EXHIBIT 10.45
Agreement to Develop
The Ticaboo Convenience Store Service Station
And
Boat Storage Operation
THIS AGREEMENT is entered into at Riverton, Wyoming and
effective as of the 5th day of April, 1995 by and between Canyon
Homesteads, Inc. ("CHI"), a Utah corporation with executive offices
at 877 North 8th West, Riverton, Wyoming 82501 and Arrowstar
Investments, Inc. ("Arrowstar") a Wyoming corporation, with
executive offices at 877 North 8th West, Riverton, Wyoming 82501.
Recitals
WHEREAS, CHI leases (in its name as trustee for the Ticaboo
Townsite Joint Venture, hereafter "TTJV") land from the State of
Utah in Garfield County, Utah pursuant to "Special Use Lease
Agreement No. 399" dated July 3, 1978 (hereafter, "Special Use
Lease"), and pursuant to Development Leases and Base Leases issued
by the State Of Utah covering land under the Special Use Lease,
whereon buildings and other improvements more fully described below
(hereafter, such assets are referred to as the "Townsite"); and
WHEREAS, CHI is responsible for the development of the Ticaboo
Townsite and the day to day management of the Ticaboo Townsite
which incudes a motel, restaurant/lounge, RV park, mobile home
park, home sites and other businesses; and
WHEREAS, CHI believes that in order to attract a developer(s)
to promote and develop the Ticaboo Townsite, it was necessary to
establish a recreational base; and
WHEREAS, In 1994, CHI reopened the motel, built a swimming
pool and leased the restaurant to a third party and after the 1994
tourist season (March through October), it became apparent that
additional services were needed to make the Ticaboo Townsite
profitable and more desirable to attract potential developers to
finance, construct, and establish the recreation resort townsite;
and
WHEREAS, CHI has spent over a year, seeking individuals or
company who would be interested in developing a convenient store
service station and boat storage site; and
WHEREAS, because of the business risks and seasonal tourist
trade, CHI has been unsuccessful in finding a company or individual
willing to risk an investment that may be abandoned after one to
two years of testing the seasonal tourist trade; and
WHEREAS, CHI and Arrowstar are willing to assume the business
risks of a recreational development business; and
WHEREAS, CHI and Arrowstar desire to incorporate an Utah
limited liability company (name if available First-N-Last, LLC) on
a 50/50 basis to finance and develop the Ticaboo Service Station
and Boat Storage Operation to service the emerging destination
recreation resort townsite of Ticaboo; and
WHEREAS, CHI has applied to the State of Utah School and
Institutional Trust Land Administration ("Utah SITLA") for approval
of the assignments of an interest in related Development Leases and
Base Lease, in accordance with this Agreement, and the Utah SITLA
has indicated to CHI that the application will be approved.
NOW THEREFORE, in consideration of the mutual promises set
forth herein and for other good and valuable consideration, the
receipt, sufficiency and legal adequacy of which are hereby
acknowledged, the Parties agree as follows:
1. FORMATION OF LLC.
CHI shall contribute its equity interest in the Ticaboo
Convenience Store Service Station and Boat Storage Site and
Operation ("Certain Ticaboo Townsite Assets"), more particularly
described on Exhibit A attached hereto, and made a part of this
Agreement and Arrowstar shall contribute cash of One Hundred Fifty
Thousand Dollars ($150,000.00). The formation of the Utah limited
liability company (name if available First-N-Last, LLC) ("LLC")
shall be completed within 10 working days by CHI upon the signing
of this Agreement. The LLC will also have the sole and exclusive
right to establish a convenient store in the Ticaboo Hotel.
2. MEMBERSHIP INTERESTS.
(a) General. Each party initially shall have a 50
percent membership interest in the LLC, subject to: (i) a special
allocation to Arrowstar of 90 percent of distributed cash from
operations until the "First" Working Capital Arrowstar contributed
and accrued interest has been paid and then 75 percent of
distributed cash profits from operations until $215,000.00 has been
paid; (ii) reduction in Arrowstar's interest for failure to pay or
arrange for the initial working capital pursuant to paragraph
3.(a); and (iii) reduction of either party's interest for failure
to make additional cash contributions to when called by Management
Committee, or the admission of additional member, provided that the
special allocation under (i) shall not be changed without
Arrowstar's prior consent.
(b) Transfer and Right of First Refusal. The proposed
sale or other transfer of any outstanding membership interests in
the LLC shall be subject to the nontransferring party's right of
first refusal to purchase the subject interest (for the same
consideration, or if for non-cash consideration, then a reasonably
equivalent amount of cash consideration). Notice shall be given
(by the party proposing transfer) to the nontransferring party, at
least 30 days prior to proposed transfer, describing the amount of
membership interest, purchase price (including terms), and the
proposed transferee (including financial ability to meet the
responsibilities of membership).
