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HomeMy WebLinkAbout10790RESOLUTION NO. 10790 A RESOLUTION APPROVING AMENDMENT NO. 1 BETWEEN THE CITY OF PUEBLO AND PEDCO FOUNDATION, INC. RELATING TO THE DOSS AVIATION, INC. JOB CREATING CAPITAL IMPROVEMENT PROJECT ( "PROJECT'), AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME, TRANSFERRING $1,940,000.00 FROM THE 1992 -2006 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND FOR THE PROJECT, REPEALING SECTION 6 OF RESOLUTION NO. 10740, AND ACCEPTING LEASE AMENDMENT NO. 1 TO THE LEASE BETWEEN PEDCO FOUNDATION, INC. AND DOSS AVIATION, INC. WHEREAS, by Resolution No. 10740 and Agreement dated May 22, 2006 between the City and PEDCO Foundation, Inc. ( "Foundation Agreement') the City Council approved the Doss Aviation, Inc. job creating capital improvement project and other related documents ( "Doss Aviation Project'), and WHEREAS, due to increased construction costs and delays occasioned in awarding construction contacts, the cost of the Doss Aviation Project has increased, and WHEREAS, at the request and upon the recommendation of PEDCO and its representatives, City is willing to make available an additional $1,940,000.00 for the Doss Aviation Project. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 Amendment No. 1 dated as of July 24, 2006 between the City and PEDCO Foundation, Inc. ( "Amendment'), a copy of which is attached hereto, having been approved by the City Attorney as to form, is hereby approved. The President of the City Council is authorized to execute the Amendment in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 2 Additional funds in the amount of $1,940,000.00 are hereby authorized to be transferred, expended and made available to PEDCO Foundation, Inc. out of the 1992 -2006 Sales and Use Tax Capital Improvement Projects Fund for the sole purpose of the Doss Aviation Project. The funds hereby authorized to be transferred and expended shall be released and paid by the Director of Finance to or for the benefit of PEDCO Foundation, Inc. after receipt by the Director of Finance of written requests for payment required by paragraph 3(b) of the Foundation Agreement. SECTION 3 Section 6 of Resolution No. 10740 relating to the transfer and reservation of $2 million in the 1992 -2006 Sales and Use Tax Capital Improvement Projects fund as and for capitalized and prepaid maintenance, operating and staffing expenses associated with the Pueblo Airport fire station ( "Pueblo Airport Fire Station Expenses ") is hereby repealed. The City Manager is directed to include in each fiscal year budget commencing with the budget for fiscal year 2007 and for ten (10) subsequent fiscal year budgets thereafter the sum of $200,000.00 for Pueblo Airport Fire Station Expenses as a priority expenditure to be paid to the City out of the 1992 -2006 Sales and Use Tax Capital Improvement Projects Fund and any amendment or extension thereof. SECTION 4 Lease Amendment No. 1 to the May 22, 2006 Lease between PEDCO Foundation, Inc. as Lessor and Doss Aviation, Inc. as Lessee in substantially the same form and content as distributed to City Council at this meeting is hereby accepted. SECTION 5 This Resolution shall become effective upon final approval and passage. BY Barbara Vidmar Councilperson APPROVED: President of City Council ATTESTED BY: CITY CLERK INTRODUCED July 24, 2006 0 Background Paper for Proposed RESOLUTION D � 1 o AGENDA ITEM # 4 1 DATE: July 24, 2006 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING AMENDMENT NO. 1 BETWEEN THE CITY OF PUEBLO AND PEDCO FOUNDATION, INC. RELATING TO THE DOSS AVIATION, INC. JOB CREATING CAPITAL IMPROVEMENT PROJECT ( "PROJECT "), AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME, TRANSFERRING $1,940,000.00 FROM THE 1992 -2006 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND FOR THE PROJECT, REPEALING SECTION 6 OF RESOLUTION NO. 10740, AND ACCEPTING LEASE AMENDMENT NO. 1 TO THE LEASE BETWEEN PEDCO FOUNDATION, INC. AND DOSS AVIATION, INC. ISSUE Should the City Council authorize an additional $1,940,000 for the Doss Aviation Project? PEDCO recommends approval of the additional funds. At the request and recommendation of PEDCO and its representatives, the City Council by Resolution No. 10740 and Agreement dated May 22, 2006 between the City and PEDCO Foundation approved the Doss Aviation, Inc. job creating capital improvement project ( "Doss Aviation Project ") and authorized the transfer of $11,150,000 out of the one -half cent sales and use tax fund for the Doss Aviation Project for the following purposes: (a) $8,730,000 construction costs, and (b) $2,420,000 employment economic incentive. Due to increased construction costs and delays occasioned in awarding construction costs, the construction costforthe Doss Aviation Project has increased by approximately $3,525,891. To meet the increased construction costs, PEDCO and its representatives have requested and recommend that the City authorize the transfer of an additional $1,940,000 from the one -half cent sales and use tax fund for the Doss Aviation Project. In order to makeup the balance of construction cost increases Doss Aviation will contribute $1,546,000 for the project construction. The additional $1,940,000 as well as the original $8,730,000 of City funds to be used for the construction of the Doss Aviation Project plus 3% interest are to be repaid to the City as part of the 132 monthly $124,830 rent payable by Doss Aviation under its lease with PEDCO Foundation for the property and facilities. If Doss Aviation exercises its option under the lease to purchase the property and facilities, the purchase price is the greater of $14,020,000 or the appraised value. The $14,020,000 represents $10,670,000 City Funds used for the construction of the project and $3,350,000 PEDCO Foundation funds for the purchase of the property. Doss Aviation will receive a credit against the purchase price in an amount equal to 85% of rent paid under the lease and the greater of $1,546,000 or 9.932% of the appraised value of the Project. However, in no event will the purchase price be less than $14,020,000 minus rent credits. This will assure that in the event of purchase by Doss Aviation, the City and PEDCO will receive all funds used in the purchase and construction of the project plus 15% of the amount of rent paid. If Doss Aviation purchases the property it will secure its repayment obligation and performance of its employment commitment agreement by a first deed of trust on the property and project. FINANCIAL IMPACT See Background. -2- AMENDMENT NO. 1 THIS AMENDMENT NO. 1 ( "Amendment ") entered into as of July 24, 2006 by and between the City of Pueblo, a Municipal Corporation ( "City ") and PEDCO Foundation, Inc., a Colorado nonprofit corporation ( "Foundation "), WITNESSETH: WHEREAS, City and Foundation entered into an Agreement dated as of May 22, 2002 relating to the Doss Aviation Inc. project ( "Agreement "), and WHEREAS, City and Foundation are desirous of amending certain provisions of the Agreement. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, City and Foundation agree as follows: 1. Paragraph 2 of the Agreement is amended to read as follows: 2. Cit, Fes City will make available and advance to Foundation, as needed, an amount not to exceed $13,090,000,00 from the City's 1992 -2006 Sales and Use Tax Capital Improvement Fund (the "City Funds ") to be used and expended solely for the following purposes: (a) remodeling the Building to meet and conform with the requirements of the U.S. Air Force Initial Flight Screening Program No. FA 3002 -04 -R -009, including, without limitation, training facilities, physical and personal security, lodging, dining and physical fitness facilities to house and screen between 1200 -1700 Air Force officer students per year and office space for a permanent -party military cadre that will oversee the students while they are in residence at the Building (the "Building Remodeling "). (b) site preparation, drainage, and construction of one (1) approximately 19,600 square foot hangar (the "Hangar ") and ramp on the Land to park, store and repair aircraft used in training students assigned to the Initial Flight Screening Program, construction of a new taxiway from the Easterly boundary of the Land to the existing concrete pad connected to Runway 35, Pueblo Memorial Airport, and necessary and required security fences (collectively the "Hangar Construction "). (c) architect and engineering fees and geotechnical material and testing. (d) Foundation acknowledges and agrees that the $13,090,000.00 City Funds includes the $2,420,000.00 to be advanced to Doss Aviation, Inc. by City under separate agreement between City and Doss Aviation, Inc. 2. Subparagraphs (d), (e), (f), (g) and (h) of Paragraph 3 of the Agreement are amended to read as follows: (d) $8,730,000.00 of City Funds to be advanced by City to Foundation hereunder plus interest at the rate of three percent (3 %) per annum shall be evidenced by Foundation's first promissory note ( "First Promissory Note "). The First Promissory Note and Foundations' obligations hereunder shall be