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HomeMy WebLinkAboutResolution - 84-330 - Final Approval MIDB's $2,700,000 Technology Park III - 3" BND-t ech I 112 RESOLUTION NO . RESOLUTION RELATING TO A $2 , 700 , 000 CITY OF EDEN PRAIRIE, MINNESOTA, COMMERCIAL DEVELOPMENT REVENUE BOND; AUTHORIZING THE ISSUANCE THEREOF PURSUANT TO MINNESOTA STATUTES , CHAPTER 474 . BE IT RESOLVED by the City Council of the City of Eden Prairie, Minnesota , as follows : Section 1 . Definitions . 1 . 01 . In this Resolution the following terms have the following respective meanings unless the context hereof or use herein clearly requires otherwise : "Act " means the Minnesota Municipal Industrial Development Act , Minnesota Statutes , Chapter 474 , as amended; "Agreement" means the Loan Agreement , dated as of R December 1, 1984 , to be entered into among the City and the Company; "Bond" means the $ 2 , 700 , 000 principal amount Com- mercial Development Revenue Bond ( Technology III Pro- ject ) , issued by the City to the Holder pursuant to the Resolution ; "Building" means the Building as defined in the Agreement ; "City" means the City of Eden Prairie , a municipal corporation and political subdivision of the State of Minnesota, its successors and assigns ; "Company" means BKH 'Limited Partnership, a Minne- sota limited partnership, its successors , and assigns ; " Equipment" means the Equipment as that term is defiried in the Agreement ; "Holder " means the Original Purchaser and any sub- sequent holder of the Bond; " Land" means the real property described in Exhibit �r A to the Agreement ; "Original Purchaser " means First Southdale National Bank of Edina, Edina , Minnesota , its successors and assigns ; "Pledge Agreement " means the Assignment and Pledge Acreement, dated as of December 1 , 1984 , between the City and the Original Purchaser ; "Project" means the Building and the Equipment to be acquired , constructed and installed upon the Land, as defined in the Agreement ; and " Project Costs" means those costs defined as Pro- ject Costs in the Agreement ; "Resolution" means this resolution of the City . Section 2 . Findings . 2 . 01. it is hereby fcund and declared that : ( a) based upon representations made to the City by representatives of the Company as to the nature of the Project as described in the Agreement , the Project con- stitutes a project authorized by the Act ; ( b ) the purpose of the Project is and the of feet thereof shall be to promote the public welfare by the attraction, encouragement and development of economic- ally sound industry and commerce so as to prevent the emergence of or to rehabilitate , so far as possible , blighted and marginal lands and areas of chronic un- employment, the retention of industry to use the avail- able resources of the community in order to retain the benefit of its existing investment in educational and public service facilities , halting the movement of tal- ented , educated personnel of mature age to other areas and thus preserving the economic and human resources needed as a base for providing governmental services and facilities and more intensive development of land avail- able in the community ; ( c ) it is desirable that the Bond in the principal amount of $ 2 , 700 , 000 be issued by the City upon the terms set forth herein and that the City pledge its interest in the Agreement and grant a security interest therein to the Holder as security for the payment of the principal of , premium, if any , and interest on the Bond ; ( d ) the loan payments contained in the Agreement are fixed so as to produce income and revenue sufficient to provide for prompt payment of the principal of , pre- - 2 - mium, if any, and interest on the Bond when due , and the Agreement also provides that the Company is required to pay all expenses of the operation and maintenance of the Project , including, but not limited to, adequate insur- ance thereon and all taxes and special assessments levied upon or with respect to the Land and payable during the term of the Agreement ; ( e ) under the provisions of Minnesota Statutes , Section 474 . 10 , the Bond is not to be payable from nor charged upon any funds of the City other than the reve- nue pledged to the payment thereof ; the City is not subject to any liability thereon ; no Holder of the Bond shall ever have the right to compel any exercise of the taxing power of the City to pay the Bond or the interest thereon nor to enforce payment thereof against any pro- perty of the City ; the Bond , premium, if any, and in- terest thereon shall not constitute an indebtedness of the City within the meaning of any constitutional , char- ter or statutory limitation and shall not constitute or give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers and shall not constitute a charge, lien or encumbrance , legal or equitable, upon any property of the City other than its interest in the Project ; 'z ( f ) the execution and delivery of the Bond , the Agreement and the Pledge Agreement shall not conflict