Exercise of right of first refusal shall be first by the
nontransferring party giving response notice of intent to exercise
the right to the party giving original notice, on or before the
close of business on the thirtieth day after original notice is
received. The membership interest must be purchased on or before
the close of business on the thirtieth day after original notice is
received. If either the response notice of intent to exercise is
not given, or is given but the membership interest is not purchased
within the time provided, there shall be no right of first refusal
for the nontransferring party to purchase the subject interest
(however, all subsequent transfers of such, and other, membership
interests shall be subject to such right of first refusal).
Transfers of membership interests to party affiliates shall not be
subject to this subparagraph (b).
(c) CHI's right to purchase Arrowstar's Membership
Interest. Notwithstanding any other provision of this Agreement,
if CHI needs to purchase Arrowstar's Membership Interest for any
reason, Arrowstar agrees to sell its Membership Interest for the
fair market value. For purposes of this Agreement fair market
value shall be determined by an appraiser acceptable to Arrowstar
and said appraisal shall be paid for by CHI. In no event shall the
fair market value be less than Arrowstar's initial Capital Account
until such time as Arrowstar has received $215,000.00 in profits.
(d) Qualification of Transferees. In addition to the
restriction of subparagraph (b), no outstanding membership interest
in the LLC may be sold or otherwise transferred to a third party
without consent of the nontransferring party (if they hold a
majority of the membership interests), in which event the
transferee shall not become a member but shall receive an interest
in profits or other compensation by way of income and right to the
return of contributions to which the transferring member otherwise
would be entitled.
3. WORKING CAPITAL.
(a) First $50,000.00. Arrowstar shall contribute or
arrange for the loan of up to $50,000.00 to the LLC (the loan may
be secured with the LLC's assets) to fund the initial program and
budget.
(b) Cash Calls. After amounts available under (a) are
spent, the Operating Manager of the LLC shall submit (before the
last day of each month) a billing for estimated cash requirements
for the next month, based on the current adopted program and
budger. Within 10 days after recipt of each bill, each each Member
of the LLC shall advance its proportionate share of the estivmated
amount.
4. MANAGEMENT COMMITTEE.
(a) General. The LLC shall be managed by an Operating
Manager selected by the Management Committee according to the
Operating Agreement. Initially, the Operating Manager shall be
CHI. The management committee for the LLC will be responsible for
setting the goals, objectives and policies, formulating the
business strategy and establishing the annual budget (including a
minimum 3 year forecast). The Operating Manager, subject to the
overall direction and ultimate authority of the Management
Committee, will be responsible for daily operations (including
without limitation supervision of architects and building and
landscape contractors, insurance and security, management and
marketing and commercial operations). CHI shall prepare monthly or
quarterly reports, as directed by the Management Committee, showing
status of and budgets and such other information requested by the
Management Committee.
(b) Representation. CHI and Arrowstar shall have equal
representation (two seats each) on the Management Committee, for so
long as CHI and Arrowstar have equal membership interests in the
LLC. The initial committee members are as follows:
(i) Arrowstar's committee members will be Keith Larsen
and Mark Larsen; and
(ii) CHI's committee members will be Al Dearth and Scott
Lorimer.
In the event a part's membership interest in the LLC
becomes less than 40 percent, that party shall be entitled to one
seat on the Management Committee; if its membership interest
becomes less than 20 percent, that party shall be entitled to no
seat on the Management Committee. The 75 percent special
allocation to Arrowstar shall not be taken into account for
purposes of representation.
5. ARROWSTAR AND CONFLICT OF INTEREST.
Arrowstar is owned by Jack Larsen, Chairman and President of
U.S. Energy Corp. ("USE") and Chairman of Plateau Resources, Ltd.,
and his sons Richard Larsen, Keith Larsen and Mark Larsen all
employees of USE. Plateau Resources, Ltd. is a wholly owned
subsidiary of U.S. Energy Corp. Therefore, there is the
possibility for a conflict of interest or the appearance of a
conflict of interest to exist between Arrowstar, USE, Plateau and
CHI. However, given the facts that at this time Arrowstar is the
only company willing to invest in the Ticaboo Service Station and
Boat Storage business, time is of the essence because development
must be completed by no later than May 1995 (beginning of 1995
tourist season) and CHI does not wish to invest in this
development; CHI believes any potential conflict is manageable and
CHI should enter into an agreement with Arrowstar to develop
Ticaboo Service Station and Boat Storage Sties.
6. REPRESENTATIONS AND WARRANTIES.
(a) Of CHI. This Agreement has been duly authorized by
the directors and shareholder of CHI, a Utah corporation in good
standing. TTJV is sole lessee or owner of the Townsite assets.
CHI is sole owner of TTJV. CHI has not received any notice of
default of provisions of the Special Use Lease, or Development
Leases or Base Leases thereunder, or other agreements under which
Townsite assets are leased or used. Subject to approval by the
Utah SITLA of the assignment of the Special Use Lease and related
Development Leases and Base Leases, Canyon has full authority to
convey certain Townsite assets under Section 1 of this Agreement,
and all such assets are free and clear of any encumbrance (except
taxes for prior periods which are not delinquent). There are no
pending or threatened actions, suits, claims or proceedings by any
person (including environmental and other public administrative
agencies) with respect to the certain Townsite assets.
