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HomeMy WebLinkAboutC08-293Second Amendment to Agreement to Provide Deed Restricted Housing on Stratton Flats This SECOND AMENDMENT (the "Second Amendment") to the Agreement to Provide Deed Restriction Housing is entered into to be effective as of the ~~'~ th day of ~_>~;~:~~,, ~ , 2008, by and among EAGLE COUNTY, COLORADO (the "County"), EAGLE COUNTY HOUSING AUTHORITY, a body corporate and politic ("ECHA"), and STRATTON FLATS, LLC, a Colorado limited liability company ("Stratton Flats"). RECITALS WHEREAS, the County, Meritage JFA Gypsum, LLC, a Colorado limited liability company ("Meritage JFA Gypsum") and Stratton Flats previously entered into that certain Agreement to Provide Deed Restricted Housing on Stratton Flats dated January 15, 2008 and the First Amendment to Agreement to Provide Deed Restricted Housing dated February 28, 2008 (the "First Amendment") (collectively, the "Development Agreement"), for the purpose of defining the rights and responsibilities of the County, Meritage JFA Gypsum, and Stratton Flats regarding the development of the real property described therein ("Property"); WHEREAS, Meritage JFA Gypsum has conveyed all of its interest in the Property to Stratton Flats, and therefore, no longer has an interest in the Property; WHEREAS, the County has created ECHA pursuant to C.R.S. 29-4-503; and WHEREAS, by this Second Amendment, the County, ECHA, and Stratton (hereinafter the "Parties") desire to amend the Development Agreement as set forth herein. NOW, THEREFORE, for and in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties hereby agree as follows: 1. Assignment to Eagle County Housing Authority. Effective upon the execution of this Second Amendment, all rights and obligations created by the Development Agreement, as modified by this Second Amendment, and any other agreement between the Parties hereto are irrevocably assigned from the County to ECHA, and ECHA accepts such assignment and agrees to perform all obligations of the County under the Development Agreement, as modified by this Second Amendment. In addition, the County hereby assigns to ECHA all its rights and obligations under the Tri-Party Agreement dated February 28, 2008 among Stratton Flats, the County and CoBiz Bank (the "Tri-Party Agreement"), and ECHA hereby accepts such assignment and agrees to be bound by the Tri-Party Agreement and perform all obligations of the County thereunder. 2. Meritage JFA Gypsum. The Development Agreement is hereby amended to provide that Meritage JFA Gypsum is no longer a party of the Development Agreement. 3. Revised Exhibit A. The Development Agreement is hereby amended to provide that "Exhibit A" to the First Amendment titled "Stratton Flats Budget Exhibit to Agreement to Provide Deed Restricted Housing January 15, 2008" is hereby superseded and replaced in its entirety { 00191 ?43. DOC / I } ~ October 7. 2008 ~- with the "Exhibit A" attached hereto titled "Stratton Flats First Amended Budget" dated January 17, 2008 (the "First Revised Budget"). 4. Transferred Units. In addition to the matters set forth in the First Revised Budget, the parties agree that the total number of Project's single family units which are "Eagle County Deed Restriction" units in the First Revised Budget and defined therein is hereby decreased by 8 units, from a total of 56 units to a total of 48 units, and the total number of the Project's designated "Free Market" units in the First Revised Budget is correspondingly increased by 8 units, from a total of 96 units to a total of 104 units. From and after the date hereof, for each $60,555 of "Additional Equity" paid by ECHA to CoBiz Bank in reduction of the Revenue Gap as provided for in Section 8 below, one single family unit from the "Free Market" category shall be "transferred" back into the "Eagle County Deed Restricted Units" category. In the event that the total amount of Additional Equity paid to CoBiz Bank in reduction of the Revenue Gap exceeds $436,108.00, all of the single family units transferred from the "Free Market" category shall instead be transferred back to the "Eagle County Deed Restricted Units" category. For purposes of this Second Amendment, the term "Additional Equity" shall mean any amounts paid to CoBiz Bank pursuant to a Priority Reservation Agreement as set forth in Section 8 below. Except with respect to the foregoing provisions of this Section 4, the First Revised Budget shall govern as to permissible sales prices and unit mix. 5. Form Restrictive Covenants for WHU and RWH Units. Attached hereto as Exhibits B, C, and D, respectively, are the approved form restrictive covenants for RWH (income restricted), RWH (non-income restricted), and WHU units, which approved forms of restrictive covenants shall be used for the number and types of units provided for in the First Revised Budget. Stratton shall be responsible for the recording in the real estate records of Eagle County, Colorado the appropriate form restrictive covenant for WHU and RWH units prior to Stratton's conveyance of such WHU or RWH unit to an initial purchaser thereof. For purposes of this Second Amendment, the terms "WHU" and "RWH" shall have the following meanings: (a) "RWH" shall mean a deed restricted unit offered for sale only to qualified buyers meeting the Town of Gypsum's eligibility requirements for a period of forty-five (45) days and then only to qualified buyers meeting Eagle County's eligibility requirements as defined in Section V of the Eagle County Local-Resident Housing Guidelines (including any supplemental rules, restrictions thereto) or offered for sale to local employers or entities purchasing such units for purchase or rent by their employees pursuant to said requirements, and whose occupancy, sale, assignment, or transfer are limited by the Town of Gypsum. (b) "WHU" shall mean a Deed Restricted Unit offered for sale only to qualified buyers meeting Eagle County's eligibility requirements as defined in Section V of the Eagle County Local-Resident Housing Guidelines (including any supplemental rules, restrictions thereto) or offered for sale to local employers or entities purchasing such units for purchase or rent by their employees pursuant to said guidelines, and the occupancy, sale, assignment, or transfer of which is limited by the terms of the Eagle County Local-Resident Housing Guidelines and a recorded master covenant for occupancy and resale of Eagle County Housing, which {00191243.DOC / 1 }2 subjects the deed restricted unit to certain occupancy and resale restrictions. 6. ECHA's Right to Qualify Purchasers. Subject to the provisions of Section 5 immediately above, ECHA or its designee shall have the right, exercisable in its sole and exclusive discretion, to establish qualifications for applicants to purchase RWH and WHU units from Stratton. RWH requirements shall be consistent with those imposed by the Town of Gypsum, as provided for in Exhibit C attached hereto. No RWH or WHU unit may be sold to a purchaser unless such purchaser satisfies ECHA's qualification standards. ECHA has the exclusive right to qualify applicants itself, but it is under no obligation to do so. Notwithstanding the preceding sentence, if ECHA or its designee does not qualify applicants, Stratton shall qualify applicants under the supervision of ECHA or its designee. 7. Allocation of Any Budget Assumption Deficiencies. The amount of the "Revenue Gap" as defined in Section 4 of the First Amendment is hereby agreed to be $1,111,857.82 (before taking into account any increases in the Revenue Gap resulting from real estate commissions), and is comprised of the following amounts: • shortfall of Gypsum fee discounts in the amount of $848,897; net price reductions for WHU's and RWH's in the amount of $232,960.82; • real estate brokerage commissions as provided for in Section 4.a of the First Amendment; appraisal fees in the amount of $20,000; and environmental, green-build testing fees in the amount of $10,000. 8. Priority Reservation Agreements. Pursuant to Section 4(c)(2) of the First Amendment, the Parties have agreed to provide for ECHA's sale of certain priority reservation rights to employers located in Eagle County, Colorado that are not instrumentalities of, or are otherwise part of, the County (each, an "Employer", and collectively, the "Employers"), providing for the Employers' right to negotiate for the purchase of one or more WHU units and/or RWH units from Stratton for the prices set forth on the First Revised Budget prior to Stratton's offering of such WHU units and/or RWH units for sale to the public. Such rights and obligations shall be set forth in a written "Priority Reservation Agreement" defined as a contract in the form attached hereto as Exhibit D, to be entered into between ECHA and each Employer. This Priority Reservation Agreement obligates an Employer to pay a "Reservation Payment" to ECHA in consideration for such priority reservation rights. All Reservation Payments paid to ECHA pursuant to a Reservation Agreement between ECHA and an Employer shall be delivered to CoBiz Bank promptly following the receipt thereof. Pursuant to Stratton's Construction Loan Agreement and the First Loan Modification Agreement with CoBiz Bank, the first $436,108 of any Reservation Payments paid by the ECHA to CoBiz Bank as provided for above shall be disbursed by CoBiz Bank solely for the payment of Stratton's costs associated with the Project. Any Reservation Payments in excess of $436,108 which are paid by ECHA to CoBiz Bank as provided for above shall be applied by CoBiz Bank toward repayment of Stratton's loans with CoBiz Bank which are evidenced by the Construction Loan Agreement. 9. Reduction in Revenue Gap. Section 4.c of the First Amendment regarding reductions in the Revenue Gap is hereby deleted in its entirety and is replaced with the following language: ~ooisioaz.ooci i f3 ~- "As a result of the transfer of the eight (8) single family units from the Eagle County Deed Restricted Units category into the Free Market Units category, the Revenue Gap is hereby reduced by a total amount of $484,440, resulting in a reduction of the Revenue Gap from $1,111,857.82 to $624,417.82. Additionally, any Reservation Payments (or any other amounts) paid by ECHA to CoBiz Bank shall result in a further dollar for dollar reduction in the Revenue Gap. To the extent that during the Project, the Parties are nonetheless unable to eliminate the Revenue Gap, and do not agree upon mutually acceptable increases in the Unit sales prices (in addition to the seven percent (7%) annual prices provided for in Section 5 of the Development Agreement), then Stratton Flats shall bear financial responsibility for one-half of the amount of the remaining Revenue Gap and ECHA shall bear financial responsibility for the other one-half of the Revenue Gap. Neither Stratton Flats nor ECHA shall be obligated to contribute cash to the Project in connection with its respective share of the Revenue Gap. 10. Eagle County Housing Authority. ECHA and the County represent and warrant the following: (a) Organization. ECHA has been duly created as a housing authority pursuant to the provisions of C.R.S. Section 29-4-503, and has the requisite power and authority to enter into and perform all of its obligations under the Development Agreement, as modified by this Second Amendment. (b) Binding Effect. The Development Agreement, as modified by this Second Amendment, has been duly executed and delivered by ECHA and is a valid and binding obligation of ECHA enforceable in accordance with its terms. (c) Due Authorization. The Development Agreement, as modified by this Second Amendment, and the documents and instruments required to be executed and delivered by ECHA pursuant hereto have each been duly authorized by all necessary corporate action on the part of ECHA and such execution, delivery and performance does not and will not conflict with or result in a violation of any document, agreement, ordinance or resolution providing for the formation of ECHA, or any agreement to which ECHA is bound or subject. 11. Dispute Resolution. Section 26 of the Development Agreement is hereby deleted in its entirety. The Development Agreement, as modified by the First Amendment and this Second Amendment shall be interpreted, construed, and governed by the laws of the State of Colorado. The parties hereto, and each of them, irrevocably consent to the jurisdiction of the Eagle County District Court and agree that such court is in any and all events the appropriate venue to enforce the provisions thereof. 12. Ratification. Except as expressly modified herein, the Parties confirm and ratify the terms and conditions of the Development Agreement. 13. Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Development Agreement. 14. Counterparts. This Second Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. {00191243.DOC / 1 }4 ~' IN WITNESS WHEREOF, the Parties have executed this Second Amendment as of the date first above written. EAGLE COUNTY, COLORADO A body corporate and politic by and through its Board of Cou Com ~ sinners Peter F. Runyon, Chairm the Board of County Commissioners, Eagle County, Colorado EAGLE COUNTY HOUSING AUTHORITY A body corporate and poli~by and through its Chairman ~, ~~ By: Peter F. Runyon, Chairman,- STRATTON FLATS, LLC, a Colorado limited liability company By: Meritage Development Group, LLC, a Colorado limited liability company By: ~ . Scott B. Russell, its Manager {00151042.DOC / I }rj EXHIBIT A FIRST AMENDMENT TO STRATTON FLATS BUDGET EXHIBIT TO AGREEMENT TO PROVIDE DEED RESTRICTED HOUSING {00191243.DOC / 1 }6 '~- >~~ ~__ Stratton flats First Amended Budget July 17, 2008 PROJECT TOTAL PRO.IECT TOTAL FREE MARKET EAG LE CTY D EED RESTR I~TIpN. GYPSI'M UEEU RESTRICTION QS 11X1%. Old Base. Q4 '_0117; , New Busr. B;ueme nh Included Ba,enunh EadudtYl \larket Rate Bau Price 16'7 Di,a~unt 117 Discount '_IXt% 21X1% Free Frre F:agle Cly (npsum Gypsum Delivery Delivery Free Market M11arkel Deed EC EC Deed Deed Gypsum Gypsum Ueed Total # ('ost per 21X1% Delicep C'o,t per 'INI% Deliccn Markel Price # of Free Market Restricted Price EC # of Restricted Restricted Price per # of Restricted Model and Location tiq Ft of f ~nig Unil ('n,l Total l'nit ('u,t Tocil Sale Price Per SF UniLS Total Sale Price per SF Cnits Total Sale Price SF Cnits Total Single Family Humes Ro+e without hasement L615 '_~ 533%,31X1 4%.359?IXl 4335.657 4%.1155,768 439%993 ,$247 U 4ll $342,'370 5212 24 48'16,8%3 5349199 4'17 11 SII Ro+e with busemenl Lfi 15 31 4348,3(X1 4111,797.31X1 433%.31X1 5111.797, 11X1 $,8111,994 ,$354 31 $12,7311,814 0.0 40 0 4p $Il 40 Il ,'411 Satin without busemenl 1,759 I6 4317,IXNl 45,8P_.(NNI 4353.fi97 '45.675,152 $421.11611 ,8239 11 4U $349.9rK) $199 I(i 45.599,9%4 4T8I,5 )11 $117 11 '411 Satin with basement 1.759 12 4367.IN XI 44A03.(NXI 4367.IXN1 9;d.303.I11X1 4333.11!>tl 4136 l'_ $5.196,7311 ~ 40 0 40 411 9X1 11 'SII Sand,tone without ba.+ement 1.7fi1 I6 4367.IXNI 45.%7?IXXI x354.635 45.fi73,1611 9:121.IK>tl 4'_39 0 411 433y.rX~ 4199 l6 $5.599.9%4 ~381.5 N1 4'17 11 ,till Sandstone with basement 1.762 II 4367,INN1 44,1137,(NNl 4367JXX1 `F3.1137,INX1 4433.0(,(1 $246 II 'F4.763.6(dl 40 $D 0 40 4U 411 ll 411 Pearl without busemem 1,1119 11 $3911.574 $11 411 $II $433,91X1 11215 Il $11 $39%3%5 5]97 (1 $0 5317,914 $31)7 U X11 Pearl with basement '_,1119 21 43rN 1,573 $%?112.1154 43911,574 $%?II'_lll6 }1.14%,rNXI $~0~ ~I 49,4'_6,'NNl 40 4p p $0 411 9D Il SII Quanr without basement 1.1 CII 11 43rN 1,573 SII YN) 1,11 4~333,'NNI $215 11 411 $39%3%5 5]97 0 40 4312913 $207 11 1,11 Quartz with basement '_,11'_0 11 43')11.573 $R '112,1153 43tN1,574 $%'IC,1136 $44%.rXNI $"' 'I $9,41611X1 ,(1 40 0 $0 ,'411 4U Il 40 151 455.735.fi11ri $55,1137.373 9fi 43L553193 56 419,41fi.