Exhibit 10.3
TENTH AMENDMENT TO
CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE
(Sky Ranch)
 
THIS TENTH AMENDMENT TO CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE (this
“Amendment”) is made as of the date the last of the Parties executes and dates
this Amendment (the “Effective Date”), by and between PCY HOLDINGS, LLC, a
Colorado limited liability company (“Seller”), and KB HOME COLORADO INC., a
Colorado corporation (“Purchaser”). Seller and Purchaser may be referred to
collectively as the “Parties.”
 
RECITALS
 
A. Seller and Purchaser previously entered into a Contract For Purchase and Sale
of Real Estate effectively dated June 29, 2017, as amended (the “Contract”) for
approximately 149 platted single-family detached residential lots in the Sky
Ranch master planned residential community in the County of Arapahoe, State of
Colorado.
 
B. Purchaser and Seller desire to amend the terms and conditions of the Contract
as set forth below.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Amendment and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser and Seller hereby
agree as follows:
 
1. Lotting Diagram. The Lotting Diagram in Contract Exhibit A is deleted and
replaced with attached Schedule 1.
 
2. Number of Lots. The references in the fourth WHEREAS clause and elsewhere in
the Contract to (i) “103” SFD 45 Lots is replaced with “106” SFD, and (ii) “46”
SFD 50 Lots is replaced with “43” SFD 45 Lots
 
3. Purchase and Sale. Section 1 “Purchase and Sale” is deleted and replaced with
the following
 
“1.                 
Purchase and Sale
. The Property shall be purchased at six (6) Closings. Subject to the terms and
conditions of this Contract, Seller agrees to sell to Purchaser, and Purchaser
agrees to purchase from Seller, on or before the dates set forth in
Section 6(b), below, the Lots in each Takedown, as generally depicted on the
Lotting Diagram and as follows:
 
At the Takedown 1 Closing (“First Closing”), twenty-five (25) Lots of which 9
are SFD 45’ Lots and 16 are SFD 50’ Lots;
 

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At the Takedown 2 Closing (“Second Closing”), twenty-five (25) Lots of which 15
are SDF 45’ Lots and 10 are SFD 50’ Lots;
 
At the Takedown 3 Closing (“Third Closing”), twenty-five (25) Lots of which 25
are SFD 45’ Lots and 0 are SFD 50’ Lots;
 
At the Takedown 4 Closing (“Fourth Closing”), twenty-four (24) Lots of which 24
are SFD 45’ Lots and 0 are SFD 50’ Lots;
 
At the Takedown 5 Closing (“Fifth Closing”), twenty-five (25) Lots of which 25
are SFD 45’ Lots and 0 are SFD 50’ Lots; and
 
At the Takedown 6 Closing (“Sixth Closing”), twenty-four (25) Lots of which 8
are SFD 45’ Lots and 17 are SFD 50’ Lots.
 
The exact number and location of the Lots within each Takedown are subject to
adjustment based upon the approval by the Authorities of the Final Plat (as
hereinafter defined) that includes the Lots to be acquired by Purchaser at each
Takedown. The precise number, dimension (subject to the provisions of this
Contract), location and legal description of the Lots will be established at the
time the Final Plat for such Lots is approved by the County and/or any other
Authority, and upon approval of each such Final Plat the parties shall execute
an amendment to this Contract setting forth the legal description of those Lots
included in the approved Final Plat.”
 
4. Master Covenants. Pursuant to Section 4(d) of the Contract, Purchaser has
approved the form of the Master Covenants set forth in attached Schedule 4,
subject to the Parties agreeing as to completion of any blanks or exhibits, if
applicable.
 
5. Public Improvement Fee Covenant. Pursuant to Section 9(e) of the Contract,
the agreed-upon form of the Public Improvement Fee Covenant is set forth in
attached Schedule 5, subject to the Parties agreeing as to completion of any
blanks or exhibits, if applicable.
 
6. Tap Purchase Agreement. Pursuant to Section 16(a) of the Contract, the
agreed-upon form of the Tap Purchase Agreement is set forth in attached Schedule
6, subject to the Parties agreeing as to completion of any blanks or exhibits,
if applicable.
 
7. Offsite Infrastructure Escrow Agreement. The agreed-upon form of the Offsite
Infrastructure Agreement is set forth in attached Schedule 7, subject to the
Parties agreeing as to completion of any blanks or exhibits, if applicable. With
respect Exhibit C, Section 4 of the Contract, Seller agrees to complete the WWRF
not later than 18 months after the first building permit is issued for any Lot.
 
8. Homebuyer Disclosure. Pursuant to Section 12(e) of the Contract, the
agreed-upon form of the Homebuyer Disclosure is set forth in attached Schedule
8. However, it is agreed Purchaser need not use and need not provide the
specific Homebuyer Disclosure attached, but rather Purchaser may provide
disclosures to its homebuyers similar in nature as part of Purchaser’s homebuyer
sales documentation.
 
 
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9. Amenity Development Agreement And Escrow Instructions. The Parties agree to
an additional document as part of the transaction, entitled the “Amenity
Development Agreement And Escrow Instructions” (herein the “Amenity Agreement”).
The agreed-upon form of the Amenity Agreement is set forth in attached Schedule
9, subject to the Parties agreeing as to completion of any blanks or exhibits,
if applicable. The Amenity Agreement is to be entered not later than the First
Closing.
 
10.  Continuation Notice. With this Amendment, Purchaser issues its Continuation
Notice.
 
11. Miscellaneous. In the case of any conflict between the terms of this
Amendment and the provisions of the Contract, the provisions of this Amendment
shall control. Except as the Contract is specifically modified by this
Amendment, the Parties hereby ratify, reaffirm, and restate the terms of the
Contract. This Amendment may be executed in counterparts, each of which shall be
deemed an original and may be signed and delivered by facsimile transmission or
electronic mail, and all of which, when taken together, shall constitute one and
the same Amendment.
 
[SIGNATURE PAGE FOLLOWS]
 
 
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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the
last day and year written below.
 
SELLER:
 
PCY HOLDINGS, LLC, a Colorado limited liability company
 
By: Pure Cycle Corporation, a Colorado corporations, its sole member
 
 
    By: /s/ Mark Harding 
    Mark Harding, President
    Date: 11-19-17
 
 

 
 
PURCHASER:
 
KB HOME COLORADO INC.,
a Colorado corporation
 
 
By: /s/ Randy Carpenter
Name: Randy Carpenter
Title: Division President
Date: 11-10-17
 
 
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Schedule 1 - Lotting Diagram
 
 
 
[pcyo_ex103000.jpg]
 
 
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Schedule 4 - Master Covenants
 
 
 
 
 
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DRAFT
McGEADY BECHER P.C.
October 9, 2017
FR DRAFT REV. 10/30/2017
 
 
When Recorded, Return to:
 
 
COVENANTS, CONDITIONS AND RESTRICTIONS
FOR SKY RANCH
THESE COVENANTS, CONDITIONS AND RESTRICTIONS FOR SKY RANCH (“Covenants,” as
hereinafter more fully defined) are made and entered into the date and year
hereinafter set forth by PCY Holdings, LLC, a Colorado limited liability company
(“Developer,” as hereinafter more fully defined).
 
 
WITNESSETH:
 
A. Developer is the owner of that certain real property in the County of
Arapahoe (“County”), State of Colorado, which is described on Exhibit A,
attached hereto and incorporated herein by this reference (“Property,”, as
hereinafter more fully defined).
 
B. Developer desires to subject the Property to certain covenants, conditions,
restrictions, easements, architectural guidelines, reservations, rights-of-way,
obligations, liabilities and other provisions.
 
C. These Covenants do not create a Common Interest Community, as defined by the
Colorado Common Interest Ownership Act at C.R.S. §38-33.3-103(8); therefore,
these Covenants are not governed by the Colorado Common Interest Ownership Act.
 
D. Pursuant to C.R.S. § 32-1-1004(8), and other provisions of Title 32 of
C.R.S., the Developer empowers the Sky Ranch Community Authority Board (the
“CAB”) with authority to furnish covenant enforcement and design review services
for the Property (collectively, the “Services,” as hereinafter more fully
defined).
 
E. Developer reserves the right to add additional real property to these
Covenants by recording an annexation document as more particularly described and
set forth herein.
 
F. Pursuant to the Colorado Constitution, Article XIV, Sections 18(2)(a) and
(b), and C.R.S. Section 29-1-2-3, metropolitan districts may cooperate or
contract with each other to provide any function, service or facility lawfully
authorized to each, and any such contract may provide for the sharing of costs,
the impositions of taxes, and the incurring of debt.
 
G. Pursuant to the Modified Service Plans for Sky Ranch Metropolitans District
Nos. 1, 3, 4 and 5 (“Sky Ranch Districts”), approved by Arapahoe County on
September 14, 2004, as may be amended from time to time (“Service Plans”), the
Sky Ranch Districts may furnish covenant enforcement and design review services
and cooperate and contract with each other regarding administrative and
operational functions.
 
 
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H. Pursuant to the Sky Ranch Districts’ Service Plans, the Districts intend to
exercise their powers to provide covenant enforcement and design review
services, as defined in C.R.S. Section 32-1-1004(8), for the Property.
 
I. In accordance with the Service Plans and statutory authority, the Sky Ranch
Districts intend to enter into a Sky Ranch Community Authority Board
Establishment Agreement (“CABEA”), creating the CAB and authorizing the CAB to
provide covenant enforcement and design review services within the Service Areas
of the Sky Ranch Districts that are parties to the CABEA using revenue derived
from the areas in which the services are to be furnished.
 
J. In accordance with the Service Plans, the CABEA and statutory authority, the
CAB has duly adopted a resolution acknowledging its power to provide covenant
enforcement and design review services pursuant to state statute, the intention
of the CAB to provide for uniform enforcement and design review services within
the service areas of the Sky Ranch Districts that are parties to the CABEA, and
authorizing the CAB to provide covenant enforcement and design review services
within the service area of the Sky Ranch Districts that are parties to the CABEA
using revenue derived from the areas in which the services are to be furnished.
 
K. Before the addition of the service area of any Sky Ranch District to these
Covenants, the applicable Sky Ranch District intends to: (i) duly adopt a
resolution acknowledging the CAB’s power to provide covenant enforcement and
design review services pursuant to state statute and its intention to provide
for uniform enforcement and design review services within the service areas of
the Sky Ranch Districts using revenues derived from the areas in which the
services are to be furnished; and (ii) authorize the CAB to provide covenant
enforcement and design review services within such Sky Ranch District’s service
area.
 
DECLARATION
NOW, THEREFORE, Developer hereby declares that the Property shall be held, sold,
and conveyed, subject to the following covenants, conditions, restrictions,
easements, architectural guidelines, reservations, rights-of-way, obligations,
liabilities, and other provisions, as set forth herein.
 
ARTICLE 1

GENERAL
 
Section 1.1 Planned Community.
  Developer is the owner of the Lots and other Property located in the County as
more particularly described on Exhibit A attached hereto and by this reference
incorporated herein, which collectively constitute and are defined in these
Covenants as the “Property”. Developer intends to develop the Property as a
planned community of single family residential homes and related uses. The name
of the community to be developed on the Property is “Sky Ranch”. All of the
Property is located within the Service Area of Sky Ranch Metropolitan District
No. 1, a quasi-municipal corporation and political subdivision of the State of
Colorado. Because ownership of a Unit (as defined below) does not obligate the
owner to pay for real estate taxes, insurance premiums, maintenance, or
improvement of other real estate described in these Covenants, the Property is
not and will not be a “common interest community”, as defined in the Colorado
Common Interest Ownership Act (“Act”), and therefore the Property and these
Covenants are not subject to or required to comply with the Act. Developer
confirms its intention that the Act will not apply to the Property or these
Covenants.
 
 
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Section 1.2 Purposes of Covenants.
  These Covenants are executed (a) to further a common and general plan for the
development of the Property; (b) to protect and enhance the quality, value,
aesthetics, desirability and attractiveness of the Property; (c) to provide for
and define certain duties, powers and rights of the Architectural Review
Committee, as defined herein; (d) to define certain duties, powers and rights of
the CAB under these Covenants; and (e) to define certain duties, powers and
rights of Owners of Lots within the Property.
 
Section 1.3 Declarations.
 Developer, for itself and its successors and assigns, hereby declares that the
Property, and all other real property that becomes subject to these Covenants in
the manner hereinafter provided from the date the same becomes subject to these
Covenants, shall be owned, held, transferred, conveyed, sold, leased, rented,
hypothecated, encumbered, used, occupied, maintained, altered and improved
subject to the covenants, conditions, restrictions, limitations, reservations,
exceptions, equitable servitudes and other provisions set forth in these
Covenants. The provisions of these Covenants run with the land and, until their
expiration in accordance with the terms hereof, shall bind, be a charge upon and
inure to the mutual benefit of: (a) the Property and all other real property
that becomes part of the Property; (b) Developer and its successors and assigns;
(c) the Sky Ranch Districts, through the CAB, and their successors and assigns;
and (d) all Persons having or acquiring any right, title or interest in any
portion of the Property or in any property that becomes part of the Property, or
any Improvement thereon, and their heirs, personal representatives, successors
or assigns. These Covenants will be recorded in the real property records of the
County.
 
Section 1.4  CAB Authority.
  Declarant, through these Covenants, grants authority to the Sky Ranch
Districts, through the CAB, to act on behalf of Declarant for certain matters
specifically set forth in these Covenants, including implementing these
Covenants, enforcing these Covenants and providing design review services.
Declarant grants the Sky Ranch Districts, through the CAB, authority as provided
herein to adopt Rules and Regulations, and Guidelines pertaining to
architectural and design review, each for the effective governance of the
Property to implements these Covenants. Declarant grants to the Sky Ranch
Districts, through the CAB, authority to review and approve Improvements in
compliance with the Guidelines and these Covenants and to enforce the
Guidelines. Declarant grants to the Sky Ranch Districts, through the CAB,
authority to appoint the ARC as provided herein and to exercise all other powers
necessary and proper to implement and enforce these Covenants and provide design
review services.
 
ARTICLE 2

DEFINITIONS
 
Section 2.1 ARC.
   “ARC” means the Architectural Review Committee appointed by the Developer
during the Developer Control Period (as defined in Section 3.1), and upon
expiration of the Developer Control Period, appointed by the Sky Ranch
Districts, through the CAB, all as provided in Section 3.1 of these Covenants.
The ARC shall review, consider and approve, or disapprove, requests for
architectural approval, as more fully provided in these Covenants.
 
 
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Section 2.2 Builder.
  “Builder” means any Person who: (i) acquires one or more parcels of the
Property for the purpose of constructing at least one residence on each such
parcel for sale, and/or rental, to the public; or (ii) acquires one or more
parcels of the Property for sale to any Person fitting the description in clause
(i) above; and is designated as a “Builder” under these Covenants in a written
designation that is signed by the then-Developer, and which designation is
recorded in the office of the Clerk and Recorder of the County.
 
Section 2.3 CAB.
  “CAB” means the Sky Ranch Community Authority Board.
 
Section 2.4 Covenants.
 “Covenants” means these Covenants, Conditions and Restrictions for Sky Ranch,
as amended and supplemented from time to time.
 
Section 2.5 Developer.
  “Developer” means PCY Holdings, LLC, a Colorado limited liability company, and
any other Person to whom the Developer may assign one or more of the Developer’s
rights under these Covenants (which will be the extent of the Developer’s rights
to which such assignee succeeds); provided, that no assignment of any Developer
rights is effective unless such assignment is duly executed by the assignor
Developer and recorded in the office of the Clerk and Recorder of the County.
 
Section 2.6 Governing Documents.
 “Governing Documents” means these Covenants, any Guidelines (as hereinafter
defined), any CCR Rules and Regulations (as hereinafter defined), and any other
documents now or hereafter adopted by or for the Sky Ranch Districts, the CAB,
or ARC, as amended and supplemented.
 
Section 2.7 Improvements.
  “Improvements” means all exterior improvements, structures, and any
appurtenances thereto or components thereof of every type or kind, and all
landscaping features, including but not limited to buildings, outbuildings,
swimming pools, hot tubs, satellite dishes, antennas, tennis courts, patios,
patio covers, awnings, porches, solar collectors, roof materials, painting or
other finish materials on any visible structure, additions, walkways, sprinkler
systems, garages, driveways, dog runs, fences, basketball backboards and hoops,
swingsets or other play structures, screening walls, retaining walls, stairs,
decks, landscaping, hedges, windbreaks, plantings, trees, shrubs, flowers,
vegetables, sod, gravel, groundcover, exterior light fixtures, poles, signs,
exterior tanks, and exterior air conditioning, cooling, heating and water
softening equipment, permanent fire pits, chimneys, and exterior ornaments, if
any.
 
Section 2.8 Owner.
  “Owner” means each fee simple title holder of a Unit, including Developer, any
Builder and any other Person who owns a Unit, but does not include a Person
having an interest in a Unit solely as security for an obligation.
 
Section 2.9 Person.
  “Person” means a natural person, a corporation, a limited liability company, a
partnership, a trust, a joint venture, an unincorporated association, or any
other entity or any combination thereof, and includes each Owner, the Developer,
each Builder, the ARC, the Sky Ranch Districts and CAB, and the governing body
of the Sky Ranch Districts and CAB.
 
 
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Section 2.10 Property.
  “Property” means the real property described on Exhibit A attached hereto, as
supplemented and amended, and all other real property, if any, made subject to
the terms and provisions of these Covenants after the date hereof, and as the
Developer, any Builder or Owner may now or hereafter subdivide or re-subdivide
any portion thereof; provided, however, that the Property does not include any
real property that has been withdrawn as provided in Section 6.10 hereof.
 
Section 2.11 Services.
  “Services” means the services that the CAB is empowered to provide pursuant to
C.R.S. §32-1-1004, as amended, and other provisions of Title 32 of C.R.S., as
amended, including but not limited to covenant enforcement and design review.
 
Section 2.12 Sky Ranch Districts.
  “Sky Ranch Districts” means Sky Ranch Metropolitans District Nos. 1, 3, 4 and
5, and any other metropolitan district(s), to which the Sky Ranch Districts or
CAB may transfer or assign any or all of the rights and duties of the Sky Ranch
Districts or CAB under these Covenants. Each such assignment or transfer, if
any, will be effective upon recording in the County of a document of transfer or
assignment, duly executed by the Sky Ranch Districts and/or CAB. In addition to
the authority to provide the Services (as defined in Section 2.11), the CAB has
such other authority with respect to the provision of the Services, as may be
permitted by the Special District Act, C.R.S. 32-1-101 et seq., including but
not limited to the right to adopt rules and regulations, fees, rates, tolls,
penalties and charges, and undertake enforcement actions (but these Covenants do
not limit in any way the authority of the Sky Ranch Districts or CAB under the
statutes of the State of Colorado).
 
Section 2.13 Unit.
  “Unit” means each portion of the Property which is designated as a lot on a
recorded plat, including each residence (attached or detached) now or hereafter
located thereon.
 
ARTICLE 3

ARCHITECTURAL REVIEW
 
Section 3.1 Composition of ARC.
  The ARC shall consist of three (3) or more natural Persons. The Developer has
the authority to appoint the ARC, and/or to delegate some or all architectural
authority (as provided in Section 3.2 hereof), from the date of recording of
these Covenants until the date of conveyance of all the Units to the first
Owners thereof other than: (i) the Developer; or (ii) any Builder; or (iii) any
other Person who acquires one or more parcels of the Property for the purpose of
constructing at least one residence on each such parcel (the “Developer Control
Period”). After expiration of the Developer Control Period, the governing board
of the CAB has the authority to serve as or appoint members to the ARC , and/or
to delegate some or all architectural authority (as provided in Section 3.2
hereof). The appointments of all then-current members of the ARC who were
appointed by the Developer will automatically terminate on the date which is
thirty (30) days after expiration of the Developer Control Period.
 
Section 3.2 Delegation of Some or All Architectural Authority.
  The Person with the authority to appoint the ARC, as provided in the preceding
Section 3.1, has the right and authority to: (i) delegate, in writing, some or
all architectural authority, to one or more other Persons, including one or more
management companies, metropolitan or other district(s), such as by entering
into intergovernmental agreement(s) or other document(s) or agreement(s); and
(ii) withdraw, in writing, any delegated authority.
 
 
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Section 3.3 Architectural Review Requirements; Authority of the ARC.
 
3.3.1                      No Improvements may be constructed, erected, placed,
altered, planted, applied, installed or modified, upon any Unit, unless said
Improvements are in full compliance with all provisions of the Governing
Documents, and unless such Improvements are approved in writing by the ARC. At
least one (1) detailed set of complete plans and specifications of proposed
Improvements (said plans and specifications to show exterior design, height,
materials, color, and location of the Improvements, plotted horizontally and
vertically, location and size of driveways, location, size, and type of
landscaping, fencing, walls, windbreaks and grading plan, as well as such other
materials and information as may be required by the ARC), must first be
submitted to the ARC for review and consideration.
 
3.3.2                      The ARC shall endeavor to exercise its judgment in an
attempt to provide for each proposed Improvement to generally harmonize with the
existing surroundings, residences, landscaping and structures. However, the ARC
shall not review or approve any proposed Improvements regarding whether the same
complies with governmental requirements. Rather, as provided in subsection 0,
below, the applicant is also required to submit proposed Improvements to the
applicable governmental entities for a determination of compliance with
governmental requirements. In its review of such plans, specifications and other
materials and information, the ARC may require, as a condition to its
considering an approval request, that the applicant(s) pay, and/or reimburse the
ARC, for the expenses incurred in the process of review and approval or
disapproval.
 
3.3.3                      In addition to the foregoing review and approval, and
notwithstanding anything to the contrary in these Covenants, the construction,
erection, addition, deletion, change or installation, of any Improvements also
requires the applicant to obtain the approval of all governmental entities with
jurisdiction thereover, and requires the issuance of all required permits,
licenses and approvals by all such entities. Without limiting the generality of
the preceding sentence, issuance of building permit(s) by the governmental
entity with jurisdiction thereover, if required, is a precondition to
commencement of any construction of, alteration of, addition to or change in,
any Improvement.
 
3.3.4                      In addition to the authority that is given to the ARC
in these Covenants, as well as such authority as may be implied from any
provision(s) of these Covenants, the ARC has all authority and powers that are
given by Colorado statute and case law, to a corporation, a limited liability
company, or any other legal entity. The foregoing shall include the power to
receive and review complaints from one or more Owners, Developer, one or more
Builders, or any other Person(s), alleging that a violation of any of the
Governing Documents has occurred or is occurring.
 
3.3.5                      The ARC may, at any time, appoint a representative or
committee to act on its behalf. If so, then the actions of such representative
or committee shall be the actions of the ARC. However, if such a representative
or committee is appointed, then the ARC will have full power over such
representative or committee, including the power to at any time withdraw from
such representative or committee, any authority to act on behalf of the ARC, and
the power to at any time remove or replace such representative or committee.
 
 
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Section 3.4 Guidelines.
  The Developer may promulgate, adopt, enact, modify, amend, repeal, and
re-enact, architectural standards, rules, regulations and/or guidelines,
regarding architectural and design matters and matters incidental thereto
(collectively the “Guidelines”), and the CAB, once it has the authority to
appoint the ARC as provided in Section 3.1 of these Covenants may modify, amend,
repeal, and re-enact the Guidelines, but the Guidelines may not be in conflict
with these Covenants. The Guidelines may include: clarifying the designs and
materials that may be considered in architectural approval; requirements for
submissions, procedural requirements, specification of acceptable Improvement(s)
that may be installed without prior review or approval; and permitting the ARC,
with respect to any violation(s) or alleged violation(s) of any of the Governing
Documents, to send demand letters and notices, levy and collect fines and
interest, and negotiate, settle and take any other actions. In addition, the
Guidelines may provide for blanket approvals, interpretations, or restrictions.
By way of example, and not by way of limitation, the Guidelines may state that a
certain type of screen door will be acceptable and will not require approval, or
may state that only one or more types of fences are acceptable and no other
types will be approved. All Improvements proposed to be constructed, erected,
placed, altered, planted, applied, installed or modified, upon any Unit by any
Owner must be done and used in accordance with the Guidelines and these
Covenants. The Guidelines (as amended from time to time in accordance with their
terms) may not be recorded against the Property but are hereby incorporated into
these Covenants as if fully set forth herein.
 
Section 3.5 Procedures.
  The ARC shall review each request for architectural approval in accordance
with the design review procedures set forth in the Design Guidelines or the CCR
Rules and Regulations, and approve (which may be with conditions and/or
requirements) or disapprove, each request in writing within forty-five (45) days
after the complete submission to the ARC along with a receipt of acknowledgement
by the ARC of the plans, specifications and other materials and information,
which the ARC may require in conjunction therewith. If the ARC fails to review
and give its writing approval (which may be with conditions and/or requirements)
or disapproval within forty-five (45) days after the complete submission of the
plans, specifications, materials and other information with respect to a written
request for architectural approval, then such request is deemed approved by the
ARC.
 
Section 3.6 Vote.
  The affirmative, majority vote of the ARC is required for approval (which may
be with conditions and/or requirements) of each matter, unless the ARC has
appointed a representative or committee to act for it, in which case the
decision of such representative or committee will control, unless the denial of
the ARC is appealed by the applicant to the CAB Board of Directors within thirty
(30) days of the date of the ARC written decision of denial in which case the
written decision of the Board of the CAB shall control.
 
Section 3.7 Prosecution of Work After Approval.
  After the ARC approves (which may be with conditions and/or requirements) any
proposed Improvement, the proposed Improvement must be completed and constructed
as promptly and diligently as possible, and in complete conformity with all
conditions and requirements of the approval. Failure to complete the proposed
Improvement within the time period set forth in the Guidelines or, if not set
forth in the Guidelines, then within one (1) year after the date of approval of
the application (“Completion Deadline”), or to complete the Improvement in
complete conformance with the conditions and requirements of the approval,
constitutes noncompliance; provided, however, that the ARC may grant extensions
of time to individual Owners for completion of any proposed Improvements, either
(a) at the time of initial approval of such Improvements, or (b) upon the
request of any Owner, provided such request is delivered to the ARC in writing
and the Owner is diligently prosecuting completion of the subject Improvements
or other good cause exists at the time such request is made. Builders are exempt
from this Section 3.7.
 
 
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Section 3.8 Notice of Completion.
  Upon the completion of an Improvement, the applicant for approval of the same
shall give a written “Notice of Completion” to the ARC (in form and substance
acceptable to the ARC, or on forms provided by the ARC). Until the date of
receipt of such Notice of Completion, the ARC shall not be deemed to have notice
of completion of any Improvement on which approval (which may be with conditions
and/or requirements) has been sought and granted as provided in this Article.

 
Section 3.9 Inspection of Work.
 The ARC, or its duly authorized representative, has the right to inspect any
Improvement at any time, including prior to or after completion, in order to
determine whether or not the proposed Improvement is being completed or has been
completed in compliance with the approval granted pursuant to this Article. Such
inspections may be made in order to determine whether or not the proposed
Improvement is being completed, or has been completed, in compliance with the
approval granted pursuant to this Article. However, such right of inspection
terminates ninety (90) days after the ARC has received a Notice of Completion
from the applicant and no action has been initiated by the ARC. The 90-day
period to perform inspections after the ARC has received a Notice of Completion
does not apply to or limit the right or authority of the ARC or the Board to
enforce these Covenants, including but not limited to the requirements
pertaining to the maintenance of Improvements.
 
Section 3.10 Notice of Non-compliance
. If, as a result of inspections or otherwise, the ARC determines that any
Improvement has been done without obtaining all required approvals (which may be
with conditions and/or requirements), or was not done in substantial compliance
with the approval that was granted, or has not been completed by the Completion
Deadline (except landscaping, as provided below), subject to any extensions of
time granted pursuant to Section 3.7 hereof, then the ARC shall notify the
applicant in writing of the non-compliance. Such notice of non-compliance must
be given not later than sixty (60) days after (as applicable), (a) the ARC
receives a Notice of Completion from the applicant, or (b) the ARC discovers any
such noncompliance. The notice of non-compliance must specify the particulars of
the non-compliance.

 
Section 3.11 Correction of Non-compliance.
  If the ARC determines that a non-compliance exists, the Person responsible for
such non-compliance shall remedy or remove the same within the time period set
forth in the Guidelines or, if not set forth in the Guidelines, then not more
than forty-five (45) days from the date of receipt of the notice of
non-compliance. If such Person does not comply with the ruling within such
period, the ARC may, at its option, record a notice of non-compliance against
the Unit on which the non-compliance exists, may impose fines, penalties and
interest, may remove the non-complying Improvement, or may otherwise remedy the
non-compliance, and the Person responsible for such non-compliance shall
reimburse the ARC, upon demand, for all costs and expenses, as well as
anticipated costs and expenses, with respect thereto. This Section 3.11 does not
prohibit composting to the extent that it has been approved by the ARC.

 
Section 3.12 Cooperation.
  The ARC has the right and authority to enter into agreements and otherwise
cooperate with any architectural review or similar committees, any metropolitan
or other districts, or one or more boards or committees that exercise
architectural or design review functions, or any other Person, in order to
increase consistency or coordination, reduce costs, or as may otherwise be
deemed appropriate or beneficial by the ARC. The costs and expenses for all such
matters, if any, shall be shared or apportioned between such Persons and the
ARC, as the ARC may determine. The foregoing includes collection, payment, and
disbursement of fees, charges, and/or any other amounts.
 
 
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Section 3.13 Access Easement.
  The Developer hereby reserves, and each Owner hereby grants, to the ARC, the
CAB, and the Person who then has the authority to appoint the ARC, as provided
in Section 3.1 of these Covenants, including the agents, employees and
contractors of each such Person (including the ARC), on, over, under and across
the Units and each of them, excluding any habitable structure and the interior
of any residence thereon, easements for performing any of the actions
contemplated in the Governing Documents, including inspections pursuant to the
first sentence of Section 3.9 of these Covenants and including enforcement of
each of the terms and provisions of the Governing Documents. If damage is
inflicted on any property or Unit, or a strong likelihood exists that damage
will be inflicted, then the Person responsible for the damage or expense to
avoid damage is liable for the cost of prompt repair. The term “Person” in the
preceding sentence includes the ARC and the Person who then has the authority to
appoint the ARC, as provided in Section 3.1 of these Covenants, if they are
responsible for such damage or expense to avoid damage. Further, the rights and
easements granted in this Section may be exercised only during reasonable hours
after reasonable notice to the Owner(s) or occupant(s) of any affected Unit;
except that no such notice is required in connection with any exterior,
non-intrusive inspections and maintenance; and except that, in emergency
situations, entry upon a Unit may be made at any time, provided that the
Owner(s) or occupant(s) of each affected Unit is given notice of the emergency
entry as early as is reasonably possible. The interior of any residence is not
subject to the easements provided for in this Section.

 
Section 3.14 No Liability.
  The ARC, the Sky Ranch Districts and CAB, the Person who then has the
authority to appoint the ARC, as well as any representative or committee
appointed by the ARC, will not be liable in equity or damages to any Person by
reason of any action, failure to act, approval (which may be with conditions
and/or requirements), disapproval, or failure to approve (which may be with
conditions and/or requirements) or disapprove, in regard to any matter. In
reviewing or approving any matter, the ARC is not responsible for the safety,
whether structural or otherwise, of the Improvements submitted for review, nor
the conformance with applicable building codes or other governmental laws or
regulations, nor compliance with any other standards or regulations, and any
approval (which may be with conditions and/or requirements) of an Improvement by
the ARC does not constitute an approval of any such matters and does not
constitute a warranty by the ARC to any applicant of the adequacy of design,
workmanship or quality of such work or materials for any applicants’ intended
use. No Owner or other Person will be a third party beneficiary of any
obligation imposed upon, rights accorded to, action taken by, or approval
granted by, the ARC.

 
Section 3.15 Variance.
  The ARC may grant reasonable variances or adjustments from any conditions and
restrictions imposed by Error! Reference source not found. of these Covenants,
or by the Guidelines, in order to overcome practical difficulties or prevent
unnecessary hardships arising by reason of the application of any such
conditions and restrictions. Such variances or adjustments may be granted only
in case the granting thereof is not materially detrimental or injurious to the
other property or improvements in the neighborhood, and does not militate
against the general intent and purpose hereof. However, any variance that may be
granted under this Section is only a variance from the requirements of the
applicable Governing Document for the individual applicant or Unit, and is not a
variance from the requirements of any applicable governmental or
quasi-governmental agency or entity. No granting of a variance or adjustment to
any one applicant/Owner constitutes a variance or adjustment, or the right to a
variance or adjustment, to any or all other applicants, Owners or Units.
 
 
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Section 3.16 Waivers; No Precedent.
  The approval or consent of the ARC, or any representative or committee
thereof, to any application for approval does not constitute a waiver of any
right to withhold or deny approval or consent by such Person, or any Person, as
to any application or other matters whatsoever, as to which approval or consent
may subsequently or additionally be required. Nor does any such approval or
consent constitute a precedent as to any other matter.

