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Exhibit 10.25

PCY HOLDINGS, LLC

and

CHALLENGER DENVER, LLC

CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE

(Sky Ranch – Phase B)

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Table of Contents

1.
PURCHASE AND SALE.
2
2.
PURCHASE PRICE.
2
3.
PAYMENT OF PURCHASE PRICE.
3
4.
SELLER’S TITLE.
5

5.
SELLER OBLIGATIONS.
8
6.
PRE-CLOSING CONDITIONS.
12
7.
CLOSING.
14
8.
CLOSINGS; CLOSING PROCEDURES.
14
9.
SELLER’S DELIVERY OF TITLE.
17
10.
DUE DILIGENCE PERIOD; ACCEPTANCE OF PROPERTY; RELEASE AND DISCLAIMER.
18
11.
SELLER’S REPRESENTATIONS.
25
12.
PURCHASER’S OBLIGATIONS.
27
13.
FORCE MAJEURE.
29
14.
COOPERATION.
30
15.
FEES.
30
16.
WATER AND SEWER TAPS; FEES; AND DISTRICT MATTERS.
30
17.
HOMEOWNERS’ ASSOCIATION.
32
18.
REIMBURSEMENTS AND CREDITS.
33
19.
NAME AND LOGO.
34
20.
RENDERINGS.
34
21.
COMMUNICATIONS IMPROVEMENTS.
34
22.
SOIL HAULING.
35

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23.
SPECIALLY DESIGNATED NATIONALS AND BLOCKED PERSONS LIST.
35
24.
ASSIGNMENT.
36
25.
SURVIVAL.
36
26.
CONDEMNATION.
36
27.
BROKERS.
36
28.
DEFAULT AND REMEDIES.
36
29.
GENERAL PROVISIONS.
38

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DEFINITIONS

“35’ Alley Load Lots” shall have the meaning set forth in the Recitals.
“Additional Deposit” shall have the meaning set forth in Section 3(a).
“APS Mill Levy” shall have the meaning set forth in Section 4(d).
“Architectural Review Committee” shall have the meaning set forth in Section
12(d).
“ASP” shall have the meaning set forth in Section 5(a).
“ASP Criteria” shall have the meaning set forth in Section 12(d).
“Authorities” and “Authority” shall have the meaning set forth in the Recitals.
“BMPs” shall have the meaning set forth in Section 29(x).
“Board” shall have the meaning set forth in Section 16(a).
“Builder Designation” shall have the meaning set forth in Section 8(d)(ii)(7).
“CAB” shall have the meaning set forth in Section 4(d).
“CABEA” shall have the meaning set forth in Section 16(b).
“CDs” shall have the meaning set forth in Section 5(a).
“Closed” shall have the meaning set forth in Section 7.
“Closing Date” shall have the meaning set forth in Section 8(b).
“Closing” shall have the meaning set forth in Section 7.
“Communication Improvements” shall have the meaning set forth in Section 21.
“Communications” shall have the meaning set forth in Section 29(j).
“Confidential Information” shall have the meaning set forth in Section 29(bb).
“Continuation Notice” shall have the meaning set forth in Section 10(a).
“Contract” shall have the meaning set forth in the Preamble.
“County” shall have the meaning set forth in the Recitals.
“County Records” shall have the meaning set forth in Section 5(a).
“Dedications” shall have the meaning set forth in Section 17.
“Deferred Purchase Price” shall have the meaning set forth in Section 2(a).
“Deferred Purchase Price Deposit” shall have the meaning set forth in Section
5(c)(iv).
“Deposit” shall have the meaning set forth in Section 3(a).
“Design Guidelines” shall have the meaning set forth in Section 12(d).
“Development” shall have the meaning set forth in the Recitals.
“District” shall have the meaning set forth in Section 9(d).

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“District Documentation” shall have the meaning set forth in Section 4(d).
“District Improvements” shall have the meaning set forth in Section 16(a).
“Due Diligence Period” shall have the meaning set forth in Section 10(a).
“Easement” shall have the meaning set forth in Section 21.
“Effective Date” shall have the meaning set forth in the Preamble.
“Entitlements” shall have the meaning set forth in Section 5(a).
“Environmental Claim” shall have the meaning set forth in Section 10(h).
“Environmental Laws” shall have the meaning set forth in Section 10(g).
“EPA” shall have the meaning set forth in Section 10(c).
“Escalator” shall have the meaning set forth in Section 2(b).
“Feasibility Review” shall have the meaning set forth in Section 10(a).
“Filing” and “Filings” shall have the meaning set forth in the Recitals.
“Final Approval” shall have the meaning set forth in Section 5(a).
“Final Lotting Diagram” shall have the meaning set forth in Section 1.
“Final Plat” shall have the meaning set forth in Section 5(a).
“Finished Lot Improvements” shall have the meaning set forth in the Recitals.
“First Closing” shall have the meaning set forth in Section 1.
“Fourth Closing” shall have the meaning set forth in Section 1.
“Gallagher Adjustments” shall have the meaning set forth in Section 4(d).
“GDP” shall have the meaning set forth in Section 5(a).
“General Assignment” shall have the meaning set forth in Section 8(d)(ii)(9).
“Good Funds” shall have the meaning set forth in Section 2(a).
“Government Warranty Period” shall have the meaning set forth in Exhibit C.
“Governmental Fees” shall have the meaning set forth in Section 17.
“Governmental Warranty” shall have the meaning set forth in Exhibit C.
“Hazardous Materials” shall have the meaning set forth in Section 10(g).
“Homebuyer Disclosures” shall have the meaning set forth in Section 12(e).
“Homeowners’ Association” shall have the meaning set forth in Section 17.
“Homes”, “Houses”, and “Residences” (in the singular or plural)shall have the
meaning set forth in Section 12(d)(i).
“House Plans” shall have the meaning set forth in Section 12(d)(i).

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“IGA” shall have the meaning set forth in Section 16(c).
“Infrastructure Improvements” shall have the meaning set forth in Section 17.
“Initial Deposit” shall have the meaning set forth in Section 3(a).
“Initial Purchase Condition” shall have the meaning set forth in Section
6(a)(i).
“Initial Purchase Price” shall have the meaning set forth in Section 2(a).
“Interchange Condition” shall have the meaning set forth in Section 6(a)(ii).
“Interchange Upgrades” shall have the meaning set forth in Section 5(a)(iii).
“Joint Improvements” shall have the meaning set forth in Section 5(c)(ii).
“Joint Improvements Memorandum” shall have the meaning set forth in Section
5(c)(ii).
“Letter of Credit” shall have the meaning set forth in Section 5(c)(iv).
“Lien Affidavit” shall have the meaning set forth in Section 4(a).
“Lot” and “Lots” shall have the meaning set forth in the Recitals.
“Lot Development Agreement” shall have the meaning set forth in the Recitals.
“Lot Development Fee Schedule” shall have the meaning set forth in Section
16(a).
“Lotting Diagram” shall have the meaning set forth in the Recitals.
“Maintenance Declaration” shall have the meaning set forth in Section 17.
“Master Commitment” shall have the meaning set forth in Section 4(a).
“Master Covenants” shall have the meaning set forth in Section 4(d).
“Master Declaration” shall have the meaning set forth in Section 4(d).
“Maximum Mills Limitation” shall have the meaning set forth in Section 4(d).
“Metro District Payments” shall have the meaning set forth in Section 16(a).
“New Exception Objection” shall have the meaning set forth in Section 4(b).
“New Exception Review Period” shall have the meaning set forth in Section 4(b).
“New Exceptions” shall have the meaning set forth in Section 4(b).
“NOI” shall have the meaning set forth in Section 29(x).
“Non-Government Warranty Period” shall have the meaning set forth in Exhibit C.
“Non-Government Warranty” shall have the meaning set forth in Exhibit C.
“Non-Seller Caused Exceptions” shall have the meaning set forth in Section 4(b).
“NORM” shall have the meaning set forth in Section 10(c).
“OFAC” shall have the meaning set forth in Section 23.
“Other New Exceptions” shall have the meaning set forth in Section 4(b).

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“Overex” shall have the meaning set forth in Section 10(e).
“Owner’s Affidavit” shall have the meaning set forth in Section 4(a).
“Permissible New Exceptions” shall have the meaning set forth in Section 4(b).
“Permitted Exceptions” and “Permitted Exception” shall have the meaning set
forth in Section 9.
“PIF Covenant” shall have the meaning set forth in Section 9(e).
“Plat Certificate” shall have the meaning set forth in Section 4(a).
“Property” shall have the meaning set forth in the Recitals.
“Public Improvement District” or “PID” shall have the meaning set forth in
Section 4(d).
“Public Improvements” shall have the meaning set forth in Exhibit C.
“Purchase Price” shall have the meaning set forth in Section 2.
“Purchaser” shall have the meaning set forth in the Preamble.
“Purchaser Parties” shall have the meaning set forth in Section 10(i).
“Purchaser’s Conditions Precedent” shall have the meaning set forth in Section
6(b).
“Purchaser’s Geotechnical Reports” shall have the meaning set forth in Section
10(e).
“Purchaser’s SWPPP” shall have the meaning set forth in Section 29(x).
“Rangeview” shall have the meaning set forth in Section 16(a).
“Regional Improvements” shall have the meaning set forth in Section 4(d).
“Regional Improvements Authority” shall have the meaning set forth in Section
4(d).
“Regional Improvements Mill Levy” shall have the meaning set forth in Section
4(d).
“Representatives” shall have the meaning set forth in Section 29(bb).
“Reservations and Covenants” shall have the meaning set forth in Section
8(c)(ii)(1).
“SDF” shall have the meaning set forth in Section 16(d)(iii).
“SDP” shall have the meaning set forth in Section 5(a).
“Second Closing” shall have the meaning set forth in Section 1.
“Seller” shall have the meaning set forth in the Preamble.
“Seller Caused Exception” shall have the meaning set forth in Section 4(b).
“Seller Cure Period” shall have the meaning set forth in Section 4(b).
“Seller Documents” shall have the meaning set forth in Section 10(a).
“Seller Party” or “Seller Parties” shall have the meaning set forth in Section
10(h).
“Seller’s Actual Knowledge” shall have the meaning set forth in Section 11(h).
“Seller’s Conditions Precedent” shall have the meaning set forth in Section
6(a).

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“Seller’s Representations” shall have the meaning set forth in Section 11.
“Service” shall have the meaning set forth in Section 21.
“Service Plans” shall have the meaning set forth in Section 16(b).
“SFD 45’ Lots” shall have the meaning set forth in the Recitals.
“Sidewalks” shall have the meaning set forth in Exhibit C.
“Sky Ranch” shall have the meaning set forth in the Recitals.
“Sky Ranch Districts” shall have the meaning set forth in Section 16(b).
“Substantially Complete” or “Substantial Completion” shall have the meaning set
forth in Section 5(c)(iv).
“Survey” shall have the meaning set forth in Section 4(a).
“SWPPP” shall have the meaning set forth in Section 29(x).
“Takedown” shall have the meaning set forth in the Recitals.
“Takedown 1 Closing Date” shall have the meaning set forth in Section 8(b).
“Takedown 1 Lots” shall have the meaning set forth in the Recitals.
“Takedown 2 Closing Date” shall have the meaning set forth in Section 8(b).
“Takedown 2 Lots” shall have the meaning set forth in the Recitals.
“Takedown 3 Closing Date” shall have the meaning set forth in Section 8(b).
“Takedown 3 Lots” shall have the meaning set forth in the Recitals.
“Takedown 4 Closing Date” shall have the meaning set forth in Section 8(b).
“Takedown 4 Lots” shall have the meaning set forth in the Recitals.
“Takedown Commitment” shall have the meaning set forth in Section 4(b).
“Tap Purchase Agreement” shall have the meaning set forth in Section 16(a).
“Third Closing” shall have the meaning set forth in Section 1.
“Title Company” shall have the meaning set forth in Section 4(a).
“Title Company Indemnity” shall have the meaning set forth in Section 4(a).
“Title Objections” shall have the meaning set forth in Section 4(a).
“Title Policy” shall have the meaning set forth in Section 4(e).
“Tree Lawns” shall have the meaning set forth in Exhibit C.
“Uncontrollable Event” shall have the meaning set forth in Section 13.

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CONTRACT FOR PURCHASE
AND SALE OF REAL ESTATE

THIS CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE (this “Contract”) is entered
into as of the last date of the signatures hereto (the “Effective Date”), by and
between PCY HOLDINGS, LLC, a Colorado limited liability company (“Seller”), and
CHALLENGER DENVER, LLC, a Colorado limited liability company (“Purchaser”).

RECITALS:

A.          Seller is developing a master planned residential community known as
“Sky Ranch” which is located in Arapahoe County, Colorado (“County”). The Sky
Ranch master planned residential community may also be referred to herein as the
“Development”. The conceptual development plan and lotting diagram for Phase B
of the Development (the “Lotting Diagram”) are attached hereto as Exhibit A and
incorporated herein by this reference. The Development is being platted in
several subdivision filings and developed in phases. Each subdivision filing is
hereinafter sometimes respectively referred to as a “Filing” and collectively as
“Filings”.

B.          Seller desires to sell to Purchaser, and Purchaser desires to
purchase and obtain from Seller, approximately 163 platted single family
residential lots (individually referred to as a “Lot” and collectively as the
“Lots”) in the Development which will be finished in accordance with this
Contract and which will be used for the construction of single family
residential dwellings upon the terms and conditions set forth in this Contract.

C.          Seller is selling platted residential lots within the Development to
multiple homebuilders, including Purchaser. The Lots to be sold by Seller and
acquired by Purchaser that are located within the Development shall be
hereinafter collectively referred to as the “Property.” The Lots will be
conveyed at one or more Closings as more particularly provided herein and each
such Closing may be referred to herein as a “Takedown.” The Lots which are to be
conveyed at the first Closing shall be sometimes hereinafter collectively
referred to as the “Takedown 1 Lots”; the Lots which are to be conveyed at the
second Closing shall be sometimes hereinafter collectively referred to as the
“Takedown 2 Lots”; the Lots which are to be conveyed at the third Closing shall
be sometimes hereinafter collectively referred to as the “Takedown 3 Lots”; and
the Lots which are to be conveyed at the fourth Closing shall be sometimes
hereinafter collectively referred to as the “Takedown 4 Lots”.

D.          As of the Effective Date, the Lots have not been subdivided pursuant
to a recorded final subdivision plat. The number and location of the Lots to be
acquired by Purchaser are generally depicted on the Lotting Diagram. The precise
number, dimension and location of the Lots will be established at the time the
subdivision plat for such Lots is approved by the County and/or any other
relevant governmental authority (the County any other governmental entity or
authority may be referred to herein collectively as the “Authorities”, and each
an “Authority”). As of the Effective Date, the parties anticipate that Purchaser
will acquire approximately:

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•
97 Lots that are approximately 35 feet wide by approximately 90 feet deep for
the construction of detached single family alley load homes (“35’ Alley Load
Lots”); and

•
66 Lots that are approximately 45 feet wide by approximately 110 feet deep for
the construction of detached single family homes (“SFD 45’ Lots”).

E.           Following Purchaser’s acquisition of Lots, Seller will construct
certain infrastructure improvements for the Lots as described on Exhibit C
attached hereto (the “Finished Lot Improvements”) pursuant to a lot development
agreement executed by Seller and Purchaser in the form set forth on Exhibit E
(“Lot Development Agreement”).

AGREEMENT:

1.          Purchase and Sale.The Property shall be purchased at four (4)
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 8(b) below, the Lots in each Takedown, as
generally depicted on the Lotting Diagram and as follows:

At the Takedown 1 Closing (“First Closing”), Thirty-Two (32) 35’ Alley Load
Lots, and Twenty (20) SFD 45’ Lots;
 
At the Takedown 2 Closing (“Second Closing”), Twenty-Three (23) 35’ Alley Load
Lots, and Twenty (20) SFD 45’ Lots;
 
At the Takedown 3 Closing (“Third Closing”), Twenty-Two (22) 35’ Alley Load
Lots, and Ten (10) SFD 45’ Lots; and
 
At the Takedown 4 Closing (“Fourth Closing”), Twenty (20) 35’ Alley Load Lots,
and Sixteen (16) SFD 45’ Lots.
 
Notwithstanding the foregoing, however, the parties acknowledge and agree that
the Parties shall negotiate during the Due Diligence Period to reach agreement
on a mutually acceptable site plan for the Lots (“Final Lotting Diagram”) and
that 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.
 
2.           Purchase Price.The purchase price to be paid by Purchaser to Seller
for each Lot (the “Purchase Price”) shall consist of the Initial Purchase Price
(as hereinafter defined) and the Deferred Purchase Price (as hereinafter
defined). The Purchase Price for each Lot shall be calculated as provided in the
following Section 2(a) and shall be subject to adjustment as provided in Section
2(b) below:
 
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(a)          Purchase Price Payments. For each Lot the Purchase Price shall be
the sum of the “Initial Purchase Price” of: (i) Twenty-Four Thousand and 00/100
Dollars ($24,000.00) per 35’ Alley Load Lot, and (ii) Twenty-Nine Thousand and
00/100 Dollars ($29,000.00) per SFD 45’ Lot, paid by Purchaser to Seller by wire
transfer or other immediately available and collectible funds (“Good Funds”),
and the “Deferred Purchase Price” of (A) Forty-Eight Thousand Three Hundred and
00/100 Dollars ($48,300.00) per 35’ Alley Load Lot, and (B) Fifty-Eight Thousand
and 00/100 Dollars ($58,000.00) per SFD 45’ Lot, paid by Purchaser to Seller in
Good Funds, for a total of (1) Seventy-Two Thousand Three Hundred and 00/100
Dollars ($72,300.00) per 35’ Alley Load Lot and (2) Eighty-Seven Thousand and
00/100 Dollars ($87,000.00) per SFD 45’ Lot (subject to adjustment as
hereinafter provided in Section 2(b) of this Contract). As more particularly
described in Section 5(c)(iv), below, the Deferred Purchase Price for the Lots
acquired by Purchaser at the First Closing shall be secured by a letter of
credit delivered by Purchaser into escrow at the First Closing, the Deferred
Purchase Price for the Lots acquired by Purchaser at the Second Closing shall be
secured by a letter of credit delivered by Purchaser into escrow at the Second
Closing, the Deferred Purchase Price for the Lots acquired by Purchaser at the
Third Closing shall be secured by a letter of credit delivered by Purchaser into
escrow at the Third Closing, and the Deferred Purchase Price for the Lots
acquired by Purchaser at the Fourth Closing shall be secured by a letter of
credit delivered by Purchaser into escrow at the Fourth Closing.
 
(b)         Purchase Price Escalator. Any and all portions of the Purchase Price
of each Lot that is to be paid after the occurrence of the First Closing will
increase by an amount equal to the amount of simple interest that would accrue
thereon for the period elapsing between the date that the First Closing occurs
until the date such amount is paid, at a per annum rate equal to four percent
(4%) per annum (the “Escalator”). The Escalator applies to both the Initial
Purchase Price and the Deferred Purchase Price. By way of example and for
clarification purposes only, if the Purchase Price of a Lot at the Closing of
the Takedown 1 Lots is $60,000 then at a subsequent Closing occurring 12 months
(365 days) following the date of the closing of the Takedown 1 Lots, the
Purchase Price for the same type of Lot at such subsequent Closing will be
$62,400.00, which is calculated as follows: $60,000 + ($60,000 x .04) =
$62,400.00. If the Initial Purchase Price for such Lot to be acquired at the
subsequent closing is $20,000, then the Initial Purchase Price for such Lot to
be paid at the subsequent closing will be $20,800 [calculated as follows:
$20,000 + ($20,000 x .04) = $20,800.00]. Likewise, if one-half of the Deferred
Purchase Price of Lot acquired at the closing of the Takedown 1 Lot is due and
payable 24 months following the date of the closing of the Takedown 1 Lots then
one-half of the Deferred Purchase Price that will be due and payable will be
$21,600 [calculated as follows: $20,000 + ($20,000 x .04) + ($20,000 x .04) =
$21,600.00]. The Purchase Price Escalator shall not accrue or be calculated
during extension periods requested by Seller and in no event be calculated
beyond 24 months from the previous Closing, except in the event of delays
resulting from Purchaser’s actions, defaults, or as a result of Uncontrollable
Events.
 
3.           Payment of Purchase Price. The Purchase Price for each of the Lots,
as determined pursuant to Section 2 above, shall be payable as follows:
 
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(a)         Earnest Money Deposit. Within three (3) business days following the
Effective Date, Purchaser shall deliver to the Title Company (as defined in
Section 4(a) hereof) an earnest money deposit in the amount of $100,000.00 (the
“Initial Deposit”). At the end of the Due Diligence Period and within three (3)
business days after delivery of the Continuation Notice (as hereinafter
defined), Purchaser shall deliver to Title Company an additional deposit in the
amount of $100,000.00 (the “Additional Deposit”). The Initial Deposit and the
Additional Deposit and all interest earned thereon shall be referred to herein
as the “Deposit”. The Title Company will act as escrow agent and invest the
earnest money deposit in a federally insured institution at the highest money
market rate available. The Deposit shall be paid in Good Funds. The Deposit
shall be applied on a pro-rata basis to the Initial Purchase Price due at each
Closing. If this Contract is terminated prior to the expiration of the Due
Diligence Period for any reason, the Initial Deposit shall be refunded to
Purchaser. If this Contract is terminated after the Due Diligence Period and
prior to the Deposit being fully applied to the Purchase Price at the last
Closing, the unapplied portion of the Deposit shall be paid to Seller, except in
the case of a termination of this Contract pursuant to a provision that
expressly entitles Purchaser to a refund of the Deposit as provided elsewhere
herein.
 
(b)         Initial Purchase Price. That portion of the Purchase Price for each
Lot that is identified as the Initial Purchase Price and calculated as provided
in Section 2 above shall be paid by Purchaser to Seller in Good Funds at the
Closing that is applicable to the Lot.
 
(c)         Deferred Purchase Price. That portion of the Purchase Price for each
Lot that is identified as the Deferred Purchase Price in Section 2 above is due
and payable by Purchaser to Seller, as provided in and pursuant to the terms of
the Lot Development Agreement.
 
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4.           Seller’s Title.
 
(a)       Preliminary Title Commitment. Within ten (10) business days after the
Effective Date, Seller shall furnish to Purchaser, at Seller’s expense, a
current commitment for a Title Policy (as defined below) for the Property (the
“Master Commitment”) issued by Land Title Guarantee Company (“Title Company”) as
agent for First American Title Insurance Company, together with copies of the
instruments listed in the schedule of exceptions in the Master Commitment. If
the Master Commitment contains any exceptions from coverage which are
unacceptable to Purchaser, then Purchaser shall object to the condition of the
Master Commitment in writing within sixty (60) days of Purchaser’s receipt of
the Master Commitment together with copies of all documents constituting
exceptions to title (the “Title Objections”). Upon receipt of the Title
Objections, Seller may, at its option and at its sole cost and expense, clear
the title to the Property of the Title Objections within twenty (20) days of
receipt of the Title Objections. In the event Seller fails, or elects not to
clear the title to the Property of the Title Objections on or before the date
that is ten (10) days before the expiration of the Due Diligence Period, the
Purchaser, as its sole remedy, may elect before the expiration of the Due
Diligence Period either: (i) to terminate this Contract, in which event the
Initial Deposit shall be promptly returned to Purchaser, Purchaser shall deliver
to Seller all information and materials received by Purchaser from Seller
pertaining to the Property and any non-confidential and non-proprietary
information otherwise obtained by Purchaser pertaining to the Property, and
thereafter the parties shall have no further rights or obligations under this
Contract except as otherwise provided in Section 12(c) below; or (ii) to waive
such objections and proceed with the transactions contemplated by this Contract,
in which event Purchaser shall be deemed to have approved the title matters as
to which its Title Objections have been waived. If Purchaser fails to provide
the Title Objections prior to the expiration of the sixty (60) day period
required by this Section 4(a), Purchaser shall be deemed to have elected to
waive its objections as described in the preceding clause. If Purchaser fails to
notify Seller of its election to terminate this Contract or waive it objections,
Purchaser shall be deemed to have elected to waive its objections to any title
matter that Seller has failed or elected not to cure. Seller shall release at or
prior to the applicable Closing any monetary lien that Seller caused or created
against the Property with respect to that portion of the Property to be acquired
at a particular Closing other than non-delinquent real estate taxes and
assessments and Permitted Exceptions, and such monetary liens shall not
constitute Permitted Exceptions (as hereinafter defined). At each Closing,
without the need for Purchaser to object to the same in Purchaser’s Title
Objections, Seller shall execute and deliver the Title Company’s standard form
mechanic’s lien affidavit (the “Lien Affidavit”) in connection with the standard
printed exception for liens arising against the Lots purchased at the Closing
for work or materials ordered or contracted for by Seller, and to the extent
required by the Title Company a commercially reasonable indemnity agreement (the
“Title Company Indemnity”), provided, however, if Purchaser determines during
the Due Diligence Period that the Title Company refuses or is unwilling to
delete the standard printed exception for liens as part of extended coverage
despite Seller’s offer to execute and deliver the Lien Affidavit and Title
Company Indemnity, then Purchaser will have the right to terminate this Contract
on or before the expiration of the Due Diligence Period whereupon the Initial
Deposit will be returned to Purchaser, or Purchaser may proceed with the Closing
in which event the Title Policy will contain, and the Lots will be conveyed
subject to, the standard printed exception for liens unless the Title Company
agrees thereafter to delete such lien exception, however, the Purchaser shall
have no further termination rights if the Title Company does not agree to do so.
If the Title Company agrees during the Due Diligence Period to delete the
standard printed exception for liens as part of extended coverage and thereafter
the Title Company refuses to delete the exception for liens based on Seller’s
offer to execute and deliver the Lien Affidavit and Title Company Indemnity,
then such exception shall be deemed a Non-Seller Caused Exception (as
hereinafter defined) to which Purchaser shall have the right to object pursuant
to Section 4(b). Seller shall request that the Takedown Commitment (as
hereinafter defined) provide for the deletion of the other standard printed
exceptions from the Title Policy (provided that Seller’s only obligation with
respect thereto shall be (i) to provide a copy of Seller’s existing survey
(“Survey”), if any, of the land that contains the Lots, obtain and furnish, at
Purchaser’s sole cost and expense, a plat certification issued by a licensed
surveyor (“Plat Certificate”) if and to the extent a Plat Certificate is
required by the Title Company as a requirement to delete the standard survey
exception, (ii) to execute the Title Company’s standard form seller-owner final
affidavit and agreement as reasonably modified by Seller and as to Seller’s acts
only if such affidavit is required by the Title Company for the purpose of
deleting any exception for parties in possession (“Owner’s Affidavit”), and
(iii) to execute the Title Company’s Lien Affidavit with respect to Seller’s
acts, in form and substance reasonably acceptable to Seller). Seller has no
obligation to provide a new Survey or to update any existing Survey.
 
