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Development Agreement
ARTICLE 1
PARTIES
THIS DEVELOPMENT AGREEMENT is made and entered into this _____ day of _____________, 2008, by and between Apple Springs, Inc., a South Dakota corporation, whose address is 12254 Reunion Ridge Road, Sturgis, South Dakota 57785 (the “Developer”), and Boulder Canyon Country Club, a South Dakota non-profit corporation, whose address is 12312 US Highway 14A, P.O. Box 305, Sturgis, South Dakota 57785-0305 (“BCCC”).
ARTICLE 2
RECITALS and DEFINITIONS
Recitals
WHEREAS, the Developer is developing a residential community and resort development known as “Apple Springs” in Lawrence County, South Dakota;
WHEREAS, BCCC operates a nine (9) hole golf course and country club adjacent to the Apple Springs development; and
WHEREAS, the Developer has agreed to develop and construct the Clubhouse/Office Building, which includes the Golf Course Condominium Unit, and certain real property modifications and improvements to make the existing nine (9) hole golf course of BCCC into an eighteen (18) hole golf course, and the parties have agreed to exchange certain real properties and
interests in real property, and have provided for the management and operation of BCCC’s developed eighteen (18) hole golf course and country club.
NOW, THEREFORE, the purpose of this Agreement is to provide for the conditions and terms of the parties’ Agreement as set forth below.
WITNESSETH:
That for and in consideration of the mutual obligations hereinafter undertaken, and the mutual covenants flowing between the parties hereto, it is agreed as follows:
Definitions
The following terms within this Agreement shall be defined as follows, except where the context clearly indicates that a different definition was intended by the parties:
§ 2.1. Description of Closings. Three closings are contemplated by the parties under this Agreement.
Subject to the provisions of this Agreement, the initial closing shall occur on or before September 15, 2009, and shall be referred to in this Agreement as the “Initial Closing.” The Initial Closing may occur prior to September 15, 2009, upon the Developer providing not less than thirty (30) days prior written notice to BCCC of a different date for the Initial Closing. On the Initial Closing, BCCC shall convey to the Developer the real property described on Exhibit A attached hereto (such real property, the “Cul de Sac Property”). In exchange for the Cul de Sac Property, the Developer shall have substantially completed the modifications and improvements to be made to holes one (1), eight (8) and nine (9) of BCCC’s nine (9) hole existing golf course pursuant to this Agreement (such modified and improved existing golf course, the “Modified Existing Course”). The Modified Existing Course shall also include a new driving range and new practice green. The Modified Existing Course shall be deemed to be “substantially completed” when (i) modified and improved holes one (1), eight (8) and nine (9), the new driving range and the new practice green have been seeded, (ii) the irrigation system for modified and improved holes one (1), eight (8) and nine (9), the new driving range and the new practice green has been installed, (iii) the new driving range and the new practice green have been constructed and (iv) cart paths for modified and improved holes one (1), eight (8) and nine (9) are functional. BCCC’s nine (9) hole existing golf course shall remain playable prior to the date the Modified Existing Course is substantially completed, subject to interruption for construction of the Modified Existing Course, but the Developer shall use its best efforts to minimize the effect of any such interruption. On the Initial Closing, the Developer shall convey to BCCC the real property described on Exhibit B attached hereto comprising additional land of the Developer to be added to, and to become a part of, the Modified Existing Course (such real property, the “Existing Course Addition”), and shall transfer to BCCC all right, title and interest in and to the improvements and modifications made by the Developer to the Modified Existing Course.
To the extent necessary or required, the Developer shall grant, at no cost, to BCCC, a recordable easement, acceptable in form to BCCC and the Developer, in order to permit ingress and egress across a portion of the Cul de Sac Property to the hole #6 tee box.
Prior to the Initial Closing, and following the Initial Closing until the LLC Management Effective Date, the parties agree that BCCC shall be responsible to mow the greens for modified and improved holes one (1), eight (8) and nine (9), but that BCCC may charge for such service at an agreed upon hourly rate.
Subject to the provisions of this Agreement, the second closing shall occur on or before December 31, 2010, and shall be referred to in this Agreement as the “LLC Management Effective Date”. The LLC Management Effective Date may occur prior to December 31, 2010, upon the Developer providing not less than thirty (30) days prior written notice to BCCC of a different date for the LLC Management Effective Date. On the LLC Management Effective Date,
the Developer shall convey to BCCC, in “turnkey” condition, the Golf Course Condominium Unit. In exchange for the Golf Course Condominium Unit, BCCC shall convey to the Developer the Sewage Treatment and Disposal Facilities Property (defined below).
From and after the LLC Management Effective Date until the Final Closing (defined below), the Modified Existing Course and the Golf Course Condominium Unit shall be leased to the LLC (defined below) subject to the provisions of Section 3.3(E).
On the LLC Management Effective Date, the LLC shall assume the management and operation of the Modified Existing Course and the Golf Course Condominium Unit as a nine (9) hole golf course and country club for the play and use of golf course and country club members of the LLC and the general public in accordance with the provisions of the Operating Agreement (defined below) by and between AS Management Company (defined below) and BCCC.
To the extent necessary or required, the Developer shall grant, at no cost, to BCCC and the LLC, a recordable easement, acceptable in form to BCCC and the Developer, in order to permit ingress and egress across a portion of the Sewage Treatment and Disposal Facilities Property.
To the extent necessary or required, the Developer shall grant, at no cost, to BCCC and the LLC, a recordable easement, acceptable in form to BCCC and the Developer, which shall permit water to be withdrawn from the irrigation pond located on the Sewage Treatment and Disposal Facilities Property for the limited purpose of watering the Golf Course Property (defined below), and shall include the right to maintain, repair and construct a waterline and pump for such purpose. Any use of water by BCCC and the LLC in accordance with this easement shall be subject to the terms of the parties’ agreement concerning the best use of available water resources located both on and off site of the Golf Course Property, and shall be without any representation or warranty, either express or implied, concerning water quality or quantity, unless otherwise agreed upon by the parties.
The third and final closing under this Agreement shall occur on or before December 31, 2011, and shall be referred to in this Agreement as the “Final Closing.” The Final Closing may occur prior to December 31, 2011, upon the Developer providing not less than thirty (30) days prior written notice to BCCC of a different date for the Final Closing. If the Nine Additional Holes shall not be substantially completed by December 31, 2011, the date of the Final Closing shall be automatically extended until December 31, 2012, without any further action by the parties, and December 31, 2012, shall thereafter be the date of the Final Closing with no further extensions allowed. On the Final Closing, BCCC shall convey to the Developer the real property described on Exhibit C attached hereto (such real property, the “BCCC Trade Property”) and the Developer shall convey to BCCC the real property described on Exhibit D attached hereto comprising new golf course holes ten (10) through eighteen (18), which when added to the Modified Existing Course shall convert the Modified Existing Course into an eighteen (18) hole golf course (such real property, the “Nine Additional Holes”). In exchange for the BCCC Trade Property, the Developer shall have substantially completed the Nine Additional Holes in accordance with Exhibit I attached hereto. The Nine Additional Holes shall be deemed to be “substantially completed” when (i) the Nine Additional Holes have been seeded and are considered playable by acceptable USGA standards, (ii) the irrigation system for the Nine Additional Holes has been installed, tested, and is fully operational (iii) cart paths for the Nine Additional Holes are functional and (iv) all on course water features are lined and hold water to the elevations described in Exhibit E in the Operating Agreement. The parties agree that the BCCC Trade Property shall be required to be rezoned from park forest to suburban residential zoning at the time of the conveyance of the BCCC Trade Property to the Developer.
From and after the Final Closing, BCCC shall lease the Modified Existing Course, the Nine Additional Holes and the Golf Course Condominium Unit to the LLC in accordance with the provisions of the Operating Agreement and the Lease Agreement therefor. On the Final Closing, the LLC shall manage and operate the Modified Existing Course, the Nine Additional Holes and the Golf Course Condominium Unit as an eighteen (18) hole golf course
and country club for the play and use of golf course and country club members of the LLC and the general public.
Exhibit E is attached hereto to show the location of the real property to be exchanged by the parties pursuant to this Agreement, and contemplated golf cart path, waterline and sewerline easements. The Cul de Sac Property, the BCCC Trade Property and the Sewage Treatment and Disposal Facilities Property are shown in orange on Exhibit E. The Existing Course Addition to be added to, and to become a part of, the Modified Existing Course and the land comprising the Nine Additional Holes are shown in green on Exhibit E.