%SI 11 40 "I'nwnlmmes Miner feud unit) 1,519 16 43116,1174 47152935 4295.546 42,684,'_(17 434%.785 4'_311 4 $1.193179 $305,0(10 520( 5 4L5'_5,000 wt'S.INN1 $213 17 $5.5'_S.INNI 17iner (interior unitl 1.5115 3% 431NI,91fi 4%.3%.635 4'_x1.3%% 4%.1311,%fil $342,65% 42_% 4 $1,3711.631 $30(1,(1(10 4199 6 ~41,8(Kh(X10 ~3'l1.INN1 $213 18 45,7611.INXl Pioneer lend unitl L8'_4 311 $336,166 $111,11%3.9%I 43?5'93 $9.75%.791 $3%3,%36 4210 _ $762692 $331.11(4 41%1 7 42317.(XHI 7349,1 NX1 $191 2I $7,329.IXX1 Pioneer [interior uniU L%111 311 4331.1X17 49.9311.'_18 43?11,134 49,6114,034 $377,759 4109 7 $?6~.311 913^6.0(4 .41%0 L $3.912.000 4333.INX1 $Ixl II 43.773.1 IINI Explorer (duplex uni[1 1,519 3 ,43116.1173 41?'_4.'_9% $295.546 41,1%2.1%6 $34%.745 82311 - 'SI1 $305.0110 4101 561 Q.INXI V;'_S.IX NI 4114 _ 46511.INN1 II% 537.623.1183 436.1611,1179 I7 $4177,611 4111.1631XX1 69 4'_3,1137.INNI Condos One Bedroom Is1 floor 712 9 4171,119_' 41.539.%311 4171,181'_ 41,539.%311 $1111,%89 $2811 - $0 41?1.11(X1 4237 4 4fi%4.1NXI 71811,INN1 $149 5 49(NLIXNI One Bedroom '_nd llnnr 711 9 417_'.81_' 41.%%%.3115 4172.80 41,555,3115 41'11311% 41%1 - 411 $176.(X4 5234 _ 535'_.INXI ~185.INN1 4'_56 7 51.295.1X4 One Bedroom 3rd floor 722 9 4175391 41.57%.519 4175.391 4L578,519 $111fi.961 42%7 - 40 4181.(X4 4'_SI _ 53fi_dll Xl *IxI,INNI $163 7 $1,33(I,INNI Two Bedroom Is10oor L1189 IS 4'_13,9411 ,83.(X19,159 $1141411 43,1X19,159 5253,619 $233 - $U 4119,(X4 4'_01 6 41.:114.01111 5_31,INN1 $112 % .41.%48.0011 Twu Bedroom Ind floor L1189 IS 4216,659 .83.033.132 4114659 43.1133.132 $255,65% 4235 - $0 $?^_6.IXN1 520% 5 $1.130.111X1 S'iB.INXI 4'_19 9 $1.142,1X111 l'wo Bedroom 3rd Ilonr I.I189 19 4'_19.'_39 43,1169,331 4219?39 $3.1169.13'_ 4?5%.7111 423% - 411 $233.IX4 5113 6 $1.398.(X4 5'S S,IXXI 4115 % 411611,INN1 fig $13,7%5,3%6 $13.7851%6 - SU ?S $5.'-30111X1 43 $4375.(NXI 'I'o4d: 339 41117.154,1177 41115,19213% 113 1i47,732,61M 113 $34,%211.%51 113 432.512,INNI EXHIBIT B RWH UNIT FORM OF RESTRICTIVE COVENANT (INCOME-RESTRICTED) {oo i s i oaz. roc i i} 7 ~ /~/ MASTER COVENANT FOR THE OCCUPANCY AND RESALE OF TOWN OF GYPSUM RESTRICTED WORKFORCE HOUSING WITH ANNUAL INCOME RESTRICTIONS IN EVENT OF DEFAULT OR INITIATION OF FORECLOSURE, NOTICE MUST BE PROVIDED TO THE DECLARANT, THE STRATTON FLATS HOA, THE TOWN OF GYPSUM, ITS AGENT, AND EAGLE COUNTY PURSUANT TO THE TERMS OF THIS COVENANT, THE REFERENCED OPTION TO BUY, ATTACHED HERETO AS EXHIBIT A, AND C.R.S. 38-38-101 ET. SEQ. THIS MASTER COVENANT FOR OCCUPANCY AND RESALE OF TOWN OF GYPSUM RESTRICTED WORKFORCE HOUSING (the "Covenant") is made and entered into this day of __, 2008, by STRATTON FLATS, LLC, (together with its successors and assigns "Declarant") and is enforceable by THE TOWN OF GYPSUM, its Agent, or its designee (the "Town") as and to the extent set forth herein. RECITALS: This Covenant is made with reference to the following facts: WHEREAS, Declarant owns the RWH legally described in Exhibit B attached hereto and incorporated herein. WHEREAS, The Town has promulgated the Gypsum Ordinance as amended from time to time, which governs development, eligibility and transfer of Restricted Workforce Housing and the Town and Declarant have entered into the Stratton Flats Housing Plan and Development Assistance Agreement (the "Housing Plan") which is attached hereto as Exhibit C and incorporated herein by reference and subject to the procedures set forth in the Gypsum Ordinance. WHEREAS, There is a demonstrated need for affordable housing for residents of the Town of Gypsum and Eagle County and this Covenant restricting the acquisition and transfer of the RWH to "Qualified Buyers", as defined in this Covenant, supports the health, safety, and welfare of the citizens of the Town and Eagle County. WHEREAS, Declarant desires to enter into this Covenant, which provides for the designation of the unit described in Exhibit B as an RWH unit and restricts the acquisition or transfer of the RWH to only Qualified Buyers as set forth in the Housing Plan. In addition, the Declarant intends that this Covenant shall constitute the terms and provisions controlling the resale of the RWH. By this Covenant, Declarant restricts the RWH against use and occupancy inconsistent with this Covenant in accordance with the terms of the Housing Plan. ;ooox~>Z~a.voc i s} NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Declarant and Town hereby represent, covenant, and agree as follows: 1. Definitions (a) "Agent" means the entity appointed by the Town to administer the RWH program, including to resell RWH units and to administer restrictions imposed against them. (b) "Declarant" means Stratton Flats LLC, a Colorado limited liability company, its successors and assigns. (c) "Gypsum Ordinance" means any ordinances, rules, restrictions, and guidelines that Gypsum may, from time to time at its discretion, promulgate regarding the RWH not inconsistent with the Housing Plan, including, but not limited to A Gypsum Ordinance Adding Section 18.05.050, Restricted Workforce Housing, To the Gypsum Municipal Code Adding Incentives and Concessions for Developers That Develop, Build and Offer For Sale Restricted Workforce Housing In the Town of Gypsum. (d) "Housing Plan" means the Stratton Flats Housing Plan and Development Assistance Agreement executed between the Town of Gypsum and Declarant. (e) "Option to Buy" means the Town's right of first refusal and option to buy the RWH as provided for in Exhibit A attached hereto. (f) "Owner" is a Qualified Buyer who acquires an ownership interest in the RWH unit in compliance with the terms and provisions of this Housing Plan, this Covenant and the Gypsum Ordinance. Such person, persons, or entity shall be deemed an "Owner" of the RWH unit only during the period of such Owner's ownership interest in the RWH and shall be obligated hereunder for the full and complete performance and observance of alt restrictions encumbering the RWH as set forth herein during such period. (g) "Qualified Buyers" are (i) natural persons meeting the eligibility requirements as defined in Gypsum's Ordinance as amended from time to time, or as otherwise expressly provided in the Housing Plan, or (ii) local employers or entities purchasing units for Qualified Buyers at the Town's sole discretion. The Town, or its assigns, will review and provide verification of the eligibility of all initial Qualified Buyers to the Declarant in accordance with the Housing Plan. (h) "RWH" is a Restricted Workforce Housing unit, which is offered for sale to Qualified Buyers, whose occupancy, sale, assignment, or transfer are limited {0008G294.DOC / 5 } 2 by the terms of the Housing Plan, the Covenant and the Gypsum Ordinance. RWH, for the purposes of these Covenants, are income restricted, e.g., earnings are capped at 140% of AMI. The RWH is subject to this Covenant, the Housing Plan, the Gypsum Ordinance, the Declaration of Covenants, Conditions, and Restrictions for Stratton Flats Master Association (the "Master Declaration"), the Declaration of Covenants, Conditions, and Restrictions for Stratton Flats Townhome Association (the ""Townhome Declaration"), and the Declaration of Covenants, Conditions and Restrictions for Stratton Flats Condominium Association (the "Condominium Declaration"). (i) "Stratton Flats HOA" collectively means the Stratton Flats Master Association, Inc. as described in the Master Declaration, the Stratton Flats Townhome Association, Inc. as described in the Townhome Declaration, and the Stratton Flats Condominium Association, Inc. as described in the Condominium Declaration. 2. Restrictions on Owner's Use, Occupancy, and Re-Sale of the RWH. (a) The use and occupancy of the RWH shall be limited to housing for Qualified Buyers meeting the income restrictions and their families as set forth in the Housing Plan and the Gypsum Ordinance with the following exceptions: (i) The RWH maybe held by the Town in the event of foreclosure or as permitted by this Covenant and the Gypsum Ordinance. (ii) The RWH may be held by Eagle County in the event of foreclosure or as permitted by this Covenant and the Ordinance. (iii) The RWH maybe held from time to time by certain districts or governmental entities as permitted under a separate intergovernmental agreement with the Town. (iv) The RWH maybe held by qualified employers and non-profit organizations as permitted by this Covenant and the Gypsum Ordinance. (b) Re-Sale of RWH. In the event that an Owner desires to sell the RWH, the Owner shall sell to a Qualified Buyer and shall comply with and follow the re-sale procedures as set forth in the Housing Plan. The Owner shall use the Agent as the sole and exclusive sales broker for the RWH. (c) Removal of RWH from RWH Program. (i) The RWH may not be sold, leased, used or owned except in compliance with this Covenant, the Housing Plan, and the Gypsum Ordinance. { ooos62~a. ooc ~ s ~ 3 (ii) The RWH must remain on the market for twelve (12) months before the Town will consider its removal from the RWH program. (iii) The RWH may only be removed from the RWH program upon written application and approval by the Town. (iv) Gypsum's approval of the removal of the RWH from the RWH program, if granted, shall include terms and conditions designed to ensure adequate amortization or repayment of the RWH development assistance specified in the Housing Plan and Gypsum Ordinance. (v) A rebate of not less than twenty (20) percent of the sale price of the RWH for the first sale following the removal of the RWH shall be paid to the Town to compensate the Town for the RWH development assistance. (vi) Rebate will be calculated and due at time of closing of the first sale of the RWH following its removal from the RWH program and collected in the same manner as, and in addition to, the Town's real estate transfer tax ("RETT"). (vii) Rebates will be used to offset the cost and expense of the RWH program, including past or future RWH development assistance. 3. Breach of Covenant for Violation of Use Occupancy or Transfer Restrictions. (a) Any remedy for a breach of this Covenant by an Owner or a Qualified Buyer is specifically enforceable by the Town, its respective successors and assigns, including the Agent, to the maximum extent under applicable law. (b) Sale or Transfer to a Non-Qualified Buyer or Violation of Resale Restrictions. (i) If title to the RWH vests in any party who is not a Qualified Buyer, the terms of this Covenant that may require sale or other relief shall govern. (ii) If the RWH is sold or conveyed in violation of the Housing Plan, the Gypsum Ordinance or this Covenant, such sale or conveyance shall be void ab initio and shall confer no title whatsoever upon the purported buyer. Each and every conveyance of the RWH, for all purposes, shall be deemed to include, incorporate, and be made subject to the covenants herein contained, even without reference therein to this Covenant. (c) Violation of Use or Occupancy Restrictions: If a violation of this Covenant is discovered, the Town shall follow the procedures set forth below and any additional consistent procedures provided for in Town of Gypsum Municipal Code in j00086294.DOC / 5 } 4 ~- effect at the time of violation or any procedures established by the Town consistent with the intent of the Ordinance: (i) Upon discovery of a violation, the Town shall give written notice to the Owner of the RWH. Not less than fifteen (15) days after issuing notice to the Owner of the RWH, the Town may inspect the RWH between the hours of 8:00 a.m. and 5:00 p.m. Monday through Saturday upon no less than twenty-four (24) hours written notice to the Owner to investigate such alleged violation. For purposes of this paragraph only, notice of hearing or inspection to the Owner shall be provided by posting notice on the front door of the RWH a minimum of twenty-four (24) hours in advance of the compliance hearing or inspection. (ii) Upon completion of the hearing and inspection, the Town may issue a written finding that there has been a violation of this Covenant or the Ordinance, and that the Owner of the RWH has breached this Covenant. If the Owner does not cure the breach in sixty (60) days, the Town may elect to assess penalties against the Owner as provided for in section (d) below. (d) Remedy. If the Owner fails to cure any violation of this Covenant, the Housing Plan, or the Gypsum Ordinance, the Town may pursue any and all action available at law or in equity, including, but not limited to, filing a complaint seeking specific performance of this Covenant or a mandatory injunction requiring the sale of the RWH by the Owner. The costs of such sale shall be taxed against the proceeds of the sale with the balance being paid to the Owner. If the RWH is sold to anon- qualified buyer, the Town shall receive twenty (20) percent of the purchase price as provided for in Section 2(c)(v) above. 4. Seniority of Covenant. Any interest in or lien upon the RWH acquired by any person or entity shall be subject and subordinate to the covenants and restrictions set forth in this Covenant. 