LLC Operating Agreement

LIMITED LIABILITY COMPANY AGREEMENT


OF


SP LAND COMPANY, LLC


Dated as of March 31, 2004


THE INTERESTS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE APPLICABLE STATE SECURITIES LAWS, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION AND QUALIFICATION PROVIDED IN THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.


IN ADDITION, THE INTERESTS ISSUED UNDER THIS AGREEMENT MAY BE SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH HEREIN.


TABLE OF CONTENTS


Page


ARTICLE 1 DEFINITIONS..........................................................1


ARTICLE 2 LIMITED LIABILITY COMPANY............................................5


2.1 Certificate of Formation.....................................5
2.2 Name.........................................................5
2.3 Principal Office, Resident Agent and Registered Office.......5
2.4 Purpose......................................................5
2.5 Term.........................................................6
2.6 Fiscal Year..................................................6


ARTICLE 3 CAPITAL CONTRIBUTIONS AND LOANS BY MEMBERS...........................6


3.1 Initial Capital Contributions................................6
3.2 Member Loans.................................................6
3.3 General......................................................6
3.4 No Third Party Rights........................................7
3.5 Return of Capital............................................7


ARTICLE 4 MANAGEMENT...........................................................7


4.1 Designation of Managing Member and Grant of Authority........7
4.2 Officers.....................................................9
4.3 Affiliate Agreements.........................................9
4.4 Limitation on Authority of Other Members to Act on Behalf
of Company.................................................9
4.5 Permissible Activities of the Members........................9
4.6 Exculpation.................................................10
4.7 Bank Accounts...............................................10


ARTICLE 5 COMPENSATION AND FEES...............................................10


5.1 Reimbursement of Expenses...................................10
5.2 No Additional Fees..........................................10


ARTICLE 6 COVENANTS, WARRANTIES AND REPRESENTATIONS OF MEMBERS................11
6.1 Representations and Warranties of Killington................11
6.2 Representations and Warranties of ASCRP.....................11


ARTICLE 7 BOOKS AND RECORDS; AUDITS; CERTAIN TAX MATTERS......................12


7.1 Books and Records; Audits; Certain Tax Matters..............12


ARTICLE 8 CAPITAL ACCOUNTS; DISTRIBUTIONS; ALLOCATIONS........................13


8.1 Capital Accounts............................................13
8.2 Allocations.................................................13
8.3 Distributions...............................................14
8.4 Withholding.................................................15
8.5 Final Distribution..........................................15


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ARTICLE 9 DISSOLUTION.........................................................15


9.1 Dissolving Events...........................................15
9.2 Methods of Liquidation......................................15
9.3 Reasonable Time for Liquidating.............................16
9.4 Date of Liquidation.........................................16
9.5 Withdrawals.................................................16


ARTICLE 10 SALE; ASSIGNMENT; TRANSFER.........................................16


10.1 Transfers of Interests in Company...........................16
10.2 Restraining Order; Specific Performance; Other Remedies.....17
10.3 Compliance with Law.........................................17
10.4 Substitute Members..........................................17
10.5 Section 754 Election........................................17
10.6 Release of Liability........................................18


ARTICLE 11 NOTICES............................................................18


11.1 In Writing; Address.........................................18
11.2 Method......................................................19


ARTICLE 12 MISCELLANEOUS......................................................19


12.1 Additional Documents and Acts...............................19
12.2 Governing Law and Jurisdiction..............................19
12.3 Pronouns....................................................19
12.4 Entire Agreement............................................19
12.5 References to this Agreement................................19
12.6 Headings....................................................20
12.7 Binding Effect..............................................20
12.8 Counterparts................................................20
12.9 Amendments..................................................20
12.10 Estoppel Certificates.......................................20
12.11 Exhibits....................................................20
12.12 Severability................................................20
12.13 Waiver; Modification........................................20
12.14 Third-Party Beneficiaries...................................20
12.15 Reliance on Authority of Person Signing Agreement;
Designated Representatives; Authority of Managing Member..21
12.16 Indemnity...................................................21
12.17 Herein......................................................22
12.18 Including...................................................22
12.19 Cost of Counsel.............................................22
12.20 Days........................................................22
12.21 Time of Essence.............................................22
12.22 General Exculpation.........................................22
12.23 Partition...................................................22


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Exhibits


Exhibit A - Description of Killington Property and ASCRP Property Exhibit A-1 - Description of Cherry Knoll Property Exhibit B - Designated Representations Exhibit C - Tax Exhibit


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LIMITED LIABILITY COMPANY AGREEMENT
OF
SP LAND COMPANY, LLC


THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of SP LAND COMPANY, LLC, a Delaware limited liability company (the "Company"), is executed as of March 31, 2004, by and among AMERICAN SKIING COMPANY RESORT PROPERTIES, INC., a Maine corporation ("ASCRP"), and KILLINGTON, LTD., a Vermont corporation ("Killington")


