3. Issuance of Revenue Note to St. Hubert Catholic Community
CITY OF
CBANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.mn.us
3
--
-.,.
MEMORANDUM
TO:
Mayor and City Council
FROM:
Greg Sticha, Finance Director
July 23, 2007 rIt6:t ·
DATE:
SUBJ:
Issuance of Revenue Note St. Hubert Catholic Community
BACKGROUND
The City has received a request froIn St. Hllbert Catholic Community, a state
and federal nonprofit corporation, to allow them to use the city's bonding
authority to issue an educational revenue note. "fhe note is in the amount
$6.2 million and is to refinance the remaining 1997 debt used to construct the
new school.
The debt is the sole responsibility of the Obligor (St. Hubert Catholic
Community) and the City will be the issuer, but will have no legal or other
obligation to the debt. St. Hubert's also has the responsibility of paying all the
costs associated with the issuance of the notes. In return for the allowance of
using the City's bonding authority, St. Hubert'.s is.paying a fee of one quarter of
one percent ($15,462.84).
First a public hearing must be conducted on. the sale of the note. Then the City
Council can vote on the actual resolution to allow for the issuance of the revenue
note.
RECOMMENDATION
Staff recommends that we hold the public hearing regarding this item as
required, and then adopt the resolution allowing for the issuance of the revenue
note. Approval of this item requires a simple majority vote of those City
Council members present.
ATTACHMENTS
1.
2.
3.
4.
5.
6.
7.
Resolution .Approving the Issuancean.dSale
Loan Agreement
Mortgage, Security Agreement & Fixture Financing Statement
Letter to Minnesota Dept. of Employmentan.d Economic Development.
Application form
Educational Facilities Revenue. Note, Series 2007
Pledge Agreement
The City of Chanhassen · A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
F:\GregS\Bonding\2007 Bonding\st.huberts council memo.doc
Extract of Minutes of a Meeting of the
City Council of the City of Chanhassen
Pursuant to due call and notice thereof, a regular meeting of the City Council of
the City of Chanhassen was duly held in the City of Chanhassen, Minnesota, on Monday, July
23,2007, at 7:00 o'clock P.M.
The following members were present:
and the following were absent:
During said meeting
introduced the following resolution and moved
its adoption:
RESOLUTION NO.
RESOLUTION APPROVING THE ISSUANCE AND SALE OF THE $6,300,000
EDUCATIONAL FACILITIES REVENUE NOTE, SERIES 2007 AND
AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO
(ST. HUBERT SCHOOL PROJECT)
The motion for the adoption of the foregoing resolution was duly seconded by
Member , and after full discussion thereof and upon vote being
taken thereon, the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
2047513vl
RESOLUTION APPROVING THE ISSUANCE AND SALE OF THE
$6,300,000 EDUCATIONAL FACILITIES REVENUE NOTE, SERIES 2007
AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO
(ST. HUBERT SCHOOL PROJECT)
WHEREAS,
(a) Minnesota Statutes, Sections 469.152 to 469.1651, as amended (the "Act)
authorizes cities to issue revenue bonds to finance industrial development projects to promote the
welfare of the state by the active development of economically sound industry and commerce to
meet the needs of an increasing population and the need for development of land use which will
provide an adequate tax base to finance the increasing cost of governmental services and access
to employment opportunities for such population;
(b) Factors necessitating the active promotion and development of
economically sound industry and commerce are the increasing concentration of population in the
metropolitan areas and the rapidly rising increase in the amount and cost of governmental
services required to meet the needs of the increased population and the need for development of
land use which will provide an adequate tax base to finance these increased costs and the need
for access to education and employment opportunities for such population;
(c) The City Council of the City of Chanhassen, Minnesota (the "City") has
received from St. Hubert Catholic Community, a Minnesota religious corporation (the
"Borrower"), a proposal that the City assist in financing a Project hereinafter described through
the issuance of a revenue note or obligation (in one or more series) (the "Note"), pursuant to the
Act. The project to be financed by the Note is the refinancing of outstanding debt used to
finance the acquisition, construction and equipping of the St. Hubert School facility located at
8201 Main Street in the City (the "Project"). The Project is owned and operated by the Borrower
(d) The City desires to facilitate the selective development of the community,
promote education for children, retain and improve the tax base and help to provide the range of
services and employment opportunities required by the population; and the Project will assist the
City in achieving those objectives and will enhance the image and reputation of the community;
(e) The City has been advised by representatives of the Borrower that with the
aid of municipal financing, and its resulting low borrowing cost, the Project is economically
more feasible;
(f) No public official of the City has either a direct or indirect financial
interest in the Project nor will any public official either directly or indirectly benefit financially
from the Project.
BE IT RESOLVED by the City Council of the City of Chanhassen, Minnesota
(the "City"), as follows:
2047513vl
2
SECTION 1. LEGAL AUTHORIZATION AND FINDINGS.
1.1 Findings. The City hereby finds, determines and declares as follows:
(a) The City is a political subdivision of the State of Minnesota and is
authorized under the Act to assist the revenue producing project herein referred to, and to
issue and sell the Note, as hereinafter defined, for the purpose, in the manner and upon
the terms and conditions set forth in the Act and in this Resolution.
(b) As required by the Act and Section 147 (t) of the Internal Revenue Code of
1986, as amended (the "Code"), the City has, on this same date, held a public hearing on
the issuance of one or more revenue notes to finance the Project.
(c) On the basis of information available to the City it appears, and the City
hereby finds, that the Project constitutes properties, real and personal, used or useful in
connection with a revenue producing enterprise within the meaning of Subdivision 2(b)
of Section 469.153 of the Act; that the availability of financing under the Act and the
willingness of the City to furnish the financing will be a substantial inducement to the
Borrower to undertake the Project, and that the effect of the Project, if undertaken, will be
to encourage the development of economically sound industry and commerce, to assist in
the prevention of the emergence of blighted and marginal land, to help prevent chronic
unemployment, to help the region retain and improve the tax base, to provide the range of
services and employment opportunities required by the population and to help prevent the
movement of talented and educated persons out of the state and to areas within the state
where their services may not be as effectively used and to promote more intensive
development and use of land within the region.
(d) The issuance and sale of its approximately $6,300,000 Educational
Facilities Revenue Note, Series 2007 (St. Hubert School Project) (the "Note") by the
City, pursuant to the Act, is in the best interest of the City, and the City hereby
determines to issue the Note and to sell the Note to KleinBank (the "Lender"), as
provided herein. The City will loan the proceeds of the Note (the "Loan") to the
Borrower in order to finance the Project.
(e) Pursuant to a Loan Agreement (the "Loan Agreement") to be entered into
between the City and the Borrower, the Borrower has agreed to repay the Note in
specified amounts and at specified times sufficient to pay in full when due the principal
of, premium, if any, and interest on the Note. In addition, the Loan Agreement contains
provisions relating to the maintenance and operation of the Project, indemnification,
insurance, and other agreements and covenants which are required or permitted by the
Act and which the City and the Borrower deem necessary or desirable for the financing
of the Project. A draft of the Loan Agreement has been submitted to the City Council.
(t) Pursuant to a Pledge Agreement to be entered into between the City and
the Lender, the City has pledged and granted a security interest in all of its rights, title,
and interest in the Loan Agreement to the Lender (except for certain rights of
2047513vl
3
indemnification and to reimbursement for certain costs and expenses). A draft of the
Pledge Agreement has been submitted to the City Council.
(g) Pursuant to a Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement (the "Mortgage") to be executed by the
Borrower in favor of the Lender, the Borrower has secured payment of amounts due
under the Loan Agreement and Note by granting to the Lender a mortgage and security
interest in the property described therein. A draft of the Mortgage has been submitted to
the City Council.
(h) The Note will be a special limited obligation of the City. The Note shall
not be payable from or charged upon any funds other than the revenues pledged to the
payment thereof, nor shall the City be subject to any liability thereon. No holder of the
Note shall ever have the right to compel any exercise of the taxing power of the City to
pay the Note or the interest thereon, nor to enforce payment thereof against any property
of the City. The Note shall not constitute a debt of the City within the meaning of any
constitutional or statutory limitation.
(i) It is desirable, feas~ble and consistent with the objects and purposes of the
Act to issue the Note, for the purpose of financing the costs of the Project.
(1) Nothing in this resolution or the documents prepared pursuant hereto shall
authorize the expenditure of any municipal funds on the Project other than the revenues
derived from the Project or otherwise granted to the City for this purpose. The Note shall
not constitute a charge, lien or encumbrance, legal or equitable, upon any property or
funds of the City except the revenue and proceeds pledged to the payment thereof, nor
shall the City be subject to any liability thereon. The holder of the Note shall never have
the right to compel any exercise of the taxing power of the City to pay the outstanding
principal on the Note or the interest thereon, or to enforce payment thereon against any
property of the City, except such property as may be expressly pledged for the security of
the Note. The Note shall recite in substance that the Note, including the interest thereon,
are payable solely from the revenue derived from the Project and pledged to the payment
thereof. The Note shall not constitute a debt of the City within the meaning of any
constitutional or statutory limitation.
1.2 Authorization and Ratification of Proiect. The City has heretofore and does
hereby authorize the Borrower, in accordance with the provisions of the Act and subject to the
terms and conditions imposed by the Lender, to provide for the acquisition, construction and
equipping of the Project by such means as shall be available to the Borrower and in the manner
determined by the Borrower, and without advertisement for bids as may be required for the
construction, acquisition and equipping of other municipal facilities; and the City hereby ratifies,
affirms, and approves all actions heretofore taken by the Borrower consistent with and in
anticipation of such authority.
SECTION 2. THE NOTE.
2047513vl
4
2.1 Authorized Amount and Form of Note. The Note issued pursuant to this
Resolution shall be in substantially the form submitted to the City Council with such appropriate
variations, omissions and insertions as are permitted or required by this Resolution, and in
accordance with the further provisions hereof; and the total aggregate principal amount of the
Note that may be outstanding hereunder is expressly limited to $6,300,000, unless a duplicate
Note is issued pursuant to Section 2.7.
2.2 The Note. The Note shall be dated as of the date of delivery to the Lender, shall
be payable at the times and in the manner, shall bear interest at the rate, and shall be subject to
such other terms and conditions as are set forth therein.
2.3 Execution. The Note shall be executed on behalf of the City by the signatures of
its Mayor and Manager and shall be sealed with the seal of the City; provided that the seal may
be intentionally omitted as provided by law. In case any officer whose signature shall appear on
the Note shall cease to be such officer before the delivery of the Note, such signature shall
nevertheless be valid and sufficient for all purposes, the same as if had remained in office until
delivery. In the event of the absence or disability of the Mayor or the Manager such officers of
the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act
or authorization of the City Council execute and deliver the Note.
2.4 Delivery of Initial Note. Before delivery of the Note there shall be filed with the
Lender (except to the extent waived by the Lender) the following items:
(1) an executed copy of each of the following documents:
(a) the Loan Agreement;
(b) the Pledge Agreement;
(c) the Mortgage;
(2) an opinion of Counsel for the Borrower as prescribed by the Lender and
Bond Counsel;
(3) the opinion of Bond Counsel as to the validity and tax exempt status of the
Note;
(4) a 501(c)(3) determination letter from the Internal Revenue Service
evidencing that the Borrower is exempt from income taxation under Section 501(c)(3) of
the Code;
(5) such other documents and opinions as Bond Counsel may reasonably
require for purposes of rendering its opinion required in subsection (3) above or that the
Lender may reasonably require for the closing.
2.5 Disposition of Note Proceeds. Upon delivery of the Note to Lender, the Lender
shall, on behalf of the City, disburse the proceeds of the Note for payment of Project Costs in
accordance with the terms of the Loan Agreement.
2047513vl
5
2.6 Registration of Transfer. The City will cause to be kept at the office of the City
Manager a Note Register in which, subject to such reasonable regulations as it may prescribe, the
City shall provide for the registration of transfers of ownership of the Note. The Note shall be
initially registered in the name of the Lender and shall be transferable upon the Note Register by
the Lender in person or by its agent duly authorized in writing, upon surrender of the Note
together with a written instrument of transfer satisfactory to the City Manager, duly executed by
the Lender or its duly authorized agent. The following form of assignment shall be sufficient for
said purpose.
For value received hereby sells, assigns and transfers unto
the within Note of the City of Chanhassen, Minnesota, and
does hereby irrevocably constitute and appoint attorney to
transfer said Note on the books of said City with full power of substitution in the
premises. The undersigned certifies that the transfer is made in accordance with
the provisions of Section 2.9 of the Resolution authorizing the issuance of the
Note.
Dated:
Registered Owner
Upon such transfer the City Manager shall note the date of registration and the name and address
of the new Lender in the Note Register and in the registration blank appearing on the Note.
2.7 Mutilated" Lost or Destroyed Note. In case any Note issued hereunder shall
become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to
be executed and delivered, a new Note of like outstanding principal amount, number and tenor in
exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in
substitution for such Note destroyed or lost, upon the Lender's paying the reasonable expenses
and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the
filing with the City of evidence satisfactory to the City with indemnity satisfactory to it. If the
mutilated, destroyed or lost Note has already matured or been called for redemption in
accordance with its terms it shall not be necessary to issue a new Note prior to payment.
2.8 Ownership of Note. The City may deem and treat the person in whose name the
Note is last registered in the Note Register and by notation on the Note whether or not such Note
shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or
on account of the Principal Balance, redemption price or interest and for all other purposes
whatsoever, and the City shall not be affected by any notice to the contrary.
2.9 Limitation on Note Transfers. The Note has been issued without registration
under state or other securities laws, pursuant to an exemption for such issuance; and accordingly
the Note may not be assigned or transferred in whole or part, nor may a participation interest in
the Note be given pursuant to any participation agreement, except (i) in amounts not less than
$100,000, (ii) not more than 35 persons each of whom have knowledge and experience in
financial business matters and that are capable of evaluating the merits and rules of the
2047513vl
6
investment in the Note and are not purchasing for more than one account or with a view to
distributing the Note or their interest therein. Any such sale, assignment or participation shall
also be (i) in full good faith compliance with all securities registration, broker, anti-fraud and
other provisions of the applicable state and federal laws, (ii) with full and accurate disclosure of
all material facts to the prospective purchaser(s) or transferee(s), and (iii) under effective federal
and state registration statements (which neither the City nor the Borrower shall in any way be
obligated to provide) or under exemptions from such registrations.
2.10 Issuance of New Notes. Subject to the provisions of Section 2.9, the City shall, at
the request and expense of the Lender, issue new notes, in aggregate outstanding principal
amount equal to that of the Note surrendered, and of like tenor except as to number, principal
amount, and the amount of the monthly installments payable thereunder, and registered in the
name of the Lender or such transferee as may be designated by the Lender.
SECTION 3. MISCELLANEOUS.
3.1 Severability. If any provision of this Resolution shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction
or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of
any constitution or statute or rule or public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any
one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not
affect the remaining portions of this Resolution or any part thereof.
3.2 Authentication of Transcript. The officers of the City are directed to furnish to
Bond Counsel certified copies of this Resolution and all documents referred to herein, and
affidavits or certificates as to all other matters which are reasonably necessary to evidence the
validity of the Note. All such certified copies, certificates and affidavits, including any
heretofore furnished, shall constitute recitals of the City as to the correctness of all statements
contained therein.
3.3 Authorization to Execute Agreements. The forms of the proposed Loan
Agreement, the Pledge Agreement and the Mortgage are hereby approved in substantially the
form heretofore presented to the City Council, together with such additional details therein as
may be necessary and appropriate and such modifications thereof, deletions therefrom and
additions thereto as may be necessary and appropriate and approved by Bond Counsel prior to
the execution of the documents, and the Mayor and Manager of the City are authorized to
execute the Loan Agreement and the Pledge Agreement in the name of and on behalf of the City
and such other documents as Bond Counsel consider appropriate in connection with the issuance
of the Note. In the event of the absence or disability of the Mayor or the Manager such officers
of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further
act or authorization of the City Council do all things and execute all instruments and documents
required to be done or executed by such absent or disabled officers. The execution of any
instrument by the appropriate officer or officers of the City herein authorized shall be conclusive
evidence of the approval of such documents in accordance with the terms hereof.
2047513vl
7
3.4 Qualified Tax Exempt Obligation. In order to qualify the Note as a "qualified
tax-exempt obligation" within the meaning of Section 265(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code"), the City hereby makes the following factual statements and
representations;
(a) the Note is not treated as a "private activity bond" under Section 265(b)(3)
of the Code;
(b) the City hereby designates the Note as a qualified tax-exempt obligation
for purposes of Section 265(b )(3) of the Code;
(c) the reasonably anticipated amount ,of tax-exempt obligations (other than
obligations described in clause (ii) of Section 265(b)(3)(C) of the Code) which will be
issued by the City (and all entities whose obligations will be aggregated with those of the
City) during the calendar year 2007 will not exceed $10,000,000; and
(d) not more than $10,000,000 of obligations issued by the City during the
calendar year 2007 have been designated for purposes of Section 265(b )(3) of the Code.
2047513vl
8
Adopted by the City council of the City of Chanhassen, Minnesota, this 23rd day
of August, 2007.
Mayor
ATTEST:
City Manager
2047513vl
9
STATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
I, the undersigned, being the duly qualified and acting Manager of the City of
Chanhassen, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of
minutes with the original thereof on file in my office, and that the same is a full, true and
complete transcript of the minutes of a meeting of the City Council duly called and held on the
date therein indicated, insofar as such minutes relate to a resolution authorizing the issuance of a
revenue note.
WITNESS my hand this _ day of August, 2007.
Manager
2047513vl
10
UNITED STATES OF AMERICA
ST ATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
Educational Facilities Revenue Note, Series 2007
(St. Hubert School Project)
$6,185,137
FOR V ALUE RECEIVED the CITY OF CHANHASSEN, Carver and Hennepin
Counties, Minnesota (the "City") hereby promises to pay KLEINBANK, in Chanhassen,
Minnesota, its successors or registered assigns (the "Lender"), from the source and in the manner
hereinafter provided, the principal sum of SIX MILLION ONE HUNDRED EIGHTY-FIVE
THOUSAND ONE HUNDRED THIRTY-SEVEN DOLLARS ($6,185,137), or so much thereof
as remains unpaid from time to time (the "Principal Balance"), with interest thereon from the
date hereof until paid or otherwise discharged as set forth below, in any coin or currency which
at the time or times of payment is legal tender for the payment of public or private debts in the
United States of America, in accordance with the terms hereinafter set forth.
1. Commencing on the date hereof and continuing though August _, 2012
(the "First Adjustment Date") interest shall accrue at the initial rate of 4.59% per annum (the
"Initial Rate").
2. On August _ in the years 2012, 2017 and 2022 (each an "Adjustment
Date"), the interest rate on this Note for interest payable commencing the _ day of the
following month will be adjusted to a rate per annum equal to _ % of the then current rate of
the Treasury Constant Maturities Index for five year obligations as reported by the Federal
Reserve for the preceding month (the "Adjusted Rate"). Except in the event of a Determination
of Taxability, as defined in the Loan Agreement, the annual rate of interest payable hereunder
shall not increase by more than 250 basis points during the term of this Note.