5. Violation of Covenant in the Case of Default Under a Promissory Note or Foreclosure. (a) Owner shall not default in payment or other obligations due or to be performed under a promissory note secured by a first deed of trust encumbering the RWH. Owner must notify the Town, in writing, of any notification received from a lender, or its assigns, of past due payments or default in payment or other obligations due or to be performed under a promissory note secured by a first deed of trust, as described herein, within five (5) calendar days of Owner's notification from lender, or its assigns, of said default or past due payments. (b) Upon default by the Owner under the terms and provisions of any deed of trust or mortgage on the RWH, the Town may, in its sole discretion, offer loan ~ 0008(294. DOC / 5 } 5 counseling or distressed loan services to the Owner, if any of these services are available. Any time after default, the Town is entitled to require the Owner to sell the RWH to avoid the commencement or continuance of any foreclosure proceeding against the RWH. If the Town determines that sale of the RWH is necessary to avoid the foreclosure process, Town may require and Owner shall immediately execute a standard listing contract on forms approved by the Colorado Real Estate Commission with the Town or its Agent, providing fora 30-day listing period. At that time, the Owner shall deposit with the Town an amount equal to one half percent (''/z %) of the estimated value of the RWH. If the Owner is unable to pay the one half percent (''/z%) at the time of listing, the same shall be paid at the time of closing at the Town's sole discretion. If a sales contract has not been executed within the initial 30-day period, the Owner shall extend the listing period for an additional 180 days, provided such extension does not conflict with the statutory rights of any secured creditors. The Town shall promptly advertise the RWH for sale by competitive bid to Qualified Buyers. At the time of closing, the Owner shall pay to the Town in addition to the one half percent (''/z%) paid at the time of listing an additional one and one-half percent (1 '/z %), for a maximum fee of two percent (2%) of the actual sales price. In the event of a listing of the RWH pursuant to this paragraph, the Town is entitled to require the Owner to accept the highest of any qualified bids which satisfies the Owner's financial or other obligations due under the promissory note secured by a first deed of trust and deed of trust in favor of the Town as described herein, and to sell the RWH to such qualified bidder. In accordance with the Gypsum Ordinance and the Housing Plan, the Town may in its sole discretion elect to purchase a RWH under this paragraph for rental or for sale to a Qualified Buyer. Upon default of Owner, as provided in paragraphs 5(a) and 5(b), the Town shall have the right, in its sole discretion, to cure the default or any portion thereof. In such event, the Owner shall be personally liable to the Town for past due payments made by the Town together with interest thereon at the rate specified in the promissory note secured by the deed of trust, plus one percent (1 %) in addition to the interest rate identified in the promissory note and all actual expenses of the Town incurred in curing the default. The Owner shall be required by the Town to execute a promissory note on commercially reasonable terms acceptable to Town and secured by deed of trust encumbering the RWH in favor of the Town for the amounts expended by the Town as specified herein, including future advances made for such purposes. The Town shall be entitled to all rights and remedies under the deed of trust including the right of foreclosure. The Owner may cure the default and satisfy its obligation to the Town under this subparagraph at any time prior to execution of a contract for sale, upon such reasonable terms as specified by the Town. Otherwise, Owner's indebtedness to the Town shall be satisfied from the Owner's proceeds at closing. If the RWH is sold to a non-qualified buyer, the Town shall receive twenty (20) percent of the purchase price as provided for in Section 2(c)(v) above. (00086294.UOC / 5} 6 6. Option to Buy; Release and Waiver of Restrictions on RWH. (a) In the event that a holder of a first deed of trust or mortgage on the RWH becomes the record owner of the RWH by way of a deed in lieu of foreclosure, a public trustee's confirmation deed, or a sheriff s confirmation deed, the Town has a priority right of refusal and option to buy the RWH from such record owner pursuant to the Option to Buy. Upon becoming the record owner of such RWH, such person or entity shall provide written notice thereof to the Town as provided in the notice requirement set forth in Exhibit A, Option to Buy, attached hereto. Upon receipt of such notice, the Town has the right to exercise its option to buy as provided in said Exhibit A. (b) The Town agrees to release and waive the deed restrictions and other covenants set forth herein, in favor of the holder of a first deed of trust or mortgage pertaining to a foreclosed RWH, if and only if (i) said holder (including assigns of the holder) of a first deed of trust or mortgage becomes the record owner of a RWH by way of deed in lieu of foreclosure, public trustee's confirmation deed or sheriff's confirmation deed; and (ii) both the Town and County fail to exercise its Option to Buy the RWH as set forth in Exhibit A hereto and as provided in paragraph 6(a) hereof. At the time a Qualified Buyer acquires the RWH, the Town, subject to the Option to Buy, agrees to execute and record a subordination agreement with the holder of a first deed of trust or mortgage, subordinating the Town's rights under this Covenant, including but not limited to the deed restrictions applicable to the RWH, to said first deed of trust or mortgage. (c) If the Town, or its assigns, chooses not to exercise the Option to Buy as provided herein, Eagle County can exercise the right in the Town's place. 7. If the Town or its assigns exercises the Option to Buy and acquires title to the RWH as set forth in Exhibit A, the Town or its assigns may thereafter sell the RWH to a Qualified Buyer or rent the RWH in accordance with the terms of the Housing Plan or Ordinance. 8. Covenant Runs with the Land. Declarant and all subsequent Owners of the RWH, and all other parties with an interest in title to the RWH hereby acknowledge or are deemed to acknowledge by virtue of recordation of the deed by which such Owner takes title to the RWH that this Covenant shall constitute a covenant running with the RWH, as a burden thereon, and shall be specifically enforceable by the Town and their respective successors and assigns, as applicable, by any appropriate legal action including but not limited to specific performance, injunction, reversion, or eviction. 9. Notices. Any notice, consent, or approval that is required to be given hereunder shall be given by mailing the same, certified mail, return receipt requested, properly addressed and with postage fully prepaid, to any address provided herein or to {0008G294.DOC / 5} 7 any subsequent mailing address of the parties indicated below as long as prior written notice of the change of address has been given to the all parties as indicated. Said notices, consents and approvals shall be sent to the following addresses unless otherwise notified in writing: To Declarant: Stratton Flats LLC 408 As en Business Center Suite 209 As en CO 81611 To Stratton Flats HOA: To the address set forth in the Articles of Inco oration and on record with the Secretar of State To Town of G sum: Town of G sum Post Office Box 130 G sum CO 81637-0130 To Ea le Count Ea le Count c/o Count Attorne P.O. Box 850 Ea le Colorado 81631-0850 To Owner: To the address set forth in the records of the Eagle County Tax Assessor for u oses of mailin tax bills. 10. Dispute Resolution. There is hereby reserved to the Town and their respective successors and assigns, any and all remedies provided in law or equity for breach of this Covenant or any of its terms. In any dispute, each party shall bear its own costs and fees. The exclusive forum for any dispute resolution shall be the Eagle County District Court. 11. Severability. Whenever possible, each provision of this Covenant and any other related document shall be interpreted in such a manner as to be valid under applicable law; but if any provision of any of the foregoing shall be invalid or prohibited under said applicable law, such provisions shall be ineffective to the extent of such invalidity or prohibition without invalidating the remaining provisions of such documents. ~ooos629a.~oc i s} 12. Choice of Law. This Covenant and each and every related document are to be governed and construed in accordance with the laws of the State of Colorado. 13. Successors. Except as otherwise provided herein, the provisions and covenants contained herein shall inure to and be binding upon the respective heirs, successors and assigns of the Declarant, any Owner of the RWH, and the Town. 14. Section HeadinQS. Paragraph or section headings within this Covenant are inserted solely for convenience or reference, and are not intended to, and shall not govern, limit or aid in the construction of any terms or provisions contained herein. 15. Waiver. No claim of waiver, consent or acquiescence with respect to any provision of this Covenant shall be valid against the Owner of the RWH and the Town except on the basis of a written instrument executed by both the Owner of the RWH and the Town. However, the party for whose benefit a condition is inserted herein shall have the unilateral right to waive such condition. 16. Gender and Number. Whenever the context so required herein, the neuter gender shall include any or all genders and vice versa and the use of the singular shall include the plural and vice versa. 17. Personal Liability. By taking title to the RWH, the Owner agrees that he or she shall be personally liable for compliance with the applicable terms and conditions of this Covenant. 18. Further Actions. The Declarant for so long as Declarant owns the RWH and the Town agree to execute such further documents and take such further actions as may be reasonably required to carry out the provisions and intent of this Covenant or any Covenant or document relating hereto or entered into in connection herewith. 19. Modifications. Any modifications of this Covenant shall be effective only when made by writings signed by the Town and the Owner of the RWH and recorded with the Clerk and Recorder of Eagle County, Colorado. The Town reserves the right to amend this Covenant unilaterally where deemed necessary to effectuate the purpose and intent of this Covenant, and where such unilateral action does not materially impair an Owner's rights or any lender's rights under this Covenant. The Owner and the Town agree to modify this covenant as necessary to comply with lending requirements imposed by Fannie Mae and other similar lending entities. 20. Perpetuities Savings Clause. If any of the terms, covenants, conditions, restrictions, uses, limitations, obligations or options created by this Covenant or any of its Exhibits shall be unlawful or void for violation of: (a) the rule against perpetuities or some similar statutory provision, (b) the rule restricting restraints on alienation, or (c) any other statutory or common law rules imposing like or similar time limits, then such (00086294.DOC / 5} 9 provision shall continue only for the period of the lives of the current duly elected and seated Gypsum Town Councilmembers, their now living descendants, if any, and the survivor of them, plus twenty-one (21) years. IN WITNESS WHEREOF, the parties hereto have executed this instrument on the day and year above first written. STATE OF COLORADO COUNTY OF STRATTON FLATS, LLC By: MERITAGE DEVELOPMENT GROUP, LLC, MANAGER By: Scott B. Russell, Manager ss. Subscribed and sworn to before me this Witness my hand and official seal. My commission expires: {OOOAG294.DOC / 5~ day of , 20 Notary Public 10 `~ ACCEPTANCE BY TOWN OF GYPSUM The Foregoing Master Covenant for the Occupancy and Resale of Town of Gypsum Restricted Workforce Housing and its terms are hereby adopted and declared by the Town of Gypsum TOWN OF GYPSUM, COLORADO By: Steve Carver, Mayor STATE OF COLORADO COUNTY OF ss. Subscribed and sworn to before me this Witness my hand and official seal. My commission expires: {0008G294.DOC / 5 } day of , 20 Notary Public 11 6~ EXHIBIT A OPTION TO BUY If the holder (or holder's assigns) of a promissory note secured by a first deed of trust on the RWH acquires title to said RWH by deed in lieu of foreclosure or by confirmation deed from the public trustee or sheriff, Town of Gypsum (or its assigns) shall have the option to purchase the Property which shall be exercised in the following manner: 1. Notice. The Owner and the holder shall give such notice to the Town as is required by law or as required in the Master Covenant. Said notice shall be sent by certified mail, return receipt requested, and addressed as follows: and and Town of Gypsum Post Office Box 130 Gypsum, CO 81637-0130 Economic Council of Eagle County Post Office Box 1705 Edwards, CO 81632 Ea le Count c/o Count Attorne P.O. Box 850 Ea le Colorado 81631-0850 2. Option to buy. The Town or its assigns shall have (sixty) 60 days after receipt of notice by the Town of Gypsum, as provided for in paragraph 1 above, of the public trustee's or sheriff's confirmation deed or deed in lieu of foreclosure in which to exercise this Option to Buy. In the event the Town chooses not to exercise the option to buy as set forth herein, Eagle County may exercise that right in the Town's place. In the event of a public trustee's or sheriff's confirmation deed, the County or its assigns shall have until the end of redemption to exercise its option to buy as provided herein. In the event of a deed in lieu of foreclosure, Eagle County shall have twenty (20) days after either the receipt of notice {00086294.DOC / 5 `~ from the Town that it will not exercise its option to buy as provided herein or the expiration of sixty (60) days after the Town's receipt of notice of the deed in lieu of foreclosure. (a) In the event of foreclosure and issuance of a public trustee's or sheriff's confirmation deed, Town or Eagle County may exercise its Option to Buy by tendering to the Transferee of such deed or its assigns, in cash or certified funds, the redemption price that would have been required to redeem from such transferee as if the Town or Eagle County were the next redemptioner entitled to redeem under Colorado law, and any additional reasonable costs incurred by said transferee during the option period directly related to the foreclosure. (b) In the event of a deed in lieu of foreclosure, the Town or Eagle County may exercise its Option to Buy by tendering to the Transferee of the deed in lieu of foreclosure or its assigns, in cash or certified funds, an amount equal to the amount due on the note, secured by the deed of trust or mortgage, and any additional reasonable costs incurred by said transferee during the option period. 3. Title. Upon receipt of the option price, the Transferee shall deliver to the Town, its assignee, or Eagle County a special warranty deed, conveying the subject RWH to the Town, its assignee or Eagle County. The Transferee shall convey only such title to the subject RWH as the Transferee obtained by way of the foreclosure or by deed in lieu of foreclosure. The Transferee shall not create or participate in the creation of any additional liens or encumbrances against the subject RWH following the Transferee's acquisition of title to the subject RWH. The Transferee shall not be liable for any of the costs of conveyance to the Town, its assignee or Eagle County. 4. Release. Upon receipt of notice to the "l,own of a Transferee's acquisition of title to the subject RWH, the Town or its assigns shall have sixty (60) days in which to exercise the option to buy by notifying the Transferee in writing of its intent to exercise the option. In the event the Town chooses not to exercise the Option to Buy as set forth herein, Eagle County may exercise that right in the Town's place. In the event of a public trustee's or sheriff's confirmation deed, the County or its assigns shall have until the end of redemption to exercise its option to buy as provided herein. In the event of a deed in lieu of foreclosure, Eagle County shall have twenty (20) days after either the receipt of notice from the Town that it will not exercise its option to buy as provided herein or the expiration of sixty (60) days after the Town's receipt of notice of the deed in lieu of foreclosure. In the event that the Town or Eagle County does not notify the Transferee in writing of its intent to exercise the option to buy as set forth herein, the ;ooosbzsa.~oc i s~ 13 'T'own's Option to Buy and the Master Covenant recorded at Reception Number in the records of the Clerk and Recorder of Eagle County, Colorado shall be automatically released only with respect to the RWH which is the subject of said Option to Buy as of the end of the redemption period in the event of a public trustee's or sheriff's confirmation deed or the end of the option period in the event of a deed in lieu of foreclosure. It is the intent of the Town that the Option to Buy and the referenced Master Covenant be terminated automatically upon the failure of the Town or the County to provide written notice of its intent to exercise its option to buy to the Transferee, whether such failure is intentional or unintentional, and that such termination will be effected without the necessity of any affirmative action on the part of the Transferee and without the necessity of recording a release of such Master Covenant. It is agreed that this section 4 shall not result in a release of the Master Covenant from the RWH that are not the subject of foreclosure or deed in lieu of foreclosure and nothing contained herein shall require Town to release and waive its ability to enforce the Master Covenant in the event of foreclosure of a lien in second or subsequent position or in the event of a deed in lieu of foreclosure of a lien in second or subsequent position. 