Document:

c58417_ex10-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 10.1

AMENDMENT NO. 2 OF 

EMPLOYMENT AGREEMENT

This Amendment No. 2 of Employment Agreement (“Amendment No. 2”), dated as of July 23, 2009, is entered into between Enzon Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Jeffrey H. Buchalter
(the “Executive”). 

     A. Whereas, the Company and the Executive are parties to that certain Amended and Restated Employment Agreement, dated as of April 27, 2007, and amended as of February 21, 2008 (the “Employment
Agreement”). 

     B. Whereas, the Board of Directors of the Company (the “Board”) intends to remove the Executive as Chairman of the Board and to designate an independent director to serve in that capacity.

     C. Whereas, the Board recognizes that the Employment Agreement provides in Section 9(c)(ii) that the Executive has "Good Reason" to terminate his employment upon the failure of the Board to continue
to maintain the Executive as Chairman of the Board at all times during the term of the Employment Agreement. 

     D. Whereas, the Board also recognizes and respects the Executive’s rights under the Employment Agreement if the Executive terminates his employment for Good Reason. 

     E. Whereas, it is the Board’s strong desire that the Executive not exercise his Good Reason termination rights under the Employment Agreement upon his removal as Chairman of the Board, and that
the Executive continue to serve as the Company’s President and Chief Executive Officer. 

     F. Whereas, the Executive is willing to waive, for the periods set forth in this Amendment No. 2, his right to terminate his employment under the Employment Agreement for Good Reason by virtue of his
removal as Chairman of the Board, but not to waive his Good Reason termination rights for any other reasons as set forth in Section 9(c) of the Employment Agreement. 

     G. Whereas, in consideration of the Executive’s waiver of his right to terminate his employment under the Employment Agreement for Good Reason by virtue of his removal as Chairman of the Board,
the Board desires to amend the Employment Agreement to provide that the Company will reimburse the Executive for the reasonable legal fees incurred by the Executive in connection with certain disputes with the Company arising under the Employment
Agreement. 

     NOW, THEREFORE, in consideration of the mutual promises set forth below and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 

     1. All capitalized terms not defined herein shall have the meanings ascribed to such terms in the Employment Agreement. 

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     2. Section 9(c) of the Employment Agreement is amended by adding the following as a new final paragraph thereto: 

Notwithstanding anything to the contrary contained in this Agreement, (i) during the period ending on January 31, 2010, the Executive shall not be entitled to terminate his employment for Good Reason in accordance with this
Section 9(c) by virtue of the Executive’s having been removed from the position of Chairman of the Board, (ii) for the period commencing on February 1, 2010 and ending on July 31, 2010, the Executive’s right to terminate his employment for
Good Reason in accordance with this Section 9(c) by virtue of his having been removed as Chairman of the Board shall be reinstated and (iii) for all periods after July 31, 2010, the Executive shall not be entitled to terminate his employment for
Good Reason in accordance with this Section 9(c) by virtue of the Executive’s having been removed from the position of Chairman of the Board. It is understood and agreed that the Executive is not waiving his Good Reason termination rights under
this Section 9(c) for any other reason or reasons. For purposes of clause (ii) of this paragraph, any resignation or termination of the Executive’s employment between February 1, 2010, and July 31, 2010 that is initiated by the Executive shall
be deemed to be a termination for Good Reason in accordance with this Section 9(c) by virtue of his having been removed as Chairman of the Board.

     3. Section 11(k) of the Employment Agreement is amended in its entirety as follows: 

     (k) Arbitration. Except as otherwise specifically provided for hereunder, any claim or controversy arising out of or relating to this
Agreement or the breach hereof shall be settled by arbitration in accordance with the laws of the State of New Jersey. Such arbitration shall be conducted in the State of New Jersey, City of Newark in accordance with the rules then existing of the
American Arbitration Association, which pertain to employment disputes, provided however, that the arbitrator shall establish an expedited schedule for the resolution of the dispute that provides for a final hearing date no later than six (6) months
from the date of the initiation of such arbitration (or as soon thereafter as is practicable for the arbitrator). Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

     4. The Employment Agreement is amended by inserting the following as a new Section 11(n) thereto: 

     (n) The Company shall reimburse the Executive for his reasonable attorneys’ fees and costs incurred in connection with any dispute arising from this Agreement in which the Executive proceeds in good faith. The foregoing
shall include the Executive’s reasonable 

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attorney’s fees and costs incurred in connection with the preparation, negotiation and execution of Amendment No. 2 to this Agreement. 

     This Amendment No. 2 shall be effective as the date first written above. Except as amended hereby, all of the terms of the Employment Agreement are hereby ratified and confirmed by each of the Company
and the Executive in all respects, and shall remain in full force and effect. 

     This Amendment No. 2 may be executed in multiple counterparts, each of which shall be deemed an original and all of which when so executed shall constitute one and the same instrument. 

      IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 as of the date first written above. 

ENZON PHARMACEUTICALS, INC.

By: /s/ Rolf A. Classon 

Name: Rolf A. Classon 

Title: Director and Chairman, Compensation Committee

EXECUTIVE: 

/s/ Jeffrey H. Buchalter 

Jeffrey H. Buchalter 

3EXHIBIT 10.1

Form of Indemnity Agreement

[Date]

[Indemnitee
Name]

[Address]
Dear [_____________],

          Reference
is hereby made to Article VII of the bylaws of Sotheby’s (the “Company”) as in
effect as of the date hereof (the “Company Indemnity Bylaws”). In consideration
of your prior and continuing service to the Company and in order to eliminate
any ambiguity in the event of any purported amendment, modification, alteration
or repeal of the Company Indemnity Bylaws that might otherwise diminish, limit,
restrict, adversely affect or eliminate any of your rights to indemnification,
advancement of expenses or otherwise under the Company Indemnity Bylaws, this
will confirm that any such purported amendment, modification, alteration or
repeal shall be prospective only and shall not in any way diminish, limit,
restrict, adversely affect or eliminate any such right with respect to any
actual or alleged state of facts, occurrence, action or omission then or
previously existing, or any action, suit or proceeding previously or thereafter
brought or threatened based in whole or in part upon any such actual or alleged
state of facts, occurrence, action or omission. The Company hereby agrees that
your rights under the Company Indemnity Bylaws are contract rights that shall
be incorporated into this letter agreement and shall continue, without
amendment or repeal, even in the event that you cease your association with the
Company and that such rights shall be for your benefit and for the benefit of
your heirs, executors and administrators. This letter agreement may not be
amended or modified except by an instrument in writing signed by both parties
hereto. 

          This
letter agreement shall be governed by Delaware law.

          If
you agree with the foregoing, please acknowledge by executing a copy of this
letter and returning it to the Company.

	
 

	
 

	
 

	
 

	
Very truly
 yours,

	
 

	
 

	
 

	
 

	
Sotheby’s

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
Title:

	
 

	
 

	
 

	
Accepted and
 Agreed to:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
Name:exv10w1

Exhibit 10.1

Purchase and Sale Agreement

And Joint Escrow Instructions

	 	 	 	 	 	 	 
	TO:

	 	First American Title Insurance Company
	 	Escrow No.	 	 
	 

	 	2425 E. Camelback Road, Suite 300
	 	Escrow Officer:
	 	Neil
Moffett
	 

	 	Phoenix, Arizona 85016
	 	Telephone No.:
	 	602/567-8100
	 

	 	 	 	Facsimile No.:
	 	602/567-8101
	 

	 	 	 	Email:
	 	nmoffett@firstam.com

     This
Purchase and Sale Agreement and Joint Escrow Instructions (this “Agreement”), dated as of
June 29, 2009 (the “Effective Date”), is by and between AZPRO DEVELOPMENTS, INC., an Arizona
corporation (“Seller”), and
SHOPOFF ADVISORS, L.P., a Delaware limited partnership (“Buyer”), and
constitutes an agreement for the purchase and sale of real property and joint escrow instructions
directed to First American Title Insurance Company (as
“Escrow Holder”) to establish an escrow (the
“Escrow”) to accommodate the transaction contemplated hereby.

RECITALS:

     A. Seller owns approximately 200 gross acres of land situated in the Town of Buckeye (the
“Town”), County of Maricopa (the
“County”), State of Arizona, as more particularly described in
Exhibit “A” attached hereto and incorporated
herein by this reference (the “Land”).

