Document:

Filed by Bowne Pure Compliance

Exhibit 10.3

April 14, 2008

Board of Directors

E Energy Adams, LLC

510 Main Street

Post Office Box 49

Adams, NE 68301

Gentlemen:

We are writing today to outline the business terms under which Headwaters BD, LLC (“Headwaters”)
will be engaged to act as financial advisor to E Energy Adams, LLC together with its affiliates and
subsidiaries (the “Company”) in connection with its consideration of a possible Transaction (as
defined in Attachment A). Please note that Headwaters BD, LLC is a wholly owned subsidiary of
Headwaters MB, LLC; references to “Headwaters” may refer to either entity.

Various legal conditions governing our relationship are set forth in Attachment B.

ADVISORY DUTIES

In the course of our engagement, Headwaters will perform such financial advisory and investment
banking services for the Company in connection with the proposed Transaction, defined in Attachment
A, as are customary and appropriate for advisory services of this type and as you may, from time to
time, reasonably request. Specific advisory services relating to the Transaction may include the
following:

Transaction

	 	1.	 	Prepare a Confidential Memorandum describing the Company, operations, management and
financial data, based upon information provided by the Company, to facilitate securing and
structuring the financing,

	 	2.	 	Identify and contact appropriate prospective capital providers and / or prospective
partners for the Transaction,

	 	3.	 	Assist and advise the Company in negotiating the terms and structure of a potential
Transaction,

	 	4.	 	Assist the Company and their legal counsel with document preparation in connection with
a Transaction,

	 	5.	 	Provide the Companies with periodic status reports (as requested) and be available to
the Companies at all reasonable times to discuss any matters relating to the Transaction,
and

	 	6.	 	Perform other financial advisory services relating to the foregoing as necessary and
agreed between the parties.

 

 

 

The Company agrees to use Headwaters as its exclusive financial advisor related to the Transaction
alternatives outlined herein. Such fees and services will be priced according to the schedule set
forth in Attachment A.

In order to coordinate the efforts to effect Transactions satisfactory to the Company, during the
period of our engagement hereunder, neither the Company nor anyone acting on its behalf shall
initiate any discussions regarding a Transaction with any person or entity, except through
Headwaters. In the event the Company or any of its officers or directors receives an inquiry
regarding a potential Transaction, they will promptly inform Headwaters of such inquiry in order
that Headwaters may assist the Company in any resulting negotiations and coordinate all activities
related to the Transaction.

We are pleased to accept this engagement and look forward to working with the Company. Please
confirm that the foregoing is in accordance with your understanding by signing and returning to us
the enclosed duplicate of this letter (including signed attachments), which shall thereupon
constitute a binding agreement.

	 	 	 	 	 
	Sincerely,	 	 
	 
	 	 	 	 
	Headwaters BD, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Philip W. Seefried Jr.	 	 
	 

	 	 	 	 
	 

	 	Philip W. Seefried Jr.	 	 
	 

	 	Co-Founder & CFO	 	 
	 
	 	 	 	 
	Accepted and agreed to by:	 	 
	 
	 	 	 	 
	By:

	 	/s/ Carl Sitzmann	 	 
	 

	 	 	 	 
	 

	 	Title: CEO	 	 
	 
	Date: April 14, 2008	 	 

 

 

 

ATTACHMENT A

PAGE 1

FEES FOR SERVICES REFERENCED IN E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th
APRIL 2008.

As used in this Attachment, “Transaction” means, whether effected in one transaction or a series of
transactions:

(a) any senior secured first lien debt financing commitment in the form of a revolver and / or
term debt (a “Senior Debt Financing” Transaction),

(b) any second lien debt, unsecured debt, subordinated debt, or mezzanine debt financing
commitment (a “Junior Debt Financing” Transaction),

(c) any equity financing commitment in the form of common stock, preferred stock, redeemable
stock, convertible stock, convertible debt, warrants, options, or any other form of equity
linked securities (an “Equity Financing” Transaction),

(d) any merger, consolidation, reorganization, or other business combination pursuant to which a
material portion of the Company’s business, is combined with that of a third party (a
“Merger”),

(e) the acquisition, directly or indirectly, by a third party by way of a tender or exchange
offer, negotiated purchase, or pursuant to a plan of reorganization or other means, of a
material portion of the then outstanding membership units of the Company (an “Acquisition”),

(f) the acquisition, directly or indirectly, by a third party of a material portion of the assets
of, or of any right to a material portion of all of the revenues or income of, the Company by
way of a negotiated purchase, lease, license, exchange, or joint venture, or pursuant to a
plan of reorganization or other means (an “Acquisition”).

Engagement Fee

Headwaters shall receive a non-refundable cash fee of $25,000 payable upon execution of this
agreement which shall be credited to the Success Fee, if such Success Fee is greater than $525,000,
upon a successful transaction.

Monthly Fee

Headwaters shall receive a non-refundable cash fee of $10,000 month, with the first month’s fee
payable on the 1st of each month thereafter,

 

 

 

ATTACHMENT A

PAGE 2

FEES FOR SERVICES REFERENCED IN E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th
APRIL 2008.

Success Fee

Concurrent with the closing of a Transaction, Headwaters shall receive Success Fee predicated on
the type of Transaction closed. The cash Success Fee for each transaction type is detailed below:

(a) Senior Debt Financing — 1.25% of the Transaction Amount associated with a Transaction described
in (a) above,

(b) Junior Debt Financing — 3.0% of the Transaction Amount associated with a Transaction described
in (b) above, and

(c) Equity Financing — 7.0% of the Transaction Amount associated with a Transaction described in
(c) above.

(d) Merger or Acquisition — 2.50% of the Transaction Amount associated with a Transaction described
in (d), (e), or (f) above.

Regardless of the Transaction Amount, the minimum cash Success Fee payable to Headwaters hereunder
upon closing of a Transaction shall be $500,000 (“Minimum Success Fee”).

Expense Reimbursement

In addition, the Company agrees to reimburse Headwaters, upon request made from time to time, for
its reasonable out-of-pocket expenses incurred in connection with any Headwaters’ activity under
this agreement. Such expense reimbursement amounts shall be considered separately from any fees
that may be owed by Company to Headwaters. No single expense shall exceed $10,000 without the prior
approval of the Company.

TRANSACTION AMOUNT

The Transaction Amount for purposes of calculating Headwaters’ fees for any Transaction
contemplated by (a), (b), or (c) above under the definition of the term Transaction in this
Attachment A (the “Capital Raise Transaction Amount”) shall be deemed to be the total amount of a
financing commitment or available, whether funded at closing or otherwise, provided to the Company
at closing.

 

 

 

ATTACHMENT A

PAGE 3

FEES FOR SERVICES REFERENCED IN E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th
APRIL 2008.

The Transaction Amount for purposes of calculating Headwaters’ fee for a sale of the Company as
described in (d), (e), or (f) above under the definition of the term Transaction in this Attachment
A (the “Sell Side Transaction Amount”)

shall be deemed to be the total amount of cash and the fair market value of other property received
or receivable (including amounts paid into escrow) by the Company or a third party, as applicable,
and by the officers and shareholders of the Company or a third party, as applicable, from any
source in connection with the Transaction. The Transaction Amount will also include the principal
amount of any indebtedness used as consideration for a Transaction, including any amounts of
Company or shareholder indebtedness assumed by the acquirer and any payments to officers or
shareholders of the Company or a third party in connection with the Transaction, including payments
under non-competition agreements. For Transactions described in (d), (e), or (f) above under the
definition of the term Transaction in this Attachment A that involve a transfer of more than 50% of
the capital stock, assets, revenues or income of the Company but less than all of the Company’s
business, capital stock, assets, revenues or income, then the Transaction Amount will be deemed to
be the valuation implied as if all of the Company’s capital stock, assets, revenues or income had
been transferred in the Transaction. If the Company owns real estate which, following the closing
of a Transaction, is the subject of a lease by the purchaser of the Company (or is the subject of a
lease by the Company if such real estate is spun out to the shareholders in connection with the
Transaction), then, in such event, the Transaction Amount shall include the then present fair
market value of such real estate, based primarily on market capitalization of such lease payments.
The Transaction Amount shall also include any assets (net of related liabilities) used in the
Company’s trade or business that are retained by or otherwise transferred to the Company’s owners
in a transaction outside the ordinary course of business during the term of Headwaters’ engagement,
if such Transaction Amount may be increased by payments related to future earnings, operations, or
otherwise; the portion of Headwaters’ fee relating thereto shall be calculated and paid on the date
of closing of the Transaction, as determined by the present value of the consideration based upon
projections developed in connection with the Transaction.

