1j. Adjusting the Interest Rate for Fluoroware Ind Dev Bonds r
I ...La:
LAW OFFICES
IGRANNIS, GRANNIS, FARRELL & KNUTSON
DAVID L,GRANNIS- 1874-1961 PROFESSIONAL ASSOCIATION TELECOPIER:
DAVID L.GRANNIS,JR. - 1910-1980 POST OFFICE BOX 57 (612)455-2359
' VANCE B.GRANNIS 403 NORWEST BANK BUILDING DAVID L. HARMEYER
ELLIOTT B. KNETSCH
VANCE B. GRANNIS,JR, 161 NORTH CONCORD EXCHANGE MICHAEL J. MAYER
PATRICK A. FARRELL
DAVID L.GRANNIS,III SOUTH ST. PAUL, MINNESOTA 55075 TIMOTHY J. BERG
IROGER N. KNUTSON TELEPHONE(612)455-1661
June 24, 1988
I
Recatmlendation: This office would recommend
approval of the refinancing of the IRB note
I Mr. Don Ashworth for Fluoroware dated April 28, 1981.
Chanhassen City Hall
690 Coulter Drive, Box 147 DWA
IChanhassen, Minnesota 55317 7-1-88
RE: 1 ,200,000 Industrial Development Revenue Note
(Fluoroware, Inc. Project) dated April 28, 1981
IDear Don:
IAt your request I have reviewed the following documents:
- Resolution of the City Council
I - Amendment Agreement
- City Arbitrage Certificate
- Certificate of City Officials
- Company Certificate (Fluoroware, Inc. )
I - Bond Counsel Opinion
I approve the documents as to form with the exception of the
I Certificate as to Arbitrage, which I have asked Mr. McCouch to
redraft. I have not conducted an investigation to determine if
the facts represented in the documents are correct. You should
satisfy yourself that they are a . . -
II Ve y trul yours,
I GR4 ■ ,, S, GRANNIS - ' ' =
• , . SO .A.
I B .
Ro-er N. Knut
RNK:srn
Icc: Mr. Grayson M. McC• _
II
JUN 2 ` 1988
1 CITY OF CHANT-,AS S�v
,.,e`r, l.;`.--
DORSEY & WHITNEY
A PARTNERSHIP INCLUOINO PROPRSSIONAL CORPORATIONS
350 PARK AVENUE 2200 FIRST BANK PLACE EAST 1200 FIRST INTERSTATE CENTER
NEW YORE.NEW YORK 10022 MINNEAPOLIS, MINNESOTA 55402 401 NORTH 31"STREET
(212)415-9200 P.O.BOX 7188
I
(622)340-2600
3 GRACECHURCH STREET TELEX 29-0605 BILLINGS.MONTANA 59103
LONDON EC3V OAT,ENGLAND (406)252-3800
01-929-3334 TELECOPIER (612)340-2868
36,RUE TRONCHET 201 DAVIDSON BUILDING I
75009 PARIS,FRANCE
8 THIRD STREET NORTH
01-42-66-59-49 GREAT FALLS,MONTANA 59401
(406)7273632
340 FIRST NATIONAL BANK BUILDING GRAYSON McCOUCH
P 0.BOX 848 (612) 340-5635 127 EAST FRONT STREET I
ROCHESTER,MINNESOTA 55903 MISSOULA,MONTANA 59802
(507)288-3156
(406)721-6025
510 NORTH CENTRAL LIFE TOWER
445 MINNESOTA STREET 315 FIRST NATIONAL BANK BUILDING
ST.PAUL,MINNESOTA 55101 June 2 1, 1988 WAYZATA,MINNESOTA 55391
I
(612)227-8017 (612)475-0373
II
TO: DISTRIBUTION LIST
Re : City of Chanhassen, Minnesota I
$1, 200, 000 Industrial Development Revenue Note
(Fluoroware, Inc . Project) dated April 28, 1981
II
Gentlemen :
Enclosed please find drafts of the following documents I
in connection with the proposed adjustment of the interest rate
on the above-referenced Note:
Resolution of the City Council ,
Amendment Agreement
City Arbitrage Certificate
II
Certificate of City Officials
Company Certificate (Fluoroware, Inc . )
II
Bond Counsel Opinion
Please let me know of any comments or questions that you may have
I
concerning the proposed transaction. Subject to the approval
of the interested parties, the transaction can be scheduled to
close as soon as the City authorizes execution of the operative
II
documents .
