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HomeMy WebLinkAbout06023ORDINANCE NO. 623— AN ORDINANCE CONCERNING THE REFINANCING OF THE CERTIFICATES OF PARTICIPATION WHICH FINANCED THE WALKING STICK GOLF COURSE; THE AUTHORIZATION AND APPROVAL OF A GROUND LEASE AGREEMENT, A LEASE PURCHASE AND SUBLEASE AGREEMENT, A MORTGAGE AND INDENTURE OF TRUST, A CERTIFICATE PURCHASE AG REEMENT , AN ESCROW AGREEMENT, A FINANCIAL GUARANTY AGREEMENT AND AN OFFICIAL STATEMENT; AND THE AUTHORIZATION AND APPROVAL OF OTHER RELATED DOCUMENTS AND ACTIONS IN CONNECTION WITH THE ISSUANCE OF CERTAIN SERIES 1995 REFUNDING CERTIFICATES OF PARTICIPATION IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $4,600,000. WHEREAS, the City of Pueblo, Colorado (the "City ") has been duly organized and is validly existing as a home rule city under the Colorado Constitution and the home rule charter of the City (the "Charter "); and WHEREAS, the City Council of the City (the "City Council ") has previously authorized and directed the creation of the Pueblo Municipal Property Corporation (the" Corporation"), a nonprofit corporation and an instrumentality of the City for certain limited purposes, under the provisions of the Colorado Nonprofit Corporation Act, articles 20 through 29 of title 7, Colorado Revised Statutes (the "Act "); and WHEREAS, pursuant to the Charter and part 8 of article 15 of title 31, Colorado Revised Statutes, the City is authorized to enter into one or more leases or lease- purchase agreements for land, buildings, equipment and other property for governmental or proprietary purposes; and WHEREAS, the City Council has determined, and hereby determines, that the City is in need of the golf course facility (the "Golf Course "), which has been constructed on a certain parcel of land more particularly described in Exhibit A to the Lease (as defined below) (the "Site "), now owned by the City; and WHEREAS, the Lessor financed the Golf Course and related Equipment (as defined herein) through the issuance of certificates of participation (the "Refunded Certificates ") and leased the Golf Course and the Equipment (collectively, the "Project ") to the City pursuant to a lease purchase and sublease agreement dated as of January 1, 1989, between the Lessor and the City; and WHEREAS, to facilitate the refunding of the Refunded Certificates and the refinancing of the Project, the City and the Lessor shall, contemporaneously herewith, enter into that certain 02/83563.3 Ground Lease Agreement, dated as of December 1, 1995 (the "Ground Lease "), pursuant to which the City shall lease the Site to the Lessor; and WHEREAS, the Lessor shall sublease the Site and lease the Project back to the City pursuant to a Golf Course Lease Purchase and Sublease Agreement, dated as of December 1, 1995 (the "Lease "); and WHEREAS, pursuant to a certain Mortgage and Indenture of Trust of even date herewith (the "Indenture "), between the Lessor and Colorado National Bank, a national banking association, as trustee (the "Trustee "), the Lessor will assign to the Trustee all of its right, title and interest in, to and under the Lease (except the rights of the Lessor under Sections 13.03 and 14.06 of the Lease) and certain other rights and interests; and WHEREAS, there will be issued pursuant to the Indenture Refunding Certificates of Participation in an aggregate principal amount not to exceed $4,600,000 (the "Series 1995 Certificates ") evidencing assignments of proportionate undivided interests in rights to receive certain payments under this Lease; and WHEREAS, the payment of the principal of and interest on the Series 1995 Certificates when due will be insured by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 1995 Certificates by MBIA Insurance Corporation; and WHEREAS, a portion of the proceeds from the sale of the Series 1995 Certificates will be disbursed by the Trustee at the direction of the City, for the refunding of the Refunded Certificates and the other purposes set forth herein; and WHEREAS, there has been presented to this meeting of the City Council copies of the following documents or instruments (a) the Ground Lease, (b) the Lease, (c) the Indenture, (d) the Series 1995 Certificates, (e) a Certificate Purchase Agreement (the "Certificate Purchase Agreement "), pursuant to which the Series 1995 Certificates shall be sold by the City to Lewis, De Rozario & Co. Incorporated (the "Underwriter "), (f) an Escrow Agreement, dated as of December 1, 1995 (the "Escrow Agreement "), among the City, the Corporation and Colorado National Bank, (g) a Financial Guaranty Agreement, dated as of December 1, 1995 (the "Financial Guaranty Agreement "), between the City and MBIA Insurance Corporation, and (g) the form of a Official Statement (the "Official Statement "), a preliminary draft of which will be distributed to potential investors in connection with the offering of the Series 1995 Certificates and a final draft of which will be executed and distributed in connection with the sale of the Series 1995 Certificates; and WHEREAS, pursuant to certain provisions of the Lease and the Indenture, the Corporation will deposit in escrow with the Trustee a deed and bill of sale for the Project from the Corporation to the City (collectively, the "escrow deed "); and 02/83563.3 2 WHEREAS, the City Council is desirous of authorizing, approving and directing the execution and delivery of the Ground Lease, the Lease and the Certificate Purchase Agreement by the City and the execution and delivery of the Ground Lease, the Lease, the Indenture, the Escrow Agreement, the Financial Guaranty Agreement and the Certificate Purchase Agreement by the Corporation, all in substantially the forms presented to of the City Council, and is further desirous of authorizing and approving the issuance of the Series 1995 Certificates pursuant to the Indenture, ratifying the distribution of the preliminary Official Statement, authorizing and approving the distribution of the final Official Statement, and authorizing and approving the transactions contemplated thereby, all for the purposes set forth in this Ordinance. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO: Section 1. Ratification of Prior Actions. All actions heretofore taken (not inconsistent with the provisions of this Ordinance) by (a) the City Council or the officers or employees of the City, or (b) the Board of Directors of the Corporation (the "Board ") or the officers or employees of the Corporation, which actions have been directed toward the refinancing of the Refunded Certificates, the leasing of the Site by the City to the Corporation, or the leasing of the Project and subleasing of the Site by the Corporation to the City, are hereby ratified, approved and confirmed. The City Council hereby specifically ratifies, approves and confums the distribution by the Underwriter of the preliminary Official Statement to prospective purchasers of the Series 1995 Certificates. Section 2. Funding and Determination. The City Council hereby finds and determines, pursuant to the provisions of the Charter, that (a) refinancing the Refunded Certificates, the proceeds of which were used for constructing, acquiring, improving and equipping the Project, (b) leasing the Site to the Corporation, and (c) leasing the Project and subleasing the Site from the Corporation, all under the terms and provisions set forth in the Ground Lease and the Lease, respectively, are necessary, convenient and in furtherance of the governmental purposes of the City and are in the best interests of the City; and the City Council hereby authorizes refinancing the Refunded Certificates and the leasing and subleasing of the Site the Project under the terms and provisions of the Lease. Section 3. Execution and Delivery of the Ground Lease by the City. The Ground Lease, in substantially the form presented to this meeting of the City Council and with substantially the same content, is in all respects approved, authorized and confirmed, and the President or Vice President of the City Council is authorized and directed to affix his or her signature to the Ground Lease 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 or deletions therein as the President or Vice President of the City Council and the City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Ground Lease presented to this meeting. 02/83563.3 3 Section 4. Execution and Delivery of the Lease by the City. The Lease, in substantially the form presented to this meeting of the City Council and with substantially the same content, is in all respects approved, authorized and confirmed, and the President or Vice President of the City Council is authorized and directed to affix his or her signature to the Lease 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 or deletions therein as the President or Vice President of the City Council and the City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Lease presented to this meeting. Section 5. Execution and Delivery of the Certificate Purchase Agreement by the City. The Certificate Purchase Agreement, in substantially the form presented to this meeting of the City Council and with substantially the same content, is in all respects approved, authorized and confirmed, and the President or Vice President of the City Council is authorized and directed to affix his or her signature to the Certificate Purchase Agreement 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 or deletions therein as the President or Vice President of the City Council and the City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Certificate Purchase Agreement presented to this meeting. Section 6. Execution and Delivery of the Escrow Agreement by the City. The Escrow Agreement, in substantially the form presented to this meeting of the City Council and with substantially the same content, is in all respects approved, authorized and confirmed, and the President or Vice President of the City Council is authorized and directed to affix his or her signature to the Escrow Agreement 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 or deletions therein as the President or Vice President of the City Council and the City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Escrow Agreement presented to this meeting. Section 7. Execution and Delivery of the Knancial Guaranty Agreement by the City. The Financial Guaranty Agreement, in substantially the form presented to this meeting of the City Council and with substantially the same content, is in all respects approved, authorized and confirmed, and the President or Vice President of the City Council is authorized and directed to affix his or her signature to the Financial Guaranty Agreement 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 or deletions therein as the President or Vice President of the City Council and the City Attorney shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval 02/83563.3 4 of any and all changes, modifications, additions or deletions therein from the form and content of the Financial Guaranty Agreement presented to this meeting. Section 8. Execution and Delivery of the Ground Lease by the Corporation. The City Council hereby approves the execution and delivery by the Corporation of the Ground Lease, in substantially the form and with substantially the same content as presented to this meeting of the City Council, but with such changes, modifications, additions or deletions therein as the Board shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Ground Lease presented to this meeting. Section 9. Execution and Delivery of the Lease by the Corporation. The City Council hereby approves the execution and delivery by the Corporation of the Lease, in substantially the form and with substantially the same content as presented to this meeting of the City Council, but with such changes, modifications, additions or deletions therein as the Board shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Lease presented to this meeting. Section 10. Execution and Delivery of the Indenture by the Corporation. The City Council hereby approves the execution and delivery by the Corporation of the Indenture, in substantially the form and with substantially the same content as presented to this meeting of the City Council, but with such changes, modifications, additions or deletions therein as the Board shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Indenture presented to this meeting. Section 11. Execution and Delivery of the Certificate Purchase Agreement by the Corporation. The City Council hereby approves the execution and delivery by the Corporation of the Certificate Purchase Agreement, in substantially the form and with substantially the same content as presented to this meeting of the City Council, but with such changes, modifications, additions or deletions therein as the Board shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Certificate Purchase Agreement presented to this meeting. Section 12. Execution and Delivery of the Escrow Agreement by the Corporation. The City Council hereby approves the execution and delivery by the Corporation of the Escrow Agreement in substantially the form and with substantially the same content as presented to this meeting of the City Council, but with such changes, modifications, additions or deletions therein as the Board shall deem necessary, desirable or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all changes, modifications, additions or deletions therein from the form and content of the Escrow Agreement presented to this meeting. 02183563.3 5 Section 13. Assignment to the Trustee. The City Council hereby acknowledges and consents to (a) the assignment by the Corporation to the Trustee, pursuant to the Indenture, of the Trust Estate (as such term is defined in the Indenture) including, without limitation, all rights, title and interest of Corporation in, to and under the Lease (with certain exceptions as provided in the Lease and the Indenture) and the Ground Lease, and (b) the delegation by the Corporation to the Trustee, pursuant to the Indenture, of all duties of the Corporation under the Lease and the Ground Lease. Section 14. Issuance of the Series 1995 Certificates. The issuance of the Series 1995 Certificates, pursuant to the Indenture, in an aggregate principal amount not to exceed $400,000 is, in all respects, hereby approved by the City. The Series 1995 Certificates shall be issued solely as fully registered certificates without coupons in the denominations of $5,000 and integral multiples thereof. The Series 1995 Certificates shall bear interest payable semiannually on June 1 and December 1 of each year, commencing June 1, 1996, at the rates and will mature in the amounts and on the dates to be set forth in the Indenture upon approval by the Corporation. The net effective interest rate of the Series 1995 Certificates shall not exceed 7.0 %. The Series 1995 Certificates shall be subject to redemption prior to their maturity, including mandatory sinking fund redemption, in the manner, on the dates and at the prices set forth in the Indenture. The City Council hereby authorizes and approves the form, and the further terms and provisions of, the Series 1995 Certificates contained in the Indenture, in substantially the form and with substantially the same content as that presented to this meeting of the City Council. The City Clerk and the President of the City Council of the City are hereby authorized and directed to affix their facsimile signatures and the City seal, or a facsimile thereof, to authenticate the Series 1995 Certificates, as provided in the Lease and the Indenture. Section 15. Sale of the Series 1995 Certificates. The City Council hereby authorizes, approves and directs the sale of the Series 1995 Certificates to the Underwriter under the terms and conditions of, and for the price set forth in, the Certificate Purchase Agreement. Section 16. Official Statement. The President or Vice President of the City Council is hereby authorized and directed to affix his or her signature to the final Official Statement, for and on behalf of the City, in basically the form and with basically the content as the Official Statement presented to this meeting of the City Council, but with such changes, modifications, additions or deletions therein as the President or Vice President of the City Council and the City Attorney may deem necessary or appropriate, the execution thereof to constitute conclusive evidence of their approval of such changes, modifications, additions or deletions therein from the form presented to this meeting. The distribution by the Underwriter of the final Official Statement to prospective purchasers of the Series 1995 Certificates is hereby approved. Section 17. Attestation by the City Clerk and Other Actions in Furtherance of the Contemplated Transactions. 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 authorized by this Ordinance, and to place the seal of the City on the Ground Lease and the Lease authorized and approved by this Ordinance. The President or Vice President of the City 02183563.3 6 Council and other officials of the City Council or the City are hereby authorized to execute and deliver for and on behalf of the City any and all additional certificates, documents and other papers and to perform all other acts that they may deem necessary or appropriate in order to implement and carry out the transactions and other matters authorized and contemplated by this Ordinance. The appropriate officers of the City Council or the City are authorized to execute on behalf of the City agreements concerning the deposit and investment of funds in connection with the transactions contemplated by this Ordinance. The execution and delivery, by the Corporation, of any and all additional certificates, documents and other papers and the performance of all other acts necessary or appropriate in order to implement and carry out the transactions and other matters authorized and contemplated by this Ordinance is hereby approved and authorized by the City. Section 18. No General Obligation of the City Creamed. NO PROVISION OF THIS ORDINANCE, THE GROUND LEASE, THE LEASE, THE INDENTURE, THE SERIES 1995 CERTIFICATES, THE CERTIFICATE PURCHASE AGREEMENT, THE ESCROW AGREEMENT, THE FINANCIAL GUARANTY AGREEMENT OR THE OFFICIAL STATEMENT SHALL BE CONSTRUED AS CREATING OR CONSTITUTING A G ENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE CITY OR A MANDATORY PAYMENT OBLIGATION OF THE CITY IN ANY FISCAL YEAR BEYOND A FISCAL YEAR FOR WHICH THE CITY HAS APPROPRIATED AMOUNTS TO MAKE PAYMENTS UNDER THE LEASE. THE CITY SHALL HAVE NO OBLIGATION TO MAKE ANY PAYMENT WITH RESPECT TO THE SERIES 1995 CERTIFICATES EXCEPT IN CONNECTION WITH THE PAYMENT OF THE BASE RENTALS AND ADDITIONAL RENTALS (AS DEFINED IN THE LEASE) AND CERTAIN OTHER PAYMENTS UNDER THE LEASE, WHICH PAYMENTS MAY BE TERMINATED BY THE CITY IN ACCORDANCE WITH THE PROVISIONS OF THE LEASE. IN ADDITION, NO PROVISION OF THIS ORDINANCE, THE GROUND LEASE, THE LEASE, THE INDENTURE, THE SERIES 1995 CERTIFICATES, THE ESCROW AGREEMENT, THE FINANCIAL GUARANTY AGREEMENT, THE CERTIFICATE PURCHASE AGREEMENT OR THE OFFICIAL STATEMENT SHALL BE CONSTRUED TO PLEDGE OR TO CREATE A LIEN ON ANY CLASS OR SOURCE OF CITY MONEYS; HOWEVER, THE CITY CURRENTLY ANTICIPATES THAT THE REVENUES GENERATED BY THE PROJECT SHALL BE THE FIRST SOURCE OF REVENUES USED TO PAY BASE RENTALS, SUBJECT TO APPROPRIATION. Section 19. Determination of Rental Value and Purchase Option Price Under the Lease. The City Council hereby determines and declares that the Base Rentals represent the fair value of the use of the Project; and that the Purchase Option Price (as defined in the Lease) represents the fair purchase price of the Project. The City Council hereby determines and declares that the Base Rentals do not exceed a reasonable amount so as to place the City under an economic or practical compulsion to renew the Lease or to exercise its option to purchase the Project pursuant to the Lease. In making such determinations, the City Council has given consideration to the cost of financing the Project, the uses and purposes for which the Project will be employed by the City, the benefit to the citizens and residents of the City by reason of 02/83563.3 7 the acquisition of the Project and the use of the Project pursuant to the terms and provisions of the Lease, the option of the City to purchase the Project, and the expected eventual vesting of title to the Project in the City. The City Council hereby determines and declares that the acquisition, construction and equipping of the Project and the leasing of the Project pursuant to the Lease will result in facilities of comparable quality and meeting the same requirements and standards as would be necessary if the acquisition, construction and equipping of the Project were performed by the City other than pursuant to the Lease. The City Council hereby determines and declares that the period during which the City has an option to purchase the Project (i.e., the maximum term of the Lease, including all Renewal Terms) does not exceed the useful life of the Project. Section 20. Determination of Rental Value of Site. The City Council hereby determines and declares that Rent to be received for the Site under the Ground Lease after a Termination Event under the Lease (all as defined in the Ground Lease and the Lease) will represent the fair rental value of the Site. The City Council hereby determines and declares that the procedure for determining the amount of the Rent to be paid after a Termination Event will result in a Rent which is not less than the fair rental value of the Site so as to place the City under an economic or practical compulsion to renew the Lease or to exercise its option to purchase the Project pursuant to the Lease. In making such determinations, the City Council has given consideration to an evaluation by the staff of the City of the fair market rental value of the Site, the user and purposes for which the Site will be employed by the City, the benefit to the citizens and residents of the City by reason of the of the use of the Project, the option of the City to purchase the Project, and the expected eventual vesting of title to the Project in the City. Section 21. Designation of Bonds as Qualified Tax - Exempt Obligations. The City represents that it reasonably anticipates to issue (and has issued), together with governmental entities which derive their issuing authority from the City or are subject to substantial control by the City, not more than an aggregate total of $10,000,000 of governmental or qualified section 501(c)(3) organization bonds (as defined in the Code) during calendar year 1995. The City recognizes that governmental bonds include tax- exempt obligations such as notes, leases, loans and warrants. The City hereby designates the Series 1995 Certificates as qualified tax - exempt obligations within the meaning of Section 265 of the Code, allowing banks, thrift institutions and other financial institutions to avoid the loss of 100 % of any otherwise available interest deduction in direct proportion to such institutions' tax- exempt holdings. Section 22. Exercise of Home Rule Powers of the City. 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 and the Charter, and the City Council of the City hereby finds, determines and declares that the matters herein referred to are matters of local or municipal concern and are appropriate for the exercise of the home rule powers of the City. Section 23. Repealer. All prior ordinances, acts, orders or resolutions, or parts thereof, by the City in conflict with this Ordinance are hereby repealed, except that this repealer shall 02/83563.3 8 not be construed to revive any ordinance, act, order or resolution, or part thereof, heretofore repealed. Section 24. Severability. If any section, paragraph, clause or provision of this Ordinance shall be adjudged to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining sections, paragraphs, clauses or provisions of this Ordinance, it being the intention that the various parts hereof are severable. 02183563.3 9 Section 25. Public Hearing. A public hearing on this Ordinance shall be held on October 23, 1995, at 7:30 p.m., in the City Council Chambers, One City Hall Place, Pueblo, Colorado. INTRODUCED OCTOBER 10, 1995 By Samuel Corsentino Councilperson APPROVED: Attest: APPROVED AS TO FORM BY CITY ATTORNEY City Attoroy By d ' 4 � 4 ) U ea�� — President of the City Council 02/83563.3 10 GROUND LEASE AGREEMENT between THE CITY OF PUEBLO, COLORADO, as Lessor, and PUEBLO MUNICIPAL PROPERTY CORPORATION, as Lessee Dated as of December 1, 1995 The interest of the Pueblo Municipal Property Corporation (the "Corporation ") in this Ground Lease Agreement has been assigned to Colorado National Bank (the "Trustee "), as trustee under the Mortgage and Indenture of Trust, dated as of December 1, 1995, from the Corporation to the Trustee, as trustee, and is subject to the first lien and security interest of the Trustee, as trustee under the Indenture. After this instrument has been recorded, please return to: William C. Gorham Kutak Rock Suite 2900 717 Seventeenth Street Denver, Colorado 80202 TABLE OF CONTENTS (This Table of Contents is not a part of this Ground Lease Agreement and is only for convenience of reference.) Paee ARTICLE I DEFINITIONS .............. ............................... 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.01. Representations, Covenants and Warranties of the City ........... 3 Section 2.02. Representations, Covenants and Warranties of the Corporation ...... 4 ARTICLE III DEMISING CLAUSE; COVENANTS OF TITLE; OTHER MATTERS .......... 5 ARTICLE IV RENT PAYMENTS ........... ............................... 5 ARTICLE V GROUND LEASE TERM Section 5.01. Commencement of Ground Lease Term .................... 6 Section 5.02. Termination of Ground Lease Term ...................... 6 Section 5.03. Disposition of Site .. ............................... 6 Section 5.04. Limitation on Subleases and Assignments ................... 6 ARTICLE VI ENJOYMENT OF SITE ........ ............................... 7 02/82114.4 i ARTICLE VII MAINTENANCE, TAXES, OTHER CHARGES, INSURANCE Section 7.01. Taxes and Utilities .. ............................... 7 Section 7.02. Maintenance ...... ............................... 7 Section 7.03. Insurance ....... ............................... 7 Section 7.04. Advances by City; Trustee's Obligations Limited .............. 8 ARTICLE VIII COMPLIANCE WITH REQUIREMENTS; OTHER COVENANTS Section 8.01. Further Assurances and Corrective Instruments ................ 8 Section 8.02. City, Corporation and Trustee Representatives ................ 8 Section 8.03. Use, Compliance with Laws, Waste ...................... 9 Section 8.04. Inspection, Access, Records ........................... 9 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.01. Events of Default Defined ............................ 9 Section 9.02. Remedies on Default ............................... 10 Section 9.03. No Remedy Exclusive ............................... 10 ARTICLE X ASSIGNMENT AND MORTGAGE Section 10.01. Assignment and Mortgage to Trustee ...................... 10 Section 10.02. Restrictions on Mortgage or Sale of Site .................... 11 ARTICLE XI MISCELLANEOUS Section 11.01. Improvements; Liens ............................... 11 Section 11.02. Damage, Destruction and Condemnation .................... 11 Section 11.03. Notices ......... ............................... 12 Section 11.04. Binding Effect .... ............................... 12 Section 11.05. Severability ...... ............................... 13 Section 11.06. Amendments, Changes and Modifications ................... 13 Section 11.07. Execution in Counterparts ............................ 13 02182114.4 ii Section 11.08. Applicable Law .... ............................... 13 Section 11.09. Captions ........ ............................... 13 Section 11.10. Rights of the Certificate Insurer Suspended Upon Default Under the Policy of Insurance . ............................... 13 Exhibit A —Legal Description ..... ............................... A -1 02/92114.4 iii GROUND LEASE AGREEMENT THIS GROUND LEASE AGREEMENT, (this "Ground Lease ") dated as of December 1, 1995, entered into by and between the CITY OF PUEBLO, COLORADO (the "City "), as lessor hereunder, a home rule municipal corporation organized under article XX of the Constitution of the State of Colorado and the home rule charter of the City, and the PUEBLO MUNICIPAL PROPERTY CORPORATION (the "Corporation ") as lessee hereunder, a nonprofit corporation duly organized, existing and in good standing under the laws of the State of Colorado and also as lessor and sublessor under that certain Golf Course Lease Purchase and Sublease Agreement, dated as of December 1, 1995 (the "Lease "), between the City and the Corporation, and as grantor under that certain Mortgage and Indenture of Trust, dated as of December 1, 1995 (the "Indenture "), between the Corporation and Colorado National Bank, as trustee thereunder (the "Trustee "); WITNESSETH: WHEREAS, the City is a duly and regularly created, established, organized and existing home rule municipal corporation, existing as such under and by virtue of article XX of the Constitution of the State of Colorado and the Charter of the City; and WHEREAS, the City is currently the owner of certain real estate with the legal description found in Exhibit A hereto (the "Site "); and WHEREAS, the Corporation was organized for the purpose of acquiring, constructing and equipping a public golf course facility (the "Golf Course ") for the City on the Site; and WHEREAS, under Sections 1 -3 and 3 -9 of the Charter of the City, the City is authorized to enter into leases and lease purchase agreements for lands and facilities for park or recreational purposes; and WHEREAS, the City Council of the City has previously determined that the City is in need of the Golf Course more fully described in the Lease, and that it is necessary and in the best interests of the City and its residents that the Golf Course be acquired; and WHEREAS, the City has previously leased the Site to the Corporation pursuant to the terms and provisions of a Ground Lease Agreement, dated as of January 1, 1989 (the "Original Ground Lease "), between the City and the Corporation; and WHEREAS, the Corporation has constructed the Golf Course on the Site with the proceeds of certain Certificates of Participation (the "Refunded Certificates "), which Refunded Certificates evidenced assignments of proportionate undivided interests in right to receive payments under a Golf Course Lease Purchase and Sublease Agreement, dated as of January 1, 1989 (the "Original Lease "), between the City and the Corporation; and 02/82114.4 WHEREAS, the Original Ground Lease will be cancelled and replaced by this Ground Lease; and WHEREAS, for the purpose of refinancing the acquisition of the Golf Course, the City and the Corporation shall, contemporaneously herewith, cancel the Original Lease and enter into the Lease; and WHEREAS, the interest of the Corporation in this Ground Lease and the Lease (with certain exceptions as provided in the Lease) shall be assigned to the Trustee, pursuant to the Indenture; and WHEREAS, certain Refunding Certificates of Participation (the "Series 1995 Certificates ") shall be issued pursuant to the Indenture and the Lease and shall be sold pursuant to a certain Certificate Purchase Agreement, dated October 23, 1995 (the "Certificate Purchase Agreement "), among Lewis, de Rozario & Co. Incorporated (the "Original Purchaser "), the City and the Corporation; and WHEREAS, the payment of the principal of and interest on the Series 1995 Certificates when due will be insured by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 1995 Certificates by MBIA Insurance Corporation (the "Certificate Insurer "); and WHEREAS, the Board of Directors of the Corporation has by resolution authorized, approved and directed the execution and delivery by the Corporation of the Lease, this Ground Lease, the Indenture, the Certificate Purchase Agreement and certain other documents, and has further authorized, approved and directed the issuance of the Series 1995 Certificates for the purpose of providing funds to refund the Refunded Certificates; and WHEREAS, under the provisions of Ordinance No. finally passed and adopted on October 23, 1995, the City Council of the City has authorized and approved the execution and delivery of the Lease and this Ground Lease, has approved of the Indenture and certain actions to be taken by the Corporation, including the lease- purchase of the Golf Course, and the issuance of the Series 1995 Certificates; and WHEREAS, the Corporation desires to lease the Site from the City, and the City desires to lease the Site to the Corporation pursuant to the terms and conditions and for the purposes set forth herein and in the Lease. NOW, THEREFORE, for and in consideration of the mutual premises and covenants herein contained, the parties hereto agree as follows: 02182114.4 2 ARTICLE I DEFINITIONS Unless the context otherwise requires, all terms defined in the Indenture or the Lease shall have the same meaning in this Ground Lease. In this Ground Lease, the following terms will have the meanings specified below: "Corporation" means the Pueblo Municipal Property Corporation, a Colorado nonprofit corporation, and its successors and assigns. "Rent" means: (a) so long as a Termination Event has not occurred and be continuing under the Lease, the sum of $1.00 per annum, payable by the Corporation to the City until this Ground Lease is terminated; and (b) subsequent to the occurrence and continuation of a Termination Event under the Lease, the sum of $500.00 per annum (increased for inflation or decreased for deflation in each year from July 1, 1990 (the year subsequent to the execution and delivery of the Original Ground Lease) based upon the increase or decrease in the Consumer Price Index Annual Average for All Urban Consumers published each year for the Denver Metropolitan Area by the Bureau of Labor Statistics of the United States Department of Labor), payable by the Corporation to the City until this Ground Lease is terminated. ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.01. Representations, Covenants and Warranties of the City. The City represents, covenants and warrants for the benefit of the Corporation, the Trustee and the registered owners from time to time of the Series 1995 Certificates and any Additional Certificates, as follows: (a) The City is a home rule municipal corporation within the State of Colorado duly organized and existing as such under article XX of the Constitution of the State of Colorado and the Charter of the City. The City has the power and authority to enter into this Ground Lease and to carry out its obligations hereunder. The City has duly authorized and approved the execution and delivery of this Ground Lease. (b) The City has good and marketable fee simple title to the Site, subject only to Permitted Encumbrances, and has by this Ground Lease leased the Site to the Corporation as hereinafter provided. It is understood by the parties hereto that the Corporation shall have a leasehold interest in the Site, subject to Permitted Encumbrances. 02182114.4 3 (c) Neither the execution and delivery hereof, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the City, except the leasehold interest of the Corporation in the Site. (d) There is no litigation or proceeding pending, or to the knowledge of the City threatened, against the City or any other person affecting the right of the City to execute this Ground Lease or to otherwise comply with its obligations hereunder. Section 2.02. Representations, Covenants and Warranties of the Corporation. The Corporation represents, covenants and warrants for the benefit of the City, the Trustee and the registered owners of the Series 1995 Certificates and any Additional Certificates, as follows: (a) The Corporation is a nonprofit corporation, duly incorporated, in good standing and qualified to transact business in the State of Colorado, is not in violation of any provision of its Articles of Incorporation or its Bylaws, has the corporate power and authority to enter into this Ground Lease, and has duly authorized and approved the execution and delivery of this Ground Lease by proper corporate action. (b) The Corporation agrees that, during the term of this Ground Lease, it will maintain its corporate existence, will continue to be a corporation in good standing under the laws of the State of Colorado, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation or permit one or more other corporations to consolidate with or merge into it. (c) The Corporation, contemporaneously with the execution of this Ground Lease, will lease the Project and sublease the Site to the City pursuant to the Lease. It is understood by the parties hereto that the Corporation shall own the Project and shall have a leasehold interest in the Site, subject to Permitted Encumbrances. The interest of the Corporation in the Lease and this Ground Lease will be assigned to the Trustee pursuant to the Indenture. (d) Prior to the occurrence and continuation of a Termination Event under the Lease, the Corporation will not mortgage or encumber the Project, except pursuant to the Lease and the Indenture. (e) Neither the execution and delivery hereof, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby conflicts with or results in a breach of the terms, 02/82114.4 4 conditions or provisions or any restriction or any agreement or instrument to which the Corporation is now a party or by which the Corporation is bound, or constitutes a default under any of the foregoing. (f) There is no litigation or proceeding pending, or to the knowledge of the Corporation threatened, against the Corporation or any other person affecting the right of the Corporation to execute this Ground Lease or to comply with the provisions hereof. ARTICLE III DEMISING CLAUSE; COVENANTS OF TITLE; OTHER MATTERS The City demises and leases the Site to the Corporation, and the Corporation leases the Site from the City, subject only to Permitted Encumbrances, in accordance with the terms and provisions of this Ground Lease, to have and to hold for the term of this Ground Lease as provided in Article V hereof. Nothing in this Ground Lease shall be construed to require the Corporation to operate the Project other than as the lessee hereunder and as lessor and sublessor under the Lease. The City warrants and covenants that it has good and marketable fee simple title to the Site free from any encumbrances, other than Permitted Encumbrances. The City will cause to be furnished to the Corporation and the Trustee, at the time of delivery of the Series 1995 Certificates and any Additional Certificates, a standard title insurance policy upon the Site, issued by a title insurance company approved by the Trustee, stating that the City is the owner of the Site and insuring the leasehold interest of the Corporation in the Site and the assignment thereof to the Trustee, subject to no encumbrances other than Permitted Encumbrances. Such title insurance policy shall be in an amount of not less than the principal amount of the Series 1995 Certificates and any Additional Certificates. The City and the Corporation acknowledge that the City will be leasing the Project and subleasing the Site from the Corporation pursuant to the Lease; and the City and the Corporation intend that there be no merger of the City's interests as lessee and sublessee under the Lease and the City's ownership interest in the Site so as to cause the cancellation of this Ground Lease. ARTICLE IV RENT PAYMENTS The Corporation and the Trustee, as assignee of the interests of the Corporation under this Ground Lease, or any sublessees or assigns of the Trustee, shall pay Rent to the City, which sum shall constitute consideration for the leasehold interest in the Site conveyed to the Corporation under this Ground Lease, and in consideration of the execution and delivery of the Lease. 02182114.4 5 Rent shall be due and payable on July 1 of each year for so long as this Ground Lease is in effect. ARTICLE V GROUND LEASE TERM Section 5.01. Commencement of Ground Lease Term. The term of this Ground Lease shall commence as of December 1, 1995, and shall terminate as provided in Section 5.02 hereof. Section 5.02. Termination of Ground Lease Term. The term of this Ground Lease shall terminate on the earliest of the following: Lease. (a) Termination of the Lease as provided in Sections 4.02(b) or (f) of the (b) Discharge of the Indenture, as provided in Article VI thereof. (c) December 1, 2028. The rights acquired by the City upon termination of this Ground Lease pursuant to (b) above shall be subject to the rights of any subsequent lessee or sublessee of the Site or the Project or any portion thereof pursuant to Section 14.02 of the Lease. In no event shall the City or the Corporation terminate this Ground Lease under Section 5.02(a) or (b) above or otherwise (except under Section 5.02(c) above) unless and until the Series 1995 Certificates and any Additional Certificates are paid or payment thereof is provided for pursuant to Article VI of the Indenture. Section 5.03. Disposition of Site. At the end of the term of this Ground Lease, all right, title and interest of the Corporation, the Trustee, or any sublessee or assignee in and to the Site and the Project located thereon, including any and all improvements and fixtures which shall at the time be situated thereon or attached thereto, shall be vested in the City, and the Corporation, the Trustee and any sublessee or assignee shall execute and deliver, upon request by the City, any instrument of transfer, conveyance or release necessary or appropriate to confirm the vesting of such right, title and interest in the City. Section 5.04. Limitation on Subleases and Assignments. The term of any sublease of the Site and the Project or any portion thereof, or any assignment of the Trustee's interest in this Ground Lease, pursuant to the Lease or the Indenture, shall not extend beyond December 1, 2028. 02182114.4 6 ARTICLE VI ENJOYMENT OF SITE The City hereby covenants to provide the Corporation and its assigns, including the Trustee and its sublessees and assigns, if any, during the term of this Ground Lease, with quiet use and enjoyment of the Site, and the Corporation shall during the term of this Ground Lease peaceably and quietly have and hold and enjoy the Site, without suit, trouble or hindrance from the City, except as expressly set forth herein, in the Lease or in the Indenture. The rights of the Corporation under this Article shall be subject to the rights of the City under Article V of the Lease. The City shall, at the request of the Corporation or the Trustee and at the expense of the City, join in any legal action in which the Corporation or the Trustee asserts its right to such possession and enjoyment, to the extent that the City may lawfully do so. In addition, the Corporation or the Trustee may join in any legal action involving the City and affecting the possession and enjoyment of the Site by the Corporation or the Trustee and shall be joined in any action affecting their rights or liabilities hereunder. Violation of this Article by the City during the Lease Term shall constitute an Event of Default under the Lease. ARTICLE VII MAINTENANCE, TAXES, OTHER CHARGES, INSURANCE Section 7.01. Taxes and Utilities. During the Lease Term, the payment of taxes and utility charges shall be governed by Article IX of the Lease. After the termination of the Lease Term and if this Ground Lease has not been terminated pursuant to Section 5.02 hereof, the Trustee or its sublessee or assignee shall promptly pay or cause to be paid when due all taxes and assessments which may be imposed on the Site and the Project and all costs or charges for utility service supplied to the Site and the Project. Section 7.02. Maintenance. During the Lease Term, the maintenance of the Site and the Project shall be governed by Article IX of the Lease. After the termination of the Lease Term and if this Ground Lease has not been terminated pursuant to Section 5.02 hereof, the Trustee or its sublessee or assignee shall maintain the Site and the Project in good condition and in good working order. Section 7.03. Insurance. The provisions of Article IX of the Lease shall govern with respect to the maintenance of insurance during the Lease Term. After the termination of the Lease Term and if this Ground Lease has not been terminated pursuant to Section 5.02 hereof, the Trustee or its sublessee or assignee shall obtain and keep in force, at its own expense, (a) comprehensive general public liability insurance against claims for personal injury, death or property damage occurring on the Site or the Project in an amount not less than $1,000,000, and (b) fire and extended coverage insurance in an amount not less than the replacement cost of the 02182114.4 7 Project (excluding foundations). All such insurance shall name the Corporation, the Trustee, any sublessee or assignee and the City as insureds. Proceeds of such fire and extended coverage insurance shall be payable to the Corporation, the Trustee, any sublessee or assignee and the City as their respective interests may appear. All such insurance policies shall provide that the insurance company shall not cancel such insurance without first giving at least 30 days' advance written notice to the Corporation, the Trustee and the City. Each insurance policy required by this Section shall contain a waiver of subrogation by the issuer of such policy with respect to the Corporation, the Trustee, any sublessee or assignee, and the City, and their officers, agents and employees, while acting within the scope of their employment. Section 7.04. Advances by City; Trustee's Obligations Limited. In the event that the Trustee or its sublessee or assignee shall fail to make any payments required by, or perform any of its obligations under Sections 7.01, 7.02 or 7.03 of this Ground Lease, the City may (but shall be under no obligation to) make such payments or perform any of such obligations; and any payments so made or costs or expenses so incurred by the City, together with interest thereon at the rate of 12 % per annum, shall be reimbursed to the City by any sublessee or assignee, or by the Trustee from any proceeds of subleasing of the Site and the Project or any portion thereof or sale of an assignment of its interest in this Ground Lease. Notwithstanding any other provision of this Article, any obligations of the Trustee to make payments under this Article or to pay Rent under this Ground Lease shall be limited to any proceeds of subleasing of the Site and leasing the Project or any portion thereof or sale or assignment of its interest in this Ground Lease, or moneys furnished to the Trustee pursuant to Section 8.01(m) of the Indenture or otherwise available to the Trustee thereunder. No provision of this Article shall be construed to create any obligation to make any payments, nor any other obligation, on the part of the Corporation. ARTICLE VIII COMPLIANCE WITH REQUIREMENTS; OTHER COVENANTS Section 8.01. Further Assurnnces and Corrective Instruments. The City and the Corporation agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Site hereby leased, or for otherwise carrying out the intention hereof. Without limiting the generality of the foregoing, the City and the Corporation agree that they will execute, acknowledge, deliver and record an amendment or supplement hereto pursuant to and as described in Section 11.04 of the Lease. Section 8.02. City, Corporation and Trustee Representatives. Whenever under the provisions hereof the approval of the City, the Corporation or the Trustee is required, or the City, the Corporation or the Trustee is required to take some action at the request of the other, such approval or such request shall be given for the City by the City Representative, for the Corporation by the Lessor Representative, and for the Trustee by the Trustee Representative 02192114.4 8 under the Lease, and the City, the Corporation and the Trustee shall be authorized to act on any such approval or request. Section 8.03. Use, Compliance with Laws, Waste. The Corporation and the Trustee or its sublessee or assignee shall use the Site and the Project only in a careful, safe and proper manner, and shall not use the Site or the Project in any manner or for any purpose prohibited by any applicable federal, State, county or municipal laws, ordinances, rules or regulations. The Corporation and the Trustee or its sublessee or assignee shall not commit any waste or nuisance on the Site or the Project. Section 8.04. Inspection, Access, Records. The City shall have the right at reasonable business hours (or at any hour if necessary in an emergency) to enter into and upon the Site and the Project for the purposes of inspecting the Site and the Project or performing obligations of the Trustee or its sublessee or assignee under this Ground Lease which the Trustee or its sublessee or assignee neglects to perform and which the City elects to undertake. The City agrees that, after termination of the Lease Term, and if this Ground Lease has not been terminated pursuant to Section 5.02 hereof, the Corporation and the Trustee or any sublessee or assignee shall have full rights of ingress and egress to the Site and the Project, and the City hereby agrees to execute and deliver any easements or rights -of -way that may be reasonably necessary to confirm such rights. The City agrees that the Trustee and the Certificate Insurer and their duly authorized agents shall have the right at all reasonable times to examine the books, records, reports and other papers of the City with respect to the Site and the Project. The Corporation and the Trustee or its sublessee or assignee agrees that the City, the Certificate Insurer and their duly authorized agents shall have the right at all reasonable times to examine the books, records, reports and other papers of the Corporation and the Trustee or its sublessee or assignee with respect to the Site and the Project. The City may, not more frequently than once in any twelve -month period, cause an audit to be made of the books, records, reports and other papers of the Corporation, the Trustee or its sublessee or assignee with respect to the Site and the Project. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES Section 9.01. Events of Default Defined. The following shall be "events of default" under this Ground Lease and the terms "events of default" and "default" shall mean anv one or more of the following events: (a) Failure by the Corporation or the Trustee or any sublessee or assignee to pay any Rent at the time specified herein for a period of thirty (30) days after such payment is due; (b) Failure by the Corporation or the Trustee or any sublessee or assignee to observe and perform any covenant, condition or agreement on its part to be observed or 02182114.4 9 performed, other than as referred to in (a) above, for a period of forty -five (45) days after written notice specifying such failure and requesting that it be remedied, unless the City shall agree in writing to an extension of such time prior to its expiration; provided, however, that if the failure stated in the notice cannot be corrected within the applicable period, the City shall not withhold its consent to an extension of such time if corrective action is instituted by the Corporation, the Trustee or any sublessee or assignee within the applicable period and diligently pursued until the default is corrected. Nonperformance by either party, except failure to pay Rent, shall be excused if such nonperformance is caused by Force Majeure. Section 9.02. Remedies on Default. Whenever any event of default referred to in Section 9.01 hereof shall have happened and be continuing, the City shall have the right, at its option without any further demand or notice, to take whatever action at law or in equity may appear necessary or desirable to enforce its rights hereunder; provided, however, that no such action by the City shall terminate the Corporation's leasehold interest in the Site granted under this Ground Lease, except that the City may terminate this Ground Lease only by reason of a default by a sublessee or assignee of the Trustee or the Corporation (other than the Trustee) and only if there are no Certificates Outstanding and all amounts due to the Certificate Insurer shall have been paid. Notwithstanding any other provision of this Article, recovery by the City from the Trustee in any action for amounts due and owing under Section 7.04 or Article IV of this Ground Lease shall be limited to any proceeds of subleasing the Site and leasing the Project or any portion thereof or sale or assignment of the Trustee's interest in this Ground Lease, or moneys furnished to the Trustee pursuant to Section 8.01(m) of the Indenture or otherwise available to the Trustee thereunder. Section 9.03. No Remedy Exclusive. Subject to the provisions of Section 9.02 of this Ground Lease, no remedy herein conferred upon or reserved to the 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 Ground Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. ARTICLE X ASSIGNMENT AND MORTGAGE Section 10.01. Assignment and Mortgage to Trustee. The City and the Corporation agree that, pursuant to the Indenture, the rights of the Corporation to receive certain payments and to enforce remedies pursuant to the Lease and all of the right, title and interest of the Corporation in this Ground Lease shall be mortgaged and assigned to the Trustee. This Ground Lease may also be assigned by the Trustee pursuant to the Indenture, with the written consent 02182114.4 10 of the Certificate Insurer. After the termination of the Lease Term, and if this Ground Lease has not been terminated pursuant to Section 5.02 hereof, the Corporation and the Trustee may also sublease and lease, with the written consent of the Certificate Insurer, the Site and the Project, respectively, or any portion thereof, or sell an assignment of their interests in this Ground Lease pursuant to Section 6.06 or 14.02 of the Lease. Section 10.02. Restrictions on Mortgage or Sale of Site. Except as provided in the Lease and except for Permitted Encumbrances, or as provided in Section 10.01 hereof, the City, the Corporation and the Trustee or its sublessee or assignee agree that neither the City, the Corporation, the Trustee nor any sublessee or assignee of the Trustee will sell, mortgage or encumber the Site or the Project or any portion thereof during the term of this Ground Lease. ARTICLE XI MISCELLANEOUS Section 11.01. Improvements, Liens. After a Termination Event, the Corporation and the Trustee or their sublessee or assignee shall have the privilege of completing the Project and making improvements on the Site, subject to the provisions of Section 11.05 of the Lease. Section 11.02. Damage, Destruction and Condemnation. The provisions of Article X of the Lease shall govern with respect to any damage, destruction or condemnation of the Site or the Project during the Lease Term. After the termination of the Lease Term, and if this Ground Lease has not been terminated pursuant to Section 5.02 hereof, if (a) the Site or the Project or any portion thereof is damaged or destroyed, in whole or in part, by fire or other casualty, or (b) title to or use of the Site or the Project or any part thereof shall be taken under the exercise of the power of eminent domain, the City, the Corporation and the Trustee or its sublessee or assignee shall cause the Net Proceeds of any insurance claim or condemnation award to be applied to the prompt replacement, repair and restoration of the Site or the Project. If there are no Series 1995 Certificates or Additional Certificates outstanding, any Net Proceeds remaining after such work has been completed shall be paid to the Trustee or its sublessee or assignee, and so long as any Series 1995 Certificates or Additional Certificates are outstanding, or if amounts shall be due and owing to the Certificate Insurer, then such Net Proceeds shall be paid to the Trustee to be used as directed by the Certificate Insurer. If the Net Proceeds are insufficient to pay the full cost of the replacement, repair and restoration, the Trustee or its sublessee or assignee shall complete the work and pay any cost in excess of the Net Proceeds (provided, however, that any obligations of the Trustee to make payments under this Section shall be limited to any proceeds of subleasing of the Site and the Project or any portion thereof or sale of an assignment of its interest in this Ground Lease, or moneys furnished to the Trustee pursuant to Section 8.01(m) of the Indenture or otherwise available to the Trustee thereunder). The City may, but shall not be required to, contribute to the cost of any such replacement, repair or restoration. 02182114.4 11 Section 11.03. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, addressed as follows: If to the Corporation: Pueblo Municipal Property Corporation One City Hall Place Pueblo, Colorado 81003, Attention: President If to the City: City of Pueblo, Colorado One City Hall Place Pueblo, Colorado 81003 Attention: City Manager If to the Trustee: Colorado National Bank 24th Floor 950 Seventeenth Street Denver, Colorado 80202 Attention: Corporate Trust Department If to Original Purchaser: Lewis, de Rozario & Co. Incorporated 555 17th Street, Suite 3400 Denver, Colorado 80202 Attention: Public Finance Department If to the Certificate Insurer: MBIA Insurance Corporation 113 King Street Armonk, New York 10504 Attention: Insured Portfolio Management -Lease Unit A duplicate copy of each notice, certificate or other communication given hereunder by the Corporation or the City shall also be given to the Trustee, the Certificate Insurer and the Original Purchaser. The Corporation, the City, the Original Purchaser, the Certificate Insurer and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 11.04. Binding Effect. This Ground Lease shall inure to the benefit of and shall be binding upon the Corporation, the City and their respective successors and assigns, including, without limitation, the Trustee and its successors and assigns. In the event that the Trustee subleases the Site and the Project or any portion thereof, or sells an assignment of its interest in this Ground Lease, as provided in Sections 6.06 and 14.02 of the Lease, the Trustee shall require its sublessee or assignee to consent in writing to, and to undertake compliance with, all provisions of this Ground Lease. 02182114.4 12 Section 11.05. Severability. In the event any provision of this Ground Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 11.06. Amendments, Changes and Modifications. Except as otherwise provided in Section 8.01 hereof, this Ground Lease may not be effectively amended, changed, modified or altered without the written consent of the Trustee and the Certificate Insurer, in accordance with provisions of the Indenture. Section 11.07. Execution in Counterparts. This Ground Lease 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. Section 11.08. Applicable Law. This Ground Lease shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to conflict of laws principles. Section 11.09. Captions. The captions or headings in this Ground Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Ground Lease. Section 11.10. Rights of the Certificate Insurer Suspended Upon Default Under the Policy of Insurance. Notwithstanding any other provision hereof or of the Lease or the Indenture, and whether or not any provision specifically so states, any rights granted to or conferred upon the Certificate Insurer hereunder shall be in effect only so long as the Certificate Insurer is not in default under its Policy of Insurance, and upon any such default by the Certificate Insurer its rights hereunder shall be suspended (except to the extent of subrogation for any payments under its Policy of Insurance theretofore made by the Certificate Insurer); provided, however, that such rights shall be reinstated when the Certificate Insurer has cured such default under its Policy of Insurance. M/%2114A 13 IN WITNESS WHEREOF, the Corporation has caused this Ground Lease to be executed in its corporate name with its corporate seal hereunto affixed and attested by its duly authorized officers. The City has executed this Ground Lease in its corporate name with its corporate seal hereunto affixed and attested by its duly authorized officers. All of the above occurred as of the date first above written. [SEAL] Attest: By Secretary [SEAL] Attest: By City Clerk PUEBLO MUNICIPAL PROPERTY CORPORATION, as lessee hereunder President CITY OF PUEBLO COLORADO, as lessor hereunder :A President of the City Council 02/92114.4 14 STATE OF COLORADO ) ss. CITY OF PUEBLO ) The foregoing instrument was acknowledged before me this day of December, 1995 by Walt Bassett, as President, and Fay B. Kastelic, as Secretary, of the PUEBLO MUNICIPAL PROPERTY CORPORATION, a Colorado nonprofit corporation. WITNESS my hand and office seal. [SEAL] My commission expires: Notary Public STATE OF COLORADO ) ss. CITY OF PUEBLO ) The foregoing instrument was acknowledged before me this day of December, 1995 by Chris Weaver, as President of the City Council, and Marian Mead, as City Clerk, of THE CITY OF PUEBLO. WITNESS my hand and office seal. [SEAL] My commission expires: Notary Public 02/92114.4 15 EXHIBIT A MI%2114.4 A -1 GOLF COURSE LEASE PURCHASE AND SUBLEASE AGREEMENT (With Authorization for Refunding Certificates of Participation in the Aggregate Principal Amount of $4,450,000 Evidencing Assignments of Proportionate Undivided Interests in Rights to Receive Certain Payments Hereunder) by and between PUEBLO MUNICIPAL PROPERTY CORPORATION, A Colorado Nonprofit Corporation, as Lessor and Sublessor, and CITY OF PUEBLO, COLORADO as Lessee and Sublessee, Dated as of December 1, 1995 The interest of the Pueblo Municipal Property Corporation in this Golf Course Lease Purchase and Sublease Agreement (with certain exceptions) has been assigned to Colorado National Bank, as trustee (the "Trustee ") under the Mortgage and Indenture of Trust, dated as of December 1, 1995, from Pueblo Municipal Property Corporation to the Trustee, as trustee, and is subject to the security interest of the Trustee, as trustee. After this instrument has been recorded, please return to: William C. Gorham Kutak Rock Suite 2900 717 Seventeenth Street Denver, Colorado 80202 02182116.4 (This Table of Contents is not a part of this Golf Course Lease Purchase Agreement and is only for convenience of reference) TABLE OF CONTENTS Page ARTICLE I DEFINITIONS .............. ............................... 3 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.01. Representations, Covenants and Warranties of the City .......... 10 Section 2.02. Representations, Covenants and Warranties of Lessor ........... 11 ARTICLE III DEMISING CLAUSE ......... ............................... 12 ARTICLE IV LEASE TERM Section 4.01. Commencement of Lease Term; Renewals .................. 12 Section 4.02. Termination of Lease Term ........................... 13 ARTICLE V ENJOYMENT OF SITE AND PROJECT ............................. 14 ARTICLE VI PAYMENTS BY THE CITY Section 6.01. Payments to Constitute Currently Budgeted Expenditures of the City .. 15 Section 6.02. Base Rentals and Additional Rentals ..................... 15 Section 6.03. Interest Component . ............................... 16 Section 6.04. Manner of Payment ............................... 16 02182116.4 1 Section 6.05. Expression of the City's Need for the Project; Determinations as to Fair Market Value and Fair Purchase Price ................. 16 Section 6.06. Nonappropriation .. ............................... 17 Section 6.07. Disposition of Base Rentals ........................... 18 ARTICLE VII AGREEMENT TO LEASE SITE ... ............................... 18 ARTICLE VIII TITLE TO THE PROJECT; LIMITATIONS ON ENCUMBRANCES Section 8.01. Title to the Project . ............................... 19 Section 8.02. No Encumbrance, Mortgage or Pledge of Project ............. 19 ARTICLE IX MAINTENANCE, TAXES, INSURANCE AND OTHER CHARGES Section 9.01. Maintenance of the Project by the City .................... 20 Section 9.02. Modification of the Project; Installation of Furnishings and Machinery of the City ...... ............................... 20 Section 9.03. Replacement and Substitution of Equipment ................. 21 Section 9.04. Taxes, Other Governmental Charges and Utility Charges ......... 22 Section 9.05. Provisions Regarding Casualty, Public Liability and Property Damage Insurance ....... ............................... 22 Section 9.06. Advances ....... ............................... 24 ARTICLE X DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET PROCEEDS Section 10.01. Damage, Destruction and Condemnation ................... 24 Section 10.02. Obligation of the City to Repair and Replace the Project ......... 24 Section 10.03. Insufficiency of Net Proceeds; Discharge of the Obligation of the City to Repair or Replace Project .......................... 25 Section 10.04. Cooperation of Lessor .............................. 26 02182116.4 ii 11>I ARTICLE XI DISCLAIMER OF WARRANTIES; OTHER COVENANTS Section 11.01. Disclaimer of Warranties ............................ 26 Section 11.02. Further Assurances and Corrective Instruments ............... 27 Section 11.03. Lessor, City and Trustee Representatives ................... 27 Section 11.04. Granting of Easements .............................. 27 Section 11.05. Compliance With Requirements ........................ 27 Section 11.06. City Acknowledgement of the Indenture and the Certificates ....... 27 Section 11.07. Tax Covenants ... ............................... 28 Section 11.08. Reporting Requirements ............................. 29 Section 11.09. Undertaking to Provide Ongoing Disclosure ................. 29 ARTICLE XII CONVEYANCE OF THE PROJECT Section 12.01. Conveyance of the Project ........................... 31 Section 12.02. Manner of Conveyance ............................. 32 Section 12.03. Escrowed Deed and Bill of Sale ........................ 32 ARTICLE XIII ASSIGNMENT, SUBLEASING, INDEMNIFICATION, MORTGAGING AND SELLING Section 13.01. Assignment by Lessor; Replacement of Lessor ............... 33 Section 13.02. Assignment and Subleasing by the City .................... 33 Section 13.03. Release and Indemnification Covenants .................... 33 Section 13.04. Restrictions on Mortgage or Sale of Project ................. 34 ARTICLE XIV EVENTS OF DEFAULT AND REMEDIES Section 14.01. Events of Default Defined ........................... 34 Section 14.02. Remedies on Default ............................... 35 Section 14.03. Limitations on Remedies ............................ 37 Section 14.04. No Remedy Exclusive .............................. 37 Section 14.05. Waivers ........ ............................... 37 Section 14.06. Agreement to Pay Attorneys Fees and Expenses .............. 38 Section 14.07. Waiver of Appraisement, Valuation, Stay and Extension ......... 38 02182116.4 111 ARTICLE XV MISCELLANEOUS Section 15.01. Notices ........ ............................... 38 Section 15.02. Binding Effect .... ............................... 39 Section 15.03. Rights of the Certificate Insurer Suspended Upon Default Under the Policy of Insurance . ............................... 39 Section 15.04. Amendments, Changes and Modifications .................. 39 Section 15.05. Amounts Remaining in Funds ......................... 39 Section 15.06. Net Lease ...... ............................... 39 Section 15.07. Payments Due on Holidays ........................... 39 Section 15.08. Severability ..... ............................... 39 Section 15.09. Execution in Counterparts ............................ 40 Section 15.10. Applicable Law ... ............................... 40 Section 15.11. Captions ....... ............................... 40 TESTIMONIUM ............. ............................... 41 SIGNATURES AND SEALS ..... ............................... 41 ACKNOWLEDGEMENTS ...... ............................... 42 EXHIBIT A— Description of the Site ............................... A -1 EXHIBIT B— Schedule of Base Rentals .............................. B -1 EXHIBIT C— Description of the Project ............................. C -1 EXHIBIT D— Schedule of Certain Permitted Encumbrances .................. D -1 02182116.4 iv GOLF COURSE LEASE PURCHASE AND SUBLEASE AGREEMENT THIS GOLF COURSE LEASE PURCHASE AND SUBLEASE AGREEMENT, dated as of December 1, 1995 (together with any amendments hereto made in accordance herewith, this "Lease "), entered into by and between the PUEBLO MUNICIPAL PROPERTY CORPORATION, as the lessor and sublessor hereunder (collectively, the "Lessor "), a nonprofit corporation duly organized, existing and in good standing under the laws of the State of Colorado, and the CITY OF PUEBLO, COLORADO (the "City"), as lessee and sublessee hereunder, a home rule municipality, duly organized under Article XX of the Constitution of the State of Colorado (the "State ") and the home rule charter (the "Charter ") of the City; WITNESSETH: WHEREAS, the City is a duly and regularly created, organized and existing home rule municipality, existing as such under and by virtue of Article XX of the Constitution of the State and the Charter of the City; and WHEREAS, the City Council of the City (the "City Council ") has the power, pursuant to Sections 1 -3 and 3 -9 of the Charter, to enter into lease and lease purchase agreements in order to provide for the financing of lands and facilities for park or recreational purposes; and WHEREAS, the City Council also has the power, pursuant to Sections 1 -3 and 3 -9 of the Charter, to purchase real and personal property and to sell and convey real and personal property of the City upon such terms and conditions as the City Council may approve; and WHEREAS, the City Council has determined, and hereby determines, that the City is in need of the golf course facility (the "Golf Course "), as hereinafter more fully described, which has been constructed on a certain parcel of land more particularly described in Exhibit A attached hereto and, by this reference, expressly incorporated herein (the "Site "), now owned by the City; and WHEREAS, the Lessor financed the Golf Course and related Equipment (as defined herein) through the issuance of certificates of participation (the "Refunded Certificates ") and leased the Golf Course and the Equipment (collectively, the "Project ") to the City pursuant to a lease purchase and sublease agreement between the Lessor and the City; and WHEREAS, to facilitate the refunding of the Refunded Certificates and the refinancing of the Project, the City and the Lessor shall, contemporaneously herewith, enter into that certain Ground Lease Agreement, dated as of December 1, 1995 (the "Ground Lease "), pursuant to which the City shall lease the Site to the Lessor; and WHEREAS, pursuant to a certain Mortgage and Indenture of Trust of even date herewith (the "Indenture "), between the Lessor and Colorado National Bank, a national banking 02/82116.4 association, as trustee (the "Trustee "), the Lessor will assign all of its rights, title and interest in, to and under this Lease (except the rights of the Lessor under Sections 13.03 and 14.06 of this Lease) and certain other rights and interests to the Trustee; and WHEREAS, there will be issued pursuant to the Indenture Refunding Certificates of Participation in an aggregate principal amount of $4,450,000 (the "Series 1995 Certificates ") evidencing assignments of proportionate undivided interests in rights to, receive certain payments under this Lease; and WHEREAS, the payment of the principal of and interest on the Series 1995 Certificates when due will be insured by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 1995 Certificates by MBIA Insurance Corporation (the "Certificate Insurer "); and WHEREAS, a portion of the proceeds from the sale of the Series 1995 Certificates will be disbursed by the Trustee at the direction of the City, for the refunding of the Refunded Certificates and the other purposes set forth herein; and WHEREAS, the Lessor is a nonprofit corporation, duly organized, existing and in good standing under the laws of the State of Colorado, and is duly qualified to do business in the State of Colorado; and under its articles and bylaws, the Lessor is authorized to own and hold or lease real and personal property and to lease the same as lessor or sublessor and to act in the manner contemplated herein; and WHEREAS, the obligation of the City to pay Base Rentals and Additional Rentals (both as hereinafter defined) hereunder shall be from year to year only; shall constitute currently budgeted expenditures of the City; shall not constitute a mandatory charge or requirement in any ensuing budget year; and shall not constitute a general obligation or other indebtedness of the City within the meaning of any constitutional, statutory or Charter limitation or requirement concerning the creation of indebtedness, nor a mandatory payment obligation of the City in any ensuing fiscal year beyond any fiscal year during which this Lease shall be in effect; and WHEREAS, the Series 1995 Certificates and any Additional Certificates (collectively, the "Certificates ") shall evidence assignments of proportionate undivided interests in the Revenues (as hereinafter defined), shall be payable solely from the sources herein provided, and shall not constitute a general obligation or other indebtedness of the City within the meaning of any constitutional, statutory or Charter limitation or requirement concerning the creation of indebtedness, nor a mandatory payment obligation of the City in any ensuing fiscal year beyond the current fiscal year; and WHEREAS, neither this Lease nor the issuance of the Certificates shall directly or indirectly obligate the City to make any payments beyond those appropriated for any fiscal year during which this Lease shall be in effect; and 02/92116.4 2 WHEREAS, the lease- purchase of the Project, and the execution, performance and delivery of this Lease and the Ground Lease, have been authorized, approved and directed by the City Council by an ordinance adopted by the City Council; and WHEREAS, the execution, delivery and performance of this Lease and the Ground Lease by the Lessor, and the assignment by the Lessor to the Trustee, pursuant to the Indenture, of all rights, title and interest of the Lessor in, to and under this Lease (except the rights of the Lessor under Sections 13.03 and 14.06 of this Lease) and the Ground Lease, have been authorized, approved and directed by all necessary and appropriate action of the Lessor, its board of directors and its officers; and WHEREAS, the Lessor desires to lease the Project and sublease the Site to the City, and the City desires to lease the Project and sublease the Site from the Lessor, pursuant to the terms and conditions and for the purposes set forth herein; NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS All words and phrases defined in Article I of the Indenture shall have the same meaning in this Lease. In addition, the following terms will have the meanings specified below unless the context clearly requires otherwise: "Additional Certificates" has the meaning ascribed to it in Section 2.11 of the Indenture. "Additional Rentals" means the cost of all taxes, insurance premiums, expenses and fees of the Trustee, all amounts payable pursuant to a Qualified Surety Bond, utility charges, costs of maintenance, upkeep and repair, payments into the Reserve Fund, amounts required to be deposited in the Rebate Fund, and all charges or costs which the City assumes or agrees to pay hereunder with respect to the Project, other than Base Rentals (together with interest that may accrue thereon in the event that the City shall fail to pay the same, as set forth herein), including but not limited to costs and expenses charged to or incurred by the Lessor at the request of the City and in its capacity as lessor hereunder, and all amounts payable to the Certificate Insurer hereunder or under the Indenture. "Annual Financial Information" means the financial information, which shall be based on financial statements prepared in accordance with generally accepted accounting principles ( "GAAP "), and operating data of the type contained in the Official Statement, including audited financial statements and financial information and operating data relating to the City, the Golf Course, the City's general fund and Golf Course enterprise fund, and its outstanding debt and other obligations. OV%2116A 3 "Base Rentals" means the payments payable by the City pursuant to Section 6.02 of this Lease and Exhibit B hereto, during the Original Term and any Renewal Term, which constitute the payments payable by the City for and in consideration of the right to use the Project during such Original Term or Renewal Term. "Base Rental Payment Date" means May 15 and November 15 of each year, commencing May 15, 1996. "Business Day" means any day other than a Saturday, Sunday or legal holiday or day on which banking institutions in the city in which the Trustee has its principal corporate trust office or New York, New York are authorized or required by law to close. "Certificate Fund" means the special fund created under Section 3.02 of the Indenture for the purpose of holding and disbursing to the Registered Owners the Base Rentals paid by the City, and includes both the Principal Account and the Interest Account thereof. "Certificate Insurer" means MBIA Insurance Corporation, and its successors and assigns. "Certificates" means one or more certificates of participation to be issued pursuant to the Indenture evidencing assignments of proportionate undivided interests in rights to receive Revenues. thereto. "Charter" means the home rule charter of the City, and any amendments or supplements "City" means City of Pueblo, Colorado or any successor to its functions. "City Council" means the City Council of the City or any successor to its functions. "City Representative" means the person at the time designated to act on behalf of the City for the purpose of performing any act under this Lease or the Indenture by a written certificate furnished to the Trustee and the Lessor containing the specimen signature of such person or persons and signed on behalf of the City by the President or Vice President of the City Council. "Equipment" means items of equipment, machinery and related property acquired and installed on the Golf Course with proceeds from the sale of the Certificates, and any items of equipment, machinery and related property acquired in replacement or substitution therefor pursuant to Sections 9.02, 9.03 and 10.02 of this Lease; less machinery, equipment and related property released from this Lease pursuant to Section 9.03 of this Lease. "Event of Default" means one or more events of default as defined in Section 14.01 of this Lease. 02/92116.4 4 "Event of Nonappropriation" means a nonrenewal of this Lease by the City, determined by the failure of the City Council, for any reason, to budget and appropriate, specifically with respect to this Lease, moneys sufficient to pay all Base Rentals and reasonably estimated Additional Rentals, as provided in Section 6.06 of this Lease. "Expenses Fund" means the special fund created under and to be disbursed as provided in Section 3.10 of the Indenture, and includes the Extraordinary Expenses Account and the Insurance Account thereof. "Extraordinary Redemption Fund" means the special fund created under Section 3.09 of the Indenture. "Extraordinary Revenues" means (a) all Net Proceeds, if any, of casualty insurance, title insurance, performance bonds and condemnation awards, and not applied to the repair, restoration, modification, improvement or replacement of the Project, which are received pursuant to the provisions of this Lease, including but not limited to Section 10.03(b) hereof; and (b) all Net Proceeds, if any, derived from subleasing the Site or any portion thereof, and the leasing, sale or assignment of the Trustee's interest in the Project and the Site, pursuant to Sections 7.02 and 7.05 of the Indenture. "Financing Statements" means the Uniform Commercial Code- Financing Statements -Form UCC -1 or any other form acceptable to the Trustee as required by Section 7.02 hereof. "Force Majeure" means, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of restraints of any kind of the government of the United States of America or of the State or any of their departments, agencies or officials or any civil or military authority; insurrection; riots; landslides; earthquakes; fires; storms; droughts; floods; explosions; breakage or accidents to machinery, transmission pipes or canals; or any other cause or event not within the control of the Lessor or the City. "Golf Course" means the golf course facility, generally described in Exhibit C to this Lease, and located on the Site, including any remodeling, additions, modifications and improvements thereto or substitutions thereof and all property permanently affixed to the Site or to the Golf Course, as provided in Section 9.02 of this Lease. "Ground Lease" means that certain Ground Lease Agreement dated of even date herewith, between the City as lessor thereunder of the Site and the Lessor as lessee thereunder of the Site, and any amendments or supplements thereto. "Indenture" means that certain Mortgage and Indenture of Trust of even date herewith between the Lessor and the Trustee, and any amendments or supplements thereto. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court in the State and who is not an employee of the Lessor, the Trustee or the City. 021%2116.4 5 "Interest Payment Date" means June 1 and December 1 of each year, commencing June 1, 1996. "Lease" means this Golf Course Lease Purchase and Sublease Agreement and any amendments or supplements hereto, including the Exhibits attached hereto. "Lease Term" means the Original Term and any Renewal Terms as to which the City may exercise its option to renew this Lease, as further provided under Section 4.01 of this Lease; subject to the terms and provisions of Sections 4.02, 6.01, 6.02 and 6.06 of this Lease. "Lease Term" refers to the time during which the City is the lessee and sublessee under the Lease; provided, however, certain provisions of this Lease survive the termination of the Lease Term, as further provided in Section 4.02 of this Lease. "Lessor" means Pueblo Municipal Property Corporation, a Colorado nonprofit corporation, acting as lessor and sublessor under this Lease and grantor under the Indenture, or any successor thereto. "Lessor Representative" means any of the following: (a) the Chairman or President of the Lessor; (b) any Vice Chairman or Vice President of the Lessor; (c) any Secretary or Assistant Secretary of the Lessor; or (d) any other person or persons at the time designated to act on behalf of the Lessor for purposes of performing any act on behalf of the Lessor under this Lease or the Indenture by a written certificate furnished to the City and the Trustee containing the specimen signature of such person or persons and signed on behalf of the Lessor by the Chairman or President or any Vice Chairman or Vice President of the Lessor. "Material Event" means any of the following events, if material, with respect to the Series 1995 Certificates: (a) Principal and interest payment delinquencies; (b) Non - payment related defaults; (c) Unscheduled draws on debt service reserves reflecting financial difficulties; (d) Unscheduled draws on credit enhancements reflecting financial difficulties; (e) Substitution of credit or liquidity providers or their failure to perform; (f) Adverse tax opinions or events affecting the tax- exempt status of the Series 1995 Certificates; (g) Modifications to rights of owners of the Series 1995 Certificates; (h) Calls of Series 1995 Certificates; 02/82116.4 6 (i) Defeasances of Series 1995 Certificates; 0) Release, substitution, or sale of property securing repayment of the Series 1995 Certificates; and (k) Rating changes. "Material Event Notice" means written or electronic notice of a Material Event. "MSRB" means the Municipal Securities Rulemaking Board. The current address of the MSRB is 1640 King Street, #300, Alexandria, Virginia 22314. "Net Proceeds, " when used with respect to any performance or payment bond proceeds, or proceeds from policies of insurance required hereby (except for proceeds from the Policy of Insurance), or proceeds from any condemnation award, or proceeds from any foreclosure and sale of the Project and subleasing of the Site, means the amount remaining after deducting from the gross proceeds thereof all expenses (including, without limitation, attorneys' fees and costs) incurred in the collection of such proceeds or award. "NRMSIR" means a nationally recognized municipal securities information repository, as recognized from time to time by the Securities and Exchange Commission for the purposes referred to in the Rule (as defined in Section 11.09 hereof). The NRMSIRs as of the date of this Lease are as follows: Kenny Information Systems, 65 Broadway -16th Floor, New York, New York 10006 -2503; Thompson Financial Services, Attention: Municipal Disclosure, 395 Hudson Street, New York, New York 10014 -3669; Disclosure Inc., 5161 River Road, Bethesda, Maryland 20816 -1584; Moody's NRMSIR, 99 Church Street, New York, New York 10007; and Bloomberg Municipal Repositories, P.O. Box 840, Princeton, New Jersey 08542 -0840. "Qfflcial Statement" means the Official Statement dated October _, 1995, as supplemented, delivered in connection with the original issue and sale of the Series 1995 Certificates. "Opinion of Counsel" means an opinion in writing of legal counsel, who may be counsel to the Trustee, the City or the Lessor. "Original Purchaser" means Lewis, de Rozario & Co. Incorporated, and its successors and assigns. "Original Term" means the portion of the Lease Term which terminates on December 31, 1996. "Outstanding" means all Certificates which have been executed and delivered, except: 02/82116.4 7 (a) Certificates canceled or which shall have been surrendered to the Trustee for cancellation; (b) Certificates in lieu of which other Certificates have been authenticated under Section 2.08 or 2.09 of the Indenture; (c) Certificates which shall have been redeemed as provided in Article IV of the Indenture (including Certificates redeemed on a partial payment as provided in Section 4.02 of the Indenture); and (d) Certificates paid or deemed to be paid in accordance with the provisions of Article VI of the Indenture. "Permitted Encumbrances" means, as of any particular time, (a) liens for taxes and assessments not then delinquent, or liens which may remain unpaid pursuant to the provisions of Article VII and Article IX of this Lease; (b) this Lease, the Ground Lease and the Indenture; (c) utility, access and other easements and rights of way, restrictions and exceptions which do not, in the opinion of the City Representative, interfere with or impair the Project, all as provided in Section 10.04 hereof; (d) any Financing Statements filed to perfect security interests pursuant to this Lease, the Ground Lease or the Indenture; (e) such minor defects, irregularities, encumbrances and clouds on title as normally exist with respect to property of the general character of the Project and as do not, in the opinion of the City Representative, materially impair the value of or title to the Project and (f) those encumbrances and exceptions to title set forth in Exhibit D to this Lease. "Project" means, collectively, the Golf Course and the Equipment, but specifically excluding the Site. "Purchase Option Price" means the amount payable, at the option of the City, for the purpose of terminating this Lease and purchasing the Project, which amount shall be equal to such amount as shall be necessary to discharge the Indenture in the manner provided in Article VI of the Indenture. "Rebate Fund" means the trust fund by that name created pursuant to Section 3.15 of the Indenture. "Refunded Certificates" means the City's certificates of participation originally issued in 1989 to finance the acquisition, construction and equipping of the Project. "Registered Owner" of a Certificate means the registered owner of any Certificate, as shown in the registration books of the Trustee. "Renewal Term" means any optional Renewal Term of the Lease Term as provided in Article IV of this Lease. M/9'2116A 8 "Reserve Fund" means the special fund created under Section 3.07 of the Indenture, which is to be disbursed as provided in Section 3.08 of the Indenture. "Reserve Fund Requirement" means $442,500, plus, in the event Additional Certificates are issued by the City, an amount equal to 10% of the principal amount of such Additional Certificates or such other lesser amount as is the maximum allowed under federal law. "Revenues" means (a) Extraordinary Revenues, if any; (b) the Base Rentals; (c) any portion of the proceeds of the Certificates deposited with the Trustee in the Certificate Fund to pay accrued interest or capitalized interest on the Certificates; (d) any earnings on moneys on deposit in the Certificate Fund except to the extent such earnings are deposited in the Rebate Fund; (e) all other revenues derived from this Lease, excluding Additional Rentals, excluding payments into the Expenses Fund, and excluding payments constituting compensation to the Trustee for its services; and (f) any other moneys to which the Trustee may be entitled for the benefit of the Registered Owners. "Series 1995 Certificates" means the Refunding Certificates or Participation dated December 1, 1995 and issued in the aggregate principal amount of $4,450,000. "SID" means any state information depository as operated or designated by the State of Colorado as such for the purposes referred to in the Rule (as defined in Section 11.09 hereof). As of the date of this Lease, no SID exists within the State. "Site" means the parcel of real estate described in Exhibit A attached hereto, and by this reference, expressly incorporated herein, owned by the City and leased by the City to the Lessor under the Ground Lease, and subleased to the City by the Lessor under this Lease. "State" means the State of Colorado. "Termination Event" means (a) an Event of Nonappropriation, (b) an Event of Default under the Lease followed by a determination by the Trustee to terminate the Lease or (c) an exercise by the City of its right to terminate this Lease under Section 10.03 of this Lease. "Trustee" means Colorado National Bank, a national banking association with its principal corporate trust office located in Denver, Colorado, acting in the capacity of trustee for the Registered Owners pursuant to the Indenture, and any successor thereto appointed under the Indenture. "Trustee Representative" means the person or persons at the time designated to act on behalf of the Trustee for purposes of performing any act on behalf of the Trustee under the Indenture, this Lease or the Ground Lease by a written certificate furnished to the City and the Lessor containing the specimen signature of such person or persons and signed on behalf of the Trustee by any duly authorized officer of the Trustee. 02/%2116.4 9 ■I ®1 H L ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES Section 2.01. Representations, Covenants and Warranties of the City. The City represents, covenants and warrants for the benefit of the Trustee, the Registered Owners and the Lessor as follows: (a) The City is a home rule municipality duly organized and existing under Article XX of the Constitution of the State and the Charter of the City. The City is authorized by its Charter to enter into the transactions contemplated by this Lease and to carry out its obligations hereunder. The City has duly authorized and approved the execution and delivery of this Lease and other documents related to this transaction. (b) The Project complies with all applicable building and zoning ordinances and regulations, if any. (c) The leasing of the Project pursuant to this Lease is essential, necessary, convenient and in furtherance of the governmental purposes of the City and is in the best interests of the City and its inhabitants. (d) During the Lease Term, the Project will at all times be used by the City for the purpose of performing its lawful governmental functions (except to the extent that subleasing of the Project by the City is permitted by Section 13.02 of this Lease). (e) Neither the execution and delivery hereof, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, or constitutes a default under any of the foregoing or results in the creation or imposition of any lien or encumbrance whatsoever upon any of the property or assets of the City, except the leasehold interest of the Lessor in the Site. (f) Except as described in the Official Statement prepared for use in connection with the sale of the Series 1995 Certificates (the "Official Statement "), to the knowledge of the City, there is no litigation or proceeding pending or threatened against the City or any other person affecting the right of the City to execute this Lease or the Ground Lease or the ability of the City to make the payments required hereunder or to otherwise comply with the obligations contained herein. (g) The City owns the Site and the Lessor has a leasehold interest in the Site pursuant to the Ground Lease. 42/92116.4 10 Section 2.02. Representations, Covenants and Warranties of Lessor. The Lessor represents, covenants and warrants for the benefit of the City, the Trustee and the Registered Owners as follows: (a) The Lessor is a nonprofit corporation duly organized, existing and in good standing under the laws of the State, 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 Lease and the Ground Lease, is possessed of full power and authority to own and hold real and personal property and to lease and sublease the same as lessee, lessor and sublessor, and by proper action has duly authorized the execution and delivery of this Lease and the Ground Lease. (b) The Lessor will not pledge or assign the Revenues or any of its other rights under this Lease and the Ground Lease except pursuant to the Indenture, and except for any assignment pursuant to Section 13.01 of this Lease; and the Lessor will not mortgage or encumber the Project, except for Permitted Encumbrances. (c) Neither the execution and delivery hereof, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby, conflicts with or results in a breach of the terms, conditions and provisions of any restriction or any agreement or instrument to which the Lessor is now a party or by which the Lessor is bound, or constitutes a default under any of the foregoing and will not conflict with or constitute a violation of any constitutional or statutory provision or order, rule, regulation, decree or ordinance of any court, government or governmental authority having jurisdiction over the Lessor or its property and which conflict or violation will have a material adverse effect on the Lessor, the Project or its operation. (d) The Lessor acknowledges and recognizes that this Lease will be terminated at the end of the Original Term or any Renewal Term in the event that sufficient funds are not budgeted and appropriated by the City, specifically with respect to this Lease, to continue paying all Base Rentals and Additional Rentals during the next occurring Renewal Term, and that the acts of budgeting and appropriating funds are legislative acts and, as such, are solely within the discretion of the City Council. (e) The Lessor agrees that so long as any of the Certificates are Outstanding or any amounts due to the Certificate Insurer remain unpaid, it will maintain its existence, will continue to be qualified to do business in the State, will maintain its principal place of business in the State, will not dissolve and will not consolidate with or merge into another legal entity or permit one or more other legal entities to consolidate with or merge into it. (f) There is no litigation or proceeding pending or, to the knowledge of the Lessor, threatened against the Lessor or any other person affecting the right of the Lessor 021%2116.4 11 to execute or deliver this Lease, the Ground Lease or the Indenture or to comply with its obligations under this Lease, the Ground Lease or the Indenture. Neither the execution and delivery of this Lease, the Ground Lease or the Indenture by the Lessor, nor compliance by the Lessor with its obligations under this Lease, the Ground Lease and the Indenture, require the approval of any regulatory body, any parent company, or any other entity, which approval has not been obtained. (g) This Lease constitutes a legal, valid and binding obligation of the Lessor enforceable in accordance with its terms. ARTICLE III DEMISING CLAUSE The Lessor demises and leases the Project, and demises and subleases the Site, to the City, and the City leases the Project, and subleases the Site, from the Lessor, in accordance with the provisions of this Lease, subject only to Permitted Encumbrances, to have and to hold for the Original Term and the Renewal Terms, if any. The City and the Lessor acknowledge that the City owns the Site and has leased the Site to the Lessor pursuant to the Ground Lease; and that the City and the Lessor intend that there be no merger of the City's interests as lessee and sublessee under this Lease and the City's ownership interest in the Site so as to cause the cancellation of the Ground Lease or this Lease, or an impairment of the leasehold and subleasehold interests intended to be created by the Ground Lease or this Lease. ARTICLE IV LEASE TERM Section 4.01. Commencement of Lease Term; Renewals. The Lease Term shall commence as of December 1, 1995. The Original Term shall terminate on December 31, 1995. The Lease Term may be continued, solely at the option of the City, for the first Renewal Term and for additional Renewal Terms thereafter, each of one year in duration, except that the final Renewal Term, if any, shall commence on January 1, 2008 and shall terminate on December 1, 2008 or, if all Base Rentals and Additional Rentals for such Renewal Term have not then been paid by the City, on such later date as all Base Rentals and Additional Rentals are paid by the City. In the event that the City shall determine, for any reason, not to renew this Lease, the City shall give written notice to such effect to the Trustee, the Lessor, the Certificate Insurer and the Original Purchaser not less than 30 days prior to the end of the Original Term or the then current Renewal Term; provided, however, that a failure to give such notice shall not M192116.4 12 constitute an Event of Default, nor prevent the City from declining to renew this Lease, nor result in any liability on the part of the City. The option of the City to renew or not to renew this Lease shall be conclusively determined by whether or not the City Council has, on or before the December 31 immediately preceding the commencement of any Renewal Term, budgeted and appropriated, specifically with respect to this Lease, moneys sufficient to pay all the Base Rentals and reasonably estimated Additional Rentals for such ensuing Renewal Term, all as further provided in Section 6.06 of this Lease. It is the intention of the City Council that the decision to renew or not to renew this Lease shall be made solely by the City Council and not by any other City officer, and the City Manager of the City (or any other officer at any time charged with the responsibility of formulating budget proposals) is hereby directed to include in the budget proposals submitted to the City Council, in any year in which this Lease shall be in effect, items for all payments required for the ensuing Renewal Term under this Lease. The City shall in any event, whether or not this Lease is to be renewed, furnish the Trustee, the Lessor, the Certificate Insurer and the Original Purchaser with copies of its annual budget promptly after the budget is adopted. The terms and conditions during any Renewal Term shall be the same as the terms and conditions during the Original Term, except that the Base Rentals shall be as provided in Exhibit B to this Lease. Section 4.02. Termination of Lease Term. The Lease Term shall terminate upon the earliest to occur of any of the following events: (a) The expiration of the Original Term or any Renewal Term during which there occurs an Event of Nonappropriation (which is not thereafter waived) pursuant to Article VI of this Lease; (b) The purchase by the City of the Project as provided in Article XII of this Lease (subject to the proviso of (c) below, if applicable) and the Certificates shall have been paid or deemed paid pursuant to Article VI of the Indenture and all amounts due to the Certificate Insurer shall have been paid; (c) Discharge of the Indenture, as provided in Article VI of the Indenture (except that, in the event of discharge of the Indenture pursuant to the second paragraph of Article VI of the Indenture, this Lease shall remain in effect solely for the purpose of conferring rights upon the Registered Owners to payments of principal of, premium, if any, and interest on the Certificates solely from moneys or Federal Securities deposited in accordance with the Indenture); (d) An Event of Default and termination of the Lease Term by the Trustee under Article XIV of this Lease; M192116.4 13 (e) The election of the City to terminate the Lease Term pursuant to Section 10.03(b) of this Lease; or (f) December 1, 2008, which date constitutes the last day of the final Renewal Term of this Lease, or such later date as all Base Rentals and Additional Rentals required hereunder shall be paid, with the effect that the Certificates shall be paid or deemed paid pursuant to Article VI of this Lease and all amounts due to the Certificate Insurer shall be paid in full. Termination of the Lease Term shall terminate all unaccrued obligations of the City under this Lease (except for the application of Section 14.02(b)(i) hereof, in the event the City holds over), and shall terminate the rights of the City to possession of the Project and the Site under this Lease (except to the extent of any conveyance pursuant to Article XII of this Lease); but all other provisions of this Lease, including all obligations of the City hereunder accrued prior to such termination, and all obligations of the Trustee with respect to the Registered Owners and the receipt and disbursement of funds, shall be continuing until the Indenture is discharged as provided in Article VI of the Indenture (subject to the proviso of (c) above, if applicable). ARTICLE V ENJOYMENT OF SITE AND PROJECT The Lessor hereby covenants that the City shall during the Lease Term peaceably and quietly have and hold and enjoy the Project and the Site without suit, trouble or hindrance from the Lessor, except as expressly required or permitted by this Lease, the Ground Lease or the Indenture. The Lessor shall not interfere with the quiet use and enjoyment of the Project and the Site by the City during the Lease Term, so long as the Lease Term shall be in effect. The Lessor shall, at the request of the City and at the cost of the City, join and cooperate fully in any legal action in which the City asserts its right to such possession and enjoyment, or which involves the imposition of any taxes or other governmental charges on or in connection with the Site or the Project. In addition, the City may at its own expense join in any legal action affecting its possession and enjoyment of the Site or the Project, and shall be joined (to the extent legally possible, and at the expense of the City) in any action affecting its liabilities hereunder. The provisions of this Article shall be subject to the right of the Trustee to inspect the Project as provided in Section 10.03 of the Indenture. The City also hereby consents to the provisions of Section 10.03 of the Indenture relating to inspection of records by the Trustee. Equitable title to the Project shall be deemed to vest in the City, subject to the rights of the Lessor, the Trustee and the Certificate Insurer under this Lease and the Indenture. 