CITY COUNCIL AGENDA MEMORANDUM

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1 City and County of Broomfield, Colorado To: From: Prepared by: CITY COUNCIL AGENDA MEMORANDUM Mayor and City Council George Di Ciero, City and County Manager Kristan Pritz, Director of Open Space and Trails Edward Scholz, Budget Manager Meeting Date Agenda Category Agenda Item # April 25, 2006 Council Business 9 (f) Agenda Title: Resolution No Authorizing the Second Amendment to the Purchase Agreement by and between the City and County of Broomfield and Cleo Marie Nordstrom and Carl Andrew Nordstrom Marital Trust for the Acquisition of Mineral Rights and Real Property Summary Proposed Resolution No will, if approved, authorize the second amendment to the purchase agreement with Cleo Marie Nordstrom and the Carl Andrew Nordstrom Marital Trust ( Seller ) to acquire the mineral rights she owns on the Nordstrom and Davis properties which are being acquired by Broomfield for open space. Each property is being acquired in phases which are noted on the map on page 2 of this Staff Memorandum. The original purchase agreement with Cleo Marie Nordstrom, for 91.4 acres, did not include the mineral rights for the property. The agreement with the Davis family to purchase their 59-acre property did include their mineral rights. The Davis and Nordstrom families each own 50% of the mineral rights on their property and on each other s property being acquired by Broomfield. The properties are adjacent to each other. The proposed agreement will acquire the 50% mineral interest owned by Seller on the Nordstrom and Davis properties. The 50% mineral interest owned by the Davis family for the Davis and Nordstrom properties has previously been addressed in the Davis Purchase Agreement. The proposed agreement provides for Broomfield to acquire 100% of the mineral rights for all the Davis and Nordstrom properties to be acquired for open space. The cost per acre for the Nordstrom property, including interest, is $21,058. The cost per acre for the mineral rights is $1,920. The total cost per acre for the property and mineral rights is $22,978. Prior Council Action January 12, 1999-Council approved the Purchase Agreement October 30, 2001-Council approved the First Amendment to the Purchase Agreement August 22, 2005-Council directed staff to exercise Broomfield s Option to purchase Parcels 6 North and 6 South. Financial Considerations The acquisition of the minerals as well as the land purchase is proposed to be paid for out of the Water Fund initially. The Open Space Sales and Use Tax Fund will reimburse the Water Fund. This expenditure has been incorporated into the Open Space Financial Plan. Alternatives The Council could decide not to purchase the mineral rights. Proposed Actions/Recommendations It is recommended that Resolution No be approved.

2 Nordstrom Second Amendment to the Purchase Agreement Page 2 BACKGROUND Proposed Resolution No will, if approved, authorize the Second Amendment with the Seller to acquire the mineral rights owned on the Nordstrom and Davis Properties which are being acquired by Broomfield for open space. Each property is being acquired in phases by Broomfield. The original configurations of the Nordstrom and Davis Properties are depicted below before Broomfield began acquiring land. The Nordstrom Property (91.4 acres) is located in the southwest corner of West 160th Avenue and Huron Street and is bisected by the Northwest Parkway. The Davis Property (59 acres) is located south and adjacent to the Northwest Parkway and east of Zuni Street. This space left intentionally blank.

3 Nordstrom Second Amendment to the Purchase Agreement Page 3 The map below shows the Davis and Nordstrom Properties in relation to surrounding Broomfield open lands as well as the parcels Broomfield has already acquired for open space, according to the Davis and Nordstrom Purchase Agreements (shown in green). History of the Davis and Nordstrom Purchase Agreements On January 12, 1999, Council approved a Purchase Agreement with Ms. Nordstrom that allowed for the acquisition of the Nordstrom Property over several years and divided the Nordstrom Property into six parcels. To date, Broomfield owns Parcels 1 through 5 that equal 47.2 acres. On October 30, 2005, Council approved the First Amendment to the Nordstrom Purchase Agreement to allow for corrections to the legal descriptions for the Nordstrom Property. On August 22, 2005, staff asked Council whether it wished to exercise Broomfield s option on the remaining Parcel 6 (north and south). Council directed staff to exercise the option to purchase the Parcel 6. Broomfield, by a letter dated August 25, 2005, informed Ms. Nordstrom of its exercise of the option to purchase Parcel 6 (north and south). Parcel 6 contains 44.2 acres. This option had expired more than a year earlier, but the Nordstrom Purchase Agreement contains a saving clause that extends Broomfield s ability to exercise the option. The vicinity map below shows the location of the Nordstrom Parcel 6 north/south and surrounding Broomfield open space purchased over past years. The following aerial map also shows the Davis Property (59 acres) that Broomfield is currently in the process of acquiring.

