G-1. Conduit Debt Issuance for Ridgeview Senior Housing FacilityMY OF
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 9522271100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.2271190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.2271120
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: 952.2271110
Public Works
7901 Park Place
Phone: 952.227.1300
Fax: 952.2271310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.b.chanhassennn.us
3 -1
MEMORANDUM
TO: Mayor and City Council
FROM: Greg Sticha, Finance Director
DATE: September 9, 2013
SUBJ: Approve Resolution Authorizing Issuance of a Revenue Note for
Ridgeview Senior Housing Facility
PROPOSED MOTION:
The City Council approves a resolution authorizing the issuance of a revenue note
for Ridgeview senior housing facility in the amount of $10,000,000.00.
Approval requires a simple majority vote of the City Council.
BACKGROUND
The City Council of the City of Chanhassen (the "City ") is being asked to authorize
the issuance of the above - referenced obligation (the "Series 2013A Note ") in a
conduit debt financing for the benefit of The Legends at Hazeltine, LLC, a Delaware
limited liability company (the `Borrower "), the members of which are Ridgeview
Medical Center, a Minnesota nonprofit corporation, and Intergenerational Living &
Health Care, Inc., a Minnesota nonprofit corporation.
The proceeds will be applied by the Borrower to the acquisition, construction, and
equipping of a 126 -unit progressive senior living community comprised of
approximately 36 independent - living units, approximately 67 assisted - living units,
and approximately 23 memory -care units (the "Project ") located on Hazeltine
Boulevard in the City of Chaska.
This Note does not constitute a general or moral obligation of the City. The debt is
the sole responsibility of the Obligor (Ridgeview Medical Center). Ridgeview
Medical Center 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, Ridgeview is paying a fee of three quarters of one percent ($75,000.00) to
the city.
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 note.
Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow
Todd Gerhardt
September 9, 2013
Page 2
RECOMMENDATION
Staff recommends that City Council hold the required public hearing and adopt the
resolution allowing for the issuance of the note.
Approval of this item requires a simple majority vote of those City Council members
present.
ATTACHMENTS
1. Resolution Approving the Issuance and Sale
2. Loan Agreement
3. Note Purchase Agreement
4. Revenue Note
5. Assignment Loan Agreement
E\gregs\debt \debt 2013 \conduit debt memo ridgeview 9- 9.doex
RESOLUTION NO.
AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF A SENIOR
HOUSING REVENUE NOTE (THE LEGENDS AT HAZELTINE SENIOR
HOUSING PROJECT), SERIES 2013A, IN A PRINCIPAL AMOUNT OF UP TO
$10,000,000, FOR THE BENEFIT OF THE LEGENDS AT HAZELTINE, LLC;
PAYABLE SOLELY FROM REVENUES PLEDGED PURSUANT TO A LOAN
AGREEMENT; APPROVING THE FORM OF AND AUTHORIZING THE
EXECUTION AND DELIVERY OF THE NOTE, THE LOAN AGREEMENT,
AND RELATED DOCUMENTS; AND PROVIDING FOR THE SECURITY,
RI13HTS, AND REMEDIES WITH RESPECT TO THE NOTE
WHEREAS, the City of Chanhassen, a statutory city and political subdivision of the State of
Minnesota (the "City "), is authorized and empowered by the provisions of Minnesota Statutes,
Chapter 462C, as amended (the "Act "), to develop and administer programs for making loans pursuant to
the terms of the Act to finance multifamily housing developments, comprised of a building or buildings
which include one or more dwelling units, each to be rented by a person or family for use as a residence;
and
WHEREAS, a multifamily housing development financed under the provisions of the Act may
consist of a multifamily housing development combined with a new or existing health care facility if:
(i) the multifamily housing development is designed and intended to be used for rental occupancy; (ii) the
multifamily housing development is designed and intended to be used primarily by elderly or physically
handicapped persons; and (iii) nursing, medical, personal care, and other health - related, assisted - living
services are available on a twenty -four hour basis in the multifamily housing development to the
residents; and
WHEREAS, to finance a program for a multifamily housing development, the City may, upon
approval of a housing program with respect to such proposed multifamily housing development, issue and
sell revenue bonds or obligations which shall be payable exclusively from the revenues derived from the
program and the multifamily housing development; and
WHEREAS, in the making of multifamily housing loans and the issuance of revenue bonds or
other obligations, the City may exercise any of the powers the Minnesota Housing Finance Agency may
exercise under Minnesota Statutes, Chapter 462A, as amended, without limitation under the provisions of
Minnesota Statutes, Chapter 475, as amended; and
WHEREAS, The Legends at Hazeltine, LLC, a Delaware limited liability company (the
"Borrower "), was formed on May 1, 2013, to own and operate an approximately 126 -unit progressive
senior living community (the "Project'), to be located on an approximately five -acre parcel in the City of
Chaska bounded on the west by Highway 41, on the south by Hazeltine Boulevard, on the north by the
City of Chaska golf course, and on the east by Hazeltine Gates office building (1107 Hazeltine
Boulevard), and the sole members of the Borrower (each owning a fifty - percent interest in the Borrower)
are Ridgeview Medical Center, a Minnesota nonprofit corporation, and Intergenerational Living & Health
Care, Inc., a Minnesota nonprofit corporation; and
WHEREAS, the Project will include approximately thirty -six (36) independent - living units,
approximately sixty -seven (67) assisted - living units, and approximately twenty -three (23) memory -care
units, with future plans for an outpatient rehabilitation center and sub -acute transitional care on -site, will
contain approximately 160,000 square feet of space on four floors and a partial underground garage, and
the total cost of the Project will be approximately $34,000,000 to be financed with up to approximately
$25,000,000 of tax- exempt debt and approximately $9,000,000 of equity; and
WHEREAS, the Borrower has proposed that: (i) the City issue a revenue obligation pursuant to
the Act in the aggregate principal amount of up to $10,000,000, in the form of a note designated as the
Senior Housing Revenue Note (The Legends at Hazeltine Senior Housing Project), Series 2013A (the
"Note "), the proceeds of which will be loaned by the City to the Borrower to be applied by the Borrower
to finance a portion of the costs to the Borrower of the acquisition, construction, and equipping of the
Project; (ii) the City of Greenwood, a statutory city and political subdivision of the State of Minnesota
(the "City of Greenwood "), issue a revenue obligation pursuant to the Act in the aggregate principal
amount of up to $10,000,000, in the form of a note designated as the Senior Housing Revenue Note (The
Legends at Hazeltine Senior Housing Project), Series 2013B (the "Series 2013B Note "), the proceeds of
which will be loaned by the City of Greenwood to the Borrower to be applied by the Borrower to finance
a portion of the costs to the Borrower of the acquisition, construction, and equipping of the Project; and
(iii) the City of Shorewood, a statutory city and political subdivision of the State of Minnesota (the "City
of Shorewood "), issue a revenue obligation pursuant to the Act in the aggregate principal amount of up to
$5,000,000, in the form of a note designated as the Senior Housing Revenue Note (The Legends at
Hazeltine Senior Housing Project), Series 2013C (the "Series 2013C Note "), the proceeds of which will
be loaned by the City of Shorewood to the Borrower to be applied by the Borrower to finance a portion of
the costs to the Borrower of the acquisition, construction, and equipping of the Project; and
WHEREAS, under the provisions of Minnesota Statutes, Section 471.59, as amended, and
Minnesota Statutes, Section 471.656, as amended, the City, the City of Greenwood, and the City of
Shorewood are authorized to issue the Note, the Series 2013B Note, and the Series 2013C Note to finance
a facility located in the City of Chaska if the City, the City of Greenwood, the City of Shorewood, and the
City of Chaska enter into a cooperation agreement under the terms of which the City, the City of
Greenwood, and City of Shorewood are authorized by the City of Chaska to issue such revenue
obligations; and
WHEREAS, under the requirements of Section 462C.03 of the Act, a joint housing program has
been prepared with respect to the Project (the "Housing Program "), a copy of the Housing Program has
been delivered to the Metropolitan Council for its review and comments in accordance with the
requirements of the Act, and a public hearing will be held by the governing bodies of the City, the City of
Greenwood, the City of Shorewood, and the City of Chaska with respect to the Housing Program after
publication of a notice of public hearing in a newspaper of general circulation in each city at least
fifteen (15) days before the date of the public hearing; and
WHEREAS, Section 147(t) of the Internal Revenue Code of 1986, as amended (the "Code "), and
regulations promulgated thereunder, require that prior to the issuance of obligations the interest on which
is not includable in gross income for federal income tax purposes: (i) this City Council must approve the
issuance of the Note after conducting a public hearing thereon preceded by publication of a notice of
public hearing (in the form required by Section 147(f) of the Code and applicable regulations) in a
newspaper of general circulation in the City at least fourteen (14) days prior to the public hearing date;
and (ii) the City Council of the City of Chaska must grant host approval to the issuance of the Note by the
City after conducting a public hearing thereon preceded by publication of a notice of public hearing (in
the form required by Section 147(f) of the Code and applicable regulations) in a newspaper of general
circulation in the City of Chaska at least fourteen (14) days prior to the public hearing date; and
WHEREAS, a notice of public hearing in the form required by the Act and by Section 147(f) of
the Code was published in the Chanhassen Villager on August 22, 2013, the official newspaper of the
City and a newspaper of general circulation in the City and at a meeting of the City Council of the City on
September 9, 2013, the City Council of the City conducted a public hearing at which a reasonable
opportunity was provided for interested individuals to express their views, both orally and in writing, on
the Project, the Housing Program, and the proposed issuance of the Note; and
WHEREAS, a notice of public hearing in the form required by Section 147(f) of the Code was
published in the Chaska Herald on August 9, 2013, the official newspaper of the City of Chaska and
newspaper of general circulation in the City of Chaska and at a regular meeting of the City Council of the
City of Chaska to be held on September 16, 2013, the City Council of the City of Chaska will conduct a
public hearing at which a reasonable opportunity will be provided for interested individuals to express
their views, both orally and in writing, on the Project, the Housing Program, and the proposed issuance of
the Note by the City, the Series 2013B Note by the City of Greenwood, and the Series 2013C Note by the
City of Shorewood; and
WHEREAS, following the conclusion of the public hearing at its meeting on September 16, 2013,
the City Council of the City of Chaska will consider a resolution granting host approval to the issuance of
the Note by the City, the issuance of the Series 2013B Note by the City of Greenwood, and the issuance
of the Series 2013C Note by the City of Shorewood;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY AS
FOLLOWS:
1. OBLIGATIONS OF THE CITY. The City acknowledges, finds, determines, and
declares that the issuance of the Note is authorized by the Act and is consistent with the purposes of the
Act and that the issuance of the Note, and the other actions of the City under a Loan Agreement, dated on
or after October 1, 2013 (the "Loan Agreement "), between the City and the Borrower, and this resolution
constitute a public purpose and are in the interests of the City and the City of Chaska. hr authorizing the
issuance of the Note for the purpose of making a loan to the Borrower (the "Loan") to finance the Project
and related costs, the City's purpose is, and the effect thereof will be, to promote the public welfare of the
City and the City of Chaska and their respective residents by providing for the development of a
multifamily housing facility for senior residents of the City of Chaska and the surrounding market area of
the Project and otherwise farthering the purposes and policies of the Act. The Note will be issued
pursuant to the terms of the Loan Agreement, an Agreement to Purchase, dated on or after
September 9, 2013 (the "Agreement to Purchase "), between the City, the Borrower, and Bell State Bank
& Trust (the "Lender"), and this resolution. The Note and the interest on the Note: (i) shall be payable
solely from the revenues pledged therefor under the Loan Agreement; (ii) shall not constitute a debt of the
City within the meaning of any constitutional or statutory limitation; (iii) shall not constitute nor give rise
to a pecuniary liability of the City or a charge against its general credit or taxing powers; (iv) shall not
constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City other than the
City's interest in the Loan Agreement; and (v) shall not constitute a general or moral obligation of the
City.
2. ISSUANCE OF THE NOTE. For the purposes set forth above, there is hereby authorized
the issuance, sale, and delivery of the Note in the maximum aggregate principal amount not to exceed
$10,000,000. The City hereby authorizes the Note to be issued as a "tax- exempt bond" the interest on
which is not includable in gross income for federal and State of Minnesota income tax purposes. The
Note, substantially in the form now on file with the City, is hereby approved with the amendments
referenced herein. All of the provisions of the Note, when executed as authorized herein, shall be deemed
to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall
be in full force and effect from the date of execution and delivery thereof. The Note shall bear interest at
the rate or rates, shall be designated, shall be numbered, shall be dated, shall mature, shall be issued in the
aggregate principal amount, shall be subject to redemption prior to maturity, shall be in such form, and
shall have such other terms, details, and provisions as are prescribed in the Note, in the form now on file
with the City, which form is hereby approved, with such necessary and appropriate variations, omissions,
and insertions (including changes to the aggregate principal amount of the Note, the stated maturity of the
Note, the interest rate on the Note, and the terms of redemption of the Note) as the Mayor and the City
Manager (collectively, the "City Officials "), in their discretion, shall determine. The execution of the
Note with the manual or facsimile signatures of the City Officials and the delivery of the Note by the City
shall be conclusive evidence of such determination.
The Note shall not constitute a general or moral obligation of the City but is a special, limited
obligation of the City payable solely from the revenues provided by the Borrower pursuant to the terms of
the Loan Agreement and from the revenues and security pledged, assigned, and granted pursuant to any
security documents provided by the Borrower to the City or to the Lender. As provided in the Loan
Agreement, the Note shall not be payable from nor charged upon any funds other than the revenues
pledged to their payment, nor shall the City be subject to any liability thereon, except as otherwise
provided in this paragraph. No holder of the Note shall ever have the right to compel any exercise by the
City of any taxing powers of the City to pay the Note or the interest or premium thereon, or to enforce
payment thereof against any property of the City except the interests of the City in the Loan Agreement
and the revenues and assets thereunder, which will be assigned to the Lender under the terms of an
Assignment of Loan Agreement, dated on or after October 1, 2013 (the "Assignment of Loan
Agreement') between the City, the Borrower, and the Lender. The Note shall recite that the Note is
issued pursuant to the Act, and that the Note, including interest and premium, if any, thereon, is payable
solely from the revenues and assets pledged to the payment thereof, and the Note shall not constitute a
debt of the City within the meaning of any constitutional or statutory limitations.
3. THE LOAN AGREEMENT AND ASSIGNMENT OF LOAN AGREEMENT. The City
Officials are hereby authorized and directed to execute and deliver the Loan Agreement and the
Assignment of Loan Agreement on behalf of the City. The loan repayments to be made by the Borrower
under the Loan Agreement are to be fixed so as to produce revenues sufficient to pay the principal of,
premium, if any, and interest on the Note when due. All of the provisions of the Loan Agreement and the
Assignment of Loan Agreement, when executed and delivered as authorized herein, shall be deemed to be
a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in
full force and effect from the date of execution and delivery thereof. The Loan Agreement and the
Assignment of Loan Agreement shall be substantially in the forms now on file with the City which are
hereby approved, with such necessary and appropriate variations, omissions, and insertions as the City
Officials, in their discretion, shall determine, and the execution and delivery thereof by the City Officials
shall be conclusive evidence of such determinations.
4. AGREEMENT TO PURCHASE. The City Officials are hereby designated as the
representatives of the City with respect to the issuance of the Note and the transactions related thereto and
are hereby authorized and directed to accept and execute the Agreement to Purchase. All of the
provisions of the Agreement to Purchase, when executed and delivered as authorized herein, shall be
deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein
and shall be in full force and effect from the date of execution and delivery thereof. The Agreement to
Purchase shall be substantially in the form now on file with the City on the date hereof, and is hereby
approved, with such necessary and appropriate variations, omissions, and insertions as the City Officials,
in their discretion, shall determine, and the execution and delivery thereof by the City Officials shall be
conclusive evidence of such determination.
5. OTHER CITY DOCUMENTS. The City Officials are authorized upon request to furnish
certified copies of all proceedings and records of the City relating to the Note, and such other affidavits
and certificates as may be required to show the facts relating to the Note as such facts appear from the
books and records in the custody and control of the City; and all such certified copies, certificates, and
affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of
all statements contained therein. The City Officials are hereby further authorized to execute and deliver,
on behalf of the City, all other certificates, instruments, and other written documents that may be
requested by Kennedy & Graven, Chartered, as bond counsel to the City ( "Bond Counsel "), the Lender,
or other persons or entities in conjunction with the issuance of the Note and the expenditure of the
proceeds of the Note. Without imposing any limitations on the scope of the preceding sentence, the City
Officials are specifically authorized to execute and deliver such other documents and certificates as are
necessary or appropriate in connection with the issuance, sale, and delivery of the Note; an Information
Return for Tax- Exempt Private Activity Bond Issues, Form 8038, with respect to the Note; and an
endorsement to a tax certificate of the Borrower as to arbitrage, rebate, and other federal tax matters
executed and delivered in connection with the issuance of the Note. The City Officials are hereby
authorized and directed to execute and deliver all other instruments and documents necessary to
accomplish the purposes for which the Note is to be issued and the Loan Agreement, the Assignment of
Loan Agreement, and the Agreement to Purchase are to be executed and delivered. The preparation and
filing of Uniform Commercial Code financing statements with respect to the assignment of the interests
of the City in the Loan Agreement and the other loan documents are hereby authorized. The City hereby
authorizes Bond Counsel, to prepare, execute, and deliver its approving legal opinions with respect to the
Note.
