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05-01-2007 TRACT O OPERATING AG FINALEXECUTEDOPERATING AGREEMENT TRACT O, BEAVER CREEK SUBDIVISION AS PART OF TOWN OF AVON WATER PARK ACTIVITIES THIS OPERATING AGREEMENT (the "Operating Agreement "), made effective as of the 1st day of May, 2007 is by and between THE VAIL CORPORATION d /b /a VAIL ASSOCIATES, INC., a Colorado corporation ( "Vail "), and the TOWN OF Avon, a Colorado municipal government, ( "Avon "), whose Federal ID number is 84- 0771088. RECITALS A. Vail and Avon have previously entered into that certain River Improvements Easement Agreement (Tract O) recorded August 16, 2006 at Reception No. 200622400 in the records of the Eagle County, Colorado Clerk and Recorder (the "Easement ") pursuant to which Avon has certain rights, as more particularly set forth in the Easement, on the real property described as Tract O, Beaver Creek Subdivision, according to the exception plat recorded on December 6, 1994 at Reception no. 552695 in Book 656 at Page 662 (the "Vail Property "). B. All terms not defined in this Operating Agreement shall have the meaning ascribed thereunto in the Easement. C. Pursuant to Section 4 of the Easement, Vail and Avon agreed to enter into this Operating Agreement to set forth the obligations of Avon in the use and operation of the Vail Property as a part of Avon's Water Park activities. D. Vail and Avon desire to enter into this Operating Agreement to further support the efforts of Avon to operate a portion of the Water Park on the Vail Property pursuant to the terms, covenants and conditions contained herein. AGREEMENT In consideration of the recitals, terms, covenants and conditions contained herein, the parties hereto agree as follows: 1. INCORPORATED INTO EASEMENT. This Operating Agreement (including the provisions of Exhibit A attached hereto) is hereby incorporated into the Easement for all purposes, and all provisions of the Easement shall be applicable and operative with respect to this Operating Agreement, including said Exhibit A. 2. REQUIREMENTS ON THE VAIL PROPERTY. Subject to the terms and conditions contained in this Operating Agreement and in the Easement, Avon shall be, and hereby is, required to provide personnel and equipment for certain maintenance, operation, and Avon -VAI Waterpark Agmt I- 09- 08FINAL.doc Page 1 of 13 general use of that portion of the Water Park on the Vail Property, as more specifically set forth herein (the "Park Operation(s) "). 3. TERM. Subject to the provisions of Section 6 hereof, this Operating Agreement shall be in force and effect as long as the Easement is in force and effect. 4. OPERATING RULES AND ENFORCEMENT. Avon, on behalf of itself and its employees, contractors, associates, agents or volunteers (the "Avon Agents ") and the Avon Permittees, hereby covenants and agrees to comply with the provisions, conditions, terms, obligations and rules set forth on Exhibit A attached hereto and incorporated herein by this reference (the "Operating Rules "). By entering into this Operating Agreement, Vail hereby consents to Avon's entering the Vail Property to enforce the Operating Rules and Avon hereby agrees to enter upon the Vail Property to enforce the Operating Rules. 5. RELATIONSHIP OF THE PARTIES. a. The terms of the Easement and this Operating Agreement do not establish an agreement of partnership, agency or employment of Avon or any of the Avon Agents. The relationship of Avon to Vail shall be that of Licensor - Licensee for the sole purpose of Avon's conducting the Park Operations as described herein and the rights under the Easement. In performing the Park Operations and the rights and obligations under the Easement, Avon will not be subject to the control of Vail but will be obligated to comply with the terms, covenants and conditions of this Operating Agreement and the Easement b. Based on the above, Avon and its employees shall specifically be excluded from coverage under Vail's Worker's Compensation while performing Park Operations. 