HomeMy WebLinkAbout7A Request from Presbyterian Homes for Conduit Financing�
EN HILLS
Request for Council Action
_ _ _ _ _ .. _..... _..... _ _ __ -- -_ ____ _
Preparecf By: S�e i�erson Cauncil Meeting Dafe: August 25, 20U8
Request from Presbyterian Homes for Cond�ai# Finar�cing
Budgeted Amo�nt: Rct�al Art�ount: Funding Source:
N!A NIA
Recornmendatio�:
A motion to ado�� Reso[ution 2008-0�2, a Reso6ution appro�Eng the issuance and sale
af a Corr�mereial Faciiities Rever��te Note, Series 2008 and authorizing the execution o�
documents relating thereto {PHM&S Building Project}.
__ _ _ .. _ ... . _ . ___ __ -- ---
Suppo�#ing Documents:
9. Memorar�dum from Sue lverson to City C€�uncil, August 21, 2008
2. Resolution 2008-Q42
3. Loan Agreement
4. Form of note
5. Pledge Agreement
6. DEED application materials
�
�.�N HYLLS
nfrEMORa1vDUM
DATE: August 21, 2Q08
TO: Honarable Mayor and City Council
Ron Moorse, City Administrator
FROM: Sue Iverson, Finance Director ��1�`
SUBJECT: Requesi from Presbyter�an Homes for Conduii Financing
Background:
MHC has been engaged by PHM&S Office Building LLC (single me�nber LLC of Presbyterian Hozz�es
Management and Service, Inc.) to arrange a tax-exempt financing of its scheduled office expansion main
office building and a refinancing of its outstanding mortgage.
At ihe July 14, 2008 work session, Steve Fenlon, MHC, presented the proposal to the City Council. The
Council directed staff to negotiate the tei-ms for the fee paid to the City of Arden Hills for the use of its
bank qualification. On July 28, 2008, the City Council agreed to act as Issuer for Presbyterian Homes for
an issuer's fee equal '/2 of 1.00% of the par amount of the Series 2008 note plus all costs incurred by the
City for the issuance of the note.
Discussion:
Attached to this memo are t�e loan agreement, forrm of note, pledge agreement, resolution, and DEED
ap�lication to complete this transaction. A public hearing wi11 be held at the Council meeting as required
by Minnesota Stat�tes, Chapter 469.152 to 469.1651 and Section 147(� of the Internal Revenue Code of
1986 as amended.
Staff Recommendation:
Staff recammends Council adopt Resolution 2008-042, a Resolution approving the issuance and sale of a
Cammercial Facilities Revenue Note, Se�ies 2008 and authorizing the execution of documents relating
thereto (PHM&S Building Project).
Extract of Minutes of a Meeting o� the
City Council of the City of Arden Hills, Minnesota
Pursuant �o due cal� ar�d notice thereo% a reguiar meeting oi the City Council of �e City
of Arden Hills was duly held in the City of Arden Hills, Minnesota, on Monday, August 25,
2008, at 7:00 o'clock P.M.
The following members were present:
and the following were absent:
During sai�. meeting introduced the iallowing resolution and moved its
adoptioxz:
RESOLUTIQN NO.
RESOLUTION APPROVING THE ISSUANCE AND SALE OF A
COMMERCIAL FACILITTE� REVENUE NOTE, SERIES 2008 AND
AUTHORTZING THE EXECUTION OF DOCUMENTS RELATING THERETO
{PHM&S BUILDING PROJECT)
The motion for the adaptian of the faregoing resolution was duly seconded by Member
, and after f�.ill discussion thereaf and upon vote being tal�en
thereon, the following voted in favor thereof:
and the follawing voied against the same:
whereupon said resolution was declared duly passed and adopted.
2210974v2
RESOLUTION APPROVING THE ISSUANCE AND SALE OF A
COMMERCIAL FACILITIES REVENUE NOTE, SERrES 2008
AUTHORIZING THE EXECUTION OF DOCUMENTS RELATING THERETO
(PHM&S BUTLDING PROJECT)
WHEREAS,
(a) The purpose of Minnesota Statutes, Chapter 469.152 to 469.1651 (the
"Act"), as four�d and deiermined by �ie legislature, is to promote the welfare of the state by the
active attraction and encouragement and development of ecanomically sound industry and
commerce to prevent so far as possible the emergence of blighted and marginai lands and areas
of chronic unemployment;
{b) Factors necessita�ing the active promotion and development of
econornically sound industry and commerce are the increasing concentration of popu�ation in the
metropolitan areas and the rapidly rising increase in the amount and cost of governmental
services xequired to meet the needs of the increased population and the need for development of
land use which will provide an adequate tax base to finance ihese increased costs and the need
for access ta emplayment opport�nities for such population,
(c) The Ciiy Council oi the City of Ard.en Hills, Miz�u�esota {the "City") has
received from Presbyterian Hames ManagerrFent and Services, Inc., a Minnesota nonprafit
carporation organized under the laws of the State o� Minnesota (the "Borrower"), a proposal that
the City assist in financing a Project hereinafter described ihrough ihe issuance of a revenue nate,
(as further defined below, the "Note") pursuant to the Act;
(d) The City desires to facilitate ihe selective development af the community,
retain and improve the tax base and help to provide the range of services and employxr�.ent
opportunities requzred by the population, includin.g housing and services for seniars; and ihe
Pxoject will assist the City in achieving those objectiv�s and will enhance the image and
reputation of the community;
(e) The Praject to be financed by the Nate is (i) ihe acquisition, const�-uciion
and equipping of an approximaiely 27,000 square foot addition to Xhe Borrower's corparate
headq�artexs located at 2845 Hamline Avenue North {the "Office Facilities") in Roseville,
Minnesata ("Roseville"), and (ii) refinancing the remaining outstanding debt the proceeds of
which were used �6y the Borrower to acquire ihe Office Facilities (the "P�oject"). The Projeci
wili be owned and operated by the Borrower;
(� The City has been advised by representatives of th� Borrower that
conventional, commercial financing to pay the capital cost of the Project is available only on a
iimiied basis and at such high costs af borrowing that the econornic feasibility of operating the
Project would be significantly reduced;
(g} Based on representations of the Borrower, no public official of the City
has either a direct ar indirect financial interest in the Project nor vvili any public official either
direcily or indirectly benef t f nancially from the Proj ect;
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{h) A public hearing on the Project was he�d August 25, 2008, after notice
was pubiished and materials made available for public inspection at the City Ha11, alI as required
by ihe Act and Section 147(fj of the Iniernal Revenue Code of 1986, as amended (the "Code"),
at which publxc hearing all those appearing who desired to speak were heard and w�ritien
comments were accepted; and
{i) A public hearing on the issuance of the Noie to finance the Proj ect was
heid on June 10, 2008 by Roseville, after notice was published, as required by the Code, a� which
public hearing al1 those appearing who desired to speak w�re heard and written comments were
accepted and on such date Roseville granted host approval as required under the Code for the
zssuance of the Note.
BE IT RESOLVED by the City Council oi ihe City of Arden Hills, Minneso�a
(the "City"), as follows:
SECTION l. LEGAL AUTHORIZAT�ON AND FINDINGS.
1.1 Findings. The City hereby finds, determines and declares as follows:
(a) The City is a body corporaie and politic and a political subdivision of the
State of Minnesota and is authorized under the Act to assist t�ie revenu� praducing project
hezein referred to, and to issue and sell the Note, as hereinafter defined, for the purpose,
in the mann.er and upon ihe tea-ms and conditions set forth in ihe Act and 'an this
Resolution.
(b) The issuance and sale of the Commercial FaciIities Revenue Note, Series
2008 (PHM&S Building Project) {the "Note"} by the City, pursuax�.t io the Act, is in the
best interest of the City, and the City hereby deterrnines to issue ihe Note and to sell the
Note to Universiiy Bank in St. Paul, Minnesota, or anoiher ba�k in Minnesoia (ihe
"Lender"), as provided herein. The City will loan the proceeds ai the Note (the "Laan")
to the Borrower in order to finance the Projeci.
(c) Pursuant to a Loan Agreement (the "Loan Agreement") to be eniered into
between the City and the Borrower, the Barrower has agreed to repay the Note in
specified amounts and at specified times suff cient to pay in full when due the principal
af, premium, if any, and interest on ti1� Note. Tn addition, ihe Loan Agreem�nt contains
pzovisions relating to the mainienance ax�d operation of the Project, indemnification,
insurance, and other agreements and covenants which are required or permitted by the
Act and vcjhich the Ciiy and the Borrower deem necessaxy or desirable far the financing
of the Project. A draft of the Loan Agreeznent has been submitted to the City Council.