3. Principal and interest on this Note shall be payable in 240 equal monthly
installments on the _ day of each month commencing September _, 2007 and continuing
thereafter until August 23, 2027 (the "Final Maturity Date") in such amounts as are required to
fully amortize the Principal Balance, together with accrued interest thereon at the interest rate
then in effect, over the remaining term of the Note and monthly payments of principal and
interest shall be recomputed as of each Adjustment Date. Payments shall be applied first to
amounts which are neither principal nor interest, next to interest due on the Principal Balance
and thereafter to reduction of the Principal Balance.
4. In any event, the payments hereunder shall be sufficient to pay all
principal and interest due, as such principal and interest becomes due, and to pay any premium
(as defined in the Loan Agreement described below) or service charge, at maturity, upon
redemption, or otherwise. Interest shall be computed on the basis of the actual number of days
elapsed, in a year of 365 or 366 days, as applicable.
2047522vl
5. Principal and interest and premium or service charge, if any, due
hereunder shall be payable at the principal office of the Lender, or at such other place as the
Lender may designate in writing.
6. This Note is issued by the City to provide funds for a project, as defined in
Minnesota Statutes, Section 469.152, consisting of refinancing outstanding debt used to finance
the acquisition, construction and equipping of the St. Hubert School facility located at 8201 Main
Street which is owned and operated by St. Hubert Catholic Community, a Minnesota religious
corporation (the "Borrower") pursuant to a Loan Agreement dated as of August _, 2007 by and
between the City and the Borrower (the "Loan Agreement"), and this Note is further issued
pursuant to and in full compliance with the Constitution and laws of the State of Minnesota,
particularly Minnesota Statutes, Sections 469.152 to 469.1651 and pursuant to a resolution of the
City Council duly adopted on July 23, 2007 (the "Resolution").
7. This Note is secured by a Pledge Agreement of even date herewith
between the City and the Lender (the "Pledge Agreement") and is further secured by a Mortgage,
Security Agreement and Fixture Financing Statement, of even date herewith executed by the
Borrower, as mortgagor, in favor of the Lender, as mortgagee (the "Mortgage").
8. The City, for itself, its successors and assigns, hereby waives demand,
presentment, protest and notice of dishonor; and to the extent permitted by law, the Lender may
extend interest and/or principal of or any service charge or premium due on this Note, including
the Final Maturity Date, or release any part or parts of the property and interest subject to the
Mortgage or to any other security document from the same, all without notice to or consent of
any party liable hereon or thereon and without releasing any such party from such liability and
whether or not as a result thereof the interest on the Note is no longer exempt from the federal or
state income tax. In no event, however, may the Final Maturity Date of the Note be extended
beyond thirty (30) years from the date hereof.
9. This Note may be prepaid in whole, or in part, at the option of the
Borrower, on any monthly payment date, as provided in Section 5.1 of the Loan Agreement, by
paying the principal, interest and without premium or penalty. Notice of any such prepayment
shall be given to the Lender by first-class mail, addressed to the Lender at its registered address,
not less than thirty (30) days prior to the date fixed for prepayment. At the date fixed for
prepayment, funds shall be paid to the Lender at its registered address appearing below. If the
Borrower so requests, and if partial prepayment is in excess of 5.00% of the outstanding
principal balance of this Note on the date of a partial prepayment of this Note, the installments
hereunder will be adjusted to amortize the then outstanding principal amount over the remaining
term of this Note, payable commencing with the next installment due after such prepayment.
10. Upon a Determination of Taxability, as defined in the Loan Agreement
and Mortgage, this Note shall convert to a taxable obligation and the interest rate for interest
payable commencing the _ day of the following month shall be adjusted to an interest rate
per annum equal to the Treasury Constant Maturities Index for Five year obligations as published
in the Federal Reserve Statistical Release H.15 for the nearest business day preceding the
Determination of Taxability plus _ basis points (the "Taxable Rate"). Any interest accruing
from the Date of Taxability which is retroactively due as a result of the interest rate adjustment
2047522vl
2
shall be payable on the _ day of the following month along with regularly scheduled principal
payment and interest accruing from the previous payment date at the Taxable Rate.
11. Any partial prepayment shall be applied first to amounts which are neither
principal nor interest, next to the interest accrued on this Note and finally shall be applied against
the principal portion of the installments due under this Note in inverse order of maturity. The
monthly payments due under Paragraph 3 hereof, shall continue to be due and payable in full
until the entire Principal Balance, accrued interest and any premium due on this Note have been
paid.
12. As provided in the Resolution and subject to certain limitations set forth
therein, this Note is only transferable upon the books of the City at the office of the City
Manager, by the Lender in person or by its agent duly authorized in writing, at the Lender's
expense, upon surrender hereof together with a written instrument of transfer satisfactory to the
City Manager, duly executed by the Lender or its duly authorized agent. Upon such transfer the
City Manager will note the date of registration and the name and address of the new registered
owner in the registration blank appearing below. The City may deem and treat the person in
whose name the Note is last registered upon the books of the City with such registration noted on
the Note, as the absolute owner hereof, whether or not overdue, for the purpose of receiving
payment of or on the account of the Principal Balance, redemption price or interest and for all
other purposes, and all such payments so made to the Lender or upon his order shall be valid and
effective to satisfy and discharge the liability upon the Note to the extent of the sum or sums so
paid, and the City shall not be affected by any notice to the contrary.
13. All of the agreements, conditions, covenants, provisions and stipulations
contained in the Resolution, the Mortgage, the Loan Agreement and the Pledge Agreement are
hereby made a part of this Note to the same extent and with the same force and effect as if they
were fully set forth herein.
14. This Note and interest thereon and any service charge or premium, if any,
due hereunder are payable solely from the revenues and proceeds derived from the Loan
Agreement and the Mortgage and 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 other than
the revenues and proceeds pledged to the payment thereof, and do not give rise to a pecuniary
liability of the City or any of its officers, agents or employees, and no holder of this Note shall
ever have the right to compel any exercise of the taxing power of the City to pay this Note or the
interest thereon, or to enforce payment thereof against any property of the City, and this Note
does not constitute a charge, lien or encumbrance, legal or equitable, 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 Loan Agreement, sufficient to pay
all costs of such performance or the enforcement thereof.
15. If an Event of Default (as that term is defined in the Mortgage and the
Loan Agreement) shall occur, then the Lender shall have the right and option to declare the
Principal Balance and accrued interest thereon, immediately due and payable, whereupon the
same, plus any premiums or service charges, shall be due and payable, but solely from sums
2047522vl
3
made available under the Loan Agreement and the Mortgage. Failure to exercise such option at
any time shall not constitute a waiver of the right to exercise the same at any subsequent time.
16. The remedies of the Lender, as provided herein and in the Mortgage, the
Loan Agreement and the Pledge Agreement, are not exclusive and shall be cumulative and
concurrent and may be pursued singly, successively or together, at the sole discretion of the
Lender, 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.
17. The Lender 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 Lender 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.
18. This Note has been issued without registration under state or federal or
other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may
not be assigned or transferred in whole or part, nor may a participation interest in the Note be
given pursuant to any participation agreement, except in accordance with an applicable
exemption from such registration requirements.
19. The City has designated this Note as a "qualified tax exempt obligation"
pursuant to Section 265(b )(3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things
required to exist to happen and to be performed precedent to or in the issuance of this Note do
exist, have happened and have been performed in regular and due form as required by law.
2047522vl
4
IN WITNESS WHEREOF, the City has caused this Note to be duly executed in
its name by the manual signatures of the Mayor and Manager, the corporate seal having been
intentionally omitted as permitted by law, and has caused this Note to be dated as of August
_, 2007.
CITY OF CHANHASSEN, MINNESOTA
Mayor
Attest:
Manager
2047522vl
5-1
PROVISIONS AS TO REGISTRATION
The ownership of the unpaid Principal Balance of this Note and the interest accruing
thereon is registered on the books of the City of Chanhassen in the name of the holder last noted
below.
Date of
Registration
Name and Address
Registered Owner
Signature of City
Manager
August
, 2007
KleinBank
600 West 78th Street
Chanhassen, MN 55317
2047522vl
5-2
LOAN AGREEMENT
BETWEEN
CITY OF CHANHASSEN , MINNESOTA
AND
ST. HUBERT CATHOLIC COMMUNITY
Dated as of August _, 2007
Except for certain reserved rights, the interest of the City of Chanhassen, Minnesota, in this Loan
Agreement has been pledged and assigned to KleinBank, pursuant to a Pledge Agreement of
even date herewith.
This instrument was drafted by:
BRIGGS AND MORGAN (JSB)
Professional Association
2200 First National Bank Building
St. Paul, Minnesota 55101
2047476vl
TABLE OF CONTENTS
(This Table of Contents is Not a Part of the Loan Agreement,
but is included for convenience only)
Page
ARTICLE 1 DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION ............1
Secti on 1.1 Defi ni ti on s. . . . . ... . . ... .. .. . .. . ... . . . . . . . .... . . ..... . . . .. .. . . . . . . ... ... .... .. . ..... . . . .. . . ... . . . . . . . .. 1
Section 1.2 Rules of Interpretation......................................................................... 3
ARTICLE 2 REPRES ENT A TI 0 N S .................................................................................... 4
Section 2.1 Representations by the City................................................................. 4
Section 2.2 Representations by the Borrower ......................................................... 4
ARTICLE 3 TIm LOAN...................................................................................................... 7
Section 3.1 Amount and Source of Loan ................................................................ 7
Section 3.2 Documents Required Prior to Disbursement of the Loan .................... 7
Section 3.3 Disbursement of the Loan .................................................................... 8
Secti on 3.4 Repa ymen t ........................................................................................... 8
Section 3.5 Borrower's Obligations Unconditional................................................ 8
ARTICLE 4 BORROWER'S COVENANTS ...................................................................... 9
Secti on 4.1 Indemni ty ............................................................................................. 9
Section 4.2 Continuing Existence and Qualification .............................................. 9
Section 4.3 Reports to Governmental Agencies................................................... 10
Section 4.4 Security for the Loan......................................................................... 10
Section 4.5 Preservation of Tax Exemption ......................................................... 10
Section 4.6 Lease or Sale of Project ..................................................................... 13
Section 4.7 Project Operation and Maintenance Expenses................................... 13
Section 4.8 Notification of Changes ..... ..................... ........................................... 13
Section 4.9 Financial Information and Reporting................................................. 14
ARTICLE 5 PREPAYMENT OF LOAN ........................................................................... 15
Section 5.1 Prepayment at Option of Borrower ....................... ....................... ...... 15
ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES ................................................ 16
Section 6.1 Events of Default ...............................................................................16
Section 6.2 Remedies............. .......... ....................... ... ............ ............ ................... 17
Section 6.3 Disposition of Funds .......................................................................... 17
Section 6.4 Manner of Exercise ............................................................................ 17
Section 6.5 Attorneys' Fees and Expenses................................ ....... .................... 18
Secti on 6.6 Effect of Wai ver ................................................................................. 18
ARTICLE 7 GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . · . · . . . . . . . . . . · . . . . . .. 19
Section 7 .1 Notices............................................................................................... 19
Section 7.2 Binding Effect .................................................................................... 19
Section 7.3 Severability ........................................................................................ 19
Section 7.4 Amendments, Changes and Modifications ........................................ 19
Section 7.5 Execution Counterparts............................... 0" 0............0.. 0.......... 0....... 0 19
2047476vl
2047476vl
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7.10
Section 7.11
TABLE OF CONTENTS
(This Table of Contents is Not a Part of the Loan Agreement,
but is included for convenience only)
Page
Limi tati on of City's Liability............................................................. 19
City's Attorneys Fees and Costs ........................................................ 20
Release............................................................................................... 20
Assignment by City and Survivorship of Obligations .......................20
Required Approval s ........................................................................... 21
Termination Upon Retirement of Note .............................................. 21
11
THIS LOAN AGREEMENT dated as of August _, 2007, between the City of
Chanhassen, a Minnesota municipal corporation of the State of Minnesota, called herein the City,
and St. Hubert Catholic Community, a Minnesota religious corporation, called herein the
Borrower,
WITNESSES that the City and the Borrower each in consideration of the
representations, covenants and agreements of the other as set forth herein, mutually represent,
covenant and agree as follows:
ARTICLE 1
DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION
Section 1.1 Definitions. In this Agreement the following terms have the
following respective meanings unless the context hereof clearly requires otherwise:
Act: Minnesota Statutes, Sections 469.152 to 469.1651, as amended;
ADA Indemnification Agreement: the ADA Indemnification Agreement dated the date
hereof and executed by the Borrower in favor of the Lender;
Agreement: this Agreement between the City and the Borrower as the same may from
time to time be amended or supplemented as herein provided;
Bond Counsel: the firm of Briggs and Morgan, Professional Association, of Saint Paul
and Minneapolis, Minnesota, and any opinion of Bond Counsel shall be a written opinion signed
by such Bond Counsel;
Borrower: St. Hubert Catholic Community, a Minnesota religious corporation, its
successors and assigns, and any surviving, resulting or transferee business entity which may
assume its obligations in accordance with the provisions of this Agreement;
City: the City of Chanhassen, Minnesota, its successors and assigns;
Closing: the date there is physical delivery of the Note to the Lender and payment
therefore;
Code: the Internal Revenue Code of 1986, as amended and the temporary, final or
proposed regulations promulgated thereunder;
Counsel: an attorney designated by or acceptable to the Lender, duly admitted to practice
law before the highest court of any state; an attorney for the Borrower or the City may be eligible
for appointment as Counsel;
Date of Taxability: this term shall have the meaning ascribed to it in Section 4.5(2)
hereof;
2047476vl
Determination of Taxability: this term shall have the meaning ascribed to it in Section
4.5(2) hereof;
Event of Default: any of the events described in Section 6.1 hereof;
GAAP: generally accepted accounting principles;
Hazardous Waste Indemnification: the Hazardous Waste Indemnification dated the date
hereof and executed by the Borrower in favor of the Lender;
Issuance Expenses: shall mean any and all costs and expenses relating to the issuance,
sale and delivery of the Note, including, but not limited to, any fees of the Lender, all fees and
expenses of legal counsel, financial consultants, feasibility consultants and accountants, any fee
to be paid to the Issuer, the preparation and printing of this Loan Agreement, the Mortgage, the
Resolution, the Pledge Agreement, the Note and all other related documents, and all other
expenses relating to the issuance, sale and delivery of the Note and any other costs which are
treated as "issuance costs" within the meaning of Section 147(g) of the Code;
Land: the real property and any other easements and rights described in Exhibits A and B
to the Mortgage;
Lender: KleinBank, a Minnesota state banking corporation, in Chanhassen, Minnesota,
its successors and assigns;
Loan: the loan of Note proceeds from the City to the Borrower described in Section 3.1
of this Agreement;
Mortgage: the Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Financing Statement dated as of August _, 2007, between the Borrower, as mortgagor,
and the Lender, as mortgagee;
Note: the $6,185,137 Educational Facilities Revenue Note, Series 2007 (St. Hubert
School Project), to be issued by the City pursuant to the Resolution;
Pledge Agreement: the pledge agreement of even date herewith between the City and the
Lender pledging and assigning the City's interest in the Loan Agreement to the Lender to the
extent provided therein;
Principal Balance: so much of the principal sum on the Note as from time to time and
remains unpaid;
Proiect: refinancing outstanding debt used to finance the acquisition, construction and
equipping of improvements to the St. Hubert School facility located at 8201 Main Street in the
City. The Project specifically does not include any facilities that may be used primarily as a
place of devotional activities, religious worship or sectarian indoctrination, which sectarian
facilities have been financed with other funds available to the Borrower and not from Note
proceeds;
2047476vl
2
Proiect Costs: all direct costs authorized by the Act and paid or incurred by the
Borrower, to refinance the Project; provided, however, that, notwithstanding the foregoing, in no
event shall the term Project Costs include payment of the costs of any portion of the Project that
is designed for use or will be used primarily as a place for devotional activities or religious
worship;
Resolution: the Final Note Resolution of the City, adopted July 23,2007, authorizing the
issuance of the Note together with any supplement or amendment thereto;
State: the State of Minnesota;
Taxable Rate: an interest rate per annum equal to the Treasury Constant Maturities Index
for Five year obligations as reported by the Federal Reserve for the nearest business day
preceding a Determination of Taxability plus _ basis points;
Treasury Regulations: all proposed, temporary or permanent federal Income tax
regulations then in effect and applicable;
Section 1.2 Rules of Interpretation.
(1) This Agreement shall be interpreted in accordance with and governed by the laws
of the State of Minnesota.
(2) The words "herein" and "hereof' and words of similar import, without reference
to any particular section or subdivision, refer to this Agreement as a whole rather than to any
particular section or subdivision hereof.
(3) References herein to any particular section or subdivision hereof are to the section
or subdivision of this instrument as originally executed.
(4) Where the Borrower is permitted or required to do or accomplish any act or thing
hereunder, the City may cause the same to be done or accomplished with the same force and
effect as if done or accomplished by the Borrower.
(5) The Table of Contents and titles of articles and sections herein are for
convenience only and are not a part of this Agreement.
(6) Unless the context hereof clearly requires otherwise, the singular shall include the
plural and vice versa and the masculine shall include the feminine and vice versa.
(7) Articles, sections, subsections and clauses mentioned by number only are those so
numbered which are contained in this Agreement.
(8) References to the Note as "tax exempt" or to the "tax exempt status of the Note"
are to the exclusion of interest on the Note from gross income pursuant to Section 103(a) of the
Code.
2047476vl
3
ARTICLE 2
REPRESENT A TIONS
Section 2.1 Representations by the City. The City makes the following
representations as the basis for its covenants herein:
(1) The City is a duly organized and existing municipal corporation pursuant to the
laws of the State of Minnesota and is authorized to issue the Note to finance Project Costs
pursuant to the Act;
(2) In authorizing the Project the City's purpose is, and in its judgment the effect
thereof will be, to promote the public welfare by: the attraction, encouragement and development
of economically sound industry and commerce so as to prevent, so far as possible, the emergence
of blighted and marginal lands and areas of chronic unemployment and to aid in the
redevelopment of areas of existing blight, marginal land and persistent unemployment; the
development of industry to use the available resources of the community, in order to retain the
benefit of the community's existing investment in educational and public service facilities;
halting the movement of talented, 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; providing accessible employment opportunities for residents in the area;
and the expansion of an adequate tax base to finance the increase in the amount and cost of
governmental services;
(3) The issuance and sale of the Note, the execution and delivery of this Agreement
and the Pledge Agreement, and the performance of all covenants and agreements of the City
contained in this Agreement, the Note and the Pledge Agreement, and of all other acts and things
required under the Constitution and laws of the State of Minnesota to make this Agreement, the
Pledge Agreement and Note valid and binding obligations of the City in accordance with their
terms, are authorized by the Act and have been duly authorized by a resolution of the governing
body of the City adopted at a meeting thereof duly called and held on July 23, 2007, by the
affirmative vote of not less than a majority of its members;
(4) Pursuant to the Resolution, the City has authorized and directed the Lender to
disburse the proceeds of the Note directly to the Borrower and such other parties as may be
entitled to payment for Project Costs, upon receipt of such supporting documentation as the
Lender may deem reasonably necessary or as required by this Agreement;
(5) No public official of the City has either a direct or indirect financial interest in
this Agreement nor will any public official either directly or indirectly benefit financially from
this Agreement.
