RESOLUTION R WHEREAS, the pre-annexation development agreement is consistent with the terms and conditions of the statute; and,

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1 RESOLUTION R A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE TOWN OF CAVE CREEK, ARIZONA, APPROVING PURSUANT TO A.R. S , A PRE-ANNEXATION DEVELOPMENT AGREEMENT. WHEREAS, A.R.S authorizes the Town to enter into development agreements relating to property within and without the municipality; and, WHEREAS, the pre-annexation development agreement is consistent with the terms and conditions of the statute; and, WHEREAS, the pre-annexation development agreement instrument is attached hereto and incorporated herein by reference. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE TOWN OF CAVE CREEK, ARIZONA, AS FOLLOWS: Section 1 : That the amendment to the Pre-Annexation Development Agreement between the Town of Cave Creek and Apache Springs Land L.L. C., attached hereto and incorporated herein by reference, is hereby adopted as presented. Section 2: That the Town Mayor, Town Manager, the Town Clerk and the Town Attorney, as appropriate, are hereby further authorized and directed to sign the pre-annexation development agreement and execute all other documents and instruments and to take such actions as necessary or appropriate to consummate the transactions contemplated by this Resolution. PASSED AND ADOPTED by the Mayor and Common Council of the Town of Cave Creek, Arizona, this as day of, ATTEST TO: APPROVED AS TO FORM: Resolution R Page 1 of 1

2 When recorded, return to: Gammage & Burnham, P.L.C. 2 North Central Avenue, 18th Floor Phoenix, Arizona Attention: Stephen W. Anderson PRE-ANNEXATION AND DEVELOPMENT AGREEMENT This Pre-Annexation and Development Agreement ("Agreement") is entered into by and between the TOWN OF CAVE CREEK, Arizona, an Arizona municipal corporation ("Town"), and APACHE SPRINGS LAND, L.L.C., an Arizona limited liability company ("Owner") (collectively "Parties"). RECITALS A. The Owner owns approximately 945 acres of land ("Property"), a portion of which is located within the municipal boundaries of the Town of Cave Creek ("Town Property") and the balance of which is located in the unincorporated area of Maricopa County, Arizona ("County Property") (the Town Property and the County Property are referred to collectively as the "Property "). The Town Property is legally described and depicted on Exhibit A and the County Property is legally described and depicted on Exhibit B. B. The Town Property currently is zoned DR-190, and the County Property currently is zoned RU-43 in Maricopa County ("County"). C. The Owner intends to develop portions of the Property. D. The Town wishes to encourage the reasonable development of vacant lands in the northwest area of the Town, including but not limited to the County property and five Sections of land to the immediate north owned by the Arizona State Land Department ("ASLD"), in a manner that is consistent with the Town's desert rural lifestyle and minimizes the impact of such development on the Town's infrastructure and current residents. The Town believes that annexation of the County Property into the Town and development of the Property in accordance with this Agreement will result in furthering these goals. E. The Owner believes that annexation of the County Property into the Town and development of the Property pursuant to the terms of this Agreement v9 4/9/2005

3 will result in significant benefits to the Property and to the future residents, including the development of the Property in a manner that is in harmony with its environment, greater certainty concerning the Town's regulatory treatment of the Property, and assurances regarding infrastructure and public amenities affecting the Property. F. The Town and the Owner agree that the development of the Property in accordance with the preliminary plat set forth on Exhibit C (the "Plan") will help to further the goals of the Town and the Owner. The Plan depicts 230 lots, roads and open space on the Property. G. The Parties desire that the bulk of the County Property be annexed into the Town in substantial conformance with Exhibit C for the County Property. H. A.R.S authorizes the Town to enter into a development agreement with the Owner and the Owner for the purpose of establishing: (i) the terms of the Agreement; (ii) the permitted uses and development standards for the Property; (iii) the density and intensity of uses and the restrictions applicable to development of structures on the Property; (iv) the conditions, terms, restrictions and requirements for annexation of the County Property by the Town; (v) the conditions, items, restrictions and requirements for public infrastructure on the Property, and the funding of said public infrastructure; and (vi) providing for other matters relating to the development of the Property. 1. The development of the Property pursuant to this Agreement is in conformity with the Town of Cave Creek General Plan ("General Plan") on the date of this Agreement. J. This Agreement shall become operative as to the Town Property upon approval of this Agreement by the Town Council. This Agreement shall become operative as to the County Property only when the annexation proceedings to annex the County Property are completed as further set forth in this Agreement. AGREEMENTS: NOW, THEREFORE, in consideration of the foregoing premises and agreements herein, the Parties hereto state, confirm, and agree as follows: 1. Incorporation of Recitals. The foregoing recitals are hereby incorporated into this Agreement as though fully restated herein. 2. Annexation of County Property. The Owner will initiate proceedings to annex the County Property into the Town with the exception of 75,000 square feet at the southwest corner of the County Property (the "Exception Parcel"). A legal description of the portion of the County Property to be annexed (the v9 2 4/9/2005

