1 Catherine M. Bowman (No. 011713) Of Counsel 2 E-mail: [email protected] SIMS MACKIN 3 3101 N. Central #870 Phoenix Arizona 85012 4 Telephone: 480-760-1482 Facsimile: 602-772-5509 5 Attorneys for The Town of Florence

6 COURT OF APPEALS STATE OF ARIZONA 7 DIVISION ONE

8 THE TOWN OF FLORENCE No. 1 CA-CV-19-0504 9 Plaintiff/Appellants, Maricopa County 10 Superior Court vs. Case No: CV 2015-000325 11 FLORENCE COPPER et al. APPENDIX TO TOWN OF 12 FLORENCE REPLY BRIEF Defendants/Appellees. 13 14 Catherine M. Bowman (No. 011713) 15 Sims Mackin 3101 N. Central #870 16 Phoenix Arizona 85012 (602)772-5500 17 Attorneys for The Town of Florence

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RAAP-001

INDEX 1 Appendix to the Town of Florence Reply Brief

2 INDEX OF DESCRIPTION APPENDIX RECORD PAGE NO. 3 1 Merrill Deposition Excerpt RAAP-004 4 2 Letter Merrill to Snyman 1-4-01 RAAP-079 5 3 Merrill Email 1-12-15 RAAP-081 6 4 Grady Gammage Trial Transcript Excerpt RAAP-083 7 5 Expert Report of Grady Gammage RAAP-099 8 6 JulieTappendorf Trial Transcript Excerpt RAAP-123 9 7 Land Use Plan RAAP-129 10 8 Merrill Deposition Excerpt (Part 2) RAAP-132 11 9 Rezoning Application RAAP-150 12

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2 RAAP-002

1 CERTIFICATE OF SERVICE 2 Catherine Bowman, being first duly sworn, upon oath states that on this 7th 3 day of April, 2020, she caused the original of the foregoing APPENDIX TO 4 TOWN OF FLORENCE REPLY BRIEF to be electronically filed through 5 AZTurboCourt and that she caused a copy of the foregoing to be deposited in the 6 United States Mail, postage prepaid, to: 7 8 Colin Campbell Osborn Maledon 9 2929 N. Central Ave, 10 Phoenix, Arizona 85012

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12 /s/ Catherine Bowman

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3 RAAP-003 1 IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA 2

3 Town of Florence, an Arizona ) municipal corporation, ) 4 ) CIVIL ACTION ) NO. CV 2015-000325 5 Plaintiff, ) ) 6 vs. ) ) 7 Florence Copper, Inc., fka ) Curis Resources (Arizona), Inc.,) 8 a Nevada corporation; RK Mine ) Finance Trust 1, a trust ) 9 organized under the laws of the ) New South Wales, Australia; and ) 10 Pinal County, Arizona. ) ) 11 Defendants. ) ______) 12 ) Florence Copper, Inc., fka Curis) 13 Resources (Arizona), Inc., a ) Nevada corporation, ) 14 ) Counterclaimant, ) 15 ) vs. ) 16 ) Town of Florence, an Arizona ) 17 municipal corporation, ) ) 18 Counterdefendant.) ______) 19

20 DEPOSITION OF

21 W. HARRISON MERRILL

22 OCTOBER 2, 2015

23 10:11 A.M.

24 Atlanta, Georgia

25 Job no. 264865

RAAP-004 Page 5 1 represent Mr. Merrill. I'm general counsel for 2 the Merrill companies. 3 MR. CAMPBELL: Jeff? 4 MR. MURRY: And appearing remotely this is 5 Jeff Murry also on behalf of the Town of 6 Florence. 7 THE VIDEOGRAPHER: Will the court reporter 8 please swear in the witness. 9 WILLIAM H. MERRILL, 10 having been first duly sworn, was deposed and 11 testified as follows: 12 EXAMINATION 13 BY MR. CAMPBELL: 14 Q. Could you state your full name for the 15 record. 16 A. Yes, sir. William Harrison Merrill. 17 Q. Mr. Merrill, in the event this video is 18 ever played to a jury, the jury will want to know a 19 little bit about you so I'm going to start off by 20 asking about your background. 21 A. Yes, sir. 22 Q. In what year were you born? 23 A. 1943. 24 Q. And were you born here in Atlanta? 25 A. I was.

RAAP-005 Page 6 1 Q. Can you tell me just a little bit about 2 your early childhood in growing up. 3 A. Yes, sir. Son of a doctor and went to 4 Westminster High School and the University of North 5 Carolina to undergraduate -- I mean to graduate 6 school -- I mean undergraduate school and then Emory 7 University to law school. 8 Q. All right. You're being modest. I've seen 9 your resume and you had quite a career at the 10 University of North Carolina, true? 11 A. Thank you. 12 Q. You were an athlete? 13 A. Yes, sir. 14 Q. And what sort of athletics did you 15 participate in? 16 A. Swimming. 17 Q. And then you also did very well 18 academically? 19 A. I did fairly well academically, yes, sir. 20 Q. You achieved a number of academic honors at 21 the University of North Carolina. 22 A. Mostly at Emory University Law School. 23 Q. You were the student body president at 24 University of North Carolina? 25 A. I was a senior class president.

RAAP-006 Page 7 1 Q. Senior class president. 2 A. Yes, sir. 3 Q. And what did you get your undergraduate 4 degree in? 5 A. In pre-med and history. 6 Q. And then did you go right into law school 7 at Emory after that? 8 A. I was going to med school at Emory and 9 changed my mind with about a week and a half to go 10 and switched over to law school so I did go to law 11 school right after the university. 12 Q. Right. And then what year did you get your 13 jurist doctorate degree? 14 A. In '68. 15 Q. And then did you go out and practice law 16 right a way? 17 A. I went into the service for about nine 18 months and then started practicing law, yes, sir. 19 Q. I see. Some of us remember in '68. That 20 was when the Viet Nam war was in its heyday. 21 A. Yes, sir. 22 Q. Well, thank you for your service. 23 And what sort of law practice did you do? 24 A. I did corporate and securities. 25 Q. And you didn't practice too long before you

RAAP-007 Page 8 1 switched over to real estate development. 2 A. No, sir. I practiced for about two and a 3 half years then I applied to business school and 4 while I was waiting to hear, I jumped into real 5 estate briefly and never left. 6 Q. Okay. And was there anything particularly 7 that prompted you into real estate or did your 8 practice lead you into it? 9 A. No. It's just while I was waiting to get 10 into business school it was an area that interested 11 me because I had practiced a little bit in real 12 estate securities and I found it kind of fascinating 13 and entrepreneurial. I didn't plan to stay in it but 14 it just turned out that way. 15 Q. Turned out that way. And then what year 16 was it that you started your real estate company? 17 A. 1970, '71. 18 Q. '70, '71. And you have pretty much been in 19 primarily real estate activities ever since. 20 A. Yes, sir. 21 Q. Are you still actively engaged in business? 22 A. I am as more a strategic adviser but I keep 23 my hand in it when I can. 24 Q. Okay. You delegate a lot of day-to-day 25 stuff to other people?

RAAP-008 Page 12 1 Vanguard Properties is involved in in Arizona. 2 Actually it goes beyond Arizona. It includes Florida 3 and Atlanta and others. If you just want to -- you 4 can look quickly at the two pages. 5 A. Okay. I'm very impressed. It's very 6 professionally done. Somebody else must have done 7 it. 8 Q. Actually at one point in time I think you 9 were the largest master community developer in 10 Arizona; is that right? 11 A. I think we were the largest private entitle 12 lot owner in Arizona and probably the country. 13 Q. Let me just ask you a little bit about 14 master community developments. This is an area that 15 you are an expert in? 16 A. I hope so. 17 Q. Would you get raw land and then entitle it 18 and bring it all the way out to development and flip 19 to homeowners or what particular part of the process 20 were you in -- 21 A. What we would do is acquire and that could 22 be one property or it could be multiple properties 23 and then we would go in for either an annexation and 24 then later zoning or if it was already in a city or 25 where we wanted it to be then we would go in for the

RAAP-009 Page 13 1 zoning of the property and we liked the larger 2 properties that would be generational in nature. I 3 have five kids so I was thinking generationally and 4 we would get the best entitlements that we possibly 5 could so that those entitlements would leave 6 flexibility for different market conditions in the 7 future. 8 Q. So by "generationally," you mean you're 9 looking at developments that could play out over 15, 10 20, 30 years? 11 A. Yes. 12 Q. Okay. If you look at -- you'll see at the 13 bottom right-hand corner there are some numbers that 14 we call Bates numbers. 15 A. Yes, sir. 16 Q. So I'm on the page that has a Bates number 17 2224 and at the top it talks about 900 acres in 18 Dynamite Mountain. That's the one. 19 A. Yes, sir. 20 Q. And if you look down at number five, number 21 five talks about a 500-acre BHP Copper mine and it 22 says that an affiliate of the Trust owns the 500-acre 23 BHP Copper mine near Florence, Arizona which contains 24 over one billion pounds of copper and then it talks 25 about how the predecessor had developed that property

RAAP-010 Page 14 1 and that the Trust was planning to ultimately joint 2 venture the development of the copper mine with a 3 large copper mining company of the Trust. Now, 4 copper mines are not master plan communities. How 5 did you get into the copper mine ownership business? 6 A. Just one moment. Let me just read this. 7 Q. You can absolutely. 8 A. I would like to re-familiarize myself. 9 Yes, sir. I can't remember. I think it was 2002, 10 5,500 acres that later became -- that this property 11 was part of became available. Actually the property 12 north of it became available. There were a number of 13 different home building companies that were vying for 14 it and it was -- the northern part of this property 15 was already zoned as a master plan community. Not 16 the way we wanted it zoned but it was already zoned 17 and we were fortunate enough to be selected as the 18 group to be able to buy that property so we bought 19 the 5,000 acres which later became Merrill Ranch and 20 then BHP Copper which owned it -- BHP had, as I 21 recall, come into the United States and they bought a 22 company called Magma Copper and Magma Copper ended up 23 being a very poor investment I think. They put in 2 24 billion and lost 4 billion because of certain closure 25 activities and other things. That's the way it was

RAAP-011 Page 15 1 recounted to me. Whether that's an exaggeration or 2 not, I don't know. But we bought it from BHP. They 3 had decided to get out of the copper business and 4 maybe the mining business altogether in the United 5 States. They wanted to sell the property. They were 6 selling it I thought very reasonably and as I say, we 7 were fortunate enough in a beauty contest to be 8 selected rather than the other competitive bids. 9 When we closed on the first 5,000 acres, they owned 10 an additional 3,700 acres as I recall which this 11 500-acre tract would be part of and I went in and I 12 told them I'd like to buy that property too to make a 13 larger master plan community and over a period of 14 nine to 12 months, we were able to get the assignment 15 of a copper lease which took a long time with the 16 state of Arizona and we bought the 3,700 acres so we 17 had a total of 8,700 acres but this property we'll 18 refer to, if you would, as the south portion which 19 was the property that contained the copper. 20 Q. Okay. So on this list you have here -- on 21 number 4, there is a thousand-acre Merrill Ranch 22 master plan community adjacent to the 5,500-acre 23 Roadrunner Estates Master Plan Community. So that 24 was the portion of the property that BHP owned that 25 was a master plan community.

RAAP-012 Page 16 1 A. The 5,500 acres was a master plan 2 community. The thousand acres refers to the southern 3 part of the property, a part of the southern -- part 4 of the 3,700 acres. We then sold 700, 800 acres to 5 an aggregate company. 6 Q. Okay. 7 A. So that we had a total of 8,000 acres but 8 that thousand acres would refer to the property I 9 think around the 500-acre copper mind. 10 Q. Okay. By an aggregate company, the 11 southern part of the property I think has the Gila 12 River, the dry riverbed running through. This was a 13 sand and gravel company I think that purchased it. 14 A. Yes, sir. 15 Q. Okay. But at least on this document you 16 break out the master plan community from the property 17 that you refer to as the BHP Copper mine. 18 A. Right. Actually we divide it. Looks like 19 in the three parts, one would be the 5,500 acres I 20 mentioned at first which we purchased initially and 21 then the thousand and the 500 referred to in 4 and 22 5 on that page would be part of the 3,700 hundred 23 acres that we acquired. 24 Q. Okay. 25 A. I don't know what happened to the rest of

RAAP-013 Page 17 1 it. We sold 700 but it looks like there's still 2 about 1,500 acres less than we owned. 3 Q. All right. Let's move a little further in 4 the document and I want you to -- if you look down at 5 the bottom right-hand page, I'm going to a document 6 that's marked 2228. 7 A. Yes, sir. 8 Q. And this is just a schedule. We are trying 9 to provide some estimate of the market value of an 10 asset and what its net worth might be after the 11 mortgages and I want you to look down here. You see 12 you list the 1,500-acre Merrill Ranch and copper mine 13 in Pinal County. 14 A. Yes, sir. 15 Q. You see that? 16 A. Yes, sir. 17 Q. And you have a market value of nineteen 18 five, 19.5 million. 19 A. Yes, sir. 20 Q. A mortgage of 1.3 million and a net worth 21 at 18.2. 22 A. Yes, sir. 23 Q. Okay. And then turn to the next page and 24 again, you see you have the BHP Copper and I assume 25 that's referring to all the land you purchased from

RAAP-014 Page 18 1 BHP Copper? 2 A. Yes, sir. That would be both tracts. 3 Q. Okay. 4 A. Again, the purchase was in two tracts even 5 though it lists more tracts. One was the northern, 6 the 5,500 acres and then the rest was the southern 7 portion that included the copper. 8 Q. All right. And if you'll turn to the next 9 page, this is actually going to be your curriculum 10 vitae as of September 2003. Is that what it appears 11 to be to you? 12 A. Yes, sir. 13 Q. And it sort of lists your background and 14 the projects you are involved in as to that period of 15 time, right? 16 A. Yes, sir. 17 Q. And you'll see in the second paragraph you 18 indicated that you acquired significant amount of 19 properties in metropolitan Phoenix and other urban 20 areas making the Trust the largest single owner of 21 entitled lots in Arizona. 22 A. Yes, sir. 23 Q. Okay. And you see you have some bullet 24 points down there. The second from the bottom is the 25 500-acre BHP Copper site containing 1.1 billion

RAAP-015 Page 19 1 pounds of copper. 2 A. Yes, sir. 3 Q. And you'll see where I learned it. If you 4 turn to the next page where I learned about your 5 honors because you list them in your curriculum 6 vitae. 7 A. Yes, sir. 8 Q. All right. And then if you turn to the 9 next page you're going to list a number of people who 10 are key players in your business in September of 11 2003. The first one you list is Mr. Hugh Nowell 12 who's present here today. 13 A. Yes, sir. 14 Q. So back then he was your vice president and 15 general counsel, true? 16 A. Yes, sir. 17 Q. Did Mr. Nowell -- we're going to be talking 18 primarily about the BHP Copper mine site. To your 19 recollection, was Mr. Nowell involved in business 20 dealings with respect to the mine? 21 A. Tangentially he was involved in everything 22 unless he was involved in something that didn't have 23 time and couldn't be involved in whatever was going 24 on at that time but yes, he was involved in virtually 25 everything we did.

RAAP-016 Page 20 1 Q. Okay. And then turn to the next page and 2 we have an individual by the name of Adrain Taylor, 3 senior vice president. 4 A. Yes, sir. 5 Q. And if you'll look at the 1, 2, 3 -- the 6 fourth paragraph, it appears that Mr. Taylor has 7 primary responsibility involving acquisition and 8 development of projects in Arizona. That was his 9 role back in September of 2003. 10 A. Yes, he headed our Phoenix office even 11 though he resided in Atlanta. 12 Q. Okay. Did he commute back and forth? 13 A. He did. Same plane we described earlier. 14 Q. Okay. Is Mr. Taylor still with the 15 company? 16 A. No, sir. 17 Q. Is he here in Atlanta now? 18 A. Yes, sir. 19 Q. And do you know what he's doing now, what 20 his business is? 21 A. I think he's just getting ready to be 22 offered a job that actually remarkably has nothing to 23 do with this. Talked to him several days ago, so. 24 Q. Okay. Has he been doing something else? 25 He's moving on?

RAAP-017 Page 21 1 A. Yes. He was consulting for a while and 2 worked for several different companies through the 3 workout process as a result of the Great Recession. 4 Q. If we wanted to find him, what city does he 5 live in here? 6 A. He lives in Atlanta. 7 Q. In Atlanta, okay. 8 A. Yes, sir. 9 Q. And how long has he been gone from your 10 company? 11 A. Six or seven years. 12 Q. Okay. Just to put things in perspective, 13 as we all know, the Great Recession started -- well, 14 let's mark it with the fall of the Lehman Brothers in 15 September of 2008. 16 A. September 23. 17 Q. Fair to say that the fall of Lehman 18 Brothers, the freezing of the liquidity capital in 19 the United States had a bad effect on real estate 20 developers. 21 A. Terrible effect. 22 Q. And I take it that resulted in cutbacks and 23 workouts with respect to a fair amount of your 24 properties I assume. 25 A. Yes, sir.

RAAP-018 Page 27 1 They all reported -- Adrain reported to me and they 2 reported to Adrain and to me. 3 Q. Okay. 4 A. I spent a lot of time out there. 5 Q. We've mentioned off the record you were 6 telling me you would take a red-eye out every Sunday 7 night. 8 A. Every Monday, Monday morning. 9 Q. Okay. You remember those days. 10 A. I do remember those days. 11 Q. Now, is Ms. Dodson still with the company? 12 A. No. None of the people in Phoenix are. We 13 had to eventually close the office 2007/2008. 14 Q. Okay. 15 A. I can't recall exactly when and I think 16 totally close down probably in 2009 just simply 17 because the Great Recession was having such an impact 18 on everything. 19 Q. Still haven't come back. 20 A. No, we're coming back. 21 Q. Is Ms. Dodson still in Phoenix; do you 22 know? 23 A. Mr. -- 24 Q. Ms. Dodson, is she still in Phoenix? 25 A. Yes, I believe she is.

RAAP-019 Page 40 1 Q. Do you recall if there are drafts of this 2 agreement that went back and forth? 3 A. Oh, I'm sure there were. It was a 4 thoroughly negotiated agreement between the Town, its 5 attorneys, its staff and my staff and my attorneys 6 and me. 7 Q. It's now 2015. This was done 12 years ago. 8 A. Yes, sir. 9 Q. Do you recall if your company -- if your 10 company kept any of the drafts or any of the 11 communications with respect to this? Where would 12 they be? 13 A. I doubt that we kept any of those. 14 Q. When the Phoenix office was shut down, what 15 happened to the documents in the Phoenix office? 16 A. A lot of stuff was thrown away and some 17 came back to Atlanta. 18 Q. Do you know if anyone has done a search of 19 what files you do have remaining as to whether 20 there's any files with respect to the property 21 development agreement with respect to correspondence 22 or drafts leading up to the final? 23 A. I don't think so. Hugh Nowell may have 24 done some but basically the thing we were most 25 interested in is whatever books we had that were the

RAAP-020 Page 47 1 Q. And to make an investment like that you 2 want to be pretty sure that the Town was going to 3 clearly define what your rights are so that you have 4 a path forward to recouping not only your investment 5 but hopefully making a profit. 6 A. Yes, sir. And it's also I might add 7 important for the -- you said county. I think you 8 meant the Town, Florence. 9 Q. Yes. 10 A. It's also important for the Town so that 11 they know what their rights are too so it's not a 12 unilateral agreement that just benefits the 13 developer. It also defines the rights of the Town 14 and the developer vis-a-vis the development itself. 15 Q. Correct. And certainly from the Town's 16 point of view, they are looking for growth and a tax 17 base and economic development, right? 18 A. Yes, sir. 19 Q. Now, if you turn to the next page -- this 20 is going to be 416 -- and this is the part that 21 actually starts the agreement, right? 22 A. Yes, sir. 23 Q. And right at the very first thing all 24 documents and exhibits referred to in this agreement 25 are incorporated by reference into the agreement,

RAAP-021 Page 48 1 right? 2 A. Yes, sir. 3 Q. And that includes the planned unit 4 development agreement. 5 A. Yes, sir. 6 Q. Turn to the next page, 417. You see up at 7 the top it has Paragraph 3 that says, Plan approval 8 invested rights and it says, For the term of this 9 agreement, owner shall have a vested right to develop 10 and use the property in accordance with this 11 agreement in the development plan. Now, you have 12 legal training and you also have been in the real 13 estate industry for virtually your whole career. 14 What's the importance to you of a vested right? 15 A. A vested right in essence means that it 16 cannot be changed by the passage of time. There are 17 some zonings which last a year if you don't develop 18 the property. Those are usually smaller properties 19 but for the large, complicated master plan 20 communities, for the very reason you said from a 21 developer's perspective but also from a Town's 22 perspective. This is important to have rights. They 23 are vested which means you are entitled throughout 24 the development process pursuant to that development 25 agreement.

