3 Lease w Option to Purchase
8
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EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF CHANHASSEN, MINNESOTA
HELD: December 4, 2000
Pursuant to due call and notice tbereof, a regular meeting of tbe City Council of tbe City
of Chanhassen, Minnesota was duly held at tbe City Hall on December 4, 2000 at _ o'clock
.M.
The following members were present:
and the following were absent:
Member
introduced the following resolution and moved its adoption:
RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF A
LEASE WITH OPTION TO PURCHASE AGREEMENT, GROUND LEASE AGREEMENT
AND ALLOCATING SMALL ISSUER REBATE EXCEPTION AUTHORITY
A. WHEREAS, unless an exception is available, bonds which are tax-exempt are
subject to the federal arbitrage requirement of rebating earnings in excess oftbe bond yield on
certain investments; and
B. WHEREAS, ordinarily bonds are subject to rebate if issued by a governmental unit
that lacks general taxing powers, such as the Economic Development Autbority ofthe City of
Chanhassen, Minnesota (tbe "Authority"); and
C. WHEREAS, iftbe Autbority issues bonds on behalf of a governmental unit with
general taxing powers, such as the City of Chanhassen, Minnesota (the "City"), it will be treated
as having general taxing powers if the bonds do not exceed the lesser of$5,000,000 or such
amount oftbe $5,000,000 small issuer limitation as a governmental unit with general taxing
powers may allocate to the Authority; and
D. WHEREAS, the City is a governmental unit with general taxing powers.
1231105.1
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NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Chanhassen,
Minnesota, as follows:
1. Authoritv. The City is authorized pursuant to Minnesota Statutes, Section 465.71, to
enter into a Lease Witb Option to Purchase Agreement witb the Autbority to construct a
municipal building in tbe City (tbe "Project").
2. Autborization of Bonds: Documents Presented. The Autbority proposes to issue its
$930,000 Public Project Revenue Bonds, Series 2000 (City of Chanhassen, Minnesota Lease
Witb Option to Purchase Project) (tbe "Bonds") payable from rental payments to be made under
tbe Lease. Forms oftbe following documents relating to tbe Bonds and tbe Project have been
submitted to tbe City Council and are now on file in tbe office of the Manager:
(a) a Lease Witb Option to Purchase Agreement dated as of December 1, 2000 (tbe
"Lease"), between tbe Autbority and the City which, among otber things, provides for the
construction and installation oftbe Project and pursuant to which tbe City is required to
pay rental payments sufficient to pay tbe principal and interest on the Bonds when due;
(b) a Ground Lease Agreement dated as of December I, 2000 (tbe "Ground Lease")
between tbe City and tbe Autbority pursuant to which tbe City leases tbe land on which
tbe Project is to be constructed to tbe Autbority; and
(c) a Revenue Bond Resolution to be adopted by the Autbority (the "Revenue Bond
Resolution"), setting forth tbe form and details of the Bonds and tbeir issuance, and
pledging tbe rental payments derived from the Lease to the payment ofthe Bonds.
3. Aooroval and Execution of Lease Witb Ootion to Purchase Agreement and Ground
Lease. The Mayor and tbe Manager are hereby autborized and directed to execute, and deliver
the Lease and the Ground Lease, in substantially tbe forms on file with the Manager. All oftbe
provisions oftbe Lease and tbe Ground Lease when executed and delivered as authorized herein
shall be deemed to be a part of this resolution as fully and to tbe same extent as if incorporated
herein and shall be in full force and effect from the date of execution and delivery tbereof.
4. Aporoval of Revenue Bond Resolution. The City hereby approves the form of the
Revenue Bond Resolution and the terms oftbe Bonds described tberein.
5. Authorized to Execute. The Mayor and Manager are hereby designated and authorized
to act on behalf of the City to execute the Lease and tbe Ground Lease, or otber documents
relating thereto.
6. Furnishing of Certificates and Proceedings. The Mayor and Manager and otber
officers ofthe City are authorized and directed to prepare and furnish to the Purchaser and Bond
Counsel, certified copies of all proceedings and records of the City relating to the Bonds, and
1231105.1
2
"
such other affidavits and certificates as may be required to show the facts relating to tbe legality
ofthe Bonds as such facts appear from tbe books and records in the officers' custody and control
or as otherwise known to them; and all such certified copies, certificates and affidavits, including
any heretofore furnished, shall constitute representations of tbe City as to tbe trutb of all
statements contained therein.
7. Modifications to Documents. The approval hereby given to tbe various documents
referred to above includes approval of such additional details tberein as may be necessary and
appropriate and such modifications tbereof, deletions therefrom and additions tbereto as may be
necessary and appropriate and approved by tbe City Attorney and the City officials autborized
herein to execute tbe documents. The City officials are hereby autborized to approve changes on
behalf of tbe City. The execution of any instrument by tbe appropriate officer or officers of tbe
City herein autborized shall be conclusive evidence of tbe approval of such documents in
accordance with the terms hereof. In tbe absence oftbe Mayor or Manager, any oftbe documents
authorized by tbis resolution to be executed may be executed by tbe Acting Mayor or the Acting
Manager respectively.
8. Finding. The City hereby finds, determines and declares that (I) the Autbority is
issuing its Bonds on behalf of tbe City within tbe meaning of Section l48(f)( 4)(C)(iv) of tbe
federal Internal Revenue Code of 1986, as amended (tbe "Code"), (2) tbe Autbority is tberefore
treated as a subordinate entity oftbe City for purposes of such Section, and (3) tbe aggregate face
amount of the Bonds does not exceed tbe lesser of$5,000,000 or tbe amount which, when added
to the aggregate amount of otber issues issued by tbe Authority in 2000, is allocated to the
Authority in paragraph 9 of this resolution.
9. Allocation. The City hereby allocates to tbe Authority a $930,000 portion oftbe
City's $5,000,000 limitation under Section l48(f)(4)(C)(i)(IV) of the Code on the aggregate face
amount of tax-exempt bonds (otber than private activity bonds) issued by the City during the
calendar year 2000. Such allocation is made solely witb respect to the Bonds, is irrevocable and
is made before the issuance of tbe Bonds. Said $930,000 allocated to tbe Authority bears a
reasonable relationship to the benefits received by the City from tbe Bonds issued by the
Authority, because the Bonds finance the Project to be located in, leased to, and used by tbe City.
The Authority shall accept tbis allocation by issuing its Bonds and making a statement in its
Nonarbitrage Certificate relating to tbe Bonds.
10. Aggregation. The City and Authority will be aggregated and treated as one issuer for
purposes of said $5,000,000 limitation, and together will not issue in 2000 more than $5,000,000
aggregate face amount of all tax-exempt bonds (other than private activity bonds).
II. Severabilitv. If any section, paragraph or provision of this resolution shall be held to
be invalid or unenforceable for any reason, tbe invalidity or unenforceability of such section,
paragraph or provision shall not affect any of the remaining provisions ofthis resolution.
1231105.1
3
(
.
12. Headings. Headings in this resolution are included for convenience of reference only
and are not a part hereof, and shall not limit or define tbe meaning of any provision hereof.
The motion for tbe adoption of the foregoing resolution was duly seconded by member
, and upon vote being taken thereon tbe following voted in favor thereof:
and tbe following voted against the same:
whereupon tbe resolution was declared duly passed and adopted.
Adopted by tbe City Council of the City of Chanhassen, Hennepin and Carver Counties,
Minnesota, tbis 4th day of December, 2000.
Mayor
ATTEST:
City Manager
1231105.1
4
STATE OF MINNESOTA )
COUNTIES OF HENNEPIN )
AND CARVER ) SS
CITY OF CHANHASSEN )
I, the undersigned, being tbe duly qualified and acting Manager of the City of
Chanhassen, Minnesota, hereby certify that I have carefully compared and attached tbe foregoing
extract of minutes of a meeting of tbe City Council held December 4, 2000, with the original
thereof on file and of record in my office and the same is a full, true and complete transcript
tberefrom insofar as the same relates to the execution of a Lease With Option to Purchase
Agreement and Ground Lease; and allocating small issuer rebate exception autbority for tbe
financing of a municipal building for tbe City.
WITNESS my hand this 4th day of December, 2000.
Manager
1231105.1
5
\
REDEVELOPMENT PLAN
FOR
DOWNTOWN CHANHASSEN REDEVELOPMENT AREA,
MODIFICATION NO. 14
December 4, 2000
ECONOMIC DEVELOPMENT AUTHORITY OF THE
CITY OF CHANHASSEN, MINNESOTA
] 2250752
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TABLE OF CONTENTS
Page
A Intent .............................................................. 1
B. Project Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I
C. Project Area Redevelopment Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I
D. Proposed Project Area Redevelopment Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
E. Project Area Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
F. Financing Plan ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exhibit A - Budget
1225075.2
A. Intent
The Economic Development Autbority of the City of Chanhassen, Minnesota (the
"EDA") proposes to cause to be constructed and equipped in the Project Area (herein
described) which has been previously established by tbe City of Chanhassen,
Minnesota (tbe "City") and tbe Housing and Redevelopment Autbority in and for tbe
City of Chanhassen, Minnesota (tbe "HRA") an approximate 9,760 square foot
municipal building to be used as for municipal purposes (tbe "Municipal Building").
The City will lease all or a portion of tbe Municipal Building from the EDA witb an
option to purchase pursuant to a lease witb option to purchase agreement. Public
project revenue bonds in tbe principal amount not to exceed approximately $930,000
are proposed to be sold by tbe EDA to finance a portion of tbe costs of tbe Municipal
Building. The public project revenue bonds will be secured by tbe payments to be
made by the City under tbe lease with option to purchase agreement.
B. Project Area
The HRA has previously transferred tbe jurisdiction oftbe Project Area to the EDA.
Prior to 1994 tbe Chanhassen Downtown Redevelopment Project Area (tbe "Project
Area") contained approximately 2, 200 acres ofland. One hundred seventy-five acres
are located north ofT.H. 5 and comprise what is generally recognized as downtown
Chanhassen. The remainder oftbe Project Area is soutb ofT.H. 5 in tbe Chanhassen
Lakes business park and otber areas. Approximately 1,519 acres were added to tbe
Project Area on March 14, 1994 in order to accommodate tbe Chanhassen/Carver
County road construction projects.
The Project Area is generally described as being bounded by Audubon Road on the
west, and tben follow T.H. 5 west to Galpin Boulevard, tben north approximately five
hundred (500) feet, tben tbe line is extended due east to Laredo Drive, tben south to
West 78th Street, tben east to T.H. 101 which is tbe T.H. 5, also including lands west
ofT.H. 101, then south ofT.H. 5 to the Lake Drive East and Dakota Avenue
intersection, tben east to tbe old and current alignment ofT.H. 101 south, but also
including lands east ofT.H. 101 and Lyman Boulevard on tbe south.
C. Project Area Redevelopment Objectives
The HRA has previously identified the following objectives for the Project Area:
I. Diversify tbe tax base of tbe City by encouraging commercial and industrial
development which in turn will enhance employment opportunities, create
stability in the tax base and increase and protect property values;
1225075.2
1225075.2
2. Encourage redevelopment of commercial and service-oriented businesses to
better serve tbe consumer needs oftbe community;
3. Remove structurally substandard buildings which cannot be rehabilitated;
4. Acquire and remove buildings tbat are economically or functionally obsolete or
under utilized and acquire land that is vacant or under utilized to facilitate
redevelopment;
5. Eliminate blighting influences which impede potential development in tbe area;
6. Provide redevelopment sites oftbe size and character necessary to assure
development oftbe area and strengthen the overall economy and improve tbe
sources of public revenues;
7. Promote industrial development, provide increased employment opportunities
and supplement the financial base oftbe community;
8. Provide land for publicly assisted housing;
9. Provide land for needed expansion of existing businesses in the area;
10. Provide adequate street, utility and otber public improvements and facilities to
enhance tbe area for botb new and existing development;
11. Achieve rehabilitation of buildings when economically feasible;
12. Accomplish the applicable goals oftbe City's Comprehensive Plan;
13. Provide maximum opportunity, consistent witb sound needs ofthe City as a
whole, for redevelopment by private enterprise;
14. Provide general design guidance in conjunction with suitable development
controls in order to enhance the physical environment of tbe area;
15. Encourage and facilitate involvement ofthe community in resolving
neighborhood problems related to business, physical structures and land use;
and
16. Provide financial incentives as appropriate to stimulate growth and private
sector redevelopment efforts within tbe Project Area.
2
D. Proposed Project Area Redevelopment Activities
The following stated objectives oftbe Redevelopment Plan have been previously
adopted by the HRA and are intended to be accomplished:
1. Clearance and redevelopment;
2. Relocation of buildings and tbe inhabitants of buildings;
3. The provision of building sites for new and expanding businesses;
4. Vacation of rights-of-way;
5. Dedication of new rights-of-way;
6. Land acquisition and leasing;
7. Soils corrections and land preparation;
8. A Special Assessment Reduction Program designed to stimulate development
within tbe Project Area;
9. New construction, or improvement of public streets and parking lots;
10. Installation or replacement of public facilities and utilities;
11. Financial subsidies to induce businesses to locate within the Project Area; and
12. Landscaping and streetscape improvements.
E. Project Area Plan
Figure 2 of Modification No. 11, dated April 17, 1992 previously adopted bytbe
HRA portrayed tbe overall plans for the Project Area. Plan highlights included the
following:
1. The Chanhassen Lakes business park comprising 450 acres, fully served by
sewer, water and landscaped streets;
2. The downtown redevelopment area which is intended to be redeveloped for a
multiplicity of uses including convenience and specialty retail, services,
entertainment, recreational, cultural, office, institutional and multi-family
residential and including public parking to adequately serve new developments;
1225075.2 3
3. A linear open space system witbin the business park and including parks on
Lake Susan and in downtown Chanhassen;
4. The relocation ofT.H. 101 to intersect with T.H. 5 at Dakota Avenue and
remove traffic from tbe downtown area by routing it directly to T.H. 5 and new
Market Boulevard;
5. The extension of Lake Drive from County Road 17 to T.H. 101 to accommodate
local traffic demands;
6. The realignment of West 78th Street at County Road 17 to provide adequate
stacking distance between West 78th Street and T.H. 5;
7. The widening of County Road 17 from Lake Drive to the northerly line oftbe
tax increment financing district and the creation of an urban section in this
Project Area;
8. The construction or reconstruction of public utilities witbin tbe downtown
redevelopment area to accommodate new development including tbe acquisition
and construction of a major ponding area witb over a million cubic feet of
storage to serve all oftbe downtown area;
9. The construction of Market Boulevard from West 78th Street to tbe soutberly
line of tbe tax increment financing district;
10. The construction of Lake Drive from Audubon to existing T.H. 101 and tbe
upgrading of Audubon witbin tbe tax increment financing district; and
11. Redevelopment oftbe area north ofT.H. 5 extending from Great Plains
Boulevard easterly to realigned T.H. 101;
12. The development of a new park and tbe expansion of an existing park;
13. Heritage preservation enhancements;
14. The meeting of public facility needs; and
15. Aesthetic improvements to Highway 5 to enhance the downtown area's image
and identity.
The Project Area Plan is modified to include the construction and equipping of the
Municipal Building as an additional activity within tbe Project Area.
1225075.2
4
F. Financing Plan
Attached hereto as Exhibit A is a budget which details estimated development costs
associated with tbe Municipal Building. The items of cost and the costs thereof
shown in tbe budget are estimated to be necessary based upon information now
available. It is anticipated tbat the items of cost and tbe costs thereof shown in each
category in tbe budget may decrease or increase, but tbat tbe total project cost will not
exceed tbe amount shown above.
1225075.2
5
1225075.2
EXHffiIT A
Budget
Construction Costs
Discount Factor
Estimated Capitalized Interest
Estimated Costs of Issuance
Miscellaneous Costs and Rounding
TOTAL
A-I
$828,000
15,810
63,495
18,000
4.695
$930,000
ECONOMIC DEVELOPMENT AUTHORITY OF THE
CITY OF CHANHASSEN, MINNESOTA
RESOLUTION NO.
STATE OF MINNESOTA )
COUNTIES OF CARVER )
AND HENNEPIN )
CITY OF CHANHASSEN )
RESOLUTION APPROVING REDEVELOPMENT PLAN FOR
DOWNTOWN CHANHASSEN REDEVELOPMENT AREA. MODIFICATION NO. 14
BE IT RESOLVED by the Economic Development Authority of the City of Chanhassen,
Carver and Hennepin Counties, Minnesota (the "Authority") as follows:
Section 1. Recitals.
1.01. It has been proposed that the Authority establish a Redevelopment Project Area in
connection with constructing and equipping a municipal building for the City of Chanhassen,
Minnesota (the "City") and adopt a redevelopment plan for the municipal building, all pursuant
to and in conformity with applicable law, including Minnesota Statutes, Section 469.001 through
469.047 and 469.090 through 469.1081.
1.02. The municipal building will be located within the Chanhassen Downtown
Redevelopment Project Area (the "Project Area") previously established by the City so therefore
it will not be necessary to establish a new project area.
1.03. A "Redevelopment Plan for Downtown Chanhassen Redevelopment Area,
Modification No. 14," dated December 4,2000 (the "Plan") has been prepared and presented for
the Board's consideration.
1.04. The Board has investigated the facts relating to the Plan and has caused the Plan to
be prepared.
1.05. The Authority has performed all actions required by law to be performed prior to
the adoption and approval of the Plan. The Authority has also requested that the City Council
hold a public hearing on the Plan.
Section 2. Findings for the Adootion and Aooroval of the Plan.
2.01. The Board hereby finds that the Plan conforms to the general plan for the
development or redevelopment ofthe City as a whole; and that the Plan will afford maximum
1225075.2
opportunity consistent with the sound needs of the City as a whole, for the development of the
Project Area and adjacent areas by private enterprise.
2.02. The Board further finds that the Plan is intended artd, in the judgment of the Board,
its effect will be, to promote the public purposes and accomplish the objectives specified in the
Plan.
Section 3. Aooroval and Adootion of the Plan. The Plan, as presented to the Authority
on this date, is hereby approved, established, and adopted.
Adopted by the Economic Development Authority of the City of Chanhassen, Carver and
Hennepin Counties, Minnesota, this 4th day of December, 2000.
President
ATTEST:
Secretary
1225075.2
2
STATE OF MINNESOTA )
COUNTIES OF CARVER )
AND HENNEPIN )
CITY OF CHANHASSEN )
SECRETARY'S CERTIFICATE
I, the undersigned, being the duly qualified and acting Secretary of the Economic
Development Authority of the City ofChanhassen, Minnesota, DO HEREBY CERTIFY that I
have carefully compared the attached and foregoing extract of minutes of a duly called and
regularly held meeting of the Board of Commissioners held on December 4, 2000, with the
original minutes thereof on file in my office and I further certify that the same is a full, true, and
correct transcript thereof insofar as the minutes relate to the Resolution Approving Downtown
Chanhassen Redevelopment Area, Modification No. 14.
WITNESS my hand officially this 4th day of December, 2000.
Secretary
Economic Development Authority
of the City of Chanhassen, Minnesota
1225075.2
LEASE WITH OPTION TO PURCHASE AGREEMENT
BETWEEN
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF CHANHASSEN, MINNESOTA
as Lessor
and
CITY OF CHANHASSEN, MINNESOTA
as Lessee
Dated as of the 1st day of December, 2000
Drafted By: Briggs and Morgan, Professional Association
2200 First National Bank Building
SaintPaul,MN 55101
1231381.1
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS AND EXHffiITS ...................................... 2
Section 1.1. Definitions........................ . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II - REPRESENTATIONS, COVENANTS AND WARRANTIES .............. 8
Section 2.1. Representations, Covenants and Warranties of Lessee . . . . . . . . . . . . . . . . . 8
Section 2.2. Tax-Exempt Status of the Bonds; Rebate. . . . . .. . . . . . . . . . . . . . . . . . . . . 9
Section 2.3. Representations, Covenants and Warranties of Lessor . . . . . . . . . . . . . . . . . 9
ARTICLE III - CONSTRUCTION AND LEASE OF PROJECT ....................... 11
Section3.1. Cost of Project; Financing ""............................".,,11
Section 3.2. Construction of Project; Payment of Cost . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3. Lease and Sublease" " . " . . . . . . . . . " . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4. Possession and Enjoyment "................................... 12
Section 3.5. Lessor Access to Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV - TERM OF LEASE .""......".................................. 13
Section 4.1. Lease Term ...............:................ . . . . . . . . . . . . . . . . . 13
Section 4.2. Termination by Lessee .....,.................................. 13
Section 4.3. Intent to Continue Lease Term; Appropriations and Property Taxes . . . . . 13
Section 4.4. Effect of Termination ".".".....".......................... 13
Section 4.5. Nonsubstitution .. .. . . " " . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.6. Termination of Lease Term. . . .. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V -RENTAL PAYMENTS .....,,".................................. .15
SectionS.1. RentalPayments ............................................ .15
Section 5.2. Interest Component. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.3. Rental Payments to be Unconditional. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SectionS.4. Current Expense "."."....."............................. .15
ARTICLE VI - INSURANCE AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.1. Liability Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.2. Property Insurance ........................................... 17
Section 6.3. Worker's Compensation Insurance ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.4. Requirements For All Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.5. Indemnification; Hazardous Substance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.6. Damage to or Destruction of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII - OTHER OBLIGATIONS OF LESSEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.1. Use; Permits ................................................20
Section 7.2. Maintenance of Project by Lessee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1231381.1
Section 7.3. Taxes, Other Governmental Charges and Utility Charges .............20
Section 7.4. Advances........................... . . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLEVill-TITLE .......... ............................................. .22
Section 8.1. Title...................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 22
Section 8.2. Security Interest ............................................. 22
Section 8.3. Liens ...................................................... 22
Section 8.4. Installation of Lessee's Equipment ...............................23
Section 8.5. Modification of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.6. Easements and Utility Access. .................................. 24
Section 8.7. Release of Unimproved Land. ..................................24
Section 8.8. Covenant For the Benefit of the Bondholders. ......................25
ARTICLE IX - PROJECT WARRANTIES ........................................ 26
Section 9.1. Selection of Project . .. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 26
Section 9.2. Construction and Maintenance of Project . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 9.3. Contractors' Warranties. . . . .. . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.4. Disclaimer of Warranties ......................................26
ARTICLE X - PREPAYMENT.............................. . . .... . .. . .. .. .... ..27
Section 10.1. When Available ............................................27
Section 10.2. Exercise of Purchase Option. . . . .. . . . . . . . . , . . . . . . . . . . . . . . . . . . .. 27
Section 10.3. Release of Lessor's Interest.. .. . . .. .. . . . . . . . . . . . . . . . . . .. . . . . . . . 27
Section 10.4. Defeasance ................................................27
Section 10.5. Partial Prepayment or Defeasance .............................. 28
Section 10.6. Exercise of Partial Prepayment or Defeasance Option. . . . . . . . . . . . . ..28
Section 10.7. Credit for Partial Prepayment or Defeasance ...................... 28
Section 10.8. Mandatory Prepayment of Bonds ...............................28
ARTICLE XI - ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING ........30
Section 11.1. Assignment by Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 11.2. Assignment and Subleasing by Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 11.3. Restriction on Mortgage or Sale of Project by Lessee ...............30
ARTICLE XII-EVENTS OF DEFAULT AND REMEDIES ..........................31
Section 12.1. Events of Default Defined. ....................................31
Section 12.2. Remedies on Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.3. Return of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 12.4. No Remedy Exclusive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 12.5. Agreement to Pay Attorneys' Fees and Expenses . . . . . . . . . . . . . . . . . . . 33
Section 12.6. Late Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
1231381.1
ARTICLE XIII-ADMINISTRATIVE PROVISIONS ................................35
Section 13.1. Notices ................................................... 35
Section 13.2. Financial Information ........................................ 35
Section 13.3. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 13.4. Severability....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 13.5. Amendments, Changes and Modifications . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 13.6. Captions .................................................. 35
Section 13.7. Further Assurances and Corrective Instruments . . . . . . . . . . . . . . . . . . . . 35
Section 13.8. Execution In Counterparts .................................... 35
Section 13.9. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 35
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 37
ACKNOWLEDGMENTS ............ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
EXHffiITS
1231381..1
THIS LEASE WITH OPTION TO PURCHASE AGREEMENT dated as of December I,
2000 (the "Lease"), by and between the Economic Development Authority of the City of
Chanhassen, a public body corporate and politic and a political subdivision duly organized and
existing under the laws of the state of Minnesota as Lessor ("Lessor") whose address is 690 City
Center Drive, Chanhassen, Minnesota 55317-0147; and the City ofChanhassen, a municipal
corporation and political subdivision duly organized and existing under the laws ofthe State of
Minnesota as Lessee ("Lessee"), whose address is 690 City Center Drive, Chanhassen, Minnesota
55317-0147;
WITNESSETH:
WHEREAS, Lessee is authorized by law to acquire such items of real and personal
property as are needed to carry out its governmental functions, and to acquire such real and
personal property by entering into lease with option to purchase agreements; and
WHEREAS, Lessee has determined that it is necessary for it to acquire under this Lease
certain real and personal property described herein as the Project; and
WHEREAS, the Lessor has heretofore established a redevelopment project area and has
adopted a redevelopment plan dated December 4, 2000, as approved by resolution of the Lessor's
governing body adopted on December 4, 2000, in connection with the acquisition and installation
of the Project for the Lessee; and
WHEREAS, Lessor is willing to finance the acquisition and construction ofthe Project
Improvements and to lease or (in the case of the Land) sublease, the Project to Lessee pursuant to
this Lease and the Lessee is willing to rent the Project from Lessor, pursuant to this Lease;
NOW, THEREFORE, in the joint and mutual exercise of their powers, and in
consideration of the mutual covenants herein contained, the parties hereto recite and agree as
follows:
1231381.1
ARTICLE I
DEFINITIONS AND EXHffiITS
Section 1.1. Defmitions. Unless the context otherwise requires, the terms defined in this
Section or in the Bond Resolution shall, for all purposes of this Lease, have the meanings herein
specified.