Very truly ,yDo�uwrs, II
G a
i'
ys n M. McCouch I
GMM:dep
Enclosures _ - :;_
JUN 2 0 1988
CITY OF CHANHASSE'
.
1
1
CITY OF CHANHASSEN, MINNESOTA
11 $1, 200, 000 INDUSTRIAL DEVELOPMENT REVENUE NOTE
(FLUOROWARE, INC. PROJECT)
dated April 28, 1981
IDISTRIBUTION LIST
ICITY: Mr. Don Ashworth
City Manager
I City Hall
690 Coulter Drive 937-1900
Chanhassen, MN 55317
IBORROWER: Mr. John Villas
Fluoroware, Inc .
1 Jonathan Industrial Center 448-8192
Chaska, MN 55318
I BORROWER'S
COUNSEL: Jay Bennett, Esq.
Dunkley, Bennett & Christensen, P.A.
1 701 Fourth Avenue South 339-1290
Suite 1400
Minneapolis, MN 55415
LENDER: Mr. James Warner
Mortgage Loan Director
1 American Family Mutual
Insurance Co .
P.O. Box 7430 ( ) _
IMadison, WI 53783
1
I
1
I
1
•
1
' r r
e ..
II
STATE OF MINNESOTA) II
) Ss . CERTIFICATION
COUNTY OF CARVER ) I
II
II
I , Don Ashworth, duly appointed, qualified and acting
City Manager of the City of Chanhassen, Minnesota, do hereby
certify that I have compared the foregoing copy of a resolution
II
with the original minutes of the proceedings of the City
Council of the City of Chanhassen, Minnesota, at its session 1
held on the day of , 1988, and now on file in
my office, and have found the same to be a true and correct II
copy thereof .
II
Witness my hand and official seal at Chanhassen,
Minnesota, this day of , 1988 . I
II
II
II
II
II
II
II
1
II
IICITY OF CHANHASSEN
IICARVER AND HENNEPIN COUNTIES, MINNESOTA
RESOLUTION
I
Date: , 1988 Resolution No . 88-
IMotion of Councilmember Seconded by Councilmember
IRESOLUTION NO. 88-
RESOLUTION RELATING TO A $1, 200 , 000 INDUSTRIAL
I DEVELOPMENT REVENUE NOTE; AUTHORIZING AN
AMENDMENT TO THE TERMS THEREOF
I BE IT RESOLVED by the City Council of the City of
Chanhassen, Minnesota (the City) , as follows :
Section 1 . Recitals .
I1 . 01 . Pursuant to Resolution No . 81-10 of the City
Council , adopted April 20, 1981 (the Note Resolution) , the City
I has heretofore issued and sold its Industrial Development
Revenue Note (Fluoroware, Inc . Project) , originally dated as of
April 28, 1981, in the principal amount of $1, 200 , 000 (the
II Note) , to finance the acquisition, construction and equipping
of an office and warehouse building located in the Chanhassen
Lakes Business Park in the City and owned by Fluoroware, Inc . ,
a Minnesota corporation (the Borrower) for its manufacturing
Ioperations, and certain necessary expenses incidental thereto .