4 "Annexation Property") is attached as Exhibit D. Upon the Town's receipt of the Owner's written request for annexation, the Town will hold such hearings and take such action as is necessary pursuant to A.R.S et seq. to annex the Annexation Property. As part of the annexation ordinance, the Town will adopt equivalent Town zoning corresponding to the existing County zoning ("Translation Zoning") for the Annexation Property, which the Parties agree i) is the Town's D- l A zoning category, and ii) will allow the Property to be developed in substantial conformance to the Plan as illustrated on Exhibit C. 3. Development Plans. Concurrently with the approval and execution of this Agreement and following the Town's review and due consideration, the Town shall hold a public hearing to consider a preliminary plat for the Property in accordance with relevant State and Town laws. The development of the Property shall be in accordance with the Plan and this Agreement. 3.1 Access. Vehicular access to the Property will occur generally from the southwest. The current access is contemplated to start at the intersection of 24`h Street and the Carefree Highway, proceeding north on 24th Street, continuing along 20 Street as it transitions into 26`h Street, turning east at Saddle Mountain Road, turning north at 32"d Street, turning east at Rockaway Hills Road, entering and crossing the southwest quadrant of the Property to the west perimeter of the Property, crossing the west perimeter of the Property and entering into ASLD property, crossing through ASLD property in a generally semi-circular pattern back to the western perimeter of the Property, continuing north along the west perimeter of the Property along the general alignment of 32"d Street, and finally entering onto the Property from 32"d Street, as illustrated on Exhibit E (the "Access Map"). However, regardless of the contemplated route, the Town and the Owner hereby agree to identify the actual access route that is most efficient and acceptable to both the Town and the Owner. The Town hereby approves the Owner's proposal for improvements to Saddle Mountain Road, all relevant portions of 32"d Street, Rockaway Hills Road and those portions of the access route that cross the southwest quadrant of the Property and ASLD property (the "Off-Site Road Improvements"), as illustrated on Exhibit F, as complying with all applicable requirements of the Town. The Owner has developed and the Town hereby approves the Owner's proposal for a primary road through the Property (the "Spine Road"), as illustrated on Exhibit F as complying with all applicable requirements of the Town. No final inspection approvals will be issued for any building until the Off-Site Road Improvements have been installed pursuant to Section (a) The Parties acknowledge that additional right-ofway is required for the south half of Saddle Mountain Road, the northwest corner of the intersection of 32d Street and Rockaway Hills Road, and the west half of the 32d Street adjacent to the west perimeter v9 3 4/9/2005

5 of the Property as illustrated on Exhibit F, and that said additional right-of-way is owned by the ASLD. The Owner shall, at its own cost, prepare and process an application for the requested right-of-way with the ASLD. The Town shall be the applicant for said application. The Parties shall evenly split the cost of the acquisition itself of the right-ofway from the ASLD for the south half of Saddle Mountain Road and the northwest corner of the intersection of 32"d Street and Rockaway Hills Road. The Town shall be solely responsible for the cost of the acquisition itself of the right-of-way from the ASLD for any and all portions of 32"d Street adjacent to the west perimeter of the Property. The Town acknowledges that with respect to said portion of 32d Street, some locations of said portion will only require acquisition of a forty (40) foot right-of-way and other locations of said portion will require acquisition of a full eight (80) foot right-of-way, as illustrated on Exhibits E and F. Simultaneously with submittal of the application to the ASLD, the Owner shall deposit with a local escrow company of its sole choosing an amount representing its reasonable estimate of its share of the cost of the acquisition. (b) The Parties acknowledge that there is additional land required both for right-of-way and construction easements for the Off-Site Road Improvements along the north half of Saddle Mountain Road, both sides of 32nd Street, and both sides of Rockaway Hills Road that is currently privately owned (the "Private Rights-of-Way"), as illustrated on Exhibit F. The Owner shall make all good faith and reasonable efforts to acquire the Private Rights-of-Way from the then current owners of the Private Rights-of-Way, including the submittal of written offers to acquire the Private Rights-of-Way at commercially reasonable prices. If the Owner is unable to acquire any portion of the Private Rights-of-Way, the Owner shall notify the Town in writing and provide the Town with a copy of any such written offers. Upon receipt of such notice from the Owner, the Town shall elect, at its sole discretion, to either diligently pursue acquisition of the Private Rightsof-Way in any manner it chooses, in accord with the Town's authority pursuant to relevant state statutes, or diligently process and issue all necessary approvals to allow modified construction of the Off-Site Road Improvements within only those Private Rights-of-way the Owner has been able to acquire. The Town shall notify the Owner in writing of its election pursuant to this Section of the Agreement within thirty days of the Owner's above-referenced notice to the Town. (i) If the Town chooses to pursue acquisition of the Private Right-of-Way, the following provisions shall apply. Upon acquisition of the Private Rights-of-Way by the Town, the Town v9 4 4/9/2005

6 shall provide the Owner with a detailed invoice describing all costs associated with acquisition of the relevant Private Rights-of-Way including but not limited to the actual purchase price, attorneys' fees, and other consulting fees. The Owner shall submit payment for the full amount of said invoice to the Town within thirty days, although the Owner shall retain the right to contest any amounts reflected on said invoice pursuant to Section 5. (ii) If the Town chooses to process and issue approvals for modified construction, the following provisions shall apply. The Owner shall submit in a reasonably complete manner any required applications, including but not limited to and only if necessary revised plats or construction drawings, to the Town within thirty days of the Town's above-referenced notice to the Owner. The Town shall waive any and all fees associated with the submittal and review of such applications. The Town shall set any necessary hearings to occur within sixty days of the Owner's submittal of any required applications. The Town hereby acknowledges that if it chooses this option, it does so with the intent that the Town Engineer will approve roadway design and construction in rights-of-way of less than eighty feet in width and possibly as narrow as forty feet in width. (c) The Parties acknowledge that the Owner is able to access the Property without constructing 32"d Street adjacent to the west perimeter of the Property. The Parties further acknowledge that said portion of 32nd Street is being constructed in conjunction with this project to secure access to lands north of the Property referenced below in Section 3.10 of this Agreement. In consideration of the Owner's cooperation in designing and accommodating said portion of 32"d Street, the Town shall reimburse the Owner for all design and construction costs for that portion of 32"d Street that is both adjacent to the west perimeter of the Property and north of the access into the subdivision. The Owner shall dedicate at no cost to the Town forty (40) feet of land along its western perimeter and north of the access into the subdivision for right-of-way to construct said portion of 32nd Street. The Owner shall provide the Town with quarterly invoices detailing said design and construction costs, and the Town shall issue cash reimbursement to the Owner within thirty (30) days of receipt of each invoice. The Town's obligation to so reimburse the Owner shall terminate six (6) months following the Town's acceptance of the duly constructed and said portion of 32d Street. 3.2 Wastewater. Each lot on the Property will be served by an on-site individual disposal system (the "Individual Treatment Systems" or "ITS") which meets all applicable requirements of the Town, the Arizona v9 5 4/9/2005