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(b)         Subsequently Disclosed Exceptions. Not less than fifteen (15) days
prior to the each Closing, at Seller’s expense, Purchaser may request that the
Title Company issue an updated title commitment for that portion of the Property
to be acquired at such Closing (each a “Takedown Commitment”), together with
copies of any additional instruments listed in the schedule of exceptions which
are not reflected in the Master Commitment furnished pursuant to Section 4(a)
above or in any prior Takedown Commitment. Additional items disclosed by a
Takedown Commitment or by an amendment to the Master Commitment that affect
title to the subject Property are referred to as “New Exceptions”. New
Exceptions affecting title to the subject Property that are allowed by the
provisions of this Contract are referred to as “Permissible New Exceptions” and
all other New Exceptions are referred to as “Other New Exceptions”. Purchaser
has no right to object to any Permissible New Exception. Other New Exceptions
which do not materially adversely affect title to a Lot, or Purchaser’s ability
to construct Homes (as hereinafter defined) thereon, shall also be Permissible
New Exceptions. Purchaser shall have a period of seven (7) days from the date of
its receipt of such Takedown Commitment or amendment to the Master Commitment
and a copy of the New Exceptions (the “New Exception Review Period”) to review
and to approve or disapprove any Other New Exceptions. If any Other New
Exception is unacceptable to Purchaser, Purchaser shall object to such Other New
Exception(s) in writing within seven (7) days after the date of Purchaser’s
receipt of the Takedown Commitment, together with a copy of the New Exceptions
(the “New Exception Objection”). Upon receipt of the New Exception Objection,
Seller shall cure the New Exception Objection (by deletion, insuring over or
endorsement) to the extent that such Other New Exception was caused or created
by Seller and is not otherwise permitted by this Contract (“Seller Caused
Exception”). If the New Exception Objection relates to an Other New Exception
that was not caused by Seller (“Non-Seller Caused Exception”), Seller may, at
its sole discretion, cure the New Exception Objection, within fifteen (15) days
of receipt of the New Exception Objection (“Seller Cure Period”) and the
applicable Closing Date will be extended to accommodate the Seller Cure Period.
In the event Seller fails, or elects not to cure a Non-Seller Caused Exception
within such fifteen (15) day period, the Purchaser, as its sole remedy, may
elect within five (5) days after the end of the Seller Cure Period either: (i)
to terminate this Contract, in which event that portion of the Deposit not
previously applied to the Purchase Price at a Closing, shall be refunded to
Purchaser and the parties shall have no further rights or obligations under this
Contract; or (ii) to waive such objection and proceed with the applicable
Takedown, in which event Purchaser shall be deemed to have approved the New
Exception. If Purchaser fails to notify Seller of its election to terminate this
Contract in accordance with the foregoing sentences within five (5) days after
the expiration of the Seller Cure Period (i) Purchaser shall be deemed to have
elected to waive its objections as described in the preceding sentences and (ii)
all such items shall be deemed to be Permitted Exceptions.
 
(c)         Permitted Exceptions; Additional Easements. Seller shall convey
title to the Lots included in each Takedown of the Property to Purchaser at the
Closing for such Takedown subject to the Permitted Exceptions described in
Section 9 hereof. Prior to each Closing, Seller shall have the right, subject to
the limitations set forth below and those Reservations and Covenants (as
hereinafter defined) as set forth on Exhibit B, attached hereto, and provided
Seller shall advise and provide copies of same to Purchaser promptly after
Seller becomes aware of same, to convey additional easements as Permissible New
Exceptions to utility and cable service providers, governmental or
quasi-governmental Authorities, metropolitan, water and sanitation districts,
homeowners associations or property owners associations or other entities that
serve the Development or adjacent property for construction of utilities and
other facilities to support the Development or such adjacent property, including
but not limited to sanitary sewer, water lines, electric, cable, broad-band and
telephone transmission, storm drainage and construction access easements across
the Property not yet acquired by Purchaser, allowing Seller or its assignees the
right to install and maintain sanitary sewer, water lines, cable television,
broad-band, electric, telephone and other utilities on the Property and on the
adjacent property owned by Seller and/or its affiliates, and further, to
accommodate storm drainage from the adjacent property. Such easements shall
require the restoration of any surface damage or disturbance caused by the
exercise of such easements, shall not be located within the building envelope of
any Lot or materially negatively impact any Home constructed thereon, and shall
not materially detract from the value, use or enjoyment of (i) the Lots affected
or the remaining portion of the Property on which such easements are to be
located, or (ii) any adjoining property of Purchaser.
 
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(d)         Master Covenants; Regional Improvements Authority. The Lots to be
acquired pursuant to this Contract shall be, prior to each Closing, made subject
to the Covenants, Conditions and Restrictions for Sky Ranch recorded in the
County Records on August 10, 2018, at Reception No. D8079588 (the “Master
Declaration”). The Master Declaration, together with any supplemental
declarations which have been, or may in the future be, recorded against the
Property, shall be collectively referred to as the “Master Covenants”. The
Master Covenants are administered by the Sky Ranch Community Authority Board
(“CAB”) and shall be a Permitted Exception (as hereinafter defined). Seller
shall provide to Purchaser for its review, a copy of the Master Covenants as
part of the Seller Documents (as hereinafter defined). Seller shall be permitted
to revise or supplement the Master Covenants at any time before the First
Closing under this Contract without the consent of Purchaser but with prior
notice and copies of same to Purchaser; provided, that any such revision has no
material adverse effect on the Lots acquired or to be acquired by Purchaser. The
Seller may petition the County for the organization of a public improvement
district pursuant to C.R.S. Title 30, Article 20 (the “Public Improvement
District” or “PID”), or one or more public entities, including without
limitation, the Sky Ranch Districts, CAB, and County may enter into an
intergovernmental agreement pursuant to C.R.S. §§ 29-1-203 and – 203.5 to create
a public authority (the “Regional Improvements Authority”) to provide a source
of funding for the construction and operation of certain regional public
improvements serving the Development and other properties, including without
limitation, the freeway interchange at Interstate I-70/Airpark Frontage Road
adjacent to the Development and other regional improvements (collectively, the
“Regional Improvements”). The PID, if formed, may pledge revenues and/or issue
general obligation indebtedness, revenue bonds or special assessment bonds and
will have the power to levy and collect ad valorem taxes on and against all
taxable property within the PID in accordance with the provisions of part 5 of
C.R.S. Title 30, Article 20. If and to the extent that Seller petitions the
County and the County organizes a PID that includes the Development, Purchaser
agrees that it will not object to the County’s organization of any such PID. The
Regional Improvements Authority, if created, may use revenue generated by the
Sky Ranch Districts’ imposition of a mill levy that is a subset of the Sky Ranch
Districts’ operations and maintenance mill levy to plan, design, acquire,
construct, install, relocate and/or redevelop, and the administration, overhead
and operations and maintenance costs incurred with respect to the Regional
Improvements (the “Regional Improvements Mill Levy”). The Regional Improvements
Mill Levy shall be calculated as the difference between the overlapping mill
levies of property subject to the Aurora Public Schools mill levy (“APS Mill
Levy”) and the overlapping mill levies of property not subject to the APS Mill
Levy. Notwithstanding the foregoing, (i) Purchaser may object if any proposal
may exceed the Maximum Mills Limitation (hereafter defined) and (ii) regardless
of whether or not Purchaser objects, Purchaser shall not be deemed to consent to
or approve, and all PID documentation, coupled and aggregated with any and all
other documentation relating to the District (hereafter defined), the other Sky
Ranch Districts (hereafter defined), and the Regional Improvements Authority
(such documentation being collectively referred to as, the “District
Documentation”) shall only be permitted to levy and collect in the aggregate
amounts that do not exceed the lesser of: (i) the total mill levy assessed
against a residential lot that is subject to the APS Mill Levy; and (ii) up to
55.664 mills (subject to “Gallagher Adjustments”) commencing with the
residential assessment rate as of January 1, 2021 for debt service, and up to
11.133 mills for operation and maintenance (also subject to Gallagher
Adjustments) (collectively, the “Maximum Mills Limitation”). Seller shall be
solely liable for and shall pay (i) any ad valorem taxes levied by any district
or other entity in excess of the Maximum Mills Limitation, and (ii) any other
rates, tolls, fees or charges adopted by any such district or other entity and
this obligation of Seller shall survive all Closings for the benefit of
Purchaser and all successor Lot owners.
 
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(e)         Title Policy. Within a reasonable time after each Closing, Seller,
at its expense, shall cause the Title Company to deliver a Form 2006 ALTA
extended coverage owner’s policy of title insurance (“Title Policy”), insuring
Purchaser’s title to the Property conveyed at such Closing, pursuant to the
applicable Takedown Commitment and subject only to the Permitted Exceptions,
together with such endorsements as Purchaser may request and which the Title
Company agrees to issue during the Due Diligence Period, and shall pay the
premium for the basic policy at such Closing. The Title Policy shall provide
insurance in an amount equal to the Purchase Price for all Lots purchased at
such Closing. At each Closing, Seller shall offer to execute and deliver a Lien
Affidavit and an Owner’s Affidavit, and shall obtain and furnish a Plat
Certificate, as necessary. Purchaser shall pay any fees charged by the Title
Company to delete the standard pre-printed exceptions. Purchaser shall pay for
the premiums for any endorsements requested by Purchaser, except that Seller
shall pay for any endorsements that Seller agrees to provide in order to cure a
Title Objection.
 
5.           Seller Obligations. Seller shall have the following obligations:
 
(a)          Entitlements.
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(i)        Platting and Entitlements. Seller shall be responsible, at Seller’s
sole cost and expense, for preparing and processing in a commercially reasonable
manner and timeframe, and diligently pursuing and obtaining Final Approval (as
defined below) from the County and any other appropriate Authority and recording
in the records of the Clerk and Recorder of the County (the “County Records”),
as may be required, the following: (A) a preliminary plat; (B) a general
development plan (“GDP”); (C) a specific development plan that includes the
Property (“SDP”); (D) an administrative site plan (“ASP”) and final subdivision
plat (or plats) for each Filing within the Property (each a “Final Plat”); (E)
the public improvement construction plans for all improvements relating to each
Final Plat (“CDs”); and (F) one or more development or subdivision improvement
agreements associated with the Final Plats and other similar documentation
required by the Authorities in connection with approval of the Final Plat(s) and
CDs (collectively, the “Entitlements”). The Entitlements shall substantially
comply with the Final Lotting Diagram, and shall provide that Phase B of the
Development contains approximately 834 lots with the Lots being of the number,
type, and dimension as set forth above in Recital D (after taking into
consideration applicable setbacks), and the Entitlements shall not impose new or
additional requirements upon Purchaser which increase (or could be expected to
increase) the construction cost for a Home on any Lot by more than $3,000 or
which materially adversely affect Purchaser’s ability to construct a Home on any
Lot. Seller shall use commercially reasonable efforts to have the Entitlements
for each Takedown, respectively, approved by the Authorities and recorded as
necessary in the County Records with all applicable governmental or third-party
appeal and/or challenge periods applicable to an approval decision of the County
Board of Commissioners or County Planning Commission having expired without any
appeal then-pending (“Final Approval”). Seller shall use commercially reasonably
efforts to obtain Final Approval of the Entitlements applicable to the Takedown
1 Lots on or before that date which is nine (9) months after the expiration of
the Due Diligence Period, as such period may be extended pursuant to this
Section 5(a)(i), or as a result of delays resulting from Uncontrollable Events.
If Final Approval of the Entitlements applicable to the Takedown 1 Lots has not
been achieved as aforesaid on or before nine (9) months after the expiration of
the Due Diligence Period (subject to delays resulting from Uncontrollable
Events), then Seller, in its discretion, shall have the right to extend the date
for obtaining such Final Approval for a period not to exceed an additional six
(6) months by providing written notice to Purchaser prior to the expiration of
such nine (9) month period (or such later date as the same may have been
previously extended). If Seller has not secured such Final Approval of the
Takedown 1 Lots by the expiration of the initial nine (9) month period (subject
to delays resulting from Uncontrollable Events) and shall fail to exercise such
extension, each party shall thereupon be relieved of all further obligations and
liabilities under this Contract, except as otherwise provided herein, and the
Deposit shall be returned to Purchaser. If Seller extends the time period for
obtaining Final Approval of the Takedown 1 Lots, then during such extended time
period Seller shall use commercially reasonable efforts to obtain Final Approval
of such Entitlements, and failing which, Seller shall not be in default of its
obligations under this Contract (unless Seller failed to use commercially
reasonable efforts to obtain Final Approval of such Entitlements), but this
Contract shall terminate in which case each party shall thereupon be relieved of
all further obligations and liabilities under this Contract, except as otherwise
provided herein, and the Deposit shall be returned to Purchaser. During the
Entitlement process, Seller shall keep Purchaser reasonably informed of the
process and the anticipated results therefrom and, upon written request, Seller
will provide Purchaser with copies of those Entitlement documents as submitted
to the County and other reasonable documentation relating to same. Purchaser, at
no material cost to Purchaser (other than costs incurred to obtain services that
could reasonably be performed or provided in-house), shall cooperate with Seller
in Seller’s efforts to obtain Final Approval of the Entitlements by the County.

(ii)        Lot Minimums for each Takedown. The Final Plat(s) for the Property
and the Lots are anticipated to be in a form which is substantially consistent
with the Final Lotting Diagram, subject to changes made necessary by the
Authorities and/or final engineering decisions which are necessary to properly
engineer, design, and install the improvements in accordance with the
requirements of the County and other applicable Authorities.

(iii)       Recordation of Final Plat. At or before each Closing, Seller shall
cause to be recorded, in the County Records, the Final Plat that includes the
Lots that are to be purchased at such Closing. Seller shall be responsible for
providing to the County any bond or other financial assurance that is required
by the County to record each Final Plat.

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(b)         Interchange Obligations. As of the Effective Date, the existing
entitlements for the Development state that no more than 774 building permits
may be issued for the Development until the Freeway Interchange is upgraded. The
foregoing building permit provision may affect the ability of Purchaser and the
other builders within Phase B to obtain building permits on the Lots acquired
after the First Closing under this Contract and after the initial closings under
the other builder contracts. Seller is currently working with the County, CDOT,
and other stakeholders to identify interim upgrades to the Freeway Interchange
that, if implemented, would increase the number of building permits available
within the Development to accommodate all Lots subject to this Contract and the
other building contracts within Phase B (the “Interchange Upgrades”). In the
event that any Closing is delayed as a result of Seller’s failure to satisfy its
obligations with respect to the Interchange Upgrades, the Escalator shall be
tolled on a day-for-day basis equal to the length of any such delay.

(c)          Finished Lot Improvements/Lot Development Agreement.

(i)         At the First Closing, Purchaser and Seller shall enter into the Lot
Development Agreement in the form attached hereto as Exhibit E, regarding
Seller’s obligations to construct and install the Finished Lot Improvements as
described on Exhibit C attached hereto.

(ii)         The Lot Development Agreement includes, without limitation,
provisions that provide for the following: (A) the payment of the Deferred
Purchase Price by Purchaser as follows: for each Takedown, one-half of the
Deferred Purchase Price for the Lots in that Phase shall be paid to Seller upon
Substantial Completion of that portion of the Finished Lot Improvements
consisting of the water, sanitary sewer and storm sewer infrastructure that is
necessary to serve the Lots in that Phase, and the remaining one-half of the
Deferred Purchase Price for the Lots in that Phase shall be paid to Seller upon
Substantial Completion of the balance of Finished Lot Improvements that serve
that Phase to the extent necessary to obtain building permits; (B) Seller’s
and/or the District’s obligation to post surety as required by the County in
connection with such Phases; (C) provisions regarding Seller’s and/or the
District’s agreements with the contractors who will construct the Finished Lot
Improvements; (D) Seller’s and/or the District’s warranty obligations, as
provided on Exhibit C; (E) Seller’s obligation to obtain lien waivers and to
discharge mechanics liens related to construction of the Finished Lot
Improvements; (F) Purchaser’s step-in rights following a Seller and/or District
Event of Default (as such term is defined in the Lot Development Agreement)
under the Lot Development Agreement; and (G) a license from Purchaser to permit
construction of the Finished Lot Improvements and performance of other related
activities on the Lots. The Seller, Purchaser, other builder(s) affected by any
improvements to be constructed under the Lot Development Agreement that serve or
benefit the Lots and other property that is to be acquired by such other
builder(s) (the “Joint Improvements”) and the Title Company will, at the
Takedown 1 Closing execute a “Joint Improvements Memorandum” that describes the
rights and obligations of Seller, Purchaser, such other builder(s) and Title
Company and such document will supplement the Lot Development Agreement
regarding the installation and construction of any Joint Improvements. The form
of the Joint Improvements Memorandum is attached to the Lot Development
Agreement as Exhibit F thereto.

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(iii)       After obtaining Final Approval of all necessary Entitlements for the
applicable Lots, Seller acting as the Constructing Party (as defined in the Lot
Development Agreement) under the Lot Development Agreement shall commence and
diligently pursue Substantial Completion, or cause to be Substantially
Completed, for the Lots being purchased and acquired by Purchaser at each
Closing, subject to delays resulting from Uncontrollable Events, the Finished
Lot Improvements in accordance with the phasing, provisions and schedules of the
Lot Development Agreement and all applicable laws, codes, regulations and
governmental requirements for the Lots. Seller will notify Purchaser when each
phase of the Finished Lot Improvements (have been Substantially Completed.
Seller’s failure to comply with the foregoing covenant shall not constitute a
default hereunder unless and until such failure shall constitute an Event of
Default (as defined in the Lot Development Agreement) under the Lot Development
Agreement.
 
(iv)       In order to secure Purchaser’s obligation (following each Closing) to
pay the Deferred Purchase Price in accordance with the terms of this Contract
and the payment schedule set forth in the Lot Development Agreement, as
described in Section 5(c) of this Contract, at each Closing Purchaser shall
deliver to Title Company (acting as escrow agent), either (a) a letter of
credit, in a form agreeable to Seller and issued by a financial institution
reasonably agreeable to Seller (the “Letter of Credit”), or (ii) a cash payment
(a Letter of Credit and the cash payment each constitute a “Deferred Purchase
Price Deposit”). The Deferred Purchase Price Deposit shall be in an amount equal
to the sum of the Deferred Purchase Price for all of the Lots acquired by
Purchaser at such Closing plus, for the Takedown 2 Lots, the Takedown 3 Lots,
and the Takedown 4 Lots, the Escalator thereon calculated pursuant to Section
2(b). Title Company shall hold and maintain the Deferred Purchase Price Deposit
pursuant to the Lot Development Agreement in an escrow account established by
Title Company for the benefit of Seller and Purchaser. A Letter of Credit that
is posted as the Deferred Purchase Price Deposit for a Closing shall remain in
place until the final payment of the Deferred Purchase Price applicable to such
Closing has been made to the Seller following Substantial Completion of the
Finished Lot Improvements which serve the Lots acquired by Purchaser at such
Closing. If a Letter of Credit is scheduled to expire prior to the Substantial
Completion of all of such Lots, and Purchaser has not renewed the Letter of
Credit at least fifteen (15) days prior to the expiration date thereof, Title
Company is authorized and directed to draw down the full amount of the Letter of
Credit and deposit such funds in escrow to be used solely for the payment of any
unpaid Deferred Purchase Price. The Letter of Credit may provide that it may be
reduced from time to time to the extent of payments of the Deferred Purchase
Price made by Purchaser for Finished Lot Improvements in accordance with the
terms, including the payment schedule, set forth in the Lot Development
Agreement and Section 5(a)(iii) of this Contract. The Letter of Credit for each
Closing shall be returned to Purchaser, together with an executed reduction
certificate reducing the face amount thereof to $0.00, upon payment in full of
the Deferred Purchaser Price for all of the Lots in such Closing. A cash payment
that is deposited as the Deferred Purchase Price Deposit for a Closing will be
drawn down and disbursed by the Title Company to Seller from time to time to the
extent of payments of the Deferred Purchase Price made by Purchaser for Finished
Lot Improvements in accordance with the terms, including the payment schedule,
set forth in the Lot Development Agreement and Section 5(a)(iii) of this
Contract. Failure by Purchaser to pay any portion of the Deferred Purchase Price
that is secured by a Letter of Credit when the same shall become due and
payable, provided that at such failure continues for a period of ten (10) days
after the delivery of written notice thereof from Seller to Purchaser, shall
entitle Seller to enforce the collection of the delinquent Deferred Purchase
Price by drawing upon the Letter of Credit or having the Title Company draw upon
the Letter of Credit, and in either event the funds so drawn shall be paid to
Seller as payment of any unpaid Deferred Purchase Price and such failure to pay
shall be deemed cured. If Seller or Title Company is unable to draw upon the
Letter of Credit, or Purchaser otherwise fails to pay the Deferred Purchase
Price, Seller may protect and enforce its rights under this Contract pertaining
to payment of the Deferred Purchase Price by (i) such suit, action, or special
proceedings as Seller shall deem appropriate, including, without limitation, any
proceedings for the specific performance of any covenant or agreement contained
in this Contract and the Lot Development Agreement or the enforcement of any
other appropriate legal or equitable remedy, or for the recovery of actual
damages (excluding consequential, punitive damages or similar damages) caused by
Purchaser’s failure to pay the Deferred Purchase Price, including reasonable
attorneys’ fees, and (ii) enforcing Seller’s lien rights under the Lot
Development Agreement. Seller’s remedies are non-exclusive. The foregoing
provisions regarding the Letter of Credit as security for payment of the
Deferred Purchase Price shall be included in the Lot Development Agreement in
the form of escrow instructions.

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(d)         Substantial Completion of Improvements. The term “Substantially
Complete” or “Substantial Completion” means that the Finished Lot Improvements
have been substantially completed in accordance with the applicable CDs and all
other requirements of this Contract and Purchaser will not be precluded from
obtaining building permits for homes on the Lots (thereafter Seller shall
complete the improvements so that Purchaser will not be precluded from obtaining
the issuance of certificates of occupancy following completion of homes as a
result of the degree of completion of the improvements).
 
6.           Pre-Closing Conditions.

(a)       Seller’s Conditions. It shall be a condition precedent to Seller’s
obligation to close each Takedown, that the following conditions (“Seller’s
Conditions Precedent”) have been satisfied:
 
(i)        Purchaser and other homebuilders are under contract to purchase at
least 250 of the Lots in Phase B, and close the initial purchase of lots under
some or all of such purchase and sale agreements as determined by Seller
simultaneously (the “Initial Purchase Condition”).
 
(ii)       Seller shall have satisfied, or is reasonably certain it will be able
to satisfy, its obligations with respect to the Interchange Upgrades, on or
before the Substantial Completion Deadline (as set forth in the Lot Development
Agreement) for such Takedown, such that Purchaser shall not be prevented from
obtaining building permits to construct Houses on Lots acquired at such Takedown
no later than the applicable Substantial Completion Deadline (the “Interchange
Condition”) and will not be prevented from obtaining certificates of occupancy
for such Houses, solely as a result of Seller’s failure to timely satisfy the
Interchange Condition.
 
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Seller agrees to use commercially reasonable, good faith efforts to timely
satisfy the Seller’s Conditions Precedent. If for any reason other than Seller’s
fault or exercise of its discretion, either Seller’s Condition Precedent is not
satisfied on or before a Closing Date, Seller may elect to: (1) terminate this
Contract by giving written notice to Purchaser at least ten (10) days prior to
such Closing; (2) waive the unsatisfied Seller’s Condition(s) Precedent and
proceed to the applicable Closing (provided, however, that such waiver shall not
apply to any subsequent Closings); or (3) extend the applicable Closing Date for
a period not to exceed ninety (90) days by giving written notice to Purchaser on
or before the applicable Closing Date, during which time Seller shall use
commercially reasonable efforts to cause such unsatisfied Seller’s Conditions
Precedent to be satisfied (and during such extension period, the Escalator be
tolled on a day-for-day basis equal to the length of such extension period). If
Seller elects to extend any Closing Date and the unsatisfied Seller’s Condition
Precedent is not satisfied on or before the last day of the 90-day extension
period for any reason other than Seller’s fault or exercise of its discretion,
then Seller shall elect within five (5) business days after the end of such
extension period to either terminate this Contract or waive the unsatisfied
Seller’s Condition(s) Precedent and proceed to the applicable Closing. In the
event Seller terminates this Contract pursuant to this Section 6(a), that
portion of the Deposit made by Purchaser that has not been applied to the
Purchase Price for Lots already acquired by Purchaser shall be returned to
Purchaser. Failure to give a termination notice as described above shall be an
irrevocable waiver of Seller’s right to terminate this Contract as to the
affected Takedown pursuant to this Section 6(a).
 
(b)          Purchaser’s Conditions. It shall be a condition precedent to
Purchaser’s obligation to close each Takedown, that the following conditions
(“Purchaser’s Conditions Precedent”) have been satisfied:
 
(i)       Final Approval of the Entitlements for the applicable Takedown by the
County and all other applicable Authorities and recordation in the County
Records of the Final Plat for the Lots to be acquired at such Takedown and such
other Entitlements, as may be required by the County, on or before the
applicable Closing Date, as the same may be extended.
 
(ii)         Seller shall have satisfied, or is reasonably certain it will be
able to satisfy, the Interchange Condition, such that Purchaser shall not be
prevented from obtaining building permits for such Lots no later than the
applicable Substantial Completion Deadline (as set forth in the Lot Development
Agreement) and will not be prevented from obtaining certificates of occupancy
for such Houses solely as a result of Seller’s failure to timely satisfy the
Interchange Condition.
 
(iii)        Seller’s representations and warranties set forth herein shall be
materially true and correct as of the applicable Closing.
 
(iv)       The Title Company shall be irrevocably and unconditionally committed
(subject only to Purchaser’s obligation to pay the portion of the Title Policy
premium for which Purchaser is responsible under this Contract and satisfaction
of any Title Company requirements applicable to Purchaser) to issue to Purchaser
the applicable Title Policy with the endorsements as Purchaser may request and
the Title Company agrees in writing to issue prior to the expiration of the Due
Diligence Period, subject only to the Permitted Exceptions accepted by Purchaser
in accordance with the provisions of this Contract.
 
(v)          The Joint Improvements Memorandum shall have been fully executed by
all required parties.
 
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If the Purchaser’s Conditions Precedent are not satisfied on or before a
respective Closing Date, Purchaser may: (1) waive the unfulfilled Purchaser’s
Condition Precedent and proceed to Closing, (2) extend the applicable Closing
Date for up to ninety (90) days to allow more time for Seller to satisfy the
unfulfilled Purchaser’s Condition Precedent, or (3) as its sole remedy hereunder
terminate this Contract as to such Takedown and any subsequent Takedowns by
written notice to Seller, delivered within two (2) business days after the
Closing Date for the applicable Takedown, in which case each party shall
thereupon be relieved of all further obligations and liabilities under this
Contract, except as otherwise provided herein, and the Deposit made by Purchaser
that has not been applied to the Purchase Price for Lots already acquired by
Purchaser shall be returned to Purchaser. If Purchaser elects to extend the
Closing Date under (2), above, and the unsatisfied Purchaser’s Condition
Precedent is not satisfied as of the last day of the ninety (90) day extension
period, then Purchaser shall, as its sole remedy, elect to waive or terminate
under (1) or (3). Failure to give notice as described above shall be an
irrevocable waiver of Purchaser’s right to terminate this Contract as to the
affected Takedown pursuant to this Section 6(b).
 
7.          Closing.“Closing” shall mean the delivery to the Title Company of
all applicable documents and funds required to be delivered pursuant to Section
8 hereof and unconditional authorization of the Title Company to disburse,
deliver and record the same. The purchase of Lots at the closing of a Takedown
shall be deemed to be “Closed” when the documents and funds required to be
delivered pursuant to Section 8 hereof have been delivered to the Title Company,
and the Title Company agrees to unconditionally to disburse, deliver and record
the same.
 
8.           Closings; Closing Procedures.
 
(a)        On each respective Closing Date, Purchaser shall purchase the number
of Lots that Purchaser is obligated to acquire hereunder in the applicable
Takedown.
 
(b)         Closing Dates. The First Closing shall occur on that date which is
ten (10) days after Final Approval of the Entitlements applicable to the
Takedown 1 Lots is obtained (the “Takedown 1 Closing Date”). The Second Closing
shall occur on that date which is ten (10) days after the later to occur of (i)
Final Approval of the Entitlements applicable to the Takedown 2 Lots and (ii)
that date which is twelve (12) months after the Takedown 1 Closing Date (the
“Takedown 2 Closing Date”). The Third Closing shall occur on that date which is
ten (10) days after the later to occur of (i) Final Approval of the Entitlements
applicable to the Takedown 3 Lots and (ii) that date which is twelve (12) months
after the Takedown 2 Closing Date (the “Takedown 3 Closing Date”). The Fourth
Closing shall occur on that date which is ten (10) days after the later to occur
of (i) Final Approval of the Entitlements applicable to the Takedown 4 Lots and
(ii) that date which is twelve (12) months after the Takedown 3 Closing Date
(the “Takedown 4 Closing Date”). The term “Closing Date” may be used to refer to
each of the Takedown 1 Closing Date, the Takedown 2 Closing Date, the Takedown 3
Closing Date, and the Takedown 4 Closing Date. If Purchaser desires to
accelerate any Closing Date, Purchaser may request that a Closing Date be
accelerated, and if Seller is willing to do so, in its sole and absolute
discretion, the parties will work together to prepare a mutually acceptable
amendment to this Contract to accommodate such request. Seller shall have the
right to extend the Takedown 1 Closing Date for up to 90 days in order to
satisfy Seller’s Condition Precedent as provided in Section 6(a) of this
Contract.
 
