company"), United Park City Mines Company, a Delaware
corporation ("UPK") and DMB Park City, LLC, an Arizona limited liability company
("DMB").
RECITALS:
A. UPK is the owner of or has interests in certain real property,
subject to various encumbrances, interests and claims, some but not all of which
are described below in Recitals B and C, which real property is located in:
(i) Summit County, Utah, known as the "Flagstaff Property"
consisting of approximately 1800 acres, which is more particularly described on
Exhibit A attached hereto;
(ii) Wasatch County, Utah, known as the "Bonanza Property"
consisting of approximately 1800 acres, which is more particularly described on
Exhibit B attached hereto;
(iii) Summit County, Utah, known as "Richardson Flats"
consisting of approximately 640 acres, which is more particularly described in
Exhibit C attached hereto; and
(iv) Summit County, Utah, known as "Quinn's Junction"
consisting of approximately 20 acres, which is more particularly described in
Exhibit D attached hereto.
B. UPK is endeavorig to, and will, to the extent set forth in the
Acquisition Election (as defined in the Operating Agreement), exercise best
efforts to acquire all or a portion of:
(i) *****;
(ii) *****;
(iii) *****;
(iv) *****;
(v) *****;
(vi) *****; and
(vii) *****;
C. UPK is endeavoring to acquire, and, to the extent set forth in the
Acquisition Election, will exercise best efforts to acquire, an emergency access
easement over and with respect to a portion of:
(i) *****; and
(ii) *****.
D. UPK is also the owner of certain Water Rights (as defined in the
Operating Agreement) which are necessary for the development of the Properties.
The term "Property" or "Properties" as used herein shall refer to all interests
or rights in the properties described in Recitals A, B, C and D, which UPK
currently owns or subsequently acquires, recognizing, however, that in the case
of Properties subsequently acquired UPK may be entitled to a credit against
Costs incurred by the Company in the acquisition thereof as and to the extent
set forth under the definition of Costs herein or in the Operating Agreement.
E. In anticipation of development of the Properties, UPK has entered
into the following agreements:
(i) Development Agreement for Flagstaff Mountain, Bonanza
Flats, Richardson Flats, the 20 Acre Quinn's Junction Parcel and Iron Mountain
with Deer Valley and Park City Municipal Corporation ("City") dated as of June
24, 1999 ("Development Agreement");
(ii) Deer Valley Settlement Agreement dated November 6, 1992
("Deer Valley Settlement Agreement");
(iii) Exchange Agreement with Park City Star Mining Company,
Inc. dated November __ [undated], 1999 ("Park City Star Exchange Agreement");
(iv) Exchange Agreement with Deer Valley Resort Company dated
March 6, 2000 ("Deer Valley Exchange Agreement");
(v) Settlement Agreement with Park City dated November 6,
1992, concerning the waiver of any requirement for the Project to provide
certain additional water rights ("Park City Settlement Agreement");
(vi) Agreement for Joint Well Development Program with Park
City dated January 14, 2000 ("Joint Well Agreement");
(vii) Memorandum of Understanding Between Park City Municipal
Corporation and United Park City Mines Company Clarifying and Implementing the
Water Service and Water Source Development Provisions of the Development
Agreement dated January 14, 2000 ("Water Memorandum") (collectively, the Park
City Settlement Agreement, Joint Well Agreement and Water Memorandum are the
"Water Agreements"); and
(viii) and any other agreements now existing or hereinafter
entered into by UPK (excluding any water agreements or rights not included in
the definition of Water Rights as stated in the Operating Agreement), which
relate directly to, or provide benefits or services to, the Properties, but only
to the extent reasonably necessary for the development of the Project
(collectively the agreements identified in Recital E are the "Existing
Agreements").
F. Contemporaneously herewith, UPK and DMB have formed the Company and
entered into an Operating Agreement of even date herewith ("Operating
Agreement") which is incorporated herein by reference, whereby UPK and DMB have
become members of the Company. DMB is the Managing Member of the Company
("Managing Member"). The purpose of the Company is to acquire (i) the Properties
or the portions of the Properties (excluding Excluded Property as defined
herein) which are necessary for development as development areas under the
Approved Business Plan, together with such Surface Rights (defined herein) as
are necessary to desirable to serve the proposed development areas, (ii) the
Water Rights and (iii) certain rights, or the right to exercise certain rights,
of UPK under the Existing Agreements which may provide benefits and which are
reasonably necessary to develop the Properties, or to develop a Project on those
portions of the Properties which are not Excluded Property, all as more fully
described in the Operating Agreement.
G. UPK is willing to contribute, to the extent of its rights therein
now owned or hereafter acquired, the Properties, the Water Rights, and any
rights necessary to the development of the Properties under the Existing
Agreements to the Company at the times and on the terms and conditions set forth
herein; provided, however, that UPK is not required to contribute affordable
housing credits or sites acquired from or in connection with other properties of
UPK not included in the Properties.
AGREEMENT:
NOW, THEREFORE, for valuable consideration, including the agreements
contained in the Operating Agreement, receipt of which is hereby acknowledged,
the parties agree as follows:
1. Recitals; Defined Terms, Conflicts. The recitals to this Agreement
are true and correct and are incorporated herein by reference, the exhibits
hereto are incorporated herein by reference. Capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Operating
Agreement. In the event of any conflicts between this Agreement and the
Operating Agreement, the terms of the Operating Agreement shall control.
