Exhibit 10.7

INDEMNITY AND GUARANTY AGREEMENT
(IMHFC Sedona)
THIS INDEMNITY AND GUARANTY AGREEMENT (this “Agreement”), made as of January 23,
2015, by IMH Financial Corporation, a Delaware corporation (“Indemnitor”), whose
address is c/o IMH Financial Corporation, 7001 N. Scottsdale Road, Scottsdale,
Arizona 85253, in favor of CALMWATER CAPITAL 3, LLC, a California limited
liability company (“Lender”), whose address is 11755 Wilshire Blvd., Suite 1400,
Los Angeles, California 90025.
W I T N E S S E T H :
WHEREAS, Lender has extended to L’AUBERGE NEWCO, LLC, a Delaware limited
liability company (“L’Auberge”) and ORCHARDS NEWCO, LLC, a Delaware limited
liability company (“Orchards” and together with L’Auberge, individually,
collectively, jointly and severally "Borrower") a loan in the principal amount
of $50,000,000.00 (the “Loan”) pursuant to that certain Loan Agreement (the
“Loan Agreement”) between Borrower and Lender, dated as the date hereof; and
WHEREAS, the Loan is evidenced by a Promissory Note dated of even date herewith
(the “Note”), executed by Borrower and payable to the order of Lender in the
stated principal amount of $50,000,000.00 and is secured by a Deed of Trust,
Security Agreement and Financing Statement dated of even date herewith (the
“Security Instrument”), from Borrower, as trustor, for the benefit of Lender, as
beneficiary, encumbering that certain real property situated at 301 L’Auberge
Lane, on which the L’Auberge de Sedona hotel is located, and 254 North Highway
89A, on which the Orchards Inn hotel is located, as is more particularly
described on Exhibits A‑1, A-2 and A-3 attached hereto and incorporated herein
by this reference, together with the buildings, structures and other
improvements now or hereafter located thereon (said real property, buildings,
structures and other improvements being hereinafter individually and
collectively referred to (as the context may require) as the “Property”) and by
other documents and instruments (the Loan Agreement, the Note, the Security
Instrument, and such other documents and instruments, as the same may from time
to time be amended, consolidated, renewed or replaced, being collectively
referred to herein as the “Loan Documents”); and
WHEREAS, as a condition to making the Loan to Borrower, Lender has required that
Indemnitor indemnify Lender from and against and guarantee payment to Lender of
the items described herein; and
WHEREAS, the extension of the Loan to Borrower is of substantial benefit to
Indemnitor and, therefore, Indemnitor desires to indemnify Lender from and
against and guarantee payment to Lender of the items described herein;
NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:

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Exhibit 10.7

1.Indemnity and Guaranty. Indemnitor hereby assumes liability for, hereby
guarantees payment to Lender of, hereby agrees to pay, protect, defend and save
Lender harmless from and against, and hereby indemnifies Lender from and against
any and all liabilities, obligations, losses, damages, costs and expenses
(including, without limitation, attorneys’ fees (which attorneys’ fees shall
include but not be limited to appellate fees and fees for all paralegals, legal
assistants and other paraprofessionals)), causes of action, suits, claims,
demands and judgments of any nature or description whatsoever (collectively,
“Costs”) which may at any time be imposed upon, incurred by or awarded against
Lender as a result of any of the Guaranteed Recourse Obligations of Borrower
(hereinafter defined). As used herein, the term “Guaranteed Recourse Obligations
of Borrower” shall mean all obligations and liabilities of Borrower for which
Borrower shall be personally liable pursuant to Section 3 of the Note, together
with all costs and expenses, including reasonable fees and out of pocket
expenses of attorneys (including but not limited to appellate fees and fees for
all paralegals, legal assistants and other paraprofessionals) and expert
witnesses, incurred by Lender in enforcing its rights under this Agreement.
This is a guaranty of payment and performance and not of collection. The
liability of Indemnitor under this Agreement shall be direct and immediate and
not conditional or contingent upon the genuineness, validity or enforceability
of the Note, the Security Instrument, or any other Loan Document, or the pursuit
of any remedies against Borrower or any other person (including, without
limitation, other guarantors, if any), nor against the collateral for the Loan.
Indemnitor waives any right to require that an action be brought against
Borrower or any other person or to require that resort be had to any collateral
for the Loan or to any balance of any deposit account or credit on the books of
Lender in favor of Borrower or any other person. In the event, on account of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable,
Borrower shall be relieved of or fail to incur any debt, obligation or liability
as provided in the Loan Documents, Indemnitor shall nevertheless be fully liable
therefor. In the event of a default under the Loan Documents which is not cured
within any applicable grace or cure period, Lender shall have the right to
enforce its rights, powers and remedies (including, without limitation,
foreclosure of all or any portion of the collateral for the Loan) thereunder or
hereunder, in any order, and all rights, powers and remedies available to Lender
in such event shall be non-exclusive and cumulative of all other rights, powers
and remedies provided thereunder or hereunder or by law or in equity. If the
indebtedness and obligations guaranteed hereby are partially paid or discharged
by reason of the exercise of any of the remedies available to Lender, this
Agreement shall nevertheless remain in full force and effect, and Indemnitor
shall remain liable for all remaining indebtedness and obligations guaranteed
hereby, even though any rights which Indemnitor may have against Borrower may be
destroyed or diminished by the exercise of any such remedy.
2.    Indemnification Procedures.
(a)    If any action shall be brought against Lender based upon any of the
matters for which Lender is indemnified hereunder, Lender shall notify
Indemnitor in writing thereof and Indemnitor shall promptly assume the defense
thereof, including, without limitation,

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Exhibit 10.7

the employment of counsel reasonably acceptable to Lender and the negotiation of
any settlement; provided, however, that any failure of Lender to notify
Indemnitor of such matter shall not impair or reduce the obligations of
Indemnitor hereunder unless the same would prejudice Indemnitor’s defense.
Lender shall have the right, at the expense of Indemnitor (which shall include
reasonable attorneys’ fees and expenses and shall be included in Costs), to
employ separate counsel in any such action and to participate in the defense
thereof. In the event Indemnitor shall fail to discharge or undertake to defend
Lender against any claim, loss or liability for which Lender is indemnified
hereunder, Lender may, at its sole option and election, defend or settle such
claim, loss or liability. The liability of Indemnitor to Lender hereunder shall
be conclusively established by such settlement, provided such settlement is made
in good faith, the amount of such liability to include both the settlement
consideration and the costs and expenses, including, without limitation,
reasonable attorneys’ fees (including but not limited to appellate fees and fees
for all paralegals, legal assistants and other paraprofessionals) and
disbursements, incurred by Lender in effecting such settlement. In such event,
such settlement consideration, costs and expenses shall be included in Costs and
Indemnitor shall pay the same as hereinafter provided. Lender’s good faith in
any such settlement shall be conclusively established if the settlement is made
on the advice of outside independent legal counsel for Lender.
(b)    No Indemnitor shall, without the prior written consent of Lender: (i)
settle or compromise any action, suit, proceeding or claim relating to an
indemnified obligation or consent to the entry of any judgment that does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to Lender of a full and complete written release of Lender (in form,
scope and substance satisfactory to Lender in its sole discretion) from all
liability in respect of such action, suit, proceeding or claim and a dismissal
with prejudice of such action, suit, proceeding or claim; or (ii) settle or
compromise any action, suit, proceeding or claim relating to an indemnified
obligation in any manner that may adversely affect Lender or obligate Lender to
pay any sum or perform any obligation as determined by Lender in its sole
discretion.
(c)    All Costs shall be immediately reimbursable to Lender when and as
incurred and, in the event of any litigation, claim or other proceeding, without
any requirement of waiting for the ultimate outcome of such litigation, claim or
other proceeding, and Indemnitor shall pay to Lender any and all Costs within
ten (10) days after written notice from Lender itemizing the amounts thereof
incurred to the date of such notice. In addition to any other remedy available
for the failure of Indemnitor to periodically pay such Costs, such Costs, if not
paid within said ten (10) day period, shall bear interest at the Default
Interest Rate (as defined in the Note).