1. 02 . The Note is secured by payments to be made by
I the Borrower pursuant to a Loan Agreement, dated as of
April 28 , 1981 (the Loan Agreement) , between the City and the
Borrower; by a Mortgage and Security Agreement, dated April 28 ,
1981 (the Mortgage) , from the Borrower, as mortgagor, to
IAmerican Family Mutual Insurance Company, a Wisconsin
corporation (the Lender) , as mortgagee; by an Assignment of
Rents and Leases , dated as of April 28 , 1981 (the Assignment of
I Rents) , from the Borrower to the Lender; and by a Guaranty and
Indemnification Agreement, dated April 28 , 1981 ( the Guaranty) ,
between the Borrower and the Lender .
I1. 03 . The City has heretofore assigned its entire
interest in the Loan Agreement and the revenues therefrom
(other than its rights to payment or reimbursement of certain
Ifees and expenses and to indemnity under Sections 2 . 2 , 2 . 4 and
I
I
1
5 . 5 thereof) to the Lender , by a Pledge Agreement , dated as of
April 28 , 1981 .
1 . 04 . The Lender (being the sole owner of the Note)
and the Borrower have requested that the City authorize the
execution and delivery of an agreement amending the terms of
the Note (the Amendment) , substantially in the form of Exhibit
A attached hereto .
Section 2 . Authorization of Amendment . ,
2 . 01 . The City hereby authorizes and directs the
Mayor and the City Manager to execute and deliver on behalf of
the City the Amendment, substantially in the form of Exhibit A
attached hereto, with such modifications as they may deem
appropriate. The Mayor and the City Manager are hereby further
authorized to execute such other certificates and affidavits as
may be required by bond counsel and approved by the City
Attorney to show the facts relating to the legality of the
modification of the Note. '
2 . 02 . Upon surrender of the original Note for
transfer or exchange after execution and delivery of the
Amendment as provided in Section 2 . 01, the form of the Note may
be amended in the manner and to the extent necessary or
appropriate to reflect the provisions of the Amendment .
2 . 03 . Except to the extent expressly modified by the
Amendment , the terms and provisions of the Note, the Note
Resolution and the Loan Agreement are hereby confirmed.
2 . 04 . The City hereby elects to have the provisions
of Section 144 (a) (4) of the Internal Revenue Code of 1986 , as
amended, and the provisions of Section 103 (b) ( 6) (D) of the
Internal Revenue Code of 1954 , as amended, apply to the Note as
amended, to the extent necessary to preserve the exclusion from
gross income of interest on the Note for federal income tax
purposes .
-2-
II
IPassed and adopted by the City Council of the City of
Chanhassen this day of , 1988 .
I
I Mayor
Attest :
City Manager
I (SEAL)
I Yes No
I
II
II
I
II
II
II
I
II
II
I
-3-
II
II
EXHIBIT A I
AMENDMENT
I
THIS AMENDMENT, made and entered into as of II, 1988, between the City of Chanhassen, Minnesota
(the City) , American Family Mutual Insurance Company, a
Wisconsin corporation (the Lender) , and Fluoroware, Inc . , a
Minnesota corporation (the Borrower) ;
I
WITNESSETH:
WHEREAS, the Lender is currently the holder of an I
Industrial Development Revenue Note (Fluoroware, Inc . Project) ,
originally dated as of April 28, 1981, and issued by the City II in the original principal amount of $1 , 200, 000 (the Note) , to
finance the acquisition, construction and equipping of an
office and warehouse building located in the City and owned by
the Borrower for its manufacturing operations, and certain
II
necessary expenses incidental thereto; and
WHEREAS, the Note is secured by certain payments to be
II
made by the Borrower pursuant to a Loan Agreement, dated as of
April 28, 1981 (the Loan Agreement) , between the City and the
Borrower; by a Mortgage and Security Agreement , dated April 28 , II 1981 (the Mortgage) , from the Borrower , as mortgagor, to the
Lender, as mortgagee; by an Assignment of Rents and Leases ,
dated as of April 28 , 1981 (the Assignment of Rents) from the
Borrower to the Lender; and by a Guaranty and Indemnification II Agreement, dated April 28 , 1981 (the Guaranty) , between the