Act: Collectively, the Lessor Powers Act and the Lessee Powers Act.
Board of Commissioners: Board of Commissioners of the Issuer, or its successor as
governing body of the Issuer.
Bonds: Public Project Revenue Bonds, Series 2000 (City of Chanhassen, Minnesota
Lease With Option to Purchase Project).
Bond Counsel: Briggs and Morgan Professional Association, in St. Paul, Minnesota, or
any other law firm nationally recognized as bond counsel in the municipal bond industry.
Bond Fund: The Bond Fund created pursuant to Section 5-2 of the Bond Resolution.
Bond Resolution: The resolution of the Lessor adopted by its Board of Commissioners
on December 4, 2000, authorizing issuance and sale of the Bonds, as the same may be amended,
modified or supplemented by any amendments or modifications thereof.
Business Dav: Any day other than a Saturday, Sunday, legal holiday or a day on which
banking institutions in the City of St. Paul, Minnesota, are authorized by law or executive order
to be closed.
Casualty Value of the Proiect: As of the date of payment, the principal amount of all
outstanding installments of principal, plus unpaid interest thereon until the earliest date on which
they may be called for extraordinary redemption under Section 3-1 (2) of the Bond Resolution,
less all sums held in the Bond Fund.
Citv: City of Chanhassen, Minnesota.
Code: Internal Revenue Code of 1986, as amended.
Condemnation: The meaning given that term in Section I-I of the Bond Resolution.
Contractor: Each of the contractors from whom Lessee has ordered or will order or with
whom Lessee has contracted or will contract for the acquisition, construction and installation of
any portion of the Project.
1231381.1
2
Environmental Law: The Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. §9601 et sea., the Resource Conservation and Recovery Act, 42 U.S.C.
§690l et sea., the Hazardous Materials Transportation Act, §1802 et sea., the Federal Water
Pollution Control Act, 33 U.S.C. §12Sl et sea., the Clean Water Act, 33 U.S.C. §132l ~ the
Clean Air Act, 42 U.S.C. §740l et sea., the Minnesota Environmental Response and Liability
Act, Minn. Stat. ch. IISB, the Minnesota Petroleum Tank Release Cleanup Act, Minn. Stat. ch.
IISC, and any other federal, state, county, municipal, local or other statute, law, ordinance or
regulation which may relate to or deal with human health or the environment, all as may be from
time to time amended.
Fiscal Year: The fiscal year January 1 to December 31 of the Lessee.
Governmental Unit: A "governmental unit" within the meaning of Section 141 of the
Code.
Hazardous Substances: Asbestos, ureaformaldehyde, polychlorinated biphenyls
("PCBs"), nuclear fuel or material, chemical waste, radioactive material, explosives, known
carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or substances listed or identified in, or regulated
by, any Environmental Law.
Indeoendent Counsel: An attorney duly admitted to the practice of law before the highest
court of the State who is not a full-time employee of Lessor or Lessee.
Indeoendent Engineer: An Independent engineer or engineering firm or an Independent
architect or architectural firm qualified to practice the profession of engineering or architecture
under the laws of Minnesota and who is not an officer of Lessee or Lessor.
Interest: The portion of any Rental Payment designated as and comprising interest as
shown in the attached Exhibit B.
Land: The real property described in Exhibit A hereto.
Lessee Powers Act: Minnesota Statutes, Sections 465.71 and 469.041, as from time to
time amended.
Lessor Powers Act: Minnesota Statutes, Sections 469.090 through 469.1081.
fMandatorv Redemotion Pavrnents: The Rental Payments which are to be made in the
years to redeem the Bonds maturing on January 1, in accordance
with the Mandatory Redemption Schedule, after appropriate credits, if any, have been made.]
1231381.1
3
fMandatorv Redemotion Schedule: The mandatory redemption schedule for the Bonds
set forth in Section 10.8.]
Net Proceeds: Any property insurance proceeds or Condemnation award, paid with
respect to the Project, remaining after payment therefrom of all expenses incurred in the
collection thereof.
Non-aoorooriation: The failure of the governing body of Lessee to appropriate money for
any Fiscal Year of Lessee sufficient for the continued performance of this Lease by Lessee, as
evidenced by the passage of an ordinance or resolution specifically prohibiting Lessee from using
any moneys to pay the Rental Payments due under this Lease for a designated Fiscal Year and all
subsequent Fiscal Years.
Paving Agent: U.S. Bank Trust National Association, in St. Paul, Minnesota, or any other
bank designated pursuant to the Bond Resolution as agent of the Lessor to receive or disburse the
principal and interest on the Bonds.
PaYment Date: The date as provided in Exhibit B attached hereto, prior to which date a
Rental Payment is required to be paid as provided in Section 5.1 hereof.
Permitted Encumbrances: As of any particular time: (i) liens for taxes and assessments
not then delinquent, or which Lessee may, pursuant to provisions of Section 7.3 hereof, permit to
remain unpaid, (ii) this Lease and amendments hereto, (iii) Lessor's interest in the Project, (iv)
any mechanic's, laborer's, materialmen's, supplier's or vendor's lien or right not filed or perfected
in the manner prescribed by law, and any such lien which Lessee may, pursuant to Article VIII
hereof, permit to remain unpaid.
Princioal: The portion of any Rental Payment designated as principal in the attached
Exhibit B.
Proiect: Project Improvements, Project Equipment and the Land which are being leased
or, as to the Land, subleased, to the City pursuant to this Lease and which are more fully
described in the attached Exhibit A.
Project Acauisition Fund: The account by that name established by Lessee under Section
5-1 of the Bond Resolution for the purpose of accounting for proceeds of the Bonds used to pay
Project Costs.
1231381.1
4
Proiect Costs or Cost of the Proiect or Cost: All costs of purchase, construction and
installation of the Project including the following:
(a) all costs and expenses necessary or incident to the acquisition of the Project
Improvements and Project Equipment;
(b) fees and expenses of surveyors and engineers for estimates, surveys, soil
borings and soil tests and other preliminary investigations and items necessary for the
cornmencement of construction, preparation of plans, drawings and specifications and
supervision of construction, as well as for the performance of all other duties of surveyors
and engineers in relation to either the construction, furnishing and equipping of the
Project or the making of the Lease;
(c) all costs and expenses of every nature incurred in purchasing and constructing
the Project Improvements and purchasing and installing the Project Equipment including
the actual cost oflabor, materials, machinery, furnishings and equipment as payable to
contractors, builders and materialmen in connection with the construction, furnishing and
equipping the Project;
(d) the cost of any insurance and performance and payment bonds maintained
during the construction period in accordance therewith;
(e) expenses of administration, supervision and inspection properly chargeable to
the Project, underwriting expenses, legal fees and expenses, fees and expenses of
accountants and other consultants, publication and printing expenses and other fees and
expenses which are necessary or incidental and to the making of the Lease and the
issuance of the Bonds or to the acquisition, purchase, construction, installation, furnishing
and equipping of the Project;
(f) all other items of expenses not elsewhere specified in this definition as may be
necessary or incident to: (i) the making of the Lease; (ii) the acquisition, purchase,
construction, installation, equipping and furnishing of the Project; and (iii) the financing
thereof; and
(g) reimbursement to Lessee or Lessor or those acting for it for any of the
above-enumerated costs and expenses incurred and paid by them before or after the
execution of the Lease.
Proiect Eauioment: All items of machinery, equipment or other personal property
installed or acquired or to be acquired for installation in the Project Improvements or elsewhere
on the Land and paid for in whole or in part from the proceeds of the Bonds and all replacements
thereof and substitutions therefor made pursuant to the Lease.
1231381.1
5
Proiect Imorovements: All buildings, structures, improvements and fixtures located on or
to be purchased, constructed and otherwise improved on the Land and all additions, alterations,
modifications and improvements thereof made pursuant to the Lease.
Purchase Ootion Price: The amount payable, at the option of the Lessee, on any
applicable Payment Date set forth on the attached Exhibit C, for the purpose of terminating the
Lease and purchasing the Project, which amount shall be equal to the amount provided in the
attached Exhibit C.
Registered Holders: The person or persons in whose name any outstanding Bond is
registered as provided in the Bond Resolution.
Rental Pavrnent: The payment due from Lessee to Lessor prior to each Payment Date
during the Term of this Lease, as provided in Section 5.1 hereof and shown on the attached
Exhibit B.
Soecifications: The bid specifications and/or similar document pursuant to which Lessee
has contracted for any portion of the Project from a Contractor.
State: The State of Minnesota.
State and Federal Law or Laws: The Constitution and any law of the State and any rule or
regulation of any agency or political subdivision of the State; and any law of the United States,
and any rule or regulation of any federal agency.
Term of this Lease or Lease Term: The period commencing as of December 1,2000 and
ending on February 1, 2012, subject to earlier termination in accordance with the provisions of
the Lease.
Section 1.2. Exhibits.
The following Exhibits are attached to and by reference made a part of this Lease:
Exhibit A: Description of the Land and the Project being leased by Lessee pursuant to
this Lease.
Exhibit B: Schedule indicating the date and amount of each Rental Payment coming due
during the Lease Term and the amount of each Rental Payment èomprising Principal and Interest.
Exhibit C: Schedule showing as of each applicable Payment Date the price at which
Lessee may exercise its option to purchase Lessor's interest in the Project in accordance with
Article X.
1231381.1
6
Exhibit D: Form of Certificate of Incumbency of Lessee relating to the offices or
positions, signatures and qualifications of the persons executing on behalf of Lessee this Lease
and other documents relating thereto.
1231381.1
7
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Reoresentations. Covenants and Warranties of Lessee. Lessee represents,
covenants and warrants as follows:
(a) Lessee is a municipal corporation and political subdivision of the State, duly
organized and existing under the Constitution and laws of the State.
(b) The Project constitutes an authorized project under the Act.
( c) Lessee is authorized under the Constitution and laws of the State to enter into
this Lease and the transactions contemplated hereby, and to perform all of its obligations
hereunder.
(d) The officers of Lessee executing this Lease have been duly authorized to
execute and deliver this Lease under the terms and provisions of a resolution of Lessee's
governing body, or by other appropriate official action.
(e) In authorizing and executing this Lease, Lessee has complied with all public
bidding and other State and Federal Laws applicable to this Lease and the acquisition of
the Project by Lessee.
(f) Lessee will not pledge, mortgage or assign this Lease, or its duties and
obligations hereunder to any other person, firm or corporation except as provided under
the terms of this Lease.
(g) The Project will be used during the Term ofthis Lease only to carry out the
governmental purposes of Lessee.
(h) During the Term of this Lease, Lessee will not take any action which will
cause the interest on the Bonds to become subject to Federal income taxation, including,
but not limited to, permitting any person who is not a governmental unit to use, directly
or indirectly, any portion of the Project in a trade or business so as to impair the tax
exempt status of the Bonds, all within the meaning of Section 141 of the Code or causing
the Bonds to be "arbitrage bonds" within Section 148 of the Code.
(i) Upon the execution ofthis Lease, Lessee will provide to Lessor a Certificate
of Incumbency in the form attached hereto as Exhibit D.
(j) The Project will comply with all applicable land use, environmental control,
building and zoning ordinances and regulations, if any.
1231381.1
8
(k) Lessee will cause the Project to be constructed in accordance with the
Specifications on or before
(I) Neither the execution and delivery hereof, nor the fulfillment of or compliance
with the terms and conditions hereof, nor the consummation of the transactions
contemplated hereby, conflicts with or results in a breach of the terms, conditions, and
provisions of any restriction or any agreement or instrument to which the Lessee is now a
party or by which the Lessee is bound, or constitutes a default under any of the foregoing.
Section 2.2. Tax-Exemot Status of the Bonds: Rebate. Lessee shall comply with
requirements necessary under the Code to establish and maintain the exclusion from gross
income under Section 103 of the Code of the interest on the Bonds, including without limitation
(I) requirements relating to temporary periods for investments, (2) limitations on amounts
invested at a yield greater than the yield on the Bonds, and (3) the rebate of excess investment
earnings to the United States if the Bonds (together with other obligations reasonably expected to
be issued and outstanding at one time this calendar year) exceed the small-issuer exception
amount of$S,OOO,OOO under Section 148 of the Code. This covenant shall survive termination of
this Lease.
Section 2.3. Reoresentations. Covenants and Warranties of Lessor. Lessor represents,
covenants and warrants as follows:
(a) Lessor is a public body corporate and politic and a political subdivision duly
organized and existing under the laws of the state of Minnesota.
(b) The Project constitutes an authorized project under the Act.
(c) The goveming body of Lessor has made all necessary investigation and has
determined that the Project will promote the public interest and welfare of the State of
Minnesota and the City and the people thereof through the provision of public facilities
required for the purpose of providing various services to the City residents and promoting
economic development within the City.
(d) The acquisition and construction of the Project, the issuance and sale of the
Bonds, the execution and delivery of this Lease and the performance of all covenants and
agreements of the Lessor contained in this Lease and of all other acts and things required
under the Constitution and laws of the State of Minnesota to make this Lease valid and
binding obligations of Lessor in accordance with their terms, are authorized and have
been duly authorized by the Bond Resolution.
(e) Lessor has not made, done, executed or suffered and warrants that it will not
make, do, execute or suffer any act or thing whereby its Lessor's interest in the Project
1231381.1
9
shall or may be impaired or charged or encumbered, except as provided in the Bond
Resolution.
(f) To finance the cost of the Project, Lessor proposes to issue the Bonds as
provided in the Act and Bond Resolution in the aggregate principal amount of $930,000.
(g) There is no litigation pending or, to the best of its knowledge threatened,
against Lessor relating to the acquisition, installation, construction or financing of the
Project or to the Bonds or to this Lease or questioning the organization, powers or
authority of Lessor.
(h) Neither the execution and delivery of this Lease, nor the fulfillment of or
compliance with the terms and conditions thereof, nor the consununation of the
transactions contemplated thereby, conflicts with or results in a breach of the terms,
conditions or provisions of any restriction or any agreement or instrument to which
Lessor is now a party or by which Lessor is bound, constitutes a default under any of the
foregoing, or results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of Lessor, or upon the Project except
Permitted Encumbrances.
1231381.1
10
ARTICLE ill
CONSTRUCTION AND LEASE OF PROJECT
Section 3.1. Cost ofProiect: Financing. Lessee has entered or will enter into one or more
contracts for the Project with Contractors providing for the construction and installation of the
Project. Any property to be acquired from the proceeds of the Bonds shall be deemed acquired
on behalf of, but without liability to, the Lessor. Lessor and Lessee agree that, in order to ensure
Lessee that moneys sufficient to pay the Project Costs will be available for this purpose when
required, upon the execution of this Lease, Lessor shall deposit with the Lessee in a Project
Acquisition Fund the proceeds derived from the sale of the Bonds except for sums deposited in
the Bond Fund as provided in the Bond Resolution. Such moneys shall be deposited in a
separate fund of the Lessee to be designated the Project Acquisition Fund and shall be used
exclusively to pay Project Costs; provided that (1) all earnings derived from the investment of
said moneys may be used by the Lessee to pay the Interest portion of the Rental Payments
payable under this Lease until used for such purpose or used for other Project Costs, and (2) upon
completion ofthe Project and payment of the Cost thereof, any excess monies in the Project
Acquisition Fund may be applied towards the payment or prepayment of Rental Payments.
Section 3.2. Construction ofProiect: Payment of Cost. Lessee shall contract for the
construction of the Project in accordance with State law. If the proceeds derived from the sale of
the Bonds and deposited in the Project Acquisition Fund shall be insufficient to pay fully all .
Project Costs and to complete fully the Project free of liens, the Lessee shall pay the full amount
of any such deficiency by making payments therefor directly to the contractor and to the suppliers
of materials and services as the same shall become due, and the Lessee shall save the Lessor
whole and harmless from any obligation to pay such deficiency; provided that the Lessee's
obligation to pay any such deficiency shall be limited to its current budgeted appropriations for
the Project, and the Lessee shall have no obligation to appropriate additional funds therefor.
Notwithstanding the foregoing, the Lessee shall authorize no change in Specifications which
would reduce the fair market value ofthe Project unless the Costs of the Project are reduced by at
least as great amount and the Lessee shall not authorize any change in the Specifications which
would increase the cost of the Project unless Lessee provides additional funds to pay the
increased cost of the Project. If as a result of the change of Specifications, a change in the
description of any Project Equipment set forth in Exhibit A must also be made, Lessor and
Lessee shall, at Lessee's expense, amend this Lease to reflect that change, and each party shall, at
the request of the other party but solely at Lessee's expense execute such other documents, such
as a UCC termination statement or a supplemental financing statement, as the party reasonably
determined is necessary or desirable to properly identify Project Equipment. For purposes of
executing any such amendment or document, Lessor may require and in good faith conclusively
rely upon a written statement of Lessee that such amendment or document complies with the
provisions of this section. The Lessee shall exercise due care in the construction, use, operation
and maintenance of the Project, and shall not install, use, operate or maintain the Project
improperly, carelessly, in violation of any state and federal Law or for a purpose or in a manner
1231381.1
11
contrary to that contemplated by the Lease. The Lessee shall obtain all permits and licenses
necessary for the construction, operation, possession and use of the Project. The Lessee shall
comply with all State and federal laws applicable to the construction, use, possession and
operation of the Project, and if compliance with any such state and federal law requires changes
or additions to be made to the Project, such changes or additions shall be made by Lessee at its
expense.
Section 3.3. Lease and Sublease. Lessor hereby leases or, as to the Land, subleases the
Project to Lessee, and Lessee hereby leases or, as to the Land, subleases the Project from Lessor,
upon the terms and conditions set forth in this Lease.
Section 3.4. Possession and Eniovrnent. Lessor hereby covenants to provide Lessee
during the Term of this Lease with the quiet use and enjoyment of the Project, and Lessee shall
during the Term of this Lease peaceably and quietly have and hold and enjoy the Project, without
suit, trouble or hindrance from Lessor, except as expressly set forth in this Lease. Lessor will, at
the request of Lessee and at Lessee's cost, join in any legal action in which Lessee asserts its right
to such possession and enjoyment to the extent Lessor lawfully may do so.
Section 3.5. Lessor Access to Proiect. Lessee agrees that Lessor shall have the right at
all reasonable times upon reasonable notice to examine and inspect the Project. Lessee further
agrees that Lessor shall have such rights of access to the Project as may be reasonably necessary
to cause the proper maintenance of any portion of the Project in the event of failure by Lessee to
perform its obligations hereunder.
1231381.1
12
ARTICLE IV
TERM OF LEASE
Section 4.1. Lease Term. This Lease shall be in effect for a Lease Term commencing
upon its date of execution and ending on the date the last Rental Payment is due and payable as
shown in Exhibit B unless terminated by Lessee at the end of any Fiscal Year of Lessee occurring
prior thereto in accordance with Section 4.2, or unless terminated as provided in Section 4.6.
Section 4.2. Termination bv Lessee. In the sole event of Non-appropriation, Lessee shall
have the right to terminate this Lease, in whole but not in part, at the end of any Fiscal Year of
Lessee, in the manner and subject to the terms specified in this Section and Sections 4.4 and 4.5.
Lessee may effect such termination by giving Lessor a written notice of termination and by
paying to lessor any Rental Payments and any other amount due pursuant to Section 4.4 which
are due and have not been paid and any other amount due pursuant to Section 4.4 at or before the
end of its then current Fiscal Year. Lessee shall give notice of termination not less than sixty
(60) days prior to the end of such Fiscal Year, and shall notify Lessor of any anticipated
termination. In the event oftermination of this Lease as provided in this Section, Lessee shall
convey to Lessor and release its interest in the Project in accordance with Section 12.3
immediately after termination of this Lease..