(d) Pursuant to a Pledge Agreement (the "Pledge Agreement") to be eniered
into between the City and the Lender, the City has p�edged and granted a security inierest
in all af its rights, title, and interest in the Loan Agreement ta the Lendez (except foz
certain rights of indemnification and to reimbursement far certain costs and expenses). A
draft of the Pledge Agreeixzent has been submitted to the City Council.
22 z og�aVz 3
(e) Pursuant to a Mortgage, ,Securiiy Agreement and Fixture Financing
Statement {the "Mortgage") to be e�ecuied by the Bozxower in favor a� the Lender, the
Borrower has secured payment of amounts c�ue under the Loan Agreement and Nate by
granting to the Lender a mortgage and security interest in the property descr�bed therein.
A c�raft of tlxe Mortgage has been submitted �o the City Council.
{� The Note will be a special limited obligation ai the City. The No�e shall
not be payable from or charged upon any fiu�ds other than the revenues pledged io the
payment thezeof, nor shall the City be subject to any liability thereon. No holder of the
Noie shall ever have the rig�t to compel any exercise of the taxing power of the City to
pay the Note or the interest thereon, nor ta enforce payment thereof againsi any prop�rty
o�' the City. The Note shall not constitute a debt of the City within the xzleaning of any
constitutional or statutory limitation.
(g) On the basis of informatian available to the City it a}�pears, and ihe City
hereby fmds, that tt�e Project constit�tes praperties, real and p�rsonal, used or useful in
connection with one or more revenue producing enterprises within the rnea�ning of
Subdivision 2(b) of Section 469.153 of ihe Act; thai the Praject furthers the purposes
stated in Section 469.152; that the availability of the financing under the Act and
willingness of the Ciiy to furnish such financing will be a s�xbstantial induceznent to the
Borrower ta undertake the Pro�eci, and that the effect of the Project, if undertaken, will be
to assist in the preventian of the emergence af b�ighted and marginal land, to help prevent
chronic unemployment, ta help the surraunding area retain and er�entually imprave the
tax base, to provide the range of se�rvice and ernployment opportunities requirec� by the
population, to help prevent the movement of talented and educated persons out of the
state and to areas within the State where th�ir services may not be as effectively used, and
to promote rnoze intensive development and use of land vcrithin the City and surrounding
communities.
{h) It is desirable, feasible and consistent with the objects and purposes of the
Act io issue the Note, for th� purpose of financing ihe costs of the Project.
1,2 Authorization and Ratification of Pro'ect. The City hereby authorizes the
Borrower, in accordance with th� provisions of the Act and subject to the tern�s and conditions
irnposed by the Lender, to provide for the construction and equipping of the Project by such
means as shall be availabie to the Borrower and in the manner determined by the Borrorwex, and
without adv�rtisemeni far bids as rnay be requized far thE construction and acquisition of ather
municipal facilities; and the Czty hereby ratifies, affirms, and approves all actions hezetofore
taken by the Bo�rrower consisteni with and in anticipaiion ot' such author�ty.
SECTIO�T 2. THE NOTE.
2.1 Auihorized Amount and Form of Note. The Note issued pursuant to this
Resolution shall be in substantially the form submitted to the City Council with such appropriate
variations, omissions and insertians as are permitted or required by this Resolution, and in
accordance with the further provisians hereof; and the total aggxegate principal amo�.uat of the
Note �hat may be outstanding hereunder is �acpressly �imited to $5,500,0�0, unless a duplicate
2ziog�aVz q.
Note is issued pursuant to Section 2.7. The Note shall bear interest ai a variable rate as set forth
therein.
2.2 The Note. The Note sha�l be dated as of the date of delivery to the Lender, shall
be payable at the times and in the manner, shall bear interest at the rate, and shall be subject to
such other terms and conditions as are set %rth therein.
2.3 Execution. The Note shall be executed on behalf of the City by the signatures of
iis Mayor ax�d Administrator and shall be sealed with the seal of the City; provided that the seal
may be intentionally om'rtted as provided by law. In case any officer whose signature shall
appear on the Noie shall cease to be such officer before the delivery of the Note, such signature
shall nevertheless be valid and suff cient for all purposes, the same as if had remainec� in office
until delivery. In the event of the absence or disability of the Mayor or ihe Adrninistrator such
officers oF the City as, in the opinion of the City Attorney, �ay act in their behalf, shall without
fiuther act or authorization of the City Council execute and deliver the Note.
2.4 Delivery of T itial Note. Before delivery of the Note there shall be filed with the
Lender (except to the extent waived by the Lender) the following items:
{1} an executed copy of each of the following documenis:
(a) the Loan Agreement;
(b) the Piedge Agreement;
(c} the Mortgage;
(2) am opinion of Counsel for ihe Borrawer as prescribed by the Lender and
Bond Counsei;
(3) the apinion of Bond Counsel as to the validity and tax exernpt status of the
Note;
{4) a 501(c)(3) determinatian letter fro�n the Internal Revenue Service
evidencing that the Borrower is exe�npt from income ta�cation ut�der Section 501(c}(3) of
ihe Coae; and
(5) such other documents and opinions as Bond Counsel may reasonably
require for purposes of rendering its opinion required in subsection (3) above ar that the
Lender may reasonably require for the closing.
2.5 Disposition of Praceeds of the Nate. Upon delivery of the Note to the Lender, the
Lender shall, on behalf o� the City, disburse the proceeds of the Note for payment of Project
Costs in accordance witkx the terms of the Loan Agreement and a Disbursing Agreement arnong
the Lender, the Borrawer and a disbursing agent.
2.6 Regisiration of Trans#'er. The City will cause to be kept at the office of the City
Administrator a Note Register in which, subj ect to such reasonable regulations as it may
2zia9�a�2 5
prescribe, the City shall provide for the registration of transfers of ownership of tl�e Note. The
Note shall be initially registered in the name oi the Lender and shall be transferable upon the
Note Register by the Lender in person or by its agent duly authorized in writing, upon surrender
o£ the Note togefher wzth a written instniment of transfer sa�tisfactoxy to the City Administirator,
duly execut�d by tk�e Lender or its duly auihorized ag�nt. The following %rrn pf assignment
shall be sufficient for said purpose.
For value received k�ereby sells, assigns and transfers unto
�he wiihin Note of the City of Arden Hills, Minnesota, and
does hereby irrevocably constitute and appoint attorney to
t�ansfez said Note on the books of said City with full power o�' substitution in the
prenaises. The undersigned certifies that the transfer is made in accordance with
the provisions of Section 2.9 of the Resolution authorizing the issuance of the
Note.
Dateci:
Registered Owner
Upon such transfer the Adminisirator shall no�e the date of registration and ti�e name and address
of ihe new Lender in the applicable Note Register and in the registration b�ank appearing on the
Note.
2.7 Mutilaied Lost ar Destro ed Noie. In case the Note issued hereunder shail
become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to
be executed and delivered, a new Nate of like outstanding principal arnount, number ar�d ienor in
exchange and substitution for and upon canceliation of such mutilated Noie, or in Iieu of and in
substitutian far such Note destroyed or lost, upon the Lender's paying ihe reasonable expenses
and charges of the City in connection therewith, and in the case of a Note destrayed or lost, the
filing wiih the City of evidence satisfactazy to the City with indemnity satisfactory to it. If the
zr�utilated, destrayed or lost Note has aiready matured or been called for redemptian in
accordance witl� its terms it shall not be necessary to issue a new Note pz-�or to paym�nt.
2.8 Qwnership of Note. TI�e City may deem and treat the persan in whose name ihe
Note is last registered in the Note Register and by notatian on the Note whether or not such Note
shall be ovardue, as the absolute owz�er of such Nate for t�e purpose af receiving paymen.t af ar
on account oi the Pr�ncipal Balance, redemption price or inierest and for all other purpases
whatsoever, and the City shail not be affected by any notice to the contx-ary.
2.9 Liznitation on Note Transfers. The Note wiil be issued to an "accredited investar"
and without registration under sta#e or other securitzes laws, pursuant to an exemption for such
issuance; and accordingly the Note may not be assigned or transferred in whole or paz-t, nor may
a participation interest in the Note be given pursuant to any participation agreernent, except to
another "accredited investor' or "financial institution" in accordance with an applicable
exemption from such r�gistration requiremen�s and witli fixll and accurate disclosure of all
rt�ateria� facts to ihe prospective purchaser(s) or transferee(s).
221U974v2 6
2.10 Issuance of a New Nate. Subject to ihe provisions of Section 2.9, the City shall,
at the request and expense of the Lender, issue a new note, in aggr�gate outstanding principal
amount equal to that of the Note surrendered, and of like ienar e�cept as to number, p�.ncipal
amount, and the amount ot'tl�e semia.nnual installments payable thereunder, and registered in the
name of the Lender or such transferee as may be designated by the Lender.