4 Nordstrom Second Amendment to the Purchase Agreement Page 4 On August 24, 2004, Council approved the Davis Agreement between Broomfield and the Davis family to acquire their Property, including the Davis family s 50% mineral interest in the Davis Property. To date, Broomfield has acquired Parcels 1 and 2. A portion of Parcel 6 is shown below when sunflowers were grown on the Nordstrom Property.

5 Nordstrom Second Amendment to the Purchase Agreement Page 5 Nordstrom and Davis Properties Mineral Rights Exchange The mineral rights on both the Nordstrom and Davis Properties are severed. The Seller owns 50% of the minerals and the Davis family owns the other 50% on the Nordstrom Property. In respect to the Davis Property, the Seller owns 50% of the mineral interest and the Davis family owns the other 50%. The existing Nordstrom No. 1-9 oil and gas well is located on the southeast corner of the Nordstrom Property. The existing Nordstrom No. 3-9 oil and gas well is located in the southeast corner of the Davis Property. The Davis Agreement called for the Davis family to arrange for a swap or exchange of mineral rights with Seller to consolidate the mineral rights under each property. To accomplish the swap, the Davis family would deed its mineral interest on the Nordstrom Property to Seller ( Davis Mineral Deed ) and Seller would deed its mineral interest on the Davis Property to the Davis family ( Nordstrom Mineral Deed ). The result would be that the Davis family would own 100% of the mineral interest on the Davis Property and Ms. Nordstrom would own 100% of the mineral interest on the Nordstrom Property. As Broomfield purchased each parcel on the Davis Property, it would obtain 100% of the minerals. It was anticipated that Broomfield would need to buy the Seller s mineral rights at some point in the future, if agreement could be reached, because the Nordstrom Purchase Agreement did not include the acquisition of minerals, except for sand and gravel. The Davis Agreement included the price of minerals. The Davis family was unable to implement the exchange of mineral rights as described above. However, the Davis family agreed to enter into an escrow agreement with Broomfield to allow for the exchange of minerals through the Davis and Nordstrom Mineral Deeds. The Second Amendment allows for the implementation of the mineral exchange. Purpose of the Second Amendment to the Purchase Agreement The purpose of the proposed Second Amendment is to provide for the purchase of the Seller s 50% mineral interest in the Nordstrom Property and the Davis Property. Through the mineral exchange, and deed from the Seller to Broomfield for all the minerals on the Nordstrom Property, Broomfield will own 100 percent of the minerals on the Nordstrom Property. The map below shows the location of the Nordstrom mineral rights associated with the proposed purchase. This space left intentionally blank.

6 Nordstrom Second Amendment to the Purchase Agreement Page 6 The reasons to purchase the minerals are listed below: 1. Broomfield s ownership of the minerals will give Broomfield the ability to control more effectively the mineral development on the Nordstrom and Davis Property Parcels owned by Broomfield because Broomfield will own both the surface and mineral estates: However, because there are existing oil and gas leases, Broomfield cannot eliminate mineral development allowed under the existing leases, unless Broomfield would buy out the lease rights; 2. As the mineral owner, Broomfield will have standing to seek termination of the mineral lease. Broomfield does not have termination power if it only owns the surface estate, i.e. land; and 3. As the mineral owner and lessor of the mineral leases, Broomfield would have the decision-making power to determine if any future mineral leases should be approved. Now, even if the existing leases are terminated, the Seller or the Davis family could lease their minerals to other oil and gas companies. The proposed purchase price for the minerals is $175,523. This proposed price is an estimate of value received from our oil and gas special counsel, Phil Barber, in consultation with a mineral appraiser, Gustavson Associates. Mr. Barber and Gustavson Associates reviewed well production records for the Nordstrom #1-9 Well, mineral development activity in the area, and the impact of increased oil and gas prices to develop the proposed purchase price. A similar valuation process for the minerals was used for the Davis Purchase Agreement that was approved by City Council in August Research to confirm the ownership of minerals has also been completed for both the Davis and Nordstrom properties. The Second Amendment allows the Seller to receive the royalties of the Nordstrom #1-9 Well as long as it is in operation, similar to the arrangement with the Davis family on the Nordstrom #3-9 Well on their property. Broomfield will receive royalties from any future wells.

