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Exhibit 10.2

TENTH AMENDMENT TO

CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE

 

(Sky Ranch)

 

THIS TENTH AMENDMENT TO CONTRACT FOR
PURCHASE AND SALE OF REAL ESTATE (this
“Amendment”)
is made as of November _____, 2017 (“Effective
Date”), by and between
PCY HOLDINGS, LLC, a Colorado limited liability company
(“Seller”),
and TAYLOR MORRISON OF COLORADO, INC., a Colorado corporation
(“Purchaser”).
Seller and Purchaser may be referred to collectively as the
“Parties.”

 

R E C I T A L S

 

A. Seller
and Purchaser previously entered into a Contract for Purchase and
Sale of Real Estate effectively dated June 27, 2017 (as amended,
the “Contract”)
for approximately 161 platted single-family detached
residential lots in the Sky Ranch master planned residential
community in the County of Arapahoe, State of
Colorado.

 

B. Purchaser
and Seller now desire to amend the terms and conditions of the
Contract as set forth below. Capitalized terms used but not
otherwise defined in this Amendment will have the same meanings
given to such terms in the Contract.

 

A G R E E M E N T

 

NOW,
THEREFORE, in consideration of the mutual covenants contained in
this Amendment and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Purchaser
and Seller hereby agree as follows:

 

1. Recitals. The recitals set
forth above are true and correct and are incorporated herein in
their entirety by this reference.

 

2. Continuation Notice. Upon
mutual execution hereof by both Seller and Purchaser, this
Amendment shall constitute Purchaser’s Continuation Notice as
defined in Section 10(a) of the Contract.

 

3. Purchaser’s
Conditions. Seller and Purchaser agree that the Seller will
cause the Sky Ranch Community Authority Board
(“CAB”),
rather than the District, to construct certain Offsite
Infrastructure Improvements as provided in the Offsite
Infrastructure Escrow Agreement and Finished Lot Improvements as
provided in the Lot Development Agreement. The CAB will be
organized by the Sky Ranch Metropolitan Districts Nos. 1 and 5
pursuant to the laws of the State of Colorado in order to
construct, operate and maintain certain public facilities and
improvements in accordance with the Sky Ranch Community Authority
Board Establishment Agreement and each of the Service Plans for
these Districts. Seller and the CAB, and Seller and Rangeview, will
each enter into separate Service Agreements (as defined below) for
project management services pursuant to which Seller will serve as
the project manager for the CAB and for Rangeview for the
construction of such improvements. Seller and Purchaser agree that
contracts for installation of the Offsite Infrastructure
Improvements and the Joint Improvements (the
“District
Construction Contracts”)
will be executed by the CAB and/or Rangeview as applicable and that
Seller, acting as project manager for the CAB and Rangeview
pursuant to the Service Agreements will manage and administer such
construction contracts. Section 5(b) of the Contract with respect
to Purchaser’s Conditions
Precedent is hereby amended to include the following additional
Purchaser’s Conditions Precedent: on or before the First
Closing, (i) the CAB and Rangeview shall have executed the District
Construction Contracts providing for a guaranteed maximum price,
(ii) Seller shall have deposited immediately available funds in
segregated construction accounts owned and maintained by the CAB
and Rangeview, respectively, in an amount not less than the
contracted cost to complete the Offsite Infrastructure Improvements
to be constructed by the CAB or Rangeview pursuant to the District
Construction Contracts, and the budgeted costs of the Joint
Improvements to be constructed by the CAB, to be used the CAB and
Rangeview to construct such improvements, and both the CAB (or the
District) and Rangeview shall have duly appropriated such funds by
resolution to be used solely for the construction of that portion
of the Offsite Infrastructure Improvements and Joint Improvements
being constructed by each such entity, and (iii) the Service
Agreements shall have been fully executed by Seller and the CAB and
Seller and Rangeview, respectively, in the forms approved by
Purchaser.

 

 

1

 

 

4. Project
Documents. The term
“Project
Documents” shall
collectively refer to the following:

 

A.

the
Lot Development Agreement;

 

B.

the
Joint Improvement Memorandum;

 

C.

the Offsite Infrastructure Escrow Agreement
(titled “Offsite
Infrastructure Agreement”);

 

D.

the
Tap Purchase Agreement;

 

E.

the escrow agreement referenced in Section 6.1(h)
of the Lot Development Agreement (the “LOC
Escrow Agreement”);

 

F.

the
Master Covenants;

 

G.

the Declaration of Covenants Imposing and
Implementing the Sky Ranch Public Improvement Fee (the
“PIF
Covenant”);

 

H.

a development agreement for the financing and
construction of the Community Park referenced in section 5(b) of
the Agreement (the “Amenity
Development Agreement”);
and

 

I.

Service Agreement for Project Management Services
between (1) Seller and that certain Community Authority Board
created by virtue of the Sky Ranch Community Authority Board
Establishment Agreement dated, between Sky Ranch Metropolitan
District No. 1 and Sky Ranch Metropolitan District No. 5; and (2)
Seller and Rangeview Metropolitan District (each, a
“Service
Agreement” and
collectively, the “Service
Agreements”). 

 

The
Contract is hereby amended to provide that Purchaser approves the
form of the Project Documents attached hereto as Schedule 1.
Purchaser and Seller will not unreasonably withhold their consent
to further amendments to the Project Documents that do not
materially adversely affect such consenting Party.

 

5. Final Lotting Diagram. Pursuant
to Section 1 of the Contract, Purchaser and Seller hereby approve
the Final Lotting Diagram attached hereto as Schedule
2.

 

6. Construction. Each of the
Parties acknowledges that they, and their respective counsel,
substantially participated in the negotiation, drafting and editing
of this Amendment. Accordingly, the Parties agree that the
provisions of this Amendment shall not be construed or interpreted
for or against any Party hereto based on authorship.

 

 

2

 

 

7. Authority. Each Party
represents and warrants that is has the power and authority to
execute this Amendment and that there are no third party approvals
required to execute this Amendment or to comply with the terms or
provisions contained herein.

 

8. Headings. The section headings
used herein shall have absolutely no legal significance and are
used solely for convenience of reference.

 

9. Ratified and Confirmed. The
Contract, except as modified by this Amendment, is hereby ratified
and confirmed and shall remain in full force and effect in
accordance with its original terms and provisions. In the case of any conflict between the terms of
this Amendment and the provisions of the Contract, the provisions
of this Amendment shall control

 

10. Counterparts. This Amendment
may be executed in counterparts, each of which shall be deemed to
be an original, and both of which together shall be deemed to
constitute one and the same instrument. Each of the Parties shall
be entitled to rely upon a counterpart of this Amendment executed
by the other Party and sent via facsimile or e-mail
transmission.

 

 

 [SIGNATURE
PAGE FOLLOWS]

 

 

3

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Amendment as
of the Effective Date.

 

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

Title:
President

 

 

PURCHASER:

 

TAYLOR
MORRISON OF COLORADO, INC., a Colorado corporation

 

 

By: /s/ Phillip R.
Cross

Name:
Phillip R. Cross

Title:
Vice President

 

 

4

 

 

Schedule
1

Project
Documents

 

 

 

 

5

 

LOT
DEVELOPMENT AGREEMENT

 

Sky
Ranch

(Taylor
Morrison)

 

THIS
LOT DEVELOPMENT AGREEMENT (this “LDA”)
is made as of the ___ day of _________, 20____ (the
“Effective
Date”), by and between PCY HOLDINGS, LLC, a Colorado
limited liability company (“Developer”),
and TAYLOR MORRISON OF COLORADO, INC., a Colorado corporation
(“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 A 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.           

Concurrently with
the execution of this LDA, 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 amended (the
“Contract”),
Builder is acquiring from Developer a portion of the Property
consisting of approximately 50 single family residential building
lots, and will be acquiring an additional 111 lots within the
Property (collectively, the “Builder
Lots”) pursuant to the Contract at two separate
closings that will occur subsequent to the execution of this LDA.
The number and location of the Builder Lots to be acquired by
Builder under the terms of the Contract, the number and location of
the Takedown 1 Lots, the Takedown 2 Lots and the Takedown 3 Lots
and the development phasing for the Builder Lots consisting of six
phases are generally depicted on the Concept Plan attached as
Exhibit
A.

 

C.           

Pursuant to the
Contract, Developer has agreed to construct or cause to be
constructed the Improvements, as hereinafter defined. The
“Improvements”
are those public infrastructure improvements described in the
construction plans and specifications that have been approved by
the Approving Authorities relating to the final plat of the
property and the corresponding subdivision improvement agreement as
identified in Exhibit B
attached hereto (“Plans”)
and any additional improvements required by the Construction
Standard (as defined below). 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 Agreement (“Revised Exhibit
B”). The Improvements do not include any Offsite
Infrastructure Improvements that are being funded pursuant to the
Offsite Infrastructure Escrow Agreement, as defined in the
Contract.

 

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 defined in the Contract) in accordance
with the terms and provisions of this LDA as the Improvements are
completed and as more particularly set forth herein.

 

 

 

6

 

 

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
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 Generally. Developer shall
construct, or cause to be constructed, the Improvements in the
manner set forth hereinafter. Developer shall coordinate,
administer and oversee (a) the preparation and filing of all
applications, filings, submittals, plans and specifications,
budgets, timetables and other documents pertaining to construction
and installation of the Improvements and (b) the construction and
installation of the Improvements. Developer will engage or cause to
be engaged consultants, contractors and subcontractors who will be
responsible for the 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 Developer may perform its obligations under this
Agreement to construct, or cause to be constructed, the
Improvements in whole or in part by acting as the project manager
(“PM”)
for the Rangeview Metropolitan District and/or the Sky Ranch
Community Authority Board (collectively the “Districts”)
pursuant to one or more project management service agreements
(“Service
Agreement”) under which Developer will coordinate,
manage and administer the construction of the Improvements for such
Districts. In such event, Developer will cause the engagement of
the Service Providers for and on behalf of the Districts with
respect to Improvements that are constructed by such District, but
Developer shall not be released from it obligation to Builder to
cause the completion of the Improvements, whether or not Developer
acts as aPM for one or both of the Districts.

 

3.2 Comply with Legal Requirements.
Developer will comply with all terms and conditions of applicable
law in performing its obligations under this LDA. Developer will
provide to Builder copies of all notices filed by the Developer
with the County, and all other applicable governmental or
quasi-governmental entities or agencies (the “Approving
Authorities”) related to the Improvements and shall,
within five (5) business days of receipt thereof, provide notice to
Builder (together with copies of all notices received by Developer)
of any notice received by Developer alleging any failure to comply
with any applicable laws, ordinances, rules, regulations, or lawful
orders of public authorities bearing on the construction of the
Improvements.

 

 

 

7

 

 

3.3 Bonds and Assurances.
Developer, as part of the Costs, shall provide to all applicable
Approving Authorities any bonds, assurance agreements, or other
financial assurances required with respect to the construction of
the Improvements. Developer shall, as part of the Costs, provide to
all Approving Authorities all warranties, bonds and other financial
assurances required to obtain permits for, and the preliminary and
final acceptance and approval of, the Improvements. Builder shall
take all commercially reasonable actions and execute all documents
reasonably requested by Developer (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 provided otherwise in this LDA. Developer
and the Service Providers shall not defer the payment of any use
taxes pertaining to the Improvements except as may be authorized
under law or agreement with the applicable taxing
authorities.

 

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 the 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.
Notwithstanding the foregoing, Developer shall not be obligated
under this LDA to indemnify the Builder Indemnitees to the extent
such liabilities result from the negligence or willful misconduct
of any Builder Indemnitee, or for any claims arising out of
geologic, soils, ground water or other physical conditions
affecting the Lots, or underdrains systems installed according to
Plans reviewed and approved by a 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 residences
(“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.

 

 

 

8

 

 

3.7 Insurance. Developer shall
procure and maintain, and shall cause the Service Providers to
procure and maintain, the insurance described in Exhibit C
attached hereto during the construction of the Improvements and any
warranty work performed on the Improvements.

 

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 for the
Improvements from the applicable Approving Authorities to the
extent required by such entities, and (ii) apply to the utility
service provider for the preparation of dry utility plans
(“Utility
Plans”). Upon receipt of the approved Utility Plans
for the dry utilities from the utility service provider, Developer
will furnish a copy of such Utility Plans to the Builder. If after
Final Approval of the Plans is obtained the Developer elects to
amend the Plans in a manner that will result in a Material Change
(defined below), then Developer shall provide written notice of the
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 provide written notice to the Developer if it objects to
the proposed Material Change (a “Notice of Material
Change Objection”), which 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 such change, as well as the time impacts for making
such correction. Within five (5) business days after delivery to
Developer of a Notice of Material Change Objection, said Developer
and the 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:

 

4.1.1 Reduction
of the total number of Builder Lots available for the construction
of residences by more than 10% or a reduction in the width of the
building envelope below the minimum dimension required by the
Contract.

 

 

9

 

 

 

 

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 single family dwelling unit 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), 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 any
so-called “over excavation” or comparable preparation
or mitigation of the soil (hereinafter defined as the
“Overex”)
on the Builder Lots and Builder has sole responsibility 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 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 all timeframes shall be deemed
extended appropriately in the event of any delay in completing such
Overex in accordance with the Construction Schedule (as hereinafter
defined).

 

4.3 Construction Contracts for
Work. Developer and contractors of Developer shall contract
for all of the work and materials comprising 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;
provided, however, that Developer shall deliver written notice to
Builder after it shall enter into any Construction Contract, which
notice shall identify the Service Provider(s). Developer shall use
reasonable good faith efforts to cause each Construction Contract,
in addition to other matters, to (i) allow for the automatic
assignment, without need for further action, of all of
Developer’s rights (including, without limitation, the
warranty and indemnity provisions thereof) to Builder on a
non-exclusive basis in the event of replacement of Developer
pursuant to the terms of this LDA, and identify Builder as an
intended third-party beneficiary of the 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, but in no event less than one (1) year
for any Improvement, (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;
(vii) provide the Developer the right, but not the obligation, to
pay subcontractors and suppliers of the Service Provider directly
or by joint check, and (viii) 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.

 

 

 

10

 

 

4.4 Commencement and Completion
Dates. Developer shall 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, and one subsequent phase with respect to the Takedown 3
Lots for a total of three phases (each a “Phase”).
Developer shall commence and complete each component of the
Improvements in each Phase in accordance with the construction
schedule set forth on Exhibit E
attached hereto (the “Construction
Schedule”), and cause Substantial Completion of the
Improvements in each Phase to occur on or before the applicable
deadline therefor as set forth in the Construction Schedule (the
“Substantial
Completion Deadline”); provided, however, subject to
Section 4.4.2
below. The Construction Schedule will provide for the first Phase
with respect to the Takedown 1 Lots (“Phase
1”) to achieve Substantial Completion on or before ten
(10) months after the First Closing of the Takedown 1 Lots, with
the second Phase with respect to the Takedown 2 Lots
(“Phase
2”) to achieve Substantial Completion on or before
nineteen (19) months after the First Closing of the Takedown 1
Lots, and with the third Phase with respect to the Takedown 3 Lots
(“Phase
3”) to achieve Substantial Completion on or before
twenty eight (28) months after the First Closing of the Takedown 1
Lots. 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,
the Developer shall have no obligation to install landscaping
during the months of October through April.

 

4.4.2 Force
Majeure. Notwithstanding any contrary provision of this LDA,
the completion dates and all interim milestones set forth on the
Construction Schedule, the Substantial Completion Deadline, and the
time for performance of Developer’s other obligations under
the Construction Schedule or this LDA shall be extended by a period
of time equal to any period that such performance or progress in
construction of the Improvements is delayed due to any Dispute, as
defined below, acts or failure to act of any Approving Authority,
strike, riot, act of war, act of terrorism, act of violence,
weather, act of God, or any other act, occurrence or non-occurrence
beyond Developer’s reasonable control (each, an “Uncontrollable
Event”). If Developer claims a delay due to an
Uncontrollable Event, then Developer shall provide written notice
to 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 the duration
of the delay that was caused by the Uncontrollable Event. Developer
will make reasonable efforts to minimize the delay from any such
Uncontrollable Event.

 

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 all of the
following have occurred with respect to the Improvements (or
applicable component thereof):

 

 

 

11

 

 

(a) Developer has
substantially completed or corrected all punchlist items provided
by the Approving Authorities and the Builder affecting the
Improvements (or applicable component thereof) in accordance with
Section
4.5.2 below so that
Builder is not precluded from obtaining from the Approving
Authorities building permits for houses constructed, or to be
constructed, on any Builder Lots solely as a result of such
punchlist items (or applicable component thereof) not being
complete, and Developer has obtained lien releases reasonably
acceptable to Builder from all contractors performing work related
to the Improvements;

 

(b) 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 houses constructed, or to be
constructed, on any Builder Lots solely as a result of such
Improvements (or applicable component thereof) not being
complete;

 

(c) Any Improvements
(or applicable component thereof) that are intended to be dedicated
to or accepted by an Approving Authority shall have been inspected
and preliminarily accepted by the applicable Approving Authority
(subject to the Government Warranty Period (as defined below));
except that those Improvements that
are (x) to be phased, if any, as set forth in the Entitlements and
to the extent the phased Improvements are not required to obtain
building permits for Homes on the Lots in the applicable Phase of
the Builder Lots, or (y) not necessary or required by the Approving
Authority to occur to obtain building permits and certificates of
occupancy for Homes on the Lots (the “Additional
Improvements”) will not
be required to achieve Substantial Completion, but Developer
shall nevertheless be required to
complete construction and obtain acceptance of such Additional
Improvements by the applicable Approving Authority after
Substantial Completion at such time as is required by the
applicable Approving Authorities and so that Builder is not
precluded from obtaining from the Approving Authorities building
permits or certificate of occupancy for houses constructed, or to
be constructed, on any Builder Lots solely as a result of such
Additional Improvements (or applicable component thereof) not being
complete.

 

(d) 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.

 

(e) With respect to any
Improvements that are required by the Construction Standard or that
are required by the subdivision improvement agreement applicable to
the Builder Lots but which are not addressed as part of the
Construction Standard or the Finished Lot Standard, and any other
Improvements which are not required for the issuance of building
permits but which are required by the Approving Authorities so that
Homes and other improvements constructed by Builder on the Builder
Lots are eligible for the issuance of certificates of occupancy for
homes, the Developer shall complete or cause the completion of such
other Improvements to the extent required by the Approving
Authorities, so as not to delay the issuance of certificates of
occupancy for Homes constructed by Builder on the Builder
Lots.

 

 

 

12

 

 

4.5.2 Inspection.

 

(a) Notice to Builder. Developer
shall notify 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 Lots, and the date(s)
and time(s) the Approving Authorities will inspect such
Improvements (or applicable component thereof). Within ten (10)
days after receipt by Builder of such notice from the Developer,
Developer and Builder 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 or provide Builder Punchlist
items for any portion of the Improvements previously inspected by
the Builder, except in the case of construction defects. 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 punchlist shall be submitted to the
expedited dispute resolution procedures in accordance with
Section 7 below.
Developer will give Builder notice of the date and time of
inspections of the Improvements by the Approving Authorities and
Builder may attend such inspections. Developer will provide Builder
with copies of any inspection reports or punchlists received from
the Approving Authorities in connection with the inspection of the
Improvements, and Developer shall be responsible to correct
punchlist items from the Approving Authority and items set forth on
the Builder Punchlist. Notwithstanding anything to the contrary
including any Builder Punchlist, if an Approving Authority grants
preliminary approval or construction acceptance to 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 conclusively be 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 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, or such shorter time as may be required pursuant to
the Construction Schedule.

 

(c) Interim Inspections. Upon
reasonable prior notice, each 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.

 

 

 

13

 

 

4.6 Self-Help Remedy.

 

4.6.1 Notice
of Default. If Developer: (a) breaches its obligation under
this LDA to complete or cause the completion of any Improvement in
accordance with the Plans or the Construction Schedule (as extended
by any Uncontrollable Event); (b) otherwise breaches any material
obligation under this LDA; (c) fails to comply with any material
provision of its Construction Contracts with Service Providers
beyond any applicable express notice or cure periods; or (d) files
a petition for relief in bankruptcy or makes an assignment for the
benefit of its creditors, or admits in writing its inability to pay
its debts generally as they become due (each a “Bankruptcy
Event”), then the Builder may deliver written notice
of the breach to Developer (a “Notice of
Default”). Each of the events set forth in Subsections
(a) through (d) inclusive of the preceding sentence shall be herein
referred to as a “Constructing Party
Default.” For any Constructing Party Default other
than a Bankruptcy Event, the Developer shall have thirty (30) days
after Developer’s receipt of the Notice of Default from 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 commenced in good
faith and with due diligence to cause such Constructing Party
Default to be remedied. If Developer does not cause the cure of the
Constructing Party Default within the Cure Period (as may be
extended pursuant to the preceding sentence, and subject to
Uncontrollable Events), or if a Bankruptcy Event occurs (either, 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 (the “Assumption
Notice”). With respect to any Improvements that
Developer is causing to be constructed as PM for a District under a
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 applicable 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
payment of any “Constructing Party Cost Overruns” (as
defined below) incurred prior
to the Assumption Notice, which Constructing Party Cost Overruns
shall remain the sole responsibility of the Developer, or receipt
of any cost savings prior to the Assumption Notice; provided,
however, that the Substitute Constructing Party shall be
entitled to an administrative fee in an amount equal to two percent
(2%) of the remaining Costs (as defined below) actually paid, which
administrative fee shall be included in the Constructing Party Cost
Overruns. The 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 or Developer’s obligations to pay any
Constructing Party Cost Overruns.

 

 

 

14

 

 

4.6.2 Assumption
Right. If Builder delivers an Assumption Notice, or if
Builder, Richmond 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, 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 applicable Service Agreements so that Substitute
Constructing Party can take over as PM thereunder; (ii) Developer
shall remain responsible for all Constructing Party Cost Overruns
(as hereinafter defined), but Developer shall be relieved of all
further obligations under this LDA with respect to the completion
of the incomplete Improvements subsequent to such assumption;
(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; and
(v) Substitute Constructing Party shall assume and perform all
obligations under all Contracts and Service Agreements pertaining
to the construction of the Improvements which Substitute
Constructing Party will complete to the extent such obligations are
to be performed after the date of delivery of the Assumption
Notice. Upon delivery of an Assumption Notice, Substitute
Constructing Party shall be obligated to complete or cause the
completion of the Improvements and pay the Costs incurred
thereafter by Substitute Constructing Party to complete the
Improvements (subject to Developer’s funding obligation under
the Joint Improvements Memorandum, as hereinafter defined, and
Developer’s obligation to pay any Constructing Party Cost
Overruns, and Substitute Constructing Party’s rights as PM
under a Service Agreement to process payments through the
applicable District). If a Substitute Constructing Party assumes
the obligation to construct the Improvements, the Builder’s
obligation for the payment of costs under Section 6.1 which are due and
payable after the date of the Assumption Notice shall be suspended
until Substantial Completion of the Improvements and thereupon all
Costs incurred and paid by Builder shall be offset against the
unpaid portions of the Deferred Purchase Price. 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, together with an
administrative fee equal to 2% of 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 12% per annum 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.

 

 

 

15

 

 

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 both the
Builder Lots and other lots that are owned by another homebuilder
that is under contract with Developer for the completion of such
Improvements (the “Joint
Improvements”), then Richmond American Homes of
Colorado (“Richmond”)
(to the extent that it has purchased lots in the Development from
Developer) shall, at its election, have the first right and option
(ahead of all other builders within the Development) to step in and
act on behalf of all such builders pursuant to the self-help
provisions of this Section
4.6 with respect to the Joint Improvements
(“Builder’s
Step-In Option”). Richmond may exercise the Builder
Step-In Option by giving notice to Developer and the other builders
within fifteen (15) days following the Event of Default
(“Builder’s
Step-In Deadline”). If Richmond does not exercise
Builder’s Step-in Option prior to the Builder Step-In
Deadline, then the other builders shall have the right to exercise
an option to step-in and select a Substitute Contracting Party to
act on behalf of all such builders pursuant to the self-help
provisions of this Section
4.6 with respect to the Joint Improvements by giving notice
to Developer and the other builders within fifteen (15) days
following the expiration of Builder’s Step-In Deadline. 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 Lot Development Agreement
regarding the installation and construction of any Joint
Improvements. The form of the Joint Improvements Memorandum shall
be agreed upon during the Inspection Period under the Contract and
attached to this Lot Development Agreement as Exhibit
H.

 

4.6.4 Service
Agreements. Each Service Agreement will permit the
assignment of the Service Agreement by Developer to Builder in the
event of a Developer’s default hereunder. Developer shall not
amend or terminate a Service Agreement without written approval of
Builder, which approval shall not be unreasonably withheld.
Developer shall deliver to Builder copies of any written default
notice sent by Developer to a Service Provider within five (5)
business days after PCY’s transmission thereof to a Service
Provider, and shall deliver to Builder copies of any default notice
received by Developer from a Constructing Entity or District within
five (5) business days after Developer’s receipt
thereof.

 

4.7 Over-Excavation of Lots. The
Parties acknowledge that the Improvements shall not include Overex
of the 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 materially interfere with or result in a
material 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 materially 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 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.

 

 

 

16

 

 

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 Developer and shall be
included in the Constructing Party Cost Overruns, except for damage
that was caused by Builder or its contractors, subcontractors,
employees, or agents, in which event Builder shall pay all such
costs and expenses to the extent caused by Builder or its
contractors, subcontractors, employees, or agents. Any damage to an
Improvement that was not listed on the Builder Punchlist shall be
presumed to have been caused by 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.

 

4.8.2 Non-Government
Warranty Period. Developer warrants (“Non-Government
Warranty”) to Builder that each Improvement to which a
Governmental Warranty Period does not apply shall have been
constructed in accordance with the Plans for one (1) year from the
date of Substantial Completion of the Improvement (the
“Non-Government
Warranty Period”). If Builder delivers written notice
to Developer of breach of the Non-Government Warranty during the
Non-Government Warranty Period, then Developer shall coordinate the
corrections with the 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 Developer (including, but
not limited to, any costs or expenses incurred to enforce any
warranties against Service Providers), and shall be included in the
Constructing Party Cost Overruns, except for any breach or damage
that was caused by 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 Builder or its contractors,
subcontractors, employees, or agents, unless Builder conclusively
proves that the damage was caused as the result of a design or
construction defect in the original construction by 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.

 

 

 

17

 

 

4.9 License for Construction.
Each Party hereby grants to
Developer or the Substitute Constructing Party (as applicable) and
the Service Providers a temporary, non-exclusive license to enter
upon the parcel within the Property owned by such Party as
reasonably necessary for the installation of the Improvements,
rough grading of the Builder Lots, stubbing of utilities and/or the
performance of 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 parcel owned by such Party 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 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 the Builder Lots (or any
of them) 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 after
Developer otherwise
become 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 Builder requests that Developer file and obtain any
such release or bond and Developer fails to do so within sixty (60)
calendar days of such request, Builder may obtain such bond or
secure such release on behalf of Developer offset all costs and
fees related thereto against any amount payable by Builder under
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
further amounts remain payable by Builder under this LDA, Developer
shall reimburse Builder for all costs and fees related thereto
within thirty (30) days after receipt of written request therefor
and any such cost or amount
that is not paid by Developer to Builder when due shall bear
interest at the rate of twelve percent (12%) per annum from the due
date thereof until paid in full (together with such
interest).

 

4.11 Tree
Lawns/Sidewalks. Notwithstanding anything in this LDA to the
contrary, Developer 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.

 

 

 

18

 

 

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. The Seller under
the Contract will designate a site within the Development, as
determined by Seller in its sole discretion, to which Builder may
transport such surplus soil. Seller may modify any such stock pile
location from time to time in Seller’s discretion. At
Seller’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 Seller 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 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.

 

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 Budget. Attached hereto as
Exhibit
F is an estimate of the Costs to construct the Improvements
(the “Budget”).
The Costs identified on the Budget are referred to herein as
“Budgeted
Costs.” Builder shall pay or cause to be paid pursuant
to Article 6
below a share of the Budgeted Costs. As consideration for the
Developer’s performance under this LDA and the construction
of the Improvements, Builder shall pay the Deferred Purchase Price
which is equal to (i) a share of the Budgeted Costs in the amount
of Forty Seven Thousand Five Hundred Dollars ($47,500.00) per
Builder Lot plus the Escalator (which based on a total of 161
Builder Lots is equal to $7,674,500.00 plus the Escalator), and
(ii) the Builder Cost Overruns, if any, as defined below
(collectively, the “Maximum
Builder Costs”).

 

5.3 Cost Overruns. Notwithstanding
anything in this LDA to the contrary, the Developer shall pay (i)
all costs for changes to the Plans or Improvements required by any
Approving Authority or to correct any error or defect in the Plans
that cause the Costs to exceed the Budgeted Costs, (ii) the costs
of all other changes to the Plans or Improvements requested by the
Developer that cause the Costs to exceed the Budgeted Costs, and
(iii) all other costs and charges that cause the Costs to exceed
the Budged Costs (with the exception of Builder Cost Overruns)
(collectively, the “Constructing Party
Cost Overruns”). The Builder shall immediately pay all
costs of changes to the Plans or Improvements requested by Builder
that causes the Costs to exceed the Budgeted Costs or that occur as
a result of Builder’s breach of its obligations under this
LDA (collectively “Builder Cost
Overruns”) and Builder shall not have any
responsibility for Constructing Party Cost Overruns unless such
Constructing Party Cost Overruns occur as a result of
Builder’s breach of its obligations under this LDA or as a
result of mismanagement or unreasonable Costs incurred by the
Substitute Constructing Party that cause the Costs to exceed the
Budged Costs. Except as provided in this Section 5.3, Builder shall
have no obligation to pay Costs that exceed the Maximum Builder
Costs.

 

 

 

19

 

 

5.4 Accounting. Developer shall
keep good and accurate books and records in sufficient detail to
allow the Costs to be calculated, which books and records shall be
made available for review (upon reasonable prior written notice) by
the Parties. Within thirty (30) days after Substantial Completion
of the Improvements, the Developer shall deliver to Builder a
reasonably detailed final accounting of the Costs.

 

5.5 Progress Reports. Developer
shall, no less frequently than once per month, provide Builder with
a progress report setting forth the amount of Costs expended to
date, a list of Improvements completed, to date, and an estimate by
a project manager of Developer of the status of overall completion
of the Improvements, in such form as Developer deems reasonably
appropriate (“Progress
Report”).

 

6. Payment of Costs.

 

6.1 Payment.

 

6.1.1 Payment.
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 Cost Overruns, if any) which represents Builder’s
share of the Budgeted 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:

 

(a) Takedown 1 Lots – Phase
1. Phase 1 consists of approximately 50 Takedown 1 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 the Developer a portion of the Deferred Purchase
Price for Phase 1 in the amount of $23,750.00 multiplied by the
actual number of Phase 1 Lots (as shown on the recorded final plat
creating the Phase 1 Lots), plus the 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 in the amount of $23,750.00 multiplied
by the actual number of Phase 1 Lots, plus the
Escalator.

 

(b)  Takedown 2 Lots – Phase
2. Phase 2 consists of approximately 50 Takedown 2 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 the Developer a portion of the Deferred Purchase
Price for Phase 2 in the amount of $23,750.00 multiplied by the
actual number of Phase 2 Lots (as shown on the recorded final plat
creating the Phase 2 Lots), plus the Escalator. Upon Substantial
Completion of all 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 in the amount of $23,750.00 multiplied
by the actual number of Phase 2 Lots, plus the
Escalator.

 

 

 

20

 

 

(c) Takedown 3 Lots – Phase
3. Phase 3 consists of approximately 61 Takedown 3 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 the Developer a portion of the Deferred Purchase
Price for Phase 3 in the amount of $23,750.00 multiplied by the
actual number of Phase 3 Lots (as shown on the recorded final plat
creating the Phase 3 Lots), plus the Escalator. Upon Substantial
Completion of all 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 in the amount of $23,750.00 multiplied
by the actual number of Phase 3 Lots, plus the
Escalator.

 

(d) Escalator. All payments of the
Deferred Purchase Price shall be subject to the Escalator as
provided in Section 2(b) of the Contract.

 

(e) 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.

 

(f) 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
G.

 

(g) Security for Payment of Deferred
Purchase Price - Letter of Credit. In order to secure
Builder’s obligation following the 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 6.1, at
each Closing, Builder shall deliver to Title Company, acting as
escrow agent, a letter of credit issued by _____________________ in
the form attached to the Contract as Exhibit G
(the “Letter of
Credit”) and in an amount equal to the sum of the
Deferred Purchase Price for all of the Lots acquired by Builder at
such Closing, plus the Escalator (with respect to the Takedown 2
Lots and the Takedown 3 Lots). Title Company shall hold and
maintain the Letter of Credit 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”)). The Letter of Credit for each 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 Lots acquired by Builder at such
Closing. If the Letter of Credit is scheduled to expire prior to
the Substantial Completion of all of such 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
Purchaser for Improvements in accordance with the terms, including
the payment schedule, set forth in this LDA. 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 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 Purchaser Price in
Good Funds for all of the Lots in such Closing. Failure by Builder
to pay any portion of the Deferred Purchase Price when the same
shall become due and payable, provided that at such failure
continues for a period of ten 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, 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.

 

 

 

21

 

 

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 or the amount of
or responsibility for Constructing Party Cost Overruns or Builder
Cost Overruns (“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.

 

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. From and
after the date of this LDA and until Substantial Completion of the
Improvements, the Parties shall cause their designated
representatives to meet within five (5) business days following a
request from a Party regarding the status of construction of the
Improvements, scheduling and coordination issues, engineering and
design issues, and other similar issues. Any Party may change its
designated representative under this LDA at any time by written
notice to the other parties. The initial designated representative
for each Party for the purpose of this Section shall be the
individual listed on each Party’s respective signature page
attached hereto. All inquiries, requests, instructions,
authorizations, and other communications with respect to the
matters covered by this 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.

 

 

 

22

 

 

9. Builder’s Stormwater Permit
Responsibilities. During any Overex construction activities
performed on the Builder Lots by Builder and 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 Overex or
construction activities on any Builder Lot, Builder shall deliver a
copy of at least one (1) of the following documents to
Developer:

 

9.0.1 Such
valid Colorado Construction Stormwater Discharge Permit for the
Builder Lots;

 

9.0.2 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

 

9.0.3 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, Builder shall also obtain a
Stormwater Quality Permit issued to Builder by the County 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.

 

9.1  Developer’s Stormwater
Permit responsibilities. Developer shall obtain and comply
with all necessary permits related to stormwater and erosion
control from all Approving Authorities, in relation to the
construction, repair, and maintenance of the
Improvements.

 

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 facsimile or electronic mail message if
telecopied or sent electronically to the number or address
designated in such Party’s Notice Address and receipt of such
telecopy or electronic mail message is electronically confirmed.
The Notice Addresses for the Developer is as follows:

 

 

 

23

 

 

To
Developer:

 PCY Holdings,
LLC

 Attention:
Mark Harding

 34501
E. Quincy Ave.

 Bldg.
34, Box 10

 Watkins,
Colorado 80137

 Telephone:
(303) 292-3456

 Facsimile:
(303) 292-3475

 E-mail:
mharding@purecyclewater.com

 

with a
copy to:

 Fox
Rothschild LLP

 1225
17th
Street, Suite 2200

 Denver, CO
80202

 Attention:
Rick Rubin, Esq.

 Telephone:
(303) 292-1200

 Email:
rrubin@foxrothschild.com

 

 

 

To
Builder:

 Taylor
Morrison of Colorado, Inc.

 1420 West
Canal Court, Suite 170

 Littleton,
Colorado 80120

 Attention:
Phillip Cross

 Telephone:
(303) 325-2429

 E-mail:
pcross@taylormorrison.com

 

with a
copy
to:                                

 Brier, Irish,
Hubbard & Erhart P.L.C.

 2400 East
Arizona Biltmore Circle, Suite 1300

 Phoenix, AZ
85016

 Attn: Jeff
Hubbard

 Telephone:
(602) 522-0160

 Facsimile:
(602) 522-3945

 E-mail:
jhubbard@bihlaw.com

 

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 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.

 

 

 

24

 

 

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.

 

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.

 

 

 

25

 

 

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 facsimile or by electronic mail in portable document format
(.pdf) or similar means and delivery of the signature page by such
method will be deemed to have the same effect as if the original
signature had been delivered to the other party. Upon execution of
this 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.

 

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 rate of 12% per annum 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.

 

 

 

26

 

 

 

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]

 

 

 

27

 

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:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

 

 

 

 

 

Designated
Representative: ____________________

 

 

 

 

28

 

 

 

BUILDER:

 

TAYLOR
MORRISON, INC.,

a
Colorado Corporation

 

By:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

 

 

 

Builder’s Builder
Lots:

______________________________________________________

______________________________________________________

______________________________________________________

 

 

 

Designated
Representative: ____________________

 

 

 

 

 

29

 

List of Exhibits

 

	

Exhibit
A:

	

Concept
Plan, Takedowns, Phases - Description of Property

	

Exhibit
B:

	

List of
Plans

	

Exhibit
C:

	

Required
Insurance

	

Exhibit
D:

Exhibit
E:

	

Finished Lot
Standard

Construction
Schedule

	

Exhibit
F:

	

Initial
Budget

	

Exhibit
G:

	

Wet
Utilities – Phased - that will trigger the Builder’s
payment obligation upon Substantial Completion

	

Exhibit
H:

	

Joint
Improvements Memorandum

 

 

 

 

30

 

Exhibit
A

to

Lot
Development Agreement

 

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

 

 

 

 

31

 

Exhibit
B

to

Lot
Development Agreement

 

(List
of Plans for Each Applicable Phase)

 

Improvements to be Constructed by

Developer

 

[List
specific work to be performed]

 

 

 

32

 

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.

 

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.

 

 

33

 

 

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.

 

 

 

34

 

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:

 

(a) 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);

 

(b) 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;

 

(c) 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;

 

(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 Plans;

 

(e) 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;

 

(f) 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;

 

(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 Standard does not include any Overex;

 

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

 

 

35

 

 

(i) 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 do not include (a) the Offsite
Infrastructure, which is addressed separately in Section 5 of the
Contract, but it does include such other offsite improvements that
are not necessary to obtain building permits but that are necessary
to obtain certificates of occupancy for homes constructed on the
Lots, provided that as aforesaid Seller shall only be obligated to
complete such other improvements at such time as required by the
County or other applicable Authority and so as not to delay the
issuance of building permits or certificates of occupancy for
residences constructed by Purchaser on the Lots, or (b) 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 Purchaser on the Lots.

 

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

 

 

 

 

36

 

Exhibit
E

to

Lot
Development Agreement

 

Construction
Schedule

 

 

 

 

 

 

37

 

Exhibit
F

to

Lot
Development Agreement

 

Budget

 

 

 

 

 

38

 

Exhibit
G

to

Lot
Development Agreement

 

Wet
Utilities

 

 

39

 

Exhibit
J

to

Lot
Development Agreement

 

Joint
Improvements Memorandum

 

 

40

 

JOINT
IMPROVEMENT MEMORANDUM

 

 

This
Joint Improvement Memorandum (the “Agreement”) is made as of the ____
day of __________, 2017 (the “Effective Date”), by and among PCY
Holding, LLC, a Colorado limited liability company
(“PCY”), Taylor
Morrison of Colorado, Inc., a Colorado corporation
(“Taylor”), and
Richmond American Homes of Colorado, Inc., a Delaware corporation
(“Richmond”).  PCY, Taylor, Richmond and any
purchaser of any Lots within the Project, as defined below, that
executes an Addendum in the form attached as Exhibit E,
and acquires the rights, liabilities and obligations hereunder with
respect to such Lots are each, a “Builder” and collectively, the
“Builders”.
Builders and PCY are sometimes hereinafter collectively referred to
as the “Parties”
and individually as a “Party.”

 

RECITALS

 

A.           Builders
collectively own real property located within the subdivision
commonly known as “Sky Ranch” (“Project”) in Arapahoe County
(“County”), Colorado, as depicted in Exhibit A
attached hereto. Each of the lots within the property as depicted
on Exhibit A
are sometimes referred to herein as a “Lot” and collectively the
“Lots” and all
of the Lots (together with any tracts as depicted on Exhibit A)
are sometimes collectively referred to herein as the
“Property.”
Exhibit
A also identifies the particular Lots that are owned by each
Builder.

 

B.           Prior
to execution hereof, PCY owned all of the Property and subsequently
conveyed portions of the Property to the other Builders. PCY may
convey other portions of the Property owned by PCY to future
Builders as further described herein below and such future Builders
may execute an Addendum (as described herein below).

 

C.           Taylor
and Richmond have each entered into a separate Lot Development
Agreement with PCY (each and any other Lot Development Agreement
executed by PCY and any other Builder, an “LDA” and together the
“LDAs”). In each
LDA PCY is or will be obligated to construct or to cause the
construction of certain infrastructure improvements generally
described in Exhibit B
attached hereto that jointly serve or otherwise benefit the Lots
that are owned by the Builders (the “Joint Improvements”) in addition to
other improvements not covered by this Agreement. The Joint
Improvements are more particularly described in the plans and
specifications therefor that are listed in Exhibit C
attached hereto (the “Plans
and Specifications”). As of the Effective Date, the
Plans and Specifications have been approved by the County and other
governmental authorities having jurisdiction over the Joint
Improvements (collectively, the “Governmental
Authorities”).

 

D.           The
budget for the Joint Improvement Costs (as defined below) is
attached hereto as Exhibit D
(the “Budget”).

 

E.           In
order to cause the construction of the Joint Improvements, PCY and
the Sky Ranch Community Authority Board (the “CAB”) entered into a Service
Agreement for Project Management Services for Sky Ranch
(“CAB Service
Agreement”) pursuant to which PCY serves as the
Project Manager (“PM”) for the CAB for the
construction of the Joint Improvements and provides the services
required to construct and deliver the Joint Improvements, including
but not limited to: CAB compliance and coordination with legal
counsel and accountants; planning design and approvals; project
administration; contractor agreements; construction management and
administration; and CAB acceptance of the CAB Infrastructure. A
copy of the CAB Service Agreement is attached hereto as a part of
Exhibit
G.

 

 

 

41

 

 

 

F.           The
CAB was organized by the Sky Ranch Colorado Metropolitan District
Nos. 1 and 5 (the “Districts”) pursuant to the laws
of the State of Colorado in order to construct, operate and
maintain certain public facilities and improvements in accordance
with the Sky Ranch Community Authority Board Establishment
Agreement (the “CABEA”) and each of the service
plans for the Districts. The CAB is constructing the Joint
Improvements and, in order to fund the Joint Improvements, PCY has
advanced funds to the CAB in an amount equal to the Budget (the
“Construction
Funds”) which were deposited into a segregated,
construction account owned and maintained by the CAB, and such
funds were appropriated to be used by the CAB to pay for the costs
of designing, permitting and constructing the Joint Improvements.
The Construction Funds are held by the CAB in a construction
account at a nationally or regionally recognized FDIC insured
financial institution (“Construction
Account”).

 

G.           Among
other things, the purpose of this Agreement is to:
(1) establish an orderly plan for the construction of the
Joint Improvements in the event that PCY defaults under one or more
of the LDAs or this Agreement and either Richmond, Taylor or any
other Builder exercises its self-help remedy and becomes the
Substitute Constructing Party under the LDAs, and in such event (2)
establish a mechanism for the funding of the completion of the
Joint Improvements.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the foregoing Recitals, the terms of
which are agreed to by the Parties, and also in consideration of
the mutual agreements, covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt,
sufficiency and validity of which are hereby acknowledged, the
Parties agree as follows:

 

 

ARTICLE
1

RIGHTS
TO COMPLETE JOINT IMPROVEMENTS

 

1.1 Default.
If PCY commits an Event of Default under one or more of the LDAs or
CAB Service Agreement or otherwise materially defaults in its
obligations to a Builder to construct or cause the construction of
the Joint Improvements and either Richmond, Taylor or another
Builder are entitled to exercise its self-help remedy by invoking
Builder’s Step-In Option and becoming the Substitute
Constructing Party under the applicable LDA, then in such event the
applicable Builder shall immediately provide notice of the Event of
Default to the other Builders and PCY. Richmond shall, at
Richmond’s election, have the first right and option (ahead
of all other builders within the Development) to step in and act on
behalf of all such Builders pursuant to the self-help provisions of
Section 4.6 of all of the LDAs with respect to the Joint
Improvements thereby becoming the Substitute Constructing Party
(“Builder’s Step-In
Option”). Seller represents and warrants that (1)
every Builder Purchase Agreement for unfinished lots provides for
Richmond to have the first right to step-in as described in the
immediately preceding sentence, (2) and except as otherwise stated
in sub-clause (1) of this Section 1.1, each Builder’s Lot
Development Agreement contains substantially similar self-help
provisions, and such provisions will not be modified without the
consent of Richmond which consent may be withheld in
Richmond’s sole discretion if Richmond is then a Builder.
Richmond may exercise the Builder’s Step-In Option by giving
notice to PCY and the other Builders within fifteen (15) days
following notice of the Event of Default (“Builder’s Step-In
Deadline”). If Richmond does not exercise
Builder’s Step-in Option prior to the Builder’s Step-In
Deadline, then the other Builders (other than PCY) shall have the
right to exercise an option to step-in and select a Substitute
Constructing Party to act on behalf of all such Builders pursuant
to the self-help provisions of Section 4.6 of the LDAs with respect
to the Joint Improvements by giving notice to PCY and the other
Builders within fifteen (15) days following the Builder’s
Step-In Deadline. If PCY commits an Event of Default and a
Builder’s Step-in Option is exercised, PCY shall assign to
Substitute Constructing Party the right, title and interest of PCY
in, to the CAB Service Agreement with respect to the Joint
Improvements, but the Substitute Constructing Party shall not
assume any responsibility for or otherwise have any liability for
any such obligations prior to such date or for any of the acts or
omissions of PCY, and the obligation to fund the Construction
Account to pay for the costs of the Joint Improvements, including
cost overruns, shall remain the sole responsibility of PCY even if
the costs exceed the amounts in the Construction Account. PCY and
the Builders shall take all action reasonably required to permit
the Substitute Constructing Party to act as the PM under the CAB
Service Agreement to complete the construction of the Joint
Improvements. In such event, PCY and the Substitute Constructing
Party shall give notice to the CAB that PCY has assigned the CAB
Service Agreement to the Substitute Constructing Party hereunder
and that the Substitute Constructing Party has assumed the position
of PM under the CAB Service Agreement with respect to the
construction of the Joint Improvements. PCY shall take all action
necessary to permit the Substitute Constructing Party to act as the
PM under the CAB Service Agreement with respect to the construction
of the Joint Improvements, including the administration and
processing of Draw Requests (as hereinafter defined) from the
Construction Account for the payment of construction costs of the
Joint Improvements as identified in Draw Requests in accordance
with the terms hereof.

 

 

42

 

 

1.2 Responsibilities
of Substitute Constructing Party. If Richmond or another
Builder, as applicable, exercises the Builder’s Step-In
Option, then in addition to the responsibilities expressly set
forth elsewhere in this Agreement, the Substitute Constructing
Party shall replace PCY as the PM for the CAB under the CAB Service
Agreement with respect to administering and coordinating the
construction of any unfinished Joint Improvements in accordance
with the Plans and Specifications and the requirements of the
County and other applicable Governmental Authorities having
jurisdiction over the construction of the Joint Improvements.
Substitute Constructing Party shall perform its obligations
hereunder in accordance with the care and skill ordinarily and
customarily used to perform similar construction at the same time
and in the same locality (“Standard of Care”).

 

1.3 Compensation.
For performing the services described in this Agreement, Substitute
Constructing Party shall be entitled to receive a construction
coordinator’s fee in the amount of five (5%) of the Joint
Improvement Costs which are the subject of Draw Requests (as
defined in the Instructions attached hereto as Exhibit F)
processed by the Substitute Constructing Party, which PCY shall pay
within 30 days after the Substitute Constructing Party’s
delivery of an invoice therefor to PCY.

 

1.4 Role
of Substitute Constructing Party; Liability. In the event
the Substitute Constructing Party takes over as the PM for the
construction of the Joint Improvements as contemplated hereby,
Substitute Constructing Party’s assumption of the obligations of the PM for the
construction of the Improvements is done only as an
accommodation to the Parties and that, except as expressly set
forth in this Agreement, Substitute Constructing Party shall have
no responsibility, liability or obligation with respect to (and the
Parties hereby covenant not to sue Substitute Constructing Party
for, and hereby release the Substitute Constructing Party from, all
liability and claims relating to or arising from) the design,
engineering, construction or completion of the Joint Improvements,
the funds collected and disbursed under this Agreement, any damage,
loss or injury to any of the parties or otherwise related to any
action or inaction of Substitute Constructing Party in connection
with this Agreement, or any defect in the materials or workmanship
pertaining to the Joint Improvements, except for any
“Substitute Constructing Party Covered Liability,” as
hereinafter defined. “Substitute Constructing Party
Covered Liability”
means the following matters for which Substitute Constructing Party
shall be liable to the other Parties in connection with its
performance as Substitute Constructing Party hereunder: (a) 
any damage, loss or injury arising from the negligence, willful
misconduct, bad faith, recklessness or illegal acts of the
Substitute Constructing Party in performing or failing to perform
hereunder, or (b) damage, loss or injury arising from the
fraudulent conduct of Substitute Constructing Party; provided,
however, that any damages to which the other Parties shall be
entitled to recover for any Substitute Constructing Party Covered
Liability shall be limited to out-of-pocket losses, costs, damages
or expenses, and the other Parties shall not be entitled to recover
from the Substitute Constructing Party any punitive or
consequential losses, costs, damages or expenses or lost profits as
a result of, or in connection with, any Substitute Constructing
Party Covered Liability. Substitute Constructing Party makes no
representation or warranty with respect to the Joint Improvements,
and shall have no liability for any defect in the materials or
workmanship pertaining thereto except for Constructing Party
Covered Liability. The parties hereby agree to look solely to the
contractors engaged to construct and complete the Improvements for
any contractual violation, indemnity, warranty or guarantee
relating to the Improvements. Upon completion of the Improvements,
Substitute Constructing Party shall assign to the parties hereto
(to the extent assignable and without any representation or
warranty whatsoever), on a non-exclusive basis, the contractual
rights received from the contractors that construct or complete any
portion of the Joint Improvements, including, without limitation,
all rights related to any indemnities, guaranties and/or warranties
received from such contractors.

 

 

 

43

 

 

1.5 CAB
Service Agreement. PCY may only amend or terminate the CAB
Service Agreement in accordance with the process set forth in the
CAB Service Agreement. PCY shall deliver to Builders copies of any
written default notice sent by PCY to a Constructing Entity within
five (5) business days after PCY’s transmission thereof to a
Constructing Entity, and shall deliver to Builders copies of any
default notice received by PCY from a Constructing Entity within
five (5) business days after PCY’s receipt
thereof.

 

ARTICLE
2

CONSTRUCTION
OF JOINT IMPROVEMENTS

 

2.1 Definitions.
Any capitalized terms not defined herein shall have meaning set
forth in LDAs. As used
herein, the following terms shall have the meanings set forth
below:

 

2.1.1 “Applicable
Recipient” shall mean the
County (as to any component of the Joint Improvements that is
owned, to be dedicated to or maintained by the County), any other
Governmental Authority (as to any component of the Joint
Improvements that is owned, to be dedicated to or maintained by
such other Governmental Authority).

 

2.1.2 “Final
Completion” of the Joint Improvements means that: (a)
Substantial Completion has occurred, free of any mechanics,
materialmen’s, or other liens arising from the Joint
Improvements, (b) a final Draw Request in accordance with the
provisions of Article 4 below has been submitted, and (c) to the
extent applicable, the Joint Improvements have been initially
accepted by the Applicable Recipient, subject to warranty and
maintenance obligations, if applicable.

 

2.1.3 “Force
Majeure Delay” shall mean a delay in progress of
construction of the Joint Improvements due to unusual weather, acts
of God, unavailability or shortage of labor or materials, national
emergency, fire or other casualty, natural disaster, war,
unanticipated or unscheduled delays or actions of Governmental
Authorities or utilities, riots, acts of violence, labor strike,
injunctions in connection with litigation, or other any cause not
within the reasonable control of Substitute Constructing Party.
Substitute Constructing Party shall provide written notice to the
Builders within thirty (30) days after Substitute Constructing
Party first becomes aware of a condition that creates a Force
Majeure Delay.

 

2.1.4 “Substantial
Completion” of the Joint Improvements (or component
thereof) means that the Joint Improvements (or component thereof)
have been substantially completed in accordance with the Plans and
Specifications such that a Builder will not be precluded, solely as
a result of the degree of completion of the Joint Improvements,
from: (a) obtaining a building permit for a residential dwelling
unit to be constructed on its Lots, (b) obtaining a certificate of
occupancy following the proper completion of a residential dwelling
unit on any of the Builder’s Lots, and (c) using such
Improvement for its intended purpose.

 

 

44

 

 

 

2.2 Completion
of Joint Improvements. Following the exercise of the
Builder’s Step-in Option, Substitute Constructing Party shall
use commercially reasonable efforts as PM under the CAB Service
Agreement, subject to Force Majeure Delay, to cause Substantial
Completion and Final Completion of the Joint Improvements in an
expeditious and diligent manner.

 

2.3 Inspection
of Joint Improvements.

 

2.3.1 Builder
Inspection Rights. Any Builder may inspect the construction
of the Joint Improvements at any time upon reasonable prior written
notice to Substitute Constructing Party, provided that any
inspection shall be at the sole risk, cost and expense of the
Builder making the inspection.

 

2.3.2 Notice
of Non-Compliance. If a Builder believes that the Joint
Improvements are not being constructed in substantial conformance
with the Plans and Specifications, then the objecting Builder shall
provide written notice to Substitute Constructing Party and all
other Builders explaining in reasonable detail the basis of its
belief that the Joint Improvements are not being constructed in
accordance with the Plans and Specifications (a “Notice of Non-Compliance”).
If Substitute Constructing Party receives a Notice of
Non-Compliance from any Builder, Substitute Constructing Party
shall promptly thereafter arrange for a meeting between the
Builders and Substitute Constructing Party to resolve the Notice of
Non-Compliance.

 

2.4 Oversee
Progress of Construction. Substitute Constructing Party
shall update the Builders on the progress of the Joint Improvements
on a periodic basis.

 

2.5 Conveyance
of Joint Improvements.

 

2.5.1 Execution
of Conveyance Documents. Upon Substantial Completion of
Joint Improvements (or components thereof) that are to be dedicated
to or maintained by the County or other Governmental Authority
(collectively, the “Governmental Improvements, Substitute
Constructing Party and/or the Builders shall execute, acknowledge
and deliver such further agreements, documents and/or instruments
as may be necessary to convey or dedicate the Governmental
Improvements to the County or other applicable Governmental
Authority.

 

2.5.2 Warranty;
Final Acceptance. Substitute Constructing Party shall cause
final acceptance of the Joint Improvements in accordance with any
warranty required by the Applicable Recipient in connection with
the conveyance of any Joint Improvement. During the Warranty
Period, Substitute Contracting Party may submit Draw Requests to
the District for warranty work required by the applicable
Governmental Authorities.

 

2.6 Grant
of Necessary Easements to Substitute Constructing Party.
Substitute Constructing Party is granted the right and license to
enter upon portions of each Builder’s Lots as necessary in
order to cause the completion of the construction of the Joint
Improvements and otherwise comply with the obligations under this
Agreement. Subject to the limitations of Section 1.4, above,
Substitute Constructing Party shall indemnify, defend and hold
harmless all Builders for, from and against all claims, costs,
demands, actual damages, expenses and liabilities (including
reasonable attorneys’ fees) and resulting from personal
injury, bodily injury, and/or property damage which the Builders
may incur or sustain resulting from entry and/or activities upon
the Builder’s Lots by Substitute Constructing Party. The
rights under this Section terminate upon the satisfaction of the
Substitute Constructing Party obligations under this
Agreement.

 

 

45

 

 

ARTICLE
3

JOINT
IMPROVEMENT COSTS

 

3.1 Construction
of Joint Improvements. The CAB is constructing the Joint
Improvements and in connection therewith PCY has acted as the PM
for the CAB pursuant to the CAB Services Agreement by and between
PCY and the CAB. If a Builder exercises the Builder’s Step-in
Option, such Builder will replace PCY as the PM for the CAB with
respect to the administration and coordination of the construction
of any unfinished Joint Improvements. In the event the Substitute
Constructing Party takes over as PM for the construction of the
Joint Improvements as contemplated hereby, PCY and the Substitute
Constructing Party shall give notice to the CAB that such Builder
has become the Substitute Constructing Party hereunder and take all
action necessary to permit the Substitute Constructing Party to
administer as construction coordinator the payment of Draw Requests
from the Construction Account (as hereinafter defined) for the
payment of construction costs of the uncompleted Joint Improvements
as identified in Draw Requests in accordance with the terms
hereof.

 

3.2 Joint
Improvement Costs Definition. As used herein, the term
“Joint Improvement Costs” shall mean the
hard and soft costs incurred in connection with the design,
engineering, construction and installation of the Joint
Improvements, including, but not limited to, costs of labor,
materials suppliers, architectural, engineering, design and
consultant fees and costs, blue printing services, construction
staking, demolition, soil amendments or compaction, any processing,
plan check or permit fees and engineering services required to
obtain a permit for and complete the Joint Improvements, costs of
insurance required by this Agreement, any corrections, changes or
additions to work required by the County or other Governmental
Authorities or necessitated by site conditions, state and County
sales taxes imposed in connection with construction of the Joint
Improvements, the fee payable to Substitute Constructing Party
pursuant to this Agreement, contractor’s fees, any
contingency funds and funds for repair during the Warranty Period
(the “Warranty
Funds”), all as listed on the Budget.

 

3.3 Construction
Funds. The Joint Improvement Costs are set forth in the
Budget. Upon the mutual execution of this Agreement, PCY has
deposited or shall deposit funds into a construction account that
is owned and maintained by the CAB in the amount of the Joint
Improvement Costs set forth in the Budget including a reasonable
contingency (the “Deposit”) which is the amount
equal to the Joint Improvements Costs necessary to achieve
Substantial Completion of the Joint Improvements. The Construction
Funds have been appropriated for the use described herein and shall
be utilized to pay for the construction of the Joint Improvements.
If at any time the amount of Construction Funds held in the
Construction Account is less than the commercially reasonable costs
to complete any uncompleted portion of the Joint Improvements,
whether due to cost overruns, change order or otherwise, PCY shall
within five (5) business days thereafter increase the amount of
Construction Funds on deposit in the Construction Account to cover
the shortfall.

 

3.4 Construction
Account. The Deposit is held in the Construction Account
that is owned and maintained by the CAB for the purpose of funding
the Joint Improvement Costs and the payment of Draw Requests. As
PM, Substitute Constructing Party shall administer the construction
of the Joint Improvements and the payment of Construction Funds
from the Construction Account in payment of Draw Requests to pay
the Joint Improvement Costs incurred to construct the Joint
Improvements.

 

 

 

46

 

 

 

 

3.5 Disbursement
from the Construction Account. Substitute Constructing Party
shall administer and process Draw Requests for the payment of
Construction Funds from the Construction Account to pay contractors
and payees identified in Draw Requests in accordance with the
instructions set forth on Exhibit F
attached hereto and incorporated herein by this reference
(“Instructions”). The Construction
Funds in the Construction Account shall not be commingled with
other funds or accounts.

 

3.6 Claims
Against Defaulting Contractor. Subject to the limitations of
Section 1.4, above, if Substitute Constructing Party has the right
to require any Contractor or Service Provider to pay for and/or
perform the repair of any Joint Improvements (the
“Defaulting Contractor or
Service Provider”) (i.e., if a Defaulting Contractor or
Service Provider is obligated to pay for and/or repair any Joint
Improvements under any warranty provided by the Defaulting
Contractor or Service Provider with respect to the affected
Improvement), then Substitute Constructing Party shall exercise any
and all rights against the Defaulting Contractor or Service
Provider on behalf of the Builders, to seek reimbursement and/or
performance from the Defaulting Contractor or Service Provider. Any
monies thereafter received from the Defaulting Contractor or
Service Provider, less the collection costs (including reasonable
attorneys’ fees), shall be used to reimburse any Warranty
Funds, if applicable, used to pay for any repair of the Joint
Improvements.

 

3.7 Accounting.
Substitute Constructing Party shall keep (or cause to be kept) good
and accurate books and records in sufficient detail to allow the
Joint Improvement Costs administered by the Substitute Constructing
Party to be calculated (“Joint Development Books”).
Substitute Constructing Party shall make the Joint Development
Books available for review by any Builder and keep the Joint
Development Books for a period of three (3) years after the Final
Completion of the Joint Improvements.

 

ARTICLE
4

[reserved]

 

 

ARTICLE
5

[reserved]

 

 

47

 

 

ARTICLE
6

PARTY
REPRESENTATIVES

 

Each
Party designates the individual named below and in each Addendum as
its representative to act on its behalf in all matters covered by
this Agreement (each, a “Designated Representative”). All
inquiries, requests, instructions, authorizations, and other
communications with respect to the matters covered by this
Agreement shall be made to the Designated Representatives. Escrow
Agent and each Party may, without further or independent inquiry,
assume and rely at all times that each Party’s Designated
Representative has the power and authority to make decisions on the
Party’s behalf, to communicate all decisions to the other
Parties and to bind the Party by his/her acts and deeds, unless
otherwise notified in writing by the Party appointing the
Designated Representative. As such, each Party executing this
Agreement or executing an Addendum and thereby becoming a Party to
this Agreement, hereby confers upon its Designated Representative
the authority to act on its behalf and all matters covered by this
Agreement. Any Party may change its Designated Representative under
this Agreement at any time by written notice to the other Parties
at least ten (10) days before the change is to take effect. The
initial Designated Representatives of the initial Parties to this
Agreement shall be as follows:

 

	

PCY:

	

Mark
Harding

	
 

	
 

	

Taylor:

	

Phillip
Cross

	
 

	
 

	

Richmond:

	

Linda
Purdy

 

The
initial Designated Representative of any additional Builder shall
be deemed to be that individual listed in the applicable Addendum
signed by such Builder.

 

ARTICLE
7

MEETINGS
AND VOTING

 

7.1 Regular
Meetings. Following the exercise of the Builder’s
Step-in Option until Final Completion of all of the Joint
Improvements, the Designated Representatives shall meet monthly or
other agreed-upon frequency (in person or by telephone) regarding
the status of construction of the Joint Improvements, scheduling
and coordination issues, engineering and design issues, and other
similar issues (each, a “Regular Meeting”). Each Regular
Meeting shall be held at the offices the Substitute Constructing
Party, unless the Substitute Constructing Party notifies the
Builders of a different place for the meeting in Denver
metropolitan area. From time to time, Substitute Constructing Party
may call for a special meeting of the Builders by written notice at
least three (3) business days prior to the scheduled meeting.
Meetings may be attended in person or by telephone or other
electronic means.

 

 

48

 

 

 

 

7.2 Approval
Process; Majority of Builders. As used herein, the term
“Majority of
Builders” means the Builders other than PCY holding a
majority of the Allocable Shares; provided, however, if any single
Builder holds fifty percent (50%) or more of the Allocable Shares,
then a Majority of Builders shall mean the consent, approval, or
decision of the Builder that holds fifty percent (50%) or more of
the Allocable Shares, plus the consent of at least one (1) other
Builder that is not an affiliate of the Builder that holds fifty
percent (50%) or more of the Allocable Shares. “Allocable
Shares means an Builder’s fixed percentage based on upon the
number of Lots owned or to be purchased by each Builder. At the
time of execution of this Agreement, the Builder’s Allocable
Shares are as follows: Richmond 196 Lots/38.7%; Taylor Morrison 161
Lots/31.9%; PCY 149 Lots/29.4%. The following procedures shall
apply to any matter in this Agreement or otherwise in connection
with the Joint Improvements that is subject to or requires the
consent, approval or decision of a Majority of Builders. The Party
(“Requesting
Party”) seeking the consent, approval, or decision of
a Majority of Builders with respect to any matter that is subject
to such approval (“Consent
Item”) shall deliver notice of the Consent Item to
each Builder, setting forth the proposed action that the Requesting
Party desires to be taken with respect to such Consent Item. The
Consent Item shall be considered at a special meeting held at least
five (5) business days after delivery of the Consent Item. If a
Builder fails to attend (either telephonically, electronically or
in person) the meeting at which the Consent Item is considered,
then such Builder shall be deemed to have consented, approved,
and/or agreed to the action proposed by the Requesting Party with
respect to such Consent Item, unless prior to 5:00 p.m. (Mountain
time) on the date of the meeting at which the Consent Item is
considered such Builder executes and delivers a Consent Form to
Substitute Constructing Party indicating that such Builder
disapproves of the Consent Item. If the consensus of a Majority of
Builders is obtained with respect to a Consent Item, then all
Builders shall be deemed to have consented, approved, and/or agreed
to such matter and shall be bound by the decision of a Majority of
Builders.

 

ARTICLE
8

NOTICES
AND COMMUNICATIONS

 

Any and
all notices, approvals, consents or other communications required
or permitted by this Agreement shall be given in writing and faxed
or emailed, and personally delivered or sent by registered or
certified mail, return receipt requested, postage prepaid, or sent
by Federal Express, U.P.S. or other similar nationally recognized
overnight courier, addressed as follows:

 

 

49

 

 

	

To
PCY:

	

PCY
Holdings, LLC

34501
E. Quincy Ave. Box 10

Watkins, CO
80137

Attention: Mark
Harding

E-Mail:
mharding@purecyclewater.com

	
 

	
 

	

To
Richmond:

	

Richmond American
Homes of Colorado, Inc.

4350 S.
Monaco St.

Denver,
CO 80237

Attention: Linda
Purdy

Facsimile:
720-977-4707

Email:
linda.purdy@,dch.com

	
 

	
 

	

With a
copy to:

	

M.D.C.
Holdings, Inc.

4350 S.
Monaco St.

Denver,
CO 80237

Attention:
Drew Rippey, Esq.

Facsimile:
720-482-8558

E-mail:
drew.rippey@mdch.com

	
 

	

 

And

 

M.D.C.
Holdings, Inc.Attention: Linda Skultety4350 South Monaco
StreetDenver, Colorado 80237Facsimile: (303) 488-4954

E-mail:
Linda.Skultety@mdch.com

 

	

To
Taylor:

	

Taylor
Morrison of Colorado, Inc.

1420
West Canal Court, Suite 170

Littleton, CO
80120

Attention: Phillip
Cross

E-Mail:
pcross@taylormorrison.com

	
 

	
 

	

With a
copy to:

	

Brier,
Irish, Hubbard & Erhart P.L.C.

2400
East Arizona Biltmore Circle, Suite 1300

Phoenix, Arizona
85016

Attention: Jeff
Hubbard, Esq.

Facsimile:
602-522-3945

E-mail:
jhubbard@bihlaw.com

 

The
notice address for any additional Builder shall be deemed to be the
address listed in the applicable Addendum executed by such Builder.
Escrow Agent or any Party may from time to time designate in
writing and deliver in a like manner any changes in address at
least ten (10) days before the change becomes effective. Notices,
approvals and other communications provided for herein shall be
deemed received upon the earlier of (a) if personally delivered, or
sent via overnight courier, the date of business day delivery to
the address of the person to receive the notice, or (b) if mailed,
the sooner of actual receipt or three (3) business days after the
date of deposit. Notwithstanding the foregoing, any notice received
after 5:00 p.m. (local time where the notice is received) or on a
Saturday, Sunday or federal legal holiday shall be deemed received
on the immediately following business day. Notices other than
notices alleging a breach or default under this Agreement may be
sent by facsimile transmission or e-mail; such facsimile or
e-mailed notices shall be effective upon receipt (or if transmitted
on a Saturday, Sunday or federal legal holiday, or after 5:00 p.m.,
local time where the notice is received, on the immediately
following business day after receipt).

 

 

50

 

 

ARTICLE
9

ARBITRATION

 

9.1 Arbitration.
Subject to Section 9.2, if any
question, dispute, or controversy remains in connection with this
Agreement on which the Parties cannot agree (a “Dispute”), then such Dispute shall
be resolved by mandatory arbitration in accordance with the
Commercial Arbitration Rules for the Real Estate Industry of the
American Arbitration Association then in effect (unless the parties
mutually agree to other rules) (the “Rules”), in accordance with and
subject to the following provisions:

 

9.2 Dispute
Notice.  If any Party believes that a Dispute exists,
it may notify the other Parties thereof, which notice (a
“Dispute
Notice”) shall identify the Dispute.  Within ten
(10) days after giving or receiving such notice, each Party shall
submit to the others its final and best position  as to
the Dispute (hereinafter referred to as a “Final Position”) which shall
remain the position of such Party throughout the arbitration
process.  Notwithstanding the foregoing, the Parties may make
offers in settlement at any time, but no such proposal shall be
considered by the Arbitrator.  As promptly as practicable, and
in any event within fourteen (14) days following the delivery of
the Dispute Notice, the Parties shall meet in an attempt to resolve
the Dispute.  If the Dispute cannot be resolved at that
meeting, any Party may submit the Dispute to arbitration as
hereinafter provided.

 

9.3 Appointment
of Arbitrator. Unless otherwise mutually agreed upon by the
parties and subject to Section 9.8 below, a
single arbitrator from the Judicial Arbiter Group shall be selected
according to the Rules; provided, however, that the individual
selected must be recognized in the Denver metropolitan area as
having competence in the subject matter of the Dispute.  The
term “Arbitrator” as used herein shall
mean and refer to the single arbitrator selected pursuant to this
Section.

 

9.4 Conduct
of Arbitration. The arbitration shall be conducted in the
Denver, Colorado metropolitan area. The arbitration process shall
generally be conducted by the designated Arbitrator in accordance
with the Rules, but the Arbitrator shall have discretion to vary
from those Rules in light of the nature or circumstances of any
particular Dispute. In all events, unless waived by the Parties,
the Arbitrator will conduct an arbitration hearing at which the
Parties and their counsel shall be present and have the opportunity
to present evidence and examine the evidence presented by the other
Party.  The proceedings at the arbitration hearing shall,
unless waived by the Parties, be conducted under oath. Any Party
may elect to pay for a court reporter at its sole expense. 
The Parties shall cooperate in good faith to permit a conclusion of
the arbitration hearing within thirty (30) days following the
appointment of the Arbitrator and shall endeavor to submit a joint
statement setting forth each Dispute to be submitted to
arbitration, including a summary of each Party’s Final
Position on each Dispute. The Arbitrator shall make a determination
as to each Dispute in favor of the Final Position (as submitted
within the first ten (10) days following the delivery of a Dispute
Notice) determined by the Arbitrator to be the most reasonable of
all the Final Positions submitted by the Parties in accordance with
this Agreement, which Final Position shall be selected by the
Arbitrator.  In addition, the Arbitrator shall require the
unsuccessful Party(ies) to pay all reasonable costs and fees,
including attorney’s fees, of the prevailing Party(ies) and
costs and fees of the Arbitrator. The award of the costs and fees
of the prevailing Parties shall be allocated among the prevailing
Parties based upon the relative costs and fees incurred by the
prevailing Parties with respect to the matter
arbitrated.

 

 

51

 

 

9.5 Standards
of Conduct. The Parties agree that with respect to all
aspects of the arbitration process contained herein they will
conduct themselves in a manner intended to assure the integrity and
fairness of that process.  To that end, if a Dispute is
submitted to arbitration, the Parties agree that they will not
contact or communicate with the Arbitrator with respect to any
Dispute either ex parte or outside of the contacts and
communications contemplated by this Article, and the Parties
further agree that they will cooperate in good faith in the
production of documentary and testimonial evidence in a prompt and
efficient manner to permit the review and evaluation thereof by the
other Parties.

 

9.6 Decision.
The decision of the Arbitrator with respect to any Dispute shall be
final and binding on all Parties and not subject to appeal, in the
absence of fraud or to the extent permitted by law, and the
prevailing Party(ies) may enforce the same by application for entry
of judgment in any court of competent jurisdiction or by other
procedures established by law.

 

9.7 Time
of the Essence. The Parties agree that time is of the
essence with respect to the resolution of any Dispute arising
hereunder.

 

9.8 Disputes
Related to Certain Matters.  Notwithstanding the
foregoing provisions of this Article or any other provisions
contained in this Agreement, Disputes related to (i) the Joint
Improvement Costs, (ii) Draw Requests, Objection Notices or Punch
List Items under the Instructions that the Parties are unable to
resolve, (iii) the Approved Plans and Specifications, Plan Changes,
the percentage of completion of a Joint Improvement, or (iv)
whether a Joint Improvement has been constructed in accordance with
the Plans and Specifications,  shall be resolved by CVL
Engineers – Melinda Lundquist or if such party is not
available or unwilling to serve as arbitrator, another reputable
third party licensed engineer reasonably agreed upon by the Parties
to the Dispute.  A hearing will be held by such Arbitrator
within ten (10) days after receipt of notice of Dispute, at which
the Parties shall be present and to which any Parties may bring
counsel.  The Arbitrator may modify the Rules as the
Arbitrator deems reasonable or necessary.  The Arbitrator
shall permit the Parties to provide a statement and evidence as to
their position.  The Arbitrator shall inspect the work in
question and shall make a decision as promptly as possible. 
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. The fees of the Project
Engineer or other arbitrator hearing a Dispute pursuant to this
Section shall be paid pro-rata by each Party to the Dispute, and
each party to a Dispute subject to resolution pursuant to this
Section shall bear its own attorneys’ fees and
costs.

 

ARTICLE
10

MISCELLANEOUS

 

10.1 Failure
to Pay Amounts Due. All amounts not timely paid by a Party
hereunder, including without limitation funds for Draw Requests,
shall bear interest at the rate of eighteen percent (18%) per annum
until paid in full (the “Interest”). Any Builder may
advance unpaid funds (a “Paying Builder”) due from any
other non-paying Builder (a “Non-Paying Builder”) and shall be
reimbursed the amount advanced plus Interest at the time the
Non-Paying Builder pays its overdue portion.

 

 

52

 

 

10.2 Attorneys’
Fees. In the event any Party brings any action at law or
other proceeding against any other Party (as applicable) to enforce
any of the terms, covenants or conditions hereof, the Party
prevailing in any action or other proceeding shall be paid all
reasonable costs and reasonable attorneys’ fees and all other
reasonable litigation-related expenses by the non-prevailing
Party(ies). In the event any arbitration award or judgment is
secured by the prevailing Party, all costs and attorneys’
fees shall be included therein and determined by the arbitrator or
the court (and not by any jury, if applicable).

 

10.3 Further
Acts. Each of the Parties shall execute and deliver all
documents and perform all acts as reasonably necessary, from time
to time, to carry out the matters contemplated by this
Agreement.

 

10.4 No
Partnership; Third Parties. It is not intended by this
Agreement to, and nothing contained in this Agreement shall, create
any owner-contractor, contractor-subcontractor, employer-employee,
partnership, joint venture or other arrangement between or among
the Parties. No term or provision of this Agreement is intended to,
or shall, be for the benefit of any person, firm, organization or
corporation not a Party hereto, and no other person, firm,
organization or corporation shall have any right or cause of action
hereunder.

 

10.5 Amendments.
This Agreement (together with the exhibits and documents
incorporated herein by reference) constitutes the entire Agreement
of the Parties relating to the construction of the Joint
Improvements and supersedes any prior agreements, written or oral,
pertaining to the construction of the Joint Improvements. No change
or addition made to this Agreement shall be enforceable unless such
change is memorialized in a written amendment executed by the
Parties. This agreement shall control in the event of a conflict
with any terms of any Purchase Agreement or LDA. Additionally, each
Party agrees that it shall not amend an LDA or Escrow Agreement to
which it is a party in any manner that has a material detrimental
effect on the Parties’ rights under this
Agreement.

 

10.6 Governing
Law; Venue. This Agreement and all claims or controversies
arising out of or relating to this Agreement shall be governed by
and construed in accordance with the law of the State of Colorado,
without regard to conflict of law principles that would result in
the application of any law other than the law of the State of
Colorado. Exclusive venue for all actions arising from this
Agreement shall be in the District Court in and for County where
the Project is located; provided, however, that this Section is not
intended to affect the requirement to arbitrate matters pursuant to
Article
9 hereof.

 

10.7 Severability.
If any provision of this Agreement is declared void or
unenforceable, the provision shall be severed from this Agreement
and the remaining provisions shall remain in full force and
effect.

 

10.8 Successors
and Assigns. The burdens of this Agreement are binding on,
and the benefits of this Agreement shall inure to the benefit of
the Parties and all of their assigns and successors in interest;
provided however, that no Builder may assign this Agreement or any
rights or obligations hereunder without the consent of a Majority
of Builders, which shall not be unreasonably withheld, delayed or
conditioned; and the assignor shall cause the assignee to assume
its rights, duties, liabilities and obligations as an Builder under
this Agreement.

 

 

53

 

 

10.9 Counterparts;
Copies of Signatures. This Agreement and any Addendum may be
executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument. The signature pages from one or more counterparts
may be removed from the counterparts and the signature pages all
attached to a single instrument so that the signatures of all
Parties may be physically attached to a single document. Copies of
signatures on this Agreement and any Addendum shall be accepted and
binding as originals.

 

10.10 Time
of Essence. Time is of the essence each and every term,
condition, obligation and provision hereof.

 

10.11 Captions.
Any captions to, or headings of, the paragraphs or subparagraphs of
this Agreement are solely for the convenience of the Parties, are
not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement
or any provision hereof.

 

10.12 Exhibits.
The exhibits attached hereto are hereby incorporated herein by this
reference.

 

10.13 Waiver.
The waiver or failure to enforce any provision of this Agreement
shall not operate as a waiver of any future breach of the provision
or any other provision hereof.

 

10.14 Computation
of Periods. All time periods referred to in this Agreement
shall include all Saturdays, Sundays and holidays, unless the
period of time specifies business days. If the date to perform any
act or give a notice with respect to this Agreement shall fall on a
Saturday, Sunday or national holiday, or other day that Escrow
Agent is not open for business, the act or notice may be timely
performed on the next succeeding day which is not a Saturday,
Sunday or a national holiday, or other day that Escrow Agent is not
open for business.

 

10.15 Satisfaction
of Obligations. Obligations required under this Agreement
shall be deemed to be satisfied if the Party responsible to satisfy
the obligation performs the obligations itself or causes the
obligation to be performed by some other third party.

 

 

 

54

 

IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.

 

	

Taylor Morrison of Colorado,
Inc.,

a
Colorado corporation

 

 

By: 

Printed
Name: 

Title: 

 

 

Richmond
American Homes of Colorado, Inc.,

a
Delaware corporation

 

 

By: 

Printed
Name: 

Title: 

 

	
 

	

 

PCY Holdings, LLC,

a
Colorado limited liability company

 

By:
Pure Cycle Corporation, a Colorado corporation, its sole
member

 

By: 

Printed
Name: 

Title: 

 

 

 

55

 

LIST OF EXHIBITS

 

Exhibit
A:    Ownership of Lots

Exhibit
B:    Description of Joint Improvements

Exhibit
C:    Schedule of Plans and
Specifications

Exhibit
D:    Budget

Exhibit E:
   Form of Addendum

Exhibit
F:    Instructions

Exhibit
G:    CAB Service Agreement

 

 

 

 

 

56

 

EXHIBIT A

 

OWNERSHIP
OF LOTS

 

 

 

 

 

57

 

EXHIBIT B

 

DESCRIPTION
OF JOINT IMPROVEMENTS

 

 

 

 

 

 

58

 

EXHIBIT C

 

SCHEDULE
OF PLANS AND SPECIFICATIONS

 

 

 

 

59

 

EXHIBIT D

 

BUDGET

 

 

 

 

 

60

 

 

EXHIBIT E

 

FORM
OF ADDENDUM

 

ADDENDUM
TO JOINT IMPROVEMENT MEMORANDUM

 

THIS
ADDENDUM TO JOINT IMPROVEMENT MEMORANDUM (the “Addendum”) is executed as of the
____ day of ____________, 20__ by _______________________, a(n)
______________________.

 

1.           ________________,
a(n) _________________, hereby joins in and assumes all of the
rights and obligations of an “Builder” under that
certain Joint Improvement Memorandum dated ____________, 20__, by
and among ______________[X], [Y], [Z]
[INSERT NAMES OF OTHER BUILDER(S) SIGNING THIS
AGREEMENT]______,
_____________________, a[n] ___________ (“Project Manager”),
_____________________, a[n] ______________, and
_____________________ (the
“Joint Improvement
Memorandum”), solely with respect to the real property
described on Exhibit A
attached hereto and incorporated herein by this reference (the
“Property”), as
if the undersigned was initially a party under the Joint
Improvement Memorandum when it was originally executed. Capitalized
terms used in this Addendum without definition shall have the
meanings assigned to such terms in the Joint Improvement
Memorandum.

 

2.           In
accordance with the provisions of the Joint Improvement Memorandum,
the undersigned shall pay its Allocable Share required by this
Joint Improvement Memorandum.

 

3.           Builder’s
Designated Representative is _______________.

 

4.           Builder’s
notice address is:

 

	

__________________________________________

__________________________________________

__________________________________________

Attention:__________________________________________

Telephone:
(___) __________________________________________

Facsimile:
(___) __________________________________________

 

5.           The
Joint Improvement Memorandum, as supplemented hereby, is assumed,
reaffirmed and constitutes the binding obligation of the
undersigned.

 

__________________________________,
a(n)_______________________________

 

By:
_______________________________

Name:
_____________________________

Its:
________________________________

 

 

 

61

 

 

EXHIBIT F

 

Disburser
Instructions

 

1.            

Draw Requests from the
Construction Account.
Substitute Constructing Party shall process and administer Draw
Requests for the payment of construction costs in accordance with
the terms of this Agreement and these
Instructions.

 

(a) On a periodic
basis, Substitute Constructing Party shall submit to the Builders a
copy of the request to be submitted to the CAB for payment of
Construction Funds from the Construction Account to pay Joint
Improvement Costs (each a “Draw Request”). Each Draw
Request shall state the amount of the requested draw, and shall be
certified to be true and correct by Substitute Constructing Party
and accompanied by: (A) a description of the basis for
disbursement (i.e., an application for progress payments based on
the status of completion of the applicable Joint Improvements, or
that substantial completion or final acceptance, as applicable, has
been obtained); (B) Substitute Constructing Party’s estimate
of the percentage of completion of the Joint Improvements; (C)
Substitute Constructing Party’s estimate of the cost to
complete the Joint Improvements; and (D) conditional lien waivers
(conditioned only upon payment of the amount due) from all
contractors covered thereunder for the amounts to be paid pursuant
to the Draw Request, and to the extent not previously provided
unconditional lien waivers from contractors paid from prior Draw
Requests. All invoices that are the subject of a Draw Request must
be verified by the CAB’s cost verification engineer as either
eligible or non-eligible costs of the CAB.

 

(b)   If a
Builder objects to all or any portion of the Draw Request, such
Builder shall deliver written notice of such objection (a
“Objection Notice”) to Substitute Constructing Party
and the other Builders on or before the fifth (5th) business day
after Substitute Constructing Party delivers the Draw Request to
the Builders. A Builder may only object to a Draw Request in the
event that (i) the documents or statements required by Section (a)
above in conjunction with a Draw Request were not properly
delivered, are incomplete or contain material errors, (ii) the
remaining cost to complete the Joint Improvements after payment of
the Draw Request will exceed the amount of the Construction Funds
in the Construction Account which objection will be deemed cured
upon the deposit by PCY of additional Construction Funds into the
Construction Account to cover the excess amount, or (iii) the work
is not work that is to be completed pursuant to this Agreement. If
a Builder delivers an Objection Notice, the Builders and Substitute
Constructing Party shall meet within three (3) business days after
receipt of the Objection Notice to review and discuss any such
Objection Notice. If the Parties are unable to resolve any
Objection Notice within five (5) business days of such meeting, the
matter shall be resolved pursuant to the dispute resolution
provisions set forth in Section 4 of these Instructions. Any
Objection Notice shall specifically identify the amount of the
requested payment to which the objection applies and the basis for
such objection. No Objection Notice shall be valid if it does not
identify specific obligations. If a Builder fails to deliver an
Objection Notice within five (5) business days after Substitute
Constructing Party delivers the Draw Request to the Builders, such
Builder shall be deemed to have waived any objection to such Draw
Request.

