20081121Pinardi added Direct.pdf

[phone]
[phone] (Fax)
McDevitt & Miller LLP
Lawyers
R.ECE\V420 W. Bannock Street
P.O. Box 2564-837CUU8NO'l 2 \ PH 3: 5~Boise, Idaho 8370!U .' ,',
UT\~R~~J30 Jä:~~\~S\ON
November 21,2008
Chas. F. McDevitt
Dean J. (Joe) Miler
Via Hand Deliveiy
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington St.
Boise, Idaho 83720
Re: Teton Springs Water and Sewer Company, LLC.
Case No. TTS-W-û8-ûl
Dear Ms. Jewell:
Enclosed for filing in the above matter please find nine (9) copies of the Supplemental Direct
Testimony of Jon Pinardi and the Supplemental Direct Testimony of Larry A. Crowley.
Also enclosed is a computer disc containing the same along with copies ofthe Testimonies marked
"Reporter's Copy."
At the conclusion of the oral argument held on November 7, 2008, it was uncertain whether the
Commission desired to convene an evidentiary hearing or to schedule further oral argument
subsequent to this fiing. We have made this supplemental fiing in the form of testimony in the event
the Commission desires to convene an evidentiary hearing so that there wil be sponsoring witnesses
who wil be able to respond to any questions the Commission might have.
After an opportunity for review, please advise whether the Commission desires to proceed by
evidentiary hearing or oral argument.
Very Truly Yours,~tüLP
Dean J. Miller
DJM/hh
Enclosures
C: Teton Water and Sewer Company, LLC
Dean J. Miler (lSB No. 1968)
McDevitt & Miler LLP
420 West Bannock Street
P.O. Box 2564-83701
Boise, Idaho 83702
208-343-7500 (T)
208-336-6912 (F)
ioeCimcdevitt-miler.com
OR1G,lNAL
RECfl
100B NOV 21 PH 3: S4
UTlde~~O PUBLICCOMMISSION
Attorneys for Teton Springs Water & Sewer Company LLC.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
TETON SPRINGS WATER AND SEWER
COMPANY LLC, FOR THE ISSUANCE OF A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY, FOR APPROVAL OF
RATES AND CHARGES FOR WATER
SERVICE, FOR APPROVAL OF
RULES AND REGULATIONS GOVERNING
THE RENDERING OF WATER SERVICE.
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Case No. TTS-W-08-01
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
SUPPLEMENTAL DIRECT TESTIMONY OF JON PINARDI
November 21, 2008
1 Q.Please state your name and occupation.
2
3 A.My name is Jon Pinardi and I am the Manager of Teton Water and Sewer
4 Company LLC ("Teton Springs").
5 Q.Are you the same Jon Pinardi who previously fied Direct Testimony in this
6 matter?
7 A.Yes I am.
8 Q.What is the purose of your Supplemental Testimony?
9 A.My Supplemental Testimony addresses questions raised by the Commission at the
10 Oral Arguent held on November 7, 2008.
11 History of the Development
12 Q.At the November 7th Oral Arguent, the Commission expressed interest in
13 understanding more fully the history of the Teton Springs PUD and associated
14 provision of water service. Please describe the history ofthe Teton Springs PUD
15 development.
16 A.The project developer purchased the real property upon which Teton Springs
17 PUD in 2000. Construction of the project's infrastrctue commenced in 2001
18 and was substantially completed in 2006; sale of lots within the development
19 commenced in 2001. In the year 2001, 19 lots out of a total of 601 lots were sold.
20 Water and Sewer District
21 Q.What was the developer's original plan for the provision of water service?
22 A.Originally it was contemplated that water and sewer service would be provided
23 through a water and sewer distrct.
Pinardi, Su Di 1
Teton Springs Water and
Sewer Company LLC
1 Q.
2
3 A.
4
5
6
7
8
9
10
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12
13
14
15
16 Q.
17
18 A.
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20
21
22
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Please describe the efforts that were undertaken in the formation of a water and
sewer distrct.
Durng the early par of 2006, representatives of the developer worked with
attorney Dale Storer of the law firm Holden, Kidwell, Hah & Crapo in Idaho
Falls to prepare necessar documents for the creation of a district. In October of
2006, a Petition was filed in distrct cour to authorize an election necessar for
the creation of a district. A hearng was held in Januar of 2007, and an election
was authorized for Mayof2007, the next time at which an election would be
legally scheduled. The election was held on May 22, 2007 and the measure to
create the distrct was passed. The election results were certified in June of2007.
In July of 2007 the anual meeting of the Homeowners Association was held. At
this meeting several homeowners objected to the purchase of the system assets by
the distrct. As a result, the homeowners who had been previously elected to the
distrct's Board of Directors decided not to pursue any fuher effort in the face of
determined opposition. The water district was abandoned.
Did representatives of the developer communicate with the Commission Staff
durng this period of time?
Yes. Representatives of the developer traveled to Boise in November of 2005 and
in early 2006, and met with the Commission Staff to explain the existence of the
water system and the intent to create a water and sewer distrct. Mr. Storer kept
the Staff advised on developments by correspondence. Attached to this
Supplement Testimony as Exhibit No. 12, is correspondence from Mr. Storer to
Mr. Scott Woodbur advising of activities related to the distrct.
Pinardi, Su Di 2
Teton Springs Water and
Sewer Company LLC
1 Q.Have you caused to be prepared a more detail chronology of activities related to
2 Teton Springs Water and Sewer Company?
3 A.Yes. Attached as Exhibit 13 is a detailed chronology prepared by Mr. Storer
4 based on a review of his files.
5 Q.Was there ever any attempt to mislead the Staff regarding the status of the water
6 system and the provision of water service?
7 A.Absolutely not.
8 IPUC Application
9 Q.After the effort to create a water and sewer distrct collapsed, what occured next?
10 A.Our attorneys then determined that water service could only be legally provided
11 by a regulated public utility. The Company retained the firm of McDevitt &
12 Miler in December of 2007 to prepare the Application for Cerificate of
13 Convenience and Necessity and the Company's initial general rate case. At the
14 same time it retained Mr. Larr Crowley to prepare and fie the financial analysis
15 necessary to support a rate request. The effort required to prepare the financial
16 analysis was substantial and was completed in May of2008. The Company's
17 Application was filed promptly after the analysis was finalized.
18 Corporate Organization
19 Q.When was Teton Springs Water and Sewer Company LLC created?
20 A.The Aricles of Organization were filed with the Idaho Secretar of State in
21 August of2005.
22 Q.Did Teton Springs begin to provide water and sewer service at that time?
Pinardi, Su Di 3
Teton Springs Water and
Sewer Company LLC
1 A.
2
3
4
5 Q.
6 A.
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8
9 Q.
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11 A.
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13
14
15
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17 Q.
18 A.
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20 Q.
21 A.
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No, it did not. It was originally contemplated that the developer LLC would hold
the water and sewer assets pending creation of the water and sewer distrct and
then transfer the assets to the distrct. Durng that period, Teton Springs Water
and Sewer was a legal entity, but it was inactive.
Please describe the corporate strctue of Teton Springs Water and Sewer.
Teton Springs Water and Sewer is a sole member limited liability company. The
sole member of Teton Springs Water and Sewer is Teton Springs Golf and
Casting LLC, the original developer.
Has Teton Springs Water and Sewer taken the necessary steps to preserve its
corporate identity separate and apar from the developer?
Yes. There is a formal Operating Agreement, which is attached as Exhibit 14 and
which is required by the Idaho Limited Liabilty Act. Teton Springs Water and
Sewer has filed the necessar Anual Reports to the Idaho Secretar of State in
each year of its existence. Teton Springs Water and Sewer has separate ban
accounts and there is no commingling of fuds with Teton Springs Golf and
Casting.
Is there also a Homeowner's Association (HOA) withn the development?
Yes. The Homeowner's Association is a separate corporation, Teton Springs
Homeowner's Association, Inc., an Idaho Corporation.
Does the developer have any continuing interest in the HOA?
No. The developer conveyed control of the HOA to an independently elected
Board of Directors in 2007. There currently is no relationship between the
developer and the HOA, other than the fact that I serve on the HOA Executive
Pinardi, Su Di 4
Teton Springs Water and
Sewer Company LLC
1 Board. I was nominated by the property owners, not the developer, and elected at
2 the anual meeting in 2008 to serve a 3 year term.
3 Q.What is the relationship, if any, between Teton Springs Water and Sewer and the
4 HOA?
5 A.None, other than the HOA Restrctive Covenants specify that private wells and
6 septic systems are not permitted and the property owners must connect to the
7 Teton Springs Water and Sewer Company.
8 Provision of Water Service Prior to IPUC Application
9 Q.From the time that the Teton Springs PUD commenced operations up to the time
10 the Company's Application was filed with the Commission, please explain how
11 water service was provided.
12 A.In the early phase of operation, following inception in 2001, the water system
13 assets were stil held within the development company and water service was
14 provided by that company. I was hired in Januar of2006. Because of my
15 experience in operating water and sewer systems within resort communities, one
16 of my first tasks was to begin to separate the water and sewer operations from the
17 development operations and to create a system of accounts that would track water
18 revenue and expense separately from the development operations. We also
19 retained the engineering firm CH2MHILL to conduct a system appraisal and rate
20 study that would have supported rates to be charged by the water and sewer
21 distrct.
22 Q.What were the rates for water service during the early phase of operation?
Pinardi, Su Di 5
Teton Springs Water and
Sewer Company LLC
I A.
2
3 Q.
4 A.
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6
7
8
9 Q.
10 A.
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12 Q.
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14 A.
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18
The initial rate was a flat $180 biled and paid quarterly for water and sewer
combined.
Were those rates suffcient to cover operating costs?
During the early phase of operation financial records were not maintained in a
way that would permit a meaningful profit and loss accounting. However, our
records indicate that by the end of 2004 there were 7 customers and by the end of
2005. there were 46 customers. It is a certainty that the revenue from such a small
number of customers was far below the expense of providing service.
Were the rates for water service subsequently adjusted?
Yes. In September of 2006, a new rate strctue was adopted. Those rates were
a flat $240 rate biled and paid quarerly for water service.
Do you believe the development company profited from the provision of water
service?
I am confident it did not. As noted, durng the early phase, rates were very low
and there were a very small number of customers. Even after rates were adjusted
in 2006 the Company operated at a loss. For the test year 2007, Mr. Crowley
calculated a revenue deficiency of $99,256. (See Direct Testimony of Lar A.
Crowley, May 20, 2008).
19 Teton Springs Water and Sewer Transactions with Developer
20
21
22
Q.At the Oral Arguent the Company indicated that at the time of the asset transfer
there was not consideration paid to the development company. Do you believe
that to be unusual or improper?
Pinardi, Su Di 6
Teton Springs Water and
Sewer Company LLC
1 A.
2
3
4
5
6
7
8
9 Q.
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12 A.