RAAP-022 Page 49 1 Q. Okay. If you look at Paragraph 5, there is 2 a section entitled Rights Run with the Land and it 3 says, The rights established under this agreement, 4 the development plan are attached to and run with the 5 property. 6 A. Yes, sir. 7 Q. On the effective date of this agreement, 8 Owner and its successors are entitled to exercise the 9 rights granted pursuant to this agreement. 10 So again, from the view of a master plan 11 community developer, what's the importance of having 12 rights that run with the land? 13 A. Rights that run with the land mean that if 14 you sell it or you assign it or you sell a part of 15 it, those rights go with the property itself and they 16 are not just rights inherent to the original owner 17 who negotiated, in this case, the pre-annexation 18 development agreement. So it continues to go with 19 whoever the ownership might be. So if there are five 20 owners, it would end up first, second, third, forth, 21 fifth would have those vested rights. 22 Q. All right. So for example, if you go in 23 and you grade the property, you bring utilities into 24 the property so it's all set for a home builder and 25 then you sell it to a home builder, the home builder

RAAP-023 Page 50 1 gets the same rights you have. 2 A. Yes, sir. 3 Q. And you wouldn't have invested $40 million 4 into this property without those rights running with 5 the land. 6 A. No. And part of that 40 million was to get 7 those rights and negotiate those rights and go 8 through those processes with the Town. 9 Q. Now, if you look down a little further on 10 number 6 there is a development plan and it states 11 that the development of the property shall be in 12 accordance with the development plan and this 13 agreement unless otherwise amended pursuant to this 14 agreement and then it says owner is authorized to 15 implement the types and uses, zoning variances, 16 densities and intensities. What is a variance? 17 A. A variance is normally something that you 18 ask with respect to your existing zoning. So 19 normally a variance would be if we've got a master 20 plan that's approved in this document and then 21 because of the location of a new road or 22 circumstances, property needs to be best zoned a 23 different way whether that's lower density, high 24 density or moving it to commercial. That would be a 25 variance and you would have to go through the process

RAAP-024 Page 51 1 with the Town to get the approval of that variance. 2 Q. All right. I want you to turn to page 420 3 and at the very top of the page, the very first full 4 sentence on the top of page 420 you see it says, The 5 Town shall not apply to the property any legislative 6 or administrative land use regulation adopted by the 7 Town or pursuant to an initiated measure that would 8 change, alter, impair, prevent, diminish, delay or 9 otherwise impact the development or use of the 10 property as set forth in the development plan. Do 11 you see that? 12 A. Yes, sir. 13 Q. And that's something you negotiated for as 14 part of your vested rights in this property, correct? 15 A. Yes, sir. 16 Q. Now, let me ask you to turn to 426 and then 17 you'll see there is a provision 19 on notices and 18 you'll see on the owner it has you and it has 19 Mr. Adrain Taylor listed as officers of Vanguard 20 Properties, right? 21 A. Yes, sir. 22 Q. And then remember there is a name of a 23 Gallagher Kennedy attorney that escaped you a little 24 while ago. Would it be this Mr. John D. Doolittle? 25 A. No. I just didn't see John's name on

RAAP-025 Page 52 1 Gallagher and Kennedy. 2 Q. Oh, okay. 3 A. But John is the one who worked with us 4 through the zoning process. 5 Q. All right. 6 A. Again, our staff did most of it and then 7 John was the attorney involved. 8 Q. So he would have been -- as an attorney, he 9 would have been involved in all the legal paperwork 10 for this deal, I assume. 11 A. Yes. 12 Q. So assuming they have the records if there 13 were drafts going back and forth, do you think -- 14 well, he would be the one we'd maybe go ask for it? 15 A. Probably so. 16 Q. I'm going to move you forward here to 17 Exhibit number B. So it's going to be 441 and 441 is 18 going to be Exhibit B. It says the Development Plan 19 and if you turn the page, there is the Merrill Ranch 20 Planned Unit Development submitted to the Town of 21 Florence dated November 7th, 2003, correct? 22 A. Yes, sir. 23 Q. So this is going to set forth the plan of 24 development that you wanted to get vested rights for, 25 correct?

RAAP-026 Page 53 1 A. Yes, sir. 2 Q. Now, let me jump outside the document for a 3 moment. When we looked at the exhibit that was used 4 in some capacity to obtain financing where you list 5 the BHP Copper mine -- do you recall that from 6 earlier this morning? 7 A. Yes, sir. 8 Q. And you state in that exhibit that you are 9 looking to joint venture the copper mine with 10 someone, true? 11 A. Yes, sir. 12 Q. And that was also in 2003. Did you have 13 any intention whatsoever when you entered into a 14 property annexation and development agreement with 15 the Town of Florence to give up your right to look 16 for a joint venture for the copper mine? 17 A. I don't think it was ever an issue one way 18 or the other and our primary focus at the time was to 19 get the zoning. At that time copper was not worth 20 much and obviously had sold it but we didn't know if 21 it would have future value or not and we were not in 22 the mining business so I don't think that -- in 23 answer to your question, I don't think there was 24 discussion. If there was discussion, I don't recall 25 it being substantive at all.

RAAP-027 Page 54 1 Q. So in general in your conversations with 2 Mr. Rankin and James Mannato leading up to the 3 property annexation and development agreement, do you 4 recall any conversation where they asked you to give 5 up your rights with respect to the copper mining 6 property? 7 A. No. As I mentioned, I don't think it was a 8 subject of discussion at all. 9 Q. All right. I want you to turn to page -- 10 it's going to be Bates number 483 so I'm going to 11 jump you in now. Now, you'll see there's a Paragraph 12 7 called Nonconforming Uses of Land. Can you see 13 that? 14 A. Yes, sir. 15 Q. Now as a developer, real estate developer, 16 does nonconforming uses of land have a particular 17 meaning to you? 18 A. If you don't mind, let me read this 19 paragraph so I can be a little bit more specific. 20 Q. Yes, you can. 21 A. Yes, sir. 22 Q. All right. So my question was does the 23 phrase "nonconforming uses of land" have a particular 24 meaning to you as a developer of master plan 25 communities?

RAAP-028 Page 55 1 A. Not a strong meaning. Normally a 2 nonconforming use of land would be a use that does 3 not conform to the zoning. 4 Q. All right. You see in this particular 5 provision -- well, let me strike that and go back. 6 Are you aware that if property has a use prior to its 7 annexation, that would not otherwise be allowed under 8 the zoning laws but that use is grandfathered into 9 the property? 10 A. I would think that it would depend on the 11 agreement itself. 12 Q. Okay. You see here -- well, this 13 particular paragraph deals with nonconforming uses of 14 land, right? 15 A. Yes, sir. 16 Q. And this particular provision says that 17 such nonconforming uses may continue so long as it 18 remains otherwise lawful, right? 19 A. Yes, sir. 20 Q. And then it has bullet points provided and 21 it has three bullet points. 22 A. Yes, sir. 23 Q. And look at the third bullet point. It 24 says if any such nonconforming use of land ceases for 25 any reason for a period of more than 180 days, any

RAAP-029 Page 56 1 subsequent use of such land shall conform to the 2 regulation specified by this planed unit development 3 for the district in which such land is located with 4 the exception of the copper mining operations. Do 5 you see that? 6 A. Yes, sir. 7 Q. Now, the only copper mining operations on 8 the property was the BHP copper mining operations, 9 right? 10 A. Yes, sir. 11 Q. Do you have any recollection at all about 12 negotiating for that exception for copper mining 13 operations? 14 A. I do not. 15 Q. You had no intention of giving up any 16 copper mining rights when you signed this agreement, 17 correct? 18 A. Well, as I said, my focus at the time was 19 really to get a master plan community that would be 20 generational so I was focused more on the 21 residential. 22 Q. Okay. 23 A. And the commercial and the ability to move 24 it around. 25 Q. Turn to page 485 and you see Paragraph 12,

RAAP-030 Page 57 1 it talks about drill sites. 2 A. Yes, sir. 3 Q. And it says, Drilling, mining or 4 exploration for any minerals, oils, gas or other 5 hydrocarbon substances shall be prohibited in the PUD 6 area with the exception of that area indicated as the 7 BHP Copper mine until said mine is closed. 8 A. Yes, sir. 9 Q. All right. Do you recall negotiating for 10 the right to drill/mine within the BHP Copper mine 11 area? 12 A. I don't think we negotiated. I think 13 that's what existed. There was already an in situ 14 leaching project that had occurred so we either had 15 to I think -- and again, this is a Brown and Caldwell 16 thing but we either had to close the mine or we had 17 to continue to monitor it, which is what we were 18 doing with Brown and Caldwell and I think we had 19 already hired Brown and Caldwell at this time but I'm 20 not sure. Probably it's in your correspondence here. 21 Q. We're going to go through some 22 correspondence a little later here. We're working 23 our way towards it where you engage in almost two and 24 a half, three years of negotiations to sell the BHP 25 Copper mine to Hunter Dickinson.

RAAP-031 Page 58 1 A. Yes, sir. 2 Q. And without refreshing your memory by going 3 through it, you do recall that you had extensive 4 discussions with Hunter Dickinson about selling them 5 the copper mine? 6 A. I think we did. I think we had two, one 7 initially for a period of time that didn't go 8 anywhere and then I think one that had to do 9 primarily with the state lease that we actually ended 10 up selling to them. 11 Q. And I assume the reason you were able to 12 enter into those negotiations was you assumed that 13 you had the right to mine this property and 14 consented -- you could sell it to a third party. 15 MR. KRAMER: Object to form. 16 THE WITNESS: Well, I assumed that 17 whatever rights were there we did have and if 18 they weren't, I had always assumed that it 19 would be beneficial to the Town if it were 20 mined any way and that they would want that. 21 BY MR. CAMPBELL: 22 Q. And you assumed that one of the rights you 23 had was the ability to drill, mine or explore for any 24 minerals, oil, gas or other hydrocarbon substances in 25 the area indicated as the BHP Copper mine.

RAAP-032 Page 59 1 MR. KRAMER: Object to form. 2 THE WITNESS: I don't think we thought a 3 lot about it one way or the other because we 4 didn't plan to do that but we thought the right 5 was certainly there at this time. 6 MR. CAMPBELL: All right. I've been 7 reading a lot about how sitting is bad for you 8 so why don't we take -- 9 THE WITNESS: Did you read the Wall Street 10 Journal article? 11 MR. CAMPBELL: I did, I did. So why don't 12 we -- I'd like to take about five minutes every 13 hour. 14 THE WITNESS: I remember eight minutes of 15 standing and two minutes of walking around, 16 right? 17 MR. CAMPBELL: Right, right. 18 THE VIDEOGRAPHER: We are off the record 19 at 11:19 a.m. 20 (A recess was taken.) 21 THE VIDEOGRAPHER: The time is 11:32 a.m. 22 and we are back on the record. 23 BY MR. CAMPBELL: 24 Q. Just wanted to go back and cover something 25 I forgot to ask you. The Paloma ranch is out along

RAAP-033 Page 61 1 Q. Let me just go back to 442 which is the 2 first page of the planned unit development agreement 3 and it was prepared by a company called Jack Johnson 4 Company. Do you remember them? 5 A. Very well. 6 Q. And who was the Jack Johnson Company? 7 A. Jack Johnson was an international planning 8 and engineering firm in Park City, Utah and we bought 9 75 percent interest in Jack Johnson Company and they 10 specialized in resorts. They did probably more ski 11 resorts than anybody in the world at the time and 12 they did Deer Valley, Deer Crest and we bought them 13 or the majority interest in them so that we would 14 have a planning firm who could plan all of these 15 entitle lots because everybody was busy at that time 16 in Phoenix and it was very difficult to get your 17 planning work done on time. 18 Q. Are they still in business? 19 A. They are not. 20 Q. When did they go out of business? 21 A. The Great Recession. 22 Q. Great Recession. Were you the majority 23 owner of them when they went out of business? 24 A. The Merrill Trust entities were the 25 majority owner, 75 percent.

RAAP-034 Page 67 1 Merrill Ranch which would be potable water, mine 2 closure, which would primarily be Ronnie Caldwell and 3 the architectural -- I mean the archaeological 4 aspects which we ended up with some unexpected 5 archaeological aspects as almost everybody else in 6 Phoenix does. 7 Q. All right. By archaeological aspects, 8 there were some native American artifacts of the land 9 you had purchased? 10 A. On sections of it, yes, sir. 11 Q. All right. And that requires all sorts of 12 things with respect to before you can develop on land 13 like that, right? 14 A. Yes, sir. 15 Q. Now regarding closing the mine, you 16 understand that when you purchased the property there 17 had been a pilot project on the property. Do you 18 recall that? 19 A. Yes, sir. 20 Q. And that pilot project was being monitored 21 by Brown and Caldwell? 22 A. Yes, sir. 23 Q. And that costs you money every year to do 24 that, correct? 25 A. Every quarter.

RAAP-035 Page 68 1 Q. But if you were going to close the mine, 2 that required complying with certain regulations with 3 respect to closure. 4 A. Yes, sir. 5 Q. And that was going to cost money too. 6 A. Yes, sir. 7 Q. So in this particular document, Mr. Taylor 8 is looking at what he anticipates the cost would be 9 to actually close the mine, right? 10 A. Yes, sir. 11 Q. Now, I noticed there is an indication here 12 whether he has a signed contract for anything. There 13 is no contract for anyone to come in and close the 14 mine. 15 A. Yes, sir. 16 Q. Do you remember discussions on or about 17 this time in 2005 about closing it, not closing it, 18 keeping it open? 19 A. We had decided at some point, and I don't 20 remember the date or even the year, but to go ahead 21 and close the mine and the reason we decided that is 22 that the -- I think it was the state was discussing 23 the lease that we had bought as part of Florence 24 Copper and we were balancing the cost of continuing 25 to monitor versus the cost of closing and I think we

RAAP-036 Page 69 1 decided to close but I don't know that we carried 2 through with it and we might have decided just to 3 continue to monitor. Again, 2005 was kind of the -- 4 late 2000 -- 2005 was the height of the market but it 5 was also at the end of 2005 was the subtle beginning 6 of the end of the fabulous market out in Phoenix. 7 Q. Okay. 8 A. Excuse the long answer to a short question. 9 Did I answer your question? 10 Q. You did; you did. 11 A. Okay. 12 Q. Well, let me just ask you this. Do you 13 recall that the mine never was closed? 14 A. Yes, sir. It was not closed. 15 Q. Let's turn to Exhibit 12. Exhibit 12 is a 16 letter from Ms. Jan Dodson to Mr. Larry Quick, the 17 planning director of the Town of Florence and do you 18 recall what this letter was about? 19 A. If you don't mind, let me read it and see 20 if I can recall. 21 Q. Please, go ahead. 22 A. I don't recall the letter specifically but 23 it certainly brings up what was going on I think at 24 that time. 25 Q. All right. Let me see if I can put it in

RAAP-037 Page 75 1 right? 2 A. No, sir. 3 Q. And you didn't get into the details of in 4 situ mining and the engineering aspects of it? 5 A. No, sir. 6 Q. Look at the second page. You see where it 7 says "property"? 8 A. Yes, sir. 9 Q. It says, Merrill owns all but 160 acres of 10 the 350-acre facility site. The 160 acres is owned 11 by the state of Arizona and the state's 160 acres is 12 located within the in situ mine site, correct? 13 A. Yes, sir. 14 Q. All right. It was always clear that Hunter 15 Dickinson wanted to pick up the mining lease and the 16 adjoining property that contained the ore deposit, 17 right? 18 A. Yes, sir. 19 Q. Fair to say that you believe on 20 November 21st, 2006, the date of this letter that you 21 had the right to sell that? 22 A. The right to sell our property? 23 Q. Yes. 24 A. Yes, sir. 25 Q. And fair to say that on November 21st,

RAAP-038 Page 76 1 2006, you thought you had the right to mine that 2 particular property that you were entering into 3 discussions of Hunter Dickinson on? 4 MR. KRAMER: Object to form. 5 THE WITNESS: That's a more difficult 6 question. We never thought it would be a 7 problem. I don't think there was ever -- 8 whether or not we had the right, but I always 9 thought at least that the Town would want it if 10 it was the right thing to do because they would 11 get some revenues from it so that's a difficult 12 question to answer precisely. 13 BY MR. CAMPBELL: 14 Q. On November 21st, 2006, did you have a 15 question about whether you had the right to mine the 16 land that Hunter Dickinson had made a proposal about? 17 A. I don't think I thought about it much one 18 way or the other. My feeling was that the -- let me 19 express it a different way. My feeling was that the 20 property could be mined. Whether or not it was a 21 right or was something I thought that could be done 22 in conjunction with the state lease, I didn't have 23 much doubt about at all and Hunter Dickinson was in a 24 much better position to determine that than I was. 25 MR. CAMPBELL: Can you reread that.

RAAP-039 Page 77 1 (Whereupon, the record was read by the court 2 reporter as follows: 3 Question: "I don't think I thought 4 about it much one way or the other. My feeling was 5 that the -- let me express it a different way. My 6 feeling was that the property could be mined. 7 Whether or not it was a right or was something I 8 thought that could be done in conjunction with the 9 state lease, I didn't have much doubt about at all 10 and Hunter Dickinson was in a much better position 11 to determine that than I was.") 12 BY MR. CAMPBELL: 13 Q. All right. You had no doubt you could mine 14 the land. 15 A. I felt like we could; yes, sir. 16 Q. You would agree with me that the ability to 17 mine the land is a material fact with respect to a 18 negotiation between you and Hunter Dickinson about 19 their buying the land for mining purposes? 20 MR. KRAMER: Object to form. 21 THE WITNESS: Yes. I mean, they would not 22 have bought the land from us if they didn't 23 feel like they could mine it certainly. 24 BY MR. CAMPBELL: 25 Q. And if you had any concern whether you

RAAP-040 Page 78 1 lacked the vested right to mine the land, would you 2 agree with me that would be a fact you would have 3 told Hunter Dickinson? 4 MR. KRAMER: Object to form. 5 THE WITNESS: That's recalling something 6 that I don't recall but I would think that it 7 would have come out in the negotiations either 8 from us or from Hunter Dickinson; yes, sir. 9 BY MR. CAMPBELL: 10 Q. We're going to go through two and a half 11 years of letters. Let me just phrase it this way. 12 In not a single one of those letters do you express 13 any reservation on behalf our your companies about 14 your ability to sell this land as a mine. Do you 15 recall that? 16 MR. KRAMER: Object to form. 17 THE WITNESS: I don't think, as I said 18 earlier, that we thought that it could not be 19 mined. 20 BY MR. CAMPBELL: 21 Q. In the very first document we looked at in 22 2003 you list the property as a mining property, the 23 BHP Copper mine project, right? 24 A. Yes, sir. 25 Q. And you state in that document your

RAAP-041 Page 79 1 intention to joint venture a mine on that property, 2 right? 3 A. Yes, sir, umn-hmn. 4 Q. All right. 5 A. Let me add for clarification. It was an 6 option we thought was available and we thought it 7 back then when we bought the property. We were 8 fascinated and the copper was selling for not very 9 much money and it was not feasible to do it. 10 Otherwise, they probably wouldn't have sold it to us 11 in the first place. 12 Q. Actually one of the things that happens 13 between 2003 and 2009, do you recall that the price 14 of copper went up? 15 A. Yes, sir. 16 Q. And when the price of copper came up then 17 actually there was a lot of interest in this mine, 18 correct? 19 A. Particularly as housing went down. 20 Q. Right. 21 A. From our perspective. 22 Q. Right. 23 A. Yes, sir. 24 Q. And you always felt you had the option of 25 either mining the property or developing it

RAAP-042 Page 80 1 residentially. You could go either direction. 2 MR. KRAMER: Object to form. 3 THE WITNESS: Yes, sir. 4 BY MR. CAMPBELL: 5 Q. I'm going to stay away from the technical 6 aspects of mining and in situ. 7 A. Thank you. 8 Q. All right. One of the things in this 9 letter -- maybe I should give you an example of it. 10 If you look at 4327 which is page 2 of the letter -- 11 A. Yes, sir. 12 Q. -- and they say that Merrill has three 13 basic concerns with respect to the property described 14 above and you'll see there is a concern -- 15 A. Are you under property? 16 Q. Yeah, under "property." 17 A. Okay. Yes, sir. 18 Q. There's three bullet points. 19 A. Okay. 20 Q. One concern is going to be how long it's 21 going to take before the mine is exhausted and 22 closed. Another concern is what impact it will have 23 on your surrounding property and a third concern is 24 subsidence in the property. Do you remember 25 discussions with Adrain and others about this? This

RAAP-043 Page 81 1 seems to be coming from you. 2 A. No. Actually this is pretty technical 3 stuff. This probably was Adrain and Roger. 4 Q. Okay. 5 A. But most things they discussed with me but 6 if they did discuss this kind of thing it was 7 something I don't recall. It was kind of what I 8 would consider the minutia deal aspects or the mining 9 aspects which is to say I never fully understood. I 10 always tried to understand in situ leaching and I 11 understood it to be noninvasive and that's really 12 what was important from my perspective. 13 Q. Okay. Well, let's turn to Exhibit 16. I'm 14 going to skip 15 because we are going to duplicate 15 those letters. 16 A. Okay. 17 Q. Exhibit 16 is going to be a letter from 18 Mr. Schafer to Adrain Taylor July 4th, 2007, and it's 19 an e-mail that attaches a letter. Why don't you take 20 a look at it and tell me if you recall getting this 21 letter or seeing it. 22 A. I don't recall it. 23 MR. KRAMER: I apologize. What exhibit? 24 MR. CAMPBELL: Number 16. 25 THE WITNESS: 16.

RAAP-044 Page 82 1 MR. KRAMER: 16, thank you. 2 THE WITNESS: 1200. 3 BY MR. CAMPBELL: 4 Q. Look at the attached letter. 5 A. Yes, sir. 6 Q. It's gonna have -- it's the next page. 7 A. Yes, sir. 8 Q. And just take a look at it and tell me if 9 you recall ever seeing that. 10 A. I don't recall precisely the letter but 11 since it's an offer, I saw all offers so I imagine I 12 saw this letter. I just don't recall the specific 13 letter. 14 Q. Okay. Let's look at the letter so it's 15 going to be page 2 of Exhibit 16 and you'll see it 16 starts off with Mr. Schafer. Let me just ask you. 17 Did you ever meet Mr. Schafer? 18 A. I don't recall meeting Mr. Schafer 19 personally. I think Adrain and Roger were the ones 20 who talked to him, particularly Adrain I think. 21 Q. Do you see, Thank you much for your 22 telephone call and discussion two weeks ago. Hunter 23 Dickinson continues to seek a business formula that's 24 acceptable -- 25 A. I'm sorry. Where are you? Page 4?

RAAP-045 Page 83 1 Q. Oh, I'm at the very beginning of the first 2 paragraph. 3 A. Okay. 4 Q. Anyway, Mr. Schafer is saying we're trying 5 to seek a formula so we're sort of at a high level 6 here to structure a deal with respect to the Florence 7 Copper project, right? 8 A. Yes, sir. 9 Q. And you'll see in the next paragraph we 10 understand from our discussion that Merrill had 11 determined that it's willing to sell about a thousand 12 acres of the Florence Property Holdings held by the 13 Florence Copper Mining Company that are located on 14 the south side of Hunt Highway, including the state 15 mineral lease lands, right? 16 A. Yes, sir. 17 Q. All right. Do you recall making a decision 18 on or about July 5th, 2007, that if you had an 19 acceptable deal, and I know that's a big "if," that 20 you would be willing to sell a thousand acres 21 including the state mining lease to Hunter Dickinson? 22 A. I don't recall the time frame but I do 23 recall the discussions and I do recall that we were 24 very interested. 25 Q. Okay.