7 Nordstrom Second Amendment to the Purchase Agreement Page 7 The Nordstrom #1-9 Well is estimated to have at least another 9 to 10 years of production. Under current well spacing regulations, there could be four additional wells drilled on the Nordstrom Property. Gustavson Associates believes that it is very possible that at least one additional well will be drilled on the Nordstrom Property, because there is some oil and gas development activity within one to three miles of the Nordstrom Property and oil and gas prices are at record highs. If Broomfield were to purchase the Seller s royalty interest, the price for the minerals would increase. To own all of the royalties from the well, Broomfield would also need to purchase the Davis family s 50% interest in the royalties of the Nordstrom #1-9 Well. It is not recommended that Broomfield spend the extra money to become the royalty owner as the primary reasons to purchase the minerals as outlined below can be met without expending the additional money to purchase the Nordstrom and Davis royalty interests. FINANCE The purchase price for Parcel 6 (north and south) is $784,477, as defined in the Nordstrom Purchase Agreement. The proposed mineral rights purchase price is $175,523. The total proposed purchase price is $960,000. The price per acre based on the total acreage plus the minerals and interest is $22,978. The following table depicts the land and mineral purchase price analysis. Land and Mineral Purchase Price Analysis Acres 91.4 Total Purchase Cost Plus Interest $1,924,711 Payments for the Nordstrom Property Mineral Rights Cost for Davis and $175,523 Nordstrom Total Cost $2,100,234 Price per Acre for Mineral Rights on the $1,920 Davis and Nordstrom 91.4 acres Price per Acre for Nordstrom $21,058 Total Price per Acre for Nordstrom $22,978 Property with Minerals on Davis and Nordstrom Properties The 50% mineral interest owned by the Davis family for the Davis and Nordstrom Properties does not require additional funding as this issue was addressed in the Davis Purchase Agreement. The price per acre for the Davis Property including interest and minerals is $29,005. The difference in price per acre between the two properties reflects the fact that the Davis Purchase Agreement was signed in fall 2004 when land and mineral prices had escalated. The Nordstrom Purchase Agreement was signed in January 1999, six years earlier when land prices were lower. In the past, the CIP Fund has provided funding for the Nordstrom Property purchase (Parcels 1 through 5) through advances from the Water Fund. It is recommended that the Open Space Sales and Use Tax Fund ( Open Space Fund ) provide the reimbursement to the Water Fund for all of the Nordstrom Property acquisition (Parcels 1 through 6) and the minerals instead of the CIP Fund. The Open Space Fund reimbursement is recommended because there is a desire to lessen impacts on the CIP Fund and Open Space monies are projected to be available for this purpose. The Staff has also incorporated this acquisition into the financial

8 Nordstrom Second Amendment to the Purchase Agreement Page 8 plan for acquiring open lands. The anticipated Open Space payback plan calls for the Open Space Fund to contribute $200,000 per year beginning in 2007 until the Water Fund is repaid. RESOLUTION NO Resolution No approves the Second Amendment and authorizes the Mayor or Mayor Pro Tem to sign the Second Amendment. (Please note that the exhibits to the Second Amendment have not been included in the packet due to the length of the documents. Staff will have a complete Second Amendment with exhibits at the council meeting if there are any questions). RECOMMENDATION It is recommended that Resolution No be approved.