The parties agree that as a part of the development and construction activities to be undertaken pursuant to this Agreement, the BCCC irrigation system, which services BCCC’s existing nine (9) hole golf course, shall be reconfigured to make the best use of available water resources located both on and off site of the Golf Course Property (defined below). The parties’ agreement concerning the best use of available water resources located both on and off site of the Golf Course Property shall take into account the terms of the parties’ “Mutual Water Supply Agreement” attached hereto as Exhibit F.
§ 2.2. Golf Course Condominium Unit. The Golf Course Condominium Unit shall be comprised of a golf course clubhouse, pro shop and golf cart parking structure, which shall be developed and constructed by the Developer as a separate condominium unit, and is intended to be built and constructed in accordance with the design and specifications set forth on attached Exhibit G. To the extent that Exhibit G does not contain a limitation as to any specific design or
element, the parties intend to give the Developer discretion in making decisions with regards to construction and design.
§ 2.3. BCCC. BCCC means the Boulder Canyon Country Club, a South Dakota nonprofit corporation.
§ 2.4. Developer. The Developer means Apple Springs, Inc., a South Dakota corporation.
§ 2.5. Golf Course Property. The Golf Course Property means the real property comprising the Modified Existing Course, including the Existing Course Addition, and the Nine
Additional Holes. The Golf Course Property shall not include the Golf Course Condominium Unit.
§ 2.6. Title Company. The Title Company means Pennington Title Company, Rapid City, South Dakota.
§ 2.7. Agreement. The Agreement means this Development Agreement, including all exhibits hereto, which are specifically incorporated herein by this reference.
§ 2.8. Clubhouse/Office Building. The Clubhouse/Office Building shall mean the multi-purpose building within which the Golf Course Condominium Unit is a part. The Clubhouse/Office Building shall be developed and constructed by the Developer as a condominium project.
§ 2.9. Sewage Treatment and Disposal Facilities Property. The Sewage Treatment and Disposal Facilities Property shall mean the real property described on Exhibit H attached hereto.
ARTICLE 3
AGREEMENT
§ 3.1. Pre-Closing Construction.
(A) Golf Course Condominium Unit. Prior to Final Closing, the Developer shall construct the Golf Course Condominium Unit as a part of the Clubhouse/Office Building upon land owned by the Developer, at the sole cost and expense of the Developer. The Clubhouse/Office Building shall be developed and constructed by the Developer as a condominium project. The Clubhouse/Office Building shall be constructed by the Developer substantially in accordance with the plans and specifications attached hereto as Exhibit G. Any major and substantial deviation in the construction of the Golf Course Condominium Unit, the condominium project common areas or the Clubhouse/Office Parking Area (defined below) from the plans and specifications for the Clubhouse/Office Building shall require the approval of a majority of BCCC’s Board of Directors. The parties agree that nothing contained in this Agreement shall restrict or otherwise limit or prohibit the Developer from unilaterally modifying the plans and specifications for the Clubhouse/Office Building, without the approval of a majority of BCCC’s Board of Directors, prior to completion of the construction of the Clubhouse/Office Building; provided, that such modification does not result in a major and substantial deviation in the construction of the Golf Course Condominium Unit, the condominium project common areas or the Clubhouse/Office Parking Area from the plans and specifications for the Clubhouse/Office Building.
In connection with the construction of the Clubhouse/Office Building, the parties understand, acknowledge and agree as follows:
(1) The Clubhouse/Office Building, together with the real property underlying the Clubhouse/Office Building, shall be developed and constructed as a condominium project subject to the provisions of SDCL 43-15A. The Clubhouse/Office Building shall be a two (2) story multi-purpose building, which shall include a separate golf cart parking structure, and shall consist of condominium units and common areas, subject to the restrictions, conditions and terms contained in the governing master deed.
(2) The footprint of the real property underlying the Clubhouse/Office Building shall be platted as a separately describable lot by the Developer, at the sole cost and expense of the Developer, and shall be part of the Clubhouse/Office Building condominium project. The platted lot shall also include the area upon which the golf cart parking structure is located, together with exterior common areas for sidewalks and Clubhouse/Office Building landscaping, but shall exclude resort amenity land owned by the Developer contiguous to the Clubhouse/Office Building, which shall be subject to use restrictions imposed by the Developer.
(3) The Golf Course Condominium Unit shall comprise approximately four thousand (4,000) square feet, more or less, exclusive of common areas. The Golf Course Condominium Unit shall include the ground floor level of the Clubhouse/Office Building and provide for a separate golf cart parking structure as shown on Exhibit G. The Golf Course Condominium Unit shall be constructed in “turnkey” condition for use as a golf course clubhouse, pro shop and for golf cart parking.
(4) Except for the Golf Course Condominium Unit, the remainder of the Clubhouse/Office Building condominium project shall be owned by the Developer.
(5) The Clubhouse/Office Building condominium project shall include common areas consisting of exterior sidewalks, separate rooms and closets for storage, maintenance, utility services and mechanical systems, landscaped grounds and the Clubhouse/Office Building Parking Area (defined below). All costs and expenses associated with the maintenance and repair of Clubhouse/Office Building common areas shall be borne pro rata by the parties based on the square footage of their respective units in the Clubhouse/Office Building condominium project, exclusive of common areas (each condominium unit owner’s share of such costs and expenses, a “Condominium Assessment”).
(6) The Developer shall provide all materials and perform all work and labor necessary to complete the construction of the Clubhouse/Office Building, including interior build-out, but shall not be obligated to furnish the Golf Course Condominium Unit. All materials used by the Developer to construct the Clubhouse/Office Building shall be new, and both workmanship and materials will be of good quality. All contractors, subcontractors and workmen used by the Developer to construct the Clubhouse/Office Building shall be skilled in their respective trades. The Developer shall obtain all required building permits to construct the Clubhouse/Office Building.
(7) The common areas of the Clubhouse/Office Building condominium project shall include a paved parking lot area (the “Clubhouse/Office Parking Area”). The Clubhouse/Office Parking Area shall be used by the general public and members of the country club to be operated by the LLC, and by the Developer, and its agents, employees, licensees, invitees, successors and assigns, for vehicular parking in connection with the Clubhouse/Office Building on a non-exclusive basis.
(8) At no cost, BCCC shall grant all easements necessary or required to provide utilities services to the Clubhouse/Office Building, and as otherwise may be necessary or required to permit pedestrian and vehicular ingress and egress to and from the Clubhouse/Office Building. All easements granted by BCCC for these purposes shall be acceptable in form to the Developer.
(9) The master deed and all documents and instruments necessary or required in connection with the development and construction of the Clubhouse/Office Building condominium project shall be subject to prior approval of BCCC, but such approval shall not be unreasonably withheld.
(B) Golf Course Property Modifications and Improvements. The Developer, at its sole cost and expense, shall develop the Golf Course Property into an eighteen (18) hole golf course, and, for this purpose, shall construct the Nine Additional Holes on land of the Developer adjacent to the existing nine (9) hole golf course of BCCC. In addition, the Developer, at its sole cost and expense, shall construct new holes one (1), eight (8), nine (9) and the driving range along with modified holes eight (8) and one (1), which shall become the new holes three (3) and four (4) of the eighteen (18) hole golf course. As a part of this modification and improvement, the Developer shall convey the Existing Course Addition to BCCC to be added to, and become a part of, the Modified Existing Course. The Nine Additional Holes and the modifications and improvements to be made to the present layout of BCCC’s existing nine (9) hole golf course are described on Exhibit I attached hereto (the “Golf Course Property Modifications and Improvements”). Any major and substantial deviation in the construction of
the Golf Course Property Modifications and Improvements from Exhibit I shall require the approval of a majority of BCCC’s Board of Directors.
§ 3.2. Exchange of Properties; Related Closing Requirements.
(A) Initial Closing Deliveries. On the Initial Closing, the parties covenant as follows:
(1) BCCC will convey by warranty deed to the Developer the Cul de Sac Property, and the Developer will convey by warranty deed to BCCC the Existing Course Addition, together with all right, title and interest in the improvements and modifications made by the Developer to the Modified Existing Course.