RAAP-046 Page 84 1 A. Is that what you're asking? 2 Q. Yes. And do you see in the fourth 3 paragraph that Hunter Dickinson is interested in the 4 land to the south of the Hunt Highway, right, and 5 that they felt this land could be isolated from the 6 remaining lands which are called the real estate 7 lands? 8 A. Yes, sir. 9 Q. All right. So did you understand in 2007 10 the concept was Hunter Dickinson would buy the land 11 south of Hunt Highway; you would retain all the lands 12 north of Hunt Highway and to the west that were part 13 of the master plan community? 14 A. Yes. Actually they would only buy part of 15 the southern property because we had commercial 16 property also that was south but they were going to 17 buy the property and I don't know if this was all of 18 it but most of it that would be the noncommercial 19 property so I think your concept is pretty much 20 correct. 21 Q. So turn to the second page of the letter 22 which is going to be -- the last Bates stamp is 1202. 23 A. Yes, sir. 24 Q. And I just want to talk about the structure 25 they were talking about here. They're talking --

RAAP-047 Page 85 1 Hunter Dickinson at this time is talking about a 2 formula where they would make a cash payment, 3 correct? 4 A. Yes, sir. 5 Q. But they're not sure at this time whether 6 the property can be developed so they're talking 7 about going in and looking at feasibility and if it 8 can't be developed, they want you to buy the land 9 back, right? Do you remember that? 10 A. I don't. Where are you on this page? 11 Q. Why don't you take a moment. Just let's 12 see if it refreshes your recollection. Just take a 13 look at the letter. 14 A. Okay. Not to take too much time. I just 15 breezed over it. I don't remember these precise 16 negotiations but I do remember the structure where we 17 did not want -- and this refreshes my memory -- where 18 we did not want the residential development and the 19 commercial development to be disturbed by the mining 20 and that was probably the reason that he wanted to 21 buy the larger acreage so they'd have a buffer. 22 That's my general recollection. 23 Q. Do you have a recollection that in terms of 24 negotiating a strategy that what you were trying to 25 bargain for was two things: The cash payment for the

RAAP-048 Page 99 1 negotiating to sell the mining property to Hunter 2 Dickinson? 3 A. Yes, sir. Didn't you say that was six 4 through nine? 5 Q. Yes. 6 A. Yes, sir. 7 Q. I think we just saw some 2007 e-mails. 8 A. Yes, sir. 9 Q. And you recall with respect to this master 10 development plan, Exhibit Number 5, you did have, 11 from time to time, conversations with Mayor Rankin. 12 A. My discussions with Mayor Rankin were 13 mostly focused around the original development plan 14 and the annexation. 15 Q. Back in 2003. 16 A. But I continued to have periodic 17 discussions but very infrequently. Those would have 18 been mostly Adrain. 19 Q. Okay. With respect to the master 20 development plan that's Exhibit Number 5, do you 21 recall having any discussions yourself with someone 22 of the Town? 23 A. I don't recall specifically. At that time 24 we had the full staff and they were probably handling 25 that. It would be Adrain, Janet Dodson, Roger and

RAAP-049 Page 100 1 Joe Agee would have had most of the discussions with 2 them but when I came and if there were issues, 3 normally I would get involved in those and normally 4 would be with Mayor Rankin or it might be with him 5 and one of his other folks. 6 MR. KRAMER: Before the next question I'd 7 like to interpose an objection. Excuse me. 8 We've been on the record now for two hours. 9 There's a presumptive four-hour limit to this 10 deposition pursuant to the Arizona Rules of 11 Civil Procedure and we believe that we should 12 have equal time to question Mr. Merrill so if 13 there are going to be objections to the length 14 of the deposition past four hours, we object to 15 any further questioning by the defendants in 16 this case. 17 BY MR. CAMPBELL: 18 Q. My next question then do you recall having 19 any conversations with anyone at the Town on or about 20 July 6 of 2007 about your ongoing negotiations with 21 Hunter Dickinson about selling the mine property? 22 A. I wouldn't have I think probably had any 23 discussions with the Town with respect to Hunter 24 Dickinson and I don't normally, unless we had a 25 completed negotiation, is we would keep that amongst

RAAP-050 Page 101 1 ourselves. Now, Adrain may have had discussions with 2 the Town but I doubt very seriously if I would have 3 had. 4 Q. Fair to say that in your opinion nothing 5 with respect to the July 2007 development plan 6 affected your ability to continue negotiations with 7 Hunter Dickinson for the sale of the mine? 8 A. I mean, we obviously continued negotiations 9 so I don't see that it would have had any effect in 10 our discussions with them. 11 Q. All right. Fair to say that you didn't 12 think anything was done that took away your rights to 13 sell the property as a mining property? 14 MR. KRAMER: Object to form. 15 THE WITNESS: As I said, we always thought 16 that it could be mined and that if there was a 17 problem, there wouldn't be a problem with the 18 Town. We never thought that that would be an 19 issue. 20 BY MR. CAMPBELL: 21 Q. All right. Now, let's put this book aside 22 and go back to the other book. If you want to hand 23 it to me, I'll put it down for you. 24 MR. KRAMER: And I don't mean to be rude 25 but one thing I would like to just ask counsel

RAAP-051 Page 162 1 THE WITNESS: We discussed it had become a

2 political football. I was inquiring as to what

3 the problem was and that it had become a very

4 political issue. I think as I recall, the

5 primary protagonist in making it difficult was

6 Southwest Value Partners because they didn't

7 want it because they felt that it would affect

8 the development of their property. I told her

9 I didn't think so because it was in situ and if

10 it was not invasive but they were -- apparently

11 it had become a pretty hot topic with some of

12 the folks in the town but I think what

13 Ms. Maguire and I discussed was it was

14 precipitated mostly by Mr. Sarver and his

15 people by Southwest Value Partners.

16 BY MR. KRAMER:

17 Q. And did she tell you where she got that

18 information or how she formed that opinion?

19 A. Well, I think she was representing Curis.

20 Q. Okay.

21 MR. KRAMER: Next in order, please.

22 MR. CAMPBELL: This is going to be 56?

23 MR. KRAMER: Yes, sir.

24 (Whereupon, the court reporter marked Exhibit 56 for 25 identification.)

RAAP-052 Page 163 1 BY MR. KRAMER:

2 Q. I've handed you what's being marked as

3 Exhibit 56 to your deposition. Do you recognize it?

4 A. May I take just a moment please, sir?

5 Q. Yes, take your time.

6 A. Yes, sir.

7 Q. Is that the affidavit that Ms. Maguire sent

8 you as a result of your conversations back in

9 December of 2013?

10 A. Yes, sir. It appears to be.

11 Q. And why were you unable to sign that

12 affidavit?

13 A. Well, there were just some things in here

14 that were not accurate.

15 Q. Could you point those out for me using this

16 yellow highlighter that I'm handing you and we'll

17 mark your copy as the next exhibit in order, 57.

18 MR. CAMPBELL: I'm sorry. Are you marking

19 another copy? Oh, he's going to mark it?

20 MR. KRAMER: He's going to mark it then.

21 We'll mark it as an exhibit to the deposition.

22 (Whereupon, the court reporter marked Exhibit 57 for 23 identification.)

24 BY MR. KRAMER:

25 Q. You know what, Mr. Merrill, we might be

RAAP-053 Page 164 1 able to get to this in an easier way.

2 A. All right, sir.

3 Q. Try to save some time.

4 MR. KRAMER: Next in order, please.

5 (Whereupon, the court reporter marked Exhibit 58 for 6 identification.)

7 BY MR. KRAMER:

8 Q. And I don't want to trip you up,

9 Mr. Merrill. Just so you know, we do have a redline

10 version of that affidavit that was produced to us in

11 the seventh or eighth supplemental disclosures that

12 were provided to us by Florence Copper. If you just

13 want to compare that with what you've done and tell

14 me if that accurately reflects the additions,

15 deletions, changes that you made.

16 A. Was this the redline from us?

17 Q. I believe so. I wasn't told but you can

18 tell me if you'd like.

19 A. Yeah, this would have been by Hugh with me

20 so this redline must have come from us to

21 Ms. Maguire.

22 Q. Now, that redline at the bottom is dated

23 January 2015, correct? See where it says --

24 A. January 2015 at the end.

25 Q. And it also reflects a date that was

RAAP-054 Page 165 1 redlined out. It was taken out in September of 2014; 2 is that right? 3 A. Yes, sir. 4 Q. So Ms. Maguire sent you an affidavit in 5 December 2013 and then you received a second version 6 of the affidavit from Mr. Campbell in September of 7 2014, correct? 8 A. I guess so. Yes, sir. 9 Q. Now, we've already talked about the fact 10 that you didn't sign the affidavit Ms. Maguire sent 11 you because it wasn't true. Why didn't you sign the 12 affidavit that Mr. Campbell sent you nine months 13 later in September 2014? 14 A. Well, because what was sent was inaccurate 15 and we needed to correct it. 16 Q. Okay. Did you tell Ms. Maguire or 17 Mr. Campbell that the affidavits they had sent you 18 were inaccurate and needed to be corrected? 19 A. Yes. 20 Q. When did you tell them that? 21 A. Well, when Ms. Maguire and Hugh and I, I 22 think the three of us were talking, when I got the 23 affidavit and it was inaccurate. 24 Q. Did they ever provide you an opportunity to 25 correct the affidavit?

RAAP-055 Page 166 1 A. I don't recall the original affidavit. 2 Obviously this provided me with an opportunity to 3 correct it because a redline would be something that 4 Hugh and I would have done. 5 Q. Okay. But that didn't happen until January 6 of 2015, correct? 7 A. Yes, sir. 8 Q. Did either Ms. Maguire or Mr. Campbell -- 9 well, let me strike that. Did you offer to provide 10 Florence Copper or its affiliates with a corrected 11 affidavit prior January of 2015? 12 A. I think at some point we turned it over to 13 our attorney Dale Zeitlin so that everything would go 14 through him. We were just getting uncomfortable. 15 Q. Why were you getting uncomfortable? 16 A. Well, it was just not affidavits that I 17 could sign. 18 Q. Had there been any other negotiations 19 between you and Florence Copper or its affiliates 20 regarding the production of this affidavit before 21 Mr. Zeitlin took over? 22 A. Well, just discussions really with 23 Ms. Maguire and Mr. Campbell and Hugh Nowell and 24 myself and I think Hugh had a few that I was not 25 involved in.

RAAP-056 Page 167 1 Q. Okay. And I apologize for looking down. 2 I'm just trying to not have to bring everything up to 3 the table here. Now, you eventually did give an 4 affidavit in this case, correct? 5 A. Yes, sir. 6 Q. And that affidavit was given in return for 7 settlements of your claim against Florence Copper, 8 Curis, Taseko, to use their many names, when you 9 wanted them to buy out your shares in the company, 10 correct? 11 A. Well, in response to our dissenting 12 shareholder's approach, yes. 13 Q. And Florence Copper agreed to expedite the 14 payment to you in exchange for the affidavit; is that 15 correct? 16 A. Yes. 17 Q. What did you think of that? 18 A. We didn't like it. 19 Q. Were they entitled to exact an affidavit 20 from you in exchange for the purchase of your shares, 21 in your opinion? 22 A. As a matter of law, no. 23 Q. So why did you go through with it? 24 A. Well, we wanted to get the money and we had 25 counsel that we had hired on dissenting shareholder's

RAAP-057 Page 168 1 rights, Bernie -- and I can't remember -- Poznanski 2 and they modified the affidavit so that it became 3 something that we felt like we could sign. 4 Q. Do you feel that the affidavit that you 5 gave in this case was as strong as you could make it 6 in favor of Florence Copper consistent with truth? 7 A. Yeah. 8 Q. Okay. Referring to the redline version, 9 and I'm sorry but I've lost track of the exhibit 10 numbers. Is that 58? Thank you. One of the lines 11 that you deleted starting on the very first page 12 after the last complete sentence, it says quote, 13 Merrill Ranch never formed an intention to give up 14 these mining rights nor did it enter into discussions 15 then it appears we're missing the rest of a paragraph 16 there but why did you take that out? 17 A. Because it just wasn't true. 18 Q. Now, Mr. Campbell talked with you about the 19 2003 pre-annexation development agreement and the 20 planned unit development that was appended to it. Do 21 you remember that? 22 A. Yes, sir. 23 Q. Okay. And Mr. Campbell walked you through 24 the fact that in the planned unit development 25 agreement there were a number of non-conforming

RAAP-058 Page 169 1 rights listed including mining. Do you recall that 2 as well? 3 A. Yes, sir. 4 Q. Now, in 2007 the planned unit development 5 or PUD was amended, correct? 6 A. There were two amendments. One of them was 7 in 2007, yes, sir. 8 Q. And the other one was 2005 dealing with 9 North Village, I believe? 10 A. I believe it was; yes, sir. 11 Q. Okay. And in the 2007 master development 12 plan amending the 2003 PUD, all references to 13 non-conforming uses including mining are deleted. 14 Are you aware of that, sir? 15 A. Yes, sir. I was told of that. 16 Q. Do you know that of your own personal 17 knowledge? 18 A. Again, when we got it, it wasn't really an 19 issue from our perspective so there was really no 20 discussion with the Town about whether it would be 21 kept or it wouldn't be kept. It just -- we were 22 looking for higher destiny. That was the focus of 23 what we were doing and also flexibility. 24 Q. And higher density and flexibility would 25 have been inconsistent with an in situ mining

RAAP-059 Page 170 1 operation on the site; is that true?

2 A. Well, certainly on the higher density

3 parcel which was the parcel south of Hunt Highway.

4 Q. And the parcel south of Hunt Highway is the

5 same parcel that had previously had the BHP mine

6 overlay that Mr. Campbell asked you about on it,

7 right?

8 A. Yes, sir.

9 Q. And the BHP mine overlay was removed when

10 the PUD was amended in July of 2007, correct?

11 A. Well, apparently from what you said that it

12 was. I don't recall one way or the other.

13 MR. KRAMER: Next one in order, please.

14 (Whereupon, the court reporter marked Exhibit 59 for 15 identification.)

16 BY MR. KRAMER:

17 Q. I'm showing you a page out of the 2007 PUD.

18 Do you recognize it?

19 A. Yes, sir.

20 MR. CAMPBELL: What's the number, 59?

21 MR. KRAMER: 59.

22 THE WITNESS: Yes, sir.

23 BY MR. KRAMER:

24 Q. There is no mine overlay indicated on that

25 exhibit, is there?

RAAP-060 Page 171 1 A. No, sir. 2 Q. And in fact, there are residential and 3 commercial densities including high density 4 residential in the area that had previously in 2003 5 been designated as the BHP mine overlay; is that 6 correct? 7 A. Yes, sir. 8 Q. And so in 2007 the planned unit development 9 was amended to remove the mine overlay and replace it 10 with residential and commercial densities, correct? 11 A. Would you repeat that question, please, 12 sir. 13 MR. KRAMER: Could you read it back? 14 THE WITNESS: I'm sorry. I was looking at 15 the map. 16 MR. KRAMER: That's fine. Could you read 17 it back, please. It's all right. I can 18 rephrase. 19 Q. In 2007 the PUD was amended to replace the 20 mine overlay with residential and commercial 21 densities, correct? 22 A. Yes, sir. 23 Q. And those densities and uses added value to 24 the property in your opinion? 25 A. Yes, sir.

RAAP-061 Page 172 1 Q. And in fact, I think that Mr. Campbell 2 earlier walked you through an exhibit where you 3 indicated that you thought that the increased density 4 that you achieved in the 2003 PUD resulted in an 5 increase in market value overall of the property in 6 the neighborhood of $46 million; is that right? 7 A. I don't recall that, sir. 8 Q. Fair enough. Turning back for a second to 9 the 2003 pre-annexation development agreement, that 10 development agreement gave you something you've 11 referred to a moment ago as flexibility adding value 12 to your property, correct? 13 A. Yes, sir. 14 Q. And in fact -- let's see. Well, strike 15 that. I'm showing you what's been marked Number 59, 16 I believe? 60, will be marked Number 60 which is a 17 letter from Vanguard Properties, Jan Dodson whose 18 name we've heard all day today to Larry Quick, 19 planning director for the Town of Florence. 20 A. And I've got -- I've got the one that went 21 to Bryan Wilson. 22 Q. I apologize for that. 23 A. Actually she does too. 24 MR. KRAMER: You guys all have Mr. Wilson? 25 MR. NOWELL: Yeah, I've got Bryan Wilson.

RAAP-062 Page 173 1 THE WITNESS: Want those back?

2 MR. KRAMER: Yeah. I guess I -- I think I

3 might have my exhibits out of order here which

4 is embarrassing and time consuming all at the

5 same time.

6 MR. CAMPBELL: I have this marked as 60.

7 Can we just leave it in and we'll mark the next

8 one.

9 MR. KRAMER: You have it marked as what

10 now?

11 MR. CAMPBELL: 60.

12 MR. KRAMER: Number 60? All right. Yeah,

13 that's fine. Now I just have to find that one.

14 (Whereupon, the court reporter marked Exhibit 60 for 15 identification.)

16 BY MR. KRAMER:

17 Q. Well, I do apologize for this. I thought I

18 had these in order. I'm going to have to do this the

19 hard way. Well, let me just ask you this. The

20 pre-annexation development agreement providing for

21 flexibility is found at page 5, section 6, Paragraph

22 B of that agreement. If you can just refer to that

23 agreement which was I believe the very first exhibit

24 we have.

25 A. I'm sorry. That's page --

RAAP-063 Page 174 1 Q. Would you look at page 5. 2 A. Yes, sir. 3 Q. Right before Paragraph B, the last sentence 4 of pre-annexation development agreement on Paragraph 5 5, the first paragraph that appears on that page says 6 that the Town hereby acknowledges and agrees that the 7 development plan may hereafter be amended to include 8 alternative plans and land use designations that 9 shall become applicable if owner elects to include 10 the additional property referenced in Paragraph 7. 11 MR. CAMPBELL: Can you give me a Bates 12 number? 13 THE WITNESS: 418. 14 MR. KRAMER: 418. 15 MR. CAMPBELL: And where are you looking 16 at, what paragraph? 17 MR. KRAMER: The very last sentence of the 18 first paragraph that appears on the page. 19 THE WITNESS: Yes, sir. 20 BY MR. KRAMER: 21 Q. Is that part of the flexibility that added 22 value to the property as a result of this agreement? 23 A. Yes, sir. 24 Q. And looking at Paragraph B, the first 25 sentence, Owner expects that amendments to the

RAAP-064 Page 175 1 development plan will be necessary from time to time. 2 That also gives you that flexibility, correct? 3 A. Yes, sir. 4 Q. And the very last sentence of Paragraph B, 5 Such modification shall not necessitate an amendment 6 to this agreement but shall be provided to the Town 7 planning director and retained in the town's official 8 file for the property, unquote. That's also part of 9 the flexibility adding value to the property because 10 of this agreement? 11 A. Yes. I think all of these things together 12 are the flexibility that I was referring to. 13 Q. And in fact, the -- strike that. The fact 14 that the planned unit development was amended in 2007 15 did not necessitate an amendment to the 16 pre-annexation development agreement, correct? 17 MR. CAMPBELL: Hold on. Can the court 18 reporter repeat the question for me? 19 THE WITNESS: Can you repeat that question 20 for me? 21 (Whereupon, the record was played back.) 22 MR. CAMPBELL: So I have an objection as 23 to form under Arizona law. 24 BY MR. KRAMER: 25 Q. You may answer.

RAAP-065 Page 176 1 A. I was trying to hear it a little better. 2 For give me. Would you mind repeating it? I didn't 3 hear it good. 4 BY MR. KRAMER: 5 Q. I don't mind. According to the terms of 6 the pre-annexation development agreement, page 5, 7 Paragraph B that we've just discussed, it is not 8 necessary to amend the pre-annexation development 9 agreement in order to amend the planned unit 10 development, correct? 11 MR. CAMPBELL: Objection as to form. 12 THE WITNESS: In part I think that's true. 13 I think it would depend on the correction 14 itself. There are some things that the Town 15 was able to do without going back to an 16 amendment of the development agreement and 17 there were things I think that they were not 18 able to do. 19 BY MR. KRAMER: 20 Q. Okay. Do you believe that the 2007 PUD had 21 to be -- strike that. Do you believe that the 2007 22 PUD necessitated an amendment to the pre-annexation 23 development agreement? 24 MR. CAMPBELL: Objection as to form. 25 THE WITNESS: I thought it actually was an

RAAP-066 Page 177 1 amendment to the pre-annexation development 2 agreement. Am I incorrect in looking over the 3 documents earlier? 4 BY MR. KRAMER: 5 Q. Why would you think that it was an 6 amendment to the pre-annexation development 7 agreement? 8 A. Well, it says the Merrill Ranch Development 9 Agreement, Amendment Number 1 and Number 2. 10 Q. Do either of those include the 2007 PUD? 11 A. That's a good point. I actually thought 12 that's what number two was so forgive me as I try to 13 tie it all together. Well, the second it appears 14 unless I'm mistaken that the amendment to the Merrill 15 Ranch Number 2 to the Merrill Ranch Development 16 Agreement was what increased our density. I'm 17 looking at page 1688, Paragraph 54. 18 Q. Okay. 19 A. So -- but it also might only relate to the 20 5,500 acres. It's confusing to me. 21 Q. Well, let's try this. Refer, if you would 22 please, to the next exhibit in order, Number 4. 23 A. Yes, sir. 24 Q. Now, this is the ordinance adopting the 25 planned unit development agreement in 2007, correct?