2. Contribution of the Properties and Surface Rights. Subject to the
Contribution Conditions set forth herein, upon written Contribution Notice
(defined herein) from the Managing Member to UPK, which request shall be
substantially in accordance with the Approved Conceptual Plan and Approved
Business Plan (each as defined in the Operating Agreement) for such Properties
or portions thereof to be developed as development areas or as Surface Rights,
UPK shall contribute:
(a) the Properties or portions thereof specified in such
Contribution Notice (such portions as are contributed from time to time are
called the "Contributed Properties") as are necessary for development of the
Project in accordance with the Phasing Plans to be approved as a part of the
Initial Business Plan and the Initial Conceptual Plan previously submitted to
UPK as the same are refined, including without limitation, the timing of
contributions, by the revised Initial Business Plan and Initial Conceptual Plan
to be presented to UPK by DMB no later than September 1, 2000 for adoption by
the Members and further refined by subsequent Business Plans and Conceptual
Plans for specific developable areas;
(b) Consistent with the Approved Business Plan and to satisfy
governmental requested requirements and where not in conflict with on going
obligations of UPK under present and future permits, easements rights ("Easement
Rights") which consist of non-exclusive easements, licenses, rights of way, or
other surface rights to be specified by the Managing Member on portions of the
Excluded Property which are necessary to provide services and access for the
Contributed Properties to be developed, including without limitation utility
easements, roadway easements, emergency access easements, maintenance easements,
transportation corridor easements for gondolas and other transportation modes,
easements for skiing, hiking, biking and other recreational uses, and for
providing access to recreational properties and facilities, easements for the
transit and retention basins for surface water runoff, easements for parking,
easement for equipment and vehicle and machinery storage and operation, and any
other easements for services or access contemplated or required by the
Development Agreement or as set forth in the Approved Business Plan;
(c) Dedicate to the public or deed restrict or otherwise
restrict by covenants, conditions and restrictions or otherwise as requested by
the Managing Member ("Deed Restrictions") all or portions of the Excluded
Property for rights of way, open spaces, view corridors, hiking, skiing, biking
or other trails and other public uses as required by the Development Agreement
or as a condition of subsequent development approvals or reasonably necessary
for development of the Properties;
(d) The Water Rights or such portion thereof as may be
required in DMB's judgment to develop the Properties to be contributed, and the
other Water Rights subject to the Company's Option as set forth in subsection
(f) below to the extent that the Option is exercised; and
(e) An assignment, right to exercise, other transfer or
conveyance of any rights under the Existing Agreements which may be necessary or
provide benefits or services to the Properties or to develop the Properties
contributed, as contemplated by the Approved Business Plan,
all upon the conditions stated herein. The Easement Rights and Deed Restrictions
are collectively sometimes herein called "Surface Rights." The term "Excluded
Property" as defined in the Operating Agreement means any portion or portions of
the Properties which are designated by DMB to be unacceptable in DMB's sole
discretion because they contain any active or prior mine sites or mining
facilities ("Mine Sites or Facilities"), any waste mine rock, tailings dump or
storage or other materials or areas which may be subject to environmental
concerns ("Mine Waste") or wetlands, protected wildlife areas or other areas not
suitable for development. To the extent that DMB elects to exclude any active or
prior Mining Sites or Facilities, areas known to contain Mine Waste or to have
suspected environmental concerns, and areas of wetlands or protected wildlife
areas from the Properties as Excluded Properties, DMB shall designate the gross
area to be included and excluded from the Properties to be contributed and the
Company shall cause, at the Company's cost, a survey to be prepared of the areas
to be included in each of the Contributed Properties. Each date of a
contribution of the Contributed Properties to the Company shall be a
"Contribution Date." To the extent that Surface Rights and Existing Agreements
are transferred or assigned to the Company, the Company and DMB shall assume
obligations (excluding any environmental obligations or liabilities) that relate
directly and solely to the Surface Rights or Existing Agreements transferred or
assigned, and with respect to obligations which may affect more than the Surface
Rights or Existing Agreements transferred or assigned, will work out the sharing
of obligations (excluding any environmental obligations or liabilities) on a
reasonable basis. Any cost sharing with respect to environmental obligations
will be as set forth in the Protocol. Any Disagreement with respect to sharing
of obligations shall be subject to dispute resolution under Section 5.12 of the
Operating Agreement.
(f) UPK owns certain Water Rights in the Ontario #2 Drain
Tunnel, and hereby grants the Company the exclusive option, to be exercised
within 36 months from the date hereof, to have UPK make available to the Company
in a legally acceptable form for as long as the Company desires as much water
for golf and irrigation use for the Bonanza Property and golf irrigation for the
Richardson Flats Property as DMB shall in good faith deem necessary for the
development, taking into account all relevant factors concerning potential
alternate water rights and sources, including without limitation, the legal
status and cost of alternative sources of water, the cost of such alternative
water rights and water sources, the cost of delivery of water to the Properties
and all other factors which will affect costs and legal certainty as well as the
feasibility of having water rights and water sources when needed for such
properties. The water made available shall include both water rights and source
water and the Option Right may be exercised by written notice from DMB, acting
alone on behalf of the Company, to UPK specifying the quantity of water rights
and water source to which the exercise relates and the term of the exercise. UPK
shall execute any legal documents reasonably necessary to perfect the Option
Right in the Company and if exercised to make available the water rights and
water to the Company. In no event less than 180 days prior to the date for DMB
commencement of water use (the "Commencement Date"), DMB shall notify UPK of the
Commencement Date. At any time prior to the Commencement Date, UPK may lease or
license the water subject to the Option Right; provided, however, that such
lease or license shall not interfere with DMB's Option Right. The Company shall
compensate UPK for the Ontario #2 Drain Tunnel water used by the Company at the
rate of $300 per acre foot per annum, which rate shall be adjusted on the
Commencement Date and annually on each anniversary of the Commencement Date to
equal $300 multiplied by a fraction, the numerator of which is the Consumer
Price Index - All Urban Consumers - All Items - U.S. City Average
(1982-1984=100) published by the United States Department of Labor, Bureau of
Labor Statistics (the "CPI") for the last day of the calendar quarter preceding
the Commencement Date and each applicable anniversary of the Commencement Date
and the denominator of which is the CPI as of the date of this Agreement.