with or constitute , on the part of the City , a breach of or a default under any existing agreement , indenture , mortgage , lease or other instrument to which the City is subject or is a party or by which it is bound ; provided that this finding is made solely for the purpose of estopping the City from denying the validity of the Bond, the Agreement, or the Pledge Agreement by reason of the existence of any facts contrary to this finding ; ( g ) all acts and things required under the Consti- tution and the laws of the State of Minnesota to make the Bond , the Agreement •and the Pledge Agreement the valid and binding obligations of the City in accordance with their terms shall have been done upon adoption of this Resolution and execution of the Bond , the Agreement and the Pledge Agreement ; provided that this finding is made solely for the purpose of estopping the City from denying the validity of the Bond, the Agreement or the Pledge Agreement by reason of the existence of any facts contrary to this finding ; and ( h) the City , a municipal corporation and poli- tical subdivision of the State of Minnesota , is duly organized and existing under the Constitution and the - 3 - laws of the State of Minnesota and is authorized to issue the Bond in accordance with the Act . ( i ) to the best knowledge of the undersigned , the consummation of the transactions contemplated by the Bond Resolution and compliance by the City with the pro- visions thereof and of the Bond, the Pledge Agreement , and the Agreement has not resulted in and will not re- sult in the creation or imposition of any lien, charge or encumbrance ( other than the Agreement , the Bond Reso- lution and the Pledge Agreement ) upon any properties or assets of the City other than its interest in the Pro- ject ; provided that this finding is made solely for the purpose of estopping the City from denying the validity of the Agreement , the Bond or any other document exe- cuted by the City by reason of the existence of any facts contrary to this finding . ( j ) to the best knowledge of the undersigned , the City is not and upon the issuance cf the Bond will not be in default in the performance and observance of any of the terms or conditions of the Bond Resolution , the Pledge Agreement and the Agreement on its part to be performed or observed, and all conditions precedent provided in the Bond Resolution relating to the issuance 9 of the Notes have been complied with ; provided that this finding is _Wade solely for the purpose of estopping the City from denying the validity of the Agreement , the Bond or any other document executed by the City by rea- son of the existence of any facts contrary to this find- ing . Section 3 . Authorization and Sale . 3 .01 . Authorization. The City is authorized by the Act to issue revenue bands and loan the proceeds thereof to business enterprises to finance the acquisition , construc- tion and installation of facilities constituting a "proj- ect , " as defined in the Act, and to make all contracts , execute all instruments and do all things necessary or con- venient in the exercise of such autriority . 3 .02 . Preliminary City Approval . By preliminary re- solution duly adopted by the City Council on December 20 , 1984 , after a public hearing held on that date , this City Council approved the acquisition. , construction and installa- tion of the Project and authorized the preparation of such documents as may be appropriate to the acquisition , con- struction and installation of the Project . 3 .03 . Approval of Documents . Pursuant to the fore- going , there have been prepared and presented to the City - 4 - Council copies of the following documents , all of which are now or shall be oiaced on file in the office of the City Clerk : ( a ) the Loan Agreement ; and ( b ) the Pledge Agreement . The forms of the documents listed in ( a ) and ( b ) above are approved, with such variations , insertions and additions as are deemed appropriate by the parties and approved by the City Attorney . Section 4 . Authorizations . 4 . 01 . Upon the completion of the Agreement and the Pledge Agreement approved in Section 3 . 03 hereof , the Mayor and the City Manager shall execute the same on behalf of the City and the Mayor and the City Manager shall execute the Bond , in substantially the form approved in paragraph 5 . 01 hereof , on behalf of the City, and the Mayor , the City Man- ager , the City Clerk and other officers of the City shall execute such other certifications , documents or instruments as bond counsel or counsel for the Original Purchaser shall require , subject to the approval of the City Attorney , and a all certifications , recitals and representations therein shall constitute the certificates , recitals and representa- tions of the City . Execution of any instrument or document by one or more appropriate officers of the City shall con- stitute and sr,all be deemed the conclusive evidence of the approval and authorization by the City and the City Council of the instrument or document so executed . Section 5 . The Bond . 