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(c)          Closing Place and Time. Each Closing shall be held at 11:00 a.m. on
the applicable Closing Date at the offices of the Title Company or at such other
time and place as Seller and Purchaser may mutually agree.
 
(d)          Closing Procedures. Each purchase and sale transaction shall be
consummated in accordance with the following procedures:
 
(i)         All documents to be recorded and funds to be delivered hereunder
shall be delivered to the Title Company to hold, deliver, record and disburse in
accordance with closing instructions approved by Purchaser and Seller;
 
(ii)         At each Closing, Seller shall deliver or cause to be delivered in
accordance with the closing instructions the following:
 
(1)          A special warranty deed conveying the applicable portion of the
Property to be acquired at such Closing to Purchaser. The special warranty deed
shall contain a reservation of easements, minerals, mineral rights and water and
water rights, as well as other rights, as set forth on Exhibit B
(the “Reservations and Covenants”). The special warranty deed shall also be
subject to non-delinquent general real property taxes for the year of such
Closing and subsequent years, District assessments and the Permitted Exceptions.
 
(2)          Payment (from the proceeds of such Closing or otherwise) sufficient
to satisfy any encumbrance relating to the portion of the Property being
acquired at such Closing, required to be paid by Seller at or before the time of
Closing.
 
(3)        A tax certificate or other evidence sufficient to enable the Title
Company to ensure the payment of all general real property taxes and
installments of District assessments then due and payable for the portion of the
Property being acquired at such Closing.
 
(4)          An affidavit, in a form sufficient to comply with applicable laws,
stating that Seller is not a foreign person or a foreign corporation subject to
the Foreign Investment in Real Property Tax Act, and therefore not subject to
its withholding requirements.
 
(5)          A certification or affidavit to comply with the reporting and
withholding requirements for sales of Colorado properties by non-residents
(Colorado Department of Revenue Form DR‑1083).
 
(6)          A Lien Affidavit.
 
(7)        A partial assignment of declarant rights or builder rights under the
Master Covenants (a “Builder Designation”), assigning only the following
declarant rights (to the extent such rights are not automatically granted to
Purchaser as a “builder” by the terms of the Master Covenants) from Seller to
Purchaser: to maintain sales offices, construction offices, management offices,
model homes and signs advertising the Development and/or Lots, and such other
rights to which the parties may mutually agree, the form of such Builder
Designation being attached hereto and incorporated herein as Exhibit H.
 
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(8)          The Tap Purchase Agreement (as defined herein).
 
(9)          A general assignment to Purchaser in the form attached hereto as
Exhibit D (“General Assignment”) with respect to the applicable Lots.
 
(10)        An Owner’s Affidavit.
 
(11)        The Lot Development Agreement and the Joint Improvements Memorandum
executed by Seller.
 
(12)        Such other documents as may be required to be executed by Seller
pursuant to this Contract or the closing instructions.
 
(iii)        At each Closing, Purchaser shall deliver or cause to be delivered
in accordance with the closing instructions the following:
 
(1)         The Purchase Price payable at such Closing, computed in accordance
with Section 2 above, for the Lots being acquired at such Closing, such payment
to be made in Good Funds.
 
(2)          The Tap Purchase Agreement.
 
(3)          The Lot Development Agreement and the Joint Improvements Memorandum
executed by Purchaser.
 
(4)       All other documents required to be executed by Purchaser pursuant to
the terms of this Contract or the closing instructions.
 
(5)          Payment of any amounts due pursuant to Section 16 hereof.
 
(iv)       At each Closing, Purchaser and Seller shall each deliver an executed
settlement statement, which shall set forth all prorations, disbursements of the
Purchase Price and expenses applicable to such Closing;
 
(v)         The following adjustments and prorations shall be made between
Purchaser and Seller as of each Closing:
 
(1)         Real property taxes and installments of District assessments, if
any, for the applicable portion of the Property for the year in which the
Closing occurs shall be prorated based upon the most recent known rates, mill
levy and assessed valuations; and such proration shall be final.
 
(2)          Seller shall pay real property taxes and assessments for years
prior to the year in which the Closing occurs.
 
(3)          Purchaser shall pay any and all recording costs and documentary
fees required for the recording of the deed.
 
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(4)         Seller shall pay the base premium for the Title Policy and for any
endorsement Seller agrees to provide to cure a Title Objection, and Purchaser
shall pay the premium for any other endorsements requested by Purchaser in
accordance with Section 4 above, including an extended coverage endorsement.
 
(5)          Each party shall pay one-half (1/2) of any closing or escrow
charges of the Title Company.
 
(6)         All other costs and expenses not specifically provided for in this
Contract shall be allocated between Purchaser and Seller in accordance with the
customary practice of commercial real estate transactions in Arapahoe County,
Colorado.
 
(vi)          Possession of the applicable portion of the Property being
acquired at each Closing shall be delivered to Purchaser at such Closing,
subject to the Permitted Exceptions.
 
9.           Seller’s Delivery of Title. At each Closing, Seller shall convey
title to the applicable portion of the Property, together with the following
items, to the extent that they have been approved, or are deemed to have been
approved by Purchaser pursuant to the terms of this Contract (each, a “Permitted
Exception” and collectively, the “Permitted Exceptions”):
 
(a)         all easements, agreements, covenants, restrictions, rights-of-way
and other matters of record that affect title to the Property as disclosed by
the Master Commitment or any Takedown Commitment, or otherwise, to the extent
that such matters are approved or deemed approved by Purchaser in accordance
with Section 4 above or otherwise approved by Purchaser (unless otherwise
identified herein as an obligation, fee or encumbrance to be assumed by
Purchaser or which is otherwise identified herein as a Purchaser obligation
which survives such Closing, the foregoing items, however, shall not include any
mortgages, deeds of trust, mechanic’s liens or judgment liens arising by,
through or under Seller, which monetary liens Seller shall cause to be released
or fully insured over by the Title Company, to the extent they affect any
portion of the Property, on or prior to the date that such portion of the
Property is conveyed to Purchaser);
 
(b)          the Entitlements, including without limitation, the Final Plat
applicable to the Property being acquired at such Closing and all easements and
other terms, agreements, provisions, conditions and obligations as shown
thereon;
 
(c)          the Master Covenants;
 
(d)       the inclusion of the Property into the Sky Ranch Metropolitan District
No. 3 (the “District”), the PID, and such other special improvement districts or
metropolitan districts as may be disclosed by the Master Commitment or any
Takedown Commitment delivered to Purchaser pursuant to this Contract;
 
(e)          the inclusion of the Property into that certain Declaration of
Covenants Imposing and Implementing the Sky Ranch Public Improvement Fee
recorded in the County Records on August 13, 2018, at Reception No. D8079674
(the “PIF Covenant”).
 
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(f)          A reservation of water and mineral rights as set forth on Exhibit B
hereof;
 
(g)          applicable zoning and governmental regulations and ordinances;
 
(h)          title exceptions, encumbrances, or other matters arising by,
through or under Purchaser;
 
(i)          items apparent upon an inspection of the Property or shown or that
would be shown on an accurate and current survey of the Property; and
 
(j)          any Permissible New Exception and any other document required or
permitted to be recorded against the Property in the County Records pursuant to
the terms of this Contract.
 
10.         Due Diligence Period; Acceptance of Property; Release and
Disclaimer.
 
(a)          Feasibility Review. Within five (5) business days following the
Effective Date, Seller shall deliver or make available (via electronic file
share if available in electronic form, otherwise at Seller’s office) to
Purchaser the following listed items to the extent in Seller’s actual
possession; if an item listed below is not in Seller’s possession and not
delivered or made available to Purchaser, but is otherwise readily available to
Seller, then Purchaser may make written request to Seller to provide such item,
and Seller will use its reasonable efforts to obtain and deliver or make such
item available to Purchaser, but Seller will have no obligation otherwise to
obtain any item not in Seller’s possession: (i) any environmental reports, soil
reports and certifications pertaining to the Lots, (ii) a copy of any
subdivision plat for the Property, (iii) engineering and construction plans
pertaining to the Lots, (iv) biological, grading, drainage, hydrology and other
engineering reports and plans and engineering and constructions plans for
offsite improvements that are required to obtain building permits/certificates
of occupancies for single-family detached residences constructed on the Lots;
(v) any PUD, Development Agreement, Site Development Plans and other approvals
pertaining to the Lots particularly and the Development generally; (vi) the
Master Covenants; (vii) any Special District Service Plans; (viii) any existing
ALTA or other boundary Survey of the Property; and (ix) copies of any
subdivision bonds or guarantees applicable to the Lots (collectively, the
“Seller Documents”). Purchaser shall have a period expiring sixty (60) calendar
days following the Effective Date of this Contract within which to review the
same (the “Due Diligence Period”). During the Due Diligence Period, Purchaser
shall have an opportunity to review and inspect the Property, all Seller
Documents and any and all factors deemed relevant by Purchaser to its proposed
development and the feasibility of Purchaser’s intended uses of the Property in
Purchaser’s sole and absolute discretion (the “Feasibility Review”). The
Feasibility Review shall be deemed to have been completed to Purchaser’s
satisfaction only if Purchaser gives written notice to Seller of its election to
continue this Contract (“Continuation Notice”) prior to the expiration of the
Due Diligence Period. If Purchaser fails to timely give a Continuation Notice or
if Purchaser gives a notice of its election to terminate, this Contract shall
automatically terminate, the Initial Deposit shall be promptly returned to
Purchaser, Purchaser shall deliver to Seller all information and materials
received by Purchaser from Seller pertaining to the Property and any
non-confidential and non-proprietary information otherwise obtained by Purchaser
pertaining to the Property and any information otherwise obtained by Purchaser,
and thereafter the parties shall have no further rights or obligations under
this Contract except as otherwise provided in Section 25 below. Seller will
reasonably cooperate with Purchaser, at Purchaser’s cost and at no cost and with
no liability to Seller to assist Purchaser in obtaining: (A) an updated or
recertification of any of the Seller Documents, (B) reliance letters from any of
the preparers of the Seller Documents, and (C) any consents that may be required
so that Purchaser may receive the benefits after Closing of any agreements
comprising the Seller Documents that confer a benefit and are reasonably
necessary for the Purchaser’s proper and efficient development of the Property
for residential use, to the extent such are obtainable by Purchaser.
 
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(b)       Approval of Property. If Purchaser gives a Continuation Notice on or
before the expiration of the Due Diligence Period, except as otherwise provided
in this Section 10, Purchaser shall be deemed to have approved the Property, the
Development and the feasibility of Purchaser’s intended uses of the Lots
(subject to the terms and conditions of Section 5 and Section 6 hereof). Such
approval shall be deemed to include, but shall not be limited to, Purchaser’s
approval of the following as to the Property:
 
(i)         The ability of applicable utility companies to provide utility
services to the Property, including the quality, sizing and cost of such
services;
 
(ii)         The soil and environmental conditions of the Property;
 
(iii)         All Seller Documents delivered to Purchaser pursuant to this
Contract;
 
(iv)         All of the Permitted Exceptions;
 
(v)         The financial condition and other factors relevant to the operation
of the District;
 
(vi)         Fitness for Purchaser’s intended use, accessibility of roads, and
the condition and suitability for improvement and sale of the Lots, subject to
Seller’s obligations under this Contract.
 
(c)          Radon. Purchaser acknowledges that radon gas and naturally
occurring radioactive materials (“NORM”) each naturally occurs in many locations
in Colorado. The Colorado Department of Public Health and Environment and the
United States Environmental Protection Agency (the “EPA”) have detected elevated
levels of naturally occurring radon gas in residential structures in many areas
of Colorado, including the County and all of the other counties along the front
range of Colorado. The EPA has raised concerns with respect to adverse effects
on human health from long-term exposure to high levels of radon and recommends
that radon levels be tested in all Residences. Purchaser acknowledges that
Seller neither claims nor possesses any special expertise in the measurement or
reduction of radon or NORM. Purchaser further acknowledges that Seller has not
undertaken any evaluation of the presence or risks of radon or NORM with respect
to the Property nor has it made any representation or given any other advice to
Purchaser as to acceptable levels or possible health hazards of radon and NORM.
SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, CONCERNING
THE PRESENCE OR ABSENCE OF RADON, NORM OR OTHER ENVIRONMENTAL POLLUTANTS WITHIN
THE PROPERTY OR THE RESIDENCES TO BE CONSTRUCTED ON THE LOTS OR THE SOILS
BENEATH OR ADJACENT TO THE PROPERTY OR THE RESIDENCES TO BE CONSTRUCTED ON THE
LOTS PRIOR TO, ON OR AFTER THE APPLICABLE CLOSING DATE. Purchaser, on behalf of
itself and its successors and assigns, hereby releases the Seller from any and
all liability and claims with respect to any NORM. Every home sales contract
entered in to by Purchaser with respect to subsequent sales of Lots shall
include any disclosures with respect to radon (and other NORMs) as required by
applicable Colorado law.
 
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(d)         Soils. Purchaser acknowledges that soils within the State of
Colorado consist of both expansive soils and low-density soils, and certain
areas contain potential heaving bedrock associated with expansive, steeply
dipping bedrock, which will adversely affect the integrity of a dwelling unit
constructed on a Lot if the dwelling unit and the Lot on which it is constructed
are not properly maintained. Expansive soils contain clay mineral, which have
the characteristic of changing volume with the addition or subtraction of
moisture, thereby resulting in swelling and/or shrinking soils. The addition of
moisture to low-density soils causes a realignment of soil grains, thereby
resulting in consolidation and/or collapse of the soils. Purchaser agrees that
it shall obtain a current geotechnical report for the Property and an individual
lot soils report for each Lot containing design recommendations from a licensed
geotechnical engineer for all structures to be placed upon the Lot. Purchaser
shall require all homes to have engineered footing and foundations consistent
with results of the individual lot soils report for each Lot and shall take
reasonable action as shall be necessary to ensure that the homes to be
constructed upon the Lots shall be done in accordance with proper design and
construction techniques. Purchaser shall also provide a copy of the geotechnical
report for the Property and the individual lot soils report for each Lot to
Seller within seven (7) days after Seller’s request for the same, and agrees in
the event that this Contract terminates for any reason Purchaser shall use
reasonable efforts to assign, without liability or recourse to Purchaser, at
Seller’s request, the geotechnical report for the Property and the individual
lot soils report for each Lot to any subsequent homebuilder who enters into a
purchase and sale agreement with Seller to purchase all of a portion of the
Lots. SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
CONCERNING THE PRESENCE OR ABSENCE OF EXPANSIVE SOILS, LOW-DENSITY SOILS OR
DIPPING BEDROCK UPON THE PROPERTY AND PURCHASER SHALL UNDERTAKE SUCH
INVESTIGATION AS SHALL BE REASONABLE AND PRUDENT TO DETERMINE THE EXISTENCE OF
THE SAME. Purchaser shall provide all disclosures required by C.R.S. Section
6-6.5-101 in every home sales contract entered in to by Purchaser with respect
to subsequent sales of a Lot to a homebuyer. Purchaser, on behalf of itself and
its successors and assigns, hereby releases the Seller from any and all
liability and claims with respect to expansive and low-density soils and dipping
bedrock located within the Property.
 
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(e)         Over Excavation. The Finished Lot Improvements required for each Lot
do not include any “over excavation” or comparable preparation or mitigation of
the soil (the “Overex”) on the Property and Purchaser shall have sole
responsibility at Purchaser’s sole expense with respect to the Overex and shall
have the right (pursuant to a license agreement to be provided by Seller) to
enter such Lots for the purposes of performing the Overex; provided, however,
that such entry shall be performed in a manner that does not materially
interfere with or result in a material delay or an increase in the costs or any
expenses in the construction of the Finish Lot Improvements, and provided
further that Purchaser shall promptly repair any portion of the Lots and
adjacent property that is materially damaged by Purchaser or its agents,
designees, employees, contractors, or subcontractors in performing the Overex.
Purchaser shall obtain, at its cost, a current geotechnical report for the
Property and an individual lot soils report for each Lot containing design
recommendations from a licensed geotechnical engineer for all structures to be
placed upon the Lot (“Purchaser’s Geotechnical Reports”). Purchaser shall not
rely upon any geotechnical or soils report furnished by Seller, and Seller shall
have no responsibility or liability with respect to the Overex, Purchaser’s
Geotechnical Reports or any matters related thereto. The parties shall
reasonably cooperate in coordinating Purchaser’s completion of the Overex so
that the Overex can be properly sequenced with Seller’s completion of the
Finished Lot Improvements and the parties acknowledge and agree that any delay
in Seller’s completion of the Finished Lot Improvements resulting from
Purchaser’s Overex work shall extend the date for substantial completion of the
Finished Lot Improvements in accordance with the provisions of the Lot
Development Agreement. In no event shall the Seller be liable to Purchaser for
any delay or costs or damages incurred by Purchaser with respect to such Overex,
even if caused by any delay in installation of Finished Lot Improvements
sequenced ahead of the Overex. THE PARTIES ACKNOWLEDGE AND AGREE THAT SELLER IS
NOT PERFORMING ANY OVER-EXCAVATION OF THE LOTS AND THAT SELLER SHALL HAVE NO
LIABILITY WHATSOEVER WITH RESPECT TO OR ARISING OUT OF ANY OVER-EXCAVATION OF
THE LOTS OR EXPANSIVE SOILS PRESENT ON THE LOTS AND SELLER EXPRESSLY DISCLAIMS
ANY LIABILITY WITH RESPECT TO ANY OVER-EXCAVATION OF THE LOTS AND EXPANSIVE
SOILS PRESENT ON THE LOTS. PURCHASER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
SELLER AND ITS 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, ARISING OUT OF ANY EXPANSIVE SOILS,
OVER-EXCAVATION OR OTHER SOIL MITIGATION OR PURCHASER’S ELECTION NOT TO PERFORM
SOILS MITIGATION, ON OR PERTAINING TO PURCHASER’S LOTS. THE PROVISIONS OF THIS
SECTION SHALL EXPRESSLY SURVIVE THE EXPIRATION OR TERMINATION OF THIS CONTRACT.
 
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(f)          No Reliance on Documents. Except as expressly stated in this
Contract and/or expressly set forth in the documents executed by Seller at a
Closing, Seller makes no representation or warranty as to the truth, accuracy or
completeness of any materials, data or information (including, without
limitation, the Seller Documents) delivered by Seller or its brokers or agents
to Purchaser in connection with the transaction contemplated hereby. Except as
otherwise provided in this Contract and/or expressly set forth in the documents
executed by Seller at a Closing, all materials, data and information delivered
by Seller to Purchaser in connection with the transaction contemplated hereby
are provided to Purchaser as a convenience only and any reliance on or use of
such materials, data or information by Purchaser shall be at the sole risk of
Purchaser, except as otherwise expressly stated herein. The Seller Parties (as
hereinafter defined) shall not be liable to Purchaser for any inaccuracy in or
omission from any such reports. Purchaser hereby represents to Seller that, to
the extent Purchaser deems the same to be necessary or advisable for its
purposes, and without waiving the right to rely upon the covenants, agreements,
representations and warranties expressly contained in this Contract and/or
expressly set forth in the documents executed by Seller at a Closing: (i)
Purchaser has performed or will perform an independent inspection and
investigation of the Lots and has also investigated or will investigate the
operative or proposed governmental laws, ordinances and regulations to which the
Lots may be subject, and (ii) Purchaser shall acquire the Lots solely upon the
basis of its own or its experts’ independent inspection and investigation,
including, without limitation, (a) the quality, nature, habitability,
merchantability, use, operation, value, fitness for a particular purpose,
marketability, adequacy or physical condition of the Lots or any aspect or
portion thereof, including, without limitation, appurtenances, access,
landscaping, parking facilities, electrical, plumbing, sewage, and utility
systems, facilities and appliances, soils, geology and groundwater, (b) the
dimensions or sizes of the Lots, (c) the development or income potential, or
rights of or relating to, the Lots, (d) the zoning or other legal status of the
Lots or any other public or private restrictions on the use of the Lots, (e) the
compliance of the Lots with any and all applicable codes, laws, regulations,
statutes, ordinances, covenants, conditions and restrictions, (f) the ability of
Purchaser to obtain any necessary governmental permits for Purchaser’s intended
use or development of the Lots, (g) the presence or absence of Hazardous
Materials on, in, under, above or about the Lots or any adjoining or neighboring
property, (h) the condition of title to the Lots, or (i) the economics of, or
the income and expenses, revenue or expense projections or other financial
matters, relating to the Lots, except as provided in any express
representations/warranties and/or covenants contained in this Contract.
 
(g)        As Is. Except for Seller’s Representations (as defined in Section 11
hereof) and Seller’s performance of its obligations under this Contract,
Purchaser acknowledges and agrees that it is purchasing the Property based on
its own inspection and examination thereof, and Seller shall sell and convey to
Purchaser and Purchaser shall accept the property on an “AS IS, WHERE IS, WITH
ALL FAULTS, LIABILITIES, AND DEFECTS, LATENT OR OTHERWISE, KNOWN OR UNKNOWN”
basis in an “AS IS” physical condition and in an “AS IS” state of repair
(subject to the Finished Lot Improvements obligation set forth in Section
5(a)(iii) hereof). Except as expressly contained in this Contract, the special
warranty deed to be delivered at each Closing and Seller’s Representations, to
the extent not prohibited by law the Purchaser hereby waives, and Seller
disclaims all warranties of any type or kind whatsoever with respect to the
Property, whether express or implied, direct or indirect, oral or written,
including, by way of description, but not limitation, those of habitability,
fitness for a particular purpose, and use. Without limiting the generality of
the foregoing, Purchaser expressly acknowledges that, except as otherwise
provided in this Contract, the Seller’s Representations, the special warranty
deed to be delivered at each Closing, Seller makes no representations or
warranties concerning, and hereby expressly disclaims any representations or
warranties concerning the following: (i) The value, nature, quality or condition
of the Property; (ii) Any restrictions related to development of the Property;
(iii) The applicability of any governmental requirements; (iv) The suitability
of the Property for any purpose whatsoever; (v) The presence in, on, under or
about the Property of any Hazardous Material or any other condition of the
Property which is actionable under any Environmental Law (as such terms are
defined in this Section 10; (vi) Compliance of the Property or any operation
thereon with the laws, rules, regulations or ordinances of any applicable
governmental body; or (vii) The presence or absence of, or the potential adverse
health, economic or other effects arising from, any magnetic, electrical or
electromagnetic fields or other conditions caused by or emanating from any power
lines, telephone lines, cables or other facilities, or any related devices or
appurtenances, upon or in the vicinity of the Property.

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EXCEPT FOR REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY
SET FORTH IN THIS CONTRACT OR OTHERWISE PROVIDED IN THIS CONTRACT AND/OR
EXPRESSLY SET FORTH IN THE CLOSING DOCUMENTS, SELLER SHALL NOT BE LIABLE TO
PURCHASER FOR ANY CONSTRUCTION DEFECT, ERRORS, OMISSIONS, OR ON ACCOUNT OF SOILS
CONDITIONS OR ANY OTHER CONDITION AFFECTING THE PROPERTY, INCLUDING, BUT NOT
LIMITED TO, THOSE MATTERS DESCRIBED ABOVE AND PURCHASER AND ANYONE CLAIMING BY,
THROUGH OR UNDER PURCHASER, HEREBY FULLY RELEASES SELLER, ITS PARTNERS,
EMPLOYEES, OFFICERS, DIRECTORS, REPRESENTATIVES, ATTORNEYS AND AGENTS (BUT NOT
INCLUDING ANY THIRD PARTY PROFESSIONAL SERVICE PROVIDERS [E.G., ENGINEERS,
ETC.], CONTRACTORS OR SIMILAR FIRMS OR PERSONS) FROM ANY AND ALL CLAIMS AGAINST
ANY OF THEM FOR ANY COST, LOSS, LIABILITY, DAMAGE, EXPENSE, DEMAND, ACTION OR
CAUSE OF ACTION (INCLUDING, WITHOUT LIMITATION, ANY RIGHTS OF CONTRIBUTION)
ARISING FROM OR RELATED TO ANY CONSTRUCTION DEFECTS, ERRORS, OMISSIONS, OR OTHER
CONDITIONS AFFECTING THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, THOSE MATTERS
DESCRIBED ABOVE AND INCLUDING ANY ALLEGED NEGLIGENCE OF SELLER.
 
As used herein, “Hazardous Materials” shall mean, collectively, any chemical,
material, substance or waste which is or hereafter becomes defined or included
in the definitions of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic
substances,” “toxic pollutants,” “pollutant” or “contaminant,” or words of
similar import, under any Environmental Law, and any other chemical, material,
substance, or waste, exposure to, disposal of, or the release of which is now or
hereafter prohibited, limited or regulated by any governmental or regulatory
authority or otherwise poses an unacceptable risk to human health or the
environment.

As used herein, “Environmental Laws” shall mean all applicable local, state and
federal environmental rules, regulations, statutes, laws and orders, as amended
from time to time, including, but not limited to, all such rules, regulations,
statutes, laws and orders regarding the storage, use and disposal of Hazardous
Materials and regarding releases or threatened releases of Hazardous Materials
to the environment.
 
(h)        Release. Purchaser agrees that, subject to the Seller’s
Representations, Seller shall not be responsible or liable to Purchaser for any
defects, errors or omissions, or on account of geotechnical or soils conditions
or on account of any other conditions affecting the Property, because Purchaser
is purchasing the Property AS IS, WHERE-IS, and WITH ALL FAULTS. Purchaser, or
anyone claiming by, through or under Purchaser, hereby fully releases Seller,
Seller’s affiliates, divisions and subsidiaries and their respective managers,
members, partners, officers, directors, shareholders, affiliates,
representatives and employees (the “Seller Parties” and each as a “Seller
Party”) from, and irrevocably waives its right to maintain, any and all claims
and causes of action that it or they may now have or hereafter acquire against
the Seller Parties for any cost, loss, liability, damage, expense, demand,
action or cause of action arising from or related to any defects, errors,
omissions or other conditions affecting the Property, except to the extent that
such loss or other liability results from a breach of the Seller’s
Representations. Purchaser hereby waives any Environmental Claim (as defined in
this Section) which it now has or in the future may have against Seller,
provided however, such waiver shall not apply to activities to be performed by
the Seller in accordance with the applicable Lot Development Agreement. The
foregoing release and waiver shall be given full force and effect according to
each of its express terms and provisions, including, but not limited to, those
relating to unknown and suspected claims, damages and causes of action. The
foregoing release and waiver shall not apply to any cost, loss, liability,
damage, expense, demand, action or cause of action arising from or related to
(i) fraud or other intentional misconduct of any Seller Party, or (ii) any
claims against contractors or subcontractors for construction defects in the
Finished Lot Improvements.
 
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As used herein, “Environmental Claim” shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation, whether written or oral, by any person, organization or agency
alleging potential liability, including without limitation, potential liability
for enforcement, investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources damages, property
damages, including diminution of the market value of the Property or any part
thereof, personal injuries or penalties arising out of, based on or resulting
from the presence or release into the environment of any Hazardous Materials at
any location, or resulting from circumstances forming the basis of any violation
or alleged violation of any Environmental Laws, and any and all claims by any
person, organization or agency seeking damages, contribution, indemnification,
costs, recovery, compensation or injunctive relief resulting from the presence
or release of any Hazardous Materials.
 