RAAP-067 Page 178 1 A. Where is the date on that at the end? Let 2 me look to the end. I'll find it. 3 Q. Yes, sir, if you look on page 6. 4 A. Yes, sir. Yes, I think I may be mistaken. 5 It appears that the zoning or the PUD zoning was 6 actually changed in '07 and what was reflected in the 7 second amendment was different because it gave us the 8 4.5 density for what I would call the northern 9 portion of the property which was the 5,500 acres. 10 So that would be -- if I'm correct, they would be 11 different. 12 Q. All right. Staying with Exhibit 4 for a 13 moment, could you look on page 2, Paragraph 6. 14 A. On Exhibit 4? 15 Q. Yes, please. 16 A. Yes, sir. 17 Q. Now, that portion of the ordinance 18 indicates that the PUD adopted in 2007 would 19 supersede the 2003 PUD. Am I reading that correctly? 20 A. Yes, sir. That is what it says. 21 Q. All right. And was that something that was 22 requested by Merrill Ranch? 23 A. I presume that it was. I don't directly 24 recall. What we were requesting was the additional 25 density and particularly the multifamily south of

RAAP-068 Page 179 1 Hunt Highway. 2 Q. And the PUD that was passed pursuant to 3 this ordinance at the request of Merrill Ranch 4 reflects those densities south of Hunt Highway, 5 right? 6 A. Yes, sir. 7 Q. Pardon me for just a second. I'm trying to 8 skip through as much as I possibly can. 9 Mr. Campbell spent quite a bit of time 10 earlier talking with you about the negotiations he 11 had with various mining companies to buy a portion 12 of the property, correct? 13 A. Yes, sir. 14 Q. And you said that if you didn't have the 15 present right to -- it's okay. If you didn't have 16 the present to -- or the buyer, excuse me. Strike 17 that. Let me start again. And you testified that if 18 the buyer didn't have the present right to conduct 19 mining operations on the property that it was your 20 opinion that the buyer could obtain such rights from 21 the Town of Florence, right? 22 MR. CAMPBELL: Object to the form of the 23 question. 24 THE WITNESS: Yes, sir. 25

RAAP-069 Page 180 1 BY MR. KRAMER: 2 Q. So let's just cut to the chase because this 3 is what this case is really all about. 4 Sir, do you believe that at the time that 5 you had the PUD amended to eliminate any references 6 to non-conforming uses in mining or drilling or the 7 BHP overlay, that those rights were removed from the 8 PUD? 9 A. There were really no discussions on that 10 issue. 11 Q. Do you believe that it would have been 12 necessary following the adoption of the 2007 PUD for 13 a buyer wishing to mine the property that was now the 14 subject of the increased density you described 15 earlier to go back to the Town and obtain proper 16 zoning? 17 MR. CAMPBELL: Object to form. 18 THE WITNESS: It's a question I had not 19 thought about and certainly wasn't thinking 20 about at the time and had I thought about it, I 21 would have presumed, as I mentioned earlier, 22 that there wouldn't have been an issue and they 23 could have gotten that. 24 BY MR. KRAMER: 25 Q. So whether or not the zoning was in place

RAAP-070 Page 181 1 at the time you entered into these negotiations, you 2 in good faith believed that if it weren't, the buyer 3 would still be able to get that zoning? 4 MR. CAMPBELL: Objection as to form. 5 THE WITNESS: Yes. 6 BY MR. KRAMER: 7 Q. Now, backing up just a second, was there 8 ever any active mining going on at any time while you 9 owned the property? 10 A. No, sir. There was monitoring by Brown and 11 Caldwell. 12 Q. And that monitoring was required by ADAQ, I 13 believe? 14 A. Yes, on a quarterly basis. 15 Q. It's not something that you would have 16 chosen to do on your own. You were forced to do it? 17 A. I would not have chosen it on my own. 18 Q. And in fact, you had taken steps from 19 2005 going forward to attempt to close the remaining 20 well field that had been constructed by BHP during 21 its test facility back in the late '90s? 22 MR. CAMPBELL: Objection as to form. 23 THE WITNESS: Yes, sir. 24 BY MR. KRAMER: 25 Q. Did you try to close them or not?

RAAP-071 Page 182 1 A. Yes, sir. We had extensive discussions 2 with Brown and Caldwell about that and what the cost 3 would be to do that. 4 Q. And in fact, the mediation you discussed 5 earlier, the mediator has issued a decision in which 6 they indicated that they thought that the probability 7 of rezoning to allow mining added value to the 8 property, correct? 9 MR. CAMPBELL: One moment. Objection as 10 to form. 11 THE WITNESS: I don't recall the decision, 12 sir. 13 BY MR. KRAMER: 14 Q. In fact, wasn't the argument that 15 Mr. Zeitlin raised before the panel that there was a 16 reasonable probability of rezoning to allow mining on 17 the property? 18 MR. CAMPBELL: Object to form. 19 THE WITNESS: The strategy was to show as 20 much increase to the value of the property as 21 we could and the possibility of the copper mine 22 was certainly that as copper prices had risen. 23 MR. KRAMER: Give me just a minute to get 24 organized again and I think we'll be pretty 25 close. Thank you.

RAAP-072 Page 183 1 MR. CAMPBELL: You want to take a break?

2 MR. KRAMER: Ten minutes.

3 MR. CAMPBELL: Okay.

4 THE VIDEOGRAPHER: We're off the record at

5 3:17.

6 (A recess was taken.)

7 THE VIDEOGRAPHER: We're back on the

8 record at 3:25 p.m.

9 MR. KRAMER: Thank you everyone for

10 letting me have that break.

11 (Whereupon, the court reporter marked Exhibit 61 for 12 identification.)

13 BY MR. KRAMER:

14 Q. Mr. Merrill, before we go on to Exhibit 61,

15 the fact of the matter is that once you owned this

16 property that's the subject of this litigation, you

17 could sell it to anybody for any purpose if the price

18 was right, correct?

19 A. Yes, sir.

20 Q. And that wasn't dependent on what the

21 entitlements happened to be at the time, was it?

22 A. That would affect perhaps what they were

23 willing to pay but other than that, no, sir.

24 Q. But you will agree with me that the

25 residential densities reflected in the 2007 PUD are

RAAP-073 Page 184 1 inconsistent with a mining operation on that same 2 property? 3 MR. CAMPBELL: Objection as to form. 4 THE WITNESS: Yes, sir. 5 BY MR. KRAMER: 6 Q. Looking at what's been marked as Exhibit 61 7 to your deposition which you have in front of you, 8 could you tell me what that is? 9 A. Yes, sir. It's a letter from me to 10 Marchand Snyman and Xenia Christos who was the 11 attorney for Hunter Dickinson. 12 Q. Referring to the first paragraph, it says 13 at the very beginning, Dear Marchand and Xenia, you 14 have asked me previously what recommendations I might 15 have from a legal and strategic standpoint with 16 respect to Curis being able to proceed with the 17 non-invasive in situ leaching process, et cetera. Do 18 you see that? 19 A. Yes, sir. 20 Q. What did they ask you specifically? 21 A. Well, apparently this thing goes back 22 further than I thought because this is almost five 23 years ago so maybe it goes back five and a half 24 years, whatever. But they had advised me and I was 25 thinking it was Rita at first but it may have been

RAAP-074 Page 185 1 Marchand and Xenia because I think this was before 2 Rita and I talked but apparently they were having 3 trouble with the Town and it was being pushed at 4 least in their opinion by the purchasers who were 5 Southwest Value Partners which we discussed earlier 6 in the deposition and had become a political issue so 7 this was a suggestion of how to get around the 8 political issue and just work straight with the state 9 of Arizona. 10 Q. Did the representatives of Hunter Dickinson 11 tell you that they were in the process of trying to 12 rezone the property to allow mining? 13 A. I don't remember if they specifically said 14 that. Obviously they were trying to get over the 15 political difficulties of being able to get the Town 16 to agree for them to be able to do the in situ 17 leasing leaching on the private property. 18 Q. Looking at Paragraph 2, the last full 19 sentence, does that refresh your recollection as to 20 whether or not Hunter Dickinson, the parent company 21 of Florence Copper, believed that a rezoning of the 22 property was necessary in order to mine on that 23 property. 24 A. Again, I don't know if they believed it but 25 that was obviously part of the discussion and how to

RAAP-075 Page 186 1 get that done and whether or not it required general 2 plan amendment because we had had to go through that 3 whole process ourselves as you know twice. 4 Q. Reading that paragraph, does that refresh 5 your recollection as to whether or not you thought 6 that rezoning of the property would be necessary in 7 order to mine the property? 8 MR. CAMPBELL: Objection as to form. 9 THE WITNESS: Well, certainly with the 10 litigation or the disagreement that the best 11 way to do it was to get a rezoning of the 12 property and again, that's a process if you 13 have to go through a general plan amendment. 14 That's a year's process which I think I did 15 discuss with them. 16 BY MR. KRAMER: 17 Q. Take a look at Paragraph 2 or I'm sorry, 18 the third paragraph starting "however." 19 A. Yes, sir. 20 Q. You talk about a way to obviate -- to 21 quote, Obviate the necessity for the Town of Florence 22 to make the difficult decision of rezoning the 23 property, unquote. Do you see that? 24 A. Yes, sir. 25 Q. Did you believe that it was necessary for

RAAP-076 Page 187 1 Hunter Dickinson or its subsidiary Florence Copper to 2 obtain rezoning in order to mine the property? 3 A. Well, I think I must have. I wouldn't have 4 written it. I don't recall specifically but I think 5 that certainly indicates it. 6 Q. Okay. And again, if you take a look at the 7 next paragraph, you talk about possible problems in 8 Florence with rezoning, correct? I'm looking now at 9 the first full sentence, second line down. 10 A. Are you on the third paragraph? 11 Q. I am on the fourth paragraph now, sir. I'm 12 sorry. 13 A. Oh, I'm sorry. Yes. 14 Q. And then the very last line after the comma 15 where it says it would avoid the quote, Necessity for 16 a controversial rezoning, unquote, correct? 17 A. Yes, sir. 18 Q. So on four different occasions in that 19 letter you indicate that there is a necessity for 20 rezoning; is that correct? 21 A. Yes, sir. 22 Q. Does that refresh your recollection as to 23 whether or not you thought that rezoning was 24 necessary in order to mine the property? 25 MR. CAMPBELL: Object to the form of the

RAAP-077 Page 188 1 question. 2 THE WITNESS: Yes, sir. I don't think I 3 would have put it in there four times unless I 4 thought that. 5 MR. KRAMER: Thank you, sir. I have no 6 further questions. 7 MR. CAMPBELL: We're going to switch again 8 so stretch your legs while we move. 9 THE VIDEOGRAPHER: We are off the record 10 at 3:32 p.m. 11 (A recess was taken.) 12 THE VIDEOGRAPHER: We're back on the 13 record at 3:35 p.m. 14 FURTHER EXAMINATION 15 BY MR. CAMPBELL: 16 Q. All right. Let's go to the big book. 17 Let's take this one away and let's go to Exhibit 18 Number 6. So Exhibit Number 6, if you turn to the 19 third page, is that your signature? 20 A. Yes, sir. 21 Q. All right. And do you remember signing 22 Exhibit 6, the affidavit? 23 A. Yes, sir. 24 Q. Is it true what you say in this affidavit? 25 A. Well, I must have thought so. I wouldn't

RAAP-078 MERRILL TRUST GROUP, LLC 15 Piedmont Center 3575Piedmon t RoadNE , SuiteL-12 0 Atlanta,Georgi a3030 5 404-495-9577 Fax: 404-495-9578

W. HARRISON MERRILL PRESIDENT

Confidential

January4,201 1

Mr. Marchand Snyman Ms. XeniaKritso s I lunterDickinson , Inc. 102080 0 WestPende rStree t Vancouver,B CCanad aV6 C 2V6

DearMarchan dan dXenia :

You have asked me previously what recommendations I might have from a legal and strategic standpoint with respectt o Curisbein g able toprocee d with the non-invasive insit u leachingproces st o recoverth ecoppe r atth eFlorenc e miningsite .

We havepreviousl ydiscusse dth eabilit y in theDevelopmen t Agreement between Merrill Ranch andth e Towno fFlorenc e tomov eth ezonin gfrom on eare ao fMerril l Ranch toanothe r area. Iunderstan d that you havediscusse dtha t with Arizona counsel and are continuingt oevaluat e the possibility. Hopefully the Town ofFlorenc e will support arezonin g ofth e property which may or may not require a General Plan Amendment

However,I thin k thatther ei sprobabl y aquicke ran dmor eelegan t wayt oachiev e thesam e result which would obviate the necessity for the Town ofFlorenc e to make the difficult decision ofrezonin g the propertyi n viewo fa possiblethrea t of alawsui tb yth e grouptha t boughtth enorther nportio n of Merrill Ranch. Thissolutio ninvolve sconveyin gth e miningportio n of yourpropert yt oth e Stateo f Arizonafo r a small residual pricepe r poundo fcoppe r mined on the property conveyed coupled with your right to buy back thepropert y fora nomina lsu ma tth een d of theminin gcycle .

It seemst o me that the appropriate approach to the State of Arizona would be to advise them of the possible problems inFlorenc e with the rezoning,an d inorde r forth estat et oreceiv e "fair value"fo rth e copper mining leaseo n tlic 160acres ,i twoul d benecessar y for Curist ob e able tomin eth e resto fth e site with onlyth e oversight ofth e State which will already overseeth eminin go fth e 160acres . Itwil l produce a win-win situation forbot h the Stateo fArizon a and Curis,i twoul d avoidth enecessit y fora

EXHIBIT^

MA000169 RAAP-079 January4,201 1 Mr.Marchan d Snyman Page2 of2

controversialrezonin gb yth eTow no fFlorence , and itwoul denabl eCurl st omov eforwar drapidl y with theFlorenc e Copperprojec twhil eth epric eo fcoppe rcontinue s tomak eal ltim ehighs .

Finally, I would strongly recommend that you negotiate this arrangement with the State of Arizona confidentially and without any discussion with the Towno f Florence or others whichcoul d possibly result in derailing the process. I would not discuss the threat of lawsuits with the State of Arizona becauseI thin kthi stransactio n is "bulletproo f and will not giveris e toan y legitimatecaus eo factio n by athir d party. In addition, openly discussing this arrangementbefor e iti s accomplished mightresul t inunnecessar yan du nwelcome d political scrutinywhic h alwaysraise sth e opportunityof a badpolitica l outcomerathe r thana goo dbusines sdecision .

Please call mewhe nXeni areturn s sotha tw cca ntal kabou tthi srathe r simplean d quick solution.

With warmest personal regardsfo ra happy andprosperou s 2011.

Sincerely,

Harrison Merrill

MA000170 RAAP-080 Cc. Sublet: Re. C*»« ana Me»iA TruS Dale: 01/U/7015 08:59 W

Bernie, they have put things in the affidavit that are simply not true in connection with their litigation against the Town of Florence, and I have no intention of signing a false affidavit. They have tried this on a couple of occasions and have been advised that I would not do it because it is simply not true.

They have called for a deposition in early February where I will testify to that fact.

We have no interest in agreeing to sign a false affidavit for Curis to do what they are required by law to do anyway. If they don't do it, please go to the regulatory authorities, file a formal complaint and go after them in every possible way. Please be sure and put in their affidavit requirement and my response in the formal regulatory complaint.

This is truly unbelievable and probably highly unethical on their part!

Sent from my iPhone

On Jan 12, 2015, at 6:19 PM, Bernard Poznanski wrote:

Hugh.

Further to my note below, Roger Taplin did get back to me mid-day and we had a discussion about the Curis share repurchase While his client (Curis/Taseko) was not prepared to commit yet to the purchase amount, he indicated that there would likely not be an issue on the price. There is a loose end, however, which they would like to clean up which would result in his client quickly accepting our proposal and paying out Mernll Trust on the terms as proposed While Curis is not entitled to impose extraneous conditions, it is evident that the repurchase will go quickly if we can tidy this up

The outstanding matter which they would like to resolve relates to the legal issues arising between the Town of Florence and Merrill Ranch. Taplin forwarded to me a form of affidavit (attached) which had previously been prepared for Harrison Merrill's signature but had not yet been signed Curis would like the affidavit settled and signed in conjunction with the share repurchase. I confirmed that they are not looking for more on this than the affidavit

I'm available to discuss at your convenience, either before 4:00 pm today or anytime in the morning Thanks.

Regards.

Bemie

Bernard Poznanski Email: bp(u>kkbl.com Direct Line: (604) 891-3606

Koffman Kalef LLP BusinessLawyer s 19th Floor, 885 West Georgia Street Vancouver, British Columbia V6C 3H4 Canada Telephone: (604) 891-3688 Facsimile: (604) 891-3788 Website: www.kkbl.com

Koffman Kalef LLP is a BC limited liability partnership of law corporations.

THIS EMAIL MESSAGE IS PRIVILEGED AND CONFIDENTIAL.

EXHIBIT£

PorwanKd by Bernard PunantkVKKUi on 01/12/2015 030 9 PM

RAAP-081 -

From Bernard PozrvanjkfKKBl

To Hugh NowM mwrJiru«l eam> Cc Harmon Memf "rnWIIjO*"*"—""' Dale 0M2-20I5 08 56A M Subject Fw Cum and Mema Trust

Hugh.

Copy ofcorrespondenc esen t toCuri s counselthi s morning, which is self-explanatory. Will advise whenI hear something.

Regards.

Bernie

rorvwraed by Bernard Po/naniaVKKBl on 01/12/2015 08 58 AM

01/12/2015 08 53A M Subject re Cum and Mend Trutl

Roger.

Iunderstan d you're out ofth e office today but available via email Further to our discussions last week, have you been able toconfir m terms with your client? As mentioned, my client is prepared tosettl e this quickly on the terms proposed, failing which my instructionsar e toprocee d with the formal proposal followed by procedures under the BCBCA.

Look forward tohearin g from you.

Regards.

Bernie

BernardPoznansk i Email: [email protected] Direct Line: (604) 891-3606 Koffman KalefLL P BusinessLawyer s 19th Floor, 885 West Georgia Street Vancouver, British Columbia V6C 3H4 Canada Telephone: (604) 891-3688 Facsimile: (604) 891-3788 Website: www.kkbl.com

Koffman Kalef LLPi sa BC limited liability partnership of law corporations.

THIS EMAIL MESSAGE ISPRIVILEGE D AND CONFIDENTIAL.

RAAP-082 1

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

) TOWN OF FLORENCE, ) ) Plaintiff, ) ) vs. ) CV 2015-000325 ) FLORENCE COPPER, et.al., ) ) Defendants. ) ) )

Phoenix, Arizona December 13, 2018

BEFORE THE HONORABLE ROGER E. BRODMAN

REPORTER'S TRANSCRIPT OF PROCEEDINGS

(Trial)

PREPARED FOR: COPY

MICHELE KALEY, CSR, RPR Certified Court Reporter #50512 (480) 558-6620 [email protected]

RAAP-083 48

1 I'm 61 years old. I'm never going to deny your 2 requesting a break. 3 MR. KRAMER: Thank you. 4 THE COURT: So we'll go ahead and take our 5 morning recess at this time. We'll resume in 15 6 minutes. 7 (Recess taken.) 8 THE COURT: Okay. We are back on the record. 9 Everyone is present. And you may redirect your 10 witness. 11 MR. MATTICE: Thank you, your Honor. 12 13 REDIRECT EXAMINATION 14 BY MR. MATTICE: 15 Q. Mr. Gammage, just for the record, could you 16 describe the PUD that's mentioned, the 2003 scenario 17 again? What is the PUD? What are we talking about 18 there? 19 A. So PUD stands for Planned Unit Development. 20 And this is kind of the way most zoning is done today. 21 Under various nomenclatures, you are allowed, under 22 PUD type zoning, to not have to adhere to the strict 23 physical standards of things like lot size or height 24 or lot coverage issues. 25 Every city does it a little bit differently in

RAAP-084 49

1 terms of what they allow in a PUD, but a PUD allows 2 you to do things like plus your densities and vary the 3 size and shape of lots. It's kind of a write your own 4 physical standard for zoning. 5 Q. And that becomes the zoning designation for 6 that property? 7 A. That's correct. 8 Q. Okay. And what is the general procedure, 9 under the statutes in Arizona, for that PUD or Plan 10 Unit Development in this case to be adopted? 11 A. So it, like any other zoning, it is a 12 legislative action. So the typical process is a 13 planning consulting firm will come up with a proposed 14 PUD that will go to the planning staff of the local 15 jurisdiction for review. They'll modify and change 16 some things. And then it goes to the planning 17 commission and city council for ultimate adoption. 18 Q. And those public -- those are public hearings? 19 A. Correct. They're required to be public 20 hearings, both at the planning commission and at the 21 city council level. 22 Q. And required with previous public notice and 23 posting by statute? 24 A. Yes. 25 Q. In the 2003 PUD, is that essentially the

RAAP-085 50

1 development plan that's referred to in the 2003 2 development agreement? 3 A. Yes. A development plan is not an, is not a 4 legal term of zoning. It is a plan that you come up 5 with; the implementation of a development plan when it 6 is rewriting physical standards of the ordinance is 7 adopted as a PUD. 8 Q. And that is the case here in both 2003 and 9 2007? 10 A. That is correct. 11 Q. So I think Exhibit 1 is still there, 12 Mr. Gammage, in front of you. If you can, turn to 13 Exhibit 1, which has been admitted into evidence. And 14 on page, it's actually -- there's the first page, the 15 title page, with the whereas clauses in the 16 development agreement. And then there's the second 17 page, although it's not numbered at the bottom, it's 18 021807, the Bates. 19 Okay. And the second full paragraph, the 20 second whereas paragraph on that document, do you see 21 that, sir? 22 A. Yes. 23 Q. Can you just take a minute, if you don't mind, 24 add just read that to yourself briefly? 25 A. You're referencing the first of the ones on

RAAP-086 51

1 the screen that is the general plan related? 2 Q. Yeah. There's actually a yellow squiggly mark 3 on the screen. 4 A. Down, that one, yes. Okay. 5 Q. Now it makes reference to the planning and the 6 development and its becoming the zoning designation 7 for this property, correct? 8 A. Correct. 9 Q. And it also mentions the development plan, 10 correct? 11 A. Yes. 12 Q. But it describes the parties' intended 13 development plan to encompass, correct? 14 A. Yes. 15 Q. And it includes, not only the land use 16 designations, but the procedures for administration 17 and implementation of the development plan, correct? 18 A. Yes. 19 Q. Okay. If you now turn to the PUD document 20 from 2003, attached to that agreement -- and it's 21 actually page 29 at the bottom, and the Bates number 22 on that is 021867. 23 A. Yes. 24 Q. There's a Section B, general provisions. And 25 then there's a number three paragraph there where it

RAAP-087 52

1 says, "this PUD"? 2 A. Yes. 3 Q. Will you take a moment to just read through 4 that, please, to yourself. 5 A. Yes. 6 Q. Section three, what is it describing there? 7 A. So this is describing how this PUD document 8 may be amended. 9 Q. And how is that done? 10 A. By the same procedure in which it was adopted, 11 which is to say it goes through a zoning amendment 12 procedure to the planning commission and to the city 13 council. 14 Q. The procedure you just described a few minutes 15 ago? 16 A. Correct. 17 Q. Okay. By ordinance? 18 A. Correct. 19 Q. Is that not what was done in 2007 when the PUD 20 was changed? 21 A. It's my understanding that's what was done in 22 2007. 23 Q. Okay. And the 2007 PUD, did it change the 24 zoning then? Did it change the 2003 PUD? 25 A. Yes, it altered the PUD.