9 RESOLUTION NO A RESOLUTION AUTHORIZING AND APPROVING THE SECOND AMENDMENT TO THE PURCHASE AGREEMENT BY AND BETWEEN THE CITY AND COUNTY OF BROOMFIELD, CLEO MARIE NORDSTROM, AND THE CARL ANDREW NORDSTROM MARITAL TRUS T BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY AND COUNTY OF BROOMFIELD, COLORADO : Section 1. The Second Amendment to the Purchase Agreement attached hereto by and between the City and County of Broomfield, CIeo Marie Nordstrom and the Carl Andrew Nordstrom Marital Trust is hereby approved. Section 2. The mayor or mayor pro tem is authorized to sign and the city clerk to attest the amendment, in final form approved by the city & county attorney. Section 3. This resolution is effective upon its approval by the city council. Approved on April 25, THE CITY AND COUNTY OF BROOMFIELD, COLORADO Mayor ATTEST : City Clerk APPROVEDASTO FORM : 1/ - -.;_ 4/f /!1'I / J City & County Attorney

10 SECOND AMENDMENT TO THE PURCHASE AGREEMENT BY AND BETWEEN THE CITY AND COUNTY OF BROOMFIELD, CLEO MARIE NORDSTROM AND THE CARL ANDREW NORDSTROM MARITAL TRUST 1.0 PARTIES. The Parties to this Second Amendment to the Purchase Agreement are the City and County of Broomfield, formerly the City of Broomfield, a Colorado municipal corporation and county, \(City\) and CIeo Marie Nordst\rom a/k/a Cleo M. Nordst\rom \(Sell\er\), and the Carl Andrew Nordstrom Marital Trust \(Trust\) collect\ively, the "Partie\s," or individ\ually, a "Party"\. 2.0 RECITAL\S.. The Recital\s to this Second Amendme\nt are incorpo\rated herein by this referen\ce as though fully set forth in the body of this Second Amendme\nt. 2.1 The City and the Seller entered into a Purchase Agreement and Option to Purchase certain real property, dated January 12, 1999 \("Purchase Agreement\). The Purchase Agreement was recorded in the records of the Adams County Clerk and recorder on February 8, The real property is described in the Purchase Agreement, as amended, as parcels I through 6 \("Property"\). 2.2 The City and the Seller entered into a First Amendment to the Purchase Agreement \("First Amendment"\)\, dated October 30, 2001 for the purpose of amending Exhibit C, legal descriptio\n\s for the Property. 2.3 The City and the Seller have closed on the purchase of Parcels I through 5 in accordance with the Purchase Agreement and the First Amendment. 2.4 The City, by a letter dated August 25, 2005 attached hereto as Exhibit A and incorporated herein by this reference, exercised its option to purchase Parcel 6 North and South from the Seller pursuant to section 6.3 of the Purchase Agreement. 2.5 Seller is the trustee and sole beneficiary of Trust. To the best of her belief, the Seller owns a portion of the total surface and subsurface mineral estates on the Property and the adjacent property, commonly known as the Davis property \("Davis Property"\), as described in Exhibit B attached hereto and incorporated herein-by this reference and desires to convey her surface and subsurface mineral estates to the City. To the best of its belief, the Trust does not own any of the surface and subsurface mineral estates on the Property and the adjacent property, commonly known as the Davis property. 2.6 The Seller now desires to sell to the City all right, title, and interest of the Seller in the surface and subsurface mineral interests in the Property, and all right, title and interest of the Seller to all surface and subsurface mineral interests owned by the Seller on the Davis Property, as described in Exhibit B

