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HomeMy WebLinkAbout2018-17 VLHA Solar Vail Operating Agreement RESOLUTION NO 17 Series of 2018 A RESOLUTION MAKING FINDINGS AND APPROVING AN OPERATING AGREEMENT REGARDING A REDEVELOPMENT PROJECT FOR THE SOLAR VAIL 1 PROPERTY; AND SETTING FORTH DETAILS IN REGARD THERETO. WHEREAS, Sonnenalp Properties Inc. (the "Developer") is the owner of certain real property with a physical address of 501 North Frontage Road West, Vail, CO 81658 (the "Property"); WHEREAS, the Developer plans to redevelop the Property for rental employee housing (the "Project"); WHEREAS, the Developer has formed Solar Vail, LLC, a Colorado limited liability company (the "Company") for purposes of developing, constructing, owning and operating the Development; WHEREAS, to facilitate the construction and operation of the Project, Developer seeks to obtain a property tax exemption for the Property; WHEREAS, to obtain a property tax exemption from the Eagle County Assessor the Vail Local Housing Authority (the "VLHA") must find that the Project substantially benefits persons of low income as determined by the VLHA; WHEREAS, to obtain a property tax exemption from the Eagle County Assessor, the VLHA will also accept a nominal ownership interest in the Company; and WHEREAS, for the VLHA to accept a nominal ownership interest in the Company the VLHA must approve the Operating Agreement for the Company (the "Agreement") NOW THEREFORE, BE IT RESOLVED BY THE VAIL LOCAL HOUSING AUTHORITY THAT: Section 1. The VLHA finds and determines, based on the evidence presented at the September IL, 2018 meeting of the VLHA commissioners, that the Project contemplated for the Property substantially benefits person of low income. Section 2. The VLHA finds that is in the best interest of the public health, safety and welfare to accept an ownership interest in the Company. Section 3. Based on the foregoing findings, the VLHA hereby approves the Agreement in substantially the form attached hereto as Exhibit A, subject to final approval by the Vail Town Attorney, and upon such approval, authorizes the Chair of the VLHA to execute the Agreement on behalf of the VLHA. Section 4. This resolution shall take effect immediately upon its passage. VLHA Resolution No. 17, Series of 2018 INTRODUCED, PASSED AND ADOPTED this 11th day of September 2018. z % Steve Lindstrom, Chair SEAL o4 ._ Vail Local Housing Authority ;ff. °o ATTEST: -, o,� .....� Oma; Ol vi./. ... 'h,,,i,A i Li COQ,\\`\. �lV� ec �tary VLHA Resolution No. 17, Series of 2018 OPERATING AGREEMENT OF SOLAR VAIL,LLC A COLORADO LIMITED LIABILITY COMPANY 11118 THIS OPERATING AGREEMENT (the "Agreement") is dated as of201-7', between SONNENALP PROPERTIES, INC., a Colorado corporation with an ad ess of 20 Vail Road, Vail, Colorado 81657 ("SPI"), and the VAIL LOCAL HOUSING AUTHORITY, a Colorado local housing authority with an address of 75 South Frontage Road, Vail, Colorado 81657 (the "VLHA") (collectively the "Members"). RECITALS The Members acknowledge the following: A. SPI has formed Solar Vail, LLC, a Colorado limited liability company (the "Company") for purposes of acquiring, developing, constructing, owning, operating, holding for investment, leasing and selling certain real property in Vail, Colorado described in Exhibit A, attached hereto and incorporated herein by this reference. B. SPI desires to admit the VLHA as a Member of the Company. C. The Members desire SPI to be the manager of the Company. D. The Members desire to set forth in writing their agreements regarding the Company. AGREEMENT In consideration of the Recitals and the mutual agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, the Members agree as follows: ARTICLE I-DEFINITIONS,NAME AND TERM 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,the following definitions shall apply: (a) "Act" means the Colorado Limited Liability Company Act, C.R.S. § 7-80-101, et seq., as amended. (b) "Adjusted Capital Account Deficit" means, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (i) Credit to such capital account any amounts which such Member is obligated to restore pursuant to the terms of the Agreement or under Section 1.704 1(b)(2)(ii)(c) of the Regulations, as well as any addition thereto pursuant to the next to last sentence of Sections 1.704-2(g)(1) and (i)(5) of the Regulations, after taking into account thereunder any changes during such year in Company minimum gain (as determined in accordance 1 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO. 17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENTIOPERATING K A120117(2)..DOCX with Section 1.704-2(d) of the Regulations) and in the minimum gain attributable to any Member's nonrecourse debt (as determined under Section 1.704-2(i)(3) of the Regulations); and (i) Debit to such Capital Account the items described in Sections 1.704- 1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations. The definition of Adjusted Capital Account Deficit is intended to comply with Section 1.704- 1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently with those provisions. (b) "Affiliate" or "Affiliated Person" means, when used with respect to another person, (i) any person who directly or indirectly controls, is controlled by or is under common control with such person, (ii) any person who is an officer of, partner in, member in or trustee of, or who serves in a similar capacity with respect to, such other person, (iii) any person who directly or indirectly is the beneficial owner of 10% or more of any securities of such other person or (iv) any corporation, partnership, limited liability company or other entity of which such other person serves as an officer, director, managing partner, managing member or in a similar capacity. (c) "Articles of Organization" means the Articles of Organization of the Company file with the Colorado Secretary of State on July 16, 2018, as amended. (d) "Capital Account" means the Capital Account maintained and adjusted for each Member pursuant to Section 4.4. (e) "Cash Flow" means all cash receipts of the Company during any year, other than capital contributions of the Members or Net Cash Proceeds, less the sum of payments on indebtedness of the Company (including Working Capital Loans and accrued interest thereon), reimbursement of expenses of the Manager or its Affiliates, all cash expenditures made in connection with the Company's business including, without limitation, capital expenditures, payment on any Related Party Agreements approved in accordance with Section 7.2(b) and all payments to Reserves to the extent such payments and expenditures are made from such cash receipts. Cash Flow shall be determined separately for each fiscal year. (f) "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent superseding federal revenue laws, as amended. (g) "Costs" shall have the meaning set forth in Section 8.5. (h) "Fiscal Year" means the Company's fiscal year, which shall be the calendar year. (i) "Development Agreement" means the agreement entered into October 4, 2017 among SPI,the VLHA and the Town of Vail. (j) "Interest" means the entire membership interest in the Company including the right to receive distributions and to share in the allocations of Profits and Losses pursuant to this Agreement and the Act. 2 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS120181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN71OPERATING K-A120117(2)..DOCX (k) "Manager" means initially SPI. (1) "Net Cash Proceeds" means cash received by the Company derived from the sale, refinancing or total or substantial condemnation, taking or destruction of the Project (which is not used to restore the Project), or from title insurance payable upon a defect in title to the Project, or from any loans made to the Company, less the payment of all expenses related to the generation of such cash including without limitation any expense