6. DEFAULT AND REMEDIES. (a) If Avon commits any violation of any provision of this Operating Agreement, such violation shall be deemed an "Event of Default" under the Easement, and Vail shall have all rights and remedies under Section 8 of the Easement. Avon hereby acknowledges and agrees that the rights under the Easement may be revoked and/or suspended by Vail at any time for Avon's failure to fulfill the obligations of this Operating Agreement, failure to adhere to the terms and conditions of this Operating Agreement or conducting Operations in violation of applicable law(s). In the event of an Event of Default under this Operating Agreement or the Easement, the rights granted under the Easement may be suspended indefinitely and the provisions of this Operating Agreement shall be deprived of practical significance and rendered moot until the rights under the Easement are re- instated and once more in force and effect. Upon such re- instatement of the rights under the Easement, the rights and obligations of the parties under this Operating Agreement shall once more be in force and effect. Avon -VAI WaterparkAgmt 1- 09- 08FINAL.doc Page 2 of 13 (b) The cure provisions of Section 8 of the Easement shall apply this to Operating Agreement, provided, however, that in the event Vail determines the insurance required by the Easement is not in place, the three (3) day notice provision may be suspended, and immediate revocation or suspension of the Easement rights may result. 7. WAIVER OF DEFAULT. Failure to insist upon strict compliance with any of the terms, covenants and conditions hereof shall not be deemed a waiver of such terms, covenants and conditions, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. No waiver shall be valid unless in writing and signed by authorized officers of the parties hereto. 8. LIMITATION OF AVON'S AUTHORITY. Avon shall not have, and shall not represent itself as having, authority to act on behalf of or to bind Vail in any manner not specifically set forth in this Operating Agreement and the Easement. 9. DELEGATION /ASSIGNMENT. Neither party may (a) delegate its respective duties under this Operating Agreement; nor (b) assign this Operating Agreement without the prior written consent of the other party. 10. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 9 above, the terms, covenants and conditions of this Operating Agreement shall be binding on the successors and assigns of each party. 11. COMPLIANCE WITH SAFETY PROGRAM. Avon hereby warrants that it will be responsible for its own safety program and compliance with all applicable Occupational Safety and Health Act regulations. 12. NONDISCRIMINATION. During the term of this Operating Agreement, Avon agrees that it shall not discriminate: (a) against any employee or applicant for employment because of race, color, religion, sex, national origin, age or handicap (Ref. Title VII of the Civil Rights Act of 1964 as amended.); and (b) by segregation or otherwise against any person on the basis of race, color, religion, sex, national origin, age or handicap, by curtailing or refusing to furnish accommodations, facilities, Park Operations or use privileges offered to the public generally. (Ref. Title VI of the Civil Rights Act of 1964 as amended, Section 504 of the Rehabilitation Act of 1973, Title IX of the Education Amendments, and the Age Discrimination Act of 1975.) 13. NOTICES. Except as otherwise set forth herein, all notices or other communications relating to this Operating Agreement shall be in writing, and shall be hand delivered or mailed by first class mail, postage prepaid, to the address of the respective parties as follows: If to Vail: Vail Associates, Inc. Attention: James Roberts and Gary Shimanowitz Aeon -VAI Waterpark Agmt I- 09- 08FINAL.doe Page 3 of 13 P.O. Box 7, Internal Box BI and B27, respectively Vail, Colorado 81658 Facsimile: 970.479.4030 With a copy to: Vail Associates, Inc. Attn: Legal Compliance Officer 390 Interlocken Crescent, Suite 1000 Broomfield, Colorado 80021 Facsimile: 303.404.6422 If to Avon: Town of Avon Attention: Justin Hildreth PO Box 975 Avon, Colorado 81620 Facsimile: 970 - 949 -5749 The time of the rendition of such notice or other communication shall be deemed to be the time when it is personally delivered or three days after mailing via the U.S. Postal Service, Either party, by notice so given, may change the address to which future notices or other communications are to be sent. 14. CONFIDENTIALITY. Neither party shall disclose nor permit the disclosure of any confidential information, except as required in the performance of this Operating Agreement, during the performance of this Operating Agreement which confidential information concerns the other party's operations, activities, business affairs as well as all such information pertaining to Vail's subsidiaries, affiliates and venture members. Each party shall require the same confidentiality of its consultants and subcontractors. 