W I T N E S S E T H :


WHEREAS, the Members formed the Company pursuant and subject to the Delaware Limited Liability Company Act (as amended from time to time, the "Act") pursuant to that certain Certificate of Formation of the Company, dated as of March 17, 2004, and filed with the Secretary of State of the State of Delaware on March 17, 2004 (the "Certificate of Formation");


WHEREAS, in connection with the formation of the Company and in exchange for certain Membership Interests therein, as more fully hereinafter set forth, ASCRP is contributing all of its right, title and interest in and to certain land, receivables, and cash accounts more fully described on Exhibit A attached hereto (the "ASCRP Property"), and Killington iss contributing to the Company all of it's right, title and interest in and to certain real property described generally on Exhibit A attached hereto including an undivided fifty percent (50%) interest in the "Cherry Knoll" property described on said Exhibit A-1 (collectively the "Killington Property," the ASCRP Property and the Killlington Property are collectively referred to herein as the "Development Property");


WHEREAS, ASCRP and Killington now desire to enter into this Agreement to (i) reflect the contributions described above and ASCRP's and Killington's admission as Members in the Company as a result thereof, (ii) set forth the Members' respectve Membership Interests as a result of such contributions, and (iii) otherwise establish the Members' respective rights in the Company and the terms and provisions upon which the Company shall operate.


NOW, THEREFORE, in consideration of the premises and the mutual promises, obligations and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be, and hereby being, legally bound, hereby agree as follows:


ARTICLE 1


DEFINITIONS


The following terms shall have the following meanings when used herein:


"Act": As defined in the Recitals.


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"Affiliate": With respect to any designated Person, any other Person which, directly or indirectly, controls or is controlled by or is under common control with such designated Person. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person.


"Affiliate Agreement": Any contract, agreement or other arrangement, oral or written, entered into between the Company and any Person which is an Affiliate of a Member with respect to the provision of services to, or supplies, machinery or equipment for, the Company Assets or any portion thereof.


"Agreement": This Limited Liability Company Agreement, as the same may be amended from time to time in accordance herewith.


"ASC": American Skiing Company, a Delaware corporation.


"ASCRP": As defined in the Preamble.


"ASCRP Property": As defined in the Preamble.


"Business Day": A day which is not a Saturday or Sunday or a legally recognized public holiday in the United States or the State of New York.


"Capital Account": As defined in Section 8.1.


"Capital Contributions": (a) the sum of (i) the Initial Capital Contributions made, or deemed made, by a Member pursuant to Section 3.1(c), plus (ii) any additional Capital Contributions made by such Member after the date hereof.


"Cash Flow": Cash Flow for any period shall mean:


(a) the gross cash receipts of the Company for such period from all sources, including, but not limited to, all receipts from the operation of the Development Property or any other Company Assets, the sale or lease of any portion of the Development Property or any other Company Assets, net proceeds available to the Company from any financing or refinancing, the cash proceeds attributable to any Capital Contributions and Member Loans, made during such period and net reductions in funded reserves or sinking funds of the Company (other than any such reductions used to pay Company expenditures); less


(b) without duplication of any amounts deducted in determining (a) above, the gross cash expenditures of the Company for such period for all purposes with respect to the Company including both operating and capital expenditures, including any amounts paid with respect to any Loans, determined in accordance with cash basis accounting principles consistently applied (excluding expenditures made from previously established reserves); less


(c) deposits or allocations into reserve accounts for the Development Property or any other Company Assets.


"Certificate of Formation": As defined in the Recitals.


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"Cherry Knoll Property": Killington's undivided fifty percent (50%) interest in the portion of the Killington Property described as "Cherry Knoll" on Exhibit A-1 attached hereto.


"Code": The Internal Revenue Code of 1986, as amended.


"Company": As defined in the Preamble.


"Company Assets": All interests, rights and properties of any kind owned by the Company, including the Development Property and any interest in any partnership, limited partnership, joint venture, limited liability company or similar organization or joint participation arrangement in which the Company shall, directly or indirectly, be a partner, member, venturer, investor or other beneficial interest owner or otherwise participate in connection with the Development Property (or any portion thereof) or any other property acquired by the Company, or otherwise in connection with the Company's purpose as hereinafter set forth.


"Development Entity": As defined in Section 4.1(e).


"Development Property": Collectively, the Killington Property and the ASCRP Property, and all buildings, structures, improvements, fixtures, equipment, and other installations now or hereafter erected on, in, under, or above the Killington Property and/or the ASCRP Property, together with all rights related thereto, including all entitlements, development rights, contract rights, leases, easements, utility rights and other appurtenances thereto.


"Fiscal Year": As defined in Section 2.6.