5 . 01 . Form and Authorized Amount . The Bond shall be issued substantially in the form presented to the City Coun- cil and set forth as Exhibit A to this Resolution , with such appropriate variations , omissions and insertions as are permitted or required by this Resolution , in the principal amount of $ 2 , 700 , 000 . The offer of the Original Purchaser to purchase the Bond at a price of par is found reasonable and is accepted . The terms of the Bond are set forth therein , and such terms , including , but not limited to , provisions as to interest rate , dates and amount of payment of principal and interest and prepayment privileges , are incorporated by reference herein . 5 . 02 . Execution. The Bond shall be executed on behalf of the City by the manual signatures of the Mayor and the City Manager . in case anv officer whose signature shall appear on the Bond shall cease to be such officer_ before the - 5 - delivery thereof , such signature shall , nevertheless , be valid and sufficient for all purposes . 5 . 03 . Mutilated, Lost and Destroyed Bond . In case the Bond shall become mutilated or be lost or destroyed , the City shall cause to be executed and delivered a new Bond of like outstanding principal amount and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for such Bond lost or destroyed , upon the Holder ' s paying the reasonable expenses and charges of the City in connection therewith and , in case the Bond is destroyed or lost , filing with the City evidence satisfactory to it of such loss or destruction . 5 . 04 . Bond Registrar ; Assignment . The City Merk is hereby designated as Bond Registrar ( the "Bond Registrar " ) and shall keep a Bond Register in which the Bond Registrar shall provide for the registration of transfers of ownership of the Bond . The Bond shall be initially registered in the name of the Original Purchaser and shall be transferable upon the Bond Register by the registered owner of the Bond at any time in person or by its agent duly authorized in writing, upon surrender of the Bond together with a written instrument of transfer duly executed by the Holder or its duly authorized agent in the following form: For value received hereby sells , assigns and transfers unto ( Tax Identification or Social Security No . the within Bond of the City of Eden Prairie , Minnesota , and does hereby irrevocably constitute and appoint attorney to transfer said Bond on the books of the Bond Registrar with full power of substitution in the premises . Upon such transfer the Bond Registrar shall note the date of registration and the name , address and tax identifi- cation number or social security number of the new Holder of the Bond in the Bond Register and in the registration blank appearing on the Bond . 5 . 05 . Deli-very and Use of Proceeds . Prior to delivery of the Bond , the documents referred to in Section 3 . 03 hereof shall be completed and executed in form and substance as approved by the City Attorney, and an original, executed counterpart of each such document shall be delivered to the Original Purchaser . The City shall thereupon deliver to the Original Purchaser the Bond in the principal amount of $2 , 700 , 000 together with a copy, duly certified by the City Clerk , of this Resolution and such closing certificates as are required by bond counsel . - 6 - Upon delivery of the Bond and the above items to the Original Purchaser , the proceeds of the Bond shall be de- posited in a Construction Fund initially maintained by the Original Purchaser and disbursement of such proceeds shall be made to the Company for payment or reimbursement of Pro- ject Costs upon the terms provided in the Agreement . Any surplus in the Construction Fund shall be applied toward prepayment of the Bond as provided in the Agreement and shall not be invested to produce a yield greater than the yield on the Bond ( within the meaning of Section 103 ( c ) of the Internal Revenue Code of 1954 , as amended ) , as re- quired by Internal. Revenue Service Revenue Procedures 79--5 and 81-22 and any regulations promulgated thereunder and amendments or modifications thereto; provided that if the Holder receives an opinion of bond counsel that the exemp- tion from federal income taxation of the interest on the Bond will not be jeopardized , the surplus funds may be in- vested at a yield greater than the yield on the Bond . 5 . 06 Issuance of New Bond . The City shall , at the request and expense of the Holder , issue new Bonds , in an aggregate outstanding principal amount equal to that of the Bond surrendered, and of like tenor except as to number , principal amount , and the amount of the monthly payment payable thereunder , and be registered by the Bond Registrar in the name of the Holder . Section 6 . Limitations of the City ' s Obligations . 6 . 01 Notwithstanding anything contained in the Bond. , the Agreement or the Pledge Agreement or any other documents referred to in Section 3 . 