11 attached hereto and incorporated herein by this reference, upon the terms and conditions of this Second Amendment, provided that the Seller and br the Trust, at the Seller s option, shall be entitled to receive all unpaid past and all future royalties, from the Nordstrom # 1-9 well as such royalties are due or become due to the Seller and/or the Trust based on the ownership interests of the Seller and/or the Trust, if any with respect to the Trust, immediately preceding the conveyances to the City contemplated by this Second Amendment and including, without limitation, the royalties attributable to the mineral interests acquired by Seller as a result of the Davis Mineral Deed referenced in this Second Amendment, as a nonparticipating royalty interest owner and not as mineral owner, whether or not such royalties accrue prior or subsequent to the date of this Second Amendment and the conveyance of mineral interests contemplated by this Second Amendment. 2.7 The Parties desire to amend the Purchase Agreement to provide for the transfer of all of Seller s surface and subsurface mineral interests in the Property and the Davis Property to the City, upon the terms and conditions of this Second Amendment, along with the Seller s transfer of Parcel 6 north and south, subject to the aforementioned reservation of royalties to the Seller with respect to the Nordstrom # 1-9 well on the Property. 2.8 The Trust desires to sell to the City all its right, title, and interest to the surface and subsurface mineral interests, if any with respect to the Trust, owned by the Trust in the Property, and all of its right, title and interest to surface and subsurface mineral interests owned on the Davis Property, upon the terms and conditions of this Second Amendment. 2.9 The City entered into an Escrow Agreement, dated September 14, 2004 \("Escrow Agreement"\), attached hereto as Exhibit C, associated with the City s agreement to purchase the Davis Property. The other parties to the Escrow Agreement are Security Title Guaranty Co. \("Escrow Agent"\) and Earl Wayne Davis and Sandra J. Davis The Escrow Agreement, which is attached hereto and incorporated herein by this reference as Exhibit D, references the execution of a mineral deed from Cleo Marie Nordstrom and from the Trust to Earl Wayne Davis and Sandra J. Davis, the "Nordstrom Mineral Deed", which shall be a bargain and saledeed attached hereto as Exhibit E, conveying to the Davises mineral rights owned by Cleo Marie Nordstrom and the Trust, if any with respect to the Trust, in the Davis Property The Escrow Agreement also references the execution of a mineral deed from Earl Wayne Davis and Sandra J. Davis to Cleo M. Nordstrom a/k/a Cleo Marie Nordstrom, the "Davis Mineral Deed", which shall be a bargain and sale deed attached hereto as Exhibit F, conveying to Cleo Marie Nordstrom all of the mineral rights owned by the Davises beneath the Seller s Property. Upon 2

12 receipt of the fully executed "Nordstrom Mineral Deed", the City is to forward said deed to the Escrow Agent in accordance with section 4 of the Escrow Agreement, and the Escrow Agent will then record, release and deliver the Davis Mineral Deed and Nordstrom Mineral Deed to the City The Parties desire to amend the Purchase Agreement to provide for the transfer of Seller s surface and subsurface mineral interests in the Property, which include the surface and subsurface mineral interests for all parcels previously conveyed or Parcels I through 6 of the Property, and the Davis Property to the City along with the Seller s transfer of Parcel 6 north and south to the City, and to provide for the transfer of the Trust s surface and subsurface mineral interests, if any with respect to the Trust, in the Seller s Property and the Davis Property to the City, subject to the aforementioned reservation of royalties with respect to the Nordstrom # 1-9 well on the Property The Parties desire to further amend the Purchase Agreement to add the Trust as a party for the purpose of the Trust s transfer of surface and subsurface mineral interests, if any with respect to the Trust, in the Property to the City and Davis Property to Davis pursuant to the terms of the Escrow Agreement The Parties agree that the total purchase price for the Seller s and the Trust s mineral interests in the Property and in the Davis Property, subject to the aforementioned reservation of royalties from the Nordstrom # 1-9 well on the Property, is $175, THE AMENDMENT. In consideration of the mutual covenants and promises of the Parties contained herein, and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties Agree as follows: 3.1 A new subparagraph 6.12 is hereby added to the Purchase Agreement to read as follows: 6.12 \(a\) Sel\ler und\erstands and agrees that the City has validly exercised its option to purchase Parcel 6 north and south pursuant to the terms and conditions of this Second Amendment at the total purchase price per the Purchase Agreement of $ 784, The closing and delivery of a general warranty deed for Parcel 6 north and south shall be at a date and time mutually agreed upon by the Parties, but such date shall not be later than 30 days after approval of this Second Amendment by City Council or as provided for in section 6.13\(b\) of this Second Amendme\nt, unless otherwi\se agreed upon in writing by the Parties, in the office of the City and County Attorney \("Closing"\). The Seller shall convey by general warranty deed, in accordance with all requirement\s of the Purchase Agreement, at Closing all of the Seller s 3

