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HomeMy WebLinkAboutResolution - 85-275 - Final Approval MIDB's - Rialto Investments - $1,900,000 - 12/17/1985 Member Bentley introduced the following resolution ( after it lead been read in full) (after the reading thereof had been disposed with by unanimous consent] * and moved its adoption : RESOLUTION NO . 85- L RESOLUTION RELATING TO $1 , 900 , 000 COMMERCIAL DEVELOPMENT REVENUE BOND (RIALTO IN`JESTMENTS PROJECT ) ; AUTHORIZING THE ISSUANCE THEREOF PURSUANT TO MINNESOTA STATUTES , CHAPTER 474 , AS AMENDED, AND APPROVLKG AND AUTHORIZING THE EXECUTION OF DOCUMENTS IN CON99CTION THEREWITH 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, when used with initial capital letters , have the following respective meanings unless the context hereof or use herein_ clearly requires otherwise : Act : the Minnesota Municipal Industrial Development Act , Minnesota Statutes, Chapter 474 , as amended; Assignment : the Assignment of Rents , Leases and Other Benefits to be given by the Borrower in favor of the Lender ; Bank : Norwest Bank Minneapolis , National Association, a national banking association, its successors and assigns; Bond : the $1 , 900 , 000 Commercial Development Revenue Bond ( Rialto Investments Project) to be issued by the City pursuant to this Resolution; Borrower : Rialto Investments, A Minnesota General Partnership, its successors and assigns ; Building : the approximately 25 , 000 square foot facility to be constructed by the Borrower on the Land; City: the City of Eden Prairie, Minnesota, its successors and assigns ; Code : the Internal Revenue Code of 1954 , as amended ; * Strike inapplicable language 3 Disbursing Agreement : the Construction Loan , Escrow and Disbursing Agreement to be executed by the City, the Borrower, the Bank and Title Company; Holder : the registered Holder of the Bond; Land : the real estate described in Exhibit A to the Mortgage; Lender : Unionmutual Stock Life Insurance Co . of America, a Maine corporation, its successors and assigns; Letter of Credit: the Letter of Credit to be issued by the Bank to the Lender ; Letter of _Credit Agreement: the Letter of Credit Agreement to be executed by the Borrower , the Bank and the Lender; Loan Agreement : the Loan Agreement to be executed by the City and the Borrower ; Mortgage : the Combination Mortgage and Security Agreement and Fixture Financing Statement to be given by the Borrower in favor of the Lender ; Pledge Agreement : the Pledge Agreement to be executed by the City and the Lender ; Project: the acquisition of the Land and the acquisition , construction and equipping of the Building ; Project Costs : the costs of the Project and the costs of the issuance and delivery of the Bond as defined in the Loan Agreement; Resolution: this resolution of the City Council , adopted December 17 , 1985 , authorizing the issuance of the Bond; and Title Company: Title Insurance Company of Minnesota . Section 2 . Findings . It is hereby found, determined and declared that: (a) the financing of the Project , the authorization of the Bond in the principal amount of $1 , 900 , 000 , the execution and delivery of the Loan Agreement , the Pledge Agreement and the Disbursing Agreement and the performance of all covenants and agreements of the City contained in -2- the Loan Agreement, the Pledge Agreement and the Disbursing Agreement and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Loan Agreement, the Pledge Agreement and the Disbursing Agreement and the Bond valid and binding obligations in accordance with their terms , are authorized by the Act; ( b ) the Project has been approved by the Minnesota Department of Energy and Economic Development, or will be so approved before issuance of the Bond; ( c ) it is desirable that the Bond in the amount of $1 , 900 , 000 be issued by the City upon the terms set forth herein and that the City grant to the Lender a security interest in certain revenues and payments to be received by the City under the Loan Agreement as security for the payment of the principal of , premium, if any, and interest on the Bond; ( d ) the loan repayments contained in the Loan Agreement are fixed, and are required to be revised from time to time as necessary, so as to produce income and revenue sufficient to provide for prompt payment of principal of , premium, if any, and interest on the Bond when due ; and the Loan Agreement also provides that the Borrower is required to pay all expenses of the operation and maintenance of the Project , including , but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Land and payable during the term of the Loan Agreement ; ( e ) the execution and delivery of the Loan Agreement, the Pledge Agreement, the Disbursing Agreement and the Bond will 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 Loan Agreement, the Pledge Agreement, the Disbursing Agreement or the Bond by reason of the existence of any facts contrary to this