No preview available
HomeMy WebLinkAbout8749RESOLUTION NO. 8749 A RESOLUTION APPROVING AN AGREEMENT BETWEEN PEDCO FOUNDATION, INC. AND PUEBLO, A MUNICIPAL CORPORATION, AND A SETTLEMENT AGREEMENT AND MUTUAL RELEASE BETWEEN QUALMED, INC. AND FOUNDATION HEALTH SYSTEMS, INC. AND PUEBLO MUNICIPAL CORPORATION RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT; AUTHORIZING THE EXPENDITURE OF $4.5 MILLION THEREFOR FROM THE 1992 -2001 SALES AND USE CAPITAL IMPROVEMENT PROJECTS FUND; APPROVING RELATED DOCUMENTS AND INSTRUMENTS; AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME WHEREAS, PEDCO Foundation, Inc. (the "Foundation ") through Pueblo Economic Development Corporation has made application for funds and release of City's claims against QualMed, Inc. and Foundation Health Systems, Inc. with respect to a job creating capital improvement project located within the downtown area of the City (the "Project "), and WHEREAS, the Project involves the acquisition of properties described in the Purchase And Sale Agreement presented to this meeting of the City Council (the "Properties ") having a represented value of $12.9 million from QualMed, Inc. and Foundation Health Systems, Inc. for $4.5 million and City's release of its claims against QualMed, Inc. and Foundation Health Systems, Inc. arising out of their business decision to phaseout their operations in Pueblo, Colorado, and the breach of their agreements with the City caused thereby, and WHEREAS, the City will advance to Foundation $4.5 million from the 1992 -2001 Sales and Use Tax Capital Improvement Projects Fund for the purchase of the Properties for lease to The TPA, Inc. for a period of seven (7) years with options to extend and purchase, and WHEREAS, The TPA, Inc. has committed to enter into a lease of the Properties with Foundation and to employ six hundred (600) full -time employees at the Properties, and WHEREAS, all rent, income and proceeds from the lease and sale of the Properties will be deposited in an escrow account for the purpose of paying Foundation's expenses incurred in these transactions and repaying funds advanced by the City, and WHEREAS, there has been presented to this meeting of the City Council copies of the following documents or instruments: (a) Agreement between Pueblo, a Municipal Corporation and PEDCO Foundation, Inc. dated as of June 28, 1 999 (the "Agreement "), (b) Settlement Agreement and Mutual Release between Pueblo, a Municipal Corporation and QualMed, Inc. and Foundation Health Systems, Inc. dated as of June 28, 1999 (the "Settlement Agreement and Mutual Release "), (c) Lease between PEDCO Foundation, Inc. and The TPA, Inc., dated as of June 28, 1999 (the "Lease "), and (d) Purchase And Sale Agreement between PEDCO Foundation, Inc. and QualMed, Inc. and Foundation Health Systems, Inc., dated as of June 28,1999 (the "Purchase And Sale Agreement "). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 The City Council hereby finds, determines and declares that Pueblo Economic Development Corporation's application for funds, release of City's claims against QualMed, Inc. and Foundation Health Systems, Inc., the Project, and the transactions contemplated by and described in the Agreement, Settlement Agreement, Mutual Release, Lease, and Purchase And Sale Agreement (a) meet the criteria and standards established by Ordinance No. 6381, (b) will promote the public, health safety and welfare, and (c) are for public purposes and municipal functions justifying the expenditure of public funds; and the City Council hereby authorizes the transactions and the Project under and pursuant to terms and conditions of the instruments and documents presented to this meeting, provided such instruments and documents incorporate the changes recommended and approved by the City Attorney. SECTION 2 The Agreement, Settlement Agreement, and Mutual Release, in substantially the form presented to this meeting of the City Council and with substantially the same content, are in all respects approved, authorized and confirmed, and the President of the City Council is authorized to affix her signature to the Agreement, Settlement Agreement and Mutual Release in substantially the form and with substantially the same content as presented to this meeting of the City Council, for and on behalf of the City, but with such changes, modifications, additions and deletions therein as the -2- President of the City Council and City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications or deletions therein from the form and content of the Agreement, Settlement Agreement, and Mutual Release presented to this meeting. SECTION 3 The City Council hereby approves the execution and delivery by the PEDCO Foundation, Inc. of the Purchase And Sale Agreement and the Lease, in substantially the form and with substantially the same content as presented to this meeting of the City Council, provided and contingent upon such documents being modified and changed to incorporate and include the changes and modifications recommended and approved by the City Attorney. SECTION 4 The City Council hereby finds, determines and declares that the acquisition of the Properties for $4.5 million and City's release of its claims against QualMed, Inc. and Foundation Health Systems, Inc. represent the fair purchase price for the Properties. In making such determination, the City Council has given consideration to the $12.9 million represented value of the Properties; the evaluation by Pueblo Economic Development Corporation of the fair market value and fair market rental value of the Properties; the enforceability and value of the City's claims against QualMed, Inc. and Foundation Health Systems, Inc. arising out of their business decision to phaseout their operations in Pueblo, Colorado, which will result in the loss of employment in the City's downtown area and breach of their agreements with the City; the uses and purposes for which the Properties will be employed under the Lease; the employment commitment of The TPA, Inc.; the benefit to the citizens and residents of the City by reason of the acquisition of the Properties and the use of the -3- Properties pursuant to the terms and conditions of the Lease; the term and provisions of the Lease including the rent and additional rent to be paid by The TPA, Inc. thereunder; and the expected vesting of the Lease Proceeds as defined in the Agreement, including rents and proceeds from the sale of the Properties in the City. SECTION 5 The City Clerk is hereby authorized and directed to attest all signatures and acts of any official of the City Council or the City in connection with the matters approved and authorized by this Resolution, and to affix the seal of the City to the Agreement, Settlement Agreement, Mutual Release, and other instruments to which the City is a party, authorized and approved by this Resolution. The President of the City Council and other officials of the City are hereby authorized to execute and deliver for and on behalf of the City any and all certificates, documents, instruments and other papers, and to perform all other acts that they may deem necessary or appropriate to carry out the transactions and other matters authorized and contemplated by this Resolution. The appropriate officers of the City Council or the City are authorized to execute on behalf of the City all documents necessary to release the deeds of trust in favor of the City described in the Settlement Agreement and to establish the escrow account and escrow agreement and to manage, invest and withdraw funds deposited in the escrow account described in the Agreement. SECTION 6 Funds in an amount equal to $4.5 million are hereby transferred from the unencumbered appropriated balance of the 1992 -2001 Sales and Use Tax Capital Improvement Projects Fund to a separate account and authorized to be expended and made available to PEDCO Foundation, Inc. for the sole purpose of purchasing the Properties described in and pursuant to the Purchase And Sale N Agreement. The funds authorized to be expended shall be released and paid by the Director of Finance to PEDCO Foundation, Inc. after the conditions and covenants described in paragraph 2 of the Agreement have been satisfied or waived, or contemporaneously with their satisfaction or waiver. SECTION 7 In authorizing and approving the actions herein set forth, it is the intent of the City Council of the City to exercise the home rule powers of the City granted pursuant to the Colorado Constitution, the Charter, and the authority vested in the City Council by Ordinance No. 5978, and the City Council hereby finds, determines and declares that the matters herein referred to are matters of local and municipal concern and are appropriate for the exercise of the home rule powers of the City and consistent with the powers and authority thereby granted. SECTION 8 If any section, paragraph, clause or provision of this Resolution shall be determined to be invalid and unenforceable, the invalidity or unenforcability of such section, paragraph, clause or provision shall not affect any of the remaining sections, paragraphs, clauses or provisions of this Resolution, it being the intent that the various parts are severable. INTRODUCED: July 1 ,1999 B Cathy A. Garcia Councilperson ATTEST: APP VED: f t City C k President of the City Council F:\ FILES \CITY\ECONDEV\ PEDCO\ FOUNDATI\1999 \6- 29- 99 \RESOLUTI.WPD -5- City of Pueblo June 25, 1999 Mr. James Spaccamonti PEDCO President 301 N. Main Street Pueblo, CO 81003 OFFICE OF THE CITY ATTORNEY 127 Thatcher Building PUEBLO, COLORADO 81003 Re: TPA, Inc. /QualMed Transaction Dear Jim: FILE COPY We have reviewed the document delivered to my office in the afternoon of June 23, 1999 and have the following requested changed and comments: Purchase And Sale Agreement Without having been furnished Exhibit "A" we assume that the term "Property" includes both the Pope Block Building and Generator Building, if not, please advise. Paragraph 2.2(b) - the Bill of Sale should contain warranties of title. Paragraph 2.2(a) - conveyance should be by warranty deed. Paragraph 2.5(a) - we recommend that Foundation obtain an extended endorsement, update and have recertified the survey and delete Exceptions 1 through 5. We also request Foundation obtain an ALTA loan policy insuring City's loan and deed of trust in the amount of the $4.5 million purchase price. Paragraph 2.5(b) - we understand Foundation will undertake a complete inspection of the Property and Personal Property and will give notice of dissatisfaction if appropriate. Paragraph 2.6 - we understand Foundation is still negotiating with QualMed to modify the warranties to conform with Foundation's warranties in the Lease. Paragraph 3.1(b) - the first sentence is incomplete. Paragraph 3.1(c) - normally the Seller pays documentary fees. Will not the closing fees exceed $250.00? Paragraph 5.4 - if material casualty, and Purchaser receives Seller's right to recovery under Seller's insurance, the following should be added to the second sentence: Mr. James Spaccamonti June 25, 1999 Page -2- and Purchaser shall receive a credit on the Purchase Price equal to the amount of the deductible applicable to that casualty under Seller's existing insurance policies. Paragraph 6.3(a) - the following should be added after "set forth in Paragraph 2.6 ": and, to the extent assignable, the items described in paragraphs 1.3(a) and (b). Paragraph 6.17 - should be deleted since the purchase agreement will be approved by the City Council and become a public record. If any personal property or fixtures now located in the Property are to be removed by Seller, such personal property should be shown on an attached Exhibit and Seller should repair all damage caused by such removal. With respect to possession, as we understand paragraph 2.2(f), actual possession of the Properties will be delivered to Foundation at Closing. Nothing addresses the continued occupancy of the Properties by QualMed. Does "actual possession" mean subject to QualMed's occupancy? Lease Section Two - since the Lessee is not going to pay Foundation as additional rent any compensation or rent received by Lessee from subtenants or assignees (which we object to), Section Five should be deleted from the last sentence. Also to clarify, the following should be added to the last sentence: during the Lease term and the term of the extension, if extended. Section Four - last paragraph, wherever "QualMed" appears, it should be changed to "QualMed and Foundation Health Systems." The words "or otherwise" probably should be deleted from the second sentence. We understand the second from the last sentence is to be deleted. However, the last sentence should remain. Section Five - Foundation has relaxed the sublease and assignment provision. Again, since the rent is below market (see Rent below), we would request that sublease rent and consideration received through assignment by Lessee be paid to Foundation as additional rent. With respect to the second paragraph, assignment should also require the consent of the City Council and the City Council should be involved in those decisions reserved to Foundation. Section Fifteen - Lessee has not committed to employ 600 full -time employees during the entire seven year period as represented. Add to the third paragraph: Mr. James Spaccamonti June 25, 1999 Page -3- commencing September 1, 2001 and each September 1 thereafter. The liquidated damage provisions have been deleted. Please explain. Section Sixteen - as we understand, Lessee has been given an option to purchase at the end of the three -year extension period; therefore, if the Lease term is not so extended, Lessee has no option to purchase. If our understanding is incorrect, please advise. After the first sentence add: in their then condition "AS IS ". The third sentence should be modified to read "at least sixty days prior to the end of the three - year extension period" and the second to last sentence should be deleted. Section Seventeen - add after the second sentence: and shall be constructed and installed in compliance with all applicable laws and code. Section Nineteen - as we understand, the Lessee is granted the right to extend for only one 3 -year extended term. Therefore, the third sentence should be deleted. The beginning of the third sentence should read: Should the Lessee hold over after the expiration of the initial lease term or the extended term, whichever the case may be, without an agreed upon further extension of the Lease, Also, add with respect to the appraiser selected by Lessor, Lessee "and City of Pueblo." Section Thirty -Four - the words "subject to the limitations of Section Five" should have been placed after the word "assigns" in the first sentence. Rent The rent is substantially less than fair market value rent. We make this observation notwithstanding that (i) the Lessee is responsible for all maintenance, repairs, utilities, taxes and insurance which are represented to be approximately $3.95 per square foot per year based upon 150,000 square feet of rentable space, and (ii) the Lessee will be liable for additional rent equivalent to $89.29 per month for each full -time employee less than committed during certain periods of the Lease. Assuming that no employees are employed by Lessee during the entire 7 -year term of its commitment, the equivalent annual square foot rent would be: Mr. James Spaccamonti June 25, 1999 Page -4- You have computed the monthly additional rent of $89.29 per employee based upon the City's $4.5 million and Company's employment commitment of 600 full time employees during the entire 7 -year period. However, if you use the actual Company employment commitment for the full 7 -year period, i.e., no employees for the first year, 200 employees for the second year, 400 employees for the third year, and 600 employees for the fourth through seventh years, the additional rent should be $125.00 per employee per month. In effect, for the actual number of employees committed during the 7 -year period, the City will advance on average $10,500 per employee instead of the $7,500 per employee as represented. The additional rent under the Lease does not reflect these figures and is 40% per employee per month less than it should be. Agreement As we discussed, your proposed Agreement between the City and PEDCO Foundation ( "Foundation ") is not acceptable. It was not my or the City Council's intent or understanding that the Foundation would receive all rent paid under the Lease and title to the Properties if TPA fulfilled its employment commitment. We understood that Foundation was to act as the vehicle to acquire the Property and lease to TPA in order that QualMed would be able to apply for tax credits and deductions. Our proposed Agreement adequately protects Foundation and furthers the intent that Foundation should not be responsible or liable for any costs and expenses incurred in the transactions. As you proposed, Foundation would receive $3,900,000 in rental payments from TPA (assuming TPA leases for 10 years) and Properties having a value in excess of $4 million. Since TPA is responsible for all Property maintenance, repair, insurance, utilities and tax, Foundation's exposure to expenses appears to be minimal. However, our Agreement pre - authorizes those expenses requiring only that Foundation submit requests for payment and supporting documentation, which does not appear unreasonable since we are dealing with public funds. As you understand, the City will have over $10.4 million in cash invested in these transactions and Properties and, in our opinion, the City may not lawfully authorize the transfer of its interest in the Properties in a manner that the Properties and income therefrom are lost to the City and transferred from the control of the City Council. All proceeds from rent or sale of the Properties must be Additional Annual Square Annual Period Base Rent Expenses Rent Foot Rent 8/1/99 to 7/31/00 2.00 3.95 -0- 5.95 8/1/00 to 7/31/01 2.00 3.95 1.43 7.38 8/1/01 to 7/31/02 2.00 3.95 2.86 8.81 8/1/02 to 7/31/03 2.00 3.95 4.29 10.24 and each annual period thereafter to 7/31/06 You have computed the monthly additional rent of $89.29 per employee based upon the City's $4.5 million and Company's employment commitment of 600 full time employees during the entire 7 -year period. However, if you use the actual Company employment commitment for the full 7 -year period, i.e., no employees for the first year, 200 employees for the second year, 400 employees for the third year, and 600 employees for the fourth through seventh years, the additional rent should be $125.00 per employee per month. In effect, for the actual number of employees committed during the 7 -year period, the City will advance on average $10,500 per employee instead of the $7,500 per employee as represented. The additional rent under the Lease does not reflect these figures and is 40% per employee per month less than it should be. Agreement As we discussed, your proposed Agreement between the City and PEDCO Foundation ( "Foundation ") is not acceptable. It was not my or the City Council's intent or understanding that the Foundation would receive all rent paid under the Lease and title to the Properties if TPA fulfilled its employment commitment. We understood that Foundation was to act as the vehicle to acquire the Property and lease to TPA in order that QualMed would be able to apply for tax credits and deductions. Our proposed Agreement adequately protects Foundation and furthers the intent that Foundation should not be responsible or liable for any costs and expenses incurred in the transactions. As you proposed, Foundation would receive $3,900,000 in rental payments from TPA (assuming TPA leases for 10 years) and Properties having a value in excess of $4 million. Since TPA is responsible for all Property maintenance, repair, insurance, utilities and tax, Foundation's exposure to expenses appears to be minimal. However, our Agreement pre - authorizes those expenses requiring only that Foundation submit requests for payment and supporting documentation, which does not appear unreasonable since we are dealing with public funds. As you understand, the City will have over $10.4 million in cash invested in these transactions and Properties and, in our opinion, the City may not lawfully authorize the transfer of its interest in the Properties in a manner that the Properties and income therefrom are lost to the City and transferred from the control of the City Council. All proceeds from rent or sale of the Properties must be Mr. James Spaccamonti June 25, 1999 Page -5- returned to the City's one -half cent sales tax fund as repayment of the monies advanced by City and be subject to appropriation for job creating capital improvement projects, as the City Council shall determine in accordance with the requirements of the people's ordinance imposing the one -half cent sales tax and creating the fund. The City Council may not lawfully delegate such authority to the Foundation. We enclose a marked copy of draft 6/25/99 Agreement showing changes and modifications acceptable to the City. For your information, I'll be out of my office Tuesday and Wednesday, June 29 and 30, 1999. Very truly yours, ZP E. Jagger /jp Enclosure xc: Wm. David Lytle, Esq. 1 AGREEMENT THIS AGREEMENT entered into as of June 28, 1999 between Pueblo, a municipal corporation (the "City ") and PEDCO Foundation, Inc., a Colorado nonprofit corporation (the "Foundation "), WITNESSETH: WHEREAS, Foundation through Pueblo Economic Development Corporation has made application for funds with respect to a job creating capital improvement project located within the downtown area of the City, and WHEREAS, the City has approved such application and will make funds available to Foundation subject to and upon the terms, conditions and covenants of this Agreement. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Foundation agree as follows: 1. Definitions. The following terms as used in this Agreement shall have the following meaning unless the context clearly indicates otherwise: "Deed of Trust" means Foundation's deed of trust encumbering the Property in form and substance satisfactory to the City Attorney securing performance of this Agreement and all Foundation's obligations and payments hereunder which Deed of Trust shall be a valid, first and prior I lien and encumbrance on the Property, except only general taxes for the year 1999. "Lease" means the Lease between Foundation and TPA, Inc., a copy of which is attached as Exhibit "A ". "Lease Proceeds" means rent and all other moneys payable or to be paid to Foundation under the Lease including without limitation, additional rent, insurance proceeds, damages, and purchase price paid by Lessee if Lessee exercises its option to purchase. "Personal Property" means the Personal Property as defined in the Purchase And Sale Agreement. "Property" means the Property as defined in the Purchase And Sale Agreement. "Purchase And Sale Agreement" means the Purchase And Sale Agreement between Foundation and QualMed, Inc. and Foundation Health Systems, Inc., a copy of which is attached as Exhibit "B ". "Settlement Agreement" means the Settlement Agreement and Mutual Release between City and Foundation Health Systems, Inc., copies of which are attached as Exhibit "C ". "Security Agreement" means Foundation's Security Agreement and UCC -1 Financing -2- i w � Statement and all other documents in form and substance acceptable to the City granting to City a first and perfected security interest in all the Personal Property. 2. Conditions To Obligations of The City. City will advance to Foundation funds in an amount not to exceed $4.5 million (the "City Funds ") for the sole purpose of acquiring marketable title to the Property and Personal Property described in the Purchase And Sale Agreement subject to and contingent upon satisfaction of the following covenants and conditions on or before August 16, 1999, any one of which may be waived by the President of the City Council with approval of the City Attorney: (a) receiving from Foundation (i) a certificate of good standing of Foundation issued by the Secretary of State of Colorado, and (ii) certified copy of the resolution of the governing board of Foundation approving this Agreement, Lease, Purchase And Sale Agreement, Deed of Trust, and Security Agreement and authorizing its officers to execute and deliver this Agreement, Lease, Purchase And Sale Agreement, Deed of Trust and Security Agreement. (b) all parties to the Lease and Purchase And Sale Agreement lawfully executing and delivering the Lease and Purchase And Sale Agreement in substantially the form and substance contained in the attached Exhibits "A" and 'B" with such modifications or changes thereto as the City Attorney shall approve in writing and the City receiving executed counterparts of the Lease and Purchase And Sale Agreement. -3- 4 (c) City receiving from Foundation this Agreement, Security Agreement, and Deed of Trust, duly and lawfully executed by Foundation in recordable or filing form. (d) City receiving the Settlement Agreement and Mutual Release in substantially the form and substance contained in the attached Exhibit "C" duly and lawfully executed and delivered by Foundation Health Systems, Inc. (e) the closing and transfer of Property and Personal Property pursuant to the Purchase And Sale Agreement has occurred or will occur contemporaneously with City advancing City Funds to Foundation. (f) City receiving from counsel to each of the parties involved in the transactions contemplated by this Agreement, i.e. Foundation, TPA, Inc., Trewit, Inc., and QualMed, Inc. Foundation Health Systems, Inc., an opinion addressed to City in substantially the same form and substance as attached Exhibit "D ", satisfactory to the City Attorney. (g) the City Attorney and Foundation's legal counsel having approved as to form and substance all title insurance commitments, general warranty deeds, bills of sale, warranties, and other documents and instruments reasonably required and necessary to consummate the transactions contemplated under the Purchase And Sale Agreement. 3. Foundation's Enforcement of Lease. The primary purpose of City in entering into this 0 el Agreement and the sole consideration for making City Funds available to Foundation and for City entering into the Settlement Agreement and Mutual Release are the creation of jobs and the economic development of the City and its downtown area. The enforcement of the Lease and Lessee's obligations thereunder will help and promote the accomplishments of such purposes. Therefore, Foundation shall timely, promptly and continuously monitor the performance of the Lessee under the Lease and enforce the terms, conditions and covenants of the Lease. In the event Foundation defaults in its performance of this Agreement or under the Lease, or refuses to enforce the Lease, then, in either event, Foundation does appoint City its true and lawful attorney -in -fact for Foundation and in Foundation's name, place and stead, to enforce the performance of the Lessee under the Lease and the terns, conditions and covenants of the Lease, and to bring any action or proceedings in any court of competent jurisdiction and to take all such steps as may be necessary with respect to such enforcement. The power of attorney, if so created, shall be deemed to be coupled with an interest and irrevocable. 4. Represented Value. City Funds constitute only a portion of the fair market value of the Property and Personal Property which has a represented value of $12.9 million (the "Represented Value "). The Represented Value is being paid in part by City Funds and the balance thereof is being paid by City through the City entering into the Settlement Agreement and Mutual Release, which constitute material and substantial consideration to QualMed, Inc. and Foundation Health Systems, Inc. for the transfer and sale of the Property and Personal Property to Foundation under the Purchase And Sale Agreement. Foundation hereby agrees to pay to City the Represented Value without interest in cash or in the form of Lease Proceeds on or before December 31, 2009, provided, -5- . however, that Foundation's obligation with respect to the payment of the Represented Value shall be limited wholly and solely to the value of the Property and Personal Property encumbered by the Deed of Trust and Security Agreement, and City will look solely to the Property and Personal Property encumbered by the Deed of Trust and Security Agreement for the payment of the Represented Value. In no event, shall Foundation be personally obligated or liable for the payment of the Represented Value either in a direct action at law or in equity against Foundation, or for deficiency after foreclosure or realization of the value of the Property and Personal Property. The Deed of Trust and Security Agreement shall secure the payment of the Represented Value as well as the performance of all Foundation's other covenants and obligations under this Agreement. 5. Lease Proceeds. All Lease Proceeds shall be collected by Foundation and held in trust nevertheless until deposited by Foundation in the hereinafter described escrow account for the following uses and purposes: first, to pay all costs and expenses reasonably and necessarily incurred by Foundation in connection with the Property and Personal Property and the transactions contemplated by this Agreement and the Lease (the "Foundation's Expenses "); and the balance thereof, to City in repayment of the Represented Value including City Funds advanced to Foundation pursuant to this Agreement. All Lease Proceeds and interest thereon received by the City shall be deposited in the 1992 -2001 Sales and Use Tax Capital Improvement Projects Fund to be used as provided in Section 14 -4 -85(1) of the Pueblo Municipal Code or as same may be subsequently amended. As soon as reasonably possible after receipt of any Lease Proceeds, Foundation shall deposit or cause such Lease Proceeds to be deposited with an escrow agent in an escrow account to be established by City. Moneys, and interest thereon, on deposit in the escrow account shall be 0 received, held and invested by the escrow agent pursuant to an escrow agreement (the "Escrow Agreement ") approved by the City's Director of Finance (the "Director "). The Escrow Agreement shall provide that all moneys on deposit in the escrow account shall be paid and disbursed by the escrow agent only for the foregoing uses and purposes and in accordance with the written instructions of the Director. Since it is the intent of the parties hereto that Foundation will not be liable or responsible for any Foundation's Expenses, the Director is authorized and directed to instruct the escrow agent to reimburse or pay Foundation's Expenses after Foundation submits to the Director a written request for payment itemizing with supporting documentation Foundation's Expenses. 