BANKRUPTCY TERMINATION FEE

In addition to any fees and expenses that may be due payable as provided for herein, upon a
Bankruptcy Event (as defined below), the Company shall immediately pay Headwaters a cash fee in the
amount of 50% of the Minimum Success Fee (the “Bankruptcy Termination Fee”), The Bankruptcy
Termination Fee shall be due in payable in immediately available fund or by wire transfer as
directed by Headwaters. As used herein, a “Bankruptcy Event” shall mean (a) the institution by the
Company of proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the filing by it of a petition or
answer or consent seeking reorganization or release under the federal Bankruptcy Act, or any other
applicable federal or state law or the consent by it to the filing of any such petition or the
appointment of a receiver, liquidator, assignee, trustee or other similar official of the Company,
or of any substantial part of its property, or the making by it of assignment for the benefit of
creditors; or (b) if, within sixty (60) days after the
commencement
of an action against the Company (and service of process in connection therewith on the Company)
seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar relief
under any present or future statute, law or regulation, such action shall not have been resolved in
favor of the Company or all orders or proceedings thereunder affecting the operations or the
business of the Company stayed, or if the stay of any such order or proceeding shall thereafter be
set aside, or if, within sixty (60) days after the appointment without the consent or acquiescence
of the Company of any trustee, receiver or liquidator of the Company or of all or any substantial
part of the properties of the Company, such appointment shall not have been vacated.

 

 

 

ATTACHMENT A

PAGE 4

FEES FOR SERVICES REFERENCED IN E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th
APRIL 2008.

TERMINATION OF ENGAGEMENT

Headwaters shall act as the Company’s exclusive financial advisor in connection with the proposed
Transaction, Any engagement for services contained in this Attachment may be terminated by either
the Company or Headwaters 30 days after receipt of written notice to that effect by the other party
and, with respect to Headwaters’ termination by the Company, payment in full to Headwaters of all
fees payable and reimbursement of all out-of-pocket expenses as described above. Additionally, the
termination of this agreement will not affect the matters set out in Attachment B, “Conditions.” In
the event that, at any time prior to 24 months following termination of this engagement by either
party, the Company enters into a Transaction (or executes a definitive agreement which results in a
Transaction), either (i) with any party with which Headwaters has sent offering materials and had
discussions on behalf of the Company, or (ii) any party which comes to the attention of the Company
as a potential party to a Transaction during the term of this engagement as a result of Headwaters’
activities, or (iii) any party that contacts the Company after termination of this engagement as a
result of Headwaters’ efforts on the Company’s behalf then, in any such event, the Company will
elect to either (a) engage Headwaters on terms equal to those herein to assist in closing such
transaction, or (b) pay Headwaters full compensation with respect to such transaction as if this
engagement had not been terminated.

Accepted and agreed to by:

E Adams Energy, LLC

	 	 	 	 	 
	By:

	 	/s/ Carl Sitzmann
	 	 
	 

	 	 	 	 
	 

	 	Title: CEO	 	 
	 
	Date:

	 	April 14, 2008	 	 
	 
	Headwaters BD, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Philip W. Seefried Jr.	 	 
	 

	 	 	 	 
	 

	 	Philip W. Seefried Jr.	 	 
	 

	 	Co-Founder & CEO	 	 

 

 

 

ATTACHMENT B

PAGE 1

CONDITIONS
TO E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th DAY OF
APRIL 2008

This attachment contains the detailed conditions of the above referenced engagement letter between
E Energy Adams, LLC and Headwaters BD LLC.

USE OF INFORMATION

The Company agrees to furnish or cause to be furnished to Headwaters all information and data
necessary for Headwaters to perform its duties under this engagement (the “Information”) and will
give Headwaters access to the Company’s relevant shareholders and employees, as well as access to
the Company’s independent accountants and legal counsel when the situation so requires. The
Company hereby represents that the Information so furnished to Headwaters will be correct and
complete in all material respects and not misleading. The Company recognizes and confirms that
Headwaters will be entitled to use the information and other publicly available information and
information in reports and other materials provided by others, and that Headwaters does not assume
responsibility for and may rely, without independent verification, on the accuracy, completeness,
reasonableness and fairness of any such information.

It is understood that any information or advice rendered by Headwaters or any of its
representatives in connection with this engagement is for the confidential use of the Company and
its Shareholders and will not be reproduced, disseminated, summarized, described, quoted or
referred to or given to any other person at any time, in any manner or for any purpose without
Headwaters’ prior written consent.

INDEMNITY AND CONTRIBUTION

The Company agrees to indemnify and hold harmless Headwaters and its affiliates and their
respective members, partners, directors, officers, employees, agents, and controlling persons
(Headwaters and each such person being an “Indemnified Party”) from and against any and all
losses, claims, damages, judgments, assessments, costs and other liabilities, joint or several, to
which such Indemnified Party may become subject under any applicable federal or state law, or
otherwise, and related to or arising out of any transaction contemplated by this letter or the
engagement of Headwaters pursuant to this letter.

The Company also will reimburse any Indemnified Party for all reasonable fees and expenses
(including reasonable counsel fees and expenses) as they are incurred in connection with the
investigation of, preparation for, or defense of any pending or threatened claim or any action or
proceeding arising there from, whether or not such
Indemnified Party is a party and whether or not such claim, action, or proceeding is initiated or
brought by or on behalf of the Company.

 

 

 

ATTACHMENT B

PAGE 2

CONDITIONS
TO E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th DAY OF
APRIL 2008

The Company will not be liable under the foregoing indemnification and reimbursement provisions to
the extent that any loss, claim, damage, judgment, assessment, cost or any other liability, or
related expense, is found in a final judgment by a court of competent jurisdiction to have resulted
primarily from an Indemnified Person’s bad faith or gross negligence. The Company also agrees that
no Indemnified Party will have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company or its security holders or creditors related to or arising out of the
engagement of Headwaters pursuant to this letter except to the extent that any loss, claim, damage,
judgment, assessment, cost or any other liability, or related expenses, is found in a final
judgment by a court of competent jurisdiction to have resulted primarily from an Indemnified
Person’s bad faith or gross negligence.

The Company and Headwaters agree that if any indemnification or reimbursement sought pursuant to
the preceding paragraph is for any reason unavailable or insufficient to hold it harmless (other
than primarily because of an Indemnified Person’s bad faith or gross negligence) then, the Company
and Headwaters shall contribute to the losses, claims, damages, judgments, assessments, costs and
other liabilities and related expenses for which such indemnification is held unenforceable as is
appropriate to reflect (i) the relative benefits to the Company on the one hand and Headwaters on
the other hand, in connection with the transaction to which such indemnification or reimbursement
relates, (ii) the relative fault of the parties, and (iii) other equitable considerations;
provided, however, that in no event shall the amount to be contributed by Headwaters exceed the
fees actually received by Headwaters under this engagement. The Company agrees that for the
purposes of this paragraph the relative benefits to the Company and any Indemnified Party shall be
deemed to be in same proportion that the aggregate cash consideration and value of securities or
any other property payable, exchangeable or transferable in such transaction bears to the fees paid
or payable to Headwaters under this engagement letter.

