Sales to Developers. Subject to Section 10.1A, once developed pursuant to the Development Business Plan, fifty-eight percent (58%) of the total number of lots approved under the Entitlements for the development of for-sale single family attached and/or detached residences (collectively, the “Lots”) are to be offered for sale to the Developers (or their Affiliates) as merchant builders, without initially offering such Lots for sale on the open market (the “Private Sale Lots”), in accordance with the terms of this Section 10.1 and Section 10.3, below, and the remaining Lots (i.e., forty-two percent (42%) of all of the Lots) (the “Open Market Lots”) are to be sold on the open market to other merchant builders (which may include one (1) or more of the Members or their Affiliates). In calculating the above percentages, any Lots sold as part of a bulk sale of unimproved land shall not be included in the total number of Lots from which the percentage is derived. Subject to Section 10.1A, each of Xxxxxx, Standard Pacific and Xxxxx (and their respective Affiliates), in each case as a merchant builder, shall be entitled, prior to taking into account the dilution described below, to purchase pursuant to the terms of Section 10.3, not less than thirty-four and one-half percent (34.5%), thirty-four and one-half percent (34.5%) and thirty-one percent (31%) respectively, of the Private Sale Lots. The Lots that are to be offered for sale to the Developers and/or in the open market pursuant to this Section 10 and the method of marketing such Lots shall be reasonably determined by the Executive Committee. In that connection, the Members have agreed that the Lots shall be conveyed to the Developers (and their Affiliates), as well as to merchant builders not Affiliated with Developers, on the then prevailing market rate and terms so as to maximize the earnings generated by the Company from the Master Project consistent with prudent and customary master land development business practices. In furtherance of the foregoing, the Members have tentatively agreed to the procedures set forth in Section 10.3, below, with respect to the Private Sale Lots to be offered for sale to the Developers (and their Affiliates). The procedures set forth below may be modified by the Executive Committee to the extent reasonably necessary to accomplish the intention of the Members set forth in this Section 10.1.