(i)        Indemnification. Purchaser shall indemnify, defend (with counsel
reasonably selected by Purchaser with Seller approval) and hold harmless the
Seller Parties of, from and against any and all claims, demands, liabilities,
losses, expenses, damages, costs and reasonable attorneys’ fees that any of the
Seller Parties may at any time incur by reason of or arising out of: (i) any
work performed in connection with or arising out of Purchaser’s activities, or
Purchaser’s acts or omissions with respect to any Overex work, (ii) Purchaser’s
failure to perform its work on the Property in accordance with applicable laws,
and (iii) either personal injuries or property damage occurring after the
Closing by reason of or arising out of the geologic, soils or groundwater
conditions on the Property acquired by Purchaser, (iv) Purchaser’s or its
successor’s development, construction, use, ownership, management, marketing or
sale activities associated with the Lots (including, without limitation, land
development, grading, excavation, trenching, soils compaction and construction
on the Lots performed by or on behalf of Purchaser (including, but not limited
to, by all subcontractors and consultants engaged by Purchaser); (v) the soils,
subsurface geologic, groundwater conditions or the movement of any home
constructed on the Lots after a Closing; (vi) the design, engineering,
structural integrity or construction of any homes constructed on the Lots after
a Closing; or (vii) any claim asserted by Purchaser’s homebuyers or their
successors in interest. The foregoing indemnity obligation of Purchaser includes
acts and omissions of Purchaser and all agents, consultants and other parties
acting for or on behalf of Purchaser (“Purchaser Parties”). Notwithstanding the
foregoing, Purchaser is not required by this indemnification provision to
indemnify the Seller against (i) Seller’s failure to perform its obligations
under this Contract or under any of the Closing documents, (ii) Seller’s breach
of an express warranty or representation set forth in this Contract or in any of
the Closing documents, or (iii) claims arising directly from the decisions of
Seller acting in its capacity as declarant under the Master Covenants; and
further provided that Purchaser is not required to indemnify consultants,
contractors and subcontractors who contract with Seller and who perform services
or supply labor, materials, equipment, and other work relating to geotechnical
or soils conditions on the Lots that is necessary for the Lots to satisfy the
requirements set forth herein and in the Lot Development Agreement.
 
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(j)           The provisions of this Section 10 shall survive each Closing and
the delivery of each respective deed to the Purchaser.
 
11.       Seller’s Representations. Seller hereby represents and warrants to
Purchaser as follows (the following Subsections (a) through (j) collectively
referred to herein as “Seller’s Representations”):
 
(a)          Organization. Seller is a limited liability company duly organized
and validly existing under the laws of the State of Colorado.
 
(b)       Litigation. To Seller’s Actual Knowledge (as defined in this Section
11), there is no pending or threatened litigation which could materially
adversely affect the Property.
 
(c)        Bankruptcy. There are no attachments, levies, executions, assignments
for the benefit of creditors, receiverships, conservatorships, or voluntary or
involuntary proceedings in bankruptcy, or any other debtor relief actions
contemplated by Seller or filed by Seller, or to Seller’s knowledge, pending in
any current judicial or administrative proceeding against Seller.
 
(d)         Non-Foreign Person. Seller is not a “foreign person” as that term is
defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and
applicable regulations.
 
(e)         Condemnation. Seller has received no written notice of any pending
or threatened condemnation or eminent domain proceedings which may affect the
Property or any part thereof.
 
(f)          Execution and Delivery. The execution, delivery and performance of
this Contract by Seller does not and will not result in a breach of, or
constitute a default under, any indenture, loan or credit agreement, mortgage,
deed of trust or other agreement to which Seller is a party. The individual(s)
executing this Agreement and the instruments referenced herein on behalf of
Seller have the legal power, right and actual authority to bind Seller to the
terms hereof and thereof.
 
(g)          Default. To Seller’s Actual Knowledge, Seller has not defaulted
under any covenant, restriction or contract affecting the Property, nor has
Seller caused by its act or omission an event to occur which would with the
passage of time constitute a breach or default under such covenant, restriction
or contract.
 
(h)          Violation of Law. To Seller’s Actual Knowledge, Seller has not
received any written notice of non-compliance, addressed to Seller, from a
regulatory agency that has jurisdiction over the Property with respect to any
federal, state or local laws, codes, ordinances or regulations relating to the
Property.
 
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(i)          Rights. Seller has not granted to any party, other than Purchaser
hereunder, any option, contract, right of refusal or other agreement with
respect to a purchase or sale of the Property. To Seller’s Actual Knowledge,
there are no leases, occupancy agreements, easements, licenses or other
agreements which grant third-parties any possessory or usage rights to all or
any part of the Property, except as disclosed in the Master Commitment, and
Takedown Commitment or the Seller Documents.
 
(j)          Environmental. To Seller’s Actual Knowledge, neither Seller nor any
third party has used Hazardous Materials on, from, or affecting the Property in
any manner which violates federal, state, or local laws, ordinances, rules,
regulations, or policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production, or disposal of Hazardous
Material, except as may be disclosed in the Seller Documents.
 
For purposes of the foregoing, the phrase “Seller’s Actual Knowledge” shall mean
the current, actual, personal knowledge of Mark Harding as President of Seller,
without any duty of investigation or inquiry and without imputation of any other
person’s knowledge. The fact that reference is made to the personal knowledge of
the above identified individual shall not render such individual personally
liable for any breach of any of the foregoing representations and warranties;
rather, Purchaser’s sole recourse in the event of any such breach shall be
against Seller, and Purchaser hereby waives any claim or cause of action against
the above identified individual arising from Seller’s Representations. Seller
and Purchaser shall notify the other in writing immediately if any Seller’s
Representation becomes untrue or misleading in light of information obtained by
Seller or Purchaser after the Effective Date. In the event that Purchaser elects
to close and Purchaser has actual knowledge (meaning the current, actual,
personal knowledge of Lee Eisenhiem, without any duty of investigation or
inquiry and without imputation of any other person’s knowledge) that any of
Seller’s Representations are untrue or misleading, or of a breach of any of
Seller’ Representations prior to a Closing, without the duty of further inquiry,
Purchaser shall be deemed to have waived any right of recovery with respect to
the matter actually known by Purchaser, and Seller shall not have any liability
in connection therewith.

Seller’s Representations shall survive each respective Closing for a period of
six (6) months, except that any claim for which legal action is filed within
such time period shall survive until resolution of such action, and except to
the extent of any matter that is waived by Purchaser pursuant to the previous
paragraph (and any such matter waived pursuant to the previous paragraph shall
not survive Closing).

Seller makes no promises, representations or warranties regarding the
construction, installation or operation of any amenities within the Development,
including without limitation, clubhouses, swimming pools and/or sports courts.
To the extent that any development plans, site plans, rendering, drawings,
marketing information or other materials related to the Development include,
depict or imply the inclusion of any amenities in the Development, they are
included only to illustrate possible amenities for the Development that may or
may not be built and Purchaser shall not rely upon any such materials regarding
the construction, installation or operation of any amenities within the
Development.

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12.        Purchaser’s Obligations. Purchaser shall have the following
obligations, each of which shall survive each respective Closing and, where
noted, termination of this Contract. Notwithstanding any contrary provision set
forth in this Contract, Seller shall have the right to enforce said obligations
by means of any legal or equitable proceedings including, but not limited to,
suit for actual damages and equitable relief:
 
(a)         Master Covenants; PID Service Plan. Purchaser shall comply with all
obligations applicable to Purchaser under the Master Covenants and under the PID
Service Plan.
 
(b)         Compliance with Laws. With respect to Purchaser’s entry onto the
Property and following each Closing, Purchaser shall comply with and abide by
all laws, ordinances, statutes, covenants, rules and regulations, building
codes, permits, association documents and other recorded instruments (as they
are from time to time amended, supplemented or changed) which regulate any
activities relating to Purchaser’s use, ownership, construction, sale or
investigation of any Lot or any improvements thereon.
 
(c)        Entry Prior to Closing. From and after the Effective Date of this
Contract until applicable Closing Date or earlier termination of this Contract,
and so long as no default by Purchaser exists under this Contract, Purchaser and
its agents, employees and representatives shall be entitled to enter upon the
Property for purposes of conducting soil and other engineering tests and to
inspect and survey any of the Property. If the Property is altered or disturbed
in any manner in connection with any of Purchaser’s activities, Purchaser shall
immediately return the Property to substantially the condition existing prior to
such activities. Purchaser shall promptly refill holes dug and otherwise to
repair any damage to the Property as a result of its activities. Purchaser and
its agents shall not have the right to conduct any invasive testing (e.g.,
borings, drilling, soil/water sampling, etc.), except standard geotech
preliminary investigation, on the Lots, including, without limitation, any
so-called “Phase II” environmental testing, without first obtaining Seller’s
written consent (and providing Seller at least seventy-two (72) hours’ prior
written notice), which consent may be withheld by Seller in its reasonable
discretion and shall be subject to any terms and conditions imposed by Seller in
its reasonable discretion. In the event that Purchaser fails to obtain Seller’s
written consent prior to any invasive testing, in addition to and without
limiting any other obligations Purchaser may have under this Section, Purchaser
shall be fully responsible and liable for all costs of remediation with respect
to any materials disturbed in any manner that requires remediation or that are
removed in connection with such invasive testing and including, but not limited
to, costs for disposal of materials removed during any invasive testing.
Purchaser shall not permit any lien to attach to the Property or any portion of
the Property as a result of the activities. Purchaser shall indemnify, defend
and hold Seller, its officers, directors, shareholders, employees, agents and
representatives harmless from and against any and all mechanics’ and
materialmen’s liens, claims (including, without limitation, personal injury,
death and property damage claims), damages, losses, obligations, liabilities,
costs and expenses including, without limitation, reasonable attorneys’ fees
incurred by Seller, its officers, directors, shareholders, employees, agents and
representatives or their property arising out of any breach of the provisions of
this Section 12(c) by Purchaser, its agents, employees or representatives. The
foregoing indemnity obligation of Purchaser includes acts and omissions of
Purchaser and all agents, consultants and other parties acting for or on behalf
of Purchaser. Purchaser shall maintain in effect during its inspection of the
Property commercial general liability coverage for bodily injury and property
damage in the amount of at least $2,000,000.00 combined single limit, and
automobile liability coverage for bodily injury and property damage in the
amount of at least $2,000,000.00 combined single limit, and the policy or
policies of insurance shall be issued by a reputable insurance company or
companies which are qualified to do business in the State of Colorado and shall
name Seller as an additional insured. In addition, before entering upon the
Property, Purchaser shall provide Seller with valid certificates indicating such
insurance is in effect. The foregoing indemnity shall not apply to claims due to
(i) Hazardous Materials or conditions that are not placed on the Property or
caused by Purchaser or its agents, (ii) pre-existing matters, (iii) or Seller’s
actions or inactions. The indemnity and agreement set forth in this Section
12(c) shall survive the expiration or termination of this Contract for any
reason.
 
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(d)         Architectural Approval. In order to assure that homes constructed by
Purchaser are compatible with the other residential construction in the
Development and the architectural, design, and landscaping criteria and
guidelines included in the approved Administrative Site Plan applicable to the
Property (the “ASP Criteria”) and are otherwise acceptable to Seller, all
construction and landscaping on the Lots shall be subject to the prior review
and approval of Seller. The Master Covenants provide for the formation of an
architectural review committee (“Architectural Review Committee”) and for the
promulgation and adoption of design guidelines (“Design Guidelines”) to be
applied by the Architectural Review Committee. The Master Covenants and the
Design Guidelines provide for an exemption from obtaining Architectural Review
Committee approval for the Seller and any other person whose House Plans (as
hereinafter defined) has been reviewed and approved by the Seller.
 
(i)          Purchaser shall submit to Seller the Purchaser’s elevations, floor
plans, typical landscape plans, exterior color palettes (“House Plans”) for
homes and other buildings, structures and improvements to be located on the Lots
(herein referred to as “Homes”, “Houses” or “Residences”) within twenty (20)
days following delivery of the ASP to Purchaser. Seller will review the House
Plans and Seller shall deliver notice to Purchaser of the Seller’s approval or
disapproval of the House Plans within ten (10) business days after receipt of
the House Plans, with such approval not to be unreasonably withheld, conditioned
or delayed, so long as such plans substantially comply and are generally
consistent and compatible with the ASP Criteria. If Seller fails to so notify
Purchaser of approval or disapproval within such 10-business day period, the
Purchaser shall provide Seller with written notice of the same and Seller shall
notify Purchaser within five (5) business days of its approval or disapproval.
If Seller fails to approve or disapprove within such 5-business day period, the
House Plans shall be deemed approved and/or an appropriate exemption shall be
given to Purchaser. In the event of disapproval, Purchaser shall revise and
resubmit the House Plans to the Seller for reconsideration, addressing the
matters disapproved by the Seller, and the procedure set forth above shall be
repeated until the House Plans are approved by the Seller. After Seller approves
the Purchaser’s House Plans, and before Purchaser commences construction of
Homes on the Lots, Purchaser shall submit to Seller any material changes in the
approved House Plans. Seller shall review the material changes for general
consistency and compatibility with the standards and criteria set forth in the
ASP Criteria and if Seller approves such changes, Seller shall notify Purchaser
within ten (10) business days of its approval, not to be unreasonably withheld,
conditioned or delayed.
 
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(ii)        Purchaser shall obtain Seller approval of House Plans before
commencing construction activities on any Lot. Purchaser shall perform all
construction, development and landscaping in accordance with the approved House
Plans and in conformity with the ASP Criteria and all other requirements, rules,
regulations of any local jurisdictional authority. Purchaser and Seller
acknowledge that the County will not conduct architectural review nor issue
approval of Purchaser’s House Plans, but rather requires the building permit
applicant to comply with the ASP Criteria. Seller’s approval of Purchaser’s
House Plans is only intended as a review for compatibility with other
residential construction in the Development and the ASP Criteria and does not
constitute a representation or warranty that Purchaser’s House Plans comply with
ASP Criteria and Purchaser shall be responsible for confirming such compliance.
 
(e)       Disclosures to Homebuyers. Purchaser shall include in each contract
for the sale of any Home constructed by Purchaser in the Development all
disclosures required by applicable laws, including, but not limited to the
Special District Disclosure, Common Interest Community Disclosure, Mineral
Disclosure and Source of Potable Water Disclosure, and any other disclosure that
applicable laws require to be made to each homebuyer regarding
expansive/low-density soils, radon, NORMs, and other matters (“Homebuyer
Disclosures”). Purchaser shall furnish to Seller upon request a copy of
Purchaser’s disclosures to homebuyers which includes the Homebuyer Disclosures.
 
13.        Force Majeure. Notwithstanding any contrary provision of this
Contract, the time for performance of any obligation of Seller or Purchaser
under this Contract (except for any monetary obligation of either party) shall
be extended if such performance is delayed due to any act, or failure to act, of
any Authority, strike, riot, act of war, act of terrorism, act of violence,
weather, act of God, epidemic/pandemic, or any other act, occurrence or
non-occurrence beyond such party’s reasonable control (each, an “Uncontrollable
Event”). Any extension under the preceding sentence shall continue for a length
of time reasonably necessary to satisfy such delayed obligation; provided,
however, that such extension shall not be for a period of time which is less
than the duration of the Uncontrollable Event. If a party claims a delay due to
an Uncontrollable Event, then such party shall provide written notice to the
other party of the occurrence of a condition that constitutes an Uncontrollable
Event, which notice shall reasonably detail the reason(s) giving rise to the
Uncontrollable Event and a reasonable estimation of the duration (to the extent
determinable at the time of such notice) of the delay that was caused by the
Uncontrollable Event. Each party will make efforts to minimize the delay from
any such Uncontrollable Event to the extent reasonably feasible; provided,
however, that neither party shall be required to use extraordinary means and/or
incur extraordinary costs in order to satisfy its obligations.
 
14.        Cooperation. Purchaser shall reasonably cooperate with and require
its agents, employees, subcontractors and other representatives to cooperate
with all other parties involved in construction within the Development,
including, where applicable, the granting of a nonexclusive license to enter
upon the Property conveyed to Purchaser. Purchaser shall execute any and all
documentation reasonably required by Seller or the Authorities to effectuate any
desired modification or change in connection with Seller’s activities in the
Development including, without limitation, amendments or restatements of the
Master Covenants, or any Final Plat; provided, however, Purchaser shall not be
obligated to execute any such documentation if it will materially adversely
affect the fair market value of the Property or Purchaser’s ability to construct
or to sell its proposed homes within the Property, or if it will materially
increase the cost of such construction, interfere with or delay such
construction.
 
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15.          Fees. Subject to the provisions of Sections 16 and 18 below:
 
(a)          FHA/VA. Seller shall not be required to obtain any approvals
pursuant to FHA, VA or other governmental programs relating to the Lots or the
financing of improvements thereon.
 
(b)        Utility Company Refunds. Any refunds from utility providers relating
to construction deposits for the Property shall be the exclusive property of
Seller. Purchaser shall cooperate with Seller in turning over any such funds and
directing those funds to Seller.
 
16.         Water and Sewer Taps; Fees; and District Matters.
 
(a)      Rangeview Metropolitan District. The water and sewer service provider
for the Lots is the Rangeview Metropolitan District (“Rangeview”) and Purchaser
shall be required to purchase water and sewer taps for the Lots from Rangeview
pursuant to the terms and provisions of a tap purchase agreement in a form
substantially consistent with the one attached hereto and incorporated herein as
Exhibit F (the “Tap Purchase Agreement”). Pursuant to the Tap Purchase
Agreement, Rangeview will agree to sell to Purchaser, and Purchaser will agree
to purchase from Rangeview, a water and sewer tap for each Lot in accordance
with an agreed-upon purchase schedule, but in no event later than the issuance
of a building permit for a Lot. The Tap Purchase Agreement shall be executed by
Rangeview and Purchaser on or before the date of the First Closing. If Rangeview
and Purchaser are unable to agree on a Tap Purchase Agreement before the
expiration of the Due Diligence Period, the Initial Deposit shall be promptly
returned to Purchaser, Purchaser shall deliver to Seller all information and
materials received by Purchaser from Seller pertaining to the Property and any
non-confidential and non-proprietary information otherwise obtained by Purchaser
pertaining to the Property, and thereafter the parties shall have no further
rights or obligations under this Contract except as otherwise provided in
Section 25 below. The combined cost to purchase a water tap and sewer will be
dependent on Lot size, house square footage, number of floors, driveway lanes,
outdoor irrigated square footage, and xeriscape square footage. For example,
based on Rangeview’s rates and charges as of the Effective Date as set forth in
that certain fee schedule attached hereto as Exhibit G (the “Lot Development Fee
Schedule”), a 5,500 square foot lot with a 2,400 square foot house 2 story 2 car
garage with 1,500 square feet of grass would have a computed tap fee equating to
a .9 SFE (1 SFE equal to .4 acre feet of water demand per year) or $24,488.10,
and a sewer tap fee of $4,752.
 
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(b)        District Governance and Financial Matters. The Property is included
within the boundaries of the District and with water and sewer service provided
by Rangeview. Persons affiliated with Seller have been elected or appointed to
the board of directors (“Board”) of the District and Rangeview and serve in that
capacity. Purchaser shall not qualify any persons affiliated with Purchaser as
its representative to serve on the Board of the District or Rangeview and this
prohibition shall survive all Closings and delivery of deeds hereunder until no
person affiliated with Seller serves on the Board. The District has been formed
for purposes that include, but are not limited to financing, owning, maintaining
and/or managing certain tracts and infrastructure improvements (“District
Improvements”) to serve the Development, including the Lots. Purchaser
acknowledges that: (i) the construction of District Improvements shall be
without compensation or reimbursement to Purchaser; and (ii) any reimbursements,
credits, payments, or other amounts payable by the District or Rangeview on
account of the construction of District Improvements or any other matters
related thereto (“Metro District Payments”) shall remain the property of the
Seller and shall not be conveyed to or otherwise be claimed by Purchaser. Upon
request of Seller, the District, or Rangeview, Purchaser will execute any and
all documents that may be reasonably required to confirm Purchaser’s waiver of
any right to Metro District Payments. The provisions of this Section are
material in determining the Purchase Price, and the Purchase Price would have
been higher but for the provisions of this Section. Seller shall provide to
Purchaser as part of the Seller Documents information available relating to the
District including the service plan and schedule of current fees and charges.
This Section shall survive each Closing as set forth herein.
 
(c)        Sky Ranch Community Authority Board. Pursuant to the Colorado
Constitution, Article XIV, Sections 18(2)(a) and (b), and C.R.S. Sections
29-1-203 and -203.5, 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. Pursuant to the Modified Service Plans for Sky
Ranch Metropolitan District Nos. 1, 3, 4 and 5 (“Sky Ranch Districts”), approved
by Arapahoe County on September 14, 2004, as amended (“Service Plans”), and
pursuant to statutory authority, the Sky Ranch Metropolitan District Nos. 1 and
5 have entered into a Sky Ranch Community Authority Board Establishment
Agreement (“CABEA”), creating the CAB. It is anticipated that the Boards of Sky
Ranch Metropolitan District Nos. 3 and 4 will elect to become parties to the
CABEA in the future. The CABEA authorizes the CAB and the Sky Ranch Districts
that are parties to the CABEA to cooperate and contract with each other
regarding administrative and operational functions. One or more of the Sky Ranch
Districts, the CAB or other governmental entity may enter into an
intergovernmental agreement (an “IGA”) pursuant to C.R.S. §§ 29-1-203 and -203.5
to create the Regional Improvement Authority to use revenue generated by the
imposition of the Regional Improvements Mill Levy to plan, design, acquire,
construct, install, relocate, and/or redevelop the Regional Improvements, and
for the administration, overhead and operations and maintenance costs incurred
with respect to the Regional Improvements serving the Development. The Regional
Improvement Authority’s authority may include, without limitation, (i) sharing
or pledging revenue, including ad valorem taxes, to provide a source of funding
to pay for specific regional improvements that serve the Development, (ii) the
issuance of debt by the CAB or other governmental authority to pay for regional
improvements, and (iii) the construction of regional improvements. If and to the
extent that the District enters into such an IGA, Builder agrees that it will
not object to the IGA creating the Regional Improvements Authority; provided
that the total mill levy on a Lot does not exceed the Maximum Mills Limitation.
 
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(d)          Fees.
 
(i)          Seller shall pay any and all of the following to the extent imposed
by any Authority in connection with the Property conveyed to Purchaser: (i) any
parks and recreation fees (including park dedication requirements and/or
cash-in-lieu payments related to the Property as part of the platting thereof);
(ii) drainage fees; (iii) fees for payment-in-lieu of school land dedications.
 
(ii)         Purchaser shall pay all costs or fees that may be imposed by any
Authority relating to the construction, use or occupancy of the Homes to be
constructed on the Lots and any ongoing or periodic maintenance and operations
fees and charges levied or otherwise imposed on Lot owned by Purchaser by any
Authority, including without limitation, those fees set forth in the Lot
Development Fee Schedule attached hereto as Exhibit G; provided, however, that
the fees set forth on Exhibit G are reflective only of the assessments as of the
Effective Date hereof and are subject to periodic increases as determined by the
assessing Authority. Without limiting the foregoing, and except for the fees to
be paid by Seller pursuant to Section 16(d)(i) above, Purchaser shall pay any
and all of the following to the extent imposed in connection with the Property
conveyed to Purchaser: (i) system development fees; (iii) any infrastructure
(facility) fee, including, without limitation, any transportation/road fee,
which may be imposed either by the County, the District or other Authority; (iv)
any impact fees and payment-in-lieu of land dedication fees imposed for roads or
other facilities that are payable at issuance of a building permit for a Home
constructed on a Lot; and (v) any excise fees.
 
(iii)       As of the Effective Date, the District does not levy a system
development fee (“SDF”) against property within the District. If the District at
any time before a Closing adopts a SDF, then at such Closing (and subsequent
Closings) the Purchaser shall pay the District’s SDF applicable to the Lots. In
order to offset Purchaser’s payment of the District’s SDF for a Lot at a
Closing, Purchaser shall receive a credit against the Purchase Price paid by
Purchaser for such Lot at such Closing equal to the amount of the District’s SDF
paid by Purchaser for the Lot.
 
(iv)        The covenants set forth in this Section 16 shall survive each
respective Closing and shall represent a continuing obligation until the
complete satisfaction or payment thereof.
 
17.         Homeowners’ Association. Certain alleys, walkways, landscape tracts,
and other private improvements will serve the Property and may also serve lots
acquired by other builders within Phase B. In order to address the maintenance
obligations related to such private improvements, Seller shall establish a
homeowners’ association that will own and/or maintain such private improvements
(the “Homeowners’ Association”) and cause the Lots to be annexed into such
Homeowners’ Association at Closing hereunder. Within thirty (30) days after the
Effective Date, Seller will deliver to Purchaser (and the other builders) for
its review and reasonable approval, a declaration with respect to the
maintenance of those private improvements (the “Maintenance Declaration”).
Purchaser shall have until fifteen (15) days before the end of the Due Diligence
Period, as the same may be extended, to notify Seller in writing of any
objection that Purchaser may have to the draft Maintenance Declaration. On or
before the fifth (5th) business day following Seller’s receipt of Buyer’s
objections to the draft Maintenance Declaration, Seller shall notify Buyer, in
writing, whether Seller elects to make such modifications to the draft
Maintenance Declaration, with Seller not to unreasonably withhold its consent to
Purchaser’s request; provided, however, that if Seller does not elect to modify,
or elects to modify and does not thereafter modify the Maintenance Declaration
within such 5-business day period and such decision is made on a reasonable
basis, Purchaser shall have the right to either: (i) terminate this Agreement by
delivery of a written termination notice to Seller on or before the end of the
Due Diligence Period, in which event the entire Initial Deposit shall be
promptly returned to Purchaser, Purchaser shall return to Seller all information
and materials received by Purchaser from Seller pertaining to the Property, and
thereafter the Parties shall have no further rights or obligations under this
Agreement except for those which expressly survive the termination hereof; or
(ii) waive any objections to the Maintenance Declaration and proceed with the
transaction contemplated by this Agreement, in which event Purchaser shall be
deemed to have approved the Maintenance Declaration as to which its objections
have been waived. Upon approval of the form of the Maintenance Declaration by
the Parties, the Parties will cause such form to be attached to this Agreement
by a mutually executed amendment hereto. The Maintenance Declaration shall be
recorded in the Records at or before the First Closing and shall constitute a
Permitted Exception hereunder.
 
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18.        Reimbursements and Credits. Purchaser shall have no right to any
reimbursements and/or cost-sharing agreements pursuant to any agreements entered
into between Seller or any of Seller’s affiliates and third parties which may or
may not affect the Property. In addition, Purchaser acknowledges that Seller,
its affiliates, the District, the PID, or other metropolitan district, has
installed or may install certain infrastructure improvements (“Infrastructure
Improvements”) the Interchange Upgrades, and/or donate, dedicate and/or convey
certain rights, improvements and/or real property (“Dedications”) to the County
or other Authority which benefit all or any part of the Property, together with
adjacent properties, and which entitle Seller or its affiliates and/or the
Property or any part thereof to certain reimbursements by the County or other
Authority or credits by the County or other Authority for park fees, open space
fees, school impact fees, capital expansion fees and other governmental fees
which would otherwise be required to be paid to the County or other governmental
or quasi-governmental entity by the owner of the Property or any part thereof
from time to time (“Governmental Fees”). In the event Purchaser is entitled to a
credit or waiver of Governmental Fees by the County and/or any other Authority
as a result of the Infrastructure Improvements, the Interchange Upgrades, and/or
any Dedications, then, in such event, Purchaser shall pay to or reimburse Seller
and/or its designated affiliates in an amount equal to such credited or waived
Governmental Fees at the same time that the Governmental Fees would otherwise be
payable by Purchaser or its assignees to the County or other Authority but for
the construction of the Infrastructure Improvements, the Interchange Upgrades,
and/or any Dedications by Seller, its affiliates, the District, or other
Authority. In addition, Purchaser acknowledges that Seller or its affiliate(s)
may have negotiated or may negotiate with the County or other Authority for
reimbursements to Seller or its affiliates. Purchaser acknowledges that certain
Governmental Fees which may be paid by Purchaser to the County or other
Authority may be reimbursed to Seller and/or its affiliates pursuant to the
terms of said agreement. The obligations and covenants set forth in this Section
18 shall survive the Closing of the purchase and sale of the Property and shall
represent a continuing obligation of Purchaser until complete satisfaction
thereof. Purchaser shall be released from the obligations in this Section 18 to
the extent such obligations are assumed in writing by a subsequent owner of all
or a portion of the Property and a copy of such written assumption is furnished
to Seller. Each special warranty deed conveying the applicable portion of the
Property at each Closing shall contain the foregoing reimbursement covenant,
which reimbursement covenant shall expressly state that it automatically
terminates as to any Lot upon issuance of a certificate of occupancy for a home
constructed on the Lot and conveyance of the Lot to a homebuyer.
 