Section 2.2 Representations by the Borrower. The Borrower makes the
following representations as the basis for its covenants herein:
(1) The Borrower is a Minnesota religious corporation duly incorporated and in good
standing under the laws of the State of Minnesota, is duly authorized to conduct its business in
all states where its activities require such authorization, has power to enter into this Agreement,
2047476vl
4
the Hazardous Waste Indemnification, the ADA Indemnification, and the Mortgage and to use
the Project for the purpose set forth in this Agreement and by proper corporate action has
authorized the execution and delivery of this Agreement, the Hazardous Waste Indemnification,
the ADA Indemnification and the Mortgage;
(2) The Borrower is an organization described in Section 501(c)(3) of the Code and is
exempt from tax under Section 501(a) of the Code. The Borrower is not a "private foundation"
as defined in Section 509(a) of the Code. Not more than five percent (5%) of the proceeds of the
Note will be used, directly or indirectly, to finance or refinance property used in an unrelated
trade or business of the Borrower determined by applying Section 513(c) of the Code or in the
trade or business of any person other than an organization described in Section 501(c)(3) of the
Code. There is no action, proceeding or investigation pending or threatened by the Internal
Revenue Service or authorities of the State of Minnesota which, if adversely determined, might
result in a modification of the status of the Borrower as a Section 501(c)(3) corporation;
(3) The execution and delivery of this Agreement, the Hazardous Waste
Indemnification, the ADA Indemnification and the Mortgage, the consummation of the
transactions contemplated thereby, and the fulfillment of the terms and conditions thereof do not
and will not conflict with or result in a breach of any of the terms or conditions of the Borrower's
articles of incorporation, its bylaws, any restriction or any agreement or instrument to which the
Borrower or any of its partners is now a party or by which it is bound or to which any property of
the Borrower is subject, and do not and will not constitute a default under any of the foregoing or
a violation of any order, decree, statute, rule or regulation of any court or of any state or federal
regulatory body having jurisdiction over the Borrower or its properties, including the Project,
and do not and will not result in the creation or imposition of any lien, charge or encumbrance of
any nature upon any of the property or assets of the Borrower contrary to the terms of any
instrument or agreement to which the Borrower is a party or by which it is bound;
(4) As of the date hereof, the use of the Project as designed and operated complies, in
all material respects, with all presently applicable development, pollution control, water
conservation and other laws, regulations, rules and ordinances of the federal government and the
State of Minnesota and the respective agencies thereof and the political subdivisions in which the
Project is located. The Borrower has obtained, or will obtain in a timely manner, all necessary
and material approvals of and licenses, permits, consents and franchises from federal, state,
county, municipal or other governmental authorities having jurisdiction over the Project to
operate the Project and to enter into, execute and perform its obligations under this Agreement
and the Mortgage; and no violation of any local ordinance, laws, regulation or requirement exists
with respect to the Land;
(5) The proceeds of the Note, together with any other funds to be contributed to the
Project by the Borrower or otherwise in accordance with this Agreement, will be sufficient to
pay the cost of the Project in a manner suitable for use as educational facilities, and all costs and
expenses incidental thereto, and the proceeds of the Note will be used only for the purposes
contemplated hereby and allowable under the Act;
2047476vl
5
(6) Comparable private financing for the Project was not found by the Borrower to be
reasonably available, and the Project is economically more feasible with the availability of the
financing herein authorized;
(7) The Borrower is not in the trade or business of selling properties such as the
Project and is constructing the Project for investment purposes only or otherwise for use by the
Borrower in its trade or business, and therefore the Borrower has no intention now or in the
foreseeable future to voluntarily sell, surrender or otherwise transfer, in whole or part, its interest
in the Project;
(8) There are no actions, suits, or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any property of the Borrower in any
court or before any federal, state, municipal or other governmental agency, which, if decided
adversely to the Borrower would have a material adverse effect upon the Borrower or upon the
business or properties of the Borrower; and the Borrower is not in default with respect to any
order of any court or governmental agency;
(9) The Borrower is not in default in the payment of the principal of or interest on any
indebtedness for borrowed money nor in default under any instrument or agreement under and
subject to which any indebtedness for borrowed money has been issued;
(10) The Borrower has filed all federal and state income tax returns which, to the
knowledge of the officers of the Borrower, are required to be filed and has paid all taxes shown
on said returns and all assessments and governmental charges received by the Borrower to the
extent that they have become due;
(11) No public official of the City has either a direct or indirect financial interest in
this Agreement nor will any public official either directly or indirectly benefit financially from
this Agreement; and
(12) The Borrower has approved the terms and conditions of the Note.
(13) The Borrower intends to operate the Project as a private grade school until the
date on which the entire principal balance of the Note has been fully paid and is no longer
outstanding.
(14) Denominational adherence IS not required for admission as a student to the
Borrower's grade school facility.
(15) All courses taught in the Project facilities are taught in compliance with general
academic standards.
(16) No portion of the facilities being financed with proceeds of the Note is or shall be
used primarily as a place for devotional activities, religious worship or sectarian indoctrination,
which sectarian facilities have been financed with other funds available to the Borrower and not
from proceeds of the Note.
2047476vl
6
ARTICLE 3
THE LOAN
Section 3.1 Amount and Source of Loan. The City has authorized the issuance
of the Note in the principal amount of $6,185,137 to provide funds to the Borrower for its use in
refinancing the Project. The City agrees to lend the Borrower, upon the terms and conditions set
forth herein, the proceeds received from the Note by causing such sums to be advanced to the
Borrower and disbursed at Closing.
Section 3.2 Documents Required Prior to Disbursement of the Loan. Prior to
any advance of Note proceeds, the Borrower shall deliver to the Lender the following:
(1) The Note.
(2) The Loan Agreement.
(3) The Pledge Agreement.
(4) The Mortgage.
(5) The Hazardous Waste Indemnification.
(6) The ADA Indemnification Agreement.
(7) Opinion of Briggs and Morgan, Professional Association, to the effect that the
City has duly authorized the Note and that the interest thereon is exempt from federal income
taxation and that the Loan Agreement and the Pledge Agreement are valid instruments legally
binding on and enforceable against the City in accordance with their terms, and subject to other
conditions acceptable to the Lender.
(8) An appraisal in a form and substance reasonably acceptable to the Lender and
conforming to the requirements of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA) (the "Appraisal") for the Real Estate and the Project, as
built, establishing a value of at least 75% of the Note.
(9) A commitment for a mortgagee's policy of title insurance in an amount equal to
the amount of the Note; in form satisfactory to Lender; showing good and marketable title to all
the Mortgaged Property in Borrower; free and clear of all defects, encumbrances, security
interest restrictions and easements, other than those acceptable to Lender on the day of the first
disbursement hereunder; and specifically insuring against mechanic's liens, rights of parties in
possession and boundary line matters.
(10) Either a letter from a governmental authority acceptable to the Lender or an
attorney's opinion that: (a) all applicable zoning ordinances and regulations, including without
limitation set-back requirements, percentage coverage requirements, height requirements,
minimum and maximum area requirements, number of room requirements, landscaping
2047476vl
7
requirements, and parking requirements have been met; and (b) the zoning of the Land permits
the operation of the Project, as built by the Borrower.
(11) An acceptable Phase I Environmental Assessment Report for the Real Estate
(12) Recent ALTA/ACSM Surveyor equivalent documentation acceptable to the
Lender;
(13) Certificates of insurance coverage in forms satisfactory to the Lender, otherwise
complying with the requirements of the Mortgage showing the standard mortgagee and lender's
loss payable endorsements in favor of the Lender.
(14) Such other assignments, security agreements, guaranties, financing statements,
terminations of existing financing statements, satisfactions of mortgages, indemnities, opinions,
and other instruments evidencing or securing the Loan as may be required by the Lender.
Section 3.3 Disbursement of the Loan. Pursuant to the Loan Agreement and
the Act, the City has authorized the Borrower to provide directly for the financing of the Project
in such manner as determined by the Borrower and hereby authorizes the Lender to advance the
proceeds of the Note directly to the Borrower to refinance the Project. $ of the
proceeds of the Note will be disbursed on the date hereof for Issuance Costs and $
of the proceeds of the Note will be disbursed on the date hereof by the Lender, together with
$ of Borrower funds, to pay the Borrower's existing debt.
Notwithstanding any other provision hereof, no proceeds of the Note shall be applied to
payment of the costs of any portion of the Project that is designed for use or will be used
primarily as a place for devotional activities or religious education or worship.
Section 3.4 Repavment. Subject to the prepayment provisions set forth in the
Note, the Borrower agrees to repay the Loan by making all payments of principal, interest and
any premium, penalty or charge that are required to be made by the City under the Note at the
times and in the amounts provided therein. All payments shall be made directly to the Lender at
its principal office for the account of the City. The Borrower represents and covenants that the
source of payment of the Note is from revenues derived from the operation of the Project.
Section 3.5 Borrower's Obligations Unconditional. All payments required of
the Borrower hereunder shall be paid without notice or demand and without setoff, counterclaim,
abatement, deduction or defense. The Borrower will not suspend or discontinue any payments,
and will perform and observe all of its other agreements in this Agreement, and, except as
expressly permitted herein, will not terminate this Agreement for any cause, including but not
limited to any acts or circumstances that may constitute failure of consideration, destruction or
damage to the Project, eviction by paramount title, commercial frustration of purpose,
bankruptcy or insolvency of the City or the Lender, change in the tax or other laws or
administrative rulings or actions of the United States of America or of the State of Minnesota or
any political subdivision thereof, or failure of the City to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of or connected with
this Agreement.
2047476vl
8
ARTICLE 4
BORROWER'S COVENANTS
Section 4.1 Indemnity. The Borrower will, to the extent permitted by law, pay,
and will protect, indemnify and save the City, its officers, agents and employees harmless from
and against all liabilities, losses, damages, costs, expenses (including attorneys' fees and
expenses), causes of action, suits, claims, demands and judgments of any nature arising from:
(1) any injury to or death of any person or damage to property in or upon the Project
or growing out of or connected with the use, non-use, condition or occupancy of the Project or a
part thereof;
(2) violation of any agreement or condition of this Agreement, except by the City or
its assignee;
(3) violation of any contract, agreement or restriction by the Borrower relating to the
Project;
(4) violation of any law, ordinance or regulation affecting the Project or a part thereof
or the ownership, occupancy or use thereof, or arising out of this Agreement, the Note or the
transactions contemplated thereby, including any requirements imposed on the Lender as a
financial institution or any disclosure or registration requirements imposed by any federal or
state securities law; and
(5) any statement or information relating to the expenditure of the proceeds of the
Note contained in the non-arbitrage certificate or similar document furnished by the Borrower to
the City which, at the time made, is misleading, untrue or incorrect in any material respect.
Section 4.2 Continuing Existence and Qualification. Throughout the term of
this Agreement the Borrower will remain duly qualified to do business as a nonprofit or religious
corporation in Minnesota, and will continue to operate as an organization described in Section
501(c)(3) of the Code whose income is exempt from taxation under Section 501(a) of the Code,
and will maintain its corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets, and will not consolidate with or merge into another corporation or
other business entity or permit any other corporation or other business entity to consolidate with
or merge into it unless (1) the surviving, resulting or transferee corporation, or other business
entity, as the case may be, shall be a nonprofit or religious corporation operating under the laws
of the United States, any state or the District of Columbia, and an organization described in
Section 501(c)(3) of the Code (provided the Project will not constitute an unrelated trade or
business within the meaning of Section 513(e) of the Code) or a governmental unit under Section
145 of the Code; (2) the surviving, resulting or transferee corporation, or other business entity, as
the case may be, if other than the Borrower, assumes in writing all of the obligations of the
Borrower under this Agreement and the Mortgage and shall deliver that instrument to the
Lender, (3) the surviving, resulting or transferee corporation or other business entity, as the case
may be, is duly qualified to do business in Minnesota and (4) the Lender consents in writing. At
least 10 days before any such merger, transfer or consolidation becomes effective, the Borrower
2047476vl
9
shall to the extent permitted by law give the Lender written notice of such merger, consolidation
or transfer. Every surviving, resulting or transferee corporation and other entity referred to in
this Section 4.2 shall be bound by all of the covenants and agreements of the Borrower herein
with respect to any further consolidation, merger, sale or transfer.
Section 4.3 Reports to Governmental Agencies. The Borrower will furnish to
agencies of the State of Minnesota, such periodic reports or statements as are required under the
Act, or as they may otherwise reasonably require of the City or the Borrower throughout the term
of this Agreement in connection with the transaction contemplated herein. Copies of such
reports will be provided to the City and the Lender.
Section 4.4 Security for the Loan. As additional security for the Lender, and to
induce the City to issue and deliver the Note, the Borrower agrees to execute and deliver the
Mortgage and agrees to meet all its obligations under the Mortgage, which document shall
remain in effect until all payments required hereunder have been made; and the Borrower will
cause to be recorded and filed the Mortgage, financing statements and such other documents
requested by Bond Counsel, in such places and in such manner as Bond Counsel deems
necessary or desirable to perfect or protect the security interest of the Lender in and to the
Project and other collateral referred to in said documents.
Section 4.5 Preservation of Tax Exemption.
(1) The Borrower covenants and agrees that, in order to assure that the interest on the
Note shall at all times be free from federal income taxation, the Borrower represents and
covenants with the City and the Lender that it will comply with the applicable provisions of
Section 103 and Section 141 through 150 of the Code and as follows:
(a) The Project is and will continue to be owned and operated by the
Borrower and no portion of the Project is or will be managed by anyone other than the Borrower
or a governmental entity or an organization described in Section 501(c)(3) of the Code or
pursuant to a "qualified management agreement" within the meaning of all pertinent provisions
of law, including all relevant provisions of the Code and regulations, rulings and revenue
procedures thereunder, including Revenue Procedure 97-13.
(b) The Project will not be used by the Borrower in an unrelated trade or
business, determined by the application of Section 513(a) of the Code except to an extent which
does not adversely affect the tax-exempt status of the interest on the Note.
(c) No more than five percent (5%) of the net proceeds of the Note are to be
used for any private business use as defined in Section 141(b)(6) of the Code.
(d) The payment of the principal of, or interest on, no more than five percent
(50/0) of the net proceeds of the Note is (under the terms of the Note or any underlying
arrangement) directly or indirectly (a) secured by any interest in (i) property used or to be used
for a private business use, or (ii) payments in respect of such property, or (b) to be derived from
payments (whether or not to the City) in respect of property, or borrowed money, used or to be
used for a private business use.
2047476vl
10
(e) The aggregate authorized face amount of the Note (when increased by any
outstanding tax -exempt "qualified 501 (c )(3) bonds" issued prior to 1997, other than "qualified
hospital bonds", of the Borrower, or any organization with which the Borrower is under common
management or control and is a test-period beneficiary determined in accordance with Section
145(b) of the Code) does not exceed $150,000,000 or, alternatively, at least 95% of the net
proceeds of the Note will be used for capital expenditures.
(f) The weighted average maturity of the Note will not exceed the estimated
economic life of the Project by more than twenty percent (20%), all within the meaning of
Section 147(b) of the Code.
(g) While the Note remains outstanding, no portion of the proceeds of the
Note will be used to provide any airplane, skybox or other private luxury box, any facility
primarily used for gambling, or a store, the principal business of which is the sale of alcoholic
beverages for consumption off premises.
(h) Not more than 2% of the proceeds of the Note will be llsed to finance
Issuance Expenses.
(i) The Borrower agrees it will not use the proceeds of the Note in such a
manner as to cause the Note to be an "arbitrage bond" within the meaning of Section 148 of the
Code and applicable Treasury Regulations. The Borrower shall:
(i) maintain records identifying all "gross proceeds" and "replacement
proceeds" (as defined in Section 148(f)(6)(B) of the Code attributable to the Note, the yield at
which such gross proceeds are invested, any arbitrage profit derived therefrom (earnings in
excess of the yield on the Note) and any earnings derived from the investment of such arbitrage
profit;
(ii) make, or cause to be made as of the end of each fifth bond year,
the annual determinations of the amount, if any, of excess arbitrage required to be paid to the
United States (the "Rebate Amount");
(iii) pay, or cause to be paid, to the United States at least once every
fifth bond year the amount, if any, which is required to be paid to the United States, including the
last installment which shall be made no later than 60 days after the day on which the Note is paid
in full;
(iv) not invest, or permit to be invested, "gross proceeds" of the Note in
any acquired nonpurpose obligations so as to deflect arbitrage otherwise payable to the United
States as a "prohibited payment" to a third party; and
(v) retain all records of the annual determination of the foregoing
amounts until six (6) years after the Note has been fully paid.
The Borrower agrees that, in order to comply with this paragraph (i), it shall
determine the Rebate Amount within 30 days after each fifth year of the anniversary of the
2047476vl
11
Closing and upon payment in full of the Note; upon request, the Borrower shall furnish the
Lender a certificate showing how such calculation was made.
(j) The Borrower has not leased, sold, assigned, granted or conveyed and will
not lease, sell, assign, grant or convey all or any portion of the Project or any interest therein to
the United States or any agency or instrumentality thereof within the meaning of Section 149(b)
of the Code.
(k) In addition to the Note, no other obligations have been or will be issued
under Section 103 of the Code which are sold at substantially the same time as the Note pursuant
to a common plan of marketing and at substantially the same rate of interest as the Note and
which are payable in whole or part by the Borrower or otherwise have with the Note any
common or pooled security for the payment of debt service thereon, or which are otherwise
treated as the same "issue of obligations" as the Note as described in Treasury Regulations
Section 1.150-( 1)( c)( 1);
(1) No Note proceeds shall be invested in investments which cause the Note
to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the
moneys in such funds exceed, within the meaning of Section 149(b)(3)(B) of the Code, (i)
amounts invested for an initial temporary period until the moneys are needed for the purpose for
which the Note was issued, (ii) investments of a bona fide debt service fund, and (iii)
investments of a reserve which meet the requirement of Section 148(d) of the Code, such excess
moneys shall be invested in only those investments, which are (A) obligations issued by the
United States Treasury, (B) other investments permitted under regulations, or (C) obligations
which are (a) not issued by, or guaranteed by, or insured by, the United States or any agency or
instrumentality thereof or (b) not federally insured deposits or accounts, all within the meaning
of Section 149(b) of the Code; and
(m) Not otherwise use Note proceeds, or take or fail to take any action, the
effect of which would be to impair the exemption of interest on the Note from federal income
taxation.