15. REMEDIES CUMULATIVE. All the rights and remedies of Vail under this Operating Agreement are intended to be distinct, separate and cumulative. 16. MISCELLANEOUS. a. Severability. If any clause or provision of this Operating Agreement shall be held to be invalid in whole or in part, then the remaining clauses and provisions, or portions thereof, shall nevertheless be and remain in full force and effect. b. Amendment. No amendment, alteration, modification of or addition to this Operating Agreement shall be valid or binding unless expressed in writing and signed by the parties to be bound thereby. Avon -VAI Waterpark Agnrt 1- 09- 08FINAL,doe Page 4 of 13 C. Captions. The captions of each section are added as a matter of convenience only and shall be considered of no effect in the construction of any provision of this Operating Agreement. d. Attome sy ' Fees. If either party hereto shall bring any suit or action against the other for relief, declaratory or otherwise, arising out of this Operating Agreement, the preVailing party shall be entitled to and recover against the other party, in addition to all court costs and disbursements, such sum as the Court may adjudge to be reasonable attorneys' fees. e. Governing Law and Jurisdiction. This Operating Agreement shall be governed by and interpreted in accordance with the laws of the State of Colorado. Exclusive jurisdiction and venue for any legal proceedings related to this Operating Agreement shall be in the District Court for Eagle County, Colorado. f Survival. Any and all provisions, rights and obligations of the parties herein described and agreed to be performed subsequent to the termination of this Operating Agreement shall survive the termination of this Operating Agreement. g. Time. Time is of the essence with respect to the performance of each of the covenants and agreements herein set forth. h. Review. The parties and their respective counsel have reviewed this Operating Agreement in its entirety and acknowledge that each has had a full opportunity to negotiate the Agreement's terms. Therefore, the parties expressly waive any and all applicable common law and statutory rules of construction that any provision of this Operating Agreement should be construed against the Agreement's drafter, and agree and affirm that the Agreement and all provisions thereof shall in all cases be construed as a whole, according to the fair meaning of the language used. i. Waiver. Failure to insist upon strict compliance with any of the terms, covenants and conditions hereof shall not be deemed a waiver of such terms, covenants and conditions, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. No waiver shall be valid unless in writing and signed by an authorized officer of Vail. j. Counterparts; Facsimile Transmission. This Operating Agreement may be executed in any number of counterparts, any or all of which may contain the signatures of less than all the parties, and all of which shall be construed together as but a single instrument and shall be binding on the parties as though originally executed on one originally executed document. k. Authority. This Operating Agreement constitutes a valid and binding agreement of the parties, enforceable against each in accordance with its terms. To the extent the Avon -VAI waterpark Agmt 1- 09- 08FINAL.doe Page 5 of 13 parties are not natural persons, the persons executing this document on such party's behalf have actual power and authority to bind the corporation or other entity and to execute and deliver this Operating Agreement. 1. Entire Agreement. This Operating Agreement contains the entire agreement between the parties hereto and supersedes any and all prior agreements, proposals, negotiations and representations pertaining to the Park Operations to be performed hereunder IN WITNESS WHEREOF, the parties hereto have executed this Operating Agreement as of the respective dates set forth below to become effective as of the day and year first set forth above. THE VAIL CORPORATION d /b /a Vail Associates. Inc. a Color By: Name: Title: Date: XZ - Ob Approved as to Pone: Legal Deparuueat Name: G =HYARN ,D Signature: Date: TOWN OF Avon a Colorado cipal government By: W Name: U �Ore- Title: ► " l v log Date: I a b to Avon -VAI WaterparkAgmt 1- 09- 08FINAL.doc Page 6 of 13 EXHIBIT A (Attached to and forming