finding; ( f ) no litigation is pending or , to the best knowledge of the members of this Council , threatened against the City questioning the organization or boundaries of the City or the right of any officer of the City to hold his or her office, or in any manner questioning the right -3- and power of the City to execute and deliver the Bond, or otherwise questioning the validity of the Bond or the execution, delivery or validity of the Loan Agreement, the Pledge Agreement or the Disbursing Agreement, or questioning the appropriation of revenues to payment of the Bond or the right of the City to loan the proceeds of the Bond to the Borrower ; (g ) all acts and things required under the Constitution and the laws of the State of Minnesota to make the Loan Agreement , the Pledge Agreement , the Disbursing Agreement and the Bond the valid and binding obligations of the City in accordance with their terms will have been done Ripon adoption of this Resolution and execution of the Loan Agreement , the Pledge Agreement and the Disbursing Agreement; provided that this finding is made solely for the purpose of estopping the City from denying the validity of the Loan Agreement, the Pledge Agreement , the Disbursing Agreement or the Bond by reason of the existence of any facts contrary to this finding; and ( h ) the City is duly organized and validly existing under the Constitution and laws of the State of Minnesota and is authorized to issue the Bond in accordance with the Act . Section 3 . Authorization and Sale 3 . 01 . Authorization . The City is authorized by the Act to issue revenue bonds , and loan the proceeds thereof to business enterprises to finance the acquisition and construction of "projects" as defined in the Act, and to make all contracts , execute all instruments and do all things necessary or convenient in the exercise of such authority. 3 . 02 . Preliminary City Approval . The Council gave preliminary approval to the sale of its revenue bonds pursuant to the Act and the loan of the proceeds to the Borrower for the acquisition and improvement of the Project and authorized the preparation of such documents as may be appropriate to the Project by adoption of Resolution No . 85-137 , on June 4 , 1985 . 3 . 03 . Documentation . There have been prepared and presented to this Council copies of the following documents , all of which are now, or shall be , placed on file in the office of the Finance Director/Clerk : ( a ) the Loan Agreement; ( b ) the Pledge Agreement; -4- ( c ) the Mortgage ; (d ) the Assignment; ( e ) the Disbursing Agreement; ( f ) the Letter of Credit; and ( g ) the Letter of Credit Agreement . 3 . 04 , Allocation of Bond Issuance Authority, The City is an "entitlement issuer" under the Act and has been allocated an entitlement amount of bond issuance authority under the Act for the 1985 calendar year in the amount of $ 9 , 342 , 948 , By Resolution No . 85-168 , this Council determined to allocate $ 1 , 900 , 000 of the City ' s available amount of bond issuance authority under the Act to the Project and the Bond . Such allocation is hereby ratified and confirmed . This Council is the body of the City responsible for making such allocation, and adoption of this resolution is intended to be a certification within the meaning of Section 103 ( n) ( 12 ) of the Code under penalties of perjury, by members of the Council voting in favor hereof, that such allocation has not been made in consideration of any bribe , gift, gratuity, or direct or indirect contribution to any political campaign . The members of this Council and officers of the City are hereby autharized and directed to execute such documents as may be necessary to effectuate such allocation , Section 4 . Approval of Documents . The forms of the Loan Agreement , the Pledge Agreement and the Disbursing Agreement referred to in Section 3 . 03 are approved subject to such modifications as are deemed appropriate and approved by the City Attorney and the City Manager , which approval shall be conclusively evidenced by execution of the Loan Agreement, the Pledge Agreement, the Disbursing Agreement and the Bond by the Mayor , the City Manager and the Finance Director/Clerk, as the case may be . The Mayor and City Manager are directed to execute the Lean Agreement upon execution thereof by the Borrower , to execute the Pledge Agreement upon, execution thereof by the Lender , to execute the Disbursing Agreement upon execution thereof by the other parties thereto . Copies of all of the documents shall be delivered , filed and recorded as provided therein , The Mayor , the City Manager and the Finance Director/Clerk are also authorized and directed to execute such other instruments as may be required to give effect to the transactions herein contemplated . -5- Section 5 . The Bond . 5 . 01 . Form. The Bond shall be issued substantially in the form set forth in Exhibit A hereto , with such appropriate variations , omissions and insertions as are permitted or .required by this Resolution, and in accordance with the further provisions of this Section 5 . 