"Initial Capital Contribution": Shall mean the amounts contributed, or deemed contributed, by each Member pursuant to Section 3.1 hereof.


"Initial Preference Amount": Shall mean, with respect to Killington (and its successors and/or assigns), the amount of [$_________________].


"Killington": As defined in the Preamble.


"Killington Property": As defined in the Recitals.


"Killington Resort": Shall mean the ski trails, lifts, day lodges and related ski facilities located on and around Killington Mountain in Killington, Vermont.


"Loan": Any indebtedness or obligation for money borrowed by the Company (including any Member Loans).


"Managing Member": Killington, in its capacity as the Managing Member or any of its successors in their respective capacities as Managing Member admitted to the Company as the Managing Member hereunder in accordance with the terms of this Agreement, for so long as any such Person is designated as the Managing Member under the terms of this Agreement.


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"Member" or "Members": Each of ASCRP and Killington in their respective capacities as Members, any of their permitted successors in their respective capacities as Members admitted to the Company as Members hereunder in accordance with the terms of this Agreement, for so long as any such Person is a Member under the terms of this Agreement.


"Member Loan": As defined in Section 3.2.


"Membership Interest": With respect to any Member, such Member's entire interest in the Company including such Member's right to receive distributions and to participate in the management of the business and affairs of the Company on the terms and conditions hereinafter set forth, including the right to vote on, consent to or otherwise participate in any decision or action of or by the Members granted pursuant to this Agreement and the Act.


"Membership Percentage": With respect to any Member, that Member's percentage ownership interest in the Company. As of the date hereof, the Membership Percentages are as follows:


Killington __%
ASCRP __%


"Mortgage(s)": Any mortgage, deed of trust, deed to secure debt, bond, collateral assignment, indenture, pledge or other lien or security interest in all or any part of the Development Property or any other Company Assets.


"Original Agreement": As defined in the Recitals.


"Person": An individual, partnership, joint venture, corporation, trust or other entity.


"Pledge": Any voluntary pledge, mortgage, deed of trust, security interest or other consensual lien or hypothecation of, in or on any Member's Membership Interest, including on any right of such Member to receive distributions from the Company.


"Securities Act": As defined on the cover page of this Agreement.


"Ski Resort Operator": As defined in Section 4.4.


"Tax Matters Partner": As defined in Section 7.1(g).


"Transfer": As defined in Section 10.1(a).


"Unpaid Preferred Return": With respect to each Member (and its successors and/or assigns) only, as of the end of any day during the term hereof, an amount equal to (a) the Unpaid Preferred Return of such Member as of the end of the immediately preceding day, plus (b) the product of the Unpaid Preferred Return of such Member as of the end of the immediately preceding day multiplied by the daily interest factor for an interest rate of twelve percent (12%) per annum compounded annually, plus (c) the product of the Unrecovered Preference Amount of such Member as of the end of the immediately preceding day multiplied by the daily interest factor for an interest rate of twelve percent (12%) per annum compounded annually, minus (d) any distributions made to such Member during the day in question pursuant to Section 8.3(b).


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"Unrecovered Preference Amount": With respect to each Member (and its successors and/or assigns) only, the Initial Preference Amount, as increased by the amount of any Capital Contributions hereafter made by such Member, and decreased by the amount of any distributions hereafter paid to such Member pursuant to Section 8.3(c).


ARTICLE 2


LIMITED LIABILITY COMPANY


2.1 Certificate of Formation. The Certificate of Formation has been filed with the Office of the Secretary of State of the State of Delaware. The Certificate of Formation may hereafter be amended whenever, and within the time periods, required by the Act.


2.2 Name. The name of the Company is SP Land Company LLC, in which name all assets belonging to the Company shall be held and under which name all business and affairs of the Company shall be conducted, except to the extent otherwise required by the laws of the State of Delaware or any other state in which the Company is doing business. 2.3 Principal Office, Resident Agent and Registered Office. The principal office of the Company shall initially be located at 4763 Killington Access Road, Killington, Vermont 05751-4746, or at such other place or places as the Managing Member may from time to time designate, provided, however, that the Company shall at all times maintain a registered agent and a registered office in the State of Delaware. The name and address of the registered agent for service of process on the Company in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The address of the registered office of the Company in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. Such principal office, registered agent or registered office may be changed by the Managing Member, so long as in accordance with the Delaware Act; concurrently with any such change, written notice thereof shall be given to each Member. Promptly following execution and delivery of this Agreement, the Managing Member shall cause the Company to register as a foreign limited liability company in the State of Vermont.