part of the Operating Agreement by and between The Vail Corporation and Town of Avon dated as of May 1, 2007) OPERATING RULES NOTE: ANY VIOLATION OF THE BELOW OPERATING RULES SHALL BE VSIDERED AN EVENT OF DEFAULT AND MAY RESULT IN TERMINATION OR SUSPENSION OF THE EASEMENT OPERATING SEASON; OPERATING HOURS; GATE a. The Park Operations shall be allowed to commence on the day following the close of any published ski season on Beaver Creek Mountain and shall terminate on the earlier of the day on which Vail begins operation of the water intake and /or pumphouse devices on the Vail Property or October 1 in each and every year (the "Operating Season "). b. Hours of the Park Operations during the Operating Season will generally be from dawn to dusk, daily, unless otherwise specified in a special events agreement, as described in Section 8 of these Operating Rules. C. The access gate at the southwest entrance to the Vail Property (the "Gate ") will remain open during daylight hours (dawn to dusk) of the Operating Season during which time Avon, the Avon Agents and the Avon Permittees (including the general public) may access the Vail Property, provided, however, in the event that damage to or abuse of the Vail Property and /or the Vail Improvements is discerned by Vail, then Vail, in Vail's sole and absolution discretion, may elect to close the Gate until and if Vail determines to re -open the Gate. In the event that the Gate is not open during Operating Hours, call Beaver Creek Public Safety at 949- 4911. 2. MAINTENANCE /PORTAPOTTIES /CHANGING BUILDING a. Avon and the Avon Agents shall keep the Vail Property in neat and clean condition. Specifically, Avon shall remove all trash rubbish, signage (after conclusion of any special event) and the like ( "Rubbish ") on a daily and weekly basis during the Operating Season. In the event Avon does not remove Rubbish from the Vail Property, Vail may suspend Park Operations, remove any Rubbish on its own accord and charge Avon for such removal, with the requirement that such charges be paid prior to the re- instatement of Park Operations, or Vail may terminate or suspend Avon's rights under the Easement. Avon -vAi waterpark Agn,t 1- 09- 08r1NAL.doc Page 7 of 13 b. Avon shall undertake to remove or repair the bridge leading to the unoccupied building located on Parcel PE -02 (the "Unoccupied Building "). Also, Avon shall remove the Unoccupied Building or take measures to discourage the Avon Agents and the Avon Permittees from entering the Unoccupied Building. C. Regularly and upon request from Vail, Avon shall "blade" the access road accessing the boat ramp and the Vail Improvements during the Operating Season. d. Avon shall maintain the Avon Improvements to the satisfaction of Vail. Vail may request repairs, or reasonable upgrades (after identification of any usage or access problems) to the Avon Improvements, and Avon shall complete such repairs as quickly as reasonably possible. If such repairs are not completed in a timely manner, the determination of which shall be left to the sole discretion of Vail, Vail may suspend Park Operations until they are completed. e. Avon shall promptly repair or replace any property damaged by vandalism, graffiti or other such acts, including damage to any improvements on the Vail Property whether owned/constructed by Avon or Vail, and Vail shall not have to show evidence that such damage is related to Park Operations or the permitted uses under the Easement, except where such damage is related to the gross negligence of Vail. f. Any disturbance or damage caused by Avon's activities under the Easement or this Operating Agreement on the Vail' Property shall be restored to Vail's satisfaction, the determination of which shall be commercially reasonable. g. Avon shall provide for the placement and servicing of portable or self - composting toilets on the Vail Property, the location of which shall be as directed by Vail in advance of such placement. h. If Vail so directs, Avon shall provide a suitably sized structure for use as a changing area on the Vail Property. SECURITY /POLICING: a. Avon shall provide day and night security for the Vail Property, either utilizing its own police force or other security detail. Avon shall promptly respond when called by Vail or members of the public regarding incidents, trespassing, or other matters requiring police response to the Vail Property. In the event Avon is unable to respond or another