6. Inalienability of Property. Foundation will not voluntarily or involuntarily mortgage, encumber, lease or sublease, or extend or renew any lease or sublease, assign, sell or otherwise transfer the Property or the Personal Property, or any part thereof, or any of its right, title or interest therein or in the Lease, without the prior written consent of the City Council of City, which consent may be arbitrarily withheld or delayed. Any such mortgage, encumbrance, lease or sublease or renewal or extension, assignment, sale or other transfer without the prior written consent of the City Council of City shall be void and unenforceable. The City Council of City does hereby consent to the Lease and the terms thereof, but, as provided in the Lease, retains the discretion to approve any Lease assignment, appointment of appraiser, the amount of the rent in the event of extension, and the purchase price in the event of a sale of the Property and Personal Property as therein contemplated. If an event of default described in paragraph 7 hereof shall have happened, and if Foundation has not remedied the default within ninety (90) days, or if the event of default cannot reasonably be remedied in ninety (90) days, and if Foundation is not proceeding in an expeditious manner to remedy the -7- default, then in either event, Foundation, at City's option, will convey marketable title to the Property and Personal Property to City or such person or entity as City may designate, in lieu of foreclosure of the Deed of Trust and /or Security Agreement, by special warranty deed free of all liens and encumbrances, except the Lease, general taxes for the year in which such conveyance takes place, and liens and encumbrances created or caused by the acts or defaults of City or the Lessee under the Lease. The covenants of this paragraph shall be and construed to be covenants running with the land, and Foundation shall at the request of City execute and record an instrument to that effect in form and substance approved by the City Attorney. Events of Default. The following shall be "events of default" under this Agreement and the term "event of default" and "default" shall mean any one or more of the following events: (a) Failure of Foundation to deposit into the escrow account any Lease Proceeds as soon as reasonably possible after receipt by Foundation. (b) Failure of Foundation to observe and perform any covenant, condition or agreement on its part to be observed or performed under this Agreement, Deed of Trust or Security Agreement, other than as referred to in (a) above, for a period of ninety (90) days after written notice specifying such failure and requesting that it be remedied is given to Foundation by City; provided, however, that if the failure stated in the notice cannot be corrected within the ninety day period and corrective action is instituted by Foundation within the ninety day period and diligently pursued until the failure is corrected, no event of default shall have happened. IN C, , 8. Remedies on Default. Whenever any event of default shall have happened and be continuing, City shall have the right, at its option, without any further notice or demand, to take whatever action at law or in equity may appear necessary or desirable to enforce its rights and Foundation's obligations hereunder, including without limitation, foreclosure of the Deed of Trust and /or the Security Agreement. No remedy herein conferred or reserved to City is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, Deed of Trust and /or Security Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power occurring upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. 9. Entire Understanding. This Agreement expresses the entire understanding of the parties and supersedes any and all prior dealings and commitments with respect to the subject matter of this Agreement and may not be amended except in writing signed by City and Foundation. 10. Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Colorado, without regard to conflict of laws principles. 11. Notices. Any notices hereunder shall be sufficiently given if given personally or mailed by certified mail, postage prepaid, addressed: (a) if to City, City Manager, City of Pueblo, 1 City Hall Place, Pueblo, Colorado, In ,. 81003, with a copy to Thomas E. Jagger, City Attorney, 127 Thatcher Building, Pueblo, Colorado, 81003, or (b) if to the Foundation, 301 N. Main Street, Pueblo, Colorado, 81003, Attention: President, or to such other address as either party shall specify in written notice given to the other party. 12. Binding Effect. Time is of the essence hereof. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and, subject to the limitations of paragraph 6, their assigns. 13. Representations of Foundation. (a) The persons signing this Agreement, Lease, Purchase And Sale Agreement, Deed of Trust and Security Agreement in the name of and on behalf of Foundation represent and warrant that they and Foundation have the requisite power and authority to enter into, execute, and deliver this Agreement, Lease, Purchase And Sale Agreement, Deed of Trust and Security Agreement, and that this Agreement, Lease, Purchase And Sale Agreement, Deed of Trust and Security Agreement are valid and legally binding obligations of Foundation enforceable against Foundation in accordance with their terms. -10- AL (b) Foundation represents and warrants that, to the best of its knowledge, no person, entity, or organization has been employed or retained or will receive or be paid, directly or indirectly, any commission, percentage, contingent fee or any other remuneration, payment or receipt of which is contingent upon approval of this Agreement or City's advancement of City Funds to Foundation hereunder. For breach or violation of this warranty, City shall have the right to terminate this Agreement, or recover the full amount of such commission, percentage, contingent fee or other remuneration, or to seek such other remedies legally available to City, which remedies shall be cumulative. 14. City's Liability. In no event shall City, its officers, agents or employees be liable to Foundation for damages, including without limitation, compensatory, punitive, indirect, special or consequential damages, resulting from or arising out of or related to this Agreement or the performance or breach thereof by City or the failure or delay of City in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of City entering into this Agreement, Foundation hereby waives and discharges City, its officers, agents and employees from any and all claims for any and all such damages. Notwithstanding the foregoing, in the event that Foundation is placed in breach of the Lease as the result of the acts or omissions of City, and in that event, Foundation may pursue compensation or other appropriate relief from City. 15. Execution of Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. -11- 16. Severabdity. If any provision of this Agreement shall be held by a court of competent jurisdiction to be invalid or unenforceable, such holding shall not affect the other provisions of this Agreement which shall remain in full force and effect. 17. Parties Interested Herein. Nothing in this Agreement expressed or implied is intended or shall be construed upon, or given to, any person other than the City and Foundation any right, remedy or claim under or by reason of this Agreement or any covenant, conditions or stipulations hereof and all the covenants, stipulations, provisions and agreements herein contained by and on behalf of the City and Foundation shall be for the sole and exclusive benefit of the City and Foundation. Executed at Pueblo, Colorado, the day and year first above written. [SEAL] PEDCO FOUNDATION, INC. ATTEST: � �_ ' 1!ol Name: golf Andersnn Secretary [SEAL] ATTEST: �," Q City C k Name: Walter L. Bassett Chairman A MUNICIPAL CORPORATION of the City Council F:\ FILES\ CPMECONDEIAPEDCO \FOUNDATI\1999 \6- 2 &99\AQ TA.WPD -12- EASE JuNe THIS Lease made this day of +is;y, 1999, effective June 1999 by and between the PEDCO Foundation, Inc., 301 N. Main St., Pueblo, Colorado 81003 as "Lessor ", and The TPA, Inc., 708 E. Lake Street,•Wayzata, Minn. 55391, a corporation organized and existing under the laws of the State of Delaware as "Lessee ": SECTION ONE TERM OF Lease Lessor Leases to Lessee, and Lessee hires and takes as tenant from Lessor for a term of seven years the real property described in Exhibit "A" which is attached hereto and incorporated herein by reference, together with all of the necessary easements, rights, improvements and appurtenances as the case may be, and the furniture, fixtures and equipment described on Exhibit B, which is attached hereto , and the benefit of the revocable permits attached as Exhibit "D" and the use of the property (including the fiber optic cabling) the subject thereof (the Premises) for general office uses. Lessee shall have sole and exclusive possession of the Premises from the effective date hereof subject to the following: (a) Fiber optic cabling - Lessee's use of the fiber optic cable and conduit system is subject to the terms and conditions of the Fiber Optic Cable and Conduit System Access and Use Agreement, which is attached hereto and incorporated herein as Exhibit "E ". (b) Generator Facilitv and Equipment - With regard to the generator facility and the equipment located therein which are described in Exhibits "A" and "B" hereto, Lessee understands and agrees that its rights with regard to the use of such facility and equipment are limited to only those situations wherein Lessee requires emergency backup power. Lessor reserves to itself, it successors and assigns the exclusive rights to all excess power generated by the facility and the equipment. In no event shall Lessor's rights with regard to such excess power interfere with or limit the use of such power by the Lessee in the event Lessee requires emergency backup power. SECTION TWO RENT During the seven year Lease term, Lessee shall pay Lessor, total rent for the Premises in the amount of Two Million One Hundred Thousand Dollars ($2,100,000.00 ) , at the rate of Twenty -Five Thousand Dollars ($25,000.00) per month in advance on the first day of every month. If the Lease is extended for an 1 EXHIBIT "A" additional three year term as provided in Section Nineteen herein, Lessee shall pay Lessor total rent for the premises in the amount of $1,800,000.00, at the rate of $50,000.00, per month in advance on the first day of every month during the term of the extension. Lessee shall also pay and be responsible for any Additional Rent as set forth in Sections Five and Fifteen below. SECTION THREE REPAIRS Lessee shall make all of the necessary repairs to both the interior and exterior of the Premises and maintain the Premises in good condition at all times, ordinary wear and tear excepted. Lessor shall have no maintenance or repair obligations whatsoever for the Premises, the entire obligation to maintain and repair the Premises being the responsibility of the Lessee. SECTION FOUR COMPLIANCE WITH LAWS, RULES AND REGULATIONS OF FIRE PREVENTION Lessee shall comply with all local, state and Federal laws, rules, regulations and requirements, revocable permits and recorded instruments currently applicable to the Premises excepting any removal obligation under the revocable permits. Copies of all recorded instruments currently applicable to the Premises are attached hereto and incorporated herein by reference as Exhibit "C ". Copies of all revocable permits currently applicable to the Premises are attached hereto and incorporated herein as Exhibit "D ". Lessee shall promptly comply with and execute all rules, orders and regulations which pertain to the prevention of fire at its own expense. Lessee shall not permit the Premises to be occupied for any purpose deemed disreputable or extra - hazardous on account of fire. Lessee understands that a portion of the Premises are on the National Historic Register. Lessee shall not cause or permit any hazardous or toxic waste or material, including petroleum products, to be brought upon, kept or used in the Premises unless used, kept and stored and removed from the Premises upon termination of this Lease in a manner that complies with all laws regulating such material. Lessee shall indemnify, save harmless, and defend the Lessor and City of Pueblo from any damages, claims, penalties, remedial and corrective actions, costs and expenses, including attorney fees, caused by or resulting from Lessee's failure to ccmpl_ with this hazardous material covenant or contamination caused by such hazardous or toxic waste or materials, including petrcleum products. 2 As an inducement to Lessee to enter into the Lease, the Lessor represents and warrants to Lessee that the Premises comply will all local, state and federal laws, rules, regulations and codes; that no hazardous materials are stored or have been stored on the Premises; that the heating, ventilation, air conditioning, and other electrical and mechanical systems which are located on the real property are in good working order, and that the personal property and fixtures included in the Premises are in good working order. The Lessee understands that the Lessor has not made an independent investigation of the foregoing, and is making the foregoing representations and warranties to Lessee based upon the same representations and warranties received, or to be received, by Lessor from QualMed in connection with Lessor's purchase of the Premises. Lessor hereby assigns the benefit of all representations and warranties relating to the condition of the Premises that it has received from QualMed, or otherwise in connection with the purchase of the Premises, to Lessee. To the extent Lessor has received representations or warranties from QualMed which Lessee seeks to enforce, Lessor shall cooperate fully with the enforcement efforts of Lessee against QualMed, and Lessee agrees to look solely to QualMed for damages associated with a breach of any of the representations and warranties set forth in this paragraph. Lessor shall provide Lessee with copies of all applicable documents including, but not limited to, warranties, maintenance agreements and other documents evidencing the condition of the building, equipment and mechanical systems. Additionally, Lessor shall provide Lessee with copies of all inspection records, certifications and other documents issued for the building by the Pueblo Regional Building Department as evidence that the building was constructed in accordance with all applicable laws, rules, regulations and codes. Lessee has been given the opportunity to inspect the Premises and discuss the condition of the Premises with Qual -Med and Foundation Health Systems. Lessee is not relying on any representation by Lessor of the condition of the Premises in entering into this Lease. SECTION FIVE ASSIGNMENT AND SUBLEASE Subject only to the prior written consent of the Lessor, which consent shall not be unreasonably withheld, Lessee shall have the right and privilege during the term of this Lease to sublease a portion of the Premises. DIo such sublease shall release the Lessee of any of its obligations to Lessor under this Lease including, but not limited to, those obligations set forth in Section Fifteen of the lease. It is anticipated that Lessee may enter into a short term 3 s sublease with the current occupant of the Premises for a portion of the Premises at fair market value. Lessor's consent to this Particular sublease will not be required. In the event Lessee sells all or substantially all of the Lessee's business, the Lessee may assign this lease or sublease all or any potion of the Premises subject to the prior written consent of the Lessor, which consent shall not withheld subject only to the following conditions. For any such assignment or sublease, the assignee or subtenant is to agree in writing to assume all of the Lessee's obligations hereunder, including the provisions for additional rent contained in Section Fifteen herein. Additionally, Lessee must demonstrate to the reasonable satisfaction of the Lessor that the jobs provided by any such assignee or subtenant are substantially equivalent to the jobs provided by the Lessee in terms of wages and benefits. Whether or not the Lessee satisfactorily demonstrates that the jobs provided by any such assignee or subtenant are substantially equivalent to the jobs provided by the Lessee in terms of wages and benefits shall be a matter within the sole and exclusive reasonable discretion of the Lessor. In connection with such an assignment or sublease as part of sale of the business, the Lessee shall not be released from its obligations to Lessor under this Lease unless and until such time as the Lessee demonstrates, to the reasonable satisfaction of the Lessor, that the assignee or subtenant has the ability, financial and otherwise, to perform all of Lessee's obligations under this Lease, which determination shall be a matter within the sole and exclusive reasonable discretion of the Lessor. Upon such demonstration, however, the Lessee shall be released hereunder. Lessor may assign this Lease and, in the event of any such assignment, will notify Lessee. SECTION SIX EFFECT OF DAtAGE TO OR DESTRUCTION OF Premises If the Premises are damaged or destroyed in whole or in part by fire or other casualty during the term of this Lease, Lessee shall, with due diligence, repair, restore, rebuild, or replace the Premises or portions thereof destroyed or damaged, so that the property shall be substantially the same as prior to such damage, and, for such purposes, the net proceeds of the fire and other hazards insurance, insuring such fire or other casualty, shall be made available to Lessee. If the destruction or damage amounts to more than thirty per cent (300) of the insurable value of the Premises, Lesscr may, at its option, cancel and terminate the Lease by giving written notice thereof to Lessee within thirty (30) days after the date such damage or destruction has 4 occurred. If the destruction or damage amounts to more than thirty percent (30 %) of the insurable value of the Premises, and the destruction or damage substantially compromises the Lessee's ability to do business on the Premises for a period of six months or longer, Lessee may, at its option, cancel and terminate the Lease by giving written notice thereof to Lessor within thirty (30) days after the date such damage or destruction has occurred. In such event, this Lease shall terminate on the date specified in such notice, and Lessee shall not be obligated to repair or rebuild. In the event of any damage or destruction to the Premises, which is not the fault of Lessee, rent under this Lease shall be abated proportionally for the time during which, and to the extent to which, the Premises may not be used by Lessee. Lessee shall be entitled to receive a pro rata refund out of any advance rent paid by it for the period during which the Premises were unusable by reason of destruction or damage. SECTION SEVEN LESSOR'S RIGHT TO INSPECT OR REPAIR Lessor and its agents or other representatives shall have the right to enter the Premises, or any part thereof, at all reasonable hours for the purpose of examining them or determining that such repairs or alterations as may be necessary to make them safe and to preserve them have been or are being made. In the event the Lessee fails to make necessary repairs in a timely manner, after reasonable notice to Lessee, Lessor may enter, upon the Premises to make such repairs to preserve and protect the Premises. The costs of any such repairs will be the responsibility of the Lessee and failure to reimburse Lessor within ten days will be considered an event of default. SECTION EIGHT LESSOR'S RIGHT TO SHOT) AND ADVERTISE PREMISES Unless this Lease is renewed by Lessee or unless Lessee exercises its purchase option as contained herein, during the 120 days immediately preceding the expiration of the term hereof, Lessor or its agent shall have the right to show the Premises and place a sign on the exterior of the Premises, such as "To Let" or "For Sale ", and shall allow such showing and the sign to remain on the building so lo-_g as it does not interfere with Lessee's use or occupancy. SECTION NINE LESSEE'S RIGHT TO PLACE SIGNS Lessee shall have the privilege of placing on the Premises such signs as it deers necessary and proper in the conduct of its S business. SECTION TEN UTILITIES Lessee shall pay for all utilities furnished to or used in the Premises during the term of this Lease and of any renewal or extension thereof. Lessee shall maintain all heating, cooling, electrical, plumbing, hot water, generator, telephone and fiber optic systems located in or used on the Premises in good working condition at its own expense, ordinary wear and tear excepted. SECTION ELEVEN KkNNER OF GIVING NOTICES Any notice to be given by either party to the other, pursuant to the provisions of this Lease or anv law, shall be given personally or by registered or certified mail, addressed to the party for whom it is intended at the address stated above or at such other address as such party may have designated in writing. Notice shall be deemed to have been given three (3) days after the date of such mailing. It is agreed that there is to be no enforceable default against Lessee or the exercise of any option or right granted to Lessor under any provision hereof in the event of Lessee's default or omission, unless notice thereof shall have been given as indicated herein, specifying the default or omission complained of, and Lessee shall have had thirty (30) days after giving such notice to remedy the default or omission. If the default or omission complained of is of such nature that it cannot be completely cured within such thirty (30) day period, such default nevertheless shall not be enforceable against Lessee if Lessee shall have begun curing it within the thirty (30) day period and shall, with reasonable diligence and in good faith, proceed to remedy it. SECTION TWELVE LEASE SUBORDINATE TO ENCUMBRANCES This Lease is subject to and subordinate to any mortgages or trust deeds now on or that may be hereafter placed against the Premises, and to all advances made or that mar be made on account of the encumbrances, to the full extent of the principal sums secured thereby and interest thereon. Upon request by Lessor, Lessee agrees to provide a certification to a current or future lender, secured by the Premises or a portion - thereof, acknowledging the priority of the lenders deed of trust or mortgage to this Lease. The foregoing subordination shall be subject to the conditions that so long as Lessee is not in default (beyond any period given Lessee under =his Lease to cure 6 such default) in the payment of rent or additional rent or in the performance of any of the material terms, covenants or conditions of this Lease on Lessee's part to be performed, Lessee's possession of the Premises and rights and privileges under this Lease shall not be disturbed or diminished or interfered with by the applicable mortgagee. SECTION THIRTEEN INDEMNIFICATION OF LESSOR Lessee, during the term hereof, shall indemnify, hold harmless and defend Lessor against all claims and demands, whether for injuries to persons, loss of life, or damage to property occurring within the Premises and arising out of the use and occupancy of the Premises by Lessee, except for any claims arising directly out of acts or omissions of Lessor. Nothing contained in this section shall, however, detract from Lessor's rights to protection under the public liability insurance policy to be paid for by Lessee as specified in Section Fourteen hereof. SECTION FOURTEEN INSURANCE A. Insurance Companies: It is agreed that all policies of insurance to be maintained in force by the Lessee shall be obtained from good and solvent insurance companies acceptable to Lessor. Lessee shall provide to Lessor certificates of insurance for all of the policies required as well as annual proof of payment of premium. B. Lessee to Obtain Public Liability Insurance: Lessee shall, at its own expense, at all times during the term of this Lease, maintain in force a,policy or policies of insurance, written by one or more responsible insurance carriers, which will insure Lessee against liability for injury to or death of persons or loss or damage to property occurring in or about the Premises and contractual coverage. The liability under such insurance shall not be less than One Million Dollars ($1,000,000) for any one person killed or injured, One Million Dollars ($1,000,000) for any one accident and One Million Dollars ($1,000,000)) property damage, with an umbrella for Five Million Dollars ($5,000,000) and will name Lessor as an additional insured. C. Lessee to Obtain Worker's Compensation Insurance: Lessee shall maintain and keep in force all employees' compensation insurance required under the laws of the State of Colorado, and such other insurance as may be necessary to protect Lessor against any other liability to person or property arising hereunder by operation of law, whether such law be now in force 7 or adopted subsequent to the execution hereof. D. Lessee to Obtain Fire and Hazard Insurance on Premises: Lessee shall maintain in force at all times during the term of this Lease a policy of insurance for fire and other hazards to the extent of at least one hundred per cent (100%) of the insurable value of the Premises with extended coverage, boiler and generator endorsements, and name Lessor and the City of Pueblo as insured for their interests in the Premises. Lessee shall cause to be endorsed on its fire and other hazard insurance and any extended coverage policy or policies, the waiver of right of subrogation. E. Lessee's Waiver of Casualty Insurance Proceeds: In the event the Premises shall be damaged or destroyed by fire or other casualty so insured against, Lessee shall claim no interest in any insurance settlement arising out of any such loss which involves the interests of the Lessor and the City of Pueblo in the Premises, and it will execute all documents required by Lessor or the insurance company or companies that may be necessary for use in connection with settlement of any such loss. F. Lessee's Failure to Insure: Should Lessee fail to keep in effect and pay for such insurance as it is in this section required to maintain, Lessor, without any obligation on its part to do so, may maintain such insurance , in which event the insurance premiums paid by Lessor shall become due and payable forthwith and failure of Lessee to pay same on demand shall constitute a breach of this Lease. SECTION FIFTEEN ADDITIONAL RENT Lessor is entering into this Lease in order to promote economic development in Pueblo, Colorado and specifically based upon Lessee's commitment to provide full time employment to a total of six hundred (600) individuals on the Premises. For the purposes of this agreement full time employee shall be deemed to mean a person who performs work at the Premises for not less than thirty -two (32) hours per week whether employed by the Lessee or by an outside entity acting as an agency to provide full time employees for the Lessee. Full time employment does not include independent contractors nor employees of the current occupant who may remain on the Premises under sublease with the Lessee. The parties agree that the amount of rent set forth in Section Two above is substantially less than the fair market value of the Premises, therefore, the amount of rent set forth in Section Two, above, will be increased in the event Lessee does not provide the number of full time employees committed. Lessee has R specifically committed to have at least 200 employees working in full time employment on the Premises by August 1, 2000. By August 1, 2001, Lessee will have added an additional 200 full time employees on the Premises and by August 1, 2002 and thereafter Lessee will have in its employ 600 full time employees on the Premises. Lessee will pay to Lessor as additional rent the sum.. of $89.29 per month for each full time employee not provided by Lessee during the following months in the numbers stated: Month Number of Full TimQ Er•olovees each month between 8/1/2000 and 7/31/2001 200 each month between 8/1/2001 and 7/31/2002 400 each month after 8/1/2002 600 Such additional rent shall be payable annually in arrears.t Within fifteen (15) days after the end of each calendar month, Lessee will submit to Lessor statements showing the number of employees working in full -time employment on the Premises during the prior calendar month and computations for the amount of additional rent, if any, certified by an officer of Lessee to be true and accurate. For purposes of verifying such employment Lessor shall have access to Lessee's books and records including payroll records. Lessor will respect the right of employees and Lessee as to confidentiality of personnel records. Lessor agrees to ,comply with all additional laws governing the handling of such records. Lessee acknowledges and understands that Lessor's primary consideration in entering into this Lease is Lessee's providing the full -time employment as set forth above. The parties understand that Lessee's ability to employ full -time employees at the Premises may be subject to factors and conditions outside of the control of Lessee. In the event that, notwithstanding Lessee's diligent efforts to meet its Employment Commitment of full -time employees on the Premises, Lessee is unable to meet the foregoing commitment d,-e to factors outside of its control, Lessor, upon written request of the Lessee , will meet with the Lessee and the City of Pueblo to discuss in good faith whether the requirements of this Lease with regard to the number of full - time employees required should be modified or extended. Lessee understands and agrees that if any such modification results in Pi the reduction of the number of full -time employees required of Lessee under this Lease, the rent provisions contained in Section Two herein will be increased to reflect any such change. SECTION SIXTEEN OPTION TO PURCi-LASE Ten years after the initial commencement of this Lease, (i.e. at the end of the initial seven year term of this Lease and the three year extension period), and providing the Lessee is not in default, the Lessee shall have an option to purchase the real property described in Exhibit A and the furniture, fixtures and equipment, described in Exhibit B, and the property that is the subject of the revocable permits for its then fair market value. Lessee's rights to purchase the fiber optic cable and conduit system shall be subject to the terms and conditions of the Fiber Optic Cable and Conduit System Access and Use Agreement attached hereto as Exhibit "E ". If Lessee desires to exercise the purchase option Lessee shall give a written notice to Lessor at least sixty days prior to the end of this Lease term. If Lessor, Lessee and the City of Pueblo are unable to mutually agree upon the fair market value then Lessor and Lessee shall engage a certified commercial real estate appraiser, subject to the approval of the City of Pueblo, which approval shall not be unreasonably withheld, to provide the fair market value. The cost of the appraisal will be shared equally between Lessor and Lessee. Lessor will then provide, at its expense, a title insurance commitment for the amount of the purchase price within thirty days of the determination of the fair market value and will convey title at closing by Special Warranty Deed and Bill of Sale. No proration of taxes or rents will be made in connection with a purchase. If Lessee does not exercise the above option to purchase the Lessee shall nevertheless have an option to extend, this Lease as provided in Section Nineteen, below. The purchase option may not be anticipated or exercised in advance of the time frame set forth above. SECTION SEVENTEEN INTERIOR ALTERATIONS Subject to the prior written approval of the Lessor, which approval shall not be unreasonably withheld, Lessee shall have the right to install such interior partitions and make other modifications as may be desirable for the conduct of its business, but shall not make any modifications or alterations that will disqualify tae Premises ( to the extent currently qualified or eligible for qualification) from registration under the National Historic Register. Any such interior partitions or other modifications are subject to the limitations and 10 conditions set forth in Section Four, above. Lessee shall remove all mechanic's liens arising out of such alterations within thirty (30) days after their completion. SECTION EIGHTEEN PROPERTY TAXES Lessee shall be responsible for and shall pay and discharge before delinquent all real and personal property taxes assessed against the Premises and any improvements or items of personal property located thereon. If Lessee fails to pay any such taxes, Lessor without any obligation on its part to do so, may pay such taxes and the amounts of taxes so paid by Lessor shall become due and payable forthwith, and failure of Lessee to pay same on demand shall constitute a breach of this Lease. SECTION NINETEEN EXTENSION OF LEASE Lessee may extend this Lease for one additional term of three years with the rate and amount of rent to be at the extension rate set forth in Section Two above. In the event Lessee wishes to extend the Lease term it shall give written notice to Lessor at least ninety days before the end of the primary term of the Lease.cLessor and Lessee will then enter into discussion about the rate and amount of rent. In the event Lessor and Lessee do not reach an agreement on the rate and amount of rent in the proposed extension, or if the City of Pueblo does not approve the rate and amount of rent, within thirty days before the end of the primary term of the Lease the Lease will expire at the end of the primary ter j Should the Lessee hold over without an agreed upon extension of he Lease the Lessee shall be deemed to be a tenant from month to month and obligated to pay rent at a rate equal to One Hund -ed Fifty Percent (150 the then fair market value rent for the entire Premises (said fair market value rent to be determined by a Colorado licensed commercial appraiser selected jointly by Lessor and Lessee) with the other terms and conditions of this Lease to be applicable. SECTION TWENTY EFFECT OF EMINENT DOHAIN A. Condemnation cf Entire Premises: In the event that all of the Premises are ta::en or condemned for any public or auasi- public use, this Lease shall terminate as of the date of such taking. The award for such taking of the Premises sh =_11 belong to Lessor. B. Condemnation : n Part of the Premises: In the event that 11 a portion of the Premises is taken or condemned for any public or quasi- public use, this Lease shall terminate as to the part taken and shall continue as to the remainder of the Premises for the balance of the term thereof at a reduced rental based on the proportion of the Premises remaining after such taking bears to the area of the Premises prior to such condemnation. However, if the taking shall be more than twenty per cent (20a) of the Premises before the taking, and Lessee shall deem it impracticable to continue its rental of the Premises after such taking of the Premises, this Lease shall terminate on Lessee's giving of thirty (30) days' written notice thereof within a reasonable time after such condemnation. In any event, Lessee shall be permitted to make claim to the condemnation authorities for the value of any improvements erected by it on the Premises and for the value of any fixtures installed by it therein. SECTION TWENTY -ONE TIME OF THE ESSENCE Time is of the essence of each and every provision, covenant and condition contained herein and on the part of Lessee or Lessor to be done and performed. SECTION TWENTY -TWO LESSOR'S COVENANTS AND WARRANTIES Lessor covenants and warrants that: 1. Lessor is the owner of the Premises and has the right to make this Lease. 