3. Condition of Properties on the Contribution Date. On the date the
Properties are required to be contributed to the Company, UPK covenants that the
condition of the Properties shall be as follows:
(a) Title to the Properties contributed shall be contributed
by UPK subject to no monetary liens or monetary encumbrances ("Monetary Liens")
including property taxes for 1999 and prior years (the Company being obligated
to pay property taxes for 2000 and future years) or other encumbrances approved
by DMB in its reasonable judgment. UPK shall be responsible for any roll back
taxes imposed by any applicable Utah governmental entity on Contributed
Properties for the years 1999 and prior and the Company shall be responsible for
any such roll back taxes applicable to the years from 2000 forward;
(b) Any Mine Sites or Facilities shall have been remediated by
UPK in accordance with a Mine Hazards Protocol ("Mine Protocol") reasonably
acceptable to the Managing Member. The Mine Protocol shall be in addition to any
Mine/Soil Hazard Mitigation Plan ("Mine Mitigation Plan") to be developed by UPK
and delivered to the City for approval as required by the Development Agreement.
Notwithstanding the foregoing, UPK shall deliver a copy of the draft Mine
Mitigation Plan to the Managing Member prior to submission thereof to the City
and the parties shall co-ordinate the two plans to the extent possible, and
shall co-operate in planning and cleanup but with separate obligations as set
forth in the Mine Protocol or the Business Plan. All remediation of Mine Sites
or Facilities shall be done under the Mine Protocol under the supervision of an
independent third party mine consultant ("Mine Protocol Manager") and the
remediation or other management shall be performed by another independent third
party contractor, each of which shall be engaged by UPK, subject to the consent
and approval of DMB. To the extent that any Mine Sites or Facilities are on, or
reasonably adjacent to development areas on Properties to be contributed to the
Company, or on other areas designated by the Mine Protocol or the Business Plan,
such as trails, roads and other areas where routinely people can be expected to
be present as a result of the development of such areas (collectively, the
"Adjacent Properties"), the provisions of both the Mine Protocol and the Mine
Mitigation Plan with respect thereto shall be reasonably acceptable to the
Managing Member and shall provide, at a minimum, that any mine shafts, adits or
tunnels which are open to the surface be capped or otherwise remediated or
managed as provided in the Mine Protocol. The Mine Protocol shall contain
specific sections dealing with the management of capping of the Daly No. 2 shaft
and the removal of the Mining Facilities at the Ontario No. 3 mine complex site.
The cost of remediating Mine Site or Facilities wherever located and whether
under the Mine Protocol or the Mine Mitigation Plan shall be at the sole expense
of UPK, except that the cost of remediation or other management within the
development areas and the Adjacent Properties designated by the Mine Protocol or
the Business Plan shall be allocated as provided therein;
(c) All Mine Waste on the development areas on Properties to
be contributed, and on Surface Rights on Excluded Property where the Company is
granted such Surface Rights, shall be remediated in accordance with a Mine Waste
Remediation Protocol ("Environmental Protocol") to be approved by either the
Utah Department of Environmental Quality ("UDEQ"), the Environmental Protection
Agency ("EPA") or another entity or agency acceptable to both UPK and DMB. The
Company and the Managing Member will co-ordinate the planning and cleanup with
UPK but shall have no obligations for cleanup except for any cost sharing set
forth in the Environmental Protocol. To the extent that the Company produces
clean fill dirt in excess of the amount needed for its development activities in
connection with its construction activities, it will permit UPK or its
independent third party contractor to remove the fill dirt for use in soil caps
under the remediation which is unrelated to the development activities. DMB
shall reasonably co-operate with UPK in trying to minimize UPK's expense in
connection with the use of excess fill dirt and will stockpile the same at
locations within the Contributed Properties where it will have the least impact
on the Company. UPK will pay for that portion of the cost of removing the excess
fill dirt consisting of the actual cost of removal over of the cost, if any,
which the Company, would have incurred to dispose of the excess fill dirt, and
in the case of a Disagreement with respect to such difference in cost, the
matter shall be subject to the dispute resolution procedures under Section 5.12.
All remediation of Mine Waste shall be done under the supervision of an
independent third party environmental consultant ("Protocol Manager") and the
remediation or other management shall be performed by another independent third
party contractor, each of which shall be engaged by UPK, subject to the consent
and approval of DMB. The cost of remediation of Mine Waste located on the
development areas of the Properties to be contributed and the Adjacent
Properties designated by the Environmental Protocol or the Business Plan shall
be borne by the Company, and the cost of remediation for other portions of the
Excluded Property shall be borne by UPK except as otherwise provided in the
Environmental Protocol with respect to cost sharing obligations assumed by the
Company related to development activities as further provided in the
Environmental Protocol. The Mine Protocol and the Environmental Protocol are
collectively referred to herein or in the Operating Agreement as the "Protocol";
(d) In the event that any Mine Waste or Mine Sites or
Facilities are discovered on Contributed Properties after contribution to the
Company, UPK shall engage an independent contractor to remediate the conditions
in accordance with the Mine Protocol or the Environmental Protocol, as
applicable, using the same Protocol Manager for Environmental Protocol matters,
and the cost of such remediation shall be shared as set for in the Protocol;
(e) UPK shall have obtained, and caused the Properties (other
than the Contributed Properties) to be in compliance with, and continue to be in
compliance with, any permits required with respect to storm or other water
runoff from or through the Properties or the retention of such water on site,
from the UDEQ, EPA or any other applicable agency and any plans adopted as part
of obtaining or complying with such permits, including, without limitation, the
drainage plan required by the City under the Development Agreement. The Company
shall be responsible for obtaining such permits with respect to the Contributed
Properties. No plan shall be adopted which contemplates that any surface water
runoff from the Properties be collected or directed through any Contributed
Properties which are to be development areas in excess of historical flows other
than as agreed by both Members;
(f) UPK shall have obtained and be in compliance with any U.S.