law enforcement agency must be contacted, Avon shall coordinate with such other agency, e.g., Eagle County Sheriff's Office and obtain assistance and response as quickly as possible. Such security shall include a minimum of one (1) on -site inspection per day during the Operating Season. b. Unless specifically authorized by Vail, all persons not conducting official Vail business and found on the Vail Property before or after daily operating hours, or before or after Avon -VAI waterpark Agmt 1- 09- 08FINAL.doc Page 8 of 13 the Operating Season, shall be considered trespassing on the Vail Property and may be issued a summons for such trespass. C. Avon covenants and warrants that it is the obligation of Avon, and not Beaver Creek Public Safety, for the following on the Vail Property: (1) to monitor the Avon Agents' and the Avon Permittees' compliance and non - compliance with the Operating Rules on the Vail Property and take appropriate action for non - compliance; and (2) to investigate any matter on the Vail Property when noticed by Avon or contacted by a third party; and (3) to take whatever action necessary to enforce these Operating Rules (and bear the resulting consequences of such enforcement, if any), including but not limited to, (i) removing non - complying and trespassing offenders from the Vail Property and (ii) enforcement of parking Operating Rules by towing vehicles for illegally parking on the Vail Property, provided, however, that vehicles bearing the Beaver Creek or Vail logo will be allowed to park on the Vail Property at any time and from time to time. 4. VEHICLES AND PARKING: a. Temporary parking only is allowed for boat put - in/take -out, special event set- up /tear -down operations, and emergency vehicles. b. No overnight parking. C. Avon, the Avon Agents and the Avon Permittees may not use any parking lot owned by Vail, including but limited to that certain parking lot located on the south side of U.S. Highway 6 commonly known as the "East Day Lot" (collectively, the "Vail Parking Lots ") subject to the following: (1) Parking for Special Events shall be addressed in a Special Event Agreement set forth in Section 8 below. (2) Gates to the Vail Parking Lots (the "Parking Lot Gates ") will be closed during much of the Operating Season and no parking by Avon, the Avon Agents and the Avon Permittees is allowed when the Parking Lot Gates are closed. (3) During certain unspecified days of the Operating Season, the Parking Lot Gates will be open in which event Avon, the Avon Agents and the Avon Permittees may park in the Vail Parking Lots during Operating Hours but only if permitted by Beaver Creek Public Safety, provided, however, no overnight parking under any circumstances is permitted in any of the Vail Parking Lots. Nothing in this Operating Agreement gives Avon, the Avon Agents, or the Avon Permittees the right to park in any of the Vail Parking Lots except as permitted by Beaver Creek Public Safety in the sole and absolute discretion of Beaver Creek Public Safety. If the driver of any vehicle on a Vail Parking Lot is not in compliance with the terms and provisions hereof, Beaver Creek Public Avon -VAI Waterpark Agmt 1- 09- 08FINAL.doc Page 9 of 13 Safety has the right and authority to remove vehicles, drivers and passengers from the Vail Parking Lots or to direct Avon to so remove and Avon will comply therewith. Notwithstanding the forgoing, Vail shall not be liable to Avon, the Avon Agents, the Avon Permittees or to any other person whomsoever or entity whatsoever for or on account of any injury or damage to persons or property occasioned by reason of such use of the Vail Parking Lots, whether such injury or damage occurs on any of the Vail Parking Lots or on any public road right of way between the Vail Property and the Vail Parking Lots. The provisions of this subsection c of the Operating Rules shall be incorporated into the provisions of Section 6 of the Easement for all purposes with respect to Avon's, the Avon Agents' and the Avon Permittees' use of any of the Vail Parking Lots or such public road rights of way. 5. PETS: a. All pets on the Vail Property must be kept on a leash at all times. b. Unruly or vicious pets must be removed from the Vail Property and Vail may call Eagle County Animal Control to do so at its discretion. 