(2) For the purpose of this Section, a "Determination of Taxability" shall mean the
issuance of a statutory notice of deficiency by the Internal Revenue Service, or a ruling of the
National Office or any District Office of the Internal Revenue Service, or a final decision of a
court of competent jurisdiction, or a change in any applicable federal statute, which holds or
provides in effect that the interest payable on the Note is includible, for federal income tax
purposes under Section 103 of the Code in the gross income of the Lender or any other holder or
prior holder of the Note, if the period, if any, for contest or appeal of such action, ruling or
decision by the Borrower or Lender or any other interested party has expired without any such
contest or appeal having been properly instituted by the Lender, the Borrower or any other
interested party. The expenses of any such contest shall be paid by the party initiating the
contest, and neither the Lender nor the Borrower shall be required to contest or appeal any
Determination of Taxability. The "Date of Taxability" shall mean that point in time, as specified
in the determination, ruling, order, or decision, that the interest payable on the Note becomes
includible in the gross income of the Lender or any other holder or prior holder of the Note, as
the case may be, for federal income tax purposes.
2047476vl
12
(3) If the Borrower receives a Determination of Taxability it will promptly give
notice of such Determination of Taxability to the City and the Lender and the Note shall convert
to a taxable obligation effective as of the Date of Taxability. The interest rate for interest
accruing from the Date of Taxability shall be adjusted to the Taxable Rate and the Borrower
shall pay any interest accruing from the Date of Taxability which is retroactively due as a result
of the interest rate adjustment on the first day of the following month along with regularly
scheduled principal payment and interest accruing from the previous payment date at the Taxable
Rate.
Section 4.6 Lease or Sale of Proiect. The Borrower shall not lease, sell,
conveyor otherwise transfer the Project in whole or part, nor sell the Project in whole or part,
without first securing the written consent of the Lender; provided that in no event shall such
lease, transfer, assignment or sale be permitted if the effect thereof would otherwise be to impair
the validity or the tax exempt status of the Note, nor shall any such transaction release the
Borrower of any of its obligations under this Agreement, unless the assignee-transferee is a
surviving, resulting or transferee entity as permitted under Section 4.2 hereof. The Borrower
shall promptly notify the City of any such sale, transfer, assignment or lease.
Section 4.7 Proiect Operation and Maintenance Expenses. The Borrower shall
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 Project and payable during the term of this Loan Agreement, all in
conformance with the provisions of the Mortgage. The Project shall not be used for purposes
which violate any Federal, State or other laws prohibiting discrimination in access or
employment based on race, creed, sex, handicap, ethnic origin, age or marital status.
The Borrower will not use any Note proceeds to pay any costs of, or attributable to, the
acquisition, construction or equipping of any facilities used primarily for religious instruction or
worship; all such costs will be paid with the Borrower's funds. The Borrower agrees that it will
not use the Project or any part thereof (a) for sectarian instruction or study or primarily as a place
for devotional activities or religious worship or as a facility used primarily in connection with
any part of a program of a school or department of divinity for any religious denomination or the
training of ministers, priests, rabbis or other similar persons in the field of religion or (b) in a
manner which would violate the First Amendment to the Constitution of the United States of
America, including the decisions of the United States Supreme Court interpreting the same, or
any comparable provisions of the Constitution of the State of Minnesota, including the decisions
in the Supreme Court of the State interpreting the same.
Section 4.8 Notification of Changes. The Borrower covenants and agrees that
it will promptly notify the Lender of:
(1) any litigation and of all proceedings before any governmental and regulatory
agency affecting the Borrower of any type which seek a monetary recovery against the Borrower
in excess of $100,000;
2047476vl
13
(2) as promptly as practicable (but in any event not later than 5 business days)
after an officer of the Borrower obtains knowledge of the occurrence of Event of Default under
this Agreement or under any other loan agreement, debenture, note, purchase agreement or any
other agreement providing for the borrowing of money by the Borrower or would constitute an
event of default with the passage of time or the giving of notice, or both, notice of such
occurrence, together with a detailed statement by a responsible officer of the Borrower of the
steps being taken by the Borrower to cure the effect of such event; and
(3) any material adverse change in the operations, business, properties, assets or
conditions, financial or otherwise, of the Borrower.
Section 4.9 Financial Information and Reporting. Except as otherwise stated
in this Agreement, all financial information provided to the Lender shall be compiled using
generally accepted accounting principles consistently applied. During the term of this
Agreement, and afterward until all amounts due under this Agreement are paid in full, unless the
Lender shall otherwise agree in writing, the Borrower agrees to:
(1) Provide the Lender and the City, within 120 days of Borrower's fiscal year end,
annual audited financial statements for Borrower, including a consolidated income statement and
balance sheet with accompanying footnotes, prepared in accordance with GAAP with an
unqualified opinion of an independent certified public accountant of recognizable standing
selected by Borrower and approved by Lender, certified as true and correct by an officer or other
authorized representative of Borrower upon request;
(2) Within 45 days of the end of each calendar quarter, provide the Lender an
unaudited financial statement for Borrower, including a consolidated income statement and
balance sheet, for the preceding calendar quarter.
(3) Provide the Lender with such other information as it may reasonably request, and
permit the Lender or its agent(s) to visit and inspect its properties and examine its books and
records.
2047476vl
14
ARTICLE 5
PREP A YMENT OF LOAN
Section 5.1 Prepayment at Option of Borrower. The Borrower may at its
option prepay the Loan, in whole or in part, on any monthly payment date by paying the
principal, interest and premium, if any, then due. Any partial prepayment shall be applied first to
amounts which are neither principal nor interest, and next to the interest accrued on the Note and
finally shall be applied against the principal portion of the installments due under this Agreement
in inverse order of maturity. At the date fixed for prepayment, funds shall be paid to the Lender
at its registered address appearing below. In the event the Borrower elects to prepay the Loan,
the Borrower shall cause to be given in the name of the City notice of redemption or prepayment
of the Note to the Lender by first-class mail, addressed to the Lender at its registered address, not
less than thirty (30) days prior to the date fixed for prepayment, and shall pay the prepayment
price when due to the Lender. The City hereby authorizes the Borrower to give mailed notice of
prepayment and, if required by law, published notice of prepayment of the Note in the name of
the City, from time to time.
If the Borrower so requests and if partial prepayment is in excess of 5.00% of the
outstanding principal balance of the Note on the date of a partial prepayment of the Note, the
installments thereunder will be adjusted to amortize the then outstanding principal amount over
the remaining term of the Note, payable commencing with the next installment due after such
prepayment.
2047476vl
15
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default. Anyone or more of the following events is an
Event of Default under this Agreement:
(1) If (a) the Borrower shall fail to make any payments required under Section 3.4 of
this Agreement on the date due, or (b) any other payment due under this Agreement on or before
the date that the payment is due and such default continues for ten (10) days after written notice
given to the Borrower by the City or the Lender as provided in the Note.
(2) If the Borrower shall fail to observe and perform any other covenant, condition or
agreement on its part under this Agreement for a period of thirty (30) days after written notice,
specifying such default and requesting that it be remedied, given to the Borrower by the City or
the Lender, unless the Lender shall agree in writing to an extension of such time prior to its
expiration, or for such longer period as may be reasonably necessary to remedy such default
provided that the Borrower is proceeding with reasonable diligence to remedy the same.
(3) If the Borrower shall file a petition in bankruptcy or for reorganization or for an
arrangement pursuant to any present or future federal bankruptcy act or under any similar federal
or state law, shall consent to the entry of an order for relief pursuant to any present or future
federal bankruptcy act or under any similar federal or state law, or shall make an assignment for
the benefit of its creditors or shall admit in writing its inability to pay its debts generally as they
become due, or if a petition or answer proposing the entry of an order for relief of the Borrower
under any present or future federal bankruptcy act or any similar federal or state law shall be
filed in any court and such petition or answer shall not be filed in any court and such petition or
answer shall not be discharged or denied within 90 days after the filing thereof, or a receiver,
trustee or liquidator of the Borrower of all or substantially all of the assets of the Borrower, or of
the Project shall be appointed in any proceeding brought against the Borrower and shall not be
discharged within 60 days after such appointment or if the Borrower shall consent to or
acquiesce in such appointment, or if the estate or interest of the Borrower in the Project or a part
thereof shall be levied upon or attached in any proceeding and such process shall not be vacated
or discharged within 60 days after such levy or attachment; if the Borrower shall be dissolved or
liquidated or shall be merged with or is acquired by another business entity in violation of
Section 4.2.
(4) If the articles of incorporation of the Borrower shall expire or be annulled; or if
the Borrower shall be dissolved or liquidated (other than when a new entity assumes the
obligations of the Borrower under the conditions permitting such action contained in Section
4.2).
(5) If any representation or warranty made by the Borrower herein, or by an officer or
representative of the Borrower in any document or certificate furnished the Lender or the City in
connection herewith or therewith or pursuant hereto or thereto, shall prove at any time to be, in
any material respect, incorrect or misleading as of the date made.
2047476vl
16
(6) If the Borrower shall default or fail to perform any covenant, condition or
agreement on its part under the Mortgage or any other security document securing the Note, and
such failure continues beyond the period set forth in such documents during which the Borrower
may cure the default.
(7) If the Borrower, shall (a) fail to pay any indebtedness for borrowed money or any
interest thereon, when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such indebtedness or (b) fail to perform or
observe any term, covenant, or condition relating to any such indebtedness when required to be
performed or observed, and such failure shall not be waived and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if the effect of such
failure to perform or observe is to accelerate or to permit the acceleration of, with the giving of
notice required, the maturity of such indebtedness; or any such indebtedness shall be declared to
be due and payable or be required to be prepaid (other than the regularly scheduled prepayment)
prior to the stated maturity thereof; unless provision for the payment of such debt has been made
in a manner satisfactory to the Lender.
Section 6.2 Remedies. Whenever any Event of Default referred to in Section
6.1 hereof shall have happened and be subsisting, anyone or more of the following remedial
steps to the extent permitted by law may be taken by the City with the prior written consent of
the Lender or by the Lender itself:
(1) The Lender's obligation to advance any further amounts under the Loan
Agreement or the Note shall terminate.
(2) The City, upon written direction of the Lender, or the Lender may declare all
installments of the Loan (being an amount equal to that necessary to pay in full the Principal
Balance plus accrued interest thereon and any premium of the Note assuming acceleration of the
Note under the terms thereof and to pay all other indebtedness thereunder) to be immediately due
and payable, whereupon the same shall become immediately due and payable by the Borrower.
(3) The Lender may foreclose the Mortgage and proceed against the collateral
described therein.
(4) The City, upon written direction of the Lender (except as otherwise provided in
Section 7.9 herein), or the Lender (in either case at no expense to the City) may take whatever
action at law or in equity may appear necessary or appropriate to collect the amounts then due
and thereafter to become due under this Agreement or the Note, or to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this Agreement and
the Note.
Section 6.3 Disposition of Funds. Notwithstanding anything to the contrary
contained in this Agreement, any amounts collected pursuant to action taken under Section 6.2
hereof, except for any amounts collected solely for the benefit of the City under any of the
provisions set forth in Section 7.9, shall, after deducting all expenses incurred in collecting the
same, be applied as a prepayment of the Note in accordance with Section 5.1.
2047476vl
17
Section 6.4 Manner of Exercise. No remedy herein conferred upon or reserved
to the City is intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law or in equity by statute. No delay or
omission to exercise any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the
City or the Lender to exercise any remedy reserved to either of them in this Article, it shall not
be necessary to give any notice, other than such notice as may be herein expressly required.
Section 6.5 Attorneys' Fees and Expenses. In the event the Borrower should
default under any of the provisions of this Agreement and the City or the Lender should employ
attorneys or incur other expenses for the collection of amounts due hereunder or the enforcement
of performance of any obligation or agreement on the part of the Borrower, the Borrower will on
demand pay to the City or the Lender the reasonable fee of such attorneys and such other
expenses so incurred.
Section 6.6 Effect of Waiver. In the event any agreement contained in this
Agreement should be breached by either party and thereafter waived by the other party, such
waiver shall be limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.
2047476vl
18
ARTICLE 7
GENERAL
Section 7.1 Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when received by certified or
registered mail, return receipt requested, postage prepaid, with proper address as indicated
below. The City, the Borrower and the Lender may, by written notice given by each to the
others, designate any address or addresses to which notices, certificates or other communications
to them shall be sent when required as contemplated by this Agreement. Until otherwise
provided by the respective parties, all notices, certificates and communications to each of them
shall be addressed as follows:
To the City:
City of Chanhassen
7700 Market Boulevard
Chanhassen, Minnesota 55317-0147
Attn: City Manager
To the Borrower:
St. Hubert Catholic Community
8201 Main Street
Chanhassen, Minnesota 55317
Attn: Business Administrator
To the Lender:
KleinBank
600 West 78th Street
Chanhassen, MN 55317
Attn: Business Banking Department
Section 7.2 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the City and the Borrower and their respective successors and assigns.
Section 7.3 Severability. In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 7.4 Amendments" Changes and Modifications. Except as otherwise
provided in this Agreement or in the Resolution, subsequent to the initial issuance of the Note
and before the Note is satisfied and discharged in accordance with its terms, this Agreement may
not be effectively amended, changed, modified, altered, or terminated without the written
consent of the Lender.
Section 7.5 Execution Counterparts. This Agreement may be simultaneously
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 7.6 Limitation of City's Liability. It is understood and agreed by the
Borrower and the Lender that no covenant of the City herein shall give rise to a pecuniary
liability of the City or a charge against its general credit, or taxing powers. It is further
2047476vl
19
understood and agreed by the Borrower and the Lender that the City shall incur no pecuniary
liability hereunder, and shall not be liable for any expenses related hereto, including
administrative expenses and fees and disbursements of the City's attorney, Bond Counsel and
fiscal consultant retained in connection therewith, all of which expenses the Borrower agrees to
pay.
Section 7.7 City's Attorneys Fees and Costs. If, notwithstanding the
provisions of Section 7.6 hereof, the City incurs any expense, or suffers any losses, claims or
damages, or incurs any liabilities in connection with the transaction contemplated by this
Agreement, the Borrower will indemnify and hold harmless the City from the same and will
reimburse the City for any reasonable legal or other expenses incurred by the City in relation
thereto. The Borrower shall also reimburse the City for all other costs and expenses, including
without limitation reasonable attorneys' fees, paid or incurred by the City in connection with (i)
the discussion, negotiation, preparation, approval, execution and delivery of this Agreement, the
Note, the Pledge Agreement and the documents and instruments related hereto or thereto; (ii) any
amendments or modifications hereto or to the Note, the Pledge Agreement and any document,
instrument or agreement related hereto or thereto, and the discussion, negotiation, preparation,
approval, execution and delivery of any and all documents necessary or desirable to effect such
amendments or modifications; and (iii) the enforcement by the City during the term hereof or
thereafter of any of the rights or remedies of the City hereunder or under the Note, the Pledge
Agreement or any document, instrument or agreement related hereto or thereto, including,
without limitation, costs and expenses of collection in the Event of Default, whether or not suit is
filed with respect thereto.
Section 7.8 Release. The Borrower hereby acknowledges and agrees that the
City shall not be liable to the Borrower, and hereby releases and discharges the City from any
liability, for any and all losses, costs, expenses (including attorneys' fees), damages, judgments,
claims and causes of action, paid, incurred or sustained by the Borrower as a result of or relating
to any action, or failure or refusal to act, on the part of the Lender with respect to this Agreement
or the documents and transactions related hereto or contemplated hereby, including, without
limitation, the exercise by the Lender of any of its rights or remedies pursuant to Article 6, the
Note, the Pledge Agreement, the Mortgage or any collateral security documents. The
Borrower's release of the City pursuant to the preceding sentence does not extend to the Lender
following the assignment of the City's rights to the Lender pursuant to the Pledge Agreement.
Section 7.9 Assignment by City and Survivorship of Obligations. The City
may assign its rights under this Agreement and any related documents to the Lender to secure
payment of the principal of and interest and premium, if any, on the Note, conditioned upon the
Lender's assumption of the City's and Lender's obligations to the Borrower hereunder, but any
such assignment shall not operate to limit or otherwise affect the following provisions hereof to
the extent that they run to the City from the Borrower to which extent they shall survive any such
assignment:
Section 3.5
Section 4.3
Section 7.6
Section 7.8
Section 4.1
Section 6.5
Section 7.7
2047476vl
20
Upon any such assignment, the provisions immediately above running to the City from the
Borrower for the City's benefit shall run jointly and severally to the City and the Lender (if
appropriate), provided that the City shall have the right to enforce any retained rights without the
approval of the Lender but only if the Lender is not enforcing such rights in a manner to protect
the City or is otherwise taking action with respect thereto that brings adverse consequences to the
City. The obligations of the Borrower running to the City for the purpose of preserving the tax
exempt status of the Note or otherwise for the City's benefit under the foregoing Sections shall
survive repayment of the Note and interest thereon.
Section 7.10 Required Approvals. Consents and approvals required by this
Agreement to be obtained from the Borrower, the City or the Lender shall be in writing and shall
not be unreasonably withheld or delayed.
Section 7.11 Termination Upon Retirement of Note. At any time when no
principal balance on the Note remains outstanding, and arrangements satisfactory to the Lender
and the City have been made for the discharge of all other accrued liabilities, if any, under this
Loan Agreement, this Loan Agreement shall terminate, except as otherwise expressly provided
in Section 7.9 or otherwise herein.
2047476vl
21
IN WITNESS WHEREOF, the City and the Borrower have caused this
Agreement to be executed in their respective names all as of the date first above written.
CITY OF CHANHASSEN, MINNESOTA
By
Mayor
By
City Manager
Loan Agreement between the City of Chanhassen, Minnesota and S1. Hubert Catholic
Community
2047476vl
S-1
ST. HUBERT CATHOLIC COMMUNITY
By
Its
By
Its
Loan Agreement between the City of Chanhassen, Minnesota and St. Hubert Catholic
Community
2047476vl
S-2
SPACE ABOVE THIS LINE FOR RECORDER'S USE
This Mortgage contains after-acquired property provisions and constitutes a fixture
financing statement under Minnesota Statutes, Section 336.9-502.
The Maximum Principal Indebtedness Secured by the Mortgage is $6,185,137.
MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FINANCING STATEMENT
BY
ST. HUBERT CATHOLIC COMMUNITY
IN FAVOR OF
KLEINBANK
AS MORTGAGEE
Dated as of August _, 2007
This instrument was drafted by:
Briggs and Morgan, Professional Association
W2200 First National Bank Bldg.