 

 

62

 

 

(c) Substitute
Constructing Party shall submit the Draw Request to the CAB for
payment by the CAB as follows: (i) if no Builder has delivered
a timely Objection Notice within five (5) business days after
Substitute Constructing Party delivers the Draw Request to the
Builders, the Draw Request shall be deemed approved and the
Substitute Constructing Party shall submit the Draw Request to the
CAB or payment in full of the amount identified in such Draw
Request out of the Construction Account to the contractors and
payees identified in such Draw Request; or (ii) if a Builder
has delivered a timely Objection Notice, the portion of the payment
identified in such Draw Request to which no Builder has objected in
an applicable Objection Notice shall be deemed approved and
Substitute Constructing Party shall submit such portion to the CAB
for payment out of the Construction Account to the contractors and
payees identified in such Draw Request; and (iii) if a Builder has
delivered a timely Objection Notice, the amount of the portion of
the payment identified in such Draw Request to which a Builder has
objected in an applicable Objection Notice but which has been
resolved pursuant to Section 4 of these Instructions below, or if
the Builder otherwise withdraws its objection by notice to
Substitute Constructing Party and the other Builders, shall be paid
by the CAB out of the Construction Account to the contractors and
payees identified in such Draw Request.

 

(d)           Within
ten (10) days after Substitute Constructing Party gives the
Builders a Notice of Substantial Completion for any Improvement (a
“Completion
Notice”), a representative of Substitute Constructing
Party and each Builder shall inspect such Improvements, and shall
jointly prepare and agree upon a “punch-list” of items
for the applicable Improvement which is uncompleted or which
require repair or other corrective work (the “Punch List Items”). Substitute
Constructing Party shall, with reasonable diligence, use
commercially reasonable efforts as PM to cause the completion of
the Punch List Items.

 

(e)           On
or before fifteen (15) days after payment of the final Draw
Request, Substitute Constructing Party shall deliver to each
Builder copies of full and final unconditional lien waivers
executed by all contractors and suppliers for all labor and
materials paid for pursuant to the final Draw Request.

 

3.         Limitation
of Liability. Substitute Constructing Party shall not be
liable for the loss or impairment of the Construction Funds due to
failure or insolvency of any financial institution which may be the
depository of the Construction Funds.

 

4.           Expedited
Dispute Resolution.

 

(a)           Disputes
Related to Draw Requests and Punchlist Items. Disputes related to any Punch List Item or
matter, a Draw Request or an Objection Notice that the Parties are
unable to resolve (“Expedited
Dispute”) shall be
resolved as provided Article 9 of the Joint Improvement Memorandum
to which these Instructions are attached. A Party and shall
not be entitled to recover from any other Party exemplary,
punitive, special, indirect, consequential or any other damages
other than actual damages (unless the Informal Arbitrator finds
intentional abuse or frustration of the dispute resolution process)
in connection with an Expedited Dispute.

 

(b)           Standards
of Conduct. The Parties agree that with respect to all
aspects of the expedited dispute resolution process contained
herein they will conduct themselves in a manner intended to assure
the integrity and fairness of that process. To that end, if an
Expedited Dispute is submitted to expedited dispute resolution
process, the Parties agree that they will not contact or
communicate with the Informal Arbitrator who was appointed with
respect to any Expedited Dispute either ex parte or outside of the contacts and
communications contemplated by these Instruction, and the Parties
further agree that they will cooperate in good faith in the
production of evidence in a prompt and efficient manner to permit
the review and evaluation thereof by the other
Parties.

 

 

63

 

 

Exhibit G

 

CAB
Service Agreement

 

 

 

64

 

OFFSITE
INFRASTRUCTURE AGREEMENT

 

(Sky
Ranch – Offsite Infrastructure)

 

THIS
OFFSITE INFRASTRUCTURE AGREEMENT (the “Agreement”)
is entered into this  day of _________ 2017 (the
“Effective
Date”) by and among PCY Holdings, LLC, a Colorado
limited liability company (“PCY”),
and the undersigned builders who have executed a counterpart
signature page to this Agreement or who have been added as a party
by execution of a Joinder hereto (each referred to herein as a
“Builder”,
and collectively as the “Builders”).
PCY and the Builders are sometimes individually referred to as a
“Party”
and collectively referred to as the “Parties.”

 

This
Agreement is made and entered into in contemplation of the
following facts and circumstances:

 

A. PCY is the
developer of certain real property located in Arapahoe County
(“County”),
Colorado, which consists of a portion of the land development known
as Sky Ranch (the “Subdivision”)
according to the Preliminary Plat and Preliminary Development Plan
therefore as approved by the County.

 

B. Each Builder and
PCY have entered into a Contract for Purchase and Sale of Real
Estate (Sky Ranch) (the “Purchase
Agreements”), pursuant to which each Builder has
purchased from PCY and is the owner of, and/or is under contract
with PCY to purchase, residential building lots within the
Subdivision. Under the terms of the Purchase Agreements, PCY has
agreed to construct or cause the construction of certain public
infrastructure improvements that are necessary to serve the
Subdivision and fund the cost of such construction, including the
public offsite infrastructure improvements all as more particularly
described in this Agreement.

 

C. The Sky Ranch
Community Authority Board (“CAB”) has been organized by the
Sky Ranch Colorado Metropolitan District Nos. 1 and 5 (the
“Districts”)
pursuant to the laws of the State of Colorado in order to
construct, operate and maintain certain public facilities and
improvements in accordance with the Sky Ranch Community Authority
Board Establishment Agreement (the “CABEA”)
and each of the service plans for the Districts. The CAB will
construct the Drainage System Improvements and the Monaghan Road
Improvements identified on Exhibit A
(the “CAB
Infrastructure”). In order to fund the Cab
Infrastructure, PCY will deposit funds into a segregated
construction account owned and maintained by the CAB to be used by
the CAB to pay for the costs of designing, permitting and
constructing the CAB Infrastructure identified and described on
Exhibit
A.

 

D. Rangeview
Metropolitan District (“Rangeview”
and with the CAB, each is a “Constructing
Entity”) will construct the Water System Improvements,
Wastewater System Improvements and the Wholesale Water and
Irrigation Lines identified on Exhibit A (the
“Rangeview
Infrastructure.” In order to fund the Rangeview
Infrastructure, PCY will deposit funds into a segregated
construction account owned and maintained by Rangeview to be used
by Rangeview to pay for the costs of designing, permitting and
constructing the Rangeview Infrastructure identified and described
on Exhibit
A.

 

 

65

 

 

E. On or before the
Effective Date, PCY and the CAB shall enter into a Service
Agreement for Project Management
Services for Sky Ranch (“CAB Service
Agreement”) pursuant to which PCY shall serve as the
Project Manager (“PM”)
for the CAB for the construction of the CAB Infrastructure and
shall provide the services required to construct and deliver the
CAB Infrastructure, including but not limited to: CAB compliance
and coordination with legal counsel and accountants; planning
design and approvals; project administration; contractor
agreements; construction management and administration; and CAB
acceptance of the CAB Infrastructure. A copy of the CAB Service
Agreement is attached hereto as a part of Exhibit
D.

 

F.  On or before
the Effective Date, PCY and Rangeview shall enter into a Service
Agreement for Project Management
Services (“Rangeview Service
Agreement” and together with CAB Service Agreement,
the “Service
Agreements”) pursuant to which PCY shall serve as the
PM for Rangeview for the construction of the Rangeview
Infrastructure and shall provide the services required to construct
and deliver the Rangeview Infrastructure, including but not limited
to: Rangeview compliance and coordination with legal counsel and
accountants; planning design and approvals; project administration;
contractor agreements; construction management and administration;
and Rangeview acceptance of the Rangeview Infrastructure. A copy of
the Rangeview Service Agreement is attached hereto as a part of
Exhibit
D.

 

G. The Parties enter
this Agreement in order to establish the terms and procedures that
will be utilized in order for funds to be disburse from the
construction accounts to pay for the costs to construct the
Improvements, all as more particularly set forth
herein.

 

NOW,
THEREFORE, in consideration of the mutual promises and covenants
set forth herein and in the Purchase Agreements, and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby agree as
follows:

 

1. Incorporation
of Recitals. The recitals set forth above are true and
correct and are incorporated herein in their entirety by this
reference.

 

2. Construction Obligation. The
CAB is constructing the Sky Ranch Infrastructure and Rangeview is
constructing the Rangeview Infrastructure (collectively, the
“Improvements”).
PCY as the PM for both the CAB and Rangeview shall cause the
construction of the Improvements pursuant to Service
Agreements.

 

3. Deposit of Construction
Funds.

 

3.1 The estimated cost
to construct each of the Improvements is set forth on Exhibit A.

 

3.2 Not later than the
Effective Date, PCY shall advance to the CAB for deposit into a
segregated construction account that is owned and maintained by the
CAB at a nationally or regionally recognized FDIC insured financial
institution funds in the amount of _______________________________
Dollars ($_____________.00) (“CAB
Funds”) for the costs of design, testing, engineering
and construction of the CAB Infrastructure. The amount of the CAB
Funds is equal to the total estimated cost to substantially
complete construction of the CAB Infrastructure as set forth on
Exhibit
A. The CAB Funds shall be utilized solely to pay for the
construction of the CAB Infrastructure.

 

 

 

66

 

 

3.3 Not later than the
Effective Date, PCY shall advance to Rangeview for deposit into a
segregated construction account that is owned and maintained by
Rangeview at a nationally or regionally recognized FDIC insured
financial institution funds in the amount of
_______________________________ Dollars ($_____________.00)
(“Rangeview
Funds”) for the costs of design, testing, engineering
and construction of the Rangeview Infrastructure. The amount of the
Rangeview Funds is equal to the total estimated cost to
substantially complete construction of the Rangeview Infrastructure
as set forth on Exhibit A.
The Rangeview Funds shall be utilized solely to pay for the
construction of the Rangeview Infrastructure.

 

3.4 To the extent that
the contracted price to construct the Improvements exceeds the
estimated cost to substantially complete the Improvements, PCY
shall advance additional funds to increase the amount of the CAB
Funds deposited with the CAB, or the Rangeview Funds deposited with
Rangeview, as applicable, by the difference in the estimated versus
the contracted amounts. PCY is solely liable for any cost overruns
incurred in connection with the construction of the applicable
Improvements that exceed the amount of funds advanced by PCY to
either the CAB or Rangeview (a “Cost
Overrun”) and shall promptly notify the Builders of
the amount of the additional funds being deposited. If there is an
increase the construction cost in excess of the amount advanced to
a Constructing Entity, then PCY shall advance good funds to the
applicable Constructing Entity in the amount of the Cost Overrun
for deposit into the Construction Account (as herein after defined)
within five (5) business days after the date upon which PCY learns
that such increase has occurred. If PCY fails to advance the
necessary additional funds to the applicable Constructing Entity to
cover Cost Overruns, each affected Builder shall be entitled to all
remedies available at law or in equity, except incidental,
consequential, or punitive damages. In addition, any Builder or
group of Builders may advance additional funds PCY fails to pay, in
which event PCY shall reimburse the Builder(s) who advanced the
funds within thirty (30) days after receipt of an invoice (or, if
such reimbursement is outstanding as of the date of the Second
Closing, such Builders shall receive a credit in such amount at the
Second Closing). Invoices not paid within thirty (30) days after
receipt shall bear simple interest at the rate of 12% per annum
until paid.

 

4. Account. The CAB Funds and the
Rangeview Funds shall be held in construction accounts (each a
“Construction
Account”) that are owned and maintained by the CAB or
Rangeview, as applicable, as provided in Section 3 above. As PM,
PCY shall administer the payment of funds from the Construction
Account in payment of Draw Requests (as hereinafter defined) to pay
the costs to construct the Improvements. All funds deposited into
the Construction Account, together with any interest accrued
thereon, shall be referred to herein as the “Construction
Funds”. The Construction Funds in a Construction
Account shall not be commingled with other funds or accounts. PCY
shall keep good and accurate books of the Construction Funds and in
sufficient detail to allow construction costs and expenditures to
be calculated and which books and records shall be made available
to the Builders for review by the Builders upon reasonable prior
written notice.

 

5. Disbursement from the Construction
Account. As PM for each of the Constructing Entities, PCY
shall administer and process the payment of Construction Funds from
each Construction Account to pay contractors and payees identified
in Draw Requests in accordance with the instructions set forth on
Exhibit
B attached hereto and incorporated herein by this reference
(“Instructions”).
If at any time PCY or a Builder becomes aware that Construction
Funds have been disbursed from a Construction Account for purposes
other than the construction of the applicable Improvements, such
Party shall immediately notify the other Parties.

 

 

67

 

 

6. Construction
of Improvements.

 

(a) Construction Schedule. PCY, as
PM for the Constructing Entities, shall use commercially reasonable
efforts cause the Improvements to be Substantially Complete within
the timeframe referenced in the first Sentence of Section 7(a),
below, subject to Force Majeure Delays.

 

(b) Construction Standard. The
Improvements will be completed, and each construction contract
entered into for the construction of any Improvement
(“Work
Contract”) will provide that the applicable
Improvements shall be completed, in a good, workmanlike and
lien-free manner, in accordance with the CDs and specifications
therefor as approved by the applicable approving authorities, and
the applicable laws, codes, regulations and governmental
requirements for the Development and Subdivision (the
“Construction
Standard”). PCY shall post or cause to be posted when
due all sureties or guaranties, if any, that are required by the
Authorities under the Entitlements in connection with the
construction of the Improvements.

 

(c) Progress Reports. PCY shall, no
less frequently than once per calendar month, provide the Builders
with a progress report setting forth the amount of Construction
Funds expended to date, a list of Improvements completed to date,
and an estimate of the status of overall completion of the
Improvements, in such form as PCY deems reasonably
appropriate.

 

(d) Temporary Construction
Easements.

 

(1)           Each
Builder hereby creates and grants to PCY and each other Builder,
for the use of PCY, the Constructing Entity and each other Builder
(if such other Builder exercises its respective step-in option) and
their respective successors, assigns, employees, agents,
contractors and subcontractors, such temporary non-exclusive
easements and licenses to enter upon the real property owned by
each Builder within the Subdivision (the “Builder Property”) as are
reasonable or necessary to permit PCY, the Constructing Entity or
such other Builder to perform the Improvements work, provided that
neither PCY, the Constructing Entity nor such other Builder in so
doing shall unreasonably impair or interfere with the performance
of any work on the other Builders’ property.

 

(2)           PCY
hereby creates and grants to each Builder (if it exercises its
Step-In Option), for the use of such Builder and its respective
successors, assigns, employees, agents, contractors and
subcontractors, such temporary non-exclusive easements and licenses
to enter upon the real property owned or controlled by PCY within
the Subdivision (the “PCY
Property”) as are reasonable or necessary to permit
such Builder to cause the completion of the construction of the
Improvements hereunder; provided that such Builder in doing so
shall unreasonably impair or interfere with the performance of any
work on the PCY Property by PCY.

 

 

 

68

 

 

(3)           The
foregoing temporary easements and licenses granted to the Parties
shall automatically terminate and cease to be of any further force
or effect upon the earlier of: (a) the date upon which the entirety
of the Improvements shall be completed; and (b) as to a particular
Lot, the date upon which a Builder (as applicable) has obtained a
certificate of occupancy for the home constructed upon such
Lot.

 

(e) Warranty Work. Notwithstanding
that either PCY or another Builder has caused the completion of the
Improvements in accordance with the terms of this Agreement, PCY as
PM shall be responsible for performing or causing to be performed
the warranty work required to release any applicable warranty
surety or guaranty with the County or other applicable
Authority.

 

(f) Erosion Control. As a part of
the Improvements hereunder, PCY shall provide or cause to be
provided all erosion control and stormwater management services
required by all Authorities having jurisdiction for the performance
of the Improvements work hereunder, including, without limitation,
obtaining, maintaining, complying with and fulfilling the
obligations under, all required permits, licenses and approvals
from any Authority having jurisdiction in connection therewith
concerning stormwater runoff, sediment or erosion control, storm
drainage, or any other water or sediment discharge pertaining to
the Property (the “Stormwater Permit”),
including any and all requirements, conditions, restrictions or
other terms contained in such Stormwater Permit, such as, but not
limited to, surety requirements, treatment requirements, discharge
limitations and revegetation requirements.

 

(g) Force Majeure Delays. A delay
in or failure to perform any obligations required of PCY (or any
Builder exercising a step-in right) hereunder shall not constitute
a default to the extent such delay or failure is caused by Force
Majeure Delays and all times for performance shall be extended by
the number of days of Force Majeure Delays. “Force Majeure Delays”
shall be limited to acts of God, war, terrorism, fire, flood,
earthquake, hurricane, weather conditions, strike, delay or
unavailability of labor or materials, delay or unavailability of
utilities, delays in obtaining governmental approvals to the extent
not caused by the party seeking approval, moratoria, injunctions,
orders or directives of any court or governmental body, or other
actions of third parties (but not including financial inability)
which, despite the exercise of reasonable diligence, the Party
required to perform is unable to prevent, avoid or remove. Within
thirty (30) days after the cessation of the occurrence of a Force
Majeure Delay, PCY (or Builder, as the case may be) will give
notice thereof specifying the cause of the Force Majeure Delay and
the number of days of the occurrence.

 

(h) Mechanic’s Liens. If
because of any act or omission (or alleged act or omission) of any
Party or its employees, agents, contractors or subcontractors under
this Agreement, any mechanic’s or other lien, charge or order
for the payment of money or other encumbrance shall be filed or
threatened against any of the other Parties hereunder and/or any
portion of its property (whether or not such lien, charge, order or
encumbrance is valid or enforceable as such), such party (the
“Indemnifying
Party”) shall at its own cost and expense, cause the
same to be discharged of record or bonded within thirty (30) days
after the assertion or the filing thereof; and the Indemnifying
Party shall indemnify, defend and save harmless the other parties
(the “Indemnified
Parties”) against and from all costs, liabilities,
suits, penalties, claims and demands, including reasonable
attorneys’ fees, resulting therefrom; provided, however, that
any loss, cost, damage or expense to which the Indemnified Parties
shall be entitled under this Section shall be limited to out of
pocket losses, costs, damages or expenses (including, however any
punitive or consequential losses, costs, damages or expenses or
lost profits actually paid by an indemnified party to a contractor
or subcontractor pursuant to such a mechanic’s lien claim),
but none of the Indemnified Parties shall be entitled to recover
from the other any of its punitive or consequential losses, costs,
damages or expenses or lost profits as a result of any failure by
the Indemnifying Party to have complied with its obligations under
this Section. If the Indemnifying Party fails to comply with the
foregoing provisions, the other Party or Parties shall have the
option of discharging or bonding any such lien, charge, order or
encumbrance, and the Indemnifying Party shall reimburse the other
party or parties for all costs, expenses and other sums of money in
connection therewith with interest at the rate of 10% per annum
thereon promptly upon demand.

 

 

 

69

 

 

(i) Insurance. From and after the
Effective Date, PCY shall obtain and maintain, at its expense, and
shall cause each contractor constructing any Improvements to obtain
and maintain: (a) workman’s compensation insurance as may be
required pursuant to the provisions of applicable law; and (b)
comprehensive general liability insurance in an amount of at least
$1,000,000 per occurrence and $2,000,000 in the
aggregate

 

(j) Service Agreements. PCY may
only amend or terminate either of the Service Agreements in
accordance with the process set forth in the Service Agreements.
PCY shall deliver to Builders copies of any written default notice
sent by PCY to a Constructing Entity within five (5) business days
after PCY’s transmission thereof to a Constructing Entity,
and shall deliver to Builders copies of any default notice received
by PCY from a Constructing Entity within five (5) business days
after PCY’s receipt thereof.

 

7. Self Help Remedy.

 

(a) In the event that
PCY defaults in the performance of its obligations to cause any
applicable Improvement or Improvements to be Substantially Complete
within 10 months after the date of the occurrence of the initial
closing under a Builder’s Purchase Agreement, after any
applicable notice and cure period, subject to Force Majeure Delays
and any other extension rights granted to PCY by that
Builder’s Purchase Agreement, and PCY thereafter fails to
timely cure such default in accordance with the terms hereof, the
following provisions shall apply. The Builder under whose Builder
Purchase Agreement PCY has defaulted, at its option, shall have the
right, but not the obligation, to step into the rights of PCY as
the PM under the Service Agreements and take control of the
construction of the Improvements as hereinafter provided (the
“Uncompleted
Improvements”) in accordance with the terms of this
Agreement by delivering written notice of such election to PCY and
the other Builders; provided, however, that notwithstanding any
provision in any Purchase Agreement to the contrary, upon the
receipt of such notice, Richmond American Homes of Colorado, Inc.
(if it is then a Builder hereunder and the owner of property in the
Subdivision) may exercise such right (first and ahead of the other
Builders) on behalf of all of the Builders (the “Richmond Step-In
Option”) by delivering written notice of such election
to PCY and the other Builders and, if Richmond fails to do so
within fifteen (15) days after PCY’s uncured default, then
the Builder under whose Builder Purchase Agreement PCY has
defaulted shall have the right to exercise such right (the
“Builder Step-in
Option”). Seller represents and warrants that every
currently existing and future Builder Purchase Agreement with
respect to the acquisition of unfinished lots provides for Richmond
to have the first right to step-in as described in the immediately
preceding sentence, and the provision for such first right to
step-in will not be modified without Richmond’s prior
consent, which consent may be withheld in Richmond’s sole
discretion if Richmond is then a Builder hereunder. If Richmond
does not timely exercise the Richmond Step-in Option, then the
other Builders shall have the right to exercise an option to
step-in and select the Exercising Builder (hereinafter defined) to
act on behalf of all such Builders to complete the Improvements by
giving notice to PCY and the other Builders within fifteen (15)
days following the deadline for Richmond to exercise the Richmond
Step-In Option. In such event, (i) the Builder that exercises such
right, including Richmond if it is a Builder, as applicable (the
“Exercising
Builder”) shall succeed to all of the rights and
obligations of PCY under this Agreement with respect to the
applicable Improvement or Improvements from and after the date such
right is exercised, including the right to obtain payment of Draw
Requests for the Construction Account to complete the Uncompleted
Improvements, and PCY shall assign to Exercising Builder all of
PCY’s right, title and interest, in and to the applicable
Service Agreement between PCY and the CAB and/or Rangeview for the
applicable Improvement or Improvements, but the Exercising Builder
shall not assume any responsibility for or otherwise have any
liability for any such obligations prior to such date or for any of
the acts or omissions of PCY, and the obligation to pay the costs
of the Improvements, including Cost Overruns, shall remain the sole
responsibility of PCY even if the costs exceed the amounts in the
Construction Account, (ii) PCY shall have no further rights or
obligations under this Agreement after the date such right is
exercised (except as otherwise set forth herein, with PCY in all
events remaining responsible for all costs of the Improvements and
to cooperate and assist if and as needed to help the Exercising
Builder complete the applicable Improvements) and that PCY shall
not be released of any other liability relating to this Agreement
or the Purchase Agreements that may accrue or arise on or before
such date, (iii) to the extent the same are not owned by any third
party, PCY shall assign to Exercising Builder, on an “as
is” basis without any representations or warranties, all of
PCY’s right, title and interest if any, in, to and under the
construction plans and specifications for the Improvements, and if
same are owned by a third party PCY shall be obligated and
responsible to secure the rights needed to use same from such third
parties or to pay the costs incurred to replace the same, and (iv)
PCY and Builders shall take all action reasonably required to
permit the Exercising Builder to act as the PM under the applicable
Service Agreement to complete the construction of the Uncompleted
Improvements. In such event, PCY and the Exercising Builder shall
give notice to the applicable Constructing Entity that PCY has
assigned the applicable Service Agreement to the Exercising Builder
hereunder and that the Exercising Builder has assumed the position
of PM under the Applicable Service Agreement and PCY shall take all
action necessary to permit the Exercising Builder act as the PM
under the Service Agreement, including the administration and
processing of Draw Requests from the Construction Account for the
payment of construction costs of the Uncompleted Improvements as
identified in Draw Requests in accordance with the terms hereof.
The Exercising Builder shall be entitled to a construction
coordinator’s fee in an amount equal to 5% of the costs which
are the subject of each Draw Request and which PCY shall pay within
30 days after the Exercising Builder’s delivery of an invoice
therefor to PCY.

 

 

 

70

 

 

(b) Effective as of the
date upon which an Exercising Builder exercises its Step-In Option,
PCY shall be deemed to have assigned to the Exercising Builder: (A)
any construction contracts entered into by PCY on its own behalf
for the completion of any Improvements (“Work Contracts”), if any, to the
extent that they pertain to such Uncompleted Improvements, (B) all
of PCY’s agreements with any utility providers to the extent
that they pertain to such Uncompleted Improvements, and (C) The
Service Agreement between PCY and Rangeview and/or the CAB, as
applicable. PCY will cause the Service Agreements to be assignable
to a Builder. The Exercising Builder shall also have the right to
take such actions as may reasonably be necessary or desirable to
obtain the County’s, or any other applicable Authority having
jurisdiction, initial acceptance of any such Uncompleted
Improvements that are completed by the Exercising Builder and which
the County, or such other Authority, is required to accept, subject
to the applicable developer’s warranty. Additionally, PCY
will execute such additional reasonable certifications, documents
or agreements as may be required to confirm the foregoing
assignments to the Exercising Builder and to enable the Exercising
Builder to obtain such agreement by the County, or any other such
applicable Authority having jurisdiction, to initially accept such
Uncompleted Improvements so completed by the Exercising Builder;
provided, however, the Exercising Builder shall have no obligation
to replace any surety previously delivered by PCY to the County or
other applicable Authority having jurisdiction for the Uncompleted
Improvements.

 

(c) In the event the
Exercising Builder takes over construction coordination of
Improvements as PM under a Service Agreement, Exercising
Builder’s assumption of the construction coordination of the
Improvements is done only as an accommodation to the Parties and
that, except as expressly set forth in this Agreement, Exercising
Builder shall have no responsibility, liability or obligation with
respect to (and the Parties hereby covenant not to sue Exercising
Builder for, and hereby release the Exercising Builder from, all
liability and claims relating to or arising from) the design,
engineering, construction or completion of the Improvements, any
damage, loss or injury to any of the parties or otherwise related
to any action or inaction of Exercising Builder in connection with
this Agreement, or any defect in the materials or workmanship
pertaining to the Improvements, except for any “Exercising
Builder Covered Liability,” as hereinafter defined.
“Exercising Builder Covered Liability” means the
following matters for which Exercising Builder shall be liable to
the other Parties in connection with its performance as Exercising
Builder hereunder: (a) any damage, loss or injury arising from the
willful misconduct, bad faith, recklessness or illegal acts of the
Exercising Builder in performing or failing to perform hereunder,
or (b) damage, loss or injury arising from the fraudulent conduct
of Exercising Builder; provided, however, that any damages to which
the other Parties shall be entitled to recover for any Exercising
Builder Covered Liability shall be limited to out-of-pocket losses,
costs, damages or expenses, and the other Parties shall not be
entitled to recover from the Exercising Builder any punitive or
consequential losses, costs, damages or expenses or lost profits as
a result of, or in connection with, any Exercising Builder Covered
Liability. Exercising Builder makes no representation or warranty
with respect to the Improvements, and shall have no liability for
any defect in the materials or workmanship pertaining thereto. The
Parties hereby agree to look solely to the contractors engaged to
construct and complete the Improvements for any contractual
violation, indemnity, warranty or guarantee relating to the
Improvements. Upon completion of the Improvements, Exercising
Builder shall assign to the Parties (if any, and to the extent
assignable and without any representation or warranty whatsoever),
on a non-exclusive basis, any contractual rights received by
Exercising Builder from the contractors that construct or complete
any portion of the Improvements, including, without limitation, all
rights related to any indemnities, guaranties and/or warranties
received from such contractors.

 

 

71

 

 

8. Default
and Termination.

 

(a) Default. An “Event of
Default” by a Party shall be deemed to have occurred
hereunder if such Party shall materially breach or materially fail
to perform, observe or meet any material covenant or condition made
in this Agreement and such breach or failure shall not be cured
within 30 days after delivery of notice to the defaulting party
from the non-defaulting party or, in the event such breach or
failure cannot be cured within 30 days, if the defaulting party
shall not have commenced, within said period, to cure such breach
or default and be diligently pursuing such cure unto
completion.

 

(b) Remedies. Upon any Event of
Default by any Party hereunder, the other Parties shall, except as
may otherwise expressly be provided herein, have all rights and
remedies as are expressly provided herein (including, without
limitation, and as may be applicable, the right to exercise its
respective Step-In Option in accordance with, and subject to the
limitations provided in, Section 7), as the case may
be.

 

9. Termination. This Agreement
shall terminate upon the date that is one hundred fifty (150)
days following the later to occur of (i) payment of the final
Draw Request, and (ii) the lien-free completion of the
Improvements and the initial construction acceptance of the
Improvements by the Authority that will own such Improvements or
component thereof. Notwithstanding the foregoing, PCY’s
obligations with respect to warranty work under Section 6(e) above,
shall survive termination of this Agreement.

 

10. Applicable Law. This Agreement
shall be governed in accordance with the laws of the state of
Colorado, and venue for any court action hereunder shall lie
exclusively in a court of competent jurisdiction in Arapahoe
County, Colorado.

 

11. Headings; Use of Certain Words.
The headings used herein are for convenience only and are not to be
used in interpreting this Agreement. The words
“hereof”, “herein”, “hereto”,
“hereunder” or “herewith” as used in this
Agreement shall refer to this Agreement as a whole and not merely
to the sentence or paragraph in which such word is
used.

 

12. Notices. All notices required
to be given hereunder shall be in writing and shall be addressed as
follows, or as any party may subsequently designate by written
notice to the others. All notices shall be delivered by facsimile
or pdf transmittal, recognized overnight delivery service, or
hand-delivery and shall be deemed effective upon: (i) the
successful transmission of a facsimile or pdf transmittal, provided
that a conforming copy is concurrently deposited for delivery by
first class U.S. mail, postage prepaid, or by hand delivery;
(ii) the first business day after deposit with a recognized
overnight delivery service; or (iii) upon receipt by
hand-delivery:

 

To
PCY:               
PCY Holdings, LLC

Attention:
Mark Harding

34501
E. Quincy Ave.

Bldg.
34, Box 10

Watkins,
Colorado 80137

Telephone:
(303) 292-3456

Facsimile:
(303) 292-3475

E-mail:
mharding@purecyclewater.com

 

 

72

 

 

 

with a
copy
to:                    
Fox Rothschild LLP

1225
17th
Street, Suite 2200

Denver,
CO 80202

Attention: Rick
Rubin, Esq.

Telephone: (303)
292-1200

Email:
rrubin@foxrothschild.com

 

To
Builders:                       
At the notice address set forth on their respective signature
pages

 

Each of
the above-listed addressees may change its address and number for
notice purposes under this Section by delivering to the
other addressees a written notice of change of address and number,
in a manner specified in this Section. However, no such
change of address or number shall be effective against another
addressee until written notice of such change is actually received
by such addressee.

 

13. Successors and Assigns. The
terms of this Agreement shall inure to the benefit of and bind the
parties hereto and their respective successors and permitted
assigns. Except as expressly contemplated herein, no party may
assign its rights or obligations hereunder without the prior
written consent of the other parties hereto.

 

14. Potential Additional Parties.
The parties acknowledge and agree that, with regard to any
third-parties (collectively, the “Additional Builders”)
with whom PCY is under contract to sell any residential building
lots, then, at PCY’s option, each of such Additional Builders
may be added to and become a party under this Agreement at any time
provided written notice of such Additional Builders is given to all
Builders at the time of such Joinder. In such event, each such
Additional Builder shall be deemed to be a “Builder” as
such term is defined herein, shall have all rights of a
“Builder” under this Agreement. Additional Builders
will be added to this Agreement by execution of a Joinder that is
substantially in the form set forth as Exhibit C attached
hereto.

 

15. No Waiver of Rights / Remedies
Cumulative. No delay or failure on the part of any party to
exercise any right, power or privilege under this Agreement shall
operate as a waiver thereof, and no single or partial exercise of
any right, power or privilege shall preclude any other or further
exercise thereof or the exercise of any other power or right, or be
deemed to establish a custom or course of dealing or performance
between the parties hereto. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided
at law or in equity.

 

16. Amendment. This Agreement may
not be amended except by a written agreement executed by all
Parties to this Agreement.

 

17. Severability. If any term or
provision of this Agreement or the application thereof to any
person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than
those to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by
law.

 

 

73

 

 

 

18. Attorneys’ Fees.
Notwithstanding anything to the contrary contained herein, any
party prevailing in any litigation brought pursuant to or arising
under this Agreement shall recover its costs of court, fees and
reasonable attorneys’ fees from the non-prevailing party as
determined by any court of competent jurisdiction.

 

19. Time of Essence. Time is of the
essence in the observance and performance of the terms and
obligations of this Agreement.

 

20. No Partnership. The provisions
of this Agreement are not intended to create, nor shall they in any
way be interpreted as creating, a joint venture, partnership or any
other similar relationship between the parties.

 

21. No Recording. Neither this
Agreement nor any memorandum hereof shall be recorded in the real
property records of Arapahoe County, State of
Colorado.

 

22. Counterparts. This Agreement
may be executed in several counterparts, each of which shall be
deemed an original, and all of such counterparts together shall
constitute one and the same instrument. Receipt of an executed
signature page to this Agreement by facsimile or other electronic
transmission shall constitute effective delivery
thereof.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

 

74

 

IN
WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.

PCY:

 

PCY
HOLDINGS LLC,

a
Colorado limited liability company

 

By:            

Pure
Cycle Corporation, a Colorado corporation

Its
sole member

 

By:
____________________________________

Name:
_________________________________

Title:
__________________________________

 

 

 

 

 

 

75

 

BUILDER:

 

RICHMOND
AMERICAN HOMES OF COLORADO, INC, a Delaware
corporation

 

 

By:
____________________________________

      Linda
Purdy, Vice President

 

Address
for Notice:

 

Richmond American
Homes of Colorado, Inc.

Attention: Linda
Purdy, Vice President

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Linda.Purdy@mdch.com

Telecopier No.:
(720) 977-4707

 

with a
copy in each case to:

 

M.D.C.
Holdings, Inc.

Attention: Drew
Rippey

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Drew.Rippey@mdch.com

Telecopier No.:
(720) 482-8558

 

and

 

M.D.C.
Holdings, Inc.

Attention: Linda
Skultety

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Linda.Skultety@mdch.com

Telecopier No.:
(303) 488-4954

 

 

76

 

BUILDER:

 

Taylor
Morrison of Colorado, Inc.,

a Colorado corporation

 

By:
____________________________________

Name:
_________________________________

Title:
__________________________________

 

Address
for Notice:

 

Taylor
Morrison of Colorado, Inc.

1420
West Canal Court, Suite 170

Littleton,
Colorado 80120

Attention:
Phillip Cross

Telephone:
(303) 325-2426

E-mail: pcross@taylormorrison.com

 

With a copy
to:                   
Brier, Irish, Hubbard & Erhart
P.L.C.

2400
East Arizona Biltmore Circle, Suite 1300

Phoenix,
AZ 85016

Attn:
Jeff Hubbard

Telephone:
(602) 522-0160

Facsimile:
(602) 522-3945

E-mail: jhubbard@bihlaw.com

 

With copy
to:                                

 

Tony Meier at same address

E-mail: tmeier@bihlaw.com

 

 

 

77

 

EXHIBIT
A

OFF-SITE
IMPROVEMENTS

 

 

 

 

 

 

 

78

 

EXHIBIT B

 Instructions

 

1.            

Draw Requests from the
Construction Account. PCY shall
process and administer Draw Requests for the payment of
construction costs in accordance with the terms of this
Agreement and these Instructions.

 

(d) On a periodic
basis, PCY shall submit to the Builders a copy of the request that
is to be submitted by PCY to the Constructing Entity for payment of
Construction Funds from the Construction Account to pay for:
(i) the design, engineering, permitting and all necessary
governmental approvals to construct the Improvements; and
(ii) the costs to construct the Improvements including, but
not limited to, the costs for any related landscaping, signage,
fencing and fixtures associated with the Improvements (each a
“Draw
Request”). Each Draw Request shall identify whether it
pertains to CAB Infrastructure or Rangeview Infrastructure and the
amount of the requested payment, and shall be certified to be true
and correct by PCY and accompanied by: (A) a description of
the basis for disbursement (i.e., an application for progress
payments based on the status of completion of the applicable
Improvements, or that substantial completion or final acceptance,
as applicable, has been obtained); (B) conditional lien waivers
(conditioned only upon payment of the amount due) from all
contractors covered thereunder for the amounts to be paid pursuant
to the Draw Request, and to the extent not previously provided
unconditional lien waivers from contractors paid from prior Draw
Requests; (C) PCY’s estimate of the percentage of completion
of the Improvements; and (D) PCY’s estimate of the cost to
complete the Improvements.

 

(e)   If a
Builder objects to all or any portion of the Draw Request, such
Builder shall deliver written notice of such objection (a
“Objection Notice”) to PCY and the other Builders on or
before the fifth (5th) business day after PCY delivers the Draw
Request to the Builders. A Builder may only object to a Draw
Request in the event that (i) the documents or statements required
by Section (a) above in conjunction with a Draw Request were not
properly delivered, are incomplete or contain material errors, (ii)
the remaining cost to complete the Improvements after payment of
the Draw Request will exceed the amount of the Construction Funds
in the Construction Account which objection will be deemed cured
upon the deposit by PCY of additional Construction Funds into the
Construction Account to cover the excess amount, or (iii) the work
is not work that is to be completed pursuant to this Agreement. If
a Builder delivers an Objection Notice, the Builders and PCY shall
meet within three (3) business days after receipt of the Objection
Notice to review and discuss any such Objection Notice. If the
parties are unable to resolve any Objection Notice within five (5)
business days of such meeting, the matter shall be resolved
pursuant to the dispute resolution provisions set forth in Section
5 of these Instructions. Any Objection Notice shall specifically
identify the amount of the requested payment to which the objection
applies and the basis for such objection. No Objection Notice shall
be valid if it does not identify specific obligations. If a Builder
fails to deliver an Objection Notice within five (5) business days
after PCY delivers the Draw Request to the Builders, such Builder
shall be deemed to have waived any objection to such Draw
Request.

 

 

79

 

 

(f) PCY shall submit
the Draw Request to the applicable Constructing Entity for payment
as follows: (i) if no Builder has delivered a timely Objection
Notice within five (5) business days after PCY delivers the Draw
Request to the Builders, the Draw Request shall be deemed approved
and PCY shall submit the Draw Request to the applicable
Constructing Entity for payment in full of the amount identified in
such Draw Request out of the Construction Account to the
contractors and payees identified in such Draw Request; or
(ii) if a Builder has delivered a timely Objection Notice, the
portion of the payment identified in such Draw Request to which no
Builder has objected in an applicable Objection Notice shall be
deemed approved and PCY shall submit such portion to the applicable
Constructing Entity for payment out of the Construction Account to
the contractors and payees identified in such Draw Request; and
(iii) if a Builder has delivered a timely Objection Notice, the
amount of the portion of the payment identified in such Draw
Request to which a Builder has objected in an applicable Objection
Notice but which has been resolved pursuant to Section 5 of these
Instructions below, or if the Builder otherwise withdraws its
objection by notice to PCY and the other Builders, shall be paid by
the applicable Constructing Entity out of the Construction Account
to the contractors and payees identified in such Draw
Request.

 

(d)           Within
ten (10) days after PCY gives the Builders a Notice of Substantial
Completion for any Improvement (a “Completion Notice”), a
representative of PCY and each Builder shall inspect such
Improvements, and shall jointly prepare and agree upon a
“punch-list” of items for the applicable Improvement
which is uncompleted or which require repair or other corrective
work (the “Punch List
Items”). PCY shall, with reasonable diligence, use
commercially reasonable efforts as PM to cause the completion of
the Punch List Items.

 

(e)           On
or before fifteen (15) days after payment of the final Draw
Request, PCY shall deliver to each Builder copies of full and final
unconditional lien waivers executed by all contractors and
suppliers for all labor and materials paid for pursuant to the
final Draw Request.

 

3.         Limitation
of Liability. PCY shall not be liable for the loss or
impairment of the Construction Funds due to failure or insolvency
of any financial institution which may be the depository of the
Construction Funds.

 

4.         Expenses.
PCY shall pay the fees, charges and expenses of PCY, including, but
not limited to, reasonable attorneys’ fees, expenses and
other out-of-pocket costs as may be incurred by PCY to administer
and process Draw Requests under this Agreement.

 

5. Expedited
Dispute Resolution.

 

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

 

 

 

80

 

 

 

(b) Standards
of Conduct. The Parties agree that with respect to all
aspects of the expedited dispute resolution process contained
herein they will conduct themselves in a manner intended to assure
the integrity and fairness of that process. To that end, if an
Expedited Dispute is submitted to expedited dispute resolution
process, the Parties agree that they will not contact or
communicate with the Informal Arbitrator who was appointed with
respect to any Expedited Dispute either ex parte or outside of the contacts and
communications contemplated by these Instruction, and the Parties
further agree that they will cooperate in good faith in the
production of evidence in a prompt and efficient manner to permit
the review and evaluation thereof by the other
Parties.

 

 

 

81

 

EXHIBIT C

FORM
OF JOINDER

 

JOINDER
BY BUILDER

THIS
JOINDER TO CONSTRUCTION DISBURSEMENT AGREEMENT (this
“Joinder”), dated as of _________________, 201___ (the
“Joinder Date”), is made by
_____________________________________________________
(“Purchaser”), for the benefit of PCY Holdings, LLC, a
Colorado limited liability company (“PCY”) and each
other Builder that is a party to that Offsite Infrastructure
Agreement dated _______________, 201__.

 

WHEREAS, PCY, as
seller, and Purchaser, as purchaser, are parties to that certain
Contract for Purchase and Sale of Real Estate (Sky Ranch) dated
___________, 201__ (as amended and assigned from time-to-time, the
“Purchase Agreement”), with respect to the sale of
certain residential building lots located within the Sky Ranch
Development in Arapahoe County, Colorado, and

 

WHEREAS, PCY has
agreed to construct certain infrastructure improvements that are
necessary to serve the lots identified under the Purchase Agreement
and fund the cost of such construction by establishing a
construction disbursement agreement. PCY and Purchaser desire that
Purchaser become a party to the Offsite Infrastructure
Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, PCY and Purchaser hereby agree as
follows:

 

1.            

Any capitalized
terms not defined in this Joinder shall have the meanings ascribed
thereto in the Offsite Infrastructure Agreement, which is hereby
incorporated by reference.

 

2.            

By execution of
this Joinder, Purchaser becomes a party to the Offsite
Infrastructure Agreement for all purposes and shall be entitled to
exercise all of the rights of a Builder thereunder, subject to the
following limitations _______________________________.

 

3.            

This Joinder shall
inure to the benefit of the Builders and their successors and
assigns under the Construction Disbursement Agreement.

 

IN
WITNESS WHEREOF, Purchase has executed this Joinder as of the
Joinder Date.

 

___________________________________,

a
__________________________________

 

 

By:           

 

Name:                      

 

Title:                      

 

 

 

82

 

EXHIBIT D

SERVICE
AGREEMENTS

 

 

 

 

 

83

 

TAP
PURCHASE AGREEMENT

(Sky
Ranch)

 

THIS
TAP PURCHASE AGREEMENT (“Agreement”), dated as of the
_____ day of ____________, 2017 (the “Effective Date”),
by and between Rangeview Metropolitan District, a quasi-municipal
corporation and political subdivision organized and existing under
the constitution and laws of the State of Colorado, acting by and
through its water activity enterprise, with the address of 141
Union Boulevard, Suite 150, Lakewood, CO 80228
(“Rangeview”), and ______________, a ________________,
with the address of ___________________________ (the
“Company”). Rangeview and the Company are sometimes
hereafter referred to collectively as the “Parties,”
and either of them may sometimes hereafter be referred to as a
“Party”.

 

RECITALS

 

A. Company is a party
to a Contract for Purchase and Sale of Real Estate (the
“Contract”) for certain property located within the
development commonly known as Sky Ranch, County of Arapahoe, State
of Colorado, as generally depicted on Exhibit A
attached hereto and made a part of this Agreement (the
“Property”) and as more particularly described in said
Contract.

 

B. The Property is now
undeveloped.

 

C. Rangeview is
authorized to provide water and wastewater services to the Property
and the Company desires to obtain such services from Rangeview to
allow development of the Property to proceed.

 

D. Company desires to
acquire and use the Property for the construction of
________________ (___) [insert number] single family
detached homes, which are to be developed in phases as generally
outlined on Exhibit A,
in compliance with applicable zoning, building, and other laws,
rules, and regulations.

 

E. Rangeview has
certain existing water and wastewater infrastructure, and plans to
construct additional infrastructure, to provide water and
wastewater services at the Property and to other
customers.

 

F.  Company
desires to purchase from Rangeview water and wastewater taps to
serve the Property with the revenue from said purchases to be
available to Rangeview in consideration of Rangeview providing
water and wastewater services to the Property.

 

G. The execution of
this Agreement will serve a public purpose and promote the health,
safety, prosperity, and general welfare of present and future
residents and landowners by providing for the planned and orderly
extension of water and wastewater services to the Property by
Rangeview.

 

 

 

84

 

 

COVENANTS

 

In
consideration of the recitals, the mutual promises and covenants
contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Rangeview and Company agree as follows:

 

ARTICLE
I

 

DEFINITIONS AND
INTERPRETATIONS

 

Section
1.1. Definitions. As used in this
Agreement, the words defined below and capitalized throughout the
text of this Agreement shall have the respective meanings set forth
below:

 

Agreement: This Tap Purchase
Agreement and any amendment to it made in accordance with Section
6.9 below.

 

Board: The duly constituted
Board of Directors of Rangeview.

 

Company: A Party to this
Agreement as described above.

 

Event of Default: One of the
events or the existence of one of the conditions set forth in
Section 5.1 below.

 

Lot: Lot means a single family
residential building lot as shown on a final subdivision plat of
the Property which designates a unique block and lot number to the
Lot.

 

Person: Any individual,
corporation, limited liability company, joint venture, estate,
trust, partnership, association, or other legal
entity.

 

Plans: The plans, documents,
drawings, and specifications for the engineering, design,
surveying, construction, installation, or acquisition of any water
and wastewater improvements; including any addendum, change order,
revision, or modification affecting the same.

 

Property: The real property as
described above.

 

Rangeview: A Party to this
Agreement as described above.

 

Residential Unit: One single
family detached dwelling unit.

 

Rules and Regulations: The duly
adopted rules, regulations, bylaws, resolutions, policies and
procedures of Rangeview governing water and wastewater service,
fees and charges, and other matters; effective as of the Effective
Date and as may be amended from time to time.

 

SFE: An SFE shall mean one
single family equivalent unit of water or wastewater demand as
defined in the Rules and Regulations. Absent unusual circumstances,
one SFE is a single family detached residence with an assumed water
demand of 0.4 acre feet of water per year, provided with a
three-quarter inch water service line and meter, and with a typical
balance of in-house and outside water usage. The average wastewater
demand for one SFE is 180 gallons of domestic-strength wastewater
per day.

 

 

 

85

 

 

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.

 

 

 

86

 

 

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
(___) Residential Units to be located on the Property.

 

(b) The use of Tap
Licenses and the connection of the Taps shall be subject to all
applicable Rules and Regulations, including the requirement for
construction by Company at its cost of the “Service
Lines” as defined in the Rules and Regulations except as may
otherwise by specifically provided for in this
Agreement.

 

(c) System Development
Charges per Lot shall be calculated in accordance with the Rules
and Regulations. The System
Development Charges applicable to any particular Lot shall be paid
in accordance with the schedule provided for below at Section 3.2.
The System Development Charges may increase or decrease prior to
issuance of any Tap License, and Company shall pay the amount of
the System Development Charge in effect at the time of
payment.

 

(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.

 

 

 

87

 

 

(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.

 

 

 

88

 

 

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.

 

 

 

89

 

 

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 5.5, Rangeview shall have the following rights and
remedies:

 

(i)

To shut off or
discontinue water and/or wastewater service, in accordance with law
and the Rules and Regulations, to those Lots owned by Company for
which service fees have not been paid or that otherwise are not
compliant with the Rules and Regulations.

 

(ii)

To protect and
enforce its rights under this Agreement and any provision of law by
such suit, action, or special proceedings as Rangeview shall deem
appropriate, including, without limitation, any proceedings for the
specific performance of any covenant or agreement contained in this
Agreement or the enforcement of any other appropriate legal or
equitable remedy, or for the recovery of damages caused by breach
of this Agreement, including reasonable attorneys’ fees and
all other costs and expenses incurred in enforcing this
Agreement;

 

 

 

90

 

 

 

(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.

 

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.

 

 

 

91

 

 

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.

 

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:

 

 

 

92

 

 

If to
District:                                      
Rangeview Metropolitan District

Attn:
Manager

141
Union Boulevard Suite 150,

Lakewood, CO
80228

E-mail:
ljohnson@SDMI.com

 

with a
copy
to:                                   
Rangeview Metropolitan District

Attn:
Mark Harding, President

34501
East Quincy Ave., Bldg. 34, Box 10

Watkins, CO
80137

Facsimile No:
(303)292-3475

E-mail:
mharding@purecyclewater.com

 

If to
Company:                                   
__________________________

Attn:
_____________________

__________________________

__________________________

Facsimile No.:
______________

E-mail:
____________________

 

with a
copy
to:                                   
__________________________

Attn:
_____________________

__________________________

__________________________

Facsimile No.:
______________

E-mail:
____________________

 

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.

 

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.

 

 

 

93

 

 

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.

 

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

 

COMPANY:

 

______________________________,

a
_____________________________

 

 

By:                                                                            

Name:                                                                                      

Title:                                                                                      

 

 

RANGEVIEW:

 

RANGEVIEW
METROPOLITAN DISTRICT,

a
Colorado quasi-municipal corporation and political subdivision
acting by and through its water enterprise

 

 

By:                                                                            

President

 

ATTEST:

 

By:                                                                 

Secretary

 

 

 

94

 

 

 

EXHIBIT
A

 

To Tap
Purchase Agreement

 

[Diagram of
Property]

 

 

 

 

 

 

 

95

 

 

EXHIBIT
B

 

to Tap
Purchase Agreement

 

 

 

RANGEVIEW
RATES AND CHARGES

 

Being
Appendices C and E of the Rules and Regulations

 

(Current as of the
Effective Date)

 

 

 

Note:
“Administrative Fees”, as used in the Tap Purchase
Agreement, are the sum of the Administrative License Fee ($50.00)
and Water Meter Purchase and Set Fee (estimated to be $367.00 for
5⁄8”x3⁄4” or 3⁄4” water
meters)

 

 

 

 

 

 

 

96

 

 

Appendix C –
Rules and Regulations of Rangeview Metropolitan
District

ADMINISTRATIVE
RATES AND CHARGES*

	

Article

	

Fee/Charge

	

Amount

	

6.2

	

System
Review Fee

	

Actual
Cost

	

6.3

	

Disconnection/Reconnection
Charge

	

Actual
Cost

	

6.4

	

Plan
Review Fee (Main Extensions)

	

Actual
Cost

	

6.5

	

Inspection/Observation
Fee (Main Extensions/Tap Installation)

	

Actual
Cost

	

6.6

	

Permit
Review Fee

	

Actual
Cost

	

6.9

	

Cure
Charge

	

Actual
Cost

	

6.11.c

	

Delinquent Payment
Late Fee

	

$10 +
1% Monthly Interest

	

6.11.d

	

Returned Check
Fee

	

$15.00

	

11.2

	

Water
Meter Purchase and Set

	

Actual
Cost

	

11.3.a

	

Administrative
License Fee

	

$50.00

	

12.1.a

	

Water
System Development Charge

	

See
Appendix E

	

12.2.b

	

Potable
Water Consumption Charge

	

See
Appendix E

	

12.2.c

	

Monthly
Water Service Charge

	

See
Appendix E

	

12.3.a

	

Hydrant
Use Fee

	

$40.00
per permit

	

12.3.b

	

Hydrant
Use Rates

	

$13.00
per 1,000 gallons

	

12.3.c

	

Owner-initiated
Shutoff Fee, each shutoff

	

$15.00
per hour

	

12.3.d

 

	

Fire
Service Standby Fee, monthly fee

	
 

	

4-inch

	

$12.00

	

6-inch

	

$18.00

	

8-inch

	

$24.00

	

12.3.e

	

Well
Site Surcharge

	

$300
per acre

	

13.7

	

Non-Potable Water
Consumption Charge

	

85% of
potable charges

	

17.1.c

	

Sewer
System Development Charge

	

See
Appendix E

	

17.2.a

	

Monthly
Sewer Service Charge

	

See
Appendix E

	

17.3.a

	

Interceptor
Inspection Fee, each inspection

	

$25.00

* Rates
and charges as effective as of March 2017

 

 

97

 

 

Appendix E –
Rules and Regulations of Rangeview Metropolitan District (Note:
Residential only listed)

(1)  SKY RANCH SERVICE AREA SYSTEM DEVELOPMENT
CHARGES

	

Article

	

Fee/Charge

	

Amount

	

12

	

Residential Water
System Development Charge

	

$26,675
per SFE based on 0.4 acre feet of water use per year.

	

17

	

Wastewater System
Charge

	

$4,659
per SFE

 

SKY
RANCH EXAMPLE SYSTEM DEVELOPMENT CHARGES

	

Component

	

1.0
SFE Amount*

	

0.8
SFE Amount**

	

Total
Water System Development Charge

	

26,675

	

$21,500

	

Wastewater System
Charge

	

$4,659

	

$4,659

	

Total
Water & Wastewater Tap Fee

	

$31,334

	

$26,159

SFE =
Single Family Equivalent

*
Assumes 0.4 AFY annual demand and 0.56 gpm max day flow
rate.

**
Assumes 0.32 AFY annual demand and 0.44 gpm max day flow
rate.

 

SKY
RANCH SERVICE AREA RESIDENTIAL MONTHLY CHARGES

	

Article

	

Fee/Charge

	

Amount

	

12.2b

	

Potable
Water Consumption Charge

	
 

	

0% to
100% of Monthly Budget

	

$4.25
per 1000 gallons

	

101% to
125% of Monthly Budget

	

$6.38
per 1000 gallons

	

126% to
150% of Monthly Budget

	

$8.50
per 1000 gallons

	

Over
150% of Monthly Budget

	

$12.75
per 1000 gallons

	

12.2c

	

Potable
Water Monthly Service Charge

	

$32.27

	

17.2b

	

Sewer
Water Generation Charge

	

$6.34
per 1000 gallons*

	

17.2a

	

Sewer
Monthly Service Charge

	

$10.05

*
Monthly sewer generation assumed to be equal to the average potable
water consumption in the months of December through
February.

 

 

98

 

ESCROW
AGREEMENT

(Sky
Ranch - Deferred Purchase Price LOC)

 

 

            

THIS ESCROW AGREEMENT
(“Agreement”) is made and entered into this ______ day
of ________, 2017, by and among PCY
HOLDINGS, LLC, a Colorado limited liability company
(“Seller”);
__________________________, a ________________________________
(“Purchaser”);
and LAND TITLE GUARANTEE COMPANY (“Escrow Holder”).

 

RECITALS:

 

            

WHEREAS, Seller and
Purchaser entered into that certain Contract for Purchase and Sale
of Real Estate dated effective as of __________, 2017 ( the
‘‘Contract”), and that certain Lot
Development Agreement dated effective as of _____________, 2017
(the “LDA”),
each of which pertain to the purchase and sale of ______
single-family residential lots (the “Lots”) located in the project
commonly known as Sky Ranch in Arapahoe County, Colorado
(“County”), as
more particularly described in the Contract; and

 

            

WHEREAS, pursuant
to the provisions of the Contract and the LDA, Seller has agreed to
construct and install certain “Improvements” (as
defined in the LDA) for the ______ Lots to be acquired by Purchaser
at the First Closing (as defined in the Contract) for a total cost
for the Takedown 1 Lots of $_______________, and for the ______
Lots to be acquired by Purchaser at the Second Closing (as defined
in the Contract) for a total cost for such Lots of
$_________________, and for the ______ Lots to be acquired by
Purchaser at the Third Closing (as defined in the Contract) for a
total cost for such Lots of $_________________ (collectively the
“Deferred Purchase
Price”), and Purchaser has agreed to pay Seller the
Deferred Purchaser Price in installments as Seller completes the
construction and installation of such Improvements;
and

 

            

WHEREAS, the
Contract and the LDA provide that Purchaser will secure its
obligation to pay the Deferred Purchase Price by depositing with
Escrow Holder a letter of credit at each Closing issued in favor of
Escrow Holder in the amount of the respective Deferred Purchase
Price for the Lots associated with such Closing (a
“Letter of
Credit”), which is to be administered in accordance
with escrow instructions mutually acceptable to Seller, Purchaser
and Escrow Holder; and

 

            

WHEREAS, Seller,
Purchaser and Escrow Holder desire to enter into this Agreement to
establish the terms applicable to the administration of each Letter
of Credit and the deposit and disbursement of the funds to be used
to pay the Deferred Purchase Price.

 

AGREEMENT:

 

            

NOW THEREFORE, in
consideration of the mutual promises contained herein and other
good and valuable consideration, the receipt and sufficiency of
which the parties acknowledge, the parties agree as
follows:

 

 

99

 

 

ARTICLE
l

CREATION
OF ESCROW;

TERMS
OF CONSTRUCTION DRAWS

 

            

1.1            

Creation of Escrow. Pursuant to
the Contract and the LDA, at each applicable Closing (as defined
therein), Purchaser shall deposit a Letter of Credit with Escrow
Holder in the amount of the Deferred Purchase Price applicable to
such Closing as follows:

 

First Closing
($47,500/Lot x _____
Lots):                                                                                     

$____________________;

 

Second
Closing ($47,500/Lot x _____Lots + Escalator): $
__________________;

 

Third
Closing ($47,500/Lot x _____Lots + Escalator): $
__________________.

 

Escrow
Holder agrees to hold, disburse, or release the Letter of Credit
and any Escrow Funds (as hereinafter defined) deposited into escrow
from time to time as set forth herein (collectively, the
“Escrow
Account”) in accordance with the provisions of this
Agreement.

 

            

1.2            

Payment of Deferred Purchase
Price. Seller and Purchaser agree that during the course of
Seller’s construction of the Seller Improvements, Purchaser
will be obligated from time to time as set forth in Section 6.1 of
the LDA to pay to Seller a portion of the Deferred Purchase Price
as Seller completes certain phases of the construction of the
Improvements.

 

ARTICLE
2

ESCROW
HOLDER

 

            

2.1            

Appointment. Seller and
Purchaser hereby appoint Escrow Holder to act as the escrow holder
in accordance with the terms and conditions of this Agreement, and
Escrow Holder hereby accepts such appointment.

 

            

2.2            

Retention of Letter of Credit.
Escrow Holder shall retain the Letter of Credit in its possession
until termination of the Escrow Account as provided for herein. If
and to the extent that any cash is held in escrow pursuant to this
Agreement, Escrow Holder shall invest all such cash
(“Escrow Funds”)
in an interest-bearing depositary accounts with an FDIC-insured
national or Colorado state bank mutually approved by Purchaser and
Seller.

 

            

2.3            

Limitation of Liability. The
duties of Escrow Holder are limited to those specifically provided
in this Agreement. Escrow Holder shall incur no liability whatever
except by reason of its breach of this Agreement or its willful
misconduct or negligence.

 

ARTICLE
3

INSTRUCTIONS

 

            

3.1            

Instructions to Escrow Holder.
Set forth in this Article 3 are the sole instructions to be
followed by Escrow Holder concerning disposition of the Letter of
Credit and the distribution of any Escrow Funds other than upon
resignation or termination of Escrow Holder as provided in this
Agreement.

 

 

100

 

 

            

3.2            

Payment of Deferred Purchase
Price. Upon achieving Substantial Completion (as defined in
Section 4.5.1 of the LDA) of the Improvements in each Phase as
identified in Section 6.1 of the LDA, Seller shall deliver to
Purchaser and Escrow Holder an invoice for payment of the
applicable of the Deferred Purchase Price that is based upon the
completion of certain Improvements that serve such Phase,
which Invoice shall
be accompanied by conditional lien waivers from all Lien Claimants
for such work in the statutorily prescribed form and unconditional
lien waivers in the statutorily prescribed form from all Lien
Claimants for the work included in the prior
Invoice. As used herein, the term
“Lien
Claimants” shall mean all
contractors and material suppliers who perform services or supply
materials in connection with the construction of the
Improvements. Each Invoice will include the amount of the
Deferred Purchase Price to be paid consistent with Section 6.1 of
the LDA and shall include Seller’s certification to Purchaser
that the Improvements applicable to the Invoice are Substantially
Complete as provided in Section 4.5.1 of the LDA. Purchaser shall
pay the applicable portion of the Deferred Purchase in Good Funds
within five (5) business days after an invoice for payment
(“Invoice”) is
delivered to Purchaser by Seller.

                       

(a)            

Written Objection. Purchaser
shall have five (5) business days from its receipt of the subject
Invoice to deliver to Seller and Escrow Holder a written objection
to payment of the Invoice (the “Objection Period”). If no such
written objection is made by Purchaser, then Purchaser shall pay to
Seller the amount of the Invoice not later that the expiration of
the Objection Period. Purchaser shall not object to an Invoice
submitted by Seller unless Seller has not achieved Substantial
Completion as required by Section 4.5.1 of the LDA with respect to
the applicable Improvements covered by the Invoice, or the amount
of the Invoice exceeds the applicable amount permitted under
Section 6.1 of the LDA, or the Invoice does not include the
information or supporting documentation required by this Section
3.2. No other objections are allowed. Any written objection shall
state with specificity the basis of the objection, and the actions
that must be taken in order for the objection to be withdrawn. Upon
withdrawal of the objection, Purchaser shall pay the Invoice within
five (5) business days after withdrawal. Seller and Purchaser
shall, in good faith, attempt to resolve any disputes regarding an
objection to disbursement within five (5) days after Seller’s
receipt of the written objection (“Resolution Period”). If Seller and
Purchaser are unable so to resolve any disputes within such (5) day
period, the dispute shall be resolved pursuant to the Expedited
Dispute Resolution provisions of Section 7 of the LDA.

 

                       

(b)            

Failure to Pay Invoice. If
Purchaser fails to pay an undisputed Invoice when due and payable,
and such failure continues for a period of ten (10) days after the
delivery of written notice thereof from Seller to Purchaser and
Escrow Holder, Seller may give written notice to Escrow Holder
stating that such payment has not been made as required above, and
Escrow Holder shall present the Letter of Credit for the applicable
Lots for payment of a partial draw in the amount of the unpaid
Invoice and pay the proceeds thereof to Seller, and such failure to
pay shall be deemed cured.

 

                       

(c)            

Reduction of Letter of Credit.
A Letter of Credit may provide that it will be reduced from time to
time to the extent of payments of the Deferred Purchase Price in
Good Funds made by Purchaser for Improvements in accordance with
the terms, including the payment schedule, set forth in this LDA
and the Contract. Upon each payment of a portion of the Deferred
Purchase Price pursuant to an Invoice, the Letter of Credit shall
be reduced by Escrow Holder by the amount paid by Purchaser by
means of a Reduction Certificate delivered to the issuer of the
Letter of Credit, as contemplated by the terms of the Letter of
Credit. 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 Purchase Price in Good Funds for all of the Lots in such
Closing.

 

 

101

 

 

(d)           

Renewal of Letter of Credit.
If a Letter of Credit is scheduled to
expire prior to the payment in full of the Deferred Purchase Price
in Good Funds for all of the Lots in a Closing, and Purchaser has
not renewed the Letter of Credit at least fifteen (15) days prior
to the expiration date thereof, Escrow Holder is authorized and
directed to draw down the full amount of the Letter of Credit and
deposit such funds in escrow (which funds will constitute Escrow
Funds) to be used solely for the payment of any unpaid Deferred
Purchase Price due to Purchaser’s failure to pay an
Invoice for any portion of the Deferred Purchase Price when the
same is due and payable; provided, however, that prior to drawing
upon the Letter of Credit, Holder shall give a written notice to
Purchaser and shall not draw upon the Letter of credit unless
Purchaser fails to renew the Letter of Credit within five (5)
business days after receipt of such notice. Escrow Holder shall make payment from such Escrow
Funds in accordance with the same procedures set forth above with
respect to drawing upon a Letter of Credit for payment of the
unpaid Invoice.  [NOTE:
Some of these letter of credit provisions are duplicated in the
LDA. Discuss only including them in this escrow
agreement.]

                       

(e)            

Representatives. Seller
appoints Mark Harding as its authorized representative who may sign
notifications on Seller’s behalf. Purchaser appoints
_________________ as its authorized representative who may sign
notifications on Purchaser’s behalf.

 

            

3.3            

Manner of Disbursements.
Disbursement of Escrow Funds by Escrow Holder pursuant to this
Agreement shall be made to Seller or to each Payee as designated by
Seller in the amount payable to it as set forth in the applicable
Invoice as approved by Purchaser.

 

            

3.4            

Interpleader. In the event
Seller and Purchaser (or in the case of Article 5, the Substitute
Contracting Party and Purchaser) cannot agree as to the disposition
of the Letter of Credit, Escrow Holder shall have the absolute
right, at its election, to do either or both of the
following:

 

                       

(a)            

Withhold and stop
all further proceedings in, and performance of, this Agreement
until such time as all differences shall have been adjusted by
agreement, and Escrow Holder shall have been notified thereof, in
writing, signed by all of the persons involved in such dispute;
or

 

                       

(b)            

File a suit in
interpleader and obtain an order from the court requiring the
parties to litigate their several claims and rights among
themselves. In the event such interpleader suit is brought, Escrow
Holder shall be fully released from any obligation to perform any
further duties imposed upon it hereunder, and the parties against
whom judgment is rendered, and if no such party, the Escrow Funds,
shall pay Escrow Holder all costs, expenses and reasonable
attorneys’ fees expended or incurred by Escrow Holder, the
amount thereof to be fixed and a judgment thereof to be rendered by
the court in such suit.

 

 

102

 

 

            

3.5            

Compensation and Expenses.
Seller shall reimburse Escrow Holder for all reasonable
out-of-pocket expenses, disbursements and advances incurred or made
by Escrow Holder in the performance of its duties
hereunder.

 

            

3.6            

Resignation. Escrow Holder, or
any successor to it hereafter appointed, may at any time resign by
giving notice in writing, stating the effective date of its
resignation to Seller and Purchaser, and furnishing to Seller and
Purchaser a written accounting of the Escrow Funds previously
delivered by Purchaser, in such form and containing such
information as Seller and Purchaser may reasonably request, and
upon the appointment of a successor Escrow Holder as hereinafter
provided and upon the delivery to such successor Escrow Holder of
the Letter of Credit and all Escrow Funds remaining in Escrow
Holder’s possession, shall be discharged from any further
duties hereunder. In the event of such resignation, a successor
Escrow Holder shall be appointed by Seller, subject to the prior
approval of Purchaser, which approval shall not be unreasonably
withheld, conditioned or delayed. Any such successor Escrow Holder
shall deliver to Seller and Purchaser a written instrument
accepting such appointment hereunder, and thereupon it shall
succeed to all of the rights and duties of Escrow Holder hereunder,
and shall take delivery of the Letter of Credit and all of the
then­remaining Escrow Funds, if any, and any other amounts
held by it pursuant to this Agreement to hold in accordance with
the terms hereof.

 

            

3.7            

Termination of Escrow Holder.
If they so agree, Seller and Purchaser together may terminate any
appointment of Escrow Holder hereunder upon notice specifying the
date upon which such termination shall take effect, provided
nothing herein shall require such agreement. In the event of such
termination, Seller (subject to the prior approval of Purchaser,
which shall not be unreasonably withheld, conditioned or delayed)
shall appoint and designate in such termination notice a successor
Escrow Holder, and Escrow Holder shall turn over to such successor
Escrow Holder the Letter of Credit and the Escrow Funds, if any,
and any other amounts held by it pursuant to this Agreement. Upon
receipt of the Letter of Credit, the Escrow Funds and other
amounts, the successor Escrow Holder shall thereupon be bound by
all of the provisions hereof, and Escrow Holder shall have no
further obligations hereunder.

 

ARTICLE
4

AGREEMENT
FOR DISPOSITION

 

            

4.1.            

Disposition. The Escrow Funds
are being held for the purpose of making the payment by Purchaser
of the Deferred Purchase Price relating to the costs of
constructing the Improvements as described in the LDA and
Contract.

 

 

103

 

 

ARTICLE
5

STEP-IN
RIGHTS

 

            

5.1            

Step-In Rights. Purchaser, Seller and other builders
are parties to a Joint Improvement Memorandum (“JIM”). The purpose of the JIM is
to establish the rights and obligations of Purchaser and such other
builders to complete the construction of certain Joint Improvements
(as defined in the JIM) in the event that Seller defaults under the
LDA (or any other Lot Development Agreement between Seller and
another builder who is a party to the JIM) by failing to commence
or complete construction of the Joint Improvements in accordance
with the requirements of the LDA or such other Lot Development
Agreement. If another builder other than Purchaser exercises its
Builder’s Step-In Rights and becomes the Substitute
Contracting Party (as defined in Section 4.6 of the LDA, a copy of
which is attached hereto as Schedule 1), and Purchaser fails to
timely pay either (i) an undisputed Draw Request (as defined in the
JIM), or (ii) a Draw Request that has been resolved pursuant to
Section 4.2 of the JIM (“Resolved Draw Request”), for its
Allocable Share of the Joint Improvement Costs (as defined in the
JIM), the Substitute Contracting Party shall have the right to a
draw upon the Letter of Credit for payment of the undisputed Draw
Request or Resolved Draw Request for a Joint Improvement in
accordance with procedures set forth in this Agreement. The
Substitute Contracting Party may make a request for a draw on the
Letter of Credit (an “LOC
Joint Improvement Payment Request”) by delivering
written notice to Escrow Holder, Purchaser and Seller identifying
itself as the Substitute Contracting Party and stating that
Purchaser has failed to pay, as required by the terms of the JIM,
either an undisputed Draw Request or a Resolved Draw Request. The
LOC Joint Improvement Payment Request must include an Invoice
containing the following information: (a) the total amount to be
paid pursuant to the current unpaid Draw Request; (b) the identity
of the suppliers, contractors, subcontractors that are to paid from
the current Draw Request; (c) the Substitute Contracting
Party’s certification that the LOC Joint Improvement Payment
Request is true, correct and complete in all material respects; and
(d) copies of conditional lien waivers and releases (conditional
only on receipt of payment) from Substitute Contracting Party and
the suppliers, contractors, subcontractors (excluding
subcontractors and materials suppliers who have not filed a
preliminary twenty (20) day lien notice) that are to paid from the
current Draw Request. Unless Purchaser objects to the LOC Joint
Improvement Payment Request by delivering a written objection to
the Substitute Contracting Party and Escrow Holder within five (5)
business days after receipt of the LOC Joint Improvement Payment
Request, Escrow Holder shall present the Letter of Credit for
payment of a partial draw in the amount of the LOC Joint
Improvement Payment Request and pay the proceeds thereof to the
Substitute Contracting Party. If the Escrow Holder receives an
objection from Purchaser within such 5-business day period, Escrow
Holder shall not draw upon the Letter of Credit and shall
thereafter proceed in accordance with written joint instructions
from Purchaser and Substitute Contracting Party or may proceed in
accordance with Section 3.4 of this Agreement. [NOTE: Discuss what
improvements are joint and whether they should be constructed under
a separate JDA with seller and all builders as
parties.]

 

 

104

 

 

ARTICLE
6

MISCELLANEOUS

 

            

6.1            

Notices. All notices, requests,
demands, approvals and other communications which are required or
may be given under this Agreement shall be in writing, and shall be
deemed to have been duly given: (a) when received if personally
delivered; (b) the day after it is sent, if sent charges prepaid
for next day delivery to a domestic address by recognized overnight
delivery service (e.g., United States Express Mail or Federal
Express); (c) upon confirmed facsimile transmission or by
electronic mail to the numbers specified below or (d) upon receipt,
if sent charges prepaid by certified or registered mail, return
receipt requested. In each case, notice shall be sent as
follows:

 

If to
Seller:

 

Attn:

                                 

Telephone:
(303)

                                 

Facsimile:
(303)

Email:

With a
copy to:

 

                                 

Attention:

                                 

Telephone:
(303)

                                 

Facsimile:
(303)

Email:

If to
Purchaser:

.

                                 

Attention:

Telephone:
(303)

 

Facsimile:
(303)

Email:

 

With a
copy to:

 

Attn:

Facsimile
No.:

Email:

 

If to Escrow
Holder:

Land Title
Guarantee Company

                                 

3033 E. First
Avenue

                                 

Denver, Colorado
80206

                                 

Attn:

                                 

Facsimile:
(303)

Email:

 

 

105

 

 

or to
such other address as such party shall have specified by notice in
writing to the other parties.

 

            

6.2            

Successors and Assigns. Except
as expressly provided in Sections 3.6 and 3.7, Escrow Holder may
not assign or delegate, by operation of law or otherwise, all or
any portion of its rights, obligations or liabilities under this
Agreement without the prior written consent of Seller and
Purchaser, which consent may be withheld in their absolute
discretion. Any attempted assignment in violation of this Section
6.2 shall be void and of no effect. This Agreement and all actions
taken hereunder in accordance with its terms shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, executors, successors and permitted assigns.
There are no third party
beneficiaries of this Agreement. [NOTE: This
conflicts with Article 5 and the joint improvement memorandum. Each
builder would need to be a third party beneficiary of each other
escrow agreement.]

 

            

6.3            

Headings. The headings of the
various sections in this Agreement are inserted for the convenience
of the parties, and shall not affect the meaning, construction or
interpretation of this Agreement.

 

            

6.4            

Waiver. No action taken
pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any agreement contained
herein or of any warranty, representation, covenant or agreement
contained in the LDA or Contract or in any document delivered in
connection herewith or therewith. No waiver of any of the
provisions of this Agreement shall be valid unless the same is in
writing and signed by the party against whom such waiver is sought
to be enforced. The written waiver by any party to this Agreement
of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach of such provision
or as a waiver of any breach of any other provision of this
Agreement.

 

            

6.5            

Governing Law. The formation,
interpretation and performance of this Agreement shall be construed
pursuant to and governed by the substantive laws of the State of
Colorado.

 

            

6.6            

Counterparts. This Agreement
may be executed in several counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.

 

            

6.7            

Tax Matters. Escrow Holder
shall be responsible for preparing, filing, and distributing all
IRS 1099 Forms and any other tax forms necessary with respect to
any income earned on portions of the Escrow Funds.

 

            

6.8            

Entire Agreement and
Modification. This Agreement constitutes the entire
agreement among the parties with respect to the Letter of Credit
and the Escrow Funds, and supersedes all prior agreements and
understandings, oral and written, among the parties to this
Agreement with respect to the subject matter hereof, except the LDA
and the Contract. In the event of any inconsistency between this
Agreement and the LDA or the Contract, the terms of this Agreement
shall govern and control the rights and obligations of Purchaser
and Seller. This Agreement may not be modified or otherwise amended
except by a written instrument that expressly refers to this
Agreement and is executed by the party to this Agreement against
whom such amendment is sought to be enforced.

 

 

106

 

 

 

            

6.9            

Severability. The invalidity or
unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and
effect.

 

            

6.10            

Expenses. Except as expressly
provided in this Agreement, each of the parties to this Agreement,
except Escrow Holder, shall pay its own expenses in connection with
this Agreement and the transactions contemplated hereby, including
the fees and expenses of its counsel and its accountants and other
experts.

 

            

6.11            

Cumulative Remedies. All rights
and remedies of either party hereto are cumulative of each other
and of every other right or remedy such party may otherwise have at
law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.

 

            

6.12            

Costs of Legal Proceedings. In
the event that a party hereunder institutes legal proceedings with
respect to this Agreement, the prevailing party shall be awarded,
in addition to any other relief to which it is entitled, its costs
and expenses incurred in connection with such legal proceedings,
including, without limitation, reasonable attorney’s
fees.

 

[SIGNATURES
INTENTIONALLY ON NEXT PAGE]

 

 

107

 

 

            

IN WITNESS WHEREOF,
the parties to this Agreement have executed it, or caused it to be
executed by their respective duly authorized officers, as of the
date first above written.

 

                                                       

SELLER:

 

                                                       

PCY
HOLDINGS, LLC,

a
Colorado limited liability company

 

By:_______________________________________

                                                       

Name:____________________________________

                                                       

Title:_____________________________________

 

 

                                                       

PURCHASER:

 

                                                       

_________________________________________

 

 

By:_______________________________________

                                                       

Name:____________________________________

                                                       

Title:_____________________________________

 

 

                                                       

ESCROW
HOLDER:

 

                                                       

LAND TITLE
GUARANTEE COMPANY

 

 

                                                       

By:_______________________________________

                                                       

Name:____________________________________

                                                       

Title:_____________________________________

 

 

 

108

 

ESCROW
AGREEMENT

(Sky
Ranch - Deferred Purchase Price LOC)

 

Schedule 1

 

Section
4.6 of the LDA

 

 

 

 

109

DRAFT

McGEADY
BECHER P.C.

October
9, 2017

FR DRAFT REV. 10/30/2017

 

When Recorded, Return to:

 

 

COVENANTS,
CONDITIONS AND RESTRICTIONS

FOR
SKY RANCH

THESE
COVENANTS, CONDITIONS AND RESTRICTIONS FOR SKY RANCH
(“Covenants,” as
hereinafter more fully defined) are made and entered into the date
and year hereinafter set forth by PCY Holdings, LLC, a Colorado
limited liability company (“Developer,” as hereinafter more
fully defined).

 

 

WITNESSETH:

 

A. Developer is the
owner of that certain real property in the County of Arapahoe
(“County”), State of Colorado, which is described on
Exhibit A, attached hereto and incorporated herein by this
reference (“Property,”, as hereinafter more fully
defined).

 

B. Developer desires
to subject the Property to certain covenants, conditions,
restrictions, easements, architectural guidelines, reservations,
rights-of-way, obligations, liabilities and other
provisions.

 

C. These Covenants do
not create a Common Interest Community, as defined by the Colorado
Common Interest Ownership Act at C.R.S. §38-33.3-103(8);
therefore, these Covenants are not governed by the Colorado Common
Interest Ownership Act.

 

D. Pursuant to C.R.S.
§ 32-1-1004(8), and other provisions of Title 32 of C.R.S.,
the Developer empowers the Sky Ranch Community Authority Board (the
“CAB”) with
authority to furnish covenant enforcement and design review
services for the Property (collectively, the “Services,” as hereinafter more
fully defined).

 

E. Developer reserves
the right to add additional real property to these Covenants by
recording an annexation document as more particularly described and
set forth herein.

 

F. Pursuant to the
Colorado Constitution, Article XIV, Sections 18(2)(a) and (b), and
C.R.S. Section 29-1-2-3, metropolitan districts may cooperate or
contract with each other to provide any function, service or
facility lawfully authorized to each, and any such contract may
provide for the sharing of costs, the impositions of taxes, and the
incurring of debt.

 

G. Pursuant to the
Modified Service Plans for Sky Ranch Metropolitans District Nos. 1,
3, 4 and 5 (“Sky Ranch
Districts”), approved by Arapahoe County on September
14, 2004, as may be amended from time to time (“Service Plans”), the Sky Ranch
Districts may furnish covenant enforcement and design review
services and cooperate and contract with each other regarding
administrative and operational functions.

 

 

110

 

 

H. Pursuant to the Sky
Ranch Districts’ Service Plans, the Districts intend to
exercise their powers to provide covenant enforcement and design
review services, as defined in C.R.S. Section 32-1-1004(8), for the
Property.

 

I. In accordance with
the Service Plans and statutory authority, the Sky Ranch Districts
intend to enter into a Sky Ranch Community Authority Board
Establishment Agreement (“CABEA”), creating the CAB and
authorizing the CAB to provide covenant enforcement and design
review services within the Service Areas of the Sky Ranch Districts
that are parties to the CABEA using revenue derived from the areas
in which the services are to be furnished.

 

J. In accordance with
the Service Plans, the CABEA and statutory authority, the CAB has
duly adopted a resolution acknowledging its power to provide
covenant enforcement and design review services pursuant to state
statute, the intention of the CAB to provide for uniform
enforcement and design review services within the service areas of
the Sky Ranch Districts that are parties to the CABEA, and
authorizing the CAB to provide covenant enforcement and design
review services within the service area of the Sky Ranch Districts
that are parties to the CABEA using revenue derived from the areas
in which the services are to be furnished.

 

K. Before the addition
of the service area of any Sky Ranch District to these Covenants,
the applicable Sky Ranch District intends to: (i) duly adopt a
resolution acknowledging the CAB’s power to provide covenant
enforcement and design review services pursuant to state statute
and its intention to provide for uniform enforcement and design
review services within the service areas of the Sky Ranch Districts
using revenues derived from the areas in which the services are to
be furnished; and (ii) authorize the CAB to provide covenant
enforcement and design review services within such Sky Ranch
District’s service area.

 

DECLARATION

 

NOW,
THEREFORE, Developer hereby declares that the Property shall be
held, sold, and conveyed, subject to the following covenants,
conditions, restrictions, easements, architectural guidelines,
reservations, rights-of-way, obligations, liabilities, and other
provisions, as set forth herein.

ARTICLE 1

GENERAL

 

Section
1.1 Planned Community.

  Developer is the owner of the Lots and
other Property located in the County as more particularly described
on Exhibit
A attached hereto and by this
reference incorporated herein, which collectively constitute and
are defined in these Covenants as the “Property”.
Developer intends to develop the Property as a planned community of
single family residential homes and related uses. The name of the
community to be developed on the Property is “Sky
Ranch”. All of the Property is located within the Service
Area of Sky Ranch Metropolitan District No. 1, a quasi-municipal
corporation and political subdivision of the State of Colorado.
Because ownership of a Unit (as defined below) does not obligate
the owner to pay for real estate taxes, insurance premiums,
maintenance, or improvement of other real estate described in these
Covenants, the Property is not and will not be a “common
interest community”, as defined in the Colorado Common
Interest Ownership Act (“Act”), and therefore the Property and these
Covenants are not subject to or required to comply with the Act.
Developer confirms its intention that the Act will not apply to the
Property or these Covenants.

 

 

 

111

 

 

Section
1.2 Purposes of Covenants.

  These
Covenants are executed (a) to further a common and general plan for
the development of the Property; (b) to protect and enhance the
quality, value, aesthetics, desirability and attractiveness of the
Property; (c) to provide for and define certain duties, powers and
rights of the Architectural Review Committee, as defined herein;
(d) to define certain duties, powers and rights of the CAB under
these Covenants; and (e) to define certain duties, powers and
rights of Owners of Lots within the Property.

 

Section
1.3 Declarations.