Corp of Engineers 404 permit or other federal or state permits required, and any
other applicable regulatory requirements, required to mitigate or remediate any
Mine Sites or Facilities or Mine Waste; and
(g) UPK shall be in compliance with the terms of the Existing
Agreements to the extent that failure to be in compliance would or might affect
the ability of the Company to develop the Contributed Property for the purpose
for which such property is intended; except to the extent that the obligations
are specifically assumed by the Company as specified in Section 2(e).
4. Form of Transfer. All instruments of conveyance, transfer,
assignment or Deed Restriction shall be in a form and substance acceptable to
the Managing Member and shall be in the following forms:
(a) Properties to be contributed for development shall be
conveyed to the Company by special warranty deed subject to no exception other
than those permitted by this Agreement or the Operating Agreement or shown on
the Title Report (excluding Monetary Liens) and approved by DMB under Section 11
of this Agreement. Any such conveyance shall exclude all mineral rights, surface
and subsurface water rights, and any surface or subsurface mining tunnels,
shafts, adits, portals and other mine workings. In cases where mineral rights
are excluded from a conveyance, UPK shall sign a separate agreement in
recordable form acceptable to DMB and the Title Company, in which UPK shall
waive any right of surface entry in connection with any remaining mineral rights
and shall covenant to provide surface support for any subsurface mining
activities;
(b) All instruments of dedication to the public or granting
Surface Rights on the Excluded Property shall be in such form and shall be
denominated as the Title Company or applicable governmental agencies shall deem
appropriate to provide sufficient rights in the Excluded Property for the
purpose for which the contribution is sought keeping in mind that the Company
does not wish to own title or other rights to any portion of the Excluded
Property in any fashion which might subject it to any environmental liability;
(c) Any rights under the Existing Agreements which may be
necessary to give the Company the right to develop the Properties shall be in
the form required to provide such rights or to allow the Company to exercise
such rights in the name of UPK without, in each case, requiring the Company to
assume obligations of UPK under the Existing Agreements except those obligations
which directly relate to the right being transferred to the Company; and
(d) The Water Rights shall be transferred free and clear of
all liens and encumbrances except as otherwise created by the documents giving
rise to such rights and the Water Agreement, by any documents, instruments or
filings customarily executed or made to transfer Water Rights of the type and
kind involved.
5. Contribution Notice. When the Managing Member desires to have UPK
contribute Properties to the Company or to grant Surface Rights, the Managing
Member shall:
(a) Give UPK written notice ("Contribution Notice") of the
Properties to be contributed or the Surface Rights required, together with a
specific identification by legal description of the real property which is the
subject of such notice unless the required easement is temporary or is not
subject to precise definition because a blanket easement, surface right or Deed
Restriction is required or the precise location cannot be determined until a
later time in which case a general description of the desired area shall be
included, and the nature of any remediation under the Mine Hazard Protocol or
the Environmental Protocol, and the date or approximate time a contribution is
required as set forth in subsection (b) below.
(b) Give UPK 30 days written notice of a required contribution
with respect to Properties to be contributed upon which no Mine Site or
Facilities or Mine Waste remediation is required. With respect to Properties to
be contributed where remediation is required under the Environmental Protocol,
UPK shall endeavor to enter into a contract which will require the independent
contractor to commence and to diligently proceed to complete the remediation
promptly in accordance with the time frames set forth in the written notice of
contribution or under the Business Plan and require the Protocol Manager to
certify to UPK, DMB and the Company that the remediation has been completed in
accordance with the Environmental Protocol ("Protocol Certification"). UPK does
not guarantee any remediation times but UPK will exercise reasonable diligence
to supervise the independent contractor and shall contractually require that
such remediation shall be accomplished within such time frames after
notification to the contractor unless the contractor can demonstrate that a
longer time is required because of force majeure or other factors beyond his
control ("Remediation Time"). The Properties to be contributed by UPK shall be
contributed within ten day after receipt of the Protocol Certification by UPK,
DMB and the Company.
(c) Not less than 15 days prior to the required date of
conveyance or transfer, the Company shall furnish the exact form of instrument
of conveyance, assignment, easement, surface rights, dedication or Deed
Restriction required by the Managing Member and subject to the reasonable right
of UPK to reasonably object to any such instrument which is not consistent with
this Agreement or the Operating Agreement; UPK shall deliver the required
instrument, duly executed and acknowledged, where necessary, on the required
date.
6. UPK Contribution Conditions. UPK's obligation to contribute the
Properties or grant Surface Rights shall be subject to the following conditions
precedent ("Contribution Conditions"):
(a) UPK shall have received a written Contribution Notice from
the Managing Member; and
(b) Such Contribution Notice shall require contributions as
are permitted or required under the then Approved Business Plan and the then
Approved Conceptual Plan for the Properties to be contributed.