CERTAIN ACKNOWLEDGMENTS

The Company acknowledges and agrees that Headwaters has been retained to act solely as financial
advisor to the Company and its Shareholders in connection with the

Analysis. In such capacity, Headwaters shall act as an independent contractor, and any duties of
Headwaters arising out of its engagement pursuant to this letter shall be owed solely to the
Company and its Shareholders. Headwaters may after
completion of the services described herein and at its own expense, place announcements or
advertisements in financial newspapers and journals describing its services hereunder.

 

 

 

ATTACHMENT
B

PAGE 3

CONDITIONS
TO E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th DAY OF
APRIL 2008

MISCELLANEOUS

This letter shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed in that state, and will be

binding upon and inure to the benefit of the successors and assigns of the Company and Headwaters:
The Company and Headwaters agree to waive trial by jury in any action, proceeding or counterclaim
brought by or on behalf of either party with respect to any matter whatsoever relating to or
arising out of any actual or proposed transaction or the engagement of or performance by Headwaters
hereunder. This agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the same document.

This agreement may not be waived, amended, modified or assigned, in any way, in whole or in part,
including by operation of law, without the prior written consent of both parties hereto. The
provisions hereof shall inure to the benefit of and be binding upon the successors, assigns and
personal representatives of the Company and Headwaters.

The Company also hereby submits to the jurisdiction of the courts of the State of Colorado in any
proceeding arising out of or relating to this agreement, including federal district courts located
in such state, agrees not to commence any suit, action or proceeding relating thereto except in
such courts, and waives, to the fullest extent permitted by law, the right to move to dismiss or
transfer any action, brought in such court on the basis of any objection to personal jurisdiction,
venue or inconvenient forum,

The Company hereby agrees to use its commercially reasonable efforts to place a. reference to
Headwaters as the Company’s Financial Advisor in any public announcement of a Transaction which the
Company publishes or in which consent of the Company is required for a third party to publish.

 

 

 

ATTACHMENT
B

PAGE 4

CONDITIONS
TO E ENERGY ADAMS, LLC/HEADWATERS BD LLC ENGAGEMENT LETTER DATED 14th DAY OF
APRIL 2008

BUSINESS CONTINUITY PLANNING

Per FINRA regulations, Headwaters has developed a Business Continuity Plan (the “Plan”) on how we
will respond to events that significantly disrupt our business. Please refer to our website at
www.headwatersmb.com for a description of our Plan.

Accepted and agreed to by:

E Energy Adams, LLC

	 	 	 	 	 
	By:

	 	/s / Carl Sitzmann
	 	 
	 

	 	 	 	 
	 

	 	Title: CEO	 	 
	 
	Date:

	 	April 14, 2008	 	 
	 
	 	 	 	 
	Headwaters BD, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Philip W. Seefried Jr.	 	 
	 

	 	 	 	 
	 

	 	Philip W. Seefried Jr.	 	 
	 

	 	Co-Founder & CEOexh10_1.htm

    EXECUTIVE
EMPLOYMENT AGREEMENT

     

    This
Executive Employment Agreement (“Agreement”) is made effective as of May 23,
2008 (“Effective Date”), by and among Meruelo Maddux Properties, Inc., a
Delaware corporation (“Company”), Meruelo Maddux Properties, L.P. (
“Partnership”) and Andrew Grant Murray (“Executive”) to affirm the terms and
conditions of employment.

     

    The
parties agree as follows:

     

    1. Employment.  Employer
(as defined below) hereby employs Executive, and Executive hereby accepts such
employment, upon the terms and conditions set forth herein.

     

    2. Duties.

     

    2.1 Position.  Executive
is employed on a full-time basis as Chief Financial Officer, shall report
directly to the President of the Company (the “President”), and shall have the
duties and responsibilities commensurate with such position as shall be
reasonably and in good faith determined from time to time by the President,
including such duties and responsibilities with respect to the Company, the
Partnership and/or a subsidiary of either (collectively, “Employer”), including,
if and to the extent requested by the Employer, management of the Employer’s (i)
accounting and financial functions, (ii) capital markets activities, (iii)
investor relations and (iv) sourcing of its borrowings and maintenance of its
borrowing relationships.

     

    2.2 Duties.  Executive
shall: (i) abide by all applicable federal, state and local laws, regulations
and ordinances, and (ii) except for vacation and illness periods, devote
substantially all of his business time, energy, skill and efforts to the
performance of his duties hereunder in a manner that will faithfully and
diligently further the business interests of the Employer; provided, that,
notwithstanding the foregoing, Executive may (x) make and manage personal
business investments of his choice, (y) serve as a director or in any other
capacity of any business enterprise, including an enterprise whose activities
may involve or relate to the business of the Employer, provided that such
service is expressly approved by the Board of Directors of the Company (“Board
of Directors”), and (z) serve in any capacity with any civic, educational,
religious or charitable organization, or any governmental entity or trade
association.

     

    3. Term of
Employment.  The term of Executive’s employment with Employer
under this Agreement shall commence on the Effective Date and shall continue
until and including the three-year anniversary of the Effective Date, unless
earlier terminated as herein provided (the “Initial Term”).  The
Initial Term shall be automatically renewed for successive one-year periods
(each an “Extended Term”) unless either party gives notice of non-renewal at
least sixty (60) days prior to the end of the Initial Term or any Extended
Term.  As used herein, “Term of Employment” shall include the Initial
Term and any Extended Term, but the Term of Employment shall end upon any
termination of Executive’s employment with Employer as herein
provided.

     

    4. Compensation.

     

    4.1 Base
Salary.  As compensation for Executive’s performance of
Executive’s duties as set forth herein and as assigned by the President from
time to time, Employer shall pay to Executive a base salary of $275,000 per year
(“Base Salary”), payable in accordance with the normal payroll practices of
Employer, less all legally required or authorized payroll deductions and tax
withholdings.  Base Salary shall be reviewed annually, and may be
increased (but not decreased unless agreed to by Executive), at the sole
discretion of the compensation committee of the Board of Directors, in light of
the Executive’s performance and the Employer’s financial performance and other
economic conditions and relevant factors.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.2 LTIP Units and Other Equity
Awards.  

     

    (a) In
consideration of services to be performed by Executive for the Partnership in
his capacity as a partner thereof, the Employer shall cause to be granted to
Executive up to an aggregate of 200,000 long-term incentive plan units (“LTIP
Units”) divided into up to five separate tranches, as follows (such LTIP Units
shall be evidenced by, and subject to, the LTIP Unit award agreement attached to
this Agreement as Exhibit A and the
Company’s 2007 Equity Incentive Plan (a copy of which has been delivered to
Executive)):

     

    (i) A first
tranche of 40,000 LTIP Units if and when at all times during any period of 20
consecutive trading days the Company’s common stock (x) is listed on The Nasdaq
Global Market or the New York Stock Exchange or a national securities exchange
that is a successor or affiliate to either of the foregoing and (y) trades at
$10 (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or similar events) or greater, as reported by the applicable
exchange.

     

    (ii) A second
tranche of 40,000 LTIP Units if and when at all times during any period of 20
consecutive trading days the Company’s common stock (x) is listed on The Nasdaq
Global Market or the New York Stock Exchange or a national securities exchange
that is a successor or affiliate to either of the foregoing and (y) trades at
$11 (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or similar events) or greater, as reported by the applicable
exchange.

     

    (iii) A third
tranche of 40,000 LTIP Units if and when at all times during any period of 20
consecutive trading days the Company’s common stock (x) is listed on The Nasdaq
Global Market or the New York Stock Exchange or a national securities exchange
that is a successor or affiliate to either of the foregoing and (y) trades at
$12 (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or similar events) or greater, as reported by the applicable
exchange.