Borrower and the Lender; and
WHEREAS, the City has heretofore assigned its entire I
interest in the Loan Agreement (other than its right to payment
or reimbursement of certain fees and expenses and to indemnity II under Sections 2 . 2 , 2 . 4 and 5 . 5 thereof) to the Lender, by a
Pledge Agreement, dated as of April 28 , 1981; and
WHEREAS, the L -ider is currently the sole owner of the II Note; and
WHEREAS, at the request of the Borrower and the I
Lender, the City, by Resolution No . 88- , adopted
, 1988, has authorized the execution and delivery of
this Amendment ;
NOW, THEREFORE, in consideration of the premises and I
the mutual covenants and agreements herein contained and other
valuable consideration, the undersigned parties do hereby agree I
as follows :
A-1
II
1
II
III1 . The rate of interest borne by the Note, from and
after , 1988 to maturity on May 1, 1996 (or earlier
I prepayment as provided in the Note) , shall be equal to eight
and one-half percent (8 . 50%) per annum, notwithstanding
anything to the contrary in the Note as originally issued, the
I Loan Agreement or any other agreement, resolution or instrument
heretofore executed or entered into in connection with the
Note. By executing this Amendment, each of the undersigned
parties signifies its express consent to the adjustment of the
Irate of interest borne by the Note as provided herein and
acknowledges that such adjusted interest rate (as reflected in
the schedule of interest and principal payments attached
I hereto) shall be binding on each of them and their respective
successors and assigns .
I 2 . The Borrower hereby further acknowledges and
agrees that it will, from and after the execution of this
Amendment, remain fully obligated under the Guaranty to the
same extent as before the execution hereof, namely, as
I guarantor for the full and prompt payment of all sums due under
the Note (as amended by this Amendment) , including the
principal thereof , premium, if any, and interest thereon, and
Iof all other amounts payable by the City under the Resolution.
IN WITNESS WHEREOF, the undersigned parties have
Iexecuted this Amendment as of the date first above written.
CITY OF CHANHASSEN, MINNESOTA
I
By
I Mayor
I And
City Manager
I AMERICAN FAMILY MUTUAL INSURANCE
COMPANY
I By
Its
I And
Its
II
I
A-2
1
FLUOROWARE, INC. '
By ,
Its President
And '
Its Executive Vice President/
Secretary
1
1
A-3
1
II
ICERTIFICATE AS TO ARBITRAGE
I The undersigned officer of the City of Chanhassen,
Minnesota (the City) , hereby certifies as follows :
I 1 . The City has heretofore issued its $1, 200 , 000
Industrial Development Revenue Note (Fluoroware, Inc . Project) ,
dated, as originally issued, as of April 28 , 1981 (the Note) ,
finance the acquisition, construction and equipping of an
Ito
office and warehouse building in the City on behalf of
Fluoroware, Inc . , a Minnesota corporation (the Borrower) .
Effective as of , 1988, the City has modified certain
I terms of the Note pursuant to an Amendment, dated as of
, 1988 , between the City, the Borrower and American
Family Mutual Insurance Company. The Note, as modified, is
Ireferred to as the Amended Note.
2 . Based upon representations of the Borrower, all
proceeds of the Note have been expended as of the date hereof .
I All proceeds of the Amended Note are deemed to have been
expended as of the date hereof to refund the Note.
I 3 . No proceeds of the Note or the Amended Note have
been used to establish a reserve fund to secure the Amended
Note. No other funds of the City or the Borrower have been so
used or otherwise pledged to secure the Amended Note.
I4 . All issuance costs relating to the Amended Note
have been or will be paid by the Borrower . No proceeds of the
I Note or the Amended Note have been used, directly or
indirectly, to pay such costs .
I 5 . The Borrower will make payments directly to the
owner of the Amended Note to repay the principal of , premium,
if any, and interest on the Amended Note. No bond fund or
sinking fund has been established by the City to receive such
I
payments, even for a temporary period .