7 Department of Environmental Quality and the County Environmental Services Department. In addition, at the time of construction, each individual lot within the Property shall construct a stub line to the front lot line, as defined by applicable Town ordinances, to provide a connection to any possible future sewer system. This Agreement creates no obligation on the Parties to develop such a sewer system. The Town currently does not have municipal sewer infrastructure in this area. The Parties further acknowledge that the Owner shall prepare and submit to the Town a study regarding the technical and economic feasibility of a package plant system for the Property and lands north of the Property referenced below in Section 3.10 of this Agreement, said study to be reviewed by the Town Engineer. The Parties reserve the right to collectively agree up to the time of the approval of the first final plat on any portion of the Property to replace ITS with a package plant to serve the wastewater needs of the Property. No final inspection approvals will be issued for any building until the ITS or package plant serving such building, as may be appropriate, has been installed pursuant to Section Water. Each lot on the Property will be served by a water system, which will be owned and maintained by the Cave Creek Water Company, the certificated water provider for the Property, as determined by the Arizona Corporation Commission. The water system must meet all requirements of the Arizona Department of Water Resources and the County Environmental Services Department. The Town does not offer municipal water service in this area. No final inspection approvals will be issued for any building until the water system serving such building has been installed pursuant to Section (a) The Parties acknowledge that the Cave Creek Water Company currently does not have infrastructure on the Property, and will require the Owner to extend appropriate infrastructure to the Property at the Owner's cost. The Parties further acknowledge that the Owner will be installing an underground water line to the Property from approximately 24th Street and Joy Ranch Road, two booster stations off-site to facilitate the functioning of said underground water line, and a storage tank designed in an environmentally compatible manner, as determined by the Owner in its sole discretion after reasonable opportunity for comment by the Town, in proximity to the northeast corner of the site in order to provide an emergency reservoir, illustrated collectively on Exhibit G (referred to collectively as the "Off-Site Water Facilities"). (b) The Town reserves the right to require the Owner to oversize the Off-Site Water Facilities to accommodate the projected future water demands of lands north of the Property referenced below in Section 3.10 of this Agreement at the time Owner processes the first v9 6 4/9/2005

8 final plat for any portion of the Property. Thereafter, the Town waives any and all rights to require the Owner to over-size the Off-Site Water Facilities. In the event the Town requires any over-sizing of the Off- Site Water Facilities, the Town shall reimburse the Owner for all costs, including but not limited to design and construction, directly attributable to said over-sizing. The Owner shall provide the Town with quarterly invoices detailing said design and construction costs, and the Town shall issue cash reimbursement to the Owner within thirty (30) days of receipt of each invoice. The Town's obligation to so reimburse the Owner shall terminate thirty-six (36) months following the recordation of said first final plat. (c) The Parties acknowledge that the Owner has entered into a line extension agreement with the Cave Creek Water Company to address repayment to the Owner for the Off-Site Water Facilities. 3.4 Electric. Each lot on the property will be served with electric power, which Arizona Public Service ("APS") will own and maintain. The Parties acknowledge that APS currently does not have infrastructure on the Property, and will extend appropriate infrastructure to the Property at APS's cost. The Parties further acknowledge that APS will be installing a power line to the Property from approximately 241h Street and Joy Ranch Road (the "Off-Site Power Line"), as illustrated on Exhibit H. The Parties shall cooperate to encourage APS to construct the Off-Site Power Line underground. The Off-Site Power Line must meet all requirements of the Arizona Corporation Commission and be in compliance with applicable Town ordinances. The Town does not offer municipal electric power service in this area. No final inspection approvals will be issued for any building until the electric power system serving such building has been installed pursuant to Section Trails. The Owner shall construct trails on the Property in accordance with the trails illustrated on the map attached as Exhibit I. The Parties acknowledge that these trails will benefit citizens of the Town, regardless of whether they are residents of the Property. These trails will exist as either trail easements or as public trails, as illustrated on Exhibit I. Trails existing as easements shall remain privately owned and maintained, but shall be available to the public. Trails existing as public trails shall be publicly owned and maintained. No final inspection approvals will be issued for any building until any trails on that particular lot have been installed pursuant to Section Open Space. The Parties acknowledge that one of the primary benefits to the Owner and the Town in master planning the v9 7 4/9/2005