RAAP-088 53

1 Q. And did it mention the BHP overlay or any 2 mining reference? 3 A. My understanding is it's -- the 2007 PUD did 4 not reference the BHP overlay or the continuing right 5 to mine. 6 Q. Okay. And Mr. Campbell asked you maybe a 7 question or two about the 2007 actions. But, again, 8 the 2007 PUD or Planned Unit Development, that was 9 implemented by the ordinance, the planning commission 10 hearings, the county attorney has prepared a draft 11 indictment hearings, by statute, and became a final 12 legislative act, didn't it? 13 A. Yes, that's my understanding. It did. 14 Q. And you're not aware of any referendum that 15 was filed on that ordinance? 16 A. I am not. 17 Q. And where typically, in your experience, would 18 that type of ordinance be maintained? 19 A. By the town clerk. 20 Q. Okay. And that would be a permanent 21 maintenance by the town clerk? 22 A. It is. And, yes, it's an ordinance of the 23 town at that point. 24 Q. And why would a planning department want to 25 also maintain a copy of that new PUD?

RAAP-089 54

1 A. Because they are the agency charged with 2 administering it. So as people come in to file plans, 3 they are the planning department. That's where they 4 would start. 5 Q. And developers might come in and ask what the 6 zoning entitlements are to a particular piece of 7 property, correct? 8 A. That's correct. Developers and zoning lawyers 9 would typically go to the planning department, not to 10 the clerk, though the clerk is the official repository 11 of ordinances. 12 Q. And you, well, you represent developers in 13 Arizona for quite a while -- 14 A. Yes. 15 Q. -- haven't you? 16 A. For a long time. 17 Q. And you still do? 18 A. Yes. 19 Q. And would you consider yourself an expert in 20 development agreements? 21 A. Yes. I would say, yes. I have represented 22 developers doing dozens -- maybe more than that -- of 23 development agreements. 24 MR. CAMPBELL: Judge, I have an objection 25 here, in the following sense.

RAAP-090 55

1 When he was deposed, we asked him about 2 similar examples he may have with respect to 3 development agreements. 4 Under the Ethical Rule 1.6 and under 5 attorney-client privilege, of course, he declined to 6 answer those questions. So I don't think it's fair to 7 ask him about clients when we weren't able to go into 8 those areas. 9 THE COURT: Well, I didn't interpret 10 Mr. Mattice's questions to go into specific clients he 11 had represented, just simply a question to this 12 witness as to whether he viewed himself as an expert 13 on development. 14 Did I miss that or. 15 MR. MATTICE: Yes, your Honor. And I 16 certainly don't intend to ask Mr. Gammage about any 17 existing clients that he or his firm represented. 18 THE COURT: Okay. But what's your response to 19 Mr. Campbell's objection? 20 THE WITNESS: Well, I think, you know, I'm 21 simply trying -- establishing is already been 22 established, that Mr. Gammage is on expert. I'm 23 trying to clarify, has he also represented developers. 24 Does he have knowledge in Arizona as a practicing 25 attorney in that area.

RAAP-091 56

1 THE COURT: Okay. I'll overrule the 2 objection. Go ahead. 3 Q. BY MR. MATTICE: Now I'll try and remember my 4 question that I was asking. 5 I think you mentioned already the operation of 6 law that occurs when a zoning ordinance is amended. 7 Would a development agreement, in your experience, be 8 something that is handled differently than a zoning 9 ordinance adoption? 10 A. Yes. There is a specific statute dealing with 11 development agreements. They typically do not go to 12 the planning commission. They are not posted or 13 advertised the way zoning rezoning is. They generally 14 would go directly to the city council for 15 consideration. 16 Q. And in the statute, is there mention of 17 recording it, that document? 18 A. Yes. Development agreements ARS 9-500.5, I 19 believe requires them to be recorded. 20 Q. And is there a similar recording requirement 21 in the statutes that control how a zoning ordinance is 22 adopted? 23 A. There is not. 24 Q. Okay. In your -- well, let me ask you this. 25 Were you involved, in any way, in the development of

RAAP-092 57

1 the drafting agreement in Arizona? 2 A. Yes. Most times that the zoning enabling acts 3 are amended in the time I've been practicing, we sort 4 of watch as a bill is introduced amending either the 5 Title 9 provision or the Title 11 provisions. And I 6 usually will be asked to comment by various 7 development organizations. Sometimes on behalf of 8 clients, we will go out to the legislature. As the 9 Development Agreement Statute was initially enacted, I 10 don't remember, frankly, whether I actually was 11 present in the legislature or not. It's been amended 12 a couple of times and, yes, I've been somewhat 13 involved. 14 Q. And earlier with Mr. Campbell you were 15 discussing nonconforming uses and that there were 16 certain acts that might be inconsistent with 17 preserving such a right, correct? 18 A. Correct. 19 Q. What might be acts in this case that would be 20 inconsistent with preserving the owner's nonconforming 21 mining right? 22 A. Well, the probably clearest and simplest issue 23 is failing to continue to do physical work in 24 furtherance of preserving a nonconforming right. I've 25 had a number of circumstances where a nonconforming

RAAP-093 58

1 commercial building, for example, goes vacant for a 2 period of time. 3 Cities will, in furtherance of the public 4 policy, try to eliminate nonconforming rights 5 aggressively as possible within their ambit of 6 Arizona's property rights use. Cities will often take 7 the position that a building that goes vacant loses 8 its nonconforming rights. 9 I think that kind of presumption about the 10 property owner can be overturned by the property owner 11 showing that he is, in fact, attempting to obtain a 12 new tenant or to market in some way. But allowing the 13 use to go fallow for any period of time is probably 14 the most common way to lose a nonconforming right. 15 Q. And I think you mentioned earlier inadvertent 16 acts can cause an owner to lose their nonconforming 17 rights? 18 A. Yes. You know, not realizing that, when you 19 cease operation, you may lose your nonconforming 20 right. I've had times when they didn't realize what 21 they were doing was a nonconforming right and believed 22 that they had a clear legal right under the existing 23 zoning to continue the use. So it's easy to sort of 24 walk away and forget about your nonconforming right. 25 Q. Were there any acts by Harrison Merrill or his

RAAP-094 59

1 representatives in this case that would indicate that 2 he acted contrary to preserving his nonconforming use? 3 A. Well, as my report states, I think 4 subsequently seeking zoning that did not explicitly 5 mention the nonconforming right is an act inconsistent 6 with the preservation of the nonconforming right and 7 is, therefore, evidence of abandonment of the 8 nonconforming right. I think many of the statements 9 he made regarding not thinking about mining indicate 10 that he was not attempting to preserve his 11 nonconforming right. 12 Q. And in fact the 2007 PUD doesn't mention the 13 BHP overlay language that Mr. Campbell showed you, 14 does it? 15 MR. CAMPBELL: Objection, leading. 16 MR. KRAMER: It's cross. 17 THE COURT: Sustained. 18 THE WITNESS: Does the 2007 PUD mention 19 nonconforming. 20 MR. CAMPBELL: Judge, the objection was 21 sustained. 22 THE WITNESS: Rights? No. 23 MR. MATTICE: You've been asked that. 24 MR. CAMPBELL: Judge, motion to strike. 25 THE COURT: I think we are eventually going to

RAAP-095 60

1 get there. It was a leading question, so please ask a 2 non leading question. 3 MR. MATTICE: I apologize. Now I'll ask the 4 question. 5 Q. The 2007 PUD, does it mention the BHP overlay? 6 A. No. 7 Q. Does it mention mining uses or operations, in 8 any way? 9 A. No. 10 Q. Whereas the 2003 PUD did mention mining uses? 11 A. Yes. 12 Q. Is that indicating one of those inadvertent 13 acts potentially by the property owner in losing the 14 nonconforming rights by those acts? 15 A. I don't know whether it was inadvertent or 16 intentional. It seems to me that, in either event, 17 the 2007 PUD did not evidence an intent to maintain a 18 nonconforming use right. 19 Q. In your view, after the 2007 PUD ordinance 20 became final passing the referendum period, would it, 21 would its validity change if the owner was taking 22 certain actions negotiating with the mining company? 23 A. I think the question as I would see it, at the 24 point in time at which the 2007 PUD was adopted, is 25 whether or not, prior to that and continuing through

RAAP-096 61

1 and after that, the property owner was maintaining the 2 nonconforming use right. 3 So I think the zoning is evidence that he was 4 not seeking to maintain it, but there may be other 5 physical evidence out there. If the mine were 6 actually in operation in 2007 when the PUD was 7 adopted, but did not mention it, the operation of the 8 mine would have maintained the nonconforming use 9 right. My understanding is that was not the case. 10 Q. Okay. Is a development agreement generally 11 concerned with preserving nonconforming uses? 12 A. No, I would not say that preserving 13 nonconforming uses is the principal motivation for 14 development agreements. I think -- we talked earlier 15 that one of the principal motivations is vesting 16 rights in a zoning approval without having to actually 17 do physical work in order to vest those rights. 18 A common use of development agreements is to 19 spell out responsibilities for infrastructure 20 construction as between the city and the developer. 21 And a common use of development agreements is to deal 22 with annexation. A common use of development 23 agreements is to seek incentives from a city by way of 24 sales tax, recycling, or property tax, favorable 25 treatment.

RAAP-097 62

1 Those are all instances where development 2 agreements are almost always used. 3 Q. And does the development agreement itself 4 create the zoning entitlement on the property? 5 A. No. Typically, a development agreement will 6 be -- it may either be simultaneous, just before 7 zoning. It may be after zoning. It does not itself 8 rezone property. There are some states that do that 9 differently; that allow development agreements to, 10 more explicitly, change the land use permitted on 11 property. 12 In Arizona, we will usually do a development 13 agreement that may contemplate a rezoning. But until 14 the subsequent rezoning is adopted, a development 15 agreement itself may not be affected. 16 Q. And once that zoning agreement or zoning 17 ordinance is adopted and the 30 days passes for the 18 referendum, is that the law of the jurisdiction? 19 A. Yes. 20 MR. MATTICE: Nothing further, your Honor. 21 THE COURT: Okay. Well, Mr. Gammage, thank 22 you. You may -- this witness may be excused, I 23 assume. 24 MR. CAMPBELL: Yes, Judge. 25 MR. KRAMER: Yes.

RAAP-098 Grady Gammage, Jr. #004552 GAMMAGE & BURNHAM, PLC ATTORNEYS AT LAW Two NORTH CENTRAL AVENUE 15TH FLOOR PHOENIX, AZ 85004 TELEPHONE (602) 256-0566 FAX (602) 256-4475 EMAIL: [email protected]

Expert Witness for Plaintiff/Counterdefendant Town of Florence

SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

Town of Florence, NO. CV2015-000325 Plaintiff/ Counterdefendant, vs. Florence Copper, Inc. fka Curis Resources (Arizona), Inc., Defendant! C ountercl aim ant

Grady Gammage Jr., being first duly sworn, upon his oath deposes and says: 1. I am an attorney with the law firm of Gammage & Burnham in Phoenix. I have been licensed to practice law in the State of Arizona since 1976 and have specialized in zoning, land-use and real estate matters since about 1978. While I most typically represent property owners and developers, I have also often represented cities and towns with regard to land use issues. 2. Attached as Exhibit A is my resume. In addition to practicing in the land-use area, I have taught land-use law at the Sandra Day O'Connor College of Law at Arizona State University since 1993. I have also taught various aspects ofland-use regulation in the W.P. Carey School of Business Masters of Real Estate Development program and in the undergraduate and masters of planning programs in the Herberger Institute of Design and the Arts.

10859.1.1212329.13 2/15/2018 RAAP-099 3. In the course of my career as land-use attorney in Arizona I have dealt with dozens of nonconforming use situations under the Arizona statutes, constitution and common law inte! pretations. I have also been involved in negotiating many development agreements with cities and in working in the state legislature on modifications of the development agreement statutes and updates to the planning and zoning enabling acts. 4. In connection with this report, I have reviewed the pleadings which have been filed in the Town a/Florence v. Florence Copper Inc., No. CV 2015-000325,2016 WL 6270819 (Ariz. Super. Sep. 16,2016), including the following: the court's ruling on cross-motions for summary judgment dated 8-14-2017; the resolutions and actions of the Town of Florence approving the preannexation and development agreement in 2003, including the subsequent amendments; the 2003 Planned Unit Development Approval, including the first and second amendments; the 2007 Town Ordinance Number 460-07; the 2007 Planned Unit Development Approval; and the deposition of Harrison Merrill dated 10/2/15. 5. I have also read the expert report of Julie Tappendorf. While I am impressed with Ms. Tappendorf's background and expertise, I believe her opinion misstates Arizona Law. As she notes, there is little case law in Arizona about the relationships between zoning ordinances and development agreements. The one Arizona case she cites, Home Builders Ass'n a/Central Arizona v. City a/Maricopa, 158 P.3d 869 (Ariz. App. 2007), was handled by my office (representing the Homebuilders Association). That case dealt with infrastructure funding and impact fees, which can clearly be controlled by a development agreement. It is not nearly so clear in Arizona that development agreements can overrule local zoning as her opinion represents. While development agreements are often drafted with language purporting to do so, Arizona's strong position that zoning is legislative in character makes such an absolute conclusion as she represents very unlikely. See Wait v. City a/Scottsdale, 618 P.2d 601,602 (Ariz. App. 1980) ("the enactment and amendment of zoning ordinances constitute legislative action."). 6. I do not believe any knowledgeable zoning practitioner in Arizona will give a legal opinion that a development agreement is always controlling over conflicting zoning provisions. The Arizona statute on development agreements, A.R.S. § 9-500.05, provides that development agreements may contain provisions regarding "the permitted uses of property subject to the development agreement." Id The statute is silent, however, on

10859.1.1212329.13 2 2/15/2018 RAAP-100 the relationship of such an agreement to the zoning on the property. The generally accepted interpretation in Arizona is that the development agreement does not change or overrule zoning, and must be implemented through a zoning change. Zoning changes must go through the required advertising, notice and hearing process (including being heard by the jurisdiction's Planning Commission) before they can become effective. 7. This case concerns whether Florence Copper Inc. continues to have a nonconforming right to mine the subject property which is now in the Town of Florence. The original right to mine was established in Pinal County. Counties in Arizona by statute are not allowed to prohibit or extensively regulate mining operations. Cities by contrast are allowed such regulation. This is an expression of long-standing public policy in Arizona. Mining is a highly favored historical use in the state, and therefore exempt from county regulations; but, because of the negative externalities of mining to nearby properties, cities and towns are given the right to regulate mining. 8. In this case, when the property was annexed into the Town of Florence in 2003, the preannexation development agreement itself did not explicitly recognize the continuing right to mine copper on the property. Rather, language in the 2003 PUD, an exhibit to the Development Agreement, recognizes mining as a nonconforming right. The language in paragraph 7 of the PUD varied from the Town Ordinance then in effect, and excepted copper mining operations from the presumptive abandonment period. The recognition of a nonconforming use right represented an acknowledgment of the right to mine which had been established under the statutory exemption in the county. The court's ruling on cross-motions for summary judgment in August of2017 recognizes that as of the 2003 annexation Florence Copper had established and protected its nonconforming right to a mining operation. 9. The Court has ruled that the remaining question presented in the case is whether, through any subsequent actions, the nonconforming use right to mine on the property has been abandoned. In denying cross-motions for summary jUdgment, the court recognized that there is available evidence regarding the intent of the owner of the property ("Merrill") regarding abandonment of the nonconforming use. It is with regard to this question that my opinion is offered.

10859.1.1212329.13 3 2/15/2018 RAAP-101 10. My opinion in connection with this case may be summarized as follows: a. Under the Arizona law of non-conforming use, the burden is on the property owner to affirmatively maintain or preserve the use. Abandonment of the use may be presumed from periods of non-use or from actions or statements inconsistent with preserving the nonconforming use. b. In this case, the right to mine recognized in the Court's ruling was abandoned by the property owner because of a failure to explicitly preserve it as a nonconforming use. The presumptive period of abandonment and the strong legal presumption against nonconforming uses both operate to create a presumption that this nonconforming use was not preserved. c. Harrison Merrill's repeated expression that, in the processing of the 2007 PUD, no one was "giving any thought whatsoever" to preserving the nonconforming mining use rights is a sufficient expression of intent to abandon the nonconforming use to find that it has been abandoned. His actions in seeking inconsistent zoning is further evidence of abandonment. d. The relationship between development agreements and zoning is not so clear-cut as represented in Ms. Tappendorfs opinion. In Arizona, whether a development agreement may simply overrule either existing or subsequently enacted zoning is not clear. While there is not an Arizona case on point, it is likely that an Arizona court would allow subsequent legislative action in contravention of a development agreement, but might view it as a breach of the development agreement. Here, since the property owner requested the rezoning, such a remedy would be hard to justify. 11. The Doctrine of Nonconforming Use Arizona zoning law has from its earliest days recognized the doctrine of legal nonconforming uses. Protections for such uses were built into the original Standard Zoning Enabling Act promulgated by the Department of Commerce in the 1920s and ultimately adopted by Arizona as its enabling legislation. The non-confirming use doctrine reconciles the rights of property owners to continue uses of their property that were legally established with the government's desire to regulate or eliminate specific uses over time in response to changes in urban development patterns. A.R.S. § 9-462.02 establishes the right to continue nonconforming uses in cities and authorizes

10859.1.1212329.13 4 2/15/2018 RAAP-102 condemnation as the only municipal action pennissible to tenninate such uses. This is in contrast to many other American jurisdictions which create a right of municipalities to "amortize" nonconfonning uses; that is to say put them out 0/ business over a period of many years. Arizona's disavowal of the doctrine of amortization is an expression of Arizona's pro-property rights orientation. 12. Arizona law recognizes that nonconfonning uses should be eliminated or brought into confonnity as quickly as possible within the limits of fairness and justice. City 0/ Glendale v. Aldabbagh, 939 P.2d 418,421 (Ariz. 1997) ("Public policy encourages the elimination of nonconfonning uses primarily because they detract from the effectiveness of comprehensive land use regulation, often resulting in lower property values and blight.") (internal quotation marks omitted); see also Stagecoach Trails MHC, L.L. C. v. City a/Benson, 307 P.3d 989, 992 (Ariz. App. 2013) (nonconfonning uses are not favored by the law and should be eliminated or reduced to confonnity as quickly as possible; but such elimination may be accomplished only within the limits of fairness and justice.") (internal quotation marks omitted). 13. While Arizona has a strong recognition of the doctrine ofnonconfonning use, it is limited in two critical ways. In order to give effect to the public policy favoring the eventual elimination of nonconfonning uses, regulations governing nonconfonning uses are held to be exceptions to the general rule that zoning ordinances should be strictly construed in favor of the property owner. Outdoor Systems, Inc. v. City a/Mesa, 819 P.2d 44,50 ("regulations governing nonconfonning uses are excepted from the general rule that zoning ordinances should be strictly construed in favor of the property owner."). Application of the rule of strict construction of the zoning ordinance in favor of property owners does not apply to regulations governing nonconfonning uses. See City a/Tucson v. Clear Channel Outdoor, Inc., 181 P.3d 219,228 ("despite the general rule that courts should strictly construe zoning ordinances in favor of an affected property owner, application of this rule to regulations governing nonconfonning uses is precluded by the public policy encouraging the elimination of nonconforming uses."). These and other Arizona cases make clear that the general presumption construing zoning ordinances in favor of a property owner is reversed with regard to nonconfonning uses: the burden of showing the right to a nonconforming use continues is a burden borne by the property owner.

10859.1.1212329.13 5 2/15/2018 RAAP-103 14. A second limitation on the doctrine of nonconforming use is that the right to expand a nonconforming use exists only if it is explicitly granted by the law and it is limited by any restrictions therein. A nonconforming use is limited to the site or area that is nonconforming when the ordinance prohibiting the use was enacted. See Rotter v. Coconino County, 818 P.2d 704, 712 (Ariz. 1991) ("a nonconforming use generally may not be extended to encompass land or property that was not in use at the time the zoning ordinance was enacted."). Municipalities are explicitly allowed to restrict or regulate the expansion or enlargement of a nonconforming use. See Rotter, 818 P .2d at 714 (holding that a local ordinance barring the expansion of a nonconforming use did not conflict with the statute governing nonconforming uses.). 15. While the evidence in this case is clear that no actual mining-i.e., extraction for commercial purposes--has taken place on the property since its annexation in 2003; In the August 14, 2017 ruling, the court stated its finding: "The Court finds that the 2003 Development Agreement unambiguously provided the Owner a vested right to mine copper on the Property, provided that the cooper mining did not extend beyond the limits established by the BHP Copper Mine Overlay area".

It is in the context of this ruling that my opinion is presented.

