EXHIBIT 10.47
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
Agreement to Develop Ticaboo
Service Station & Boat Storage Operation
Page 2
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.
Agreement to Develop Ticaboo
Service Station & Boat Storage Operation
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(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.
Agreement to Develop Ticaboo
Service Station & Boat Storage Operation
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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.
Agreement to Develop Ticaboo
Service Station & Boat Storage Operation
Page 5
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.
Agreement to Develop Ticaboo
Service Station & Boat Storage Operation
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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.
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Service Station & Boat Storage Operation
Page 7
(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
Agreement to Develop Ticaboo
Service Station & Boat Storage Operation
Page 8
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