7. UPK Covenants. Recognizing that the ability of the Company to
develop the Properties to be contributed is, and the Surface Rights may be,
dependent on actions taken or not taken, and the fulfillment of obligations, by
UPK both before and after the contribution with respect to the Properties, and
compliance with the Existing Agreements, over which the Company and DMB have no
control, UPK covenants and agrees with the Company and DMB as follows:
(a) To exercise reasonable due diligence to cause the
independent contractor pursuant to the contract to be entered into to remediate
Mining Sites or Facilities and Mine Waste in accordance with the Mine Protocol
and the Environmental Protocol, in each instance in accordance with the
requirements thereof and within the Remediation Time frames so as to not delay
the development of the Contributed Properties or Surface Rights;
(b) To (i) use good faith efforts and reasonable diligence to
obtain when required to perform activities under the Business Plan, and (ii)
thereafter keep in force and comply with, all permits and other regulatory
requirements which are needed, required or triggered by remediation of Mine
Sites or Facilities, Mine Waste or to comply with the Existing Agreements, the
Environmental Protocol, the Mine Protocol, the Mine Mitigation Plan, or any
other plan required to be adopted and approved under the Existing Agreements, or
otherwise required by federal or state laws, rules or regulations, except as
such obligations are assumed by the Company under the Protocol;
(c) To use good faith efforts and reasonable diligence prior
to contribution of Contributed Properties or Surface Rights to the Company (and
thereafter with respect to Excluded Property and Surface Rights unless, in the
case of Surface Rights such obligations are expressly assumed by the Company in
connection with the contribution as stated in Section 2(e)) to comply with all
federal or state laws which would or may affect the development by the Company
of the Contributed Properties or Surface Rights;
(d) Except as otherwise provided in the Operating Agreement,
not to amend, modify or waive rights under the Existing Agreements without the
reasonable consent of DMB, where such action might affect the development of the
Contributed Properties or Surface Rights or to transfer the Properties or
Excluded Properties to any person or entity which is not approved by DMB and
which does not agree to accept and perform all of the obligations of UPK under
this Agreement with respect to the contributed properties and Excluded
Properties;
(e) Subject to the right of DMB to exercise reasonable
approval rights, not to enter into any new agreements which would be binding
upon the Company or the Properties to be contributed or the Surface Rights, or
which would create obligations which must be satisfied by either UPK or the
Company prior to, during or after development of the Properties to be
contributed or the Surface Rights;
(f) To utilize good faith efforts to acquire marketable title
to the ***** Property, the ***** Fractions and the ***** Properties prior to
December 31, 2000, and thereafter to the extent such Properties are specified as
ones which UPK will acquire in the Acquisition Election to exercise best efforts
to acquire such ***** Property, the ***** Fractions and the ***** Properties if
no Voluntary Termination Date has occurred;
(g) To cause a water and sewer line and dry utility lines or
pipes for gas, electricity, telephone and cable to be installed in accordance
with plans and specifications, and by an independent contractor, each approved
by the Company up Empire Canyon sufficient in size to provide services to the
Project. The sharing of costs between the Company and UPK for the installation
of the line or pipes and the costs of any remediation of Mine Waste occasioned
by such installation shall be as set forth in the Protocol;
(h) Subject to reasonable approval rights of the Managing
Member, to exercise good faith and reasonable efforts to negotiate an agreement
for a non-potable water supply for the development of the Bonanza Property in
accordance with the Approved Business Plan to be implemented at the Company's
expense;
(i) Not to apply for any change in zoning or entitlements for
the Properties without the written consent of the Managing Member;
(j) To complete the transfer of properties to Deer Valley as
contemplated in the Settlement Agreement, with the reasonable prior consent and
approval of DMB as to the actual properties to be conveyed to Deer Valley;
(k) To engage a contractor to construct a runaway truck ramp
("Runaway Truck Ramp") on SR 224 at a location and in accordance with plans to
be approved by the City or the other Utah governmental agency accepting the ramp
and DMB, including any required remediation of Mine Wastes or hazardous
substances to level required by the accepting governmental agency, with the
costs of such construction to be borne by the Company and the cost of any
remediation to be shared as provided in the Protocol; and
(l) To use good faith efforts and reasonable diligence to
acquire utility easements from Deer Valley across its property to provide
service to the Properties, and to acquire a roadway easement for the purpose of
widening SR 224 at locations approved by the City or Utah Department of
Transportation.
8. Escrow. Promptly after the Effective Date of this Agreement, the
Company and UPK shall establish an escrow (the "Escrow") with Coalition Title
Agency, 2200 Park Avenue, Suite C-100, Park City, Utah 84060, attention Diane
Zimney with ("Escrow Agent") for the purposes of handling the transfer of the
Properties from UPK to the Company.
9. Planning Submittal Authorization. During the term of this Agreement
and subject to any limitations set forth in the Operating Agreement, UPK hereby
irrevocably authorizes and appoints the Company as UPKs exclusive agent to
obtain all planning, rezoning and development rights authorizations and
entitlements required to permit the development of the Properties but only in
accordance with the Approved Conceptual Plan and Approved Business Plan for a
particular Property set forth in Sections 5.4 and 5.5 of the Operating
Agreement. Notwithstanding the appointment of the Company as agent for UPK
under, and subject to Section 5.9 of, the Operating Agreement, UPK shall execute
all formal applications for such authorizations and entitlements at the request
of DMB.
10. Survey. As provided in Section 2 above, upon determination of the
Excluded Property areas, the Company at its sole expense shall provide UPK and
Escrow Agent with a current survey or surveys (the "Survey") of the Properties
or each of the Properties as contributed, excluding the Excluded Property
sufficient for the issuance of an extended coverage owner's policy of title
insurance. The Survey shall be prepared by a land surveyor or civil engineer
licensed in the State of Utah.