Section 4.3. Intent to Continue Lease Term: Aoorooriations and Prooertv Taxes. Lessee
presently intends to continue this Lease for its entire Term and to pay all Rental Payments
specified in Exhibit B. Lessee's Manager will include in the annual budget request an
appropriation of an amount sufficient to meet Lessee's obligations under this Lease. Subject to
the provisions in Section 4.2 and subject to applicable law, Lessee shall levy ad valorem property
taxes on all taxable property within the jurisdiction of the Lessee if and to the extent such taxes
are necessary to pay when due all Rental Payments.
Section 4.4. Effect of Termination. Upon termination of this Lease as provided in
Section 4.2, Lessee shall not be responsible for the payment of any additional Rental Payments
coming due with respect to succeeding Fiscal Years. However, in consideration of use of the
Project by Lessee through the end of the Fiscal Year then in effect, Lessee shall pay to Lessor on
the last day of such Fiscal Year such pro rata portion of the next succeeding Rental Payment as it
relates to the period of time from the date of the last Rental Payment paid by Lessee (as shown on
Exhibit B) to the end of such Fiscal Year. If Lessee does not deliver possession of the Project to
Lessor in accordance with Section 12.3 and convey to Lessor or release its interest in the Project
immediately after the termination of this Lease, the termination shall nevertheless be effective,
but Lessee shall be responsible for the payment of damages in an amount equal to the amount of
the Rental Payments coming due under Exhibit B which are attributable to the number of days
after termination of the Lease during which Lessee fails to take such actions and for any other
loss suffered by Lessor as a result of Lessee's failure to take such actions as required.
1231381.1
13
Section 4.5. Nonsubstitution. If this Lease is terminated by Lessee in accordance with
Section 4.2, Lessee agrees, to the extent permitted by law, not to purchase, lease or rent property
to perform the same functions as, or functions taking the place of, those performed by the Project
for a period of ninety days, provided, however, that these restrictions shall not be applicable in
the event the Project shall be sold by Lessor and the amount received from such sale, less all
costs of such sale, is sufficient to pay the then applicable Purchase Option Price as set forth in
Exhibit C; or to the extent that the application of these restrictions would affect the validity of
this Lease.
Section 4.6. Termination of Lease Term. The Term of this Lease will terminate upon the
occurrence of the first of the following events:
(a) the termination thereof by Lessee in accordance with Section 4.2;
(b) the exercise by Lessee of its option to purchase or otherwise acquire Lessor's
interest in the Project pursuant to Article X;
(c) a default by Lessee and Lessor's election to terminate this Lease pursuant to
Article XII; or
(d) the payment by Lessee of all Rental Payments shown on Exhibit B hereto and
the expiration of the Lease Term as stated in Section 4.1.
1231381.1
14
ARTICLE V
RENTAL PAYMENTS
Section 5.1. Rental Pavrnents. Subject to the prepayment options set forth in Article X
hereof, Lessee shall, by wire transfer in immediately available funds, pay Rental Payments with
respect to the moneys provided by Lessor under Section 3.1 hereof, on the Business Day
immediately preceding each Payment Date and in the amount specified in the attached Exhibit B
as of that Payment Date. Such Rental Payments comprise Principal and Interest as shown in
Exhibit B. All Rental Payments shall be paid directly to the Lessor for deposit in the Bond Fund,
and Lessee shall not be responsible for the use or application of such Rental Payments. Lessor
represents and covenants that the Rental Payments shall be applied exclusively towards the
payment of principal of and interest on the Bonds. Nothing herein shall affect Lessor's rights
under this Lease in the event of default in the timely payment of any Rental Payment by Lessee.
Any money, other than Rental Payments, deposited in the Bond Fund under the provisions of this
Lease shall be credited against the last installments of Rental Payments due under this Lease but
only ifthis Lease has not been terminated under Section 4.6(a) or (c) hereof.
Section 5.2. Interest Comoonent. A portion of each Rental Payment is paid as and
represents the payment of Interest. Exhibit B sets forth the Interest component of each Rental
Payment.
Section 5.3. Rental Pavrnents to be Unconditional. Except as provided in Section 4.2,
the obligation of Lessee to make Rental Payments required hereunder, and to perform and
observe all other covenants and agreements of Lessee contained herein, shall be absolute and
unconditional in all events and the obligation to make such Rental Payments shall remain
notwithstanding any dispute between Lessee and Lessor or any other person unless the Lessor
shall violate the Lessee's right to quite enjoyment of the Project to such a degree that Lessee no
longer enjoys its right of possession to the Project. Lessee shall make aU Rental Payments and
other payments required hereunder when due and shall not withhold any Rental Payment or other
payment pending final resolution of such dispute nor shall Lessee assert any right of setoff or
counterclaim against its obligation to make such Rental Payments or other payments required
under this Lease. Lessee shall have the right pursuant to Section 7.3 to in good faith contest
taxes, special assessments, utility or other charges in accordance with the provisions of Section
7.3. However, nothing herein shall be construed to release Lessor from the performance of its
obligations hereunder; and if Lessor should fail to perform any such obligation, Lessee may
institute such legal action against Lessor as Lessee may deem necessary to compel the
performance of such obligation or to recover damages therefor.
Section 5.4. Current Exoense. The obligations of Lessee under this Lease, including its
obligation to pay the Rental Payments due with respect to the Project, in any Fiscal Year for
which this Lease is in effect, shaU constitute a current expense of Lessee for such Fiscal Year.
The Lessee's obligations hereunder shall be from year to year only and shall not constitute an
1231381.1
15
indebtedness, liability or mandatory payment obligation of Lessee in any ensuing Fiscal Year
beyond the then current Fiscal Year. No provision herein shall be construed or interpreted as
creating a general obligation or other indebtedness of the Lessee within the meaning of any
Constitutional or statutory debt limitation. Except for the lien herein created in the Project and
the proceeds thereof, nothing herein shall be construed to pledge or to create a lien on any taxes
or on any other class or source of money of the Lessee, nor shall any provision herein restrict the
future issuance of any bonds of the Lessee or obligations payable from any class or source of
Lessee moneys.
1231381.1
16
ARTICLE VI
INSURANCE AND INDEMNIFICATION
Section 6.1. Liability Insurance. The Lessee shall, at its own expense, cause
comprehensive liability and property damage insurance to be carried and maintained with respect
to the activities to be undertaken by and on behalf of the Lessee in connection with the use of the
Project substantially the same as insurance carried by the Lessee with respect to other
governmental activities.
Section 6.2. Prooertv Insurance. The Lessee shall cause casualty and property damage
insurance to be carried and maintained with respect to the Project in an amount at least equal to
the outstanding Principal amount with a deductible not to exceed the deductible carried by the
Lessee with respect to other similar governmental buildings.
Section 6.3. Worker's Compensation Insurance. Ifrequired by State law, Lessee shall
carry Worker's Compensation Insurance covering all employees on, in, near or about the Project,
and upon request, shall furnish to Lessor certificates evidencing such coverage throughout the
Term of this Lease.
Section 6.4. Reauirements For All Insurance. All insurance policies (or riders) required
by this Article shall be taken out and maintained with responsible insurance companies organized
under the laws of one of the states of the United States and qualified to do business in the State;
and shall contain a provision that the insurer shall not cancel or revise coverage thereunder
without giving written notice to the insured parties at least thirty (30) days before the cancellation
or revision becomes effective. All insurance policies or riders required by Sections 6.1 and 6.2
shall name Lessee and Lessor as insured parties and, with respect to the property insurance, shall
also name Lessor as loss payee. During the period of construction of the Project, the requirement
that Lessor be named as an insured party under the liability insurance may be satisfied by having
Lessor named as additional insureds under the liability insurance policy carried by the General
Contractor. Lessee shall deposit with Lessor policies (and riders) evidencing any such insurance
procured by it, or a certificate or certificates of the respective insurers stating that such insurance
is in full force and effect. Before the expiration of any such policy (or rider), Lessee shall furnish
to Lessor evidence that the policy has been renewed or replaced by another policy conforming to
the provisions of this Article.
Section 6.5. Indemnification: Hazardous Substance.
(I) Lessee assumes all risks and liabilities, whether or not covered by insurance, for loss
or damage to the Project or any portion thereof and for injury to or death of any person or damage
to any property, in any manner arising out of or incident to any possession, use, operation or
condition of the Project or any portion thereof, whether such injury or death be with respect to
agents or employees of Lessee or of third parties, and whether such property damage be to
1231381.1
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Lessee's property or the property of others to the maximum extent permitted by law, Lessee
hereby assumes responsibility for and agrees to indemnify, protect, save and keep harmless
Lessor from and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, costs and expenses (including reasonable attorney's fees) of whatsoever kind and nature,
imposed on, incurred by or asserted against Lessor that in any way relate to or arise out of the
possession, use, operation or condition of the Project or the financing related thereto, unless
caused by Lessor or its agents.
(2) Lessee hereby agrees to defend, indemnify and hold harmless Lessor, their officers,
employees, agents, successors and assigns (hereinafter collectively referred to as the
"Indemnities") from and against, and shall reimburse each such Indemnitee for, any and all loss,
claim, liability, damage, judgment, penalty, injunctive relief, injury to person, property or natural
resources, cost, expense, action or cause of action arising in connection with or as the result of
any past, present or future existence, use, handling, storage, transportation, manufacture, release
or disposal of any Hazardous Substance in, on or under the Land, whether foreseeable or
unforeseeable, regardless of the source, the time of occurrence or the time of discovery (hereafter
collectively referred to as "Loss"). The foregoing indemnification against Loss includes, without
limitation, indenmification against all costs in law or in equity of removal, response,
investigation, or remediation of any kind, and disposal of such Hazardous Substances, all costs of
determining whether the Land is in compliance with, and of causing the Land to be in
compliance with, all applicable Environmental Laws, all costs associated with claims for
damages to persons, property, or natural resources, and the Indemnities' reasonable attorneys' and
consultants' fees, court costs and expenses incurred in connection with any thereof.
(3) The obligations of Lessee to indemnify the Indemnities shall survive satisfaction and
payment in full of the Bonds, termination of this Lease. The rights of the Indemnities hereunder
shall be in addition to any other rights and remedies which the Indemnities may have against the
Land and the Lessee under this Lease or any other document or at law or in equity.
(4) Notwithstanding anything in this Lease to the contrary, if Lessor should, after the
subleasing the Land to the Lessee as provided herein, subsequently terminate the Lease and
reacquire possession of the Land subject the Land Lease (the date on which this event occurs
being the "Transfer Date"), this Indemnity shall not apply to any Loss incurred by Lessor as a
direct result of affirmative actions of Lessor as lessee and operator of the Land after Lessor has
acquired possession of the Land if such affirmative actions of the Lessor are the sole and direct
cause of the introduction and initial release of a Hazardous Substance in, on or under the Land;
orovided. however. that the Indenmitor shall bear the burden of proof that the introduction and
initial release of such Hazardous Substance (i) occurred subsequent to the Transfer Date, (ii) did
not occur as a result of any action of the Indemnitor, and (iii) did not occur as a result of a
continuing migration or release of any Hazardous Substance introduced prior to the Transfer
Date in, on, under or near the Project.
1231381.1
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(5) Except as expressly provided for in this Section 6.5, this indemnity shall remain in
full force and effect, including, without limitation, with respect to Hazardous Substances which
are discovered or released in, on or under the Land after the Transfer Date, and with respect to
the continuing migration or release of any Hazardous Substance previously introduced in, on,
under or near the Land. The foregoing limitations shall not affect or impair any rights, remedies
or claims the Lessor may have outside the scope of this indenmity, at law or in equity, with
respect to the Indemnitor or others.
Section 6.6. Damage to or Destruction ofProiect. Ifafter the execution of this Lease
with respect to all or a portion of the Project all or any part of the Project is lost, stolen,
condemned, destroyed or damaged beyond repair, Lessee shall as soon as practicable after such
event either: (i) replace the same at Lessee's sole cost and expense, such replacement to be of
equal or greater value to the Project or any portion thereof, immediately prior to the time of the
loss occurrence, whereupon such replacement shall be substituted in this Lease by appropriate
endorsement; or (ii) exercise its option to purchase or otherwise acquire the Project as provided
in Article X hereof. Lessee shall, within ninety (90) days after the loss occurrence, notify Lessor
of which course of action it has taken or will take. If Lessee fails or refuses to so notify Lessor
within the required period, Lessor may, at its option, require the Lessee to purchase the Project at
the applicable Casualty Value of the Project, in which event said amount shall become
immediately due and payable, and Lessee shall be obligated to pay the same to the Lessor. The
Net Proceeds payable with respect to the loss shall be used to discharge Lessee's obligation under
this Section. Upon Lessee purchasing or otherwise acquiring the Project as provided in this
Section 6.6, this Lease shall terminate and Lessee thereupon shall become entitled to the Project
AS IS, WITHOUT WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY Lessee, except that the
Project shall not be subject to any lien or encumbrance created by or arising through Lessor,
except Permitted Encumbrances. To evidence the foregoing, the Lessor shall, at the request and
expense of Lessee, execute such documents as Lessee reasonably determines are required to
convey and release to Lessee, any and all of their remaining right, title and/or interest in and to
the Project.
1231381.1
19
ARTICLE VII
OTHER OBLIGATIONS OF LESSEE
Section 7.1. Use: Permits. Lessee shall exercise due care in the construction, use,
operation and maintenance of the Project, and shall not install, use, operate or maintain the
Project improperly, carelessly, in violation of any State and federal Law or for a purpose or in a
manner contrary to that contemplated by this Lease. Lessee shall obtain all permits and licenses
necessary for the construction, operation, possession and use of the Project. Lessee shall comply
with all State and federal laws applicable to the construction, use possession and operation of the
Project, and if compliance with any such State and federal law requires changes or additions to
be made to the Project, such changes or additions shall be made by Lessee at its expense.
Section 7.2. Maintenance ofProiect bv Lessee. Lessee shall, at its own expense,
maintain, preserve and keep the Project in good repair, working order, condition and/or
operation, and shall from time to time make all repairs and replacements necessary to keep the
Project in such condition. Lessor shall have no responsibility for any of these repairs or
replacements.
Section 7.3. Taxes. Other Governmental Charges and Utility Charges. Except as
expressly limited by this Section, Lessee shall pay all taxes and other charges of any kind which
are at any time lawfully assessed or levied against or with respect to the Project, or which
become due during the Term of this Lease, whether assessed against Lessee or Lessor. Lessee
shall also pay when due all gas, water, steam, electricity, heat, power, telephone, and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the Project, and all
special assessments and charges lawfully made by any governmental body for public
improvements that may be secured by a lien on the Project; provided that with respect to special
assessments or other governmental charges that may lawfully be paid in installments Lessee shall
only be required to pay such installments, during the Term of this Lease as and when the same
become due. Lessee shall not be required to pay any federal, state or local income, inheritance,
estate, succession, transfer, gift, franchise, gross receipts, profit, excess profit, capital stock,
corporate, or other similar tax payable by Lessor, its successors or assigns, unless such tax is
made in lieu of or as a substitute for any tax, assessment or charge which is the obligation of
Lessee under this Section.
Lessee may, at its own expense and in its own name, in good faith contest any such taxes,
assessments, utility and other charges and shaU notify the Lessor of such good faith contest and,
in the event of any such contest, may permit the taxes, assessments, utility or other charges so
contested to remain unpaid during the period of such contest and any appeal therefrom but only if
nonpayment of any such items will not materiaUy endanger the interest of Lessor in the Project
will be materially endangered or the Project, nor subject to loss or forfeiture, the Project or any
part thereof. If this condition is not satisfied Lessee shall promptly pay such taxes, assessments,
1231381.1
20
utility or other charges or provide Lessor with full security against any loss which may result
from nonpayment, in form satisfactory to Lessor.
Section 7.4. Advances. If Lessee shall fail to perform any of its obligations under this
Article, Lessor may, but shall not be obligated to, take such action as may be necessary to cure
such failure, including the advancement of money, and Lessee shall be obligated to repay all such
advances on demand with interest from the date of the advance to the date of repayment. The
interest rate on the advance shall be 200 basis points greater than (1) the rate of interest at which
the Lessor borrowed the money advanced or, (2) if the Lessor did not borrow the money, the rate
of interest then being charged by the Paying Agent as its reference rate.
1231381.1
21
ARTICLE VIII
TITLE
Section 8.1. Title. During the Term of this Lease title to the Project and any and all
repairs, replacements, substitutes and modifications to it shall be in Lessee. Upon termination of
this Lease for the reason specified in Section 4.6, Clause (a) or (c) thereof, full and
unencumbered title to the Project, but not the Land, shall pass to Lessor, and Lessee shall have no
further interest in the Project under this Lease. In such event Lessee shall execute and deliver to
Lessor such documents as Lessor may request to evidence passage of legal title to the Project, but
not the Land, to Lessor and the termination of this Lease and of Lessee's interest in the Project
thereunder; and upon request by Lessor, Lessee shall deliver possession of the Project to Lessor,
in accordance with Section 12.3. Upon termination of this Lease for the reason specified in
Section 4.6, Clause (b) or (d) thereof, Lessor's title to, if any, and security or other interest in the
Project shall terminate, and Lessor shall, at Lessee's expense, execute and deliver to Lessee such
documents as Lessee may request to evidence the termination of Lessor's title, if any, to and
security or other interest in the Proj ect.
Section 8.2. Security Interest. Lessee hereby grants Lessor a security interest in all
portions of the Project that are deemed personal property or fixtures pursuant to applicable law,
the proceeds thereof and all repairs, replacements, substitutions and modifications thereto or
thereof made pursuant to Section 8.5 and a security interest in the proceeds of all insurance
policies, in order to secure Lessee's payment of all Rental Payments due during the Term of this
Lease and the performance of all other obligations herein to be performed by Lessee. Lessee will
cause to be executed, filed and recorded all instruments, including financing statements and
continuation statements, and will perform such acts as are required to establish and maintain a
valid and perfected security interest in such portions of the Project.
Section 8.3. Liens. During the Term of this Lease, Lessee shall not, directly or indirectly,
create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim
on or with respect to the Project, other than the respective rights of Lessor and Lessee as herein
provided and Permitted Encumbrances. Except as expressly provided in Section 7.3 and this
Article, Lessee shall promptly, at its own expense, take such action as may be necessary to duly
discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the same
shall arise at any time; provided that if any such lien for labor or materials is established against
the Project and Lessee shall first notify Lessor of Lessee's intention to do so, Lessee may in good
faith contest any such lien, and in such event may permit the lien so contested to remain
undischarged and unsatisfied during the period of such contest and any appeal therefrom but only
if (I) nonpayment of any such item will not materially endanger the interest of Lessor in the
Project, nor subject to loss or forfeiture the Project or any part thereof, and (2) the Lessee files
with the Lessor an opinion of Independent Counsel stating in effect that neither event will occur.
Lessee shall reimburse Lessor for any expense incurred by Lessor in order to discharge or remove
any such mortgage, pledge, lien, charge, encumbrance or claim.
~231381.1
22
Section 8.4. Installation of Lessee's Eouioment. Lessee may at any time and from time to
time, in its sole discretion and at its own expense, install items of fixtures, equipment and other
personal property in or upon the Project. All such items shall remain the sole property of Lessee,
in which Lessor shall have no interest, and may be modified or removed by Lessee at any time
provided that Lessee shall repair and restore on a timely basis any and all damage to the Project
resulting from the installation, modification or removal of any such items. Nothing in this Lease
shall prevent Lessee from purchasing items to be installed pursuant to this Section under a
conditional sale or lease-purchase contract, or subject to a vendor's lien or security agreement, as
security for the unpaid portion of the purchase price thereof, or from entering into any other loan
agreement secured by a lien or security interest in such property provided that no such lien or
security interest shall attach to any part of the Project. Lessor shall, at the request and expense of
Lessee, execute such releases and other documents as Lessee reasonably determines is necessary
to facilitate such purchase or loan and as are consistent with the rights of the parties under this
Lease; and as a condition to executing such documents, Lessor may require and in good faith
conclusively rely upon a written statement of Lessee that the documents comply with the
provisions of this Section 8.4.
Section 8.5. Modification ofProiect. Subject to Lessee's rights under Section 8.4, Lessee
shall, at its own expense, have the right to make repairs to the Project, and to make repairs,
replacements, substitutions and modifications to all or any of the parts thereof. All such work
and any part or component used or installed to make a repair or as a replacement, substitution or
modification, shall thereafter comprise part ofthe Project and be subject to the provisions of this
Lease. Such work shall not in any way damage the Project or cause it to be used for purposes
other than those authorized under the provisions of State and Federal Law or those contemplated
by this Lease; and the Project, upon completion of any such work shall be of value which is not
less than the value of the Project prior to the commencement of such work. Any property for
which a replacement or substitution is made pursuant to this Section may be disposed of by
Lessee in such manner and on such terms as are determined by Lessee. If as a result of such
replacement or substitution, a change in the description of any Project Equipment set forth in
Exhibit A must also be made, Lessor and Lessee shall, at Lessee's expense, amend this Lease to
reflect that change, and each party shall, at the request of the other party but solely at Lessee's
expense execute such other documents, such as a UCC termination statement or a supplemental
financing statement, as the party reasonably determines is necessary or desirable to properly
identify Project Equipment. Lessor shall also at Lessees expense execute such other releases
from the provisions of the Lease for any replacement equipment as Lessee may reasonably
request. For purposes of executing any such amendment or document, Lessor may require and in
good faith conclusively rely upon a written statement of Lessee that such amendment or
document complies with the provisions of this Section. Lessee will not permit any mechanic's or
other lien to be established or remain against the Project for labor or materials fumished in
connection with any repair, replacement, substitution or modification made by Lessee pursuant to
this Section; provided that Lessee may in good faith contest any such lien upon satisfaction of the
conditions for contesting the lien set forth in Section 8.3 hereof. Lessor will cooperate fully with
Lessee in any such contest, upon the request and at the expense of Lessee.