 
Section 3.17 Developer and Builder Exemption.
 
3.17.1                      The Developer is exempt from this Article and all
provisions of the Governing Documents that require ARC review or approval,
except for the requirement to obtain approval from all governmental entities
with jurisdiction thereover (as provided in subsection 0 of these Covenants.
 
3.17.2                      As long as, and to the extent that, a Builder has
received written architectural approval from the Developer for one or more
matters, such Builder is, as to Developer-approved Improvements, exempt from
this Article and all provisions of the Governing Documents that require ARC
review or approval of such matters, except for the requirement to obtain
approval from all governmental entities with jurisdiction thereover (as provided
in subsection 0 of these Covenants).
 
ARTICLE 4

RESTRICTIONS
 
Section 4.1 General.
  The Property is subject to all covenants, conditions, restrictions,
requirements, easements, licenses, and other provisions of all documents
recorded in the office of the Clerk and Recorder of the County, as amended,
including those stated on the recorded plats of the Property, or any portion
thereof, but only as and to the extent provided in such documents. In addition,
the Developer declares that, subject to Section 6.4 hereof, all of the Units
shall be held and shall henceforth be sold, conveyed, used, improved, occupied,
owned, resided upon and hypothecated, subject to the following provisions,
conditions, limitations, restrictions, agreements and covenants, as well as
those contained elsewhere in these Covenants.
Section 4.2 Compliance with Law.
  All Owners, and all other Persons, who reside upon or use any Unit or any
other portion of the Property, shall comply with all applicable statutes,
ordinances, laws, regulations, rules and requirements of all governmental and
quasi-governmental entities, agencies and authorities, but neither the
Developer, the ARC nor the Sky Ranch Districts nor CAB has any obligation to
enforce compliance with the statutes, ordinances, laws, regulations, rules and
requirements of any other governmental or quasi-governmental entities, agencies
or authorities.
 
Section 4.3 Residential Use; Professional or Home Occupation.
  Units that consist of platted single-family lots may be used for residential
use only, including uses which are customarily incident thereto, and may not be
used at any time for business, commercial or professional purposes except that
Owners may conduct home occupations and business activities within their
residences to the extent permitted by, and in compliance with, the ordinances of
the County (as applicable) and any Guidelines and CCR Rules and Regulations that
do not conflict with such ordinances.
 
 
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Section 4.4 Animals.
  No animals, livestock (pigs, cattle, horses, goats, lamas, etc.), birds,
poultry, reptiles or insects of any kind may be raised, bred, kept or boarded in
or on the Units except as permitted by, and in compliance with, the ordinances
of the County, as applicable, and any Guidelines and/or the CCR Rules and
Regulations that do not conflict with such the ordinances of the County, as
applicable. An Owner’s right to keep household pets is coupled with the
responsibility for collecting and properly disposing of any animal waste and to
pay for all damage caused by such pets.
 
Section 4.5 Temporary Structures; Unsightly Conditions.
  Except as hereinafter provided, no structure of a temporary character,
including a house trailer, tent, shack, storage shed, or outbuilding shall be
placed or erected upon any Unit; provided, however, that during the actual
construction, alteration, repair or remodeling of a structure or other
Improvements, necessary temporary structures, offices and trailers for
construction, marketing, sales or storage of materials may be erected and
maintained by the Person doing such work. The work of constructing, altering or
remodeling any structure or other Improvements must be prosecuted diligently
from the commencement thereof until the completion thereof. Further, no
unsightly conditions, structures, facilities, equipment or objects, may be so
located on any Unit as to be visible from a street or from any other Unit.

 
Section 4.6 Miscellaneous Improvements.
 
4.6.1                      No advertising or signs of any character other than
political signs, may be erected, placed, permitted, or maintained on any Unit
other than a name plate of the occupant and a street number, and except for a
“For Sale,” “Open House,” “For Rent,” or security sign of not more than five (5)
square feet in the aggregate; except that signs advertising garage sales, block
parties, or similar community events, may be permitted if the same are in
accordance with the Guidelines and applicable laws or have been submitted to the
ARC for review and written approval (which may be with conditions and/or
requirements), prior to posting of such signs. Notwithstanding the foregoing,
any signs, billboards or other advertising may be placed by the Developer or by
any Builder (with the prior, written approval of the Developer if located on
Developer owned property), without regard to the foregoing or any limitations,
requirements, specifications or other provisions of the Governing Documents, the
ARC, or the Sky Ranch Districts or CAB, and without any approval of the
foregoing (except as stated earlier in this sentence).
 
4.6.2                      No wood piles or storage areas, may be so located on
any Unit as to be visible from a street or from the ground level of any other
Unit.
 
4.6.3                      No types of refrigerating, cooling or heating
apparatus are permitted on a roof, except as permitted by law, and then only
with the prior, written approval of the ARC. Further, no such apparatus is
permitted elsewhere on a Unit, other than on the ground, except when
appropriately screened and approved in writing by the ARC.
 
 
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4.6.4                      No exterior radio antenna, television antenna, or
other antenna, satellite dish, or audio or visual reception device of any type
may be placed, erected or maintained on any Unit, except inside a residence or
otherwise concealed from view; provided, however, that any such devices may be
erected or installed by the Developer or by any Builder during its sales or
construction upon the Units; and provided further, however, that the
requirements of this subsection do not apply to those “antenna” (including
certain satellite dishes) which are specifically covered by the
Telecommunications Act of 1996 and/or applicable regulations, as amended. As to
“antenna” (including certain satellite dishes) which are specifically covered by
the Telecommunications Act of 1996 and/or applicable regulations, as amended,
the ARC is empowered to adopt CCR Rules and Regulations governing the types of
“antenna” (including certain satellite dishes) that are permissible hereunder
and, to the extent permitted by the Telecommunications Act of 1996 and/or
applicable regulations, as amended, establish reasonable, non-discriminatory
restrictions relating to appearance, safety, location, maintenance, and other
matters.
 
4.6.5                      No fences, other than fences constructed or installed
by the Developer or a Builder (with the prior, written approval of the
Developer), are permitted, except with the prior, written approval (which may be
with conditions and/or requirements) of the ARC. Any fence(s) constructed on a
Unit shall be maintained, repaired and replaced by the Owners of that Unit.
 
4.6.6                      The ARC may not effectively prohibit renewable energy
generation devices or the installation or use of any energy efficient measures,
provided that the ARC may adopt reasonable aesthetic rules and regulations
concerning dimensions, placement or external appearance of such devices or
measures to the extent such rules and regulations do not conflict with or
violate applicable laws.
 
Section 4.7 Vehicular Parking, Storage and Repairs.
 
4.7.1                      Subject to the Guidelines and/or the CCR Rules and
Regulations (as hereinafter defined), the garage area and driveway of each Unit
should first be fully used for the parking of vehicles before any street parking
is done. However, notwithstanding the foregoing, street parking is not
restricted by this Section.
 
4.7.2                      Commercial vehicles, vehicles with commercial writing
on their exteriors, vehicles primarily used or designed for commercial purposes,
tractors, mobile homes, recreational vehicles, trailers (either with or without
wheels), campers, camper trailers, boats and other watercraft, recreational
vehicles, golf carts and boat trailers, may only be parked in enclosed garages
or specific areas, if any, which may be designated by ARC. This restriction,
however, does not restrict trucks or commercial vehicles which are necessary for
construction or for the maintenance of any portion of the Property, or any
Improvements located thereon, and such restriction does not prohibit vehicles
that may be otherwise parked as a temporary expedient for loading, delivery or
emergency, or emergency service vehicles. Stored vehicles and vehicles which are
inoperable or do not have current operating licenses are not be permitted on the
Property except within enclosed garages. For purposes of this Section, the ARC
may determine whether a vehicle is considered “stored”. For example, a vehicle
may be considered to be “stored” if it is up on blocks or covered with a
tarpaulin and remains on blocks or so covered for seventy-two (72) consecutive
hours without the prior approval (which may be with conditions and/or
requirements) of the ARC.
 
 
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4.7.3                      No activity, including maintenance, repair,
rebuilding, dismantling, repainting or servicing of any kind of vehicles,
trailers or boats, may be performed or conducted in the Property unless it is
done within completely enclosed structure(s) which screen the sight and sound of
the activity from the street and from adjoining property. Any Owner or other
Person undertaking any such activities will be solely responsible for, and
assumes all risks of, such activities, including adoption and utilization of any
and all necessary safety measures, precautions and ventilation. However, the
foregoing restrictions do not prevent washing and polishing of any motor
vehicle, boat, trailer, motor-driven cycle, or other vehicle on a Unit, together
with those activities normally incident and necessary to such washing and
polishing.
 
4.7.4                      In the event the ARC determines that a vehicle is
parked or stored in violation of subsections 0 or 0 hereof, then the ARC shall
deliver a written notice describing said vehicle to the owner thereof (if such
owner can be reasonably ascertained) or conspicuously place such notice upon the
vehicle (if the owner thereof cannot be reasonably ascertained), and if the
vehicle is not removed within a reasonable time thereafter, as determined by the
ARC, then the ARC may have the vehicle removed at the sole expense of the owner
thereof.
 
4.7.5                      DEVELOPER, EACH BUILDER, THE SKY RANCH DISTRICTS AND
CAB, AND THE ARC, HEREBY DISCLAIM ANY AND ALL OBLIGATIONS REGARDING, RELATING TO
OR ARISING OUT OF, THE PERFORMANCE OF ANY MAINTENANCE, SERVICING, REBUILDING,
REPAIR, DISMANTLING, OR REPAINTING OF ANY TYPE OF VEHICLE, BOAT, TRAILER,
MACHINE OR DEVICE OF ANY KIND, BY ANY OWNER OR OTHER PERSON.
 
Section 4.8 Nuisances.
  No nuisance is permitted which is visible within or otherwise affects any
portion of the Property, nor any use, activity or practice which interferes with
the peaceful enjoyment or possession and proper use of any Unit, or any portion
thereof, by its residents. As used herein, the term “nuisance” includes each
violation of the Governing Documents.

 
Section 4.9 No Hazardous Activities; No Hazardous Materials or Chemicals.
 No activities shall be conducted on any Unit which are unsafe or hazardous to
any person or property. Without limiting the generality of the foregoing, no
firearms shall be discharged upon any Unit, and no open fires shall be lighted
or permitted on any Unit (except in a contained barbecue unit while attended and
in use for cooking purposes or within an interior fireplace or outdoor fire pit
powered by natural gas, propane or something similar). Further, no hazardous
materials or chemicals shall at any time be located, kept or stored in, on or at
any Unit, except such as may be contained in household products normally kept at
homes for use of the residents thereof, and in such limited quantities so as not
to constitute a hazard or danger to person or property.

 
Section 4.10 No Annoying Lights, Sounds.
  No light shall be emitted from any Unit which is unreasonably bright or causes
unreasonable glare and no sound shall be emitted from any Unit which is
unreasonably loud or annoying.
 
 
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Section 4.11 Restrictions on Trash and Materials.
  No refuse, garbage, trash, lumber, grass, shrubs or tree clippings, plant
waste, metal, bulk materials, scrap or debris of any kind shall be kept, stored,
or allowed to accumulate, except inside the residence, nor shall such items be
deposited on a street, unless placed in a suitable, tightly-covered container
that is suitably located solely for the purpose of trash or recycling pickup.
All equipment for the storage or disposal of such materials shall be kept in a
clean and sanitary condition. No garbage or trash cans or receptacles shall be
maintained in an exposed or unsightly manner. Finally, trash removal services
may be subscribed to by the Sky Ranch Districts or CAB on behalf of the
residents of the Property and, if so, the governing board of the Sky Ranch
Districts or CAB may determine the scope, frequency, and all other matters, with
regard to such trash removal services; and the Owners shall pay their
proportionate share of such trash removal services, as determined by the
governing board of the Sky Ranch Districts or CAB.

 
Section 4.12 Trash Removal Services and Recycling.
  Declarant requires centralized trash removal and recycling services for the
Lots and/or Units, other than with respect to removal of construction waste
resulting from Declarant’s, Declarant’s Affiliates’ or Builders’ respective
construction activities. Without limiting its authority, the CAB, on behalf of
the Sky Ranch Districts, may levy and collect fees, charges, and other amounts
to be imposed upon the Lots and/or Units for such trash removal and recycling
services; provided, however that such fees, charges and other amounts must be
derived from within the applicable District boundaries where the trash removal
and recycling services are required or performed. The scope, frequency, and all
other matters with respect to such trash removal and recycling services, shall
be determined by the CAB. Without limiting the generality of the foregoing, the
CAB may, for example, as a part of establishing rules and regulations related to
the enforcement of the covenant to provide centralized trash removal and
recycling services, elect to provide for regularly scheduled trash pick-ups and
recycling, but may require each Owner to be responsible for scheduling, and
paying for, any extraordinary trash pick-ups and/or other recycling and may
limit the items eligible for trash pick-up and/or recycling from time to time.
In the event that the CAB does not administer trash removal and/or recycling
services for the Property, one or more of the Districts shall enforce this
covenant by coordinating the centralized trash removal and recycling services
for the Lots and/or Units, including, without limitation, the levy and
collection of fees, charges, and other amounts to be imposed upon the Lots
and/or Units for such trash removal and recycling services; provided, however
that such fees, charges and other amounts must be derived from within the
applicable District boundaries where the trash removal and recycling services
are required or performed.
 
Section 4.13 Units to be Maintained.
  Subject to Section 4.5 hereof, each Unit (including adjacent tree lawn areas)
shall at all times be maintained, repaired and replaced in a good, clean and
sightly condition by the Owners of such Unit.

 
Section 4.14 Leases.
  The term “lease,” as used herein, includes any agreement for the leasing or
rental of a Unit, or any portion thereof, and shall specifically include
month-to-month rentals and subleases. Any Owner has the right to lease his Unit,
or any portion thereof, as long as all leases provide that the terms of the
lease and lessee’s occupancy of the leased premises are subject in all respects
to the Governing Documents; and that any failure by the lessee to comply with
any of the aforesaid documents, in any respect, constitutes a default under the
lease.
 
 
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Section 4.15 Landscaping.
  Within the time frames as hereinafter provided, subject to applicable “force
majeure” delays as determined by the ARC, the Owner of each Unit (other than
Developer or a Builder) shall install landscaping on all portions of the Unit
which is not covered by a building or Improvement, as well as on the tree lawn
areas adjacent to such Unit in accordance with the Governing Documents and the
requirements of the applicable governmental entity having jurisdiction. The
Owner of each Unit (other than Developer or a Builder) shall install landscaping
on such Unit, and on adjacent tree lawn areas, within the time period set forth
in the Guidelines or, if not set forth in the guidelines, then one hundred (180)
days after acquisition of such Unit by such Owner, if said acquisition occurs
between April 1 and July 31, or; by the following July 31 if such acquisition
does not occur between such dates, then such Owner shall install such
landscaping. Landscaping plans must be submitted to the ARC for review and
approval (which may be with conditions and/or requirements), and such approval
must be obtained prior to the installation of landscaping, in accordance with
Article 3 of these Covenants. Each Owner shall maintain all landscaping on such
Owner’s Unit, and on adjacent tree lawn areas, in a neat and attractive
condition, including periodic and horticulturally correct pruning, removal of
weeds and debris, and replacement of landscaping.

 
Section 4.16 Grade and Drainage; Irrigation Recommendations; Drainage Easement;
Maintenance of Surface Drainage Improvements and Underdrains.
  
4.16.1                      Each Owner shall maintain the grading upon his Unit,
and grading around the building foundation, at the slope and pitch fixed by the
final grading thereof, so as to maintain the established drainage. Each Owner
agrees that he will not in any way interfere with the established drainage
pattern over his Unit. In the event that it is necessary or desirable to change
the established drainage over any Unit, then the Owner thereof shall submit a
plan to the ARC for review and approval (which may be with conditions and/or
requirements), in accordance with Article 3 of these Covenants, and any such
change shall also be made in accordance with all laws, regulations, requirements
and resolutions of all applicable governmental entities. For purposes of this
Section, “established drainage” is defined as the drainage which exists at the
time final grading of a Unit by the Developer, or by a Builder, is completed.
 
4.16.2                      The Owner of a Unit should not plant flower beds
(especially annuals), vegetable gardens and other landscaping which requires
regular watering, within five (5) feet of the foundation of the dwelling unit or
any slab on the Unit. If evergreen shrubbery is located within five (5) feet of
any foundation wall or slab, then the Owner of the Unit should water such
shrubbery by “controlled hand-watering,” and should avoid excessive watering.
Further, piping and heads for sprinkler systems should not be installed within
five (5) feet of foundation walls and slabs.
 
4.16.3                      Developer reserves to itself and to the Sky Ranch
Districts and CAB the right to enter in and upon each rear, front and side yard
drainage easements of record, at any time, to construct, repair, replace or
change drainage pipes, structures or drainage ways, or to perform such grading,
drainage or corrective work as Developer or the Sky Ranch Districts or CAB may
determine.
 
 
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ARTICLE 5  

ALTERNATIVE DISPUTE RESOLUTION
 
Section 5.1 Intent of Article; Applicability of Article; and Applicability of
Statutes of Limitation.
 
5.1.1                      Each Bound Party (as defined below) agrees to
encourage the amicable resolution of disputes, without the emotional and
financial costs of litigation. Accordingly, each Bound Party covenants and
agrees to submit any Claims (as defined below) to the procedures set forth in
Section 4.6 hereof.
 
5.1.2                      By acceptance of a deed for a Unit, each Owner agrees
to abide by the terms of this Article.
 
5.1.3                      Any applicable statute of limitation applies to the
alternative dispute resolution procedures set forth in this Article.
 
Section 5.2 Definitions Applicable to this Article.
  For purposes of this Article only, the following terms have the meanings set
forth in this Section:
 
5.2.1                      “Bound Party” means each of the following: the
Developer, each Builder, each contractor, subcontractor, supplier, and laborer,
the Sky Ranch Districts or CAB, to the extent permitted by law, and their
respective directors, officers, members, partners, employees and agents; the ARC
and the committees and representatives appointed by the ARC, and each of their
respective members and agents; all Persons subject to these Covenants; and any
Person who is not otherwise subject to these Covenants, but who agrees to submit
to this Article. Notwithstanding the foregoing, “Bound Party” does not include
any of the Persons identified in this Section, if such Persons have jointly
entered into a separate written agreement providing for dispute resolution
applicable to the Claim; in such circumstance, the dispute resolution mechanism
set forth in such separate written agreement between such Persons will apply
with respect to such Claim, unless such Persons mutually agree to submit such
Claim to the provisions of this Article.
 
5.2.2                      “Claimant” means any Bound Party having a Claim.
 
5.2.3                      “Claim” means, except as exempted by the terms of
this Article, any claim, grievance or dispute between one Bound Party and
another, regardless of how the same may have arisen or on what it might be
based, including those arising out of or related to (i) the interpretation,
application or enforcement of any of the Governing Documents or the rights,
obligations or duties of any Bound Party under any of the Governing Documents;
and/or (ii) any statements, representations, promises, warranties, or other
communications made by or on behalf of any Bound Party.
 
 
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5.2.4                      “JAG” means the Judicial Arbiter Group or any other
Person agreed to by the Claimant and Respondent in writing for the purpose of
performing the functions of the Judicial Arbiter Group under these Covenants.
 
5.2.5                      “Notice” means the written notification given by a
Claimant to a Respondent which complies with subsection 0 of these Covenants.
 
5.2.6                      “Party” means the Claimant and the Respondent
individually; “Parties” means the Claimant and the Respondent collectively.
 
5.2.7                      “Respondent” means any Bound Party against whom a
Claimant asserts a Claim.
 
5.2.8                      “Termination of Mediation” means a period of time
expiring thirty (30) days after submission of the matter to mediation (or within
such other time as determined by the mediator or otherwise agreed to by the
Parties) and upon the expiration of which the Parties have not settled the
applicable Claim.
 
5.2.9                      “Termination of Negotiations” means a period of time
expiring thirty (30) days after the date of the Notice (or such other period of
time as may be agreed upon by the Parties) and upon the expiration of which the
Parties have not resolved a Claim.
 
Section 5.3 Commencement or Pursuit of Claim Against Bound Party.
 
5.3.1                      A Bound Party may not commence or pursue a Claim
against any other Bound Party except in compliance with this Article.
 
5.3.2                      Prior to any Bound Party commencing any proceeding
against another Bound Party, the Respondent has the right to be heard by the
Claimant, and to access, inspect, correct the condition of, or redesign, any
portion of any Improvement as to which a defect is alleged or otherwise correct
the alleged dispute.
 
Section 5.4 Claims.
  Unless specifically exempted below, all Claims between any of the Bound
Parties are subject to the provisions of Section 5.6 hereof. Notwithstanding the
foregoing, unless all Parties thereto otherwise agree, the following shall not
be Claims and shall not be subject to the provisions of Section 5.6 hereof:
 
5.4.1                      any action by the ARC, the governing board of the Sky
Ranch Districts or CAB, or the Developer, to enforce these Covenants, or any
provision(s) of the Guidelines or the CCR Rules and Regulations (as hereinafter
defined), including obtaining a temporary restraining order or injunction (or
equivalent emergency equitable relief), and such other ancillary relief as a
court may deem necessary;
 
 
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5.4.2                      any suit between or among Owners, which does not
include Developer, Builder, the Sky Ranch Districts or CAB, or the governing
board of the Sky Ranch Districts or CAB as a Party, if such suit asserts a Claim
which would constitute a cause of action independent of the Governing Documents;
and
 
5.4.3                      any suit in which any indispensable party is not a
Bound Party.
 
Section 5.5 Mandatory Procedures.
 
5.5.1                      Notice. Prior to proceeding with any Claim against a
Respondent, each Claimant shall give a Notice to each Respondent, which Notice
must state plainly and concisely:
 
(a) the nature of the Claim, including all Persons involved and Respondent’s
role in the Claim;
 
(b) the legal basis of the Claim (i.e., the specific authority out of which the
Claim arises);
 
(c) the proposed remedy; and
 
(d) the fact that Claimant will give the Respondent an opportunity to inspect
all property and Improvements potentially involved with the Claim, and that
Claimant will meet with Respondent not sooner than thirty (30) days after such
inspection to discuss in good faith ways to resolve the Claim.
 
 
5.5.2                       
Negotiation and Mediation.
 
(a) The Parties shall make every reasonable effort to meet in person and confer
for the purpose of resolving the Claim by good faith negotiation. If requested
in the Notice, the governing board of the Sky Ranch Districts or CAB may appoint
a representative to assist the Parties in negotiation.
 
(b) Upon a Termination of Negotiations, Claimant shall have thirty (30) days to
submit the Claim to mediation under the auspices of JAG (or such other reputable
arbitration service as acceptable to the parties) in accordance with the rules
of JAG (or the rules of such other reputable arbitration service as acceptable
to the parties) in effect on the date of the Notice that is provided for in
subsection 0 of these Covenants.
 
(c) If Claimant does not submit the Claim to mediation within such time, or does
not appear for the mediation, Claimant shall be deemed to have waived the Claim,
and Respondent shall be released and discharged from any and all liability to
Claimant on account of such Claim; provided, nothing herein shall release or
discharge Respondent from any liability to any Person other than the Claimant.
 
 
24

 
 
 
 
(d) Any settlement of the Claim through mediation shall be documented in writing
by the mediator and signed by the Parties. If a Termination of Mediation occurs,
the mediator shall issue a notice of Termination of Mediation. The Termination
of Mediation notice must state that the Parties are at an impasse and the date
that mediation was terminated.
 
(e) Each Party shall bear its own costs of the mediation, including attorneys’
fees, and each Party shall share equally all charges rendered by the mediator.
(f) If the Parties agree to a resolution of any Claim through negotiation or
mediation in accordance with subsection 0 and any Party thereafter fails to
abide by the terms of such agreement, then any other Party may file suit or
initiate arbitration proceedings to enforce such agreement without the need to
again comply with the procedures set forth in Section 5.5 hereof. In such event,
the Party taking action to enforce the agreement is entitled to recover from the
non-complying Party (or if more than one non-complying Party, from all such
Parties pro rata) all costs incurred in enforcing such agreement, including
attorneys’ fees and court costs.
 
 
Section 5.6 Final, Binding Arbitration.
 
 
5.6.1                      Upon termination of mediation, if Claimant desires to
pursue the Claim, Claimant shall thereafter be entitled to initiate final,
binding arbitration of the Claim under the auspices of JAG, in accordance with
the then-current rules of JAG in effect as of the date of the Notice provided in
accordance in subsection 0 of these Covenants (or such other reputable
arbitration service and its rules as acceptable to the parties). Any judgment
upon the award rendered by the arbitrator may be entered in and enforced by any
court having jurisdiction over such Claim. Unless otherwise mutually agreed to
by the Parties, there will be one arbitrator who must have expertise in the
area(s) of dispute, which may include legal expertise if legal issues are
involved.
 
5.6.2                      Each Party shall bear its own costs and expenses, and
an equal share of the arbitrator’s and administrative fees of arbitration.
Notwithstanding the foregoing, if a Party unsuccessfully contests the validity
or scope of arbitration in a court of law, reasonable attorneys’ fees and
expenses incurred in defending such contests, including those incurred in trial
and on appeal, shall be awarded to the non-contesting Party. All decisions
respecting the arbitrability of any Claim shall be decided by the arbitrator.
 
5.6.3                      The award of the arbitrator shall be accompanied by
detailed written findings of fact and conclusions of law. Except as may be
required by law or for confirmation of an award, neither a Party nor an
arbitrator may disclose the existence, content, or results of any arbitration
without the prior written consent of all Parties.
 
 
25

 
 
ARTICLE 6

GENERAL PROVISIONS
 
Section 6.1 Rules and Regulations.
  Any rules and regulations, if any, concerning and governing the Property, may
be promulgated, adopted, enacted, modified, amended, repealed, and re-enacted by
the governing board of the Sky Ranch Districts or CAB (“CCR Rules and
Regulations”) and such actions shall not be construed as an amendment to these
Covenants requiring processing under Section 6.6, hereof. The CCR Rules and
Regulations, if any, may state procedural requirements, interpretations,
clarifications and applications of any provision(s) of these Covenants or the
Guidelines and law, and may include blanket requirements, blanket
interpretations, and blanket applications. The governing board of the Sky Ranch
Districts or CAB has the authority to adopt or vary one or more CCR Rules and
Regulations that are different for different types of Units, if any. Any CCR
Rules and Regulations, if any, that are adopted must be in accordance with, and
must not be inconsistent with or contrary to, these Covenants.
 
Section 6.2 Enforcement.
 
6.2.1                      Enforcement of the covenants, conditions,
restrictions, easements, reservations, rights-of-way, liens, charges and other
provisions contained in these Covenants, as amended, may be by any proceeding at
law or in equity against any Person(s) violating or attempting to violate any
such provision, and possible remedies include all of those available at law or
in equity, but Claims subject to Article 5 will be subject to the alternative
dispute resolution procedures set forth in Article 5. The Developer, the Sky
Ranch Districts or CAB, ARC and any aggrieved Owner, has the right, but not the
duty, to institute, maintain and prosecute any such proceedings. No remedy is
exclusive of other remedies that may be available. Except as otherwise provided
in Article 5 of these Covenants, in any action instituted or maintained under
these Covenants or any other such documents, the prevailing party shall be
awarded its costs and attorney fees incurred in asserting or defending the
claim, as well as any and all other sums; except that, any Person who brings an
action against the Developer, any Builder, the Sky Ranch Districts or CAB, or
the ARC, regarding enforcement, or non-enforcement, of any provision(s) of the
Governing Documents, shall not be awarded their costs or any attorney fees.
Failure by the Developer, the Sky Ranch Districts or CAB, the ARC or any Owner,
to enforce any covenant, restriction or other provision contained in these
Covenants, shall in no event give rise to any liability, nor shall such
non-enforcement be deemed a waiver of the right to thereafter enforce any
covenant, restriction or other provision of these Covenants, regardless of the
number of violations or breaches that may occur.
 
6.2.2                      The foregoing includes the right of the Sky Ranch
Districts or CAB, to send demand letters and notices, to charge interest and/or
late charges, to levy and collect fines, to impose liens (as provided in C.R.S.
Section 32-1-1001(j)(1), as amended), to negotiate, settle and/or take any other
actions, with respect to any violation(s), or alleged violation(s), of any of
the Governing Documents.
 
 
 
26

 
 
 
Section 6.3 Severability.
 All provisions of these Covenants are severable. Invalidation of any of the
provisions by judgment, court order or otherwise, shall in no way affect or
limit any other provisions, which shall remain in full force and effect.

 
Section 6.4 Rights and Easements of Developer and Builders.
 Notwithstanding anything to the contrary contained in the Governing Documents,
it is expressly permissible and proper for Developer and each Builder, and their
respective employees, agents, and contractors, to perform all activities, and
maintain Improvements, tools, equipment, and facilities, on the portion of the
Property owned by them and also on public property, incidental to development,
construction, use, rental, sale, occupancy, and/or advertising. The foregoing
includes locating, maintaining and relocating management offices, construction
offices, signs, model units and sales offices, in such numbers, of such sizes,
and at such locations on the portion of the Property owned by them and also on
public property, as determined by the Developer or applicable Builder. In
addition, nothing contained in these Covenants limits the rights of Developer,
or require the Developer, to obtain approvals:
 
6.4.1                      to excavate, cut, fill or grade any property (with
the consent of the Owner thereof), or to construct, alter, demolish or replace
any Improvements;
 
6.4.2                      to use any Improvements on any property (with the
consent of the Owner thereof) as a construction, management, model home or sales
or leasing office, in connection with the development, construction or sale of
any property; and/or
 
6.4.3                      to seek or obtain any approvals under these Covenants
for any such activity.
 
Section 6.5 Conflict of Provisions.
  In the case of any conflict between any of the Governing Documents, these
Covenants control.
 
Section 6.6 Duration, Revocation and Amendment.
 
 
6.6.1                      Each and every provision of these Covenants run with
and bind the Property perpetually from the date of recording of these Covenants.
Subject to subsection 0 of these Covenants, these Covenants may be amended,
supplemented and/or terminated, by the affirmative vote or agreement of the
Owners of sixty-seven percent (67%) of the Units, but the Sky Ranch Districts or
CAB shall not be required to comply with or enforce any Owner-adopted
amendments, supplements or termination, until such time as the governing board
of the Sky Ranch Districts or CAB receives a recorded copy of such amendment,
supplement and/or termination.
 
6.6.2                      Until all of the Units have been conveyed to the
first Owners thereof other than the Developer or a Builder, no amendment,
supplement or termination of these Covenants shall be effective, without the
prior written approval of the Developer, which may be with conditions and/or
requirements. This subsection 0 will remain in effect until conveyance of all
the Units to the first Owners thereof, other than the Developer or any Builder.
 
 
27

 
 
 
6.6.3                      These Covenants may be amended, in whole or in part,
by the Developer without the consent or approval of any other Owner, the Sky
Ranch Districts or CAB, or any other Person, in order to comply with the
requirements, standards, or guidelines of any recognized secondary mortgage
markets, including the department of housing and urban development, the federal
housing administration, the veterans administration, the federal home loan
mortgage corporation, the government national mortgage association, and the
federal national mortgage association. This subsection 0 will remain in effect
until conveyance of all the Units to the first Owners thereof, other than the
Developer or any Builder.
 
6.6.4                      These Covenants may be amended, in whole or in part,
by the Developer without the consent or approval of any other Owner, any
Builder, the Sky Ranch Districts or CAB, or any other Person, in order to
correct any clerical, typographical, technical or other errors in these
Covenants and/or to clarify any provision(s) of these Covenants. This subsection
0 will remain in effect until conveyance of all the Units to the first Owners
thereof, other than the Developer or any Builder.
 
6.6.5                      Each Amendment to this Declaration enacted by the
vote or agreement of Owners of Units shall be applicable only to disputes,
issues, controversies, circumstances, events, claims or causes of action that
arose out of acts, omissions, events or other circumstances that occurred after
the date of recording of such amendment in the real property records of the
County, and no such amendment shall be applied retroactively (i) to any
disputes, issues, controversies, circumstances, events, claims or causes of
action that arose out of acts, omissions, events or other circumstances that
occurred before the date of recording of such amendment in the County, or (ii)
to impair the rights or obligations of any Person, including Developer, as
originally set forth in these Covenants. This subsection 0 may not be amended
without the written consent of the Developer.

 
Section 6.7 Minor Violations of Setback Restrictions.
  If upon the erection of any structure, it is disclosed by survey that a minor
violation or infringement of setback lines has occurred, the Owners of each Unit
immediately adjoining the structure which is in violation of the setback waive
such violation or infringement and such waiver shall be binding upon all other
Owners. However, nothing contained in this Section prevents the prosecution of a
suit for any other violation of these Covenants or the Guidelines, if any. A
“minor violation,” for the purpose of this Section, is a violation of not more
than two (2) feet beyond the required setback lines or Unit lines. This
provision applies only to the original structures and is not applicable to any
alterations or repairs to, or replacements of, any of such structures.