(B) LLC Management Effective Date Deliveries. On the LLC Management Effective Date, the parties covenant as follows:
(1) The Developer will convey by warranty deed to BCCC the Golf Course Condominium Unit.
(2) BCCC will convey by warranty deed to the Developer the Sewage Treatment and Disposal Facilities Property.
(3) AS Management Company and BCCC will execute and deliver the Operating Agreement and all documents and instruments, and will do all acts, deeds and things, necessary and required to organize and capitalize the LLC in order for the LLC to manage and operate the Modified Existing Course and the Golf Course Condominium Unit as a nine (9) hole golf course and country club for the play and use of golf course and country club members of the LLC and the general public, and, thereafter, as an eighteen (18) hole golf course and country club following the Final Closing.
(4) BCCC will lease the Modified Existing Course and the Golf Course Condominium Unit to the LLC in accordance with the provisions of Section 3.3(F).
(C) Final Closing Deliveries. On the Final Closing, the parties covenant as follows:
(1) BCCC will convey by warranty deed to the Developer the BCCC Trade Property, and the Developer will convey by warranty deed to BCCC the Nine Additional Holes. Neither the BCCC Trade Property nor the Nine Additional Holes shall include any items of equipment or personal property other than fixtures. If the parties later agree to transfer certain items of personal property, a separate written agreement will be made.
(2) BCCC will lease the Modfied Existing Course, the Nine Additional Holes and the Golf Course Condominium Unit to the LLC in accordance with the provisions of the Operating Agreement and the lease agreement therefor.
(3) The parties will execute and deliver all other paperwork, agreements, documents and instruments, and will do all acts, deeds and things, required to be executed and deliver or undertaken pursuant to the terms of this Agreement and the Operating Agreement.
(D) Liens and Encumbrances. All real property, including any interest in real property, subject to this Agreement shall be conveyed free and clear of any and all liens and encumbrances, subject only to easements, covenants, reservations, restrictions and rights-of-way of record, and easements, covenants, reservations, restrictions and rights-of-way to be recorded under the terms of this Agreement. Notwithstanding the preceding sentence, BCCC understands, acknowledges and agrees that the Developer will encumber the real property to be conveyed to BCCC pursuant to this Agreement with one or more mortgages and security interests granted in favor of one or more lenders, who provide construction financing to the Developer for purposes of the development and construction contemplated by this Agreement, or in connection with any refinancing of any construction financing provided for such purpose (such financing, the “Developer Construction Indebtedness”). BCCC further understands, acknowledges and agrees that the Developer, at the sole election of the Developer, shall have the right to encumber the real property to be conveyed to BCCC pursuant to this Agreement with the Developer Construction Indebtedness, subject to the following requirements:
(1) The Developer must timely pay all Developer Construction Indebtedness principal and interest payments when due.
(2) The total unpaid principal and interest balance of the Developer Construction Indebtedness, which encumbers the real property conveyed to BCCC pursuant to this Agreement, may not exceed Two Hundred Fifty Thousand Dollars ($250,000.00). Upon request made by BCCC at any time or from time to time, the institution/entity/individual lending the Developer Construction Indebtedness shall certify for BCCC the outstanding balance of the Developer Construction Indebtedness, which encumbers the real property conveyed to BCCC.
(3) If the Developer violates the provisions of this Section 3.2(D), the Developer shall be in material breach of this Agreement, except that the Developer shall have
the right for a period of thirty (30) days following the receipt of written notice from BCCC in which to reduce the encumbrance of the Developer Construction Indebtedness to a total unpaid balance of Two Hundred Fifty-Thousand Dollars ($250,000.00) or less.
(4) At any time while AS Management Company is acting as the Manager of the LLC, the Developer shall have the right to refinance, or modify the terms of, the Developer Construction Indebtedness, with the prior consent of a majority of the Board of Directors of BCCC, which consent shall not be unreasonably withheld; provided, that (i) the terms of such refinanced or modified indebtedness are more favorable than the terms of the Developer Construction Indebtedness and (ii) the original principal balance of any new loan does not exceed the unpaid principal and interest balance of the Developer Construction Indebtedness. Provided any refinanced or modified indebtedness satisfies these requirements, BCCC shall execute and deliver all paperwork, agreements, documents and instruments necessary or required for such purpose, and, to the extent required, shall exercise its rights as a member of the LLC to vote to cause the LLC to execute and deliver all paperwork, agreements, documents and instruments necessary or required for such purpose.
(5) The obligations of the Developer under this Section 3.2(D) shall be subject to the provisions of Section 4.5 of the Operating Agreement, if the membership of BCCC removes AS Management Company as the manager of the LLC pursuant to Section 3.2 of the Operating Agreement.
§ 3.3. Additional Consideration.
(A) Restrictive Covenants. At or prior to the Final Closing, restrictive covenants in recordable form, which are acceptable to BCCC and the Developer, will be filed upon the Golf Course Property restricting its use to a golf course with related greenways, ponds, observation areas and forested areas for a term of not less than ninety-nine (99) years.
(B) Right of First Refusal in Favor of Developer. At or prior to the Final Closing, BCCC will grant to the Developer, acceptable in form to BCCC and the Developer, a right of first refusal on any future sale or exchange of the Golf Course Property and/or the Golf Course Condominium Unit in recordable form, subject to the following:
(1) The right of first refusal shall continue in existence for a term of ninety-nine (99) years from the Final Closing, unless the parties mutually agree to terminate the right of first refusal earlier.
(2) The right of first refusal shall provide that if BCCC receives a bona fide third party offer to sell or exchange all or any part of the Golf Course Property and/or the Golf Course Condominium Unit, which BCCC intends to accept, BCCC, as a condition to such sale or exchange, shall be obligated to provide the Developer with a copy of the bona fide third party offer. At any time within the forty-five (45) day period following the Developer’s receipt of such bona fide third party offer, the Developer may elect to purchase the real property subject to the bona fide third party offer on the same terms and conditions set forth in the bona fide third party offer upon providing written notice to BCCC of such election. If the Developer shall fail to elect to purchase the real property subject to the bona fide third party offer within such forty-five (45) day period, BCCC shall be free to sell or exchange the real property subject to the bona fide third party offer in accordance with the terms and conditions of the bona fide third party offer, and the right of first refusal granted to the Developer as to such real property shall be null and void. Should BCCC be unable to subsequently close the sale or exchange of the real property subject to the bona fide third party offer, or if BCCC attempts to close the sale or exchange of the real property subject to the bona fide third party offer on terms and conditions, which differ materially from the bona fide third party offer, such real property will again become subject to the right of first refusal granted to the Developer.
(3) If the bona fide third party offer provides for an exchange of real property, the Developer, at its option pursuant to the Developer’s election to exercise its right of first refusal, may substitute, in place of any real property to be conveyed to BCCC pursuant to the
terms and conditions of such bona fide third party offer, cash equivalent in value to such real property.
(4) The right of first refusal shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.
(C) Right of First Refusal in Favor of LLC. At or prior to the Final Closing, the Developer will grant to the LLC, acceptable in form to BCCC and the Developer, a right of first refusal on any future sale or exchange of the remainder of the Clubhouse/Office Building to be owned by the Developer in recordable form, subject to the following:
(1) The right of first refusal shall continue in existence for a term of ninety-nine (99) years from the Final Closing, unless the parties mutually agree to terminate the right of first refusal earlier.
(2) The right of first refusal shall provide that if the Developer receives a bona fide third party offer to sell or exchange all or any part of the remainder of the Clubhouse/Office Building to be owned by the Developer, which the Developer intends to accept, the Developer, as a condition to such sale or exchange, shall be obligated to provide the LLC with a copy of the bona fide third party offer. At any time within the forty-five (45) day period following the LLC’s receipt of such bona fide third party offer, the LLC may elect to purchase the real property subject to the bona fide third party offer on the same terms and conditions set forth in the bona fide third party offer upon providing written notice to the Developer of such election. If the LLC shall fail to elect to purchase the real property subject to the bona fide third party offer within such forty-five (45) day period, the Developer shall be free to sell or exchange the real property subject to the bona fide third party offer in accordance with the terms and conditions of the bona fide third party offer, and the right of first refusal granted to the LLC as to such real property shall be null and void. Should the Developer be unable to subsequently close the sale or exchange of the real property subject to the bona fide third party offer, or if the Developer attempts to close the sale or exchange of the real property subject to the bona fide third party offer on terms and conditions, which differ materially from the bona fide third party offer, such real property will again become subject to the right of first refusal granted to the LLC.