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19.        Name and Logo. The name and logo of “Sky Ranch” are wholly owned by
Seller. Purchaser agrees that it shall not use or allow the use of the name “Sky
Ranch” or any logo, symbol or other words or phrases which are names or
trademarks used or registered by Seller or any of its affiliates in any manner
to name, designate, advertise, sell or develop the Property or in connection
with the operation or business located or to be located upon the Property
without the prior written consent of Seller, which consent may be withheld for
any reason. Any consent to the use of such names or logos may be conditioned
upon Purchaser entering into a license agreement with Seller, as applicable, at
no additional cost to Purchaser. Notwithstanding the foregoing, however,
Purchaser shall have a non-exclusive, royalty-free license for so long as
Purchaser is building and selling homes in the Development, without the need for
any further consent or approval by Seller, to use the name and logo of “Sky
Ranch” in connection with the use, marketing, sales, development and operation
of the Property, provided that Purchaser shall comply with any requirements
uniformly applicable to all homebuilders in Sky Ranch that Seller promulgates
with respect to such usage.
 
20.        Renderings. All renderings, plans or drawings of the Property or the
Development locating landscaping, trees and any improvements are artists’
conceptions only and may not accurately reflect their actual location. Purchaser
waives any claims based upon any inaccuracy in the location of such items as
depicted on the renderings, plans or drawings.
 
21.       Communications Improvements. Seller may, but is not obligated to,
enter into an agreement with a service provider for the development and
installation of Communication Improvements in all or any portion of the
Development. “Communications Improvements” means any equipment, property and
facilities, if used or useful in connection with the delivery, deployment,
provision or modification of (a) broadband Internet access service; (b)
monitoring service, for the benefit of governmental entities, quasi-governmental
entities, or utilities, regarding the usage of electricity, gas, water and other
resources; (c) video programming or content, including Internet protocol
television (a/k/a “IPTV”) service; (d) voice over Internet protocol (a/k/a
“VoIP”) service; (e) telecommunications services, including voice; (f) any other
service or services delivered by means of the Internet or otherwise delivered by
means of digital signals; and (g) any other service or services based on
technology that is similar to or is a technological extension of any of the
foregoing (“Service”). Communications Improvements do not include any equipment,
facilities or property located or in the home of a person who receives services
from the service provider, such as, but not limited to routers, wireless access
points, in-house wiring, set-top boxes, game consoles, gateways and other
equipment under the control of the owner or occupant of the home. Seller may
grant to such service provider one or more permanent, non-exclusive, perpetual,
assignable and recordable easements (collectively referred to as the “Easement”)
to access and use the Property and other property within the Development, as
necessary, appropriate or desirable, to lay, install, construct, reconstruct,
modify, operate, maintain, repair, enhance, upgrade, regulate, remove, replace
and otherwise use the Communications Improvements. So long as any such Easement
does not materially interfere with Purchaser’s ability to construct its intended
Homes on the Lots, Purchaser shall not object to and shall cooperate with Seller
in connection with the installation and operation of the Communications
Improvements.
 
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22.        Soil Hauling. Purchaser shall be responsible for either relocating
from the Property all surplus soil generated during Purchaser’s construction of
structures on the Property or to import any necessary fill required to complete
Purchaser’s Overex activities or other construction activities. At the option of
Seller, in its sole discretion, the surplus soil shall be transported at
Purchaser’s expense, to a site designated by Seller within the Development;
provided, that Seller has designated and made such a site available to Purchaser
at the time Purchaser is ready to transport surplus soils, if any. Purchaser may
choose its preferred form of transport for such surplus soils, subject to
Seller’s prior written consent to such form of transport, and provided that
Purchaser shall not damage any portion of the Development or interfere with
Seller’s activities within the Development. If and to the extent that Seller
establishes stock pile site within the Development, Seller may modify any such
stock pile locations from time to time in Seller’s discretion (but Purchaser
shall not have any obligation to relocate any soil Purchaser previously
delivered to the prior designated stock pile site). At Seller’s request,
Purchaser shall supply copies of any reports or field assessments identifying
the material characteristics of the excess soil prior to accepting such soil for
fill purposes. Notwithstanding the foregoing, in the event that Seller does not
establish a stock pile site or elects not to accept any surplus soils from
Purchaser, then Purchaser shall, at its sole expense, find a purchaser or taker
or otherwise transport and dispose of such surplus soil upon such terms as it
shall desire, but such surplus soil must still be removed from the Property and
may not be stockpiled on the Property or within the Development after
construction has been completed. At the option of Developer, in its sole
discretion, if Builder needs to import any necessary fill that is required to
complete Builder’s construction activities and Developer has fill dirt available
on the Property, then Developer may make available to Builder, on terms and
conditions determined by Developer, any such fill dirt for transport at
Builder’s expense.
 
23.        Specially Designated Nationals and Blocked Persons List. Purchaser
represents and warrants to Seller that Purchaser and all persons and entities
owning (directly or indirectly) an ownership interest in Purchaser are currently
in compliance with and shall at all times prior to the Closing of this
transaction remain in compliance with the regulations of the Office of Foreign
Assets Control (“OFAC”) of the United States Department of the Treasury
(including those named on OFAC’s Specially Designated and Blocked Persons List)
and any statute, executive order (including the September 24, 2001, Executive
Order Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit or Support Terrorism), or other governmental action relating
thereto. Seller represents and warrants to Purchaser that Seller and all persons
and entities owning (directly or indirectly) an ownership interest in Seller are
currently in compliance with and shall at all times prior to the Closing of this
transaction remain in compliance with the regulations of the OFAC (including
those named on OFAC’s Specially Designated and Blocked Persons List) and any
statute, executive order (including the September 24, 2001, Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism), or other governmental action relating thereto.
 
24.         Assignment.
 
(a)          Seller’s Assignment. Seller may assign its rights and obligations
in whole or in part under this Contract without the consent of Purchaser.
 
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(b)         Purchaser’s Assignment. The obligations of the Purchaser under this
Contract are personal in nature, and neither this Contract nor any rights,
interests, or obligations of Purchaser under this Contract may be transferred or
assigned without the prior written consent of Seller, except that Purchaser may
assign its rights or obligations under this Agreement, without the prior written
consent of Seller, to (i) any affiliate of Purchaser, or (ii) any third-party
from which Purchaser has a contractual right to acquire the Lots pursuant to an
option agreement or similar arrangement with such third-party, but Purchaser
shall not be released from any obligations hereunder.
 
25.         Survival. All covenants and agreements of either party which are
intended to be performed in whole or in part after any Closing or termination of
this Contract, and all representations, warranties and indemnities by either
party to the other under this Contract shall survive such Closing or termination
of this Contract and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided,
however, that Seller’s Representations pursuant to this Contract shall survive
each respective Closing for a period of six (6) months, and any action by
Purchaser based on a breach of any of such Seller’s Representations must be
brought within such six (6) month period.
 
26.        Condemnation. If a condemnation action is filed or either party
receives written notice from any competent condemning authority of intent to
condemn which directly affects any Lot or Lots which Purchaser has a right to
purchase, either party may at its sole discretion by written notice to the other
party within ten (10) days following receipt of such condemnation notice
terminate this Contract as to the Lots subject to the condemnation action and
receive a refund of a prorata portion of the Deposit with respect to those Lots
only, and the parties shall have no further rights or obligations with respect
to those Lots. If the right to terminate is not exercised by either party, this
Contract shall remain in full force and effect with respect to the Lot in
question and upon exercise of the right to purchase the Lot, the Closing shall
proceed in accordance with the terms of this Contract. Any condemnation award
shall be paid to the party who is the owner of the affected Lot at the time the
award is determined by the condemning authority.
 
27.       Brokers. Each Party does hereby represent that it has not engaged any
broker, finder, or real estate agent in connection with the transactions
contemplated by this Contract. Each party agrees to and does hereby indemnify
and hold the other harmless from any and all fees, brokerage and other
commissions or costs (including reasonable attorneys’ fees), liabilities,
losses, damages or claims which may result from any broker, agent or finder,
licensed or otherwise, claiming through, under or by reason of the conduct of
either of them respectively in connection with the purchase of the Lots by
Purchaser.
 
28.         Default and Remedies. Time is of the essence hereof. If any amount
received as a Deposit hereunder or any other payment due hereunder is not paid
by Purchaser, honored or tendered when due and payable, or if each Closing is
not consummated as required in accordance with Section 8 above, or if any other
covenant, agreement, obligation or condition hereunder is not performed or
waived as herein provided within five (5) days (or such longer period as
required under this Contract) after the party failing to perform the same has
received written notice of such failure, there shall be the following remedies:
 
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(a)         Purchaser’s Default. If Purchaser is in default under this Contract,
Seller may terminate this Contract, in which event the Deposit shall be
forfeited and retained on behalf of Seller, and both parties shall, except as
otherwise provided herein, thereafter be released from all obligations
hereunder. It is agreed that, except as otherwise provided in this subpart (a)
and in subparts (c) and (d) below and except with respect to the indemnification
by Purchaser in Sections 10, 12 and 27 above, such payments and things of value
are LIQUIDATED DAMAGES and are SELLER’S SOLE AND ONLY REMEDY for Purchaser’s
failure to perform the obligations of this Contract prior to the Closing. Except
as otherwise provided in this Contract, Seller expressly waives the remedies of
specific performance and additional damages with respect to a default by
Purchaser. Notwithstanding the foregoing or any other contrary provision of this
Contract, Seller’s right to file a claim against Purchaser in accordance with
any provision of this Contract pursuant to which Purchaser agrees to indemnify,
hold harmless and defend Seller from and against any losses, costs, claims,
causes of action or liabilities of any kind or nature, or pursuant to which
Purchaser waives any rights or claims that it may have against Seller, shall
survive for twelve (12) months after any termination of this Contract, and shall
be and remain fully enforceable against Purchaser for said twelve (12) month
period in accordance with the terms of this Contract and applicable laws.
Notwithstanding the foregoing or any other indemnity provision contained herein,
Purchaser shall not be liable for and Seller shall not be entitled to recover
from Purchaser exemplary, punitive, special, indirect, consequential, lost
profits or any other damages.
 
(b)          Seller’s Default. If Seller is in default under this Contract,
Purchaser may elect AS ITS SOLE AND EXCLUSIVE REMEDY either: (i) to treat this
Contract as canceled, in which case the Deposit shall be returned to Purchaser,
and Purchaser shall have the right to recover, as damages, all out‑of‑pocket
expenses incurred by it in negotiating this Contract and in inspecting,
analyzing or otherwise performing its rights and obligations pursuant to this
Contract, but in no event will the amount of such damages exceed Fifty Thousand
Dollars ($50,000.00); or (ii) Purchaser may elect to treat this Contract as
being in full force and effect and Purchaser shall have a right to specific
performance, provided that any such action for specific performance must be
commenced within sixty (60) days after the expiration of the applicable notice
and cure period provided herein, and, in the event specific performance is not
available, then Purchaser may pursue the remedy set forth in clause (i) above.
Seller shall not be liable for and Purchaser shall not be entitled to recover
exemplary, punitive, special, indirect, consequential, lost profits or any other
damages (except for recovery of out‑of‑pocket expenses as set forth in clause
(i) above).
 
(c)        Indemnity. Notwithstanding any contrary provision of this Contract,
any and all provisions of this Contract pursuant to which a party agrees to
indemnify, hold harmless and defend the other party from and against any losses,
costs, claims, causes of action or liabilities of any kind or nature, or
pursuant to which a party waives any rights or claims that it may have against
the other party, shall survive any termination of this Contract, and shall be
and remain fully enforceable against a party in accordance with the terms of
this Contract and applicable laws.
 
(d)        Award of Costs and Fees. Anything to the contrary herein
notwithstanding, in the event of any litigation arising out of this Contract
related to an action for specific performance brought by either party as
permitted in accordance with the terms of this Contract, the court shall award
the substantially prevailing party all reasonable costs and expenses, including
attorneys’ fees, incurred by the substantially prevailing party in the
litigation or other proceedings.
 
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(e)         Post-Closing Defaults. With respect to post-closing defaults, the
parties agree that the non-defaulting party shall be entitled to exercise all
remedies available at law or in equity, except that damages shall be limited to
actual out-of-pocket costs and expenses incurred. The foregoing does not limit
or control the remedies as are to be separately provided in the Lot Development
Agreement.
 
29.         General Provisions.
 
The parties hereto further agree as follows:
 
(a)          Time of the Essence. Time is of the essence under this Contract. In
computing any period of time under this Contract, the date of the act or event
from which the designated period of time begins to run shall not be included.
The last day of the period so computed shall be included unless it is a
Saturday, Sunday, or federal legal holiday, in which event the period shall run
until the end of the next day which is not a Saturday, Sunday, or federal legal
holiday.
 
(b)          Governing Law. This Contract shall be governed by and construed in
accordance with the laws of the State of Colorado.
 
(c)        Severability. Should any provisions of this Contract or the
application thereof, to any extent, be held invalid or unenforceable, the
remainder of this Contract and the application thereof, other than those
provisions which shall have been held invalid or unenforceable, shall not be
affected thereby and shall continue in full force and effect and shall be
enforceable to the fullest extent permitted at law or in equity.
 
(d)       Entire Contract. This Contract embodies the entire agreement between
the parties hereto concerning the subject matter hereof and supersedes all prior
conversations, proposals, negotiations, understandings and agreements, whether
written or oral.
 
(e)        Exhibits. All schedules, exhibits and addenda attached to this
Contract and referred to herein shall for all purposes be deemed to be
incorporated in this Contract by this reference and made a part hereof.
 
(f)          Further Acts. Each of the parties hereto covenants and agrees with
the other, upon reasonable request from the other, from time to time, to execute
and deliver such additional documents and instruments and to take such other
actions as may be reasonably necessary to give effect to the provisions of this
Contract.
 
(g)          Compliance. The performance by the parties of their respective
obligations provided for in this Contract shall comply with all applicable laws
and the rules and regulations of all governmental agencies, municipal, county,
state and federal, having jurisdiction in the premises.
 
(h)        Amendment. This Contract shall not be amended, altered, changed,
modified, supplemented or rescinded in any manner except by a written agreement
executed by both parties.
 
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(i)         Authority. Each of the parties hereto represents to the other that
each such party has full power and authority to execute, deliver and perform
this Contract, that the individuals executing this Contract on behalf of said
party are fully empowered and authorized to do so, that this Contract
constitutes a valid and legally binding obligation of such party enforceable
against such party in accordance with its terms, that such execution, delivery
and performance will not contravene any legal or contractual restriction binding
upon such party or any of its assets and that there is no legal action,
proceeding or investigation of any kind now pending or to the knowledge of each
such party threatened against or affecting such party or affecting the
execution, delivery or performance of this Contract. Each of the parties hereto
represents to the other that each such party is a duly organized, legal entity
and is validly existing in good standing under the laws of the jurisdiction of
its formation.
 
(j)         Notices. All notices, statements, demands, requirements, or other
communications and documents (collectively, “Communications”) required or
permitted to be given, served, or delivered by or to either party or any
intended recipient under this Contract shall be in writing and 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 the address specified below;
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 the address specified below; 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 as specified below; 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 specified below:
 
To Seller:             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

To Purchaser:       Challenger Denver, LLC
8605 Explorer Dr, Ste 250
Colorado Springs, CO 80920
Attn: Tom Zieske
Telephone: (719) 598-5192
Email:    tzieske@challengerhomes.com

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with a copy to:

 
 
 
 
 
 
 
 

 
Attn:
 
 

 
Telephone:

 
 

 
Email:

 
 

If to Title Company:

Land Title Guarantee Company
Attn: Derek Greenhouse
3033 E. 1st Ave. #600
Denver, Colorado 80206
Direct: (303) 331-6239
Email: dgreenhouse@ltgc.com

(k)          Place of Business. This Contract arises out of the transaction of
business in the State of Colorado by the parties hereto.
 
(l)         Counterparts; Facsimile Signature. This Contract may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one (1) and the same instrument, and
either of the parties hereto may execute this Contract by signing any such
counterpart. This Contract 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.
 
(m)       Captions; Interpretation. The section captions and headings used in
this Contract are inserted herein for convenience of reference only and shall
not be deemed to define, limit or construe the provisions hereof. Purchaser and
Seller acknowledge that each is a sophisticated builder or developer, as
applicable, and that each has had an opportunity to review, comment upon and
negotiate the provisions of this Contract, and thus the provisions of this
Contract shall not be construed more favorably or strictly for or against either
party. Purchaser and Seller each acknowledges having been advised, and having
had the opportunity, to consult legal counsel in connection with this Contract
and the transactions contemplated by this Contract.
 
(n)        Number and Gender. When necessary for proper construction hereof, the
singular of any word used herein shall include the plural, the plural shall
include the singular and the use of any gender shall be applicable to all
genders.
 
(o)         Waiver. Any one (1) or more waivers of any covenant or condition by
a party hereto shall not be construed as a waiver of a subsequent breach of the
same covenant or condition nor a consent to or approval of any act requiring
consent to or approval of any subsequent similar act.
 
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(p)          Binding Effect. Subject to the restrictions on assignment contained
herein, this Contract shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
 
(q)         Recordation. Purchaser shall not cause or allow this Contract or any
memorandum or other evidence thereof to be recorded in the County Records or
become a public record without Seller’s prior written consent, which consent may
be withheld at Seller’s sole discretion. If Purchaser records this Contract,
then Purchaser shall be in default of its obligations under this Contract.
 
(r)          No Beneficiaries. No third parties are intended to benefit by the
covenants, agreements, representations, warranties or any other terms or
conditions of this Contract.
 
(s)          Relationship of Parties. Purchaser and Seller acknowledge and agree
that the relationship established between the parties pursuant to this Contract
is only that of a seller and a purchaser of single-family lots. Neither
Purchaser nor Seller is, nor shall either hold itself out to be, the agent,
employee, joint venturer or partner of the other party.
 
(t)          Interstate Land Sales Full Disclosure Act and Colorado Subdivision
Developers Act Exemptions. It is acknowledged and agreed by the parties that the
sale of the Property will be exempt from the provisions of the federal
Interstate Land Sales Full Disclosure Act under the exemption applicable to sale
or lease of property to any person who acquires such property for the purpose of
engaging in the business of constructing residential, commercial or industrial
buildings or for the purpose of resale of such property to persons engaged in
such business. Purchaser hereby represents and warrants to Seller that it is
acquiring the Property for such purposes. It is further acknowledged by the
parties that the sale of the Property will be exempt under the provisions of the
Colorado Subdivision Developers Act under the exemption applicable to transfers
between developers. Purchaser represents and warrants to Seller that Purchaser
is acquiring the Property for the purpose of participating as the owner of the
Property in the development, promotion and sale of the Property and portions
thereof.
 
(u)         Special Taxing 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.
 
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(v)         Common Interest Community Disclosure. In accordance with the
provisions of C.R.S. §38‑35.7‑102(1), Seller provides the following disclosure
to Purchaser: IF SELLER ELECTS TO FORM A HOMEOWNERS ASSOCIATION UNDER THE MASTER
COVENANTS FOR THE DEVELOPMENT, THEN THE PROPERTY IS, OR WILL BE PRIOR TO EACH
RESPECTIVE CLOSING, LOCATED WITHIN A COMMON INTEREST COMMUNITY AND IS, OR WILL
BE PRIOR TO SUCH CLOSING, SUBJECT TO THE DECLARATION FOR SUCH COMMUNITY. THE
OWNER OF THE PROPERTY WILL BE REQUIRED TO BE A MEMBER OF THE OWNER’S ASSOCIATION
FOR THE COMMUNITY AND WILL BE SUBJECT TO THE BYLAWS AND RULES AND REGULATIONS OF
THE ASSOCIATION. THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS WILL IMPOSE
FINANCIAL OBLIGATIONS UPON THE OWNER OF THE PROPERTY, INCLUDING AN OBLIGATION TO
PAY ASSESSMENTS OF THE ASSOCIATION. IF THE OWNER DOES NOT PAY THESE ASSESSMENTS,
THE ASSOCIATION COULD PLACE A LIEN ON THE PROPERTY AND POSSIBLY SELL IT TO PAY
THE DEBT. THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS OF THE COMMUNITY
MAY PROHIBIT THE OWNER FROM MAKING CHANGES TO THE PROPERTY WITHOUT AN
ARCHITECTURAL REVIEW BY THE ASSOCIATION (OR A COMMITTEE OF THE ASSOCIATION) AND
THE APPROVAL OF THE ASSOCIATION. PURCHASERS OF PROPERTY WITHIN THE COMMON
INTEREST COMMUNITY SHOULD INVESTIGATE THE FINANCIAL OBLIGATIONS OF MEMBERS OF
THE ASSOCIATION. PURCHASERS SHOULD CAREFULLY READ THE DECLARATION FOR THE
COMMUNITY AND THE BYLAWS AND RULES AND REGULATIONS OF THE ASSOCIATION.
 
(w)       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.

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(x)       STORM WATER POLLUTION PREVENTION PLAN. Seller has previously filed a
Notice of Intent (“NOI”) and/or prepared a Stormwater Pollution Prevention Plan
(“SWPPP”) to satisfy its stormwater obligations arising from Seller’s work on
the Property. Seller covenants that prior to each Closing Date and until Closing
of the Lots, Seller and/or its contractor shall comply with the SWPPP with
respect to Seller’s work on the Property, and shall comply with all local,
state, and federal environmental obligations (including stormwater) associated
with Seller’s development work on the Property. Seller shall indemnify and hold
Purchaser harmless from all claims and causes of action arising from breach of
the foregoing covenants of Seller to the extent there is an uncured notice of
violation issued with respect to any Lot prior to conveyance of such Lot to
Purchaser. From and after conveyance of Lots, and until such time as such Lots
are subject to Purchaser’s SWPPP (as hereafter defined), Purchaser shall be
solely responsible for complying with the SWPPP, installing and maintaining all
required best management practices (“BMPs”), and conducting and documenting all
required inspections. Purchaser shall also comply with all local, state, and
federal environmental obligations (including stormwater) associated with its
ownership of, development of, and construction on the Lots conveyed to Purchaser
by Seller. Such obligations include, without limitation, (i) complying with the
SWPPP or the Purchaser’s SWPPP, as applicable, (ii) installing and maintaining
all required BMPs associated with Purchaser’s ownership of, development of, and
construction on, the Lots (including without limitation silt fences), and (iii)
conducting and documenting all required inspections. Purchaser covenants and
Seller acknowledges that, with respect to Lots acquired by Purchaser, Purchaser
shall, within ten (10) days after conveyance of such Lots, at its sole cost and
expense (subject to Seller’s prior written approval) submit its own notice of
intent for a new stormwater pollution prevention plan (the “Purchaser’s SWPPP”).
Subsequent to the applicable Closing Date, Purchaser shall comply with the
Purchaser’s SWPPP with respect to all of the Lots then owned by Purchaser, and
shall comply with all local, state, and federal environmental obligations
(including stormwater) associated with its ownership of, development of, or
construction on, all such Lots. Purchaser shall indemnify and hold Seller
harmless from all third party claims and causes of action solely arising from
breach of the foregoing covenants of Purchaser. Notwithstanding anything to the
contrary, Seller is only responsible for complying with the SWPPP to the extent
required to complete Seller’s development work on the Property and is otherwise
not obligated to install any other stormwater management facilities on the Lots,
as shown in the CDs, including without limitation, any SWPPP work to be
conducted by Purchaser, its successors and assigns..
 
(y)        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.
 
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.
 
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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.
 
(z)        Property Tax Disclosure Summary. PURCHASER SHOULD NOT RELY ON
SELLER’S CURRENT PROPERTY TAXES AS THE AMOUNT OF PROPERTY TAXES THAT PURCHASER
MAY BE OBLIGATED TO PAY IN THE YEAR SUBSEQUENT TO PURCHASE. A CHANGE IN
OWNERSHIP OR PROPERTY IMPROVEMENTS TRIGGERS REASSESSMENTS OF THE PROPERTY THAT
COULD RESULT IN HIGHER PROPERTY TAXES. IF PURCHASER HAS ANY QUESTIONS CONCERNING
VALUATION, CONTACT THE COUNTY PROPERTY APPRAISER’S OFFICE FOR INFORMATION.
 
(aa)       Waiver of Jury Trial. 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 CONTRACT.
 
(bb)      Confidentiality. Purchaser and Seller agree that, prior to each
respective Closing, and thereafter if such Closing does not occur, all
information relating to the Property that is the subject of such Closing, any
reports, studies, data and summaries developed by Purchaser, and any information
relating to the business of either party (together, the “Confidential
Information”) shall be kept confidential as provided in this Section. Without
the prior written consent of the other party, prior to the applicable Closing,
the Confidential Information shall not be disclosed by Purchaser, Seller or
their Representatives (as hereinafter defined) in any manner whatsoever, in
whole or in part, except (1) to their Representatives who need to know the
Confidential Information for the purpose of evaluating the Property and who are
informed by Seller or Purchaser as applicable of the confidential nature
thereof; (2) as may be necessary for Seller, Purchaser or their Representatives
to comply with applicable laws, including, without limitation, governmental
regulatory, disclosure, tax and reporting requirements (including, without
limitation, any applicable reporting requirements for publically traded
companies); to comply with other requirements and requests of regulatory and
supervisory authorities and self-regulatory organizations having jurisdiction
over Seller, Purchaser or their Representatives; to comply with regulatory or
judicial processes; or to satisfy reporting procedures and inquiries of credit
rating agencies in accordance with customary practices of Seller, Purchaser or
their affiliates; and (3) to lenders and investors for the transaction. As used
herein, “Representatives” shall mean: Seller’s and Purchaser’s managers,
members, directors, officers, employees, affiliates, investors, brokers, agents
or other representatives, including, without limitation, attorneys, accountants,
contractors, consultants, engineers, lenders, investors and financial advisors.
Seller, at its election, may issue an oral or written press release or public
disclosure of the existence or the terms of this Contract without the consent of
the Purchaser. “Confidential Information” shall not be deemed to include any
information or document which (I) is or becomes generally available to the
public other than as a result of a disclosure by Seller, Purchaser or their
Representatives in violation of this Contract, (II) becomes available from a
source other than Seller, Purchaser or any affiliates of Seller or Purchaser or
their agents or Representatives, or (III) is developed by Seller or Purchaser or
their Representatives without reliance upon and independently of otherwise
Confidential Information. In addition to any other remedies available to a party
for breach of this Section, the non-breaching party shall have the right to seek
equitable relief, including, without limitation, injunctive relief or specific
performance, against the breaching party or its Representatives, in order to
enforce the provisions of this Section. The provisions of this Section shall
survive the termination of this Contract, or the applicable Closing, for one (1)
year.
 
44

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(cc)        Survival. Obligations to be performed subsequent to a Closing shall
survive each Closing.
 
[SIGNATURE PAGE FOLLOWS]
 
45

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IN WITNESS WHEREOF, Seller and Purchaser have executed this Contract effective
as of the day and year first above written.