 
Section 6.8 Subdivision or Replatting of Units.
  The Developer reserves the right to subdivide or replat any Unit(s) owned by
the Developer. Each such subdivision or replatting may change the number of
Units in the Property. The foregoing reservation includes the right to move any
lot line(s) on Unit(s) for the purpose of accommodating Improvements which are,
or may be constructed. This Section 6.8 will remain in effect until conveyance
of all the Units to the first Owners thereof, other than the Developer or any
Builder.
 
 
28

 
 
 
Section 6.9 Annexation.
  The Developer may annex to the Property additional real estate (including
Improvements), including any real estate (including Improvements) which may
previously have been withdrawn from the Property. Each such annexation, if any,
shall be accomplished by recording, in the office of the Clerk and Recorder of
the County, of an annexation document that expressly states that the real estate
(including Improvements) described therein is annexed and made subject to these
Covenants and all terms and provisions hereof. However, any such annexation may
include provisions which, as to the real estate (including Improvements)
described therein, adds to or changes the rights, responsibilities and other
requirements of these Covenants. Any such additional or changed provisions may
be amended, supplemented, and/or terminated, with the consent of the Owners of
67% of the Units to which those provisions apply. The first three (3) sentences
of this Section 6.9, will remain in effect until conveyance of all the Units to
the first Owners thereof, other than the Developer or any Builder.

 
Section 6.10 Withdrawal.
  The Developer reserves the right to withdraw the Property, or any portion
thereof, including one or more Units, from these Covenants, so long as the
Developer owns the portion of the Property to be withdrawn. Each withdrawal, if
any, may be effected by the Developer recording a withdrawal document in the
office of the Clerk and Recorder of the County. A withdrawal as contained in
this paragraph constitutes a divestiture, withdrawal, and de-annexation of the
withdrawn real estate (including Improvements) from these Covenants so that,
from and after the date of recording a withdrawal document, the real estate
(including Improvements) so withdrawn is not a part of the “Property”. This
Section 6.10 will remain in effect until conveyance of all the Units to the
first Owners thereof, other than the Developer or any Builder.

 
Section 6.11 Notices.
  Any notice permitted or required in these Covenants is effective upon the
earlier to occur of (i) personal delivery upon the Person to whom such notice is
to be given; or (ii) two (2) days after deposit in the United States mail,
postage prepaid, addressed to the Owner at the address for such Owner’s Unit.

 
Section 6.12 Limitation on Liability.
  The Developer, any Builder, the Sky Ranch Districts or CAB, the ARC, and their
respective directors, officers, shareholders, members, partners, agents and
employees, are not liable to any Person for any action or for any failure to act
arising out of any of the Governing Documents, unless the action or failure to
act was not in good faith and was done or withheld with malice. Further, the Sky
Ranch Districts and CAB do not waive, and no provision of these Covenants
constitutes a waiver of, the immunities and limitations to which the Sky Ranch
Districts and CAB are entitled as a matter of law, including the Colorado
Governmental Immunity Act, §24-10-101, et seq. C.R.S., as amended. The release
and waiver set forth in Section 6.16 (Waiver) applies to this Section.

 
Section 6.13 No Representations, Guaranties or Warranties.
  Neither Developer, any Builder, the Sky Ranch Districts or CAB, the ARC, nor
their respective officers, directors, shareholders, members, partners, agents or
employees, have given or made any representations, guaranties or warranties of
any kind, express or implied in connection with any portion of the Property, or
any Improvement, its physical condition, structural integrity, freedom from
defects, zoning, compliance with applicable laws, fitness for intended use, or
view, or in connection with the subdivision, sale, operation, maintenance, cost
of maintenance, taxes or regulation thereof, unless and except as specifically
set forth in writing. The release and waiver set forth in Section 6.16 (Waiver)
applies to this Section.
 
 
29

 
 
 
Section 6.14 Disclaimer Regarding Safety.
  DEVELOPER, THE BUILDERS, THE SKY RANCH DISTRICTS AND CAB, THE ARC, AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, MEMBERS, PARTNERS, AGENTS AND
EMPLOYEES, HEREBY DISCLAIM ANY OBLIGATION REGARDING THE SECURITY OF ANY PERSONS
OR PROPERTY WITHIN THE PROPERTY. BY ACCEPTING A DEED TO A UNIT WITHIN THE
PROPERTY, EACH OWNER ACKNOWLEDGES THAT DEVELOPER, THE BUILDERS, THE SKY RANCH
DISTRICTS AND CAB, THE ARC, AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, MEMBERS, PARTNERS, AGENTS AND EMPLOYEES, ARE OBLIGATED TO DO THOSE
ACTS SPECIFICALLY ENUMERATED IN THE GOVERNING DOCUMENTS, IF ANY, AND ARE NOT
OBLIGATED TO DO ANY OTHER ACTS WITH RESPECT TO THE SAFETY OR PROTECTION OF
PERSONS OR PROPERTY WITHIN THE PROPERTY. THE RELEASE AND WAIVER SET FORTH IN
SECTION 5.16 (WAIVER) APPLIES TO THIS SECTION.

 
Section 6.15 Development Within and Surrounding the Property.
 Each Owner acknowledges that development within and surrounding the Property
may continue for an indefinite period, and that plans for the density, type and
location of improvements, developments or land uses may change over time. Such
development may entail changes to or alterations in the access to the Property,
views of or from the Property or the Units, surrounding land uses, open space or
facilities, traffic volumes or patterns, privacy or other aspects or amenities.
Development also may entail noise, odors, unsightliness, dust and other
inconveniences or disruptions. By accepting a deed to a Unit, each Owner accepts
title to such Unit subject to the foregoing, and waives and releases any claim
against the Developer, any Builders, the Sky Ranch Districts and CAB, the ARC,
and their respective officers, directors, members, partners, agents and
employees, heirs, personal representatives, successors and assigns, arising out
of or associated with any of the foregoing. The release and waiver set forth in
Section 6.16 (Waiver) applies to this Section.
 
Section 6.16 Waiver.
  By acceptance of a deed to a Unit, each Owner hereby releases, waives, and
discharges the Developer, each Builder, the Sky Ranch Districts and CAB, the
ARC, and their respective officers, directors, members, partners, agents and
employees, heirs, personal representatives, successors and assigns, from all
losses, claims, liabilities, costs, expenses, and damages, arising directly or
indirectly from any hazards, disclosures or risks set forth in these Covenants,
including, but not limited to, those contained in Section 6.12, Section 6.13,
Section 6.14 and Section 6.15.

 
Section 6.17 Headings.
 The Article, Section and subsection headings in these Covenants are inserted
for convenience of reference only, do not constitute a part of these Covenants,
and in no way define, describe or limit the scope or intent of these Covenants
or any of the provisions hereof.

 
Section 6.18 Gender.
  Unless the context requires a contrary construction, the singular includes the
plural and the plural the singular and the use of any gender is applicable to
all genders.
 
 
30

 
 
 
Section 6.19 Action.
  Any action that has been or may be taken by the Developer, any Builder, the
Sky Ranch Districts or CAB, the ARC, or any other Person, may be taken “at any
time, from time to time”. Each provision that authorizes, directs or permits
action shall be deemed to include such language.
 
Section 6.20 Sole Discretion.
  All actions which are to be taken by, or on behalf of, the Developer, any
Builder, Sky Ranch Districts or CAB, the governing body of the Sky Ranch
Districts or CAB, the ARC, or any other Person, will be considered to have been
taken “in the sole discretion” of such Person.

 
Section 6.21 Use of “Include,” “Includes,” and “Including”.
  All uses, in these Covenants, of the words “include,” “includes,” and
“including,” will be construed to include the words “without limitation”
immediately thereafter.
 
Section 6.22 Runs with the Land; Binding Upon Successors.
  The benefits, burdens, and all other provisions contained in these Covenants
are covenants running with and binding upon the Property and all Improvements
which are now or hereafter located on the Property. The benefits, burdens, and
all other provisions contained in these Covenants are binding upon, and inure to
the benefit of the Developer, the Builders and all Owners, and upon and to their
respective heirs, personal representatives, successors and assigns; but, no
Person becomes a “Developer” or a “Builder” under these Covenants, except by
written assignment or designation, as more fully provided in Section 1.2 or
Section 1.4 of these Covenants, respectively.
 
Section 6.23 Governmental Immunity.
  Nothing herein shall be construed as a waiver of the rights and privileges of
the Sky Ranch Districts and CAB pursuant to the Colorado Governmental Immunity
Act, §§ 24-10-101, et seq., C.R.S., as amended from time to time.
 
[SIGNATURE PAGE FOLLOWS]
 
 
31

 
IN WITNESS WHEREOF, the undersigned, being the Developer herein and the Owner of
the Property, has hereunto set its hand and seal this ___ day of ____________,
2017.
 
 
 
 
 
DEVELOPER:
 
PCY Holdings, LLC,
a Colorado limited liability company
 
 
By:                                                                           
Name: ___________________________________
Its:                                                                           
 
STATE OF COLORADO  

)
) ss.
COUNTY OF 

)
 
The foregoing instrument was acknowledged before me this ___ day of
____________, 2017, by  as  of PCY Holdings, LLC, a Colorado limited liability
company.
 
Witness my hand and official seal.
 
{S E A L}
Notary Public
My Commission expires: 
 
 
 
 
32

 
CONSENT OF SKY RANCH COMMUNITY AUTHORITY BOARD
 
The undersigned, Sky Ranch Community Authority Board, hereby consent to the
aforesaid Covenants, Conditions and Restrictions for Sky Ranch.
 
 
IN WITNESS WHEREOF, the undersigned has hereunto set its hand this ___ day of
____________, 2017.
 
 
SKY RANCH COMMUNITY AUTHORITY BOARD
 
By:           
____________________________________President
 
STATE OF COLORADO

)
)           
ss.
COUNTY OF ________________________     

)
 
The foregoing instrument was acknowledged before me this ___ day of
____________, 2017 by _________________ as President of SKY RANCH COMMUNITY
AUTHORITY BOARD.
Witness my hand and official seal.
 
(S E A L)
______________________________
Notary Public My Commission Expires: ____________________
 
 
33

 
EXHIBIT A
TO
COVENANTS, CONDITIONS AND RESTRICTIONS
FOR SKY RANCH
(Property)
 
 
 
 
34

 
COVENANTS, CONDITIONS AND RESTRICTIONS
 
FOR SKY RANCH
 
 
TABLE OF CONTENTS
 
ARTICLE 1 GENERAL  
2
Section 1.1
Planned Community.
2
Section 1.2
Purposes of Covenants.
3
Section 1.3
Declarations.
3
Section 1.4
CAB Authority.
3
ARTICLE 2 DEFINITIONS  
3
Section 2.1
ARC.
3
Section 2.2
Builder.
4
Section 2.3
CAB.
4
Section 2.4
Covenants.
4
Section 2.5
Developer.
4
Section 2.6
Governing Documents.
4
Section 2.7
Improvements.
4
Section 2.8
Owner.
4
Section 2.9
Person.
4
Section 2.10
Property.
5
Section 2.11
Services.
5
Section 2.12
Sky Ranch Districts.
5
Section 2.13
Unit.
5
ARTICLE 3 ARCHITECTURAL REVIEW  
5
Section 3.1
Composition of ARC.
5
Section 3.2
Delegation of Some or All Architectural Authority.
5
Section 3.3
Architectural Review Requirements; Authority of the ARC.
6
Section 3.4
Guidelines.
7
Section 3.5
Procedures.
7
Section 3.6
Vote.
7
Section 3.7
Prosecution of Work After Approval.
7
Section 3.8
Notice of Completion.
8
Section 3.9
Inspection of Work.
8
Section 3.10
Notice of Non-compliance
8
Section 3.11
Correction of Non-compliance.
8
Section 3.12
Cooperation.
9
Section 3.13
Access Easement.
9
Section 3.14
No Liability.
9
Section 3.15
Variance.
10
Section 3.16
Waivers; No Precedent.
10
Section 3.17
Developer and Builder Exemption.
10

 
 
 
35

 
 
ARTICLE 4 RESTRICTIONS  
10
Section 4.1
General.
10
Section 4.2
Compliance with Law.
11
Section 4.3
Residential Use; Professional or Home Occupation.
11
Section 4.4
Animals.
11
Section 4.5
Temporary Structures; Unsightly Conditions.
11
Section 4.6
Miscellaneous Improvements.
11
Section 4.7
Vehicular Parking, Storage and Repairs.
12
Section 4.8
Nuisances.
13
Section 4.9
No Hazardous Activities; No Hazardous Materials or Chemicals.
14
Section 4.10
No Annoying Lights, Sounds.
14
Section 4.11
Restrictions on Trash and Materials.
14
Section 4.12
Trash Removal Services and Recycling.
14
Section 4.13
Units to be Maintained.
15
Section 4.14
Leases.
15
Section 4.15
Landscaping.
15
Section 4.16
Grade and Drainage; Irrigation Recommendations; Drainage Easement; Maintenance
of Surface Drainage Improvements and Underdrains.
15
ARTICLE 5 ALTERNATIVE DISPUTE RESOLUTION  
16
Section 5.1
Intent of Article; Applicability of Article; and Applicability of Statutes of
Limitation.
16
Section 5.2
Definitions Applicable to this Article.
16
Section 5.3
Commencement or Pursuit of Claim Against Bound Party.
17
Section 5.4
Claims.
18
Section 5.5
Mandatory Procedures.
18
Section 5.6
Final, Binding Arbitration.
19
ARTICLE 6 GENERAL PROVISIONS  
20
Section 6.1
Rules and Regulations.
20
Section 6.2
Enforcement.
20
Section 6.3
Severability.
21
Section 6.4
Rights and Easements of Developer and Builders.
21
Section 6.5
Conflict of Provisions.
21
Section 6.6
Duration, Revocation and Amendment.
21
Section 6.7
Minor Violations of Setback Restrictions.
22
Section 6.8
Subdivision or Replatting of Units.
23
Section 6.9
Annexation.
23
Section 6.10
Withdrawal.
23
Section 6.11
Notices.
23
Section 6.12
Limitation on Liability.
23
Section 6.13
No Representations, Guaranties or Warranties.
24
Section 6.14
Disclaimer Regarding Safety.
24
Section 6.15
Development Within and Surrounding the Property.
24
Section 6.16
Waiver.
24
Section 6.17
Headings.
25
Section 6.18
Gender.
25
Section 6.19
Action.
25
Section 6.20
Sole Discretion.
25
Section 6.21
Use of “Include,” “Includes,” and “Including”.
25
Section 6.22
Runs with the Land; Binding Upon Successors.
25
Section 6.23
Governmental Immunity.
25

 
 
 
36

 

 
 
Schedule 5 - Public Improvement Fee Covenant
 
 
 
 
 
 
 
37

DRAFT 8-15
DECLARATION OF COVENANTS IMPOSING AND IMPLEMENTING
 
THE SKY RANCH PUBLIC IMPROVEMENT FEE
 
 
THIS DECLARATION OF COVENANTS IMPOSING AND IMPLEMENTING THE SKY RANCH PUBLIC
IMPROVEMENT FEE (this “PIF Covenant”) is made and effective as of
__________, 2017 by PCY Holdings, LLC, a Colorado limited liability company
(“Declarant”).
 
RECITALS
 
This PIF Covenant is made with respect to the following facts:
 
A.  All terms used herein shall have the meanings set forth in Section 1 hereof
unless the context otherwise requires.
B. Declarant owns certain real property described on Exhibit A hereto, which
Declarant is currently operating or intends to develop as a residential and
commercial development to be known as the _________________________________
(“Property”) located within unincorporated Arapahoe County, Colorado. New public
improvements and services are needed to serve the Property and other properties
within the service area boundaries of the Sky Ranch Metropolitan District No. 5
or other quasi-municipal entity which may exist or be formed to include the
Property or a public improvement corporation established for such purpose (the
“District”).
 
C.           The public improvements that the District will construct, install
or cause to be constructed and installed, operated and maintained, include those
public improvements the costs of which may lawfully be paid for by the District
(the “Public Improvement Costs”), including, without limitation, water services,
safety protection devices, sanitation services, street improvements, curbs,
gutters, culverts, drainage facilities, sidewalks, parking facilities, paving,
lighting, grading, railroad crossings, landscaping, transportation services and
storm and wastewater management facilities and associated land acquisition and
remediation (the “Public Improvements”).
 
D.           The Public Improvement Costs shall be paid, in part, through the
imposition of:
 
i.) a Retail Public Improvement Fee on all PIF Sales equal to 2.75%. Subject to
the terms of this PIF Covenant, such Retail Public Improvement Fee shall be
required to be collected by all Retailers and then paid over to the PIF
Collection Agent on behalf of the District or the Bond Trustee; and
 
ii.) a one-time Material Sales and Use Public Improvement Fee imposed on
Construction Activities for the materials incorporated into the construction of
any newly constructed building, dwelling or structure within the Property. The
Material Sales and Use Public Improvement Fee shall be equal to 2.75% of an
amount equal to fifty percent (50%) of the Construction Valuation Amount.
Subject to the terms of this PIF Covenant, such Material Sales and Use Public
Improvement Fee shall be required to be collected from all Persons constructing
any new building, dwelling or structure within the Property at the time a
building permit is obtained for such construction. The Material Sales and Use
Public Improvement Fee shall be paid over to the PIF Collection Agent on behalf
of the District or the Bond Trustee.
 
 
 
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The PIF Collection Agent shall receive the Retail Public Improvement Fees and
the Material Sales and Use Public Improvement Fees and remit the same to the
Bond Trustee to pay for Bond Requirements and other costs provided in the Public
Financing Documents or if the Public Financing Documents are not in place or do
not require the full amount of fees collected to be remitted to the Bond
Trustee, to the District.
 
E.           The Declarant under this PIF Covenant owns fee title to all of the
Property, which is the property that is subject to this PIF Covenant.
 
F.           The Declarant intends to assign its declarant rights, as fee simple
owner of the
Property subject to this PIF Covenant to the District in accordance with the
terms and conditions
of this PIF Covenant and the District intends to assume the declarant rights of
the Declarant and
to exercise all of the rights and perform the obligations of the Declarant
hereunder.
 
G.           Subject to and in accordance with the terms and provisions of this
PIF Covenant, Declarant now desires to impose the obligation to collect and pay,
and to provide for the implementation of the collection and payment of, the
Retail Public Improvement Fee and the Material Sales and Use Public Improvement
Fee.
 
Declaration
 
In consideration of the facts set forth in the Recitals and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged by
Declarant, Declarant hereby declares as follows:
 
1.           Defined Terms. The following terms, when used in this PIF Covenant,
shall have the following meanings:
 
“Bond Requirements” means principal, redemption or purchase price, premium, if
any, interest, reserves and other amounts required to be paid with respect to
the Bonds or other Public Financing outstanding from time to time.
 
“Bonds” means any of the bonds, notes, certificates, leases, loan agreements or
other financial obligations to be issued from time to time by the District, the
proceeds of which are used to pay Public Improvement Costs or to pay the costs
of any refunding or refinancing of outstanding bonds, notes, certificates,
leases, loan agreements or other financial obligations issued by the District.
 
“Bond Trustee” means the trustee or fiduciary acting on behalf of holders of the
Bonds pursuant the Public Financing Documents.
 
“Confidential Information” has the meaning set forth in Section 6 hereof.
 
“Construction Activities” means the use of building and construction materials
for incorporation into the construction of any new building, dwelling or
structure, in each case to the same extent that such building and construction
materials are included in the Construction Valuation Amount as indicated on the
application for a County building permit. The Material Sales and Use Public
Improvement Fee shall apply to all Construction Activities within the Property
including, but not limited to, commercial, retail, residential and industrial
classified structures; provided, however, “Construction Activities” shall not
include the use of building and construction materials in connection with
reconstruction, renovation, remodel or other improvement of existing buildings
or existing structures.
 
 
 
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“Construction Activities Guidelines” has the meaning set forth in Section 3(b)
hereof.
 
“Construction Valuation Amount” means the total cost or valuation of the project
giving rise to the applicable Construction Activities as indicated on the
application for the County building permit for such project and finally
determined by the County to be a reasonable approximation of the value of
materials for the applicable Construction Activities.
 
“County” means the County of Arapahoe, State of Colorado, or any government with
the jurisdiction to grant building permits for construction on the Property.
 
“County Clerk” means the County Clerk and Recorder of Arapahoe County, Colorado.
 
“Declarant” means PCY Holdings, LLC a Colorado limited liability company or its
successors or assigns.
 
“Default Rate” means eighteen percent (18%) per annum, but if such rate exceeds
the maximum interest rate permitted by State law, such rate shall be reduced to
the highest rate allowed by State law under the circumstances.
 
“Dissemination Agent” means an agent of the District or the Bond Trustee charged
with disseminating information on a periodic basis to the Public Financing
Documents.
 
“District” has the meaning set forth in Recital A above.
 
“Enforcing Party” has the meaning set forth in Section 7 hereof.
 
“Material Sales and Use Public Improvement Fee” shall mean a one-time fee
assessed pursuant to and in accordance with this PIF Covenant against all
Construction Activities occurring on the Property. The Material Sales and Use
Public Improvement Fee shall be equal to 2.75% of an amount equal to fifty
percent (50%) of the Construction Valuation Amount. Subject to the terms of this
PIF Covenant, such Material Sales and Use Public Improvement Fee shall be
required to be collected from all Persons undertaking Construction Activities at
the time a building permit is obtained for such construction.
 
“Occupant” means any Person who has the legal right, pursuant to a deed, lease,
sublease, license, concession, easement or other occupancy agreement of any type
or nature, to possess or occupy any portion of the PIF Property, including,
without limitation, any space within any building constructed on any PIF
Property; provided that a mortgagee, a trustee under or beneficiary of a deed of
trust, or any other Person who has such of right of possession primarily for the
purpose of securing a debt or other obligation owed to such Person, shall not
constitute an “Occupant” unless and until such Person becomes an Owner or a
mortgagee in possession or otherwise possesses or occupies a portion of the PIF
Property by an intentional or voluntary act of its own, whereupon the subject
mortgagee, trustee, beneficiary or other Person shall be an “Occupant”
hereunder.
 
 
 
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“Owned/Leased Property” means, with respect to any Owner, the portion of the PIF
Property to which such Owner owns fee title and, with respect to any Occupant,
the portion of the PIF Property which such Occupant has the right to possess or
occupy pursuant to its lease, sublease, license, concession or other occupancy
agreement.
 
“Owner” means any Person who owns fee title to all or any portion of the PIF
Property.
 
“Person” means any individual, partnership, corporation, limited liability
company, association, trust or other type of entity or organization.
 
“PIF Collection Agent” means the person or firm designated by the District as
responsible for monitoring, receiving and enforcing the collection of Public
Improvement Fee revenues pursuant to this PIF Covenant.
 
“PIF Covenant” means this PIF Covenant as it may be supplemented or amended from
time to time.
 
“PIF Obligor(s)” means, with respect to the Retail Public Improvement Fee, any
Retailer or, with respect to the Material Sales and Use Public Improvement Fee,
any Person who engages in Construction Activities, or hires another (e.g., a
contractor) to engage in Construction Activities, and is therefore obligated to
pay a Material Sales and Use Public Improvements Fee with regard to such
Construction Activities pursuant to the terms of this PIF Covenant.
 
“PIF Property” or “Property” means the real property described on Exhibit A
hereto, provided that additional property may be made a part of the PIF Property
pursuant to the provisions of Section 13 hereof.
 
“PIF Sales” shall mean and refer to any and all retail sales transactions by any
Retailer of tangible personal property initiated, consummated, conducted,
transacted or otherwise occurring from or within any portion of the Property
which are on the date of recording of this PIF Covenant subject to the Sales
Tax, plus any and all retail sales transactions by any Retailer of tangible
personal property initiated, consummated, conducted, transacted or otherwise
occurring from or within any portion of the Property which are from time to time
in the future subject to a retail Sales Tax but excluding any retail sales
transactions specified as exempt from the definition of PIF Sales in the
guidelines established by the District from time to time pursuant to Section 4
hereof.
 
“PIF Sales Guidelines” has the meaning set forth in Section 4(a) hereof.
 
“Pledge” means such assignment, conveyance, pledge, remittance or other transfer
as may be customary and necessary or appropriate to make fully available for
payment of the Bond Requirements any Public Improvement Fee revenues.
 
“Public Financing” means the sale of Bonds by the District.
 
“Public Financing Documents” means any documents executed or delivered in
connection with any Public Financing.
 
 
 
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“Public Improvements” has the meaning set forth in Recital B above.
 
“Public Improvement Costs” has the meaning set forth in Recital B above.
 
“Public Improvement Fee” as used in this PIF Covenant shall mean the Retail
Public Improvement Fee and the Material Sales and Use Public Improvement Fee as
may be applicable in the context of such reference herein.
 
“Report Recipients” has the meaning set forth in Section 6 hereof.
 
“Reports” has the meaning set forth in Section 6 hereof.
 
“Retailer” means any Occupant who is a seller or provider of goods or services
who engages in any PIF Sales initiated, consummated, conducted, transacted or
otherwise occurring from or within any portion of the PIF Property.
 
“Retail Public Improvement Fee” means a Public Improvement Fee assessed pursuant
to this PIF Covenant on all PIF Sales equal to 2.75%.
 
“Sales Tax” means that tax levied by the State pursuant to the Sales Tax
Statutes.
 
“Sales Tax Statutes” means Sections 39-26-101 et. seq., Colorado Revised
Statutes, and any regulations promulgated pursuant thereto, both as amended from
time to time.
 
“State” means the State of Colorado.
 
2. Assignment of Declarant Rights. The Declarant, as owner of the Property does
hereby transfer, assign, convey and deliver to District any and all rights and
benefits reserved to the Declarant pursuant to this PIF Covenant and District
hereby assumes from the Property Owners any and all rights and benefits reserved
to the Declarant under this PIF Covenant.
 
3. Assessment of Public Improvement Fee. From and after the filing of this PIF
Covenant:
 
(a) every Retailer shall collect the Retail Public Improvement Fee on each PIF
Sale and pay the same to the District or the PIF Collection Agent as required by
the Public Financing Documents or this PIF Covenant;
 
(b) every Owner or Occupant who leases or subleases any portion of its
Owned/Leased PIF Property to a Retailer, or who permits a Retailer to occupy any
portion of its Owned/Leased PIF Property by license, concession or otherwise,
shall require, pursuant to the lease, sublease, license, concession or other
occupancy agreement between such Owner or Occupant and each Retailer by virtue
of which such Retailer is given the right to possess or occupy any portion of
such Owned/Leased PIF Property, that such Retailer collect in the Retail Public
Improvement Fee on each PIF Sale and pay the same to the District or the PIF
Collection Agent as required by the Public Financing Documents or this PIF
Covenant; and
 
 
 
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(c) each Person who intends to engage in Construction Activities will, prior to,
or at the time of issuance of a building permit for such Construction
Activities, pay the Material Sales and Use Public Improvements Fee with respect
to such Construction Activities to the District or the PIF Collection Agent as
set forth in the Construction Activities Guidelines.
 
4. Guidelines.
 
(a)           
In accordance with the definition of PIF Sales set forth in Section 1 above, the
District in its sole discretion may from time to time establish uniform
guidelines further clarifying or delineating which transactions are included in
the definition of “PIF Sales” (“PIF Sales Guidelines”) for purposes of
calculating the Retail Public Improvement Fee due hereunder, provided, however,
that such guidelines may not change the definition of PIF Sales or waive the
Retail Public Improvement Fee collection. Such guidelines shall be delivered to
all Retailers in writing (and for purposes of determining the names and
addresses of Retailers, any Owner will, within 10 business days after receipt of
a written request therefor from the District, the Trustee or the PIF Collection
Agent, provide such requesting party with the name and address of all Retailers
that then occupy any PIF Property owned by such Owner). Each Retailer shall be
entitled to rely on such guidelines for purposes of compliance with this PIF
Covenant. In addition to the Retail Public Improvement Fee, each Retailer shall
be subject to all sales and use taxes that may be imposed and otherwise not
waived or credited by any other applicable taxing entity.
 
(b)           
In accordance with the definition of Construction Activities set forth in
Section 1 hereof, the District in its sole discretion (but subject to any
applicable terms of any Public Financing Documents) may from time to time
establish reporting forms (“MSU Reports”), instructions and uniform guidelines
for the calculation, collection and remittance of revenues derived from
imposition of the Material Sales and Use Public Improvements Fee, and for
further clarifying or delineating which transactions are included in the
definition of “Construction Activities” (“Construction Activities Guidelines”).
The Construction Activities Guidelines shall apply and be enforced in a uniform
and consistent manner to all of the PIF Property and each portion of the PIF
Property. The District or PIF Collection Agent shall make available the
Construction Activities Guidelines to all Owners, Occupants and PIF Obligors.
Each Owner, Occupant and PIF Obligor shall be entitled to rely on the
Construction Activities Guidelines for purposes of compliance with this PIF
Covenant. In addition to the Material Sales and Use Public Improvements Fee,
each Owner, Occupant and PIF Obligor is subject to all use taxes that may be
imposed and otherwise not waived or credited by the State of Colorado or any
other applicable taxing entity.
 
 
 
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5. Payment of Public Improvement Fee.
 
(a)           
Retail Public Improvement Fee. Whether or not collected from customers, each
Retailer shall pay the Retail Public Improvement Fee monthly in arrears for all
PIF Sales initiated, consummated, conducted, transacted or otherwise occurring
during the immediately preceding month from or within the portion of the PIF
Property occupied by such Retailer during such month. The Retail Public
Improvement Fee shall be due and payable without notice within 20 days after the
close of each calendar month, and unless the District in its sole discretion
otherwise directs, each Retailer shall pay the same directly to the PIF
Collection Agent on behalf of the District or its assignee. The procedures for
reporting, assessment, collection, and segregation of the Retail Public
Improvement Fee (but not for calculation) shall be identical in all material
respects to those set forth in Colorado law regarding the reporting, assessment,
collection and segregation of State sales tax, and each Retailer shall report
PIF Sales and remit the Retail Public Improvement Fee to the PIF Collection
Agent on a monthly basis when such Retailer reports and remits sales taxes to
the State, employing reporting forms and following procedures provided by the
State intended to be substantially similar to those used and required by the
State for the remittance of Sales Tax. The Retail Public Improvement Fee shall
be calculated and imposed on transactions at the rate stated above (in the
definition of Public Improvement Fee) prior to the calculation and assessment of
the Sales Tax, and before any sales taxes of any other taxing entity required to
be imposed by law. The Retail Public Improvement Fee shall be added to the sales
price for transactions subject to sales tax prior to the calculation of sales
taxes. The Sales Tax and sales taxes of other taxing entities shall be
calculated and assessed on the sum of the PIF Sales price plus the amount of the
Retail Public Improvement Fee. Specific instructions regarding reporting forms
and payment procedures shall be provided to all Retailers by the District, and
each Retailer shall be entitled to rely thereon for purposes of compliance with
this Section 5(a). Declarant hereby acknowledges, any other Owner, by acquiring
fee title to any portion of the PIF Property subject to this PIF Covenant, shall
be deemed to have acknowledged, any Occupant, by acquiring the right to possess
or occupy any portion of the PIF Property subject to this PIF Covenant, shall be
deemed to have acknowledged, and each Owner and Occupant shall cause any
Retailer whom such Owner or Occupant permits to possess or occupy (by lease or
otherwise) any portion-of its Owned/Leased PIF Property, to acknowledge, prior
to conducting any business at any PIF Property, (i) THAT THE RETAIL PUBLIC
IMPROVEMENT FEE IS NOT A TAX IN ANY FORM AND IS A FEE IMPOSED UNDER PRIVATE
COVENANT AND NOT THROUGH THE EXERCISE OF ANY GOVERNMENTAL TAXING AUTHORITY;
(ii) THAT THE RETAIL PUBLIC IMPROVEMENT FEE REVENUES ARE NOT TAX REVENUES IN ANY
FORM AND THE RETAIL PUBLIC IMPROVEMENT FEE SHALL NOT BE ENFORCEABLE BY THE ANY
OTHER GOVERNMENTAL ENTITY OR QUASI-GOVERNMENTAL ENTITY, OTHER THAN THE DISTRICT
(EXCEPT WHERE THE GOVERNMENTAL ENTITY IS THE PIF COLLECTION AGENT AND IS ACTING
IN SUCH CAPACITY UNDER THIS PIF COVENANT OR EXCEPT BY JUDICIAL ENFORCEMENT
PURSUANT TO AN ENFORCEMENT ACTION BROUGHT BY A PERSON AUTHORIZED TO ENFORCE THIS
PIF COVENANT); AND (iii) THAT THE AUTHORITY OF THE DISTRICT AND/OR PIF
COLLECTION AGENT TO RECEIVE THE RETAIL PUBLIC IMPROVEMENT FEE IS DERIVED THROUGH
THIS PIF COVENANT. In the event the District or the Bond Trustee ceases to be
the PIF Collection Agent for the Public Improvement Fee (as further described in
Section 10 below), the District shall promptly notify each Retailer of the same
and provide appropriate direction for payment and reporting of the Retail Public
Improvement Fee thereafter. For purposes of compliance with this Section 5, each
Retailer shall be entitled to rely upon written notice from the District and, in
such event, upon specific instructions regarding reporting forms and payment
procedures for the Retail Public Improvement Fee provided in writing to such
Retailer by the District.
 