 Developer,
for itself and its successors and assigns, hereby declares that the
Property, and all other real property that becomes subject to these
Covenants in the manner hereinafter provided from the date the same
becomes subject to these Covenants, shall be owned, held,
transferred, conveyed, sold, leased, rented, hypothecated,
encumbered, used, occupied, maintained, altered and improved
subject to the covenants, conditions, restrictions, limitations,
reservations, exceptions, equitable servitudes and other provisions
set forth in these Covenants. The provisions of these Covenants run
with the land and, until their expiration in accordance with the
terms hereof, shall bind, be a charge upon and inure to the mutual
benefit of: (a) the Property and all other real property that
becomes part of the Property; (b) Developer and its successors and
assigns; (c) the Sky Ranch Districts, through the CAB, and their
successors and assigns; and (d) all Persons having or acquiring any
right, title or interest in any portion of the Property or in any
property that becomes part of the Property, or any Improvement
thereon, and their heirs, personal representatives, successors or
assigns. These Covenants will be recorded in the real property
records of the County.

 

Section
1.4  CAB
Authority.

  Declarant, through these Covenants, grants
authority to the Sky Ranch Districts, through the CAB, to act on
behalf of Declarant for certain matters specifically set forth in
these Covenants, including implementing these Covenants, enforcing
these Covenants and providing design review services. Declarant
grants the Sky Ranch Districts, through the CAB, authority as
provided herein to adopt Rules and Regulations, and Guidelines
pertaining to architectural and design review, each for the
effective governance of the Property to implements these Covenants.
Declarant grants to the Sky Ranch Districts, through the CAB,
authority to review and approve Improvements in compliance with the
Guidelines and these Covenants and to enforce the Guidelines.
Declarant grants to the Sky Ranch Districts, through the CAB,
authority to appoint the ARC as provided herein and to exercise all
other powers necessary and proper to implement and enforce these
Covenants and provide design review services.

 

ARTICLE
2

DEFINITIONS

 

Section
2.1 ARC.

   “ARC”
means the Architectural Review
Committee appointed by the Developer during the Developer Control
Period (as defined in Section
3.1), and upon expiration of
the Developer Control Period, appointed by the Sky Ranch Districts,
through the CAB, all as provided in Section 3.1 of
these Covenants. The ARC shall review, consider and approve, or
disapprove, requests for architectural approval, as more fully
provided in these Covenants.

 

 

 

112

 

 

Section
2.2 Builder.

  “Builder”
means any Person who: (i) acquires one
or more parcels of the Property for the purpose of constructing at
least one residence on each such parcel for sale, and/or rental, to
the public; or (ii) acquires one or more parcels of the Property
for sale to any Person fitting the description in clause (i) above;
and is designated as a “Builder” under these Covenants
in a written designation that is signed by the then-Developer, and
which designation is recorded in the office of the Clerk and
Recorder of the County.

 

Section
2.3 CAB.

  “CAB” means the Sky Ranch Community Authority
Board.

 

Section
2.4 Covenants.

 “Covenants”
means these Covenants, Conditions and
Restrictions for Sky Ranch, as amended and supplemented from time
to time.

 

Section
2.5 Developer.

  “Developer”
means PCY Holdings, LLC, a Colorado
limited liability company, and any other Person to whom the
Developer may assign one or more of the Developer’s rights
under these Covenants (which will be the extent of the
Developer’s rights to which such assignee succeeds);
provided, that no assignment of any Developer rights is effective
unless such assignment is duly executed by the assignor Developer
and recorded in the office of the Clerk and Recorder of the
County.

 

Section
2.6 Governing
Documents.

 “Governing
Documents” means these
Covenants, any Guidelines (as hereinafter defined), any CCR Rules
and Regulations (as hereinafter defined), and any other documents now or hereafter adopted by or
for the Sky Ranch Districts, the CAB, or ARC, as amended and
supplemented.

 

Section
2.7 Improvements.

  “Improvements”
means all exterior improvements,
structures, and any appurtenances thereto or components thereof of
every type or kind, and all landscaping features, including but not
limited to buildings, outbuildings, swimming pools, hot tubs,
satellite dishes, antennas, tennis courts, patios, patio covers,
awnings, porches, solar collectors, roof materials, painting or
other finish materials on any visible structure, additions,
walkways, sprinkler systems, garages, driveways, dog runs, fences,
basketball backboards and hoops, swingsets or other play
structures, screening walls, retaining walls, stairs, decks,
landscaping, hedges, windbreaks, plantings, trees, shrubs, flowers,
vegetables, sod, gravel, groundcover, exterior light fixtures,
poles, signs, exterior tanks, and exterior air conditioning,
cooling, heating and water softening equipment, permanent fire
pits, chimneys, and exterior ornaments, if any.

 

Section
2.8 Owner.

  “Owner”
means each fee simple title holder of
a Unit, including Developer, any Builder and any other Person who
owns a Unit, but does not include a Person having an interest in a
Unit solely as security for an obligation.

 

Section
2.9 Person.

  “Person”
means a natural person, a corporation,
a limited liability company, a partnership, a trust, a joint
venture, an unincorporated association, or any other entity or any
combination thereof, and includes each Owner, the Developer, each
Builder, the ARC, the Sky Ranch Districts and CAB,
and the governing body of the Sky
Ranch Districts and CAB.

 

 

 

113

 

 

Section
2.10 Property.

  “Property”
means the real property described on
Exhibit A attached hereto, as supplemented and amended, and all
other real property, if any, made subject to the terms and
provisions of these Covenants after the date hereof, and as the
Developer, any Builder or Owner may now or hereafter subdivide or
re-subdivide any portion thereof; provided, however, that the
Property does not include any real property that has been withdrawn
as provided in Section 6.10 hereof.

 

Section
2.11 Services.

  “Services”
means the services that the CAB is
empowered to provide pursuant to C.R.S. §32-1-1004, as
amended, and other provisions of Title 32 of C.R.S., as amended,
including but not limited to covenant enforcement and design
review.

 

Section
2.12 Sky Ranch Districts.

  “Sky Ranch
Districts” means Sky
Ranch Metropolitans District Nos. 1, 3, 4 and 5, and any other
metropolitan district(s), to which the Sky Ranch Districts or CAB
may transfer or assign any or all of the rights and duties of the
Sky Ranch Districts or CAB under these Covenants. Each such
assignment or transfer, if any, will be effective upon recording in
the County of a document of transfer or assignment, duly executed
by the Sky Ranch Districts and/or CAB. In addition to the authority
to provide the Services (as defined in Section 2.11),
the CAB has such other authority with respect to the provision of
the Services, as may be permitted by the Special District Act,
C.R.S. 32-1-101 et seq., including but not limited to the right to
adopt rules and regulations, fees, rates, tolls, penalties and
charges, and undertake enforcement actions (but these Covenants do
not limit in any way the authority of the Sky Ranch Districts or
CAB under the statutes of the State of
Colorado).

 

Section
2.13 Unit.

  “Unit” means
each portion of the Property which is designated as a lot on a
recorded plat, including each residence (attached or detached) now
or hereafter located thereon.

 

ARTICLE
3

ARCHITECTURAL
REVIEW

 

Section
3.1 Composition of ARC.

  The ARC shall consist of three (3) or
more natural Persons. The Developer has the authority to appoint
the ARC, and/or to delegate
some or all architectural authority (as provided in
Section 3.2 hereof), from the date of recording of these
Covenants until the date of conveyance of all the Units to the
first Owners thereof other than: (i) the Developer; or (ii) any
Builder; or (iii) any other
Person who acquires one or more parcels of the Property for the
purpose of constructing at least one residence on each such parcel
(the “Developer Control
Period”). After
expiration of the Developer Control Period, the governing board of
the CAB has the authority to serve as or appoint members to the ARC
, and/or to delegate some or all architectural authority (as
provided in Section 3.2
hereof). The appointments of all
then-current members of the ARC who were appointed by the Developer
will automatically terminate on the date which is thirty (30) days
after expiration of the Developer Control
Period.

 

Section
3.2 Delegation of Some or All Architectural
Authority.

  The Person with the authority to
appoint the ARC, as provided in the preceding Section 3.1,
has the right and authority to: (i) delegate, in writing, some or
all architectural authority, to one or more other Persons,
including one or more management companies, metropolitan or other
district(s), such as by entering into intergovernmental
agreement(s) or other document(s) or agreement(s); and (ii)
withdraw, in writing, any delegated authority.

 

 

 

114

 

 

Section
3.3 Architectural Review Requirements; Authority of
the ARC.

 

3.3.1                      No
Improvements may be constructed, erected, placed, altered, planted,
applied, installed or modified, upon any Unit, unless said
Improvements are in full compliance with all provisions of the
Governing Documents, and unless such Improvements are approved in
writing by the ARC. At least one (1) detailed set of complete plans
and specifications of proposed Improvements (said plans and
specifications to show exterior design, height, materials, color,
and location of the Improvements, plotted horizontally and
vertically, location and size of driveways, location, size, and
type of landscaping, fencing, walls, windbreaks and grading plan,
as well as such other materials and information as may be required
by the ARC), must first be submitted to the ARC for review and
consideration.

 

3.3.2                      The
ARC shall endeavor to exercise its judgment in an attempt to
provide for each proposed Improvement to generally harmonize with
the existing surroundings, residences, landscaping and structures.
However, the ARC shall not review or approve any proposed
Improvements regarding whether the same complies with governmental
requirements. Rather, as provided in subsection 0, below, the
applicant is also required to submit proposed Improvements to the
applicable governmental entities for a determination of compliance
with governmental requirements. In its review of such plans,
specifications and other materials and information, the ARC may
require, as a condition to its considering an approval request,
that the applicant(s) pay, and/or reimburse the ARC, for the
expenses incurred in the process of review and approval or
disapproval.

3.3.3                      In
addition to the foregoing review and approval, and notwithstanding
anything to the contrary in these Covenants, the construction,
erection, addition, deletion, change or installation, of any
Improvements also requires the applicant to obtain the approval of
all governmental entities with jurisdiction thereover, and requires
the issuance of all required permits, licenses and approvals by all
such entities. Without limiting the generality of the preceding
sentence, issuance of building permit(s) by the governmental entity
with jurisdiction thereover, if required, is a precondition to
commencement of any construction of, alteration of, addition to or
change in, any Improvement.

 

3.3.4                      In
addition to the authority that is given to the ARC in these
Covenants, as well as such authority as may be implied from any
provision(s) of these Covenants, the ARC has all authority and
powers that are given by Colorado statute and case law, to a
corporation, a limited liability company, or any other legal
entity. The foregoing shall include the power to receive and review
complaints from one or more Owners, Developer, one or more
Builders, or any other Person(s), alleging that a violation of any
of the Governing Documents has occurred or is
occurring.

 

3.3.5                      The
ARC may, at any time, appoint a representative or committee to act
on its behalf. If so, then the actions of such representative or
committee shall be the actions of the ARC. However, if such a
representative or committee is appointed, then the ARC will have
full power over such representative or committee, including the
power to at any time withdraw from such representative or
committee, any authority to act on behalf of the ARC, and the power
to at any time remove or replace such representative or
committee.

 

 

 

115

 

 

Section
3.4 Guidelines.

  The Developer may promulgate, adopt,
enact, modify, amend, repeal, and re-enact, architectural
standards, rules, regulations and/or guidelines, regarding
architectural and design matters and matters incidental thereto
(collectively the “Guidelines”), and the CAB, once it has the authority
to appoint the ARC as provided in Section 3.1 of
these Covenants may modify, amend, repeal, and re-enact the
Guidelines, but the Guidelines may not be in conflict with these
Covenants. The Guidelines may include: clarifying the designs and
materials that may be considered in architectural approval;
requirements for submissions, procedural requirements,
specification of acceptable Improvement(s) that may be installed
without prior review or approval; and permitting the ARC, with
respect to any violation(s) or alleged violation(s) of any of the
Governing Documents, to send demand letters and notices, levy and
collect fines and interest, and negotiate, settle and take any
other actions. In addition, the Guidelines may provide for blanket
approvals, interpretations, or restrictions. By way of example, and
not by way of limitation, the Guidelines may state that a certain
type of screen door will be acceptable and will not require
approval, or may state that only one or more types of fences are
acceptable and no other types will be approved. All Improvements
proposed to be constructed, erected, placed, altered, planted,
applied, installed or modified, upon any Unit by any Owner must be
done and used in accordance with the Guidelines and these
Covenants. The Guidelines (as amended from time to time in
accordance with their terms) may not be recorded against the
Property but are hereby incorporated into these Covenants as if
fully set forth herein.

 

Section
3.5 Procedures.

  The ARC shall review each request for
architectural approval in accordance with the design review
procedures set forth in the Design Guidelines or the CCR Rules and
Regulations, and approve (which may be with conditions and/or
requirements) or disapprove, each request in writing within
forty-five (45) days after the complete submission to the ARC along
with a receipt of acknowledgement by the ARC of the plans,
specifications and other materials and information, which the ARC
may require in conjunction therewith. If the ARC fails to review
and give its writing approval (which may be with conditions and/or
requirements) or disapproval within forty-five (45) days after the
complete submission of the plans, specifications, materials and
other information with respect to a written request for
architectural approval, then such request is deemed approved by the ARC.

 

Section
3.6 Vote.

  The
affirmative, majority vote of the ARC is required for approval
(which may be with conditions and/or requirements) of each matter,
unless the ARC has appointed a representative or committee to act
for it, in which case the decision of such representative or
committee will control, unless the denial of the ARC is appealed by
the applicant to the CAB Board of Directors within thirty (30) days
of the date of the ARC written decision of denial in which case the
written decision of the Board of the CAB shall
control.

 

Section
3.7 Prosecution of Work After
Approval.

  After the ARC approves (which may be with
conditions and/or requirements) any proposed Improvement, the
proposed Improvement must be completed and constructed as promptly
and diligently as possible, and in complete conformity with all
conditions and requirements of the approval. Failure to complete
the proposed Improvement within the time period set forth in the
Guidelines or, if not set forth in the Guidelines, then within one
(1) year after the date of approval of the application
(“Completion
Deadline”), or to
complete the Improvement in complete conformance with the
conditions and requirements of the approval, constitutes
noncompliance; provided, however, that the ARC may grant extensions
of time to individual Owners for completion of any proposed
Improvements, either (a) at the time of initial approval of
such Improvements, or (b) upon the request of any Owner,
provided such request is delivered to the ARC in writing and the
Owner is diligently prosecuting completion of the subject
Improvements or other good cause exists at the time such request is
made. Builders are exempt from this Section 3.7.

 

 

 

116

 

 

Section
3.8 Notice of Completion.

  Upon the completion of an Improvement,
the applicant for approval of the same shall give a written
“Notice of
Completion” to the ARC
(in form and substance acceptable to the ARC, or on forms provided
by the ARC). Until the date of receipt of such Notice of
Completion, the ARC shall not be deemed to have notice of
completion of any Improvement on which approval (which may be with
conditions and/or requirements) has been sought and granted as
provided in this Article.

 

Section
3.9 Inspection of Work.

 The
ARC, or its duly authorized representative, has the right to
inspect any Improvement at any time, including prior to or after
completion, in order to determine whether or not the proposed
Improvement is being completed or has been completed in compliance
with the approval granted pursuant to this Article. Such
inspections may be made in order to determine whether or not the
proposed Improvement is being completed, or has been completed, in
compliance with the approval granted pursuant to this Article.
However, such right of inspection terminates ninety (90) days after
the ARC has received a Notice of Completion from the applicant and
no action has been initiated by the ARC. The 90-day period to
perform inspections after the ARC has received a Notice of
Completion does not apply to or limit the right or authority of the
ARC or the Board to enforce these Covenants, including but not
limited to the requirements pertaining to the maintenance of
Improvements.

 

Section
3.10 Notice
of Non-compliance

. If, as a result of inspections or otherwise, the
ARC determines that any Improvement has been done without obtaining
all required approvals (which may be with conditions and/or
requirements), or was not done in substantial compliance with the
approval that was granted, or has not been completed by the
Completion Deadline (except landscaping, as provided below),
subject to any extensions of time granted pursuant to
Section 3.7 hereof, then the ARC shall notify the applicant in
writing of the non-compliance. Such notice of non-compliance must
be given not later than sixty (60) days after (as applicable), (a)
the ARC receives a Notice of Completion from the applicant, or (b)
the ARC discovers any such noncompliance. The notice of
non-compliance must specify the particulars of the
non-compliance.

 

Section
3.11 Correction of
Non-compliance.

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

 

Section
3.12 Cooperation.

  The
ARC has the right and authority to enter into agreements and
otherwise cooperate with any architectural review or similar
committees, any metropolitan or other districts, or one or more
boards or committees that exercise architectural or design review
functions, or any other Person, in order to increase consistency or
coordination, reduce costs, or as may otherwise be deemed
appropriate or beneficial by the ARC. The costs and expenses for
all such matters, if any, shall be shared or apportioned between
such Persons and the ARC, as the ARC may determine. The foregoing
includes collection, payment, and disbursement of fees, charges,
and/or any other amounts.

 

 

 

117

 

 

Section
3.13 Access Easement.

  The Developer hereby reserves, and
each Owner hereby grants, to the ARC, the CAB, and the Person who
then has the authority to appoint the ARC, as provided in
Section 3.1 of these Covenants, including the agents,
employees and contractors of each such Person (including the ARC),
on, over, under and across the Units and each of them, excluding
any habitable structure and the interior of any residence thereon,
easements for performing any of the actions contemplated in the
Governing Documents, including inspections pursuant to the first
sentence of Section 3.9
of these Covenants and including
enforcement of each of the terms and provisions of the Governing
Documents. If damage is inflicted on any property or Unit, or a
strong likelihood exists that damage will be inflicted, then the
Person responsible for the damage or expense to avoid damage is
liable for the cost of prompt repair. The term “Person”
in the preceding sentence includes the ARC and the Person who then
has the authority to appoint the ARC, as provided in
Section 3.1 of these Covenants, if they are responsible for
such damage or expense to avoid damage. Further, the rights and
easements granted in this Section may be exercised only during
reasonable hours after reasonable notice to the Owner(s) or
occupant(s) of any affected Unit; except that no such notice is
required in connection with any exterior, non-intrusive inspections
and maintenance; and except that, in emergency situations, entry
upon a Unit may be made at any time, provided that the Owner(s) or
occupant(s) of each affected Unit is given notice of the emergency
entry as early as is reasonably possible. The interior of any
residence is not subject to the easements provided for in this
Section.

 

Section
3.14 No Liability.

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

 

Section
3.15 Variance.

  The ARC may grant reasonable variances
or adjustments from any conditions and restrictions imposed
by Error!
Reference source not found. of
these Covenants, or by the Guidelines, in order to overcome
practical difficulties or prevent unnecessary hardships arising by
reason of the application of any such conditions and restrictions.
Such variances or adjustments may be granted only in case the
granting thereof is not materially detrimental or injurious to the
other property or improvements in the neighborhood, and does not
militate against the general intent and purpose hereof. However,
any variance that may be granted under this Section is only a
variance from the requirements of the applicable Governing Document
for the individual applicant or Unit, and is not a variance from
the requirements of any applicable governmental or
quasi-governmental agency or entity. No granting of a variance or
adjustment to any one applicant/Owner constitutes a variance or
adjustment, or the right to a variance or adjustment, to any or all
other applicants, Owners or Units.

 

 

 

118

 

 

Section
3.16 Waivers; No Precedent.

  The
approval or consent of the ARC, or any representative or committee
thereof, to any application for approval does not constitute a
waiver of any right to withhold or deny approval or consent by such
Person, or any Person, as to any application or other matters
whatsoever, as to which approval or consent may subsequently or
additionally be required. Nor does any such approval or consent
constitute a precedent as to any other matter.

 

Section
3.17 Developer and Builder
Exemption.

 

3.17.1                      The
Developer is exempt from this Article and all provisions of the
Governing Documents that require ARC review or approval, except for
the requirement to obtain approval from all governmental entities
with jurisdiction thereover (as provided in subsection 0 of these
Covenants.

 

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

 

ARTICLE
4 

RESTRICTIONS

 

Section
4.1 General.

  The Property is subject to all
covenants, conditions, restrictions, requirements, easements,
licenses, and other provisions of all documents recorded in the
office of the Clerk and Recorder of the County, as amended,
including those stated on the recorded plats of the Property, or
any portion thereof, but only as and to the extent provided in such
documents. In addition, the Developer declares that, subject
to Section 6.4
hereof, all of the Units shall be held
and shall henceforth be sold, conveyed, used, improved, occupied,
owned, resided upon and hypothecated, subject to the following
provisions, conditions, limitations, restrictions, agreements and
covenants, as well as those contained elsewhere in these
Covenants.

 

Section
4.2 Compliance with Law.

  All
Owners, and all other Persons, who reside upon or use any Unit or
any other portion of the Property, shall comply with all applicable
statutes, ordinances, laws, regulations, rules and requirements of
all governmental and quasi-governmental entities, agencies and
authorities, but neither the Developer, the ARC nor the Sky Ranch
Districts nor CAB has any obligation to enforce compliance with the
statutes, ordinances, laws, regulations, rules and requirements of
any other governmental or quasi-governmental entities, agencies or
authorities.

 

Section
4.3 Residential Use; Professional or Home
Occupation.

  Units
that consist of platted single-family lots may be used for
residential use only, including uses which are customarily incident
thereto, and may not be used at any time for business, commercial
or professional purposes except that Owners may conduct home
occupations and business activities within their residences to the
extent permitted by, and in compliance with, the ordinances of the
County (as applicable) and any Guidelines and CCR Rules and
Regulations that do not conflict with such ordinances.

 

 

 

119

 

 

 

Section 4.4 Animals.

  No
animals, livestock (pigs, cattle, horses, goats, lamas, etc.),
birds, poultry, reptiles or insects of any kind may be raised,
bred, kept or boarded in or on the Units except as permitted by,
and in compliance with, the ordinances of the County, as
applicable, and any Guidelines and/or the CCR Rules and Regulations
that do not conflict with such the ordinances of the County, as
applicable. An Owner’s right to keep household pets is
coupled with the responsibility for collecting and properly
disposing of any animal waste and to pay for all damage caused by
such pets.

 

Section
4.5 Temporary Structures; Unsightly
Conditions.

  Except
as hereinafter provided, no structure of a temporary character,
including a house trailer, tent, shack, storage shed, or
outbuilding shall be placed or erected upon any Unit; provided,
however, that during the actual construction, alteration, repair or
remodeling of a structure or other Improvements, necessary
temporary structures, offices and trailers for construction,
marketing, sales or storage of materials may be erected and
maintained by the Person doing such work. The work of constructing,
altering or remodeling any structure or other Improvements must be
prosecuted diligently from the commencement thereof until the
completion thereof. Further, no unsightly conditions, structures,
facilities, equipment or objects, may be so located on any Unit as
to be visible from a street or from any other Unit.

 

Section
4.6 Miscellaneous Improvements.

 

4.6.1                      No
advertising or signs of any character other than political signs,
may be erected, placed, permitted, or maintained on any Unit other
than a name plate of the occupant and a street number, and except
for a “For
Sale,” “Open
House,” “For
Rent,” or security sign of not more than five (5)
square feet in the aggregate; except that signs advertising garage
sales, block parties, or similar community events, may be permitted
if the same are in accordance with the Guidelines and applicable
laws or have been submitted to the ARC for review and written
approval (which may be with conditions and/or requirements), prior
to posting of such signs. Notwithstanding the foregoing, any signs,
billboards or other advertising may be placed by the Developer or
by any Builder (with the prior, written approval of the Developer
if located on Developer owned property), without regard to the
foregoing or any limitations, requirements, specifications or other
provisions of the Governing Documents, the ARC, or the Sky Ranch
Districts or CAB, and without any approval of the foregoing (except
as stated earlier in this sentence).

 

4.6.2                      No
wood piles or storage areas, may be so located on any Unit as to be
visible from a street or from the ground level of any other
Unit.

 

4.6.3                      No
types of refrigerating, cooling or heating apparatus are permitted
on a roof, except as permitted by law, and then only with the
prior, written approval of the ARC. Further, no such apparatus is
permitted elsewhere on a Unit, other than on the ground, except
when appropriately screened and approved in writing by the
ARC.

 

4.6.4                      No
exterior radio antenna, television antenna, or other antenna,
satellite dish, or audio or visual reception device of any type may
be placed, erected or maintained on any Unit, except inside a
residence or otherwise concealed from view; provided, however, that
any such devices may be erected or installed by the Developer or by
any Builder during its sales or construction upon the Units; and
provided further, however, that the requirements of this subsection
do not apply to those “antenna” (including certain
satellite dishes) which are specifically covered by the
Telecommunications Act of 1996 and/or applicable regulations, as
amended. As to “antenna” (including certain
satellite dishes) which are specifically covered by the
Telecommunications Act of 1996 and/or applicable regulations, as
amended, the ARC is empowered to adopt CCR Rules and Regulations
governing the types of “antenna” (including certain
satellite dishes) that are permissible hereunder and, to the extent
permitted by the Telecommunications Act of 1996 and/or applicable
regulations, as amended, establish reasonable, non-discriminatory
restrictions relating to appearance, safety, location, maintenance,
and other matters.

 

 

 

120

 

 

4.6.5                      No
fences, other than fences constructed or installed by the Developer
or a Builder (with the prior, written approval of the Developer),
are permitted, except with the prior, written approval (which may
be with conditions and/or requirements) of the ARC. Any fence(s)
constructed on a Unit shall be maintained, repaired and replaced by
the Owners of that Unit.

 

4.6.6                      The
ARC may not effectively prohibit renewable energy generation
devices or the installation or use of any energy efficient
measures, provided that the ARC may adopt reasonable aesthetic
rules and regulations concerning dimensions, placement or external
appearance of such devices or measures to the extent such rules and
regulations do not conflict with or violate applicable
laws.

 

Section
4.7 Vehicular Parking, Storage and
Repairs.

 

4.7.1                      Subject
to the Guidelines and/or the CCR Rules and Regulations (as
hereinafter defined), the garage area and driveway of each Unit
should first be fully used for the parking of vehicles before any
street parking is done. However, notwithstanding the foregoing,
street parking is not restricted by this Section.

 

4.7.2                      Commercial
vehicles, vehicles with commercial writing on their exteriors,
vehicles primarily used or designed for commercial purposes,
tractors, mobile homes, recreational vehicles, trailers (either
with or without wheels), campers, camper trailers, boats and other
watercraft, recreational vehicles, golf carts and boat trailers,
may only be parked in enclosed garages or specific areas, if any,
which may be designated by ARC. This restriction, however, does not
restrict trucks or commercial vehicles which are necessary for
construction or for the maintenance of any portion of the Property,
or any Improvements located thereon, and such restriction does not
prohibit vehicles that may be otherwise parked as a temporary
expedient for loading, delivery or emergency, or emergency service
vehicles. Stored vehicles and vehicles which are inoperable or do
not have current operating licenses are not be permitted on the
Property except within enclosed garages. For purposes of this
Section, the ARC may determine whether a vehicle is considered
“stored”. For
example, a vehicle may be considered to be “stored” if it is up on blocks or
covered with a tarpaulin and remains on blocks or so covered for
seventy-two (72) consecutive hours without the prior approval
(which may be with conditions and/or requirements) of the
ARC.

 

4.7.3                      No
activity, including maintenance, repair, rebuilding, dismantling,
repainting or servicing of any kind of vehicles, trailers or boats,
may be performed or conducted in the Property unless it is done
within completely enclosed structure(s) which screen the sight and
sound of the activity from the street and from adjoining property.
Any Owner or other Person undertaking any such activities will be
solely responsible for, and assumes all risks of, such activities,
including adoption and utilization of any and all necessary safety
measures, precautions and ventilation. However, the foregoing
restrictions do not prevent washing and polishing of any motor
vehicle, boat, trailer, motor-driven cycle, or other vehicle on a
Unit, together with those activities normally incident and
necessary to such washing and polishing.

 

 

 

121

 

 

4.7.4                      In
the event the ARC determines that a vehicle is parked or stored in
violation of subsections 0 or 0 hereof, then the ARC shall deliver
a written notice describing said vehicle to the owner thereof (if
such owner can be reasonably ascertained) or conspicuously place
such notice upon the vehicle (if the owner thereof cannot be
reasonably ascertained), and if the vehicle is not removed within a
reasonable time thereafter, as determined by the ARC, then the ARC
may have the vehicle removed at the sole expense of the owner
thereof.

 

4.7.5                      DEVELOPER,
EACH BUILDER, THE SKY RANCH DISTRICTS AND CAB, AND THE ARC, HEREBY
DISCLAIM ANY AND ALL OBLIGATIONS REGARDING, RELATING TO OR ARISING
OUT OF, THE PERFORMANCE OF ANY MAINTENANCE, SERVICING, REBUILDING,
REPAIR, DISMANTLING, OR REPAINTING OF ANY TYPE OF VEHICLE, BOAT,
TRAILER, MACHINE OR DEVICE OF ANY KIND, BY ANY OWNER OR OTHER
PERSON.

 

Section
4.8 Nuisances.

  No
nuisance is permitted which is visible within or otherwise affects
any portion of the Property, nor any use, activity or practice
which interferes with the peaceful enjoyment or possession and
proper use of any Unit, or any portion thereof, by its residents.
As used herein, the term “nuisance” includes each
violation of the Governing Documents.

 

Section
4.9 No Hazardous Activities; No Hazardous Materials
or Chemicals.

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

 

Section
4.10 No Annoying Lights, Sounds.

  No
light shall be emitted from any Unit which is unreasonably bright
or causes unreasonable glare and no sound shall be emitted from any
Unit which is unreasonably loud or annoying.

 

Section
4.11 Restrictions on Trash and
Materials.

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

 

 

 

122

 

 

Section
4.12 Trash Removal Services and
Recycling.

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

 

Section
4.13 Units to be Maintained.

  Subject to Section 4.5 hereof, each Unit (including adjacent tree lawn
areas) shall at all times be maintained, repaired and replaced in a
good, clean and sightly condition by the Owners of such
Unit.

 

Section
4.14 Leases.

  The term “lease,” as used herein, includes any agreement
for the leasing or rental of a Unit, or any portion thereof, and
shall specifically include month-to-month rentals and subleases.
Any Owner has the right to lease his Unit, or any portion thereof,
as long as all leases provide that the terms of the lease and
lessee’s occupancy of the leased premises are subject in all
respects to the Governing Documents; and that any failure by the
lessee to comply with any of the aforesaid documents, in any
respect, constitutes a default under the lease.

 

Section
4.15 Landscaping.

  Within the time frames as hereinafter
provided, subject to applicable “force
majeure” delays as
determined by the ARC, the Owner of each Unit (other than Developer
or a Builder) shall install landscaping on all portions of the Unit
which is not covered by a building or Improvement, as well as on
the tree lawn areas adjacent to such Unit in accordance with the
Governing Documents and the requirements of the applicable
governmental entity having jurisdiction. The Owner of each Unit
(other than Developer or a Builder) shall install landscaping on
such Unit, and on adjacent tree lawn areas, within the time period
set forth in the Guidelines or, if not set forth in the guidelines,
then one hundred (180) days after acquisition of such Unit by such
Owner, if said acquisition occurs between April 1 and July 31, or;
by the following July 31 if such acquisition does not occur between
such dates, then such Owner shall install such landscaping.
Landscaping plans must be submitted to the ARC for review and
approval (which may be with conditions and/or requirements), and
such approval must be obtained prior to the installation of
landscaping, in accordance with Article 3 of
these Covenants. Each Owner shall maintain all landscaping on such
Owner’s Unit, and on adjacent tree lawn areas, in a neat and
attractive condition, including periodic and horticulturally
correct pruning, removal of weeds and debris, and replacement of
landscaping.

 

 

 

123

 

 

Section
4.16 Grade and Drainage; Irrigation Recommendations;
Drainage Easement; Maintenance of Surface Drainage Improvements and
Underdrains.

 

4.16.1                      Each
Owner shall maintain the grading upon his Unit, and grading around
the building foundation, at the slope and pitch fixed by the final
grading thereof, so as to maintain the established drainage. Each
Owner agrees that he will not in any way interfere with the
established drainage pattern over his Unit. In the event that it is
necessary or desirable to change the established drainage over any
Unit, then the Owner thereof shall submit a plan to the ARC for
review and approval (which may be with conditions and/or
requirements), in accordance with Article 3 of these Covenants, and
any such change shall also be made in accordance with all laws,
regulations, requirements and resolutions of all applicable
governmental entities. For purposes of this Section,
“established
drainage” is defined as the drainage which exists at
the time final grading of a Unit by the Developer, or by a Builder,
is completed.

4.16.2                      The
Owner of a Unit should not plant flower beds (especially annuals),
vegetable gardens and other landscaping which requires regular
watering, within five (5) feet of the foundation of the dwelling
unit or any slab on the Unit. If evergreen shrubbery is located
within five (5) feet of any foundation wall or slab, then the Owner
of the Unit should water such shrubbery by “controlled hand-watering,” and
should avoid excessive watering. Further, piping and heads for
sprinkler systems should not be installed within five (5) feet of
foundation walls and slabs.

 

4.16.3                      Developer
reserves to itself and to the Sky Ranch Districts and CAB the right
to enter in and upon each rear, front and side yard drainage
easements of record, at any time, to construct, repair, replace or
change drainage pipes, structures or drainage ways, or to perform
such grading, drainage or corrective work as Developer or the Sky
Ranch Districts or CAB may determine.

 

ARTICLE
5

ALTERNATIVE DISPUTE
RESOLUTION

 

Section
5.1 Intent of Article; Applicability of Article;
and Applicability of Statutes of Limitation.

 

5.1.1                      Each
Bound Party (as defined below) agrees to encourage the amicable
resolution of disputes, without the emotional and financial costs
of litigation. Accordingly, each Bound Party covenants and agrees
to submit any Claims (as defined below) to the procedures set forth
in Section 4.6 hereof.

 

5.1.2                      By
acceptance of a deed for a Unit, each Owner agrees to abide by the
terms of this Article.

 

5.1.3                      Any
applicable statute of limitation applies to the alternative dispute
resolution procedures set forth in this Article.

 

Section
5.2 Definitions Applicable to this
Article.

 

  For
purposes of this Article only, the following terms have the
meanings set forth in this Section:

 

 

 

124

 

 

5.2.1                      “Bound
Party” means each of the following: the Developer,
each Builder, each contractor, subcontractor, supplier, and
laborer, the Sky Ranch Districts or CAB, to the extent permitted by
law, and their respective directors, officers, members, partners,
employees and agents; the ARC and the committees and
representatives appointed by the ARC, and each of their respective
members and agents; all Persons subject to these Covenants; and any
Person who is not otherwise subject to these Covenants, but who
agrees to submit to this Article. Notwithstanding the foregoing,
“Bound Party”
does not include any of the Persons identified in this Section, if
such Persons have jointly entered into a separate written agreement
providing for dispute resolution applicable to the Claim; in such
circumstance, the dispute resolution mechanism set forth in such
separate written agreement between such Persons will apply with
respect to such Claim, unless such Persons mutually agree to submit
such Claim to the provisions of this Article.

 

5.2.2                      “Claimant”
means any Bound Party having a Claim.

 

5.2.3                      “Claim”
means, except as exempted by the terms of this Article, any claim,
grievance or dispute between one Bound Party and another,
regardless of how the same may have arisen or on what it might be
based, including those arising out of or related to (i) the
interpretation, application or enforcement of any of the Governing
Documents or the rights, obligations or duties of any Bound Party
under any of the Governing Documents; and/or (ii) any statements,
representations, promises, warranties, or other communications made
by or on behalf of any Bound Party.

 

5.2.4                      “JAG”
means the Judicial Arbiter Group or any other Person agreed to by
the Claimant and Respondent in writing for the purpose of
performing the functions of the Judicial Arbiter Group under these
Covenants.

 

5.2.5                      “Notice”
means the written notification given by a Claimant to a Respondent
which complies with subsection 0 of these Covenants.

 

5.2.6                      “Party”
means the Claimant and the Respondent individually;
“Parties” means
the Claimant and the Respondent collectively.

 

5.2.7                      “Respondent”
means any Bound Party against whom a Claimant asserts a
Claim.

 

5.2.8                      “Termination
of Mediation” means a period of time expiring thirty
(30) days after submission of the matter to mediation (or within
such other time as determined by the mediator or otherwise agreed
to by the Parties) and upon the expiration of which the Parties
have not settled the applicable Claim.

 

5.2.9                      “Termination
of Negotiations” means a period of time expiring
thirty (30) days after the date of the Notice (or such other period
of time as may be agreed upon by the Parties) and upon the
expiration of which the Parties have not resolved a
Claim.

 

 

 

125

 

 

Section
5.3 Commencement or Pursuit of Claim Against Bound
Party.

 

5.3.1                      A
Bound Party may not commence or pursue a Claim against any other
Bound Party except in compliance with this Article.

 

5.3.2                      Prior
to any Bound Party commencing any proceeding against another Bound
Party, the Respondent has the right to be heard by the Claimant,
and to access, inspect, correct the condition of, or redesign, any
portion of any Improvement as to which a defect is alleged or
otherwise correct the alleged dispute.

 

Section
5.4 Claims.

 

  Unless specifically exempted below,
all Claims between any of the Bound Parties are subject to the
provisions of Section
5.6 hereof. Notwithstanding the
foregoing, unless all Parties thereto otherwise agree, the
following shall not be Claims and shall not be subject to the
provisions of Section
5.6 hereof:

 

5.4.1                      any
action by the ARC, the governing board of the Sky Ranch Districts
or CAB, or the Developer, to enforce these Covenants, or any
provision(s) of the Guidelines or the CCR Rules and Regulations (as
hereinafter defined), including obtaining a temporary restraining
order or injunction (or equivalent emergency equitable relief), and
such other ancillary relief as a court may deem
necessary;

 

5.4.2                      any
suit between or among Owners, which does not include Developer,
Builder, the Sky Ranch Districts or CAB, or the governing board of
the Sky Ranch Districts or CAB as a Party, if such suit asserts a
Claim which would constitute a cause of action independent of the
Governing Documents; and

 

5.4.3                      any
suit in which any indispensable party is not a Bound
Party.

 

Section
5.5 Mandatory Procedures.

5.5.1                      Notice.
Prior to proceeding with any Claim against a Respondent, each
Claimant shall give a Notice to each Respondent, which Notice must
state plainly and concisely:

 

(a) the nature of the
Claim, including all Persons involved and Respondent’s role
in the Claim;

 

(b) the legal basis of
the Claim (i.e., the specific authority out of which the Claim
arises);

 

(c) the proposed
remedy; and

 

(d) the fact that
Claimant will give the Respondent an opportunity to inspect all
property and Improvements potentially involved with the Claim, and
that Claimant will meet with Respondent not sooner than thirty (30)
days after such inspection to discuss in good faith ways to resolve
the Claim.

 

 

126

 

 

 

5.5.2                       

Negotiation and Mediation.

 

(a) The Parties shall
make every reasonable effort to meet in person and confer for the
purpose of resolving the Claim by good faith negotiation. If
requested in the Notice, the governing board of the Sky Ranch
Districts or CAB may appoint a representative to assist the Parties
in negotiation.

 

(b) Upon a Termination
of Negotiations, Claimant shall have thirty (30) days to submit the
Claim to mediation under the auspices of JAG (or such other
reputable arbitration service as acceptable to the parties) in
accordance with the rules of JAG (or the rules of such other
reputable arbitration service as acceptable to the parties) in
effect on the date of the Notice that is provided for in subsection
0 of these Covenants.

 

(c) If Claimant does
not submit the Claim to mediation within such time, or does not
appear for the mediation, Claimant shall be deemed to have waived
the Claim, and Respondent shall be released and discharged from any
and all liability to Claimant on account of such Claim; provided,
nothing herein shall release or discharge Respondent from any
liability to any Person other than the Claimant.

 

(d) Any settlement of
the Claim through mediation shall be documented in writing by the
mediator and signed by the Parties. If a Termination of Mediation
occurs, the mediator shall issue a notice of Termination of
Mediation. The Termination of Mediation notice must state that the
Parties are at an impasse and the date that mediation was
terminated.

 

(e) Each Party shall
bear its own costs of the mediation, including attorneys’
fees, and each Party shall share equally all charges rendered by
the mediator.

(f) If the Parties
agree to a resolution of any Claim through negotiation or mediation
in accordance with subsection 0 and any Party thereafter fails to
abide by the terms of such agreement, then any other Party may file
suit or initiate arbitration proceedings to enforce such agreement
without the need to again comply with the procedures set forth in
Section 5.5 hereof. In such event, the Party taking action to
enforce the agreement is entitled to recover from the non-complying
Party (or if more than one non-complying Party, from all such
Parties pro rata) all costs incurred in enforcing such agreement,
including attorneys’ fees and court costs.

 

 

 

127

 

 

 

Section
5.6 Final, Binding Arbitration.

 

5.6.1                      Upon
termination of mediation, if Claimant desires to pursue the Claim,
Claimant shall thereafter be entitled to initiate final, binding
arbitration of the Claim under the auspices of JAG, in accordance
with the then-current rules of JAG in effect as of the date of the
Notice provided in accordance in subsection 0 of these Covenants
(or such other reputable arbitration service and its rules as
acceptable to the parties). Any judgment upon the award rendered by
the arbitrator may be entered in and enforced by any court having
jurisdiction over such Claim. Unless otherwise mutually agreed to
by the Parties, there will be one arbitrator who must have
expertise in the area(s) of dispute, which may include legal
expertise if legal issues are involved.

 

5.6.2                      Each
Party shall bear its own costs and expenses, and an equal share of
the arbitrator’s and administrative fees of arbitration.
Notwithstanding the foregoing, if a Party unsuccessfully contests
the validity or scope of arbitration in a court of law, reasonable
attorneys’ fees and expenses incurred in defending such
contests, including those incurred in trial and on appeal, shall be
awarded to the non-contesting Party. All decisions respecting the
arbitrability of any Claim shall be decided by the
arbitrator.

 

5.6.3                      The
award of the arbitrator shall be accompanied by detailed written
findings of fact and conclusions of law. Except as may be required
by law or for confirmation of an award, neither a Party nor an
arbitrator may disclose the existence, content, or results of any
arbitration without the prior written consent of all
Parties.

 

ARTICLE 6

GENERAL PROVISIONS

 

Section
6.1 Rules and Regulations.

  Any rules and regulations, if any,
concerning and governing the Property, may
be promulgated, adopted, enacted, modified, amended, repealed, and
re-enacted by the governing board of the Sky Ranch Districts or CAB
(“CCR Rules and
Regulations”) and such
actions shall not be construed as an amendment to these Covenants
requiring processing under Section 6.6,
hereof. The CCR Rules and Regulations, if any, may state procedural
requirements, interpretations, clarifications and applications of
any provision(s) of these Covenants or the Guidelines and law, and
may include blanket requirements, blanket interpretations, and
blanket applications. The governing board of the Sky Ranch
Districts or CAB has the authority to adopt or vary one or more CCR
Rules and Regulations that are different for different types of
Units, if any. Any CCR Rules and Regulations, if any, that are
adopted must be in accordance with, and must not be inconsistent
with or contrary to, these Covenants.

 

Section
6.2 Enforcement.

 

6.2.1                      Enforcement
of the covenants, conditions, restrictions, easements,
reservations, rights-of-way, liens, charges and other provisions
contained in these Covenants, as amended, may be by any proceeding
at law or in equity against any Person(s) violating or attempting
to violate any such provision, and possible remedies include all of
those available at law or in equity, but Claims subject to Article
5 will be subject to the alternative dispute resolution procedures
set forth in Article 5. The Developer, the Sky Ranch Districts or
CAB, ARC and any aggrieved Owner, has the right, but not the duty,
to institute, maintain and prosecute any such proceedings. No
remedy is exclusive of other remedies that may be available. Except
as otherwise provided in Article 5 of these Covenants, in any
action instituted or maintained under these Covenants or any other
such documents, the prevailing party shall be awarded its costs and
attorney fees incurred in asserting or defending the claim, as well
as any and all other sums; except that, any Person who brings an
action against the Developer, any Builder, the Sky Ranch Districts
or CAB, or the ARC, regarding enforcement, or non-enforcement, of
any provision(s) of the Governing Documents, shall not be awarded
their costs or any attorney fees. Failure by the Developer, the Sky
Ranch Districts or CAB, the ARC or any Owner, to enforce any
covenant, restriction or other provision contained in these
Covenants, shall in no event give rise to any liability, nor shall
such non-enforcement be deemed a waiver of the right to thereafter
enforce any covenant, restriction or other provision of these
Covenants, regardless of the number of violations or breaches that
may occur.

 

 

128

 

 

6.2.2                      The
foregoing includes the right of the Sky Ranch Districts or CAB, to
send demand letters and notices, to charge interest and/or late
charges, to levy and collect fines, to impose liens (as provided in
C.R.S. Section 32-1-1001(j)(1), as amended), to negotiate, settle
and/or take any other actions, with respect to any violation(s), or
alleged violation(s), of any of the Governing
Documents.

 

Section
6.3 Severability.

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

 

Section
6.4 Rights and Easements of Developer and
Builders.

 Notwithstanding
anything to the contrary contained in the Governing Documents, it
is expressly permissible and proper for Developer and each Builder,
and their respective employees, agents, and contractors, to perform
all activities, and maintain Improvements, tools, equipment, and
facilities, on the portion of the Property owned by them and also
on public property, incidental to development, construction, use,
rental, sale, occupancy, and/or advertising. The foregoing includes
locating, maintaining and relocating management offices,
construction offices, signs, model units and sales offices, in such
numbers, of such sizes, and at such locations on the portion of the
Property owned by them and also on public property, as determined
by the Developer or applicable Builder. In addition, nothing
contained in these Covenants limits the rights of Developer, or
require the Developer, to obtain approvals:

 

 

6.4.1                      to
excavate, cut, fill or grade any property (with the consent of the
Owner thereof), or to construct, alter, demolish or replace any
Improvements;

 

6.4.2                      to
use any Improvements on any property (with the consent of the Owner
thereof) as a construction, management, model home or sales or
leasing office, in connection with the development, construction or
sale of any property; and/or

 

6.4.3                      to
seek or obtain any approvals under these Covenants for any such
activity.

 

Section
6.5 Conflict of Provisions.

  In
the case of any conflict between any of the Governing Documents,
these Covenants control.

 

Section
6.6 Duration, Revocation and
Amendment.

 

 

6.6.1                      Each
and every provision of these Covenants run with and bind the
Property perpetually from the date of recording of these Covenants.
Subject to subsection 0 of these Covenants, these Covenants may be
amended, supplemented and/or terminated, by the affirmative vote or
agreement of the Owners of sixty-seven percent (67%) of the Units,
but the Sky Ranch Districts or CAB shall not be required to comply
with or enforce any Owner-adopted amendments, supplements or
termination, until such time as the governing board of the Sky
Ranch Districts or CAB receives a recorded copy of such amendment,
supplement and/or termination.

 

 

129

 

 

6.6.2                      Until
all of the Units have been conveyed to the first Owners thereof
other than the Developer or a Builder, no amendment, supplement or
termination of these Covenants shall be effective, without the
prior written approval of the Developer, which may be with
conditions and/or requirements. This subsection 0 will remain in
effect until conveyance of all the Units to the first Owners
thereof, other than the Developer or any Builder.

6.6.3                      These
Covenants may be amended, in whole or in part, by the Developer
without the consent or approval of any other Owner, the Sky Ranch
Districts or CAB, or any other Person, in order to comply with the
requirements, standards, or guidelines of any recognized secondary
mortgage markets, including the department of housing and urban
development, the federal housing administration, the veterans
administration, the federal home loan mortgage corporation, the
government national mortgage association, and the federal national
mortgage association. This subsection 0 will remain in effect until
conveyance of all the Units to the first Owners thereof, other than
the Developer or any Builder.

 

6.6.4                      These
Covenants may be amended, in whole or in part, by the Developer
without the consent or approval of any other Owner, any Builder,
the Sky Ranch Districts or CAB, or any other Person, in order to
correct any clerical, typographical, technical or other errors in
these Covenants and/or to clarify any provision(s) of these
Covenants. This subsection 0 will remain in effect until conveyance
of all the Units to the first Owners thereof, other than the
Developer or any Builder.

 

6.6.5                      Each
Amendment to this Declaration enacted by the vote or agreement of
Owners of Units shall be applicable only to disputes, issues,
controversies, circumstances, events, claims or causes of action
that arose out of acts, omissions, events or other circumstances
that occurred after the date of recording of such amendment in the
real property records of the County, and no such amendment shall be
applied retroactively (i) to any disputes, issues, controversies,
circumstances, events, claims or causes of action that arose out of
acts, omissions, events or other circumstances that occurred before
the date of recording of such amendment in the County, or (ii) to
impair the rights or obligations of any Person, including
Developer, as originally set forth in these Covenants. This
subsection 0 may not be amended without the written consent of the
Developer.

 

Section
6.7 Minor Violations of Setback
Restrictions.

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

 

 

 

130

 

 

Section
6.8 Subdivision or Replatting of
Units.

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

 

Section
6.9 Annexation.

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

 

Section
6.10 Withdrawal.

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

 

Section
6.11 Notices.

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

 

Section
6.12 Limitation on Liability.

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

 

 

 

131

 

 

Section
6.13 No Representations, Guaranties or
Warranties.

  Neither Developer, any Builder, the
Sky Ranch Districts or CAB, the ARC, nor their respective officers,
directors, shareholders, members, partners, agents or employees,
have given or made any representations, guaranties or warranties of
any kind, express or implied in connection with any portion of the
Property, or any Improvement, its physical condition, structural
integrity, freedom from defects, zoning, compliance with applicable
laws, fitness for intended use, or view, or in connection with the
subdivision, sale, operation, maintenance, cost of maintenance,
taxes or regulation thereof, unless and except as specifically set
forth in writing. The release and waiver set forth in
Section 6.16 (Waiver) applies to this
Section.

 

Section
6.14 Disclaimer Regarding
Safety.

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

 

Section
6.15 Development Within and Surrounding the
Property.

 Each Owner acknowledges that development
within and surrounding the Property may continue for an indefinite
period, and that plans for the density, type and location of
improvements, developments or land uses may change over time. Such
development may entail changes to or alterations in the access to
the Property, views of or from the Property or the Units,
surrounding land uses, open space or facilities, traffic volumes or
patterns, privacy or other aspects or amenities. Development also
may entail noise, odors, unsightliness, dust and other
inconveniences or disruptions. By accepting a deed to a Unit, each
Owner accepts title to such Unit subject to the foregoing, and
waives and releases any claim against the Developer, any Builders,
the Sky Ranch Districts and CAB, the ARC, and their respective
officers, directors, members, partners, agents and employees,
heirs, personal representatives, successors and assigns, arising
out of or associated with any of the foregoing. The release and
waiver set forth in Section
6.16 (Waiver) applies to this
Section.

 

Section
6.16 Waiver.

  By acceptance of a deed to a Unit,
each Owner hereby releases, waives, and discharges the Developer,
each Builder, the Sky Ranch Districts and CAB, the ARC, and their
respective officers, directors, members, partners, agents and
employees, heirs, personal representatives, successors and assigns,
from all losses, claims, liabilities, costs, expenses, and damages,
arising directly or indirectly from any hazards, disclosures or
risks set forth in these Covenants, including, but not limited to,
those contained in Section
6.12, Section 6.13, Section
6.14 and Section 6.15.

 

 

 

132

 

 

Section
6.17 Headings.

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

 

Section
6.18 Gender.

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

 

Section
6.19 Action.

  Any action that has been or may be
taken by the Developer, any Builder, the Sky Ranch Districts or
CAB, the ARC, or any other Person, may be taken
“at
any time, from time to time”. Each provision that authorizes, directs
or permits action shall be deemed to include such
language.

 

Section
6.20 Sole Discretion.

  All actions which are to be taken by,
or on behalf of, the Developer, any Builder, Sky Ranch Districts or
CAB, the governing body of the Sky Ranch Districts or CAB, the ARC,
or any other Person, will be considered to have been taken
“in
the sole discretion” of
such Person.

 

Section
6.21 Use of “Include,”
“Includes,” and
“Including”.

  All uses, in these Covenants, of the
words “include,” “includes,” and “including,” will be construed to include the words
“without
limitation” immediately
thereafter.

 

Section
6.22 Runs with the Land; Binding Upon
Successors.

  The benefits, burdens, and all other
provisions contained in these Covenants are covenants running with
and binding upon the Property and all Improvements which are now or
hereafter located on the Property. The benefits, burdens, and all
other provisions contained in these Covenants are binding upon, and
inure to the benefit of the Developer, the Builders and all Owners,
and upon and to their respective heirs, personal representatives,
successors and assigns; but, no Person becomes a
“Developer” or a “Builder” under these Covenants, except by written
assignment or designation, as more fully provided in
Section 1.2 or Section
1.4 of these Covenants,
respectively.

 

Section
6.23 Governmental Immunity.

  Nothing herein shall be construed as a waiver of
the rights and privileges of the Sky Ranch Districts and CAB
pursuant to the Colorado Governmental Immunity Act, §§
24-10-101, et seq., C.R.S., as amended from time to
time.

 

 

 

[SIGNATURE PAGE
FOLLOWS]

 

 

133

 

IN
WITNESS WHEREOF, the undersigned, being the Developer herein and
the Owner of the Property, has hereunto set its hand and seal this
___ day of ____________, 2017.

 

 

DEVELOPER:

 

PCY
Holdings, LLC,

a
Colorado limited liability company

 

 

By:                                                                           

Name:
___________________________________

Its:                                                                           

 

STATE OF
COLORADO

)

)
ss.

COUNTY
OF

)

 

The
foregoing instrument was acknowledged before me this ___ day of
____________, 2017, by  as  of PCY Holdings, LLC, a
Colorado limited liability company.

 

Witness
my hand and official seal.

 

{S E A
L}

Notary
Public

My
Commission expires: 

 

 

 

 

134

 

CONSENT
OF SKY RANCH COMMUNITY AUTHORITY BOARD

 

The
undersigned, Sky Ranch Community Authority Board, hereby consent to
the aforesaid Covenants, Conditions and Restrictions for Sky
Ranch.

 

IN
WITNESS WHEREOF, the undersigned has hereunto set its hand this ___
day of ____________, 2017.

 

 

SKY
RANCH COMMUNITY AUTHORITY BOARD

 

By:           

____________________________________President

 

STATE OF
COLORADO

)

)

ss.

COUNTY OF
________________________

)

 

The
foregoing instrument was acknowledged before me this ___ day of
____________, 2017 by _________________ as President of SKY RANCH
COMMUNITY AUTHORITY BOARD.

Witness
my hand and official seal.

 

(S E A
L)

______________________________

Notary
Public My Commission Expires:
____________________

 

 

135

 

EXHIBIT A

TO

COVENANTS,
CONDITIONS AND RESTRICTIONS

FOR
SKY RANCH

(Property)

 

 

 

 

136

 

COVENANTS,
CONDITIONS AND RESTRICTIONS

 

FOR
SKY RANCH

 

 

TABLE
OF CONTENTS

 

	

ARTICLE 1 GENERAL

	

2

	

Section
1.1

	

Planned
Community.

	

2

	

Section
1.2

	

Purposes
of Covenants.

	

3

	

Section
1.3

	

Declarations.

	

3

	

Section
1.4

	

CAB
Authority.

	

3

	

ARTICLE 2 DEFINITIONS

	

3

	

Section
2.1

	

ARC.

	

3

	

Section
2.2

	

Builder.

	

4

	

Section
2.3

	

CAB.

	

4

	

Section
2.4

	

Covenants.

	

4

	

Section
2.5

	

Developer.

	

4

	

Section
2.6

	

Governing
Documents.

	

4

	

Section
2.7

	

Improvements.

	

4

	

Section
2.8

	

Owner.

	

4

	

Section
2.9

	

Person.

	

4

	

Section
2.10

	

Property.

	

5

	

Section
2.11

	

Services.

	

5

	

Section
2.12

	

Sky
Ranch Districts.

	

5

	

Section
2.13

	

Unit.

	

5

	

ARTICLE 3 ARCHITECTURAL REVIEW

	

5

	

Section
3.1

	

Composition
of ARC.

	

5

	

Section
3.2

	

Delegation
of Some or All Architectural Authority.

	

5

	

Section
3.3

	

Architectural
Review Requirements; Authority of the ARC.

	

6

	

Section
3.4

	

Guidelines.

	

7

	

Section
3.5

	

Procedures.

	

7

	

Section
3.6

	

Vote.

	

7

	

Section
3.7

	

Prosecution
of Work After Approval.

	

7

	

Section
3.8

	

Notice
of Completion.

	

8

	

Section
3.9

	

Inspection
of Work.

	

8

	

Section
3.10

	

Notice
of Non-compliance

	

8

	

Section
3.11

	

Correction
of Non-compliance.

	

8

	

Section
3.12

	

Cooperation.

	

9

	

Section
3.13

	

Access
Easement.

	

9

	

Section
3.14

	

No
Liability.

	

9

	

Section
3.15

	

Variance.

	

10

	

Section
3.16

	

Waivers;
No Precedent.

	

10

	

Section
3.17

	

Developer
and Builder Exemption.

	

10

 

 

137

 

 

 

	

ARTICLE 4 RESTRICTIONS

	

10

	

Section
4.1

	

General.

	

10

	

Section
4.2

	

Compliance
with Law.

	

11

	

Section
4.3

	

Residential
Use; Professional or Home Occupation.

	

11

	

Section
4.4

	

Animals.

	

11

	

Section
4.5

	

Temporary
Structures; Unsightly Conditions.

	

11

	

Section
4.6

	

Miscellaneous
Improvements.

	

11

	

Section
4.7

	

Vehicular
Parking, Storage and Repairs.

	

12

	

Section
4.8

	

Nuisances.

	

13

	

Section
4.9

	

No
Hazardous Activities; No Hazardous Materials or
Chemicals.

	

14

	

Section
4.10

	

No
Annoying Lights, Sounds.

	

14

	

Section
4.11

	

Restrictions
on Trash and Materials.

	

14

	

Section
4.12

	

Trash
Removal Services and Recycling.

	

14

	

Section
4.13

	

Units
to be Maintained.

	

15

	

Section
4.14

	

Leases.

	

15

	

Section
4.15

	

Landscaping.

	

15

	

Section
4.16

	

Grade
and Drainage; Irrigation Recommendations; Drainage Easement;
Maintenance of Surface Drainage Improvements and
Underdrains.

	

15

	

ARTICLE 5 ALTERNATIVE DISPUTE RESOLUTION

	

16

	

Section
5.1

	

Intent
of Article; Applicability of Article; and Applicability of Statutes
of Limitation.

	

16

	

Section
5.2

	

Definitions
Applicable to this Article.

	

16

	

Section
5.3

	

Commencement
or Pursuit of Claim Against Bound Party.

	

17

	

Section
5.4

	

Claims.

	

17

	

Section
5.5

	

Mandatory
Procedures.

	

18

	

Section
5.6

	

Final,
Binding Arbitration.

	

19

	

ARTICLE 6 GENERAL PROVISIONS

	

20

	

Section
6.1

	

Rules
and Regulations.

	

20

	

Section
6.2

	

Enforcement.

	

20

	

Section
6.3

	

Severability.

	

21

	

Section
6.4

	

Rights
and Easements of Developer and Builders.

	

21

	

Section
6.5

	

Conflict
of Provisions.

	

21

	

Section
6.6

	

Duration,
Revocation and Amendment.

	

21

	

Section
6.7

	

Minor
Violations of Setback Restrictions.

	

22

	

Section
6.8

	

Subdivision
or Replatting of Units.

	

22

	

Section
6.9

	

Annexation.

	

23

	

Section
6.10

	

Withdrawal.

	

23

	

Section
6.11

	

Notices.

	

23

	

Section
6.12

	

Limitation
on Liability.

	

23

	

Section
6.13

	

No
Representations, Guaranties or Warranties.

	

23

	

Section
6.14

	

Disclaimer
Regarding Safety.

	

24

	

Section
6.15

	

Development
Within and Surrounding the Property.

	

24

	

Section
6.16

	

Waiver.

	

24

	

Section
6.17

	

Headings.

	

24

	

Section
6.18

	

Gender.

	

24

	

Section
6.19

	

Action.

	

25

	

Section
6.20

	

Sole
Discretion.

	

25

	

Section
6.21

	

Use
of “Include,” “Includes,” and
“Including”.

	

25

	

Section
6.22

	

Runs
with the Land; Binding Upon Successors.

	

25

	

Section
6.23

	

Governmental
Immunity.

	

25

 

 

 

138

DRAFT

October
30, 2017

 

DECLARATION
OF COVENANTS IMPOSING AND IMPLEMENTING

 

THE
SKY RANCH PUBLIC IMPROVEMENT FEE

 

 

THIS
DECLARATION OF COVENANTS IMPOSING AND IMPLEMENTING THE SKY RANCH
PUBLIC IMPROVEMENT FEE (this “PIF Covenant”) is made and
effective as of __________, 2017 by PCY Holdings, LLC, a
Colorado limited liability company (“Declarant”).

 

Recitals

 

This
PIF Covenant is made with respect to the following
facts:

 

A.  All terms
used herein shall have the meanings set forth in Section 1 hereof
unless the context otherwise requires.

 

B. Declarant owns
certain real property described on Exhibit A hereto, which Declarant is
currently operating or intends to develop as a residential and
commercial development to be known as the
_________________________________ (“Property”) located within
unincorporated Arapahoe County, Colorado. New public improvements
and services are needed to serve the Property and other properties
within the service area of the Sky Ranch Metropolitan District No.
5 or other quasi-municipal entity which may exist or be formed to
include the Property or a public improvement corporation
established for such purpose (the “District”).

 

C. The public
improvements that the District will construct, install or cause to
be constructed and installed, operated and maintained, include
those public improvements the costs of which may lawfully be paid
for by the District (the “Public Improvement Costs”),
including, without limitation, water services, safety protection
devices, sanitation services, street improvements, curbs, gutters,
culverts, drainage facilities, sidewalks, parking facilities,
paving, lighting, grading, railroad crossings, landscaping,
transportation services and storm and wastewater management
facilities and associated land acquisition and remediation (the
“Public
Improvements”).

 

D. The Public
Improvement Costs shall be paid, in part, through the imposition
of:

i.)           

a Retail Public
Improvement Fee on all PIF Sales equal to 2.75%. Subject to the
terms of this PIF Covenant, such Retail Public Improvement Fee
shall be required to be collected by all Retailers and then paid
over to the PIF Collection Agent on behalf of the District or the
Bond Trustee; and

 

ii.)           

a one-time Material
Sales and Use Public Improvement Fee imposed on Construction
Activities for the materials incorporated into the construction of
any newly constructed building, dwelling or structure within the
Property. The Material Sales and Use Public Improvement Fee shall
be equal to 2.75% of an amount equal to fifty percent (50%) of the
Construction Valuation Amount. Subject to the terms of this PIF
Covenant, such Material Sales and Use Public Improvement Fee shall
be required to be collected from all Persons constructing any new
building, dwelling or structure within the Property at the time a
building permit is obtained for such construction. The Material
Sales and Use Public Improvement Fee shall be paid over to the PIF
Collection Agent on behalf of the District or the Bond
Trustee.

 

 

 

139

 

 

The PIF
Collection Agent shall receive the Retail Public Improvement Fees
and the Material Sales and Use Public Improvement Fees and remit
the same to the Bond Trustee to pay for Bond Requirements and other
costs provided in the Public Financing Documents or if the Public
Financing Documents are not in place or do not require the full
amount of fees collected to be remitted to the Bond Trustee, to the
District.

 

E.           The
Declarant under this PIF Covenant owns fee title to all of the
Property, which is the property that is subject to this PIF
Covenant.

 

F.           The
Declarant intends to assign its declarant rights, as fee simple
owner of the

Property subject to
this PIF Covenant to the District in accordance with the terms and
conditions of this PIF Covenant and the District intends to assume
the declarant rights of the Declarant and to exercise all of the
rights and perform the obligations of the Declarant
hereunder.

 

G.           Subject
to and in accordance with the terms and provisions of this PIF
Covenant, Declarant now desires to impose the obligation to collect
and pay, and to provide for the implementation of the collection
and payment of, the Retail Public Improvement Fee and the Material
Sales and Use Public Improvement Fee.

 

Declaration

 

In
consideration of the facts set forth in the Recitals and for other
good and valuable consideration, the receipt and sufficiency of
which are acknowledged by Declarant, Declarant hereby declares as
follows:

 

1.           Defined
Terms. The following terms, when used in this PIF Covenant,
shall have the following meanings:

 

“Bond
Requirements” means principal, redemption or purchase price,
premium, if any, interest, reserves and other amounts required to
be paid with respect to the Bonds or other Public Financing
outstanding from time to time.

 

“Bonds”
means any of the bonds, notes, certificates, leases, loan
agreements or other financial obligations to be issued from time to
time by the District, the proceeds of which are used to pay Public
Improvement Costs or to pay the costs of any refunding or
refinancing of outstanding bonds, notes, certificates, leases, loan
agreements or other financial obligations issued by the
District.

 

“Bond
Trustee” means the trustee or fiduciary acting on behalf of
holders of the Bonds pursuant the Public Financing
Documents.

 

“Confidential
Information” has the meaning set forth in Section 6
hereof.

 

“Construction
Activities” means the use of building and construction
materials for incorporation into the construction of any new
building, dwelling or structure, in each case to the same extent
that such building and construction materials are included in the
Construction Valuation Amount as indicated on the application for a
County building permit. The Material Sales and Use Public
Improvement Fee shall apply to all Construction Activities within
the Property including, but not limited to, commercial, retail,
residential and industrial classified structures; provided,
however, “Construction Activities” shall not include
the use of building and construction materials in connection with
reconstruction, renovation, remodel or other improvement of
existing buildings or existing structures.

 

 

 

140

 

 

“Construction
Activities Guidelines” has the meaning set forth in Section
4(b) hereof.

 

“Construction
Valuation Amount” means the total cost or valuation of the
project giving rise to the applicable Construction Activity as
determined by the County and indicated as the project value for the
County building permit issued for the Construction
Activity.

 

“County”
means the County of Arapahoe, State of Colorado, or any government
with the jurisdiction to grant building permits for construction on
the Property.

 

“County
Clerk” means the County Clerk and Recorder of Arapahoe
County, Colorado.

 

“Declarant”
means PCY Holdings, LLC a Colorado limited liability company or its
successors or assigns.

 

“Default
Rate” means eighteen percent (18%) per annum, but if such
rate exceeds the maximum interest rate permitted by State law, such
rate shall be reduced to the highest rate allowed by State law
under the circumstances.

 

“Dissemination
Agent” means an agent of the District or the Bond Trustee
charged with disseminating information on a periodic basis to the
Public Financing Documents.

 

“District”
has the meaning set forth in Recital B., above.

 

“Enforcing
Party” has the meaning set forth in Section 8
hereof.

 

“Material
Sales and Use Public Improvement Fee” shall mean a one-time
fee assessed pursuant to and in accordance with this PIF Covenant
against all Construction Activities occurring on the Property. The
Material Sales and Use Public Improvement Fee shall be equal to
2.75% of an amount equal to fifty percent (50%) of the Construction
Valuation Amount. Subject to the terms of this PIF Covenant, such
Material Sales and Use Public Improvement Fee shall be required to
be collected from all Persons undertaking Construction Activities
at the time a building permit is obtained for such
construction.

 

“Occupant”
means any Person who has the legal right, pursuant to a deed,
lease, sublease, license, concession, easement or other occupancy
agreement of any type or nature, to possess or occupy any portion
of the PIF Property, including, without limitation, any space
within any building constructed on any PIF Property; provided that
a mortgagee, a trustee under or beneficiary of a deed of trust, or
any other Person who has such of right of possession primarily for
the purpose of securing a debt or other obligation owed to such
Person, shall not constitute an “Occupant” unless and
until such Person becomes an Owner or a mortgagee in possession or
otherwise possesses or occupies a portion of the PIF Property by an
intentional or voluntary act of its own, whereupon the subject
mortgagee, trustee, beneficiary or other Person shall be an
“Occupant” hereunder.

 

“Owned/Leased
Property” means, with respect to any Owner, the portion of
the PIF Property to which such Owner owns fee title and, with
respect to any Occupant, the portion of the PIF Property which such
Occupant has the right to possess or occupy pursuant to its lease,
sublease, license, concession or other occupancy
agreement.

 

 

 

141

 

 

“Owner”
means any Person who owns fee title to all or any portion of the
PIF Property.

 

“Person”
means any individual, partnership, corporation, limited liability
company, association, trust or other type of entity or
organization.

 

“PIF
Collection Agent” means the person or firm designated by the
District as responsible for monitoring, receiving and enforcing the
collection of Public Improvement Fee revenues pursuant to this PIF
Covenant.

 

“PIF
Covenant” means this PIF Covenant as it may be supplemented
or amended from time to time.

 

“PIF
Obligor(s)” means, with respect to the Retail Public
Improvement Fee, any Retailer or, with respect to the Material
Sales and Use Public Improvement Fee, any Person who engages in
Construction Activities, or hires another (e.g., a contractor) to
engage in Construction Activities, and is therefore obligated to
pay a Material Sales and Use Public Improvements Fee with regard to
such Construction Activities pursuant to the terms of this PIF
Covenant.

 

“PIF
Property” or “Property” means the real property
described on Exhibit A
hereto, provided that additional property may be made a part of the
PIF Property pursuant to the provisions of Section 13
hereof.

 

“PIF
Sales” shall mean and refer to any and all retail sales
transactions by any Retailer of services or tangible personal
property initiated, consummated, conducted, transacted or otherwise
occurring from or within any portion of the Property, which retail
sales transactions are, following the date of recording of this PIF
Covenant, subject to the Sales Tax, plus any and all retail sales
transactions by any Retailer of tangible personal property
initiated, consummated, conducted, transacted or otherwise
occurring from or within any portion of the Property which are from
time to time in the future subject to a retail Sales Tax but
excluding any retail sales transactions specified as exempt from
the definition of PIF Sales in the guidelines established by the
District from time to time pursuant to Section 4
hereof.

 

“PIF Sales
Guidelines” has the meaning set forth in Section 4(a)
hereof.

 

“Pledge”
means such assignment, conveyance, pledge, remittance or other
transfer as may be customary and necessary or appropriate to make
fully available for payment of the Bond Requirements any Public
Improvement Fee revenues.

 

“Public
Financing” means the sale of Bonds by the
District.

 

“Public
Financing Documents” means any documents executed or
delivered in connection with any Public Financing.

 

“Public
Improvements” has the meaning set forth in Recital C.
above.

 

“Public
Improvement Costs” has the meaning set forth in Recital C.
above.

 

 

 

142

 

 

“Public
Improvement Fee” as used in this PIF Covenant shall mean the
Retail Public Improvement Fee and the Material Sales and Use Public
Improvement Fee as may be applicable in the context of such
reference herein.

 

“Report
Recipients” has the meaning set forth in Section 6
hereof.

 

“Reports”
has the meaning set forth in Section 6 hereof.

 

“Retailer”
means any Occupant who is a seller or provider of goods or services
who engages in any PIF Sales initiated, consummated, conducted,
transacted or otherwise occurring from or within any portion of the
PIF Property.

 

“Retail
Public Improvement Fee” means a Public Improvement Fee
assessed pursuant to this PIF Covenant on all PIF Sales equal to
2.75%.

 

“Sales
Tax” means that tax levied by the State pursuant to the Sales
Tax Statutes.

 

“Sales Tax
Statutes” means Sections 39-26-101 et. seq., Colorado Revised
Statutes, and any regulations promulgated pursuant thereto, both as
amended from time to time.

 

“State”
means the State of Colorado.

 

2.
Assignment of Declarant
Rights. The Declarant, as owner of the Property does hereby
transfer, assign, convey and deliver to District any and all rights
and benefits reserved to the Declarant pursuant to this PIF
Covenant and District hereby assumes from the Property Owners any
and all rights and benefits reserved to the Declarant under this
PIF Covenant.

 

3. Assessment of Public Improvement
Fee. From and after the filing of this PIF
Covenant:

 

(a) every Retailer
shall collect the Retail Public Improvement Fee on each PIF Sale
and pay the same to the District or the PIF Collection Agent as
required by the Public Financing Documents or this PIF
Covenant;

 

(b) every Owner or
Occupant who leases or subleases any portion of its Owned/Leased
PIF Property to a Retailer, or who permits a Retailer to occupy any
portion of its Owned/Leased PIF Property by license, concession or
otherwise, shall require, pursuant to the lease, sublease, license,
concession or other occupancy agreement between such Owner or
Occupant and each Retailer by virtue of which such Retailer is
given the right to possess or occupy any portion of such
Owned/Leased PIF Property, that such Retailer collect in the Retail
Public Improvement Fee on each PIF Sale and pay the same to the
District or the PIF Collection Agent as required by the Public
Financing Documents or this PIF Covenant; and

 

(c) each Person who
intends to engage in Construction Activities will, prior to, or at
the time of issuance of a building permit for such Construction
Activities, pay the Material Sales and Use Public Improvements Fee
with respect to such Construction Activities to the District or the
PIF Collection Agent as set forth in the Construction Activities
Guidelines.

 

 

 

143

 

 

4. Guidelines.

 

(a)           

In accordance with
the definition of PIF Sales set forth in Section 1 above, the
District in its sole discretion may from time to time establish
uniform guidelines further clarifying or delineating which
transactions are included in the definition of “PIF
Sales” (“PIF Sales
Guidelines”) for purposes of calculating the Retail
Public Improvement Fee due hereunder, provided, however, that such
guidelines may not change the definition of PIF Sales or waive the
Retail Public Improvement Fee collection. Such guidelines shall be
delivered to all Retailers in writing (and for purposes of
determining the names and addresses of Retailers, any Owner will,
within ten (10) business days after receipt of a written request
therefor from the District, the Trustee or the PIF Collection
Agent, provide such requesting party with the name and address of
all Retailers that then occupy any PIF Property owned by such
Owner). Each Retailer shall be entitled to rely on such guidelines
for purposes of compliance with this PIF Covenant. In addition to
the Retail Public Improvement Fee, each Retailer shall be subject
to all sales and use taxes that may be imposed and otherwise not
waived or credited by any other applicable taxing
entity.

 

(b)           

In accordance with
the definition of Construction Activities set forth in Section 1
hereof, the District in its sole discretion (but subject to any
applicable terms of any Public Financing Documents) may from time
to time establish reporting forms (“MSU Reports”), instructions and
uniform guidelines for the calculation, collection and remittance
of revenues derived from imposition of the Material Sales and Use
Public Improvements Fee, and for further clarifying or delineating
which transactions are included in the definition of
“Construction Activities” (“Construction Activities
Guidelines”). The Construction Activities Guidelines
shall apply and be enforced in a uniform and consistent manner to
all of the PIF Property and each portion of the PIF Property. The
District or PIF Collection Agent shall make available the
Construction Activities Guidelines to all Owners, Occupants and PIF
Obligors. Each Owner, Occupant and PIF Obligor shall be entitled to
rely on the Construction Activities Guidelines for purposes of
compliance with this PIF Covenant. In addition to the Material
Sales and Use Public Improvements Fee, each Owner, Occupant and PIF
Obligor is subject to all use taxes that may be imposed and
otherwise not waived or credited by the State of Colorado or any
other applicable taxing entity.

 

 

 

144

 

 

5. Payment of Public Improvement
Fee.

 

(a)           

Retail Public Improvement Fee.
Whether or not collected from customers, each Retailer shall pay
the Retail Public Improvement Fee monthly in arrears for all PIF
Sales initiated, consummated, conducted, transacted or otherwise
occurring during the immediately preceding month from or within the
portion of the PIF Property occupied by such Retailer during such
month. The Retail Public Improvement Fee shall be due and payable
without notice within twenty (20) days after the close of each
calendar month, and unless the District in its sole discretion
otherwise directs, each Retailer shall pay the same directly to the
PIF Collection Agent on behalf of the District or its assignee. The
procedures for reporting, assessment, collection, and segregation
of the Retail Public Improvement Fee (but not for calculation)
shall be identical in all material respects to those set forth in
Colorado law regarding the reporting, assessment, collection and
segregation of State sales tax, and each Retailer shall report PIF
Sales and remit the Retail Public Improvement Fee to the PIF
Collection Agent on a monthly basis when such Retailer reports and
remits sales taxes to the State, employing reporting forms and
following procedures provided by the State intended to be
substantially similar to those used and required by the State for
the remittance of Sales Tax. The Retail Public Improvement Fee
shall be calculated and imposed on transactions at the rate stated
above (in the definition of Public Improvement Fee) prior to the
calculation and assessment of the Sales Tax, and before any sales
taxes of any other taxing entity required to be imposed by law. The
Retail Public Improvement Fee shall be added to the sales price for
transactions subject to sales tax prior to the calculation of sales
taxes. The Sales Tax and sales taxes of other taxing entities shall
be calculated and assessed on the sum of the PIF Sales price plus
the amount of the Retail Public Improvement Fee. Specific
instructions regarding reporting forms and payment procedures shall
be provided to all Retailers by the District, and each Retailer
shall be entitled to rely thereon for purposes of compliance with
this Section 5(a). Declarant hereby acknowledges, any other Owner,
by acquiring fee title to any portion of the PIF Property subject
to this PIF Covenant, shall be deemed to have acknowledged, any
Occupant, by acquiring the right to possess or occupy any portion
of the PIF Property subject to this PIF Covenant, shall be deemed
to have acknowledged, and each Owner and Occupant shall cause any
Retailer whom such Owner or Occupant permits to possess or occupy
(by lease or otherwise) any portion-of its Owned/Leased PIF
Property, to acknowledge, prior to conducting any business at any
PIF Property, (i) THAT THE RETAIL PUBLIC IMPROVEMENT FEE IS
NOT A TAX IN ANY FORM AND IS A FEE IMPOSED UNDER PRIVATE COVENANT
AND NOT THROUGH THE EXERCISE OF ANY GOVERNMENTAL TAXING AUTHORITY;
(ii) THAT THE RETAIL PUBLIC IMPROVEMENT FEE REVENUES ARE NOT
TAX REVENUES IN ANY FORM AND THE RETAIL PUBLIC IMPROVEMENT FEE
SHALL NOT BE ENFORCEABLE BY THE ANY OTHER GOVERNMENTAL ENTITY OR
QUASI-GOVERNMENTAL ENTITY, OTHER THAN THE DISTRICT (EXCEPT WHERE
THE GOVERNMENTAL ENTITY IS THE PIF COLLECTION AGENT AND IS ACTING
IN SUCH CAPACITY UNDER THIS PIF COVENANT OR EXCEPT BY JUDICIAL
ENFORCEMENT PURSUANT TO AN ENFORCEMENT ACTION BROUGHT BY A PERSON
AUTHORIZED TO ENFORCE THIS PIF COVENANT); AND (iii) THAT THE
AUTHORITY OF THE DISTRICT AND/OR PIF COLLECTION AGENT TO RECEIVE
THE RETAIL PUBLIC IMPROVEMENT FEE IS DERIVED THROUGH THIS PIF
COVENANT. In the event the District or the Bond Trustee ceases to
be the PIF Collection Agent for the Public Improvement Fee (as
further described in Section 10 below), the District shall promptly
notify each Retailer of the same and provide appropriate direction
for payment and reporting of the Retail Public Improvement Fee
thereafter. For purposes of compliance with this Section 5, each
Retailer shall be entitled to rely upon written notice from the
District and, in such event, upon specific instructions regarding
reporting forms and payment procedures for the Retail Public
Improvement Fee provided in writing to such Retailer by the
District.

 

 

 

145

 

 

(b)           Material
Sales and Use Public Improvement Fee. Each PIF Obligor shall
pay the Material Sales and Use Public Improvement Fee. The Material
Sales and Use Public Improvement Fee owed by a PIF Obligor for any
Construction Activities shall be due and payable prior to or at the
time of such PIF Obligor obtaining a building permit from the
County for such Construction Activities, and in no event shall any
Construction Activities be commenced by or on behalf of any PIF
Obligor prior to the payment of the Material Sales and Use Public
Improvement Fee owed with respect to such Construction Activities.
Each PIF Obligor shall pay the Public Improvement Fee owed with
respect to Construction Activities to the PIF Collection Agent on
behalf of the District or its assignee. With the consent of the
County, the procedures for collection of any or all of the PIF
Revenues owed by a PIF Obligor for any Construction Activities may
be coordinated with the building permit process administered by the
County. The District may implement procedures applicable to all
proposed development and Construction Activities within the PIF
Property or any portion thereof pursuant to which PIF Obligors are
required to demonstrate payment of the Material Sales and Use
Public Improvement Fee with respect to any planned Construction
Activities as a precondition to commencing such Construction
Activities. Each PIF Obligor shall deliver to the PIF Collection
Agent a true and complete MSU Report relating to the applicable
Construction Activities and the PIF Collection Agent is expressly
authorized to deliver such MSU Report to the District and, at the
express written direction of the District, to the Bond Trustee or
other entity. Each PIF Obligor shall be under a continuing duty to
make such adjustments, additions, modifications or supplements to
the MSU Report as may be necessary to correct any mistake in a
previously delivered Report or to otherwise cause such MSU Report
to accurately reflect the Construction Valuation Amount for the
applicable Construction Activities and such other information
contained therein, and to deliver such adjustments, additions,
modifications or supplements to the MSU Report to the PIF
Collection Agent for distribution to the District. If any such
adjustment increases the amount of the Material Sales and Use
Public Improvement Fee that a PIF Obligor is required to remit or
pay, such PIF Obligor shall immediately pay such additional
Material Sales and Use Public Improvement Fee in the amount due to
the PIF Collection Agent. District hereby acknowledges, any Owner,
by acquiring fee title to any portion of the PIF Property subject
to this PIF Covenant, shall be deemed to have acknowledged, any
other Occupant, by acquiring the right to possess or occupy any
portion of the PIF Property subject to this PIF Covenant, shall be
deemed to have acknowledged (i) THAT THE MATERIAL SALES AND
USE PUBLIC IMPROVEMENT FEE IS NOT A TAX IN ANY FORM AND IS A FEE
IMPOSED UNDER PRIVATE COVENANT AND NOT THROUGH THE EXERCISE OF ANY
GOVERNMENTAL TAXING AUTHORITY; (ii) THAT THE MATERIAL SALES
AND USE PUBLIC IMPROVEMENT FEE REVENUES ARE NOT TAX REVENUES IN ANY
FORM AND THE MATERIAL SALES AND USE PUBLIC IMPROVEMENT FEE SHALL
NOT BE ENFORCEABLE BY ANY GOVERNMENTAL ENTITY OR QUASI-GOVERNMENTAL
ENTITY, OTHER THAN THE DISTRICT (EXCEPT WHERE THE GOVERNMENTAL
ENTITY IS THE PIF COLLECTION AGENT AND IS ACTING IN SUCH CAPACITY
UNDER THIS PIF COVENANT OR EXCEPT BY JUDICIAL ENFORCEMENT PURSUANT
TO AN ENFORCEMENT ACTION BROUGHT BY A PERSON AUTHORIZED TO ENFORCE
THIS PIF COVENANT); AND (iii) THAT THE AUTHORITY OF THE
DISTRICT AND/OR PIF COLLECTION AGENT TO RECEIVE THE MATERIAL SALES
AND USE PUBLIC IMPROVEMENT FEE IS DERIVED THROUGH THIS PIF
COVENANT.