5. Perpetuities Savings Clause. If any of the terms, covenants, conditions, restrictions, uses, limitations, obligations or options created by this Option to Buy shall be unlawful or void for violation of (1) the rule against perpetuities or some analogous statutory provision, (2) the rule restricting restraints on alienation, or (3) any other statutory or common law rules imposing like or similar time limits, then such provision shall continue only for the period of the lives of the current duly elected and seated Gypsum Town Councilmembers, Gypsum, Colorado, their now living descendants, if any, and the survivor of them, plus twenty-one (21) years. 6. Successors and Assigns. Except as otherwise provided herein, the provisions and covenants contained herein shall inure to and be binding upon the heirs, successors and assigns of the parties hereto. 7. Modifications. The parties hereto agree that any modification to this Option to buy shall be effective only when made by writings signed by all parties and recorded with the Clerk and Recorder of Eagle County, Colorado. { 00086294. DOC / 5 } 14 EXHIBIT B LEGAL DESCRIPTION OF THE RWH {00086294.DOC / 5} 15 EXHIBIT C RWH UNIT FORM OF RESTRICTIVE COVENANT (NON-INCOME RESTRICTED) {00191243.DOC / 1 }8 ~~~„- ~C MASTER COVENANT FOR THE OCCUPANCY AND RESALE OF TOWN OF GYPSUM RESTRICTED WORKFORCE HOUSING (RWH) WITHOUT ANNUAL INCOME RESTRICTIONS IN EVENT OF DEFAULT OR INITIATION OF FORECLOSURE, NOTICE MUST BE PROVIDED TO THE DECLARANT, THE STRATTON FLATS HOA, THE TOWN OF GYPSUM, ITS AGENT, AND EAGLE COUNTY PURSUANT TO THE TERMS OF THIS COVENANT, THE REFERENCED OPTION TO BUY, ATTACHED HERETO AS EXHIBIT A, AND C.R.S. 38-38-101 ET. SEQ. THIS MASTER COVENANT FOR OCCUPANCY AND RESALE OF TOWN OF GYPSUM RESTRICTED WORKFORCE HOUSING (the "Covenant") is made and entered into this day of , 2008, by STRATTON FLATS, LLC, (together with its successors and assigns "Declarant") and is enforceable by THE TOWN OF GYPSUM, its Agent, or its designee (the "Town") as and to the extent set forth herein. RECITALS: This Covenant is made with reference to the following facts: WHEREAS, Declarant owns the RWH legally described in Exhibit B attached hereto and incorporated herein. WHEREAS, The Town has promulgated the Gypsum Ordinance as amended from time to time, which governs development, eligibility and transfer of Restricted Workforce Housing and the Town and Declarant have entered into the Stratton Flats Housing Plan and Development Assistance Agreement (the "Housing Plan") which is attached hereto as Exhibit C and incorporated herein by reference and subject to the procedures set forth in the Gypsum Ordinance. WHEREAS, There is a demonstrated need for affordable housing for residents of the Town of Gypsum and Eagle County and this Covenant restricting the acquisition and transfer of the RWH to "Qualified Buyers", as defined in this Covenant, supports the health, safety, and welfare of the citizens of the Town and Eagle County. WHEREAS, Declarant desires to enter into this Covenant, which provides for the designation of the unit described in Exhibit B as an RWH unit and restricts the acquisition or transfer of the RWH to only Qualified Buyers as set forth in the Housing Plan. In addition, the Declarant intends that this Covenant shall constitute the terms and provisions controlling the resale of the RWH. By this Covenant, Declarant restricts the RWH against use and occupancy inconsistent with this Covenant in accordance with the terms of the Housing Plan. Z~ NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Declarant and Town hereby represent, covenant, and agree as follows: 1. Definitions (a) "Agent" means the entity appointed by the Town to administer the RWH program, including to resell RWH units and to administer restrictions imposed against them. (b) "Declarant" means Stratton Flats LLC, a Colorado limited liability company, its successors and assigns. (c) "Gypsum Ordinance" means any ordinances, rules, restrictions, and guidelines that Gypsum may, from time to time at its discretion, promulgate regarding the RWH not inconsistent with the Housing Plan, including, but not limited to A Gypsum Ordinance Adding Section 18.05.050, Restricted Workforce Housing, To the Gypsum Municipal Code Adding Incentives and Concessions for Developers That Develop, Build and Offer For Sale Restricted Workforce Housing In the Town of Gypsum. (d) "Housing Plan" means the Stratton Flats Housing Plan and Development Assistance Agreement executed between the Town of Gypsum and Declarant. (e) "Option to Buy" means the Town's right of first refusal and option to buy the RWH as provided for in Exhibit A attached hereto. (f) "Owner" is a Qualified Buyer who acquires an ownership interest in the RWH unit in compliance with the terms and provisions of this Housing Plan, this Covenant and the Gypsum Ordinance. Such person, persons, or entity shall be deemed an "Owner" of the RWH unit only during the period of such Owner's ownership interest in the RWH and shall be obligated hereunder for the full and complete performance and observance of all restrictions encumbering the RWH as set forth herein during such period. (g) "Qualified Buyers" are (i) natural persons meeting the eligibility requirements as defined in Gypsum's Ordinance as amended from time to time, or as otherwise expressly provided in the Housing Plan, or (ii) local employers or entities purchasing units for Qualified Buyers at the Town's sole discretion. The Town, or its assigns, will review and provide verification of the eligibility of all initial Qualified Buyers to the Declarant in accordance with the Housing Plan. (h) "RWH" is a Restricted Workforce Housing unit, which is offered for sale to Qualified Buyers, whose occupancy, sale, assignment, or transfer are limited ~- by the terms of the Housing Plan, the Covenant and the Gypsum Ordinance. RWH, for the purposes of these Covenants, are not subject to income restrictions. The RWH is subject to this Covenant, the Housing Plan and the Gypsum Ordinance. All units will be subject to the Declaration of Covenants, Conditions, and Restrictions for Stratton Flats Master Association (the "Master Declaration"). Additionally, twnhome units will be subject to the Declaration of Covenants, Conditions, and Restrictions for Stratton Flats Townhome Association (the "Townhome Declaration"), and condominium units will be subject to the Declaration of Covenants, Conditions and Restrictions for Stratton Flats Condominium Association (the "Condominium Declaration"). (i) "Stratton Flats HOA" collectively means the Stratton Flats Master Association, Inc. as described in the Master Declaration, the Stratton Flats Townhome Association, Inc. as described in the Townhome Declaration, and the Stratton Flats Condominium Association, Inc. as described in the Condominium Declaration. 2. Restrictions on Owner's Use, Occupancy, and Re-Sale of the RWH. (a) The RWH is not subject to income restrictions. The use and occupancy of the RWH shall be limited to housing for Qualified Buyers meeting the qualification requirements as set forth in the Housing Plan and Gypsum Ordinance and their families with the following exceptions: (i) Qualified Buyers need not comply with income restrictions in order to qualify to purchase this RWH. (ii) The RWH may be held by the Town in the event of foreclosure or as permitted by this Covenant and the Gypsum Ordinance. (iii) The RWH may be held by Eagle County in the event of foreclosure or as permitted by this Covenant and the Ordinance. (iv) The RWH may be held from time to time by certain districts or governmental entities as permitted under a separate intergovernmental agreement with the Town. (v) The RWH may be held by qualified employers and non-profit organizations as permitted by this Covenant and the Gypsum Ordinance. (b) Re-Sale of RWH. In the event that an Owner desires to sell the RWH, the Owner shall sell to a Qualified Buyer and shall comply with and follow the re-sale procedures as set forth in the Housing Plan and the Gypsum Ordinance. The Owner shall use the Agent as the sole and exclusive sales broker for the RWH. ~- (c) Removal of RWH from RWH Program. (i) The RWH may not be sold, leased, used or owned except in compliance with this Covenant, the Housing Plan, and the Gypsum Ordinance. (ii) The RWH must remain on the market for twelve (12) months before the Town will consider its removal from the RWH program. (iii) The RWH may only be removed from the RWH program upon written application and approval by the Town. (iv) Gypsum's approval of the removal of the RWH from the RWH program, if granted, shall include terms and conditions designed to ensure adequate amortization or repayment of the RWH development assistance specified in the Housing Plan and Gypsum Ordinance. (v) A rebate of not less than twenty (20) percent of the sale price of the RWH for the first sale following the removal of the RWH shall be paid to the Town to compensate the Town for the RWH development assistance. (vi) Rebate will be calculated and due at time of closing of the first sale of the RWH following its removal from the RWH program and collected in the same manner as, and in addition to, the Town's real estate transfer tax ("RETT"). (vii) Rebates will be used to offset the cost and expense of the RWH program, including past or future RWH development assistance. 3. Breach of Covenant for Violation of Use Occupancy or Transfer Restrictions. (a) Any remedy for a breach of this Covenant by an Owner or a Qualified Buyer is specifically enforceable by the Town, its respective successors and assigns, including the Agent, to the maximum extent under applicable law. (b) Sale or Transfer to aNon-Qualified Buyer or Violation of Resale Restrictions. (i) If title to the RWH vests in any party who is not a Qualified Buyer, the terms of this Covenant that may require sale or other relief shall govern. (ii) If the RWH is sold or conveyed in violation of the Housing Plan, the Gypsum Ordinance or this Covenant, such sale or conveyance shall be void ab initio and shall confer no title whatsoever upon the purported buyer. Each and every conveyance of the RWH, for all purposes, shall be deemed to include, incorporate, and be made subject to the covenants herein contained, even without reference therein to this Covenant. (c) Violation of Use or Occupancy Restrictions: If a violation of this Covenant is discovered, the Town shall follow the procedures set forth below and any additional consistent procedures provided for in Town of Gypsum Municipal Code in effect at the time of violation or any procedures established by the Town consistent with the intent of the Ordinance: (i) Upon discovery of a violation, the Town shall give written notice to the Owner of the RWH. Not less than fifteen (15) days after issuing notice to the Owner of the RWH, the Town may inspect the RWH between the hours of 8:00 a.m. and 5:00 p.m. Monday through Saturday upon no less than twenty-four (24) hours written notice to the Owner to investigate such alleged violation. For purposes of this paragraph only, notice of hearing or inspection to the Owner shall be provided by posting notice on the front door of the RWH a minimum of twenty-four (24) hours in advance of the compliance hearing or inspection. (ii) Upon completion of the hearing and inspection, the Town may issue a written finding that there has been a violation of this Covenant or the Ordinance, and that the Owner of the RWH has breached this Covenant. If the Owner does not cure the breach in sixty (60) days, the Town may elect to assess penalties against the Owner as provided for in section (d) below. (d) Remedy. If the Owner fails to cure any violation of this Covenant, the Housing Plan, or the Gypsum Ordinance, the Town may pursue any and all action available at law or in equity, including, but not limited to, filing a complaint seeking specific performance of this Covenant or a mandatory injunction requiring the sale of the RWH by the Owner. The costs of such sale shall be taxed against the proceeds of the sale with the balance being paid to the Owner. If the RWH is sold to a non- qualified buyer, the Town shall receive twenty (20) percent of the purchase price as provided for in Section 2(c)(v) above. 4. Seniority of Covenant. Any interest in or lien upon the RWH acquired by any person or entity shall be subject and subordinate to the covenants and restrictions set forth in this Covenant. 5. Violation of Covenant in the Case of Default Under a Promissory Note or Foreclosure. (a) Owner shall not default in payment or other obligations due or to be performed under a promissory note secured by a first deed of trust encumbering the RWH. Owner must notify the Town, in writing, of any notification received from a lender, or its assigns, of past due payments or default in payment or other obligations due or to be performed under a promissory note secured by a first deed of trust, as described herein, within five (5) calendar days of Owner's notification from lender, or its assigns, of said default or past due payments. (b) Upon default by the Owner under the terms and provisions of any deed of trust or mortgage on the RWH, the Town may, in its sole discretion, offer loan counseling or distressed loan services to the Owner, if any of these services are available. Any time after default, the Town is entitled to require the Owner to sell the RWH to avoid the commencement or continuance of any foreclosure proceeding against the RWH. If the Town determines that sale of the RWH is necessary to avoid the foreclosure process, Town may require and Owner shall immediately execute a standard listing contract on forms approved by the Colorado Real Estate Commission with the Town or its Agent, providing fora 30-day listing period. At that time, the Owner shall deposit with the Town an amount equal to one half percent (''/z %) of the estimated value of the RWH. If the Owner is unable to pay the one half percent ('/2%) at the time of listing, the same shall be paid at the time of closing at the Town's sole discretion. If a sales contract has not been executed within the initial 30-day period, the Owner shall extend the listing period for an additional 180 days, provided such extension does not conflict with the statutory rights of any secured creditors. The Town shall promptly advertise the RWH for sale by competitive bid to Qualified Buyers. At the time of closing, the Owner shall pay to the Town in addition to the one half percent (1/z%) paid at the time of listing an additional one and one-half percent (1 '/2 %), for a maximum fee of two percent (2%) of the actual sales price. In the event of a listing of the RWH pursuant to this paragraph, the Town is entitled to require the Owner to accept the highest of any qualified bids which satisfies the Owner's financial or other obligations due under the promissory note secured by a first deed of trust and deed of trust in favor of the Town as described herein, and to sell the RWH to such qualified bidder. 