6. SUBSEQUENT AMENDMENTS. On any date subsequent to the date of issuance of the
Note, the City Officials are hereby authorized to execute and deliver any amendments or supplements to
any of the documents referred to in this resolution on behalf of the City if after review by the City
Attorney and Bond Counsel, the City Officials determine that the execution and delivery of such
amendment or supplement is in the interests of the City. The City Officials may impose any terms or
conditions on their execution and delivery of any such amendment or supplement as the City Officials
deem appropriate.
7. SECURITY. The City acknowledges and hereby approves the following to be provided
as security for the payment of the obligations of the Borrower under the Loan Agreement and the
payment of the principal of, premium, if any, and interest on the Note: (i) a Combination Mortgage,
Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents, to be dated on or
after October 1, 2013 (the "Mortgage "), executed and delivered by the Borrower to the Lender; and
(ii) such other security documents as the Borrower and the Lender agree are necessary or appropriate to
ensure timely payment of the Loan and the Note. All such security documents, if any are delivered, shall
be substantially in the forms authorized by the Borrower. In the discretion of the Borrower and the
Lender, the proceeds of the Note may be disbursed in accordance with the terms of a Disbursing
Agreement, dated on or after October 1, 2013 (the "Disbursing Agreement "), between the Borrower, the
Lender, and a disbursing agent to be selected by the Borrower (the "Disbursing Agent "), for the payment
of the costs of the Project and related costs in accordance with the terms of the Loan Agreement and the
Disbursing Agreement. The Disbursing Agreement shall be substantially in the form authorized by the
Borrower.
8. LIMITATIONS OF LIABILITY. No covenant, stipulation, obligation, or agreement
herein contained or contained in the aforementioned documents shall be deemed to be a covenant,
stipulation, obligation, or agreement of any member of the City Council of the City, or any officer, agent,
or employee of the City in that person's individual capacity, and neither the City Council of the City nor
any officer or employee executing the Note shall be personally liable on the Note or be subject to any
personal liability or accountability by reason of the issuance thereof. No provision, covenant, or
agreement contained in the aforementioned documents, the Note, or in any other document relating to the
5
Note, and no obligation therein or herein imposed upon the City or the breach thereof, shall constitute or
give rise to a general or moral obligation of the City or any pecuniary liability of the City or any charge
upon its general credit or taxing powers. In making the agreements, provisions, covenants, and
representations set forth in such documents, the City has not obligated itself to pay or remit any funds or
revenues, other than funds and revenues derived from the Loan Agreement, which are to be applied to the
payment of the Note, as provided therein.
Except as herein otherwise expressly provided, nothing in this resolution or in the aforementioned
documents expressed or implied, is intended or shall be construed to confer upon any person or firm or
corporation, other than the City and the Lender, any right, remedy, or claim, legal or equitable, under and
by reason of this resolution or any provisions hereof, this resolution, the aforementioned documents, and
all of their provisions being intended to be and being for the sole and exclusive benefit of the City, the
Borrower, and the Lender.
9. SEVERABILITY. In case any one or more of the provisions of this resolution, other
than the provisions limiting the liability of the City, or of the aforementioned documents, or of the Note
issued hereunder, shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not
affect any other provision of this resolution, or of the aforementioned documents, or of the Note, but this
resolution, the aforementioned documents, and the Note shall be construed and endorsed as if such illegal
or invalid provisions had not been contained therein.
10. VALIDITY OF THE NOTE. The Note, when executed and delivered, shall contain a
recital that it is issued pursuant to the Act, and such recital shall be conclusive evidence of the validity of
the Note and the regularity of the issuance thereof, and that all acts, conditions, and things required by the
laws of the State of Minnesota relating to the adoption of this resolution, to the issuance of the Note, and
to the execution of the aforementioned documents to happen, exist, and be performed precedent to the
execution of the aforementioned documents have happened, exist, and have been performed as so
required by law.
11. ADDITIONAL ACTIONS. The officers of the City, the City Attorney, Bond Counsel,
other attorneys, and other agents or employees of the City are hereby authorized to do all acts and things
required of them by or in connection with this resolution, the aforementioned documents, and the Note
for the full, punctual, and complete performance of all the terms, covenants, and agreements contained in
the Note, the aforementioned documents, and this resolution.
12. FEES AND INDEMNIFICATION. The Borrower has agreed to pay the administrative
fees of the City in accordance with the policy and procedures of the City. It is hereby determined that any
and all costs incurred by the City in connection with the financing of the Project will be paid by the
Borrower. It is understood and agreed by the Borrower that the Borrower shall indemnify the City against
all liabilities, losses, damages, costs, and expenses (including attorney's fees and expenses incurred by the
City) arising with respect to the Project and the Note, as provided for and agreed to by and between the
Borrower and the City in the Loan Agreement.
13. BANK - QUALIFIED OBLIGATION. The Note is hereby designated by the City as a
"qualified tax - exempt obligation" for purposes of Section 265(b)(3) of the Code. In order to qualify the
Note as a "qualified tax - exempt obligation," the City makes the following factual statements and
representations:
(a) the Note will be a "private activity bond," as defined in Section 141 of the Code,
but the City has been advised that the Note will also be a "qualified 501(c)(3) bond," as defined
in Section 145 of the Code;
(b) the City shall designate the Note as a "qualified tax- exempt obligation" for
purposes of Section 265(b)(3) of the Code;
(c) the City reasonably anticipates that the principal amount of tax - exempt
obligations (other than "private activity bonds" that are not "qualified 501(c)(3) bonds ") to be
issued by the City (and all subordinate entities of the City) during calendar year 2013 will not
exceed $10,000,000; and
(d) the City has not designated more than $10,000,000 of tax- exempt obligations
(including the Note) during calendar year 2013 as "qualified tax- exempt obligations" for purposes
of Section 265(b)(3) of the Code.
14. EFFECTIVE DATE. This resolution shall take effect and be in force from and after its
approval.
(The remainder of this page is intentionally left blank.)
Adopted by the City Council of the City of Chanhassen, Minnesota, this September _ 2013.
CITY OF CHANHASSEN, MINNESOTA
0
DUl 11 -180 (.lU)
430755v.1
Tom Furlong
Mayor
First Draft
Monday, September 02, 2013
LOAN AGREEMENT
between
CITY OF CHANHASSEN, MINNESOTA
and
THE LEGENDS AT HAZELTINE, LLC
$10,000,000
City of Chanhassen, Minnesota
Senior Housing Revenue Note
(The Legends at Hazeltine Senior Housing Project)
Series 2013A
Dated as of 2013
Except for certain reserved rights, the interests of the City of Chanhassen, Minnesota, in this Loan
Agreement have been assigned to Bell State Bank & Trust., pursuant to the terms of an Assignment of
Loan Agreement, dated as of , 2013, between the City of Chanhassen, Bell State Bank &
Trust, and The Legends at Hazeltine, LLC.
This instrument was drafted by:
Kennedy & Graven, Chartered (JU)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402 -1458
ARTICLE I DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION .......................3
Section1.1
Definitions .............................................................................. ..............................3
Section 1.2
Rules of Interpretation ............................................................ ..............................7
ARTICLE H REPRESENTATIONS ................................................................. ..............................9
Section 2.1
Representations by the City ................................................... ..............................9
Section 2.2
Representations by the Borrower ........................................... ..............................9
Section 2.3
Lender May Rely on Representations ................................... .............................13
ARTICLEIII THE LOAN ................................................................................. .............................14
Section 3.1
Amount and Source of Loan ................................................. .............................14
Section 3.2
Documents Required Prior to Disbursement of the Loan ..... .............................14
Section 3.3
Disbursement of the Loan ..................................................... .............................15
Section 3.4
Requirements for Each Disbursement ................................... .............................15
Section 3.5
Requirement to Final Disbursement ...................................... .............................16
Section3.6
Repayment ............................................................................ .............................16
Section 3.7
City Administrative Fee ........................................................ .............................17
Section 3.8
Borrower's Obligations Unconditional ................................. .............................17
ARTICLE IV CONSTRUCTION OF PROJECT ............................................. .............................18
Section 4.1
Agreement to Construct the Project ..................................... .............................18
Section 4.2
Changes in the Project .......................................................... .............................18
Section 4.3
Inspection and Access ......................................................... .............................18
Section 4.4
Maintenance and Modification of Project by the Borrower . .............................19
ARTICLE V BORROWER'S COVENANTS .................................................. .............................20
Section5.1
Indemnity .............................................................................. .............................20
Section 5.2
Continuing Existence and Qualification ............................... .............................20
Section 5.3
Reports to Governmental Agencies ....................................... .............................21
Section 5.4
Security for the Loan ............................................................. .............................21
Section 5.5
Preservation of Tax Exemption ............................................. .............................21
Section 5.6
Lease or Sale of Project ......................................................... .............................24
Section 5.7
Project Operation and Maintenance Expenses ...................... .............................24
Section 5.8
Notification of Changes ........................................................ .............................24
Section 5.9
Financial Information ............................................................ .............................24
Section 5.10
Access to the Project ............................................................. .............................25
Section 5.11
Access to Books and Inspection ............................................ .............................25
Section 5.12
Debt Service Coverage Ratio ................................................ .............................25
Section 5.13
Borrower Operating Account ................................................ .............................26
Section 5.14
Additional Long -Term Debt .................................................. .............................26
Section 5.15
Loan Required to be in Balance ............................................ .............................26
Section 5.16
Advertising and Signage ....................................................... .............................26
Section 5.17
Additional Covenants ............................................................ .............................26
i
Section5.18 Days Cash on Hand ............................................................... .............................28
Section 5.19 Minimum Occupancy Requirements ..................................... .............................28
Section 5.20 Repair and Replacement Fund .............................................. .............................28
ARTICLE VI REPAYMENT OF LOAN ........................................................... .............................30
Section 6.1
Prepayment at Option of Borrower ....................................... .............................30
Section 6.2
Mandatory Redemption ......................................................... .............................30
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES .............................. .............................31
Section 7.1
Events of Default ................................................................... .............................31
Section7.2
Remedies ............................................................................... .............................33
Section 7.3
Disposition of Funds ............................................................. .............................34
Section 7.4
Manner of Exercise ............................................................... .............................34
Section 7.5
Attorneys' Fees and Expenses ............................................... .............................34
Section7.6
Effect of Waiver .................................................................... .............................35
Section 7.7
No Marshalling of Assets ...................................................... .............................35
ARTICLEVIII GENERAL ................................................................................... .............................36
Section8.1
Notices .................................................................................. .............................36
Section8.2
Binding Effect ....................................................................... .............................36
Section8.3
Severability ........................................................................... .............................36
Section 8.4
Amendments, Changes and Modifications ............................ .............................36
Section 8.5
Execution Counterparts ......................................................... .............................37
Section 8.6
Limitation of City's Liability ................................................ .............................37
Section 8.7
City's Fees and Costs ............................................................ .............................37
Section8.8
Release .................................................................................. .............................37
Section 8.9
Assignment by City and Survivorship of Obligations ........... .............................37
Section8.10
Required Approvals .............................................................. .............................38
Section 8.11
Termination Upon Retirement of Note ................................. .............................38
Section 8.12
Expenses of Lender ............................................................... .............................38
Section 8.13
Entire Agreement .................................................................. .............................38
Section 8.14
Further Assurances ................................................................ .............................38
Section 8.15
Not Partners; No Third Party Beneficiaries .......................... .............................39
Section 8.16
Maximum Interest Payable ................................................... .............................39
Section 8.17
Payment by Any Party .......................................................... .............................39
Section 8.18
Fee for Services Rendered .................................................... .............................39
Section8.19
Jurisdiction ............................................................................ .............................39
Section 8.20
Waiver of Trial by Jury ......................................................... .............................40
SIGNATURES............................................................................... ...............................
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ii
........ S -1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of , 2013 (the "Agreement "), is made and
entered into between the City of Chanhassen, a statutory city and political subdivision duly organized and
existing under the Constitution and laws of the State of Minnesota (the "City "), and The Legends at
Hazeltine, LLC, a Delaware limited liability company (the `Borrower "), the members of which are
Ridgeview Medical Center, a Minnesota nonprofit corporation, and Intergenerational Living & Health
Care, hic., a Minnesota nonprofit corporation.
RECITALS
The Borrower has requested the participation of the City, the City of Chaska (the "Host City "),
the City of Greenwood, and the City of Shorewood in the financing of the costs of the acquisition,
construction, and equipping of an approximately 126 -unit progressive senior living community comprised
of approximately 36 independent - living units, approximately 67 assisted - living units, and approximately
23 memory-care units (the "Project "). The Project will be owned and operated by the Borrower. The
Project will be located on an approximately five -acre parcel in the Host City bounded on the west by
Highway 41, on the south by Hazeltine Boulevard, on the north by the Host City golf course, and on the
east by Hazeltine Gates office building (1107 Hazeltine Boulevard).
The Borrower has requested that the City: (i) issue its Senior Housing Revenue Note (The
Legends at Hazeltine Senior Housing Project), Series 2013A (the "Note "), in the original aggregate
principal amount of $10,000,000, under the provisions of Minnesota Statutes, Chapter 462C, as amended
(the "Act "); (ii) sell the Note to Bell State Bank & Trust (the "Lender "); and (iii) apply the proceeds
derived from the sale of the Note to make a loan to the Borrower under the terms of this Agreement (the
"Loan").
Pursuant to a resolution of the governing body of the City, adopted on September 9, 2013 (the
"Resolution "), the City has authorized the issuance, sale, and delivery of the Note and the execution and
delivery of this Agreement.
The proceeds of the Loan will be applied by the Borrower to finance a portion of: (i) the
construction and equipping of the Project; (ii) the funding of one or more reserve funds to secure the
timely payment of Note; (iii) the payment of a portion of the interest on the Note; and (iv) the payment of
a portion of the costs of issuing the Note.
The Borrower will be absolutely and unconditionally obligated to repay the Loan, together with
interest thereon, at times and in amounts sufficient to pay when due the principal of and interest on the
Note.
To secure its obligations under this Agreement, the Borrower will execute and deliver to the
Lender a Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of
Leases and Rents, dated as of ' 2013 (the "Mortgage "), from the Borrower, as mortgagor,
in favor of the Lender, as mortgagee, and certain other assignments, security agreements, financing
statements, and other instruments evidencing or securing the Loan as may be required by the Lender.
To induce the Lender to purchase the Note and to secure the payment of the principal of,
premium, if any, and interest on the Note when due, the City will assign its rights under this Agreement to
the Lender (except for its rights to indemnification and payment of certain costs of the City as set forth in
1
this Agreement) under the terms of an Assignment of Loan Agreement, dated as of 2013
(the "Assignment of Loan Agreement'), between the City, the Lender, and the Borrower. '
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:
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2
ARTICLE I
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, Chapter 462C, as amended.
Administrative Fee: the fee payable to the City pursuant to Section 3.7 hereof.
Agreement or Loan Agreement: this Loan Agreement between the City and the Borrower as the
same may from time to time be amended or supplemented as herein provided.
Assignment of Loan Agreement: the Assignment of Loan Agreement, dated as of
, 2013, between the City, the Lender, and the Borrower, as it may be amended or
supplemented.
Assignment of Leases and Rents: the Assignment of Leases and Rents, dated , 2013,
from the Borrower in favor of the Lender
Assignment of Permits and Commitments. Contracts, Plans and Specifications: the Assignment
of Permits and Commitments, Contracts, Plans and Specifications, dated 2013, from the
Borrower in favor of the Lender.
Bond Counsel: the law firm of Kennedy & Graven, Chartered, of Saint Paul and Minneapolis,
Minnesota, and any opinion of Bond Counsel shall be a written opinion signed by such Bond Counsel.
Borrower: The Legends at Hazeltine, LLC, a Delaware limited liability company, 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.
Business Dav: any day other than a Saturday, a Sunday, or a day on which banking institutions in
the states of Minnesota and New York are closed.
Certificate of Hazardous Waste: the Certificate of Hazardous Waste, dated 2013,
executed by the Borrower in favor of the Lender, and any amendments thereto.
City: the City of Chanhassen, Minnesota, a statutory city and political subdivision duly organized
and existing under the Constitution and laws of the State of Minnesota, its successors and assigns.
Closing: the date there is physical delivery of the Note to the Lender and payment therefor.
Code: the Internal Revenue Code of 1986, as amended.
Completion: Completion of the construction of the Project in accordance with the Plans.
Completion of the Project shall be deemed to have occurred when the Borrower has furnished to the
Lender all of the following: (i) a certificate of substantial completion of the Project executed by the
Borrower, the architect for the Project and the general contractor, subject only to minor punch list work
(for which a hold back of Loan proceeds of not less than 150 percent of the reasonably estimated costs of
completion shall be retained); (ii) a final certificate or certificate of occupancy for the Project from the
local governmental authority; and (iii) other evidence reasonably satisfactory to the Lender certifying that
the Project complies with all applicable zoning ordinances, building and use regulations and codes and all
requirements with respect to licenses, permits and agreements necessary for the lawful use and operation
of the Project.
Completion Date: , 201. which is the date Completion of the Project is expected to
occur.
Cooperation Agreement: the Cooperation Agreement, dated , 2013, between the
Host City, the City, Greenwood, and Shorewood.
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 5.5(2) hereof.
Determination of Taxability: this term shall have the meaning ascribed to it in Section 5.5(2)
hereof.
Disbursement Agreement: the Disbursement Agreement, dated , 2013, between the
Borrower, the Lender, and the Title Company, acting as disbursing agent, as the same may be amended
from time to time.
Draw Request: the draw request set forth in Exhibit A of the Disbursement Agreement.