 

 

 

146

 

 

6. Additional Reporting
Requirements. Each Retailer shall deliver to Declarant or
Affiliate of a Declarant specified by Declarant, the District and,
at the express written direction of the District, to the Bond
Trustee or other entity (collectively, “Report Recipients”), true and
complete copies of all written reports, returns, statements,
records and declarations, including any supplements or amendments
thereto (collectively the “Reports”) made or provided to the
State of Colorado by such Retailer in connection with all Sales Tax
for the corresponding Sales Tax period at the same time such
Reports are delivered to the State of Colorado. If any subsequent
adjustments, additions or modifications are made: to any Sales
Taxes or the Retail Public Improvement Fee reported, remitted or
paid, or Report made, by a Retailer to the State of Colorado with
respect to Sales Taxes or the Retail Public Improvement Fee, such
Retailer shall provide the Report Recipients with true and complete
copies of all revised Reports or other written material issued or
received by such Retailer in regard thereto. If any such adjustment
increases the amount of the Retail Public Improvement Fee which a
Retailer is required to remit or pay, or results in a refund of
such Retail Public Improvement Fee, such Retailer shall immediately
pay such additional Retail Public Improvement Fee in the amount
due, or shall receive an appropriate credit against the next retail
Public Improvement Fee due from such Retailer in the amount of such
excess Retail Public Improvement Fee. Such Retailer shall claim
such credits or pay such additional retail Public Improvement Fee
in the next monthly reporting period by use of the standard
reporting and remittance forms. All Reports made or provided by a
Retailer shall be maintained by such Retailer for at least three
years from the date of submission thereof to the State of Colorado,
and upon written request, shall be made available to the Report
Recipients for inspection and audit. Subject to Section 7 below,
Reports received by any Declarant, the District or the Bond Trustee
shall remain confidential and be used only for purposes of
collecting the Retail Public Improvement Fee due, enforcing
Retailers’ obligations hereunder, and otherwise monitoring
compliance with the provisions of this PIF Covenant.

 

7. Audits and Release of Information by
the PIF Collection Agent. By acquiring its possessory
interest in and to its Owned/Leased PIF Property subject to the
terms and conditions of this PIF Covenant, each Retailer and PIF
Obligor hereby specifically authorizes the District, the Bond
Trustee and or the PIF Collection Agent to audit the books and
records of such Retailer or PIF Obligor to determine compliance
with the Public Improvement Fee collection and remittance
obligation of such Retailer or PIF Obligor under this PIF Covenant
and, subject to the restrictions set forth in the next sentence, to
release to the Declarants, the District, the Bond Trustee and any
Dissemination Agent for distribution to the holders of any Bonds
(but not to any other person or entity, except as required by law)
such audited information and any Public Improvement Fee-related
reports, returns (including sales tax returns) and other documents
as are delivered to the District, the Bond Trustee and the PIF
Collection Agent by such Retailer or PIF Obligor and any relevant
information gathered by the District, the Bond Trustee, or
successor PIF Collection Agent during an audit or in reviewing such
reports, returns or other documents (collectively, the
“Confidential
Information”); provided, however, that all
Confidential Information, together with the contents thereof, shall
be kept strictly confidential and shall not be disclosed or
otherwise published by any person to whom the District, the Bond
Trustee, or successor PIF Collection Agent so releases Confidential
Information, except for such disclosures or publications as may be
required by applicable laws. Without limiting the foregoing
confidentiality and non-disclosure requirements, to the fullest
extent permitted under applicable laws, any publication or
disclosure of Confidential Information submitted by or pertaining
to a specific Retailer or PIF Obligor (or the contents of such
Confidential Information) by the District, the Bond Trustee or
successor PIF Collection Agent, any Declarant, the District, or any
Dissemination Agent (or by anyone else to whom the District, the
Bond Trustee or the successor PIF Collection Agent is required by
law to disclose Confidential Information) which is otherwise
required to be made, shall be made only on an aggregated basis with
the similar information submitted by other Retailers and PIF
Obligors and without separate identification (direct or indirect)
of the Public Improvement Fee or sales of such specific
Retailer.

 

 

 

147

 

 

8. Compliance and Enforcement.
Each Retailer and PIF Obligor shall comply with all policies and
requirements of District and the PIF Collection Agent regarding the
calculation and payment of the Public Improvement Fee. Each
Retailer shall comply with all policies and requirements of the
District regarding notification to customers of the assessment and
collection of the Public Improvement Fee as such policies and
requirements are communicated by the District to such Retailer in
writing from time to time. The failure or refusal of any Retailer
to assess, collect or remit the Public Improvement Fee, or to
comply with the requirements concerning notification to customers
as required in this PIF Covenant, shall constitute a default by
such Retailer under the terms of this PIF Covenant. The failure or
refusal of any PIF Obligor to remit the Material Sales and Use
Public Improvement Fee shall constitute a default by such PIF
Obligor under the terms of this PIF Covenant. THE DISTRICT, THE
BOND TRUSTEE, OR THE PIF COLLECTION AGENT ARE HEREBY EXPRESSLY MADE
THIRD PARTY BENEFICIARIES OF THE RETAILERS’ AND PIF
OBLIGORS’ OBLIGATIONS UNDER THIS PIF COVENANT, INCLUDING, BUT
NOT LIMITED TO, THE ASSESSMENT, COLLECTION AND REMITTANCE OF THE
PUBLIC IMPROVEMENT FEE. Declarant hereby acknowledges, any other
Owner, by acquiring fee title to any portion of the PIF Property
subject to this PIF Covenant, shall be deemed to have acknowledged,
any Occupant, by acquiring the right to possess or occupy any
portion of the PIF Property subject to this PIF Covenant, shall be
deemed to have acknowledged, and each Owner and Occupant shall
cause any Retailer whom such Owner or Occupant permits to possess
or occupy (by lease or otherwise) any portion of its Owned/Leased
PIF Property to acknowledge, prior to conducting any business at
any PIF Property, THAT ANY DECLARANT, THE DISTRICT, THE BOND
TRUSTEE, OR THE PIF COLLECTION AGENT SHALL HAVE A DIRECT CAUSE OF
ACTION AND FULL RIGHT AND AUTHORITY TO ENFORCE EACH
RETAILER’S AND PIF OBLIGOR’S OBLIGATIONS UNDER THIS PIF
COVENANT; AND THAT NO DEFAULT BY A RETAILER’S LANDLORD UNDER
ANY PROVISION OF THE LEASE OR OTHER OCCUPANCY AGREEMENT PURSUANT TO
WHICH SUCH RETAILER OCCUPIES ANY PIF PROPERTY SHALL ENTITLE SUCH
RETAILER TO ANY OFFSET, DEDUCTION OR OTHER DEFENSE TO PAYMENT OF
THE PUBLIC IMPROVEMENT FEE DUE HEREUNDER. Any payment of the Public
Improvement Fee not paid when due hereunder shall bear interest at
the Default Rate, and the defaulting Retailer or PIF Obligor shall
bear all costs of enforcement and collection thereof, including
reasonable attorney’s fees. In addition, if a Retailer or PIF
Obligor fails to pay any Public Improvement Fee when due and such
failure continues for more than 10 days after notice thereof is
given to such Retailer or PIF Obligor by the PIF Collection Agent,
the PIF Collection Agent may charge such Retailer or PIF Obligor,
and such Retailer or PIF Obligor shall be obligated to pay the PIF
Collection Agent, a late charge in an amount equal to the greater
of 10% of the delinquent Public Improvement Fee or $100.00. So long
as the District or the Bond Trustee is the PIF Collection Agent,
the District or the Bond Trustee shall have the right to take any
lawful action to the collect the Public Improvement Fee.
Notwithstanding anything to the contrary contained in this PIF
Covenant, any Declarant, the District, the Bond Trustee, or the PIF
Collection Agent, or any third party designated by any of the
foregoing (collectively, an “Enforcing Party”), shall have the
right to enforce the provisions of this PIF Covenant against any
Retailer or PIF Obligor that fails to abide by any of the terms and
conditions of this PIF Covenant. An Enforcing Party shall be
awarded and recover from a defaulting Retailer all costs and
expenses incurred by such Enforcing Party in successfully enforcing
the obligations of such Retailer or PIF Obligor under this PIF
Covenant in any legal
proceedings brought (or defended) by such Enforcing
Party.

 

 

 

148

 

 

9. Use and Pledge of Public Improvement
Fee Revenues; PIF Collection Agent’s Payment
Instructions. The Public Improvement Fee revenues generated
by the Public Improvement Fee imposed pursuant to this PIF Covenant
may be used for the payment of Public Improvements Costs or
otherwise as expressly provided in this PIF Covenant and the Public
Financing Documents. Any right, title and interest of any Declarant
in the Public Improvement Fee and the obligations of the PIF
Obligors as set forth in this PIF Covenant may be assigned by such
Declarant to the District or the Bond Trustee; provided, however,
notwithstanding any such assignment, such Declarant shall be
entitled to enforce this PIF Covenant against any Retailer or PIF
Obligor in the event such PIF Obligor fails to comply with the
provisions hereof. The District is hereby expressly authorized to
Pledge for the payment of Bond Requirements all Public Improvement
Fee revenues, or any portion thereof, generated by the Public Improvement Fee imposed
pursuant to this PIF Covenant and received or receivable by the PIF
Collection Agent. The PIF Collection Agent is hereby instructed and
required to pay so much of such Public Improvement Fee revenues
received by it as may be so Pledged to the party entitled thereto
pursuant to the applicable Public Financing Documents and the
balance thereof shall be paid to the District, to the extent
required for ongoing operation, maintenance and administrative
expenses of the District related to Public
Improvements.

 

10. PIF Collection Agent
Succession. If the District terminates the services of the
PIF Collection Agent and appoints a new PIF Collection Agent, the
District shall notify all Retailers thereof pursuant to Section
4 hereof.

 

11. General Acknowledgement.
Declarant hereby acknowledges, any other Owner, by acquiring fee
title to any portion of the PIF Property subject to this PIF
Covenant, shall be deemed to have acknowledged, and any Occupant,
by acquiring the right to possess or occupy any portion of the PIF
Property subject to this PIF Covenant, shall be deemed to
have acknowledged,
prior to conducting any business at any PIF Property, THAT THE
PROVISIONS OF THIS PIF COVENANT HAVE BEEN OR SHALL BE AGREED TO BY
THE DISTRICT AND THE BOND TRUSTEE, AND THAT THE DISTRICT AND THE
BOND TRUSTEE ARE OR SHALL BE RELYING UPON THESE PROVISIONS IN
TAKING CERTAIN ACTIONS WITH RESPECT TO THE PUBLIC IMPROVEMENT FEE
AND THE PUBLIC IMPROVEMENTS WITH THE EXPRESS CONDITION THAT THIS
PIF COVENANT SHALL NOT BE AMENDED, MODIFIED OR WAIVED; ACCORDINGLY,
DECLARANT HEREBY AGREES AND ALL OTHER OWNERS AND OCCUPANTS SHALL BE
DEEMED TO HAVE AGREED THAT NO AMENDMENT OR MODIFICATION SHALL BE
MADE TO, NOR ANY WAIVER MADE OR ACCEPTED BY DECLARANT, ANY OWNER OR
ANY OCCUPANT WITH RESPECT TO THIS PIF COVENANT WITHOUT THE WRITTEN
CONSENT OF THE DISTRICT AND THE BOND TRUSTEE, AND THAT ANY SUCH
PURPORTED AMENDMENT, MODIFICATION OR WAIVER, WITHOUT THE WRITTEN
CONSENT OF THE DISTRICT AND THE BOND TRUSTEE, SHALL BE VOID AND OF
NO FORCE AND EFFECT. Each Owner and Occupant shall cause any
Retailer whom such Owner or Occupant permits to possess or occupy
(by lease or otherwise) any portion of its Owned Leased PIF
Property to acknowledge, prior to conducting any business at any
PIF Property, THAT THE PROVISIONS OF THIS PIF COVENANT THAT PERTAIN
TO RETAILERS HAVE BEEN OR WILL BE AGREED TO BY THE DISTRICT AND THE
BOND TRUSTEE, AND THAT THE DISTRICT AND THE BOND TRUSTEE ARE OR
WILL BE RELYING UPON SUCH PROVISIONS IN TAKING CERTAIN ACTIONS WITH
RESPECT TO THE PUBLIC IMPROVEMENT FEE AND THE PUBLIC IMPROVEMENTS
WITH THE EXPRESS CONDITION THAT THE PROVISIONS OF THIS PIF COVENANT
THAT PERTAIN TO RETAILERS SHALL NOT BE AMENDED, MODIFIED OR WAIVED;
ACCORDINGLY, SUCH RETAILER SHALL BE DEEMED TO HAVE AGREED THAT NO
AMENDMENT OR MODIFICATION SHALL BE MADE TO, NOR ANY WAIVER MADE OR
ACCEPTED BY SUCH RETAILER WITH RESPECT TO THE PROVISIONS
OF THIS PIF COVENANT
THAT PERTAIN TO RETAILERS WITHOUT THE WRITTEN CONSENT OF THE
DISTRICT AND THE BOND TRUSTEE, AND THAT ANY SUCH PURPORTED
AMENDMENT, MODIFICATION OR WAIVER, WITHOUT THE WRITTEN CONSENT OF
THE DISTRICT AND THE BOND TRUSTEE, SHALL BE VOID AND OF NO FORCE
AND EFFECT.

 

 

 

149

 

 

12. Owner/Occupant Obligations.
Each Owner and Occupant shall cause any Retailer to whom such Owner
or Occupant leases or whom such Owner or Occupant otherwise permits
to occupy any portion of its Owned/Leased PIF Property, in its
lease or other occupancy agreement with such Retailer pursuant to
which such Retailer occupies any portion of such Owner’s or
Occupant’s Owned/Leased PIF Property, to acknowledge and
agree to (in a manner that causes such Retailer to be bound by) all
provisions of this PIF Covenant that pertain to such
Retailer.

 

13. Additional PIF Property.
Declarants may acquire fee title to, or cause one or more of its
affiliates to acquire fee title to, additional property
(“Additional PIF
Property”). Upon acquisition of any Additional PIF
Property by Declarant or such an affiliate, the new fee owner
thereof may record a supplement to this PIF Covenant in the real
property records maintained by the County Clerk, which shall set
forth the legal description of such Additional PIF Property and
state that, from and after the date of such recording, such
Additional PIF Property shall constitute PIF Property
for all purposes
under this PIF Covenant. From and after the date any such
supplement is properly signed, acknowledged and recorded, the
Additional PIF Property described therein shall constitute, and
become a part of the, PIF Property for all purposes under this PIF
Covenant.

 

14. No Dominion or Control by
Declarants. Notwithstanding anything contained in this PIF
Covenant to the contrary, or in any other document related to the
PIF Property, Declarant does not have and shall not be legally
entitled, authorized or empowered to exercise any dominion or
control over any of the Public Improvement Fee revenues imposed or
collected pursuant to this PIF Covenant and the Public Financing
Documents. To the extent any Public Improvement Fee revenue is
collected by any Declarant, such Declarant is merely acting on
behalf of the District in implementing this PIF Covenant and
providing for the collection and payment of Public Improvement Fee
revenues under the Public Financing Amendment. Subject to the
express terms of this Section 14: (a) the Public Improvement
Fee is a fee imposed on Retailers and PIF Obligors to pay Public
Improvements Costs as provided herein; (b) the nature of the
Public Improvement Fee is that of a fee imposed for the benefit of
the District under private contract and not through the exercise of
any District taxing authority; (c) the Public Improvement Fee
revenues are not tax revenues in any form and the Public
Improvement Fee shall not be enforceable by the State or any taxing
entity other than the District; (d) the Public Improvement Fee
revenues are the property of the District to be used for the
payment of the Bond Requirements and as otherwise may be provided
in this PIF Covenant or the Public Financing Documents; and
(e) the authority of the District to receive the Public
Improvement Fee revenues is derived through this PIF Covenant and
the Public Financing Documents.

 

15. Notices to Retailers. Whenever
a party is required pursuant to the provisions of this PIF Covenant
to give notice to “all” Retailers, the notice given
shall be deemed sufficient if given to all Retailers the names and
addresses of which were known to the party giving such notice after
a reasonably diligent effort to ascertain the names and addresses
of all Retailers

 

16. Governing Laws. This PIF
Covenant shall be governed by, and enforced in accordance with, the
laws of the State of Colorado.

 

 

 

150

 

 

17. Covenants Run with the Land.
The covenants, agreements, promises and duties as set forth in this
PIF Covenant shall be construed as covenants and not as conditions
and, to the fullest extent legally possible, all such covenants
shall run with and be enforceable against both the covenantor and
the land and shall constitute equitable servitudes burdening both
the respective covenantor and its PIF Property for the benefit of
the respective covenantee. Each covenant to do or refrain from
doing some act on or with respect to activities on any portion of
the PIF Property under this PIF Covenant (i) is a burden upon
such portion of the PIF Property and is for the benefit of the
remainder of the PIF Property, (ii) shall be a covenant
running with the land with respect to both the burdened and
benefited portions of the PIF Property, and (iii) shall be
binding upon of each Owner, Occupant and Retailer and each
successor to their respective interests in the PIF Property and
shall inure to the benefit of Declarants, the other Owners,
the District, the Bond
Trustee and any other PIF Collection Agent. If and to the extent
that any of the covenants or other provisions herein would
otherwise be unlawful or void for violation of (a) the rule
against perpetuities, (b) the rule restricting restraints on
alienation, or (c) any other applicable statute or common law
rule analogous thereto or otherwise imposing limitations upon the
time for which such covenants maybe valid, then the provisions
concerned shall continue and endure only until the expiration of a
period of 90 years after the date this PIF Covenant is filed in the
real property records maintained by the County Clerk.

 

18.           Severability.
Invalidation of any of the provisions contained in this PIF
Covenant, or of the application thereof to any person or entity, by
judgment or court order, will in no way affect any of the other
provisions of this PIF Covenant or the application thereof to any
other person or entity or circumstance and the remainder of this
PIF Covenant shall remain in effect; provided, however, that in the
event such invalidation would render the remaining portions of this
PIF Covenant ineffective to carry out the material intentions of
Declarant as expressed or implied by this PIF Covenant, then the
objectionable provisions) hereof shall be construed, and this PIF
Covenant shall be deemed amended, as if such provision were
replaced with an enforceable provision which effectuates, as nearly
as possible, the material intentions of Declarants.

 

19.           Applicability
of Retail Public Improvement Fee to Residential Property.
Declarant may cause portions of the PIF Property to be developed
for residential use. The Retail Public Improvement Fee as
established by this PIF Covenant shall have no applicability to any
portion of the PIF Property that is used solely for residential
purposes, except to the extent that any PIF Sales are initiated,
consummated, conducted, transacted or otherwise occur from or
within such portion of the PIF Property. Notwithstanding to
foregoing, the Material Sales and Use Public Improvement Fee is
applicable to the residential portions of the PIF
Property.

 

IN
WITNESS WHEREOF Declarants have executed this PIF Covenant as of
the date first set forth above.

 

Declarant:

 

PCY
Holdings, LLC,

a
Colorado limited liability company

 

By:                                                                 

Name: 

Title: 

 

 

 

151

 

 

STATE OF
__________

)

)
ss.

COUNTY OF
_____________

)

 

 

The
foregoing instrument was acknowledged before me as of the _____ day
of _________________, 2017, by ______________________________ as
________________ of PCY Holdings, LLC, a Colorado limited liability
company.

 

WITNESS
my hand and official seal.

 

 

Notary
Public for the State of ____________

 

My
Commission Expires: 

 

 

 

 

152

 

Exhibit A

 

 

 

LEGAL
DESCRIPTION OF THE

PIF
PROPERTY

 

 

153

 

DRAFT
10/30/17

 

AMENITY
DEVELOPMENT AGREEMENT

 

AND
ESCROW INSTRUCTIONS

 

Sky
Ranch

 

THIS
AMENITY DEVELOPMENT AGREEMENT (this “Agreement”)
is made as of the ___ day of _________, 20____ (the
“Effective
Date”), by and between PCY Holdings, LLC, a Colorado
limited liability company (“Developer”),
and Richmond American Homes of Colorado, Inc., a Delaware
corporation (“Richmond”),
and Taylor Morrison of Colorado, Inc., a Colorado corporation
(“Taylor
Morrison”) and any other purchaser
(“Additional
Builder”) of any of the Builder Lots shown on the
Concept Plan (as defined below) that executes a joinder to this
Agreement and acquires the rights, liabilities and obligations
hereunder with respect to such Builder Lots (collectively the
“Builders”
and each a “Builder,”).
Developer and Builders are sometimes individually referred to as a
“Party”
and collectively referred to as the “Parties.”
Land Title Guarantee Company, as Escrow Agent, executes this
Agreement to acknowledge its agreement to act as the escrow agent
in accordance with the Section 5 and the instructions set forth on
Attachment 1
attached hereto.

 

RECITALS

 

A.           

Developer owns
certain real property located in Arapahoe County (the
“County”),
Colorado which Developer is developing as part of the Sky Ranch
master planned residential community (“Development”).
The Development is being subdivided in several subdivision filings
and developed in phases.

 

B.           

Each Builder has
entered into a separate Contract for Purchase and Sale of Real
Estate with the Developer (each a “Purchase
Agreement” and collectively the “Purchase
Agreements”), under which each Builder is acquiring
from Developer a portion of the Development consisting of single
family residential building lots (collectively, the
“Builder
Lots”). The approximate number and location of the
Builder Lots to be acquired by each Builder under the terms of the
Purchase Agreements are generally depicted on the attached as
Exhibit
A (“Concept
Plan”).

 

C.           

Pursuant to the
Purchase Agreements, Developer and the Builders have agreed to
construct or cause to be constructed certain park improvements and
amenities within the three park areas designated on the Concept
Plan (the “Parks”).
The improvements to be installed and constructed within the Parks
(the “Improvements”)
will be identified and described as provided in this Agreement. At
such time as the plans and specifications have been approved for
the Improvements by the County or other applicable governmental
authority, the Improvements and the applicable Plans will be set
forth on Exhibit B to
be attached hereto by amendment to this Agreement executed by the
Parties.

 

D.           

The Parties now
desire to enter into this Agreement in order to set forth the terms
and conditions under which the Improvements will be constructed and
paid for by the Parties, together with such other matters as are
set forth hereinafter.

 

 

 

154

 

 

AGREEMENT

 

NOW
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Developer and
Builders agree as follows:

 

23. Incorporation of Recitals. The
Parties hereby acknowledge and agree to the Recitals set forth
above, which are incorporated herein by this
reference.

 

24. Responsibilities of Developer and
Builders.

 

24.1 Generally.
Developer shall construct, or cause to be constructed, the
Improvements in the manner set forth hereinafter. Developer shall
coordinate, administer and oversee (a) the preparation and
filing of all applications, filings, submittals, plans and
specifications, budgets, timetables and other documents pertaining
to construction and installation of the Improvements, and (b) the
construction and installation of the Improvements. Developer will
engage or cause to be engaged consultants, contractors and
subcontractors who will be responsible for the design and
construction of the Improvements and suppliers who will be
responsible for supplying labor, materials, equipment, services and
other work in connection with the construction of the Improvements
(“Service
Provider(s)”), pursuant to the Contracts (as
hereinafter defined).

 

24.2 Comply
with Legal Requirements. Developer will comply with all
terms and conditions of applicable law in performing its
obligations under this Agreement. Developer will provide to each
Builder copies of all notices filed by the Developer with the
County, and all other applicable governmental or quasi-governmental
entities or agencies (the “Approving
Authorities”) related to the Improvements and shall,
within ten (10) business days of receipt thereof, provide notice to
each Builder (together with copies of all notices received by
Developer) of any notice received by Developer alleging any failure
to comply with any applicable laws, ordinances, rules, regulations,
or lawful orders of public authorities bearing on the construction
of the Improvements.

 

24.3 Bonds
and Assurances. Developer, as part of the Costs, shall
provide to all applicable Approving Authorities any bonds,
assurance agreements, or other financial assurances if any are
required with respect to the construction of the Improvements.
Developer shall, as part of the Costs, provide to all Approving
Authorities all warranties, bonds and other financial assurances
required to obtain permits for, and the preliminary and final
acceptance and approval of, the Improvements. Builder shall take
all commercially reasonable actions and execute all documents
reasonably requested by Developer in its efforts to obtain releases
of all such warranties, bonds, and other financial assurances upon
final acceptance of the Improvements by the Approving
Authorities.

 

24.4 Taxes,
Fees and Permits. Developer or the Service Providers shall
pay all applicable sales, use, and other similar taxes pertaining
to the construction of the Improvements, and shall secure and pay
for all approvals, easements, assessments, charges, permits and
governmental fees, licenses and inspections necessary for proper
construction and completion of the Improvements, except as provided
otherwise in this Agreement. Developer and the Service Providers
shall not defer the payment of any use taxes pertaining to the
Improvements except as may be authorized under law or agreement
with the applicable taxing authorities.

 

 

 

155

 

 

24.5 Dedications.
Developer shall timely make all conveyances and dedications of the
Improvements if and as required by the Approving Authorities, free
and clear of all liens and encumbrances.

 

24.6 Indemnity.
Developer shall indemnify, defend and hold harmless the Builders
and their owners, employees, members, managers, directors,
officers, agents, affiliates, successors and assigns (each a
“Builder
Indemnitee” and collectively, the “Builder
Indemnitees”) for, from and against all claims,
demands, liabilities, losses, damages (exclusive of special,
consequential, punitive, consequential and lost profits damages),
costs and expenses, including but not limited to court costs and
reasonable attorneys’ fees, arising out of material damage
caused by Developer’s negligence or willful misconduct in the
performance of the construction of the Improvements.
Notwithstanding the foregoing, Developer shall not be obligated
under this Agreement to indemnify the Builder Indemnitees to the
extent such liabilities result from the act, negligence or willful
misconduct of any Builder Indemnitee.

 

24.7 Insurance.
Developer shall procure and maintain, and shall cause the Service
Providers to procure and maintain, the insurance described in
Exhibit
C attached hereto during the construction of the
Improvements and any warranty work performed on the
Improvements.

 

24.8 Independent
Contractor. Developer is an independent contractor and
neither Developer nor its employees are entitled to worker’s
compensation benefits or unemployment insurance benefits through
any Builder as a result of performing under this Agreement. The
Developer is responsible for and obligated to pay all assessable
federal and state income tax on amounts earned or paid under this
Agreement.

 

25. Construction of
Improvements.

 

25.1 Plans
and Specifications. Developer shall diligently finalize,
process and obtain approval of the Plans for the Improvements from
the applicable Approving Authorities to the extent required by such
entities. Upon receipt of the approved Plans for the Improvements,
Developer will furnish a copy of such Plans to the Builders.
Exhibit
B shall then be completed to identify the Plans and
Improvements.

 

25.2 Construction
Standard. Developer shall cause the applicable Improvements
to be constructed in accordance with the Construction Standard and
shall obtain preliminary and final acceptance thereof by the
applicable Approving Authorities. As used herein, the term
“Construction
Standard” means construction and installation of the
Improvements in a good, workmanlike and lien-free manner and in
substantial conformity with the Plans (as may be modified pursuant
to the terms hereof), and the applicable requirements of the
Approving Authorities.

 

 

 

156

 

 

25.3 Contracts.
Developer and contractors of Developer shall contract for all of
the work and materials related to the design and construction of
the applicable Improvements. Developer shall bid, pursue,
negotiate, agree to and execute contracts and agreements with
Service Providers for the work and materials comprising the
Improvements (each a “Contract”
and collectively, the “Contracts”),
based upon forms that Developer deems necessary or appropriate in
its commercially reasonable discretion; provided, however, that
Developer shall deliver written notice to the Builders after it
enters into any Contract, which notice shall identify the Service
Provider(s). Developer shall use good faith efforts to cause each
Contract, in addition to other matters, to (i) allow for the
automatic assignment, without need for further action, of all of
Developer’s rights (including, without limitation, the
warranty and indemnity provisions thereof) to a Builder on a
non-exclusive basis in the event of replacement of Developer
pursuant to the terms of this Agreement and identify the Builders
as intended third-party beneficiaries of the Contract,
(ii) require the Service Providers to provide a warranty on
materials and labor supplied by such Service Provider for a period
coterminous with any warranty period required by the applicable
Approving Authorities for Improvements to be dedicated to an
Approving Authority, but in no event less than one (1) year for any
Improvement, (iii) require the Service Provider to perform its work
in accordance with the Construction Standard, (iv) require the
Service Provider to indemnify, defend, and hold harmless Developer
from all claims and causes of action arising from the negligent
acts or omissions or intentional misconduct of the Service Provider
providing construction services or its employees or agents, (v)
permit retainage in an amount of at least five percent (5%) of the
amounts payable to the Service Provider, until the work to be
completed pursuant to such Contract has been substantially
completed and, if applicable, granted initial acceptance by the
applicable Approving Authority; (vi) provide the Developer the
right, but not the obligation, to pay subcontractors and suppliers
of the Service Provider directly or by joint check, and (vii)
provide for no limitation on remedies against the Service Provider
for a default to the extent customary, except the prohibition of
recovery of punitive damages. Upon receipt of written request from
a Builder, Developer shall deliver a copy of each Contract to such
Builder.

 

25.4 Construction
Schedule. Developer shall cause construction of the
Improvements to be completed as follows:

 

25.4.1 Completion.
The Improvements will be completed in two phases (each a
“Phase”)
consisting of the construction of the Improvements applicable to
the Central Park (as identified on the Concept Plan) during the
first Phase (the “Phase 1 Park
Improvements”) and the construction of the
Improvements applicable to the North Park and the South Park (as
identified on the Concept Plan) during the second Phase (the
“Phase 2 Park
Improvements”). Developer shall cause Substantial
Completion of each component of the Phase 1 Park Improvements to
occur on the date that is ninety (90) days after substantial
completion of the Builder Lots that are designated as Takedown 1 as
depicted on the Concept Plan, provided, however, if such date for
completion would require landscape installation between the during
the months of October through April of any year, landscape
installation may be delayed until May 31 of such year (the
“Phase 1 Substantial
Completion Date”), and cause Substantial Completion of
the Phase 2 Park Improvements to occur on or before the date that
is one (1) year after the Phase 1 Substantial Completion Date
(referred to collectively as the “Substantial
Completion Dates”); provided, however, subject to
Section 3.4.2
below. Developer may cause the Improvements to be constructed and
installed as Developer deems necessary, in the Developer’s
commercially reasonable discretion, to coordinate such Improvements
with the development of other portions of the Development.
Notwithstanding anything to the contrary, the Developer shall have
no obligation to install landscaping during the months of October
through April.

 

 

 

157

 

 

25.4.2 Force
Majeure. Notwithstanding any contrary provision of this
Agreement, the Substantial Completion Dates and the time for
performance of Developer’s other obligations under this
Agreement shall be extended by a period of time equal to any period
that such performance or progress in construction of the
Improvements is delayed due to any Dispute, as defined below, acts
or failure to act of any Approving Authority, strike, riot, act of
war, act of terrorism, act of violence, weather, act of God, or any
other act, occurrence or non-occurrence beyond Developer’s
reasonable control (each,
an “Force Majeure
Delay”). Within thirty (30) days after the cessation
of the occurrence of a Force Majeure Delay, PCY will give notice
thereof specifying the cause of the Force Majeure Delay and the
number of days of the occurrence.

 

25.5 Substantial
Completion.

 

25.5.1 Definition
of Substantial Completion. “Substantial
Completion” of the Improvements (or applicable
component thereof) shall be deemed to have occurred when all of the
following have occurred with respect to the Improvements (or
applicable component thereof):

 

(a) Developer has
substantially completed or corrected all punchlist items provided
by the Approving Authorities affecting the Improvements (or
applicable component thereof) in accordance with Section 3.5.2
below;

 

(b) Subject to
Section 3.5.1(c)
below, the Improvements (or applicable component thereof) have been
installed pursuant to the Construction Standard;

 

(c) Any Improvements
(or applicable component thereof) that are intended to be dedicated
to or accepted by an Approving Authority shall have been inspected
and preliminarily accepted by the applicable Approving Authority
(subject to the Government Warranty Period (as defined
below); 

 

(d) No mechanics’
or materialmen’s liens shall have then been filed with
respect to the Improvements and lien waivers have been obtained
from the Service Providers that constructed the Improvements (or
applicable portion thereof), or the Developer has obtained a bond
to insure over any such mechanics’ or materialmen’s
liens.

 

25.5.2 Notice
to Builders. Developer shall notify the Builders in writing
when Substantial Completion of the Improvements (or applicable
component thereof) has been achieved, except for minor punch-list
work and the date(s) and time(s) the Approving Authorities, if any,
will inspect such Improvements (or applicable component thereof).
Within ten (10) days after receipt by Builder of such notice from
the Developer, Developer and Builders shall jointly inspect the
Improvements (or applicable component thereof) and produce a
punchlist (“Builders
Punchlist”). The Builders Punchlist may not contain
any items other than incomplete Improvements or components thereof,
deficient or defective construction of the Improvements or
components thereof, or failure to construct the Improvements or
components thereof in accordance with the plans approved by the
applicable Approving Authorities. Builders shall not be able to
object or provide Builders Punchlist items for any portion of the
Improvements previously inspected by the Builders, except in the
case of construction defects. If the Parties are unable to agree
upon a Builders Punchlist within five (5) days after the joint
inspection described above, then any dispute related to such
punchlist shall be submitted to the expedited dispute resolution
procedures in accordance with Section 6 below. Developer will
attempt to provide Builders with copies of any inspection reports
or punchlists received from the Approving Authorities in connection
with the inspection of the Improvements, and Developer shall be
responsible to correct punchlist items from the Approving Authority
and items set forth on the Builders Punchlist. Notwithstanding
anything to the contrary including any Builders Punchlist, if an
Approving Authority grants preliminary approval or construction
acceptance to any of the Improvements, then it shall conclusively
be presumed that such Improvement or work was completed in
accordance with the plans approved by the Approving Authorities,
subject to completion of the punchlist items provided by the
Approving Authority. If an item is not identified as incomplete on
the Builders Punchlist, then it shall be presumed that such
Improvement was completed in accordance with the plans approved by
the Approving Authorities. Disputes regarding Builders Punchlist
items and matters will be resolved pursuant to the expedited
dispute resolution procedures set forth in Section 6 of this
Agreement.

 

 

 

158

 

 

25.5.3 Correction
of Punchlist Items. Developer shall cause any punchlist
items received from the Approving Authorities and any items on the
Builders Punch List that are the same as the items on the Approving
Authorities punchlist to be corrected within the time required by
the County or other applicable Approving Authorities, and shall
cause any other punchlist items appearing on the Builders Punch
List to be corrected within 90 days, subject to Force Majeure
Delay.

 

25.6 Self-Help
Remedy.

 

25.6.1 Notice
of Default. If Developer: (a) breaches its obligation under
this Agreement to complete or cause the completion of any
Improvement in accordance with the Plans or by the applicable
Substantial Completion Date (as extended by any Force Majeure
Delay); (b) otherwise breaches any material obligation under this
Agreement (c) fails to comply with any material provision of its
Contracts with Service Providers beyond any applicable express
notice or cure periods; or (d) files a petition for relief in
bankruptcy or makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as
they become due (each a “Bankruptcy
Event”), then any Builder may deliver written notice
of the breach to Developer (a “Notice of
Default”). Each of the events set forth in Subsections
(a) through (d) inclusive of the preceding sentence shall be herein
referred to as a “Constructing Party
Default.” For any Constructing Party Default other
than a Bankruptcy Event, the Developer shall have thirty (30) days
after Developer’s receipt of the Notice of Default from any
Builder to cure the Constructing Party Default (the
“Cure
Period”); provided, however, if the nature of the
Constructing Party Default is such that it cannot reasonably be
cured within thirty (30) days, the Cure Period shall be deemed
extended for a reasonable period of time (not to exceed an
additional ninety (90) days) so long as Developer commenced in good
faith and with due diligence to cause such Constructing Party
Default to be remedied. If Developer does not cause the cure of the
Constructing Party Default within the Cure Period (as may be
extended pursuant to the preceding sentence, and subject to Force
Majeure Delays), or if a Bankruptcy Event occurs (either, an
“Event of
Default”), then Richmond (acting as
“Substitute
Constructing Party”) may elect to assume and take over
the construction of the Improvements by providing written notice to
Developer of such appointment within 15 days following the Event of
Default (the “Assumption
Notice”). If Richmond does not deliver an Assumption
Notice within such 15 day period, the remaining Builders may meet
and appoint one of the other Builders or another qualified third
party to serve as the Substitute Constructing Party. Substitute Constructing Party’s assumption
of the construction of the Improvements shall not include the
assumption of any liability for acts or omissions occurring prior
to the Assumption Notice, or payment of any “Constructing
Party Cost Overruns” (as defined below) incurred prior to the Assumption Notice, which
Constructing Party Cost Overruns shall remain the sole
responsibility of the Developer, or receipt of any cost savings
prior to the Assumption Notice; provided, however, that the
Substitute Constructing Party shall be entitled to an
administrative fee in an amount equal to two percent (2%) of the
remaining Costs (as defined below) actually paid, which
administrative fee shall be included in the Constructing Party Cost
Overruns. The Builders’ election to
appoint a Substitute Constructing Party to assume and take over the
construction of the Improvements and to exercise and enforce the
rights and obligations set forth in Section 3.6.2 below shall
thereafter be the Builders’ sole and exclusive remedy except
as provided in Section 3.6.2 and in Sections 3.7 and 3.8 with
respect to work performed by PCY.

 

 

 

159

 

 

25.6.2 It
is expressly acknowledged and agreed that in the event the
Substitute Constructing Party takes over the construction of the
Improvements as contemplated hereby, Substitute Constructing
Party’s assumption of the
construction of the Improvements is done only as an
accommodation to the Parties and that, except as expressly set
forth in this Agreement, Substitute Constructing Party shall have
no responsibility, liability or obligation with respect to (and the
Parties hereby covenant not to sue Substitute Constructing Party
for, and hereby release the Substitute Constructing Party from, all
liability and claims relating to or arising from) the design,
engineering, construction or completion of the Improvements, the
funds collected and disbursed under this Agreement, any damage,
loss or injury to any of the parties or otherwise related to any
action or inaction of Substitute Constructing Party in connection
with this Agreement, or any defect in the materials or workmanship
pertaining to the Improvements, except for any “Substitute
Constructing Party Covered Liability,” as hereinafter
defined. “Substitute
Constructing Party Covered
Liability” means the following matters for which
Substitute Constructing Party shall be liable to the other Parties
in connection with its performance as Substitute Constructing Party
hereunder: (a)  any damage, loss or injury arising from the
willful misconduct, bad faith, recklessness or illegal acts of the
Substitute Constructing Party in performing or failing to perform
hereunder, or (b) damage, loss or injury arising from the
fraudulent conduct of Substitute Constructing Party; provided,
however, that any damages to which the other Parties shall be
entitled to recover for any Substitute Constructing Party Covered
Liability shall be limited to out-of-pocket losses, costs, damages
or expenses, and the other Parties shall not be entitled to recover
from the Substitute Constructing Party any punitive or
consequential losses, costs, damages or expenses or lost profits as
a result of, or in connection with, any Substitute Constructing
Party Covered Liability. Substitute Constructing Party makes no
representation or warranty with respect to the Joint Improvements,
and shall have no liability for any defect in the materials or
workmanship pertaining thereto. The parties hereby agree to look
solely to the contractors engaged to construct and complete the
Improvements for any contractual violation, indemnity, warranty or
guarantee relating to the Improvements. Upon completion of the
Improvements, Substitute Constructing Party shall assign to the
parties hereto (to the extent assignable and without any
representation or warranty whatsoever), on a non-exclusive basis,
the contractual rights received from the contractors that construct
or complete any portion of the Joint Improvements, including,
without limitation, all rights related to any indemnities,
guaranties and/or warranties received from such
contractors.

 

25.6.3 Assumption
Right. If the Builders deliver an Assumption Notice, then:
(i) Developer shall cooperate to allow the Substitute Constructing
Party to take over and complete the incomplete Improvements,
including the execution and delivery to the Substitute Constructing
Party of such agreements, documents or instruments as may be
reasonably necessary to assign to the Substitute Constructing Party
all Contracts with third parties pertaining to the Improvements;
(ii) Developer shall remain responsible for all Constructing Party
Cost Overruns (as hereinafter defined) and Costs incurred through
the date that the Assumption Notice if given, but Developer shall
be relieved of all further obligations under this Agreement with
respect to the completion of the incomplete Improvements subsequent
to such assumption; (iii) Developer shall remain liable for
its negligence or willful misconduct, and any indemnification
obligations specified herein incurred prior to the date of such
assumption; and (v) Substitute Constructing Party shall assume and
perform all obligations under all Contracts for Improvements which
Substitute Constructing Party will complete to the extent such
obligations are to be performed after the date of delivery of the
Assumption Notice; and (vi) Substitute Contracting Party shall
succeed to all of the Developer’s rights under Section 5 of
this Agreement pertaining to the right to receive and collect
payment for Costs for completing the construction of the
Improvements. The Substitute Constructing Party shall be entitled
to recover the Constructing Party Cost Overruns incurred by the
Substitute Constructing Party from the Developer. In the event of
an Assumption Notice, the Substitute Constructing Party shall
indemnify, defend and hold harmless the Developer and its members,
managers, shareholders, employees, directors, officers, agents,
affiliates, successors and assigns for, from and against all
claims, demands, liabilities, losses, damages (exclusive of
special, consequential, punitive, speculative or lost profits
damages), costs and expenses, including but not limited to court
costs and reasonable attorneys’ fees, that accrue after the
date of the Assumption Notice and arise out of the Substitute
Constructing Party’s Covered Liability or gross negligence in
the completion of the Improvements, and this indemnity shall not
apply to any claims, demands, liabilities, losses, damages, costs,
expenses, acts or omissions arising or accruing before the date of
the Assumption Notice. The obligations under this Section shall
survive the termination or expiration of this
Agreement.

 

 

 

160

 

 

25.7 Warranty
Periods.

 

25.7.1 Government
Warranty Period. The Approving Authorities may require a
warranty period after the Substantial Completion with respect to
certain Improvements (a “Government Warranty
Period”). In the event defects in the Improvements to
which a governmental warranty applies become apparent during the
Government Warranty Period, then Developer shall coordinate the
repairs with the applicable Approving Authorities and cause the
Service Provider(s) who performed the work or supplied the
materials in which the defect(s) appear to complete such repairs
or, if such Service Providers fail to correct such defects,
otherwise cause such defects to be repaired to the satisfaction of
the Approving Authorities. Any costs and expenses incurred in
connection with any repairs or warranty work performed during the
Government Warranty Period (including, but not limited to, any
costs or expenses incurred to enforce any warranties against any
Service Providers) that cause the Budgeted Costs to be exceeded
shall be borne by Developer and shall be included in the
Constructing Party Cost Overruns, unless such defect or damage was
caused by Builder or its contractors, subcontractors, employees, or
agents, in which event Builder shall pay all such costs and
expenses to the extent caused by Builder or its contractors,
subcontractors, employees, or agents.

 

25.7.2 Non-Government
Warranty Period. Developer warrants (“Non-Government
Warranty”) to each Builder that each Improvement to
which a Governmental Warranty Period does not apply shall have been
constructed in accordance with the Plans for one (1) year from the
date of Substantial Completion of the applicable Improvement (the
“Non-Government
Warranty Period”). If the Builders deliver written
notice to Developer of breach of the Non-Government Warranty during
the Non-Government Warranty Period, then Developer shall coordinate
the corrections with the Builders and cause the Service Provider(s)
who performed the applicable work or supplied the applicable
materials to complete such corrections or, if such Service
Providers fail to make such corrections, otherwise cause such
corrections to be made. Any costs and expenses incurred in
connection with a breach of the Non-Government Warranty that cause
the Budgeted Costs to be exceeded shall be borne by Developer
(including, but not limited to, any costs or expenses incurred to
enforce any warranties against Service Providers), and shall be
included in the Constructing Party Cost Overruns, unless such
breach was caused by a Builder or its contractors, subcontractors,
employees, or agents, in which event the Builder shall pay all such
costs and expenses to the extent caused by the Builder or its
contractors, subcontractors, employees, or agents. EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 3.7.1 OR 3.7.2, THE
DEVELOPER PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND
TO BUILDER IN RELATION TO THE IMPROVEMENTS, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF HABITABILITY,
MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE, AND
EXPRESSLY DISCLAIMS ALL OF THE SAME AND SHALL HAVE NO OBLIGATION TO
REPAIR OR CORRECT ANY DEFECT IN IMPROVEMENTS FOR WHICH NO CLAIM IS
ASSERTED DURING THE APPLICABLE WARRANTY PERIOD. The preceding
sentence does not affect, alter or modify any Service
Provider’s obligations to repair or correct any defects in
Improvements and shall not be construed as a limitation on the
Builders’ statutory rights or remedies, if any, which may not
be modified by contract.

 

 

 

161

 

 

25.8 Liens.
Developer shall pay, or cause to be paid, when due, all liens and
claims for labor and/or materials furnished for the construction of
the Improvements pursuant to this Agreement to prevent the filing
or recording by any third party of any mechanics’,
materialmen’s or other lien, stop notice or bond claim or any
attachments, levies or garnishments (collectively
“Liens”)
involving the Improvements.

 

26. Costs of
Improvements.

 

26.1 Definition
of Costs. As used herein, the term “Costs”
shall mean all hard and soft costs incurred in connection with the
design (including all engineering expenses), construction and
installation of the Improvements, including, but not limited to,
costs of labor, materials and suppliers, engineering, design and
consultant fees and costs, blue printing services, construction
staking, demolition, soil amendments or compaction, any processing,
plan check or permit fees for the Improvements, engineering
services required to obtain a permit for and complete the
Improvements, costs of surety and compliance with all applicable
laws, costs of insurance required by this Agreement, costs of any
financial assurances, any corrections, changes or additions to work
required by the Approving Authorities or necessitated by site
conditions, municipal, state and county taxes imposed in connection
with construction of the Improvements, any warranty work, and any
other costs incurred in connection with the performance of the
obligations of Developer or the Substitute Constructing Party (as
applicable) hereunder to complete the Improvements.

 

26.2 Budget.
Upon completion of the Plans there will be attached hereto by an
amendment as Exhibit D an
estimate of the Costs to construct the Improvements (the
“Budget”).
The Costs identified on the Budget are referred to herein as
“Budgeted
Costs.” The Builders shall pay or cause to be paid
pursuant to Article 6 below a share of
the Budgeted Costs not to exceed One Million Two Hundred Thousand
Dollars ($1,200,000.00) (the “Maximum Builder
Costs”).

 

26.3 Cost
Overruns. Notwithstanding anything in this Agreement to the
contrary, the Developer shall pay (i) all costs to correct any
error or defect in the Plans that cause the Costs to exceed the
Maximum Builder Costs, and (ii) all other costs and charges that
cause the Costs to exceed the Maximum Builder Costs (collectively,
the “Constructing Party
Cost Overruns”). The Builders shall not have any
responsibility for Constructing Party Cost Overruns except that the
applicable Builder shall pay for such Constructing Party Cost
Overruns which occur as a result of that Builder’s breach of
its obligations under this Agreement or such Builder’s
actions.

 

26.4 Accounting.
Developer shall keep good and accurate books and records in
sufficient detail to allow the Costs to be calculated, which books
and records shall be made available for review (upon reasonable
prior written notice) by the Parties. Within thirty (30) days after
Substantial Completion of the Improvements, the Developer shall
deliver to the Builders a reasonably detailed final accounting of
the Costs.

 

26.5 Progress
Reports. Developer shall, no less frequently than once per
calendar quarter, provide the Builders with a progress report
setting forth the amount of Costs expended to date, a list of
Improvements completed to date, and an estimate by a project
manager of Developer of the status of overall completion of the
Improvements, in such form as Developer deems reasonably
appropriate.

 

 

 

162

 

 

27. Payment of Costs.

 

27.1 Payment.

 

27.1.1 Payment.
The Builders shall pay to Developer in the aggregate an amount
equal to the Maximum Builder Costs. Each Builder shall pay a
prorata portion of the Maximum Builder Costs that is equal to a
percentage of the Maximum Builder Costs that is calculated by
dividing the number of Builder Lots to be purchased by a Builder
under the terms of that Builder’s Purchase Agreement by the
total number of Builder Lots to be purchased by all of the Builders
in the first phase of the Development under the terms of all of the
Purchase Agreements. Based upon this calculation, each
Builder’s prorata share of the Maximum Builder Cost expressed
as a percentage (“Prorata
Share”) is as follows, subject to adjustment if the
total number or any Builder’s number of Builder Lots changes
as provided in Section 16.3 hereof:

 

# of Lot to be Purchased
 Total # of Lots in
Development Percentage

 

Richmond:  196    506    38.7%

 

Taylor
Morrison: 161    506    31.8%

 

Additional
Builder: 149    506    29.5%

 

Notwithstanding the
foregoing or anything else to the contrary contained in this
Agreement, and for the avoidance of doubt, the Parties acknowledge
and agree that in no event will the amount due from any individual
Builder exceed the dollar amount equal to the product of (a)
$1,200,000.00 multiplied by (b) such Builder’s Percentage
shown in the table above.

 

27.1.2  Escrow
Instruction. Within ten (10) business days after substantial
completion of the Builder Lots to be acquired by a Builder at its
first Closing under its Purchase Agreement, each Builder shall pay
its Prorata Share of that portion of the Maximum Builder Costs
equal to $750,000 to Escrow Agent (the “Initial
Payment”). On or before the date that is two hundred
seventy (270) days after the Phase 1 Substantial Completion Date,
each Builder shall pay to Escrow Agent its Prorata Share of (a) the
lesser of the remaining portion of the Maximum Builder Costs equal
to $450,000, or (b) the remaining portion of the Budgeted Costs
(the “Final
Payment”). For the purposes of this Agreement,
Developer shall be deemed an Additional Builder with respect to the
Pro Rata Share allocated above to the Additional Builder and its
obligations hereunder and Developer shall pay the Additional
Builder’s Prorata Share of the Initial Payment at the first
closing of lots under a Purchase Agreement and pay the Final
Payment on or before the date required above. If a Builder’s
Purchase Agreement terminates before such Builder has closed on the
purchase of any Builder Lots thereunder, then Developer will fund
such Builder’s Prorata Share to the extent required so that
there is not a shortfall in the Initial Payment or Final Payment
required hereunder. When another builder executes a joinder to this
Agreement, the Additional Builder shall be substituted for
Developer as the Additional Builder and shall be responsible for
paying the Pro Rata Share of the Initial Payment and the Final
Payment allocated to the Additional Builder and the obligations of
a Builder hereunder and Developer will be reimbursed from such
payments for any Initial Payment or Final Payment made by
Developer. Escrow Agent has executed this Agreement in order to
reflect its agreement with regard to the Escrowed Funds under this
Section 5. Pursuant to the request of Developer and the Builders,
Escrow Agent agrees to receive and accept the Initial Payment and
the Final Payment (collectively the “Escrowed
Funds”) upon and subject to the remaining terms and
conditions hereof. Developer (or the Substitute Contracting Party
who has been appointed pursuant to Section 3.6.1) is entitled to
draw upon the Escrowed Funds for reimbursement of invoices for
Costs incurred by Developer (or the Substitute Contracting Party)
in connection with the completion of the Improvements. In the event
that a Substitute Contracting Party is appointed pursuant to
Section 3.6.1, Developer and such Substitute Contracting Party
shall promptly give notice thereof to the Escrow Agent and such
Substitute Contracting Party shall thereafter have the rights of
the Developer under this Section 5.1.2 in connection with Draw
Requests to pay for Costs incurred by such Substitute Contracting
Party to complete the construction of the Improvements. The Escrow
Agent shall disburse amounts from the Escrowed Funds in accordance
with the following instructions. To the extent that any
Builder’s Purchase Agreement has be terminated at the time
any payment is due pursuant to this Section, Developer will make
such Builder’s payment, subject to reimbursement from a New
Builder as herein after defined:

 

 

 

163

 

 

(a) Submission
and Payment.
Developer may submit written draw requests
(“Draw
Requests”)
to the Builders and Escrow Agent from time to time. Draw Requests
must be accompanied by (i) copies of invoices from the third party
contractors and other Service Providers for the amounts to be
disbursed and (ii) shall include conditional lien waivers
and releases from Service Providers relating to work to paid for
from the current Draw Request, and to the extent not previously
provided, unconditional waivers and releases from such Service
Providers in the full amount shown on all conditional waivers and
releases previously submitted in connection with prior Draw
Requests for which payment has been made hereunder.

 

(b) Objection. Any portion of a
Draw Request that a Builder does not disapprove by written notice
to Developer and Escrow Agent within five (5) business days
following receipt thereof will be deemed approved. Builders may
only object to a Draw Request for the following reasons: (a) the
invoices to accompany the Draw Request were not properly delivered;
or (b) Builder has good cause to dispute the validity of the
invoice; or (c) the invoice is not for Costs incurred by Developer
in connection with the construction of the Improvements. Builders
shall deliver written notice of any objection (“Objection
Notice”) pursuant to the preceding sentence to Escrow
Agent and Seller within the five (5) business day period described
in the first sentence of this Section. If Escrow Agent and Seller
timely receive an Objection Notice, then Escrow Agent shall not be
authorized to disburse such disputed amount to Developer (but
Escrow Agent shall be authorized to disburse all other non-disputed
amounts to Developer) unless and until Escrow Agent receives
authorization to do so from the Parties. If Escrow Agent and
Developer timely receive an Objection Notice, then Builder and
Seller shall promptly meet and in good faith attempt to resolve all
objections and provide direction to Escrow Agent to disburse
mutually-acceptable amounts to the Developer. Any Objection Notice
shall specifically identify the amount of the requested payment to
which the objection applies and the basis for such objection. No
Objection Notice shall be valid if it does not identify specific
objections.

 

(c) Final Disbursement. Upon
Substantial Completion of the Improvements, Developer will submit a
Completion Notice to Escrow Agent and the Builders along with a
final Draw Request (which shall include an unconditional lien
waiver from all Service Providers, to the extent not previously
provided) with respect to any funds remaining in the Escrow
Account. If Escrow Agent is not in possession of an unresolved
Objection Notice, then Escrow Agent will pay any undisbursed
portion of the Escrow Funds then remaining in escrow to Developer.
If Escrow Agent receives an Objection Notice from a Builder in
accordance with this pertaining to Developer’s final Draw
Request, the Escrow Agent may hold such undisbursed Escrow Funds
until it receives joint written instructions from Developer and
such Builder directing Escrow Agent regarding the disbursement of
such amount, or Escrow Agent may proceed as permitted by the
General Provisions to this Agreement attached as Attachment 1
hereto.

 

(d) If the Developer
and Builders are unable to agree upon a resolution of an Objection
Notice within five (5) days after Developer’s receipt
thereof, then any dispute related to such Objection Notice shall be
submitted to the expedited dispute resolution procedures in
accordance with Section
6 below.

 

 

 

164

 

 

(e) Developer shall pay
all charges of Escrow Agent in acting hereunder, and such
reasonable attorneys’ fees, expenses and other costs as may
be incurred by Escrow Agent in connection with the negotiation,
preparation and administration of this Agreement.

 

28. Expedited Dispute
Resolution.

 

28.1 Disputes
Related to Contracts, Draw Notices and Costs. Notwithstanding anything to the contrary herein,
disputes related to any objections to Contracts,
determination of Substantial Completion, Draw Notices or the amount
of or responsibility for Constructing Party Cost Overruns
(“Expedited
Disputes”) shall all be
resolved by CVL Engineers – Melinda Lundquist or if
such party is not available or unwilling to serve as arbitrator,
another reputable third party licensed engineer selected by
Developer and approved by Builders (“Informal
Arbitrator”). Within five (5) business days after a
Party delivers a Dispute Notice to all Parties, the Developer and
the Builder or Builders involved in the Expedited Dispute shall
deliver to the Informal Arbitrator a written statement of how such
Party believes the Expedited Dispute should be resolved, together
with reasonable supporting documentation of such position
(“Resolution
Notice”). Within ten (10) business days after receipt
of Resolution Notices from both such Parties, the Informal
Arbitrator shall approve one (1) of the Parties’ Resolution
Notice and shall deliver written notice of such approval to each
Party. The decision of the Informal Arbitrator shall be binding on
all Parties with respect to the applicable Expedited Dispute. All
Parties shall timely cooperate with the Informal Arbitrator in
rendering his or her decision. The Party that is not the prevailing
party in the resolution of any Expedited Dispute shall promptly pay
the Informal Arbitrator’s fee, and the prevailing
party’s other fees and costs of any such expedited dispute
resolution process and reasonable attorney’s fees. The term
“prevailing party” means the party who successfully
obtains substantially all of the relief sought by such party or is
successful in denying substantially all of the relief sought by the
other party. The Parties acknowledge that there is a benefit to the
Parties in having work done as expeditiously as possible and that
there is a need for a streamlined method of making decisions
described in this Section so that work is not delayed. A Party
shall not be entitled to recover from any other Party exemplary,
punitive, special, indirect, consequential or any other damages
other than actual damages (unless the Informal Arbitrator finds
intentional abuse or frustration of the arbitration process) in
connection with an Expedited Dispute.

 

28.2 Standards
of Conduct. The Parties agree that with respect to all
aspects of the expedited dispute resolution process contained
herein they will conduct themselves in a manner intended to assure
the integrity and fairness of that process. To that end, if an
Expedited Dispute is submitted to expedited dispute resolution
process, the Parties agree that they will not contact or
communicate with the Informal Arbitrator who was appointed with
respect to any Expedited Dispute either ex parte or outside of the contacts and
communications contemplated by this Section 6, and the Parties
further agree that they will cooperate in good faith in the
production of evidence in a prompt and efficient manner to permit
the review and evaluation thereof by the other
Parties.

 

29. Progress Meetings. From and
after the date of this Agreement and until Substantial Completion
of the Improvements, the Parties shall cause their designated
representatives to meet within five (5) business days following a
request from a Party regarding the status of construction of the
Improvements, scheduling and coordination issues, engineering and
design issues, and other similar issues. Any Party may change its
designated representative under this Agreement at any time by
written notice to the other parties. The initial designated
representative for each Party for the purpose of this Section shall
be the individual listed on each Party’s respective signature
page attached hereto. All inquiries, requests, instructions,
authorizations, and other communications with respect to the
matters covered by this Agreement shall be made to such
representatives. Any Party may without further or independent
inquiry, assume and rely at all times that the representatives of
the other parties designated hereunder have the power and authority
to make decisions on behalf of such other parties, to communicate
such decisions to the other Party and to bind such Party by his
acts and deeds, unless otherwise notified in writing by the Party
designating the representative. Any Party may change its
representative under this Agreement at any time by written notice
to the other Parties.

 

 

 

165

 

 

30. Developer’s Stormwater Permit
responsibilities. Developer shall obtain and comply with all
necessary permits related to stormwater and erosion control from
all Approving Authorities, in relation to the construction, repair,
and maintenance of the Improvements.

 

31. Notices and Communications. All
notices, statements, demands, requirements, approvals or other
communications and documents (“Communications”)
required or permitted to be given, served, or delivered by or to
any Party or any intended recipient under this Agreement shall be
in writing and shall be given to the
addresses set forth in this Section 9
(“Notice
Address”). Communications
to a Party shall be deemed to have been duly given (i) on the
date and at the time of delivery if delivered personally to the
Party to whom notice is given at such Party’s Notice Address;
or (ii) on the date and at the time of delivery or refusal of
acceptance of delivery if delivered or attempted to be delivered by
an overnight courier service to the Party to whom notice is given
at such Party’s Notice Address; or (iii) on the date of
delivery or attempted delivery shown on the return receipt if
mailed to the Party to whom notice is to be given by first-class
mail, sent by registered or certified mail, return receipt
requested, postage prepaid and properly addressed to such Party at
such Party’s Notice Address; or (iv) on the date and at
the time shown on the facsimile or electronic mail message if
telecopied or sent electronically to the number or address
designated in such Party’s Notice Address and receipt of such
telecopy or electronic mail message is electronically confirmed
(provided, however, any notice of default from Developer to Builder
may not be delivered by electronic mail message and must be
delivered by facsimile or other delivery method set forth above).
The Notice Addresses for the Developer and Builder are as follows:

 

To
Developer:

PCY
Holdings, LLC

Attention:
Mark Harding

34501
E. Quincy Ave.

Bldg.
34, Box 10

Watkins,
Colorado 80137

Telephone:
(303) 292-3456

Facsimile:
(303) 292-3475

E-mail: mharding@purecyclewater.com

 

with a
copy to:

Fox
Rothschild LLP

1225
17th
Street, Suite 2200

Denver,
CO 80202

Attention: Rick
Rubin, Esq.

Telephone: (303)
292-1200

Email:
rrubin@foxrothschild.com

 

 

 

166

 

 

To
Richmond:

Linda
Purdy

Richmond American
Homes of Colorado, Inc.

4350
South Monaco Street

Denver,
Colorado 80237

Telephone:
(720)-977-3847

Facsimile: (720)
977-4707

Email:
linda.purdy@mdch.com

 

with a
copy to:

M.D.C.
Holdings, Inc.

4350
South Monaco Street

Denver,
Colorado 80237

Attn:
Drew Rippey

Telephone: (720)
977-3213

Facsimile: (720)
482-8558

Email:
Drew.Rippey@mdch.com

 

M.D.C.
Holdings, Inc.

4350 S.
Monaco Street

Denver,
CO  80237

Attn:                      Linda
Zimmerman Skultety

Senior
Paralegal – Real Estate

Telephone: 
720-977-3254

Facsimile:
303-488-4954

Email:
Linda.Skultety@mdch.com

 

To
Taylor Morrison:

Taylor
Morrison of Colorado, Inc.

1420
West Canal Court, Suite 170

Littleton, Colorado
80120

Attention: Phillip
Cross

Telephone:
(303) 325-2426

E-mail: pcross@taylormorrison.com

 

With
copy to Phillip Cross at same address

E-mail: pcross@taylormorrison.com

 

with a
copy
to:                                

Brier,
Irish, Hubbard & Erhart P.L.C.

2400
East Arizona Biltmore Circle, Suite 1300

Phoenix, AZ
85016

Attn:
Jeff Hubbard

Telephone: (602)
522-0160

Facsimile: (602)
522-3945

E-mail: jhubbard@bihlaw.com

 

With
copy to Tony Meier at same address

E-mail: tmeier@bihlaw.com

 

 

167

 

 

If to
Escrow Agent:

 

Land
Title Guarantee Company

Attn:
____________________

3033 E.
1st Ave. #600

Denver,
Colorado 80206

Fax#: 303-393-4959

Direct: 303-_______________

Email: ___________@ltgc.com

 

32. Attorneys’ Fees. Except
as provided in Section
6.1, should any action be brought in connection with this
Agreement including, without limitation, actions based on contract,
tort or statute, the prevailing Party in such action shall be
awarded all costs and expenses incurred in connection with such
action, including reasonable attorneys’ fees. The provisions
of this Section shall survive the expiration or termination of this
Agreement.

 

33. Further Acts. Each of the
Parties hereto shall execute and deliver all such documents and
perform all such acts as reasonably necessary, from time to time,
to carry out the matters contemplated by this
Agreement.

 

34. No Partnership; Third Parties.
It is not intended by this Agreement to, and nothing contained in
this Agreement shall, create any partnership, joint venture or
other arrangement among the Parties hereto. No term or provision of
this Agreement is intended to, or shall, be for the benefit of any
person, firm, organization or corporation not a Party hereto, and
no such other person, firm, organization or corporation shall have
any right or cause of action hereunder.

 

35. Entire Agreement; Headings for
Convenience Only; Not to be Construed Against Drafter; No Implied
Waiver. This Agreement and all other written agreements
among the Parties constitute the entire agreement among the Parties
hereto pertaining to the subject matter hereof. No change or
addition is to be made to this Agreement except by written
amendment executed by the Parties. The
headings, captions and titles contained in this Agreement
are intended for convenience of
reference only and are of no meaning in the interpretation or
effect of this Agreement. This Agreement shall not be construed
more strictly against one (1) Party than another merely by virtue
of the fact that it may have been initially drafted by one (1) of
the Parties or its counsel, since all Parties have contributed
substantially and materially to the preparation hereof. No failure
by a Party to insist upon the strict performance of any term,
covenant or provision contained in this Agreement, no failure by a
Party to exercise any right or remedy under this Agreement, and no
acceptance of full or partial payment owed to a Party during the
continuance of any default by the other Party(ies), shall
constitute a waiver of any such term, covenant or provision, or a
waiver of any such right or remedy, or a waiver of any such default
unless such waiver is made in writing by the Party to be bound
thereby. Any waiver of a breach of a term or a condition of this
Agreement shall not prevent a subsequent act, which would have
originally constituted a default under this Agreement, from having
all the force and effect of a default.

 

 

 

168

 

 

36. Governing Law. This Agreement
is entered into in Colorado and shall be construed and interpreted
under the law of the State of Colorado without giving effect to
principles of conflicts of law which would result in the
application of any law other than the law of the State of
Colorado.

 

37. Severability. If any provision
of this Agreement is declared void or unenforceable, such provision
shall be severed from this Agreement and shall not affect the
enforceability of the remaining provisions of this
Agreement.

 

38. Assignment; Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective successors and permitted
assigns. Neither the Builders nor Developer may assign any of their
rights or obligations under this Agreement without the prior
written consent of the other Party(ies), which consent may be
withheld in each Party’s sole and absolute discretion;
provided, however, that:

 

38.1 A
Builder may assign, without consent, its rights under this
Agreement in full, but not in part: (i) to a third party which
acquires some or all of Builder’s Builder Lots, or (ii) to an
entity that controls, is controlled by, or under common control
with, Builder; provided further, however that Developer approves
the form of assignment, which approval shall be in
Developer’s reasonable discretion; and

 

38.2 Developer
may assign, without consent (but with prior notice to Builder), its
rights under this Agreement: (i) to an entity that controls, is
controlled by, or under common control with, Developer; (ii) to any
entity that acquires all or substantially all of the
Developer’s interests in the Builder Lots which Seller
reasonably believes has the financial ability and experience to
perform Seller’s obligations under this
Agreement.

 

38.3 Notwithstanding
the foregoing, to the extent that any Builder identified herein
does not acquire all of the Builder Lots to be acquired pursuant to
its Purchase Agreement, the Developer shall have the right to
unilaterally amend this Agreement by having any other builder (each
a “New
Builder”) which contracts to acquire any of the
Builder Lots from Developer to execute a joinder to this Agreement
which shall set forth a Prorata Share for such New Builder as
calculated pursuant to Section 5.1.1 hereof and in the form
attached as Exhibit
E.

 

39. Counterparts;
Copies of Signatures. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one (1) and
the same instrument. The signature pages from one (1) or more
counterparts may be removed from such counterparts and such
signature pages all attached to a single instrument so that the
signatures of all Parties may be physically attached to a single
document. This Agreement
may be executed and delivered by
facsimile or by electronic mail in portable document format (.pdf)
or similar means and delivery of the signature page by such method
will be deemed to have the same effect as if the original signature
had been delivered to the other party. Upon execution of
this Agreement by Developer and
the Builders, Developer shall provide a fully executed copy of
this Agreement to each Builder
for its records.

 

 

 

169

 

 

40. Time of the Essence. Time is of
the essence for performance or satisfaction of all requirements,
conditions, or other provisions of this Agreement, subject to any
specific time extensions set forth herein.

 

41. Computation of Time Periods.
All time periods referred to in this Agreement shall include all
Saturdays, Sundays and holidays, unless the period of time
specifies business days. If the date to perform any act or give a
notice with respect to this Agreement shall fall on a Saturday,
Sunday or national or state holiday, the act or notice may be
timely performed on the next succeeding day which is not a
Saturday, Sunday or a national or state holiday.

 

42. Remedies. Except as hereinafter
provided with regard to Expedited Disputes and the self-help remedy
under Section 3.6,
if any Party is in default of any of its obligations under this
Agreement beyond any applicable notice or cure periods, the other
Party(ies) may avail itself to any rights and remedies available at
law and equity, but may only recover its actual, out-of-pocket
damages (excluding any incidental, consequential, speculative,
punitive or lost profits damages) incurred as a result of such
default. For Expedited Disputes, the sole and exclusive remedy of
the Parties is set forth in Section 6 of this Agreement, and for
Developer Defaults, the sole and exclusive remedy of the Parties is
set forth in Section
3.6 of this Agreement.

 

43. Jury Waiver. TO THE EXTENT
PERMITTED BY LAW, THE PARTIES HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE,
RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THE PROVISIONS OF THIS AGREEMENT.

 

[SIGNATURE PAGE
FOLLOWS]

 

 

 

170

 

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

 

DEVELOPER:

 

PCY
HOLDINGS. LLC,

a
Colorado limited liability company

 

 

By:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

 

Designated
Representative:
______________________________________________________

 

 

 

 

 

 

 

ESCROW
AGENT:

 

Land
Title Guarantee Company

 

By:            

___________________________________

Name:                       

___________________________________

Title:                       

___________________________________

 

 

 

 

171

 

BUILDER:

 

Richmond American
Homes of Colorado, Inc.,

a
Delaware corporation

 

By:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

Designated
Representative:  

_____________________________________________________

 

 

 

 

 

BUILDER:

 

Taylor
Morrison of Colorado, Inc.,

a
Colorado corporation

 

By:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

Designated
Representative: 

_____________________________________________________

 

 

 

 

 

 

 

 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

172

 

Exhibit
A

to

Amenity
Development Agreement

Showing
Central Park, North Park and South Park

 

 

 

173

 

Exhibit
B

to

Amenity
Development Agreement

 

(Improvements and
Plans)

 

 

174

 

 

 

 

 

175

 

 

 

 

176

 

Exhibit
C

to

Amenity
Development Agreement

 

(Required
Insurance)

 

Developer or the
Substitute Constructing Party (as applicable) shall maintain the
amounts and types of insurance described below and shall cause the
Service Providers to maintain such coverages from insurance
companies licensed to do business in the State of Colorado having a
Best’s Insurance Report Rating of A/VI or better covering the
risks described below:

 

A.            

Commercial General
Liability Insurance (including premises, operations, products,
completed operations, and contractual liability coverages) in an
amount not less than One Million Dollars ($1,000,000.00) per
occurrence, One Million Dollars ($1,000,000.00) personal injury and
advertising injury, and Two Million Dollars ($2,000,000.00) General
Aggregate.

 

B.            

Automobile
Liability Insurance for all motor vehicles operated by or for
Developer or Substitute Constructing Party, including owned, hired,
and non-owned autos, with minimum Combined Single Limit for Bodily
Injury and Property Damage of One Million Dollars ($1,000,000.00)
for each occurrence.

 

C.            

Workers
Compensation Insurance for all employees of Developer or Substitute
Constructing Party as required by law, to cover the applicable
statutory limits in the State of Colorado and employer’s
liability insurance with limits of liability of not less than One
Million Dollars ($1,000,000.00) for bodily injury by accident (each
accident) and One Million Dollars ($1,000,000.00) for bodily injury
by disease (each employee).

 

D.            

With respect to
Service Providers that provide professional services (e.g.,
engineers), professional liability insurance, including prior acts
coverage sufficient to cover any and all claims arising out of the
services, or a retroactive date no later than the date of
commencement of the services, with limits of not less than One
Million Dollars ($1,000,000.00) per claim and Two Million Dollars
($2,000,000.00) annual aggregate. The professional liability
insurance shall be maintained continuously during the term of the
Agreement and so long as the insurance is commercially reasonably
available, for a period not less than the Government Warranty
Period. The professional liability insurance required by this
paragraph shall not contain any exclusions or limitations
applicable to residential projects.

 

The
following general requirements shall apply to all insurance
policies described in this Exhibit.

 

1.            

All liability
insurance policies, except workers compensation insurance, shall be
written on an occurrence basis.

 

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.

 

 

177

 

 

 

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.

 

 

 

 

178

 

Exhibit
D

to

Amenity
Development Agreement

 

(Budget)

 

 

179

 

Exhibit
E

to

Amenity
Development Agreement

 

 

 

 

 

 

 

180

 

 

 

JOINDER
BY BUILDER

 

THIS
JOINDER TO AMENITY DEVELOPMENT AGREEMENT (this
“Joinder”), dated as of _________________, 201___ (the
“Joinder Date”), is made by
_____________________________________________________
(“Purchaser”), for the benefit of PCY Holdings, LLC, a
Colorado limited liability company (“PCY”) and each
other Builder that is a party to that Amenity Development Agreement
dated _______________, 201__.

 

WHEREAS, PCY, as
seller, and Purchaser, as purchaser, are parties to that certain
Contract for Purchase and Sale of Real Estate (Sky Ranch) dated
___________, 201__ (as amended and assigned from time-to-time, the
“Purchase Agreement”), with respect to the sale of
certain residential building lots located within the Sky Ranch
Development in Arapahoe County, Colorado, and

 

WHEREAS, PCY has
agreed to construct certain park amenities and improvements for the
benefit of the lots identified under the Purchase Agreement to be
funded as provided in the Amenity Development Agreement. PCY and
Purchaser desire that Purchaser become a party to the Amenity
Development Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, PCY and Purchaser hereby agree as
follows:

 

1.            

Any capitalized
terms not defined in this Joinder shall have the meanings ascribed
thereto in the Amenity Development Agreement, which is hereby
incorporated by reference.

 

2.            

By execution of
this Joinder, Purchaser becomes a party to the Amenity Development
Agreement for all purposes and shall be entitled to exercise all of
the rights, and subject to all of the obligations, of the
Additional Builder thereunder. Purchaser shall pay the Additional
Builder’s Prorata Share of the Initial Payment and the Final
Payment as required by the terms of the Amenity Development
Agreement.

 

3.            

This Joinder shall
inure to the benefit of the Builders and their successors and
assigns under the Amenity Development Agreement.

 

IN
WITNESS WHEREOF, Purchaser has executed this Joinder as of the
Joinder Date.

 

___________________________________,

a
__________________________________

 

 

By:           

 

Name:                      

 

Title:                      

 

181

 

ATTACHMENT 1

to

Amenity
Development Agreement

 

LAND
TITLE GUARANTEE COMPANY Initials
_______

GENERAL
PROVISIONS TO THE ESCROW AGREEMENT Initials
_______

 

1.

Notices.

 

Any
notices required or permitted to be given under the Escrow
Agreement shall have been deemed to have been served:

 

i.

one business day
after the notice is hand delivered with proof of receipt by the
addressee, or

 

ii.

one business day
after transmission by facsimile evidencing confirmation of receipt
by the receiving facsimile machine, or

 

iii.

one business day
after transmission by email evidencing confirmation of receipt by
the receiving email address, or

 

iv.

if reputable
overnight courier (such as United Parcel Service or Federal
Express) is used, on the immediately following business day after
notice is sent for overnight delivery, or

 

v.

if the United
States Mail is used, on the third business day after the notice is
deposited in the United States Mail, postage prepaid;

 

Provided in each
case such notice is addressed to the parties at the addresses given
on the first page of this Escrow Agreement.

 

2.

Reliance
on Notice.

 

Escrow
Agent may act in reliance upon any writing or instrument or
signature which Escrow Agent, in good faith, believes to be
genuine, and may assume the validity and accuracy of any statement
or assertion contained in such a writing or instrument, and may
assume that any person purporting to give any writing, notice,
advice or instruction in connection with the provisions hereof has
been duly authorized so to do.

 

3.

Laws Relating to Unclaimed
Funds.

 

Seller
and Buyer are hereby advised that unclaimed funds may be payable to
the State at some future date pursuant to unclaimed property laws,
and should Escrow Agent pay any such funds held in the Escrow
Deposit, Escrow Agent shall be released from all further
responsibility under the Escrow Agreement and shall not be liable
to any Party so long as such payment was made pursuant to
applicable law.

 

4.

Escrow
Deposit and Interest Earned on Escrow Deposit

 

a.

In the event that
the Escrow Deposit consists partly or entirely of money, then
during the period the Escrow Agent is in possession of the Escrow
Deposit, the money will be deposited in an FDIC insured institution
(the “Institution”).

 

b.

Upon receipt of
written direction of the parties along with a completed W-9, funds
will be invested in an interest bearing account.

 

c.

Deposits of
$100,000.00 or more may be directed by the parties hereto to other
types of investments, or the Escrow Agent may invest the Escrow
Deposit in Repurchase Agreements for U.S. Treasury obligations or
other Federal agency issued securities.

 

d.

Escrow Agent shall
not be responsible for maximizing the yield on the Escrow Deposit.
Under no circumstances shall Escrow Agent be liable for loss of
funds due to bank or other Institution failure, including employees
or agents thereof, suspension or cessation of business, or any
action or inaction on the part of the bank or other institution, or
any delivery service transporting funds to and from the
institution.

 

e.

All parties hereto
shall execute and deliver to Escrow Agent all forms required by
federal, state or other governmental agencies relative to taxation
matters and Escrow Agent will file appropriate 1099 or other
required forms.

 

5.

Fees and Expenses of Escrow
Agent.

 

a.

The Escrow Agent
shall be entitled to reimbursement in full, or may demand payment
in advance, for all costs, expenses, charges, fees or other
payments made or to be made by Escrow Agent in the performance of
Escrow Agent’s duties and obligations under the Escrow
Agreement.

 

b.

The parties to the
Escrow Agreement are jointly and severally liable for the payment
to Escrow Agent of all fees and expenses. Escrow Agent is hereby
authorized and directed to reimburse to itself in payment of fees
or expenses from any funds in the Escrow Deposit, whether from
principal or interest or both, at any time, and from time to time,
as the same may be due and owing.

 

c.

Escrow Agent is
hereby authorized to withhold any fees or expenses from any
disbursement or distribution of Escrow Deposit to any Party hereto
or to the Clerk of the Court upon interpleader.

 

d.

In the event that
the Escrow Deposit shall consist of documents only and not funds,
Escrow Agent may refuse to distribute any such documents or to
otherwise act under this Agreement until all accrued but unpaid
fees and expenses have been paid in full.

 

6.

Non-liability
of Escrow Agent.

 

a.

Escrow Agent shall
not be liable for any mistakes of fact, or errors of judgment, or
for any acts or omissions of any kind unless caused by the willful
misconduct or gross negligence of Escrow Agent.

 

b.

Escrow Agent shall
not be liable for any taxes, assessments or other governmental
charges which may be levied or assessed upon the Escrow Deposit or
any part thereof, or upon the income therefrom.

 

 

 

182

 

 

 

 

c.

Escrow Agent may
rely upon the advice of counsel and upon statements of accountants,
brokers or other persons reasonably believed by it in good faith to
be expert in the matters upon which they are consulted, and for any
reasonable action taken or suffered in good faith based upon such
advice or statements

 

7.

Indemnity
of Escrow Agent.

The
Seller and Builders jointly and severally, agree to:

i.

indemnify Escrow
Agent and hold it harmless as to any liability by it incurred by
the Escrow Agent to any other person or persons by reason of this
Escrow Agreement, or in connection herewith except for Escrow
Agent’s own willful misconduct or gross negligence,
and

ii.

reimburse Escrow
Agent for all its expenses, including, but not necessarily limited
to attorneys’ fees and court costs incurred in connection
herewith.

8.

Request
for Written Instructions.

a.

Escrow Agent may at
any time, and from time to time, request the Seller and Buyer to
provide written instructions concerning the propriety of a proposed
payment of the Escrow Deposit, distribution of documents, or other
action or refusal to act by Escrow Agent.

b.

Should the Seller
and Buyer fail to provide such written instructions within a
reasonable time, Escrow Agent may take such action, or refuse to
act, as it may deem appropriate and shall not be liable to anyone
for such action or refusal to act.

c.

Notwithstanding the
foregoing, should the terms of the Escrow Agreement be complied
with, in the judgment of Escrow Agent, then the Escrow Agent may
disburse any funds, distribute documents, or take such action
without specific further written instructions from any
Party.

9.

Disputes and Interpleader.

a.

In the event of any
dispute between the Parties as to either law or fact, or in the
event any of the parties hereto fail, for any reason, to fully
receipt and acquit the Escrow Agent in writing, Escrow Agent may
refuse, in its discretion, to carry out said escrow instructions or
to deliver any funds, documents, or property in its hand to anyone
and in so doing shall not become liable to demand.

b.

Escrow Agent shall
be entitled to continue, without liability, to refrain and refuse
to act:

i.

until all the
rights of the adverse claimants have been finally adjudicated by a
court having jurisdiction over the Parties and the items affected
hereby, after which time the Escrow Agent shall be entitled to act
in conformity with such adjudication; or

ii.

until all
differences shall have been adjusted by agreement and Escrow Agent
shall have been notified thereof and shall have been directed in
writing signed jointly or in counterpart by the parties and all
persons making adverse claims or demand, at which time Escrow Agent
shall be protected in acting in compliance therewith.

c.

Escrow Agent also
has the right to interplead into a court of competent jurisdiction
at the expense of the Parties.

10.

Resignation of Escrow
Agent.

a.

Escrow Agent may
resign under this Agreement by giving written notice to all of the
parties hereto, effective 30 days after the date of said
notice.

b.

Upon the
appointment by the parties of a new Escrow Agent or custodian, or
upon written instructions to Escrow Agent for other disposition of
the Escrow Deposit, Escrow Agent shall, after retention of its
accrued escrow fees and expenses, if any, shall deliver the Escrow
Deposit within a reasonable period of time as so directed, and
shall be relieved of any and all liability hereunder arising
thereafter.

11.

Applicable Law.

This
Agreement shall be governed by the laws of the State of
Colorado.

12.

Counterparts/Facsimile.

 

The
Escrow Agreement may be executed in any number of counterparts,
each of which when so executed shall constitute the entire
agreement between the Seller and Buyer and may be executed in
facsimile and such facsimile signature shall be accepted as
original signatures. The Seller and Buyer acknowledge and agree
that there are no intended or unintended third party beneficiaries
who may rely upon or benefit from the provisions of this
agreement.

 

 

183

 

SERVICE
AGREEMENT FOR

PROJECT
MANAGEMENT SERVICES

(FOR IMPROVEMENTS AT SKY RANCH)

 

 

THIS
SERVICE AGREEMENT FOR
PROJECT MANAGEMENT
SERVICES FOR
_______________(“Agreement”) is entered into and
effective as of the ______ day
of ________________,
2017, by and between
SKY RANCH
COMMUNITY AUTHORITY BOARD,
an authority and separate legal entity formed pursuant to
§29-1-203.5, C.R.S. (the “CAB”), and PCY HOLDINGS, LLC, a
Colorado limited liability
company (the “Consultant”) (each a
“Party” and,
collectively, the “Parties”).

 

RECITALS

 

A. The
CAB was organized by the Sky Ranch Colorado Metropolitan District
Nos. 1 and 5 (the “Districts”) and pursuant to the
laws of the State of Colorado in order to construct, operate and
maintain certain public facilities and improvements in accordance
with the Sky Ranch Community Authority Board Establishment
Agreement (the “CABEA”) and each of the service
plans for the Districts.

 

B. The CAB and the
Districts were formed to provide public improvements to that
certain development known as Sky Ranch in Arapahoe County,
Colorado.

 

C. Pursuant to the
CABEA, the CAB is permitted to enter into contracts and agreements
affecting the affairs of the CAB.

 

D. The Consultant has
experience in providing the services, as set forth in Exhibit A
hereto, attached and incorporated herein (the “Services” or “CAB Eligible Services”), and is
willing to provide such Services to the CAB for reasonable
consideration for the project/improvements as set forth in
Exhibit
B (the “Improvements” or
“CAB Eligible
Improvements”).

 

E. The Parties desire
to enter into this Agreement to establish the terms by which the
Consultant will provide the Services to the CAB.

 

NOW,
THEREFORE, in consideration of the mutual covenants and promises
set forth herein, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:

 

I.            

CONSULTANT
DUTIES AND AUTHORITY

 

1.1 Duties
of Consultant. The Consultant shall:

 

(a) Perform the
Services, safely and in accordance with the highest standard of
care, skill, and diligence provided by a professional consultant in
performance of work similar to the Services.

 

(b) Be properly
qualified to perform the Services. The Consultant does hereby
warrant that the quality of the Services shall be as specified in
this Agreement, shall conform in all respects to the requirements
of this Agreement and shall be free of defects and
deficiencies.

 

 

 

184

 

 

(c) Take all
precautions necessary for safely and prudently conducting the
Services required by this Agreement, including maintaining
insurance as required under Section 4.2 hereof.