03 hereof , the Bond, premium, if any, and interest thereon shall not constitute an indebted- ness of the City within the meaning of any constitutional , charter or statutory limitation and shall not constitute or give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers and shall not constitute a charge , - lien or encumbrance , legal or equit- able , upon any property of the City other than its interest in the Project , and no Holder of the Bond shall ever have the right to compel any exercise of the taring power of the City to pay the Bond or the interest thereon or to enforce payment thereof against any property of the City other than its interest in the Project . The agreement of the City to perform the covenants and other provisions contained in this Resolution or the Bond , the Agreement or the Pledge Agree- ment and the other documents listed in Section 3 . 03 hereof shall be subject at all times to the availability of reve- nues furnished by the Company sufficient to pay all costs of such performance or the enforcement thereof , and neither the - 7 - City nor any of its officers , employees or agents shall be subject to any personal or pecuniary liability thereon . No failure of the City to comply with any terms , conditions , or agreement therein shall subject the City or its officers , employees or agents to liability for any claim for damages , costs or other financial or pecuniary charges except to the extent that the same can be paid or recovered .From the Agreement or revenues therefrom or proceeds of the Bond . Section 7 . City Representative ; Statement of Election . 7 . 01 . The City Manager and the Mayor and City Clerk of the City are hereby designated and authorized to act on behalf of the City as the City Representative and alternate City Representatives, respectively ( as defined in the Agree- ment ) . 7 . 02 . The principal amount of the Bond being in excess of $1 , 000 , 000 , the Mayor is hereby authorized and directed on behalf of the City to execute and cause to be filed with the Internal Revenue Service a statement of election to issue its obligations in excess of $1 , 000 , 000 as provided by Section 103 ( b ) ( 6 ) ( 10 ) of the Internal Revenue Code of 1954 , as amended, and Section 1 . 103 ( b) ( 2 ) ( vi ) of the regulations promulgated thereunder . Adopted by the Eden Prairie City Council on December 20 , 1984 . W gan. H. enzel , Mayor SEAL ATTESTED: J6-r b rane, City Clerk 8 - Clerk ' s Certificate I , the undersigned , being the duly qualified and acting Clerk of the City of Eden Prairie , Minnesota , hereby certify that I have carefully compared the attached and foregoing resolution with the original thereof - on file in my office and further certify that the same is a full , true and com- plete transcript therefrom, insofar as the same relates to the =roval of the issuance of a bond of the City to fi- nance a commercial or industrial development project for BKH Partnership, a Minnesota Limited Partnership . I certify that Councilmember intro- duced said resolution , Councilmember moved its adoption, which motion was duly seconded by Council- member , and upon roll call , the "Ayes , " "Abstains" and "Nays " were as follows : AYES ABSTAINS NAYS Whereupon the resolution was declared duly passed and adopted . I further certify that said resolution was duly adopted by the Eden Prairie City Council at a duly called and regu- larly held regular or special meeting thereof . WITNESS my hand officially as such Clerk and the corpor- ate seal of the City this 20th day of December , 1984 . Citv Clerk Eden Prairie , Minnesota ( SEAL ) 9 - EXHIBIT A ( Form of Bond) STATE OF MINNESOTA COUNTY OF HENNEPIN CITY. OF EDEN PRAIRIE Commercial Development Revenue Bond ( Technology III Project ) No . R-1 $2 , 700 , 000 The City of Eden Prairie , a municipal corporation and political subdivision of the State of Minnesota ( the "City" ) , hereby acknowledges itself to be indebted and , for value received, promises to pay to First Southdale National Bank of Edina , Edina , Minnesota , or its registered assigns ( the "Holder " ) , from the sources and in the manner herein provided, the principal sum of TWO MILLION SEVEN HUNDRED THOUSAND DOLLARS ( $2 , 700 , 000 ) on the dates and in the Principal Amounts specified below ( the "Principal Amounts" ) , and to pay to the Holder , inter- est from the date hereof on the unpaid Principal Balance ( the "Principal Balance" ) , until such interest is paid, at the per annum rates of interest hereinafter specified . Both principal and interest on this Bond are payable at the offices of the Holder , or , such other place as may be specified from time to time , in any coin or currency of tiie United States of America which on the date of payment is legal tender for public and private debts . This Bond is subject to mandatory purchase by BKH Limited Partnership , a Minnesota limited partnership ( the "Company" ) from the Holder hereof at a purchase price equal to the unpaid principal balance hereof ( the "Purchase Price" ) on July 1 , 1985 , July 1 , 1995 , and