Attached are the following:

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1 The Highlands Ranch Metropolitan District is considering a refinancing for a portion of its existing debt. It has been determined that the best structure for this transaction is in the form of a bank loan. Attached are the following: RFP related to the transaction A preliminary principal amortization schedule A draft loan agreement to be used as a starting point. Thank you in advance for your consideration of this transaction. District contact information: finance@highlandsranch.org 62 West Plaza Drive Highlands Ranch, CO (303)

2 Highlands Ranch Metropolitan District (In Douglas County, Colorado) Request for Fixed-Rate Lending Proposals April 5, 2016 Borrower & Background: Highlands Ranch Metropolitan District (the District ) The District is a political subdivision of the State of Colorado and a quasi-municipal corporation created pursuant to Title 32, Colorado Revised Statutes, as amended (the Act ). The District is located entirely within an unincorporated area of Douglas County, Colorado (the County ) in the planned development community of Highlands Ranch. The District boundaries encompass approximately 22,000 acres located approximately 12 miles south of Denver, Colorado, and contains approximately 28,500 single family homes, 6,500 multi-family units, and over 1,000 acres of developed commercial property. The District estimates that its 2015 population was 95,800. The District s 2015 certified assessed valuation (for collection of taxes in 2016) was certified at $1,417,417,070. The current District structure was created as a result of the consolidation of four metropolitan districts originally formed in the early 1980 s to provide governmental services to the Highlands Ranch development located in Douglas County, Colorado. On February 22, 2006, Highlands Ranch Metropolitan District No. 3 filed with the District Court of Douglas County, Colorado, its resolution initiating consolidation and the concurring resolutions of Highlands Ranch Metropolitan Districts Nos. 1, 2 and 4. After a public hearing on March 24, 2006, the District Court ordered an election within each district to be held on May 2, 2006 (the 2006 Election ). At the 2006 Election, voters of the four separate districts approved the consolidation into the existing Metro 3 district to be known as Highlands Ranch Metropolitan District (the District ). The financial operation of the four individual districts, and all the outstanding debt of the four individual districts, was assumed by the District. The consolidation was effective January 1, Water and wastewater services provided to residents of the District through contract by the Centennial Water and Sanitation District (a separate legal entity) were unaffected by the consolidation. The District is located generally in unincorporated northern portion of Douglas County, south of the City of Littleton and Arapahoe County. Access to the District is provided from I-25 by means of County Line Road, C-470, Broadway, University, and Quebec on the north. Access is provided by U.S. Highway 85 on the west and Lincoln Avenue on the east. C-470 generally parallels County Line Road along the northern border of Highlands Ranch, and is open from I-25 to I Loan Information: The District is seeking proposals from direct lenders as further described in this RFP. Interested lenders should submit proposals directly to the District. Proposals from brokers or agents may be rejected by the District. The District is seeking a loan in an amount of approximately $29,945,000 (the Loan or the 2016 Loan ). The proceeds of the Loan will be applied, along with other funds of the District, to the advanced refunding of debt that was assumed under the consolidation: $21,920,000 of the District 2 Series 2005 General Obligation Bonds and $7,810,000 of the District 3 Series 2005 General Obligation Bonds (the Refunded Bonds ), and to pay costs associated with the transaction. 1

3 General Obligation Of the District: Interest on the Loan will be exempt from federal and State of Colorado income tax. The Loan is not eligible to be designated to be a bank-qualified obligation. The Note evidencing the Loan will not be registered with either DTC or CUSIP. No official statement or other disclosure document will be prepared by the District, and the District will not provide a credit rating. The Loan will be a general obligation of the District, payable from general ad valorem taxes which may be levied against all taxable property within the District, without limitation of rate, in an amount necessary to pay the Bonds when due. Payment Dates: Interest on the Loan will be payable semiannually on June 1 and December 1, commencing December 1, Principal will be payable on December 1, starting in 2018, and then annually until the proposed final maturity date of December 1, An estimated maturity schedule is attached to this RFP and should be used Other Debt and Debt Authorization: in the preparation of bids. The total amount of the Loan and the final maturity amounts and payment dates are subject to revision based on the District s cash flow objectives, and will be finalized after further consultation between the District and the lender. In addition to the Refunded Bonds, the Highlands Ranch Metropolitan District has $4,825,000 of its Series 2008 General Obligation Refunding Bonds outstanding (the 2008 Bonds ), as well as $2,310,000 of District No. 4 s Series 2005 Bonds outstanding. The District is authorized to issue up to $69,455,000 in additional debt, but has no plans to incur additional debt at this time. Information on the District s finances and financial obligations can be found at: Prospective 2016B Loan: The 2008 Bonds described in the preceding paragraph are not eligible for a taxexempt refunding until September 2, 2016, and, because of this and other timing considerations, will not be included in the 2016 Loan. At this time, the District is willing to consider proposals for a 2016B Loan if it can be priced on a forward delivery basis (prospectively, the 2016B Loan ). Proposals to provide a 2016B Loan on a forward delivery basis may be submitted in conjunction with your response to this RFP, according to the information provided below. District No. 4 s Series 2005 Bonds described in the preceding paragraph are not being considered for refunding at this time. The District reserves the right to pursue a refunding of the 2008 Bonds or the District No Bonds through a separate loan or loans. Identifying a Prospective Lender: After reviewing proposals and term sheets selected by prospective lenders, and after any additional review of proposals or of any information the District find useful, the District expects to identify the lender which it believes will best meet its overall expectations for the proposed financing. The District will consider the qualifications and experience of the lenders, their ability to comply with the preferred structure and terms as outlined in this RFP, and the overall cost of the proposals as determined by the District. Any necessary credit approvals should be completed upon the submission of your proposal, if possible. 2