1231381.1
23
Section 8.6. Easements and Utility Access. Lessee may, at Lessee's expense, at any time
and from time to time request Lessor to convey an easement affecting the Land to a railroad,
corporate utility or public body, or any other person, upon written certification by an Independent
Engineer that in that person's opinion the easement is necessary or desirable to provide rail, road
or other access or utility service for the Project or other property and will not impair the
usefuIness of the Project for the purposes contemplated in this Lease and will not destroy the
means of ingress therefrom and egress therefrom. No such easement shall result in any
abatement of rents or other sums payable by Lessee under this Lease. Lessor will execute the
easement and join in the execution of a supplement to this Lease, providing for the subordination
of this Lease to any such easement; but if at any time any Bonds remain outstanding under the
Bond Resolution, the subordination shall not become effective until the following items are filed
with, and/or where applicable, executed by, the Lessor:
(1) an executed duplicate of the Lease supplement, stating the purpose thereof and that
neither Lessor nor Lessee is then in default under this Lease or the Bond Resolution;
(2) a copy of the easement (or if Section 8.7 is applicable, release) executed or to be
executed by Lessor;
(3) a plat or survey of the Land prepared and certified by a registered Minnesota land
surveyor, showing the land to be subjected to the easement as described in the easement (or if
Section 8.7 is applicable, the land to be released) and the location in relation thereto of all
buildings, structures and permanently installed equipment on the land, and all other easements,
roads, tracks and utility installations;
(4) evidence of the authority of the officers executing the lease supplement and easement
(or, if Section 8.7 is applicable, the release) on behalf of Lessor and Lessee, including a certified
copy of an authorizing resolution of the governing body of Lessor and of Lessee; and
(5) the certificate of the Independent Engineer.
Any money received by Lessee for the easement shall be remitted to the Lessor and credited to
the Bond Fund. For purposes of executing the instruments described in this Section 8.6, Lessor
may require and in good faith conclusively rely upon a written statement of Lessee that the
provisions of this Section 8.6 have been fully satisfied.
Section 8.7. Release of Unimoroved Land. Lessee may, at Lessee's expense, at any time
and from time to time request Lessor to release from the provisions of the Lease any part ofthe
Land on which no building, structure or permanently installed equipment is situated, upon
written certification by an Independent Engineer stating that in the Independent Engineer's
opinion the land proposed to be released is not needed for the operation of the Project for the
purposes stated in this Lease, and that the release will not impair the usefulness of the Project for
these purposes and will not destroy the means of ingress thereto and egress therefrom. Lessor
1231381.1
24
to
will join in the execution of a supplement to this Lease providing for the release thereof, subject
to the following conditions:
(1) if at the time any Bonds remain outstanding under the Bond Resolution, the release
shall not become effective until the filing with the Lessor of the following items:
(A) the items described in paragraphs (1) to (5), inclusive, of Section 8.6;
and
(B) an opinion of Independent Counsel stating that the above documents
satisfy the requirements of this Section and that the release is in appropriate form
for execution by the respective parties; and
(2) the Lessee shall not be entitled to any abatement, reduction, or diminution of any
rents payable under this Lease;
(3) any money received by Lessee for the sale of the released land to a third party shall be
remitted to the Lessor and credited to the Bond Fund.
Section 8.8. Covenant For the Benefit of the Bondholders. Lessee recognizes the
authority of the Lessor to pledge all moneys receivable under this Lease, including any proceeds
from the sale of all or a part of the Project, as security for the payment of the principal of and
interest and redemption premiums, if any, on the Bonds. Each of the terms and provisions of this
Lease is a covenant for the use and benefit of the Holders of the Bonds, so long as any thereof
shall remain outstanding; but upon payment in full of the Bonds and of all fees and charges of the
Paying Agent, all references in this Lease to the Bonds shaH be ineffective, and no Holder of any
of the Bonds shaH thereafter have any rights hereunder, save and except those that shaH have
theretofore vested.
1231381.1
25
.
report of an independent certified public accountant acceptable to the Lessor stating in effect that
the sums held in escrow satisfy the payment requirements set forth in this Section 10.4.
Section 10.5. Partial Preoavrnent or Defeasance. Lessee shall have the option to prepay
on February 1, 2008, and any date, in increments of $5,000, the Principal portion of any Rental
Payment selected by the Lessee and scheduled to become due under the Lease, and to be thereby
relieved of any obligation to pay any Interest on said Principal portion that would otherwise
accrue from and after the prepayment date. The Lesser shall also have the option to provide for
the payment or prepayment, in increments of$S,OOO of the Principal portion of Rental Payments
scheduled to become due nnder the Lease, or any Rental Payment, by depositing in escrow with
the Lessor sufficient funds for that purpose, in the manner and subject to the conditions set forth
in Section 10.4 above as if (a) those Rental Payments to be paid or prepaid were the only Rental
Payments then scheduled to become due under the Lease and (b) any of the Rental Payments to
be prepaid were the Optional Purchase Price.
Section 10.6. Exercise of Partial Prenavrnent or Defeasance ÜDtion. Lessee shall give
notice to Lessor of its intention to exercise its option to partially prepay Rental Payments or
defease its Rental Payment obligations, in whole or part, as provided in Sections 10.4 and 10.5
above. Lessee shall give such notice not less than forty-five (45) days prior to the date on which
the Principal portion of any Rental Payments is to be prepaid, in whole or part, or the Optional
Purchase Price is to be paid, and shall deposit with the Paying Agent on the date of exercise the
sum required to effect such prepayment or defeasance.
Section 10.7. Credit for Partial Preoavrnent or Defeasance. If Lessee partially prepays or
defeases any Rental Payments under Section 10.5 hereof and thereafter elects to acquire the
Project as provided in this Article X, the Lessee shall be entitled to credit against the applicable
Purchase Option Price an amount equal to the Principal of the Rental Payments scheduled to
come due after the Payment Date as of which the applicable Purchase Option Price is calculated
and taken into account at the time such partial prepayment or defeasance occurred.
[Section 10.8. Mandatorv Preoavrnent of Bonds.
(a) All Bonds maturing on February 1, , are subject to mandatory
redemption by lot at par and accrued interest without premium, on the following dates
and in the following amounts (unless and to the extent any credit against such amount is
applied as provided in this Lease, or ifless than such amount is then outstanding, an
amount equal to the aggregate principal amount of the Bonds then outstanding):
1231381.1
28
Februarv 1. Term Bond
Year Principal Amount
(final maturity)
Februarv 1. Term Bond
Year Princioal Amount
(final maturity)
(b) If Bonds are redeemed at the direction of the Lessee pursuant to a
prepayment of the Principal portion of any Rental Payment pursuant to Section 10.5
hereof, the Bonds so optionally redeemed may, at the option of the Lessee, be applied as a
credit against any subsequent Mandatory Redemption Payment with respect to Bonds
otherwise to be redeemed thereby, such credit to be equal to the principal amount of such
Bonds redeemed, provided that the Lessee shall have delivered to the Lessor not less than
sixty days prior to such mandatory redemption date written notice stating its election to
apply such Bonds as such a credit. In such case, the Paying Agent shall reduce the
amount of Bonds to be redeemed on the mandatory redemption date specified in a
certificate of Lessee by the principal amount of Bonds so redeemed.
(c) Any credit given Mandatory Redemption Payments shall not affect any
subsequent Mandatory Redemption Payments, which shall remain payable as otherwise
provided herein, unless and until another credit is given in accordance with the provisions
hereof.]
1231381.1
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ARTICLE XI
ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING
Section 11.1. Assignment bv Lessor. Subject to Section 8.8 hereof, Lessor shall not
assign its obligations under this Lease, and no purported assignment thereof shall be effective.
The Lessor's sole obligation is to provide to the Lessee quiet enjoyment of the Project. Any and
all of Lessor's rights, title and/or interest in and to this Lease, the Rental Payments and other
amounts due hereunder and the Project may be assigned and reassigned in whole or in part to one
or more assignees or sub-assignees by Lessor at any time pursuant to the Bond Resolution or
otherwise, without the consent of Lessee. No such assignment shall be effective as against
Lessee unless and until the assignor shall have filed with Lessee a copy or written notice thereof
identifying the assignee. Lessee shall pay all Rental Payments due hereunder to or at the
direction of Lessor or the assignee named in the most recent assignment or notice of assignment
filed with Lessee.
Section 11.2. Assignment and Subleasing bv Lessee. Neither this Lease nor Lessee's
interest in the Project may be assigned or subleased by Lessee without the written consent of
Lessor and any such assignment or sublease shall not relieve Lessee from its obligation to make
the Rental Payments hereunder; provided that Lessor's consent to a sublease shall not be required
if (1) the sublease provides that the sublessee will not take any action in derogation of Lessee's
obligations hereunder, (2) a copy of the sublease is filed with Lessor'and the Paying Agent, and
(3) either (A) the sublease is to a Governmental Unit or (B) an opinion of Bond Counsel is first
filed with the Lessor and the Paying Agent stating in effect that the sublease will not impair the
tax exempt status of the Bonds.
Section 11.3. Restriction on Mortgage or Sale ofProiect bv Lessee. Lessee will not sell,
transfer or convey its interest in the Project or any portion thereof during the Term of this Lease,
without the written consent of Lessor.
1231381.1
30
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
Section 12.1. Events of Default Defined. The following shall be "events of default"
under this Lease and the terms "events of default" and "default" shall mean, whenever they are
used in this Lease, with respect to the Project, anyone or more of the following events:
(i) Failure by Lessee to pay any Rental Payment or other payment required to be
paid under this Lease at the time specified herein (which in the case of a Rental Payment
shall be five (5) days prior to the Payment Date or, if Lessee elects to pay by wire transfer,
the last Business Day immediately preceding the Payment Date) and, except in the case of
a failure to pay when due any Rental Payment, the continuation of said failure for a period
of seven days.
(ii) Failure by Lessee to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as referred to in Clause (i)
of this Section, for a period ofthirty (30) days after written notice specifying such failure
and requesting that it be remedied has been given to Lessee by Lessor, unless Lessor shall
agree in writing to an extension of such time prior to its expiration; provided, however, if
the failure stated in the notice cannot be corrected within the applicable period, Lessor
will not unreasonably withhold its consent to an extension of such time if corrective
action is instituted by Lessee within the applicable period and diligently pursued until the
default is corrected.
(iii) The filing by Lessee of a voluntary petition in bankruptcy; or failure by
Lessee promptly to lift any execution, garnishment or attachment of such consequence as
would impair the ability of Lessee to carry on its governmental or proprietary function; or
adjudication of Lessee as a bankrupt; or assignment by Lessee for the benefit of creditors,
or the entry by Lessee into an agreement of composition with creditors; or the approval by
a court of competent jurisdiction of a petition applicable to Lessee in any proceedings
instituted under the provisions ofthe Federal Bankruptcy Statute, as amended, or under
any similar acts which may hereafter be enacted.
(iv) The vacation or abandonment by the Lessee of the Project for a period of90
consecutive days.
The provisions of this Section 12.1 and Section 12.2 are subject to the following limitation: ifby
reason of force maieure Lessee is unable in whole or in part to carry out its obligations under this
Lease with respect to the Project, other than its obligation to oav Rental Payments with resoect
thereto which shall be oaid when due notwithstanding the orovisions ofthis oaragraDh, Lessee
shall not be deemed in default during the continuance of such inability. The term "force
maieure" as used herein shall mean, without limitation, the following: acts of God; strikes,
1231381.1
31
lockouts or other labor disturbances; acts of public enemies; orders or restraints of any kind of
the government of the United States of America or the State or their respective departments,
agencies or officials, or any civil or military authority; insurrections; riots, landslides;
earthquakes; fires; storms; droughts; floods; explosions; breakage or accident to machinery,
transmission pipes or canals; or any other cause or event not reasonably within the control of
Lessee and not resulting from its negligence. Lessee agrees, however, to remedy with all
reasonable dispatch the cause or causes preventing Lessee from carrying out its obligations under
this Lease; provided that the settlement of strikes, lockouts and other labor disturbances shall be
entirely within the discretion of Lessee and Lessee shall not be required to make settlement of
strikes, lockouts and other labor disturbances by acceding to the demands of the opposing party
or parties when such course is, in the judgment of Lessee, unfavorable to Lessee.
Section 12.2. Remedies on Default. Whenever any event of default referred to in Section
12.1 hereof shall have happened and be continuing with respect to the Project, Lessor shall have
the right, at its option and without any further demand or notice, to take one or any combination
of the following remedial steps:
(i) Lessor, with or without terminating this Lease, may declare all Rental
Payments due or to become due during the Term of the Lease to be immediately due and
payable by Lessee, whereupon such Rental Payments shall be immediately due and
payable. If Lessor has not terminated the Lease and has not declared all Rental Payments
immediately due and payable and if Lessee has cured the event of default and pays the
late charge provided in Section 12.6, if applicable, the Lessee shall be restored to its
former position before the event of default occurred.
(ii) Lessor, with or without terminating this Lease, may repossess the Project or
any portion thereof by giving Lessee written notice to vacate the Project, whereupon
Lessee shall do so in the manner provided in SectiQn 12.3; or in the event Lessee fails to
do so within ten (10) days after receipt of such notice, Lessor may enter upon the Project
and take possession of the Project and charge Lessee for costs incurred in repossessing
such portion of the Project, including reasonable attorneys' fees. Lessee hereby expressly
waives any damages occasioned by such repossession. If the Project or any portion of it
has been destroyed, wasted, or damaged beyond repair, Lessee shall pay the applicable
Purchase Option Price of the Project, as set forth in Exhibit C (less credit for Net
Proceeds), to Lessor. Lessee shall continue to be responsible for the payment of Rental
Payments. Ifthis Lease has not been terminated, Lessor shall return the Proj ect or any
portion thereof to Lessee at Lessee's expense when the event of default is cured.
(iii) If the Lessor terminates this Lease and takes possession ofthe Project or any
portion thereof, Lessor, shall have the right to sell the Project or any portion thereof in a
commercially reasonable manner at public or private sale in accordance with applicable
State laws. Lessor shall apply the proceeds of such sale to pay the following items in the
following order; (a) all costs incurred in securing possession of the Project; (b) all
1231381.1
32
expenses incurred in completing the sale; (c) the applicable Purchase Option Price of the
Project; and (d) the balance of any accrued Rental Payments owed by Lessee. Any sale
proceeds remaining after the requirements of Clauses (a), (b), (c) and (d) have been met
may be retained by the Lessor.
(iv) Lessor may take any other remedy available at law or in equity to require
Lessee to perform any ofits obligations hereunder.
In no event however, shall the Lessee be liable under this Article 12 in excess of the moneys
appropriated by it on a yearly basis (other than for any additional Rental Payments due if the
Lessee occupies the Project after termination of the Lease pursuant to Section 4.4 hereof).
Section 12.3. Return ofProiect. Upon the termination of this Lease prior to the payment
of all Rental Payments in accordance with Exhibit B, Lessee, shall vacate the Project in the
condition, repair, appearance and working order required in Section 7.2, reasonable wear and tear
damage by the elements and insured damage excepted in the following manner as may be
specified by Lessor; (i) by executing such documents as Lessor reasonably deems necessary to
transfer all of Lessee's right, title and interest under this Lease in and to the Project to Lessor and
(ii) by paying all reasonable costs and expenses whether incurred by the Lessor (including
attorneys fees) with respect to such transfer of the property; provided that nothing herein shall
limit the rights of Lessee as fee owner of the Land. If Lessee refuses to return the Project in the
manner designated, Lessor may repossess the Project and charge to Lessee the costs of such'
repossession or pursue any remedy described in Section 12.2. In addition to all other remedies
provided in this Lease, Lessor shall also have the right in its sole discretion to abandon the
Project or any portion thereof, and upon such abandonment Lessor shall have no further interest
in or any obligation with respect to the Project or the portion thereof being abandoned. In such
event Lessor shall execute such documents as Lessee reasonably deems necessary to transfer all
of Lessor's right, title and interest in and to the Project or the portion thereof being abandoned to
Lessee.
Section 12.4. No Remedv Exclusive. No remedyconferred upon or reserved to Lessor
by this Article is intended to be exclusive and every such remedy shall be cumulative and shall be
in addition to every other remedy given under this Lease. 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 by Lessor.
Section 12.5. Agreement to Pav Attornevs' Fees and Exoenses. In the event either party
to this Lease should default under any of the provisions hereof and the non-defaulting party
should employ attorneys and/or incur other expenses for the collection of moneys or for the
enforcement of performance or observance of any obligation or agreement on the part of the
defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay
1231381.1
33
¥
to the non-defaulting party the reasonable fee of such attorneys and/or such other reasonable
expenses so incurred by the non-defaulting party.
Section 12.6. Late Charge. Whenever any event of default referred to in Section 12.1,
Clause (i) hereof shall have happened and be continuing with respect to the Project, Lessor shall
have the right, at its option and without any further demand or notice, to require a late payment
charge equal to four percent (4%) of the delinquent amount or such lesser amount as may be
permitted by Minnesota law if four percent (4%) exceeds Minnesota law, and Lessee shall be
obligated to pay the same inunediately upon receipt of Lessor's written invoice therefor;
provided, however, that this Section 12.6 shall not be applicable if or to the extent that the
application thereof would affect the validity of this Lease.
1231381.1
34
ARTICLE XIII
ADMINISTRATIVE PROVISIONS
Section 13. I. Notices. All notices, certificates, legal opinions or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered or deposited in
the United States mail in registered or certified form with postage fully prepaid; provided that
Lessor and Lessee, by notice given hereunder, may designate different addresses to which
subsequent notices, certificates, legal opinions or other communications will be sent.
Section 13.2. Financial Information. Lessee shall annually provide Lessor with current
financial statements and budgets, and such other financial information relating to the ability of
Lessee to continue this Lease as may be requested by Lessor.
Section 13.3. Binding Effect. This Lease shall inure to the benefit of and shall be
binding upon Lessor and Lessee and their respective successors and assigns.
Section 13.4. Severability. In the event any provision ofthis Lease 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 13.5. Amendments. Changes and Modifications. This Lease may be amended or
any of its terms modified only by written document duly authorized, executed and delivered by
Lessor and Lessee.
Section 13.6. Caotions. The captions or headings in the Lease are for convenience only
and in no way define, limit or describe the scope or intent of any provision, Article, Section or
Clause of this Lease.
Section 13.7. Further Assurances and Corrective Instruments. Lessor and Lessee agree
that they will, from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments as may
reasonably be required for correcting any inadequate or incorrect description of the Project
hereby leased or intended so to be, or for otherwise carrying out the expressed intention of this
Lease.
Section 13.8. Execution In Counteroarts. This Lease 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 13.9. Aoolicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State.
1231381.1
35
.
IN WITNESS WHEREOF, Lessor has caused this Lease to be executed in its corporate
name by its duly authorized officer; and Lessee has caused this Lease to be executed in its name
by its duly authorized officer, as of the date first above written.
ECONOMIC DEVELOPMENT AUTHORITY OF
THE CITY OF CHANHASSEN, MINNESOTA,
Lessor
By
Its Chairperson
By
Its Executive Director/Secretary
Signature page to Lease With Option to Purchase Agreement.
1231381.1
36
CITY OF CHANHASSEN, MINNESOTA, Lessee
By
Its Mayor
By
Its Manager
Signature page to Lease With Option to Purchase Agreement.
1231381.1
37
STATE OF MINNESOTA)
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _ day of December,
2000, by Gary Boyle, Chairperson and Don Ashworth, Executive Director/Secretary of the
Economic Development Authority of the City ofChanhassen, a public body corporate and politic
and a political subdivision of the State of Minnesota, on behalf of said public entity.
Notary Public
(Notarial Seal)
STATE OF MINNESOTA)
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _ day of December,
2000, by Nancy Mancino, Mayor and Scott Botcher, Manager of the City of Chanhassen,
Minnesota, a municipal corporation on behalf of said corporation.
Notary Public
(Notarial Seal)
1231381.1
38
EXHffiIT A
DESCRIPTION OF PROJECT AND LAND
PROJECT:
LAND:
1231381.1
A-I
EXHffiIT B
SCHEDULE OF RENTAL PAYMENTS
1231381.1
B-1
1231381.1
EXHffiIT C
SCHEDULE OF PURCHASE OPTION PRICE AND CASUALTY VALUES
C-l
EXHIBIT D
CERTIFICATE OF INCUMBENCY
I, the undersigned, hereby certify that I am the duly qualified and acting
* of the City of Chanhassen, Minnesota ("Lessee"); and, with respect to
the Lease With Option to Purchase Agreement, dated as of December I, 2000 (the "Lease"), by
and between Lessee and the Economic Development Authority of the City of Chanhassen,
Minnesota ("Lessor"), that I am well acquainted with the persons listed below and with their
signatures; that the persons hold the respective offices or positions set forth opposite their
signatures below; that the signatures below written are true and correct signatures of the officers;
and that as of the date of execution of the Lease or other documents relating thereto by any of the
officers, they were duly qualified and acting as the officers or position holders indicated below
and duly authorized to execute the same:
Name
Office or Position
Signature
Nancy Mancino
Mayor
Scott Botcher
Manager
Dated: December ---> 2000.
CITY OF CHANHASSEN, MINNESOTA
Lessee
By
Its
Subscribed and sworn to before me
this _ day of December, 2000.
Notary Public
(Notarial Seal)
*This Certificate of Incumbency must be executed by an officer of Lessee different from those
persons whose signatures are listed in the text hereof
1231381.1
D-l
EDA -2.
GROUND LEASE AGREEMENT
Between
CITY OF CHANHASSEN, MINNESOTA
as Lessor
and
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF CHANHASSEN, MINNESOTA
as Lessee
Dated as of December I, 2000
This Instrument Drafted By:
Briggs & Morgan P.A.
2200 First National Bank Bldg.
Saint Paul, Minnesota 55101
1233422.1
TABLE OF CONTENTS
Page
ARTICLE I - DEMISE OF LAND AND WARRANTIES .............................. 1
Section 1.01. Demise .................................................... 1
Section 1.02. Warranties.................................................. I
Section 1.03. Lessee's Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II - TERM AND RENT ..........................,..................... 2
Section 2.01. Term ...................................................... 2
Section 2.02. Rent... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.03. Lease...................................................... 2
ARTICLE ill - USE OF PREMISES; ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . 2
Section 3.01. Use ....................................................... 2
Section 3.02. Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.03. Assignment and Subletting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.04. Additional Covenants .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV -LESSEE'S DEFAULT; REMEDIES ..................................3
Section 4.01. Lessee's Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.02. Lessor's Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE V - BINDING EFFECT; SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . 3
Section 5.01. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 5.02. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SIGNATURES............................................................... 4
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
EXHIBIT A
1233422.1
THIS GROUND LEASE AGREEMENT, made and entered into as of December 1,2000
(the "Ground Lease"), by and between the CITY OF CHANHASSEN, a municipal corporation
and political subdivision duly organized and existing under the laws of the State of Minnesota, as
Lessor, and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF
CHANHASSEN, a public body corporate and politic and a political subdivision duly organized
and existing under the laws ofthe State of Minnesota, as Lessee.
WIT N E SSE T H:
In consideration of the mutual covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEMISE OF LAND AND WARRANTIES
Section 1.01. Demise. Subject to and upon the terms, conditions, covenants and
undertakings hereinafter set forth, Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the real property legally described in Exhibit A attached hereto, located in Carver
County, Minnesota (hereinafter called the "Land").
