exh10-25.htm


     

    
      

      

    

     

     

     

     

     

     

     

     

     

     

     

     

    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 

     

     

    
      
        
        

      

      
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      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 

     

     

    
      
        
        

      

      
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    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), (ii) and (iii), above, may be
      amended by the unanimous consent of the Managers, which shall be granted if
      Tuhaye has diligently and in good faith carried out the Project to that point,
      and if either a force majeure event or other good cause exists for relief from
      the schedule, which relief must be sought by Tuhaye at or about the time of
      the
      causal event.

    


    5.           Tuhaye
      Compensation.  Tuhaye shall be compensated for the
      Tuhaye Responsibilities (described above) as follows:

     

    a.           A
      Construction Management Fee equal to five percent (5%) of the hard and soft
      costs associated with the improvement and development of the underlying
      Property, but excluding: (i) the cost of the acquisition of the Property, (ii)
      any above-market construction costs charged by a Talisker construction entity
      for improvement and development of the Property, and (iii) the cost of Talisker
      Club membership, such fee to be paid as described below.  Tuhaye and
      the Joint Venture Entity shall not enter into any above market construction
      contracts involving the development of the Property with any Talisker-affiliated
      person or entity.

     

    b.           A
      Talisker Branding Fee of eighteen percent (18%) of the actual retail sales
      price
      (excluding broker commissions and the cost of the associated Talisker Club
      membership) of all lots, parcels, and improvements sold in connection with
      the
      Project, such Branding Fee to be paid as described below.  Neither
      owner of the Joint Venture Entity shall be obligated to pay any capital
      contributions, special assessments or other proceeds to the Joint Venture Entity
      for purposes of allowing the Joint Venture Entity to pay the Branding Fee as
      described herein.

    


    6.           Payment
      and Distribution of Joint Venture Revenues.  All
      revenues received by the Joint Venture Entity from the transfer or sale of
      lots,


     

     

     

    
      
        
        

      

      
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      parcels,
        improvements or any of its assets shall be paid and distributed as follows:
        (i)
        first, as required by any lender that has provided financing for the Project;
        (ii) second, to Seller in payment of the Property Value; (iii) third, to
        the
        repayment of any Special Capital Contribution made by Tuhaye under Section
        4,
        above; (iv) fourth, to the payment of the Construction Management Fee, and
        then
        the Talisker Branding Fee; and (v) fifth, 50/50 to the
        Parties.

    

    


    7.           Lot
      Selection Right.  Seller shall have the first right to
      select a lot from among all lots platted on the Property.  Tuhaye
      shall provide to Seller a copy of the recorded plat within thirty (30) days
      of
      recordation, together with lot pricing information.  Seller’s first
      right is exercisable by written notice to the Joint Venture Entity within thirty
      (30) days after Seller’s receipt of a copy of the recorded plat and the pricing
      information regarding the lots.  In the event Seller elects to
      exercise this right as provided above, the Value of said lot (as defined below)
      shall be deducted from the amount of the Property Value to be paid to seller
      under Section A.6.(ii), above.  The lot Value shall be the retail
      price of the lot as established by the Joint Venture Entity during the ordinary
      course of business and in a manner not designed or intended to discriminate
      against Seller.

    


    B.           OTHER
      TERMS AND CONDITIONS

    