secured by a first deed of trust or mortgage lien on the Property superior to Foundation's Deed of Trust hereinafter described ( "First Deed of Trust "), both in form and content approved by the City Attorney of City. In addition, $1,940,000.00 of City Funds to be advanced to Foundation hereunder plus interest at three percent (3 %) per annum shall be evidenced by Foundation's second promissory note ( "Second Promissory Note "). The Second Promissory Note shall be secured by a deed of trust lien on the Property subordinate only to the First Deed of Trust ( "Second Deed of Trust "), both in form and content approved by the City Attorney of City. The First Promissory Note and First Deed of Trust and Second Promissory Note and Second Deed of Trust shall provide that Foundation's obligation in respect to the indebtedness secured thereby shall be limited solely to the value of the Property encumbered thereby, without right to any deficiency claim or judgment against Foundation. (e) The rent and option to purchase under the Lease shall be structured so that City will be paid $10,670,000.00 ($13,090,000.00 less $2,420,000.00 employment incentive) plus three percent (3 %) interest per annum in one hundred thirty-two (132) equal consecutive monthly payments out of the monthly rent, or if purchased, the balance thereof will be paid out of the purchase price paid by Doss Aviation, Inc. for the Property (collectively the "City's Share "). All rent and other payments received by Foundation under the Lease representing City's Share shall be held in trust by Foundation for the benefit of the City and, immediately after receipt thereof by Foundation, Foundation shall deliver and, pay City's Share of the rent and other payments to City's Director of Finance ( "Director ") for deposit in the 1992 -2006 Sales and Use Tax Capital Improvement Project Fund. All City's Share of such rent or other payments received by City shall be applied by the Director as follows: First, to interest on the Foundation's First Promissory Note and Second Promissory Note, Second, in reduction of principal of Foundation's Second Promissory Note, and Third, in reduction of principal of Foundations First Promissory Note. (f) In the event Doss Aviation, Inc. purchases the Property pursuant to any option under the Lease, and the purchase price paid by Doss Aviation, Inc. is more than the then balance of principal and interest on the First Promissory Note and Second Promissory Note, plus the then balance of the Purchase Price plus accrued interest, less any credits against the purchase price granted to Doss Aviation, Inc. under the Lease ( "Excess Amount "), eighty percent (80 %) of the Excess Amount shall paid to City at closing of the purchase of the Property by Doss Aviation, Inc. (g) If Doss Aviation, Inc. performs its obligations under the Lease including payment of rent thereunder during the original eleven (11) year term of the Lease but does not purchase the Property pursuant to any option under the Lease, immediately upon -2- the expiration of the original term of the Lease, Foundation shall convey to City marketable fee simple title in and to an undivided eighty percent (80 %) interest in the Property free of liens and encumbrances. (h) If the Lease is extended by Doss Aviation, Inc. beyond the original eleven (11) year term of the Lease, eighty percent (80 %) of the rent payable during the extended term(s) shall be paid to City immediately upon receipt thereof by Foundation. 3. All other terms, covenants and provisions of the Agreement are by reference incorporated herein as if set forth herein in full. The Agreement as modified by this Amendment No. 1 shall remain in full force and effect inuring to the benefit of and binding upon City and Foundation and their respective successors. Executed as of the day and year first above written. [SEAL] Attest: RJt City C k CITY OF PUEBLO By President of the City Council PEDCO FOUNDATION, INC. Attest: Secretary Approved as to form: City Attorne By puw�lo Chairman -3- PROMISSORY NOTE US $1,940,000 00 Pueblo, Colorado July 24, 2006 FOR VALUE RECEIVED, the undersigned, PEDCO Foundation, Inc , a Colorado nonprofit corporation, 301 N Main Street, Pueblo, Colorado, 81003 (Borrower), promises to pay to the City of Pueblo, a municipal corporation, 1 City Hall Place, Pueblo, Colorado, 81003, or order (Note Holder) the principal sum of $1,940,000 00 U S Dollars, with interest on the unpaid principal balance from date hereof, until paid, at the rate of three percent (3 %) per annum. Principal and interest shall be payable at 