2. Lessee, on paying the rent herein reserved and on performance of all the terms and conditions of this Lease on its part to be performed, shall at all times during the term hereof peacefully and quietly hold and enjoy the Premises. 3. The Premises will be free on the effective date of this Lease from all encumbrances except a trust deed of record or which will be placed of record for the benefit of the City of Pueblo, Colorado, a municipal corporation. Lessor further covenants and warrants that at the time of the delivery of possession of the Premises to Lessee: 4. The Premises shall be clear of all mechanic's liens. 12 SECTION TWENTY -THREE DEFAULT AND LESSOR'S REENTRY ON DEFAULT OR ABF�::)ODRMENT If the Premises, or any part thereof, shall be deserted or become vacated during the term of this Lease, or if any default is made in the payment of rent or additional rent cr in the performance of any of the covenants contained herein, Lessor or its representatives may reenter the Premises by su_,.ary or other proceedings and remove all persons therefrom, without being liable to prosecution therefore and without terr..inating this Lease, and Lessee shall pay at the same time as the rent becomes payable under the terms hereof a sum equivalent to the rent reserved herein and all amounts otherwise payable by Lessee hereunder. Lessor may, on reentry, rent the Premises on behalf of Lessee, reserving the right to rent them for a Ion -ger period of time than that fixed in this Lease, without releasing the Lessee from liability, applying any sums collected, first to the expense of resuming or obtaining possession, second to restoring the Premises to a rentable condition, and finally to the payment of the rent and all of the charges and amounts due and to become due to Lessor under this Lease, any surplus to be paid to Lessee, who shall remain liable for any deficiency. In the e "ent of Lessee's default Lessor shall be entitled to recover its damages for such default and its attorney fees and costs. In the event of a default in the payment of the rent or additional rent the Lessor shall be entitled to anticipate the loss of future rents as well as those currently in arrears and seek recovery of the future amounts due. SECTION TWENTY -FOUR LEASE BIDDING ON SUCCESSORS AND ASSIGNS The covenants and agreements contained in this _ease shall be binding on the parties hereto and on their respec successors, heirs, executors, administrators and assigns. Lessor may pledge this Lease, subject to the limitations of Section Five, to the City of Pueblo, a Municipal Corporation and may assign to the City of Pueblo the right to enforce the terms and conditions of this Lease. 13 SECTION TWENTY -FIVE LAWS TO APPLY This Lease will be interpreted according to the laws of the State of Colorado, without regard to any conflict of law principles . In the event of any litigation arising out of this Lease, or its interpretation, the parties agree that venue is proper in Pueblo County, Colorado. IN WITNESS WHEREOF, the parties have executed this Lease at Pueblo, Colorado the day and year first above written. PEDCO FOUNDATION, LESSOR: The TPA, INC., LESSEE: 14 PURCHASE AND SALE AGREEMENT THIS AGREEMENT is entered into this ;Z& ` day of June, 1999 between QualMed, Inc., a Delaware corporation and Foundation Health Systems, Inc., a Delaware corporation (collectively the "Seller ") and the PEDCO Foundation, Inc., a Colorado non- profit corporation (the "Purchaser"). ARTICLE 1 Purchase and Sale 1.1 Purchase and Sale. Subject to the terms and provisions in this Agreement, Seller agrees to sell to Purchaser and Purchaser agrees to purchase from Seller the land described in Exhibit A to this Agreement and the buildings, fixtures and other improvements located on that land owned by Seller (together called the "Property), commonly known as the Pope Block Buildings, (317 North Main Street, Pueblo, Colorado 81003) and the Generator Building (310 Court Street, Pueblo, Colorado 81003) together with (a) all easements, servitudes and other rights now belonging or appertaining to the Property, and (b) the Personal Property described in Section 1.3. 1.2 Purchase Price; Payment of Purchase Price. The price of the Property and Personal Property is Four Million Five Hundred Thousand Dollars ($4,500,000.00) (the "Purchase Price "). The Purchase Price (subject to the prorations to be made under this Agreement) is payable by Purchaser at Closing in immediately available funds. 1.3 Personal Property. Included in the sale of the Property is all of the Seller's right, title and interest in and to the following ( "Personal Property "): (a) Licenses, Permits and Warranties. To the extent they may be transferred by Seller and are in existence and effect (i) all general business licenses, permits, approvals and authorizations required for the use and operation of the Property; and (ii) all warranties covering any portion of the Property or Personal Property; (b) Surveys and Plans. To the extent assignable, all existing surveys, blueprints, drawings, operating manuals and similar documents, plans and specifications (including, without limitation, structural, HVAC, mechanical and plumbing plans and specifications) in Seller's possession; (c) Furniture, Fixtures and Equipment. The furniture, fixtures and equipment described in Exhibit B. (d) Fiber Optic Cable- Conduit System. The fiber optic cable - conduit system installed by Seller which is the subject of a series of revocable permits which are attached as Exhibit C. The fiber optic cable- conduit system to be transferred shall be EXHIBIT "B" - subject to a Fiber Optic Cable- Conduit System Access and Use Agreement which is attached hereto as Exhibit D. The items listed in paragraphs (a) through (d) inclusive shall be transferred to the extent assignable "as is" and "where is" and without any representation or warranty, except as set forth in paragraph 2.6 of this Agreement. ARTICLE 2 CLOSING 2.1 Closing. The Closing of the purchase and sale of the Property shall be held on June , 1999 or on an earlier date if Seller and Purchaser so agree ( "Closing Date ") at 10:00 a.m. Mountain Time, at the offices of Lawyer's Title Insurance Company, 3930 Ridge Dr., Pueblo, Colorado 81008. Time is of the essence with respect to the obligations of Seller and Purchaser to close the purchase and sale pursuant to this Agreement on the Closing Date, except as expressly provided in this Agreement. 2.2 Seller's Closing Items. At the Closing Seller agrees to execute, deliver and/or provide to Purchaser, or cause to be executed, delivered and provided to Purchaser, the following: (a) Deed. A duly executed S ( "Deed ") conveying fee title to the property subject to (i) the permitted exceptions (as defined in Section 2.5 (a); (ii) real property taxes for 1999 and subsequent years and (iii) applicable building, subdivision and zoning regulations; (b) Bill of Sale. A Bill of Sale transferring Sellers interest in the Personal Property described in Section 1.3 (c). '(c) Non - foreign Affidavit; Colorado Withholding. An affidavit stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code, in order that Purchaser will not be required to withhold any portion of the Purchase Price, and evidence that no withholding is required under Colorado Revised Statutes §39 -22- 604.5; (d) Authorization Documents. Evidence satisfactory to the Escrow Agent of the authority of Seller to execute and deliver this Agreement and other documents delivered and to be delivered under it by Seller, the consummation by Seller of the transaction contemplated hereby, and such other documentation as the Title Insurer may reasonably require in order to issue the title policy; (e) Owner's Title Policy. The Title Policy referred to in Section 2.5 (a), which may be delivered a reasonable time after the Closing so long as the Title Insurer commits at Closing to issue the policy in accordance with the Commitment approved by Purchaser under Section 2.5 (a); K (f) Possession. Actual possession of the Property. 2.3 Purchaser's Closing Items. At the Closing, Purchaser agrees to execute, deliver and /or provide to Seller, or cause to be executed, delivered and /or provided to Seller, the following: (a) Authorization Documents. Evidence satisfactory to the Escrow Agent of the authority of Purchaser to execute and deliver this Agreement and the other documents delivered and to be delivered under it by Purchaser, the consummation by Purchaser of the transaction contemplated hereby, and such other documentation as the Title Insurer may reasonably require in order to insure the Title Policy; (b) Purchase Price. The Purchase Price as provided in Section 1.2 which shall be wire transferred to Seller in an amount equal to the Purchase Price, as adjusted for the prorations required pursuant to this Agreement. 2.4 Other Closing Documents. In addition to the documents referred to in Sections 2.2 and 2.3, each party agrees to execute and deliver at the Closing a transfer declaration, affidavits and such other documents as may be required in this Agreement or as may be reasonably necessary to carry out its obligations under the intent of this Agreement. 2.5 Conditions to Purchaser's Obligations. The obligation of Purchaser to purchase the Property pursuant this Agreement is subject to the fulfillment of each of the following conditions, except to the extent waived by Purchaser within the time parameters set forth below: (a) Title Evidence; Surveys, Tax Certificates. (1) Title evidence. Seller has provided to Purchaser a title insurance commitment ( "the "Commitment ") issued by the Escrow Agent as agent for the Lawyers's Title Insurance Company ( "Title Insurer"), case no. 99 -06 -117, showing the status of the record of title to the Property, together with all copies of all recorded documents listed as exceptions to title in Schedule B -2 of the Commitment or otherwise (collectively the "Title Documents "). Seller shall pay the base premium for an owner's title insurance policy in the amount of the Purchase Price (the "Title Policy ") to be issued to Purchaser pursuant to the Commitment and Purchaser shall pay the cost, if any, for any extended coverage or other endorsements it requests to the Title Policy. Seller agrees to deliver to the Escrow Agent at the Closing a Mechanic's Lien Affidavit reasonably acceptable to the Title Insurer certifying that all work on the Property requested by Seller or its employees or agents has been paid in full or that provision has been made by Seller for payment in full in the ordinary course of business. The Commitment and Title Documents are referred to as "Title Materials." (2) Title Objections. Purchaser has reviewed the title commitment and has no objection to the Exceptions shown on Schedule B - Section 2, items 6 through 13. Based upon the survey documents to be supplied by Seller, as well as Seller's mechanic's lien affidavit, Purchaser will require the deletion of Exceptions 1 through 5. (3) Permitted Exceptions. "Permitted Exceptions" are listed in paragraph 2.5(a)(2) above. (4) Additional Defects of Title. If, at any time prior to the Closing, Purchaser becomes aware of any encumbrance on or defect in title to the Property that is not a Permitted Exception and that was not disclosed in the Title Materials and which would otherwise qualify for an Objection Notice (an "Additional Title Objection "), Purchaser shall give Seller written notice of the Additional Title Objection and Seller will have five days to correct same. If the matter can not be cured within the five days then Purchaser, at its option, may elect to treat this Agreement as null and void or may proceed to close without the defect being cured.. If, at any time prior to the Closing, Seller becomes aware of any encumbrance on the Property that is not disclosed in the Title Materials, Seller shall give prompt notice to Purchaser with a description of the encumbrance, as to which Purchaser may, if it so elects, give Seller an additional Title Objection. (5) Survey. Immediately upon execution of this Agreement, Seller shall deliver to Purchaser all surveys in Seller's possession with respect to the Property (the "Survey"), which Purchaser, at Purchaser's sole cost and expense, may update and /or have recertified to Seller, Purchaser and the Title Insurer. (6) Tax Certificates. Immediately upon execution of this Agreement, Seller shall cause the Escrow Agent to deliver to Seller and Purchaser a certificate of taxes due and unredeemed tax sales issued by the Pueblo County, Colorado Treasurer's office, showing the status of real estate taxes and assessments applicable to the Property as of the date after the date of this Agreement. (b) Inspection of the Property. Beginning upon the mutual execution of this Agreement and ending at 5:00 p.m. Mountain Time, on the date that is ten (10) days after the mutual execution of this Agreement (the "Inspection Period ") Purchaser shall be permitted to investigate and evaluate the Property, the status of zoning and all other documents and /or information with respect to the Property and any other aspects or characteristics of the Property which may affect the acquisition, ownership, development, uses, operation, marketability or economic viability of the Property. Purchaser shall indemnify, defend and hold Seller harmless from any expenses, damages and liabilities including reasonable attorney fees that Seller may incur arising out of any claim for property damages, personal injury or claims for material or labor which in turn arise from Purchaser's investigations hereunder. If, on or before expiration of the Inspection Period, Purchaser gives written notice setting forth Purchaser's dissatisfaction with the Property or any aspect or characteristic thereof, for any reason whatsoever, then this Agreement shall terminate and both parties shall be released from all obligations hereunder except Purchaser's obligations under this paragraph. If Purchaser does not terminate this Agreement as 4 " IL hereinabove described, then this Agreement shall remain in full force and effect in accordance with its terms. 2.6 Limited Representation and Warranty. Seller represents and warrants that the Property complies with all local, state and Federal laws, rules, regulations and codes; l that no hazardous materials are stored or have been stored on the Property; that the heating, ventilation, air conditioning, and other electrical and mechanical systems which are located on the real property are in good working order; and Personal Property (Exhibit B) purchased and sold pursuant to this Agreement are and will be in good repair and working order on the Closing Date. The representations, covenants and warranties of Seller set forth in this paragraph 2.6 shall survive closing. 2.7 Sale "As Is ". Except as provided in paragraph 2.6, Seller hereby disclaims any warranty or representation, express or implied, with respect to following: (a) The fitness of the Property for any particular use; (b) The financial benefits, income, expenses, profits or losses to be achieved, derived or incurred as a result of the ownership, operation, leasing or management of the Property; or ARTICLE 3 Closing and Post - Closing Adjustments 3.1 Closing Adjustments. The following are to be apportioned at the Closing on a per diem basis through and including 11:59 p.m. of the day preceding the Closing Date with respect to the Property or otherwise allocated as set forth herein: (a) Taxes and Assessments. Seller shall be responsible for and shall pay all real estate taxes, personal property taxes and installments of assessments (special and general) for the tax years prior to 1999. Real estate, personal property taxes and all installments of assessments (special and general) for the year of the Closing shall be prorated between the parties. If the rate or amount of these taxes has not been fixed prior to the Closing Date, the adjustment shall be upon the basis of the mill levy for the preceding year applied to the latest assessed valuation as of the Closing Date and shall be a final settlement between the parties. / z (b) Utilities and Other Operating Expenses. Unless final meter readings are obtained up to the Closin Date (for which Seller shall be solely responsible), water and sewer service charges, and c arges for all other public utilities, including, without limitation, telephone, electricity and gas.. The right to the return of any deposits with utility companies shall be retained by Seller and Seller shall not receive any credit at Closing for those deposits. Seller shall pay and be responsible for all salaries, benefits and other expenses for the operation of the Property that accrue or are attributable to periods prior to the Closing and Purchaser shall pay and be responsible for those expenses of operation of the Property that accrue or are attributable to periods after the Closing. (c) Closing Costs. All real estate recording and documentary fees payable in connection with the conveyance of the Property shall be paid by Purchaser. All costs and expenses incurred for closing services, such as closing fees and document preparation fees charged by the Escrow Agent, not to exceed $250.00 shall be paid in equal shares by Seller and Purchaser. (d) Other Apportionments. Such other items as are customarily apportioned at a Closing of the sale of an office building in Pueblo, Colorado or as provided in Section 3.2. 3.2 Post - Closing Apportionments. Seller and Purchaser agree to, use reasonable efforts to calculate all apportionments required under Article 3 (and to make the applicable payments resulting from those calculations) with respect to those items of income and expenses which are known, received or can be accurately and finally determined on the Closing Date. Each other item of income and expense which is subject to apportionment, under this Article 3 but which is not known, has not been received or cannot be accurately or finally determined on the Closing Date shall be apportioned retroactive to the Closing Date and the payment made on such apportionment within thirty (30) days after the date that the apportionment becomes ascertainable, i.e., the date by which each party, in its good faith business judgment, has sufficient information to make the apportionment. Purchaser and Seller shall cooperate as necessary following the Closing in order to promptly and in good faith discharge their respective obligations under this Article 3. Notwithstanding the foregoing, any claim for an adjustment under Section 3.1 will be valid only if made in writing with reasonable specificity within ninety (90) days of the Closing Date. The provisions of this Article 3 shall survive the Closing. ARTICLE 4 Default 4.1 Default and Termination. (a) Purchaser's Default. If Purchaser defaults in its obligations to close or otherwise commits a default under this Agreement, Seller shall have the right to obtain any equitable or legal remedy or relief for that default including, but not limited to, specific performance and money damages, and to obtain from Purchaser reasonable attorney fees incurred in connection with obtaining any such remedy or relief, (b) Seller's Default. If Seller defaults in its obligation to close or otherwise commits a default under this Agreement, Purchaser shall have the right to obtain any equitable or legal remedy or relief for that default including, but not limited to, specific performance and money damages, and to obtain from Seller reasonable attorney fees incurred in connection with obtaining any such remedy or relief. n ARTICLE Damage and Condemnation 5.1 Damage. All risk of casualty or other loss or damage to the Property and Personal Property shall remain with Seller until the Closing. In the event that prior to the Closing Date any of the Property is damaged by fire or other cause, Seller shall notify Purchaser and Purchaser shall have the option either' (a) to terminate this Agreement by notice given to Seller within seven (7) days after Purchaser receives the notice, or (b) to close this sale by paying Seller the entire Purchase Price for the Property and to the extent the damage has not been repaired prior to the Closin� receiving all of Seller's right with respect to recovery for such unrepaired damage under Seller's existing insurance policies to the extent not already used to repair the Propert y, The right of termination shall only exist if the damage caused by the casualty is material and has not been completely repaired prior to the Closing. A material casualty is one that results in damage to the improvements on the Property in excess of $50,000.00. If the casualty is not material and has not been completely repaired prior to the Closing then at the Closing Purchaser shall receive a credit on the Purchase Price equal to the amount of the deductible applicable to that casualty under Seller's existing insurance policies and Seller shall assign to Purchaser all of Seller's rights with respect to recovery for such unrepaired damage under Seller's existing insurance policies. If the damage or other casualty is not covered under Seller's existing insurance policies, then Purchaser shall receive a credit on the Purchase Price equal to the amount Seller and Purchaser agree it will cost to repair the damage. Seller shall be responsible for the payment of any such repairs made prior to the Closing and shall be entitled to insurance proceeds applicable to those repairs. 5.2 Condemnation. If prior to the Closing, any of the Property is taken in a condemnation or similar proceeding, or if Seller receives notice of a threat or intent to take any of the Property, or if Seller agrees to transfer any of the Property in lieu of such a taking ( "Taking "), Seller shall promptly notify Purchaser and Purchaser shall have the right by written notice to Seller prior- to or at Closing (a) to terminate this Agreement, or (b) to close the purchase of the Property, without a reduction of the Purchase Price, and to receive all of the condemnation proceeds or other consideration paid or payable as a result of the Taking. ARTICLE 6 Miscellaneous 6.1 Authority of Seller and Purchaser. (a) Seller. Seller represents and warrants that, as of the date of this Agreement and as of the date of Closing, Seller has and shall have full power and lawful right and authority to execute, enter into, perform and deliver this Agreement and to consummate and perform the transactions contemplated in it and that such execution and delivery has been authorized and approved by the necessary actions required to be taken 7 with respect to this transaction; and that, when executed and delivered, this Agreement and the other documents and instruments contemplated to be delivered and executed in connection herewith are and shall be binding obligations of the Seller. Furthermore, Seller represents and warrants that the person or persons executing this Agreement and any documents required under it on behalf of Seller have the authority to do so. Seller also represents and warrants that the consummation and performance of the transaction contemplated by this Agreement will not constitute a default or result in the breach of any term or provision of any contract or agreement to which Seller is a party so as to adversely affect the consummation of these transactions. (b) Purchaser. Purchaser represents and warrants that, as of the date of this Agreement and as of the date of Closing, Purchaser is and shall be a duly organized and existing non - profit corporation under the laws of the State of Colorado and authorized to conduct business in this State and has and shall have full power and lawful right and authority to execute, enter into, perform and deliver this Agreement and to consummate and perform the transactions contemplated in it, with full power and authority to carry on its business as now conducted and to enter into and carry out this Agreement. Furthermore, Purchaser represents and warrants that the person or persons executing this Agreement and any documents required under it on behalf of Purchaser have the full legal power and authority to do so and that such execution and delivery has been authorized and approved by all necessary actions required to be taken to make this Agreement the binding obligation of the Purchaser. Purchaser also represents and warrants that the consummation and performance of the transaction contemplated by this Agreement will not constitute a default or result in the breach of any term or provision of any contract or agreement to which Purchaser is a party so as to adversely affect the consummation of this transaction. 6.2 Brokers. Seller and Purchaser each represent and warrant to the other that no broker or finder has been engaged by Seller or Purchaser in connection with the sale contemplated by this Agreement. Each party further represents and warrants to the other that no person or entity claims or will claim any commission, finder's fee or other amounts by, through, under or as a result of any relationship with such party because of this transaction. Each party agrees to hold the other party harmless from and against any and all costs, expenses, claims, losses or damages, including reasonable attorney fees, resulting from any breach of such party's representations and warranties contained in this section. 6.3 Assignability. Al (a) Purchaser's Assignability. Purchaser cannot assign all or any part of its rights or obligations hereunder without the prior \written consent of Seller. Notwithstanding the foregoing, Purchaser may assign and transfer the warranties, covenants and representation of Seller, set forth in Paragraph 2.6, to The TPA, Inc. (TPA), in connection with a contemplated Lease Agreement between Purchaser and TPA which Lease Agreement contains an option to purchase. Seller acknowledges and understands that the ability to transfer these warranties, covenants and representations is a substantial part of the consideration for Purchaser entering into this Agreement with Seller. 8 (b) Seller's Assignability. Seller cannot assign all or any part of its rights obligations hereunder without the prior written consent of Purchaser. 