 
SELLER:
      
PCY HOLDINGS, LLC,
 
a Colorado limited liability company
       By:

Pure Cycle Corporation,
   
a Colorado corporation,
   
its sole member

            By:

/s/ Mark Harding
    Name: 

Mark Harding
    Its:
President

 
PURCHASER:
     
CHALLENGER DENVER, LLC,
 
a Colorado limited liability company
     
By:
/s/ Lee Eisenheim

 
Name:

Lee Eisenheim  
Title:

Sr. Dir. Of Strategy & Community
Development
 
Date:

11.02.2020

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LIST OF EXHIBITS

EXHIBIT A:
CONCEPTUAL DEVELOPMENT PLAN AND LOTTING DIAGRAM
   
EXHIBIT B:
RESERVATIONS AND COVENANTS
   
EXHIBIT C:
FINISHED LOT IMPROVEMENTS
   
EXHIBIT D:
FORM OF GENERAL ASSIGNMENT
   
EXHIBIT E:
FORM OF LOT DEVELOPMENT AGREEMENT
   
EXHIBIT F:
FORM OF TAP PURCHASE AGREEMENT
   
EXHIBIT G:
LOT DEVELOPMENT FEE SCHEDULE (CURRENT AS OF EFFECTIVE DATE)
   
EXHIBIT H:
FORM OF BUILDER DESIGNATION

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EXHIBIT A

CONCEPTUAL DEVELOPMENT PLAN AND LOTTING DIAGRAM

[image00012.jpg]

A-1

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EXHIBIT B

RESERVATIONS AND COVENANTS

Reservation of Easements. For a period of twenty-five (25) years following the
date hereof, Grantor expressly reserves unto itself, its successors and assigns,
easements for construction of utilities and other facilities to support the
development of the properties commonly known as “Sky Ranch,” including but not
limited to sanitary sewer, water lines, electric, cable, broad‑band and
telephone transmission, storm drainage and construction access easements across
the Property allowing Grantor or its assignees the right to install and maintain
sanitary sewer, water lines, cable television, broad‑band, electric, and
telephone utilities on the Property and on its adjacent property, and further,
to accommodate storm drainage from its adjacent property. Such easements shall
not allow above-grade surface installation of facilities and shall require the
restoration of any surface damage or disturbance caused by the exercise of such
easements, shall not be located within the building envelope of any Lot or
otherwise interfere with the use of a Lot for construction of Grantee’s homes,
shall not materially detract from the value, use or enjoyment of (i) the
remaining portion of the Property on which such easements are to be located, or
(ii) any adjoining property of Grantee, and shall not require any reduction in
allowed density for the Property or reconfiguration of planned lots or the
building envelope on a lot. If possible, such easements shall be located within
the boundaries of existing easement areas. Grantor, at its sole expense, shall
immediately restore the land and improvements thereon to their prior condition
to the extent of any damage incurred due to Grantor’s utilization of the
easements herein reserved.

Reservation of Minerals and Mineral Rights. To the extent owned by Grantor,
Grantor herein expressly excepts and reserves unto itself, its successors and
assigns, all right, title and interest in and to all minerals and mineral
rights, including bonuses, rents, royalties, royalty interests and other
benefits that may be payable as a result of any oil, gas, gravel, minerals or
mineral rights on, in, under or that may be produced from the Property,
including, but not limited to, all gravel, sand, oil, gas and other liquid
hydrocarbon substances, casinghead gas, coal, carbon dioxide, helium, geothermal
resources, and all other naturally occurring elements, compounds and substances,
whether similar or dissimilar, organic or inorganic, metallic or non-metallic,
in whatever form and whether occurring, found, extracted or removed in solid,
liquid or gaseous state, or in combination, association or solution with other
mineral or non-mineral substances, provided that Grantor expressly waives all
rights to use or damage the surface of the Property to exercise the rights
reserved in this paragraph and, without limiting such waiver, Grantor’s
activities in extracting or otherwise dealing with the minerals and mineral
rights shall not cause disturbance or subsidence of the surface of the Property
or any improvements on the Property.

B-1

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Reservation of Water and Water Rights. To the extent owned by Grantor, Grantor
herein expressly excepts and reserves unto itself, its successors and assigns,
all water and water rights, ditches and ditch rights, reservoirs and reservoir
rights, streams and stream rights, water wells and well rights, whether
tributary, non-tributary or not non-tributary, including, but not limited to,
all right, title and interest under C.R.S. 37-90-137 on, underlying, appurtenant
to or now or historically used on or in connection with the Property, whether
appropriated, conditionally appropriated or unappropriated, and whether
adjudicated or unadjudicated, including, without limitation, all State Engineer
filings, well registration statements, well permits, decrees and pending water
court applications, if any, and all water well equipment or other personalty or
fixtures currently used for the supply, diversion, storage, treatment or
distribution of water on or in connection with the Property, and all water and
ditch stock relating thereto; provided that Grantor expressly waives all rights
to use or damage the surface of the Property to exercise the rights reserved in
this paragraph and, without limiting such waiver, Grantor’s activities in
dealing with the water and water rights herein reserved shall not cause
disturbance or subsidence of the surface of the Property or any improvements on
the Property.

Reimbursements and Credits. Grantee shall have no right to any reimbursements
and/or cost-sharing agreements pursuant to any agreements entered into between
Grantor or any of Grantor’s affiliates and third parties which may or may not
affect the Property. In addition, Grantee acknowledges that Grantor, its
affiliates or one (1) or more metropolitan district(s) have installed or may
install certain infrastructure improvements (“Infrastructure Improvements”)
and/or donate, dedicate and/or convey certain rights, improvements and/or real
property (“Dedications”) to Arapahoe County (“County”) or other governmental
authority (“Authority”) which benefit all or any part of the Property, together
with adjacent properties, and which entitle Grantor or its affiliates and/or the
Property or any part thereof to certain reimbursements by the County or other
Authority or credits by the County or other Authority for park fees, open space
fees, school impact fees, capital expansion fees and other governmental fees
which would otherwise be required to be paid to the County or other Authority by
the owner of the Property or any part thereof from time to time (“Governmental
Fees”). In the event Grantee is entitled to a credit or waiver of Governmental
Fees by the County and/or other Authority as a result of the Infrastructure
Improvements and/or Dedications, then, in such event, Grantee shall pay to or
reimburse Grantor and/or its designated affiliates in an amount equal to such
credited or waived Governmental Fees at the same time that the Governmental Fees
would otherwise be payable by Grantee or its assignees to the County or other
Authority but for the construction of the Infrastructure Improvements and/or the
Dedications by Grantor, its affiliates and/or metropolitan district(s). In
addition, Grantee acknowledges that Grantee or its affiliate(s) may have
negotiated or may negotiate with the County or other Authority for
reimbursements to Grantor or its affiliates. Grantee acknowledges that certain
Governmental Fees which may be paid by Grantee to the County or other Authority
may be reimbursed to Grantor and/or its affiliates pursuant to the terms of said
agreement.

The obligations and covenants set forth herein shall be binding on Grantee, its
successors and assigns, and any subsequent owners of the Property, except that
homeowners shall have no obligation for any reimbursements provided herein. The
obligation for reimbursements described herein shall automatically terminate
(without the necessity of recording any document) with respect to any
residential lot as of the date of conveyance of such residential lot, together
with a residence constructed thereon, to a homebuyer. Any title insurance
company may rely on the automatic termination language set forth above for the
purpose of insuring title to a home.

B-2

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EXHIBIT C

FINISHED LOT IMPROVEMENTS

1.            “Finished Lot Improvements” means the following improvements on,
to or with respect to the Lots or in public streets or tracts in the locations
as required by all approving Authorities to obtain building permits for home
improvements for the Lots, and substantially in accordance with the CDs:

(a)          overlot grading together with corner pins for each Lot installed in
place, graded to match the specified Lot drainage template within the CDs (but
not any Overex);

(b)          water and sanitary sewer mains and other required installations in
connection therewith identified in the CDs, valve boxes and meter pits,
substantially in accordance with the CDs approved by the approving Authorities,
together with appropriate markers;

(c)          storm sewer mains, inlets and other associated storm drainage
improvements pertaining to the Lots in the public streets as shown on the CDs;

(d)          curb, gutter, asphalt, sidewalks, street striping, street signage,
traffic signs, traffic signals (if any are required by the approving
Authorities), and other street improvements, in the private and/or public
streets as shown on the CDs; Seller will either have applied a final lift of
asphalt or in Seller’s discretion posted sufficient financial guarantees as
required by the County for the Lots to qualify for issuance of building permits
in lieu of such final lift of asphalt;

(e)          sanitary sewer service stubs if required by the Authorities,
connected to the foregoing sanitary sewer mains, installed into each respective
Lot (to a point beyond any utility easement), together with appropriate markers
of the ends of such stubs, as shown on the CDs;

(f)          water service stubs connected to the foregoing water mains
installed into each Lot (to a point beyond any utility easement), together with
appropriate markers of the ends of such stubs, as shown on the CDs;

(g)          Lot fill in compliance with the geotechnical engineer’s
recommendation, and with respect to any filled area or compacted area, provide
from a Colorado licensed professional soils engineer a HUD Data Sheet 79G
Certification (or equivalent) and a certification that the compaction and
moisture content recommendations of the soils engineer were followed and that
the grading of the respective Lots complies with the approved grading plans,
with overlot grading completed in conformance with the approving Authorities
approved grading plans within a +/- 0.2’ tolerance of the approved grading
plans; however, the Finished Lot Improvements do not include any Overex as
provided in Section 10(e) of the Contract;

(h)          all storm water management facilities as shown in the CDs; and

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2.            Dry Utilities. Electricity, natural gas, and telephone service
will be installed by local utility companies. The installations may not be
completed at the time of a Closing, and are not part of the Finish Lot
Improvements; provided, however, that: (i) with respect to electric distribution
lines and street lights, Seller will have signed an agreement with the electric
utility service provider and paid all costs and fees for the installation of
electric distribution lines and facilities to serve the Lots, and all sleeves
necessary for electric, gas, telephone and/or cable television service to the
Lots will be installed; (ii) with respect to gas distribution lines, Seller will
have signed an agreement with the gas utility service provider and paid all
costs and fees for the installation of gas distribution lines and facilities to
serve the Lots. Seller will take commercially reasonable efforts to assist
Purchaser in coordinating with these utility companies to provide final
electric, gas, telephone and cable television service to the residences on the
Lots, however, Purchaser must activate such services through an end user
contract. Purchaser acknowledges that in some cases the telephone and cable
companies may not have pulled the main line through the conduit if no closings
of residences have occurred. Notwithstanding the foregoing, if dry utilities
have not been installed upon Substantial Completion of the Finished Lot
Improvements, Seller shall be obligated to have contracted for same and paid all
costs and fees payable for such installation. Unless Seller has contracted for
such installation and paid such costs before the Effective Date, Seller will
give Purchaser notice when such contracts have been entered and such costs paid.
With respect to any Finished Lot Improvements that are required by the
subdivision improvement agreement applicable to the Lots but which are not
addressed as part of the Finished Lot Improvements, and any other improvements
which are not required for the issuance of building permits but which are
required by the Authorities so that dwellings and other improvements constructed
by Purchaser on the Lots are eligible for the issuance of certificates of
occupancy for homes, Seller shall complete such other improvements, to the
extent required by the County, so as not to delay the issuance of certificates
of occupancy for residences constructed by Purchaser on the Lots.

3.            Tree Lawns/Sidewalks. Notwithstanding anything in the Contract to
the contrary, Seller shall have no obligation to construct, install, maintain or
pay for the maintenance, construction and installation of (i) any landscaping or
irrigation for such landscaping behind the curb on any Lot that is to be
maintained by the owner of such lot (collectively, “Tree Lawns”), but Seller
shall be responsible for constructing and installing the detached sidewalks and
ramps (collectively, “Sidewalks”) that are located immediately adjacent to any
Lot or on a tract as required by the approved CDs, County, or any other
Authority and/or applicable laws as provided in this Contract. Purchaser shall
be responsible for installing any other lead walks, pathways, and driveways and
any other flatwork on the Lots. Purchaser shall install all Tree Lawns on or
adjacent to the Lots in accordance with all applicable CDs, requirements,
regulations, laws, development codes and building codes of all Authorities.

4.            Warranty.

(a)          Government Warranty Period. The Authorities require warranty
periods (each a “Government Warranty Period”) after the final completion that is
applicable to those Finished Lots Improvements that are dedicated to or owned,
and accepted for maintenance by the Authorities (the “Public Improvements”). In
the event defects in the Public Improvements to which a governmental warranty
(each a “Governmental Warranty”) applies become apparent during the applicable
Government Warranty Period, then Seller shall coordinate the repairs with the
applicable 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 Authorities. Any costs and
expenses incurred pursuant to a Government Warranty 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) shall be borne by Seller, unless such
defect was caused by Purchaser or its contractors, subcontractors, employees, or
agents, in which event Purchaser shall pay all such costs and expenses to the
extent such defect was caused by Purchaser or its contractors, subcontractors,
employees, or agents.

C-2

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(b)          Non-Government Warranty Period. Seller warrants (“Non-Government
Warranty”) to Purchaser that each Finished Lot Improvement, other than the
Public Improvements, shall have been constructed in accordance with the CDs for
one (1) year from the date of Substantial Completion of the Improvement (the
“Non-Government Warranty Period”). If Purchaser delivers written notice to
Seller of breach of the Non-Government Warranty during the Non-Government
Warranty Period, then Seller shall coordinate the corrections with Purchaser and
cause the service provider(s) who performed the work or supplied the materials
in which the breach of Non-Government Warranty appears to complete such
corrections or, if such service providers fail to make such corrections,
otherwise cause such corrections to be made to the reasonable satisfaction of
Purchaser. Any costs and expenses incurred in connection with a breach of the
Non-Government Warranty shall be borne by Seller (including, but not limited to,
any costs or expenses incurred to enforce any warranties against service
providers), unless such breach was caused by Purchaser or its contractors,
subcontractors, employees, or agents, in which event Purchaser shall pay all
such costs and expenses to the extent the breach was caused by Purchaser or its
contractors, subcontractors, employees, or agents.

(c)          EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 3, SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND TO PURCHASER IN RELATION TO THE
FINISHED LOT 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 AND SHALL HAVE NO LIABILITY OR RESPONSIBILITY WITH RESPECT TO
ANY DEFECT IN IMPROVEMENTS FOR WHICH NO CLAIM IS ASSERTED DURING THE APPLICABLE
WARRANTY PERIOD.  If and to the extent C.R.S. 13.20-806(7) applies with respect
to any claim arising out of residential property, nothing in this Agreement is
intended to constitute a waiver of, or limitation on, the legal rights, remedies
or damages provided by the Construction Defect Action Reform Act, C.R.S.
13-20-801 et seq., or provided by the Colorado Consumer Protection Act, Article
1 of Title 6, C.R.S., as described in the Construction Defect Action Reform Act,
or on the ability to enforce such legal rights, remedies, or damages within the
time provided by applicable statutes of limitation or repose.

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EXHIBIT D

FORM OF GENERAL ASSIGNMENT

GENERAL ASSIGNMENT

Reference is hereby made to that certain Purchase and Sale Agreement dated as of
_______________, 20__ (the “Agreement”), pursuant to which PCY HOLDINGS, LLC, a
Colorado limited liability company (“Seller”), has agreed to sell to [INSERT
ENTITY], a [INSERT ENTITY TYPE] (“Purchaser”), the Property as described in the
Agreement.

For good and valuable consideration, the receipt of which is hereby
acknowledged, Seller hereby assigns and transfers to Purchaser on a
non-exclusive basis, Seller’s right, title and interest in the following as the
same relate solely to the Property, and to the extent the same are assignable:
(i) all subdivision agreements, development agreements, and entitlements; (ii)
all plats, construction plans and specifications; (iii) all construction
warranties; and (iv) all development rights benefiting the Property.

 
SELLER:
      
PCY HOLDINGS, LLC,
 
a Colorado limited liability company
       By:

Pure Cycle Corporation,
   
a Colorado corporation,
   
its sole member

    By:

 

    Name: 

Mark Harding
    Its:
President

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EXHIBIT E

FORM OF LOT DEVELOPMENT AGREEMENT

LOT DEVELOPMENT AGREEMENT
Sky Ranch – Phase B
(Challenger Homes)

THIS LOT DEVELOPMENT AGREEMENT (this “LDA”) is made as of the ___ day of
_____________, 202__ (the “Effective Date”), by and between PCY HOLDINGS, LLC, a
Colorado limited liability company (“Developer”), and CHALLENGER DENVER, LLC, a
Colorado limited liability company (“Builder,”).  Developer and Builder are
sometimes individually referred to as a “Party” and collectively referred to as
the “Parties.”

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 preliminary concept
map for Phase B of the Development (“Concept Plan”) is depicted on Exhibit A
attached hereto (the “Property”). The Development is being subdivided in several
subdivision filings and developed in phases. The Builder Lots in each phase are
generally depicted on the Concept Plan.
 
B.          Pursuant to the terms of a separate Contract for Purchase and Sale
of Real Estate by and between Developer, as seller, and Builder, as purchaser,
as may be amended from time to time (the “Contract”), Builder is acquiring from
Developer a portion of the Property consisting of approximately 163 single
family residential lots (collectively, the “Builder Lots”) at four (4) closings
(each, a “Takedown”, and collectively, the “Takedowns”), as more specifically
described on Exhibit A, attached hereto and incorporated herein by this
reference.
 
C.          Pursuant to the Contract, Developer has agreed to construct, or
cause to be constructed, those public infrastructure improvements described in
the construction plans and specifications that have been approved by the
Approving Authorities (the “Plans”) and which relate to the final plat(s) of the
Property (each, a “Plat”) and the corresponding subdivision improvement
agreement (“SIA”) as identified in Exhibit B attached hereto (“Improvements”). 
To the extent that Developer has not obtained Final Approval (as defined in the
Contract) of any of the Plans as of the Effective Date, then at such time as any
such Plans have been so approved, and to the extent required, Exhibit B will be
replaced by an updated list of the final approved Plans by amendment to this LDA
(“Revised Exhibit B”).

D.          As required by the terms of the Contract, Builder has agreed (i) to
pay the Initial Purchase Price (as defined in the Contract) for the Builder Lots
that the Builder acquires at a Closing; and (ii) pay that portion of the
Purchase Price for the Builder Lots defined as the Deferred Purchase Price (as
hereinafter defined) in accordance with the terms and provisions of this LDA as
the Improvements are completed and as more particularly set forth herein.
 
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E.          The Parties now desire to enter into this LDA in order to set forth
the terms and conditions under which the Improvements will be constructed by the
Developer and provide for the payment of the Improvements, 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 Builder 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.           Definitions.  Unless otherwise defined herein, all capitalized
terms used in this LDA and not defined in this LDA shall have the same meaning
as set forth in the Contract.

3.           Responsibilities of Developer and Builder.

3.1.        Constructing Party.  The Parties acknowledge and agree that, as of
the Effective Date hereof, Developer is the constructing party hereunder with
the obligation to construct, or cause to be constructed, the public
infrastructure improvements as provided herein, subject to the rights of Builder
and the other builders within the Development, as set forth in Section 4.6, (and
the other builders within the Development as set forth in such builders’
respective LDA), to appoint either Builder or another qualified third party as a
Substitute Constructing Party to assume and take over the construction of the
Improvements.  Any exercise by Builder of the Builder’s Step-In Option (under
Section 4.6), or any similar exercise by another builder within the Development
of its step-in option, shall apply only with respect to completion of the
Improvements to serve the Phase in which such step-in option was exercised.

3.2.        Generally.  Developer shall construct, or cause to be constructed,
the Improvements in substantial conformance with the approved Plans.  Developer
will coordinate, administer, and oversee (a) the preparation and filing of all
applications, filings, submittals, plans and specifications, and other documents
pertaining to construction and installation of the Improvements and (b)
construction and installation of the Improvements.  Developer may engage or
cause to be engaged consultants, contractors and subcontractors who will be
responsible for the 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 Construction Contracts (as hereinafter defined).  Developer and
Builder acknowledge and agree that the Developer may perform its obligations
under this Agreement, in whole or in part, by acting as the project manager
(“PM”) for Sky Ranch Community Authority Board (the “CAB”) and/or the Sky Ranch
Metropolitan District No. 3 (“District”) pursuant to one or more project
management service agreements (collectively, the “Service Agreements”) under
which the Developer will coordinate, manage and administer the construction of
the Improvements for the CAB and/or the District.  In either such event,
Developer may cause the engagement of the Service Providers for and on behalf of
the CAB and/or the District, as applicable, with respect to Improvements that
are constructed by the applicable entity, but Developer shall not be released
from its obligation to Builder to cause the completion of the Improvements,
whether or not Developer acts as PM for the CAB or the District. Each Service
Agreement will permit assignment thereof by Developer to Builder in the event
Builder becomes the Substitute Constructing Party (as set forth in Section
4.6.3).
 
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3.3.         Legal Requirements; Bonds and Assurances.  Developer will comply
with all applicable laws in performing its obligations under this LDA.  As part
of the Costs, Developer shall provide to all applicable Approving Authorities
any bonds, assurance agreements, or other financial assurances required with
respect to the construction of the Improvements and provide to all applicable
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 requested by the Developer (at no cost or
liability to Builder) 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.
 
3.4.         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, subject to the terms of the Contract and except as otherwise
provided in this LDA.
 
3.5.         Dedications.  Developer and Builder shall timely make all
conveyances and dedications of the Improvements as to any Improvements owned by
such Party if and as required by the Approving Authorities, free and clear of
all liens and encumbrances.
 
3.6.         Indemnity.  Developer shall indemnify, defend and hold harmless
Builder and its 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 gross negligence or willful misconduct in
the performance of the construction of the Improvements undertaken by the
Developer.  Notwithstanding the foregoing, Developer shall not be obligated
under this LDA to indemnify the Builder to the extent such liabilities result
from the negligence or willful misconduct of any Builder Indemnitee and
Developer shall not be obligated hereby to indemnify Builder for any claims
arising out of geologic, soils, ground water or other physical conditions
affecting the Lots, or underdrains systems installed by the Developer according
to Plans reviewed and approved by Builder.  Builder shall indemnify, defend and
hold harmless Developer and its respective owners, affiliates, employees,
members, managers, directors, officers, agents, successors and assigns (each an
“Developer Indemnitee” and collectively, the “Developer Indemnitees”) for, from
and against all claims, demands, liabilities, losses, damages, costs and
expenses, including but not limited to court costs and reasonable attorneys’
fees, arising out of or relating to (i) Builder’s or its successor’s
development, construction, use, ownership, management, marketing or sales
activities associated with the Lots and the Property (including, without
limitation, land development, grading, excavation, trenching, and soils
compaction, and construction on the Builder Lots performed by or on behalf of a
Builder); (ii) the soils, subsurface geologic, groundwater or other physical
conditions present on or affecting the Builder Lots; (iii) any change subsequent
to the Effective Date in the Entitlements to the extent that the change was
caused, requested or made by Builder or the design of any residence for which
Builder obtained approval from Seller in accordance with Section 12(d) of the
Contract (each a “Home”, and collectively, the “Homes”) constructed on the
Builder Lots; or (e) homeowner claims asserting or relating to any implied
warranty of habitability, merchantability, or fitness for any particular purpose
in connection with Builder’s construction of one or more Homes on the Builder
Lots.  Notwithstanding the foregoing, Builder shall not be obligated under this
LDA to indemnify, defend or hold harmless Developer from claims arising solely
out of a successor’s development, construction, use, ownership, management,
marketing or sales activities associated with the Builder Lots and the Property
if such successor is approved by Developer and gives Developer a substitute
indemnity that is equivalent to the indemnity provided by the Builder under this
Section 3.6 and such successor is financially sound as reasonably determined by
Developer. Obligations under this Section shall survive the termination or
expiration of this LDA.
 
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3.7.        Insurance.  Developer shall procure and maintain, or 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.
 
3.8.         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 Builder as a result of
performing under the LDA.  The Developer is responsible for and obligated to pay
all assessable federal and state income tax on amounts earned or paid under this
LDA.
 
4.           Construction of Improvements.
 
4.1.         Plans and Specifications.  To the extent that Developer has not
obtained Final Approval of all of the Plans as of the Effective Date, Developer
shall (i) diligently finalize, process and obtain approval of the Plans from the
applicable Approving Authorities and (ii) apply to the utility service provider
for the preparation of electric, gas and telephone dry utility plans (“Utility
Plans”).  If and to the extent Developer receive copies of the approved Utility
Plans from the applicable utility service provider, then upon receipt of any
such approved Utility Plans, Developer will, upon written request by Builder,
furnish Builder with a copy of such Utility Plans.  If after Final Approval of
the Plans, Developer elects to amend such Plans in a manner that will result in
a Material Change (defined below), then Developer shall provide written notice
of such Material Change (a “Notice of Material Change”) to Builder if the
Builder Lots are affected by the change.  The Notice of Material Change shall
describe the modification to the Plans requested by Developer.  Builder shall
have five (5) business days after receipt of the Notice of Material Change to
object to the proposed Material Change (a “Notice of Material Change
Objection”).  Each Notice of Material Change Objection shall describe revisions
to the Material Change that would render it acceptable to Builder.  If Builder
fails to give a timely Notice of Material Change Objection to Developer, the
Material Change shall be deemed approved by Builder.  If Developer performs any
Material Change without first providing Builder with a Notice of Material
Change, or after receiving a Notice of Material Change Objection, which
objection has not been resolved in accordance with the following provisions,
then Developer shall assume responsibility for the cost of correcting any damage
resulting from such action.  Within five (5) business days after delivery to
Developer of a Notice of Material Change Objection, Developer and Builder shall
meet to approve or reject the Material Change.  If Developer and Builder cannot
reach an acceptable resolution regarding the Notice of Material Change
Objection, the dispute shall be resolved pursuant to the arbitration provision
set forth in Section 7 below.  For purposes of this Section 4.1, a “Material
Change” shall consist only of the following changes to the approved Plans for
the Improvements to be installed for the benefit of the Property which have
previously been approved by the applicable Approving Authorities:
 
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4.1.1.     Reduction of the total number of Builder Lots available for the
construction of Homes by more than 10% in any phase or a reduction in the width
of the building envelope below the minimum dimension required by the Contract.
 
4.1.2.     Changes greater than one half (1/2) of one (1) foot to the proposed
finish grade elevation for any of the Builder Lots.
 
4.1.3.     Changes that prevent the construction of a Home on any Builder Lot.
 
4.2.        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 all 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), in compliance with the terms of the SIA
which corresponds to the Plat(s) containing the applicable Builder Lots, and in
substantial conformity with the applicable requirements of the Approving
Authorities and the “Finished Lot Standard” set forth on Exhibit D attached
hereto.  The Construction Standard does not include, and Developer shall have no
obligation with respect to, any so-called “over excavation” or comparable
preparation or mitigation of the soil (hereinafter defined as the “Overex”) on
the Builder Lots, and the Developer shall have no obligation to complete any
Improvement required by the SIA (or any Plat), which is not necessary to obtain
building permits (or certificates of occupancy) for the Builder Lots included in
the applicable Phase.  Builder shall be solely and exclusively responsible with
respect to any Overex that the Builder determines to undertake on the Builder
Lots.  The terms and provision of Section 10(e) (Over Excavation) of the
Contract are hereby incorporated herein by this reference.  The Parties,
including as applicable any Substitute Constructing Party, shall reasonably
cooperate in coordinating the Builder’s completion of the Overex so that the
Overex can be properly sequenced with Developer’s completion of the
Improvements.  In no event shall Developer be liable to Builder for any delay,
costs or damages incurred with respect to such Overex, even if caused by any
delay in installation of Improvements sequenced ahead of the Overex and such any
delay shall extend, on a day-for-day basis, the applicable Substantial
Completion Deadline (as set forth herein).
 
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4.3.        Construction Contracts for Work.  Developer and contractors of
Developer shall construct and/or contract for all of the work and materials for
the construction of the applicable Improvements.  Developer shall have the right
to bid, pursue, negotiate, agree to and execute contracts and agreements with
Service Providers for the work and materials comprising the Improvements (each a
“Construction Contract” and collectively, the “Construction Contracts”), based
upon forms that Developer deems necessary or appropriate in its commercially
reasonable discretion.  Developer shall use commercially reasonable efforts to:
(i) cause each Construction Contract to identify Builder as an intended
third-party beneficiary of such Construction Contract (including, without
limitation, the warranty and indemnity provisions thereof); (ii) require the
Service Provider to name the Builder as additional insured on all required
insurance maintained by the Service Provider for a period expiring not sooner
than final acceptance of the Improvements by the applicable Approving Authority
for which such Service Provider furnished materials or work; (iii) require the
Service Providers to provide a warranty on materials and labor supplied by such
Service Provider for a period coterminous with the warranty period required by
the applicable Approving Authorities for Improvements to be dedicated to an
Approving Authority; (iv) require the Service Provider to perform its work in
accordance with the Construction Standard; (v) 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 or its employees or agents; (vi) 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; and (vii) provide for no limitation on remedies
against the Service Provider for a default except the prohibition of recovery of
punitive damages.  Upon receipt of written request from Builder, Developer shall
deliver a copy of each Construction Contract to Builder.
 