1 City Hall Place, Pueblo, Colorado, 81003, Attention. Director of Finance, or such other place as Note Holder may designate, in one hundred thirty -two (132) consecutive monthly payments of $17,273 00 on the first day of each month hereafter, commencing January 1, 2007 Such monthly payments of principal and interest shall continue until the entire indebtedness evidenced by this Note is fully paid, provided, if not sooner paid or accelerated as herein provided, the entire principal amount outstanding and accrued interest thereon, shall be due and payable on January 1, 2018 Pavments received for application to this Note shall be applied first to the payment of accrued interest and the balance applied in reduction of the principal amount hereof. Borrower agrees to pay and Note Holder shall be entitled to collect all reasonable costs and expense of collection, including but not limited to attorney fees. If any payment required by this Note is not paid when due, the entire principal amount outstanding and accrued interest thereon shall at once become due and payable at the option of Note Holder without notice, notice being hereby expressly waived. Borrower may prepay the principal amount outstanding under this Note, in whole or in part, at any time without penalty Presentment, notice of dishonor, and protest are hereby waived by Borrower and all other makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of Borrower and all other makers, sureties, guarantors and endorsers, and their respective heirs, personal representatives, successors and assigns. Borrower agrees to remain and continue to be bound for the payment of the principal, interest and other sums provided for by the terms of this Note notwithstanding any assignment of this Note by Note Holder, any extension or extensions of the time of or for the payment of said principal, interest or other sums due and payable hereunder, or any change or changes in the amount or amounts to be paid under and by virtue of the obligation to pay provided for in this Note, or any change or changes by way of release or surrender of any collateral held as security for the payment of this Note, or any change or changes by way of release of, agreement not to sue or suspension of rights against any other person. Borrower hereby waives all and every kind of notice of such assignment, extension or extensions, change or changes, release, surrender, agreement and suspension and agrees that the same maybe made without the Joinder or approval of Borrower No delay or omission on the part of Note Holder in exercising any right hereunder or under the Deed of Trust shall operate as a waiver of such right. Any notice to Borrower provided for in this Note shall be in writing and shall be given and be effective upon (1) delivery to Borrower or (2) mailing such notice by certified mail, addressed to Borrower at Borrower's address stated in the first paragraph of this Note, or to such other address as Borrower may designate by notice to Note Holder Any notice to Note Holder shall be in writing and shall be given and be effective upon (1) delivery to Note Holder or (2) by mailing such notice by certified mail, to Note Holder at the address stated in the first paragraph of this Note, or to such other address as Note Holder may designate by notice to Borrower The indebtedness evidenced by this Note is secured by a Deed of Trust of even date and until released said Deed of Trust contains additional rights of the Note Holder Such rights may cause acceleration of the indebtedness evidenced by this Note Reference is made to said Deed of Trust for such additional terms Said Deed of Trust grants rights to the real property located in the County of Pueblo, State of Colorado described in Exhibit "A" attached hereto and incorporated herein as if set out herein in full. Notwithstanding anything contained in this Note to the contrary, Borrower's obligation in respect to the indebtedness shall be limited wholly and solely to the value of the real property described in the Deed of Trust, without any right in Note Holder to any deficiency claim or judgment. This Note shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of laws principles. Venue for any action under this Note shall be Pueblo County, Colorado As used herein, the singular shall include the plural [ Corporate Seal ] / I Attest. � _,•`� Name BI 1 Cr, Title Secretary PE O Foundation, Inc. By A�v�n� k Nam es A. n udle v Title ` Chairman -2- EXHIBIT "A" Parcel B, Lot Line Rearrangement No 2005 -005, a vacation and replat of Lots 23 and 24, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, State of Colorado, according to the plat thereof filed for record June 5, 2006 at Reception No 1678289 in the office of the Pueblo County Clerk and Recorder, Street Address No 1 William White Boulevard, Pueblo, Colorado, 81001 t ti Illlll III VIII' ®III I IIII I'll III II III VIII IIII IIII 0 Page I of 2 7/21/2006 04 Chris C Munoz PuebloCtyClk &Rec TD R 11 00 D 0 00 DEED OF TRUST 14P THIS DEED OF 'TRUST, Dated July 24, 2 0 0 6 between PEDCO Foundation, Inc , a corporation organized and existing under the laws of the State of �ogO orge"in whose address is 301 N Main Street, Pueblo Colorado, 81003 *County of Pueblo and State of Colorado and the PUBLIC TRUSTEE of the County or City and County in which the property described below is situated, in the State of Colorado Witness: The grantor, to secure a promissory note or notes, hereinafter referred to in the singular, dated for the total principal sum of $1 , 9 4 0, 0 0 0 0 0 dollars payable to the order of City of Pueblo, a municipal corporation the beneficiary herein whose address is 1 City Hall Place, Pueblo, Colorado, 81003 after the date thereof, with interest thereon from the date thereof at the rate of three (3) percent per annum principal and interest payable in 132 consecutive monthly installments of $17,273 00 commencing January 1, 2007, does hereby grant and convey unto said Public Trustee the kWXba[CdcxPbxckproperty situate in the County of Pueblo State of Colorado,Xo described in Exhibit "A" attached hereto and incorporated herein as if set forth herein in full also known by street and number as: No 1 William White Boulevard, Pueblo, CO $1001 assessor's schedule or parcel number TO HAVE AND TO HOLD the same together with all appurtenances, in trust nevertheless, that in case of default in the payment of said note or any part thereof or interest thereon, or in the performance of any covenants hereinafter set forth, then upon the beneficiary (note holder) filing notice of election and demand for sale, said Public Trustee after advertising notice of said sale weekly, for not less than four weeks in some newspaper of general circulation in said county, shall sell said property in the manner provided by law in effect at the time of filing said notice and demand, at public auction for cash, at any proper place designated in the notice of sale. Out of the proceeds of said sale said Trustee shall retain or pay first all fees, charges and costs and all moneys advanced for taxes, insurance and assessments, oron any prior encumbrance, with interest thereon, and pay the principal and interest due on said note rendering the overplus (if any) unto the grantor and after the expiration of the time of redemption, said Trustee shall execute and deliver to the purchaser a deed to the property sold. The beneficiary may purchase said property or any part thereof at such sale. The grantor covenants that at the time of delivery of these presents, he is seized of said property in fee simple, and that said property is free of encumbrances, except easements, rights of way, conditions, restrictions and covenants of record The grantor also covenants that he will keep all buildings insured with a company approved by the beneficiary for fire and extended coverage in an amount equal to the unpaid balance of said note with loss payable to the beneficiary, will deliver a copy of the policy to the beneficiary and will pay all taxes and assessments against said property and amounts due on prior encumbrances. If grantor shall fail to pay insurance premiums, taxes or amounts due on prior encumbrance, the beneficiary may P the same and all amounts shall become additional indebtedness due hereunder; and in case of foreclosure, he will pay an attorney s fee of a reasonable amount Should the beneficiary hereunder be made a party to any action affecting this deed of trust or the title to said property, the grantor agrees that all court costs and a reasonable attorney s fee paid by the beneficiary shall become additional indebtedness due hereunder and the grantor does hereby release and waive all claims in said property as a homestead exemption or other exemption now or hereafter provided by law. If all or any part of the property or an interest therein is sold or transferred by the grantor without beneficiary's prior written consent, excluding (a) the creation of a lien or encumbrance subordinate to this Deed of Trust, (b) the creation of a purchase money security interest for household appliances, (c) a transfer by devise, descent or by operation of law upon