Event of Default: any of the events described in Section 7.1 hereof.
Exempt Organization: an organization that is exempt from federal income taxation pursuant to
Section 501(a) of the Code as a result of the application of Section 501(c)(3) of the Code.
Financial Statements: all balance sheets, income statements, and statements of cash flow for the
Borrower, delivered by the Borrower to the City or the Lender prior to Closing or pursuant to the
requirements of the Loan Agreement.
Final Sworn Construction Statement: The certificate as to sworn construction statement to be
executed by the Borrower and the General Contractor within ninety (90) days of the Closing which lists
the detailed costs and expenses for constructing the Project by the General Contractor.
Fiscal Year: the period commencing on the first day of January of any year and ending on the
last day of December of the same year or any other twelve (12) month period specified by the Borrower.
GAAP: generally accepted accounting principles at the time in the United States of America,
consistently applied.
General Contractor: , its successors and assigns.
Greenwood: the City of Greenwood, a statutory city and political subdivision duly organized and
existing under the Constitution and laws of the State of Minnesota.
Host City: the City of Chaska, a statutory city and political subdivision duly organized and
existing under the Constitution and laws of the State of Minnesota.
ILHC Guaranty Agreement the Guaranty Agreement, dated 2013, executed and
delivered by Intergenerational Living & Health Care, Inc., a Minnesota nonprofit corporation, to the
Lender to secure the obligations of the Borrower under this Agreement and the other Loan Documents.
Independent: when used with reference to an attorney, engineer, architect, certified public
accountant, consultant or other professional person, means a person who (i) is in fact independent,
(ii) does not have any material financial interest in the Borrower or the transaction to which a certificate
or opinion relates (other than payment to be received for professional services rendered), and (iii) is not
connected with the City or the Borrower as an officer, director, or employee.
Initial Sworn Construction Statement: the sworn construction statement to be executed by the
Borrower and the General Contractor dated as of, or prior to, the Closing which lists the detailed costs and
expenses for constructing the Project by divisions of materials and labor rather than by contractor and/or
subcontractor.
his ep cting Architect: or any other architect mutually agreeable to the
Borrower and the Lender.
Interest Expense: for any Fiscal Year, the interest expense of the Borrower for such Fiscal Year,
including all imputed interest on capital leases, as determined in accordance with GAAP.
Issuance Expenses: 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, the preparation and printing of this
Agreement, the Assignment of Loan Agreement, the Resolution, the Mortgage, 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 Exhibit A to the
Mortgage.
Lender: Bell State Bank & Trust, a banking association organized under the laws of the State of
North Dakota, its successors and assigns.
Loan: the loan of proceeds of the Note from the City to the Borrower described in Section 3.1 of
this Agreement.
Loan Documents: the Note; the Loan Agreement; the Assignment of Loan Agreement; the
Mortgage; the Certificate of Hazardous Waste; the Disbursement Agreement; the Assignment of Permits
and Commitments, Contracts, Plans and Specifications; and any other agreements between the Borrower
and the Lender entered into pursuant to or in connection with the Note.
Loan Repayments: the payments required to be made by the Borrower under the terms of this
Agreement to be applied to the payment of the principal and premium of, interest on, and other amounts
due under the terms of the Note.
Long Term Debt: all obligations for the payment of money incurred or assumed by a Person
which appear as liabilities on its balance sheet as determined in accordance with generally accepted
accounting principles consistently applied, having a final maturity of more than one year from the date of
its creation or which is renewable or extendible at the option of the obligor for a period or periods more
than one year from the date of its creation, but excluding any portion of it which is properly included in
current liabilities.
Members: Ridgeview Medical Center, a Minnesota nonprofit corporation, and Intergenerational
Living & Health Care, Inc., a Minnesota nonprofit corporation, as members of the Borrower.
Mortgage: the Combination Mortgage, Security Agreement, Fixture Financing Statement and
Assignment of Leases and Rents, dated as of , 2013, from the Borrower, as mortgagor, to
the Lender, as mortgagee, pursuant to which the mortgagor mortgages and grants a security interest in the
Mortgaged Property (as defined in the Mortgage) to the mortgagee, which includes the Land, to secure the
obligations of the Borrower under this Agreement.
Net Income: the net income or loss of the Borrower for a Fiscal Year excluding any
extraordinary gains, as determined in accordance with GAAP.
Note: the Senior Housing Revenue Note (The Legends at Hazeltine Senior Housing Project),
Series 2013A, issued by the City in the original aggregate principal amount of $10,000,000 pursuant to
the Resolution.
Person: any individual, corporation, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated organization, government, or any agency or political
subdivision thereof, or any other form of entity.
Plans: the architect plans and specifications for the Project.
Prepayment Premium: the premium payable on the Note pursuant to any optional prepayment
under the terms of the Note.
Principal Balance: so much of the principal sum on the Note as from time to time and remains
unpaid.
Project: an approximately 126 -unit progressive senior living community comprised of
approximately 36 independent - living units, approximately 67 assisted - living units, and approximately
23 memory-care units (the "Project'). The Project will be owned and operated by the Borrower. The
Project will be located on an approximately five -acre parcel in the Host City bounded on the west by
Highway 41, on the south by Hazeltine Boulevard, on the north by the Host City golf course, and on the
east by Hazeltine Gates office building (1107 Hazeltine Boulevard), the acquisition, construction, and
equipping of which is to be financed in part with the Loan.
Project Costs: all direct costs authorized by the Act and paid or incurred by the Borrower to
finance the Project.
Repair and Replacement Fund: the Repair and Replacement Fund to be established pursuant to
Section 5.18 hereof.
Resolution: Resolution No. adopted by the City Council of the City on
September 9, 2013, authorizing the issuance of the Note, together with any supplement or amendment
thereto.
Ridgeview Guaranty greement: the Guaranty Agreement, dated , 2013, executed
and delivered by Ridgeview Medical Center, a Minnesota nonprofit corporation, to the Lender to secure
the obligations of the Borrower under this Agreement and the other Loan Documents.
Security Agreement: the Security Agreement, dated 2013, between the Borrower
and the Lender.
Series 2013B Note: the Senior Housing Revenue Note (The Legends at Hazeltine Senior
Housing Project), Series 2013B, issued by the City of Greenwood in the original aggregate principal
amount of $10,000,000, the proceeds of which are to be loaned to the Borrower to finance a portion of the
Project Costs.
Series 2013C Note: the Senior Housing Revenue Note (The Legends at Hazeltine Senior
Housing Project), Series 2013C, issued by the City of Shorewood in the original aggregate principal
amount of $ the proceeds of which are to be loaned to the Borrower to finance a portion of
the Project Costs.
Shorewood: the City of Shorewood, a statutory city and political subdivision duly organized and
existing under the Constitution and laws of the State of Minnesota.
State: the State of Minnesota.
Sworn Construction Statement: the Initial Sworn Construction Statement or the Final Sworn
Construction Statement, as applicable, detailed costs and expenses for constructing the Project, executed
by the Borrower and the General Contractor.
Title or Title Company: , its successors and assigns.
Title Policy: an ALTA mortgagee's title insurance policy to be issued by Title in favor of the
Lender and the endorsements thereto required by the Lender in form and substance acceptable to the
Lender.
Total Principal and Interest Requirements: for any Fiscal Year, the sum of the principal
requirements on the Note and the principal requirements on all other indebtedness of the Borrower during
such Fiscal Year, plus Interest Expense, as determined in accordance with GAAP.
Treasury Relations: all proposed, temporary, or permanent federal income tax regulations then
in effect and applicable.
Uniform Commercial Code: the Uniform Commercial Code, as adopted in Minnesota, Minnesota
Statutes, Chapter 336, as amended.
Unrestricted Liquid Funds: unrestricted cash, cash equivalents, and marketable securities, but
specifically excluding and exclusive of (i) borrowed money payable in one year or less; (ii) any demand
obligations; and (iii) borrowed funds that are entrusted with a lender.
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.
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ARTICLE II
REPRESENTATIONS
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 and political subdivision
of the State of Minnesota and, based solely on the opinion of Bond Counsel, is authorized under the
provisions of the Act to issue the Note and loan the proceeds derived from the sale of the Note to the
Borrower under the terms of this Agreement.
(2) Based on the opinion of Bond Counsel, the issuance and sale of the Note, the execution
and delivery of this Agreement and the Assignment of Loan Agreement, and the performance of all
covenants and agreements of the City contained in the Note, this Agreement, and the Assignment of Loan
Agreement, and of all other acts and things required under the Constitution and laws of the State to make
the Note, this Agreement, and the Assignment of Loan Agreement valid and binding obligations of the
City in accordance with their terms, are authorized by the Act and have been duly authorized by the
Resolution.
(3) To the knowledge of the officials of the City executing this Agreement, without inquiry
or investigation, there is no pending or threatened suit, action, or proceeding against the City before any
court, arbitrator, and administrative or other governmental authority that challenges the City's execution
and delivery of the Note, this Agreement, and the Assignment of Loan Agreement.
(4) To the knowledge of the officials of the City executing this Agreement, without inquiry
or investigation, the execution and delivery of the Note, this Agreement, and the Assignment of Loan
Agreement will not constitute a breach of or default under any existing (i) provision of any special
legislative act relating to the establishment of the City, or (ii) agreement, indenture, mortgage, lease, or
other instrument to which the City is a party or by which it is bound.
(5) The Resolution has not been repealed, rescinded, amended, or revoked as of the date
hereof.
(6) To the knowledge of the officials of the City executing this Agreement, without inquiry
or investigation, 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 Delaware limited liability company, duly authorized 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, the Assignment of
Loan Agreement, the Mortgage, and all other Loan Documents to which the Borrower is a party, and to
apply the proceeds of the Loan to finance the Project Costs, as set forth in this Agreement, and by proper
corporate action has authorized the execution and delivery of this Agreement, the Assignment of Loan
Agreement, the Mortgage, and all other Loan Documents to which the Borrower is a party.
(2) The Members of Borrower are Exempt Organizations. 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 property used in an unrelated trade or business of
the Members determined by applying Section 513(a) of the Code or in the trade or business of any person
other than an Exempt Organization. The Members have not been notified by the Internal Revenue
Service of any revocation, modification, withdrawal, or rescission of the rulings or determination letters
recognizing the Members as Exempt Organizations. 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 either Member as an organization
described in Section 501(c)(3) of the Code.
(3) The execution and delivery of the Loan Documents to which the Borrower is a party, 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 formation documents, any restriction or any agreement or instrument to which the Borrower
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. The
Borrower represents and warrants that the Borrower's execution, delivery, and performance of the Loan
Documents to which it is a party do not require the consent or approval of or the giving of notice to any
person which approval has not been duly obtained or which notice has not been duly given.
(4) As of the date hereof, the use of the Project as designed and to be 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 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 the
Loan Documents to which it is a party; and no violation of any local ordinance, laws, regulation, or
requirement exists with respect to the Land. The representations contained in this subsection (4) as to the
presence or release of any hazardous substances or environmental conditions located in, on, or from the
Project are limited to the actual knowledge of individuals in the Borrower's or any Member's
employment in a position to know the same, without independent investigation or inquiry of any kind or
nature.
(5) The proceeds of the Note, together with any other funds to be contributed by the
Borrower or otherwise in accordance with this Agreement, will be sufficient to pay the costs of the
Project in a manner suitable for its use, 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 and
Section 145 of the Code.
(6) The Borrower is not in the trade or business of selling properties such as the Project and
operates the Project 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.
10
(7) The Borrower represents and warrants that there is no litigation, arbitration, legal or
administrative proceeding, tax audit, investigation, or other action of any nature pending or, to the
knowledge of the Borrower, threatened against, likely to be instituted against, or affecting the Borrower
or any of its properties which would have a material adverse effect on its financial condition. The
Borrower is not subject to any outstanding court or administrative order, writ, or injunction which would
have a material adverse effect on its financial condition. To the best of the Borrower's knowledge,
information and belief, no facts exist that give material adverse claims to third parties against the
Borrower, except as disclosed in writing to the City and the Lender.
(8) The Borrower represents and warrants that the Borrower is not in default in any respect
that affects its business, properties, operations, or condition, financial or otherwise, under any indenture,
mortgage, deed of trust, credit agreement, note, agreement, lease, sale agreement, or other instrument to
which the Borrower is a party or by which its properties is bound. To the best of the Borrower's
knowledge, information and belief, no other party to any contract with the Borrower is in default or
breach thereof and no circumstances exist which, with the giving of notice and/or the passing of time or
both, would constitute such default or breach. As of the date hereof, no Event of Default exists under this
Agreement.
(9) The Borrower has filed all federal and state income tax returns which, to the knowledge
of the managers 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.
(10) To the knowledge of the Borrower, no public official of the City has either a direct or
indirect fmancial interest in this Agreement nor will any public official either directly or indirectly benefit
financially from this Agreement.
(11) The Borrower has approved the terms and conditions of the Note.
(12) The Borrower intends to operate the Project until the date on which the entire principal
balance of the Note has been fully paid and is no longer outstanding.
(13) This Agreement and the other Loan Documents to which the Borrower is a party, when
executed and delivered by the Borrower, constitute legal, valid, and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms (subject, as to enforceability,
to limitations resulting from bankruptcy, insolvency, and other similar laws affecting creditors' rights
generally).
(14) The financial statements of the Borrower heretofore furnished to the Lender are complete
and correct in all material respects and fairly present the financial condition of the Borrower at the
respective dates of such financial statements. Since the most recent set of financial statements delivered
by the Borrower to the Lender, there have been no material adverse changes in the financial condition of
the Borrower.
(15) No consent, approval, order, or authorization of, or registration, declaration, or filing
with, or notice to, any governmental authority or any third party is required in connection with the
execution and delivery of this Agreement, or any of the other Loan Documents to which the Borrower is a
party or the carrying out or performance of any of the transactions required or contemplated hereby or
thereby or, if required, such consent, approval, order or authorization has been (or, with respect to the
filing of the Information Return for Tax - Exempt Private Activity Bond Issues, Form 8038, with the
11
Internal Revenue Service, will be) obtained or such registration, declaration, or filing has been or will be
accomplished or such notice has been or will be given.
(16) The Borrower has good title to the Land free and clear of all mortgages, liens, and
encumbrances, except the Permitted Encumbrances (as described in Exhibit B of the Mortgage). When
timely and properly recorded, the Mortgage will constitute a valid and perfected first mortgage lien on the
Land.
(17) The Project and the Land are in substantial compliance with the accessibility guidelines
set forth in Title III of The Americans with Disabilities Act of 1990, as the same may be amended from
time to time, and any rules and regulations promulgated thereunder.
(18) The Borrower covenants and agrees to promptly cure, and ratify the cure of, any defects
in the creation, issuance, and delivery of this Agreement, the Assignment of Loan Agreement, the
Mortgage, and any other Loan Documents to which it is a party. The Borrower covenants and agrees, at
its expense, to execute (or cause to be executed) and deliver to the Lender upon request all such other and
further documents, agreements, and instruments in compliance with the covenants and agreements of the
Borrower in the documents delivered in conjunction with the issuance of the Note to which it is a party, or
to evidence further and to describe more fully any collateral intended as security for the obligations of the
Borrower under this Agreement, or to correct any omissions in this Agreement, the Assignment of Loan
Agreement, the Mortgage, or any other Loan Documents to which it is a party, or to state more fully the
obligations and agreements of the Borrower set out in the this Agreement, the Assignment of Loan
Agreement, the Mortgage, or any other Loan Documents to which it is a party, or to perfect, protect, or
preserve any encumbrances created pursuant to this Agreement, the Assignment of Loan Agreement, the
Mortgage, or any other Loan Documents to which it is a party, or to make any recordings, to file any
notices, or to obtain any consents, all as may be reasonably necessary or appropriate in connection
therewith.
(19) No proceeds of the Note will be used to finance facilities primarily used for any religious
purpose.
(20) The Borrower covenants and agrees to pay all filing, registration, tax, or recording fees,
and all expenses incident to the execution and acknowledgment or filing of this Agreement and the
Mortgage and any extension, amendment, or renewal thereof.
(21) The Borrower agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect until such time as the Loan shall be paid in
full.
(22) The Borrower has, as of the date hereof, permitted no work on any of the Project which
could give rise to a lien on the Land or any portion of the Project or, if such work has commenced, has
provided adequate waivers, indemnifications, and other assurances to the Title Company so that the Title
Policy and all endorsements thereto can be issued without exception for filed or unfiled mechanics or
construction liens.
(23) The Borrower has obtained all licenses and permits which are required for the
construction of the Project as contemplated by the Plans.
(24) The Borrower has not guaranteed the obligations of any other Person.
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Section 2.3. Lender May Rely on Representations. The City and the Borrower agree that the
representations contained in this Article II are for the use and benefit of the City and the Lender, and the
Lender shall be entitled to rely thereon.
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13
ARTICLE III
THE LOAN
Section 3.1. Amount and Source of Loan. The City has authorized the issuance of the Note in
the principal amount of $10,000,000 to provide funds to make the Loan to the Borrower for its use in
financing the acquisition, construction, and equipping of the Project. Upon the execution and delivery of
this Agreement, the other Loan Documents, and all other documents and instruments necessary to the
transactions contemplated hereby and the recording and filing of such documents as may be required to be
filed or recorded by the Lender or Bond Counsel, the City will execute the Note and cause it to be
delivered to the Lender. The City agrees to lend to the Borrower the proceeds received from the sale of
the Note to the Lender by causing such sums to be advanced to the Borrower, or to its order, and
disbursed pursuant to the terms of this Agreement and the Disbursement Agreement.