Section 1.02. Warranties. Lessor covenants and warrants to Lessee:
(I) That Lessor has good and merchantable title to the Land, has authority to enter
into, execute and deliver this Ground Lease, and has duly authorized the execution
and delivery of this Ground Lease;
(2) That Lessor has determined that the Land can best be made suitable and
convenient for public purposes through Lessor's entering into this Ground Lease
and the Lease (as hereinafter defmed), and the completion of the transactions
contemplated thereby;
(3) That the Land is not subject to any dedication, easement, right of way, reservation
in patent, covenant, condition, restriction, lien or encumbrance which would
prohibit or materially interfere with the construction of a municipal building
(hereinafter called the "Project Improvements") on the Land, as contemplated by
that certain Lease With Option to Purchase Agreement by and between Lessor and
Lessee of even date herewith (hereinafter called the "Lease");
(4) That all taxes, assessments or impositions of any kind with respect to the Land,
except current taxes, have been paid in full;
(5) That the Land is properly zoned for the purpose ofthe Project Improvements; and
1233422,1
(6) That Lessor has authority to enter into, execute and deliver the Lease and has duly
authorized its execution and delivery.
Section 1.03. Lessee's Warranties. Lessee covenants and warrants to Lessor that Lessee
has authority to enter into, execute and deliver this Ground Lease and the Lease, and has duly
authorized the execution and delivery of this Ground Lease and the Lease.
ARTICLE II
TERM AND RENT
Section 2.01. Term. The term of this Ground Lease shall commence as of the day and
year first above written, and shall end on December I, 2038, or earlier pursuant to the Lease.
Section 2.02. Rent. The rent shall be One Dollar ($1.00) payable in advance on the date
hereof.
Section 2.03. Lease. In further consideration of the authorization, execution and delivery
of this Ground Lease by each of the parties, the parties have entered into the Lease and agreed to
carry out and perform their obligations thereunder.
ARTICLE III
USE OF PREMISES: ADDITIONAL COVENANTS
Section 3.01. Use. Lessee shall not use or permit the use of the Land for any unlawful
purpose.
Section 3.02. Ouiet Eniovrnent. Lessor covenants that upon Lessee's paying the rent
reserved herein, and performing all conditions and covenants set forth in this Ground Lease and
the Lease, Lessee shall and may peaceably have, hold and enjoy the Land for the term of this
Ground Lease. Lessee covenants that upon expiration ofthis Ground Lease, either on the date
specified in Section 2.01 hereof or earlier pursuant to the terms of the Lease, it shall give Lessor
peaceable possession of the Land, together with the Project Improvements constructed thereon
pursuant to the Lease.
Section 3.03. Assil!llrtlent and Subletting. Lessee shall have the right to assign or
mortgage its interest in this Ground Lease and Land, and to sublet the Land in accordance with
the Lease.
1233422.1
2
Section 3.04. Additional Covenants. In the event that any person or entity, however
organized (other than Lessee or any assignee of Lessee), shall be determined to hold any interest
that in any manner affects Lessor's good and merchantable title to the Land, Lessor shall use its
best efforts to acquire the interest in the Land so held, such acquisition to be made at Lessor's
sole cost and expense. Lessor hereby agrees to save and keep harmless Lessee, or any assignee
of Lessee, from and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, costs and expenses (including reasonable attorneys' fees) of whatever kind and nature,
imposed on, incurred by or asserted against Lessee, or any assignee of Lessee, that in any way
relate to or arise out of the assertion of any interest affecting Lessor's good and merchantable title
to the Land by any person or entity, however organized (other than Lessee or any assignee of
Lessee).
ARTICLE IV
LESSEE'S DEFAULT: REMEDIES
Section 4.01. Lessee's Default. The following shall be an "event of default" or a
"default" hereunder: if Lessee shall fail to (i) pay the rent provided herein, (ii) observe or
perform any of the obligations of Lessee otherwise provided herein, (iii) observe or perform any
of its obligations under the Lease in accordance with the terms thereof.
Section 4.02. Lessor's Remedies. Upon the occurrence of an event of default by Lessee
hereunder, which shall remain uncured for thirty (30) days after receipt by Lessee of written
notice of such event of default, Lessor may thereafter or any time subsequently during the
existence of such breach or default; (i) enter into and upon the Land and repossess the same,
expelling and removing therefrom all persons and property, and (ii) terminate this Ground Lease,
holding Lessee liable for damages for its breach.
ARTICLE V
BINDING EFFECT: SUCCESSORS AND ASSIGNS
Section 5.01. Binding Effect. This Ground Lease shall be binding upon, and inure to the
benefit of, the parties hereto, and their successors and assigns.
Section 5.02. Aoolicable Law. This Ground Lease shall be interpreted and enforced in
accordance with the laws of the State of Minnesota.
1233422,1
3
IN WITNESS WHEREOF, the parties hereto have executed this Ground Lease as of the
date first above written.
CITY OF CHANHASSEN, MINNESOTA
By
Its Mayor
And
Its Manager
ECONOMIC DEVELOPMENT AUTHORITY OF
THE CITY OF CHANHASSEN, MINNESOTA
By
Its Chairperson
And
Its Executive Director/Secretary
1233422.1
4
STATE OF MINNESOTA)
) ss.
COUNTY OF CARVER )
On this _ day of December, 2000, before me, a Notary Public in and for said County,
personally appeared Nancy Mancino and Scott Botcher, the Mayor and Manager, respectively, of
the City of Chanhassen, Minnesota, known to me to be the persons whose names are subscribed
to the within Ground Lease Agreement, and acknowledged to me that they executed the same.
NOTARY PUBLIC
(SEAL)
STATE OF MINNESOTA)
) ss.
COUNTY OF CARVER )
On this _ day of December, 2000, before me, a Notary Public in and for said County,
personally appeared Gary Boyle and Don Ashworth, the Chairperson and Executive
Director/Secretary, respectively, of the Economic Development Authority of the City of
Chanhassen, Minnesota, known to me to be the persons whose names are subscribed to the
within Ground Lease Agreement, and acknowledged to me that they executed the same.
NOTARY PUBLIC
(SEAL)
1233422.1
5
EXHffiIT A
Legal Description
1233422.1
A-I
1.231446.1
RESOLUTION NO.
REVENUE BOND RESOLUTION
$930,000 PUBLIC PROJECT REVENUE BONDS, SERIES 2000
(CITY OF CHANHASSEN, MINNESOTA
LEASE WITH OPTION TO PURCHASE PROJECT)
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF CHANHASSEN, MINNESOTA
ADOPTED: . December 4, 2000
£ÞA 3,
TABLE OF CONTENTS
PajJe
ARTICLE ONE - DEFINITIONS, EXHIBITS, LEGAL AUTHORIZATION AND FINDINGS I
1-1. Definitions.......................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I
1-2. Exhibits ........................................................... 5
1-3. Legal Authorization. . .. . .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1-4. Findings......... . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE TWO - BONDS ...................................................... 7
2-1. Authorized Amount and Form of Bonds ..................................7
2-2. Initial Issue ....................................................... 15
2-3. Execution......................................,.............····· 15
2-4. Delivery ofInitial Issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2-5. Issuance of Additional Parity Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2-6. Mutilated, Lost or Destroyed Bonds ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2-7. Ownership of Bonds ................................................ 17
2-8. Delivery of Temporary Bond ......................................... 17
2-9. Registration, Transfer and Exchange of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2-10. Interest Rights Preserved; Dating of Registered Bonds .................... 18
2-11. Other Revenue Bonds... .. .. . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2-12. Book-Entry Only System..................... . . ... . .. . . .. .. .. .. .. .. . 19
2-13. Termination of Book-Entry Only System ...............................19
ARTICLE THREE - REDEMPTION OF BONDS BEFORE MATURITY. . . . . . . . . . . . . . . . 21
3-1. Redemption.................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3-2. Notice of Redemption ...............................................22
3-3. Procedure for Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3-4. Cancellation....................................................... 23
ARTICLE FOUR - GENERAL COVENANTS ..................................... 24
4-1. Payment of Principal and Interest .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4-2. Performance of and Authority for Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4-3. Title and Instruments of Further Assurance ..............................24
4-4. Taxes, Assessments and Charges ...................................... 24
4-5. Maintenance and Repair ............................................. 25
4-6. Recording and Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4-7. Books and Records ................................................. 25
4-8. Names of Bondholders ..............................................25
4-9. Nature of Security ... . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4-10. Disposition of Pledged Funds. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' . . . . . 26
4-11. Enforcement of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1231446.1
4-12. Covenant to Lease, Sell and Operate. . . . ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4-13. Acceleration. .... . . . .. . . ... .. . ... .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
4-14. Tax Exempt Status of Bonds; Designation ofQTEO . . . . . . . . . . . . . . . . . . . . . . . 28
4-15. Conditions to Authority Action. ......................................29
ARTICLE FIVE - FUNDS AND ACCOUNTS ..................................... 30
5-1. Deposit of Bond Proceeds ... . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5-2. ................................................................. 30
Bond Fund ........................................ . . . . . . . . . . . . . . . . . . . . 30
5-3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Deposit of Funds with Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5-5. Priority of Payment and Application of Moneys ........................... 31
ARTICLE SIX - POSSESSION, USE AND RELEASE OF PROPERTY. . . . . . . . . . . . . . . . .33
6-1. Possession and Use ................................................. 33
6-2. Easement for Access or Utility Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6-3. Release of Encumbered Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6-4. Release of Unimproved Land ......................................... 33
ARTICLE SEVEN - INVESTMENTS ............................................ 34
7-1. Investments by Authority ............................................34
7-2. Return on Investments.. . . . . . . .. . .. .. . . .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE EIGHT - DISCHARGE OF OBLIGATIONS TO BONDHOLDERS. . . . . . . . . . . .35
8-1. Conditions of Discharge ...........................................,. 35
8-2. Payment of Bonds .................................................. 35
8-3. Cancellation of Surrendered Bonds and Coupons. . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE NINE - SUPPLEMENTAL AND AMENDATORY RESOLUTIONS ..........37
9-1. Supplemental and Amendatory Resolutions Not Requiring Consent
of Bondholders . . . .. ... . . ... . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
9-2. Supplemental and Amendatory Resolution Requiring Consent of Bondholders. .37
ARTICLE TEN - AMENDMENT TO LEASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10-1. Amendments Without Bondholder Consent .............................39
10-2. Amendments Requiring Bondholder Consent. . . . , . . . . . . . . . . . . . . . . . . . . , . , 39
ARTICLE ELEVEN - MISCELLANEOUS ..................................,.,.,.40
11-1. Consent of Bondholders ............................................40
11-2. Notice of Amendments.. . . . . .. .. . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . , . .40
11-3. Severability ..................................................,... 40
11-4. Authentication of Transcript ......................................... 41
11-5. Limitation of Liability . . . . . . . .. . . . . . . .. ... . . . . . . . . . ',' . . . . . . ' . . , . , . . . 41
1231446.1
11-6. Registration of Bond Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . 41
11-7. Approval of Lessee ...............................................,41
11-8. Authorization to Execute Lease, Ground Lease and Incidental Documents . . . . . 41
11-9. Payment ofIssuance Expenses .......................................41
SIGNATURES.. .. ... .. ... . ... .. . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . .42
EXHIBITS
1231446.1
REVENUE BOND RESOLUTION
BE IT RESOLVED by the Economic Development Authority of the City of Chanhassen,
Minnesota:
ARTICLE ONE
DEFINITIONS, EXHffiITS, LEGAL AUTHORIZATION AND FINDINGS
1-1. Definitions. The term used herein, unless the context hereof shall require otherwise
shall have the following meanings, and any other terms defined in the Lease shall have the same
meanings when used herein as assigned to them in the Lease unless the context or use thereof
indicates another or different meaning or intent.
Act: collectively the Issuer Powers Act and the Lessee Powers Act as amended from time
to time.
Additional Bonds: any additional Bonds issued pursuant to the terms and conditions of
Section 2-5 hereof.
Authenticating Agent: the Paying Agent.
Authoritv: the Economic Development Authority of the City of Chanhassen, Minnesota,
and any successor public entity.
Beneficial Owner: means the person for which a DTC Participant holds an interest in the
Bonds as shown on the books and records of the DTC Participant.
Bond Closing: the date on which there is delivery of and payment for the Bonds.
Bond Counsel: Briggs and Morgan, Professional Association, of Saint Paul and
Minneapolis, Minnesota, or any other attorney designated by the Authority duly admitted to
practice law before the highest court of any state and nationally recognized in the field of
municipal finance, and any opinion of Bond Counsel shall be a written opinion of such Counsel.
Bond Fund: the Bond Fund created under Section 5-2 hereof.
Bond Register: the register maintained by the Bond Registrar pursuant to Section 2-9.
Bond Registrar. U.S. Bank Trust National Association, in St. Paul, Minnesota and any
duly appointed successor Bond Registrar.
1231446.1
Bondholder: any Holder of a Bond.
Bonds: the Public Project Revenue Bonds, Series 2000 (City of Chanhassen, Minnesota
Lease With Option to Purchase Project).
Business Dav: any day other than a Saturday, Sunday, legal holiday or a day on which
banking institutions in the City were the principal office of the Paying Agent is located are
authorized by law or executive order to close.
Cede & Co.: means, initially, Cede & Co., as nominee ofDTC and any successor or
subsequent such nominee designated by DTC respecting DTC's functions as book-entry
depository for the Bonds.
City: the City of Chanhassen, Minnesota.
Condemnation: requisition or taking by governmental authority or by a person, firm or
corporation acting under governmental authority and a conveyance made under threat of
Condemnation provided such conveyance is made with the approval of the Authority, which
approval shall not be unreasonably withheld, and Condemnation award shall include payment for
property taken or requisitioned or conveyed under threat of Condemnation.
County Recorder: the County Recorder for Carver County.
DTC: means Depository Trust Company, New York, New York, a limited purpose trust
company organized under the laws of the State of New York, or any successor book-entry
securities depository for the Bonds appointed pursuant to Section 2.12.
DTC Particioant: means those broker-dealers, banks and other financial institutions from
time to time for which DTC holds Bonds or Securities as depository.
Financial Journal: Northwestern Financial Review or any other newspaper or journal
devoted to fmancial news circulated in the English language in Minneapolis and St. Paul,
Minnesota.
Ground Lease: the Ground Lease Agreement dated as of December 1,2000, between the
Lessee as Lessor, and the Authority as Lessee, whereby the Lessee leases the Land to the
Authority.
Holder: the person in whose name any Bond is registered, as shown on the Bond Register
maintained by the Bond Registrar.
Indeoendent: any person who is not a full time employee of the Authority or the Lessee.
1231446.1
2
Indeoendent Accountant: a certified public accountant or firm of certified public
accountants registered, Independent and qualified to practice as such under the laws of
Minnesota, and not regularly employed by the Authority or the Lessee except to perform
independent audits of the books and records of either or both of them or to make other similar
periodic reviews.
Indeoendent Counsel: an attorney or firm of attorneys designated by the Authority,
Independent and duly admitted to practice law before the highest court of any state.
Indeoendent Engjneer: an architect or engineer or architectural or engineering firm
designated by the Authority, Independent, and registered and qualified to practice such profession
under the laws of Minnesota.
Internal Revenue Code: the Internal Revenue Code of 1986, as amended.
Issuer Powers Act: Miunesota Statutes, Section 469.090 through 469.1081, as from time
to time amended.
Land: the parcel or parcels or other interests in real estate leased to the Authority under
the Ground Lease and described in Exhibit A to the Lease.
Lease: the Lease with Option to Purchase Agreement dated December I, 2000, whereby
the Authority proposes to lease, or sublease as to the Land, the Project to the Lessee, a form of
which Lease is on file in the office of the Authority.
Lease Pavrnents: Rental Payments payable to the Authority under Section 5.1 of the
Lease.
Lessee: the City of Chanhassen, Minnesota, or any successor to its functions.
Lessee Powers Act: Minnesota Statutes, Section 469.041 and 465.71, as from time to
time amended.
Net Proceeds: with respect to any property insurance payment or Condemnation award,
the amount remaining after deduction of all expenses reasonably incurred by the Authority in the
collection thereof, including but not limited to attorneys' fees, witness fees and any extraordinary
expenses of the Authority.
Net Revenues: all sums realized from the operation of all or any part of the Project by the
Authority after deducting all necessary reasonable current costs of operation of the Project
incurred by the Authority determined in accordance with accepted accounting practice, including,
but without limitation, administrative expenses incurred solely with respect to the operation of
1231446.1
3
the Project; current maintenance and repairs necessary to maintain the Project in adequate repair
and operating condition; labor and the cost of material and supplies necessarily used for such
current operation, maintenance and repairs; insurance of the premises against risks and in
amounts for which insurance is usually carried by prudent owners of like properties, including
but not limited to insurance required by the Lease; insurance of the Authority and its officers and
employees against liability for damage to persons and property incurred in connection with such
operation, in amounts such as are usually carried by prudent operators of similar enterprises, or in
lesser amounts to which Authority's liability may be limited by law; and charges for the accumu-
lation of appropriate reserves for the payment of operating costs which recur periodically but in
varying amounts. The operating costs of the Project shall also include the cost of any renewal,
replacement or improvement of or additions to capital assets incurred by the Authority to
facilitate the lease, sale or other disposition of the Project after any termination of the Lease. The
operating costs of the Project shall not, however, include any allowance of payment for
depreciation; any portion of the salary or wages paid to any officer or employee of the Authority,
except such portion as represents reasonable compensation for the performance of duties
necessary exclusively for the operation of such Project, and not for other operations of the
Authority; or any liability incurred by the Authority or any officer or employee for damage to
persons or property, in excess of the amount of such liability compensated by insurance. The Net
Revenues from the operation of the Project constitute all of the revenues from time to time
received from the operation of the Project, including any improvements thereto, in excess of said
operating costs incurred and payable or to become payable within one month and any reasonable
reserve therefor. In addition Net Revenues shall include all sums realized from the sale of all or
any part of the Project after deducting all necessary reasonable costs of the sale incurred by the
Authority.
Official Statement: the Official Statement dated November 22, 2000, and the Addendum
thereto, prepared in connection with the Bonds.
Outstanding: used as any particular time with reference to Bonds, means all Bonds
theretofore executed and delivered by the Authority under this Resolution except: (i) Bonds
theretofore canceled by the Authority or surrendered to the Authority for cancellation; (ii) Bonds
fully paid or otherwise discharged under Article Eight hereof; and (iii) Bonds in lieu of or in
substitution for which other Bonds shall have been executed and delivered by the Authority
pursuant to the terms of Section 2-6 pertaining to replacement of Bonds.
Paying Agent: U.S. Bank Trust National Association, in St. Paul, Minnesota, or any
other bank designated pursuant to this Resolution as the agent of the Authority to receive and
disburse the principal and interest on the Bonds.
Project Acauisition Fund: the Project Acquisition Fund described in Section 5-1.
Purchaser:
,In
, Minnesota.
1231446.1
4
ReDresentation Letter: means such letter of representations to DTC or other
documentation required by DTC as a condition to its acting as book-entry depository for the
Bonds together with any replacement thereof or amendment or supplement thereto (and including
any structured procedures or policies referenced therein or applicable thereto) respecting the
procedures and other matters relating to DTC's role as book-entry depository for the Bonds.
ReDresentative: the Chairperson of the Authority or the Mayor of the Lessee, or any other
person at any time designated to act on behalf of the Authority or the Lessee as the case may be,
as evidenced by a written certificate furnished to the other party containing a specimen signature
of such person and signed for the Authority by its Chairperson or for the Lessee by its Mayor.
Resolution: this resolution ofthe Authority. All references in this Resolution to
designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections
and subdivisions of this instrument as originally executed. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Resolution as a whole not to any
particular Article, Section or subdivision.
[Sinking Fund Installment: the amount of money required pursuant to this Resolution to
be paid on any Sinking Fund Installment Date toward the mandatory redemption of Term Bonds.]
rSinking Fund Installment Date: any particular February 1 in the years
.]
rTerm Bonds: the Bonds maturing on February 1,
.]
1-2. Exhibits. The following Exhibits are attached to and by reference made a part of
this Resolution:
Exhibit A: legal description of the Land; and
Exhibit B: description of the Project.
1-3. Legal Authorization. The Authority is a body corporate and politic organized and
existing under the Issuer Power Act, and is authorized under said laws to initiate the Project
herein referred to, and to issue and sell bonds for that purpose in the manner and upon the terms
and conditions set forth in the Issuer Power Act, and in this Resolution.
1-4. Findings. The Authority has heretofore determined, and does hereby determine, as
follows:
(1) the Authority is authorized by the Issuer Powers Act to acquire the Land for the
public purposes expressed in the Issues Powers Act, provided for installation and construction of
1231446.1
5
..
the Project Equipment and Improvements therefor and to lease, or as for the Land sublease, the
Project upon the terms set forth thereon.
(2) the Authority has made the necessary arrangements with the Lessee, for the
establishment within the City of a Project consisting of property to be used as a municipal
building, all as more fully described in the Lease and which will be of the character and
accomplish the purposes provided by the Issuer Powers Act; and the Authority has by this
Resolution authorized the Project and execution of the Lease, specifying the terms and conditions
of the acquisition, installation, improvement and construction of the Project and of the leasing, or
as for the Land subleasing, of the same to the Lessee;
(3) in authorizing the Project the Authority's purpose is, and in its judgment the effect
thereof will be, to promote the public welfare by providing publicly owned facilities required for
governmental services needed for: the attraction, encouragement and development of
economically sound industry so as to prevent, so far as possible, the emergence of blighted and
marginal lands and areas of chronic unemployment; the development of industry to use the
available resources of the community in order to retain the benefit of the community's existing
investment in educational and public service facilities and to halt the movement of talented,
educated personnel of mature age to other areas, thus preserving the economic and human
resources needed as a base for providing governmental services and facilities; the provision of
accessible employment opportunities for residents in the area; and the expansion of an adequate
tax base of the City to finance the increase in the amount and cost of governmental services,
including educational services for the School District of the City;
(4) the amount estimated to be necessary to finance the Cost of the Project will require
the issuance, sale and delivery of Bonds in the aggregate principal amount of $930,000 as
hereinafter provided;
(5) it is desirable, feasible and consistent with the objects and purposes of the Issuer
Powers Act to issue the Bonds, for the purpose of acquiring, constructing, improving and
installing the Project;
(6) the Bonds and the interest thereon do not constitute an indebtedness of the Authority
or the City within the meaning of any constitutional or statutory limitation and do not constitute
or give rise to a pecuniary liability or a charge against the general credit or taxing powers ofthe
Authority or the City and neither the faith and credit nor the taxing powers of the Authority or the
City is pledged for the payment of the Bonds or interest thereon; and
(7) the Purchaser has offered to purchase the Bonds in accordance with the terms and
conditions of this Resolution.