1n accordance with the Gypsum Ordinance and the Housing Plan, the Town may in its sole discretion elect to purchase a RWH under this paragraph for rental or for sale to a Qualified Buyer. Upon default of Owner, as provided in paragraphs 5(a) and 5(b), the Town shall have the right, in its sole discretion, to cure the default or any portion thereof. In such event, the Owner shall be personally liable to the Town for past duc payments made by the Town together with interest thereon at the rate specified in the promissory note secured by the deed of trust, plus one percent (1 %) in addition to the interest rate identified in the promissory note and all actual expenses of the Town incurred in curing the default. The Owner shall be required by the Town to execute a promissory note on commercially reasonable terms acceptable to Town and secured by deed of trust encumbering the RWH in favor of the Town for the amounts expended by the Town as specified herein, including future advances made for such purposes. The Town shall be entitled to all rights and remedies under the deed of trust including the right of foreclosure. The Owner may cure the default and satisfy its obligation to the Town under this subparagraph at any time prior to execution of a contract for sale, upon such reasonable terms as specified by the Town. Otherwise, Owner's indebtedness to the Town shall be satisfied from the Owner's proceeds at closing. If the RWH is sold to a non-qualified buyer, the Town shall receive twenty (20) percent of the purchase price as provided for in Section 2(c)(v) above. 6. Option to Buy; Release and Waiver of Restrictions on RWH. (a) In the event that a holder of a first deed of trust or mortgage on the RWH becomes the record owner of the RWH by way of a deed in lieu of foreclosure, a public trustee's confirmation deed, or a sheriff s confirmation deed, the Town has a priority right of refusal and option to buy the RWH from such record owner pursuant to the Option to Buy. Upon becoming the record owner of such RWH, such person or entity shall provide written notice thereof to the Town as provided in the notice requirement set forth in Exhibit A, Option to Buy, attached hereto. Upon receipt of such notice, the Town has the right to exercise its option to buy as provided in said Exhibit A. (b) The Town agrees to release and waive the deed restrictions and other covenants set forth herein, in favor of the holder of a first deed of trust or mortgage pertaining to a foreclosed RWH, if and only if (i) said holder (including assigns of the holder) of a first deed of trust or mortgage becomes the record owner of a RWH by way of deed in lieu of foreclosure, public trustee's confirmation deed or sheriff's confirmation deed; and (ii) both the Town and County fail to exercise its Option to Buy the RWH as set forth in Exhibit A hereto and as provided in paragraph 6(a) hereof. At the time a Qualified Buyer acquires the RWH, the Town, subject to the Option to Buy, agrees to execute and record a subordination agreement with the holder of a first deed of trust or mortgage, subordinating the Town's rights under this Covenant, including but not limited to the deed restrictions applicable to the RWH, to said first deed of trust or mortgage. (c) If the Town, or its assigns, chooses not to exercise the Option to Buy as provided herein, Eagle County can exercise the right in the Town's place. 7. If the Town or its assigns exercises the Option to Buy and acquires title to the RWH as set forth in Exhibit A, the Town or its assigns may thereafter sell the RWH to a Qualified Buyer or rent the RWH in accordance with the terms of the Housing Plan or Ordinance. 8. Covenant Runs with the Land. Declarant and all subsequent Owners of the RWH, and all other parties with an interest in title to the RWH hereby acknowledge or are deemed to acknowledge by virtue of recordation of the deed by which such Owner takes title to the RWH that this Covenant shall constitute a covenant running with the RWH, as a burden thereon, and shall be specifically enforceable by the Town and their -~- respective successors and assigns, as applicable, by any appropriate legal action including but not limited to specific performance, injunction, reversion, or eviction. 9. Notices. Any notice, consent, or approval that is required to be given hereunder shall be given by mailing the same, certified mail, return receipt requested, properly addressed and with postage fully prepaid, to any address provided herein or to any subsequent mailing address of the parties indicated below as long as prior written notice of the change of address has been given to the all parties as indicated. Said notices, consents and approvals shall be sent to the following addresses unless otherwise notified in writing: To Declarant: Stratton Flats LLC 408 As en Business Center Suite 209 As en CO 81611 To Stratton Flats HOA: To the address set forth in the Articles of Inco oration and on record with the Secretar of State To Town of Gypsum: Town of G sum Post Office Box 130 G sum CO 81637-0130 To Eagle County: Ea le Count c/o Count Attorne P.O. Box 850 Ea le Colorado 81631-0850 To Owner: To the address set forth in the records of the Eagle County Tax Assessor for u oses of mailin tax bills. 10. Dispute Resolution. There is hereby reserved to the Town and their respective successors and assigns, any and all remedies provided in law or equity for breach of this Covenant or any of its terms. In any dispute, each party shall bear its own costs and fees. The exclusive forum for any dispute resolution shall be the Eagle County District Court. 11. Severability. Whenever possible, each provision of this Covenant and any other related document shall be interpreted in such a manner as to be valid under applicable law; but if any provision of any of the foregoing shall be invalid or prohibited under said applicable law, such provisions shall be ineffective to the extent of such invalidity or prohibition without invalidating the remaining provisions of such documents. 12. Choice of Law. This Covenant and each and every related document are to be governed and construed in accordance with the laws of the State of Colorado. 13. Successors. Except as otherwise provided herein, the provisions and covenants contained herein shall inure to and be binding upon the respective heirs, successors and assigns of the Declarant, any Owner of the RWH, and the Town. 14. Section Headings. Paragraph or section headings within this Covenant are inserted solely for convenience or reference, and are not intended to, and shall not govern, limit or aid in the construction of any terms or provisions contained herein. 15. Waiver. No claim of waiver, consent or acquiescence with respect to any provision of this Covenant shall be valid against the Owner of the RWH and the Town except on the basis of a written instrument executed by both the Owner of the RWH and the Town. However, the party for whose benefit a condition is inserted herein shall have the unilateral right to waive such condition. 16. Gender and Number. Whenever the context so required herein, the neuter gender shall include any or all genders and vice versa and the use of the singular shall include the plural and vice versa. 17. Personal Liability. By taking title to the RWH, the Owner agrees that he or she shall be personally liable for compliance with the applicable terms and conditions of this Covenant. 18. Further Actions. The Declarant for so long as Declarant owns the RWH and the Town agree to execute such further documents and take such further actions as may be reasonably required to carry out the provisions and intent of this Covenant or any Covenant or document relating hereto or entered into in connection herewith. 19. Modifications. Any modifications of this Covenant shall be effective only when made by writings signed by the Town and the Owner of the RWH and recorded with the Clerk and Recorder of Eagle County, Colorado. The Town reserves the right to amend this Covenant unilaterally where deemed necessary to effectuate the purpose and intent of this Covenant, and where such unilateral action does not materially impair an Owner's rights or any lender's rights under this Covenant. The Owner and the Town agree to modify this covenant as necessary to comply with lending requirements imposed by Fannie Mae and other lending entities. 20. Perpetuities Savings Clause. If any of the terms, covenants, conditions, restrictions, uses, limitations, obligations or options created by this Covenant or any of its Exhibits shall be unlawful or void for violation of: (a) the rule against perpetuities or some similar statutory provision, (b) the rule restricting restraints on alienation, or (c) any other statutory or common law rules imposing like or similar time limits, then such provision shall continue only for the period of the lives of the current duly elected and seated Gypsum Town Councilmembers, their now living descendants, if any, and the survivor of them, plus twenty-one (21) years. IN WITNESS WHEREOF, the parties hereto have executed this instrument on the day and year above first written. STRATTON FLATS, LLC By: MERITAGE DEVELOPMENT GROUP, LLC, MANAGER By: Scott B. Russell, Manager STATE OF COLORADO ) ss. COUNTY OF ) Subscribed and sworn to before me this day of , 20 Witness my hand and official seal. My commission expires: Notary Public ~~ ACCEPTANCE BY TOWN OF GYPSUM The Foregoing Master Covenant for the Occupancy and Resale of Town of Gypsum Restricted Workforce Housing and its terms are hereby adopted and declared by the Town of Gypsum TOWN OF GYPSUM, COLORADO By: Steve Carver, Mayor STATE OF COLORADO COUNTY OF ss. Subscribed and sworn to before me this day of , 20 Witness my hand and official seal. My commission expires: Notary Public EXHIBIT A OPTION TO BUY If the holder (or holder's assigns) of a promissory note secured by a first deed of tY-ust on the RWH acquires title to said RWH by deed in lieu of foreclosure or by confirmation deed from the public trustee or sheriff, Town of Gypsum (or its assigns) shall have the option to purchase the Property which shall be exercised in the following manner: 1. Notice. The Owner and the holder shall give such notice to the Town as is required by law or as required in the Master Covenant. Said notice shall be sent by certified mail, return receipt requested, and addressed as follows: Town of Gypsum Post Office Box 130 Gypsum, CO 81637-0130 and Economic Council of Eagle County Post Office Box 1705 Edwards, CO 81632 and Ea le Count c/o Count Attorne P.O. Box 850 Ea le Colorado 81631-0850 2. Option to buy. The Town or its assigns shall have (sixty) 60 days after receipt of notice by the Town of Gypsum, as provided for in paragraph 1 above, of the public trustee's or sheriff's confirmation deed or deed in lieu of foreclosure in which to exercise this Option to Buy. In the event the Town chooses not to exercise the option to buy as set forth herein, Eagle County may exercise that right in the Town's place. In the event of a public trustee's or sheriff's confirmation deed, the County or its assigns shall have until the end of redemption to exercise its option to buy as provided herein. In the event of a deed in lieu of foreclosure, Eagle County shall have twenty (20) days after either the receipt of notice {00085782.D0(' / 5) from the Town that it will not exercise its option to buy as provided herein or the expiration of sixty (60) days after the Town's receipt of notice of the deed in lieu of foreclosure. (a) In the event of foreclosure and issuance of a public trustee's or sheriff's confirmation deed, Town or Eagle County may exercise its Option to Buy by tendering to the Transferee of such deed or its assigns, in cash or certified funds, the redemption price that would have been required to redeem from such transferee as if the Town or Eagle County were the next redemptioner entitled to redeem under Colorado law, and any additional reasonable costs incurred by said transferee during the option period directly related to the foreclosure. (b) In the event of a deed in lieu of foreclosure, the Town or Eagle County may exercise its Option to Buy by tendering to the Transferee of the deed in lieu of foreclosure or its assigns, in cash or certified funds, an amount equal to the amount due on the note, secured by the deed of trust or mortgage, and any additional reasonable costs incurred by said transferee during the option period. 3. Title. Upon receipt of the option price, the Transferee shall deliver to the Town, its assignee, or Eagle County a special warranty deed, conveying the subject RWH to the Town, its assignee or Eagle County. The Transferee shall convey only such title to the subject RWH as the Transferee obtained by way of the foreclosure or by deed in lieu of foreclosure. The Transferee shall not create or participate in the creation of any additional liens or encumbrances against the subject RWH following the Transferee's acquisition of title to the subject RWH. The Transferee shall not be liable for any of the costs of conveyance to the Town, its assignee or Eagle County. 4. Release. Upon receipt of notice to the Town of a Transferee's acquisition of title to the subject RWH, the Town or its assigns shall have sixty (60) days in which to exercise the option to buy by notifying the Transferee in writing of its intent to exercise the option. In the event the Town chooses not to exercise the Option to Buy as set forth herein, Eagle County may exercise that right in the Town's place. In the event of a public trustee's or sheriff's confirmation deed, the County or its assigns shall have until the end of redemption to exercise its option to buy as provided herein. In the event of a deed in lieu of foreclosure, Eagle County shall have twenty (20) days after either the receipt of notice from the Town that it will not exercise its option to buy as provided herein or the expiration of sixty (60) days after the Town's receipt of notice of the deed in lieu of foreclosure. In the event that the Town or Eagle County does not notify the Transferee in writing of its intent to exercise the option to buy as set forth herein, the ~oooss~sz.~oc i s t 13 Town's Option to Buy and the Master Covenant recorded at Reception Number in the records of the Clerk and Recorder of Eagle County, Colorado shall be automatically released only with respect to the RWH which is the subject of said Option to Buy as of the end of the redemption period in the event of a public trustee's or sheriff' s confirmation deed or the end of the option period in the event of a deed in lieu of foreclosure. It is the intent of the Town that the Option to Buy and the referenced Master Covenant be terminated automatically upon the failure of the Town or the County to provide written notice of its intent to exercise its option to buy to the Transferee, whether such failure is intentional or unintentional, and that such termination will be effected without the necessity of any affirmative action on the part of the Transferee and without the necessity of recording a release of such Master Covenant. It is agreed that this section 4 shall not result in a release of the Master Covenant from the RWH that are not the subject of foreclosure or deed in lieu of foreclosure and nothing contained herein shall require Town to release and waive its ability to enforce the Master Covenant in the event of foreclosure of a lien in second or subsequent position or in the event of a deed in lieu of foreclosure of a lien in second or subsequent position. 