13 right, title, and interest of any nature whatsoever in the Parcel. 6 north and south, including without limitation, all contractual rights in the Property that the Seller owns in the Property, except surface and subsurface mineral interests that will be conveyed by bargain and sale deed as provided for below. The Seller and the Trust shall convey by bargain and sale deed at Closing all of the Sellet s and the Trust s right, title, and interest to all surface and subsurface mineral interests in the Property and the Davis Property, except that Seller shall be allowed to retain and receive all royalties under the current lease for the Nordstrom # 1-9 well only, as a nonparticipating royalty owner, and not as a mineral owner, as such royalties are due or become due to the Seller and/or the Trust based on the ownership interests of the Seller and/or the Trust immediately preceding the conveyances to the City contemplated by this Second Amendment and including, without limitation, the royalties attributable to the mineral interests acquired by Seller as a result of the Davis Mineral Deed referenced in this Second Amendment. The Seller has no rights, including no rights to any royalties, from any other wells that may be drilled on the Property. The City shall become the Lessor for the existing lease of the Nordstrom # 1-9 well and the Seller agrees to take all necessary steps and sign all necessary documents to transfer or assign such lease to the City immediately after Closing. The City shall have the right to renegotiate or terminate the existing lease for the Nordstrom # 1-9 well, however the City agrees that it will not renegotiate or terminate the existing lease for the Nordstrom #1-9 well in a manner that would affect the production from the # 1-9 well or which would otherwise diminish the royalties payable to Seller from the Nordstrom # 1-9 well in the absence of such renegotiation or termination or royalties paid to the Seller from the production of the #1-9 well. The City agrees to execute and deliver such written confirmation or other documentation necessary confirming the right of the Seller and the Trust, if any with respect to the Trust, to receive the royalties under the existing lease for the Nordstrom # 1-9 well. The historical or other alternative access to the Nordstrom # 1-9 well shall be permitted over and across the Property as is reasonably necessary. City shall be entitled to receive all rentals, royalties, and other consideration due or to become due as a result of or attributable to any wells or any existing or future leases, other than the royalties under the existing lease from the Nordstrom # 1-9 well. City shall have the exclusive right to negotiate and execute any new leases which may be issued for the Property after closing and to receive all rentals, royalties and other consideration therefrom, except as limited above with respect to the Nordstrom # 1-9 well on the Property. Immediately after closing City shall also become the Lessor of any lease which covers Seller s interest in the Property \(recorded or unrecorded\). The Parties agree that the Davis Mineral Deed will be recorded prior to the deed conveying Parcel 6 north and south and all of the mineral interests owned by Seller in the Property to the City, so that 100% of the surface and, subsurface mineral interests 4

14 owned by the Seller, after the transfer of mineral interests to the Seller by the Davis Mineral Deed, will be conveyed to the City, subject to the aforementioned reservation of royalties with respect to the Nordstrom # 1-9 well on the Property. \(b\) Sel\ler and the Trust hereby agree to transfer to Earl Wayne Davis and Sandra J. Davis, as joint tenants, all surface and subsurface mineral interests owned by the Seller and the Trust, if any with respect to the Trust, in the Davis Property as such property is described on Exhibit B attached hereto. Said mineral interests shall be transferred by the "Nordstrom Mineral Deed" in the form attached hereto as Exhibit E, in accordance with the requirements of the Escrow Agreement and said transfer shall take place at the Closing. \(c\) At Clo\sing, Cit\y sha\ll pay to Seller the total sum of $ 872, comprised of $ 784, for Parcel 6 north and south of the Property and $ 175,523, as payment for all the surface and subsurface mineral interests owned by Seller in the balance of the Property and the Davis Property, and as said mineral interests are to be transferred by Seller pursuant the terms of sub-section \(a\) and \(b\) of thi\s sub\-section \(d\) The Trust hereby agrees to transfer to the City all surface and subsurface mineral interests, if any with respect to the Trust, owned by the Trust for the Property by a separate bargain and sale deed. The City shall pay the Trust $ and other good and valuable consideration, as payment for all the surface and subsurface mineral interests owned by the Trust in the balance of the Property and the Davis Property. 3.2 A new subparagraph 6.13 MINERALS/TITLE is hereby added to the Purchase Agreement to read as follows: 6.13 MINERALS/ TITLE. \(a\) Sel\ler rep\resents and covenants to City that to the best of her actual knowledge she comprises all of the parties who have an interest in the surface and subsurface mineral interests of the Property and the Davis Property, except that the Seller and the Trust and the City do have actual knowledge of the interests of the Davises as set froth in the Escrow Agreement and those interests referenced in the lease and easement agreements of record for the Nordstrom # 1-9 well located on the Property and the # 3-9 well located on the Davis Property, the approved PUD Plan for the Property and the Davis Property, and all matters set forth in the two letters from Attorney Phillip Barber to Kristan Pritz, Director of Open Space and Trails for the City and County of Broomfield, dated March 24, 2006, concerning the Property and the Davis Property. The Trust 5