    1.           Seller
      Warranties and
      Representations. Seller
      represents that Seller has fee title to the Property and will convey to the
      Joint Venture Entity good and marketable title to the Property free from any
      options, claims, rights to purchase, or encumbrances, except those approved
      by
      Tuhaye.  Seller agrees to be responsible for taxes related to the
      Property prior to Contribution Date.  Seller will cause to be paid by
      the Contribution Date all mortgages, trust deeds, judgments, mechanic's liens,
      damages, claims, tax liens and warrants involving the Property which appear
      in
      the Title Commitment delivered to the Joint Venture Entity as of the
      Contribution Date, and will indemnify and hold the Joint Venture Entity and
      its
      principals harmless from and against such to the extent related to any events
      and/or ownership of the Property prior to the Contribution Date, except Seller’s
      indemnity shall not apply to any claims by through or under Terry Brodkin,
      his
      affiliated company, or their predecessors, successors or assigns (collectively,
      “Brodkin”), for an easement on, through or across the Property to the extent any
      such Brodkin claim results from any action taken by Seller upon the instruction
      of Tuhaye; and the Joint Venture Entity will indemnify and hold Seller harmless
      from and against any such Brodkin claim.   The parties
      acknowledge that commencing in the fall of 2006, Brodkin made a demand upon
      Seller for an easement on, through or across the Property and ultimately, Seller
      declined to grant Brodkin an easement upon the instruction of Tuhaye; the
      parties further acknowledge that the Joint Venture Entity shall indemnify and
      hold Seller harmless from and against any claim by Brodkin arising
      therefrom.  Seller shall fully cooperate with and support in any way
      necessary the Joint Venture Entity’s development efforts including all
      entitlement and permitting processes. Seller disclaims, and makes no


     

     

    
      
        
        

      

      
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      representation
        or warranty with respect to water or water rights including, without limitation,
        the ability of the Property to participate in, or purchase water rights from
        any
        water district.

    

     

    2.          Seller
      Disclosures.  No later than ten days following execution
      of this Agreement, Seller shall provide to Tuhaye the following (“collectively,
      "Seller Disclosures"): (a) a current commitment for a policy of title insurance
      issued by Coalition Title Agency; (b) a copy of any leases and rental agreements
      now in effect, if any, with regard to the Property; (c) a copy of written
      notices of any claims or conditions concerning the Property, if any, including
      without limitation, any relating to environmental conditions; and (d) any
      agreements, documents, surveys or studies in Seller’s possession concerning the
      Property including, without limitation, any option or purchase
      agreements.  Within three days of receipt of the Seller Disclosures,
      Tuhaye may terminate this Agreement based on any material condition adversely
      affecting the Property, as identified in the Seller Disclosures, or give Seller
      written notice of unmerchantability of title or of any other unsatisfactory
      title condition shown by the title documents.  If Seller receives
      notice of unmerchantability of title or any other unsatisfactory title
      conditions, Seller shall use reasonable efforts to correct said items and bear
      any nominal expense to correct the same prior to the Contribution
      Date.  If such unsatisfactory title conditions are not corrected to
      Tuhaye's satisfaction on or before Contribution Date, this Agreement shall
      then
      terminate; provided, however, Tuhaye may, by written notice received by Seller,
      on or before Contribution Date, waive objection to such items, in which case
      the
      Property shall be deeded to the Joint Venture Entity as provided
      herein.  Upon such waiver and notwithstanding any other provision of
      this Agreement to the contrary, all of Seller’s obligations as to any such
      waived conditions shall be deemed discharged and satisfied, and Seller deemed
      released by Tuhaye and Joint Venture Entity from any and all claims in
      connection therewith.

     

    3.          Talisker
      Club.  The purchasers or transferees of any platted
      Project lot shall be required to acquire a Talisker Club membership at the
      then
      applicable price or deposit amount.

    


    D.           COSTS

     

    Tuhaye
      and Seller are responsible for
      their respective costs and expenses incurred at any time in connection with
      pursuing or consummating this Agreement.  Notwithstanding the
      foregoing, Joint Venture Entity shall be responsible for the title insurance
      premium for an Owner’s Policy of Title Insurance issued to the Joint Venture
      Entity in the full amount of the Property Value.  Items such as
      property taxes and other assessments and charges shall be pro-rated between
      Seller and the Joint Venture Entity as of the Contribution Date.

     

     

    
 

    
      
        
        

      

      
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    E.           MISCELLANEOUS

    


    
      	
              1  

            	
              Counterparts.  This
                Agreement may be executed in one or more counterparts, each of which
                will
                be deemed to be an original copy and all of which, when taken together,
                will be deemed to constitute one and the same
                agreement.