1231446.1
6
·
ARTICLE TWO
BONDS
2-1. Authorized Amount and Form of Bonds. Bonds issued pursuant to this Resolution
shall be in substantially the form set forth herein, with such appropriate variations, omissions and
insertions as are permitted or required by this Resolution, and in accordance with the further
provisions of this Article, and the total principal amount of Bonds that may be outstanding
hereunder is expressly limited to $930,000 unless Additional Bonds are authorized as provided in
2-5 or duplicate Bonds are issued pursuant to Section 2-6. The Bonds shall be in substantially
the following form:
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTIES OF HENNEPIN AND CARVER
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF CHANHASSEN
Public Project Revenue Bonds, Series 2000
(City ofChanhassen, Minnesota Lease With Option to Purchase Project)
No.R-
$
Rate
Maturitv
Date of Original Issue
CUSIP
December 1, 2000
REGISTERED OWNER:
CEDE & CO.
PRINCIPAL AMOUNT:
The ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF CHANHASSEN,
a public body corporate and politic and a political subdivision in the Counties of Hennepin and
Carver and State of Minnesota (the "Authority"), for value received, hereby promises to pay, but
only from its 2000 Public Project Revenue Bond Fund (the "Bond Fund"), to Cede & Co. or
registered assigns, the principal amount specified above, on the maturity date specified above
upon the presentation and surrender hereof, and to pay to the registered owner hereof interest on
such principal sum from such Bond Fund at the interest rate specified above from December I,
2000, or the most recent interest payment date to which interest has been paid or duly provided
for, as specified below, commencing on August 1,2001 and semiannually thereafter on February
1 and August 1 of each year until the principal sum is paid. Principal and interest are payable in
1231446.1
7
lawful money of the United States of America at the office of U.S. Bank Trust National
Association, in St. Paul, Minnesota (the "Bond Registrar"), as Paying Agent and Bond Register
or any successor named pursuant to the terms of the Bond Resolution hereinafter described.
Interest shall be paid on each February 1 and August 1 interest payment date by check or draft
mailed to the person in whose name this Bond is registered at the close of business on the
fifteenth day of the preceding calendar month (whether or not a business day) at the address set
forth on the registration books maintained by the Bond Registrar. Any such interest not
punctually paid or provided for will cease to be payable on such regular record dates and such
defaulted interest may be paid to the person in whose name this Bond shall be registered at the
close of business on a special record date for the payment of such defaulted interest established
by the Authority pursuant to the Bond Resolution.
So long as this Bond is immobilized in global book-entrY form registered in the name of
the nominee ofDTC (as defined in the Bond Resolution) payments of principal of, premium, if
any, and interest on this Bond shall be made as provided in the Representation Letter, as defined
in the Bond Resolution and surrender of this Bond shall not be required for payment ofthe
redemption price upon a partial redemption of this Bond or for optional or mandatory purchases
of this Bond or portions thereof. Until termination of the book-entrY only system pursuant to the
Bond Resolution, Bonds may be registered only in the name ofDTC or its nominee, and
notwithstanding express provisions of this Bond providing other or contrary results, the
Representation Letter (which includes the applicable practices and procedures ofDTC) shall
apply to this Bond.
"
Optional Redemotion. Bonds maturing after February I, 2008, are subject to redemption
and prepayment, in whole or in part, and if in part, of any maturity designated by the Lessee and
by lot within a maturity, and in integral multiples of principal amount of$S,OOO, at the option of
the Authority acting at the direction of the Lessee, on February 1, 2008, and on any date
thereafter at a redemption price equal to par plus accrued interest. If(a) all or any part of the
Project is lost, stolen, condemned, destroyed or damaged beyond repair, (b) Lessee fails to notify
the Authority of which course of action Lessee plans to take as required under Section 6.6 of the
Lease and (c) Lessee pays to the Authority a sum equal to the Casualty Value of the Project under
Section 6.6 of the Lease, on the first day of the month next succeeding such payment before
which month timely notice of redemption can be given under Section 3-2 of the Bond
Resolution, all Bonds shall be called for and are subject to redemption and prepayment in whole
and not in part, at a redemption price equal to par plus accrued interest. If an Event of Default
should occur and subsist under the Lease or if the Lease should be terminated on account of a
Non-appropriation pursuant to Section 4.2 of the Lease, all Bonds then outstanding may, at the
option of the Authority, become or be declared due and payable before the stated maturity
thereof, together with interest accrued thereon, all as provided in the Bond Resolution.
[Mandatorv Redemotion. The Bonds maturing February 1, , are subject to
mandatory prepayment and redemption by lot on February I in the years and principal amounts
1231446.1
8
stated below, at the principal amount thereof plus accrued interest to the date fixed for
redemption:
Mandatorv Redemotion Schedule
F ebruarv 1.
Term Bond (inclusive)
Year
Princioal Amount
(maturity)
Februarv 1.
Term Bond (inclusive)
Year
Princioal Amount
(maturity)
or, ifless than such amount is then outstanding, an amount equal to the aggregate principal
amount of the Bonds then outstanding.
The Authority may, at its option to be exercised on or before the thirtieth day next
preceding any date specified in the Mandatory Redemption Schedule above, deliver to the Bond
Registrar written notice, which shall (i) specify a principal amount of such Term Bonds
previously redeemed (otherwise than pursuant to the above Mandatory Redemption Schedule) or
purchased and cancelled by the Bond Registrar and not theretofore applied as a credit against any
redemption of Bonds pursuant to the above Mandatory Redemption Schedule, and (ii) instruct
the Bond Registrar to apply the principal amount of such Term Bonds so delivered or previously
redeemed or purchased and cancelled for credit against the principal installments to be prepaid
pursuant to the Mandatory Redemption Schedule and selected by the Authority. Each such Term
Bond so delivered or previously redeemed or purchased and cancelled shall be credited by the
Bond Registrar against the principal installments to be prepaid pursuant to the Mandatory
Redemption Schedule and selected by the Authority.]
Prior to the date on which any Bond or Bonds are directed by the Authority to be
redeemed in advance of maturity, the Authority will cause notice of the call thereof for
redemption identifying the Bonds to be redeemed to be mailed to the Paying Agent and all
1231446.1
9
Bondholders, at the addresses shown on the Bond Register. All Bonds so called for redemption
will cease to bear interest on the specified redemption date, provided funds for their redemption
have been duly deposited.
To effect a partial redemption of Bonds having a cornmon maturity date, the Bond
Registrar shall assign to each Bond having a common maturity date a distinctive number for each
$5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using
such method of selection as it shall deem proper in its discretion, from the numbers assigned to
the Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of
such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were
assigned numbers so selected; provided, however, that only so much of the principal amount of
such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for
each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be
surrendered to the Bond Registrar (with, if the Authority or Bond Registrar so requires, a written
instrument of transfer in form satisfactory to the Authority and Bond Registrar duly executed by
the Holder thereof or the Holder's attorney duly authorized in writing) and the Authority shall
execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such
Bond, without service charge, a new Bond or Bonds having the same stated maturity and interest
rate and of any authorized denomination or denominations, as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion of the principal
of the Bond so surrendered.
This Bond is one of an issue in the aggregate principal amount of $930,000, all of like
date of original issue and tenor, except as to number, interest rate, maturity, denomination and
redemption privilege, issued in accordance with an authorizing resolution (the "Bond
Resolution") duly adopted by the Authority, setting forth the terms upon which such Bonds are
issued and describing the security therefor, to which Bond Resolution reference is made for a full
description of such terms, conditions and security. The Bonds are issued by the Authority for the
purpose of fmancing a project consisting of the construction and acquisition of land, a building or
buildings, improvements and equipment thereon (the "Project") pursuant to Minnesota Statutes,
Sections 469.090 through 469.1081 including the payment of all expenses incidental thereto, and
the leasing of the Project under the provisions of a Lease With Option to Purchase Agreement
(the "Lease") between the Authority and the City ofChanhassen, Minnesota (the "Lessee"), dated
December 1, 2000.
The Bonds are equally and ratably secured by the Bond Resolution, and reference is made
to the Lease and Bond Resolution and amendments thereof for a description of the revenues
pledged to secure the payment of the Bonds, the nature and extent of the security thereby created,
the rights of the registered owners of the Bonds, the rights, duties, immunities and obligations of
the Authority and the rights, duties and obligations of the Lessee. The obligation of the Lessee
under the Lease to make Rental Payments sufficient to pay the principal of and interest on the
Bonds when due is a binding and enforceable obligation ofthe Lessee, but is subject to a right to
1231446.1
10
terminate the Lease at the end of any fiscal year during its term, as more fully provided in the
Lease.
The Bonds are issued pursuant to and in full compliance with the Constitution and laws
of the State of Minnesota, and pursuant to the Bond Resolution adopted and approved by the
Authority, which authorized the Project and the issuance of the Bonds as special obligations
payable solely from revenues derived by the Authority from the Project. Rental Payments are to
be paid to the Authority and credited to the Bond Fund as a special trust fund account created by
the Authority and have been and are hereby pledged for that purpose. No Additional Bonds
payable from the Bond Fund may be issued on a parity with the Bonds except as provided in the
Bond Resolution. The Bonds do not constitute an indebtedness of the Authority or the Lessee
within the meaning of any constitutional provision or statutory limitation and do not constitute
nor give rise to a pecuniary liability or moral obligation of the Authority or the Lessee or, to the
extent permitted by law, any of their respective officers, employees and agents, nor a charge
against their general credit or taxing powers of the Authority or the Lessee; and neither the full
faith and credit nor the taxing powers of the Authority or the Lessee is pledged for the payment
of the Bonds or interest thereon.
No Holder of any Bond issued under the Bond Resolution shaU have the right to institute
any proceedings, judicial or otherwise, for the enforcement of the covenants therein contained
without the written concurrence of the Holders of not less than twenty-five percent (25%) in
aggregate principal amount of such Bonds which are at that time outstanding, but the Holders of
such principal amount of Bonds may, either at law or in equity, by suit, action, mandamus,
application for appointment of a receiver or other proceeding, protect and enforce the rights of aU
Holders of such Bonds, and may enforce the performance of aU covenants and duties of the
Authority and its officials as set forth in the Bond Resolution, including, but not limited to, the
collection and proper segregation and application of all funds described in the Bond Resolution.
The Holders of fifty-one percent (51 %) in principal amount of such outstanding Bonds shall have
the right to direct the time, method and place of conducting any proceeding for any remedy
available to the Bondholders and for the exercise of any power conferred on them, and the right
to waive a default in the performance of any such covenant, and its consequences, except a
default in the payment of the principal of or interest on any Bond when due or required to be
redeemed. However, nothing herein shall impair the absolute and unconditional right of the
Holder of each such Bond to receive payment of the principal thereof and interest thereon at the
times, in the manner and from the sources provided in the Bond Resolution, and to institute suit
for the enforcement of any such payment.
This Bond has been designated by the Authority as a "qualified tax-exempt obligation"
for purposes of Section 26S(b) (3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that the Authority has duly
created the Bond Fund and has pledged and appropriated thereto certain rentals from the Project
1231446.1
11
referred to in the Lease hereinafter defined; that it will promptly give all notices and do all other
acts and things required under the terms of the Lease for the performance of its obligations and
for the enforcement of all obligations of the Lessee and for the collection of all rentals when due;
that this Bond is secured by a pledge of and first lien upon the rentals from the Project as more
fully provided in the Bond Resolution authorizing the Bonds and the Lease, and no additional
revenue bonds or other obligations will be issued and made payable from such rentals and Net
Revenues on a parity herewith except as specifically provided in the Bond Resolution; that all
acts, conditions and things required by the Constitution and laws of the State of Minnesota to be
done, to exist, to happen and to be performed in order to make this Bond a valid and binding
special obligation of the Authority according to its terms have been done, do exist, have
happened and have been performed in regular and due form, time and manner as so required; and
that the issuance of this Bond does not cause the special or general indebtedness ofthe Authority
to exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, the Economic Development Authority of the City of
Chanhassen, Minnesota, has caused this Bond to be executed on its behalf by the facsimile
signatures of its Chairperson and Executive Director/Secretary, authenticated by the manual
signature of a representative of U.S. Bank Trust National Association, as Authenticating Agent,
the seal of the Authority having been intentionally omitted as permitted by law and has caused
this Bond to be dated as of December 1,2000.
Facsimile Signature Chairoerson
Facsimile Signature Executive
Director/Secretarv
Attest:
U.S. BANK TRUST NATIONAL ASSOCIATION
St. Paul, Minnesota
as Authenticating Agent
1231446.1
12
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall be
construed as though they were written out in full according to applicable laws or regulations:
TEN COM -
TEN ENT -
IT TEN -
UTMA -
as tenants in common
as tenants by entireties
as joint tenants with right of survivorship and not as tenants in common
as custodian for
(Minor)
Uniform Transfers to Minors Act
(Cust)
under the
(State)
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, ("Transferor"), the undersigned,
hereby sells, assigns and transfers unto (Social Security or Federal Employer
Identification No. ) the Bond and all rights thereunder, and hereby
irrevocably constitute and appoints ("Transferee") as attorney to
transfer the Bond on the books kept for registration thereof, with full power of substitution in the
premises; provided, however, that if any default with respect to the Bond shall have occurred to
or to the date of this transfer, the Bond shall not be registered and the Transferee shall be entitled
to receive payment with respect to the Bond upon presentation thereof as assignee of the
Transferor.
Date:
NOTICE: No transfer will be registered and no new Bond
will be issued in the name of the Transferee, unless the
signature(s) to this assignment correspond(s) with the
name(s) as it (they) appear(s) upon the face of the Bond in
every particular, without alteration or enlargement of any
change whatever and the Social Security or Federal
Employer Identification numbers of the settlor and
beneficiaries of the trust, the date of the trust and the name
of the trustee should be supplied.
Signature Guaranteed:
NOTICE: Signature(s) must be granted by a
member firm of the New York Stock Exchange
or a commercial bank or a trust company or any other
"Eligible Guarantor Institution" as defined in
17 CFR 240.17 Ad-lS(a)(2).
1231.446.1
13
PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and in the amount(s) as follows:
Date
1231446.1
Amount
14
Authorized Signature
of Holder
2-2. Initial Issue. The Bonds initially issued in the aggregate principal amount of
$930,000, shall be dated December 1, 2000, as the original issue date, shall be in the
denomination of $5,000 each or any integral multiple thereof (as requested by the Purchaser),
numbered consecutively from R-l upwards and shall mature in order of bond numbers on
February 1 in the years and amounts set forth below, with Bonds maturing in such years and
amounts bearing interest from the original issue date until paid or discharged as herein provided
at the annual rate set forth opposite such years and amounts, respectively:
Year Amount Rate Year Amount Rate
2003 2008
2004 2009
2005 2010
2006 2011
2007 2012
The Bonds shall be subject to redemption and prior payment at the times and prices and in the
amounts and manner provided in Article Three. Interest on each Bond shall be payable on
August 1,2001, and semiannually thereafter on each February I and August I until the Bond is
fully paid or discharged. Both principal and interest shall be payable by check or draft mailed to
the Holder of the Bonds by the Bond Registrar at the last address thereof as shown on the Bond
Register on the 15th day of the calendar month next preceding the interest payment date (whether
or not a Business Day) or, if on any interest payment date there are insufficient funds to pay in
full the interest then due on the Bonds, to the Holder as of a special record date established by the
Authority.
2-3. Execution. Each Bond shall be executed on behalf of the Authority by the manual
signature of the Authority's Chairperson and by the printed, engraved or lithographed facsimile
signature of the Authority's Executive Director/Secretary; provided that each Bond may at the
direction of the Chairperson of the Authority be attested by the manual signature of the Executive
Director/Secretary or of a person authorized to sign on behalf of the Paying Agent, hereby
designated for such purpose as authenticating agent, in which event the signature of the
Chairperson on the Bond may be a facsimile signature. In the event of the disability or re-
signation or other absence of either officer, the Bond may be signed by the manual or facsimile
signature, as the case may be, of an officer who under the bylaws of the Authority may act in
behalf of the absent or disabled officer. The Bonds may be sealed with the seal of the Authority;
provided the Authority's seal may be a printed facsimile and provided further that the seal may be
omitted. In case any officer whose signature shall appear on the Bonds shall cease to be such
officer before delivery of the Bonds, the signature or facsimile shall nevertheless be valid and
sufficient for all purposes, the same as if the officer had remained in office until delivery.
2-4. Deliverv of Initial Issue. Before delivery of the Bonds of this issue there shall be
filed with the Executive Director/Secretary of the Authority the following items:
1231446.1
15
(I) an original of the Lease of which shall be fully executed;
(2) the opinion of counsel for the Lessee as prescribed by Bond Counsel;
(3) the manually signed opinion of Bond Counsel relating to the legality and tax
exempt status of the Bonds issued pursuant to this Resolution; and
(4) such other documents and opinions as Bond Counsel may reasonably require
for purposes of rendering its opinion required in subsection (3) above; provided, however,
that the Chairperson or Executive Director/Secretary of the Authority, with the consent of
Bond Connsel, may waive the requirement that one or more of the foregoing items
(except the item required in clause (3) above) be filed on or before Bond Closing upon
the Authority receiving adequate assurances that such item or items will be filed with the
Executive Director/Secretary as soon as practicable following delivery of the Bonds.
2-5. Issuance of Additional Parity Bonds. After the delivery of Bonds, the Authority and
the Lessee may from time to time, upon the conditions stated in this section, agree upon and
approve the issuance and delivery of Additional Bonds to complete or improve the Project,
including the refunding of any Bonds, payable equally and ratably from the revenues of the
Project pledged and appropriated hereunder with the Bonds of the initial issue, but bearing such
date or dates and interest rate or rates and with such maturities and redemption dates and
premiums as may be agreed upon. Every series of such Additional Bonds shall be authorized by
an amendment to the Lease and a supplemental bond resolution, establishing the terms thereof,
providing for any additional facilities to be financed by the Additional Bonds as part of the
Project, and providing for additional rents sufficient to pay the interest when due for such
Additional Bonds, and to pay and redeem all such Additional Bonds at or before maturity as
provided in such supplemental resolution. Each series of such Additional Bonds shall be
executed, authenticated and delivered as provided in this Article Two upon filing with the
Authority original executed counterparts of the supplemental resolution and the amendment to
the Lease, together with such additional certificates, opinions and other documents described in
Section 2-4 as Bond Counsel determines to be applicable. No such Additional Bonds, however,
shall be issued unless the following conditions are met:
(I) The Lease shall be in effect, and no "event of default", as such term is defined
in the Lease, shall exist thereunder; and
(2) The Authority shall have been furnished an opinion of Bond Counsel to the
effect that the issuance of the Additional Bonds will not impair the tax exempt status of
the interest on the Bonds; and
(3) There shall have been furnished to the Authority a supplement to the Lease
providing for additional payments of Lease Payments sufficient to pay the principal of
and interest on the Additional Bonds when due; and
1231446.1
16
(4) There shall have been furnished to the Authority a certificate of a Lessee
Representative to the effect that the proceeds of the Additional Bonds, together with any
additional funds supplied or to be supplied by the Lessee will be sufficient to complete
the Project, the cost of the improvement or the cost of the refunding, as the case maybe.
2-6. Mutilated. Lost or Destroved Bonds. In case any Bond issued hereunder shall
become mutilated or be destroyed or lost, the Authority shall, if not then prohibited by law, cause
to be executed and delivered, a new Bond oflike amount, number, maturity date and tenor in
exchange and substitution for and upon cancellation of such mutilated Bond if any, or in lieu of
and in substitution for such Bond, if any, destroyed or lost upon the Holder's or owners paying
the reasonable expenses and charges of the Authority in connection therewith, and in case of a
Bond destroyed or lost, the filing with the Authority of evidence satisfactory to the Authority that
the Bond, if any, were destroyed or lost, and of the ownership thereof, and furnishing the
Authority with indemnity satisfactory to it. If the mutilated, destroyed or lost Bond has already
matured or been called for redemption in accordance with its terms it shall not be necessary to
issue a new Bond prior to payment.
2-7. Ownershio of Bonds. The Authority and Paying Agent may deem and treat the
Holder of any Bond whether or not the Bond shall be overdue, as the absolute owner of the Bond
for the purpose of receiving payment thereof and for all other purposes whatsoever, and the
Authority shall not be affected by any notice to the contrary.
2-8. Deliverv of Temoorarv Bond. In order to facilitate timely delivery of the Bonds, the
Purchaser may elect with respect to the Bonds to receive in lieu of the definitive Bonds, as set
forth in Section 2-2, a single Bond payable to the Purchaser with installments of principal and
interest due as provided for the Bonds; and such single Bond shall upon request of the Purchase
and the printing of the appropriate definitive Bonds be exchanged therefor and canceled.
2-9. Registration. Transfer and Exchange of Bonds.
(1) The Authority will cause to be kept at the principal corporate trust office of the Bond
Registrar a Bond Register in which, subject to such reasonable regulations as the Bond Registrar
may prescribe, the Authority shall provide for the registration of transfers of Bonds entitled to be
registered or transferred as herein provided.
(2) Upon surrender for transfer of any Bond at the principal corporate trust office of the
Bond Registrar, the Authority shall execute, and the Authenticating Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more new Bonds of any
denomination or denominations of $5,000 or any integral multiple thereof of a like aggregate
principal amount, having the same stated maturity and interest rate, as requested by the
transferor.
1231446.1
17
(3) All Bonds surrendered upon any transfer provided for in this Bond Resolution shall
be promptly canceled by the Bond Registrar and thereafter disposed of a directed by the
Authority.
(4) All Bonds delivered in exchange for or upon transfer shall be valid special
obligations of the Authority evidencing the same debt, and entitled to the same benefits under
this Bond Resolution, as the Bonds surrendered for such exchange or transfer.
(5) Every Bond presented or surrendered for transfer shall (if so required by the
Authority) be duly endorsed or be accompanied by a written instrnment of transfer, in form
satisfactory to the Authority and the Bond Registrar, duly executed by the Holder thereof or the
Holder's attorney duly authorized in writing.
(6) No service charge shall be made to the Holder for any transfer, but the Authority may
require payment of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Bonds, other than exchanges expressly
provided in this Bond Resolution to be made without expense or without charge to Bondholder,
and the cost of printing any new Bonds.
(7) The Authority and the Bond Registrar shall not be required (i) to transfer or exchange
any Bond for a period of I S days next preceding any interest payment date, or (ii) to transfer or
exchange any Bond called or being called for redemption in whole or in part.
2-10. Interest Rights Preserved: Dating of Registered Bonds. Each Bond delivered upon
transfer of any other Bond shall carry all the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Bond, and each such Bond shall be so dated, that neither gain
nor loss in interest shall result from such transfer.
Each Bond shall be dated by the Bond Registrar as of the last interest payment date
preceding the date of authentication to which the Bond has been paid or made available for
payment, unless the date of authentication is an interest payment date to which interest has been
paid or made available for payment, in which case the Bond shall be dated as of the date of
authentication.