July 1 , 2005 ( together , the "Purchase Cates " ) . Payment of the Purchase Price shall be made in immediately available funds against delivery of this Bond . Thirty ( 30 ) days prior to each Pur- chase Date the Company shall notify the Holder by certified mail of the date of the Purchase Date , the Company ' s obliga- tion to purchase the Bonds from the Holder on the Purchase s Date and the amount of the Purchase Price due and payable on such Purchase Date . The Holder is required to tender the - 10 - Bond to the Company for purchase on the Purchase Date . Payment of the Purchase Price shall be made only upon de- livery of the Bond to the Company, together with proper instruments of assignment to the Company ( or , by written direction of the Company to the Holder , to its assignee ) . The Holder of the Bond prior to any Purchase Date shall cease to be entitled to hold such Bond or to accrue interest in respect thereof on and after such Purchase Date ( unless such Holder shall repurchase the Bond) . interest accrued on this Bond through the applicable Purchase Date and any installment of principal due and pay- able on the Bond on such Purchase Date (whether at Stated Maturity or upon prepayment as provided in the Bond ) shall be paid to the Holder as if such Bond had not been pur- chased . This Bond shall continue to be outstanding for all purposes after each such Purchase Date and may be retained or sold by the Company . This Bond bears interest until July 1, 1985 ( the "First Purchase Date" ) at a fluctuating rate per annum equal to seventy percent ( 70% ) of the interest rate per annum an- nounced by The First National Bank of Saint Paul , St . Paul , Minnesota , as its Reference Rate , as the same from time to time is in effect . The interest rate on this Bond is sub- ject to adjustment on each Purchase Date as hereinafter provided. On July 1 , 1985 , and on each subsequent Purchase Date , the interest rate on the Bond shall be adjusted to annual rate ( the "Adjusted Rate" ) to be determined by a Remarketing Agent selected by the Company ( the "Remarketing Agent" ) on the seventh ( 7th ) Business Day preceeding such Purchase Date . The Adjusted Rate determined with respect to any Purchase Date shall be an annual rate which ( i ) in the opin- ion of the Remarketing Agent is either ( A) a fixed rate per annum which is not less than ninety percent ( 90% ) nor more than one hundred ten percent ( 110% ) times the Base Rate ( the "Fixed Rate" ) , or ( B) a variable rate per annum equal to not less then ninety percent ( 90% ) nor more than one hundred ten percent ( 110% ) times the Reference Rate ( the "Floating Rate" ) , and ( ii ) will , in the written opinion of the Remar- keting Agent , allow the Bond to be resold at a price closest to par . The Bond shall bear interest at the applicable Adjusted Rate from and after each Purchase Date until the earlier of ( i ) the next Purchase Date or the Stated maturity of the Bond , whichever is applicable , or ( ii ) prior payment in full of the Bond . The Base Rate shall be a rate equal to one hundred six percent ( 106% ) of the rate per annum equal to the average of the yields to maturity stated in the " 20-Bond (G.O. Bond ) - 11 - Index " appearing in The Bond Buyer for each of the four ( 4 ) weeks prior to the tenth Business Day prior to each. Purchase Date; provided, however , that if The Bond Buyer or the " 20- Bond (G .O. Bond ) Index " is no longer published , that the Base Rate shall be a rate equal to one hundred percent ( 100% ) of the rate per, annum - equal to the closing yield to maturity on the tenth Business Day prior to the applicable Purchase Date on United States Treasury Bonds maturing on or on the date closest to the next Purchase Date , or if the interest rate adjustment is being made with respect to the Third Purchase Date , maturing on or on the date closest to December 1 , 2014 . The Reference Rate shall mean seventy percent ( 70% ) of the interest rate per annum announced by The First National Bank of Saint Paul , St . Paul , Minnesota, as its Reference Rate, as the same shall from time to time be in effect ; provided , however , that if The First National Bank of Saint Paul shall cease to announce its Reference Rate , the Remarketing Agent shall select as the Reference Rate such other interest rate regularly announced by any national or state bank as shall , in the written opinion of the Remarketing Agent delivered to the Company and the City , allow the Bond to be resold at a price closet to par . "Business Day" means any day other than a Saturday , Sunday , legal holiday or other day on which banking institutions in Minneapolis , Minnesota are not open for business . The init- ial Remarketing Agent is Dougherty , Dawkins , Strand and Yost , Minneapolis , Minnesota; the Company may replace the Remarketing Agent as provided in the Loan Agreement . The Remarketing Agent shall deliver the applicable Ad- justed Rate to the Company and the City on the seventh ( 7th ) Business Day prior to each Purchase