(3) The decision whether the LLC shall elect to purchase the real property subject to the bona fide third party offer shall be made by the golf course and country club members of the LLC. If AS Management Company is acting as the manager of the LLC, AS Management Company, in either its capacity as manager or as a member of the LLC, shall have no right to participate in such decision.
(4) If the bona fide third party offer provides for an exchange of real property, the LLC, at its option pursuant to the LLC’s election to exercise its right of first refusal, may substitute, in place of any real property to be conveyed to the Developer pursuant to the
terms and conditions of such bona fide third party offer, cash equivalent in value to such real property.
(5) The right of first refusal shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.
(D) Non-Voting Board Liaison Position. BCCC will permit and allow one (1) representative of the Developer to observe and participate in all board meetings of BCCC, with no power to vote as a Director, to call meetings, or to veto measures under consideration by BCCC, with the objective of improving communications and fostering an open dialogue between the parties. The Developer will be timely notified of all board meetings of BCCC simultaneously with notice to BCCC’s board members. Access to board meetings of BCCC by the Developer shall continue until mutually terminated by agreement of the parties.
(E) Sewer Easements. Upon request made by the Developer, or any affiliate of the Developer involved in the development of Apple Springs, at any time or times after the LLC Management Effective Date, including any time or times after the Final Closing, BCCC and the LLC covenant to grant, at no cost, to the Developer, or such affiliate of the Developer, one or more recordable easements, acceptable in form to BCCC and the Developer, or such affiliate of the Developer, which shall be necessary or required to ensure the following rights, uses and purposes:
(1) To permit one or more sewer lines originating from one or more points located within the Apple Springs development to connect to any new or existing sewer line located on any real property which comprises the Modified Existing Course, the Nine
Additional Holes and/or the BCCC Trade Property as shown on Exhibit E attached hereto (such real property, the “Sewer Easement Encumbered Property”).
(2) To permit any new or existing sewer lines located on the Sewer Easement Encumbered Property to connect to sewer lines located on the Sewage Treatment and Disposal Facilities Property.
(3) To permit treated and untreated sewage waste generated from within the Apple Springs development to be transported over and across the Sewer Easement Encumbered Property through new and existing sewer lines for such purpose.
(4) To permit the construction, installation, maintenance, improvement and repair of new and existing sewer lines located on the Sewer Easement Encumbered Property, with all related rights of ingress and egress of vehicles, equipment and persons for such purpose, at the cost of the Developer, or such affiliate of the Developer, and subject to the obligation of the Developer, or such affiliate of the Developer, to restore the Sewer Easement Encumbered Property to its original or a better condition for the effect of any such construction, installation, maintenance, improvement and repair. Any repair/restoration work shall be done in a timely manner so as to not materially adversely affect the operation of the golf course.
(5) The rights and uses in the Sewer Easement Encumbered Property granted to the Developer, or such affiliate of the Developer, pursuant to the provisions of this Section shall be undertaken in a manner, which shall not unreasonably affect golf course play.
(F) Interim Lease of Modified Existing Course and Golf Course Condominium Unit. Following the LLC Management Effective Date, but prior to the Final Closing, BCCC shall lease the Modified Existing Course and the Golf Course Condominium Unit to the LLC in exchange for the agreement of the LLC to pay: (i) all real property taxes and special assessments, which become due and payable during the term of the interim lease; (ii) all costs and expenses arising out of or related to the LLC’s use of the Modified Existing Course and the Golf Course Condominium Unit during the term of the interim lease, including, with limitation, all course maintenance costs and expenses; and (iii) the cost to maintain public liability and property and casualty insurance coverages, which insure the Modified Existing Course and the Golf Course Condominium Unit during the term of the interim lease, in such amounts and subject to such deductibles, limitations and requirements as are acceptable to BCCC, but such acceptance shall not be unreasonably withheld. This interim lease shall be in effect from the LLC Management Effective Date until the date of the Final Closing.
From and after the Final Closing, the Modified Existing Course shall be leased by BCCC, along with the Nine Additional Holes and the Golf Course Condominium Unit, to the LLC in accordance with the Operating Agreement and the lease agreement therefor.
(G) BCCC Liquor and Alcoholic Beverage Licenses. Following the LLC Management Effective Date, BCCC shall retain the ownership of its current liquor and alcoholic beverage licenses. From and after the LLC Management Effective Date, the LLC shall manage all liquor and alcoholic beverage sales on behalf of BCCC as a part of the Business Activities (defined in the Operating Agreement) of the LLC. To permit compliance with South Dakota law, that portion of the premises of the Golf Course Condominium Unit and the Golf Course Property, which are used for the sale of liquor and alcoholic beverages shall not be leased to the LLC, but shall instead be retained by BCCC, subject to a license in favor of the LLC, which shall exist during the term of the lease of the Golf Course Condominium Unit and the Golf Course Property to the LLC, and shall grant to the LLC the exclusive right to use such premises for the conduct of all Business Activities (other than the sale of liquor and alcoholic beverages). All real estate taxes, insurance and maintenance costs associated with such excluded portion of the Golf Course Condominium Unit and Golf Course Property shall be paid by the LLC as a part of its lease of the Modified Existing Course, the Nine Additional Holes and the Golf Course Condominium Unit. BCCC agrees to pursue modification of its liquor and alcoholic beverage licenses to the extent necessary or required for any change in the legal description to the licensed premises resulting from the transactions contemplated by this Agreement, with all related costs and expenses reimbursed to BCCC in the form of a non-pro rata distribution made by the LLC to BCCC.
To the maximum extent permitted under South Dakota law, the parties agree that all liquor and alcoholic beverage licenses of BCCC shall extend to the entire Clubhouse/Office Building and related facilities. The parties covenant to work in good faith, if required, to undertake any lease, sublease or other transaction necessary to achieve such purpose consistent with the requirements of South Dakota law.
The parties agree that the Developer and its affiliates shall not be prohibited from separately obtaining one or more liquor and alcoholic beverage licenses to permit the sale of liquor and alcoholic beverages in any portion of the Clubhouse/Office Building and related facilities (other than the Golf Course Condominium Unit); nor shall any such liquor and alcoholic beverage sales be treated as a part of the Business Activities of the LLC.
(H) Other Provisions.
(1) Costs The following costs shall be borne by the party indicated:
(a) The cost of all transfer fees and all recording fees shall be paid by the Developer. The recording fees for any documents or instruments other than the deeds, restrictive covenants and the right of first refusal described herein such as financing instruments or mortgages shall be borne by the party requesting the same.
(b) Closing costs shall be paid by the Developer. Closing costs shall not include any loan origination fees or other fees or charges incurred by either party in connection with financing or otherwise. Closing costs are limited to the fees charged by the Title Company for its role in supervising the closing.
(c) Appraisal fees, if any, shall be paid by the party requesting the same.
(d) Attorney fees shall be paid by the party incurring the
same.
(e) Escrow costs, if any, shall be paid by the Developer.
(f) The Developer shall pay the cost of title insurance. For this purpose, the Developer shall only be obligated to pay for the cost of a standard owner’s policy of title insurance, which insures the Nine Additional Holes and the Golf Course Condominium Unit. The title insurance coverage to be provided shall also insure the Existing Course Addition.
(g) Real Estate Taxes shall be prorated as provided in section 3.3(H)(5), subject to the provisions of Section 3.3(F) and Section 3.3(G).
(2) Documents to be Delivered at Closing Each shall deliver the following documents to the other party or its representative no later than the closing date as to the property that party is exchanging:
(a) A warranty deed or quitclaim deed, or both, as required by this Agreement, in recordable form with the required certificate of value.
(b) A policy of title insurance as described herein.
(c) An affidavit of title and such other required documents requested by the Title Company or otherwise necessary to carry out the intent of this Agreement including, by way of example, documentation necessary or advisable to demonstrate and qualify the exchange portion of this transaction for section 1031 tax-deferred gain recognition.
(d) Any other document, agreement, instrument or paperwork required or necessary to effectuate the transaction contemplated by this Agreement.