16. Abandonment of the Nonconforming Use. a. Arizona Law has long recognized that the right to a nonconforming use may be lost as a result of abandonment. See Kubby v. Hammon, 198 P.2d 134 (Ariz. 1948). Many cities in Arizona have zoning ordinances which provide that a nonconforming use is deemed abandoned if the use is discontinued for a specified period of time. Courts generally interpret the discontinuance of a use for the specified period under the ordinance as creating a rebuttable presumption of intent to abandon the nonconforming use. Thus, the burden to establish that a nonconforming use continues is on the property owner, and any ambiguity as to continuance should be interpreted in the favor of abandonment. The treatise on Arizona Zoning Law, DOUGLAS A. JORDEN & FRANK J. CASSIDY, ARIZONA LAND USE LAW (7th ed. 2017), published by the State Bar of Arizona, states the rule: "Zoning ordinances sometimes provide that a nonconforming use is deemed abandoned if the use is discontinued for a specified period of time. These ordinances create a rebuttable presumption of intent to abandon a nonconforming use. Where a city lacks significant evidence of a property owner's subjective intent to abandon, it can make a prima facie case merely by establishing that the use has been unused for the required time. The burden then shifts to the property

10859.1.1212329.13 6 2/15/2018 RAAP-104 owner to rebut the presumption. If the owner does not come forward with evidence of intent not to abandon, the use is terminated. However, if the owner appears and establishes that the use was not abandoned the presumption is extinguished." Id. at 7-7 (citing Aldabbagh, 939 P.2d at 418).

b. At all times relevant to the instant case, the Town of Florence ordinance provided: "REGULAnONS PART 1. GENERAL PROVISIONS § 150.080 NONCONFORMING USE. (A) Continuance of use ofland ; abandonment. The lawful use of land existing on July 19,2006, although not conforming to the provisions hereof for the land, may be continued, but if the nonconforming use is abandoned, and a nonconforming use discontinued for a period of three months, it is presumed abandoned, then any future use of the land shall be in conformity with the provisions of this Development Code. (B) Continuance ofuse ofbuilding or land. The lawful use of a building or land existing on July 19,2006 may be continued, although the use does not conform with the provisions of this Development Code for the building or land and the use may be continued providing only reasonable repairs and alterations are made. Whenever a nonconforming use of a building or land has been changed to a more restricted use or to a conforming use, the use shall not thereafter be changed to a less restricted use or a nonconforming use. (C) Abandonment of use ofbuilding or land. In the event that a nonconforming use of any building is abandoned, and a nonconforming use discontinued for a period of three months is presumed abandoned, then any future use of the building or land shall be in conformity with the provisions of this Development Code." (Prior Code, Ch. 4, Art. IV, § 4-91) (Ord. 432-06, passed 6-19-2006) Thus, the Town's zoning ordinance explicitly recognizes that "abandonment" may be presumed from a three-month discontinuance, but also that, as recognized in Aldabbagh, evidence of a subjective intent to abandon may satisfy the test without a presumptive time period. In the instant case, the Court's ruling in section D, Page 13 concludes that the language of the Development Agreement (specifically, sections 7 and 12) essentially overrules the presumptive abandonment period, leaving subjective intent to abandon as the single triable issue. c. Since the section of the Town's zoning ordinance cited above was in effect throughout the period at issue, I do not believe the language in the Development Agreement should be read to overrule the ordinance. For it to do so, the Development Agreement would need to have been treated as a zoning text amendment. The requirement that zoning be uniform for all areas ofland within a given district (ARS § 9-462.01 (C)) would not allow a development agreement to create different nonconforming use rules for a specific

10859.1.1212329.13 7 2/15/2018 RAAP-105 location. To create different rules, such a change would need to amend the text of the zoning ordinance, be advertised as such, and be voted upon by the Planning Commission for recommendation to the City Council. Thus, I believe the presumptive abandonment period in the ordinance was still in effect after the property was annexed into the Town. d. From the record it appears that there may be numerous occasions when no mining related activity took place on the site for extended periods of three months or more. If so, these periods would invoke the presumption of abandonment. 17. Testimony in the instant case by the owner of the property, Harrison Merrill, is that, as he was processing the 2007 PUD, the parties were simply giving no thought whatsoever to the issue of mining the property. In the Superior Court's opinion, Merrill's testimony is quoted: "Question: ... And the copper mining never came up in the discussion of the 2007 PUD because it just wasn't on anybody's mind, right? Answer: No, again, the mining question was never an issue ever." In addition to the language quoted by the court, Merrill's deposition is replete with statements indicating that in the 2006-2007 time frame there was no thought given to preserving the right to mine. See, e. g.: Page 58-59: "I don't think we thought a lot about it [the right to mine] one way or the other because we didn't plan to do that ... "

Page 101: " ... we always thought that it could be mined and that is there was a problem, there wouldn't be a problem with the Town .... "

Page 119-120: "I don't think we ever really thought we didn't have the right, or if we didn't have the right we couldn't get the right from the State and the Town."

Page 121: "It's more if I didn't think they had the right to mine the property. I think they had the right to mine the property if we assigned it or if they didn't, they would get it or they wouldn't close it.

10859.1.1212329.13 8 2/15/2018 RAAP-106 Page 169: "Q. Okay. And in the 2007 master development plan amending the 2003 PUD, all references to non-conforming uses including mining are deleted. Are you aware of that, sir? A. Yes, sir. I was told of that. Q. Do you know that of your own personal knowledge. A. Again, when we got it, it wasn't really an issue from our perspective so there was really no discussion with the town about whether it would be kept or it wouldn't be kept. It was just-we were looking for higher destiny. That was the focus of what we were doing and also flexibility. Q. And higher density and flexibility would have been inconsistent with an in situ mining operation on the site; is that true? A. Well certainly on the higher density parcel which was the parcel of south of Hunt Highway. Q. And the parcel south of Hunt Highway is the same parcel that had previously had the BHP mine overlay that Mr. Campbell asked you about on it, right? A: Yes, sir."

Page 180-181: "Q. SO let's just cut to the chase because this is what this case is really all about. Sir, do you believe that at the time that you had the PUD amended to eliminate any references to non-conforming uses in mining or drilling or the BHP overlay, that those rights were removed from the PUD? A. There were really no discussions on that issue. Q. Do you believe that it would have been following the adoption of the 2007 PUD for a buyer wishing to mine the property that was now the subject of the increased density you described to go back to the Town and obtain proper zoning? MR. CAMPBELL: Object to form. THE WITNESS: It's a question I had not thought about and certainly wasn't thinking about at the time and had I thought about it, I would have presumed, as I mentioned earlier, that there wouldn't have been an issue and they could have gotten that. BY MR. KRAMER: Q. SO whether or not the zoning was in place at the time you entered into these negotiations, you in good faith believed that if it weren't, the buyer would still be able to get that zoning? MR. CAMPBELL: Objection as to form. THE WITNESS: Yes."

10859.1.1212329.13 9 2/15/2018 RAAP-107 Page 183-184: "Q. Mr. Merrill, before we go on to Exhibit 61, the fact of the matter is that once you owned this property that's the subject of this litigation, you could sell it to anybody for any purpose if the price was right, correct? A. Yes, sir. Q. And that wasn't dependent on what the entitlements happened to be at the time, was it? A. That would affect perhaps what they were willing to pay but other than that, no, SIr. Q. But you will agree with me that the residential densities reflected in the 2007 PUD are inconsistent with a mining operation on that same property? MR. CAMPBELL: Objection as to form. THE WITNESS: Yes, sir."

17. This action and testimony is a clear expression that the property owner did not think about or attempt to preserve the right to mine. The statements by Merrill clearly indicate that in 2007-2008 he was not thinking about mining. He applied for zoning inconsistent with mining. He thought that if an entity subsequently wanted to mine, they would go back to the town and get such use approved. This concept of seeking a new approval to mine (which in fact was attempted) should be seen as an admission that the right to mine has been abandoned. Under Arizona's view disfavoring nonconforming uses, it is my opinion that taken together, this behavior and testimony establishes a clear abandonment of the nonconforming right to mine. This testimony by Harrison Merrill regarding his intent is critical, whether viewed in the context of rebutting a presumed abandonment or as simple direct evidence of intent to abandon. Either way, the nonconforming use right was lost as a result of actions in 2007 and a clear failure to preserve the right. 18. In 2008, Merrill lost the property to a bank lender, which thereafter marketed the property for residential use-more evidence of abandonment of the right to mine. Furthermore, Merrill actually applied for the residential rezoning in 2006-an act itself which is evident of an intent not to mine the property. 19. The Court has stated that the triable issue of fact is whether the property owner abandoned the nonconforming use right. Under the Arizona law of nonconforming uses, the question should be phrased: "Did the owner take the appropriate steps to preserve a non-confirming use?" The burden is clearly on the property owner to affirmatively preserve the right.

10859.1.1212329.13 10 2/15/2018 RAAP-108 20. Relationship between Development Agreement and Zoning Regulations. a. Because the law in Arizona does not clearly permit a development agreement to overrule legislative enactments, I also believe that Ms. Tappendorfs affidavit and the Court's ruling overstate the extent to which the development agreement prohibits the Town of Florence from passing any subsequent zoning regulations on the property which may overrule the Development Agreement. The Development Agreement did include, among other relevant provisions, the following paragraph: "(f) the ordinances, rules, regulations, permit requirements, policies or other requirements of the Town applicable to the Property and the development of the Property shall be those that are now existing and in force for the Town as of the date of the recording of the Agreement. Town shall not apply to the Property any legislative or administrative land use regulations adopted by the Town or pursuant to an initiated measure that would change, alter, impair, prevent, diminish, delay or otherwise impact the development or use of the Property as set forth in the Development Plan except as follows: 1) as specifically agreed in writing by the Owner; 2) future generally applicable ordinances, rules, regulations, and permit requirements ... of the Town reasonably necessary to alleviate legitimate threats to public health and safety ... 3) adoption and enforcement of zoning ordinance provisions governing nonconforming property or uses; 4) future planned use ordinances, rules, regulations, permit requirements and other requirements and official policies of the Town enacted as necessary to comply with mandatory requirements imposed on the Town by County, state or federal laws and regulations ... and 5) future updates of, and amendments to, existing building, plumbing, mechanical, electrical, and similar construction and safety related codes adopted by the Town."

b. Numerous Arizona development agreements contain provisions similar to that cited above. But it is far from clear under Arizona law that such a provision can bar a city from subsequently enacting, and applying, zoning regulations inconsistent with such a provision. In 2007, upon application of the property owner, the Town rezoned the property at issue in this case from I-I (which itself did NOT permit mining) to residential, which clearly did not permit mining. Even if the property owner had objected (as he did not, and in fact asked for the rezoning he requested), the strong Arizona doctrine that zoning is a purely legislative matter does not mean, as Ms. Tappendorf suggests, that this subsequent enactment is void as to the property. Actions by a prior city council are generally not binding as against future legislative enactments. See, e.g., Sedona Private Property Owners Ass'n v. City o/Sedona, 961 P.2d 1074 (Ariz. App. 1998) (another case handled by our office). Rather, the impact of that subsequent zoning would be a possible

10859.1.1212329.13 11 2/15/2018 RAAP-109 breach of the earlier development agreement, giving rise to a damage action or other remedy. And, such a cause of action would be hard to maintain where the rezoning was at the property owner's request. c. The subsequent enactment would also be limited by the common law doctrine of non­ conforming use, as recognized by the Court in its ruling. The correct analysis, therefore, leads back to the inquiry of whether the property owner's action in 2007 evidenced an intent to preserve the nonconforming use.

DATED this 13th day of February, 2018.

10859.1.1212329.13 12 2/15/2018 RAAP-110 GRADY GAMMAGE, JR Two North Central Avenue, 15th Floor Phoenix, Arizona 85004 (602) 256-0566

LEGAL PRACTICE: Gammage & Burnham P.L.C.: 1983 to Present. One of the founders of a firm which has since grown to 33 lawyers. Practice primarily limited to real estate, zoning, land use and public/private relationships.

Jennings, Strouss & Salmon: 1976-1983 (Associate 1976-79, Partner 1979-83).

PUBLIC OFFICES: Board of Directors, Central Arizona Water Conservation District, a three-county governmental entity which operates the Central Arizona Project, (1993-2005) President of the Board, 1995 - 99.

Member, Arizona Water Banking Authority, 1996 - 99.

ACADEMIC EXPERIENCE:

Senior Fellow, Morrison Institute for Public Policy, School of Public Affairs, College of Public Programs, Arizona State University, 2003 - Present; Kyl Institute for Water Policy, 2015 - Present.

Senior Sustainability Scholar, Julie Ann Wrigley Global Institute of Sustainability, Arizona State University, 2003 -2016.

Adjunct Faculty, Masters of Real Estate Development program, Arizona State University, 2006 - Present.

Adjunct Faculty, Sandra Day O'Connor College of Law, Arizona State University, 1993 - Present. Courses taught: "Land Use Regulation" (2d/3d yr); "Property II" (1 st Year).

Adjunct Faculty, Herberger Institute of Arts and Design, Arizona State University, 1990 - 2013. Course: "Preservation Planning".

School of Sustainability, Arizona State University, "Urban Sustainability Policy" Class, Fall 2011.

Co-Principal Investigator, Decision Center for a Desert City, National Science Foundation funded Center, Arizona State University, 2005 - 2010.

Sabbatical Fellow, Herberger Institute for Design Excellence, College of Architecture and Environmental Design, Arizona State University, Spring Semester 1998.

Visiting Faculty Member, Arizona State University College of Law, Spring Semester 1996.

REAL ESTATE DEVELOPMENT EXPERIENCE: Developer and owner of Studios 5c in Tempe, Arizona. This urban, mixed use office/retail building of about 25,000 square feet was developed in 2000-2001. The building won awards from Valley Forward Association and the City of Tempe, and was the earliest transit oriented development along the Valley Metro Lightrail.

Owner Representative (volunteer), Arizona State University Foundation Building, six story office building and parking garage built in 2005 which serves as headquarters of Arizona State University Foundation and senior Arizona State University management, including the President's office. This LEEDS certified building received

RAAP-111 Grady Gammage, Jr. Curriculum Vitae Page 2

awards from Southwest Contractor Magazine, The National Association of Industrial and Office Properties and The City of Tempe.

AWARDS

Lifetime Award of Excellence, NAIOP, 2017,

Arizona Business Leaders, Real Estate Law, AZ Big Media, 2016.

Wright Spirit Award, Frank Lloyd Wright Building Conservancy, 2014.

Richard Ely Distinguished Educator Award, Lambda Alpha International, 2013.

Named "One of the Ten Most Influential People in the History of Arizona Commercial Real Estate" by AZRE Magazine, 2011.

Valley's Most Admired CEO's and Executives, Phoenix Business Journal, 2010.

Lawyer of the Year, Land Use, Best Lawyers in America, 2010 and 2014.

Historic Planning Pioneer Award, Arizona Planning Association, 2007.

Valley Forward Leadership Award, 2002.

James W. Creasman Award of Excellence, ASU Alumni Association, Fall, 1998.

Southwest Airlines "Smart Award," for contributions to heritage education in Arizona, 1992.

Distinguished Achievement Award, Arizona State University College of Architecture and Environmental Design, 1991.

CURRENT CIVIC ACTIVITIES:

Governor's Water Augmentation Council, 2016 - Present, GWAC

Advisory Board, Kyl Center for Water Policy, 2014 - present

Advisory Board, Center for the Study of Race and Democracy, 2012 - present

Board of Directors, Aquila Municipal Trust

Board of Directors, Aquila Funds Trust

Gammage Scholars Selection Committee, Arizona State University, 1985 to Present; Chair, 1990 to present

ASU Gammage Fifty Year Leadership Board

PREVIOUS CIVIC ACTIVITIES:

Board of Directors, Celebracion Artisticas de las Americas, 2010 - 2104

Governor's Sustainable State Parks Task Force, 2008 - 2010

RAAP-112 Grady Gammage, Jr. Curriculum Vitae Page 3

Board of Directors, Arizona State University Foundation, 1998 - 2009, Secretary 2001 - 2002

Board of Advisors, Morrison Institute for Public Policy, Arizona State University, 1997 - 2007

Advisory Council, Arizona Trust for Public Land, 2002 - 2008

KAET Channel 8 Advisory Board, 2000 - 2010

Board of Directors, Maricopa Partnership for Arts and Culture, 2004 - 2010

Board of Directors, Public Architecture, 2005 - 2009

Campaign Chair, Harry Mitchell for Congress, 2006

Board of Advisors, Think Arizona, 2002 - 2005

Governor's Water Management Commission, 2000 - 2002

Board Member, Salt River Pima Maricopa Indian Community Asset Management and Land Disposition Enterprise (Salt River Devco), 1999 - 2003

Member, Phoenix Ad Hoc Committee on Historic Preservation, 2000

Board of Directors, Arizona Town Hall, 1998 - 2000

Co-Chair, Old Main Restoration Campaign, Arizona State University, 1996 - 2000

Arizona Advisor (one of two from each state), National Trust for Historic Preservation, 1992 - 2000

Board of Directors, Orpheum Theatre Foundation, Inc, 1993 - 1999

Dean's Advisory Council, ASU Honors College, 1993 - 1999

Chair, City of Phoenix Design Review Standards Committee, 1989-92; reappointed 1996, Chair 1996 - 1998 The 1997-98 effort to change single family home design regulation in the City of Phoenix received Valley Forward's Crescordia award

Member, Phoenix Historic Preservation Commission, 1987-93; Vice Chair, 1987-91

President, Phoenix Chapter, Lambda Alpha International (Real Estate Economics Honorary), 1991-92

Director, Ahwatukee Custom Estates Homeowner's Association, 1990-97

Executive Board, Phoenix Community Alliance, 1988-90

City of Phoenix Zoning Ordinance Revision Committee, 1986-88

Board of Directors, Arizona Center for Law in the Public Interest, 1987-89

Graduate, Valley Leadership Class IV, 1984

Board of Directors, Arizona Historical Society, 1983-85

RAAP-113 Grady Gammage, Jr. Curriculum Vitae Page 4

SELECTED PRESENTATIONS:

"Suburban Cities," CEO's for Cities Annual Conference, Phoenix, November 2017.

"Arizona Water Issues: of Plumbers and Planners," Keynote Address, American Planning Association Annual State Conference, Fort McDowell, October 2017.

"Lessons From Sustaining Phoenix," Western States League of Cities & Towns, Phoenix, October 2017.

"Suburban Cities," for Gensler, June 2017.

"Arizona's Colorful History of Real Estate Fraud," Arizona! Mexico Commission, Phoenix, June 2017.

"Legal Issues of Golf Course Redevelopment," Arizona Association for Economic Development, Phoenix, May 2017.

"College Towns," IDA National College Town Summit, Tempe, Arizona, April 2017.

"The Future of the Suburban City," North Carolina State University Urban Development Conference, Raleigh, North Carolina, March 2017.

"Regulation & The Sharing Economy," Federalist Society Debate, Sandra Day O'Connor College of Law, Phoenix, March 2017.

"National Politics and the Future of Real Estate," ULI Trends Day, Phoenix, February 2017.

"The Suburban City, Clean Air, and Transportation," Keynote Address for Valley Metro Clean Air Campaign Annual Event, Phoenix, AZ, November 2016.

"Sustaining the Suburban City," 4th Annual IEEE Conference on Technologies for Sustainability, Phoenix, AZ, October 2016.

"Sustaining the Suburban City," Julie Ann Wrigley Global Institute of Sustainability, Keynote Speaker Series, Tempe, AZ, September 2016.

"Sustaining the Suburban City," Arizona Public Works Association Statewide Conference, Keynote Address, August 2016.

"Sustaining the Suburban City," Utah National Public Radio, Interview, June 2016.

"Sustaining the Suburban City," Arizona Association for Economic Development, Tucson, AZ, May 2016

"Security and Sustainability," Webinar, Island Press, April 2016.

RAAP-114 Grady Gammage, Jr. Curriculum Vitae Page 5

"Water Resources and Land Use Planning," American Planning Association National Conference, Phoenix, AZ, March 2016.

"Arizona Water Issues," Protect the Flows Conference, Phoenix, AZ, March 2016.

"The Sun Corridor," Create Oklahoma City Chamber of Commerce, Phoenix, AZ, February 2016.

"Southwestern Water Issues Panel," ULI Arizona Trends Day, Moderate, Phoenix, AZ, January 2016.

"Arizona's Permanent Fund: A Dilemma ofIntergenerational Equity," Real Estate CouncillMorrison Institute, Scottsdale, AZ, December 2015.

"Western Water Rights Status," Western Growers Annual Meeting, San Diego, CA, November 2015.

"Arizona and The River," 10th Colorado River Symposium, Santa Fe, NM, September 2015.

"Phoenix and Orlando," Orlando Business Leader visit, Phoenix, AZ, June 2015.

"Phoenix, Tucson, and the Sun Corridor," Tucson SALC meeting, Tucson, AZ, May 2015.

"Looking Into the Future," Annual Colorado River Conference, Las Vegas, NY, April 20] 5.

"The Sun Corridor," Presentation for New OrleanslBaton Rouge Study Trip to Arizona, Phoenix, AZ, April 2015.

"Arizona's Non Profit Sector," Keynote for Organization of Non Profit Executives, Phoenix, AZ, March 2015.

"Pinal County Water and Growth Issues," Keynote for SRP Economic Forum, Mesa, AZ, March 2015.

"Status of the Sun Corridor," Prescott Valley, AZ, March 2015.

"Water in The Sun Corridor," Arizona Women in Commercial Real Estate, Phoenix, AZ, March 2015.

"Can Phoenix' Past Predict Its Future?" Lambda Alpha Chapter, Phoenix, AZ, February 2015.

"ULI Trends Day 2015 Debate: The Use of Economic Incentives," Phoenix, AZ, January 2015.

"Colorado Basin Issues," Arizona Forward Luncheon Conference, Phoenix, AZ, October 2014.

"Challenges of Preserving Modern Architecture," Frank Lloyd Wright Conservancy Annual Conference, Phoenix, AZ, October 2014.

"Arizona Water Issues," Rocky Mountain Land Use Institute Conference, Denver, CO, November 2013.

"The Fourth Generation of Arizona Water," Panel Discussion with Senator Jon Kyl, ASU Morrison Institute State of our State, Phoenix, AZ, November 2013.

RAAP-115 Grady Gammage, Jr. Curriculum Vitae Page 6

"Arizona Sustainability: A 21st Century Case Study," American Council of Engineering Companies National Conference, Scottsdale, AZ, October 2013.

"Arizona Perspective," for the Minneapolis/St. Paul Chamber of Commerce visit to Phoenix, AZ, October 2013.

"Sustaining Arizona," The Hal W. Hunt Memorial Lecture, Deep Foundations Institute National Conference, Phoenix, AZ, September 2013.

"Arizona Water Myths and Realities," Arizona Hydrological Society Annual Meeting, Tucson, AZ, September 2013.