02192116.4 14 ARTICLE VI PAYMENTS BY THE CITY Section 6.01. Payments to Constitute Currently Budgeted Expenditures of the City. The City and the Lessor acknowledge and agree that the Base Rentals and Additional Rentals hereunder shall constitute currently budgeted expenditures of the City. The obligations of the City under this Lease shall be from year to year only (as further provided in Sections 4.01, 4.02, 6.02 and 6.06 hereof), and shall not constitute a mandatory payment obligation of the City in any fiscal year beyond a fiscal year during which this Lease shall be in effect. No provision of this Lease shall be construed or interpreted as creating a general obligation or other indebtedness of the City within the meaning of any constitutional, statutory or Charter debt limitation. No provision of this Lease shall be construed or interpreted as creating a delegation of governmental powers nor as a donation by or a lending of the credit of the City within the meaning of Section 1 or 2 of Article XI of the Constitution of the State. Neither this Lease nor the issuance of the Certificates shall directly or indirectly obligate the City to make any payments beyond those appropriated for any fiscal year in which the Lease shall be in effect. The City shall be under no obligation to exercise its option to purchase the Project. No provision of this Lease shall be construed to pledge or to create a lien on any class or source of City moneys, nor shall any provision of this Lease restrict the future issuance of any City bonds or obligations payable from any class or source of City moneys (provided, however, that the restrictions of Section 2.11 of the Indenture shall apply to the issuance of Additional Certificates). Section 6.02. Base Rentals and Additional Rentals. The City shall pay Base Rentals directly to the Trustee for distribution to the Registered Owners in accordance with the Indenture during the Lease Term on the due dates set forth in Exhibit B to this Lease. The Base Rentals during the Original Term and any Renewal Terms shall be in the amounts in the "Total Base Rentals" column, as set forth in Exhibit B to this Lease. There shall be credited against the amount of Base Rentals otherwise payable hereunder all amounts at the time on deposit in the Certificate Fund and available for such payments to Registered Owners. The initial. Base Rentals to be paid by the City on May 15, 1996 shall be in consideration for the use of the Project and the Site by the City from December 1, 1995 until and including June 30, 1996. Thereafter, Base Rentals due on any November 15 shall be in consideration for the use of the Project and the Site by the City from the immediately preceding July 1 to and including the immediately following December 31; and Base Rentals due on any May 15 shall be in consideration for the use of the Project and the Site by the City from the immediately preceding January 1 to and including the immediately following June 30. In the event of any partial redemption of Certificates prior to maturity or upon the issuance of Additional Certificates, the Base Rentals shall be recalculated by the Trustee, so that the Base Rentals payable on May 15 and November 15 shall be equal to the amount necessary 02192116.4 15 to pay the principal of and interest on the Certificates coming due on the next June 1 or December 1, as the case may be. The City shall pay Additional Rentals during the Lease Term as herein provided. The Additional Rentals during the Lease Term shall be in an amount sufficient to pay all amounts payable pursuant to a Qualified Surety Bond, the fees and expenses of the Trustee, payments for the cost of taxes, insurance premiums, utility charges, maintenance and repair costs, and all other expenses expressly required to be paid hereunder or under the Indenture, including but not limited to costs and expenses charged to or incurred by the Lessor at the request of the City and in its capacity as Lessor hereunder and all amounts payable to the Certificate Insurer hereunder or under the Indenture, as well as for payments into the Reserve Fund or the Rebate Fund required by the Indenture. All Additional Rentals shall be paid by the City on a timely basis directly to the Person or entity to which such Additional Rentals are owed (except that payments into the Reserve Fund and the Rebate Fund shall be made to the Trustee as provided in the Indenture). If the estimates of the City of Additional Rentals for any Renewal Term are not itemized in the budget required to be furnished to the Trustee, the Lessor, the Certificate Insurer and the Original Purchaser under Section 4.01 of this Lease, the City shall furnish an itemization of such estimated Additional Rentals to the Trustee, the Lessor, the Certificate Insurer and the Original Purchaser on or before the December 15 preceding such Renewal Term. Section 6.03. Interest Component. A portion of each payment of Base Rentals is paid as, and represents payment of, interest. Exhibit B attached hereto, as it may be amended hereunder, sets forth the interest component of each payment of Base Rentals. Section 6.04. Manner of Payment. The Base Rentals and, if paid, the Purchase Option Price, shall be paid in lawful moneys of the United States of America to the Trustee at its principal corporate trust office. The obligation of the City to pay the Base Rentals and Additional Rentals required under this Article and other sections hereof, during the Lease Term, shall be absolute and unconditional, and payment of the Base Rentals and Additional Rentals shall not be abated through accident or unforeseen circumstances. Notwithstanding any dispute between the City and the Lessor, the Trustee, any Registered Owner, any contractor or subcontractor retained with respect to the Project, any supplier of labor or materials in connection therewith, or any other person, the City shall, during the Lease Term, make all payments of Base Rentals and Additional Rentals when due and shall not withhold any Base Rentals or Additional Rentals pending final resolution of such dispute (except to the extent permitted by Sections 8.02 and 9.04 hereof with respect to certain Additional Rentals), nor shall the City assert any right of set -off or counterclaim against its obligation to make such payments required hereunder. No action or inaction on the part of the Lessor or the Trustee shall affect the City's obligation to pay all Base Rentals and Additional Rentals (except to the extent provided by Sections 8.02 and 9.04 hereof with respect to certain Additional Rentals), during the Lease Term. Section 6.05. Expression of the City's Need for the Project; Determinations as to Fair Market Value and Fair Purchase Price. The City hereby declares its current need for the 02/%2116.4 16 Project. It is hereby declared to be the present intention and expectation of the City Council that this Lease will be renewed annually until title to the Project is acquired by the City pursuant to this Lease; but this declaration shall not be construed as contractually obligating or otherwise binding the City. The City and the Lessor hereby agree and determine that the Base Rentals hereunder during the Original Term and any Renewal Term represent the fair value of the use of the Project and the Site; and that the Purchase Option Price represents the fair purchase price of the Project. The City hereby determines that the Base Rentals do not exceed a reasonable amount so as to place the City under an economic or practical compulsion to renew this Lease or to exercise its option to purchase the Project hereunder. In making such determinations, the City and the Lessor have given consideration to the value of the Project, the value of the Site, the uses and purposes for which the Project will be employed by the City, the benefit to the City by reason of the leasing of the Project and the use and occupancy of the Project and the Site pursuant to the terms and provisions of this Lease, the option of the City to purchase the Project, and the expected eventual vesting of title to the Project in the City. The City hereby determines and declares that the leasing of the Project and the subleasing of the Site pursuant to this Lease will result in a Project facility of comparable quality and meeting the same requirements and standards as would be necessary if the City acquired or constructed a similar golf course facility other than pursuant to this Lease. The City hereby determines and declares that the period during which the City has an option to purchase the Project (i.e., the maximum term of this Lease including all Renewal Terms) does not exceed the useful life of the Project. Section 6.06. Nonappropriation. In the event that the City Council shall not budget and appropriate, specifically with respect to this Lease, on or before December 31 of each year, moneys sufficient to pay all Base Rentals and the reasonably estimated Additional Rentals coming due for the next ensuing Renewal Term, an Event of Nonappropriation shall be deemed to have occurred (provided, however, that the Trustee shall declare an Event of Nonappropriation on any earlier date on which the Trustee receives written notice from the City that this Lease will not be renewed; and provided further that the Trustee may, with the written consent of the Certificate Insurer, waive any Event of Nonappropriation which is cured by the City within a reasonable time if in the judgment of the Trustee such waiver is in the best interests of the Registered Owners). In the event that during the Original Term or any Renewal Term, any Additional Rentals shall become due which were not included in the current budget of the City, or which exceed the amounts which were included therefor in the current budget of the City, and if there are no moneys available to pay such Additional Rentals pursuant to Section 3.08 of the Indenture, then, in the event that moneys are not specifically budgeted and appropriated to pay such Additional Rentals within 90 days subsequent to the date upon which such Additional Rentals are due, an Event of Nonappropriation shall be deemed to have occurred, upon notice by the Trustee to the City to such effect (subject to waiver by the Trustee with the written consent of the Certificate Insurer as hereinbefore provided). If an Event of Nonappropriation occurs, the City shall not be obligated to make payment of the Base Rentals or Additional Rentals or any other payments provided for herein which accrue after the last day of the Original or Renewal Term during which such Event of Nonappropriation occurs; provided, however, that, subject to the limitations of Section 14.03 02182116.4 17 hereof, the City shall continue to be liable for Base Rentals and Additional Rentals allocable to any period during which the City shall continue to occupy the Project. The City shall in all events vacate the Project and the Site (leaving the Equipment) by the expiration of the Original or Renewal Term during which an Event of Nonappropriation occurs. The City and the Lessor hereby acknowledge and agree that any termination of this Lease, whether pursuant to this Section, Section 10.03(b) or Section 14.02 hereof, shall terminate the City's rights as to the Project, until the Ground Lease expires in accordance with its terms. The Trustee, upon the occurrence of an Event of Nonappropriation, shall be entitled to all moneys then on hand and being held in all funds created under the Indenture, but excluding the Rebate Fund, for the benefit of the Registered Owners. After the expiration of the Original or Renewal Term during which an Event of Nonappropriation occurs, the Trustee may, with the consent of the Certificate Insurer, and shall, at the direction of the Certificate Insurer, proceed to foreclose on and sell, lease or assign its interest in the Project or any portion thereof, sublease the Site and exercise the rights and remedies of a secured party under the Colorado Uniform Commercial Code with respect to the Equipment, as provided in Sections 7.02 and 7.05 of the Indenture, or take one or any combination of the steps described in paragraphs (a), (b) and (c) of Section 14.02 of this Lease. All property, funds and rights acquired by the Trustee by reason of any Event of Nonappropriation as provided herein, less any moneys due and owing to the Trustee, shall be held by the Trustee for the benefit of the Registered Owners as set forth in the Indenture. Upon the occurrence of an Event of Nonappropriation, the Trustee shall give notice of such occurrence to the Certificate Insurer. Section 6.07. Disposition of Base Rentals. Upon receipt by the Trustee of each payment of Base Rentals, the Trustee shall apply the amount of such Base Rentals in the following manner and order: First, the amount of such payment of Base Rentals designated and paid as interest under Exhibit B, plus the amount of any past due interest on the Certificates, shall be deposited in the Interest Account of the Certificate Fund. Second, the remaining portion of such payment of Base Rentals shall be deposited in the Principal Account of the Certificate Fund. ARTICLE VII AGREEMENT TO LEASE SITE The City agrees to lease the Site to the Lessor pursuant to the Ground Lease which shall be executed contemporaneously with or prior to the issuance of the Certificates. The City shall 02/82116.4 18 cause to be furnished, at the time it leases the Site to the Lessor, standard form ALTA title insurance policies upon the Site issued by a title insurance company approved by the Trustee and issued to (a) the Trustee, insuring the assignment of the Lessor's leasehold interest in the Site, and (b) the Lessor, insuring the Lessor's leasehold interest in the Site. Said title insurance policies shall be subject to no encumbrances other than Permitted Encumbrances, and shall each be issued in an amount not less than the principal amount of the Certificates. ARTICLE VDT TITLE TO THE PROJECT; LEVIITATIONS ON ENCUMBRANCES Section 8.01. 77de to the Project. At all times during the Lease Term, title to the Site shall remain in the City, subject to the Ground Lease, this Lease, the Indenture and any other Permitted Encumbrances. Except personal property purchased by the City at its own expense pursuant to Section 9.02 of this Lease and personal property purchased by the City from amounts on deposit in the Special Construction Fund, title to the Project and any and all additions and modifications to or replacements of any portion of the Project shall be held in the name of the Lessor, subject only to Permitted Encumbrances, until foreclosed on or conveyed as provided in Section 7.02 of the Indenture or Article XH of this Lease, or, with respect to the Project, until the termination of the Ground Lease, notwithstanding (a) the occurrence of an Event of Nonappropriation as provided in Section 6.06 of this Lease or one or more Events of Default as defined in Section 14.01 of this Lease; (b) the occurrence of any event of damage, destruction, condemnation or construction defect or title defect, as provided in Article X of this Lease; or (c) the violation by the Lessor (or by the Trustee as assignee of the Lessor pursuant to the Indenture) of any provision of this Lease. The City shall have no right, title or interest in the Project or any additions and modifications to or replacements of any portion of the Project, except as expressly set forth in this Lease. Section 8.02. No Encumbrance, Mortgage or Pledge of Project. The City shall not permit any mechanic's or other lien to be perfected or remain against the Project; provided that, if the City shall first notify the Trustee and the Certificate Insurer of the intention of the City so to do, the City may in good faith contest any mechanic's or other lien filed or perfected against the Project, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom; provided, however, that during the prosecution of such contest and appeal and until final discharge of such mechanic's or other lien, the City shall (a) provide a surety bond in the amount of such mechanic's or other lien in accordance with the laws of the State, or (b) provide affirmative title insurance coverage over such mechanic's or other lien, or (c) provide such other collateral or surety of payment as the Trustee and the Certificate Insurer may deem acceptable in their sole discretion. The Lessor and the Trustee will cooperate fully with the City in any such contest, upon the request and at the expense of the City. Neither the Lessor nor, except as provided above, the City, shall directly or indirectly create, incur, assume or suffer to exist any mortgage, 02182116.4 19 F Eli] III pledge, lien, charge, encumbrance or claim on or with respect to the Site or the Project, except Permitted Encumbrances. The City shall promptly, at its own expense, take such action as may be necessary to duly discharge any such mortgage, pledge, lien, charge, encumbrance or claim not excepted above which it shall have created, incurred or suffered to exist. The Lessor shall promptly, at its own expense, take such action as may be necessary to duly discharge any such mortgage, pledge, lien, charge, encumbrance or claim not excepted above which it shall have created or incurred. ARTICLE IX MAINTENANCE, TAXES, INSURANCE AND OTHER CHARGES Section 9.01. Maintenance of the Project by the City. The City agrees that, at all times during the Lease Term, the City will maintain, preserve and keep the Project or cause the Project to be maintained, preserved and kept, with the appurtenances and every part and parcel thereof, in good repair, working order and condition, and that the City will from time to time make or cause to be made all necessary and proper repairs, except as otherwise provided in Sections 9.03 and 10.03 of this Lease. Neither the Lessor nor the Trustee nor any of the Registered Owners, shall have any responsibility in any of these matters or for the making of any additions, modifications or replacements to the Project. Section 9.02. Modification of the Project; Installation of Furnishings and Machinery of the City. The City shall have the privilege of remodeling the Project or making substitutions, additions, modifications and improvements to the Project, at its own cost and expense; and title to the same shall be held in the name of the Lessor, subject to this Lease and the Indenture, and shall be included under the terms of this Lease and the Indenture; provided, however, that such remodeling, substitutions, additions, modifications and improvements shall not in any way damage the Project or cause the Project to be used for purposes other than lawful governmental functions of the City or cause the City to violate its covenants in Section 11.07 hereof; and provided that the Project, as remodeled, improved or altered, upon completion of such remodeling, substitutions, additions, modifications and improvements, shall be of a value not less than the value of the Project immediately prior to such remodeling or such making of substitutions, additions, modifications and improvements, as reasonably determined by the Trustee. The City may also, from time to time in its sole discretion and at its own expense, install machinery, equipment and other tangible property in or on the Project. All such machinery, equipment and other tangible property shall remain the sole property of the City in which neither the Lessor, the Trustee nor the Registered Owners shall have any interest; provided, however, that title to any such machinery, equipment and other tangible property which becomes permanently affixed to the Project shall be in the Lessor, subject to this Lease and the Indenture, and shall be included under the terms of this Lease and the Indenture, in the event the Trustee shall reasonably determine that the Project would be damaged or impaired by the removal of such machinery, equipment or other tangible property. 02/92116.4 20 Section 9.03. Replacement and Substitution of Equipment. The City shall not be under any obligation to renew, repair or replace any inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary Equipment. In any instance where the City determines that any Equipment has become inadequate, obsolete, worn -out, unsuitable, undesirable or unnecessary, the City may remove such Equipment from the Project and (on behalf of the Lessor) sell, trade -in, exchange or otherwise dispose of it (as a whole or in part) without any responsibility or accountability to the Lessor or the Trustee therefor, provided that the City shall either: (a) substitute (by direct payment of the costs thereof or by designating as Equipment, machinery, equipment or other personal property, other than property included as part of the Project pursuant to Section 9.02 hereof) and install anywhere in or on the Project, other equipment, machinery or related property having equal or greater value and utility (but not necessarily having the same function) in the operation of the Project; or (b) not make any such substitution and installation, provided (i) in the case of the sale of any such Equipment to anyone other than itself or in the case of the scrapping thereof, the City shall pay to the Trustee for deposit into the Extraordinary Redemption Fund the net proceeds from such sale or the scrap value thereof, as the case may be, (ii) that in the case of the trade -in of such Equipment for other machinery, equipment or related property not to be installed in or on the Project, the City shall pay to the Trustee for deposit into the Extraordinary Redemption Fund the amount of the credit received by it in such trade -in and (iii) that in the case of the sale of any such Equipment to the City, or in the case of any other disposition thereof, the City shall pay to the Trustee for deposit into the Extraordinary Redemption Fund an amount equal to the original cost thereof less depreciation at rates calculated in accordance with generally accepted accounting principles. The removal from the Project of any portion of the Equipment pursuant to the provisions of this Section shall not entitle the City to any postponement, abatement or diminution of the Base Rentals or other payments required to be made under Section 6.02 of this Lease. The City will promptly report in writing to the Trustee and the Certificate Insurer each removal, substitution, sale or other disposition under subsections (a) and (b) of this Section and will pay to the Trustee all amounts required by subsection (b) of this Section to be paid into the Extraordinary Redemption Fund promptly after any subsequent sale, trade -in or other disposition requiring such payment. All substituted machinery, equipment or related property installed pursuant to this Section shall be free of all liens and encumbrances (other than Permitted Encumbrances) and shall become a part of the Project. The City shall furnish to the Trustee such Financing Statements and other documentation with respect to any equipment, machinery or related property substituted as Equipment as are required by the Trustee. The City will not remove, or permit the removal of, any of the Equipment from the Site except in accordance with this Section or in accordance with Article X of this Lease. The Lessor and the Trustee will cooperate with the City in implementing the rights of the City to dispose of Equipment pursuant 02/92116.4 21 to this Section and will execute any and all conveyances, releases or other documents necessary or appropriate in connection therewith. Section 9.04. Taxes, Other Governmental Charges and Utility Charges. In the event that the Project or any portion thereof shall, for any reason, be deemed subject to taxation, assessments or charges lawfully made by any governmental body, the City shall, during the Lease Term, pay the amount of all such taxes, assessments and governmental charges then due as Additional Rentals. With respect to special assessments or other governmental charges which may be lawfully paid in installments over a period of years, the City shall be obligated to provide for Additional Rentals only for such installments as are required to be paid during the Original or any Renewal Term. The City shall not allow any liens for taxes, assessments or governmental charges to exist with respect to the Project or any portion thereof (including, without limitation, any taxes levied upon the Site, the Project or any portion thereof which, if not paid, will become a charge on the rentals and receipts from the Project or any portion thereof, or any interest therein, including the interest of the Lessor, the Trustee or the Registered Owners), or the rentals and revenues derived therefrom or hereunder. The City shall also pay as Additional Rentals, as the same respectively become due, all gas, water, steam, electricity, heat, power, telephone, utility and other charges incurred in the maintenance and upkeep of the Project. The City may, at the expense and in the name of the City, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments, utility or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Trustee shall notify the City and the Certificate Insurer that, in the opinion of Independent Counsel, by nonpayment of any such items the security afforded pursuant to the Indenture will be materially endangered or the Project or any portion thereof will be subject to loss or forfeiture, or the Lessor or the Trustee will be subject to liability, in which event such taxes, assessments, utility or other charges shall be paid forthwith as Additional Rentals (provided, however, that such payment shall not constitute a waiver of the right to continue to contest such taxes, assessments, utility or other charges). Section 9.05. Provisions Regarding Casualty, Public Liability and Property Damage Insurance. The City shall cause casualty and property damage insurance to be carried and maintained with respect to the Project in an amount equal to the aggregate principal amount of the Certificates then Outstanding or the replacement cost of the Project, whichever is greater, after taking into account the amount of any deductible clause concerning such insurance. In the event that the City shall so fail to insure the Project, the Trustee shall, using the moneys available in the Insurance Account of the Expenses Fund, pay premiums for such casualty and property damage insurance. The Trustee shall, during the Lease Term, comply with the reasonable direction of the City as to the terms of such casualty and property damage insurance, consistent with the requirements of this Section, and as to the selection of a responsible insurer to provide such casualty and property damage insurance. The insurance policy may have a deductible clause in an amount not to exceed $150,000. The Project may be insured under a blanket insurance policy which insures other buildings as well, as long as such blanket insurance 02182116.4 22 policy complies with the requirements of this Lease. If the City shall insure against similar risks by self - insurance, the City, at its election, may provide for property and casualty insurance with respect to the Project, partially or wholly by means of an adequate self - insurance fund. Upon the execution and delivery of this Lease, the City shall, at its own expense, cause public liability insurance to be carried and maintained with respect to the activities to be undertaken by and on behalf of the City in connection with the use of the Project. Such public liability insurance in connection with the Project shall be in an amount not less than the amounts provided in the Colorado Governmental Immunity Act, article 10 of title 24, Colorado Revised Statutes, as the same may be hereafter amended. The public liability insurance required by this Section may be by blanket insurance policy or policies. If the City shall insure against similar risks by self- insurance, the City, at its election, may provide for public liability insurance with respect to the Project, partially or wholly by means of an adequate self - insurance fund, subject to the provisions of the following paragraph. Any self- insurance maintained by the City shall comply with the following terms: (a) the self - insurance program shall be acceptable to the Certificate Insurer; (b) the self - insurance program shall be approved by an Independent Insurance Consultant; (c) the self- insurance program shall include an actuarially sound claims reserve fund out of which each self - insured claim shall be paid; the adequacy of each such fund shall be evaluated on an annual basis by the Independent Insurance Consultant; and any deficiencies in any self - insurance claims shall be remedied in accordance with the recommendation of the Independent Insurance Consultant; (d) the self - insurance claims fund shall be held in a separate trust fund by an independent trustee who may be the Trustee; and (e) in the event the self - insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by the Independent Insurance Consultant, shall be maintained. For purposes of this Section, "Independent Insurance Consultant" shall mean a nationally recognized, independent actuary, insurance company or broker acceptable to the Certificate Insurer that has actuarial personnel experience in the area of insurance for which the City is to be self - insured. Any casualty and property damage insurance policy required by this Section shall be so written or endorsed as to make losses of $2,500 or less, if any, payable to the City, and losses over $2,500, if any, payable to the Trustee, who, along with the City and the Lessor, shall be a co- insured. Each insurance policy provided for in this Section shall contain a provision to the 021%2116.4 23 effect that the insurance company shall not cancel the policy or modify it materially and adversely to the interest of the Trustee or the Registered Owners, without first giving written notice thereof to the City, the Certificate Insurer and the Trustee at least 30 days in advance of such cancellation or modification. All insurance policies issued pursuant to this Section, or certificates with respect thereto, shall be deposited with the Trustee. No agent or employee of the City shall have the power to adjust or settle any loss with respect to the Project, whether or not covered by insurance, without the prior written consent of the Trustee and the Certificate Insurer. The consent of the Lessor shall not be required for any such adjustment or settlement. All insurance policies required by this Section must be provided by a commercial insurer rated "A +" by A.M. Best & Company or in the two highest rating categories of Standard & Poor's Ratings Group and Moody's Investors Service. All such policies shall name the City, the Lessor and the Trustee as insureds. Original copies of all insurance policies required by this Section shall be delivered annually to the Certificate Insurer. Notwithstanding the foregoing, the City's participation in the Colorado Intergovernmental Risk Sharing Agency shall be deemed to meet the requirements of this Section. Section 9.06. Advances. In the event that the City shall fail to pay any Additional Rentals during the Lease Term, and if there are not sufficient moneys available therefor in the Reserve Fund, the Trustee may, with the consent of the Certificate Insurer, pay such Additional Rentals, which Additional Rentals, together with interest thereon at the rate of 18% per annum, the City agrees to reimburse to the Trustee. ARTICLE X DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET PROCEEDS Section 10.01. Damage, Destruction and Condemnation. If, during the Lease Term (i) the Project shall be destroyed (in whole or in part), or damaged by fire or other casualty; or (ii) title to, or the temporary or permanent use of, the Project or any portion thereof or the estate of the City, the Lessor or the Trustee in the Project or any portion thereof shall be taken under the exercise of the power of eminent domain by any governmental authority; or (iii) a material defect in construction of the Project shall become apparent; or (iv) title to or the use of all or any portion of the Project shall be lost by reason of a defect in title thereto; then the City shall continue to be obligated, subject to the provisions of Section 10.03 of this Lease, to continue to pay the amounts specified in Sections 10.02 and 6.02 of this Lease. Section 10.02. Obligation of the City to Repairand Replace the Project. Subject to the provisions of Section 10.03 of this Lease, the Trustee shall cause the Net Proceeds of any insurance policies, performance bonds, condemnation awards or made available by reason of any occurrence described in Section 10.01 hereof, to be deposited in a separate trust fund. Except as set forth in Section 10.03 of this Lease, all Net Proceeds so deposited shall be applied to the prompt repair, restoration, modification, improvement or replacement of the Project upon receipt of requisitions acceptable to the Trustee signed by the City Representative, stating with respect 02/82116.4 24 to each payment to be made: (i) the requisition number; (ii) the name and address of the person, firm or corporation to whom payment is due; (iii) the amount to be paid; and (iv) that each obligation mentioned therein has been properly incurred, is a proper charge against the separate trust fund, and has not been the basis of any previous withdrawal and specifying in reasonable detail the nature of the obligation, accompanied by a bill or a statement of account for such obligation. The Trustee shall cooperate with the City in the administration of such fund and shall not unreasonably withhold its approval of requisitions under this Section. The balance of any such Net Proceeds remaining after such repair, restoration, modification, improvement or replacement has been completed shall be deposited into the Extraordinary Redemption Fund. Any repair, restoration, modification, improvement or replacement paid for in whole or in part out of such Net Proceeds shall be the property of the Lessor, subject to this Lease and the Indenture, and shall be included as part of the Project under this Lease and the Indenture. Section 10.03. Insufficiency of Net Proceeds; Discharge of the Obligation of the City to Repair or Replace Project. If the Net Proceeds (plus any amount withheld therefrom by reason of any deductible clause) shall be insufficient to pay in full the cost of any repair, restoration, modification, improvement or replacement of the Project as required under Section 10.02 of this Lease, the City may elect to proceed under any of the following options: (a) The City may complete the work and pay any cost in excess of the amount of the Net Proceeds, and the City agrees that, if by reason of any such insufficiency of the Net Proceeds, the City shall make any payments pursuant to the provisions of this Section 10.03(a), the City shall not be entitled to any reimbursement therefor from the Lessor, the Trustee or the Registered Owners, nor shall the City be entitled to any diminution of the Base Rentals and Additional Rentals payable under Section 6.02 of this Lease. (b) The obligation of the City to repair or replace the Project under Section 10.02 of this Lease may, at the option of the City, be discharged by depositing the Net Proceeds of insurance policies, performance bonds or condemnation awards, made available by reason of such occurrence, into the Extraordinary Redemption Fund, to be used to redeem Certificates as provided in Section 4.01(c) of the Indenture. Upon such deposit: (i) this Lease shall terminate and all obligations of the City hereunder shall terminate (except the obligation to pay Base Rentals and Additional Rentals which would otherwise have been payable by the City hereunder during the Original or Renewal Term in which such deposit of Net Proceeds occurs); and (ii) the Trustee shall notify the City to vacate the Project (leaving the Equipment) within 30 days of such deposit; the Project shall thereafter be foreclosed on and subleased as provided in Sections 7.02 and 7.05 of the Indenture; and the Net Proceeds of such foreclosure and subleasing shall also be deposited into the Extraordinary Redemption Fund for the purpose of redeeming Certificates as provided in Section 4.01(d) of the Indenture. (c) The obligation of the City to repair or replace the Project under Section 10.02 of this Lease may, at the option of the City, be discharged by applying the 02182116.4 25 Net Proceeds of such insurance policies, performance bonds or condemnation awards to the payment of the Purchase Option Price, in accordance with Article XII of this Lease. In the event of an insufficiency of the Net Proceeds for such purpose, the City shall pay such amounts as may be necessary to equal the Purchase Option Price; and in the event the Net Proceeds shall exceed the Purchase Option Price, such excess shall be paid to or retained by the City. Within 90 days of the occurrence of an event specified in Section 10.01 of this Lease, the City shall commence the repair, restoration, modification, improvement or replacement of the Project, or shall elect, by written notice to the Trustee and the Certificate Insurer, to proceed under the provisions of subsection (b) or subsection (c) of this Section. In the event that the City shall, after commencing the repair, restoration, modification, improvement or replacement of the Project, determine that the Net Proceeds (plus any amount withheld therefrom by reason of any deductible clause) shall be insufficient for the accomplishment thereof, the City may elect to proceed under subsection (b) or subsection (c) of this Section. Section 10.04. Cooperation of Lessor. The Lessor shall cooperate fully with the City and the Trustee in filing any proof of loss with respect to any insurance policy or performance bond covering the events described in Section 10.01 of this Lease, in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Project or any portion thereof, or in any action relating to any Construction Contract, and hereby assigns to the Trustee any interest it may have in such policies or rights of action for such purposes. In no event shall the Lessor voluntarily settle, or consent to the settlement of, any proceeding arising out of any insurance claim, performance or payment bond claim, prospective or pending condemnation proceeding, with respect to the Project or any portion thereof, without the written consent of the Trustee, the Certificate Insurer and the City. ARTICLE XI DISCLAIMER OF WARRANTIES; OTHER COVENANTS Section 11.01. .Disclaimer of Warranties. NEITHER THE LESSOR, THE TRUSTEE NOR THE REGISTERED OWNERS MAKE ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR USE OF THE PROJECT OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE PROJECT. The City hereby acknowledges and declares that the City was solely responsible for the design and construction of the Project, and is solely responsible for the operation and maintenance of the Project during the Lease Term, and that neither the Lessor, the Trustee nor the Registered Owners has any responsibility therefor. In no event shall the Lessor, the Trustee or the Registered Owners be liable for any direct or indirect, incidental, special or consequential damage in connection with or arising out of this Lease or the existence, furnishing, functioning or use by the City of any item, product or service provided for herein. 02/92116.4 26 � ■ICI Ill Section 11.02. Further Assurances and Corrective Instruments. The Lessor and the City agree that, with the consent of the Certificate Insurer, they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project hereby leased or intended so to be, or for otherwise carrying out the intention hereof. Section 11.03. Lessor, City and Trustee Representatives. Whenever under the provisions hereof the approval of the Lessor, the City or the Trustee is required to take some action at the request of the other, unless otherwise provided, such approval or such request shall be given for the Lessor by a the Lessor Representative, for the City by the City Representative, and for the Trustee by the Trustee Representative, and the Lessor, the City and the Trustee shall be authorized to act on any such approval or request. Section 11.04. Granting of Easements. So long as no Event of Nonappropriation or Event of Default shall have happened and be continuing, and so long as the Lease Term shall not have been terminated by the City pursuant to Section 10.03(b) of this Lease, the Lessor and the Trustee, with the consent of the Certificate Insurer, shall at any time or times, but only upon the request of the City, grant easements, licenses, rights -of -way (including the dedication of public highways) and other rights or privileges in the nature of easements with respect to any property or rights included in the Ground Lease, free from the Ground Lease, this Lease and the Indenture and any security interest or other encumbrance created hereunder or thereunder, and the Lessor and the Trustee shall release existing easements, licenses, rights -of -way and other rights and privileges with respect to such property or rights, with or without consideration, and the Lessor and the Trustee agree to execute and deliver any instrument necessary or appropriate to confirm and grant or release any such easement, license, right -of -way or other grant or privilege upon receipt of. (i) a copy of the instrument of grant or release; (ii) a written application signed by the City Representative requesting such instrument; and (iii) an opinion of Independent Counsel to the effect that such grant or release will not impair the value or the effective use or interfere with the operation of the Project. Section 11.05. Compliance With Requirements. During the Lease Term, the City, the Lessor and the Trustee shall observe and comply promptly with all current and future orders of all courts having jurisdiction over the Project or any portion thereof, and all current and future requirements of all insurance companies writing policies covering the Project or any portion thereof. Section 11.06. City Acknowledgement of the Indenture and the Certificates. The City acknowledges and agrees to the terms of the Indenture and agrees to be bound thereby. The City further acknowledges and agrees to the assignment by the Lessor to the Trustee, pursuant to the Indenture, of all rights, title and interest of the Lessor in, to and under this Lease (except the rights of the Lessor under Sections 13.03 and 14.06 of this Lease) and the Ground Lease; and to the delegation by the Lessor to the Trustee, pursuant to the Indenture, of all duties of the Lessor under this Lease. The City acknowledges, directs and agrees to the issuance and sale 02182116.4 27 of the Certificates pursuant to the Indenture. The City acknowledges and approves the form of the Certificates contained in the Indenture. Section 11.07. Tax Covenants. The City hereby covenants to comply with all restrictions of the Code applicable to the Certificates and necessary to preserve the exclusion from gross income and from alternative minimum taxable income, for purposes of federal income taxation, of interest paid in connection with the Certificates, unless the City obtains an opinion of nationally recognized municipal bond counsel to the effect that compliance with such restrictions is not necessary to preserve such exclusion. In particular, but without limitation, the City further represents, warrants and covenants to comply with the following restrictions of the Code, unless it receives an opinion of nationally recognized municipal bond counsel stating that such compliance is not necessary. (a) Gross proceeds of the Certificates will not be used in a manner which will cause the Certificates to be considered "private activity bonds" within the meaning of the Code. The Certificates will be classified as private activity bonds if greater than 10% of the net proceeds of the Certificates are used for any private business use and greater than 10% of the net proceeds of the Certificates are directly or indirectly (i) secured by any interest in (A) property used or to be used for a private business use or (B) payments in respect of such property or (ii) to be secured by payments derived from payments in respect of property, or borrowed money, used or to be used for a private business use. The Certificates will also be deemed private activity bonds if greater than 5 % of the proceeds of the Certificates are (i) used for a private use which is unrelated or disproportionate to the City's use of the proceeds of the Certificates and greater than 5 % of the debt service on the Certificates is secured by payments made directly or indirectly by such private user or (ii) an amount exceeding the lesser of 5 % or $5 million of the proceeds of the Certificates is used to make a private loan to a person or entity other than a governmental unit. (b) The Certificates are not and shall not become directly or indirectly "federally guaranteed. " Under the Code, the Certificates will be considered to be "federally guaranteed" if the payment of principal or interest with respect to the Certificates is directly or indirectly guaranteed (in whole or in part) by the United States of America (or any agency or instrumentality thereof) or 5 % or more of the proceeds of the Certificates are used in making loans the payment of principal or interest with respect to which are guaranteed or invested (directly or indirectly) in federally insured deposits or accounts. The Certificates shall not be treated as federally guaranteed due to (i) the proceeds of the issue being invested for an initial temporary period until such proceeds are needed for the purpose for which such Certificates were issued; (ii) investments of a bona fide debt service fund; (iii) investments of a reserve fund which meet the limitations placed on reserve funds by the Code; (iv) investments in obligations issued by the United States Treasury; or (v) other investments permitted by the regulations under the Code. 02182116.4 28 (c) The City shall timely file Internal Revenue Form 8038 -G which shall contain the information required to be filed pursuant to Section 149(e) of the Code. (d) The City shall comply with the Investment Instructions delivered to it on the date of issuance of the Certificates with respect to the application and investment of the proceeds of the Certificates. Section 11.08. Reporting Requirements. (a) The City agrees that immediately, in the case of the issuance of Additional Certificates, and annually, in the case of the issuance of indebtedness, it will file or cause to be filed with the Certificate Insurer any official statement issued by, or on behalf of, the City in connection with the issuance by the City of Additional Certificates or the incurrence by the City of any such indebtedness. (b) The City agrees promptly to provide or cause to be provided to the Certificate Insurer such financial, statistical and other factual information as the Certificate Insurer shall from time to time reasonably request regarding the City. (c) The City agrees, so long as the Policy of Insurance is in effect, to provide not more than 90 days after the end of each Fiscal Year, a certificate of its Finance Director (or any other officer at any time charged with the responsibility of formulating budget proposals) to the effect that the City is in compliance with the terms and conditions of the Lease, or specifying the nature of any noncompliance and the remedial action taken or proposed to be taken to cure such noncompliance. (d) The City agrees, so long as the Policy of Insurance is in effect, promptly to provide to the Certificate Insurer: (i) audited (or if not audited then unaudited) financial statements and quarterly financial statements of the City, (ii) the City's annual report and (iii) all budgets, budget amendments, reports, certificates and financial information required to be filed with the Trustee pursuant to the Indenture and this Lease. Any other information available to the Registered Owners on request shall also be available to the Certificate Insurer on request. Section 11.09. Undertaking to Provide Ongoing Disclosure. (a) This Section constitutes the written undertaking of the City for the benefit of the owners of the Series 1995 Certificates required by Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2 -12 under the Securities Exchange Act of 1934, as amended (17 CFR Part 240, § 240. 