 
 
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(b)           Material Sales and Use Public Improvement Fee. Each PIF Obligor
shall pay the Material Sales and Use Public Improvement Fee. The Material Sales
and Use Public Improvement Fee owed by a PIF Obligor for any Construction
Activities shall be due and payable prior to or at the time of such PIF Obligor
obtaining a building permit from the County for such Construction Activities,
and in no event shall any Construction Activities be commenced by or on behalf
of any PIF Obligor prior to the payment of the Material Sales and Use Public
Improvement Fee owed with respect to such Construction Activities. Each PIF
Obligor shall pay the Public Improvement Fee owed with respect to Construction
Activities to the PIF Collection Agent on behalf of the District or its
assignee. With the consent of the County, the procedures for collection of any
or all of the PIF Revenues owed by a PIF Obligor for any Construction Activities
may be coordinated with the building permit process administered by the County.
The District may implement procedures applicable to all proposed development and
Construction Activities within the PIF Property or any portion thereof pursuant
to which PIF Obligors are required to demonstrate payment of the Material Sales
and Use Public Improvement Fee with respect to any planned Construction
Activities as a precondition to commencing such Construction Activities. Each
PIF Obligor shall deliver to the PIF Collection Agent a true and complete MSU
Report relating to the applicable Construction Activities and the PIF Collection
Agent is expressly authorized to deliver such MSU Report to the District and, at
the express written direction of the District, to the Bond Trustee or other
entity. Each PIF Obligor shall be under a continuing duty to make such
adjustments, additions, modifications or supplements to the MSU Report as may be
necessary to correct any mistake in a previously delivered Report or to
otherwise cause such MSU Report to accurately reflect the Construction Valuation
Amount for the applicable Construction Activities and such other information
contained therein, and to deliver such adjustments, additions, modifications or
supplements to the MSU Report to the PIF Collection Agent for distribution to
the District. If any such adjustment increases the amount of the Material Sales
and Use Public Improvement Fee that a PIF Obligor is required to remit or pay,
such PIF Obligor shall immediately pay such additional Material Sales and Use
Public Improvement Fee in the amount due to the PIF Collection Agent. District
hereby acknowledges, any Owner, by acquiring fee title to any portion of the PIF
Property subject to this PIF Covenant, shall be deemed to have acknowledged, any
other Occupant, by acquiring the right to possess or occupy any portion of the
PIF Property subject to this PIF Covenant, shall be deemed to have acknowledged
(i) THAT THE MATERIAL SALES AND USE PUBLIC IMPROVEMENT FEE IS NOT A TAX IN ANY
FORM AND IS A FEE IMPOSED UNDER PRIVATE COVENANT AND NOT THROUGH THE EXERCISE OF
ANY GOVERNMENTAL TAXING AUTHORITY; (ii) THAT THE MATERIAL SALES AND USE PUBLIC
IMPROVEMENT FEE REVENUES ARE NOT TAX REVENUES IN ANY FORM AND THE MATERIAL SALES
AND USE PUBLIC IMPROVEMENT FEE SHALL NOT BE ENFORCEABLE BY ANY GOVERNMENTAL
ENTITY OR QUASI-GOVERNMENTAL ENTITY, OTHER THAN THE DISTRICT (EXCEPT WHERE THE
GOVERNMENTAL ENTITY IS THE PIF COLLECTION AGENT AND IS ACTING IN SUCH CAPACITY
UNDER THIS PIF COVENANT OR EXCEPT BY JUDICIAL ENFORCEMENT PURSUANT TO AN
ENFORCEMENT ACTION BROUGHT BY A PERSON AUTHORIZED TO ENFORCE THIS PIF COVENANT);
AND (iii) THAT THE AUTHORITY OF THE DISTRICT AND/OR PIF COLLECTION AGENT TO
RECEIVE THE MATERIAL SALES AND USE PUBLIC IMPROVEMENT FEE IS DERIVED THROUGH
THIS PIF COVENANT.
 
 
 
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6. Additional Reporting Requirements. Each Retailer shall deliver to Declarant
or Affiliate of a Declarant specified by Declarant, the District and, at the
express written direction of the District, to the Bond Trustee or other entity
(collectively, “Report Recipients”), true and complete copies of all written
reports, returns, statements, records and declarations, including any
supplements or amendments thereto (collectively the “Reports”) made or provided
to the State of Colorado by such Retailer in connection with all Sales Tax for
the corresponding Sales Tax period at the same time such Reports are delivered
to the State of Colorado. If any subsequent adjustments, additions or
modifications are made: to any Sales Taxes or the Retail Public Improvement Fee
reported, remitted or paid, or Report made, by a Retailer to the State of
Colorado with respect to Sales Taxes or the Retail Public Improvement Fee, such
Retailer shall provide the Report Recipients with true and complete copies of
all revised Reports or other written material issued or received by such
Retailer in regard thereto. If any such adjustment increases the amount of the
Retail Public Improvement Fee which a Retailer is required to remit or pay, or
results in a refund of such Retail Public Improvement Fee, such Retailer shall
immediately pay such additional Retail Public Improvement Fee in the amount due,
or shall receive an appropriate credit against the next retail Public
Improvement Fee due from such Retailer in the amount of such excess Retail
Public Improvement Fee. Such Retailer shall claim such credits or pay such
additional retail Public Improvement Fee in the next monthly reporting period by
use of the standard reporting and remittance forms. All Reports made or provided
by a Retailer shall be maintained by such Retailer for at least three years from
the date of submission thereof to the State of Colorado, and upon written
request, shall be made available to the Report Recipients for inspection and
audit. Subject to Section 7 below, Reports received by any Declarant, the
District or the Bond Trustee shall remain confidential and be used only for
purposes of collecting the Retail Public Improvement Fee due, enforcing
Retailers’ obligations hereunder, and otherwise monitoring compliance with the
provisions of this PIF Covenant.
 
7. Audits and Release of Information by the PIF Collection Agent. By acquiring
its possessory interest in and to its Owned/Leased PIF Property subject to the
terms and conditions of this PIF Covenant, each Retailer and PIF Obligor hereby
specifically authorizes the District, the Bond Trustee and or the PIF Collection
Agent to audit the books and records of such Retailer or PIF Obligor to
determine compliance with the Public Improvement Fee collection and remittance
obligation of such Retailer or PIF Obligor under this PIF Covenant and, subject
to the restrictions set forth in the next sentence, to release to the
Declarants, the District, the Bond Trustee and any Dissemination Agent for
distribution to the holders of any Bonds (but not to any other person or entity,
except as required by law) such audited information and any Public Improvement
Fee-related reports, returns (including sales tax returns) and other documents
as are delivered to the District, the Bond Trustee and the PIF Collection Agent
by such Retailer or PIF Obligor and any relevant information gathered by the
District, the Bond Trustee, or successor PIF Collection Agent during an audit or
in reviewing such reports, returns or other documents (collectively, the
“Confidential Information”); provided, however, that all Confidential
Information, together with the contents thereof, shall be kept strictly
confidential and shall not be disclosed or otherwise published by any person to
whom the District, the Bond Trustee, or successor PIF Collection Agent so
releases Confidential Information, except for such disclosures or publications
as may be required by applicable laws. Without limiting the foregoing
confidentiality and non-disclosure requirements, to the fullest extent permitted
under applicable laws, any publication or disclosure of Confidential Information
submitted by or pertaining to a specific Retailer or PIF Obligor (or the
contents of such Confidential Information) by the District, the Bond Trustee or
successor PIF Collection Agent, any Declarant, the District, or any
Dissemination Agent (or by anyone else to whom the District, the Bond Trustee or
the successor PIF Collection Agent is required by law to disclose Confidential
Information) which is otherwise required to be made, shall be made only on an
aggregated basis with the similar information submitted by other Retailers and
PIF Obligors and without separate identification (direct or indirect) of the
Public Improvement Fee or sales of such specific Retailer.
 
 
 
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8. Compliance and Enforcement. Each Retailer and PIF Obligor shall comply with
all policies and requirements of District and the PIF Collection Agent regarding
the calculation and payment of the Public Improvement Fee. Each Retailer shall
comply with all policies and requirements of the District regarding notification
to customers of the assessment and collection of the Public Improvement Fee as
such policies and requirements are communicated by the District to such Retailer
in writing from time to time. The failure or refusal of any Retailer to assess,
collect or remit the Public Improvement Fee, or to comply with the requirements
concerning notification to customers as required in this PIF Covenant, shall
constitute a default by such Retailer under the terms of this PIF Covenant. The
failure or refusal of any PIF Obligor to remit the Material Sales and Use Public
Improvement Fee shall constitute a default by such PIF Obligor under the terms
of this PIF Covenant. THE DISTRICT, THE BOND TRUSTEE, OR THE PIF COLLECTION
AGENT ARE HEREBY EXPRESSLY MADE THIRD PARTY BENEFICIARIES OF THE RETAILERS’ AND
PIF OBLIGORS’ OBLIGATIONS UNDER THIS PIF COVENANT, INCLUDING, BUT NOT LIMITED
TO, THE ASSESSMENT, COLLECTION AND REMITTANCE OF THE PUBLIC IMPROVEMENT FEE.
Declarant hereby acknowledges, any other Owner, by acquiring fee title to any
portion of the PIF Property subject to this PIF Covenant, shall be deemed to
have acknowledged, any Occupant, by acquiring the right to possess or occupy any
portion of the PIF Property subject to this PIF Covenant, shall be deemed to
have acknowledged, and each Owner and Occupant shall cause any Retailer whom
such Owner or Occupant permits to possess or occupy (by lease or otherwise) any
portion of its Owned/Leased PIF Property to acknowledge, prior to conducting any
business at any PIF Property, THAT ANY DECLARANT, THE DISTRICT, THE BOND
TRUSTEE, OR THE PIF COLLECTION AGENT SHALL HAVE A DIRECT CAUSE OF ACTION AND
FULL RIGHT AND AUTHORITY TO ENFORCE EACH RETAILER’S AND PIF OBLIGOR’S
OBLIGATIONS UNDER THIS PIF COVENANT; AND THAT NO DEFAULT BY A RETAILER’S
LANDLORD UNDER ANY PROVISION OF THE LEASE OR OTHER OCCUPANCY AGREEMENT PURSUANT
TO WHICH SUCH RETAILER OCCUPIES ANY PIF PROPERTY SHALL ENTITLE SUCH RETAILER TO
ANY OFFSET, DEDUCTION OR OTHER DEFENSE TO PAYMENT OF THE PUBLIC IMPROVEMENT FEE
DUE HEREUNDER. Any payment of the Public Improvement Fee not paid when due
hereunder shall bear interest at the Default Rate, and the defaulting Retailer
or PIF Obligor shall bear all costs of enforcement and collection thereof,
including reasonable attorney’s fees. In addition, if a Retailer or PIF Obligor
fails to pay any Public Improvement Fee when due and such failure continues for
more than 10 days after notice thereof is given to such Retailer or PIF Obligor
by the PIF Collection Agent, the PIF Collection Agent may charge such Retailer
or PIF Obligor, and such Retailer or PIF Obligor shall be obligated to pay the
PIF Collection Agent, a late charge in an amount equal to the greater of 10% of
the delinquent Public Improvement Fee or $100.00. So long as the District or the
Bond Trustee is the PIF Collection Agent, the District or the Bond Trustee shall
have the right to take any lawful action to the collect the Public Improvement
Fee. Notwithstanding anything to the contrary contained in this PIF Covenant,
any Declarant, the District, the Bond Trustee, or the PIF Collection Agent, or
any third party designated by any of the foregoing (collectively, an “Enforcing
Party”), shall have the right to enforce the provisions of this PIF Covenant
against any Retailer or PIF Obligor that fails to abide by any of the terms and
conditions of this PIF Covenant. An Enforcing Party shall be awarded and recover
from a defaulting Retailer all costs and expenses incurred by such Enforcing
Party in successfully enforcing the obligations of such Retailer or PIF Obligor
under this PIF Covenant in any legal proceedings brought (or defended) by such
Enforcing Party.
 
 
 
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9. Use and Pledge of Public Improvement Fee Revenues; PIF Collection Agent’s
Payment Instructions. The Public Improvement Fee revenues generated by the
Public Improvement Fee imposed pursuant to this PIF Covenant may be used for the
payment of Public Improvements Costs or otherwise as expressly provided in this
PIF Covenant and the Public Financing Documents. Any right, title and interest
of any Declarant in the Public Improvement Fee and the obligations of the PIF
Obligors as set forth in this PIF Covenant may be assigned by such Declarant to
the District or the Bond Trustee; provided, however, notwithstanding any such
assignment, such Declarant shall be entitled to enforce this PIF Covenant
against any Retailer or PIF Obligor in the event such PIF Obligor fails to
comply with the provisions hereof. The District is hereby expressly authorized
to Pledge for the payment of Bond Requirements all Public Improvement Fee
revenues, or any portion thereof, generated by the Public Improvement Fee
imposed pursuant to this PIF Covenant and received or receivable by the PIF
Collection Agent. The PIF Collection Agent is hereby instructed and required to
pay so much of such Public Improvement Fee revenues received by it as may be so
Pledged to the party entitled thereto pursuant to the applicable Public
Financing Documents and the balance thereof shall be paid to the District, to
the extent required for ongoing operation, maintenance and administrative
expenses of the District related to Public Improvements.
 
10. PIF Collection Agent Succession. If the District terminates the services of
the PIF Collection Agent and appoints a new PIF Collection Agent, the District
shall notify all Retailers thereof pursuant to Section 4 hereof.
 
11. General Acknowledgement. Declarant hereby acknowledges, any other Owner, by
acquiring fee title to any portion of the PIF Property subject to this PIF
Covenant, shall be deemed to have acknowledged, and any Occupant, by acquiring
the right to possess or occupy any portion of the PIF Property subject to this
PIF Covenant, shall be deemed to have acknowledged, prior to conducting any
business at any PIF Property, THAT THE PROVISIONS OF THIS PIF COVENANT HAVE BEEN
OR SHALL BE AGREED TO BY THE DISTRICT AND THE BOND TRUSTEE, AND THAT THE
DISTRICT AND THE BOND TRUSTEE ARE OR SHALL BE RELYING UPON THESE PROVISIONS IN
TAKING CERTAIN ACTIONS WITH RESPECT TO THE PUBLIC IMPROVEMENT FEE AND THE PUBLIC
IMPROVEMENTS WITH THE EXPRESS CONDITION THAT THIS PIF COVENANT SHALL NOT BE
AMENDED, MODIFIED OR WAIVED; ACCORDINGLY, DECLARANT HEREBY AGREES AND ALL OTHER
OWNERS AND OCCUPANTS SHALL BE DEEMED TO HAVE AGREED THAT NO AMENDMENT OR
MODIFICATION SHALL BE MADE TO, NOR ANY WAIVER MADE OR ACCEPTED BY DECLARANT, ANY
OWNER OR ANY OCCUPANT WITH RESPECT TO THIS PIF COVENANT WITHOUT THE WRITTEN
CONSENT OF THE DISTRICT AND THE BOND TRUSTEE, AND THAT ANY SUCH PURPORTED
AMENDMENT, MODIFICATION OR WAIVER, WITHOUT THE WRITTEN CONSENT OF THE DISTRICT
AND THE BOND TRUSTEE, SHALL BE VOID AND OF NO FORCE AND EFFECT. Each Owner and
Occupant shall cause any Retailer whom such Owner or Occupant permits to possess
or occupy (by lease or otherwise) any portion of its Owned Leased PIF Property
to acknowledge, prior to conducting any business at any PIF Property, THAT THE
PROVISIONS OF THIS PIF COVENANT THAT PERTAIN TO RETAILERS HAVE BEEN OR WILL BE
AGREED TO BY THE DISTRICT AND THE BOND TRUSTEE, AND THAT THE DISTRICT AND THE
BOND TRUSTEE ARE OR WILL BE RELYING UPON SUCH PROVISIONS IN TAKING CERTAIN
ACTIONS WITH RESPECT TO THE PUBLIC IMPROVEMENT FEE AND THE PUBLIC IMPROVEMENTS
WITH THE EXPRESS CONDITION THAT THE PROVISIONS OF THIS PIF COVENANT THAT PERTAIN
TO RETAILERS SHALL NOT BE AMENDED, MODIFIED OR WAIVED; ACCORDINGLY, SUCH
RETAILER SHALL BE DEEMED TO HAVE AGREED THAT NO AMENDMENT OR MODIFICATION SHALL
BE MADE TO, NOR ANY WAIVER MADE OR ACCEPTED BY SUCH RETAILER WITH RESPECT TO THE
PROVISIONS OF THIS PIF COVENANT THAT PERTAIN TO RETAILERS WITHOUT THE WRITTEN
CONSENT OF THE DISTRICT AND THE BOND TRUSTEE, AND THAT ANY SUCH PURPORTED
AMENDMENT, MODIFICATION OR WAIVER, WITHOUT THE WRITTEN CONSENT OF THE DISTRICT
AND THE BOND TRUSTEE, SHALL BE VOID AND OF NO FORCE AND EFFECT.
 
 
 
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12. Owner/Occupant Obligations. Each Owner and Occupant shall cause any Retailer
to whom such Owner or Occupant leases or whom such Owner or Occupant otherwise
permits to occupy any portion of its Owned/Leased PIF Property, in its lease or
other occupancy agreement with such Retailer pursuant to which such Retailer
occupies any portion of such Owner’s or Occupant’s Owned/Leased PIF Property, to
acknowledge and agree to (in a manner that causes such Retailer to be bound by)
all provisions of this PIF Covenant that pertain to such Retailer.
 
13. Additional PIF Property. Declarants may acquire fee title to, or cause one
or more of its affiliates to acquire fee title to, additional property
(“Additional PIF Property”). Upon acquisition of any Additional PIF Property by
Declarant or such an affiliate, the new fee owner thereof may record a
supplement to this PIF Covenant in the real property records maintained by the
County Clerk, which shall set forth the legal description of such Additional PIF
Property and state that, from and after the date of such recording, such
Additional PIF Property shall constitute PIF Property for all purposes under
this PIF Covenant. From and after the date any such supplement is properly
signed, acknowledged and recorded, the Additional PIF Property described therein
shall constitute, and become a part of the, PIF Property for all purposes under
this PIF Covenant.
 
14. No Dominion or Control by Declarants. Notwithstanding anything contained in
this PIF Covenant to the contrary, or in any other document related to the PIF
Property, Declarant does not have and shall not be legally entitled, authorized
or empowered to exercise any dominion or control over any of the Public
Improvement Fee revenues imposed or collected pursuant to this PIF Covenant and
the Public Financing Documents. To the extent any Public Improvement Fee revenue
is collected by any Declarant, such Declarant is merely acting on behalf of the
District in implementing this PIF Covenant and providing for the collection and
payment of Public Improvement Fee revenues under the Public Financing Amendment.
Subject to the express terms of this Section 14: (a) the Public Improvement Fee
is a fee imposed on Retailers and PIF Obligors to pay Public Improvements Costs
as provided herein; (b) the nature of the Public Improvement Fee is that of a
fee imposed for the benefit of the District under private contract and not
through the exercise of any District taxing authority; (c) the Public
Improvement Fee revenues are not tax revenues in any form and the Public
Improvement Fee shall not be enforceable by the State or any taxing entity other
than the District; (d) the Public Improvement Fee revenues are the property of
the District to be used for the payment of the Bond Requirements and as
otherwise may be provided in this PIF Covenant or the Public Financing
Documents; and (e) the authority of the District to receive the Public
Improvement Fee revenues is derived through this PIF Covenant and the Public
Financing Documents.
 
15. Notices to Retailers. Whenever a party is required pursuant to the
provisions of this PIF Covenant to give notice to “all” Retailers, the notice
given shall be deemed sufficient if given to all Retailers the names and
addresses of which were known to the party giving such notice after a reasonably
diligent effort to ascertain the names and addresses of all Retailers
 
16. Governing Laws. This PIF Covenant shall be governed by, and enforced in
accordance with, the laws of the State of Colorado.
 
 
 
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17. Covenants Run with the Land. The covenants, agreements, promises and duties
as set forth in this PIF Covenant shall be construed as covenants and not as
conditions and, to the fullest extent legally possible, all such covenants shall
run with and be enforceable against both the covenantor and the land and shall
constitute equitable servitudes burdening both the respective covenantor and its
PIF Property for the benefit of the respective covenantee. Each covenant to do
or refrain from doing some act on or with respect to activities on any portion
of the PIF Property under this PIF Covenant (i) is a burden upon such portion of
the PIF Property and is for the benefit of the remainder of the PIF Property,
(ii) shall be a covenant running with the land with respect to both the burdened
and benefited portions of the PIF Property, and (iii) shall be binding upon of
each Owner, Occupant and Retailer and each successor to their respective
interests in the PIF Property and shall inure to the benefit of Declarants, the
other Owners, the District, the Bond Trustee and any other PIF Collection Agent.
If and to the extent that any of the covenants or other provisions herein would
otherwise be unlawful or void for violation of (a) the rule against
perpetuities, (b) the rule restricting restraints on alienation, or (c) any
other applicable statute or common law rule analogous thereto or otherwise
imposing limitations upon the time for which such covenants maybe valid, then
the provisions concerned shall continue and endure only until the expiration of
a period of 90 years after the date this PIF Covenant is filed in the real
property records maintained by the County Clerk.
 
17.           Severability. Invalidation of any of the provisions contained in
this PIF Covenant, or of the application thereof to any person or entity, by
judgment or court order, will in no way affect any of the other provisions of
this PIF Covenant or the application thereof to any other person or entity or
circumstance and the remainder of this PIF Covenant shall remain in effect;
provided, however, that in the event such invalidation would render the
remaining portions of this PIF Covenant ineffective to carry out the material
intentions of Declarant as expressed or implied by this PIF Covenant, then the
objectionable provisions) hereof shall be construed, and this PIF Covenant shall
be deemed amended, as if such provision were replaced with an enforceable
provision which effectuates, as nearly as possible, the material intentions of
Declarants.
 
18.           Applicability of Retail Public Improvement Fee to Residential
Property. Declarant may cause portions of the PIF Property to be developed for
residential use. The Retail Public Improvement Fee as established by this PIF
Covenant shall have no applicability to any portion of the PIF Property that is
used solely for residential purposes, except to the extent that any PIF Sales
are initiated, consummated, conducted, transacted or otherwise occur from or
within such portion of the PIF Property. Notwithstanding to foregoing, the
Material Sales and Use Public Improvement Fee is applicable to the residential
portions of the PIF Property.
 
IN WITNESS WHEREOF Declarants have executed this PIF Covenant as of the date
first set forth above.
 
Declarant:
 
PCY Holdings, LLC,
a Colorado limited liability company
 
By:                                                                 
Name: 
Title: 
 
 
 
50

 
 
STATE OF __________ 

)
) ss.
COUNTY OF _____________  

)
 
 
The foregoing instrument was acknowledged before me as of the _____ day of
_________________, 2017, by ______________________________ as ________________
of PCY Holdings, LLC, a Colorado limited liability company.
 
WITNESS my hand and official seal.
 
 
Notary Public for the State of ____________
 
My Commission Expires: 
 
 
 
 
51

 
Exhibit A
 
 
 
LEGAL DESCRIPTION OF THE
PIF PROPERTY
 
 
 
 
 
52

 
Schedule 6 - Tap Purchase Agreement
 
 
 
 
 
53

 
DRAFT 10/30/19
TAP PURCHASE AGREEMENT
(Sky Ranch)
 
THIS TAP PURCHASE AGREEMENT (“Agreement”), dated as of the _____ day of
____________, 2017 (the “Effective Date”), by and between Rangeview Metropolitan
District, a quasi-municipal corporation and political subdivision organized and
existing under the constitution and laws of the State of Colorado, acting by and
through its water activity enterprise, with the address of 141 Union Boulevard,
Suite 150, Lakewood, CO 80228 (“Rangeview”), and KB HOME COLORADO INC., a
Colorado corporation, with the address of 7807 E Peakview Avenue, Suite 300,
Centennial, CO 80111 (the “Company”). Rangeview and the Company are sometimes
hereafter referred to collectively as the “Parties,” and either of them may
sometimes hereafter be referred to as a “Party”.
 
RECITALS
 
A. Company is a party to a Contract for Purchase and Sale of Real Estate (the
“Contract”) for certain property located within the development commonly known
as Sky Ranch, County of Arapahoe, State of Colorado, as generally depicted on
Exhibit A attached hereto and made a part of this Agreement (the “Property”) and
as more particularly described in said Contract.
 
B. The Property is now undeveloped.
 
C. Rangeview is authorized to provide water and wastewater services to the
Property and the Company desires to obtain such services from Rangeview to allow
development of the Property to proceed.
 
D. Company desires to acquire and use the Property for the construction of
________________ (___) [insert number – should be about 149] single family
detached homes, which are to be developed in phases as generally outlined on
Exhibit A, in compliance with applicable zoning, building, and other laws,
rules, and regulations.
 
E. Rangeview has certain existing water and wastewater infrastructure, and plans
to construct additional infrastructure, to provide water and wastewater services
at the Property and to other customers.
 
F.  Company desires to purchase from Rangeview water and wastewater taps to
serve the Property with the revenue from said purchases to be available to
Rangeview in consideration of Rangeview providing water and wastewater services
to the Property.
 
G. The execution of this Agreement will serve a public purpose and promote the
health, safety, prosperity, and general welfare of present and future residents
and landowners by providing for the planned and orderly extension of water and
wastewater services to the Property by Rangeview.
 
 
 
54

 
 
COVENANTS
 
In consideration of the recitals, the mutual promises and covenants contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Rangeview and Company agree as
follows:
 
ARTICLE I
 
DEFINITIONS AND INTERPRETATIONS
 
Section 1.1. Definitions. As used in this Agreement, the words defined below and
capitalized throughout the text of this Agreement shall have the respective
meanings set forth below:
 
Agreement: This Tap Purchase Agreement and any amendment to it made in
accordance with Section 6.9 below.
 
Board: The duly constituted Board of Directors of Rangeview.
 
Company: A Party to this Agreement as described above.
 
Event of Default: One of the events or the existence of one of the conditions
set forth in Section 5.1 below.
 
Lot: Lot means a single family residential building lot as shown on a final
subdivision plat of the Property which designates a unique block and lot number
to the Lot.
 
Person: Any individual, corporation, limited liability company, joint venture,
estate, trust, partnership, association, or other legal entity.
 
Plans: The plans, documents, drawings, and specifications for the engineering,
design, surveying, construction, installation, or acquisition of any water and
wastewater improvements; including any addendum, change order, revision, or
modification affecting the same.
 
Property: The real property as described above.
 
Rangeview: A Party to this Agreement as described above.
 
Residential Unit: One single family detached dwelling unit.
 
Rules and Regulations: The duly adopted rules, regulations, bylaws, resolutions,
policies and procedures of Rangeview governing water and wastewater service,
fees and charges, and other matters; effective as of the Effective Date and as
may be amended from time to time.
 
SFE: An SFE shall mean one single family equivalent unit of water or wastewater
demand as defined in the Rules and Regulations. Absent unusual circumstances,
one SFE is a single family detached residence with an assumed water demand of
0.4 acre feet of water per year, provided with a three-quarter inch water
service line and meter, and with a typical balance of in-house and outside water
usage. The average wastewater demand for one SFE is 180 gallons of
domestic-strength wastewater per day.
 
 
 
55

 
 
 
Systems: The water and wastewater systems of Rangeview, consisting of the
facilities, supplies, assets, and appurtenant property rights owned or directly
controlled by Rangeview, which are used and useful to Rangeview to provide water
and wastewater services to the Property and other customers but not including
the service lines and any other facilities owned by individual customers as
established in the Rules and Regulations. The water system may be referred to
herein as the “Water System”; the wastewater system may be referred to herein as
the “Wastewater System”; and together they may be referred to as the “Water and
Wastewater Systems”.
 
System Development Charges. Collectively, the Water System Development Charges
and the Wastewater System Development Charges.
 
Tap: The physical connection to Rangeview’s Water or Wastewater Systems which is
authorized by sequentially numbered Water and/or Wastewater Tap Licenses issued
by Rangeview for the same.
 
Tap License: The Tap License issued by Rangeview that acknowledges the receipt
of payment of Water System Development Charges and/or Wastewater System
Development Charges, along with applicable Administrative Fees, as provided for
in the Rules and Regulations, for a specific Lot within the Property.
 
Wastewater System Development Charge: The Wastewater System Development Charges
paid to Rangeview as provided in Section 3.1 below for the right to make a Tap
and obtain domestic wastewater service from Rangeview
 
Water System Development Charge: The Water System Development Charges paid to
Rangeview as provided in Section 3.1 below for the right to make a Tap and
obtain potable and/or non-potable water service from Rangeview.
 
Section 1.2. Interpretation. In this Agreement, unless the context otherwise
requires:
 
(a) All definitions, terms, and words shall include both the singular and
plural.
 
(b) Words of the masculine gender include correlative words of the feminine and
neuter genders.
 
(c) The captions or headings of this Agreement are for convenience only and in
no way define, limit, or describe the scope or intent of any provision, article,
or section of this Agreement.
 
(d) The Recitals set forth above are incorporated herein by this reference.
 
 
 
56

 
 
ARTICLE II
 
WATER AND WASTEWATER SYSTEMS
 
Section 2.1. Construction of Certain On-Site and Off-Site Water and Wastewater
Systems. Rangeview has or shall cause the construction and installation of the
Water and Wastewater Systems as needed to serve customers when needed within the
boundaries of the Property.
 
Section 2.2. Ownership, Operation and Use of Water and Wastewater Systems. The
Water and Wastewater Systems, shall be owned, operated, and maintained by
Rangeview. The Company’s payment of System Development Charges shall not be
deemed to give Company any ownership right in any of the Water and Wastewater
Systems. The Water and Wastewater Systems shall be available for the use of all
persons in accordance with the Rules and Regulations. The proceeds of System
Development Charges may be used, in the discretion of the Board, for capital,
debt service, operation, maintenance of Water and Wastewater Systems, payment of
other costs, fees and charges payable by Rangeview, and other lawful purposes.
 
Section 2.3. Administration of Water and Wastewater Systems. Rangeview shall
establish all rates, fees, tolls, penalties, and charges for the use of the
Water and Wastewater Systems. Unless otherwise expressly specified in this
Agreement, service to the Property shall be subject to all duly promulgated
rates, rules, regulations, and policies of Rangeview adopted and applied on a
nondiscriminatory basis for similarly situated customers within their respective
powers and limitations.
 
ARTICLE III
 
SYSTEM DEVELOPMENT CHARGES
 
Section 3.1. Water and Wastewater System Development Charges.
 
(a) Subject to the terms hereof, Rangeview hereby agrees to sell to Company, and
Company hereby agrees to purchase from Rangeview (if and when Company secures
building permits for the applicable lots within the Property, Company not having
any obligation to secure building permits by any date(s) specific), Tap Licenses
for (___) [insert number – should be about 149] Residential Units to be located
on the Property.
 
(b) The use of Tap Licenses and the connection of the Taps shall be subject to
all applicable Rules and Regulations, including the requirement for construction
by Company at its cost of the “Service Lines” as defined in the Rules and
Regulations except as may otherwise by specifically provided for in this
Agreement.
 
(c) System Development Charges per Lot shall be calculated in accordance with
the Rules and Regulations. The System Development Charges applicable to any
particular Lot shall be paid in accordance with the schedule provided for below
at Section 3.2. The System Development Charges may increase or decrease prior to
issuance of any Tap License, and Company shall pay the amount of the System
Development Charge in effect at the time of payment.
 
 
 
57

 
 
(d) Additional Charges. In addition to System Development Charges, Rangeview
charges certain administrative fees as outlined in Exhibit B that includes a
meter/meter set fee, inspection fee, and account set up fee (the “Administrative
Fees”) along with periodic service charges, usage fees, and other rates, fees,
charges and assessments as provided for in the Rules and Regulations and
consistent with the District’s Service Plan, as may be amended from time to
time. Such rates, fees, charges and assessments shall be imposed by Rangeview in
such amounts as may be determined by its board of directors on a
nondiscriminatory basis for similarly situated customers within their respective
powers and limitations.
 
(e) Additional Lots. This Agreement does not obligate Rangeview to extend water
and wastewater services to additional lots beyond those specified in Section
3.1(a). Nothing herein shall be deemed or construed to limit Company’s ability
to obtain water and wastewater services from Rangeview, consistent with the
Rules and Regulations, for additional lots located off the Property and where
Rangeview has the right to provide such services.
 
Section 3.2. Schedule for Payment, Changes in Fees.
 