9 development of the Property and entering into this Agreement is the Owner's desire and offer to preserve a substantial amount of open space within the Property. To evidence this desire, the Owner agrees that within ninety (90) days of preliminary plat approval by the Town for the entire Property, the Owner shall voluntarily and without consideration convey at least 175 acres ("the Preserved Open Space") of the Town Property to, at its sole discretion, either the Town or an independent, non-profit, third-party capable of managing the Preserved Open Space, subject to a mutually approved stewardship plan and applicable covenants, conditions and restrictions created and approved by the Owner. The stewardship plan for the Preserved Open Space shall ensure public access to the Preserved Open Space. The location of the Preserved Open Space is generally illustrated on Exhibit C. The Owner shall have sole discretion, to be reasonably exercised, to determine the identity of the independent, non-profit, third-party, but the Parties expressly acknowledge that the Desert Foothills Land Trust, the Trust for Public Lands, and the Town are each qualified recipients of the Preserved Open Space. The Owner shall have the sole discretion, to be reasonably exercised, to determine the method of conveyance of the Preserved Open Space, examples of which include but are not limited to a dedication, a charitable gift, or a conservation easement, to the Town or the independent, non-profit, third party. 3.7 Infrastructure Construction The Owner shall be authorized to install the infrastructure necessary for the development of the Property in accordance with Sections 3.1 through 3.5, including but not limited to street, wastewater, water, electric, telephone, cable television, and drainage improvements (the "Infrastructure"), and will be accorded the approvals necessary to permit the Owner to install the Infrastructure, subject to the Town's routine and customary review and approval of the Owner's application(s). For all required construction and engineering approvals and inspections, the Owner shall comply with all applicable requirements, codes, rules, or regulations of the Town (including permit submittal requirements) and with all permit requirements, codes, rules or regulations of (i) Maricopa County that have been incorporated by the Town into the Town's requirements, codes, rules, or regulations, (ii) the State of Arizona, and (iii) the United States of America as applicable, in effect at the time of such construction The Owner, its agents and employees shall have the additional right, upon receipt of an appropriate encroachment permit issued pursuant to the Town's routine and customary review procedures, to enter and remain upon and cross over Town easements or rights-of-way to the extent reasonably necessary to facilitate such construction, or to perform necessary maintenance or repairs of such infrastructure, provided that the Owner's use of such easements and rights-of-way shall not impede or adversely affect the v9 8 4/9/2005

10 Town's use and enjoyment thereof. To the extent permitted by law and subject to obtaining an encroachment permit from the Town, the prior dedication of any easement or rights-of-way shall not affect or proscribe the Owner's right to construct, install, and/or provide Infrastructure thereon or thereover. 3.8 Infrastructure Dedication and Acceptance. The Owner shall dedicate to the Town all completed segments of roads in accordance with the final plats and this Agreement, or within such other time period as may be agreed to by the Owner and the Town, and subject to acceptance by the Town as hereinafter set forth. 3.9 Development For the term of this Agreement, and in consideration of the valuable consideration being provided by the Owner pursuant to this Agreement and the financial investment of the Owner in developing the Property, the Town acknowledges the Parties' intent that the Owner shall have the right to develop the Property in accordance with this Agreement, the Plan, and Exhibit C. The Property will be developed in phases and the Owner shall make the determination of the phases in which the Property will be developed and the order in which the phases will be completed and the Town shall not object to such phases so long as they do not create a public nuisance or hazard and are in conformance with applicable Town ordinances. The Owner is authorized to implement the types and uses, densities and intensities, location of uses, minimum lot size of proposed lots, and other standards of design as now set forth in Exhibit C, subject only to the Town's processing in a timely manner applications for such review, permits, and inspections as are required by the Town's applicable ordinances and regulations, and subject to the Owner's compliance with all applicable platting, application, and permit requirements, and payment of all applicable filing, review, and development fees Except as required by law, the Town shall not take any affirmative action or position that would have the effect of subjecting the timing or the development of the Property to procedures and limitations that may be a part of any growth boundary Development Fees. In accordance with the terms of this Agreement, expressly including without limitation any fee forgiveness provisions of Section 3, each lot on the Property shall be subject to the then current and legally permissible development, impact, or other infrastructure fees, however denominated, in effect at the time any particular building permit is issued by the Town for a structure to be developed on the Property. The Town acknowledges and agrees that if the Owner provides for or pays for v9 9 4/9/2005

11 certain dedicated public sites or infrastructure improvements without direct reimbursement or not subject to another agreement, including without limitation, land dedicated for public school purposes, then the Owner shall receive a credit/offset to be applied in lieu of existing or future development fees payable by the Owner which relate to or otherwise address the particular type or category of public site or infrastructure improvement provided or paid for by the Owner (whether such public site or infrastructure improvement provided or paid for prior to or subsequent to the imposition of such development fee). This Section does not apply to public sites or infrastructure improvements that are not of the type contemplated by the existing or future development fees. By way of example, if the Town's transportation development fee is not assessed for the purpose of constructing local streets, then the Owner would not be entitled to a development fee credit for local street right-of-way improvements or right-of-way Adjacent ASLD Lands. The Parties acknowledge that the ASLD owns five Sections of land located immediately north of the Property (the "ASLD Sections"), and that the ASLD Sections are located in the northwest corner of the planning limits of the Town and outside of the Town's current boundaries. The Parties agree that they shall cooperate with the Town in the planning and development of the ASLD Sections to the extent permitted by the ASLD, including but not limited to master planning of infrastructure on the ASLD Sections and through the Property. Nothing in this Agreement obligates the Owner in any way to supply the ASLD Sections with services and/or access or to pay any costs associated with planning for such services and/or access. Although the Parties agree to cooperate regarding the ASLD Sections, nothing in this Section of the Agreement shall be construed to allow the Town to deny or otherwise frustrate any of the other rights and responsibilities of the Parties described elsewhere in this Agreement. 4. Notices. All notices, filings, consents, approvals and other communications provided for herein or given in connection herewith shall be validly given, filed, made, delivered or served if in writing and delivered personally or sent by certified United States Mail, postage pre-paid, return receipt requested to: The Town: Town of Cave Creek North Cave Creek Road Cave Creek, AZ Attn: Town Manager v9 10 4/9/2005