4 The District reserves the right to reject any and all proposals submitted in response to this RFP, to negotiate with any proposing firm, and to seek financing through other means. The District also reserves the right to request additional information from any of the proposing firms and to waive any irregularities in any proposal. If the Loan is not closed for any reason, prospective lenders will have no recourse against the District, its elected officials, employees, or officers, its financial advisor, general counsel, bond counsel, or any of their affiliates, agents, or representatives for any expenses, losses, damages, or liability incurred. The failure to disclose substantive terms, conditions, and covenants in the proposal may be considered cause for the proposal to be rejected by the District. At the closing of the Loan, the lender will be required to make certain certifications, including, but not limited to, signing a closing certificate that states: A. It is a bank, trust company, savings institution, or insurance company that is engaged as a regular part of its business in making loans; B. It is making the Loan for its own account, does not currently intend to syndicate the Loan, and will take no action to cause the Loan to be characterized as a security; C. It will not treat the Loan as a municipal security for purposes of any securities law (whether described as a bond, or a note, or by other terminology); D. There will be no CUSIPs obtained on the Loan; and, E. There will be no credit rating obtained on the Loan. 3

5 Proposal Contents: Each proposal to provide the 2016 Loan should include the following information: 1. Legal name of the lender and the primary contact person. 2. Fixed Interest Rates and Specific Prepayment Options. The proposal should provide two single, fixed interest rates which will be applied to the Loan assuming: A. A prepayment option on December 1, 2019, and on any date thereafter; and, B. A prepayment option on December 1, 2021, and on any date thereafter. 3. If the submitted interest rate is subject to change prior to the projected closing date of June 3 rd, please explain the timing and the methodology of setting the final rate, including an applicable formula or indexed calculation which would be used to determine the final rate on the day of pricing. 4. Fees and Expenses - The proposal should clearly indicate the total amount of any fees and expenses which will be charged to the District if your proposal is accepted, including any fees payable for your legal representation. If your firm expects to be represented by outside legal counsel, please identify the law firm which you expect to retain for that purpose. 5. Conditions or Covenants - Provide a listing of all conditions, covenants, terms or restrictions, which would be included in your commitment to provide the Loan. The District may reject proposals which provide for a change in the rate of interest during the term of the Loan, including proposed default rates, interest rate changes linked to the future tax treatment of the Loan, or changes in the lender s cost of capital. The District may reject proposals based on specific Conditions or Covenants requested by the lender, including any Conditions or Covenants which may be considered usual and customary by the prospective lender. 6. The District will not be liable for any expenses incurred in connection with the preparation of a response to this RFP. No successful proposer may assign any portion of the contractual agreement between the parties without prior written authorization by the District. 7. Although not required, the proposal may additionally provide two single, fixed interest rates for a prospective 2016B Loan as described earlier in this RFP. For the purposes of this RFP, the 2016B Loan should be assumed to be a forward delivery loan in the amount of $4,825,000, with a funding date of December 1, An estimated 2018B maturity schedule is attached to this RFP and should be used in the preparation of bids. The total amount of the 2018B Loan and the final maturity amounts and payment dates are subject to revision based on the District s cash flow objectives, and will be finalized after further consultation between the District and the lender. A proposal for the 2016B Loan should provide two single, fixed interest rates which will be applied assuming: C. A prepayment option on December 1, 2019, and on any date thereafter; and, D. A prepayment option on December 1, 2021, and on any date thereafter. 4

6 Professionals: Tentative Schedule: The District has retained the law firm of Butler Snow LLP, who will prepare the approving resolution and will deliver an opinion to the effect that the Loan is a valid and binding obligation, and that the interest on the Loan will be excludable from gross income for federal and State of Colorado income tax purposes. Butler Snow will prepare all other documents as necessary, including the Loan Agreement, the form of the Note evidencing the Loan, an Accredited Investor/Transfer Letter, and any other Closing Documents. FirstSouthwest, a Division of HilltopSecurities, Inc. ( FirstSouthwest ), will act as financial advisor to the District. Proposals should be delivered electronically no later than 3 pm MDT on Friday, April 22, to: Bruce A. Lebsack, Director Finance and Administration Highlands Ranch Metropolitan District blebsack@highlandsranch.org The District reserves the right to reject any or all proposals and to waive any irregularities associated with any proposal. The District currently anticipates that it will identify a preferred lender on April 26. The District intends to contact the preferred lender and start the process of reviewing loan documentation immediately. Approval of the financing by the District Board of Directors is expected to occur on April 26, 2016, with final terms to be determined by District Staff as delegated by the Board. Settlement is expected to occur on or about June 3, Questions about this RFP should be directed to the District s Financial Advisor, Jim Manire, at FirstSouthwest, , or at jim.manire@hilltopsecurities.com. 5