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Exhibit 10.7

3.    Reinstatement of Obligations. If at any time all or any part of any
payment made by Indemnitor or received by Lender from Indemnitor under or with
respect to this Agreement is or must be rescinded or returned for any reason
whatsoever (including, but not limited to, the insolvency, bankruptcy or
reorganization of Indemnitor or Borrower), then the obligations of Indemnitor
hereunder shall, to the extent of the payment rescinded or returned, be deemed
to have continued in existence, notwithstanding such previous payment made by
Indemnitor, or receipt of payment by Lender, and the obligations of Indemnitor
hereunder shall continue to be effective or be reinstated, as the case may be,
as to such payment, all as though such previous payment by Indemnitor had never
been made.
4.    Waivers by Indemnitor. To the extent permitted by law, Indemnitor hereby
waives and agrees not to assert or take advantage of:
(a)    Any right to require Lender to proceed against any other person or to
proceed against or exhaust any security held by Lender at any time or to pursue
any other remedy in Lender’s power or under any other agreement before
proceeding against Indemnitor hereunder;
(b)    The defense of the statute of limitations in any action hereunder;
(c)    Any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other person or persons or the failure of
Lender to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other person or persons;
(d)    Demand, presentment for payment, notice of nonpayment, intent to
accelerate, acceleration, protest, notice of protest and all other notices of
any kind, or the lack of any thereof, including, without limiting the generality
of the foregoing, notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of Borrower, Lender, any endorser or creditor of Borrower or of Indemnitor or on
the part of any other person whomsoever under this or any other instrument in
connection with any obligation or evidence of indebtedness held by Lender;
(e)    (i) any defense based upon an election of remedies by Lender, even though
such election (e.g., nonjudicial foreclosure with respect to any collateral held
by Lender to secure repayment of the indebtedness evidenced by the Note)
destroys or otherwise impairs the subrogation rights of Indemnitor or the right
of Indemnitor (after payment of the obligations guaranteed by Indemnitor under
this Agreement) to proceed against Borrower for reimbursement, or both, and
(ii) any and all rights or defenses Indemnitor may have by reason of protection
afforded to Borrower with respect to any of the obligations of Indemnitor under
this Agreement pursuant to the antideficiency or other laws of the State of
Arizona limiting or discharging Borrower’s indebtedness; evidenced by the Note
and secured, in part, by the Security Instrument;
(f)    Any right or claim of right to cause a marshaling of the assets of
Indemnitor;

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Exhibit 10.7

(g)    Any principle or provision of law, statutory or otherwise, which is or
might be in conflict with the terms and provisions of this Agreement;
(h)    Any duty on the part of Lender to disclose to Indemnitor any facts Lender
may now or hereafter know about Borrower or the Property, regardless of whether
Lender has reason to believe that any such facts materially increase the risk
beyond that which Indemnitor intends to assume or has reason to believe that
such facts are unknown to Indemnitor or has a reasonable opportunity to
communicate such facts to Indemnitor, it being understood and agreed that
Indemnitor is fully responsible for being and keeping informed of the financial
condition of Borrower, of the condition of the Property and of any and all
circumstances bearing on the risk that liability may be incurred by Indemnitor
hereunder;
(i)    Any lack of notice of disposition or of manner of disposition of any
collateral for the Loan;
(j)    Any invalidity, irregularity or unenforceability, in whole or in part, of
any one or more of the Loan Documents;
(k)    Any deficiencies in the collateral for the Loan or any deficiency in the
ability of Lender to collect or to obtain performance from any persons or
entities now or hereafter liable for the payment and performance of any
obligation hereby guaranteed;
(l)    Any assertion or claim that the automatic stay provided by 11 U.S.C. §362
(arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or
any other stay provided under any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, shall operate or be
interpreted to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any of its rights, whether now or hereafter required, which
Lender may have against Indemnitor or the collateral for the Loan;
(m)    Any modifications of the Loan Documents or any obligation of Borrower
relating to the Loan by operation of law or by action of any court, whether
pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise;
(n)    Any action, occurrence, event or matter consented to by Indemnitor under
Section 5(h) hereof, under any other provision hereof, or otherwise;
(o)    Any and all benefits and defenses under any applicable law which would
limit Indemnitor’s liability if Borrower had no liability at the time of
execution of the Note, the Security Instrument or any other Loan Document, or
thereafter ceases to be liable;
(p)    Any and all benefits and defenses under any applicable law which, if
Indemnitor had not given this waiver would otherwise prohibit Indemnitor’s
liability from being larger in amount and more burdensome than that of Borrower;

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Exhibit 10.7

(q)    Principles or provisions of law, statutory or otherwise, which might
otherwise constitute a legal or equitable discharge of a surety or a guarantor;
and
(r)    Any right of discharge under any and all statutes or other laws relating
to guarantors or sureties and any other rights of sureties and guarantors
thereunder.
Indemnitor understands that the exercise by Lender of certain rights and
remedies contained in the Security Instrument (such as a nonjudicial foreclosure
sale) may affect or eliminate Indemnitor’s right of subrogation against Borrower
and that Indemnitor may therefore incur a partially or totally nonreimbursable
liability under this Agreement. Nevertheless, Indemnitor hereby authorizes and
empowers Lender to exercise, in its sole and absolute discretion, any right or
remedy, or any combination thereof, which may then be available, since it is the
intent and purpose of Indemnitor that the obligations under this Agreement shall
be absolute, independent and unconditional under any and all circumstances.
Indemnitor expressly waives, to the maximum extent permitted by law, any defense
(which defense, if Indemnitor had not given this waiver, Indemnitor might
otherwise have) to a judgment against Indemnitor by reason of a nonjudicial
foreclosure. Without limiting the generality of the foregoing, Indemnitor hereby
expressly waives any and all benefits under (i) any applicable law which would
otherwise limit Indemnitor’s liability after a nonjudicial foreclosure sale to
the difference between the obligations of Indemnitor under this Agreement and
the fair market value of the property or interests sold at such nonjudicial
foreclosure sale, (ii) any applicable law which, if Indemnitor had not given
this waiver, would otherwise limit Lender’s right to recover a deficiency
judgment with respect to purchase money obligations and after a nonjudicial
foreclosure sale, respectively, and (iii) any applicable law which, if
Indemnitor had not given this waiver, among other things, would otherwise
require Lender to exhaust all of its security before a personal judgment could
be obtained for a deficiency. Notwithstanding any foreclosure of the lien of the
Security Instrument, whether by the exercise of the power of sale contained in
the Security Instrument, by an action for judicial foreclosure or by Lender’s
acceptance of a deed in lieu of foreclosure, Indemnitor shall remain bound under
this Agreement. Indemnitor waives all rights and defenses that Indemnitor may
have because Borrower’s obligations are secured by real property. This means,
among other things:
(s)    To the full extent permitted under applicable laws, any benefits of any
statutory provision or rule of civil procedure limiting the liability of a
surety, including, without limitation, ARS § 12-1641 et seq. or the benefits of
ARS § 33-814.
(t)    Lender may collect from Indemnitor without first foreclosing on any real
or personal property collateral pledged by Borrower or others; and
(u)    If Lender forecloses on any real property collateral pledged by Borrower
or others: (a) the amount of the debt may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price; and (b) Lender may collect from Indemnitor even if
Lender, by foreclosing on the real property collateral, has destroyed any right
Indemnitor may have to collect from Borrower.

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Exhibit 10.7

This is an unconditional and irrevocable waiver of any rights and defenses that
Indemnitor may have because Borrower’s obligations are secured by real property.
5.    General Provisions.
(a)    Fully Recourse. All of the terms and provisions of this Agreement are
recourse obligations of Indemnitor and not restricted by any limitation on
personal liability set forth in any Loan Document.
(b)    Unsecured Obligations. Indemnitor hereby acknowledges that Lender’s
appraisal of the Property is such that Lender is not willing to accept the
consequences of the inclusion of Indemnitor’s indemnity set forth herein among
the obligations secured by the Security Instrument and the other Loan Documents
and that Lender would not make the Loan but for the unsecured personal liability
undertaken by Indemnitor herein.
(c)    Survival. This Agreement shall be deemed to be continuing in nature and
shall remain in full force and effect and shall survive the exercise of any
remedy by Lender under the Security Instrument or any of the other Loan
Documents, including, without limitation, any foreclosure or deed in lieu
thereof, even if, as a part of such remedy, the Loan is paid or satisfied in
full.
(d)    No Subrogation; No Recourse Against Lender. Notwithstanding the
satisfaction by Indemnitor of any liability hereunder, until such time as the
Loan has been fully and indefeasibly repaid, all obligations owed to Lender
under the Loan Documents have been fully performed, and Lender has released,
transferred or disposed of all of Lender’s right, title and interest in all
collateral or security for the Loan, and there has expired the maximum possible
period thereafter during which any payment made by Borrower or others to Lender
with respect to the indebtedness evidenced by the Note could be deemed a
preference under the United States Bankruptcy Code, Indemnitor shall not have
any right of subrogation, contribution, reimbursement or indemnity whatsoever or
any right of recourse to or with respect to the assets or property of Borrower
or to any collateral for the Loan. In connection with the foregoing, Indemnitor
expressly waives, until such time as the Loan has been fully and indefeasibly
repaid, all obligations owed to Lender under the Loan Documents have been fully
performed, and Lender has released, transferred or disposed of all of Lender’ s
right, title and interest in such collateral or security, and there has expired
the maximum possible period thereafter during which any payment made by Borrower
or others to Lender with respect to the indebtedness evidenced by the Note could
be deemed a preference under the United States Bankruptcy Code, any and all
rights of subrogation to Lender against Borrower, and Indemnitor hereby waives
any rights to enforce any remedy which Lender may have against Borrower, and any
right to participate in any collateral for the Loan. In addition to and without
in any way limiting the foregoing, Indemnitor hereby subordinates any and all
indebtedness of Borrower now or hereafter owed to Indemnitor to all indebtedness
of Borrower to Lender, and agree with Lender that Indemnitor shall not demand or
accept any payment of principal or interest from Borrower, shall not claim any
offset or other reduction of Indemnitor’s obligations hereunder because of any
such indebtedness and shall not take any action to obtain any of the collateral
from the Loan; provided, however, that so long as there does not exist a default
or Event of Default, or condition of event which, with the