     B. The term “Appurtenant Rights” shall mean all of Sellers’ right, title and interest, if any,
in and to any rights and appurtenances pertaining to the Land, development rights (including
without limitation, tentative maps, site plan approvals, permits and authorizations issued by
federal and state regulatory agencies), roads, alleys, easements, streets and ways appurtenant to
the Land, rights of ingress and egress thereto. The Appurtenant Rights also include the right to
use the unregistered name “Desert Moon Estates”. The Land and the Appurtenant Rights shall
sometimes hereinafter be referred to collectively as the
“Property”.

     C. Seller wishes to sell the Property to Buyer, and Buyer wishes to purchase the Property from
Seller, all under the terms and conditions contained herein.

     NOW THEREFORE, in consideration of the foregoing recitals, and the mutual covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree
as follows:

     1. Purchase and Sale. Seller agrees to sell the Property to Buyer and Buyer agrees to
purchase the Property from Seller, on and subject to the terms and conditions hereinafter set
forth.

     2. Purchase Price. The “Purchase Price” for the Property shall be Three Million
Dollars ($3,000,000.00) all cash at Closing (as hereinafter defined).

     3. Payment of Purchase Price. The Purchase Price shall be paid as follows:

     a. Not later than 5:00 PM (Phoenix Time) on the third (3rd) business day
following the Effective Date, Buyer, as a condition precedent to this Agreement becoming a
binding agreement between the parties, shall deposit into the Escrow by confirmed wire
transfer of immediately available federal funds, the amount of Fifty Thousand Dollars
($50,000.00) (the “First Deposit”).

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     b. If Buyer has elected to proceed with the purchase of the Property prior to or upon
expiration of the Due Diligence Period (defined below), Buyer shall deposit into Escrow by
confirmed wire transfer of immediately available federal funds, the additional sum of One
Hundred Thousand Dollars ($100,000.00) (the “Second Deposit”). The First Deposit and the
Second Deposit shall become non-refundable to Buyer upon Escrow Holder’s receipt of the
Second Deposit, except upon a termination of this Agreement as a result of (i) Seller’s
material default under this Agreement occurring prior the Close of Escrow, or (ii) the
failure of any material condition precedent to Buyer’s obligation to purchase the Property
expressly stated herein.

     c. If Buyer fails to deposit the First Deposit or the Second Deposit within the time
period provided for above, Seller may at any time prior to Escrow Holder’s receipt of the
First Deposit or Second Deposit, as applicable, terminate this Agreement and the Escrow by
giving written notice to Buyer and Escrow Holder, in which case this Agreement shall be null
and void ab initio and in such event Escrow Holder will immediately deliver to Seller all
copies of this Agreement in its possession and, thereafter, neither party shall have any
further rights or obligations to the other hereunder, except as otherwise set forth in this
Agreement. The First Deposit, together with the Second Deposit shall sometimes collectively
be referred to herein as the “Deposit”. The Deposit and all interest on that portion of the
Deposit while in Escrow during the term of this Agreement, shall be credited in favor of
Buyer against the Purchase Price for the Property upon the Close of Escrow, but shall be (i)
paid to Seller if Seller is entitled to receive the Deposit in accordance with this
Agreement, or (ii) returned to Buyer if Buyer is entitled to a return of the Deposit in
accordance with this Agreement.

     d. The balance of the Base Purchase Price for the Property, together with Buyer’s share
of costs to be paid and pro-rations to be made pursuant to Section 13 and
Section 14 of this Agreement, shall be deposited by Buyer into the Escrow by
confirmed wire transfer of immediately available federal funds, no later than 3:00 P.M.
(Phoenix Time) on the last business day before the Close of Escrow and shall be disbursed to
Seller by Escrow Holder upon the Close of Escrow.

     4. Opening and Close of Escrow.

     a. Opening of Escrow. For the purposes of this Agreement, the “Opening of
Escrow” shall mean the date that Escrow Holder receives the First Deposit and executed
counterpart copies (delivered or by facsimile transmission) of this Agreement signed by
Buyer and Seller. Escrow Holder shall notify Buyer and Seller, in writing, of the date of
Opening of Escrow. Buyer and Seller agree to execute, deliver and be bound by any reasonable
and customary supplemental instructions that may be reasonably requested by Escrow Holder or
that may be necessary or convenient to consummate the transaction contemplated hereby;
provided, however, that such supplemental instructions shall be consistent
with and shall not supersede this Agreement and in all cases this Agreement shall control.

     b. Close of Escrow. For purposes of this Agreement, the “Close of Escrow” with
respect to the Property shall mean the date on which a Special Warranty Deed executed by
Seller conveying the title to the Land, substantially in the form attached hereto as
Exhibit “B” (the “Warranty
Deed”), is recorded in the Official Records of the
County.

     c. Date of Close of Escrow; Outside Date. The Close of Escrow for the Property
shall occur on July 30, 2009 at the office of Escrow Holder or at such other location in
Phoenix, Arizona, at the parties may mutually agree in writing.

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     5. Buyer’s Contingencies. For the benefit of Buyer, Buyer’s obligation to consummate
the transaction contemplated in this Agreement shall be expressly subject to and contingent upon
Buyer’s written approval or written waiver of each of the following contingencies
(“Contingencies”).

     a. Title Matters.

     i. First American Title Insurance Company (the “Title Company”) has been
requested to issue a title commitment (the “Title Commitment”) covering the Land,
together with copies of all exceptions referred to in the Title Commitment. Prior to
the expiration of the Due Diligence Period, Buyer shall notify Seller in writing
(the “Title Objections Notice”) of those title exceptions, if any, which Buyer is
unwilling to accept (such exception[s] being herein called, collectively, the
“Un-permitted Exceptions”); provided, however, Seller shall remove, and Buyer shall
not be required to object to, any and all monetary liens and encumbrances executed
by Seller affecting the Property and any judgment lien naming Seller as a defendant
or mechanics’ liens recorded against the Property relating to work initiated by
Seller (excluding non-delinquent taxes, bonds and assessments and excluding monetary
obligations arising out of or relating to the Development Agreements (defined below)
and the CC&Rs (defined below)) (collectively, “Seller’s Monetary Liens”).
Notwithstanding anything to the contrary herein, in no event shall the title review
period specified in this Section 5.a, extend the past the date of expiration the Due
Diligence Period (defined below).

          Seller discloses to Buyer that (a) the Land is subject to the Development
Agreements (collectively, the “Development Agreements”) and the Declaration of
Covenants, Conditions and Restrictions regarding membership in the Central Arizona
Groundwater Replenishment District (the “CC&Rs”) described below, and (b) that the
Property will be subject to any and all assessments and other amounts payable after
the Close of Escrow pursuant to the Development Agreements and/or the CC&Rs,
including any assessments imposed upon the Land by virtue of any assessment
districts referred to in the Development Agreements or by virtue of the CC&Rs:

     (1) Development and Reimbursement Agreement Concerning the
Payment of Engineering and other Professional Fees Pertaining to the
Formation of an Assessment District within a Community Facilities
District (Sewer and Effluent Lines), recorded in the Official Records
of Maricopa County, Arizona on May 28, 2004, at Instrument No.
2004-0610172;

     (2) Development and Reimbursement Agreement Concerning the
Payment of Engineering and other Professional Fees Pertaining to the
Formation of an Assessment District within a Community Facilities
District (Wastewater Treatment Plant), recorded in the Official
Records of Maricopa County, Arizona on June 25, 2004, at Instrument
No. 2004-0726243;

     (3) The Watson Road Community Facilities District (Town of
Buckeye, Arizona) Waiver and Development Agreement Pertaining to
Assessment District No. 1, recorded in the Official

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Records of `Maricopa County, Arizona, on October 19, 2005, at
Instrument No. 2005-1559019, and re-recorded on November 15, 2005, at
Instrument No. 2005-1727787 (the “Waiver Agreement”) and related
documents recorded at Instrument No. 2005-1559020, Instrument No.
2005-1559021, 2005-1570264 and Instrument No. 2005-1864436;