13 Q.
14 A.
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No. The transfer was a transfer between a parent company and a wholly owned
subsidiar company. In such transactions it is common that there is no
consideration. Additionally, a payment of consideration could have trggered a
tax liability for the parent. Furher, our attorneys advised us it was unlikely that
the Commission would have allowed a retu on any sums paid in consideration
of the transfer. In such circumstances there was no logic to support payment of a
compensation for the transfer. The transfer documents are attached to this
Supplemental Direct Testimony as Exhbit 15.
At the Oral Argument the Staff attorney suggested that Teton Springs is a shell
corporation. (Tr. Pg. 43). Is it fair to characterize Teton Springs as a "shell" or
"phantom" corporation?
Absolutely not. That description is extremely misleading.
Please explain.
In the business world the phrase "shell corporation" refers to a corporation that
exists on paper but does not have any significant assets or business operations. In
some cases a shell corporation may have a legitimate purose as an investment
vehicle or tax shelter; in other cases shell corporations may be sham corporations
with no legitimate business purose.
In contrast, Teton Springs owns assets with a replacement cost of
approximately six milion dollars. It has active business operations. Teton
Springs is not in any sense a shell or phantom corporation. And, as noted above,
Teton Springs Water and Sewer has preserved its independent corporate identity.
Pinardi, Su Di 7
Teton Springs Water and
Sewer Company LLC
1 Q.
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4 A.
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At the Oral Arguent the Staff attorney fuher suggested that the development
company should have "disgorged some of its profits" to establish a sinkng fud.
(Tr. Pg 43). What is your reaction to that suggestion?
I have severaL. First, this suggestion was not contained in Staffs wrtten
Comments. It appears to have occurred to the Staff attorney as he was speakng,
without thoughtful consultation with the Staff.
Second, Teton Springs has always acknowledged that the cost of the water
system infrastructue was recovered in sales oflots by the developer and that
following transfer to Teton Springs the system assets retained their character as
contrbuted property. Teton Springs has not attempted to conceal, distort or
misrepresent this fact. It has not attempted to invent a rate base when none
existed. Because lot owners have, in effect, paid for the system assets through lot
purchases it would be inappropriate for Teton Springs to recover the cost of the
assets again from water customers. Accordingly, Teton Springs has not requested
a return investment in system assets in its rates.
What Teton Springs has requested is an expense element in rates, which
we have labeled an amortization expense, which would allow for the orderly
maintenance, repair and replacement of the systems assets. It is fair and logical
that customers, not the developer, have the cost responsibility for maintenance,
repair and replacement of system assets because it is the customers, not the
developer, that benefit from the existence and operation of the water system
assets.
Pinardi, Su Di 8
Teton Springs Water and
Sewer Company LLC
1 Further, the phrase "disgorge profits" implies there are some past profits to
2 give back. As discussed above, the water system has never operated at a profit.
3 Finally, the phase "disgorge profits" implies some form of wrong doing by
4 either Teton Springs or its owner. Throughout this case, from the initial
5 Application, to cooperation with the Staff audit, to the Company's Reply
6 Comments and this Supplemental Testimony, Teton Springs has been
7 forthcoming in disclosing all relevant information. The Staff audit did not reveal
8 impropriety of any natue.
9 Q.In a similar vein, at Oral Arguent a question was raised as to whether customers
10 have acquired some form of equitable interest in the system assets. Do you have
11 an opinion?
12 A.Except in narow circumstances, I do not believe that utility customers become
13 equitable owners of utility assets by virte of paying rates, any more than
14 customers of Chevron Oil become, in effect, shareholders by purchasing gasoline
15 at the pump.
16 Need for Amortization Expense Allowance and Reserve for Repairs
17 Q.At the Oral Arguent the Staff Attorney observed that the water system is well
18 designed and constrcted and is relatively new, implying there is not a need for a
19 reserve for repairs. (Tr. Pg. 25). Does that correctly describe the circumstance?
20 A.Although the system is about five years old, the need for repairs stil arses. For
21 example, in the four month period from December 2006 though March 2007 the
22 Company incured the following expense for repairs, totaling $24,944, as
23 reflected by invoices from our repair contractor:
Pinardi, Su Di 9
Teton Springs Water and
Sewer Company LLC
1
2
3
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7 Q.
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9 A.
10 Q.
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13 A.
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15 Q.
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17 A.
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· 12/18/06:$16,545: Repair mainline where a thrst block failed;
· 1/25/07:$1,890: Locate, expose and repair curb stop;
· 2/9/07:$5,909: Repair broken mainline;
· 3/7/07:$600: Repair broken line at a curb stop.
Fortately, since that time repairs have been minimal, but this seres to show
that at any paricular time unexpected repair expense can be significant.
Would the revenues produced by the rates proposed by Staffhave been suffcient
to pay repair expense incured between December 2006 and March 20071
No they would not.
Could repairs of the nature as were necessar durng that period of time have
been deferred while the Company applied to the Commission for an emergency
surcharge?
No. A public drnkng water system is obligated to provide continuous service
and does not have the luxur of waiting to make system repairs.
Does the climate of the region in which the Teton Springs is located pose special
challenges?
Yes. The winter climate conditions are harsh. For example, durng the months of
Januar and Februar the average minimum temperatue is 7.5 degrees and the
average snow depth is 13 inches. Temperatues of 40 degrees below zero have
been recorded. This creates stress on the system and complicates repairs durng
the winter months. To ilustrate, attached to this Supplemental Testimony as
Exhibit No. 16, are photographs depicting the weather conditions in December of
2006 when repair of a mainline was necessar.
Pinardi, Su Di 10
Teton Springs Water and
Sewer Company LLC
1 Q.
2 A.
Does that conclude your testimony?
Yes it does.
Pinardi, Su Di 11
Teton Springs Water and
Sewer Company LLC
Law Offces
HOLDEN, KIDWELL, HAHN & CRAPO, P.L.L.C.
KENT W. FOSTER
ROBERT E. FARNAM
WILLIAM D. FALER
CHARLES A. HOMER
GARY L. MEIKLE
DONALD L. HARRIS
DALE W. STORER
FREDERICK J. HAHN, II.
KARL R. DECKER
SHAN B. PERRY
DEANNE CASPERSON""
AMELIA A. SHEETS
ROBER T L. HARRIS
*Also licensed in Wyoming
"' Also licensed in Missouri and Kansas
1000 RIVERWALK DRIVE, SUITE 200
P.O. BOX 50130
IDAHO FALLS, IDAHO 83405
Arthur W. Holden
(1877-1967)
Rohert B. Holden
(1911-1971)
Terry L. Crapo
(1939-1982)
Wiliam S. Holden
(1907-1988)TELEPHONE [phone]
FACSIMILE [phone]
E-MAIL DSTORER(iHOLDENLEGAL.COM
Of Counsel
Fred J. Hahn
Marie T. Tyler
August 28, 2007
Scott Woodbury
Idaho Public Utilities Commission
PO Box 83720
Boise, Idaho 83720-0074
Re: Teton Springs PUD
Dear Scott:
In furtherance of my earlier correspondence with you regarding the above-referenced
matter, the following is a status report of our efforts to form a water district for the purpose of
operating the Teton Springs water and sewer utilities.
As reported to you earlier, we were successful in forming a water district and establishing
a Board of Directors to operate the same. Recently, at a very contentious meeting of the
Homeowners Association, the propert owners voted to discontinue efforts to transfer the assets
of the system to the Distrct and directed the Board of Directors to dissolve the Distrct.
Needless to say, my clients were disappointed with that turn of events, however they certinly
respect the wishes of the home owners.
Accordingly, we wil be moving forward with "Plan A" which involves the fiing of an
application for a certificate of convenience with the IPUC. We have instructed our consultant,
CH2M Hil to dust off their previous rate study and update it into a condition that could be
presented in conjunction with that Petition. As soon as that update is completed we will then
move forward with the filing of the necessary application.
Should you have any questions, please feel free to call.
Very trly yours,
Dale W. Storer
Attorney at Law
cc: Jon Pinardi
Tony Vest
David B1anksma
G:\WPDATA\DWS\2787.02 - Teton Sprigs Water & Sewer Co., LLC - Generl\Water District\Distrt Formtion Petition -Teton Co\Woodbur 082807.ltr.wpd:sm
EXHBI 12""1013
Law Offces
HOLDEN, KIDWELL, HAHN & CRAPO, P.L.L.C.
KENT W. FOSTER
ROBERT E. FARNAM
WILLIAM D. FALER
CHARLES A. HOMER
GARY L. MEIKLE
DONALD L. HARRIS
DALE W. STORER
MARIE T. TYLER
FREDERICK J. HAHN, II
KARL R. DECKER
SHAN B. PERRY
DEANNE CASPERSON.'
AMELIA A. SHEETS
ROBERT L. HARRIS
DEBORAH S. O'MALLEY
**Also licensed in Missouri and Kansas
1000 RIVER WALK DRIVE, SUITE 200
P.O. BOX 50130
IDAHO FALLS, IDAHO 83405
Arthur W. Holden
(1877-1967)
Robert B. Holden
(1911-1971)
Terry L. Crapo
(1939-1982)
Wiliam S. Holden
(1907-1988)TELEPHONE [phone]
FACSIMILE [phone]
E-MAIL DSTORER(åHOLDENLEGAL.COM
OfCOUDsel
Fred J. Hahn
September 29,2006
Scott Woodbury
Idaho Public Utilities Commission
PO Box 83720
Boise, Idaho 83720-0074
Re: Teton Springs PUD
Dear Scott:
In furtherance of our earlier conversation regarding the Teton Springs Resort
development near Victor, Idaho, I am enclosing a copy of a Petition I have prepared in behalf
of my client, Teton Springs. As you wil note, the Petition requests the formation of a water
and sewer district for the purpose of providing water and sewer services to the residents of
the Teton Springs PUD. My clients are now soliciting the necessary signatures and we
anticipate the Petition wil be filed with the District Court of Teton County within the next
three to four weeks. As you requested, I wil keep you posted of the progress of that effort
and the eventual outcome thereof.
If you need further information concerning the project you may wish to visit with Joe
Leckie or C.J. Cooper. We have met with them several times and have provided them with
considerable information about the project.
Should you have further questions, please feel free to calL.
Very truly yours,
Dale W. Storer
Enclosure
cc: Dave B1anksma
G:IWPDATA\DWS\2787.02 - Teton SpringslCreation ofWaler DistrcllWoodhur 092906.ltr.wpd
EXHtiPqlof3
Law Offces
HOLDEN, KIDWELL, HAHN & CRAPO, P.L.L.C.