11. Title Review. As soon as reasonably possible after delivery of the
Survey, and not later than September 1, 2000, the Company shall cause Escrow
Agent to deliver to the Company and DMB, with a copy to UPK, a current
preliminary title report (the "Title Report") from a Title Insurer approved by
DMB ("Title Insurer") for the Properties leading to the issuance of an extended
coverage owner's policy of title insurance for the Company with such
endorsements as DMB may require, together with legible copies of any matters
typed on the Title Report as exceptions to or affecting title to the Property.
Any costs involved in obtaining such Title Report shall be a due diligence cost
of DMB. DMB, acting on behalf of the Company, shall have thirty (30) days from
receipt of the Title Report (and all required copies of matters affecting title)
to object, in its reasonable discretion, by notice to UPK and Escrow Agent to
any matter affecting title shown on the Title Report which is not expressly
permitted by this Agreement or the Operating Agreement. No title policy or
report obtained by or furnished to DMB prior to the date of this Agreement, or
any other knowledge of title matters with respect to the Properties obtained by
DMB prior to the date of this Agreement, shall in any way waive, estop or
otherwise prevent DMB from objecting to a matter shown upon the Title Report
even if such matter shall have appeared on a title report or policy received by
DMB prior to the date of this Agreement or the Title Report, or have been
otherwise known by DMB prior to the date hereof or of the Title Report. If any
amendment or supplement ("Amendment") to the Title Report is issued (except to
remove matters previously objected to by DMB), a copy thereof shall be promptly
delivered by Escrow Agent to the Company and DMB, with a copy to UPK, together
with a legible copy of any new matter referred to therein. DMB, acting on behalf
of the Company, shall have ten (10) days after receipt of any such amendment or
supplement (and any required copies), or until the Contribution Date, whichever
first occurs, to object by notice to UPK and Escrow Agent. Any objection by DMB
under this Section shall describe in reasonable detail the objectionable matter
and the reason(s) why it is objectionable. UPK may elect, but shall not be
required, to cure any matters objected to by DMB as provided herein, except that
UPK shall remove any Monetary Liens which are objected to herein and UPK shall
remove any item placed upon the Properties in violation of Section 16(c). If UPK
fails to cure any matter objected to by DMB, DMB may elect, as its exclusive
remedy for UPK's failure to cure an objectionable matter, to (i) waive its
objection by notice to UPK and Escrow Agent, and the Properties shall be
contributed to the Company on the Contribution Date subject to such
objectionable matters, (ii) terminate this Agreement as of December 31, 2000
under the Operating Agreement as a Title Termination by giving notice on or
before January 11, 2001, with the right to obtain a Termination reimbursement,
or (iii) terminate the Contribution Notice and elect not to have the Company
acquire any Properties subject to such objectionable matters by notice to UPK
and Escrow Agent; provided, however, that no remedy elected by DMB shall result
in a reduction of UPK's Capital Account. If DMB fails to object to any matter
set forth in the Title Report or in any amendment or supplement thereto within
the time periods prescribed in this Section but no later than December 31, 2000,
the Company shall be deemed to have accepted such matters; provided, however,
that if further Amendments are issued after December 31, 2000, then DMB shall
have the right to object to any further matters shown therein which it considers
objectionable, but in the absence of an election by UPK to cure the objection,
DMB may elect, as its sole remedy for UPK's failure to cure such objectionable
matter, to waive the objection or terminate the Contribution Notice but only
with respect to the affected Property to which the objection relates.
12. Title Insurance. In connection with the contribution of the
Properties to the Company, Escrow Agent's Title Insurer shall be unconditionally
committed to issue to the Company an extended coverage owner's policy of title
insurance in an amount equal to at least the amount credited to the Capital
Account of UPK under the Operating Agreement or such larger amount as the
Managing Member may request, with such reinsurance or co-insurance as the
Managing Member may require. The title insurance policy shall insure title to
the Contributed Properties and any interest in Surface Rights in the Company
subject only to the usual conditions and stipulations appearing in the printed
form of policy and matters typed on the Title Report (and any amendment or
supplement thereto) and not objected to in a timely manner or waived by the
Managing Member as provided herein, together with such endorsements are the
Managing Member may require. The Company shall pay the premium for the extended
coverage owner's policy and any endorsements.
13. Development Submissions. UPK shall cooperate fully with DMB and the
Company and work together to gather and prepare all necessary documents,
reports, and applications for submission to the City, or other governmental
authority, in connection with any proposed zoning and other approvals required
for the development of the Properties including any related zoning stipulations
or development standard modifications provided the same are consistent with the
Initial Conceptual Plan or the Conceptual Plan for a particular Properties.
14. Planning and Studies. The Company, DMB, their contractors and
agents shall have the right to enter upon the Properties at all reasonable times
prior to the contribution of the Contributed Properties or Surface Rights to the
Company for the purpose of inspecting the Properties and making, preparing and
obtaining any tests, surveys or studies the Company or DMB may desire,
including, but not limited to, drainage, percolation and soils tests and
studies, environmental studies, and other engineering or archaeological tests
and studies and activities relating to any Environmental Protocol or Mine
Protocol adopted with respect to the Properties. The Company shall defend,
indemnify and hold UPK harmless for, from and against any claims, demands,
actions, liabilities and obligations (including, but not limited to, mechanics'
and materialmen's liens) arising from any exercise of the rights granted the
Company under this Section. If the Properties are not contributed to the Company
for any reason, the Company shall promptly restore the Property to its condition
prior to any such testing and inspection and the Company shall, upon request,
provide the originals or copies of all tests and studies to UPK.