5 . 02 . Bond Terms . The Bond shall be designated the Commercial Development Revenue Bond ( Rialto Investments Project) , and shall : ( a ) be dated as of the date of delivery thereof to the Lender ; ( b ) be in the total principal amount of $1 , 900 , 000; ( c ) bear interest at the rates set forth in the form of the Bond contained in Exhibit A heteto; ( d ) be payable in monthly installments of principal and interest as set forth in the form of the Bond contained in Exhibit A hereto; ( e ) be subject to redemption and prepayment upon the terms and subject to the conditions provided in the form of the Bond provided in Exhibit A hereto . 5 . 03 . Execution . As provided in Section 4 hereof , the Bond shall be executed on behalf of the City by the signatures of the Mayor , the City Manager and the Finance Director/Clerk , and shall be sealed with its corporate seal . In case any officer whose signature shall appear on the Bond shall cease to be such officer before the delivery thereof , such signature shall nevertheless be valid and sufficient for all purposes . 5 . 04 . Mutilated , Lost and Destroyed Bond . In case the Bond shall become mutilated or be destroyed or lost , the City upon compliance by the Holder thereof with any applicable provision of law 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 destroyed or lost, 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 , its filing with the City evidence satisfactory to it and compliance with any applicable provisions of law. -6- 5 . 05 . Registration of Transfer . The City will cause to be kept at the office of the Finance Director/Clerk a Bond Register in which , subject to such reasonable regulations as it may prescribe , the City shall provide for the registration or transfer of ownership of the Bond . The Bond shall be transferable upon the books of the City by the Holder thereof in person or by its attorney duly authorized in writing , upon surrender of the Bond together with a written instrument of . transfer satisfactory to the Finance Director/Clerk , duly executed by the Holder thereof or its duly authorized attorney. Upon such transfer the Finance Director/Clerk shall note the date of registration and the name and address of the new Holder on the books of the City and in the registration blank appearing on such Bond . Alternatively, the City shall , at the request and expense of the Holder , issue a new bond or bonds , in 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 installments payable there,inder , and registered in the name of the Holder or such transferee as may be designated by the Holder . The City may deem and treat the person in whose name the Bond is last registered upon the books of the City with such registration noted on the Bond as the absolute owner thereof , whether or not overdue , for the purpose of receiving payment of or on account of the principal balance , prepayment price or interest and for all other purposes , and all such payments so made to the Holder or upon its order shall be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid, and the City shall not be affected by any notice to the contrary . 5 . 06 . Delivery and Use of Proceeds . Prior to delivery of the Bond, the documents referred to below shall be completed and executed in form and substance as approved by the City Attorney . The City shall execute and deliver to the Lender the Bond in the maximum aggregate principal amount of $1 , 900 , 000 , together with the following : ( a ) a duly certified copy of this Resolution; ( b) original , executed counterparts of the Loan Agreement , the Disbursing Agreement and the Pledge Agreement ; and ( c ) such closing certificates , opinions and related documents as are required by the Lender or by Dorsey & Whitney, as bond counsel to the City, and which are approved by the City Attorney. -7- Upon delivery of the Bond and the above items to the Lender , the Lender shall pay the purchase price of the Bond to the Bank , on behalf of the City (which purchase price shall be in an amount equal to the principal amount of the Bond ) . The Bank shall hold such proceeds in accordance with the Disbursing Agreement and disburse to the Borrower such moneys in reimbursement of Project Costs pursuant to the provisions of the Loan Agreement and the Disbursing Agreement, and the proceeds so disbursed shall be deemed to have been disbursed for the benefit of the City . Upon the request of the City, the Borrower shall provide the City with a full accounting of all funds disbursed for Project Costs . Section o . Limitations of the Cit ' s Obligations . Notwithstanding anything contained in the Bond, the Loan Agreement , the Disbursing Agreement, the Pledge Agreement , or any other documents referred to in Section 3 . 