2-11. Other Revenue Bonds. Nothing contained herein shall however prevent the
issuance by the Authority at the request of the Lessee of other bonds without consent of the
Bondholders for any of the purposes authorized under the Act, including any improvement to the
Project, payable from revenues furnished by the Lessee but not pledged and appropriated to the
Bond Fund whether or not the obligation of the Lessee to make such payments is secured by
tangible property or other collateral (except for the Project and revenues derived by the Authority
therefrom under the Bond Resolution), so long as such other bonds are in no way secured by any
of the provisions of the Bond Resolution and an effect thereof would not be to subject the interest
payable on the Bonds and any Additional Bonds to federal or state income taxes.
1231446.1
18
2-12. Book-Entrv Only SYStem. DTC will act as securities depository for the Bonds. The
Bonds shall be issued in the form of a separate single fully registered bond for each separate
maturity of the Bonds. Upon initial issuance the ownership of the Bonds shall be registered in
the Bond Register in the name of Cede & Co., as the nominee ofDTC.
With respect to Bonds registered in the Bond Register in the narne of Cede & Co., as
nominee ofDTC, neither the Authority, the Lessee nor the Bond Registrar shall have any
responsibility or obligation to any DTC Participant or to any Beneficial Owner. Without limiting
the inunediately preceding sentence, neither the Authority, nor the Bond Registrar shall have any
responsibility or obligation with respect to (i) the accuracy of the records ofDTC, Cede & Co., or
any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any
DTC Participant, any Beneficial Owner or any other person, other than DTC, of any notice with
respect to the Bonds, including any notice of redemption, (iii) the payment to any DTC
Participant, any Beneficial Owner or any other person, other than DTC, of any amount with
respect to the principal of or premium, if any, or interest on the Bonds, or (iv) the failure ofDTC
to provide any information or notification on behalf of any DTC Participant or Beneficial Owner.
The Authority and the Bond Registrar may treat as and deem DTC to be the absolute
owner of each Bond for the purpose of payment of the principal of and premium and interest on
the Bond, for the purpose of giving notices of redemption and other matters with respect to the
Bond, for the purpose of registering transfers with respect to the Bonds, and for all other
purposes whatsoever (except for the giving of certain Bondholder consents). The Bond Registrar
shall pay all principal of and premium, if any, and interest on the Bonds only to or upon the order
of the Bondholders as shown on the Bond Register, and all such payments shall be valid and
effective to fully satisfy and discharge the Authority's obligations with respect to the principal of
and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid.
Upon delivery by DTC to the Bond Registrar of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to the transfer
provisions in Section 2-9 hereof, references to "Cede & Co." in this Section shall refer to such
new nominee ofDTC.
Notwithstanding the provisions of this Resolution to the contrary (including without
limitation surrender of Bonds, registration thereof, and Authorized Denominations), as long as
the Bonds are in book-entry form, full effect shall be given to the Representation Letter and the
procedures and practices ofDTC thereunder.
2-13. Termination ofBook-Entrv Onlv Svstem. DTC may determine to discontinue
providing its services with respect to the Bonds at any time by giving written notice to the
Authority and discharging its responsibilities with respect thereto under applicable law. The
Authority may terminate the services of DTC with respect to the Bonds if it determines that DTC
is no longer able to carry out its functions as security depository as contemplated herein.
1231446.1
19
Upon the termination of the services ofDTC as provided in the preceding paragraph, the
Authority shall take all reasonable and diligent steps as may be necessary to find an alternate
book-entry depository, but if (and only if) no such substitute securities depository willing to
undertake the functions ofDTC hereunder can be found which, in the opinion of the Authority, is
willing and able to undertake such functions upon reasonable or customary terms, then the Bonds
shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co.,
as nominee ofDTC, but may be registered in whatever name or names the Bondholders shall
designate at that time, in accordance with Section 2-9. To the extent that the Beneficial Owners
are designated as the transferee by the Bondholders, in accordance with Section 2-9 the Bonds
will be delivered in appropriate form, content and Authorized Denomination to the Beneficial
Owners.
Notwithstanding any other provision of this Resolution to the contrary, so long as any
Bond is registered in the name of Cede & Co., as nominee ofDTC, all payments with respect to
the principal of and premium, if any, and interest on such Bond and all notices with respect to
such Bond shall be made and given, respectively, to DTC as provided in the Representation
Letter.
1.231446.1
20
ARTICLE THREE
REDEMPTION OF BONDS BEFORE MATURITY
3-1. Redemotion.
(1) Ootional Redemotion of Bonds. Bonds maturing after February 1, 2008 are subject
to redemption and prepayment, in whole or in part, and if in part, of any maturity designated by
the Lessee and by lot within a maturity, and in integral multiples of principal amount of$S,OOO,
at the option of the Authority acting at the direction of the Lessor, on February 1, 2008 and on
any date thereafter at a redemption price equal to par plus accrued interest.
[(2) Mandatorv Redemotion of Bonds. The Term Bonds shall be subject to mandatory
prepayment and redemptión by lot on February 1 in the years and principal amounts stated below,
at a price equal to the principal amount thereof plus accrued interest to the date fixed for
redemption:
Mandatorv Redemotion Schedule
Februarv 1.
Term Bond (inclusive)
Year
Princioal Amount
(maturity)
Februarv 1.
Term Bond (inclusive)
Year
Principal Amount
(maturity)
(a) Selection of Term Bonds to be redeemed pursuant to the above schedule of
Sinking Fund Installments shall be by lot.
(b) To the extent that Term Bonds have been previously called for optional
redemption under subparagraph (c) below in part from the Bond Fund in excess of that
portion of the Term Bonds not subject to Sinking Fund Installments, Sinking Fund
Installments shall be reduced in inverse order of Sinking Fund Installment Dates.
(c) The amount of Term Bonds to be redeemed on any Sinking Fund Installment
Date shall be reduced by the principal amount of Term Bonds (subject to that Sinking
Fund Installment Date) which are purchased by the Authority at least one business day
1231446.1
21
prior to the date on which the Term Bonds are selected by lot for redemption and which
are not already credited hereunder against Sinking Fund Installments otherwise payable
on a prior Sinking Fund Installment Date.]
(3) Extraordinarv Redemotion of Bonds. If (a) all or any part of the Project is lost,
stolen, condemned, destroyed or damaged beyond repair, (b) Lessee fails to notify the Authority
of which course of action Lessee plans to take as required under Section 6-6 ofthe Lease and (c)
Lessee pays to the Authority a sum equal to the Casualty Value of the Project under Section 6.6
of the Lease, on the first day of the month next succeeding such payment before which month
timely notice of redemption can be given under Section 3-2 hereof, all Bonds shall be called for
and are subject to redemption and prepayment in a whole and not in part, at a redemption price
equal to par plus accrued interest thereon to the redemption date.
(4) Except as provided in this section or in Section 4-13, the Bonds shall not be subject
to redemption prior to their stated maturity date.
3-2. Notice of Red emotion. Notice of the call for any redemption pursuant to Section 3-1
shall be mailed by the Authority but at the expense of the Lessee, at least 30 days but not more
than 60 days prior to the redemption date, to the Paying Agent and to the Bondholders, at the
addresses shown on the Bond Register. Each such notice shall refer to the Bonds to be redeemed
by their numbers and maturities and the date on which and the place where they shall be
presented for redemption. On or before the date fixed for redemption, funds sufficient to redeem
such Bonds, including accrued interest thereon to the redemption date, shall be deposited with
the Paying Agent. The Bonds thus called shall not, on or after the specified redemption date,
bear interest.
3-3. Procedure for Redemotion. To effect a partial redemption of Bonds having a
common maturity date, the Bond Registrar prior to giving notice of redemption shall assign to
each Bond having a common maturity date a distinctive number for each $5,000 of the principal
amount of such Bond. The Bond Registrar shall then select by lot, using such method of
selection as it shall deem proper in its discretion, from the numbers so assigned to such Bonds, as
many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to
be redeemed. . The Bonds to be redeemed shall be the Bonds to which were assigned numbers so
selected; provided, however, that only so much of the principal amount of each the Bond of a
denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number
assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to
the Bond Registrar (with, if the Authority or Bond Registrar so requires, a written instrument or
transfer in form satisfactory to the Authority and Bond Registrar duly executed by the Holder
thereof or the Holder's attorney duly authorized in writing) and the Authority shall execute (if
necessary) and the Bond Registrar shall deliver to the Holder ofthe Bond, without service
charge, a new Bond or Bonds having the same stated maturity and interest rate and of any
authorized denomination or denominations, as requested by the Holder, in aggregate principal
1231446.1
22
f
amount equal to and in exchange for the unredeemed portion of the principal ofthe Bond so
surrendered.
3-4. Cancellation. All Bonds which have been redeemed shall be canceled by the
Authority and shall not be reissued.
1231446.1
23
ARTICLE FOUR
GENERAL COVENANTS
4-1. Payment ofPrincioal and Interest. The Authority covenants that it will promptly pay
or cause to be paid the principal of and interest on every Bond issued under this Resolution at the
place, on the dates and in the manner provided herein and in the Bonds, according to the terms
thereof. The principal and interest are payable solely from revenues derived from the Project
(including certain Bond proceeds and other sums appropriated to the Bond Fund), which
revenues are hereby specifically assigned and pledged as a fIrst and prior lien to the payment
thereof for the benefit of the Holders of all Bonds and interest and any premium thereon in the
manner and to the extent herein specified, and nothing in the Bonds or in this Resolution shall be
considered as assigning or pledging any other funds or assets of the Authority. All sums held in
the Bond Fund pursuant to this Resolution shall to the extent permitted by law be deemed
property of the Holders of all Bonds, held in trust for them and subject to the terms and
conditions of this Resolution, including the pledge thereofto the payment ofthe Bonds and
interest and any premium thereon.
4-2. Performance of and Authority for Covenants. The Authority covenants that it will
faithfully perform at all times any and all covenants, undertakings, stipulations and provisions
contained in this Resolution, in any and every Bond executed, authenticated and delivered
hereunder and in all proceedings of its goveming body pertaining thereto; that it is duly
authorized under the Constitution and laws of the State of Minnesota including particularly and
without limitation the Act, to issue the Bonds authorized hereby and to assign and pledge the
revenues in the manner and to the extent herein set forth; that all action on its part for the
issuance of the Bonds and for the execution and delivery thereof has been duly and effectively
taken; and that the Bonds in the hands ofthe Holders thereof are and will be valid and
enforceable special obligations of the Authority according to the terms thereof.
4-3. Title and Instruments of Further Assurance. The Authority covenants that it has not
made, done, executed or suffered, and will not make, do, execute or suffer, any act or thing
whereby its leasehold estate or interest in and title to the Project or any part thereof is now or at
any time hereafter shall or may be impaired or charged or encumbered in any manner whatsoever
except by Permitted Encumbrances.
. 4-4. Taxes. Assessments and Charges. The Authority covenants that it will promptly
pay, or cause to be paid, but solely from revenues derived from the Project including payments
required to be made under the Lease, all lawful taxes, assessments, imposts and governmental
charges at any time levied or assessed upon or against the Project, or any part thereof; provided,
however, that nothing contained in this Section shall require the payment of any such taxes,
assessments, imposts or charges so long as the validity thereof is being contested in good faith
and by appropriate legal proceedings.
1231446.1
24
4-5. Maintenance and Reoair. The Authority covenants that it will at all times, but solely
from revenues derived from the Project including payments required to be made under the Lease,
maintain, preserve and keep in good condition, repair and working order the Project or cause the
same to occur.
4-6. Recording and Filing. The Authority covenants that, at the expense of the Lessee, it
will cause the Lease or a short form thereof and all supplements thereto, and all related fmancing
statements, to be kept, recorded and filed in such manner and in such places as may be required
by law in order to preserve and protect fully the security of the Holders and owners of the Bonds
and the rights of Authority hereunder, and will cause rerecording and refiling of the Lease, each
financing statement and each supplement thereto as is necessary to maintain, preserve and protect
the validity of the Lease and the security of the Holders ofthe Bonds.
4-7. Books and Records. The Authority covenants that, at the expense of the Lessee, so
long as any Bonds issued hereunder shall be Outstanding and unpaid the Authority will keep, or
cause to be kept, proper books of record and account, in which full, true and correct entries will
be made of all its financial dealings or transactions of and in relation to the Project and the
revenues derived by the Authority therefrom. Such books and records shall be open to inspection
and copying at all reasonable times by the Holder of any Bond or the Holder's agent or attorney.
The Authority will cause said books and records to be audited annually by an Independent
Accountant, within 150 days after the close of each fiscal year, and will upon request furnish a
copy of such audit without cost to the original purchasers of any issue of Bonds or Additional
Bonds.
4-8. Names of Bondholders. At reasonable times and under reasonable regulations
established by the Authority, the Bond Register may be inspected and copied by Holders (or a
designated representative thereof) often percent (10%) or more in principal amount of Bonds
then Outstanding hereunder, such authority of any designated representative to be evidenced to
the satisfaction of the Authority.
4-9. Nature ofSecuritv. Under the provisions ofthe Act the Bonds may not be payable
from or be a charge upon any funds of the Authority other than the revenues pledged to the
payment thereof, nor shall the Authority be subject to any liability thereon, nor shall the Bonds
otherwise contribute or give rise to a pecuniary liability of the Authority or the Lessee or, to the
extent permitted by law, any of their respective officers, employees and agents. No Holder or
Holders of the Bonds shall ever have the right to compel any exercise of the taxing power of the
Authority or the Lessee to pay any Bonds or the interest thereon, or to enforce payment thereof
against any property of the Authority other than the revenues derived from the Project. The
Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of
the Authority or the Lessee other than the revenues derived from the Project, and no Bond shall
constitute a debt of the Authority or the Lessee within the meaning of any constitutional or
statutory limitation; but nothing in the Act impairs the rights of Holders of Bonds issued under
this Resolution to enforce the covenants made for the security thereof as provided in this
1231446.1
25
Resolution and in the Act, and by Authority of the Act the Authority has made the covenants and
agreements herein for the equal and proportionate benefit of all Holders of the Bonds in the
manner and to the extent permitted in Section 5-5.
4-10. Disoosition of Pledged Funds. The Authority covenants that it will cause Lease
Payments and all other revenues pledged to the payment of the Bonds to be accounted for and
expended only as prescribed in this Resolution, and will at all times maintain complete and
accurate books of record and acconnt showing all receipts and expenditures thereof and the
segregation of such rentals and other sums in the funds herein provided, and will at no time loan,
invest, use or apply such funds in any manner or for any purpose other than as specifically
prescribed and permitted in this Resolution.
4-11. Enforcement of Covenants. Subject to the provisions in Section 4-15:
(I) The Authority agrees to enforce all covenants and obligations ofthe Lessee under the
Lease and to that end exercise all of the Authority's rights in connection therewith, to the extent
and in the manner that the Authority reasonably determines is prudent and necessary to assure
performance of such covenants and obligations and to protect the interests of the Bondholders;
provided however that the Authority shall have the right, with or without Bondholders consent at
its sole discretion, to waive a default in the performance of any such covenant or obligation, and
its consequences, to the extent and in the manner provided in Section 4-ll(3).
(2) No Holder of any Bond issued under this Resolution shall have the right to institute
any proceeding, judicial or otherwise, for the enforcement of the covenants herein contained,
without the written concurrence of the Holders of not less than twenty-five percent (25%) in
aggregate principal amount of Outstanding Bonds but the Holders of this principal amount of
Bonds may, either at law or in equity, by suit, action, mandamus, application for appointment of
a receiver or other proceeding, protect and enforce the rights of all Holders of the Bonds, and
may enforce the performance of all covenants and duties of the Authority and its officials as set
forth in this Resolution, including but not limited to the collection and proper segregation and
application of all funds herein described. The Holders of not less than fifty-one percent (51 %) in
aggregate principal amount of Outstanding Bonds shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Bondholders and for the
exercise of any power conferred on them, and the right to waive a default in the performance of
any such covenant, and its consequences, except a default in the payment of the principal of or
interest on any Bond when due or required to be redeemed. However, nothing herein shall
impair the absolute and unconditional right of the Holder of each the Bond to receive payment of
the principal thereof and interest thereon at the times provided in this Resolution, and to institute
suit for the enforcement of any such payment except to the extent that the Authority shall have
the right to accelerate payment of the Bonds as provided in Section 4-13 hereof.
(3) The Authority may in its discretion waive any Event of Default under the Lease and
its consequences and rescind any declaration of maturity of principal under Section 4-13, and
1231446.1
26
shall do so upon written request of the Holders of (1) fifty-one percent (51 %) in aggregate
principal amount of all the Bonds Outstanding in respect of which default in the payment of
principal and/or interest exists, or (2) fifty-one percent (51 %) in aggregate principal amount of all
the Bonds then Outstanding in the case of any other Event of Default; provided, however, that
there shall not be waived any Event of Default in the payment of Lease Payments, unless prior to
such waiver or rescission (a) all arrears of Lease Payments with interest equal to at least the
amount by which such Lease Payments is less than total amount of unpaid debt service due on
the Bonds and (b) all expenses of the Authority and Paying Agent, in connection with such
default shall have been paid or provided for and in case of any such waiver or rescission or in
case any proceeding taken by the Authority on account of any such default shall have been
discontinued or abandoned or determined adversely then and in every such case the Authority
and the Bondholders shall be restored to their former positions and rights hereunder respectively,
but no such waiver or rescission shall extend to any subsequent or other Event of Default, or
impair any right consequent thereon.
(4) If an Event of Default should occur under the Lease, all moneys received by the
Authority pursuant to any right given or action taken under the provisions of this Section 4-1l or
the Lease shall, after payment of the cost and expenses of the proceedings resulting in the
collection of such moneys and of the expenses, liabilities and advances incurred or made by the
Authority in connection therewith and any other sums due the Authority under the Lease (other
than any interest due on delinquent Lease Payments), be deposited in the Bond Fund or the
Project Acquisition Fund, as appropriate.
(5) The Authority and any Paying Agent shall be entitled to payment and/or
reimbursement for all advances, counsel fees and other expenses reasonably and necessarily
made or incurred in and about the execution of the trusts created by this Resolution and in and
about the exercise and performance of the powers and duties of the Authority hereunder and for
the reasonable and necessary costs and expenses incurred in defending any liability in the
premises of any character whatsoever (unless such liability is adjudicated to have resulted from
the negligence or willful default of the Authority). The Paying Agent shall also be entitled to a
reasonable fee for services hereunder. In this regard the Authority has made provisions in the
Lease for the payment of said fees, advances, counsel fees, costs and expenses and reference is
hereby made to said Lease for the provisions so made. Upon an Event of Default under the
Lease, but only upon such an Event of Default and failure of Lessee to make timely payments
under the Lease, the Authority shall have a lien with right of payment prior to the lien herein
created for the benefit of the Bondholders on all revenues derived from the Project by the
Authority including Lease Payments for said fees, advances, counsel fees, costs and expenses
incurred by it.
(6) The Authority shall give to the Holders ofthe Bonds of any Event of Default under
the Lease known to the Authority or termination of the Lease under Section 4.1 of the Lease,
within ninety (90) days after such event unless such default shall have been cured before the
giving of such notice; provided that such notice shall be given within ten (10) days if the event is
1231446.1
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either (i) a failure to pay when due any Lease Payments and to cure the same before giving such
notice or (ii) termination of the Lease under Section 4.1 thereof; and provided further that, except
in the case of default in the payment of Lease Payments or termination of the Lease under
Section 4.1 thereof, the Authority shall be protected in withholding such notice if and so long as
the goveming body of the Authority or its chief executive officer in good faith determines that
the withholding of such notice is in the interest of the Bondholders.
4-12. Covenant to Lease. Sell and Ooerate. Subject to the provisions of Section 4-14, the
Authority agrees that if on Event of Default occurs under the Lease or Lessee terminates the
Lease under Section 4-1 thereof, the Authority will use its best efforts while any Bonds remain
Outstanding to lease or operate the Project to provide Net Revenues sufficient to pay the
principal, interest and call premium, if any, on the Bonds and in the event of sale, to obtain the
best price obtainable so that to the extent the Authority determines it reasonably possible all of
the Bonds and the interest thereon are paid in full. This covenant, to the extent that it may
obligate the Authority to re-lease or sell the Project for the benefit of the Bondholders, may be
enforced against the Authority only to the extent that at such time the Authority is permitted by
law to sell the property or to the extent that any consent required for re-leasing the property has
been given.
4-13. Acceleration. Subject to the provisions in Section 4-14, upon the occurrence of an
Event of Default nnder the Lease or termination of the Lease on account of a Non-appropriation
under Section 4-1 of the Lease, the Authority may, and upon the written request of the Holders of
not less than fifty-one (51 %) percent in aggregate principal amount of Outstanding Bonds shall,
by notice in writing delivered to the Lessee, declare the principal of all Bonds then Outstanding
and the interest accrued thereon immediately due and payable, and such principal and interest
shall thereupon become and be immediately due and payable. The Authority shall promptly give
mailed notice of acceleration to the Bondholders.
4-14. Tax Exemot Status of Bonds: Designation ofOTEO. The Authority shall not
knowingly take, nor fact to take, any action the effect of which would be to impair the tax exempt
status of the Bonds.
In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of
Section 26S(b)(3) ofthe Code, the Authority hereby makes the following factual statements and
representations:
(1) the Bonds are issued after August 7, 1986;
(2) the Bonds are not "private activity bonds" as defined in Section 141 of the Code,
treating "qualified 501(c)(3) bonds as not being private activity bonds;
(3) the Authority hereby designates the Bonds as "qualified tax-exempt obligations" for
purposes of Section 26S(b)(3) of the Code;
1231446.1
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(4) the reasonably anticipated amount oftax-exempt obligations (other than private
activity bonds, treating qualified 501 (c )(3) bonds as not being private activity bonds) which will
be issued by the Authority (and all entities treated as one issuer with the Authority, and all
subordinate entities whose obligations are treated as issued by the Authority) during this calendar
year 2000 will not exceed $10,000,000;
(5) not more than $ I 0,000,000 of obligations issued by the Authority during this calendar
year 2000 have been designated for purposes of Section 26S(b)(3) of the Code.
The Authority shall use its best efforts to comply with any federal procedural
requirements which may apply in order to effectuate the designation made by this section.