 

(d) Advise the CAB and
Builders of the status of the Services required by this Agreement
on a regular basis and work in coordination with the CAB’s
consultants to assure that the CAB and Builders have the most
complete information available for the exercise of the CAB’s
powers and discretionary authority.

 

(e) Refrain from
entering into any contract, oral or written, in the name of the
CAB, and from incurring any debt, liability or obligation for or on
behalf of the CAB. All obligations incurred by the Consultant shall
be obligations of the Consultant and the Consultant shall hold the
CAB harmless therefrom.

 

1.2 Limitations on
Authority.

 

(a) The Consultant
shall have no right or authority, expressed or implied, to take any
action, expend any sum, incur any obligation, or otherwise obligate
the CAB in any manner whatsoever, except to the extent specifically
provided in this Agreement or specifically authorized or ratified
by the board of directors of the CAB as reflected in the minutes of
the CAB board meetings. The Consultant shall at all times conform
to the stated policies established and approved by the
CAB.

 

(b) Independent Contractor Status.
The Consultant is an independent contractor, as provided in Section
8-40-202(2)(b)(I)-(IV), C.R.S., as amended, and nothing herein
contained shall constitute or designate the Consultant or any of
its employees, agents, subcontractors or suppliers as employees of
the CAB. The Services to be performed by the Consultant shall be at
its sole cost, risk and expense, and no part of the cost thereof
shall be charged to the CAB, except the payments to be made by the
CAB to the Consultant for the Services performed as provided
herein. The CAB shall not be responsible for the Consultant’s
means, methods, techniques, sequences or procedures of work or for
safety precautions incident thereto. The Consultant is not entitled to
workers’ compensation benefits and the Consultant is
obligated to pay federal and state income taxes on moneys earned
pursuant to this Agreement.

 

1.3 Compliance with Applicable Law.
The Consultant shall provide the Services set forth herein in full
compliance with all applicable laws, rules, and regulations of any
federal, state, county, or municipal body or agency thereof having
jurisdiction over the activities of the CAB.

 

1.4 No Right or Interest in CAB
Assets. The Consultant shall have no right or interest in
any of the CAB’s assets, nor any claim or lien with respect
thereto, arising out of this Agreement or the performance of the
Services contemplated herein.

 

 

 

185

 

 

1.5 Certification of Compliance with
Illegal Alien Statute. By its execution hereof, the
Consultant confirms and ratifies all of the certifications,
statements, representations and warranties set forth in
Exhibit
D attached
hereto and made a part hereof by this reference.

 

1.6 Work Product.
“Work Product”
shall consist of all written materials maintained by the Consultant
in connection with performance of this Agreement, including, but
not limited to, all test results, logs, surveys, maps, plans,
drawings, specifications, reports, PDF formatted electronic files
and other documents, in whatever form. The Consultant shall
maintain reproducible copies of any test results and logs which it
obtains and shall make them available for the CAB’s use, and
shall provide such copies to the CAB upon request at reasonable
commercial printing rates. Consultant agrees all right, title and
interest in the Work Product is and shall remain the property of
the CAB. If requested by the CAB, Consultant shall execute and
deliver such documents as shall be necessary in the CAB’s
sole discretion, to assign, transfer and convey all rights in the
Work Product to the CAB or its assignee. If Consultant fails to
execute any documents required under this Section 1.6, then
Consultant hereby irrevocably appoints the CAB its attorney-in-fact
for the purpose of executing any required transfers of ownership or
interests and any other documents necessary to effectuate this
Section 1.6. Further, all Work Product, whether in paper or
electronic form, reproductions thereof, or any information or
instruments derived therefrom, shall be provided to the CAB
immediately upon termination of this Agreement.

 

II.            

COMPENSATION

 

2.1 Compensation.
The Consultant shall be paid as set forth in Exhibit C
attached hereto on a time and
materials basis, unless otherwise approved in advance by the
CAB through a written change order in form substantially as
attached hereto as Exhibit E
(“Change
Order”).

 

2.2 Monthly Invoices and Payments.
The Consultant shall submit to the CAB a monthly invoice, in a form
acceptable to the CAB. Invoices shall be submitted and paid no more
frequently than once a month.

 

2.3 Expenses. The Consultant is
responsible for all expenses it incurs in performance of this
Agreement and shall not be entitled to any reimbursement or
compensation except as set forth in Exhibit C,
unless otherwise approved in advance by the CAB in
writing.

 

2.4 CAB Debt; Improvements Fund.
The CAB does not intend hereby to create a multiple fiscal year
direct or indirect debt or other financial obligation whatsoever.
The performance of those obligations of the CAB hereunder requiring
budgeting and appropriation of funds is subject to budgeting and
appropriation. Nothing herein constitutes or creates an
indebtedness or debt of the CAB within the meaning of any Colorado
constitutional provision or statutory limitation; provided that the
CAB acknowledges and agrees as follows:

 

2.4.1.                      The
“Improvements Fund” is hereby established, to be held
by the CAB for the purposes specified in this Agreement, and
maintained in accordance with the provisions of this Agreement. PCY
has or will deposit funds in a CAB-controlled bank account (at an
FDIC-insured bank reasonably acceptable to the CAB) in an amount
sufficient to fund the construction of and substantial completion
of the Improvements.

 

 

 

186

 

 

2.4.2.
The CAB will hold the Improvements Fund in a segregated account for
the sole purpose of funding the construction and substantial
completion of the Improvements.

 

2.4.3
The CAB will promptly fund all draw requests from the Improvements
Fund, so long as such draw requests are properly submitted in
accordance with the terms of this Agreement.

 

III.            

TERM

 

3.1 Term.
The term of this Agreement shall begin on the date set forth above,
and shall expire on satisfactory
completion of the Services. Extensions of this Agreement
must be pursuant to a Change Order executed by both Parties. The
CAB shall pay the Consultant for all Services satisfactorily
performed through the termination date.

 

IV.            

INDEMNIFICATION
AND INSURANCE

 

4.1 Indemnification.
The Consultant (but not any Builder that exercises its Step-In
Right as described in Article V, below, except to the extent
provided in Section 5.1(c) below) hereby agrees to indemnify,
defend and hold the CAB and its affiliated entities or other
persons or entities designated by the CAB, and their respective
directors, trustees, officers, members, managers, agents and
employees (collectively, the “Indemnitees”), harmless from any
and all liability for damage, including, but not limited to, the
reimbursement of attorneys’ fees and costs, arising out of
death or bodily injury to persons or damage to property, in such
amount that is represented by the degree or percentage of
negligence or fault attributable to the Consultant and/or its
agents, representatives, subcontractors, or suppliers. The
foregoing does not modify any separate agreement as to liabilities
or obligations between any Builder (as hereinafter defined) that
exercises its Step-In Rights (as hereinafter defined) and
Consultant.

 

4.2 Insurance Requirements. The
Consultant shall procure, at its sole cost and expense, the
insurance coverages set forth below, which insurance shall be
placed with insurance companies rated at least “A:XIII”
by A.M. Best Company. The Consultant shall give notice to the CAB
at least thirty (30) days prior to the cancellation or nonrenewal
of such policies. The Consultant shall give notice to the CAB as
soon as practicable of any modification of any such policies. The
Consultant shall, upon request, promptly furnish the CAB with
insurance certificates evidencing the insurance policies obtained
pursuant to this Section 4.2. Prior to commencing the Services, the
Consultant shall furnish the CAB with certificates evidencing such
insurance and provided further, however, with respect to the
Workers’ Compensation Insurance required below, the
Consultant must furnish to the CAB, prior to the commencement of
any Services, duly executed and validated forms as prescribed by
the state authority having jurisdiction evidencing that such
insurance is in full force and effect. The CAB shall not pay any
invoices until Consultant provides the certificates evidencing such
insurance and Workers’ Compensation coverage.

 

 

 

187

 

 

(a) Liability Insurance
Coverage.

 

(i) Workers’ Compensation
Insurance. A Workers’ Compensation Insurance Policy in
form and substance reasonably acceptable to the CAB and in an
amount not less than the statutory benefits, including
Employer’s Liability Insurance with limits of liability of
not less than (i) $500,000 for bodily injury by accident, each
accident; (ii) $500,000 for bodily injury by disease, each
employee; and (iii) $500,000 aggregate liability for disease. The
Workers’ Compensation Insurance Policy, or an endorsement to
such policy, must include a waiver of subrogation in favor of the
CAB.

 

(ii) Commercial
General Liability Insurance. A Commercial General Liability
Insurance Policy (“CGL Policy”) written on an
occurrence basis, in form and substance reasonably acceptable to
the CAB, which policy shall include, without limitation, the CAB as
an additional insured, a waiver of subrogation endorsement in favor
of the CAB, cross liability and severability of interest
endorsements. The CGL Policy shall also include endorsements
providing that the coverage afforded by the insurance policy or
policies is primary and non-contributing with any other insurance
maintained by or available to the CAB (but only to the extent that
the claim at issue is attributable to the actions of the
Consultant), and appropriate language providing the following
coverages: Premises and Operations Liability; Personal Injury
Liability; Broad Form Property Damage Liability; Contractual
Liability supporting the Consultant’s indemnification
agreements in favor of the CAB; Completed Operations and Products
Liability; and Independent Contractor’s Protective Liability.
The Commercial General Liability Insurance Policy must be written
with a combined single limit of liability of not less than
$1,000,000 for each occurrence of bodily injury and/or property
damage and an annual aggregate of liability of not less than
$2,000,000 for bodily injury and/or property damage, and an annual
aggregate of liability of not less than $2,000,000 for Completed
Operations and Products Liability.

 

(iii) Automobile Liability Insurance.
An Automobile Liability Insurance Policy written on a per accident
basis, in form and substance reasonably acceptable to the CAB. The
Automobile Liability Insurance Policy must provide coverage for all
owned, hired, rented and nonowned automobiles, and must include
uninsured motorist coverages. The Automobile Liability Insurance
Policy must be written with a combined single limit of liability of
not less than $1,000,000 for each accident for bodily injury and/or
property damage.

 

(iv) Excess
Liability Insurance. An Excess Liability Insurance Policy
written in excess of the coverages provided by the insurance
policies described in the preceding Subsections 4.2(a)(i) - (iii),
in form and substance reasonably acceptable to the CAB, which
policy will include the CAB as additional insured. The Excess
Liability Insurance Policy must be written with a combined single
limit of not less than $1,000,000 for each occurrence of bodily
injury/or property damage and annual aggregate. This subsection
(iv) will not apply to a Builder that exercises its Step-In
Rights.

 

 

 

188

 

 

(v) Professional Liability Insurance
Coverage. The Consultant shall obtain and, continuously
thereafter for eight (8) years from the date of substantial
completion of the design, maintain in full force and effect a
claims made policy covering errors, omissions and negligent acts in
the performance of its Services hereunder, in an amount of
$1,000,000 per claim and annual aggregate. The Consultant shall be
solely responsible for the payment of all deductibles.
Consultant’s deductibles or Consultant’s self-insured
retentions shall be approved by the CAB. This subsection (v) will
not apply to a Builder that exercises its Step-In
Rights.

 

(b) Failure to Obtain and Obligation to
Maintain Insurance. If the Consultant fails to furnish and
maintain insurance as required by this Section 4.2, the CAB may
purchase such insurance on behalf of the Consultant and deduct the
cost of such insurance premium(s) from the compensation otherwise
owed to the Consultant, and the Consultant shall furnish to the CAB
any information needed to obtain such insurance. Except as
otherwise expressly provided herein, all insurance policies
required by the terms of this section shall be kept in full force
and effect until the date of final payment to the Consultant for
the Services specified in this Agreement. Notwithstanding anything
to the contrary contained in this Agreement, the foregoing
insurance requirements are in no way intended to, and will not in
any manner, limit or qualify the liabilities and/or indemnities
assumed by the Consultant under or pursuant to this
Agreement.

 

(c) Effect of Approval or Acceptance of
Insurance. CAB acceptance and/or approval of any or all of
the insurances required hereunder does not and shall not be
construed to relieve Consultant from any obligations,
responsibilities or liabilities under this Agreement.

 

V.            

MISCELLANEOUS

 

5.1 Assignment.
The CAB acknowledges that Consultant has entered into agreements
with various home builders (“Builders”) for the purchase and
sale of residential building lots with the Sky Ranch subdivision
which obligate Consultant to cause the construction of the
Improvements as required to obtain building permits and
certificates of occupancy for residential dwellings constructed by
the Builders on such lots. The CAB further acknowledges that such
agreements entitle a Builder to step-in and take over the role of
the Consultant as project manager to perform the Services under
this Agreement in the event that Consultant defaults in its
obligation to cause the construction of the Improvements under the
agreements between Consultant and a Builder (such rights being
referred to herein as “Step-In Rights”). CAB agrees that
this Agreement is assignable to a Builder that exercises its
Step-In Rights upon written notice thereof by such Builder to the
CAB and the Consultant certifying that the conditions to the
Builder’s exercise of the Step-In Rights have been met, and
that the CAB will honor such assignment (such Builder being
referred to herein as the “Exercising Builder”). Except for
an assignment to a Builder as permitted by this Section, the
Consultant shall not assign any of its rights or delegate any of
its duties hereunder to any person or entity. Any purported
assignment or delegation in violation of the provisions hereof
shall be void and of no effect.

 

 

 

189

 

 

(a)           Acknowledgement.
The CAB hereby acknowledges the right of a Builder to exercise its
Step-In Rights and take an assignment of this Agreement from the
Consultant.

 

(b)           Third
Party Beneficiary. The Builders are intended third party
beneficiaries of this Agreement.

 

(c)           Role
of Exercising Builder. Exercising Builder’s assumption
of the under this Article V is done only as an accommodation to the
Parties and that, except as expressly set forth in this subsection
5.1(c), Exercising Builder shall have no responsibility, liability
or obligation with respect to (and the Parties hereby covenant not
to sue Exercising Builder for, and hereby release the Exercising
Builder from, all liability and claims relating to or arising from)
the design, engineering, construction or completion of the
Improvements, any damage, loss or injury to any of the Parties or
otherwise related to any action or inaction of Exercising Builder
in connection with this Agreement, or any defect in the materials
or workmanship pertaining to the Improvements, except for any
“Exercising Builder Covered Liability,” as hereinafter
defined. “Exercising Builder Covered Liability” means
the following matters for which Exercising Builder shall be liable
to the Parties in connection with its performance as Exercising
Builder hereunder: (a) any damage, loss or injury arising from the
negligence, willful misconduct, bad faith, recklessness or illegal
acts of the Exercising Builder in performing or failing to perform
hereunder, or (b) damage, loss or injury arising from the
fraudulent conduct of Exercising Builder; provided, however, that
any damages to which the Parties shall be entitled to recover for
any Exercising Builder Covered Liability shall be limited to
out-of-pocket losses, costs, damages or expenses, and the Parties
shall not be entitled to recover from the Exercising Builder any
punitive or consequential losses, costs, damages or expenses or
lost profits as a result of, or in connection with, any Exercising
Builder Covered Liability. Except for the Exercising Builder
Covered Liability, Exercising Builder makes no representation or
warranty with respect to the Improvements, and shall have no
liability for any defect in the materials or workmanship pertaining
thereto. Except for the Exercising Builder Covered Liability, the
Parties hereby agree to look solely to the contractors engaged to
construct and complete the Improvements for any contractual
violation, indemnity, warranty or guarantee relating to the
Improvements. Upon completion of the Improvements, Exercising
Builder shall assign to the Parties (if any, and to the extent
assignable and without any representation or warranty whatsoever),
on a non-exclusive basis, any contractual rights received by
Exercising Builder from the contractors that construct or complete
any portion of the Improvements, including, without limitation, all
rights related to any indemnities, guaranties and/or warranties
received from such contractors.

 

5.2 Modification; Amendment. This
Agreement may be amended from time to time by agreement between the
Parties hereto; provided, however, (a) that no amendment,
modification, or alteration of the terms or provisions hereof shall
be binding upon the CAB or the Consultant unless the same is in
writing and duly executed by the Parties, and (b) no amendment,
modification or alteration of the terms or provisions hereof that
has a material, adverse effect on the Builders’ rights
described herein shall be made without the prior written consent of
the Builders, which consent shall not be unreasonably withheld,
conditioned or delayed.

 

 

 

190

 

 

5.3 Integration. This Agreement
constitutes the entire agreement between the Parties with respect
to the matters addressed herein. All prior discussions and
negotiations regarding the subject matter hereof are merged
herein.

 

5.4 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 herein, the
intention being that such provisions are severable.

 

5.5 Governing Law and Jurisdiction.
This Agreement shall be governed and construed under the laws of
the State of Colorado. Venue for any legal action relating to this
Agreement shall be exclusive to the State District Court in and for
the County of Arapahoe,
Colorado.

 

5.6 Paragraph Headings. Paragraph
headings are inserted for convenience of reference
only.

 

5.7 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
the CAB and the Consultant any right, remedy, or claim under or by
reason of this Agreement or any covenants, terms, conditions, or
provisions thereof, and all the covenants, terms, conditions, and
provisions in this Agreement by and on behalf of the CAB and the
Consultant shall be for the sole and exclusive benefit of the CAB
and the Consultant.

 

5.8 Notices. All notices, demands,
requests or other communications to be sent by one Party to the
other hereunder or required by law shall be in writing and shall be
deemed to have been validly given or served by delivery of same in
person to the addressee or by courier delivery via Federal Express
or other nationally recognized overnight air courier service, by
electronically-confirmed email transmission, or by depositing same
in the United States mail, postage prepaid, addressed as
follows:

 

	

To
CAB:

	

Sky
Ranch Community Authority Board

c/o
Special District Management Services, Inc.

141
Union Blvd., Ste. 150

Lakewood, CO 
80228

Phone:
(303) 987-0835

Email:
ljohnson@sdmsi.com

Attn:
Lisa Johnson

	
 

	
 

	

With a
Copy To:

	

McGeady
Becher P.C.

450 E.
17th
Avenue, Suite 400

Denver,
CO 80203Phone: (303) 592-4380Email:  mmcgeady@specialdistrictlaw.com

Attn: MaryAnn
McGeady

	
 

	
 

 

 

191

 

 

 

	

To
Consultant:

	

PCY
Holdings, LLC

34501
E. Quincy Ave., Bldg. 34, Box 10

Watkins,
CO 80137

Phone: (303)
292-3456

Email: mharding@purecyclewater.com

Attn: Mark
Harding

	
 

	
 

	

To the
Builders:

	

Richmond American
Homes of Colorado, Inc.

Attention: Linda
Purdy, Vice President

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Linda.Purdy@mdch.com

Telecopier No.:
(720) 977-4707

	
 

	
 

	

with a
copy to:

	

M.D.C.
Holdings, Inc.

Attention: Drew
Rippey

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Drew.Rippey@mdch.com

Telecopier No.:
(720) 482-8558

 

	
 

	

and

 

	
 

	

M.D.C. Holdings, Inc.Attention: Linda
Skultety4350 South Monaco StreetDenver, Colorado
80237E-Mail: Linda.Skultety@mdch.comTelecopier No.: (303)
488-4954

	
 

	
 

	
 

	

Taylor
Morrison of Colorado, Inc.

1420
West Canal Court, Suite 170

Littleton, Colorado
80120

Attention: Phillip
Cross

Telephone: (303)
325-2426

E-mail:
pcross@taylormorrison.com

	
 

	
 

	

With a
copy to:

	

Brier,
Irish, Hubbard & Erhart P.L.C.

2400
East Arizona Biltmore Circle, Suite 1300

Phoenix, AZ
85016

Attn:
Jeff Hubbard

Telephone: (602)
522-0160

Facsimile: (602)
522-3945

E-mail:
jhubbard@bihlaw.com

 

	
 

	
 

	

With
copy to:

	

Tony
Meier at same address

E-mail:
tmeier@bihlaw.com

 

 

192

 

 

 

All
notices, demands, requests or other communications shall be
effective upon such personal delivery or one (1) business day after
being deposited with Federal Express or other nationally recognized
overnight air courier service, upon electronic confirmation of
email transmission, or three (3) business days after deposit in the
United States mail. By giving the other Party hereto at least ten
(10) days’ written notice thereof in accordance with the
provisions hereof, each of the Parties shall have the right from
time to time to change its address.

 

5.9 Default/Remedies. If either
Party fails to perform any of its responsibilities, obligations or
agreements to be performed in accordance with the provisions of
this Agreement, and if such failure of performance continues for a
period of thirty (30) days following written notice of default from
the other Party (or such additional period of time as may
reasonably be required to cure such default; provided that the
curative action is commenced within such thirty (30) day period and
is diligently and continuously pursued to completion), then the
non-defaulting Party, at its option, may elect (i) to treat this
Agreement as remaining in full force and effect; or (ii) terminate
this Agreement as of any specified date. The non-defaulting Party
shall additionally be entitled to exercise all remedies available
at law or in equity, including specific performance. In the event
of any litigation or other proceeding to enforce the terms,
covenants or conditions hereof, the non-defaulting Party in any
such litigation or other proceeding shall obtain as part of its
judgment or award its reasonable attorneys’ fees.
Notwithstanding the foregoing, if a non-defaulting Party elects to
terminate this Agreement as described in subsection (ii) of this
section 5.9, such non-defaulting Party shall first deliver a copy
of the default notice together with notice of such election to
terminate to the Builders, and in lieu of any such termination, the
applicable Builder shall have thirty (30) days following receipt of
such notice to exercise its Step-In Rights as described in this
Agreement. If the applicable Builder(s) do not exercise such
Step-In Rights by delivering notice of same to the Parties and
other Builders within such thirty (30) day time period, the
Builders shall be deemed to have waived such Step-In Rights and the
non-defaulting party may then proceed with termination of this
Agreement as described in subsection (ii). The Parties acknowledge
and agree that the Exercising Builder shall have no liability for
the default that gave rise to the Exercising Builder exercising its
Step-In Rights as described in this Agreement, and that the scope
of Exercising Builder’s responsibilities and liabilities is
limited to the provisions of Section 5.1(c), above.

 

5.10 Instruments
of Further Assurance. Each Party covenants it 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 hereunder.

 

5.11 Compliance
with Law. This Agreement is intended to be performed in
accordance with and only to the extent permitted by all applicable
laws, ordinances, rules, and regulations of the jurisdiction in
which the Agreement is performed. The Consultant declares it has
complied and will comply with all federal, state and local laws
regarding business permits, certificates and licenses required to
perform the Services.

 

5.12 Non-Waiver.
No waiver of any of the provisions of this Agreement shall be
deemed to constitute a waiver of any other provision of this
Agreement, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided herein, nor shall the waiver of
any default hereunder be deemed to be a waiver of any subsequent
default hereunder. Notwithstanding any provision to the contrary in
this Agreement, no term or condition of this Agreement shall be
construed or interpreted as a waiver, either expressed or implied,
of any of the immunities, rights, benefits or protection provided
to the CAB under the Colorado Governmental Immunity
Act.

 

 

 

193

 

 

 

5.13 Inurement.
This Agreement shall inure to and be binding on the heirs,
executors, administrator, successors, and permitted assigns of the
Parties hereto.

 

5.14 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall constitute an original and all of which shall
constitute one and the same document.

 

5.15 Conflicts.
If any term or provision(s) in any Exhibit attached as part of this
Agreement conflicts with any term or provision(s) in the body of
this Agreement, the term or provision(s) contained in the body of
this Agreement shall control.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

 

194

 

[SIGNATURE PAGE TO
SERVICE AGREEMENT]

 

IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.

 

	

Consultant:

	

PCY HOLDINGS, LLC

 

	

By:
PURE CYCLE CORPORATION, its Sole Member

 

	

By:    

	

Its:    

 

	

STATE
OF COLORADO

	

)

	
 

	
 

	

)

	

ss.

	

COUNTY
OF [___________]

	

)

	
 

 

The
foregoing instrument was acknowledged before me this ______ day of ____________________, 2017, by ____________________, as ______________ of PCY Holdings, LLC of Pure Cycle Corporation, its
Sole Member.

 

Witness
my hand and official seal.

 

	

My
commission expires:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Notary
Public

 

	

CAB:

	

SKY
RANCH COMMUNITY AUTHORITY BOARD

	

By:

	
 

	
 

	

President

 

 

195

 

 

 

	

STATE
OF COLORADO

	

)

	
 

	
 

	

)

	

ss.

	

COUNTY
OF [___________]

	

)

	
 

 

The
foregoing instrument was acknowledged before me this ______ day of ____________________, 2017, by Mark
Harding, as President of
Sky Ranch Community Authority
Board.

 

Witness
my hand and official seal.

 

	

My
commission expires:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Notary
Public

 

 

196

 

EXHIBIT
A

 

SCOPE
OF SERVICES

 

 

GENERAL
COMPREHENSIVE SCOPE OF SERVICES

The
Project Manager (“PM”) shall provide any and all
services required to deliver the CAB Eligible Improvements,
including but not limited to: CAB Compliance; Planning Design and
Approvals; Project Administration; Contractor Agreements;
Construction Management and Administration; and CAB Acceptance. In
general, the following detailed Scope of Services is intended to be
applicable for CAB Eligible Improvements and may not include all
needs of the CAB. The Local Jurisdiction accepting improvements
shall have precedence over CAB Requirements.

 

CAB
COMPLIANCE

The PM
shall provide any and all necessary CAB Compliance, including but
not limited to: coordination with the CAB and CAB Consultants; and
providing needed information and coordination with legal counsel
and accountants for the Board of Directors for the CAB. The PM
shall track CAB Expenditures separately from other Expenditures in
a form acceptable to the CAB Accountant.

 

The PM
shall periodically report progress to the Board of Directors for
the CAB and advise the Board of Directors for the CAB of any issues
that may arise. In the event the Board schedules Board meetings at
least one time per month, the PM shall report to the Board at such
Board meetings on at least a monthly basis. In the event the Board
schedules more than one Board meeting per month, the PM shall also
report to the Board at such additional Board meetings. The PM shall
adhere to all CAB Policies and Procedures, regardless of date of
adoption.

 

PLANNING
DESIGN AND APPROVALS

Consultant
Selection and Administration – The PM shall be responsible
for the selection and management of qualified design and
construction support consultants and shall develop invoicing
procedures that include a clear description of CAB Eligible
Services provided and the amount of the Services. The PM shall be
responsible for development, negotiation and execution of
Consultant Agreements and Scope of Services and shall ensure that
any CAB Required Terms and Conditions are included in the Agreement
per requirements of the Board of Directors for the CAB and/or Title
32, Colorado Revised Statutes. The PM shall manage the Plan
Development and all other Services by Consultants in a
cost-effective manner. Plans containing CAB Improvements to be
owned and/or maintained by the CAB shall be submitted to the CAB
periodically during design for review and acceptance by the CAB.
The PM shall ensure that all plans meet Local Jurisdiction and/or
CAB Specifications.

 

Plan
Development, Local Jurisdiction and other Coordination – The
PM shall be responsible for all coordination with governing and
other local jurisdictions, utility companies, adjacent developers,
residents and other entities requiring approvals, review or
interest in the Project. The PM shall coordinate with the CAB for
any Agreements where the CAB may be party to such
Agreement.

 

197

 

 

Constructability
Reviews – The PM should provide review of plans for
constructability to assist the CAB and/or the design engineer in
determining more efficient or cost-effective alternatives. The work
would likely involve plan reviews, site visits and investigations,
meetings with the CAB and/or local jurisdiction, and others, review
of preliminary geotechnical report, phasing plans, and any other
pertinent information to better qualify the design. Operation and
Maintenance costs of Improvements constructed for CAB ownership or
maintenance will likely represent a significant portion of the
PM’s services.

 

PROJECT
ADMINISTRATION

The PM
shall maintain CAB Project Files, Issues tracking lists, meeting
minutes, Agreement and Contract files, plan files, schedules, and
other Program Administration activities as need to support the
Project. The PM shall provide Project coordination with
consultants, local agencies, traffic control, utilities, power
companies and other public utilities, residents and other entities
as required

 

Project
Cost Estimating and Control – The PM shall provide Project
Cost Estimating Services, which may include updating of initial
Estimates, plan quantity and pay item take-offs and specialty cost
estimates needed in support of various Agreements, reporting
requirements or other as-needed estimates. Cost share matrixes may
be required. Special Reports including Cost Share Reimbursements,
Bonding Agency Reports and other specialized reports may be
produced as requested.

 

Project
Scheduling Services – The PM shall create Project Schedules
and provide updates which will include entitlement, planning,
design, and construction that would reflect additions, deletions
and deviations in the timing of all the associated activities.
Specialized Schedules shall be provided when requested. Schedules
would be formatted in Microsoft Project unless otherwise
directed.

 

Meetings –
The PM shall participate in Project Meetings as necessary. Meetings
can include, but are not limited to: CAB Board Meetings; Project
Status Meetings; local jurisdiction coordination meetings; pre-bid
meetings; pre-construction meetings; construction progress
meetings; miscellaneous field meetings; and other meetings with
Project Stakeholders as required or requested. The PM shall advise
Board of Meetings requiring Board participation.

 

CONSTRUCTION
MANAGEMENT AND ADMINISTRATION

CAB
Contract Document Development – The PM shall prepare and
negotiate Agreements and Contracts for Contractors and Contractor
forms, including but not limited to: Change Orders; RFI; Submittal;
Pay Certifications; and other miscellaneous forms for use on the
Project.

 

Bid and
Award of Project – The PM shall select or conduct the Bid
Process, which includes but is not limited to: development of the
bid documents, Bid Schedules and Technical Specifications (when
required for CAB owned and/or maintained property or improvements);
answering questions; preparing Addendums; and conducting a Bid
Opening or Award.

 

198

 

 

Construction
Observation – The PM shall provide construction
observation/inspection for compliance with the Contract Documents
for all phases of construction activities. Information gained by
construction observation/inspections will be made available to the
CAB. Prior to acceptance by the CAB, all geotechnical and other
testing reports will be provided to the CAB. When constructing CAB
Owned or maintained improvements, the PM shall notify and allow CAB
to observe/inspect improvements. The CAB shall (a) grant easements
over, under and across any CAB-owned real property to the extent
reasonably necessary to facilitate the construction of the
Improvements contemplated by this Agreement, and (b) obtain
easements over, under and across any other real property to the
extent reasonably necessary to facilitate the construction of the
Improvements contemplated by this Agreement.

 

Construction
Administration and Coordination – The PM will provide
construction administration activities including but not limited
to: partial pay/draw request processing; submittal review
coordination; change orders review; force account; permit
management; project close-out; claim reviews; and other tasks as
necessary to provide project documentation. The PM shall provide
construction coordination activities including, but not limited to:
project coordination with stakeholders; monitoring project
scheduling; jurisdictional coordination; and other activities
necessary to provide coordination. The PM is authorized to
terminate Contractor Agreements and Contracts that are in default
in accordance with the rights of the CAB under such Contractor
Agreements and at is option prepare and negotiate new Contractor
Agreements, including construction contracts between the CAB and
PM, to complete uncompleted Improvements (subject to
Builders’ Step-In Rights) to be awarded in compliance with
applicable laws. In such event, PM will continue to process all
payments for work under a Contractor Agreement through the CAB in
accordance with this Agreement and to the extent PM performs the
work to complete any Improvements, PM will not exceed the contract
price between CAB and its contractor without obtaining
authorization from the CAB board of directors and appropriation of
sufficient funds to cover those amounts required by statute, unless
PCY Holdings, LLC, a Colorado limited liability company, deposits
or causes the deposit of sufficient funds to cover such amount
which the CAB shall appropriate for such purpose. If a Contractor
Agreement with a CAB contractor is no longer in effect or PM
terminates a defaulted Contractor Agreement and PM elects to
complete the Improvements, or portion thereof, itself, PM (or the
Builder that exercises its Step-In Rights) will install and
complete such uncompleted Improvements in accordance with
applicable public contracting statutes and this Agreement between
the PM and the CAB pertaining to the Construction of the
Improvements and the disbursement of construction funds for the
construction accounts held by the CAB for the construction of the
Improvements. The foregoing does not modify any separate agreement
between any Builder that exercises its Step-In Rights and
Consultant as to the obligation to fund costs that exceed a
contract price.

 

Stormwater
Management – The PM shall provide coordination of storm water
compliance and bmp inspection coordination and maintenance,
including but not limited to: coordinating permit application and
closeout; developing Stormwater Management Plans (SWMP),
remediation and action plans, dewatering plans and plans for bmp
drainage structures for implementation; directing contractors on
bmp maintenance for adherence and compliance to the plans
developed; providing ongoing analysis of bmps for functionality
based on changes in field conditions, and modifying plans based on
necessary field changes and changes made to local and state agency
requirements.

 

199

 

 

 

CAB
ACCEPTANCE

The PM
shall provide all necessary documentation and information needed by
the CAB for Acceptance as required by the CAB or CAB Acceptance
Policy. Such items may include but are not limited to: Conveyance
of Real Property; As Built Drawings (electronic); Maintenance
Manuals; Manufacture cut sheets; Contracts; Agreements; Invoices;
pay application; proof of payments; Construction Administration
Documentation; Test Reports; and other documentation as needed. The
PM shall provide estimates of CAB Maintenance costs.

 

 

 

200

 

EXHIBIT
B

 

PROJECT/IMPROVEMENTS

 

 

 

 

 

201

 

 

EXHIBIT
C

 

COMPENSATION

 

 

PROJECT
MANAGEMENT FEE

The
Project Management Fee (PM Fee) shall be five percent (5%) of
actual construction costs of CAB Eligible Improvements. The PM Fee
shall be based only on the actual costs of the Improvements; thus,
items such as fees, permits, review fees, consultant or other soft
costs, land acquisition, or any other costs that are not directly
related to the cost of construction of CAB Eligible Improvements
will not be included in the calculation of the PM Fee. All such
costs excluded from calculating the PM Fee are reimbursable to the
Project Manager (PM) provided they are exclusively spent on CAB
Eligible Improvements, are reasonable with other similar projects
in the Denver metropolitan area and approved by the Sky Ranch
Community Authority Board (the “CAB”). This Section is for
calculation of the PM Fee only and is not intended to exclude
reimbursement for CAB Eligible Improvements meeting the
requirements of the CAB.

 

The PM
shall be reimbursed the PM Fee after submission of an acceptable
invoice including documentation of all CAB Eligible Expenses.
Invoice and documentation shall be reviewed and approved by the
Board of Directors for the CAB or designated Representative prior
to payment. Invoices may be submitted periodically but not more
than once per month.

 

 

 

 

202

 

EXHIBIT
D

 

CERTIFICATION
OF CONSULTANT

 

1. Pursuant to the
requirements of Section 8-17.5–102(1), C.R.S., the Consultant
hereby certifies to the CAB that the Consultant does not knowingly
employ or contract with an illegal alien who will perform work
under the Agreement and that it will participate in the E-Verify
Program or Department Program (as defined in Sections
8-17.5-101(3.3) and (3.7), C.R.S.) in order to confirm the
employment eligibility of all employees of the Consultant who are
newly hired to perform work under the Agreement.

 

2. In accordance with
Section 8-17.5-102(2)(a), C.R.S., the Consultant shall
not:

 

(a) Knowingly employ or
contract with an illegal alien to perform work under the Agreement;
or

 

(b) Enter into a
contract with a subcontractor that fails to certify to the
Consultant that the subcontractor shall not knowingly employ or
contract with an illegal alien to perform work under the
Agreement.

 

3. The Consultant
represents and warrants it has confirmed the employment eligibility
of all employees who are newly hired for employment to perform work
under the Agreement through participation in either the E-Verify
Program or the Department Program.

 

4. The Consultant is
prohibited from using either the E-Verify Program or the Department
Program procedures to undertake pre-employment screening of job
applicants while the Agreement is in effect.

 

5. If the Consultant
obtains actual knowledge that a subcontractor performing work under
the Agreement knowingly employs or contracts with an illegal alien,
the Consultant shall:

 

(a) Notify the
subcontractor and the CAB within three (3) days that the Consultant
has actual knowledge that the subcontractor is employing or
contracting with an illegal alien; and

 

(b) Terminate the
subcontract with the subcontractor if within three (3) days of
receiving the notice the subcontractor does not stop employing or
contracting with the illegal alien; except that the Consultant
shall not terminate the contract with the subcontractor if during
such three days the subcontractor provides information to establish
that the subcontractor has not knowingly employed or contracted
with an illegal alien.

 

6. The Consultant
shall comply with any reasonable request by the Colorado Department
of Labor and Employment (“Department”) made in the course of
an investigation that the Department is undertaking, pursuant to
the law.

 

7. If the Consultant
violates any provision of Section 8-17.5–102(1), C.R.S., the
CAB may terminate the Agreement immediately and the Consultant
shall be liable to the CAB for actual and consequential damages of
the CAB resulting from such termination, and the CAB shall report
such violation by the Consultant to the Colorado Secretary of
State, as required by law.

 

 

203

 

EXHIBIT
E

 

FORM
OF CHANGE ORDER

 

	

Change Order No:

	

Date Issued:

	

Name of Agreement:

 

	

Date
of Agreement:

 

	

Sky Ranch Community Authority
Board:

	

Other
Party/Parties:

 

 

	

CHANGE IN SCOPE OF SERVICES
(describe):

 

	

CHANGE
IN AGREEMENT PRICE:

	
 

	

CHANGE
IN TERM OF AGREEMENT:

	
 

	
 

	
 

	

Original
Price:

$________

	
 

	

Original Term: Expires _______________,
20____

	
 

	
 

	
 

	

Increase of this
Change Order:

$_________

	
 

	

New
Term:

Expires
_______________, 20___

	
 

	
 

	
 

	

Price
with all Approved Change Orders:

$_________

	
 

	

Agreement Time with
all Approved Change Orders:

	
 

	
 

	
 

 

	

APPROVED:

	
 

	

APPROVED:

	
 

	
 

	
 

	

By:

	
 

	
 

	

By:

	
 

	
 

	

Sky
Ranch Community Authority Board

	
 

	
 

	

Consultant

 

 

204

 

SERVICE
AGREEMENT FOR

PROJECT
MANAGEMENT SERVICES

(FOR RANGEVIEW IMPROVEMENTS)

 

 

THIS
SERVICE AGREEMENT FOR
PROJECT MANAGEMENT
SERVICES FOR
_______________(“Agreement”) is entered into and
effective as of the ______ day
of ________________,
2017, by and between
RANGEVIEW
METROPOLITAN DISTRICT, a
Colorado special district (“Rangeview”), and PCY HOLDINGS, LLC, a
Colorado limited liability
company (the “Consultant”) (each a
“Party” and,
collectively, the “Parties”).

 

RECITALS

 

F. Rangeview
was organized pursuant to the laws of the State of Colorado in
order to construct, operate and maintain certain public water and
wastewater facilities and improvements in accordance with the
service plan for Rangeview.

 

G. Rangeview was
formed to provide public improvements to it service area, including
that certain development known as Sky Ranch in Arapahoe County,
Colorado.

 

H. Rangeview is
permitted to enter into contracts and agreements affecting the
affairs of Rangeview.

 

I. The Consultant has
experience in providing the services, as set forth in Exhibit A
hereto, attached and incorporated herein (the “Services” or “Rangeview Eligible Services”), and
is willing to provide such Services to Rangeview for reasonable
consideration for the project/improvements as set forth in
Exhibit
B (the “Improvements” or “Rangeview Eligible
Improvements”).

 

J. The Parties desire
to enter into this Agreement to establish the terms by which the
Consultant will provide the Services to Rangeview.

 

NOW,
THEREFORE, in consideration of the mutual covenants and promises
set forth herein, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:

 

VI. CONSULTANT DUTIES AND AUTHORITY

 

6.1 Duties
of Consultant. The Consultant shall:

 

(a) Perform the
Services, safely and in accordance with the highest standard of
care, skill, and diligence provided by a professional consultant in
performance of work similar to the Services.

 

(b) Be properly
qualified to perform the Services. The Consultant does hereby
warrant that the quality of the Services shall be as specified in
this Agreement, shall conform in all respects to the requirements
of this Agreement and shall be free of defects and
deficiencies.

 

 

 

205

 

 

(c) Take all
precautions necessary for safely and prudently conducting the
Services required by this Agreement, including maintaining
insurance as required under Section 4.2 hereof.

 

(d) Advise Rangeview
and Builders of the status of the Services required by this
Agreement on a regular basis and work in coordination with
Rangeview’s consultants to assure that Rangeview and Builders
have the most complete information available for the exercise of
Rangeview’s powers and discretionary authority.

 

(e) Refrain from
entering into any contract, oral or written, in the name of
Rangeview, and from incurring any debt, liability or obligation for
or on behalf of Rangeview. All obligations incurred by the
Consultant shall be obligations of the Consultant and the
Consultant shall hold Rangeview harmless therefrom.

 

6.2 Limitations on
Authority.

 

(a) The Consultant
shall have no right or authority, expressed or implied, to take any
action, expend any sum, incur any obligation, or otherwise obligate
Rangeview in any manner whatsoever, except to the extent
specifically provided in this Agreement or specifically authorized
or ratified by the board of directors of Rangeview as reflected in
the minutes of Rangeview board meetings. The Consultant shall at
all times conform to the stated policies established and approved
by Rangeview.

 

(b) Independent Contractor Status.
The Consultant is an independent contractor, as provided in Section
8-40-202(2)(b)(I)-(IV), C.R.S., as amended, and nothing herein
contained shall constitute or designate the Consultant or any of
its employees, agents, subcontractors or suppliers as employees of
Rangeview. The Services to be performed by the Consultant shall be
at its sole cost, risk and expense, and no part of the cost thereof
shall be charged to Rangeview, except the payments to be made by
Rangeview to the Consultant for the Services performed as provided
herein. Rangeview shall not be responsible for the
Consultant’s means, methods, techniques, sequences or
procedures of work or for safety precautions incident thereto.
The Consultant is not entitled to
workers’ compensation benefits and the Consultant is
obligated to pay federal and state income taxes on moneys earned
pursuant to this Agreement.

 

6.3 Compliance with Applicable Law.
The Consultant shall provide the Services set forth herein in full
compliance with all applicable laws, rules, and regulations of any
federal, state, county, or municipal body or agency thereof having
jurisdiction over the activities of Rangeview.

 

6.4 No Right or Interest in Rangeview
Assets. The Consultant shall have no right or interest in
any of Rangeview’s assets, nor any claim or lien with respect
thereto, arising out of this Agreement or the performance of the
Services contemplated herein.

 

 

 

206

 

 

6.5 Certification of Compliance with
Illegal Alien Statute. By its execution hereof, the
Consultant confirms and ratifies all of the certifications,
statements, representations and warranties set forth in
Exhibit
D attached
hereto and made a part hereof by this reference.

 

6.6 Work Product.
“Work Product”
shall consist of all written materials maintained by the Consultant
in connection with performance of this Agreement, including, but
not limited to, all test results, logs, surveys, maps, plans,
drawings, specifications, reports, PDF formatted electronic files
and other documents, in whatever form. The Consultant shall
maintain reproducible copies of any test results and logs which it
obtains and shall make them available for Rangeview’s use,
and shall provide such copies to Rangeview upon request at
reasonable commercial printing rates. Consultant agrees all right,
title and interest in the Work Product is and shall remain the
property of Rangeview. If requested by Rangeview, Consultant shall
execute and deliver such documents as shall be necessary in
Rangeview’s sole discretion, to assign, transfer and convey
all rights in the Work Product to Rangeview or its assignee. If
Consultant fails to execute any documents required under this
Section 1.6, then Consultant hereby irrevocably appoints Rangeview
its attorney-in-fact for the purpose of executing any required
transfers of ownership or interests and any other documents
necessary to effectuate this Section 1.6. Further, all Work
Product, whether in paper or electronic form, reproductions
thereof, or any information or instruments derived therefrom, shall
be provided to Rangeview immediately upon termination of this
Agreement.

 

VII. COMPENSATION

 

7.1 Compensation.
The Consultant shall be paid as set forth in Exhibit C
attached hereto on a time and
materials basis, unless otherwise approved in advance by
Rangeview through a written change order in form substantially as
attached hereto as Exhibit E
(“Change
Order”).

 

7.2 Monthly Invoices and Payments.
The Consultant shall submit to Rangeview a monthly invoice, in a
form acceptable to Rangeview. Invoices shall be submitted and paid
no more frequently than once a month.

 

7.3 Expenses. The Consultant is
responsible for all expenses it incurs in performance of this
Agreement and shall not be entitled to any reimbursement or
compensation except as set forth in Exhibit C,
unless otherwise approved in advance by Rangeview in
writing.

 

7.4 Rangeview Debt; Improvement
Fund. Rangeview does not intend hereby to create a
multiple-fiscal year direct or indirect debt or other financial
obligations whatsoever. The performance of those obligations of
Rangeview hereunder requiring budgeting and appropriation of funds
is subject to budgeting and appropriation. Nothing herein
constitutes or creates an indebtedness or debt of Rangeview within
the meaning of any Colorado constitutional provision or statutory
limitation; provided that Rangeview acknowledges and agrees as
follows:

 

2.4.1. The
“Improvements Fund” is hereby established, to be held
by Rangeview for the purposes specified in this Agreement, and
maintained in accordance with the provisions of this Agreement. PCY
has or will deposit funds in a Rangeview-controlled bank account
(at an FDIC-insured bank reasonably acceptable to Rangeview) in an
amount sufficient to fund the construction of and substantial
completion of the Improvements.

 

 

 

207

 

 

2.4.2.
Rangeview will hold the Improvement Fund in a segregated account,
and the Improvement Funds will be used for the sole purpose of
funding the construction and substantial completion of the
Improvements.

 

2.4.3
Rangeview will promptly fund all draw requests from the Improvement
Fund, so long as such draw requests are properly submitted in
accordance with the terms of this Agreement.

 

VIII. TERM

 

8.1 Term.
The term of this Agreement shall begin on the date set forth above,
and shall expire on satisfactory
completion of the Services. Extensions of this Agreement
must be pursuant to a Change Order executed by both Parties.
Rangeview shall pay the Consultant for all Services satisfactorily
performed through the termination date.

 

IX. INDEMNIFICATION AND INSURANCE

 

9.1 Indemnification.
The Consultant (but not any Builder that exercises its Step-In
Right as described in Article V, below, except to the extent
provided in Section 5.1(c) below) hereby agrees to indemnify,
defend and hold Rangeview and its affiliated entities or other
persons or entities designated by Rangeview, and their respective
directors, trustees, officers, members, managers, agents and
employees (collectively, the “Indemnitees”), harmless from any
and all liability for damage, including, but not limited to, the
reimbursement of attorneys’ fees and costs, arising out of
death or bodily injury to persons or damage to property, in such
amount that is represented by the degree or percentage of
negligence or fault attributable to the Consultant and/or its
agents, representatives, subcontractors, or suppliers. The
foregoing does not modify any separate agreement as to liabilities
or obligations between any Builder (as hereinafter defined) that
exercises its Step-In Rights (as hereinafter defined) and
Consultant.

 

9.2 Insurance Requirements. The
Consultant shall procure, at its sole cost and expense, the
insurance coverages set forth below, which insurance shall be
placed with insurance companies rated at least “A:XIII”
by A.M. Best Company. The Consultant shall give notice to Rangeview
at least thirty (30) days prior to the cancellation or nonrenewal
of such policies. The Consultant shall give notice to Rangeview as
soon as practicable of any modification of any such policies. The
Consultant shall, upon request, promptly furnish Rangeview with
copies of insurance certificates evidencing the insurance policies
obtained pursuant to this Section 4.2. Prior to commencing the
Services, the Consultant shall furnish Rangeview with certificates
evidencing such insurance and provided further, however, with
respect to the Workers’ Compensation Insurance required
below, the Consultant must furnish to Rangeview, prior to the
commencement of any Services, duly executed and validated forms as
prescribed by the state authority having jurisdiction evidencing
that such insurance is in full force and effect. Rangeview shall
not pay any invoices until Consultant provides the certificates
evidencing such insurance and Workers’ Compensation
coverage.

 

 

 

208

 

 

(a) Liability Insurance
Coverage.

 

(i) Workers’ Compensation
Insurance. A Workers’ Compensation Insurance Policy in
form and substance reasonably acceptable to Rangeview and in an
amount not less than the statutory benefits, including
Employer’s Liability Insurance with limits of liability of
not less than (i) $500,000 for bodily injury by accident, each
accident; (ii) $500,000 for bodily injury by disease, each
employee; and (iii) $500,000 aggregate liability for disease. The
Workers’ Compensation Insurance Policy, or an endorsement to
such policy, must include a waiver of subrogation in favor of
Rangeview.

 

(ii) Commercial
General Liability Insurance. A Commercial General Liability
Insurance Policy (“CGL
Policy”) written on an occurrence basis, in form and
substance reasonably acceptable to Rangeview, which policy shall
include, without limitation, Rangeview as an additional insured, a
waiver of subrogation endorsement in favor of Rangeview, cross
liability and severability of interest endorsements. The CGL Policy
shall also include endorsements providing that the coverage
afforded by the insurance policy or policies is primary and
non-contributing with any other insurance maintained by or
available to Rangeview (but only to the extent that the claim at
issue is attributable to the actions of the Consultant), and
appropriate language providing the following coverages: Premises
and Operations Liability; Personal Injury Liability; Broad Form
Property Damage Liability; Contractual Liability supporting the
Consultant’s indemnification agreements in favor of
Rangeview; Completed Operations and Products Liability; and
Independent Contractor’s Protective Liability. The Commercial
General Liability Insurance Policy must be written with a combined
single limit of liability of not less than $1,000,000 for each
occurrence of bodily injury and/or property damage and an annual
aggregate of liability of not less than $2,000,000 for bodily
injury and/or property damage, and an annual aggregate of liability
of not less than $2,000,000 for Completed Operations and Products
Liability.

 

(iii) Automobile
Liability Insurance. An Automobile Liability Insurance
Policy written on a per accident basis, in form and substance
reasonably acceptable to Rangeview. The Automobile Liability
Insurance Policy must provide coverage for all owned, hired, rented
and nonowned automobiles, and must include uninsured motorist
coverages. The Automobile Liability Insurance Policy must be
written with a combined single limit of liability of not less than
$1,000,000 for each accident for bodily injury and/or property
damage.

 

(iv) Excess
Liability Insurance. An Excess Liability Insurance Policy
written in excess of the coverages provided by the insurance
policies described in the preceding Subsections 4.2(a)4.2(a)(i) -
4.2(a)(iii), in form and substance reasonably acceptable to
Rangeview, which policy will include Rangeview as additional
insured. The Excess Liability Insurance Policy must be written with
a combined single limit of not less than $1,000,000 for each
occurrence of bodily injury/or property damage and annual
aggregate. This subsection (iv) will not apply to a Builder that
exercises its Step-In Rights.

 

 

 

209

 

 

(v) Professional Liability Insurance
Coverage. The Consultant shall obtain and, continuously
thereafter for eight (8) years from the date of substantial
completion of the design, maintain in full force and effect a
claims made policy covering errors, omissions and negligent acts in
the performance of its Services hereunder, in an amount of
$1,000,000 per claim and annual aggregate. The Consultant shall be
solely responsible for the payment of all deductibles.
Consultant’s deductibles or Consultant’s self-insured
retentions shall be approved by Rangeview. This subsection (v) will
not apply to a Builder that exercises its Step-In
Rights.

 

(b) Failure to Obtain and Obligation to
Maintain Insurance. If the Consultant fails to furnish and
maintain insurance as required by this Section 4.2, Rangeview may
purchase such insurance on behalf of the Consultant and deduct the
cost of such insurance premium(s) from the compensation otherwise
owed to the Consultant, and the Consultant shall furnish to
Rangeview any information needed to obtain such insurance. Except
as otherwise expressly provided herein, all insurance policies
required by the terms of this section shall be kept in full force
and effect until the date of final payment to the Consultant for
the Services specified in this Agreement. Notwithstanding anything
to the contrary contained in this Agreement, the foregoing
insurance requirements are in no way intended to, and will not in
any manner, limit or qualify the liabilities and/or indemnities
assumed by the Consultant under or pursuant to this
Agreement.

 

(c) Effect of Approval or Acceptance of
Insurance. Rangeview acceptance and/or approval of any or
all of the insurances required hereunder does not and shall not be
construed to relieve Consultant from any obligations,
responsibilities or liabilities under this Agreement.

 

X. MISCELLANEOUS

 

10.1 Assignment.
Rangeview acknowledges that Consultant has entered into agreements
with various home builders (“Builders”) for the purchase and
sale of residential building lots with the Sky Ranch subdivision
which obligate Consultant to cause the construction of the
Improvements as required to obtain building permits and
certificates of occupancy for residential dwellings constructed by
the Builders on such lots. Rangeview further acknowledges that such
agreements entitle a Builder to step-in and take over the role of
the Consultant as project manager to perform the Services under
this Agreement in the event that Consultant defaults in its
obligation to cause the construction of the Improvements under the
agreements between Consultant and a Builder (such rights being
referred to herein as “Step-In Rights”). Rangeview agrees
that this Agreement is assignable to a Builder that exercises its
step-in rights upon written notice thereof by such Builder to
Rangeview and the Consultant certifying that the conditions to the
Builder’s exercise of the Step-In Rights have been met, and
that Rangeview will honor such assignment (such Builder being
referred to herein as the “Exercising Builder”). Except for
an assignment to a Builder as permitted by this Section, the
Consultant shall not assign any of its rights or delegate any of
its duties hereunder to any person or entity. Any purported
assignment or delegation in violation of the provisions hereof
shall be void and of no effect.

 

 

 

210

 

 

(a) Acknowledgement. The CAB hereby
acknowledges the right of a Builder to exercise its Step-In Rights
and take an assignment of this Agreement from the
Consultant.

 

(b) Third Party Beneficiary. The
Builders are intended third party beneficiaries of this
Agreement.

 

(c) Role of Exercising Builder.
Exercising Builder’s assumption of the under this Article V
is done only as an accommodation to the Parties and that, except as
expressly set forth in this subsection 5.1(c), Exercising Builder
shall have no responsibility, liability or obligation with respect
to (and the Parties hereby covenant not to sue Exercising Builder
for, and hereby release the Exercising Builder from, all liability
and claims relating to or arising from) the design, engineering,
construction or completion of the Improvements, any damage, loss or
injury to any of the Parties or otherwise related to any action or
inaction of Exercising Builder in connection with this Agreement,
or any defect in the materials or workmanship pertaining to the
Improvements, except for any “Exercising Builder Covered
Liability,” as hereinafter defined. “Exercising Builder
Covered Liability” means the following matters for which
Exercising Builder shall be liable to the Parties in connection
with its performance as Exercising Builder hereunder: (a) any
damage, loss or injury arising from the negligence, willful
misconduct, bad faith, recklessness or illegal acts of the
Exercising Builder in performing or failing to perform hereunder,
or (b) damage, loss or injury arising from the fraudulent conduct
of Exercising Builder; provided, however, that any damages to which
the Parties shall be entitled to recover for any Exercising Builder
Covered Liability shall be limited to out-of-pocket losses, costs,
damages or expenses, and the Parties shall not be entitled to
recover from the Exercising Builder any punitive or consequential
losses, costs, damages or expenses or lost profits as a result of,
or in connection with, any Exercising Builder Covered Liability.
Except for the Exercising Builder Covered Liability, Exercising
Builder makes no representation or warranty with respect to the
Improvements, and shall have no liability for any defect in the
materials or workmanship pertaining thereto. Except for the
Exercising Builder Covered Liability, the Parties hereby agree to
look solely to the contractors engaged to construct and complete
the Improvements for any contractual violation, indemnity, warranty
or guarantee relating to the Improvements. Upon completion of the
Improvements, Exercising Builder shall assign to the Parties (if
any, and to the extent assignable and without any representation or
warranty whatsoever), on a non-exclusive basis, any contractual
rights received by Exercising Builder from the contractors that
construct or complete any portion of the Improvements, including,
without limitation, all rights related to any indemnities,
guaranties and/or warranties received from such
contractors.

 

10.2 Modification;
Amendment. This Agreement may be amended from time to time
by agreement between the Parties hereto; provided, however, that
(a) no amendment, modification, or alteration of the terms or
provisions hereof shall be binding upon Rangeview or the Consultant
unless the same is in writing and duly executed by the Parties, and
(b) no amendment, modification or alteration of the terms or
provisions hereof that has a material, adverse effect on the
Builders’ rights described herein shall be made without the
prior written consent of the Builders, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

 

 

211

 

 

10.3 Integration.
This Agreement constitutes the entire agreement between the Parties
with respect to the matters addressed herein. All prior discussions
and negotiations regarding the subject matter hereof are merged
herein.

 

10.4 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 herein,
the intention being that such provisions are
severable.

 

10.5 Governing
Law and Jurisdiction. This Agreement shall be governed and
construed under the laws of the State of Colorado. Venue for any
legal action relating to this Agreement shall be exclusive to the
State District Court in and for the County of Arapahoe, Colorado.

 

10.6 Paragraph
Headings. Paragraph headings are inserted for convenience of
reference only.

 

10.7 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 Consultant any
right, remedy, or claim under or by reason of this Agreement or any
covenants, terms, conditions, or provisions thereof, and all the
covenants, terms, conditions, and provisions in this Agreement by
and on behalf of Rangeview and the Consultant shall be for the sole
and exclusive benefit of Rangeview and the Consultant.

 

10.8 Notices.
All notices, demands, requests or other communications to be sent
by one Party to the other hereunder or required by law shall be in
writing and shall be deemed to have been validly given or served by
delivery of same in person to the addressee or by courier delivery
via Federal Express or other nationally recognized overnight air
courier service, by electronically-confirmed email transmission, or
by depositing same in the United States mail, postage prepaid,
addressed as follows:

 

	

To
Rangeview:

	

Rangeview
Metropolitan District

c/o
_______________________

__________________________

__________________________

Phone:
____________________

Email: ____________________

Attn: ____________________

	
 

	
 

	

With a
Copy To:

	

__________________________

__________________________

__________________________Phone: ____________________Email:
____________________

Attn:

	
 

	
 

 

 

212

 

 

	

To
Consultant:

	

PCY
Holdings, LLC

34501
E. Quincy Ave., Bldg. 34, Box 10

Watkins,
CO 80137

Phone: (303)
292-3456

Email: mharding@purecyclewater.com

Attn: Mark
Harding

 

	

To the
Builders:

	

Richmond American
Homes of Colorado, Inc.

Attention: Linda
Purdy, Vice President

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Linda.Purdy@mdch.com

Telecopier No.:
(720) 977-4707

	
 

	
 

	

with a
copy to:

	

M.D.C.
Holdings, Inc.

Attention: Drew
Rippey

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Drew.Rippey@mdch.com

Telecopier No.:
(720) 482-8558

 

	
 

	

and

 

	
 

	

M.D.C. Holdings, Inc.Attention: Linda
Skultety4350 South Monaco StreetDenver, Colorado
80237E-Mail: Linda.Skultety@mdch.comTelecopier No.: (303)
488-4954

	
 

	
 

	
 

	

Taylor
Morrison of Colorado, Inc.

1420
West Canal Court, Suite 170

Littleton, Colorado
80120

Attention: Phillip
Cross

Telephone: (303)
325-2426

E-mail:
pcross@taylormorrison.com

	
 

	
 

	

With a
copy to:

	

Brier,
Irish, Hubbard & Erhart P.L.C.

2400
East Arizona Biltmore Circle, Suite 1300

Phoenix, AZ
85016

Attn:
Jeff Hubbard

Telephone: (602)
522-0160

Facsimile: (602)
522-3945

E-mail:
jhubbard@bihlaw.com

 

	
 

	
 

	

With
copy to:

	

Tony
Meier at same address

E-mail:
tmeier@bihlaw.com

 

 

213

 

 

All
notices, demands, requests or other communications shall be
effective upon such personal delivery or one (1) business day after
being deposited with Federal Express or other nationally recognized
overnight air courier service, upon electronic confirmation of
email transmission, or three (3) business days after deposit in the
United States mail. By giving the other Party hereto at least ten
(10) days’ written notice thereof in accordance with the
provisions hereof, each of the Parties shall have the right from
time to time to change its address.

 

10.9 Default/Remedies.
If either Party fails to perform any of its responsibilities,
obligations or agreements to be performed in accordance with the
provisions of this Agreement, and if such failure of performance
continues for a period of thirty (30) days following written notice
of default from the other Party (or such additional period of time
as may reasonably be required to cure such default; provided that
the curative action is commenced within such thirty (30) day period
and is diligently and continuously pursued to completion), then the
non-defaulting Party, at its option, may elect (i) to treat this
Agreement as remaining in full force and effect; or (ii) terminate
this Agreement as of any specified date. The non-defaulting Party
shall additionally be entitled to exercise all remedies available
at law or in equity, including specific performance. In the event
of any litigation or other proceeding to enforce the terms,
covenants or conditions hereof, the non-defaulting Party in any
such litigation or other proceeding shall obtain as part of its
judgment or award its reasonable attorneys’ fees.
Notwithstanding the foregoing, if a non-defaulting Party elects to
terminate this Agreement as described in subsection (ii) of this
section 5.9, such non-defaulting Party shall first deliver a copy
of the default notice together with notice of such election to
terminate to the Builders, and in lieu of any such termination, the
applicable Builder shall have thirty (30) days following receipt of
such notice to exercise its Step-In Rights as described in this
Agreement. If the applicable Builder(s) do not exercise such
Step-In Rights by delivering notice of same to the Parties and
other Builders within such thirty (30) day time period, the
Builders shall be deemed to have waived such Step-In Rights and the
non-defaulting party may then proceed with termination of this
Agreement as described in subsection (ii). The Parties acknowledge
and agree that the Exercising Builder shall have no liability for
the default that gave rise to the Exercising Builder exercising its
Step-In Rights as described in this Agreement, and that the scope
of Exercising Builder’s responsibilities and liabilities is
limited to the provisions of Section 5.1(c), above.

 

10.10 Instruments
of Further Assurance. Each Party covenants it 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 hereunder.

 

10.11 Compliance
with Law. This Agreement is intended to be performed in
accordance with and only to the extent permitted by all applicable
laws, ordinances, rules, and regulations of the jurisdiction in
which the Agreement is performed. The Consultant declares it has
complied and will comply with all federal, state and local laws
regarding business permits, certificates and licenses required to
perform the Services.

 

10.12 Non-Waiver.
No waiver of any of the provisions of this Agreement shall be
deemed to constitute a waiver of any other provision of this
Agreement, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided herein, nor shall the waiver of
any default hereunder be deemed to be a waiver of any subsequent
default hereunder. Notwithstanding any provision to the contrary in
this Agreement, no term or condition of this Agreement shall be
construed or interpreted as a waiver, either expressed or implied,
of any of the immunities, rights, benefits or protection provided
to Rangeview under the Colorado Governmental Immunity
Act.

 

 

 

214

 

 

 

10.13 Inurement.
This Agreement shall inure to and be binding on the heirs,
executors, administrator, successors, and permitted assigns of the
Parties hereto.

 

10.14 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall constitute an original and all of which shall
constitute one and the same document.

 

10.15 Conflicts.
If any term or provision(s) in any Exhibit attached as part of this
Agreement conflicts with any term or provision(s) in the body of
this Agreement, the term or provision(s) contained in the body of
this Agreement shall control.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

 

215

 

[SIGNATURE PAGE TO
SERVICE AGREEMENT]

 

IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.

 

	

Consultant:

	

PCY HOLDINGS, LLC

a
Colorado limited liability company

 

By:
Pure Cycle Corporation, a Colorado corporation, its sole
member

 

	

By:

	
 

	

 

Its:

	

Mark
Harding

President

 

	

STATE
OF COLORADO

	

)

	
 

	
 

	

)

	

ss.

	

COUNTY
OF

	

)

	
 

 

The
foregoing instrument was acknowledged before me this ______ day of ____________________, 2017, 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

 

	

RANGEVIEW:

	

RANGEVIEW
METROPOLITAN DISTRICT

 

	

By:

	
 

	
 

	

President

 

 

216

 

 

 

	

STATE
OF COLORADO

	

)

	
 

	
 

	

)

	

ss.

	

COUNTY
OF

	

)

	
 

 

The
foregoing instrument was acknowledged before me this ______ day of ____________________, 2017, by _____________________, as
President of Rangeview
Metropolitan District.

 

Witness
my hand and official seal.

 

	

My
commission expires:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Notary
Public

 

 

217

 

EXHIBIT
A

 

SCOPE
OF SERVICES

 

 

GENERAL
COMPREHENSIVE SCOPE OF SERVICES

The
Project Manager (“PM”) shall provide any and all
services required to deliver Rangeview Eligible Improvements,
including but not limited to: Rangeview Compliance; Planning Design
and Approvals; Project Administration; Contractor Agreements;
Construction Management and Administration; and Rangeview
Acceptance. In general, the following detailed Scope of Services is
intended to be applicable for Rangeview Eligible Improvements and
may not include all needs of Rangeview. The Local Jurisdiction
accepting improvements shall have precedence over Rangeview
Requirements.

 

RANGEVIEW
COMPLIANCE

The PM
shall provide any and all necessary Rangeview Compliance, including
but not limited to: coordination with Rangeview and Rangeview
Consultants; and providing needed information and coordination with
legal counsel and accountants for the Board of Directors for
Rangeview. The PM shall track Rangeview Expenditures separately
from other Expenditures in a form acceptable to Rangeview
Accountant.

 

The PM
shall periodically report progress to the Board of Directors for
Rangeview and advise the Board of Directors for Rangeview of any
issues that may arise. In the event the Board schedules Board
meetings at least one time per month, the PM shall report to the
Board at such Board meetings on at least a monthly basis. In the
event the Board schedules more than one Board meeting per month,
the PM shall also report to the Board at such additional Board
meetings. The PM shall adhere to all Rangeview Policies and
Procedures, regardless of date of adoption.

 

PLANNING
DESIGN AND APPROVALS

Consultant
Selection and Administration – The PM shall be responsible
for the selection and management of qualified design and
construction support consultants and shall develop invoicing
procedures that include a clear description of Rangeview Eligible
Services provided and the amount of the Services. The PM shall be
responsible for development, negotiation and execution of
Consultant Agreements and Scope of Services and shall ensure that
any Rangeview Required Terms and Conditions are included in the
Agreement per requirements of the Board of Directors for Rangeview
and/or Title 32, Colorado Revised Statutes. The PM shall manage the
Plan Development and all other Services by Consultants in a
cost-effective manner. Plans containing Rangeview Improvements to
be owned and/or maintained by Rangeview shall be submitted to
Rangeview periodically during design for review and acceptance by
Rangeview. The PM shall ensure that all plans meet Local
Jurisdiction and/or Rangeview Specifications.

 

Plan
Development, Local Jurisdiction and other Coordination – The
PM shall be responsible for all coordination with governing and
other local jurisdictions, utility companies, adjacent developers,
residents and other entities requiring approvals, review or
interest in the Project. The PM shall coordinate with Rangeview for
any Agreements where Rangeview may be party to such
Agreement.

 

218

 

 

 

Constructability
Reviews – The PM should provide review of plans for
constructability to assist Rangeview and/or the design engineer in
determining more efficient or cost-effective alternatives. The work
would likely involve plan reviews, site visits and investigations,
meetings with Rangeview and/or local jurisdiction, and others,
review of preliminary geotechnical report, phasing plans, and any
other pertinent information to better qualify the design. Operation
and Maintenance costs of Improvements constructed for Rangeview
ownership or maintenance will likely represent a significant
portion of the PM’s services.

 

PROJECT
ADMINISTRATION

The PM
shall maintain Rangeview Project Files, Issues tracking lists,
meeting minutes, Agreement and Contract files, plan files,
schedules, and other Program Administration activities as need to
support the Project. The PM shall provide Project coordination with
consultants, local agencies, traffic control, utilities, power
companies and other public utilities, residents and other entities
as required

 

Project
Cost Estimating and Control – The PM shall provide Project
Cost Estimating Services, which may include updating of initial
Estimates, plan quantity and pay item take-offs and specialty cost
estimates needed in support of various Agreements, reporting
requirements or other as-needed estimates. Cost share matrixes may
be required. Special Reports including Cost Share Reimbursements,
Bonding Agency Reports and other specialized reports may be
produced as requested.

 

Project
Scheduling Services – The PM shall create Project Schedules
and provide updates which will include entitlement, planning,
design, and construction that would reflect additions, deletions
and deviations in the timing of all the associated activities.
Specialized Schedules shall be provided when requested. Schedules
would be formatted in Microsoft Project unless otherwise
directed.

 

Meetings –
The PM shall participate in Project Meetings as necessary. Meetings
can include, but are not limited to: Rangeview Board Meetings;
Project Status Meetings; local jurisdiction coordination meetings;
pre-bid meetings; pre-construction meetings; construction progress
meetings; miscellaneous field meetings; and other meetings with
Project Stakeholders as required or requested. The PM shall advise
Board of Meetings requiring Board participation.

 

CONSTRUCTION
MANAGEMENT AND ADMINISTRATION

Rangeview Contract
Document Development – The PM shall prepare and negotiate
Agreements and Contracts for Contractors and Contractor forms,
including but not limited to: Change Orders; RFI; Submittal; Pay
Certifications; and other miscellaneous forms for use on the
Project.

 

Bid and
Award of Project – The PM shall select or conduct the Bid
Process, which includes but is not limited to: development of the
bid documents, Bid Schedules and Technical Specifications (when
required for Rangeview owned and/or maintained property or
improvements); answering questions; preparing Addendums; and
conducting a Bid Opening or Award.

 

219

 

 

 

Construction
Observation – The PM shall provide construction
observation/inspection for compliance with the Contract Documents
for all phases of construction activities. Information gained by
construction observation/inspections will be made available to
Rangeview. Prior to acceptance by Rangeview, all geotechnical and
other testing reports will be provided to Rangeview. When
constructing Rangeview owned or maintained improvements, the PM
shall notify and allow Rangeview to observe/inspect improvements.
Rangeview shall (a) grant easements over, under and across any
Rangeview-owned real property to the extent reasonably necessary to
facilitate the construction of the Improvements contemplated by
this Agreement, and (b) obtain easements over, under and across any
other real property to the extent reasonably necessary to
facilitate the construction of the Improvements contemplated by
this Agreement.

 

Construction
Administration and Coordination – The PM will provide
construction administration activities including but not limited
to: partial pay request processing; submittal review coordination;
change orders review; force account; permit management; project
close-out; claim reviews; and other tasks as necessary to provide
project documentation. The PM shall provide construction
coordination activities including, but not limited to: project
coordination with stakeholders; monitoring project scheduling;
jurisdictional coordination; and other activities necessary to
provide coordination. The PM is authorized to terminate Contractor
Agreements and Contracts that are in default in accordance with the
rights of Rangeview under such Contractor Agreements and at is
option prepare and negotiate new Contractor Agreements, including
construction contracts between Rangeview and PM, to complete
uncompleted Improvements (subject to Builder’s Step-In
Rights) to be awarded in compliance with applicable laws. In such
event, PM will continue to process all payments for work under a
Contractor Agreement through Rangeview in accordance with this
Agreement and to the extent PM performs the work to complete any
Improvements, PM will not exceed the contract price between
Rangeview and its contractor without obtaining authorization for
Rangeview board of directors and appropriation of sufficient funds
to cover those amounts required by statute, or unless PCY Holdings,
LLC, a Colorado limited liability company, deposits or causes the
deposit of sufficient funds to cover such amounts which Rangeview
shall appropriate for such purpose. If a Contractor Agreement with
a Rangeview contractor is no longer in effect or PM terminates a
defaulted Contractor Agreement and PM elects to complete the
Improvements, or portion thereof, itself, PM (or the Builder that
exercises its Step-In Rights) will install and complete such
uncompleted Improvements in accordance with applicable public
contracting statutes and this Agreement in effect between the PM
and Rangeview pertaining to the Construction of the Improvements
and the disbursement of construction funds for the construction
accounts held by Rangeview for the construction of the
Improvements. The foregoing does not modify any separate agreement
between any Builder that exercises its Step-In Rights and
Consultant as to the obligation to fund costs that exceed a
contract price.

 

Stormwater
Management – The PM shall provide coordination of storm water
compliance and bmp inspection coordination and maintenance,
including but not limited to: coordinating permit application and
closeout; developing Stormwater Management Plans (SWMP),
remediation and action plans, dewatering plans and plans for bmp
drainage structures for implementation; directing contractors on
bmp maintenance for adherence and compliance to the plans
developed; providing ongoing analysis of bmps for functionality
based on changes in field conditions, and modifying plans based on
necessary field changes and changes made to local and state agency
requirements.

 

220

 

 

RANGEVIEW
ACCEPTANCE

 

The PM
shall provide all necessary documentation and information needed by
Rangeview for Acceptance as required by Rangeview or Rangeview
Acceptance Policy. Such items may include but are not limited to:
Conveyance of Real Property; As Built Drawings (electronic);
Maintenance Manuals; Manufacture cut sheets; Contracts; Agreements;
Invoices; pay application; proof of payments; Construction
Administration Documentation; Test Reports; and other documentation
as needed. The PM shall provide estimates of Rangeview Maintenance
costs.

 

 

221

 

 

EXHIBIT
B

 

PROJECT/IMPROVEMENTS

 

 

222

 

 

 

EXHIBIT
C

 

COMPENSATION

 

 

PROJECT
MANAGEMENT FEE

The
Project Management Fee (PM Fee) shall be five percent (5%) of
actual construction costs of Rangeview Eligible Improvements. The
PM Fee shall be based only on the actual costs of the Improvements;
thus, items such as fees, permits, review fees, consultant or other
soft costs, land acquisition, or any other costs that are not
directly related to the cost of construction of Rangeview Eligible
Improvements will not be included in the calculation of the PM Fee.
All such costs excluded from calculating the PM Fee are
reimbursable to the Project Manager (PM) provided they are
exclusively spent on Rangeview Eligible Improvements, are
reasonable with other similar projects in the Denver metropolitan
area and approved by the Rangeview Board of Directors. This Section
is for calculation of the PM Fee only and is not intended to
exclude reimbursement for Rangeview Eligible Improvements meeting
the requirements of Rangeview.

 

The PM
shall be reimbursed the PM Fee after submission of an acceptable
invoice including documentation of all Rangeview Eligible Expenses.
Invoice and documentation shall be reviewed and approved by the
Board of Directors for Rangeview or designated Representative prior
to payment. Invoices may be submitted periodically but not more
than once per month.

.

 

223

 

EXHIBIT
D

 

CERTIFICATION
OF CONSULTANT

 

8. Pursuant to the
requirements of Section 8-17.5–102(1), C.R.S., the Consultant
hereby certifies to Rangeview that the Consultant does not
knowingly employ or contract with an illegal alien who will perform
work under the Agreement and that it will participate in the
E-Verify Program or Department Program (as defined in Sections
8-17.5-101(3.3) and (3.7), C.R.S.) in order to confirm the
employment eligibility of all employees of the Consultant who are
newly hired to perform work under the Agreement.

 

9. In accordance with
Section 8-17.5-102(2)(a), C.R.S., the Consultant shall
not:

 

(a) Knowingly employ or
contract with an illegal alien to perform work under the Agreement;
or

 

(b) Enter into a
contract with a subcontractor that fails to certify to the
Consultant that the subcontractor shall not knowingly employ or
contract with an illegal alien to perform work under the
Agreement.

 

10. The Consultant
represents and warrants it has confirmed the employment eligibility
of all employees who are newly hired for employment to perform work
under the Agreement through participation in either the E-Verify
Program or the Department Program.

 

11. The Consultant is
prohibited from using either the E-Verify Program or the Department
Program procedures to undertake pre-employment screening of job
applicants while the Agreement is in effect.

 

12. If the Consultant
obtains actual knowledge that a subcontractor performing work under
the Agreement knowingly employs or contracts with an illegal alien,
the Consultant shall:

 

(a) Notify the
subcontractor and Rangeview within three (3) days that the
Consultant has actual knowledge that the subcontractor is employing
or contracting with an illegal alien; and

 

(b) Terminate the
subcontract with the subcontractor if within three (3) days of
receiving the notice the subcontractor does not stop employing or
contracting with the illegal alien; except that the Consultant
shall not terminate the contract with the subcontractor if during
such three days the subcontractor provides information to establish
that the subcontractor has not knowingly employed or contracted
with an illegal alien.

 

13. The Consultant
shall comply with any reasonable request by the Colorado Department
of Labor and Employment (“Department”) made in the course of
an investigation that the Department is undertaking, pursuant to
the law.

 

14. If the Consultant
violates any provision of Section 8-17.5–102(1), C.R.S.,
Rangeview may terminate the Agreement immediately and the
Consultant shall be liable to Rangeview for actual and
consequential damages of Rangeview resulting from such termination,
and Rangeview shall report such violation by the Consultant to the
Colorado Secretary of State, as required by law.

 

 

224

 

EXHIBIT
E

 

FORM
OF CHANGE ORDER

 

	

Change Order No:

	

Date Issued:

	

Name of Agreement:

 

	

Date
of Agreement:

 

	

Rangeview Metropolitan
District:

	

Other
Party/Parties:

 

 

	

CHANGE IN SCOPE OF SERVICES
(describe):

 

 

 

	

CHANGE
IN AGREEMENT PRICE:

	
 

	

CHANGE
IN TERM OF AGREEMENT:

	
 

	
 

	
 

	

Original
Price:

$________

	
 

	

Original Term: Expires _______________,
20____

	
 

	
 

	
 

	

Increase of this
Change Order:

$_________

	
 

	

New
Term:

Expires
_______________, 20___

	
 

	
 

	
 

	

Price
with all Approved Change Orders:

$_________

	
 

	

Agreement Time with
all Approved Change Orders:

	
 

	
 

	
 

 

	

APPROVED:

	
 

	

APPROVED:

	
 

	
 

	
 

	

By:

	
 

	
 

	

By:

	
 

	
 

	

Rangeview
Metropolitan District

	
 

	
 

	

Consultant

 

 

 

 

 

 

 

225

 

Schedule
2

Final
Lotting Diagram

 

 

226Blueprint

Exhibit 10.3

TENTH AMENDMENT TO

CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE

(Sky Ranch)

 

THIS
TENTH AMENDMENT TO CONTRACT FOR PURCHASE AND SALE OF REAL ESTATE
(this “Amendment”)
is made as of the date the last of the Parties executes and dates
this Amendment (the “Effective
Date”), by and between PCY HOLDINGS, LLC, a Colorado limited
liability company (“Seller”),
and KB HOME COLORADO INC., a
Colorado corporation (“Purchaser”).
Seller and Purchaser may be referred to collectively as the
“Parties.”

 

RECITALS

 

A. Seller and
Purchaser previously entered into a Contract For Purchase and Sale
of Real Estate effectively dated June 29, 2017, as amended (the
“Contract”)
for approximately 149 platted single-family detached residential
lots in the Sky Ranch master planned residential community in the
County of Arapahoe, State of Colorado.

 

B. Purchaser and
Seller desire to amend the terms and conditions of the Contract as
set forth below.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the mutual covenants contained in
this Amendment and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Purchaser and Seller hereby agree as follows:

 

1. Lotting
Diagram. The Lotting Diagram in Contract Exhibit A is
deleted and replaced with attached Schedule 1.

 

2. Number of
Lots. The references in the fourth WHEREAS clause and
elsewhere in the Contract to (i) “103” SFD 45 Lots is
replaced with “106” SFD, and (ii) “46” SFD
50 Lots is replaced with “43” SFD 45 Lots

 

3. Purchase and
Sale. Section 1 “Purchase and Sale” is
deleted and replaced with the following

 

“1.                 

Purchase and Sale

. The
Property shall be purchased at six (6) Closings. Subject to the
terms and conditions of this Contract, Seller agrees to sell to
Purchaser, and Purchaser agrees to purchase from Seller, on or
before the dates set forth in Section 6(b), below, the
Lots in each Takedown, as generally depicted on the Lotting Diagram
and as follows:

 

At the
Takedown 1 Closing (“First
Closing”), twenty-five (25) Lots of which 9 are SFD
45’ Lots and 16 are SFD 50’ Lots;

 

1

 

 

 

At the
Takedown 2 Closing (“Second
Closing”), twenty-five (25) Lots of which 15 are SDF
45’ Lots and 10 are SFD 50’ Lots;

 

At the
Takedown 3 Closing (“Third
Closing”), twenty-five (25) Lots of which 25 are SFD
45’ Lots and 0 are SFD 50’ Lots;

 

At the
Takedown 4 Closing (“Fourth
Closing”), twenty-four (24) Lots of which 24 are SFD
45’ Lots and 0 are SFD 50’ Lots;

 

At the
Takedown 5 Closing (“Fifth
Closing”), twenty-five (25) Lots of which 25 are SFD
45’ Lots and 0 are SFD 50’ Lots; and

 

At the
Takedown 6 Closing (“Sixth
Closing”), twenty-four (25) Lots of which 8 are SFD
45’ Lots and 17 are SFD 50’ Lots.

 

The
exact number and location of the Lots within each Takedown are
subject to adjustment based upon the approval by the Authorities of
the Final Plat (as hereinafter defined) that includes the Lots to
be acquired by Purchaser at each Takedown. The precise number,
dimension (subject to the provisions of this Contract), location
and legal description of the Lots will be established at the time
the Final Plat for such Lots is approved by the County and/or any
other Authority, and upon approval of each such Final Plat the
parties shall execute an amendment to this Contract setting forth
the legal description of those Lots included in the approved Final
Plat.”

 

4. Master
Covenants. Pursuant to Section 4(d) of the Contract,
Purchaser has approved the form of the Master Covenants set forth
in attached Schedule 4, subject to the Parties agreeing as to
completion of any blanks or exhibits, if applicable.

 

5. Public Improvement
Fee Covenant. Pursuant to Section 9(e) of the Contract, the
agreed-upon form of the Public Improvement Fee Covenant is set
forth in attached Schedule 5, subject to the Parties agreeing as to
completion of any blanks or exhibits, if applicable.

 

6. Tap Purchase
Agreement. Pursuant to Section 16(a) of the Contract, the
agreed-upon form of the Tap Purchase Agreement is set forth in
attached Schedule 6, subject to the Parties agreeing as to
completion of any blanks or exhibits, if applicable.

 

7. Offsite
Infrastructure Escrow Agreement. The agreed-upon form of the
Offsite Infrastructure Agreement is set forth in attached Schedule
7, subject to the Parties agreeing as to completion of any blanks
or exhibits, if applicable. With respect Exhibit C, Section 4 of
the Contract, Seller agrees to complete the WWRF not later than 18
months after the first building permit is issued for any
Lot.

 

8. Homebuyer
Disclosure. Pursuant to Section 12(e) of the Contract, the
agreed-upon form of the Homebuyer Disclosure is set forth in
attached Schedule 8. However, it is agreed Purchaser need not use
and need not provide the specific Homebuyer Disclosure attached,
but rather Purchaser may provide disclosures to its homebuyers
similar in nature as part of Purchaser’s homebuyer sales
documentation.

 

 

2

 

 

 

 

9. Amenity Development
Agreement And Escrow Instructions. The Parties agree to an
additional document as part of the transaction, entitled the
“Amenity Development Agreement And Escrow Instructions”
(herein the “Amenity Agreement”). The agreed-upon form
of the Amenity Agreement is set forth in attached Schedule 9,
subject to the Parties agreeing as to completion of any blanks or
exhibits, if applicable. The Amenity Agreement is to be entered not
later than the First Closing.

 

10.  Continuation
Notice. With this Amendment, Purchaser issues its
Continuation Notice.

 

11. Miscellaneous.
In the case of any conflict between the terms of this Amendment and
the provisions of the Contract, the provisions of this Amendment
shall control. Except as the Contract is specifically modified by
this Amendment, the Parties hereby ratify, reaffirm, and restate
the terms of the Contract. This Amendment may be executed in
counterparts, each of which shall be deemed an original and may be
signed and delivered by facsimile transmission or electronic mail,
and all of which, when taken together, shall constitute one and the
same Amendment.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

3

 

 

 

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Amendment as
of the last day and year written below.