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Exhibit 10.7

passage of time or giving of notice, or both, would constitute a default or
Event of Default, a distribution of profits on a return of capital made by
Borrower which may ultimately be received by Indemnitor shall not be deemed to
be indebtedness of, or payment of principal and interest from, Borrower.
Further, Indemnitor shall not have any right of recourse against Lender by
reason of any action Lender may take or omit to take under the provisions of
this Agreement or under the provisions of any of the Loan Documents.
(e)    Reservation of Rights. Nothing contained in this Agreement shall prevent
or in any way diminish or interfere with any rights or remedies, including,
without limitation, the right to contribution, which Lender may have against
Borrower, Indemnitor or any other party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (codified at Title 42 U.S.C.
§9601 et seq.), as it may be amended from time to time, or any other applicable
federal, state or local laws, all such rights being hereby expressly reserved.
(f)    Financial Statements; Net Worth. Indemnitor hereby agrees, as a material
inducement to Lender to make the Loan to Borrower, to furnish, from time to time
to Lender promptly upon demand by Lender current and dated financial statements
detailing the assets and liabilities of Indemnitor certified by Indemnitor, in
form and substance reasonably acceptable to Lender. Indemnitor hereby warrants
and represents unto Lender that any and all balance sheets, net worth statements
and other financial data which have heretofore been given or may hereafter be
given to Lender with respect to Indemnitor did or will at the time of such
delivery fairly and accurately present the financial condition of Indemnitor.
Indemnitor hereby agrees, for the benefit of Lender: (i) No Indemnitor shall,
without the prior written approval of Lender which may be given or withheld in
Lender’s sole and absolute discretion, enter into, effect or permit by operation
of law or otherwise, any merger, reorganization, consolidation, dissolution or
liquidation affecting Indemnitor, or any change in ownership of Indemnitor, or
any sale of any assets of Indemnitor (a "Transfer Event"), which would result in
Indemnitor failing to have, immediately after the effective date of such
Transfer Event, a minimum aggregate net worth of at least Fifty Million Dollars
($50,000,000) (the "Minimum Net Worth") with not less than $4,000,000 of such
Minimum Net Worth consisting of cash and cash equivalents at all times during
the 2015 calendar year and $5,000,000 of such Minimum Net Worth consisting of
cash and cash equivalents at all times during the 2016 calendar year (“Minimum
Liquidity”); (ii)  Indemnitor shall maintain, from and after the date of
execution of this Agreement and thereafter throughout the term of the Loan, a
net worth equal to the Minimum Net Worth and the Minimum Liquidity in the
foregoing amounts, as evidenced by financial statements certified by Indemnitor;
Indemnitor agrees that such financial statements shall be prepared for
Indemnitor as required by Indemnitor’s public reporting obligations and
delivered to Lender within ninety (90) days following the end of each calendar
year, together with a certificate from Indemnitor that no material adverse
change in the financial statements and net worth of Indemnitor has occurred
since the date of such statement; and (iii) Indemnitor shall notify Lender
within ten (10) days after Indemnitor becomes aware that Indemnitor has failed
to maintain the Minimum Net Worth and/or Minimum Liquidity as set forth above.
For the purposes hereof, “net worth” shall be determined based upon the (1) fair
market value of all of the assets of Indemnitor (excluding intangible assets
(determined in conformity with generally accepted accounting principles as of
the date of the applicable financial report (“GAAP”)) and excluded intangible
assets shall

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Exhibit 10.7

include goodwill, intellectual property, licenses, organizational costs,
deferred amounts, covenants not to compete, unearned income, restricted funds,
investments in subsidiaries or other Affiliates (as defined in the Loan
Agreement), intercompany receivables and accumulated depreciation, less (2) all
liabilities of Indemnitor (as determined in accordance with GAAP). Any breach of
this Section 5(f) shall be deemed an Event of Default under the Loan Documents.
(g)    Rights Cumulative; Payments. Lender’s rights under this Agreement shall
be in addition to all rights of Lender under the Note, the Security Instrument
and the other Loan Documents. Further, payments made by Indemnitor under this
Agreement shall not reduce in any respect Borrower’s obligations and liabilities
under the Note, the Security Instrument and the other Loan Documents.
(h)    No Limitation on Liability. Indemnitor hereby consents and agrees that
the liability of Indemnitor under this Agreement shall be unconditional and
absolute and shall in no way be impaired or limited by any of the following
events, whether occurring with or without notice to Indemnitor or with or
without consideration: (i) any extensions of time for performance required by
any of the Loan Documents or extension or renewal of the Note; (ii) any sale,
assignment or foreclosure of the Note, the Security Instrument or any of the
other Loan Documents or any sale or transfer of the Property; (iii) any change
in the composition of Borrower, including, without limitation, the withdrawal or
removal of Indemnitor from any current or future position of ownership,
management or control of Borrower; (iv) the accuracy or inaccuracy of the
representations and warranties made by Indemnitor herein or by Borrower in any
of the Loan Documents; (v) the release of Borrower or of any other person or
entity from performance or observance of any of the agreements, covenants, terms
or conditions contained in any of the Loan Documents by operation of law,
Lender’s voluntary act or otherwise; (vi) the release or substitution in whole
or in part of any security for the Loan; (vii) Lender’s failure to record the
Security Instrument or to file any financing statement (or Lender’s improper
recording or filing thereof) or to otherwise perfect, protect, secure or insure
any lien or security interest given as security for the Loan; (viii) the
modification of the terms of any one or more of the Loan Documents; or (ix) the
taking or failure to take any action of any type whatsoever. No such action
which Lender shall take or fail to take in connection with the Loan Documents or
any collateral for the Loan, nor any course of dealing with Borrower or any
other person, shall limit, impair or release Indemnitor’s obligations hereunder,
affect this Agreement in any way or afford Indemnitor any recourse against
Lender. Nothing contained in this Section shall be construed to require Lender
to take or refrain from taking any action referred to herein.
(i)    Entire Agreement; Amendment; Severability. This Agreement contains the
entire agreement between the parties respecting the matters herein set forth and
supersedes all prior agreements, whether written or oral, between the parties
respecting such matters. Any amendments or modifications hereto, in order to be
effective, shall be in writing and executed by the parties hereto. A
determination that any provision of this Agreement is unenforceable or invalid
shall not affect the enforceability or validity of any other provision, and any
determination that the application of any provision of this Agreement to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.