     

    (iv) A fourth
tranche of 40,000 LTIP Units if and when at all times during any period of 20
consecutive trading days the Company’s common stock (x) is listed on The Nasdaq
Global Market or the New York Stock Exchange or a national securities exchange
that is a successor or affiliate to either of the foregoing and (y) trades at
$13 (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or similar events) or greater, as reported by the applicable
exchange.

     

    (v) A fifth
tranche of 40,000 LTIP Units if and when at all times during any period of 20
consecutive trading days the Company’s common stock (x) is listed on The Nasdaq
Global Market or the New York Stock Exchange or a national securities exchange
that is a successor or affiliate to either of the foregoing and (y) trades at
$14 (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or similar events) or greater, as reported by the applicable
exchange.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Each
tranche of LTIP Units will be fully vested when such LTIP Units are granted
pursuant to the achievement of the specified common stock trading hurdles as
described above (subject to achieving parity with common units of limited
partnership in the Partnership and the two-year prohibition against transfer,
each as provided in the form of LTIP Unit award agreement attached as Exhibit A). The
parties acknowledge and agree that Employer shall have no obligation to make any
award pursuant to this Section 4.2(a) upon or after the end of the Term of
Employment.  The parties further acknowledge and agree that none of
such potential awards shall be deemed outstanding for purposes of this Agreement
unless and until actually awarded (or required to be awarded), including for
purposes of Sections 7.1, 7.2 or 7.6; provided that for purposes of Section 7.6
in the event of a Change in Control (as defined in Section 7.10), the foregoing
awards shall be deemed to be outstanding to the extent that the actual or
implied per-share common stock price realized by the holders of the Company’s
common stock upon the Change in Control equals or exceeds the applicable common
stock trading hurdles described above.

     

    (b)   In
addition, Employer agrees on each of December 31, 2008, December 31, 2009,
December 31, 2010, December 31, 2011, December 31, 2012, and May 31, 2013, but
only if such date occurs during the Term of Employment, to cause to be issued to
Executive 35,000 LTIP Units, 60,000 LTIP Units, 60,000 LTIP Units, 60,000 LTIP
Units, 60,000 LTIP Units and 25,000 LTIP Units, respectively (for a potential
aggregate of 300,000 Units), subject to the terms and conditions of the LTIP
Unit award agreement attached to this Agreement as Exhibit A and the
Company’s 2007 Equity Incentive Plan.  Each award of LTIP Units will
be fully vested when such LTIP Units are granted (subject to achieving parity
with common units of limited partnership in the Partnership and the two-year
prohibition against transfer, each as provided in the form of LTIP Unit award
agreement attached as Exhibit
A).  The parties acknowledge and agree that Employer shall have
no obligation to make any award pursuant to this Section 4.2(b) upon or after
the end of the Term of Employment.  The parties further acknowledge
and agree that none of such potential awards shall be deemed outstanding for
purposes of this Agreement, including for purposes of Sections 7.1, 7.2 or 7.6;
provided that for purposes of Section 7.6 in the event of a Triggering Change in
Control (as defined in Section 7.10), all LTIP Units that remain to be awarded
(if any) pursuant to this Section 4.2(b) shall be deemed to be
outstanding.

     

    (c) The award
agreements for the LTIP Units awarded or that may be awarded pursuant to this
Section 4.2 shall reference that the LTIP Units are “Safe Harbor Interests”
under Internal Revenue Service Notice 2005-43, as provided in the agreement of
limited partnership of Meruelo Maddux Properties, L.P. and for which LTIP Units
a Section 83(b) election shall be made timely by Executive showing a zero
liquidation value.

     

    (d) In
addition, as part of the consideration for employment, Executive shall be
eligible to receive additional awards of LTIP Units and other equity awards,
subject to the terms and conditions of the Company’s 2007 Equity Incentive Plan
(or plan for a subsequent year) and the applicable award agreement.

     

    (e) Any LTIP
Units granted to the Executive during the term of this Agreement shall be deemed
to have been granted to the Executive in consideration of services rendered or
to be rendered in Executive’s capacity as a partner of the
Partnership.

     

    (f) The
Company and the Partnership shall (and shall cause each subsidiary that is a
component Employer to) allocate the services provided by Executive to each
component Employer and compensate Executive from the respective component
Employer on a basis proportionate to the services provided by Executive to each
component Employer.  The provision of services to one component
Employer shall satisfy any time commitment of the Executive to Employer for
purposes of determining whether Executive has discharged his obligations to
Employer under this or any other employment agreement with
Employer.  The parties confirm that Employer shall (and intends to)
require that a sufficient amount of services be provided hereunder to the
Partnership by Executive in his capacity as a partner of the Partnership to
constitute full and adequate consideration for the issuance of LTIP Units to
Executive as provided in the limited partnership agreement governing the
Partnership, as may be amended from time to time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.3 Bonus.

     

    (a) Within
two weeks after the Effective Date, Employer shall pay Executive a one-time cash
signing bonus in the amount of $200,000 (the “Signing Bonus”).

     

    (b) In
addition, Executive shall be paid by Company on or before December 31st of
each year during the Term of Employment a minimum cash bonus equal to
twenty-five percent (25%) of Executive’s Base Salary.  In addition, at
the sole discretion of the Board’s compensation committee, Executive may be paid
an additional bonus relating to each calendar year during the Term of
Employment, and such additional bonus, if any, shall be paid on or before March
1st of the following year.

     

    5. Customary Fringe
Benefits.  Executive shall be eligible for all customary and
usual fringe benefits generally available to full-time employees of Employer,
subject to the terms and conditions of Employer’s policies and benefit plan
documents.  Employer reserves the right to change or eliminate the
fringe benefits on a prospective basis, at any time, effective upon notice to
Executive.  Notwithstanding the standard vacation policy provisions on
vacation accrual rates, Executive shall be entitled to earn vacation at the rate
of three weeks per year.

     

    6. Business
Expenses.  Executive shall be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of Executive’s
duties on behalf of Employer.  To obtain reimbursement, expenses must
be submitted promptly with appropriate supporting documentation in accordance
with Employer’s policies.  All such expenses shall be reimbursed
within thirty (30) days after such submission.

     