6.4 Notices. All notices required or permitted under this Agreement shall be given by telefax (with a confirmation of receipt), registered or certified mail, postage prepaid or by Federal Express or other recognized overnight courier service addressed to the appropriate party at its address, or by hand delivery, directed as follows: If intended for Seller, to: B. Curtis Westen, Esq. Senior Vice- President, General Counsel and Secretary Foundation Health Systems, Inc. 21650 Oxnard Street Woodland Hills, California 91367 Telephone: (818) 676 -7601 Telecopier: (818) 676 -7503 and Thomas T. Farley, Esq. Peterson, Fonda, Farley, Mattoon, Crockenberg, Garcia & Mattoon, P.C. 650 Thatcher Building Pueblo, Colorado 81003 Telephone: (719) 545 -9330 Telecopier: (719) 542 -8515 with a copy to: Daniel C. K_ ogovsek, Esq. Kogovsek & Higinbotham P.C. 323 South Union Avenue Pueblo, Colorado 81003 Telephone: (719) 546 -3800 Telecopier: (719) 546 -0754 If intended for Purchaser to: James E. Spaccamonti, President Pueblo Economic Development Corporation 301 North Main Street P.O. Box 5807 Pueblo, Colorado 81002 Telephone: (719) 544 -2000 Telecopier: (719) 543 -1650 with a copy to: U Wm. David Lytle, Esq. Altman, Keilbach, Lytle, Parlapiano & Ware, P.C. 229 Colorado Avenue Pueblo, Colorado 81004 Telephone: (719) 545 -7325 Telecopier: (719) 545 -9437 Any notice delivered by mail or overnight courier in accordance with this section shall be deemed to have been delivered upon being deposited in any post office or postal box regularly maintained by the United States Postal Service or upon deposit with such courier, but, in the case of intended recipients who have a telecopier listed above, only if concurrently with that deposit a copy of the notice is sent by telecopier to that intended recipient. If that copy is not sent by telecopier to any intended recipient who has a telecopier number listed above, the notice shall not be deemed to have been delivered until actually received by the intended recipient. Each party, by notice given as set forth above, may change the address to which future notices or copies of notices may be sent. 6.5 Contingencies. (a) Contingencies of Purchaser. Purchasers performance and closing of this Agreement is expressly contingent upon the approval of this Agreement by the City of Pueblo and the City of Pueblo funding the Purchase Price. Purchaser's performance of this Agreement is also contingent upon Purchaser entering into a lease agreement for the Property with TPA, Inc., which is satisfactory to Purchaser. Purchaser agrees to use its best efforts to enter into a satisfactory agreement with TPA, Inc. (b) Contingencies of Seller. Seller's performance and closing of this Agreement is expressly contingent upon Seller and the City of Pueblo entering into a settlement agreement which provides for a mutual release of contractual obligations and a mutual general release between Seller and the City of Pueblo, which is satisfactory to Seller. 6.6 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 6.7 Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and this Agreement may not modified in any manner except by an instrument in writing signed by both parties. This Agreement supersedes and replaces all earlier agreements or understandings of the parties, whether written or oral. 6.8 Headings. The headings herein are inserted only for convenient reference and do not define, limit or prescribe the scope of this Agreement or any section or subsection. 10 6.9 No Merger. The representations, covenants and agreements contained herein shall not merge into the various documents executed and delivered at Closing and shall survive Closing, except as limited in this Agreement. 6.10 Severability. If any provision of this Agreement or its application to any person or situation, to any extent, shall be held invalid or unenforceable, the remainder of this Agreement, and the application of that provision to other persons or situations shall continue valid and enforceable to the fullest extent permitted by law. 6.11 No Waiver. No waiver by either party of any provision hereof shall be deemed a waiver of any other provision or of any subsequent breach by either party of the same or any other provision. 6.12 Construction of Agreement. Seller and Purchaser acknowledge that both they and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or exhibits to it. 6.13 Relationship with Parties. Nothing in this Agreement shall be construed or deemed to make or constitute Seller and Purchaser partners, joint venturers or any other form of joint participants in the acquisition and ownership of the Property and Seller and Purchaser agree and acknowledge that the sole and exclusive nature of their relationship is as Seller and Purchaser. 6.14 Exhibits; Paragraph References. All exhibits to this Agreement are a part of this Agreement and are incorporated into it by this reference. References tp section numbers and exhibits, unless otherwise stated, are to sections in and exhibits to this Agreement. 6.15 Purchaser's Cooperation. Purchaser =agrees that it will cooperate with Seller and Seller's parent, subsidiary and affiliate corporations in pursuing all relevant tax deductions and credits for Seller and in marketing Seller's remaining Pueblo real properties to qualified buyers. 6.16 Prohibition on Recording Agreement. It is understood that neither this Agreement nor any memorandum of it shall be recorded in the real estate records of any county prior to conveyance of the Property to Purchaser. 6.17 Confidentiality. The existence and contents of this Agreement shall be considered confidential and shall not be disclosed to any third person (except attorneys, accountants and other professionals employed by the parties) either by Purchaser or Seller except with the prior written approval of the other party or upon the order of a court of competent jurisdiction. IN WITNESS WHEREOF, the parties have executed this Agreement in Pueblo, Colorado on the day and year first above written. Ii "SELLER" QUALMED, INC. N ATTEST: Name: Title: FOUNDATION HEALTH SYSTEMS, INC. Name: Title: ATTEST: Title: PURCHASER" PEDCO FOUNDATION, INC. Name: Title: 12 ATTEST: Nam Title: 13 DRAFT 6118199 SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT is entered into as of June AN 1999 between Pueblo, a Colorado municipal corporation ( "City ") and QualMed, Inc., a Delaware corporation ( "QualMed ") and Foundation Health Systems, Inc., a Delaware corporation ( "FHS "). RECITALS a. City and QualMed entered into an agreement dated July 22, 1991 relating to the expansion of QuahMed's business within the downtown areas of the City of Pueblo. Pursuant to said agreement, QualMed executed an $800,000.00 Promissory Note dated January 2, 1992 made payable to the City. On January 2, 1992, QualMed also executed and delivered to City a Colorado Deed of Trust which was recorded in the records of the Pueblo County Clerk and Recorder on January 15, 1992 at Reception No. 964451, Book 2574 at Page 233. b. City and QualMed entered into an agreement dated July 8, 1996 relating to the further expansion of QuahMed's business within the downtown area of the City of Pueblo. Pursuant to said agreement, QualMed delivered to the City a Colorado Deed of Trust dated July 17, 1996 which was recorded in the records of the Pueblo County Clerk and Recorder on July 18, 1996 at Reception No. 1131265, Book 2911 at Page 979. C. On October 7, 1997, the City and QualMed entered into Addendum No. 1 modifying the July 8, 1996 agreement described in b. above. d. The City and FHS entered into an agreement dated September 22, 1997 concerning the acquisition of land for the construction of a standby electric generation facility and Generator Building (3 10 Court Street). e. QualMed and FHS represent they are fee owners of the following real properties located within the downtown area of the City of Pueblo: Pope Block Buildings (317 N. Main Street) Generator Building (3 10 Court Street) Butler Building (215 W. 2nd Street) Montgomery Ward/Henkel -Duke Building (225 N. Main Street) Amherst Building (201 N. Main Street) Dante's/Doreen's Buildings (215 -217 N. Main Street) f QualMed and FHS have made a business decision to phaseout their operations in Pueblo, Colorado, which will result in the loss of employment in the City's downtown area. g. City believes that QualMed and FHS's phaseout of business in Pueblo, Colorado constitutes a breach of QualMed and FHS's agreements with the City which gives rise to claims against QualMed and FHS. EXHIBIT "C" h. Qualvled and FHS, based upon preliminary property valuations, have asserted that the Pope Block Buildings (317 N. Main Street) and the Generator Building (3 10 Court Street), including fixtures, equipment, and furnishings located in the Buildings (collectively the "Properties ") have a current fair market value in excess of S 12.9 million. i. QualMed and FHS are willing to sell the Properties to PEDCO Foundation ( "PEDCO ") in consideration of the sum of $4.5 million and City's release of its claims and execution of the Mutual Release attached hereto as Exhibit A (the "Mutual Release ") j. PEDCO intends to lease the Properties to Third Party Administrators, Inc. ( "TPA ") which plans over a phasein period to maintain the employment levels in the City's downtown area which may be lost by QuaUl led and FHS's phaseout of business in Pueblo, Colorado. k. Subject to the occurrence of the conditions and contingencies set forth in Section 2.1.e. hereof, City is willing to advance $4.5 million to PEDCO for the purchase of the Properties and execute the Mutual Release for the purposes of maintaining the economic stability and viability of the City's downtown area and employment within such area, which purposes constitute matters of public, local and municipal concerns justifying the expenditure of public funds. 1. There exists within the City a lack of available employment opportunities which places a public burden upon the City and its citizens. The prevention and reduction of unemployment and underemployment and the social and economic hardships associated therewith are proper public purposes and matters of public concern. AGREEMENT In consideration of the foregoing Recitals and the mutual obligations of the parties hereto and other good and valuable consideration, the -receipt and adequacy of which is hereby acknowledged, each party covenants and agrees with the other as follows: Section 1. Representations, Covenants and Warranties. 1.1 City represents, covenants and warrants for the benefit of Quallled and FHS as follows: a. City is a home rule municipality duly organized and existing under Article XX of the Constitution of the State of Colorado and the Charter of the City. The City has duly authorized and approved the execution and delivery of this Agreement. b. This Agreement and the transfer of Properties are necessary, convenient and in furtherance of the municipal and governmental purposes of the City, will further economic -2- development and create employment opportunities for its citizens, and is in the best interests of the City and its inhabitants. C. This Agreement constitutes a legal, valid and binding obligation of the City enforceable in accordance with its terms which has been approved by Resolution of the City Council of the City. follows: 1.2 QualMed and FHS represent, covenant and warrant for the benefit of the City as a. QualMed and FHS are corporations duly organized, existing and in good standing under the laws of the State of Delaware, are duly qualified to do business in the State of Colorado, have all necessary power and authority to enter into and perform and observe the covenants and agreements on their part contained in this Agreement and by proper action have approved and duly organized the execution and delivery of this Agreement. b. This Agreement constitutes a legal, valid and binding obligation of QualMed and FHS enforceable in accordance with its terms. Section 2. City's Obligations. 2.1 At the closing of the sale of the Properties by QualMed and FHS to PEDCO, the City shall take the following actions: a. Execute and deliver the Mutual Release attached as Exhibit A. b. Deliver the original January 2, 1992 Promissory Note to Quah\4ed marked "PAID IN FULL." C. Execute and deliver to the closing agent all documents required to cause the following Deeds of Trust to be released: Deed of Trust dated July 17,1996, recorded July 18, 1996 in the records of the Pueblo County Clerk and Recorder as Reception No. 1131265 in Book 2911 at Page 979. Deed of Trust dated January 2, 1992, recorded in the records of the Pueblo County Clerk and Recorder on January 15,1992 as Reception No. 964451 in Book 2574 at Page 233. d. Advance S4.5 million in funds to PEDCO for PEDCO to carry out its obligations under the Purchase And Sale Agreement attached hereto as Exhibit B. -3- e. City's obligations are subject to and contingent upon (i) PEDCO and TPA entering into a lease - purchase agreement for the Properties in form and substance acceptable to City, (ii) PEDCO and City entering into and closing an agreement with respect to these transactions in form and substance acceptable to City, and (iii) City's approval of the Purchase And Sale Agreement described in Section 3.1 below. Section 3. Obligations of QualMed and FHS. -1 QualMed and FHS agree to sell the Properties and certain personal property contained therein to PEDCO for $4.5 million in cash or readily available funds in accordance with the Purchase And Sale Agreement, dated as of June, 1999, a copy of which, marked as Exhibit B, is attached hereto and incorporated herein by reference. 3.2 At the closing of the sale of the Properties to PEDCO, QualMed and FHS will execute and deliver to the City the Mutual Release attached as Exhibit A. Section 4. Miscellaneous. 4.1 Time is of the essence hereof. This Agreement shall inure to the benefit of and shall be binding upon the City and QualMed and FHS and their respective successors and assigns. 4.2 This Agreement shall not be effectively amended, changed, modified or altered within the written consent of all parties. 4.3 This Agreement expresses the entire understanding of the parties and supersedes all prior dealings and commitments with respect to the subject matter of this Agreement. 4.4 If any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable. any other provision hereof. 4.5 This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 4.6 Nothing in this Agreement, expressed or implied, is intended nor shall be construed to confer upon, or give to, any person or entity other than the City and QualMed and FHS any right, remedy or claim under or by reason of this Agreement or any covenant, condition or provision hereof, and all covenants, conditions, provisions and agreements contained in this Agreement by or on behalf of the City or QualMMed or FHS shall be for the exclusive and sole benefit of said parties. 4.7 In the event of any litigation arising out of this Agreement, the court shall award to the prevailing party its costs and reasonable attorney fees. All such litigation shall be filed in the District Court, County of Pueblo, State of Colorado and each party agrees to such venue and submits !is to the jurisdiction of that Court. To the extent permitted by law, each party waives its right to ajury trial. 4.8 This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of law principles. 4.9 In no event shall City, its officers, agents or employees be liable to Company for damages, including without limitation, compensatory, punitive, indirect, special and consequential damages, resulting from or arising out of or related to this Agreement or the performance or breach hereof or the failure or delay of City in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of City entering into this Agreement, Company hereby waives and discharges City, its officers, agents and employees from any and all claims for any and all such damages. IN WITNESS WHEREOF, the parties have executed this Agreement in Pueblo, Colorado on the day and year first above written. ATTEST: PUEBLO, a municipal corporation President of the City Council QUALMED, INC. Title: FOUNDATION HEALTH SYSTEMS, INC. N -5- By City Clerk Approved as to form: ATTEST: By Name: Title: ATTEST: By Name: Title: President of the City Council QUALMED, INC. Title: FOUNDATION HEALTH SYSTEMS, INC. N -5- . DRAFT 6118199 c:..i�� PGIy�gP7 MUTUAL RELEASE THIS MUTUAL RELEASE is entered into as of this `lam day of June, 1999 between Pueblo, a Colorado municipal corporation ( "City ") and QualMed, a Delaware corporation ( "QualMed ") and Foundation Health Systems, Inc., a Delaware corporation ( "FHS "). RECITALS a. Disputes and differences have arisen between the City and QualMed and FHS with respect to the following agreements entered into between the parties: Exhibit Number Date of Agreement Parties to Agreement 1 07 -22 -91 City and QualMed 2 07 -OS -96 City and QualMed 3 10 -07 -97 City and QualMed 4 09 -22 -97 City and FHS b. Copies of the aforesaid agreements are attached hereto and are incorporated herein by reference in order that all such claims, demands, actions, responsibilities, obligations and liabilities of the respective parties may be ascertained. c. The parties have agreed to execute this Mutual Release in settlement of such disputes and differences. Section 1. Mutual Release of Contract Claims. 1.1 In consideration of the mutual relinquishment of their respective legal rights with reference to the above- mentioned disputes and differences, in consideration of the execution of this Mutual Release and other good and valuable consideration, the receipt and' adequacy of which is hereby acknowledged, QualMed and FHS for themselves and for their assigns hereby release the City and successors and assigns from all liability for claims and demands arising out of the agreements as described above. 1.2 In consideration of the mutual relinquishment of their respective legal rights with reference to the above - mentioned disputes and differences, in consideration of the execution of this Mutual Release and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its assigns expressly releases QualMed and FHS and their predecessors, successors and assigns from all liability for claims and demands arising out of the agreements as described above except as otherwise provided in Section 4.2 hereof. Section 2. Mutual General Release. 2.1 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, QualMed and FHS and their successors and L assigns hereby release and forever discharge City, its successors and assigns, of and from any and every claim, demand, action or right of action, of whatever kind or nature, either in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. 2.2 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its successors and assigns hereby release and forever discharge QualMed and FHS and their predecessors, successors and assigns, of and from any and every claim demand, action or right of action, of whatever kind or nature, known or unknown, either in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. V Section 3. Release to Cover Personnel and Parent Companies and Subsidiary Companies of Corporate Releasees. 3.1 The City intends that this Release apply to all parent, subsidiary and affiliated compa- nies ofQuahvled and FHS and such entities' respective subsidiaries, affiliates, predecessors, succes- sors and assigns, and all of such entities' past, present and future officers, directors, agents, attorneys and employees and their respective heirs and legal representatives (the "FHS Released Persons "). 3.2 Quah\4ed and FHS intend that this Release apply to the City and the City's respective predecessors, successors and assigns, and all of their past, present and future elected officials, officers, directors, agents, attorneys and employees and their respective heirs and legal representatives. Section 4. Rescission of Contracts. 4.1 This parties mutually agree that the following agreements entered into between the parties shall be and hereby are rescinded, terminated and canceled as of the date of this Agreement: Exhibit Number I pate of Agreement Parties to Agreement 1 07 -22 -91 City and QualMed 2 07 -05 -96 City and QualMed 3 10 -07 -97 City and QualMed S (o -2G -qa C , L7 n-d aw /he k 4.2 The parties mutually agree that the agreement attached as Exhibit 4 dated September 22, 1997 entered into by City and FHS is not rescinded, terminated or canceled in any manner by this Mutual Release or any covenant or provision hereof, but shall remain in full force and effect, except that the FHS Released Persons are released and discharged from all personal obligations and liabilities thereunder. Section 5. Other Laws. 5.1 Noty ithstanding anything contained herein to the contrary, neither this Mutual Release nor any covenant or provision hereof is intended to, nor shall it be construed to, release or discharge -2- 4 ak QeueRn< any FHS Released Persons from any claim, liabili , action, proceeding, or penalty now, or in the future, existing under or by virtue of any ordinance law or any violation thereof by any FHS Released Person. 4 ( ?)J etd 4 - (°( 6 /P 7f e exerc, e dh t'h r (t - ,. o� Section 6. Miscellaneous Provisions. goV9AAJ1 e,J,yt Poseur, 6.1 This Mutual Release shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of law principles. 6.2 In the event of any litigation arising out of this Mutual Release, the court shall award to the prevailing party its costs and reasonable attorney fees. All such litigations shall be filed in the District Court, Pueblo County, Colorado, and each party agrees to such venue and submits to the jurisdiction of that court. N WITNESS WHEREOF, the parties have executed this Mutual Release in Pueblo, Colorado on the day and year first above written. ATTEST: City Clerk Approved as to form: City Attorney ATTEST: 0 By Title: ATTEST: Name: 0 -3- PUEBLO, a municipal corporation President of the City Council QUALMED, INC. Title: FOUNrDATION HEALTH SYSTEMS, INC. N . . f [letterhead of legal counsel] [date] Pueblo, a Municipal Corporation 1 City Hall Place Pueblo, Colorado 51003 Re: [describe instruments or documents to which client is a party] Gentlemen: As legal counsel for [correct corporate name of client] (the "Corporation ") [I] [We] have reviewed an executed counterpart of [describe instruments or documents to which client is a party] (the "Documents ") and such documents, instruments and records as [I] [We] have considered relevant. Based upon such examination, and other research and investigation as [I] [We] determined necessary, [I] [We] are of the opinion that: 1. The corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of [insert state], is duly qualified to conduct business in the State of Colorado, and has full power to execute, deliver, and perform its obligations under the Documents. 2. The execution and delivery of the Documents [has] [have] been duly approved by all corporate action of the Corporation. The Document[s] have been duly executed on behalf of the Corporation and the Document[s] constitute the valid and legally binding obligation of the Corporation. enforceable against the Corporation in accordance with [its] [their respective] terms, except as enforceability may be limited by the provisions of bankruptcy, insolvency, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights, generally or by the general principles of equity now or hereafter in effect. Exhibit "D" SECURITY AGREEMENT Debtor: Name: PEDCO FOUNDATION, INC. Address: Residence No. Sheet City State Zip Code Business 301 N. Main Street Pueblo CO 81003 No. Street City State Zip Code Sec ured Part Name: Pueblo, a Municipal Corporation Add fG45; 1 City Hall Place Pueblo CO 8100 No. Street City State Zip Code Debtor, for consideration, hereby grants to Secured Party a security interest in the folloving property, and o7 and all property of like type now owned or hereafter acquired Debtor, he r with all additions, accessions, substitutions, proceeds and products therefrom, including natural increase of livestock, all herein called the "Collatera ": a accounts, equipment, fixtures, intangibilities, goods and Personal Property O described in the Purchase And Sale Agreement datedP T 1999 between Debtor and QualMed, Inc. and Foundation Health Systems, Inc. To secure payment of the indebtedness evidenced by + 6gytpBE6D�gI6MXX ]Q}td6N�p1018069gW. LObk16 hBI[: the Agreement dated June 28, 1999 between Debtor and Secured Party and the performance of Debtor's obligations under the Agreement including the payment of $12.9 million by Debtor to Secured Party on or before December 31, 2009, and all other liabilities of Debtor to Secured Party, absolute or contingent, due or to become due, now existing or hereafter arising including liabilities arising because of funds advanced in the future at the option of Secured Party, all heroin called the "OBLIGATIONS'. DEBTOR EXPRESSLY WARRANTS AND COVENANTS: The Collateral is used or bought primarily for: ❑ Personal, family or household purposes; ❑ Use in farming operations; lil Use in business. That Debtor% residence is as stated above, and the Collateral will be kept at 310 N. Main Street and Location 310 Court Street, Pueblo, CO Count Pueblo State C0 If any of the Collateral is crops, oil, gas, or minerals to be extracted or timber to be cut, or goods which are or are to become fixtures, said Collateral concerns the following described real estate situate in the County of Pueblo and State of Colorado, to -wit: Real Property described in attached Exhibit "A" The undersigned acknowledge receipt of a copy of this Security Agreement on date hereof, and agree that it includes and is subject to the ADDITIONAL PROVISIONS on the reverse side hereof, the same being incorporated herein by reference. Debtor: PEDCO FOUNDATION, INC. By: L Dated this day of July —1999. RXt f1MtK Walter L. Bassett, Chairman No. 651. Rev. 8-90. SECURITY AGREEMENT Bradford Publishing, 1743 Weave St., Denver, CO 80202 — (303) 292 -2500 — I1 -96 Case No. 99 -06 -117 File No. 12959 LEGAL DESCRIPTION PARCEL 1 All of Lot 9 and the North 61.00 feet of the West 5.70 feet of Lot 10, Block 33 of the platted Plan of Pueblo filed March 1869, also known and designated as Parcel A on the Rearrangement of Property Boundaries of Lots 9, 10, and 11, Block 33, Plan of Pueblo, located in the NE 1/4 of Section 36, Township 20 South, Range 65 West, of the 6th P.M., recorded October 30, 1997, at Instrument No. 1191914, together with that portion of vacated alley adjacent to said lots, Pueblo County, Colorado. PARCEL 2: All of that portion of Block 33 in the Town, now City of Pueblo, according to the plan of Pueblo made for the Probate Judge of Pueblo County, H.M. Fosdick, Engineer, in March 1869, bounded and described as follows: BEGINNING at the point of intersection of the South line of Fourth Street with the East line of Court Street; thence South and along the East line of Court Street 119.85 feet to the point of intersection of the East line of Court Street with the North line of the alley in said Block 33; thence Easterly and along the North line of the alley in said Block 33 140.02 feet to a point; thence Northerly and parallel with the East line of Court Street 119.71 feet to a point in the South line of Fourth street; thence Westerly and along the South line of Fourth Street 140.02 feet to the POINT OF BEGINNING, being the same property sometimes described as lots 6, 7, 8, and the West 8 feet of Lot 5, Block 33, of the Town, now City of Pueblo, according to the plan of Pueblo made for the Probate Judge of Pueblo County by H.M. Fosdick, Engineer in March 1869, together with that portion of vacated alley adjacent to said lots. PARCEL 3: The Northerly 71.05 feet of Lots 1, 2, and 3, all of Lot 4, the East 36 feet in width of Lot 5 and the South 48.38 feet of the West 41.33 feet of Lot 3, Block 33, in that part of the present City of Pueblo which was surveyed and platted by H.M. Fosdick, Civil Engineer for the Probate Judge of said Pueblo County, in March 1869. All in County of Pueblo, State of Colorado. ESCROW AGREEMENT THIS ESCROW AGREEMENT, made and entered into this "'= day of July, 1999, by and between Community First National Bank, 1000 West 6th Street, Pueblo, Colorado, 81003 (the "Escrow Agent"), PEDCO Foundation, Inc., a Colorado nonprofit corporation, 301 N. Main Street, Pueblo, Colorado, 81003 ( "Foundation") and the City of Pueblo, Colorado, a political subdivision of the State of Colorado, 1 City Hall Place, Pueblo, Colorado, 81003 ( "City "): WITNES SETH THAT, in the joint and mutual exercise of their powers, and in consideration of the mutual covenants herein contained, the parties hereto recite and agree as follows: Section 1. Recitals. 1.01 Foundation and City have entered into an Agreement dated June 28, 1999 (the "Agreement "), a copy of which has been furnished to Escrow Agent, whereby City advanced to Foundation $4.5 million to purchase the Property and Personal Property from QualMed, Inc. and Foundation Health Systems, Inc. for the purpose of leasing the Property and Personal Property to The TPA, Inc. 1.02 This Escrow Agreement is not intended to alter or change in any way the rights and obligations of Foundation and City under the Agreement, but is entirely supplemental thereto. 1.03 The terms capitalized in this Escrow Agreement but not defined herein shall have the meanings given to them in the Agreement. 1.04 Under the Agreement, Foundation is required to deposit or cause to be deposited with Escrow Agent all Rent Proceeds as soon as reasonably possible after receipt thereof, which funds, together with the interest earnings thereon, will be credited to the Rent Proceeds Fund established in Section 2 hereof and applied and disbursed as provided in Sections 2.02 and 2.03 hereof. 1.05 Subject to the terms and provisions of this Escrow Agreement, Foundation and City agree to employ Escrow Agent to receive, hold, invest and disburse the moneys to be paid to Escrow Agent by Foundation as described in Section 1.04, all as hereinafter provided; however, Escrow Agent shall not be obligated to assume or perform any obligations of Foundation or City under the Agreement or by reason of anything contained in this Escrow Agreement. 1.06 Each of the parties has authority to enter into this Escrow Agreement and has taken all actions necessary to authorize the execution of this Escrow Agreement by the officers whose signatures are affixed hereto. Section 2. Lease Proceeds Fund. 2.01 Escrow Agent shall establish a special escrow fund designated as the Lease Proceeds Fund (the "Lease Proceeds Fund ") and shall keep such fund separate and apart from all other funds and money held by it, and shall administer such fund as provided in this Escrow Agreement. 2.02 Foundation shall pay or cause to be paid to the Escrow Agent all Rent Proceeds, which shall be credited to the Lease Proceeds Fund, and disbursed for the following purposes: first, to all reasonable and necessary fees and expenses incurred by Escrow Agent in connection herewith as evidenced by its statements forwarded to the City's Director of Finance (the "Director "), second, to pay Foundation's Expenses, and the balance thereof, to City in repayment of the Represented Value, upon submission to Escrow Agent by Director of written requests for payment (the "Request For Payment "). 2.03 Upon receipt by Escrow Agent of a Request For Payment signed by the Director, the Escrow Agent shall pay out of the Lease Proceeds Fund such amounts and to such persons as the Director shall specify in each such Request for Payment. 2.04 Escrow Agent shall only be responsible for the safekeeping and investment of the money held in the Lease Proceeds Fund, and the disbursement thereof in accordance with the Request For Payment signed by Director, and shall not be responsible for the authenticity or accuracy of such Requests For Payment, the application of amounts paid pursuant to such Request For Payment by the persons or entities to whom they are paid, or the sufficiency of the moneys credited to the Lease Proceeds Fund to make the payments in accordance with such Requests for Payment. Section 3. Money in Lease Proceeds Fund; Investment. 