reimbursements payable to the Manager or its Affiliates and payments on any Related Party Agreements approved in accordance with Section 7.2(b). (m) "Nondeductible Expenditures" means any expenditures including organization expenses which are not amortized under Section 709(b) of the Code and syndication expenses that are not deductible in computing taxable income under the Code and are not capital expenditures. (n) "Person" means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity. (o) "Presumed Tax Liability" for any Member for a Fiscal Year and any Fiscal Year prior thereto, an amount equal to the product of(a) the amount of taxable income allocated to such Member for that Fiscal Year and all Fiscal Years prior thereto and (b) the Presumed Tax Rate. (p) "Presumed Tax Rate" means the highest combined federal and state income tax rate applicable during such Fiscal Year to a natural person residing in Colorado, taxable at the highest marginal federal income tax rate and the highest marginal Colorado income tax rates, determined without regard to the adjustments provided for in Section 67 and 68 of the Code. (q) "Prime Rate" means the prime rate announced by The Wall Street Journal from time to time. (r) "Profits and Losses" means the income or loss of the Company for federal income tax purposes including federal income tax items such as capital gain or loss, tax preference and depreciation recapture. (s) "Project" means the 64 unit employee housing apartment complex and other improvements to be constructed on the real property described in Exhibit A attached hereto. (t) "Regulations" means the proposed temporary and final federal income tax regulations promulgated to the Code, as amended. (u) "Related Party Agreement" means any agreement, arrangement or understanding between the Company and the Manager, any Member or any Affiliate of a Member or Manager, or any officer or employee of the Company, as such agreement may be amended, modified, supplemented or restated in accordance with the terms of this Agreement. 3 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS12018IRESOLUTION NO. 17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN7IOPERATING K-A120117(2).DOCX (v) "Reserves" means, with respect to any Fiscal Year, any funds set aside or amounts allocated during such year to reserves which shall be maintained in amounts deemed sufficient by the Manager for Company expenses, liabilities and operations. For purposes of subsequent distribution of Reserves determined by the Manager to be no longer needed, Reserves which are derived from Cash Flow shall be distributed as Cash Flow and Reserves which are derived from capital contributions or Net Cash Proceeds shall be distributed as Net Cash Proceeds. (w) "Tax Exempt Income" means any income or gain exempt from tax under the Code. (x) "Units" means all of Interest in the Company which is divided into units of participation. (y) "Unreturned Cash Contribution Balance" means with respect to each applicable Member, the total amount of cash contributed to the Company by such Member less the total amount of distributions to such Member pursuant to Section 5.2(b)(iii). 1.2 Continuation. The Company is continued pursuant to the terms of this Agreement. 1.3 Name and Principal Place of Business. The name of the Company is Solar Vail, LLC. The principal place of business of the Company is 20 Vail Road, Vail, Colorado 81657 or such other place as the Manager designates. 1.4 Registered Office and Registered Agent. The Company's registered office is 20 Vail Road, Vail, Colorado 81657, and its registered agent at such address is Johannes Faessler. The Company may change its registered office or the registered agent as provided under the Act. 1.5 Term. The term of the Company shall be perpetual, unless the Company is earlier dissolved or merged in accordance with the provisions of the Agreement or the Act. ARTICLE 2 -BUSINESS OF COMPANY 2.1 Business. The business of the Company shall be limited solely to the following: (a) To acquire, develop, construct, own, operate, hold for investment, lease and sell all or any portion of the Project; (b) To accomplish any lawful purpose related to the Project which shall at any time appear conducive or expedient for the protection or benefit of the Company and its assets; (c) To exercise all the powers necessary to or reasonably connected with the Company's business related to the Project which may be legally exercised by limited liability companies under the Act; and (d) To engage in all activities necessary, customary, convenient or incident to any of the foregoing. 4 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS120181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN71OPERATING K-A120117(2).DOCX 2.2 Change. The business of the Company may be changed only with the prior written consent of all of the Members including the VLHA, which consent a Member may withhold in is sole and absolute discretion. ARTICLE III -MEMBERS 3.1 Admission. SPI and the VLHA are admitted to the Company as Members as of the date hereof 3.2 Addresses. The addresses of the Company's Members are as set forth in Exhibit B, attached hereto and incorporated herein by this reference. ARTICLE IV- CAPITAL 4.1 Contributions to Capital by Members. On the date hereof, each Member has contributed to the Company cash (if any) in the amount set forth next to such Member's name on Exhibit B and each Member is entitled to the number of Units set forth next to such Member's name on Exhibit B. 4.2 No Further Liability. Except as otherwise set forth in Section 8.5, a Member shall not be required to make any additional capital contributions, and such Member shall have no further liability either to creditors of the Company or to the other Members except as required by the Act. The Members shall not be personally liable for the return of the capital contributions of the other Members, it being understood that any return of such contributions shall be made solely from the Company's assets. 4.3 Working Capital Loans. If the Company needs funds to pay operating expenses, capital expenditures or any other financial obligations which are not funded by loans from third parties, capital contributions, reserves or its gross revenues, the Manager shall send written notice thereof to all of the Members. The notice shall set forth the amount of funds needed and the date by which they must be funded. Any Member may, but is not obligated to, provide a loan to the Company (a "Working Capital Loan") to fund all or any portion of any such shortfall. The Members acknowledge that the VLHA cannot and will not provide any Working Capital Loans, the amount funded by each Member shall be as agreed to between the lending Members. Working Capital Loans shall be represented by the Company's unsecured promissory note bearing interest until paid at the rate which is 1.0% above the Prime Rate, and such rate shall change when and as the Prime Rate changes. Working Capital Loans shall be deemed loans to the Company and not capital contributions. 4.4 Capital Accounts. The Company shall maintain a separate Capital Account for each Member which shall be equal to each Member's capital contribution made upon admission to the Company. Each Member's Capital Account shall be credited or debited as the case may be with all of such Member's subsequent capital contributions, withdrawals of capital, and shares of 5 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS12018IRESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENIIOPERATING K-A120117(2).DOCX distributions, Profits and Losses (including special allocations made pursuant to Section 5.3), Tax Exempt Income and Nondeductible Expenditures. In addition, each Member's capital account shall be credited or debited by such other adjustments as may be required by Section 1.704-1(b)(2)(iv) of the Regulations. 