6 . The City and the Borrower have jointly covenanted
I to comply with the provisions of Section 148 ( relating to
arbitrage restrictions and rebate requirements) of the Internal
Revenue Code of 1986 , as amended, and applicable Treasury
IRegulations, to the extent applicable to the Amended Note .
7 . Based upon the foregoing, it is not expected that
the Amended Note will be an "arbitrage bond" as defined in said
I Section 148 and applicable Treasury Regulations , and the
foregoing expectations are reasonable .
IDated: , 1988 .
ICITY OF CHANHASSEN, MINNESOTA
By
IIIts City Manager
•
$1, 200, 000 '
Industrial Development Revenue Note
(Fluoroware, Inc . Project)
City of Chanhassen, Minnesota
CERTIFICATE OF CITY OFFICIALS ,
We, Tom Hamilton and Don Ashworth, do hereby certify
and declare that we are the Mayor and City Manager,
respectively, duly qualified and acting as such, as of the date
hereof, of the City of Chanhassen, Minnesota (the City) , and,
to the best of our knowledge, that :
1 . At a meeting of the City Council held
1988 , a form of the Amendment , dated as of , 1988
(the Amendment) , between the City, American Family Mutual
Insurance Company, and Fluoroware, Inc . (the Borrower) , was
submitted to and approved by the City Council . A final form of
the Amendment has been reviewed and approved by the City and
the Amendment has been executed on behalf of the City by the
signatures of the Mayor and City Manager .
2 . No litigation or other governmental proceedings ,
are threatened or pending questioning the organization or
boundaries of the City or the right of any of us to our
respective offices , or in any manner questioning our right and
power to execute and deliver the Amendment, or the validity of
the Amendment .
3 . Attached hereto and identified as Exhibit A is a
true and complete copy of an extract of minutes of a meeting of
the City Council containing a resolution adopted and other
actions taken at a meeting duly called and held on
1988 , and at which meeting a quorum was present and acting
throughout and said resolution and action remains in full force
and effect on the date hereof in the form in which adopted or '
taken .
IN WITNESS WHEREOF, we have hereunto set our hands and
affixed the seal of the City this day of , 1988 .
Mayor '
(SEAL)
City Manager
1
II
IFLUOROWARE, INC.
ICOMPANY CERTIFICATE
I The undersigned, being the President and the Executive
Vice President/Secretary, respectively, of Fluoroware, Inc . , a
Minnesota corporation (the Borrower) , do hereby certify and
declare as follows :
I1 . The Borrower is a corporation duly organized,
validly existing and qualified to do business under the laws of
I the State of Minnesota and has full power and authority to
conduct the business in which it is now engaged.
I 2 . The Amendment , dated as of , 1988 (the
Amendment) , between the City of Chanhassen, Minnesota (the
City) , American Family Mutual Insurance Company and the
Borrower, has been duly authorized, executed, acknowledged and
I delivered on behalf of the Borrower by its President and its
Executive Vice President/Secretary.
I 3 . There are no actions , suits or proceedings pending
or to the knowledge of the Borrower threatened against or
affecting the Borrower at law or in equity or before any
I federal , state or local government authority or agency which,
if adversely determined, would result in any material adverse
change in the business, properties , assets or financial
condition of the Borrower .
I4 . The execution and delivery by the Borrower of the
Amendment, and compliance by the Borrower with the provisions
I thereof, will not result in a breach of any of the terms,
conditions or provisions of or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Borrower
I pursuant to any indenture, loan agreement or other instrument
to which the Borrower is a party or by which the Borrower may
be bound, nor will such action result in any violation of the
I provisions of the articles of incorporation or bylaws of the
Borrower .