7 Schedule A Highlands Ranch Metropolitan District Proposed 2016 Loan Sample Amortization Schedule For estimated $29,945,000 Loan Maturity (Dec. 1) Principal 2018 $3,490, ,560, ,630, ,700, ,775, ,850, ,930, ,010,000 $29,945,000 Schedule B Highlands Ranch Metropolitan District Prospective 2016B Loan Sample Amortization Schedule For estimated $4,825,000 Loan Maturity (Dec. 1) Principal 2018 $ ,575, ,605, ,645,000 $4,825,000

8 LOAN AGREEMENT by and between HIGHLANDS RANCH METROPOLITAN DISTRICT (DOUGLAS COUNTY, COLORADO) as Borrower and [LENDER] as Lender Highlands Ranch Metropolitan District General Obligation Refunding Loan Series 2016 in the Principal Amount of $[ ] Dated as of [ ], 2016

9 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS...3 Section Definitions ARTICLE II LOAN...7 Section Loan In General Section Interest Rates; Interest Payments; Principal Payments Section Prepayment of Loan Section Manner of Payments Section Costs and Expenses Section Obligations Unconditional Section Taxes Section Pledge Section Conditions to Closing ARTICLE III FUNDS AND ACCOUNTS Section Acknowledgement of Funds Section Application of Pledged Revenue Section Pledged Revenue Fund Section Loan Payment Fund ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE DISTRICT...13 Section Due Organization Section Power and Authorization Section No Legal Bar Section Consents Section Litigation Section Changes in Law Section Financial Information and Statements Section Accuracy of Information Section IRS Listing Section Tax-Exempt Status Section Financing Documents Section Default, Etc Section Sovereign Immunity Section No Filings ARTICLE V COVENANTS OF THE DISTRICT...15 Section Performance of Covenants, Authority

10 Section Laws, Permits and Obligations Section Tax Covenants Section Bonding and Insurance Section Other Liabilities Section Proper Books and Records Section Reporting Requirements Section Visitation and Examination Section Further Assurances Section Covenant To Impose Required Mill Levy Section Permitted Debt Section Continued Existence Section District Operations; Operations and Maintenance Mill Levy Section Enforcement and Collection Section Material Adverse Action Section No Change in Financing Documents Section Termination of Agreement Section No Lien or Security Interest Section Permitted Investments Only Section Compliance With Tax Covenants Section Electoral Authorization ARTICLE VI EVENTS OF DEFAULT AND REMEDIES...21 Section Events of Default Section Remedies Section Notice of Default Section Delay or Omission No Waiver Section No Waiver of One Default To Affect Another; All Remedies Cumulative Section Other Remedies ARTICLE VII MISCELLANEOUS...22 Section Loan Agreement and Relationship to Other Documents Section Assignments, Participations, etc. by the Bank Section Notice of Claims Against Bank; Limitation of Certain Damages Section Notices Section Payments Section Applicable Law and Jurisdiction; Interpretation; Severability Section Copies; Entire Agreement; Modification Section Attachments Section No Recourse Against Officers and Agents Section Conclusive Recital Section Limitation of Actions Section Pledge of Revenues Section No Waiver; Modifications in Writing Section Payment on Non-Business Days ii

11 Section Document Imaging Section Execution in Counterparts Section Severability Section Headings Section Waiver of Rules of Construction Section Integration EXHIBIT A FORM OF PROMISSORY NOTE EXHIBIT B REPAYMENT SCHEDULE iii

12 LOAN AGREEMENT THIS LOAN AGREEMENT (this Agreement ) is made and entered into as of the day of, 2016, by and between HIGHLANDS RANCH METROPOLITAN DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado (the District ), and [LENDER], a national banking association, as lender (the Bank ). W I T N E S S E T H WHEREAS, the District is a quasi-municipal corporation and political subdivision of the State of Colorado, duly organized and existing under the constitution and laws of the State of Colorado (all capitalized terms used and not otherwise defined herein shall have the respective meanings assigned in Article I hereof); and WHEREAS, on February 22, 2006, Highlands Ranch Metropolitan District No. 3 (HRMD3) filed a petition to initiate consolidation of HRMD3 and Highlands Ranch Metropolitan District Nos. 1, 2, and 4 (HRMD1, HRMD2, and HRMD4, or, collectively, with HRMD3, the Districts ); and WHEREAS, on March 24, 2006, the District Court for Douglas County, Colorado, ordered an election relating to the consolidation; and WHEREAS, ON May 2, 2006, the voters of the collective Districts approved the consolidation and ballot questions relating to the assumption of bonded indebtedness and to form Highlands Ranch Metropolitan District (the District ); and WHEREAS, the official corporate name of the District is the Highlands Ranch Metropolitan District ; and WHEREAS, the organization of the District has been fully effected; and WHEREAS, a consolidation order (the Consolidation Order ) was entered by the District Court of Douglas County, Colorado, on September 11, 2006; and WHEREAS, the Consolidation Order provides that the District shall be the owner of and entitled to receive, hold, sue for, and collect all moneys, funds, taxes, levies, assessments, fees, and charges and all property and assets of any kind or nature owned, leased or claimed by or due to all of the collective Districts and shall receive all benefits from, and be responsible for future compliance with, all contracts and agreements of all of the Districts; and WHEREAS, the Consolidation Order provides that the District shall be responsible for complying with all resolutions of each of the Districts which require future performance, including, but not limited to, the resolutions authorizing outstanding general obligation indebtedness of the Districts; and