15c2 -12) (the "Rule "). The owners of the Series 1995 Certificates for purposes of this Section shall be the beneficial owners as well as the Registered Owners. It is the City's express intention that this Section be assigned by the Lessor pursuant to and in accordance with the Indenture to the Trustee for the benefit of the owners of Series 1995 Certificates and that each owner of a Series 1995 Certificate MA2116.4 29 be a beneficiary of this Section with the right to enforce this Section directly against the City. (b) The City, as an "obligated person" within the meaning of the Rule, undertakes to provide the following information: (i) Annual Financial Information; and (ii) Material Event Notices. (c) The City shall while any Series 1995 Certificates are Outstanding provide Annual Financial Information to the Trustee within 188 days after the end of the City's fiscal year (the "Submission Date "), beginning with the City's fiscal year ending December 31, 1996, and the Trustee shall provide to each then existing NRMSIR and the SID, if any, such Annual Financial Information within two days of the day it receives it (the "Report Date ") while any Series 1995 Certificates are Outstanding. It shall be sufficient if the City provides to the Trustee and the Lessor and the Trustee provides to each then existing NRMSIR and the SID, if any, the Annual Financial Information by specific reference to documents previously provided to each NRMSIR and the SID, if any, or filed with the Securities and Exchange Commission and, if such a document is a final official statement within the meaning of the Rule, available from the MSRB. (d) If a Material Event occurs while any Series 1995 Certificates are outstanding, the City shall provide a Material Event Notice to the Trustee in a timely manner and the Trustee shall promptly provide to the MSRB and the SID, if any, such Material Event Notice. Each Material Event Notice shall be so captioned and shall prominently state the date, title, and CUSIP numbers of the Series 1995 Certificates. (e) The Trustee shall promptly advise the City whenever, in the course of performing its duties as Trustee under the Indenture, the Trustee identifies an occurrence which, if material, would require the City to provide a Material Event Notice pursuant to clause (d) above; provided that the failure of the Trustee so to advise the City of such occurrence shall not constitute a breach by the Trustee of any of its duties and responsibilities hereunder or under the Indenture. (f) The Trustee shall, without further direction or instruction from the City, provide in a timely manner to each then existing NRMSIR (or the MSRB) and to the SID, if any, notice of any failure while any Series 1995 Certificates are Outstanding by the Trustee to provide to each then existing NRMSIR and the SID, if any, Annual Financial Information on or before the Report Date (whether caused by failure of the City to provide such information to the Trustee by the Submission Date or for any other reason). 02192116.4 30 (g) If the City provides to the Trustee information relating to the City or the Series 1995 Certificates, which information is not designated as a Material Event Notice, and directs the Trustee to provide such information to information repositories, the Trustee shall provide such information in a timely manner to each then existing NRMSIR (or the MSRB) and the SID, if any. (h) Unless otherwise required by law and subject to technical and economic feasibility, the City and the Trustee shall employ such methods of information transmission as shall be reasonably requested or recommended by the designated recipients of the City's information. (i) The undertaking in this Section will be in effect from the date of delivery of the Series 1995 Certificates until the earliest of (i) the date all principal and interest on the Series 1995 Certificates has been legally defeased pursuant to the terms of the Indenture; (ii) the date that the City shall no longer constitute an "obligated person" within the meaning of the Rule; or (iii) the date on which those portions of the Rule which required this written undertaking are held to be invalid by a court of competent jurisdiction in a non - appealable action, have been repealed retroactively or otherwise do not apply to the Series 1995 Certificates. 0) This Section may be amended without the consent of the owners of the Series 1995 Certificates, in compliance with the Rule and any interpretive guidance related to the Rule. The Trustee shall provide notice of such amendment to each NRMSIR. (k) Any failure by the City to perform in accordance with this Section shall not constitute an "Event of Default" under this Lease, and the rights and remedies provided by the Lease upon the occurrence of an "Event of Default" shall not apply to any such failure. Either the Certificate owners, or the Trustee, on behalf of the Certificate owners, may enforce specific performance of the undertakings herein by any available judicial proceeding. Unless otherwise required by law, no owner of a Series 1995 Certificate shall be entitled to damages for the City's non - compliance with its obligations under this Section. ARTICLE XH CONVEYANCE OF THE PROJECT Section 12.01. Conveyance of the Project. The Lessor shall transfer and convey to the City the Project (or, in the case of (c) below, any portion of the Project to which the Lessor may then hold title), in the manner provided for in Section 12.02 of this Lease; provided, however, that prior to such transfer and conveyance: 02/92116.4 31 (a) The City shall have paid the then applicable Purchase Option Price and the Indenture shall have been discharged as provided in Article VI of the Indenture; or (b) The City shall have paid all Base Rentals set forth in Exhibit B hereto, for the Original Term and all Renewal Terms, including the final Renewal Term, and all then current Additional Rentals required hereunder; or (c) The Indenture shall have been discharged as provided in Article VI of the Indenture; and (d) All amounts due to the Certificate Insurer and the provider of any Qualified Surety Bond shall have been paid in full. The City is hereby granted the option to terminate the Lease Term and to purchase the Project upon payment by the City of the then applicable Purchase Option Price and discharge of the Indenture as provided in Article VI of the Indenture. Section 12.02. Manner of Conveyance. At the closing of any purchase or other conveyance of the Project pursuant to Section 12.01 of this Lease, the Lessor and the Trustee shall execute and deliver to the City all necessary documents releasing this Lease, the Ground Lease and the Indenture, and assigning, transferring and conveying good and marketable title to the Project, as the Project then exists, subject to the following: (a) Permitted Encumbrances, other than this Lease, the Ground Lease and the Indenture and any Financing Statements, indicating the City or the Lessor as the debtor and the Lessor or the Trustee as secured party, filed to perfect any security interests granted under this Lease or the Indenture; (b) all liens, encumbrances and restrictions created or suffered to exist by the Lessor or the Trustee as required or permitted by this Lease or the Indenture or arising as a result of any action taken or omitted to be taken by the Lessor or the Trustee as required or permitted by this Lease or the Indenture; (c) any lien or encumbrance created by action of the City; and (d) those liens and encumbrances (if any) to which title to the Site was subject when leased to the Lessor. Section 12.03. Escrowed Deed and Bill of Sale. In order to facilitate the enforcement by the City of the obligation of the Lessor to convey the Project to the City under the circumstances provided in Section 12.01 of this Lease, the Lessor shall deposit in escrow with the Trustee, concurrently with the delivery of the Certificates to the Original Purchaser, a deed to the Project and a bill of sale satisfactory to the City. The Trustee shall, upon payment of the Purchase Option Price and discharge of the Indenture as provided in Article VI of the Indenture or payment of all Base Rentals or upon discharge of the Indenture as provided in Section 12.01(c) of this Lease, date and release the deed and bill of sale to the City for recording. In the event of any change in description of the Site (pursuant to Section 11.04 of this Lease), the Lessor shall promptly cooperate with the City and the Trustee in appropriately modifying, re- executing and redelivering the deed and bill of sale. 02182116.4 32 � I x'11 II�III ARTICLE XIII ASSIGNMENT, SUBLEASING, INDEMNIFICATION, MORTGAGING AND SELLING Section 13.01. Assignment by Lessor, Replacement of Lessor. The rights of the Lessor under this Lease, including rights to receive and enforce payments hereunder (except the rights of the Lessor under Sections 13.03 and 14.06 of this Lease), have been assigned to the Trustee pursuant to the Indenture. In the event of any bankruptcy, insolvency, or other similar proceeding as to the Lessor, or in any other event which in the judgment of the Trustee materially impairs the ability of the Lessor to serve as lessor under this Lease or as grantor under the Indenture, the Trustee, with the consent of the Certificate Insurer, may replace the Lessor with such other entity as it deems appropriate. In any such event the Lessor shall cooperate with the Trustee in conveying title to the Project and any and all other right, title and interest of the Lessor in, to and under this Lease, the Ground Lease and the Indenture to such successor entity as the Trustee may designate. Any costs or expenses incurred by or charged to the Lessor at the request of the Trustee and in the course of cooperating with the Trustee pursuant to the provisions of this Section shall be paid by the City. Section 13.02. Assignment and Subleasing by the City. This Lease may not be assigned by the City for any reason. However, the Project may be subleased, as a whole or in part, by the City, with the consent of the Certificate Insurer, but without the necessity of obtaining the consent of the Lessor, the Trustee or any Registered Owners; subject, however, to each of the following conditions: (a) The Project may be subleased, in whole or in part, only to an agency or department or political subdivision of the State, or to another entity or entities if, in the opinion of nationally recognized bond counsel acceptable to the Trustee, such sublease will not cause the City to violate its covenants in Section 11.07 hereof; (b) This Lease, and the obligations of the City hereunder, shall, at all times during the Original and any Renewal Terms, remain obligations of the City, and the City shall maintain its direct relationships with the Lessor and the Trustee, notwithstanding any sublease; (c) The City shall furnish or cause to be furnished to the Lessor, the Certificate Insurer and the Trustee a copy of any sublease agreement; and (d) No sublease by the City shall cause the Project to be used for any purpose which would cause the City to violate its covenants in Section 11.07 hereof, or which would violate the Constitution, statutes or laws of the State or the Charter. Section 13.03. Release and Indemnification Covenants. To the extent permitted by law, the City shall and hereby agrees to indemnify and save the Lessor, the Certificate Insurer 02182116.4 33 and the Trustee harmless against and from all claims, by or on behalf of any person, firm, corporation or other legal entity arising from the conduct, management or ownership of, or from any work or thing done on, the Project during the Lease Term, from: (i) any condition of the Project; and (ii) any act of negligence of the City or of any of its agents, contractors or employees or any violation of law by the City or breach of any covenant or warranty by the City hereunder. To the extent permitted by law, the City shall indemnify and save the Lessor, the Certificate Insurer and the Trustee harmless from any such claim arising as aforesaid from (i) or (ii) above, or in connection with any action or proceeding brought thereon and, upon notice from the Lessor, the Certificate Insurer or the Trustee, shall defend the Lessor, the Certificate Insurer or the Trustee, as the case may be, and pay the cost of such defense in any such action or proceeding. All indemnification provisions contained in this Section shall be subject to the restrictions, provisions and damage limitations contained in the Colorado Governmental Immunity Act, Article 10 of Title 24, C.R.S., now existing or as subsequently amended or any statute superseding such Act. Further, nothing in this Lease shall be construed or interpreted to require or provide for indemnification of the Lessor and the Trustee by the City for any injury to any person or any property damage whatsoever which is caused by the negligence or other misconduct of such Lessor or Trustee or their agents or employees. Section 13.04. Restrictions on Mortgage or Sale of Project. The City and the Lessor agree that, except for: (a) the assignment by the Lessor of this Lease and the Ground Lease and mortgaging of the Project to the Trustee pursuant to the Indenture; (b) any exercise by the Trustee or the Lessor of the remedies afforded by this Lease; (c) the right of the Trustee to replace the Lessor pursuant to Section 13.01 of this Lease and any conveyances required by reason of such replacement; (d) the right of the City to sublease all or a portion of the Project pursuant to Section 13.02 of this Lease; (e) any granting of easements pursuant to Section 11.04 of this Lease; (f) any conveyance to the City pursuant to Article XII of this Lease; (g) any substitutions, additions, modifications and improvements of the Project pursuant to Section 9.02 of this Lease; (h) release or reconvey the Site in the event the Alternate Site is acquired by the City for the Project; and (i) any removal, substitution, sale or other disposition of Equipment pursuant to Section 9.03 of this Lease; neither the Lessor nor the City will mortgage, sell, assign, transfer or convey the Project or any portion thereof during the Lease Term. ARTICLE XIV EVENTS OF DEFAULT AND REMEDIES Section 14.01. Events of Default Defined. Any one of the following shall be "Events of Default" under this Lease: (a) Failure by the City to pay any Base Rentals or Additional Rentals when due during the Lease Term; or 02/82116.4 34 (b) Failure by the City to vacate the Project (leaving the Equipment) by the expiration of the Original or Renewal Term during which an Event of Nonappropriation occurs; or (c) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in (a) or (b), for a period of 30 days after written notice, specifying such failure and requesting that it be remedied shall be given to the City by the Trustee or the Certificate Insurer, unless the Trustee or the Certificate Insurer shall agree in writing to an extension of such time prior to its expiration; provided, however, that if the failure stated in the notice cannot be corrected within the applicable period, the Trustee and the Certificate Insurer shall not unreasonably withhold their consent to an extension of such time if corrective action shall be instituted by the City within the applicable period and diligently pursued until the default is corrected; or (d) failure by the City to comply with the terms of Article VI of the Ground Lease for a period of five Business Days after written notice specifying such failure and requesting that it be remedied is given to the City by the Trustee; or (e) Failure by the City to budget for and seek an appropriation to reimburse the provider of a Qualified Surety Bond for any drawing upon such Qualified Surety Bond. The foregoing provisions of this Section are subject to the following limitations: (i) the City shall be obligated to pay the Base Rentals and Additional Rentals only during the Lease Term, except as otherwise expressly provided in this Lease; and (ii) if, by reason of Force Majeure, the City shall be unable in whole or in part to carry out any agreement on its part herein contained, other than the obligations on the part of the City contained in Article VI of this Lease, the City shall not be deemed in default during the continuance of such inability. The City agrees, however, to remedy, as promptly as legally and reasonably possible, the cause or causes preventing the City from carrying out its agreement; provided that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the City. Section 14.02. Remedies on Default. Whenever any Event of Default referred to in Section 14.01 of this Lease shall have happened and be continuing, the Trustee may terminate the Lease Term and may give notice to the City to vacate the Project (leaving the Equipment) within 15 days from the date of such notice. After the occurrence of an Event of Default the Trustee may, with the consent of the Certificate Insurer, and shall, at the direction of the Certificate Insurer, without any further demand or notice, foreclose through the courts on the Project, and exercise all the rights and remedies of a secured party under the Colorado Uniform Commercial Code with respect to the Equipment, and take one or any combination of the following additional remedial steps: 02182116.4 35 ( a) The Trustee may sublease the Site and lease the Project or any portion thereof for the benefit of the Registered Owners, or sell an assignment of its interest in the Ground Lease; provided that, notwithstanding anything contained herein, in the Ground Lease or in the Indenture to the contrary, the University of Southern Colorado shall have the exclusive right, for two weeks from the day notice of the Event of Default is given, to enter into an agreement to lease the Project and sublease the Site from the Trustee, so long as the University of Southern Colorado agrees to make such payments of Base Rentals and Additional Rentals as are set forth herein. In the event that the University of Southern Colorado fails to exercise its right to lease the Project and sublease the Site from the Trustee within such two week period, the Trustee may lease and sublease to the highest responsible bidder. Any such lease and sublease or assignment shall be conditioned, however, on an agreement by the lessee /sublessee or assignee to use the Site in a manner compatible with other uses in the area immediately surrounding the Site. Prior to the execution of any such lease and sublease or assignment, the Trustee shall give written notice by mail, return receipt requested, of the proposed use or uses to the University of Southern Colorado, which shall have 30 days from the date of receipt of the notice within which to acquiesce or object to each of the proposed uses on the basis of the standard set forth in the preceding sentence. If the University of Southern Colorado fails to respond within the allotted time, it will be conclusively presumed to have acquiesced to all of the uses proposed. If the University of Southern Colorado objects to one or more of the proposed uses, the Trustee may either (i) execute a lease and sublease or assignment which limits the use or uses of the Site to those to which the University of Southern Colorado has acquiesced, or (ii) take the issue of whether a particular use or uses meet the standard of compatibility set forth above to binding arbitration, which arbitration shall be concluded within 180 days from the date of the objection from the University of Southern Colorado, such arbitration to be conducted in accordance with the rules of the American Arbitration Association. (b) The Trustee may recover from the City: (i) the portion of Base Rentals and Additional Rentals which would otherwise have been payable hereunder, allocable to any period in which the City continues to occupy the Project; and (ii) Base Rentals and Additional Rentals which would otherwise have been payable by the City hereunder during the remainder, after the City vacates the Project, of the Original or Renewal Term in which such Event of Default occurs; provided, however, that if the Trustee does not proceed to foreclose and sell the Project and assign its interest in the Ground Lease reasonably promptly after such Event of Default, the Trustee shall be obligated to the City to use its best efforts to lease and sublease the Project and the Site for the remainder of such Original or Renewal Term, as provided in paragraph (a) of this Section, and the Net Proceeds of such leasing shall be offset against the amount recoverable from the City under this paragraph (ii). 02/82116.4 36 (c) The Trustee may take whatever action at law or in equity may appear necessary or desirable to enforce its right in and to the Project under this Lease, the Ground Lease and the Indenture. The exercise of any remedies under this Lease shall be subject to the limitations and requirements of the Indenture, including without limitation, the right of the Certificate Insurer to direct, or consent to the exercise of, such remedies as provided in the Indenture. Section 14.03. Limitations on Remedies. A judgment requiring a payment of money may be entered against the City by reason of an Event of Default only as to the City's liabilities described in paragraph (b) of Section 14.02 of this Lease. A judgment requiring a payment of money may be entered against the City by reason of an Event of Nonappropriation only to the extent that the City fails to vacate the Project as required by Section 6.06 of this Lease, and only as to the liabilities described in paragraph (b)(i) of Section 14.02 of this Lease. Notwithstanding paragraph (b)(ii) of Section 14.02 of this Lease, any Event of Default consisting of failure by the City to vacate the Project by the expiration of the Original or Renewal Term during which an Event of Nonappropriation occurs shall not result in any liability for Base Rentals or Additional Rentals allocable to any period other than the period in which the City continues to occupy the Project. Section 14.04. No Remedy Exclusive. Subject to Section 14.03 hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, and the same may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Trustee to exercise any remedy reserved in this Article, it shall not be necessary to give any notice, other than such notice as may be required in this Article. Section 14.05. Waivers. The Trustee may waive any Event of Default under this Lease and its consequences, as the Trustee deems to be in the best interests of the Registered Owners; provided, however, that the consent of the Certificate Insurer shall be required for any such waiver, and the consent of the University of Southern Colorado shall be required for any waiver of the Event of Default described under Section 14.01(c). In the event that any agreement 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 breach hereunder. In view of the assignment of the rights of the Lessor under this Lease and the Ground Lease to the Trustee pursuant to the Indenture, the Lessor shall have no right to waive any Event of Default hereunder or under the Ground Lease without the consent of the Trustee and the Certificate Insurer; and the waiver of any Event of Default hereunder by the Trustee, with the consent of the Certificate Insurer, shall constitute a waiver of such Event of Default by the Lessor, without the necessity of any action of or consent by the Lessor. A waiver of an Event 02 /92116.4 37 of Default under the Indenture shall constitute a waiver of the corresponding Event of Default or Event of Nonappropriation under this Lease and the Ground Lease; provided that no such waiver shall extend to or affect any subsequent or other Event of Default or Event of Nonappropriation under this Lease or the Ground Lease or impair any right consequent thereon. Section 14.06. Agreement to Pay Attorneys' Fees and Expenses. In the event that either party hereto shall default under any of the provisions hereof and the nondefaulting party or the Certificate Insurer shall employ attorneys or incur other expenses for the collection of Base Rentals and Additional Rentals, or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it shall pay on demand therefor to the nondefaulting party or the Certificate Insurer the fees of such attorneys and such other expenses so incurred by the nondefaulting party or the Certificate Insurer, to the extent that such attorneys' fees and expenses may be determined to be reasonable by a court of competent jurisdiction. Section 14.07. Waiver of Appraisement, Valuation, Stay and Extension. The Lessor and the City agree, to the extent permitted by law, that in the case of a termination of the Lease Term by reason of an Event of Nonappropriation or an Event of Default, neither the Lessor nor the City nor any one claiming through or under either of them shall or will set up claim or seek to take advantage of any appraisement, valuation, stay or extension laws now or hereafter in force in order to prevent or hinder the enforcement of the Indenture, this Lease or the Ground Lease; and the Lessor and the City, for themselves and all who may at any time claim through or under either of them, each hereby waives, to the full extent that it may lawfully do so, the benefit of all such laws; provided, however, that Lessor, for itself and all who may at any time claim through or under the Lessor, shall retain all rights of redemption. ARTICLE XV AUSCELLANEOUS Section 15.01. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by certified or registered mail, postage prepaid, as follows: if to the City, City of Pueblo, Colorado, #1 City Hall Place, Pueblo, Colorado 81003, Attention: City Manager; if to the Lessor, Pueblo Municipal Property Corporation, One City Hall Place, Pueblo, Colorado 81003, Attention: President; if to the Trustee, Colorado National Bank, 24th Floor, 950 Seventeenth Street, Denver, Colorado 80202, Attention: Corporate Trust Department; if to the Original Purchaser, Lewis, de Rozario & Co. Incorporated, 555 Seventeenth Street, Suite 3400, Denver, Colorado 80202 -3934, Attention: Public Finance Department; and if to the Certificate Insurer, MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured Portfolio Management -Lease Unit. The City, the Lessor, the Trustee, the Original Purchaser and the Certificate Insurer may, by written notice, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. 02/82116.4 38 Section 15.02. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Lessor and the City and their respective successors and assigns, subject, however, to the limitations contained in Article XIII of this Lease. Section 15.03. Rights of the Certificate Insurer Suspended Upon Default Under the Policy of Insurance. Notwithstanding any other provision hereof or of the Indenture, and whether or not any provision specifically so states, any rights granted to or conferred upon the Certificate Insurer hereunder shall be in effect only so long as the Certificate Insurer is not in default under the Policy of Insurance, and upon any such default by the Certificate Insurer its rights hereunder shall be suspended (except to the extent of subrogation for any payments under the Policy of Insurance theretofore made by the Certificate Insurer); provided, however, that such rights shall be reinstated when the Certificate Insurer has cured such default under the Policy of Insurance. Section 15.04. Amendments, Changes and Mod'if'ications. Except as otherwise provided in this Lease or the Indenture, subsequent to the delivery of the Certificates to the Original Purchaser and prior to the discharge of the Indenture, this Lease may not be effectively amended, changed, modified or altered without the written consent of the Trustee and the Certificate Insurer, as provided in the Indenture. Section 15.05. Amounts Remaining in Funds. It is agreed by the parties hereto that any amounts remaining in the Certificate Fund, the Reserve Fund, the Extraordinary Redemption Fund, the Expenses Fund or any other fund or account created under the Indenture except the Rebate Fund, upon termination of the Lease Term, and after payment in full of the Certificates (or provision for payment thereof having been made in accordance with the provisions of Article VI of the Indenture) and fees and expenses of the Trustee in accordance with this Lease, shall belong to and be paid to the City by the Trustee as an overpayment of Base Rentals. Section 15.06. Net Lease. This Lease shall be deemed and construed to be a "net lease," and the City shall pay absolutely net during the Lease Term, the Base Rentals, Additional Rentals and all other payments required hereunder, free of any deductions, and without abatement, deduction or setoff (other than credits against Base Rentals expressly provided for in this Lease). Section 15.07. Payments Due on Holidays. If the date for making any payment or the last day for performance of any act or the exercising of any right, as provided in this Lease, shall be a legal holiday or a day on which banking institutions in the city in which the principal corporate trust office of the Trustee is located are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day that is not a legal holiday or a day on which such banking institutions are not authorized by law to remain closed with the same force and effect as if done on the nominal date provided in this Lease. Section 15.08. Severability. In the event that any provision of this Lease, other than the requirement of the City to pay Base Rentals and the requirement of the Lessor to provide quiet 02192116.4 39 enjoyment of the Project and to convey the Project to the City under the conditions set forth in Article XII of this Lease, shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 15.09. Execution in Counterparts. This Lease 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. Section 15.10. Applicable Law. This Lease shall be governed by and construed in accordance with the laws of the State, without regard to conflict of laws principles. Section 15.11. Captions. The captions or headings herein are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Lease. 02/82116.4 40 IN WITNESS WHEREOF, the Lessor has executed this Lease in its corporate name with its corporate seal hereunto affixed and attested by its duly authorized officers; and the City has caused this Lease to be executed in its corporate name and the seal of the City affixed and attested by duly authorized officers thereof. All of the above are effective as of the date first above written. [SEAL] Attest: By Secretary [CITY SEAL] Attest: City Clerk PUEBLO MUNICIPAL PROPERTY CORPORATION, as the Lessor and Sublessor President CITY OF PUEBLO, COLORADO, as Lessee and Sublessee L-A President of the City Council 02/92116.4 41 STATE OF COLORADO ] ] ss. CITY OF PUEBLO ] The foregoing instrument was acknowledged before me this _ day of December 1995, by , as President, and by , as Secretary, of Pueblo Municipal Property Corporation, a Colorado nonprofit corporation. WITNESS my hand and official seal. [SEAL] My commission expires: STATE OF COLORADO ] ] ss. CITY OF PUEBLO ] Notary Public The foregoing instrument was acknowledged before me as of the _ day of December 1995, by Chris Weaver, as President of the City Council of the City of Pueblo, Colorado, and by Marian D. Mead, as City Clerk of the City of Pueblo, Colorado. WITNESS my hand and official seal. [SEAL] My commission expires: Notary Public 02/92116.4 42 EXHIBIT A DESCRIPTION OF THE SITE 02/82116.4 A -1 EXHIBIT B SCHEDULE OF BASE RENTALS Base Rentals Base Rentals Principal Interest Total Date Component Component Base Rental May 15, 1996 November 15, 1996 May 15, 1997 November 15, 1997 May 15, 1998 November 15, 1998 May 15, 1999 November 15, 1999 May 15, 2000 November 15, 2000 May 15, 2001 November 15, 2001 May 15, 2002 November 15, 2002 May 15, 2003 November 15, 2003 May 15, 2004 November 15, 2004 May 15, 2005 November 15, 2005 May 15, 2006 November 15, 2006 May 15, 2007 November 15, 2007 May 15, 2008 November 15, 2008 TOTAL $ $ $ 02/82116.4 B -1 1 W4 I s 11 . DESCRIPTION OF THE PROJECT The Project consists of the Golf Course and the Equipment, including but not limited to, a clubhouse with pro shop facilities, parking lot and driveway, practice range, tees, fairways, bunkers and greens, maintenance facilities, automated sprinkler systems, trees and shrubbery, public restrooms, a "half -way" house, bridges and crossings, concrete cart paths, potable water (drinking) fountains, rain /lightning shacks, retaining and irrigation ponds and pumps, cart storage and maintenance areas and facilities, maintenance roads, scoreboard, tee markers and benches, exterior lighting and fencing. 02/92116.4 C -1 EXHIBIT D SCHEDULE OF CERTAIN PERMITTED ENCUMBRANCES [To be taken from Title Insurance Policy Schedule B] 02/82116.4 D -1 MORTGAGE AND INDENTURE OF TRUST by and between PUEBLO MUNICIPAL PROPERTY CORPORATION, as Lessor, and COLORADO NATIONAL BANK, as Trustee Dated as of December 1, 1995 After this instrument has been recorded, please return to: William C. Gorham Kutak Rock Suite 2900 717 Seventeenth Street Denver, Colorado 80202 02/82115.4 TABLE OF CONTENTS (This Table of Contents is not a part of this Indenture of Trust and is only for convenience of reference.) Page ARTICLE I DEFINITIONS AND CONSTRUCTION Section 1.01. Definitions ...... ............................... 4 Section 1.02. Construction ..... ............................... 9 ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF CERTIFICATES Section 2.01. Authorized Amount of Certificates ....................... 10 Section 2.02. Issuance of the Series 1995 Certificates .................... 10 Section 2.03. Limited Obligation . ............................... 11 Section 2.04. Execution of the Certificates .......................... 12 Section 2.05. Authentication .... ............................... 12 Section 2.06. Form of Certificates ............................... 13 Section 2.07. Delivery of the Series 1995 Certificates .................... 13 Section 2.08. Mutilated, Lost, Stolen or Destroyed Certificates .............. 13 Section 2.09. Registration of Certificates; Persons Treated as Registered Owners; Transfer and Exchange of Certificates ..................... 13 Section 2.10. Cancellation of Certificates ........................... 14 Section 2.11. Issuance of Additional Certificates ....................... 14 Section 2.12. Book -Entry System . ............................... 16 Section 2.13. Variable Rate Obligations Prohibited ..................... 18 ARTICLE III REVENUES AND FUNDS Section 3.01. Source of Payment of Certificates ....................... 18 Section 3.02. Creation of the Certificate Fund ........................ 19 Section 3.03. Payments Into the Interest Account of the Certificate Fund ........ 19 Section 3.04. Payments Into the Principal Account of the Certificate Fund ....... 19 02/82115.4 i Section 3.05. Use of Moneys in the Certificate Fund .................... 19 Section 3.06. Custody of the Funds ............................... 20 Section 3.07. Creation of the Reserve Fund .......................... 20 Section 3.08. Use of Moneys in the Reserve Fund ...................... 20 Section 3.09. Creation of the Extraordinary Redemption Fund ............... 22 Section 3.10. Creation of the Expenses Fund ......................... 22 Section 3.11. Creation of Special Construction Fund .................... 23 Section 3.12. Nonpresentment of Certificates ......................... 23 Section 3.13. Reports to City .... ............................... 23 Section 3.14. Repayment to the City from the Trustee ................... 23 Section 3.15. Rebate Fund ..... ............................... 23 Section 3.16. Rebate Deposits ... ............................... 24 Section 3.17. Rebate Disbursements .............................. 24 Section 3.18. Policy of Insurance . ............................... 24 ARTICLE IV REDEMPTION OF CERTIFICATES Section 4.01. Redemption Dates and Prices .......................... 27 Section 4.02. Redemption Upon Termination of the Lease Term by Reason of Certain Events......... ............................... 28 Section 4.03. Notice of Redemption .............................. 29 Section 4.04. Redemption Payments .............................. 29 Section 4.05. Cancellation ..... ............................... 30 Section 4.06. Delivery of New Certificates Upon Partial Redemption of Certificates . 30 ARTICLE V INVESTMENTS Section 5.01. Investment of Moneys .............................. 30 Section 5.02. Arbitrage Certification .............................. 31 ARTICLE VI DISCHARGE OF INDENTURE ... ............................... 32 ARTICLE VII DEFAULTS AND REMEDIES Section 7.01. Events of Default .. ............................... 34 Section 7.02. Remedies on Default ............................... 34 02/92115.4 ii Section 7.03. Certificate Insurer or Majority of Registered Owners May Control ARTICLE VIII CONCERNING THE TRUSTEE Section 8.01. Proceedings ...... ............................... 36 Section 7.04. Rights and Remedies of Registered Owners ................. 36 Section 7.05. Purchase of Project by Registered Owners or Trustee; Application of 41 Section 8.04. Certificates Toward Purchase Price ...................... 37 Section 7.06. Waiver of Appraisement, Valuation, Stay and Extension .......... 37 Section 7.07. Trustee May Enforce Rights Without Certificates .............. 38 Section 7.08. Delay or Omission No Waiver ......................... 38 Section 7.09. No Waiver of One Default to Affect Another ................ 38 Section 7.10. Discontinuance of Proceedings on Default; Position of Parties Restored ........ ............................... 38 Section 7.11. Waivers of Events of Default .......................... 38 ARTICLE VIII CONCERNING THE TRUSTEE Section 8.01. Duties of the Trustee ............................... 39 Section 8.02. Fees and Expenses of Trustee .......................... 41 Section 8.03. Resignation or Replacement of Trustee .................... 41 Section 8.04. Conversion, Consolidation or Merger of Trustee .............. 42 Section 8.05. Intervention by Trustee .............................. 43 Section 8.06. Escrowed Deed and Bill of Sale ........................ 43 Section 8.07 Undertakings to Provide Ongoing Disclosure . ................ 43 ARTICLE IX SUPPLEMENTAL INDENTURES AND AMENDMENTS OF THE LEASE Section 9.01. Supplemental Indentures Not Requiring Consent of Registered Owners........ ............................... 44 Section 9.02. Supplemental Indentures Requiring Consent of Registered Owners .... 45 Section 9.03. Execution of Supplemental Indenture ..................... 45 Section 9.04. Amendments, Etc., of the Lease Not Requiring Consent of Registered Owners........ ............................... 46 Section 9.05. Amendments, Etc., of the Lease Requiring Consent of Registered Owners........ ............................... 46 02/82115.4 iii ARTICLE X MISCELLANEOUS Section 10.01. Evidence of Signature of Registered Owners and Ownership of EXHIBIT A —Form of Certificate of Participation ........... . EXHIBIT B— Description of the Site ..................... .. A -1 .. B -1 02182115.4 1V Certificates ...... ............................... 47 Section 10.02. Covenants of Lessor ............................... 47 Section 10.03. Inspection of the Project ............................. 48 Section 10.04. Parties Interested Herein ............................. 48 Section 10.05. Titles, Headings, Captions, Etc ......................... 48 Section 10.06. Severability ...... ............................... 48 Section 10.07. Consent of the Certificate Insurer Where Consent of Registered Owners Required; Certificate Insurer to Direct Trustee ................ 48 Section 10.08. Subrogation ...... ............................... 49 Section 10.09. Governing Law ... ............................... 49 Section 10.10. Execution in Counterparts ............................ 49 Section 10.11. Notices ........ ............................... 49 Section 10.12. Payments Due on Holidays ........................... 49 Section 10.13. Lessor, City and Trustee Representatives ................... 50 EXHIBIT A —Form of Certificate of Participation ........... . EXHIBIT B— Description of the Site ..................... .. A -1 .. B -1 02182115.4 1V MORTGAGE AND INDENTURE OF TRUST THIS MORTGAGE AND INDENTURE OF TRUST dated as of December 1, 1995 (together with any amendments hereto made in accordance herewith, this "Indenture "), by and between the PUEBLO MUNICIPAL PROPERTY CORPORATION (the "Lessor "), a nonprofit corporation duly organized and existing under the laws of the State of Colorado, and COLORADO NATIONAL BANK, as trustee (the "Trustee "), having an office and principal place of business in Denver, Colorado, duly organized and existing under the laws of the United States of America, being authorized to accept and execute trusts of the character herein set out under and by virtue of the laws of the State of Colorado; WITNESSETH: WHEREAS, the City of Pueblo, Colorado (the "City"), for the purposes of refinancing a municipal golf course facility (the "Golf Course ") on certain real property owned by the City (the "Site ") and refinancing the purchase of certain equipment (the "Equipment ") for use in connection therewith, has entered into (i) a Ground Lease Agreement, dated as of December 1, 1995 (the "Ground Lease "), with the Lessor, whereby the City has leased the Site to the Lessor, and (ii) an annually renewable Golf Course Lease Purchase and Sublease Agreement, dated as of December 1, 1995 (the "Lease "), between the Lessor, as lessor and sublessor, and the City, as lessee and sublessee, whereby the City has subleased the Site from the Lessor, and has leased from the Lessor the Golf Course to be constructed thereon and the Equipment to be used in connection therewith (the Golf Course and the Equipment are collectively referred to herein as the "Project "); and WHEREAS, pursuant to the Lease, and subject to the right of the City to terminate the Lease and other limitations as therein provided, the City will pay certain Base Rentals and Additional Rentals (as such terms are defined in the Lease) in consideration for the right of the City to use the Project; and WHEREAS, pursuant to this Indenture, the right of the Lessor to receive the Base Rentals, and rights to receive certain other payments as provided herein and in the Lease (with certain exceptions as provided herein and in the Lease), have been assigned to the Trustee; and WHEREAS, pursuant to this Indenture, the Lessor has also granted to the Trustee a first mortgage on and a security interest in the Project, subject only to Permitted Encumbrances, and has also assigned to the Trustee the Lessor's interest in the Ground Lease; and WHEREAS, there will be executed and delivered by the Trustee pursuant to this Indenture one or more Certificates of Participation (the "Certificates "), evidencing assignments of proportionate interests in rights to receive Base Rentals and certain other payments, which rights have been assigned to the Trustee by the Lessor; and 02192115.4 WHEREAS, the net proceeds from the sale of the first issue of Certificates (the "Series 1995 Certificates ") will be disbursed by the Trustee to refund certain previously issued certificates of participation (the "Refunded Certificates ") and other purposes set forth herein; and WHEREAS, the payment of the principal of and interest on the Series 1995 Certificates when due will be insured by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 1995 Certificates by MBIA Insurance Corporation (the "Certificate Insurer "); and WHEREAS, the Trustee has entered into this Indenture for and on behalf of the registered owners of the Certificates (the "Registered Owners "), and will hold its rights hereunder, including its rights with respect to the Project, except as otherwise specifically provided herein, for the equal and proportionate benefit of the Registered Owners, and will disburse moneys received by the Trustee in accordance with this Indenture; and WHEREAS, the Certificates are to be in substantially the form set forth in Exhibit A to this Indenture, with such necessary or appropriate variations, omissions and insertions as permitted or required by this Indenture; and WHEREAS, all things necessary to make the Certificates, when executed and delivered by the Trustee and authenticated by the Lessor and the City as in this Indenture provided, legal, valid and binding assignments of proportionate interests in rights to receive Revenues and certain other payments, as herein provided, and to constitute this Indenture a valid, binding and legal instrument for the security of the Certificates in accordance with its terms, have been done and performed; NOW, THEREFORE, THIS MORTGAGE AND INDENTURE OF TRUST WITNESSETH: That the Lessor, in consideration of the premises and the mutual covenants herein contained and for the benefit of the Registered Owners and any provider of a Qualified Surety Bond (as defined herein) and the sum of One Dollar ($1.00) to it duly paid by the Trustee at or before the execution of these presents, and for other good and valuable consideration, the receipt of which is hereby acknowledged, in order to secure the payment of the principal of, premium, if any, and interest on all Certificates at any time outstanding under this Indenture, according to their tenor and effect, and to secure the performance and observance of all the covenants and conditions in the Certificates and herein contained, and to declare the terms and conditions upon and subject to which the Certificates are issued and secured, has executed and delivered this Indenture and has granted, bargained, sold, warranted, mortgaged, aliened, remised, released, conveyed, assigned, pledged, set over and confirmed, and by these presents does grant, bargain, sell, warrant, mortgage, alien, remise, release, convey, assign, pledge, set over and confirm unto Colorado National Bank, as the Trustee, and to its successors and assigns forever, all and singular the following described property, franchises and income: M182115.4 2 (a) all rights, title and interest of the Lessor (i.e., Pueblo Municipal Property Corporation) in, to and under the Ground Lease; (b) the Golf Course and the Equipment, as defined in the Lease, constituting the Project; subject only to Permitted Encumbrances; (c) all rights, title and interest of the Lessor in, to and under the Lease (except the rights of the Lessor under Sections 13.03 and 14.06 of the Lease); (d) all Revenues and any other receipts received by or on behalf of the Lessor pursuant to the Lease including, without limitation, (i) all Base Rentals (as defined in the Lease) to be received from the City pursuant to the Lease and pursuant to the terms of which Base Rentals are to be paid directly to the Trustee, which hereby constitutes an absolute and present assignment of all Base Rentals received and to be received from the City pursuant to the Lease; (ii) all Net Proceeds received pursuant to the Lease; and (iii) all rights to enforce payments under the Lease when due or to otherwise enforce rights under the Lease for the benefit of the Registered Owners (but excluding the rights of the Lessor under Sections 13.03 and 14.06 of the Lease); (e) all moneys and securities from time to time held by the Trustee under this Indenture (except the Rebate Fund) and any and all other real or personal property of every name and nature from time to time hereafter by delivery or by writing of any kind specially mortgaged, pledged or hypothecated, as and for additional security hereunder, by the Lessor, or by anyone on its behalf, in favor of the Trustee, which is hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms hereof. TO HAVE AND TO HOLD the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended to be, to the Trustee and its successors in said trust and assigns forever; IN TRUST, NEVERTHELESS, upon the terms herein set forth for the equal and proportionate benefit, security and protection of all Registered Owners (and upon payment of all amounts due the Registered Owners, to providers of any Qualified Surety Bond), without privilege, priority or distinction as to the lien or otherwise of any of the Certificates over any other of the Certificates; PROVIDED, HOWEVER, that if the principal of the Certificates and the premium, if any, and the interest due or to become due thereon, shall be paid at the times and in the manner mentioned in the Certificates according to the true intent and meaning thereof, and if there are paid to the Trustee all sums of money due or to become due to the Trustee in accordance with the terms and provisions hereof, then upon such final payment this Indenture and the rights hereby granted shall cease, determine and be void; otherwise this Indenture to be and remain in full force and effect. 