Date , together with a copy of any opinion of the Remarketing Agent required by this Section and of the applicable indices with respect to which such Adjusted Rate was determined, as the case may be . The Company shall also cause to be delivered to the Holder of the Bond upon any resale subsequent to purchase of the Bond by the Company on any Purchase Date a copy of the opinion of the Remarketing Agency specifying the Adjusted Rate borne by the Bond from and after such Purchase Date . All interest on this Bond shall be calculated on the basis of a 360 day year and the actual number of days elapsed . Interest due on any Payment Date shall be calcuated by multiplying the applicable interest rate or rates in effect during the preceding month by the actual number of daS- s such rate was in effect and then dividing that amount by 360 days . These sums will. then be accumulated for the preceding month and the resulting interest rate will then be multi- plied by the unpaid principal balance of the Bond calculated - 12 - prior to any principal payments made on such Payment Date to determine the interest payment due on such Payment Date . This Bond shall be paid as provided below , such payments to be applied first to interest due on the Principal Balance and thereafter to reduction of the Principal Balance in inverse order of maturity : ( a) Interest shall accrue on the Principal Balance from and after the date of this Bond and shall be pay- able on the first day of the calendar month next suc- ceeding the date of this Bond and on the first day of each and every calendar month thereafter . ( b ) There shall be no principal due and payable on the Bond prior to July 1 , 1986 . Commencing July 1 , 1986 and on or before the first ( 1st ) day of each calendar month thereafter until the first to occur of ( i ) payment in full of the Bond , or ( i i ) November 1 , 2015 , the Com- pany shall make a principal payment , in addition to any accrued interest due and payable on such date , of Seven Thousand Five Hundred Dollars ( $7 , 500 ) , being the amount which would provide for level amortization of principal of the Bond based on an amortization period of 30 years .. In addition , 1 final payment of all unpaid principal and accrued interest shall be due and payable on December 1 , 2015 ( the "Maturity Date" ) ( c ) If the interest on this Bond should become subject to federal income taxation pursuant to a "Deter- mination of Taxability" as that term is defined below and the Holder delivers to the Compc-.n.;r a copy of the notice of the "Determination of Taxability" , the inter- est rate shall be immediately adjusted to be a rate equal to four percent over the rate per annum equal to the average of the yields to maturity stated in the " 20- Bond ( G .O . Bond ) index" appearing in The Bond Buyer each week ; as the same shall change from time to time ( the "Taxable Rate" ) ; provided , however , that if The Bond Buyer or the " 20-Bond ( G . O. Bond ) Index" shall cease to be published , the Taxable Rate shall be two percent ( 2% ) over the interest rate per annum announced from time to time by The First National Bank of Saint Paul as its Reference Rate , as the same from time to time is in effect . Such rate shall be variable daily and interest on this Bond at the Taxable Rate shall be calculated on the basis of a 360 day year and the actual number of days elapsed . In addition, upon the occurrence of a Determination of Taxability , the Holder shall be en- titled to receive upon demand an amount equal to the aggregate difference between (A) the monthly payments theretofore made to the Holder on this Bond between the - 13 - "Date of Taxability" ( as defined below ) , and the Deter- mination of Taxability, and ( B ) the monthly payments which would have been made during such period if the Taxable Rate had been in effect throughout such per- iod . Such obligation shall survive the payment in full of the Principal Balance of the Bond . "Date of Taxability" means that date , as specified in the determination , ruling or decision referred to in the definition of Determination of Taxability herein, that the interest payable on the Bond becomes includable in the gross income of the Holder thereof . "Determination of Taxability" means the receipt by a Bond Holder , the Company or the City of any determination, ruling or decision of the Internal Revenue Service or a court of competent jurisdiction or a change in any applicable federal statute which ( in the opin- ion of Bond Counsel , submitted in writing to the Holder ) holds or provides in effect that the interest payable on the Bonds is includable in the gross income of a Holder of Bonds for federal tax purposes for any reason other than that the Ponds Holder is a substantial user or related person within the meaning of Section 103 ( b ) ( 13 ) of the Cade, if such ac- tion , ruling or decision has not been revoked , reversed or overturned by a date 180 days subsequent to the original date of issuance of such action , ruling or decision ; pro- vided, however , that payment of any assessment of income tax liability made by the United States Internal Revenue Service by an individual Bondholder prior to the issuance of a statutory notice of deficiency with respect to such alleged tax liability shall not constitute a determination. , ruling or decision within the meaning of this sentence unless the Company shall have been provided an opportunity to partici- pate in the defense or contest of such assessment . The Holder shall give notice , as soon as practicable , but in any event before the right to appeal a Notice of Tax- ability has expired, to the Company , the City and any prior Holder of its receipt of a notice of any statutory notice of deficiency or any other communication from the Internal P.evenue Service holding in effect that interest on the Bond is includable in the gross income of the Holder for federal tax purposes and permit the Company to contest , litigate or appeal the same at its sole expense . In the event of prepayment of this Bond the Helder shall apply any such prepayment first against the accrued interest on the Principal Balance and then against the Principal Balance in inverse order of maturity, provided that if any advances made by the Holder hereof under the terms of any instruments securing the Bond are not repaid , any moneys received , at the option of the Holder , may first be applied to repay such advances , plus interest thereon at the Taxable - 14 - Rate , to the extent of such advances and interest thereon . The monthly payments due hereunder shall continue to be due and payable in full until the entire Principal Balance and accrued interest due on this Bond have been paid regardless of any partial prepayment made hereunder . This Bond is subject to optional prepayment and prior redemption , without premium, on any Interest Payment Date , in whole or in part , at the option of the Company ( as here- inafter defined) , upon fifteen ( 15 ) days' notice to the Holder , at a Redemption Price equal to the amount of the Principal Balance to be redeemed plus accrued interest thereon to the date of such redemption . This Bond is subject to mandatory redemption in whole and not in part , at the unpaid Principal Balance plus accrued interest to the date of such redemption, plus any service charges or premiums , reasonable attorney' s fees , and collection charges of the Holder , in the discretion of the Holder , upon the occurrence of an Event of Default , as de- fined in the Agreement . This Bond is subject to mandatory redemption in whole and not in part , at the unpaid Pr i_ncipal Balance plus accrued interest to the date of such redemption, on August 1 , 1986 , if , on July 1 , 1986 , an amount equal to at least Three Hundred Seventy Thousand Five Hundred Dollars ( $370 , 500 ) has not been disbursed from the Construction Fund to pay Project Costs ( other than Costs of Issuance ) (as such terms are defined in the hereinafter-defined Agreement ) . This Bond is further subject to mandatory prepayment and prior redemption in whole and not in part, on the earliest practicable date, and in all events no later than sixty ( 60 ) days , following the Failure of the Company to restore the Project ( hereinafter defined) , in accordance with Section 4 . 6 of the hereinafter-defined Agreement , following casualty thereto . The redemption price in such event shall be equal to the unpaid Principal Balance of this Bond plus accrued interest thereon to the date of such redemption . This Bond is the sole bond of a duly authorized issue designated as "Commercial Development Revenue Bond ( Tech- nology III Project ) , " dated as of the date of delivery thereof ( the "Bond" ) , issued as a fully registered Bond without interest coupons in the principal amount of $2 , 700 , 000 pursuant to Minnesota Statutes , Chapter 474 ( the "Act " ) and a resolution of the City Council of the City, adopted on December 20 , 1984 ( the "Bond Resolution" ) . The Bond has been issued to provide funds to the Company to finance a portion of the cost of constructing a 55 , 500 square foot office services building , including warehouse - 15 - t facilities , in the City of Eden Prairie , Hennepin County , Minnesota ( the "Project " ) , pursuant to a Loan Agreement , dated as of December 1 , 1984 , between the City and the Com- pany ( the "Agreement" ) . All interest and duties of the City in the Agreement ( except for certain rights with respect to reimbursement , indemnifification and the City ' s- adrninstra- tive fees ) have been pledged to the Holder pursuant to an Assignment and Pledge Agreement dated as of December 1 , 1984 ( the " Pledge Agreement " ) . The proceeds of the Bond shall be placed in a Construction Fund established pursuant to the Agreement , and the disbursement of the proceeds of this Bond from the Construction Fund is subject to the terms and con- ditions of the Agreement and any Disbursing Agreement nego- tiated and executed between the Company and the Holder . The City, for itself , its successors