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Exhibit 10.7

(j)    Binding Effect; Waiver of Acceptance. This Agreement shall bind
Indemnitor and the heirs, personal representatives, successors and assigns of
Indemnitor and shall inure to the benefit of Lender and the officers, directors,
shareholders, agents and employees of Lender and their respective heirs,
successors and assigns. Notwithstanding the foregoing, Indemnitor shall not
assign any of their rights or obligations under this Agreement without the prior
written consent of Lender, which consent may be withheld by Lender in Lender’s
sole discretion. Indemnitor hereby waives any acceptance of this Agreement by
Lender, and this Agreement shall immediately be binding upon Indemnitor.
(k)    Notices. All notices or other communications required or permitted to be
given pursuant to the provisions of this Agreement shall be in writing and shall
be considered as properly given if delivered to the appropriate party at the
address set forth below (subject to change from time to time by written notice
to all other parties to this Agreement). Except when otherwise required by law,
any notice which a party is required or may desire to give the other shall be in
writing and may be sent by e-mail (provided that a copy is simultaneously sent
by one of the other permitted means of giving notice hereinafter set forth), by
personal delivery or by mail (either (i) by United States registered or
certified mail, return receipt requested, postage prepaid, or (ii) by Federal
Express or similar generally recognized overnight carrier regularly providing
proof of delivery). Any notice so given by e-mail shall be deemed to have been
given as of the date on which the sender of such communication shall confirm
receipt thereof by the appropriate parties. Any notice so given by mail shall be
deemed to have been given as of the date of delivery established by U.S. Post
Office return receipt or the overnight carrier’s proof of delivery, as the case
may be. Any such notice not so given shall be deemed given upon receipt of the
same by the party to whom the notice is to be given; provided, however, that
non-receipt of any communication as the result of any change of address of which
the sending party was not notified or as the result of a refusal to accept
delivery shall be deemed receipt of such communication. For purposes of notice,
the addresses of the parties shall be:

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Exhibit 10.7

Indemnitor:
IMH Financial Corporation
 
7001 N. Scottsdale Road
 
Scottsdale, Arizona 85253
 
Attention: Lawrence D. Bain
 
Email: ldb@imhfc.com
 
 
With a copies to:
Polsinelli PC
 
One East Washington Street, Suite 1200
 
Phoenix, Arizona 85004
 
Attention: Margaret Esler
 
Email: mesler@polsinelli.com
 
 
and
c/o IMH Financial Corporation
 
7001 N. Scottsdale Road
 
Scottsdale, Arizona 85253
 
Attention: Jonathan Brohard
 
Email: jbrohard@imhfc.com
 
 
Lender:
Calmwater Capital 3, LLC

 
11755 Wilshire Blvd., Suite 1400
 
Los Angeles, California 90025
 
Attention: Larry Grantham
 
Email: larry@karlinre.com
 
 
With a copy to:
Safarian, Choi & Bolstad LLP
 
555 South Flower St., Suite 650
 
Los Angeles, California 90071
 
Attention: Alex Choi
 
Email: achoi@safarianchoi.com

Any party shall have the right to change its address for notice hereunder to any
other location within the continental United States by the giving of fifteen
(15) days’ notice to the other party in the manner set forth hereinabove.
(l)    No Waiver; Time of Essence; Business Day. The failure of any party hereto
to enforce any right or remedy hereunder, or to promptly enforce any such right
or remedy, shall not constitute a waiver thereof nor give rise to any estoppel
against such party nor excuse any of the parties hereto from their respective
obligations hereunder. Any waiver of such right or remedy must be in writing and
signed by the party to be bound. This Agreement is subject to enforcement at law
or in equity, including actions for damages or specific performance. Time is of
the essence hereof. The term “business day” as used herein shall mean

11

--------------------------------------------------------------------------------

Exhibit 10.7

a weekday, Monday through Friday, except a legal holiday or a day on which
banking institutions in Los Angeles, California are authorized by law to be
closed.
(m)    Captions for Convenience. The captions and headings of the sections and
paragraphs of this Agreement are for convenience of reference only and shall not
be construed in interpreting the provisions hereof.
(n)    Attorneys’ Fees. If any dispute (whether or not any action or proceeding
for any relief against the other is brought) arises between the parties relating
to this Agreement, the losing party shall pay to the prevailing party a
reasonable sum for attorneys’ fees (including but not limited to appellate fees
and fees for all paralegals, legal assistants and other paraprofessionals) and
costs incurred in bringing or defending such action or proceeding and appealing
and enforcing any judgment granted therein, all of which shall be deemed to have
accrued upon the commencement of such action or proceeding and shall be paid
whether or not such action or proceeding is prosecuted to final judgment and, to
the extent the Lender is the prevailing party, such costs, fees and expenses
shall be included in Costs.
(o)    Successive Actions. A separate right of action hereunder shall arise each
time Lender acquires knowledge of any matter indemnified or guaranteed by
Indemnitor under this Agreement. Separate and successive actions may be brought
hereunder to enforce any of the provisions hereof at any time and from time to
time. No action hereunder shall preclude any subsequent action, and Indemnitor
hereby waives and covenants not to assert any defense in the nature of splitting
of causes of action or merger of judgments.
(p)    Reliance. Lender would not make the Loan to Borrower without this
Agreement. Accordingly, Indemnitor intentionally and unconditionally enters into
the covenants and agreements as set forth above and understand that, in reliance
upon and in consideration of such covenants and agreements, the Loan shall be
made and, as part and parcel thereof, specific monetary and other obligations
have been, are being and shall be entered into which would not be made or
entered into but for such reliance.
(q)    SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(i)    INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, EACH HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i)
SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PROPERTY IS LOCATED
OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO
THIS AGREEMENT OR ANY OTHER OF THE LOAN DOCUMENTS, (ii) HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER
JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA
EXCEPT AS SPECIFICALLY SET FORTH HEREIN, (iii) SUBMITS TO THE JURISDICTION OF
SUCH COURTS, AND (iv) AGREES THAT INDEMNITOR WILL NOT BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM WITH RESPECT TO THIS AGREEMENT

12

--------------------------------------------------------------------------------

Exhibit 10.7

(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT
OR PROCEEDING IN ANY OTHER FORUM). INDEMNITOR FURTHER CONSENTS AND AGREES TO
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO
THE AUTHORIZED AGENT FOR INDEMNITOR AT THE ADDRESS FOR NOTICES DESCRIBED ABOVE,
AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT
VALID AND EFFECTIVE SERVICE UPON INDEMNITOR (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).
(r)    INDEMNITOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY. THE PARTIES HERETO HEREBY AGREE THAT THE PROVISIONS CONTAINED HEREIN HAVE
BEEN FAIRLY NEGOTIATED ON AN ARMS-LENGTH BASIS, WITH BOTH SIDES AGREEING TO THE
SAME KNOWINGLY AND BEING AFFORDED THE OPPORTUNITY TO HAVE THEIR RESPECTIVE LEGAL
COUNSEL CONSENT TO THE MATTERS CONTAINED HEREIN. ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY AND THE AGREEMENTS CONTAINED HEREIN REGARDING THE APPLICATION OF
JUDICIAL REFERENCE IN THE EVENT OF THE INVALIDITY OF SUCH JURY TRIAL WAIVER.
(s)    Waiver by Indemnitor. Indemnitor covenants and agrees that, upon the
commencement of a voluntary or involuntary bankruptcy proceeding by or against
Borrower, Indemnitor shall not seek or cause Borrower or any other person or
entity to seek a supplemental stay or other relief, whether injunctive or
otherwise, pursuant to 11 U.S.C. § 105 or any other provision of the Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law, (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, which may be or become applicable, to stay,
interdict, condition, reduce or inhibit the ability of Lender to enforce any
rights of Lender against Indemnitor or the collateral for the Loan by virtue of
this Agreement or otherwise.

13

--------------------------------------------------------------------------------

Exhibit 10.7

(t)    No Petition. Indemnitor hereby covenants and agrees that they will not at
any time institute against Borrower, or join in any institution against Borrower
of, any bankruptcy proceedings under any United States Federal or state
bankruptcy or similar law.
(u)    Secondary Market. Lender may sell, transfer and deliver the Loan
Documents to one or more investors in the secondary market. In connection with
such sale, Lender may retain or assign responsibility for servicing the Loan or
may delegate some or all of such responsibility and/or obligations to a
servicer, including, but not limited to, any subservicer or master servicer, on
behalf of the investors. All references to Lender herein shall refer to and
include, without limitation, any such servicer, to the extent applicable.
(v)    Construction. This Agreement shall not be construed more strictly against
one party than against the other merely by virtue of the fact that this
Agreement may have been physically prepared by one of the parties, or such
party’s counsel, it being agreed that all parties and their respective counsel
have mutually participated in the negotiation and preparation of this Agreement.
(w)    Joint and Several Liability. The liability of all persons and entities
obligated in any manner under this Agreement shall be joint and several.
[END OF TEXT; SIGNATURE FOLLOWS ON NEXT PAGE]

14

--------------------------------------------------------------------------------

Exhibit 10.7

IN WITNESS WHEREOF, Indemnitor has executed this Agreement as of the day and
year first above written.
“INDEMNITOR”
 
IMH FINANCIAL CORPORATION,
 
a Delaware corporation
 
 
 
 
By:
/s/ Lawrence D. Bain
Name:
Lawrence D. Bain
Title:
Chairman & CEO
 
 
 