Section 3.2. Documents Required Prior to Disbursement of the Loan. Prior to any advance of
the proceeds of the Note and the Loan, the Borrower shall deliver to the Lender, or cause to be delivered
to the Lender, the following:
(1) Note;
(2) Loan Agreement;
(3) Assignment of Loan Agreement;
(4) Mortgage;
(5) Disbursement Agreement;
(6) Security Agreement;
(7) Assignment of Leases and Rents;
(8) Assignment of Permits and Commitments, Contracts, Plans and Specifications;
(9) Ridgeview Guaranty Agreement and ILHC Guaranty Agreement;
(10) financing statements prepared in conformity with the provisions of the Uniform
Commercial Code with respect to the interests of the City in the Loan Agreement and with respect to the
interests of the Borrower in the Project;
(11) An opinion of Counsel for the Borrower as prescribed by the Lender and Bond Counsel;
(12) An opinion of Bond Counsel, to the effect that the City has duly authorized the Note and
that the interest thereon is exempt from federal income taxation and subject to other conditions acceptable
to the Lender;
(13) Determination letters from the hitemal Revenue Service evidencing that the Members are
exempt from federal income taxation under Section 501(a) of the Code as a result of the application of
Section 501(c)(3) of the Code, and such other documents and opinions as Bond Counsel may reasonably
require for purposes of rendering its opinion required in subsection (11) above;
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(14) On the date of issuance and delivery of the Note, an origination fee in an amount equal to
the product of 0.75 percent and the aggregate principal amount of the Note, the Series 2013B Note, and
the Series 2013C Note;
(15) Such other assignments, security agreements, guaranties, financing statements,
indemnities, opinions, and other instruments evidencing or securing the Loan as may be required by the
Lender; and
(16) Any certification, instrument, assignment, or other document referenced in or required by
any of the foregoing.
Section 3.3. Disbursement of the Loan. On the date hereof, $ of the proceeds
of the Note will be disbursed for Issuance Expenses, including the origination fee of the Lender in an
amount equal to the product of 0.75 percent and the principal face amount of the Note. The City hereby
authorizes the Lender to advance the proceeds of the Note directly to the Borrower. The proceeds of the
Loan evidenced by the Note shall be disbursed by the Lender to the Borrower, or to its order, pursuant to
the terms of this Agreement and the Disbursement Agreement to pay Project Costs.
Section 3.4. Requirements for Each Disbursement. No disbursement shall be made by the
Lender from the proceeds of the Note unless and until the following conditions have been satisfied by the
Borrower, each in a manner acceptable to the Lender:
(1) All warranties and representations made in the Loan Documents to which it is a party
shall remain true and correct as if made on the date of each disbursement.
(2) At least ten (10) Business Days prior to each requested disbursement, the Borrower shall
have furnished to the Lender, Title Company, and Inspecting Architect the documents required for a
disbursement pursuant to the Disbursement Agreement.
(3) No portion of the Land or the Project shall have been materially damaged by fire or other
casualty unless the Lender shall have received insurance proceeds sufficient, in the sole judgment of the
Lender, to effect the satisfactory restoration of the Land and the Project and to permit the Completion on
or before the Completion Date.
(4) No "Event of Default' nor any event which, with the passing of time or the giving of
notice, or both, could become an "Event of Default' under the Loan Documents shall have occurred and
be continuing.
(5) If requested by the Lender, the Title Company shall provide the Lender an updated
endorsement to the Title Policy.
(6) Upon request of the Lender, upon completion of the foundation for the Project, the
Borrower shall provide to the Lender and Title Company an updated survey, in form and substance
acceptable to the Lender showing that the Project is being constructed in the location shown on the Plans
within the lot lines, within the setback requirements, and otherwise according to applicable law. The
Lender may also require an updated survey at a later date if the Lender reasonably believes that any
portion of the Project may have been constructed in an area that later may cause title or other problems.
(7) The Loan shall be in balance as required by Section 5.16 hereof
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(8) Prior to any disbursement of proceeds to pay for the delivery or installation of fixtures
and equipment or other personal property not being provided by the General Contractor, the Borrower
shall deliver to the Lender a list of all such fixtures, equipment, and other personal property which has
been delivered to or installed in the Project, together with invoices and other evidence of the Borrower's
ownership thereof.
(9) The Lender or its representative has, at the Lender's sole option, inspected the Land and
the Project to confirm, for the Lender's purposes, the status of construction of the Project.
(10) The Borrower has complied with all of the other requirements, conditions, and covenants
of this Agreement, the Disbursement Agreement, and the other Loan Documents to which it is a party.
(11) As a condition to the first disbursement to be made hereunder, the Borrower shall deliver
to the Lender, in form and substance acceptable to the Lender, a footings, foundation, and grading permit.
Section 3.5. Recuirement to Final Disbursement. The following requirements, in addition to
all other requirements of this Article III, shall have been met prior to a final disbursement by the Lender
of the proceeds of the Note, each in a manner acceptable to the Lender:
(1) Completion shall have occurred, free and clear of construction and mechanic's liens. The
Borrower shall be open for business in the Project.
(2) All fixtures, equipment, and other personal property required for the operation of the
Project which are to be installed or paid for by the Borrower shall have been installed and paid for and
shall be free and clear of all liens and security interests, other than the liens created by the Loan
Documents. The Borrower shall have provided to the Lender an updated list of all fixtures, equipment,
and other personal property installed on or used in connection with the Project.
(3) A final certificate of occupancy for the Project shall have been issued to the Borrower
and delivered to the Lender.
(4) At the Lender's sole option, the Lender or its representative has inspected the Project to
confirm, for the Lender's purposes, the accuracy of the statements contained in this Article III.
(5) Upon request of the Lender, the Title Company shall provide to the Lender a final
endorsement to the Title Policy.
(6) The Borrower shall provide to the Lender an as -built survey showing the actual location
of the Project, in form and substance acceptable to the Lender.
(7) The Borrower shall have complied with all of the other requirements, conditions, and
covenants of this Agreement and the other Loan Documents to which it is a party.
Section 3.6. Repayment. Subject to the prepayment provisions set forth in the Note and in
Article V hereof, the Borrower agrees to repay the Loan by making Loan Repayments in amounts equal to
all payments of principal, interest, and any premium, penalty, or charge that are required to be made by
the City under the terms of the Note at the times and in the amounts provided therein. All payments shall
be made directly to the Lender at such office of the Lender as it shall designate from time to time 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 and other revenues of the Borrower obtained
pursuant to the tax- exempt purposes of its Members.
Wi
Section 3.7. City Administrative Fee. The Borrower shall have paid or shall pay the
Administrative Fee of the City in an amount equal to three- quarters of one percent (0.75 %) of the original
aggregate principal amount of the Note payable on the date of issuance of the Note.
In addition to the Loan repayments payable pursuant to Section 3.6 hereof and the Administrative
Fee payable pursuant to this Section 3.7, the Borrower shall pay to the City and the Lender, when due and
at the times requested by the City and the Lender, amounts sufficient to pay in full all reasonable out -of-
pocket costs and expenses of the City and the Lender paid or incurred in the issuance and payment of the
Note and the making and collection of the Loan, including: (i) all costs paid or incurred in connection
with the purchase, transfer, registration, exchange, or redemption of the Note; (ii) the reasonable fees and
other costs paid or incurred for services of such engineers, architects, attorneys, management consultants,
accountants, and other consultants as are employed by the City or the Lender to make examinations or
reports, provide services, or render opinions required or permitted by this Agreement; (iii) all costs
reasonably paid or incurred by the City or the Lender in the amendment, waiver, or enforcement of the
Note, this Agreement, or any other Loan Document; (iv) all costs paid or incurred by the City or the
Lender in connection with an audit, examination, or other action taken with respect to the transactions
undertaken in connection with the Note and this Agreement conducted by any department of the State of
Minnesota (including the Department of Revenue, the Department of Commerce, or the Office of the
State Auditor), by the Internal Revenue Service of the United States Department of the Treasury, or by
the Securities and Exchange Commission, the Municipal Securities Rulemaking Board, or the United
States Department of Justice or as a result of the City's or the Lender's compliance with an audit, random
or otherwise, by the hntemal Revenue Service or the Minnesota Department of Revenue with respect to
the Note, the Borrower, or the Project; and (v) all Issuance Expenses with respect to the Note.
Section 3.8. 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 shall 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, shall 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.
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17
ARTICLE IV
CONSTRUCTION OF PROJECT
Section 4.1. Agreement to Construct the Project. The Borrower shall proceed with due
diligence to complete the acquisition, construction, and equipping of the Project in accordance with the
Plans and all applicable laws and regulations. The Borrower agrees to use its best efforts to diligently
complete the Project by the Completion Date, but the Borrower shall not be in violation of such
agreement if the Completion is delayed at any time by changes ordered in the work, or by labor disputes,
fire, unusual delay in transportation, unavoidable casualties, or any causes beyond the control of the
Borrower and the General Contractor and any subcontractor or supplier. If the Inspecting Architect
determines that any of the foregoing events justify a delay, then the Completion Date shall be extended
for such reasonable time as such Inspecting Architect may determine but not beyond
, 201_, and there will be no resulting liability of the Borrower hereunder. In any case,
there shall be no abatement or diminution in the Loan Repayments and other payments required to be
made by the Borrower under this Agreement.
Section 4.2. Changes in the Project. The Borrower may make any material changes in the
Plans or any construction contract for the construction of the Project, and may make any deletions from or
substitutions or additions to the Project, but only with the prior written consent of the Lender. No such
changes may be made if such change will disqualify the Project as a "project" under the terms of the Act.
No change in the Plans or a construction contract and no deletion from or substitution or addition to the
Project may be made without the prior approval of the General Contractor's surety if required by the
payment and performance bond provided by such surety. Changes to the Plans or to any construction
contract shall be deemed material if any single change costs more than $25,000, or any change in the
aggregate costs more than $100,000, or the change constitutes a structural change to the Project.
Section 4.3. Inspection and Access. In addition to any other inspection rights of the Lender
set forth herein, the Lender may retain the Inspecting Architect, at the Borrower's expense, to make
periodic inspections of the Project and to review all change orders and requests for advances relating to
the Project. The Lender may request the Inspecting Architect, before each disbursement of Loan
proceeds is made, to inspect all work and materials for which payment is requested and all other work
upon the Project, approve such work and the current Draw Request, and/or submit to the Lender a
progress inspection report. The Lender may also retain such other consultants as the Lender deems
necessary or convenient to perform such services as may, from time to time, be required by the Lender in
connection with the Loan, this Agreement, the other Loan Documents, or the Project. The Borrower will
permit the Lender and its representatives to enter upon the Project at all reasonable times to inspect the
Project and the construction thereof and to examine all detailed plans, shop drawings, specifications, and
other records which relate to the Project. The Borrower will cooperate, and cause the General Contractor
and all subcontractors and materialmen to cooperate with the Lender to enable it to perform its functions
hereunder.
Notwithstanding any provisions of this Agreement or of the Disbursement Agreement to the
contrary, in the event that the Lender should determine that the work performed or the materials furnished
with respect to the Project are, in any way, not as shown on the Plans, the Lender shall notify the
Borrower of its objections thereto, and, upon demand, the Borrower shall correct the conditions to which
the Lender objects.
Neither the Borrower nor any third party shall have the right to use or rely upon the reports of
hnspecting Architect or any other reports generated by the Lender or its consultants for any purpose
M
whatsoever, whether made prior to or after commencement of construction. The Borrower shall be
responsible for making its own inspections of the Project during the course of construction and shall
determine to its own satisfaction that the work done and materials supplied are in accordance with
applicable contracts with its General Contractor and the Plans. By advancing funds after any inspection
of the Project by the Lender or Inspecting Architect, the Lender shall not be deemed to waive any Event
of Default, to waive any right to require that construction defects be corrected, or to acknowledge that all
construction conforms with the Plans.
Section 4.4. Maintenance and Modification of Proiect by the Borrower. The Borrower agrees
that at all times during the term of this Agreement, the Borrower will, at the Borrower's own expense,
maintain, preserve, and keep the Project open as a multifamily housing development for seniors, as well
as functionally related facilities, with the appurtenances and every part and parcel thereof, and in good
repair, working order, and condition and that the Borrower will from time to time make all repairs,
replacements, and renewals deemed proper and necessary by it. The Borrower agrees that it will
administer, maintain, and operate the Project in a manner such that the Project is open to members of the
general public, free of discrimination based upon race, creed, color, sex, or national origin.
hi addition, with the prior written consent of the Lender, which consent shall not to be
unreasonably withheld or delayed, the Borrower shall have the privilege of remodeling the Project or
making substitutions, additions, modifications, and improvements to the Project from time to time as the
Borrower, in its discretion, may deem to be desirable for the Borrower's use for such purposes as shall be
permitted by the Act, the costs of which remodeling, substitutions, additions, modifications, and
improvements shall be paid by the Borrower, and the same shall be the property of the Borrower and be
included under the terms of this Agreement as part of the Project, respectively; provided, however, that all
such remodeling, substitutions, additions, modifications, and improvements shall be done in a good and
workmanlike manner and in compliance with all laws and the Project, as remodeled, improved, or altered,
upon completion of such remodeling, substitutions, additions, modifications, and improvements made
pursuant to this Section shall be of a value not less than the fair market value of the Project immediately
prior to the remodeling or the making of substitutions, additions, modifications, and improvements. Any
property for which a substitution or replacement is made pursuant to this Section may be disposed of by
the Borrower in any manner and in the sole discretion of the Borrower. The Borrower will not permit any
mechanic's or other lien to be established or remain against the Project for labor or materials furnished in
connection with any remodeling, substitutions, additions, modifications, improvements, repairs, renewals
or replacements so made by the Borrower, provided that if the Borrower shall first notify the Lender in
writing of the Borrower's intention so to do, and no Event of Default or event which with the passage of
time would be an Event of Default exists, and the Borrower obtains the prior written consent of the
Lender, which consent shall not to be unreasonably withheld or delayed, the Borrower may in good faith,
diligently contest any mechanic's or other lien filed or established against the Project, and in such event
may permit the items so contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom unless in the opinion of Independent Counsel by nonpayment of any
such items the lien of the Mortgage as to the payments will be materially endangered or the Project or any
part thereof will be subject to loss or forfeiture, in which event the Borrower shall promptly pay and cause
to be satisfied and discharged all such unpaid items.
With the prior written consent of the Lender, which consent shall not to be unreasonably withheld
or delayed, the Borrower may from time to time in its sole discretion and at its own cost and expense,
install or place other equipment and tangible personal property in the Project. With the prior written
consent of the Lender, which consent shall not to be unreasonably withheld or delayed, the Borrower may
remove such equipment and tangible personal property at any time at its own cost and expense, whether
or not the same shall have been affixed or annexed to the Project, but any damage caused to the Project by
any such removal shall be repaired at the sole cost and expense of the Borrower.
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ARTICLE V
BORROWER'S COVENANTS
Section 5.1. Indemnity. The Borrower will, to the extent permitted by law, pay, and will
protect, indemnify and save the City, the Lender, and their respective 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 the
following:
(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
Proj ect;
(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 and
the Loan contained in a tax 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 5.2. Continuing Existence and Qualification. Throughout the term of this Agreement
the Borrower shall remain duly qualified to do business as a limited liability company in the State of
Minnesota, and the Members shall each remain duly qualified to do business as a nonprofit corporation in
the State of Minnesota, and shall each 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.
The Borrower shall maintain its existence as a limited liability company, shall not dissolve or
otherwise dispose of all or substantially all of its assets, and shall not consolidate with or merge into
another business entity or permit any other business entity to consolidate with or merge into it unless:
(1) the surviving, resulting, or transferee business entity is duly qualified to do business in Minnesota;
(2) the surviving, resulting, or transferee business entity, if other than the Borrower, assumes in writing
all of the obligations of the Borrower under this Agreement and the other Loan Documents to which it is a
party and shall deliver that instrument to the Lender; and (3) the Borrower first obtains the written
consent of the Lender to such merger, transfer, or consolidation.
At least sixty (60) days before any proposed merger, transfer, or consolidation of the Borrower
would become effective, the Borrower shall deliver to the Lender a written request seeking the Lender's
approval of such merger, transfer, or consolidation, and shall thereafter promptly famish to the Lender
such information pertaining to the proposed merger, transfer, or consolidation as the Lender shall request.
If the Lender approves the proposed merger, transfer, or consolidation, the surviving, resulting, or
20
transferee business entity referred to in this Section 5.2 shall be bound by all of the covenants and
agreements of the Borrower herein with respect to any further consolidation, merger, sale or transfer. The
Lender's approval under this Section shall not be unreasonably withheld, delayed, or conditioned.
Section 5.3. _Reports to Governmental A¢encies. The Borrower shall 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 shall be provided to the City
and the Lender.
Section 5.4. 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 (or cause to be executed
and delivered) the documents described in Section 3.2 hereof and agrees to meet all its obligations under
such documents, which documents shall remain in effect until all payments required hereunder have been
made; and the Borrower shall direct Bond Counsel or the Lender to cause to be recorded and filed the
Mortgage and such other documents requested by Bond Counsel or the Lender, in such places and in such
manner as Bond Counsel or the Lender 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. Except as
otherwise provided in the Mortgage, the Borrower shall not further encumber the property pledged therein
without the Lender's consent which shall not be unreasonably withheld.
Section 5.5. Preservation of Tax Exemption.