SECTION 3. MISCELLANEOUS.
3.1 Severabilitv. If any pravision of this Resolution shali be held or deemed to be or
sha11, in fact, be inoperative or unent'orceable as appIied in any particular case in any jurisdiction
or jurisd�ctions or in all jurisdictions or in alI cases because it conflicts with any provisions of
any constit�xtion 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 oz- unenfarceable in
any other case ar circuznstance, or of rendering any other provision or provisions herein
containe� invalid, inaperaiive, ar unenfarceable to any extent whatever. The invalidity of any
one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not
affect the remaining portions of this Resolutian or any part thereof.
3.2 Authentication af„Transcrit�t. The officers of the City are directed to furnish to
Bond Counsel certified copies of this Resolution and all docurnents referred to herein, and
affidavits or certificates as to all other matters which axe reasonably necessary to evidence the
validity of the Noie. Al� s�ch certified capies, certificates an.d affidavits, ancluding any
heretoforc furnished, shall canstitute recitals af the City as to the correctness of all statements
coniained therein.
3.3 Author�zation io Execute Agreeznents. The forms of f1�e propose� Loan
Agreement and the Pledge Agreement are hereby approved in substantially the form heretofore
pxesented to the City Council, together with such additional details therein as zxzay be nEcessary
and appropriate and such modifications tY�ereo% deIetions therefrom and additions thereto as xnay
be necessary and appropriate and approved by Bond Counsel prior to the execution of the
docurnents. The Mayor and Administrator of the City are authorized to execute the Loan
Agreerneni and the Pledge Agreement and such otl�er documents as Bond Cotu�.se1 consider�
appropriaie in co�ectian with the issuance of the Note, in the name of and on behalf of the City.
�n. the event af the absence or disabi�ity of the Mayor ar the Administratar such officers of the
City as, in the opinion of the City Attorney, may aci on their behalf, shall wi#hout furthez act ar
authorizatian of the City Council do all things and execute aIl instruments and documents
required to be done or executed by such absent or disabled officers. The execution of any
insinunent by the appropriate off cer or off cers of the City herein authorized shall be conclusive
evidence of the approval of s�ch documents in accardance with the terms hereof.
3.4 A roval. �n anticipation of the approval of ihe Project by the State of
Minn�sota, Departrr�ent of Employment and Economic Development anc� all other necessary
entities and ihe issuance of the Note to finance all or a portion af the Project, and in order that
corripletion of the Project will not be unduly delayed when appraved, the Borrower is hereby
authorized to make such expenditures and advances toward payment of that partion of the costs
of'the Project to be financed frorn �he proceeds of the Note as the Borrawer cansiders nEcessary,
2210974v2 ']
including the use of interim, short term �nancing, subject to reimbursement from the proceeds of
the Note if and vcrhen delivered but otherwise without liability on the part of the Ciiy.
3.5 ualified Tax Exem t Qbli ation. In order to qualify tlie Note as a"qualified
ta�-exempt obligation" vv�thin the meaning of Section 265(b){3) of the Internal Revenue Code of
198b, as amended (the "Code"), the Ciiy hereby makes the following factual statements and
representations;
(a} the Note is not treated as a"private activiry bond" under Section 265{b)(3)
of the Code;
(b) the Cxty hereby designates the Note as a qualifi�d tax-exempt obligation
for purposes of Section 265(b}(3) of the Code;
(c) the reasonably aniicipated amount oi tax-exempt obligations {oiher ti�an
obligations described in clause (ii) of Seciion 265(l�)(3)(C) of the Code} which will be
issued by the City {and all entities whose obligations will be aggregated with those of the
City) during the calendar year 2008 will not e�ceed $10,000,000; and
(d) not more than $10,400,000 of obligations issued by the City during the
calendar year 2008 have been designated for purposes of Section 265(b)(3) of the Code.
3.6 Note A roval. The approval of the issuanca o�'the Note and the execuiion of the
related dact�ments are subject to the approval of the Project by ihe Depariment of Employment
and Economic Developrnent and sha�l be effective until December 31, 2008.
2210974v2 $
Adopted by the City Council of the Ciiy of Arden Hil�s, Minnesota, this 25th day of
Aug�ist, 2008.
Mayor
ATTEST:
City Admirustrator
z2 i o9�4�z
STATE OF MINNE�SQTA
COUNTY OF RAMSEY
THE CITY OF ARDEN HILLS
I, the undersigned, being the duly qua�ified and aciing Administrator of the City of Arden
Hills, DO HEREBY CERTIFY thai Y have cornpared the attached and foregoing extract of
minutes with ihe original thereof on file in my office, and that the same is a full, true and
co�nplete transcript af the minuies of a meeting of the City Cauncil duly called azld held on the
date th�rein indicated, insofar as such minuies relate to a resolution authorizing ihe issuance of a
revenue note.
WITNESS rny han.d this day of August, 2008.
City Administrator
2210974v2 1 4
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_ _ ..... . _ . . .. .... .
LOAN AGREEMENT
BETWEEN
ARDEN HILLS, MINNESOTA
. �
PRESBYTERTAN HQMES MANAGEMENT
AND SERV�CES, INC.
Dated as of Septernber , 2008
Except for certain reserved rights, the interest of the City af Arden Hills, Miruaesoia, in this Loan
Agreement has been pledged and assigned to University Bank, p�u-suant to a Pledg� Agreemeni
of even date herewith.
This instrument was drafted by:
BRIGGS �1ND MORGAN (JSB)
Professional Association
22Q0 First National Bank Building
Si. Paul, Minnesota 55101
2208&45v4
_ _
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, EXHIBITS AND RULES OF iNTERPRETATION............ I
�5ection 1.1 Definiiions .............................
............................................................... 1
Section 1.2 Rules of Interpretation ......................................................................... 3
ARTICLE II REPRESENTATIONS .................................................................................... 4
Section 2.1 Representations by the City ................................................................. 4
Seciion 2.2 Representations by the Borrower ......................................................... 5
ARTTCLEIII THE LOAN ....................................................................................:................. 8
Section 3.1 Amauni and Source of Loan....... ......................................................... $
Section 3.2 Documents Required Priar to Disbursement of the Loan .................... 8
Section 3.3 DisbursemEnt of the Loan .................................................................... 9
Section3.4 Repayment ........................................................................................... 9
Section 3.5 Borrower's Obiigations Unconditional............ .................................... 9
Section 3.6 City's Administrative Fee .................................................................... 9
A.RTTCLE IV BORROWER'S COVENANTS .................................................................... 10
�ection 4.1 indemnity ........................................................................................... 10
Seciion 4.2 Contin�ing Existence and Qualifica�ion ............................................ 10
Seciion 4.3 Reports to Governmental Agencies ................................................... 1 J
5ection 4.4 Security �or the Loan ......................................................................... 11
Section 4.5 Preservation of Tax Exemption ......................................................... 11
Section 4.6 Lease or Sale of Praject ..................................................................... 14
Section 4.7 Project Operation and Maintenat�ce Expenses ................................... 14
�ectian 4.8 Notif cation of Charzges ..................................................................... 15
Sectio�n 4.9 Financial Covenaz�ts ........................................................................... 15
Section4.10 Access ................................................................................................ Z S
Section 4.11 Access to Books and Inspection ........................................................ 15
ARTICLE V PREPAYMENT OF L4AN ........................................................................... 16
Section 5.1 Prepayrnent at Option of Borrower .................................................... 16
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ................................................ 17
Section 6.1 Ev�nts of Default ............................................................................... 17
Section6.2 Rernedies ............................................................................................ 18
Seciion b.3 Disposition of Fizt�ds .......................................................................... 19
Section �.4 Manner of Ex�rcise ............................................................................ 19
Section 6.5 Attorneys' Fees and Expenses ........................................................... 19
Section 6.6 Effect of Waiver ................................................................................. 19
ARTICLEVII GENERAL ..................................................................................................... 24
�ection 7.1 Noiices ............................................................................................... 20
Section 7.2 Binding Effeci .................................................................................... 20
Section7.3 Severability ........................................................................................ 20
Section 7.4 Amendments, Cha�ges and Modifications ........................................ 20
Section 7.S Exec�xtion Counterparts ...................................................................... 20
2208845v4
-1-
TABLE OF CONTENTS
{continued)
Page
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7.10
Seciian 7.11
Section 7.12
Sectian 7.13
Section 7.14
Limitatian of City's Liability ............................................................. 24
City's Attorneys Fees and Costs ........................................................ 21
Release............................................................................................... 21
Assignrnen� by City and Survivorship of Obligations ....................... 21
RequiredApprovals ........................................................................... 22