13 WHEREAS, HRMD2 has previously authorized, sold, issued and delivered its General Obligation Refunding Bonds, Series 2005, which are currently outstanding in the aggregate principal amount of $21,920,000 (the HRMD Bonds ); and WHEREAS, HRMD3 has previously authorized, sold, issued and delivered its General Obligation Refunding Bonds, Series 2005, which are currently outstanding in the aggregate principal amount of $7,810,000 (the HRMD Bonds ); and WHEREAS, Title 32, Article 1, Part 13, C.R.S. (the Act ), authorizes the District to issue refunding indebtedness without an election to refund, pay, or discharge all or any part of its outstanding general obligation bonds and other general obligation indebtedness for the purpose of reducing interest costs or effecting other economies; and WHEREAS, the Board of Directors of the District has determined that it is in the best interests of the District that the HRMD Bonds and the HRMD Bonds (collectively, the Refunded Bonds ) be paid or refunded, as applicable, from the proceeds of the 2016 Loan (as hereinafter defined), on the earliest applicable redemption date (the Refunding Project ); and WHEREAS, the Board has determined, and does hereby determine, that the limitations of the Act imposed upon the execution and delivery of the 2016 Loan have been met and that the Refunding Project serve a valid governmental purpose and is necessary, expedient and in the best interests of the District and its taxpayers. WHEREAS, the Bank has agreed, subject to the terms and conditions of this Agreement and the other Financing Documents, to make a loan in the original principal amount of $[ ] (the 2016 Loan or Loan ) to accomplish the Refunding Project; and WHEREAS, the District will accomplish the Refunding Project through the execution of this Loan Agreement, together with other available moneys of the District and this Loan Agreement will govern the terms of the 2016 Loan. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the parties hereto agree as follows. ARTICLE I DEFINITIONS Section Definitions. Act means Article 1, Title 32, C.R.S. time. Agreement means this Loan Agreement, as amended or supplemented from time to 2

14 Authorized Person means the President of the District, the District Manager of the District, the Chief Financial Officer of the District, or any other individual authorized by the Board to act as an Authorized Person hereunder. Authorizing Resolution means the resolution adopted by the Board on April [ ], 2016, authorizing the District to incur the indebtedness of the Loan and to execute and deliver the Note, this Agreement, and the other Financing Documents to which the District is a party. Bank means [LENDER], Denver, Colorado, in its capacity as lender of the Loan. Board means the Board of Directors of the District. Bond Counsel means (a) as of the Closing Date, Butler Snow, LLP, Denver, Colorado; and (b) as of any other date, Butler Snow, LLP, Denver, Colorado, or such other attorneys selected by the District and acceptable to the Bank with nationally recognized expertise in the issuance of tax-exempt debt. Business Day means any day of the week on which the Bank is conducting its banking operations nationally and on which day the Bank s offices are open for business in Denver, Colorado. Closing means the execution and delivery of the Note, this Agreement, and the other Financing Documents by the respective parties thereto and the issuance and disbursement of the Loan and application of the proceeds thereof in accordance with the provisions hereof and the other Financing Documents. Closing Date means the date on which the Closing occurs, estimated to be on or about [ ], Code means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. County means Douglas County, Colorado. C.R.S. means the Colorado Revised Statutes, as amended and supplemented as of the date hereof. Default means an event, act or occurrence which, with the giving of notice or the lapse of time (or both), would become an Event of Default. District means Highlands Ranch Metropolitan District, Douglas County, Colorado, and its successors. Event of Default has the meaning set forth in Section 6.01 hereof. Financing Documents means this Agreement, the Note, and the Authorizing Resolution, as the same may be amended or supplemented from time to time. 3