"Watering the Sun Corridor," Arizona Water Reuse Conference, Flagstaff, AZ, July, 2013.

Keynote Speaker: National Conference of the Water Reuse Foundation, Phoenix, AZ, May, 2013.

Keynote Speaker: US Public Health Service Scientific and Training Symposium, Glendale, AZ, May 2013.

"Arizona 3.0," Arizona Business & Education Coalition Annual Conference, Phoenix, AZ, May 2013.

Keynote Speaker: WateReuse Foundation Water Reuse & Desalination Research Conference, Phoenix, AZ, May 2013.

Keynote Speaker: Alliance for Construction Excellence Public/Private Partnership Conference, Phoenix, AZ, March 2013.

Keynote Speaker: ASA Fall Superintendency/Higher Ed Conference, Prescott, AZ, October 2012.

"Arizona State of our State" 9th Annual Arizona Pavements and Materials Conference, Tempe, AZ, October 2012.

"Arizona's Sun Corridor," Verde Valley Regional Economic Organization Speakers Series, Sedona, AZ, September 2012.

"Arizona's First One Hundred Years," Arizona Mortgage Lenders Association Annual Luncheon, Scottsdale, AZ, September 212.

"Supreme Court Decision on City of Tucson v. State of Arizona: What This Means for Arizona Cities and Towns," League of Cities Conference, Scottsdale, AZ, August 2012.

Keynote Speaker: Continuing Legal Education International's 20th Annual AZ Water Law Conference, Phoenix, AZ, August 2012.

Keynote Speaker: Arizona American Public Works Association/Solid Waste Association of North America Annual Symposium, Phoenix, AZ, August 2012.

"What's the Deal with Arizona?" Arizona Business Education Council Meeting, Tempe, AZ, June 2012.

"Watering the Sun Corridor," National Federation of Municipal Analysts Annual Meeting, Las Vegas, NY, April 2012.

RAAP-116 Grady Gammage, Jr. Curriculum Vitae Page 7

"Is Phoenix Sustainable?" PURL debate with Andrew Ross, author of Bird on Fire; Phoenix, AZ, April 2012.

"Broadacre City and Phoenix," Panel at Phoenix Art Museum in connection with Frank Lloyd Wright Exhibit, Phoenix, AZ, March 2012.

"Tucson's Place in the Sun Corridor", Tucson Metro Chamber of Commerce, Tucson, AZ, March 2012.

"Rehousing the American Dream," Panel discussion at the Museum of Modern Art, New York, March 2012.

"Watering the Sun Corridor," Water Resources Research Center Annual Conference, Tucson, AZ, January 2012.

"Public Lands: The Dysfunctional Lessons of Attempts at State Trust land Reform," American Family Farm Foundation, Sedona, AZ, January 2012.

"What's the Deal with Arizona?," Morrison Institute State of our State Address, Phoenix, AZ, November 2011.

"Arizona and Water Sustainability," American Water Works Association Annual Conference, Phoenix, AZ, November 2011.

"Water, Agriculture and the Future of the Southwest," National Association of Wheat Growers, Tucson, AZ, November 2011.

"Changing the Dialogue: Thinking About Arizona Water Sustainability," Arizona Hydrological Conference, Flagstaff, AZ, September 2011.

"Water, Conflict and Climate Change: A Conversation about Western Water," Sponsored by Discover Magazine and the Weather Channel, Tempe, AZ, August 2011. Featured as "Water Wranglers" in Discover Magazine, December 2011.

"Watering the Sun Corridor," Project Central International Conference, Tucson, AZ, August 2011.

"Arizona's Gift Clause," Rocky Mountain Land Use Institute, Denver, CO, March 2011.

"Future of Water Partnerships in AZ," National PubliclPrivate Association, Phoenix, AZ, September 2010.

"The Value of Open Space," Pinal Open Space Conference, Coolidge, AZ, September 2010.

"God and Zoning: The Use ofRLUIPA," State Bar of Arizona Land Use Panel, Phoenix, AZ, June 2010.

"CityNorth and Arizona's Gift Clause," Arizona Association for Economic Development, Phoenix AZ, May 2010.

"ASU: The New American University and Metro Phoenix," Atlanta Leadership Council, Phoenix AZ, April 2010.

"Arizona's Gift Clause and the CityNorth Decision," Arizona League of Cities and Towns, Phoenix, AZ, March 2010.

"Arizona Perspective on Western Water Issues," WAMCA, Santa Barbara, CA, March 2010.

"Real Estate Trends: The CityNorth Decision," ULI, Phoenix, AZ, January 2010.

RAAP-117 Grady Gammage, Jr. Curriculum Vitae Page 8

"The Future of Agriculture in Central Arizona," Decision Center for a Desert City, Tempe AZ, January 2010.

''Northern Gila County Economic Sustainability," Northern Gila County Economic Development Organization, Payson AZ, December 2009.

"Connecting Water and Land Use," Urban Land Institute, Las Vegas, NY, December 2009.

"Rethinking Arizona," Arizona Planning Association Annual Conference, Prescott, AZ, October 2009.

"Responding to a Changing Economy," National Association of Regional Councils, Phoenix, AZ, October, 2009.

"Sustainability, Water and Development," State Capitol Museum, Phoenix, AZ, September, 2009.

"Rethinking Arizona," Arizona Transit Association, Tempe, AZ, April 2009.

"Prop 207 and Transit Oriented Development," EPA, Phoenix, AZ, April 2009.

"Arizona Water Issues," Water Resource Research Center, Tucson, AZ, March 2009.

"Arizona Water - Canalscape," Arizona State University Canalscape Symposium, Phoenix, AZ, February 2009.

"Arizona Water - The Big Picture," Little Colorado Watershed Conference, Show Low, AZ, January 2009.

"State Trust Land Reform," McDowell Sonoran Land Conservancy, Scottsdale, AZ, February 2008.

"Will Phoenix go the way of the Hohokam?," Panel discussion hosted by High Country News, January 2008.

"Comparing Phoenix and Denver," Denver Leadership (including Mayor of Denver and Governor of Colorado), October 2007.

"Arizona's Counties and the Future," County Supervisors' Association, Flagstaff, October, 2007.

"Growth and Water: Is Conservation Enough?," Panel discussion at the Colorado River Symposium, Santa Fe, September 2007.

"Arizona Home Rule," Arizona League of Cities and Towns Conference, Scottsdale, August 2007.

"Superstition Vistas: Scenarios for the Future," Pinal County Economic Foundation, Casa Grande, February 2007.

"Downtown Phoenix Development Challenges," American Institute of Architects State Conference, Phoenix, November 2006.

"The University and the City," Association of Urban Historians National Conference, Tempe, October 2006.

"Public Policy Choices," Boise Chamber of Commerce Retreat, Sun Valley, Idaho, May 2006.

"Economic Development in Arizona: Past and Future," Arizona Association of Economic Development Annual Conference, Pinetop, May 2006.

"Water and Growth in the West," Nevada Water Resources Association, Mesquite, Nevada, February 2006. RAAP-118 Grady Gammage, Jr. Curriculum Vitae Page 9

"Phoenix and Sustainability," Western Fulbright Students from Foreign Countries, Tempe, February 2006.

"Urban Growth and Water," Keynote address at Colorado River Water User's Association Annual Conference, Las Vegas, Nevada, December 2005.

"Growth, Resources and Greater Phoenix," Association of Pacific Coast Geographers, Phoenix, October 2005.

"Report from the Lower Basin," Western States Water Forum, Gunnison, Colorado, July 2005.

"Confessions of a Water Buffalo," American Bar Association Natural Resources Law Section, San Diego, February 2005.

"Phoenix in Perspective," Goldwater Lecture, Arizona Historical Foundation, Phoenix, February 2005.

"Introduction to Phoenix," Chinese Planning Delegation to U.S., Portland, Oregon, September 2004.

"Experiment Phoenix," Land Use Planning in the West - Then and Now, Stanford University, April 2004.

"Arizona's Growing Smarter Experience," - American Planning Association National Conference, March 2003

"Which Way Scottsdale?" - Televised Public Forum, April 2003

"Preservation Issues at Arizona State," - Campus Heritage Preservation: A National Conference; University of Oregon, Chicago, June 2002

"Trust Land Conservation," - Sustainable Landscapes Conference, Utah State University, Logan, Utah, May 2002

"Phoenix in Perspective Revisited" - The Annual Herberger Lecture, Arizona State University College of Architecture, March 2002

"Issues in Conservation: The Post War Suburb" - Getty Lecture Series, Getty Museum, Los Angeles, March 2002

"The Politics of Recharge" - Arizona Hydrological Symposium, June 2001

"Planning by Plebescite" - Rocky Mountain Land Use Institute, Denver, April 200 1

"Conveying Land Use and Environmental Decision Making" - ABA Section on Natural Resources, Las Vegas, March 2001

"Basic Due Process and Takings" - National Historic Preservation Conference, Los Angeles, November 2000

"Legal Standards for Preservation Commissions" - National Alliance of Preservation Commissions" Pittsburgh, August 2000

"Water, Land and Growth" - American Planning Association, Five Corners Conference, Flagstaff, 1999

"Arizona, The CAP and the Colorado River" - Rocky Mountain Mineral Law Foundation, Tenth Institute For Natural Resources Law Teachers, Las Vegas, 1999

RAAP-119 Grady Gammage, Jr. Curriculum Vitae Page 10

"When Sprawl Becomes Historic" - National Historic Preservation Conference, Washington, D.C., 1999

"A Debate on the Quality of Life, Controlling Growth and Defining the Phoenix Style" - Outlook '99, Phoenix Metro Chamber of Commerce (with Reed Kroloff, Editor, Architecture Magazine), October 1998

"Sun, Water, Land: Thoughts on Guiding Southwestern Growth" - Keynote address at New Mexico Town Hall, 1997

"Legal Issues in Neighborhood Preservation" - America Planning Association, National Conference, San Diego, 1997

"The Future of The Central Arizona Project" - CAP Twenty-fifth Anniversary Celebration, September 1996

"Arizona's Proposition 300 & Property Rights" - Plenary Session, National Historic Preservation Conference, Ft. Worth, Texas, October 1995

"Sprawl: Pro and Con" - National Trust for Historic Preservation Advisors Meeting, Washington, D.C., May 1995

"Has Direct Democracy Gone Too Far? Should there be Limits on Initiative and Referendum?" - The 1992 Great Debate, sponsored by Valley Partnership

"Economic Hardship in Preservation Hearings" - National Historic Preservation Conference, Miami, Florida, October 1992

Symposium on Economic Hardship, Preservation League of New York State, Vassar College, May 1992

"Should Your Tax Dollars be used to Support Sports, Arts and Entertainment?" - The 1991 Great Debate, sponsored by Valley Partnership, 1991

"Can Phoenix Ever be a Great City?" - The Dickie Penguin Memorial Debate; Arizona State University College of Architecture and Environmental Design, 1990

"Master Planning State Trust Lands" - Western State Land Commissioner's Association, Rapid City, South Dakota, 1990

SELECTED PUBLICATIONS:

Morrison Institute Reports:

Principal Author:

"Sustaining Phoenix: Beyond Desert Survival," April, 2013, 19 p.

"Watering the Sun Corridor: Managing Choices in Arizona's Megapolitan Area," July, 2011, 38 p.

"The Price of Stewardship: The Future of Arizona's State Parks," October, 2009, 46 p.

"Megapolitan: Arizona's Sun Corridor," May 2008,51 p.

"The Treasure of the Superstitions: Scenarios for the Future of Superstition Vistas," April 2006 RAAP-120 Grady Gammage, Jr. Curriculum Vitae Page 11

"The Future at Pinal: Making Choices / Making Places," July 2007,47 p.

"We are L.A.?" for Morrison Institute series Forum 411. September, 2008, 8 pages.

Contributor:

State Trust Lands and Education Funding, 2015.

"Sun Corridor: A Competitive Mindset," 2014.

"Sustainability for Arizona: The Issue of Our Age," November 2007

"Hits and Misses: Fast Growth in Metropolitan Phoenix," September 2007

"Arizona Ideas," September 2006

"Phoenix and the Vision Thing" - Arizona Policy Choices, Morrison Institute, Fall 1998

The Future of the Suburban City: Lessons from Sustaining Phoenix; - Island Press, April, 2016.

Phoenix in Perspective: Reflections on Developing The Desert; - Herberger Center for Design Excellence, Arizona State University, 1999, 180 pp. Second Edition, 2003

Historic Preservation in California: A Legal Handbook - Stanford Environmental Law Society and The National Trust for Historic Preservation, 1975, 145 pages, with Stephen and Philip Jones

Articles, Chapters and Papers:

"Just Add Water," in The Environmental Forum, www.eli.org, NovemberlDecember 2016.

"Proposition 207," in Land Use Challenges and Choices for the 2Ft Century, Report for the Ninety First Arizona Town Hall, October 2007

"Shaped by Water: An Arizona Historical Perspective," with Jack L. August, Jr., in Colby & Jacobs Arizona Water Policy Resources for the Future, Press 2007

"Our Water Legacy," in Greater Phoenix Regional Atlas, Arizona State University, 2003

"Thoughts on Urban Growth Boundaries" - Arizona Planning, February, 1998

Greater Phoenix 2100: The Arizona State University Urban Atlas; ASU Center for Study of Rapidly Urbanizing Regions, April 2003.

"Growing Weary?" - Phoenix Magazine, November 1996

"Squareacre, Broaddesert: Visions of Phoenix" - Frank Lloyd Wright: The Phoenix Papers, Vol. 1: Broadacre City, Arizona State University, The Herberger Center for Design Excellence, 1995

RAAP-121 Grady Gammage, Jr. Curriculum Vitae Page 12

"The Property Rights Debate: A Preservationist's Guide" - Forum News, Vol. 1, No.4, National Trust for Historic Preservation, May/June 1995

"Design Review Comes to Phoenix" - Chapter 8 in Scheer and Preiser, ed., Design Review: Challenging Urban Aesthetic Control, Chapman and Hall, 1994

"The Changing Role of the Central Arizona Water Conservation District" - WaterWords, Vol. 13, No.2, Southern Arizona Water Resources Association, March/April, 1995

"Design Review: A Perspective from the West" - Historic Preservation Forum, The Journal of the National Trust for Historic Preservation, Vol. 5, September/October 1991, with Deborah Edge Abele

"Phoenix Does It Citywide; A Primer for Writing Design Guidelines" - Planning, American Planning Association, Vol. 57, No.5, May 1991

"Land Use Decisions: Context and Conflict" - FORUM, Arizona Real Estate Center, College of Business, Arizona State University, Vol. 2, No.3, 1989

"The Bureaucrat as Developer: Arizona's Urban Lands Act" - Arizona Bar Journal, February, 1989, with Karen LSchroeder

"State Trust Land and the Enabling Act Reconsidered" - Arizona Bar Journal, AprillMay, 1986, with Karen L Schroeder

"The State Urban Lands Act" - Arizona Bar Journal, February, 1982

EDUCATION: Stanford Law School, J.D., 1976. Honors and Activities:

Order of the Coif (top 10% of class) Co-chairman, Environmental Law Society Internship, Natural Resources Defense Council Member, University Committee on Land and Building Development (functioned as the Planning Commission for 6,000 acres of the San Francisco Peninsula owned by Stanford University)

Occidental College, B.A., Magna Cum Laude, 1973 Honors and Activities:

Phi Beta Kappa Departmental Honors, American Studies Richter Fellowship to study architectural history of American railroad stations Student Member, Faculty Committee on Educational Policy and Curriculum

PROFILED IN: Southwest Super Lawyers, 2005 - Present The Best Lawyers in America, 1991- Present; WoodwardlWhite The American Lawyer, March, 1985 Northwest Orient Magazine, November, 1983

PERSONAL: Born October 1, 1951, Phoenix, Arizona Married, three children Wife: Karen Marie Gammage RAAP-122 1

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

TOWN OF FLORENCE ) ) ) vs. ) ) No. CV 2015-000325 ) FLORENCE COPPER, INC., ) et al. ) ) ) )

Phoenix, Arizona December 12, 2018

BEFORE: The Honorable Roger Brodman Judge of the Superior Court

REPORTER'S TRANSCRIPT OF PROCEEDINGS (Trial)

Marylynn LeMoine, RMR, CRI Certified Reporter #50441

SUPERIOR COURT RAAP-123 20

1 Reminder Tribune, the local paper?

2 A. Yes.

3 Q. And those are available on microfilm at the

4 Arizona state archives?

5 A. Yes.

6 MR. CAMPBELL: No further questions, Your

7 Honor.

8 THE COURT: Okay. Well, then,

9 Mr. Longley, you may step down, and I assume this

10 witness may be excused?

11 MR. CAMPBELL: Yes, Your Honor.

12 MR. KRAMER: Yes, Your Honor.

13 THE COURT: And Mr. Campbell, you may call

14 your next witness.

15 MR. KRAMER: Before we call

16 Ms. Tappendorf, I have a preliminary matter relating to

17 her testimony, Your Honor.

18 THE COURT: Sure.

19 MR. KRAMER: To the extent Ms. Tappendorf

20 is going to express opinions on Arizona law, her

21 testimony is prohibited by Rule 31 of the Arizona

22 Supreme Court, and Rule 5.5 of the Arizona Rules -- or

23 ER 5.5 under Rule 42.

24 Rule 31 says that expressing a legal

25 opinion as to Arizona law is practicing law in Arizona.

SUPERIOR COURT RAAP-124 21

1 Unless Ms. Tappendorf is prepared to testify that she

2 is, in fact, admitted to practice law in Arizona, I

3 don't think that her testimony -- not only is her

4 testimony not admissible, but I think it would be

5 prohibited by the rules of the Supreme Court.

6 THE COURT: Okay. Mr. Campbell?

7 MR. CAMPBELL: Your Honor --

8 THE COURT: Or Ms. Crawford, whoever is

9 going to argue this.

10 MS. CRAWFORD: Sure.

11 Ms. Tappendorf is going to be testifying

12 based on her expert knowledge of development agreements

13 and annexation agreements. She has written extensively

14 on this topic.

15 She is not going to be opining on the --

16 whether this agreement is valid or invalid based on

17 Arizona law. We're really focusing on her overall

18 knowledge and the purpose of history development

19 agreements and the way they are structured and should

20 work.

21 So we would say that this is not the

22 unauthorized practice of law. It is relatively common

23 to have lawyers who are barred in other jurisdictions

24 provide testimony in cases, so we would submit this is

25 appropriate.

SUPERIOR COURT RAAP-125 22

1 THE COURT: Okay. Mr. Kramer, your

2 response?

3 MR. KRAMER: Thank you, Your Honor.

4 Rule 31(A)(2), Subsection 2 of the rules

5 of Arizona Supreme Court define practicing law as

6 preparing or expressing legal opinions, and the

7 authority to practice under Subsection B says no person

8 shall practice law in the state, in other words,

9 express legal opinions, unless that person is an active

10 member of the state bar, so to the -- and the

11 consequence of doing that, expressing legal opinions in

12 this context, is that it's a violation of Rule 5.5 of

13 Rule 42 of the Arizona Supreme Court.

14 MS. CRAWFORD: I would also like to note

15 that this objection was not -- I don't believe it was

16 stated in the joint pretrial statement, so we would

17 contend that he has waived this objection since it was

18 not previously raised until this morning.

19 MR. KRAMER: I don't think we can waive

20 the ethical rules.

21 THE COURT: Well, Here's the scoop. I'm

22 going to overrule the objection with a qualifying. The

23 fact of the matter is I think I've previously indicated

24 in my view, I don't need expert help on interpretation

25 of Arizona law. That's what you guys are for.

SUPERIOR COURT RAAP-126 23

1 You can certainly present me with your

2 interpretations of what Arizona law is and what it means

3 and how I should apply it. I have already, in my August

4 ruling, expressed what I thought was at least pretty

5 clear opinions of my view of Arizona law as it relates

6 to development agreements.

7 Now, unlike both of you, I don't know what

8 Ms. Tappendorf is specifically going to testify to, and

9 I think the appropriate way to proceed here is we will

10 make a record. I've overruled the objection. I'll

11 allow her to testify, and I will give her testimony the

12 weight that I think is appropriate under the

13 circumstances, so then we'll have a full record, and I

14 suppose once the record is in there, we can -- if you

15 guys want to argue about what she says or whether I

16 should wholly disregard it, you can make that argument

17 in your closing tomorrow.

18 So on that note and that somewhat of a

19 waffling ruling, it's basically let's make the record,

20 put it in, and I'll give it the weight to which it

21 deserves.

22 Ms. Crawford, you may call your next

23 witness.

24 MS. CRAWFORD: Thank you, Your Honor.

25 We are calling Julie Tappendorf.

SUPERIOR COURT RAAP-127 24

1 THE COURT: Ms. Tappendorf, if you could

2 please step forward here in front of the clerk, give her

3 your name and spelling, and she will swear you in.

4 (Whereupon, the witness was sworn.)

5

6 THE COURT: If you could please take the

7 witness stand. Please be seated. Speak loud and

8 directly towards the microphone.

9 Ms. Crawford, you may proceed as soon as

10 you are ready.

11 MS. CRAWFORD: Thank you, Your Honor.

12

13 JULIE TAPPENDORF,

14 called as a witness herein, having first been duly

15 sworn, was examined and testified as follows:

16

17 DIRECT EXAMINATION

18 BY MS. CRAWFORD:

19 Q. Good morning.

20 A. Good morning.

21 Q. Would you please state your full name for the

22 record.

23 A. Julie Ann Tappendorf.

24 Q. Thank you, Ms. Tappendorf.

25 I would like to go over your resumé

SUPERIOR COURT RAAP-128 ) II. DEVELOPMENT PLAN A. LAND USE PLAN

1. Proposed Uses and Densities

Merrill Ranch is a 5,802-acre mixed-use development featuring a wide range of neighborhood housing, with several areas reserved for neighborhood business, commercial, industrial, and mixed uses. An extensive trail network, natural desert open space and a variety of community parks are all part of the open space system within Merrill Ranch. Land set aside as developed- or undeveloped-open space will account for no less than 14% (or approximately 812 acres) of the total land area of Merrill Ranch. It is anticipated that Merrill Ranch will be a diverse residential community catering to all potential home buyers.