KENT W. FOSTER
ROBERT E. FARNAM
WILLIAM D. FALER
CHARLES A. HOMER
GARY L. MEIKLE
DONALD L. HARRIS
DALE W. STORER
MARIE T. TYLER
FREDERICK J. HAHN, II
KARL R. DECKER
SHAN B. PERRY
DEANNE CASPERSON..
AMELIA A. SHEETS
ROBERT L. HARRIS
DEBORAH S. O'MALLEY
**Also licensed in Missouri and Kansas
1000 RIVER WALK DRIVE, SUITE 200
P.O. BOX 50130
IDAHO FALLS, IDAHO 83405
Arthur W, Holden
(1877-1967)
Robert B. Holden
(1911-1971)
Terry L. Crapo
(1939-1982)
Wiliam S. Holden
(1907-1988)TELEPHONE [phone]
FACSIMILE [phone]
E-MAIL DSTORER(?HOLDENLEGAL.COM
Of Counsel
Fred J. Hahn
November 29,2006
Scott Woodbury
Idaho Public Utilities Commission
PO Box 83720
Boise, Idaho 83720-0074
Re: Teton Springs PUD
Dear Scott:
By way of a further update regarding the above-referenced matter, this wil advise you
that I have fied a Petition on behalf of Teton Springs requesting the formation of water and
sewer district with the District Court in Teton County, Idaho. I am awaiting the court's
issuance of an order setting the matter for hearing at which time the court wil establish a
date and time for an election, assuming it finds the Petition is in proper form and order.
As noted in my earlier correspondence, I wil keep you apprised ofthe progress of this
effort. In the interim, should you have any questions please feel free to call.
Very truly yours,
Dale W. Storer
Attorney at Law
cc: David Blanksma
G:\WPDATA\DWS\2787.02 - Teton Sprngs Water & Sewer Co., LLC - Generl\Water District\Distrct Formtion Petition - Teton Co\Woodbur i 12906.hr.wpd:sm
EXHI8IU..3813
CHRONOLOGY
TETON SPRINGS WATER AND SEWER COMPANY
Date Event
June, 2005 Tony Vest signs Teton Springs Water and Sewer Company,
LLC, Operating Agreement
August 8, 2005 Articles of Organization fied with Secretary of State
September 21, 2005 CH2M Hil submits scope of work proposal for water and sewer
rate study
September 29,2005 Teton Springs Water & Sewer Company commissions CH2M
Hil to perform rate study and appraisal
October 5, 2005 Storer contacts Leckie concerning possibility of meeting with
IPUC staff.
October 14,2005 Storer forwards marketing brochure and information packet to
Joe Leckie regarding Teton Springs PUD
October 14, 2005 Storer emails Mr. Leckie letter soliciting meeting with IPUC
staff
October 25, 2005 Storer discusses possible IPUC staff meeting dates with Leckie
November 16, 2005 B1anksma, Storer, CH2M Hil meet with IPUC staff to discuss
the status of operations and intent to form Distrct
Spring, 2006 (?)1 Teton Springs and CH2M Hil meet with IPUC staffa second
time
August 16, 2006 Storer discusses need for temporary operating certificate with
Scott Woodbury. Woodbur advises that operating informally
w/o certificate is okay with IPUC as long as moving forward
with Distrct organization. Woodbury asks to be kept advised
of progress.
September 15, 20062 Storer forwards draft copy of Petition seeking formation of
Water/Sewer Distrct to Woodbur
October 18,2006 Pinardi sends letter to residents soliciting signatues on Petition
for Formation of Water and Sewer District
November 7,2006 Storer verbally apprises Woodbury of status of District
1I'm unsure of this date because I was not directly involved in the meeting.
2Between September 2005, and September 2006, CH2M Hil was working on the rate study and appraisal of the system assets,
Teton Springs did not wish to move forward with formation of the Distrct until the rate study was completed.
EXHI813Pai.n
November 13, 2006 Petition for Organization of Water/Sewer District fied with
District Court, Teton County, CV -06-360
November 20, 2006 Request for hearng fied with the Cour
November 29,2006 Storer sends letter advising Woodbury of filing of Petition
December 14, 2006 Court signs Order setting hearing date on Petition
January 22, 2007 Nominations for Board of Directors filed
January 23, 2007 Hearing on Petition held
February 5, 2007 Court signs order callng for election on May 22, 20073
February 27,2007 CH2M Hil completes appraisal of system assets
March, 2007 Teton Springs files action against Victor seeking to correct
erroneous sewer rate under Sewer User Agreement.
May 9,2007 Additional nominations fied for Board of Directors
May 22,2007 Election conducted. Majority of home owners approve
formation of Water/Sewer District; Board of Directors elected
June 8. 2007 Court signs Order establishing Water/Sewer District
June 13, 2007 Water/Sewer Distrct purchases policy of liabilty insurance
July 25,2007 Victor passes ordinance anexing entire PUD. The annexation
was later invalidated by the District Cour on January 30, 2008.
July 30, 2007 HOA meets and decides not to proceed with purchase of assets
from Teton Springs Golf & Casting Club
August 28, 2007 Storer advises Woodbur ofHOA's decision to terminate
negotiations for sale of assets to Distrct and of Teton Springs'
intent to pursue IPUC application
December, 2007 Teton Springs retains McDevitt-Miler to prepare IPUC
application
May 6, 2008 Bil of Sale, Warranty Deed, Indemnity Agreement signed
transferring assets from Teton Springs Golf & Casting to Teton
Springs Water and Sewer4
3The heanng date was delayed beyond the February election date because the Clerk of the Court failed to timely forward the
proposed Order to the Court for signature, This delayed the election by four months,
4Until the Distnct concept was abandoned, the intent was to transfer the system assets directly from Teton Spnngs Golf &
Casting, LLC to the District, rather than capitalizing the Water and Sewer Company,
Exm13hplen
OPERATING AGREEMENT
of
Teton Springs Water and Sewer Company, LLC
Em.. 14,.hU'
This Operating Agreement of Teton Springs Water and Sewer Company, LLC, a
limited liabilty company organized pursuant to the Act, is entered into and shall be effective
as of the Effective Date, by and between the Company and Teton Springs Golf and Casting
Club, LLC, whose address is 1 Teton Springs Parkway, Victor, Idaho, 83455, hereinafter
referred to as "Initial Member".
ARTICLE I
FORMATION
1.1 Organization. The Initial Member hereby organizes the Company as an Idaho
limited liabilty company pursuant to the provisions of the Act.
1.2. Name. The name of the Company is Teton Springs Water and Sewer
Company, LLC, and all business ofthe Company shall be conducted under that name.
1.3 Effective Date. This Agreement shall be effective upon the later of July 1.
2005, or the filing of the Aricles with the Idaho Secreta of State.
1.4. Term. The Company shall be dissolved and its affairs wound up in accordance
with the Act or this Agreement.
1.5. Registered Agent and Offce. The registered agent for the service of process
and the registered office shall be that person and location reflected in the Articles as fied in
the office of the Secretar of State, The registered officer or agent may be changed by
indicating the change on the anual report prescribed by the Act or by delivering to the
Secretar of State the Statement of Change of Registered Agent meeting the requirements
of the Act.
1.6. Nature of Business. The Company is created to for the purose of providing
domestic and commercial water and sewer services to the owners, occupants, lessees and
invitees of the Teton Springs Golf and Fishing Resort, located in Teton County, Idaho. The
Company shall also have the authority to do all things necessar or convenient to accomplish
its purose and operate its business as described in this Agreement.
ARTICLE II
DEFINITIONS
F or puroses of this Agreement, unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
Act. The Idaho Limited Liabilty Company Act and all amendments to the Act.
OPERATING AGREEMENT OF TETON SPRINGS WATER AND SEWER COMPANY, LLC
EXHIBI 14Pahfit
Agreement. This Operating Agreement including all amendments adopted in
accordance herewith and the Act.
Articles. The Aricles of Organization of the Company as properly adopted and
amended from time to time by the Members and filed with the Secretar of State.
Assignee. A person to whom one or more Units has been transferred but who has not
been admitted as a Member. An Assignee is treated as a Member for the limited puroses
specified under the definition of Member.
Capital Account. The account maintained for a Member or Assignee determined in
accordance with Aricle III.
Capital Contribution. Any contribution of Propert, services or the obligation to
contrbute Propert or services made by or on behalf of a Member or Assignee.
Code. The Tnternal Revenue Code of 1986 as amended from time to time.
Company. Teton Springs Water and Sewer Company, LLC, a limited liabilty
company formed under the Act, and any successor limited liabilty company.
Company Liabilty. Any enforceable debt or obligation for which the Company is
liable or which is secured by any Company Propert.
Company Propert. Any Proper owned by the Company.
Consent of the Members. Consent of the Members requires that Members holding
a majority of the Units entitled to vote consent to or approve a paricular matter, unless the
applicable provision of this Agreement specifically requires the unanimous agreement of all
Members. Assignees shall not be considered Members with Units entitled to vote for the
purose of determining Consent of the Members.
Disposition (Dispose). Any sale, assignent, transfer, exchange, mortgage, pledge,
grant, hypothecation, or other transfer, absolute or as security or encumbrance (including but
not limited to Dispositions by operation of law).
Dissociation. Any action which causes a person to cease to be Member as described
iii Aricle X of this Agreement.
Distribution (Distribute). A transfer of Propert to a Member on account of Units
as described in Aricle VI.
2 _ OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXHIII14..30U.
Initial Capital Contribution. The Capital Contribution agreed to be made by the
Initial Members as described in Aricle III.
Initial Members. Those persons identified on Exhibit "A" attached hereto and made
a par of this Agreement by this reference who have executed this Agreement.
Losses. The losses and deductions of the Company determined in accordance with
accounting principles consistently applied from year to year employed under the method of
accounting adopted by the Company and as reported separately or in the aggregate, as
appropriate, on the tax return of the Company fied for federal income tax purposes.
Management Right. The right of a Member to participate in the management of the
Company, including the right to consent to or approve actions of the Company. Every
Member may vote his or her Units on any issue subject to a vote of the Members, except the
Seller's Units shall be ignored for all votes under Section 8.1.
Manager. The Manager shall mean Teton Springs Golfand Casting Club, LLC and
any other persons or entities that succeed the Manager( s) in that capacity.. References to the
Manager in the singular or as him, her, it, itself or other like references shall also include the
plural or the masculine or feminine reference as the case may be.
Member. A person who holds Units and who also has the right to exercise the
Management Rights attibutable to those Units by reason of being (i) an Initial Member, or
(ii) admitted as a Member pursuant to Aricle ix. An Assignee is treated as a Member for
the limited puroses of accounting, taxation and Distributions, whether or not specifically
referred to in those sections of this Agreement dealing with such matters. The treatment of
an Assignee as a Member for such limited puroses does not confer upon the Assignee any
rights to vote or to paricipate in management of the Company.