02/92115.4 3 THIS INDENTURE FURTHER WITNESSETH and it is expressly declared, that all Certificates issued and secured hereunder are to be executed, authenticated and delivered and all said property, rights, interests, revenues and receipts hereby pledged, assigned and mortgaged are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the Lessor has agreed and covenanted, and does hereby agree and covenant, with the Trustee for the benefit of the Registered Owners, as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION Section 1.01. Definitions. All words and phrases defined in Article I of the Lease shall have the same meaning in this Indenture. In addition, the following terms, except where the context indicates otherwise, shall have the respective meanings set forth below. "Business Day" means any day other than a Saturday, Sunday or legal holiday or day on which banking institutions in the city in which the Trustee has its principal corporate trust office or in New York, New York are authorized or required by law to close. "Deficiency" means the difference between the total amount of principal and interest due on any Interest Payment Date for the Certificates and the amount of Base Rentals paid by the City and deposited in the Certificate Fund on or before such Interest Payment Date to be used for payment of principal and interest on the Certificates on such Interest Payment Date. "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns. "Escrow Agent" means Colorado National Bank, a national banking association, and any successor thereto. "Escrow Agreement" means the Escrow Agreement, dated as of December 1, 1995, among the City, the Lessor and the Escrow Agent, as amended or supplemented. "Event of Default" means those defaults specified in Section 7.01 of this Indenture. "Federal Securities" means direct obligations of, or obligations the timely payment of principal and interest of which are fully and unconditionally guaranteed by, the United States of America. "Investment Instructions" means (a) the Investment Instructions delivered to the Trustee upon the original issuance of the Certificates and (b) any subsequent Investment Instructions, amending or superseding such Investment Instructions, accompanied by an opinion of nationally recognized municipal bond counsel addressed to the City to the effect that compliance with said 02/92115.4 4 new Investment Instructions will not cause the interest paid or to be paid on the Certificates to be or become includable in gross income for purpose of Colorado or federal income taxation. "Opinion of Counsel" means an opinion in writing of legal counsel, who may be counsel to the Trustee, the City or the Lessor. "Participants" means those broker - dealers, banks and other financial institutions from time to time for which DTC holds Series 1995 Certificates as a securities depository. "Permitted Investments" means the following investments, so long as such investments are permitted under the laws of the State, for funds of the City: (a) Direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury, and CATS and TGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. (b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) Farmers Home Administration (FHA) Certificates of beneficial ownership (ii) Federal Housing Administration Debentures (FHA) (iii) General Services Administration Participation certificates (iv) Government National Mortgage Association (GNMA or "Ginnie Mae ") GNMA - guaranteed mortgage - backed bonds GNMA - guaranteed pass - through obligations (v) U.S. Maritime Administration Guaranteed Title XI financing (vi) U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds (c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System Senior debt obligations 021%2115.4 5 (ii) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac ") Participation Certificates Senior debt obligations (iii) Federal National Mortgage Association (FNMA or "Fannie Mae ") Mortgage - backed securities and senior debt obligations (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal) (iv) Student Loan Marketing Association (SLMA or "Sallie Mae ") Senior debt obligations (v) Resolution Funding Corp. ( REFCORP) Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable (vi) Farm Credit System consolidated systemwide bonds and notes. (d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor's ( "S &P ") of "AAAm -G "; "AAAm "; or "AAm." (e) Certificates of deposit secured at all times by collateral described in (a) or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks whose student loan obligations are rated "A -1 +" or better by S &P. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. (f) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF. (g) Investment Agreements, including GIC's, acceptable to the Certificate Insurer. (h) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's Investors Service ( "Moody's ") or "A -1 +" or better by S &P. (i) Bonds or notes issued by any state or municipality which are rated by Moody's or S &P in one of the two highest rating categories assigned by such agencies. 0) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A -1 +" or better by S &P. ov82115.4 6 (k) Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer /lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. Repurchase Agreements ( "repos ") must satisfy the following criteria or be approved by the Certificate Insurer. (i) Repos must be between the municipal entity and a dealer bank or securities firm: (A) Primary dealers on the Federal Reserve reporting dealer list which fall under the jurisdiction of the SIPC and which are rated "A" or better by S &P and Moody's, or (B) Banks rated "A" or above by S &P and Moody's. (ii) The written repo contract must include the following: (A) Securities which are acceptable for transfer are: (1) Direct U.S. governments, or (2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FMAC). (B) The term of the repo may be up to 30 days. (C) The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before /simultaneous with payment (perfection by possession of certificated securities). (D) The trustee has a perfected first- priority security interest in the collateral. (E) Collateral is free and clear of third -party liens and in the case of SIPC broker was not acquired pursuant to a repo or reverse repo. 02192115.4 7 (F) Failure to maintain the requisite collateral percentage, after a two -day restoration period, will require the trustee to liquidate collateral. (G) Valuation of Collateral: (1) The securities must be valued weekly, marked -to- market at current market price plus accrued interest. The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104 % of the value of the cash transferred by municipality, then additional cash and /or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105 %. (iii) Legal opinion which must be delivered to the municipal entity: Repo meets guidelines under state law for legal investment of public funds. (1) Pre - refunded municipal bonds rated "Aaa " by Moody's and "AAA" by S &P. If, however, the issue is only rated by S &P (i,e., there is no Moody's rating), then the pre - refunded bonds must have been pre - refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre - refunded municipals to satisfy this condition. "Person" means natural persons, firms, associations, corporations and public bodies. "Policy of Insurance" means one or more policies of insurance issued by the Certificate Insurer insuring the timely payment of the principal of and interest on the Certificates without regard to acceleration or advancement of maturity or redemption prior to maturity, other than mandatory sinking fund redemption, if any. "Qualified Surety Bond" means any insurance policy, surety bond, letter of credit or similar instrument deposited in or credited to the Reserve Fund as provided in Section 3.08 hereof in lieu of or in partial substitution for cash or Permitted Investments on deposit in the Reserve Fund. Any such insurance policy, surety bond, letter of credit or similar instrument must be issued by an entity having a rating in the highest rating category assigned by Moody's Investors Service and Standard & Poor's Ratings Group and, if rated by A.M. Best & Company, must also be rated in the highest rating category by A.M. Best & Company, at the time such policy, surety, bond, letter of credit or similar instrument is deposited in or credited to the Reserve Fund. 02/82115.4 8 "Rebate Fund" means the trust fund by that name created pursuant to Section 3.15 hereof. "Regular Record Date" means the fifteenth day (whether or not a Business Day) next preceding each interest payment date for the Certificates (other than a Special Record Date). "Representation Letter" means, collectively, the representation letters from the City and the Lessor to DTC. "Special Record Date" means a special date fixed to determine the names and addresses of Registered Owners for purposes of paying interest on a special interest payment date for the payment of defaulted interest, all as further provided in Section 2.02 hereof. "Trust Estate" means the property mortgaged, pledged and assigned to the Trustee pursuant to the granting clauses hereof. Section 1.02. Construction. In this Indenture, unless the context otherwise requires: (a) Articles and Sections referred to by number shall mean the corresponding Articles and Sections of this Indenture. (b) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms refer to this Indenture, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before, the date of execution and delivery of this Indenture. (c) Words of the masculine gender shall mean and include correlative words of the female and neuter genders, and words importing the singular number shall mean and include the plural number and vice versa. (d) Words importing the redemption of a Certificate or the calling of a Certificate for redemption do not include or connote the payment of such Certificate at its stated maturity or the purchase of such Certificate. (e) References in this Indenture to particular sections of the Code, the Act or any other legislation shall be deemed to refer also to any successor sections thereto or other redesignations for codification purposes and shall be deemed to include any related Regulations. (f) The terms "receipt, " "received, " "recovery, " "recovered" and any similar terms, when used in this Indenture with respect to moneys or payments due, shall be deemed to refer to the passage of physical possession and control of such moneys and payments to the Trustee. 02/82115.4 9 ARTICLE H AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF CERTIFICATES Section 2.01. Authorized Amount of Certif' tcates. No Certificates shall be issued hereunder except in accordance with this Article II. The aggregate principal amount of Certificates that may be issued shall be $4,450,000, except as provided in Section 2.11 of this Indenture. Section 2.02. Issuance of the Series 1995 Certificates. In order to provide funds for the refunding of the Refunded Certificates and other funds and accounts created hereunder, the Series 1995 Certificates shall be issued in the form attached hereto as Exhibit A and shall constitute assignments of proportionate undivided interests in the right to receive Revenues under the Lease. The Series 1995 Certificates shall be issuable solely as fully registered Certificates without coupons in the denominations of $5,000 and any integral multiple thereof. The Certificates shall be lettered "R" and shall be numbered separately from 1 upward. The Series 1995 Certificates shall be dated as of their date of their authentication by the Trustee. The Series 1995 Certificates shall bear interest from December 1, 1995, if authenticated prior to June 1, 1996, or if authenticated on any later date, the Series 1995 Certificates shall bear interest from the June 1 or December 1 next preceding their date of authentication, or if authenticated on a June 1 or December 1, the Series 1995 Certificates shall bear interest from such date; provided, however, that if interest on the Series 1995 Certificates shall be in default, Series 1995 Certificates issued in exchange for Series 1995 Certificates surrendered for transfer or exchange shall bear interest from the date to which interest has been paid in full on the Series 1995 Certificates so surrendered. The Series 1995 Certificates shall bear interest payable semiannually on June 1 and December 1 of each year, commencing June 1, 1996, until such Series 1995 Certificates are paid pursuant to the provisions of this Indenture. The Series 1995 Certificates shall mature on December 1 of the years, and in the amounts, and shall bear interest at the rates per annum, set forth below: 02182115.4 10 Maturity Date Interest Rate (December 11 Amount Per Annum 1996 $260,000 4.00% 1997 270,000 4.15 1998 285,000 4.30 1999 295,000 4.45 2000 305,000 4.45 2001 320,000 4.60 2002 335,000 4.70 2003 350,000 4.80 2004 365,000 4.90 2005 385,000 5.00 2006 405,000 5.10 2007 425,000 5.25 2008 450,000 5.35 The principal of and premium, if any, on the Certificates shall be payable to the Registered Owner thereof as shown on the registration books of the City kept by the Trustee, upon presentation and surrender thereof at the principal operations office of the Trustee, presently located at First Trust National Association, in St. Paul, Minnesota, or its successor. Payment of interest on any Certificate shall be made to the Registered Owner thereof by check or draft mailed by the Trustee, on or before each interest payment date (or, if such interest payment date is not a Business Day, on or before the next succeeding Business Day), to the registered owner thereof at the address of such Registered Owner shown on the registration books of the City kept by the Trustee at the close of business on the Regular Record Date for such interest payment date; but any such interest not so timely paid or duly provided for shall cease to be payable to the person who is the Registered Owner thereof at the close of business on the Regular Record Date and shall be payable to the person who is the registered owner thereof at the close of business on a Special Record Date for the payment of any such defaulted interest. Such Special Record Date shall be fixed by the Trustee whenever moneys become available for payment of the defaulted interest, and notice of the Special Record Date shall be given to the Registered Owners of the Certificates not less than ten days prior thereto by first -class mail to each such registered owner as shown on the registration books on a date selected by the Trustee, stating the date of the Special Record Date and the date fixed for the payment of such defaulted interest. The Trustee may make payments of interest on any Certificate by such alternative means as may be mutually agreed to between the Registered Owner of such Certificate and the Trustee. All such payments shall be made in lawful money of the United States of America without deduction for the services of the Trustee. Section 2.03. Limited Obligation. Each Certificate shall evidence the assignment of a proportionate undivided interest in the right to receive Revenues under the Lease. The Certificates are payable solely from Revenues as, when and if the same are received by the 02/82115.4 11 Trustee, and from payments under the Policy of Insurance. The Revenues are to be held in trust by the Trustee for such purposes in the manner and to the extent provided herein. NEITHER THE LEASE NOR THE CERTIFICATES CONSTITUTES A GENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR CHARTER DEBT LIMITATION. NEITHER THE LEASE, THE INDENTURE NOR THE CERTIFICATES HAVE DIRECTLY OR INDIRECTLY OBLIGATED THE CITY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED FOR ANY FISCAL YEAR IN WHICH THE LEASE SHALL BE IN EFFECT. EXCEPT TO THE EXTENT PAYABLE FROM THE PROCEEDS OF THE SALE OF THE CERTIFICATES AND INCOME FROM THE INVESTMENT THEREOF, FROM NET PROCEEDS OF CERTAIN INSURANCE POLICIES, PERFORMANCE BONDS AND CONDEMNATION AWARDS, FROM NET PROCEEDS OF SUBLEASING THE SITE AND LEASING THE PROJECT OR SELLING AN ASSIGNMENT OF THE GROUND LEASE OR FROM OTHER AMOUNTS MADE AVAILABLE UNDER THE INDENTURE, THE CERTIFICATES WILL BE PAYABLE DURING THE LEASE TERM SOLELY FROM BASE RENTALS TO BE PAID BY THE CITY UNDER THE LEASE AND THE INCOME FROM CERTAIN INVESTMENTS THEREUNDER. ALL PAYMENT OBLIGATIONS OF THE CITY UNDER THE LEASE, INCLUDING, WITHOUT LIMITATION, THE OBLIGATION OF THE CITY TO PAY BASE RENTALS, ARE FROM YEAR TO YEAR ONLY AND DO NOT CONSTITUTE A MANDATORY PAYMENT OBLIGATION OF THE CITY IN ANY FISCAL YEAR BEYOND A FISCAL YEAR IN WHICH THE LEASE SHALL BE IN EFFECT. THE LEASE IS SUBJECT TO ANNUAL RENEWAL AT THE OPTION OF THE CITY AND WILL BE TERMINATED UPON THE OCCURRENCE OF A TERMINATION EVENT. IN SUCH EVENT, ALL PAYMENTS FROM THE CITY UNDER THE LEASE WILL TERMINATE, AND THE CERTIFICATES AND THE INTEREST THEREON WILL BE PAYABLE FROM CERTAIN MONEYS, IF ANY, HELD BY THE TRUSTEE UNDER THE INDENTURE, ANY AMOUNTS PAYABLE UNDER THE POLICY OF INSURANCE AND ANY MONEYS MADE AVAILABLE BY ACTION OF THE TRUSTEE REGARDING THE SITE AND THE PROJECT. Section 2.04. Execution of the Certificates. Each Certificate shall be authenticated by the manual or facsimile signature of the President of the City Council of the City and the President of the Lessor, shall be attested with the manual or facsimile signature of the City Clerk of the City and the Secretary of the Lessor and shall bear the original or facsimile of the seal of the City and the Lessor. In addition, each Certificate shall be executed by the manual signature of any duly authorized representative of the Trustee. In case any official of the Trustee, the City or the Lessor whose signature shall appear on the Certificates shall cease to be such official before delivery of the Certificates, such signature shall nevertheless be valid and sufficient for all purposes, the same as if he or she had remained in office until delivery. Section 2.05. Authentication. No Certificate shall be valid or obligatory for any purpose or entitled to any security or benefit hereunder unless and until executed and authenticated in the manner prescribed by Section 2.04 of this Indenture, and such execution and 02/82115.4 12 Mi 111111111111 authentication of any Certificate shall be conclusive evidence that such Certificate has been properly issued and delivered hereunder. Section 2.06. Form of Certi acates. The Certificates shall be substantially in the form set forth in Exhibit A to this Indenture, with such appropriate variations, omissions and insertions as permitted or required hereby. Section 2.07. Delivery of the Series 1995 Certificates. Upon the execution and delivery of this Indenture, the Trustee shall execute and deliver the Series 1995 Certificates in the aggregate principal amount of $4,450,000 to the Original Purchaser, as hereinafter in this Section 2.07 provided. (a) Prior to the delivery by the Trustee of any of the Series 1995 Certificates, there shall be filed with the Trustee (i) originally executed counterparts of the Lease, the Ground Lease, the Escrow Agreement and this Indenture, (ii) a certified copy of the Ordinance adopted by the City Council approving the Lease, the Ground Lease and the issuance of the Certificates pursuant to the Indenture; (iii) a certified copy of a Resolution adopted by the Board of Directors of the Lessor approving the Lease, the Ground Lease, the Escrow Agreement, this Indenture and the issuance of the Series 1995 Certificates, (iv) commitments for the issuance of the title insurance policies required by Article VII of the Lease and (v) the Policy of Insurance and Qualified Surety Bond. (b) Thereupon, the Trustee shall deliver the Series 1995 Certificates to the Original Purchaser, upon payment to the Trustee of a sum specified in a separate agreement between the City and the Original Purchaser, plus accrued interest on the Series 1995 Certificates to the date of delivery. Such sum shall be deposited as set forth in Article III hereof. Section 2.08. Mutilated, Lost, Stolen or Destroyed Certificates. In the event that any Certificate is mutilated, lost, stolen or destroyed, a new Certificate may be authenticated on behalf of the Trustee, of like date, maturity and denomination as that mutilated, lost, stolen or destroyed; provided that the Trustee shall have received indemnity from the Registered Owner of the Certificate satisfactory to it and provided further, in case of any mutilated Certificate, that such mutilated Certificate shall first be surrendered to the Trustee, and in the case of any lost, stolen or destroyed Certificate, that there shall be first furnished to the Trustee evidence of such loss, theft or destruction satisfactory to the Trustee. In the event that any such Certificate shall have matured or is about to mature, instead of issuing a duplicate Certificate, the Trustee may pay the same without surrender thereof. The Trustee may charge the Registered Owner of the Certificate with its reasonable fees and expenses in this connection. Section 2.09. Registration of Certificates; Persons Treated as Registered Owners, Transfer and Exchange of Certfdcates. Books for the registration and for the transfer of Certificates shall be kept by the Trustee which is hereby appointed the registrar. Upon surrender for transfer of a Certificate at the principal corporate trust office of the Trustee, duly endorsed 02/92115.4 13 for transfer or accompanied by an assignment duly executed by the Registered Owner or the attorney of such Registered Owner duly authorized in writing, the Trustee shall execute and deliver in the name of the transferee or transferees a new fully registered Certificate or Certificates for a like aggregate principal amount and of a like maturity, series and interest rate. Certificates may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Certificates of the same date, maturity, series and interest rate, or for a like aggregate principal amount of Certificates of other authorized denominations of the same date, maturity, series and interest rate. The City shall authenticate and the Trustee shall execute and deliver Certificates which the Registered Owner thereof making the exchange is entitled to receive, bearing numbers not then outstanding. The Trustee shall not be required to transfer or exchange the Certificates during the period of 15 days next preceding any interest payment date of such Certificate nor to transfer or exchange any Certificate after the mailing of notice calling such Certificate for redemption has been given as herein provided, nor during the period of 15 days next preceding the giving of such notice of redemption. As to any Certificate, the person in whose name the same shall be registered on a Regular Record Date or Special Record Date shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of either principal or interest on the Certificate shall be made only to or upon the written order of the Registered Owner thereof or the legal representative of such Registered Owner, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge such Certificate to the extent of the sum or sums paid. The Trustee shall require the payment, by any Registered Owner requesting transfer or exchange of Certificates, of any tax, trustee's fee, fee or other governmental charge required to be paid with respect to such transfer. Upon the occurrence of a Termination Event, or if the Certificate Insurer shall be obligated to pay under the Policy of Insurance for any other reason, the Certificate Insurer and its designated agent shall have the right to inspect the registration books maintained by the Trustee during normal business hours and upon reasonable notice to the Trustee. Section 2.10. Cancellation of CenVcates. Whenever any Outstanding Certificates shall be delivered to the Trustee for cancellation pursuant to this Indenture, upon payment thereof or for or after replacement pursuant to Section 2.08 or 2.09 of this Indenture, such Certificates shall be promptly canceled and destroyed by the Trustee, and counterparts of a certificate of destruction evidencing such destruction shall be furnished by the Trustee to the City. Section 2.11. Issuance of Additional Certificates. So long as the Lease Term shall remain in effect and no Termination Event shall have occurred, one or more issues of additional MIa2.115.4 14 Certificates (the "Additional Certificates ") may be issued upon the terms and conditions provided herein. Additional Certificates may be issued to provide funds to pay any one or more of the following: (i) the costs of refunding all or any of the Outstanding Certificates; (ii) the costs of making at any time or from time to time such substitutions, additions, modifications and improvements in, on or to the Project as the City may deem necessary or desirable; and (iii) the costs of the issuance and sale of the Additional Certificates, any deposit to the Reserve Fund necessary for the amount therein to equal the Reserve Fund Requirement, and capitalized interest for such period, and such other costs reasonably related to the financing, as shall be agreed upon by the City and the Trustee. In addition to the other requirements of this Indenture, each issue of Additional Certificates, except those Additional Certificates issued to refund all or any of the Outstanding Certificates as described in (i) above, shall be insured under a policy of insurance issued by any company whose primary business is the insurance of municipal bonds. Additional Certificates may be issued only upon there being filed with the Trustee: (a) Originally executed counterparts of a supplemental Indenture and an amendment to the Lease adopted in accordance with the requirements of Article IX hereof, including requirements regarding approval of the Registered Owners, if applicable, expressly providing that, for all the purposes hereof, the Project shall include any property, buildings or equipment being financed by the Additional Certificates, and that the Certificates being issued as well as any Certificates and Additional Certificates theretofore issued, except that the date or dates of the Additional Certificates, the rate or rates of interest on the Additional Certificates, and provisions for the redemption thereof, if any, all shall be as provided in the supplemental Indenture and amendment to the Lease rather than as provided in this Indenture, and further providing for an increase in the Base Rentals required to be paid to the Trustee under Exhibit B to the Lease in such amount as shall be necessary to pay (assuming that no Termination Event shall occur), the principal of, premium, if any, and interest on the Certificates then Outstanding as well as the Additional Certificates proposed to be issued. (b) A written opinion or opinions of counsel of nationally recognized stature in the field of municipal bonds and mutually acceptable to the City and the Trustee, to the effect that the amendment to the Lease and the authentication of the Additional Certificates have been duly authorized, that the amendment to the Lease is valid and enforceable against the City, that the exclusion from gross income, for purposes of federal income taxation, of the interest on the Certificates and Additional Certificates theretofore issued will not be adversely affected by the issuance of the Additional Certificates being issued, and that the issuance, sale and delivery of the Additional Certificates will not constitute a default under the Ground Lease, the Lease or this OV82115 A 15 Indenture nor cause any violation of the covenants, agreements or representations in the Lease or this Indenture. (c) Evidence that the amount of the title insurance policy or policies required by Article VII of the Lease and the Reserve Fund Requirement have been increased, if necessary, to reflect the amount of the Series 1995 Certificates and Additional Certificates theretofore issued plus the Additional Certificates (or such lesser amount as shall be the maximum insurable value of the Site and the Project). (d) A written order to the Trustee by the City to deliver the Additional Certificates to the purchaser or purchasers therein identified upon payment to the Trustee of a specified sum plus accrued interest. (e) The consent of the Certificate Insurer unless the Additional Certificates are issued to provide funds to pay the costs of refunding Outstanding Certificates in part and the aggregate debt service on the Additional Certificates is less than the debt service on the refunded Certificates. Each of the Additional Certificates issued pursuant to this Section shall evidence assignment of a proportionate undivided interest in rights to receive Revenues under the Lease, as amended, proportionately and ratably secured with the Certificates originally issued and all other issues of Additional Certificates, if any, issued pursuant to this Section, without preference, priority or distinction of any Certificates or Additional Certificates over any other. Section 2.12. Book -Entry System. (a) Notwithstanding any other provision hereof, the Series 1995 Certificates shall be initially issued in the form of a separate single certificated fully registered Series 1995 Certificate for each of the maturities set forth in Section 2.02 hereof. Upon initial issuance, the ownership of each Series 1995 Certificate shall be registered in the registration records kept by the Trustee in the name of Cede & Co. ( "Cede "), as nominee of DTC. Except as provided in Section 2.12(d) hereof, all of the Outstanding Series 1995 Certificates shall be registered in the registration records kept by the Trustee in the name of Cede, as nominee of DTC. (b) With respect to Series 1995 Certificates registered in the registration records kept by the Trustee in the name of Cede, as nominee of DTC, the Lessor and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which a Participant holds an interest in the Series 1995 Certificates. Without limiting the immediately preceding sentence, the City, the Lessor and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede or any Participant with respect to any ownership interest in the Series 1995 Certificates, (ii) the delivery to any Participant or any other person, other than a Registered Owner, as shown in the registration records kept by the Trustee, or any notice with respect to the Series 1995 Certificates, including any notice of redemption or (iii) the payment to any Participant or any other person, other than a Registered Owner, as shown in the registration records kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest on the Series 1995 Certificates. The City, the Lessor and the Trustee may treat and consider the person in whose name each Series 1995 Certificate is registered in the registration records kept by the Trustee as the absolute owner of such Series 1995 Certificate for the purpose of payment of principal, premium and interest with respect to such Series 1995 Certificate, for the purpose of giving notices of redemption and other matters with respect to such Series 1995 Certificate, for the purpose of registering transfers with respect to such Series 1995 Certificate, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, the interest on the Series 1995 Certificates only to or upon the order of the respective Registered Owners, as shown in the registration records kept by the Trustee, or their respective attorneys duly authorized in writing, as provided in Section 2.09 hereof, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal of, premium, if any, and interest on the Series 1995 Certificates to the extent of the sum or sums so paid. No person other than a Registered Owner, as shown in the registration records kept by the Trustee, shall receive a certificated Series 1995 Certificate evidencing the obligation to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede, and subject to the provisions herein with respect to Record Dates, the word "Cede" in this Indenture shall refer to such new nominee of DTC. (c) The Representation Letter, with such changes, omissions, insertions and revisions as a City Representative shall approve, is hereby authorized and a City Representative and a Lessor Representative shall execute and deliver such Representation Letters. The approval by a City Representative and a Lessor Representative of any such changes, omissions, insertions and revisions shall be conclusively established by said City Representative's and Lessor Representative's execution and delivery of the Representation Letter which shall not in any way limit the provisions of Section 2.12(b) hereof or in any other way impose upon the Lessor or the City any obligation whatsoever with respect to persons having interests in the Series 1995 Certificates other than the Registered Owners, as shown on the registration records kept by the Trustee. The Trustee shall take all action necessary for all representations of the City and the Lessor in the Representation Letter with respect to the paying agents and the bond registrar, respectively, to at all times to be complied with. (d) (i) DTC may determine to discontinue providing its services with respect to the Series 1995 Certificates at any time by giving notice to the City, the Lessor and the Trustee and discharging its responsibilities with respect thereto under applicable law. 02192115.4 17 (ii) The Trustee, in its sole discretion and without the consent of any other person, may terminate the services of DTC with respect to the Series 1995 Certificates if the Trustee determines that: (A) DTC is unable to discharge its responsibilities with respect to the Series 1995 Certificates, or (B) a continuation of the requirement that all of the Outstanding Series 1995 Certificates be registered in the registration records kept by the Trustee in the name of Cede or any other nominee of DTC, is not in the best interest of the beneficial owners of the Series 1995 Certificates. (iii) Upon the termination of the services of DTC with respect to the Series 1995 Certificates pursuant to subsection 2.12(d)(ii)(B) hereof, or upon the discontinuance or termination of the services of DTC with respect to the Series 1995 Certificates pursuant to subsection 2.12(d)(i) or subsection 2.12(d)(ii)(A) hereof after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found which, in the opinion of the Trustee, is willing and able to undertake such functions upon reasonable and customary terms, the Trustee is obligated to deliver Series 1995 Certificate certificates at the expense of the beneficial owners of the Series 1995 Certificates, as described in this Indenture, and the Series 1995 Certificates shall no longer be restricted to being registered in the registration records kept by the Trustee in the name of Cede as nominee of DTC, but may be registered in whatever name or names Registered Owners transferring or exchanging Series 1995 Certificates shall designate, in accordance with the provisions of this Indenture. (e) Notwithstanding any other provision of this Indenture to the contrary, so long as any Series 1995 Certificate is registered in the name of Cede, as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Series 1995 Certificate and all notices with respect to such Series 1995 Certificate shall be made and given, respectively, in the manner provided in the Representation Letter. Section 2.13. Variable Rate Obligations Prohibited. None of the Series 1995 Certificates nor any Additional Certificates shall pay interest on a variable rate basis, either directly or through a derivative instrument. ARTICLE III REVENUES AND FUNDS Section 3.01. Source of Payment of Certificates. The Certificates shall be payable solely from Revenues received by the Trustee and from proceeds of the Policy of Insurance and do not constitute a general obligation or other indebtedness of the City within the meaning of 02/82115.4 18 any constitutional, statutory or Charter debt limitation. Revenues, when, as and if received by the Trustee, shall be held hereunder for payment of the principal of, premium, if any, and interest on the Certificates as provided in this Indenture. Section 3.02. Creation of the Certificate Fund. A special fund is hereby created and established with the Trustee, to be designated "City of Pueblo, Colorado, Golf Course Lease Purchase and Sublease Agreement, Certificate of Participation Fund" (the "Certificate Fund "), which shall be used to pay the principal of, premium, if any, and interest on the Certificates. Within the Certificate Fund there are hereby created and ordered established an Interest Account and a Principal Account which shall be used as set forth in Section 3.05 of this Indenture. Section 3.03. Payments Into the Interest Account of the Certificate Fund. There shall be deposited into the Interest Account of the Certificate Fund (a) all accrued interest and capitalized interest received at the time of the issuance, sale and delivery of the Certificates; (b) that portion of each payment of Base Rentals made by the City which is designated and paid as interest under Exhibit B to the Lease; (c) any portion of the Reserve Fund to be deposited into the Interest Account of the Certificate Fund, as provided in Section 3.08 hereof; and (d) all other moneys received by the Trustee under this Indenture to be used for the purpose of paying interest on the Certificates. Section 3.04. Payments Into the Principal Account of the Certificate Fund. There shall be deposited into the Principal Account of the Certificate Fund (a) that portion of each payment of Base Rentals made by the City which is designated and paid as principal under Exhibit B to the Lease; (b) any portion of the Reserve Fund to be deposited into the Principal Account of the Certificate Fund, as provided in Section 3.08 hereof; and (c) all other moneys received by the Trustee under this Indenture to be used for the purpose of paying the principal of the Certificates. Section 3.05. Use of Moneys in the Cert'if'icate Fund. Moneys in the Interest Account of the Certificate Fund shall be used solely for the payment of the interest on the Certificates except to the extent that moneys therein, with the consent of the Certificate Insurer, may be deposited in the Rebate Fund. Moneys in the Principal Account of the Certificate Fund shall be used solely for the payment of the principal of the Certificates except to the extent that moneys therein, with the consent of the Certificate Insurer, may be deposited in the Rebate Fund. In the event the Certificates are to be redeemed in whole, any moneys remaining in the Certificate Fund shall be applied to such redemption along with other moneys held by the Trustee for such purpose. If the Base Rentals paid by the City on any Base Rental Payment Date are not sufficient to pay the principal of and interest on the Certificates due on the next ensuing Interest Payment Date, the Trustee shall first, satisfy any deficiency from the Reserve Fund, and second, make a claim therefor on the Policy of Insurance pursuant to the provisions of Section 3.18 hereof. 02/92115.4 19 Amounts deposited into the Certificate Fund shall be depleted at least once a year except for an amount not to exceed the greater of one year's earnings on the Certificate Fund or 1 /12th of the annual debt service on the Certificates. Section 3.06. Custody of the Funds. All Funds created under this Indenture shall be in the custody of the Trustee, subject to the provisions of this Indenture. Section 3.07. Creation of the Reserve Fund. A special fund is hereby created and established with the Trustee to be designated "City of Pueblo, Colorado, Golf Course Lease Purchase and Sublease Agreement, Reserve Fund" (the "Reserve Fund "), which shall be expended in accordance with Section 3.08 hereof. The Reserve Fund shall be initially funded in an amount equal to the Reserve Fund Requirement by a Qualified Surety Bond. Section 3.08. Use of Moneys in the Reserve Fund. The income derived from the investment of the Reserve Fund shall be deposited when received in the following order of priority: (i) to the Reserve Fund until the amount on deposit shall equal the Reserve Fund Requirement; (ii) to the Extraordinary Expenses Account of the Expenses Fund until the amount on deposit therein shall equal $50,000, (iii) to the Insurance Account of the Expenses Fund until the amount on deposit therein shall equal $50,000, and (iv) all remaining income derived from the investment of the Reserve Fund shall be deposited in the Certificate Fund. Moneys held in the Reserve Fund excluding income from the investment thereof and applied pursuant to (ii), (iii) and (iv) of the preceding paragraph shall be applied to any of the following purposes: (a) To the payment of the principal amount of the Certificates and interest thereon, as the same shall become due, to the extent of any deficiency in either the Interest Account or the Principal Account of the Certificate Fund for such purpose; and, with the consent of the Certificate Insurer, to the payment of any Additional Rentals in the event the City shall fail to make payment thereof; (b) At the option of the Trustee, subsequent to a Termination Event, to the payment of any cost or expense necessary to preserve or protect the Project or the interest of the Trustee or the Registered Owners therein, or necessary to make any repairs or modifications to the Project in preparation for sale or subleasing thereof, as the Trustee may deem to be in the best interests of the Registered Owners; provided, however, that, so long as the Certificate Insurer is not in default under the Policy of Insurance, then no disbursement shall be made from the Reserve Fund for any of the purposes set forth in this subsection (b) without the written consent of the Certificate Insurer; (c) In the event that the Certificates are to be redeemed subsequent to a Termination Event, proportionately to the redemption of the Certificates then Outstanding and the payment of interest thereon; 02/92115 A 20 (d) In the event that the City shall exercise its option to purchase the Project and terminate the Lease upon payment of the Purchase Option Price, to the City, or, at the option of the City, as a reduction of such Purchase Option Price; or (e) At the option of the City, in reduction of the final payment of Base Rentals payable by the City under the Lease and, to the extent of moneys in the Reserve Fund, the next preceding payment or payments of Base Rentals. To the extent that Reserve Fund moneys are applied pursuant to paragraph (a) of this Section, the City hereby agrees to pay to the Trustee for deposit in the Reserve Fund, as Additional Rentals, such amounts as are required to restore the amount on deposit in the Reserve Fund to the Reserve Fund Requirement, over a period of not less than twelve (12) months in twelve (12) substantially equal payments. Payments received which represent reimbursements for draws upon a Qualified Surety Bond shall be paid to the provider of such Qualified Surety Bond. If amounts on deposit in the Reserve Fund shall be less than the applicable Reserve Fund Requirement due to a decrease in the market value of the Permitted Investments on deposit in the Reserve Fund, the Certificate Insurer shall be notified immediately of such deficiency and such deficiency shall be made up from Additional Rentals over a period of not more than four (4) months, in four (4) substantially equal payments. The Trustee shall notify the Certificate Insurer (i) immediately upon the withdrawal of amounts on deposit in the Reserve Fund, other than amounts representing investment earnings thereon and applied pursuant to (ii), (iii) and (iv) of the first paragraph of this Section, and (ii) upon a determination that a deficiency exists in the Reserve Fund after a valuation of the Reserve Fund pursuant to Section 5.01 hereof. The Lessor may at any time substitute (i) cash or Permitted Investments for a Qualified Surety Bond or (ii) a Qualified Surety Bond for cash or Permitted Investments, so long as the amount on deposit in the Reserve Fund after such substitution is at least equal to the Reserve Fund Requirement. In the event the Lessor shall substitute a Qualified Surety Bond for cash or Permitted Investments, the amount on deposit in the Reserve Fund shall be that amount available to be drawn or otherwise paid pursuant to such policy at the time of calculation. Notwithstanding the foregoing, no Qualified Surety Bond shall be accepted by the Trustee for such substitution unless the (i) Trustee has received an opinion acceptable to the Trustee of nationally recognized municipal bond counsel acceptable to the Trustee to the effect that such substitution and the intended use by the Lessor of the cash or Permitted Investments to be released from the Reserve Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates and (ii) written consent from the Certificate Insurer. In the event the Lessor shall deliver a Qualified Surety Bond in substitution for the cash or Permitted Investments then on deposit in the Reserve Fund (together with the opinion required 02!82115.4 21 herein), the Trustee is hereby authorized to release to the Lessor or its designee cash and Permitted Investments in an amount (including accrued but unpaid interest on such Permitted Investments, if any) equal to the face amount of such Qualified Surety Bond from the Trust Estate in the event the Lessor shall deliver to the Trustee for deposit to the Reserve Fund cash and Permitted Investments (exclusive of accrued but unpaid interest thereon) in an amount equal to the amount then available to be drawn under such released Qualified Surety Bond. The Trustee shall submit a draw request to the provider of a Qualified Surety Bond at least three (3) days prior to the date on which the provider of the Surety Bond shall be required to provide any funds under such Qualified Surety Bond. If the Reserve Fund contains both cash and Qualified Surety Bonds securing the same series of Certificates, the cash in the Reserve Fund shall be used prior to drawing upon any Qualified Surety Bond. If the Reserve Fund contains more than one Qualified Surety Bond securing the same series of Certificates, the Qualified Surety Bonds shall be drawn upon on a pro -rata basis. Payments received by the Trustee as replenishments of the Reserve Fund shall be used first to replenish any draws upon Qualified Surety Bonds and thereafter used to replenish any cash component of the Reserve Fund. If more than one Qualified Surety Bond has been drawn upon, such replenishment shall be paid to the providers of the Qualified Surety Bond on a pro - rata basis. Section 3.09. Creation of the Extraordinary Redemption Fund. There is hereby created and established with the Trustee the "City of Pueblo, Colorado, Golf Course Lease Purchase and Sublease Agreement, Extraordinary Redemption Fund" (the "Extraordinary Redemption Fund ") into which shall be deposited all Extraordinary Revenues which are to be applied for the redemption of the Certificates on the first Business Day for which notice of redemption may be given. Moneys on deposit in the Extraordinary Redemption Fund shall be disbursed for redemption of the Certificates as provided in Section 4.01 of this Indenture. Any income from investment of moneys in the Extraordinary Redemption Fund shall be deposited into the Certificate Fund. Section 3.10. Creation of the Expenses Fund. There is hereby created and established with the Trustee the "City of Pueblo, Colorado, Golf Course Lease Purchase and Sublease Agreement, Expenses Fund" (the "Expenses Fund "). Within the Expenses Fund there are hereby created and ordered established an Extraordinary Expenses Account and an Insurance Account, which shall be used as hereinafter set forth. Income from the investment of moneys in the Reserve Fund, if any, shall be deposited into the Expenses Fund under certain circumstances as set forth in Section 3.08 of this Indenture. Any moneys held in each account of the Expenses Fund shall be invested and reinvested by the Trustee in accordance with Article V of this Indenture. Income derived from the investment of the Extraordinary Expenses Account shall be retained in such account to the extent the amount on deposit therein is less than $50,000, and any remaining income shall be 02182115.4 22 deposited in the Certificate Fund. Income derived from the investment of the Insurance Account shall be retained in such account to the extent the amount on deposit therein is less than $50,000, and any remaining income shall be deposited in the Certificate Fund. Moneys held in the Extraordinary Expenses Account, including income derived from the investment thereof, shall be used to reimburse the Trustee and the Lessor, respectively, for costs, expenses, outlays, counsel fees and other reasonable disbursements incurred by the Trustee or Lessor by reason of any litigation pertaining to the Project in which the Trustee or the Lessor is named as a defendant; and for any such costs, expenses, outlays, counsel fees and other reasonable disbursements incurred by the Trustee by reason of a Termination Event. Moneys held in the Insurance Account, including income derived from the investment thereof, shall be used by the Trustee, both during the Lease Term and after a Termination Event, to maintain current payments of premiums for the casualty and property damage insurance on the Project required by the Lease, if and to the extent such premiums are not otherwise paid by the City. Section 3.11. Creation of Special Construction Fund. Upon direction of the City, there shall be created and established with the Trustee a "Special Construction Fund. " Amounts deposited therein by the City shall be expended solely for the purchase of moveable personal property for use in or on the Project or for the purpose of paying any other expense related to the leasehold estate of the City, which in the opinion of nationally- recognized municipal bond counsel, shall not adversely affect the validity and enforceability of the Lease. Section 3.12. Nonpresentment of Certi zcates. In the event any Certificate shall not be presented for payment when due, if funds sufficient to pay such Certificate shall have been made available to the Trustee for the benefit of the Registered Owner thereof, it shall be the duty of the Trustee to hold such funds for a period of six years, without liability for interest thereon, for the benefit of the Registered Owner of such Certificate, who shall be restricted exclusively to such funds for any claim of whatever nature on his or her part under the Lease or this Indenture or on or with respect to such Certificate. Any unclaimed funds remaining after the expiration of the six year period shall be returned by the Trustee to the City. Section 3.13. Reports to City. Not less than once during each calendar year, the Trustee shall provide the City and the Certificate Insurer with an accounting for all receipts to and disbursements from the funds or accounts created hereunder. Section 3.14. Repayment to the City from the Trustee. Upon a discharge and a defeasance of the Indenture pursuant to Article VI of this Indenture, any amounts remaining in the Certificate Fund, the Reserve Fund, the Extraordinary Redemption Fund, the Expenses Fund or otherwise held by the Trustee pursuant thereto, except the Rebate Fund, shall be paid to the City as a return of an overpayment of Base Rentals. 