Planning villages have been designated to accommodate the envisioned development of the Merrill Ranch Planned Unit Development site. A breakdown of proposed land uses by planning village is provided in Table 11-1, along with gross acres and planned number of residential units per planning village.

Table 11-2, the Land Use Summary Table, totals the anticipated number of dwelling units and gross acreage by proposed zoning and land use categories.

Table 11-3, the Quantitative Development Table, summarizes the percentage of open ) space, acres of residential development and the total allowable density within the PUD. Maximum overall density of the PUD is 4.5 dwelling units per gross acre.

The land use concept of the Planned Unit Development presents a balanced and diverse urban community. All of the land use elements are integrated for circulation, infrastructure, aesthetic and visual setting, development standards and guidelines.

2. Phasing Program

The Merrill Ranch Planned Unit Development will be developed in multiple phases. A summary of the proposed phasing sequence by planning village is provided on Table 11-4 and shown on Exhibit 11-2, Phasing Plan.

- 15 - RAAP-129FLOR098195 ------North

Sc a l e ; 1 " .. 600

LEGEND: 0 I 00 0 200 0 I R-1 I SINGLE FAMILY RESIDENCE ZONE SINGLE FAMILY AND MULTI-FAMILY R-2 RESIDENCE ZONE I I .... I R-3 I MULTIPLE FAMILY RESIDENCE ZONE COMMERCIAUEMPLOYMENT I CE-I I INDUSTRIAL ZONE COMMERCIAUEMPLOYMENT I CE-M I MIXED-USE ZONE COMMERCIAUEMPLOYMENT RETAIL ZONE I- VMU I VILLAGE MIXED-USE ZONE I I OPEN SPACE I POS I RECREATION CENTER/PARK

POTENTIAL SCHOOL SITE

@* POTENTIAL PUBLIC FACILITY SITE RAAP-130

I y TOW N O F F L ORENCE, ARIZONA G P LANN ED U N IT DEV E L OPM ENT Exhibit 11 -2 Page 24 PHASING PLAN JACK JOHNScpN COMPANY JANUARY 2e , 2007 11 ~1 x~1 7~A~IR~-~LA~N~D~U~S~E~. p~l o...... ,.10~~~1~/2~0~0~6 ~9~:5~3 :~30"""="PM:-:---~------~~- FLOR098204 ) TABLE 11-4 PHASING PLAN TABLE

North Village Planning Area

Target Total Target Phase Land Uses Gross Acreage Dwelling Units Phase Units

R-1 203.4 712 1 892 R-2 40 180 2 R-1 244.2 855 855 R-1 183.2 641 3 702 R-2 13.4 60 R-2 76.9 346 4 940 R-3 49.5 594 R-2 66.1 297 5 663 R-3 34.2 410 R-1 42.4 148 6 368 R-2 48.9 220 7 R-1 147.7 517 517 R-1 95.3 334 8 455 R-2 27.0 122 R-2 117.6 529 9 788 R-3 21.5 259 ) 10 R-2 128.2 577 577 R-1 66.0 231 11 R-2 99.8 449 1,001 R-3 26.7 320 12 R-3 32.0 384 384 13 R-3 52.7 632 632 14 R-3 25.8 310 310 15 VMU 99.9 1,499 1,499 16 R-3 33.6 403 403 17 R-2 22.2 100 100 18 R-2 27.6 124 124 19 R-2 72.9 328 328 20 R-3 78.8 946 946 21 R-3 22.2 266 266 22 R-3 74.7 896 896 23 R-3 47.1 565 565 24 R-3 27.4 329 329

- 25 -

RAAP-131FLOR098205 1 IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA 2

3 Town of Florence, an Arizona ) municipal corporation, ) 4 ) CIVIL ACTION ) NO. CV 2015-000325 5 Plaintiff, ) ) 6 vs. ) ) 7 Florence Copper, Inc., fka ) Curis Resources (Arizona), Inc.,) 8 a Nevada corporation; RK Mine ) Finance Trust 1, a trust ) 9 organized under the laws of the ) New South Wales, Australia; and ) 10 Pinal County, Arizona. ) ) 11 Defendants. ) ______) 12 ) Florence Copper, Inc., fka Curis) 13 Resources (Arizona), Inc., a ) Nevada corporation, ) 14 ) Counterclaimant, ) 15 ) vs. ) 16 ) Town of Florence, an Arizona ) 17 municipal corporation, ) ) 18 Counterdefendant.) ______) 19

20 DEPOSITION OF

21 W. HARRISON MERRILL

22 OCTOBER 2, 2015

23 10:11 A.M.

24 Atlanta, Georgia

25 Job no. 264865

RAAP-132 Page 119 1 you state the Merrill Trust is going to do business 2 with Hunter Dickinson on this property and possibly 3 our Copper Mountain Ranch property if and only if it 4 is a reasonably equitable deal for the Merrill Trust 5 considering the contributions by each party. If not, 6 our preference is simply to own the real estate which 7 as the real estate market returns would give us a 8 hundred thousand to 250 thousand per acre for the 9 high density residential portion south of Hunt 10 Highway or Merrill Ranch and then a hundred thousand 11 or better for the residential portion around the 12 Asarco Mine at Copper Mountain Ranch. 13 Fair to say that on the date of this 14 letter, June 12th, 2008, you thought you had the 15 right to go two different ways on this property 16 south of Hunt Highway. You could sell it as a mine 17 or you could develop it as residential property. 18 MR. KRAMER: Object to form. 19 THE WITNESS: Yes, sir. I mean, that was 20 our feeling. 21 BY MR. CAMPBELL: 22 Q. And it was more than a feeling. That's 23 what you thought your rights were to the property, 24 correct? 25 MR. KRAMER: Object to form.

RAAP-133 Page 120 1 THE WITNESS: I don't think we ever really 2 thought we didn't have the right or if we 3 didn't have the right we couldn't get the right 4 from the State and the Town. 5 BY MR. CAMPBELL: 6 Q. You saw in the property annexation 7 agreement that you had the right to drill within the 8 BHP Copper mine overlay area and to mine. 9 MR. KRAMER: Object to form. 10 THE WITNESS: Yeah, yeah. And I think at 11 that time that was industrial. 12 BY MR. CAMPBELL: 13 Q. All right. 14 A. To allow us to do it. 15 Q. And you also remember from the property 16 annexation and development agreement that you would 17 lose certain nonconforming use rights if you didn't 18 use them except for mining. 19 MR. KRAMER: Object to form. 20 BY MR. CAMPBELL: 21 Q. Do you recall that? 22 MR. KRAMER: Object to form. 23 THE WITNESS: Yeah, I recall the 24 nonconforming. I would have to go back and 25 look at that. I don't know what other

RAAP-134 Page 121 1 nonconforming uses there would be. 2 BY MR. CAMPBELL: 3 Q. All right. Would you offer this proposed 4 structure to Hunter Dickinson, if you didn't think 5 you had the right to mine the property? 6 MR. KRAMER: Object to form. 7 THE WITNESS: It's more if I didn't think 8 they had the right to mine the property. I 9 think they had the right to mine the property 10 if we assigned it or if they didn't, they would 11 get it or they wouldn't close it. 12 BY MR. CAMPBELL: 13 Q. I understand. You were a passive investor 14 in this project, right? You weren't going to 15 actively mine it yourself if Hunter Dickinson bought 16 the property. 17 A. No. We never would have mined the 18 property. 19 Q. Okay. Let's just move through this -- 20 A. "Never" is a big word. 21 Q. Yeah, "never" is a big word. 22 A. We probably would not have ever mined the 23 property. 24 Q. Let's turn to Exhibit 26. 25 A. Yes, sir.

RAAP-135 Page 207 1 lease was designated as industrial zoning. Does that 2 ring a bell? 3 A. Yes, sir. I think we looked at that 4 earlier in the deposition. 5 Q. Do you know whether or not you can mine a 6 property that has industrial zoning? 7 A. It depends on the industrial zone. I mean, 8 some places you can. Some places it requires 9 different kind of zoning so it depends. I don't 10 remember what it was allowed there but it was zoned, 11 as I recall, industrial when we bought the property. 12 Q. Okay. So just are you aware or not whether 13 the Town of Florence zoning plan allows you to mine 14 under an industrial designation? 15 A. I'm not sure. I'd have to read it. If you 16 showed it to me I could reflect it. 17 Q. Okay. And then with respect to the law 18 with respect to non-conforming uses, zoning and 19 zoning changes, you don't purport to be an expert on 20 that. 21 A. No. From a business perspective I think 22 I'm an expert. From a legal perspective, I would 23 have to go and read all the laws and the ordinances 24 and state laws, et cetera. I mean, I could become an 25 expert but I'm not an expert right now.

RAAP-136 Page 208 1 Q. Don't do it. 2 A. Thank you. Thank you. I was hoping that 3 was going to be your answer. 4 Q. When you testified earlier that you thought 5 Hunter Dickinson needed a rezoning, do you mean to 6 suggest that it is your legal opinion that rezoning 7 would have been necessary under all the facts and 8 circumstances of this case? 9 MR. KRAMER: Object to form. 10 THE WITNESS: No. I just think in the 11 context of discussions that it appeared to me 12 that they needed rezoning apparently from that 13 letter. 14 BY MR. CAMPBELL: 15 Q. Okay. 16 A. I did mention it several times. 17 Q. But you don't have any legal opinion one 18 way or the other whether they needed rezoning. 19 A. No, sir; no, sir. I wouldn't render a 20 legal opinion. 21 Q. You were in negotiations for a long period 22 of time and I realize some of this is pie in the sky 23 but, you know, if everything came out in a way where 24 all the stars were aligned, you could potentially get 25 a hundred million dollars for the mine, right?

RAAP-137 Page 209 1 A. With the -- it seemed to be what I was 2 asking for. 3 Q. Yeah, but your discussions -- 4 A. A hundred cash rather than a hundred and 5 75 million maybe. That's unusual for me. Usually I 6 take the 175. 7 Q. Would you have given away that right for 8 nothing? 9 MR. KRAMER: Object to form. 10 THE WITNESS: Would I have given away that 11 right away for nothing. No. 12 BY MR. CAMPBELL: 13 Q. I realize I'm speaking hypothetically here. 14 If the Town of Florence had come to you and said we 15 want to negotiate to take the mine out of the 16 property, do you have any idea what you would have 17 asked for that? 18 MR. KRAMER: Object to form. 19 THE WITNESS: Well, it depended on the 20 timing. When I went in to get the rezoning, I 21 wasn't interested at all in the copper. I was 22 interested in the higher density which was 23 basically apartment density and had no interest 24 in the mining in terms of my interest and when 25 things were really good and you multiplied it

RAAP-138 Page 210 1 out and I was getting a hundred thousand to a 2 hundred and thirty thousand an acre for the 3 property to the north for the lower density, 4 lower to medium density then I figured we'd get 5 even more, maybe up to $250,000 for the 6 property to the south with the higher 7 residential density so that's what we were 8 focused on in the -- I believe it was the two 9 -- it gets confusing but the 2007 zoning and I 10 think the Town also realized that they needed 11 to have affordable housing and they were very 12 interested in that and that was multifamily 13 high density because the other housing had kind 14 of gotten ridiculous in terms of pricing, as we 15 know that everything did in Phoenix and Atlanta 16 and Vegas. Sorry for the long answer but it's 17 the best I could do. 18 BY MR. CAMPBELL: 19 Q. No, I understand. But I guess we have a 20 situation where there's two lines that are 21 intersecting. Copper prices are going up so the 22 interest in copper mining is increasing and land 23 prices are sliding to where it hits a disastrous 24 waterfall in September of 2008. You thought you had 25 the option of going in either direction up until you

RAAP-139 Page 211 1 lost that property, true? 2 MR. KRAMER: Object to form. 3 THE WITNESS: Well, Hunter Dickinson 4 certainly brought up that second possibility. 5 That was a very attractive possibility as an 6 option as we were negotiating through during 7 that period of time. 8 BY MR. CAMPBELL: 9 Q. Right. 10 A. But again, I thought there'd be no problem. 11 Even if there was a problem, I didn't think that 12 would end up being a problem. 13 MR. CAMPBELL: All right. Let me take a 14 -- I want to speak with my client and we'll see 15 if we have some more questions. 16 THE WITNESS: Okay. 17 THE VIDEOGRAPHER: We're off the record at 18 4:05 p.m. 19 (A recess was taken.) 20 THE VIDEOGRAPHER: We're back on the 21 record at 4:10 p.m. 22 BY MR. CAMPBELL: 23 Q. I wanted to clarify one thing and maybe 24 just because I didn't hear things right but was there 25 ever a discussion with the Town of Florence where the

RAAP-140 Page 212 1 Town of Florence said we'll give you higher density 2 on the southern part of the property south of Hunt 3 Highway but in return for the higher density, you're 4 going to have to give up the mining rights? 5 A. No, sir. 6 MR. KRAMER: Object to form. 7 MR. CAMPBELL: All right. Nothing 8 further. Do you want to read and sign? 9 MR. NOWELL: Yes. 10 MR. KRAMER: I have couple of follow-up. 11 I'm sorry and I don't think we need to switch. 12 I don't think we need to switch out. 13 MR. CAMPBELL: Okay. I just want to just 14 mention we have the last word, as you know, on 15 our depositions so we may have some follow-up 16 questions. 17 THE WITNESS: 12:00 o'clock's looking 18 good, Rita. 19 MR. KRAMER: I'm thinking -- I'm thinking 20 it's not going to be that long. Could we pass 21 one of these to the court reporter and one to 22 Mr. Merrill, please. 23 THE WITNESS: Hugh, do you get any 24 overtime when it goes over seven hours? Do I 25 get another 17 bucks?

RAAP-141 Page 213 1 MR. KRAMER: It's not going to be that

2 long. This is truly, truly a follow-up.

3 MR. CAMPBELL: So what number is this?

4 MR. KRAMER: Good question.

5 MR. CAMPBELL: 62.

6 (Whereupon, the court reporter marked Exhibit 62 for 7 identification.)

8 FURTHER EXAMINATION

9 BY MR. KRAMER:

10 Q. And I apologize. During my portion of the

11 deposition earlier, I had misplaced an exhibit that I

12 found while we were on break so I wanted to go back

13 and cover that and what's been marked as Exhibit 62

14 to your deposition is a letter from Mr. Ditullio to

15 Mark Eckhoff, the planning director at the Town of

16 Florence. Is that correct, sir?

17 A. Yes, sir.

18 Q. And Mr. Ditullio is representing you and

19 your companies in negotiating the 2007 PUD at the

20 time; is that correct?

21 A. Yes, sir.

22 Q. And the letter reflects that fact, correct?

23 A. Yes, it appears to. May I just take a

24 moment and just --

25 Q. Yes, sir. Take your time.

RAAP-142 Page 214 1 A. -- thumb through it very quickly. Yes, 2 sir. 3 MR. CAMPBELL: Can I just ask one 4 question? There's no Bates number on this. 5 MR. KRAMER: You're right. There is no 6 Bates number on this. 7 MR. CAMPBELL: So do you know where it 8 came from? 9 MR. KRAMER: I do not know where it came 10 from offhand. 11 MR. CAMPBELL: Okay. It hasn't been 12 produced to us, though. 13 MR. KRAMER: I think that it has been 14 produced to you because you've gotten 15 everything that we have but -- 16 MR. CAMPBELL: Everything we have from you 17 is Bates-stamped. 18 BY MR. KRAMER: 19 Q. Well, in any case, earlier sir I asked you 20 about the ordinance adopting the 2007 PUD and whether 21 or not the language in that ordinance relating to the 22 fact that the 2007 PUD superseded the previously 23 approved Merrill Ranch PUD dated November 7, 2003, 24 was put in that document by Merrill Ranch and you 25 told us that you thought that it was.

RAAP-143 Page 215 1 MR. CAMPBELL: Object to the form of the 2 question. 3 BY MR. KRAMER: 4 Q. Looking at what's been marked as Exhibit 62 5 and specifically referring to page -- let's see, 8 of 6 13, does it appear that that is in fact the case, 7 that Merrill Ranch was the author of that portion of 8 the ordinance? 9 MR. CAMPBELL: You know, I don't even know 10 where you are. Are you on 8 of 13 of the 11 attachment? 12 MR. KRAMER: 8 of 13, yeah. 13 MR. CAMPBELL: And what paragraph are you 14 looking at? 15 MR. KRAMER: Paragraph 7. 16 THE WITNESS: So the question is did 17 Mr. Ditullio representing us make these 18 changes? 19 BY MR. KRAMER: 20 Q. That's my question, yes, sir. 21 A. Yes, it appears that he did. 22 Q. All right. 23 A. And which page are you on, sir? 24 Q. I was looking at -- if you look at the 25 attachment --

RAAP-144 Page 216 1 A. Yes, sir. 2 Q. -- I was looking at page 8 of 13, Paragraph 3 7. 4 A. Okay, sir. Yes, sir. 5 Q. And in fact, that language was included in 6 the ordinance and adopted by the Town counsel per 7 this request, correct? 8 A. Yes, apparently so. 9 Q. All right. The language in the 10 pre-annexation development agreement or excuse me, 11 the language in the 2007 PUD that Mr. Campbell asked 12 you about on his second run-through regarding the 13 obligation of the parties to bring the pre-annexation 14 development agreement into compliance with the terms 15 of the PUD, do you recall talking about that? 16 MR. CAMPBELL: Object to the form of the 17 question. 18 THE WITNESS: I don't remember 19 specifically. Was that in the plan itself or 20 the ordinance? 21 BY MR. KRAMER: 22 Q. Mr. Campbell was referring to Exhibit I 23 believe 5. 24 A. Okay, sir. That was the plan itself; yes, 25 sir.

RAAP-145 Page 217 1 Q. And to a provision in that agreement 2 whereby it says that the parties to this agreement 3 work in good faith to bring the pre-annexation 4 development agreement into conformity with the terms 5 of the 2007 PUD, do you recall that now? 6 MR. CAMPBELL: Object to the form of the 7 question. 8 THE WITNESS: Yes, sir. And -- 9 MR. CAMPBELL: It's not in Exhibit 5. 10 THE WITNESS: Where is that? 11 MR. KRAMER: Well, I'm sorry, 12 Mr. Campbell. Can you help me out? 13 MR. CAMPBELL: I can. It's in the 14 ordinance which is Exhibit 4. 15 MR. KRAMER: Oh, I'm sorry. I'm in the 16 wrong -- 17 MR. CAMPBELL: Paragraph 23. 18 MR. KRAMER: I'm in the wrong exhibit. I 19 apologize for that. Mr. Campbell is correct. 20 It is Exhibit 4, Paragraph 23. 21 THE WITNESS: Yes, sir. 22 BY MR. KRAMER: 23 Q. So the -- and you see Paragraph 24 where 24 you agreed to waive claims for diminution and value 25 pursuant to Proposition 207 as a result of the --

RAAP-146 Page 218 1 MR. CAMPBELL: I'm sorry. Where are you? 2 MR. KRAMER: Paragraph 24 of Exhibit 4. 3 Strike the question. I'll ask it again. 4 Q. Do you see Paragraph 24 of that same 5 exhibit? 6 A. Yes. Yes, sir. 7 Q. Okay. And you did in fact execute a waiver 8 in return for the passage of the 2007 PUD, correct? 9 A. Yes, sir. Yes, Hugh did. Hugh Nowell did 10 on our behalf. 11 Q. All right. And finally regarding the 12 affidavit -- in fact -- 13 MR. CAMPBELL: What's the date of this? 14 THE WITNESS: Hugh, can I have one of 15 those? 16 MR. CAMPBELL: Or what's the number on 17 this? 18 MR. KRAMER: This would be 63, I believe. 19 MR. CAMPBELL: Okay. Sixty-three is also 20 not Bates marked. 21 THE WITNESS: She gets one too. 22 BY MR. KRAMER: 23 Q. Well, that's because 63 is an e-mail that I 24 received yesterday from your attorney in Vancouver. 25 Do you recognize it, Mr. Merrill?

RAAP-147 Page 219 1 MR. CAMPBELL: Just so I'm clear, you're

2 saying that you didn't give it to me before the

3 deposition?

4 MR. KRAMER: I just got it last night,

5 Colin.

6 MR. CAMPBELL: And you didn't give it to

7 me before the deposition today?

8 MR. KRAMER: I gave it to you right now.

9 MR. CAMPBELL: Well, then let's just wait

10 so I can read it too.

11 (Whereupon, the court reporter marked Exhibit 63 for 12 identification.)

13 MR. CAMPBELL: All right.

14 THE WITNESS: Question?

15 BY MR. KRAMER:

16 Q. I'm sorry. Mr. Merrill, are you ready?

17 A. Yes, sir.

18 Q. All right. So Mr. Merrill, when you got

19 the affidavit from Ms. Maguire and Mr. Campbell, you

20 didn't think that the necessary changes were minor or

21 in any way innocuous, did you?

22 A. No.

23 Q. In fact, you thought that the affidavit as

24 it was written as they asked you to sign was to put

25 it bluntly a lie?

RAAP-148 Page 226 1 or hire the best people in town to do it for you, 2 right? 3 A. Yes, sir. I think so. 4 Q. Let's go back to the affidavit, okay? 5 A. Umn-hmn. 6 Q. Ms. Maguire is right here. 7 A. Umn-hmn. 8 Q. Do you think she was trying to get you to 9 lie? 10 A. Do I think what? 11 Q. Ms. Maguire was trying to get you to lie? 12 A. I thought she was adding things that simply 13 weren't true, absolutely. 14 Q. All right. You didn't sign that, right? 15 A. I did not. 16 Q. But you did sign something that you changed 17 to reflect what you thought was true. 18 A. The one with you that we changed. 19 Q. The one I went through with you. 20 A. Yes. 21 Q. Okay. As far as I can tell, the only 22 difference between the affidavit, substantive 23 difference putting aside corporate names, is this 24 issue of intention, right? 25 A. Yes, sir.

RAAP-149 RAAP-150 RAAP-151 RAAP-152 RAAP-153 RAAP-154 RAAP-155 RAAP-156 RAAP-157 RAAP-158 RAAP-159 RAAP-160 RAAP-161 RAAP-162 RAAP-163 RAAP-164 RAAP-165 RAAP-166