4.5 Transfer of Capital Account. In the event of a permitted sale or exchange of a Member's Units, the Capital Account of the transferor shall become the Capital Account of the transferee to the extent it relates to the transferred Units in accordance with Section 1.704-1(b)(2)(iv) of the Regulations. ARTICLE V-PROFITS AND LOSSES; DISTRIBUTIONS; CAPITAL ACCOUNTS 5.1 Profits and Losses. Subject to the provisions set forth in Sections 5.3 and 5.4, Profits and Losses for any taxable year shall be allocated to each Member in such a manner that, as of the end of such taxable year, the sum of: (a) the Capital Account of such Member, (b) such Member's share of minimum gain (as determined according to Section 1.704-2(g)) of the Regulations and (c) such Member's partner nonrecourse debt minimum gain (as defined in Section 1.704-2(i)(3) of the Regulations) shall be equal to the respective net amounts, positive or negative, which would be distributed to such Member or for which it would be liable to the Company under the Act, determined as if the Company were to: liquidate the assets of the Company for an amount equal to their book value for tax purposes and distribute the proceeds of such liquidation pursuant to Section 5.4. Profits and Losses, and items thereof, of the Company are intended to be allocated hereunder in a manner that would cause the distributions from the Company to be made hereunder to the Members in the order and priority set forth in Section 5.2, while at the same time complying with the applicable requirements of Subchapter K of Chapter 1 of Subtitle A of the Code (in particular, Section 704 thereof) and the Regulations, and this Agreement shall be interpreted in a manner consistent with such intent. 5.2 Distributions Prior to Dissolution. Except as otherwise provided in Section 5.5, Cash Flow shall be distributed within 90 days after the close of each Fiscal Year to the Members in accordance with the proportion that the number of Units owned by each Member from time to time bears to the total number of Units. (a) Except as otherwise provided in Section 5.4 and 5.5, Net Cash Proceeds shall be applied and distributed as soon as practicable (but in no event more than 90 days after the close of the Fiscal Year in which the event giving rise to Net Cash Proceeds occurs) in the following order of priority: (i) First, to discharge, to the extent required by any lender or creditor, the debts and obligations of the Company including Working Capital Loans (plus accrued interest thereon) and any expense reimbursements payable to the Manager or its Affiliates and payments on any Related Party Agreements approved in accordance with Section 7.2(b); (ii) Second, to fund Reserves that the Manager deems reasonably necessary for any unforeseen or contingent liabilities or obligations of the Company arising out of or in connection with the business or operations of the Company (at the expiration of such period, or from time to time, as the Manager deems advisable, the balance of such 6 9/7/2018 S:IHOUSING.BOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN7IOPERATING K-A120117(2).DOCX Reserves, or any portion no longer deemed necessary to be held, shall be distributed pursuant to Sections 5.2(b)(iii)through (iv)); (iii) Third, an amount to each Member that has a positive Unreturned Cash Contribution Balance, an amount equal to such Unreturned Cash Contribution Balance; and (iv) Fourth, the balance to the Members in accordance with the proportion that the number of Units owned by each Member from time to time bears to the total number of Units. 5.3 Special Allocations. (a) Qualified Income Offset. Except as provided in Section 5.3(c), in the event any Member unexpectedly receives any adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such unexpected allocation creates or increases an Adjusted Capital Account Deficit of any Member, items of income and gain shall be specifically allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible. (b) Gross Income Allocation. Except as provided in Section 5.3(c), in the event any Member has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of(i) the amount such Member is obligated to restore (pursuant to the terms of this Agreement or otherwise), and (ii) such Member's share of minimum gain, as defined in Section 1.704-2(d) of the Regulations, each such Member shall be specifically allocated items of income and gain in the amount of such excess as quickly as possible. (c) Minimum Gain Chargeback. If there is a net decrease in minimum gain as defined in Section 1.704-2(d) of the Regulations, during any Fiscal Year, each Member shall be allocated items of income and gain for that year equal to that Member's share of the net decrease in minimum gain in accordance with Sections 1.704-2(f) and (g) of the Regulations. This Section is intended to comply with the minimum gain chargeback requirement in such sections of the Regulations and shall be interpreted consistently therewith. (d) Code Section 704(b). It is the intent of the Members that each Member's distributive share of Profits and Losses shall be determined and allocated in accordance with this Article V to the fullest extent permitted by Section 704(b) of the Code and the Regulations. (e) Curative Allocations. The allocations set forth in Sections 5.3(a)-(d) (the "Regulatory Allocations") are intended to comply with Sections 1.704-1(b) and 1.704-2 of the Regulations. Notwithstanding any other provisions of this Article (other than the Regulatory Allocations), the Regulatory Allocations shall be taken into account (based upon advise of the Company's accountant and/or legal counsel) in allocating other Profits and Losses among the Members so that to the extent possible, the net amount of such allocations of other Profits and 7 9/7/2018 S:I HOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS12018\RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENT1OPERATING K-A120117(2).DOCX Losses and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each such member if the Regulatory Allocations had not occurred. 5.4 Distributions Upon Dissolution and Winding Up. (a) Upon liquidation, dissolution and winding up of the Company, distributions will be made in accordance with the positive Capital Account balances of the Members, as determined after taking into account all Capital Account adjustments for the Company's taxable year during which the liquidation or dissolution and winding up occurs and all anticipated adjustments under the section. Liquidation proceeds will be paid by the end of the taxable year (or, if later, within 90 days after the date of the liquidation or dissolution and winding up). It is the intent of the Members, that upon liquidation or dissolution and winding up of the Company, any liquidation proceeds available for distributions to the Members be distributed in accordance with the Members' respective Capital Account balances and the Members agree that the special allocations shall be made to cause the Members' respective Capital Account balances to equal the distributions contemplated under Section 5.2. (b) If any assets of the Company are to be distributed in kind, the assets shall be distributed on the basis of their then fair market value and the Profit and Loss which would have been realized had such assets been sold at such fair market value shall be deemed realized and allocated to the members in accordance with Section 5.1 and credited or charged to their capital accounts, even though no gain or loss may be recognized for federal income tax purposes as a result of such distribution. Any Member other than the VLHA entitled to an interest in the assets shall receive its interest as a tenant-in-common with all other Members so entitled. The fair market value of assets shall be determined by an appraiser selected by the Manager, subject to the approval of the other Members, which approval shall not unreasonably withheld, conditioned or delayed. The VLHA is not entitled to an interest in assets of the Company under this Section. 