02/92115A 23 Section 3.15. Rebate Fund. There is hereby created and established with the Trustee a separate trust fund in the name of the City to be designated "City of Pueblo, Colorado, Golf Course Lease Purchase and Sublease Agreement, Rebate Fund" (the "Rebate Fund "), which shall be expended in accordance with the provisions hereof and the Investment Instructions. The Trustee shall make deposits and disbursements from the Rebate Fund in accordance with the Investment Instructions, shall invest the Rebate Fund pursuant to said Investment Instructions and shall deposit income from such investments immediately upon receipt thereof in the Rebate Fund, all as directed by the City in the Investment Instructions. The City shall employ, at its expense, a qualified firm of certified public accountants, which firm shall make the calculations, deposits, disbursements and investments as may be required by the immediately preceding sentence. The City shall attach the report of such firm to any directions given by the City to the Trustee. The Investment Instructions may be superseded or amended by new Investment Instructions accompanied by an opinion of nationally recognized municipal bond counsel addressed to the City to the effect that the use of said new Investment Instructions will not cause the interest paid or to be paid on the Certificates to become subject to federal income taxation. Section 3.16. Rebate Deposits. The Trustee shall annually make the Rebate Deposit described in the Investment Instructions as directed by the City. The City shall attach the report of the firm of certified public accountants required by Section 3.15 above to any such directions. If a withdrawal from the Rebate Fund is permitted as a result of such computation, the amount withdrawn shall be deposited in the Certificate Fund for the benefit of the City. Records of the determinations required by this Section and the Investment Instructions must be retained by the Trustee until six (6) years after the final retirement of the Certificates. Section 3.17. Rebate Disbursements. Not later than sixty (60) days after the end of the fifth Certificate Year (thirty (30) days after December 1, 1999) and every five (5) years thereafter, the Trustee shall pay to the United States of America (but only from funds provided by the City) ninety percent (90%) of the amount required to be on deposit in the Rebate Fund as of such payment date. Not later than sixty (60) days after the final retirement of the Certificates (whether at maturity or upon redemption or acceleration or otherwise), the Trustee shall pay to the United States of America (but only from funds provided by the City) one hundred percent (100 %) of the balance remaining in the Rebate Fund. Each payment required to be paid to the United States of America pursuant to this Section shall be filed with the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255. Each payment shall be accompanied by a copy of the information report originally filed with respect to the Certificates and a statement summarizing the determination of the amount to be paid to the United States of America. Section 3.18. Policy of Insurance. As long as the Policy of Insurance shall be in full force and effect, the Trustee shall comply with the following provisions: (a) In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Series 1995 Certificates, the Trustee has not received sufficient moneys to pay all principal of and interest on the Series 1995 02192115.4 24 Certificates due on the second following or following, as the case may be, Business Day, the Trustee shall immediately notify the Certificate Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. (b) If the deficiency is made up in whole or in part prior to or on the payment date, the Trustee shall so notify the Certificate Insurer or its designee. (c) In addition, if the Trustee has notice that any Registered Owner has been required to disgorge payments of principal or interest on the Series 1995 Certificates to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Registered Owner within the meaning of any applicable bankruptcy laws, then the Trustee shall notify the Certificate Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. (d) The Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for the Registered Owners of the Series 1995 Certificates as follows: (i) If and to the extent there is a deficiency in amounts required to pay interest on the Series 1995 Certificates, the Trustee shall (a) execute and deliver to State Street Bank and Trust Company, N.A., or its successors under the Policy of Insurance (the "Insurance Paying Agent "), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Certificate Insurer as agent for such Registered Owners in any legal proceeding related to the payment of such interest and an assignment to the Certificate Insurer of the claims for interest to which such deficiency relates and which are paid by the Certificate Insurer, (b) receive as designee of the respective Registered Owners (and not as Trustee) in accordance with the tenor of the Policy of Insurance payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Registered Owners; and (ii) If and to the extent of a deficiency in amounts required to pay principal of the Series 1995 Certificates, the Trustee shall (A) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Certificate Insurer as agent for such Registered Owner in any legal proceeding relating to the payment of such principal and an assignment to the Certificate Insurer of any of the Series 1995 Certificates surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Trustee and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (B) receive as designee of the respective Registered Owners (and not as Trustee) in accordance 02182115.4 25 with the tenor of the Policy of Insurance payment therefor from the Insurance Paying Agent, and (C) disburse the same to such Registered Owners. (e) Payments with respect to claims for interest on and principal of Series 1995 Certificates disbursed by the Trustee from proceeds of the Policy of Insurance shall not be considered to discharge the obligation of the City with respect to such Series 1995 Certificates, and the Certificate Insurer shall become the owner of such unpaid Series 1995 Certificates and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (f) Irrespective of whether any such assignment is executed and delivered, the City and the Trustee hereby agree for the benefit of the Certificate Insurer that: (i) They recognize that to the extent the Certificate Insurer makes payments, directly or indirectly (as by paying through the Trustee), on account of principal of or interest on the Series 1995 Certificates, the Certificate Insurer will be subrogated to the rights of such Registered Owners to receive the amount of such principal and interest from the City, with interest thereon as provided and solely from the sources stated in this Indenture and the Series 1995 Certificates; and (ii) They will accordingly pay to the Certificate Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy of Insurance, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the Series 1995 Certificates, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Series 1995 Certificates to Registered Owners, and will otherwise treat the Certificate Insurer as the owner of such rights to the amount of such principal and interest. (g) In connection with the issuance of Additional Certificates, the City shall deliver to the Certificate Insurer a copy of the disclosure document, if any, circulated with respect to such Additional Certificates. (h) Copies of any amendments made to the documents executed in connection with the issuance of the Series 1995 Certificates which are consented to by the Certificate Insurer shall be sent to Standard & Poor's Corporation. (i) The Certificate Insurer shall receive notice of the resignation or removal of the Trustee and the appointment of a successor thereto. M192115.4 26 (j) The Certificate Insurer shall receive copies of all notices required to be delivered to the Registered Owners and, on an annual basis, copies of the City's audited financial statements and annual budget. (k) Any notice that is required to be given to a Registered Owner of the Series 1995 Certificates or to the Trustee pursuant to this Indenture shall also be provided to the Certificate Insurer. All notices required to be given to the Certificate Insurer under this Indenture shall be in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Insurer Portfolio Management—Lease Unit. ARTICLE IV REDEMPTION OF CERTIFICATES Section 4.01. Redemption Dates and Prices. The Certificates are subject to redemption as set forth below: (a) The Series 1995 Certificates shall be called for redemption on any date in the event of, and to the extent that moneys are actually received by the Trustee from, the exercise by the City of its option to purchase the Project, as provided in the Lease, upon payment of the then applicable Purchase Option Price; provided, however, that paragraph (b) below, and not this paragraph (a), shall apply in the event that the Purchase Option Price is paid from moneys borrowed by the City or derived from any installment purchase or lease purchase financing by the City. (b) The Series 1995 Certificates maturing on or after December 1, 2006, shall be callable for redemption prior to maturity, at the option of the City, on December 1, 2005 and on any date thereafter at a redemption price (expressed as a percentage of principal amount) of 100 %, plus accrued interest to the redemption date. (c) The Certificates shall be called for redemption in the event and only to the extent that Extraordinary Revenues are deposited into the Extraordinary Redemption Fund, other than as provided in paragraph (a), (b) or (d) of this Section. (d) The Certificates may also be called for redemption as set forth in Section 4.02 of this Indenture. In the event the Series 1995 Certificates are redeemed pursuant to (a) above, the Series 1995 Certificates shall be redeemed in whole, at a redemption price equal to the par amount of the Series 1995 Certificates being redeemed, plus accrued interest to the redemption date. In the event the Series 1995 Certificates are redeemed pursuant to (b) above, the Series 1995 Certificates shall be redeemed in whole; provided, however, that if Additional Certificates 02182115.4 27 are issue to provide the funds for such redemption, the Series 1995 Certificates may be redeemed in part. In the event that the Certificates are redeemed pursuant to (c) above, the Certificates shall be redeemed in whole, or in part in inverse order of maturity and by lot within any maturity, at a redemption price (expressed as a percentage of principal amount) of 100% plus accrued interest to the redemption date, on the first Business Day for which notice of redemption may be given. When Certificates are to be redeemed in part, the schedule of Base Rentals set forth in Exhibit B to the Lease shall be recalculated by the Trustee. No Certificate shall be redeemed pursuant to (a) or (b) above unless and until all amounts owing to the Certificate Insurer have been paid by the City. Section 4.02. Redemption Upon Termination of the Lease Term by Reason of Certain Events. The Certificates are callable for redemption upon the occurrence of a Termination Event; provided, however, that so long as the Certificate Insurer is not in default under the Policy of Insurance, no such redemption shall be called without the prior written consent of the Certificate Insurer. If the Certificates are to be redeemed subsequent to a Termination Event as described in the preceding sentence, the Registered Owners shall have no right to payment from the City, the Lessor or the Trustee, in redemption of their Certificates or otherwise, except as expressly set forth in this Section. Upon the occurrence of a Termination Event the Certificates shall be payable from such moneys as may be obtained by the Trustee through the exercise of its rights under this Indenture. Upon the occurrence of a Termination Event, the Trustee may, with the consent of the Certificate Insurer, and, upon direction of the Certificate Insurer, shall commence proceedings for subleasing the Site and leasing the Project, or the sale or assignment of the Trustee's interest in the Project and its leasehold interest in the Site as provided in Sections 7.02 and 7.05 of this Indenture, and may, with the consent of the Certificate Insurer, and, upon direction of the Certificate Insurer, shall, call the Certificates for redemption from and only to the extent of the Net Proceeds of such subleasing of the Site and leasing, sale or assignment of the Project and all other moneys, if any, then on hand and being held by the Trustee for the Registered Owners at 100% of the principal amount thereof plus accrued interest to the redemption date. In the event that such Net Proceeds of foreclosure and sale and other moneys shall be insufficient to redeem the Certificates at 100% of the principal amount thereof plus accrued interest to the redemption date, then such Net Proceeds of such subleasing of the Site and leasing, sale or assignment of the Project and other moneys shall be allocated proportionately among the Certificates, according to the principal amount thereof Outstanding. In the event that such Net Proceeds of such subleasing of the Site and leasing, sale or assignment of the Project and other moneys are in excess of the amount required to redeem the Certificates then Outstanding at 100% of the principal amount thereof plus accrued interest to the redemption date, after the Certificates have been redeemed, such excess moneys shall be applied to reimburse the Certificate Insurer for its expenses and any payments made under the Policy of 02/92115.4 28 Insurance and the balance shall be paid to the City. Prior to any distribution of the Net Proceeds of such subleasing of the Site and leasing, sale or assignment of the Project in redemption of the Certificates pursuant to this Section, the Trustee shall be entitled to payment of its customary fees for all services rendered in connection with such subleasing of the Site and leasing, sale or assignment of the Project, as well as reimbursement for all costs and expenses incurred thereby, from proceeds of such subleasing of the Site and leasing, sale or assignment of the Project. If the Certificates are to be redeemed subsequent to a Termination Event from such Net Proceeds of such subleasing of the Site and leasing, sale or assignment of the Project for an amount less than the aggregate principal amount thereof plus accrued interest to the redemption date, no Registered Owner of any Certificate shall have any further claim for payment against the City, the Lessor or the Trustee. In such an event, the Registered Owners of the Certificates shall be entitled to payments solely from the Policy of Insurance in accordance with its terms. In the event that the Certificates are called for redemption pursuant to this Section, the Certificate Insurer may, at any time and at its sole option, pay to the Registered Owners all or any portion of amounts due on the Certificates prior to the stated maturity dates thereof. Subsequent to the occurrence of a Termination Event and in the event that the Certificates have been paid by the Certificate Insurer, the Trustee shall at the direction of the Certificate Insurer, subject to the provisions of Article VIII of this Indenture, commence subleasing of the Site and leasing, sale or assignment of the Project in the manner set forth in the preceding paragraph, if such subleasing of the Site and leasing, sale or assignment of the Project shall not have previously occurred. All amounts derived from such subleasing of the Site and leasing, sale or assignment of the Project, after payment to the Trustee of its customary fees for all services rendered and reimbursement for all expenses incurred in connection with such subleasing of the Site and leasing, sale or assignment of the Project shall be applied to reimburse the Certificate Insurer for all payments made under the Policy of Insurance and the balance shall be paid to the City. Section 4.03. Notice of Redemption. Notice of the call for any redemption, identifying the Certificates or portions thereof to be redeemed and specifying the terms of such redemption, shall be given by the Trustee, upon being satisfactorily indemnified as to expenses, by mailing a copy of the redemption notice by registered or certified mail at least 30 days and not more than 60 days prior to the date fixed for redemption to the Certificate Insurer and to the Registered Owner of each Certificate to be redeemed at the address shown on the registration books; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of any proceedings for the redemption of Certificates as to which no such failure has occurred. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Registered Owner receives the notice. If at the time of mailing of notice of redemption there shall not have been deposited with the Trustee moneys sufficient to redeem all the Certificates called for redemption, which moneys 02/82115.4 29 are or will be available for redemption of Certificates, such notice will state that it is conditional upon the deposit of the redemption moneys with the Trustee not later than the opening of business on the redemption date, and such notice shall be of no effect unless such moneys are so deposited. Section 4.04. Redemption Payments. Prior to the date fixed for redemption, funds shall be deposited with the Trustee to pay, and the Trustee is hereby authorized and directed to apply such funds to the payment of, the Certificates called, together with accrued interest thereon to the redemption date, and any required premium. Upon the giving of notice and the deposit of such funds as may be available for redemption pursuant to this Indenture (which, in the case of redemption pursuant to Section 4.02 above, may be less than the full principal amount of the Outstanding Certificates and accrued interest thereon to the redemption date), interest on the Certificates or portions thereof thus called shall no longer accrue after the date fixed for redemption. The Trustee shall pay to the Registered Owners of Certificates so redeemed, the amounts due on their respective Certificates, at the principal corporate trust office of the Trustee upon presentation and surrender of the Certificates; provided, however, that, if redeemed in part, the Certificates may be redeemed only in multiples of $5,000. Redemption payments shall be accompanied by a written designation prepared by the Trustee stating the portion of the payment representing the unpaid principal amount of the Certificate immediately prior to the payment, the portion of the payment representing interest, and the remaining portion, if any, which shall be designated and paid as a redemption premium. Section 4.05. Cancellation. All Certificates which have been redeemed shall not be reissued but shall be canceled and cremated or otherwise destroyed by the Trustee in accordance with Section 2.10 hereof. Section 4.06. Delivery of New Cert4ficates Upon Partial Redemption of Certificates. Upon surrender and cancellation of the Certificates for redemption in part only, a new Certificate or Certificates of the same maturity and of authorized denomination in an aggregate principal amount equal to the unredeemed portion thereof, shall be executed on behalf of and delivered by the Trustee. The expenses of such execution, delivery and exchange shall be paid by the City as Additional Rentals under the Lease. ARTICLE V INVESTMENTS Section 5.01. Investment of Moneys. All moneys held as part of the Certificate Fund, the Reserve Fund, the Extraordinary Redemption Fund, the Expenses Fund, the Rebate Fund or any other fund or account created hereunder or under the Lease shall be deposited or invested and reinvested by the Trustee, at the direction of the City, in accordance with the provisions of the Investment Instructions and this Indenture, in Permitted Investments; provided, however, that 02192115.4 30 notwithstanding anything to the contrary contained in this Indenture (a) the Trustee shall make no deposits or investments of any fund or account created hereunder which shall interfere with or prevent withdrawals for payment of the Certificates at or before maturity or interest thereon as required hereunder, and (b) the Reserve Fund and all amounts representing accrued interest in the Interest Account of the Certificate Fund shall be invested solely in Federal Securities with maturities not exceeding five years. All investments and reinvestments of any amounts pursuant to this Indenture or the Lease shall be made in compliance with the requirements of the No Arbitrage Certificate executed by the City in connection with the issuance of the Certificates, unless the Trustee shall receive an opinion of nationally recognized municipal bond counsel acceptable to the City and the Trustee to the effect that an alternate investment or reinvestment shall not adversely affect the exclusion from gross income or alternative minimum taxable income, for purposes of federal income taxation, of interest on the Certificates, in which case such investment or reinvestment shall be made in accordance with such opinion. Any and all such deposits or investments shall be held by or under the control of the Trustee. The Trustee may make any and all such deposits or investments through its own investment department or the investment department of any bank or trust company under common control with the Trustee. The Trustee is specifically authorized to enter into agreements with itself or any other person, which agreements guarantee the repurchase of specific Permitted Investments at specific prices and provided that such Permitted Investments are held by a third party during the term thereof. Income from deposits or investments of moneys in the Reserve Fund shall be deposited in the Expenses Fund or the Certificate Fund under certain circumstances as provided in Section 3.08 of this Indenture; income from deposits or investments of moneys in the Extraordinary Redemption Fund shall be deposited into the Certificate Fund, as provided in Section 3.09 of this Indenture; and income from deposits or investments of moneys in each account of the Expenses Fund shall be deposited into the Certificate Fund under certain circumstances as provided in Section 3.10 of this Indenture; otherwise, deposits or investments shall at all times be a part of the fund or account from which the moneys used to acquire such deposits or investments shall have come, and all income and profits on such deposits or investments shall be credited to, and losses thereon shall be charged against, such fund or account. In computing the amount in any fund or account held under the provisions of this Indenture, obligations purchased as a deposit or investment of moneys therein shall be valued at the cost or market price thereof, whichever is lower, exclusive of accrued interest. With respect to all funds and accounts, valuation shall occur annually, except in the event of a withdrawal from the Reserve Fund, whereupon obligations therein shall be valued immediately after such withdrawal. If amounts on deposit in the Reserve Fund shall, at any time, be less that the applicable Reserve Fund Requirement, the Certificate Insurer shall be notified immediately of such deficiency, and such deficiency shall be made up from first available moneys after required deposits to the Certificate Fund (a) over a period of not more than four months, in four (4) substantially equal payments in the event such deficiency results from a decrease in the market value of the Permitted Investments on deposit in the Reserve Fund and (b) over a twelve (12) -month period, in twelve (12) substantially equal payments, in the event such deficiency results from a withdrawal from the Reserve Fund. The Trustee shall sell and reduce to cash a sufficient amount of such deposits or investments whenever the cash 02182115.4 31 I I A Ell II! II balance in any fund or account created hereunder is insufficient to satisfy the purposes of such fund or account. Section 5.02. Arbitrage Certification. In reliance on the direction of investments by the City as provided in Section 5.01 of this Indenture, and in reliance on the covenants of the City in Section 11.07 of the Lease, the Trustee certifies and covenants to and for the benefit of the Registered Owners that so long as any of the Certificates remain Outstanding, moneys in any fund or account held by the Trustee under this Indenture, whether or not such moneys were derived from the proceeds of the sale of the Certificates or from any other source, will not be knowingly deposited or invested in a manner which will cause the Certificates to be classified as "arbitrage bonds" within the meaning of Section 148 of the Code. ARTICLE VI DISCHARGE OF INDENTURE If, when the Certificates secured hereby shall become due and payable in accordance with their terms or otherwise as provided in this Indenture, the whole amount of the principal of, premium, if any, and interest due and payable upon all of the Certificates shall be paid (or, in the case of redemption of the Certificates pursuant to Section 4.01(d) of this Indenture, if full or partial payment of the Certificates and interest thereon is made as provided in Section 4.02 of this Indenture), or provision shall have been made for the payment of the same, together with all other sums payable hereunder including all amounts due to the Certificate Insurer pursuant to the Policy of Insurance and any Qualified Surety Bond, then the right, title and interest of the Trustee in and to the Trust Estate and all covenants, agreements and other obligations of the Lessor and the City to the Trustee and the Registered Owners shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, upon the request of the City, and upon reimbursement to the Certificate Insurer of all amounts paid by the Certificate Insurer under the Policy of Insurance, the Trustee and the Lessor shall transfer and convey to the City all property assigned, pledged or mortgaged to the Trustee by the Lessor then held by the Lessor or by the Trustee pursuant to this Indenture, and the Lessor and the Trustee shall execute such documents as may be reasonably required by the City and shall turn over to the City any surplus in any fund created under this Indenture except the Rebate Fund. All Outstanding Certificates shall, prior to the maturity or redemption date thereof, be deemed to have been paid within the meaning and with the effect expressed in this Article if (a) in case said Certificates are to be redeemed on any date prior to their maturity, the City shall have given to the Trustee in form satisfactory to the Trustee irrevocable instructions to give, on a date in accordance with the provisions of Section 4.03 hereof, notice of redemption of such Certificates on said redemption date, such notice to be given in accordance with the provisions of Section 4.03 hereof, (b) there shall have been deposited with the Trustee either moneys in an amount which shall be sufficient, or Federal Securities which shall not contain provisions permitting the redemption thereof at the option of the issuer, the principal of and the interest on which when due, and without any reinvestment thereof, will provide moneys which, together 02192115.4 32 with the moneys, if any, deposited with or held by the Trustee at the same time, shall be sufficient to pay when due the principal of, premium, if any, and interest due and to become due on said Certificates on and prior to the redemption date or maturity date thereof, as the case may be, and (c) in the event said Certificates are not by their terms subject to redemption within the next 60 days, the City shall have given the Trustee in form satisfactory to it irrevocable instructions to give, as soon as practicable in the same manner as the notice of redemption is given pursuant to Section 4.03 hereof, a notice to the Registered Owners of such Certificates that the deposit required by (b) above has been made with the Trustee and that said Certificates are deemed to have been paid in accordance with this Article and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal of, premium, if any, and interest on said Certificates. Neither the Federal Securities nor moneys deposited with the Trustee pursuant to this Article or principal or interest payments on any such Federal Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of, premium, if any, and interest on said Certificates; provided any cash received from such principal or interest payments on such Federal Securities deposited with the Trustee, if not then needed for such purpose, shall, to the extent practicable, be reinvested in Federal Securities of the type described in clause (b) of this paragraph maturing at the times and in amounts sufficient to pay when due the principal of, premium, if any, and interest to become due on said Certificates on or prior to such redemption date or maturity date thereof, as the case may be. At such time as any Certificates shall be deemed paid as aforesaid, such Certificates shall no longer be secured by or entitled to the benefits of this Indenture and the Lease, except for the purpose of exchange and transfer and any payment from such moneys or Federal Securities deposited with the Trustee. Prior to any discharge of this Indenture becoming effective, (i) the Certificate Insurer shall have received an opinion of counsel, satisfactory to the Certificate Insurer, to the effect that any deposit of cash or securities and any deposit of investment earnings thereon to effect a discharge of this Indenture, which opinion may be waived by the Certificate Insurer at the time of such discharge and defeasance, (ii) the amounts required to be deposited to discharge this Indenture and defease the Certificates shall be invested only in Federal Securities and (iii) the Certificate Insurer shall have received (a) the final official statement delivered in connection with the refunding obligations, if any, (b) a copy of the accountants' verification report, (c) a copy of the escrow deposit agreement in form and substance acceptable to the Certificate Insurer, and (d) a copy of an opinion of bond counsel, dated the date of closing and addressed to the Certificate Insurer, to the effect that the Certificates have been paid within the meaning and with the effect expressed in this Indenture, and that the covenants, agreements and other obligations of the City to the holders of the Certificates have been discharged. In the event that the principal of and /or interest on the Certificates shall be paid by the Certificate Insurer pursuant to the terms of the Policy of Insurance, the assignment and pledge of the Trust Estate and all covenants, agreements and other obligations of the City to the Certificate owners shall continue to exist, such Certificates shall be deemed to be "Outstanding" and the Certificate Insurer shall be fully subrogated to the rights of such Registered Owners. M/92115.4 33 The release of the obligations of the Lessor under this Section shall be without prejudice to the rights of the Trustee to be paid reasonable compensation for all services rendered by it hereunder and all its reasonable expenses, charges and other disbursements incurred with respect to the administration of the trust hereby created and the performance of its powers and duties hereunder. Amounts paid by the Certificate Insurer under the Policy of Insurance or a Qualified Surety Bond shall not be deemed to have been paid by the City or the Lessor, and such amounts shall continue to be secured solely by the Trust Estate and shall be deemed to be due and owing under this Indenture. ARTICLE VII DEFAULTS AND REMED Section 7.01. Events of Default. If any of the following events occur it is hereby defined as and shall be deemed an "Event of Default" under this Indenture: (a) default by the City in the payment of Base Rentals or Additional Rentals; (b) The occurrence of a Termination Event; or (c) The occurrence of an Event of Default as provided in Section 14.01 of the Lease. The Trustee shall notify the Certificate Insurer and the University of Southern Colorado within five (5) days after it has received notice or has knowledge of an Event of Default or of any event that with notice and /or with the lapse of time could become an Event of Default. Notwithstanding anything herein, in the Ground Lease or in the Lease to the contrary, the University of Southern Colorado shall have the right to pay to the Trustee the amount of money necessary, together with moneys then on deposit with the Trustee in funds established under this Indenture, to redeem all of the Outstanding Certificates and to thereby discharge this Indenture, but only in accordance with the conditions set forth in Article VI hereof. If the University of Southern Colorado makes such payments, the Trustee and the Lessor shall take all necessary actions to release the entire Site from the provisions of this Indenture, the Lease and the Ground Lease. Section 7.02. Remedies on Default. Upon the occurrence of an Event of Default described in Section 7.01(b) of this Indenture, the Trustee shall, with the prior written consent of the Certificate Insurer, terminate the Lease Term, shall become entitled to possession of the Project, and shall give notice to the City to vacate the Project (leaving the Equipment) as provided in Sections 6.06 and 14.02 of the Lease, as the case may be, and shall exercise the rights and remedies of a secured party under the Colorado Uniform Commercial Code with respect to the Equipment; and the Trustee may, or as provided in Section 7.03 of this Indenture, 02/92115.4 34 shall, without any further demand or notice, take one or any combination of the following additional remedial steps: (a) The Trustee may lease the Project or any portion thereof and sublease the Site, or sell an assignment of its interest in the Ground Lease, all for the benefit of the Registered Owners; provided that, notwithstanding anything contained herein, in the Ground Lease or in the Lease to the contrary, the University of Southern Colorado shall have the exclusive right, for two weeks from the day notice of the Event of Default is given, to enter into an agreement to lease the Project and sublease the Site from the Trustee, so long as the University of Southern Colorado agrees to make such payments of Base Rentals and Additional Rentals as are set forth in the Lease. In the event that the University of Southern Colorado fails to exercise its right to lease the Project and sublease the Site from the Trustee within such two week period, the Trustee may lease and sublease to the highest responsible bidder. Any such lease and sublease or assignment shall be conditioned, however, on an agreement by the lessee /sublessee or assignee to use the Site in a manner compatible with other uses in the area immediately surrounding the Site. Prior to the execution of any such lease and sublease or assignment, the Trustee shall give written notice by mail, return receipt requested, of the proposed use or uses to the University of Southern Colorado, which shall have 30 days from the date of receipt of the notice within which to acquiesce or object to each of the proposed uses on the basis of the standard set forth in the preceding sentence. If the University of Southern Colorado fails to respond within the allotted time, it will be conclusively presumed to have acquiesced to all of the uses proposed. If the University of Southern Colorado objects to one or more of the proposed uses, the Trustee may either (i) execute a lease and sublease or assignment which limits the use or uses of the Site to those to which the University of Southern Colorado has acquiesced, or (ii) take the issue of whether a particular use or uses meet the standard of compatibility set forth above to binding arbitration, which arbitration shall be concluded within 180 days from the date of the objection from the University of Southern Colorado, such arbitration to be conducted in accordance with the rules of the American Arbitration Association. (b) The Trustee, on behalf of the Lessor, may recover from the City: (i) the portion of Base Rentals and Additional Rentals which would otherwise have been payable under the Lease allocable to any period in which the City continues to occupy the Project; and (ii) Base Rentals and Additional Rentals which would otherwise have been payable by the City under the Lease during the remainder, after the City vacates the Project, of the Original or Renewal Term in which such Event of Default occurs; provided, however, that if the Trustee does not proceed to foreclose and sell the Project and assign its interest in the Ground Lease reasonably promptly after such Event of Default, the Trustee shall be obligated to the City to use its best efforts to lease or sublease the Project and the Site for 02/92115.4 35 the remainder of such Original or Renewal Term, as provided in paragraph (a) of this Section 7.02, and the Net Proceeds of such leasing and subleasing shall be offset against the amount recoverable from the City under this paragraph (ii). (c) The Trustee may take whatever action at law or in equity may appear necessary or desirable to enforce its rights in and to the Project and the Site under the Lease, the Ground Lease and this Indenture. No right or remedy is intended to be exclusive of any other rights or remedies, but each and every such right or remedy shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute. However, notwithstanding any other provision of the Lease or this Indenture, any and all remedies against the City under the Lease or this Indenture shall be limited as provided in Section 14.03 of the Lease. If any Event of Default shall have occurred and if requested by the Certificate Insurer or, if there shall not be sufficient payments under the Policy of Insurance to pay the principal of and interest on the Certificates when due, the Registered Owners of a majority in aggregate principal amount of Certificates then Outstanding and indemnified as provided in Section 8.01(m) hereof, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Section as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Registered Owners. Section 7.03. Certificate Insurer or Majority of Registered Owners May Control Proceedings. Anything in this Indenture to the contrary notwithstanding, the Certificate Insurer, or, if the Certificate Insurer is in default under the Policy of Insurance, the Registered Owners of a majority in aggregate principal amount of the Certificates then Outstanding, shall have the right, at any time, to the extent permitted by law, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the time, method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver, and any other proceedings hereunder; provided that such direction shall not be otherwise than in accordance with the provisions hereof. The Trustee shall not be required to act on any direction given to it pursuant to this Section until the indemnity described in Section 8.01(m) of this Indenture is furnished to it by such Registered Owners. Section 7.04. Rights and Remedies of Registered Owners. No Registered Owner shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless (a) a default has occurred of which the Trustee has been notified as provided in Section 8.01(h) hereof, or of which by said Section 8.01(b) it is deemed to have notice; (b) such default shall have become an Event of Default as defined in Section 7.01 of this Indenture; (c) the Registered Owners of not less than a majority in aggregate principal amount of Certificates then outstanding shall have made written request to the Trustee and shall 02/92115.4 36 � III IIINLI�IIIII�III have offered reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceedings in its own name; (d) such Registered Owners of the Certificates shall have offered to the Trustee indemnity as provided in Section 8.01(m) hereof; (e) the Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name; and (f) if the Certificate Insurer is not in default under the Policy of Insurance, the Certificate Insurer shall have consented. The foregoing conditions are hereby declared in every case to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Registered Owners shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by any action or to enforce any right hereunder except in the manner herein provided and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the Registered Owners of all Certificates then Outstanding. Nothing contained in this Indenture shall, however, affect or impair the right of any Registered Owner to enforce the payment of the principal of, premium, if any, and interest on any Certificate at and after the maturity thereof. Section 7.05. Purchase of Project by Registered Owners or Trustee, Application of Certificates Toward Purchase Price. Upon the occurrence of an Event of Default under this Indenture, the lien on the Project created and vested in the Trustee hereunder may be foreclosed either by sale at public auction or by proceedings in equity. Upon any such sale, any Registered Owner or the Trustee may bid for and purchase the Project and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in their own absolute right without further accountability; and any purchaser at any such sale may, if permitted by law, after allowing for the proportion of the total purchase price required to be paid in cash for the costs and expenses of the sale, compensation and other charges, in paying purchase money, turn in all Certificates then Outstanding in lieu of cash, to the amount which shall, upon distribution of the Net Proceeds of such sale, be payable thereon. If the Trustee shall acquire title to the Project as a result of any such foreclosure sale, or any proceeding or transaction in lieu of foreclosure, the Trustee shall thereafter sell the Project (except as provided in paragraph (a) of Section 7.02 of this Indenture); and may take any further lawful action with respect to the Project which it, being advised by counsel and, so long as the Certificate Insurer is not in default under the Policy of Insurance, after obtaining consent of the Certificate Insurer, shall deem to be in the best interest of the Registered Owners, including but not limited to the enforcement of all rights and remedies set forth in the Lease and this Indenture and the taking of all other courses of action permitted therein or herein. Section 7.06. Waiver of Appraisement, Valuation, Stay and Extension. The Lessor agrees, to the extent permitted by law, that in case of the occurrence of an Event of Default, neither the Lessor nor anyone claiming through or under the Lessor shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay or extension laws now or hereafter in force in order to prevent or hinder the enforcement or foreclosure of this Indenture, or the absolute sale of the Trust Estate, or the final and absolute putting into possession thereof, 02192115.4 37 immediately after such sale, of the purchasers thereat; and the Lessor, for itself and all who may at any time claim through or under the Lessor, hereby waives, to the full extent that it may lawfully do so, the benefit of all such laws, and any and all right to have the estates comprised in the security intended to be hereby created and marshalled upon any foreclosure of the lien hereof and agrees that the Trustee or any court having jurisdiction to foreclose such lien may sell the Project and assign the Trustee's interest in the Site as an entirety; provided, however, that Lessor, for itself and all who may at any time claim through or under the Lessor, shall retain all rights of redemption. Section 7.07. Trustee May Enforce Rights Without Certificates. All rights of action and claims under this Indenture or any of the Certificates Outstanding hereunder may be enforced by the Trustee without the possession of any of the Certificates or the production thereof in any trial or proceedings relative thereto; and any suit or proceeding instituted by the Trustee shall be brought in its name as the Trustee, without the necessity of joining as plaintiffs or defendants any Registered Owners of the Certificates, and any recovery of judgment shall be for the ratable benefit of the Registered Owners of the Certificates, subject to the provisions of this Indenture. Section 7.08. Delay or Omission No Waiver. No delay or omission of the Trustee, the Certificate Insurer or of any Registered Owner to exercise any right or power accruing upon any default shall exhaust or impair any such right or power or shall be construed to be a waiver of any such default, or acquiescence therein; and every power and remedy given by this Indenture may be exercised from time to time and as often as may be deemed expedient. Section 7.09. No Waiver of One Default to Affect Another. No waiver of any default hereunder, whether by the Trustee, the Certificate Insurer or the Registered Owners, shall extend to or affect any subsequent or any other then existing default or shall impair any rights or remedies consequent thereon. Section 7.10. Discontinuance of Proceedings on Default; Position of Parties Restored. In case the Trustee, the Certificate Insurer or the Registered Owners shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, the Certificate Insurer or the Registered Owners, then and in every such case the Lessor, the City, the Certificate Insurer, the Trustee and the Registered Owners shall be restored to their former positions and rights hereunder with respect to the Trust Estate, and all rights, remedies and powers of the Trustee, the Certificate Insurer and the Registered Owners shall continue as if no such proceedings had been taken. Section 7.11. Waivers of Events of Default. The Trustee may in its discretion waive any Event of Default hereunder and its consequences upon the consent of the Certificate Insurer, and notwithstanding anything else to the contrary contained in this Indenture shall do so upon the written request of the Certificate Insurer, or, if the Certificate Insurer is in default under the Policy of Insurance, the Registered Owners of two -thirds in aggregate principal amount of all 02/92115.4 38 Ell 011T the Certificates then Outstanding; provided, however, that there shall not be waived without the consent of the Registered Owners of 100% of the Certificates then Outstanding as to which the Event of Default exists (a) any Event of Default in the payment of the principal of or premium on any Outstanding Certificates at the date of maturity specified therein or (b) any default in the payment when due of the interest on any such Certificates, unless prior to such waiver or rescission, all arrears of interest and all arrears of payments of principal and premium, if any, then due, as the case may be, and all expenses of the Trustee in connection with such default shall have been paid or provided for. In case of any such waiver, or in case any proceedings taken by the Trustee on account of any such default shall have been discontinued or abandoned or determined adversely to the Trustee, then and in every such case the Lessor, the City, the Trustee, the Certificate Insurer and the Registered Owners shall be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereon. ARTICLE VIII CONCERNING THE TRUSTEE Section 8.01. Duties of the Trustee. The Trustee hereby accepts the trusts imposed upon it by this Indenture and agrees to perform said trusts (including, without limitation, the delegation to the Trustee by the Lessor of all duties of the Lessor under the Lease), but only upon and subject to the following express terms and conditions, and any implied covenants or obligations shall be read into this Indenture against the Trustee: (a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise as a reasonable and prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees but shall be answerable for the conduct of the same in accordance with the standard specified above, and shall be entitled to act upon an Opinion of Counsel concerning all matters of trust hereof and the duties hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon an Opinion of Counsel and shall not be responsible for any loss or damage resulting from any action or nonaction taken by or omitted to be taken in good faith in reliance upon such Opinion of Counsel. 