3.01 The money and investments held by Escrow Agent under this Escrow Agreement are irrevocably held in trust for the benefit of City, and such money and investments, together with any income or interest earned thereon, shall be expended and disbursed only as provided in this Escrow Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of either Foundation or City. 3.02 Escrow Agent shall hold and invest the moneys held in the Lease Proceeds Fund in securities which are legal investments of public funds as the Director shall designate, or in lieu of such designation, in a Public Money Market Checking Account with interest at a rate equal to the 91 day T -Bill Rate plus -0- percent. Any income received on such investments shall be credited to the Lease Proceeds Fund. The Escrow Agent shall at least semi - annually furnish an accounting of all money, investments and income therefrom. 3.03 Escrow Agent shall, without further direction from the Director, sell such investments as and when required to make any payment from the Lease Proceeds Fund in accordance with Requests For Payment received by the Escrow Agreement. Section 4. Escrow Agent's Authority. Escrow Agent may act in reliance upon any writing or instrument or signature which it, in -2- good faith, believes to be genuine, may assume the validity and accuracy of any statement of assertion contained in such a writing or instrument, and may assume that any person purporting to given any writing, notice or advice or instructions in connection with the provisions hereof has been duly authorized to do so. Escrow Agent shall not liable in any manner for the sufficiency or correctness as to form, manner and execution, or validity of any instrument deposited with it, nor as to the identity, authority or right of any person executing the same; and its duties hereunder shall be limited to those specifically provided herein. Section 5. Administrative Provisions. 5.01 This Escrow Agreement shall be construed and governed in accordance with the laws of the State of Colorado. 5.02 This Escrow Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. 5.03 This Escrow Agreement shall terminate upon written notice given by the Director to the Escrow Agent specifying the date of termination. 5.04 This Escrow Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the date and year first written above. [SEAL] ATTEST: v By City Cl APPROVED: I A 64!eoe�z- Director of inance Community Fir Nat ' nal Bank, crow Agent By , President Foundatic 7as,Fundation By resident CIF PUEBL 0 ORADO, as City i i t President of the City Council APPROVED AS TO FORM: City Attorn -3- LEO S. ALTMAN JOHN J. KEILBACH WM. DAVID LYTLE JAMES S. OLIVER DAVID E. WARE ALTMAN, KEILBACH, LYTLE, PARLAPIANO & WARE, P. C. ATTORNEYS AT LAW 229 COLORADO AVENUE P. O. Box 333 PUEBLO, COLORADO 81002 (719) 545 -7325 FAx No. 719- 545 -9437 E-MAIL ADDRESS: Altman@rmi.net July 7, 1999 Pueblo, a Municipal Corporation 1 City Hall Place Pueblo, Colorado 81003 Gentlemen: Re: Agreement Between City of Pueblo, a Municipal Corporation and PEDCO Foundation, Inc. Dated June 28, 1999 OF COUNSEL DAVID C. PARLAPIANO JAMES W. PRESTON (1876 -1966) DAVID A. PRESTON (1914 -1973) As legal counsel for PEDCO Foundation, Inc. (the "Corporation "), I have reviewed an executed counterpart of the Agreement dated June 28, 1999 between the City of Pueblo and PEDCO Foundation and such documents, instruments and records as I have considered relevant. Based upon such examination, and other research and investigation as I determined necessary, I am of the opinion that: 1. The corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado, is duly qualified to conduct business in the State of Colorado, and has full power to execute, deliver, and perform its obligations under the Documents. 2. The execution and delivery of the Documents have been duly approved by all corporate action of the Corporation. The Documents have been duly executed on behalf of the Corporation, and the Documents constitute the valid and legally binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms, except as enforceability may be limited by the provisions of bankruptcy, insolvency, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights, generally or by the general principles of equity now or hereafter in effect. WDL /dlw EXHIBIT Very tru our , Wm. David Ly e D 11111111111111111111111 1111 1111 1293156 08/10/1999 12:03P FS Chris C. Munoz 1 of 2 R 20.00 D 0.00 Pueblo Cty Clk 8 Rec. COLORADO UCC -1 FINANCING STATEMENT (See instructions on back) Standard Form Effective May 1, 1998 Total Fee = $16 1ST DEBTOR Name (Last, First): PEDCO FOUNDATION, INC. SSN /FED Tax ID: 74- 2457373 Street: 301 N. MAIN ST. City, State, Zip: PUEBLO, CO 81003 2ND DEBTOR (Put additional Debtors on attachment) Name (Last, First): SSN /FED Tax ID: Street: City, State, Zip: Check One: M Business ❑ Individual Check One: X Business ❑ Individual 1ST SECURED PARTY (Put additional Secured Parties on attachment) Name (Last, First): PUEBLO, A MUNICIPAL CORPORATION Street: 1 CITY HALL PLACE City, State, Zip: PUEBLO, CO 81003 ASSIGNED PARTY (Put additional Assigned Party on attachment) Name (Last, First): Street: City, State, Zip: RETURN COPY TO Name: THOMAS E. JAGGER Street: 127 THATCHER BLDG. City, State, Zip: PUEBLO, CO 81003 Name of the Record Owner of the real property containing the collateral is: PEDCO FOUNDATION, INC. (See _instruction 13) REAL PROPERTY IS DESCRIBED IN ATTACHED EXHIBIT " A " Above Space For Filing Officer Use Only CHECK ONLY ONE (If no box is checked, it will be filed in UCC only) ❑ File in UCC ONLY ❑ This statement is to be recorded in the real estate records ONLY EXThis statement is to be filed in UCC AND recorded in real estate records. (Requires an additional recording fee) ❑ The debtor is a transmitting utility. FOR UCC FILINGS (Fill in collateral codes from UCC Codes) 10 500 12 40 FOR AGRICULTURAL LIEN NOTIFICATION Check if this filing is intended as EFS notification ❑ Enter EFS collateral code, County Code and crop years covered. If all years are covered, leave from and to dates blank. EFS Code County Code From To COMPLETE DESCRIPTION OF COLLATERAL (Use if collateral codes do not adequately describe collateral. Attach additional pages if necessary) PEDCO FOUNDAT INC. PUEBLO, A MUNICIPAL CORPORATION By By �i� r�raa� De r ignature(s) (See Instruction 14) Secured Party Signature(s) Wa1ter- I.. Bassett Printed Name(s) M 2]dZ Chairman Title THOMAS E. JAGGER CITY ATTORNE Printed Name(s) 719) 545 -4412 / 545 -4301 No. 602. Rev. 1 -98. FINANCING STATEMENT (UCC -1) Bradford Publishing, 1743 Wazee St., Denver, CO 80202 — (303) 292 -2500 — 1 -98 Title Contact Phone /FAX (1) Secretary of State (Filing Officer) 1111111111111111111111111111111111111111111111111111111 1293136 08/10/1999 12:03P FS Chris C. Munoz 2 of 2 R 20.00 D 0.00 Pueblo C!y Clk & Rec. Case No. 99 -06 -117 File No. 12959 PARCEL 1: LEGAL DESCRIPTION All of Lot 9 and the North 61.00 feet of the West 5.70 feet of Lot 10, Block 33 of the platted Plan of Pueblo filed March 1869, also known and designated as Parcel A on the Rearrangement of Property Boundaries of Lots 9, 10, and 11, Block 33, Plan of Pueblo, located in the NE 1/4 of Section 36, Township 20 South, Range 65 West, of the 6th P.M. recorded October 30, 1997, at Instrument No. 1191914, together with that portion of vacated alley adjacent to said lots, Pueblo County, Colorado. PARCEL 2: All of that portion of Block 33 in the Town, now City of Pueblo, according to the plan of Pueblo made for the Probate Judge of Pueblo County, H.M. Fosdick, Engineer, in March 1869, bounded and described as follows: BEGINNING at the point of intersection of the South line of Fourth Street with the East line of Court Street; thence South and along the East line of Court Street 119.85 feet to the point of intersection of the East line of Court Street with the North line of the alley in said Block 33; thence Easterly and along the North line of the alley in said Block 33 140.02 feet to a point; thence Northerly and parallel with the East line of Court Street 119.71 feet to a point in the South line of Fourth street; thence Westerly and along the South line of Fourth Street 140.02 feet to the POINT OF BEGINNING, being the same property sometimes described as lots 6, 7, 8, and the West 8 feet of Lot 5, Block 33, of the Town, now City of Pueblo, according to the plan of Pueblo made for the Probate Judge of Pueblo County by H.M. Fosdick, Engineer in March 1869, together with that portion of vacated alley adjacent to said lots. PARCEL 3: The Northerly 71.05 feet of Lots 1, 2, and 3, all of Lot 4, the East 36 feet in width of Lot 5 and the South 48.38 feet of the West 41.33 feet of Lot 3, Block 33, in that part of the present City of Pueblo which was surveyed and platted by H.M. Fosdick, Civil Engineer for the Probate Judge of said Pueblo County, in March 1869. All in County of Pueblo, State of Colorado. 1, • I IIIIII VIII VIII IIIIII IIIIII III IIIIIII III VIII IIII IIII 1293158 08/10/1999 12:03P TD Chris C. Munoz 1 of 4 R 20.00 D 0.00 Pueblo Cty Clk & Rae. DEED OF TRUST THIS INDENTURE, Made on July V-1/ 1999 between PEDCO Foundation, Inc. a corporation duly organized and existing under and by virtue of the laws of the state of Colorado whose address is 301 N. Main Street, Pueblo, CO 81003 hereinafter referred to as grantor, and the Public Trustee of the 'County of Pueblo , State of Colorado, hereinafter referred to as Public Trustee, W ITNESSETI I, XMK6;;WmRgmps, hTL57�3' r25L[ e143LpkXdiiEEffirl( 7ioYcX4Cd (>?tDGNe'Xe�IXG@Xce4UYe1{�� Jd9ntl1E N4�XOGtCd( WHEREAS; grantor and Pueblo a Municipal Corporation, 1 Cit . all Place, Pueblo, Colorado, 8100'3 (the "beneficiary ") entered in�o n Agreement dated as of June 28, 1999 whereby grantor agreed to pay eneficiary the principal sum of $12.9 million without interest on or efore December 31, 2009 (the "Indebtedness ") and to perform certain ther obligations therein described (the "Agreement "), and WHEREAS, grantor is desirous of securing payment of the ndebtedness and performance of the Agreement on its part to be erformed, and WHEREAS, whenever the term "promissory note" or "note" is sed herein it shall mean and include the Agreement and grantor's bligation to pay the Indebtedness to beneficiary. xm NaSa � RR �� s ��sampmemx 6 a �apaiocipxxad�osceaxizss :octmwsaxorxawe�msbxvcbco¢da sabracmacsxiX xorelncatigt Mlkl7cmSAM )34x. NOW THEREFORE, the grantor, in consideration of the premises and for the purpose aforesaid, does hereby grant, bargain, sell and convey unto the said Public Trustee in trust forever, the following described property, situate in the County of Pueblo , State of Colorado, to wit: The real property described in the attached Exhibit "A" and all improvements located thereon 310 N. Main Street and 310 Court Street also known by street and number as: Pueblo, Colorado 81003 assessor's schedule or parcel number: N/A 'If in Denver, insert "City and ". A- ,l rl_ -. u n.. "• •••••�•s•.�•wwuaal •inn me on bale Clause Copyrrlgl"1988 Bradford Publishing, 1743 Wazee St., Denwr, CO 80202 — (303) 292-2500 — 8 -98 t t � J 111111111111 IN 1111111 III HIM IIII IN 1293183 08/10/1999 12:03P TO Chris C. Munos 2 of 4 R 20.00 0 0.00 Pueblo Cty Clk 8 Rec. TO HAVE AND TO HOLD the same, together with all and singular the privileges and appurtenances thereunto belonging: In trust nevertheless, that in case of default in the payment of said note, or any of them, or any part thereof, or in the payment of the interest thereon according to the tenor and effect of said note, or any of them, or in the payment of any prior encumbrances, principal or interest, if any, or in case default shall be made in or in case of violation or breach of any of the terms, conditions, covenants or agreements herein contained, the beneficiary hereunder or the legal holder of the indebtedness secured hereby may declare a violation of any of the covenants herein contained and may elect to advertise said property for sale, and demand such sale by filing a notice of election and demand for sale with the Public Trustee. Upon receipt of such notice of election and demand for sale, the Public Trustee shall cause a copy of the same to be recorded in the recorder's office of the county in which said property is situated. The Public Trustee shall then give public notice of the time and place of sale by advertisement to be published for four weeks (once each week for five successive weeks) in some newspaper of general circulation at that time published in the county or counties in which said property is located. A copy of such notice shall be mailed within ten days after the date of the first publication thereof to the grantor at the address given herein, to such person or persons appearing to have acquired a subsequent record interest in said property at the address given in the recorded instrument, and to any other person or persons as may be provided by law. It shall and may then be lawful for the Public Trustee to sell said property for the highest and best price the same will bring in cash and to dispose of the same (en masse or in separate parcels, as the said Public Trustee may think best), together with all the right, title and interest of the grantor, its successors or assigns therein, at public auction at any place as may be specified by statute and designated in the notice of sale. The Public Trustee shall make and give to the purchaser or purchasers of such property at such sale a certificate or certificates in writing describing such property purchased, and the sum or sums paid therefor, and the time when the purchaser or purchasers (or other person entitled thereto) shall be entitled to a deed or deeds therefor, unless the same shall be redeemed as is provided by law. The Public Trustee shall, upon demand by the person or persons holding the said certificate or certificates of purchase, when said demand is made, or upon demand by the person entitled to a deed to and for the property purchased at the time such demand is made, the time for redemption having expired, make and execute to such person or persons a deed or deeds to the said property purchased. Said deed or deeds shall be in the ordinary form of a conveyance, and shall be signed, acknowledged and delivered by the said Public Trustee and shall confirm the foreclosure sale and sell and convey to such person or persons entitled to such deed, the said property purchased as aforesaid and all the right, title, interest, benefit and equity of redemption of the grantor, its successors and assigns therein. The Public Trustee shall, out of the proceeds or avails of such sale, after first paying and retaining all fees, charges and costs of making said sale, pay to the beneficiary hereunder or the legal holder of said note the principal and interest due on said note according to the tenor and effect thereof, and all moneys advanced by such beneficiary or legal holder of said note for insurance, taxes and assessments, with interest thereon at per cent per annum, rendering the overplus, if any, unto the grantor, its legal representatives, successors, or assigns. Said sale or sales and said deed or deeds so made shall be a perpetual bar, both in law and equity, against the grantor, its successors and assigns, and all other persons claiming the said property, or any part thereof, by, from, through or under the grantor, or any of them. The holder or holders of said note or notes may purchase said property or any part thereof; and it shall not be obligatory upon the purchaser or purchasers at any such sale to see to the application of the purchase money. If a release deed be required, it is agreed that the grantor, its successors or assigns, will pay the expense thereof. And the grantor, for its successors and assigns, covenants and agrees to and with the Public Trustee, that at the time of the ensealing of and delivery of these presents it is well seized of the said land and tenements in fee simple, and has good right, full power and lawful authority to grant, bargain, sell and convey the same in the manner and form as aforesaid; and that the same are free and clear of all liens and encumbrances whatever ,except easements, rights Of way, conditions, restrictions and reservations of record - —The grantor shall and will Warrant and Forever Defend the above bargained property in the quiet and peaceable possession of the Public Trustee, against all and every person or persons lawfully claiming or to claim - the whole of any part thereof. Until payment in full of the indebtedness, the grantor shall timely pay all taxes and assessments levied on the property; any and all amounts due on account of principal and interest or other sums on any senior encumbrances, if any; and will keep all improvements on said lands in good repair insured against any casualty loss, including extended coverage, by a company or companies meeting the net worth requirements of the beneficiary hereof in an amount not less than the then total indebtedness, including senior encumbrances. Each policy shall contain a loss payable clause naming the beneficiary as mortgagee and shall further provide that the insurance may not be canceled upon less than ten days written notice to the beneficiary. At the option of the beneficiary, the original policy or policies of insurance shall be delivered to the beneficiary as further security for the indebtedness. Should the grantor fail to insure and deliver the policies or to pay taxes or assessments as the same fall due, or to keep the property in good repair, or to pay any amounts payable upon senior encumbrances, if any, the beneficiary may make such repairs or anv such payments or procure any such insurance without being required to do so, and all monies so paid with interest thereon at the rate of 10 % per annum shall be added to and become a part of the indebtedness secured by this Deed of Trust and may be paid out of the proceeds of the sale of the property, if not paid by the grantor. In addition, and at its option, the beneficiary may declare the indebtedness secured hereby and this Deed of Trust to be in default for failure to procure insurance or make any payments or repairs required by this paragraph. T - ������ 111111 IN 1111111 III IIIII 1111 IN 1293138 08/10/1999 12:03P TO Chris C. Munoz 3 of 4 R 20.00 D 0.00 Pueblo Cty Clk 8 Rae. including grantor's interest in the lease between grantor and THE TPA, INC. ,, i p g mortgaged, encumbered, leased, subleased, extended, renewed, ( A.r a`Ir y the property or an interest therein/ sold or transferred without beneficiary's prior written consent, eX II6,94 xicxns�toax x6ctcxocicwmtumxocsc4[ ttrsaxac�4hex5thc�c7fTTSrk >ikkIXx xxX§bw)t Yom X csl3nitXkNkr 3tkYt xa,14]twxtfcgsptwxtx�(og x xamabc�pcdc�cxxbcacooaaxilyamaxuwcaf iaxxooxstucs4xtic�dwxabrt�ct�oaCCacEdiafco ¢�coaovkxtx YcXs2Q�lg34�4[ 9C] 4C4riG2NJg' Dxny �yCCt )7Ntl36PQCtMN[p(64t1(pa]m7cppX� beneficiary may, at beneficiary's option, declare all the sums secured by this Deed of Trust to be immediately due and payable. I➢ �Yc3idGtX} 7EAC�4] isAF049Cd4CQCC6CK3�� 'IC36GICOtt60(6(t(]6p4X x� Ttr�I�TC�sas�x�uaffia�: xlmuncxtxixtwxscbowylhcxralwaxaco�eanhk >;axacaa6cttcr�dxcxc4 xsca�naeSdxx�aGiezL4adstx Tttx TCaaattT�mxxxx�sExaaaqusd isac an45aasnun+} aam�s4dack�a�F >xa4�a6t&na4fiS���srtt ZGIEG:a4tg xs7bffitTfQCfficy ximllcrtgta�TC - AND THAT IN CASE OF ANY DEFAULT, Whereby the right of foreclosure occurs hereunder, the Public Trustee or the holder of said note or certificate of purchase, shall at once become entitled to the possession, use and enjoyment of the property aforesaid, and to the rents, issues and profits thereof, from the accruing of such right and during the pendency of foreclosure proceedings and the period of redemption, if any there be: and such possession shall at once be delivered to the Public Trustee or the holder of said note or certificate of purchase on request, and on refusal, the delivery of such possession may he enforced by the Public Trustee or the holder of said note or certificate of purchase by any appropriate civil suit or proceeding, and the Public Trustee, or the holder of said note or certificate of purchase, or any thereof, shall be entitled to a Receiver for said property, and of the rents, issues and profits thereof, after such default, including the time covered by foreclosure proceedings and the period of redemption, if any there be, and shall be entitled thereto as a matter of right without regard to the solvency or insolvency of the grantor or of the then owner of said property and without regard to the value thereof, and such Receiver may be appointed by any court of competent jurisdiction upon ex parte application and without notice — notice being hereby expressly waived — and all rents, issues and profits, income and revenue therefrom shall be applied by such Receiver to the payment of the indebtedness hereby secured, according to the law and the orders and directions of the court. AND, That in case of default in any of said payments of principal or interest, according to the tenor and effect of said promissory note aforesaid, or any of them, or any part thereof, or of a breach or violation of any of the covenants or agreements herein, by the grantor, its successors or assigns, then and in that case the whole of said principal sum hereby secured, and the interest thereon to the time of the sale, may at once, at the option of the legal holder thereof, become due and payable, and the said property'be sold in the manner and with the same ellect as if said indebtedness had matured, and that if foreclosure be made by the Public Trustee, an attorney's fee of a reasonable amount for services in the supervision of said foreclosure proceedings shall be allowed by the Public Trustee as a part of the cost of foreclosure, and if foreclosure be made through the courts a reasonable attorney's fee shall be taxed by the court as a part of the cost of such foreclosure proceedings. It is further expressly understood and agreed that all the covenants and agreements herein contained shall extend to and be binding upon the successors and assigns of the respective parties hereto. The singular number shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. IN WITNESS WIIEREOF, the grantor has caused its corporate name to be hereunto subscribed by its President, and its corporal I b reret affix , attested by its Secretary on the day first written above. irrrtsl% ' PEDCO PC) TTN _ Sec etary (SEAL) ny��� Walter L. Bassett State of Colomdo County of Pueblo SS. The foregoing instrument was acknowledged before me this 8th day of July 1999 , by Walter L: Bassett as Chairman Rm3id Rand Rolf Anderson a ecrctaryofi ��PEDCO, FOUNDATION INC. ,a corporation. 1 . �4 ��{ t eCd '2/14/2003 Nom Public I IIIIII VIII II'll II'Ill II'lll III IIIIIII III I'lll �Ifl II'I � ` ...- 1293185 0 8/10/1999 12:03P TD Chris C. Munoz 4 of 4 R 20.00 D 0.00 Puebla Cty Clk & Rae. LEGAL DESCRIPTION PARCEL 1: All of Lot 9 and the North 61.00 feet of the West 5.70 feet of Lot 10, Block 33 of the platted Plan of Pueblo filed March 1869, also known and designated as Parcel A on the Rearrangement of Property Boundaries of Lots 9, 10, and 11, Block 33, Plan of Pueblo, located in the NE 1/4 of Section 36, Township 20 South, Range 65 West, of the 6th P.M, recorded October 30, 1997, at Instrument No. 1191914, together with that portion of vacated alley adjacent to said lots, Pueblo County, Colorado. PARCEL 2: 411 of that portion of Block 33 in the Town, now City of Pueblo, according to the plan of Pueblo made for the Probate Judge of Pueblo County, H.M. Fosdick, Engineer, in March 1869, bounded and described as follows: BEGINNING at the point of intersection of the South line of Fourth Street with the East line of Court Street; thence South and along the East line of Court Street 119.85 feet to the point of intersection of the East line of Court Street with the North line of the alley in said Block 33; thence Easterly and along the North line of the alley in said Block 33 140.02 feet to a point; thence Northerly and parallel with the East line of =ourt Street 119.71 feet to a point in the South line of Fourth street; thence Westerly and along the South line of Fourth Street 150.02 feet to the POINT OF BEGINNING, being _he same property sometimes described as lots 6, 7, 8, and the West 8 feet of Lot 5, 3lock 33, of the Town, now City of Pueblo, according to the plan of Pueblo made for the ?robate Judge of Pueblo County by H.M. Fosdick, Engineer in March 1869, together with :hat portion of vacated alley adjacent to said lots. ?A.RCEL 3: Che Northerly 71.05 feet of Lots 1, 2, and 3, all of Lot 4, the East 36 feet in width of .ot 5 and the South 48.38 feet of the West 41.33 feet of Lot 3, Block 33, in that part of :he present City of Pueblo which was surveyed and platted by H.M. Fosdick, Civil Engineer for the Probate Judge of said Puebla County, in March 1869. all in County of Pueblo, State of Colorado. EXHIBIT "A" MUTUAL RELEASE THIS MUTUAL RELEASE is entered into as of this day of b�= day of July, 1999 between Pueblo, a Colorado municipal corporation ( "City ") and QualMed, a Delaware corporation ( "QualMed ") and Foundation Health Systems, Inc., a Delaware corporation ( "FHS "). RECITALS a. Disputes and differences have arisen between the City and QualMed and FHS with respect to the following agreements entered into between the parties: Exhibit Number Date of Agreement Parties to Agreement 1 07 -22 -91 City and QualMed 2 10 -26 -92 City and QualMed 3 07 -08 -96 City and QualMed 4 10 -07 -97 City and QualMed 5 09 -22 -97 City and FHS b. Copies of the aforesaid agreements are attached hereto and are incorporated herein by reference in order that all such claims, demands, actions, responsibilities, obligations and liabilities of the respective parties may be ascertained. C. Disputes and differences have arisen between the City and QualMed and FHS with respect to Ordinance 6276 which granted QualMed a temporary, conditional off - street parking variance from the 210 parking spaces required for the property commonly known as 226 W. 4th Street, Pueblo, Colorado. A copy of the aforesaid Ordinance, marked as Exhibit 6 is attached hereto and is incorporated herein by reference in order that all such claims, demands, actions, responsibilities, obligations and liabilities of the respective parties may be ascertained. C. The parties have agreed to execute this Mutual Release in settlement of such disputes and differences. Section 1. Mutual Release of Contract Claims. 1.1 In consideration of the mutual relinquishment of their respective legal rights with reference to the above - mentioned disputes and differences, in of the execution of this Mutual Release and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, QualMed and FHS for themselves and for their assigns hereby release the City and its successors and assigns from all liability for claims and demands arising out of the agreements as described above. 1.2 In consideration of the mutual relinquishment of their respective legal rights with reference to the above - mentioned disputes and differences, in consideration of the execution of this rl A I Mutual Release and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its assigns expressly release QualMed and FHS and their predecessors, successors and assigns from all liability for claims and demands arising out of the agreements described above except as otherwise provided in Section 5.2 hereof. Section 2. Mutual General Release. 2.1 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, QualMed and FHS and their successors and assigns hereby release and forever discharge City, its successors and assigns, of and from any and every claim, demand, action or right of action, of whatever kind or nature, either in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. 2.2 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its successors and assigns hereby release and forever discharge QualMed and FHS and their predecessors, successors and assigns, of and from any and every claim, demand, action or right of action, of whatever kind or nature, known or unknown, either in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. Section 3. Release with Respect to Ordinance 6276. 3.1 The parties mutually agree that the Ordinance attached as Exhibit 6 dated November 10, 1997 is not rescinded, terminated or canceled in any manner by this Mutual Release or any covenant or provision hereof but shall remain in full force and effect, except that the FHS Released Persons (other than the subsequent owners of the property therein described) are released and discharged from all personal obligations and liabilities thereunder. Section 4. Release to Cover Personnel and Parent Companies and Subsidiary Companies of Corporate Releasees. 4.1 The City intends that this Release apply to all parent, subsidiary and affiliated companies of QualMed and FHS and such entities' respective subsidiaries, affiliates, predecessors, successors and assigns, and all of such entities' past, present and future officers, directors, agents, attorneys and employees and their respective heirs and legal representatives (the "FHS Released Persons "). 4.2 QualMed and FHS intend that this Release apply to the City and the City's respective predecessors, successors and assigns, and all of their past, present and future elected officials, officers, directors, agents, attorneys and employees and their respective heirs and legal representatives. Section 5. Rescission of Contracts. K y 5.1 This parties mutually agree that the following agreements entered into between the parties shall be and hereby are rescinded, terminated and canceled as of the date of this Agreement: Exhibit Numb Date of Agreement Parties to Agreement 1 07 -22 -91 City and QualMed 2 10 -26 -92 City and QualMed 3 07 -08 -96 City and QualMed 4 10 -07 -97 City and Qualified 5.2 The parties mutually agree that the agreement attached as Exhibit 5 dated September 22, 1997 entered into by City and FHS is not rescinded, terminated or canceled in any manner by this Mutual Release or any covenant or provision hereof, but shall remain in full force and effect, except that the FHS Released Persons (other than the subsequent owners of the property therein described) are released and discharged from all personal obligations and liabilities thereunder. Section 6. Other Laws. 6.1 Except with respect to Ordinance 6276, neither this Mutual Release nor any covenant or provision hereof is intended to, nor shall it be construed to, release or discharge any FHS Released Persons from any claim, liability, action, proceeding, or penalty now, or in the future, existing under or by virtue of any ordinance, or general law enacted by the City in the exercise of its police or governmental powers or any violation thereof by any FHS Released Person. 6.2 The City covenants that to the best of its knowledge, it is unaware of any alleged violations of any City Ordinance or general law by QualMed or FHS other than as disclosed prior to Closing. Section 7. Miscellaneous Provisions. 7.1 This Mutual Release shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of law principles. 7.2 In the event of any litigation arising out of this Mutual Release, the court shall award to the prevailing party its costs and reasonable attorney fees. 7.3 This Mutual Release may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Mutual Release in Pueblo, Colorado on the day and year first above written. 