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EXHIBIT 10.25
LETTER AGREEMENT DATED FEBRUARY 15, 2007
BETWEEN ROBERT AND KATHY DUNLAP AND TUHAYE LLC
LETTER AGREEMENT
(Project “B” Joint Venture: Approximately 40
Acres)
February
15, 2007
This Letter Agreement
(“Agreement”) memorializes the agreement of the
undersigned, Robert & Kathy Dunlap
(“Seller”), to enter into a joint venture with
Tuhaye LLC or its designee (“Tuhaye”) with
respect to the development and sale of all of Seller’s
right, title and interest in and to approximately 40 acres of
land in Wasatch County, Utah, as described more particularly
in Exhibit “A” attached hereto (the
“Property”), upon the terms, conditions, and
covenants contained herein. Tuhaye and Seller are
sometimes called the "Parties".
The joint venture
involving the development and sale of the Property shall
occur based on the following terms and
conditions:
A. BASIC
TRANSACTION
1.
Formation of Joint
Venture. Within three (3) calendar
days of execution of this Agreement by the Parties and
satisfaction of the conditions below (the “Formation
Date”), the Parties shall form a mutually-acceptable
joint-venture entity (e.g., limited liability company)
domiciled in Utah (the “Joint Venture Entity”)
for the sole purpose of developing and selling the Property,
(the “Project”), and shall prepare and execute a
definitive joint venture agreement and/or charter documents
(e.g., an operating agreement) that reflect the terms and
conditions of this Letter Agreement (collectively,
“Definitive JV Agreement”). The obligation of
Seller to consummate formation of the Joint Venture Entity on
the Formation Date is subject to the satisfaction, at or
prior to the Formation Date, of the following conditions:
Seller, associated third parties and Talisker Realty Limited
or assigns shall have entered into and delivered copies of
Letter Agreements (Project “C" Joint Venture:
Approximately 30 Acres, and Project “A”:
Approximately 303.1 Acres) mutually acceptable to the parties
thereto and the directors and shareholders of sellers of
Projects “A” and “C” shall have
approved and ratified those agreements.
2.
Ownership and Management of Joint Venture
Entity. The Joint Venture Entity
shall be owned equally by Seller and Tuhaye, and shall be
managed and operated by three managers consisting of two
selected by Tuhaye or its designee under this Agreement, and
one selected by Seller (collectively, the
“Managers”) in accordance with standards generally
applicable to real estate developers in the area; provided,
however, that the mutual consent of Seller and Talisker shall
be required for any and all of the following: (i) dissolution,
termination, merger or consolidation of the Joint Venture
Entity; (ii) termination of this Agreement or the Definitive
JV Agreement, except as otherwise provided herein or therein;
(iii) any bulk sales of Joint Venture Entity assets outside
the ordinary course of business, or the sale, transfer or
conveyance of substantially
all
of the Joint Venture Entity’s assets outside the ordinary
course of business; (iv) entry into the Joint Venture
Entity of any new member or owner (e.g., member, partner,
shareholder); (v) the transfer or sale of any ownership or
membership interest in the Joint Venture Entity (other than
transfers to affiliates that control, are controlled by, or are
under common control with, the transferring Party); (vi) borrowing
money outside the ordinary course of business from banks, other
lending institutions, or the Members, and in connection therewith,
encumbering and granting security interests in the assets of the
Joint Venture Entity outside the ordinary course of business to
secure payments of the borrowed sum; (vii) to pay or cause to be
paid compensation to any Member or the Managers outside the
ordinary course of business or other than as expressly set forth
herein, and (viii) to increase the number of, or replace the
managers of the Joint Venture Entity, except for a Member’s
right to replace its own designated Manager or
Managers. No member of the Joint Venture
Entity may sell any portion of their ownership or membership
interest therein for a period of four (4) years following the
Formation Date. Thereafter, if a member receives a
bona-fide written offer to purchase its interest, such member shall
provide the other member with written notice of the offer together
with a copy of the offer, and the other member shall have the right
for a period of sixty (60) days after receipt of such notice to
elect to purchase the interest on the same terms and conditions as
those contained in the offer. If the other member fails
to make such election within said time period, then the selling
member may consummate the purchase and sale of its membership
interest pursuant to the terms and conditions of such
offer.
3.
Conveyance of Property.
Within three (3) business days of the Formation Date (the
“Contribution Date” or "Closing"), Seller shall
convey the Property “AS-IS,” except as otherwise
expressly provided in this Agreement, to the Joint Venture by
Special Warranty Deed. For purposes of this
Agreement and the transactions contemplated hereunder, the
Property shall be deemed to have a Property Value of
$2,000,000. At Closing, Seller may file a deed of
trust, collateral assignment of agreements, permits and
licenses, assignment of rents and profits, and security
agreement (collectively, the “Deed of Trust”) in
the amount of the Property Value. Seller agrees the lien of
its Deed of Trust will be subject, subordinate, junior and
inferior in all respects to the liens evidenced by and the
payments due under or in connection with any construction loan
or permanent financing provided, obtained or secured in
connection with development of the Property. At the request of
such lenders and without further consideration, Seller agrees
to execute, deliver and record such other documents, and take
such other action to confirm and effectuate the
foregoing.
4.
Tuhaye
Responsibilities. Tuhaye shall have
the following responsibilities on behalf of and in relation
to the operation and management of the Joint Venture Entity:
(i) as soon as practicable following Closing but not later
than 18 months following Closing, create a business &
development plan that specifies development timing parameters
and that is consistent with the look and feel of Talisker
residential developments in the vicinity of the Project, and
that
addresses
material aspects of the Project including land planning,
marketing, budgeting and sales; (ii) submit the Project to
Wasatch County for approvals and permitting within 18 months
following Closing; (iii) as soon as practicable following
receipt of such approvals and permits, commence construction
of the Project, and diligently proceed in good faith and
complete all construction and development work in accordance
with the business plan & development plan through to
Project completion; (iv) cause the Joint Venture Entity to pay
all direct and indirect costs (as determined in accordance
with GAAP) related to the construction, development and sale
of the Project, including sales and marketing costs; (v)
arrange financing for the Project at rates substantially the
same as those then paid by Tuhaye or its affiliates to its
commercial lenders; and (vi) advance to the Joint Venture
Entity, as a Special Capital Contribution, any funds necessary
to complete the Project in the event the proceeds of such
financing are insufficient. In no event shall
Seller have any obligation to fund the costs or expenses of
the Joint Venture Entity or the Project. The
schedule described in (i), (
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