02 /82115.4 39 (c) The Trustee shall not be responsible for any recital herein or in the Certificates (except in respect to the execution of the Certificates on behalf of the Trustee), or for the recording or rerecording, filing or refiling of the Lease or this Indenture or of any supplements thereto or hereto or instruments of further assurance, or collecting any insurance moneys or for the validity of the execution by the Lessor of this Indenture or of any supplements hereto or instruments of further assurance, or for the sufficiency of the security for the Certificates issued hereunder or intended to be secured hereby, or for the value of or title to the Project, and the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Lessor or the City, except as provided herein; but the Trustee may require of the Lessor or the City full information and advice as to the performance of the covenants, conditions and agreements aforesaid. The Trustee shall have no obligation to perform any of the duties of the City under the Lease; and the Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Article V hereof. (d) The Trustee shall not be accountable for the use of any Certificates authenticated or delivered hereunder. The Trustee may become the Registered Owner of the Certificates with the same rights which it would have if not the Trustee. (e) The Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Registered Owner of any Certificate shall be conclusive and binding upon all future Registered Owners of the same Certificate and upon any Certificates issued in place thereof. (f) As to the existence or nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed on behalf of the Lessor by the Lessor Representative, or on behalf of the City by the City Representative or such other person as may be designated for such purpose by a certified resolution, as sufficient evidence of the facts therein contained, and, prior to the occurrence of a default of which the Trustee has been notified as provided in subsection (h) of this Section or of which by said subsection it is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may as is advisable, but shall in no case be bound to secure the same. (g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful default. mraaiis.a 40 (h) The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except failure by the City or the Lessor to cause to be made any of the payments to the Trustee required to be made by Article III hereof, unless the Trustee shall be specifically notified in writing of such default by the Lessor, the Certificate Insurer or the City, or by the Registered Owners of at least 25% in aggregate principal amount of Certificates then Outstanding, and all notices or other instruments required by this Indenture to be delivered to the Trustee, must, in order to be effective, be delivered at the principal corporate trust office of the Trustee, and in the absence of such notice so delivered, the Trustee may conclusively assume there is no default except as aforesaid. (i) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust in the manner and for the purposes for which they were received but need not be segregated from other funds except to the extent required by this Indenture or law. The Trustee shall not be under any liability for interest on any moneys received hereunder except such as may be agreed upon. 0) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right, but shall not be required, to inspect any and all of the property pledged herein, including all books, papers and records of the Lessor or the City pertaining to the Project. (k) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. 0) Notwithstanding anything in this Indenture contained, the Trustee shall have the right, but shall not be required, to demand in respect of the execution and delivery of any Certificates, the withdrawal of any cash, or any action whatsoever within the purview of this Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required, as a condition of such action by the Trustee deemed desirable for the purpose of establishing the right of the Lessor or the City to the execution and delivery of any Certificates, the withdrawal of any cash, or the taking of any other action by the Trustee. (m) Before taking any action hereunder the Trustee may require that satisfactory indemnity be furnished to it by the Registered Owners for the reimbursement of all expenses which it may incur and to protect it against all liability, except liability which may result from its negligence or willful default, by reason of any action so taken. Section 8.02. Fees and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for its reasonable fees for its services rendered hereunder as and when the same become due and all expenses reasonably and necessarily made or incurred by the Trustee 02/92115.4 41 in connection with such services as and when the same become due as provided in Section 6.02 of the Lease. Section 8.03. Resignation or Replacement of Trustee. The present or any future Trustee may resign by giving written notice to the City, the Certificate Insurer and to the Lessor not less than 60 days before such resignation is to take effect. Such resignation shall take effect only upon the appointment of a successor qualified as provided in the third paragraph of this Section. The present or any future Trustee may be removed at any time by an instrument in writing, executed by the Registered Owners of a majority in aggregate principal amount of the Certificates then Outstanding and delivered to the Trustee and the Certificate Insurer. In case the present or any future Trustee shall at any time resign or be removed or otherwise become incapable of acting, a successor may be appointed by the Registered Owners of a majority by an instrument or concurrent instruments signed by such Registered Owners, or their attorneys -in -fact duly appointed; provided that the City may, by an instrument executed by order of the City Council, appoint a successor until a new successor shall be appointed by the Registered Owners as herein authorized. The City upon making such appointment shall forthwith give notice thereof to each Registered Owner, the Certificate Insurer and to the Lessor, which notice may be given concurrently with the notice of resignation given by any resigning Trustee. Any successor so appointed by the City shall immediately and without further act be superseded by a successor appointed in the manner above provided by the Registered Owners of a majority in aggregate principal amount of the Certificates Outstanding. Every successor shall always be a bank or trust company in good standing, qualified to act hereunder, and having a capital and surplus of not less than $50,000,000 or, if the Certificate Insurer is not in default under the Policy of Insurance, shall be approved by the Certificate Insurer. Any successor appointed hereunder shall execute, acknowledge and deliver to the City and to the Lessor an instrument accepting such appointment hereunder, and thereupon such successor shall, without any further act, deed or conveyance, become vested with all the estates, properties, rights, powers and trusts of its predecessor in the trust hereunder with like effect as if originally named as Trustee herein; but the Trustee retiring shall, nevertheless, on the written demand of its successor, execute and deliver an instrument conveying and transferring to such successor, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of the predecessor, which shall duly assign, transfer and deliver to the successor all properties and moneys held by it under this Indenture. Should any instrument in writing from the City or the Lessor be required by any successor for more fully certainly vesting in and confirming to it, the said deeds, conveyances and instruments in writing shall be made, executed, acknowledged and delivered by the City or the Lessor on request of such successor. The instruments evidencing the resignation or removal of the Trustee and the appointment of a successor hereunder, together with all other instruments provided for in this Section shall be filed and /or recorded by the successor the Trustee in each recording office, if any, where this Indenture shall have been filed and /or recorded. 02/82115.4 42 Elul Section 8.04. Conversion, Consolidation or Merger of Trustee. Any bank or trust company into which the Trustee or its successor may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business as a whole shall be the successor of the Trustee under this Indenture with the same rights, powers, duties and obligations and subject to the same restrictions, limitations and liabilities as its predecessor, all without the execution or filing of any papers or any further act on the part of any of the parties hereto or thereto, anything herein or therein to the contrary notwithstanding. In case any of the Certificates to be issued hereunder shall have been authenticated, but not delivered, any successor Trustee may adopt the certificate of any predecessor Trustee, and deliver the same as authenticated; and, in case any of such Certificates shall not have been authenticated, any successor Trustee may authenticate such Certificates in the name of such successor Trustee. Section 8.05. Intervention by Trustee. In any judicial proceeding to which the Lessor or the City is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Registered Owners of the Certificates, the Trustee may intervene on behalf of Registered Owners of the Certificates, the Trustee may intervene on behalf of Registered Owners and shall do so if requested in writing by the Certificate Insurer or the Registered Owners of at least 25 % in aggregate principal amount in Certificates then Outstanding. Section 8.06. Escrowed Deed and Bill of Sale. The Trustee agrees to hold the escrowed deed and bill of sale provided for in Section 12.03 of the Lease, for the benefit of the City, to cooperate in any required modification, re- execution and redelivery of the deed and bill of sale, and to date and release the escrowed deed and bill of sale to the City, all as provided in said Section 12.03 of the Lease. The Trustee shall not be responsible for recording the escrowed deed. Section 8.07. Undertakings to Provide Ongoing Disclosure. (a) The City has undertaken to provide ongoing disclosure for the benefit of the Registered Owners of the Series 1995 Certificates (including for purposes of this Section both the beneficial owners and the Registered Owners) pursuant to Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2 -12 under the Securities Exchange Act of 1934, as amended (17 CFR Part 240 § 240.15c2 -12) in Section 11.09 of the Lease, which undertaking is hereby assigned by the Lessor to the Trustee for the benefit of the Registered Owners of the Series 1995 Certificates. Such assignment is a present absolute assignment and not the assignment of a security interest. The Trustee hereby covenants and agrees that it will comply with and carry out all the provisions of Section 11.09 of the Lease applicable to the Trustee. The Lessor and the Trustee shall have no obligation to examine or review the Annual Financial Information and shall have no duty to verify the accuracy or completeness of the Annual Financial Information. 02182115.4 43 (b) Notwithstanding any other provision of this Indenture, failure of the City or the Trustee to comply with Section 11.09 of the Lease shall not be considered an Event of Default under the Indenture and the rights and remedies provided by the Indenture upon the occurrence of an Event of Default shall not apply to any such failure. Section 11.09 of the Lease shall be enforceable only by specific performance, by any Registered Owner of a Series 1995 Certificate, or by the Trustee, on behalf of the Registered Owners of the Series 1995 Certificates, as further described in Section 11.09 of the Lease. The Lessor shall have any power or duty to enforce the obligations of the City under Section 11.09 of the Lease. (c) If the Trustee is entering into a sublease or otherwise permitting another person to use the Project following an Event of Default or Event of Nonappropriation, which person will constitute an "obligated person" for purposes of the Rule, the Trustee hereby agrees to require that such subsequent "obligated person" enter into an undertaking which complies with the Rule as a condition to being permitted to use the Project. ARTICLE I K SUPPLEMENTAL INDENTURES AND AMENDMENTS OF THE LEASE Section 9.01. Supplemental Indentures Not Requiring Consent of Registered Owners. The Trustee and the Lessor may, with the written consent of the City and the Certificate Insurer, but without the consent of, or notice to, the Registered Owners, enter into such indentures or agreements supplemental hereto for any one or more or all of the following purposes: (a) To add to the covenants and agreements of Lessor contained in this Indenture other covenants and agreements to be thereafter observed by the Lessor; (b) To cure any ambiguity, or to cure, correct or supplement any defect or omission or inconsistent provision contained in this Indenture, or to make any provisions with respect to matters arising under this Indenture or for any other purpose if such provisions are necessary or desirable and do not adversely affect the interests of the Registered Owners; (c) To subject to this Indenture additional revenues, properties or collateral; or (d) To set forth the terms and conditions and other matters in connection with the issuance of Additional Certificates (and to pay other costs reasonably related thereto), pursuant to Section 2.11 of this Indenture. OV92115.4 44 The Trustee shall provide to the Certificate Insurer a copy of any supplemental indenture executed pursuant to the provisions of this Section 9.01. The Trustee, in determining whether any amendments or supplements to the Indenture may be made without the consent of the Registered Owners shall consider the effect on the rights of the Registered Owners as if the Policy of Insurance was not in effect. Section 9.02. Supplemental Indentures Requiring Consent of Registered Owners. Exclusive of supplemental indentures covered by Section 9.01 hereof, the written consent of the City and the consent of the Registered Owners of not less than two- thirds in aggregate principal amount of the Certificates then Outstanding shall be required for the execution by the Lessor and the Trustee of any indenture or indentures supplemental hereto; provided, however, that without the consent of the Registered Owners of all the Certificates at the time Outstanding nothing herein contained shall permit, or be construed as permitting: (a) A change in the terms of redemption or maturity of the principal amount of or the interest on any Outstanding Certificate, or a reduction in the principal amount of or premium payable upon any redemption of any Outstanding Certificate or the rate of interest thereon, without the consent of the Registered Owner of such Certificate; (b) The deprivation of the Registered Owner of any Certificate then Outstanding of the lien created by this Indenture (other than as originally permitted hereby); (c) A privilege or priority of any Certificate or Certificates over any other Certificate or Certificates; or (d) A reduction in the aggregate principal amount of the Certificates required for consent to such supplemental indenture. If at any time the City or the Lessor shall request the Trustee to enter into such supplemental indenture for any of the purposes of this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be mailed by registered or certified mail to the Registered Owners of the Certificates then Outstanding at the address shown on the registration books maintained by the Trustee and to the Certificate Insurer. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the principal corporate trust office of the Trustee for inspection by all Registered Owners. If, within 60 days or such longer period as shall be prescribed by the City following the giving of such notice, the Registered Owners of not less than two - thirds in aggregate principal amount of the Certificates then Outstanding at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no Registered Owner shall have any right to object to any of the terms and provisions contained therein, or in the operation thereof, or in any manner to question the propriety of the execution thereof, or to 02/92115.4 45 enjoin or restrain the Trustee or the Lessor from executing the same or from taking any action pursuant to the provisions thereof. Section 9.03. Execution of Supplemental Indenture. The Trustee is authorized to join with the Lessor in the execution of any such supplemental indenture and to make further agreements and stipulations which may be contained therein, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects its rights, duties or immunities under this Indenture. Any supplemental indenture executed in accordance with the provisions of this Article shall thereafter form a part of this Indenture; and all the terms and conditions contained in any such supplemental indenture as to any provision authorized to be contained therein shall be deemed to be part of this Indenture for any and all purposes. In case of the execution and delivery of any supplemental indenture, express reference may be made thereto in the text of the Certificates issued thereafter, if any, if deemed necessary or desirable by the Trustee. Section 9.04. Amendments, Etc., of the Lease Not Requiring Consent of Registered Owners. The Lessor and the Trustee may, with the written consent of the City and the Certificate Insurer, but without the consent of or notice to the Registered Owners, consent to any amendment, change or modification of the Lease as may be required (a) by the provisions of the Lease or this Indenture, (b) for the purpose of curing any ambiguity or formal defect or omission in the Lease, (c) in order to more precisely identify the Project or to add additional improvements or properties acquired in accordance with the Lease and the Indenture (including the replacement, substitution or deletion of Equipment pursuant to Sections 9.02 and 9.03 of the Lease; (d) in connection with the issuance of Additional Certificates (and to pay costs reasonably related thereto), or (e) in connection with any other change therein which, in the judgment of the Trustee, is not to the prejudice of the Registered Owners. The Trustee shall provide to the Certificate Insurer a copy of any amendment of the Lease executed pursuant to this Section. The Trustee, in determining whether any amendments or supplements to the Lease may be made without the consent of the Registered Owners, shall consider the effect on the rights of the Registered Owners as if the Policy of Insurance was not in effect. Section 9.05. Amendments, Etc., of the Lease Requiring Consent of Registered Owners. Except for the amendments, changes or modifications permitted by Section 9.04 hereof, neither the Lessor nor the Trustee shall consent to any other amendment, change or modification of the Lease without the giving of notice and the written approval or consent of the Registered Owners of not less than two - thirds in aggregate principal amount of the Certificates at the time Outstanding given and procured as provided in Section 9.02 hereof. If at any time the City and the Lessor shall request the consent of the Trustee to any such proposed amendment, change or modification of the Lease, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided in Section 9.02 hereof. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall 02/92115.4 46 state that copies of the instrument embodying the same are on file at the principal corporate trust office of the Trustee for inspection by all Registered Owners. ARTICLE X AMCELLANEOUS Section 10.01. Evidence of Signature of Registered Owners and Ownership of Certificates. Any request, consent or other instrument which this Indenture may require or permit to be signed and executed by the Registered Owners may be in one or more instruments of similar tenor, and shall be signed or executed by such Registered Owners in person or by their attorneys appointed in writing. Proof of the execution of any such instrument or of an instrument appointing any such attorney, or the ownership of Certificates shall be sufficient (except as otherwise herein expressly provided) if made in the following manner, but the Trustee may, nevertheless, in its discretion require further or other proof in cases where it deems the same desirable: (a) The fact and date of the execution by any Registered Owner or his or her attorney of such instrument may be proved by the certificate of any officer authorized to take acknowledgments in the jurisdiction in which he or she purports to act that the person signing such request or other instrument acknowledged to him or her the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before a notary public. (b) The fact of the owning by any person of Certificates and the amounts and numbers of such Certificates, and the date of the owning of the same, may be proved by a certificate executed by any trust company, bank or bankers, wherever situated, stating that at the date thereof the party named therein did exhibit to an officer of such trust company or bank or to such bankers, as the property of such party, the Certificates therein mentioned, if such certificate shall be deemed by the Trustee to be satisfactory. The Trustee may, in its discretion, require evidence that such Certificates have been deposited with a bank, bankers or trust company before taking any action based on such ownership. In lieu of the foregoing the Trustee may accept other proofs of the foregoing as it shall deem appropriate. Any request or consent of the Registered Owner of any Certificate shall bind all future Registered Owners of such Certificate in respect of any thing done or suffered to be done by the City or the Trustee in accordance therewith. Section 10.02. Covenants of Lessor. The Lessor hereby covenants to the Trustee for the benefit of the Registered Owners that the Lessor will observe and comply with the covenants of quiet enjoyment contained in Article V of the Lease, with its covenant to cooperate with the Trustee in the enforcement of the Lease. The Lessor agrees that wherever in the Lease it is stated that the Lessor will notify the Trustee, or whenever the Lease gives the Trustee some OV92115.4 47 right or privilege or in any way attempts to confer upon the Trustee the ability to protect the security for payment of the Certificates, that such part of the Lease shall be as if it were set forth in full in this Indenture. The Lessor agrees that the Trustee as assignee of the Lessor under the Lease may enforce, in its name or in the name of the Lessor, all rights of the Lessor and all obligations of the City under the Lease, for and on behalf of the Registered Owners, whether or not the Lessor is in default under this Indenture. The Trustee and the Lessor hereby agree that the Lessor shall not be obligated to make any payments or to take any other action with respect to the Project under the Lease. Section 10.03. Inspection of the Project. The Trustee and the Certificate Insurer and their duly authorized agents shall have the right, on reasonable notice to the City, at all reasonable times, to examine and inspect the Project. The Trustee and its duly authorized agents shall also be permitted, at all reasonable times, to examine the books, records, reports and other papers of the City with respect to the Project. Section 10.04. Parties Interested Herein. With the exception of rights herein expressly conferred on the City, nothing in this Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person other than, the City, the Lessor, the Trustee, the Certificate Insurer and the Registered Owners, any right, remedy or claim under or by reason of this Indenture or any covenant, condition or stipulation hereof, and all the covenants, stipulations, promises and agreements in this Indenture contained by and on behalf of the Lessor or the Trustee shall be for the sole and exclusive benefit of the City, the Lessor, the Trustee, the Certificate Insurer and the Registered Owners. Section 10.05. Titles, Headings, Captions, Etc. The titles, captions and headings of the articles, sections and subdivisions of this Indenture have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof. Section 10.06. Severability. In the event any provision of this Indenture shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 10.07. Consent of the Certificate Insurer Where Consent of Registered Owners Required, Certificate Insurer to Direct Trustee. As long as the Certificate Insurer is not in default under the Policy of Insurance, notwithstanding any other provision hereof to the contrary, the Certificate Insurer shall, at all times, be deemed to be the exclusive owner of all the Certificates for all purposes (except for the purpose of payment of the principal of and premium, if any, and interest on the Certificates prior to the payment by the Certificate Insurer of the principal of and interest on the Certificates) including but not limited to: (i) the execution and delivery of any supplemental indenture except supplemental indentures described in Section 9.02 hereof, which supplemental indentures shall only be executed and delivered with the consent of the owners of all Certificates at the time outstanding adversely affected thereby, (ii) the execution and delivery of any amendment, change and modification of the Lease, and (iii) any action which under this Indenture or the Lease requires the written approval or consent of or can 021%2115.4 48 be initiated by the owners of a stated percentage in aggregate principal amount of the Certificates at the time outstanding. In addition, the Certificate Insurer shall be notified in advance of the execution of any Supplemental Indenture and of any amendment, change or modification of the Lease in the event Registered Owner or Certificate Insurer consent is not required. The Certificate Insurer shall have the exclusive right to direct any action or remedy to be undertaken by the Trustee at the Registered Owners' or any other party's request pursuant to the Indenture and the Lease. No event of default shall be waived without the consent of the Certificate Insurer. Section 10.08. Subrogation. In the event that the principal and interest due on the Certificates or any portion thereof shall be paid by the Certificate Insurer pursuant to the Policy of Insurance, such Certificates shall continue to be outstanding under the Indenture, the assignment and pledge of the Trust Estate and all covenants, agreements and other obligations under this Indenture shall continue to exist, and the Certificate Insurer shall be fully subrogated to all of the rights of the Registered Owners of such Certificates, as further provided in Section 3.18 hereof and in the Policy of Insurance. Section 10.09. Governing Law. This Indenture shall be governed and construed in accordance with the laws of the State of Colorado, without regard to conflict of laws principles. Section 10.10. Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 10.11. Notices. Any notice that is required to be given to the Registered Owners or to the Trustee pursuant to this Indenture, any supplemental indenture, and the Lease shall also be provided to the Certificate Insurer. All notices, certificates or other communications shall be sufficiently given and shall be deemed given when delivered or mailed by certified or registered mail, postage prepaid, as follows: if to the City, City of Pueblo, Colorado, #1 City Hall Place, Pueblo, Colorado 81003, Attention: City Manager; if to the Lessor, Pueblo Municipal Property Corporation, One City Hall Place, Pueblo, Colorado 81003, Attention: President; if to the Original Purchaser, Lewis, de Rozario & Co. Incorporated, 555 Seventeenth Street, Suite 3400, Denver, Colorado 80202 -3934, Attention: Public Finance Department; if to the Trustee, Colorado National Bank, 24th Floor, 950 Seventeenth Street, Denver, Colorado 80202, Attention: Corporate Trust Department; if to the Certificate Insurer, MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured Portfolio Management -Lease Unit; and if to the University of Southern Colorado, 2200 Bonforte Boulevard, Pueblo, Colorado 81001 -4901, Attention: President. The City, the Lessor, the Original Purchaser, the Certificate Insurer, the Trustee and the University of Southern Colorado, may, by written notice, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 10.12. Payments Due on Holidays. If the date for making any payment or the last day for performance of any act or the exercising of any right, as provided in this Indenture, 02182115.4 49 shall not be a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided in this Indenture. Section 10.13. Lessor, City and Trustee Representatives. Whenever under the provisions hereof the approval of the Lessor, the City or the Trustee is required, or the City, the Lessor or the Trustee is required to take some action at the request of the other, unless otherwise provided, such approval or such request shall be given for the Lessor by an Lessor Representative, for the City by the City Representative, and for the Trustee by the Trustee Representative, and the Lessor, the City and the Trustee shall be authorized to act on any such approval or request. 02182115.4 50 IN WITNESS WHEREOF, the Lessor and the Trustee have caused this Indenture to be executed in their respective corporate names and their respective corporate seals to be hereto affixed and attested by their duly authorized officials or officers, all as of the date first above written. [SEAL] Attest: By Secretary [SEAL] PUEBLO MUNICIPAL PROPERTY CORPORATION, as Lessor President COLORADO NATIONAL BANK, as Trustee B Attest: Name: Title: By Name: Title: 02182115.4 51 STATE OF COLORADO ) ) ss. CITY OF PUEBLO ) The foregoing instrument was acknowledged before me as of the _ day of December 1995, by , as President of Pueblo Municipal Property Corporation, a Colorado nonprofit corporation. WITNESS my hand and official seal. [SEAL] My commission expires: STATE OF COLORADO ] ] ss. CITY OF PUEBLO ] Notary Public The foregoing instrument was acknowledged before me as of the _ day of December 1995, by , as Secretary of Pueblo Municipal Property Corporation, a Colorado nonprofit corporation. WITNESS my hand and official seal. [SEAL] My commission expires: Notary Public 02/82115.4 52 STATE OF COLORADO ) CITY AND ) ss. COUNTY OF DENVER ) The foregoing instrument was acknowledged before me as of the _ day of December 1995, by , as and , as , of Colorado National Bank, a national banking association. WITNESS my hand and official seal. [SEAL] My commission expires: Notary Public for the State of Colorado 02182115.4 53 EXHIBIT A UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( "DTC "), TO THE LESSOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. REFUNDING CERTIFICATE OF PARTICIPATION EVIDENCING ASSIGNMENT OF A PROPORTIONATE UNDIVIDED INTEREST IN RIGHTS TO RECEIVE CERTAIN REVENUES PURSUANT TO THE GOLF COURSE LEASE PURCHASE AND SUBLEASE AGREEMENT BETWEEN PUEBLO MUNICIPAL PROPERTY CORPORATION, AS LESSOR, AND CITY OF PUEBLO, COLORADO, AS LESSEE No. R Interest Rate: Maturily Date: Original Issue Date: REGISTERED OWNER: PRINCIPAL SUM: December 1, _ CUSIP: DOLLARS THIS CERTIFIES THAT THE REGISTERED OWNER (named above), or registered assigns, has a proportionate undivided interest in rights to receive certain revenues, as described December 1, 1995 022192115.4 A -1 below, pursuant to an annually renewable Golf Course Lease Purchase and Sublease Agreement, dated as of December 1, 1995 (which agreement as from time to time amended is referred to herein as the "Lease "), between PUEBLO MUNICIPAL PROPERTY CORPORATION, a Colorado nonprofit corporation, as lessor (the "Lessor ") and CITY OF PUEBLO, COLORADO (the "City "), as lessee. The interest of the Registered Owner of this Certificate of Participation (this "certificate ") is secured as provided in the Lease and in the Mortgage and Indenture of Trust, dated as of December 1, 1995 (which indenture as from time to time amended is herein referred to as the "Indenture "), between the Lessor and COLORADO NATIONAL BANK, as trustee, or its successor (the "Trustee ") for the registered owners (the "Registered Owners ") of the certificates (as defined in the Lease), whereby the rights (with certain exceptions) of the Lessor as lessor and sublessor under the Lease have been assigned by the Lessor to the Trustee for the benefit of the Registered Owners. Under the Indenture, the Lessor has also granted to the Trustee, for the benefit of the Registered Owners, a leasehold mortgage on and a security interest in the Project (as hereinafter defined). Pursuant to the Lease and the Indenture, the Registered Owner hereof is entitled to receive, solely out of and to the extent available from the sources hereinafter identified, on the Maturity Date (stated above) (or earlier as hereinafter provided), the Principal Sum (stated above), and interest thereon as described in the Indenture at the Interest Rate (stated above) per annum payable semiannually on June 1 and December 1 in each year, commencing June 1, 1995. Principal of and any premium on this Certificate are payable in lawful money of the United States of America upon presentation and surrender thereof at the principal operations office of the Trustee presently located at First Trust National Association, in St. Paul, Minnesota, or its successor; and interest on this certificate is payable to the Registered Owner hereof by check or draft of the Trustee, or its successor, to be mailed to such Registered Owner, on or before each interest payment date (or, if such interest payment date is not a Business Day, as defined in the Indenture, on or before the next succeeding Business Day), at his or her address as it last appears in the registration books kept by the Trustee. REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTH ON THE REVERSE HEREOF WHICH SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN. This certificate shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Lease, until executed on behalf of the Trustee. 02/%2115.4 A -2 IN WITNESS WHEREOF, this certificate has been executed with the manual signature of an authorized officer of the Trustee and has been authenticated by the facsimile signature of an authorized representative of the City, all as of the date set forth below. Dated: COLORADO NATIONAL BANK, as Trustee By (Manual Signature) Authorized Officer 02/92115.4 A -3 CERTIFICATE OF AUTHENTICATION This is one of the Certificates of Participation evidencing a proportionate interest in rights to receive certain revenues pursuant to the within - mentioned Lease and Indenture. (FACSIMILE OF THE CITY'S SEAL) CITY OF PUEBLO, COLORADO Attest: : City Clerk (FACSIMILE OF THE LESSOR'S SEAL) President of the City Council PUEBLO MUNICIPAL CORPORATION im Attest: : Secretary President PROPERTY 02/92115.4 A -4 [BACK OF CERTIFICATE] CERTIFICATE OF PARTICIPATION EVIDENCING ASSIGNMENT OF A PROPORTIONATE UNDIVIDED INTEREST IN RIGHTS TO RECEIVE CERTAIN REVENUES PURSUANT TO THE GOLF COURSE LEASE PURCHASE AND SUBLEASE AGREEMENT BETWEEN PUEBLO MUNICIPAL PROPERTY CORPORATION, AS LESSOR, AND CITY OF PUEBLO, COLORADO, AS LESSEE This certificate is one of an issue of Certificates evidencing assignments of proportionate undivided interests in rights to receive certain Revenues, as described below, pursuant to the Lease and the Indenture, issued, in an aggregate principal amount of $4,450,000 (the "Series 1995 Certificates "), pursuant to the Indenture for the purpose, among others, of providing funds to advance refund certain certificates of participation issued by the Lessor in 1989 to finance the acquisition, construction and equipping of a golf course facility (the "Golf Course "), on a certain parcel of land (the "Site ") owned by the City and leased to the Lessor pursuant to that certain Ground Lease Agreement, dated as of December 1, 1995 (the "Ground Lease "), between the City as lessor thereunder, and the Lessor, as lessee thereunder. Under the Lease, the Golf Course and the Equipment, as defined in the Lease (collectively, the "Project "), have been leased by the Lessor to the City and the Site has been subleased by the Lessor to the City; and the City has agreed to pay directly to the Trustee semiannual rental payments (the "Base Rentals ") in consideration for its right to use the Project and the Site, the proceeds of which are required by the Indenture to be distributed by the Trustee to the payment of the principal of, premium, if any, and interest on the Certificates. In addition to the Base Rentals, the City has agreed to make certain other payments (the "Additional Rentals ") sufficient to pay the fees and expenses of the Trustee, certain insurance premiums, taxes, utility charges, costs of maintenance and repair, payments to the Reserve Fund and the Rebate Fund (as defined in the Lease) and other expenses expressly required to be paid by the City under the Lease. The Lease is subject to annual renewal at the option of the City. The obligation of the City to pay Base Rentals and Additional Rentals under the Lease will terminate in the event that the City, for any reason, fails to budget and appropriate, specifically with respect to the Lease, moneys to pay all Base Rentals and reasonably estimated Additional Rentals during the next occurring renewal term of the Lease. In the event that the Lease Term (as defined in the Lease) is terminated by the City as set forth above (herein referred to as an "Event of Nonappropriation ") or is terminated by reason of an Event of Default (as defined in the Lease), the principal amount of this certificate and interest hereon will be payable from such moneys, if any, as may be available for such purpose, including any moneys received by the Trustee from subleasing the Site or any portion thereof, or leasing, selling or assigning its interest in the 02182115.4 A -5 Project, or from repossession or liquidation of the Equipment. Under certain circumstances, this Certificate and the interest hereon may also be payable from the Net Proceeds (as defined in the Lease) of title or casualty insurance policies, or condemnation awards. The Lease Term may also be terminated in the event that the City shall exercise its option to purchase the Project by making payment of the Purchase Option Price (as defined in the Lease). In the event that the City shall pay the Purchase Option Price, the proceeds thereof are required to be used to pay the principal of, premium, if any, and interest on the Certificates. MBIA Insurance Corporation (the "Certificate Insurer ") has agreed to provide a surety bond in the principal amount of $442,500 to be deposited to the Reserve Fund established pursuant to the Indenture and used to make payments on the Series 1995 Certificates when other Revenues are not sufficient. It is provided in the Indenture that there may hereafter be issued additional Certificates ( "Additional Certificates ") from time to time under certain terms and conditions, and if issued, such Additional Certificates will be equally and proportionately secured under and entitled to the protection given by the Indenture with the Certificates. Reference is hereby made to the Lease and the Indenture for a description of the rights, duties and obligations of the City, the Lessor, the Trustee and the Registered Owners, the terms upon which Additional Certificates may be issued, the terms upon which the Certificates and any Additional Certificates are secured, the terms and conditions upon which the Certificates will be deemed to be paid at or prior to maturity or redemption of the Certificates upon the making of provision for the full or partial payment thereof, and the rights of the Registered Owners upon the occurrence of an Event of Default or an Event of Nonappropriation. NEITHER THE LEASE NOR THE CERTIFICATES CONSTITUTES A GENERAL OBLIGATION OR OTHER INDEBTEDNESS OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR CHARTER DEBT LIMITATION. NEITHER THE LEASE, THE INDENTURE NOR THE CERTIFICATES HAVE DIRECTLY OR INDIRECTLY OBLIGATED THE CITY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED FOR ANY FISCAL YEAR IN WHICH THE LEASE SHALL BE IN EFFECT. EXCEPT TO THE EXTENT PAYABLE FROM THE PROCEEDS OF THE SALE OF THE CERTIFICATES AND INCOME FROM THE INVESTMENT THEREOF, FROM NET PROCEEDS OF CERTAIN INSURANCE POLICIES, PERFORMANCE BONDS AND CONDEMNATION AWARDS, FROM NET PROCEEDS OF SUBLEASING OF THE SITE OR ANY PORTION THEREOF, LEASING, SALE OR ASSIGNMENT OF THE TRUSTEE'S INTEREST IN THE PROJECT, AND REPOSSESSION AND LIQUIDATION OF THE EQUIPMENT OR FROM OTHER AMOUNTS MADE AVAILABLE UNDER THE INDENTURE, THIS CERTIFICATE WILL BE PAYABLE DURING THE LEASE TERM SOLELY FROM BASE RENTALS TO BE PAID BY THE CITY UNDER THE LEASE AND THE INCOME FROM CERTAIN INVESTMENTS THEREUNDER. ALL PAYMENT OBLIGATIONS OF THE CITY UNDER THE LEASE, INCLUDING, WITHOUT LIMITATION, THE OBLIGATION OF THE CITY TO PAY BASE RENTALS, ARE FROM YEAR TO YEAR ONLY AND DO NOT CONSTITUTE A MANDATORY PAYMENT 02182115.4 A -6 OBLIGATION OF THE CITY IN ANY FISCAL YEAR BEYOND A FISCAL YEAR IN WHICH THE LEASE SHALL BE IN EFFECT. THE LEASE IS SUBJECT TO ANNUAL RENEWAL AT THE OPTION OF THE CITY AND WILL BE TERMINATED UPON THE OCCURRENCE OF A TERMINATION EVENT. IN SUCH EVENT, ALL PAYMENTS FROM THE CITY UNDER THE LEASE WILL TERMINATE, AND THIS CERTIFICATE AND THE INTEREST HEREON WILL BE PAYABLE FROM CERTAIN MONEYS, IF ANY, HELD BY THE TRUSTEE UNDER THE INDENTURE, AND ANY AMOUNTS PAYABLE UNDER THE POLICY OF INSURANCE REFERRED TO IN THE INDENTURE AND ANY MONEYS MADE AVAILABLE BY ACTION OF THE TRUSTEE REGARDING THE SITE AND THE PROJECT. THE LESSOR HAS NO OBLIGATION TO MAKE ANY PAYMENTS ON THE CERTIFICATES. The Certificates are issuable solely as fully registered Certificates without coupons in denominations of $5,000 and any integral multiple thereof. This certificate is transferable by the Registered Owner hereof in person or by his or her attorney duly authorized in writing on the registration books kept at the principal operations office of the Trustee upon surrender of this Certificate together with a duly executed written instrument of transfer satisfactory to the Trustee. Upon such transfer, a new fully registered Series 1995 Certificate or Series 1995 Certificates without coupons and of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange herefor, all upon payment of the charges and subject to the terms and conditions set forth in the Indenture. The Trustee may deem and treat the person in whose name this certificate is registered as the absolute owner hereof, whether or not this certificate shall be overdue, for the purpose of receiving payment and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. Notwithstanding the foregoing, so long as the ownership of the Series 1995 Certificates is maintained in book -entry form by The Depository Trust Company (the "Securities Depository") or a nominee thereof, this certificate may be transferred in whole but not in part only to the Securities Depository or a nominee thereof or to a successor Securities Depository or its nominee. Certificates may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Certificates of the same date, maturity, series and interest rate, or for a like aggregate principal amount of Certificates of other authorized denominations of the same date, maturity, series and interest rate. The City shall authenticate and the Trustee shall execute and deliver Certificates which the Registered Owner thereof making the exchange is entitled to receive, bearing numbers not then outstanding. The Trustee shall not be required to transfer or exchange the Certificates during the period of 15 days next preceding any interest payment date of such Certificate nor to transfer or exchange any Certificate after the publication or the mailing of notice calling such Certificate 02182115.4 A -7 W11 I IFFININ for redemption has been given as herein provided, nor during the period of 15 days next preceding the giving of such notice of redemption. In the event that this certificate is called for redemption in part only, upon surrender and cancellation of this certificate, a new fully registered Series 1995 Certificate or Series 1995 Certificates of the same maturity, of authorized denomination, in an aggregate principal amount equal to the unredeemed portion hereof, shall be executed and delivered by the Trustee to the Registered Owner hereof. The Certificates are subject to redemption as follows: (a) The Series 1995 Certificates shall be called for redemption on any date in the event of, and to the extent that moneys are actually received by the Trustee from, the exercise by the City of its option to purchase the Project, as provided in the Lease, upon payment of the then applicable Purchase Option Price; provided, however, that paragraph (b) below, and not this paragraph (a), shall apply in the event that the Purchase Option Price is paid from moneys borrowed by the City or derived from any installment purchase or lease purchase financing by the City. (b) The Series 1995 Certificates maturing on or after December 1, 2006, shall be callable for redemption prior to maturity, at the option of the City, on December 1, 2005 and on any date thereafter at a redemption price (expressed as a percentage of principal amount) of 100 % plus accrued interest to the redemption date. (c) The Certificates shall be called for redemption in the event and only to the extent that any Extraordinary Revenues (as defined in the Lease) are deposited into the Extraordinary Redemption Fund, other than as provided in (a) or (b) above or in (d) below. (d) The Certificates may also be called for redemption as set forth below upon the occurrence of a Termination Event. In the event the Series 1995 Certificates are