            


    

     

    
      	
              2  

            	
              Binding
                Effect.  Upon execution of this Agreement, the
                development and sale of the Property shall occur in accordance with
                the
                terms and conditions of this
                Agreement.

            


    

     

    
      	
              3  

            	
              Confidentiality.  The
                Parties shall at all times keep the terms and conditions of this
                Agreement
                and the transactions contemplated hereunder in relation to the development
                and sale of the Property strictly confidential, and shall not disclose
                such outside their respective organizations except that Tuhaye may
                disclose such to any party providing financing or professional services
                to
                Tuhaye or its affiliates, or as required by law either through mandatory
                legal process or in disclosures required of public companies. Each Party
                shall
                cause its members, officers, employees, agents, representatives and
                affiliates to abide by the provisions of this
                Paragraph.

            


    

     

    
      	
              4  

            	
              Governing
                Law; Jurisdiction; Costs.  This Agreement shall be
                construed in accordance with and governed by the laws of the State
                of
                Utah.  In the event of any dispute related to this Agreement or
                the Property, (i) any formal action shall be commenced and maintained
                in
                federal and/or state courts located in Utah, and (ii) the prevailing
                party
                shall be entitled to all costs and expenses related thereto, including
                attorney’s fees.

            


    

     

    


    
      	
              5.  

            	
              Commissions.   Each
                party represents and warrants that no broker or finder has acted
                directly
                or indirectly for it in connection with this Agreement, and no broker
                or
                finder is entitled to any brokerage or finder’s fee or other commission in
                connection with the transactions contemplated
                herein.

            


    

    


    
      	
              6.  

            	
              General. The
                captions and headings of this Agreement are for convenience and reference
                only, and do not affect the construction or interpretation of any
                of its
                provisions.  In this Agreement the singular includes the plural,
                the plural the singular, and the use of any gender is applicable
                to all
                genders. This Agreement shall not be assigned without the prior written
                consent of the parties hereto, such consent not to be unreasonably
                withheld.

            


    

     

     

    
      
        
        

      

      
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              7.  

            	
              Notices.   Notice
                required or permitted hereunder shall be in writing and delivered
                in a
                manner most efficient under the circumstances.  Subject to the
                foregoing and unless otherwise specifically provided, notice shall
                be
                given by (1) hand delivery, (2) facsimile, or (3) certified mail
                (postage
                prepaid & return receipt requested), delivered as
                follows:

            


    

    


    Seller:                         Robert
      W. Dunlap

    32391
      Horseshoe Drive

    Evergreen,
      Colorado 80439

    Telephone
      No.: 303 670
      3885

    Facsimile
      No.:   303
      670 3902

    Email:
      rbobkat@aol.com

    


    Tuhaye:                      
      David J. Smith   

                                                               
      900 Main Street

                                                               
      P. O. Box 4349

                                                               
      Park City, UT  84060

    Telephone
      No.: 
435-487-0255

    Facsimile
      No.: 
435-487-0256

    Email: 
      dsmith@taliskermountain.co m

    


    or
      at
      such other address as a party hereto may designate by written
      notice.  Notice shall be deemed effective on the date of delivery if
      hand delivered or faxed (to be an effective notice by fax, there must be a
      written confirmation of the date and time of the transmission, generated
      contemporaneously by the transmission device in the ordinary course), or on
      the
      third day after mailing if sent by certified mail.

    


     

    
      	
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            	    /s/ Robert W.
              Dunlap          
              


    

    
      	
               

            	
              Robert
                W. Dunlap

            


    

    


    


    


    
      	
               

            	  /s/ Kathy L.
              Dunlap             
              


    

    
      	
               

            	
              Kathy
                L. Dunlap

            


    

    


    


    


    


    
      	
               

            	
              Tuhaye
                LLC

            


    

     

    
      	
               

            	 /s/  David J.
              Smith                  


    

    
      	
              By:

            	  David J.
              Smith


    

    
      	
              Its:

            	  Authorized Signing
              Officer


    

    


     

     

     

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