03 , the Bond shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation, and shall not be payable from nor charged upon any funds other than the revenues pledged to the payment thereof , and 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 premium, if any, or interest thereon , or to enforce payment thereof against any property of the City other than those rights and interests of the City under the Loan Agreement which have been pledged to the payment thereof , and the Bond shall not constitute a charge, lien or encumbrance , legal or equitable, upon any property of the City other than those rights and interests of the City under the Loan Agreement which have been pledged to the payment thereof . The agreement of the City to perform the covenants and other provisions contained in this resolution or the Bond , the Loan Agreement , the Pledge Agreement or the Disbursing Agreement and the other documents listed in Section 3 . 03 shall be subject at all times to the availability of the revenues furnished by the Borrower sufficient to pay all costs of such performance or the enforcement thereof , and the City shall not be subject to any personal or pecuniary liability thereon other than as stated above . Section 7 . Registration and Certification of Proceedings . 7 . 01 Registration . The Clerk/Finance Director is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of Hennepin County , together with such other information as he shall require , and to obtain from the County Auditor of Hennepin County a certificate that the Bond has been entered in his bond register as required by law . -8- 7 . 02 . Certification of Proceedings . The officers of the City and the County Auditor of Hennepin County are directed to prepare and furnish to the mender , and to the attorneys rendering an opinion as to the _legality of the issuance of the Bon( certified copies of all proceedings and records of the City , and such other affidavits , certificates and information as may be required to show the facts relating to the legality of the Bond as the same appears from the books and records under their custody and control or as otherwise known to them, and all such certified copies , certificates and affidavits , including any heretofore furnished , shall be deemed representations of the City as to the facts stated therein. Section 8 . Election . The City hereby elects that the provisions of Section 103 ( b) ( 6 ) (D) of the Code apply to the Bond and the Mayor and the City Manager are hereby authorized and directed on behalf of the City to execute and file with the Interna? Revenue Service a statement of such election and to take such other action as may be necessary to effectuate such election . Adopted this 17thday of December , 1985 . Mayor Attest: F ' nancp iiector/Clerk The motion for the adoption of the foregoing resolution was duly seconded by Councilmember Redpath and upon vote being taken thereon, the following voted in favor thereof: Richard Anderson, George Bentley, Patricia Pidcock , Paul Redpath and Mayor Gary Peterson and the following voted against: the same : none whereupon the resolution was declared duly passed and adopted . -9- EXHIBIT A UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF EDEN PRAIRIE Commercial Development Revenue Bond (Rialto Investments Project ) US $1 , 900 , 000 . 00 December 17 1985 1 . FOR VALUE RECEIVED, the CITY OF EDEN PRAIRIE , MINNESOTA , a municipal corporation under the laws of the State of Minnesota ( hereinafter called "Issuer" ) , promises to pay, solely from the sources and as hereinafter provided, to Unionmu tual Stock Life Insurance Co . of America, a Maine corporation, or registered assigns (hereinafter called "Holder " ) , at 2211 Congress Street, Portland , Maine 04122 , or at such other place as Holder may designate in writing , the principal sum of One Million Nine Hundred Thousand Dollars ( US $1 , 900 , 000 . 00 ) , together with interest on the unpaid principal balance from the date hereof as hereinafter specified . 2 . From and after the date hereof, interest , computed on the basis of a 360-day year composed of twelve 30-day months, shall be payable at the rate of nine and three-fourths percent ( 9-3/4% ) per annum. Interest only from the date hereof through the last day of December , 1985 shall be payable on the first day of January , 1986 ; provided, however , that if this Bond is dated on or after December 15 , 1985 , the interest which would accrue through December 31 , 1985 shall be payable in advance on the date hereof . Thereafter , the unpaid principal and interest shall be due and payable in monthly payments of Sixteen Thousand Three Hundred Twenty-four and 17/100 Dollars ( US $16 , 324 . 17 ) each , on the first day of each month beginning on the first day of February, 1986 , and continuing to the first day of December , 2015 ( hereinafter called the "Maturity Date" ) , on which date all obligations of Issuer hereunder shall be fully paid , and all remaining principal and accrued interest shall be due and payable in full . 