    7. Termination of
Employment.  Subject to the terms and conditions of this
Section 7, either Employer or Executive may terminate Executive’s
employment with Employer at any time, with or without Cause (as defined in
Section 7.10), during the Term of Employment.  Any termination of
Executive’s employment during the Term of Employment shall be communicated by
written notice of termination from the terminating party to the other party
(“Notice of Termination”).  The Notice of Termination shall indicate
the specific provision(s) of this Agreement relied upon in effecting the
termination and a written statement of the reason(s) for the
termination.  In the case of a Notice of Termination provided by
Executive to Employer, such Notice of Termination shall not be effective for a
period of sixty (60) days after receipt of such Notice of Termination by
Employer.  In the case of a Notice of Termination provided by Employer
to Executive, such Notice of Termination shall be effective on the date
designated by Employer in the Notice of Termination.  In the event
Executive’s employment is terminated by either party, for any reason, during the
Term of Employment, Employer shall pay the prorated Base Salary earned as of the
date of Executive’s termination of employment and the accrued but unused
vacation as of the date of Executive’s termination of employment to Executive
upon Executive’s termination of employment.  Except as otherwise
provided in this Section 7, Employer shall have no further obligation to
make or provide to Executive, and Executive shall have no further right to
receive or obtain from Employer, any payments or benefits in respect of the
termination of Executive’s employment with Employer during the Term of
Employment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.1 Severance Upon Involuntary
Termination without Cause.  In the event that Employer causes
to occur an involuntary termination without Cause (as defined in
Section 7.10) of Executive’s employment with Employer during the Term of
Employment and such involuntary termination qualifies as a “Separation from
Service” under Section 409A (as hereinafter defined), Executive shall be
entitled to a “Severance Package” that consists of the following :(a) a
single cash lump-sum “Severance Payment” equal to two times the sum of
(x) Executive's annual rate of Base Salary in effect immediately prior to
Executive’s termination of employment, and (y) the greater of (i) the bonus
actually paid to Executive for the most recently completed fiscal year
(excluding the Signing Bonus), and (ii) the minimum bonus that would have
been paid to Executive for the entire fiscal year in which the termination
occurs (excluding the Signing Bonus); (b) Employer’s direct-to-insurer
payment of any group health premiums that Executive would otherwise have been
required to pay for a period of one (1) year (subject to Executive’s eligibility
for, and proper and timely election of continued group health benefits under the
Consolidated Omnibus Budget and Reconciliation Act (“COBRA”)); and
(c) immediate vesting of all outstanding and unvested (if applicable) LTIP
Units (which shall, in accordance with the applicable award agreement, remain
subject to achieving parity with common units of limited partnership interest in
the Partnership and shall remain subject to the two-year prohibition against
transfer provided in any such applicable award grant), stock options, restricted
stock, and other equity awards granted to Executive under any of Employer’s
equity incentive plans;  provided,
however, that all of the following conditions are first satisfied:
(a) Executive reaffirms Executive’s commitment to comply with all surviving
provisions of this Agreement, including Section 9 and Section 10
hereof; and (b) Executive executes a Separation Agreement that includes a
general release in favor of Employer and its parent, and all subsidiary and
related entities, and their officers, directors, shareholders, employees and
agents to the fullest extent permitted by law, drafted by and in a form
reasonably satisfactory to Employer, and does not revoke the general release
within any legally required revocation period, if applicable.  All
legally required and authorized deductions and tax withholdings shall be made
from the Severance Payment, including for wage garnishments, if applicable, to
the extent required or permitted by law.  Effective immediately upon
termination of employment, Executive shall no longer be eligible to contribute
to or to be an active participant in any retirement or benefit plan covering
employees of Employer.  All other Employer obligations to Executive
shall be automatically terminated and completely extinguished.

     

    7.2 Severance Upon Resignation
for Good Reason.  In the event that Executive resigns from
employment with Employer for Good Reason (as defined in Section 7.10)
during the Term of Employment and such resignation qualifies as a “Separation
from Service” under Section 409A, Executive shall be entitled to a “Severance
Package” that consists of the following : (a) a single cash lump-sum
“Severance Payment” equal to two times the sum of (x) Executive's annual
rate of Base Salary in effect immediately prior to Executive’s termination of
employment, and (y) an amount equal to the bonus actually paid to Executive for
the most recently completed fiscal year (excluding the Signing Bonus);
(b) Employer’s direct-to-insurer payment of any group health premiums that
Executive would otherwise have been required to pay for a period of one (1) year
(subject to Executive’s eligibility for, and proper and timely election of
continued group health benefits under COBRA); and (c) immediate vesting of
all outstanding and unvested (if applicable) LTIP Units (which shall, in
accordance with the applicable award agreement, remain subject to achieving
parity with common units of limited partnership interest in the Partnership and
shall remain subject to the two-year prohibition against transfer provided in
any such applicable award grant), stock options, restricted stock, and other
equity awards granted to Executive under any of Employer’s equity incentive
plans;  provided,
however, that all of the following conditions are first satisfied:
(a) Executive reaffirms Executive’s commitment to comply with all surviving
provisions of this Agreement, including Section 9 and Section 10
hereof; and (b) Executive executes a Separation Agreement that includes a
general release in favor of Employer and its parent, and all subsidiary and
related entities, and their officers, directors, shareholders, employees and
agents to the fullest extent permitted by law, drafted by and in a form
reasonably satisfactory to Employer, and does not revoke the general release
within any legally required revocation period, if applicable.  All
legally required and authorized deductions and tax withholdings shall be made
from the Severance Payment, including for wage garnishments, if applicable, to
the extent required or permitted by law.  Effective immediately upon
termination of employment, Executive shall no longer be eligible to contribute
to or to be an active participant in any retirement or benefit plan covering
employees of Employer.  All other Employer obligations to Executive
shall be automatically terminated and completely extinguished.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.3 Beneficial Excise Tax
Treatment.  In the event that any payment or benefit received
or to be received by Executive pursuant to this Agreement or otherwise would
subject Executive to any excise tax pursuant to Section 4999 of the Code due to
the characterization of such payment or benefit as an excess parachute payment
under Section 280G of the Code, Executive may elect, in his sole discretion, to
reduce the amounts of any payments or benefits called for under this Agreement
in order to avoid such characterization.  To aid Executive in making
any election called for under this Section 7.3, upon the occurrence of any
event that might reasonably be anticipated to give rise to the application of
this Section 7.3 (an “Event”), Employer shall promptly
request a determination in writing by independent public accountants selected by
Employer (the “Accountants”).  Unless
Employer and Executive otherwise agree in writing, the Accountants, within
thirty (30) days after the date of the Event, shall determine and report to
Employer and Executive whether any reduction in payments or benefits at the
election of Executive would produce a greater after-tax benefit to Executive and
shall provide to Employer and Executive a written report containing a
sufficiently detailed quantitative substantiation of their analysis and
presented in a manner that Executive can readily understand.  For the
purposes of such determination, the Accountants may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code.  Employer and Executive shall furnish to the Accountants
such information and documents as the Accountants may reasonably request in
order to make their required determination.  The Employer shall bear
all fees and expenses the Accountants may reasonably charge in connection with
their services contemplated by this Section 7.3.  Under no
circumstances shall Executive be entitled to any tax reimbursement or tax
gross-up payment by virtue of the occurrence of an Event or any additional
payment or benefit under this Section 7.3.

     

    7.4 Section 409A
Compliance.  The parties intend for this Agreement either to
satisfy the requirements of Section 409A or to be exempt from the application of
Section 409A, and this Agreement shall be construed and interpreted
accordingly.  If this Agreement either fails to satisfy the
requirements of Section 409A or is not exempt from the application of Section
409A, then the parties hereby agree to amend or to clarify this Agreement in a
timely manner so that this Agreement either satisfies the requirements of
Section 409A or is exempt from the application of Section 409A.

     

    (a) Notwithstanding
any provision in this Agreement to the contrary, in the event that Executive is
a “specified employee” (as defined in Section 409A), any Severance Payment,
severance benefits or other amounts payable under this Agreement that would be
subject to the special rule regarding payments to “specified employees” under
Section 409A(a)(2)(B) of the Code (together, “Specified Employee Payments”)
shall not be paid before the expiration of a period of six months following the
date of Executive’s termination of employment (or before the date of Executive’s
death, if earlier).  The Specified Employee Payments to which
Executive would otherwise have been entitled during the six-month period
following the date of Executive’s termination of employment shall be accumulated
and paid as soon as administratively practicable following the first date of the
seventh month following the date of Executive’s termination of
employment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) To ensure
satisfaction of the requirements of Section 409A(b)(3) of the Code, assets shall
not be set aside, reserved in a trust or other arrangement, or otherwise
restricted for purposes of the payment of amounts payable under this
Agreement.

     

    (c) Employer
hereby informs Executive that the federal, state, local, and/or foreign tax
consequences (including without limitation those tax consequences implicated by
Section 409A) of this Agreement are complex and subject to
change.  Executive acknowledges and understands that Executive should
consult with his or her own personal tax or financial advisor in connection with
this Agreement and its tax consequences.  Executive understands and
agrees that Employer has no obligation and no responsibility to provide
Executive with any tax or other legal advice in connection with this Agreement
and its tax consequences.  Executive agrees that Executive shall bear
sole and exclusive responsibility for any and all adverse federal, state, local,
and/or foreign tax consequences (including without limitation any and all tax
liability under Section 409A) of this Agreement, and fully indemnifies and
holds Employer harmless therefor.