 

--------------------------------------------------------------------------------

Exhibit 10.7

EXHIBIT A-1

DESCRIPTION OF L’AUBERGE PROPERTY
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF ARIZONA, COUNTY OF COCONINO, AND
DESCRIBED AS FOLLOWS:
PARCEL 1

A parcel of land situated in the West Half of Section 8, Township 17 North,
Range 6 East of the Gila and Salt River Base and Meridian, Coconino County,
Arizona, being more particularly described as follows:

COMMENCING at the West Quarter corner of said Section 8 as marked by a G.L.O.
brass capped pipe under drain cover in sidewalk and from which the Southwest
corner of said Section 8, as marked by a B.L.M. brass capped pipe in cairn, lies
South 01°42'03" East (basis of bearings for this description) a distance of
2,621.04 feet;

THENCE from said West Quarter corner North 12°54'17" East (North 12°27'33" East
rec.) a distance of 76.90 (76.90 rec.) feet to a point on the Southeasterly
right of way line of Arizona State Highway 89-A;

THENCE Northeasterly along said Southeasterly right of way line being a
non-tangent curve concave to the Southeast having a radius of 2,150.00 (2,150.00
rec.) feet, chord bearing of North 23°04'02" East and central angle of 05°24'36"
(05°24'18" rec.) an arc distance of 203.00 (203.00 rec.) feet to the position of
a previously set cotton picker spindle with brass tag stamped "LS 14184";

THENCE continuing Northeasterly along said Southeasterly right of way line being
a curve concave to the Southeast having a radius of 2,150.00 (2,150.00 rec.)
feet, chord bearing of North 26°36'58" East a central angle of 01°41'17"
(01°41'39" rec.) an arc distance of 63.35 (63.57 rec.) feet to the position of a
previously set chiseled “+” in concrete;

THENCE departing said Southeasterly right of way line of Arizona State Highway
89-A, South 89° 51' 31" East (North 89° 42' 07" East rec.) a distance of 3.74
feet to a ½ inch re-bar with cap stamped "LS 14184" found as previously set on
the Northeasterly line of that certain tract of land acquired by the City of
Sedona in December 2005 and described in Instrument No. 2005-3361777 of the
Coconino County Recorder's Office in Coconino County, Arizona;

THENCE along the North line of the Orchards/L'Auberge parcel, South 89° 51' 31"
East (North 89° 42' 07" East rec.) a distance of 212.10 feet to a ½ inch re-bar
with cap stamped "LS 14184" (found as previously set);

THENCE along the Northerly line of the Orchards/L'Auberge parcel, South
40°28'17" East (South 41°45'00" East rec.) a distance of 62.25 feet to the POINT
OF BEGINNING;

Exhibit A-1

--------------------------------------------------------------------------------

THENCE South 40°28'17" East (South 41°45'00" East rec.) a distance of 47.00 feet
to a ½ inch re-bar with brass tag stamped "LS 14184" (found as previously set);

THENCE North 38°57'49" East (North 38°15'00" East rec.) a distance of 150.75
(152.00 rec.) feet to a ½ inch re-bar with brass tag stamped "LS 14184 (found as
previously set);

THENCE South 50°57'03" East (South 51°45'00" East rec.) a distance of 82.00
(82.00 rec.) feet to a ½ inch re-bar with brass tag stamped "LS 14184" (found as
previously set);

THENCE North 57°27'57" East (North 56°40'00" East rec.) a distance of 26.55
(26.55 rec.) feet to a ½ inch re-bar with brass tag stamped "LS 14184" (found as
previously set);

THENCE South 32°32'03" East (South 33°20'00" East rec.) a distance of 523.60
(542.50 rec.) feet to a point in Oak Creek that lies on the Northwesterly
boundary of the "Brewer Tract" described in Docket 510, Page 496 of the Coconino
County Recorder's Office and from which a ½ inch re-bar with cap stamped "LS
14184", previously set as a witness corner, lies North 32º 32'03” West, a
distance of 100.00 feet;

THENCE South 51°44'33" West (no rec.), a distance of 6.59 (no rec.) feet to the
Westerly corner of said "Brewer Tract" being a point in Oak Creek;

THENCE South 54°01'27" East (no rec.) a distance of 19.52 (no rec.) feet along
the Southwesterly boundary of said "Brewer Tract" to a point in Oak Creek;

THENCE South 52°31'27" West (South 51°43'30" West rec.) a distance of 11.99
(11.40 rec.) feet to a point in Oak Creek;

THENCE along the Southerly boundary of “Parcel 1B” as shown and described on
that certain ALTA/ACSM Land Title Survey map recorded as instrument number
3490268 in the Official Records of Coconino County, South 69°02'57" West a
distance of 134.25 feet to the most Northerly corner of the Weckerly parcel as
described in Dkt. 1525, Pgs. 007-009 of the Coconino County Recorder's Office;

THENCE along a prolongation of the Northeasterly boundary of said Weckerly
parcel, North 54°01'29" West a distance of 23.88 feet, more or less, to the
centerline of Oak Creek as it may exist from time to time in the future;

THENCE along said centerline of Oak Creek, as it may exist from time to time in
the future, an approximate bearing of South 65°34'01" West a distance of 111.83
feet, more or less;

THENCE continuing along said centerline of Oak Creek, as it may exist from time
to time in the future, an approximate bearing of South 69°31'14" West a distance
of 163.52 feet, more or less, to the intersection of said centerline of Oak
Creek with the Northwesterly prolongation of the Southwesterly boundary of the
Miller parcel as described in Dkt. 1478, Pgs. 378 & 378A of the Coconino County
Recorder's Office;

THENCE in a reversed direction of said Northwesterly prolongation of the
Southwesterly boundary of the Miller parcel, South 38°15'58" East a distance of
98.08 feet, more or less, to said Southerly boundary of “Parcel 1B”;

Exhibit A-1

--------------------------------------------------------------------------------

THENCE along said Southerly boundary of “Parcel 1B”, South 63°20'02" West (South
62°02'45" West rec.) a distance of 579.51 feet to a point in Oak Creek that is
on the West line of said Section 8 and lies South 01"42'03" East a distance of
624.60 feet from said West Quarter corner of Section 8;

THENCE North 01°42'03" West (North 02°30'00" West rec.) a distance of 447.60
(447.60 rec.) feet along said West line of Section 8 to a ½ inch re-bar with
brass tag stamped "PE 2924" (found as previously found);

THENCE North 38°37'57" East (North 37°50'00" East rec.) a distance of 207.55
feet to a ½ inch re-bar with cap stamped "LS 14184" (found as previously set);

THENCE North 38°09'30" East (North 37°50'00" East rec.) a distance of 109.23
feet to a ½ inch re-bar with cap stamped "LS 14184" (found as previously set);

THENCE North 49°44'02" East a distance of 94.50 feet;

THENCE North 37°42'35" East a distance of 174.72 feet to the POINT OF BEGINNING.

PARCEL 2

An easement for ingress, egress and public utilities created by instrument
recorded December 22, 1982, in Docket 911, Page 206, records of Coconino County,
Arizona, described as follows:

A strip of land 33.00 feet wide situated in the Southeast Quarter of Section 7,
Township 17 North, Range 6 East of the Gila and Salt River Meridian, Coconino
County, Arizona, being more particularly defined as lying 16.50 feet on each
side of the following described center line:

COMMENCING at the East Quarter corner of said Section 7 as marked by a G.L.O.
brass capped pipe under drain cover in sidewalk and from which the Southeast
corner of said Section 7 as marked by a B.L.M. brass capped pipe, lies South
0l°42'03" East (basis of bearings for this description) a distance of 2621.04
feet;

THENCE South 0l°42'03" East (South 02°30'00" East rec.) a distance of 261.40
(261.4 rec.) feet along the East line of said Southeast Quarter of Section 7 to
the POINT OF BEGINNING of this center line (side lines of this strip of land
begin on said East line);

THENCE South 28°37'57" West (South 27°50'00" West rec.) a distance of 500.20
(500.2 rec.) feet;

THENCE South 37°53'57" West (South 37°06'00" West rec.) a distance of 330.00
(330.00 rec.) feet to the terminus of this center line;

EXCEPTING THEREFROM all that portion thereof lying within the right-of-way of
Arizona Highway 89-A.

Exhibit A-1

--------------------------------------------------------------------------------

PARCEL 3

A perpetual, non-exclusive easement for ingress and egress as set forth in that
certain easement agreement recorded April 25, 2002 in instrument number
2002-3138455 and re-recorded July 18, 2005 in instrument number 2005-3332653 of
Official Records, Coconino County, Arizona.