6. SIGNAGE: Avon shall place signage at the entrance to the Vail Property, and at various key and/or conspicuous places on the Vail Property indicating the Water Park is operated by Avon and outlining the risks associated with its use. Signage language shall be approved by Vail and include statements that the landowner (Vail) is not responsible for any activities under the Easement on the Vail Property. Avon shall also place signage indicating the wetlands specified in Section 7.b below and provide that no walking or entering on the wetlands is permitted. FENCE: a. Avon shall construct a fence of materials and height to be agreed upon by the parties (to remain in place at all times unless otherwise directed by Vail) to provide security for the Vail Improvements and as a physical separation between the Vail Improvements and Parcel PE -01. The fence structure shall include two twelve (12) feet openings, each comprised of two six (6) feet wide gates, to accommodate large vehicles used by Vail in the operation, maintenance, repair, replacement and use of the Vail Improvements. The location of the fence and the 2 gates are generally depicted on Schedule 1 to these Operating Rules. b. Avon shall provide a separation structure, for example, a split rail or similar fence, between the boat ramp and the wetlands east of the boat ramp, as such areas are illustrated on Exhibit B -2 of the Easement, to provide wetlands protection. SPECIAL EVENTS: Avon -VAI WaterparkAgmt 1- 09- 08FINAL.doc Page 10 of 13 a. In Vail's sole and absolute discretion, Avon may schedule special water/boating/kayaking events using the Vail Property, the description and dates of which events shall be provided to Vail by Avon prior to April 1 of each year b. Avon shall provide a listing of all proposed special events at the Vail Property during the Operating Season, and submit such list to Gary Shimanowitz and Greg Johnson in accordance with Section I O.c of these Operating Rules on or before April 1 of each year. For the 2007 Operating Season, such list shall be provided no later than May 1, 2007. C. Individual "Event Agreements" shall be required for all special events to be held on the Vail Property. These Event Agreements shall be between Vail and, at the election of Vail in Vail's sole and absolute discretion, either the proposed promoter (the "Promoter ") or Avon and will set forth the terms and conditions specific to such event, including required insurance, indemnification, set up, tear down, parking, security, and other matter pertinent to such event. d. Avon or the event promoter, as appropriate, shall name Vail on the liability releases specific to each event. Avon shall monitor, supervise and insure that all special event participants, volunteers, employees and anyone associated with the event properly execute such liability release in favor of Vail and others, as appropriate. Copies of all special event liability releases shall be provided to Vail Risk Manager Steve Clark. 9. THIRD PARTY COMMERCIAL RIVER GUIDE CONTRACTORS (E.G. TIMBERLINE TOURS NOVA GUIDES, LAKOTA GUIDES): If Avon receives any inquiry from third party commercial river guide contractors, such inquiry shall be referred to Vail. Avon hereby acknowledges and agrees that each commercial river operation seeking to use the Vail Property for put - in/take -out shall execute an annual agreement with Vail, not Avon, for authorization to do so. 10. GENERAL: a. Avon, the Avon Agents and the Avon Permittees shall conduct themselves in a professional manner and be neat and clean in appearance at all times when conducting Park Operations. Further, Avon shall provide reasonable and sufficient supervision to the Avon Agents at all times when conducting Park Operations. b. Avon, the Avon Agents and the Avon Permittees shall comply with all applicable laws, orders and regulations (whether federal, state, county or local) having jurisdiction over the Park Operations and the Vail Property. C. Any requests regarding Avon's use of the Vail Property, e.g., additional events, event date changes, or similar requests, shall be presented only via email to Gary Avon -vAt waterpuk Agmt 1- 09- 08FINAL.doc Page 11 of 13 Shimanowitz (gshimanowitz@a Vailresotts.com) AND Greg Johnson (gjohnson n,Vailresorts.com), or their respective successors or designees, who shall make the sole and final determination on any such requests. [End of Operating Rules.] Avon -VAI Waterpark Agmt 1- 09- 08HNAL.doc Page 12 of 13 SCHEDULEI TO EXHIBIT A TO OPERATING AGREEMENT (ATTACHED) Avon -VAI Waterpark Agmt 1-09- 08FINAL.doc Page 13 of 13