3 s ATTEST: _ 'r Approved as to form: ATTEST: Name: Vtq, C he r a Title: V. Q. ATTEST: Name: _I,ln; rl e tR E SGN), Title: U, PUEBLA a municipal of the City Council QUALMED, INC. By Name. B. Curtis Westen Title: Senior Vice President, General Counsel and Secretary FOUNDATION HEALTY SYSTEMS, INC. Name: B. Curtis Westen - Title: Senior Vice President, General Counsel and Secretary ld AGREEMENT THIS AGREEMENT entered into as of this 22nd day of July, 1991 between Pueblo, a municipal corporation, ( "City "), and Qual -Med, Inc., a Delaware Corporation (the "Company "). WHEREAS, there exists and has existed within the City unem- ployment and underemployment and a lack of available employment opportunities which places a public burden upon the City and its citizens, and WHEREAS, it is in the best interest of the City to encourage economic development which creates employment opportunities and jobs for its citizens, and to appropriate funds for purposes of stimulating investment and inducing industry to locate within the City, and WHEREAS, the prevention and reduction of unemployment and underemployment and social and economic hardships associated therewith are proper public purposes and matters of public concern and public purpose which justify the expenditure of public funds, and WHEREAS, Company has represented it will remodel, renovate and equip the Montgomery Ward Building, Pueblo, Colorado and move its corporate headquarters into the building and within eight months thereafter employ within the building 43 full time employees and within twenty months thereafter employ 72 full time employees with a gross base payroll of $2.7 million. NOW, THEREFORE, in consideration of the foregoing and the mutual obligations of the parties hereto and other good and valuable consideration, the receipt and adequacy of which is E h �<f 1 t , hereby acknowledged, each party covenants and agrees with the other as follows: SECTION 1. DEFINITIONS. The following words and phrases shall have the following meaning in this Agreement: (a) "Authorized Officer" means an officer of Company authorized by resolution of the Board of Directors of Company to sign certificates under this Agreement on behalf of Company. (b) "Building" means the land and the Montgomery Ward Building located at Third and Main Streets, Pueblo, Coloado. (c) "Construction Documents" means the construction contracts and documents for the remodeling and renovation of the Building, including without limitation, payment and performance bonds and scope of work. (d) "Director" means the Director of Finance of City. (e) "Employees" means full -time employees including full - time equivalents. (f) "Fund" means an amount not to exceed Eight Hundred Thousand Dollars ($800,000.00) to be appropriated and made available by City to Company solely for Fund Purposes. (g) "Fund Purposes" means actual expenditures made by Company for the hard costs of constructing the Project. (h) "Project" means the renovation and remodeling of the Building. SECTION 2. CITY'S OBLIGATIONS. City represents, warrants and agrees that: -2- (a) City will appropriate and make the Fund available to Company to be used solely and exclusively by Company for Fund Purposes. If Company is not in default hereunder, City will make periodic payments out of the Fund to Company for Fund Purposes within ten (10) days after receipt by the Director of Company's written application for payment ( "Application For Payment "). Application For Payment will be in such form as approved by City, be certified as true and correct by an Authorized Officer of Company, and contain (i) the total amount spent or obligated by Company for labor actually performed and /or materials incorporated into or delivered to the Building for the construction of the Project (the "Work ") since the date of any prior Application For Payment and a statement that such Work has not been included in any other Application For Payment, and (ii) a statement that all Work represented by such Application For Payment has been performed in conformity with the approved Construction Documents and in compliance with applicable law and regulations. Each Application For Payment will be accompanied by AIA Document G702, Application And Certification For Payment properly completed and certified by the contractor and architect for the Work covered by each Application For Payment. and agrees that: (a) Company will cause all payments of the Fund made by City to Company to be paid to its contractors, subcontractors, mate.rialmen and suppliers for the Work performed as shown on the SECTION 3. COMPANY'S OBLIGATIONS. Company represents, warrants -3- Application For Payment for which payment was made. Company shall not make, create or suffer to be created any mechanics' liens on the Building. (b) Company will timely renovate, remodel and equip the Project. The Project will be constructed in accordance with the Construction Documents approved by City and in compliance with applicable laws and regulations. Company will commence construction of the Project by November 1, 1991 and will thereafter diligently pursue the Project's completion, and will in a timely and expeditious manner take all action necessary and required to construct and equip the Project and obtain a Certificate of Occupancy for the Building within eight (8) months after commencement of Project construction. Company will submit all Construction Documents to City for approval prior to commencement of Project construction. City's approval will not be unreasonably withheld. (c) Company understands and agrees that the creation of jobs as herein contemplated is the primary purpose for City to enter into this Agreement and is the sole consideration accruing to City hereunder. Accordingly, Company will employ at the Building (i) within eight (8) months after commencement of Project construction and thereafter at least 43 Employees, and (ii) within 20 months after commencement of Project construction and thereafter at least 72 Employees (including the 43 Employees under (i) above) with a gross base payroll of not less than $2.7 million. (d) Construction contracts for the Project will be obtained through and be based upon competitive bidding process and proce- -4- dures and may be based upon a "design - build" concept of construc- tion. Company will invite general contractors having their principal place of business within City or County of Pueblo who are in the opinion of Company qualified and experienced to perform the work to submit bids and will to the extent practical and feasible, in the exercise of Company's business judgment, enter into construction contracts with such local contractors, provided, that Company reserves the right to enter into contracts with other contractors if in Company's sole opinion it is necessary to. obtain the best bid and technical expertise. (e) Company shall repay to City all Funds advanced to Company by City under this Agreement in 120 equal monthly install- ments of principal without interest commencing the date the Certificate Of Occupancy for the Building is issued or July 1, 1992, whichever occurs first. Company will execute and deliver to City Company's attached Promissory Note evidencing such indebtedness and Deed of Trust on the Building securing payment thereof, which Deed of Trust shall be a first and prior mortgage and encumbrance on the Building. (f) Company shall move its corporate headquarters to the Building and commence corporate headquarters operations in the Building no later than eight (8) months after commencement of Project construction and thereafter maintain no less than the number of Employees and minimum dollar payroll set forth in paragraph 3(c) in the Building until at least the date Company's $800,000 promissory note is paid in full. (g) Company shall, within three years after commencement of Project construction, spend in addition to the Fund no less than -5- $400,000 of its monies acquiring adjacent property and in renovat- ing, remodeling, furnishing and equipping the Building and adjacent property. (h) Company shall use its best efforts to hold board of directors, shareholders and other meetings within the City in in accordance with Company's memo of April 24, 1991. (i) Company at its expense shall deliver to City a commit- ment for an ALTA loan title insurance policy in form and content acceptable to City insuring the $800,000 to be advanced by City under this Agreement as a first mortgage and encumbrance on. the Building. Company shall deliver the title insurance policy to City within ten days after Company's Promissory Note and Deed of Trust are delivered to City. No part of the Fund will be advanced to Company until after the title insurance policy and Company's Deed of Trust and Promissory Note are executed and delivered to the City. If Company shall default in or violate any of the provisions or covenants set forth in this Section 3, City shall be entitled, at its option, to treat such default or violation as a default under Company's Promissory Note and Deed of Trust. SECTION 4. MISCELLANEOUS. (a) This Agreement shall be governed by the laws of the State of Colorado and shall be construed in accordance therewith. (b) Time is of the essence hereof. No provision of this Agreement may be waived except by an agreement in writing signed by the waiving party. A waiver of any term or provision shall not be construed as a waiver of any other term or provision. (c) This Agreement shall inure to the benefit of and be binding on the parties and their successors and approved assigns. The parties agree to do any and all things necessary to effectuate the purposes of this Agreement. (d) Throughout this Agreement, the singular shall include the plural, the plural shall include the singular, and the masculine and neuter shall include the feminine, wherever the context so requires. (e) The headings of sections are included solely for convenience of reference. If any conflict between any heading and the text of this Agreement exists, the text shall control. (f) This Agreement sets forth the entire understanding of the parties and may be amended, altered or revoked at any time, in whole or in part, only by filing with this Agreement a written in- strument setting forth such changes, signed by the parties hereto. X (g) Should any action at law or in equity be brought by any party to this Agreement to enforce any right or remedy hereunder, such action will be brought in the District Court in and for the County of Pueblo, State of Colorado and the parties hereto consent to the venue and personal jurisdiction of such Court. In the event of any litigation arising out of this Agreement, the court shall award to the prevailing party all reasonable costs and expenses, including reasonable attorney fees. V/ (h) Company shall not assign this Agreement nor any interest herein. Any attempted assignment or assignment by Company shall be void and unenforceable. -7- (i) All notices required to be given by this Agreement shall be made in writing and served either by: (i) Personal delivery to the party requiring notice; or (ii) Mailing notice via the U.S. Mail to the last known address of the party requiring notice, by first class mail, postage prepaid. Effective date of the notice shall be the date of the personal delivery as specified in subparagraph (i) above or four (4) days after the date the notice was deposited in the U.S.. Mail as specified in subparagraph (ii) above. For purposes of this section, the initial addresses of the parties hereto shall be as follows: Qual -Med, Inc. City 95 West First Avenue City Manager Monte Vista, CO 81144 City of Pueblo 1 City Hall Place Pueblo, CO 81003 I, (j) This Agreement supersedes all other contracts or agree- ments between the parties hereto with respect to the subject matter of this Agreement. (k) If any provision of this Agreement shall be held to be invalid or unenforceable by any court of competent jursidiction, such holding shall not invalidate or make unenforceable any other provision of this Agreement. I' (1) The representations and warranties of each party shall survive the delivery of Company's Promissory Note and Deed of Trust for the benefit of the other party. (m) Any action taken by City to accelerate the payment of Company's Promissory Note shall be authorized by Resolution cm adopted by the City Council of City. (n) Each person_ signing this Agreement represents and warrants that the Agreement has been approved by the entity or organization in whose name he is signing and that he has been duly authorized to sign this Agreement in the name of and on behalf of such entity or organization. IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its duly authorized officers, and City has caused this Agreement to be executed by its duly authorized representatives both on the day and year first written above. [S E A L] UAL -MED, INC. ATTEST: '- -t By / e Secretary Its n� a CITY OF PUEBLO, A MUNIC PAL CORPORATION [S E A L) N/ ATTEST: B C1 y Clerk `af President of the City Council APPROVED AS TO FORM: City Attor y ° TJ 53.35 -9- LEASE This Lease entered into this day of �, � 1992 between Pueblo, a Municipal Corporation, 1 City Hau Place, Pueblo, Colorado, 61003 (herein `Co see °) and QUAL MED, lNC., 225 N. Main, Pueblo, Colorado, 81003 (herein ° Les•), 1 • Pr r�ise�, City leases to Lessee and Lessee leases from City, subject to and upon the terms and provisions of this Lease, seventy -two 2 City's parking lot located at Third and Court Streets, Pueblo, Coloaado C shall make available to Lessee such number of spaces in such lot; Ora ecific p spaces shall be assigned each day on a first come - first - serve basis. Cstomers and invitees for 2. - LIS& The Parking epoces are to tie used by Lessee and its employees, 6:00 A.M t d Saturday. vehicles o 6:00 P.M. during we an During ati other times, such use will be shared wkh the general d urin g the hours of I've basi vehicles will be parked only within ma marked at and d s a current p Motor Permit issued by the City. If at any time, all or more than 20 parking sp aces impaired or rendered unusable for a period longer than one week, then Lessee shall be relieved of its obligation to pay rent for such spaces during such period. 3. TA rrn . The original term of this Lease shall be one (1) year commencing on November 1, 1992 and ending October 31, 1993, and shall automatically be renewed for successive one (1) ear terms unless either party gives written notice of non - renewal to the otFor party at least thirty (3o) days prior to the end of original term or any renewal term, whichever the case may be. the 4. Pont. Lessee the minimum will pay to City, without offset or deduction, monthly rent in amount of $10.00 for each parking space or a total minimum monthly rant of $720.00 for the 72 parking spaces, in advance without notice or demand, on or beforP the first day of each calendar month during the effective term of this Lease shall With the first month's rent to be paid upon execution hereon. All past due rent right, f i Co ati the rent for each until P City reserves the provided such increased rent shall be comparable to rent for parki g�spaces in City's other municipal parking lots in the downtown area of the City and not greater than rents charged at private parking lots or facilities in the downtown area of the City. Lessee will pay the increased rent commencing the first day of the calendar month after Lessee is given written notice by City of such rent increase. City shall provide 00 days' priur written notice of any and all rent increases. 5. Term inat City or Lessee may terminate this Lease upon six Prior written notice given to the other party specifying (G) months' the date of termination. 6. Taxes. Lessee shall pay all real estates taxes, if any, levied or assessed against the parking spaces or imposed or assessed against Less out of Lessee's use of the parking spaces. ee with respect to or 7• Bgpair s. City shall not be responsible to maintain or to make repairs of any kind in or upon or to the parking spaces. However, Cit maintain or repair the parking spaces in conji inction with its m ai enan a e and epair Of its parking lot wherein the parking spaces are located and for such purpose City may obstruct or deny access to or use of such parking spaces during the period of such maintenance or repairs. Except in emergencies City will give written notice in Lessee at least five (5) days prior to commencement of repairs which will nterf ere with use of the parking space. Lessee shall not make an re alterations or improvements to or upon the parking spaces without the prior written consent of City, such consent not to be unreasonably withheld, y pairs, £0'd VSL09VS &h(bri_ a a�)r aan rcw L�Wr ...r - - -- __ .. -- S. indem nity, City shall not be liable to Lessee or to is employees, customers or invitees of Lessee for any injury or damage to any person or property in he Ong spspaces s or parking lot by or from any cause or about whatsoever and Lessee waives all claims against City therefore. employees from any and all claim harmless em demands, �aclions�Suits and expe and including reasonable attorney fees, for any injury or damage to any person or property: (a) when such injury or damage shall be caused in whole or in part by the act, neglect. fault of, or omission of any duty of Lessee, Its customers, invitees invitees or employees} usarising or ccupancy of he�parking spaces unless ss its by negligent acts Of City or its employees. 9. liability Incur Lessee effective period of Leas e a Policy Ofaclomprehensvenpub c ce th or self- insurance or self - insurance pool (the "insurance ") insurin liability for injury to or death of an 9 against in amounts not less than those cot fo th n sect n 24 - 1 p jg 4�i) CRS or o f s assurance to be in force All s such insu shall provide or a minimum of ten (10) days notice to City in tho event of nowenewal, cancellation or material changes in the terms thereof. 10. Rsi nment. Lessee shall not assign or otherwise transfer this Lease or any of Lessee's interest herein, or sublease the parking spaces or any part thereof without the prior written approval of City, which approval will not be unreasonably withheld. An yy such assignment, transfer ur sublease without prior written approval Of City shall be void and ineffective as to the City and shall constitute grounds to terminate this Lease. 11 - S- iaM Lessee shall not, without City's prior written consent install, affix or use any sign or other advertising or identifying media on or within the parking spaces. 12. D fault. If Lessee defaults in the payment of rent or fails to perform or observe any of the conditions and covenants on its part to be performed or observed hereunder, and such default or failure shall continue for a period of ten (10) days after written - notice thereof has been given to Lessee by City, then and ,n that event City may (a) terminate this Lease and forthwith repossess the parking spaces, or (b) City may retake possession of the parking spaces and without terminating this Lease relet the parking spaces for the remainder of the term, and if the rent received from such reletting does not equal the rent provided for herein, Lessee shall be liable for the difference between the amount of the rent provided for herein and the rent received through reletting. 13 . Waiver Failure or delay by City in taking any action in connection with a default or failure of Lessee, or accepting partial or full of rent with knowledge of such default or failure, shall not waive such default or failure, d City sized have the right at any time to take be lawful or authorized hereunder. such action as may 170'd 7SL097S n i »111� M. , ..,. _. _ _ _ _ a. 74. ttomev Fees, Lessee shall pay to City all costs, including reasonable May Of any action brougght by City to enforce any provision of this Lease or to recover rent due or unpaid fiereunder or to recover possession of the parking spaces, whether such action procePds to judgment or not. 15. f Win If Lessee remains in possession of the parking spaces after termination of this Lease, without any express written agreement as to such holding over, then such holding over is deemed and taken to be a month -to -month tenancy subject to all the terms and conditions of this Lease at a rent equivalent to double the rent payable during the last month of the term of this Lease. Such holding over may be terminated by City or Lessee upon ten (10) days' prior written notice. 16. Miscellanaous (a) This Lease shalt be binding upon and inure to the benefit of the successors of Lessee and City. (b) This Lease shall be governed by and interpreted in accordance with the law Of the State of Colorado. (c) This Lease may not be a@ered, changed, Or amended except by an instrument in writing signed by Lessee and City. Executed in Puebla, Colorado the day and year first above written. ATTEST: r I City Clerk , [SEAL) 4AEST: [SEAL) My COMMISSION.EXPIRES 11/22/93 PUEBLO, A MUNICIPAL CORPORATION, b. Presid nt of City Council LESSEE: QUAL -MED, INC. ��. Executive Vice President /Fin. and Adman. 90'd lblol ' I a x Z m CD � -1 CD V 0 z -1 s 1 n s N co q G e Up r s r. IM N 90'd bSL09bS nl A AGREEMENT THIS AGREEMENT entered into as of July 8, 1996 between Pueblo, a Colorado municipal corporation (the "City ") and QualMed, Inc., a Delaware corporation (the "Company "). RECITALS 1. Company has expressed a willingness to expand its business within the downtown area of the City of Pueblo and in furtherance thereof Company has through the Pueblo Economic Development Corporation made application for funds with the City. 2. Company, subject to the terms and provisions of this Agreement, has committed to employ 450 additional full -time employees at its facilities located within the downtown area of the City of Pueblo. 3. City, subject to the terms and provisions of this Agreement, has approved Company's application for funds and has committed to make an amount not to exceed $4.5 million available to Company for the purpose of Company's renovating certain real property to be acquired by City for Company's use and benefit. AGREEMENT In consideration of the foregoing Recitals and mutual covenants contained herein, City and Company agree as follows: Section 1. Definition In addition to terms otherwise defined herein, the following terms shall have the following meaning unless the context clearly indicates otherwise: "Architect" means a competent qualified architect engaged by Company to prepare the Plans and Specifications and oversee the construction of Improvements. "Current Employment" means 252 Full -Time Employees. "Project Area" means the area of the City of Pueblo bounded by Fourth Street on the North, Main Street on the East, Court Street on the West, and Second Street on the South. "Facilities" means Company's offices and related facilities located within Project Area including the Properties. "Full -Time Employee" means a person who is physically present and actually performs work in the Facilities for Company for not less than thirty (30) hours per week whether employed by Company or by an outside independent contractor of Company, including an independent contractor acting as an agency to provide Full -Time Employees for Company. The term "Full- Time" employee does not include independent contractors performing construction work nor employees of such 4-5` ""1-3 independent contractors. "Improvements" means the renovation of the Properties and other on -site improvements to be constructed and installed by Company in accordance with the Plans and Specifications. "Parcel One" means the real property described on the attached Exhibit "A" and improvements thereon. "Parcel Two" means the real property described on the attached Exhibit "B" and improvements thereon. "Plans and Specifications" means the design and development plans, specifications, final working drawings, construction contracts and related documents for the construction and installation of Improvements prepared by the Architect and approved by Company. "Properties" means the real property described on the attached Exhibits "A" and "B" and improvements thereon. "Quarter" means three consecutive calendar months. "Quarterly Employees" means the sum of the number of Full -Time Employees employed by Company at the Facilities on each business day of a Quarter divided by the sum of business days in such Quarter. "State" means the State of Colorado. "Substantially Completed" means the Improvements have been substantially completed in accordance with the approved Plans and Specifications except for work or materials which do not materially interfere with Company's use of the improved structure. Any dispute with respect to Substantially Completed shall be resolved by the Architect in the good faith exercise of his professional judgment and based upon the Plans and Specifications. Section 2. Representations Covenant5 and Warranti 2.1 City represents, covenants and warrants for the benefit of Company as follows: (a) City is a home rule municipality duly organized and existing under Article XX of the Constitution of the State of Colorado and the Charter of the City. The City has duly authorized and approved the execution and deliver of this Agreement. (b) This Agreement, acquisition of the Properties and construction of the Improvements are necessary, convenient and in furtherance of the municipal and governmental purposes -2- ;iii 9! IWIW of the City, will further economic development and create employment opportunities for its citizens, and is in the best interests of the City and its inhabitants. (c) This Agreement constitutes a legal, valid and binding obligation of City enforceable in accordance with its terms. 2.2 Company represents, covenants and warrants for the benefit of the City as follows: (a) Company is a corporation duly organized, existing and in good standing under the state of Delaware, is duly qualified to do business in the State, has all necessary power and authority to enter into and perform and observe the covenants and agreements on its part contained in this Agreement, is possessed of full power to own and hold real and personal property as owner, and by proper action has approved and duly authorized the execution and delivery of this Agreement. (b) All construction contracts awarded by Company for the construction or installation of the Improvements shall be awarded pursuant to competitive proposal procedures approved by City which allow qualified local contractors a reasonable opportunity to participate in competitive proposals. (c) This Agreement constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms. Section 3. City's Obligations 3.1 City is the owner of the Properties and will transfer the Properties to Company upon execution of this Agreement. 3.2 City will as provided in Section 3.3 advance to or for the benefit of Company funds in an amount not to exceed $4.5 million (the "City Funds ") to be used by Company for the construction and installation of Improvements to both Parcel One and Parcel Two. 3.3 City Funds will be made available and advanced to or for the benefit of Company on a periodic basis within thirty (30) days after Company files with the Director of Finance (a) certified copy of resolution of Company's board of directors approving this Agreement and authorizing its officers to execute and deliver same, and (b) written requests for payment certified by an authorized officer of Company that the amounts included in the request for payment have not been included in any prior request for payment and are for the actual cost of Improvements, identifying the Improvements for which payment is requested, including certificates of the Architect and general contractor that such Improvements have been installed in accordance with the approved Plans and Specifications. 3.4 City and Company acknowledge and agree that City has committed to or has expended the following sums: -3- I ! (a) $132,839 for replacement of air conditioning refrigeration units and related improvements to that portion of Parcel Two known as the Rocky Mountain Bank Note Building. (b) $227,758 for roof replacement and renovations to that portion of Parcel Two known as the Woolworth Building. The sum specified in (a) above will be credited against the $4.5 million City Funds. The sum specified in (b) above will be credited against the $4.5 million City Funds on a pro rata basis to the extent the roof replacement and renovations are incorporated into Company's Improvements to and use of the Woolworth Building. City and Company will in good faith jointly determine within thirty (30) days after the Plans and Specifications for the Improvements to the Woolworth Building are approved by Company, the amount of (b) which shall be credited against the $4.5 million City Funds. Section 4. Parkin City commits to provide its best efforts to locate by January 1, 1998 for Company's use 350 parking spaces in addition to the 248 parking spaces available to Company during December 1995. The parking spaces may be either public or private. Public parking spaces may be located in any parking area or facility owned or controlled by the City within the downtown area of the City. The additional 350 parking spaces include all parking spaces located on Parcel One and Parcel Two. Company commits (a) to pay the normal cost or charge for parking spaces and (b) to discuss Company's participation with the City in a park and ride program to help alleviate parking problems in the downtown area of the City. Section 5 Company's Obligations In addition to Company's Employment Commitment and Repayment Obligations set forth in Section 7 hereof, 5.1 Company shall cause the Plans and Specifications to be prepared by the Architect in an expeditious manner. 5.2 Company shall award the construction contracts for Improvements after competitive proposals which allow local contractors reasonable opportunity to participate and shall cause the Improvements to the Properties to be Substantially Completed on or before June 30, 1998. 5.3 Company shall at its cost and expense (less City Funds advanced or paid to or for the benefit of Company) expeditiously complete the Improvements and cause all work to be done in a good and workmanlike manner in compliance with the approved Plans and Specifications, all applicable federal, state and local laws, regulations, codes and ordinances and with all new materials except existing materials used for historical preservation purposes. Section 6 Transfer of Properties se 6.1 Company acknowledges and agrees that City has or will acquire the Properties for the use and benefit of Company and that City makes no representation or warranty with respect to the condition of the Properties or improvements thereon, environmental or otherwise. Company shall be responsible for all claims, expenses and costs, including remedial and clean-up costs, incurred by reason of, or resulting from the existence, release, discharge, disposal or removal of any hazardous materials, asbestos - containing materials, petroleum or petroleum based products, or lead, in, on, under, or about the Properties or any improvements thereon. 