PARCEL 4

A parcel of land being a portion of the "PACINI TRACT" described as Parcel II in
Docket 1711, Pages 863 and 864 of the Coconino County Recorder's Office and
situated in the West half of Section 8, Township 17 North, Range 6 East of the
Gila and Salt River Meridian in Coconino County, Arizona, said parcel being more
particularly described as follows:

COMMENCING at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S 01°42'03" E (Basis of
Bearings for this description) a distance of 2,621.04 feet;

THENCE from said West quarter corner, N 21°27'04" E a distance of 342.00 feet (N
20°32' E, 342' rec.) to the position of a previously set chiseled "+" in
concrete on the Southeasterly right-of-way line of Arizona Highway 89-A;

THENCE departing said Southeasterly right-of-way line of Arizona Highway 89-A, S
89°51'31" E a distance of 215.82 feet (N 89°10' E, 217.50' rec.) to a ½" re-bar
with plastic cap stamped "LS 14184" (found as previously set);

THENCE S 40°28'17" E a distance of 109.25 feet (S 41°45' E, 110.77' rec.) to a
½" re-bar with brass tag stamped "LS 14184" (found as previously set);

THENCE N 38°57'49" E a distance of 150.75 feet (N 38°15' E, 152.0' rec.) to a ½"
re-bar with brass tag stamped "LS 14184" found as previously set at a corner of
said "PACINI TRACT";

THENCE along the boundary of said "PACINI TRACT", S 50°57'03" E a distance of
82.00 feet (same as rec.) to a ½" re-bar with brass tag stamped "LS 14184" found
as previously set at a corner thereof;

THENCE continuing along the boundary of said "PACINI TRACT", N 57°27'57" E a
distance of 26.55 feet (same as rec.) to a ½" re-bar with brass tag stamped "LS
14184" found as previously set at a corner thereof;

THENCE continuing along the boundary of said "PACINI TRACT" S 32°32'03" E a
distance of 5.00 feet to a ½" re-bar with plastic cap stamped "LS 14184" found
as previously set at the POINT OF BEGINNING;

THENCE N 57°27'57" E a distance of 58.00 feet to a concrete nail with brass tag
stamped "LS 14184" (found as previously set);

Exhibit A-1

--------------------------------------------------------------------------------

THENCE N 89°27'57" E a distance of 35.39 feet to a ½" re-bar with cap stamped
"LS 14184" (found as previously set);

THENCE S 00°32'03" E a distance of 163.25 feet to the position of a previously
set nail with brass tag stamped "LS 14184";

THENCE S 32°32'03" E a distance of 215.13 feet ½" re-bar with cap stamped "LS
14184" (found as previously set);

THENCE S 31°56'49" E a distance of 146.28 feet to a point on the Northwesterly
boundary of the "BREWER TRACT" as described in Docket 510, Page 496 of the
Coconino County Recorder's Office, at the Southwest corner of the said "PACINI
TRACT", and from which a ½" re-bar with cap stamped "LS 14184" (found as
previously set as a witness corner) bears N 32°32'03" W a distance of 100.00
feet;

THENCE along the Westerly boundary of the said "PACINI TRACT", N 32°32'03" W a
distance of 518.60 feet to the POINT OF BEGINNING.
 

Exhibit A-1

--------------------------------------------------------------------------------

Exhibit 10.7

EXHIBIT A-2

DESCRIPTION OF ORCHARDS PROPERTY
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF ARIZONA, COUNTY OF COCONINO, AND
DESCRIBED AS FOLLOWS:
PARCEL 5

A parcel of land situated in the West Half of Section 8, Township 17 North,
Range 6 East of the Gila and Salt River Meridian, Coconino County, Arizona,
being more particularly described as follows:

COMMENCING at the West Quarter corner of said Section 8 as marked by a G.L.O.
brass capped pipe under drain cover in sidewalk and from which the Southwest
corner of said Section 8, as marked by a B.L.M. brass capped pipe in cairn, lies
South 01°42'03" East (basis of bearings for this description) a distance of
2,621.04 feet;

THENCE from said West Quarter corner North 12°54'17" East (North 12°27'33" East
rec.) a distance of 76.90 (76.90 rec.) feet to a point on the Southeasterly
right of way line of Arizona State Highway 89-A;

THENCE Northeasterly along said Southeasterly right of way line being a
non-tangent curve concave to the Southeast having a radius of 2,150.00 (2,150.00
rec.) feet, chord bearing of North 23°04'02" East and central angle of 05°24'36"
(05°24'18" rec.) an arc distance of 203.00 (203.00 rec.) feet to the position of
a previously set cotton picker spindle with tag stamped "LS 14184";

THENCE departing said Southeasterly right of way line of Arizona State Highway
89-A, South 65° 25' 03" East a distance of 11.73 feet to the POINT OF BEGINNING
which lies on the Southeasterly line of that certain tract of land acquired by
the City of Sedona in December 2005 and described in Instrument No. 2005-3361777
of the Coconino County Recorder's Office in Coconino County, Arizona;

THENCE along said Southeasterly line, North 24º 46' 32" East a distance of 23.47
feet;

THENCE continuing along said Southeasterly line, North 21º 21' 48" East a
distance of 3.63 feet;

THENCE continuing along said Southeasterly line, North 20º 52' 26" West a
distance of 8.33 feet;

THENCE continuing along said Southeasterly line, North 69º 07' 34" East a
distance of 1.00 foot;

THENCE continuing along said Southeasterly line, North 19º 27' 50" West a
distance of 6.81 feet;

THENCE continuing along said Southeasterly line, North 26º 18' 08" East a
distance of 19.54 feet;

THENCE continuing along said Southeasterly line, South 62º 51' 12" East a
distance of 4.07 feet;

THENCE continuing along said Southeasterly line, North 23º 53' 25" East a
distance of 6.93 feet;

Exhibit A-2

--------------------------------------------------------------------------------

THENCE continuing along said Southeasterly line of that tract of land acquired
by the City of Sedona in December 2005, North 62º 35' 35" West a distance of
0.55 feet to the North line of the Orchards/L'Auberge parcel;

THENCE along said North line of the Orchards/L'Auberge parcel, South 89° 51' 31"
East (North 89° 42' 07" East rec.) a distance of 212.10 feet to a 1/2 inch rebar
with cap stamped "LS 14184" found as previously set;

THENCE South 40°28'17" East (South 41°45'00" East rec.) a distance of 62.25
feet;

THENCE South 37º 42' 35" West a distance of 174.72 feet;

THENCE South 49º 44' 02" West a distance of 94.50 feet to a 1/2 inch rebar with
cap stamped "LS 14184" found as previously set;

THENCE North 31°49'11" West (North 32°21'20" West rec.) a distance of 114.47
(113.94 rec.) feet to a 1/2 inch rebar with cap stamped "LS 14184" found as
previously set;

THENCE North 22°35'10" East (North 24°24'07" East rec.) a distance of 66.04
(65.00 rec.) feet to a concrete nail with brass tag stamped "LS 14184" found as
previously set;

THENCE North 65°25'03" West (North 65°34'02" West rec.) a distance of 65.96 feet
to the POINT OF BEGINNING.

PARCEL 6

An easement for overhead canopies and other purposes by or pursuant to that
certain Special Warranty Deed (In Lieu of Condemnation) recorded December 27,
2005, in Document No. 3361777, Official Records of Coconino County, Arizona.
 