Profits. The income and gains of the Company determined in -accordance with
accounting principles consistently applied from year to year employed under the method of
accounting adopted by the Company and as reported separately or in the aggregate, as
appropriate, on the tax retur of the Company filed for federal income tax puroses.
Propert. Any propert real or personal, tangible or intangible, including money and
any legal or equitable interest in such propert, but excluding services and promises to
perform services in the future.
Regulations. Except where the context indicates otherwise, the permanent,
temporar, and proposed regulations of Deparent of the Treasur under the Code as such
regulations may be lawfully changed from time to time.
3 _ OPERATING AGREEl\1ENT OF TETON SPRIGS WATER AND SE\VER COMPANY, LLC
EXHI.-14Pa4.Ut
Remaining Members. In the event of Dissociation of a Member, all of the Members
at the time of such Dissociation other than the Member who is Dissociated. In the event of
a Member who has any potential conflct of interest or transaction between the Member and
the Company, the Members not having the potential conflct ofinterest or transaction. In the
event of a Disposition of Units, the Members not Disposing of their Units.
Sharing Ratio. With respect to any Member or Assignee, a fraction (expressed as a
percentage), the numerator of which is the total of such person's Units and the denominator
is the total of all Units of all Members and Assignees.
Taxable Year. The taxable year of the Company as determined pursuant to §706 of
the Code.
Taxing Jurisdiction. Any state, local, or foreign governent that collects tax,
interest or penalties, however designated, on any Member's share of the income or gain
attibutable to the Company.
Units. Ownership rights of a Member of the Company as fuer set fort in Aricle
III.
ARTICLEID
CONTRIBUTIONS, UNITS AND CAPITAL ACCOUNTS
3.1. Units. Ownership rights in the Company are reflected in Units. Each Unit has
the following described rights.
3.1.1. Each Unit held by a Member has equal Management Rights with every
other Unit held by Members and in matters subject to a vote of Members .has one vote.
3.1.2. Each Unit has equal rights with every other Unit with respect to the
sharing of Profits and Losses and with respect to Distributions.
3.2. Initial Capital Contributions. The name, address, description and value of
the Initial Capital Contrbutions, and number of Units issued to each Initial Member are as
set fort in the attched Exhbit "A".
3.3. Disposition of Units. No Member may Dispose of Units except as provided
in this Agreement. Any such Disposition results in the Disposition of
the rights in Profits and
Losses and the rights in the Capital Account attibutable to the Units, but no rights to vote
unless the Assignee becomes a Member.
4 _ OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXHIBI 1"..5.,.
3.4. Subsequent Capital Contributions. No Member shall be required or
permitted to make additional contributions to the capital of the Company, without the
unanimous consent of all Members. If such consent is obtained and additional capital is
contributed to the Company, the Capital Account and Units of the contributing Member shall
be adjusted to reflect the additional capital contribution.
3.5. Capital Accounts. The Company shall establish and maintain a Capital
Account for each Member and Assignee. Each Member's Capital Account shall be increased
by (1) the amount of any money actually contributed by the Member to the capital of the
Company, (2) the fair market value of any Propert contributed, as determined by the
Company and the contributing Member at ar's length at the time of contribution (net of
liabilties assumed by the Company or subject to which the Company takes such Propert,
within the meaning of § 752 ofthe Code), and (3) the Member's share of Profits and of any
separately allocated items of income or gai except adjustments required by the Code
(including any gain and income from unrealized income with respect to accounts receivable
allocated to the Member to reflect the difference between the book value and tax basis of
assets contributed by the Member). Each Member's Capital Account shall be decreased by
(1) the amount of any money Distrbuted to the Member by the Company, (2) the fair market
value of any Propert Distributed to the Member, as determined by the Company and the
contributing Member at ar's length at the time of contrbution (net of liabilties of the
Company assumed by the Member or subject to which the Member takes such Propert
within the meaning of § 752 of the Code), and (3) the Member's share of Losses and of any
separately allocated items of deduction or loss (including any loss or deduction allocated to
the Member to reflect the difference between the book value and tax basis of assets
contributed by the Member).
3.6. Distribution of Propert. If the Company at any time Distributes any of its
Propert in-kind to any Member, the Capital Account of each Member shall be adjusted to
account for that Member's allocable share (as determined under Aricle VI) of the Profits or
Losses that would have been realized by the Company had it sold the Propert that was
Distributed at its fair market value imediately prior to its Distribution.
3.7. Basis Adjustment. The §704(b) basis of Company Propert shall be adjusted
to equal their respective fair market values, as determined by the Consent of the Members,
at the following times: (a) the acquisition of an additional interest in the Company by any
new or existing Member in exchange for more than a de minimis Capital Contrbution, (b)
the distribution by the Company to a Member of more than a de minimis amount of
Propert
as consideration for an interest in the Company, and (c) the liquidation of
the Company,
provided that the adjustments are necessar or appropriate to reflect the relative economic
interests of the Members. Such adjustments are to be treated as items of Profits or Losses
and allocated in accordance with Section 6.1.
5 _ OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXBIB14""of28
ARTICLE IV
PRINCIPAL OFFICE; ACCOUNTING AND RECORDS
4.1. Principal Offce. The principal office of the Company shall be as designated
by the Manager.
4.2. Records to be Maintained. The Company books shall be maintained at the
principal office of the Company or such other place as the Managers agree. Each Member
shall at all times have reasonable access to and may inspect and copy any of them. The
Company shall maintain books and records which properly reflect all financial transactions
made by the Company. The Company shall not be required to maintain the records set fort
in Idaho Code § 53-625 except to the extent the Manager may determine.
4.3. Reports to Members. All Members shall be entitled to receive financial
reports on the Company at least anually. All Members shall be provided with those
information returns required by law.
ARTICLE V
RIGHTS AND DUTIES OF MANAGER AND MEMBERS
5.1. Management. The business and affairs of the Company shall be managed by
its Manager. Except for situations in which the Consent of the Members is expressly
required by this Agreement, or by non-waivable provisions of applicable law, the Manager
shall have full and complete authority, power and discretion to manage and control the
business, affairs and properties of the Company, to make all decisions regarding those
matters, and to perform any and other acts and activities customar or incident to the
management of the Company's business.
5.2. Certain Powers of Manager. Without limiting the generality of section 5.1,
the Manager shall have power and authority, on behalf of the Company:
5.2.1. To acquire propert from any person as the Manager may determine.
The fact that a Manager or a Member is directly or indirectly affliated or connected
with any such person shall not prohibit the Manager from dealing with that person;
5.2.2. To borrow money for the Company from banks, other lending
institutions, the Manager, Members, or affiiates of the Manager or Members on such
terms as the Manager deems appropriate, and in connection therewith, to hypothecate,
encumber, and grant security interests in the assets of the Company to secure
repayment of the borrowed sums. No debt shall be contracted or liabilty incured by
or on behalf of the Company, except by the Manager or, to the extent permitted under
6 - OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLCEXBmli4Pi10U'
the Act, by agents or employees of the Company expressly authorized to contract such
debt or incur such liabilty by the Manager;
5.2.3. To purchase liabilty and other insurance to protect the Company's
propert and business;
5.2.4. To invest any Company funds temporarily (by way of example but not
limitation) in time deposits, short-term governental obligations~ commercial paper,
or other investments;
5.2.5. Upon the Consent of the Members, to sell or otherwise dispose of all
or substatially all of the assets of the Company as par of a single tranaction or plan
so long as such disposition is not in violation of or a cause of a default under any
other agreement to which the Company may be bound. The Consent of the Members
shall not be required with respect to any sale or disposition of the Company's assets
in the ordinary course of the Company's business;
5.2.6. To execute on behalf of the Company all instruments and documents,
including, without limitation, checks; drafts; notes and other negotiable instruents;
mortgages or deeds of trust; security agreements; financing statements; documents
providing for the acquisition, mortgage, or disposition of the Company's propert;
assignents; bils of sale; leases; partership agreements, operating agreements of
other limited liabilty companies; and any other instruents or documents necessary
to the business of the Company;
5.2.7. To employ accountants, legal counsel, managing agents, or other expert
to perform services for the Company and to compensate them from Company fuds;
5.2.8. To enter into any and all other agreements on behalf of the Company,
with any other person for any purose, in such form as the Manager may approve;
and
5.2.9. To do and perform all other acts as may be necessar or appropriate to
the conduct of the Company's business.
5.3. Limitations on Manager's Authority. Notwithstanding any other provision
of this Operating Agreement, no Manager shall cause or commit the Company to do any of
the following without the Consent of the Members.
5.3.1 Sell or otherwise dispose of any Company propert, real or personal,
other than in the ordinar course of business;
7 _ OPERATING AGREEMENT OF TETON SPRIGS WATER A1\TJ SEWER COMPANY, LLC
EXBim14....u.
5.3.2. Mortgage, pledge, or grant a security interest in any property of the
Company;
5.3.3. Incur or refinance any indebtedness for money borrowed by the
Company, whether secured or unsecured and including any indebtedness for money
borrowed from a Member without the Consent of the Members.
5.3.4. Constrct any capital improvements, repairs, alterations or changes
involving an amount in excess of One Hundred Thousand Dollars ($100,000);
5.4. Limitations on Authority of Others. Unless authorized to do so by this
Operating Agreement or by a Manager of the Company, no attorney-in-fact, employee, or
other agent of the Company shall have any power or authority to bind the Company in any
way, to pledge its credit, or to render it liable pecuniarly for any purose. No Member shall
have any power or authority to bind the Company unless the Member has been authorized
by the Manager to act as an agent of the Company in accordance with the previous sentence.
5.5. Liabilty for Certain Acts. Each Manager shall perform his duties as
Manager in good faith, in a maner he believes to be in the best interests of the Company,
and with such care as an ordinarily prudent person in a like position would use under similar
circumstances. A Manager who so performs the duties as Manager shall not have any
liabilty to the Company or the Members by reason of being or having been a Manager of the
Company. The Manager does not guarantee the retur of the Members' or Assignees' capital
contributions or a profit for the Members or Assignees from the operations of the Company.
The Manager shall not be liable to the Company or to any Member or Assignee for any loss
or damage sustained by the Company or any Member or Assignee, unless the loss or damage
shall have been the result of fraud, deceit, gross negligence, wilful misconduct, breach of
this Operating Agreement or a wrongful taking by the Manager.
5.6. Manager and Members Have No Exclusive Duty to Company. The
Manager shall not be required to manage the Company as his sole and exclusive fuction and
any Manager and/or Member may have other business interests and may engage in other
activities in addition to those relatig to the Company. Neither the Company nor any
Member or Assignee shall have any right, by virtue of this Operating Agreement, to
'share
or paricipate in such other investments or activities of the Manager and/or Member or
Assignee or to the income or proceeds derived therefrom. Neither the Manager nor any
Member or Assignee shall incur any liabilty to the Company or to any of the Members or
Assignees as a result of engaging in any other business or venture.