Saint Paul, Minnesota 55101
2047500vl
T ABLE OF CONTENTS
Page
ARTICLE I COVENANTS OF THE MORTGAGOR........................................................ 4
Section 1.1 Payment of Utility Charges, Taxes and Assessments .......................... 4
Section 1.2 Liens..................................................................................................... 4
Section 1.3 Care of Property ...................................................................................4
Section 1.4 Right of the Mortgagee to Enter .......................................................... 5
Secti on 1.5 S ubrogati on .......................................................................................... 5
Section 1.6 Right of the Mortgagee to Perform...................................................... 5
Section 1.7 Limited Assumption............................................................................. 5
Secti on 1.8 Loan Agreement................................................................................... 6
Section 1.9 Miscellaneous Rights of the Mortgagee .............................................. 6
Section 1.10 Assignment of Rents ............................................................................ 6
Section 1.11 Further Assurances.................................................... ........................... 9
Section 1.12 Expenses ................................... ............ ........... ................ ............... ..... 9
Section 1.13 Books and Records............................................................................ 10
Section 1.14 Final Maturity Date............................................................................ 10
Secti on 1.15 Hazardous Materials .......................................................................... 10
Section 1.16 Removal of Personal Property........................................................... 11
ARTICLE II INSURANCE, CONDEMNATION, USE OF PROCEEDS ......................... 12
Section 2 .1 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12
Section 2.2 Condemnation..... ...... ............ ........................ ..................................... 13
Section 2.3 Mortgagor to Repair, Replace, Rebuild or Restore............................ 13
Section 2.4 Use of Proceeds to Prepay Loan and Note......................................... 14
Section 2.5 Protection of Mortgagee's Security................................................... 14
ARTICLE III DEFAULT ..................................................................................................... 15
Section 3.1 Event of Default Defined ................................................................... 15
Section 3.2 Remedies............................................................................................ 16
Section 3.3 Purchase of Mortgaged Property....................................................... 16
Section 3.4 Appointment of Recei ver ................................................................... 17
Secti on 3.5 Proceeds.. . ... .. . .. .. ... . .. .. .. . .. . . ... . .. . . . . . . . . . . . . . . . . . ... . . . .. .. . . . . . . ... . . . . . .. . . . . . . . · . . . . . . .. 17
Section 3.6 Proceedings Discontinued........................................... ....................... 17
ARTICLE IV MISCELLANEOUS...................................................................................... 18
Section 4.1 No Implied Waiver............................................................................ 18
Section 4.2 Remedies Cumulative ........................................................................ 18
Section 4.3 Successors and Assigns................................. ..................................... 18
Secti on 4.4 N oti ces ............................................................................................... 18
S ecti on 4.5 Headi n gs ............................................................................................ 18
Secti on 4.6 In demni ty ........................................................................................... 18
Section 4. 7 Expenses.................. ..................... .................. ...................... ............. 19
Section 4.8 Waiver of Trial by Jury...................................................................... 19
S ec ti on 4.9 Con s tru c ti on Mort gag e ...................................................................... 19
EXHIB IT A Le gal Descri pti on ...................................... ................................................... A-I
EXHIBIT B Permitted Encumbrances............................................................................. B-1
2047500vl
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
SECURITY AGREEMENT
AND
FIXTURE FINANCING STATEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FINANCING STATEMENT, (the "Mortgage") dated as of the
1st of August, 2007, made and given by St. Hubert Catholic Community, a Minnesota religious
corporation (the "Mortgagor") in favor of KleinBank, (the "Mortgagee" or "Lender");
WITNESSETH:
WHEREAS, the City of Chanhassen, Minnesota, (the "City") will issue its Educational
Facilities Revenue Note, Series 2007, (St. Hubert School Project) (as the same may be amended,
supplemented, extended, restated or otherwise modified from time to time, the "Note"), with a
final maturity date of August _, 2027, and bearing interest and maturing as provided therein
and the Lender has purchased the Note from the City; and
WHEREAS, the City will loan the proceeds of the Note to the Mortgagor pursuant to a
Loan Agreement dated as of the date hereof, between the City and the Mortgagor (as the same
may be amended, supplemented, restated or otherwise modified from time to time, the "Loan
Agreement") for the purpose of refinancing outstanding debt used to finance the acquisition,
construction and equipping of the St. Hubert School facility located at 8201 Main Street on the
property legally described on Exhibit A attached hereto (the "Project") and the City's interest in
the Loan Agreement, except for certain reserved rights, has been assigned to the KleinBank; and
WHEREAS, pursuant to the Loan Agreement, the Mortgagor has covenanted, among
other things, to make loan repayments sufficient to pay amortized installments of principal and
interest on the Note when due; and
WHEREAS, the City and the Lender have required, as a condition for the issuance of the
Note by the City and for the purchase and acceptance of the Note by the Lender, that the
Mortgagor secure the Note by this Mortgage.
NOW, THEREFORE, THIS MORTGAGE FURTHER WITNESSETH, that in
consideration of the aggregate sum of $6,185,137 (or so much thereof as from time to time
remains unpaid under the Loan Agreement and the Note) made available to the Mortgagor by the
Mortgagee through the purchase of the Note by the Mortgagee, and other good and lawful
consideration, the receipt and sufficiency of which is hereby acknowledged, and to secure, and as
security for (i) the payment of the Note and any extensions, renewals or modifications thereof
(including without limitation the principal thereof and interest thereon) by the City and
Mortgagor to the Mortgagee and (2) the performance and observance by the Mortgagor of all of
the other covenants, agreements, representations, warranties and conditions herein or contained
in this Mortgage and the Loan Agreement and the Note (hereinafter collectively the foregoing
are referred to as the "Mortgagor's Obligations"), the Mortgagor does hereby grant, bargain, sell,
convey, assign, transfer, pledge, set over and confirm unto the Mortgagee, and the Mortgagee's
2047500vl
successors and assigns, forever, and does hereby grant a lien and security interest unto the
Mortgagee, its successors and assigns, forever, the tract(s) of land (hereinafter sometimes called
the "Land"), described in Exhibit A attached hereto and made a part hereof,
Together with (i) all of the buildings, structures and other improvements now standing or
at any time hereafter constructed or placed upon the Land; (ii) all lighting, heating, ventilating,
air conditioning, sprinkling and plumbing fixtures, water and power systems, engines and
machinery, boilers, furnaces, oil burners, elevators and motors, communication systems,
dynamos, transformers, electrical equipment and all other fixtures of every description, kind and
nature located in or on, or used, or intended to be used in connection with the Land or any
building now or hereafter located thereon; (iii) all hereditaments, easements, rights, privileges
and appurtenances, riparian rights, rents, issues, profits, insurance proceeds, condemnation
awards, mineral rights and water rights now or hereafter belonging, attached or in any way
pertaining to the Land or to any building, structure or improvement now or hereafter located
thereon and all the estates, rights and interests of the Mortgagor in the Land; (iv) all building
materials, furniture, furnishings, maintenance equipment and all other equipment and personal
property of every description, kind and nature now or hereafter located in, or on, or used, or
intended to be used in connection with the Land or any building, structure or improvement now
or hereafter located thereon and all replacements and additions thereto; (v) the immediate and
continuing right to receive and collect all rents, income, issues and profits now due and which
may hereafter become due under or by virtue or any lease or agreement (oral or written) for the
leasing, subleasing, use or occupancy of all or any part of the Land now, heretofore or hereafter
made or agreed to by the Mortgagor; (vi) all of the leases and agreements described in (v) above,
and (v) all proceeds of all of the foregoing (all of the foregoing, together with the Land, are
hereinafter referred to as the "Mortgaged Property"); and the filing of this Mortgage shall
constitute a fixture filing in the office where it is filed and a carbon, photographic or other
reproduction of this document may also be filed as a financing statement:
Name and Address of Debtor and Record
Owner of the Mortgaged Property:
St. Hubert Catholic Community
8201 Main Street
Chanhassen, Minnesota 55317
Attn: Business Administrator
Tax ID # 41-
Minnesota Secretary of
State ID #
Names and Addresses of Secured Party:
KleinBank
600 West 78th Street
Chanhassen, MN 55317
Attn: Business Banking Department
2047500vl
2
Description of the Types (or items) of See above
property covered by this financing
statement:
Description of real estate to which all or a See Exhibit "A" attached hereto.
part of the collateral is attached or upon
which it is located:
Some of the above described collateral is or is to become fixtures upon the real estate described
on Exhibit "A", and this financing statement is to be filed for record in the public real estate
records.
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee forever.
PROVIDED, NEVERTHELESS, that if the Mortgagor, shall have fully and completely
performed and complied with the Mortgagor's Obligations, and shall have made all payments
required of it under the Loan Agreement, including without limitation payment of the principal
sum of Six Million One Hundred Eighty-Five Thousand One Hundred Thirty-Seven Dollars
($6,185,137), with interest at the rate set forth in the Note, and any other sums due and owing
under the Note, and shall also payor cause to be paid all other sums, with interest thereon, as
may be advanced by the Mortgagee in accordance with this Mortgage either to protect the lien of
this Mortgage, or by way of additional loan or for any other purpose, and shall also keep and
perform all and singular the covenants herein, and the Loan Agreement, required on the part of
the Mortgagor to be kept and performed, then this Mortgage shall be null and void, in which
event the Mortgagee will execute and deliver to the Mortgagor in form suitable for recording a
full satisfaction of this Mortgage; otherwise this Mortgage shall remain in full force and effect.
The Mortgagor represents, warrants and covenants to and with the Mortgagee that it is
lawfully seized of the Mortgaged Property in fee simple and has the right and lawful authority to
mortgage the same as provided herein; that the Mortgaged Property is free from all liens and
encumbrances except Permitted Encumbrances; that all buildings, structures and other
improvements now or hereafter located on the Land are, or will be, located entirely within the
boundaries of the Land; and that the Mortgagor will warrant and defend the title to the
Mortgaged Property against all claims and demands whatsoever not specifically excepted herein.
The Mortgagor further represents, warrants and covenants that the Note, the Loan
Agreement, and this Mortgage have been validly executed and delivered and are valid and
enforceable obligations of the parties thereto in accordance with the terms thereof and hereof;
and that this Mortgage does not, nor do the Note or this Loan Agreement, nor does the
performance or observance by the Mortgagor of any of the covenants, agreements or matters or
things in this Mortgage, or the Loan Agreement provided for, contravene or result in the
violation of or default under any covenant in any indenture or agreement affecting the Mortgagor
or the Mortgaged Property.
2047500vl
3
ARTICLE I
COVENANTS OF THE MORTGAGOR
The Mortgagor further covenants and agrees as follows:
Section 1.1 Payment of Utility Charges~ Taxes and Assessments. Mortgagor shall,
before any penalty attaches thereto, payor cause to be paid all charges made for electricity, gas,
heat, water, sewer and other utilities furnished or used in connection with the Mortgaged
Property, and all taxes, assessments, levies and encumbrances of every nature heretofore or
hereafter assessed against the Mortgaged Property and upon demand will furnish the Mortgagee
receipted bills evidencing such payment.
Nothing in this section shall require the payment or discharge of any obligation imposed
upon the Mortgagor so long as the Mortgagor shall in good faith and at its own expense contest
the same or the validity thereof by appropriate legal proceeding which shall operate to prevent
the collection thereof or other realization thereon and the sale or forfeiture of the Mortgaged
Property or any part thereof to satisfy the same; provided that during such contest the Mortgagor
shall, at the option of the Mortgagee, provide security satisfactory to the Mortgagee, assuring the
discharge of the Mortgagor's obligation under said section and of any additional charge, penalty
or expense arising from or incurred as a result of such contest; and provided further, that if at any
time payment of any obligation imposed upon the Mortgagor by said section shall become
necessary to prevent the delivery of a tax deed conveying the Mortgaged Property or any portion
thereof because of nonpayment, then Mortgagor shall pay the same in sufficient time to prevent
the delivery of such tax deed.
Section 1.2 Liens. Except for liens (i) liens for ad valorem taxes and special
assessments not then delinquent, (ii) utility, access and other easements and rights of way,
mineral rights, restrictions and exceptions that the Mortgagor certifies will not interfere with or
impair the use of or operations being conducted in the Project Buildings, (iii) such minor defects,
irregularities, encumbrances, easements, rights of way and clouds on title as normally exist with
respect to properties similar in character to the Project facilities and as do not in the aggregate, in
the opinion of independent Counsel, materially impair the property affected thereby for the
purposes for which it was acquired or is held by the Mortgagor, (iv) this Mortgage, (v) purchase
money security interests in furniture, equipment, or other personal property, other than fixtures
and (vi) security interests in equipment hereafter acquired, other than fixtures and (v) those
additional encumbrances identified in Exhibit B (collectively, the "Permitted Encumbrances") or
any other liens consented to in writing by the Mortgagee, the Mortgagor will keep the Mortgaged
Property free from all liens and encumbrances of every nature heretofore or hereafter arising
which might or could be prior to or equal to the security interest of this Mortgage; and upon
written demand of the Mortgagee, the Mortgagor will pay and procure the release of any such
lien or encumbrance.
Section 1.3 Care of Property. The Mortgagor will take good care of the Mortgaged
Property, and will maintain the same in good repair and condition, ordinary depreciation
excepted, and will commit or permit no waste and will not construct any new buildings,
2047500v]
4
structures or other improvements on the Land nor add to or alter the design or structural
character of any building, structure or other improvement now or hereafter erected upon the
Land if, in the reasonable opinion of the Mortgagee, it would impair or lessen the value of the
Mortgaged Property, and will not remove or permit removal of any buildings, structures or other
improvements or fixtures of any kind from the Land nor do any act that would impair or lessen
the value of the Mortgaged Property. The Mortgagor will promptly comply with all present and
future laws, ordinances, rules and regulations of any governmental authority affecting the
Mortgaged Property. The Mortgagor shall not acquiesce in any rezoning classification,
modification or restriction affecting the Land without the prior written consent of the Mortgagee.
Section 1.4 Right of the Mortgagee to Enter. The Mortgagor will permit the
Mortgagee and its agents to enter and to authorize others to enter upon any or all of the
Mortgaged Property, at any time and from time to time, to inspect the same, and, after giving the
Mortgagor reasonable notice and opportunity to perform, to perform or observe any covenants,
conditions, or terms which the Mortgagor shall fail to perform, meet or comply with, or for any
other purpose in connection with the protection or preservation of the Mortgagee's security,
without thereby becoming liable to the Mortgagor or any person in possession under the
Mortgagor.
Section 1.5 Subrogation. If any prior lien is paid from the proceeds of the Note
secured by this Mortgage, the Mortgagee shall be subrogated to the rights of the holder of such
prior lien as fully as if such lien has been assigned to the Mortgagee.
Section 1.6 Right of the Mortgagee to Perform. If the Mortgagor fails to pay all and
singular any taxes, assessments levies or other similar charges or encumbrances heretofore or
hereafter assessed against the Mortgaged Property or fails to obtain the release of any lien or
encumbrance (other than Permitted Encumbrances or otherwise consented to by the Mortgagee)
of any nature heretofore or hereafter arising upon the Mortgaged Property or fails to perform any
other covenants and agreements contained in this Mortgage or if any action or proceeding is
commenced which adversely affects or questions the title to or possession of the Mortgaged
Property or the interest of the Mortgagor or Mortgagee therein, then the Mortgagee, at the
Mortgagee's option, after giving the Mortgagor reasonable notice and opportunity to perform,
may perform such covenants and agreements, investigate and defend against such action or
proceeding, and take such other action as the Mortgagee deems necessary to protect the
Mortgagee's interest. Any amounts disbursed by the Mortgagee pursuant to this section,
including court costs and expenses and attorney's fees, with interest thereon, shall become
additional indebtedness of the Mortgagor and shall be secured by this Mortgage. Such amount
shall be payable upon written notice from the Mortgagee to the Mortgagor requesting payment
thereof, and shall bear interest from the date of disbursement at a rate equal to the rate of interest
under the Note or, if such rate is illegal or usurious, at the maximum rate then permitted by law.
Nothing contained in this paragraph shall require the Mortgagee to incur any expense or to do
any act hereunder.
Section 1.7 Limited Assumption. The Mortgagor shall not sell, assign, lease, convey,
mortgage or otherwise encumber or dispose of either the legal or equitable title, or both legal and
equitable title, to all or any portion of the Mortgaged Property without the written consent of the
2047500vl
5
Mortgagee, which consent shall not be unreasonably withheld. So long as the Note is
outstanding, no sale, assignment, lease, conveyance, mortgage or other encumbrance shall be
made by the Mortgagor which impairs the validity of the Note or the exemption of the interest
payable thereon from federal income taxation.
Section 1.8 Loan Agreement. The Mortgagor shall duly and punctually pay and
perform the Mortgagor's Obligations, and shall promptly and faithfully observe all of the terms
and provisions of the Loan Agreement binding upon it, and will not permit any Event of Default
(as defined therein) to occur thereunder.
Section 1.9 Miscellaneous Rights of the Mortgagee. The Mortgagee may at any time
and from time to time, without notice, release any person liable for payment of any indebtedness
secured hereby, extend the time as permitted by law or agree to alter the terms of payment of any
of the indebtedness, accept additional security of any kind, release any property securing the
indebtedness, consent to the making of any plat or map of the Land or the creation of any
easement thereon or any covenants restricting use or occupancy thereof, or alter or amend the
terms of this Mortgage in any way. No such release, modification, addition or change shall
affect the liability of any person other than the person so released for payment of any
indebtedness secured hereby, nor affect the priority and first lien status of this Mortgage upon
any property not released.
Section 1.10 Assignment of Rents. The Mortgagor does hereby sell, assign and transfer
unto the Mortgagee (1) the immediate and continuing right to receive and collect all rents,
income, issues and profits now due and which may hereafter become due under or by virtue of
any lease or agreement (oral or written) for the leasing, subleasing, use or occupancy of all or
any part of the Mortgaged Property now, heretofore or hereafter made or agreed to by the
Mortgagor, and (2) all of such leases and agreements, together with all guarantees therefor and
any renewals or extensions thereof, for the purpose of securing payment of the indebtedness of
the Mortgagor under the Note and the documents related thereto, and all other Mortgagor's
Obligations.
The Mortgagor does hereby irrevocably appoint the Mortgagee as the Mortgagor's true
and lawful attorney in the Mortgagor's name, place and stead, with or without taking possession
of the Mortgaged Property, to rent, lease, sublease, let or sublet all or any portion of the
Mortgaged Property to any party or parties at such rental and upon such terms, as the Mortgagee
in the Mortgagee's discretion may determine, and to collect all of said avails, rents, income,
issues and profits arising from or accruing at any time hereafter under each and all of such leases
and agreements, with the same rights and powers and subject to the same immunities,
exoneration of liability and rights of recourse and indemnity as the Mortgagee would have upon
taking possession of the Mortgaged Property.
The Mortgagor represents and warrants that no portion of the Mortgaged Property is
currently the subject of any lease or other agreement (oral or written) for the leasing, subleasing,
use or occupancy of all or any portion of the Mortgaged Property. The Mortgagor represents and
agrees that, in the event all or any portion of the Mortgaged Property is or becomes subject to
any lease or other such agreement, no rent has been or will be paid in advance by any persons in
2047500v I
6
connection with any such lease or other agreement for a period of more than one month and that
the payment of none of the rents to accrue for all or any portion of the Mortgaged Property has or
will be waived, released, reduced or discounted, or otherwise discharged or compromised, by the
Mortgagor. The Mortgagor waives any right of setoff against any person in possession of all or
any portion of the Mortgaged Property. The Mortgagor represents that the Mortgagor has not
assigned any of said rents or profits to any third party and agrees that the Mortgagor will not so
assign any of said rents or profits without the prior written consent of the Mortgagee.