     (4) Declaration of Covenants, Conditions and Restrictions for
Desert Moon Estates Regarding Membership in the Central Arizona
Groundwater Replenishment District recorded in the Official Records
of Maricopa County, Arizona on April 11, 2006, at Instrument No.
2006-0483225; and

     (5) Water Facilities Offsite Extension Agreement dated January
25, 2008, between Seller, Buckeye 60, LLC, Armstrong Miller, LLC, CVS
5934 AZ, LLC, Great American Capital/Miller MarketPlace, LLC, and
Buckeye 40, LLC and Valencia Water Company (the “Company”) (the
“Valencia Offsite Agreement”) and related Letter Agreement dated
January 14, 2008 between Seller and the Valencia Water Company (the
“Letter Agreement”).

     ii. Within two (2) days after the Seller receives Buyer’s Title Objection
Notice, Seller shall notify Buyer in writing (a “Title Objection Response”) whether
it is unable or unwilling to remove any Un-permitted Exceptions identified in
Schedule 3 or the Supplemental Title Objection Notice, as applicable, it
being understood and agreed by Buyer that Seller shall have no obligation to remove
any Un-permitted Exceptions. In either event, Buyer shall have the right, as its
sole remedy for such inability or unwillingness of Seller, by delivery of written
notice to Seller within two (2) days following receipt of notice from Seller of its
election not to remove such Un-permitted Exceptions, to either (1) terminate this
Agreement and the Escrow by written notice delivered to Seller and Escrow Holder (in
which event the termination provisions of Section 12 below shall apply), or
(2) accept title to the Property subject to such Un-permitted Exceptions without an
abatement in or credit against the Purchase Price, in which event such Un-permitted
Exceptions shall then become Permitted Exceptions. The failure of Buyer to deliver
any written notice of election under this Section 5.a.ii within five (5)
business days following receipt of written notice from Seller of its election not to
remove such Un-permitted Exceptions shall conclusively be deemed to be an election
under clause (1) of the preceding sentence. During the term of this Agreement,
Seller shall not record any items against title to the Property or otherwise enter
into any binding agreement encumbering title to the Property except as expressly
permitted by this Agreement, without obtaining the prior written approval of Buyer,
which shall not be unreasonably withheld, conditioned or delayed.

     iii. If, as of the Close of Escrow, in addition to Seller’s Monetary Liens,
there are any monetary liens or encumbrances affecting the Land that Seller has
agreed (in the exercise of its sole discretion and without any obligation) to
discharge under this Agreement (collectively, the “Un-Permitted Liens”), Seller
shall cause the discharge of the same at Seller’s sole expense, either by way of
payment or by alternative manner

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reasonably satisfactory to Seller and the Title Company, and the same shall not
be deemed to be Un-permitted Exceptions.

     iv. The Property shall be sold and conveyed subject to the following exceptions
to title (collectively, the “Permitted Exceptions”):

     1. those matters specifically set forth in Schedule B to the Title
Commitment that are accepted by Buyer as provided in this Agreement, other
than Seller’s Monetary Liens and any Un-Permitted Liens;

     2. all laws, ordinances, rules and regulations of the United States,
the State of Arizona, the County, the Town or any agency, department,
commission, bureau or instrumentality of any of the foregoing having
jurisdiction over the Property (each, a “Governmental Authority”), as the
same may now exist or may be hereafter modified, supplemented or
promulgated;

     3. all presently existing and future liens of real estate taxes or
assessments and water rates, water meter charges, water frontage charges and
sewer taxes, rents and charges, if any; provided that such items are
not yet due and payable and are apportioned as provided in this Agreement;

     4. any Un-permitted Exception which Seller is unwilling or unable to
remedy as provided in this Agreement if this Agreement is not terminated by
Buyer as a result thereof pursuant to Section 5.a.ii above;

     5. Any matter (including any lien, encumbrance or easement) voluntarily
imposed or consented to in writing by Buyer prior to or as of the Close of
Escrow; and

     6. Such state of facts as may be shown on an accurate and accurate
survey or by inspection of the Property.

     v. In the event Buyer requests any endorsements to the Title Policy (“Buyer
Requested Title Endorsements”), the issuance of any such Buyer Requested Title
Endorsements shall not be deemed to be a condition to closing the transaction
contemplated, except to the extent the Title Company, prior to the end of the Due
Diligence Period, commits in writing to issue such Buyer Requested Title
Endorsements and in no event shall Seller be obligated to provide any indemnity or
other document or undertake any obligation in order to cause the Title Company to
issue the same (other than for mechanic’s liens); provided, however,
that Seller will reasonably cooperate, at no cost or liability to Seller, with Buyer
and the Title Company in connection with the issuance of the Title Policy and Buyer
Requested Title Endorsements, as the case may be.

     b. Due Diligence Reviews. Commencing on the Effective Date and ending at 5:00
PM (Phoenix Time) on July 20, 2009 (the “Due Diligence Period”), Buyer shall have the
opportunity to review and investigate the Property, in Buyer’s sole discretion, which review
and investigation may include, without limitation, the following matters:

     i. The adequacy and condition of the Land and the adequacy of all utilities to
the Property, including, but not limited to, power, water, gas, telephone, cable and
sanitary sewer.

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     ii. The condition of the soils and the geologic, environmental and engineering
conditions of the Property, based on any and all soils, engineering, environmental
or geologic tests, reports and studies which Buyer desires to perform, which
reports, tests and studies shall be performed at Buyer’s sole cost and expense in
compliance with the provisions of Section 18 below.

     iii. Any documents, instruments and agreements in Seller’s possession or
control relating to the currently intended use or development of the Property but
excluding confidential financial data and work product (the “Property Information
Materials”), including without limitation any geo-technical reports, engineering
reports, civil engineering drawings (in electronic PDF or CADD form), lotting
studies, tentative maps, site plans, surveys (including any existing ALTA surveys in
Seller’s possession), a phase I environmental audit, traffic studies and drainage
studies, which items have been delivered by Seller to Buyer, or made available to
Buyer by Seller, prior to the Effective Date. Such reports, surveys, investigations,
audits or studies have been provided or made available to Buyer as an accommodation
only, and Seller makes no representation as to the accuracy or completeness of any
of such reports, surveys, investigations, audits or studies (except as otherwise may
be expressly stated in Section 7(a) below). Notwithstanding the foregoing,
Seller has made available to Buyer and will continue to make available to Buyer for
inspection during the Due Diligence Period, any and all known information in
Seller’s possession or reasonably available to Seller regarding the physical
condition or legal entitlements with respect to the Property, during the term of
this Agreement. Seller agrees to instruct its consultants and their employees to be
available to Buyer openly discuss the Due Diligence Materials prepared by or used by
such consultants, but Buyer shall not have the right to request that such
consultants perform additional work unless at Buyer’s sole cost and expense. Seller
agrees to provide to Buyer complete copies of all permit applications submitted by
Seller or its consultants and all relevant correspondence relating to all regulatory
permits affecting the Property promptly following Seller’s receipt of same.

     All of the documents, instruments and agreements identified in Section 5.b.
above and any other information delivered to the Buyer by Seller relating to the Property
shall be referred to herein as the “Due Diligence Materials”.

     c. Buyer’s Election. If, prior to the expiration of the Due Diligence Period,
Buyer deposits into Escrow the Second Deposit, then Buyer shall be deemed to have
unconditionally approved the condition of the Property as provided in this Agreement (but
subject to closing conditions as set forth in Section 10 below, otherwise, Buyer
shall be deemed to have disapproved the condition of the Property, in which event the
termination provisions of Section 12 of this Agreement shall apply.

     During the term of this Agreement, Seller further agrees to provide to Buyer, promptly
following its receipt of same, copies of any additional Due Diligence Materials (being
documents, reports, etc. which relate in a material way to the current physical condition of
the Land) not available to Seller as of the Effective Date of this Agreement.