12 With copy to: Town Attorneys Mariscal Weeks McIntyre & Friedlander PA 2901 N. Central Avenue, Suite 200 Phoenix, Arizona Attn: William Farrell Owner : With copy to : Apache Springs Land, L.L.C N. 54`h Street Phoenix, AZ Attn: Mark Stapp Gammage & Burnham, PLC 2 North Central, 18`h Floor Phoenix, Arizona Attn: Stephen W. Anderson Or to such other address or addresses as may hereafter be specified by notice given by any of the above for itself to the others. Any notice or other communication directed to a party to this Agreement shall become effective upon the earliest of the following: (a) actual receipt by that party; (b) delivery to the address of the party, addressed to the party; or (c) if given by certified or registered U.S. Mail, return receipt requested, 72 hours after deposit with the United States Postal Service, addressed to the party. 5. General Provisions. 5.1 Cooperation and Alternative Dispute Resolution. To further the cooperation of the Parties in implementing this Agreement, the Town and the Owner each shall designate and appoint a representative to act as a liaison between the Town and its various departments and the Owner. The initial representative for the Town (the "Town Representative") shall be the Town Manager and the initial representative for the Owner shall be its project manager, as identified by the Owner from time to time (the "Owner Representative"). The representatives shall be available at all reasonable times to discuss and review the performance of the Parties to this Agreement and the development of the Property. The Town acknowledges and agrees that it is desirable for the Owner to proceed in a timely manner with the implementation of this Agreement and the development of the Property and that, accordingly, the Town will follow its standard review processes and timetables for inspections, approvals, and other Town actions, and will not purposely delay the development of the Property. 5.2 Default. Failure or unreasonable delay by the Owner or the Town to perform or otherwise act in accordance with any term or provision hereof shall constitute a breach of this Agreement and, if the breach is not v9 11 4/9/2005

13 cured within 30 days after written notice thereof from the other Party (the "Cure Period"), shall constitute a default under this Agreement; provided, however, that if the failure is such that more than 30 days would reasonably be required to perform such action or comply with any term or provision hereof, then the Party shall have such additional time as may be necessary to perform or comply so long as the Party commences performance or compliance within said 30 day period and diligently proceeds to complete such performance or fulfill such obligation. Any notice of a breach shall specify the nature of the alleged breach and the manner in which said breach may be satisfactorily cured, if possible. In the event a breach is not cured within the Cure Period, the non-defaulting Party shall have all rights and remedies which may be available under law or equity. 5.3 Mediation: Arbitration. Any dispute, claim or cause of action arising out of or relating to this Agreement may be settled by either Party submitting the matter to non -binding arbitration in accordance with the rules of the American Arbitration Association and the Arizona Uniform Arbitration Act, A.R.S , et seq. Notwithstanding any other provision of this Agreement, however, a dispute concerning an action, decision or omission of the Town Council shall not be submitted to mediation or arbitration, but instead shall be resolved through a civil action filed in a court of competent jurisdiction. 5.4 Good Standing; Authority. Each of the Parties represents and warrants to the other (a) that it is duly formed and validly existing under the laws of Arizona; and (b) that the individuals executing this Agreement on behalf of their respective Parties are authorized and empowered to bind the Party on whose behalf each such individual is signing. 5.5 Recordation. The text of this Agreement shall be recorded in its entirety in the Official Records of Maricopa County, Arizona, not later than 10 days after its full execution, along with complete copies of Exhibits A, B and D. The Clerk of the Town shall maintain originals of all other Exhibits on file for public review in accord with normal public record keeping practices. 5.6 Future Effect. This Agreement shall run with the land and for the benefit of the Property. The provisions of this Agreement are binding upon and shall inure to the benefit of the Parties, and all of their successors in interest and assigns; provided, however, that subject to the written consent of the Town Manager, said consent not to be unreasonably withheld, the Owner may assign its respective rights and obligations hereunder, in whole or in part, to a person or entity that has acquired title to the Property or a portion thereof, by a written instrument recorded in the Official Records of Maricopa County, Arizona, expressly assigning such rights v9 12 4/9/2005

14 and obligations. In the event of a complete assignment of all of its rights and obligations, the assigning Party shall be relieved of any further liability under this Agreement. 5.7 Term. This Agreement shall be effective on the effective date of the Town Ordinance annexing the Annexation Property (the "Effective Date") and shall automatically terminate ten (10) years after the Effective Date, provided, however, the Town shall not discontinue applicable municipal services to the Property, once commenced, except as permitted by applicable law. 5.8 Termination Upon Sale of Public Lots. Except as otherwise provided herein, the Town and the Owner hereby acknowledge and agree that this Agreement is not intended to and shall not create conditions or exceptions to title or covenants running with the Property when sold to bulk or end purchasers or users. Therefore, in order to alleviate any concern as to the effect of this Agreement on the status of title to any of the Property, so long as not prohibited by law, this Agreement shall terminate without the execution or recordation of any further document or instrument as to any lot (a "Public Lot") which has been finally subdivided and leased (for a period of longer than one year) or sold to a bulk or end purchaser or user thereof, and thereupon such Public Lot shall be released from and no longer shall be subject to or burdened by the provisions of this Agreement. As used in this Section, a bulk purchaser is an entity acquiring any relevant interest in a maximum of fifty (50) lots. This Section shall not apply to Section 3.7, and such Section shall terminate as to a Public Lot only when construction of the permitted structures on the Public Lot are complete. 5.9 No Partnership; Third Parties. It is not intended by this Agreement to, and nothing contained in this Agreement shall, create any partnership, joint venture or other agreement between the Owner and the Town. No term or provision of this Agreement is intended to, or shall, be for the benefit of any person or entity not a Party hereto, and no such other person or entity shall have any right or cause of action hereunder Waiver. No delay in exercising any right or remedy shall constitute a waiver thereof, and no waiver by the Town or the Owner of the breach of any covenant or condition of this Agreement shall be construed as a waiver of any preceding or succeeding breach of the same or any other covenant or condition of this Agreement. No waiver shall be effective unless it is in writing and is signed by the Party asserted to have granted such waiver Severability. If any provision of this Agreement is declared void or unenforceable by a court of competent jurisdiction, such provision shall be severed from this Agreement, which shall otherwise remain v9 13 4/9/2005