3 . The interest rate of this Bond shall be increased ( but not decreased ) as of the beginning of the sixth loan year ( as hereinafter defined ) to the Index Rate ( as hereinafter defined ) , as determined by Holder as of October 1 , 1990 (hereinafter referred to as the "Determination Date" ) . Holder shall give Issuer and Borrower (as hereinafter defined ) written notice of any such increase in the interest rate on this Bond within ten ( 10 ) days after the Determination Date . Also, as more fully provided in Section 1 . 11 of the Combination Mortgage and Security Agreement and Fixture Financing Statement hereinafter referred to , Holder ' s consent to certain sales , assignments , encumbrances or other dispositions of title to the mor -:gaged property, or to certain transfers of ownership interests in the mortgagor, may be required , and in such cases where Holder ' s consent is required , Holder may condition its consent upon an increase in the interest rate on this Bond to the Index Rate . Upon and after any such change in interest rate, the amount of each monthly payment hereunder shall be increased to an amount sufficient to amortize the then unpaid principal balance of this Bond in equal monthly payments by the Maturity Date . Index Rate shall mean the rate of interest per annum equal to 110% of the average of the Bond Buyer 30-year Index of 25 Revenue Bonds as published weekly in "The Bond Buyer " for the four weeks prior to the Determination Date, or , in the case of an increase in the interest rate on this Bond imposed as a condition to Holder ' s consent to certain actions referred to above , the date on which written notice of such increase is given by Holder to Issuer and to Borrower ( or , if such index is no longer published , a similar or comparable index selected by Holder ) . In the case of an increase in the interest rate on this Bond imposed as a condition to Holder ' s consent to certain actions referred to above, during the three ( 3 ) month period following Issuer ' s and Borrower ' s receipt of notice of any such increase in interest rate, Issuer shall have the right to prepay this Bond in full without prepayment premium . The provisions of this paragraph shall be self-executing without the need for any modification or amendment to this Bond; provided , however , Holder may, at its sole option, require that Iss,ier and/or Borrower execute or provide documents confirming any adjustment in the interest rate , including without limiting the generality of the foregoing , at the expense of Borrower , endorsements to the title insurance policy and/or opinions of counsel satisfactory to Holder . 4 . At the option of Holder exercisable at any time during the term of this Bond , payments due under this Bond may be required to be paid by wire transfer or other immediately available funds satisfactory to Holder . 5 . If any payment under this Bond is not paid by the fifth ( 5th ) day of the calendar month, then Issuer shall pay to Holder a late charge of five percent ( 5% ) of such payment . If any payment under this Bond is not paid by the fifteenth ( 15th) -2- day of the calendar month, then the entire principal balance of this Bond shall bear interest from the due date of such late payment until such late payment is paid at a rate of five percent ( 5% ) per annum in excess of the interest rate then applicable hereunder . The late charge and excess interest shall be due and payable immediately upon demand. 6 . From and after the date hereof, Issuer shall not have any right , except as otherwise specifically provided , to prepay all or a portion of the principal balance of this Bond until ten ( 10 ) loan years ( a "loan year " being for purposes of this Bond each successive twelve ( 12 ) month period beginning with the first day of January, 1986 ) have elapsed . Commencing with the eleventh ( llth ; loan year , on any payment date thereafter and with two ( 2 ) months ' prior written notice to the Holder hereof , additional payments may be made to be credited to principal in the inverse order of maturity. Any prepaid amounts specified in such prior written notice together with the applicable prepayment premium shall become due and payable at the time provided in said notice. In the event of such prepayment, either in full or in part, a premium of five percent ( 5% ) of the amount so prepaid shall be charged during the eleventh ( llth ) loan year . Such premium shall decrease one-half of one percent ( 1/2% ) per loan year thereafter until a premium of one percent ( 1% ) is reached , which premium s'.iall continue until the Maturity Date . Such premium shall also be payable if the loan is repaid following an acceleration after default, provided that if the principal sum is so repaid prior to the expiration of the tenth ( loth) loan year , the premium payable in respect thereof shall be an amount equal to the greater of ( a ) ten percent ( 10% ) of the principal sum repaid , or ( b) an amount necessary to ensure Holder an internal rate of return on the principal sum repaid equal to the current interest rate on this Bond at the time of prepayment, assuming the total amount received by Holder is invested in AAA municipal bonds selected by Holder and maturing at or near the Maturity Date_ There shall be no prepayment premium payable if the principal sum is prepaid with casualty insurance proceeds or condemnation awards. 