the death of a joint tenant or (d) the grant of any leasehold interest of three years or less not containing an option to purchase, beneficiary may, at beneficiary's option, declare all the sums secured by this Deed of Trust to be immediately due and payable. Beneficiary shall have waived such option to accelerate if, prior to the sale or transfer, beneficiary and the person to whom the property is to be sold or transferred reach agreement in writing that the credit of such person is satisfactory to beneficiary and that the interest payable on the sums secured by this Deed of Trust shall he at such rate as beneficiary shall request. It is agreed that in case of default in payment of said principal or interest or a breach of any of the covenants herein, then said principal sum hereby secured and interest thereon may at the option of the beneficiary become due and payable at once, anything in said note to the contrary notwithstanding and possession of said property will thereupon be delivered to the beneficiary, and on failure to deliver such possession the beneficiary shall be entitled to a receiver for said property who may be appointed by any court of competent jursidict'ron. Whenever used herein the singular number shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. All of the covenants herein shall be binding upon the respective heirs, personal representatives, successors and assigns of the parties hereto Executed the day and year first above written. Attest Q� 6ecre Name. STATE OF COLORADO Countyof Pueblo PEDCQ Foundation, Inc �oww o (' `� U.,A Titl -• Chni r•rran 1 ss The foregoing instrument was acknowledged before me this 18th day of July, 2006 is b James A Dudley as Chairman and Bill Croley as,, a �taV'y of PEDCO Foundation, Inc , a Colorado nonprof [V u91�w 2/1407 Witness my hand and official seal 3' • . p U * 1- Vnver, inset it3'apd' UH�% " ' 4 • wrltl :.dress of p0n&VthiNewly Created Legal Description (§ 38- 35- 106.5, C.R.S.) No. 923C.'RReyj DEED OF TRUST (Public Trustee) with Due on Sale Clause Notary Public I t a 0 Bradford Publishing, 1743 Wazee St. Denver, CO 80202 — (303) 292 -2500 — 8 -98 1585351 Page 2 of 2 07/21/2006 04 14P Chris C Munoz PuebloCtyClk&Rec TD R 11 00 D 0 00 EXHIBIT "A" Parcel B, Lot Line Rearrangement, No 2005 -005, a vacation and replat of Lots 23 and 24, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, State of Colorado, according to the plat thereof filed for record June 5, 2006 at Reception No 1678289 in the office of the Pueblo County Clerk and Recorder, Street Address No 1 William White Boulevard, Pueblo, Colorado, 81001 LEASE AMENDMENT NO 1 THIS LEASE AMENDMENT NO 1 ( "Amendment ") entered into as of July 24, 2006 by and between PEDCO Foundation, a Colorado corporation ( "Lessor ") and Doss Aviation, Inc., a Texas corporation (the "Lessee "), WITNESSETH. WHEREAS, Lessor and Lessee entered into a Lease dated as of May 22, 2006 ( "Lease "), and WHEREAS, Lessor and Lessee are desirous of amending the Lease. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, Lessor and Lessee agree as follows Article 2.01 and 2.02 of the Lease are amended to read as follows. 2.01 Lessor shall cause the Building remodeling, Hangar Construction, fencing and other improvements to be completed as herein provided (the "Remodeling ") and shall pay the actual cost of Remodeling, including architectural and engineering fees up to but not to exceed $13,090,000 00 (the "Maximum Construction Costs "). The Maximum Construction Costs consist of the $13,090,000 00 to be advanced by City to be used for Remodeling pursuant to an Agreement between Lessor and City of Pueblo (the "City ") dated as of May 22, 2006 and modified by Amendment No. 1 dated July 24, 2006 (collectively, the "Lessor's City Agreement "), and the separate agreement between the City of Pueblo and Lessee dated May 22, 2006 A copy of the Agreement between Lessee and the City of Pueblo is attached to the Lease as Exhibit "A" and incorporated herein (the "City Agreement "). Capitalized terms used in this Amendment shall have the same meaning as those terms are used in the City Agreement and Lessor's City Agreement or otherwise defined herein. 