6.2 The Properties shall be transferred by City to Company "AS IS ", "WHERE IS" at the time of delivery of the deed. Conveyance shall be by special warranty deed subject to general taxes and assessments; covenants, conditions, reservations, restrictions and easements of record; zoning, building and land use laws, ordinances and regulations; standard printed Exceptions 1 through 5, Schedule B, ALTA 1992 Owner's Form, which are incorporated herein by reference; and all liens and encumbrances caused or created by the acts or defaults of Company (the "Title Conditions "). 6.3 After transfer of the Properties to Company by City and until Company's Repayment Obligation has been fully satisfied and discharged, Company will at its expense keep and maintain the Properties (a) insured by fire and extended coverage insurance in an amount not less than their full replacement value with a standard mortgagee clause in favor of City; (b) in good condition and state of repair; and (c) free of all liens and encumbrances which are or may become by lapse of time or subsequent action superior to the City's deed of trust lien on the Properties. 6.4 Upon execution of this Agreement by City and Company and transfer of the Properties to Company by City, the February 1, 1996 Lease between City and Company for that portion of Parcel Two commonly known as the Rocky Mountain Bank Note Building shall automatically cancel and terminate and City and Company shall be released from all obligations thereunder. Section? Company's Employment Commitment and Repayment Obligations 7.1 Company acknowledges and agrees that the sole purpose of City entering into this Agreement and the only benefit to the City for making funds available to Company under this Agreement is the creation of jobs. Company therefore commits and agrees to employ at the Facilities a minimum four hundred fifty (450) Full -Time Employees in addition to Company's Current Employment of 252 during the ten (10) year Repayment Period (the "Employment Commitment "). 7.2 Notwithstanding anything contained in this Agreement to the contrary or which may appear to be to the contrary, if Company shall for any reason default in Company's Employment -5- Commitment set forth in Section 7.1 hereof, Company shall repay to City a pro -rata share of the City Funds advanced by City under Section 3 hereof based upon the number of Full -Time Employees employed by Company at the Facilities (the "Repayment Obligation ") as follows: (a) During the ten (10) year period starting thirty -six (36) months after the earlier of (i) the calendar month in which the Improvements to the Properties are Substantially Completed or (ii) January 1, 1998 and ending ten (10) years thereafter (the "Repayment Period "), Company shall pay to City an amount each Quarter during the Repayment Period equal to the number of Quarterly Employees less than 702 multiplied by $250.00 (the "Quarterly Payment ") reduced by any available Credits. (b) For the sole and only purpose of reducing Company's Quarterly Payments, the following Credits shall be available to Company and applied to Company's Quarterly Payments until such Credits are exhausted: (i) First, an amount equal to $382,500; then, (ii) Second, an amount equal to $250.00 multiplied by the number of Quarterly Employees in excess of 252 for any Quarter during the period from January 1, 1996 to the commencement of the Repayment Period; then, (iii) Third, an amount equal to $250.00 multiplied by the number of Quarterly Employees in excess of 702 for any Quarter during the Repayment Period. (iv) The Credit described in (ii) and (iii) shall be cumulative, i.e., the Credit for any Quarters shall be added to the Credits for any other Quarter until used or applied in reduction of Company's Quarterly Payments. (c) Within sixty (60) days after the end of each calendar year starting with the year 1996 and ending the last calendar year of the Repayment Period (except as hereinafter provided for the calendar year in which the Repayment Period ends), Company will submit to City's Director of Finance Company's statement showing the Quarterly Employees, Credits and /or Quarterly Payments for each Quarter of that calendar year and the basis upon which Quarterly Employees, Credits and /or Quarterly Payments were computed certified by an officer of Company to be true and accurate (the "Annual Report"). The Annual Report for the last calendar year of the Repayment Period shall include the Quarters (and any partial Quarter) within the Repayment Period during that calendar year and shall be submitted to City by Company within sixty (60) days after the end of the Repayment Period. For purposes of verifying by investigation or audit (the "City's Audit "), Quarterly Employees, Credits and/or Quarterly Payments, City, or its designated representative, shall have access to Company's books and records including payroll records. City will, however, respect the confidentiality of Company's personnel records. (d) If at any time Company's Quarterly Payments after application of all available IE Credits as shown by any Annual Report or City's Audit are in excess of $50,000, Company shall pay the amount of such Quarterly Payments to City without notice, demand, deduction, or setoff, within ninety (90) days after the calendar year for which the Annual Report was submitted or after completion of the City's Audit. All past due Company's Quarterly Payments shall bear interest at the rate of 10% per annum. Thereafter, if Company is entitled to any Credits as shown by any subsequent Annual Report or City's Audit, City will refund to Company within ninety (90) days after City's receipt of Company's Annual Report or City's Audit showing Company is entitled to such Credits, an amount equal to such Credits but in no event shall such refund exceed the amount of Quarterly Payments previously paid by Company to City. (e) If Company ceases to do business within the Properties for any consecutive six (6) month period after the earlier of (i) Substantial Completion of the Improvements to the Properties or (ii) commencement of the Repayment Period, City may declare the entire balance of Company's Repayment Obligation due and payable in full and for such purpose the entire balance of Company's Repayment Obligation shall be an amount equal to 450 times $250.00 multiplied by the then remaining Quarters of the Repayment Period after Company first ceased to do business within the Properties less all available Credits. "Ceases to do business within the Properties means that Company has less than fifty (50) Full -Time Employees actually performing work within the Properties. (f) Company's obligations under this Agreement and Company's performance of such obligations, including without limitation, Company's Repayment Obligation, shall be secured by a first and valid deed of trust lien on the Properties. Contemporaneously with City's delivery of a special warranty deed to Company for the Properties, Company shall execute and deliver to City Company's deed of trust on the real property described in such special warranty deed securing performance of Company's obligations in form and content satisfactory to the City Attorney of City (the Company's Deed of Trust "). (g) Notwithstanding any provision herein to the contrary, Company's Repayment Obligation shall not be greater than the amount of City Funds advanced or paid to Company under Section 3.2 hereof. Section 8 Company's Default 8.1 If Company defaults in the performance of any material covenant or provision of this Agreement or Company's Deed of Trust, including without limitation, Company's Repayment Obligation under Section 7 hereof, and such default in not cured within ninety (90) days after written notice thereof is given by City to Company, such default shall constitute an event of default under this Agreement and City may, at its option: hereof; (a) cease to advance City Funds to or for the benefit of Company under Section 3 -7- (b) If to Company, 225 North Main Street, Pueblo, Colorado, 81003, Attention: Legal Department. Each party reserves the right to change its address provided notice of such change is given in accordance herewith. Section 11. Waiver In the event that any agreement or covenant contained herein should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other or subsequent breach hereunder. Section 12, Miscel laneous. 12.1 Time is of the essence hereof. This Agreement shall inure to the benefit of and shall be binding upon the City and Company and their respective successors and assigns, provided, that no assignment of this Agreement by Company shall be valid unless approved in writing by City. Notwithstanding the foregoing, the merger of Company with, acquisition of Company by, or sale of substantially all of Company's assets as a going concern to any third party shall not constitute an assignment of this Agreement. 12.2 This Agreement shall not be effectively amended, changed, modified or altered without the written consent of both parties. 12.3 This Agreement expresses the entire understanding of the parties and supersedes all prior dealings and commitments with respect to the subject matter of this Agreement. 12.4 In the event of any litigation arising out of this Agreement, the court shall award to the prevailing party its costs and reasonable attorney fees. All such litigation shall be filed in the District Court, County of Pueblo, State of Colorado and each party submits to such venue and to the jurisdiction j of that Court. To the extent permitted by law, each party waives its right to a jury trial. 12.5 If any provision of this Agreement, other than the Company's Repayment Obligation, shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 12.6 This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 12.7 This Agreement shall be governed by and construed in accordance with the laws of the l State of Colorado, without regard to conflict of law principles. 12.8 Nothing in this Agreement, expressed or implied, is intended nor shall be construed to -9- confer upon, or give to, any person or entity other than the City and Company any right, remedy or claim under or by reason of this Agreement or any covenant, condition or provision hereof, and all covenants, conditions, provisions and agreements contained in this Agreement by or on behalf of City or Company shall be for the exclusive and sole benefit of City and Company. 12.9 Whenever the approval or consent of City or Company is required under this Agreement, such consent or approval shall not be unreasonably withheld or delayed. IN WITNESS WHEREOF, the parties have executed this Agreement in Pueblo, Colorado on the day and year first above written. Attest: _ . City Cler PUEBLO, A MUNICIPAL CORPORATION By Presic7crnt of the City Council Attest: / 4. Title: U P QUALMED, INC. t3y Title: yu�— �w�rrvu�. -10- LEGAL DESCRIPTION Lo t 13 and south half of Lots City of Pueblo, according to 14, 15 and 16, Block J2, In the Town, now City the plan of Pueblo made far the Probate Judge of Bald Pueblo County by 11. H. Fosdick, Engineer] Of the Ilorth 10 feet In width of Second Street also that portion said South half of Lots 14, g said Lot 13 and Colorado 15 adjoininand 16, County of Pueblo, State Of AND The East 26 feet of Lot 10 and the West 20 feet of Lot 11, Block 72, in the Town, now City of Pueblo, according to the plan of Pueblo as surveyed Pueblo and platted for the Probate Judge of said County by 11. H. Fosdick, Engineer; Also that portion of the Northerl 10 feet In width of Second Street adjoining said East 26 feet of Lot 10 and the South; the West 20 Feet of Lot 11 on All of Lot 12 and the East 24 feet of Lot 11, Block 72 In the Town, now City of Pueblo, as surveyed by 11. H. Fosdick, Engineer, for the Probate Judge of said County, TOGETHER WITH a stripp of land 10 feet In width, lying Im South of and )) contiguou� to the South end of said Lot 12 Off the North side e of o second lStreet dIn0sa idtformer Town now f eet Pueblo- which strlp was vacated and discontinued and attached to the lots adjoining thereto y an Act of the Council and (louse of Representatives Of Colorado Territory, entitled "An Act to Change Certain Streets and Alleys in the Town of Pueblo ", approved February Bth, A.D. 1870, County of Pueblo, State of Colorado. EXHIBIT "A" LEGAL DESCRinION All of that portion of Block 33 In the Town, now City of Pueblo, according to the plan of Pueblo made for the Probate Judge of Pueblo County, 11, M. Fosdick, Engineer, In March 1869, bounded and described as follows: BEG11111ING at the point of Intersection of the South li with tile ne of Fourtil Street e East line of Court street] thence South and along the East line Of Court Street 119.85 feet to the point of intersection of the East line Of Court Street with the North line of the alley In said Block 33; thence Easterly and along the North line of the alley in said Block 33 140.02 feet to a point; thence Northerly and parallel with the East line of Court Street 119.71 feet to a point in the South line of Fourth Street; thence Westerly and along the South line of Fourth Street 140.02 feet to the POINT of BEGINIIG, being the same property sometimes described as Lots 6, 7, 8 and the West B feet of Lot 5, Block 33 of the Town, now City of Pueblo, according to the plan of PVeblo made for the Probate Judge of Pueblo County by if. M. Fosdick, Engineer in March 1869. wows - , The Northerly 71.05 feet of Lots 1, 2, and 3, all of Lot 4, the East 36 feet in width of Lot 5 and the South 48.38 feet of the West 41.33 feet of Lot 3, Block 33, in that part of the present City of Pueblo which surveyed and platted by H. M. Fosdick, Civil Engineer for the Probate Judge of said Pueblo County, in March, 1869. EXHIBIT "Q' II ADDENDUM NO. 1 THIS ADDENDUM NO. 1 entered into as of October 7, 1997 by and between Pueblo, a Municipal Corporation (the "City ") and QualMed, Inc., a Delaware Corporation (the "Company ), WITNESSETH: WHEREAS, City and Company entered into an Agreement dated July 8, 1996 relating to the expansion of Company's business within the downtown area of the City of Pueblo, which was approved by City Council Resolution No. 7910 (the "Agreement "), and WHEREAS, City and Company are desirous of amending certain provisions of the Agreement as hereinafter provided. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follow: 1. Notwithstanding any provision of the Agreement to the contrary (a) Company may use $315,000.00 of City Funds to acquire the real property and improvements located at 215 -217 North Main Street, Pueblo, Colorado (the "Additional Property") and upon such acquisition the Additional Property shall become a part of and be included within the term Facilities as defined in the Agreement. Company, at its cost and expense (and not out of any City Funds which have been committed for the construction and installation of Improvements to Parcel One and Parcel Two), shall after acquisition of the Additional Property expeditiously complete the conversion of the Additional Property to be used by Company as part of its Facilities. Such conversion of the Additional Property shall be Substantially Completed on or before October 1, 1999 and shall be done in good and workmanlike manner in compliance with all applicable federal, state and local laws, regulations, codes and ordinances. (b) Company shall Substantially Complete the Improvements to the Amherst Building on or before October 1, 1998. The Amherst Building is located at the intersection of 2nd and Main Streets, Pueblo, Colorado, is part of Parcel One, and is legally described in Exhibit "A" to the Agreement. 2. The Agreement as amended by this Addendum No. 1 shall remain in full force and effect and be binding upon and inure to the benefit of Company and City and their respective successors and approved assigns the same as if the amendments to the Agreement contained in this Addendum No. 1 were fully set forth in the Agreement as originally executed. Executed as of the day and year first above written. rtit4t7<Y [SEAL] Attest: City erk Approved as to form: 22! /'5 City Attorney [SEAL] Attest:_ Title: PUEBLO, A MUNICIPAL CORPORATION President o1 #e Cit Council QUALMED, WCC. By 1/ , -2- THIS AGREEMENT entered into as of September -� . 1997 between Pueblo, a municipal corporation (the "City ") and Foundation Health Systems, Inc., a 0 /q G „u,;E corporation (the "Company "). WHEREAS, Company desires to acquire land from the City to construct a standby electric generation facility, and WHEREAS, City is willing to convey land to Company for such purpose upon the terms, covenants and conditions herein set forth. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, City and Company agree as follows: Definitions In addition to the terms otherwise defined herein, the following terms shall have the following meanings unless the context clearly indicates otherwise: "Architect" means a competent and qualified architect engaged by Company to prepare the Plans and Specifications and oversee the construction of the Facility. "Company's Buildings" means the buildings including fixtures, machinery and equipment therein located on West 4th Street between Main and Court Streets. Pueblo, Colorado, owned and operated by Company. "Facility" means a standby electric generation facility consisting of two 1 megawatt electric generators and related appurtenances including a 6,000 gallon above - ground fuel storage tank completely enclosed within the same building. "Facility Land" means the approximately 3,030 square feet of land described in the attached Exhibit "A ". "Laws and Regulations" means all federal, state, and local laws, ordinances, codes and regu- lations applicable to the Facility including without limitation, those pertaining to hazardous waste and materials, petroleum and petroleum products, air quality, and noise, and building and fire codes. "Land" means Lot 9 and that portion of Lot 10 included within the Facility Land, Block 33 of the platted City of Pueblo, filed March 1869, County of Pueblo, State of Colorado. "Local Utility" means the entity which holds the franchise to conduct and operate an electric utility within Pueblo, Colorado. "Plans and Specifications" means the design, specifications and working drawings for the -2- construction and installation of the Facility prepared by the Architect and approved by Company and City's Director of Public Works. "Rearrangement of Property Boundaries" means the rearrangement of property boundaries to establish changed building sites pursuant to Section 12- 4 -5(C) of the 1971 Code of Ordinances of the City. Conveyance Upon completion and approval of the Rearrangement of Property 1 Boundaries and receipt by City from Company of the sum of $ ICS . ( - , within thirty (30) days after date of this Agreement, City will execute and deliver to Company the attached quit claim deed conveying to Company the City's right, title and interest in and to the Land as long as the Facility Land is used for the Facility, reserving however to the City, its successors and assigns, in perpetuity, the right, privilege and option to use and occupy the Land except the surface of the Facility Land (but not the air rights above the Facility), for parking, or parking facility or facilities, or any other lawful or public purpose, and, if, for any such purpose, Company's written consent or approval is required, Company shall execute and deliver such consent or approval in form and content acceptable to City within ten (10) days after written request by City. If Company does not execute and deliver such written consent and approval within said 10 -day period, Company appoints City as its true and lawful attorney -in -fact to execute and deliver such consent or approval in the name and on behalf of Company. It is the expressed intent of the parties, this Agreement, and the quit claim deed, to convey the Land to Company in order for Company to construct the Facility on the Facility Land and to allow and permit City under its reserved rights to use the balance of the Land -3- and/or to install a parking structure on the Land and over the Facility and the Facility Land. In explanation, Company has requested and desires to own rather than lease the Facility Land and City is unable under its existing subdivision and other ordinances to convey the Facility Land which is located on two subdivided lots and consist of approximately 3,030 square feet; therefore, in order to accomplish Company's request and desire, City must approve an appropriate Rearrangement of Property Boundaries and convey all of the Land to Company with appropriate reservations described in this paragraph 1. 2. Rearrangement of Property Boundaries Company shall cause to be prepared and submitted to City's Subdivision Review Committee for review and approval a plat showing the proposed Rearrangement of Property Boundaries to establish a separate building site for the Land which plat shall include and establish a separate building site for the other lots and vacated alley within the same block owned by the City. 3. Representations The Land shall be transferred by City and accepted by Company ",U IS ", "WHERE IS." Company acknowledges and agrees that City makes no representation or warranty with respect to the Land or its condition, environmental or otherwise. Company shall be responsible for and shall indemnify and hold City harmless from and against all claims, costs, liabilities, expenses (including without limitation, court costs and attorney fees), penalties, remedial and clean-up costs, or demands of whatever nature or source for any condition, defect or environmental problem, latent or obvious, now existing or hereafter discovered, created or caused, in, on, under, from or within the Land or the Facility, or incurred by reason of, or resulting from ME the existence. release., emission, discharge or removal of any hazardous material or waste, or petroleum or petroleum based products or by- products or exhaust from their combustion, in, on, under. within, from, or about the Land and /or the Facility. 4. Facility Construction Company will accept the quit claim from City and will use and occupy the Facility Land for the Facility. Company shall expeditiously install, construct, maintain and operate the Facility is a careful, safe and proper manner in compliance with the Plans and Specifications, this Agreement and all Laws and Regulations. If the Facility is not substantially constructed and completed within 180 days from date of this Agreement, Company shall reconvey the Land to City by special warranty deed subject only to the liens, encumbrances, restrictions, reservations, rights of way, easements and conditions existing of record at the time of delivery of City's quit claim deed to Company. Upon City's receipt of such special warranty deed duly executed and acknowledged for recording, this Agreement shall terminate and the parties shall be released and discharged from all future obligations hereunder. ; 5. Facility Use It is the expressed intent and understanding of the parties, that the Land is conveyed by City and the Facility is to be constructed by Company on the Facility Land for the limited purpose of making available an emergency supply of electricity and electric power and service for Company's Buildings. Therefore, all electricity and electric power generated or produced by the Facility shall be distributed, used and consumed in Company's Buildings solely in the event of, and during the temporary loss of, or interruption in electrical power and service being furnished or supplied by the Local Utility. Company shall not operate or permit the Facility to be operated -5- to generate or produce electricity or electric power for sale or distribution or use by the Local Utility or by any other person, entity or facility, provided. however that electricity or electric power generated or produced during the limited periods of one or two hours per week when the Facility is operated to verify capacity may be sold or distributed to the Local Utility. 6. val. Company shall not commence construction or installation of the Facility on the Facility Land until after the Plans and Specifications therefor have been submitted to and approved by City's Director of Public Works, which approval shall not be unreasonably delayed or withheld. Such approval shall not impose any liability or obligation on the City or the City's Director of Public Works with respect to the Plans and Specifications, including without limitation, the design, suitability, safety or function of the Facility. 7. Covenant Running With Land And Enforcement This Agreement and all its covenants and conditions are and shall be construed to be covenants running with the Land, inuring to the benefit of and binding upon City and Company, and their respective successors and assigns, and the Land, enforceable by City or Company by action in law or equity, including injunction and specific performance, without the necessity of showing a lack of an adequate remedy at law. In the event of any litigation arising out of this Agreement or its enforcement, the Court shall award the prevailing party its costs and expenses, including reasonable expert witness and attorney fees. Venue for all such litigation shall be in Pueblo County, Colorado and filed in the District Court, County of Pueblo, State of Colorado, and City and Company submit to the jurisdiction of that Court. To the extent permitted by law, City and Company each waive its right, if any, to a jury trial. M 8. Notice All notices or communications of any kind which may be given or required to be given under this Ag reement shall be sufficiently given if served personally or mailed by certified mail, postage prepaid, as follows: (a) if to City: City Manager, 1 City Hall Place, Pueblo, Colorado, 81003; (b) if to Company: 225 N. Main Street, Pueblo, Colorado, 81003, Attention: Legal Department. (or to such other address or person as may hereafter from time to time be designated for this purpose by City or Company in writing given as above provided). 9. Assi.n� Lessee shall not have the right to assign this Agreement or any of its rights hereunder without the prior written consent of City, which consent will not be unreasonably withheld or delayed. Company shall have the right, however, without the consent of the City, to assign this Agreement to any financially responsible entity to which Company transfers title to Company's Buildings, provided, that in the event of any such assignment, Company shall remain liable for Company's obligations under this Agreement. Notwithstanding the foregoing, a merger of Company with, acquisition of Company by, or sale of substantially all of Company's assets as a going concern to any third party shall not constitute an assignment of this Agreement. 10. Merger The covenants and conditions contained in this Agreement shall not merge -7- with or into the quit claim deed to be executed and delivered by City to Company hereunder. On the contrary, all covenants and conditions of this Agreement shall survive the delivery and recording of said quit claim deed. 11. Miscellaneous Provisions (a) Colorado Law This Agreement shall be governed by the laws of the State of Colorado and shall be construed in accordance therewith. (b) Writing for Waiver or Modification No provision of this Agreement may be waived or modified except by an agreement in writing signed by the waiving parry. A waiver of any term or provision shall not be construed as a waiver of any other term or provision. (c) Complete Understanding This Agreement sets forth the entire and complete undersmnding and agreement of the parties hereto. The parties agree to do any and all things lawful and necessary to effectuate the purpose of this Agreement. (d) Construction Throughout this Agreement, the singular shall include the plural; dae plural shall include the singular, and the masculine and neuter shall include the feminine, wherever the context so requires. (e) Text to Control The headings of sections are included solely for convenience of reference. If anv conflict between any heading and the text of this Agreement exists, the text shall conarol. (f) Severability If any provisions of this Agreement is declared by any court of corrtnetent jurisdiction to be invalid for any reason, such invalidity shall not effect the remaining Provisions. On the contrary, such remaining provisions shall be fully severable, and this Agreement shall Tie construed and enforced as if such invalid provisions had never been inserted in the Agreement. (g) Third -Party Beneficiary Nothing in this Agreement, expressed or implied, is intended nor shall be construed to confer upon, or give to, any person or entity other than the City and Ccwnpany and their respective successors and assigns, any right, remedy or claim under or by reason of this Agreement or any covenant, condition or provision hereof, and all covenants, condibaans, provisions contained in this Agreement by or on behalf of City oS Company shall be for the exclusive and sole benefit of City and Company and their respective successors and assigns. (h) Waiver and Time of Essence No waiver of any breach or breaches of any provision, covenant or condition of this Agreement shall be construed to be a waiver of any precediaeg or succeeding breach of such provision, covenant or condition, or of any other provision, covenant or condition; and time is of the essence for each and every provision, covenant and condition herein contained and on the part of Company or City to be done and performed. 6oz IN WITNESS WHEREOF, City and Company, by their duly authorized representatives, have executed this Agreement on the day and year first above written. PUEBLO, A MUNICIPAL CORPORATION Attest: ` B ,( City Clerli6 President of the0b ty C until FOUNgATION HEALTH SYSTEMS, INC. By 1 41 0 1 1 1 Title: (.s . yS �✓'sv� i v , STATE OF COLORADO ) COUNTY OF PUEBLO ss. The foregoing instrument was acknowledged before this Qr�_ day of September, 1997 by Cathy Garcia as President of City Council and Gina Dutcher, City Clerk of Pueblo, a municipal corporation. Witness my hand and official seal. My commission expires: (0 1 /'Z 6 SEAL] �ublic STATEOF Colnrd�o ) COUNTY OF p, l eb ) () ) ss. The foregoing instrument was acknowledged before this 1 S' 4 k day of September, 1997 by Michael D PuU h as 1?reS,dfnt; FHS l,i;esiern Div-Sr of Foundation Health Systems, Inc., a corporation. Witness my hand and official seal. My commission expires: - 10 - G 8 [SEAL] e ay l Notary Publi 1.\�BUC \ SMCRMGREEMEKWPD - 10- ORDINANCE NO. 6 OFF41IMT PAIUmqG vAWAN ,R p j COMB Y RNOWN AS 236 WEST 4TH STREET, MMBLO, COL Law WHEREAS, the Owma of dm property commonly lrnowa as 226 Wet 4* Sure; Ptaebla, Catotado and kWty 6wCtihed as Lora 6, 7, B and die WeK a tat of Lot 5, Blodc 33, Pueblo CouatY, Colorado (the `FMopany") applied for a variance la the PUMM SPAS Sot * Property caul its ioaanded one as on office, mmba of off-m �4Ibc PMM is ve s 100W widin �� �mdada aMe formarPeebb Municipal Code the City Council may, otter r=* of m eco f *0 rtie pueblo TOmnB COmmitx'O% Bra= a variaaa in the tegnired number of tdgtitaet PtWPWy aed ion oaa, sad Pte$ 04M far are pia ud Zo=M C=ja= as Lae revidwed the Piet" ownueo appCr- Of off etteet aPP� of s OUNWuy, wnditfonal variance fiom the noTgrad ambe Pa►44 spaces for dw Property and ira iasended was sa an office, whicb hoe boa com"od by CiW%4dmm,soratrn staff t0 be 210 park eg spacer (f wr,..