8 ~ OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXHlarl",.'.Ut
5.7. Indemnity of the Manager, Employees, and Other Agents.
5.7.1. The Company shall indemnify the Manager and make advances for
expenses to the maximum extent permitted under Idaho law. The Company shall indemnify
its employees and other agents who are not Managers to the fullest extent permitted by law,
provided that such indemnification in any given situation is approved by Consent of the
Members.
5.7.2. The Company shall indemnify the Manager for and hold him harless
from any liabilty, whether civil or criminal, and any loss, damage, or expense, including
reasonable attorney fees, incured in connection with the ordinar and proper conduct of the
Company's business and the preservation of its business and propert, or by reason of the fact
that such person is or was a Manager; if the Manager to be indemnified (i) acted in good faith
and in a maner such Manager believed to be consistent with the provisions of this
Agreement; and (ii) with respect to any criminal action or proceeding, the Manager to be
indemnified had no reasonable cause to believe the conduct was unlawfuL. The termination
of any action, suit or proceeding by judgment. order. settlement. conviction, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent shall not of itself create a presumption that indemnification is not available
hereunder. The obligation of the Company to indemnify any Manager hereunder shall be
satisfied out of Company assets only, and if the assets of the Company are insufficient to
satisfy its obligation to indemnify any Manager, such Manager shall not be entitled tocontribution from any Member. .
5.8. Removal. At a meeting called expressly for that purose, the Manager may
be removed at any time, with or without cause, by the Consent of the Remaining Members.
The removal of a Manager who is also a Member shall not affect the Manager's rights as a
Member and shall not constitute a withdrawal of a Member.
5.9. Vacancies. Any vacancy occuring for any reason in the number of Managers
of the Company shall be filled by the Consent of the Members (determned without regard
to any interest owned by a Manager who was removed pursuant to section 5.8 during the
preceding 24-month period). Any Manager's position to be filled by reason of an increase
in the number of Managers shall be filled by the Consent of the Members.
5.10. Compensation, Reimbursement, Organization Expenses. The compensation
of the Manager shall be fixed from time to time by the Consent of the Members. No
Manager shall be prevented from receiving such salar by reason of the fact that he is also
a Member of the Company.
5.11. Liabilty of Members. No Member shall be liable as such for the liabilties
of the Company. The failure of the Company to observe any formalities or requirements
9 - OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXHI..i4
r-11of28
relating to the exercise of its powers or management of its business or affairs under this
Agreement or the Act shall not be grounds for imposing personal liability on the Members
for liabilties of the Company. Notwithstanding anything in this Agreement to the contrar,
this Agreement shall not be construed as creating a deficit restoration obligation or otherwise
personally obligate any Member to make a Capital Contribution in excess of the Initial
Contribution.
5.12. Representations and Warranties. Each Member hereby represents and
warrants to the Company and each other Member that: (a) the Member is acquiring its
interest in the Company for the Member's own account as an investment and without an
intent to distribute the interest; (b) the Member acknowledges that the Units have not been
registered under the Securities Act of 1933 or any state securities laws, and may not be resold
or transferred by the Member without appropriate registration or the availabilty of an
exemption from such requirements.
5.13. Title to and Conveyance of Company Propert. Title to Company Propert
shall be held in the Company name. Conveyance of title to real propert held in the name
of the Company shall be effective only upon the execution of all documents relating thereto
by the Manager, after obtaining the Consent of the Members.
5.14. Outside Activities of Members. Any Member or Manger may engage in or
possess an interest in other business ventures of every nature and description, including those
that may be in competition with the company, independently or with others, including but not
limited to, the ownership of an investment in stock, securities, real estate and other
investment properties; and neither the Company nor the other Members shall have any right
by virtue of this Agreement in and to such independent ventures or to the income or profits
derived.
ARTICLE VI
ALLOCATIONS AND DISTRIUTIONS
6.1. Allocations of Profits and Losses from Operations. Except as may be
required by § 704(c) of the Code, and Sections 6.2 and 6.3, Profits, Losses, and other items
of income, gain, loss, deduction and credit shall be apportioned among the Members in
proportion to their Sharing Ratios.
6.2. Distributions. Each year the Company shall Distribute cash in an amount
determined by the Consent of the Members. Cash shall be Distributed according to each
Member's Sharing Ratio.
10 _ OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXHIBI 14
PwlhU'
6.3. Limitations on Distributions. No Distribution shall be declared and paid
unless, after the Distribution is made, the assets of the Company are in excess of all liabilties
of the Company, except liabilities to Members on account of their Capital Accounts.
ARTICLE VII
TAXS
7.1. Elections. The Manager may make any tax elections for the Company allowed
under the Code or the tax laws of any Taxing Jurisdiction. The Company shall be taxed as
a Parership. .
7.2. Taxes of Taxing Jurisdictions.
7.2.1. To the extent that the laws of any Taxing Jurisdiction require, each
Member and Assignee or such Members or Assignees as may be required by the Taxng
Jurisdiction, wil submit an agreement indicating that the Member wil make timely income
tax payments to the Taxing Jurisdiction and that the Member accepts personal jurisdiction
of the Taxing Jurisdiction with regard to the collection of income taxes attributable to the
Member's income, and interest, and penalties assessed on such income. If a Member fails
to provide such agreement, the Company may withold and pay over to such Taxing
Jurisdiction the amount oftax, penaltyand interest determined under the laws of the Taxing
Jurisdiction with respect to such Member and such Member's income. Any such payments
with respect to the income of a Member shall be treated as a Distrbution for purposes of
Aricle VI.
7.2.2. The Members may, where permitted by the rules of any Taxing
Jurisdiction, fie a composite, combined or aggregate tax retu reflecting the income of the
Company and pay the tax, interest and penalties of some or all of the Members on such
income to the Taxing Jurisdiction, in which case the Company shall inform the Members of
the amount of such tax interest and penalties so paid.
7.3. Tax Matters Partner. The Manager shall be the tax matters partner of the
Company pursuant to § 6231(a)(7) of the Code. The Manager shall tae such action as may
be necessar to cause each Member to become a notice parer within the meaning of § 6223
of the Code. The Manager may not take any action contemplated by § 6222 though 6232
of the Code without the Consent of the Members.
7.4. Method of Accounting. The records of the Company shall be maintained on
the method of accounting determined by the Manager.
11 - OPERATING AGREEME1'H OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXBmr14hpu.ni
ARTICLE VIII
DISPOSITION OF UNITS
8.1 Death or Withdrawal of a Member.
8.1.1 Upon the death of a Member, the Member's successors in interest
(referred to as the "Seller") shall give written notice to the Company and the Remaining
Members of an offer to sell all of the Units owned by the Seller.
8.1.2 The Company shall have the option for a period of sixty (60) days (the
Company Option Period) from the effective date of the notice under subsection (a) above to
purchase all the Units so offered. If the option is not exercised within the Company Option
Period as to all the Units so offered, the Members shall have the option for a period of thirt
(30) days commencing with the end of the Company Option Period to purchase all the Units
so offered ("the Member Option Period"). The option may not be exercised on only a portion
of the Units offered for sale. In order to be validly exercised, the option must be exercised
on all of the Units offered for sale. If the above option is not exercised as to all ofthe Units
so offered, the Company shall be obligated to purchase all such remaining Units or to
liquidate its assets and dissolve. The Company shall have thirt (30) days after the expiration
of the Member Option Period to purchase such Units.
8.1.3 If the Company or the Members (the "Purchaser") exercise the option to
purchase, the purchase price for the Units shall be the value that shall be mutually determined
by the Purchaser and the Seller. If the Purchaser and Seller canot agree on the value, the
Units shall be appraised by an appraiser appointed in the manner set fort below.
8.1.3 .1. In the event the Purchaser and Seller cannot agree upon a
value for the Units, then such value shall be determned by an appraiser who has been
previously designated in a written agreement signed by all of the Members of the company.
In the event the Members of the company have not so designated an appraiser, then the
Purchaser and Seller shall agree upon an appraiser. If the Purchaser and the Seller canot
agree on an appraiser, they shall each appoint an appraiser. If the two appraisers canot
agree upon the value of such Units, they shall appoint a third appraiser, and the decision of
the majority of the thee appraisers shall be binding on all paries. In making such appraisal,
the appraisers may consider all relevant factors affecting the value of the Units, including,
but not limited to market value, net asset value, and investment or capitalized earings value.
The paries realize that such valuation may take into account premiums due to majority
interest or discounts due to minority interest. The appraisers may consider as an asset ofthe
Company the cash surrender value of life insurance owned by the Company on the lives of
the Members but shall not include the proceeds of policies insuring the life of a deceased
Member in excess of their cash surrender value. The cost of appraisal shall be shared equally
by the Purchaser and the Seller.
12 _ OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPAl-TY, LLC
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8.1.4 Upon the closing date the Purchaser shall make a cash down payment
of not less than ten percent (10%) of the total purchase price. If the Company or the other
Members shall receive the proceeds of any insurance policy on the life of a deceased Member
such insurance proceeds shall be paid to the Seller, up to the purchase price ofthe Units. If
the total amount of such insurance proceeds does not equal ten percent (10%) of the total
purchase price, the purchaser shall pay sufficient additional cash to cause the down payment
to equal ten percent (10%) of said purchase price. The Seller shall have no claim to any
proceeds in excess of the purchase price. The balance of the purchase price shall be paid in
ten equal annual installments which shall commence one year following the closing date and
shall continue on the same day of each year thereafter until the balance of the purchase price
and accrued interest shall be paid in full.
8.1.5 The unpaid balance of the purchase price shall bear interest at the lowest
permitted applicable federal rate as of the date of closing. Interest shall be payable anually
with principal commencing one (1) year following the date of closing and continue on each
successive year thereafter until the purchase price shall be paid in full. All payments shall
be applied first to accrued interest, then to reduction of principaL.
8.1.6 The purchaser may prepay principal at any time in multiples of Five
. Hundred Dollars ($500) without penalty. Interest on such additional pricipal payments shall
cease as of the date payment is made. Any prepayment shall be applied to the last payment(s)
coming due under this Agreement and shall not excuse the necessity of making the next
ensuing payment( s) on the date and in the amount as required by ths Agreement.
8.2 Miscellaneous.
8.2.1 The Remaining Members shall guarantee the Company's obligations
under a purchase agreement. The Units purchased shall be pledged as security for the
payment obligations hereunder. Unless the paries agree otherwise, the promissory note,
securty agreement and guarantee shall be in the form attached hereto.
8.2.2 The Units purchased by the Company shall have no voting or other rights
while held by the Company. Units purchased by any Member shall have all rights and said
rights shall belong to the Purchaser so long as the Purchaser is not in default under the terms
of ths Agreement. If the Purchaser fails to cure any default withn the time required, the
Seller shall be entitled to exercise all rights to which said Units may be entitled.