(3) Title Except as otherwise provided in Section 3.2(D), each party warrants to the other party that on the closing it shall convey good and merchantable title in fee simple to the real property being exchanged pursuant to this Agreement according to the Title Standards adopted by the State Bar of South Dakota, subject only to easements, covenants, reservations, restrictions and rights-of-way of record and current taxes not delinquent, and easements, covenants, reservations, restrictions and rights-of-way to be recorded under the terms of this Agreement.
The parties understand, acknowledge and agree that, except as otherwise expressly provided in this Agreement or state law, all easements, covenants, reservations, restrictions and
rights-of-way to be granted by a party pursuant to this Agreement shall be perpetual, run with the land, and be binding upon the parties and their successors and assigns.
(4) Title Insurance A standard owner’s title insurance policy to the real property will be secured through the Title Company and delivered to each party prior to the Final Closing. Each party agrees to advise the other party in writing of any defects in the title within thirty (30) days of receiving a title commitment for the real property to be conveyed to it pursuant to this Agreement, which defects the other party will cure, and the closing date will be adjusted accordingly to accommodate the other party’s ability to cure. A party’s failure to object to any defect or any other matter disclosed in a commitment for title insurance within thirty (30) days shall be deemed a waiver of the right to object to such defect or matters.
(5) Taxes. Each party warrants that as to the real property it shall convey that all prior calendar year real property taxes and special assessments which are payable in the calendar year of the closing, and all real property taxes and special assessments for all prior calendar years, have been or will be paid at or prior to closing. Estimated real property taxes and special assessments for the calendar year of the closing, which may be payable in the subsequent calendar year, are to be prorated to the date of the closing (based on the most recent assessment).
(6) Possession; License for Pre-Closing Access. Subject to the provisions of this Agreement, the Developer shall receive possession to the Cul de Sac Property at the time of the Initial Closing and possession to the BCCC Trade Property at the time of the Final Closing. Subject to the provisions of this Agreement, the BCCC shall receive possession to the Existing Course Addition, together with all right, title and interest in the improvements and modifications made by the Developer to the Modified Existing Course, at the time of the Initial Closing, possession to the Golf Course Condominium Unit at the time of the LLC Management Effective Date, and possession to the Nine Additional Holes at the time of the Final Closing. The parties understand, acknowledge and agree that the Developer will require access to the existing nine (9) hole golf course of BCCC, the Cul de Sac Property and the BCCC Trade Property prior to the Final Closing for the purpose of development, construction, landscaping, surveying, platting, and otherwise to fulfill its obligations under this Agreement. BCCC does hereby grant a license to the Developer, and its agents and employees, to enter upon the existing nine (9) hole golf course of BCCC, the Cul De Sac Property and the BCCC Trade Property to perform any act or activity, which may be necessary or required for the Developer to fulfill its obligations under this Agreement. Should the Developer, or its agents or employees, damage the existing nine (9) hole golf course of BCCC, the Cul de Sac Property or the BCCC Trade Property at any time prior to the Final Closing, the Developer agrees to repair/restore such damaged property to its original or better condition. Any repairs/restoration work shall be done in a timely manner so as to not materially adversely affect the operation of the golf course. In addition, BCCC also hereby grants a license to the Developer, and its agents and employees, to survey and plat the BCCC Trade Property at any time prior to the Final Closing.
(7) Inspection. Each party shall be allowed a full and adequate opportunity to inspect the real property being exchanged prior to closing. The parties agree that the real property to be conveyed to each of them pursuant to this Agreement shall be conveyed “AS IS” and “SUBJECT TO ALL FAULTS,” and that neither party makes any representations and warranties, either express or implied, concerning the real property to be conveyed by that party in accordance with this Agreement, except as otherwise expressly contained in this Agreement.
(8) Insurance. For the benefit of both BCCC and the Developer, existing insurance policies shall be kept in effect pending the Final Closing. Each party agrees to name the other party and the LLC as additional named insureds under all liability insurance coverages, and to waive all subrogation rights. Upon request made by a party, the other party
shall provide an insurance certificate evidencing the requirements contained in this Section 3.3(H)(8).
§ 3.4. LLC Management and Operation of Country Club and Golf Course. As of the LLC Management Effective Date, the parties agree that a South Dakota manager-managed limited liability company (the “LLC”) shall manage and operate the Modified Existing Course and the Golf Course Condominium Unit as a nine (9) hole golf course and country club for the play and use of golf course and country club members of the general public, and, thereafter, from and after the Final Closing as an eighteen (18) hole golf course and country club, in accordance with the terms and conditions set forth in the operating agreement attached hereto as Exhibit J (“Operating Agreement”). The LLC shall be initially managed by an affiliate of the Developer, Apple Springs Management Company, a South Dakota corporation (“AS Management Company”), subject to the provisions of the Operating Agreement. The parties agree that the obligations of the Developer under this Agreement are expressly conditioned upon AS Management Company and BCCC executing and delivering the Operating Agreement and all documents and instruments, and doing all acts, deeds and things, necessary and required to organize and capitalize the LLC in order to permit AS Management Company to manage and operate the country club, golf course and related facilities developed pursuant to this Agreement as of the LLC Management Effective Date.
§ 3.5 Developer’s Right to Pre-Sell BCCC Trade Property and the Cul de Sac Property. The parties agree that the Developer may pre-sell the BCCC Trade Property and the Cul de Sac Property to the general public prior to the date of the Final Closing, subject to the following:
(A) As a condition to the right to pre-sell the BCCC Trade Property and the Cul de Sac Property to the general public prior to the Final Closing, the Developer shall be required to first offer to pre-sell the residential lots to be developed on the BCCC Trade Property and the Cul de Sac Property to the existing golf course and country club members of the LLC (hereinafter the “GC & CC Offerees”). The GC & CC Offerees shall have a limited, exclusive first right to purchase such residential lots prior to the general public on the terms and conditions set forth in this Section 3.5.
(B) To notify the GC & CC Offerees of this right, the Developer shall be required to mail a written notice to the GC & CC Offerees based on the membership records of the LLC. The mailed written notice shall designate a period not less than sixty (60) days in length during which the GC & CC Offerees shall have a first right to purchase residential lots offered for pre-sale on a “first come, first served” type basis. In order to afford all GC & CC Offerees an equal opportunity to participate, this exclusive purchase period for GC & CC Offerees may not commence until at least fourteen (14) days after the date the written notice has been mailed to all GC & CC Offerees. The purchase price and the terms of sale of all residential lots offered for pre-sale to the GC & CC Offerees during this exclusive purchase period shall be determined in the sole discretion of the Developer. This written notice may be sent to the GC & CC Offerees at any time after the execution of this Agreement.
(C) At the conclusion of the exclusive purchase period provided to the GC & CC Offerees, the Developer may pre-sell to the general public any residential lot not pre-sold to the GC & CC Offerees at such purchase price and on such sale terms as shall be determined in the sole discretion of the Developer. Such purchase price and sale terms may differ from those offered to the GC & CC Offerees pursuant to the provisions of this Section 3.5.
(D) The provisions of this Section 3.5 shall not apply to the pre-sale of any part of the BCCC Trade Property or the Cul de Sac Property, which shall be sold as commercial property.
§ 3.6. BCCC Cooperation. At all times prior to Final Closing, the BCCC pledges its full cooperation, support and assistance, and, upon request made by the Developer, covenants to grant all approvals and consents, and to execute and deliver all instruments, agreements, documents and paperwork, necessary or required for the following purposes:
(A) To permit the Developer to perform all obligations imposed upon the Developer under this Agreement;
(B) To permit the Developer to subdivide and plat BCCC and Developer lands for purposes of this Agreement; and
(C) To permit the Developer to obtain pre-closing land use and zoning changes, variances, permitting and approvals from governmental bodies for purposes of
developing the Cul de Sac Property and the BCCC Trade Property for residential and commercial uses in connection with the Apple Springs development.
BCCC shall incur no cost or expense in providing such cooperation, support and assistance.
§ 3.7. Dispute Resolution. All disputes between or among the parties under or relating to this Agreement shall be exclusively and finally resolved in accordance with the dispute resolution procedures set forth in attached Exhibit K. Notwithstanding the preceding sentence, the parties agree that if the closing required to take place on the LLC Management Effective Date shall have occurred, but the Developer is unable to complete the construction of the Nine Additional Holes on or before the Final Closing, then in such event, any dispute between or among the parties concerning this Agreement, shall be exclusively and finally resolved as follows, and not pursuant to the dispute resolution procedures set forth in Exhibit K.