2.4 Purpose. The objects and purposes of the Company are solely to invest in, acquire, hold, own, operate, manage, maintain, improve, subdivide, pre-develop, develop, sell, finance, lease, and otherwise use or deal with the Development Property and any other Company Assets, for profit and as an investment, and in all respects to act as owner of the Company Assets. In furtherance of the foregoing, the Company's purposes shall include to make, enter into, deliver and perform all contracts, agreements and other undertakings, pay all costs and expenses, and do all such other acts and things as the Managing Member may deem necessary or advisable to carry out the foregoing objects and purposes upon and subject to the terms and conditions of this Agreement. The Company may do any of the foregoing through wholly-owned subsidiaries or, subject to Section 4.3 below, through any Development Entity in which the Company shall, directly or indirectly, be a partner, member, venturer, investor or other beneficial interest owner.


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2.5 Term. The term of the Company shall continue until the liquidation and dissolution of the Company pursuant to Article 9 hereof.


2.6 Fiscal Year. The fiscal year of the Company (the "Fiscal Year") shall end on the 31st day of December in each year. The Company shall have the same Fiscal Year for income tax and accounting purposes.


ARTICLE 3


CAPITAL CONTRIBUTIONS AND LOANS BY MEMBERS


3.1 Initial Capital Contributions.


(a) Killington. As of the date hereof, Killington is contributing to the Company all of Killington's right, title and interest in and to the Killington Property, in exchange for Killington's Membership Interest in the Company. As of the date hereof, Killington's Membership Percentage is __________________ (__%).


(b) ASCRP. As of the date hereof, ASCRP is contributing to the Company, all of ASCRP's right, title and interest in and to the ASCRP Property, in exchange for ASCRP's Membership Interest in the Company. As of the date hereof, ASCRP's Membership Percentage is ___________________ (__%).


3.2 Member Loans. If at any time or from time to time, additional funds are required (or are expected to be required) to meet the obligations or needs of the Company, or are otherwise determined by the Managing Member to be necessary or desirable in connection with any activity by the Company in fulfilling its purpose as described in Section 2.4 hereof or as otherwise contemplated by this Agreement, ASCRP and Killington shall each have the right, but not the obligation, to make a loan ("Member Loan") for the amount of funds so required. If ASCRP does not make a Member Loan, then Killington may make a Member Loan for the full amount of the funds so required. If both ASCRP and Killington desire to make a Member Loan, they shall do so in such amounts as agreed to, or in the absence of agreement, _________________ percent (__%) of the funds so required will be loaned by Killington and _________ percent (1%) loaned by ASCRP. Any such Member Loans shall bear interest from the time each such Member Loan is made computed at a per annum rate equal to the lesser of (A) twelve percent (12%), or (B) the highest rate allowed by applicable law. Member Loans made pursuant to this Section 3.2 shall be repaid as provided in Section 8.3(a).


3.3 General.


(a) Except as specifically provided in this Agreement, no Member shall be obligated to contribute capital to, or and no Member may withdraw capital from, the Company. To the extent any monies which any Member is entitled to receive pursuant to Article 8 below would constitute a return of capital, each of the Members consents to the withdrawal of such capital.


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(b) Interest earned on Company funds shall inure solely to the benefit of the Company. Unless otherwise specifically provided herein, no interest shall be paid on any Capital Contributions or advances to the capital of the Company, nor upon any undistributed or reinvested income or profits of the Company.


3.4 No Third Party Rights. The right of the Members to require or make any Capital Contributions after the date hereof or Member Loans under the terms of this Agreement shall not be construed as conferring any rights or benefits to or upon any Person not a party to this Agreement, or the holder of any indebtedness of the Company, or the holder of any obligations secured by a Mortgage or other lien or encumbrance upon or affecting the Company or any interest of a Member therein or in the Company Assets or any part thereof or any interest therein, except to the extent expressly agreed in writing by all Members.


3.5 Return of Capital. Except as otherwise provided in Article 8 or 9, no Member shall have the right to demand or to receive the return of all or any part of its contributions to the capital of the Company. In addition, no Member has the right to demand or to receive property other than cash in return for its contributions to the capital of the Company.


ARTICLE 4


MANAGEMENT


4.1 Designation of Managing Member and Grant of Authority. Except as otherwise provided in this Agreement, the Managing Member (i) shall have the sole and exclusive power and authority on behalf of the Company to carry out any and all of the purposes of the Company and to perform all acts and enter into and perform all contracts and other undertakings that it may in its sole and absolute discretion deem necessary or advisable or incidental thereto, and (ii) shall have, and shall have full and absolute authority in its discretion to exercise, on behalf of and in the name of the Company, all rights and powers of a manager or managing member under the Act. Without in any manner limiting the foregoing, the Members hereby stipulate, confirm, acknowledge and agree that the Managing Member, acting directly or through any duly appointed Officers of the Company, may cause the Company to do, or cause to be done, on behalf and as an act of the Company, any act which is necessary or desirable to carry out any of the purposes of the Company, including any of the following:


(a) Enter into, make, deliver and perform all contracts ...