5. Perpetuities Savings Clause. If any of the terms, covenants, conditions, restrictions, uses, limitations, obligations or options created by this Option to Buy shall be unlawful or void for violation of (1) the rule against perpetuities or some analogous statutory provision, (2) the rule restricting restraints on alienation, or (3) any other statutory or common law rules imposing like or similar time limits, then such provision shall continue only for the period of the lives of the current duly elected and seated Gypsum Town Councilmembers, Gypsum, Colorado, their now living descendants, if any, and the survivor of them, plus twenty-one (21) years. 6. Successors and Assigns. Except as otherwise provided herein, the provisions and covenants contained herein shall inure to and be binding upon the heirs, successors and assigns of the parties hereto. 7. Modifications. The parties hereto agree that any modification to this Option to buy shall be effective only when made by writings signed by all parties and recorded with the Clerk and Recorder of Eagle County, Colorado. 00085782. DOC ! S f 14 EXHIBIT B LEGAL DESCRIPTION OF THE RWH is EXHIBIT D WHU UNIT FORM OF RESTRICTIVE COVENANT {ooisioa~.~oci i }9 ~~ ~ ~/`~ ~ MASTER COVENANT FOR THE OCCUPANCY AND RESALE OF EAGLE COUNTY HOUSING IN EVENT OF DEFAULT OR INITIATION OF FORECLOSURE, NOTICE MUST BE PROVIDED TO EAGLE COUNTY, COLORADO PURSUANT TO THE TERMS OF THIS COVENANT, THE REFERENCED OPTION TO BUY SET FORTH IN PARAGRAPH 6 HEREOF, AND C.R.S. 38-38-101 ET. SEQ. THIS MASTER COVENANT FOR OCCUPANCY AND RESALE OF EAGLE COUNTY HOUSING (the "Covenant") is made and entered into this day of , 2008, by STRATTON FLATS, LLC, (together with its successors and assigns "Declarant") and is enforceable by EAGLE COUNTY, COLORADO, or its designee (the "County") as and to the extent set forth herein. RECITALS: This Covenant is made with reference to the following facts: A. Declarant owns the real property legally described in "Master Exhibit A" attached hereto and incorporated herein by this reference (the "Unit"). For the purposes of this Covenant, the Unit includes all appurtenances, improvements, and fixtures associated therewith. B. The County has promulgated the Guidelines, as amended from time to time, which govern development, eligibility, and transfer of Local-Resident Housing. C. Declarant and the County desire to enter into this Covenant, which provides for the designation of the Unit as a WHU. Buyers. D. There is a demonstrated need for affordable housing for residents of the County. E. This Covenant restricts the acquisition and transfer of the Unit to Qualified F. Declarant desires to enter into this Covenant restricting the acquisition or transfer of the Unit to Qualified Buyers as set forth in the Guidelines. In addition, the Declarant intends that this Covenant shall constitute the terms and provisions controlling the resale of the Unit as a WHU. Finally, by this Covenant, Declarant restricts the Unit against use and occupancy inconsistent with this Covenant and in accordance with the terms of the Guidelines. NOW, THEREFORE, in consideration of the foregoing, Declarant hereby represents, covenants, and agrees as follows: Definitions: (a) "Agent" means the entity appointed by Eagle County to resell WHUs and to administer restrictions on them. (b) "Guidelines" means any supplemental rules, restrictions, and guidelines that Eagle County may, from time to time at its discretion, promulgate regarding the WHUs not ~ Detu~ed terms are capitalized throughout afar detined in Section 1. ,00194391 .DOC 4 ~'L inconsistent with this Covenant, including but not limited to the Eagle Coirntr Local-Resident Hoarsing Guidelines and Adnzrnistratire Procedures. (c) "Owner" is a Qualified Buyer acquiring an ownership interest in a WHU in compliance with the terns and provisions of this Covenant and the Guidelines. Such person, persons, or entity shall be deemed an Owner of a WHU only during the period of such Owner's ownership interest in the relevant WHU and shall be obligated hereunder for the full and complete performance and observance of all restrictions encumbering such WHU as set forth herein during such period. (d) "Qualified Buyers" arc (i) Qualified Buyers meeting the eligibility requirements as defined in Section V the Guidelines or (ii) local employers or entities purchasing WHUs for purchase or rent by their employees pursuant to the Guidelines. (c) "WHU" is Affordable For-Sale Housing offered only to Qualified Buyers, the occupancy, sale, assignment, or transfer of which is limited by the terms of this Covenant and the Guidelines. 2. Restrictions on Owner's Use, Occupancy, and Re-Sale of the Unit: (a) The Unit is hereby designated a WHU. Its use and occupancy shall be limited to housing for Qualified Buyers as set forth in this Covenant and the Guidelines, with the following exceptions: (i) The County may acquire title to the Unit in the event of foreclosure or as permitted by this Covenant and the Guidelines. (ii) Certain districts or governmental entities may acquire title to the Unit fi-o-n time to time, as permitted under a separate intergovernmental agreement with the County. (b) Re-Sale of Unit: In the event that an Owner desires to sell the Unit, the Owner shall sell only to a Qualified Buyer for a maximum resale price determined by the Agent pursuant to the Guidelines. The Owner shall use the Agent as the sole and exclusive sales broker for the Unit. Any and all sales commission Eagle County or its Agent charges shall be borne by the Owner and not paid by the Qualified Buyer. This maximum resale price shall be based on the wage increases in Eagle County or a similar metric identifted in the Guidelines. The Owner shall comply with and follow all of the rc-sale procedures as set forth in the Guidelines, including the maximum sales price requirements provided for therein. Breach of Covenant for Violation of Use, Occupancy or Transfer Restrictions: (a) Any remedy for a breach of this Covenant by an Owner or a Qualified Buyer is specifically enforceable by the County and its Board of County Commissioners, and their respective successors and assigns, as applicable. (b) Sale or Transfer to aNon-Qualitied Buyer or Violation of Resale Restrictions: (i) If title to the Unit vests in any party who is not a Qualified Buyer, the terms of this Covenant that may require sale or other relief shall govern. oo~ya39i.ooc -~ (ii) If the Unit is sold or conveyed in violation of the Guidelines or this Covenant, such sale or conveyance shall be void ab initro and shall confer no title whatsoever upon the purported buyer. Each and every conveyance of the Unit, for all purposes, shall be deemed to include, incorporate, and be made subject to the covenants herein contained, even without reference therein to this Covenant. (c) Violation of Use or Occupancy Restrictions: If a violation of this Covenant is discovered, the County shall follow the procedures set forth below and any additional consistent procedures provided for in the Guidelines: (i) Upon discovery of a violation, the County shall give written notice to the Owner of the Unit. Not less than 15 days after issuing notice to the Owner of the Unit, the County may inspect the Unit between the hours of 8:00 a.m. and 5:00 p.m., Monday through Saturday, upon no less than 24 hours written notice to the Owner to investigate such alleged violation. For purposes of this paragraph only, notice of hearing or inspection to the Owner shall be provided by posting notice on the front door of the Unit a minimum of 24 hours in advance of the compliance hearing or inspection. (ii) Upon completion of the hearing and inspection, the County may issue a written finding that there has been a violation of this Covenant or the Guidelines, and that the Owner of the Unit has breached this Covenant. If the Owner does not cure the breach in 60 days, the County may elect to assess penalties against the Owner. Penalties which the County may assess against the Owner include, but shall not be limited to, requiring sale of a WHU, assessing penalties and seeking remedies set forth in the Eagle County Land Use Regulations or the Guidelines then in effect. (iii) In addition to any of the elective remedies enumerated above, in the event of a violation of this Covenant by an Owner, his or her heirs, successors, or assigns, the Maximum Sales Price of a WHU as defined and set forth in the Guidelines shall, upon the date of such breach as determined by the County cease to increase, and shall remain fixed until the date of cure of said violation. (d) Remedy: If the Owner tails to cure any violation of this Covenant or the Guidelines, the County may pursue any and all available legal action, including, but not limited to, filing a complaint seeking specific performance of this Covenant or a mandatory injunction requiring the salt of the Unit by the Owner. The costs of such sale shall be taxed against the proceeds of the sale with the balance being paid to the Owner. 4. Seniority of Covenant: Any interest in or lien upon the Unit acquired by any person or entity shall be subject and subordinate to the covenants and restrictions set forth in this Covenant. Violation of Covenant in the Case of Default Under a Promissory Notc or Foreclosure: (a) Owner shall not default in payment or other obligations due or to be performed under a promissory note secured by a first deed of trust encumbering the Unit. The Owner of the Unit must notify the County, in writing, of any notification received from a lender, or its assigns, of past due payments or default in payment or other obligations due or to be performed under a promissory note secured by a first deed of trust, as described herein, within five calendar days of Owner's notification from lender, or its assigns, of said default or past due payments. 00194391.DOC ~ ~~ (b) Upon default by the Owner under the teens and provisions of any deed of trust or mortgage on the Unit, the County may, in its sole discretion, offer loan counseling or distressed loan services to the Owner, if any of these services are available. Any time after default the County is entitled to require the Owner to sell the Unit to avoid the commencement or continuance of any foreclosure proceeding against the Unit. If the County detennincs that sale of the Unit is necessary to avoid the foreclosure process, the County may require, and the Owner shall immediately execute, a standard listing contract on forms approved by the Colorado Real Estate Commission with the County, providing fora 30-day listing period. At that time, the Owner shall deposit with the County an amount equal to one half percent (%z %) of the estimated value of the Unit. If the Owner is unable to pay the one half percent (%z %) at the time of listing, the same shall be paid at the time of closing at the County's sole discretion. If a sales contract has not been executed within the initial 30-day period, the Owner shall extend the listing period for an additional 180 days, provided such extension does not conflict with the statutory rights of any secured creditors. The County shall promptly advertise the Unit for sale by competitive bid to Qualified Buyers. At the time of closing, the Owner shall pay to the County in addition to the one half percent (''/z%) paid at the time of listing an additional one and one-half percent (1 '/z %), for a maximum fee of two percent (2%) of the actual sales price. In the event of a listing of the Unit pursuant to this Paragraph S.b, the County is entitled to require the Owner to accept the highest of any qualified bids which satisfies the Owner's financial or other obligations due under the promissory note secured by a first deed of trust and deed of trust in favor of the County as described herein, and to sell the Unit to such qualified bidder. In accordance with the Guidelines and the Guidelines, the County may in its sole discretion elect to purchase the Unit under this Paragraph S.b for rental or for sale to a Qualified Buyer. Upon default of Owner, as provided in Paragraphs 5.a and S.b, the County shall have the right, in its sole discretion, to cure the default or any portion thereof. In such event, the Owner shall be personally liable to the County for past due payments made by the County together with interest thereon at the rate specified in the promissory note secured by the deed of trust, plus one percent (1 %) in addition to the interest rate identified in the promissory note and all actual expenses of the County incut-t-ed in curing the default. The Owner shall be required by the County to execute a promissory note on commercially reasonable terms acceptable to County and secured by deed of trust encumbering the Unit in favor of the County for the amounts expended by the County as specified herein, including future advances made for such purposes. The County shall be entitled to all rights and remedies under the deed of trust including the right of foreclosure. The Owner may cure the default and satisfy its obligation to the County under this subparagraph at any time prior to execution of a contract for sale, upon such reasonable terms as specified by the County. Otherwise, Owner's indebtedness to the County shall be satisted from the Owner's proceeds at closing. ;00194391 .DOC ~ 4 6. Option to Buy; Release and Waiver of Restrictions on Unit: (a) In the event that a holder of a first deed of trust or mortgage on the Unit becomes the record owner of the Unit by way of a deed in lieu of foreclosure, a public trustee's confirnation deed, or a sheriff s confirmation decd, the County has an Option to Buy the Unit from such record owner. Upon becoming the record owner of the Unit, such person or entity shall provide written notice thereof sent by certified mail, return receipt requested to the County as provided herein. Upon receipt of such notice, the County has the right to exercise its Option to Buy as provided in this Paragraph 6. (b) The County or its assigns shall have (sixty) 60 days after receipt of notice by the County, as provided for in paragraph (a) above, of the public trustee's or sheriff's confirmation decd or deed in lieu of foreclosure in which to exercise this Option to Buy. In the event of foreclosure and issuance of a public trustee's or sheriffs confirmation deed, the County may exercise its Option to Buy by tendering to the transferee of such deed or its assigns, in cash or certified funds, the redemption price that would have been required to redeem from such transferee as if the County were the next redemptioncr entitled to redeem under Colorado law, and any additional reasonable costs incurred by said transferee during the option period directly related to the torcclosurc. ii. In the event of a deed in lieu of foreclosure, the County may exercise its Option to Buy by tendering to the transferee of the deed in lieu of foreclosure or its assigns, in cash or certified fimds, an amount equal to the amount due on the note, secured by the deed of trust or mortgage, and any additional reasonable costs incurred by said transferee during the option period. Upon receipt of the option price, the transferee shall deliver to the County or its assignee a special warranty deed, conveying the Unit to the County or its assignee. The transferee shall convey only such title to the subject Unit as the transferee obtained by way of the foreclosure or by deed in lieu of foreclosure. The transferee shall not create or participate in the creation of any additional liens or encumbrances against the Unit following the transferee's