     6. “AS-IS” SALE. Buyer acknowledges and agrees that Buyer is experienced in the
purchase and development of land similar to the Property and that Buyer has inspected the Property,
or will, during the Due Diligence Period, inspect the Property, to its satisfaction, and is
qualified to make such inspections. Except for Seller’s express representations to Buyer in this
Agreement, Buyer acknowledges that it is fully relying on Buyer’s (or Buyer’s representatives’ or

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consultants’) inspections of the Property and not upon any statements (oral or written) which
may have been made or may be made (or purportedly made) by Seller or any of its representatives or
consultants, including, without limitation, the Recitals set forth above in this Agreement. No
person acting on behalf of Seller is authorized to make, and by execution hereof Buyer acknowledges
no person has made, any representation, statement, warranty, guaranty, or promise regarding the
Property or the transaction contemplated herein, or the zoning, construction, physical condition or
other status of the Property except as may be expressly set forth in this Agreement. Buyer
acknowledges that Buyer, or Buyer’s representatives and/or consultants, will have the opportunity
to thoroughly inspect and examine the Property to the extent deemed necessary by Buyer in order to
enable Buyer to evaluate the condition of the Property and all other aspects of the Property
(including, but not limited to, the environmental condition of the Property), and except to the
extent of Seller’s representations set forth herein, Buyer acknowledges that Buyer will rely solely
upon its own (or its representatives’ or consultants’) inspections, examinations and evaluations of
the Property, as a material part of the consideration of this Agreement and the purchase of the
Property.

          EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLER IS SELLING THE
PROPERTY “AS IS” AND “WITH ALL FAULTS” AND THAT NEITHER SELLER NOR ITS AGENTS HAVE MADE ANY
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, REGARDING ANY MATTER PERTAINING
TO THE PROPERTY OR ITS USE INCLUDING: (I) THE PHYSICAL CONDITION, ZONING, USE, VALUE, INTENDED USE,
OR OTHER CONDITION OF THE PROPERTY; (II) ITS MERCHANTABILITY; (III) ITS FITNESS FOR A PARTICULAR
PURPOSE; (IV) THE PHYSICAL CONDITION, ZONING, USE, VALUE, INTENDED USE, OR OTHER CONDITION OF ANY
NEIGHBORING PROPERTY; OR (V) THE CLASSIFICATION OF THE PROPERTY FOR AD VALOREM PURPOSES. UPON THE
CLOSING, BUYER WAIVES, AND RELEASES SELLER FROM, ALL PRIVATE RIGHTS OF ACTION UNDER FEDERAL, STATE,
LOCAL, AND COMMON LAW, INCLUDING THE COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND
LIABILITY ACT, WHICH BUYER MAY HAVE AGAINST SELLER ARISING OUT OF THE PAST OR PRESENT (AS OF THE
DATE HEREOF) PRESENCE OF HAZARDOUS WASTE OR SUBSTANCES ON THE PROPERTY OR ARISING OUT OF THE
PHYSICAL CONDITION OF THE PROPERTY OR ANY NEIGHBORING PROPERTY. BUYER FURTHER ASSUMES THE RISK OF
ALL CHANGES IN APPLICABLE LAWS AND REGULATIONS RELATING TO THE PRESENCE OF HAZARDOUS WASTES OR
CONDITIONS WHICH MAY NOT BE REVEALED IN ANY ENVIRONMENTAL REPORT PROVIDED TO OR OBTAINED BY BUYER
UNDER THIS AGREEMENT.

THAT BY INITIALLING BELOW, THE BUYER ACKNOWLEDGES THAT (I) THIS SECTION 6 HAS BEEN READ AND
FULLY UNDERSTOOD, (II) THE BUYER HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS
MEANING AND SIGNIFICANCE, AND (III) THE BUYER HAS ACCEPTED AND AGREED TO THE TERMS SET FORTH IN
THIS SECTION 6.

	 	 	 
	TJ	 	WAS
	SELLER’S INITIALS
	 	BUYER’S INITIALS

     7. Seller’s Representations, Warranties and Covenants.

     a. Seller hereby represents and warrants to Buyer, which representations and warranties
shall be true and correct as of the Effective Date and as of the date of the Close of
Escrow, and which shall survive the Close of Escrow for a period of six (6) months, as
follows:

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     i. Seller is a corporation duly organized, validly existing and in good
standing under Arizona law. Seller has the legal power, right and authority to enter
into this Agreement and the instruments to be executed by Seller pursuant to this
Agreement and to consummate the transactions contemplated hereby. No consent of any
third party is required in order for Seller to perform its obligations hereunder.

     ii. All requisite action has been taken by Seller in connection with Seller’s
execution of this Agreement and the instruments to be executed by Seller pursuant to
this Agreement and the consummation of the transactions contemplated hereby.

     iii. The individuals executing this Agreement and the instruments to be
executed by Seller pursuant to this Agreement on behalf of such entity have the
legal power, right and actual authority to bind Seller to the terms and conditions
of this Agreement and such instruments.

     iv. Neither the execution and delivery of this Agreement and the documents
referenced herein, nor the undertaking of the obligations set forth herein, nor the
consummation of the transactions herein contemplated, nor compliance with the terms
of this Agreement or the documents referenced herein conflict with or result in the
material breach of any terms, conditions or provisions of, or constitute a default
under, any bond, note or other evidence of indebtedness or any contract, indenture,
mortgage, deed of trust, loan, partnership agreement, lease or other agreement or
instrument to which Seller is a party.

     v. Except as otherwise provided in Section 32 below, all consultants,
contractors and suppliers who provided materials and/or services/labor with respect
to the Property or its contemplated development have been paid in full.

     vi. To Seller’s knowledge, there is not pending or overtly threatened in
writing, from any federal, state, county or local authority any notice, suit, or
judgment relating to any violation of any statute, ordinance, law or code with
respect to the Property.

     vii. Except as may be disclosed in any environmental assessment or report
provided to or obtained by Buyer, Seller has not caused or knowingly authorized the
presence, placement, generation, transportation, storage, release, treatment or
disposal on the Land of any hazardous substance, and has not received any notice
from any governmental authority stating or indicating the existence or occurrence of
any of the foregoing.

     viii. Seller has not entered into any leases or contracts which will affect or
burden the Land following the Close of Escrow, and to Seller’s knowledge, there are
no leases, contracts or other agreements which will affect or burden the Land
following the Close of Escrow, except for matters disclosed in or pursuant to this
Agreement.

     ix. To Seller’s knowledge, except as otherwise disclosed to Buyer in writing,
the Property Information Materials do not contain any material inaccuracy or any
material omission which would render such Property Information Materials materially
misleading.

     x. To Seller’s knowledge: (i) there presently is not any environmentally
hazardous substances or above- or below-ground storage tanks on the Land; (ii)
Seller

8

 

has not received any notification from any governmental entity or agency
regarding any alleged non-compliance of the Land with applicable laws and/or
regulations relating to environmentally hazardous substances; and (iii) there is no
pending or threatened litigation, proceedings or investigations before any
governmental entity or agency in which the presence, placement, generation,
transportation, storage, release, treatment or disposal of any environmental
hazardous substance on or in the Property has been alleged.

     For purposes of this Section, “Seller’s knowledge” shall refer to the actual, personal
knowledge of Terry Johnson (who Seller represents is the most knowledge person within
Seller’s organization regarding the Property and its development potential), without any
duty of inquiry or investigation and without imposition of any individual liability on such
representative of Seller. In the event a representation or warranty of Seller as stated
above is true as of the Effective Date, but due to the occurrence of a change in
circumstances of which Seller actually becomes aware between the Effective Date and the
Close of Escrow, cannot be stated truthfully by Seller in all material respects upon the
Close of Escrow, Seller shall not be in breach of this Agreement by reason thereof, provided
Seller promptly after learning of the same and prior to the Close of Escrow, notifies Buyer
in writing of such change in circumstances or the date of Close of Escrow, whichever is
first to occur. In such event, Buyer shall have the right, by written notice to Seller and
Escrow Holder within five (5) business days of learning of such changed circumstance, to
either (x) waive such changed circumstances (which shall be deemed given if Buyer authorizes
Escrow Holder to close Escrow) and proceed to close Escrow with Seller’s relevant
representation or warranty deemed qualified to exclude the changed circumstances, or (y)
deem such change in circumstances a failure of a condition precedent to Buyer’s obligation
to purchase the Property and terminate this Agreement and the Escrow, in which event the
termination provisions of Section 12 below shall apply.