8.2.3 So long as any par of the purchase price of Units remains unpaid, the
Company wil not do any of the following, without the Seller's prior written approval: Issue
any additional Units; reorganize its capital strctue; merge or consolidate with any other
Company; sell any of its assets except in the ordinar course of
business; incur extaordinar
indebtedness; or pay salaries or other compensation in excess of that which is reasonable.
13 - OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXHII 14"14.no
So long as any par of the purchase price of such Units shall remain unpaid, the Seller or the
Seller's legal representative shall have the right to examine the books and records of the
Company and to receive copies of all accounting records and reports prepared for or on
behalf of the Company; but all such information disclosed shall be confidentiaL.
8.2.4 Ifpurchase offers from the Remaining Members specify in the aggregate
more Units than are available for purchase by the Members, each Member shall have priority,
up to the number of Units specified in the Member's notice, to such proportion of the
available Units as the Member's Units bears to the Units of all Members electing to purchase.
The Units not purchased on such a priority basis shall be allocated in one or more successive
allocations to those Members electing to purchase more than the Units to which they have
priority right, up to the Units specified in their respective notices, in the proportion that the
Units held by each of them bears to the Units held by those Members entitled to purchase
such excess Units.
8.2.5 The Company shall make an election under §754 ofthe Internal Revenue
Code of 1986, as amended, for the year in which a Member's Units in the Company
terminates.
8.2.6 The closing date for any purchase or redemption of Units under the terms
and conditions of this Agreement shall be not later than One Hundred Twenty (120) days
following the effective date of notice.
8.2.7 The paries hereby declare that it is impossible to measure in money the
damages which wil accrue to any par, by reason of a failure to perform any of the
obligations under ths Agreement and that the remedy of the Members or the Company for
a breach of this Agreement is not adequate at law. Any Member, Seller, or the Company may
enforce rights hereunder by injunction proceedings, proceedings for specific performance,
or other equitable proceedings. Any person (including the Company) against whom such
action or proceeding is brought hereby waives the claim or defense an adequate remedy at
law exists.
ARTICLE IX
ADMISSION OF ADDITIONAL MEMBERS
New Members shall be admitted to the Company only by Consent of the Members.
The Members may grant or withold the approval of such admission for any reason, or no
reason, in their sole and absolute discretion.
14 _ OPERATING AGREEMENT OF TETON SPRIGS WATER
AND SEWER COMPANY, LLC
EXHllU14
Pa 15 of2l
ARTICLE X
DISSOCIATION OF A MEMBER
A person shall cease to be a Member, without breaching this Agreement, upon the
death of the Member.
ARTICLE XI
DISSOLUTION AND WINDING UP
11.1 Dissolution. The Company shall be dissolved and its affairs wound up, upon
the first to occur ofthe following events:
11.1.1. the expiration of the Term;
11.1.2. the unanimous written consent of all of the Members;
11.1.3. the death of any Member unless the business of the Company is
continued with the Consent of the Remaining Members.
11.2. Effect of Dissolution. Upon dissolution, the Company shall cease caring on
as distinguished from the winding up of the Company business, but the Company is not
terminated, but continues until the winding up of the affairs of the Company is completed
and the Certificate of Dissolution has been issued by the Secretar of State.
11.3. Distribution of Assets on Dissolution. Upon the winding up of the Company,
the Company Propert shall be Distributed:
11.3 .1. to creditors, including Members who are creditors, to the extent
permitted by law, in satisfaction of Company Liabilties;
11.3.2. to Members in accordance with positive Capital Account balances
taing into account all Capital Account adjustments for the Company's taxable year in which
the liquidation occurs;
11.3.3. to Members in accordance with each Member's Sharing Ratio;
11.3.4 Liquidation proceeds shall be paid within 60 days of the end of the
Company's taxable year or, if later, within 90 days after the date of liquidation. Such
Distributions shall be in cash or Propert (which need not be Distributed proportionately) or
parly in both, as determined by Consent of the Members.
15 - OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
EXHIN14Pq16.ne
11.4. Winding Up and Certificate of Dissolution. The winding up of the Company
shall be completed when all debts, liabilties, and obligations of the Company have been paid
and discharged or reasonably adequate provision therefor has been made, and all of the
remaining Propert and assets of the Company have been Distributed to the Members. Upon
the completion of winding up of the Company, a certificate of dissolution shall be delivered
to the Secretary of State for filing. The certificate of dissolution shall set fort the
information required by the Act.
ARTICLE XII
AMENDMENT
This Agreement may be amended or modified from time to time only by a written
instrent executed by all of the Members at the time of the amendment. No Member shall
have any vested rights in this Agreement which may not be modified though an amendment
to this Agreement.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1. Entire Agreement. This Agreement represents the entire agreement among
all the Members and between the Members and the Company pertaining to the subject matter
of this Agreement.
13.2. No Partnership Intended for Nontax Purposes. The Members have formed
the Company under the Act, and expressly do not intend hereby to form a parership under
either the Idaho Uniform Parership Act nor the Idaho Uniform Limited Parership Act.
The Members do not intend to be parers one to another, or parers as to any third par.
To the extent any Member, by word or action, represents to another person that any other
Member is a parter or that the Company is a parnership, the Member making such
wrongful representation shall be liable to any other Member who incurs personal liabilty by
reason of such wrongful representation.
13.3. Rights of Creditors and Third Parties under Agreement. This Agreement
is entered into among the Company and the Members for the exclusive benefit of the
Company, its Members, and their successors and Assignees. This Agreement is expressly
not intended for the benefit of any creditor ofthe Company or any other person. Except and
only to the extent provided by applicable statute, no such creditor or third par shall have
any rights under this Agreement, or any agreement between the Company and any Member
with respect to any Capital Contrbution or otherwise.
16 _ OPERATING AGREEMENT OF TETON SPRIGS WATER AND SEWER COMPANY, LLC
Exøøri4
Pa 17.Ut
13.4. Notice. Any notice required hereunder shall be effective when (i) mailed by
certified mail, postage paid, addressed as follows, or (ii) when such notice is delivered to the
recipient in person, or (iii) when sent by telefax to a number designated by the recipient.
The addresses are as follows:
Company:
Teton Springs Water and Sewer Company, LLC,
1 Teton Springs Parkway
Victor, Idaho, 83455
Members:
Teton Springs Golf and Casting Club, LLC
1 Teton Springs Parkway
Victor, Idaho, 83455
Such addresses for receiving notices may be changed by any par at any time
by written notice to the other Members and the Company.
13.5. Income Tax Provisions. All income tax provisions on the attached Exhibit
"B" are incorporated by this reference. .
IN WITNSS WHREOF, the undersigned has set its hand and seal this _ day of
June, 2005.
TETON SPRIGS GOLF AND CASTING
CLUB,LLC
By: ã:~J!
Anthon . est
Managing Member
17 _ OPERATING AGREEMENT OF TETON SPRIGS WATER
AND SEWER COMPANY, LLC
EXHBI 14..11.0.
Names and Addresses of Initial
Members
Teton Springs Golf and Casting
Club, LLC .
1 Teton Springs Parkway
Victor, ID 83455
EXHIBIT" A"
Description of
Initial Capital
Contribution
Cash
GIWPDATAIDWSI2787.02 - Teton Springs (WaierDj.lriet)ILLCOPETlG AGREME.v2.wpchm
Value
$10,000.00
Units
10.00
EXH..i4..1'.21
EXHIBIT "B"
INCOME TAX PROVISIONS
B.l. Compliance with § 704(b) ofthe Code. All provisions
of the Agreement relating to maintenance of Capital Accounts are
intended, and shall be construed, and, if necessar, modified to cause
the allocations of Profits, Loses, income, gain and credit pursuant
to this Agment to have substantial economic effect under the
Reglations promulgated under § 704(b) of the Code, in light of the
Distributions made pursuant to this Agrent.
B.2. Definitions, The definitions that follow are par ofthe
Ageement.
Company Minimum Gain. An amount determined by first
computing for each Company Nonrecourse Liability any gain the
Company would realize if it disposed of the Compiuy Propert
subject to that liabilty for no consideration other than full
satisfaction of the liability, and then agggating the separtely
computed gains. The amount of Company Minimum Gain includes
such minimum gain arsing frm a conversion, refinancing, or other
change to a debt instrment, only to the extent a Member is allocated
a share of th minimum gain. For any Taxle Yea, the net
increase or decrease in Company Minimum Gain is determined by
comparng the Company Minimum Gain on the last day of the
immediately preceding Taxable Yea with th Minimum Gain on the
last day of the currt Taxable Yea. Notwithstading any provision
io ihe coütulf)' COlllalied iii this All"eemelit, Company Minimum
Gain and increases and decreases in Company Minimum Gan ar
intended to be computed in accordance with § 704 of the Code and
the Regulations. A Member's share of Company Minimum Gain at
the end of any Taxable Year equals: the sum of Nonrcourse
Deductions allocated to that Member (and to that Member's
predecessors in interest) up to that time and the Distributions made
to that Member (and to that Member's predeceors in interest) up to
that time of proceeds of a nonrecourse liabilty allocable to an
increase in Company Minimum Gain minus the sum of that
Member's (and that Member's predecessors' in interest) aggegate
share of the net decreases in Company Minimum Gan plus their
agegate share of decrees resulting from revaluations of Company
Propert subject to one or more Company Nonreurse Liabilities.
Company Nonrecourse Liabilty. A Company Liabilty to the
extent that no Member or Related Person bear the ecnomic risk of
loss (as defied in §1.752-2 of the Regulations) with respect to the
liabilty.
Member Minimum Gain. An amount determined by first
computing for each Member Nonrecourse Liability any gain the
Company would realize if it Disposed of the Company Propert
subject to that liabilty for no consideration other than full
satisfacon of the liabilty, and then agegating the separately
computed gans. The amount of Member Minimum Gai includes
such minmum gai arising from a coversion, refinancing, or other
change to a debt instruent, only to the extent a Member is allocated
a shar of that minimum gain. For any Taxable Year, the net
incr or decrease in Member Minimum Gain is determined by
comparing the Member Minimum Gan on the last day of the
immediately preding Taxable Year with the Membe Minimum
Gain on the last day of the current Taxable Year. Notwithstanding
any provision to the contr contained in this Agment, Member
Minimum Gain and increases and decreases in Member Minimum
Gain ar intended to be compute in accordance with § 704 of the
Code and the Regulations,
Member Nonrecourse Liabilty. Any Company Liabilty to
the exent the liability is nonrecourse under state law, and on which
a Member or Related Person bears the economic risk of loss under §
1.752-2 of the Regulations because, for example, the Membe or
Relatd Peron is the creditor or a guarantor,
Nonrecours Liabilties, Nonrcourse liabilties include
Company Nonrourse Liabilities and Member Nonrecoure
Liabilties.