5.5 Tax Distributions. For each Fiscal Year the Company will, not later than 90 days following the end of such Fiscal Year, to the extent that there is Cash Flow to distribute to each Member, make a distribution in an amount equal to such Member's Presumed Tax Liability for the immediately prior Fiscal Year(a "Tax Distribution"). Any amount distributed pursuant to this Section 5.5 will be deemed to be an advance distribution of amounts otherwise distributable to the Members pursuant to Section 5.2(a) and will reduce the amounts that would subsequently otherwise be distributable to the Members pursuant to such provision. ARTICLE VI - COMPENSATION TO MANAGER AND ITS AFFILIATES 6.1 Generally. The Manager and its Affiliates shall be entitled to charge the Company reasonable and competitive fees for architectural, construction management, and property management services provided to the Company by the Manger and/or its Affiliates. The Manager shall not otherwise be compensated for its services as the Manager (except for distributions relating to the Units of the Manager hereunder). 6.2 Reimbursement of Expenses. The Company shall reimburse the Manager and its Affiliates for all out of pocket expenses they incur or have incurred on behalf of the Company or 8 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO. 17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENTOPERATING K-A120117(2).DOCX in connection with the business of the Company provided such expenses are reasonable. Such expenses shall be evidenced by invoices and proof of payment. ARTICLE VII - MANAGEMENT; RIGHTS AND DUTIES OF MEMBERS 7.1 Manager. (a) Except as expressly provided in Section 7.2(b) and (c) or elsewhere in the Agreement, the Manager shall have full, exclusive and complete discretion in the management and control of the affairs of the Company for the purposes herein stated, shall make the decisions affecting the Company affairs and may take such actions as it deem necessary to accomplish the purposes of the Company; provided, however, that such decisions and actions must be made or taken in good faith with a view to the prudent and expeditious management of the Project and in accordance with any other requirements of this Agreement. Subject to the foregoing, the Manager shall have all the rights and powers of a manager as provided in the Act including without limitation the right to: (i) Execute and deliver any and all documents necessary for the Company to acquire, own, operate and lease the Project or any portion thereof; (ii) Borrow a construction/permanent mortgage loan for purposes of acquiring, developing, constructing and operating the Project, and additional loans for any Company purposes, with all of such loans having such terms and conditions and such rates of interest as the Manager may deem appropriate and in connection therewith if security is required therefor,to mortgage, pledge or subject to any other security interest the Project. (iii) Cause the Project and property acquired by the Company to be taken and held in the name of nominees, trustees, or the Manager or the Company provided that said property shall nevertheless be Company property subject to this Agreement and the VLHA shall maintain its interest in assets of the Company; (iv) Bring, defend, settle, compromise or otherwise participate in any actions, proceedings or investigations (whether at law, in equity or before any governmental authority or agency, and whether brought against the Company of Manager) arising out of, connected with or related to the business and affairs of the Company or the enforcement or protection of interest in the Company, other than those actions, proceedings or investigations related to the VLHA or its interest in the Company, which shall be exclusively handled by the VLHA and its counsel; (v) Purchase insurance as the Manager may deem necessary to protect Company assets and operations; (vi) Enter into agreements for architectural, construction, accounting and legal services and other contracts or agreements and pay from Company funds the consideration required; 9 9/7/2018 S:\HOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENTOPERATING K-A120117(2).DOCX (vii) Employ such persons, firms and corporation and fix their compensation as may be reasonably necessary for the preparation of the Company's financial statements, tax returns and advice and to carry on the business and accomplish the purposes of the Company; (viii) Pay out of Company funds all fees and expenses incurred in the organization of the Company as well as all fees and expenses necessary to carry on the business and accomplish the purposes of the Company; (ix) Establish Reserves and thereafter maintain Reserves in such amounts as the Manger deems appropriate; and (x) Perform any and all other acts or activities customary or incidental to the acquisition, development, construction, ownership, operation, holding for investment, leasing and selling of real estate. (b) Anything herein to the contrary notwithstanding, the Manager shall not have authority to: (i) Do any act in contravention of the Agreement, as amended from time to time; (ii) Do any act which would make it impossible to carry on the ordinary business of the Company; or (iii) Do any act which would cause the Company to commit an illegal act. (c) The Manager shall manage and control the business of the Company in accordance with generally accepted business standards and devote such time to the Company business as shall be reasonably required. The Manager may engage in other business ventures of every kind, independently or with others, including but not limited to hospitality and real estate businesses in all phases, and further including the acquisition, development, ownership and operation of real property which competes with the Project. Neither the Company nor any of the Members shall have any rights in such independent ventures or the income derived therefrom. (d) The Manager shall not be liable, responsible or accountable in damages or otherwise to the Company or to any Member for any acts performed or omitted by it in good faith except for acts or omissions which constitute gross negligence or willful misconduct. The Manager shall be indemnified and held harmless by the Company, to the extent of the Company's assets, against obligations and liabilities arising or resulting from or incidental to the management of the Company's affairs provided that the Manager shall not be entitled to indemnification hereunder for acts or omissions constituting gross negligence or willful misconduct. Any such indemnification shall only be from the assets of the Company and not from the individual assets of any Member. This Section shall not be construed as an indemnification of the Manager by the VLHA. (e) Any of the duties and responsibilities of the Manager under this Agreement may be delegated, assigned or subcontracted by the Manager on whatever reasonable terms and 10 9/7/2018 S:IHOUSINGIBOARDSIVAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS120181RESOLUTIONNO. 17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENT\OPERATING K-A120117(2).DOCX conditions may be acceptable to it at any time to any individual, corporation or other entity which, in the judgment of the Manager, is capable of performing the same. If the Manager assigns, delegates or subcontracts any of its duties and responsibilities hereunder, the Manager shall continue to be primarily responsible for the fulfillment of all its obligation as set forth herein. The fact that the Manager is directly or indirectly interested in or affiliated with any individual, corporation or other entity employed by the Manager to perform a serve or from or to whom the Company may buy or sell services, merchandise, material or other property, shall not prohibit the Manager on behalf of the Company from contracting with such individual, corporation or other entity so long as the fee or price paid or received, and the other terms or conditions governing such arrangement, are reasonable and competitive. (f) SPI shall be the initial Manager of the Company and shall remain the Manager during the term of the Company unless SPI ceases to be a Member of the Company. 