     8. Buyer’s Representations, Warranties and Covenants. Buyer hereby represents,
warrants and covenants to Seller, which representations and warranties shall be true and correct as
of the Effective Date and as of the date of the Close of Escrow, and which shall survive the Close
of Escrow for a period of six (6) months, as follows:

     a. Buyer has the legal power, right and authority to enter into this Agreement and the
instruments to be executed by Buyer pursuant to this Agreement and to consummate the
transactions contemplated hereby.

     b. All requisite action has been taken by Buyer in connection with Buyer’s execution of
this Agreement, the instruments to be executed by Buyer pursuant to this Agreement, and the
consummation of the transactions contemplated hereby.

     c. The individuals executing this Agreement and the instruments to be executed by Buyer
pursuant to this Agreement on behalf of Buyer have the legal power, right and actual
authority to bind Buyer to the terms and conditions of this Agreement and such instruments.

     d. Neither the execution and delivery of this Agreement and the documents referenced
herein, nor the undertaking of the obligations set forth herein, nor the consummation of the
transactions herein contemplated, nor compliance with the terms of this Agreement and the
documents referenced herein conflict with or result in the material breach of any terms,
conditions or provisions of, or constitute a default under, any bond, note or other evidence
of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership
agreement, lease or other agreement or instrument to which Buyer is a party.

9

 

     9. Title Insurance. It shall be a condition to the Close of Escrow for Buyer’s benefit
that the Title Company shall have unconditionally committed to issue to Buyer an ALTA standard
coverage owner’s policy of title insurance (the “Title Policy”) in the amount of the Base Purchase
Price, showing fee simple title to the Land to be vested in Buyer free and clear of all liens and
encumbrances other than the Permitted Exceptions. Seller shall pay the premium for the issuance of
the Title Policy. Buyer, at Buyer’s sole option so long as the Close of Escrow is not thereby
delayed, may elect to obtain and require as a condition to the Close of Escrow an ALTA extended
coverage Title Policy, provided Buyer timely prepares an ALTA survey satisfactory to the Title
Company. In such event, Seller shall pay for the standard coverage portion of the premium for the
Title Policy and Buyer shall pay the portion of the cost of the Title Policy attributable to
extended coverage, including the cost of any Buyer Requested Title Endorsements.

     10. Conditions to Close of Escrow.

     a. Buyer’s obligation to purchase the Property and close Escrow is subject to and
conditioned upon the satisfaction of the following conditions on or before the Close of
Escrow, as indicated below (Seller agrees to use commercially reasonable efforts to complete
the identified items, but Seller’s failure to complete the identified items notwithstanding
such efforts shall not constitute a default by Seller under this Agreement):

     i. The Title Company shall be committed to issue the Title Policy for the
Property to Buyer in accordance with the requirements of Section 9 above;

     ii. The physical condition of the Property shall not have changed in any
material, adverse manner;

     iii. The representations and warranties of Seller shall be true and correct on
the Closing Date, and Seller shall not be (or deemed to be) in material breach of
any representation or warranty given by Seller under Section 7.a above;

     iv. Seller shall not otherwise be in default in the performance of any of its
material obligations under this Agreement.

     v. The requirements of Section 32 below have been satisfied as of the
Close of Escrow.

     b. Seller’s obligation to sell the Property and close the Escrow is subject to and
conditioned upon the satisfaction of the following conditions on or before the Close of
Escrow:

     i. The representations and warranties of Buyer shall be true and correct on the
Closing Date, and Buyer shall not be in material breach of any representation or
warranty given by Buyer under Section 8 above;

     ii. Buyer shall have timely executed and delivered to Escrow Holder the items
described in Section 11.b below;

     iii. Buyer shall have deposited into the Escrow all funds required to pay the
Purchase Price and Buyer’s share of pro-rations and closing costs;

     iv. the Title Company shall be committed to issue the Title Policy to Buyer in
accordance with the requirements of Section 9 above; and

10

 

     v. Buyer shall not be in default of any other obligation of Buyer under this
Agreement.

     11. Deliveries to Escrow Holder.

     a. Seller shall execute and deliver or cause to be delivered to Escrow Holder by 5:00
P.M. (Phoenix time) on the last business day before the date of the Close of Escrow the
following instruments, and documents (“Seller Closing Deliveries”):

     i. The Warranty Deed, in recordable form, duly executed and acknowledged by
Seller;

     ii. a General Assignment, substantially in the form attached hereto as
Exhibit “C” (the “Assignment”);

     iii. a Certification of Non-Foreign Status (the “Certification”), substantially
in the form attached hereto as Exhibit “D”, and any Arizona required
certifications; and

     iv. any other instruments and documents which Seller is obligated to execute
and deliver into the Escrow under this Agreement.

     b. Buyer shall execute (and have notarized where appropriate) and deliver or
cause to be delivered to Escrow Holder by 5:00 P.M. (Phoenix time) on the last business day
before the date of the Close of Escrow the following (“Buyer Closing Deliveries”):

     i. all sums that Buyer is required to deliver to Escrow Holder pursuant to
Section 3.d to close the Escrow;

     ii. A letter to Valencia Water Company in the form attached hereto as
Exhibit “E”; and

     iii. any other instruments and documents which Buyer is obligated to execute
and deliver to Escrow Holder pursuant to this Agreement.

     12. Termination. Whenever (i) a party has the right to terminate this Agreement
pursuant to an express provision of this Agreement, and notifies the other party and Escrow Holder,
in writing, of its election to terminate the Agreement and the Escrow, or (ii) this Agreement and
the Escrow automatically terminate pursuant to an express provision of this Agreement, then:

     a. This Agreement, the Escrow and the rights and obligations of Buyer and Seller under
this Agreement shall terminate except as otherwise expressly provided in this Agreement;

     b. If neither Buyer nor Seller are in breach of this Agreement, each party shall be
responsible to pay one-half of any cancellation charges payable to Escrow Holder and the
Title Company; otherwise the breaching party shall be responsible for all such cancellation
charges;

     c. Escrow Holder shall promptly return to Seller and Buyer all documents deposited by
them into the Escrow, respectively;

     d. Buyer and/or Buyer’s Representatives (as hereinafter defined) shall promptly deliver
to Seller all originals and copies of such information and all third party reports and
studies

11

 

obtained by Buyer and/or Buyer’s Representatives (without warranty as to accuracy or
completeness and subject to the rights of third party consultants preparing such reports),
except to that portion of such information already in the public domain (e.g., title
reports, matters of public record, filings with public agencies);

     e. If Buyer is entitled to the return of the First Deposit (and if made, the Second
Deposit) (i.e., Buyer terminates this transaction due to a breach by Seller of this
Agreement or due to the failure of a condition precedent to Buyer’s obligation to purchase
the Property as specified in Section 10.a above), then provided the terms of
Section 12.d. above have been satisfied, as evidenced by written notice from Seller
to Escrow Holder, Escrow Holder shall release the Deposit to Buyer; provided, if Escrow
Holder shall have already disbursed the First and/or Second Deposit to Seller, then Seller
shall first immediately return the First and/or Second Deposit, as applicable, to Escrow
Holder so as to enable Escrow Holder to release the entire Deposit to Buyer (less one-half
of any escrow cancellation charges, if applicable); and

     f. If Buyer is not entitled to the return of the First Deposit (and if made, the Second
Deposit), then Escrow Holder shall release the First Deposit (and if made, the Second
Deposit) to Seller.

     13. Costs and Expenses. The premium for the Title Policy shall be paid in accordance
with the provisions of Section 9 above. The escrow fees of Escrow Holder shall be shared
equally by Seller and Buyer. All recording costs shall be paid by Buyer. Buyer and Seller shall
each pay their own legal and professional fees and fees of other consultants incurred in connection
with this transaction. All other costs and expenses shall be paid according to the custom of real
estate transactions consummated in the County, as determined by Escrow Holder, allocated equally
between Buyer and Seller, except the costs of performing the obligations of each party to this
Agreement, which costs shall be borne solely by the party incurring such costs. The provisions of
this Section 13 shall survive the Close of Escrow or a termination of this Agreement.