15. Information. Promptly following the Effective Date of this
Agreement, UPK shall provide DMB copies of all requested information within the
possession or control of UPK regarding the Properties including, but not limited
to, any survey, preliminary and final plats, engineering plans, drawings and
specifications for on-site or off-site improvements, soils tests, archeological
reports, environmental assessments, reports on water and utility availability
and quality, tax assessment records, and zoning applications and stipulations.
If any such information comes into the possession or control of UPK after the
Effective Date of this Agreement, UPK shall promptly provide copies of such
information to DMB. UPK makes no representation or warranty regarding the
information and materials provided to DMB pursuant to this Section except that,
to the best of UPK's actual knowledge, the copies provided to DMB are genuine.
16. Representation and Warranties.
-----------------------------
UPK represents and warrants to and covenants with the Company
and DMB that:
(a) UPK has full power and authority to enter into and perform
this Agreement according to its terms and has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Agreement.
(b) The individual executing this Agreement on behalf of UPK
is authorized to do so and, upon his execution hereof, this Agreement
shall be binding upon and enforceable against UPK in accordance with
its terms.
(c) Following the Effective Date of this Agreement, UPK will
not cause any matter, and will use good faith efforts and reasonable
diligence not to permit (but without being required to spend material
amounts of money to do so), any matter which it has the power to
prevent to arise or be imposed upon the Properties which materially and
adversely affects title to the Properties.
(d) UPK, as of the Effective Date, has no actual knowledge of
any pending, and has received no written notice of any threatened or
contemplated claims or litigation affecting the Properties except as
set forth on Exhibit G attached hereto or referred to elsewhere in this
Agreement or the Operating Agreement.
(e) UPK has not, and will not prior to the date of
contribution of the Properties to the Company, granted leases and other
rights to possession, or rights to purchase the Properties to any third
party except for the Deer Valley Settlement Agreement, and any existing
leases to Deer Valley.
(f) Except as specifically set forth on Exhibit H attached
hereto, UPK, as of the Effective Date, has not received notice from any
governmental or other agency of any violation of any laws, ordinances,
governmental rules or regulations with respect to the Properties, and
has no actual knowledge of any proposed condemnation, exercise of
eminent domain, or proposed or pending assessments with respect to the
Properties other than normal real estate taxes.
(g) There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorships, or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor
relief laws contemplated by UPK or filed by or against UPK or pending
in current judicial administrative proceeding against UPK.
DMB represents and warrants to and covenants with UPK that:
(h) DMB has full power and authority to enter into and perform
this Agreement according to its terms and has taken all necessary
limited liability company action to authorize the execution, delivery
and performance of this Agreement.
(i) The individual executing this Agreement on behalf of DMB
is authorized to do so and, upon his execution hereof, this Agreement
shall be binding upon and enforceable against DMB in accordance with
its terms.
(j) DMB acknowledges that the acquisition of the Property by
the Company shall constitute its acknowledgment that it has
independently inspected and investigated the Property. DMB has or will
employ such independent attorneys, architects, engineers, and
contractors of DMB's own choice as it deems necessary to advise DMB on
the suitability of the Properties for the Company's proposed
development of the Properties. The Company and DMB shall accept the
Property "AS IS", subject only to the specific representations and
warranties and covenants set forth in this Agreement except for any
warranties in the deed conveying the Properties to the Company.
(k) There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorships, or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor
relief laws contemplated by DMB or filed by or against DMB or pending
in current judicial administrative proceeding against DMB.
The foregoing representations of UPK and DMB shall be true and correct
as of the Effective Date and as to subsections (a), (c), (e), (h), (j), and (k)
shall remain true as of the Contribution Date of each of the Contributed
Properties. The representations, warranties, and covenants of DMB and UPK
contained in this Section shall survive the contribution of each of the
Properties to the Company for a period of six months.
If UPK obtains actual knowledge of any material change in the
statements made by UPK set forth above after the Effective Date (whether arising
before or after the Effective Date), UPK will give prompt notice to DMB. If DMB
obtains actual knowledge of any material change in the statements made by DMB
set forth above after the Effective Date (whether arising before or after the
Effective Date), DMB will give prompt notice to UPK. Any breach of
representation by a party shall become a Performance Default as defined in the
Operating Agreement after a Notice of Default as defined in the Operating
Agreement if not cured within the Cure Period or contested as provided in
Section 5.12 of the Operating Agreement.
17. Defaults. In the event that a party hereto ("Non-Defaulting Party")
shall believe that another party hereto ("Defaulting Party") is in
non-compliance or default of its obligations hereunder, the Non-Defaulting Party
may send the Defaulting Party a Default Notice as set forth in the Operating
Agreement. All procedures for responding to Default Notices, all dispute
resolutions procedures for Disagreements, and all remedies under the Operating
Agreement for Performance Defaults shall be applicable to breaches of this
Agreement.
18. Dispute Resolution. In the event of any disputes or disagreements
under this Agreement with respect to the compliance with or interpretation of
this Agreement by a party, any party hereto may require the parties to resolve
the dispute through the Disagreement Resolution procedures set forth in Section
5.12 of the Operating Agreement except that in connection with any dispute or
disagreement involving the failure to comply with or interpretation of any
Environmental Protocol, Mine Hazard Protocol, Mine Mitigation Plan or other
environmental issues, the Facilitator shall have the authority to employ an
environmental consultant having at least 10 years experience in the field of
environmental mining problems to assist him with technical matters.