7.2 Members. (a) Except as expressly set forth in this Agreement, the Members shall not participate in the management or control of the Company's business, shall not transact any business for the Company and shall not have the power to sign for or bind the Company, said powers being vested solely and exclusively in the Manager. (b) The affirmative vote, approval or consent of the Manager is necessary to do any of the following: (i) Amend the Articles of Organization consistent with this Agreement; (ii) Issue additional Units to existing Members consistent with this Agreement; (iii) Allow a redemption of all or any portion of a Member's Units; (iv) Voluntarily file a petition in bankruptcy against the Company; (v) Sell all or any portion of the Project; (vi) Incur any indebtedness, pledge or grant liens on any assets or guarantee, assume, endorse or otherwise become responsible for the obligations of any other Person, except for the construction/permanent financing for the Project, and any additional loans authorized in this Agreement; (vii) Make any loan, advance or capital contribution in any Person, except to the extent approved or authorized in the Budget; (viii) Enter into or effect any transaction or series of related transactions involving the purchase, lease, license, exchange or other acquisition (including by merger, consolidation, acquisition of stock or acquisition of assets) by the Company of any assets or equity interest of any Person, other than in the ordinary course of business, including, without limitation, residential leases provided that any acquisition of real property interests shall not be considered to be in the ordinary course of business; or 11 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENTIOPERATING K-A120117(2).DOCX (ix) Enter into or effect any transaction or series of related transactions involving the sale, lease, license, exchange or other disposition (including by merger, consolidation, sale of stock or sale of assets) by the Company of any assets. (c) The affirmative vote, approval or consent of all Members is necessary to do any of the following: (i) Authorize the Manager or other persons to do any act on behalf of the Company that contravenes this Agreement or any other agreement to which the Company is a party; (ii) Take or authorize any act which would make it impossible to carry on the ordinary business of the Company; (iii) Commence, undertake or engage in any line of business or project other than the Project or not directly in furtherance of the Project; (iv) Amend the terms and conditions of the Development Agreement or the terms and conditions of any material exhibits thereto, including without limitation, the Deed Restriction(as defined in the Development Agreement); (v) Establish a subsidiary or enter into any joint venture, partnership or similar business arrangement; or (vi) Take or authorize any other act requiring the consent of all of the Members as set forth in this Agreement. 7.3 Budget. (a) Attached hereto as Exhibit C is a financial forecast (the "Forecast") for the Project. The Forecast includes a proposed construction budget for the Project and a proposed initial operating budget for the Project. (b) At least 60 days before the beginning of each Fiscal Year (commencing with the Fiscal Year beginning on January 1, 2019), the Manager shall prepare and submit to the Members a proposed operating budget (the "Budget") for such upcoming Fiscal Year. The Budget shall include detailed capital and operating expense budgets, cash flow projections and profit and loss projections. The Manager shall use its best efforts to operate the Company in accordance with the approved Budget. Not later than 30 days following its receipt of the proposed Budget, the Members must, by written notice to the Manager, either approve or disapprove the Budget. If the Members shall not have responded in writing to the Budget prior to the end of such 30 day period, the Members will be deemed to have approved the Budget. If the Members disapprove of the proposed Budget, then the Manager and Members shall use good faith efforts to agree on the Budget. The Manager shall continue to operate the Company in accordance with existing Budget until a new Budget is approved by the Members. 7.4 Procedural Requirements—Meetings of Members. 12 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN71OPERATING K-A120117(2).DOCX (a) Action by Members. Except as otherwise expressly provided in this Agreement, (i) all actions requiring the approval of the members will be deemed approved if Members owning more than 50% of the outstanding Units, voting together as a single voting group, as of the record date for the meeting or written consent vote in favor of approval, (ii) all Units, regardless of class, will vote together as a single voting group, and (iii) each Unit will have one vote. (b) Meetings of Members. (i) Annual Meeting of Members. An annual meeting of the Members will be held on such date and at time as may be determined by the Manager. The purpose of the annual meeting is to review the Company's operations for the preceding Fiscal Year and to transact such other business as may come before the meeting. The failure to hold any annual meeting has no adverse effect on the continuance of the Company. (ii) Special Meetings. Special meetings of the Members, for any purpose or purposes, may be called by the Manager or by an Member or Members owning at least 10% of the aggregate number of Units then outstanding. (iii) Place. The person calling a meeting of Members may designate the place of the meeting. If the place so designated for a meeting of Members is not in the Colorado area, then such location must be agreed in the case of a Member meeting, by all Members. If no designation is made by a person calling a meeting of Members, the place of meeting will be the Project's principal place of business. (iv) Notice. Notice of any meeting must be given not less than three Business Days nor more than 30 days before the date of the meeting. Such notice must state the place, day and hour of the meeting and, in the case of a special Members meeting, the purpose for which the meeting is called. (v) Waiver of Notice. Any Member may waive, in writing, any notice required to be given to such Member, whether before or after the meeting or other event to which such notice relates. Attendance by a Member at a meeting will constitute a waiver of notice of the meeting, unless the Member attends the meeting for the sole and express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called. (vi) Record Date. For the purpose of determining Members entitled to notice of and to vote at any meeting of Members, or to sign any written consent, the last Business Day before the day on which such notice or consent is first transmitted to the Members will be the record date. Any such determination of Members entitled to vote at any meeting of members will apply to any adjournment of a meeting. (vii) Quorum. A quorum at any meeting of members will consist of Members who own more than 50% of the aggregate number of Units outstanding on the record date for the meeting (which Members may be in attendance in person, by proxy, by telephone or 13 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN71OPERATING K-A120117(2).DOCX by video conference). Any Members meeting at which a quorum is not present may be adjourned to a specific place, day and hour without further notice. (viii) Proxies. At any meeting of members, a Member may vote in person or by written proxy given to another Member. Such proxy must be signed by the Member, or by a duly authorized attorney-in-fact, and must be filed with the Company before or at the time of the meeting. No proxy will be valid after eleven months from the date of its signing unless otherwise provided in the proxy. Attendance at the meeting by the Member giving the proxy will revoke the proxy during the period of attendance. (ix) Meetings by Telephone or Video. The Members may participate in a meeting by means of conference telephone or video or similar communications equipment by which all Members participating in the meeting can hear each other at the same time. Such participation will constitute presence in person at the meeting and waiver of any required notice. The Company will take all reasonable steps to ensure that Members are able to participate by telephone or video conference in meetings of Members. 