(b) Of Arrowstar. Execution, delivery and performance
of this Agreement has been duly authorized by the directors and
shareholders of Arrowstar, a Wyoming corporation in good standing.
Arrowstar acknowledges having been provided the opportunity to
inspect the Certain Ticaboo Townsite Assets and review all files of
CHI regarding the Certain Ticaboo Townsite Assets. Arrowstar
understands that the profitable development of the Certain Ticaboo
Townsite Assets is not assured, whether due to unanticipated
construction costs, lack of market, or other factors.
7. FIDUCIARY DUTIES OF THE PARTIES. Each party hereto, and
the affiliates of each party, agrees that fiduciary duties are owed
to the LLC and its members, such that all Parties and affiliates
will act on behalf of the LLC for benefit of that entity, and
further agree that all profits that can be derived from dealings by
the Parties and their affiliates with the LLC and/or its assets,
shall be made only in and through the LLC for the benefit of its
members. No party or its affiliates shall make profits for their
own accounts from doing any kind of business with the LLC and/or
its assets, without the knowledge and consent of the other party.
Notwithstanding the preceding, pursuant to Section 48-2b-125(l) of
the Utah Limited Liability Company Act, only the Operating Manager
shall have the right to bind the LLC.
8. OPERATING AGREEMENT TO CONTROL. In the event of any
conflict between this Agreement and the Operating Agreement, the
Operating Agreement shall control.
9. NO PARTNERSHIP OR AGENCY. CHI and Arrowstar acknowledge
that, by virtue of this Agreement and the transactions contemplated
hereby, CHI and Arrowstar are not the agents or partners of each
other, and nothing contained in this Agreement shall be construed
to create between CHI and Arrowstar the relationship of principal
and agent, joint venturers, co-partners or any other similar
relationship, the existence of which is hereby expressly disclaimed
by the Parties here to. Neither Party shall have the authority to
act for or assume any obligation or responsibility on behalf of the
other Party, except as expressly set forth herein. Each Party
shall indemnify, defend and hold harmless the other Party, its
directors, officers, employees, and agents from and against any and
all losses, claims, damages or liabilities, including reasonable
attorney's fees, arising out of any act of any assumption of
liability by the indemnifying Party or any of its directors,
officers, employees, and agents done or undertaken, or apparently
done or undertaken, on behalf of the other Party, except pursuant
to authority expressly granted herein or as otherwise agreed upon
in writing between the Parties.
10. GENERAL PROVISIONS.
(i) Binding Agreement. This Agreement shall be binding
upon and shall inure to the benefit of the heirs, legal
representative, successors and assigns, as applicable, of the
respective Parties hereto, and any entities resulting from the
reorganization, consolidation or merger of any Party hereto.
(ii) Headings. The headings used in this Agreement are
inserted for reference purposes only and shall not be deemed to
limit or affect in any way the meaning or interpretation of any of
the terms or provisions of the Agreement.
(iii) Time of the Essence. Time is of the essence of
this Agreement. Any deadline hereunder which falls on a weekend
day or holiday shall instead fall on the next following business
day.
(iv) Severability. The provisions of this Agreement are
severable, and should any provision hereof be found to be void,
voidable or unenforceable, such void, voidable or unenforceable
provision shall not affect any other portion or provision of this
Agreement.
(v) Waiver. Any waiver by any Party hereto of any
breach of any kind or character whatsoever by any other party,
whether such waiver be direct or implied, shall not be construed as
a continuing waiver or consent to any subsequent breach of this
Agreement on the part of the other party.
(vi) Modification. This Agreement may not be modified
except by an instrument in writing signed by the Parties hereto.
(vii) Governing Law. This Agreement shall be
interpreted, construed and enforced according to the laws of the
State of Utah.
(viii) Attorney's Fees. In the event any action or
proceeding is brought by either Party against the other under this
Agreement, the prevailing Party shall be entitled to recover
attorney's fees and costs in such amount as the court may adjudge
reasonable, whether incurred before, during or after such
proceeding is commenced and conducted. Notwithstanding the
preceding, the collecting attorney must be able to swim the mighty
Colorado, across the widest and deepest point, with cement line
boots and hands tied behind his or her back or in the alternative
the attorneys must get the Parties to work together to resolve
their differences.
(ix) Notices. Any notice, consent, request, objection or
communication to be given by either Party to this Agreement shall
be in writing and shall be either delivered personally, by
certified mail or by Airborne, Federal Express or other commercial
overnight delivery service addressed as follows:
If to CHI: Canyon Homesteads, Inc..
877 North 8th West
Riverton, Wyoming 82501
If to Arrowstar: Arrowstar Investments, Inc.
877 North 8th West
Riverton, Wyoming 82501
(x) Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when executed and delivered,
shall be deemed an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement is executed to be effective as
of the date first stated above.
CANYON HOMESTEADS INC.
s/ A. E. Dearth
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A. E. DEARTH, President
ARROWSTAR INVESTMENTS, INC.
s/ Mark J. Larsen
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MARK J. LARSEN, President