15 represents and covenants to the City that to the best of its knowledge that the Trust does not own any of the surface and subsurface mineral estates on the Property or the Davis property. The Seller and the Trust represent and covenant to City that to the best of their actual knowledge they have full and lawful authority to enter into this Agreement. \(b\) Sel\ler and Trust agree that the City has obtained, paid for and delivered to Seller and Trust an abstract of all surface and subsurface mineral interests for the Property and the Davis Property that was prepared by a consultant satisfactory to the City, the Seller and the Trust. In the event the City determines that the Seller does not have good and merchantable title to the Property or the mineral interests and the Davis Property or that the Seller is not the sole owner of the Property or the mineral interests, or shows outstanding liens against or encumbrances upon the Property or the mineral interests or in the event said abstract or other investigation shows rights of parties in possession other than those of the Seller or that the Escrow Agreement is not amended, if necessary, or the Davises do not agree to the transfer of mineral interests per the Escrow Agreement by bargain and sale deeds, then notwithstanding any provision hereof to the contrary, City may, at its option, \(a\) ext\end the date of Closing for up to a maximum of 45 days to allow the Seller to clear the title to and deliver a deed for said mineral interests, without obligation of the Seller to clear the title, \(b\) ter\minate thi\s Agr\eement, \(c\) pro\ceed wit\h thi\s Agr\eement and waive any defects in title which City, in its sole discretion, determines can be waived; \(d\) may without obligation attempt to correct such defects at the City s expense at any time, including on or before Closing; \(e\) any combination of \(a\), \(b\), \(c\) and \(d\) abo\ve. In fur\therance of ass\uring the City that the Seller has good and merchantable title in the mineral interests and the mineral estate for the Property and the Davis property, to the best of the Sellers actual knowledge as qualified in Section 6.13\(a\), abov\e, the Sell\er agre\es to full\y coop\erate in obta\ining such written confirmation and other documentation as is reasonably requested to confirm the mineral right and mineral estate title transferred by Trust and the Seller, including, but not limited to disclaimers of interests in mineral rights from the grantees of the Personal Representatives Deed from Diann Davis Meyers on behalf of the Dorothy Beatrice Nordstrom Estate, dated September 21, 2005 and recorded at Reception No ? in record of the City and County of Broomfield and releases for all unreleased mortgages and deeds of trust on the Property and the mineral rights and estate of the Property, provided the same does not obligate Seller to incur expense in connection with obtaining said documentation, and Seller shall provide to the City prior to Closing a personal affidavit of identity indicating that Cleo Marie Nordstrom and Cleo M. Nordstrom are the same person. 6