Offsettble Decrease. Any allocaion that unexpectly
causes or increases a deficit in the Membets Capital Account as of
the end of the taable year to which the allocation relates attibutable
to depletion allowances under § i .704-1 (b )(2)(iv)(k) ofthe Regulations,
allocations of loss and deductions under §§ 704(e)(2) or 706 of the
Code or under § 1. 7 5 i - i ofthe Regulations, or Distributions that, as of
the end of the yea ar reasonably expected to be made to the extent they
exced the offsetting increases to such Member's Capital Account that
reasonably are expected to occur during or (prior to) the taxable years
in which the such Distributions are expected to be made (other than
increases pursuant to a Minimum Gain Chargeback).
Related Person. A person having a relationship to a Member that
is described in § 1.7524(b) of the Regulations,
B.3. Compliance with § 704(b) ofthe Code. The provisions of
this Aricle il as they relate to the maintenance of Capital Accounts are
intended, and shall be constred, and, if necessar, modified to cause
the allocations of Profits, Losses, incoire, gain and credit pursuant to
Aricle VI of this Agement to have substantial economic effec under
the Regulations promulgated under § 704(b) of the Code, in light of the
Distrbutions made puruant to this Agreement and the Capital
Contributions made pursuant to this Aricle II.
B.4. Company Minimum Gain Chargeback. lfthere is a net
decrease in Company Minimum Gain for a Taxable Year, each Member
must be allocated items ofincome and gain for that Taxable Year equal
to that Member's share of the net decrease in Company Minimum Gan.
A Member's shar of the net decrease in Company Minimum Gain is
the amowit of the total net decreas multiplied by the Member's
percetage share of the Company Minimum Gain at the end of the
immediately preeding Taxable Year. A Member's shar of any
decrease in Company Minimum Gain resulting frm a revaluation of
Company Prpert equals the incree in the Member's Capital Account
atbutable to the revaluation to the extent the reduction in minimum
gain is cause by the revaluation. A Member is not subject to the
Company Minimum Gan Chargeback Requirement to the extent the
Member's sha of the net decreasc in Company Minimum Gain is
caused by a guarantee, refinancing, or other change in the debt
instrent causing it to become parially or wholly a Recourse Liabilty
or a Member Nonrecourse Liability, and the Member bears the
economic risk of loss (within the meaning of §1.752-2 of the
Reguations) for the newly guaranteed, refinanced, or otherise changed
liability.
B.5. Member Minimum Gain Chargeback. If during a Taxable
Yea there is a net derease in Member Minimum Gain, any Membe
with a share of that Member Minimum Gain (as determined under §
i.704-2(i)(5) of the Regulations) as of the beginning of that Taxble
Year must be allocated items of income and gain for that Taxable Year
(and, if necessary, for succeding Taxable Years) equal to that.
Member's shar of the net decreae in the Company Minimum Gain,
A Member's shar of the net decrease in Member Minimum Gain is
determined in a manner consistent with the provisions of § 1.704-
2(g)(2) of the Regulations. A Member is not subject to this Member
Minimum Gai Chargeback, however, to the extent the nct decrease in
Member Minimum Gan arses because the liability ceaes to be
Member Nonrecoure Liabilty due to a conversion, refinancing, or
other change in the debt instrent that causes it to become parially or
wholly a Company Nonrcour Liabilty, The amount that would
otherise be subject to the Member Minimum Gain Chaeback is
added to the Membe's share of Company Minimum Gain. In addition,
rules consistent with those applicable to Company Minimum Gain shall
be applied to determine the shars of Member Minimum Gain and
Member Minimum Gain Chargeback to the extent provided under the
Regulations issued pursuant to § 704(b) of the Code,
B.5. Qualified Income Offset. In the event any Membe, in such
capacity, unexpctedly receives an Offsettable Decrease, such Member
wil be allocated items of income and gain (consisting of a pro rata
porton of each item ofpaiership income and gain for such yea) in an
amount and manner suffcient to offet such Offsetble Decrease as
quickly as poible,
Exøiar 14..20011.
BILL OF SALE
For Ten Dollars and other good and valuable consideration paid to Teton Springs
Golf and Casting Club, LLC, a Wyoming limited liability company, whose address is 10
Headwaters Drive, Victor, Idaho, 83455, hereinafter referred to as "Grantor", the receipt and
suffciency of which are acknowledged, Grantor transfers, conveys and assigns to the Teton
Springs Water and Sewer Company, LLC, an Idaho limited liabilty company, hereinafter
referred to as "Grantee", all of Grantor's right, title and interest in and to that certin
personal property listed in Exhibit A attached and incorporated by reference (the "Personal
Property"). The Personal Property does not include items owned by third persons and leased
to Grantor, although it does include any leasehold interest of Grantor in and to the same.
Grantor represents and warrants to Grantee that: (i) Grantor is the lawful owner of
the Personal Property, (ii) Grantor has not encumbered the Personal Property or consented to
the creation of any security interest in the Personal Property except as disclosed on Exhibit
A; and (iii) the persons executing this Bil of Sale on behalf of Grantor are authorized so to
do and are authorized to bind Grantor under the terms of this Bil of Sale.
The Personal Property is sold in a used and an "AS IS" condition. Grantor makes no
warranties, express or implied, of any kind (including, but not limited to: title;
merchantability; fitness for any particular purpose; design; condition; quality; capacity;
workmanship; conformity with applicable laws, ordinances, rules or regulations; patent
infringement; or latent defects) to Grantee regarding the Personal Property except as
specifically set forth in this Bil of Sale.
IN WITNESS WHEREOF, Grantor has executed this Bill of Sale this ¿'/,l day of
May, 2008.
GRANTOR:
TETON SPRINGS GOLF AND CASTING
CLUB,LLC
By:
Exaiaris..1.,13
BILL OF SALE
EXHIBIT A
Item Description Quantity Manufactuer Model
1 Marking Paint 30 various n/a
2 Hydrant wrench 2 n/a n/a
3 Manhole lifter 2 n/a n/a
4 2" Valve key -8'2 n/a n/a
5 2" Valve key -15' ext 1 n/a n/a
6 Electronic Locator 1 Schonstedt GA92XTd
7 Pocket CL Photometer 1 HF Scientific pocket
8 Measuring wheel 1 Stanley wheel
9 2" valve Key-lO' ext 1 n/a n/a
10 Curb stop key- 6'1 n/a n/a
11 2.5" hose- 50'4 n/a n/a
12 2.5" hose- 100'4 n/a n/a
13 Barricade sign 2 n/a n/a
14 2.5" nozzle 1 n/a 2.5"
15 2.5" gate valve 1 n/a 2.5"
16 2.5" 90 degree fitting 1 n/a n/a
17 2.5" 45 degree fittting 1 n/a n/a
18 Misc. Handtools n/a various n/a
19 I" meter 48 Sensus 1 "
20 1" Yoke assbly 35 Ford I"
21 I" check valve 40 Ford 1 "
22 5" valve box ext 15 n/a 5"
23 5" valve box ext 12 n/a 5"
24 Manhole lids 5 n/a n/a
25 IDWR Permit 22-13178
26 All rights, title anâ interest of Grantor
in the customer list, any customer
deposits, and customer service
agreements of the water and sewer
systems.
u;\WPDATA\OWS\2787JI5. Teton Springs (Anet Transfer)\8i1 ofSalc.v2.w~d
2 - BILL OF SALE
EXHBI is ..2.13
ASSUMPTION AND INDEMNITY AGREEMENT
This Assumption and Indemnity Agreement (this "Agreement") is executed between
Teton Springs Golf and Casting Club, LLC, a Wyoming limited liability company,
hereinafter referred to as "Assignor" and Teton Springs Water and Sewer Company, LLC,
an Idaho limited liability company, hereby referred to as "Assignee."
RECITALS:
A. Assignor is the owner of a culinary water system and the sewage collection
system (the "Systems") located at Teton Springs Planned Unit Development situated in Teton
County, Idaho.
B. Assignee is a wholly owned subsidiary of Assignor.
C. Assignor desires to transfer to Assignee and Assingee desires to accept from
Assignor, all of the assets constituting the Systems.
D. In connection with the assignment of the Systems, Assignor wil transfer
certain contractual obligations to Assignee, but wil only do so upon Assignee's express
acceptance of the assignment and execution of this Agreement in order to indemnify
Assignor of any liability with respect to such contractual obligations.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and suffciency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Assignment And Acceptance. Assignor assigns to assignee all of Assignor's
rights and obligations in all contracts, permits, licenses and certificates relating to the
Systems, including but not limited those identified on the attached Exhibit A (all of which
are referred to herein as the "Contracts"). Assignee hereby accepts assignment of the
Contracts and agrees to perform each of Assignor's obligations thereunder.
2. Indemnity. Assignee shall indemnify, defend and hold harmless Assignor for,
from and against any and all claims, actions, suits, liabilities, damages, penalties, fines and
costs, including but not limited to attorneys' fees and costs, (i) that may be brought against
it in connection with the Contracts or that Assignor may incur or pay by way of settlement,
judgment or otherwise in connection with any of the Contracts. If any claim, action or suit
Exalll 15
Pa 3 .,13
alleging such liabilities, damages, penalties or fines is brought against Assignor, then
Assignee shall defend the same at its expense by counsel reasonably satisfactory to Assignor.
3. No Limitation. Assignee's liability under this Agreement is unlimited.
4. Enforcement Costs. If there is any litigation or other action taken by any party
to enforce or interpret any provisions of or rights arising under this Agreement, the
nonprevailing party shall pay to the prevailing party all costs and expenses incurred by the
prevailng party, including but not limited to reasonable attorney fees and costs.
5. Entire Agreement. This Agreement sets forth the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior oral or written
agreements of the parties. This Agreement cannot be altered or amended except by an
instrument in writing signed by the parties hereto.
6. Successors and Assigns. This Agreement is binding upon and inures to the
benefit of the parties hereto and their respective successors and assigns.
7. Headings. The headings in this Agreement are for reference only and do not
limit or define the meaning of any provisions of this Agreement.
8. SurvivaL. All of the representations, warranties, agreements and indemnities
set forth in this Agreement shall survive the execution and delivery of this Agreement and
any other instruments and documents executed and delivered in connection with this
Agreement.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Idaho.
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective
as of the ¿fib day of May, 2008.
ASSIGNOR
TETON SPRINGS GOLF AND CASTING
CLUB, LLC
By:
2 INDEMNITY AGREEMENT
Exalll IS""0113
-----._-_. _._-------- ---- -------_.._----
ASSIGNEE
TETON SPRINGS WATER AND SEWER
COMPANY, LLC
By: Teton Springs Golf and Casting Club,
LLC, managerBY:~~~thony t
Manag' g Member
3 INDEMNITY AGREEMENT
ExalBI15..5.13
EXHIBIT A
ASSIGNED CONTRACTS
1. The Water Main Easement granted by Fay T. Rammell and Corey T. Rammell,
Limited Partnership, as set forth in that certain Water Main Easement, recorded in the records
of Teton County, Idaho, as instrument no. 15 i 595 and instrument no. 152735.