Termination Upon Retirement of Note .............................................. 22
Expenses of Lender ............................................................................ 22
Entire Agreement .. ........ ....... ...... . ...... . ...... ...... ...... . ...... ...... ...... . ........ .. 23
Further Ass�rances ............................................................................. 23
zaasaas�a -ii-
THIS LOAN AGREEMENT dated as of September �, 204$, between the CITY OF
ARDEN HILLS, MIl�INESOTA a Minnesota rnunicipal corporation and political subdivision of
the State of Minnesota {the "City"}, and PRESBYTERIAN HOMES MANAGEMENT AND
SERVICES, INC., a Minnesota nonprofii corporation {the "Barrower"),
WITNESSES that the City and the Borravver each in cansideration of the representaiions,
covenants and agreements af the other as set forth herein, mutually represent, covenani and agree
as follows:
ARTICLE I
DEFTNITIONS, EXHIBITS �iND RULES OF 1NTERPRETATION
Seciion 1,1 Definitions. In this Agr�ement the following terms have the following
respective meanings unless the context hereof clearly requires othenvise:
Act: Minnesota Statutes, Sections 469.152 to 469.1�51, as amended;
A�-eement: this Agreement between th� City and the Borrower as the same znay from
time to tiane be amended ar supplemenied as herein provided;
Bond Counsel: the firm of Briggs and Morgan, Professional Association, of Saint Paul
and Minneapolis, Minnesota, or any other nationally recogruzed bond counse�, and any apinion
of Bond Counsel shall he a written opinion signed by such Bond Counsel;
Borrower: Presbyterian Hornes Management and Services, Itic., its successors and
assigns, and any surviving, resulting or transferee business entity which may assume its
obligations in accordance wiih the provisions of this Agreement;
Citv: the Ciiy of Arden Hills, Minnesota, its �uccessors and asszgns;
Closin�: the date there is physical delivery of the Note �o the Lender and paymeni
�herefore;
Code: the Internal Revenue Code of 1986, as amended and tha temporary, final oz-
proposed regulations praxnulgated ihereunder;
Counsel: an attorney designated by or acceptable to the Lender, duly admit�ed to practice
law before the hig�est court of any state; an attorney for the Borrower or the City may be eligible
for appointment as Counsel;
Date of Taxabilitv: this term shall have the meaning ascribed to it in Section 4.5(4)
hereof;
Debt Service Co,y, era e Ratio: the ratio of (a) changes in unrestricted net assets plus
depreciation plus amortization plus other non-cash expenses plus interest expense less 25% of
capital expenditures and less I00% of the inczease or plus 100% of the decrease in accounts
220$$45v4
receivable for any Fiscal Year to (b) annual principal and interest due on th� Noie �n such Fiscal
Year;
Determinaiion of Taxabilii : this term shall have the meaning ascribed to it in Section
4.5(2) hereof;
Disbursing Ag�eement: the Disbursing Agxeemeni, dated as of the date hereof, among the
Borrower, Title and ihe Lender including any axnendment ihereof or supplement thereto;
Event of Default: any of the events described in Section 6, i hereof;
Host Ci�: the City of Roseville, Minnesata, a municipal corparation and political
subdivision ofthe State, iis successors and assigns;
�ssuance Ex enses: shall mean azly and a11 costs and expenses incurred by the City and
the Host City relating to the issuance, sale and delivery of the Noie, including, but noi limited to,
any fees of the Lender, all fees and expenses of legal counsel, financial consultants, feasibility
consultants and accountants, any fee to be paid to the City, the preparation and pr�nting of this
Loan Agreement, the Mortgage, the Resolution, the Pledge Agreement, the Noie and all otiler
relat�d documents, at�d all other expenses relating to the issuance, sale and deTivery of the Note
and any other costs which are treated as "issuance costs" within ihe meaning of Section 147(g) of
the Code;
Land: the real praperty and any ather easements and rights described in Exhibits A and B
to the Mortgage;
Lender: University Bank, its successors and assigns;
Loan: the loan ot' proceeds of the Note from the City ta the Bo�rrower described in
Section 3.1 of this Agreement;
Mart�a�e: the Mortgage, Security Agreement and Fixture Financing Statement dated as
o�September _, 2008, frorn ihe Borrower, as mortgagor, to the Lender, as mortgagee;
Note: ihe Senies 2008 Note to be issued by the City pursuant to the Resolution;
Pled e A eement: ihe Pledge Agreement o£ even date herewith between ihe City and
the Lender pledging ar�d assigning the City's interest in the Loan Agreement to the Lender to the
extent provided therein;
Principal Balance: so much of the principal sum on the Noie as from time to time and
remaians unpaid;
Projeci: the construction and equipping of an approxirriately 27,000 �quare foot addition
to the Borrower's corparate headq�arters locaied at 2845 Hamline Avenue North (the "Office
Facilities"} in the Host City;
2208845v4 2
Project Cosis: all direct costs authorized by the Act and paid or incurred by ihe
Borrower, to finance the Project;
Resoluiion: the Final Note Resolution of �the City, adopted August 25, 200$, auihor�zing
the issuance of the Note togeiher vcJith any supplement or amendment thereto;
Series 200$ Note: the Commercial Facilities Revenue Note, Series 2008 {PHM&S
Office Building Proj ect), to be issued by the City pursuant to the Resalution;
State: the State ot' Minnesota;
Tax Exezn t Or anization: either (i) a nonprofit corporation organized under the Iaws of
one of the states af the United States of America or the District of Columbia �hat i� an
organizatian described in Section 501(c){3) of the Code and exempt from Federal income iaxes
under Section 501(a) of the Code or any predec�ssor or successor provisions of siznilar import
heretofare or hereafter enacted or an organization that is otherwise treated as an organization
described in Section SOi (c){3} of the Code and �xernpt from Federal income ta�ces under Section
501(a) of ihe Code, (ii) a limited liability carnpaxiy whose sole member is an organization
described in clause {i), or (iii) a governmental unit within the xneaning of Seciion 103 of ihe
Code;
Title: First American Title Insurance Company;
Treasury Re ul�at'�ons: alI proposed, temporary ar pennanent federal income tax
regulations th�n in effeci and applicable;
Section 1.2 Rules of Inte retation.
(1) This Agreemeni shall be interpreted in accorc�ance with and gov�med by
the laws of the State oiMinnesota.
(2) The words "herein" and "hereofl' and words of similar import, without
reference io any particular section or subdivision, refer to this Agreement as a whole rather than
to any particular section or subdivision hereof.
(3) Re%rences herein to any particular section or subdivi�ion hereo� are to the
section ar subdivisian of thais instrument as originally executed.
(4} Where the Borrower is pennitted or required io do or accomplish atiy act
or thing hereunder, the City or the Lender znay cause the sazane to be c�one or accomplished wiih
the same force anc� effect as if done ar accomplished by the Borrower.
(5) The Table of Contents �nd titles of articles and sections herein are for
convenience only and are not a part af this Agreement.
(6) Unless the context hereaf clearly requires otherwise, the singular shall
include the plural and vice versa and the masculine shall include the fexninine and vzce versa.
2208845v4 3
{7) Articles, sections, subsections and clauses mentioned by number only are
those so numbered which are contained in this Agreement.
($) Re�erences to the Note as "tax exempt" or to the "ta.x exempi status of the
Note" are to the exclusion of interest on the Note from gross income pursuant to Section 1Q3(a)
of the Code.
2208845v4 [j.
ART�CLE II
REPRESENTATION,S
Sectian 2.1 Re�re�entations by the ,Citv. The City makes the fallowing
representations as the basis for its covenants herein:
(1} The City is a duly organized and existing rnunicipal coiporation and
political subdivision pursuant to the �ar�vs of the State of Minnesota and is authorized to issue the
Note to finance Project Costs pursuant to the Act;
{2) In authorizing the Project the City's purpos� is, and in its �udgment th.e
effect thereof will be, to promote the public welfare by: the attraction, encouragement and
development o:f economically sound industry and comrnerce so as to prevent, so far as possible,
th� emergence of blighted and marginal lands and areas of chronic unemployxnent and io aid in
the redevelopment of areas of existing blight, marginal land and persistent unemployment; the
developmen� of industry ta use the available re�ources of the cornmuni#y, in order to retain the
benefit of the community's existing investme�t in educational and public service facilities;
halting the movernent of talented, educated personnel of mature age to oiher areas and thus
preserving the econonaic and human resources needed as a base for providing governmental
services and facilitzes; providing accessible employmeni opportunities for residents in the area;
anc� the expansion of an adequate ta� base to finance the i�crease in the amount and cost of
gavernrnental services;
(3) The Projeci has been approved by the Comm;ssioner of ihe Departrnent of
Employment and Econornic Development of �the State of Minnesota, ar his/her duly delegated
designee, as tending to further the puiposes and policies of the Act;
{4) The issuance and sale of the Nate, t�e execution and delivery of this
Agreement and tk�e Pledge Agreement, and the performance of all covenants and agreements of
the City contained in this Agreement, the Note and the Pledge Agreement, and of all oih�r acts
and things required under ihe Consiitution and laws of the Staie of Minnesota to make this
Agxeement, ihe Pledge Agreemeni and Note valid and binding obligaiions af the City in
accordance vcrith �heir terms, are authorized by the Act and have been du�y authorized by a
resolution of the governing body of the City adopted at a meeting ihereof duly called and he�d on
August 25, 20Q8, by the a�'firtnative vote of not less tharz a majority of its members;
(5) Pursuant to the Resolution, the City has authorized and directed the
Lender ta disburse the proceeds o�' tt�e Note directly to the Borrower and such other parties as
may be entitled to payment or reimbursement for Project Costs, upon receipt of such supporting
documentation as the Lender may deem reasonably necessary or as required by this Agre�ment;
{6) Based on the r�presentations of t1�e Borrower, the City represents that no
public official of the City has either a direct or indirect finax�cial interest in this Agreement nar
will any p�blic official either directly or indirectly benefit financially frarn this Agreement.