4.4.        Commencement and Completion Dates.  Developer shall use commercially
reasonable efforts to cause construction of the Improvements to be commenced and
completed as follows:

4.4.1.      Commencement; Construction Schedule; Completion.  The Improvements
will be completed in phases consisting of one phase with respect to the Takedown
1 Lots, one subsequent phase with respect to the Takedown 2 Lots, one subsequent
phase with respect to the Takedown 3 Lots, and one subsequent phase with respect
to the Takedown 4 Lots, for a total of four (4) phases (each a “Phase”). 
Developer shall cause Substantial Completion (as hereinafter defined) of the
Improvements in each Phase to occur on or before the applicable deadline
therefor (each, a “Substantial Completion Deadline”), subject to Section 4.4.2
below.  The Substantial Completion of the first Phase of Improvements (“Phase
1”) shall occur on or before that date which is twelve (12) months after the
First Closing of the Takedown 1 Lots (the “Phase 1 Completion Deadline”);
Substantial Completion of the second Phase of Improvements (“Phase 2”) shall
occur on or before that date which is the later of (a) twelve (12) months after
the Second Closing of the Takedown 2 Lots and (b) ____________, 20__ (the “Phase
2 Completion Deadline”); Substantial Completion of the third Phase of
Improvements (“Phase 3”) shall occur on or before that date which is the later
of (i) twelve (12) months after the Third Closing of the Takedown 3 Lots and
(ii) ____________, 20__ (the “Phase 3 Completion Deadline”); and Substantial
Completion of the fourth Phase of Improvements (“Phase 4”) shall occur on or
before that date which is the later of (A) twelve (12) months after the Fourth
Closing of the Takedown 4 Lots and (B) ____________, 20__ (the “Phase 4
Completion Deadline”).  Developer may cause 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
portions of the Development other than the Property; or cause Improvements to be
constructed and installed in accordance with scheduling requirements of the
County and other Approving Authorities or in advance of the Substantial
Completion dates set forth above.  Notwithstanding anything to the contrary,
Developer shall have no obligation to install landscaping during the months of
October through April.
 
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4.4.2.     Force Majeure.  Notwithstanding any contrary provision of this LDA,
the Substantial Completion Deadline for each Phase and the time for performance
of any other Developer obligation under this LDA shall be extended if such
performance or progress in construction of the Improvements is delayed due to
any Dispute, as defined below, acts or failures to act of any Approving
Authority, strike, riot, act of war, act of terrorism, act of violence, weather,
act of God, epidemic/pandemic, or any other act, occurrence or non-occurrence
beyond Developer’s reasonable control (each, an “Uncontrollable Event”).  Any
extension under the preceding sentence shall continue for a length of time
reasonably necessary to satisfy such delayed obligation; provided, however, that
such extension shall not be for a period of time which is less than the duration
of the Uncontrollable Event.  If Developer claims a delay due to an
Uncontrollable Event, then Developer shall provide written notice to the Builder
of the occurrence of a condition that constitutes an Uncontrollable Event, which
notice shall reasonably detail the reason(s) giving rise to the Uncontrollable
Event and a reasonable estimation duration (to the extent determinable at the
time of such notice) of the delay that was caused by the Uncontrollable Event. 
Developer will make efforts to minimize the delay from any such Uncontrollable
Event to the extent reasonably feasible; provided, however, that Developer shall
not be required to use extraordinary means and/or incur extraordinary costs in
order to satisfy its obligations hereunder.
 
4.5.        Substantial Completion.
 
4.5.1.     Definition of Substantial Completion.  “Substantial Completion” of
the Improvements (or applicable component thereof) shall be deemed to have
occurred when; (a) the Improvements (or applicable component thereof) have been
installed pursuant to the Construction Standard and shall be substantially
complete so that Builder is not precluded from obtaining from the Approving
Authorities building permits for Homes constructed, or to be constructed, on any
Builder Lots solely as a result of such Improvements (or applicable component
thereof) not being complete; and (b) no mechanics’ or materialmen’s liens shall
have then been filed against any of the Builder Lots with respect to the
Improvements and final unconditional 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.  Notwithstanding the foregoing to the
contrary, with respect to any Improvements that are required pursuant to the
Construction Standard (or the applicable subdivision improvement agreement), but
which are not required by the Approving Authority to obtain building permits,
but are necessary prior to the issuance of certificates of occupancy for Homes
on the Builder Lots, completion of such Improvements is not required to achieve
Substantial Completion, but the Developer shall either: (a) complete or cause
the completion of such other Improvements at a later time, or (b) post such
collateral, as required by the Approving Authorities in order to obtain
certificates of occupancy; so as not to delay the issuance of certificates of
occupancy for Homes constructed by Builder on the Builder Lots.
 
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4.5.2.     Inspection.
 
(a)          Notice to Builder.  Developer shall notify the Builder in writing
when Substantial Completion of the Improvements (or applicable component
thereof) on the Builder Lots has been achieved, except for minor punch-list work
which does not affect the ability to obtain building permits or certificates of
occupancy, as applicable, for Homes on the Builder Lots.  Within ten (10) days
after receipt by the Builder such notice from the Developer, the Parties shall
jointly inspect the Improvements (or applicable component thereof) on the
Builder Lots and produce a punchlist (“Builder Punchlist”).  The Builder
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 Construction Standard.  Builder shall not be able
to object to, or provide Builder Punchlist items for, any portion of the
Improvements previously inspected by the Builder except in the case of
construction defects, or any portion of the Improvements constructed by Builder
as the Substitute Constructing Party.  If the Parties are unable to agree upon a
Builder Punchlist within five (5) business days after the joint inspection
described above, then any dispute related to such Builder Punchlist shall be
submitted to the expedited dispute resolution procedures in accordance with
Section 7 below.  Upon written request by the Builder, the Developer will
provide copies of any inspection reports or punchlists received from the
Approving Authorities in connection with the inspection of the Improvements, and
the Developer shall be responsible to correct punchlist items from the Approving
Authority and items set forth on the Builder Punchlist.  In the event of a
conflict between corrective action required by the Approving Authority and
corrective action required by the Builder Punchlist, the punchlists received
from the Approving Authorities shall control. Notwithstanding anything to the
contrary, including any Builder Punchlist item, if an Approving Authority grants
preliminary approval or construction acceptance of any of the Improvements, or,
with respect to grading, if the engineer issues a certification with respect to
the grading, fill and compaction in accordance with item (g) of Exhibit D, then
it shall be conclusively presumed that such Improvement or work was completed in
accordance with the Construction Standard, subject to completion of the
punchlist items provided by the Approving Authority.  If an item is not
identified as incomplete on the Builder Punchlist or any Approving Authority
punchlist, then it shall conclusively be presumed that such Improvement was
completed in accordance with the Construction Standard, and thereafter the
Builder and not Developer, regardless of which Party is the constructing party,
shall be responsible for repairing damage to such Improvement occurring after
completion of the Builder Punchlist work unless such damage is determined either
by agreement of the parties or pursuant to Section 7 of this LDA to be the
result of a design or construction defect.  Disputes regarding Builder Punchlist
items and matters will be resolved pursuant to the expedited dispute resolution
procedures set forth in Section 7 of this LDA.
 
(b)          Correction of Punchlist Items.  Developer shall cause any punchlist
items to be corrected within the time required by the County or other applicable
Approving Authorities.
 
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(c)          Interim Inspections.  Upon reasonable prior notice, Builder may
inspect the construction of the Improvements on the Builder Lots; provided,
however, such inspection shall be (i) at the sole risk of Builder, (ii) such
inspection shall be non-invasive and shall be performed in a manner that does
not interfere with or result in a delay in the construction of the Improvements,
and (iii) Builder shall indemnify Developer for any damage resulting from such
inspection.
 
4.6.        Self-Help Remedy.
 
4.6.1.     Notice of Default.  If Developer does not Substantially Complete the
Improvements in accordance with the Plans on or before the applicable
Substantial Completion Deadline, as may be extended by any Uncontrollable Event
(a “Constructing Party Default”), then the Builder may deliver to Developer
written notice of such Constructing Party Default (a “Notice of Default”). 
Developer shall have thirty (30) days after receipt of a Notice of Default from
the 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
sixty (60) days) so long as Developer has commenced in good faith and with due
diligence to cause such Constructing Party Default to be remedied.  If Developer
does not timely cure the Constructing Party Default within the Cure Period, as
may be extended pursuant to the preceding sentence or as a result of
Uncontrollable Events (an “Event of Default”), then the Builder may elect to
appoint either itself or another qualified third party (which may include
another builder under contract with Developer to purchase lots within the
Development, provided that such builder agrees to, and accepts, such
appointment) (“Substitute Constructing Party”) to assume and take over the
construction of the Improvements by providing written notice to Developer of its
election (an “Assumption Notice”).  With respect to any Improvements that
Developer causes to be constructed as PM for the CAB (or the District) under
either Service Agreement, the Substitute Constructing Party’s right to take over
the construction of the Improvement shall be the right to step into the rights
of Developer as the PM under the Service Agreements and assume the role of the
PM thereunder, including the right to submit draw requests to the CAB, or the
District, for payment of Service Providers and other construction costs to
complete the Improvements.  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
receipt of any cost savings prior to the Assumption Notice.  The Builder’s
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 4.6.2 below shall thereafter be the Builder’s
sole and exclusive remedy, except that the limitation on Builder’s remedies for
a Constructing Party Default shall not apply to Developer’s indemnity
obligations in this LDA.  Notwithstanding anything contained in this Section 4.6
to the contrary, the rights of any party, including Builder, to step in and act
as a Substitute Constructing Party, in place of Developer, shall apply only with
respect to a Constructing Party Default pertaining the Developer’s failure to
Substantially Complete the Improvements for a particular Phase and the Builder
rights under this Section 4.6 must be exercised with respect to a Constructing
Party Default on a phase-by-phase basis.
 
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4.6.2.     Assumption Right.  If Builder delivers an Assumption Notice, or if
Builder or another builder exercises the Builder’s Step-In Option with respect
to the Joint Improvements (as such terms are defined below), then: (i) Developer
shall cooperate to allow the Substitute Constructing Party to take over and
complete the incomplete Improvements for the applicable Phase, including, as
applicable, 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 Construction Contracts with
third parties pertaining to the Improvements, and/or assignment of the Service
Agreements so that Substitute Constructing Party can take over as PM thereunder;
(ii) Developer shall be relieved of all further obligations under this LDA with
respect to the completion of the incomplete Improvements for the applicable
Phase; (iii) Developer shall remain liable for its gross negligence or willful
misconduct, and any indemnification obligations specified herein incurred prior
to the date of such Assumption Notice; and (iv) Substitute Constructing Party
shall assume and perform all obligations under all Contracts and the Service
Agreements pertaining to the construction of the Improvements for the applicable
Phase which Substitute Constructing Party will complete to the extent such
obligations are to be performed after the date of delivery of the Assumption
Notice.  Upon delivery of an Assumption Notice, Substitute Constructing Party
shall be obligated to complete or cause the completion of the Improvements for
the applicable Phase and pay the Costs incurred thereafter by Substitute
Constructing Party to complete such Improvements (subject to Developer’s funding
obligation under the Joint Improvements Memorandum (as hereinafter defined), and
Substitute Constructing Party’s rights as PM under the Service Agreements to
process payments through the CAB and/or the District.  If a Substitute
Constructing Party assumes the obligation to construct the Improvements for the
applicable Phase, the Substitute Constructing Party shall use commercially
reasonable and diligent efforts to Substantially Complete the applicable
Improvements under existing Construction Contracts, construction budgets and
other similar construction documents, and the Builder’s obligation for the
payment of costs under Section 6 which are due and payable after the date of the
Assumption Notice shall be suspended until Substantial Completion of the
Improvements for the applicable Phase and thereupon all Costs incurred and paid
by Builder shall be offset against the unpaid portions of the Deferred Purchase
Price (as hereinafter defined).  If the amount of the unpaid portions of the
Deferred Purchase Price is insufficient to offset the Costs incurred and paid by
Builder, then Developer will pay to Builder the amount of the deficiency within
thirty (30) days after Builder presents Developer with an invoice for such
payment, including reasonable supporting documentation for the Cost incurred by
Builder.  Invoices not paid within thirty (30) days after receipt shall bear
simple interest at the rate of twelve percent (12%) per annum (the “Default
Interest Rate”) until paid.  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 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 LDA.
 
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4.6.3.      Appointment of Substitute Constructing Party.  For purposes of
exercising the self-help remedies set forth in this Section 4.6 with respect to
an Event of Default, Builder may elect to appoint either itself or another
Substitute Constructing Party (which may include another builder under contract
with Developer to purchase lots within the Development, provided that such
builder agrees to, and accepts, such appointment) who shall then have the right
and authority to act pursuant to the self-help provisions of this Section 4.6
(“Designated Builder”).  If the cure of an Event of Default requires the
construction or completion of Improvements that serve the Builder Lots and other
lots that are owned by another builder that is under contract with Developer for
the completion of such Improvements (the “Joint Improvements”), then Builder
shall have the non-exclusive right, but not the obligation, to step in and
complete such Joint Improvements pursuant to the self-help provisions of this
Section 4.6 (“Builder’s Step-In Option”).  If Builder desires to exercise the
Builder’s Step-In Option, it shall give notice thereof to Developer and the
other builders; provided, that, the first builder to give such notice, shall be
deemed the Substitute Constructing Party authorized to act on behalf of all such
builders pursuant to the self-help provisions of this Section 4.6 (or such
similar provisions set forth in such other builder’s LDA) with respect to the
Joint Improvements.  The Developer, Builder, the other builders(s) affected by
any joint improvements and the Title Company will at Closing execute a “Joint
Improvements Memorandum” that describes the rights and obligations of Developer,
Builder, such other builder(s) and Title Company and such document will
supplement this LDA regarding the installation and construction of any Joint
Improvements.  The form of the Joint Improvements Memorandum is attached hereto
as Exhibit F.
 
4.7.         Over-Excavation of Lots.  The Parties acknowledge that the
Improvements shall not include Overex of the Builder Lots.  Builder, with
respect to its Builder Lots shall, at its sole cost, cause the Overex to be
performed, and shall have the right to enter such Builder Lots for the purposes
of performing the Overex; provided, however, that such entry shall be performed
in a manner that does not interfere with or result in a delay or an increase in
the Costs or any expenses in the construction of the Improvements, and provided
further that Builder shall promptly repair any portion of the Builder Lots and
adjacent property that is damaged by Builder or its agents, designees,
employees, contractors, or subcontractors in performing the Overex.  THE PARTIES
ACKNOWLEDGE AND AGREE THAT DEVELOPER IS NOT PERFORMING ANY OVER-EXCAVATION OF
THE BUILDER LOTS AND THAT THE DEVELOPER SHALL HAVE NO LIABILITY WHATSOEVER WITH
RESPECT TO OR ARISING OUT OF ANY OVER-EXCAVATION OF THE BUILDER LOTS OR
EXPANSIVE SOILS PRESENT ON THE BUILDER LOTS AND DEVELOPER EXPRESSLY DISCLAIMS
ANY LIABILITY WITH RESPECT TO ANY OVER-EXCAVATION OF THE BUILDER LOTS AND
EXPANSIVE SOILS PRESENT ON THE BUILDER LOTS.  BUILDER SHALL INDEMNIFY, DEFEND
AND HOLD HARMLESS DEVELOPER AND ITS 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, ARISING OUT OF ANY EXPANSIVE SOILS, OVER-EXCAVATION OR OTHER SOIL
MITIGATION OR BUILDER’S ELECTION NOT TO PERFORM SOILS MITIGATION, ON OR
PERTAINING TO THE BUILDER LOTS.  THE PROVISIONS OF THIS SECTION 4.7 SHALL
EXPRESSLY SURVIVE THE EXPIRATION OR TERMINATION OF THIS LDA.
 
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4.8.        Warranty Periods.
 
4.8.1.     Government Warranty Period.  The Approving Authorities may require a
warranty period after the Substantial Completion of the 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) shall be borne by the Developer, except for damage that was caused by
the 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
Builder or its contractors, subcontractors, employees, or agents.  Any damage to
an Improvement that was not listed on the Builder Punchlist shall be presumed to
have been caused by the Builder, or its contractors, subcontractors, employees,
or agents, unless the Builder conclusively proves that the damage was caused by
a third party or as the result of a design or construction defect in the
original construction by Developer as determined by agreement of the parties or
as determined in a legal proceeding pursuant to the Expedited Dispute procedure
in Section 7, below.
 
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4.8.2.     Non-Government Warranty Period.  Developer shall warrant
(“Non-Government Warranty”) to Builder 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 such
Improvement (the “Non-Government Warranty Period”).  If the Builder delivers
written notice to the Developer of breach of the Non-Government Warranty during
the Non-Government Warranty Period, then the Developer shall coordinate the
corrections with the Builder 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 shall be borne by the
Developer (including, but not limited to, any costs or expenses incurred to
enforce any warranties against Service Providers), except for any breach or
damage that was caused by the Builder or its contractors, subcontractors,
employees, or agents, in which event the Builder Party shall pay all such costs
and expenses to the extent caused by the Builder or its contractors,
subcontractors, employees, or agents.  Any damage to an Improvement that was not
listed on the Builder Punchlist shall be presumed to have been caused by the
Builder or its contractors, subcontractors, employees, or agents, unless the
Builder conclusively proves that the damage was caused as the result of a design
or construction defect in the original construction by the Developer.  EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 4.8.1 OR 4.8.2, 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
Builder’s statutory rights or remedies which may not be modified by contract.
 

4.9.         License for Construction.  Each Party hereby grants to the
Developer or the Substitute Constructing Party (as applicable) and the Service
Providers a temporary, non-exclusive license to enter upon the Property owned by
such Party, including the Builder Lots, as reasonably necessary for the
installation of the Improvements, rough grading of the Builder Lots, stubbing of
utilities and/or the performance of the Developer’s (or Substitute Constructing
Party’s, as applicable) responsibilities under this LDA.  Each Party further
agrees to grant such separate written rights of entry and/or licenses in or upon
the Property owned by such Party, including the Builder Lots, as may be
reasonably necessary for installation of the Improvements, rough grading of the
Builder Lots and stubbing of utilities.  No rights of entry and/or licenses over
any portion of the Property may be exercised or used by a Party in any fashion
that would unreasonably interfere with or adversely impact any other Party’s
development of its parcel.  The rights under this Section or any instruments
delivered hereunder shall terminate upon the expiration of all Government
Warranty Periods.
 
4.10.       Liens.  Developer shall pay, or cause to be paid, when due, all
liens and claims for labor and/or materials furnished to the Builder Lots
pursuant to this LDA 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.  Developer shall indemnify, defend and hold harmless the Builder
for, from and against all injuries, losses, liens, claims, demands, judgments,
liabilities, damages, costs and expenses (including but not limited to court
costs and reasonable attorneys’ fees and expenses) sustained by or made or
threatened against Builder, which result from or arise out of or in connection
with mechanics' or materialmen's liens, stop notices or bonded stop notices
which may be asserted against Builder or such party’s property (including, as
applicable, any Builder Lot) as a result of Developer’s actions in connection
with the construction of the Improvements.  Developer will, within sixty (60)
calendar days after written notice from Builder, or within sixty (60) days after
Developer otherwise becomes aware of such Liens, terminate the effect of any
Liens by filing or recording an appropriate release or bond if so requested by
Builder.  If the Builder requests that Developer file and obtain any such
release or bond and the Developer fails to do so within sixty (60) calendar days
of such request, the Builder may obtain such bond or secure such release on
behalf of Developer and offset all costs and fees related thereto against any
amount payable by Builder pursuant to this LDA.  If any mechanic's or
materialmen's lien is not removed from each Builder Lot affected thereby prior
to the scheduled closing of the retail sale of such Builder Lot, then the notice
and cure period above shall not apply and Builder shall have the right to
immediately exercise its right to secure such bond or release. If no amounts are
payable by Builder under this LDA, then Developer shall reimburse the Builder
for all costs and fees related securing such bond or release, within thirty (30)
days after receipt of written request therefor and any such cost or amount that
is not paid by the Developer to the Builder when due shall bear interest at the
Default Interest Rate from the due date thereof until paid in full (together
with such interest).  Notwithstanding the foregoing, Developer shall have no
obligation with respect to Liens which arise as a result of Builder’s failure to
timely pay any sum due under the Contract or this LDA.
 
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4.11.       Tree Lawns/Sidewalks. Notwithstanding anything in this LDA to the
contrary, Developer, as Constructing Party, shall have no obligation to
construct, install, maintain or pay for the maintenance, construction and
installation of any landscaping or irrigation for such landscaping behind the
curb on any Builder Lot that is to be maintained by the owner of such lot
(collectively, “Tree Lawns”), but Developer shall be responsible for
constructing and installing the detached sidewalks and ramps (collectively,
“Sidewalks”) that are located immediately adjacent to any Builder Lot or on a
tract as required by the approved Plans, County, or any other Approving
Authority and/or applicable laws as provided in this LDA.  Builders shall be
responsible for installing any other lead walks, pathways, and driveways and any
other flatwork on the Builder Lots.  Builder shall install all Tree Lawns on or
adjacent to its Builder Lots in accordance with all applicable Plans,
requirements, regulations, laws, development codes and building codes of all
Approving Authorities and such Tree Lawns shall not be considered part of the
Improvements.
 

4.12.      Soil Hauling.  Builder shall be responsible for relocating from the
Builder Lots all surplus soil generated during Builder’s construction of
structures on the Builder Lots, if any, and for importing any necessary fill
required to complete Builder’s construction activities.  At the option of
Developer, in its sole discretion, any surplus soil shall be transported at
Builder’s expense to a site designated by Developer within the Development;
provided, that Developer has designated and made such a site available to
Builder at the time Builder is ready to transport surplus soils, if any. 
Builder may choose its preferred form of transport for such surplus soils,
subject to Developer’s prior written consent to such form of transport, and
provided that Builder shall not damage any portion of the Development or
interfere with Developer’s activities within the Development.  Developer may
modify any such stock pile location from time to time in Developer’s
discretion.  At Developer’s request, Builder shall supply copies of any reports
or field assessments identifying the material characteristics of the excess soil
prior to accepting such soil for fill purposes and if Developer does not accept
any surplus soils from Builder, then Builder shall, at its sole expense, find a
purchaser or taker or otherwise transport and dispose of any surplus soil upon
such terms as it shall desire, but such surplus soil must still be removed from
the Property and may not be stockpiled on the Property or within the Development
after construction has been completed.  At the option of Developer, in its sole
discretion, if Builder needs to import any necessary fill that is required to
complete Builder’s construction activities and Developer has fill dirt available
on the Property, then Developer may make available to Builder, on terms and
conditions determined by Developer,  any such fill dirt for transport at
Builder’s expense.
 
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5.           Costs of Improvements.
 
5.1.        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 compliance with all
applicable laws, costs of insurance required by this LDA, 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.
 
5.2.        Deferred Purchase Price; Additional Costs.  As set forth in Section
6, below, Builder shall pay to Developer, the Deferred Purchase Price which is
equal to the sum of:
 
(a) $48,300 per 35’ Alley Load Lot,
 
(b) $58,000 per SFD 45’ Lot,
 
(c) plus the applicable Escalator; and
 
(d) the Builder Required Costs, if any, as defined below;
 
(collectively, the “Maximum Builder Costs”).  The term “Builder Required Costs”
means those Costs which represent increases in Developer’s costs, as reasonably
determined by the Developer to the extent such increases result from (a) changes
requested by Builder to the approved Plans, Entitlements, and/or Improvements,
(b) Builder’s breach of its obligations under this LDA, and (c) Builder’s
actions or inactions under this LDA, the Contract, or otherwise.  Builder shall
immediately pay all Builder Required Costs upon receipt of an invoice therefor
from the Developer and Developer’s determination of Builder Required Costs shall
be binding on the Parties except in the event of manifest error.  Developer
shall pay all Costs which exceed the Maximum Builder Costs as set forth above,
subject to payment of costs due from other builders. Builder shall not be
responsible for any increase in Developer costs which are the result of changes
requested by other builders.  In the event Builder disputes any Builder Required
Costs and the parties cannot resolve such dispute within 30 days, either party
shall have the right to submit such dispute to arbitration in accordance with
the provisions in Section 7, below.
 
6.           Payment of Costs.  Pursuant to the terms of the Contract, Builder
shall pay to Developer, as Seller, part of the Purchase Price in cash at each
closing (the “Initial Purchase Price”), and pay in accordance with the terms of
this LDA a deferred portion of the Purchase Price (“Deferred Purchase Price”)
equal to the Maximum Builder Costs (including Builder Required Costs, if any)
which represents Builder’s share of the Costs of the Improvements.  After
Builder pays the Initial Purchase Price under the Contract, Builder has no
responsibility for payment of any funds in excess of the Maximum Builder Costs. 
The Deferred Purchase Price is payable to Developer in installments based upon
completion of the Improvements that serve each Phase of the Builder Lots as
follows:
 
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6.1.        Takedown 1 Lots – Phase 1. Phase 1 consists of approximately
thirty-two (32) 35’ Alley Lots and twenty (20) SFD 45’ Lots, as identified on
the Concept Plan (the “Phase 1 Lots”).  Upon Substantial Completion of the Wet
Utilities that serve the Phase 1 Lots in accordance with Section 4.5 above,
Builder shall pay to Developer one-half (1/2) of the Deferred Purchase Price due
for each of the Phase 1 Lots, as set forth on Exhibit G, attached hereto and
incorporated herein by this reference (the “Takedown Matrix”) plus the
applicable Escalator.  Upon Substantial Completion of the Improvements that
serve the Phase 1 Lots in accordance with Section 4.5 above, Builder shall pay
the Developer the balance of the Deferred Purchase Price due for each of the
Phase 1 Lots, as set forth on the Takedown Matrix, plus the applicable
Escalator.
 
6.2.        Takedown 2 Lots – Phase 2. Phase 2 consists of approximately
twenty-three (23) 35’ Alley Lots and twenty (20) SFD 45’ Lots, as identified on
the Concept Plan (the “Phase 2 Lots”).  Upon Substantial Completion of the Wet
Utilities that serve the Phase 2 Lots in accordance with Section 4.5 above,
Builder shall pay to Developer one-half (1/2) of the Deferred Purchase Price due
for each of the Phase 2 Lots, as set forth on Takedown Matrix plus the
applicable Escalator.  Upon Substantial Completion of the Improvements that
serve the Phase 2 Lots in accordance with Section 4.5 above, Builder shall pay
the Developer the balance of the Deferred Purchase Price due for each of the
Phase 2 Lots, as set forth on the Takedown Matrix, plus the applicable
Escalator.
 
6.3.        Takedown 3 Lots – Phase 3. Phase 3 consists of approximately
twenty-two (22) 35’ Alley Lots and ten (10) SFD 45’ Lots as identified on the
Concept Plan (the “Phase 3 Lots”).  Upon Substantial Completion of the Wet
Utilities that serve the Phase 3 Lots in accordance with Section 4.5 above,
Builder shall pay to Developer one-half (1/2) of the Deferred Purchase Price due
for each of the Phase 3 Lots, as set forth on Takedown Matrix plus the
applicable Escalator.  Upon Substantial Completion of the Improvements that
serve the Phase 3 Lots in accordance with Section 4.5 above, Builder shall pay
the Developer the balance of the Deferred Purchase Price due for each of the
Phase 3 Lots, as set forth on the Takedown Matrix, plus the applicable
Escalator.
 