     

    7.5 Effect of Death or
Disability.  In the event that Executive dies or experiences a
Disability (as defined in Section 7.10) during the Term of Employment, Executive
shall be entitled to payment of his unpaid prorated Base Salary earned as of the
date of Executive’s death or Disability (the “Measurement Date”) and a single
cash lump-sum payment equal to the minimum bonus specified in this Agreement
that otherwise would have been payable to Executive for Employer’s fiscal year
in which the Measurement Date occurs multiplied by a fraction, the numerator of
which is the number of days that have elapsed between the beginning of the
fiscal year in which the Measurement Date occurs and the Measurement Date and
the denominator of which is the number of days in the fiscal year in which the
Measurement Date occurs.  All legally required and authorized
deductions and tax withholdings shall be made from the payments described in the
previous sentence, including for wage garnishments, if applicable, to the extent
required or permitted by law.  Payment under this Section 7.5
shall be made not more than once, if at all.

     

    7.6 Effect of a Change in
Control.  In the event of, and subject to the consummation of,
a Change in Control, Employer shall cause to occur the immediate vesting of all
outstanding and unvested (if applicable) LTIP Units (which shall, in accordance
with the applicable award agreement, remain subject to achieving parity with
common units of limited partnership interest in the Partnership and shall remain
subject to the two-year prohibition against transfer provided in any such
applicable award grant), stock options, restricted stock, and other equity
awards granted to Executive under any of Employer’s equity incentive
plans.

     

    7.7 Employment
Reference.  In the event Executive’s employment is terminated
without Cause, or Executive resigns for Good Reason, Executive and Employer will
negotiate in good faith to reach an agreement on a statement reflecting a benign
reason for termination or resignation.  This statement will include,
at minimum, positions held, date of hire, employment period and confirmation of
salary history (if requested by Executive).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.8 Ineligibility For
Severance.  Executive shall not be entitled to any Severance
Package under this Agreement, and Section 7.3 shall not apply to Executive,
if at any time during the Term of Employment, either (a) Executive
voluntarily resigns or otherwise terminates employment with Employer other than
for Good Reason, or (b) Employer involuntarily terminates Executive’s
employment for any reason other than without Cause.  Effective
immediately upon termination of employment, Executive shall no longer be
eligible to contribute to or to be an active participant in any retirement or
benefit plan covering employees of Employer.  All other Employer
obligations to Executive shall be automatically terminated and completely
extinguished.

     

    7.9 Taxes and
Withholdings.  The Employer may withhold from any amounts
payable under this Agreement, including any benefits or Severance Payment, such
federal, state or local taxes as may be required to be withheld pursuant to
applicable law or regulations, which amounts shall be deemed to have been paid
to Executive.

     

    7.10 Definitions.

     

    (a) “Cause”
shall mean the occurrence during the Term of Employment of any of the following:
(i) indictment for, formal admission to (including a plea of guilty or
nolo contendere to), or
conviction of a felony, a crime of moral turpitude, dishonesty, breach of trust
or unethical business conduct, or any crime involving Employer, (ii) gross
negligence or willful misconduct by Executive in the performance of Executive’s
duties which is likely to materially damage Employer’s financial position or
reputation; (iii) willful or knowing unauthorized dissemination by
Executive of Confidential Employer Information; (iv) repeated failure by
Executive to perform Executive’s duties which are reasonably and in good faith
requested in writing by the President of the Company, the Chief Executive
Officer of the Company, or the Board of Directors (each, a “Delegator”), and
which are not substantially cured by Executive within ten (10) days following
receipt by Executive of such written request; (v) failure of Executive to
perform any lawful directive of a Delegator communicated to Executive in the
form of a written request from such Delegator and which failure Executive does
not begin to cure within ten (10) days following receipt by Executive of such
written request or Executive has not substantially cured within thirty (30) days
following receipt by Executive of such written request, or (vi) material
breach of this Agreement by Executive which breach has been communicated to
Executive in the form of a written notice from a Delegator, which material
breach Executive does not begin to cure within ten (10) days following receipt
by Executive of such written notice or Executive has not substantially cured
within thirty (30) days following receipt by Executive of such written
notice.

     

    (b) “Change
in Control” shall have the meaning ascribed to such term in the Company’s 2007
Equity Incentive Plan, as in effect on the Effective Date.

     

    (c) “Disability”
shall mean a medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months and which either (i) renders Executive
unable to engage in any substantial gainful activity; or (ii) results in
Executive receiving income replacement benefits for a period of not less than
three (3) months under any policy of long-term disability insurance maintained
by the Company for the benefit of its employees.

     

    (d) “Good
Reason” shall mean the occurrence during the Term of Employment of any of the
following: (i) a material breach of this Agreement by Company which is not
cured by Company within 30 days following Company’s receipt of written notice by
Executive to Company describing such alleged breach; (ii) Executive’s Base
Salary, minimum bonus, or minimum bonus opportunity is reduced by Company;
(iii) a material reduction in Executive’s title, duties and/or
responsibilities, or the assignment to Executive of any duties materially
inconsistent with Executive’s position; or (iv) a Triggering Change of Control
occurs and within six months thereafter Employer, without Executive’s consent,
relocates Executive’s principal place of work to a location other than a
location within the greater Southern California metropolitan area.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e) “Triggering
Change in Control” shall mean a Change in Control other than (i) a Change in
Control in connection with which the Company’s common stock is no longer listed
on The Nasdaq Global Market or the New York Stock Exchange or a national
securities exchange that is a successor or affiliate to either of the foregoing
and where either Richard Meruelo or John Charles Maddux is an affiliate of the
Company (or its successor, including an entity that is the transferee of all or
substantially all of the Company’s assets) or its ultimate parent or (ii) a
Change in Control solely because the Continuing Directors cease for any reason
to constitute a majority of the Board of Directors of the Company.

     

    (f) “Section
409A” means Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and all applicable guidance promulgated thereunder.

     

    7.11 Nonduplication of
Benefits.  Notwithstanding any provision in this Agreement or
in any other Employer benefit plan or compensatory arrangement to the contrary,
but at all times subject to Section 7.4, (a) any payments due under either
Section 7.1 or Section 7.2 shall be made not more than once, if at
all, (b) payments may be due under either Section 7.1 or Section 7.2, but
under no circumstances shall payments be made under both Section 7.1 and
Section 7.2, (c) no payments made under this Agreement shall be considered
compensation for purposes of any benefit plan or compensatory arrangement of
Employer, and (d) Executive shall not be entitled to severance benefits from
Employer other than as contemplated under this Agreement, unless such other
severance benefits offset and reduce the benefits due under this Agreement on a
dollar-for-dollar basis, but not below zero.

     