I 5 . Attached hereto as Exhibit A is a true and correct
listing of the project costs paid from the proceeds of the
City' s $1, 200 , 000 Industrial Development Revenue Note
(Fluoroware, Inc. Project) , dated, as originally issued, as of
I April 28 , 1981 (the Note) . The Note, as amended by the
Amendment, is referred to as the Amended Note. With respect to
the proceeds of the Note:
I
I
a) no proceeds were expended for land acquisition,
for the acquisition of existing property, or to provide
residential real property for family units ;
b) no more than 25% of the net proceeds were expended
to provide a facility the primary purpose of which is
retail food and beverage services , automobile sales or
service, or the provision of recreation or entertainment ;
c) no proceeds were expended to provide facilities
for a golf course, country club, massage parlor, tennis
club, skating facility, racquet sports facility, hot tub
facility, suntan facility, racetrack, airplane, skybox,
health club facility, gambling facility, or facility for
the sale of alcoholic beverages for consumption off
premises ; and
d) at least 95% of the net proceeds were expended for
the acquisition, construction, reconstruction or
improvement of land or property of a character subject to
the allowance for depreciation.
6 . The facility financed by the Note has an estimated
remaining useful life of not less than 10 years .
7 . As of , 1988, the outstanding principal
balance of the Note is $ , and from and after '
, 1988 , the Borrower will make loan repayments
pursuant to Section 2 . 1 of the Loan Agreement referred to in
the Note and the amortization schedule attached to the
Amendment .
8 . There are no obligations issued prior to the date
of the Amendment, (i) the interest on which is excludable from
gross income for federal income tax purposes under
Section 103 (b) (6) of the Internal Revenue Code of 1954 , as
amended, or Section 144 (a) of the Internal Revenue Code of '
1986 , as amended, and (ii) the proceeds of which have been used
or are to be used with respect to a single building, an
enclosed shopping mall or a strip of offices , stores or
warehouses using substantial common facilities with the
property financed from proceeds of the Note.
9 . The Borrower has reviewed the Certificate as to
Arbitrage, dated , 1988, of the City in connection
with the execution and delivery of the Amendment , and hereby
confirms and represents that the statements therein contained
are true and correct .
-2-
10 . The Borrower will comply with the provisions of
Section 148 of the Internal Revenue Code of 1986 , as amended,
' and applicable Treasury Regulations relating to the restriction
of yield with respect to proceeds of the Amended Note and
payment of arbitrage profits to the United States . However, it
is not expected that any such payment will be required since
all proceeds of the Note have been expended as of the date
hereof , no reserve or similar fund has been established for the
security of the Amended Note and monthly payments of principal
' and interest on the Amended Note are made directly to the owner
thereof when due .
Dated: , 1988 .
FLUOROWARE, INC.
By
Its President
' And
Its Executive Vice President/
Secretary
1
1
-3-
, 1988 '
American Family Mutual Insurance Company
Box 7430
Madison, Wisconsin 53783
Re: City of Chanhassen, Minnesota
$1, 200, 000 Industrial Development Revenue Note •
(Fluoroware, Inc. Project)
Gentlemen:
You have requested that we render an opinion with
respect to the tax-exempt status of the above referenced Note,
originally dated as of April 28, 1981, in connection with the
modification of the terms of the Note and related documents as
set forth in that certain Amendment, dated as of
1988 (the "Amendment") , between the City of Chanhassen,
Minnesota (the "City" ) , American Family Mutual Insurance
Company, a Wisconsin corporation, and Fluoroware, Inc . , a
Minnesota corporation (the "Borrower" ) .
In connection with the modification of the Note, we
have examined certain proceedings , affidavits and certificates
furnished to us by the City and others as the basis for this
opinion, including, without limitation, the following :
(i) the Amendment ;
(ii) a resolution of the City Council of the City
adopted on , 1988 ; and
( iii) such other documents as we have deemed relevant
for purposes of this opinion, including a
Company Certificate of even date herewith,
executed by the President and the Executive
Vice President/Secretary, respectively, of the
Borrower .