220$845v4 5
(7) This Loan Agreement and the Note are issued by the City pursuaxzt to the
City's governrnental pxogram of acquiring purpase investments for qualified 501(c){3) projects.
The governmental program involves ihe origination or acquisition of purpose investments and (a)
at least 95 percent af the cost of the purpase invest�ments acquired �nder the program represents
one or more loans to 501(c)(3) arganizations, (b) at least 95 percent of the receipis from the
purpose inves�znents are used to pay principal, inierest or redemption prices on issues ihat
financed the program, to pay or reixnburse administrative costs af those issues or of the program,
to pay or reimburse anticipated future losses directly related to the program, to �inance additional
puzpose investments %r �he same general purposes of the program, or to redeem and retire
governmental obligations at the nexi earliest possible date of redemption, (c) ihe program
documents prohibit any obligar on a purpose invest�ieni financed by the program or any related
party to that obligoz from purchasing bands of an issue that finance the program i� an amount
related to the amount of the purpose investment acquired from thati obligor, and (d) th� City has
not waived the right to treat the investment as a program invesi�nent.
Section 2,2 Re�resentations by the Borrower. The Borrower rnakes the following
representations as the basis for its covenants herein:
{J.) The Borrow�r is a Mi�esota nonprofit corporatiox� duly incorparaied and
in gaod standing under the laws of the State of Minnesota, is duly authorized to conduct its
business in all staies where its activities require such authorization, has power to enter into this
Agreement, the Disbursing Agree�zent, and ihe Mortgage and to use the Project for the purpose
set forth in this Agreement and by proper corporate action has authorized the execution and
deiivery of this A�re�ment and the Mortgage;
(2) The Borrower is an organization described in Seciion 501(c}(3) of the
Code and is exempt from t� under Section 501(a) of the Code. The Borrower is not a"private
�oundation" as defined in Section 549(a) of the Code. Nat more than five percent (5%} of the
proceec�s of the Note will be used, directly or indirectly, to fmance or refinance property used in
an unrelated trade or business of th� Borrawer deterrnined by applying Section 513(a) oi the
Code or in the t�rade or business of any person oiher than an organization described in Section
501(c}(3) of the Code. There is no action, proceeding ar investigation pending or threatened by
the Internal Revenue Service or authoz�ties of the State of Minn.esota which, if adversely
determined, might resu�t in a modif cation of the status oi the Borrower as an organization
desc�bed in Section 501(c}(3) of the Code;
(3) The issuance and sale of the Note by the City and loan of the praceeds of
the Noteto ihe Borrower, has induced the Borrower to complete the Projeci within the Host Ciiy.
{4) The e�ecution and delivery of this Agreement and the Mortgage, the
consumrz�ation of the transactions contemplaied ihereby, and the fulfillment o#' the te�ns and
conditioz�s thereof do noi and will not conflict with or result in a breach of any of the terms or
condition.s of ihe Barrower's articles af incorporation, its bylaws, any r�striction or any
agreement or inst�unent to r�hich the Borrower is novc� a party or by which it is baund or to
which any property of the Boxxower is subject, and do nat and will not constitute a default ur�der
a,xa.y of the faregoing or a violation of any order, decree, statute, rule or regulation of any court ar
of any state ar federal regulatory body having jurisdiction over the Bo�ower or its properties,
zzossasva 6
including the Project, and do not and will not result in the creatian or irriposition of any lien,
charge or e�xcumbrance af any nature upon any of the property or assets of the Borrower conirary
to the �erms of any instrument or agreement to which the Borrower is a party or by which ii is
bound;
(5) As of the daie hereof, the use of the Proj ect as designed and ta be operaied
compli�s, in all material respects, wiih a11 presently applicable development, pai�ution control,
water conservation and oiher law�, regulat�ons, ru�es and ordinances of the �ederal governrnent
and the State of Minnesoia and the respective agencies thereof and the political subdi�risions in
vvhich the Project i� located, unless (a) the Borrower has received a permit or variance allowing
such non-campliance; (b) such no�-compliance exists priar to the ez�actment or adoption of such
law, ordinance rule or regulation, or (c) the same is being diligently contested by the Borrower in
good faiih and by proper proceedings. The Borrower has obtained, ar will obtain in a timely
manner, all necessary ar�d material approvals of and licenses, pernuts, cansents and franchises
from fec�eral, staie, county, nnunicipal or other governmental authorities having jurisdiction aver
the Project to operate the Project and to enter into, execute and perform its obligations undez- #his
Agreernent and the Mortgage; and no violation of arry local ordinance, laws, regulation or
requirement exists with respect to the Land;
(b) The praceeds of the Note, together with any other funds to be contributed
to the Projeci by the Borrower or atl�erwise in accordance with this Agreement, will be sufficient
to pay the cost of the Project in a manner suitable for use as a ot'fice facility, and aIl costs and
expenses incidentai thereto, and the proce�c�s of ihe Note will be used only far the purposes
contemplated hereby and allowable under the Act;
(7) Comparable private financing for the Project was not foun.d by the
Borrawer to be reasonably available, and the Paroject is econornically mare feasible wiih the
availability of the financing herein authorized;
{8} The Borrower is not in the t�ade or business of selling properties such as
the Project and is undertaking the �roject far investment pu�pases only or a#herwise for use by
the Borrower in its trade or business, and therefore ihe Barrower has no intention now or in the
foreseeable future to voluntarily sell, surrender or otherwise transfer, in whole or part, its interest
in the Project;
(9) There are no actions, suits, or proceedings pending or, to the knowledge of
the Borrower, threatened against ar affecting the Borrower or any property of the Barrower in
any court or befare any federal, siate, municipal or other governmental agency, which, if c�ecided
adversely to the Borrower would have a mater�al adverse effect upon the Borrower or upon the
business or properties of the Borrower; arad the Borrower is nat in default with respect to any
order of ar�y court or governrnental agency;
(10) The Borrower is not in default in the payment of ihe principai of or
interest on any indebtedness for borrowed money nor in default under any instrument or
agreement under and subject to which ar�y indebtedness for borrowed rnoney has been issued;
2208845v4 '%
(11} T�e Borrower has filed all federal and staie income tax ret�rris which, io
the knowledge of the officers of the Borrower, are zequired to be filed and has paid all taxes
shovcm on said returns and all assessments and goveznmental charges received by tlie Borrower to
th� extent that they have become due;
(12) To the knowledge of the Borrower, no public official of the City has either
a direct or indirect �inaa�cial interest in this Agreement nor will any public officzal either directly
or indirecily benefit financially from this Agreement;
(13) Tl�e Borrower has approved the terms and conditions of the Note;
(14} The Barrower intends to operate the Project as an office facility until �he
date on which the �ntire principal balance of the Note has been fiz1ly paid and is no longer
ouistanding;
{15) Each document executed by the Borrower in connection wiih the Loan
constitutes the Iegal, valid and binding obligation of the Borrawer, enforceab�e in accardance
with its terms {subject, as to enforceability, to limitations resulting from bankruptcy, insolvency
and other szmilar laws affecting cred'ztors' rights generally);
{16) The financial statements of ihe Borrower heretoiare furnished to the
Lender are compl�te and correct in al� maierial respects and fairly present the financial condition
of the Borrower at the date of such staierr�ent. Since the rnost recent set of financial statements
aelivered by the Borrower to the Lender, there have been no material adverse changes in the
fina�n.cial candition of the Borrower;
{17) No consent, approval, order or authorization of, or registration, declaration
ar filing with, or noiice to, any governmental authority or any third party is arequired in
connection with fihe executian and delivery of this Agreement, or any of the agreeanents or
instr�ments herein mentioned or related hereto �o which ihe Borrower is a party or the carrying
out ar performance of any of ihe transactions required or contemplated hereby or thereby or, if
requir�d, such consent, approval, arder or authorization has been {or, with respect to the filing of
the Form 8038 with the Internal Revenu� Service and the Notice of Issue with the Minnesota
Depariment of Employment and Economic Development and obtaining a building permit from
the Cxty) will be obtained or such registration, �eclaz-ation or filing has been ar will be
accornplished or such notice has been or will be giv�n;
(18) The Borrower has good title to the Lazld, free and clear of all mortgages,
liens and encutnbrances, except the Permitted Encumbrances (as described in the Mortgage).