(A) The parties shall first (1st) seek to agree upon a reasonable extension to the Final Closing date.
(B) If the parties are unable to mutually consent to extend the Final Closing date, then either party, upon providing written notice to the other party, may elect to terminate this Agreement (such election, a “Termination Election”), subject to the following:
(1) The Developer shall grant to BCCC an exclusive option to purchase the Nine Additional Holes for its appraised value based on an appraisal performed by an appraiser mutually agreeable to the parties. The option shall be exercisable for a period forty-five (45) days following the date of the Termination Election, and may be exercised by BCCC upon providing written notice of its exercise to the Developer within such forty-five (45) day period. If BCCC shall exercise the option, the closing shall occur within forty-five (45) days after the issuance of the appraisal report. The terms of the sale shall be cash. On the closing, the Developer shall convey the Nine Additional Holes to BCCC by warranty deed, free and clear of all liens and encumbrances, and subject only to easements, covenants, reservations, restrictions and rights-of-way of record and current taxes not delinquent. The Developer shall pay the deed transfer fee and for the cost of a standard owner’s title insurance policy. BCCC shall pay for the cost to record the deed. Closing costs shall be borne equally (50/50) by the parties, and unassessed real estate taxes shall be prorated to the date of the closing based on the prior year’s assessment. If BCCC shall fail to timely exercise this option, the option granted herein shall lapse, and, thereafter, shall be null and void, without any further legal effect.
(2) BCCC shall grant to the Developer an exclusive option to purchase the BCCC Trade Property for its appraised value based on an appraisal performed by an appraiser mutually agreeable to the parties. The option shall be exercisable for a period forty-five (45) days following the date of the Termination Election, and may be exercised by the Developer upon providing written notice of its exercise to BCCC within such forty-five (45) day period. If the Developer shall exercise the option, the closing shall occur within forty-five (45) days after the issuance of the appraisal report. The terms of the sale shall be cash. On the closing, BCCC shall convey the BCCC Trade Property to the Developer by warranty deed, free and clear of all liens and encumbrances, and subject only to easements, covenants, reservations, restrictions and rights-of-way of record and current taxes not delinquent. BCCC shall pay the deed transfer fee and for the cost of a standard owner’s title insurance policy. The Developer shall pay for the cost to record the deed. Closing costs shall be borne equally (50/50) by the parties, and unassessed real estate taxes shall be prorated to the date of the closing based on the prior year’s assessment.
If the Developer shall fail to timely exercise this option, the option granted herein shall lapse, and, thereafter, shall be null and void, without any further legal effect.
(3) AS Management Company shall resign as manager of the LLC, and shall transfer and assign its entire profits, loss and capital membership interest in the LLC to BCCC, without the payment of any consideration to either AS Management Company or the Developer. As a part of this relinquishment of the LLC membership interest of AS Management Company to BCCC, BCCC, the LLC and AS Management Company shall execute a written instrument pursuant to which they shall mutually release and discharge each other and their affiliates from any and all injuries, claims, demands, actions, judgments, executions, damages, costs, expenses, liabilities and debts, whether in law or in equity, known or unknown, foreseen or unforeseen, which have been asserted or could have been asserted on or before the date of the Termination Election by a party against another party or its affiliates. This mutual release and discharge shall include the obligation to fund any shortfall in the Annual Capital Improvement Account Addition and the Annual Debt Service Obligation (as those terms are defined in the Operating Agreement) and the obligation to fund an Operational Loss (as that term is defined in the Operating Agreement), and shall include the obligation to pay any unpaid Management Fee (as that term is defined in the Operating Agreement) and all unpaid sums owed to AS Management Company and its affiliates for goods and services.
(4) All Development Construction Indebtedness, which constitutes a lien against and encumbers the Golf Course Condominium Unit, shall be fully satisfied by the developer.
(5) Except for the provisions of Section 3.3(E) [relating to sewer easements to be granted by BCCC and the LLC], which shall continue to obligate BCCC and the LLC following a Termination Election, the parties shall execute a written instrument terminating this Agreement, and BCCC, the LLC, the Developer and AS Management Company shall mutually release and discharge each other and their affiliates from any and all injuries, claims, demands, actions, judgments, executions, damages, costs, expenses, liabilities and debts, whether in law or in equity, known or unknown, foreseen or unforeseen, which have been asserted or could have been asserted on or before the date of the Termination Election by a party against another party or its affiliates. This mutual release shall not apply to a breach of the provisions of this Section 3.7(B).
(6) BCCC, at its election, may terminate any contractual agreement with the Developer and/or AS Management Company executed by BCCC or the LLC as a result of this Agreement; provided, that all parties to a terminated contractual agreement shall be fully and completely released and discharged from any and all further performance, liabilities, obligations and duties under the terminated contractual agreement. Notwithstanding the preceding sentence, the minimum operational covenants contained in Exhibit E to the Operating Agreement of the LLC shall remain in full force and effect following any termination of the Operating Agreement or a dissolution of the LLC.
ARTICLE 4
CONDITION PRECEDENT TO DEVELOPER’S OBLIGATIONS
Notwithstanding the provisions of this Agreement, the obligations of Developer under this Agreement are expressly conditioned upon the BCCC Trade Property being rezoned from forest park to suburban residential zoning, at the cost and expense of Developer. If the BCCC Trade Property shall not be rezoned from forest park to suburban residential zoning prior to the Initial Closing, Developer, at its election, and upon providing written notice to BCCC, may terminate this Agreement, whereupon the parties shall be fully and completely released and discharged from any and all further obligations and liabilities hereunder. Developer covenants to use its best efforts to prosecute an application to rezone the BCCC Trade Property from forest park to suburban residential zoning.
ARTICLE 5
MISCELLANEOUS
§ 5.1. Time. The parties agree that time is of the essence of this Agreement and to all of its provisions. Any extension of time granted for the performance of any duty under this
Agreement shall not be considered an extension of time for the performance of any other duty under this Agreement.
§ 5.2. Severability. If any provision of this Agreement or any application thereof shall be invalid or unenforceable, such provision shall be stricken from this Agreement, and the remainder of this Agreement and any other application of such provision shall not be affected thereby. If any provision or part of this Agreement shall be stricken in accordance with this section, then such stricken part or provision shall be replaced, to the extent possible, with a legal, enforceable, and valid provision that is as similar in tenor to the stricken provision as is legally possible.
§ 5.3. Binding on Parties’ Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns.
§ 5.4. Headings. Article and section headings are for convenience and reference only and shall not be used to limit, amplify or otherwise affect the meaning of any provision of this Agreement.
§ 5.5. Counterparts. This Agreement may be simultaneously executed in two or more counterparts, each of which shall be deemed a fully enforceable original but all of which
together shall constitute one and the same instrument. This Agreement may be executed by fax.
§ 5.6. Laws. This Agreement shall be construed in accordance with and governed by the laws of the State of South Dakota, without regard to choice of law rules.
§ 5.7. Relationship of Parties. The relationship of the parties shall be that of contracting parties. The relationship between the parties shall not be considered or deemed to be that of joint venturers, principal and agent, or partners and neither shall have the power to bind or obligate the other except as set forth herein. Nothing in this Agreement is intended or should be construed to bind or obligate the members, stockholders, officers or directors of the respective parties as individuals in any way or under any circumstances.
§ 5.8. Construction. All terms used in this Agreement, regardless of the number or gender in which they are used, shall be deemed and construed to include all other numbers, singular or plural, and all other genders, masculine, feminine, or neuter, as the context or sense of this Agreement or any section, subsection, or clause herein may require as if such terms had been fully and properly written in such number or gender. Any reference to “person” herein shall include an individual, firm, corporation, partnership, limited liability company, trust, syndicate, governmental authority, or any other entity.
§ 5.9. Non-Waiver. No delay or failure by either party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein.
§ 5.10. Entire Agreement. This Agreement and the Exhibits appended hereto constitute the entire Agreement between the parties. This Agreement supersedes all Agreements, representations, warranties, or understandings, whether oral or written, by or among the parties, previously or contemporaneously given. There are no other understandings or Agreements between the parties.