7.5 Action Without Meeting. Any matter that is to be voted on, consented to or approved by Members may be taken without a meeting, without prior notice and without a vote if consented to, in writing or by electronic transmission, by a Member or Members having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all members entitled to vote thereon were present and voted. A record shall be maintained by the Manager of each such action taken by written consent of a Member or Members. 7.6 Informational Rights. In addition to the information required to be provided pursuant to Article X, the Manager shall keep the other Members reasonably informed on a timely basis of any material fact, information, litigation, employee relations or other matter that could reasonably be expected to have a material impact on the operations or financial position of the Company. The Manager shall provide all material information relating to the Company or the management or operation of the Company as any Member may reasonable request from time to time. ARTICLE VIII -ADDITIONAL RIGHTS AND OBLIGATIONS OF MEMBERS 8.1 Limitation of Liability. Each Member's liability for debt and obligation of the Company shall be limited to the maximum extent permitted under the Act, provided that the VLHA shall have no liability for debts or obligations of the Company. 8.2 List of Members. Upon written request of any Member, the Company shall provide a list showing the names, addresses and Units of all Members. 8.3 Priority and Return of Capital. Except as may be expressly provided in Articles IV and V, no Member shall have priority over any other Member, either as to the return of capital contributions or as to Profits, Losses or distributions; provided that this Section shall not affect the right of a Member to received payments of principal and/or interest with respect to Working Capital Loans which a Member has made to the Company. 14 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS120181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN7IOPERATING K-A120117(2).DOCX 8.4 Liability of a Member to the Company. (a) A Member who rightfully receives the return in whole or in part of its capital contribution is only liable to the Company to the extent now or hereafter provided by the Act, provided that the VLHA shall never be liable to the Company. (b) A Member who receives a distribution made by the Company that is either in violation of(i)this Agreement or(ii)the act is liable to the Company and its creditors only to the extent required by the Act, provided that the VLHA shall never be liable to the Company or its creditors. 8.5 Indemnification. SPI shall indemnify, defend and hold the VLHA and its agents, employees, officers and attorneys harmless from and against any and all claims, costs, damages, expenses, liabilities and losses, including, without limitation, reasonable attorneys' fees, (collectively, "Costs") in any way arising out of or resulting from the VLHA being a Member of the Company except to the extent the Costs arise out of or result from the VLHA's gross negligence or willful misconduct. ARTICLE IX-TRANSFER OF UNITS; ADMISSION OF MEMBERS 9.1 Transferability of Member's Units. (a) A Member may transfer all of any portion of its Units to any other Member of the Company at any time or to any Affiliate; provided, however,that, except as otherwise set forth in Article XIII, in no event shall the VLHA assign its Units to any other Member with the consent of all of the other Members, which consent may be withheld by a Member in its sole and absolute discretion. A Member may not transfer of all or any portion of its Units to a non- Member unless an Affiliate without the consent of all of the other Members, which consent shall not be unreasonably withheld, conditioned or delayed. The VLHA shall be deemed to consent to any transfer of Unit to a non-Member or Affiliate as long as the VLHA is not prohibited by applicable law from doing business with such non-Member. Any purported transfer in violation of Section 9.1(a) shall be void and have no effect and, unless the provisions of Section 9.3 have been met, the transferee of any Units shall be entitled only to those rights set forth in Section 9.2. The term "transfer" when used in this Article includes a sale, assignment, gift, pledge, exchange, transfer by operation of law of any other disposition or encumbrance. (b) Notwithstanding anything in Section 9.1(a) to the contrary, upon the bankruptcy, assignment for the benefit of creditors, dissolution, death or legal incapacity of a Member, the rights set forth in Section 9.2 shall descend to and vest in its successors, trustees, receivers, assignees for the benefit of creditors, heirs, legatees or other legal representatives. Such transferee shall not become a substitute Member unless the provisions of Section 9.3 are satisfied. Notwithstanding anything to the Act to the contrary, a transferee under this Section 9.1(b) shall not be entitled to receive a distribution in complete redemption of the fair value of the Units being transferred. (c) Notwithstanding any provision of the Agreement to the contrary, no transfer of any Units may be made nor shall such a transfer be effective if such transfer would cause the 15 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS120181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENTIOPERATING K-A120117(2).DOCX termination of the Company for Federal income tax purposes or cause the Company to lose its tax classification as a partnership. THE UNITS DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE UNITS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. 9.2 Rights of Transferee and Transferor. (a) Unless admitted as a substitute Member in accordance with Section 9.3, a transferee of Units in accordance with Sections 9.1(a) or 9.1(b) shall obtain only the right to receive the distributions and to share in the allocations of Profits and Losses pursuant to this Agreement and the Act and shall have no right to become a Member or to exercise any of the rights of a Member pursuant to Section 7.2(b) or otherwise (except with respect to a transferee that is a preexisting Member prior to the Transfer). (b) The transferor shall forfeit its entire interest in the Company including, but not limited to, the rights set forth sin Section 7.2(b) as to the Units transferred notwithstanding the fact that the transferee may not be admitted as a substitute Member. 