(1) In order to ensure that the interest on the Note shall at all times be free from federal
income taxation, the Borrower covenants and agrees to comply with the applicable provisions of
Section 103 and Sections 141 through 150 of the Code. The Borrower also represents, warrants, and
covenants to the City and the Lender 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 Treasury Regulations, rulings and revenue
procedures thereunder, including Revenue Procedure 97 -13, 1997 -1 C.B. 632 (February 3, 1997).
(b) No more than five percent (5 %) of the net proceeds of the Note will be used by
the Borrower: (i) in an unrelated trade or business of the Members, determined by the application
of Section 513(a) of the Code; and (ii) for any private business use, as defined in
Section 141(b)(6) of the Code.
(c) No more than five percent (5 %) of the net proceeds of the Note is (under the
terms of the Note or any underlying arrangement) directly or indirectly: (i) secured by any
interest in (A) property used or to be used for a private business use, or (B) payments in respect of
such property; or (ii) to be 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.
(d) 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
21
Section 145(b) of the Code) does not exceed $150,000,000 or, alternatively, at least ninety -five
percent (95 %) of the net proceeds of the Note will be used for capital expenditures.
(e) 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.
(f) 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.
(g) Not more than two percent (2 %) of the proceeds of the Note will be used to
finance Issuance Expenses.
(h) The Borrower 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 and, consistent with such representation, the Borrower will:
(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, unless the Borrower obtains an Opinion of Counsel to the effect that such
calculations need not be made (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 sixty (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) if applicable, retain all records of the determination of the foregoing
amounts until six (6) years after the Note has been fully paid.
Unless the Opinion of Counsel described in clause (ii) above is provided, the Borrower agrees
that, in order to comply with this paragraph (h), it shall determine the Rebate Amount within
thirty (30) days after each fifth year of the anniversary of the Closing and upon payment in full of
the Note; and, upon request, the Borrower shall furnish the Lender a certificate showing how such
calculation was made.
(i) 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
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United States or any agency or instrumentality thereof within the meaning of Section 149(b) of
the Code.
0) In addition to the Note, no other obligations have been or will be issued that
purport to be "tax- exempt bonds," as defined in Section 150 of the Code, that are sold at
substantially the same time as the Note, pursuant to a common plan of marketing with the Note,
and at substantially the same rate of interest as the Note, and that 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).
(k) No proceeds of the Note will be used to acquire investments which cause the
Note to be "federally guaranteed" within the meaning of Section 149(b) of the Code. If at any
time such proceeds exceed, within the meaning of Section 149(b)(3)(B) of the Code:
(i) amounts invested for an initial temporary period until the proceeds 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,
then such excess proceeds 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 (1) not issued by, or guaranteed by, or insured by, the United States or
any agency or instrumentality thereof or (2) not federally insured deposits or accounts, all within
the meaning of Section 149(b) of the Code.
(1) Not otherwise use proceeds of the Note, or take or fail to take any action within
its control, 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 includable, 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 for any reason
including, but not limited to, the Note failing to qualify as a "qualified tax exempt obligation" within the
meaning of Section 265(b)(3) of the Code, 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 includable 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.
(3) If the Borrower receives a Determination of Taxability it shall promptly give notice of
such Determination of Taxability to the City and the Lender and the Note shall be deemed to convert to a
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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" (as defined in the Note) on the date of the
Determination of Taxability 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 next payment date along with
the regularly scheduled principal payment and interest accruing from the previous payment date at the
Taxable Rate, as provided in the Note.
Section 5.6. Lease or Sale of Proiect. The Borrower shall not lease, sell, convey, or 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 Project is conveyed in whole and such conveyance has been approved by the Lender. The
Borrower shall promptly notify the City and the Lender of any such sale, transfer, assignment, or lease.
Section 5.7. Project 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 Borrower shall keep the Project in good working order and condition, subject to ordinary wear and
tear. 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.
Section 5.8. Notification of Changes. The Borrower covenants and agrees that it will
promptly notify the Lender of:
(1) any litigation which might materially and adversely affect the Borrower or any of its
properties;
(2) the occurrence of any Event of Default under this Agreement or under any other loan
agreement, debenture, note, purchase agreement, or any other agreement with respect to indebtedness of
the Borrower for borrowed money or any event of which the Borrower has knowledge and which, with
the passage of time or giving of notice, or both, would constitute an Event of Default under this Loan
Agreement or under such other agreements; and
(3) any material adverse change in the operations, business, properties, assets, or conditions,
financial or otherwise, of the Borrower.
Section 5.9. Financial Information.
(1) The Borrower represents and warrants that all balance sheets, income statements, and
statements of cash flow for the Borrower, delivered by the Borrower to the Lender prior to date hereof
(the "Prior Financial Statements ") are complete and correct, have been prepared in accordance with
generally accepted principles of accounting consistently applied, and present fairly the financial condition
and results of operations of the Borrower, as of the date and for the period stated therein. The Borrower
represents and warrants that no material adverse change in the financial condition of the Borrower has
occurred since the date of the Prior Financial Statements. The Borrower acknowledges that the Lender
has purchased the Note and shall advance the Loan in reliance upon the Prior Financial Statements. The
Borrower represents that the Borrower has fully advised the Lender of all matters involving the
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Borrower's financial condition, operations, properties, or industry that would be reasonably expected to
have a material adverse effect on the financial condition, operations, properties, or prospects of the
Borrower. The Borrower represents and warrants that no information, exhibit, or report furnished or to be
furnished by the Borrower to the Lender in connection with this Agreement contains, as of the date
thereof, any misrepresentation of fact or fails to state any material fact, the omission of which would
render the statements therein materially false or misleading.
(2) The Borrower covenants that it will keep proper books of records and accounts in which
full, true, and correct entries will be made of all dealings or transactions of, or in relation to, the business
and affairs of the Borrower in accordance with generally accepted principles of accounting consistently
applied; provided, however, that the method of recording entries in the books of records and accounts
may be changed to reflect any changes in generally accepted accounting principles so long as any such
change is reflected in the notes accompanying the financial statements of the Borrower. The Borrower
will furnish to the Lender: (i) internally- prepared quarterly financial statements of the Borrower to be
provided to the Lender within forty -five (45) days from the end of each fiscal quarter during each Fiscal
Year of the Borrower during the term of this Agreement; (ii) audited annual financial statements of the
Borrower to be provided to the Lender within one hundred and fifty (150) days from the end of each
Fiscal Year of the Borrower during the term of this Agreement; (iii) annual tax returns of the Borrower;
(iv) monthly leasing schedules during the lease -up period of the Project; and (v) annual rental roll of the
Borrower.
(3) The Borrower shall provide to the Lender such additional financial reports and other
financial information that is reasonably requested by the Lender from time to time.
Section 5.10. Access to the Proiect. The Borrower grants to the Lender and to the Lender's
agents access to the Project at any reasonable time, upon reasonable advance notice, during normal
business hours in order to inspect the Project and the Borrower's other property.
Section 5.11. Access to Books and hispection. The Borrower shall keep proper books of
record and accounts with respect to the use and operation of the Project, and, subject to any privacy laws
applicable to Borrower, upon request of the Lender, provide any duly authorized representative of the
Lender access, upon reasonable advance notice, during normal business hours to, and permit such
representative to examine, copy, or make extracts from, or audit any and all books, records, and
documents relating to, the Project, the Borrower's affairs, and to inspect any of its facilities and
properties. The Lender shall be permitted to disclose the information contained therein to its legal
counsel, its independent public accountants, any participating lenders, or in connection with any action to
collect any indebtedness of the Borrower or to enforce this Agreement and the documents related hereto,
or as otherwise permitted or required by law.
Section 5.12. Debt Service Coverage Ratio. Commencing with the Fiscal Year of the
Borrower ending on December 31 after the Project has reached stabilized occupancy (_ percent
occupancy), and for each Fiscal Year of the Borrower thereafter as long as the Loan remains outstanding
and unpaid in full, the Borrower will maintain a Debt Service Coverage Ratio of not less than 1.20 to
1.00, calculated annually at the end of each such Fiscal Year. For the purposes of this Section 5.12, the
term "Debt Service Coverage Ratio" means, as of each date of calculation: (i) net operating income, plus
or minus extraordinary items, divided by (ii) the higher of all scheduled or actual payments of principal of
and interest paid or payable, all determined in accordance with generally accepted accounting principles
for nonprofit organizations consistently applied. If the Debt Service Coverage Ratio at the end of any
Fiscal Year after stabilized occupancy is less than 1.20 to 1.00, then, upon the written direction of the
Lender, the Borrower will promptly employ an Independent Consultant to review and analyze the
operations and administration of the Project, inspect the Project, and submit to the Borrower and the
25
Lender written reports, and make such recommendations as to the operation and administration of the
Project as such Independent Consultant deems appropriate, including any recommendation as to a
revision of the methods of operation thereof. The Borrower agrees to consider any recommendations by
the Independent Consultant and, to the fullest extent practicable, to adopt and carry out such
recommendations. So long as the Borrower is otherwise in full compliance with its obligations under this
Loan Agreement, including following, to the fullest extent practicable, the recommendations of the
Independent Consultant, it shall not constitute an Event of Default if the Debt Service Coverage Ratio at
the end of any Fiscal Year after stabilized occupancy is less than 1.20 to 1.00.
Section 5.13. Borrower Operating Account. The Borrower shall maintain its primary operating
account with the Lender as long as the Loan remains outstanding and unpaid in full.
Section 5.14. Additional Long -Term Debt. The Borrower shall not incur Long Term Debt (in
addition to the Loan) without the prior written consent of the Lender.
Section 5.15. Loan Required to be in Balance.
(1) Anything in this Agreement to the contrary notwithstanding, it is expressly understood
and agreed that the Loan at all times shall be in balance. The Loan shall be deemed to be in balance only
when the undisbursed Loan proceeds, together with the undisbursed proceeds of the loans made to the
Borrower from the proceeds of the Series 2013B Note and the Series 2013C Note, equal or exceed the
amount necessary, based on the Lender's estimates, to pay all unpaid costs to complete the Project in
accordance with the Plans and to pay the amount necessary for the estimated or actual costs of start up,
interest expense, initial operating deficits, including all operating expenses, and interest expenses through
the date that the Lender projects break -even operations and the amounts necessary for the amounts
payable by the Borrower to the Lender, and all other non - construction costs associated with the Project
and with the Borrower's actual or proposed use of the Land and the Project.
(2) If for any reason the amount of such undisbursed Loan proceeds shall at any time be or
become insufficient for such purpose under clause (1) above, regardless of how such conditions may be
caused, the Borrower will deposit with the Lender funds equal to said deficiency in order to bring the
Loan back into balance. Until the Loan is in balance to the satisfaction of the Lender, the Lender will not
be obligated to make any further disbursements hereunder.
Section 5.16. Advertisine and Signage. In connection with the Loan, the Borrower hereby
agrees that Lender may publicly identify details of the Loan in advertising and public communications of
all kinds, including, but not limited to, press releases, direct mail, newspapers, magazines, journals, email,
or internet advertising or communications. Such details may include the name of the Project, the address
of the Project, the amount of the Loan, the date of the closing and a description of the size/location of the
Project. In addition, during the period that the Project is under construction, the Lender may construct a
sign to be located on the Project site and visible to traffic, subject to any necessary City approval, which
reflects Lender's financing of the Project.
Section 5.17. Additional Covenants. In addition to the covenants and agreements of the
Borrower set forth herein and the documents related hereto, the Borrower hereby covenants and agrees, so
long as the Note remains unpaid, as follows:
(1) All proceeds of the Note shall be used solely to pay Project Costs and Issuance Expenses.
(2) The Project shall comply with all applicable restrictions, conditions, ordinances,
regulations, and laws of governmental departments and agencies having jurisdiction over the Project, and
M
shall not violate any private restrictions or covenants or encroach upon or interfere with easements
affecting the Land.
(3) The Borrower shall keep, perform, enforce, and maintain in full force and effect all of the
terms, covenants, conditions, and requirements of this Agreement, the Note, and the other Loan
Documents; and shall not amend, modify, supplement, terminate, cancel, or waive any of the terms,
covenants, conditions, or requirements of any of the Loan Documents without the prior written consent of
the Lender.
(4) The Borrower shall not create, permit to be created, or allow to exist liens, charges, or
encumbrances on the Land other than "Permitted Encumbrances" (as defined in the Mortgage) and the
lien of general real estate taxes and the installments of special assessments payable therewith except for
such liens, charges, and encumbrances which are consented to by the Lender or which are being diligently
contested in good faith by appropriate proceedings but provided that, if requested by the Lender, the
Borrower shall have provided to the Lender security satisfactory to the Lender with respect to any such
contested liens, charges, or encumbrances.
(5) The Borrower will furnish to the Lender as soon as possible and in any event within
seven (7) business days after the Borrower has obtained knowledge of the occurrence of an Event of
Default, or an event which with the giving of notice or lapse of time or both would constitute an Event of
Default, a statement signed by the Borrower setting forth details of such Event of Default or event and the
action which the Borrower has taken, is taking, or proposes to take to correct the same.
(6) The Borrower shall hold the Lender harmless, and the Lender shall have no liability or
obligation of any kind to the Borrower, creditors of the Borrower, or any third party, in connection with
any defective, improper, or inadequate workmanship performed in or about, or materials supplied with
respect to, the Project, or any mechanics', suppliers' or materialmen's liens arising as a result of such
defective, improper, or inadequate workmanship or materials, and upon the Lender's reasonable request,
to replace or cause to be replaced, any such defective, improper, or inadequate workmanship or materials.
(7) The Borrower shall pay and discharge all taxes prior to the attachment of penalties with
respect thereof and installments of special assessments payable therewith, and insurance premiums with
respect to the insurance required to be maintained by the Borrower under the terms of any Loan
Documents, and utility charges incurred by the Borrower prior to or during the term of this Agreement,
except if such taxes, assessments, and premiums are being contested in good faith by appropriate
proceedings and provided that, if requested by the Lender, the Borrower shall have deposited into escrow
with the Lender an amount equal to such taxes, assessments, or premiums plus penalties accrued thereon.
(8) The Borrower shall promptly give notice in writing to the Lender of any and all litigation
involving the Borrower where the amount in dispute exceeds $75,000.00 and is not covered by insurance,
and of any and all material proceedings commenced against the Borrower by or before any court or
governmental or regulatory agency.
(9) The Borrower shall comply with the requirements of all applicable laws, rules,
regulations, and orders of any governmental authority, a breach of which would materially and adversely
affect the business or credit of the Borrower, except where diligently contested in good faith and by
proper proceedings.
(10) The Borrower shall preserve and maintain all of the Borrower's rights, privileges, and
franchises necessary or desirable in the normal conduct of the Borrower's business, and not to suspend
business operations.
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(11) The Borrower shall obtain all necessary state, federal, local, and private clearances,
authorizations, permits, and licenses with respect to the business operations of the Borrower, including,
without limitation, any export and other trade licenses or permits required by law for the present or future
business operations of the Borrower.
(12) The Project shall be maintain all such federal, Minnesota, and Carver County licenses
required to operate a multifamily housing development for seniors, as well as functionally related
facilities.
Section 5.18. Days Cash on Hand. The Borrower shall maintain unrestricted Cash on Hand
such that on each testing date the Cash on Hand shall be equal to or greater than forty -five (45) Days Cash
on Hand. The Cash on Hand shall be tested on the last day of each Fiscal Year, commencing on the first
Fiscal Year following the Fiscal Year in which the Project has reached stabilized occupancy (_ percent
occupancy). If the Cash on Hand for any testing date, is less than forty -five (45) Days Cash on Hand,
then, upon the written direction of the Lender, the Borrower will promptly employ an Independent
Consultant to review and analyze the operations and administration of the Project, inspect the Project, and
submit to the Borrower and the Lender written reports, and make such recommendations as to the
operation and administration of the Project as such Independent Consultant deems appropriate, including
any recommendation as to a revision of the methods of operation thereof. The Borrower agrees to
consider any recommendations by the Independent Consultant and, to the fullest extent practicable, to
adopt and carry out such recommendations. So long as the Borrower is otherwise in full compliance with
its obligations under this Loan Agreement, including following, to the fullest extent practicable, the
recommendations of the Independent Consultant, it shall not constitute an Event of Default if the Cash on
Hand for any testing date is less than forty -five (45) Days Cash on Hand. It shall constitute an Event of
Default if the Cash on Hand for any testing date is less than twenty -five (25) Days Cash on Hand.
"Cash on Hand" means the sum of cash, cash equivalents, liquid investments and unrestricted
marketable securities (valued at the lower of cost or market) of the Borrower, but shall not include money
or securities credited to the Repair and Replacement Fund and any escrows for taxes and insurance.
"Days Cash on Hand" means (I) Cash on Hand of the School, as shown on the financial statements for
each Fiscal Year divided by (II) the quotient of operating expenses, as shown on the financial statements
for such Fiscal Year, divided by 365.
Section 5.19. Minimum Occupancy Requirements. During the lease -up period for the Project,
the Borrower shall meet the following minimum occupancy requirements: (i) at the end of six (6) months
from Completion, thirty -four (34) units; (ii) at the end of one (1) year from Completion, sixty (60) units;
(iii) at the end of eighteen (18) months from Completion, eighty -five (85) units; (iv) at the end of two (2)
years from Completion, one hundred and eleven (I 11) units; and (v) at the end of twenty -five (25) months
from Completion, one hundred and sixteen (116) units.