(a) Payments. Company shall pay the total amount due for System Development
Charges and Administrative Fees, as described in Section 3.1(d) above,
applicable to a specific Lot not later than the time of issuance of a building
permit for the construction of a Residential Unit on said Lot. Payments shall be
made by check, to the address specified by Rangeview, or by wire transfer, with
routing information as specified by Rangeview.
 
(b) Changes in Rates, Fees, and Charges. Changes to the System Development
Charges, Administrative Fees, or other rates, fees, charges and assessments by
Rangeview will become effective, including for Tap Licenses thereafter purchased
by the Company under this Agreement, after the Board of Directors adopts and
approves such new fees in a publicly noticed meeting of the Board.
 
Section 3.3. Allocation of Taps. Each Tap License purchased by Company shall be
allocated to a Lot within the Property as required by the Rules and Regulations.
The SFE allocation for each Lot shall be commensurate with the anticipated
demands on the Water and Wastewater Systems as provided in the Rules and
Regulations.
 
Section 3.4. Service Upon Payment. With respect to any Residential Unit,
Rangeview will permit a Tap connection only upon payment by Company of the
System Development Charge and the Administration Fee provided for in this
Agreement.
 
Section 3.5. Expiration of SFE. If Company fails to use any Tap License
purchased from Rangeview by connecting the Tap authorized by such Tap License
within one (1) year after the date of purchase, Company’s rights to use such Tap
License shall expire pursuant to the Rules and Regulations. Although Company is
not entitled to a refund of any System Development Charges previously paid,
Company shall be entitled to a credit in the amount of those charges previously
paid towards the amount of the then-current System Development Charges due and
payable at the time any subsequent application is made to purchase a Tap License
for service to said Lot.
 
 
 
58

 
 
 
Section 3.6. License’s Non-Transferable, Exception. Company shall not reallocate
any Tap License allocated to one Lot on the Property to another Lot without the
consent of Rangeview.
 
Section 3.7. Liability for Service Fee. The then-current owner of the Lot for
which the License was furnished shall be liable for payment of all service fees
and system operation fees (including minimum service fees, if any) assessed by
Rangeview (on a nondiscriminatory basis for similarly situated customers within
their respective powers and limitations) with respect to the particular Tap
License purchased.
 
ARTICLE IV
REPRESENTATIONS, WARRANTIES, AND COVENANTS
 
Section 4.1. Company Representations. In addition to the other representations,
warranties, and covenants made by Company in this Agreement, Company makes the
following representations, warranties, and covenants to Rangeview.
 
(a) Upon purchase of the Property, Company will have good and marketable title
to the Property.
 
(b) Company has the full right, power, and authority to enter into, perform, and
observe this Agreement.
 
(c) Neither the execution of this Agreement, the consummation of the
transactions contemplated under it, nor the fulfillment of or the compliance
with the terms and conditions of this Agreement by Company will conflict with or
result in a breach of any terms, conditions, or provisions of, or constitute a
default under, or result in the imposition of any prohibited lien, charge, or
encumbrance of any nature under any agreement, instrument, indenture, or any
judgment, order, or decree to which Company is a party or by which the Company
or the Property are bound.
 
Section 4.2. Rangeview Representations. In addition to the other
representations, warranties, and covenants made by the Rangeview in this
Agreement, Rangeview makes the following representations, warranties, and
covenants to Company:
 
(a) Rangeview is authorized under the Constitution and laws of the State of
Colorado to execute this Agreement and perform its obligations under this
Agreement, and all action on its part for the execution and delivery of this
Agreement has been or will be duly and effectively taken.
 
(b) Rangeview has the right, power, and authority to enter into, perform, and
observe this Agreement and to allocate Tap Licenses to Lots on the Property and
no third-party consent or approval is required for the performance of the
Rangeview’s obligations hereunder.
 
(c) Neither the execution of this Agreement, the consummation of the
transactions contemplated under it, nor the fulfillment of or the compliance
with the terms and conditions of this Agreement by Rangeview will conflict with
or result in a breach of any terms, conditions, or provisions of, or constitute
a default under, or result in the imposition of any prohibited lien, charge, or
encumbrance of any nature under any agreement, instruction, indenture,
resolution, or any judgment, order, or decree of any court to which Rangeview is
a Party or by which Rangeview is bound.
 
 
 
59

 
 
 
 
(d) To Rangeview’s actual knowledge, based on the representations of the
Company, as of the date hereof, the number of SFEs identified in Section 3.1(a)
are sufficient under the Rules and Regulations of Rangeview for servicing the
proposed Residential Units; however, Company is responsible for determining the
sufficiency of said number of SFEs for Company’s use on the Property and if
additional SFEs are needed, Company shall acquire the same from Rangeview.
 
(e) Rangeview has or shall cause the construction and installation of the Water
and Wastewater Systems as needed to serve customers when needed within the
boundaries of the Property.
 
Section 4.3. Instruments of Further Assurance. To the extent allowed by
applicable law, Rangeview and Company covenant that they will do, execute,
acknowledge, and deliver or cause to be done, executed, acknowledged, and
delivered, such acts, instruments, and transfers as may reasonably be required
for the performance of their obligations under this Agreement.
 
ARTICLE V
 
DEFAULT, REMEDIES, AND ENFORCEMENT
 
Section 5.1. Events of Default. The occurrence of any one or more of the
following events or the existence of any one or more of the following conditions
shall constitute an Event of Default under this Agreement:
 
(a) Failure of the Company to pay any System Development Charges, and/or service
fees when the same shall become due and payable as provided in this Agreement
or, as applicable, under the applicable Rules and Regulations of Rangeview. The
non-payment of any amount due hereunder when due, if such failure continues for
a period of ten (10) business days after the delivery of written notice from
Rangeview to Company, shall constitute a default.
 
(b) Failure to perform or observe any other of the material covenants,
agreements, or conditions in this Agreement, if such failure continues for a
period of ten (10) business days after the delivery of written notice from
Rangeview to Company as provided in Section 5.4;
 
(c) The failure of any material representation or warranty made in this
Agreement, if such representation or warranty is not remedies within a period of
ten (10) business days after the delivery of written notice from Rangeview to
Company as provided in Section 5.4;
 
Section 5.2. Occurrence of Event of Default by Company Results in Forfeiture.
Upon the occurrence of an Event of Default by Company, after written notice by
Rangeview to the Company and opportunity to cure as provided in Section 5.4, and
at the election of Rangeview, in its sole discretion, Company’s rights to
purchase additional SFEs for which System Development Charges have not been
received by Rangeview shall be suspended until the Event of Default is cured;
provided, that such suspension shall not act to terminate the provision of water
and wastewater service for which System Development Charges have been paid.
 
 
 
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Section 5.3. Remedies on Occurrence of Events of Default.
 
(a) Upon the occurrence of an Event of Default by Company, after written notice
by Rangeview to the Company and opportunity to cure as provided in Section 5.5,
Rangeview shall have the following rights and remedies:
 
(i)
To shut off or discontinue water and/or wastewater service, in accordance with
law and the Rules and Regulations, to those Lots owned by Company for which
service fees have not been paid or that otherwise are not compliant with the
Rules and Regulations.
 
(ii)
To protect and enforce its rights under this Agreement and any provision of law
by such suit, action, or special proceedings as Rangeview shall deem
appropriate, including, without limitation, any proceedings for the specific
performance of any covenant or agreement contained in this Agreement or the
enforcement of any other appropriate legal or equitable remedy, or for the
recovery of damages caused by breach of this Agreement, including reasonable
attorneys’ fees and all other costs and expenses incurred in enforcing this
Agreement;
 
(iii)
To enforce collection of any amount due to Rangeview by collection upon its
perpetual lien against the property served as provided in C.R.S. §
32-1-1001(1)(j) or (k) whether the amounts are due for property within or
without the district boundary of Rangeview;
 
(iv)
To suspend Company’s rights to purchase additional SFEs under this Agreement as
provided for in Section 5.2; and
 
(v)
If an Event of Default is also a violation of the Rules and Regulations of
Rangeview, then Rangeview shall have all remedies available to them to enforce
the Rules and Regulations in addition to the remedies provided under this
Agreement.
 
(b) Upon the occurrence of an Event of Default by Rangeview, after written
notice by the Company and opportunity to cure as provided in Section 5.5, the
Company is entitled to such remedies at law or in equity that are available to
it; provided, that such default shall not act to terminate the provisions of
water and wastewater service to a Lot owner by Company for which a valid Tap
License has been obtained and water and wastewater service fees have been paid.
 
(c) Delay or Omission No Waiver. No delay or omission of Rangeview or Company to
exercise any right or power accruing upon any Event of Default shall exhaust or
impair any such right or power or shall be construed to be a waiver of any such
Event of Default, or acquiescence in the Event of Default.
 
 
 
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Section 5.4. No Waiver of One Default to Affect Another; All Remedies
Cumulative; Notice and Opportunity to Cure. No waiver of any Event of Default
under this Agreement by Rangeview or Company shall extend to or affect any
subsequent or any other then-existing Event of Default or shall impair any
rights or remedies available for such other Event of Default. All rights and
remedies of Rangeview and Company whether or not provided in this Agreement, may
be exercised following notice and an opportunity to cure such default within ten
(10) business days, shall be cumulative, may be exercised separately,
concurrently, or repeatedly, and the exercise of any such right or remedy shall
not affect or impair the exercise of any other right or remedy.
 
Section 5.5. No Effect on Rights. No recovery of any judgment by Rangeview shall
in any manner or to any extent affect any rights, powers, or remedies of
Rangeview or Company under this Agreement, but such rights, powers, and remedies
of Rangeview or Company shall continue unimpaired as before. No moratorium shall
impair the rights of Rangeview or Company hereunder.
 
Section 5.6. Discontinuance of Proceedings on Default; Position of Parties
Restored. In case Rangeview or Company shall have proceeded to enforce any right
under this Agreement and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to Rangeview
or Company, then and in every such case Rangeview and Company shall be restored
to their former positions and rights hereunder (unless Rangeview shall have
exercised its right to terminate or rescind this Agreement), and, except as may
be barred by res judicata, all rights, remedies, and powers of Rangeview and the
Company shall continue as if no such proceedings had been taken.
 
Section 5.7. Unconditional Obligation. The obligations of Company to pay the
System Development Charges as provided for herein shall be absolute and
unconditional and shall be binding and enforceable in all circumstances and
shall not be subject to setoff or counterclaim (unless Rangeview is in in
default hereunder).
 
ARTICLE VI
 
MISCELLANEOUS PROVISIONS
 
Section 6.1. Effective Date. Upon the execution by both Parties of this
Agreement, this Agreement shall be in full force and effect and be legally
binding upon each Party on the date first written above.
 
Section 6.2. Time of the Essence. Time is of the essence under this Agreement.
If the last day permitted or the date otherwise determined for the performance
of any act required or permitted under this Agreement falls on a Saturday,
Sunday or legal holiday, the time for performance shall be the next succeeding
weekday that is not a holiday, unless otherwise expressly stated.
 
Section 6.3. Parties Interested Herein. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon, or to give to, any
Person other than Rangeview and the Company, any right, remedy, or claim under
or by reason of this Agreement or any covenants, terms, conditions, or
provisions hereof, and all the covenants, terms, conditions, and provisions in
this Agreement by and on behalf of Rangeview and Company shall be for the sole
and exclusive benefit of Rangeview and the Company. The covenants, terms,
conditions, and provisions contained herein and all amendments of this Agreement
shall inure to and be binding upon the heirs, personal representatives,
successors and assigns of the Parties hereto, provided that any assignment that
requires consent as provided in Section 6.4 hereof has been consented to by
Rangeview.
 
 
 
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Section 6.4. Assignment. Except as provided in Section 3.6, Company shall not
assign its rights or obligations (in whole or in part) under this Agreement
without the prior written consent of Rangeview. Any other assignment of this
Agreement without written consent by Rangeview and resolution by the Board shall
be void. Except for an assignment by Rangeview to another municipal,
quasi-municipal, or political subdivision that is a water and/or wastewater
service provider, Rangeview shall not assign its rights or obligations (in whole
or in part) under this Agreement without the prior written consent of Company.
 
Section 6.5. Impairment of Credit. None of the obligations of Company hereunder
shall impair the credit of Rangeview. Rangeview shall be able to rely upon the
timely performance of the obligations by Company to pay for Taps as herein
provided.
 
Section 6.6. Notices. Except as otherwise provided herein, any notice or other
communication required to be given hereunder will be in writing and delivered
personally, sent by United States certified mail, return receipt requested, by
reputable overnight courier, or by facsimile, in each case addressed to the
Party to receive such notice at the following addresses:
 
If to District:                                       Rangeview Metropolitan
District
Attn: Manager
141 Union Boulevard Suite 150,
Lakewood, CO 80228
E-mail: ljohnson@SDMI.com
 
with a copy to:                                    Rangeview Metropolitan
District
Attn: Mark Harding, President
34501 East Quincy Ave., Bldg. 34, Box 10
Watkins, CO 80137
Facsimile No: (303)292-3475
E-mail: mharding@purecyclewater.com
 
If to Company:                                   KB Home Colorado Inc.
7807 E Peakview Avenue, Suite 300
Centennial, CO 80111
Attention: Doug Shelton
Telephone: (303) 323-1141
E-mail: dshelton@kbhome.com
 
Any notice delivered personally will be deemed given on receipt; any notice
delivered by mail will be deemed given three business days after the deposit
thereof in the United States mail with adequate postage prepaid; any notice
delivered by overnight courier will be deemed given one business day after the
same has been deposited with the courier, with delivery charges prepaid; and any
notice given by facsimile will be deemed given on receipt by the recipient’s
facsimile facilities.
 
 
 
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Section 6.7. Severability. If any covenant, term, condition, or provision under
this Agreement shall, for any reason, be held to be invalid or unenforceable,
the invalidity or unenforceability of such covenant, term, condition, or
provision shall not affect any other provision contained in this Agreement, the
intention being that such provisions are severable.
 
Section 6.8. Venue. Exclusive venue for all actions arising from this Agreement
shall be in the District Court in and for Arapahoe County, Colorado.
 
Section 6.9. Amendment. This Agreement may be amended from time to time by
agreement between Rangeview and Company; provided, however that no amendment,
modification, or alteration of the terms or provisions of this Agreement shall
be binding upon Rangeview or Company unless the same is in writing and duly
executed by Rangeview and Company.
 
Section 6.10. Entirety. This Agreement, together with the recitals and exhibits
attached hereto, constitutes the entire contract between Rangeview and Company
concerning the subject matter herein, and all prior negotiations,
representations, contracts, understandings, or agreements pertaining to such
matters are merged into and superseded by this Agreement.
 
Section 6.11. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Colorado.
 
Section 6.12. Attorneys’ Fees. Should any action be brought in connection with
this Agreement, including, without limitation, actions based on contract, tort
or statute, the prevailing party in such action shall be awarded all costs and
expenses incurred in connection with such action, including reasonable
attorneys’ fees, plus interest at a rate of 12% per annum on all said costs from
the date of expenditure. The provisions of this Paragraph 6.12 shall survive
purchase of all Taps by Company, or the expiration or termination of this
Agreement.
 
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the
date first written above:
 
COMPANY:
 
KB HOME COLORADO INC.,
a Colorado corporation
 
 
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By:                                                                            
Name:                                                                                      
Title:                                                                                      
 
 
RANGEVIEW:
 
RANGEVIEW METROPOLITAN DISTRICT,
a Colorado quasi-municipal corporation and political subdivision acting by and
through its water enterprise
 
 
 
 
By:                                                                            
President
 
ATTEST:
 
By:                                                                 
Secretary
 
 
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EXHIBIT A
 
To Tap Purchase Agreement
 
[Diagram of Property]
 
 
 
 
 
 
 
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EXHIBIT B
 
to Tap Purchase Agreement
 
 
 
RANGEVIEW RATES AND CHARGES
 
Being Appendices C and E of the Rules and Regulations
 
(Current as of the Effective Date)
 
 
 
Note: “Administrative Fees”, as used in the Tap Purchase Agreement, are the sum
of the Administrative License Fee ($50.00) and Water Meter Purchase and Set Fee
(estimated to be $367.00 for ⅝”x¾” or ¾” water meters)
 
 
 
 
 
 
 
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Appendix C – Rules and Regulations of Rangeview Metropolitan District
ADMINISTRATIVE RATES AND CHARGES*
Article
Fee/Charge
Amount
6.2
System Review Fee
Actual Cost
6.3
Disconnection/Reconnection Charge
Actual Cost
6.4
Plan Review Fee (Main Extensions)
Actual Cost
6.5
Inspection/Observation Fee (Main Extensions/Tap Installation)
Actual Cost
6.6
Permit Review Fee
Actual Cost
6.9
Cure Charge
Actual Cost
6.11.c
Delinquent Payment Late Fee
$10 + 1% Monthly Interest
6.11.d
Returned Check Fee
$15.00
11.2
Water Meter Purchase and Set
Actual Cost
11.3.a
Administrative License Fee
$50.00
12.1.a
Water System Development Charge
See Appendix E
12.2.b
Potable Water Consumption Charge
See Appendix E
12.2.c
Monthly Water Service Charge
See Appendix E
12.3.a
Hydrant Use Fee
$40.00 per permit
12.3.b
Hydrant Use Rates
$13.00 per 1,000 gallons
12.3.c
Owner-initiated Shutoff Fee, each shutoff
$15.00 per hour
12.3.d
 
Fire Service Standby Fee, monthly fee
 
4-inch
$12.00
6-inch
$18.00
8-inch
$24.00
12.3.e
Well Site Surcharge
$300 per acre
13.7
Non-Potable Water Consumption Charge
85% of potable charges
17.1.c
Sewer System Development Charge
See Appendix E
17.2.a
Monthly Sewer Service Charge
See Appendix E
17.3.a
Interceptor Inspection Fee, each inspection
$25.00

* Rates and charges as effective as of March 2017
 
 
 
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Appendix E – Rules and Regulations of Rangeview Metropolitan District (Note:
Residential only listed)
(1) 
SKY RANCH SERVICE AREA SYSTEM DEVELOPMENT CHARGES
Article
Fee/Charge
Amount
12
Residential Water System Development Charge
$26,675 per SFE based on 0.4 acre feet of water use per year.
17
Wastewater System Development Charge
$4,659 per SFE

 
SKY RANCH EXAMPLE SYSTEM DEVELOPMENT CHARGES
Component
1.0 SFE Amount*
0.8 SFE Amount**
Total Water System Development Charge
26,675
$21,500
Wastewater System Development Charge
$4,659
$4,659
Total Water & Wastewater Tap Fee
$31,334
$26,159

SFE = Single Family Equivalent
* Assumes 0.4 AFY annual demand and 0.56 gpm max day flow rate.
** Assumes 0.32 AFY annual demand and 0.44 gpm max day flow rate.
 
SKY RANCH SERVICE AREA RESIDENTIAL MONTHLY CHARGES
Article
Fee/Charge
Amount
12.2b
Potable Water Consumption Charge
 
0% to 100% of Monthly Budget
$4.25 per 1000 gallons
101% to 125% of Monthly Budget
$6.38 per 1000 gallons
126% to 150% of Monthly Budget
$8.50 per 1000 gallons
Over 150% of Monthly Budget
$12.75 per 1000 gallons
12.2c
Potable Water Monthly Service Charge
$32.27
17.2b
Sewer Water Generation Charge
$6.34 per 1000 gallons*
17.2a
Sewer Monthly Service Charge
$10.05

* Monthly sewer generation assumed to be equal to the average potable water
consumption in the months of December through February.
 
 
 
 
 
 
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Schedule 7 –
Offsite Infrastructure Escrow Agreement
 
 
 
 
 
 
70

 
OFFSITE INFRASTRUCTURE AGREEMENT
 
(Sky Ranch – Offsite Infrastructure)
 
THIS OFFSITE INFRASTRUCTURE AGREEMENT (the "Agreement") is entered into this 
day of _________ 2017 (the “Effective Date”) by and among PCY Holdings, LLC, a
Colorado limited liability company ("PCY"), and the undersigned builders who
have executed a counterpart signature page to this Agreement or who have been
added as a party by execution of a Joinder hereto (each referred to herein as a
"Builder", and collectively as the "Builders"). PCY and the Builders are
sometimes individually referred to as a “Party” and collectively referred to as
the “Parties.”
 
This Agreement is made and entered into in contemplation of the following facts
and circumstances:
 
A. PCY is the developer of certain real property located in Arapahoe County
(“County”), Colorado, which consists of a portion of the land development known
as Sky Ranch (the "Subdivision") according to the Preliminary Plat and
Preliminary Development Plan therefore as approved by the County.
 
B. Each Builder and PCY have entered into a Contract for Purchase and Sale of
Real Estate (Sky Ranch) (the “Purchase Agreements”), pursuant to which each
Builder has purchased from PCY and is the owner of, and/or is under contract
with PCY to purchase, residential building lots within the Subdivision. Under
the terms of the Purchase Agreements, PCY has agreed to construct or cause the
construction of certain public infrastructure improvements that are necessary to
serve the Subdivision and fund the cost of such construction, including the
public offsite infrastructure improvements all as more particularly described in
this Agreement.
 
C. The Sky Ranch Community Authority Board (“CAB”) has been organized by the Sky
Ranch Colorado Metropolitan District Nos. 1 and 5 (the “Districts”) pursuant to
the laws of the State of Colorado in order to construct, operate and maintain
certain public facilities and improvements in accordance with the Sky Ranch
Community Authority Board Establishment Agreement (the “CABEA”) and each of the
service plans for the Districts. The CAB will construct the Drainage System
Improvements and the Monaghan Road Improvements identified on Exhibit A (the
“CAB Infrastructure”). In order to fund the Cab Infrastructure, PCY will deposit
funds into a segregated construction account owned and maintained by the CAB to
be used by the CAB to pay for the costs of designing, permitting and
constructing the CAB Infrastructure identified and described on Exhibit A.
 
D. Rangeview Metropolitan District (“Rangeview” and with the CAB, each is a
“Constructing Entity”) will construct the Water System Improvements, Wastewater
System Improvements and the Wholesale Water and Irrigation Lines identified on
Exhibit A (the “Rangeview Infrastructure.” In order to fund the Rangeview
Infrastructure, PCY will deposit funds into a segregated construction account
owned and maintained by Rangeview to be used by Rangeview to pay for the costs
of designing, permitting and constructing the Rangeview Infrastructure
identified and described on Exhibit A.
 
 
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E. On or before the Effective Date, PCY and the CAB shall enter into a Service
Agreement for Project Management Services for Sky Ranch (“CAB Service
Agreement”) pursuant to which PCY shall serve as the Project Manager (“PM”) for
the CAB for the construction of the CAB Infrastructure and shall provide the
services required to construct and deliver the CAB Infrastructure, including but
not limited to: CAB compliance and coordination with legal counsel and
accountants; planning design and approvals; project administration; contractor
agreements; construction management and administration; and CAB acceptance of
the CAB Infrastructure. A copy of the CAB Service Agreement is attached hereto
as a part of Exhibit D.
 
F.  On or before the Effective Date, PCY and Rangeview shall enter into a
Service Agreement for Project Management Services (“Rangeview Service Agreement”
and together with CAB Service Agreement, the “Service Agreements”) pursuant to
which PCY shall serve as the PM for Rangeview for the construction of the
Rangeview Infrastructure and shall provide the services required to construct
and deliver the Rangeview Infrastructure, including but not limited to:
Rangeview compliance and coordination with legal counsel and accountants;
planning design and approvals; project administration; contractor agreements;
construction management and administration; and Rangeview acceptance of the
Rangeview Infrastructure. A copy of the Rangeview Service Agreement is attached
hereto as a part of Exhibit D.
 
G. The Parties enter this Agreement in order to establish the terms and
procedures that will be utilized in order for funds to be disburse from the
construction accounts to pay for the costs to construct the Improvements, all as
more particularly set forth herein.
 
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein and in the Purchase Agreements, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
 
1. Incorporation of Recitals. The recitals set forth above are true and correct
and are incorporated herein in their entirety by this reference.
 
2. Construction Obligation. The CAB is constructing the Sky Ranch Infrastructure
and Rangeview is constructing the Rangeview Infrastructure (collectively, the
“Improvements”). PCY as the PM for both the CAB and Rangeview shall cause the
construction of the Improvements pursuant to Service Agreements.
 
3. Deposit of Construction Funds.
 
3.1 The estimated cost to construct each of the Improvements is set forth on
Exhibit A.
 
3.2 Not later than the Effective Date, PCY shall advance to the CAB for deposit
into a segregated construction account that is owned and maintained by the CAB
at a nationally or regionally recognized FDIC insured financial institution
funds in the amount of _______________________________ Dollars
($_____________.00) (“CAB Funds”) for the costs of design, testing, engineering
and construction of the CAB Infrastructure. The amount of the CAB Funds is equal
to the total estimated cost to substantially complete construction of the CAB
Infrastructure as set forth on Exhibit A. The CAB Funds shall be utilized solely
to pay for the construction of the CAB Infrastructure.
 
 
 
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3.3 Not later than the Effective Date, PCY shall advance to Rangeview for
deposit into a segregated construction account that is owned and maintained by
Rangeview at a nationally or regionally recognized FDIC insured financial
institution funds in the amount of _______________________________ Dollars
($_____________.00) (“Rangeview Funds”) for the costs of design, testing,
engineering and construction of the Rangeview Infrastructure. The amount of the
Rangeview Funds is equal to the total estimated cost to substantially complete
construction of the Rangeview Infrastructure as set forth on Exhibit A. The
Rangeview Funds shall be utilized solely to pay for the construction of the
Rangeview Infrastructure.
 
3.4 To the extent that the contracted price to construct the Improvements
exceeds the estimated cost to substantially complete the Improvements, PCY shall
advance additional funds to increase the amount of the CAB Funds deposited with
the CAB, or the Rangeview Funds deposited with Rangeview, as applicable, by the
difference in the estimated versus the contracted amounts. PCY is solely liable
for any cost overruns incurred in connection with the construction of the
applicable Improvements that exceed the amount of funds advanced by PCY to
either the CAB or Rangeview (a “Cost Overrun”) and shall promptly notify the
Builders of the amount of the additional funds being deposited. If there is an
increase the construction cost in excess of the amount advanced to a
Constructing Entity, then PCY shall advance good funds to the applicable
Constructing Entity in the amount of the Cost Overrun for deposit into the
Construction Account (as herein after defined) within five (5) business days
after the date upon which PCY learns that such increase has occurred. If PCY
fails to advance the necessary additional funds to the applicable Constructing
Entity to cover Cost Overruns, each affected Builder shall be entitled to all
remedies available at law or in equity, except incidental, consequential, or
punitive damages. In addition, any Builder or group of Builders may advance
additional funds PCY fails to pay, in which event PCY shall reimburse the
Builder(s) who advanced the funds within thirty (30) days after receipt of an
invoice (or, if such reimbursement is outstanding as of the date of the Second
Closing, such Builders shall receive a credit in such amount at the Second
Closing). Invoices not paid within thirty (30) days after receipt shall bear
simple interest at the rate of 12% per annum until paid.
 
4. Account. The CAB Funds and the Rangeview Funds shall be held in construction
accounts (each a "Construction Account") that are owned and maintained by the
CAB or Rangeview, as applicable, as provided in Section 3 above. As PM, PCY
shall administer the payment of funds from the Construction Account in payment
of Draw Requests (as hereinafter defined) to pay the costs to construct the
Improvements. All funds deposited into the Construction Account, together with
any interest accrued thereon, shall be referred to herein as the "Construction
Funds". The Construction Funds in a Construction Account shall not be commingled
with other funds or accounts. PCY shall keep good and accurate books of the
Construction Funds and in sufficient detail to allow construction costs and
expenditures to be calculated and which books and records shall be made
available to the Builders for review by the Builders upon reasonable prior
written notice.
 
5. Disbursement from the Construction Account. As PM for each of the
Constructing Entities, PCY shall administer and process the payment of
Construction Funds from each Construction Account to pay contractors and payees
identified in Draw Requests in accordance with the instructions set forth on
Exhibit B attached hereto and incorporated herein by this reference
(“Instructions”). If at any time PCY or a Builder becomes aware that
Construction Funds have been disbursed from a Construction Account for purposes
other than the construction of the applicable Improvements, such Party shall
immediately notify the other Parties.
 
 
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6. Construction of Improvements.
 
(a) Construction Schedule. PCY, as PM for the Constructing Entities, shall use
commercially reasonable efforts cause the Improvements to be Substantially
Complete within the timeframe referenced in the first Sentence of Section 7(a),
below, subject to Force Majeure Delays.
 
(b) Construction Standard. The Improvements will be completed, and each
construction contract entered into for the construction of any Improvement
(“Work Contract”) will provide that the applicable Improvements shall be
completed, in a good, workmanlike and lien-free manner, in accordance with the
CDs and specifications therefor as approved by the applicable approving
authorities, and the applicable laws, codes, regulations and governmental
requirements for the Development and Subdivision (the “Construction Standard”).
PCY shall post or cause to be posted when due all sureties or guaranties, if
any, that are required by the Authorities under the Entitlements in connection
with the construction of the Improvements.
 
(c) Progress Reports. PCY shall, no less frequently than once per calendar
month, provide the Builders with a progress report setting forth the amount of
Construction Funds expended to date, a list of Improvements completed to date,
and an estimate of the status of overall completion of the Improvements, in such
form as PCY deems reasonably appropriate.
 
(d) Temporary Construction Easements.
 
(1)                      Each Builder hereby creates and grants to PCY and each
other Builder, for the use of PCY, the Constructing Entity and each other
Builder (if such other Builder exercises its respective step-in option) and
their respective successors, assigns, employees, agents, contractors and
subcontractors, such temporary non-exclusive easements and licenses to enter
upon the real property owned by each Builder within the Subdivision (the
“Builder Property”) as are reasonable or necessary to permit PCY, the
Constructing Entity or such other Builder to perform the Improvements work,
provided that neither PCY, the Constructing Entity nor such other Builder in so
doing shall unreasonably impair or interfere with the performance of any work on
the other Builders’ property.
 
(2)                      PCY hereby creates and grants to each Builder (if it
exercises its Step-In Option), for the use of such Builder and its respective
successors, assigns, employees, agents, contractors and subcontractors, such
temporary non-exclusive easements and licenses to enter upon the real property
owned or controlled by PCY within the Subdivision (the “PCY Property”) as are
reasonable or necessary to permit such Builder to cause the completion of the
construction of the Improvements hereunder; provided that such Builder in doing
so shall unreasonably impair or interfere with the performance of any work on
the PCY Property by PCY.
 
(3)                      The foregoing temporary easements and licenses granted
to the Parties shall automatically terminate and cease to be of any further
force or effect upon the earlier of: (a) the date upon which the entirety of the
Improvements shall be completed; and (b) as to a particular Lot, the date upon
which a Builder (as applicable) has obtained a certificate of occupancy for the
home constructed upon such Lot.
 
 
 
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(e) Warranty Work. Notwithstanding that either PCY or another Builder has caused
the completion of the Improvements in accordance with the terms of this
Agreement, PCY as PM shall be responsible for performing or causing to be
performed the warranty work required to release any applicable warranty surety
or guaranty with the County or other applicable Authority.
 
(f) Erosion Control. As a part of the Improvements hereunder, PCY shall provide
or cause to be provided all erosion control and stormwater management services
required by all Authorities having jurisdiction for the performance of the
Improvements work hereunder, including, without limitation, obtaining,
maintaining, complying with and fulfilling the obligations under, all required
permits, licenses and approvals from any Authority having jurisdiction in
connection therewith concerning stormwater runoff, sediment or erosion control,
storm drainage, or any other water or sediment discharge pertaining to the
Property (the “Stormwater Permit”), including any and all requirements,
conditions, restrictions or other terms contained in such Stormwater Permit,
such as, but not limited to, surety requirements, treatment requirements,
discharge limitations and revegetation requirements.
 
(g) Force Majeure Delays. A delay in or failure to perform any obligations
required of PCY (or any Builder exercising a step-in right) hereunder shall not
constitute a default to the extent such delay or failure is caused by Force
Majeure Delays and all times for performance shall be extended by the number of
days of Force Majeure Delays. "Force Majeure Delays" shall be limited to acts of
God, war, terrorism, fire, flood, earthquake, hurricane, weather conditions,
strike, delay or unavailability of labor or materials, delay or unavailability
of utilities, delays in obtaining governmental approvals to the extent not
caused by the party seeking approval, moratoria, injunctions, orders or
directives of any court or governmental body, or other actions of third parties
(but not including financial inability) which, despite the exercise of
reasonable diligence, the Party required to perform is unable to prevent, avoid
or remove. Within thirty (30) days after the cessation of the occurrence of a
Force Majeure Delay, PCY (or Builder, as the case may be) will give notice
thereof specifying the cause of the Force Majeure Delay and the number of days
of the occurrence.
 