Nothing contained herein shall be construed as constituting the Mortgagee "a mortgagee
in possession" in the absence of the taking of actual possession of the Mortgaged Property by the
Mortgagee. In the exercise of the powers herein granted to the Mortgagee, no liability shall be
asserted or enforced against the Mortgagee, all such liability being expressly waived and released
by the Mortgagor.
The Mortgagor further agrees to assign and transfer to the Mortgagee all rents from future
leases or subleases upon all or any part of the Mortgaged Property and to execute and deliver,
immediately upon request of the Mortgagee, all such further assurances and assignments in the
Mortgaged Property as the Mortgagee from time to time shall require.
Although it is the intention of the parties that this Assignment of Rents shall be a present
assignment, it is expressly understood and agreed that, anything herein contained to the contrary
notwithstanding, the Mortgagee shall not exercise any of the rights and powers conferred upon
the Mortgagee herein unless and until an "Event of Default" as defined in the Loan Agreement
and nothing herein contained shall be deemed to affect or impair any rights which the Mortgagee
may have under the Note, this Mortgage or any other document or agreement related hereto or
thereto.
Upon the occurrence at any time of an Event of Default and during the continuance
thereof, the Mortgagee, without in any way waiving such default, may:
(1) apply to the Minnesota District Court for the County wherein the
Mortgaged Property is located for the appointment of a receiver under Minnesota Statutes 9
559.17, it being understood and agreed that Mortgagee shall be entitled to the appointment of a
receiver upon a showing that an Event of Default has occurred under the terms of this Mortgage.
A receiver so appointed shall apply all rents and profits collected from the date of his
appointment through the redemption period from any foreclosure sale, first as provided in
Minnesota Statutes 9 576.01, Subdivision 2, and thereafter shall apply the rents and profits to the
payment of the following items in the order indicated: first, to the payment of principal and
interest on any prior mortgages; second, to the payment of any other prior liens or encumbrances;
third, to payment of all advances made by Mortgagee under this Mortgage and all costs of
collection incurred by Mortgagee in collecting the Indebtedness and enforcing this Mortgage and
all interest thereon; and fourth, to the payment of interest and principal on the Note; or
(2) collect all rents and profits from the occupiers of the Mortgaged Property
upon the filing by the Mortgagee, in the office of the County Recorder or, in the case of
registered property in the office of the Registrar of Titles, for the County in which the Mortgaged
Property is located, of a notice of the occurrence of an Event of Default in the terms and
2047500vl 7
conditions of this Mortgage and the service of said notice of default upon the occupiers of the
Mortgaged Property. From the date of filing and service upon the occupiers of notice of default
through the redemption period from any foreclosure sale, Mortgagee shall first apply all rents
and profits so collected in the same manner provided in subparagraph (1) above where the rents
and profits are collected pursuant to the appointment of a receiver. In the event Mortgagee
exercises the Mortgagee's rights under this subparagraph (2), the Mortgagee shall not, solely by
reason thereof, be deemed to be a mortgagee-in-possession of the Mortgaged Property.
The Mortgagee shall not be obligated to perform or discharge, nor does the Mortgagee
hereby undertake to perform or discharge, any obligation, duty or liability under any leases,
subleases or rental agreements relating to the Mortgaged Property, and the Mortgagor shall and
does hereby agree to indemnify and hold the Mortgagee harmless from and against any and all
liability, loss or damage which the Mortgagee mayor might incur under any such lease, sublease
or agreement or under or by reason of the assignment of the rents thereof and from and against
any and all claims and demands whatsoever which may be asserted against the Mortgagee by
reason of any alleged obligations or undertakings on the Mortgagee's part to perform or
discharge any of the terms, covenants or agreements contained in any of such leases, provided
that the Mortgagor shall not indemnify and hold harmless the Mortgagee from any liability, loss
or damage resulting from acts or omissions of the Mortgagee which occur on or after the date the
Mortgagee takes possession of the Mortgaged Property. Except for any liability, loss or damage
resulting from acts or omissions of the Mortgagee, should the Mortgagee incur any liability, loss
or damage by reason of this assignment of leases and rents, or in the defense of any claim or
demand, the Mortgagor agrees to reimburse the Mortgagee for the amount thereof, including
costs, expenses and reasonable attorneys' fees, immediately upon demand.
The Mortgagee, or such agent or receiver, in the exercise of the rights and powers
conferred upon the Mortgagee by this assignment of leases and rents shall have the full power to
use and apply the avails, rents, issues, income and profits of the Mortgaged Property to which the
Mortgagor would otherwise be entitled to the payment of or on account of the following in the
order listed below:
(a) reasonable receiver's fees;
(b) application of tenant security deposits as required by Minnesota Statutes
~504B.178;
(c) payment, when due, of prior or current real estate taxes or special
assessments with respect to the Mortgaged Property, or the periodic escrow for the
payment of the taxes or special assessments;
(d) payment, when due, of premiums for insurance of the type required by this
Mortgage, or the periodic escrow for the payment of premiums;
(e) to payment for the keeping of the covenants required of a lessor or
licensor pursuant to Minnesota Statutes S504B.161, subdivision 1, if applicable; and,
(f)
all expenses for normal maintenance of the Mortgaged Property;
8
2047500vt
provided, however, that nothing herein shall prohibit the right to reinstate pursuant to
Minnesota Statutes 9 580.30, or the right to redeem granted pursuant to Minnesota Statutes 99
580.23 and 581.10.
Any excess cash remaining after paying the expenses listed in clauses (a) through (f)
above shall be applied to the payment of the Note and shall be deemed to be credited to the
amount required to be paid to effect a reinstatement or redemption or, if the period of redemption
ends without redemption, such remaining amounts shall be paid to the purchaser at the
foreclosure sale, its successors or assigns.
The Mortgagor does further specifically authorize and instruct each and every present and
future lessee, sublessee, tenant or subtenant of the whole or any part of the Mortgaged Property
to pay all unpaid rental agreed upon in any lease or sublease to the Mortgagee upon receipt of
demand from the Mortgagee so to pay the same.
Any tenants, subtenants or other occupants of all or any part of the Mortgaged Property
are hereby authorized to recognize the claims of the Mortgagee hereunder without investigating
the reason for any action taken by the Mortgagee, or the validity or the amount of indebtedness
owing to the Mortgagee, or the occurrence or existence of any Event of Default, or the
application to be made by the Mortgagee of any amounts to be paid to the Mortgagee. The sole
signature of any officer or attorney of the Mortgagee shall be sufficient for the exercise of any
rights under this assignment of leases and rents and the sole receipt of the Mortgagee for any
sums received by such tenants, subtenants or other occupants shall be a full discharge and release
therefor. Checks for all or any part of the rentals collected under this assignment of leases and
rents shall be drawn to the exclusive order of the Mortgagee.
Section 1.11 Further Assurances. At any time, and from time to time, upon request by
the Mortgagee, the Mortgagor will make, execute and deliver or cause to be made, executed and
delivered, to the Mortgagee, any and all other further instruments, certificates and other
documents as may, in the reasonable opinion of the Mortgagee, be necessary or desirable in
order to effectuate, complete, or perfect or to continue and preserve the obligations of the
Mortgagor hereunder and under the Note, the Loan Agreement and the estate and security
interest granted by this Mortgage. Upon any failure by the Mortgagor so to do, the Mortgagee
may make, execute and record any and all such instruments, certificates and documents for and
in the name of the Mortgagor and the Mortgagor hereby irrevocably appoints the Mortgagee the
agent and attorney in fact of the Mortgagor so to do.
Section 1.12 Expenses. The Mortgagor will payor reimburse the Mortgagee for all
reasonable attorneys' fees, disbursements, costs and expenses incurred by the Mortgagee in any
action, legal proceeding or dispute of any kind in which the Mortgagee is made a, party, or
appears as party plaintiff or defendant, affecting the indebtedness secured hereby, this Mortgage
or the interest created herein, or the Mortgaged Property, including but not limited to the exercise
of the power of sale set forth in this Mortgage, any condemnation action involving the
Mortgaged Property, or collection of insurance proceeds or any action to protect the security
hereof; and any such amounts paid by the Mortgagee shall be added to the indebtedness secured
by this Mortgage.
2047500v 1
9
Section 1.13 Books and Records. The Mortgagor shall keep and maintain full, true and
accurate books of account adequate to reflect correctly the results of the operation of the
Mortgaged Property, which books and the records relating thereto shall be open to inspection by
the Mortgagee or its representative during ordinary business hours.
Section 1.14 Final Maturity Date. The Mortgagor shall, at the request of the
Mortgagee, amend the Mortgage to reflect any change in the final maturity date of the debt
secured by the Mortgage as set forth in the Mortgage if such date is either accelerated or
extended as provided in the Note. However, in no case may the final maturity date be extended
beyond thirty years from the date of the Note.
Section 1.15 Hazardous Materials. The Mortgagor represents and warrants to the
Mortgagee, its successors and assigns, that, except to the extent reasonably necessary in the
ordinary course of its operations, it has not used or permitted and will not use or knowingly
permit the Mortgaged Property to be used, whether directly or through contractors, agents or
tenants, and to the best of Mortgagor's knowledge the Mortgaged Property has not at any time
been used for the generating, transporting, treating, storage, manufacture, emission of, or
disposal of any dangerous, toxic or hazardous pollutants, chemicals, wastes or substances as
defined in the Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), or the Federal Resource Conservation and Recovery Act of 1976 or any
other federal, state or local environmental laws, statutes, regulations, requirements and
ordinances ("Hazardous Materials"); that there have been no investigations or reports involving
Mortgagor or the Mortgaged Property by any governmental authority which in any way pertain
to Hazardous Materials; that the operation of the Mortgaged Property has not violated and is not
currently violating any federal, state or local law, regulation, ordinance or requirement governing
Hazardous Materials; that the Mortgaged Property is not listed in the United States
Environmental Protection Agency's National Priorities List of Hazardous Waste Sites nor any
other list, schedule, log, inventory or record of Hazardous Materials or hazardous waste sites,
whether maintained by the United States Government or any state or local agency and that the
building improvements do not contain any formaldehyde, urea or asbestos, except as may have
been disclosed in writing to the Mortgagee by the Mortgagor at the time of execution and
delivery of this Mortgage. The Mortgagor agrees to indemnify and reimburse the Mortgagee, its
successors and assigns, for any breach of these representations and warranties and from any loss,
damage, expense or cost arising out of or incurred by Mortgagee which is the result of a breach
of, misstatement of or misrepresentation of the above covenants, representations and warranties,
together with all attorneys' fees incurred in connection with the defense of any action against the
Mortgagee arising out of the above. These covenants, representations and warranties shall be
deemed continuing covenants, representations and warranties for the benefit of the Mortgagee,
and any successors and assigns of the Mortgagee, including any purchaser at mortgage
foreclosure sale, any transferee of the title of the Mortgagee or any subsequent purchaser at a
foreclosure sale and shall survive any foreclosure of this Mortgage and any acquisition of title by
Mortgagee or anyone claiming, through or under this Mortgage, the title of Mortgagee. The
amount of all such indemnified loss, damage, expense or cost, shall bear interest thereon at the
highest rate of interest in effect on the Note and shall become so much additional indebtedness
secured by this Mortgage and shall become immediately due and payable in full on demand of
the Mortgagee, its successors and assigns. Said indemnity shall only apply in connection with
2047500vl 10
conditions which were in existence, in whole or in part, prior to the date on which Mortgagee
acquires possession and title to the Mortgaged Property.
Section 1.16 Removal of Personal Property. The Mortgagor will not, without the prior
consent of the Mortgagee, remove or permit the removal or sell or otherwise surrender its right to
possession of any personal property which is a part of the Mortgaged Property unless (1) the
Mortgagor first determines that such item has become inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary for the operation of the Mortgaged Property and that such disposition
will not otherwise materially impair the operating unity or structural unity of the Mortgaged
Property, and (2) if the estimated fair market value of such item exceeds $25,000, the Mortgagor
substitutes for such item machinery or equipment of substantially equivalent utility to that
replaced, provided that if any personal property is removed under the provisions of this Section
the Mortgagor or lessee shall repair and restore any and all damage to the Mortgaged Property
resulting from the removal of such items. This Mortgage shall immediately attach to and
constitute a lien or security interest against any substituted item without further act or deed of the
Mortgagor.
2047500vl
11
ARTICLE II
INSURANCE, CONDEMNATION, USE OF PROCEEDS
Section 2.1 Insurance. The Mortgagor shall keep the buildings, structures, fixtures
and other improvements now existing or hereafter erected on the Land insured against loss by
fire, vandalism and malicious mischief, perils of extended coverage, and such other hazards,
casualties and contingencies as may be reasonably specified by the Mortgagee, in an amount not
less than the full replacement cost of the buildings, structures, fixtures and other improvements
now existing or hereafter erected on the Land or the full insurable value thereof, whichever is
greater. All insurance shall be carried in companies licensed to conduct business in the State of
Minnesota, rated A+ or better by A. M. Best, or the equivalent, and approved by the Mortgagee
and the policies and renewals thereof shall (i) contain a waiver of defense based on coinsurance,
(ii) be constantly assigned and pledged to and held by the Mortgagee as additional security for
the indebtedness secured by this Mortgage, (iii) have attached thereto loss-payable clauses in
favor of and in form acceptable to the Mortgagee, and (iv) shall provide that Mortgagee shall
receive at least thirty (30) days notice in advance of cancellation or substantial modification of
the policy. In default thereof, the Mortgagee may effect such insurance and the amount paid
therefor shall become immediately due and payable, with interest at a rate equal to the rate of
interest under the Note or, if such rate is illegal or usurious, at the maximum rate permitted by
law, and shall be secured by this Mortgage. In the event of loss in the case of damage to or
destruction of the Project or any portion thereof not exceeding $100,000 in amount resulting
from fire or other casualty the Mortgagor shall forthwith repair, reconstruct and restore the
Project to substantially the same or an improved condition or value as existed prior to the event
causing such damage and, to the extent necessary to accomplish such repair, reconstruction and
restoration, the Mortgagor will apply the net proceeds of any insurance relating to such damage
received by the Mortgagor to the payment or reimbursement of the costs thereof. Net proceeds
of any insurance relating to such damage up to $100,000 shall be paid directly to the Mortgagor.
In event that any such damage or destruction exceeds $100,000, the Mortgagor will give
immediate notice by mail to the Mortgagee, who may make proof of loss if not made promptly
by the Mortgagor. The Mortgagor hereby authorizes the Mortgagee to settle and compromise all
such claims on the applicable policies and hereby authorizes and directs each insurance company
concerned to make payment for any such loss directly to the Mortgagee instead of to the
Mortgagor and the Mortgagee jointly. In event of foreclosure of this Mortgage, all right, title
and interest of the Mortgagor in and to any property insurance policies then in force shall pass to
the purchaser at the foreclosure sale.
The Mortgagor shall also maintain an insurance policy or policies covering such risks as
are ordinarily insured against by similar businesses, including (without limiting the generality of
the foregoing) (i) insurance against all liability for injury to persons or property arising from the
operation of the Mortgaged Property, and (ii) business interruption insurance covering an
interruption of Mortgagor's business for up to 12 months, but not less than the sum of (A) total
debt service due on the Note in any Fiscal Year plus (B) real estate taxes due and owing during
the same Fiscal Year; and the Mortgagee shall be named as insured.
2047500v 1
12
Section 2.2 Condemnation. The Mortgagor shall gIve the Mortgagee immediate
written notice of the actual or threatened commencement of any proceedings under
condemnation or eminent domain affecting all or any part of the Mortgaged Property or any
easement therein or appurtenance thereof. If all or any part of the Mortgaged Property is
damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding,
or by exercise of the right of eminent domain, the amount of any award or other payment for
such taking, acquisition or damages made in consideration thereof, to the extent of the full
amount of the remaining unpaid indebtedness secured by this instrument, is hereby assigned to
the Mortgagee, who is empowered to collect and receive the same and to give proper receipts
therefor in the name of the Mortgagor and the same shall be paid forthwith to the Mortgagee, to
be held and applied as set forth in Section 2.3 hereof.
Section 2.3 Mortgagor to Repair" Replace" Rebuild or Restore. If any principal
amount of the Note is outstanding when all or any part of the Mortgaged Property is taken by
eminent domain, or destroyed or damaged, unless the Mortgagor exercises its right to prepay all
or a portion of the Note pursuant to Section 2.4 hereof:
(1) The Mortgagor shall proceed promptly, subject to the prOVISIons of
subsection (2), to replace, repair, rebuild and restore the Mortgaged Property to substantially the
same condition as existed before the taking or event causing the damage or destruction, with
such changes, alterations and modifications (including substitution or addition of other property)
as may be desired by the Mortgagor, and reasonably approved by the Mortgagee, and will be
suitable for continued operation of the Mortgaged Property for the business purposes of the
Mortgagor.
(2) All proceeds of any condemnation award or property insurance claim shall
be paid directly to the Mortgagee. Subject to the option of Section 2.4 hereof, the Mortgagee
shall apply the proceeds, less such sum, if any, required for payment of all expenses incurred in
collecting the same ("Net Proceeds"), to payment of the costs of repair, replacement, rebuilding
or restoration of the Mortgaged Property upon compliance with such construction and
disbursement terms as the Mortgagee may deem reasonably necessary, including, but not limited
to, providing architect prepared plans and specifications, executing a disbursing agreement
acceptable to Mortgagee and depositing with the Mortgagee of such funds of the Mortgagor as
may be required to ensure payment of all costs of rebuilding and restoration. If such deposit
conditions imposed by Mortgagee are not met or are not made when requested by the Mortgagee,
or if any other Event of Default should occur while the Mortgagee is retaining the Net Proceeds,
the Mortgagee may apply said Net Proceeds on the indebtedness of the Mortgagor under the
Loan Agreement and the balance of Net Proceeds remaining after payment of all costs of any
repair, rebuilding, replacement or restoration of the Mortgaged Property shall be applied against
the unpaid principal balance of the Note.
(3) The Mortgagor shall not, by reason of the payment of any costs of repair,
rebuilding, replacement or restoration, be entitled to any reimbursement from the City or any
abatement or diminution of the amounts payable under Article 3 of the Loan Agreement.
2047500v I
13
Section 2.4 Use of Proceeds to Prepay Loan and Note. In the event the Mortgagor
does not elect to rebuild and restore the Mortgaged Property pursuant to Section 2.3, the
Mortgagor may elect to apply the Net Proceeds of any property insurance or condemnation
award to prepay the Note. Any such prepayment shall be applied against the accrued interest
then due on the Note and then against the final principal amounts and any premium (as defined
in the Loan Agreement) due under the Note. Any excess remaining after such application shall
be returned to the Mortgagor.