2. All rights, title and interest of Grantor in that certain Memorandum Of Water Tank
Easement Agreement between Richard M. Jacobsen and Susan Jacobsen as trustees of the
Richard and Susan Jacobsen Trust dated April 2, i 993 and Teton Springs Golf and Casting
Club, LLC, recorded in the records of Teton County, Idaho, as instrument no. 151483.
3. All rights and obligations of Assignor under that Wastewater Collection system and
Treatment Facilities Use Agreement among Assignor, City of Victor and City of Driggs,
dated May 19,2000.
4. All culinary water rights, including but not limited to those evidenced by IDWR
Permit no. 22-13178.
5. All rights, title and interest of Grantor in the customer list, any customer deposits, and
customer service agreements of the water and sewer systems.
6. Grantor's Public Water Supply Permit, Permit No. PWS 7410033
7. Grantor's DEQ Certificate issued by the Idaho Department of Environmental Quality,
Certificate No. 00-01-41
G:\WPDATA\DWS\2787.0S - Teton Sprin (Asse Trafcr)\indemny.v2.wp:sm
4 INDEMNITY AGREEMENT
ExalBIlS..6e113
Instnment # 198128
TETON COUNTY. IDAHO6-10-200 04:07:00 No. of Pag: 7
Recorde for : TETON SRPI~G GOLF & CASTING r qQ- J :;.(:; . ¡,U' ¡!JÜ'~r 0Fi Fi'¡ 4 Ø?MARY LOU HANSEN Fee: 21.00 . I -" ~ ,,-- --Ex-oio Recor De " ...
Index to: DEED, SlECIAL WARTY
SPECIAL WARRANTY DEED
For the consideration ofTen Dollars ($10.00), and other valuable consideration, the
receipt and sufficiency of which are acknowledged, Teton Springs Golf and Casting Club,
LLC, a Wyoming limited liability company, hereinafter referred to as "Grantor", hereby
conveys to Teton Springs Water and Sewer Company, LLC, an Idaho limited liability
company, whose address is 10 Headwaters Drive, Victor, Idaho 83445, hereinafter referred
to as "Grantee", all of its right title and interest in and to the culinary water system and the
sewage collection system located at Teton Springs Planned Unit Development (the "PUD")
situated in Teton County, Idaho, referred to hereafter as the Property. Without limiting the
foregoing, Grantor conveys to Grantee
1. the well lots described on Exhibit A,
2. the Water system improvements described on Exhibit B,
3. the Sewer system improvements described on Exhibit C,
4. all benefits and burdens of the easements described on Exhibit D.
5. all permits, licenses and certificates pertRining to the water and sewer systems,
including but not limited to those described on Exhibit E.
6. all benefits and burdens of all easements on the recorded plat of Teton Springs
Planned Unit Development that are utilized for delivery of water and or sewer
services to the Lot Owners within the PUD.
7. all rights and obligations of Grantor under that Wastewater Collection system
and Treatment Facilties Use Agreement among Grantor, City of Victor and
City of Driggs, dated May 19,2000.
Grantor binds itself and its successors to warrant and defend the title to the Property
against all acts of Grantor and no other, subject to the matters set forth above.
Dated this ~ay of May, 2008.
GRANTOR:
TETON SPRINGS GOLF AND
CASTING CLUB, LLC
By:
EXH..is..'..13
STATE OF IDAHO )
)ss.
County of Teton )\~On the lD day of~, 2008, before me, the undersigned, a notary public in and
for said State, personally appeared ANTHONY VEST, known or identified to me to be the
manager or a member of Teton Springs Golf and Casting Club, LLC, the limited liability
company that executed the instrument or the person who executed the instrument on behalf
of said limited liability company, and acknowledged to me that such limited liability
company executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my offcial seal,
the day and year in this certificate first above written.
SHANNON R. HERNDON
ItTARY PUBLIC
STATE OF IDAHO
s~~ Q. \4t"~~
Notary Public for: -:-b\oc.:i
Residing at: ~. \l"t~ri m
My Commission Expires: \ \ - Ola- oS
(se I)
2 - SPECIAL WARRANTY DEED
Exøiarl!",'''13
EXHIBIT A
WELL LOTS
1. Block 29, Tract 4, Well Lot 2, Teton Springs Golf and Casting Club, Phase 4, Teton
County, Idaho
2. Tract 16, Well Lot 1, Teton Springs Golf and Casting Club, Phase 4, Teton County,
Idaho
3 - SPECIAL WARRANTY DEED
EXHIB isPalefl3
EXHIBIT B
WATER SYSTEM ASSETS
Water Supply Lines
Well NE Corner
Well SE Corner
Water Tank
Booster Pump/Clor Stn/Pwr
Pumphouse Building 3,
Flow Meter
Telemetry
Water Mains
12" Main - Phase i
12" Main - Commercial Vilage
12" Main - Forest Tract 12 & 13
4" Main - Enclave
4" Main - Forest Cabins
6" Main - Phase i
6" Main - Commercial Village
6" Main - Creekside Cabins
6" Main - Forest Cabins
6" Main - Mountain Meadows
8" Main - Phase i
8" Main - O&M Center
8" Main - Block 13
8" Main - Commercial Vilage
8" Main - Creekside Cabins
8" Main - Dog Leg Lane
8" Main - Forest Cabins
8" Main - Mountain Meadows
8" Main - Winger Circle
8" Main - Forest Tract 12 & 13
8" Main - Mtn Meadows North
Valves
12" Gate Valve - Forest Cabins
12" Gate Valve - Phase i
8" Gate Valve - Commercial Vilage
8" Gate Valve - Creekside Cabins
8" Gate Valve - Forest Cabins
8" Gate Valve - Mountain Meadows
8" Gate Valve - Winger Circle
4 - SPECIAL WARRANTY DEED
8" Gate Valve - Forest Tract 12 & 13
8" Gate Valve - Mtn Meadows North
8" Gate Valve - Dog Leg Lane
8" Gate Valve - Phase i
6" Gate Valve - Commercial Vilage
4" Gate Valve - Commercial Vilage
4" Gate Valve - Enclave
4" Gate Valve - Forest Cabins
Release Valve - Creekside Cabins
Release Valve - Phase i
Release Valve - Forest Tract 12 & 13
Fire Hydrants
Hydrant - Commercial Vilage
Hydrant - Creekside Cabins
Hydrant - Forest Cabins
Hydrant -Mountain Meadows
Hydrant - Winger Circle
Hydrant - Forest Tract 12 & 13
Hydrant - Mtn Meadows North
Hydrant - Phase i
Service Lines
Infrastructure - Commercial Vilage
Infrastructure - Phase i
Infrastructure - Block 13
Infrastructure - Creekside Cabins
Infrastructure - Dog Leg Lane
Infrastructure - Enclave
Infrastructure - Forest Cabins
Infrastructure - Mountain Meadows
Infrastructure - Winger Circle
Infrastructure-Forest Tract 12 & 13
Infrastructure - Mtn Meadows North
O&M Center
Sales Center
Infrastructure - Phase I
Infrastructure - Commercial Vilage
Infrastructure - Phase i
EXBll15,.1..13
EXHIBIT C
SEWER SYSTEM ASSETS
Pressure Sewers, Force Mains
4" Pressure Sewer - Forest Cabins
4" Pressure Sewer - Forest Tract 12&
13
6" Force Mains - Phase I
Pipeline Insulation
Gravity Mains
8" Gravity Main - Block 13
8" Gravity Main - Creekside
8" Gravity Main - Dog Leg Lane
8" Gravity Main - Enclave
8" Gravity Main - Enclave
8" Gravity Main - Mountain Meadow
North
8" Gravity Main - Mountain Meadows
8" Gravity Main - Winger Circle
8" Gravity Main - Forest Tract 10 & 11
8" Gravity Main - Forest Tract 12 & 13
8" Gravity Main - Forest Cabins
8" Gravity Main - Phse I 4
Manholes
Flow Meter Manhole - Phse i
Manhole- Block 13
Manhole - Creekside
Manhole - Dog Leg Lane
Manhole - Enclave
Manhole - Enclave
Manhole - Forest Cabins
Manhole - Mountain Meadow North
Manhole - Mountain Meadows
Manhole - Phse i 2
Manhole - Winger Circle
Manhole - Forest Tract 10 & 11
Manhole - Forest Tract 12 & 13
5 - SPECIAL WARRANTY DEED
Lift Stations
Grinder Lift Station - Forest Cabins
Large Lift Station - Phse i 1
Lift Station - Forest Tract 12 & 13
Medium Lift Station - Winger Circle
Service Lines
Infrastructure - Forest Cabins
Infrastructure - Block 13
Infrastructure - Creekside
Infrastructure - Dog Leg Lane
Infrastructure - Enclave
Infrastructure - Enclave
Infrastructure - Mountain Meadow
North
Infrastructure - Mountain Meadows
Infrastructure - Phse I 1
Infrastructure - Winger Circle
Infrastructu re-Forest Tract 10 & 11
Infrastructure-Forest Tract 12 & 13
O&M Center
Sales Center
EXHII IS
hi 11 fi 13
EXHIBIT D
EASEMENTS
1. The Water Main Easement granted by Fay T. Rammell and Corey T. Rammell,
Limited Partnership, as set forth in that certain Water Main Easement, recorded in the records
of Teton County, Idaho, as instrument no. 151595 and instrument no. 152735.
2. All rights, title and interest of Grantor in that certain Memorandum Of Water Tank
Easement Agreement between Richard M. Jacobsen and Susan Jacobsen as trstees of the
Richard and Susan Jacobsen Trust dated April 2, 1993 and Teton Springs Golf and Casting
Club, LLC, recorded in the records of Teton County, Idaho, as instrument no. 151483.
3. All water and sewer easements in the PUD, including but not limited to (a) those
previously reserved to Grantor in the deed dated September 25,2007, with Grantor herein
as the grantor in that deed and Teton Springs Home Owners' Association, Inc., as the
grantee, and recorded as Instrument no. 191968, records of Teton County, Idaho, and (b)
those identified on the plat of the Planned Unit Development.
6 - SPECIAL WARRANTY DEED
EXI 15
Pa 12 fi 13
EXHIBIT E
PERMITS, LICENSES AND CERTIFICATES
1. All culinary water rights, including but not limited to those evidenced by IDWR
Permit no. 22-13178.
2. Grantor's Public Water Supply Permit, Permit No. PWS 7410033
3. Grantor's DEQ Certificate issued by the Idaho Department of Environmental Quality,
Certificate No. 00-01-41
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7 - SPECIAL WARRANTY DEED
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