 

	

SELLER:

 

PCY
HOLDINGS, LLC, a Colorado limited liability company

 

By:
Pure Cycle Corporation, a Colorado corporations, its sole
member

 

 

    By:
/s/ Mark Harding 

    Mark
Harding, President

    Date:
11-19-17

 

	
 

 

 

PURCHASER:

 

KB HOME
COLORADO INC.,

a
Colorado corporation

 

 

By: /s/ Randy
Carpenter

Name:
Randy Carpenter

Title:
Division President

Date:
11-10-17

 

 

4

 

 

 

Schedule 1 - Lotting Diagram

 

 

 

 

 

5

 

Schedule 4 - Master Covenants

 

 

 

 

 

6

DRAFT

McGEADY
BECHER P.C.

October
9, 2017

FR DRAFT REV. 10/30/2017

 

 

When Recorded, Return to:

 

 

COVENANTS, CONDITIONS AND RESTRICTIONS

FOR SKY RANCH

THESE
COVENANTS, CONDITIONS AND RESTRICTIONS FOR SKY RANCH
(“Covenants,” as
hereinafter more fully defined) are made and entered into the date
and year hereinafter set forth by PCY Holdings, LLC, a Colorado
limited liability company (“Developer,” as hereinafter more
fully defined).

 

 

WITNESSETH:

 

A. Developer is the
owner of that certain real property in the County of Arapahoe
(“County”), State of Colorado, which is described on
Exhibit A, attached hereto and incorporated herein by this
reference (“Property,”, as hereinafter more fully
defined).

 

B. Developer desires
to subject the Property to certain covenants, conditions,
restrictions, easements, architectural guidelines, reservations,
rights-of-way, obligations, liabilities and other
provisions.

 

C. These Covenants do
not create a Common Interest Community, as defined by the Colorado
Common Interest Ownership Act at C.R.S. §38-33.3-103(8);
therefore, these Covenants are not governed by the Colorado Common
Interest Ownership Act.

 

D. Pursuant to C.R.S.
§ 32-1-1004(8), and other provisions of Title 32 of C.R.S.,
the Developer empowers the Sky Ranch Community Authority Board (the
“CAB”) with
authority to furnish covenant enforcement and design review
services for the Property (collectively, the “Services,” as hereinafter more
fully defined).

 

E. Developer reserves
the right to add additional real property to these Covenants by
recording an annexation document as more particularly described and
set forth herein.

 

F. Pursuant to the
Colorado Constitution, Article XIV, Sections 18(2)(a) and (b), and
C.R.S. Section 29-1-2-3, metropolitan districts may cooperate or
contract with each other to provide any function, service or
facility lawfully authorized to each, and any such contract may
provide for the sharing of costs, the impositions of taxes, and the
incurring of debt.

 

G. Pursuant to the
Modified Service Plans for Sky Ranch Metropolitans District Nos. 1,
3, 4 and 5 (“Sky Ranch
Districts”), approved by Arapahoe County on September
14, 2004, as may be amended from time to time (“Service Plans”), the Sky Ranch
Districts may furnish covenant enforcement and design review
services and cooperate and contract with each other regarding
administrative and operational functions.

 

 

7

 

 

 

 

H. Pursuant to the Sky
Ranch Districts’ Service Plans, the Districts intend to
exercise their powers to provide covenant enforcement and design
review services, as defined in C.R.S. Section 32-1-1004(8), for the
Property.

 

I. In accordance with
the Service Plans and statutory authority, the Sky Ranch Districts
intend to enter into a Sky Ranch Community Authority Board
Establishment Agreement (“CABEA”), creating the CAB and
authorizing the CAB to provide covenant enforcement and design
review services within the Service Areas of the Sky Ranch Districts
that are parties to the CABEA using revenue derived from the areas
in which the services are to be furnished.

 

J. In accordance with
the Service Plans, the CABEA and statutory authority, the CAB has
duly adopted a resolution acknowledging its power to provide
covenant enforcement and design review services pursuant to state
statute, the intention of the CAB to provide for uniform
enforcement and design review services within the service areas of
the Sky Ranch Districts that are parties to the CABEA, and
authorizing the CAB to provide covenant enforcement and design
review services within the service area of the Sky Ranch Districts
that are parties to the CABEA using revenue derived from the areas
in which the services are to be furnished.

 

K. Before the addition
of the service area of any Sky Ranch District to these Covenants,
the applicable Sky Ranch District intends to: (i) duly adopt a
resolution acknowledging the CAB’s power to provide covenant
enforcement and design review services pursuant to state statute
and its intention to provide for uniform enforcement and design
review services within the service areas of the Sky Ranch Districts
using revenues derived from the areas in which the services are to
be furnished; and (ii) authorize the CAB to provide covenant
enforcement and design review services within such Sky Ranch
District’s service area.

 

DECLARATION

NOW,
THEREFORE, Developer hereby declares that the Property shall be
held, sold, and conveyed, subject to the following covenants,
conditions, restrictions, easements, architectural guidelines,
reservations, rights-of-way, obligations, liabilities, and other
provisions, as set forth herein.

 

ARTICLE 1

GENERAL

 

Section 1.1 Planned
Community.

  Developer
is the owner of the Lots and other Property located in the County
as more particularly described on Exhibit A
attached hereto and by this reference incorporated herein, which
collectively constitute and are defined in these Covenants as the
“Property”. Developer intends to develop the Property
as a planned community of single family residential homes and
related uses. The name of the community to be developed on the
Property is “Sky Ranch”. All of the Property is located
within the Service Area of Sky Ranch Metropolitan District No. 1, a
quasi-municipal corporation and political subdivision of the State
of Colorado. Because ownership of a Unit (as defined below) does
not obligate the owner to pay for real estate taxes, insurance
premiums, maintenance, or improvement of other real estate
described in these Covenants, the Property is not and will not be a
“common interest community”, as defined in the Colorado
Common Interest Ownership Act (“Act”), and therefore the Property
and these Covenants are not subject to or required to comply with
the Act. Developer confirms its intention that the Act will not
apply to the Property or these Covenants.

 

 

8

 

 

 

 

Section 1.2 Purposes of
Covenants.

  These
Covenants are executed (a) to further a common and general plan for
the development of the Property; (b) to protect and enhance the
quality, value, aesthetics, desirability and attractiveness of the
Property; (c) to provide for and define certain duties, powers and
rights of the Architectural Review Committee, as defined herein;
(d) to define certain duties, powers and rights of the CAB under
these Covenants; and (e) to define certain duties, powers and
rights of Owners of Lots within the Property.

 

Section 1.3 Declarations.

 Developer,
for itself and its successors and assigns, hereby declares that the
Property, and all other real property that becomes subject to these
Covenants in the manner hereinafter provided from the date the same
becomes subject to these Covenants, shall be owned, held,
transferred, conveyed, sold, leased, rented, hypothecated,
encumbered, used, occupied, maintained, altered and improved
subject to the covenants, conditions, restrictions, limitations,
reservations, exceptions, equitable servitudes and other provisions
set forth in these Covenants. The provisions of these Covenants run
with the land and, until their expiration in accordance with the
terms hereof, shall bind, be a charge upon and inure to the mutual
benefit of: (a) the Property and all other real property that
becomes part of the Property; (b) Developer and its successors and
assigns; (c) the Sky Ranch Districts, through the CAB, and their
successors and assigns; and (d) all Persons having or acquiring any
right, title or interest in any portion of the Property or in any
property that becomes part of the Property, or any Improvement
thereon, and their heirs, personal representatives, successors or
assigns. These Covenants will be recorded in the real property
records of the County.

 

Section 1.4  CAB
Authority.

  Declarant, through these Covenants, grants
authority to the Sky Ranch Districts, through the CAB, to act on
behalf of Declarant for certain matters specifically set forth in
these Covenants, including implementing these Covenants, enforcing
these Covenants and providing design review services. Declarant
grants the Sky Ranch Districts, through the CAB, authority as
provided herein to adopt Rules and Regulations, and Guidelines
pertaining to architectural and design review, each for the
effective governance of the Property to implements these Covenants.
Declarant grants to the Sky Ranch Districts, through the CAB,
authority to review and approve Improvements in compliance with the
Guidelines and these Covenants and to enforce the Guidelines.
Declarant grants to the Sky Ranch Districts, through the CAB,
authority to appoint the ARC as provided herein and to exercise all
other powers necessary and proper to implement and enforce these
Covenants and provide design review services.

 

ARTICLE 2

DEFINITIONS

 

Section 2.1 ARC.

   “ARC”
means the Architectural Review Committee appointed by the Developer
during the Developer Control Period (as defined in Section 3.1), and upon expiration of the
Developer Control Period, appointed by the Sky Ranch Districts,
through the CAB, all as provided in Section 3.1 of these Covenants. The ARC shall
review, consider and approve, or disapprove, requests for
architectural approval, as more fully provided in these
Covenants.

 

 

9

 

 

 

Section 2.2 Builder.

  “Builder”
means any Person who: (i) acquires one or more parcels of the
Property for the purpose of constructing at least one residence on
each such parcel for sale, and/or rental, to the public; or (ii)
acquires one or more parcels of the Property for sale to any Person
fitting the description in clause (i) above; and is designated as a
“Builder” under these Covenants in a written
designation that is signed by the then-Developer, and which
designation is recorded in the office of the Clerk and Recorder of
the County.

 

Section 2.3 CAB.

  “CAB”
means the Sky Ranch Community Authority Board.

 

Section 2.4 Covenants.

 “Covenants” means these Covenants,
Conditions and Restrictions for Sky Ranch, as amended and
supplemented from time to time.

 

Section 2.5 Developer.

  “Developer” means PCY Holdings, LLC,
a Colorado limited liability company, and any other Person to whom
the Developer may assign one or more of the Developer’s
rights under these Covenants (which will be the extent of the
Developer’s rights to which such assignee succeeds);
provided, that no assignment of any Developer rights is effective
unless such assignment is duly executed by the assignor Developer
and recorded in the office of the Clerk and Recorder of the
County.

 

Section 2.6 Governing
Documents.

 “Governing Documents” means these
Covenants, any Guidelines (as hereinafter defined), any CCR Rules
and Regulations (as hereinafter defined), and any other documents
now or hereafter adopted by or for the Sky Ranch Districts, the
CAB, or ARC, as amended and supplemented.

 

Section 2.7 Improvements.

  “Improvements” means all exterior
improvements, structures, and any appurtenances thereto or
components thereof of every type or kind, and all landscaping
features, including but not limited to buildings, outbuildings,
swimming pools, hot tubs, satellite dishes, antennas, tennis
courts, patios, patio covers, awnings, porches, solar collectors,
roof materials, painting or other finish materials on any visible
structure, additions, walkways, sprinkler systems, garages,
driveways, dog runs, fences, basketball backboards and hoops,
swingsets or other play structures, screening walls, retaining
walls, stairs, decks, landscaping, hedges, windbreaks, plantings,
trees, shrubs, flowers, vegetables, sod, gravel, groundcover,
exterior light fixtures, poles, signs, exterior tanks, and exterior
air conditioning, cooling, heating and water softening equipment,
permanent fire pits, chimneys, and exterior ornaments, if
any.

 

Section 2.8 Owner.

  “Owner”
means each fee simple title holder of a Unit, including Developer,
any Builder and any other Person who owns a Unit, but does not
include a Person having an interest in a Unit solely as security
for an obligation.

 

Section 2.9 Person.

  “Person” means a natural person, a
corporation, a limited liability company, a partnership, a trust, a
joint venture, an unincorporated association, or any other entity
or any combination thereof, and includes each Owner, the Developer,
each Builder, the ARC, the Sky Ranch Districts and CAB, and the
governing body of the Sky Ranch Districts and CAB.

 

 

10

 

 

 

Section 2.10 Property.

  “Property” means the real property
described on Exhibit A attached hereto, as supplemented and
amended, and all other real property, if any, made subject to the
terms and provisions of these Covenants after the date hereof, and
as the Developer, any Builder or Owner may now or hereafter
subdivide or re-subdivide any portion thereof; provided, however,
that the Property does not include any real property that has been
withdrawn as provided in Section 6.10 hereof.

 

Section 2.11 Services.

  “Services” means the services that
the CAB is empowered to provide pursuant to C.R.S. §32-1-1004,
as amended, and other provisions of Title 32 of C.R.S., as amended,
including but not limited to covenant enforcement and design
review.

 

Section 2.12 Sky Ranch
Districts.

  “Sky
Ranch Districts” means Sky Ranch Metropolitans
District Nos. 1, 3, 4 and 5, and any other metropolitan
district(s), to which the Sky Ranch Districts or CAB may transfer
or assign any or all of the rights and duties of the Sky Ranch
Districts or CAB under these Covenants. Each such assignment or
transfer, if any, will be effective upon recording in the County of
a document of transfer or assignment, duly executed by the Sky
Ranch Districts and/or CAB. In addition to the authority to provide
the Services (as defined in Section
2.11), the CAB has such other authority with respect to the
provision of the Services, as may be permitted by the Special
District Act, C.R.S. 32-1-101 et seq., including but not limited to
the right to adopt rules and regulations, fees, rates, tolls,
penalties and charges, and undertake enforcement actions (but these
Covenants do not limit in any way the authority of the Sky Ranch
Districts or CAB under the statutes of the State of
Colorado).

 

Section 2.13 Unit.

  “Unit” means each portion of the
Property which is designated as a lot on a recorded plat, including
each residence (attached or detached) now or hereafter located
thereon.

 

ARTICLE 3

ARCHITECTURAL
REVIEW

 

Section 3.1 Composition of
ARC.

  The
ARC shall consist of three (3) or more natural Persons. The
Developer has the authority to appoint the ARC, and/or to delegate
some or all architectural authority (as provided in Section 3.2 hereof), from the date of
recording of these Covenants until the date of conveyance of all
the Units to the first Owners thereof other than: (i) the
Developer; or (ii) any Builder; or (iii) any other Person who
acquires one or more parcels of the Property for the purpose of
constructing at least one residence on each such parcel (the
“Developer Control
Period”). After expiration of the Developer Control
Period, the governing board of the CAB has the authority to serve
as or appoint members to the ARC , and/or to delegate some or all
architectural authority (as provided in Section 3.2 hereof). The appointments of all
then-current members of the ARC who were appointed by the Developer
will automatically terminate on the date which is thirty (30) days
after expiration of the Developer Control Period.

 

Section 3.2 Delegation of Some or All
Architectural Authority.

  The
Person with the authority to appoint the ARC, as provided in the
preceding Section 3.1, has the right
and authority to: (i) delegate, in writing, some or all
architectural authority, to one or more other Persons, including
one or more management companies, metropolitan or other
district(s), such as by entering into intergovernmental
agreement(s) or other document(s) or agreement(s); and (ii)
withdraw, in writing, any delegated authority.

 

 

11

 

 

 

 

Section 3.3 Architectural Review
Requirements; Authority of the ARC.

 

3.3.1                      No
Improvements may be constructed, erected, placed, altered, planted,
applied, installed or modified, upon any Unit, unless said
Improvements are in full compliance with all provisions of the
Governing Documents, and unless such Improvements are approved in
writing by the ARC. At least one (1) detailed set of complete plans
and specifications of proposed Improvements (said plans and
specifications to show exterior design, height, materials, color,
and location of the Improvements, plotted horizontally and
vertically, location and size of driveways, location, size, and
type of landscaping, fencing, walls, windbreaks and grading plan,
as well as such other materials and information as may be required
by the ARC), must first be submitted to the ARC for review and
consideration.

 

3.3.2                      The
ARC shall endeavor to exercise its judgment in an attempt to
provide for each proposed Improvement to generally harmonize with
the existing surroundings, residences, landscaping and structures.
However, the ARC shall not review or approve any proposed
Improvements regarding whether the same complies with governmental
requirements. Rather, as provided in subsection 0, below,
the applicant is also required to submit proposed Improvements to
the applicable governmental entities for a determination of
compliance with governmental requirements. In its review of such
plans, specifications and other materials and information, the ARC
may require, as a condition to its considering an approval request,
that the applicant(s) pay, and/or reimburse the ARC, for the
expenses incurred in the process of review and approval or
disapproval.

 

3.3.3                      In
addition to the foregoing review and approval, and notwithstanding
anything to the contrary in these Covenants, the construction,
erection, addition, deletion, change or installation, of any
Improvements also requires the applicant to obtain the approval of
all governmental entities with jurisdiction thereover, and requires
the issuance of all required permits, licenses and approvals by all
such entities. Without limiting the generality of the preceding
sentence, issuance of building permit(s) by the governmental entity
with jurisdiction thereover, if required, is a precondition to
commencement of any construction of, alteration of, addition to or
change in, any Improvement.

 

3.3.4                      In
addition to the authority that is given to the ARC in these
Covenants, as well as such authority as may be implied from any
provision(s) of these Covenants, the ARC has all authority and
powers that are given by Colorado statute and case law, to a
corporation, a limited liability company, or any other legal
entity. The foregoing shall include the power to receive and review
complaints from one or more Owners, Developer, one or more
Builders, or any other Person(s), alleging that a violation of any
of the Governing Documents has occurred or is
occurring.

 

3.3.5                      The
ARC may, at any time, appoint a representative or committee to act
on its behalf. If so, then the actions of such representative or
committee shall be the actions of the ARC. However, if such a
representative or committee is appointed, then the ARC will have
full power over such representative or committee, including the
power to at any time withdraw from such representative or
committee, any authority to act on behalf of the ARC, and the power
to at any time remove or replace such representative or
committee.

 

 

12

 

 

 

Section 3.4 Guidelines.

  The
Developer may promulgate, adopt, enact, modify, amend, repeal, and
re-enact, architectural standards, rules, regulations and/or
guidelines, regarding architectural and design matters and matters
incidental thereto (collectively the “Guidelines”), and the CAB, once it
has the authority to appoint the ARC as provided in Section 3.1 of these Covenants may modify,
amend, repeal, and re-enact the Guidelines, but the Guidelines may
not be in conflict with these Covenants. The Guidelines may
include: clarifying the designs and materials that may be
considered in architectural approval; requirements for submissions,
procedural requirements, specification of acceptable Improvement(s)
that may be installed without prior review or approval; and
permitting the ARC, with respect to any violation(s) or alleged
violation(s) of any of the Governing Documents, to send demand
letters and notices, levy and collect fines and interest, and
negotiate, settle and take any other actions. In addition, the
Guidelines may provide for blanket approvals, interpretations, or
restrictions. By way of example, and not by way of limitation, the
Guidelines may state that a certain type of screen door will be
acceptable and will not require approval, or may state that only
one or more types of fences are acceptable and no other types will
be approved. All Improvements proposed to be constructed, erected,
placed, altered, planted, applied, installed or modified, upon any
Unit by any Owner must be done and used in accordance with the
Guidelines and these Covenants. The Guidelines (as amended from
time to time in accordance with their terms) may not be recorded
against the Property but are hereby incorporated into these
Covenants as if fully set forth herein.

 

Section 3.5 Procedures.

  The
ARC shall review each request for architectural approval in
accordance with the design review procedures set forth in the
Design Guidelines or the CCR Rules and Regulations, and approve
(which may be with conditions and/or requirements) or disapprove,
each request in writing within forty-five (45) days after the
complete submission to the ARC along with a receipt of
acknowledgement by the ARC of the plans, specifications and other
materials and information, which the ARC may require in conjunction
therewith. If the ARC fails to review and give its writing approval
(which may be with conditions and/or requirements) or disapproval
within forty-five (45) days after the complete submission of the
plans, specifications, materials and other information with respect
to a written request for architectural approval, then such request
is deemed approved by the ARC.

 

Section 3.6 Vote.

  The
affirmative, majority vote of the ARC is required for approval
(which may be with conditions and/or requirements) of each matter,
unless the ARC has appointed a representative or committee to act
for it, in which case the decision of such representative or
committee will control, unless the denial of the ARC is appealed by
the applicant to the CAB Board of Directors within thirty (30) days
of the date of the ARC written decision of denial in which case the
written decision of the Board of the CAB shall
control.

 

Section 3.7 Prosecution of Work After
Approval.

 
After the ARC approves (which may be with conditions and/or
requirements) any proposed Improvement, the proposed Improvement
must be completed and constructed as promptly and diligently as
possible, and in complete conformity with all conditions and
requirements of the approval. Failure to complete the proposed
Improvement within the time period set forth in the Guidelines or,
if not set forth in the Guidelines, then within one (1) year after
the date of approval of the application (“Completion Deadline”), or to
complete the Improvement in complete conformance with the
conditions and requirements of the approval, constitutes
noncompliance; provided, however, that the ARC may grant extensions
of time to individual Owners for completion of any proposed
Improvements, either (a) at the time of initial approval of
such Improvements, or (b) upon the request of any Owner,
provided such request is delivered to the ARC in writing and the
Owner is diligently prosecuting completion of the subject
Improvements or other good cause exists at the time such request is
made. Builders are exempt from this Section 3.7.

 

 

13

 

 

 

Section 3.8 Notice of
Completion.

  Upon
the completion of an Improvement, the applicant for approval of the
same shall give a written “Notice of Completion” to the ARC
(in form and substance acceptable to the ARC, or on forms provided
by the ARC). Until the date of receipt of such Notice of
Completion, the ARC shall not be deemed to have notice of
completion of any Improvement on which approval (which may be with
conditions and/or requirements) has been sought and granted as
provided in this Article.

 

Section 3.9 Inspection of
Work.

 The
ARC, or its duly authorized representative, has the right to
inspect any Improvement at any time, including prior to or after
completion, in order to determine whether or not the proposed
Improvement is being completed or has been completed in compliance
with the approval granted pursuant to this Article. Such
inspections may be made in order to determine whether or not the
proposed Improvement is being completed, or has been completed, in
compliance with the approval granted pursuant to this Article.
However, such right of inspection terminates ninety (90) days after
the ARC has received a Notice of Completion from the applicant and
no action has been initiated by the ARC. The 90-day period to
perform inspections after the ARC has received a Notice of
Completion does not apply to or limit the right or authority of the
ARC or the Board to enforce these Covenants, including but not
limited to the requirements pertaining to the maintenance of
Improvements.

 

Section 3.10 Notice
of Non-compliance

. If,
as a result of inspections or otherwise, the ARC determines that
any Improvement has been done without obtaining all required
approvals (which may be with conditions and/or requirements), or
was not done in substantial compliance with the approval that was
granted, or has not been completed by the Completion Deadline
(except landscaping, as provided below), subject to any extensions
of time granted pursuant to Section
3.7 hereof, then the ARC shall notify the applicant in writing
of the non-compliance. Such notice of non-compliance must be given
not later than sixty (60) days after (as applicable), (a) the ARC
receives a Notice of Completion from the applicant, or (b) the ARC
discovers any such noncompliance. The notice of non-compliance must
specify the particulars of the non-compliance.

 

Section 3.11 Correction of
Non-compliance.

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

 

Section 3.12 Cooperation.

  The
ARC has the right and authority to enter into agreements and
otherwise cooperate with any architectural review or similar
committees, any metropolitan or other districts, or one or more
boards or committees that exercise architectural or design review
functions, or any other Person, in order to increase consistency or
coordination, reduce costs, or as may otherwise be deemed
appropriate or beneficial by the ARC. The costs and expenses for
all such matters, if any, shall be shared or apportioned between
such Persons and the ARC, as the ARC may determine. The foregoing
includes collection, payment, and disbursement of fees, charges,
and/or any other amounts.

 

 

14

 

 

 

 

Section 3.13 Access
Easement.

  The
Developer hereby reserves, and each Owner hereby grants, to the
ARC, the CAB, and the Person who then has the authority to appoint
the ARC, as provided in Section 3.1 of
these Covenants, including the agents, employees and contractors of
each such Person (including the ARC), on, over, under and across
the Units and each of them, excluding any habitable structure and
the interior of any residence thereon, easements for performing any
of the actions contemplated in the Governing Documents, including
inspections pursuant to the first sentence of Section 3.9 of these Covenants and including
enforcement of each of the terms and provisions of the Governing
Documents. If damage is inflicted on any property or Unit, or a
strong likelihood exists that damage will be inflicted, then the
Person responsible for the damage or expense to avoid damage is
liable for the cost of prompt repair. The term “Person”
in the preceding sentence includes the ARC and the Person who then
has the authority to appoint the ARC, as provided in Section 3.1 of these Covenants, if they are
responsible for such damage or expense to avoid damage. Further,
the rights and easements granted in this Section may be exercised
only during reasonable hours after reasonable notice to the
Owner(s) or occupant(s) of any affected Unit; except that no such
notice is required in connection with any exterior, non-intrusive
inspections and maintenance; and except that, in emergency
situations, entry upon a Unit may be made at any time, provided
that the Owner(s) or occupant(s) of each affected Unit is given
notice of the emergency entry as early as is reasonably possible.
The interior of any residence is not subject to the easements
provided for in this Section.

 

Section 3.14 No Liability.

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

 

Section 3.15 Variance.

  The
ARC may grant reasonable variances or adjustments from any
conditions and restrictions imposed by Error! Reference source not found. of
these Covenants, or by the Guidelines, in order to overcome
practical difficulties or prevent unnecessary hardships arising by
reason of the application of any such conditions and restrictions.
Such variances or adjustments may be granted only in case the
granting thereof is not materially detrimental or injurious to the
other property or improvements in the neighborhood, and does not
militate against the general intent and purpose hereof. However,
any variance that may be granted under this Section is only a
variance from the requirements of the applicable Governing Document
for the individual applicant or Unit, and is not a variance from
the requirements of any applicable governmental or
quasi-governmental agency or entity. No granting of a variance or
adjustment to any one applicant/Owner constitutes a variance or
adjustment, or the right to a variance or adjustment, to any or all
other applicants, Owners or Units.

 

 

15

 

 

 

Section 3.16 Waivers; No
Precedent.

  The
approval or consent of the ARC, or any representative or committee
thereof, to any application for approval does not constitute a
waiver of any right to withhold or deny approval or consent by such
Person, or any Person, as to any application or other matters
whatsoever, as to which approval or consent may subsequently or
additionally be required. Nor does any such approval or consent
constitute a precedent as to any other matter.

 

Section 3.17 Developer and Builder
Exemption.

 

3.17.1                      The
Developer is exempt from this Article and all provisions of the
Governing Documents that require ARC review or approval, except for
the requirement to obtain approval from all governmental entities
with jurisdiction thereover (as provided in subsection
0
of these
Covenants.

 

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

 

ARTICLE 4

RESTRICTIONS

 

Section 4.1 General.

  The
Property is subject to all covenants, conditions, restrictions,
requirements, easements, licenses, and other provisions of all
documents recorded in the office of the Clerk and Recorder of the
County, as amended, including those stated on the recorded plats of
the Property, or any portion thereof, but only as and to the extent
provided in such documents. In addition, the Developer declares
that, subject to Section 6.4 hereof,
all of the Units shall be held and shall henceforth be sold,
conveyed, used, improved, occupied, owned, resided upon and
hypothecated, subject to the following provisions, conditions,
limitations, restrictions, agreements and covenants, as well as
those contained elsewhere in these Covenants.

Section 4.2 Compliance with
Law.

  All
Owners, and all other Persons, who reside upon or use any Unit or
any other portion of the Property, shall comply with all applicable
statutes, ordinances, laws, regulations, rules and requirements of
all governmental and quasi-governmental entities, agencies and
authorities, but neither the Developer, the ARC nor the Sky Ranch
Districts nor CAB has any obligation to enforce compliance with the
statutes, ordinances, laws, regulations, rules and requirements of
any other governmental or quasi-governmental entities, agencies or
authorities.

 

Section 4.3 Residential Use; Professional
or Home Occupation.

  Units
that consist of platted single-family lots may be used for
residential use only, including uses which are customarily incident
thereto, and may not be used at any time for business, commercial
or professional purposes except that Owners may conduct home
occupations and business activities within their residences to the
extent permitted by, and in compliance with, the ordinances of the
County (as applicable) and any Guidelines and CCR Rules and
Regulations that do not conflict with such ordinances.

 

 

16

 

 

 

 

Section 4.4 Animals.

  No
animals, livestock (pigs, cattle, horses, goats, lamas, etc.),
birds, poultry, reptiles or insects of any kind may be raised,
bred, kept or boarded in or on the Units except as permitted by,
and in compliance with, the ordinances of the County, as
applicable, and any Guidelines and/or the CCR Rules and Regulations
that do not conflict with such the ordinances of the County, as
applicable. An Owner’s right to keep household pets is
coupled with the responsibility for collecting and properly
disposing of any animal waste and to pay for all damage caused by
such pets.

 

Section 4.5 Temporary Structures; Unsightly
Conditions.

  Except
as hereinafter provided, no structure of a temporary character,
including a house trailer, tent, shack, storage shed, or
outbuilding shall be placed or erected upon any Unit; provided,
however, that during the actual construction, alteration, repair or
remodeling of a structure or other Improvements, necessary
temporary structures, offices and trailers for construction,
marketing, sales or storage of materials may be erected and
maintained by the Person doing such work. The work of constructing,
altering or remodeling any structure or other Improvements must be
prosecuted diligently from the commencement thereof until the
completion thereof. Further, no unsightly conditions, structures,
facilities, equipment or objects, may be so located on any Unit as
to be visible from a street or from any other Unit.

 

Section 4.6 Miscellaneous
Improvements.

 

4.6.1                      No
advertising or signs of any character other than political signs,
may be erected, placed, permitted, or maintained on any Unit other
than a name plate of the occupant and a street number, and except
for a “For Sale,” “Open House,” “For Rent,” or security sign of not more than five
(5) square feet in the aggregate; except that signs advertising
garage sales, block parties, or similar community events, may be
permitted if the same are in accordance with the Guidelines and
applicable laws or have been submitted to the ARC for review and
written approval (which may be with conditions and/or
requirements), prior to posting of such signs. Notwithstanding the
foregoing, any signs, billboards or other advertising may be placed
by the Developer or by any Builder (with the prior, written
approval of the Developer if located on Developer owned property),
without regard to the foregoing or any limitations, requirements,
specifications or other provisions of the Governing Documents, the
ARC, or the Sky Ranch Districts or CAB, and without any approval of
the foregoing (except as stated earlier in this
sentence).

 

4.6.2                      No
wood piles or storage areas, may be so located on any Unit as to be
visible from a street or from the ground level of any other
Unit.

 

4.6.3                      No
types of refrigerating, cooling or heating apparatus are permitted
on a roof, except as permitted by law, and then only with the
prior, written approval of the ARC. Further, no such apparatus is
permitted elsewhere on a Unit, other than on the ground, except
when appropriately screened and approved in writing by the
ARC.

 

 

17

 

 

 

 

4.6.4                      No
exterior radio antenna, television antenna, or other antenna,
satellite dish, or audio or visual reception device of any type may
be placed, erected or maintained on any Unit, except inside a
residence or otherwise concealed from view; provided, however, that
any such devices may be erected or installed by the Developer or by
any Builder during its sales or construction upon the Units; and
provided further, however, that the requirements of this subsection
do not apply to those “antenna” (including certain satellite dishes) which
are specifically covered by the Telecommunications Act of 1996
and/or applicable regulations, as amended. As to
“antenna” (including certain satellite dishes) which
are specifically covered by the Telecommunications Act of 1996
and/or applicable regulations, as amended, the ARC is empowered to
adopt CCR Rules and Regulations governing the types of
“antenna” (including certain satellite dishes) that
are permissible hereunder and, to the extent permitted by the
Telecommunications Act of 1996 and/or applicable regulations, as
amended, establish reasonable, non-discriminatory restrictions
relating to appearance, safety, location, maintenance, and other
matters.

 

4.6.5                      No
fences, other than fences constructed or installed by the Developer
or a Builder (with the prior,
written approval of the Developer), are permitted, except with the
prior, written approval (which may be with conditions and/or
requirements) of the ARC. Any fence(s) constructed on a Unit shall
be maintained, repaired and replaced by the Owners of that
Unit.

 

4.6.6                      The
ARC may not effectively prohibit renewable energy generation
devices or the installation or use of any energy efficient
measures, provided that the ARC may adopt reasonable aesthetic
rules and regulations concerning dimensions, placement or external
appearance of such devices or measures to the extent such rules and
regulations do not conflict with or violate applicable
laws.

 

Section 4.7 Vehicular Parking, Storage and
Repairs.

 

4.7.1                      Subject
to the Guidelines and/or the CCR Rules and Regulations (as
hereinafter defined), the garage area and driveway of each Unit
should first be fully used for the parking of vehicles before any
street parking is done. However, notwithstanding the foregoing,
street parking is not restricted by this
Section.

 

4.7.2                      Commercial
vehicles, vehicles with commercial writing on their exteriors,
vehicles primarily used or designed for commercial purposes,
tractors, mobile homes, recreational vehicles, trailers (either
with or without wheels), campers, camper trailers, boats and other
watercraft, recreational vehicles, golf carts and boat trailers,
may only be parked in enclosed garages or specific areas, if any,
which may be designated by ARC. This restriction, however, does not
restrict trucks or commercial vehicles which are necessary for
construction or for the maintenance of any portion of the Property,
or any Improvements located thereon, and such restriction does not
prohibit vehicles that may be otherwise parked as a temporary
expedient for loading, delivery or emergency, or emergency service
vehicles. Stored vehicles and vehicles which are inoperable or do
not have current operating licenses are not be permitted on the
Property except within enclosed garages. For purposes of this
Section, the ARC may determine whether a vehicle is considered
“stored”. For example, a vehicle may be considered
to be “stored” if it is up on blocks or covered with a
tarpaulin and remains on blocks or so covered for seventy-two (72)
consecutive hours without the prior approval (which may be with
conditions and/or requirements) of the ARC.

 

 

18

 

 

 

 

4.7.3                      No
activity, including maintenance, repair, rebuilding, dismantling,
repainting or servicing of any kind of vehicles, trailers or boats,
may be performed or conducted in the Property unless it is done
within completely enclosed structure(s) which screen the sight and
sound of the activity from the street and from adjoining property.
Any Owner or other Person undertaking any such activities will be
solely responsible for, and assumes all risks of, such activities,
including adoption and utilization of any and all necessary safety
measures, precautions and ventilation. However, the foregoing
restrictions do not prevent washing and polishing of any motor
vehicle, boat, trailer, motor-driven cycle, or other vehicle on a
Unit, together with those activities normally incident and
necessary to such washing and polishing.

 

4.7.4                      In
the event the ARC determines that a vehicle is parked or stored in
violation of subsections 0
or 0
hereof, then the ARC shall deliver a
written notice describing said vehicle to the owner thereof (if
such owner can be reasonably ascertained) or conspicuously place
such notice upon the vehicle (if the owner thereof cannot be
reasonably ascertained), and if the vehicle is not removed within a
reasonable time thereafter, as determined by the ARC, then the ARC
may have the vehicle removed at the sole expense of the owner
thereof.

 

4.7.5                      DEVELOPER,
EACH BUILDER, THE SKY RANCH DISTRICTS AND CAB, AND THE ARC, HEREBY
DISCLAIM ANY AND ALL OBLIGATIONS REGARDING, RELATING TO OR ARISING
OUT OF, THE PERFORMANCE OF ANY MAINTENANCE, SERVICING, REBUILDING,
REPAIR, DISMANTLING, OR REPAINTING OF ANY TYPE OF VEHICLE, BOAT,
TRAILER, MACHINE OR DEVICE OF ANY KIND, BY ANY OWNER OR OTHER
PERSON.

 

Section 4.8 Nuisances.

  No
nuisance is permitted which is visible within or otherwise affects
any portion of the Property, nor any use, activity or practice
which interferes with the peaceful enjoyment or possession and
proper use of any Unit, or any portion thereof, by its residents.
As used herein, the term “nuisance” includes each
violation of the Governing Documents.

 

Section 4.9 No Hazardous Activities; No
Hazardous Materials or Chemicals.

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

 

Section 4.10 No Annoying Lights,
Sounds.

  No
light shall be emitted from any Unit which is unreasonably bright
or causes unreasonable glare and no sound shall be emitted from any
Unit which is unreasonably loud or annoying.

 

 

19

 

 

 

Section 4.11 Restrictions on Trash and
Materials.

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

 

Section 4.12 Trash Removal Services and
Recycling.

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

 

Section 4.13 Units to be
Maintained.

  Subject
to Section 4.5 hereof, each Unit
(including adjacent tree lawn areas) shall at all times be
maintained, repaired and replaced in a good, clean and sightly
condition by the Owners of such Unit.

 

Section 4.14 Leases.

  The
term “lease,” as
used herein, includes any agreement for the leasing or rental of a
Unit, or any portion thereof, and shall specifically include
month-to-month rentals and subleases. Any Owner has the right to
lease his Unit, or any portion thereof, as long as all leases
provide that the terms of the lease and lessee’s occupancy of
the leased premises are subject in all respects to the Governing
Documents; and that any failure by the lessee to comply with any of
the aforesaid documents, in any respect, constitutes a default
under the lease.

 

 

20

 

 

 

Section 4.15 Landscaping.

  Within
the time frames as hereinafter provided, subject to applicable
“force majeure”
delays as determined by the ARC, the Owner of each Unit (other than
Developer or a Builder) shall install landscaping on all portions
of the Unit which is not covered by a building or Improvement, as
well as on the tree lawn areas adjacent to such Unit in accordance
with the Governing Documents and the requirements of the applicable
governmental entity having jurisdiction. The Owner of each Unit
(other than Developer or a Builder) shall install landscaping on
such Unit, and on adjacent tree lawn areas, within the time period
set forth in the Guidelines or, if not set forth in the guidelines,
then one hundred (180) days after acquisition of such Unit by such
Owner, if said acquisition occurs between April 1 and July 31, or;
by the following July 31 if such acquisition does not occur between
such dates, then such Owner shall install such landscaping.
Landscaping plans must be submitted to the ARC for review and
approval (which may be with conditions and/or requirements), and
such approval must be obtained prior to the installation of
landscaping, in accordance with Article 3 of these Covenants. Each
Owner shall maintain all landscaping on such Owner’s Unit,
and on adjacent tree lawn areas, in a neat and attractive
condition, including periodic and horticulturally correct pruning,
removal of weeds and debris, and replacement of
landscaping.

 

Section 4.16 Grade and Drainage; Irrigation
Recommendations; Drainage Easement; Maintenance of Surface Drainage
Improvements and Underdrains.

  

4.16.1                      Each
Owner shall maintain the grading upon his Unit, and grading around
the building foundation, at the slope and pitch fixed by the final
grading thereof, so as to maintain the established drainage. Each
Owner agrees that he will not in any way interfere with the
established drainage pattern over his Unit. In the event that it is
necessary or desirable to change the established drainage over any
Unit, then the Owner thereof shall submit a plan to the ARC for
review and approval (which may be with conditions and/or
requirements), in accordance with Article 3 of
these Covenants, and any such change shall also be made in
accordance with all laws, regulations, requirements and resolutions
of all applicable governmental entities. For purposes of this
Section, “established
drainage” is defined as
the drainage which exists at the time final grading of a Unit by
the Developer, or by a Builder, is completed.

 

4.16.2                      The
Owner of a Unit should not plant flower beds (especially annuals),
vegetable gardens and other landscaping which requires regular
watering, within five (5) feet of the foundation of the dwelling
unit or any slab on the Unit. If evergreen shrubbery is located
within five (5) feet of any foundation wall or slab, then the Owner
of the Unit should water such shrubbery by
“controlled
hand-watering,” and
should avoid excessive watering. Further, piping and heads for
sprinkler systems should not be installed within five (5) feet of
foundation walls and slabs.

 

4.16.3                      Developer
reserves to itself and to the Sky Ranch Districts and CAB the right
to enter in and upon each rear, front and side yard drainage
easements of record, at any time, to construct, repair, replace or
change drainage pipes, structures or drainage ways, or to perform
such grading, drainage or corrective work as Developer or the Sky
Ranch Districts or CAB may determine.

 

 

21

 

 

ARTICLE 5  

ALTERNATIVE
DISPUTE RESOLUTION

 

Section 5.1 Intent of Article;
Applicability of Article; and Applicability of Statutes of
Limitation.

 

5.1.1                      Each
Bound Party (as defined below) agrees to encourage the amicable
resolution of disputes, without the emotional and financial costs
of litigation. Accordingly, each Bound Party covenants and agrees
to submit any Claims (as defined below) to the procedures set forth
in Section 4.6 hereof.

 

5.1.2                      By
acceptance of a deed for a Unit, each Owner agrees to abide by the
terms of this Article.

 

5.1.3                      Any
applicable statute of limitation applies to the alternative dispute
resolution procedures set forth in this
Article.

 

Section 5.2 Definitions Applicable to this
Article.

  For
purposes of this Article only, the following terms have the
meanings set forth in this Section:

 

5.2.1                      “Bound
Party” means each of the
following: the Developer, each Builder, each contractor,
subcontractor, supplier, and laborer, the Sky Ranch Districts or
CAB, to the extent permitted by law, and their respective
directors, officers, members, partners, employees and agents; the
ARC and the committees and representatives appointed by the ARC,
and each of their respective members and agents; all Persons
subject to these Covenants; and any Person who is not otherwise
subject to these Covenants, but who agrees to submit to this
Article. Notwithstanding the foregoing, “Bound Party” does not include any of the Persons
identified in this Section, if such Persons have jointly entered
into a separate written agreement providing for dispute resolution
applicable to the Claim; in such circumstance, the dispute
resolution mechanism set forth in such separate written agreement
between such Persons will apply with respect to such Claim, unless
such Persons mutually agree to submit such Claim to the provisions
of this Article.

 

5.2.2                      “Claimant”
means any Bound Party having a Claim.

 

5.2.3                      “Claim”
means, except as exempted by the terms of this Article, any claim,
grievance or dispute between one Bound Party and another,
regardless of how the same may have arisen or on what it might be
based, including those arising out of or related to (i) the
interpretation, application or enforcement of any of the Governing
Documents or the rights, obligations or duties of any Bound Party
under any of the Governing Documents; and/or (ii) any statements,
representations, promises, warranties, or other communications made
by or on behalf of any Bound Party.

 

 

22

 

 

 

 

5.2.4                      “JAG”
means the Judicial Arbiter Group or any other Person agreed to by
the Claimant and Respondent in writing for the purpose of
performing the functions of the Judicial Arbiter Group under these
Covenants.

 

5.2.5                      “Notice”
means the written notification given by a Claimant to a Respondent
which complies with subsection 0
of these
Covenants.

 

5.2.6                      “Party”
means the Claimant and the Respondent individually;
“Parties” means the Claimant and the Respondent
collectively.

 

5.2.7                      “Respondent”
means any Bound Party against whom a Claimant asserts a
Claim.

 

5.2.8                      “Termination
of Mediation” means a
period of time expiring thirty (30) days after submission of the
matter to mediation (or within such other time as determined by the
mediator or otherwise agreed to by the Parties) and upon the
expiration of which the Parties have not settled the applicable
Claim.

 

5.2.9                      “Termination
of Negotiations” means a
period of time expiring thirty (30) days after the date of the
Notice (or such other period of time as may be agreed upon by the
Parties) and upon the expiration of which the Parties have not
resolved a Claim.

 

Section 5.3 Commencement or Pursuit of
Claim Against Bound Party.

 

5.3.1                      A
Bound Party may not commence or pursue a Claim against any other
Bound Party except in compliance with this
Article.

 

5.3.2                      Prior
to any Bound Party commencing any proceeding against another Bound
Party, the Respondent has the right to be heard by the Claimant,
and to access, inspect, correct the condition of, or redesign, any
portion of any Improvement as to which a defect is alleged or
otherwise correct the alleged dispute.

 

Section 5.4 Claims.

  Unless
specifically exempted below, all Claims between any of the Bound
Parties are subject to the provisions of Section 5.6 hereof. Notwithstanding the
foregoing, unless all Parties thereto otherwise agree, the
following shall not be Claims and shall not be subject to the
provisions of Section 5.6
hereof:

 

5.4.1                      any
action by the ARC, the governing board of the Sky Ranch Districts
or CAB, or the Developer, to enforce these Covenants, or any
provision(s) of the Guidelines or the CCR Rules and Regulations (as
hereinafter defined), including obtaining a temporary restraining
order or injunction (or equivalent emergency equitable relief), and
such other ancillary relief as a court may deem
necessary;

 

 

23

 

 

 

 

5.4.2                      any
suit between or among Owners, which does not include Developer,
Builder, the Sky Ranch Districts or CAB, or the governing board of
the Sky Ranch Districts or CAB as a Party, if such suit asserts a
Claim which would constitute a cause of action independent of the
Governing Documents; and

 

5.4.3                      any
suit in which any indispensable party is not a Bound
Party.

 

Section 5.5 Mandatory
Procedures.

 

5.5.1                      Notice.
Prior to proceeding with any Claim against a Respondent, each
Claimant shall give a Notice to each Respondent, which Notice must
state plainly and concisely:

 

(a) the nature of the
Claim, including all Persons involved and Respondent’s role
in the Claim;

 

(b) the legal basis of
the Claim (i.e., the specific authority out of which the Claim
arises);

 

(c) the proposed
remedy; and

 

(d) the fact that
Claimant will give the Respondent an opportunity to inspect all
property and Improvements potentially involved with the Claim, and
that Claimant will meet with Respondent not sooner than thirty (30)
days after such inspection to discuss in good faith ways to resolve
the Claim.

 

 

5.5.2                       

Negotiation and
Mediation.

 

(a) The Parties shall
make every reasonable effort to meet in person and confer for the
purpose of resolving the Claim by good faith negotiation. If
requested in the Notice, the governing board of the Sky Ranch
Districts or CAB may appoint a representative to assist the Parties
in negotiation.

 

(b) Upon a Termination
of Negotiations, Claimant shall have thirty (30) days to submit the
Claim to mediation under the auspices of JAG (or such other
reputable arbitration service as acceptable to the parties) in
accordance with the rules of JAG (or the rules of such other
reputable arbitration service as acceptable to the parties) in
effect on the date of the Notice that is provided for in subsection
0 of these Covenants.

 

(c) If Claimant does
not submit the Claim to mediation within such time, or does not
appear for the mediation, Claimant shall be deemed to have waived
the Claim, and Respondent shall be released and discharged from any
and all liability to Claimant on account of such Claim; provided,
nothing herein shall release or discharge Respondent from any
liability to any Person other than the Claimant.

 

 

24

 

 

 

 

(d) Any settlement of
the Claim through mediation shall be documented in writing by the
mediator and signed by the Parties. If a Termination of Mediation
occurs, the mediator shall issue a notice of Termination of
Mediation. The Termination of Mediation notice must state that the
Parties are at an impasse and the date that mediation was
terminated.

 

(e) Each Party shall
bear its own costs of the mediation, including attorneys’
fees, and each Party shall share equally all charges rendered by
the mediator.

(f) If the Parties
agree to a resolution of any Claim through negotiation or mediation
in accordance with subsection 0 and
any Party thereafter fails to abide by the terms of such agreement,
then any other Party may file suit or initiate arbitration
proceedings to enforce such agreement without the need to again
comply with the procedures set forth in Section 5.5 hereof. In such event, the Party
taking action to enforce the agreement is entitled to recover from
the non-complying Party (or if more than one non-complying Party,
from all such Parties pro rata) all costs incurred in enforcing
such agreement, including attorneys’ fees and court
costs.

 

 

Section 5.6 Final, Binding
Arbitration.

 

 

5.6.1                      Upon
termination of mediation, if Claimant desires to pursue the Claim,
Claimant shall thereafter be entitled to initiate final, binding
arbitration of the Claim under the auspices of JAG, in accordance
with the then-current rules of JAG in effect as of the date of the
Notice provided in accordance in subsection 0
of these Covenants (or such other
reputable arbitration service and its rules as acceptable to the
parties). Any judgment upon the award rendered by the arbitrator
may be entered in and enforced by any court having jurisdiction
over such Claim. Unless otherwise mutually agreed to by the
Parties, there will be one arbitrator who must have expertise in
the area(s) of dispute, which may include legal expertise if legal
issues are involved.

 

5.6.2                      Each
Party shall bear its own costs and expenses, and an equal share of
the arbitrator’s and administrative fees of arbitration.
Notwithstanding the foregoing, if a Party unsuccessfully contests
the validity or scope of arbitration in a court of law, reasonable
attorneys’ fees and expenses incurred in defending such
contests, including those incurred in trial and on appeal, shall be
awarded to the non-contesting Party. All decisions respecting the
arbitrability of any Claim shall be decided by the
arbitrator.

 

5.6.3                      The
award of the arbitrator shall be accompanied by detailed written
findings of fact and conclusions of law. Except as may be required
by law or for confirmation of an award, neither a Party nor an
arbitrator may disclose the existence, content, or results of any
arbitration without the prior written consent of all
Parties.

 

 

25

 

 

ARTICLE 6

GENERAL PROVISIONS

 

Section 6.1 Rules and
Regulations.

  Any
rules and regulations, if any, concerning and governing the
Property, may be
promulgated, adopted, enacted, modified, amended, repealed, and
re-enacted by the governing board of the Sky Ranch Districts or CAB
(“CCR Rules and Regulations”) and such
actions shall not be construed as an amendment to these Covenants
requiring processing under Section
6.6, hereof. The CCR Rules and Regulations, if any, may state
procedural requirements, interpretations, clarifications and
applications of any provision(s) of these Covenants or the
Guidelines and law, and may include blanket requirements, blanket
interpretations, and blanket applications. The governing board of
the Sky Ranch Districts or CAB has the authority to adopt or vary
one or more CCR Rules and Regulations that are different for
different types of Units, if any. Any CCR Rules and Regulations, if
any, that are adopted must be in accordance with, and must not be
inconsistent with or contrary to, these Covenants.

 

Section 6.2 Enforcement.

 

6.2.1                      Enforcement
of the covenants, conditions, restrictions, easements,
reservations, rights-of-way, liens, charges and other provisions
contained in these Covenants, as amended, may be by any proceeding
at law or in equity against any Person(s) violating or attempting
to violate any such provision, and possible remedies include all of
those available at law or in equity, but Claims subject to Article
5 will be subject to the alternative dispute resolution procedures
set forth in Article 5. The Developer, the Sky Ranch Districts or
CAB, ARC and any aggrieved Owner, has the right, but not the duty,
to institute, maintain and prosecute any such proceedings. No
remedy is exclusive of other remedies that may be available. Except
as otherwise provided in Article 5 of these Covenants, in any
action instituted or maintained under these Covenants or any other
such documents, the prevailing party shall be awarded its costs and
attorney fees incurred in asserting or defending the claim, as well
as any and all other sums; except that, any Person who brings an
action against the Developer, any Builder, the Sky Ranch Districts
or CAB, or the ARC, regarding enforcement, or non-enforcement, of
any provision(s) of the Governing Documents, shall not be awarded
their costs or any attorney fees. Failure by the Developer, the Sky
Ranch Districts or CAB, the ARC or any Owner, to enforce any
covenant, restriction or other provision contained in these
Covenants, shall in no event give rise to any liability, nor shall
such non-enforcement be deemed a waiver of the right to thereafter
enforce any covenant, restriction or other provision of these
Covenants, regardless of the number of violations or breaches that
may occur.

 

6.2.2                      The
foregoing includes the right of the Sky Ranch Districts or CAB, to
send demand letters and notices, to charge interest and/or late
charges, to levy and collect fines, to impose liens (as provided in
C.R.S. Section 32-1-1001(j)(1), as amended), to negotiate, settle
and/or take any other actions, with respect to any violation(s), or
alleged violation(s), of any of the Governing
Documents.

 

 

 

26

 

 

 

Section 6.3 Severability.

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

 

Section 6.4 Rights and Easements of
Developer and Builders.

 Notwithstanding
anything to the contrary contained in the Governing Documents, it
is expressly permissible and proper for Developer and each Builder,
and their respective employees, agents, and contractors, to perform
all activities, and maintain Improvements, tools, equipment, and
facilities, on the portion of the Property owned by them and also
on public property, incidental to development, construction, use,
rental, sale, occupancy, and/or advertising. The foregoing includes
locating, maintaining and relocating management offices,
construction offices, signs, model units and sales offices, in such
numbers, of such sizes, and at such locations on the portion of the
Property owned by them and also on public property, as determined
by the Developer or applicable Builder. In addition, nothing
contained in these Covenants limits the rights of Developer, or
require the Developer, to obtain approvals:

 

6.4.1                      to
excavate, cut, fill or grade any property (with the consent of the
Owner thereof), or to construct, alter, demolish or replace any
Improvements;

 

6.4.2                      to
use any Improvements on any property (with the consent of the Owner
thereof) as a construction, management, model home or sales or
leasing office, in connection with the development, construction or
sale of any property; and/or

 

6.4.3                      to
seek or obtain any approvals under these Covenants for any such
activity.

 

Section 6.5 Conflict of
Provisions.

  In
the case of any conflict between any of the Governing Documents,
these Covenants control.

 

Section 6.6 Duration, Revocation and
Amendment.

 

 

6.6.1                      Each
and every provision of these Covenants run with and bind the
Property perpetually from the date of recording of these Covenants.
Subject to subsection 0 of these
Covenants, these Covenants may be amended, supplemented and/or
terminated, by the affirmative vote or agreement of the Owners of
sixty-seven percent (67%) of the Units, but the Sky Ranch Districts
or CAB shall not be required to comply with or enforce any
Owner-adopted amendments, supplements or termination, until such
time as the governing board of the Sky Ranch Districts or CAB
receives a recorded copy of such amendment, supplement and/or
termination.

 

6.6.2                      Until
all of the Units have been conveyed to the first Owners thereof
other than the Developer or a Builder, no amendment, supplement or
termination of these Covenants shall be effective, without the
prior written approval of the Developer, which may be with
conditions and/or requirements. This subsection 0
will remain in effect until conveyance
of all the Units to the first Owners thereof, other than the
Developer or any Builder.

 

 

27

 

 

 

6.6.3                      These
Covenants may be amended, in whole or in part, by the Developer
without the consent or approval of any other Owner, the Sky Ranch
Districts or CAB, or any other Person, in order to comply with the
requirements, standards, or guidelines of any recognized secondary
mortgage markets, including the department of housing and urban
development, the federal housing administration, the veterans
administration, the federal home loan mortgage corporation, the
government national mortgage association, and the federal national
mortgage association. This subsection 0 will remain
in effect until conveyance of all the Units to the first Owners
thereof, other than the Developer or any
Builder.

 

6.6.4                      These
Covenants may be amended, in whole or in part, by the Developer
without the consent or approval of any other Owner, any Builder,
the Sky Ranch Districts or CAB, or any other Person, in order to
correct any clerical, typographical, technical or other errors in
these Covenants and/or to clarify any provision(s) of these
Covenants. This subsection 0
will remain in effect until conveyance
of all the Units to the first Owners thereof, other than the
Developer or any Builder.

 

6.6.5                      Each
Amendment to this Declaration enacted by the vote or agreement of
Owners of Units shall be applicable only to disputes, issues,
controversies, circumstances, events, claims or causes of action
that arose out of acts, omissions, events or other circumstances
that occurred after the date of recording of such amendment in the
real property records of the County, and no such amendment shall be
applied retroactively (i) to any disputes, issues, controversies,
circumstances, events, claims or causes of action that arose out of
acts, omissions, events or other circumstances that occurred before
the date of recording of such amendment in the County, or (ii) to
impair the rights or obligations of any Person, including
Developer, as originally set forth in these Covenants. This
subsection 0 may not
be amended without the written consent of the
Developer.

 

Section 6.7 Minor Violations of Setback
Restrictions.

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

 

Section 6.8 Subdivision or Replatting of
Units.

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

 

 

28

 

 

 

Section 6.9 Annexation.

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

 

Section 6.10 Withdrawal.

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

 

Section 6.11 Notices.

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

 

Section 6.12 Limitation on
Liability.

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

 

Section 6.13 No Representations, Guaranties
or Warranties.

  Neither
Developer, any Builder, the Sky Ranch Districts or CAB, the ARC,
nor their respective officers, directors, shareholders, members,
partners, agents or employees, have given or made any
representations, guaranties or warranties of any kind, express or
implied in connection with any portion of the Property, or any
Improvement, its physical condition, structural integrity, freedom
from defects, zoning, compliance with applicable laws, fitness for
intended use, or view, or in connection with the subdivision, sale,
operation, maintenance, cost of maintenance, taxes or regulation
thereof, unless and except as specifically set forth in writing.
The release and waiver set forth in Section 6.16 (Waiver) applies to this
Section.

 

 

29

 

 

 

Section 6.14 Disclaimer Regarding
Safety.

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

 

Section 6.15 Development Within and
Surrounding the Property.

 Each
Owner acknowledges that development within and surrounding the
Property may continue for an indefinite period, and that plans for
the density, type and location of improvements, developments or
land uses may change over time. Such development may entail changes
to or alterations in the access to the Property, views of or from
the Property or the Units, surrounding land uses, open space or
facilities, traffic volumes or patterns, privacy or other aspects
or amenities. Development also may entail noise, odors,
unsightliness, dust and other inconveniences or disruptions. By
accepting a deed to a Unit, each Owner accepts title to such Unit
subject to the foregoing, and waives and releases any claim against
the Developer, any Builders, the Sky Ranch Districts and CAB, the
ARC, and their respective officers, directors, members, partners,
agents and employees, heirs, personal representatives, successors
and assigns, arising out of or associated with any of the
foregoing. The release and waiver set forth in Section 6.16 (Waiver) applies to this
Section.

 

Section 6.16 Waiver.

  By
acceptance of a deed to a Unit, each Owner hereby releases, waives,
and discharges the Developer, each Builder, the Sky Ranch Districts
and CAB, the ARC, and their respective officers, directors,
members, partners, agents and employees, heirs, personal
representatives, successors and assigns, from all losses, claims,
liabilities, costs, expenses, and damages, arising directly or
indirectly from any hazards, disclosures or risks set forth in
these Covenants, including, but not limited to, those contained in
Section 6.12, Section 6.13, Section
6.14 and Section
6.15.

 

Section 6.17 Headings.

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

 

Section 6.18 Gender.

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

 

 

30

 

 

 

Section 6.19 Action.

  Any
action that has been or may be taken by the Developer, any Builder,
the Sky Ranch Districts or CAB, the ARC, or any other Person, may
be taken “at any time, from
time to time”. Each provision that authorizes, directs
or permits action shall be deemed to include such
language.

 

Section 6.20 Sole
Discretion.

  All
actions which are to be taken by, or on behalf of, the Developer,
any Builder, Sky Ranch Districts or CAB, the governing body of the
Sky Ranch Districts or CAB, the ARC, or any other Person, will be
considered to have been taken “in the sole discretion” of such
Person.

 

Section 6.21 Use of “Include,”
“Includes,” and
“Including”.

  All
uses, in these Covenants, of the words “include,” “includes,” and “including,” will be construed to
include the words “without
limitation” immediately thereafter.

 

Section 6.22 Runs with the Land; Binding
Upon Successors.

  The
benefits, burdens, and all other provisions contained in these
Covenants are covenants running with and binding upon the Property
and all Improvements which are now or hereafter located on the
Property. The benefits, burdens, and all other provisions contained
in these Covenants are binding upon, and inure to the benefit of
the Developer, the Builders and all Owners, and upon and to their
respective heirs, personal representatives, successors and assigns;
but, no Person becomes a “Developer” or a
“Builder” under
these Covenants, except by written assignment or designation, as
more fully provided in Section 1.2 or
Section 1.4 of these Covenants,
respectively.

 

Section 6.23 Governmental
Immunity.

  Nothing herein shall be construed as a waiver of the
rights and privileges of the Sky Ranch Districts and CAB pursuant
to the Colorado Governmental Immunity Act, §§ 24-10-101,
et seq., C.R.S., as amended from time to time.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

31

 

IN
WITNESS WHEREOF, the undersigned, being the Developer herein and
the Owner of the Property, has hereunto set its hand and seal this
___ day of ____________, 2017.

 

 

 

 

 

DEVELOPER:

 

PCY
Holdings, LLC,

a
Colorado limited liability company

 

 

By:                                                                           

Name:
___________________________________

Its:                                                                           

 

STATE OF
COLORADO  

)

)
ss.

COUNTY
OF 

)

 

The
foregoing instrument was acknowledged before me this ___ day of
____________, 2017, by  as  of PCY Holdings, LLC, a
Colorado limited liability company.

 

Witness
my hand and official seal.

 

{S E A
L}

Notary
Public

My
Commission expires: 

 

 

 

 

32

 

CONSENT OF SKY RANCH COMMUNITY AUTHORITY BOARD

 

The
undersigned, Sky Ranch Community Authority Board, hereby consent to
the aforesaid Covenants, Conditions and Restrictions for Sky
Ranch.

 

 

IN
WITNESS WHEREOF, the undersigned has hereunto set its hand this ___
day of ____________, 2017.

 

 

SKY
RANCH COMMUNITY AUTHORITY BOARD

 

By:           

____________________________________President

 

STATE OF
COLORADO

)

)           

ss.

COUNTY OF
________________________     

)

 

The
foregoing instrument was acknowledged before me this ___ day of
____________, 2017 by _________________ as President of SKY RANCH
COMMUNITY AUTHORITY BOARD.

Witness
my hand and official seal.

 

(S E A
L)

______________________________

Notary
Public My Commission Expires:
____________________

 

 

33

 

EXHIBIT A

TO

COVENANTS, CONDITIONS AND RESTRICTIONS

FOR SKY RANCH

(Property)

 

 

 

 

34

 

COVENANTS, CONDITIONS AND RESTRICTIONS

 

FOR SKY RANCH

 

 

TABLE OF CONTENTS

 

	

ARTICLE 1 GENERAL  

	

2

	

Section
1.1

	

Planned
Community.

	

2

	

Section
1.2

	

Purposes
of Covenants.

	

3

	

Section
1.3

	

Declarations.

	

3

	

Section
1.4

	

CAB
Authority.

	

3

	

ARTICLE 2 DEFINITIONS  

	

3

	

Section
2.1

	

ARC.

	

3

	

Section
2.2

	

Builder.

	

4

	

Section
2.3

	

CAB.

	

4

	

Section
2.4

	

Covenants.

	

4

	

Section
2.5

	

Developer.

	

4

	

Section
2.6

	

Governing
Documents.

	

4

	

Section
2.7

	

Improvements.

	

4

	

Section
2.8

	

Owner.

	

4

	

Section
2.9

	

Person.

	

4

	

Section
2.10

	

Property.

	

5

	

Section
2.11

	

Services.

	

5

	

Section
2.12

	

Sky
Ranch Districts.

	

5

	

Section
2.13

	

Unit.

	

5

	

ARTICLE 3 ARCHITECTURAL REVIEW
 

	

5

	

Section
3.1

	

Composition
of ARC.

	

5

	

Section
3.2

	

Delegation
of Some or All Architectural Authority.

	

5

	

Section
3.3

	

Architectural
Review Requirements; Authority of the ARC.

	

6

	

Section
3.4

	

Guidelines.

	

7

	

Section
3.5

	

Procedures.

	

7

	

Section
3.6

	

Vote.

	

7

	

Section
3.7

	

Prosecution
of Work After Approval.

	

7

	

Section
3.8

	

Notice
of Completion.

	

8

	

Section
3.9

	

Inspection
of Work.

	

8

	

Section
3.10

	

Notice
of Non-compliance

	

8

	

Section
3.11

	

Correction
of Non-compliance.

	

8

	

Section
3.12

	

Cooperation.

	

9

	

Section
3.13

	

Access
Easement.

	

9

	

Section
3.14

	

No
Liability.

	

9

	

Section
3.15

	

Variance.

	

10

	

Section
3.16

	

Waivers;
No Precedent.

	

10

	

Section
3.17

	

Developer
and Builder Exemption.

	

10

 

 

 

35

 

 

	

ARTICLE 4 RESTRICTIONS  

	

10

	

Section
4.1

	

General.

	

10

	

Section
4.2

	

Compliance
with Law.

	

11

	

Section
4.3

	

Residential
Use; Professional or Home Occupation.

	

11

	

Section
4.4

	

Animals.

	

11

	

Section
4.5

	

Temporary
Structures; Unsightly Conditions.

	

11

	

Section
4.6

	

Miscellaneous
Improvements.

	

11

	

Section
4.7

	

Vehicular
Parking, Storage and Repairs.

	

12

	

Section
4.8

	

Nuisances.

	

13

	

Section
4.9

	

No
Hazardous Activities; No Hazardous Materials or
Chemicals.

	

14

	

Section
4.10

	

No
Annoying Lights, Sounds.

	

14

	

Section
4.11

	

Restrictions
on Trash and Materials.

	

14

	

Section
4.12

	

Trash
Removal Services and Recycling.

	

14

	

Section
4.13

	

Units
to be Maintained.

	

15

	

Section
4.14

	

Leases.

	

15

	

Section
4.15

	

Landscaping.

	

15

	

Section
4.16

	

Grade
and Drainage; Irrigation Recommendations; Drainage Easement;
Maintenance of Surface Drainage Improvements and
Underdrains.

	

15

	

ARTICLE 5 ALTERNATIVE DISPUTE RESOLUTION
 

	

16

	

Section
5.1

	

Intent
of Article; Applicability of Article; and Applicability of Statutes
of Limitation.

	

16

	

Section
5.2

	

Definitions
Applicable to this Article.

	

16

	

Section
5.3

	

Commencement
or Pursuit of Claim Against Bound Party.

	

17

	

Section
5.4

	

Claims.

	

18

	

Section
5.5

	

Mandatory
Procedures.

	

18

	

Section
5.6

	

Final,
Binding Arbitration.

	

19

	

ARTICLE 6 GENERAL PROVISIONS
 

	

20

	

Section
6.1

	

Rules
and Regulations.

	

20

	

Section
6.2

	

Enforcement.

	

20

	

Section
6.3

	

Severability.

	

21

	

Section
6.4

	

Rights
and Easements of Developer and Builders.

	

21

	

Section
6.5

	

Conflict
of Provisions.

	

21

	

Section
6.6

	

Duration,
Revocation and Amendment.

	

21

	

Section
6.7

	

Minor
Violations of Setback Restrictions.

	

22

	

Section
6.8

	

Subdivision
or Replatting of Units.

	

23

	

Section
6.9

	

Annexation.

	

23

	

Section
6.10

	

Withdrawal.

	

23

	

Section
6.11

	

Notices.

	

23

	

Section
6.12

	

Limitation
on Liability.

	

23

	

Section
6.13

	

No
Representations, Guaranties or Warranties.

	

24

	

Section
6.14

	

Disclaimer
Regarding Safety.

	

24

	

Section
6.15

	

Development
Within and Surrounding the Property.

	

24

	

Section
6.16

	

Waiver.

	

24

	

Section
6.17

	

Headings.

	

25

	

Section
6.18

	

Gender.

	

25

	

Section
6.19

	

Action.

	

25

	

Section
6.20

	

Sole
Discretion.

	

25

	

Section
6.21

	

Use
of “Include,” “Includes,” and
“Including”.

	

25

	

Section
6.22

	

Runs
with the Land; Binding Upon Successors.

	

25

	

Section
6.23

	

Governmental
Immunity.

	

25

 

 

 

36

 

 

 

Schedule 5 - Public Improvement Fee Covenant

 

 

 

 

 

 

 

37

DRAFT
8-15

DECLARATION OF COVENANTS IMPOSING AND IMPLEMENTING

 

THE SKY
RANCH PUBLIC IMPROVEMENT FEE

 

 

THIS
DECLARATION OF COVENANTS IMPOSING AND IMPLEMENTING THE SKY RANCH
PUBLIC IMPROVEMENT FEE (this “PIF Covenant”) is made and
effective as of __________, 2017 by PCY Holdings, LLC, a
Colorado limited liability company (“Declarant”).

 

RECITALS

 

This
PIF Covenant is made with respect to the following
facts:

 

A.  All terms
used herein shall have the meanings set forth in Section 1 hereof
unless the context otherwise requires.

B.
Declarant owns certain real property described on Exhibit A hereto, which Declarant is
currently operating or intends to develop as a residential and
commercial development to be known as the
_________________________________ (“Property”) located within
unincorporated Arapahoe County, Colorado. New public improvements
and services are needed to serve the Property and other properties
within the service area boundaries of the Sky Ranch Metropolitan
District No. 5 or other quasi-municipal entity which may exist or
be formed to include the Property or a public improvement
corporation established for such purpose (the “District”).

 

C.           The
public improvements that the District will construct, install or
cause to be constructed and installed, operated and maintained,
include those public improvements the costs of which may lawfully
be paid for by the District (the “Public Improvement Costs”),
including, without limitation, water services, safety protection
devices, sanitation services, street improvements, curbs, gutters,
culverts, drainage facilities, sidewalks, parking facilities,
paving, lighting, grading, railroad crossings, landscaping,
transportation services and storm and wastewater management
facilities and associated land acquisition and remediation (the
“Public
Improvements”).

 

D.           The
Public Improvement Costs shall be paid, in part, through the
imposition of:

 

i.) a
Retail Public Improvement Fee on all PIF Sales equal to
2.75%. Subject to
the terms of this PIF Covenant, such Retail Public Improvement Fee
shall be required to be collected by all Retailers and then paid
over to the PIF Collection Agent on behalf of the District or the
Bond Trustee; and

 

ii.) a
one-time Material Sales and Use Public Improvement Fee imposed on
Construction Activities for the materials incorporated into the
construction of any newly constructed building, dwelling or
structure within the Property. The Material Sales and Use Public
Improvement Fee shall be equal to 2.75% of an amount equal to fifty
percent (50%) of the Construction Valuation Amount. Subject to the
terms of this PIF Covenant, such Material Sales and Use Public
Improvement Fee shall be required to be collected from all Persons
constructing any new building, dwelling or structure within the
Property at the time a building permit is obtained for such
construction. The Material Sales and Use Public Improvement Fee
shall be paid over to the PIF Collection Agent on behalf of the
District or the Bond Trustee.

 

 

 

38

 

 

 

 

The PIF
Collection Agent shall receive the Retail Public Improvement Fees
and the Material Sales and Use Public Improvement Fees and remit
the same to the Bond Trustee to pay for Bond Requirements and other
costs provided in the Public Financing Documents or if the Public
Financing Documents are not in place or do not require the full
amount of fees collected to be remitted to the Bond Trustee, to the
District.

 

E.           The
Declarant under this PIF Covenant owns fee title to all of the
Property, which is the property that is subject to this PIF
Covenant.

 

F.           The
Declarant intends to assign its declarant rights, as fee simple
owner of the

Property
subject to this PIF Covenant to the District in accordance with the
terms and conditions

of this
PIF Covenant and the District intends to assume the declarant
rights of the Declarant and

to
exercise all of the rights and perform the obligations of the
Declarant hereunder.

 

G.           Subject
to and in accordance with the terms and provisions of this PIF
Covenant, Declarant now desires to impose the obligation to collect
and pay, and to provide for the implementation of the collection
and payment of, the Retail Public Improvement Fee and the Material
Sales and Use Public Improvement Fee.

 

Declaration

 

In
consideration of the facts set forth in the Recitals and for other
good and valuable consideration, the receipt and sufficiency of
which are acknowledged by Declarant, Declarant hereby declares as
follows:

 

1.           Defined
Terms. The following terms, when used in this PIF Covenant,
shall have the following meanings:

 

“Bond
Requirements” means principal, redemption or purchase price,
premium, if any, interest, reserves and other amounts required to
be paid with respect to the Bonds or other Public Financing
outstanding from time to time.

 

“Bonds”
means any of the bonds, notes, certificates, leases, loan
agreements or other financial obligations to be issued from time to
time by the District, the proceeds of which are used to pay Public
Improvement Costs or to pay the costs of any refunding or
refinancing of outstanding bonds, notes, certificates, leases, loan
agreements or other financial obligations issued by the
District.

 

“Bond
Trustee” means the trustee or fiduciary acting on behalf of
holders of the Bonds pursuant the Public Financing
Documents.

 

“Confidential
Information” has the meaning set forth in Section 6
hereof.

 

“Construction
Activities” means the use of building and construction
materials for incorporation into the construction of any new
building, dwelling or structure, in each case to the same extent
that such building and construction materials are included in the
Construction Valuation Amount as indicated on the application for a
County building permit. The Material Sales and Use Public
Improvement Fee shall apply to all Construction Activities within
the Property including, but not limited to, commercial, retail,
residential and industrial classified structures; provided,
however, “Construction Activities” shall not include
the use of building and construction materials in connection with
reconstruction, renovation, remodel or other improvement of
existing buildings or existing structures.

 

 

 

39

 

 

 

 

“Construction
Activities Guidelines” has the meaning set forth in Section
3(b) hereof.

 

“Construction
Valuation Amount” means the total cost or valuation of the
project giving rise to the applicable Construction Activities as
indicated on the application for the County building permit for
such project and finally determined by the County to be a
reasonable approximation of the value of materials for the
applicable Construction Activities.

 

“County”
means the County of Arapahoe, State of Colorado, or any government
with the jurisdiction to grant building permits for construction on
the Property.

 

“County
Clerk” means the County Clerk and Recorder of Arapahoe
County, Colorado.

 

“Declarant”
means PCY Holdings, LLC a Colorado limited liability company or its
successors or assigns.

 

“Default
Rate” means eighteen percent (18%) per annum, but if such
rate exceeds the maximum interest rate permitted by State law, such
rate shall be reduced to the highest rate allowed by State law
under the circumstances.

 

“Dissemination
Agent” means an agent of the District or the Bond Trustee
charged with disseminating information on a periodic basis to the
Public Financing Documents.

 

“District”
has the meaning set forth in Recital A above.

 

“Enforcing
Party” has the meaning set forth in Section 7
hereof.

 

“Material
Sales and Use Public Improvement Fee” shall mean a one-time
fee assessed pursuant to and in accordance with this PIF Covenant
against all Construction Activities occurring on the Property. The
Material Sales and Use Public Improvement Fee shall be equal to
2.75% of an amount equal to fifty percent (50%) of the Construction
Valuation Amount. Subject to the terms of this PIF Covenant, such
Material Sales and Use Public Improvement Fee shall be required to
be collected from all Persons undertaking Construction Activities
at the time a building permit is obtained for such
construction.

 

“Occupant”
means any Person who has the legal right, pursuant to a deed,
lease, sublease, license, concession, easement or other occupancy
agreement of any type or nature, to possess or occupy any portion
of the PIF Property, including, without limitation, any space
within any building constructed on any PIF Property; provided that
a mortgagee, a trustee under or beneficiary of a deed of trust, or
any other Person who has such of right of possession primarily for
the purpose of securing a debt or other obligation owed to such
Person, shall not constitute an “Occupant” unless and
until such Person becomes an Owner or a mortgagee in possession or
otherwise possesses or occupies a portion of the PIF Property by an
intentional or voluntary act of its own, whereupon the subject
mortgagee, trustee, beneficiary or other Person shall be an
“Occupant” hereunder.

 

 

 

40

 

 

 

 

“Owned/Leased
Property” means, with respect to any Owner, the portion of
the PIF Property to which such Owner owns fee title and, with
respect to any Occupant, the portion of the PIF Property which such
Occupant has the right to possess or occupy pursuant to its lease,
sublease, license, concession or other occupancy
agreement.

 

“Owner”
means any Person who owns fee title to all or any portion of the
PIF Property.

 

“Person”
means any individual, partnership, corporation, limited liability
company, association, trust or other type of entity or
organization.

 

“PIF
Collection Agent” means the person or firm designated by the
District as responsible for monitoring, receiving and enforcing the
collection of Public Improvement Fee revenues pursuant to this PIF
Covenant.

 

“PIF
Covenant” means this PIF Covenant as it may be supplemented
or amended from time to time.

 

“PIF
Obligor(s)” means, with respect to the Retail Public
Improvement Fee, any Retailer or, with respect to the Material
Sales and Use Public Improvement Fee, any Person who engages in
Construction Activities, or hires another (e.g., a contractor) to
engage in Construction Activities, and is therefore obligated to
pay a Material Sales and Use Public Improvements Fee with regard to
such Construction Activities pursuant to the terms of this PIF
Covenant.

 

“PIF
Property” or “Property” means the real property
described on Exhibit A
hereto, provided that additional property may be made a part of the
PIF Property pursuant to the provisions of Section 13
hereof.

 

“PIF
Sales” shall mean and refer to any and all retail sales
transactions by any Retailer of tangible personal property
initiated, consummated, conducted, transacted or otherwise
occurring from or within any portion of the Property which are on
the date of recording of this PIF Covenant subject to the Sales
Tax, plus any and all retail sales transactions by any Retailer of
tangible personal property initiated, consummated, conducted,
transacted or otherwise occurring from or within any portion of the
Property which are from time to time in the future subject to a
retail Sales Tax but excluding any retail sales transactions
specified as exempt from the definition of PIF Sales in the
guidelines established by the District from time to time pursuant
to Section 4 hereof.

 

“PIF Sales
Guidelines” has the meaning set forth in Section 4(a)
hereof.

 

“Pledge”
means such assignment, conveyance, pledge, remittance or other
transfer as may be customary and necessary or appropriate to make
fully available for payment of the Bond Requirements any Public
Improvement Fee revenues.

 

“Public
Financing” means the sale of Bonds by the
District.

 

“Public
Financing Documents” means any documents executed or
delivered in connection with any Public Financing.

 

 

 

41

 

 

 

 

“Public
Improvements” has the meaning set forth in Recital B above.

 

“Public
Improvement Costs” has the meaning set forth in Recital B above.

 

“Public
Improvement Fee” as used in this PIF Covenant shall mean the
Retail Public Improvement Fee and the Material Sales and Use Public
Improvement Fee as may be applicable in the context of such
reference herein.

 

“Report
Recipients” has the meaning set forth in Section 6
hereof.

 

“Reports”
has the meaning set forth in Section 6 hereof.

 

“Retailer”
means any Occupant who is a seller or provider of goods or services
who engages in any PIF Sales initiated, consummated, conducted,
transacted or otherwise occurring from or within any portion of the
PIF Property.

 

“Retail
Public Improvement Fee” means a Public Improvement Fee
assessed pursuant to this PIF Covenant on all PIF Sales equal to
2.75%.

 

“Sales
Tax” means that tax levied by the State pursuant to the Sales
Tax Statutes.

 

“Sales Tax
Statutes” means Sections 39-26-101 et. seq., Colorado Revised
Statutes, and any regulations promulgated pursuant thereto, both as
amended from time to time.

 

“State”
means the State of Colorado.

 

2.
Assignment of Declarant
Rights. The Declarant, as owner of the Property does hereby
transfer, assign, convey and deliver to District any and all rights
and benefits reserved to the Declarant pursuant to this PIF
Covenant and District hereby assumes from the Property Owners any
and all rights and benefits reserved to the Declarant under this
PIF Covenant.

 

3. Assessment of Public Improvement
Fee. From and after the filing of this PIF
Covenant:

 

(a) every Retailer
shall collect the Retail Public Improvement Fee on each PIF Sale
and pay the same to the District or the PIF Collection Agent as
required by the Public Financing Documents or this PIF
Covenant;

 

(b) every Owner or
Occupant who leases or subleases any portion of its Owned/Leased
PIF Property to a Retailer, or who permits a Retailer to occupy any
portion of its Owned/Leased PIF Property by license, concession or
otherwise, shall require, pursuant to the lease, sublease, license,
concession or other occupancy agreement between such Owner or
Occupant and each Retailer by virtue of which such Retailer is
given the right to possess or occupy any portion of such
Owned/Leased PIF Property, that such Retailer collect in the Retail
Public Improvement Fee on each PIF Sale and pay the same to the
District or the PIF Collection Agent as required by the Public
Financing Documents or this PIF Covenant; and

 

 

 

42

 

 

 

 

(c) each Person who
intends to engage in Construction Activities will, prior to, or at
the time of issuance of a building permit for such Construction
Activities, pay the Material Sales and Use Public Improvements Fee
with respect to such Construction Activities to the District or the
PIF Collection Agent as set forth in the Construction Activities
Guidelines.

 

4. Guidelines.

 

(a)           

In accordance with
the definition of PIF Sales set forth in Section 1 above, the
District in its sole discretion may from time to time establish
uniform guidelines further clarifying or delineating which
transactions are included in the definition of “PIF
Sales” (“PIF Sales
Guidelines”) for purposes of calculating the Retail
Public Improvement Fee due hereunder, provided, however, that such
guidelines may not change the definition of PIF Sales or waive the
Retail Public Improvement Fee collection. Such guidelines shall be
delivered to all Retailers in writing (and for purposes of
determining the names and addresses of Retailers, any Owner will,
within 10 business days after receipt of a written request therefor
from the District, the Trustee or the PIF Collection Agent, provide
such requesting party with the name and address of all Retailers
that then occupy any PIF Property owned by such Owner). Each
Retailer shall be entitled to rely on such guidelines for purposes
of compliance with this PIF Covenant. In addition to the Retail
Public Improvement Fee, each Retailer shall be subject to all sales
and use taxes that may be imposed and otherwise not waived or
credited by any other applicable taxing entity.

 

(b)           

In accordance with
the definition of Construction Activities set forth in Section 1
hereof, the District in its sole discretion (but subject to any
applicable terms of any Public Financing Documents) may from time
to time establish reporting forms (“MSU Reports”), instructions and
uniform guidelines for the calculation, collection and remittance
of revenues derived from imposition of the Material Sales and Use
Public Improvements Fee, and for further clarifying or delineating
which transactions are included in the definition of
“Construction Activities” (“Construction Activities
Guidelines”). The Construction Activities Guidelines
shall apply and be enforced in a uniform and consistent manner to
all of the PIF Property and each portion of the PIF Property. The
District or PIF Collection Agent shall make available the
Construction Activities Guidelines to all Owners, Occupants and PIF
Obligors. Each Owner, Occupant and PIF Obligor shall be entitled to
rely on the Construction Activities Guidelines for purposes of
compliance with this PIF Covenant. In addition to the Material
Sales and Use Public Improvements Fee, each Owner, Occupant and PIF
Obligor is subject to all use taxes that may be imposed and
otherwise not waived or credited by the State of Colorado or any
other applicable taxing entity.