Section 2.5 Protection of Mortgagee's Security. If the Mortgagor fails to perform any
of the covenants and agreements contained in this Mortgage or if any action or proceeding is
commenced which affects the Mortgaged Property or the interest of the Mortgagee therein or the
title thereto, including any determination of an insurance or condemnation award, then the
Mortgagee, at Mortgagee's option, after written notice to Mortgagor, may perform such
covenants and agreements, defend against and/or investigate such action or proceeding, and take
such other action as the Mortgagee deems necessary to protect the Mortgagee's interest in the
Mortgaged Property. Mortgagee shall be the sole judge of the legality, validity and priority of
any claim, lien, encumbrance, tax, assessment, charge and premium paid by it and of the amount
necessary to be paid in satisfaction thereof and Mortgagee may obtain counsel for such action at
the expense of the Mortgagor. In connection with such failure to perform by Mortgagor,
Mortgagee is hereby given the irrevocable power of attorney (which power is coupled with an
interest and is irrevocable) to enter upon the Mortgaged Property as the Mortgagor's agent in the
Mortgagor's name to perform, after written notice to Mortgagor, any and all covenants and
agreements to be performed by the Mortgagor as herein provided.
Any amounts or expenses disbursed or incurred by the Mortgagee pursuant to this
Section 2.5, with interest thereon, shall become additional indebtedness of the Mortgagor
secured by this Mortgage. Unless Mortgagor and Mortgagee agree in writing to other terms of
repayment, such amounts shall be immediately due and payable upon written demand therefor
from the Mortgagee to Mortgagor, and shall bear interest from the date of disbursement at the
Default Rate (as defined in the Loan Agreement) unless collection from Mortgagor of interest at
such rate would be contrary to applicable law, in which event such amounts shall bear interest at
the highest rate which may be collected from Mortgagor under applicable law. Mortgagee shall,
at its option; be subrogated to the lien of any mortgage or other lien discharged in whole or in
part by the Indebtedness or by the Mortgagee under the provisions hereof, and any such
subrogation rights shall be additional and cumulative security for this Mortgage. Nothing
contained in this Section 2.5 shall require the Mortgagee to incur any expense or do any act
hereunder, and the Mortgagee shall not be liable to the Mortgagor for any damages or claims
arising out of action taken by the Mortgagee pursuant to this Section 2.5.
2047500vl
14
ARTICLE III
DEFAULT
Section 3.1 Event of Default Defined. Each of the following occurrences shall
constitute an Event of Default hereunder:
(1) The Mortgagor shall fail to pay when due the principal sum of the Note or
any interest thereon or any installment thereof;
(2) The Mortgagor shall fail to pay when due any other payment due under
the Loan Agreement or this Mortgage and such failure continues after ten (10) days written
notice thereof to the Mortgagor;
(3)
Loan Agreement;
An Event of Default (as that term is defined therein) shall occur under the
(4) Except as otherwise provided in this Mortgage, the Mortgagor, without the
written consent of the Mortgagee, voluntarily or by operation of law, shall transfer, sell, convey
or assign all or any part of the legal or equitable title or legal and equitable title to the Mortgaged
Property, or any part of the Mortgaged Property, or any of the personalty located thereon or used
or intended to be used in connection therewith;
(5) The Mortgagor shall otherwise fail to perform or observe any of the
covenants contained in this Mortgage and such default shall remain uncured for thirty (30) days
after written notice thereof to the Mortgagor;
(6) Any representation or warranty made by the Mortgagor in this Mortgage
or in the Loan Agreement is untrue or misleading in any material respect, or any statement,
certificate or report furnished hereunder or under the Loan Agreement by or on behalf of the
Mortgagor is untrue or misleading in any material respect on the date as of which the facts set
forth are stated or certified;
(7) If (a) the Mortgagor shall file a petItIon in bankruptcy or for
reorganization or for an arrangement pursuant to any present or future federal bankruptcy act or
under any similar federal or state law, or (b) shall be adjudicated a bankrupt or insolvent, or (c)
shall make an assignment for the benefit of its creditors, or (d) shall admit in writing its inability
to pay its debts generally as they become due, or (e) if a petition or answer proposing the
adjudication of the Mortgagor as a bankrupt or its reorganization under any present or future
federal bankruptcy act or any similar federal or state law shall be filed in any court and such
petition or answer shall not be discharged of denied within 90 days after the filing thereof, or (f)
a receiver, trustee or liquidator of the Mortgagor or of all or substantially all of the assets of the
Mortgagor or of the Mortgaged Property shall be appointed in any proceeding brought against
the Mortgagor and shall not be discharged within 90 days after such appointment, or (g) if the
estate or interest of the Mortgagor in the Mortgaged Property or a part thereof shall be levied
upon or attached in any proceeding and such process shall not be vacated or discharged within 90
days after such levy or attachment, or (h) if the Mortgagor shall be dissolved or liquidated.
2047500vl 15
Section 3.2 Remedies. Upon the occurrence of an Event of Default or at any time
thereafter until such Event of Default is cured to the satisfaction of the Mortgagee, the
Mortgagee may, at its option, exercise any and all of the following rights and remedies (and any
other rights and remedies available to it including, without limitation, the rights and remedies
provided to the City under Section 6.2 of the Loan Agreement):
(1) The Mortgagee may, without notice to the Mortgagor or City, declare
immediately due and payable all indebtedness secured by this Mortgage, the same shall
thereupon be immediately due and payable (subject to the limited liability of the City on the Note
as set forth therein); and
(2) The Mortgagee may foreclose this Mortgage by action or advertisement,
and the Mortgagor hereby authorizes the Mortgagee to do so, power being herein expressly
granted to sell the Mortgaged Property at public auction without any prior hearing or notice
thereof and to convey the same to the purchaser, in fee simple, pursuant to the statutes of
Minnesota in such case made and provided and, out of the proceeds arising from such sale, to
pay all indebtedness secured hereby with interest, and all legal costs and charges of such
foreclosure and the maximum attorney's fees permitted by law, which costs, charges and fees the
Mortgagor herein agrees to pay; and
(3) The Mortgagee may exercise any of the remedies made available under
the Minnesota Uniform Commercial Code, or other applicable law, with respect to any of the
Mortgaged Property which constitutes personal property, including without limitation the right to
take possession thereof, proceeding without judicial process or by judicial process (without a
prior hearing or notice thereof, which the Mortgagor hereby waives), and the right to sell, lease
or otherwise dispose of or use any or all of such personal property. The Mortgagee may require
the Mortgagor to assemble such personal property and make it available to the Mortgagee at a
place designated by the Mortgagee which is reasonably convenient to both the Mortgagor and the
Mortgagee. If notice to the Mortgagor of any intended disposition of any of the Mortgaged
Property constituting personal property or any other intended action is required by law in a
particular instance, such notice shall be deemed commercially reasonable if given (in the manner
specified in Section 4.4 hereof) at least ten (10) calendar days prior to the date of intended
disposition or other action.
In the event of a sale under the Mortgage, whether by virtue of judicial proceedings or
otherwise, the Mortgaged Property may, at the option of the Mortgagee, be sold in such parcels,
manner and order as the Mortgagee in its sole discretion may elect.
Section 3.3 Purchase of Mortgaged Property. In case of any sale of the Mortgaged
Property pursuant to any judgment or decree of any court or otherwise in connection with the
enforcement of any of the terms of this Mortgage, the Mortgagee, its successors and assigns, may
become the purchaser, and for the purpose of making settlement for or payment of the purchase
price, shall be entitled to turn in and use the Note and any claims for interest matured and unpaid
thereon, together with additions to the mortgage debt or any other indebtedness secured hereby,
if any, accrued in order that there may be credited as paid on the purchase price the sum then due
2047500v 1
16
under the Note, including principal thereof and interest and any premium thereon, and any
accrued additions to the mortgage debt or other indebtedness secured hereby.
Section 3.4 Appointment of Receiver. If any portion of the Mortgaged Property has
been leased, after the happening of any Event of Default and during its continuance or upon the
commencement of any proceedings to foreclose this Mortgage or to enforce the specific
performance hereof or in aid thereof or upon the commencement of any other judicial proceeding
to enforce any right of the Mortgagee, the Mortgagee shall be entitled, as a matter of right, if it
shall so elect, without the giving of notice to any other party and without regard to the adequacy
or inadequacy of any security for the mortgage indebtedness, forthwith either before or after
declaring the unpaid principal of the Note to be due and payable, to the appointment of a receiver
or receIvers.
Section 3.5 Proceeds. The purchase money proceeds and avails of any sale of the
Mortgaged Property or any part thereof, and the proceeds and avails of any other remedy
hereunder, shall be paid to and applied as follows:
(1) First, to the payment of costs and expenses of foreclosure and of such sale
and of all proper expenses (including maximum attorney's fees permitted by law), liability and
advances incurred or made hereunder by the Mortgagee, and of all taxes, assessments or liens
superior to the lien of this Mortgage.
(2) Second, to the payment to the Mortgagee of the amount then owing or
unpaid under the Note and this Mortgage for principal, interest and any premium and in case any
such proceeds shall be insufficient to pay the whole amount so due, then first to final payments
of principal and then to the payment of interest thereon; and
(3) Third, to the payment of any excess to the Mortgagor, its successors and
assigns, or to whomsoever may be lawfully entitled to receive the same.
Section 3.6 Proceedings Discontinued. In case the Mortgagee shall have proceeded to
enforce any right under this Mortgage by foreclosure, sale, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall have been
determined adversely, then and in every such case the Mortgagor and Mortgagee shall be
restored to their former positions and rights hereunder with respect to the property subject to the
lien hereof.
2047500vl
17
ARTICLE IV
MISCELLANEOUS
Section 4.1 No Implied Waiver. Any delay by the Mortgagee in exercising or any
failure by the Mortgagee to exercise any right or remedy hereunder, or afforded by law, shall not
be a waiver of or preclude the exercise of any right or remedy hereunder, whether on such
occasion or any future occasion.
Section 4.2 Remedies Cumulative. Each remedy of the Mortgagee is distinct and
cumulative to each other right or remedy under this Mortgage or afforded by law and may be
exercised concurrently or independently.
Section 4.3 Successors and Assigns. The covenants and agreements herein contained
shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the
Mortgagor and the Mortgagee, including among the Mortgagor's assigns any purchasers or
transferees of the Mortgaged Property.
Section 4.4 Notices. Any notice, request, demand or other communication permitted
or required hereunder shall be in writing and shall be deemed duly given if deposited in the
United States mails, first class postage prepaid and addressed as follows:
If to the Mortgagor: St. Hubert Catholic Community
8201 Main Street
Chanhassen, Minnesota 55317
Attn: Business Administrator
If to the Mortgagee: KleinBank
600 West 78th Street
Chanhassen, MN 55317
Attn: Business Banking Department
or at such other address as either party shall notify the other of as aforesaid.
Section 4.5 Headings. The headings of the sections contained herein are for
convenience only and are not to be construed to be a part of or limit or affect the terms hereof.
Section 4.6 Indemnity. The Mortgagor shall indemnify Mortgagee and save the
Mortgagee harmless from all costs and expenses, including reasonable attorneys' fees, incurred
by Mortgagee in any proceedings or disputes of any kind in which the Mortgagee is made a
party, or appears, and which affects the indebtedness secured hereby, this Mortgage, the interest
created herein, or the Mortgaged Property. Proceedings and disputes shall include, but shall not
be limited to, exercise of the power of sale provided for in Section 3.2(2), condemnation action
involving the land and any action to protect the security provided for herein. Any amounts paid
by the Mortgagee, for which the Mortgagee is entitled to indemnity, may, at the Mortgagee's
option, be added to the indebtedness secured by this Mortgage.
2047500vl
18
Section 4.7 Expenses. The Mortgagor shall reimburse the Mortgagee and any
participant, upon demand, for all costs and expenses, including without limitation reasonable
attorneys' fees, appraisal fees, survey fees, closing charges, documentary or tax stamps,
recording and filing fees, insurance premiums and service charges, paid or incurred by the
Mortgagee in connection with (1) the preparation, negotiation, approval, execution and delivery
of the Loan Agreement, the Note, this Mortgage and any other documents and instruments
related hereto or thereto; (2) the negotiation of any amendments or modifications to any of the
foregoing documents, instruments or agreements and the preparation of any and all documents
necessary or desirable to effect such amendments or modifications; and (3) the enforcement by
the Mortgagee during the term hereof or thereafter of any of the rights or remedies of the
Mortgagee or any participant hereunder as a result of the occurrence of an Event of Default or
under any of the foregoing documents, instruments or agreements, including without limitation
costs and expenses of collection, whether or not suit is filed with respect thereto and whether
such costs are paid or incurred, or to be paid or incurred, prior to or after entry of judgment.
Section 4.8 Waiver of Trial bv Jury. EACH OF THE MORTGAGOR AND
MORTGAGEE HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY UNDER ANY
ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY OUT OF THIS
MORTGAGE.
Section 4.9 Construction Mortgage. This Mortgage constitutes a construction
mortgage as defined in Minnesota Statutes, Section 336.9-334.
2047500vl
19
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly executed
as of the day and year first above written.
ST. HUBERT CATHOLIC COMMUNITY
By
Its
By
Its
STATE OF MINNESOTA )
) SS
COUNTY OF )
The foregoing instrument was acknowledged before me this _ day of
2007, by , the , and by , the
, of St. Hubert Catholic Community, a Minnesota religious corporation, on
behalf of said corporation.
Notary Public
[Notarial Stamp]
2047500vl
S-1
EXHIBIT A
Legal Description
2047500v I
A-I
EXHIBIT B
Permitted Encumbrances
2047500vl
B-1
[Letterhead of City of Chanhassen]
, 2007
Mr. Paul Moe
Minnesota Department of
Employment and Economic Development
First National Bank Building
332 Minnesota Street, E200
St. Paul, Minnesota 55101
Re: City of Chanhassen, Minnesota - $6,300,000 Educational Facilities
Revenue Note, Series 2007 (St. Hubert School Project)
Dear Mr. Moe:
Attached hereto in duplicate is the application of the City of Chanhassen, Minnesota, for
approval of the above referenced project (the "Project") including a copy of the Resolution
approving the issuance of the Note adopted by the City Council.
As indicated in the attached Resolution, we believe that this Project fully meets the public
purpose requirements of Minnesota Statutes, Sections 469.152 to 469.1651 (the "Act"). St.
Hubert Catholic Community (the "Borrower"), a Minnesota religious corporation, provides,
among other things, Kindergarten through 8th grade education. The City Council desires to help
promote provision of educational programs and believes that the financing of the Project by the
issuance of the revenue Note will accomplish that objective. Reference is made to the
Resolution for a more definitive statement of the public purposes served by the financing.
Based on representations of the Borrower, the Project does not contain any property to be
sold or affixed or consumed in the production of property for sale, and does not include any
housing facility to be rented or used as a permanent residence.
The City has complied with the notice and hearing requirements of Minnesota Statutes,
Section 469.154, subdivision 4, and agrees it will comply with the reporting requirements set
forth in Minnesota Statutes, Section 469.154, subdivisions 5 and 7. The public hearing was held
on July 23, 2007, at the City Hall in the City of Chanhassen, a draft copy of the enclosed
application with all attachments was available for public inspection and all interested parties
were afforded an opportunity to express their views.
The City will undertake to encourage that the employment opportunities made available
by the Project will, if feasible, be offered to individuals who are unemployed or who are
economicall y disadvantaged.
2045 1 OOv 1
We respectfully request prompt approval by the Minnesota Department of Employment
and Economic Development of the Project under the provisions of the Act.
Sincerely,
CITY OF CHANHASSEN , MINNESOTA
20451 OOv 1
, 2007
Mr. Paul Moe
Minnesota Department of
Employment and Economic Development
First National Bank Building
332 Minnesota Street, E200
St. Paul, Minnesota 55101
Re: City of Chanhassen, Minnesota - $6,300,000 Educational Facilities Revenue Note, Series
2007 (St. Hubert School Project)
Dear Mr. Moe:
Our firm has been engaged to act as Bond Counsel in connection with the issuance of the
Note named above. This is to advise you that our firm has reviewed the attached resolution, the
feasibility letter of Midwest Healthcare Capital, the application of the City of Chanhassen,
Minnesota (the "City") and the letter of transmittal from the City. Based upon a review of that
material it is our opinion that the Project referred to therein constitutes a project within the
meaning of Minnesota Statutes, Section 469.153, Subdivision 2(b) and that the proposed
financing thereof as set forth in the attached resolution is authorized by law.
Please do not hesitate to give me a call if there are any questions.
Very truly yours,
Jenny Boulton
Enclosures
20451 OOv 1
[Letterhead of Midwest Healthcare Capital]
July _, 2007
City of Chanhassen
City Hall
7700 Market Boulevard
Chanhassen, MN 55317-0147
Re: City of Chanhassen, Minnesota - $6,300,000 Educational Facilities Revenue
Note, Series 2007 (St. Hubert School Project)
Ladies and Gentlemen:
At the request of St. Hubert Catholic Community, a Minnesota religious corporation (the
"Borrower"), we have conducted a study of the economic feasibility of the proposal that the City
of Chanhassen, Minnesota (the "City") issue a revenue Note under the provisions of the
Minnesota Municipal Industrial Development Act to provide funds to refinance outstanding debt
used to finance the construction and equipping of the St. Hubert School Facility (the "Project").
Our study has led us to the conclusion that on the basis of current financial conditions,
the Project is feasible from a financial standpoint and the revenue Note can be successfully
issued and sold.
We understand a copy of this letter will be forwarded by the City to the Minnesota
Department of Employment and Economic Development to serve as the letter of feasibility
required by the Commissioner.
Sincerel y,
MIDWEST HEALTHCARE CAPITAL
By
Its
20451 OOV 1
Revised Nov. 2004
ST ATE OF MINNESOTA
MINNESOT A DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT
BUSINESS AND COMMUNITY DEVELOPMENT DIVISION
APPLICATION FOR APPRO V AL OF INDUSTRIAL DEVELOPMENT BOND
PROJECT PURSUANT TO MINNESOTA STATUTES, SECTION 469.152 THROUGH 469.165
(Please submit this form in duplicate -all supporting data in single copy only)
Date:
, 2007
The governing body of the City of Chanhassen. Minnesota, hereby applies to the Minnesota Department of Employment and
Economic Development (Department) for approval of a proposed Industrial Development Bond issue as required by Minn. Stat.
9469.152 - 469.165.
Address of Issuer : Chanhassen City Halt 7700 Market Boulevard" P.O. Box 147. Chanhassen. MN 55317-0147
Telephone: 952-227-1110
Fax: 952-227-1110
Attn: Greg Sticha
We have entered into preliminary discussions with:
Firm: St. Hubert Catholic Community
Address: 8201 Main Street
City: Chanhassen State: MN Zip: 55317
Attorney: Gregorv Brennv. Funski" Mark & Johnson" P.A.
Address: 775 Prairie Center Drive" Suite 400
City: Eden Prairie State: MN Zip: 55344
Name of Project: St. Hubert School Proiect
This firm is engaged primarily in (nature of business): providing Kindergarten through 8th grade education (among other religious"
charitable" and educational oUl1loses)
The proceeds from the sale of the Industrial Development Bonds will be used to (describe the project): refinance outstanding debt
used to finance the construction and equipoing of the St. Hubert School facilitv.