7 . Notwithstanding the foregoing, upon six ( 6 ) months ' written notice to Issuer , Holder shall , at its sole option, have the right to call for payment in full of the principal balance of this Bond plus accrued interest, with no prepayment premium, at the end of the tenth, fifteenth, twentieth and twenty-fifth ( loth , 15th, 20th and 25th ) loan years . Under no circumstances shall this paragraph be construed to snake this Bond one which is payable on demand except after such demand has been made and such six ( 6 ) months ' notice period expired. -3- 8 . If Holder receives notice of a Determination of Taxability ( as hereinafter defined ) , then the rate of interest then payable under this Bond shall automatically be increased by two and one-half percent ( 2-1/2% ) per annum ( but in any event to a rate not less than 12-1/4% per annum) , effective as of the date of receipt by Holder of such notice, and the monthly payments required hereunder shall be increased , effective as of the first day of the calendar month following such date of receipt , to an amount sufficient to amortize the then unpaid principal balance of this Bond , together with interest as increased in accordance with the provisions of this paragraph , in equal monthly payments by the Maturity Date . As soon as practicable after its receipt of notice of a Determination of Taxability , Holder shall notify in writing Issuer and Borrower ( as hereinafter defined ) of its receipt thereof and of the consequent increase in interest rate and monthly payments required hereunder . In addition, Holder may, at its option , at any time after receipt of notice of a Determination of Taxability , declare the unpaid principal balance of this Bond , together with accrued interest thereon and any other indebtedness due hereunder , due and payable in full, upon at least six ( 6 ) months ' prior wr.• itten notice to Issuer and Borrower , and Issuer shall pav the same to Holder on the date specified in said notice , plus a prepayment premium equal to nine and three-fourths percent ( 9-3/4% ) of such unpaid principal balance, if such payment occurs prior to the eleventh ( llth ) loan year , or the prepayment premium that would be payable by Issuer hereunder if such payment occurs during or after the eleventh ( llth ) loan year ; provided , however , that Holder may not exercise such call option if ( a ) the Determination of Taxation is not caused by or due to any act or omission of. the Borrower or any tenant of, or other person or party interested in , the Project ( as hereinafter defined ) , and ( b ) within. sixty ( 60 ) days after Borrower ' s receipt of Holder ' s notice of acceleration, Borrower either prepays the principal amount of the Bond equal to , or delivers to Lender , and thereafter until the Maturity Date maintains for the benefit of Lender , an irrevocable, non-documentary letter of credit issued by a bank acceptable to Holder in an amount equal to , the amount by which Holder would reduce the loan evidenced by this Bond, assuming interest at the interest rate per annum as increased in accordance with the provisions of this paragraph , to achieve 1 . 2 debt service coverage. In addition to the other amounts set forth in this paragraph and within thirty ( 30 ) days of receipt of a notice setting forth such amounts, Issuer shall pay to the current and any previous Holder of this Bond the amounts of additional federal , state and local income taxes , including penalties and interest thereon, which such Holder or- Holders estimate they will incur by reason of such Determination of Taxability with respect to their current and -4- past tax years , plus a "gross up" amount equal to all federal , state and local taxes required to be paid by virtue of the receipt_ of payments under this sentence ( calculated at an assumed federal tax rate of 46% and at the maximum state and local statutory rates applicable to the recipient) , and the provisions of this sentence shall survive the payment of this Bond . If the Determination of Taxability is due to an act or omission of the Borrower , the obligation set forth in the immediately preceding sentence shall constitute a personal liability of the Borrower and its general partners . 