Section 5.20. Repair and Replacement Fund. The Borrower shall establish with the Lender the
Repair and Replacement Fund (as Account No. ). Borrower hereby grants to Lender a
security interest in the Repair and Replacement Fund to secure the timely payment of the Loan
Repayments under this Agreement and the timely payment of the principal of, premium, if any, and
interest on Note when due. Commencing on the fortieth month after the date of this Agreement, the
Borrower shall make monthly deposits of cash in the Repair and Replacement Fund in an amount equal to
$350 for each unit of the Project divided by twelve (12). Amounts deposited in the Repair and
Replacement Fund shall be applied by the Borrower not more often than once each month, as requested in
a Borrower request approved by the Lender, only to the payment of items of repair, improvement, and
replacement with respect to the Project which constitute capital expenditures under generally accepted
W.
accounting principles or which otherwise constitute major periodic repair or maintenance of the Project,
such as annual painting or re- carpeting of a section of the Project (as opposed to incidental repairs such as
touch -up painting, replacement of individual carpet tiles, etc.). The Borrower request shall identify the
expenditures to be made by nature and amount, shall identify the contractor or other party making the
repairs, improvements, and replacements, and shall certify that the expenditures are proper expenditures
to be made or reimbursed from the Repair and Replacement Fund. Investment earnings on amounts held
in the Repair and Replacement Fund shall remain in, and be credited as received to, the Repair and
Replacement Fund.
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F
ARTICLE VI
PREPAYMENT OF LOAN
Section 6.1. Prepayment at Option of Borrower. The Borrower may at its option prepay the
Loan, in whole or in part, on any date on which the Note is subject to redemption and prepayment, by
paying the principal amount to be prepaid, accrued interest thereon, 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 and any premium due on such
principal. At the date fixed for prepayment, funds shall be paid to the Lender at its registered address
appearing on the Note. hi 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.
Section 6.2. Mandatory Redemption.
(1) Upon a Determination of Taxability, the interest rate on the Note shall be adjusted to a
taxable rate in accordance with the provisions of the Note.
(2) The Note is subject to mandatory redemption in whole, on any date upon thirty (30) days
written notice from the Lender to the Borrower, from insurance proceeds in accordance with
Section_ of the Mortgage or from the proceeds of a condemnation award in accordance with
Section of the Mortgage.
(3) The Note is subject to mandatory redemption and prepayment at the election of the
Lender following an Event of Default pursuant to the provisions of the Note.
No Prepayment Premium shall be payable in connection with a mandatory redemption pursuant to
Sections 6.2(2) hereof.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Any one or more of the following events is an Event of
Default under this Agreement:
(1) If the Borrower shall fail to make (a) 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 thereafter.
(2) The Borrower fails to maintain a minimum Debt Service Coverage Ratio of 1:00 to 1.00,
or calculated in accordance with the terms of Section 5.12 hereof, or the Borrower fails to maintain Cash
on Hand for any testing date, as calculated by the terms of Section 5.18 hereof, less than twenty -five (25)
Days Cash on Hand, or the Borrower fails to satisfy the minimum occupancy requirements of
Section 5.19 hereof.
(3) 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, and provided that such longer period does not place the
Project at material risk.
(4) 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 ninety (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 ninety (90) 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 ninety (90) days after such levy or attachment; or if the Borrower shall be dissolved
or liquidated or shall be merged with or is acquired by another business entity in violation of Section 5.2.
(5) If the formation documents 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 5.2 hereof). If either Member
fails to maintain its existence as a nonprofit corporation, or dissolves or otherwise disposes of all or
substantially all of its assets, or consolidates with or merges into another business entity, or permits any
other business entity to consolidate with or merge into it unless: (i) the surviving, resulting, or transferee
business entity is a nonprofit corporation operating under the laws of the United States, any State of the
United States, or the District of Columbia, and is 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
31
Section 513(a) of the Code) or a governmental unit under Section 145 of the Code; and (ii) the surviving,
resulting, or transferee business entity is duly qualified to do business in Minnesota.
(6) 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.
(7) If the Borrower shall default or fail to perform any covenant, condition, or agreement on
its part under the Disbursement Agreement or 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.
(8) Any state or federal tax lien shall be filed against the Borrower and shall remain
undischarged for a period of sixty (60) days.
(9) All or any portion of the Land or the Project, or the legal, equitable, or any other interest
therein, shall be sold, transferred, assigned, leased, further encumbered (except as permitted herein), or
otherwise disposed of, unless the prior written consent of the Lender is first obtained; provided that
nothing in this Agreement prohibits the Borrower from entering into an agreement for sale of the Land
where the Loan and all other amounts due under this Agreement and the other documents evidencing the
Loan will be paid in full at the closing of the sale.
(10) Work on the Project shall be substantially abandoned, or shall, by reason of the
Borrower's fault, be unreasonably delayed or discontinued for a period of more than thirty (30) days, or
construction shall be delayed for any reason whatsoever to the extent that Completion cannot, in the
reasonable judgment of the Lender, be accomplished on or before the Completion Date;
(11) The reasonable disapproval by the Lender at any time of any construction work and the
failure of the Borrower to cause the same to be corrected to the satisfaction of the Lender within
fifteen (15) days; provided, however, if within such fifteen -day period the Borrower has made a good
faith effort to comply with the foregoing requirements but has not yet been able to complete the same and
such efforts continue and it reasonably appears that they will be successful, then the time to cure such
default shall be extended by such reasonable time as determined by the Lender;
(12) The bankruptcy or insolvency of the General Contractor or any subcontractor under
contract to work on the Project and failure of the Borrower to procure a contract or subcontract with a
new substitute general contractor or subcontractor acceptable to the Lender within sixty (60) days from
the occurrence of such bankruptcy or insolvency;
(13) Any payment default occurs under the terms of any other indebtedness of the Borrower in
excess of $125,000 to the Lender or any third party whether any such indebtedness is now existing or
hereafter arises and whether direct or indirect, due or to become due, absolute or contingent, primary or
secondary or joint or joint and several;
(14) A judgment or judgments for the payment of money in excess of the sum of $125,000 in
the aggregate shall be rendered against the Borrower, and the Borrower shall within thirty (30) days
thereafter and in any event prior to the execution thereof by the judgment creditor, not discharge the
same, procure a stay of execution thereof, or appeal therefrom and cause the execution thereof to be
stayed during such appeal;
32
(15) Any execution or attachment shall be issued whereby any property of the Borrower shall
be taken or attempted to be taken and the same shall not have been vacated or stayed within thirty (30)
days after the issuance thereof;
(16) Any Loan Document shall, at any time, cease to be in full force and effect or shall be
judicially declared null and void, or the validity or enforceability thereof shall be contested by the
Borrower, or the Lender shall cease to have a valid and perfected security interest having the priority
contemplated thereunder in the collateral described therein, other than by action or inaction of the Lender,
if any of the foregoing shall remain unremedied for ten (10) days or more after receipt or notice thereof to
the Borrower from the Lender; or
(17) The Borrower shall liquidate, dissolve, terminate, or suspend its respective business
operations or otherwise fail to operate its respective business in the ordinary course, or sell all or
substantially all of its assets, without the Lender's prior written consent.
Section 7.2. Remedies. Whenever any Event of Default referred to in Section 7.1 hereof shall
have happened and be subsisting, any one 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 Note shall terminate.
Notwithstanding anything to the contrary contained herein or in any other instrument evidencing or
securing the Loan, the Lender may exercise the foregoing remedy upon the occurrence of an event that
would constitute such an Event of Default but for the requirement that notice be given or that a period of
grace or time elapse.
(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) Exercise any or all remedies specified herein and in the other Loan Documents, including
(without limiting the generality of the foregoing) foreclose the Mortgage and proceed against the
collateral described therein.
(4) Take possession of the Land and Project and complete (or discontinue the completion of)
the construction and equipping of the Project and do anything in its sole judgment to fulfill the obligations
of the Borrower hereunder, including either the right to avail itself of or procure performance of existing
contracts, under the assignment to the Lender or otherwise, or let any contracts with the same contractors
or others. Without restricting the generality of the foregoing and for purposes aforesaid, the Borrower
hereby appoints and constitutes the Lender its lawful attorney -in -fact with full power of substitution in the
premises to complete construction and equipping of the Project in the name of the Borrower; to make
changes in the Plans necessary or desirable to complete constructions of the Project in substantially the
manner contemplated by the Plans; to retain or employ new general contractors, subcontractors, architects
and inspectors as shall be required for such purposes; to pay, settle, or compromise all existing bills and
claims, which may be lien or security interests, or to avoid such bills and claims becoming liens against
the Project or security interests against fixtures or equipment, or as may be necessary or desirable for the
Completion or for the clearance of title; to provide for and cause the completion of any tenant work,
tenant furnishings, and/or tenant improvements for all or any portion of the Land or the Project; and to do
any and every act which the Borrower might do in its own behalf; to prosecute and defend all actions or
33
proceedings in connection with the Land or the Project or fixtures or equipment; it being understood and
agreed that this power of attorney shall be a power coupled with an interest and cannot be revoked.
(5) The City, upon written direction of the Lender (except as otherwise provided in
Section 8.9 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 to enforce performance and observance of any obligation,
agreement or covenant of the Borrower under this Agreement or the Mortgage.
(6) Without regard to any waste, adequacy of the security, or solvency of the Borrower,
apply for the appointment of a receiver to liquidate or provide for the orderly liquidation of any and all
collateral, to which appointment the Borrower hereby consents.
(7) The City, upon written direction of the Lender, or the Lender may exercise any other
remedy permitted under any other instrument evidencing or securing the Loan.
(8) In addition to the remedies set forth in this Agreement, upon the occurrence of any Event
of Default and thereafter while the same be continuing, the Borrower hereby irrevocably authorizes the
Lender to set off all sums owing by the Borrower to the Lender against all deposits and credits of the
Borrower with, and any and all claims of the Borrower against, the Lender. Such right shall exist whether
or not the Lender shall have made any demand hereunder or under any other Loan Document, whether or
not said sums, or any part thereof, or deposits and credits held for the account of the Borrower is or are
matured or uninatured, and regardless of the existence or adequacy of any collateral, guaranty or any
other security, right or remedy available to the Lender. The Lender agrees that, as promptly as is
reasonably possible after the exercise of any such setoff right, it shall notify the Borrower of its exercise
of such setoff right; provided, however, that the failure of the Lender to provide such notice shall not
affect the validity of the exercise of such setoff rights. Nothing in this Agreement shall be deemed a
waiver or prohibition of or restriction on the Lender to all rights of banker's lien, setoff and counterclaim
available pursuant to law
Section 7.3. Disposition of Funds. Notwithstanding anything to the contrary contained in this
Agreement, any amounts collected pursuant to action taken under Section 7.2 hereof, except for any
amounts collected solely for the benefit of the City under any of the provisions set forth in Section 8.9,
shall, after deducting (a) all expenses incurred in collecting the same, and (b) then accrued interest on the
Note, the remainder of such amounts, if any, be applied as a prepayment of the Note in accordance with
Section 6.1 hereof.
Section 7.4. Manner of Exercise. No remedy herein conferred upon or reserved to the City or
the Lender 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 7.5. Attorneys' Fees and Exnenses. 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
34
obligation or agreement on the part of the Borrower, the Borrower will on demand pay to the City or the
Lender the reasonable fees and costs of such attorneys and such other expenses so incurred.
Section 7.6. 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.
Section 7.7. No Marshalling of Assets. The Lender may proceed against any collateral
securing the Loan and against parties liable therefor in such order as it may elect, and neither the
Borrower nor any surety for the Borrower nor any creditor of the Borrower shall be entitled to require the
Lender to marshal assets. The benefit of any rule of law or equity to the contrary is hereby expressly
waived.
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35
ARTICLE VIII
GENERAL
Section 8.1. Notices. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when hand delivered or received by certified or registered
United States 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, Minnesota
7700 Market Boulevard
PO Box 147
Chanhassen, Minnesota 55317
Attn: City Finance Director
To the Borrower: The Legends at Hazeltine, LLC
c/o Intergenerational Living & Health Care, Inc.
1107 Hazeltine Blvd., Suite 200
Chaska, Minnesota 55318
Attention: Chief Executive Officer
with a copy to: The Goodman Group
3386 Pilot Knob Road
Eagan, Minnesota 55121
Attention: Chief Financial Officer
with a copy to: Henson & Efron, P.A.
220 South Sixth Street
Suite 1800
Minneapolis, Minnesota 55402 -4503
Attention: Jennie Clarke
To the Lender: Bell State Bank & Trust
5500 Wayzata Blvd. Suite 140
Minneapolis, Minnesota 55416
Attn: Julie Lovaas, Senior Vice President/Business Banker
Section 8.2. Binding Effect. ffect. 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 8.3. 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 8.4. Amendments, Changes and Modifications. Except as otherwise provided in this
Agreement or in the Resolution, subsequent to the Closing Date and before the Note is satisfied and
discharged in accordance with its terms, this Agreement may not be effectively amended, changed,
36
modified, altered, or terminated without the written consent of the Lender. Amendments may be made to
the rights and obligations of the Lender and the Borrower pursuant to this Loan Agreement without the
consent of the City as long as the Note is not deemed to have been "reissued" under the terms of
Section 1001 of the Code and Treasury Regulations, Section 1.1001 -3, as amended.
Section 8.5. 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 8.6. 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 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 8.7. City's Fees and Costs. If, notwithstanding the provisions of Section 8.6 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 Assignment of Loan Agreement, and the documents and instruments related
hereto or thereto; (ii) any amendments or modifications hereto or to the Note, the Assignment of Loan
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 Assignment of
Loan 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 8.8. 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 VI, the Note, the Assignment of Loan 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
Assignment of Loan Agreement.
Section 8.9. Assignment by City and Survivorship of Obli atg ions. 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:
37
Section 3.5 Section 8.6
Section 5.1 Section 8.7
Section 5.3 Section 8.8
Section 7.5
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 8.10. 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 8.11. 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 8.9 or otherwise herein.
Section 8.12. Expenses of Lender. The Borrower shall reimburse the Lender for any and all
costs and expenses, including, without limitation, attorneys' fees, paid or incurred by the Lender in
connection with (i) review, negotiation, preparation, and approval of this Agreement and any other
document or agreement related hereto or thereto or the transactions contemplated hereby; (ii) the review,
negotiation, preparation, and approval of any amendments, modifications or extensions to any of the
foregoing documents, instruments or agreements, and the preparation and consummation of any and all
documents necessary or desirable to effect such amendments, modifications or extensions; (iii) any
appraisals, environmental assessments, or other reports relating to the Land which the Lender is
authorized to seek, order or prepare pursuant to this Agreement or any other instrument evidencing or
securing the Loan or is required to seek, order or prepare pursuant either to applicable laws or regulations
or the Lender's policies or procedures generally applicable to commercial mortgage loans by the Lender;
(iv) any reasonable fees or costs charged to the Lender by the Inspecting Architect or other design
professional engaged by the Lender to, among other things, inspect the construction of any approved
improvements to the Land, or verify compliance thereof with applicable building and zoning laws; (v) all
title insurance premiums, filing and recording fees and mortgage registration tax paid or payable in
connection with the consummation of the transaction contemplated hereby; and (vi) the enforcement by
the Lender during the term hereof or thereafter of any of the rights or remedies of the Lender under any of
the foregoing documents, instruments or agreements or under applicable law, whether or not suit is filed
with respect thereto (attorneys fees and costs are limited to reasonable fees and costs).
Section 8.13. Entire Agreement. This Agreement contains the entire agreement of the parties
with respect to the subject matter of this Agreement and supersedes any and all prior letters, proposals,
contracts and understandings between the parties with respect to the same, including, but not limited to,
any proposal or commitment letter, and such letters, proposals, contracts and understandings are hereby
terminated.
Section 8.14. Further Assurances. At any time and from time to time, upon request by the
Lender, the Borrower will make, execute and deliver or cause to be made, executed and delivered, to the
M
Lender, any and all other further instruments, certificates and other documents as may, in the reasonable
opinion of the Lender, be necessary or desirable in order to effectuate, complete, secure, or perfect, or to
continue and preserve, the obligations of the Borrower hereunder and under any of the other documents
related to the Loan. So long as no Event of Default has occurred and is continuing, and so long as the
further assurances are not made necessary or desirable by any action or inaction of the Borrower, the
Borrower shall not be responsible for the cost of preparing or recording such further assurances. Upon
any failure by the Borrower so to do after ten (10) days written notice from the Lender, the Lender may
make, execute and record any and all such instruments, certificates and documents for and in the name of
the Borrower and the Borrower hereby irrevocably appoints the Lender its agent and attorney -in -fact of
the Borrower so to do. The Borrower hereby understands, acknowledges and agrees that the Lender may
prepare and file such UCC financing statements or similar instruments as may be necessary to perfect the
Lender's security interest in any real or personal property pledged by the Borrower as security for the
Loan.
Section 8.15. Not Partners; No Third Party Beneficiaries. Nothing contained herein or in any
related document shall be deemed to render the Lender a partner of the Borrower for any purpose. This
Agreement has been executed for the sole benefit of the City, the Borrower, and the Lender, and no third
party is authorized to rely upon the City's, the Borrower's, or the Lender's rights hereunder or to rely
upon an assumption that either the City, the Borrower, or the Lender has or will exercise its rights under
this Agreement or under any document referred to herein.
Section 8.16. Maximum Interest Payable. None of the provisions of this Loan Agreement or
the Note shall have the effect of, or be construed as, requiring or permitting the Borrower to pay interest
in excess of the highest rate per annum allowed by the laws of the State of Minnesota. If, under any
circumstances, the Lender shall ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall, ipso facto, be applied to the reduction of the
unpaid principal balance due hereunder and not to the payment of interest.