When timely and praperly recorded, the Mortgage will constitute a valid and perfected frst
rnortgage lien on the Land; and
(19) After completion offhe Projeci, the Land will be in substan.tial compliance
with tl�e accessibility guidelines set forth in Title III o#' Th.e Americans with Disabilities Act of
1990, as the same may be amended from tirne io time, and any rules and regulations prorr�ulgated
ther�under (the "ADA").
zzassas�4 g
ARTICLE III
THE LOAN
Section 3. i Ar�ount and Source oi Loazi. The Ciiy has authorized the issuance of the
Series 2008 Note in the principal amount of $5,500,040 to provide funds to ihe Borrower for its
use in financing the Project. The Cfty agrees to lend the Borrower, upon the other terms and
conditions set forth hereiz�, the proceeds received from th� Nate by causing such sums to be
advanced to the Borrower and disbursed at Closing or pursuant to the Disbursing Agreement.
Forthwith upon the execution and delivery of this Agreement and all other doczunents and
insiruments necessary to the transactions conternplated hereby and the recording and filing of
such documents as �nay be required to be filed or recorded by the Lender or Bond Cour�sel, the
City �rill execute the Nate and cause it io be delivered to the Lender.
�ection 3.2 Doc�.unents Re uired Prior to Disbursement of the Loan. Prioz to any
advance o�tl�e proceeds, the Borrower shall deliver to the Lend�r the following:
{I} The Series 20�8 Note.
{2) The Loan Agreement.
(3) The Pledge Agreement.
(4) The Mortgage.
(5} The Disbursing Agreement.
(6) The items listed in Sections 2.1 and 2.2 af �e Disbursing Agxeement.
(7) An apinion of Counsel for the Borrower as prescribed by the Lender and
Band Counsel;
(8} An Opinion of Bond Counsel, to the effect that the City has dnly
auihorized the Note and thai the interest thereon is exernpt from federal income taxation and
subject ta other conditions acceptable ta #he Lender.
(9) A 501(c}(3) determination letter from the Tnterna� Revenue Service
evidencing that the Borrower is axernpt from income taxation under Section 501(c)(3} of the
Code and such other documen�s and opinions as Bond Counsel may reasonably require for
purposes of rendering its opinion required in subseciion (6) above.
{10) Such other assignrnents, security agreements, guaranties, financing
staterza.enis, indemnities, opinions, and othez- instrurnents evidencing or securing the Loan as �ay
be required by the Lender.
(11) Any certif cation, instrument, assignment or other ciocurnent referenced in
ar required by any of the foregoing.
2208845�4 9
Section 3.3 Disbursernent of the Loan. Pursuant io tl�e Resolution and the Act, the
City has authorized the Borrow�r to provide direct�y for the financing of the Pzoject in such
manner as determined by the Borrower and hereby authorizes the Lender to advance the
proceeds of the Note direciiy to the Borrower or such othez parties as may be entitled to payment
or reimbursenr�ent for Project Costs and Issuance Expenses, upon receipt of such supporting
docurnentation as the Lender xnay deem reasonably necessary or as required by this Agreemeni
and the Disbursing Agree�ent.
Section 3.4 Re�ayixieni. Subject to the prepayment provisions set forth in the Note,
the Borrower agrees to repay the Loan by mal�ing all payments of principal, interesi and any
premiurn, penalty or charge that are required to be made by the City under the Noie at the times
and in the amounts provided iherein. AIl payaments shall be made directly to the Lender at its
office for �he account of the City. The Bonrower represen�ts and covenanis tliat the source oi
payment of the Nate is from revenues der�ved from the operation of the Project and other
revenues of the Borrower obtained pursuant to its tax-exempt puipos�s.
Section 3.5 Borrower's 4bli ations Unconditzonal. All payments required af the
Borrow�r hereunder shall be paid without notice or demand and �ovitk�oui setoff, counterclaim,
abatemen�, deduction or de%nse. The Borrovver will not suspend ar discontinue any paymenis,
and vvill perform and observe all of its other agreements in this Agreement, and, except as
expressly pernlitted herein, will not ter�ninate this Agreerrient for aa�y cause, including but not
lirnited to any acts or circunn.stances that may constitute failure of consideration, destruction or
darnage to �he Project, eviction by paraxnount �itle, comrnercial fiustration of puipose,
baukruptcy ar insolvency of the Ci�y ar ihe Lender, change in the tax or other laws or
administra�ive rulings or actions of the United S�ates of America or of the State of Minnesoia or
any political subdivisian thereof, or failure of the City to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of ar cor�ecied with
this Agreement.
Section 3.6 City's Adminisirative Fe�. Qn the date of Closing, the Borrower shail pay
to the City ar� administrative fee of %z of 1% of the principal amount of the Note plus all costs
reasonably incurred by the City in conneciion with the issuance of the Note.
Zaoss�sva 10
ART�CLE N
BORROWER'S COVENANTS
Section 4.1 Indemnitv. The Borrower will, to the extent pern�.itted by law, pay, and
�ill proiect, inderra�ify ar�d save the City, its officers, agents and employees har�nless from and
against all liabilities, losses, dazxiages, costs, expenses (including atiorneys' fees aaid expenses),
causes of action, suits, claims, demanc�s and judgments of any nat�re arising fraxn the followir�g:
(�.) any injury #o or death of any person or damage to property in or npon the
Project or growing out of or connected with the use, non-use, condition or occupancy of �he
Project or a part thereof;
(2) violaiion of any agreement or condition o�` thi� Agreement, except by th�
City or its assignee;
(3) violation o� any contract, agreement or restric�ion by the Borrower relating
to the Proj ect;
(4) violation of any law, ordinance or regulation affecting the Project or a part
thereaf ar the ownership, occupaxicy or use thereaf, or arising out of this Agreement, the Note or
the t�-ansactians contemplated tkaereby, includrng any requirernents imposed on the Lender as a
financial institution ar any disclosure or regis�aiian requirements imposed by any federal ar
state securities law; and
(5) any statement ar information relating to fhe expenditure of the praceeds of
the Note coniained in the non-arbitrage certificate or similar documer�t furnished by the
Borrower ta the City vvhich, at ihe iirne made, is misleading, untrue or incozrect in any material
respect.
Section 4.2 Continuin Existence and ualification. Throughout the term of this
Agreernent the Borrower will remain duly quaiified to do business as a nonprofii corporatzon in
Miru�esota, and wi11 continue to operate as an organization described in Section 501{c){3} of the
Code whase income is exempi from taxation under Section 501(a) of the Code, and will maintain
its carporate existence, wil� not dissolve or other�wise dispose of all ar substantially all of its
assets, and will not consolidate with or merge into amoiher corporation or oiher business entity or
permit any other corparation or other business entiiy to consolidate with or rnerge into it unless
(1) the surviving, resulting or transferee corparation, ar other business entity, as the cas� rnay be,
�hal1 be a nonprofit corporation operating under the lavvs of the United Siates, any sta�e or the
District of Columbia, and an organization described in Section 501{c}(3) of the Code {provided
the Praject wili not constiiute an unrelated trade or business within t�e meaning of Section
513(a) o� the Code) ar a goverizmental unit under Section 145 of the Code; (2) the �urviving,
resulting or transferee corporation, or ather business entity, as the case may be, if other ihan the
Borrower, assumes in writing all of the obligations of tl�e Borrower under this Agreement and
ihe Mortgage and shalI deliver that instrument to the Lender, {3) the surviving, resulting or
transferee corporation or oiher business entity, as the case may be, is d�xly qualif ed to do
2208845v4 1 �
business in Minnesota and (4) the Bozrawer first obiains the writien consent of the Lender to
such merger, transfer or consolidatio�. At leasi 60 days before any proposed merger, transfer or
consolidation would become effective, the Borrower shall deliver io ihe Lender a wr�tten request
seeking the Lender's approval of such merger, transfer ar consolidation, and shall thereaftex
promptly furnish to the Lender such information pertaining to the proposed merger, tra.nsfer, or
consolidation as the Lender shall request. If the Lender approves the proposed merger, transfer
or consolidation, the surviving, resulting or �ransferee corporation and other entity referred to in
this Section 4.2 shall be bound by a11 of the covenants and agreements of the Borrower herein
with respect to any fiuther consolidation, merger, sale or transfer. The Lender's approvai under
this Section shall not be unreasonably withheld, delayed oz condiiioned.