Exhibit A-2

--------------------------------------------------------------------------------

Exhibit 10.7

EXHIBIT A-3

DESCRIPTION OF SUBLEASES
A.
ORCHARDS SUBLEASES

1.
That certain Lease of a forty (40) unit hotel property dated as of March 13,
2009, by and between Canyon Portal II, L.L.C., an Arizona limited liability
company (“Canyon Portal”) and Orchards Annex, LLC, an Arizona limited liability
company (“Original Orchards Annex Lessee”), as amended by that certain Amendment
to Lease dated as of July 1, 2011, by and between Canyon Portal and Original
Orchards Annex Lessee, as further amended by that certain Second Amendment to
Lease dated as of May 14, 2013, by and between Canyon Portal and Original
Orchards Annex Lessee, as assigned to Orchards pursuant to that certain
Assignment and Assumption of Lease and Consent to Assignment and Assumption of
Lease dated as of May 14, 2013, by and between Original Orchards Annex Lessee
and Orchards, and consented to by Canyon Portal[Affects Parcels 8, 9 and 10
below];

2.
That certain Lease for Parking Spaces dated as of January 1, 2012, by and
between Canyon Portal and Orchards Inn & Restaurant LLC, an Arizona limited
liability company (“Original Orchards Parking Lessee”), as amended by that
certain Amendment to Lease dated as of May 1, 2012, by and between Canyon Portal
and Original Orchards Parking Lessee, as further amended by that certain Second
Amendment to Lease dated as of May 14, 2013, by and between Canyon Portal and
Original Orchards Parking Lessee, as assigned to Orchards pursuant to that
certain Assignment and Assumption of Lease and Consent to Assignment and
Assumption of Lease dated as of May 14, 2013, by and between Original Orchards
Annex Lessee and Orchards, and consented to by Canyon Portal [Affects Parcels
12, 13, and 14 below];

3.
That certain Lease for five (5) hotel room units dated as of April 1, 2012, by
and between Canyon Portal and L’Auberge Orchards LLC, an Arizona limited
liability company (“Original L’Auberge Lessee”), as amended by that certain
Amendment to Lease dated as of May 14, 2013, by and between Canyon Portal and
Original L’Auberge Lessee, as assigned to Orchards pursuant to that certain
Assignment and Assumption of Lease and Consent to Assignment and Assumption of
Lease dated as of May 14, 2013, by and between Original L’Auberge Lessee and
Orchards, and consented to by Canyon Portal [Affects Parcel 11 below]; and

4.
That certain Lease of 174 square feet dated as of April 1, 2010, by and between
Canyon Portal and Original L’Auberge Lessee, as amended by that certain First
Amendment to Lease dated as of February 1, 2011, by and between Canyon Portal
and Original L’Auberge Lessee, as further amended by that certain Second
Amendment to Lease dated as of May 14, 2013, by and between Canyon Portal and
Original L’Auberge Lessee, as assigned to Orchards pursuant to that certain
Assignment and Assumption of Lease and Consent to Assignment and Assumption of
Lease dated as of May 14, 2013, by and

Exhibit A-3

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Exhibit 10.7

between Original L’Auberge Lessee and Orchards, and consented to by Canyon
Portal [Affects Parcel 7 below].
Each of the leases described in 1-4 above being a sublease of certain real
property in the City of Sedona, County of Coconino, State of Arizona, and more
particularly described as follows:

PARCEL 7 (I.T. EQUIPMENT ROOM):
A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt
River Meridian in Coconino County, Arizona, being more particularly described as
follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S01°42'03"E (Basis of
Bearings for this description) a distance of 2,621.04 feet;
THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N74°53'13"E a distance of 103.87 feet to the POINT OF BEGINNING;
THENCE S56°33'53"E a distance of 8.00 feet;
THENCE S33°26'07"W a distance of 22.14 feet;
THENCE N89°41'47"W a distance of 9.55 feet;
THENCE N33°26'07"E a distance of 27.36 feet to the POINT OF BEGINNING.

PARCEL 8 (ORCHARDS ANNEX BUILDING “A”):
A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt River Meridian in Coconino County,
Arizona, being more particularly described as follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S01°42'03"E (Basis of
Bearings for this description) a distance of 2,621.04 feet;

Exhibit A-3

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Exhibit 10.7

THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N67°01'52"E a distance of 426.86 feet to the POINT OF BEGINNING;
THENCE S56°17'32"E a distance of 37.30 feet;
THENCE S33°42'28"W a distance of 14.70 feet;
THENCE S56°17'32"E a distance of 8.10 feet;
THENCE S33°42'28"W a distance of 62.40 feet;
THENCE N56°17'32"W a distance of 50.00 feet;
THENCE N33°42'28"E a distance of 62.30 feet;
THENCE S56°17'32"E a distance of 4.60 feet;
THENCE N33°42'28"E a distance of 14.80 feet to the POINT OF BEGINNING.

PARCEL 9 (ORCHARDS ANNEX BUILDING “B”):
A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt River Meridian in Coconino County,
Arizona, being more particularly described as follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S01°42'03"E (Basis of
Bearings for this description) a distance of 2,621.04 feet;
THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N77°31'12"E a distance of 296.27 feet to the POINT OF BEGINNING;
THENCE N33°26'55"E a distance of 44.70 feet;
THENCE S56°33'05"E a distance of 12.70 feet;
THENCE N33°26'55"E a distance of 8.20 feet;
THENCE S56°33'05"E a distance of 38.10 feet;

Exhibit A-3

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Exhibit 10.7

THENCE S33°26'55"W a distance of 67.10 feet;
THENCE N56°33'05"W a distance of 38.30 feet;
THENCE N33°26'55"E a distance of 14.20 feet;
THENCE N56°33'05"W a distance of 12.50 feet to the POINT OF BEGINNING.

PARCEL 10 (ORCHARDS ANNEX BUILDING “C”):
A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt River Meridian in Coconino County,
Arizona, being more particularly described as follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S01°42'03"E (Basis of
Bearings for this description) a distance of 2,621.04 feet;
THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N80°02'28"E a distance of 274.61 feet to the POINT OF BEGINNING;
THENCE S56°52'51"E a distance of 45.40 feet;
THENCE S33°07'09"W a distance of 76.10 feet;
THENCE N56°52'51"W a distance of 38.30 feet;
THENCE N33°07'09"E a distance of 5.70 feet;
THENCE N56°52'51"W a distance of 12.70 feet;
THENCE N33°07'09"E a distance of 55.70 feet;
THENCE S56°52'51"E a distance of 5.60 feet;
THENCE N33°07'09"E a distance of 14.70 feet to the POINT OF BEGINNING.

PARCEL 11 (TEMPORARY HOUSING):

Exhibit A-3

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Exhibit 10.7

A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt River Meridian in Coconino County,
Arizona, being more particularly described as follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S01°42'03"E (Basis of
Bearings for this description) a distance of 2,621.04 feet;
THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N59°47'28"E a distance of 330.63 feet;
THENCE N56°03'17"W a distance of 25.50 feet to the POINT OF BEGINNING (Point “A”
for reference hereinafter);
THENCE N56°03'17"W a distance of 34.10 feet;
THENCE N33°56'43"E a distance of 18.84 feet;
THENCE S86°25'02"E a distance of 1.59 feet;
THENCE N03°34'58"E a distance of 5.00 feet;
THENCE S86°25'02"E a distance of 3.50 feet;
THENCE N03°34'58"E a distance of 50.13 feet;
THENCE S86°25'02"E a distance of 5.10 feet;
THENCE N03°34'58"E a distance of 5.02 feet to Point “B” for reference
hereinafter;
THENCE S86°25'02"E a distance of 26.10 feet;
THENCE S03°34'58"W a distance of 33.00 feet to Point “C” for reference
hereinafter;
THENCE S03°34'58"W a distance of 30.49 feet;
THENCE S56°03'17"E a distance of 1.10 feet;
THENCE S33°56'43"W a distance of 34.30 feet to the POINT OF BEGINNING.
EXCEPTING THEREFROM the following described two portions thereof that are on the
bottom floor of a two story building:
BEGINNING at Point “A” as referenced hereinbefore;

Exhibit A-3

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Exhibit 10.7

THENCE N56°03'17"W a distance of 24.90 feet;
THENCE N33°56'43"E a distance of 23.30 feet;
THENCE N03°34'58"E a distance of 0.80 feet;
THENCE S86°25'02"E a distance of 21.00 feet;
THENCE S03°34'58"W a distance of 0.35 feet;
THENCE S56°03'17"E a distance of 7.01 feet;
THENCE S33°56'43"W a distance of 34.30 feet to the POINT OF BEGINNING (Point
“A”).
Beginning at Point “C” as referenced hereinbefore;
THENCE S03°34'58"W a distance of 17.70 feet;
THENCE N86°25'02"W a distance of 5.10 feet;
THENCE N03°34'58"E a distance of 17.70 feet;
THENCE S86°25'02"E a distance of 5.10 feet to the POINT OF BEGINNING (Point
“C”).
AND FURTHER EXCEPTING THEREFROM the following described portion thereof that is
on the top floor of said two story building:
BEGINNING at Point “B” as referenced hereinbefore;
THENCE S86°25'02"E a distance of 26.10 feet;
THENCE S03°34'58"W a distance of 34.15 feet;
THENCE N86°25'02"W a distance of 26.10 feet;
THENCE N03°34'58"E a distance of 34.15 feet to the POINT OF BEGINNING (Point
“B”).