(h) Mechanic’s Liens. If because of any act or omission (or alleged act or
omission) of any Party or its employees, agents, contractors or subcontractors
under this Agreement, any mechanic’s or other lien, charge or order for the
payment of money or other encumbrance shall be filed or threatened against any
of the other Parties hereunder and/or any portion of its property (whether or
not such lien, charge, order or encumbrance is valid or enforceable as such),
such party (the “Indemnifying Party”) shall at its own cost and expense, cause
the same to be discharged of record or bonded within thirty (30) days after the
assertion or the filing thereof; and the Indemnifying Party shall indemnify,
defend and save harmless the other parties (the “Indemnified Parties”) against
and from all costs, liabilities, suits, penalties, claims and demands, including
reasonable attorneys’ fees, resulting therefrom; provided, however, that any
loss, cost, damage or expense to which the Indemnified Parties shall be entitled
under this Section shall be limited to out of pocket losses, costs, damages or
expenses (including, however any punitive or consequential losses, costs,
damages or expenses or lost profits actually paid by an indemnified party to a
contractor or subcontractor pursuant to such a mechanic’s lien claim), but none
of the Indemnified Parties shall be entitled to recover from the other any of
its punitive or consequential losses, costs, damages or expenses or lost profits
as a result of any failure by the Indemnifying Party to have complied with its
obligations under this Section. If the Indemnifying Party fails to comply with
the foregoing provisions, the other Party or Parties shall have the option of
discharging or bonding any such lien, charge, order or encumbrance, and the
Indemnifying Party shall reimburse the other party or parties for all costs,
expenses and other sums of money in connection therewith with interest at the
rate of 10% per annum thereon promptly upon demand.
 
 
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(i) Insurance. From and after the Effective Date, PCY shall obtain and maintain,
at its expense, and shall cause each contractor constructing any Improvements to
obtain and maintain: (a) workman’s compensation insurance as may be required
pursuant to the provisions of applicable law; and (b) comprehensive general
liability insurance in an amount of at least $1,000,000 per occurrence and
$2,000,000 in the aggregate
 
(j) Service Agreements. PCY may only amend or terminate either of the Service
Agreements in accordance with the process set forth in the Service Agreements.
PCY shall deliver to Builders copies of any written default notice sent by PCY
to a Constructing Entity within five (5) business days after PCY’s transmission
thereof to a Constructing Entity, and shall deliver to Builders copies of any
default notice received by PCY from a Constructing Entity within five (5)
business days after PCY’s receipt thereof.
 
7. Self Help Remedy.
 
(a) In the event that PCY defaults in the performance of its obligations to
cause any applicable Improvement or Improvements to be Substantially Complete
within 10 months after the date of the occurrence of the initial closing under a
Builder’s Purchase Agreement, after any applicable notice and cure period,
subject to Force Majeure Delays and any other extension rights granted to PCY by
that Builder’s Purchase Agreement, and PCY thereafter fails to timely cure such
default in accordance with the terms hereof, the following provisions shall
apply. The Builder under whose Builder Purchase Agreement PCY has defaulted, at
its option, shall have the right, but not the obligation, to step into the
rights of PCY as the PM under the Service Agreements and take control of the
construction of the Improvements as hereinafter provided (the “Uncompleted
Improvements”) in accordance with the terms of this Agreement by delivering
written notice of such election to PCY and the other Builders; provided,
however, that notwithstanding any provision in any Purchase Agreement to the
contrary, upon the receipt of such notice, Richmond American Homes of Colorado,
Inc. (if it is then a Builder hereunder and the owner of property in the
Subdivision) may exercise such right (first and ahead of the other Builders) on
behalf of all of the Builders (the “Richmond Step-In Option”) by delivering
written notice of such election to PCY and the other Builders and, if Richmond
fails to do so within fifteen (15) days after PCY’s uncured default, then the
Builder under whose Builder Purchase Agreement PCY has defaulted shall have the
right to exercise such right (the “Builder Step-in Option”). Seller represents
and warrants that every currently existing and future Builder Purchase Agreement
with respect to the acquisition of unfinished lots provides for Richmond to have
the first right to step-in as described in the immediately preceding sentence,
and the provision for such first right to step-in will not be modified without
Richmond’s prior consent, which consent may be withheld in Richmond’s sole
discretion if Richmond is then a Builder hereunder. If Richmond does not timely
exercise the Richmond Step-in Option, then the other Builders shall have the
right to exercise an option to step-in and select the Exercising Builder
(hereinafter defined) to act on behalf of all such Builders to complete the
Improvements by giving notice to PCY and the other Builders within fifteen (15)
days following the deadline for Richmond to exercise the Richmond Step-In
Option. In such event, (i) the Builder that exercises such right, including
Richmond if it is a Builder, as applicable (the "Exercising Builder") shall
succeed to all of the rights and obligations of PCY under this Agreement with
respect to the applicable Improvement or Improvements from and after the date
such right is exercised, including the right to obtain payment of Draw Requests
for the Construction Account to complete the Uncompleted Improvements, and PCY
shall assign to Exercising Builder all of PCY's right, title and interest, in
and to the applicable Service Agreement between PCY and the CAB and/or Rangeview
for the applicable Improvement or Improvements, but the Exercising Builder shall
not assume any responsibility for or otherwise have any liability for any such
obligations prior to such date or for any of the acts or omissions of PCY, and
the obligation to pay the costs of the Improvements, including Cost Overruns,
shall remain the sole responsibility of PCY even if the costs exceed the amounts
in the Construction Account, (ii) PCY shall have no further rights or
obligations under this Agreement after the date such right is exercised (except
as otherwise set forth herein, with PCY in all events remaining responsible for
all costs of the Improvements and to cooperate and assist if and as needed to
help the Exercising Builder complete the applicable Improvements) and that PCY
shall not be released of any other liability relating to this Agreement or the
Purchase Agreements that may accrue or arise on or before such date, (iii) to
the extent the same are not owned by any third party, PCY shall assign to
Exercising Builder, on an "as is" basis without any representations or
warranties, all of PCY's right, title and interest if any, in, to and under the
construction plans and specifications for the Improvements, and if same are
owned by a third party PCY shall be obligated and responsible to secure the
rights needed to use same from such third parties or to pay the costs incurred
to replace the same, and (iv) PCY and Builders shall take all action reasonably
required to permit the Exercising Builder to act as the PM under the applicable
Service Agreement to complete the construction of the Uncompleted Improvements.
In such event, PCY and the Exercising Builder shall give notice to the
applicable Constructing Entity that PCY has assigned the applicable Service
Agreement to the Exercising Builder hereunder and that the Exercising Builder
has assumed the position of PM under the Applicable Service Agreement and PCY
shall take all action necessary to permit the Exercising Builder act as the PM
under the Service Agreement, including the administration and processing of Draw
Requests from the Construction Account for the payment of construction costs of
the Uncompleted Improvements as identified in Draw Requests in accordance with
the terms hereof. The Exercising Builder shall be entitled to a construction
coordinator’s fee in an amount equal to 5% of the costs which are the subject of
each Draw Request and which PCY shall pay within 30 days after the Exercising
Builder’s delivery of an invoice therefor to PCY.
 
 
76

 
 
(b) Effective as of the date upon which an Exercising Builder exercises its
Step-In Option, PCY shall be deemed to have assigned to the Exercising Builder:
(A) any construction contracts entered into by PCY on its own behalf for the
completion of any Improvements (“Work Contracts”), if any, to the extent that
they pertain to such Uncompleted Improvements, (B) all of PCY’s agreements with
any utility providers to the extent that they pertain to such Uncompleted
Improvements, and (C) The Service Agreement between PCY and Rangeview and/or the
CAB, as applicable. PCY will cause the Service Agreements to be assignable to a
Builder. The Exercising Builder shall also have the right to take such actions
as may reasonably be necessary or desirable to obtain the County’s, or any other
applicable Authority having jurisdiction, initial acceptance of any such
Uncompleted Improvements that are completed by the Exercising Builder and which
the County, or such other Authority, is required to accept, subject to the
applicable developer’s warranty. Additionally, PCY will execute such additional
reasonable certifications, documents or agreements as may be required to confirm
the foregoing assignments to the Exercising Builder and to enable the Exercising
Builder to obtain such agreement by the County, or any other such applicable
Authority having jurisdiction, to initially accept such Uncompleted Improvements
so completed by the Exercising Builder; provided, however, the Exercising
Builder shall have no obligation to replace any surety previously delivered by
PCY to the County or other applicable Authority having jurisdiction for the
Uncompleted Improvements.
 
(c) In the event the Exercising Builder takes over construction coordination of
Improvements as PM under a Service Agreement, Exercising Builder’s assumption of
the construction coordination of the Improvements is done only as an
accommodation to the Parties and that, except as expressly set forth in this
Agreement, Exercising Builder shall have no responsibility, liability or
obligation with respect to (and the Parties hereby covenant not to sue
Exercising Builder for, and hereby release the Exercising Builder from, all
liability and claims relating to or arising from) the design, engineering,
construction or completion of the Improvements, any damage, loss or injury to
any of the parties or otherwise related to any action or inaction of Exercising
Builder in connection with this Agreement, or any defect in the materials or
workmanship pertaining to the Improvements, except for any “Exercising Builder
Covered Liability,” as hereinafter defined. “Exercising Builder Covered
Liability” means the following matters for which Exercising Builder shall be
liable to the other Parties in connection with its performance as Exercising
Builder hereunder: (a) any damage, loss or injury arising from the willful
misconduct, bad faith, recklessness or illegal acts of the Exercising Builder in
performing or failing to perform hereunder, or (b) damage, loss or injury
arising from the fraudulent conduct of Exercising Builder; provided, however,
that any damages to which the other Parties shall be entitled to recover for any
Exercising Builder Covered Liability shall be limited to out-of-pocket losses,
costs, damages or expenses, and the other Parties shall not be entitled to
recover from the Exercising Builder any punitive or consequential losses, costs,
damages or expenses or lost profits as a result of, or in connection with, any
Exercising Builder Covered Liability. Exercising Builder makes no representation
or warranty with respect to the Improvements, and shall have no liability for
any defect in the materials or workmanship pertaining thereto. The Parties
hereby agree to look solely to the contractors engaged to construct and complete
the Improvements for any contractual violation, indemnity, warranty or guarantee
relating to the Improvements. Upon completion of the Improvements, Exercising
Builder shall assign to the Parties (if any, and to the extent assignable and
without any representation or warranty whatsoever), on a non-exclusive basis,
any contractual rights received by Exercising Builder from the contractors that
construct or complete any portion of the Improvements, including, without
limitation, all rights related to any indemnities, guaranties and/or warranties
received from such contractors.
 
 
77

 
 
8. Default and Termination.
 
(a) Default. An “Event of Default” by a Party shall be deemed to have occurred
hereunder if such Party shall materially breach or materially fail to perform,
observe or meet any material covenant or condition made in this Agreement and
such breach or failure shall not be cured within 30 days after delivery of
notice to the defaulting party from the non-defaulting party or, in the event
such breach or failure cannot be cured within 30 days, if the defaulting party
shall not have commenced, within said period, to cure such breach or default and
be diligently pursuing such cure unto completion.
 
(b) Remedies. Upon any Event of Default by any Party hereunder, the other
Parties shall, except as may otherwise expressly be provided herein, have all
rights and remedies as are expressly provided herein (including, without
limitation, and as may be applicable, the right to exercise its respective
Step-In Option in accordance with, and subject to the limitations provided in,
Section 7), as the case may be.
 
9. Termination. This Agreement shall terminate upon the date that is one hundred
fifty (150) days following the later to occur of (i) payment of the final Draw
Request, and (ii) the lien-free completion of the Improvements and the initial
construction acceptance of the Improvements by the Authority that will own such
Improvements or component thereof. Notwithstanding the foregoing, PCY’s
obligations with respect to warranty work under Section 6(e) above, shall
survive termination of this Agreement.
 
10. Applicable Law. This Agreement shall be governed in accordance with the laws
of the state of Colorado, and venue for any court action hereunder shall lie
exclusively in a court of competent jurisdiction in Arapahoe County, Colorado.
 
11. Headings; Use of Certain Words. The headings used herein are for convenience
only and are not to be used in interpreting this Agreement. The words "hereof",
"herein", "hereto", "hereunder" or "herewith" as used in this Agreement shall
refer to this Agreement as a whole and not merely to the sentence or paragraph
in which such word is used.
 
12. Notices. All notices required to be given hereunder shall be in writing and
shall be addressed as follows, or as any party may subsequently designate by
written notice to the others. All notices shall be delivered by facsimile or pdf
transmittal, recognized overnight delivery service, or hand-delivery and shall
be deemed effective upon: (i) the successful transmission of a facsimile or pdf
transmittal, provided that a conforming copy is concurrently deposited for
delivery by first class U.S. mail, postage prepaid, or by hand delivery;
(ii) the first business day after deposit with a recognized overnight delivery
service; or (iii) upon receipt by hand-delivery:
 
To PCY:                 PCY Holdings, LLC
Attention: Mark Harding
34501 E. Quincy Ave.
Bldg. 34, Box 10
Watkins, Colorado 80137
Telephone: (303) 292-3456
Facsimile: (303) 292-3475
E-mail: mharding@purecyclewater.com
 
 
78

 
 
 
with a copy to:                     Fox Rothschild LLP
1225 17th Street, Suite 2200
Denver, CO 80202
Attention: Rick Rubin, Esq.
Telephone: (303) 292-1200
Email: rrubin@foxrothschild.com
 
To Builders:                                At the notice address set forth on
their respective signature pages
 
Each of the above-listed addressees may change its address and number for notice
purposes under this Section by delivering to the other addressees a written
notice of change of address and number, in a manner specified in this Section.
However, no such change of address or number shall be effective against another
addressee until written notice of such change is actually received by such
addressee.
 
13. Successors and Assigns. The terms of this Agreement shall inure to the
benefit of and bind the parties hereto and their respective successors and
permitted assigns. Except as expressly contemplated herein, no party may assign
its rights or obligations hereunder without the prior written consent of the
other parties hereto.
 
14. Potential Additional Parties. The parties acknowledge and agree that, with
regard to any third-parties (collectively, the "Additional Builders") with whom
PCY is under contract to sell any residential building lots, then, at PCY's
option, each of such Additional Builders may be added to and become a party
under this Agreement at any time provided written notice of such Additional
Builders is given to all Builders at the time of such Joinder. In such event,
each such Additional Builder shall be deemed to be a "Builder" as such term is
defined herein, shall have all rights of a "Builder" under this Agreement.
Additional Builders will be added to this Agreement by execution of a Joinder
that is substantially in the form set forth as Exhibit C attached hereto.
 
15. No Waiver of Rights / Remedies Cumulative. No delay or failure on the part
of any party to exercise any right, power or privilege under this Agreement
shall operate as a waiver thereof, and no single or partial exercise of any
right, power or privilege shall preclude any other or further exercise thereof
or the exercise of any other power or right, or be deemed to establish a custom
or course of dealing or performance between the parties hereto. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided at law or in equity.
 
16. Amendment. This Agreement may not be amended except by a written agreement
executed by all Parties to this Agreement.
 
17. Severability. If any term or provision of this Agreement or the application
thereof to any person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
 
 
79

 
 
 
18. Attorneys' Fees. Notwithstanding anything to the contrary contained herein,
any party prevailing in any litigation brought pursuant to or arising under this
Agreement shall recover its costs of court, fees and reasonable attorneys' fees
from the non-prevailing party as determined by any court of competent
jurisdiction.
 
19. Time of Essence. Time is of the essence in the observance and performance of
the terms and obligations of this Agreement.
 
20. No Partnership. The provisions of this Agreement are not intended to create,
nor shall they in any way be interpreted as creating, a joint venture,
partnership or any other similar relationship between the parties.
 
21. No Recording. Neither this Agreement nor any memorandum hereof shall be
recorded in the real property records of Arapahoe County, State of Colorado.
 
22. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, and all of such counterparts together
shall constitute one and the same instrument. Receipt of an executed signature
page to this Agreement by facsimile or other electronic transmission shall
constitute effective delivery thereof.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
80

 
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.
PCY:
 
PCY HOLDINGS LLC,
a Colorado limited liability company
 
By:            
Pure Cycle Corporation, a Colorado corporation
Its sole member
 
By: ____________________________________
Name: _________________________________
Title: __________________________________
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
81

 
BUILDER:
 
RICHMOND AMERICAN HOMES OF COLORADO, INC, a Delaware corporation
 
 
By: ____________________________________
      Linda Purdy, Vice President
 
 
 
Address for Notice:
 
Richmond American Homes of Colorado, Inc.
Attention: Linda Purdy, Vice President
4350 South Monaco Street
Denver, Colorado 80237
E-Mail: Linda.Purdy@mdch.com
Telecopier No.: (720) 977-4707
 
with a copy in each case to:
 
M.D.C. Holdings, Inc.
Attention: Drew Rippey
4350 South Monaco Street
Denver, Colorado 80237
E-Mail: Drew.Rippey@mdch.com
Telecopier No.: (720) 482-8558
 
and
 
M.D.C. Holdings, Inc.
Attention: Linda Skultety
4350 South Monaco Street
Denver, Colorado 80237
E-Mail: Linda.Skultety@mdch.com
Telecopier No.: (303) 488-4954
 
 
82

 
BUILDER:
 
Taylor Morrison of Colorado, Inc.,
a Colorado corporation
 
By: ____________________________________
Name: _________________________________
Title: __________________________________
 
Address for Notice:
 
Taylor Morrison of Colorado, Inc.
1420 West Canal Court, Suite 170
Littleton, Colorado 80120
Attention: Phillip Cross
Telephone: (303) 325-2426
E-mail: pcross@taylormorrison.com
 
With a copy to:                    Brier, Irish, Hubbard & Erhart P.L.C.
2400 East Arizona Biltmore Circle, Suite 1300
Phoenix, AZ 85016
Attn: Jeff Hubbard
Telephone: (602) 522-0160
Facsimile: (602) 522-3945
E-mail: jhubbard@bihlaw.com
 
                                            With copy
to:                                
 
Tony Meier at same address
E-mail: tmeier@bihlaw.com
 
 
 
83

 
EXHIBIT A
OFF-SITE IMPROVEMENTS
 
 
 
 
 
 
 
84

 
EXHIBIT B
 Instructions
 
1.            
Draw Requests from the Construction Account. PCY shall process and administer
Draw Requests for the payment of construction costs in accordance with the terms
of this Agreement and these Instructions.
 
(a) On a periodic basis, PCY shall submit to the Builders a copy of the request
that is to be submitted by PCY to the Constructing Entity for payment of
Construction Funds from the Construction Account to pay for: (i) the design,
engineering, permitting and all necessary governmental approvals to construct
the Improvements; and (ii) the costs to construct the Improvements including,
but not limited to, the costs for any related landscaping, signage, fencing and
fixtures associated with the Improvements (each a "Draw Request"). Each Draw
Request shall identify whether it pertains to CAB Infrastructure or Rangeview
Infrastructure and the amount of the requested payment, and shall be certified
to be true and correct by PCY and accompanied by: (A) a description of the basis
for disbursement (i.e., an application for progress payments based on the status
of completion of the applicable Improvements, or that substantial completion or
final acceptance, as applicable, has been obtained); (B) conditional lien
waivers (conditioned only upon payment of the amount due) from all contractors
covered thereunder for the amounts to be paid pursuant to the Draw Request, and
to the extent not previously provided unconditional lien waivers from
contractors paid from prior Draw Requests; (C) PCY’s estimate of the percentage
of completion of the Improvements; and (D) PCY’s estimate of the cost to
complete the Improvements.
 
(b)   If a Builder objects to all or any portion of the Draw Request, such
Builder shall deliver written notice of such objection (a “Objection Notice”) to
PCY and the other Builders on or before the fifth (5th) business day after PCY
delivers the Draw Request to the Builders. A Builder may only object to a Draw
Request in the event that (i) the documents or statements required by Section
(a) above in conjunction with a Draw Request were not properly delivered, are
incomplete or contain material errors, (ii) the remaining cost to complete the
Improvements after payment of the Draw Request will exceed the amount of the
Construction Funds in the Construction Account which objection will be deemed
cured upon the deposit by PCY of additional Construction Funds into the
Construction Account to cover the excess amount, or (iii) the work is not work
that is to be completed pursuant to this Agreement. If a Builder delivers an
Objection Notice, the Builders and PCY shall meet within three (3) business days
after receipt of the Objection Notice to review and discuss any such Objection
Notice. If the parties are unable to resolve any Objection Notice within five
(5) business days of such meeting, the matter shall be resolved pursuant to the
dispute resolution provisions set forth in Section 5 of these Instructions. Any
Objection Notice shall specifically identify the amount of the requested payment
to which the objection applies and the basis for such objection. No Objection
Notice shall be valid if it does not identify specific obligations. If a Builder
fails to deliver an Objection Notice within five (5) business days after PCY
delivers the Draw Request to the Builders, such Builder shall be deemed to have
waived any objection to such Draw Request.
 
 
85

 
 
 
(c) PCY shall submit the Draw Request to the applicable Constructing Entity for
payment as follows: (i) if no Builder has delivered a timely Objection Notice
within five (5) business days after PCY delivers the Draw Request to the
Builders, the Draw Request shall be deemed approved and PCY shall submit the
Draw Request to the applicable Constructing Entity for payment in full of the
amount identified in such Draw Request out of the Construction Account to the
contractors and payees identified in such Draw Request; or (ii) if a Builder has
delivered a timely Objection Notice, the portion of the payment identified in
such Draw Request to which no Builder has objected in an applicable Objection
Notice shall be deemed approved and PCY shall submit such portion to the
applicable Constructing Entity for payment out of the Construction Account to
the contractors and payees identified in such Draw Request; and (iii) if a
Builder has delivered a timely Objection Notice, the amount of the portion of
the payment identified in such Draw Request to which a Builder has objected in
an applicable Objection Notice but which has been resolved pursuant to Section 5
of these Instructions below, or if the Builder otherwise withdraws its objection
by notice to PCY and the other Builders, shall be paid by the applicable
Constructing Entity out of the Construction Account to the contractors and
payees identified in such Draw Request.
 
(d)           Within ten (10) days after PCY gives the Builders a Notice of
Substantial Completion for any Improvement (a “Completion Notice”), a
representative of PCY and each Builder shall inspect such Improvements, and
shall jointly prepare and agree upon a “punch-list” of items for the applicable
Improvement which is uncompleted or which require repair or other corrective
work (the “Punch List Items”). PCY shall, with reasonable diligence, use
commercially reasonable efforts as PM to cause the completion of the Punch List
Items.
 
(e)           On or before fifteen (15) days after payment of the final Draw
Request, PCY shall deliver to each Builder copies of full and final
unconditional lien waivers executed by all contractors and suppliers for all
labor and materials paid for pursuant to the final Draw Request.
 
3.         Limitation of Liability. PCY shall not be liable for the loss or
impairment of the Construction Funds due to failure or insolvency of any
financial institution which may be the depository of the Construction Funds.
 
4.         Expenses. PCY shall pay the fees, charges and expenses of PCY,
including, but not limited to, reasonable attorneys' fees, expenses and other
out-of-pocket costs as may be incurred by PCY to administer and process Draw
Requests under this Agreement.
 
 
 
86

 
 
 
5. Expedited Dispute Resolution.
 
(a) Disputes Related to Draw Requests and Punchlist Items. Notwithstanding
anything to the contrary herein, disputes related to any Punch List Item or
matter, a Draw Request or an Objection Notice that the Parties are unable to
resolve (“Expedited Disputes”) shall be resolved by CVL Engineers – Melinda
Lundquist or if such party is not available or unwilling to serve as arbitrator,
another reputable third party licensed engineer selected by PCY and approved by
Builders (“Informal Arbitrator”). Within five (5) business days after notice to
all Parties that an Expedited Dispute exists, each of the Parties involved in
the Expedited Dispute shall deliver to the Informal Arbitrator a written
statement of how such Party believes the Expedited Dispute should be resolved,
together with reasonable supporting documentation of such position (“Resolution
Notice”). Within ten (10) business days after receipt of Resolution Notices from
both such Parties, the Informal Arbitrator shall approve one (1) of the Parties’
Resolution Notice and shall deliver written notice of such approval to each
Party and to Disburser. The decision of the Informal Arbitrator shall be binding
on all Parties with respect to the applicable Expedited Dispute. All Parties
shall timely cooperate with the Informal Arbitrator in rendering his or her
decision. The Party or Parties involved in the Expedited Dispute that are not
the prevailing party in the resolution of the Expedited Dispute shall promptly
pay the Informal Arbitrator’s fee, and the prevailing party’s other fees and
costs of any such expedited dispute resolution process and reasonable attorney’s
fees. The term “prevailing party” means the Party who successfully obtains
substantially all of the relief sought by such Party or is successful in denying
substantially all of the relief sought by the other Party. The Parties
acknowledge that there is a benefit to the Parties in having work done as
expeditiously as possible and that there is a need for a streamlined method of
making decisions described in this Section so that work is not delayed. A Party
and shall not be entitled to recover from any other Party exemplary, punitive,
special, indirect, consequential or any other damages other than actual damages
(unless the Informal Arbitrator finds intentional abuse or frustration of the
dispute resolution process) in connection with an Expedited Dispute.
 
(b) Standards of Conduct. The Parties agree that with respect to all aspects of
the expedited dispute resolution process contained herein they will conduct
themselves in a manner intended to assure the integrity and fairness of that
process. To that end, if an Expedited Dispute is submitted to expedited dispute
resolution process, the Parties agree that they will not contact or communicate
with the Informal Arbitrator who was appointed with respect to any Expedited
Dispute either ex parte or outside of the contacts and communications
contemplated by these Instruction, and the Parties further agree that they will
cooperate in good faith in the production of evidence in a prompt and efficient
manner to permit the review and evaluation thereof by the other Parties.
 
 
 
87

 
EXHIBIT C
FORM OF JOINDER
 
JOINDER BY BUILDER
THIS JOINDER TO CONSTRUCTION DISBURSEMENT AGREEMENT (this “Joinder”), dated as
of _________________, 201___ (the “Joinder Date”), is made by
_____________________________________________________ (“Purchaser”), for the
benefit of PCY Holdings, LLC, a Colorado limited liability company (“PCY”) and
each other Builder that is a party to that Offsite Infrastructure Agreement
dated _______________, 201__.
 
WHEREAS, PCY, as seller, and Purchaser, as purchaser, are parties to that
certain Contract for Purchase and Sale of Real Estate (Sky Ranch) dated
___________, 201__ (as amended and assigned from time-to-time, the “Purchase
Agreement”), with respect to the sale of certain residential building lots
located within the Sky Ranch Development in Arapahoe County, Colorado, and
 
WHEREAS, PCY has agreed to construct certain infrastructure improvements that
are necessary to serve the lots identified under the Purchase Agreement and fund
the cost of such construction by establishing a construction disbursement
agreement. PCY and Purchaser desire that Purchaser become a party to the Offsite
Infrastructure Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, PCY and Purchaser hereby agree as follows:
 
1.            
Any capitalized terms not defined in this Joinder shall have the meanings
ascribed thereto in the Offsite Infrastructure Agreement, which is hereby
incorporated by reference.
 
2.            
By execution of this Joinder, Purchaser becomes a party to the Offsite
Infrastructure Agreement for all purposes and shall be entitled to exercise all
of the rights of a Builder thereunder, subject to the following limitations
_______________________________.
 
3.            
This Joinder shall inure to the benefit of the Builders and their successors and
assigns under the Construction Disbursement Agreement.
 
IN WITNESS WHEREOF, Purchase has executed this Joinder as of the Joinder Date.
 
___________________________________,
a __________________________________
 
 
By:           
 
Name:                      
 
Title:                      
 
 
 
88

 
EXHIBIT D
SERVICE AGREEMENTS
 
 
 
89

 
Schedule 8 - Homebuyer Disclosure
 
Provisions to include in Homebuyer Disclosure:
 
Special District Disclosure. In accordance with the provisions of
C.R.S. §38-35.7-101(1), Seller provides the following disclosure to Purchaser:
SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT
IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY
WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE PLACED AT RISK
FOR INCREASED MILL LEVIES AND TAX TO SUPPORT THE SERVICING OF SUCH DEBT WHERE
CIRCUMSTANCES ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE
SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. PURCHASERS SHOULD
INVESTIGATE THE SPECIAL TAXING DISTRICTS IN WHICH THE PROPERTY IS LOCATED BY
CONTACTING THE COUNTY TREASURER, BY REVIEWING THE CERTIFICATE OF TAXES DUE FOR
THE PROPERTY, AND BY OBTAINING FURTHER INFORMATION FROM THE BOARD OF COUNTY
COMMISSIONERS, THE COUNTY CLERK AND RECORDER, OR THE COUNTY ASSESSOR.
 
Source of Water Disclosure. In accordance with the provisions of
C.R.S. §38-35.7-104, Seller provides the following disclosure to Purchaser:
 
THE SOURCE OF POTABLE WATER FOR THIS REAL ESTATE IS:
 
 
A WATER PROVIDER, WHICH CAN BE CONTACTED AS FOLLOWS:
 
 
NAME:                                 
Rangeview Metropolitan District
 
ADDRESS:                                            
c/o Special District Management Services, Inc.
 
141 Union Blvd., Suite 150
 
Lakewood, Colorado 80228
 
WEB SITE:                                            
www.rangviewmetro.org
 
TELEPHONE:                                            
303-987-0835
 
SOME WATER PROVIDERS RELY, TO VARYING DEGREES, ON NONRENEWABLE GROUND WATER. YOU
MAY WISH TO CONTACT YOUR PROVIDER TO DETERMINE THE LONG-TERM SUFFICIENCY OF THE
PROVIDER’S WATER SUPPLIES.
 
Oil, Gas, Water and Mineral Disclosure. THE SURFACE ESTATE OF THE PROPERTY MAY
BE OWNED SEPARATELY FROM THE UNDERLYING MINERAL ESTATE, AND TRANSFER OF THE
SURFACE ESTATE MAY NOT NECESSARILY INCLUDE TRANSFER OF THE MINERAL ESTATE OR
WATER RIGHTS.
 
 
 
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THIRD PARTIES MAY OWN OR LEASE INTERESTS IN OIL, GAS, OTHER MINERALS, GEOTHERMAL
ENERGY OR WATER ON OR UNDER THE SURFACE OF THE PROPERTY, WHICH INTERESTS MAY
GIVE THEM RIGHTS TO ENTER AND USE THE SURFACE OF THE PROPERTY TO ACCESS THE
MINERAL ESTATE, OIL, GAS OR WATER.
 
SURFACE USE AGREEMENT. THE USE OF THE SURFACE ESTATE OF THE PROPERTY TO ACCESS
THE OIL, GAS OR MINERALS MAY BE GOVERNED BY A SURFACE USE AGREEMENT, A
MEMORANDUM OR OTHER NOTICE OF WHICH MAY BE RECORDED WITH THE COUNTY CLERK AND
RECORDER.
 
OIL AND GAS ACTIVITY. OIL AND GAS ACTIVITY THAT MAY OCCUR ON OR ADJACENT TO THE
PROPERTY MAY INCLUDE, BUT IS NOT LIMITED TO, SURVEYING, DRILLING, WELL
COMPLETION OPERATIONS, STORAGE, OIL AND GAS, OR PRODUCTION FACILITIES, PRODUCING
WELLS, REWORKING OF CURRENT WELLS, AND GAS GATHERING AND PROCESSING FACILITIES.
 
ADDITIONAL INFORMATION. PURCHASER IS ENCOURAGED TO SEEK ADDITIONAL INFORMATION
REGARDING OIL AND GAS ACTIVITY ON OR ADJACENT TO THE PROPERTY, INCLUDING
DRILLING PERMIT APPLICATIONS. THIS INFORMATION MAY BE AVAILABLE FROM THE
COLORADO OIL AND GAS CONSERVATION COMMISSION.
 
Radon. The U.S. Environmental Protection Agency, the U.S. Department of Health
and Human Services, and the U.S. Public Health Service have expressed concern
over the presence of radon gas in homes. Prolonged exposure to high levels of
indoor radon or its progeny may affect the health of residents. Although such
conditions may exist at the Community, Seller has made no investigation to
determine whether radon gas is or will be present in the home or affecting the
premises, and the Community makes no representation or warranty as to (a) the
presence or lack of radon or hazardous environmental conditions nor (b) the
effect of radon or any such condition on the Community. Seller recommends that
the Buyer, at his/her sole expense, conduct his/her own investigation and
consult with such experts as the Purchaser deems appropriate in order to
determine the level of radon gas in the home. By signing below Purchaser
acknowledges that he or she has read the foregoing Disclosure Statement, and
hereby releases Seller from any and all liability with respect to the above
matters.
 
Soils Report. The soils within the State of Colorado are variable, and include
both expansive soils/bedrock and compressible soils which may result in shifting
or other movement of basement floors or foundations, or otherwise result in
cracking of concrete floors, slabs, patios, the foundation, or other components
of a home. In some instances, soil movements can result in more damage to the
structure or other parts of the improvements.
 