15 Fixed Rate has the meaning set forth in Section 2.02(b) hereof. General Obligation Indebtedness means general obligation indebtedness payable from taxes levied on property in the District, including (i) the Loan; and (ii) any bonds, loan, note or other multiple fiscal year financial obligation approved by the voters of the District and previously issued; and (iii) any obligations issued by the District to refund any of the foregoing. Interest Payment Date means June 1 and December 1 of each year, commencing on [December 1, 2016]. Interest Period means the period commencing on the applicable Interest Payment Date to (but not including) the next succeeding Interest Payment Date. Loan or 2016 Loan has the meaning set forth in the recitals hereof. Loan Amount means $[ ] Loan Balance means the Loan Amount less any payments of principal received by the Bank for application to the Loan. Loan Payment Fund means the Loan Payment Fund established herein and held by the District. Maturity Date means December 1, 20[ ]. Note means the promissory note evidencing the indebtedness of the Loan, dated of even date herewith, from the District, as Maker, to the Bank, as Payee, issued in an original principal amount equal to the Loan Amount in substantially the form of Exhibit A hereto. Participant has the meaning set forth in Section 7.02(c) hereof. Permitted Debt means debt issued pursuant to the provisions of Section 5.11 hereof. Permitted Investments means any investment or deposit permissible for the District under then applicable law. Person means an individual, a corporation, a partnership, an association, a joint venture, a trust, an unincorporated organization or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. Pledged Revenue means such portion of the revenue derived by the District (less costs of collection) from the imposition of the Required Mill Levy as is sufficient to pay the principal of, premium, if any, and interest on the Loan as the same becomes due. Pledged Revenue Fund means the Pledged Revenue Fund established herein and held by the District. Principal Payment Date means December 1 of each year, commencing on [December 1, 2016]. 4

16 Refunded Bonds means, collectively, the HRMD Bonds and the HRMD Bonds as set forth in the recitals hereto. Refunding Project has the meaning given to such term in the recitals hereto. Required Mill Levy means: (a) Subject to paragraph (b) below, an ad valorem mill levy imposed by the District on the real property of the District in an amount sufficient for the payment of the General Obligation Indebtedness, including the Loan, without limitation of rate. (b) Notwithstanding anything herein to the contrary, in no event may the Required Mill Levy be established at a mill levy that would cause the District to derive tax revenue in any year in excess of the maximum tax increases permitted by electoral authorization, and if the Required Mill Levy as calculated pursuant to the foregoing would cause the amount of taxes collected in any year to exceed the maximum tax increase permitted by the Election electoral authorization, the Required Mill Levy shall be reduced to the point that such maximum tax increase is not exceeded. Specific Ownership Tax means that portion of the specific ownership tax that is collected by the County and remitted to the District pursuant to Section , C.R.S., or any successor statute, that is allocable to the revenue derived by the Required Mill Levy. Supplemental Public Securities Act means Title 11, Article 57, Part 2, C.R.S. Tax Certificate means the tax compliance certificate to be signed by the District, in a form acceptable to Bond Counsel, relating to the requirements of Sections 103 and of the Code. Section Loan In General. ARTICLE II LOAN (a) Agreement To Make Loan. The Bank hereby agrees to extend the Loan to the District in the original principal amount of $[ ] (as previously defined, the Loan Amount ) subject to the terms and conditions of this Agreement. The Loan shall be evidenced by the Note, the form of which is set forth in Exhibit A attached hereto. (b) Application of Loan Proceeds. On the Closing Date the Bank shall fund the Loan by disbursing the gross proceeds thereof in the amount of $[ ] pursuant to a closing memorandum approved by the Bank and the District. 5

17 Section Interest Rates; Interest Payments; Principal Payments. (a) Interest Computation. All interest due and payable under this Agreement shall be calculated on the basis of a 360-day year and actual number of days elapsed in the applicable Interest Period. (b) Interest Rate. The Loan Balance shall bear interest at a fixed rate equal to [ ]% per annum (the Fixed Rate ). (c) Interest Payments. Interest payments on the Loan shall be due and payable semi-annually on June 1 and December 1 of each year, commencing on [ ], and ending on the Maturity Date (as previously defined in Section 1.01 hereof, each, an Interest Payment Date ). If the Loan is not paid on each Interest Payment Date, it shall continue to draw interest at the interest rate until the principal thereof is paid in full. Payment of interest on the Loan shall be made by check or draft mailed or wire sent to the Bank, 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). (d) Principal Payments. Principal payments on the Loan shall be due and payable on December 1 of each year, commencing [ ], and ending on the Maturity Date, in the amounts set forth on Exhibit B attached hereto. Section Prepayment of Loan. The Loan is [not subject to Prepayment prior to Maturity, at the option of the District]. [TO BE DETERMINED BY THE DISTRICT] Section Manner of Payments. All interest, fees, and other payments to be made hereunder by or on behalf of the District to the Bank shall be made, and shall not be considered made until received, in lawful money of the United States of America in immediately available funds. The District shall make each payment hereunder in the manner and at the time necessary so that each such payment is received not later than 12:00 p.m., Denver time, on the day when due. Any payment received after 12:00 p.m., Denver time, shall be deemed made on the next succeeding Business Day. All payments made hereunder by or on behalf of the District to the Bank may be applied to amounts due hereunder in such order of priority as the Bank shall elect. Section Costs and Expenses. The District agrees to pay all reasonable costs and expenses of the Bank in connection with (a) the preparation, execution and delivery of this Agreement or any other documents, including the other Financing Documents, which may be delivered by any party in connection with the transactions contemplated under this Agreement and the other Financing Documents; (b) the filing, recording, administration (other than normal, routine administration), enforcement, transfer, amendment, maintenance, renewal or cancellation of this Agreement and all amendments or modifications thereto (or supplements thereto), including, without limitation, the reasonable fees and out-of-pocket expenses of outside counsel for the Bank and independent public accountants and other outside experts retained by the Bank in connection with any of the foregoing; and (c) the reasonable fees and expenses of any custodian appointed by the Bank to hold any collateral securing the obligations of the District hereunder. In addition, to the extent the Bank is not in default hereunder, the District agrees to 6