� Vmi"Wl ead MCREMI, a 6mldola pa= hat bem OmM far c0ndn won work as and t, the Property Olcc • BeiW ftrmit) coaditioned upon the ow= of the Property obMWM tither s va Uoft fiom, or meeting Citys off -seroet PerktaB tequireaxaft, and "M&AA the 8tendag of a fees Mmy, OOOdldOnel va it don not meet the MW and pt"e of dac 6l Parrying 4011 od imPOacd upon the iaattmtce of tba Bnildiog Pta Mt, and WHEREAS, Set the City Camcfi having ooaaidered the toregoing and the hum hum fat& in acaiea )7 4 - 44(a)(2) trf tbs Ptutbb MtmiciPal C'.odn BE IT ORDAVE D BY TM CF1Y COUNCIL OF PUEBLOi that- A tm*mry, conditional oti- street pedciaB variance from the 210 poking spaces . Got tbeproPerty end its wbMdW use u as Office is hereby }pasted for a period not to award Me (Z) Rm fiOm Navemba 1,1997 (the 'Temporary variaacs•). TLO Tams My Variance aahftll be rav'Wd V six (6) mnntbe by the Planeigg and TM"S Comwiw;on w determine if theoWOer . -r.Li of the Prop" has diligently made reawnable program in securing, pttwidmg and fumisWeg the mgnined 210aff4freet puWag spaces. The Planning and Zoning C.orpmmion iltaH furnish to City Council awritmn repatof each of weh detarniesdon. SECMM 2 in the wvmft cwwm cdm work covered by the Buikdisg Permit is completed poiof m the owner of the Pmpraty aeeum& providing and ftsnishmg the required 210 oB' -street pods" spaces, the 0060CM of OCCUPexY, if air, ioued fof the Pmpefty br the Pueblo ltOSWUai ROO B Depertmeot"be temporary Until the Mgab ed 210 off-Wed perking spaces have beta seamed. WwAdtdand Ganished by the owner of the Property and aveitable for its inimded Use as an office. SPOM 3 During the ddf eve period of any such temporary certiflcete of occupenoy and until the fequW d 210 off -wrect pausing spares have bem weaned, provided and fiunishad by the owner of the Property. dw owner of the Property shall cause its tsnpbyew and odw ocoepsrtet of dw Property to puk their vftclaa m private w public parting late wed, if "amsaM to orusport its employees led other oeeupabts of the Property from such pairing ion to end from the pro". being the intent and purpose of this Section 3, as a condition to the gran ft of the Tcmp xW Variance, to problbit and not m allaw the employee of lire owner of the property and oebw Oeaupants of the Property to park an the public streets or eimwA er , except in private Of public pwft Ion. Ay;,rrQry a, The TCMpofafy Varmacc hereby granted shall terminate upon the awabon of the tavo-year pmod set froth m Section I hereof, wed may be revoked by Rmolodon of the City Cotmal of any time Was thedefiukof Mure of the owner of the Property, as dmarmimd by the City C.ounrdl in -Z r , SO'd - Ii101 in dnatdiat, b toeet Cad y adlhthe pravisioes of Swim 3 hereof, and/or to diii�y mgm rtmanabie paw= in eoau erg firmismag and providing five rcquircd 210 olTetreet putin= spar . Upon Mu tarmutatea and/or rev"W'O" of ate Temporary Vumace, my umeporMY ceit twAte of owrpancy usued for *a Property ahatl teemiaata and aa4mm and Property abaft not tlaulalla be ttsed a occupied" Off= cc for any odw pwpoae WO the Te*&W 210 afl-atroet pmicin8 Spann nave bean sea=red, provided aid Aumhad by the owm of do ProM. If any Ftmaitm of this Ordinance is in conflict wit any 06W "U m, or Plots rfMreof, the provi/io as of fain Ordinance aaall eatual to the eavnot of nub waflict during iha dfectivr Period of dw Tampoacy Vuitatoa tf nay praviaom of this Ordinance sbaU be dete�iaed to be intialid or uoenboreaaale, upon mcli detrrmms im tae Tempwr:y Vadme and any temporary cwditade of ocmgwoy faataad for Thin tkdmmw abet! bamme eft txlivc upon final paapge. ATTEST. v I mo- • a� �� I rI -3- APPROVING THE CITY AGREEMENT, LEASE AGREEMENT, PURCHASE AND SALE AGREEMENT, AND ASSOCIATED DOCUMENTS RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT WHEREAS, the PEDCO Foundation, Inc., acting by and through the Pueblo Economic Development Corporation, has made application to the City of Pueblo for funds with respect to a job creating capital improvement project located within the downtown area of the City of Pueblo; and WHEREAS, the PEDCO Foundation, Inc., will use the one -half cent sales tax funds received from the City of Pueblo to purchase buildings, furniture, fixtures and equipment for use by a company planning to locate a facility within the City of Pueblo, which company will commit to employ six hundred (600) full -time employees; and WHEREAS, the Board of Directors of the PEDCO Foundation, Inc., hereby finds that the above - mentioned job creation project is in the best interests of the citizens of Pueblo, Colorado in that it will reduce unemployment and underemployment and the social and economic hardships associated therewith; and WHEREAS, the Board of Directors of the PEDCO Foundation, Inc., wishes to approve all documents associated with the aforementioned job creation project including, but not limited to, the Agreement between the PEDCO Foundation, Inc., and the City of Pueblo, the Purchase and Sale Agreement between the PEDCO Foundation, Inc. and QualMed, Inc./Foundation Health Systems, Inc., the Lease Agreement between the PEDCO Foundation, Inc., and the TPA, Inc., the Fiber Optic Cable and Conduit System Access and Use Agreement between the PEDCO Foundation, Inc., and QualMed, Inc. /Foundation Health Systems, Inc. NOW, THEREFORE, be it resolved by the Board of Directors of the PEDCO Foundation, Inc., that; 1. The Agreement between Pueblo, a municipal corporation and the PEDCO Foundation, Inc., and the Deed of Trust and Security Agreement and Colorado UCC -1 Financing Statement given pursuant to the Agreement, and be, and hereby are, approved. 2. The Purchase and Sale Agreement between the PEDCO Foundation, Inc. and QualMed, Inc. /Foundation Health Systems, Inc. be, and hereby is, approved. 3. The Fiber Optic Agreement between the PEDCO Foundation, Inc. and QualMed, Inc. /Foundation Health Systems, Inc. be, and hereby is, approved. 4. The Lease Agreement between the PEDCO Foundation, Inc., and The TPA, Inc., and related documents be, and hereby are, approved. 5. Walter L. Bassett, Sr. as the Chairman of the Board of Directors of the PEDCO Foundation, Inc., be, and hereby is, authorized and directed to execute the Agreement, (including but not limited to, the Deed of Trust, Security Agreement and Colorado UCC- 1 Financing Statement given pursuant thereto), Purchase and Sale Agreement, the Fiber Optic Cable and Conduit Systems Access and Use Agreement, the Lease Agreement, and all other documents necessary to the aforementioned job creation project on behalf of the PEDCO Foundation, Inc. By action of the Board of Directors taken this 1st day of July, 1999. I, Rolf Anderson, hereby certify that I am the Secretary and official custodian of certain records for the PEDCO Foundation, Inc., and that the foregoing is a true and accurate representation of the resolution contained in the records of the PEDCO Foundation, Inc., and such resolution has not been amended or revoked and ains in full force and effect. IN WITNESS WHEREOF, I have set my hand this day of July, 1999, at Pueblo, Colorado. I 1 10" 10 � MA I WIFo ■ �F . colo\ !1_ STATE OFACOLORADO DEPARTMENT OF STATE CERTLCATE I, VICTORIA BUCKLEY, S = -TARY C= STATE OF THE STATE OF COLORADO HEREBY CERTIFY THAT ACCORDING TO THE R=3DS OF :-- S OFFICE PEDCO FOUc= =TION, INC_ (COLORADO NONPc = -= IT CORPC= 'TION) FILE # 19871711252 WAS FILED IN THIS OFFICE ON February 17, 1987 AND HAS COMPLIED WITH THE APPLICABLE PROVISIONS OF THE LAWS OF THE STATE OF COLORADO AND ON THIS DATE IS IN GOOD STANDING AND AUTHORIZED AND COMPETENT TO TRANSACT BUSINESS OR TO CONDUCT ITS AFFAIRS WITHIN THIS =ATE. Dated; June 07, 1999 SECRETARY OF STATE ■ SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT is entered into as of July A , 1999 between Pueblo, a Colorado municipal corporation ( "City ") and QualMed, Inc., a Delaware corporation ( "QualMed ") and Foundation Health Systems, Inc., a Delaware corporation ( "FHS "). RECITALS a. City and QualMed entered into an agreement dated July 22, 1991 relating to the expansion of QualMed's business within the downtown areas of the City of Pueblo. Pursuant to said agreement, QualMed executed an $800,000.00 Promissory Note dated January 2, 1992 made payable to the City. On January 2, 1992, QualMed also executed and delivered to City a Colorado Deed of Trust which was recorded in the records of the Pueblo County Clerk and Recorder on January 15, 1992 at Reception No. 964451, Book 2574 at Page 233. b. On October 26, 1992 the City and QualMed entered into a lease whereby QualMed leased from the City 72 parking spaces in the City's parking lot located at Third and Court Streets in Pueblo, Colorado. C. City and QualMed entered into an agreement dated July 8, 1996 relating to the further expansion of QualMed's business within the downtown area of the City of Pueblo. Pursuant to said agreement, QualMed delivered to the City a Colorado Deed of Trust dated July 17, 1996 which was recorded in the records of the Pueblo County Clerk and Recorder on July 18, 1996 at Reception No. 1131265, Book 2911 at Page 979. d. On October 7, 1997, the City and QualMed entered into Addendum No. 1 modifying the July 8, 1996 agreement described in b. above. e. The City and FHS entered into an agreement dated September 22, 1997 concerning the acquisition of land for the construction of a standby electric generation facility and Generator Building (310 Court Street). f. On November 10, 1997, the City granted QualMed a temporary, conditional off - street parking variance from the 210 parking spaces required for the building located at 226 W. 4th Street, Pueblo, Colorado. g. QualMed and FHS represent they are fee owners of the following real properties located within the downtown area of the City of Pueblo: Pope Block Buildings (317 N. Main Street) y' Generator Building (310 Court Street) Butler Building (215 W. 2nd Street) Montgomery Ward /Henkel -Duke Building (225 N. Main Street) Amherst Building (201 N. Main Street) Dante's /Doreen's Buildings (215 -217 N. Main Street) h. QualMed and FHS have made a business decision to phaseout their operations in Pueblo, Colorado, which will result in the loss of employment in the City's downtown area. L City believes that QualMed and FHS's phaseout of business in Pueblo, Colorado constitutes a breach of QualMed and FHS's agreements with the City which gives rise to claims against QualMed and FHS. QualMed and FHS deny they have breached their agreements with the City. j. QualMed and FHS, based upon preliminary property valuations, have asserted that the Pope Block Buildings (317 N. Main Street) and the Generator Building (310 Court Street), including certain fixtures, equipment, and certain furnishings located in the Buildings (collectively the "Properties ") could have a current fair market value in excess of $12.9 million. k. QualMed and FHS are willing to sell the Properties to PEDCO Foundation, Inc. ( "PEDCO ") in consideration of the sum of $4.5 million and City's release of its claims and execution of the Mutual Release attached hereto as Exhibit A (the "Mutual Release ") and to make a gift of the remaining value to PEDCO. I. PEDCO intends to lease the Properties to Third Party Administrators, Inc. ("TPA ") which plans over a phasein period to maintain the employment levels in the City's downtown area which may be lost by QualMed and FHS's phaseout of business in Pueblo, Colorado. M. Subject to the occurrence of the conditions and contingencies set forth in Section 2.1 .e. hereof, City is willing to advance $4.5 million to PEDCO for the purchase of the Properties and execute the Mutual Release for the purposes of maintaining the economic stability and viability of the City's downtown area and employment within such area, which purposes constitute matters of public, local and municipal concerns justifying the expenditure of public funds. n. There exists within the City a lack of available employment opportunities which places a public burden upon the City and its citizens. The prevention and reduction of unemployment and underemployment and the social and economic hardships associated therewith are proper public purposes and matters of public concern. AGREEMENT In consideration of the foregoing Recitals and the mutual obligations of the parties hereto and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, each party covenants and agrees with the other as follows: Section 1. Representations, Covenants and Warranties. 1.1 City represents, covenants and warrants for the benefit of QualMed and FHS as follows: a. City is a home rule municipality duly organized and existing under Article XX of the Constitution of the State of Colorado and the Charter of the City. The City has duly authorized and approved the execution and delivery of this Agreement. b. This Agreement and the transfer of Properties are necessary, convenient and in furtherance of the municipal and governmental purposes of the City, will further economic development and create employment opportunities for its citizens, and is in the best interests of the City and its inhabitants. C. This Agreement constitutes a legal, valid and binding obligation of the City enforceable in accordance with its terms which has been approved by Resolution of the City Council of the City. 1.2 QualMed and FHS represent, covenant and warrant for the benefit of the City as follows: a. QualMed and FHS are corporations duly organized, existing and in good standing under the laws of the State of Delaware, are duly qualified to do business in the State of Colorado, have all necessary power and authority to enter into and perform and observe the covenants and agreements on their part contained in this Agreement and by proper action have approved and duly organized the execution and delivery of this Agreement. b. This Agreement constitutes a legal, valid and binding obligation of QualMed and FHS enforceable in accordance with its terms. Section 2. City's Obligations. 2.1 At the closing of the sale of the Properties by QualMed and FHS to PEDCO, the City shall take the following actions: a. Execute and deliver the Mutual Release attached as Exhibit A. b. Deliver the original January 2, 1992 Promissory note to QualMed marked "PAID IN FULL." C. Execute and deliver to the closing agent all documents required to cause the following Deeds of Trust to be released: Deed of Trust dated July 17,1996, recorded July 18, 1996 in the records of the Pueblo County Clerk and Recorder as Reception No. 1131265 in Book 2911 at Page 979. Deed of Trust dated January 2, 1992, recorded in the records of the Pueblo County Clerk and Recorder on January 15,1992 as Reception No. 964451 in Book 2574 at Page 233. d. Advance $4.5 million in funds to PEDCO for PEDCO to carry out its obligations under the Purchase and Sale Agreement attached hereto as Exhibit B. e. City's obligations are subject to and contingent upon (i) PEDCO and TPA entering into a lease- purchase agreement for the Properties in form and substance acceptable to City, (ii) PEDCO and City entering into and closing an agreement with respect to these transactions in form and substance acceptable to City, and (iii) City's approval of the Purchase And Sale Agreement described in Section 3.1 below. Section 3. Obligations of QualMed and FHS. 3.1 QualMed and FHS agree to sell the Properties and certain personal property contained therein to PEDCO for $4.5 million in cash or immediately available funds in accordance with the Purchase And Sale Agreement, dated July , 1999, a copy of which, marked as Exhibit B. is attached hereto and incorporated herein by reference. 3.2 At the closing of the sale of the Properties to PEDCO, QualMed and FHS will execute and deliver to the City the Mutual Release attached as Exhibit A. Section 4. Miscellaneous. 4.1 Time is of the essence hereof. This Agreement shall inure to the benefit of and shall be binding upon the City and QualMed and FHS and their respective successors and assigns. 4.2 This Agreement shall not be effectively amended, changed, modified or altered within the written consent of all parties. 4.3 This Agreement expresses the entire understanding of the parties and supersedes all prior dealings and commitments with respect to the subject matter of this Agreement. 4.4 If any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 4.5 This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 4.6 Nothing in this Agreement, expressed or implied, is intended nor shall be construed to confer upon, or give to, any person or entity other than the City and QualMed and FHS any right, remedy or claim under or by reason of this Agreement or any covenant, condition or provision hereof, and all covenants, conditions, provisions and agreements contained in this Agreement by or on behalf of the City or QualMed or FHS shall be for the exclusive and sole benefit of said parties. 4.7 In the event of any litigation arising out of this Agreement, the court shall award to the prevailing party its costs and reasonable attorney fees. 4.8 This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of law principles. IN WITNESS WHEREOF, the parties have executed this Agreement in Pueblo, Colorado on the day and year first above written. ATTEST: i PUEB Zmunici poration B /t &-- reside uncil Approved as to form: �i I MMIM R -+ ATTEST: Name: {N T R Y I C �RN jth Title: V. �. QUALMED, INC. By Name B. Curtis Westen Title: Senior Vice President, General Counsel and Secretary ATTEST: Name: W ;rtiP -r C. Taws Title: V. R FOUNDATION HEALTH SYSTEMS, INC. By [ v� Name: B. Curtis Westen Title: Senior Vice President, General Counsel and Secretary MUTUAL RELEASE THIS MUTUAL RELEASE is entered into as of this day of day of July, 1999 between Pueblo, a Colorado municipal corporation ( "City ") and QualMed, a Delaware corporation ( "QualMed ") and Foundation Health Systems, Inc., a Delaware corporation ( "FHS "). RECITALS a. Disputes and differences have arisen between the City and QualMed and FHS with respect to the following agreements entered into between the parties: Exhibit Number Date of Agreement Parties to Agreement 1 07 -22 -91 City and QualMed 2 10 -26 -92 City and QualMed 3 07 -08 -96 City and QualMed 4 10 -07 -97 City and QualMed 5 09 -22 -97 City and FHS b. Copies of the aforesaid agreements are attached hereto and are incorporated herein by reference in order that all such claims, demands, actions, responsibilities, obligations and liabilities of the respective parties may be ascertained. C. Disputes and differences have arisen between the City and QualMed and FHS with respect to Ordinance 6276 which granted QualMed a temporary, conditional off - street parking variance from the 210 parking spaces required for the property commonly known as 226 W. 4th Street, Pueblo, Colorado. A copy of the aforesaid Ordinance, marked as Exhibit 6 is attached hereto and is incorporated herein by reference in order that all such claims, demands, actions, responsibilities, obligations and liabilities of the respective parties may be ascertained. C. The parties have agreed to execute this Mutual Release in settlement of such disputes and differences. Section 1. Mutual Release of Contract Claims. 1.1 In consideration of the mutual relinquishment of their respective legal rights with reference to the above - mentioned disputes and differences, in consideration of the execution of this Mutual Release and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, QualMed and FHS for themselves and for their assigns hereby release the City and its successors and assigns from all liability for claims and demands arising out of the agreements as described above. 1.2 In consideration of the mutual relinquishment of their respective legal rights with reference to the above - mentioned disputes and differences, in consideration of the execution of this 1 Mutual Release and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its assigns expressly release QualMed and FHS and their predecessors, successors and assigns from all liability for claims and demands arising out of the agreements described above except as otherwise provided in Section 5.2 hereof. Section 2. Mutual General Release. 2.1 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, QualMed and FHS and their successors and assigns hereby release and forever discharge City, its successors and assigns, of and from any and every claim, demand, action or right of action, of whatever kind or nature, either" in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. 2.2 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its successors and assigns hereby release and forever discharge QualMed and FHS and their predecessors, successors and assigns, of and from any and every claim, demand, action or right of action, of whatever kind or nature, known or unknown, either in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. Section 3. Release with Respect to Ordinance 6276. 3.1 The parties mutually agree that the Ordinance attached as Exhibit 6 dated November 10, 1997 is not rescinded, terminated or canceled in any manner by this Mutual Release or any covenant or provision hereof but shall remain in full force and effect, except that the FHS Released Persons (other than the subsequent owners of the property therein described) are released and discharged from all personal obligations and liabilities thereunder. Section 4. Release to Cover Personnel and Parent Companies and Subsidiary Companies of Corporate Releasees. 4.1 The City intends that this Release apply to all parent, subsidiary and affiliated companies of QualMed and FHS and such entities' respective subsidiaries, affiliates, predecessors, successors and assigns, and all of such entities' past, present and future officers, directors, agents, attorneys and employees and their respective heirs and legal representatives (the "FHS Released Persons "). 4.2 QualMed and FHS intend that this Release apply to the City and the City's respective predecessors, successors and assigns, and all of their past, present and future elected officials, officers, directors, agents, attorneys and employees and their respective heirs and legal representatives. Section 5. Rescission of Contracts. 2 5.1 This parties mutually agree that the following agreements entered into between the parties shall be and hereby are rescinded, terminated and canceled as of the date of this Agreement: Exhibit Number Date of Agreement Parties to Agreement 1 07 -22 -91 City and QualMed 2 10 -26 -92 City and QualMed 3 07 -08 -96 City and QualMed 4 10 -07 -97 City and Qualified 5.2 The parties mutually agree that the agreement attached as Exhibit 5 dated September 22, 1997 entered into by City and FHS is not rescinded, terminated or canceled in any manner by this Mutual Release or any covenant or provision hereof, but shall remain in full force and effect, except that the FHS Released Persons (other than the subsequent owners of the property therein described) are released and discharged from all personal obligations and liabilities thereunder. Section 6. Other Laws. 6.1 Except with respect to Ordinance 6276, neither this Mutual Release nor any covenant or provision hereof is intended to, nor shall it be construed to, release or discharge any FHS Released Persons from any claim, liability, action, proceeding, or penalty now, or in the future, existing under or by virtue of any ordinance, or general law enacted by the City in the exercise of its police or governmental powers or any violation thereof by any FHS Released Person. 6.2 The City covenants that to the best of its knowledge, it is unaware of any alleged violations of any City Ordinance or general law by QualMed or FHS other than as disclosed prior to Closing. Section 7. Miscellaneous Provisions. 7.1 This Mutual Release shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of law principles. 7.2 In the event of any litigation arising out of this Mutual Release, the court shall award to the prevailing party its costs and reasonable attorney fees. 7.3 This Mutual Release may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Mutual Release in Pueblo, Colorado on the day and year first above written. 3 ATTEST: City Clerk Approved as to form: City Attorney ATTEST: Name: Title: ATTEST: Name: Title: PUEBLO, a "municipal corporation President of the City Council QUALMED, INC. Name: B. Curtis Westen Title: Senior Vice President, General Counsel and Secretary FOUNDATION HEALTY SYSTEMS, INC. By Name: B. Curtis Westen Title: Senior Vice President, General Counsel and Secretary M MUTUAL RELEASE THIS MUTUAL RELEASE is entered into as of this day of day of July, 1999 between Pueblo, a Colorado municipal corporation ( "City ") and QualMed, a Delaware corporation ( "QualMed ") and Foundation Health Systems, Inc., a Delaware corporation ( "FHS "). RECITALS a. Disputes and differences have arisen between the City and QualMed and FHS with respect to the following agreements entered into between the parties: Exhibit Number Date of Aare m nt Parties to Agreement 1 07 -22 -91 City and QualMed 2 10 -26 -92 City and QualMed 3 07 -08 -96 City and QualMed 4 10 -07 -97 City and QualMed 5 09 -22 -97 City and FHS b. Copies of the aforesaid agreements are attached hereto and are incorporated herein by reference in order that all such claims, demands, actions, responsibilities, obligations and liabilities of the respective parties may be ascertained. C. Disputes and differences have arisen between the City and QualMed and FHS with respect to Ordinance 6276 which granted QualMed a temporary, conditional off - street parking variance from the 210 parking spaces required for the property commonly known as 226 W. 4th Street, Pueblo, Colorado. A copy of the aforesaid Ordinance, marked as Exhibit 6 is attached hereto and is incorporated herein by reference in order that all such claims, demands, actions, responsibilities, obligations and liabilities of the respective parties may be ascertained. C. The parties have agreed to execute this Mutual Release in settlement of such disputes and differences. Section 1. Mutual Release of Contract Claims. 1.1 In consideration of the mutual relinquishment of their respective legal rights with reference to the above - mentioned disputes and differences, in consideration of the execution of this Mutual Release and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, QualMed and FHS for themselves and for their assigns hereby release the City and its successors and assigns from all liability for claims and demands arising out of the agreements as described above. 1.2 In consideration of the mutual relinquishment of their respective legal rights with reference to the above - mentioned disputes and differences, in consideration of the execution of this Mutual Release and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its assigns expressly release QualMed and FHS and their predecessors, successors and assigns from all liability for claims and demands arising out of the agreements described above except as otherwise provided in Section 5.2 hereof. Section 2. Mutual General Release. 2.1 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, QualMed and FHS and their successors and assigns hereby release and forever discharge City, its successors and assigns, of and from any and every claim, demand, action or right of action, of whatever kind or nature, either in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. 2.2 In consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City and its successors and assigns hereby release and forever discharge QualMed and FHS and their predecessors, successors and assigns, of and from any and every claim, demand, action or right of action, of whatever kind or nature, known or unknown, either in law or in equity arising from or by reason of the prior business dealings between the City and QualMed and FHS. Section 3. Release with Respect to Ordinance 6276. 3.1 The parties mutually agree that the Ordinance attached as Exhibit 6 dated November 10, 1997 is not rescinded, terminated or canceled in any manner by this Mutual Release or any covenant or provision hereof but shall remain in full force and effect, except that the FHS Released Persons (other than the subsequent owners of the property therein described) are released and discharged from all personal obligations and liabilities thereunder. Section 4. Release to Cover Personnel and Parent Companies and Subsidiary Companies of Corporate Releasees. 4.1 The City intends that this Release apply to all parent, subsidiary and affiliated companies of QualMed and FHS and such entities' respective subsidiaries, affiliates, predecessors, successors and assigns, and all of such entities' past, present and future officers, directors, agents, attorneys and employees and their respective heirs and legal representatives (the "FHS Released Persons "). 4.2 QualMed and FHS intend that this Release apply to the City and the City's respective predecessors, successors and assigns, and all of their past, present and future elected officials, officers, directors, agents, attorneys and employees and their respective heirs and legal representatives. Section 5. Rescission of Contracts. E 5.1 This parties mutually agree that the following agreements entered into between the parties shall be and hereby are rescinded, terminated and canceled as of the date of this Agreement: Exhibit Number Date of Agreement Parties to Agreement 1 07 -22 -91 City and QualMed 2 10 -26 -92 City and QualMed 3 07 -08 -96 City and QualMed 4 10 -07 -97 City and Qualified 5.2 The parties mutually agree that the agreement attached as Exhibit 5 dated September 22, 1997 entered into by City and FHS is not rescinded, terminated or canceled in any manner by this Mutual Release or any covenant or provision hereof, but shall remain in full force and effect, except that the FHS Released Persons (other than the subsequent owners of the property therein described) are released and discharged from all personal obligations and liabilities thereunder. Section 6. Other Laws. 6.1 Except with respect to Ordinance 6276, neither this Mutual Release nor any covenant or provision hereof is intended to, nor shall it be construed to, release or discharge any FHS Released Persons from any claim, liability, action, proceeding, or penalty now, or in the future, existing under or by virtue of any ordinance, or general law enacted by the City in the exercise of its police or governmental powers or any violation thereof by any FHS Released Person. 6.2 The City covenants that to the best of its knowledge, it is unaware of any alleged violations of any City Ordinance or general law by QualMed or FHS other than as disclosed prior to Closing. Section 7. Miscellaneous Provisions. 7.1 This Mutual Release shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of law principles. 7.2 In the event of any litigation arising out of this Mutual Release, the court shall award to the prevailing parry its costs and reasonable attorney fees. 7.3 This Mutual Release may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Mutual Release in Pueblo, Colorado on the day and year first above written. 3 ATTEST: City Clerk Approved as to form: City Attorney ATTEST: Name: Title: ATTEST: Name Title: PUEBLO, a municipal corporation President of the City Council QUALMED, INC. By Name: B. Curtis Westen Title: Senior Vice President, General Counsel and Secretary FOUNDATION HEALTY SYSTEMS, INC. Name: B. Curtis Westen Title: Senior Vice President, General Counsel and Secretary 12