     14. Pro-rations and Credits.

     a. Real property taxes and assessments with respect to the Land based upon the latest
available tax information shall be pro-rated such that Seller shall be responsible for all
such taxes and assessments levied against the portion of Land owned by such entity to and
including the day prior to the Close of Escrow and Buyer shall be responsible for all such
taxes and assessments levied against the Land from and after the date of the Close of
Escrow. If the Land is not as of the Close of Escrow assessed as separate legal parcels, the
parties shall in good faith fairly allocate a pro-rata share of the property taxes of the
larger tax parcel of which the Land is a part based on previous tax bills.

     b. Within ninety (90) days after the Close of Escrow, (i) if any errors or omissions
are made regarding adjustments and pro-rations as set forth above, the parties shall make
the appropriate corrections promptly upon the discovery thereof, and (ii) if any estimates
are made at the Close of Escrow regarding adjustments or pro-rations, the parties shall make
the appropriate corrections promptly when accurate information becomes available; provided
that neither party shall have the right to request apportionment or reapportionment of any
items at any time following ninety (90) days after the Close of Escrow. The provisions of
this Section 14.b shall survive the Close of Escrow.

12

 

     15. Disbursements and Other Actions by Escrow Holder. Upon the Close of Escrow, Escrow
Holder shall promptly undertake all of the following in the manner indicated:

     a. Escrow Holder shall cause the Warranty Deed to be recorded in the Official Records
of the County, together with any other documents that the parties hereto may mutually direct
and then immediately disburse the Purchase Price proceeds as follows and in the following
order: (i) pay all closing costs to be paid through Escrow (including premium for the Title
Policy, escrow fees and recording charges); (ii) pay in full or the required partial release
relating to all notes secured by existing deeds of trust encumbering the Property, if any,
for the account of Seller, in accordance with separate instructions or demands approved by
Seller, (iii) after deducting closing costs and other payments chargeable to Seller, and
deducting or adding (as appropriate) pro-rations for the account of Seller, disburse the
balance of the Purchase Price due to Seller at Close of Escrow in accordance with separate
wiring or other payment instructions delivered to Escrow Holder by Seller; and (iv) disburse
any remaining funds to Buyer in accordance with separate wiring or other payment
instructions delivered to Escrow Holder by Buyer.

     b. At Close of Escrow Holder shall (i) direct the Title Company to issue a Title Policy
to Buyer; (ii) deliver to Buyer conformed copies of the Warranty Deed, originals of the
other Seller Closing Deliveries and Buyer’s closing statement; and (iii) deliver to Seller
conformed copies of the Warranty Deed, originals of the Buyer Closing Deliveries and
Seller’s closing statement.

     16. Default.

          16.1 Seller’s Remedies Upon Buyer’s Default. If Buyer defaults under this Agreement
prior to the Close of Escrow, the sole right and remedy of Seller, if Seller is not in default and
has performed all of its obligations hereunder which are then due, shall be to terminate this
Agreement and the Escrow, by notice to Buyer and Escrow Holder and to be paid the First Deposit,
and if made, the Second Deposit, immediately upon such termination as liquidated damages. Buyer and
Seller hereby acknowledge that actual damages in the event of such a default by Buyer would be
difficult to calculate with certainty and agree that the First Deposit, and if made, the Second
Deposit, is a reasonable approximation of actual damages. Seller waives and covenants not to assert
any other rights and remedies for a default by Buyer. The provisions of the preceding sentences
shall not limit Seller’s right to reimbursement for its costs and expenses incurred in enforcing
this Agreement pursuant to Section 16.1 or Seller’s right to enforce any of Buyer’s
indemnity or other obligations that expressly survive the Closing or termination of this Agreement.

          16.2 Buyer’s Remedies Upon Seller’s Default. If Seller defaults under this Agreement
prior to the Close of Escrow, or any of Seller’s representations or warranties provided herein
shall prove to be false or materially untrue, the sole rights and remedies of Buyer under this
Agreement, if Buyer is not in material default and has performed all of its material obligations
hereunder which are then due, shall be as follows:

     (a) Buyer may terminate this Agreement and the Escrow by written notice to Seller and
Escrow Holder, whereupon the Deposit (and any other sums paid by Buyer on account of the
Purchase Price) shall be promptly refunded to Buyer by Seller or Escrow Holder, as
applicable; or

13

 

     (b) Sue for specific performance of Seller’s obligation to perform its obligations
under this Agreement; provided, however, if specific performance is not available as a
remedy for Buyer due to the intentional acts or omissions of Seller, the Deposit (and any
other sums paid by Buyer on account of the Purchase Price) shall be promptly refunded to
Buyer by Escrow Holder and Buyer shall be entitled to recover from Seller its actual
damages, (plus any reasonable attorneys’ fees and costs incurred by Buyer to collect such
damages), but shall not be entitled to recover special, exemplary, punitive or similar
damages.

     17. Right of Entry.

     a. Buyer and Buyer’s agents, representatives, consultants, contractors and
subcontractors (collectively, “Buyer’s Representatives”) shall have the right to enter upon
the Land at all reasonable times during the term of this Agreement, in order to conduct such
further investigations, tests and studies as Buyer shall reasonably deem necessary (the
“Investigations”), so long as such activities do not unreasonably damage the Land. Prior to
entry onto the Land, Buyer shall deliver to Seller a certificate or certificates evidencing
insurance coverage for the contemplated activities on the Property has been obtained and is
in effect. Buyer shall keep the Land free and clear of any mechanic’s liens or materialmen’s
liens arising out of any such activities (and at Buyer’s sole expense, Buyer shall
immediately discharge of record or bond around any such liens or encumbrances that are so
filed or recorded, including, without limitation, liens for services, labor or materials
furnished in connection with the activities of Buyer or Buyer’s Representatives on the
Property). Further, Buyer hereby indemnifies and holds Seller harmless from and against any
and all claims, demands, causes of action, losses, costs, liabilities and/or expenses
(including, without limitation, attorneys’ fees and disbursements) to the extent caused by
Buyer or Buyer’s Representatives in connection with any Investigations or other activities
of Buyer or Buyer’s Representatives taken with respect to the Land and/or any liens or
encumbrances filed or recorded against the Property as a result thereof; provided,
however, that notwithstanding the foregoing, in no event shall Buyer be responsible
for any environmental conditions existing on the Land and discovered by (but not caused or
exacerbated by an act or knowing omission of) Buyer during the course of Buyer’s
investigation of the Land, or any acts of Seller or Seller’s agents. The foregoing
obligation shall survive the Close of Escrow or termination of this Agreement.

     b. During the term of this Agreement, Buyer shall:

     i. conduct any further Investigations of the Property deemed desirable by Buyer
(but the subject transaction shall not be contingent upon the results of such
Investigations);

     ii. promptly repair any damage to the Land resulting from Buyer’s
Investigations and replace, refill and re-grade any holes made by Buyer in, or
Buyer’s excavations of, any portion of the Property used for such Investigations so
that the Land shall be in substantially the same condition that it existed in prior
to such Investigations;

     iii. fully comply with all laws applicable to the Investigations and all other
activities undertaken in connection therewith;

     iv. permit Seller to have a representative present during all Investigations
undertaken hereunder;

14

 

     v. take all actions and implement all protections reasonably necessary to
ensure that the Investigations and the equipment, materials, and substances
generated, used or brought onto the Land in connection with the Investigations pose
no threat to the safety or health of persons or the environment and cause no damage
to the Land or other property of Seller or other persons; and

     vi. furnish to Seller, at no cost or expense to Seller (but without warranty as
to accuracy, completeness or fitness for a particular purpose) and subject to any
disclaimers or limitations on reliance imposed by third party consultants, copies of
all surveys, soil test results, engineering, asbestos, environmental and other third
party studies and reports relating to the Investigations which Buyer shall obtain
with respect to the Land (Buyer shall be relieved of this obligation if this
Agreement terminates due to a breach by Seller of a material obligation under this
Agreement).

     The foregoing obligations shall survive the Close of Escrow or a termination of this
Agreement.

     c. Without limiting the foregoing, in no event shall Buyer, without the prior written
consent of Seller, which shall not be unreasonably withheld, conditioned or delayed, make
any intrusive physical testing (environmental, geo-technical or otherwise) on the Land.