2.02 All costs and expenses of Remodeling in excess of the Maximum Construction Costs ( "Excess Construction Costs ") shall be the sole responsibility of Lessee and shall be paid by Lessee to Lessor in cash or certified funds within five (5) business days after such Excess Construction Costs are incurred, except that, Lessee shall deposit with Lessor the sum of $1,546,000 00 in cash or certified funds ( "Lessee Funds ") within five (5) business days after written request therefor is given by Lessor to Lessee; provided, however, that such request shall not be made by Lessor until at least 80% of the Maximum Construction Costs have been committed or expended by Lessor for the Remodeling. Lessor and Lessee acknowledge that the Lessee Funds constitute Excess Construction Costs necessary and required for the Remodeling. 2. Article 4 01 of the Lease is amended to read as follows 401 Lessee shall pay rent in the total amount of $16,477,660 00, payable, in advance and without notice, in one hundred thirty -two (132) equal monthly payments of $124,830 00 commencing on the Overall Commencement Date and continuing on the same day of each consecutive month thereafter during the eleven (11) year term of this Lease. For the period beginning on the Phase One Commencement Date or the date Phase One is ready for occupancy by Lessee, whichever occurs later, and ending on the Overall Commencement Date, Lessee shall pay rent in the amount of $14,668 per month ($0.60 per square foot per month) based on 24,448 square feet. City's share of rent and other payments received by Lessor under this Lease shall be held in trust for the benefit of City, and immediately after receipt thereof shall be paid to City as provided in the Lessor's City Agreement. Articles 17 04 and 17 05 of the Lease are amended to read as follows: 17 04 The purchase price shall be the greater of (a) an amount equal to the appraised value of the Leased Premises on or not more than ninety (90) days prior to the Designated Purchase Date as determined by an independent appraiser qualified in appraising commercial real property who is a Colorado certified general appraiser and Member Appraisal Institute (MAI), selected by mutual agreement of Lessor, Lessee and City of Pueblo, or (b) $14,020,000.00 If Lessor, Lessee, and City of Pueblo are unable to mutually agree as to such appraiser within twenty (20) days after delivery of Lessee's notice of exercise of option, Lessee may, at its cost and expense (including attorney fees), petition the District Court, County of Pueblo, State of Colorado, to select after notice and hearing an appraiser from alist of three (3) appraisers consisting of the appraisers designated by Lessor, Lessee and City of Pueblo. All fees and costs of the appraiser selected by mutual agreement or by the Court shall be paid by Lessee. After receipt of the appraisal made by the selected appraiser, Lessee may decline to purchase the Leased Premises upon written notice given to Lessor and City of Pueblo prior to the Designated Purchase Date. Such declination shall not prevent Lessee from purchasing the Leased Premises in accordance with the provisions of this Article 17 and Article 18 on any subsequent anniversary of the Overall Commencement Date. 17 05 Subject to the limitations set forth in this Article 17 05, Lessee shall be granted a credit against the purchase price as follows: (a) an amount equal to eighty -five percent (85 %) of the rental payments made by Lessee pursuant to Article 4 01 hereof during the term of this Lease up to the Designated Purchase Date ( "Rent Credits "), and (b) the greater of (a) $1,546,000 00, or (b) 9.932% of the appraised value of the Leased Premises determined in accordance with the appraisal method set forth in Article 17 04 above; provided, however, that in no event shall the purchase price by less than $14,020,000 00 2 minus Rent Credits. 4 All other terms, covenants and provisions of the Lease are by reference incorporated herein as if set forth herein in full. The Lease as modified by this Amendment No 1 shall remain in full force and effect inuring to the benefit of and binding upon Lessor and lessee and their respective successors and approved assigns. Executed as of the day and year first written above. LESSEE DOSS AVIATION, INC By a- Frank G Hunter President/CEO STATE OF COLORADO ) ss. COUNTY OF PUEBLO ) LESSOR EDCO FOUNDATION O " 1 6 W k� es A. Dudley V tChairman The foregoing instrument was acknowledged before me this 18'"' day of July, 2006 by James A. Dudley as Chairman of PEDCO Foundation, Inc., a Colorado nonprofit corporation. Witness my hand and official seal. My commission expires: 2- 1�Yl'o? [SEAL] No tdy Public STATE OF COLORADO ) ) ss. COUNTY OF EL PASO ) The foregoing instrument was acknowledged before me this 1 6 4 - day of July, 2006 by Frank G Hunter as President/CEO of Doss Aviation, Inc., a Texas Corporation. Witness my hand and official seal. My commission expires. [SEAL] tary Public 4