9.3 Admission as Substitute Member. A non-Member transferee of any Units may be admitted as a substitute Member only upon satisfaction of all of the following conditions: (a) All of the non-transferring Members have consented in writing to the admission of such transferee a substitute Member, which consent shall not be unreasonably withheld. The VLHA shall be deemed to consent to the admission of the transferee as a substitute Member as long as the VLHA is not prohibited by applicable law from doing business with such transferee. (b) The transferee has accepted, in form satisfactory to the non-transferring Members, all the terms and provisions of this Agreement. (c) The Company has received from the transferee a sworn statement that it has acquired the Units for investment and not for resale. (d) The Company has received such other documents, instruments or consents as may be required to affect the transferee's admission as a substitute Member. (e) The transferor has paid to the Company such reasonable expenses as may be incurred in connection with the admission of the transferee as a substitute Member, including, but not limited to, the actual expenses of the Company in obtaining any legal advice or opinion of counsel relating to the transfer. (f) The transferor has indemnified the Company and all of the remaining Members against any and all loss, damage or expense including, but not limited to, reasonable attorney fees, tax liabilities or loss of tax benefits, arising or incurred directly or indirectly as a result of any transfer. 16 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS12018IRESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN71OPERATING K-A120117(2).DOCX 9.4 Admission of Additional Members. Additional Members may be admitted into the Company by issuance of additional Units, provided that all of the Members consent in writing to the admission of additional Members. The VLHA shall be deemed to consent to the admission of any additional Member into the Company as long as the VLHA is not prohibited by applicable law from doing business with such additional Member. ARTICLE X-ACCOUNTING AND BANK ACCOUNTS 10.1 Books. The Company shall maintain books and records which shall be kept at the principal office of the Company of such other place designated by the Manager. Each Member shall have access to and the right to inspect and copy such books and records during normal business hours. At a minimum the Company shall keep at is principal place of business the following records: (a) A current alphabetical listing of the full name and last known mailing address of each Member and transferee of a member, both past and present, including the date the person became a Member and the date, if applicable, on which the person ceased to be a Member. (b) A copy of the Articles of Organization of the Company and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any such Articles of Organization or amendment had been executed; (c) Copies of the Company's federal, state and local income tax returns and reports, if any, for the four most recent years and, if such returns are not prepared for any reason, copies of the information and statements provided to, or which should have been provided to, the Members in order to enable them to prepare their federal, state and local income tax returns for the four most recent years; (d) Copies of all operating agreements of the Company, including all amendments and any operating agreements no longer in effect, copies of any writings permitted or required with respect to a Member's obligation to contribute cash, property or services, and copies of any financial statements of the Company for the three most recent years; (e) Minutes of every annual, special and court ordered meeting; (f) Any written consents obtained from Members for actions taken by Members without a meeting; and (g) A statement of each Member's Capital Account. 10.2 Accounting and Reports. (a) Within 90 days after the end of each Fiscal Year, the Manager shall send to each Member a narrative summary report of operations and progress in bringing the Project to fruition (or result of operations if construction of the Project has been completed). (b) Within 20 days after the occurrence of any Material Adverse Event (as defined below), the Manager shall send to each Member a report of such event, describing in reasonable 17 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS12018IRESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN7IOPERATING K-A120117(2).DOCX detail the nature, causes and likely consequences of such event. For purposes hereof, a "Material Adverse Event" shall mean any occurrence, circumstance or event reasonably likely to have a material adverse affect on the Project or its prospects, including without limitation any accident, natural disaster, fire, damage or destruction, legal or regulatory proceedings, or deterioration in financial conditions. (c) No later than 60 days prior to the end of any Fiscal Year, the Manager shall send to each Member a budget setting forth the Manager's estimate of capital expenditures and operating costs for the next succeeding Fiscal Year, and, if applicable, anticipated revenues for the next succeeding Fiscal Year. 10.3 Bank Accounts. The Manager, in the name of the Company, shall open and maintain bank accounts in which only funds of the Company shall be deposited. The funds in such accounts shall be disbursed solely for the business of the Company. Withdrawals from any Company bank account shall be made only upon signature of such person or persons as the Manager may designate from time to time. 10.4 Method of Accounting. The books and records of the Company shall be maintained on the accrual method of accounting used for federal income tax purposes. ARTICLE XI-DISSOLUTION AND WINDING UP 11.1 Dissolution. The Company shall dissolve on the happening of any of the following events: (a) Written agreement of the Manager and Members to dissolve the Company; (b) The sale, lease or other disposition of all or substantially all of the assets of the Company in any transaction or series of transactions; or (c) By decree of judicial dissolution pursuant to the Act. 11.2 No Withdrawal Power. Other than as set forth in Article XIII for the VLHA, no Member shall have the power to withdraw by voluntary act from membership in the Company without the unanimous written consent of all of the other members (including the Manager), except upon any transfer of all of the Units of such Member in a manner permitted by this Agreement. 11.3 No Redemption Upon Dissociation. Notwithstanding anything to the contrary in the Act, upon an event of dissociation that does not cause dissolution of the Company, the dissociating Member (or its transferee) shall not be entitled to receive a distribution in complete redemption of the fair value of Member's Units. 11.4 Procedure on Dissolution and Winding Up. Upon the dissolution of the Company, a balance sheet shall be prepared by the Company's accountant and furnished to each of the Members within a reasonable time after dissolution. The Manager shall proceed with reasonable promptness to wind up the business of the Company. Any Member may purchase Company assets upon winding up. If the Manager decides to sell Company assets, it shall not be required 18 9/7/2018 S:IHOUSINGIBOARDS\VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONSI20181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN11OPERATING K-A120117(2).DOCX to do so promptly but shall have reasonable discretion to determine the time and manner in which the sale shall be made, giving due regard to general financial and economic conditions. 11.5 Articles of Dissolution. Upon completion of the winding up, liquidation and distribution of the assets, the Manager shall file Articles of Dissolution and thereafter the Company shall cease to exist. ARTICLE XII -AMENDMENTS 12.1 Amendments. This Agreement may be amended only by the written consent of all of the Members excluding the VLHA; provided, however, that this Agreement may not be amended in any manner that would adversely affect the VLHA or change the purpose or business of the Company unless the VLHA consents to such amendment in writing. ARTICLE XIII -VLHA PROVISIONS 13.1 General. In the event of any inconsistencies between the terms of this Article and other terms of this Agreement, this Article shall control. 