16 3.3 Sub-sections \(1\) \(k\) and \(I\) of Sec\tion 4.1 of the Purchase Agreement shall be amended to read as follows: \(j\) Wit\h the exception of the disclosures set forth in the Phase II Environmental Site Assessment for the Seller s Property, prepared by ERO Resources Corporation and dated June 4, 2003, to the best of the Seller s actual knowledge, no part of the Property has ever been used as a landfill, and no materials have ever been stored or deposited upon the Property that would under any applicable governmental law or regulations require that the Property be treated or materials removed from the Property prior to the use of the Property for any purpose that would be permitted by law but for the existence of said materials on the Property. \(k\) Wit\h the exception of the disclosures set forth in the Phase II Environmental Site Assessment for the Seller s Property, prepared by ERO Resources Corporation and dated June 4, 2003, to the best of the Seller s actual knowledge, no underground storage tank, as that term is defined by federal statute or Colorado Statute, is located on the Property which under applicable governmental law or regulation require such underground storage tank to be upgraded, modified, replaced, closed, or removed. \(I\) Wit\h the exception of the disclosures set forth in the Phase II Environmental Site Assessment for the Seller s Property, prepared by ERO Resources Corporation and dated June 4, 2003, to the best of the Seller s actual knowledge, the Seller has not caused or permitted the release of any hazardous substance on the Property. The terms "hazardous substance" and "release" as used herein shall have the same meaning and definition as set forth in paragraphs \(14\), \(22\) and \(23\), resp\ectively, of 42 US.C\. 9601\, prov\ided that the term "hazardous substance" as used herein also shall include "hazardous waste" as defined in paragraph \(5\) of 42 U.S\.C Section 53 of the Purchase Agreement is hereby deleted in its entirety. 3.4 The Parties to this Second Amendment agree and understand that all other provisions of the Purchase Agreement shall remain the same. In the event of a conflict between the Purchase Agreement and this Second Amendment, this Second Amendment shall be construed by the Parties to implement the purposes and intent of the Parties as described in the above Recitals. 4.0 PARAGRAPH CAPTIONS. The captions of the paragraphs are set forth only for the convenience and reference of the Parties and are not intended in any way to define, limit, or describe the scope or intent of this Second Amendment. 7

17 5.0 BINDING EFFECT. This Second Amendment shall inure to the benefit of and be binding upon the Parties and their respective legal representatives, successors, heirs, and assigns. 6.0 EXECUTION IN COUNTERPARTS. This Second Amendment may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. 7.0 NO PRESUMPTION. The Parties to this Second Amendment and their attorneys have had a full opportunity to review and participate in the drafting of the final form of this First Amendment. Accordingly, the First Amendment shall be construed without regard to any presumption or other rule of construction against the Party causing the First Amendment to be drafted. 8.0 MINOR CHANGES. The Parties executing this Second Amendment are authorized to make nonsubstantive changes to this Second Amendment and attached exhibits, if any with respect to the Trust, as they consider necessary. So long as such changes were consistent with the intent and understanding of the Parties at the time of approval by, the execution of this Second Amendment shall constitute the approval of such changes by the respective Parties. 9.0 EXECUTION REQUIRED. This Second Amendment shall not be binding upon any Party hereto unless and until the Parties have executed this Second Amendment. None of the Parties hereto shall be precluded from disputing the accuracy of any statement in this Second Amendment nor be deemed to have admitted the accuracy of any statement in this Second Amendment if the Parties do not close on the Property as set forth in section 6.12.a above EXHIBITS. All exhibits referred to in this Agreement are by reference incorporated herein for all purposes RECORDNG. Th!s Agreement shall be recorded with the Broomfield County Clerk and Recorder. IN WITNESS WHEREOF, this Second Amendment is executed by the Parties hereto in their respective names as of, S

18 APR-2-eee 10:23 FROM:H&K TO: P: 3/4 THE CITY AND COUNTY OF BROOMFIELD, a Colorado municipal corporation and county ArrEST: Mayor City Clerk VET Ctty&CountyAttorney SELLER Cleo Marl Nordstr STATE OF COLORADO \) \)ss, County of L c.&\).- The foreg\oing jn8tr\ument was ackno\wledged befor\e me this L9pi \i I 2006, by Cleo Marie Nordstrom. of Witness my hjand official seal: PATh COOK \)oj Mycor5 My Comiuiin Exiros AUGUST 25, Notary Public \(:;-os4_

19 APR-2e : 23 FROM: H&K TO: F: 4/4 TRUST &2f Carl An raw Nordstrom Marital Trust By Trustee: CIeo Marie Nordstrom aju0 STATE OF COLORADO \), \)ss. County of T a foregoin instrument was acknowledged before me this Lg day of -, 2006, by Ciso Marie Nordstrom as Trustee for the Cart Andrew rdstrom Marital Trust Witness my hand and official seal: \(SEAL\) Notary Public My My Commission Expires AUGUST 25,