18 pay promptly from legally available revenues of the District, including Specific Ownership Taxes subject to appropriation, all costs and expenses of the Bank, including, without limitation, the reasonable fees and expenses of external for (i) any and all amounts the Bank has paid relative to the Bank s curing of any Event of Default under this Agreement or any of the other Financing Documents; (ii) the enforcement of this Agreement or any of the other Financing Documents; or (iii) any action or proceeding relating to a court order, injunction, or other process or decree restraining or seeking to restrain the District from paying any amount hereunder. Without prejudice to the survival of any other agreement of the District hereunder, the agreements and obligations contained in this Section 2.05 shall survive the payment in full of all amounts owing to the Bank hereunder. Section Obligations Unconditional. The District s obligation to repay the Loan and all of its other obligations under this Agreement shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the District may have against the Bank, any Participant, or any other Person, including, without limitation, any defense based on the failure of any nonapplication or misapplication of the proceeds of the Loan hereunder, and irrespective of the legality, validity, regularity or enforceability of all or any of the Financing Documents, and notwithstanding any amendment or waiver of (other than an amendment or waiver signed by the Bank explicitly reciting the release or discharge of any such obligation), or any consent to, or departure from, all or any of the Financing Documents or any exchange, release, or nonperfection of any collateral securing the obligations of the District hereunder or under the other Financing Documents and any other circumstances or happening whatsoever, whether or not similar to any of the foregoing. Notwithstanding the foregoing, only the taxable property of the District is subject to the levy of a general ad valorem tax to pay the principal of, premium, if any, and interest on the Loan. Section Taxes. To the extent permitted by law any and all payments by the District hereunder (or with respect to the Note) shall be made free and clear of and without deduction for any and all taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the overall net income of the Bank (and franchise taxes imposed in lieu of net income taxes) by the jurisdiction of the Bank s applicable lending office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as Taxes ). If the District shall be required by law to withhold or deduct any Taxes from or in respect of any sum payable hereunder (or with respect to the Note) then, to the extent permitted by law, (A) the sum payable shall be increased as may be necessary so that after making all required withholdings or deductions (including those Taxes payable solely by reason of additional sums payable under this Section 2.07) the Bank receives an amount equal to the sum it would have received had no such withholdings or deductions been made, (B) the District shall make such withholdings or deductions, and (C) the District shall pay the full amount withheld or deducted to the relevant taxing authority or other authority in accordance with applicable law. In addition, to the extent permitted by law, the District agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise under the laws of the United States or the State from any payment made hereunder or with respect to the Note or otherwise with respect to this Agreement or the Note (hereinafter referred to as Other Taxes ). 7

19 Section Pledge. The District hereby assigns, transfers, pledges, hypothecates, delivers and grants to the Bank a first priority security interest in and to the Pledged Revenue to secure the payment of the principal of, premium, if any, and interest on the Loan and the General Obligation Indebtedness. The lien of the Bank on the Pledged Revenue shall be subject to no other liens (other than the General Obligation Indebtedness) without the prior written consent of the Bank. The District represents and warrants that the Pledged Revenue is not and shall not be subject to any other lien or encumbrance (other than General Obligation Indebtedness) without the prior written consent of the Bank. Section Conditions to Closing. The making by the Bank of the Loan is conditioned upon the satisfaction of each of the following on or prior to the Closing Date: (a) Financing Documents. All Financing Documents and other instruments applicable to the Loan are in form and content satisfactory to the Bank; have been duly executed and delivered in form and substance satisfactory to the Bank and have not been modified, amended or rescinded and are in full force and effect on and as of the Closing Date and executed original or certified copies of each thereof shall have been delivered to the Bank. (b) Certified Proceedings. The Bank is in receipt of a copy of the Authorizing Resolution of the District, which shall be in form and content satisfactory to the Bank and duly and properly authorize the District to issue the Loan, to execute and deliver this Agreement and the other Financing Documents to which the District is a party, and to perform all acts contemplated hereunder and thereunder, together with such other certifications as to the specimen signatures of the officers of the District authorized to sign this Agreement and the other Financing Documents to be delivered by the District hereunder and as to other matters of fact as shall reasonably be requested by the Bank. (c) District Certificate. The District has provided the Bank with a certificate certifying that on the Closing Date each representation and warranty on the part of the District contained in this Agreement and in any other Financing Document to which the District is a party is true and correct and no Event of Default, or event that would, with the passage of time or the giving of notice, constitute an Event of Default, has occurred and is continuing and no default exists under any other Financing Document to which the District is a party, or under any other agreement by and between the District and the Bank relating to the Loan and certifying as to such other matters as the Bank might reasonably request. (d) Other Proceedings. All proceedings of any Party taken in connection with the transactions contemplated by this Agreement and the other Financing Documents, and all instruments, authorizations and other documents applicable thereto, are satisfactory to the Bank and its counsel. (e) Opinion of Bond Counsel. The Bank shall have received a reliance letter of Bond Counsel dated as of the Closing Date, with respect to such matters as the Bank may require, including the ability of the Bank to rely upon an opinion of Bond Counsel delivered to the District to the effect that the obligation of the District to pay principal of, 8