§ 5.11. Necessary Acts. The parties shall, at their own cost and expense, promptly execute and deliver such further documents and instruments and shall take such actions as may be reasonably required or appropriate to carry out the intent and purposes of this Agreement.
§ 5.12. No Presumption. Each party has fully participated in the revision and review of this Agreement. The language in this Agreement shall be interpreted as to its fair meaning and not strictly for or against any party. The parties mutually agree and acknowledge that this Agreement is the result of negotiations between the parties and that each has had an opportunity to contribute to the terms and conditions contained herein. The language in this Agreement shall be interpreted as to its fair meaning and not strictly for or against either party.
§ 5.13. Necessary Authorization. Each party represents that all necessary corporate or board approval has been obtained to bind itself to this Agreement. Each party acknowledges that this Agreement has been entered into with full knowledge of the facts and full information as to the legal rights and responsibilities of each.
§ 5.14. Written Amendments. This Agreement may be supplemented, amended or modified only by mutual agreement of the parties. No supplement, amendment or modification of this Agreement shall be binding unless it is in writing and signed by all the parties.
§ 5.15. Notices. All notices, demands, requests, consents, approvals, offers, statements, and other instruments or communications required or permitted to be given hereunder shall be in writing and be deemed to have been given when delivered, or when mailed by first class registered or certified mail, postage prepaid, addressed, (a) if to the Developer, at its address set forth above, or at any other address that it may furnish in writing to the other party, with a required copy to John H. Raforth, Esq., Bangs, McCullen, Butler, Foye & Simmons, L.L.P., 333 West Boulevard, Suite 400, P.O. Box 2670, Rapid City, SD 57709-2670, and (b) if to BCCC, at the address set forth above, or at any other address that a party may furnish in writing to the other party.
§ 5.16. No Warranties. Except as otherwise expressly provided in this Agreement, neither party makes any warranties of any kind, express or implied, including, without limitation, any implied warranty of merchantability or fitness for a particular purpose. The Developer takes no independent liability or responsibility with regards to the suitability or fitness of the construction of the Modified Existing Course, the Nine Additional Holes or the Golf Course Condominium Unit, all such responsibilities being vested in its contractors.
§ 5.17. Corporate Status. BCCC is a non-profit corporation, duly organized, validly existing, and in good standing under the laws of the State of South Dakota, with all requisite power and authority to carry on its business. The Developer is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of South Dakota, with all requisite power and authority to carry on its business.
§ 5.18. Truthfulness. The representations, warranties, and covenants contained in this Agreement and any exhibits hereto do not contain any untrue statement of material fact and do not omit to state any fact necessary herein or therein not misleading or necessary to a correct presentation of all material aspects of the parties and the matters contemplated under this Agreement.
§ 5.19. Assignment. This Agreement may not be assigned by either party hereto without the prior written consent of the other party, except that the Developer shall have the right to assign its interests under this Agreement to an entity controlled by the Developer, but any such assignment shall not release the Developer from its obligations hereunder. The assignment of any additional agreement described herein shall be governed by the terms of that agreement.
§ 5.20. No Third Party Beneficiary Rights. This Agreement is not intended to and shall not be construed to give any person, other than the parties signatory hereto and AS Management Company, any interest or right (including, without limitation, any third party beneficiary rights) with respect to or in connection with this Agreement or any provision contained herein or the transaction contemplated hereby.
§ 5.21. Force Majure. This Agreement is subject to force majure, and is contingent on strikes, accidents, acts of God, flood, war, earthquakes, governmental action, civil unrest or fire, but not upon a party’s negligence or financial condition. Performance shall be excused only to the extent of and during the reasonable continuance of such disability. Any deadline or time for performance specified in this Agreement which falls due during or subsequent to the occurrence of any of the disabilities referred to herein shall be automatically extended for the period of such disability.
§ 5.22. Changes in Print. No change, addition, or erasure of any printed portion of this Agreement shall be valid or binding on either party unless mutually agreed to by the parties.
§ 5.23. Remedies. The remedies in this Agreement are cumulative and are in addition to any and all remedies available under South Dakota law.
§ 5.24. Notice of Breach. No claim can be made for breach of this Agreement or default hereunder unless notice of the breach or default, and demand for performance, is made to the other party. Notice of breach under this section must specify the details of the claimed breach. Demand for performance must specify the details specific to the demanded performance. Upon such notice from one party to this Agreement, the other party shall have ninety (90) days in which to cure the claimed breach or satisfy the demanded performance unless a different cure period is expressly provided in this Agreement.
§ 5.25. Survival. Except as otherwise provided in this Agreement, representations, warranties, and covenants contained in this Agreement shall survive the termination of this Agreement.
§ 5.26. Effective Date. The effective date of this Agreement is the date and year first written above.
IN WITNESS WHEREOF the parties hereto have signed and sealed this Agreement as of the day and year first above written.
[SEPARATE SIGNATURE PAGES]
[SIGNATURE PAGE OF APPLE SPRINGS, INC.]
DEVELOPER:
APPLE SPRINGS, INC.
By:
Its: President
State of South Dakota )
) ss.
County of _____________ )
On this _____ day of _______________, 2008 before me, the undersigned officer, personally appeared , as President of Apple Springs, Inc., a South Dakota corporation, known to me or satisfactorily proven to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same on behalf of Apple Springs, Inc., for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
______________________________
Notary Public, South Dakota
(SEAL) My Commission Expires:
[SIGNATURE PAGE OF BCCC]
BCCC:
BOULDER CANYON COUNTRY CLUB
By:
Its: President
State of South Dakota )
) ss.
County of ___________ )
On this _____ day of________________, 2008 before me, the undersigned officer, personally appeared __________________, as President of Boulder Canyon Country Club, a South Dakota non-profit corporation, known to me or satisfactorily proven to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same on behalf of Boulder Canyon Country Club for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
______________________________
Notary Public, South Dakota
(SEAL) My Commission Expires:
EXHIBIT A
Description of Cul de Sac Property
4.38 acres, more or less, the general boundaries of which have been staked by the parties prior to the execution of this Agreement. The exact location of the boundaries of the Cul de Sac Property shall be determined by a survey mutually agreeable to the parties, the cost of which shall be borne by the Developer. The Cul de Sac Property shall be platted, at the cost of the Developer.
EXHIBIT B
Description of Existing Course Addition
14.57 acres, more or less, the general boundaries of which have been staked by the parties prior to the execution of this Agreement. The exact location of the boundaries of the Existing Course Addition shall be determined by a survey mutually agreeable to the parties, the cost of which shall be borne by the Developer. The Existing Course Addition shall be platted, at the cost of the Developer.
EXHIBIT C
Description of BCCC Trade Property
______ acres, more or less, the general boundaries of which have been staked by the parties prior to the execution of this Agreement. The exact location of the boundaries of the BCCC Trade Property shall be determined by a survey mutually agreeable to the parties, the cost of which shall be borne by the Developer. The BCCC Trade Property shall be platted, at the cost of the Developer.
EXHIBIT D
Description of Nine Additional Holes
34.44 acres, more or less, the general boundaries of which have been staked by the parties prior to the execution of this Agreement. The exact location of the Nine Additional Holes shall be determined by a survey mutually agreeable to the parties, the cost of which shall be borne by the Developer. The Nine Additional Holes shall be platted, at the cost of the Developer.
EXHIBIT E
Color Coded Diagram of Real Property to be Exchanged
[ATTACHED]
EXHIBIT F
Mutual Water Supply Agreement
[ATTACHED]
EXHIBIT G
Clubhouse/Office Building Plans and Specifications
[ATTACHED]
EXHIBIT H
Description of Sewage Treatment and
Disposal Facilities Property
______ acres, more or less, the general boundaries of which have been staked by the parties prior to the execution of this Agreement. The exact location of the boundaries of the Sewage Treatment and Disposal Facilities Property shall be determined by a survey mutually agreeable to the parties, the cost of which shall be borne by the Developer. The Sewage Treatment and Disposal Facilities Property shall be platted, at the cost of the Developer.
EXHIBIT I
Description of Nine Additional Holes and New
Holes One (1), Eight (8) and Nine (9) and
Modifications to Existing Holes Eight (8) and Nine (9)
1. #1 new will utilize part of existing hole #1 and the Existing Course Addition.