    8. No Competition and No
Conflict of Interest.  Except as otherwise provided in
Section 2.2 of this Agreement, during the Term of Employment, Executive
must not engage in any work, paid or unpaid, that creates an actual conflict of
interest with the essential business-related interests of the Employer where
such conflict would materially and substantially disrupt
operations.  Such work shall include, but is not limited to, directly
or indirectly competing with the Employer Business in any way, or acting as an
officer, director, employee, consultant, stockholder, volunteer, lender, or
agent of any business enterprise of the same nature as, or which is in direct
competition with, the Employer Business or any business in which Employer
becomes engaged during the Term of Employment, as may be determined by the
President or Board of Directors in its sole discretion.  If the
President or Board of Directors believes a prohibited conflict exists during the
term of this Agreement, the President or Board of Directors may take appropriate
action to eliminate such conflict.  In addition, Executive agrees not
to refer any tenant or customer or potential tenant or customer of Employer to
competitors of Employer, without obtaining Employer’s prior written consent,
during the Term of Employment.  Notwithstanding the foregoing,
Executive’s investment in, or ownership of, less than five percent (5%) of the
capital stock of any business entity that competes with or could reasonably be
expected to compete with the Employer Business and whose securities are traded
on any national securities exchange or registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, shall not be treated as a breach of this
Section 8.  For purposes of this Agreement, the term “Employer
Business” shall mean the acquisition, development, redevelopment, ownership,
operation or financing of commercial and residential properties in the State of
California.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9. Confidentiality.  During the Term of
Employment, Executive has been and will continue to be given access to a wide
variety of information about the Employer, its affiliates and other related
businesses that the Employer considers “Confidential Employer
Information.”  As a condition of continued employment, Executive
agrees to abide by Employer’s business policies and directives on
confidentiality and nondisclosure of “Confidential Employer
Information.”  “Confidential Employer Information” shall mean all
information applicable to the business of the Employer which confers or may
confer a competitive advantage upon the Employer over one who does not possess
the information; and has commercial value in the business of the Employer or any
other business in which the Employer engages or is preparing to engage during
Executive’s employment with Employer.  “Confidential Employer
Information” includes, but is not limited to, information regarding the
Employer’s business plans and strategies; contracts and proposals (including
leases and proposed leases); artwork, designs, drawings and specifications for
development and redevelopment projects; tenants and customers and prospective
tenants and customers; suppliers and other business partners and Employer’s
business arrangements and strategies with respect to them; current and future
marketing or advertising campaigns; software programs; codes, formulae or
techniques; rent rolls; financial information; personnel information; and all
ideas, plans, processes or information related to the current, future and
proposed projects or other business of the Employer that has not been disclosed
to the public by an authorized representative of the Employer, acting within the
scope of his or her authority, whether or not such information would be
enforceable as a trade secret of the Employer or enjoined or restrained by a
court or arbitrator as constituting unfair competition.  “Confidential
Employer information” also includes confidential information of any third party
who may disclose such information to the Employer or Executive in the course of
the Employer’s business.

     

    9.1 Nondisclosure.  Executive
acknowledges that Confidential Employer Information constitutes valuable,
special and unique assets of the Employer’s business and that the unauthorized
disclosure of such information to competitors of the Employer, or to the general
public, will be highly detrimental to the Employer.  Executive
therefore agrees to hold Confidential Employer Information in strictest
confidence.  Except as shall occur as and to the extent that Executive
performs his duties to Employer, Executive agrees not to disclose or allow to be
disclosed to any individual or entity, other than those individuals or entities
authorized by the Employer, any Confidential Employer Information that Executive
has or may acquire during Executive’s employment by Employer (whether or not
developed or compiled by Executive and whether or not Executive has been
authorized to have access to such Confidential Employer
Information).

     

    9.2 Continuing
Obligation.  Executive agrees that the agreement not to
disclose Confidential Employer Information will be effective during Executive’s
employment and continue even after Executive is no longer employed by
Employer.  Any obligation not to disclose any portion of any
Confidential Employer Information will continue indefinitely unless Executive
can demonstrate that such information (a) has become public knowledge
through no fault of Executive; or (b) has been developed independently
without any reference to any information obtained during Executive‘s employment
with Employer; or (c) must be disclosed in response to a valid order by a
court or government agency or is otherwise required by law.

     

    9.3 Return of Employer
Property.  On termination of employment with Employer for
whatever reason, or at the request of the Employer before termination, Executive
agrees to promptly deliver to Employer all records, files, computer disks,
memoranda, documents, lists and other information regarding or containing any
Confidential Employer Information, including all copies, reproductions,
summaries or excerpts thereof, then in Executive’s possession or control,
whether prepared by Executive or others.  Executive also agrees to
promptly return, on termination or the Employer’s request, any and all Employer
property issued to Executive, including but not limited to computers, cellular
phones, keys and credits cards.  Executive further agrees that should
Executive discover any Employer property or Confidential Employer Information in
Executive’s possession after the return of such property has been requested,
Executive agrees to return it promptly to Employer without retaining copies,
summaries or excerpts of any kind.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.4 No Violation of Rights of
Third Parties.  Executive warrants that the performance of all
the terms of this Agreement does not and will not breach any agreement to keep
in confidence proprietary information, knowledge or data acquired by Executive
prior to Executive’s employment with Employer.  Executive agrees not
to disclose to Employer, or induce Employer to use, any confidential or
proprietary information or material belonging to any previous employers or
others.  Executive warrants that Executive is not a party to any other
agreement that will interfere with Executive’s full compliance with this
Agreement.  Executive further agrees not to enter into any agreement,
whether written or oral, in conflict with the provisions of this Agreement while
such provisions remain effective.

     

    10. Interference with Business
Relations.

     

    10.1 Interference with Customers,
Suppliers and Other Business Partners.  Executive acknowledges
that Employer’s tenant and customer base and leasing and sales strategies for
such tenants and customers, its suppliers and purchasing strategies for such
suppliers, and its other business arrangements have been developed through
substantial effort and expense, and its nonpublic business information regarding
these tenants, customers, suppliers and other business partners is confidential
and constitutes trade secrets.  In addition, because of Executive’s
position, Executive understands that Employer will be particularly vulnerable to
significant harm from Executive’s use such information for purposes other than
to further Employer’s business interests.  Accordingly, Executive
agrees that during Executive’s employment with Employer, and for a period of
twelve (12) months thereafter, Executive will not, either directly or
indirectly, separately or in association with others, interfere with, impair,
disrupt or damage Employer’s relationship with any of the tenants, customers,
suppliers or other business partners of Employer with whom Executive has had
contact, or conducted business, by contacting them for the purpose of inducing
or encouraging any of them to divert or take away business from
Employer.

     

    10.2 Interference with Employer’s
Employees.  Executive acknowledges that the services provided
by Employer’s employees are unique and special, and that Employer’s employees
possess trade secrets and Confidential Employer Information that is protected
against misappropriation and unauthorized use.  As such, Executive
agrees that during, and for a period of twelve (12) months after, Executive’s
employment with Employer, Executive will not, either directly or indirectly,
separately or in association with others, interfere with, impair, disrupt or
damage Employer’s business by contacting any Employer employees for the purpose
of inducing or encouraging them to discontinue their employment with
Employer.

     

    10.3 Negative
Information.  During the Term of Employment and thereafter,
Executive shall not disclose confidential or negative non-public information
regarding, or take any action materially detrimental to the reputation of
Employer or its directors, officers, employees, investors, shareholders or
advisors and any affiliates of any of the foregoing (collectively, the “Employer
Affiliates”);  provided, however, that nothing contained in this
Section 10.3 shall affect any legal obligation of Executive to respond to
mandatory governmental inquiries concerning the Employer Affiliates or to act in
accordance with, or to establish, his rights under this
Agreement.  Employer likewise agrees that no one acting with the
actual authority of Employer shall disclose negative non-public information
regarding, or take any action materially detrimental to the reputation of,
Executive;  provided, however, that nothing contained in this Section
10.3 shall affect any legal obligation of the Employer Affiliates to respond to
mandatory governmental inquiries concerning Executive or to act in accordance
with, or to establish, the rights of the Employer Affiliates under this
Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11. Injunctive
Relief.  Executive acknowledges that Executive’s breach of the
covenants contained in Sections 8 through 10 of this Agreement inclusive
(collectively “Covenants”) would cause irreparable injury and continuing harm to
Employer for which there will be no adequate remedy at law, and agrees that in
the event of any such breach, Employer seek temporary, preliminary and permanent
injunctive relief to the fullest extent allowed by the California Arbitration
Act, without the necessity of proving actual damages or posting any bond or
other security.

     

    12. Agreement to
Arbitrate.

     

    12.1 Mandatory
Arbitration.  Any dispute or controversy arising out of or
relating to any interpretation, construction, performance, termination or breach
of this Agreement, will be settled by final and binding arbitration by a single
arbitrator to be held in Los Angeles County, California, in accordance with the
American Arbitration Association national rules for resolution of employment
disputes then in effect, except as provided herein.  The arbitrator
selected shall have the authority to grant any party all remedies otherwise
available by law, including injunctions, but shall not have the power to grant
any remedy that would not be available in a state or federal
court.  The arbitrator shall have the authority to hear and rule on
dispositive motions (such as motions for summary adjudication or summary
judgment).  The arbitrator shall have the powers granted by California
law and the rules of the American Arbitration Association which conducts the
arbitration, except as modified or limited herein.