20 premium, if any, and interest on the Loan constitutes a legal, valid and binding general obligation of the District and the Loan Agreement and the Note are valid and binding obligations of the District, enforceable against the District in accordance with their respective terms; and which opinion shall address the tax exemption of the interest on the Loan for state and federal purposes; and otherwise in form and substance satisfactory to the Bank and its counsel. (f) Opinion of General Counsel. The Bank shall have received an opinion of counsel to the District dated as of the Closing Date and addressed to the Bank, with respect to such matters as the Bank may require, including opinions as to the validity of the District s organization and existence; to the effect that all governmental approvals, if any, necessary for the District to execute, deliver and perform its obligations under this Agreement and the other Financing Documents to which the District is a party have been duly obtained; that the Authorizing Resolution was duly and properly adopted, is in full force and effect, and has not been rescinded as of the Closing Date; that this Agreement and the other Financing Documents to which the District is a party have been duly authorized, executed, and delivered by the District; and otherwise in form and substance acceptable to the Bank and its counsel. (g) No Change in Law. No law, regulation, ruling or other action of the United States, the State of Colorado or any political subdivision or authority therein or thereof shall be in effect or shall have occurred, the effect of which would be to prevent the District from fulfilling its obligations under this Agreement or the other Financing Documents to which the District is a party. (h) Payment of Costs and Expenses. All Bank counsel fees and any other fees and expenses due and payable in connection with the execution and delivery of this Agreement and the other Financing Documents and the transactions contemplated hereunder and thereunder shall have been paid by the District. (i) Due Diligence. The Bank shall have been provided with the opportunity to review all pertinent financial information regarding the District; all agreements, documents, and any other material information relating to the District or the Pledged Revenue; and any other pertinent data relating to District or the Pledged Revenue. (j) Accuracy and Completion. All information provided by the District to the Bank shall be, as of the Closing Date, complete and accurate in all respects. (k) No Breach or Other Violation. The District shall not, as of the Closing Date, be in violation or breach of any other agreement with the Bank or of any material agreement with any third party of any nature or kind related to its ability to fulfill its responsibilities under this Agreement and the Financing Documents. (l) No Material Adverse Change. No material adverse change has, in the sole opinion of the Bank based on its business expertise, occurred with respect to the District s business operations, financial condition or performance, as reflected in the most recent financial statements provided to the Bank or as otherwise known by the Bank. 9

21 (m) No Structural Changes. No change in the structure of the financing transactions relating to the Loan has occurred since that initially presented to and agreed upon by the Bank. (n) Colorado Municipal Bond Supervision Act. The Bank shall be in receipt of evidence satisfactory to the Bank that the Loan is exempt from the registration requirements of the Colorado Municipal Bond Supervision Act. (o) Other Certificates and Approvals. The Bank shall have received such other certificates, approvals, filings, opinions and documents as shall be reasonably requested by the Bank. (p) Other Legal Matters. All other legal matters pertaining to the execution and delivery of this Agreement and the other Financing Documents and the full and timely performance of the transactions contemplated hereunder and thereunder shall be reasonably satisfactory to the Bank. ARTICLE III FUNDS AND ACCOUNTS Section Acknowledgement of Funds. The District has created and established the following funds and accounts, which shall be held and administered by the District in accordance with the provisions hereof: (a) (b) the Pledged Revenue Fund; and the Loan Payment Fund. Section Application of Pledged Revenue. Following issuance of the Note, so long as there remain unpaid amounts due and owing on the Loan, the District shall promptly transfer all amounts comprising Pledged Revenue to the Pledged Revenue Fund. Section Pledged Revenue Fund. There was previously created and is hereby continued, a separate fund to be known as the Highlands Ranch Metropolitan District Pledged Revenue Fund herein referred to as the Pledged Revenue Fund. The District shall hold and administer the Pledged Revenue Fund so long as any General Obligation Indebtedness of the District remains outstanding. The Pledged Revenue Fund constitutes a trust fund held for the benefit of the Owners of the Loan and any other General Obligation Indebtedness and the money in such fund shall be disbursed only for the purposes and uses hereinafter authorized. The District shall deposit to the Pledged Revenue Fund all amounts received from the collection of the Required Mill Levy to pay principal and interest payments on the Loan and any General Obligation Indebtedness of the District, including Permitted Debt. Moneys on deposit in the accounts in the Pledged Revenue Fund shall be applied by the District on or about two Business Days prior to the next succeeding Interest Payment Date and Principal Payment Date, as follows: (i) to the Loan Payment Fund up to the amount required to pay 10