     18. Brokers. Buyer and Seller each warrant and covenant to the other that other than
Dave Mullard of Nathan & Associates (“Broker”), whose commission shall be paid by Seller pursuant
to a separate agreement, no fees or commissions are due or owing to any finders or brokers as a
result of this transaction. Any commission payable by Seller to Broker shall be payable if and only
if the Escrow closes. In the event the Close of Escrow fails to occur for any reason, Seller shall
have no obligation to pay, and Broker shall have no right to receive, all or any portion of the
commission or any monies, including, but not limited to, deposits paid or forfeited by Buyer.
Joinder of Broker shall not be required for any amendment or termination of this Agreement. In the
event of any other claim for brokers’ for finders’ fees or commissions in connection with the
negotiations, execution or consummation of this Agreement or the purchase and sale of the Property,
then Buyer shall indemnify, save harmless and defend Seller from and against any such claim based
upon the alleged statement, representation or agreement by Buyer, and Seller shall indemnify, save
harmless and defend Buyer from and against any such claim based upon any alleged statement,
representation or agreement by Seller. The provisions of this Section shall survive the Close of
Escrow.

     19. Assignment. Buyer may not assign or transfer its rights or obligations under this
Agreement without the prior written consent of Seller, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, Buyer shall have the right to assign its
interest under this Agreement to any corporation, partnership or limited liability company over
which Buyer or its principals has or have managerial control and in which Buyer or its principals
has or have a material economic interest, provided that in either instance the assignee
unqualifiedly and fully assumes all the obligations of Buyer (including all post-closing
obligations of Buyer as set forth in this Agreement) pursuant to a fully executed assignment and
assumption agreement delivered to Seller not later than two (2) business days prior the Close of
Escrow. Upon such transfer Shopoff Advisors, L.P. shall be released of any further obligations
under this Agreement. Subject to the foregoing, this Agreement and the terms and provisions hereof
shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto.

     20. Notices. All notices or other communications required or permitted hereunder shall
be in writing, and shall be personally delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, telegraphed, delivered or sent by telecopy or reputable
overnight courier (such as

15

 

Federal Express) and shall be deemed received upon the earlier of (i) if personally delivered,
the date of delivery to the address of the person to receive such notice, (ii) if mailed, four (4)
business days after the date of posting by the United States post office, (iii) if sent by e-mail,
when sent (except emails delivered after 5:00 PM in the time zone of the recipient’s office address
shall be deemed delivered the next business day), (iv) if given by fax, when sent (except emails
delivered after 5:00 PM in the time zone of the recipient’s office address shall be deemed
delivered the next business day), or (v) if sent by reputable overnight courier (such as Federal
Express, DHL or Overnight Express), one (1) business day after deposit with the overnight delivery
service. Any notice, request, demand, direction or other communication sent by fax or e-mail must
be confirmed within forty-eight (48) hours by letter mailed or delivered in accordance with the
foregoing. The addresses of Buyer, Seller and Escrow Holder are as follows:

	 	 	 	 	 	 	 
	 	 	To Seller:	 	Azpro Developments, Inc.
	 	 	 	 	c/o The Johnson Group
	 	 	 	 	25455 0 32 Ave,
	 	 	 	 	Aldergrove, British Columbia, V4W 2A2
	 

	 	 	 	Canada	 	 
	 

	 	 	 	Attention:
	 	Terry Johnson
	 

	 	 	 	Telephone:
	 	(604)-309-3443
	 

	 	 	 	Facsimile:
	 	(604)-552-0109
	 

	 	 	 	Email:
	 	t.r.johnson@shaw.ca
	 
	 	 	 	 	 	 
	 	 	With a copy to:	 	James F. Byrne, Jr., Esq.
	 	 	 	 	Byrne & Shaw, PLLC
	 	 	 	 	21111 East Highland Avenue, Suite 215
	 	 	 	 	Phoenix, Arizona 85016
	 

	 	 	 	Telephone:
	 	(602) 522-8147
	 

	 	 	 	Facsimile:
	 	(602) 522-8145
	 

	 	 	 	Email:
	 	jfb@jbyrnelaw.com
	 
	 	 	 	 	 	 
	 	 	To Buyer:	 	c/o Shopoff Advisors, L.P.
	 	 	 	 	8951 Research Drive
	 	 	 	 	Irvine, California 92618
	 

	 	 	 	Attention:
	 	Mr. Tim McSunas
	 

	 	 	 	Telephone:
	 	(949) 417-9945
	 

	 	 	 	Facsimile:
	 	(949) 417-1399
	 	 	 	 	tmcsunas@shopoff.com
	 
	 	 	 	 	 	 
	 	 	With a copy to:	 	Gromet & Associates
	 	 	 	 	114 Pacifica, Suite 250
	 	 	 	 	Irvine, California 92618
	 

	 	 	 	Attention:
	 	Stevan J. Gromet, Esq.
	 

	 	 	 	Telephone:
	 	(949) 261-1110
	 

	 	 	 	Facsimile:
	 	(949) 261-1818
	 	 	 	 	sjgromet@grometlaw.com 
	 
	 	 	 	 	 	 
	 	 	To Escrow Holder:	 	to the address given at the top of page 1 hereof

     Notices given by counsel to a party in accordance with the above shall be deemed given by such
party.

16

 

     21. Required Actions of Buyer and Seller. Buyer and Seller shall execute all
instruments and documents and take all other actions that may be reasonably required in order to
consummate the purchase and sale herein contemplated, and shall use commercially reasonable efforts
to accomplish the Close of Escrow in accordance with the provisions hereof.

     22. Partial Invalidity. If any term or provision of this Agreement or the application
thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each such term and provision of this Agreement shall be valid and be enforced
to the fullest extent permitted by law.

     23. Waivers. No failure or delay of either party in the exercise of any right or
remedy given to such party hereunder or the waiver by any party of any condition hereunder for its
benefit (unless the time specified in this Agreement for exercise of such right or remedy has
expired) shall constitute a waiver of any other or further right or remedy nor shall any single or
partial exercise of any right or remedy preclude other or further exercise thereof or any other
right or remedy. No waiver by either party of any breach hereunder or failure or refusal by the
other party to comply with its obligations hereunder shall be deemed a waiver of any other or
subsequent breach, failure or refusal to so comply.

     24. Professional Fees. Subject to the provisions of Section 16 hereof, in the
event of the bringing of any action or suit by either party against the other by reason of any
breach of any of the covenants, representations or warranties of the other party under this
Agreement, the prevailing party shall be entitled to have and recover of and from the other party
all costs and expenses of the action or suit, including, without limitation, actual attorneys’
fees, accounting and engineering fees, and other professional fees resulting therefrom.

     25. Entire Agreement; Amendment. This Agreement (including all recitals, exhibits and
schedules attached hereto) is the final expression of, and contains the entire agreement between,
the parties with respect to the subject matter hereof and supersedes all prior understandings with
respect thereto. This Agreement may not be modified, changed, or supplemented, nor may any
obligation hereunder be waived, except by written instrument signed by the party to be charged or
by its agent duly authorized in writing or as otherwise expressly permitted herein. The parties do
not intend to confer any benefit hereunder on any person, firm or corporation other than the
parties hereto. Any standard form escrow instructions required by Escrow Holder shall be construed
as applying principally to Escrow Holder’s employment, and if there are conflicts between the terms
of this Agreement and the terms of such standard form escrow instructions, the terms of this
Agreement shall control.

     26. Time of the Essence. Time is of the essence with respect to each and every
provision of this Agreement. Whenever any action must be taken (including the giving of notice or
the delivery of documents) under this Agreement during a certain period of time (or by a particular
date) that ends (or occurs) on a non-business day, then such period (or date) shall be extended
until the next succeeding business day. As used herein, the term “business day” shall mean
any day, other than a Saturday or Sunday, that Escrow Holder is open for business.

     27. Construction of Agreement. Headings at the beginning of each section and
subsection of this Agreement are solely for the convenience of the parties and are not a part of
this Agreement. Whenever required by the context of this Agreement, the singular shall include the
plural and the masculine shall include the feminine and vice verse. This Agreement shall not be
construed as if it had been prepared by one of the parties, but rather as if both parties had
prepared the same. Unless otherwise indicated, all references to sections and subsections are to
sections and subsections in this Agreement. All recitals, exhibits and schedules referred to in
this Agreement are attached and incorporated by this reference.