15 in full force and effect if the remaining provisions permit the Parties to achieve the practical benefits of the arrangements contemplated by this Agreement. Otherwise, either Party may terminate this Agreement. If any applicable law or court of competent jurisdiction prohibits or excuses the Town or the Owner, as applicable, from undertaking any contractual commitment to perform any act hereunder, this Agreement shall remain in full force and effect, but the provisions requiring such action shall be deemed to permit the Town or the Owner, as applicable, to take such action at its discretion, if such a construction is permitted by law Further Documentation. Each Party agrees in good faith to execute such further or additional instruments and documents and to take such further acts as may be necessary or appropriate to fully carry out the intent and purpose of this Agreement Fair Interpretation. Both Parties have been represented by counsel in the negotiation and drafting of this Agreement, and this Agreement shall be construed according to the fair meaning of its language. The rule of construction that ambiguities shall be resolved against the party who drafted a provision shall not be employed in interpreting this Agreement Heading; Counterparts. The headings of this Agreement are for purposes of reference only and shall not limit or define the meaning of any provision of this Agreement. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one and the same instrument Computation of Time. In computing any period of time under this Agreement the date of the act or event from which the designated period of time begins to run shall not be included. The last day of the period so completed shall be included unless it is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is not a Saturday, Sunday or legal holiday. The time for performance of any obligation or taking any action under this Agreement shall be deemed to expire at 5:00 p.m. (Arizona time) on the last day of the applicable time period provided herein Amendment. No change or addition is to be made to this Agreement except by a written amendment executed by the parties hereto. Within 10 days after any amendment to this Agreement, such amendment shall be recorded in the Official Records of Maricopa County Governing Law; Choice of Forum. This Agreement shall be deemed to be made under, shall be construed in accordance with, and shall be governed by the internal, substantive laws of the State of Arizona (without v9 14 4/9/2005

16 reference to conflict of law principles). Any action brought to interpret, enforce or construe any provision of this Agreement shall be commenced and maintained in the Superior Court of the State of Arizona in and for the County of Maricopa (or, as may be appropriate, in the Justice Courts of Maricopa County or in the United States District Court for the District of Arizona, if, but only if, the Superior Court lacks or declines jurisdiction over such action). The Parties irrevocably consent to jurisdiction and venue in such courts for such purposes and agree not to seek transfer or removal of any action commenced in accordance with the terms of this Section Attorneys ' Fees. In the event of a breach by any Party and commencement of a subsequent legal action in a court of law or forum of arbitration, the prevailing Party in any such dispute shall be entitled to reimbursement of reasonable attorneys' fees and court costs, including, but not limited to, the costs of expert witnesses, transportation, lodging and meal costs of the Parties and witnesses, costs of transcript preparation and other reasonable and necessary direct and incidental costs of such dispute No Owner Representations. Nothing contained herein shall be deemed to obligate the Owner to commence or complete any part or all of the development of the Property or any planning in connection with such development (including Infrastructure expenditures); provided, however, that any development of the Property undertaken by the Owner shall be done in accordance with this Agreement as may be amended from time to time Entire Agreement. This Agreement together with all Exhibits attached hereto (which are incorporated herein by this reference) constitutes the entire agreement between the Parties pertaining to the subject matter hereof. All prior and contemporaneous agreements, representations and understandings of the Parties, oral or written, are superseded by and merged in this Agreement. [SIGNATURE PAGE FOLLOWS] v9 15 4/9/2005

17 IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as provided herein. TOWN: TOWN OF CAVE CREEK, an Arizona municipal crporation By: Vincent Fran ia, yor Date:L?.5 Approved as to Form: By: illia /m/ Farrell, Town Attorney Date: ^l ^5-/ 0r Attested by: By: Date: v9 16 4/ 9/2005

18 OWNER: APAC E PRINGS LAND, L.L.C., an Arizon *to^^ liability comp STATE OF ARIZONA County of Maricopa Subscribed Springs Land, L.L.C. ss. and sworn to before me this c5 L- day of, 2005, by Mark Stapp, a Managing Member of Apache My Commission Expires v9 17 4/9/2005

