LETTER AGREEMENT DATED FEBRUARY 15, 2007 BETWEEN PARK-PREMIER MINING COMPANY AND RANCH 248 LLC
EXHIBIT
10.26
LETTER
AGREEMENT DATED FEBRUARY 15, 2007 BETWEEN
PARK-PREMIER
MINING COMPANY AND RANCH 248 LLC
(Project
“C” Joint Venture: Approximately 30 Acres)
February
15, 2007
This
Letter Agreement (“Agreement”)
memorializes the agreement of the undersigned, Park Premier Mining Company,
a
Utah corporation, f/k/a Xxxxxxxx Mining Company, a/k/a Park Premier Properties
(“Seller”), to enter into a joint venture with Ranch 248 LLC or its designee
(“Ranch 248”) with respect to the development and sale of all of Seller’s right,
title and interest in and to approximately 30 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. Ranch 248 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 five (5) calendar days of
execution of this Agreement by the Parties, this Agreement shall be ratified
by
Seller's Board of Directors. Thereafter within three (3) calendar
days of ratification of this Agreement by at least a majority of the Seller's
shareholders 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, including the construction
of
homes thereon (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 close this agreement and
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:(a) Seller, associated third parties and Talisker Realty Limited
or
assigns shall have entered into and delivered copies of Letter Agreements
(Project “B,” and Project “A”: Approximately 303.1 Acres) mutually acceptable to
the parties thereto; and (b) the directors and shareholders of Seller shall
have
approved and ratified this Agreement and Project “A” as described
above.
2. Ownership
and Management of Joint Venture Entity. The Joint
Venture Entity shall be owned equally by Seller and Ranch 248, and shall be
managed and operated by three managers consisting of two selected by Ranch
248
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
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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 $3,500,000. 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.
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4. Ranch
248 Responsibilities. Ranch 248 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, design, imaging, 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 Ranch
248
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 Ranch 248 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 Ranch 248 at or about the time of
the
causal event.
5. Ranch
248 Compensation. Ranch 248 shall be compensated for
the Ranch 248 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 the direct costs associated with the construction of
homes themselves thereon (referenced in 5(b), below), the cost of the
acquisition of the Property, any above-market construction costs charged by
a
Talisker construction entity for improvement and development of the Property,
and the cost of Talisker Club membership, such fee to be paid as described
below. Ranch 248 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
Construction Development Fee equal to eight percent (8%) of the hard and soft
costs associated with the construction of the homes themselves, but excluding
the acquisition costs of the Property, the costs referenced in Subsection 5(a)
above, any above-market construction costs
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charged
by a Talisker construction entity for improvement and development of the
Property, and the cost of Talisker Club membership, such fee to be paid as
described below.
c. 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, homes 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
homes
or and 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 Ranch 248
under Section 4, above; (iv) fourth, to the payment of the Construction
Management Fee, the Construction Development Fee, and then the Talisker Branding
Fee; and (v) fifth, 50/50 to the Parties.
B. OTHER
TERMS AND CONDITIONS
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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 Ranch 248. 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. 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
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.
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2. Seller
Disclosures. No later than ten days following execution
of this Agreement, Seller shall provide to Ranch 248 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,
Ranch 248 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
Ranch 248’s satisfaction on or before Contribution Date, this Agreement shall
then terminate; provided, however, Ranch 248 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 Ranch 248 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
Ranch
248 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.
E. MISCELLANEOUS
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Counterparts. This
Agreement may be executed in one or more counterparts, each of which
will
be deemed to be an original copy
and
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all
of which, when taken together, will be deemed to constitute one
and the
same agreement.
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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.
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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 Ranch 248
may
disclose such to any party providing financing or professional services
to
Ranch 248 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.
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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.
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5.
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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.
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6.
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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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[SIGNATURES
COMMENCE ON NEXT PAGE]
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/s/ Xxxxxx X. Xxxxxx
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By:
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Its:
President 2/21/07
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Ranch 248 LLC
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/s/ Xxxxx X. Xxxxx
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By:
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Its:
Authorized Signing Officer
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