acquisition of title to the Unit. The transferee shall not be liable for any of the costs of conveyance to the County or its assignee. Upon notice to the County of a transferee's acquisition of title to the Unit, the County or its assigns shall have sixty (60) days in which to exercise the Option to Buy by notifying the transferee in writing of its intent to exercise the Option to Buy. {00194391.DOC ~ (c) In the event that the County does not notify the transferee in writing of its intent to exercise the Option to Buy as set forth herein, the County's Option to Buy and this Covenant shall be automatically released only with respect to the Unit as of the sixty-first day after notice to the County as provided for above. (d) It is the intent of the County that this Option to Buy terminate automatically upon the failure of the County to provide written notice of its intent to exercise its Option to Buy to the U-ansfercc, whether such failure is intentional or unintentional, and that such termination will be effected without the necessity of any affirmative action on the part of the transferee and without the necessity of recording a release of this Covenant. (e) It is agreed that this subparagraph shall not result in a release of this Covenant ti-om the Unit that are not the subject of foreclosure or deed in lieu of foreclosure and nothing contained herein shall require County to release and waive its ability to enforce this Covenant in the event of foreclosure of a lien in second or subsequent position or in the event of a decd in lieu of foreclosure of a lien in second or subsequent position. (t) The County agrees to release and waive the deed restrictions and other covenants set forth herein, in favor of the holder of a first deed of trust or mortgage pertaining to a foreclosure of the Unit, if and only (i) said holder (including assigns of the holder) of a first deed of trust or mortgage becomes the record owner of the Unit by way of decd in lieu of foreclosure, public trustee's confirmation decd or sheriff's continuation deed; and (ii) the County fails to exercise its Option to Buy the WHU as set forth in this Paragraph 6. At the time a Qualified Buyer acquires the Unit, the County agrees to execute and record a subordination agreement with the holder of a first decd of trust or mortgage, subordinating the County's rights under this Master Covenant, including but not limited to the deed restrictions applicable to the Unit, to said first deed of trust or mortgage. (g) If the County or its assigns exercises the Option to Buy and acquires title to the Unit, the County or its assigns may thereafter sell the Unit to a Qualified Buyer or rent the Unit in accordance with the terms of the Guidelines or Guidelines. 7. Covenant Runs with the Land. Declarant and all subsequent Owners of the Unit, and all other parties with an interest in title to the Unit hereby acknowledge or arc deemed to acknowledge by virtue of recordation of the deed by which such Owner takes title to the Unit that this Covenant shall constitute a covenant running with the WHU, as a burden thereon, and shall be specifically enforceable by the County and its Board of County Commissioners, and their respective successors and assigns, as applicable, by any appropriate legal action including but not limited to specific performance, injunction, reversion, or eviction. S. Notices. Any notice, consent, or approval that is required to be given hereunder shall be given by mailing the same, certified mail, return receipt requested, properly addressed and with postage fully prepaid, to any address provided herein or to any subsequent mailing address of the parties indicated below as long as prior written notice of the change of address has been given to the all parties as indicated. Said notices, consents and approvals shall be sent to the following addresses unless otherwise notified in writing: 00194391.DOC / 4 [7~ To Declarant: Stratton Flats, LLC 408 Aspen Business Center, Suite 209 Aspen, CO 8161 1 To Eagle County: Eagle County Housing Depa--tment Post Office Box 179 Eagle, CO 81631-0179 With copy to: Eagle County Attorney Post Office Box 850 Eagle, CO 81631 To Owner: To the address set forth in the records of the Eagle County Tax Assessor for purposes of mailing tax bills. 9. Dispute Resolution. There is hereby reserved to the County any and all remedies provided by law for breach of this Covenant or any of its terms. In any dispute, each party shall bear its own costs and fees. The exclusive forum for any dispute arising from or relating to the Covenant shall be the Eagle County District Court. 10. Severability. Whenever possible, each provision of this Covenant and any other related document shall be interpreted in such a manner as to be valid under applicable law; but if any provision of any of the foregoing shall be invalid or prohibited under said applicable law, such provisions shall be ineffective to the extent of such invalidity or prohibition without invalidating the remaining provisions of such documents. 1 1. Choice of Law. This Covenant and each and every related document are to be governed and construed in accordance with the laws of the State of Colorado. 12. Successors. Except as otherwise provided herein, the provisions and covenants contained herein shall inure to and be binding upon the respective heirs, successors and assigns of the Declarant, any Owner of the Unit, and the County. 13. Section Headings. Paragraph or section headings within this Covenant are inserted solely for convenience or reference, and are not intended to, and shall not govern, limit or aid in the construction of any terms or provisions contained herein. 14. Waiver. No claim of waiver, consent or acquiescence with respect to any provision of this Covenant shall be valid against the Declarant and the County except on the basis of a written instrument executed by both the Declarant and the County. However, the party for whose benefit a condition is inserted herein shall have the unilateral right to waive such condition. 15. Gcndcr and Number. Whenever the context so required herein, the neuter gender shall include any or all genders and vice versa and the use of the singular shall include the plural and vice versa. 16. Personal Liability. By taking title to the Unit, an Owner agrees that he or she shall be personally liable for compliance with the applicable terms and conditions of this Covenant. ooi9a~~~i.~xx~ ~ '~2 17. Further Actions. The Declarant for so long as Declarant owns the Unit, the Owner of the Unit, and the County agree to execute such further documents and take such further actions as may be reasonably required to carry out the provisions and intent of this Covenant or any Covenant or document relating hereto or entered into in connection herewith. 18. Modifications. The Declarant, any Owner of the Unit, and the County agree that any modifications of this Covenant shall be effective only when made by writings signed by both parties and recorded with the Clerk and Recorder of Eagle County, Colorado. The Cotmty reserves the right to amend this Covenant unilaterally where deemed necessary to effectuate the purpose and intent of this Covenant, and where such unilateral action does not materially impair an Owner's rights or any lender's rights under this Covenant. The Declarant, any Owner of the Unit, and the County agree to modify this covenant as necessary to comply with lending requirements imposed by Fannie Mac and other lending entities. 19. Perpetuities Savings Clause. if any of the terms, covenants, conditions, restrictions, uses, limitations, obligations or options created by this Covenant or any of its Exhibits shall be unlawful or void for violation of: (a) the rule against perpetuities or some similar statutory provision, (b) the rule restricting restraints on alienation, or (c) any other statutory or common law rules imposing like or similar time limits, then such provision shall continue only for the period of the lives of the then-current duly elected and seated Eagle County Commissioners, and the then-current Eagle County employees, their now living descendants, if any, and the survivor of them, plus twenty-one (21) years. 1N WITNESS WHEREOF, the parties hereto have executed this instrument on the day and year above first written. By: STATE OF ) )ss: COUNTY OF ) STRATTON FLATS, LLC, a Colorado limited liability company By: Meritage Development Group, LLC, a Colorado limited liability company Scott B. Russell, Manager The foregoing instrument was acknowledged before me this day of , 2008, by Scott B. Russell, as Manager of Meritage Development Group, LLC, Manager of Stratton Flats, LLC. Witness my hand and official seal. U0194391.DOC ' 4; _~ My commission expires: Notary Public ;0019-~391.DOC -l ACCEPTANCE BY COUNTY OF EAGLE The Foregoing Deed Restriction Covenant for the Occupancy and Resale of Eagle County Housing and its terms arc hereby adopted and declared by Eagle County. EAGLE COUNTY, COLORADO A body corporate and politic by and through its Board of County Commissioners By: Chaii7nan STATE OF COLORADO ) ss: COUNTY OF EAGLE ) The foregoing instrument was acknowledged before me this day of 2008, by ,Chairman Eagle County Board of County Commissioners. Witness my hand and ofticial seal. My commission expires: Notary Public 00194191.DOC 4; 10 C9- Master Exhibit A: Legal Description of the Unit Inse~7 Lega! Description of Ur7it 00194391.DOC ! a; ~ ~ `~i EXHIBIT E PRIORITY RESERVATION AGREEMENT {00191243.DOC / 1}~ ~ ,~ / / PRIORITY RESERVATION AGREEMENT REGARDING DEED RESTRICTED HOUSING ON STRATTON FLATS This PRIORITY RESERVATION AGREEMENT REGARDING DEED RESTRICTED HOUSING ON STRATTON FLATS (the "Agreement") is entered into to be effective as of the th day of , 2008, by and between THE EAGLE COUNTY HOUSING AUTHRORITY, a body corporate and politic ("Eagle County Housing Authority")and ("Reserving Party"). RECITALS WHEREAS, Eagle County Housing Authority, as a successor to Eagle County, Colorado, a body corporate and politic ("Eagle County"), Meritage JFA Gypsum, LLC, a Colorado limited liability company, and Stratton Flats, LLC, a Colorado limited liability company, previously entered into that certain Agreement to Provide Deed Restricted Housing on Stratton Flats dated January 15, 2008, First Amendment to Provide Deed Restricted Housing on Stratton Flats dated February 28, 2008, and Second Amendment to Provide Deed Restricted Housing on Stratton Flats dated August , 2008 (collectively, the "Deed Restricted Housing Agreement"). WHEREAS, the Deed Restricted Housing Agreement provides for Stratton Flats, LLC's acquisition and construction of a residential development on the Property described herein, consisting of 152 single family homes, 118 townhomes, and 69 condominium units, together with certain onsite and offsite improvements (collectively, the "Project"). WHEREAS, for purposes of this Agreement, the single family homes, townhomes, and condominium units are referred to collectively herein as "Units", and each separately is referred to herein as a "Unit". WHEREAS, among other things, the Deed Restricted Housing Agreement obligates Stratton Flats, LLC to perform the Project and sell a portion of the Units subject to certain restrictions upon the initial sales price of the Units and subsequent resale price of the Units as more fully defined herein as Restricted Workforce Housing Units and Workforce Housing Units (collectively the "Deed Restricted Units"), and to sell the Deed Restricted Units to purchasers identified by The Eagle County Housing Authority who either meet certain income and/or residency requirements specified by The Eagle County Housing Authority or meet certain income and/or residency requirements specified by the Town of Gypsum, Colorado. WHEREAS, in the course of performing the Project, Stratton Flats, LLC shall make certain quantities and types of the Deed Restricted Units available for purchase in releases (each individually, a "Release"). WHEREAS, the Deed Restriction Housing Agreement provides that employers may only purchase a Deed Restricted Unit upon approval by The Eagle County Housing Authority. WHEREAS, the Deed Restriction Housing Agreement provides that the Eagle County Housing Authority may grant "Priority Reservation Rights" as provided for herein to employers in negotiating for the purchase and sale of any Deed Restricted Units. 0018?083.DOC ? ~ ;Ocaibcr 3. 2008 .~ WHEREAS, the Eagle County Housing Authority desires to allow employers in Eagle County to be able to obtain housing for their workforce pursuant to the terms and conditions of this Agreement; WHEREAS, by this Agreement, the Eagle County Housing Authority and Reserving Party desire to provide for either Reserving Party's (or its Qualified Designee's) priority right to negotiate for the purchase one or more Deed Restricted Units from Stratton Flats, LLC. NOW, THEREFORE, for and in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereby agree as follows: 1. Certain Additional Definitions. For purposes of this Agreement, the following capitalized terms shall have the following meanings: (a) "Property" shall mean the land legally described on Exhibit A, attached hereto and incorporated herein by reference, and all appurtenances, improvements, and fixtures associated therewith, commonly known as "Stratton Flats". (b) "Qualified Designee" shall mean any third party identified in writing by Reserving Party to the Eagle County Housing Authority who may negotiate with Stratton Flats, LLC for the purchase of a Deed Restricted Unit and who otherwise meets the requirements to purchase a RWH Unit or WHU Unit, as determined by the Eagle County Housing Authority or its designee, in the Eagle County Housing Authority's sole and exclusive discretion. (c) "Pre-Release Notice" shall mean written notice from the Eagle County Housing Authority to Reserving Party of Stratton Flats, LLC's intention to offer for sale of certain Deed Restricted Units in the Project as described in a Release Notice for future Releases. (d) "Release Notice" shall mean written notice from Stratton Flats, LLC to the public of Stratton Flats, LLC's intention to offer for sale of certain Deed Restricted Units in the Project. (e) "Restricted Workforce Housing Unit" or "RWH Unit" shall mean a Deed Restricted Unit offered for sale only to qualified buyers meeting the Town of Gypsum's eligibility requirements for forty-five (45) days and then only to qualified buyers meeting the Eagle County Housing Authority's eligibility requirements as defined in Section V of the Eagle County Local- Resident Housing Guidelines (including any supplemental rules, restrictions thereto) or offered for sale to local employers or entities purchasing such units for purchase or rent by their employees pursuant to such guidelines, and whose occupancy, sale, assignment, or transfer are limited by the terms of: (1) the "Stratton Flats Housing Plan and Development Assistance Agreement" adopted by the Town of Gypsum on May 27, 2008 pursuant to Town of Gypsum Resolution No. 2008-24; (2) any ordinances, rules, restrictions, and guidelines that the Town of Gypsum may, from time to time at its discretion, promulgate regarding the RWH not inconsistent with the Stratton Flats Housing Plan and Development Assistance Agreement, including, but not limited to A Gypsum Ordinance Adding Section 18.05.050, Restricted Workforce Housing, to the Gypsum Municipal Code Adding Incentives and Concessions for Developers that Develop, Build and Offer For Sale Restricted Workforce Housing /n the Town of Gypsum; and (3) a recorded "Master Covenant for the Occupancy and Resale of Town of Gypsum Restricted Workforce {00182083.DOC / 2}2 Housing (RWH)," which shall either provide for an annual income restriction on the buyer thereof for earning capped at 140% of "AMI", or shall not provide for any such restriction, together with certain other occupancy and resale restrictions. (f) "Workforce Housing Unit" or "WHU Unit" shall mean a Deed Restricted Unit offered for sale only to qualified buyers meeting Eagle County's eligibility requirements as defined in Section V of the Eagle County Local-Resident Housing Guidelines (including any supplemental rules, restrictions thereto) or offered for sale to local employers or entities purchasing such units for purchase or rent by their employees pursuant to such guidelines, and the occupancy, sale, assignment, or transfer of which is limited by the terms of the Eagle County Local-Resident Housing Guidelines and a recorded Master Covenant for Occupancy and Resale of Eagle County Housing, which subjects the Deed Restricted to Unit to certain occupancy and resale restrictions. 