Section 4.3 Re�orts to Govez�mental A e� ncies. The Borrower will furnish to
agencies of the Siate of Minnesota, such periodic reports ar statements as are required under the
Act, or as they rnay otherwise reasonabiy require ofthe City or the Borrower �roughout the terrn
of this Agreement in connection with the transaction contemplated herein. Copies of such
reports wili be provided io the City and the Lender.
Section 4.4 Seci iy for the Loan. As additional security for the Lender, ax�d to induce
the City to issue and deliver the Note, the Barrower agrees to execute and deliver (or cause to be
ex�cuted and delivered) the docume�ts described in Section 3.2 hereof and agrees to meet aIl its
obligations under such documents, which documents shall remain in effect until all payments
required hereunder have been made; and the Borrower will direct Bond Counsel or the Lender to
cause ta be recorded and filed the Mortgage and such oth�r documents requested by Bond
Counsel or the Lender, in such places and in such manner as Bond Counsel or the Lender deems
necessary or desirable ta perfect or pzotect the security interest of the Lender in and to the
Project and other collateral referred to in said documents. Except as otherwise provided in the
Mortgage, the Borrower will not further encumber the property pledged therein withoui the
Lender's consent which shall �ot be unreasonably vvithheld.
Section 4.5 Preservatfon of Tax,Exemption.
(1) The Borrower covenants and agr�es �liat, in order to assure that the interest
o� th� Note shali at all iimes be free from �ederal irccame taxatior�, the Borrower represents and
covenants with the City and the Lender that it will comp�y wiih the applicable provisions of
Section 103 and Seciion 141 through 150 of ihe Code and as follows:
{a} The Project is and will continue to be owned and operated by the
Borrower and no portion of the Project is managed by anyane oiher than the Borrower or
a Tax Exe�npt Organization or pursuant to a"c�ualif ed management agreement" within
ihe meaning af all pertinent provisions of Iaw, including all relevant provisions of the
Code and regulations, rulings and revenue procedures thereunder, including Revenue
Procedure 97-13.
(b) The Praject will not be used by the Borrower in an unrelated trade or
business, determined by the application af Section 513(a} of the Code except to an extent
wkuch does not adversely affect the tax-exempt status of the inierest an the Note.
zzassas�a 12
(c} Na more than five p�rcent (5%) of the net proceeds of the Note, less any
proceeds of �he Nate used for Issuance Expenses, are ta be used far any private business
use as defined in Section 141{b}(f) of ihe Code.
(d) The payment of the principal of, or interest on, no mare than five percent
{5%) of ihe net proceeds of the Note is {under ihe terms of ihe Note or aziy underlying
arrangement) directly or indirectly (a) secured by any interest in (i) property used ar to be
used for a private business use, or {ii} payments in respect of such property, ar(b) to be
derived from payrz�ents (whether oz- not to the City) in respect of property, or borrowed
xnoney, used or to be used for a private business use.
(e) The aggregate autk�orized face amount of the Note (when increased by any
outstanding tax-exempt "qualified 501(c)(3} bonds" issued prior to 1997, ather than
"qualified hospital bonds," of the Borronver, or any arganization with which the Borrower
is under cammon managexnent ar control and is a test-period beneficiary determined in
accordance with Section 145{b} oi the Code) does not exceed $ISO,Q00,400 or,
aliernatively, at least 95% of the net proceeds of the Nate will be used for capital
expenditures.
( fl The w�ighted average maturity of the Note will not e�ceed the estimated
economic life of the Project by more than iwenty percent (20%), all within ihe rneaning
oiSection 147(b} ofthe Code.
(g) While the Note remains autstanding, na portion of the proceeds of the
Note will be used ta provide any airpiane, skybox ar ather private luxury box, any facility
primarily used for gambling, or a store, the principal business of which is the sale of
a�coholic beverages for consumption off premises.
(h) Not rnore than 2% oi tl�e proceeds oi the Note will be used to finance
Issuaz�ce Expenses.
(i) The Borrower agrees it will not use the proceeds of the Note in such a
rnanne� as to cause the Note to be an "arbitrage bond" within the meaning of Section 148
of the Code and applicable Treasury Regulations. The Borrower shall:
(i) maintain recards identifying alI "gross proceeds" and "replacement
proceeds" {as defined in Section 148(fl{6)(B) af the Code attributable to the Note,
the yield at which such gross proceeds are invested, ariy arbitrage prafit derived
therefrom (earnings in excess of the yield on the Note) and any earnings derived
from the investment of such arbitrage profit;
(ii) make, or cause to be made as of ihe end of each fifth bond year,
the annual determinations of the amount, if any, of excess arbitrage required to be
paid to the United Sta�es, unless the Borrower obtains an Opinion of Counsel to
the effect that such calculations need not be made (the "Rebate Am�ouni");
{iii) pay, or cause to be paid, to the Uniied States at least once every
fifth bond year the amo�nt, if any, which is required to be paid ta the Unitet�
2208$45v4 � 3
States, including the last insia�lment which sha11 be made no later than 60 days
after the day on which the Not� is paid in full;
(iv} nat invest, or permit to be invested, "gross proceeds" of the Note in
any acquirec� nonpurpose abligahons so as to deflect arbitrage othezwise payabl�
to the Unifed States as a"prohibited payment" to a third party; arxd
{v) if applicable, retain all records of the determination of thc
foregaing arnounts until six (6) years after ihe Note has been full� paid.
Unless the Opinion of Counsel described 'an {ii} above is provided, the Borrower
agrees that, in order to comply wiih this paragraph (i), it shall determine the Rebate
Amaunt within 30 days after each fifth year of ihe anniversary of the Closing and upon
payment in full of the Note; upon request, the Borrower shall furnish the Lender a
certificate showing how such calcuiaiion was made.
{j) The Borrower has not leased, so1d, assigned, granied or conveyed and will
no� lease, sell, assign, grant ar convey aIl ar any portion of the Project or any interesi
therein to the Uniied Siat�s or any agency or instruxnentality thereof within the rneaning
of �ection 149(b) of the Code,
(k) In addition to the Note, no other obligations have been ar will be issued
under Section J 03 of the Code which are sold at s�xbstantially the same time as the Note
�ursuant to a common plan o£ marketing and at substaniially the same rate of interest as
the Note and which are payable in whole or part by the Borrowex or otherwise have with
�ie Note any cornrnon. or pooled security for the payment af debt service thereon, or
which are otherwise ireated as the same "issue of obligations" as tlae Note as described in
TreasuryRegulations Section L150-(I}(c){1};
(1) No proceeds of the Noie shall be invested in investments which cause ihe
Note to be federally guaranteed within the meaning of Section 149(b) of the Cade. If at
any time the moneys i�n such funds exceed, within the meaning of Section 149(b)(3){B) of
the Code, (i} az�nounts invested for an irtitial temporary period until the �noneys are
needea for the purpose for which the Note was issued, (ii) investments of a bona fide debt
�ervice fund, and (iii} investments of a reserve which meet ihe requirement of Section
148(d) of the Code, such excess moneys shall be invested in. only those investments,
which are (A) obligations i�sued by the United States Treasury, {B) other investments
permitted under regulations, or {C) obligations which are {a} not issued by, or guaranteed
by, or insured by, the United States or any agency or instrumentality thereof or (6) not
federally insured deposits or accounts, all within the meaziing of Section 149(b) of the
Code; and
(m) Not otherwise use proc�eds of the Note, or take or fail io take any action
within its control, the effect of which would be io impair the exemption o� interest on the
Note from f�deral income taxation.
(n) rn order to qualify the Note and this Agreement under the "governmental
prograrn" provisions a� Section 1.148-1(b) of the Treasiuy Regulations, the Borrovver
22D8845v4 1 L�
{and any "related persan" thereto) will take no action the effect of which would be to
disqualify this Loan Agreement as an"acquired program abligafion" under said Seciion
1.148-1(b), incl�ding but not limited to entering into axiy arrangement, formal ar
in%rmal, far the Borrower to purchase bonds or Note af the City in an atnaunt related to
the amoun� of the Nate.