9 . A "Determination of Taxability" shall mean a determination by the Internal Revenue Service or an opinion of nationally recognized bond counsel selected by Holder that the interest payable on this Bond is includible in whole or in part for federal income tax_ purposes in the gross income of Holder ( other than a Holder who is a substantial user of the Project or a related person, within the meaning of Section 103 ( b) ( 13 ) of the Internal Revenue Code of 1954 , as amended ) , or a statement of such counsel that it is unable to give an opinion that the interest payable on the Bond continues to be excludable for federal income tax purposes from the gross income of Holder ( other than a Holder who is a substantial user of the Project or a related person , within the meaning of Section 103 ( b ) ( 13 ) of the Internal Revenue Code of 1954 , as amended ) . 10 . This Bond is issued pursuant to and in full compliance with the Constitution and laws of the State of Minnesota, including Minnesota Statutes , Chapter 474 , as amended , and a Resolution adopted by the City Council of the Issuer on December 17 , 1985 ( hereinafter called the "Resolution" ) , is issued by Issuer for the purpose of providing funds to be loaned to Rialto Investments , A Minnesota General Partnership ( herein called "Borrower " ) , pursuant to the terms of a Loan Agreement of even date ( hereinafter called the "Loan Agreement" ) to be used to pay the cost of acquiring land and improvements ( herein called the "Project" ) . The Project constitutes a "project" , as defined in Minnesota Statutes , Section 474 . 02 , Subdivision la . As security for this Bond , Issuer has pledged to Holder certain of its rights under the Loan Agreement pursuant to a Pledge Agreement , and Borrower has. given Holder a Combination Mortgage and Security Agreement and Fixture Financing Statement pertaining to the Project and such other security as may have been agreed by Borrower and Holder , and Borrower has also given to Holder in connection herewith an Assignment of Rents, Leases, and Other Benefits , a Letter of Credit Agreement and a Letter of Credit ( all such documents and all other documentation pertaining hereto are hereinafter called the "Bond Documents" ) . -5- 11 . This Bond and the interest and any premium hereon , or any amount payable hereunder , however designated , are payable by the City solely from the revenues and proceeds derived from the Loan 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 proceeds pledged by the City to payment thereof , and do not give rise to a pecuniary liability of the City nor of any of its officers , agents , or 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 or any premium hereon, or any amounts payable hereunder , however designated , or to enforce payment thereof against any property of the City, except the revenues from the Project specifically pledged to the payment thereof . This Bond and the interest payable hereunder , and premium hereon , or any amount payable hereunder , however designated , do not constitute a charge , lien , or encumbrance , legal or equitable , upon any property of the City, ex--ept the revenues from the Project specifically pledged to the payment thereof , 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 Loan Agreement , sufficient to pay all costs of such performance or the enforcement 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 . 12 . It is agreed that time is of the essence in the performance of all obligations hereunder and under the Bond Documents . If Issuer or Borrower shall fail to make any payment hereunder when due , and such failure shall continue for a period of ten ( 10 ) days , or if Issuer or Borrower shall default in the performance or observance of any of the terms , agreements , covenants or conditions contained in the Bond Documents , then , or at any time thereafter , the entire principal balance of this Bond , irrespective of the Maturity Date specified herein, together with the then accrued interest thereon, and to the extent permitted by law, the prepayment premium, shall , at the election of the Holder hereof, and without notice of such election, become immediately due and payable and the entire principal balance with accrued interest thereon shall thereafter until paid bear interest at a rate of five percent ( 5% ) in excess of the interest rate then applicable hereunder . 13 . All makers , endorsers , guarantors and sureties hereof jointly and severally waive presentment, protest, notice of dishonor , and notice of intent to accelerate ; and they also -6— jointly and severally hereby consent to any and all renewals , extensions or modifications of the terms hereof , including the terms or time for payment; and further agree that any such renewal , extension or modification of the terms hereof or time for payment or of the terms of any of the Bond Documents or the release or substitution of any security for the indebtedness evidenced hereby or any other indulgences shall not otherwise affect the liability of any of said parties for the indebtedness evidenced by this Bona . 14 . This Bond shall be the joint and several obligation of all makers, endorsers, guarantors , and sureties , and shall be binding upon them and their successors and assigns; and shall inure to the benefit of the successors and assigns of Holder . All makers , endorsers , guarantors , and sureties hereof agree jointly and severally to pay all costs of collection and of suit and foreclosure, including reasonable attorneys ' fees . 