2. The Eagle County Housing Authority has the exclusive right, exercisable in its sole and exclusive discretion, to set qualifications for applicants for WHU units and RWH units. RWH requirements shall be consistent with those imposed by the Town of Gypsum, as provided for in Exhibit C to the Second Amendment to the Agreement to Provide Deed Restricted Housing. No WHU or RWH unit may be sold without meeting Eagle County's qualification standards. Eagle County may qualify applicants itself, but it is under no obligation to do so. If Eagle County does not qualify applicants, Stratton Flats shall qualify applicants under the supervision of Eagle County. 3. Reservation Fee. Contemporaneous with this Agreement, Reserving Party has paid to The Eagle County Housing Authority in good funds anon-refundable "Reservation Fee" in the total amount of $ ,based upon a reservation price of $ per Deed Restricted Unit. In consideration of Reserving Party's payment of the Reservation Fee to the Eagle County Housing Authority, Reserving Party (or its Qualified Designee), is hereby granted a Priority Reservation Right as defined in Section 3 herein for the purchase and sale of a total of Deed Restricted Units in the Project, which Deed Restricted Units shall be of the following types and amounts: Unit Type Quantity Single Family Home(s) Townhome(s) Condominium(s) TOTAL Deed Restriction Type Quantity WHU Unit(s) RWH Unit(s) (non-income capped) RWH Unit(s) (income capped) WHU Unit(s) RWH Unit(s) (non-income capped) RWH Unit(s) (income capped) WHU Unit(s) Reserving Party's Reservation Fee is non-refundable to Reserving Party and shall not be applied to any purchase price paid by Reserving Party (or its Qualified Designee) purchase of a 3 Deed Restricted Unit from Stratton Flats, LLC. The Reservation Fee will be utilized by the Eagle County Housing Authority to maintain the overall affordability of the Project and shall not be returned to Reserving Party for any reason except those set forth in Section 18 herein. 4. .Priority Reservation Rights. The Reserving Party's priority right to negotiate with Stratton Flats, LLC for the purchase and sale of any Deed Restricted Unit described immediately above shall be based upon afirst-in-time priority system. Under such system, with respect to any Release, and prior to Stratton Flats, LLC's publication of a Release Notice to the public for a particular Release, Stratton Flats, LLC shall first deliver aPre-Release Notice to Reserving Party and to any other party who has entered into a Priority Reservation Agreement with the Eagle County Housing Authority that sets forth a written description of all Deed Restricted Units to be offered for sale by Stratton Flats, LLC in a particular Release of the Project. a. Reserving Party's Right to Negotiate for Purchase of Deed Restricted Unit(s). For a period of five (5) business days after Stratton Flats, LLC's delivery of aPre-Release Notice, Reserving Party shall have anon-exclusive right, together with any other party who has entered into a Priority Reservation Agreement with the Eagle County Housing Authority, to negotiate with Stratton Flats, LLC for Reserving Party (or its Qualified Designee), to purchase any Deed Restricted Unit or Units having the Unit Type and Deed Restriction Type reserved by Reserving Party as described in Paragraph 2 above. b. Standard Purchase Agreement. In the event that during such five (5) day period, Reserving Party successfully negotiates with Stratton Flats, LLC for Reserving Party's purchase of any such Deed Restricted Unit, then for each such Deed Restricted Unit, the Reserving Party's priority reservation of Deed Restricted Units with respect to future Releases and Pre-Release Notices shall be correspondingly reduced to reflect such successful negotiation. Reserving Party's (or its Qualified Designee's) successful negotiation for the purchase of a Deed Restricted Unit shall be evidenced by a written agreement between Reserving Party (or its Qualified Designee) and Stratton Flats, LLC for the purchase of such Deed Restricted Unit, which written agreement shall be a uniform, standard form purchase and sale agreement offered to all purchasers of Deed Restricted Units, providing for an earnest money deposit of Three Thousand Dollars and no/100 ($3,000.00), and at sales prices applicable to other situated Deed Restricted Units which are subject only to price adjustments which take into certain upgrades and modifications to the Deed Restricted Unit requested by Reserving Party (or its Qualified Designee) (a "Standard Purchase Agreement"). c. Stratton Flats, LLC's Rights to Release Deed Restricted Units to Public. For any Deed Restricted Unit types reserved by Reserving Party (or its Qualified Designee) described in aPre-Release Notice for which Reserving Party (or its Qualified Designee) does not successfully negotiate for the purchase of such Deed Restricted Unit(s) pursuant to a Standard Purchase Agreement within such five (5) day period, then Stratton Flats, LLC shall be free to issue a Release Notice which includes any such Deed Restricted Unit, and shall be thereafter free to market for sale, solicit offers, and negotiate for the purchase and sale of any such Deed Restricted Unit to members of the public. In the event the Reserving Party shall not successfully negotiate for the purchase, the Reserving Party's number of priority reservations of Deed Restricted Units with respect to future Releases and Pre-Release Notices shall remain the same. {00182083.DOC / 2}4 d. Duration of Reservation Rights. Reserving Party's Priority Reservation Rights with Stratton Flats, LLC for the purchase of the Deed Restricted Unit(s) as described herein shall remain in effect until the earliest of: (1) Reserving Party (or its Qualified Designee) enters into a Standard Purchase Agreement with Stratton Flats, LLC for the purchase and sale of each such Deed Restricted Unit(s) described herein; or (2) Stratton Flats, LLC has sold out of a particular Unit type and Deed Restriction type; or (3) the expiration of the term of this Agreement. 5. Term. The term of this Agreement shall be for a period of time which commences with the date of this Agreement, and ends on January 1, 2012. 6. Additional Eligibility Requirements. In addition to the terms and conditions of any written purchase and sale agreement with Stratton Flats, LLC for the purchase of a Deed Restricted Unit, either Reserving Party (or its Qualified Designee), as the purchaser of such Deed Restricted Unit, shall also be subject to the following additional requirements: (a) RWH Unit Eligibility Requirements. For any Deed Restricted Unit that is a RWH Unit, Reserving Party (or its Qualified Designee), acknowledges and understands that the purchaser of such RWH Unit will be subject to certain eligibility and qualification requirements of the Town of Gypsum in order to purchase the RWH Unit, and that Reserving Party (or its Qualified Designee) shall confirm that Reserving Party (or its Qualified Designee) has satisfied such requirements prior to negotiating with Stratton Flats, LLC for the purchase of a Deed Restricted Unit. (b) WHU Unit Eligibility Requirements. For any Deed Restricted Unit which is an WHU Unit, Reserving Party (or its Qualified Designee) acknowledges and understands that the purchaser of such WHU Unit will be subject to certain eligibility and qualification requirements of the Eagle County Housing Authority in order to purchase the WHU Unit, and that Reserving Party (or its Qualified Designee) shall confirm that Reserving Party (or its Qualified Designee) has satisfied such requirements prior to negotiating with Stratton Flats, LLC for the purchase of a Deed Restricted Unit. 7. Additional Deed Restrictions. In connection with a Reserving Party's Qualified Designee's purchase of a Deed Restricted Unit, a Reserving Party's or its Qualified Designee may further subject a Deed Restricted Unit to a recorded deed restriction permitting the Reserving Party's re-purchase of the Deed Restricted Unit from its Qualified Designee. The Eagle County Housing Authority shall separately approve such additional deed restriction on a case-by-case basis, with a form of deed restriction approved by the Eagle County Housing Authority. 8. Amendments. This Agreement is subject to amendment only by the written consent of both of the parties. Any amendment will be effective as of the date provided in the amendment. 9. Notices. All notices hereunder will be in writing and will be deemed to have been given on the third day after mailing if mailed by Certified Mail, postage prepaid, and properly addressed to the parties as set forth below, or upon the day of delivery if delivered in person to the parties. Any such notice will be given to all of the following addresses: As to the Eagle County Housing Authority: Eagle County Attorney 500 Broadway Box 850 Eagle, Colorado 81631 Fax: 970.328.8699 Email: bryan.treu@eaglecounty.us With a copy to: Eagle County Managing Director: Housing and Development 500 Broadway Box 850 Eagle, Colorado 81631 Fax: 970.328.8699 Email: alex.potente@eaglecounty.us As to Reserving Party: Email: Either party may change its address for purposes hereof, by giving notice to the other parties as set forth above. 10. Entire Agreement. This Agreement constitutes the entire agreement between the parties; it supersedes any prior agreement or understandings among them, oral or written, all of which are hereby canceled. 11. Headings and Gender. The headings in this Agreement are inserted for convenience of reference only and will not affect interpretation of this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or the plural will include the singular and the plural, and pronouns stated in either the masculine or the neuter gender will include the masculine, the feminine, and the neuter. 12. Amendments. This Agreement is subject to amendment only by the written consent of both of the parties. Any amendment will be effective as of the date provided in the amendment. 13. Payment or Performance on Saturday, Sunday or Holiday. Whenever the provisions of this Agreement call for any payment or the performance of any act on or by a date that is not a Business Day, including the expiration date of any cure periods provided herein, then such payment or such performance shall be required on or by the immediately succeeding Business Day. For the purposes of this Agreement, the term "Business Day" shall mean a day other than a Saturday, Sunday or legal holiday in the State of Colorado. 14. Governing Law; Severability of Provisions; Mutual Drafting; Venue. It is the intention of the parties that the laws of the State of Colorado as the same may be amended from time to {00182083.DOC / 2}6 time, will govern the validity of this Agreement, the construction of its terms, and interpretation of the rights and duties of the parties. If any provision of this Agreement is held to be invalid, the remainder of this Agreement will not be affected thereby. This Agreement shall have been deemed to be drafted by all parties hereto. The exclusive venue for all disputes arising from or relating to this Agreement shall be Eagle County Colorado. 15. Binding Provisions. The covenants and agreements contained herein will be binding upon and inure to the benefit of the heirs, executors, administrators, successors, and permitted assigns of the respective parties hereto. 16. Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed an original but all of which will constitute one and the same instrument. 17. Restriction on Assignment. With the exception of a Qualified Designee, Reserving Party may not assign, convey or otherwise transfer any portion of its interest under this Agreement without the Eagle County Housing Authority's prior written consent, which the Eagle County Housing Authority may withhold in its sole and absolute discretion. This Agreement does not and shall not be deemed to confer upon or grant to any third party any right enforceable at law or equity arising out of any term, covenant, or condition herein or the breach thereof. 18. The Eagle County Housing Authority Liability. The Eagle County Housing Authority's only obligations with respect to this Agreement are as follows: 1) grant the Reserving Party the right to negotiate for the purchase of Deed Restricted Units on its behalf or that of its Qualified Designees and 2) grant Priority Reservation Rights to the Reserving Party in negotiating for the purchase and sale of any Deed Restricted Units. The County shall not be liable for the conduct or actions of Stratton Flats, LLC in carrying out any of its functions regarding the purchase and sale of Deed Restricted Units, including but not limited to, giving any required notifications, negotiating, or in any other matters set forth herein or related to the transfer of Deed Restricted Units. Additionally, any recovery by Reserving Party against the Eagle County Housing Authority for any violations of this Agreement shall be specifically limited to the return of the Reservation Fee. The Eagle County Housing Authority shall have no financial liabilities for costs, fees, lost income, lost profit, loss revenue, or any other incidental or consequential damages beyond the amount of the Reservation Fee. 19. No Recording. Reserving Party will not record this Agreement or any memorandum of or other reference to this Agreement in the real estate records of Eagle County, Colorado. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. EAGLE COUNTY: EAGLE COUNTY, COLORADO A body corporate and politic by and through its Board of County Commissioners By: Peter F. Runyon, Chairman of the Board of the Eagle County Housing Authority, Eagle County, Colorado Date {00182083.DOC / 2}8 ~~ RESERVING PARTY: Print Name Title Date Exhibit A (Legal description of the Property) PARCEL A, AMENDED LEHMANN PARCELS, ACCORDING TO THE "AMENDED EXEMPTION PLAT, LEHMANN PARCELS" FILED JUNE 30, 2006 AT RECEPTION NO. 200617646, COUNTY OF EAGLE, STATE OF COLORADO, AND THE RESUBDIVISION THEREOF ACCORDING TO THE "PRELIMINARY PLAT OF STRATTON FLATS PLANNED UNIT DEVELOPMENT", RECORDED MARCH 21, 2008 UNDER RECEPTION NO. 200806089, EAGLE COUNTY, COLORADO, AND THE "FINAL PLAT OF STRATTON FLATS PLANNED UNIT DEVELOPMENT, FILING 1" RECORDED MARCH 21, 2008 UNDER RECEPTION NO. 200806090 IN THE EAGLE COUNTY RECORDS, AND ANY SUPPLEMENTS AND/OR AMENDMENTS THERETO. {00182083.DOC / 2}10