6.4.        Takedown 4 Lots – Phase 4. Phase 4 consists of approximately twenty
(20) 35’ Alley Lots and sixteen (16) SFD 45’ Lots as identified on the Concept
Plan (the “Phase 4 Lots”).  Upon Substantial Completion of the Wet Utilities
that serve the Phase 4 Lots in accordance with Section 4.5 above, Builder shall
pay to Developer one-half (1/2) of the Deferred Purchase Price due for each of
the Phase 4 Lots, as set forth on Takedown Matrix plus the applicable
Escalator.  Upon Substantial Completion of the Improvements that serve the Phase
4 Lots in accordance with Section 4.5 above, Builder shall pay the Developer the
balance of the Deferred Purchase Price due for each of the Phase 4 Lots, as set
forth on the Takedown Matrix, plus the applicable Escalator.
 
6.5.        Escalator.  All payments of the Deferred Purchase Price shall be
subject to the Escalator as provided in Section 2(b) of the Contract.
 
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6.6.        Invoice.  After Substantial Completion is achieved as described in
Section 4.5 above (including inspections under Section 4.5.2(a)), Builder shall
pay the applicable portion of the Deferred Purchase within five (5) business
days after an invoice for payment is delivered to Builder by Developer.
 
6.7.        Definition of Wet Utilities. The Wet Utilities that serve each Phase
of the Builder Lots that will trigger the Builder’s payment obligation upon
Substantial Completion thereof are identified on Exhibit E.
 
6.8.        Security for Payment of Deferred Purchase Price - Letter of Credit. 
In order to secure Builder’s obligation following each Closing to pay the
Deferred Purchase Price in accordance with the terms of the Contract and the
payment obligations set forth above in this Section 6, at each Closing, Builder
shall deliver to Title Company, acting as escrow agent, either (i) a letter of
credit issued by [insert issuer of LOC], in a form agreeable to Developer (the
“Letter of Credit”), or (ii) a cash payment (a Letter of Credit and the cash
payment each constitute a “Deferred Purchase Price Deposit”).  The Deferred
Purchase Price Deposit shall be an amount that is equal to the sum of the
Deferred Purchase Price for all Builder Lots acquired by Builder at such
Closing, plus an estimate of the applicable Escalator, as reasonably determined
by Developer.  Title Company shall hold and maintain such Deferred Purchase
Price Deposit pursuant to this LDA and the Contract in an escrow account
established by Title Company for the benefit of Developer and Builder (pursuant
to the terms of an escrow agreement to be agreed upon during the Due Diligence
Period under the Contract, and entered into by Developer, Builder and Title
Company concurrently with the execution of this LDA (the “Escrow Agreement”)). 
A Letter of Credit that is posted for a Closing shall remain in place until the
final payment of the Deferred Purchase Price applicable to such Closing has been
made to the Developer following Substantial Completion of the Finished Lot
Improvements which serve the Builder Lots acquired by Builder at such Closing. 
If a Letter of Credit is scheduled to expire prior to the Substantial Completion
of all such Builder Lots, and Builder has not renewed the Letter of Credit at
least fifteen (15) days prior to the expiration date thereof, Title Company is
authorized and directed to draw down the full amount of the Letter of Credit and
deposit such funds in escrow to be used solely for the payment of any unpaid
Deferred Purchase Price.  The Letter of Credit may provide that it may be
reduced from time to time to the extent of payments of the Deferred Purchase
Price in Good Funds made by Builder for Improvements in accordance with the
terms, including the payment schedule, set forth in this LDA.  If the Letter of
Credit provides for periodic reduction, then from time to time as Builder pays
installments of the Deferred Purchase Price, Developer and Escrow Agent shall
execute and deliver to the issuer of the Letter of Credit a reduction
certificate (in the form required and furnished by the issuer) to reduce the
Letter of Credit by the amount of the Deferred Purchase Price installment that
was paid.  The Letter of Credit for each Closing shall be returned to Builder,
together with an executed reduction certificate reducing the face amount thereof
to $0.00, upon payment in full of the Deferred Purchase Price in Good Funds for
all of the Builder Lots in such Closing.  A cash payment that is deposited as
the Deferred Purchase Price Deposit for a Closing will be drawn down and
disbursed by the Title Company to Developer from time to time to the extent of
payments of the Deferred Purchase Price made by Builder in accordance with the
terms, including the payment schedule, set forth in this LDA and Section 5(c) of
the Contract.  Failure by Builder to pay any portion of the Deferred Purchase
Price that is secured by a Letter of Credit when the same shall become due and
payable, provided that at such failure continues for a period of ten (10) days
after the delivery of written notice thereof from Developer to Builder, shall
entitle Developer to enforce the collection of the delinquent Deferred Purchase
Price by having the Title Company draw upon the Letter of Credit, and the funds
so drawn shall be paid to Developer as payment of any unpaid Deferred Purchase
Price and such failure to pay shall be deemed cured.  If Developer or Title
Company is unable to draw upon the Letter of Credit, or Builder otherwise fails
to pay the Deferred Purchase Price, Developer may protect and enforce its rights
under this LDA pertaining to payment of the Deferred Purchase Price by (i) such
suit, action, or special proceedings as Developer shall deem appropriate,
including, without limitation, any proceedings for the specific performance of
any covenant or agreement contained in this LDA or the Contract or the
enforcement of any other appropriate legal or equitable remedy, or for the
recovery of actual damages (excluding consequential, punitive damages or similar
damages) caused by Builder’s failure to pay the Deferred Purchase Price,
including reasonable attorneys' fees, and (ii) enforcing Developer’s lien rights
set forth in this LDA.  Developer’s remedies are non-exclusive.  Notwithstanding
the foregoing, Builder shall have the right, at any time, upon written notice to
Developer, to substitute any Letter of Credit with a cash payment of equal
amount into escrow with Escrow Agent, subject to the Parties’ reasonable
agreement to amend the Escrow Agreement to reflect such change.
 
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7.           Expedited Dispute Resolution.
 
7.1.        Disputes Related to Material Changes, Draw Requests and Punchlist
Items.  Notwithstanding anything to the contrary herein, disputes related to
Material Changes, any Builder Punchlist item or matter, objections to
Construction Contracts, determination of Substantial Completion (“Expedited
Disputes”) shall all be resolved by an independent, impartial third party
qualified to resolve such disputes as determined by the Parties involved in the
Expedited Dispute (“Informal Arbitrator”).  If such Parties cannot agree on an
Informal Arbitrator, then the Parties involved shall select one (1) registered
engineer and the Builder shall select one (1) registered engineer and the
engineers so selected by such Parties shall promptly select an independent,
impartial third party qualified to act as the Informal Arbitrator and resolve
the Expedited Dispute.  Within five (5) business days after a Party delivers a
Dispute Notice, the Developer and the Builder 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 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 arbitration process) in connection with an Expedited Dispute.
 
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7.2.        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 Article 7, 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.
 
8.           Progress Meetings.  The Parties shall, from time to time, meet
following reasonable request by the Builder to discuss the status of
construction of the Improvements, scheduling and coordination issues,
engineering and design issues, and other similar issues.  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 LDA 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 LDA at any time by written notice to the other Parties.
 
9.           Builder’s Stormwater Permit Responsibilities.  Following
Substantial Completion of the Improvements and prior to Builder engaging in any
construction activities upon the Builder Lots, Builder shall obtain from the
Colorado Department of Public Health, Water Quality Control Division, a Colorado
Construction Stormwater Discharge Permit issued to Builder with respect to the
Builder Lots.  No fewer than five (5) business days prior to the initiation of
construction activities on any Builder Lot, Builder shall deliver a copy of at
least one (1) of the following documents to Developer:

9.1.        Such valid Colorado Construction Stormwater Discharge Permit for the
Builder Lots;
 
9.2.         A signed notice of reassignment of permit coverage (State of
Colorado Form COR030000 or current equivalent), that transfers any pre-existing
permit coverage for the Builder Lots; or
 
9.3.         A signed State of Colorado modification form to add the Builder
Lots if Builder has an existing site permit with the State of Colorado within
the Property.
 
To the extent required by the County and the Southeast Metro Stormwater
Authority, Builder shall also obtain a Grading, Erosion and Sediment Control
Permit issued to Builder by the County and the Southeast Metro Stormwater
Authority for the Builder Lots.  Builder shall be responsible to obtain and
maintain any State of Colorado dewatering permits if required for Builder’s
further construction within the Builder Lots.  If requested by Developer,
Builder shall execute a Notice of Property Conveyance and Change in
Responsibility for the Colorado Discharge Permit held by Developer or an
affiliated entity with respect to the Property.  In all cases, Builder shall
obtain from the Colorado Department of Public Health & Environment Water Quality
Control Division, a Notice of Property Conveyance and Change in Responsibility
on a form acceptable to the Colorado Department of Public Health & Environment
Water Quality Control Division executed by Builder, for the Colorado Stormwater
Discharge Permit held by Developer with respect to the Builder Lots prior to any
construction by Builder on the Builder Lots.

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9.4.        Stormwater Permit Responsibilities.  Developer shall obtain and/or
maintain, 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.
 
10.         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 LDA shall be in writing and shall be given to
the addresses set forth in this Section 10 (“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 electronic mail
message if sent electronically to the address designated in such Party’s Notice
Address and receipt of such electronic mail message is electronically
confirmed.  The Notice Addresses for the Developer is 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
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

To Builder:          Challenger Denver, LLC
8605 Explorer Dr., ste 250

E-20

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Colorado Springs, CO 80920
Attention: Tom Zieske
Telephone: (719) 598-5192
E-mail: TZieske@Challengerhomes.com

with a copy to:

 
 
 
 
 
 
 
 

 
Attn:
 
 

 
Telephone:

 
 

 
E-mail:

 
 

11.         Attorneys’ Fees.  Except as provided in Section 7.1, should any
action be brought in connection with this LDA, including, without limitation,
actions based on contract, tort or statute, the substantially 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 LDA.

12.         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 LDA.
 
13.         No Partnership; Third Parties.  It is not intended by this LDA to,
and nothing contained in this LDA shall, create any partnership, joint venture
or other arrangement among the Parties hereto.  No term or provision of this LDA
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.
 
14.         Entire Agreement; Headings for Convenience Only; Not to be Construed
Against Drafter; No Implied Waiver.  This LDA 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 LDA except by written amendment executed by the Parties.  The headings,
captions and titles contained in this LDA are intended for convenience of
reference only and are of no meaning in the interpretation or effect of this
LDA.  This LDA 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 LDA, no failure by a Party to exercise any right or remedy
under this LDA, 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 LDA shall not prevent a subsequent act, which would have
originally constituted a default under this LDA, from having all the force and
effect of a default.
 
E-21

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15.         Governing Law.  This LDA 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.
 
16.         Severability.  If any provision of this LDA is declared void or
unenforceable, such provision shall be severed from this LDA and shall not
affect the enforceability of the remaining provisions of this LDA.
 
17.         Assignment; Binding Effect.  This LDA shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns. Neither Builder or Developer may assign any of its rights or
obligations under this LDA 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:
 
17.1.      Builder may assign, without consent, its rights under this LDA in
full, but not in part: (i) to a third party which acquires 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
 
17.2.      Developer may assign, without consent, its rights under this LDA: (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
LDA.
 
18.         Counterparts; Copies of Signatures.  This LDA 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
LDA may be executed and delivered 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 LDA by Developer and
Builder, Developer shall provide a fully executed copy of this LDA to Builder
for its records.
 
19.         Time of the Essence.  Time is of the essence for performance or
satisfaction of all requirements, conditions, or other provisions of this LDA,
subject to any specific time extensions set forth herein.
 
20.         Computation of Time Periods. All time periods referred to in this
LDA 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 LDA 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.
 
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21.         Remedies.
 
21.1.       Except as hereinafter provided with regard to Expedited Disputes and
the self-help remedy under Section 4.6, if any Party is in default of any of its
obligations under this LDA 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 7 of this LDA, and for
Constructing Party Defaults, the sole and exclusive remedy of the Parties is set
forth in Section 4.6 of this LDA.
 
21.2.       In addition to the remedies permitted under Section 21.1, any claim
by Developer against Builder for breach of Builder’s obligation hereunder to pay
of any portion of the Deferred Purchase Price, together with simple interest at
the Default Interest Rate from the date such payment is due and payable, and all
costs and expenses including reasonable attorneys' fees awarded to Developer in
enforcing any payment in any suit or proceeding under this LDA, shall constitute
a lien ("Lien") against the applicable Phase of Builder Lots to which the
payment pertains until paid, effective upon the recording of a notice of lien
with respect thereto in the Office of the Clerk and Recorder of the County;
provided, however, that any such Lien shall be subject and subordinate to (i)
liens for taxes and other public charges which by applicable law are expressly
made superior, and (ii) all liens recorded in the Office of the Clerk and
Recorder of the County prior to the date of recordation of said notice of lien. 
All liens recorded subsequent to the recordation of the notice of lien described
herein shall be junior and subordinate to the Lien.  The notice of lien will be
signed and acknowledged by Developer and will contain the following: (a) a
statement of all amounts due and payable; (b) a description sufficient for
identification of the applicable Phase of Builder Lots to which the notice
relates; (c) the name of the Builder as owner of such Builder Lots; and (d) the
name and address of the Developer causing the notice to be recorded.  Developer
has the right to enforce the Lien by foreclosing the Lien against the applicable
Phase of Builder Lots under the prevailing Colorado law relating to the
foreclosure of realty mortgages.  Upon the timely curing by the defaulting
Builder of any default for which a notice of lien was recorded, the Developer
shall record an appropriate release of such notice of lien and Lien. The sale or
transfer of a Builder Lot by Builder does not affect the Lien.

22.         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 LDA.
 
[SIGNATURE PAGE FOLLOWS]
 
E-23

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IN WITNESS WHEREOF, the Parties have executed this LDA as of the Effective Date
first set forth above.

 
DEVELOPER:
 

 
PCY HOLDINGS, LLC
 
a Colorado limited liability company
 

 
By:

Pure Cycle Corporation,
   
a Colorado corporation
   
Its Sole Member

     
 
By:
 

 
Name:

Mark Harding
 
Its:

President

Designated Representative:
 
 

E-24

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BUILDER:
      
CHALLENGER DENVER, LLC
 
a Colorado limited liability company

 
By:
 

 
Name:
   
Title:
 

Builder’s Builder Lots:

 

 

Designated Representative:
 
 

E-25

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List of Exhibits

Exhibit A
Concept Plan, Takedowns, Phases – Description of Property
Exhibit B
List of Plans
Exhibit C
Required Insurance
Exhibit D
Finished Lot Standard
Exhibit E
Wet Utilities – Phased – that will trigger the Builder’s payment obligation upon
Substantial Completion
Exhibit F
Joint Improvements Memorandum
Exhibit G
Takedown Matrix

E-26

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Exhibit A
to
Lot Development Agreement

(Concept Plan - Description of Property for Each Applicable Phase)

E-27

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Exhibit B
to
Lot Development Agreement

(List of Plans for Each Applicable Phase)

Improvements to be Constructed by
Developer

List of Plans:

E-28

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Exhibit C
to
Lot 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 LDA 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.

E-29

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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.

E-30

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Exhibit D
to
Lot Development Agreement

(Finished Lot Standard)

“Finished Lot Standard” means all improvements on, to or with respect to the
Builder Lots or in public streets or tracts in the locations as required by all
Approving Authorities to obtain building permits and certificates of occupancy
for homes constructed on the Builder Lots, and substantially in accordance with
the Plans, including the following:

(i)
overlot grading together with all property pins for each Builder Lot installed
in place, graded to match the specified Builder Lot drainage template within the
Plans (but not any Overex);

(j)
water and sanitary sewer mains and other required installations in connection
therewith identified in the Plans, valve boxes and meter pits, substantially in
accordance with the Plans approved by the Approving Authorities, together with
appropriate permanent markings in the curb/sidewalk in accordance with Approving
Authorities requirements;

(k)
storm sewer mains, inlets and other associated storm drainage improvements
pertaining to the Builder Lots in the public streets and open space tracts as
shown on the Plans;

(l)
curb, gutter, asphalt, sidewalks, street striping, street signage, traffic
signs, traffic signals (if any are required by the Approving Authorities), and
other street improvements, in the private and/or public streets as shown on the
Plans;

  (m)
sanitary sewer service stubs, connected to the foregoing sanitary sewer mains,
installed into each respective Builder Lot (to a point beyond any utility
easements), together with appropriate markers of the ends of such stubs, as
shown on the Plans;

(n)
water service stubs connected to the foregoing water mains installed into each
Builder Lot (to a point beyond any utility easements), together with appropriate
markers of the ends of such stubs, as shown on the Plans;

(o)
Lot fill in compliance with the geotechnical engineer’s recommendation, and with
respect to any filled area or compacted area, provide from a Colorado licensed
professional soils engineer a HUD Data Sheet 79G Certification (or equivalent)
and a certification that the compaction and moisture content recommendations of
the soils engineer were followed and that the grading of the respective Builder
Lots complies with the approved grading plans, with overlot grading completed in
conformance with the approving Authorities approved grading plans within a +/-
0.2’ tolerance of the approved grading plans; however, the Finished Lot Standard
does not include any Overex;

(p)
all storm water management facilities as shown in the Plans; and

E-31

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(q)
Electricity, natural gas, and telecommunication and cable television services
will be installed by local utility companies.  The installations may not be
completed at the time of a Closing, and are not part of the Finish Lot Standard;
provided, however, that: (i) with respect to electric distribution lines and
street lights, Developer will have signed an agreement with the electric utility
service provider and paid all costs and fees for the installation of electric
distribution lines and facilities to serve the Builder Lots, and all sleeves
necessary for electric, gas, telephone and/or cable television service to the
Builder Lots will be installed; (ii) with respect to gas distribution lines,
Developer will have signed an agreement with the gas utility service provider
and paid all costs and fees for the installation of gas distribution lines and
facilities to serve the Builder Lots.  Developer will take commercially
reasonable efforts to assist Builder in coordinating with these utility
companies to provide final electric, gas, telephone and cable television service
to the residences on the Builder Lots, however, Builder must activate such
services through an end user contract.  Builder acknowledges that in some cases
the telephone and cable companies may not have pulled the main line through the
conduit if no closings of residences have occurred.  Notwithstanding the
foregoing, if dry utilities have not been installed upon substantial completion
of the Improvements required by the Finished Lot Standard, Developer shall be
obligated to have contracted for same and paid all costs and fees payable for
such installation. Unless Developer has contracted for such installation and
paid such costs before the Effective Date, Developer will give Builder notice
when such contracts have been entered and such costs paid.

The Finished Lot Improvements include such offsite improvements which are not
necessary to obtain building permits but which are necessary to obtain
certificates of occupancy for homes constructed on the Builder Lots, provided
that Developer shall only be obligated to complete such offsite improvements at
such time as required by the County or other applicable Authority and so as not
to delay the issuance of certificates of occupancy for residences constructed by
Builder on the Builder Lots.

The Finished Lot Improvements do not include common area landscaping which will
be installed at such time as required by the County or other applicable
Authority so as not to delay the issuance of building permits or certificates of
occupancy for residences constructed by Builder on the Builder Lots.

The Finished Lot Standard does not include Tree Lawns, which is addressed
separately in Section 4.11 of the LDA.

E-32

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Exhibit E
to
Lot Development Agreement

Wet Utilities

E-33

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Exhibit F
to
Lot Development Agreement
 
Joint Improvements Memorandum
 
E-34

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Exhibit G
 
to
Lot Development Agreement
 
Takedown Matrix
 
Lot Type
 
Purchase Price
   
Initial
Purchase Price
   
Deferred
Purchase Price
 
35' Alley Load Lots
 
$
72,300.00
   
$
24,000.00
   
$
48,300.00
 
SFD 45' Lots
 
$
87,000.00
   
$
29,000.00
   
$
58,000.00
 
All amounts set forth in the Takedown Matrix are subject to increase as a result
of the application of the Escalator in
accordance with Section 2(b) of the Contract.

E-35

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EXHIBIT F

FORM OF TAP PURCHASE AGREEMENT

TAP PURCHASE AGREEMENT
(Sky Ranch)
 
THIS TAP PURCHASE AGREEMENT (“Agreement”), dated as of the _____ day of
_____________, 20___ (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 Challenger
Denver, LLC, a Colorado limited liability company, with the address of 8605
Explorer Drive, Suite 250, Colorado Springs, Colorado 80920 (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 approximately one hundred sixty-three (163) single family residential 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.
 
F-1

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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 residential 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.
 
F-2

--------------------------------------------------------------------------------

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 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.
 
F-3

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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 to serve customers 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.
 
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, Tap Licenses for
one hundred sixty-three (163) 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 be 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.
 
(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.
 
F-4

--------------------------------------------------------------------------------

(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.
 
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 with respect to the particular Tap License purchased.
 
F-5

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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.
 
(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.
 
F-6

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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;
 
(c)          The failure of any material representation or warranty made in this
Agreement;
 
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 5.5, and at the election of Rangeview, in its sole discretion,
Company’s rights to receive any 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 to a connected Tap for which a Tap License has
been issued and System Development Charges have been paid.
 
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 5.4, 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.

 
F-7

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(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 terminate or rescind 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
provision of water and wastewater service to a Lot owned 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.
 
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.
 
F-8

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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.
 
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.
 
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.
 
F-9

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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, Colorado  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, Colorado  80137
Facsimile No: (303)292-3475
E-mail: mharding@purecyclewater.com

To Purchaser:                                    Challenger Denver, LLC
8605 Explorer Dr, Ste 250
Colorado Springs, CO 80920
Attn: Tom Zieske
Telephone: (719) 598-5192
Email: tzieske@challengerhomes.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.
 
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.
 
F-10

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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 18% 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.
 
[signature pages follow]

F-11

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the
date first written above:

COMPANY:

CHALLENGER DENVER, LLC
a Colorado limited liability company

By:

 
 

Name:
   

Its:
   

RANGEVIEW:

RANGEVIEW METROPOLITAN DISTRICT,
a Colorado quasi-municipal corporation and political subdivision acting by and
through its water enterprise

By:
 
 
 
President
 

ATTEST:

By:
 
 
 
Secretary
 

 

F-12

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EXHIBIT A
 
To Tap Purchase Agreement
 
[Diagram of Property]
 
F-13

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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)
 
F-14

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EXHIBIT G

SKY RANCH LOT DEVELOPMENT FEE SCHEDULE
(CURRENT AS OF __/__/20__)

 
Fee Description
 
Timing
 
Contact Information

 
System Development Fees (Tap Fees)
(Issued to Rangeview Metropolitan District)

Water Tap Fee per unit= $27,209 (for 1 SFE lot)
Wastewater Tap Fee per unit= $4,752
Meter Set Fee (3/4”) per unit or irrigated area = $408.23
Service Line Inspection Fee per meter= $75.00

 
Building
Permit
 
Brent Brouillard
303-292-3456
bbrouillard@purecyclewater.com
 
 
 
Public Improvement Fee
(Issued to Sky Ranch CAB)

2.75% of 50% of construction valuation per lot

 
Building
Permit
 
Rick Dinkel
303-292-3475
rdinkel@purecyclewater.com

 
Fire Development Fee
(Issued to Bennett-Watkins Fire)

$1,500/lot
 
Building
Permit
 
Life Safety Assistant/Fire Inspector
Victoria Flamini
355 4th Street
Bennett, CO 80102

303-644-3572

 
Operations & Maintenance Fee
(Issued to Sky Ranch CAB)

$50/month per lot (prorated to $25 for builder owned lots)

$100 One-time turnover fee

 
Substantial
Completion
of Lot
 
Rick Dinkel
303-292-3475
rdinkel@purecyclewater.com
 
 
Stormwater Management Co-Op
(Issued to Pure Cycle)
 
$500/lot

 
Takedown
Closing
 
Robert McNeill
303-292-3475
rmcneill@purecyclewater.com
 

G-1

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Marketing Co-Op
(Issued to Pure Cycle)

$1,000/lot

 
Takedown
Closing
 
Robert McNeill
303-292-3475
rmcneill@purecyclewater.com

 
Public Improvement District – TBD

Additional mill levies for regional improvements such as I70 interchange,
Schools, 1st Creek Bridges, Rec Center, etc. will be required

Objective is for Phase 2 total mill levies not to exceed Phase 1 total mill
levies
 
Building
Permit
 
TBD

G-2

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EXHIBIT H

FORM OF BUILDER DESIGNATION

RECORDING REQUESTED BY
 
AND WHEN RECORDED MAIL TO:
 
 
 
 
 
 
 
Attn:

 
 

DESIGNATION OF BUILDER

THIS DESIGNATION OF BUILDER (this “Designation”) is made and entered into this
____ day of ________ 20__ (the “Effective Date”), by and between PCY HOLDINGS,
LLC, a Colorado limited liability company (“Developer”), whose address is 34501
E. Quincy Ave, Bldg. 34, Box 10, Watkins, CO 80137, and CHALLENGER DENVER, LLC,
a Colorado limited liability company (“Challenger”), whose legal address is 8605
Explorer Dr., Ste 250, Colorado Springs, CO 80920.

RECITALS

A.          Developer is a Developer under the Covenants, Conditions and
Restrictions for Sky Ranch, recorded in the real property records of Arapahoe
County, Colorado (the “Records”) on August 10, 2018 at Reception No. D8079588
(the “Covenants”).

B.          On the Effective Date, Challenger has acquired from Developer a
portion of the Property (as defined in the Covenants) that is subject to the
Covenants, which portion is more particularly described on Exhibit A attached
hereto and incorporated herein by this reference (the “Builder Property”).

C.          Developer desires to designate Challenger as a Builder under the
Covenants in conjunction with Challenger’s purchase of the Builder Property from
Developer, as set forth herein.

DESIGNATION

For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Developer and Challenger agree as follows:

1.           Recitals. The foregoing Recitals are incorporated herein by this
reference.

2.           Defined Terms. Terms herein set in initial capital letters but not
defined herein shall have the meanings given them in the Covenants.

H-1

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3.           Designation of Builder. Developer hereby designates Challenger as a
Builder under the Covenants with respect to, but only with respect to, the
Builder Property. Challenger hereby accepts the foregoing Builder designation
from Developer with an acknowledgment that Builder shall mean the party
responsible for the vertical construction of Homes, onsite development work
(including Overex), any landscaping, and any other improvements on the Lots,
except for Developer’s Finished Lot Improvements.

4.           Miscellaneous. This Designation embodies the entire agreement
between the parties as to its subject matter and supersedes any prior agreements
with respect thereto. The validity and effect of this Designation shall be
determined in accordance with the laws of the State of Colorado, without
reference to its conflicts of laws principles. This Designation may be modified
only in writing signed by both parties. This Designation may be executed in any
number of counterparts and each counterpart will, for all purposes, be deemed to
be an original, and all counterparts will together constitute one instrument.

5.           Binding Effect. This Designation is binding upon and inures to the
benefit of Developer and Challenger and their respective successors and assigns,
and shall be recorded in the Records.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

H-2

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DEVELOPER:
      
PCY HOLDINGS, LLC,
 
a Colorado limited liability company
       By:

Pure Cycle Corporation,
   
a Colorado corporation,
   
its sole member

 
By:

  Name:   

Mark Harding
  Its:

 President

STATE OF COLORADO
)
   
)
ss.

COUNTY OF

   
)
 

The foregoing instrument was acknowledged before me this ___ day of __________
20__, by Mark Harding as President of Pure Cycle Corporation, a Colorado
corporation, sole member of PCY HOLDINGS, LLC, a Colorado limited liability
company.

Witness my hand and official seal.
 
My commission expires:
       
Notary Public

H-3

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CHALLENGER:
     
CHALLENGER DENVER, LLC,
 
a Colorado limited liability company
     
By:

   
Name:

     
Title: 

   

STATE OF COLORADO
)
   
)
ss.

COUNTY OF
   
)
 

The foregoing instrument was acknowledged before me this _____ day of _______,
20__, by ___________________________________________ as _____________________ of
Challenger Denver, LLC a Colorado limited liability company.

Witness my hand and official seal.
 
My commission expires:
       
Notary Public

H-4

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