redeemed pursuant to (a) above, the Series 1995 Certificates shall be redeemed in whole, at a redemption price equal to the par amount of the Series 1995 Certificates being redeemed, plus accrued interest to the redemption date. In the event the Series 1995 Certificates are redeemed pursuant to (b) above, the Series 1995 Certificates shall be redeemed in whole; provided, however, that if Additional Certificates are issue to provide the funds for such redemption, the Series 1995 Certificates may be redeemed in part. In the event that the Certificates are redeemed pursuant to (c) above, the Certificates shall be redeemed in whole, or in part in inverse order of maturity and by lot within any maturity, selected in such a manner as the Trustee shall determine, at a redemption price (expressed as 02192115.4 A -8 a percentage of principal amount) of 100% plus accrued interest to the redemption date, on the first Business Day for which notice of redemption may be given. If the Certificates are redeemed in part and less than all of the Certificates of a single maturity are to be redeemed, the Trustee shall select Certificates of such maturity for redemption, by lot in such manner as the Trustee shall determine. Upon the occurrence of a Termination Event (as defined in the Indenture), the Certificates shall be payable from such moneys as may be obtained by the Trustee through the exercise of its rights under the Indenture, including any payments under the Policy of Insurance. Upon the occurrence of a Termination Event, the Trustee may, with the consent of the Certificate Insurer, and shall, upon direction of the Certificate Insurer, commence proceedings for subleasing the Site and leasing the Project or the sale or assignment of the Trustee's interest in the Project and the Site as provided in the Indenture, and may, with the consent of the Certificate Insurer, and shall upon direction of the Certificate Insurer, call the Certificates for redemption from the Net Proceeds of such subleasing of the Site and leasing, sale or assignment of the Project and all other moneys, if any, then on hand and being held by the Trustee for the Registered Owners, subject to the provisions of the Indenture, at 100% of the principal amount thereof plus accrued interest to the redemption date. In the event that such Net Proceeds and other moneys are insufficient to redeem the Certificates at 100 % of the principal amount thereof plus accrued interest to the redemption date, such Net Proceeds and other moneys shall be allocated proportionately among the Certificates, according to the principal amount thereof Outstanding. In the event that such Net Proceeds and other moneys are in excess of the amount required to redeem the Certificates at 100 % of the principal amount thereof plus accrued interest to the redemption date, then such excess moneys shall be applied to reimburse the Certificate Insurer for any payments made under the Policy of Insurance and the balance shall be paid to the City. Prior to any distribution of such Net Proceeds in redemption of the Certificates, the Trustee shall be entitled to payment of its customary fees for all services rendered in connection with such liquidation, as well as reimbursement for all costs and expenses incurred thereby from the proceeds of such foreclosure and sale. A REGISTERED OWNER SHOULD NOT ANTICIPATE THAT IT WILL BE POSSIBLE TO FORECLOSE ON AND SELL THE PROJECT FOR AN AMOUNT EQUAL TO THE AGGREGATE PRINCIPAL AMOUNT OF THE CERTIFICATES THEN OUTSTANDING PLUS ACCRUED INTEREST THEREON. IF THE CERTIFICATES ARE REDEEMED SUBSEQUENT TO THE OCCURRENCE OF A TERMINATION EVENT FOR AN AMOUNT LESS THAN THE AGGREGATE PRINCIPAL AMOUNT THEREOF PLUS ACCRUED INTEREST TO THE REDEMPTION DATE, NO REGISTERED OWNER OF ANY CERTIFICATE SHALL HAVE ANY FURTHER CLAIM FOR PAYMENT AGAINST THE CITY, THE LESSOR OR THE TRUSTEE. IN SUCH AN EVENT, THE REGISTERED OWNERS OF THE CERTIFICATES SHALL BE ENTITLED TO PAYMENTS SOLELY FROM THE POLICY OF INSURANCE IN ACCORDANCE WITH ITS TERMS. In the event any of the Certificates are called for redemption as aforesaid, the Trustee shall cause notice of the call for redemption, identifying the Certificates or portions thereof to be redeemed, to be given by mailing, at least 30 days and not more than 60 days prior to the 02182115.4 A -9 redemption date, as provided in the Indenture. All Certificates so called for redemption shall cease to bear interest after the specified redemption date, provided that such funds as may be available for their redemption pursuant to the Lease (which, in the case of a Termination Event, as defined in the Indenture, may be less than the full principal amount of the outstanding Certificates and accrued interest thereon to the redemption date) are on deposit at the place of payment at that time. The Trustee shall pay to the Registered Owners of Certificates to be redeemed, or their representatives duly authorized in writing, the amounts due on their respective Certificates at the principal corporate trust office of the Trustee; provided, however, that, if redeemed in part, the Certificates may only be redeemed in multiples of $5,000. Redemption payments shall be accompanied by a written designation prepared by the Trustee stating the portion of the payment representing the unpaid principal amount of each Certificate immediately prior to the payment, the portion representing interest and the remaining portion, if any, which shall be designated and paid as a redemption premium. The Trustee may waive an Event of Nonappropriation or an Event of Default under certain circumstances as provided in the Lease and the Indenture. The Indenture permits amendments thereto and to the Lease, upon the agreement of the City and the Trustee and compliance with the other requirements of the Indenture, including but not limited to, in certain cases the approval of the Registered Owners of not less than two -thirds or, for certain amendments, 100% in aggregate principal amount of the Certificates at the time Outstanding, as defined in the Lease. The Lease also contains provisions permitting the City and the Trustee to enter into amendments to the Indenture and the Lease without the consent of the Registered Owners of the Certificates for certain purposes, including, without limitation, the issuance of Additional Certificates for certain purposes. The Indenture requires the written consent of the Trustee to any amendment of the Indenture or the Lease which modifies the rights, duties or immunities of the Trustee. Any consent or request by the Registered Owner of this certificate shall be conclusive and binding upon such owner and upon all future Registered Owners of this Certificate and of any Certificate issued upon the transfer of this certificate whether or not notation of such consent or request is made upon this certificate. The Indenture provides that, so long as the Certificate Insurer is not in default under the Policy of Insurance, the Certificate Insurer is deemed to be the exclusive owner of all of the Certificates for the purpose of execution and delivery of any supplemental indenture (except as otherwise provided in the Indenture) or of any amendment, change or modification of the Lease or other actions requiring the written consent of a specified percentage of Registered Owners. In addition, the Indenture provides that the Certificate Insurer has the exclusive right to direct any action or remedy to be undertaken by the Trustee at the Registered Owners' or any other party's request pursuant to the Lease and the Indenture. 02/92115.4 A -10 This certificate is issued with the intent that the laws of the State of Colorado shall govern its legality, validity, enforceability and construction. M/92115.4 A -11 LEGAL OPINION CERTIFICATE The undersigned City Clerk of the City of Pueblo, Colorado, hereby certifies that in connection with the issuance of the Certificates of Participation, an opinion in substantially the following form was delivered to the City of Pueblo, Colorado. By Facsimile Signature) City Clerk [Opinion of Kutak Rock to Appear Here] STATEMENT OF INSURANCE The MBIA Insurance Corporation (the "Certificate Insurer ") has issued a policy containing the following provisions, such policy being on file at the principal corporate trust office of Colorado National Bank, Denver, Colorado. The Certificate Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to Colorado National Bank, Denver, Colorado, or its successor (the "Trustee ") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $4,450,000 CITY OF PUEBLO, COLORADO GOLF COURSE LEASE PURCHASE AND SUBLEASE AGREEMENT WITH PUEBLO MUNICIPAL PROPERTY AUTHORITY REFUNDING CERTIFICATES OF PARTICIPATION 02/82115.4 A -12 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Certificate Insurer from the Trustee or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Certificate Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank & Trust Company, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Certificate Insurer, and appropriate instruments to effect the appointment of the Certificate Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street Bank & Trust Company, State Street Bank & Trust Company shall disburse to such owners or the Trustee payment of the Insured Amounts due on such Obligations, less any amount held by the Trustee for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Trustee, the Issuer or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Certificate Insurer may be made to the Certificate Insurer at its offices located at 113 King Street, Armonk, New York 10504, and such service of process shall be valid and binding. This policy is noncancellable for any reason. The premium on this policy is not refundable for any reason, including the payment prior to maturity of the Obligations. MBIA INSURANCE CORPORATION 021%2115.4 A -13 ®1 mill (Form of Transfer) FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (Please Insert Social Security or the Identifying Number of Transferee) (Please Print or Type Name and Address of Transferee) the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Certificate on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in NOTICE: Signature(s) must be guaranteed every particular without alteration or by a member firm of the New York Stock enlargement or any change whatever. Exchange or a commercial bank or trust company. TRANSFER FEE MAY BE REQUIRED (End of Form of Certificate) 02/92115.4 A -14 EXHIBIT B DESCRIPTION OF THE SITE 02182115.4 B -1 Ell 11H ESCROW AGREEMENT THIS ESCROW AGREEMENT, dated as of December 1, 1995 (this "Escrow Agreement "), is made by and among THE CITY OF PUEBLO, COLORADO (the "City "), PUEBLO MUNICIPAL PROPERTY CORPORATION (the "Lessor ") and COLORADO NATIONAL BANK, as escrow agent (the 'Escrow Agent "). WITNESSETH: WHEREAS, the City is a duly organized and validly existing home rule city under the Colorado Constitution and the home rule charter of the City; and WHEREAS, the Lessor is a duly organized and validly existing nonprofit corporation under the laws of the State of Colorado; and WHEREAS, the City and the Lessor have previously entered into a Golf Course Lease Purchase and Sublease Agreement, dated as of January 1, 1989 (the "Original Lease "), in connection with the acquisition, construction and equipping of a municipal golf course within the City (the "Project "); and WHEREAS, the Lessor, pursuant to a Mortgage and Indenture of Trust, dated as of January 1, 1989 (the "Original Indenture "), between the Lessor and Colorado National Bank, as successor trustee to The Pueblo Bank and Trust Company, as trustee (the "Trustee "), issued Certificates of Participation in the aggregate principal amount of $4,580,000 (the "Refunded Certificates "); and WHEREAS, the City and the Lessor desire to refinance the Project by replacing the Original Lease with a Golf Course Lease Purchase and Sublease Agreement, dated as of December 1, 1995 (the "Lease "), and by having the Lessor, pursuant to a Mortgage and Indenture of Trust, dated as of December 1, 1995 (the "Indenture "), between the Lessor and the Trustee, as trustee, issue Certificates of Participation in the aggregate principal amount of $4,450,000 (the "Series 1995 Certificates "), which Series 1995 Certificates will evidence assignments of proportionate undivided interests in the rights to receive payments under the Lease; and WHEREAS, a portion of the proceeds from the sale of the Series 1995 Certificates will be deposited with the Escrow Agent in a special fund and account and will be invested in the noncallable direct obligations of the United States of America (the "Government Obligations ") listed in Exhibit A hereto for the purposes of advance refunding the Refunded Certificates; and WHEREAS, the maturing interest on and principal of such Government Obligations will be used by the City and the Lessor for the payment of the principal of and interest on the Refunded Certificates through December 1, 1999 and for the redemption of the Refunded 0287707.3 Certificates maturing on and after December 1, 2000 on December 1, 1999 at a redemption price of 100 % of the principal amount thereof; and WHEREAS, the Escrow Agent, as the trustee for the Refunded Certificates, shall provide notice of the redemption of the Refunded Certificates as required by the Original Indenture; NOW, THEREFORE, IT IS AGREED that in consideration of the mutual covenants herein contained and in consideration of $1.00 duly paid by the City and the Lessor to the Escrow Agent at or before the execution and delivery of this Escrow Agreement, the receipt whereof is hereby acknowledged, and in order to secure the payment of the principal of, interest on and redemption price of the Refunded Certificates outstanding according to the schedules set forth herein, the parties hereto mutually undertake, promise and agree for themselves and their respective representatives, successors and assigns, as follows: Section 1. The City and the Lessor hereby establish with the Escrow Agent a special fund and trust account designated as "City of Pueblo, Golf Course Lease Purchase and Sublease Agreement, Certificates of Participation, Series 1989, Escrow Fund" (the "Escrow Fund "). There shall be irrevocably deposited therein $4,198,562.46 from the proceeds of the Series 1995 Certificates and $ -0- of moneys of the City and the Lessor. Moneys in the Escrow Fund shall be invested in the Government Obligations described in Exhibit A hereof at a cost of $4,190,138.17 and $8,424.29 shall be held as uninvested cash. The principal of and interest on the Government Obligations described above shall be sufficient and shall be used to pay the principal of and interest on the Refunded Certificates as the same becomes due through December 1, 1999 and to redeem the Refunded Certificates maturing on and after December 1, 2000 on December 1, 1999 at a price of 100% of the principal amount thereof. The debt service schedules for the Refunded Certificates is set forth in Exhibit B hereto and the Escrow Agent is authorized to rely thereon. Section 2. The Escrow Agent shall receive from the Lessor $ for its services in connection with this Escrow Agreement. The Escrow Agent expressly waives any lien upon or claim against any other moneys and investments in the Escrow Fund. Section 3. The Escrow Agent shall hold the deposits in the Escrow Fund, together with the obligations herein authorized and directed to be purchased, at all times in the Escrow Fund, wholly segregated from other funds and securities on deposit with it, shall never commingle such deposit or securities with other funds or securities of the Escrow Agent, shall never at any time use, loan or borrow the same in any way unless said funds are fully secured in the manner required by law for other trust funds. The Escrow Fund shall at all times be maintained on the books of the Escrow Agent together with the Government Obligations so purchased. The Government Obligations will be irrevocably deposited in the Escrow Fund, will be registered in the name of the Escrow Agent and title to the Government Obligations shall vest in the Escrow Agent on behalf of the registered owners of the Refunded Certificates. 02r17707.3 2 Section 4. The maturing interest on and principal of the Government Obligations in the Escrow Fund shall be used solely to meet the debt service requirements on the Refunded Certificates as provided in Section 1 hereof. On or prior to each principal and /or interest payment date on the Refunded Certificates and without further direction from anyone, including the City and the Lessor, the Escrow Agent shall withdraw from the Escrow Fund an amount sufficient to pay the debt service on the Refunded Certificates and shall use such moneys, as the trustee for the Refunded Certificates, to pay the principal of, interest on or redemption price on the Refunded Certificates. The Escrow Agent shall notify the City and the Lessor if the amounts on deposit in the Escrow Fund are not sufficient to make the transfers required by Section 1 hereof and the Lessor shall immediately deposit with the Escrow Agent an amount equal to the deficiency. The Escrow Agent will not commingle any amounts subsequently deposited by the Lessor to make up a deficiency with the Government Obligations or any other funds in the Escrow Fund, but will create and deposit such deficiency in a subaccount of the Escrow Fund. The City hereby waives any and all conditions to any vesting of title to the Government Obligations in the Escrow Agent and the timely payment of amounts due on the Refunded Certificates from the Government Obligations. Section S. The Escrow Agent shall maintain the Escrow Fund until the date upon which all the Refunded Certificates are fully paid, as to principal, interest and redemption price, whereupon the Escrow Agent shall redeem any Government Obligations remaining in the Escrow Fund and shall remit all moneys, if any, then remaining in the Escrow Fund to the Escrow Agent as an additional fee for its services hereunder. Section 6. The Escrow Agent shall continuously secure any moneys in the Escrow Fund not invested in Government Obligations by a pledge of Government Obligations in a principal amount at all times at least equal to the total uninvested moneys held in the Escrow Fund. This requirement shall not apply with regard to any such uninvested moneys to the extent and during any time the same are fully insured by the Federal Deposit Insurance Corporation. Section 7. The Escrow Agent shall not be liable or responsible for any loss resulting from any investment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof. Neither the City nor the Lessor shall be liable for any acts or failure to act of the Escrow Agent. Section 8. In the event of the Escrow Agent's failure to account for any funds or Government Obligations received by it for the account of the registered owners of the Refunded Certificates, said funds and Government Obligations shall be and remain the property of the registered owners of the Refunded Certificates, and if for any reason said funds or Government Obligations cannot be identified, all other assets of the Escrow Agent shall be impressed with a trust for the amount thereof and the registered owners of the Refunded Certificates shall be entitled to the preferred claim upon such assets enjoyed by a trust beneficiary. The funds received by the Escrow Agent shall not be considered as a banking deposit by the City or the Lessor, and the Escrow Agent shall have no right or title with respect thereto. The funds so 02rMO7.3 3 received by the Escrow Agent as escrow agent shall not be subject to checks drawn by the City or the Lessor. Section 9. The Escrow Agent, as the trustee for the Refunded Certificates, is hereby irrevocably directed to give notice to the registered owners of the Refunded Certificates maturing on and after December 1, 2000 that such Refunded Certificates shall be redeemed on December 1, 1999 at a redemption price of 100% of the principal amount thereof plus accrued interest. The Escrow Agent, as trustee for the Refunded Certificates, hereby agrees to give such notice in such form and at such times as is required to effect such redemption in accordance with the Original Indenture. The Escrow Agent is hereby directed to provide notice of the advance refunding of the Refunded Certificates, in the same manner required for notices of redemption under the Original Indenture in the form attached as Exhibit C hereto. Section 10. On or prior to June 30 and December 31, the Escrow Agent shall forward to the Secretary of the Lessor a statement in detail of the income, investments, payments and withdrawals of moneys from the Escrow Fund. The City, MBIA Insurance Corporation (the "Certificate Insurer ") and the Lessor shall have the right, at any time, to examine all the Escrow Agent's records regarding the status of the Escrow Fund, and the details of all income, investments, payments and withdrawals therefrom with respect to the Escrow Fund. Section 11. The Escrow Agent shall not be liable for any act done or step taken or omitted by it or any mistake of fact or law or for anything which it may do or refrain from doing, except for its negligence or its default in the performance of any obligation imposed upon it hereunder. Section 12. This Escrow Agreement is made by the City and the Lessor for the benefit of the registered owners of the Refunded Certificates as provided herein and shall not be revocable by the City or the Lessor, and the Government Obligations and other funds held in the Escrow Fund and all income therefrom are hereby irrevocably appropriated for the payment of the Refunded Certificates in accordance with this Escrow Agreement and as particularly described in Section 1 hereof. Section 13. This Escrow Agreement shall be binding upon and shall inure to the benefit of the registered owners of the Refunded Certificates, as third party beneficiaries, and the Escrow Agent and their respective successors and assigns; provided, however, that the Escrow Agent shall not assign this Escrow Agreement without the consent of the City and the Lessor, which consent shall not be unreasonably withheld. Said third party beneficiaries shall be entitled to enforce performance and observance by the City and the Escrow Agent of the respective agreements and covenants herein contained as fully and completely as if such third party beneficiaries were parties hereto. Any bank into which the Escrow Agent may be merged or with which it may be consolidated or any bank resulting from any merger or consolidation to which it shall be a party or any bank to which it may sell or transfer all or substantially all of its corporate trust business shall, unless the City or the Lessor disapproves in writing, be the successor agent without the execution of any document or the performance of any further act. MnV07.s 4 In the event that the City disapproves of the successor agent resulting from any of the events described above, the City and the Lessor shall immediately appoint any commercial bank which is a member of the Federal Deposit Insurance Corporation and which has trust powers to be the successor escrow agent hereunder, and shall notify the Certificate Insurer, whereupon such successor agent shall immediately succeed to the agreements and covenants of the Escrow Agent hereunder. Section 14. If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the City, the Lessor or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement. Section IS. This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. This Escrow Agreement shall be governed by the laws of the State of Colorado. Section 16. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Escrow Agreement. Section 17. This Escrow Agreement shall not be amended in any manner that adversely affects the registered owners of the Refunded Certificates without the consent of the registered owners of the Refunded Certificates. 02rMO7.3 5 IN WITNESS WHEREOF, the City has caused this Escrow Agreement to be signed in its name by its President of the City Council, sealed with its official seal and attested by its City Clerk; the Lessor has caused this Escrow Agreement to be signed in its name by its President, sealed with its official seal and attested and by its Secretary; the Escrow Agent has caused this Escrow Agreement to be signed in its corporate name by its authorized officer, and sealed with its corporate seal, all as of the day and year first above written. [SEAL] CITY OF PUEBLO, COLORADO, as the City Attest: By President of the City Council By City Clerk [SEAL] PUEBLO MUNICIPAL PROPERTY CORPORATION, as the Lessor Attest: By Secretary [SEAL] Attest: By Title LIM President COLORADO NAITONAL BANK, as Escrow Agent By _ Title o2nrnm.3 6 EXHIBIT A GOVERNMENT OBLIGATIONS Principal Interest Maturity T-)w Amount Rate Date Cost 02rMO7.3 A -1 EXHIBIT B DEBT SERVICE SCHEDULE FOR THE REFUNDED CERTIFICATES Date Princi Interest 06/01/96 -- $145,735.00 12/01/96 190,000.00 145,735.00 06/01/97 -- 139,275.00 12/01/97 205,000.00 139,275.00 06/01/98 -- 132 12/01/98 220,000.00 132 06/01/99 -- 124,502.50 12/01/99 3 124 Total $145,735.00 335,735.00 139,275.00 344,275.00 132,202.50 352,202.50 124,502.50 3.429.502.50 $ 5.003.430.00 02rrnO7.3 B -1 EXHIBIT C NOTICE OF REFUNDING OF CITY OF PUEBLO, COLORADO LEASE PURCHASE AND SUBLEASE AGREEMENT WITH PUEBLO MUNICIPAL PROPERTY CORPORATION CERTIFICATES OF PARTICIPATION SERIFS 1989 Notice is hereby given that there is on deposit with Colorado National Bank, escrow agent for the above - captioned certificates of participation (the "Refunded Certificates "), cash and direct obligations of the United States of America ( "Government Obligations ") which are sufficient, together with interest earned on the Government Obligations, to pay the principal of and interest on the Refunded Certificates through December 1, 1999 and to redeem the Refunded Certificates maturing on and after December 1, 2000 on said date at a redemption price of 100% of the principal amount thereof. 02rMO7.3 C -1 FINANCIAL GUARANTY AGREEMENT FINANCIAL GUARANTY AGREEMENT made as of December 1, 1995 by and between the City of Pueblo, Colorado (the "Issuer ") and MBIA Insurance Corporation (the "Insurer "), organized under the laws of the state of New York. WITNESSETH: WHEREAS, the Issuer has or will issue the Obligations; and WHEREAS, pursuant to the terms of the Document the Issuer agrees to make certain payments on the Obligations; and WHEREAS, the Insurer will issue its Surety Bond, substantially in the form set forth in Appendix A to this Agreement, guaranteeing certain payments by the Issuer subject to the terms and limitations of the Surety Bond; and WHEREAS, to induce the Insurer to issue the Surety Bond, the Issuer has agreed to pay the premium for the Surety Bond and to reimburse the Insurer for all payments made by the Insurer under the Surety Bond, all as more fully set forth in this Agreement; and WHEREAS, the Issuer understands that the Insurer expressly requires the delivery of this Agreement as part of the consideration for the execution by the sum of the Surety Bond; and NOW, THEREFORE, in consideration of the premises and of the agreements herein contained and of the execution of the Surety Bond, the Issuer and the Insurer agree as follows: ARTICLE I DEFINITIONS; SURETY BOND Section 1.01. Definitions. The terms which are capitalized herein shall have the meanings specified in Appendix B hereto. Section 1.02. Surety Bond. (a) The Insurer will issue the Surety Bond in accordance with and subject to the terms and conditions of the Commitment. (b) The maximum liability of the Insurer under the Surety Bond and the coverage and term thereof shall be subject to and limited by the terms and conditions of the Surety Bond. OYM90.2 Section 1.03. Premium. In consideration of the Insurer agreeing to issue the Surety Bond hereunder, the Issuer hereby agrees to pay or cause to be paid the Premium set forth in Appendix B hereto. The Premium on the Surety Bond is not refundable for any reason. Section 1.04. Certain Other Expenses. Subject to Section 2.01 (f) hereof, the Issuer will pay all reasonable fees and disbursements of the Insurer's special counsel related to any modification of this Agreement or the Surety Bond. ARTICLE H REMBURSEMENT AND INDFAINIFICATION OBLIGATIONS OF ISSUER AND SECURITY THEREFOR Section 2.01. Reimbursement for Payments Under the Surety Bond and Expenses; Indemnification. (a) Subject to Section 2.01(f) hereof, the Issuer will reimburse the Insurer, within the Reimbursement Period, without demand or notice by the Insurer to the Issuer or any other person, to the extent of each Surety Bond Payment with interest on each Surety Bond Payment from and including the date made to the date of the reimbursement at the lesser of the Reimbursement Rate or the maximum rate of interest permitted by then- applicable law. (b) Subject to Section 2.01(f) hereof, the Issuer also agrees to reimburse the Insurer immediately and unconditionally upon demand, to the extent permitted by state law, for all reasonable expenses incurred by the Insurer in connection with the Surety Bond and the enforcement by the Insurer of the Issuer's obligations under this Agreement, the Document and any other document executed in connection with the issuance of the Obligations, together with interest on all such expenses from and including the date incurred to the date of payment at the rate set forth in subsection (a) of this Section 2.01. (c) Subject to Section 2.01(f) hereof, the Issuer agrees to indemnify the Insurer, to the extent permitted by state law, against any and all liability, claims, loss, costs, damages, fees of attorneys and other expenses which the Insurer may sustain or incur by reason of or in consequence of (i) the failure of the Issuer to perform or comply with the covenants or conditions of this Agreement or (ii) reliance by the Insurer upon representations made by the Issuer or (iii) a default by the Issuer under the terms of the Document or any other documents executed in connection with the issuance of the Obligations. (d) The Issuer agrees that all amounts owing to the Insurer pursuant to Section 1.03 hereof and this Section 2.01 must be paid in full prior to any optional redemption or refunding of the Obligations. 02nT780.2 2 (e) All payments made to the Insurer under this Agreement shall be paid in lawful currency of the United States in immediately available funds at the Insurer's office at 113 King Street, Armonk, New York 10504, Attention: Accounting and Insured Portfolio Management—Lease Unit, or at such other place as shall be designated by the Insurer. (f) No provision of this Agreement shall be construed or interpreted as creating a general obligation or other indebtedness of the Issuer within the meaning of any constitutional, statutory or charter debt limitation. No provision of this Agreement shall be construed or interpreted as creating a delegation of governmental powers or as a donation by or a lending of the credit of the Issuer within the meaning of Section 1 or 2 of Article XI of the Constitution of the State. This Agreement shall not directly or indirectly obligate the Issuer to make any payments beyond those appropriated for any fiscal year during which any payments are due hereunder; however, the Issuer covenants that it will annually include in its proposed budget and request that the City Council of the Issuer include in the final approved budget, and thereby appropriate, all amounts due to the Insurer under this Agreement. Failure to annually seek an appropriation until such time as the Insurer has been fully reimbursed is an Event of Default under the Golf Course Lease Purchase and Sublease Agreement, dated as of October 1, 1995, between the Issuer and the Pueblo Municipal Property Corporation, and hereunder. No provision of this Agreement shall be construed to pledge or to create a lien on any class or source of Issuer moneys (except in respect of moneys on deposit in the funds and accounts created under the Document). Section 2.02. Allocation of Payments. The Insurer and the Issuer hereby agree that each payment received by the Insurer from or on behalf of the Issuer as a reimbursement to the Insurer as required by Section 2.01 hereof shall be applied by the Insurer first, toward payment of any unpaid premium; second, toward repayment of the aggregate Surety Bond Payments made by the Insurer and not yet repaid, payment of which will reinstate all or a portion of the Surety Bond Coverage to the extent of such repayment (but not to exceed the Surety Bond Limit); and third, upon full reinstatement of the Surety Bond Coverage to the Surety Bond Limit, toward other amounts, including, without limitation, any interest payable with respect to any Surety Bond Payments then due to the Insurer. Section 2.03. Security for Payments: Instruments of Further Assurance. To the extent, but only to the extent, that the Document, or any related indenture, trust agreement, ordinance, resolution, mortgage, security agreement or similar instrument, if any, pledges to the Owners or any trustee therefor, or grants a security interest or lien in or on any collateral, property, revenue or other payments ( "Collateral and Revenues ") in order to secure the Obligations or provide a source of payment for the Obligations, the Issuer hereby grants to the Insurer a security interest in or lien on, as the case may be, and pledges to the Insurer all such Collateral and Revenues as security for payment of all amounts due hereunder and under the Document or any other document executed in connection with the issuance of the Obligations, which security interest, lien and /or pledge created or granted under this Section 2.03 shall be subordinate only oumso.2 3 to the interests of the Owners and any trustee therefor in such Collateral and Revenues, except as otherwise provided. The Issuer agrees that it will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all financing statements, if applicable, and all other further instruments as may be required by law or as shall reasonably be requested by the Insurer for the perfection of the security interest, if any, granted under this Section 2.03 and for the preservation and protection of all rights of the Insurer under this Section 2.03. Section 2.04. Unconditional Obligation. The obligations hereunder are absolute and unconditional and will be paid or performed strictly in accordance with this Agreement, subject to the limitations of the Document, irrespective of: (a) any lack of validity or enforceability of, or any amendment or other modification of, or waiver with respect to the Obligations, the Document or any other document executed in connection with the issuance of the Obligations; or (b) any exchange, release or nonperfection of any security interest in property securing the Obligations or this Agreement or any obligations hereunder; or (c) any circumstances that might otherwise constitute a defense available to, or discharge of, the Issuer with respect to the Obligations, the Document or any other document executed in connection with the issuance of the Obligations; or (d) whether or not such obligations are contingent or matured, disputed or undisputed, liquidated or unliquidated. Section 2.05. Insurer's Rights. Subject to Section 2.01(f) hereof, the Issuer shall repay the Insurer to the extent of payments made and expenses incurred by the Insurer in connection with the Obligations and this Agreement. The obligation of the Issuer to repay such amounts shall be subordinate only to the rights of the Owners to receive regularly scheduled principal and interest on the Obligations. Section 2.06. Ongoing Information Obligations of Issuer. (a) Quarterly Reports. The Issuer will provide to the Insurer within 45 days of the close of each quarter interim financial statements covering all fund balances under the Document, a statement of operations (income statement), balance sheet and changes in fund balances. These statements need not be audited by an independent certified public accountant, but if any audited statements are produced, they must be provided to the Insurer, (b) Annual Reports. The Issuer will provide to the Insurer annual financial statements audited by an independent certified public accountant within 120 days of the end of each fiscal year, o2rmsoa 4 ®1111�1�L (c) Access to Facilities, Books and Records. The Issuer will grant the Insurer reasonable access to the project financed by the Obligation and will make available to the Insurer, at reasonable times and upon reasonable notice all books and records relative to the project financed by the Obligations; and (d) Compliance Certificate. On an annual basis, the Issuer will provide to the Insurer a certificate confirming compliance with all covenants and obligations hereunder and under the Document or any other document executed in connection with the issuance of the Obligations. ARTICLE III AMENDMENTS TO DOCUMENT So long as this Agreement is in effect, the Issuer agrees that it will not agree to amend the Document or any other document executed in connection with the issuance of the Obligations, without the prior written consent of the Insurer. ARTICLE IV EVENTS OF DEFAULT; REMEDIES Section 4.01. Events of Default. The following events shall constitute Events of Default hereunder: (a) the Issuer shall fail to pay to the Insurer when due any amount payable under Section 1.03 hereof; or (b) the Issuer shall fail to pay to the Insurer any amount payable under Sections 1.04 and 2.01 hereof and such failure shall have continued for a period in excess of the Reimbursement Period; or (c) any material representation or warranty made by the Issuer under the Document or hereunder or any statement in the application for the Surety Bond or any report, certificate, financial statement, document or other instrument provided in connection with the Commitment, the Surety Bond, the Obligations, or herewith shall have been materially false at the time when made; or (d) except as otherwise provided in this Section 4.01, the Issuer shall fail to perform any of its other obligations under the Document, or any other document executed in connection with the issuance of the Obligations, or hereunder, provided that such failure continues for more than 30 days after receipt by the Issuer of written notice of such failure to perform; or 0=901 5 (e) the Issuer shall (i) voluntarily commence any proceeding or file any petition seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of; or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official for such party or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take action for the purpose of effecting any of the foregoing; or (f) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Issuer, or of a substantial part of its property, under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law or (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official for the Issuer or for a substantial part of its property; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for 30 days. Section 4.02. Remedies. If an Event of Default shall occur and be continuing, then the Insurer may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due under this Agreement or to enforce performance of any obligation of the Issuer to the Insurer under the Document or any related instrument, and any obligation, agreement or covenant of the Issuer under this Agreement; provided, however, that the Insurer may not take any action to direct or require acceleration or other early redemption of the Obligations or adversely affect the rights of the Owners. In addition, if an Event of Default shall occur due to the failure to pay to the Insurer the amounts due under Section 1.03 hereof, the Insurer shall have the right to cancel the Surety Bond in accordance with its terms. All rights and remedies of the Insurer under this Section 4.02 are cumulative and the exercise of any one remedy does not preclude the exercise of one or more of the other available remedies. ARTICLE V SETTLEMENT The Insurer shall have the exclusive right to decide and determine whether any claim, liability, suit or judgment made or brought against the Insurer, the Issuer or any other party on the Surety Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed, and the Insurer's decision thereon, if made in good faith, shall be final and binding upon the Insurer, the Issuer and any other party on the Surety Bond. An itemized statement of payments made by the Insurer, certified by an officer of the Insurer, or the voucher or vouchers for such 02n 6 payments, shall be prima facie evidence of the liability of the Issuer, and if the Issuer fails to immediately reimburse the Insurer upon the receipt of such statement of payments, interest shall be computed on such amount from the date of any payment made by the Insurer at the rate set forth in subsection (a) of Section 2.01 hereof. ARTICLE VI MISCELLANEOUS Section 6.01. Interest Computations. All computations of interest due hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Section 6.02. Exercise of Rights. No failure or delay on the part of the Insurer to exercise any right, power or privilege under this Agreement and no course of dealing between the Insurer and the Issuer or any other party shall operate as a waiver of any such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Insurer would otherwise have pursuant to law or equity. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in similar or other circumstances, or constitute a waiver of the right of the other party to any other or further action in any circumstances without notice or demand. Section 6.03. Amendment and Waiver. Any provision of this Agreement may be amended, waived, supplemented, discharged or terminated only with the prior written consent of the Issuer and the Insurer. The Issuer hereby agrees that upon the written request of the Paying Agent, the Insurer may make or consent to issue any substitute for the Surety Bond to cure any ambiguity or formal defect or omission in the Surety Bond which does not materially change the terms of the Surety Bond nor adversely affect the rights of the Owners, and this Agreement shall apply to such substituted surety bond. The Insurer agrees to deliver to the Issuer and to the company or companies, if any, rating the Obligations, a copy of such substituted surety bond. Section 6.04. Successors and Assigns: Descriptive Headings. (a) This Agreement shall bind, and the benefits thereof shall inure to, the Issuer and the Insurer and their respective successors and assigns; provided, that the Issuer may not transfer or assign any or all of its rights and obligations hereunder without the prior written consent of the Insurer. (b) The descriptive headings of the various provisions of this Agreement are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. mrmao.z 7 Section 6.05. Other Sureties. If the Insurer shall procure any other surety to reinsure the Surety Bond, this Agreement shall inure to the benefit of such other surety, its successors and assigns, so as to give to it a direct right of action against the Issuer to enforce this Agreement, and "the Insurer," wherever used herein, shall be deemed to include such reinsuring surety, as its respective interests may appear. Section 6.06. Signature on Bond. The Issuer's liability shall not be affected by its failure to sign the Surety Bond nor by any claim that other indemnity or security was to have been obtained nor by the release of any indemnity, nor the return or exchange of any collateral that may have been obtained. Section 6.07. Waiver. The Issuer waives any defense that this Agreement was executed subsequent to the date of the Surety Bond, admitting and covenanting that such Surety Bond was executed pursuant to the Issuer's request and in reliance on the Issuer's promise to execute this Agreement. Section 6.08. Notices, Requests, Demands. Except as otherwise expressly provided herein, all written notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been given or made when actually received, or in the case of telex or telecopier notice sent over a telex or a telecopier machine owned or operated by a party hereto, when sent, addressed as specified below or at such other address as any of the parties may hereafter specify in writing to the others: If to the Issuer: City of Pueblo, Colorado City Hall Place Pueblo, Colorado 81003 Attention: City Manager If to the Paying Agent: Colorado National Bank 24th Floor 950 Seventeenth Street Denver, Colorado 80202 Attention: Corporate Trust Department If to the Insurer: MBIA Insurance Corporation 113 King Street Armonk, New York 10504 Attention: Insured Portfolio Management—Lease Unit Section 6.09. Survival of Representations and Warranties. All representations, warranties and obligations contained herein shall survive the execution and delivery of this Agreement and the Surety Bond. 02rM80.2 8 Section 6. 10. Governing Law. This Agreement and the rights and obligations of the parties under this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State. Section 6.11. Counterparts. This Agreement may be executed in any number of copies and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument. Complete counterparts of this Agreement shall be lodged with the Issuer and the Insurer. Section 6.12. Sevembility. In the event 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. Section 6.13. Survival of Obligations. Notwithstanding anything to the contrary contained in this Agreement, the obligation of the Issuer to pay all amounts due hereunder and the rights of the Insurer to pursue all remedies shall survive the expiration, termination or substitution of the Surety Bond and this Agreement. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. CITY OF PUEBLO, COLORADO President of City Council Attest: MBIA INSURANCE CORPORATION President Assistant Secretary 02rmaos 9 APPENDIX A SURETY BOND [To be provided] 02rM80.2 A -1 APPENDIX B DEFINITIONS For all purposes of this Agreement and the Surety Bond, except as otherwise expressly provided herein or unless the context otherwise requires, all capitalized terms shall have the meaning as set out below, which shall be equally applicable to both the singular and plural forms of such terms. "Agreement" means this Financial Guaranty Agreement. "Closing Date" means December 5, 1995. "Commitment" means the commitment to issue Municipal Bond Guaranty Insurance in the form attached hereto as Appendix C. "Debt Service Payments" means those payments required to be made by or on behalf of the Issuer which will be applied to payment of principal of and interest on the Obligations. "Demand for Payment" means the certificate submitted to the Insurer for payment under the Surety Bond substantially in the form attached to the Surety Bond as Attachment 1. "Document" means, collectively, the Ground Lease Agreement, dated as of December 1, 1995, between the Issuer and the Pueblo Municipal Property Corporation (the "Lessor "), the Golf Course Lease Purchase and Sublease Agreement, dated as of December 1, 1995, between the Issuer and the Lessor, and the Mortgage and Indenture of Trust, dated as of December 1, 1995, between the Lessor and the Paying Agent. "Event of Default" shall mean those events of default set forth in Section 4.01 of this Agreement. "Insurer" has the same meaning as set forth in the first paragraph of this Agreement. "Issuer" means the City of Pueblo, Colorado, and any successor thereto. "Obligations" means the Certificates of Participation, dated December 1, 1995 and issued in the aggregate principal amount of $ evidencing assignments of proportionate undivided interests in rights to receive payments under the Golf Course Lease Purchase and Sublease Agreement, dated as of December 1, 1995, between the Issuer and the Lessor. "Owners" means the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer or any designee of the Issuer for such purpose. ozrmao.z B -1 "Paying Agent" means Colorado National Bank, a national banking association, and any successor thereto. "Premium" means payable to the Insurer on or prior to the Closing Date. "Reimbursement Period" means, with respect to a particular Surety Bond Payment, the period commencing on the date of such Surety Bond Payment and ending on the earlier of the date of cancellation of the Surety Bond due to nonpayment of Premium when due or on the expiration of 365 days following such Surety Bond Payment. "Reimbursement Rate" means Citibank's prime rate plus three percent (3 %) per annum, as of the date of such Surety Bond Payment, said "prime rate" being the rate of interest announced from time to time by Citibank, N.A., New York, New York, as its prime rate. The rate of interest shall be calculated on the basis of the actual number of days elapsed over a 360 - day year. "State" means the State of Colorado. "Surety Bond" means that surety bond attached hereto as Appendix A and issued by the Insurer guaranteeing, subject to the terms and limitations thereof, Debt Service Payments required to be made by the Issuer under the Document. "Surety Bond Coverage" means the amount available at any particular time to be paid under the terms of the Surety Bond, which amount shall never exceed the Surety Bond Limit. "Surety Bond Limit" means $ "Surety Bond Payment" means an amount equal to the Debt Service Payment required to be made by the Issuer pursuant to the Document less (i) that portion of the Debt Service Payment paid by or on behalf of the Issuer, and (ii) other funds legally available for payment to the Owners, all as certified in a Demand for Payment. 02nV80.2 B -2 APPENDIX C CONMTMENT [To be provided.] 02rm80.2 C -1