13.2 VLHA Authority. The Members acknowledge: that the VLHA is a Colorado governmental entity with the limited powers and authority set forth in C.R.S. § 29-4-201, et seq., as amended (the "Housing Authorities Law"); that the VLHA cannot continue to be a Member if the Company expands its business into areas that do not qualify as housing projects under the Housing Authorities Law; that the VLHA can never be liable for any debt, loan or other obligation of the Company or any of its Members; that the VLHA can never be named as an oblige on any debt, loan or other obligation of the Company or any of its Members; and that the VLHA can only act by resolution or motion of its Board occurring at a properly noticed public meeting. Further, except as otherwise expressly set forth in this Agreement, the VLHA shall be a nonvoting Member with no authority to bind the Company in any transaction, contract or legal proceeding. 13.3 Governmental Immunity. The VLHA and its officers, attorneys and employees are relying on, and do not waive or intend to waive by any provision of this Agreement, the monetary limitations or any other rights, immunities and protection provided by the Colorado Governmental Immunity Act, C.R.S. § 24-10-101, et seq., as amended, or otherwise available to the VLHA and its officers, attorneys or employees. 13.4 VLHA Withdrawal. (a) If the real estate property tax exemption for the Project is rescinded or revoked in full, SPI shall notify the VLHA in writing thereof(the "Tax Exemption Notice"). The VLHA and SPI shall, within 10 days after the date on which the VLHA receives the Tax Exemption Notice, enter into an assignment agreement pursuant to which the VLHA shall assign to SPI, free and clear of any and all liens and encumbrances, the VLHA's entire Interest in the Company, for the sum of$1. Upon the execution and delivery of such assignment agreement by the VLHA, the VLHA shall no longer be a Member of the Company. 19 9/7/2018 S:I HOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS120181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENTIOPERATING K-A120117(2).DOCX (b) In addition, should the Company expand its purposes to include business unrelated to the Project, or expand its business into areas that do not qualify as housing projects under the Housing Authorities Law, the VLHA and SPI shall enter into an assignment agreement pursuant to which the VLHA shall assign to SPI, free and clear of any and all liens and encumbrances, the VLHA's entire Interest in the Company, for the sum of $1. Upon the execution and delivery of such assignment agreement by the VLHA and SPI, the VLHA shall no longer be a member of the Company. 13.5 Successor Company. If the Company assigns its ownership or leasehold interest in the Project to another Colorado limited liability company, or if the Company sells the Project (including the real estate) to another Colorado limited liability company, and such successor Colorado limited liability company requests that the VLHA be a member of such company, the VLHA agrees to participate as a member of such successor Colorado limited liability company so long as the rights and obligations of the VLHA under the operating agreement of any such successor Colorado limited liability company are the same as the rights and obligations of the VLHA under this Agreement; provided that the VLHA may refuse to join such successor Colorado limited liability company if the VLHA determines, in its sole discretion, that the VLHA is not authorized by the Housing Authorities Law or other applicable law to be a member of such limited liability company. ARTICLE XIV-MISCELLANEOUS 14.1 Notices. All notices shall be in writing and deemed given when deposited in the United States mail, first class postage prepaid, addressed to the Member at the address set forth on the first page of this Agreement, as amended in writing. 14.2 Entire Agreement. This Agreement contains the entire agreement among the parties and supersedes any prior understandings or agreements among them. 14.3 Successors in Interest. Except as otherwise provided, all provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by and again the respective heirs, executors, administrators, personal representatives, successors and assigns of any of the parties. 14.4 Execution of Additional Documents. Each member shall execute and deliver such other and further instruments necessary to comply with any laws, rules or regulations relating to the formation of the Company of the conduct of business by the Company. 14.5 Arbitration. The Members (other than the VLHA) shall submit all controversies to arbitration in Eagle County, Colorado in accordance with the Commercial Arbitration Rules and practices of the American Arbitration Association. This agreement to arbitrate shall be specifically enforceable. Notwithstanding the foregoing, in the event the VLHA is a party to any controversy concerning this Agreement, such controversy shall be litigated and the venue for such litigation shall be a court of competent jurisdiction in Eagle County, Colorado. 14.6 Counterparts. This Agreement may be executed in several counterparts and each executed counterpart shall be considered an original of this Agreement. 20 9/7/2018 S:IHOUSINGIBOARDSI VAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS120181RESOLUTION NO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMEN71OPERATING K-A120117(2).DOCX 14.7 Captions. The captions at the beginning of the several articles, sections and subsection of this Agreement are not part of the context, are merely labels to assist in the locating and reading of those sections and subsection and shall be ignored in construing this Agreement. 14.8 Governing Law. This Agreement shall be governed exclusively by its terms and by the laws of the State of Colorado and specifically the Act. 14.9 Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the remainder of this Agreement shall be enforceable to the fullest extent permitted by law. In addition, any provision of this Agreement which is construed to cause the Company to be taxed as a corporation shall be repealed, limited or construed in a manner which will allow the Company to qualify as a partnership for federal income tax purposes. 14.10 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company. SONNE I' ' I •ERTIES, INC. "' By: e. . •��T Johannes ! aessler, President VAIL LOCAL HOUSING AUTHORITY By: Chair L;•-JV S r��-►ti_ 21 9/7/2018 S:IHOUSINGIBOARDSIVAIL LOCAL HOUSING AUTHORITYIRESOLUTIONS12018IRESOLUTIONNO.17 SERIES OF 2018 SOLAR VAIL OPERATING AGREEMENTIOPERATING K-A120117(2).DOCX { LTG Policy No. CTEJ58022708 • Our Order No. VTF50022708 EXHIBIT"A"LEGAL DESCRIPTION PARCEL 1 A PORTION OF LOT 8, BLOCK 2,VAIL/POTATO PATCH, A SUBDIVISION RECORDED IN BOOK 233.AT PAGE 629, OF THE EAGLE COUNTY, COLORADO, CLERK AND RECORDER'S RECORDS, SAID PORTION OF LAND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS; BEGINNING AT THE SOUTHEASTERLY CORNER OF SAID LOT 8, WHICH IS A POINT ON THE NORTHERLY RIGHT OF WAY LINE OF INTERSTATE HIGHWAY NO. 70; THENCE WESTERLY ALONG SAID NORTHERLY RIGHT OF WAY LINE AN ARC DISTANCE OF 200.93 FEET ON A 3990.0 FOOT RADIUS CURVE TO THE LEFT, WHOSE CENTRAL ANGLE IS 2 DEGREES 53 MINUTES 07 SECONDS AND WHOSE CHORD BEARS SOUTH 82 DEGREES 36 MINUTES 28 SECONDS WEST A DISTANCE OF 200,91 FEET; THENCE NORTH 0 DEGREES 07 MINUTES 12 SECONDS WEST A DISTANCE OF 238: 85 FEET TO A POINT ON THE NORTHERLY BOUNDARY LINE OF SAID LOT 8;THENCE SOUTH 86 DEGREES 16 MINUTES 09 SECONDS EAST ALONG SAID NORTHERLY BOUNDARY LINE A DISTANCE OF 199.74 FEET TO THE NORTHEASTERLY CORNER OF SAID LOT 8;THENCE SOUTH 0 DEGREES 07 MINUTES 12 SECONDS EAST ALONG THE EASTERLY BOUNDARY LINE OF SAID LOT 8 A DISTANCE OF 200.00 FEET TO THE POINT OF BEGINNING. i fi EXHIBIT B Name and Address Initial Capital Units SPI, Inc. $0 99.90 20 Vail Rd. Vail, Colorado 81657 The Vail Local Housing Authority $0 0.10 75 South Frontage Road Vail, Colorado 81657