The suitability of the soil of the lots contained within the Community was
tested by __________. As is common in the State of Colorado, the soil conditions
in the Community include variable bedrock and soil conditions, including
[expansive soils/bedrock and compressible soils]. Therefore, the soils in the
Community can heave or settle, and cause cracking in foundations, slabs, walks,
drives, etc. All lots contain filled ground, which depth varies from lot to lot.
The fill soils placed during site grading were compacted and tests of the degree
of compaction were performed under the supervision of a licensed Professional
engineer. The tests indicated this fill was compacted sufficiently to support
the houses.
 
 
 
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The findings are contained in the report entitled [Title of Soils Report] dated
_________, 20__ (the “Soils Report”). Purchaser has been provided a summary
report of the Soils Report (the “Summary Soils Report”), in addition to a copy
of the Colorado Geologic Survey Special Publication 43: A Guide To Swelling
Soils For Colorado Homebuyers and Homeowners which details the problems
associated with expansive soils and the building methods to address problems
associated with construction on such soils and suggestions for care and
maintenance as required by Colorado Revised Statutes § 6-6.5-101, or any
subsequent or additional law hereafter adopted. It is very important that
Purchasers read and understand the summary soils report and Special Publication
43, and understand and accept the care and maintenance responsibilities that
Purchaser must assume. [Purchaser should also review the soils addendum of their
Purchase Agreement.] Purchasers are encouraged to review a copy of the Soils
Report which is available for review in the Sales Office. If you do not
understand this information, you should contact a soils engineer of your choice
to help interpret and explain the conditions on your lot, and/or legal counsel.
For further information concerning soil conditions, you may also contact
________________ for information regarding the Soils Report.
 
Protective Covenants Disclosure. THE PROPERTY IS, OR WILL BE PRIOR TO CLOSING,
SUBJECT TO PROTECTIVE COVENANTS THAT ARE ADMINISTERED AND ENFORCED BY THE SKY
RANCH METROPOLITAN DISTRICT NO. 5. THE PROTECTIVE COVENANTS MAY PROHIBIT THE
OWNER FROM MAKING CHANGES TO THE PROPERTY WITHOUT AN ARCHITECTURAL REVIEW BY THE
DISTRICT AND THE APPROVAL OF THE DISTRICT. PURCHASERS OF PROPERTY WITHIN THE SKY
RANCH DEVELOPMENT SHOULD REVIEW AND CAREFULLY READ THE PROTECTIVE COVENANTS.
 
 
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Schedule 9 - Amenity Development Agreement And Escrow Instructions
 
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DRAFT 10/30/17
 
 
AMENITY DEVELOPMENT AGREEMENT
 
AND ESCROW INSTRUCTIONS
 
 
 
 
Sky Ranch
 
THIS AMENITY DEVELOPMENT AGREEMENT (this “Agreement”) is made as of the ___ day
of _________, 20____ (the “Effective Date”), by and between PCY Holdings, LLC, a
Colorado limited liability company (“Developer”), and Richmond American Homes of
Colorado, Inc., a Delaware corporation (“Richmond”), and Taylor Morrison of
Colorado, Inc., a Colorado corporation (“Taylor Morrison”) and any other
purchaser (“Additional Builder”) of any of the Builder Lots shown on the Concept
Plan (as defined below) that executes a joinder to this Agreement and acquires
the rights, liabilities and obligations hereunder with respect to such Builder
Lots (collectively the “Builders” and each a “Builder,”). Developer and Builders
are sometimes individually referred to as a “Party” and collectively referred to
as the “Parties.” Land Title Guarantee Company, as Escrow Agent, executes this
Agreement to acknowledge its agreement to act as the escrow agent in accordance
with the Section 5 and the instructions set forth on Attachment 1 attached
hereto.
 
RECITALS
 
A.           
Developer owns certain real property located in Arapahoe County (the “County”),
Colorado which Developer is developing as part of the Sky Ranch master planned
residential community (“Development”). The Development is being subdivided in
several subdivision filings and developed in phases.
 
B.           
Each Builder has entered into a separate Contract for Purchase and Sale of Real
Estate with the Developer (each a “Purchase Agreement” and collectively the
“Purchase Agreements”), under which each Builder is acquiring from Developer a
portion of the Development consisting of single family residential building lots
(collectively, the “Builder Lots”). The approximate number and location of the
Builder Lots to be acquired by each Builder under the terms of the Purchase
Agreements are generally depicted on the attached as Exhibit A (“Concept Plan”).
 
C.           
Pursuant to the Purchase Agreements, Developer and the Builders have agreed to
construct or cause to be constructed certain park improvements and amenities
within the three park areas designated on the Concept Plan (the “Parks”). The
improvements to be installed and constructed within the Parks (the
“Improvements”) will be identified and described as provided in this Agreement.
At such time as the plans and specifications have been approved for the
Improvements by the County or other applicable governmental authority, the
Improvements and the applicable Plans will be set forth on Exhibit B to be
attached hereto by amendment to this Agreement executed by the Parties.
 
 
 
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D.           
The Parties now desire to enter into this Agreement in order to set forth the
terms and conditions under which the Improvements will be constructed and paid
for by the Parties, together with such other matters as are set forth
hereinafter.
 
AGREEMENT
 
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Developer and Builders agree as follows:
 
1. Incorporation of Recitals. The Parties hereby acknowledge and agree to the
Recitals set forth above, which are incorporated herein by this reference.
 
2. Responsibilities of Developer and Builders.
 
2.1 Generally. Developer shall construct, or cause to be constructed, the
Improvements in the manner set forth hereinafter. Developer shall coordinate,
administer and oversee (a) the preparation and filing of all applications,
filings, submittals, plans and specifications, budgets, timetables and other
documents pertaining to construction and installation of the Improvements, and
(b) the construction and installation of the Improvements. Developer will engage
or cause to be engaged consultants, contractors and subcontractors who will be
responsible for the design and construction of the Improvements and suppliers
who will be responsible for supplying labor, materials, equipment, services and
other work in connection with the construction of the Improvements (“Service
Provider(s)”), pursuant to the Contracts (as hereinafter defined).
 
2.2 Comply with Legal Requirements. Developer will comply with all terms and
conditions of applicable law in performing its obligations under this Agreement.
Developer will provide to each Builder copies of all notices filed by the
Developer with the County, and all other applicable governmental or
quasi-governmental entities or agencies (the “Approving Authorities”) related to
the Improvements and shall, within ten (10) business days of receipt thereof,
provide notice to each Builder (together with copies of all notices received by
Developer) of any notice received by Developer alleging any failure to comply
with any applicable laws, ordinances, rules, regulations, or lawful orders of
public authorities bearing on the construction of the Improvements.
 
2.3 Bonds and Assurances. Developer, as part of the Costs, shall provide to all
applicable Approving Authorities any bonds, assurance agreements, or other
financial assurances if any are required with respect to the construction of the
Improvements. Developer shall, as part of the Costs, provide to all Approving
Authorities all warranties, bonds and other financial assurances required to
obtain permits for, and the preliminary and final acceptance and approval of,
the Improvements. Builder shall take all commercially reasonable actions and
execute all documents reasonably requested by Developer in its efforts to obtain
releases of all such warranties, bonds, and other financial assurances upon
final acceptance of the Improvements by the Approving Authorities.
 
2.4 Taxes, Fees and Permits. Developer or the Service Providers shall pay all
applicable sales, use, and other similar taxes pertaining to the construction of
the Improvements, and shall secure and pay for all approvals, easements,
assessments, charges, permits and governmental fees, licenses and inspections
necessary for proper construction and completion of the Improvements, except as
provided otherwise in this Agreement. Developer and the Service Providers shall
not defer the payment of any use taxes pertaining to the Improvements except as
may be authorized under law or agreement with the applicable taxing authorities.
 
 
 
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2.5 Dedications. Developer shall timely make all conveyances and dedications of
the Improvements if and as required by the Approving Authorities, free and clear
of all liens and encumbrances.
 
2.6 Indemnity. Developer shall indemnify, defend and hold harmless the Builders
and their owners, employees, members, managers, directors, officers, agents,
affiliates, successors and assigns (each a “Builder Indemnitee” and
collectively, the “Builder Indemnitees”) for, from and against all claims,
demands, liabilities, losses, damages (exclusive of special, consequential,
punitive, consequential and lost profits damages), costs and expenses, including
but not limited to court costs and reasonable attorneys’ fees, arising out of
material damage caused by Developer’s negligence or willful misconduct in the
performance of the construction of the Improvements. Notwithstanding the
foregoing, Developer shall not be obligated under this Agreement to indemnify
the Builder Indemnitees to the extent such liabilities result from the act,
negligence or willful misconduct of any Builder Indemnitee.
 
2.7 Insurance. Developer shall procure and maintain, and shall cause the Service
Providers to procure and maintain, the insurance described in Exhibit C attached
hereto during the construction of the Improvements and any warranty work
performed on the Improvements.
 
2.8 Independent Contractor. Developer is an independent contractor and neither
Developer nor its employees are entitled to worker’s compensation benefits or
unemployment insurance benefits through any Builder as a result of performing
under this Agreement. The Developer is responsible for and obligated to pay all
assessable federal and state income tax on amounts earned or paid under this
Agreement.
 
3. Construction of Improvements.
 
3.1 Plans and Specifications. Developer shall diligently finalize, process and
obtain approval of the Plans for the Improvements from the applicable Approving
Authorities to the extent required by such entities. Upon receipt of the
approved Plans for the Improvements, Developer will furnish a copy of such Plans
to the Builders. Exhibit B shall then be completed to identify the Plans and
Improvements.
 
3.2 Construction Standard. Developer shall cause the applicable Improvements to
be constructed in accordance with the Construction Standard and shall obtain
preliminary and final acceptance thereof by the applicable Approving
Authorities. As used herein, the term “Construction Standard” means construction
and installation of the Improvements in a good, workmanlike and lien-free manner
and in substantial conformity with the Plans (as may be modified pursuant to the
terms hereof), and the applicable requirements of the Approving Authorities.
 
 
 
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3.3 Contracts. Developer and contractors of Developer shall contract for all of
the work and materials related to the design and construction of the applicable
Improvements. Developer shall bid, pursue, negotiate, agree to and execute
contracts and agreements with Service Providers for the work and materials
comprising the Improvements (each a “Contract” and collectively, the
“Contracts”), based upon forms that Developer deems necessary or appropriate in
its commercially reasonable discretion; provided, however, that Developer shall
deliver written notice to the Builders after it enters into any Contract, which
notice shall identify the Service Provider(s). Developer shall use good faith
efforts to cause each Contract, in addition to other matters, to (i) allow for
the automatic assignment, without need for further action, of all of Developer’s
rights (including, without limitation, the warranty and indemnity provisions
thereof) to a Builder on a non-exclusive basis in the event of replacement of
Developer pursuant to the terms of this Agreement and identify the Builders as
intended third-party beneficiaries of the Contract, (ii) require the Service
Providers to provide a warranty on materials and labor supplied by such Service
Provider for a period coterminous with any warranty period required by the
applicable Approving Authorities for Improvements to be dedicated to an
Approving Authority, but in no event less than one (1) year for any Improvement,
(iii) require the Service Provider to perform its work in accordance with the
Construction Standard, (iv) require the Service Provider to indemnify, defend,
and hold harmless Developer from all claims and causes of action arising from
the negligent acts or omissions or intentional misconduct of the Service
Provider providing construction services or its employees or agents, (v) permit
retainage in an amount of at least five percent (5%) of the amounts payable to
the Service Provider, until the work to be completed pursuant to such Contract
has been substantially completed and, if applicable, granted initial acceptance
by the applicable Approving Authority; (vi) provide the Developer the right, but
not the obligation, to pay subcontractors and suppliers of the Service Provider
directly or by joint check, and (vii) provide for no limitation on remedies
against the Service Provider for a default to the extent customary, except the
prohibition of recovery of punitive damages. Upon receipt of written request
from a Builder, Developer shall deliver a copy of each Contract to such Builder.
 
3.4 Construction Schedule. Developer shall cause construction of the
Improvements to be completed as follows:
 
3.4.1 Completion. The Improvements will be completed in two phases (each a
“Phase”) consisting of the construction of the Improvements applicable to the
Central Park (as identified on the Concept Plan) during the first Phase (the
“Phase 1 Park Improvements”) and the construction of the Improvements applicable
to the North Park and the South Park (as identified on the Concept Plan) during
the second Phase (the “Phase 2 Park Improvements”). Developer shall cause
Substantial Completion of each component of the Phase 1 Park Improvements to
occur on the date that is ninety (90) days after substantial completion of the
Builder Lots that are designated as Takedown 1 as depicted on the Concept Plan,
provided, however, if such date for completion would require landscape
installation between the during the months of October through April of any year,
landscape installation may be delayed until May 31 of such year (the “Phase 1
Substantial Completion Date”), and cause Substantial Completion of the Phase 2
Park Improvements to occur on or before the date that is one (1) year after the
Phase 1 Substantial Completion Date (referred to collectively as the
“Substantial Completion Dates”); provided, however, subject to Section 3.4.2
below. Developer may cause the Improvements to be constructed and installed as
Developer deems necessary, in the Developer’s commercially reasonable
discretion, to coordinate such Improvements with the development of other
portions of the Development. Notwithstanding anything to the contrary, the
Developer shall have no obligation to install landscaping during the months of
October through April.
 
 
 
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3.4.2 Force Majeure. Notwithstanding any contrary provision of this Agreement,
the Substantial Completion Dates and the time for performance of Developer’s
other obligations under this Agreement shall be extended by a period of time
equal to any period that such performance or progress in construction of the
Improvements is delayed due to any Dispute, as defined below, acts or failure to
act of any Approving Authority, strike, riot, act of war, act of terrorism, act
of violence, weather, act of God, or any other act, occurrence or non-occurrence
beyond Developer’s reasonable control (each, an “Force Majeure Delay”). Within
thirty (30) days after the cessation of the occurrence of a Force Majeure Delay,
PCY will give notice thereof specifying the cause of the Force Majeure Delay and
the number of days of the occurrence.
 
3.5 Substantial Completion.
 
3.5.1 Definition of Substantial Completion. “Substantial Completion” of the
Improvements (or applicable component thereof) shall be deemed to have occurred
when all of the following have occurred with respect to the Improvements (or
applicable component thereof):
 
(a) Developer has substantially completed or corrected all punchlist items
provided by the Approving Authorities affecting the Improvements (or applicable
component thereof) in accordance with Section 3.5.2 below;
 
(b) Subject to Section 3.5.1(c) below, the Improvements (or applicable component
thereof) have been installed pursuant to the Construction Standard;
 
(c) Any Improvements (or applicable component thereof) that are intended to be
dedicated to or accepted by an Approving Authority shall have been inspected and
preliminarily accepted by the applicable Approving Authority (subject to the
Government Warranty Period (as defined below); 
 
(d) No mechanics’ or materialmen’s liens shall have then been filed with respect
to the Improvements and lien waivers have been obtained from the Service
Providers that constructed the Improvements (or applicable portion thereof), or
the Developer has obtained a bond to insure over any such mechanics’ or
materialmen’s liens.
 
3.5.2 Notice to Builders. Developer shall notify the Builders in writing when
Substantial Completion of the Improvements (or applicable component thereof) has
been achieved, except for minor punch-list work and the date(s) and time(s) the
Approving Authorities, if any, will inspect such Improvements (or applicable
component thereof). Within ten (10) days after receipt by Builder of such notice
from the Developer, Developer and Builders shall jointly inspect the
Improvements (or applicable component thereof) and produce a punchlist
(“Builders Punchlist”). The Builders Punchlist may not contain any items other
than incomplete Improvements or components thereof, deficient or defective
construction of the Improvements or components thereof, or failure to construct
the Improvements or components thereof in accordance with the plans approved by
the applicable Approving Authorities. Builders shall not be able to object or
provide Builders Punchlist items for any portion of the Improvements previously
inspected by the Builders, except in the case of construction defects. If the
Parties are unable to agree upon a Builders Punchlist within five (5) days after
the joint inspection described above, then any dispute related to such punchlist
shall be submitted to the expedited dispute resolution procedures in accordance
with Section 6 below. Developer will attempt to provide Builders with copies of
any inspection reports or punchlists received from the Approving Authorities in
connection with the inspection of the Improvements, and Developer shall be
responsible to correct punchlist items from the Approving Authority and items
set forth on the Builders Punchlist. Notwithstanding anything to the contrary
including any Builders Punchlist, if an Approving Authority grants preliminary
approval or construction acceptance to any of the Improvements, then it shall
conclusively be presumed that such Improvement or work was completed in
accordance with the plans approved by the Approving Authorities, subject to
completion of the punchlist items provided by the Approving Authority. If an
item is not identified as incomplete on the Builders Punchlist, then it shall be
presumed that such Improvement was completed in accordance with the plans
approved by the Approving Authorities. Disputes regarding Builders Punchlist
items and matters will be resolved pursuant to the expedited dispute resolution
procedures set forth in Section 6 of this Agreement.
 
 
 
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3.5.3 Correction of Punchlist Items. Developer shall cause any punchlist items
received from the Approving Authorities and any items on the Builders Punch List
that are the same as the items on the Approving Authorities punchlist to be
corrected within the time required by the County or other applicable Approving
Authorities, and shall cause any other punchlist items appearing on the Builders
Punch List to be corrected within 90 days, subject to Force Majeure Delay.
 
3.6 Self-Help Remedy.
 
3.6.1 Notice of Default. If Developer: (a) breaches its obligation under this
Agreement to complete or cause the completion of any Improvement in accordance
with the Plans or by the applicable Substantial Completion Date (as extended by
any Force Majeure Delay); (b) otherwise breaches any material obligation under
this Agreement (c) fails to comply with any material provision of its Contracts
with Service Providers beyond any applicable express notice or cure periods; or
(d) files a petition for relief in bankruptcy or makes an assignment for the
benefit of its creditors, or admits in writing its inability to pay its debts
generally as they become due (each a “Bankruptcy Event”), then any Builder may
deliver written notice of the breach to Developer (a “Notice of Default”). Each
of the events set forth in Subsections (a) through (d) inclusive of the
preceding sentence shall be herein referred to as a “Constructing Party
Default.” For any Constructing Party Default other than a Bankruptcy Event, the
Developer shall have thirty (30) days after Developer’s receipt of the Notice of
Default from any Builder to cure the Constructing Party Default (the “Cure
Period”); provided, however, if the nature of the Constructing Party Default is
such that it cannot reasonably be cured within thirty (30) days, the Cure Period
shall be deemed extended for a reasonable period of time (not to exceed an
additional ninety (90) days) so long as Developer commenced in good faith and
with due diligence to cause such Constructing Party Default to be remedied. If
Developer does not cause the cure of the Constructing Party Default within the
Cure Period (as may be extended pursuant to the preceding sentence, and subject
to Force Majeure Delays), or if a Bankruptcy Event occurs (either, an “Event of
Default”), then Richmond (acting as “Substitute Constructing Party”) may elect
to assume and take over the construction of the Improvements by providing
written notice to Developer of such appointment within 15 days following the
Event of Default (the “Assumption Notice”). If Richmond does not deliver an
Assumption Notice within such 15 day period, the remaining Builders may meet and
appoint one of the other Builders or another qualified third party to serve as
the Substitute Constructing Party. Substitute Constructing Party’s assumption of
the construction of the Improvements shall not include the assumption of any
liability for acts or omissions occurring prior to the Assumption Notice, or
payment of any “Constructing Party Cost Overruns” (as defined below) incurred
prior to the Assumption Notice, which Constructing Party Cost Overruns shall
remain the sole responsibility of the Developer, or receipt of any cost savings
prior to the Assumption Notice; provided, however, that the Substitute
Constructing Party shall be entitled to an administrative fee in an amount equal
to two percent (2%) of the remaining Costs (as defined below) actually paid,
which administrative fee shall be included in the Constructing Party Cost
Overruns. The Builders’ election to appoint a Substitute Constructing Party to
assume and take over the construction of the Improvements and to exercise and
enforce the rights and obligations set forth in Section 3.6.2 below shall
thereafter be the Builders’ sole and exclusive remedy except as provided in
Section 3.6.2 and in Sections 3.7 and 3.8 with respect to work performed by PCY.
 
 
 
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3.6.2 It is expressly acknowledged and agreed that in the event the Substitute
Constructing Party takes over the construction of the Improvements as
contemplated hereby, Substitute Constructing Party’s assumption of the
construction of the Improvements is done only as an accommodation to the Parties
and that, except as expressly set forth in this Agreement, Substitute
Constructing Party shall have no responsibility, liability or obligation with
respect to (and the Parties hereby covenant not to sue Substitute Constructing
Party for, and hereby release the Substitute Constructing Party from, all
liability and claims relating to or arising from) the design, engineering,
construction or completion of the Improvements, the funds collected and
disbursed under this Agreement, any damage, loss or injury to any of the parties
or otherwise related to any action or inaction of Substitute Constructing Party
in connection with this Agreement, or any defect in the materials or workmanship
pertaining to the Improvements, except for any “Substitute Constructing Party
Covered Liability,” as hereinafter defined. “Substitute Constructing Party
Covered Liability” means the following matters for which Substitute Constructing
Party shall be liable to the other Parties in connection with its performance as
Substitute Constructing Party hereunder: (a)  any damage, loss or injury arising
from the willful misconduct, bad faith, recklessness or illegal acts of the
Substitute Constructing Party in performing or failing to perform hereunder, or
(b) damage, loss or injury arising from the fraudulent conduct of Substitute
Constructing Party; provided, however, that any damages to which the other
Parties shall be entitled to recover for any Substitute Constructing Party
Covered Liability shall be limited to out-of-pocket losses, costs, damages or
expenses, and the other Parties shall not be entitled to recover from the
Substitute Constructing Party any punitive or consequential losses, costs,
damages or expenses or lost profits as a result of, or in connection with, any
Substitute Constructing Party Covered Liability. Substitute Constructing Party
makes no representation or warranty with respect to the Joint Improvements, and
shall have no liability for any defect in the materials or workmanship
pertaining thereto. The parties hereby agree to look solely to the contractors
engaged to construct and complete the Improvements for any contractual
violation, indemnity, warranty or guarantee relating to the Improvements. Upon
completion of the Improvements, Substitute Constructing Party shall assign to
the parties hereto (to the extent assignable and without any representation or
warranty whatsoever), on a non-exclusive basis, the contractual rights received
from the contractors that construct or complete any portion of the Joint
Improvements, including, without limitation, all rights related to any
indemnities, guaranties and/or warranties received from such contractors.
 
 
 
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3.6.3 Assumption Right. If the Builders deliver an Assumption Notice, then: (i)
Developer shall cooperate to allow the Substitute Constructing Party to take
over and complete the incomplete Improvements, including the execution and
delivery to the Substitute Constructing Party of such agreements, documents or
instruments as may be reasonably necessary to assign to the Substitute
Constructing Party all Contracts with third parties pertaining to the
Improvements; (ii) Developer shall remain responsible for all Constructing Party
Cost Overruns (as hereinafter defined) and Costs incurred through the date that
the Assumption Notice if given, but Developer shall be relieved of all further
obligations under this Agreement with respect to the completion of the
incomplete Improvements subsequent to such assumption; (iii) Developer shall
remain liable for its negligence or willful misconduct, and any indemnification
obligations specified herein incurred prior to the date of such assumption; and
(v) Substitute Constructing Party shall assume and perform all obligations under
all Contracts for Improvements which Substitute Constructing Party will complete
to the extent such obligations are to be performed after the date of delivery of
the Assumption Notice; and (vi) Substitute Contracting Party shall succeed to
all of the Developer’s rights under Section 5 of this Agreement pertaining to
the right to receive and collect payment for Costs for completing the
construction of the Improvements. The Substitute Constructing Party shall be
entitled to recover the Constructing Party Cost Overruns incurred by the
Substitute Constructing Party from the Developer. In the event of an Assumption
Notice, the Substitute Constructing Party shall indemnify, defend and hold
harmless the Developer and its members, managers, shareholders, employees,
directors, officers, agents, affiliates, successors and assigns for, from and
against all claims, demands, liabilities, losses, damages (exclusive of special,
consequential, punitive, speculative or lost profits damages), costs and
expenses, including but not limited to court costs and reasonable attorneys’
fees, that accrue after the date of the Assumption Notice and arise out of the
Substitute Constructing Party’s Covered Liability or gross negligence in the
completion of the Improvements, and this indemnity shall not apply to any
claims, demands, liabilities, losses, damages, costs, expenses, acts or
omissions arising or accruing before the date of the Assumption Notice. The
obligations under this Section shall survive the termination or expiration of
this Agreement.
 
3.7 Warranty Periods.
 
3.7.1 Government Warranty Period. The Approving Authorities may require a
warranty period after the Substantial Completion with respect to certain
Improvements (a “Government Warranty Period”). In the event defects in the
Improvements to which a governmental warranty applies become apparent during the
Government Warranty Period, then Developer shall coordinate the repairs with the
applicable Approving Authorities and cause the Service Provider(s) who performed
the work or supplied the materials in which the defect(s) appear to complete
such repairs or, if such Service Providers fail to correct such defects,
otherwise cause such defects to be repaired to the satisfaction of the Approving
Authorities. Any costs and expenses incurred in connection with any repairs or
warranty work performed during the Government Warranty Period (including, but
not limited to, any costs or expenses incurred to enforce any warranties against
any Service Providers) that cause the Budgeted Costs to be exceeded shall be
borne by Developer and shall be included in the Constructing Party Cost
Overruns, unless such defect or damage was caused by Builder or its contractors,
subcontractors, employees, or agents, in which event Builder shall pay all such
costs and expenses to the extent caused by Builder or its contractors,
subcontractors, employees, or agents.
 
 
 
101

 
 
 
3.7.2 Non-Government Warranty Period. Developer warrants (“Non-Government
Warranty”) to each Builder that each Improvement to which a Governmental
Warranty Period does not apply shall have been constructed in accordance with
the Plans for one (1) year from the date of Substantial Completion of the
applicable Improvement (the “Non-Government Warranty Period”). If the Builders
deliver written notice to Developer of breach of the Non-Government Warranty
during the Non-Government Warranty Period, then Developer shall coordinate the
corrections with the Builders and cause the Service Provider(s) who performed
the applicable work or supplied the applicable materials to complete such
corrections or, if such Service Providers fail to make such corrections,
otherwise cause such corrections to be made. Any costs and expenses incurred in
connection with a breach of the Non-Government Warranty that cause the Budgeted
Costs to be exceeded shall be borne by Developer (including, but not limited to,
any costs or expenses incurred to enforce any warranties against Service
Providers), and shall be included in the Constructing Party Cost Overruns,
unless such breach was caused by a Builder or its contractors, subcontractors,
employees, or agents, in which event the Builder shall pay all such costs and
expenses to the extent caused by the Builder or its contractors, subcontractors,
employees, or agents. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 3.7.1 OR 3.7.2,
THE DEVELOPER PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND TO
BUILDER IN RELATION TO THE IMPROVEMENTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF HABITABILITY, MERCHANTABILITY, OR FITNESS
FOR ANY PARTICULAR PURPOSE, AND EXPRESSLY DISCLAIMS ALL OF THE SAME AND SHALL
HAVE NO OBLIGATION TO REPAIR OR CORRECT ANY DEFECT IN IMPROVEMENTS FOR WHICH NO
CLAIM IS ASSERTED DURING THE APPLICABLE WARRANTY PERIOD. The preceding sentence
does not affect, alter or modify any Service Provider’s obligations to repair or
correct any defects in Improvements and shall not be construed as a limitation
on the Builders’ statutory rights or remedies, if any, which may not be modified
by contract.
 
3.8 Liens. Developer shall pay, or cause to be paid, when due, all liens and
claims for labor and/or materials furnished for the construction of the
Improvements pursuant to this Agreement to prevent the filing or recording by
any third party of any mechanics’, materialmen’s or other lien, stop notice or
bond claim or any attachments, levies or garnishments (collectively “Liens”)
involving the Improvements.
 
4. Costs of Improvements.
 
4.1 Definition of Costs. As used herein, the term “Costs” shall mean all hard
and soft costs incurred in connection with the design (including all engineering
expenses), construction and installation of the Improvements, including, but not
limited to, costs of labor, materials and suppliers, engineering, design and
consultant fees and costs, blue printing services, construction staking,
demolition, soil amendments or compaction, any processing, plan check or permit
fees for the Improvements, engineering services required to obtain a permit for
and complete the Improvements, costs of surety and compliance with all
applicable laws, costs of insurance required by this Agreement, costs of any
financial assurances, any corrections, changes or additions to work required by
the Approving Authorities or necessitated by site conditions, municipal, state
and county taxes imposed in connection with construction of the Improvements,
any warranty work, and any other costs incurred in connection with the
performance of the obligations of Developer or the Substitute Constructing Party
(as applicable) hereunder to complete the Improvements.
 
 
 
102

 
 
 
4.2 Budget. Upon completion of the Plans there will be attached hereto by an
amendment as Exhibit D an estimate of the Costs to construct the Improvements
(the “Budget”). The Costs identified on the Budget are referred to herein as
“Budgeted Costs.” The Builders shall pay or cause to be paid pursuant to
Article 6 below a share of the Budgeted Costs not to exceed One Million Two
Hundred Thousand Dollars ($1,200,000.00) (the “Maximum Builder Costs”).
 
4.3 Cost Overruns. Notwithstanding anything in this Agreement to the contrary,
the Developer shall pay (i) all costs to correct any error or defect in the
Plans that cause the Costs to exceed the Maximum Builder Costs, and (ii) all
other costs and charges that cause the Costs to exceed the Maximum Builder Costs
(collectively, the “Constructing Party Cost Overruns”). The Builders shall not
have any responsibility for Constructing Party Cost Overruns except that the
applicable Builder shall pay for such Constructing Party Cost Overruns which
occur as a result of that Builder’s breach of its obligations under this
Agreement or such Builder’s actions.
 
4.4 Accounting. Developer shall keep good and accurate books and records in
sufficient detail to allow the Costs to be calculated, which books and records
shall be made available for review (upon reasonable prior written notice) by the
Parties. Within thirty (30) days after Substantial Completion of the
Improvements, the Developer shall deliver to the Builders a reasonably detailed
final accounting of the Costs.
 
4.5 Progress Reports. Developer shall, no less frequently than once per calendar
quarter, provide the Builders with a progress report setting forth the amount of
Costs expended to date, a list of Improvements completed to date, and an
estimate by a project manager of Developer of the status of overall completion
of the Improvements, in such form as Developer deems reasonably appropriate.
 
5. Payment of Costs.
 
5.1 Payment.
 
5.1.1 Payment. The Builders shall pay to Developer in the aggregate an amount
equal to the Maximum Builder Costs. Each Builder shall pay a prorata portion of
the Maximum Builder Costs that is equal to a percentage of the Maximum Builder
Costs that is calculated by dividing the number of Builder Lots to be purchased
by a Builder under the terms of that Builder’s Purchase Agreement by the total
number of Builder Lots to be purchased by all of the Builders in the first phase
of the Development under the terms of all of the Purchase Agreements. Based upon
this calculation, each Builder’s prorata share of the Maximum Builder Cost
expressed as a percentage (“Prorata Share”) is as follows, subject to adjustment
if the total number or any Builder’s number of Builder Lots changes as provided
in Section 16.3 hereof:
 
 
 
103

 
 
 
 
 
# of Lot to be Purchased 
Total # of Lots in Development
Percentage
Richmond:
196
506
38.70%
Taylor Morrison:
161
506
31.80%
Additional Builder:
149
506
29.50%

 
 
Notwithstanding the foregoing or anything else to the contrary contained in this
Agreement, and for the avoidance of doubt, the Parties acknowledge and agree
that in no event will the amount due from any individual Builder exceed the
dollar amount equal to the product of (a) $1,200,000.00 multiplied by (b) such
Builder’s Percentage shown in the table above.
 