19 EXHIBIT A

20 EXHIBIT A LEGAL DESCRIPTION CAHAVA SPRINGS TOWN PROPERTY THAT PART OF THE SOUTH HALF OF SECTION 13, TOWNSHIP 6 NORTH, RANGE 3 EAST, AND THE SOUTH HALF OF SECTION 18, TOWNSHIP 6 NORTH, RANGE 4 EAST OF THE GILA AND SALT RIVER MERIDIAN, MARICOPA COUNTY, ARIZONA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWEST CORNER OF SAID SECTION 13; THENCE NORTH 00009'49" EAST, ALONG THE WEST LINE OF THE SOUTHWEST QUARTER THEREOF, A DISTANCE OF 1, FEET TO THE NORTHWEST CORNER OF THE WEST 1,000 FEET OF THE SOUTH 1,000 FEET OF SAID SOUTHWEST QUARTER, AND TIIE TRUE POINT OF BEGINNING; THENCE NORTH 00009'49" EAST, ALONG SAID WEST LINE, A DISTANCE OF 1, FEET TO THE WEST QUARTER-CORNER OF SAID SECTION 13; THENCE NORTH 89 56'05" EAST, ALONG THE EAST-WEST MID-SECTION LINE THEREOF, A DISTANCE OF 2, FEET TO THE CENTER OF SAID SECTION 13; THENCE SOUTH '46" EAST, ALONG THE NORTH-SOUTH MID-SECTION LINE THEREOF, A DISTANCE OF 2, FEET TO THE SOUTH QUARTER- CORNER OF SAID SECTION 13; THENCE SOUTH 89058'38" WEST, ALONG THE SOUTH LINE OF THE SOUTHWEST QUARTER THEREOF, A DISTANCE OF 1, FEET TO THE SOUTHEAST CORNER OF THE WEST 1,000 FEET OF THE SOUTH 1,000 FEET OF SAID SOUTHWEST QUARTER; THENCE NORTH 00009'49" EAST, ALONG THE EAST LINE OF SAID WEST 1,000 FEET OF THE SOUTH 1,000 FEET, A DISTANCE OF 1, FEET TO THE NORTHEAST CORNER THEREOF; THENCE SOUTH '38" WEST, ALONG THE NORTH LINE OF SAID WEST 1,000 FEET OF THE SOUTH 1,000 FEET, A DISTANCE OF 1, FEET TO THE TRUE POINT OF BEGINNING. CONTAINING ACRES, MORE OR LESS. ALSO: COMMENCING AT THE SOUTH QUARTER-CORNER OF SAID SECTION 13; v] 4/15/2005

21 THENCE SOUTH 89 54'55" EAST, ALONG THE SOUTH LINE OF THE SOUTHEAST QUARTER THEREOF, A DISTANCE OF 1, FEET TO THE SOUTHWEST CORNER OF THE EAST HALF OF THE SOUTHEAST QUARTER OF SAID SECTION 13, AND THE TRUE POINT OF BEGINNING; THENCE NORTH 00 06'28" WEST, ALONG THE WEST LINE OF SAID EAST HALF, A DISTANCE OF 2, FEET TO THE NORTHWEST CORNER THEREOF; THENCE NORTH 89 56'05" EAST, ALONG THE EAST-WEST MID-SECTION LINE OF SAID SECTION 13, A DISTANCE OF 1, FEET TO THE WEST QUARTER- CORNER OF SAID SECTION 18; THENCE SOUTH 89 56'34" EAST, ALONG THE EAST-WEST MID-SECTION LINE OF SAID SECTION 18, A DISTANCE OF 2, FEET TO THE CENTER THEREOF; THENCE SOUTH 89 56'34" EAST, CONTINUING ALONG SAID EAST-WEST MID- SECTION LINE, A DISTANCE OF 1, FEET TO THE NORTHEAST CORNER OF THE WEST HALF OF THE SOUTHEAST QUARTER OF SAID SECTION 18; THENCE SOUTH 00 04'11" EAST, ALONG THE EAST LINE OF SAID WEST HALF, A DISTANCE OF 2, FEET TO THE SOUTHEAST CORNER THEREOF; THENCE NORTH " WEST, ALONG THE SOUTH LINE OF SAID WEST HALF, A DISTANCE OF 1, FEET TO THE SOUTH QUARTER-CORNER OF SAID SECTION 18; THENCE SOUTH 89 26'23" WEST, ALONG THE SOUTH LINE OF THE SOUTHWEST QUARTER THREOF, A DISTANCE OF 2, FEET TO THE SOUTHEAST CORNER OF SAID SECTION 13; THENCE NORTH 89 54'55" WEST, ALONG THE SOUTH LINE OF THE SOUTHEAST QUARTER OF SAID SECTION 13, A DISTANCE OF 1, FEET TO THE TRUE POINT OF BEGINNING. CONTAINING ACRES, MORE OR LESS. ALL CONTAINING A TOTAL OF ACRES, MORE OR LESS v1 2 4/15/2005

22 EXHIBIT B LEGAL DESCRIPTION CAHAVA SPRINGS COUNTY PROPERTY THE NORTH HALF OF SECTION 13, TOWNSHIP 6 NORTH, RANGE 3 EAST AND THE NORTHWEST QUARTER OF SECTION 18, TOWNSHIP 6 NORTH, RANGE 4 EAST OF THE GILA AND SALT RIVER MERIDIAN, MARICOPA COUNTY, ARIZONA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF SAID SECTION 13; THENCE NORTH 89 52'37" EAST, ALONG THE NORTH LINE OF THE NORTHWEST QUARTER THEREOF, A DISTANCE OF 2, FEET TO THE NORTH QUARTER-CORNER OF SAID SECTION 13; THENCE NORTH '27" EAST, ALONG THE NORTH LINE OF THE NORTHEAST QUARTER THEREOF, A DISTANCE OF 2, FEET TO THE NORTHWEST CORNER OF SAID SECTION 18; THENCE NORTH 89 57'50" EAST, ALONG THE NORTH LINE OF THE NORTHWEST QUARTER OF SAID SECTION 18, A DISTANCE OF 2, FEET TO THE NORTH QUARTER-CORNER THEREOF; THENCE SOUTH 00 03'22" EAST, ALONG THE NORTH-SOUTH MID-SECTION LINE OF SAID SECTION 18, A DISTANCE OF 2, FEET TO THE CENTER THEREOF; THENCE NORTH 89 56'34" WEST, ALONG THE EAST-WEST MID-SECTION LINE OF SAID SECTION 18, A DISTANCE OF 2, FEET TO THE EAST QUARTER-CORNER OF SAID SECTION 13; THENCE SOUTH 89 56'05" WEST, ALONG THE EAST-WEST MID-SECTION LINE OF SAID SECTION 13, A DISTANCE OF 2, FEET TO THE CENTER THEREOF; THENCE SOUTH 89 56'05 " WEST, CONTINUING ALONG SAID EAST-WEST MID-SECTION LINE, A DISTANCE OF 2, FEET TO THE WEST QUARTER- CORNER OF SAID SECTION 13; THENCE NORTH 00 18'11" WEST, ALONG THE WEST LINE OF THE NORTHWEST QUARTER THEREOF, A DISTANCE OF 2, FEET TO THE POINT OF BEGINNING. CONTAINING ACRES, MORE OR LESS v1 4 / 15/2005