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     28. Third Parties. Nothing in this Agreement, whether expressed or implied, is
intended to confer any rights or remedies under or by reason of this Agreement upon any other
person other than the parties hereto and their respective permitted successors and assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement, nor shall any provision give any third parties any
right of subrogation or action over or against any party to this Agreement. This Agreement is not
intended to and does not create any third party beneficiary rights whatsoever.

     29. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same document.

     30. Survival of Obligations. All of Buyer’s and Seller’s representations and
warranties in this Agreement shall survive the Close of Escrow for a period of one (1) year;
covenants of the parties expressly stated to survive the Close of Escrow shall survive until the
obligations in question are discharged. All other obligations of Seller or Buyer not expressly
stated to survive the Close of Escrow or not stated in the exhibit documents to be delivered upon
the Close of Escrow shall be deemed discharged upon the Close of Escrow and the recordation of the
Warranty Deed.

     31. Governing Law. The parties expressly agree that this Agreement shall be governed
by, interpreted under, and construed and enforced in accordance with the laws of the State of
Arizona, without resort to conflict of law principles.

     32. Venue. Buyer and Seller hereby agree that the proper venue for any legal
proceedings arising out of this Agreement shall be Maricopa County, Arizona.

     33. Satisfaction of Fees Due Core Group Engineering Consultants. The parties
acknowledge that Core Group Engineering Consultants (“Core”) performed engineering and related
consulting services to Seller in connection with the planned development of the Property and that
Core is owed $100,000 for such services (the “Core Receivable”). Seller shall cause Core
to submit into Escrow (and to concurrently provide a copy to Buyer), prior to the Close of Escrow,
a written demand (with a copy of the unpaid invoices attached) by which Core shall represent to
Buyer that the Core Receivable constitutes the entire amount owed by Seller to Core in connection
with services rendered by Core to Seller with respect to the Property. Seller hereby instructs
Escrow Holder to pay, out of Seller’s proceeds of sale, the amount of the Core Receivable to Core
It is agreed that Buyer shall have no obligation or responsibility for the payment of the Core
Receivable, and that Seller’s payment of the Core Receivable in full prior to or upon the Close of
Escrow is a material consideration to Buyer to purchase the Property.

     34. Valencia Water Company Offsite Extension Agreement — Reimbursement. As of the
Close of Escrow, Seller will have paid the Valencia Water Company the amount of Two Million Five
Hundred Eighty Six Thousand Five Hundred Dollars ($2,586,500.00) pursuant to the Valencia Offsite
Agreement and the Letter Agreement. To obtain water service to the Property the ultimate
developer(s) of the Property will be required to enter into a Water Facilities Onsite Extension
Agreement (the “Valencia Onsite Agreement”) with the Valencia Water Company, or its successors and
assigns.

          Pursuant to the Valencia Offsite Agreement and the Letter Agreement, the payments made by
Seller towards offsite facilities pursuant to the Valencia Offsite Agreement

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shall be subject to the same refunding terms described within the Valencia Onsite Agreement.
Essentially, once all such facilities are conveyed to the Valencia Water Company, refunds to
Participants, including Seller, under the Valencia Offsite Agreement and the Valencia Onsite
Agreement shall begin in Year 4 from the date of such conveyance and shall continue annually for 22
years. Seller discloses to Buyer that Seller is entitled to a refund from the Valencia Water
Company the entire amount of Two Million Five Hundred Eighty Six Thousand Five Hundred Dollars
($2,586,500.00) paid by Seller pursuant to the Valencia Offsite Agreement and the Letter Agreement
(the “Refund Amount”), in accordance with the refunding terms described in the Valencia Offsite
Agreement, the Letter Agreement and the Valencia Onsite Agreement, notwithstanding that Seller will
not be the ultimate developer of the Property. At the Closing Buyer and Seller shall execute a
letter to the Valencia Water Company, substantially in the form attached hereto as Exhibit
“E”, confirming Seller’s entitlement to the entire Refund Amount, which letter shall be
delivered to the Valencia Water Company by Escrow Holder immediately following the Close of Escrow.

          Buyer will give Seller (and cause its successor-in-interest to give Seller) written notice of
execution of the Valencia Onsite Agreement within ten (10) days of execution of such agreement by
Buyer (or its successor-in-interest).

          Buyer’s obligations under and the provisions of this Section 34 shall survive the
Closing.

     35. IRS Real Estate Sales Reporting. Buyer and Seller hereby appoint Escrow Agent as,
and Escrow Holder agrees to act as, “the person responsible for closing” the transaction which is
the subject of this Agreement pursuant to Internal Revenue Code Section 6045(e). Escrow Holder
shall prepare and file all informational returns, including without limitation, IRS Form 1099-S and
shall otherwise comply with the provisions of Internal Revenue Code Section 6045(e). Escrow Holder
agrees to comply with the provisions of Executive Order 13224 regarding the Specially Designated
Nationals Blocked Persons list. Escrow Holder shall indemnify, protect, hold harmless and defend
Seller, Buyer and their respective attorneys for, from and against any and all claims, actions,
costs, loss, liability or expense arising out of or in connection with the failure of Escrow Holder
to comply with the provisions of this Section 35.

     36. 1031 Exchange(s). Buyer agrees to cooperate with Seller if Seller elects to
consummate the transaction set forth in this Agreement as a “like-kind exchange” within the purview
and meaning of section 1031 of the Internal Revenue Code of 1986, as amended (a “1031 Exchange”),
including, without limitation, executing documents reasonably requested by such entity or entities
to effectuate such 1031 Exchange which are in form and content acceptable to Buyer; provided,
however, that:

     a. Buyer’s right to purchase the Property shall not be conditioned upon the
consummation of the 1031 Exchange;

     b. In no event shall Seller be relieved from liability under this Agreement or any
other escrow instructions, exhibits or documents to be executed in connection herewith;

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     c. The consummation of the 1031 Exchange shall be at no liability, risk or expense to
Buyer;

     d. The consummation of the 1031 Exchange shall not delay or extend the Close of Escrow;
and

     e. Buyer shall not be obligated to take title to any real or personal property other
than the Property.

     37. Interstate Land Sales Full Disclosure Act. To assure that Seller’s operations
qualify for exemption from the Interstate Land Sales Full Disclosure
Act (the “Land Sales
Act”), Buyer represents and warrants that (i) Buyer is a duly organized and validly existing
business entity; (ii) Buyer is purchasing the Land for its own use and development in the ordinary
course of its business; (iii) Buyer has been represented in the negotiations regarding the subject
purchase by a representative of its own choosing; (iv) Buyer does not intend for this transaction
to be subject to the Land Sales Act; and (v) Buyer has personally inspected the Land prior to the
execution of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Purchase and Sale Agreement and Joint Escrow
Instructions as of the date first above written.

	 	 	 	 	 
	SELLER:	 AZPRO DEVELOPMENTS, INC., an Arizona corporation

 	 
	 	By:  	/s/ Terry Johnson
 	 
	 	 	Name:  	Terry Johnson 	 
	 	 	Title:  	President 	 
	 
	BUYER:	SHOPOFF ADVISORS, L.P., a Delaware limited partnership	 
	 	 	 	 	 
	 	By:  	                                     The Shopoff Corporation, a Delaware corporation, its
 	 
	 	 	 General Partner 	 

	 	 	 	 	 
	 	By:  	                 /s/ William A. Shopoff
 	 
	 	 	Name:  	William A. Shopoff 	 
	 	 	Title:  	President and CEO 	 

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ESCROW HOLDER APPROVES THE ESCROW PROVISIONS AND SPECIFIC INSTRUCTIONS TO ESCROW HOLDER SET FORTH
IN THE FOREGOING AGREEMENT AND AGREES TO ACT IN ACCORDANCE THEREWITH. SPECIFICALLY, ESCROW HOLDER
UNDERSTANDS, ACKNOWLEDGES AND AGREES TO THE PROVISIONS OF SECTION 35 ABOVE.

	 	 	 	 	 	 	 
	FIRST AMERICAN TITLE INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Neil Moffett
	 	 	 	Date: June 29, 2009
	 

	 	 	 	 	 	 
	 

	 	Neil Moffett, Escrow Officer	 	 	 	 

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