The hole will be a dogleg right converted from a par 3 to a par 4 with a newly
extended fairway and a smoothing out of the existing tee box.
2. #3 will be a modification of the existing #8. This will involve adding a fourth tee box and
building a new green to the South onto the existing #1 fairway resulting in a dogleg left
par 4 with an approximate length of 480 yards from the back tees.
3. #4 will be a modification of existing #1. This will involve building four tees at the East
end of the existing driving range as well as reshaping, seeding, and adding irrigation
heads to the existing driving range which will result in a dogleg right par 4 with a length
of approximately 370 yards from the back tees.
4. #8 will be an entirely new par 3 with new tee box fairway and green.
5. #9 will be an entirely new par 4 which brings golfers back toward the
Clubhouse/Office Building.
6. #10 will be an entirely new par 4 skirting the edge of the newly formed lake.
7. #11 will be an entirely new par 3 which takes golfers directly between the fairways and
masters residential blocks.
8. #12 will be an entirely new par 4 which traverses along a beautiful mountain ridge.
9. #13 will be an entirely new par 5 which lies on the boundary to thousands of acres of
forest service land.
10. #14 will be an entirely new par 4 high atop the mountain.
11. #15 will be a par 4 dogleg right which brings golfers back down the mountain.
12. #16 will be a new par 3 which knifes through a canyon and spills out into the meadows.
13. #17 will be a new par 5 which slowly rolls across the foothills, across a charming
traditional fishing pond and onto a finely manicured green.
14. #18 will be a new hole which lazily sweeps through vacation homes and comfortably
returns golfers back to the Clubhouse/Office Building.
15. A new driving range and new practice green will be constructed pursuant to the exhibits showing the same.
* * * Notes * * *
The Nine Additional Holes shall be a minimum of 3,000 yards.
All new greens constructed by the Developer shall be in excess of the
average of the greens of holes #4, #5 and #7 of BCCC’s nine (9) hole existing course.
The construction of hole #17 described above is contingent upon the Developer acquiring certain real property known as the “Shonley Property.” If the Developer is unable to acquire the Shonley Property, the Developer will construct hole #17 on separate land owned by the Developer, which shall become a part of the land constituting the Nine Additional Holes. If this alternative is undertaken, hole #17 will still remain a par 5 hole.
EXHIBIT J
LLC Operating Agreement
[ATTACHED]
EXHIBIT K
Dispute Resolution Procedures
1. Alternative Dispute Resolution Procedures.
1.1 Negotiations. In the event that any dispute may arise, the parties shall first seek to resolve any disputes by negotiations between representatives which have authority to settle the controversy.
(i) Notification. When a party believes there is a dispute relating to the Agreement, the party will give the other party written notice of the dispute.
(ii) Meetings. The representatives of the parties shall meet at a mutually acceptable time and place within thirty (30) days after the date of the notice to exchange relevant information and to attempt to resolve the dispute. If a the representative of a party intends to be accompanied at a meeting by an attorney, the other party’s representative shall be given at least three (3) business days’ notice of such intention and may also be accompanied by an attorney.
(iii) Confidentiality. All negotiations are confidential and shall be treated as compromise and settlement negotiations under the State of South Dakota Rules of Evidence.
1.2 Mediation. If the dispute has not been resolved within thirty (30) days after the date of the notice of a dispute, or if the party receiving such notice fails or refuses to meet within such time period, either party may initiate mediation of the dispute by sending the other party a written request that the dispute be mediated. The party receiving such a written request will promptly respond to the requesting party so that all parties can jointly select a neutral and impartial mediator and schedule the mediation session. The parties shall mediate the dispute before a neutral, thirty-party mediator within thirty (30) days after the date of the written request for mediation.
1.3 Arbitration. If a dispute has not been resolved within sixty (60) days after the original notice of a dispute or within thirty (30) days after the date of a request for mediation, whichever is later, then either party may initiate arbitration proceedings. Notwithstanding the above provisions, if either Party deems that time is of the essence in resolving the dispute, it may initiate arbitration and seek interim measures under Section 6 of this Exhibit K, if appropriate, and then comply with the requirements for negotiations and mediation as long as they are fully completed before the commencement of the final hearing on the merits in the arbitration proceeding.
2. Scope/Final and Binding. Any dispute, controversy or claim, of any and every kind or type, whether based on contract, tort, statute, regulations, or otherwise, arising out of, connected with, or relating in any way to this Agreement, the relationship of the parties, the obligations of the parties under this Agreement, including without limitation, any dispute as to the existence, validity, construction, interpretation, negotiation, performance, non-performance, breach, termination, or enforceability of this Agreement, shall be settled through final and binding arbitration, it being the intention of the parties that this is a broad form arbitration agreement designed to encompass all possible disputes among the parties relating to this Agreement.
3. Institutional Arbitration. The arbitration shall be conducted before a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) as in effect on the date of commencement of the arbitration proceeding (the “AAA Rules”). The arbitration panel shall apply the State of South Dakota Rules of Evidence to all evidentiary questions arising in the course of the arbitration, and shall apply the State of South Dakota Rules of Civil Procedure to the conduct of discovery in the course of the arbitration.
4. Place of Arbitration. Unless otherwise agreed in writing by all Parties to the arbitration, the situs of the arbitration under this Agreement shall be Sturgis, South Dakota.
5. Entry of Judgment. Judgment on the award of the arbitral tribunal may be entered by any court of competent jurisdiction.
6. Interim Measures. The arbitrator may grant interim measures including injunctions, attachments and conservation orders in appropriate circumstances, which measures the parties agree may be immediately enforced by the arbitrator or by court order. Hearings on requests for interim measures may be held in person, by telephone or by video conference, and requests for relief, responses, briefs or memorials may be sent to, and orders or awards received from, the arbitrators by facsimile or other similar means which include a confirmation of delivery. Notwithstanding the requirements for alternative dispute resolution procedures (such as negotiation and mediation), prior to the constitution of the arbitration tribunal and thereafter as necessary to enforce the arbitrators’ rulings or in the absence of the jurisdiction of the arbitrators to rule on interim measures in a given jurisdiction, any party may apply to a court for interim measures, and the parties agree that seeking and obtaining such measures shall not waive the right to arbitration.
7. Costs and Attorney’s Fees. In the event of any action, arbitration or litigation to enforce this Agreement, for interpretation or construction of this Agreement, or on account of any default under or breach of this Agreement, the nonprevailing party to such action, arbitration or litigation covenants and agrees to pay to the prevailing party therein, in addition to all other relief, all costs and expenses, expressly including, but not limited to, reasonable attorneys' fees (regardless of any otherwise applicable court schedule for the determination of such costs, expenses and attorneys' fees) incurred by such prevailing party in connection with such action, arbitration or litigation, including, but not limited to, any appeal thereof, which costs, expenses and attorneys' fees shall be included in and as a part of any judgment rendered in such action, arbitration or litigation. The arbitral tribunal is shall make an award of costs and attorney’s fees in accordance with this Section 7.
8. Punitive Damages. Penal, punitive, treble, multiple, consequential, incidental or similar damages may not be recovered or awarded.
9. Confidentiality. Except to the extent necessary to enforce the arbitration, agreement or award, to enforce other rights of the party, or as required by law, the parties, their employees, officers, directors, counsel, consultants, and expert witnesses, shall maintain as confidential the fact of the arbitration proceeding, the arbitral award, contemporaneous or historical documents exchanged or produced during the arbitration proceeding, and memorials, briefs or other documents prepared for the arbitration.
10. Waiver of Appeals. To the extent permitted by law, right to appeal from or to cause a review of any arbitral award by any court is hereby waived by the parties.
11. Summary Disposition. The arbitrators are hereby authorized, if they consider it appropriate, to decide any disputes by summary disposition on the documents and written testimony without hearing oral testimony.
12. Draft of the Proposed Award. Prior to rendering the final award, the arbitral tribunal shall submit to the parties an unsigned draft of the proposed award and each party, within ten (10) business days after receipt of such draft award, may serve on every other party a file with the tribunal a written statement commenting upon any alleged errors of fact, law, computation, or otherwise. The tribunal shall endeavor to render its final award within ten (10) business days after the receipt of the letter of the written statements of the parties.
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