23 EXHIBIT B

24 April 25, 2005 The Honorable Vincent Francia Town of Cave Creek North Cave Creek Road Cave Creek, AZ Re: P Preliminary Plat for Cahava Springs Dear Mayor Francia: Representatives from the State Land Department (Department), the Town of Cave Creek (Town), and Mark Stapp, representing Apache Springs Land, L.L.C. (Owner), met on March 8, 2005 to discuss the issue of access to the State Trust land north of the proposed Cahava Springs subdivision. The Town of Cave Creek and the Owner have agreed that approval of the proposed subdivision plat will be conditioned upon the following, and the Department has agreed to withdraw its objections to approval of the plat if it is so conditioned: 1. The Town will purchase from the Department a 40 ft. right-of-way along the south side of Saddle Mountain Road in T6N, R3E, Section 23 (a distance of approximately 2640 linear feet), and the Owner will construct and dedicate a 40 ft. half-street in the right-ofway. The Department will expedite within its statutory authority the Town's application to purchase said right-of-way. Final engineering and alignment will occur during final platting and will be subject to the approval of the Town Engineer. One purpose of said street shall be to provide legal and physical access to the adjacent State Trust lands. 2. The Town will purchase from the Department a 40 ft. right-of-way on State Trust land in T6N, R3E, to the section line between Sections 14 (Trust land) and 13 (Owner' s land), and the Owner will construct and dedicate a 40 ft. half-street along the east section line of Section 14. The Owner will dedicate a 40 ft. right-of-way and will construct and dedicate a 40 ft. half-street on Owner' s land along the western section line of Section 13. The Department will expedite within its statutory authority the Town's application to purchase said right-of-way. Final engineering and alignment will occur during final platting and will be subject to the approval of the Town Engineer. The distance of the full street length is approximately 2300 linear feet, measured southward from the northwest corner of the Owner's property. One purpose of said street shall be to provide legal and physical access to the State Trust land in Sections 11 and Where State Trust land is the only land available to achieve the full 80 ft. right-of-way (Trust lands within Section 14 but not parallel to or right on the section line) in T6N, R3E, Section 14, the Town will purchase from the Department the 80 ft. right-of-way, and will construct and dedicate an 80 ft. street in the right-of-way. The Department will expedite within its statutory authority the Town's application to purchase said right-ofway. Final engineering and alignment will occur during final platting and will be subject to the approval of the Town Engineer. The distance of the full street length is approximately 1350 linear feet, measured from the return points to the section line separating State Trust land and the Owner's property to provide legal and physical access to the surrounding State Trust lands. Page 1 of 3

25 4. Proposed roadways shall be constructed in accordance with the Town's standards for arterial roadways as may be modified by the Town Engineer, in consultation with the Department. 5. Roadway construction described above in Nos. 1-3 shall be completed prior to the issuance of Certificates of Occupancy or their equivalent for any building within the Cahava Springs subdivision. The Owner shall require any sellers of lots to the general public to disclose the existence and construction of all roadways, including but not limited to 32"d Street on the western perimeter of the site, to all prospective purchasers of land within the Cahava Springs subdivision, including in said disclosure notice that one purpose of these roadways is to provide access to adjacent State Trust lands. 6. A barrier as approved by the Town Engineer shall be provided by the Owner and/or Town just outside and north of the main entrance to Cahava Springs to prohibit through traffic to the Trust lands to the north until such time the Department requests its removal. 7. The Town and the Owner shall include the manager or other designated representative of the Department's Water Rights and Agriculture Section in future discussions with the Cave Creek Water Company concerning water service to the proposed development and the adjoining State Trust lands. 8. The State Trust land to the north of Cahava Springs is outside the present boundaries of the Cave Creek Water Company ("Water Company") service area. The Town is beginning the hearing process to acquire the Water Company by eminent domain. If the Town acquires the Water Company or its service area and Certificate of Convenience and Necessity, the Town will take appropriate action to seek to include any State Trust land within five (5) miles of Town's boundaries in the Town's service area, and/or to take any other actions reasonably required to provide water service to any such State Trust land. Any such State Trust land will bear its proportionate share of the expense of providing water when any such State Trust land is sold for development. The exact design for the most efficient and cost effective method for delivery of water to any such State Trust land will be subject to appropriate technical study and approval by the Town, said design to be developed in cooperation with the Department. 9. If Owner and Town should agree to construct a sewage treatment package plant to serve Cahava Springs, Town will require Owner to design and locate the Package Plant in a manner that would allow future expansion of the Package Plant to serve any surrounding State Trust land, subject to the determination at the time of the initial construction of the Package Plant by the Town Engineer that it is appropriate to ultimately provide capacity for future wastewater treatment to any such State Trust land by means of this Package Plant. Town will bear any costs of oversizing of any wastewater systems by Developer pursuant to this letter, and will so reimburse Owner upon presentation to Town by Owner of appropriately documented invoices. Any such State Trust land will bear its proportionate share of the expense of the Package Plant when any such State Trust land is sold for development, including any necessary reimbursement to the Town for oversizing costs previously paid by Town to Owner pursuant to the immediately preceding sentence. The exact design for the most efficient and cost effective method for wastewater service to any such State Trust land will be subject to appropriate technical study and approval by the Town, said design to be developed in cooperation with the Department. Page 2 of 3