As to questions of fact material to our opinion, we
have assumed the authenticity of and relied upon the
proceedings , affidavits and certificates furnished to us
without undertaking to verify the same by independent
1
1
T .
I
I
American Family Mutual Insurance Company
III , 1988
Page 2
Iinvestigation. From our examination of such proceedings ,
affidavits and certificates and on the basis of existing law,
it is our opinion that the modification of the Note and related
I security documents as provided in the Amendment will not cause
the interest on the Note to become includable in gross income
for federal income tax purposes or in taxable net income of
I individuals, trusts or estates for Minnesota income tax
purposes . It is further our opinion that the Note and the Loan
Agreement, as defined in and modified by the Amendment, are
I valid instruments legally binding on the City and legally
enforceable in accordance with their terms, except to the
extent enforceability thereof may be limited by principles of
equity and by bankruptcy, moratorium, reorganization or other
I laws relating to or affecting enforcement of creditors '
rights . Minnesota Statutes , Section 290 . 371, subd. 5 , provides
that any corporation required to file a Notice of Business
I Activities Report does not have a cause of action upon which it
may bring suit under Minnesota law unless the corporation has
filed a Notice of Business Activities Report and that the use
I of the courts of the State of Minnesota for all contracts
executed and all causes of actions that arose before the end of
any period for which a corporation failed to file a required
report is precluded. Insofar as this opinion may relate to the
I enforceability of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to
enforce the agreement has at all times been, and will continue
I at all times to be, exempt from the requirement of filing a
Notice of Business Activities Report or, if not exempt, has
duly filed, and will continue to duly file, all Notice of
Business Activities Reports .
INoncompliance by the City or the Borrower following
the modification of the Note with their respective covenants in
I the Note and the Loan Agreement , as modified by the Amendment ,
relating to certain continuing requirements of the Internal
Revenue Code of 1986 , as amended (the "Code" ) may result in
I inclusion of interest on the Note in gross income for federal
income tax purposes and in taxable net income for Minnesota
income tax purposes .
I Interest on the Note, as modified, is not an item of
tax preference includable in alternative minimum taxable income
for purposes of the federal alternative minimum tax applicable
Ito all taxpayers or the Minnesota alternative minimum tax
I
S
II
I
American Family Mutual Insurance Company
1988 II Page 3
applicable to individuals, estates and trusts , but such
I
interest is includable in book income or in earnings and
profits of corporations in determining alternative minimum
taxable income for purposes of the federal alternative minimum
I
tax imposed on corporations .
The Note, as modified, has not been designated, and is
II
not eligible for designation, as a "qualified tax-exempt
obligation" within the meaning of Section 265 (b) (3) of the
Code . In the case of an insurance company subject to the tax II imposed by Section 831 of the Code, the amount which would
otherwise be taken into account as losses incurred under
Section 832 (b) (5) of the Code must be reduced by an amount
equal to 15% of the interest to be paid on the Note, as
I
modified, that is received or accrued during the taxable year .
Ownership of tax-exempt obligations may result in II collateral federal income tax consequences to certain
taxpayers, including, without limitation, financial
institutions , insurance companies , foreign corporations ,
foreign insurance companies , certain S corporations , individual
II
recipients of social security or railroad retirement benefits
and taxpayers who may be deemed to have incurred or continued
indebtedness to purchase or carry tax-exempt obligations .
II
Prospective purchasers of the Note, as modified, or an interest
therein, should consult their tax advisors as to the
applicability and impact of any collateral consequences . II Except as stated in this opinion, we express no opinion
regarding federal , state or other tax consequences to the owner
of the Note, as modified.
We have not been asked and have not undertaken to II
review ( i) the accuracy, completeness or sufficiency of any
offering materials relating to the Note, as modified, or I
(ii ) matters relating to title to any real or personal property
referred to in the Amendment , and, accordingly, we express no
opinion with respect thereto .
II
Very truly yours ,
I
II
II
II