 

 

 

43

 

 

 

 

5. Payment of Public Improvement
Fee.

 

(a)           

Retail Public Improvement Fee.
Whether or not collected from customers, each Retailer shall pay
the Retail Public Improvement Fee monthly in arrears for all PIF
Sales initiated, consummated, conducted, transacted or otherwise
occurring during the immediately preceding month from or within the
portion of the PIF Property occupied by such Retailer during such
month. The Retail Public Improvement Fee shall be due and payable
without notice within 20 days after the close of each calendar
month, and unless the District in its sole discretion otherwise
directs, each Retailer shall pay the same directly to the PIF
Collection Agent on behalf of the District or its assignee. The
procedures for reporting, assessment, collection, and segregation
of the Retail Public Improvement Fee (but not for calculation)
shall be identical in all material respects to those set forth in
Colorado law regarding the reporting, assessment, collection and
segregation of State sales tax, and each Retailer shall report PIF
Sales and remit the Retail Public Improvement Fee to the PIF
Collection Agent on a monthly basis when such Retailer reports and
remits sales taxes to the State, employing reporting forms and
following procedures provided by the State intended to be
substantially similar to those used and required by the State for
the remittance of Sales Tax. The Retail Public Improvement Fee
shall be calculated and imposed on transactions at the rate stated
above (in the definition of Public Improvement Fee) prior to the
calculation and assessment of the Sales Tax, and before any sales
taxes of any other taxing entity required to be imposed by law. The
Retail Public Improvement Fee shall be added to the sales price for
transactions subject to sales tax prior to the calculation of sales
taxes. The Sales Tax and sales taxes of other taxing entities shall
be calculated and assessed on the sum of the PIF Sales price plus
the amount of the Retail Public Improvement Fee. Specific
instructions regarding reporting forms and payment procedures shall
be provided to all Retailers by the District, and each Retailer
shall be entitled to rely thereon for purposes of compliance with
this Section 5(a). Declarant hereby acknowledges, any other Owner,
by acquiring fee title to any portion of the PIF Property subject
to this PIF Covenant, shall be deemed to have acknowledged, any
Occupant, by acquiring the right to possess or occupy any portion
of the PIF Property subject to this PIF Covenant, shall be deemed
to have acknowledged, and each Owner and Occupant shall cause any
Retailer whom such Owner or Occupant permits to possess or occupy
(by lease or otherwise) any portion-of its Owned/Leased PIF
Property, to acknowledge, prior to conducting any business at any
PIF Property, (i) THAT THE RETAIL PUBLIC IMPROVEMENT FEE IS
NOT A TAX IN ANY FORM AND IS A FEE IMPOSED UNDER PRIVATE COVENANT
AND NOT THROUGH THE EXERCISE OF ANY GOVERNMENTAL TAXING AUTHORITY;
(ii) THAT THE RETAIL PUBLIC IMPROVEMENT FEE REVENUES ARE NOT
TAX REVENUES IN ANY FORM AND THE RETAIL PUBLIC IMPROVEMENT FEE
SHALL NOT BE ENFORCEABLE BY THE ANY OTHER GOVERNMENTAL ENTITY OR
QUASI-GOVERNMENTAL ENTITY, OTHER THAN THE DISTRICT (EXCEPT WHERE
THE GOVERNMENTAL ENTITY IS THE PIF COLLECTION AGENT AND IS ACTING
IN SUCH CAPACITY UNDER THIS PIF COVENANT OR EXCEPT BY JUDICIAL
ENFORCEMENT PURSUANT TO AN ENFORCEMENT ACTION BROUGHT BY A PERSON
AUTHORIZED TO ENFORCE THIS PIF COVENANT); AND (iii) THAT THE
AUTHORITY OF THE DISTRICT AND/OR PIF COLLECTION AGENT TO RECEIVE
THE RETAIL PUBLIC IMPROVEMENT FEE IS DERIVED THROUGH THIS PIF
COVENANT. In the event the District or the Bond Trustee ceases to
be the PIF Collection Agent for the Public Improvement Fee (as
further described in Section 10 below), the District shall promptly
notify each Retailer of the same and provide appropriate direction
for payment and reporting of the Retail Public Improvement Fee
thereafter. For purposes of compliance with this Section 5, each
Retailer shall be entitled to rely upon written notice from the
District and, in such event, upon specific instructions regarding
reporting forms and payment procedures for the Retail Public
Improvement Fee provided in writing to such Retailer by the
District.

 

 

 

44

 

 

 

 

(b)           Material
Sales and Use Public Improvement Fee. Each PIF Obligor shall
pay the Material Sales and Use Public Improvement Fee. The Material
Sales and Use Public Improvement Fee owed by a PIF Obligor for any
Construction Activities shall be due and payable prior to or at the
time of such PIF Obligor obtaining a building permit from the
County for such Construction Activities, and in no event shall any
Construction Activities be commenced by or on behalf of any PIF
Obligor prior to the payment of the Material Sales and Use Public
Improvement Fee owed with respect to such Construction Activities.
Each PIF Obligor shall pay the Public Improvement Fee owed with
respect to Construction Activities to the PIF Collection Agent on
behalf of the District or its assignee. With the consent of the
County, the procedures for collection of any or all of the PIF
Revenues owed by a PIF Obligor for any Construction Activities may
be coordinated with the building permit process administered by the
County. The District may implement procedures applicable to all
proposed development and Construction Activities within the PIF
Property or any portion thereof pursuant to which PIF Obligors are
required to demonstrate payment of the Material Sales and Use
Public Improvement Fee with respect to any planned Construction
Activities as a precondition to commencing such Construction
Activities. Each PIF Obligor shall deliver to the PIF Collection
Agent a true and complete MSU Report relating to the applicable
Construction Activities and the PIF Collection Agent is expressly
authorized to deliver such MSU Report to the District and, at the
express written direction of the District, to the Bond Trustee or
other entity. Each PIF Obligor shall be under a continuing duty to
make such adjustments, additions, modifications or supplements to
the MSU Report as may be necessary to correct any mistake in a
previously delivered Report or to otherwise cause such MSU Report
to accurately reflect the Construction Valuation Amount for the
applicable Construction Activities and such other information
contained therein, and to deliver such adjustments, additions,
modifications or supplements to the MSU Report to the PIF
Collection Agent for distribution to the District. If any such
adjustment increases the amount of the Material Sales and Use
Public Improvement Fee that a PIF Obligor is required to remit or
pay, such PIF Obligor shall immediately pay such additional
Material Sales and Use Public Improvement Fee in the amount due to
the PIF Collection Agent. District hereby acknowledges, any Owner,
by acquiring fee title to any portion of the PIF Property subject
to this PIF Covenant, shall be deemed to have acknowledged, any
other Occupant, by acquiring the right to possess or occupy any
portion of the PIF Property subject to this PIF Covenant, shall be
deemed to have acknowledged (i) THAT THE MATERIAL SALES AND
USE PUBLIC IMPROVEMENT FEE IS NOT A TAX IN ANY FORM AND IS A FEE
IMPOSED UNDER PRIVATE COVENANT AND NOT THROUGH THE EXERCISE OF ANY
GOVERNMENTAL TAXING AUTHORITY; (ii) THAT THE MATERIAL SALES
AND USE PUBLIC IMPROVEMENT FEE REVENUES ARE NOT TAX REVENUES IN ANY
FORM AND THE MATERIAL SALES AND USE PUBLIC IMPROVEMENT FEE SHALL
NOT BE ENFORCEABLE BY ANY GOVERNMENTAL ENTITY OR QUASI-GOVERNMENTAL
ENTITY, OTHER THAN THE DISTRICT (EXCEPT WHERE THE GOVERNMENTAL
ENTITY IS THE PIF COLLECTION AGENT AND IS ACTING IN SUCH CAPACITY
UNDER THIS PIF COVENANT OR EXCEPT BY JUDICIAL ENFORCEMENT PURSUANT
TO AN ENFORCEMENT ACTION BROUGHT BY A PERSON AUTHORIZED TO ENFORCE
THIS PIF COVENANT); AND (iii) THAT THE AUTHORITY OF THE
DISTRICT AND/OR PIF COLLECTION AGENT TO RECEIVE THE MATERIAL SALES
AND USE PUBLIC IMPROVEMENT FEE IS DERIVED THROUGH THIS PIF
COVENANT.

 

 

 

45

 

 

 

 

6. Additional Reporting
Requirements. Each Retailer shall deliver to Declarant or
Affiliate of a Declarant specified by Declarant, the District and,
at the express written direction of the District, to the Bond
Trustee or other entity (collectively, “Report Recipients”), true and
complete copies of all written reports, returns, statements,
records and declarations, including any supplements or amendments
thereto (collectively the “Reports”) made or provided to the
State of Colorado by such Retailer in connection with all Sales Tax
for the corresponding Sales Tax period at the same time such
Reports are delivered to the State of Colorado. If any subsequent
adjustments, additions or modifications are made: to any Sales
Taxes or the Retail Public Improvement Fee reported, remitted or
paid, or Report made, by a Retailer to the State of Colorado with
respect to Sales Taxes or the Retail Public Improvement Fee, such
Retailer shall provide the Report Recipients with true and complete
copies of all revised Reports or other written material issued or
received by such Retailer in regard thereto. If any such adjustment
increases the amount of the Retail Public Improvement Fee which a
Retailer is required to remit or pay, or results in a refund of
such Retail Public Improvement Fee, such Retailer shall immediately
pay such additional Retail Public Improvement Fee in the amount
due, or shall receive an appropriate credit against the next retail
Public Improvement Fee due from such Retailer in the amount of such
excess Retail Public Improvement Fee. Such Retailer shall claim
such credits or pay such additional retail Public Improvement Fee
in the next monthly reporting period by use of the standard
reporting and remittance forms. All Reports made or provided by a
Retailer shall be maintained by such Retailer for at least three
years from the date of submission thereof to the State of Colorado,
and upon written request, shall be made available to the Report
Recipients for inspection and audit. Subject to Section 7 below,
Reports received by any Declarant, the District or the Bond Trustee
shall remain confidential and be used only for purposes of
collecting the Retail Public Improvement Fee due, enforcing
Retailers’ obligations hereunder, and otherwise monitoring
compliance with the provisions of this PIF Covenant.

 

7. Audits and Release of Information by
the PIF Collection Agent. By acquiring its possessory
interest in and to its Owned/Leased PIF Property subject to the
terms and conditions of this PIF Covenant, each Retailer and PIF
Obligor hereby specifically authorizes the District, the Bond
Trustee and or the PIF Collection Agent to audit the books and
records of such Retailer or PIF Obligor to determine compliance
with the Public Improvement Fee collection and remittance
obligation of such Retailer or PIF Obligor under this PIF Covenant
and, subject to the restrictions set forth in the next sentence, to
release to the Declarants, the District, the Bond Trustee and any
Dissemination Agent for distribution to the holders of any Bonds
(but not to any other person or entity, except as required by law)
such audited information and any Public Improvement Fee-related
reports, returns (including sales tax returns) and other documents
as are delivered to the District, the Bond Trustee and the PIF
Collection Agent by such Retailer or PIF Obligor and any relevant
information gathered by the District, the Bond Trustee, or
successor PIF Collection Agent during an audit or in reviewing such
reports, returns or other documents (collectively, the
“Confidential
Information”); provided, however, that all
Confidential Information, together with the contents thereof, shall
be kept strictly confidential and shall not be disclosed or
otherwise published by any person to whom the District, the Bond
Trustee, or successor PIF Collection Agent so releases Confidential
Information, except for such disclosures or publications as may be
required by applicable laws. Without limiting the foregoing
confidentiality and non-disclosure requirements, to the fullest
extent permitted under applicable laws, any publication or
disclosure of Confidential Information submitted by or pertaining
to a specific Retailer or PIF Obligor (or the contents of such
Confidential Information) by the District, the Bond Trustee or
successor PIF Collection Agent, any Declarant, the District, or any
Dissemination Agent (or by anyone else to whom the District, the
Bond Trustee or the successor PIF Collection Agent is required by
law to disclose Confidential Information) which is otherwise
required to be made, shall be made only on an aggregated basis with
the similar information submitted by other Retailers and PIF
Obligors and without separate identification (direct or indirect)
of the Public Improvement Fee or sales of such specific
Retailer.

 

 

 

46

 

 

 

 

8. Compliance and Enforcement.
Each Retailer and PIF Obligor shall comply with all policies and
requirements of District and the PIF Collection Agent regarding the
calculation and payment of the Public Improvement Fee. Each
Retailer shall comply with all policies and requirements of the
District regarding notification to customers of the assessment and
collection of the Public Improvement Fee as such policies and
requirements are communicated by the District to such Retailer in
writing from time to time. The failure or refusal of any Retailer
to assess, collect or remit the Public Improvement Fee, or to
comply with the requirements concerning notification to customers
as required in this PIF Covenant, shall constitute a default by
such Retailer under the terms of this PIF Covenant. The failure or
refusal of any PIF Obligor to remit the Material Sales and Use
Public Improvement Fee shall constitute a default by such PIF
Obligor under the terms of this PIF Covenant. THE DISTRICT, THE
BOND TRUSTEE, OR THE PIF COLLECTION AGENT ARE HEREBY EXPRESSLY MADE
THIRD PARTY BENEFICIARIES OF THE RETAILERS’ AND PIF
OBLIGORS’ OBLIGATIONS UNDER THIS PIF COVENANT, INCLUDING, BUT
NOT LIMITED TO, THE ASSESSMENT, COLLECTION AND REMITTANCE OF THE
PUBLIC IMPROVEMENT FEE. Declarant hereby acknowledges, any other
Owner, by acquiring fee title to any portion of the PIF Property
subject to this PIF Covenant, shall be deemed to have acknowledged,
any Occupant, by acquiring the right to possess or occupy any
portion of the PIF Property subject to this PIF Covenant, shall be
deemed to have acknowledged, and each Owner and Occupant shall
cause any Retailer whom such Owner or Occupant permits to possess
or occupy (by lease or otherwise) any portion of its Owned/Leased
PIF Property to acknowledge, prior to conducting any business at
any PIF Property, THAT ANY DECLARANT, THE DISTRICT, THE BOND
TRUSTEE, OR THE PIF COLLECTION AGENT SHALL HAVE A DIRECT CAUSE OF
ACTION AND FULL RIGHT AND AUTHORITY TO ENFORCE EACH
RETAILER’S AND PIF OBLIGOR’S OBLIGATIONS UNDER THIS PIF
COVENANT; AND THAT NO DEFAULT BY A RETAILER’S LANDLORD UNDER
ANY PROVISION OF THE LEASE OR OTHER OCCUPANCY AGREEMENT PURSUANT TO
WHICH SUCH RETAILER OCCUPIES ANY PIF PROPERTY SHALL ENTITLE SUCH
RETAILER TO ANY OFFSET, DEDUCTION OR OTHER DEFENSE TO PAYMENT OF
THE PUBLIC IMPROVEMENT FEE DUE HEREUNDER. Any payment of the Public
Improvement Fee not paid when due hereunder shall bear interest at
the Default Rate, and the defaulting Retailer or PIF Obligor shall
bear all costs of enforcement and collection thereof, including
reasonable attorney’s fees. In addition, if a Retailer or PIF
Obligor fails to pay any Public Improvement Fee when due and such
failure continues for more than 10 days after notice thereof is
given to such Retailer or PIF Obligor by the PIF Collection Agent,
the PIF Collection Agent may charge such Retailer or PIF Obligor,
and such Retailer or PIF Obligor shall be obligated to pay the PIF
Collection Agent, a late charge in an amount equal to the greater
of 10% of the delinquent Public Improvement Fee or $100.00. So long
as the District or the Bond Trustee is the PIF Collection Agent,
the District or the Bond Trustee shall have the right to take any
lawful action to the collect the Public Improvement Fee.
Notwithstanding anything to the contrary contained in this PIF
Covenant, any Declarant, the District, the Bond Trustee, or the PIF
Collection Agent, or any third party designated by any of the
foregoing (collectively, an “Enforcing Party”), shall have the
right to enforce the provisions of this PIF Covenant against any
Retailer or PIF Obligor that fails to abide by any of the terms and
conditions of this PIF Covenant. An Enforcing Party shall be
awarded and recover from a defaulting Retailer all costs and
expenses incurred by such Enforcing Party in successfully enforcing
the obligations of such Retailer or PIF Obligor under this PIF
Covenant in any legal
proceedings brought (or defended) by such Enforcing
Party.

 

 

 

47

 

 

 

 

9. Use and Pledge of Public Improvement
Fee Revenues; PIF Collection Agent’s Payment
Instructions. The Public Improvement Fee revenues generated
by the Public Improvement Fee imposed pursuant to this PIF Covenant
may be used for the payment of Public Improvements Costs or
otherwise as expressly provided in this PIF Covenant and the Public
Financing Documents. Any right, title and interest of any Declarant
in the Public Improvement Fee and the obligations of the PIF
Obligors as set forth in this PIF Covenant may be assigned by such
Declarant to the District or the Bond Trustee; provided, however,
notwithstanding any such assignment, such Declarant shall be
entitled to enforce this PIF Covenant against any Retailer or PIF
Obligor in the event such PIF Obligor fails to comply with the
provisions hereof. The District is hereby expressly authorized to
Pledge for the payment of Bond Requirements all Public Improvement
Fee revenues, or any portion thereof, generated by the Public Improvement Fee imposed
pursuant to this PIF Covenant and received or receivable by the PIF
Collection Agent. The PIF Collection Agent is hereby instructed and
required to pay so much of such Public Improvement Fee revenues
received by it as may be so Pledged to the party entitled thereto
pursuant to the applicable Public Financing Documents and the
balance thereof shall be paid to the District, to the extent
required for ongoing operation, maintenance and administrative
expenses of the District related to Public
Improvements.

 

10. PIF Collection Agent
Succession. If the District terminates the services of the
PIF Collection Agent and appoints a new PIF Collection Agent, the
District shall notify all Retailers thereof pursuant to Section
4 hereof.

 

11. General Acknowledgement.
Declarant hereby acknowledges, any other Owner, by acquiring fee
title to any portion of the PIF Property subject to this PIF
Covenant, shall be deemed to have acknowledged, and any Occupant,
by acquiring the right to possess or occupy any portion of the PIF
Property subject to this PIF Covenant, shall be deemed to
have acknowledged,
prior to conducting any business at any PIF Property, THAT THE
PROVISIONS OF THIS PIF COVENANT HAVE BEEN OR SHALL BE AGREED TO BY
THE DISTRICT AND THE BOND TRUSTEE, AND THAT THE DISTRICT AND THE
BOND TRUSTEE ARE OR SHALL BE RELYING UPON THESE PROVISIONS IN
TAKING CERTAIN ACTIONS WITH RESPECT TO THE PUBLIC IMPROVEMENT FEE
AND THE PUBLIC IMPROVEMENTS WITH THE EXPRESS CONDITION THAT THIS
PIF COVENANT SHALL NOT BE AMENDED, MODIFIED OR WAIVED; ACCORDINGLY,
DECLARANT HEREBY AGREES AND ALL OTHER OWNERS AND OCCUPANTS SHALL BE
DEEMED TO HAVE AGREED THAT NO AMENDMENT OR MODIFICATION SHALL BE
MADE TO, NOR ANY WAIVER MADE OR ACCEPTED BY DECLARANT, ANY OWNER OR
ANY OCCUPANT WITH RESPECT TO THIS PIF COVENANT WITHOUT THE WRITTEN
CONSENT OF THE DISTRICT AND THE BOND TRUSTEE, AND THAT ANY SUCH
PURPORTED AMENDMENT, MODIFICATION OR WAIVER, WITHOUT THE WRITTEN
CONSENT OF THE DISTRICT AND THE BOND TRUSTEE, SHALL BE VOID AND OF
NO FORCE AND EFFECT. Each Owner and Occupant shall cause any
Retailer whom such Owner or Occupant permits to possess or occupy
(by lease or otherwise) any portion of its Owned Leased PIF
Property to acknowledge, prior to conducting any business at any
PIF Property, THAT THE PROVISIONS OF THIS PIF COVENANT THAT PERTAIN
TO RETAILERS HAVE BEEN OR WILL BE AGREED TO BY THE DISTRICT AND THE
BOND TRUSTEE, AND THAT THE DISTRICT AND THE BOND TRUSTEE ARE OR
WILL BE RELYING UPON SUCH PROVISIONS IN TAKING CERTAIN ACTIONS WITH
RESPECT TO THE PUBLIC IMPROVEMENT FEE AND THE PUBLIC IMPROVEMENTS
WITH THE EXPRESS CONDITION THAT THE PROVISIONS OF THIS PIF COVENANT
THAT PERTAIN TO RETAILERS SHALL NOT BE AMENDED, MODIFIED OR WAIVED;
ACCORDINGLY, SUCH RETAILER SHALL BE DEEMED TO HAVE AGREED THAT NO
AMENDMENT OR MODIFICATION SHALL BE MADE TO, NOR ANY WAIVER MADE OR
ACCEPTED BY SUCH RETAILER WITH RESPECT TO THE PROVISIONS
OF THIS PIF COVENANT
THAT PERTAIN TO RETAILERS WITHOUT THE WRITTEN CONSENT OF THE
DISTRICT AND THE BOND TRUSTEE, AND THAT ANY SUCH PURPORTED
AMENDMENT, MODIFICATION OR WAIVER, WITHOUT THE WRITTEN CONSENT OF
THE DISTRICT AND THE BOND TRUSTEE, SHALL BE VOID AND OF NO FORCE
AND EFFECT.

 

 

 

48

 

 

 

 

12. Owner/Occupant Obligations.
Each Owner and Occupant shall cause any Retailer to whom such Owner
or Occupant leases or whom such Owner or Occupant otherwise permits
to occupy any portion of its Owned/Leased PIF Property, in its
lease or other occupancy agreement with such Retailer pursuant to
which such Retailer occupies any portion of such Owner’s or
Occupant’s Owned/Leased PIF Property, to acknowledge and
agree to (in a manner that causes such Retailer to be bound by) all
provisions of this PIF Covenant that pertain to such
Retailer.

 

13. Additional PIF Property.
Declarants may acquire fee title to, or cause one or more of its
affiliates to acquire fee title to, additional property
(“Additional PIF
Property”). Upon acquisition of any Additional PIF
Property by Declarant or such an affiliate, the new fee owner
thereof may record a supplement to this PIF Covenant in the real
property records maintained by the County Clerk, which shall set
forth the legal description of such Additional PIF Property and
state that, from and after the date of such recording, such
Additional PIF Property shall constitute PIF Property
for all purposes
under this PIF Covenant. From and after the date any such
supplement is properly signed, acknowledged and recorded, the
Additional PIF Property described therein shall constitute, and
become a part of the, PIF Property for all purposes under this PIF
Covenant.

 

14. No Dominion or Control by
Declarants. Notwithstanding anything contained in this PIF
Covenant to the contrary, or in any other document related to the
PIF Property, Declarant does not have and shall not be legally
entitled, authorized or empowered to exercise any dominion or
control over any of the Public Improvement Fee revenues imposed or
collected pursuant to this PIF Covenant and the Public Financing
Documents. To the extent any Public Improvement Fee revenue is
collected by any Declarant, such Declarant is merely acting on
behalf of the District in implementing this PIF Covenant and
providing for the collection and payment of Public Improvement Fee
revenues under the Public Financing Amendment. Subject to the
express terms of this Section 14: (a) the Public Improvement
Fee is a fee imposed on Retailers and PIF Obligors to pay Public
Improvements Costs as provided herein; (b) the nature of the
Public Improvement Fee is that of a fee imposed for the benefit of
the District under private contract and not through the exercise of
any District taxing authority; (c) the Public Improvement Fee
revenues are not tax revenues in any form and the Public
Improvement Fee shall not be enforceable by the State or any taxing
entity other than the District; (d) the Public Improvement Fee
revenues are the property of the District to be used for the
payment of the Bond Requirements and as otherwise may be provided
in this PIF Covenant or the Public Financing Documents; and
(e) the authority of the District to receive the Public
Improvement Fee revenues is derived through this PIF Covenant and
the Public Financing Documents.

 

15. Notices to Retailers. Whenever
a party is required pursuant to the provisions of this PIF Covenant
to give notice to “all” Retailers, the notice given
shall be deemed sufficient if given to all Retailers the names and
addresses of which were known to the party giving such notice after
a reasonably diligent effort to ascertain the names and addresses
of all Retailers

 

16. Governing Laws. This PIF
Covenant shall be governed by, and enforced in accordance with, the
laws of the State of Colorado.

 

 

 

49

 

 

 

 

17. Covenants Run with the Land.
The covenants, agreements, promises and duties as set forth in this
PIF Covenant shall be construed as covenants and not as conditions
and, to the fullest extent legally possible, all such covenants
shall run with and be enforceable against both the covenantor and
the land and shall constitute equitable servitudes burdening both
the respective covenantor and its PIF Property for the benefit of
the respective covenantee. Each covenant to do or refrain from
doing some act on or with respect to activities on any portion of
the PIF Property under this PIF Covenant (i) is a burden upon
such portion of the PIF Property and is for the benefit of the
remainder of the PIF Property, (ii) shall be a covenant
running with the land with respect to both the burdened and
benefited portions of the PIF Property, and (iii) shall be
binding upon of each Owner, Occupant and Retailer and each
successor to their respective interests in the PIF Property and
shall inure to the benefit of Declarants, the other Owners,
the District, the Bond
Trustee and any other PIF Collection Agent. If and to the extent
that any of the covenants or other provisions herein would
otherwise be unlawful or void for violation of (a) the rule
against perpetuities, (b) the rule restricting restraints on
alienation, or (c) any other applicable statute or common law
rule analogous thereto or otherwise imposing limitations upon the
time for which such covenants maybe valid, then the provisions
concerned shall continue and endure only until the expiration of a
period of 90 years after the date this PIF Covenant is filed in the
real property records maintained by the County Clerk.

 

17.           Severability.
Invalidation of any of the provisions contained in this PIF
Covenant, or of the application thereof to any person or entity, by
judgment or court order, will in no way affect any of the other
provisions of this PIF Covenant or the application thereof to any
other person or entity or circumstance and the remainder of this
PIF Covenant shall remain in effect; provided, however, that in the
event such invalidation would render the remaining portions of this
PIF Covenant ineffective to carry out the material intentions of
Declarant as expressed or implied by this PIF Covenant, then the
objectionable provisions) hereof shall be construed, and this PIF
Covenant shall be deemed amended, as if such provision were
replaced with an enforceable provision which effectuates, as nearly
as possible, the material intentions of Declarants.

 

18.           Applicability
of Retail Public Improvement Fee to Residential Property.
Declarant may cause portions of the PIF Property to be developed
for residential use. The Retail Public Improvement Fee as
established by this PIF Covenant shall have no applicability to any
portion of the PIF Property that is used solely for residential
purposes, except to the extent that any PIF Sales are initiated,
consummated, conducted, transacted or otherwise occur from or
within such portion of the PIF Property. Notwithstanding to
foregoing, the Material Sales and Use Public Improvement Fee is
applicable to the residential portions of the PIF
Property.

 

IN
WITNESS WHEREOF Declarants have executed this PIF Covenant as of
the date first set forth above.

 

Declarant:

 

PCY
Holdings, LLC,

a
Colorado limited liability company

 

By:                                                                 

Name: 

Title: 

 

 

 

50

 

 

STATE OF
__________ 

)

)
ss.

COUNTY OF
_____________  

)

 

 

The
foregoing instrument was acknowledged before me as of the _____ day
of _________________, 2017, by ______________________________ as
________________ of PCY Holdings, LLC, a Colorado limited liability
company.

 

WITNESS
my hand and official seal.

 

 

Notary
Public for the State of ____________

 

My
Commission Expires: 

 

 

 

 

51

 

Exhibit A

 

 

 

LEGAL
DESCRIPTION OF THE

PIF
PROPERTY

 

 

 

 

 

52

 

Schedule 6 - Tap Purchase Agreement

 

 

 

 

 

53

 

DRAFT
10/30/19

TAP PURCHASE AGREEMENT

(Sky Ranch)

 

THIS
TAP PURCHASE AGREEMENT (“Agreement”), dated as of the
_____ day of ____________, 2017 (the “Effective Date”),
by and between Rangeview Metropolitan District, a quasi-municipal
corporation and political subdivision organized and existing under
the constitution and laws of the State of Colorado, acting by and
through its water activity enterprise, with the address of 141
Union Boulevard, Suite 150, Lakewood, CO 80228
(“Rangeview”), and KB HOME COLORADO INC., a Colorado
corporation, with the address of 7807 E Peakview Avenue, Suite 300,
Centennial, CO 80111 (the “Company”). Rangeview and the
Company are sometimes hereafter referred to collectively as the
“Parties,” and either of them may sometimes hereafter
be referred to as a “Party”.

 

RECITALS

 

A. Company is a party
to a Contract for Purchase and Sale of Real Estate (the
“Contract”) for certain property located within the
development commonly known as Sky Ranch, County of Arapahoe, State
of Colorado, as generally depicted on Exhibit A
attached hereto and made a part of this Agreement (the
“Property”) and as more particularly described in said
Contract.

 

B. The Property is now
undeveloped.

 

C. Rangeview is
authorized to provide water and wastewater services to the Property
and the Company desires to obtain such services from Rangeview to
allow development of the Property to proceed.

 

D. Company desires to
acquire and use the Property for the construction of
________________ (___) [insert number – should be about
149] single family detached homes, which are to be developed
in phases as generally outlined on Exhibit A,
in compliance with applicable zoning, building, and other laws,
rules, and regulations.

 

E. Rangeview has
certain existing water and wastewater infrastructure, and plans to
construct additional infrastructure, to provide water and
wastewater services at the Property and to other
customers.

 

F.  Company
desires to purchase from Rangeview water and wastewater taps to
serve the Property with the revenue from said purchases to be
available to Rangeview in consideration of Rangeview providing
water and wastewater services to the Property.

 

G. The execution of
this Agreement will serve a public purpose and promote the health,
safety, prosperity, and general welfare of present and future
residents and landowners by providing for the planned and orderly
extension of water and wastewater services to the Property by
Rangeview.

 

 

 

54

 

 

COVENANTS

 

In
consideration of the recitals, the mutual promises and covenants
contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Rangeview and Company agree as follows:

 

ARTICLE I

 

DEFINITIONS
AND INTERPRETATIONS

 

Section
1.1. Definitions. As used in this
Agreement, the words defined below and capitalized throughout the
text of this Agreement shall have the respective meanings set forth
below:

 

Agreement: This Tap Purchase
Agreement and any amendment to it made in accordance with Section
6.9 below.

 

Board: The duly constituted
Board of Directors of Rangeview.

 

Company: A Party to this
Agreement as described above.

 

Event of Default: One of the
events or the existence of one of the conditions set forth in
Section 5.1 below.

 

Lot: Lot means a single family
residential building lot as shown on a final subdivision plat of
the Property which designates a unique block and lot number to the
Lot.

 

Person: Any individual,
corporation, limited liability company, joint venture, estate,
trust, partnership, association, or other legal
entity.

 

Plans: The plans, documents,
drawings, and specifications for the engineering, design,
surveying, construction, installation, or acquisition of any water
and wastewater improvements; including any addendum, change order,
revision, or modification affecting the same.

 

Property: The real property as
described above.

 

Rangeview: A Party to this
Agreement as described above.

 

Residential Unit: One single
family detached dwelling unit.

 

Rules and Regulations: The duly
adopted rules, regulations, bylaws, resolutions, policies and
procedures of Rangeview governing water and wastewater service,
fees and charges, and other matters; effective as of the Effective
Date and as may be amended from time to time.

 

SFE: An SFE shall mean one
single family equivalent unit of water or wastewater demand as
defined in the Rules and Regulations. Absent unusual circumstances,
one SFE is a single family detached residence with an assumed water
demand of 0.4 acre feet of water per year, provided with a
three-quarter inch water service line and meter, and with a typical
balance of in-house and outside water usage. The average wastewater
demand for one SFE is 180 gallons of domestic-strength wastewater
per day.

 

 

 

55

 

 

 

Systems: The water and
wastewater systems of Rangeview, consisting of the facilities,
supplies, assets, and appurtenant property rights owned or directly
controlled by Rangeview, which are used and useful to Rangeview to
provide water and wastewater services to the Property and other
customers but not including the service lines and any other
facilities owned by individual customers as established in the
Rules and Regulations. The water system may be referred to herein
as the “Water System”; the wastewater system may be
referred to herein as the “Wastewater System”; and
together they may be referred to as the “Water and Wastewater
Systems”.

 

System Development Charges.
Collectively, the Water System Development Charges and the
Wastewater System Development Charges.

 

Tap: The physical connection to
Rangeview’s Water or Wastewater Systems which is authorized
by sequentially numbered Water and/or Wastewater Tap Licenses
issued by Rangeview for the same.

 

Tap License: The Tap License
issued by Rangeview that acknowledges the receipt of payment of
Water System Development Charges and/or Wastewater System
Development Charges, along with applicable Administrative Fees, as
provided for in the Rules and Regulations, for a specific Lot
within the Property.

 

Wastewater System Development
Charge: The Wastewater System Development Charges paid to
Rangeview as provided in Section 3.1 below for the right to make a
Tap and obtain domestic wastewater service from
Rangeview

 

Water System Development
Charge: The Water System Development Charges paid to
Rangeview as provided in Section 3.1 below for the right to make a
Tap and obtain potable and/or non-potable water service from
Rangeview.

 

Section
1.2. Interpretation. In this
Agreement, unless the context otherwise requires:

 

(a) All definitions,
terms, and words shall include both the singular and
plural.

 

(b) Words of the
masculine gender include correlative words of the feminine and
neuter genders.

 

(c) The captions or
headings of this Agreement are for convenience only and in no way
define, limit, or describe the scope or intent of any provision,
article, or section of this Agreement.

 

(d) The Recitals set
forth above are incorporated herein by this reference.

 

 

 

56

 

 

ARTICLE II

 

WATER
AND WASTEWATER SYSTEMS

 

Section
2.1. Construction of Certain On-Site and
Off-Site Water and Wastewater Systems. Rangeview has or
shall cause the construction and installation of the Water and
Wastewater Systems as needed to serve customers when needed within
the boundaries of the Property.

 

Section
2.2. Ownership, Operation and Use of Water
and Wastewater Systems. The Water and Wastewater Systems,
shall be owned, operated, and maintained by Rangeview. The
Company’s payment of System Development Charges shall not be
deemed to give Company any ownership right in any of the Water and
Wastewater Systems. The Water and Wastewater Systems shall be
available for the use of all persons in accordance with the Rules
and Regulations. The proceeds of System Development Charges may be
used, in the discretion of the Board, for capital, debt service,
operation, maintenance of Water and Wastewater Systems, payment of
other costs, fees and charges payable by Rangeview, and other
lawful purposes.

 

Section
2.3. Administration of Water and Wastewater
Systems. Rangeview shall establish all rates, fees, tolls,
penalties, and charges for the use of the Water and Wastewater
Systems. Unless otherwise expressly specified in this Agreement,
service to the Property shall be subject to all duly promulgated
rates, rules, regulations, and policies of Rangeview adopted and
applied on a nondiscriminatory basis for similarly situated
customers within their respective powers and
limitations.

 

ARTICLE III

 

SYSTEM
DEVELOPMENT CHARGES

 

Section
3.1. Water and Wastewater System
Development Charges.

 

(a) Subject to the
terms hereof, Rangeview hereby agrees to sell to Company, and
Company hereby agrees to purchase from Rangeview (if and when
Company secures building permits for the applicable lots within the
Property, Company not having any obligation to secure building
permits by any date(s) specific), Tap Licenses for (___)
[insert number –
should be about 149] Residential Units to be located on the
Property.

 

(b) The use of Tap
Licenses and the connection of the Taps shall be subject to all
applicable Rules and Regulations, including the requirement for
construction by Company at its cost of the “Service
Lines” as defined in the Rules and Regulations except as may
otherwise by specifically provided for in this
Agreement.

 

(c) System Development
Charges per Lot shall be calculated in accordance with the Rules
and Regulations. The System
Development Charges applicable to any particular Lot shall be paid
in accordance with the schedule provided for below at Section 3.2.
The System Development Charges may increase or decrease prior to
issuance of any Tap License, and Company shall pay the amount of
the System Development Charge in effect at the time of
payment.

 

 

 

57

 

 

(d) Additional Charges.
In addition to System Development Charges, Rangeview charges
certain administrative fees as outlined in Exhibit B
that includes a meter/meter set fee, inspection fee, and account
set up fee (the “Administrative Fees”) along with
periodic service charges, usage fees, and other rates, fees,
charges and assessments as provided for in the Rules and
Regulations and consistent with the District’s Service Plan,
as may be amended from time to time. Such rates, fees, charges and
assessments shall be imposed by Rangeview in such amounts as may be
determined by its board of directors on a nondiscriminatory basis
for similarly situated customers within their respective powers and
limitations.

 

(e) Additional Lots.
This Agreement does not obligate Rangeview to extend water and
wastewater services to additional lots beyond those specified in
Section 3.1(a). Nothing herein shall be deemed or construed to
limit Company’s ability to obtain water and wastewater
services from Rangeview, consistent with the Rules and Regulations,
for additional lots located off the Property and where Rangeview
has the right to provide such services.

 

Section
3.2. Schedule for Payment, Changes in
Fees.

 

(a) Payments. Company shall pay the
total amount due for System Development Charges and Administrative
Fees, as described in Section 3.1(d) above, applicable to a
specific Lot not later than the time of issuance of a building
permit for the construction of a Residential Unit on said Lot.
Payments shall be made by check, to the address specified by
Rangeview, or by wire transfer, with routing information as
specified by Rangeview.

 

(b) Changes in Rates, Fees, and
Charges. Changes to the System Development Charges,
Administrative Fees, or other rates, fees, charges and assessments
by Rangeview will become effective, including for Tap Licenses
thereafter purchased by the Company under this Agreement, after the
Board of Directors adopts and approves such new fees in a publicly
noticed meeting of the Board.

 

Section
3.3. Allocation of Taps. Each Tap
License purchased by Company shall be allocated to a Lot within the
Property as required by the Rules and Regulations. The SFE
allocation for each Lot shall be commensurate with the anticipated
demands on the Water and Wastewater Systems as provided in the
Rules and Regulations.

 

Section
3.4. Service Upon Payment. With
respect to any Residential Unit, Rangeview will permit a Tap
connection only upon payment by Company of the System Development
Charge and the Administration Fee provided for in this
Agreement.

 

Section
3.5. Expiration of SFE. If Company
fails to use any Tap License purchased from Rangeview by connecting
the Tap authorized by such Tap License within one (1) year after
the date of purchase, Company’s rights to use such Tap
License shall expire pursuant to the Rules and Regulations.
Although Company is not entitled to a refund of any
System Development Charges previously paid, Company shall be
entitled to a credit in the amount of those charges previously paid
towards the amount of the then-current System Development Charges
due and payable at the time any subsequent application is made to
purchase a Tap License for service to said Lot.

 

 

 

58

 

 

 

Section
3.6. License’s Non-Transferable,
Exception. Company shall not reallocate any Tap License
allocated to one Lot on the Property to another Lot without the
consent of Rangeview.

 

Section
3.7. Liability for Service Fee. The
then-current owner of the Lot for which the License was furnished
shall be liable for payment of all service fees and system
operation fees (including minimum service fees, if any) assessed by
Rangeview (on a nondiscriminatory basis for similarly situated
customers within their respective powers and limitations) with
respect to the particular Tap License purchased.

 

ARTICLE IV

REPRESENTATIONS,
WARRANTIES, AND COVENANTS

 

Section
4.1. Company Representations. In
addition to the other representations, warranties, and covenants
made by Company in this Agreement, Company makes the following
representations, warranties, and covenants to
Rangeview.

 

(a) Upon purchase of
the Property, Company will have good and marketable title to the
Property.

 

(b) Company has the
full right, power, and authority to enter into, perform, and
observe this Agreement.

 

(c) Neither the
execution of this Agreement, the consummation of the transactions
contemplated under it, nor the fulfillment of or the compliance
with the terms and conditions of this Agreement by Company will
conflict with or result in a breach of any terms, conditions, or
provisions of, or constitute a default under, or result in the
imposition of any prohibited lien, charge, or encumbrance of any
nature under any agreement, instrument, indenture, or any judgment,
order, or decree to which Company is a party or by which the
Company or the Property are bound.

 

Section
4.2. Rangeview Representations. In
addition to the other representations, warranties, and covenants
made by the Rangeview in this Agreement, Rangeview makes the
following representations, warranties, and covenants to
Company:

 

(a) Rangeview is
authorized under the Constitution and laws of the State of Colorado
to execute this Agreement and perform its obligations under this
Agreement, and all action on its part for the execution and
delivery of this Agreement has been or will be duly and effectively
taken.

 

(b) Rangeview has the
right, power, and authority to enter into, perform, and observe
this Agreement and to allocate Tap Licenses to Lots on the Property
and no third-party consent or approval is required for the
performance of the Rangeview’s obligations
hereunder.

 

(c) Neither the
execution of this Agreement, the consummation of the transactions
contemplated under it, nor the fulfillment of or the compliance
with the terms and conditions of this Agreement by Rangeview will
conflict with or result in a breach of any terms, conditions, or
provisions of, or constitute a default under, or result in the
imposition of any prohibited lien, charge, or encumbrance of any
nature under any agreement, instruction, indenture, resolution, or
any judgment, order, or decree of any court to which Rangeview is a
Party or by which Rangeview is bound.

 

 

 

59

 

 

 

 

(d) To
Rangeview’s actual knowledge, based on the representations of
the Company, as of the date hereof, the number of SFEs identified
in Section 3.1(a) are sufficient under the Rules and Regulations of
Rangeview for servicing the proposed Residential Units; however,
Company is responsible for determining the sufficiency of said
number of SFEs for Company’s use on the Property and if
additional SFEs are needed, Company shall acquire the same from
Rangeview.

 

(e) Rangeview has or
shall cause the construction and installation of the Water and
Wastewater Systems as needed to serve customers when needed within
the boundaries of the Property.

 

Section
4.3. Instruments of Further
Assurance. To the extent allowed by applicable law,
Rangeview and Company covenant that they will do, execute,
acknowledge, and deliver or cause to be done, executed,
acknowledged, and delivered, such acts, instruments, and transfers
as may reasonably be required for the performance of their
obligations under this Agreement.

 

ARTICLE V

 

DEFAULT,
REMEDIES, AND ENFORCEMENT

 

Section
5.1. Events of Default. The
occurrence of any one or more of the following events or the
existence of any one or more of the following conditions shall
constitute an Event of Default under this Agreement:

 

(a) Failure of the
Company to pay any System Development Charges, and/or service fees
when the same shall become due and payable as provided in this
Agreement or, as applicable, under the applicable Rules and
Regulations of Rangeview. The non-payment of any amount due
hereunder when due, if such failure continues for a period of ten
(10) business days after the delivery of written notice from
Rangeview to Company, shall constitute a default.

 

(b) Failure to perform
or observe any other of the material covenants, agreements, or
conditions in this Agreement, if such failure continues for a
period of ten (10) business days after the delivery of written
notice from Rangeview to Company as provided in Section
5.4;

 

(c) The failure of any
material representation or warranty made in this Agreement, if such
representation or warranty is not remedies within a period of ten
(10) business days after the delivery of written notice from
Rangeview to Company as provided in Section 5.4;

 

Section
5.2. Occurrence of Event of Default by
Company Results in Forfeiture. Upon the occurrence of an
Event of Default by Company, after written notice by Rangeview to
the Company and opportunity to cure as provided in Section 5.4, and
at the election of Rangeview, in its sole discretion,
Company’s rights to purchase additional SFEs for which System
Development Charges have not been received by Rangeview shall be
suspended until the Event of Default is cured; provided, that such
suspension shall not act to terminate the provision of water and
wastewater service for which System Development Charges have been
paid.

 

 

 

60

 

 

 

 

Section
5.3. Remedies on Occurrence of Events of
Default.

 

(a) Upon the occurrence
of an Event of Default by Company, after written notice by
Rangeview to the Company and opportunity to cure as provided in
Section 5.5, Rangeview shall have the following rights and
remedies:

 

(i)

To shut off or
discontinue water and/or wastewater service, in accordance with law
and the Rules and Regulations, to those Lots owned by Company for
which service fees have not been paid or that otherwise are not
compliant with the Rules and Regulations.

 

(ii)

To protect and
enforce its rights under this Agreement and any provision of law by
such suit, action, or special proceedings as Rangeview shall deem
appropriate, including, without limitation, any proceedings for the
specific performance of any covenant or agreement contained in this
Agreement or the enforcement of any other appropriate legal or
equitable remedy, or for the recovery of damages caused by breach
of this Agreement, including reasonable attorneys’ fees and
all other costs and expenses incurred in enforcing this
Agreement;

 

(iii)

To enforce
collection of any amount due to Rangeview by collection upon its
perpetual lien against the property served as provided in C.R.S.
§ 32-1-1001(1)(j) or (k) whether the amounts are due for
property within or without the district boundary of
Rangeview;

 

(iv)

To suspend
Company’s rights to purchase additional SFEs under this
Agreement as provided for in Section 5.2; and

 

(v)

If an Event of
Default is also a violation of the Rules and Regulations of
Rangeview, then Rangeview shall have all remedies available to them
to enforce the Rules and Regulations in addition to the remedies
provided under this Agreement.

 

(b) Upon the occurrence
of an Event of Default by Rangeview, after written notice by the
Company and opportunity to cure as provided in Section 5.5, the
Company is entitled to such remedies at law or in equity that are
available to it; provided, that such default shall not act to
terminate the provisions of water and wastewater service to a Lot
owner by Company for which a valid Tap License has been obtained
and water and wastewater service fees have been paid.

 

(c) Delay or Omission No Waiver. No
delay or omission of Rangeview or Company to exercise any right or
power accruing upon any Event of Default shall exhaust or impair
any such right or power or shall be construed to be a waiver of any
such Event of Default, or acquiescence in the Event of
Default.

 

 

 

61

 

 

 

 

Section
5.4. No Waiver of One Default to Affect
Another; All Remedies Cumulative; Notice and Opportunity to
Cure. No waiver of any Event of Default under this Agreement
by Rangeview or Company shall extend to or affect any subsequent or
any other then-existing Event of Default or shall impair any rights
or remedies available for such other Event of Default. All rights
and remedies of Rangeview and Company whether or not provided in
this Agreement, may be exercised following notice and an
opportunity to cure such default within ten (10) business days,
shall be cumulative, may be exercised separately, concurrently, or
repeatedly, and the exercise of any such right or remedy shall not
affect or impair the exercise of any other right or
remedy.

 

Section
5.5. No Effect on Rights. No
recovery of any judgment by Rangeview shall in any manner or to any
extent affect any rights, powers, or remedies of Rangeview or
Company under this Agreement, but such rights, powers, and remedies
of Rangeview or Company shall continue unimpaired as before. No
moratorium shall impair the rights of Rangeview or Company
hereunder.

 

Section
5.6. Discontinuance of Proceedings on
Default; Position of Parties Restored. In case Rangeview or
Company shall have proceeded to enforce any right under this
Agreement and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely
to Rangeview or Company, then and in every such case Rangeview and
Company shall be restored to their former positions and rights
hereunder (unless Rangeview shall have exercised its right to
terminate or rescind this Agreement), and, except as may be barred
by res judicata, all rights, remedies, and powers of Rangeview and
the Company shall continue as if no such proceedings had been
taken.

 

Section
5.7. Unconditional Obligation. The
obligations of Company to pay the System Development Charges as
provided for herein shall be absolute and unconditional and shall
be binding and enforceable in all circumstances and shall not be
subject to setoff or counterclaim (unless Rangeview is in in
default hereunder).

 

ARTICLE VI

 

MISCELLANEOUS
PROVISIONS

 

Section
6.1. Effective Date. Upon the
execution by both Parties of this Agreement, this Agreement shall
be in full force and effect and be legally binding upon each Party
on the date first written above.

 

Section
6.2. Time of the Essence. Time is of
the essence under this Agreement. If the last day permitted or the
date otherwise determined for the performance of any act required
or permitted under this Agreement falls on a Saturday, Sunday or
legal holiday, the time for performance shall be the next
succeeding weekday that is not a holiday, unless otherwise
expressly stated.

 

Section
6.3. Parties Interested Herein.
Nothing expressed or implied in this Agreement is intended or shall
be construed to confer upon, or to give to, any Person other than
Rangeview and the Company, any right, remedy, or claim under or by
reason of this Agreement or any covenants, terms, conditions, or
provisions hereof, and all the covenants, terms, conditions, and
provisions in this Agreement by and on behalf of Rangeview and
Company shall be for the sole and exclusive benefit of Rangeview
and the Company. The covenants, terms, conditions, and provisions
contained herein and all amendments of this Agreement shall inure
to and be binding upon the heirs, personal representatives,
successors and assigns of the Parties hereto, provided that any
assignment that requires consent as provided in Section 6.4 hereof
has been consented to by Rangeview.

 

 

 

62

 

 

 

 

Section
6.4. Assignment. Except as provided
in Section 3.6, Company shall not assign its rights or obligations
(in whole or in part) under this Agreement without the prior
written consent of Rangeview. Any other assignment of this
Agreement without written consent by Rangeview and resolution by
the Board shall be void. Except for an assignment by Rangeview to
another municipal, quasi-municipal, or political subdivision that
is a water and/or wastewater service provider, Rangeview shall not
assign its rights or obligations (in whole or in part) under this
Agreement without the prior written consent of
Company.

 

Section
6.5. Impairment of Credit. None of
the obligations of Company hereunder shall impair the credit of
Rangeview. Rangeview shall be able to rely upon the timely
performance of the obligations by Company to pay for Taps as herein
provided.

 

Section
6.6. Notices. Except as otherwise
provided herein, any notice or other communication required to be
given hereunder will be in writing and delivered personally, sent
by United States certified mail, return receipt requested, by
reputable overnight courier, or by facsimile, in each case
addressed to the Party to receive such notice at the following
addresses:

 

If to
District:                                      
Rangeview Metropolitan District

Attn:
Manager

141
Union Boulevard Suite 150,

Lakewood, CO
80228

E-mail:
ljohnson@SDMI.com

 

with a
copy
to:                                   
Rangeview Metropolitan District

Attn:
Mark Harding, President

34501
East Quincy Ave., Bldg. 34, Box 10

Watkins, CO
80137

Facsimile No:
(303)292-3475

E-mail:
mharding@purecyclewater.com

 

If to
Company:                                  
KB Home Colorado Inc.

7807 E
Peakview Avenue, Suite 300

Centennial, CO
80111

Attention: Doug
Shelton

Telephone:
(303) 323-1141

E-mail:
dshelton@kbhome.com

 

Any
notice delivered personally will be deemed given on receipt; any
notice delivered by mail will be deemed given three business days
after the deposit thereof in the United States mail with adequate
postage prepaid; any notice delivered by overnight courier will be
deemed given one business day after the same has been deposited
with the courier, with delivery charges prepaid; and any notice
given by facsimile will be deemed given on receipt by the
recipient’s facsimile facilities.

 

 

 

63

 

 

 

 

Section
6.7. Severability. If any covenant,
term, condition, or provision under this Agreement shall, for any
reason, be held to be invalid or unenforceable, the invalidity or
unenforceability of such covenant, term, condition, or provision
shall not affect any other provision contained in this Agreement,
the intention being that such provisions are
severable.

 

Section
6.8. Venue. Exclusive venue for all
actions arising from this Agreement shall be in the District Court
in and for Arapahoe County, Colorado.

 

Section
6.9. Amendment. This Agreement may
be amended from time to time by agreement between Rangeview and
Company; provided, however that no amendment, modification, or
alteration of the terms or provisions of this Agreement shall be
binding upon Rangeview or Company unless the same is in writing and
duly executed by Rangeview and Company.

 

Section
6.10. Entirety. This Agreement,
together with the recitals and exhibits attached hereto,
constitutes the entire contract between Rangeview and Company
concerning the subject matter herein, and all prior negotiations,
representations, contracts, understandings, or agreements
pertaining to such matters are merged into and superseded by this
Agreement.

 

Section
6.11. Governing Law. This Agreement
shall be governed and construed in accordance with the laws of the
State of Colorado.

 

Section
6.12. Attorneys’ Fees. Should
any action be brought in connection with this Agreement, including,
without limitation, actions based on contract, tort or statute, the
prevailing party in such action shall be awarded all costs and
expenses incurred in connection with such action, including
reasonable attorneys’ fees, plus interest at a rate of 12%
per annum on all said costs from the date of expenditure. The
provisions of this Paragraph 6.12 shall survive purchase of all
Taps by Company, or the expiration or termination of this
Agreement.

 

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

 

COMPANY:

 

KB HOME
COLORADO INC.,

a
Colorado corporation

 

 

64

 

 

 

 

By:                                                                            

Name:                                                                                      

Title:                                                                                      

 

 

RANGEVIEW:

 

RANGEVIEW
METROPOLITAN DISTRICT,

a
Colorado quasi-municipal corporation and political subdivision
acting by and through its water enterprise

 

 

 

 

By:                                                                            

President

 

ATTEST:

 

By:                                                                 

Secretary

 

 

65

 

 

EXHIBIT A

 

To Tap
Purchase Agreement

 

[Diagram
of Property]

 

 

 

 

 

 

 

66

 

 

EXHIBIT B

 

to Tap
Purchase Agreement

 

 

 

RANGEVIEW RATES AND CHARGES

 

Being
Appendices C and E of the Rules and Regulations

 

(Current
as of the Effective Date)

 

 

 

Note:
“Administrative Fees”, as used in the Tap Purchase
Agreement, are the sum of the Administrative License Fee ($50.00)
and Water Meter Purchase and Set Fee (estimated to be $367.00 for
5⁄8”x3⁄4” or 3⁄4” water
meters)

 

 

 

 

 

 

 

67

 

 

Appendix
C – Rules and Regulations of Rangeview Metropolitan
District

ADMINISTRATIVE RATES AND CHARGES*

	

Article

	

Fee/Charge

	

Amount

	

6.2

	

System
Review Fee

	

Actual
Cost

	

6.3

	

Disconnection/Reconnection
Charge

	

Actual
Cost

	

6.4

	

Plan
Review Fee (Main Extensions)

	

Actual
Cost

	

6.5

	

Inspection/Observation
Fee (Main Extensions/Tap Installation)

	

Actual
Cost

	

6.6

	

Permit
Review Fee

	

Actual
Cost

	

6.9

	

Cure
Charge

	

Actual
Cost

	

6.11.c

	

Delinquent
Payment Late Fee

	

$10 +
1% Monthly Interest

	

6.11.d

	

Returned
Check Fee

	

$15.00

	

11.2

	

Water Meter Purchase and Set

	

Actual Cost

	

11.3.a

	

Administrative License Fee

	

$50.00

	

12.1.a

	

Water
System Development Charge

	

See
Appendix E

	

12.2.b

	

Potable
Water Consumption Charge

	

See
Appendix E

	

12.2.c

	

Monthly
Water Service Charge

	

See
Appendix E

	

12.3.a

	

Hydrant
Use Fee

	

$40.00
per permit

	

12.3.b

	

Hydrant
Use Rates

	

$13.00
per 1,000 gallons

	

12.3.c

	

Owner-initiated
Shutoff Fee, each shutoff

	

$15.00
per hour

	

12.3.d

 

	

Fire
Service Standby Fee, monthly fee

	
 

	

4-inch

	

$12.00

	

6-inch

	

$18.00

	

8-inch

	

$24.00

	

12.3.e

	

Well
Site Surcharge

	

$300
per acre

	

13.7

	

Non-Potable
Water Consumption Charge

	

85% of
potable charges

	

17.1.c

	

Sewer
System Development Charge

	

See
Appendix E

	

17.2.a

	

Monthly
Sewer Service Charge

	

See
Appendix E

	

17.3.a

	

Interceptor
Inspection Fee, each inspection

	

$25.00

* Rates
and charges as effective as of March 2017

 

 

 

68

 

 

Appendix
E – Rules and Regulations of Rangeview Metropolitan District
(Note: Residential only listed)

(1) 

SKY
RANCH SERVICE AREA SYSTEM DEVELOPMENT CHARGES

	

Article

	

Fee/Charge

	

Amount

	

12

	

Residential
Water System Development Charge

	

$26,675
per SFE based on 0.4 acre feet of water use per year.

	

17

	

Wastewater
System Development Charge

	

$4,659
per SFE

 

SKY RANCH EXAMPLE SYSTEM DEVELOPMENT CHARGES

	

Component

	

1.0 SFE Amount*

	

0.8 SFE Amount**

	

Total
Water System Development Charge

	

26,675

	

$21,500

	

Wastewater
System Development Charge

	

$4,659

	

$4,659

	

Total
Water & Wastewater Tap Fee

	

$31,334

	

$26,159

SFE =
Single Family Equivalent

*
Assumes 0.4 AFY annual demand and 0.56 gpm max day flow
rate.

**
Assumes 0.32 AFY annual demand and 0.44 gpm max day flow
rate.

 

SKY RANCH SERVICE AREA RESIDENTIAL MONTHLY CHARGES

	

Article

	

Fee/Charge

	

Amount

	

12.2b

	

Potable
Water Consumption Charge

	
 

	

0% to
100% of Monthly Budget

	

$4.25
per 1000 gallons

	

101% to
125% of Monthly Budget

	

$6.38
per 1000 gallons

	

126% to
150% of Monthly Budget

	

$8.50
per 1000 gallons

	

Over
150% of Monthly Budget

	

$12.75
per 1000 gallons

	

12.2c

	

Potable
Water Monthly Service Charge

	

$32.27

	

17.2b

	

Sewer
Water Generation Charge

	

$6.34
per 1000 gallons*

	

17.2a

	

Sewer
Monthly Service Charge

	

$10.05

*
Monthly sewer generation assumed to be equal to the average potable
water consumption in the months of December through
February.

 

 

 

 

 

 

69

 

Schedule 7 –

Offsite Infrastructure Escrow Agreement

 

 

 

 

 

 

70

 

OFFSITE INFRASTRUCTURE AGREEMENT

 

(Sky
Ranch – Offsite Infrastructure)

 

THIS
OFFSITE INFRASTRUCTURE AGREEMENT (the "Agreement")
is entered into this  day of _________ 2017 (the
“Effective
Date”) by and among PCY Holdings, LLC, a Colorado
limited liability company ("PCY"), and
the undersigned builders who have executed a counterpart signature
page to this Agreement or who have been added as a party by
execution of a Joinder hereto (each referred to herein as a
"Builder",
and collectively as the "Builders").
PCY and the Builders are sometimes individually referred to as a
“Party”
and collectively referred to as the “Parties.”

 

This
Agreement is made and entered into in contemplation of the
following facts and circumstances:

 

A. PCY is the
developer of certain real property located in Arapahoe County
(“County”),
Colorado, which consists of a portion of the land development known
as Sky Ranch (the "Subdivision")
according to the Preliminary Plat and Preliminary Development Plan
therefore as approved by the County.

 

B. Each Builder and
PCY have entered into a Contract for Purchase and Sale of Real
Estate (Sky Ranch) (the “Purchase
Agreements”), pursuant to which each Builder has
purchased from PCY and is the owner of, and/or is under contract
with PCY to purchase, residential building lots within the
Subdivision. Under the terms of the Purchase Agreements, PCY has
agreed to construct or cause the construction of certain public
infrastructure improvements that are necessary to serve the
Subdivision and fund the cost of such construction, including the
public offsite infrastructure improvements all as more particularly
described in this Agreement.

 

C. The Sky Ranch
Community Authority Board (“CAB”) has been organized by the
Sky Ranch Colorado Metropolitan District Nos. 1 and 5 (the
“Districts”)
pursuant to the laws of the State of Colorado in order to
construct, operate and maintain certain public facilities and
improvements in accordance with the Sky Ranch Community Authority
Board Establishment Agreement (the “CABEA”)
and each of the service plans for the Districts. The CAB will
construct the Drainage System Improvements and the Monaghan Road
Improvements identified on Exhibit A
(the “CAB
Infrastructure”). In order to fund the Cab
Infrastructure, PCY will deposit funds into a segregated
construction account owned and maintained by the CAB to be used by
the CAB to pay for the costs of designing, permitting and
constructing the CAB Infrastructure identified and described on
Exhibit
A.

 

D. Rangeview
Metropolitan District (“Rangeview”
and with the CAB, each is a “Constructing
Entity”) will construct the Water System Improvements,
Wastewater System Improvements and the Wholesale Water and
Irrigation Lines identified on Exhibit A (the
“Rangeview
Infrastructure.” In order to fund the Rangeview
Infrastructure, PCY will deposit funds into a segregated
construction account owned and maintained by Rangeview to be used
by Rangeview to pay for the costs of designing, permitting and
constructing the Rangeview Infrastructure identified and described
on Exhibit
A.

 

 

71

 

 

E. On or before the
Effective Date, PCY and the CAB shall enter into a Service
Agreement for Project Management
Services for Sky Ranch (“CAB Service
Agreement”) pursuant to which PCY shall serve as the
Project Manager (“PM”)
for the CAB for the construction of the CAB Infrastructure and
shall provide the services required to construct and deliver the
CAB Infrastructure, including but not limited to: CAB compliance
and coordination with legal counsel and accountants; planning
design and approvals; project administration; contractor
agreements; construction management and administration; and CAB
acceptance of the CAB Infrastructure. A copy of the CAB Service
Agreement is attached hereto as a part of Exhibit
D.

 

F.  On or before
the Effective Date, PCY and Rangeview shall enter into a Service
Agreement for Project Management
Services (“Rangeview Service
Agreement” and together with CAB Service Agreement,
the “Service
Agreements”) pursuant to which PCY shall serve as the
PM for Rangeview for the construction of the Rangeview
Infrastructure and shall provide the services required to construct
and deliver the Rangeview Infrastructure, including but not limited
to: Rangeview compliance and coordination with legal counsel and
accountants; planning design and approvals; project administration;
contractor agreements; construction management and administration;
and Rangeview acceptance of the Rangeview Infrastructure. A copy of
the Rangeview Service Agreement is attached hereto as a part of
Exhibit
D.

 

G. The Parties enter
this Agreement in order to establish the terms and procedures that
will be utilized in order for funds to be disburse from the
construction accounts to pay for the costs to construct the
Improvements, all as more particularly set forth
herein.

 

NOW,
THEREFORE, in consideration of the mutual promises and covenants
set forth herein and in the Purchase Agreements, and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby agree as
follows:

 

1. Incorporation
of Recitals. The recitals set forth above are true and
correct and are incorporated herein in their entirety by this
reference.

 

2. Construction Obligation. The
CAB is constructing the Sky Ranch Infrastructure and Rangeview is
constructing the Rangeview Infrastructure (collectively, the
“Improvements”).
PCY as the PM for both the CAB and Rangeview shall cause the
construction of the Improvements pursuant to Service
Agreements.

 

3. Deposit of Construction
Funds.

 

3.1 The estimated cost
to construct each of the Improvements is set forth on Exhibit A.

 

3.2 Not later than the
Effective Date, PCY shall advance to the CAB for deposit into a
segregated construction account that is owned and maintained by the
CAB at a nationally or regionally recognized FDIC insured financial
institution funds in the amount of _______________________________
Dollars ($_____________.00) (“CAB
Funds”) for the costs of design, testing, engineering
and construction of the CAB Infrastructure. The amount of the CAB
Funds is equal to the total estimated cost to substantially
complete construction of the CAB Infrastructure as set forth on
Exhibit
A. The CAB Funds shall be utilized solely to pay for the
construction of the CAB Infrastructure.

 

 

 

72

 

 

3.3 Not later than the
Effective Date, PCY shall advance to Rangeview for deposit into a
segregated construction account that is owned and maintained by
Rangeview at a nationally or regionally recognized FDIC insured
financial institution funds in the amount of
_______________________________ Dollars ($_____________.00)
(“Rangeview
Funds”) for the costs of design, testing, engineering
and construction of the Rangeview Infrastructure. The amount of the
Rangeview Funds is equal to the total estimated cost to
substantially complete construction of the Rangeview Infrastructure
as set forth on Exhibit A.
The Rangeview Funds shall be utilized solely to pay for the
construction of the Rangeview Infrastructure.

 

3.4 To the extent that
the contracted price to construct the Improvements exceeds the
estimated cost to substantially complete the Improvements, PCY
shall advance additional funds to increase the amount of the CAB
Funds deposited with the CAB, or the Rangeview Funds deposited with
Rangeview, as applicable, by the difference in the estimated versus
the contracted amounts. PCY is solely liable for any cost overruns
incurred in connection with the construction of the applicable
Improvements that exceed the amount of funds advanced by PCY to
either the CAB or Rangeview (a “Cost
Overrun”) and shall promptly notify the Builders of
the amount of the additional funds being deposited. If there is an
increase the construction cost in excess of the amount advanced to
a Constructing Entity, then PCY shall advance good funds to the
applicable Constructing Entity in the amount of the Cost Overrun
for deposit into the Construction Account (as herein after defined)
within five (5) business days after the date upon which PCY learns
that such increase has occurred. If PCY fails to advance the
necessary additional funds to the applicable Constructing Entity to
cover Cost Overruns, each affected Builder shall be entitled to all
remedies available at law or in equity, except incidental,
consequential, or punitive damages. In addition, any Builder or
group of Builders may advance additional funds PCY fails to pay, in
which event PCY shall reimburse the Builder(s) who advanced the
funds within thirty (30) days after receipt of an invoice (or, if
such reimbursement is outstanding as of the date of the Second
Closing, such Builders shall receive a credit in such amount at the
Second Closing). Invoices not paid within thirty (30) days after
receipt shall bear simple interest at the rate of 12% per annum
until paid.

 

4. Account. The CAB Funds and the
Rangeview Funds shall be held in construction accounts (each a
"Construction
Account") that are owned and maintained by the CAB or
Rangeview, as applicable, as provided in Section 3 above. As PM,
PCY shall administer the payment of funds from the Construction
Account in payment of Draw Requests (as hereinafter defined) to pay
the costs to construct the Improvements. All funds deposited into
the Construction Account, together with any interest accrued
thereon, shall be referred to herein as the "Construction
Funds". The Construction Funds in a Construction Account
shall not be commingled with other funds or accounts. PCY shall
keep good and accurate books of the Construction Funds and in
sufficient detail to allow construction costs and expenditures to
be calculated and which books and records shall be made available
to the Builders for review by the Builders upon reasonable prior
written notice.

 

5. Disbursement from the Construction
Account. As PM for each of the Constructing Entities, PCY
shall administer and process the payment of Construction Funds from
each Construction Account to pay contractors and payees identified
in Draw Requests in accordance with the instructions set forth on
Exhibit
B attached hereto and incorporated herein by this reference
(“Instructions”).
If at any time PCY or a Builder becomes aware that Construction
Funds have been disbursed from a Construction Account for purposes
other than the construction of the applicable Improvements, such
Party shall immediately notify the other Parties.

 

 

73

 

 

6. Construction
of Improvements.

 

(a) Construction Schedule. PCY, as
PM for the Constructing Entities, shall use commercially reasonable
efforts cause the Improvements to be Substantially Complete within
the timeframe referenced in the first Sentence of Section 7(a),
below, subject to Force Majeure Delays.

 

(b) Construction Standard. The
Improvements will be completed, and each construction contract
entered into for the construction of any Improvement
(“Work
Contract”) will provide that the applicable
Improvements shall be completed, in a good, workmanlike and
lien-free manner, in accordance with the CDs and specifications
therefor as approved by the applicable approving authorities, and
the applicable laws, codes, regulations and governmental
requirements for the Development and Subdivision (the
“Construction
Standard”). PCY shall post or cause to be posted when
due all sureties or guaranties, if any, that are required by the
Authorities under the Entitlements in connection with the
construction of the Improvements.

 

(c) Progress Reports. PCY shall, no
less frequently than once per calendar month, provide the Builders
with a progress report setting forth the amount of Construction
Funds expended to date, a list of Improvements completed to date,
and an estimate of the status of overall completion of the
Improvements, in such form as PCY deems reasonably
appropriate.

 

(d) Temporary Construction
Easements.

 

(1)                      Each
Builder hereby creates and grants to PCY and each other Builder,
for the use of PCY, the Constructing Entity and each other Builder
(if such other Builder exercises its respective step-in option) and
their respective successors, assigns, employees, agents,
contractors and subcontractors, such temporary non-exclusive
easements and licenses to enter upon the real property owned by
each Builder within the Subdivision (the “Builder Property”) as are
reasonable or necessary to permit PCY, the Constructing Entity or
such other Builder to perform the Improvements work, provided that
neither PCY, the Constructing Entity nor such other Builder in so
doing shall unreasonably impair or interfere with the performance
of any work on the other Builders’ property.

 

(2)                      PCY
hereby creates and grants to each Builder (if it exercises its
Step-In Option), for the use of such Builder and its respective
successors, assigns, employees, agents, contractors and
subcontractors, such temporary non-exclusive easements and licenses
to enter upon the real property owned or controlled by PCY within
the Subdivision (the “PCY
Property”) as are reasonable or necessary to permit
such Builder to cause the completion of the construction of the
Improvements hereunder; provided that such Builder in doing so
shall unreasonably impair or interfere with the performance of any
work on the PCY Property by PCY.

 

(3)                      The
foregoing temporary easements and licenses granted to the Parties
shall automatically terminate and cease to be of any further force
or effect upon the earlier of: (a) the date upon which the entirety
of the Improvements shall be completed; and (b) as to a particular
Lot, the date upon which a Builder (as applicable) has obtained a
certificate of occupancy for the home constructed upon such
Lot.

 

 

 

74

 

 

(e) Warranty Work. Notwithstanding
that either PCY or another Builder has caused the completion of the
Improvements in accordance with the terms of this Agreement, PCY as
PM shall be responsible for performing or causing to be performed
the warranty work required to release any applicable warranty
surety or guaranty with the County or other applicable
Authority.

 

(f) Erosion Control. As a part of
the Improvements hereunder, PCY shall provide or cause to be
provided all erosion control and stormwater management services
required by all Authorities having jurisdiction for the performance
of the Improvements work hereunder, including, without limitation,
obtaining, maintaining, complying with and fulfilling the
obligations under, all required permits, licenses and approvals
from any Authority having jurisdiction in connection therewith
concerning stormwater runoff, sediment or erosion control, storm
drainage, or any other water or sediment discharge pertaining to
the Property (the “Stormwater Permit”),
including any and all requirements, conditions, restrictions or
other terms contained in such Stormwater Permit, such as, but not
limited to, surety requirements, treatment requirements, discharge
limitations and revegetation requirements.

 

(g) Force Majeure Delays. A delay
in or failure to perform any obligations required of PCY (or any
Builder exercising a step-in right) hereunder shall not constitute
a default to the extent such delay or failure is caused by Force
Majeure Delays and all times for performance shall be extended by
the number of days of Force Majeure Delays. "Force Majeure Delays" shall be
limited to acts of God, war, terrorism, fire, flood, earthquake,
hurricane, weather conditions, strike, delay or unavailability of
labor or materials, delay or unavailability of utilities, delays in
obtaining governmental approvals to the extent not caused by the
party seeking approval, moratoria, injunctions, orders or
directives of any court or governmental body, or other actions of
third parties (but not including financial inability) which,
despite the exercise of reasonable diligence, the Party required to
perform is unable to prevent, avoid or remove. Within thirty (30)
days after the cessation of the occurrence of a Force Majeure
Delay, PCY (or Builder, as the case may be) will give notice
thereof specifying the cause of the Force Majeure Delay and the
number of days of the occurrence.

 

(h) Mechanic’s Liens. If
because of any act or omission (or alleged act or omission) of any
Party or its employees, agents, contractors or subcontractors under
this Agreement, any mechanic’s or other lien, charge or order
for the payment of money or other encumbrance shall be filed or
threatened against any of the other Parties hereunder and/or any
portion of its property (whether or not such lien, charge, order or
encumbrance is valid or enforceable as such), such party (the
“Indemnifying
Party”) shall at its own cost and expense, cause the
same to be discharged of record or bonded within thirty (30) days
after the assertion or the filing thereof; and the Indemnifying
Party shall indemnify, defend and save harmless the other parties
(the “Indemnified
Parties”) against and from all costs, liabilities,
suits, penalties, claims and demands, including reasonable
attorneys’ fees, resulting therefrom; provided, however, that
any loss, cost, damage or expense to which the Indemnified Parties
shall be entitled under this Section shall be limited to out of
pocket losses, costs, damages or expenses (including, however any
punitive or consequential losses, costs, damages or expenses or
lost profits actually paid by an indemnified party to a contractor
or subcontractor pursuant to such a mechanic’s lien claim),
but none of the Indemnified Parties shall be entitled to recover
from the other any of its punitive or consequential losses, costs,
damages or expenses or lost profits as a result of any failure by
the Indemnifying Party to have complied with its obligations under
this Section. If the Indemnifying Party fails to comply with the
foregoing provisions, the other Party or Parties shall have the
option of discharging or bonding any such lien, charge, order or
encumbrance, and the Indemnifying Party shall reimburse the other
party or parties for all costs, expenses and other sums of money in
connection therewith with interest at the rate of 10% per annum
thereon promptly upon demand.

 

 

75

 

 

(i) Insurance. From and after the
Effective Date, PCY shall obtain and maintain, at its expense, and
shall cause each contractor constructing any Improvements to obtain
and maintain: (a) workman’s compensation insurance as may be
required pursuant to the provisions of applicable law; and (b)
comprehensive general liability insurance in an amount of at least
$1,000,000 per occurrence and $2,000,000 in the
aggregate

 

(j) Service Agreements. PCY may
only amend or terminate either of the Service Agreements in
accordance with the process set forth in the Service Agreements.
PCY shall deliver to Builders copies of any written default notice
sent by PCY to a Constructing Entity within five (5) business days
after PCY’s transmission thereof to a Constructing Entity,
and shall deliver to Builders copies of any default notice received
by PCY from a Constructing Entity within five (5) business days
after PCY’s receipt thereof.

 

7. Self Help Remedy.

 

(a) In the event that
PCY defaults in the performance of its obligations to cause any
applicable Improvement or Improvements to be Substantially Complete
within 10 months after the date of the occurrence of the initial
closing under a Builder’s Purchase Agreement, after any
applicable notice and cure period, subject to Force Majeure Delays
and any other extension rights granted to PCY by that
Builder’s Purchase Agreement, and PCY thereafter fails to
timely cure such default in accordance with the terms hereof, the
following provisions shall apply. The Builder under whose Builder
Purchase Agreement PCY has defaulted, at its option, shall have the
right, but not the obligation, to step into the rights of PCY as
the PM under the Service Agreements and take control of the
construction of the Improvements as hereinafter provided (the
“Uncompleted
Improvements”) in accordance with the terms of this
Agreement by delivering written notice of such election to PCY and
the other Builders; provided, however, that notwithstanding any
provision in any Purchase Agreement to the contrary, upon the
receipt of such notice, Richmond American Homes of Colorado, Inc.
(if it is then a Builder hereunder and the owner of property in the
Subdivision) may exercise such right (first and ahead of the other
Builders) on behalf of all of the Builders (the “Richmond Step-In
Option”) by delivering written notice of such election
to PCY and the other Builders and, if Richmond fails to do so
within fifteen (15) days after PCY’s uncured default, then
the Builder under whose Builder Purchase Agreement PCY has
defaulted shall have the right to exercise such right (the
“Builder Step-in
Option”). Seller represents and warrants that every
currently existing and future Builder Purchase Agreement with
respect to the acquisition of unfinished lots provides for Richmond
to have the first right to step-in as described in the immediately
preceding sentence, and the provision for such first right to
step-in will not be modified without Richmond’s prior
consent, which consent may be withheld in Richmond’s sole
discretion if Richmond is then a Builder hereunder. If Richmond
does not timely exercise the Richmond Step-in Option, then the
other Builders shall have the right to exercise an option to
step-in and select the Exercising Builder (hereinafter defined) to
act on behalf of all such Builders to complete the Improvements by
giving notice to PCY and the other Builders within fifteen (15)
days following the deadline for Richmond to exercise the Richmond
Step-In Option. In such event, (i) the Builder that exercises such
right, including Richmond if it is a Builder, as applicable (the
"Exercising
Builder") shall succeed to all of the rights and obligations
of PCY under this Agreement with respect to the applicable
Improvement or Improvements from and after the date such right is
exercised, including the right to obtain payment of Draw Requests
for the Construction Account to complete the Uncompleted
Improvements, and PCY shall assign to Exercising Builder all of
PCY's right, title and interest, in and to the applicable Service
Agreement between PCY and the CAB and/or Rangeview for the
applicable Improvement or Improvements, but the Exercising Builder
shall not assume any responsibility for or otherwise have any
liability for any such obligations prior to such date or for any of
the acts or omissions of PCY, and the obligation to pay the costs
of the Improvements, including Cost Overruns, shall remain the sole
responsibility of PCY even if the costs exceed the amounts in the
Construction Account, (ii) PCY shall have no further rights or
obligations under this Agreement after the date such right is
exercised (except as otherwise set forth herein, with PCY in all
events remaining responsible for all costs of the Improvements and
to cooperate and assist if and as needed to help the Exercising
Builder complete the applicable Improvements) and that PCY shall
not be released of any other liability relating to this Agreement
or the Purchase Agreements that may accrue or arise on or before
such date, (iii) to the extent the same are not owned by any third
party, PCY shall assign to Exercising Builder, on an "as is" basis
without any representations or warranties, all of PCY's right,
title and interest if any, in, to and under the construction plans
and specifications for the Improvements, and if same are owned by a
third party PCY shall be obligated and responsible to secure the
rights needed to use same from such third parties or to pay the
costs incurred to replace the same, and (iv) PCY and Builders shall
take all action reasonably required to permit the Exercising
Builder to act as the PM under the applicable Service Agreement to
complete the construction of the Uncompleted Improvements. In such
event, PCY and the Exercising Builder shall give notice to the
applicable Constructing Entity that PCY has assigned the applicable
Service Agreement to the Exercising Builder hereunder and that the
Exercising Builder has assumed the position of PM under the
Applicable Service Agreement and PCY shall take all action
necessary to permit the Exercising Builder act as the PM under the
Service Agreement, including the administration and processing of
Draw Requests from the Construction Account for the payment of
construction costs of the Uncompleted Improvements as identified in
Draw Requests in accordance with the terms hereof. The Exercising
Builder shall be entitled to a construction coordinator’s fee
in an amount equal to 5% of the costs which are the subject of each
Draw Request and which PCY shall pay within 30 days after the
Exercising Builder’s delivery of an invoice therefor to
PCY.

 

 

76

 

 

(b) Effective as of the
date upon which an Exercising Builder exercises its Step-In Option,
PCY shall be deemed to have assigned to the Exercising Builder: (A)
any construction contracts entered into by PCY on its own behalf
for the completion of any Improvements (“Work Contracts”), if any, to the
extent that they pertain to such Uncompleted Improvements, (B) all
of PCY’s agreements with any utility providers to the extent
that they pertain to such Uncompleted Improvements, and (C) The
Service Agreement between PCY and Rangeview and/or the CAB, as
applicable. PCY will cause the Service Agreements to be assignable
to a Builder. The Exercising Builder shall also have the right to
take such actions as may reasonably be necessary or desirable to
obtain the County’s, or any other applicable Authority having
jurisdiction, initial acceptance of any such Uncompleted
Improvements that are completed by the Exercising Builder and which
the County, or such other Authority, is required to accept, subject
to the applicable developer’s warranty. Additionally, PCY
will execute such additional reasonable certifications, documents
or agreements as may be required to confirm the foregoing
assignments to the Exercising Builder and to enable the Exercising
Builder to obtain such agreement by the County, or any other such
applicable Authority having jurisdiction, to initially accept such
Uncompleted Improvements so completed by the Exercising Builder;
provided, however, the Exercising Builder shall have no obligation
to replace any surety previously delivered by PCY to the County or
other applicable Authority having jurisdiction for the Uncompleted
Improvements.

 

(c) In the event the
Exercising Builder takes over construction coordination of
Improvements as PM under a Service Agreement, Exercising
Builder’s assumption of the construction coordination of the
Improvements is done only as an accommodation to the Parties and
that, except as expressly set forth in this Agreement, Exercising
Builder shall have no responsibility, liability or obligation with
respect to (and the Parties hereby covenant not to sue Exercising
Builder for, and hereby release the Exercising Builder from, all
liability and claims relating to or arising from) the design,
engineering, construction or completion of the Improvements, any
damage, loss or injury to any of the parties or otherwise related
to any action or inaction of Exercising Builder in connection with
this Agreement, or any defect in the materials or workmanship
pertaining to the Improvements, except for any “Exercising
Builder Covered Liability,” as hereinafter defined.
“Exercising Builder Covered Liability” means the
following matters for which Exercising Builder shall be liable to
the other Parties in connection with its performance as Exercising
Builder hereunder: (a) any damage, loss or injury arising from the
willful misconduct, bad faith, recklessness or illegal acts of the
Exercising Builder in performing or failing to perform hereunder,
or (b) damage, loss or injury arising from the fraudulent conduct
of Exercising Builder; provided, however, that any damages to which
the other Parties shall be entitled to recover for any Exercising
Builder Covered Liability shall be limited to out-of-pocket losses,
costs, damages or expenses, and the other Parties shall not be
entitled to recover from the Exercising Builder any punitive or
consequential losses, costs, damages or expenses or lost profits as
a result of, or in connection with, any Exercising Builder Covered
Liability. Exercising Builder makes no representation or warranty
with respect to the Improvements, and shall have no liability for
any defect in the materials or workmanship pertaining thereto. The
Parties hereby agree to look solely to the contractors engaged to
construct and complete the Improvements for any contractual
violation, indemnity, warranty or guarantee relating to the
Improvements. Upon completion of the Improvements, Exercising
Builder shall assign to the Parties (if any, and to the extent
assignable and without any representation or warranty whatsoever),
on a non-exclusive basis, any contractual rights received by
Exercising Builder from the contractors that construct or complete
any portion of the Improvements, including, without limitation, all
rights related to any indemnities, guaranties and/or warranties
received from such contractors.

 

 

77

 

 

8. Default
and Termination.

 

(a) Default. An “Event of
Default” by a Party shall be deemed to have occurred
hereunder if such Party shall materially breach or materially fail
to perform, observe or meet any material covenant or condition made
in this Agreement and such breach or failure shall not be cured
within 30 days after delivery of notice to the defaulting party
from the non-defaulting party or, in the event such breach or
failure cannot be cured within 30 days, if the defaulting party
shall not have commenced, within said period, to cure such breach
or default and be diligently pursuing such cure unto
completion.

 

(b) Remedies. Upon any Event of
Default by any Party hereunder, the other Parties shall, except as
may otherwise expressly be provided herein, have all rights and
remedies as are expressly provided herein (including, without
limitation, and as may be applicable, the right to exercise its
respective Step-In Option in accordance with, and subject to the
limitations provided in, Section 7), as the case may
be.

 

9. Termination. This Agreement
shall terminate upon the date that is one hundred fifty (150)
days following the later to occur of (i) payment of the final
Draw Request, and (ii) the lien-free completion of the
Improvements and the initial construction acceptance of the
Improvements by the Authority that will own such Improvements or
component thereof. Notwithstanding the foregoing, PCY’s
obligations with respect to warranty work under Section 6(e) above,
shall survive termination of this Agreement.

 

10. Applicable Law. This Agreement
shall be governed in accordance with the laws of the state of
Colorado, and venue for any court action hereunder shall lie
exclusively in a court of competent jurisdiction in Arapahoe
County, Colorado.

 

11. Headings; Use of Certain Words.
The headings used herein are for convenience only and are not to be
used in interpreting this Agreement. The words "hereof", "herein",
"hereto", "hereunder" or "herewith" as used in this Agreement shall
refer to this Agreement as a whole and not merely to the sentence
or paragraph in which such word is used.

 

12. Notices. All notices required
to be given hereunder shall be in writing and shall be addressed as
follows, or as any party may subsequently designate by written
notice to the others. All notices shall be delivered by facsimile
or pdf transmittal, recognized overnight delivery service, or
hand-delivery and shall be deemed effective upon: (i) the
successful transmission of a facsimile or pdf transmittal, provided
that a conforming copy is concurrently deposited for delivery by
first class U.S. mail, postage prepaid, or by hand delivery;
(ii) the first business day after deposit with a recognized
overnight delivery service; or (iii) upon receipt by
hand-delivery:

 

To
PCY:                
PCY Holdings, LLC

Attention:
Mark Harding

34501
E. Quincy Ave.

Bldg.
34, Box 10

Watkins,
Colorado 80137

Telephone:
(303) 292-3456

Facsimile:
(303) 292-3475

E-mail:
mharding@purecyclewater.com

 

 

78

 

 

 

with a
copy
to:                    
Fox Rothschild LLP

1225
17th
Street, Suite 2200

Denver,
CO 80202

Attention: Rick
Rubin, Esq.

Telephone: (303)
292-1200

Email:
rrubin@foxrothschild.com

 

To
Builders:                                At
the notice address set forth on their respective signature
pages

 

Each of
the above-listed addressees may change its address and number for
notice purposes under this Section by delivering to the
other addressees a written notice of change of address and number,
in a manner specified in this Section. However, no such
change of address or number shall be effective against another
addressee until written notice of such change is actually received
by such addressee.

 

13. Successors and Assigns. The
terms of this Agreement shall inure to the benefit of and bind the
parties hereto and their respective successors and permitted
assigns. Except as expressly contemplated herein, no party may
assign its rights or obligations hereunder without the prior
written consent of the other parties hereto.