5.1.2  Escrow Instruction. Within ten (10) business days after substantial
completion of the Builder Lots to be acquired by a Builder at its first Closing
under its Purchase Agreement, each Builder shall pay its Prorata Share of that
portion of the Maximum Builder Costs equal to $750,000 to Escrow Agent (the
“Initial Payment”). On or before the date that is two hundred seventy (270) days
after the Phase 1 Substantial Completion Date, each Builder shall pay to Escrow
Agent its Prorata Share of (a) the lesser of the remaining portion of the
Maximum Builder Costs equal to $450,000, or (b) the remaining portion of the
Budgeted Costs (the “Final Payment”). For the purposes of this Agreement,
Developer shall be deemed an Additional Builder with respect to the Pro Rata
Share allocated above to the Additional Builder and its obligations hereunder
and Developer shall pay the Additional Builder’s Prorata Share of the Initial
Payment at the first closing of lots under a Purchase Agreement and pay the
Final Payment on or before the date required above. If a Builder’s Purchase
Agreement terminates before such Builder has closed on the purchase of any
Builder Lots thereunder, then Developer will fund such Builder’s Prorata Share
to the extent required so that there is not a shortfall in the Initial Payment
or Final Payment required hereunder. When another builder executes a joinder to
this Agreement, the Additional Builder shall be substituted for Developer as the
Additional Builder and shall be responsible for paying the Pro Rata Share of the
Initial Payment and the Final Payment allocated to the Additional Builder and
the obligations of a Builder hereunder and Developer will be reimbursed from
such payments for any Initial Payment or Final Payment made by Developer. Escrow
Agent has executed this Agreement in order to reflect its agreement with regard
to the Escrowed Funds under this Section 5. Pursuant to the request of Developer
and the Builders, Escrow Agent agrees to receive and accept the Initial Payment
and the Final Payment (collectively the “Escrowed Funds”) upon and subject to
the remaining terms and conditions hereof. Developer (or the Substitute
Contracting Party who has been appointed pursuant to Section 3.6.1) is entitled
to draw upon the Escrowed Funds for reimbursement of invoices for Costs incurred
by Developer (or the Substitute Contracting Party) in connection with the
completion of the Improvements. In the event that a Substitute Contracting Party
is appointed pursuant to Section 3.6.1, Developer and such Substitute
Contracting Party shall promptly give notice thereof to the Escrow Agent and
such Substitute Contracting Party shall thereafter have the rights of the
Developer under this Section 5.1.2 in connection with Draw Requests to pay for
Costs incurred by such Substitute Contracting Party to complete the construction
of the Improvements. The Escrow Agent shall disburse amounts from the Escrowed
Funds in accordance with the following instructions. To the extent that any
Builder’s Purchase Agreement has be terminated at the time any payment is due
pursuant to this Section, Developer will make such Builder’s payment, subject to
reimbursement from a New Builder as herein after defined:
 
 
 
104

 
 
 
 
(a) Submission and Payment. Developer may submit written draw requests (“Draw
Requests”) to the Builders and Escrow Agent from time to time. Draw Requests
must be accompanied by (i) copies of invoices from the third party contractors
and other Service Providers for the amounts to be disbursed and (ii) shall
include conditional lien waivers and releases from Service Providers relating to
work to paid for from the current Draw Request, and to the extent not previously
provided, unconditional waivers and releases from such Service Providers in the
full amount shown on all conditional waivers and releases previously submitted
in connection with prior Draw Requests for which payment has been made
hereunder.
 
(b) Objection. Any portion of a Draw Request that a Builder does not disapprove
by written notice to Developer and Escrow Agent within five (5) business days
following receipt thereof will be deemed approved. Builders may only object to a
Draw Request for the following reasons: (a) the invoices to accompany the Draw
Request were not properly delivered; or (b) Builder has good cause to dispute
the validity of the invoice; or (c) the invoice is not for Costs incurred by
Developer in connection with the construction of the Improvements. Builders
shall deliver written notice of any objection (“Objection Notice”) pursuant to
the preceding sentence to Escrow Agent and Seller within the five (5) business
day period described in the first sentence of this Section. If Escrow Agent and
Seller timely receive an Objection Notice, then Escrow Agent shall not be
authorized to disburse such disputed amount to Developer (but Escrow Agent shall
be authorized to disburse all other non-disputed amounts to Developer) unless
and until Escrow Agent receives authorization to do so from the Parties. If
Escrow Agent and Developer timely receive an Objection Notice, then Builder and
Seller shall promptly meet and in good faith attempt to resolve all objections
and provide direction to Escrow Agent to disburse mutually-acceptable amounts to
the Developer. Any Objection Notice shall specifically identify the amount of
the requested payment to which the objection applies and the basis for such
objection. No Objection Notice shall be valid if it does not identify specific
objections.
 
(c) Final Disbursement. Upon Substantial Completion of the Improvements,
Developer will submit a Completion Notice to Escrow Agent and the Builders along
with a final Draw Request (which shall include an unconditional lien waiver from
all Service Providers, to the extent not previously provided) with respect to
any funds remaining in the Escrow Account. If Escrow Agent is not in possession
of an unresolved Objection Notice, then Escrow Agent will pay any undisbursed
portion of the Escrow Funds then remaining in escrow to Developer. If Escrow
Agent receives an Objection Notice from a Builder in accordance with this
pertaining to Developer’s final Draw Request, the Escrow Agent may hold such
undisbursed Escrow Funds until it receives joint written instructions from
Developer and such Builder directing Escrow Agent regarding the disbursement of
such amount, or Escrow Agent may proceed as permitted by the General Provisions
to this Agreement attached as Attachment 1 hereto.
 
(d) If the Developer and Builders are unable to agree upon a resolution of an
Objection Notice within five (5) days after Developer’s receipt thereof, then
any dispute related to such Objection Notice shall be submitted to the expedited
dispute resolution procedures in accordance with Section 6 below.
 
 
 
105

 
 
 
 
(e) Developer shall pay all charges of Escrow Agent in acting hereunder, and
such reasonable attorneys' fees, expenses and other costs as may be incurred by
Escrow Agent in connection with the negotiation, preparation and administration
of this Agreement.
 
6. Expedited Dispute Resolution.
 
6.1 Disputes Related to Contracts, Draw Notices and Costs. Notwithstanding
anything to the contrary herein, disputes related to any objections to
Contracts, determination of Substantial Completion, Draw Notices or the amount
of or responsibility for Constructing Party Cost Overruns (“Expedited Disputes”)
shall all be resolved by CVL Engineers – Melinda Lundquist or if such party is
not available or unwilling to serve as arbitrator, another reputable third party
licensed engineer selected by Developer and approved by Builders (“Informal
Arbitrator”). Within five (5) business days after a Party delivers a Dispute
Notice to all Parties, the Developer and the Builder or Builders involved in the
Expedited Dispute shall deliver to the Informal Arbitrator a written statement
of how such Party believes the Expedited Dispute should be resolved, together
with reasonable supporting documentation of such position (“Resolution Notice”).
Within ten (10) business days after receipt of Resolution Notices from both such
Parties, the Informal Arbitrator shall approve one (1) of the Parties’
Resolution Notice and shall deliver written notice of such approval to each
Party. The decision of the Informal Arbitrator shall be binding on all Parties
with respect to the applicable Expedited Dispute. All Parties shall timely
cooperate with the Informal Arbitrator in rendering his or her decision. The
Party that is not the prevailing party in the resolution of any Expedited
Dispute shall promptly pay the Informal Arbitrator’s fee, and the prevailing
party’s other fees and costs of any such expedited dispute resolution process
and reasonable attorney’s fees. The term “prevailing party” means the party who
successfully obtains substantially all of the relief sought by such party or is
successful in denying substantially all of the relief sought by the other party.
The Parties acknowledge that there is a benefit to the Parties in having work
done as expeditiously as possible and that there is a need for a streamlined
method of making decisions described in this Section so that work is not
delayed. A Party shall not be entitled to recover from any other Party
exemplary, punitive, special, indirect, consequential or any other damages other
than actual damages (unless the Informal Arbitrator finds intentional abuse or
frustration of the arbitration process) in connection with an Expedited Dispute.
 
6.2 Standards of Conduct. The Parties agree that with respect to all aspects of
the expedited dispute resolution process contained herein they will conduct
themselves in a manner intended to assure the integrity and fairness of that
process. To that end, if an Expedited Dispute is submitted to expedited dispute
resolution process, the Parties agree that they will not contact or communicate
with the Informal Arbitrator who was appointed with respect to any Expedited
Dispute either ex parte or outside of the contacts and communications
contemplated by this Section 6, and the Parties further agree that they will
cooperate in good faith in the production of evidence in a prompt and efficient
manner to permit the review and evaluation thereof by the other Parties.
 
7. Progress Meetings. From and after the date of this Agreement and until
Substantial Completion of the Improvements, the Parties shall cause their
designated representatives to meet within five (5) business days following a
request from a Party regarding the status of construction of the Improvements,
scheduling and coordination issues, engineering and design issues, and other
similar issues. Any Party may change its designated representative under this
Agreement at any time by written notice to the other parties. The initial
designated representative for each Party for the purpose of this Section shall
be the individual listed on each Party’s respective signature page attached
hereto. All inquiries, requests, instructions, authorizations, and other
communications with respect to the matters covered by this Agreement shall be
made to such representatives. Any Party may without further or independent
inquiry, assume and rely at all times that the representatives of the other
parties designated hereunder have the power and authority to make decisions on
behalf of such other parties, to communicate such decisions to the other Party
and to bind such Party by his acts and deeds, unless otherwise notified in
writing by the Party designating the representative. Any Party may change its
representative under this Agreement at any time by written notice to the other
Parties.
 
 
 
106

 
 
 
8. Developer’s Stormwater Permit responsibilities. Developer shall obtain and
comply with all necessary permits related to stormwater and erosion control from
all Approving Authorities, in relation to the construction, repair, and
maintenance of the Improvements.
 
9. Notices and Communications. All notices, statements, demands, requirements,
approvals or other communications and documents (“Communications”) required or
permitted to be given, served, or delivered by or to any Party or any intended
recipient under this Agreement shall be in writing and shall be given to the
addresses set forth in this Section 9 (“Notice Address”). Communications to a
Party shall be deemed to have been duly given (i) on the date and at the time of
delivery if delivered personally to the Party to whom notice is given at such
Party’s Notice Address; or (ii) on the date and at the time of delivery or
refusal of acceptance of delivery if delivered or attempted to be delivered by
an overnight courier service to the Party to whom notice is given at such
Party’s Notice Address; or (iii) on the date of delivery or attempted delivery
shown on the return receipt if mailed to the Party to whom notice is to be given
by first-class mail, sent by registered or certified mail, return receipt
requested, postage prepaid and properly addressed to such Party at such Party’s
Notice Address; or (iv) on the date and at the time shown on the facsimile or
electronic mail message if telecopied or sent electronically to the number or
address designated in such Party’s Notice Address and receipt of such telecopy
or electronic mail message is electronically confirmed (provided, however, any
notice of default from Developer to Builder may not be delivered by electronic
mail message and must be delivered by facsimile or other delivery method set
forth above). The Notice Addresses for the Developer and Builder are as follows:
 
To Developer:
PCY Holdings, LLC
Attention: Mark Harding
34501 E. Quincy Ave.
Bldg. 34, Box 10
Watkins, Colorado 80137
Telephone: (303) 292-3456
Facsimile: (303) 292-3475
E-mail: mharding@purecyclewater.com
 
with a copy to:
Fox Rothschild LLP
1225 17th Street, Suite 2200
Denver, CO 80202
Attention: Rick Rubin, Esq.
Telephone: (303) 292-1200
Email: rrubin@foxrothschild.com
 
 
 
107

 
 
 
To Richmond:
Linda Purdy
Richmond American Homes of Colorado, Inc.
4350 South Monaco Street
Denver, Colorado 80237
Telephone: (720)-977-3847
Facsimile: (720) 977-4707
Email: linda.purdy@mdch.com
 
with a copy to:
M.D.C. Holdings, Inc.
4350 South Monaco Street
Denver, Colorado 80237
Attn: Drew Rippey
Telephone: (720) 977-3213
Facsimile: (720) 482-8558
Email: Drew.Rippey@mdch.com
 
M.D.C. Holdings, Inc.
4350 S. Monaco Street
Denver, CO  80237
Attn:                      Linda Zimmerman Skultety
Senior Paralegal – Real Estate
Telephone:  720-977-3254
Facsimile: 303-488-4954
Email: Linda.Skultety@mdch.com
 
To Taylor Morrison:
Taylor Morrison of Colorado, Inc.
1420 West Canal Court, Suite 170
Littleton, Colorado 80120
Attention: Phillip Cross
Telephone: (303) 325-2426
E-mail: pcross@taylormorrison.com
 
With copy to Phillip Cross at same address
E-mail: pcross@taylormorrison.com
 
with a copy to:                                
Brier, Irish, Hubbard & Erhart P.L.C.
2400 East Arizona Biltmore Circle, Suite 1300
Phoenix, AZ 85016
Attn: Jeff Hubbard
Telephone: (602) 522-0160
Facsimile: (602) 522-3945
E-mail: jhubbard@bihlaw.com
 
With copy to Tony Meier at same address
E-mail: tmeier@bihlaw.com
 
 
108

 
 
 
If to Escrow Agent:
 
Land Title Guarantee Company
Attn: ____________________
3033 E. 1st Ave. #600
Denver, Colorado 80206
Fax#: 303-393-4959
Direct: 303-_______________
                                            Email: ___________@ltgc.com
 
10. Attorneys’ Fees. Except as provided in Section 6.1, should any action be
brought in connection with this Agreement including, without limitation, actions
based on contract, tort or statute, the prevailing Party in such action shall be
awarded all costs and expenses incurred in connection with such action,
including reasonable attorneys’ fees. The provisions of this Section shall
survive the expiration or termination of this Agreement.
 
11. Further Acts. Each of the Parties hereto shall execute and deliver all such
documents and perform all such acts as reasonably necessary, from time to time,
to carry out the matters contemplated by this Agreement.
 
12. No Partnership; Third Parties. It is not intended by this Agreement to, and
nothing contained in this Agreement shall, create any partnership, joint venture
or other arrangement among the Parties hereto. No term or provision of this
Agreement is intended to, or shall, be for the benefit of any person, firm,
organization or corporation not a Party hereto, and no such other person, firm,
organization or corporation shall have any right or cause of action hereunder.
 
13. Entire Agreement; Headings for Convenience Only; Not to be Construed Against
Drafter; No Implied Waiver. This Agreement and all other written agreements
among the Parties constitute the entire agreement among the Parties hereto
pertaining to the subject matter hereof. No change or addition is to be made to
this Agreement except by written amendment executed by the Parties. The
headings, captions and titles contained in this Agreement are intended for
convenience of reference only and are of no meaning in the interpretation or
effect of this Agreement. This Agreement shall not be construed more strictly
against one (1) Party than another merely by virtue of the fact that it may have
been initially drafted by one (1) of the Parties or its counsel, since all
Parties have contributed substantially and materially to the preparation hereof.
No failure by a Party to insist upon the strict performance of any term,
covenant or provision contained in this Agreement, no failure by a Party to
exercise any right or remedy under this Agreement, and no acceptance of full or
partial payment owed to a Party during the continuance of any default by the
other Party(ies), shall constitute a waiver of any such term, covenant or
provision, or a waiver of any such right or remedy, or a waiver of any such
default unless such waiver is made in writing by the Party to be bound thereby.
Any waiver of a breach of a term or a condition of this Agreement shall not
prevent a subsequent act, which would have originally constituted a default
under this Agreement, from having all the force and effect of a default.
 
 
 
109

 
 
 
14. Governing Law. This Agreement is entered into in Colorado and shall be
construed and interpreted under the law of the State of Colorado without giving
effect to principles of conflicts of law which would result in the application
of any law other than the law of the State of Colorado.
 
15. Severability. If any provision of this Agreement is declared void or
unenforceable, such provision shall be severed from this Agreement and shall not
affect the enforceability of the remaining provisions of this Agreement.
 
16. Assignment; Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and
permitted assigns. Neither the Builders nor Developer may assign any of their
rights or obligations under this Agreement without the prior written consent of
the other Party(ies), which consent may be withheld in each Party’s sole and
absolute discretion; provided, however, that:
 
16.1 A Builder may assign, without consent, its rights under this Agreement in
full, but not in part: (i) to a third party which acquires some or all of
Builder’s Builder Lots, or (ii) to an entity that controls, is controlled by, or
under common control with, Builder; provided further, however that Developer
approves the form of assignment, which approval shall be in Developer’s
reasonable discretion; and
 
16.2 Developer may assign, without consent (but with prior notice to Builder),
its rights under this Agreement: (i) to an entity that controls, is controlled
by, or under common control with, Developer; (ii) to any entity that acquires
all or substantially all of the Developer’s interests in the Builder Lots which
Seller reasonably believes has the financial ability and experience to perform
Seller’s obligations under this Agreement.
 
16.3 Notwithstanding the foregoing, to the extent that any Builder identified
herein does not acquire all of the Builder Lots to be acquired pursuant to its
Purchase Agreement, the Developer shall have the right to unilaterally amend
this Agreement by having any other builder (each a “New Builder”) which
contracts to acquire any of the Builder Lots from Developer to execute a joinder
to this Agreement which shall set forth a Prorata Share for such New Builder as
calculated pursuant to Section 5.1.1 hereof and in the form attached as Exhibit
E.
 
17. Counterparts; Copies of Signatures. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one (1) and the same instrument. The signature
pages from one (1) or more counterparts may be removed from such counterparts
and such signature pages all attached to a single instrument so that the
signatures of all Parties may be physically attached to a single document. This
Agreement may be executed and delivered by facsimile or by electronic mail in
portable document format (.pdf) or similar means and delivery of the signature
page by such method will be deemed to have the same effect as if the original
signature had been delivered to the other party. Upon execution of this
Agreement by Developer and the Builders, Developer shall provide a fully
executed copy of this Agreement to each Builder for its records.
 
 
 
110

 
 
 
18. Time of the Essence. Time is of the essence for performance or satisfaction
of all requirements, conditions, or other provisions of this Agreement, subject
to any specific time extensions set forth herein.
 
19. Computation of Time Periods. All time periods referred to in this Agreement
shall include all Saturdays, Sundays and holidays, unless the period of time
specifies business days. If the date to perform any act or give a notice with
respect to this Agreement shall fall on a Saturday, Sunday or national or state
holiday, the act or notice may be timely performed on the next succeeding day
which is not a Saturday, Sunday or a national or state holiday.
 
20. Remedies. Except as hereinafter provided with regard to Expedited Disputes
and the self-help remedy under Section 3.6, if any Party is in default of any of
its obligations under this Agreement beyond any applicable notice or cure
periods, the other Party(ies) may avail itself to any rights and remedies
available at law and equity, but may only recover its actual, out-of-pocket
damages (excluding any incidental, consequential, speculative, punitive or lost
profits damages) incurred as a result of such default. For Expedited Disputes,
the sole and exclusive remedy of the Parties is set forth in Section 6 of this
Agreement, and for Developer Defaults, the sole and exclusive remedy of the
Parties is set forth in Section 3.6 of this Agreement.
 
21. Jury Waiver. TO THE EXTENT PERMITTED BY LAW, THE PARTIES HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE
PROVISIONS OF THIS AGREEMENT.
 
[SIGNATURE PAGE FOLLOWS]
 
 
 
111

 
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date first set forth above.
 
DEVELOPER:
 
PCY HOLDINGS. LLC,
a Colorado limited liability company
 
 
By:           ___________________________________
Name:                      ___________________________________
Title:                      ___________________________________
 
 
 
 
Designated Representative:
______________________________________________________
 
 
 
 
 
 
ESCROW AGENT:
 
Land Title Guarantee Company
 
By:            
___________________________________
Name:                       
___________________________________
Title:                       
___________________________________
 
 
 
 
112

 
BUILDER:
 
Richmond American Homes of Colorado, Inc.,
a Delaware corporation
 
By:           ___________________________________
Name:                      ___________________________________
Title:                      ___________________________________
 
Designated Representative:    

_____________________________________________________
 
 
 
 
BUILDER:
 
Taylor Morrison of Colorado, Inc.,
a Colorado corporation
 
By:           ___________________________________
Name:                      ___________________________________
Title:                      ___________________________________
 
 
Designated Representative:  

_____________________________________________________
 
 
 
 
 
113

 
Exhibit A
to
Amenity Development Agreement
Showing Central Park, North Park and South Park
 
 
 
[pcyo_ex103001.jpg]
 
 
 
 
 
 
114

 
Exhibit B
to
Amenity Development Agreement
 
(Improvements and Plans)
 
[pcyo_ex103002.jpg]
 
 
115

 
[pcyo_ex103003.jpg]
 
116

 
[pcyo_ex103004.jpg]
 
 
117

 
Exhibit C
to
Amenity Development Agreement
 
(Required Insurance)
 
Developer or the Substitute Constructing Party (as applicable) shall maintain
the amounts and types of insurance described below and shall cause the Service
Providers to maintain such coverages from insurance companies licensed to do
business in the State of Colorado having a Best’s Insurance Report Rating of
A/VI or better covering the risks described below:
 
A.            
Commercial General Liability Insurance (including premises, operations,
products, completed operations, and contractual liability coverages) in an
amount not less than One Million Dollars ($1,000,000.00) per occurrence, One
Million Dollars ($1,000,000.00) personal injury and advertising injury, and Two
Million Dollars ($2,000,000.00) General Aggregate.
 
B.            
Automobile Liability Insurance for all motor vehicles operated by or for
Developer or Substitute Constructing Party, including owned, hired, and
non-owned autos, with minimum Combined Single Limit for Bodily Injury and
Property Damage of One Million Dollars ($1,000,000.00) for each occurrence.
 
C.            
Workers Compensation Insurance for all employees of Developer or Substitute
Constructing Party as required by law, to cover the applicable statutory limits
in the State of Colorado and employer’s liability insurance with limits of
liability of not less than One Million Dollars ($1,000,000.00) for bodily injury
by accident (each accident) and One Million Dollars ($1,000,000.00) for bodily
injury by disease (each employee).
 
D.            
With respect to Service Providers that provide professional services (e.g.,
engineers), professional liability insurance, including prior acts coverage
sufficient to cover any and all claims arising out of the services, or a
retroactive date no later than the date of commencement of the services, with
limits of not less than One Million Dollars ($1,000,000.00) per claim and Two
Million Dollars ($2,000,000.00) annual aggregate. The professional liability
insurance shall be maintained continuously during the term of the Agreement and
so long as the insurance is commercially reasonably available, for a period not
less than the Government Warranty Period. The professional liability insurance
required by this paragraph shall not contain any exclusions or limitations
applicable to residential projects.
 
The following general requirements shall apply to all insurance policies
described in this Exhibit.
 
1.            
All liability insurance policies, except workers compensation insurance, shall
be written on an occurrence basis.
 
 
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2.            
All insurance policies required hereunder except Workers Compensation and
Employers Liability shall: (i) name the Parties as “additional insureds”
utilizing an ACORD form or equivalent acceptable to Developer or Substitute
Constructing Party (as applicable), excluding, however, insurance policies of
Service Providers who provide professional services whose insurance policies do
not permit the designation of additional insureds; (ii) be issued by an insurer
authorized in the State of Colorado; and (iii) provide that such policies shall
not be canceled or not renewed, nor shall any material change be made to the
policy without at least thirty (30) days’ prior written notice to the Parties.
Each additional insured endorsement (or each policy, by reasonably acceptable
endorsement) shall contain a primary insurance clause providing that the
coverage afforded to the additional insureds is primary and that any other
insurance or self-insurance available to any of the additional insureds is
non-contributing. A waiver of subrogation endorsement for the workers’
compensation coverage shall be provided in favor of the Parties.
 
3.            
The liability insurance policies shall provide that such insurance shall be
primary on a non-contributory basis.
 
4.            
Service Providers shall provide Developer or Substitute Constructing Party (as
applicable) with certificates, or copies of insurance policies if request by the
Developer, evidencing the insurance coverages required by this Exhibit in the
certificate form described in Item 2 of this Exhibit, prior to the commencement
of any activity or operation which could give rise to a loss to be covered by
such insurance. Replacement certificates shall be sent to Developer or
Substitute Constructing Party (as applicable), as policies are renewed,
replaced, or modified.
 
5.            
The foregoing insurance coverage must be maintained in force at all times during
the construction of the Improvements.
 
 
 
 
119

 
Exhibit D
to
Amenity Development Agreement
 
(Budget)
 
[pcyo_ex103005.jpg]
 
120

 
Exhibit E
to
Amenity Development Agreement
 
JOINDER BY BUILDER
 
THIS JOINDER TO AMENITY DEVELOPMENT AGREEMENT (this “Joinder”), dated as of
_________________, 201___ (the “Joinder Date”), is made by
_____________________________________________________ (“Purchaser”), for the
benefit of PCY Holdings, LLC, a Colorado limited liability company (“PCY”) and
each other Builder that is a party to that Amenity Development Agreement dated
_______________, 201__.
 
WHEREAS, PCY, as seller, and Purchaser, as purchaser, are parties to that
certain Contract for Purchase and Sale of Real Estate (Sky Ranch) dated
___________, 201__ (as amended and assigned from time-to-time, the “Purchase
Agreement”), with respect to the sale of certain residential building lots
located within the Sky Ranch Development in Arapahoe County, Colorado, and
 
WHEREAS, PCY has agreed to construct certain park amenities and improvements for
the benefit of the lots identified under the Purchase Agreement to be funded as
provided in the Amenity Development Agreement. PCY and Purchaser desire that
Purchaser become a party to the Amenity Development Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, PCY and Purchaser hereby agree as follows:
 
1.            
Any capitalized terms not defined in this Joinder shall have the meanings
ascribed thereto in the Amenity Development Agreement, which is hereby
incorporated by reference.
 
2.            
By execution of this Joinder, Purchaser becomes a party to the Amenity
Development Agreement for all purposes and shall be entitled to exercise all of
the rights, and subject to all of the obligations, of the Additional Builder
thereunder. Purchaser shall pay the Additional Builder’s
 
 
 
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Prorata Share of the Initial Payment and the Final Payment as required by the
terms of the Amenity Development Agreement.
 
3.            
This Joinder shall inure to the benefit of the Builders and their successors and
assigns under the Amenity Development Agreement.
 
IN WITNESS WHEREOF, Purchaser has executed this Joinder as of the Joinder Date.
 
___________________________________,
a __________________________________
 
 
By:           
 
Name:                      
 
Title:                      
 
122

 
ATTACHMENT 1
to
Amenity Development Agreement
 
LAND TITLE GUARANTEE COMPANY Initials _______
GENERAL PROVISIONS TO THE ESCROW AGREEMENT Initials _______
 
1.
Notices.
 
Any notices required or permitted to be given under the Escrow Agreement shall
have been deemed to have been served:
 
i.
one business day after the notice is hand delivered with proof of receipt by the
addressee, or
 
ii.
one business day after transmission by facsimile evidencing confirmation of
receipt by the receiving facsimile machine, or
 
iii.
one business day after transmission by email evidencing confirmation of receipt
by the receiving email address, or
 
iv.
if reputable overnight courier (such as United Parcel Service or Federal
Express) is used, on the immediately following business day after notice is sent
for overnight delivery, or
 
v.
if the United States Mail is used, on the third business day after the notice is
deposited in the United States Mail, postage prepaid;
 
Provided in each case such notice is addressed to the parties at the addresses
given on the first page of this Escrow Agreement.
 
2.
Reliance on Notice.
 
Escrow Agent may act in reliance upon any writing or instrument or signature
which Escrow Agent, in good faith, believes to be genuine, and may assume the
validity and accuracy of any statement or assertion contained in such a writing
or instrument, and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized so to do.
 
3.
Laws Relating to Unclaimed Funds.
 
Seller and Buyer are hereby advised that unclaimed funds may be payable to the
State at some future date pursuant to unclaimed property laws, and should Escrow
Agent pay any such funds held in the Escrow Deposit, Escrow Agent shall be
released from all further responsibility under the Escrow Agreement and shall
not be liable to any Party so long as such payment was made pursuant to
applicable law.
 
4.
Escrow Deposit and Interest Earned on Escrow Deposit
 
a.
In the event that the Escrow Deposit consists partly or entirely of money, then
during the period the Escrow Agent is in possession of the Escrow Deposit, the
money will be deposited in an FDIC insured institution (the "Institution").
 
b.
Upon receipt of written direction of the parties along with a completed W-9,
funds will be invested in an interest bearing account.
 
c.
Deposits of $100,000.00 or more may be directed by the parties hereto to other
types of investments, or the Escrow Agent may invest the Escrow Deposit in
Repurchase Agreements for U.S. Treasury obligations or other Federal agency
issued securities.
 
d.
Escrow Agent shall not be responsible for maximizing the yield on the Escrow
Deposit. Under no circumstances shall Escrow Agent be liable for loss of funds
due to bank or other Institution failure, including employees or agents thereof,
suspension or cessation of business, or any action or inaction on the part of
the bank or other institution, or any delivery service transporting funds to and
from the institution.
 
e.
All parties hereto shall execute and deliver to Escrow Agent all forms required
by federal, state or other governmental agencies relative to taxation matters
and Escrow Agent will file appropriate 1099 or other required forms.
 
5.
Fees and Expenses of Escrow Agent.
 
a.
The Escrow Agent shall be entitled to reimbursement in full, or may demand
payment in advance, for all costs, expenses, charges, fees or other payments
made or to be made by Escrow Agent in the performance of Escrow Agent's duties
and obligations under the Escrow Agreement.
 
b.
The parties to the Escrow Agreement are jointly and severally liable for the
payment to Escrow Agent of all fees and expenses. Escrow Agent is hereby
authorized and directed to reimburse to itself in payment of fees or expenses
from any funds in the Escrow Deposit, whether from principal or interest or
both, at any time, and from time to time, as the same may be due and owing.
 
c.
Escrow Agent is hereby authorized to withhold any fees or expenses from any
disbursement or distribution of Escrow Deposit to any Party hereto or to the
Clerk of the Court upon interpleader.
 
d.
In the event that the Escrow Deposit shall consist of documents only and not
funds, Escrow Agent may refuse to distribute any such documents or to otherwise
act under this Agreement until all accrued but unpaid fees and expenses have
been paid in full.
 
6.
Non-liability of Escrow Agent.
 
a.
Escrow Agent shall not be liable for any mistakes of fact, or errors of
judgment, or for any acts or omissions of any kind unless caused by the willful
misconduct or gross negligence of Escrow Agent.
 
b.
Escrow Agent shall not be liable for any taxes, assessments or other
governmental charges which may be levied or assessed upon the Escrow Deposit or
any part thereof, or upon the income therefrom.
 
 
 
123

 
 
 
c.
Escrow Agent may rely upon the advice of counsel and upon statements of
accountants, brokers or other persons reasonably believed by it in good faith to
be expert in the matters upon which they are consulted, and for any reasonable
action taken or suffered in good faith based upon such advice or statements
 
7.
Indemnity of Escrow Agent.
The Seller and Builders jointly and severally, agree to:
i.
indemnify Escrow Agent and hold it harmless as to any liability by it incurred
by the Escrow Agent to any other person or persons by reason of this Escrow
Agreement, or in connection herewith except for Escrow Agent's own willful
misconduct or gross negligence, and
ii.
reimburse Escrow Agent for all its expenses, including, but not necessarily
limited to attorneys' fees and court costs incurred in connection herewith.
8.
Request for Written Instructions.
a.
Escrow Agent may at any time, and from time to time, request the Seller and
Buyer to provide written instructions concerning the propriety of a proposed
payment of the Escrow Deposit, distribution of documents, or other action or
refusal to act by Escrow Agent.
b.
Should the Seller and Buyer fail to provide such written instructions within a
reasonable time, Escrow Agent may take such action, or refuse to act, as it may
deem appropriate and shall not be liable to anyone for such action or refusal to
act.
c.
Notwithstanding the foregoing, should the terms of the Escrow Agreement be
complied with, in the judgment of Escrow Agent, then the Escrow Agent may
disburse any funds, distribute documents, or take such action without specific
further written instructions from any Party.
9.
Disputes and Interpleader.
a.
In the event of any dispute between the Parties as to either law or fact, or in
the event any of the parties hereto fail, for any reason, to fully receipt and
acquit the Escrow Agent in writing, Escrow Agent may refuse, in its discretion,
to carry out said escrow instructions or to deliver any funds, documents, or
property in its hand to anyone and in so doing shall not become liable to
demand.
b.
Escrow Agent shall be entitled to continue, without liability, to refrain and
refuse to act:
i.
until all the rights of the adverse claimants have been finally adjudicated by a
court having jurisdiction over the Parties and the items affected hereby, after
which time the Escrow Agent shall be entitled to act in conformity with such
adjudication; or
ii.
until all differences shall have been adjusted by agreement and Escrow Agent
shall have been notified thereof and shall have been directed in writing signed
jointly or in counterpart by the parties and all persons making adverse claims
or demand, at which time Escrow Agent shall be protected in acting in compliance
therewith.
c.
Escrow Agent also has the right to interplead into a court of competent
jurisdiction at the expense of the Parties.
10.
Resignation of Escrow Agent.
a.
Escrow Agent may resign under this Agreement by giving written notice to all of
the parties hereto, effective 30 days after the date of said notice.
b.
Upon the appointment by the parties of a new Escrow Agent or custodian, or upon
written instructions to Escrow Agent for other disposition of the Escrow
Deposit, Escrow Agent shall, after retention of its accrued escrow fees and
expenses, if any, shall deliver the Escrow Deposit within a reasonable period of
time as so directed, and shall be relieved of any and all liability hereunder
arising thereafter.
11.
Applicable Law.
This Agreement shall be governed by the laws of the State of Colorado.
12.
Counterparts/Facsimile.
 
The Escrow Agreement may be executed in any number of counterparts, each of
which when so executed shall constitute the entire agreement between the Seller
and Buyer and may be executed in facsimile and such facsimile signature shall be
accepted as original signatures. The Seller and Buyer acknowledge and agree that
there are no intended or unintended third party beneficiaries who may rely upon
or benefit from the provisions of this agreement.
 
 
 
 
 
 
 
124