15 . Any forbearance of Holder- in exercising any right or remedy hereunder or under the Bond Documents , or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any right or remedy . The acceptance by Holder of payment of any sum payable hereunder after the due date of such payment shall not be a waiver of Holder ' s right to either require prompt payment when due of all other sums payable hereunder or to declare a default for failure to make prompt payment. 16 . This Bond shall be governed by the laws of the State of Minnesota except to the extent that federal usury law may preempt it . 17 . All agreements between Issuer and Holder are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to Holder for the use , forbearance or detention of the money to be advanced hereunder in accordance with the Bond Documents exceed the highest lawful rate permissible under applicable law, it being the intent of Holder and Issuer in the execution hereof and of the Bond Documents to contract in strict accordance with applicable usury laws . If any obligation under this Bond or under. any Bond Document shall involve transcending the usury limit prescribed by applicable law, then ipso facto the obligation to be fulfilled shall be reduced to such limit , and if from any circumstanc.:e Holder shall receive as interest an amount which would exceed the highest lawful rate allowable under applicable law , such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance due hereunder , without premium or penalty, and not to the payment 7- of interest , or if such excessive interest exceeds the unpaid principal balance , the excess shall be refunded to Issuer . This provision shall control every other provision of all agreements between Issuer and Holder . 18 . As provided in the Resolution, the Issuer will cause to be kept at the office of its Finance Director/Clerk a Bond Register in which , subject to such reasonable regulations as it may prescribe , the Issuer shall provide for the registration or transfer of ownership of this Bond . This Bond is transferable upon the books of the Issuer at the office of its Finance Director/Clerk , by the Holder hereof in person or by its attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the Finance Director/Clerk , duly executed by the I3older or its duly authorized attorney. Upon such transfer the Finance Director/Clerk of the Issuer will note the date of registration and the name and address of the new Holder upon the books of the Issuer and in the registration blank appearing below . Alternatively, the Issuer will at the request of the Holder issue a new bond or bonds in an aggregate principal amount equal to the unpaid principal balance of this Bond, and of like tenor except as to number , principal amount and the amount of the monthly installments payable thereund^r , and registered in t:le name of the registered Holder or such transferee as may be designated by the Holder . The Issuer may deem and treat the person in whose name this Bond is last registered upon the books of the Issuer with such registration noted on the Bond as the absolute owner hereof, whether or not overdue , for the purpose of receiving payment of or on account of the principal balance , redemption price or interest and for all other purposes , and all such payments so made to the Holder or upon its order shall be valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or sums so paid , and the Issuer shall not be affected by any notice to the contrary . 19 . It is hereby certified and recited that all conditions, acts and things required to exist , happen and 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 . 20 . rhis Bond has been issued without registration under state or federal or other securities laws , pursuant to an exemption for such issuance ; and accordingly the Bond may not be assigned or transferred in whole or part , nor may a participation interest in the Bond be given pursuant to any participation agreement , except in accordance with an applicable exemption from such registration requirements or compliance with such securities laws . f -8- IN WITNESS WHEREOF , Issuer has caused this Bond to be duly executed by its duly authorized officers and its corporate seal to be affixed hereto, all as of this 17th day of December , 1985 . CITY OF EDEN PRAIRIE , MINNN-ESOTA AT Sr - By</ r, Its May Fi/nah- Director/Clerk And Its City ages (SEAL ) -9- PROVISIONS AS TO REGISTRATION The ownership of this Bond is registered on the books of the Issuer in the name of the registered holder last noted below. Date of Name and Address of Signature of Registration Registered Holder Finance Director/Clerk December 17 1985 Unionmutual Stock Life a Insurance Co. of America 2211 Congress Street Portland , Maine 04122 -10-