4-15. Conditions to Authority Action. Before taking any specific action under Sections
4-11,4- 12,4-13, or 4-14 or the last paragraph in Section 5-5, the Authority may at its sole
discretion:
(1) Require that it be furnished an indenmity bond satisfactory to it for the
reimbursement of all expenses to which it may be put and to protect it against all liability, except
liability which is adjudicated to have resulted from the negligence or willful default of the
Authority;
(2) Act upon the opinion or advice of any Independent Counsel, Independent Engineer or
Independent Accountant selected by the Authority in the exercise of reasonable care, or upon the
direction of the Holders of a fifty-one percent (51 %) in aggregate principal amount of
Outstanding Bonds; and the Authority shall not be responsible for any loss or damage resulting
from any action or nonaction taken in good faith in reliance upon such opinion or advice or
Bondholder direction; and
(3) Require the consent to the action of the Holders of not less than fifty-one percent
(51 %) in principal amount of Outstanding Bonds.
1231446.1
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ARTICLE FIVE
FUNDS AND ACCOUNTS
5-1. Deoosit of Bond Proceeds. The Authority shall deposit, or shall direct the Purchaser
to deposit, with the Lessee all of the net proceeds of the sale of the Bonds (including accrued
interest thereon paid by the purchaser; less capitalized interest; and any unused discount) for
deposit in the Project Acquisition Fund as provided in Section 3.1 ofthe Lease.
5-2. Bond Fund. The Authority hereby establishes and shall maintain, so long as any of
the Bonds are Outstanding, a separate trust account for the benefit of the Bondholders to be
designated "2000 Public Project Revenue Bonds Bond Fund" (herein called the "Bond Fund")
into which the following deposits shall be made:
(1) All payments by the Lessee as Lease Payments under the Lease or any
Purchase Option Price (unless held in escrow to discharge Bonds under Article Eight
hereof).
(2) All other moneys received by the Authority from the Lessee when
accompanied by directions of the Lessee that such moneys are to be paid into the Bond
Fund or used for purposes for which moneys in the Bond Fund may be used. If the
Lessee so directs, such monies shall be credited against Lease Payments due or to become
due.
(3) If the Lease is terminated, all Net Revenues derived from the Project.
(4) All other moneys required to be deposited in the Bond Fund pursuant to any
provision of this Resolution or the Lease.
The moneys and investments in the Bond Fund are irrevocably pledged to and shall be
used by the Authority, from time to time, to the extent required, for the payment of principal of,
and interest and any premium on the Bonds as more fully provided in Section 5-5 hereof; and
shall be used for no other purpose, provided that the Authority may use sums in the Bond Fund to
be used to pay principal on Bonds of a particular maturity (and interest thereon) to instead
purchase the Bonds at a price not to exceed par and accrued interest.
5-3. Deoosit of Funds with Paving Agent. The Authority shall transfer and remit sums
from the Bond Fund to the Paying Agent in advance of each interest and principal due date and
redemption date, from the balance then on hand in the Bond Fund, sufficient to pay all principal,
interest and redemption premiums then due on Bonds. The Paying Agent shall hold in trust for
the Holders of such Bonds representing such interest all sums so transferred to it until paid to
such Holders or otherwise disposed of as herein provided. Any money deposited with the
Paying Agent in trust for the Holder of any Bond and remaining unclaimed for six years after the
1231446.1
30
principal, premium, if any, or interest owing to the Holder becomes due and payable, shall be
paid to the Lessee upon request and shall be discharged from the trust, and the Holder of the
Bond shall thereafter, as an unsecured general creditor look only to the Lessee for the payment
thereof, and all liability of the Paying Agent, or the Authority with respect to such trust money
shall cease.
5-5. Priority ofPavrnent and Aoolication ofMonevs. All Bonds issued hereunder and
secured hereby shall be equally and ratably secured by and payable from the Bond Fund, without
priority of one Bond over any other, except as otherwise expressly provided herein. Accordingly,
all moneys credited to the Bond Fund, shall be applied as follows:
(I) Unless the principal of all the Bonds shall have become or shall have been declared
due and payable, all such moneys shall be applied:
FIRST: To the payment to the persons entitled thereto of all installments of interest then
due on the Bonds, in the order of the maturity of the installments of such interest, and, if the
amount available shall not be sufficient to pay in full any particular installment, then to the
payment ratably, according to the amounts due on such installment, to the persons entitled
thereto, without any discrimination or privilege;
SECOND: To the payment to the persons entitled thereto of the unpaid principal of any
of the Bonds which shall have become due (other than Bonds called for redemption for the
payment of which moneys are held pursuant to the provisions of this Bond Resolution), in the
order of their due dates, and, if the amount available shall not be sufficient to pay in full Bonds
due on any particular date, then to the payment ratably, according to the amount of principal due
on such date, to the persons entitled thereto without any discrimination or privilege; and
THIRD: To the payment of interest and premium, if any, on and the principal of the
Bonds, and to the redemption of Bonds, as thereafter may from time to time become due, all in
accordance with the provisions of Article Five hereof.
(2) If the principal of all Bonds shall have become due or shall have been declared due
and payable, all such moneys shall be applied to the payment of the principal and interest then
due and unpaid upon the Bonds, without preference or priority of principal over interest or of
interest over principal, or of any installment of interest over any other installment of interest, or
of any Bond over any other Bond, ratably, according to the amounts due respectively for
principal and interest, to the persons entitled thereto without any discrimination or privilege.
(3) If the principal of all the Bonds shall have been declared due and payable, and if such
declaration shall thereafter have been rescinded and annulled under the provisions of this
Resolution, then, subject to the provisions of subparagraph (2) of this Section, in the event that
the principal of all the Bonds shall later become due or be declared due and payable, the moneys
shall be applied in accordance with the provisions of paragraph (I) ofthis Section.
1231446.1
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Subject to the provisions in Section 4-15, whenever moneys are to be applied by the
Authority pursuant to the provisions of this Section and there are insufficient sums in the Bond
Fund to pay principal and/or interest then due on the Bonds, the Authority shall apply such
moneys at such times, and from time to time, as the Authority shall determine, having due regard
to the amount of such moneys available for application and the likelihood of additional moneys
becoming available for such application in the future. Whenever the Authority shall apply such
funds, it shall fix the date (which shall be an interest payment date unless it shall deem another
date more suitable) upon which such application is to be made and upon such date interest on the
amounts of principal to be paid on such dates shall cease to accrue. The Authority shall give
such notice as it may deem appropriate of the deposit with the Paying Agent of any such moneys
and of the fixing of any such date, and shaiI not be required to make payment to the Holder of
any Bond until such Bond shall be presented to the Paying Agent for appropriate endorsement or
for cancellation if fully paid.
1231446.1
32
ARTICLE SIX
POSSESSION, USE AND RELEASE OF PROPERTY
6-1. Possession and Use. Subject to the terms hereof and to the pledge of rentals and
profits under the Lease, until the happening of an Event of Default under the Lease or
termination of the Lease under Section 4.2 thereof, the Lessee shall be permitted to possess, use
and enjoy the Project (except cash or other personal property deposited or pledged or determined
by the terms hereof to be deposited or pledged to the Authority) and to receive and use the issues
and profits of the Project.
6-2. Easement for Access or Utility Service The Authority is authorized, without notice
to or consent of the Holders of any Bonds, to join in the execution of a conveyance for access or
utility service and certain other easements and to subordinate the Lease to such easement
pursuant to Section 8.6 of the Lease or if the Lease has been terminated at the Authority's own
initiative, but only upon satisfaction of the applicable conditions set forth in said Section.
6-3. Release of Encumbered Ec¡uioment. The Authority is authorized, without notice to
or consent of any Bondholders, to remove Project Equipment from time to time, provided that
the applicable conditions set forth in Section 3-2 ofthe Lease are met. If the Lessee or the
Authority desires to sell any Project Equipment that Authority has a fair market value in excess
of the fair market value of Project Equipment to be substituted therefor, the Authority may sell,
or permit such sale, without notice to or consent of any bondholders if the removed Project
Equipment is in good faith sold for cash and the net proceeds from the sale are deposited in the
Bond Fund.
6-4. Release ofUnimoroved Land. The Authority is hereby authorized, without notice to
or consent of any Bondholders, to join in the execution of such instruments as may be necessary
to release from the terms of the Lease unimproved Land, but only upon the satisfaction of the
applicable conditions set forth in Section 8.7 of the Lease.
1231446.1
33
ARTICLE SEVEN
INVESTMENTS
7-1. Investments bv Authoritv. Subject to the provisions of Section 7-2, moneys held for
the credit of the Funds established by Article Five shall, to the extent practicable and permitted
by the Act, be invested as received and reinvested by the Authority in such securities as are
authorized by the Act after taking into consideration any recommendation made by the Lessee.
The Authority shall sell and reduce to cash funds a sufficient portion of investments under the
provisions of this Section whenever the cash balance in the Fund for which the investment was
made is insufficient for its current requirements. Securities so purchased as an investment of
moneys shall be paid by the Authority and shall be deemed at all times a part of the applicable
Fund, and the interest accruing thereon and any profit realized from such investments shall be
deemed at all times a part of the applicable Fund, and the interest accruing thereon and any profit
realized from such investments shall be credited to the Fund from which the investment was
made. Any loss resulting from such investment shall be charged to the Fund from which the
investment was made.
7-2. Return on Investments. The Authority will not cause any use to be made of the
proceeds of the Bonds to be issued which would cause such obligations to be arbitrage bonds
within the meaning of Section 148 of the Internal Revenue Code and any applicable and valid
temporary, proposed or final regulations from time to time promulgated thereunder if and to the
extent such provisions remain in full force and effect; and the Authority will comply with the
requirements of said Section 148 and with all such applicable regulations pertaining thereto
while the Bonds to be issued hereunder remain Outstanding.
1231446.1
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ARTICLE EIGHT
DISCHARGE OF OBLIGATIONS TO BONDHOLDERS
8-1. Conditions of Discharge. When all of the Bonds issued and secured hereunder have
been discharged as provided in Section 8-2, and if all fees and expenses of the Authority and
Paying Agent required by this Resolution to be paid (other than sums deposited in escrow for
such purpose) have been paid, all pledges, covenants and other rights granted by this Resolution
shall cease as to the Holders of the Bonds, the Bonds shall no longer be considered Outstanding,
and the lien herein created upon any revenues derived from the Project may be discharged.
8-2. Payment of Bonds. (I) Bonds for the payment or redemption of which sufficient
cash shall have been deposited with the Paying Agent shall be deemed to be paid and discharged
within the meaning of this Section, provided, however, that if such Bonds are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been duly given and sufficient
cash shalI also be deposited with the Paying Agent to pay any redemption premium.
(2) The Authority may also pay and discharge at any time any and all of the Bonds and
pay all future Paying Agent fees and expenses with respect thereto by irrevocably depositing in
escrow for the benefit of the Holders of said Bonds and the Paying Agent in a suitable banking
institution a sum of cash and securities in such aggregate face amount, bearing interest at such
rates and maturing or callable at the option of the holder thereof on such dates as shall be
required to provide amounts sufficient to pay when due (i) all redemption premiums, if any, on
the Bonds, (ii) all principal and interest due on said Bonds to their stated maturity dates or any
earlier permissible date upon which they may be redeemed prior to maturity in accordance with
their terms, (so long as notice of such redemption shall have been duly given as herein required),
and (iii) all such future Paying Agent fees and expenses; and provided further that the securities
deposited for this purpose shall be limited to securities which may be purchased for an escrow
account under the provisions of Section 475.67, Minnesota Statutes, or any amendments or
supplements thereto.
(3) All liability of the Authority to the Holders of any Bonds for the payment of principal
and interest and any premium thereon shall forthwith cease, terminate and be completely
discharged upon payment and discharge of the Bonds as provided in this section, and the Holders
shall have a claim therefor solely upon the cash or cash and securities so deposited with the
Paying Agent or in escrow and shall not be entitled thereafter to any other benefit of or security
under this Resolution or the Lease.
(4) Any Bonds paid and discharged as provided in this Section 8-2 shall no longer be
deemed outstanding for the purposes of this Resolution.
1231446.1
35
8-3. Cancellation of Surrendered Bonds and Couoons. The Authority may at any time
surrender to the Paying Agent for cancellation by it any Bonds previously authenticated and
delivered hereunder, which the Authority acquired in any manner whatsoever, and such Bonds,
upon such surrender and cancellation, shall be deemed to be paid and retired.
1231446.1
36
ARTICLE NINE
SUPPLEMENTAL AND AMENDATORY RESOLUTIONS
9-1. Supolemental and Amendatorv Resolutions Not Reauiring Consent of Bondholders.
The Authority may, from time to time and at any time, without the consent of or notice to any of
the Bondholders, and when so required by this Resolution shall adopt a resolution or resolutions
supplemental to or amendatory of this Resolution as shall not be inconsistent with the terms and
provisions hereof (which supplemental or amendatory resolution or resolutions shall thereafter
form a part hereof), so as to thereby (I) permit the issuance of Additional Bonds as provided in
Section 2-5, or duplicate Bonds as provided in Section 2-6, (2) cure any ambiguity or formal
defect or omission in this Resolution or in any supplemental resolution, (3) grant for the benefit
of the Bondholders any additional rights, remedies powers, authority or security that may
lawfully be granted to or conferred upon the Bondholders, (4) substitute or add additional
equipment, machinery or land or to release land or property in the manner specifically provided
herein or to more precisely identify any equipment or machinery forming a part of the Project and
generally described in Exhibit B and any other property, real or personal which may become a
part of the Project, (5) modify, eliminate and/or add to the provisions of this Resolution to such
extent as shall be necessary to prevent any interest on the Bonds from becoming taxable under
the Federal income tax laws or to allow the Bonds to be qualified under a different exemption
under Section 103 of the Internal Revenue Code, (6) make any other change determined by the
Authority necessary to reconcile the Resolution with the Lease or any amendment thereto or (7)
make any other change to the Resolution which in the reasonable judgment ofthe Authority is
not to the prejudice of any Holders of the Bonds who have not consented to the change.
9-2. Suoolemental and Amendatorv Resolution Reauiring Consent of Bondholders.
Exclusive of supplemental and amendatory resolutions covered by Section 9-1 hereof and subject
to the terms and provisions contained in this Section, and not otherwise, the Authority upon
receipt of an instrument evidencing the consent to the below-mentioned supplemental or
amendatory resolution by the Holders of not less than fifty-one percent (51 %) of the aggregate
principal amount of the Bonds outstanding, secured in accordance with the provisions of Sections
11-1 and 1-2, shall adopt such other resolution or resolutions supplemental or amendatory thereto
as shall be deemed necessary and desirable for the purpose of modifying, altering, amending,
adding to or rescinding, in any particular, any ofthe terms or provisions contained in this
Resolution or in any supplemental or amendatory resolution; provided, however, that nothing
herein contained shall permit or be construed as permitting (I) an extension ofthe maturity of any
Bond of a nonconsenting Holder thereof, or (2) a reduction in the principal amount of any Bond
of a nonconsenting Holder thereof, or (3) a privilege or priority of any Bond or Bonds over any
other Bond or Bonds of a nonconsenting Holder thereof, or (4) a reduction in the aggregate
principal amount of the Bonds required for consent to such supplemental or amendatory
resolution or (5) the subordination or release of the Authority's title to and security interest in the
Project except as otherwise permitted herein, without the consent of the Holders of one hundred
1231446.1
37
percent (100%) of the principal amount of the Bonds then outstanding (hereinafter "100%
Bondholder Consent") secured in accordance with Section 11-1.
Anything herein to the contrary notwithstanding, a supplemental or amendatory resolution
nnder this Article Nine which adversely affects the right of the Lessee under the Lease shall not
become effective unless and until the Lessee shall have consented in writing to the adoption and
delivery of such resolution, except supplemental or amendatory resolutions adopted after any
termination of the Lease. In this regard, the Authority shall cause notice of the proposed
adoption of any such supplemental or amendatory resolution, together with a copy of the
proposed amendatory resolution, to be mailed by certified or registered mail to the Lessee at least
fifteen (15) days prior to the proposed date of adoption and delivery of any such resolution. The
Lessee shall be deemed to have consented to the adoption and delivery of any such resolution if
the Authority does not receive a letter signed by a Representative of the Lessee of protest or
objection thereto on or before 4:30 o'clock P.M., Central Standard or Central Daylight time,
whichever is then in effect, of the fifteenth day after the mailing of the notice and a copy of the
proposed resolution to the Lessee unless such fifteenth day falls on a Business Day in which
event the letter of objection must be received on the next succeeding Business Day.
1231446.1
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ARTICLE TEN
AMENDMENT TO LEASE
10-1. Amendments Without Bondholder Consent. The Authority and the Lessee may
without the consent of or notice to any of the Bondholders consent to any amendment, change or
modification of the Lease or the Ground Lease;
(1) to facilitate, (i) the conveyance of an easement for access or utility services and the
subordination of the rights of the Lessee, and the Authority under the Lease or the Ground Lease
to such easement as provided in Section 6-2, (ii) the release of equipment and unimproved land
as provided in Sections 6-3 and 6-4, or (iii) the issuance of Additional Bonds without
Bondholders' consent as provided by Section 2-5 or duplicate Bonds as provided in Section 2-6;
(2) which may be required by the provisions of the Lease, the Ground Lease or this
Resolution;
(3) for the purpose of curing any ambiguity or formal defect or omission;
(4) in connection with any property or equipment acquired and which constitutes a part
of the Project, including the Project Equipment described in Exhibit B, so as to more precisely
identify the same or substitute or add additional equipment supplied pursuant to the Lease or the
Ground Lease;
(5) to reconcile the Lease or the Ground Lease with any supplement to the Resolution; or
(6) to effect any other change therein which in the reasonable judgment of the Authority
is not to the prejudice of any Holders of the Bonds.
10-2. Amendments Reouiring Bondholder Consent. Except for amendments, changes or
modifications as provided in Section 10-1 of this Resolution, neither the Authority nor the Lessee
shall consent to any other amendment, change or modification of the Lease or the Ground Lease
without publication of notice and _the written approval or consent of the Holders of not less than
fifty-one percent (51 %) in aggregate principal amount of the Bonds at the time outstanding given
and procured as provided in Sections 11-1 and 11-2. If at any time the Lessee shall request the
consent of the Authority to any such proposed amendment, change or modification of the Lease
or the Ground Lease, the Authority shall in the absence of 100% Bondholder Consent, upon
being satisfactorily indemnified with respect to expenses, cause notice of such proposed
amendment, change or modification to be published in the same manner as provided in Section
11-2.
1231446.1
39
ARTICLE ELEVEN
MISCELLANEOUS
11-1. Consent of Bondholders. Any consent, request, direction, approval, objection or
other instrument required by this Resolution to be signed and executed by the Bondholders may
be in any number of concurrent writings of similar tenor and must be signed or executed by such
Bondholders in person or by agent appointed in writing. Proof of the execution of any such
consent, request, direction, approval, objection or other instrument or of the writing appointing
any agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for
any of the purposes of this Resolution, and shall be conclusive in favor of the Authority with
regard to any action taken by it under such request or other instrument, namely:
(I) The fact and date of the execution by any person of any such writing may be proved
by the certificate of any officer in any jurisdiction who by law has power to take acknowledge-
ments within said jurisdictions that the person signing such writing acknowledged before him the
execution thereof, or by an affidavit of any witness to such execution.
(2) The fact ofthe holding by any person of Bonds and the amounts and numbers of such
Bonds, and the date of the holding of the same, shall be proved by reference to the Bond
Register.
11-2. Notice of Amendments. If at any time the Authority desires to adopt any
supplemental or amendatory resolution and/or amend the Lease as herein provided without 100%
Bondholder Consent, unless consent of and notice to the Bondholders is not required, the
Authority shall cause notice ofthe proposed resolution or amendment to be published at least
once in a financial periodical or newspaper of general circulation published in a Minnesota city
of the first class or its metropolitan area. Such notice shall briefly set forth the nature of the
proposed resolution or arnendment and shall state that copies thereof are on file at the principal
office of the Authority for inspection by all Bondholders. The Authority shall not, however, be
subject to any liability to any Bondholder by reason of its failure to publish such notice, and any
such failure shall not affect the validity of such resolution or amendment when consented to and
approved as herein provided. If the Holders of not less than fifty-one percent (51 %) in aggregate
principal amount of the Bonds Outstanding hereunder at the time of the adoption of such
resolution or amendment shall have consented to and approved the adoption thereof as herein
provided, no Holder of any Bond shall have any right to object to any of the terms and provisions
contained therein, or the operation thereof or in any manner to question the propriety of the
adoption thereof, or to enjoin or restrain the Authority or the Lessee from adopting or executing
the same or from taking any action pursuant to the provisions thereof.
11-3. Severabilitv. If any provision of this Resolution shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction
or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of
1231446.1
40
any constitution or statute or rule or public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to any extent whatever. The invalidity of anyone
or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the
remaining portions of this Resolution or any part thereof.
11-4. Authentication of Transcriot. The officers of the Authority are directed to furnish
to the attorneys approving the legality thereof, certified copies of this Resolution and all
documents referred to herein, and affidavits or certificates as to all other matters which are
reasonably necessary to evidence the validity and marketability of the Bonds. All such certified
copies, certificates and affidavits, including any heretofore furnished, shall constitute recitals of
the Authority as to the correctness of all statements contained therein.
11-5. Limitation ofLiabilitv. To the extent permitted by law, no provision, covenant nor
agreement contained in this Resolution shall give rise or impose upon the Lessee or the Authority
or any of its officers, employees or agents any pecuniary liability.
11-6. Registration of Bond Resolution The Executive Director/Secretary of the
Authority is authorized and directed to cause a copy of this Resolution to be filed with the
County Auditors of Hennepin and Carver Counties, and to obtain from the County Auditors
certificates that the Bonds have been duly entered upon the Auditor's Bond register.
11-7. AoorovalofLessee. The Lessee has examined and given approval of this
Resolution and all terms hereof and approves the sale of the Bonds as provided for herein for the
price and terms set forth herein.
11-8. Authorization to Execute Lease. Ground Lease and Incidental Documents. The
forms of the proposed Lease and Ground Lease between the Authority and Lessee are hereby
approved and the Chairperson and Executive Director/Secretary of the Authority are authorized
to execute the same, the official statement to be used by the Purchaser in marketing the Bonds,
and such other documents as Bond Counselor Independent Counsel consider appropriate for
Bond Closing, in the name of and on behalf of the Authority.
11-9. PaYment ofIssuance Exoenses. The Authority authorizes the Purchaser to forward
the amount of Bond proceeds allocable to the payment of issuance expenses to Resource Bank &
Trust Company, Minneapolis, Minnesota on the Bond Closing for further distribution as directed
by the Authority's financial advisor, Ehlers and Associates, Inc.
1231446.1
41
Adopted: December 4, 2000.
Attest:
Executive Director/Secretary
1231446.1
Chairperson
42
t.
EXHffiIT A
LEGAL DESCRIPTION OF REAL ESTATE
1231446.1
A-I
EXHffiIT B
PROJECT
The construction and equipping of an approximate 9,760 square foot municipal building.
1.231446.1
B-1
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