and assigns , hereby waives demand , presentment, protest and notice of dishonor . This Bond may be transferred or exchanged , as provided in the Bond Resolucion , only upon the Bond Register kept by City Clerk of the City, as Bond Registrar , for such purpose , by the Holder in person or by its attorney duly authorized in writing , upon surrender hereof together with a written instrument of transfer or exchange in the form specified in the Bond Resolution duly executed by the Holder or such duly authorized attorney, and thereupon , at the request and ex- pense of the Holder , the City shall issue and deliver in the name of the designated transferee or transferees a new Bond of the same aggregate principal amount , designation , matur- ity and interest rate as the surrendered Bond and in any authorized denomination , all as provided in the Bond Resolu- tion. The City and the Bond Registrar may treat and con- sider the Holder of this Bond as the holder and absolute owner hereof for the purpose of receiving payment of or on account of the principal or redemption price hereof and interest due hereon and for all other purposes whatsoever . The City and any of its authorized officials or agents shall not be personally liable on this Bond or for any act or omission related to the authorization or issuance of the Bond. This Bond and the interest hereon and any penalty , charge , or premium, or any amounts payable hereunder , how- ever designated , due hereunder are payable by the City solely from the revenues and proceeds derived from the Agreement , do not constitute a debt of the City within the meaning of any constitutional or statutory limitation , are not payable from or a charge upon any funds of the City other than the revenues and procees pledged by the City to the payment thereof , and do not give rise to a pecuniary liability of the City nor of any of its officers , agents, or - 16 - employees , and no holder of this Bond shall ever have the right to compel any exercise of the taxing power of the City to pay this Bond or the interest hereon or any penalty, charge , or prem.iun , or any amounts payable hereunder , how- ever designated, due hereunder , or to enforce payment thereof against any property of the City, and- this Bond and the interest hereon and any penalty, charge, or premium, or any amounts payable hereunder, however designated , do not constitute a charge , lien , or encumbrance , legal or equit- able , upon any property of the City and the agreement of the City to perform or cause the performance of the covenants and other provisions herein referred to shall be subject at all times to the availability of revenues or other funds furnished for such purpose in accordance with the Agreement , sufficient to pay all costs of such performance or the en- forcement thereof . The provisions of this paragraph shall , for purposes of this Bond , be controlling and shall be given full force and effect , anything else to the contrary in this Bond notwithstanding . It is hereby certified and recited that the Project constitutes a project as defined in Section 474 . 02 , Subdivi- sion la , of the Act and that all conditions , acts , and things required by the Constitution and laws of the State of Minnesota to exist , to have happened , and to be performed precedent to or in the issuance of this Bond do exist , have happened, and have been performed in regular and due form, time , and manner as required by law. The remedies of the Holder , as provided herein and in the Agreement are not exclusive and shall be cumulative and concurrent and may be pursued singly, successively or to- gether , at the sole discretion of the Holder , and may be exercised as often as occasion therefor shall occur ; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof . The Holder shall not be deemed , by any act of omission or commission , to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and , then only to the extent specifically set forth in the writing . A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event . This Bond applies to , inures to the benefit of , and is binding not only on the parties hereto , but on their suc- cessors and assigns . The term "Holder" shall mean the registered holder of this Bond, whether or not named as a Holder herein . 17 - IN WITNESS WHEREOF, the City of Eden Prairie , Minnesota has caused this Bond to be duly executed by the facsimile or manual signatures of its Mayor and City Manager ; and has caused this Bond to be dated December 20 , 1984 . CITY OF ED N, PRAIRIE, MINNESOTA /iMayor City Manager 18 CERTIFICATE OF REGISTRATION It is hereby certified that at the request of the Reg- istered Owner of the within Bond the Bond Registrar has this date registered it as to principal and i-nterest in the name of such Registered Owner , as indicated in the registration blank below, on the books kept by the undersigned for such purpose : Name of Registered Date of Authorized Signature Owner Registration of Bond Registrar First Southdale National Bank 19 -