 

14. Potential Additional Parties.
The parties acknowledge and agree that, with regard to any
third-parties (collectively, the "Additional Builders") with whom
PCY is under contract to sell any residential building lots, then,
at PCY's option, each of such Additional Builders may be added to
and become a party under this Agreement at any time provided
written notice of such Additional Builders is given to all Builders
at the time of such Joinder. In such event, each such Additional
Builder shall be deemed to be a "Builder" as such term is defined
herein, shall have all rights of a "Builder" under this Agreement.
Additional Builders will be added to this Agreement by execution of
a Joinder that is substantially in the form set forth as
Exhibit C attached
hereto.

 

15. No Waiver of Rights / Remedies
Cumulative. No delay or failure on the part of any party to
exercise any right, power or privilege under this Agreement shall
operate as a waiver thereof, and no single or partial exercise of
any right, power or privilege shall preclude any other or further
exercise thereof or the exercise of any other power or right, or be
deemed to establish a custom or course of dealing or performance
between the parties hereto. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided
at law or in equity.

 

16. Amendment. This Agreement may
not be amended except by a written agreement executed by all
Parties to this Agreement.

 

17. Severability. If any term or
provision of this Agreement or the application thereof to any
person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than
those to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by
law.

 

 

79

 

 

 

18. Attorneys' Fees.
Notwithstanding anything to the contrary contained herein, any
party prevailing in any litigation brought pursuant to or arising
under this Agreement shall recover its costs of court, fees and
reasonable attorneys' fees from the non-prevailing party as
determined by any court of competent jurisdiction.

 

19. Time of Essence. Time is of the
essence in the observance and performance of the terms and
obligations of this Agreement.

 

20. No Partnership. The provisions
of this Agreement are not intended to create, nor shall they in any
way be interpreted as creating, a joint venture, partnership or any
other similar relationship between the parties.

 

21. No Recording. Neither this
Agreement nor any memorandum hereof shall be recorded in the real
property records of Arapahoe County, State of
Colorado.

 

22. Counterparts. This Agreement
may be executed in several counterparts, each of which shall be
deemed an original, and all of such counterparts together shall
constitute one and the same instrument. Receipt of an executed
signature page to this Agreement by facsimile or other electronic
transmission shall constitute effective delivery
thereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

80

 

IN
WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.

PCY:

 

PCY HOLDINGS LLC,

a Colorado limited liability company

 

By:            

Pure
Cycle Corporation, a Colorado corporation

Its
sole member

 

By: ____________________________________

Name: _________________________________

Title: __________________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81

 

BUILDER:

 

RICHMOND
AMERICAN HOMES OF COLORADO, INC, a Delaware
corporation

 

 

By:
____________________________________

      Linda
Purdy, Vice President

 

 

 

Address
for Notice:

 

Richmond American
Homes of Colorado, Inc.

Attention: Linda
Purdy, Vice President

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Linda.Purdy@mdch.com

Telecopier No.:
(720) 977-4707

 

with a
copy in each case to:

 

M.D.C.
Holdings, Inc.

Attention: Drew
Rippey

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Drew.Rippey@mdch.com

Telecopier No.:
(720) 482-8558

 

and

 

M.D.C.
Holdings, Inc.

Attention: Linda
Skultety

4350
South Monaco Street

Denver,
Colorado 80237

E-Mail:
Linda.Skultety@mdch.com

Telecopier No.:
(303) 488-4954

 

 

82

 

BUILDER:

 

Taylor
Morrison of Colorado, Inc.,

a Colorado corporation

 

By:
____________________________________

Name:
_________________________________

Title:
__________________________________

 

Address
for Notice:

 

Taylor
Morrison of Colorado, Inc.

1420
West Canal Court, Suite 170

Littleton,
Colorado 80120

Attention:
Phillip Cross

Telephone:
(303) 325-2426

E-mail: pcross@taylormorrison.com

 

With a copy
to:                   
Brier, Irish, Hubbard & Erhart
P.L.C.

2400
East Arizona Biltmore Circle, Suite 1300

Phoenix,
AZ 85016

Attn:
Jeff Hubbard

Telephone:
(602) 522-0160

Facsimile:
(602) 522-3945

E-mail: jhubbard@bihlaw.com

 

       
           
           
            With copy
to:                                

 

Tony Meier at same address

E-mail: tmeier@bihlaw.com

 

 

 

83

 

EXHIBIT A

OFF-SITE IMPROVEMENTS

 

 

 

 

 

 

 

84

 

EXHIBIT B

 Instructions

 

1.            

Draw Requests from the
Construction Account. PCY shall
process and administer Draw Requests for the payment of
construction costs in accordance with the terms of this
Agreement and these Instructions.

 

(a) On a periodic
basis, PCY shall submit to the Builders a copy of the request that
is to be submitted by PCY to the Constructing Entity for payment of
Construction Funds from the Construction Account to pay for:
(i) the design, engineering, permitting and all necessary
governmental approvals to construct the Improvements; and
(ii) the costs to construct the Improvements including, but
not limited to, the costs for any related landscaping, signage,
fencing and fixtures associated with the Improvements (each a
"Draw Request").
Each Draw Request shall identify whether it pertains to CAB
Infrastructure or Rangeview Infrastructure and the amount of the
requested payment, and shall be certified to be true and correct by
PCY and accompanied by: (A) a description of the basis for
disbursement (i.e., an application for progress payments based on
the status of completion of the applicable Improvements, or that
substantial completion or final acceptance, as applicable, has been
obtained); (B) conditional lien waivers (conditioned only upon
payment of the amount due) from all contractors covered thereunder
for the amounts to be paid pursuant to the Draw Request, and to the
extent not previously provided unconditional lien waivers from
contractors paid from prior Draw Requests; (C) PCY’s estimate
of the percentage of completion of the Improvements; and (D)
PCY’s estimate of the cost to complete the
Improvements.

 

(b)   If a
Builder objects to all or any portion of the Draw Request, such
Builder shall deliver written notice of such objection (a
“Objection Notice”) to PCY and the other Builders on or
before the fifth (5th) business day after PCY delivers the Draw
Request to the Builders. A Builder may only object to a Draw
Request in the event that (i) the documents or statements required
by Section (a) above in conjunction with a Draw Request were not
properly delivered, are incomplete or contain material errors, (ii)
the remaining cost to complete the Improvements after payment of
the Draw Request will exceed the amount of the Construction Funds
in the Construction Account which objection will be deemed cured
upon the deposit by PCY of additional Construction Funds into the
Construction Account to cover the excess amount, or (iii) the work
is not work that is to be completed pursuant to this Agreement. If
a Builder delivers an Objection Notice, the Builders and PCY shall
meet within three (3) business days after receipt of the Objection
Notice to review and discuss any such Objection Notice. If the
parties are unable to resolve any Objection Notice within five (5)
business days of such meeting, the matter shall be resolved
pursuant to the dispute resolution provisions set forth in Section
5 of these Instructions. Any Objection Notice shall specifically
identify the amount of the requested payment to which the objection
applies and the basis for such objection. No Objection Notice shall
be valid if it does not identify specific obligations. If a Builder
fails to deliver an Objection Notice within five (5) business days
after PCY delivers the Draw Request to the Builders, such Builder
shall be deemed to have waived any objection to such Draw
Request.

 

 

85

 

 

 

(c) PCY shall submit
the Draw Request to the applicable Constructing Entity for payment
as follows: (i) if no Builder has delivered a timely Objection
Notice within five (5) business days after PCY delivers the Draw
Request to the Builders, the Draw Request shall be deemed approved
and PCY shall submit the Draw Request to the applicable
Constructing Entity for payment in full of the amount identified in
such Draw Request out of the Construction Account to the
contractors and payees identified in such Draw Request; or
(ii) if a Builder has delivered a timely Objection Notice, the
portion of the payment identified in such Draw Request to which no
Builder has objected in an applicable Objection Notice shall be
deemed approved and PCY shall submit such portion to the applicable
Constructing Entity for payment out of the Construction Account to
the contractors and payees identified in such Draw Request; and
(iii) if a Builder has delivered a timely Objection Notice, the
amount of the portion of the payment identified in such Draw
Request to which a Builder has objected in an applicable Objection
Notice but which has been resolved pursuant to Section 5 of these
Instructions below, or if the Builder otherwise withdraws its
objection by notice to PCY and the other Builders, shall be paid by
the applicable Constructing Entity out of the Construction Account
to the contractors and payees identified in such Draw
Request.

 

(d)           Within
ten (10) days after PCY gives the Builders a Notice of Substantial
Completion for any Improvement (a “Completion Notice”), a
representative of PCY and each Builder shall inspect such
Improvements, and shall jointly prepare and agree upon a
“punch-list” of items for the applicable Improvement
which is uncompleted or which require repair or other corrective
work (the “Punch List
Items”). PCY shall, with reasonable diligence, use
commercially reasonable efforts as PM to cause the completion of
the Punch List Items.

 

(e)           On
or before fifteen (15) days after payment of the final Draw
Request, PCY shall deliver to each Builder copies of full and final
unconditional lien waivers executed by all contractors and
suppliers for all labor and materials paid for pursuant to the
final Draw Request.

 

3.         Limitation
of Liability. PCY shall not be liable for the loss or
impairment of the Construction Funds due to failure or insolvency
of any financial institution which may be the depository of the
Construction Funds.

 

4.         Expenses.
PCY shall pay the fees, charges and expenses of PCY, including, but
not limited to, reasonable attorneys' fees, expenses and other
out-of-pocket costs as may be incurred by PCY to administer and
process Draw Requests under this Agreement.

 

 

 

86

 

 

 

5. Expedited
Dispute Resolution.

 

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

 

(b) Standards
of Conduct. The Parties agree that with respect to all
aspects of the expedited dispute resolution process contained
herein they will conduct themselves in a manner intended to assure
the integrity and fairness of that process. To that end, if an
Expedited Dispute is submitted to expedited dispute resolution
process, the Parties agree that they will not contact or
communicate with the Informal Arbitrator who was appointed with
respect to any Expedited Dispute either ex parte or outside of the contacts and
communications contemplated by these Instruction, and the Parties
further agree that they will cooperate in good faith in the
production of evidence in a prompt and efficient manner to permit
the review and evaluation thereof by the other
Parties.

 

 

 

87

 

EXHIBIT C

FORM OF JOINDER

 

JOINDER BY BUILDER

THIS
JOINDER TO CONSTRUCTION DISBURSEMENT AGREEMENT (this
“Joinder”), dated as of _________________, 201___ (the
“Joinder Date”), is made by
_____________________________________________________
(“Purchaser”), for the benefit of PCY Holdings, LLC, a
Colorado limited liability company (“PCY”) and each
other Builder that is a party to that Offsite Infrastructure
Agreement dated _______________, 201__.

 

WHEREAS, PCY, as
seller, and Purchaser, as purchaser, are parties to that certain
Contract for Purchase and Sale of Real Estate (Sky Ranch) dated
___________, 201__ (as amended and assigned from time-to-time, the
“Purchase Agreement”), with respect to the sale of
certain residential building lots located within the Sky Ranch
Development in Arapahoe County, Colorado, and

 

WHEREAS, PCY has
agreed to construct certain infrastructure improvements that are
necessary to serve the lots identified under the Purchase Agreement
and fund the cost of such construction by establishing a
construction disbursement agreement. PCY and Purchaser desire that
Purchaser become a party to the Offsite Infrastructure
Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, PCY and Purchaser hereby agree as
follows:

 

1.            

Any capitalized
terms not defined in this Joinder shall have the meanings ascribed
thereto in the Offsite Infrastructure Agreement, which is hereby
incorporated by reference.

 

2.            

By execution of
this Joinder, Purchaser becomes a party to the Offsite
Infrastructure Agreement for all purposes and shall be entitled to
exercise all of the rights of a Builder thereunder, subject to the
following limitations _______________________________.

 

3.            

This Joinder shall
inure to the benefit of the Builders and their successors and
assigns under the Construction Disbursement Agreement.

 

IN
WITNESS WHEREOF, Purchase has executed this Joinder as of the
Joinder Date.

 

___________________________________,

a
__________________________________

 

 

By:           

 

Name:                      

 

Title:                      

 

 

 

88

 

EXHIBIT D

SERVICE AGREEMENTS

 

 

 

89

 

Schedule 8 - Homebuyer Disclosure

 

Provisions to include in Homebuyer Disclosure:

 

Special District Disclosure. In accordance with the
provisions of C.R.S. §38-35.7-101(1), Seller provides the
following disclosure to Purchaser: SPECIAL
TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS
THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE
TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH
DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND TAX
TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE
RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH
INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. PURCHASERS
SHOULD INVESTIGATE THE SPECIAL TAXING DISTRICTS IN WHICH THE
PROPERTY IS LOCATED BY CONTACTING THE COUNTY TREASURER, BY
REVIEWING THE CERTIFICATE OF TAXES DUE FOR THE PROPERTY, AND BY
OBTAINING FURTHER INFORMATION FROM THE BOARD OF COUNTY
COMMISSIONERS, THE COUNTY CLERK AND RECORDER, OR THE COUNTY
ASSESSOR.

 

Source of Water Disclosure. In accordance with the
provisions of C.R.S. §38-35.7-104, Seller provides the
following disclosure to Purchaser:

 

THE
SOURCE OF POTABLE WATER FOR THIS REAL ESTATE IS:

 

 

A
WATER PROVIDER, WHICH CAN BE CONTACTED AS FOLLOWS:

 

 

NAME:                                 

Rangeview
Metropolitan District

 

ADDRESS:                                            

c/o
Special District Management Services, Inc.

 

141
Union Blvd., Suite 150

 

Lakewood,
Colorado 80228

 

WEB
SITE:                                            

www.rangviewmetro.org

 

TELEPHONE:                                            

303-987-0835

 

SOME WATER PROVIDERS RELY, TO VARYING DEGREES, ON NONRENEWABLE
GROUND WATER. YOU MAY WISH TO CONTACT YOUR PROVIDER TO DETERMINE
THE LONG-TERM SUFFICIENCY OF THE PROVIDER’S WATER
SUPPLIES.

 

Oil, Gas, Water and Mineral Disclosure. THE SURFACE ESTATE
OF THE PROPERTY MAY BE OWNED SEPARATELY FROM THE UNDERLYING MINERAL
ESTATE, AND TRANSFER OF THE SURFACE ESTATE MAY NOT NECESSARILY
INCLUDE TRANSFER OF THE MINERAL ESTATE OR WATER
RIGHTS.

 

 

 

90

 

 

THIRD
PARTIES MAY OWN OR LEASE INTERESTS IN OIL, GAS, OTHER MINERALS,
GEOTHERMAL ENERGY OR WATER ON OR UNDER THE SURFACE OF THE PROPERTY,
WHICH INTERESTS MAY GIVE THEM RIGHTS TO ENTER AND USE THE SURFACE
OF THE PROPERTY TO ACCESS THE MINERAL ESTATE, OIL, GAS OR
WATER.

 

SURFACE
USE AGREEMENT. THE USE OF THE SURFACE ESTATE OF THE PROPERTY TO
ACCESS THE OIL, GAS OR MINERALS MAY BE GOVERNED BY A SURFACE USE
AGREEMENT, A MEMORANDUM OR OTHER NOTICE OF WHICH MAY BE RECORDED
WITH THE COUNTY CLERK AND RECORDER.

 

OIL AND
GAS ACTIVITY. OIL AND GAS ACTIVITY THAT MAY OCCUR ON OR ADJACENT TO
THE PROPERTY MAY INCLUDE, BUT IS NOT LIMITED TO, SURVEYING,
DRILLING, WELL COMPLETION OPERATIONS, STORAGE, OIL AND GAS, OR
PRODUCTION FACILITIES, PRODUCING WELLS, REWORKING OF CURRENT WELLS,
AND GAS GATHERING AND PROCESSING FACILITIES.

 

ADDITIONAL
INFORMATION. PURCHASER IS ENCOURAGED TO SEEK ADDITIONAL INFORMATION
REGARDING OIL AND GAS ACTIVITY ON OR ADJACENT TO THE PROPERTY,
INCLUDING DRILLING PERMIT APPLICATIONS. THIS INFORMATION MAY BE
AVAILABLE FROM THE COLORADO OIL AND GAS CONSERVATION
COMMISSION.

 

Radon. The U.S. Environmental
Protection Agency, the U.S. Department of Health and Human
Services, and the U.S. Public Health Service have expressed concern
over the presence of radon gas in homes. Prolonged exposure to high
levels of indoor radon or its progeny may affect the health of
residents. Although such conditions may exist at the Community,
Seller has made no investigation to determine whether radon gas is
or will be present in the home or affecting the premises, and the
Community makes no representation or warranty as to (a) the
presence or lack of radon or hazardous environmental conditions nor
(b) the effect of radon or any such condition on the Community.
Seller recommends that the Buyer, at his/her sole expense, conduct
his/her own investigation and consult with such experts as the
Purchaser deems appropriate in order to determine the level of
radon gas in the home. By signing below Purchaser acknowledges that
he or she has read the foregoing Disclosure Statement, and hereby
releases Seller from any and all liability with respect to the
above matters.

 

Soils Report. The soils within
the State of Colorado are variable, and include both expansive
soils/bedrock and compressible soils which may result in shifting
or other movement of basement floors or foundations, or otherwise
result in cracking of concrete floors, slabs, patios, the
foundation, or other components of a home. In some instances, soil
movements can result in more damage to the structure or other parts
of the improvements.

 

The
suitability of the soil of the lots contained within the Community
was tested by __________. As is common in the State of Colorado,
the soil conditions in the Community include variable bedrock and
soil conditions, including [expansive soils/bedrock and
compressible soils]. Therefore, the soils in the Community can
heave or settle, and cause cracking in foundations, slabs, walks,
drives, etc. All lots contain filled ground, which depth varies
from lot to lot. The fill soils placed during site grading were
compacted and tests of the degree of compaction were performed
under the supervision of a licensed Professional engineer. The
tests indicated this fill was compacted sufficiently to support the
houses.

 

 

 

91

 

 

 

The
findings are contained in the report entitled [Title of Soils
Report] dated _________, 20__ (the “Soils Report”).
Purchaser has been provided a summary report of the Soils Report
(the “Summary Soils Report”), in addition to a copy of
the Colorado Geologic Survey Special Publication 43: A Guide To
Swelling Soils For Colorado Homebuyers and Homeowners which details
the problems associated with expansive soils and the building
methods to address problems associated with construction on such
soils and suggestions for care and maintenance as required by
Colorado Revised Statutes § 6-6.5-101, or any subsequent or
additional law hereafter adopted. It is very important that
Purchasers read and understand the summary soils report and Special
Publication 43, and understand and accept the care and maintenance
responsibilities that Purchaser must assume. [Purchaser should also
review the soils addendum of their Purchase Agreement.] Purchasers
are encouraged to review a copy of the Soils Report which is
available for review in the Sales Office. If you do not understand
this information, you should contact a soils engineer of your
choice to help interpret and explain the conditions on your lot,
and/or legal counsel. For further information concerning soil
conditions, you may also contact ________________ for information
regarding the Soils Report.

 

Protective Covenants Disclosure. THE PROPERTY IS, OR WILL BE
PRIOR TO CLOSING, SUBJECT TO PROTECTIVE COVENANTS THAT ARE
ADMINISTERED AND ENFORCED BY THE SKY RANCH METROPOLITAN DISTRICT
NO. 5. THE PROTECTIVE COVENANTS MAY PROHIBIT THE OWNER FROM MAKING
CHANGES TO THE PROPERTY WITHOUT AN ARCHITECTURAL REVIEW BY THE
DISTRICT AND THE APPROVAL OF THE DISTRICT. PURCHASERS OF PROPERTY
WITHIN THE SKY RANCH DEVELOPMENT SHOULD REVIEW AND CAREFULLY READ
THE PROTECTIVE COVENANTS.

 

 

92

 

 

 

 

 

Schedule 9 - Amenity Development Agreement And Escrow
Instructions

 

93

 

 

 

DRAFT
10/30/17

 

 

AMENITY DEVELOPMENT AGREEMENT

 

AND ESCROW INSTRUCTIONS

 

 

 

 

Sky Ranch

 

THIS
AMENITY DEVELOPMENT AGREEMENT (this “Agreement”)
is made as of the ___ day of _________, 20____ (the
“Effective
Date”), by and between PCY Holdings, LLC, a Colorado
limited liability company (“Developer”),
and Richmond American Homes of Colorado, Inc., a Delaware
corporation (“Richmond”),
and Taylor Morrison of Colorado, Inc., a Colorado corporation
(“Taylor
Morrison”) and any other purchaser
(“Additional
Builder”) of any of the Builder Lots shown on the
Concept Plan (as defined below) that executes a joinder to this
Agreement and acquires the rights, liabilities and obligations
hereunder with respect to such Builder Lots (collectively the
“Builders”
and each a “Builder,”).
Developer and Builders are sometimes individually referred to as a
“Party”
and collectively referred to as the “Parties.”
Land Title Guarantee Company, as Escrow Agent, executes this
Agreement to acknowledge its agreement to act as the escrow agent
in accordance with the Section 5 and the instructions set forth on
Attachment 1
attached hereto.

 

RECITALS

 

A.           

Developer owns
certain real property located in Arapahoe County (the
“County”),
Colorado which Developer is developing as part of the Sky Ranch
master planned residential community (“Development”).
The Development is being subdivided in several subdivision filings
and developed in phases.

 

B.           

Each Builder has
entered into a separate Contract for Purchase and Sale of Real
Estate with the Developer (each a “Purchase
Agreement” and collectively the “Purchase
Agreements”), under which each Builder is acquiring
from Developer a portion of the Development consisting of single
family residential building lots (collectively, the
“Builder
Lots”). The approximate number and location of the
Builder Lots to be acquired by each Builder under the terms of the
Purchase Agreements are generally depicted on the attached as
Exhibit
A (“Concept
Plan”).

 

C.           

Pursuant to the
Purchase Agreements, Developer and the Builders have agreed to
construct or cause to be constructed certain park improvements and
amenities within the three park areas designated on the Concept
Plan (the “Parks”).
The improvements to be installed and constructed within the Parks
(the “Improvements”)
will be identified and described as provided in this Agreement. At
such time as the plans and specifications have been approved for
the Improvements by the County or other applicable governmental
authority, the Improvements and the applicable Plans will be set
forth on Exhibit B to
be attached hereto by amendment to this Agreement executed by the
Parties.

 

 

 

94

 

 

 

D.           

The Parties now
desire to enter into this Agreement in order to set forth the terms
and conditions under which the Improvements will be constructed and
paid for by the Parties, together with such other matters as are
set forth hereinafter.

 

AGREEMENT

 

NOW
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Developer and
Builders agree as follows:

 

1. Incorporation of Recitals. The
Parties hereby acknowledge and agree to the Recitals set forth
above, which are incorporated herein by this
reference.

 

2. Responsibilities of Developer and
Builders.

 

2.1 Generally. Developer shall
construct, or cause to be constructed, the Improvements in the
manner set forth hereinafter. Developer shall coordinate,
administer and oversee (a) the preparation and filing of all
applications, filings, submittals, plans and specifications,
budgets, timetables and other documents pertaining to construction
and installation of the Improvements, and (b) the construction and
installation of the Improvements. Developer will engage or cause to
be engaged consultants, contractors and subcontractors who will be
responsible for the design and construction of the Improvements and
suppliers who will be responsible for supplying labor, materials,
equipment, services and other work in connection with the
construction of the Improvements (“Service
Provider(s)”), pursuant to the Contracts (as
hereinafter defined).

 

2.2 Comply with Legal Requirements.
Developer will comply with all terms and conditions of applicable
law in performing its obligations under this Agreement. Developer
will provide to each Builder copies of all notices filed by the
Developer with the County, and all other applicable governmental or
quasi-governmental entities or agencies (the “Approving
Authorities”) related to the Improvements and shall,
within ten (10) business days of receipt thereof, provide notice to
each Builder (together with copies of all notices received by
Developer) of any notice received by Developer alleging any failure
to comply with any applicable laws, ordinances, rules, regulations,
or lawful orders of public authorities bearing on the construction
of the Improvements.

 

2.3 Bonds and Assurances.
Developer, as part of the Costs, shall provide to all applicable
Approving Authorities any bonds, assurance agreements, or other
financial assurances if any are required with respect to the
construction of the Improvements. Developer shall, as part of the
Costs, provide to all Approving Authorities all warranties, bonds
and other financial assurances required to obtain permits for, and
the preliminary and final acceptance and approval of, the
Improvements. Builder shall take all commercially reasonable
actions and execute all documents reasonably requested by Developer
in its efforts to obtain releases of all such warranties, bonds,
and other financial assurances upon final acceptance of the
Improvements by the Approving Authorities.

 

2.4 Taxes, Fees and Permits.
Developer or the Service Providers shall pay all applicable sales,
use, and other similar taxes pertaining to the construction of the
Improvements, and shall secure and pay for all approvals,
easements, assessments, charges, permits and governmental fees,
licenses and inspections necessary for proper construction and
completion of the Improvements, except as provided otherwise in
this Agreement. Developer and the Service Providers shall not defer
the payment of any use taxes pertaining to the Improvements except
as may be authorized under law or agreement with the applicable
taxing authorities.

 

 

 

95

 

 

2.5 Dedications. Developer shall
timely make all conveyances and dedications of the Improvements if
and as required by the Approving Authorities, free and clear of all
liens and encumbrances.

 

2.6 Indemnity. Developer shall
indemnify, defend and hold harmless the Builders and their owners,
employees, members, managers, directors, officers, agents,
affiliates, successors and assigns (each a “Builder
Indemnitee” and collectively, the “Builder
Indemnitees”) for, from and against all claims,
demands, liabilities, losses, damages (exclusive of special,
consequential, punitive, consequential and lost profits damages),
costs and expenses, including but not limited to court costs and
reasonable attorneys’ fees, arising out of material damage
caused by Developer’s negligence or willful misconduct in the
performance of the construction of the Improvements.
Notwithstanding the foregoing, Developer shall not be obligated
under this Agreement to indemnify the Builder Indemnitees to the
extent such liabilities result from the act, negligence or willful
misconduct of any Builder Indemnitee.

 

2.7 Insurance. Developer shall
procure and maintain, and shall cause the Service Providers to
procure and maintain, the insurance described in Exhibit C
attached hereto during the construction of the Improvements and any
warranty work performed on the Improvements.

 

2.8 Independent Contractor.
Developer is an independent contractor and neither Developer nor
its employees are entitled to worker’s compensation benefits
or unemployment insurance benefits through any Builder as a result
of performing under this Agreement. The Developer is responsible
for and obligated to pay all assessable federal and state income
tax on amounts earned or paid under this Agreement.

 

3. Construction of
Improvements.

 

3.1 Plans and Specifications.
Developer shall diligently finalize, process and obtain approval of
the Plans for the Improvements from the applicable Approving
Authorities to the extent required by such entities. Upon receipt
of the approved Plans for the Improvements, Developer will furnish
a copy of such Plans to the Builders. Exhibit B
shall then be completed to identify the Plans and
Improvements.

 

3.2 Construction Standard.
Developer shall cause the applicable Improvements to be constructed
in accordance with the Construction Standard and shall obtain
preliminary and final acceptance thereof by the applicable
Approving Authorities. As used herein, the term “Construction
Standard” means construction and installation of the
Improvements in a good, workmanlike and lien-free manner and in
substantial conformity with the Plans (as may be modified pursuant
to the terms hereof), and the applicable requirements of the
Approving Authorities.

 

 

 

96

 

 

3.3 Contracts. Developer and
contractors of Developer shall contract for all of the work and
materials related to the design and construction of the applicable
Improvements. Developer shall bid, pursue, negotiate, agree to and
execute contracts and agreements with Service Providers for the
work and materials comprising the Improvements (each a
“Contract”
and collectively, the “Contracts”),
based upon forms that Developer deems necessary or appropriate in
its commercially reasonable discretion; provided, however, that
Developer shall deliver written notice to the Builders after it
enters into any Contract, which notice shall identify the Service
Provider(s). Developer shall use good faith efforts to cause each
Contract, in addition to other matters, to (i) allow for the
automatic assignment, without need for further action, of all of
Developer’s rights (including, without limitation, the
warranty and indemnity provisions thereof) to a Builder on a
non-exclusive basis in the event of replacement of Developer
pursuant to the terms of this Agreement and identify the Builders
as intended third-party beneficiaries of the Contract,
(ii) require the Service Providers to provide a warranty on
materials and labor supplied by such Service Provider for a period
coterminous with any warranty period required by the applicable
Approving Authorities for Improvements to be dedicated to an
Approving Authority, but in no event less than one (1) year for any
Improvement, (iii) require the Service Provider to perform its work
in accordance with the Construction Standard, (iv) require the
Service Provider to indemnify, defend, and hold harmless Developer
from all claims and causes of action arising from the negligent
acts or omissions or intentional misconduct of the Service Provider
providing construction services or its employees or agents, (v)
permit retainage in an amount of at least five percent (5%) of the
amounts payable to the Service Provider, until the work to be
completed pursuant to such Contract has been substantially
completed and, if applicable, granted initial acceptance by the
applicable Approving Authority; (vi) provide the Developer the
right, but not the obligation, to pay subcontractors and suppliers
of the Service Provider directly or by joint check, and (vii)
provide for no limitation on remedies against the Service Provider
for a default to the extent customary, except the prohibition of
recovery of punitive damages. Upon receipt of written request from
a Builder, Developer shall deliver a copy of each Contract to such
Builder.

 

3.4 Construction Schedule.
Developer shall cause construction of the Improvements to be
completed as follows:

 

3.4.1 Completion.
The Improvements will be completed in two phases (each a
“Phase”)
consisting of the construction of the Improvements applicable to
the Central Park (as identified on the Concept Plan) during the
first Phase (the “Phase 1 Park
Improvements”) and the construction of the
Improvements applicable to the North Park and the South Park (as
identified on the Concept Plan) during the second Phase (the
“Phase 2 Park
Improvements”). Developer shall cause Substantial
Completion of each component of the Phase 1 Park Improvements to
occur on the date that is ninety (90) days after substantial
completion of the Builder Lots that are designated as Takedown 1 as
depicted on the Concept Plan, provided, however, if such date for
completion would require landscape installation between the during
the months of October through April of any year, landscape
installation may be delayed until May 31 of such year (the
“Phase 1 Substantial
Completion Date”), and cause Substantial Completion of
the Phase 2 Park Improvements to occur on or before the date that
is one (1) year after the Phase 1 Substantial Completion Date
(referred to collectively as the “Substantial
Completion Dates”); provided, however, subject to
Section 3.4.2
below. Developer may cause the Improvements to be constructed and
installed as Developer deems necessary, in the Developer’s
commercially reasonable discretion, to coordinate such Improvements
with the development of other portions of the Development.
Notwithstanding anything to the contrary, the Developer shall have
no obligation to install landscaping during the months of October
through April.

 

 

 

97

 

 

3.4.2 Force
Majeure. Notwithstanding any contrary provision of this
Agreement, the Substantial Completion Dates and the time for
performance of Developer’s other obligations under this
Agreement shall be extended by a period of time equal to any period
that such performance or progress in construction of the
Improvements is delayed due to any Dispute, as defined below, acts
or failure to act of any Approving Authority, strike, riot, act of
war, act of terrorism, act of violence, weather, act of God, or any
other act, occurrence or non-occurrence beyond Developer’s
reasonable control (each,
an “Force Majeure
Delay”). Within thirty (30) days after the cessation
of the occurrence of a Force Majeure Delay, PCY will give notice
thereof specifying the cause of the Force Majeure Delay and the
number of days of the occurrence.

 

3.5 Substantial
Completion.

 

3.5.1 Definition
of Substantial Completion. “Substantial
Completion” of the Improvements (or applicable
component thereof) shall be deemed to have occurred when all of the
following have occurred with respect to the Improvements (or
applicable component thereof):

 

(a) Developer has
substantially completed or corrected all punchlist items provided
by the Approving Authorities affecting the Improvements (or
applicable component thereof) in accordance with Section 3.5.2
below;

 

(b) Subject to
Section 3.5.1(c)
below, the Improvements (or applicable component thereof) have been
installed pursuant to the Construction Standard;

 

(c) Any Improvements
(or applicable component thereof) that are intended to be dedicated
to or accepted by an Approving Authority shall have been inspected
and preliminarily accepted by the applicable Approving Authority
(subject to the Government Warranty Period (as defined
below); 

 

(d) No mechanics’
or materialmen’s liens shall have then been filed with
respect to the Improvements and lien waivers have been obtained
from the Service Providers that constructed the Improvements (or
applicable portion thereof), or the Developer has obtained a bond
to insure over any such mechanics’ or materialmen’s
liens.

 

3.5.2 Notice
to Builders. Developer shall notify the Builders in writing
when Substantial Completion of the Improvements (or applicable
component thereof) has been achieved, except for minor punch-list
work and the date(s) and time(s) the Approving Authorities, if any,
will inspect such Improvements (or applicable component thereof).
Within ten (10) days after receipt by Builder of such notice from
the Developer, Developer and Builders shall jointly inspect the
Improvements (or applicable component thereof) and produce a
punchlist (“Builders
Punchlist”). The Builders Punchlist may not contain
any items other than incomplete Improvements or components thereof,
deficient or defective construction of the Improvements or
components thereof, or failure to construct the Improvements or
components thereof in accordance with the plans approved by the
applicable Approving Authorities. Builders shall not be able to
object or provide Builders Punchlist items for any portion of the
Improvements previously inspected by the Builders, except in the
case of construction defects. If the Parties are unable to agree
upon a Builders Punchlist within five (5) days after the joint
inspection described above, then any dispute related to such
punchlist shall be submitted to the expedited dispute resolution
procedures in accordance with Section 6 below. Developer will
attempt to provide Builders with copies of any inspection reports
or punchlists received from the Approving Authorities in connection
with the inspection of the Improvements, and Developer shall be
responsible to correct punchlist items from the Approving Authority
and items set forth on the Builders Punchlist. Notwithstanding
anything to the contrary including any Builders Punchlist, if an
Approving Authority grants preliminary approval or construction
acceptance to any of the Improvements, then it shall conclusively
be presumed that such Improvement or work was completed in
accordance with the plans approved by the Approving Authorities,
subject to completion of the punchlist items provided by the
Approving Authority. If an item is not identified as incomplete on
the Builders Punchlist, then it shall be presumed that such
Improvement was completed in accordance with the plans approved by
the Approving Authorities. Disputes regarding Builders Punchlist
items and matters will be resolved pursuant to the expedited
dispute resolution procedures set forth in Section 6 of this
Agreement.

 

 

 

98

 

 

3.5.3 Correction
of Punchlist Items. Developer shall cause any punchlist
items received from the Approving Authorities and any items on the
Builders Punch List that are the same as the items on the Approving
Authorities punchlist to be corrected within the time required by
the County or other applicable Approving Authorities, and shall
cause any other punchlist items appearing on the Builders Punch
List to be corrected within 90 days, subject to Force Majeure
Delay.

 

3.6 Self-Help Remedy.

 

3.6.1 Notice
of Default. If Developer: (a) breaches its obligation under
this Agreement to complete or cause the completion of any
Improvement in accordance with the Plans or by the applicable
Substantial Completion Date (as extended by any Force Majeure
Delay); (b) otherwise breaches any material obligation under this
Agreement (c) fails to comply with any material provision of its
Contracts with Service Providers beyond any applicable express
notice or cure periods; or (d) files a petition for relief in
bankruptcy or makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as
they become due (each a “Bankruptcy
Event”), then any Builder may deliver written notice
of the breach to Developer (a “Notice of
Default”). Each of the events set forth in Subsections
(a) through (d) inclusive of the preceding sentence shall be herein
referred to as a “Constructing Party
Default.” For any Constructing Party Default other
than a Bankruptcy Event, the Developer shall have thirty (30) days
after Developer’s receipt of the Notice of Default from any
Builder to cure the Constructing Party Default (the
“Cure
Period”); provided, however, if the nature of the
Constructing Party Default is such that it cannot reasonably be
cured within thirty (30) days, the Cure Period shall be deemed
extended for a reasonable period of time (not to exceed an
additional ninety (90) days) so long as Developer commenced in good
faith and with due diligence to cause such Constructing Party
Default to be remedied. If Developer does not cause the cure of the
Constructing Party Default within the Cure Period (as may be
extended pursuant to the preceding sentence, and subject to Force
Majeure Delays), or if a Bankruptcy Event occurs (either, an
“Event of
Default”), then Richmond (acting as
“Substitute
Constructing Party”) may elect to assume and take over
the construction of the Improvements by providing written notice to
Developer of such appointment within 15 days following the Event of
Default (the “Assumption
Notice”). If Richmond does not deliver an Assumption
Notice within such 15 day period, the remaining Builders may meet
and appoint one of the other Builders or another qualified third
party to serve as the Substitute Constructing Party. Substitute Constructing Party’s assumption
of the construction of the Improvements shall not include the
assumption of any liability for acts or omissions occurring prior
to the Assumption Notice, or payment of any “Constructing
Party Cost Overruns” (as defined below) incurred prior to the Assumption Notice, which
Constructing Party Cost Overruns shall remain the sole
responsibility of the Developer, or receipt of any cost savings
prior to the Assumption Notice; provided, however, that the
Substitute Constructing Party shall be entitled to an
administrative fee in an amount equal to two percent (2%) of the
remaining Costs (as defined below) actually paid, which
administrative fee shall be included in the Constructing Party Cost
Overruns. The Builders’ election to
appoint a Substitute Constructing Party to assume and take over the
construction of the Improvements and to exercise and enforce the
rights and obligations set forth in Section 3.6.2 below shall
thereafter be the Builders’ sole and exclusive remedy except
as provided in Section 3.6.2 and in Sections 3.7 and 3.8 with
respect to work performed by PCY.

 

 

 

99

 

 

 

3.6.2 It
is expressly acknowledged and agreed that in the event the
Substitute Constructing Party takes over the construction of the
Improvements as contemplated hereby, Substitute Constructing
Party’s assumption of the
construction of the Improvements is done only as an
accommodation to the Parties and that, except as expressly set
forth in this Agreement, Substitute Constructing Party shall have
no responsibility, liability or obligation with respect to (and the
Parties hereby covenant not to sue Substitute Constructing Party
for, and hereby release the Substitute Constructing Party from, all
liability and claims relating to or arising from) the design,
engineering, construction or completion of the Improvements, the
funds collected and disbursed under this Agreement, any damage,
loss or injury to any of the parties or otherwise related to any
action or inaction of Substitute Constructing Party in connection
with this Agreement, or any defect in the materials or workmanship
pertaining to the Improvements, except for any “Substitute
Constructing Party Covered Liability,” as hereinafter
defined. “Substitute
Constructing Party Covered
Liability” means the following matters for which
Substitute Constructing Party shall be liable to the other Parties
in connection with its performance as Substitute Constructing Party
hereunder: (a)  any damage, loss or injury arising from the
willful misconduct, bad faith, recklessness or illegal acts of the
Substitute Constructing Party in performing or failing to perform
hereunder, or (b) damage, loss or injury arising from the
fraudulent conduct of Substitute Constructing Party; provided,
however, that any damages to which the other Parties shall be
entitled to recover for any Substitute Constructing Party Covered
Liability shall be limited to out-of-pocket losses, costs, damages
or expenses, and the other Parties shall not be entitled to recover
from the Substitute Constructing Party any punitive or
consequential losses, costs, damages or expenses or lost profits as
a result of, or in connection with, any Substitute Constructing
Party Covered Liability. Substitute Constructing Party makes no
representation or warranty with respect to the Joint Improvements,
and shall have no liability for any defect in the materials or
workmanship pertaining thereto. The parties hereby agree to look
solely to the contractors engaged to construct and complete the
Improvements for any contractual violation, indemnity, warranty or
guarantee relating to the Improvements. Upon completion of the
Improvements, Substitute Constructing Party shall assign to the
parties hereto (to the extent assignable and without any
representation or warranty whatsoever), on a non-exclusive basis,
the contractual rights received from the contractors that construct
or complete any portion of the Joint Improvements, including,
without limitation, all rights related to any indemnities,
guaranties and/or warranties received from such
contractors.

 

 

 

100

 

 

 

3.6.3 Assumption
Right. If the Builders deliver an Assumption Notice, then:
(i) Developer shall cooperate to allow the Substitute Constructing
Party to take over and complete the incomplete Improvements,
including the execution and delivery to the Substitute Constructing
Party of such agreements, documents or instruments as may be
reasonably necessary to assign to the Substitute Constructing Party
all Contracts with third parties pertaining to the Improvements;
(ii) Developer shall remain responsible for all Constructing Party
Cost Overruns (as hereinafter defined) and Costs incurred through
the date that the Assumption Notice if given, but Developer shall
be relieved of all further obligations under this Agreement with
respect to the completion of the incomplete Improvements subsequent
to such assumption; (iii) Developer shall remain liable for
its negligence or willful misconduct, and any indemnification
obligations specified herein incurred prior to the date of such
assumption; and (v) Substitute Constructing Party shall assume and
perform all obligations under all Contracts for Improvements which
Substitute Constructing Party will complete to the extent such
obligations are to be performed after the date of delivery of the
Assumption Notice; and (vi) Substitute Contracting Party shall
succeed to all of the Developer’s rights under Section 5 of
this Agreement pertaining to the right to receive and collect
payment for Costs for completing the construction of the
Improvements. The Substitute Constructing Party shall be entitled
to recover the Constructing Party Cost Overruns incurred by the
Substitute Constructing Party from the Developer. In the event of
an Assumption Notice, the Substitute Constructing Party shall
indemnify, defend and hold harmless the Developer and its members,
managers, shareholders, employees, directors, officers, agents,
affiliates, successors and assigns for, from and against all
claims, demands, liabilities, losses, damages (exclusive of
special, consequential, punitive, speculative or lost profits
damages), costs and expenses, including but not limited to court
costs and reasonable attorneys’ fees, that accrue after the
date of the Assumption Notice and arise out of the Substitute
Constructing Party’s Covered Liability or gross negligence in
the completion of the Improvements, and this indemnity shall not
apply to any claims, demands, liabilities, losses, damages, costs,
expenses, acts or omissions arising or accruing before the date of
the Assumption Notice. The obligations under this Section shall
survive the termination or expiration of this
Agreement.

 

3.7 Warranty Periods.

 

3.7.1 Government
Warranty Period. The Approving Authorities may require a
warranty period after the Substantial Completion with respect to
certain Improvements (a “Government Warranty
Period”). In the event defects in the Improvements to
which a governmental warranty applies become apparent during the
Government Warranty Period, then Developer shall coordinate the
repairs with the applicable Approving Authorities and cause the
Service Provider(s) who performed the work or supplied the
materials in which the defect(s) appear to complete such repairs
or, if such Service Providers fail to correct such defects,
otherwise cause such defects to be repaired to the satisfaction of
the Approving Authorities. Any costs and expenses incurred in
connection with any repairs or warranty work performed during the
Government Warranty Period (including, but not limited to, any
costs or expenses incurred to enforce any warranties against any
Service Providers) that cause the Budgeted Costs to be exceeded
shall be borne by Developer and shall be included in the
Constructing Party Cost Overruns, unless such defect or damage was
caused by Builder or its contractors, subcontractors, employees, or
agents, in which event Builder shall pay all such costs and
expenses to the extent caused by Builder or its contractors,
subcontractors, employees, or agents.

 

 

 

101

 

 

 

3.7.2 Non-Government
Warranty Period. Developer warrants (“Non-Government
Warranty”) to each Builder that each Improvement to
which a Governmental Warranty Period does not apply shall have been
constructed in accordance with the Plans for one (1) year from the
date of Substantial Completion of the applicable Improvement (the
“Non-Government
Warranty Period”). If the Builders deliver written
notice to Developer of breach of the Non-Government Warranty during
the Non-Government Warranty Period, then Developer shall coordinate
the corrections with the Builders and cause the Service Provider(s)
who performed the applicable work or supplied the applicable
materials to complete such corrections or, if such Service
Providers fail to make such corrections, otherwise cause such
corrections to be made. Any costs and expenses incurred in
connection with a breach of the Non-Government Warranty that cause
the Budgeted Costs to be exceeded shall be borne by Developer
(including, but not limited to, any costs or expenses incurred to
enforce any warranties against Service Providers), and shall be
included in the Constructing Party Cost Overruns, unless such
breach was caused by a Builder or its contractors, subcontractors,
employees, or agents, in which event the Builder shall pay all such
costs and expenses to the extent caused by the Builder or its
contractors, subcontractors, employees, or agents. EXCEPT AS
EXPRESSLY PROVIDED IN SECTION 3.7.1 OR 3.7.2, THE
DEVELOPER PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND
TO BUILDER IN RELATION TO THE IMPROVEMENTS, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF HABITABILITY,
MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE, AND
EXPRESSLY DISCLAIMS ALL OF THE SAME AND SHALL HAVE NO OBLIGATION TO
REPAIR OR CORRECT ANY DEFECT IN IMPROVEMENTS FOR WHICH NO CLAIM IS
ASSERTED DURING THE APPLICABLE WARRANTY PERIOD. The preceding
sentence does not affect, alter or modify any Service
Provider’s obligations to repair or correct any defects in
Improvements and shall not be construed as a limitation on the
Builders’ statutory rights or remedies, if any, which may not
be modified by contract.

 

3.8 Liens. Developer shall pay, or
cause to be paid, when due, all liens and claims for labor and/or
materials furnished for the construction of the Improvements
pursuant to this Agreement to prevent the filing or recording by
any third party of any mechanics’, materialmen’s or
other lien, stop notice or bond claim or any attachments, levies or
garnishments (collectively “Liens”)
involving the Improvements.

 

4. Costs of
Improvements.

 

4.1 Definition of Costs. As used
herein, the term “Costs”
shall mean all hard and soft costs incurred in connection with the
design (including all engineering expenses), construction and
installation of the Improvements, including, but not limited to,
costs of labor, materials and suppliers, engineering, design and
consultant fees and costs, blue printing services, construction
staking, demolition, soil amendments or compaction, any processing,
plan check or permit fees for the Improvements, engineering
services required to obtain a permit for and complete the
Improvements, costs of surety and compliance with all applicable
laws, costs of insurance required by this Agreement, costs of any
financial assurances, any corrections, changes or additions to work
required by the Approving Authorities or necessitated by site
conditions, municipal, state and county taxes imposed in connection
with construction of the Improvements, any warranty work, and any
other costs incurred in connection with the performance of the
obligations of Developer or the Substitute Constructing Party (as
applicable) hereunder to complete the Improvements.

 

 

 

102

 

 

 

4.2 Budget. Upon completion of the
Plans there will be attached hereto by an amendment as Exhibit D an
estimate of the Costs to construct the Improvements (the
“Budget”).
The Costs identified on the Budget are referred to herein as
“Budgeted
Costs.” The Builders shall pay or cause to be paid
pursuant to Article 6 below a share of
the Budgeted Costs not to exceed One Million Two Hundred Thousand
Dollars ($1,200,000.00) (the “Maximum Builder
Costs”).

 

4.3 Cost Overruns. Notwithstanding
anything in this Agreement to the contrary, the Developer shall pay
(i) all costs to correct any error or defect in the Plans that
cause the Costs to exceed the Maximum Builder Costs, and (ii) all
other costs and charges that cause the Costs to exceed the Maximum
Builder Costs (collectively, the “Constructing Party
Cost Overruns”). The Builders shall not have any
responsibility for Constructing Party Cost Overruns except that the
applicable Builder shall pay for such Constructing Party Cost
Overruns which occur as a result of that Builder’s breach of
its obligations under this Agreement or such Builder’s
actions.

 

4.4 Accounting. Developer shall
keep good and accurate books and records in sufficient detail to
allow the Costs to be calculated, which books and records shall be
made available for review (upon reasonable prior written notice) by
the Parties. Within thirty (30) days after Substantial Completion
of the Improvements, the Developer shall deliver to the Builders a
reasonably detailed final accounting of the Costs.

 

4.5 Progress Reports. Developer
shall, no less frequently than once per calendar quarter, provide
the Builders with a progress report setting forth the amount of
Costs expended to date, a list of Improvements completed to date,
and an estimate by a project manager of Developer of the status of
overall completion of the Improvements, in such form as Developer
deems reasonably appropriate.

 

5. Payment of Costs.

 

5.1 Payment.

 

5.1.1 Payment.
The Builders shall pay to Developer in the aggregate an amount
equal to the Maximum Builder Costs. Each Builder shall pay a
prorata portion of the Maximum Builder Costs that is equal to a
percentage of the Maximum Builder Costs that is calculated by
dividing the number of Builder Lots to be purchased by a Builder
under the terms of that Builder’s Purchase Agreement by the
total number of Builder Lots to be purchased by all of the Builders
in the first phase of the Development under the terms of all of the
Purchase Agreements. Based upon this calculation, each
Builder’s prorata share of the Maximum Builder Cost expressed
as a percentage (“Prorata
Share”) is as follows, subject to adjustment if the
total number or any Builder’s number of Builder Lots changes
as provided in Section 16.3 hereof:

 

 

 

103

 

 

 

 

	
 

	

# of Lot to be Purchased 

	

Total # of Lots in Development

	

Percentage

	

Richmond:

	

196

	

506

	

38.70%

	

Taylor Morrison:

	

161

	

506

	

31.80%

	

Additional Builder:

	

149

	

506

	

29.50%

 

 

Notwithstanding the
foregoing or anything else to the contrary contained in this
Agreement, and for the avoidance of doubt, the Parties acknowledge
and agree that in no event will the amount due from any individual
Builder exceed the dollar amount equal to the product of (a)
$1,200,000.00 multiplied by (b) such Builder’s Percentage
shown in the table above.

 

5.1.2  Escrow
Instruction. Within ten (10) business days after substantial
completion of the Builder Lots to be acquired by a Builder at its
first Closing under its Purchase Agreement, each Builder shall pay
its Prorata Share of that portion of the Maximum Builder Costs
equal to $750,000 to Escrow Agent (the “Initial
Payment”). On or before the date that is two hundred
seventy (270) days after the Phase 1 Substantial Completion Date,
each Builder shall pay to Escrow Agent its Prorata Share of (a) the
lesser of the remaining portion of the Maximum Builder Costs equal
to $450,000, or (b) the remaining portion of the Budgeted Costs
(the “Final
Payment”). For the purposes of this Agreement,
Developer shall be deemed an Additional Builder with respect to the
Pro Rata Share allocated above to the Additional Builder and its
obligations hereunder and Developer shall pay the Additional
Builder’s Prorata Share of the Initial Payment at the first
closing of lots under a Purchase Agreement and pay the Final
Payment on or before the date required above. If a Builder’s
Purchase Agreement terminates before such Builder has closed on the
purchase of any Builder Lots thereunder, then Developer will fund
such Builder’s Prorata Share to the extent required so that
there is not a shortfall in the Initial Payment or Final Payment
required hereunder. When another builder executes a joinder to this
Agreement, the Additional Builder shall be substituted for
Developer as the Additional Builder and shall be responsible for
paying the Pro Rata Share of the Initial Payment and the Final
Payment allocated to the Additional Builder and the obligations of
a Builder hereunder and Developer will be reimbursed from such
payments for any Initial Payment or Final Payment made by
Developer. Escrow Agent has executed this Agreement in order to
reflect its agreement with regard to the Escrowed Funds under this
Section 5. Pursuant to the request of Developer and the Builders,
Escrow Agent agrees to receive and accept the Initial Payment and
the Final Payment (collectively the “Escrowed
Funds”) upon and subject to the remaining terms and
conditions hereof. Developer (or the Substitute Contracting Party
who has been appointed pursuant to Section 3.6.1) is entitled to
draw upon the Escrowed Funds for reimbursement of invoices for
Costs incurred by Developer (or the Substitute Contracting Party)
in connection with the completion of the Improvements. In the event
that a Substitute Contracting Party is appointed pursuant to
Section 3.6.1, Developer and such Substitute Contracting Party
shall promptly give notice thereof to the Escrow Agent and such
Substitute Contracting Party shall thereafter have the rights of
the Developer under this Section 5.1.2 in connection with Draw
Requests to pay for Costs incurred by such Substitute Contracting
Party to complete the construction of the Improvements. The Escrow
Agent shall disburse amounts from the Escrowed Funds in accordance
with the following instructions. To the extent that any
Builder’s Purchase Agreement has be terminated at the time
any payment is due pursuant to this Section, Developer will make
such Builder’s payment, subject to reimbursement from a New
Builder as herein after defined:

 

 

 

104

 

 

 

 

(a) Submission
and Payment.
Developer may submit written draw requests
(“Draw
Requests”)
to the Builders and Escrow Agent from time to time. Draw Requests
must be accompanied by (i) copies of invoices from the third party
contractors and other Service Providers for the amounts to be
disbursed and (ii) shall include conditional lien waivers
and releases from Service Providers relating to work to paid for
from the current Draw Request, and to the extent not previously
provided, unconditional waivers and releases from such Service
Providers in the full amount shown on all conditional waivers and
releases previously submitted in connection with prior Draw
Requests for which payment has been made hereunder.

 

(b) Objection. Any portion of a
Draw Request that a Builder does not disapprove by written notice
to Developer and Escrow Agent within five (5) business days
following receipt thereof will be deemed approved. Builders may
only object to a Draw Request for the following reasons: (a) the
invoices to accompany the Draw Request were not properly delivered;
or (b) Builder has good cause to dispute the validity of the
invoice; or (c) the invoice is not for Costs incurred by Developer
in connection with the construction of the Improvements. Builders
shall deliver written notice of any objection (“Objection
Notice”) pursuant to the preceding sentence to Escrow
Agent and Seller within the five (5) business day period described
in the first sentence of this Section. If Escrow Agent and Seller
timely receive an Objection Notice, then Escrow Agent shall not be
authorized to disburse such disputed amount to Developer (but
Escrow Agent shall be authorized to disburse all other non-disputed
amounts to Developer) unless and until Escrow Agent receives
authorization to do so from the Parties. If Escrow Agent and
Developer timely receive an Objection Notice, then Builder and
Seller shall promptly meet and in good faith attempt to resolve all
objections and provide direction to Escrow Agent to disburse
mutually-acceptable amounts to the Developer. Any Objection Notice
shall specifically identify the amount of the requested payment to
which the objection applies and the basis for such objection. No
Objection Notice shall be valid if it does not identify specific
objections.

 

(c) Final Disbursement. Upon
Substantial Completion of the Improvements, Developer will submit a
Completion Notice to Escrow Agent and the Builders along with a
final Draw Request (which shall include an unconditional lien
waiver from all Service Providers, to the extent not previously
provided) with respect to any funds remaining in the Escrow
Account. If Escrow Agent is not in possession of an unresolved
Objection Notice, then Escrow Agent will pay any undisbursed
portion of the Escrow Funds then remaining in escrow to Developer.
If Escrow Agent receives an Objection Notice from a Builder in
accordance with this pertaining to Developer’s final Draw
Request, the Escrow Agent may hold such undisbursed Escrow Funds
until it receives joint written instructions from Developer and
such Builder directing Escrow Agent regarding the disbursement of
such amount, or Escrow Agent may proceed as permitted by the
General Provisions to this Agreement attached as Attachment 1
hereto.

 

(d) If the Developer
and Builders are unable to agree upon a resolution of an Objection
Notice within five (5) days after Developer’s receipt
thereof, then any dispute related to such Objection Notice shall be
submitted to the expedited dispute resolution procedures in
accordance with Section
6 below.

 

 

 

105

 

 

 

 

(e) Developer shall pay
all charges of Escrow Agent in acting hereunder, and such
reasonable attorneys' fees, expenses and other costs as may be
incurred by Escrow Agent in connection with the negotiation,
preparation and administration of this Agreement.

 

6. Expedited Dispute
Resolution.

 

6.1 Disputes Related to
Contracts, Draw Notices and Costs. Notwithstanding anything to the contrary herein,
disputes related to any objections to Contracts,
determination of Substantial Completion, Draw Notices or the amount
of or responsibility for Constructing Party Cost Overruns
(“Expedited
Disputes”) shall all be
resolved by CVL Engineers – Melinda Lundquist or if
such party is not available or unwilling to serve as arbitrator,
another reputable third party licensed engineer selected by
Developer and approved by Builders (“Informal
Arbitrator”). Within five (5) business days after a
Party delivers a Dispute Notice to all Parties, the Developer and
the Builder or Builders involved in the Expedited Dispute shall
deliver to the Informal Arbitrator a written statement of how such
Party believes the Expedited Dispute should be resolved, together
with reasonable supporting documentation of such position
(“Resolution
Notice”). Within ten (10) business days after receipt
of Resolution Notices from both such Parties, the Informal
Arbitrator shall approve one (1) of the Parties’ Resolution
Notice and shall deliver written notice of such approval to each
Party. The decision of the Informal Arbitrator shall be binding on
all Parties with respect to the applicable Expedited Dispute. All
Parties shall timely cooperate with the Informal Arbitrator in
rendering his or her decision. The Party that is not the prevailing
party in the resolution of any Expedited Dispute shall promptly pay
the Informal Arbitrator’s fee, and the prevailing
party’s other fees and costs of any such expedited dispute
resolution process and reasonable attorney’s fees. The term
“prevailing party” means the party who successfully
obtains substantially all of the relief sought by such party or is
successful in denying substantially all of the relief sought by the
other party. The Parties acknowledge that there is a benefit to the
Parties in having work done as expeditiously as possible and that
there is a need for a streamlined method of making decisions
described in this Section so that work is not delayed. A Party
shall not be entitled to recover from any other Party exemplary,
punitive, special, indirect, consequential or any other damages
other than actual damages (unless the Informal Arbitrator finds
intentional abuse or frustration of the arbitration process) in
connection with an Expedited Dispute.

 

6.2 Standards of Conduct. The
Parties agree that with respect to all aspects of the expedited
dispute resolution process contained herein they will conduct
themselves in a manner intended to assure the integrity and
fairness of that process. To that end, if an Expedited Dispute is
submitted to expedited dispute resolution process, the Parties
agree that they will not contact or communicate with the Informal
Arbitrator who was appointed with respect to any Expedited Dispute
either ex parte or outside
of the contacts and communications contemplated by this
Section 6, and the
Parties further agree that they will cooperate in good faith in the
production of evidence in a prompt and efficient manner to permit
the review and evaluation thereof by the other
Parties.

 

7. Progress Meetings. From and
after the date of this Agreement and until Substantial Completion
of the Improvements, the Parties shall cause their designated
representatives to meet within five (5) business days following a
request from a Party regarding the status of construction of the
Improvements, scheduling and coordination issues, engineering and
design issues, and other similar issues. Any Party may change its
designated representative under this Agreement at any time by
written notice to the other parties. The initial designated
representative for each Party for the purpose of this Section shall
be the individual listed on each Party’s respective signature
page attached hereto. All inquiries, requests, instructions,
authorizations, and other communications with respect to the
matters covered by this Agreement shall be made to such
representatives. Any Party may without further or independent
inquiry, assume and rely at all times that the representatives of
the other parties designated hereunder have the power and authority
to make decisions on behalf of such other parties, to communicate
such decisions to the other Party and to bind such Party by his
acts and deeds, unless otherwise notified in writing by the Party
designating the representative. Any Party may change its
representative under this Agreement at any time by written notice
to the other Parties.

 

 

 

106

 

 

 

8. Developer’s Stormwater Permit
responsibilities. Developer shall obtain and comply with all
necessary permits related to stormwater and erosion control from
all Approving Authorities, in relation to the construction, repair,
and maintenance of the Improvements.

 

9. Notices and Communications. All
notices, statements, demands, requirements, approvals or other
communications and documents (“Communications”)
required or permitted to be given, served, or delivered by or to
any Party or any intended recipient under this Agreement shall be
in writing and shall be given to the
addresses set forth in this Section 9
(“Notice
Address”). Communications
to a Party shall be deemed to have been duly given (i) on the
date and at the time of delivery if delivered personally to the
Party to whom notice is given at such Party’s Notice Address;
or (ii) on the date and at the time of delivery or refusal of
acceptance of delivery if delivered or attempted to be delivered by
an overnight courier service to the Party to whom notice is given
at such Party’s Notice Address; or (iii) on the date of
delivery or attempted delivery shown on the return receipt if
mailed to the Party to whom notice is to be given by first-class
mail, sent by registered or certified mail, return receipt
requested, postage prepaid and properly addressed to such Party at
such Party’s Notice Address; or (iv) on the date and at
the time shown on the facsimile or electronic mail message if
telecopied or sent electronically to the number or address
designated in such Party’s Notice Address and receipt of such
telecopy or electronic mail message is electronically confirmed
(provided, however, any notice of default from Developer to Builder
may not be delivered by electronic mail message and must be
delivered by facsimile or other delivery method set forth above).
The Notice Addresses for the Developer and Builder are as follows:

 

To
Developer:

PCY
Holdings, LLC

Attention:
Mark Harding

34501
E. Quincy Ave.

Bldg.
34, Box 10

Watkins,
Colorado 80137

Telephone:
(303) 292-3456

Facsimile:
(303) 292-3475

E-mail: mharding@purecyclewater.com

 

with a
copy to:

Fox
Rothschild LLP

1225
17th
Street, Suite 2200

Denver,
CO 80202

Attention: Rick
Rubin, Esq.

Telephone: (303)
292-1200

Email:
rrubin@foxrothschild.com

 

 

 

107

 

 

 

To
Richmond:

Linda
Purdy

Richmond American
Homes of Colorado, Inc.

4350
South Monaco Street

Denver,
Colorado 80237

Telephone:
(720)-977-3847

Facsimile: (720)
977-4707

Email:
linda.purdy@mdch.com

 

with a
copy to:

M.D.C.
Holdings, Inc.

4350
South Monaco Street

Denver,
Colorado 80237

Attn:
Drew Rippey

Telephone: (720)
977-3213

Facsimile: (720)
482-8558

Email:
Drew.Rippey@mdch.com

 

M.D.C.
Holdings, Inc.

4350 S.
Monaco Street

Denver,
CO  80237

Attn:                      Linda
Zimmerman Skultety

Senior
Paralegal – Real Estate

Telephone: 
720-977-3254

Facsimile:
303-488-4954

Email:
Linda.Skultety@mdch.com

 

To
Taylor Morrison:

Taylor
Morrison of Colorado, Inc.

1420
West Canal Court, Suite 170

Littleton, Colorado
80120

Attention: Phillip
Cross

Telephone:
(303) 325-2426

E-mail: pcross@taylormorrison.com

 

With
copy to Phillip Cross at same address

E-mail: pcross@taylormorrison.com

 

with a
copy
to:                                

Brier,
Irish, Hubbard & Erhart P.L.C.

2400
East Arizona Biltmore Circle, Suite 1300

Phoenix, AZ
85016

Attn:
Jeff Hubbard

Telephone: (602)
522-0160

Facsimile: (602)
522-3945

E-mail: jhubbard@bihlaw.com

 

With
copy to Tony Meier at same address

E-mail: tmeier@bihlaw.com

 

 

108

 

 

 

If to
Escrow Agent:

 

Land
Title Guarantee Company

Attn:
____________________

3033 E.
1st Ave. #600

Denver,
Colorado 80206

Fax#: 303-393-4959

Direct: 303-_______________

           
           
           
        Email: ___________@ltgc.com

 

10. Attorneys’ Fees. Except
as provided in Section
6.1, should any action be brought in connection with this
Agreement including, without limitation, actions based on contract,
tort or statute, the prevailing Party in such action shall be
awarded all costs and expenses incurred in connection with such
action, including reasonable attorneys’ fees. The provisions
of this Section shall survive the expiration or termination of this
Agreement.

 

11. Further Acts. Each of the
Parties hereto shall execute and deliver all such documents and
perform all such acts as reasonably necessary, from time to time,
to carry out the matters contemplated by this
Agreement.

 

12. No Partnership; Third Parties.
It is not intended by this Agreement to, and nothing contained in
this Agreement shall, create any partnership, joint venture or
other arrangement among the Parties hereto. No term or provision of
this Agreement is intended to, or shall, be for the benefit of any
person, firm, organization or corporation not a Party hereto, and
no such other person, firm, organization or corporation shall have
any right or cause of action hereunder.

 

13. Entire Agreement; Headings for
Convenience Only; Not to be Construed Against Drafter; No Implied
Waiver. This Agreement and all other written agreements
among the Parties constitute the entire agreement among the Parties
hereto pertaining to the subject matter hereof. No change or
addition is to be made to this Agreement except by written
amendment executed by the Parties. The
headings, captions and titles contained in this Agreement
are intended for convenience of
reference only and are of no meaning in the interpretation or
effect of this Agreement. This Agreement shall not be construed
more strictly against one (1) Party than another merely by virtue
of the fact that it may have been initially drafted by one (1) of
the Parties or its counsel, since all Parties have contributed
substantially and materially to the preparation hereof. No failure
by a Party to insist upon the strict performance of any term,
covenant or provision contained in this Agreement, no failure by a
Party to exercise any right or remedy under this Agreement, and no
acceptance of full or partial payment owed to a Party during the
continuance of any default by the other Party(ies), shall
constitute a waiver of any such term, covenant or provision, or a
waiver of any such right or remedy, or a waiver of any such default
unless such waiver is made in writing by the Party to be bound
thereby. Any waiver of a breach of a term or a condition of this
Agreement shall not prevent a subsequent act, which would have
originally constituted a default under this Agreement, from having
all the force and effect of a default.

 

 

 

109

 

 

 

14. Governing Law. This Agreement
is entered into in Colorado and shall be construed and interpreted
under the law of the State of Colorado without giving effect to
principles of conflicts of law which would result in the
application of any law other than the law of the State of
Colorado.

 

15. Severability. If any provision
of this Agreement is declared void or unenforceable, such provision
shall be severed from this Agreement and shall not affect the
enforceability of the remaining provisions of this
Agreement.

 

16. Assignment; Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective successors and permitted
assigns. Neither the Builders nor Developer may assign any of their
rights or obligations under this Agreement without the prior
written consent of the other Party(ies), which consent may be
withheld in each Party’s sole and absolute discretion;
provided, however, that:

 

16.1 A
Builder may assign, without consent, its rights under this
Agreement in full, but not in part: (i) to a third party which
acquires some or all of Builder’s Builder Lots, or (ii) to an
entity that controls, is controlled by, or under common control
with, Builder; provided further, however that Developer approves
the form of assignment, which approval shall be in
Developer’s reasonable discretion; and

 

16.2 Developer
may assign, without consent (but with prior notice to Builder), its
rights under this Agreement: (i) to an entity that controls, is
controlled by, or under common control with, Developer; (ii) to any
entity that acquires all or substantially all of the
Developer’s interests in the Builder Lots which Seller
reasonably believes has the financial ability and experience to
perform Seller’s obligations under this
Agreement.

 

16.3 Notwithstanding
the foregoing, to the extent that any Builder identified herein
does not acquire all of the Builder Lots to be acquired pursuant to
its Purchase Agreement, the Developer shall have the right to
unilaterally amend this Agreement by having any other builder (each
a “New
Builder”) which contracts to acquire any of the
Builder Lots from Developer to execute a joinder to this Agreement
which shall set forth a Prorata Share for such New Builder as
calculated pursuant to Section 5.1.1 hereof and in the form
attached as Exhibit
E.

 

17. Counterparts;
Copies of Signatures. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one (1) and
the same instrument. The signature pages from one (1) or more
counterparts may be removed from such counterparts and such
signature pages all attached to a single instrument so that the
signatures of all Parties may be physically attached to a single
document. This Agreement
may be executed and delivered by
facsimile or by electronic mail in portable document format (.pdf)
or similar means and delivery of the signature page by such method
will be deemed to have the same effect as if the original signature
had been delivered to the other party. Upon execution of
this Agreement by Developer and
the Builders, Developer shall provide a fully executed copy of
this Agreement to each Builder
for its records.

 

 

 

110

 

 

 

18. Time of the Essence. Time is of
the essence for performance or satisfaction of all requirements,
conditions, or other provisions of this Agreement, subject to any
specific time extensions set forth herein.

 

19. Computation of Time Periods.
All time periods referred to in this Agreement shall include all
Saturdays, Sundays and holidays, unless the period of time
specifies business days. If the date to perform any act or give a
notice with respect to this Agreement shall fall on a Saturday,
Sunday or national or state holiday, the act or notice may be
timely performed on the next succeeding day which is not a
Saturday, Sunday or a national or state holiday.

 

20. Remedies. Except as hereinafter
provided with regard to Expedited Disputes and the self-help remedy
under Section 3.6,
if any Party is in default of any of its obligations under this
Agreement beyond any applicable notice or cure periods, the other
Party(ies) may avail itself to any rights and remedies available at
law and equity, but may only recover its actual, out-of-pocket
damages (excluding any incidental, consequential, speculative,
punitive or lost profits damages) incurred as a result of such
default. For Expedited Disputes, the sole and exclusive remedy of
the Parties is set forth in Section 6 of this Agreement, and for
Developer Defaults, the sole and exclusive remedy of the Parties is
set forth in Section
3.6 of this Agreement.

 

21. Jury Waiver. TO THE EXTENT
PERMITTED BY LAW, THE PARTIES HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE,
RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THE PROVISIONS OF THIS AGREEMENT.

 

[SIGNATURE PAGE
FOLLOWS]

 

 

 

111

 

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

 

DEVELOPER:

 

PCY
HOLDINGS. LLC,

a
Colorado limited liability company

 

 

By:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

 

 

 

Designated
Representative:
______________________________________________________

 

 

 

 

 

 

ESCROW AGENT:

 

Land Title Guarantee Company

 

By:            

___________________________________

Name:                       

___________________________________

Title:                       

___________________________________

 

 

 

 

112

 

BUILDER:

 

Richmond American
Homes of Colorado, Inc.,

a
Delaware corporation

 

By:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

Designated
Representative:    

_____________________________________________________

 

 

 

 

BUILDER:

 

Taylor
Morrison of Colorado, Inc.,

a
Colorado corporation

 

By:           ___________________________________

Name:                      ___________________________________

Title:                      ___________________________________

 

 

Designated
Representative:  

_____________________________________________________

 

 

 

 

 

113

 

Exhibit
A

to

Amenity
Development Agreement

Showing
Central Park, North Park and South Park

 

 

 

 

 

 

 

 

 

114

 

Exhibit
B

to

Amenity
Development Agreement

 

(Improvements
and Plans)

 

 

 

115

 

 

116

 

 

 

117

 

Exhibit
C

to

Amenity
Development Agreement

 

(Required
Insurance)

 

Developer
or the Substitute Constructing Party (as applicable) shall maintain
the amounts and types of insurance described below and shall cause
the Service Providers to maintain such coverages from insurance
companies licensed to do business in the State of Colorado having a
Best’s Insurance Report Rating of A/VI or better covering the
risks described below:

 

A.            

Commercial General
Liability Insurance (including premises, operations, products,
completed operations, and contractual liability coverages) in an
amount not less than One Million Dollars ($1,000,000.00) per
occurrence, One Million Dollars ($1,000,000.00) personal injury and
advertising injury, and Two Million Dollars ($2,000,000.00) General
Aggregate.

 

B.            

Automobile
Liability Insurance for all motor vehicles operated by or for
Developer or Substitute Constructing Party, including owned, hired,
and non-owned autos, with minimum Combined Single Limit for Bodily
Injury and Property Damage of One Million Dollars ($1,000,000.00)
for each occurrence.

 

C.            

Workers
Compensation Insurance for all employees of Developer or Substitute
Constructing Party as required by law, to cover the applicable
statutory limits in the State of Colorado and employer’s
liability insurance with limits of liability of not less than One
Million Dollars ($1,000,000.00) for bodily injury by accident (each
accident) and One Million Dollars ($1,000,000.00) for bodily injury
by disease (each employee).

 

D.            

With respect to
Service Providers that provide professional services (e.g.,
engineers), professional liability insurance, including prior acts
coverage sufficient to cover any and all claims arising out of the
services, or a retroactive date no later than the date of
commencement of the services, with limits of not less than One
Million Dollars ($1,000,000.00) per claim and Two Million Dollars
($2,000,000.00) annual aggregate. The professional liability
insurance shall be maintained continuously during the term of the
Agreement and so long as the insurance is commercially reasonably
available, for a period not less than the Government Warranty
Period. The professional liability insurance required by this
paragraph shall not contain any exclusions or limitations
applicable to residential projects.

 

The
following general requirements shall apply to all insurance
policies described in this Exhibit.

 

1.            

All liability
insurance policies, except workers compensation insurance, shall be
written on an occurrence basis.

 

 

118

 

 

 

 

2.            

All insurance
policies required hereunder except Workers Compensation and
Employers Liability shall: (i) name the Parties as
“additional insureds” utilizing an ACORD form or
equivalent acceptable to Developer or Substitute Constructing Party
(as applicable), excluding, however, insurance policies of Service
Providers who provide professional services whose insurance
policies do not permit the designation of additional insureds;
(ii) be issued by an insurer authorized in the State of
Colorado; and (iii) provide that such policies shall not be
canceled or not renewed, nor shall any material change be made to
the policy without at least thirty (30) days’ prior
written notice to the Parties. Each additional insured endorsement
(or each policy, by reasonably acceptable endorsement) shall
contain a primary insurance clause providing that the coverage
afforded to the additional insureds is primary and that any other
insurance or self-insurance available to any of the additional
insureds is non-contributing. A waiver of subrogation endorsement
for the workers’ compensation coverage shall be provided in
favor of the Parties.

 

3.            

The liability
insurance policies shall provide that such insurance shall be
primary on a non-contributory basis.

 

4.            

Service Providers
shall provide Developer or Substitute Constructing Party (as
applicable) with certificates, or copies of insurance policies if
request by the Developer, evidencing the insurance coverages
required by this Exhibit in the certificate form described in
Item 2 of this
Exhibit, prior to the commencement of any activity or operation
which could give rise to a loss to be covered by such insurance.
Replacement certificates shall be sent to Developer or Substitute
Constructing Party (as applicable), as policies are renewed,
replaced, or modified.

 

5.            

The foregoing
insurance coverage must be maintained in force at all times during
the construction of the Improvements.

 

 

 

 

119

 

Exhibit
D

to

Amenity
Development Agreement

 

(Budget)

 

 

120

 

Exhibit
E

to

Amenity
Development Agreement

 

JOINDER BY BUILDER

 

THIS
JOINDER TO AMENITY DEVELOPMENT AGREEMENT (this
“Joinder”), dated as of _________________, 201___ (the
“Joinder Date”), is made by
_____________________________________________________
(“Purchaser”), for the benefit of PCY Holdings, LLC, a
Colorado limited liability company (“PCY”) and each
other Builder that is a party to that Amenity Development Agreement
dated _______________, 201__.

 

WHEREAS, PCY, as
seller, and Purchaser, as purchaser, are parties to that certain
Contract for Purchase and Sale of Real Estate (Sky Ranch) dated
___________, 201__ (as amended and assigned from time-to-time, the
“Purchase Agreement”), with respect to the sale of
certain residential building lots located within the Sky Ranch
Development in Arapahoe County, Colorado, and

 

WHEREAS, PCY has
agreed to construct certain park amenities and improvements for the
benefit of the lots identified under the Purchase Agreement to be
funded as provided in the Amenity Development Agreement. PCY and
Purchaser desire that Purchaser become a party to the Amenity
Development Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, PCY and Purchaser hereby agree as
follows:

 

1.            

Any capitalized
terms not defined in this Joinder shall have the meanings ascribed
thereto in the Amenity Development Agreement, which is hereby
incorporated by reference.

 

2.            

By execution of
this Joinder, Purchaser becomes a party to the Amenity Development
Agreement for all purposes and shall be entitled to exercise all of
the rights, and subject to all of the obligations, of the
Additional Builder thereunder. Purchaser shall pay the Additional
Builder’s

 

 

 

121

 

 

Prorata
Share of the Initial Payment and the Final Payment as required by
the terms of the Amenity Development Agreement.

 

3.            

This Joinder shall
inure to the benefit of the Builders and their successors and
assigns under the Amenity Development Agreement.

 

IN
WITNESS WHEREOF, Purchaser has executed this Joinder as of the
Joinder Date.

 

___________________________________,

a
__________________________________

 

 

By:           

 

Name:                      

 

Title:                      

 

122

 

ATTACHMENT 1

to

Amenity
Development Agreement

 

LAND
TITLE GUARANTEE COMPANY Initials
_______

GENERAL
PROVISIONS TO THE ESCROW AGREEMENT Initials
_______

 

1.

Notices.

 

Any
notices required or permitted to be given under the Escrow
Agreement shall have been deemed to have been served:

 

i.

one business day
after the notice is hand delivered with proof of receipt by the
addressee, or

 

ii.

one business day
after transmission by facsimile evidencing confirmation of receipt
by the receiving facsimile machine, or

 

iii.

one business day
after transmission by email evidencing confirmation of receipt by
the receiving email address, or

 

iv.

if reputable
overnight courier (such as United Parcel Service or Federal
Express) is used, on the immediately following business day after
notice is sent for overnight delivery, or

 

v.

if the United
States Mail is used, on the third business day after the notice is
deposited in the United States Mail, postage prepaid;

 

Provided in each
case such notice is addressed to the parties at the addresses given
on the first page of this Escrow Agreement.

 

2.

Reliance
on Notice.

 

Escrow
Agent may act in reliance upon any writing or instrument or
signature which Escrow Agent, in good faith, believes to be
genuine, and may assume the validity and accuracy of any statement
or assertion contained in such a writing or instrument, and may
assume that any person purporting to give any writing, notice,
advice or instruction in connection with the provisions hereof has
been duly authorized so to do.

 

3.

Laws Relating to Unclaimed
Funds.

 

Seller
and Buyer are hereby advised that unclaimed funds may be payable to
the State at some future date pursuant to unclaimed property laws,
and should Escrow Agent pay any such funds held in the Escrow
Deposit, Escrow Agent shall be released from all further
responsibility under the Escrow Agreement and shall not be liable
to any Party so long as such payment was made pursuant to
applicable law.

 

4.

Escrow
Deposit and Interest Earned on Escrow Deposit

 

a.

In the event that
the Escrow Deposit consists partly or entirely of money, then
during the period the Escrow Agent is in possession of the Escrow
Deposit, the money will be deposited in an FDIC insured institution
(the "Institution").

 

b.

Upon receipt of
written direction of the parties along with a completed W-9, funds
will be invested in an interest bearing account.

 

c.

Deposits of
$100,000.00 or more may be directed by the parties hereto to other
types of investments, or the Escrow Agent may invest the Escrow
Deposit in Repurchase Agreements for U.S. Treasury obligations or
other Federal agency issued securities.

 

d.

Escrow Agent shall
not be responsible for maximizing the yield on the Escrow Deposit.
Under no circumstances shall Escrow Agent be liable for loss of
funds due to bank or other Institution failure, including employees
or agents thereof, suspension or cessation of business, or any
action or inaction on the part of the bank or other institution, or
any delivery service transporting funds to and from the
institution.

 

e.

All parties hereto
shall execute and deliver to Escrow Agent all forms required by
federal, state or other governmental agencies relative to taxation
matters and Escrow Agent will file appropriate 1099 or other
required forms.

 

5.

Fees and Expenses of Escrow
Agent.

 

a.

The Escrow Agent
shall be entitled to reimbursement in full, or may demand payment
in advance, for all costs, expenses, charges, fees or other
payments made or to be made by Escrow Agent in the performance of
Escrow Agent's duties and obligations under the Escrow
Agreement.

 

b.

The parties to the
Escrow Agreement are jointly and severally liable for the payment
to Escrow Agent of all fees and expenses. Escrow Agent is hereby
authorized and directed to reimburse to itself in payment of fees
or expenses from any funds in the Escrow Deposit, whether from
principal or interest or both, at any time, and from time to time,
as the same may be due and owing.

 

c.

Escrow Agent is
hereby authorized to withhold any fees or expenses from any
disbursement or distribution of Escrow Deposit to any Party hereto
or to the Clerk of the Court upon interpleader.

 

d.

In the event that
the Escrow Deposit shall consist of documents only and not funds,
Escrow Agent may refuse to distribute any such documents or to
otherwise act under this Agreement until all accrued but unpaid
fees and expenses have been paid in full.

 

6.

Non-liability
of Escrow Agent.

 

a.

Escrow Agent shall
not be liable for any mistakes of fact, or errors of judgment, or
for any acts or omissions of any kind unless caused by the willful
misconduct or gross negligence of Escrow Agent.

 

b.

Escrow Agent shall
not be liable for any taxes, assessments or other governmental
charges which may be levied or assessed upon the Escrow Deposit or
any part thereof, or upon the income therefrom.

 

 

 

123

 

 

 

c.

Escrow Agent may
rely upon the advice of counsel and upon statements of accountants,
brokers or other persons reasonably believed by it in good faith to
be expert in the matters upon which they are consulted, and for any
reasonable action taken or suffered in good faith based upon such
advice or statements

 

7.

Indemnity
of Escrow Agent.

The
Seller and Builders jointly and severally, agree to:

i.

indemnify Escrow
Agent and hold it harmless as to any liability by it incurred by
the Escrow Agent to any other person or persons by reason of this
Escrow Agreement, or in connection herewith except for Escrow
Agent's own willful misconduct or gross negligence,
and

ii.

reimburse Escrow
Agent for all its expenses, including, but not necessarily limited
to attorneys' fees and court costs incurred in connection
herewith.

8.

Request
for Written Instructions.

a.

Escrow Agent may at
any time, and from time to time, request the Seller and Buyer to
provide written instructions concerning the propriety of a proposed
payment of the Escrow Deposit, distribution of documents, or other
action or refusal to act by Escrow Agent.

b.

Should the Seller
and Buyer fail to provide such written instructions within a
reasonable time, Escrow Agent may take such action, or refuse to
act, as it may deem appropriate and shall not be liable to anyone
for such action or refusal to act.

c.

Notwithstanding the
foregoing, should the terms of the Escrow Agreement be complied
with, in the judgment of Escrow Agent, then the Escrow Agent may
disburse any funds, distribute documents, or take such action
without specific further written instructions from any
Party.

9.

Disputes and Interpleader.

a.

In the event of any
dispute between the Parties as to either law or fact, or in the
event any of the parties hereto fail, for any reason, to fully
receipt and acquit the Escrow Agent in writing, Escrow Agent may
refuse, in its discretion, to carry out said escrow instructions or
to deliver any funds, documents, or property in its hand to anyone
and in so doing shall not become liable to demand.

b.

Escrow Agent shall
be entitled to continue, without liability, to refrain and refuse
to act:

i.

until all the
rights of the adverse claimants have been finally adjudicated by a
court having jurisdiction over the Parties and the items affected
hereby, after which time the Escrow Agent shall be entitled to act
in conformity with such adjudication; or

ii.

until all
differences shall have been adjusted by agreement and Escrow Agent
shall have been notified thereof and shall have been directed in
writing signed jointly or in counterpart by the parties and all
persons making adverse claims or demand, at which time Escrow Agent
shall be protected in acting in compliance therewith.

c.

Escrow Agent also
has the right to interplead into a court of competent jurisdiction
at the expense of the Parties.

10.

Resignation of Escrow
Agent.

a.

Escrow Agent may
resign under this Agreement by giving written notice to all of the
parties hereto, effective 30 days after the date of said
notice.

b.

Upon the
appointment by the parties of a new Escrow Agent or custodian, or
upon written instructions to Escrow Agent for other disposition of
the Escrow Deposit, Escrow Agent shall, after retention of its
accrued escrow fees and expenses, if any, shall deliver the Escrow
Deposit within a reasonable period of time as so directed, and
shall be relieved of any and all liability hereunder arising
thereafter.

11.

Applicable Law.

This
Agreement shall be governed by the laws of the State of
Colorado.

12.

Counterparts/Facsimile.

 

The
Escrow Agreement may be executed in any number of counterparts,
each of which when so executed shall constitute the entire
agreement between the Seller and Buyer and may be executed in
facsimile and such facsimile signature shall be accepted as
original signatures. The Seller and Buyer acknowledge and agree
that there are no intended or unintended third party beneficiaries
who may rely upon or benefit from the provisions of this
agreement.

 

 

 

 

 

 

 

124

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