19. Commissions. Each party warrants and represents to the other that
no real estate sales or brokerage commissions, finders fees or similar payments
are or will be due in connection with this transaction, as the result of any
act(s) of the party so representing, however, the parties acknowledge that a
commission may be claimed by Brown Realty in connection with a Four Seasons
Hotel if one is incorporated into the Project, which if incurred would be a
project cost. Except for the Brown Realty matter, each party shall defend,
indemnify and hold the other harmless for, from and against any claims by third
parties, made as a result of any act(s) of the party so representing, for real
estate sales or brokerage commissions, finders fees or similar payments in
connection with the transactions provided for herein, and all costs and expenses
incurred by the indemnitee in connection therewith including, but not limited
to, reasonable attorneys' fees.
20. Environmental Indemnity on Excluded Property. UPK shall indemnity,
defend and hold harmless the Company and DMB from and against any claims, loss
or damage or penalty arising out of the environmental conditions of the Excluded
Property to be retained by UPK or the failure of UPK to remediate the Excluded
Property in accordance with the requirements of law; provided, however, that the
foregoing shall not alter any cost sharing obligations set forth in the Protocol
or this Agreement.
21. Risk of Loss. All risk of loss or physical damage to the Properties
prior to the contribution of the Properties to the Company shall remain with
UPK.
22. Assignment. No party hereto may assign its interest hereunder
except in accordance with the Operating Agreement.
23. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be given by personal delivery, by
facsimile transmission, by overnight courier, or by deposit in the United States
mail, first class, registered or certified, return receipt requested, postage
prepaid, correctly addressed to the intended recipient at the addresses shown
below:
To UPK: United Park City Mines Corporation
PO Box 1450
Park City, Utah 84060
Attention: Hank Rothwell
(435) 649-8035
To DMB and the Company: DMB Park City, LLC
c/o DMB Associates, Inc.
7600 E. Doubletree Ranch Road, Suite 300
Scottsdale, Arizona 85258
Attn: Jim Hoselton
(480) 367-9788
Any time periods provided for herein shall be calculated from required notices
only and shall not be delayed or otherwise affected by any courtesy copies to be
sent. Such notices and other communications shall be deemed to be received upon
actual receipt, if delivered personally or by facsimile, the next business day
if delivered by courier, or three (3) days following deposit in the mail, if
delivered by mail. The parties and Escrow Agent may, from time to time,
designate a different address by notice given in the manner provided for above,
not less than three (3) days prior to the effective date of the change.
24. Entire Agreement. This Agreement, together with any exhibits and
other matters attached hereto and/or incorporated herein by reference, the
Protocol and the Operating Agreement, constitutes the entire contract between
the parties with respect to the Properties.
25. Further Instruments; Survival. Each party, promptly upon the
written request of the other or Escrow Agent, shall execute (and have
acknowledged, if appropriate) and deliver to the other or to the Escrow Agent,
or as may be otherwise reasonably designated, all additional instruments
reasonably requested to evidence or give effect to this Agreement, whether the
request is made before or after the Contribution Date.
26. Modification of Agreement. No modification of this Agreement shall
be effective unless it is in writing and is signed by all parties.
27. Waiver. No waiver of any term or condition of this Agreement shall
be effective unless it is in writing and is signed by the party against whom
enforcement of the waiver is sought, and then only in the particular
circumstances specified. No failure by a party to exercise any right or
privilege provided for herein, or to require timely performance of any
obligation herein in strict accordance with the provisions hereof, shall
preclude the exercise of such rights or privileges or the enforcement of such
obligations in different circumstances or upon the reoccurrence of the same or
similar circumstances. Moreover, the exercise of any remedy provided for at law,
in equity, or herein shall not impliedly preclude the exercise of any other
remedy except when, and then only to the extent that, the other remedy is
expressly forbidden or limited by the provisions hereof.
28. Time Periods. If the time fixed for performance of any obligation
hereunder expires on a Saturday, Sunday or legal holiday, the deadline shall be
extended automatically to the next day that is not a Saturday, Sunday or legal
holiday. Except as may be otherwise expressly provided herein, the time for
performance of any obligation hereunder shall expire at 5:00 p.m. (Utah time) on
the last day of the period allowed hereunder.
29. Applicable Laws. This Agreement shall be governed by and construed
in accordance with the laws of the State of Utah.
30. Venue. UPK and DMB and the Company hereby agree that the proper
venue for any legal proceedings or arbitration arising out of this Agreement
shall be Salt Lake County, Utah or as the parties shall otherwise approve.
31. Construction. As used in this Agreement, the masculine, feminine
and neuter gender and the singular or plural shall each be construed to include
the other whenever the context so requires. This Agreement shall be construed as
a whole and in accordance with its fair meaning, without regard to any
presumption or rule of construction causing this Agreement or any part of it to
be construed against the party causing the Agreement to be written. The parties
acknowledge that each has had a full and fair opportunity to review the
Agreement and to have it reviewed by counsel.
32. Inurement. This Agreement shall be binding upon and shall inure to
the benefit of the heirs, personal representatives, successors and permitted
assigns of the respective parties.
33. Non-Foreign Affidavit. UPK shall provide the Company and DMB with
an affidavit meeting applicable legal requirements evidencing UPK's non-foreign
status within the meaning of Sections 1445 and 7701 of the Internal Revenue
Code.
34. Descriptive Headings. The descriptive headings of the paragraphs,
sections and other portions of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any provisions
herein.
35. Counterparts. This Agreement may be executed in counterparts, each
of which may contain fewer than all signatures but all of which, together, shall
constitute a single instrument.
DMB Park City, LLC United Park City Mines Company
By: DMB Realco LLC, Its Sole Member
By: DMB Associates, Inc., Manager
By:___________________________
By: _______________________ Its _______________________
Its: __________________
UPK/DMB, LLC
By: DMB Park City, LLC, Managing Member
By: DMB Realco LLC, Its Sole Member
By: DMB Associates, Inc., Manager
By: _______________________
Its ___________________
