ENGAGEMENT LETTER

ENGAGEMENT LETTER (Marriott School Letterhead) ENGAGEMENT LETTER 3 October, 200_ Lawrence L. Lawrence, President XYZ Corporation 5295 South ABC Street, Suite 123 Seattle, WA 98101 Dear Mr. Lawrence: As a field study team of graduate students from the Marriott School of Management at Brigham Young University, we look forward to working with you toward the completion of the Tao feasibility study for the XYZ Corporation. The purpose of this letter is to confirm our understanding of the project scope, approach, schedule, deliverables, and fees. Background The XYZ Corporation (COMPANY… replace COMPANY with short name using search and replace) , a subsidiary of the Paul Tillich Group, was established in May, 1976 to focus exclusively on development of the substantial land and water assets held by the Paul Tillich Group. One such property is the Tao development near Avila, Spain. The Tao development entails a multi-use development of 4,500 acres. It is the largest master plan community ever proposed on the Iberian Peninsula. The development will include single and multi-family projects as well as a central business district for office, retail, a Carmelite Monastery, and an industrial complex. COMPANY will attempt to include in the Tao project the latest ideals in community planning, such as open space, public transportation, walkable neighborhoods, contemplation gardens utilizing native plants and animals, and a central business and residential core surrounded by organic agricultural lands jointly owned by community members. COMPANY's business strategy is to control the land master planning and entitlement process and to be responsible for the provision of infrastructure. Revenue generation will initially come from the sale of residential lots to builders and, to a lesser extent, the sale of commercial pads. COMPANY's major task is to complete a feasibility study on the development of the Tao. Engagement Scope and Objectives This field study will provide a feasibility study addressing the financial viability of the Tao. The team will be divided into a marketing and a finance subgroup. The finance subgroup will assemble the estimated upfront costs for on sight improvements, utilities, legal expenses and permits. The second phase of the finance portion of the study will be to complete a 5-year pro forma for the project. The second subgroup BYU Marriott School 1 will complete a survey to determine the size of the market and consumer interest in the Tao. The study will conclude with a recommendation to proceed or not to proceed with the Tao project based solely on economic viability. Approach, Tasks, and Schedule Our suggested approach and time frame consists of the following four phases: Phase 1: Information Collection and Discovery (October 7 through October 26) The purpose of this phase for the finance subgroup is to gather information from public officials and from the attached approved list of experienced developers in order to complete a list of projected initial costs and fees for the Tao. During this same time period, the marketing subgroup will be conducting focus groups to help prepare the survey, and gathering marketing results from similar large scale real estate developments on the Iberian Peninsula. The work of both subgroups will be reviewed by Juan de Yepes of the Tao, on October 26 at a meeting at the Marriott School of Management in Provo, Utah. Phase 2: Pro Forma Preparation and Survey (October 26 through November 8) Using the information obtained in Phase one, the finance subgroup will prepare a five year pro forma of cash flows for the Tao. The marketing subgroup will execute its survey of 1,000 residents of four Spanish cities (Mt. Carmel, Avila, Segovia, and Bilboa). Phase 3: Analysis (November 8 through December 7) Based on the results of Phase 1 and 2, the field studies team will run net present value calculations and obtain financing recommendations from Don Quixote, the financial liaison at the Bank of the Ascent of Mt. Carmel. The work of both subgroups will be combined into a single feasibility report. Phase 4: Report Delivery (December 12) The findings, analysis, and final recommended plan of action will be submitted at this time at the Salt Lake City offices of COMPANY. The project will officially conclude with this formal oral and written report to be presented by our team to the COMPANY management. The report will be made on or before 12 December 200_. Deliverables Seven copies of the final written report will be delivered at the time of the final PowerPoint presentation; all of these copies will become the property of COMPANY. Roles of Engagement Team and Client Our team intends to deliver information that is reliable, representative, credible, and timely to help COMPANY complete its due diligence regarding the feasibility of the Tao. The consulting team includes BYU Marriott School 2 (LIST STUDENT NAMES HERE) on the marketing subgroup. Mark Thomas will function as the engagement coach, and Dr. (PROFESSOR NAME), professor of the Marriott School of Management at BYU, will serve as the advisor of the project. In addition, external resources in the real estate development field available to the University will be used. Critical to the success of the project will be our ability to contact and/or meet with Juan de Yepes on a regular basis to obtain information and to have questions answered. Owner of Intellectual Property COMPANY retains ownership rights to all intellectual property developed by the students as a result of their work on the Tao. All students and faculty associated with the field studies project will, at your request, sign a standard Assignment of Ownership and Nondisclosure Agreement. BYU reserves the right to retain up to 10 copies of the final report for educational purposes. Unless notified otherwise by COMPANY, one of these copies will be place in the general reference section of the Lee Library. Confidentiality We will make reasonable efforts to protect any confidential or proprietary information that you provide to the team, as long as you identify such information in writing at the time that you provide it. Students and faculty will freely discuss all other information associated with the project as part of normal educational activities. Publications Faculty and students will have the right to publish and present information concerning the project. If you notify us of intellectual property rights or confidential or proprietary information which precludes complete disclosure of the project, we will work with you to provide for both protection of rights and appropriate publication. Of course, we will not disclose your confidential information in any such publication. Warranty Disclaimer The project is an educational program designed to help students learn the practice of business consulting. Students are not, however, considered employees nor agents of BYU. While the team will work in good faith to provide a quality project, there is no promise of success. Accordingly, BYU, its trustees, employees, agents, and students make no warrantees, express or implied, as to the condition, accuracy, originality, merchantability, or fitness for any particular purpose of any work performed, advice given or intellectual property developed in the program and provide the work performed on an as is basis. Further, COMPANY agrees through its participation in the program that BYU will not be liable for incidental or consequential damage or of lost profits, even if BYU is advised of the possibility of such damages. Indemnity COMPANY is to assume all risks and responsibility with respect to its use of the work and research provided to you under this agreement, and agree to indemnify and hold harmless BYU, its trustees, employees, agents, and students from any claim or liability, including reasonable attorneys fees, arising from COMPANY’s use of the work or research provided to you. BYU Marriott School 3 Status Reporting Every two weeks, beginning the week of 8 October 2001, we will submit a written progress report that reviews the achievements to date and gives the plan for the following two weeks. The reports will also evaluate compliance with the project goals and objectives. Fees The fee for the team's work is $20,000, plus any ordinary expenses. Ordinary expenses include the cost of materials for the preparation of the written report, telephone, and any other costs pre-approved by COMPANY. Payment, payable to the Marriott School of Management, is due within 15 days of invoicing. Invoicing will occur when the final report is delivered. Team Professional Profile and Contacts If you have any concerns or questions, please feel free to contact (STUDENT NAME), or Mark Thomas at the numbers or e-mails attached in the Professional Profile. The qualifications, names, e-mails, and telephone numbers of the team members are included in the Professional Profile. We look forward to working with you on this important endeavor. Please sign below, evidencing your agreement to, and approval of the terms of this engagement letter. An original executed copy of this letter should then be returned to Mark Thomas at the following address: Mark Thomas Brigham, Young University 437 TNRB Provo, Utah 84602 Sincerely, _________________________ _________________________ Student 1 Student 2 _________________________ _________________________ Student 3 Student 4 _________________________ _________________________ BYU Marriott School 4 Student 5 Student 6 Accepted by: Signature: _______________________________________ Date: _______________________ Authorized Representative of COMPANY Print Name and Title: ________________________________________ BYU Marriott School 5