Address of Project: 8201 Main Street Chanhassen. Minnesota
Acquisition of Land:
New construction:
Demolition and site preparation:
Acquisition and installation of Equipment:
Fees: Architectural, engineering, inspection,
fiscal, legal, administration, or printing:
Construction Interest:
Initial Bond Reserve:
Contingencies:
Other (refinancing):
TOT AL:
$ 0
o
o
o
126.000
o
o
103,,000
6.071.000
$ 6,300,000
2045112v1
It is presently estimated that construction will begin on or about N/A and will be complete on or about N/A. When completed, there
will be approximately _ new jobs created by the project at an annual payroll of approximately $ based upon currently
prevailing wages. (If applicable) There are _ existing jobs provided by business.
(If applicable) There will be N/Ajobs created by construction of the project. Number of hours N/A. Average wage level $N/A.
Repayment of the proposed issue will be amortized over a period of 20 years.
The following exhibits are furnished with this application and are incorporated herein by reference:
1. An opinion of bond counsel that the proposal constitutes a project under Minn. Stat. 9469.153, subd. 2.
2. A copy of the resolution by the governing body of the issuer giving preliminary approval for the issuance of its revenue
bonds and stating that the project, except for a project under Minn. Stat. 9469.153, subd. 2(g) or (j) would not be undertaken
but for the availability of Industrial Development Bond financing.
3. A comprehensive statement by the municipality indicating how the project satisfies the public or purpose and policies of
Minn. Stat. 9469.152 - 469.165.
4. A letter of intent to purchase the bond issue or a letter confirming the feasibility of the project from a financial standpoint.
5. A statement signed by the principal representative of the issuing authority to the effect that upon entering into the revenue
agreement, the information required by Minn. Stat. 9469.154, subd. 5 will be submitted to the Department (not applicable to
project under Minn. Stat. 9469.153, subd. 2(g) or (j).
6. A statement signed by the principal representati ve of the issuing authority that the project does not include any property to be
sold or affixed to or consumed in the production of property for sale, and does not include any housing facility to be rented or
used as a permanent residence.
7. A statement signed by a representative of the issuing authority that a public hearing was conducted pursuant to Minn. Stat.
9469.154, subd. 4. The statement shall include the date, time and place of the meeting and certify that a draft copy of this
application with all attachments was available for public inspection and that all interested parties were afforded an
opportunity to express their views.
8. Copies of notice(s) as published which indicate the date(s) of publication and the newspaper(s) in which the notice(s) were
published.
9. Provide a plan for compliance of employment preference of economically disadvantaged or unemployed individuals. (See
Minn. Stat. 9469.154, subd. 7.)
2045112v1
We, the undersigned, are duly elected representatives of the City of Chanhassen. Minnesota and solicit your approval of this project at
your earliest convenience so that we may carry it to a final conclusion.
Signed by:
(Principal Officers or Representatives of Issuing Authority; type or print official's name on the line to the left of the
signature line. Thank you.)
Tom Furlong
Mayor
Signature
Todd Gerhardt
Manager
Signature
This approval shall not be deemed to be an approval by the Department of the State of the feasibility of the project or the terms of the
revenue agreement to be executed or the bonds to be issued therefor.
Authorized Signature, Minnesota Department of
Employment and Economic Development
Date of Approval
Please return to:
Minnesota Department of Employment and Economic Development
Attn: Paul A. Moe, Director
Office of Business Finance
First National Bank Building
332 Minnesota Street, Suite E200
St. Paul, Minnesota 55101-1351
Phone: 651-297-1391 Fax: 651-296-5287
2045112v1
UNITED STATES OF AMERICA
ST ATE OF MINNESOTA
COUNTIES OF CARVER AND HENNEPIN
CITY OF CHANHASSEN
Educational Facilities Revenue Note, Series 2007
(St. Hubert School Project)
$6,185,137
FOR V ALUE RECEIVED the CITY OF CHANHASSEN, Carver and Hennepin
Counties, Minnesota (the "City") hereby promises to pay KLEINBANK, in Chanhassen,
Minnesota, its successors or registered assigns (the "Lender"), from the source and in the manner
hereinafter provided, the principal sum of SIX MILLION ONE HUNDRED EIGHTY-FIVE
THOUSAND ONE HUNDRED THIRTY-SEVEN DOLLARS ($6,185,137), or so much thereof
as remains unpaid from time to time (the "Principal Balance"), with interest thereon from the
date hereof until paid or otherwise discharged as set forth below, in any coin or currency which
at the time or times of payment is legal tender for the payment of public or private debts in the
United States of America, in accordance with the terms hereinafter set forth.
1. Commencing on the date hereof and continuing though August _,2012
(the "First Adjustment Date") interest shall accrue at the initial rate of 4.59% per annum (the
"Initial Rate").
2. On August _ in the years 2012, 2017 and 2022 (each an "Adjustment
Date"), the interest rate on this Note for interest payable commencing the _ day of the
following month will be adjusted to a rate per annum equal to _ % of the then current rate of
the Treasury Constant Maturities Index for five year obligations as reported by the Federal
Reserve for the preceding month (the "Adjusted Rate"). Except in the event of a Determination
of Taxability, as defined in the Loan Agreement, the annual rate of interest payable hereunder
shall not increase by more than 250 basis points during the term of this Note.
3. Principal and interest on this Note shall be payable in 240 equal monthly
installments on the _ day of each month commencing September _, 2007 and continuing
thereafter until August 23, 2027 (the "Final Maturity Date") in such amounts as are required to
fully amortize the Principal Balance, together with accrued interest thereon at the interest rate
then in effect, over the remaining term of the Note and monthly payments of principal and
interest shall be recomputed as of each Adjustment Date. Payments shall be applied first to
amounts which are neither principal nor interest, next to interest due on the Principal Balance
and thereafter to reduction of the Principal Balance.
4. In any event, the payments hereunder shall be sufficient to pay all
principal and interest due, as such principal and interest becomes due, and to pay any premium
(as defined in the Loan Agreement described below) or service charge, at maturity, upon
redemption, or otherwise. Interest shall be computed on the basis of the actual number of days
elapsed, in a year of 365 or 366 days, as applicable.
2047522vl
5. Principal and interest and premium or service charge, if any, due
hereunder shall be payable at the principal office of the Lender, or at such other place as the
Lender may designate in writing.
6. This Note is issued by the City to provide funds for a project, as defined in
Minnesota Statutes, Section 469.152, consisting of refinancing outstanding debt used to finance
the acquisition, construction and equipping of the St. Hubert School facility located at 8201 Main
Street which is owned and operated by St. Hubert Catholic Community, a Minnesota religious
corporation (the "Borrower") pursuant to a Loan Agreement dated as of August _,2007 by and
between the City and the Borrower (the "Loan Agreement"), and this Note is further issued
pursuant to and in full compliance with the Constitution and laws of the State of Minnesota,
particularl y Minnesota Statutes, Sections 469.152 to 469.1651 and pursuant to a resolution of the
City Council duly adopted on July 23, 2007 (the "Resolution").
7. This Note is secured by a Pledge Agreement of even date herewith
between the City and the Lender (the "Pledge Agreement") and is further secured by a Mortgage,
Security Agreement and Fixture Financing Statement, of even date herewith executed by the
Borrower, as mortgagor, in favor of the Lender, as mortgagee (the "Mortgage").
8. The City, for itself, its successors and assigns, hereby waives demand,
presentment, protest and notice of dishonor; and to the extent permitted by law, the Lender may
extend interest and/or principal of or any service charge or premium due on this Note, including
the Final Maturity Date, or release any part or parts of the property and interest subject to the
Mortgage or to any other security document from the same, all without notice to or consent of
any party liable hereon or thereon and without releasing any such party from such liability and
whether or not as a result thereof the interest on the Note is no longer exempt from the federal or
state income tax. In no event, however, may the Final Maturity Date of the Note be extended
beyond thirty (30) years from the date hereof.
9. This Note may be prepaid in whole, or in part, at the option of the
Borrower, on any monthly payment date, as provided in Section 5.1 of the Loan Agreement, by
paying the principal, interest and without premium or penalty. Notice of any such prepayment
shall be given to the Lender by first-class mail, addressed to the Lender at its registered address,
not less than thirty (30) days prior to the date fixed for prepayment. At the date fixed for
prepayment, funds shall be paid to the Lender at its registered address appearing below. If the
Borrower so requests, and if partial prepayment is in excess of 5.00% of the outstanding
principal balance of this Note on the date of a partial prepayment of this Note, the installments
hereunder will be adjusted to amortize the then outstanding principal amount over the remaining
term of this Note, payable commencing with the next installment due after such prepayment.
10. Upon a Determination of Taxability, as defined in the Loan Agreement
and Mortgage, this Note shall convert to a taxable obligation and the interest rate for interest
payable commencing the _ day of the following month shall be adjusted to an interest rate
per annum equal to the Treasury Constant Maturities Index for Five year obligations as published
in the Federal Reserve Statistical Release H.15 for the nearest business day preceding the
Determination of Taxability plus _ basis points (the "Taxable Rate"). Any interest accruing
from the Date of Taxability which is retroactively due as a result of the interest rate adjustment
2047522vl
2
shall be payable on the _ day of the following month along with regularly scheduled principal
payment and interest accruing from the previous payment date at the Taxable Rate.
11. Any partial prepayment shall be applied first to amounts which are neither
principal nor interest, next to the interest accrued on this Note and finally shall be applied against
the principal portion of the installments due under this Note in inverse order of maturity. The
monthly payments due under Paragraph 3 hereof, shall continue to be due and payable in full
until the entire Principal Balance, accrued interest and any premium due on this Note have been
paid.
12. As provided in the Resolution and subject to certain limitations set forth
therein, this Note is only transferable upon the books of the City at the office of the City
Manager, by the Lender in person or by its agent duly authorized in writing, at the Lender's
expense, upon surrender hereof together with a written instrument of transfer satisfactory to the
City Manager, duly executed by the Lender or its duly authorized agent. Upon such transfer the
City Manager will note the date of registration and the name and address of the new registered
owner in the registration blank appearing below. The City may deem and treat the person in
whose name the Note is last registered upon the books of the City with such registration noted on
the Note, as the absolute owner hereof, whether or not overdue, for the purpose of receiving
payment of or on the account of the Principal Balance, redemption price or interest and for all
other purposes, and all such payments so made to the Lender or upon his order shall be valid and
effective to satisfy and discharge the liability upon the Note to the extent of the sum or sums so
paid, and the City shall not be affected by any notice to the contrary.
13. All of the agreements, conditions, covenants, provisions and stipulations
contained in the Resolution, the Mortgage, the Loan Agreement and the Pledge Agreement are
hereby made a part of this Note to the same extent and with the same force and effect as if they
were fully set forth herein.
14. This Note and interest thereon and any service charge or premium, if any,
due hereunder are payable solely from the revenues and proceeds derived from the Loan
Agreement and the Mortgage and 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 other than
the revenues and proceeds pledged to the payment thereof, and do not give rise to a pecuniary
liability of the City or any of its officers, agents or employees, and no holder of this Note shall
ever have the right to compel any exercise of the taxing power of the City to pay this Note or the
interest thereon, or to enforce payment thereof against any property of the City, and this Note
does not constitute a charge, lien or encumbrance, legal or equitable, 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 Loan Agreement, sufficient to pay
all costs of such performance or the enforcement thereof.
15. If an Event of Default (as that term is defined in the Mortgage and the
Loan Agreement) shall occur, then the Lender shall have the right and option to declare the
Principal Balance and accrued interest thereon, immediately due and payable, whereupon the
same, plus any premiums or service charges, shall be due and payable, but solely from sums
2047522vl
3
made available under the Loan Agreement and the Mortgage. Failure to exercise such option at
any time shall not constitute a waiver of the right to exercise the same at any subsequent time.
16. The remedies of the Lender, as provided herein and in the Mortgage, the
Loan Agreement and the Pledge Agreement, are not exclusive and shall be cumulative and
concurrent and may be pursued singly, successively or together, at the sole discretion of the
Lender, 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.
17. The Lender 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 Lender 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.
18. This Note has been issued without registration under state or federal or
other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may
not be assigned or transferred in whole or part, nor may a participation interest in the Note be
given pursuant to any participation agreement, except in accordance with an applicable
exemption from such registration requirements.
19. The City has designated this Note as a "qualified tax exempt obligation"
pursuant to Section 265(b )(3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things
required to exist to happen and to be performed precedent to or in the issuance of this Note do
exist, have happened and have been performed in regular and due form as required by law.
2047522vl
4
IN WITNESS WHEREOF, the City has caused this Note to be duly executed in
its name by the manual signatures of the Mayor and Manager, the corporate seal having been
intentionally omitted as permitted by law, and has caused this Note to be dated as of August
_, 2007.
CITY OF CHANHASSEN , MINNESOTA
Mayor
Attest:
Manager
2047522vl
5-1
PROVISIONS AS TO REGISTRATION
The ownership of the unpaid Principal Balance of this Note and the interest accruing
thereon is registered on the books of the City of Chanhassen in the name of the holder last noted
below.
Date of
Registration
Name and Address
Registered Owner
Signature of City
Manager
August
~ 2007
KleinBank
600 West 78th Street
Chanhassen~ MN 55317
2047522vl
5-2
PLEDGE AGREEMENT
This Pledge Agreement is made as of the _ day of August, 2007, between the CITY
OF CHANHASSEN, MINNESOTA, a municipal corporation and political subdivision of the
State of Minnesota (the "City") and KLEINBANK, a Minnesota corporation (the "Lender").
Recitals
WHEREAS, St. Hubert Catholic Community, a Minnesota religious corporation (the
"Borrower") and the City have entered into a Loan Agreement (the "Loan Agreement") of even
date herewith, pursuant to which the City will lend to the Borrower the proceeds of the
$6,185,137 Educational Facilities Revenue Note, Series 2007 (St. Hubert School Project) (the
"Note"); and
WHEREAS, the Note is to be payable from and secured by the loan repayments to be
made by the Borrower under the Loan Agreement; and the Lender, as a condition to the purchase
of the Note, has required the execution of this Pledge Agreement.
NOW THEREFORE, as an inducement to the Lender to purchase the Note, and in
consideration of the promises and other good and valuable consideration, the receipt and
sufficiency whereof is hereby acknowledged, the parties hereby agree as follows:
1. In order to secure the due and punctual payment of the Note and all other sums
due the Lender under the Loan Agreement, the City does hereby pledge and assign to the Lender
all of the City's right,' title and interest in and to the Loan Agreement, subject to the City's rights
under the provisions of Section 7.9 thereof.
2. The City hereby represents and warrants to the Lender that the City's right, title
and interest in the Loan Agreement is free and clear of any lien, security interest or other
encumbrance other than that arising under this Pledge Agreement.
3. The City hereby authorizes the Lender to exercise, whether or not a default exists
under the Note or an Event of Default has occurred under the Loan Agreement, either in the
City's name or the Lender's name, any and all rights or remedies available to the City under the
Loan Agreement. The City agrees, on request of the Lender, to execute and deliver to the Lender
such other documents or instruments as shall be deemed necessary or appropriate by the Lender
at any time to confirm or perfect the security interest hereby granted. The City hereby appoints
the Lender its attorney-in-fact to execute on behalf of the City, and in its name, any and all such
assignments, financing statements or other documents or instruments which the Lender may
deem necessary or appropriate to perfect, protect or enforce the security interest hereby granted.
4. The City will not:
(a) exercise or attempt to exercise any remedies under the Loan Agreement
except as permitted by Sections 6.2 and 7.9 of the Loan Agreement, or terminate, modify or
accept a surrender of the same, or by affirmative act, consent to the creation or existence of any
security interest or other lien in the Loan Agreement to secure payment of any other
indebtedness; or
2047529vl
(b) receive or collect or permit the receipt or collection of any payments,
receipts, rentals, profits or other moneys under the Loan Agreement (except as allowed under
Section 7.9 thereof) or assign, transfer or hypothecate (other than to the Lender hereunder) any
or the same then due or to accrue in the future.
5. The City expressly covenants and agrees that the Lender shall be entitled to
receive all payments under the Loan Agreement (except any payments due the City under
Section 7.9 thereof), and hereby authorizes and directs the Borrower to make such payments
directly to the Lender. The Lender covenants and agrees that all payments received by the
Lender pursuant to the Loan Agreement shall be applied to the payment of principal and interest
on the Note.
6. The Lender agrees to advance the purchase price of the Note directly to the
Borrower as provided in the Note and the Loan Agreement. In accordance with Section 7.9 of
the Loan Agreement the Lender hereby assumes the City's and Lender's obligations to the
Borrower thereunder.
7. If an Event of Default (as defined in the Loan Agreement) shall occur and be
continuing, the Lender may exercise anyone or more or all, and in any order, of the remedies
hereinafter set forth, it being expressly understood that no remedy herein conferred is intended to
be exclusive of any other remedy or remedies; but each and every remedy shall be cumulative
and shall be in addition to every other remedy given herein or now or hereafter existing at law or
in equity or by statute:
(a) The Lender may, without prior notice of any kind declare the principal of
and interest accrued and any premium (as defined in the Loan Agreement) on the Note
immediately due and payable.
(b) The Lender may exercise any rights and remedies and options of a secured
party under the Uniform Commercial Code as adopted in the State of Minnesota and any and all
rights available to it under the Loan Agreement and Mortgage securing payment of the Note.
8. Whenever any of the parties hereto is referred to, such reference shall be deemed
to include the successors and assigns of such party; and all the covenants, promises and
agreements in this Pledge Agreement contained by or on behalf of the City or the Lender shall
bind and inure to the benefit of the respective successors and assigns of such parties whether so
expressed or not.
9. The unenforceability or invalidity of any provision or provisions of this Pledge
Agreement shall not render any other provision or provisions herein contained unenforceable or
invalid.
10. This Pledge Agreement shall in all respects be construed in accordance with and
governed by the laws of the State of Minnesota. This Pledge Agreement may not be amended or
modified except in writing signed by the City and the Lender.
2047529vl
2
11. This Pledge Agreement may be executed, acknowledged and delivered in any
number of counterparts and each of such counterparts shall constitute an original but all of which
together shall constitute one agreement.
12. The terms used in this Pledge Agreement which are defined in the Loan
Agreement shall have the meanings specified therein, unless the context of this Pledge
Agreement otherwise requires, or unless such terms are otherwise defined herein.
13. No obligation of the City hereunder shall constitute or give rise to a pecuniary
liability of the City or a charge against its general credit or taxing powers, but shall be payable
solely out of the proceeds and the revenues derived under the Loan Agreement.
2047529vl
3
IN WITNESS WHEREOF, the City and the Lender have caused this Pledge Agreement
to be duly executed as of the day and year first above written.
CITY OF CHANHASSEN, MINNESOTA
By
Mayor
By
City Manager
2047529vl
S-l
KLEINBANK
By
Its
Pledge Agreement between the City of Chanhassen, Minnesota and KleinBank.
2047529vl
5-2