22 principal of and interest due on the Loan; and (ii) to any similar fund or account established to pay the principal of and interest on any General Obligation Indebtedness, including Permitted Debt. Section Loan Payment Fund. There is hereby established, and there shall be maintained with the District, a separate fund to be known as the Highlands Ranch Metropolitan District Loan Payment Fund herein referred to as the Loan Payment Fund. The District shall hold and administer the Loan Payment Fund so long as the Loan or any General Obligation Indebtedness of the District, including the Permitted Debt, remains outstanding. The Loan Payment Fund constitutes a trust fund for the benefit of the Owners of the Loan and any General Obligation Indebtedness, including Permitted Debt, and the money in such fund shall be disbursed only for the purposes and uses hereinafter authorized. (i) First, on each Interest Payment Date and the Maturity Date, to the Bank and to the owner of any General Obligation Indebtedness, including Permitted Debt, an amount equal to the interest due on the Loan, General Obligation Indebtedness, and Permitted Debt, on such Interest Payment Date or Maturity Date; and (ii) Second, on each Principal Payment Date and the Maturity Date, to the Bank and to the owner of any General Obligation Indebtedness, including Permitted Debt, an amount equal to the interest due on the Loan, and General Obligation Indebtedness, and Permitted Debt on such Principal Payment Date or Maturity Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE DISTRICT While any obligations hereunder or under any of the other Financing Documents are unpaid or outstanding, the District continuously represents and warrants to the Bank as follows: Section Due Organization. The District is a public or quasi-municipal subdivision of the State of Colorado and a body corporate duly organized and validly existing under the laws of the State of Colorado, including the Act. Section Power and Authorization. The District has all requisite power and authority to own and convey its properties and to carry on its business as now conducted and as contemplated to be conducted under the Financing Documents, to execute, deliver and to perform its obligations under this Agreement and the other Financing Documents, and to cause the execution, delivery and performance of the Financing Documents. Section No Legal Bar. The District is not in violation of any of the provisions of the laws of the State of Colorado or the United States of America or any of the provisions of any order of any court of the State of Colorado or the United States of America which would affect its existence or its powers referred to in the preceding Section The execution, delivery and performance by the District of this Agreement and of the other Financing Documents (a) will not violate any provision of any applicable law or regulation or of any order, writ, judgment or 11

23 decree of any court, arbitrator or governmental authority; (b) will not violate any provisions of any document constituting, regulating or otherwise affecting the operations or activities of the District; and (c) will not violate any provision of, constitute a default under, or result in the creation, imposition or foreclosure of any lien, mortgage, pledge, charge, security interest or encumbrance of any kind other than liens created or imposed by the Financing Documents, on any of the revenues or other assets of the District which could have a material adverse effect on the assets, financial condition, business or operations of the District, on the District s power to cause the Financing Documents to be executed and delivered, or its ability to pay in full in a timely fashion the obligations of the District under this Agreement or the other Financing Documents. Section Consents. The District has obtained all consents, permits, licenses and approvals of, and has made all registrations and declarations with any governmental authority or regulatory body required for the execution, delivery and performance by the District of this Agreement and the other Financing Documents. Section Litigation. There is no action, suit, inquiry or investigation or proceeding to which the District is a party, at law or in equity, before or by any court, arbitrator, governmental or other board, body or official which is pending or, to the best knowledge of the District, threatened in connection with any of the transactions contemplated by this Agreement or against or affecting the assets of the District, nor, to the best knowledge of the District, is there any basis therefor, wherein an unfavorable decision, ruling or finding (a) would adversely affect the validity or enforceability of, or the authority or ability of the District to perform its obligations under, the Financing Documents; (b) would, in the reasonable opinion of the District, have a materially adverse effect on the ability of the District to conduct its business as presently conducted or as proposed or contemplated to be conducted; or (c) would adversely affect the exclusion of interest on the Loan from gross income for federal income tax purposes or the exemption of such interest from State of Colorado personal income taxes. Section Enforceability. This Agreement and each other Financing Document to which the District is a party constitute the legal, valid and binding obligation of the District, enforceable against the District in accordance with its terms (except as such enforceability may be limited by bankruptcy, moratorium or other similar laws affecting creditors rights generally and provided that the application of equitable remedies is subject to the application of equitable principles). Section Changes in Law. To the best knowledge of the District, there is not pending any change of law which, if enacted or adopted could have a material adverse effect on the assets, financial condition, business or operations of the District, on the District s power to issue or its ability to pay in full in a timely fashion the obligations of the District under this Agreement or the other Financing Documents. Section Financial Information and Statements. The financial statements and other information previously provided to the Bank or provided to the Bank in the future are or will be complete and accurate and prepared in accordance with generally accepted accounting principles. There has been no material adverse change in the District s financial condition since such information was provided to the Bank. 12