Section 8.17. Payment by Any Party. Any payment made in accordance with the terms of this
Agreement by any Person at any time liable for the payment of the whole or any part of the Loan or the
Note, or by any subsequent owner of the Project, or by any other Person whose interest in the Project
might be prejudiced in the event of a failure to make such payment, or by any stockholder, officer, or
director of a corporation which at any time may be liable for such payment or may own or have such an
interest in the Project, or by any partner, limited partner, or an affiliate of any partnership which at any
time may be liable for such payment or may own or have such an interest in the Project shall be deemed,
as between the Lender and all Persons who at any time may be liable as aforesaid or who may own the
Project, to have been made on behalf of all such Persons.
Section 8.18. Fee for Services Rendered. The Lender further reserves the right to assess the
Borrower (and the latter agrees to pay) a reasonable fee for services rendered in connection with the Loan
or the Note, including, but not limited to, the modification of any documents, matters undertaken by the
Lender at the request of the Borrower, collection efforts regarding payments on the Loan, reasonable
attorneys' fees, as well as record - keeping costs resulting therefrom, and attorneys' fees and court costs in
connection with proceedings under the Mortgage or in pursuit of any remedies under this Agreement or
the Mortgage. After notice to the Borrower, the fees for services rendered shall become immediately due
and payable to the Lender. In default of said payment, such fee shall be added to the outstanding
principal balance of the Loan and shall bear interest at the highest interest rate for the Note.
Section 8.19. Jurisdiction. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
BORROWER HEREBY SUBMITS TO PERSONAL JURISDICTION IN MINNESOTA FOR THE
ENFORCEMENT OF THE BORROWER'S OBLIGATIONS UNDER THIS AGREEMENT OR THE
39
MORTGAGE, AND WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAW OF ANY
OTHER STATE TO OBJECT TO JURISDICTION WITHIN SUCH STATE FOR THE PURPOSES OF
LITIGATION TO ENFORCE SUCH OBLIGATIONS.
Section 8.20. Waiver of Trial by Jurv. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE, IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER MATTERS RELATING THERETO.
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BE
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
By
Its Mayor
By
Its City Manager
Loan Agreement between the City of Chanhassen, Minnesota and The Legends at Hazeltine, LLC
S -1
Execution page of the Borrower to the Agreement.
THE LEGENDS AT HAZELTINE, LLC
By
Its
Chief Executive Officer
Loan Agreement between the City of Chanhassen and The Legends at Hazeltine, LLC
DUI 11-180 (JU)
430717v.1
S -2
First Draft
Monday, September 02, 2013
AGREEMENT TO PURCHASE
between
CITY OF CHANHASSEN, MINNESOTA,
as City
THE LEGENDS AT HAZELTINE, LLC,
as Borrower
and
BELL STATE BANK & TRUST,
as Lender
Dated ,2013
with respect to the
$10,000,000
City of Chanhassen, Minnesota
Senior Housing Revenue Note
(The Legends at Hazeltine Senior Housing Project)
Series 2013A
This instrument was drafted by:
Kennedy & Graven, Chartered (JU)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
$10,000,000
City of Chanhassen, Minnesota
Senior Housing Revenue Note
(The Legends at Hazeltine Senior Housing Project)
Series 2013A
City of Chanhassen
7700 Market Boulevard
PO Box 147
Chanhassen, Minnesota 55317
Attn: City Finance Director
AGREEMENT TO PURCHASE
2013
The Legends at Hazeltine, LLC
c/o The Goodman Group
1107 Hazeltine Blvd., Suite 200
Chaska, Minnesota 55318
Attn: Chief Financial Officer
Bell State Bank & Trust, a banking association organized under the laws of the State of North
Dakota (the "Lender "), offers to purchase, upon the terms and conditions hereinafter specified, the Senior
Housing Revenue Note (The Legends at Hazeltine Senior Housing Project), Series 2013A (the
"Series 2013A Note "), to be issued by the City of Chanhassen, a statutory city organized and existing
under the Constitution and laws of the State of Minnesota (the "City "), in the original aggregate principal
amount of $10,000,000, in substantially in the form attached hereto as EXHIBff A. This document shall
constitute a legal, binding, and enforceable obligation of the Lender, the City, and The Legends at
Hazeltine, LLC, a Delaware limited liability company (the `Borrower ") as of P.M. on
, 2013 (the "Effective Date "), and shall be referred to as the Agreement to Purchase.
The offer to purchase the Series 2013A Note is made subject to acceptance by the City, on or
before the Effective Date, of this Agreement to Purchase (as evidenced by the execution and delivery of
this Agreement to Purchase by authorized officers of the City) and, upon such acceptance, this Agreement
to Purchase shall be in full force and effect in accordance with its terms and shall be binding upon the
City, the Lender, and the Borrower. If not so accepted, this Agreement to Purchase will be subject to
withdrawal by the Lender upon notice delivered by the Lender to the City and the Borrower at any time
prior to the acceptance hereof by the City.
1. Purchase and Sale. Subject to the satisfaction by the City and the Borrower of the terms
and conditions set forth in this Agreement to Purchase, subject also to the conditions precedent set forth
in this Agreement to Purchase, and in reliance upon the representations in this Agreement to Purchase set
forth or incorporated by reference, the Lender hereby agrees to purchase from the City, upon the terms
and conditions set forth in this Agreement to Purchase, and the City hereby agrees to sell to the Lender,
the Series 2013A Note. The date of sale and purchase of the Series 2013A Note shall be
, 2013 (the "Closing Date"), or at such later date as is mutually agreed upon by the City, the
Borrower, and the Lender. The purchase price to be paid by the Lender for the Series 2013A Note shall
be $10,000,000. The initial interest rate on the Series 2013A Note shall be percent per annum.
Proceeds derived from the issuance and sale of the Series 2013A Note shall be loaned to the
Borrower to finance a portion of the costs of the acquisition, construction, and equipping of an
approximately 126 -unit progressive senior living community comprised of approximately
36 independent - living units, approximately 67 assisted - living units, and approximately 23 memory-care
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units (the "Project "). The Project will be owned and operated by the Borrower. The Project will be
located on an approximately five -acre parcel in the City of Chaska bounded on the west by Highway 41,
on the south by Hazeltine Boulevard, on the north by the City of Chaska golf course, and on the east by
Hazeltine Gates office building (1107 Hazeltine Boulevard). The remaining portion of the costs of the
Project are expected to be paid with from Borrower equity and with the proceeds of separate obligations
issued by: (i) the City of Greenwood, a statutory city organized and existing under the Constitution and
laws of the State of Minnesota (the "City of Greenwood "), in the original aggregate principal amount of
$10,000,000 to be designated as the Senior Housing Revenue Note (The Legends at Hazeltine Senior
Housing Project), Series 2013B (the "Series 2013B Note "), and (ii) the City of Shorewood, a statutory
city organized and existing under the Constitution and laws of the State of Minnesota (the "City of
Shorewood "), in the original aggregate principal amount of $ to be designated as the Senior
Housing Revenue Note (The Legends at Hazeltine Senior Housing Project), Series 2013C (the
"Series 2013C Note ").
In connection with the issuance of the Series 2013A Note, the Borrower will enter into a Loan
Agreement, dated as of , 2013 (the "Loan Agreement "), with the City, pursuant to which the
City will loan the proceeds derived from the issuance and sale of the Series 2013A Note to the Borrower.
The Series 2013A Note will be secured by: (i) the loan repayment obligations of the Borrower under the
terms of the Loan Agreement; (ii) an assignment of the obligations of the Borrower under the Loan
Agreement to the Lender pursuant to the terms of an Assignment of Loan Agreement, dated as of dated as
of , 2013 (the "Assignment "), between the City, the Borrower, and the Lender; (iii) a
Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and
Rents, dated as of , 2013 (the "Mortgage "), from the Borrower to the Lender; and (iv) such
other security, including one or more guaranties, an assignment of leases and rents, a security agreement,
and such other security as is required by the Lender. The Loan Agreement, the Assignment, the
Mortgage, this Agreement to Purchase, and the other documents to which the Borrower is a party, are
collectively referred to as the `Borrower Documents."
It is understood and agreed that the Series 2013A Note and the interest thereon are special,
limited obligations of the City payable solely from: (i) payments to be made under the Loan Agreement
and assigned to the Lender under the terms of the Assignment; and (ii) amounts realized upon foreclosure
of the Mortgage or the realization of other security. The Series 2013A Note shall never constitute a
general or moral obligation of the City or indebtedness of the City within the meaning of any state
constitutional or statutory provision, is not secured by a pledge of any assets or property of the City
(except the interests of the City in the Loan Agreement) or the taxing power of the City, is not payable
from any tax revenues of the City, and does not constitute a charge against the City's property, general
credit, or taxing powers.
2. City's Representations and Warranties. The City makes the following representations
and warranties:
(a) The City is a statutory city and a political subdivision of the State of Minnesota created
and existing under its charter and the Constitution and the laws of the State of Minnesota. By resolution
of its City Council adopted on September 9, 2013 (the "Resolution "), the City has authorized the issuance
of the Series 2013A Note for the purposes stated in the Loan Agreement, the execution and delivery of
this Agreement to Purchase, the Loan Agreement, and the Assignment, and a loan to the Borrower of the
proceeds derived from the sale of the Series 2013A Note to the Lender.
(b) To the knowledge of the City, the execution and delivery of this Agreement to Purchase
does not, and the execution and delivery of the Series 2013A Note, the Loan Agreement, and the
Assignment, and the adoption of the Resolution, and compliance with the provisions of each of them,
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under the circumstances contemplated thereby, will not, in any material respect, conflict with or constitute
on the part of the City a breach of or default under any other agreement or instrument to which the City is
a party or any existing law, administrative regulation, court order or consent decree to which the City is
subj ect.
(c) With respect to such matters that are preconditions to the issuance of the Series 2013A
Note that are identified in the Act and the Loan Agreement, the City has, to its knowledge, and on the
Closing Date expects to have, in all respects complied therewith.
(d) To the knowledge of the City, all approvals, consents, and orders of any governmental
authority, board, agency, council, commission, or other body in or of the City or the State of Minnesota
which would constitute a condition precedent to the performance by the City of its obligations hereunder
and under the Loan Agreement, the Assignment, and the Series 2013A Note, have been obtained or, if
not, are expected to be obtained at the time of or prior to the Closing Date.
(e) To the knowledge of the City, no litigation is pending or threatened: (i) seeking to
restrain or enjoin the issuance or delivery of any of the Series 2013A Note or the application of proceeds
of the Series 2013A Note as provided in the Loan Agreement or the collection of revenues pledged under
the Loan Agreement; (ii) in any way contesting or affecting any authority for the issuance of the
Series 2013A Note or the validity of the Series 2013A Note, the Loan Agreement, the Assignment, the
Resolution, or this Agreement to Purchase; or (iii) in any way contesting the existence or powers of the
City.
3. Borrower's Representations and Warranties. The Borrower makes the following
representations and wan-antics:
(a) The Borrower is duly organized and existing as a limited liability company under the
laws of the State of Minnesota and the Members are nonprofit corporations under the laws of the State of
Minnesota, and the Borrower has full legal right, power and authority to enter into the Borrower
Documents, and to carry out and consummate all transactions contemplated by such documents.
(b) The execution and delivery of this Agreement to Purchase does not, and the execution
and delivery of the Borrower Documents and compliance with the provisions of each of them, under the
circumstances contemplated thereby, will not, in any material respect, conflict with or constitute on the
part of the Borrower a breach of or default under any other agreement or instrument to which the
Borrower is a party or, to the Borrower's knowledge, any existing law, administrative regulation, court
order or consent decree to which the Borrower is subject.
(c) All approvals, consents and orders of any governmental authority, board, agency, council,
commission or other body in or of any state and the federal government having jurisdiction which would
constitute a condition precedent to the performance by the Borrower of its obligations hereunder and
under the other Borrower Documents have been obtained or, if not, are expected to be promptly obtained
by the Borrower for its operation of the Project as soon as commercially possible after the Closing Date.
(d) This Agreement to Purchase does, and the other Borrower Documents, when each of
them has been executed and delivered by the Borrower, shall, assuming due authorization, execution, and
delivery by the other parties thereto, each constitute a valid and binding obligation of the Borrower,
enforceable in accordance with their respective terms, subject to any applicable bankruptcy, insolvency,
or other laws affecting creditors' rights or remedies heretofore or hereafter enacted.
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(e) No litigation to which the Borrower is a party is pending or, to the knowledge of the
Borrower, threatened: (i) seeking to restrain or enjoin the issuance or delivery of the Series 2013A Note
or the application of proceeds of the Series 2013A Note as provided in the Loan Agreement; (ii) in any
way contesting or affecting any authority for the issuance of the Series 2013A Note or the validity of the
Series 2013A Note, or any Borrower Documents; or (iii) in any way affecting, in a material adverse
manner, the property of the Borrower or contesting the existence or powers of the Borrower (other than
what has been previously disclosed to the Lender).
4. Lender's Renresentations and Warranties. The Lender makes the following
representations and warranties:
(a) The Lender is a banking association organized under the laws of the State of North
Dakota and has full legal right, power, and authority to enter into this Agreement to Purchase, and to
cant' out and consummate all transactions contemplated herein.
(b) The Lender is a financial institution with experience in financial matters and is capable of
evaluating the merits and risks of an investment in the Series 2013A Note and will provide a certificate to
this effect to the City and the Borrower on the Closing Date.
5. Purchase, Sale and Delivery of the Series 2013A Note. On the basis of the
representations and warranties and subject to the terms and conditions set forth herein, the Lender agrees
to purchase the Series 2013A Note at a purchase price of 10,000,000. With respect to the purchase of the
Series 2013A Note, the Lender will charge the Borrower a fee of $75,000 on the date the Series 2013A
Note is issued and delivered to the Lender. Payment for the Series 2013A Note shall be made in
installments in accordance with the terms of the Loan Agreement and the Disbursement Agreement (as
defined in the Loan Agreement) from and after the Closing Date.
6. Conditions of Purchase Obligation of the Lender. The obligation of the Lender to
purchase and pay for the Series 2013A Note is subject to the following conditions:
(a) The representations and warranties of the City and the Borrower contained in this
Agreement to Purchase shall be true, complete, and correct on the Effective Date and on the Closing Date
with the same effect as if made on the date of the Closing.
(b) On the Closing Date, the Resolution, the Loan Agreement, the Assignment, and the
Mortgage shall be in full force and effect, shall each be in form and substance acceptable to the Lender in
all respects, and shall not have been amended, modified, or supplemented except as may have been
agreed to in writing by the Lender; and the City and the Borrower shall have duly adopted and there shall
be in full force and effect such resolutions as, in the opinion of counsel to the Lender, shall be necessary
in connection with the transactions contemplated hereby or the documentation or security for the
Series 2013A Note.
(c) On the Closing Date, the Borrower has sufficient funds, including the proceeds of the
loan made pursuant to the Loan Agreement, the proceeds of the loans made to the Borrower from the
proceeds of the Series 2013B Note and the Series 2013C Note, and Borrower equity, to provide for the
payment in full of all costs of the acquisition, construction, and equipping of the Project.
(d) On the Closing Date, the Lender determines that: (i) all documentation in connection
with the issuance of the Series 2013A Note shall be satisfactory in form and substance to the Lender or its
counsel; (ii) the results of any due diligence efforts by the Lender with respect to the proposed issuance of
the Series 2013A Note shall be satisfactory to the Lender, in the sole discretion of the Lender; (iii) the
H
Lender, the Borrower, and the City shall have reached agreement as to the terms of the agreements
referred to in this Agreement to Purchase; (iv) the Borrower has obtained sufficient financing, along with
the Borrower equity to pay the costs of the acquisition, construction, and equipping of the Project; and
(v) the Series 2013A Note is issued on terms and conditions satisfactory to the Lender, in its sole
discretion, on or before the Closing Date.
(e) On or prior to the Closing Date, the Lender shall have received the documents and the
other items set forth in EXHIBIT B attached hereto.
If the City or the Borrower shall be unable for any reason to satisfy the conditions of the Lender's
obligation contained in this Agreement to Purchase or if the Lender's obligation shall be terminated for
any reason permitted by this Agreement to Purchase, this Agreement to Purchase shall terminate and
neither the Lender, the City, nor the Borrower shall have any further obligations or liability hereunder,
except as otherwise expressly provided to the contrary in this Agreement to Purchase.
7. Payment of Expenses. The Borrower agrees to pay either directly or, to the extent
permitted under federal tax law as determined by Kennedy & Graven, Chartered, in its capacity as bond
counsel ( "Bond Counsel "), from the proceeds of the Series 2013A Note, all expenses and costs to effect
the authorization, preparation, issuance, delivery, and sale of the Series 2013A Note, including, without
limitation: (i) the Lender's fee and miscellaneous expenses; (ii) the fees and disbursements of Bond
Counsel, the fees and disbursements of the Borrower's counsel, and the fees and disbursements of the
City; (iii) the fees and expenses of Lender's counsel; and (iv) all other expenses and costs of closing.
8. Covenants and Indemnifications for the Benefit of the Citv.
(a) The Borrower and the Lender hereby consent and agree that the City's execution and
delivery of this Agreement to Purchase, and any action taken by the City hereunder and any failure or
alleged failure on the part of the City to abide by such terms hereof as may be applicable to the City, shall
not give rise to any pecuniary liability of the City.
(b) The issuance of the Series 2013A Note by the City shall be subject to the condition that
the City, in its sole and absolute discretion, shall have executed and delivered the Loan Agreement, and
nothing in this Agreement to Purchase shall impose or imply an obligation on the City to do so.