PARCEL 12 (PARKING LEASEHOLD SITE NO. 1):
A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt River Meridian in Coconino County,
Arizona, being more particularly described as follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a

Exhibit A-3

--------------------------------------------------------------------------------

Exhibit 10.7

B.L.M. brass capped pipe, lies S01°42'03"E (Basis of Bearings for this
description) a distance of 2,621.04 feet;
THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N65°24’08”E a distance of 429.98 feet to the POINT OF BEGINNING;
THENCE N32°17’00”E a distance of 27.00 feet;
THENCE S57°43’00”E a distance of 18.00 feet;
THENCE S32°17’00”W a distance of 27.00 feet;
THENCE N57°43’00”W a distance of 18.00 feet to the POINT OF BEGINNING.

PARCEL 13 (PARKING LEASEHOLD SITE NO. 2):
A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt River Meridian in Coconino County,
Arizona, being more particularly described as follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S01°42'03"E (Basis of
Bearings for this description) a distance of 2,621.04 feet;
THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N62°08’42”E a distance of 198.61 feet to the POINT OF BEGINNING;
THENCE N34°11’13”E a distance of 18.00 feet;
THENCE S55°48’47”E a distance of 36.00 feet;
THENCE S34°11’13”W a distance of 18.00 feet;
THENCE N55°48’47”W a distance of 36.00 feet to the POINT OF BEGINNING.

PARCEL 14 (PARKING LEASEHOLD SITE NO. 3):

Exhibit A-3

--------------------------------------------------------------------------------

Exhibit 10.7

A parcel of land situated in the Northwest quarter of Section 8, Township 17
North, Range 6 East of the Gila and Salt River Meridian in Coconino County,
Arizona, being more particularly described as follows:
Commencing at the West quarter corner of said Section 8, as marked by a G.L.O.
brass cap under drain cover in sidewalk, from which the Southwest corner of said
Section 8, as marked by a B.L.M. brass capped pipe, lies S01°42'03"E (Basis of
Bearings for this description) a distance of 2,621.04 feet;
THENCE from said West quarter corner, N21°27'04"E a distance of 342.00 feet to
West corner of the Canyon Portal property that lies on the Southeasterly
right-of-way line of Arizona State Route 89A;
THENCE N73°08’07”E a distance of 158.27 feet to the POINT OF BEGINNING;
THENCE N33°52’16”E a distance of 18.00 feet;
THENCE S56°07’44”E a distance of 27.00 feet;
THENCE S33°52’16”W a distance of 18.00 feet;
THENCE N56°07’44”W a distance of 27.00 feet to the POINT OF BEGINNING.
 

[EXHIBIT CONTINUES ON NEXT PAGE]

Exhibit A-3

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Exhibit 10.7

B.
L’AUBERGE LEASES

5.
That certain Lease For Parking Spaces dated as of January 1, 2012, by and
between Sinagua Plaza II, L.L.C., an Arizona limited liability company
(“Sinagua”) and L’Auberge Orchards LLC, an Arizona limited liability company
(“Original L’Auberge Lessee”), as amended by that certain Amendment to Lease
dated as of May 1, 2012, by and between Sinagua and Original L’Auberge Lessee,
as further amended by that certain Second Amendment to Lease dated as of May 14,
2013, by and between Sinagua and Original L’Auberge Lessee, as assigned to
L’Auberge pursuant to that certain Assignment and Assumption of Lease and
Consent to Assignment and Assumption of Lease dated as of May 14, 2013, by and
between Original L’Auberge Lessee and L’Auberge, and consented to by Sinagua;
and

6.
That certain Lease for Storage Space dated as of January 1, 2012, by and between
Sinagua and Original L’Auberge Lessee, as amended by that certain Amendment to
Lease dated as of May 1, 2012, by and between Sinagua and Original L’Auberge
Lessee, as further amended by that certain Second Amendment to Lease dated as of
May 14, 2013, by and between Sinagua and Original L’Auberge Lessee, as assigned
to L’Auberge pursuant to that certain Assignment and Assumption of Lease and
Consent to Assignment and Assumption of Lease dated as of May 14, 2013, by and
between Original L’Auberge Lessee and L’Auberge, and consented to by Sinagua.

Each of the leases described in 5 and 6 above being a lease of certain real
property in the City of Sedona, County of Coconino, State of Arizona, and more
particularly described as follows:

PARCEL NO. 1:

A parcel of land being a portion of the Northwest quarter of Section 8, Township
17 North, Range 6 East, of the Gila and Salt River Base and Meridian, Coconino
County, Arizona, described as follows:

COMMENCING at the West quarter corner of said Section 8 as marked by a B.L.M.
brass cap under a drain cover in sidewalk and from which the Southwest corner of
said Section 8 as marked by a B.L.M brass capped iron pipe lies South 01°42'03"
East (Basis of Bearings) a distance of 2,621.04 feet;

Thence from said West quarter corner of Section 8, North 30°07'59" East, a
distance of 916.99 feet to a ½ inch rebar with plastic cap stamped "LS 14184",
on the Southeasterly right-of-way line of Arizona State Highway 89A, said point
being the TRUE POINT OF BEGINNING;

Thence Northeasterly along said Southeasterly right-of-way line of Arizona State
Highway 89A being a non-tangent curve to the right with a radius of 2,150.00
feet, chord bearing of North 46°38’13” East a distance of 272.98 feet through a
central angle of 07°16'47" an arc distance of 273.17 feet to a' inch rebar with
plastic cap stamped “LS14184”;

Thence South 41°57'23" East, a distance of 29.20 feet to a concrete nail with
brass tag stamped “LS14184”;
Thence continuing South 41°57'23" East, a distance of 3.86 feet to a ½ inch
rebar with plastic cap stamped "LS14184";
Thence South 46°38'13" West, a distance of 42.83 feet to a ½ inch rebar with
plastic cap stamped "LS14184";
Thence North 85°34'54" East, a distance of 93.69 feet to a ½ inch rebar with cap
"LS 14184";

Exhibit A-3

--------------------------------------------------------------------------------

Exhibit 10.7

Thence South 12°45'42" East, a distance of 60.56 feet to a 1 ¼ inch pipe, with
no identification;
Thence South 13°36'15" West, a distance of 21.07 feet to a ½ inch rebar, with no
identification;
Thence South 18°11'28" West, a distance of 63.83 feet to a 1 ¼ inch pipe, with
no identification;
Thence South 39°06'47" West, a distance of 66.31 feet to a ½ inch rebar with
plastic cap stamped "RLS 15888";
Thence South 19°19'46” East, a distance of 49.71 feet to a ½ inch rebar with
plastic cap;
Thence North 78°11'14” West, a distance of 56.00 feet to a 1/2 inch rebar with
plastic cap "LS 14184";
Thence South 81°59’22” West, a distance of 81.56 feet to ½ inch rebar with
plastic cap stamped “LS 14184”;
Thence South 56°57’39” West, a distance of 91.19 feet, to a ½ inch rebar with
plastic cap stamped “LS 14184”;
Thence North 33°02’21” West, a distance of 140.07 feet to a ½ concrete nail with
brass tag stamped “LS 14184”;
Thence North 21°24’00” West, a distance of 152.40 feet to the Point of
Beginning.

PARCEL NO. 2
An easement for ingress and egress, as granted in Instrument No. 00-3070064,
over and across, the following described parcel:

That part of the Northwest quarter of Section 8, Township 17 North, Range 6 East
of the Gila and Salt River Base and Meridian, Coconino County, Arizona, more
particularly described as follows:

BEGINNING at a point on the Southeasterly line of Highway 89-A at a 5/8 inch
iron rod marking the most Westerly corner of that parcel described in instrument
recorded in Docket 188, page 467, records of Coconino County, Arizona, said
point of beginning being Northerly, a distance of 994.44 feet and Easterly a
distance of 672.96 feet from the West quarter corner of said Section 8;
Thence South 41°52'17" East, along the Southwesterly line of said parcel a
distance of 155.05 feet to a ¾ inch pipe at the Southerly most corner of said
parcel;
Thence South 30°30'45" East, a distance of 22.62 feet to a ½ inch rebar being an
angle point in the Northwesterly line of that parcel described in Docket 141,
page 257, records of Coconino County Arizona;
Thence South 47°50'15" West, along the Northwesterly line of said parcel, a
distance of 18.85 feet;

Thence North 40°52'59" West, a distance of 178.27 feet to to the Southeasterly
line of Highway 89-A, said point being on a curve concave to the Southeast
having a radius of 2150.00 feet and a chord bearing of North 50°41’21” East;

Thence Northeasterly along said curve, an arc distance of 20.40 feet through a
central angle of 00°32’37” to the Point of Beginning.

Exhibit A-3