     

    12.2 Principles Governing
Arbitration.  Notwithstanding anything to the contrary in the
rules of the American Arbitration Association, the arbitration shall provide (i)
for written discovery and depositions as provided in California Code of Civil
Procedure Section 1283.05 and (ii) for a written decision by the arbitrator that
includes the essential findings and conclusions upon which the decision is based
which shall be issued no later than thirty (30) days after a dispositive motion
is heard and/or an arbitration hearing has completed.  Except in
disputes where Executive asserts a claim otherwise under a state or federal
statute prohibiting discrimination in employment (“a Statutory Discrimination
Claim”), each side shall split equally the fees and administrative costs charged
by the arbitrator and American Arbitration Association.  In disputes
where Executive asserts a Statutory Discrimination Claim against Employer,
Executive shall be required to pay the American Arbitration Association’s filing
fee only to the extent such filing fee does not exceed the fee to file a
complaint in state or federal court.  Employer shall pay the balance
of the arbitrator’s fees and administrative costs.

     

    12.3 Rules Governing
Arbitration.  Executive and Employer shall have the same amount
of time to file any claim against any other party as such party would have if
such a claim had been filed in state or federal court.   In
conducting the arbitration, the arbitrator shall follow the rules of evidence of
the State of California (including but not limited to all applicable
privileges), and the award of the arbitrator must follow California and/or
federal law, as applicable.

     

    12.4 Selection of
Arbitrator.  The arbitrator shall be selected by the mutual
agreement of the parties.  If the parties cannot agree on an
arbitrator, the parties shall alternately strike names from a list provided by
the American Arbitration Association until only one name remains.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    12.5 Arbitrator
Decision.  The decision of the arbitrator will be final,
conclusive and binding on the parties to the arbitration.  The
prevailing party in the arbitration, as determined by the arbitrator, shall be
entitled to recover his or its reasonable attorneys’ fees and costs, including
the costs or fees charged by the arbitrator and the American Arbitration
Association.  In disputes where Executive asserts a Statutory
Discrimination Claim, reasonable attorneys’ fees shall be awarded by the
arbitrator based on the same standard as such fees would be awarded if the
Statutory Discrimination Claim had been asserted in state or federal
court.  Judgment may be entered on the arbitrator's decision in any
court having jurisdiction.

     

    13. General
Provisions.

     

    13.1 Successors and
Assigns.  The rights and obligations of Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Employer.  The Employer will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) or
assignee to all or substantially all of the business and/or assets of the
Employer to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Employer would be required to perform it
if no such succession or assignment had taken place.  Executive shall
not be entitled to assign any of Executive’s rights or obligations under this
Agreement without Employer’s written consent.

     

    13.2 Legal Protection
Clause.  The Employer will defend, indemnify and hold harmless
the Executive from and against any claim or legal action taken against Executive
as a direct consequence of the discharge of Executive’s duties or obedience to
directions of the Employer, in accordance with California Labor Code
2802.  Such protection, if applicable, includes the cost of legal
defense and judgment, if any, against Executive.

     

    13.3 Nonexclusivity of
Rights.  Except as expressly provided in this Agreement,
Executive is not prevented from continuing or future participation in any
Employer benefit, bonus, incentive or other plans, programs, policies or
practices provided by Employer subject to the terms and conditions of such
plans, programs, or practices.

     

    13.4 Waiver.  Either
party’s failure to enforce any provision of this Agreement shall not in any way
be construed as a waiver of any such provision, or prevent that party thereafter
from enforcing each and every other provision of this Agreement.

     

    13.5 Attorneys’
Fees.  Each side will bear its own attorneys’ fees in any
dispute unless a statutory section at issue, if any, authorizes the award of
attorneys’ fees to the prevailing party, and the arbitrator awards such
attorneys’ fees accordingly.

     

    13.6 Severability.  In
the event any provision of this Agreement is found to be unenforceable by an
arbitrator or court of competent jurisdiction, such provision shall be deemed
modified to the extent necessary to allow enforceability of the provision as so
limited, it being intended that the parties shall receive the benefit
contemplated herein to the fullest extent permitted by law.  If a
deemed modification is not satisfactory in the judgment of such arbitrator or
court, the unenforceable provision shall be deemed deleted, and the validity and
enforceability of the remaining provisions shall not be affected
thereby.

     

    13.7 Interpretation;
Construction.  The headings set forth in this Agreement are for
convenience only and shall not be used in interpreting this
Agreement.  This Agreement has been drafted by legal counsel
representing Employer, but Executive has participated in the negotiation of its
terms.  Furthermore, Executive acknowledges that Executive has had an
opportunity to review and revise the Agreement and have it reviewed by legal
counsel, if desired, and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    13.8 Governing
Law.  This Agreement will be governed by and construed in
accordance with the laws of the State of California.  Except as and to
the extent that Section 12 does not properly apply, each party consents to
the jurisdiction and venue of the state or federal courts in Los Angeles County,
California, in any action, suit, or proceeding arising out of or relating to
this Agreement.

     

    13.9 Notices.  Any
notice required or permitted by this Agreement shall be in writing and shall be
delivered as follows with notice deemed given as
indicated:  (a) by personal delivery when delivered personally;
(b) by overnight courier upon written verification of receipt; (c) by
telecopy or facsimile transmission upon acknowledgment of receipt of electronic
transmission; or (d) by certified or registered mail, return receipt
requested, upon verification of receipt.  Notice shall be sent to the
addresses set forth below, or such other address as either party may specify in
writing.

     

    13.10 Survival.  The
following provisions shall survive Executive’s employment with Employer to the
extent reasonably necessary to fulfill the parties’ expectations in entering
this Agreement:  Sections 7 (“Termination of Employment”),
9 (“Confidentiality”), 10 (“Interference with Business Relations”)
11 (“Injunctive Relief”), 12 (“Agreement to Arbitrate”),
13 (“General Provisions”), and 14 (“Entire Agreement”).

     

    14. Entire
Agreement.  This Agreement, together with the other agreements
and documents governing the benefits described in this Agreement, constitute the
entire agreement among the parties relating to this subject matter hereof and
supersedes all prior or simultaneous representations, discussions, negotiations,
and agreements, whether written or oral.  This Agreement may be
amended or modified only with the written consent of President of the
Company.  No oral waiver, amendment or modification will be effective
under any circumstances whatsoever.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THE
PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND
EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED
THIS AGREEMENT ON THE DATES SHOWN BELOW.

     

    
      
        	 	 	 
	 	 	 	 
	
                Date:
      May 23, 2008

              	
                By:
      

              	/s/ Andrew
      G Murray	 
	 	 	Andrew
      Grant Murray	 
	 	 	 	 
	 	 	 	 

      

     

    Address:                              

                                      

    

    
      
        	 	MERUELO MADDUX PROPERTIES,
      INC.	 
	 	 	 	 
	
                Date:
      May 23, 2008

              	
                By:
      

              	/s/ John
      Charles Maddux	 
	 	 	John
      Charles Maddux	 
	 	 	President
      and Chief Operating Officer	 
	 	 	 	 

      

    

    

    

    
      	
               
      

            	
              
                Meruelo
      Maddux Properties, l.p.

              

            

    

    
      
        	 	

                By:
      Meruelo Maddux Properties, Inc., its sole general
    partner

              	 
	 	 	 	 
	
                Date:
      May 23, 2008

              	
                By:
      

              	/s/ John
      Charles Maddux	 
	 	 	John
      Charles Maddux	 
	 	 	President
      and Chief Operating Officer

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