(c) All indemnification of the City and other agreements respecting payment of costs of the
City provided in this Agreement to Purchase shall not be subject to limitation and shall survive expiration
or termination of this Agreement to Purchase, notwithstanding any provision in this Agreement to
Purchase to the contrary.
9. Notices. Any notice or other communication to be given to the City, the Borrower, or the
Lender under this Agreement to Purchase may be given by delivering the same in writing to the addresses
set forth below.
To the City: City of Chanhassen
7700 Market Boulevard
PO Box 147
Chanhassen, Minnesota 55317
Attn: City Finance Director
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To the Borrower:
The Legends at Hazeltine, LLC
c/o Intergenerational Living & Health Care, Inc.
1107 Hazeltine Blvd., Suite 200
Chaska, Minnesota 55318
Attention: Chief Executive Officer
with a copy to:
The Goodman Group
3386 Pilot Knob Road
Eagan, Minnesota 55121
Attention: Chief Financial Officer
with a copy to:
Henson & Efron, P.A.
220 South Sixth Street
Suite 1800
Minneapolis, Minnesota 55402 -4503
Attention: Jennie Clarke
To the Lender:
Bell State Bank & Trust
5500 Wayzata Blvd. Suite 140
Minneapolis, Minnesota 55416
Attn: Julie Lovaas, Senior Vice President/Business Banker
10. Parties in Interest. This Agreement to Purchase shall be binding upon and shall inure to
the benefit of the Lender, the City, the Borrower, and, to the extent expressed, any person controlling the
Lender, the City, or the Borrower and their respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement to Purchase. The term "successors and
assigns" shall not include any person or entity that purchases the Series 2013A Note from the Lender.
11. Governing Law. This Agreement to Purchase shall be governed by and construed in
accordance with the laws of the State of Minnesota.
12. Counterparts. This Agreement to Purchase may be executed in any number of
counterparts.
13. Severability. In the event any provision of this Agreement to Purchase shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provisions of this Agreement to Purchase.
(The remainder of this page is intentionally left blank.)
10
Note.
Execution page of the Lender to the Agreement to Purchase with respect to the Series 2013A
BELL STATE BANK & TRUST
M
Its:
S -1
Note.
Execution page of the Borrower to the Agreement to Purchase with respect to the Series 2013A
THE LEGENDS AT HAZELTINE, LLC
M
Its:
S -2
Execution page of the City to the Agreement to Purchase with respect to the Series 2013A Note.
CITY OF CHANHASSEN, MINNESOTA
By:
Its: Mayor
By:
Its: City Manager
S -3
EXHIBIT A
FORM OF SERIES 2013A NOTE
A -1
EXHMIT B
DOCUMENTS OR OTHER ITEMS REQUIRED FOR CLOSING
All capitalized terms in this Exhibit shall have the meaning set forth in the Loan Agreement.
(a) Series 2013A Note;
(b) Loan Agreement;
(c) Assignment of Loan Agreement;
(d) Uniform Commercial Code Financing Statement from City, as debtor, to the Lender, as
secured party (as to the Loan Agreement);
(e) Guaranties
(f) Mortgage;
(g) Uniform Commercial Code Financing Statement (with respect to the Project from the
Borrower, as debtor, to the Lender, as secured party);
(h) Assignment of Leases and Rents
(i) Security Agreement
0) Tax Exemption Agreement;
(k) Proforma marked and initialed Title Policy issued by First American Title Insurance
Company
(1) Certified Survey prepared by ;
(m) Title Company closing instruction letter;
(n) Appraisal prepared by ;
(o) Equity contribution from the Borrower;
(p) Phase I Report and Reliance Letter prepared by American Engineering & Testing
(q) Loan closing statement executed by the Borrower and the Title Company;
(r) Soil Report and Reliance Letter prepared by American Engineering & Testing;
(s) Financial statements of the Borrower;
(t) Payment of the Lender's origination fee;
[:a
(u) Certificate of the City;
(v) Certificate of the Borrower;
(w) Tax certificate of the Borrower endorsed by the City;
(x) Opinion of Kennedy & Graven, Chartered, as Bond Counsel, to the effect that the City
has duly authorized, executed and delivered the Series 2013A Note, that the Series 2013A Note is
enforceable in accordance with its terms, and that the interest on the Series 2013A Note is exempt from
federal income taxation;
(y) Payment of all costs and expenses of the City and the Lender;
(z) Opinion of Henson & Efron, P. A., as counsel to the Borrower;
(aa) UCC and State and Federal Tax Lien searches; and
(bb) Such other items, papers, and documents as may be required by the Loan Agreement or
the documents related hereto or as the Lender may reasonably require.
DUI 11-180 (JU)
430853v.1
IM
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTIES OF HENNEPIN AND CARVER
City of Chanhassen, Minnesota
Senior Housing Revenue Note
(The Legends At Hazeltine Senior Housing Project)
Series 2013A
Note R -1
$10,000,000
FOR VALUE RECEIVED the City of Chanhassen, a statutory city and political subdivision of
the State of Minnesota (the "City ") hereby promises to pay to the order of Bell State Bank & Trust, its
successors or registered assigns (the "Lender"), from the source and in the manner hereinafter provided,
the principal sum of TEN MILLION DOLLARS ($10,000,000), or so much thereof as has been advanced
and remains unpaid from time to time (the "Principal Balance "), with interest thereon from the date
hereof until paid or otherwise discharged as set forth in Section 1 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.
I. Commencing on the date of this Note and continuing to the seventh anniversary of the
date of this Senior Housing Revenue Note (The Legends at Hazeltine Senior Housing Project),
Series 2013A (the "Note "), interest shall accrue on the outstanding Principal Balance of this Note at an
interest rate equal to percent per annum (the "Initial Rate "). Commencing on the seventh
anniversary of the date of this Note (the "Adjustment Date ") and continuing to the maturity date of this
Note on , 2028 (the "Maturity Date "), interest shall accrue on the outstanding Principal
Balance of this Note at the interest rate per annum equal to the product of: (i) 0.60 percent; and (ii) the
"Prime Rate," as published in the Wall Street Journal on the Business Day prior to the Adjustment Date,
or if the "Prime Rate" is not published by the Wall Street Journal on the Business Day prior to the
Adjustment Date then a comparable interest rate selected by the Lender and available on the Business
Day prior to the Adjustment Date (the "Adjustment Rate ").
2. In the event that any Loan Repayment, as hereinafter defined, is more than ten (10) days
late, the interest rate on this Note shall be immediately increased to the sum o£ (i) the then applicable
interest rate per annum on this Note; plus (ii) three percent (3.00 %) per annum (the "Default Rate "). The
Default Rate shall remain in effect for as long as there is an uncured default in a Loan Repayment.
Interest on this Note shall accrue on the basis of actual days elapsed in a year of 360 days.
"Business Day" means a day which is not (a) a Saturday, Sunday, or other day on which banking
institutions in the State of Minnesota are closed, or (b) a day on which the New York Stock Exchange or
the Federal Reserve is closed.
3. Interest only shall be payable on this Note on the day of each month for the
thirty -nine (39) months following the month on which the date of this Note occurs. Thereafter, principal
and interest on this Note shall be payable in monthly installments on the day of each month and
continuing thereafter until the Maturity Date. The payments to be made by The Legends at Hazeltine,
LLC, a Delaware limited liability company (the `Borrower "), under the terms of a Loan Agreement, dated
, 2013 (the "Loan Agreement'), between the City and the Borrower, which are to be
applied directly to payments due on this Note, whether interest only or principal and interest, are
hereinafter referred to collectively as the "Loan Repayments." The Loan Repayments commencing on
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the fortieth month following the month on which the date of this Note occurs shall be determined on the
basis of a twenty- five -year amortization of the Principal Balance of this Note, beginning on the thirty -
ninth month following the month on which the date of this Note occurs, and based on the Initial Rate on
this Note. The Lender shall adjust the monthly Loan Repayments on the Adjustment Date to reflect the
changes in the applicable interest rate on this Note to the Adjustment Rate and to re- amortize the
Principal Balance of this Note based on the remaining years of a twenty - five -year amortization schedule.
The outstanding Principal Balance of this Note, together with accrued and unpaid interest thereon, shall
be paid in full on the Maturity Date. If any payment due under this Note is not paid within ten (10) days
of the date such payment is due, an additional late payment fee shall be payable on this Note in an amount
equal to five percent (5 %) of the amount of the late payment.
4. In all events, the Loan Repayments hereunder shall be sufficient to pay all principal and
interest due, as such principal and interest becomes due, and to pay any premium, late payment fee, or
service charge, at maturity, upon redemption, or otherwise.
5. Principal and interest and premium, 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 to make a loan to the Borrower (the
"Loan") pursuant to the terms and conditions of the Loan Agreement to finance a multifamily housing
development, as defined in Minnesota Statutes, Chapter 462C, as amended (the "Act'), consisting of the
acquisition, construction, and equipping of an approximately 126 -unit progressive senior housing facility
comprised of approximately 36 independent - living units, approximately 67 assisted - living units, and
approximately 23 memory -care units (the "Project'), to be located on an approximately five -acre parcel in
the City of Chaska bounded on the west by Highway 41, on the south by Hazeltine Boulevard, on the
north by the City of Chaska golf course, and on the east by Hazeltine Gates office building (1107
Hazeltine Boulevard). This Note is issued pursuant to and in full compliance with the Constitution and
laws of the State of Minnesota, particularly the Act, and pursuant to a resolution of the City Council of
the City duly adopted on September 9, 2013 (the "Resolution ").
7. This Note is secured by an Assignment of Loan Agreement, dated as of
, 2013 (the "Assignment of Loan Agreement'), between the City, the Lender, and the
Borrower, and is further secured by a Combination Mortgage, Security Agreement, Fixture Financing
Statement and Assignment of Leases and Rents, dated as of 2013 (the "Mortgage "), from
the Borrower, as mortgagor, in favor of the Lender, as mortgagee, and certain other assignments, security
agreements, financing statements, and other instruments evidencing or securing the Loan as may be
required by the Lender.
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 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 Maturity Date of the
Note be extended beyond fifteen (15) years from the Maturity Date.
9. This Note is subject to redemption and prepayment in immediately available funds on
any date at the option of the Borrower, in whole or in part, at a redemption price equal to the sum of the
principal of this Note to be redeemed and prepaid, plus accrued interest to the date of redemption, plus a
premium equal to two percent (2 %) of the principal of this Note to be redeemed and prepaid. No
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redemption premium is payable with respect to any prepayment that, is made within 120 days of the
Maturity Date.
10. Upon a Determination of Taxability, as defined in the Loan Agreement, this Note shall
convert to a taxable obligation and the interest rate for interest accruing from the Date of Taxability, as
defined in the Loan Agreement, shall be adjusted to an interest rate per annum equal to the sum of
percent C2%) plus the Initial Rate or Adjustment Rate, whichever is applicable to the Note as
of any date of payment (the "Taxable Rate "). Any interest accruing from the Date of Taxability which is
retroactively due as a result of the interest rate adjustment 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. 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 this 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 the order of the Lender shall be
valid and effective to satisfy and discharge the liability upon this Note to the extent of the sum or sums so
paid, and the City shall not be affected by any notice to the contrary.
12. All of the agreements, conditions, covenants, provisions, and stipulations contained in the
Resolution, the Loan Agreement, and the Assignment of Loan Agreement, as the same may be amended
from time to time, 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.
13. This Note and the interest hereon and any service charge or premium, if any, due
hereunder are payable solely from the revenues and proceeds derived from the Loan Agreement, the
Assignment of Loan Agreement, the Mortgage, and any other security provided by the Borrower to the
City or the Lender to secure the payment of the obligations of the Borrower under the Loan Agreement or
to secure the payment of the Note. This Note does not constitute a general or moral obligation of the City
and does not constitute a debt of the City within the meaning of any constitutional or statutory limitation,
is not payable from or a charge upon any funds other than the revenues and proceeds pledged to the
payment thereof, and does 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.
14. If an Event of Default (as that term is defined in the Loan Agreement) shall occur, then
the Lender shall have the right and option, among other things, to declare the Principal Balance and
accrued interest thereon immediately due and payable, whereupon the same, plus any premium or service
charges, shall be due and payable, but solely from sums made available under the Loan Agreement, the
Assignment of Loan Agreement, the Mortgage, and any other security provided by the Borrower to the
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City or the Lender to secure the payment of the obligations of the Borrower under the Loan Agreement or
to secure the payment of the Note. Failure to exercise such option at any time shall not constitute a
waiver of the right to exercise the same at any subsequent time.
15. The remedies of the Lender, as provided herein and in the Mortgage, the Loan
Agreement, and the Assignment of Loan 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.
16. 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 such 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.
17. This Note has been issued without registration under state or federal or other securities
laws, pursuant to an exemption from such registration requirements; and accordingly this Note may not be
assigned or transferred in whole or part, nor may a participation interest in this Note be given pursuant to
any participation agreement, except to another "accredited investor" or "financial institution" in
accordance with an applicable exemption from such registration requirements and with full and accurate
disclosure of all material facts to the prospective purchaser(s) or transferee(s).
18. This Note has been designated by the City as a "qualified tax- exempt obligation" under
Section 265(b) 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.
[The remainder of this page is intentionally left blank.]
me
IN WITNESS WHEREOF, the City has caused this Note to be duly executed in its name by the
manual signatures of the Mayor and City Manager, the seal of the City having been intentionally omitted
as permitted by law, and has caused this Note to be dated as of 12013.
CITY OF CHANHASSEN, MINNESOTA
By
Its Mayor
By
Its City Manager
S -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, Minnesota in the name of the holder last noted below.
Date of Name and Address Signature of
Registration Registered Owner City Manager
Bell State Bank & Trust
5500 Wayzata Blvd., Suite 140
2013 Minneapolis, Minnesota 55416
EIN:
DU111 -180 (N)
430816v.1
R -1
First Draft
Monday, September 02, 2013
$10,000,000
City of Chanhassen, Minnesota
Senior Housing Revenue Note
(The Legends at Hazeltine Senior Housing Project)
Series 2013A
ASSIGNMENT OF LOAN AGREEMENT
This Assignment of Loan Agreement, dated as of , 2013 (the "Assignment "), is made
and entered into between the City of Chanhassen, a statutory city and political subdivision duly organized
and existing under the Constitution and laws of the State of Minnesota (the "City "), The Legends at
Hazeltine, LLC, a Delaware limited liability company (the `Borrower "), the members of which are
Ridgeview Medical Center, a Minnesota nonprofit corporation, and Intergenerational Living & Health
Care, hic., a Minnesota nonprofit corporation (collectively, the "Members "), and Bell State Bank & Trust,
a banking association organized under the laws of the State of North Dakota (the "Lender ").
RECITALS
WHEREAS, the Borrower and the City have entered into a Loan Agreement, dated as of
2013 (the "Loan Agreement "), pursuant to which the City will lend to the Borrower the
proceeds derived from the sale to the Lender of its Senior Housing Revenue Note (The Legends at
Hazeltine Senior Housing Project), Series 2013A (the "Note "), issued by the City in the original
aggregate principal amount of $10,000,000; and
WHEREAS, the Note is to be payable from and secured by the loan repayments (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 Assignment;
NOW THEREFORE, as an inducement to the Lender to purchase the Note, and in consideration
of the premises and other good and valuable consideration, the receipt and sufficiency of which are
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, including the Loan Repayments payable by the
Borrower thereunder, subject to the City's rights under the provisions of Section 8.9 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 Assignment.
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 7.2 and 8.9 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
(b) receive or collect or permit the receipt or collection of any payments, receipts,
rentals, profits, or other money under the Loan Agreement (except as allowed under Section 8.9
thereof) or assign, transfer, or hypothecate (other than to the Lender hereunder) any of 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
Loan Repayments and other payments under the Loan Agreement (except any payments due the City
under Section 8.9 thereof), and hereby authorizes and directs the Borrower to make such Loan
Repayments and other 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 as provided in the
Loan Agreement.
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 8.9 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 any one or more or all, and in any order, of the remedies hereinafter set forth, in
addition to any other remedy at law or in equity or specified in the Loan Agreement, 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
Assignment 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 Assignment shall
not render any other provision or provisions herein contained unenforceable or invalid.
10. This Assignment shall in all respects be construed in accordance with and governed by
the laws of the State of Minnesota. This Assignment may not be amended or modified except in writing
signed by the City and the Lender.
11. This Assignment 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 Assignment which are defined in the Loan Agreement shall have
the meanings specified therein, unless the context of this Assignment 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.
14. Amendments may be made to the rights and obligations of the Lender and the Borrower
pursuant to this Assignment without the consent of the City as long as the Note is not deemed to have
been `reissued" under the terms of Section 1001 of the Internal Revenue Code of 1986, as amended, or
Treasury Regulations, Section 1.1001 -3, as amended, as a result of such amendments.
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IN WITNESS WHEREOF, the City and the Lender have caused this Assignment to be duly
executed as of the day and year first above written.
CITY OF CHANHASSEN, MINNESOTA
By
Its Mayor
By
Its City Manager
Signature page to the Assignment of Loan Agreement
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Execution page of the Lender to the Assignment of Loan Agreement.
BELL STATE BANK & TRUST
LCM
Its:
Signature page to the Assignment of Loan Agreement
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Execution page of the Borrower to the Assignment of Loan Agreement.
DUI 11-180 (N)
430814v.]
THE LEGENDS AT HAZELTINE, LLC
By
Its Chief Executive Officer
Signature page to the Assignment of Loan Agreement
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