(2) For the purpose of this Section, a"Deterxnination of Taxability" shall
rnean the assuance of a statutory notice of deficiency by the Internal Revenue Se�rvice, or a ruling
of the National Office oz any Dish-ict Offce of the Intarnal Revenue Service, or a final decision
of a court of competent jurisdiction, or a change in any applicable federal statute, which holds or
provides in effect t�at the interest payable on the Nate is includible, �or federal incona.e tax
puxposes under Section 1Q3 of the Code in the gross incame of the Lendez- or a�y other holder ar
pz-ior holder oi the Note, if the period, if any, for contest or appeal of such action, ruiing ar
decisian by the Borrower or Lender or any other interested party has expired without any such
contest or appeal having been properly instit�xted by the Lender, the Borrower or any other
interested party. The expenses of any such cantest sha11 be paid by the party initiating the
contest, and neither the Lender nor the Borrower shall be required to contesi or appeal any
Determination of Taxability.
(3) If the Borrower receives a Determination of Taxability it will promptly
give notice of such Deternaination of Taacability to the City and the Lender and the Note shall
convert to a taxable obligation as provided in Section 11 of the No�e.
(4) The "Date of T�ability" shall mean �hat point in tirr�e, as specified in the
determination, ruling, order, or decision, that the interest payable on the Note beco�nes includible
in the gross income of the Lend�r or any other holder or prior holder of ihe N�te, as the case rnay
be, for federal income tax purposes.
Section 4.6 Lease or Sale of Project. The Bonower shall not lease, sell, convey or
otherwis� transfer the Project in whole or part, nor sell the Project in whole or part, without first
securing the wz-iiten consent oi the Lender provided that in no event shall such Iease, transfer,
assigntnent or sale be perinitted if the effect thereof would otherwise be ta iznpair the validity or
the tax exern.pt status of the Note, nor shall any such transaction release the Borrower ai any of
its obligations under this Agreement, unless the assignee-transferee is a surviving, resulting or
iransferee eniity as permitted under Section 4.2 hereof. The Borrower sha�l promptly notify the
City of any such sale, transfer, assignrnent or lease.
Section 4.7 Project Operation and Maintenar�ce Ex en nses. The Borrower shall pay all
expenses of the operation and maintenance of the Project including, �ut without limitation,
adequate insurance thereon and insurance against aIl liability for injury to persons or property
arising from �he operaiion thEreof, az�d all taxes and special assessments levied upon or with
respeci to the Project and payable during ihe term of this Loan Agreement, all in confor�nance
with the provisions of the Mortgage. The Borrower shall keep the Project in good working order
and condition, subject to ordinary wear and tear. The �'roject shall nat be used far p�rposes
which vialate any Federal, State or other Iaws prohibiting discrinnination in access or
employrnent based on race, creed, sex, handicap, ethnic origin, age ox mariial status.
2208845v4 1 S
Section 4.8 Natification af Chan es. The Borrower covenants and agrees that it will
promptly notify the Lender of:
{1) any litigation vcrhich might materially and adversely affect the Borrower or
any of its properties;
(2) the occurrence of any Event of Default unc�er this Agreement or under any
other Ioan agreement, debenture, note, purchase a�reemeni or any other agreement providing for
the borrowing o#'money by ihe Borrower or any event of which the Borrower has knowledge and
wh'rch, with ihe passage of time ar giving of notice, ar both, vvauld constitute an Event of Defauli
under this Loan Agxeement or under such other agreemen�s; and
(3) any material adverse change in the operations, business, properties, assets
or conditions, financial or othervvise, of the Borrower.
Section 4.9 Financial Covenants. Except as atherwise stated in this Agreement, all
financ'ral informaiion provided to the Lender sha11 be compiled using generally accepted
accounting principles consistenily applied. During the term oi this Agreernent, and afterward
until all amounts due under this Agreement are paid in full, unless ihe Lender shall otherwise
agree in writing, the Borrower agrees to:
(1} Provide the Lender within 180 days of the Borrower's fiscal year end, the
Borrower's annual financial s#aternents for the fiscal year then ending, in form acceptable to the
Lender and certified as correct by an officer of the Borrower acceptable to the Lender. The
statements must be audited with an unqualified opinion by a certified public accoun�ant
acceptable io the Lender.
(2} Pror�ide ihe Lender with such athez infortnation as it may reasonably
request from time io time.
{3) Maintain a Debt Servzce Coverage Ratio of at least 1.00 for each Fiscal
Year comrnencing wath the Fiscal Year ending 7une 3Q, 2009. If, in a Fiscal Year the Debt
Service Coverage Ratio is less than L00 for such Fiscal Year, the Barrower at its expense shall
retain an independent cansultant acceptable to the Lendex to make recoxnmendations wiih respect
to the Bor�-ower's rates, fees and charges and other rx�atters relating ta or affecting said Debt
Service Coverage Ratio, provided that if the Borrower shall have employed an independent
consultant pursuar�� to this Sui�section on a continuing basis, the Borrower shall nat be required
to exnploy a new independent consultant or obtain new recommen�ations. A copy of the
independent con.sultani's report and recornmendations and any supplements thereto shall be filed
with ihe Borrower and the Lender. The recommendatians of the independent consultant and any
supplements thereto shall be pres�nted by the independeni consultant in writing to the Board of
Directors of the Borrower. The Borrower agrees that it will, to �e extent permitted by law,
follow the recommendatians of the independent consultant unless #he Board of Directors of the
Borrower in gaod faith resolves in a writing delivered to the Lender on or be�ore 45 days of
receipt of the recommendations of the i�xdependent consultant that such recommendaiions are nai
in the best interests of tl�e Borrower and that a proposed alternate set of recommendations of
management are likely to achieve the 1.00 Debt Service Coverage Ratio set for� in this
2208845v4 16
_ _ . ..
Subsection. So long as an independent consultant shall be employed ar�d the Borrower accepts
and follows the recommendations of the independent consultan� or such alternate
recommendations of ihe Board of Directors of the Borrower, the Borrower shall be deemed to be
in cornplianee wiih ihe covenants pravided in this Subsection with respect to the fiscal yeaz in
�vhich the Debi Service Cave�rage Ratio was Iess than 1.00 {the "Noncomp�iant Fiscal Year}.
Thereafter, the Borrovver will maintain a Debt Service Caverage Ratio of at leas� 1.00 for each
Fiscal Year following the Noncompliant Fiscal Year, and the Borrower shaIl not be deemed to be
in compliance with the covenants contained in thiis Subsection if the Borrower retains an
independent consultant as described herein.
Section 4.10 Access. The Borrower grants to the Lender and to the Lender's agents
access to the Project at any reasonabl� time during normal business haurs in arder to inspect the
Project and the Borrower's other property.
Section 4.11 Access to Books and Ins ection. The Borrower shall keep proper books
of record ar�d accounts with respect io the use and operation of the Project, and, subject to any
privacy laws applicabie io Borrower, upon request of the Lender, provide any duly authorized
representative af the Lender access durira.g normal business haurs to, and perm'rt such
representative to examine, copy or make exiracts from, or audit any and all books, recort�s and
docurnents relating to the Projec#, the Borrower's affairs and to inspect any of its facilities and
properties. (The Lender shall be permitted to disclose the in#'ormation conta�ned therein io iis
legal counsel, its independent public accountants, any participating lenders, or in connection with
any action to collect any indebtedness of the Bozxower or io enforce this Agreemeni and the
documents related hereto, or as othenvise permittec� or required by law).
Section 4.12 Il2S Audit Ex�enses. The Borrower agrees to pay any reasonable costs
incurred by th� City as a result of the City's compliance wiih an audit, random or otherwise, by
the Internal Re�renue Service or the Minnesota Department of Revenue with respect to the Nate
ar the Project.
Sectian 4.13 Bank ualification. The Borrower agrees to pay to the Ciiy the amount
required to reirz�burse the Ciry for loss o� "bank qualification" for any Unqualified Bonds i�s�ed
in 2008 (re�erred to as the "Reimbursement Amount"}. The tern� "Unqualified Bands" means
bonds issued by ihe City {excluding "qualified 501(c){3) bonds" as defined in Section I45 of the
Code) which would have been eligible for bank quali�ication had the Note not been issued. The
Reirnbursement Amount shall be calculated as follovc�s: (i) the present value of the to�al debt
service payable on the Unqualified Bonds ta th�ir stated maturiiy dates, less (ii) the present vatue
af the total debt service that would have been payable on the Unqualified Bonds to their stated
maturity dates if the Unqualified Bonds had been "qualified tax-exemipt obligatians" far the
purposes of Section 265(b}(3) of the Code. For the purposes of this paragraph, present vaiue will
be calculated using ihe assum�d yield described in c�ause {ii}, which yield wi11 be dete�nined by
an independent financial advisor {mutually agreed upon by the City and the Borrower) based on
the best availabie market evid�nce as of the date of acceptance of the bid or praposal frorn the
purchaser of the Unqualified Bands. The Reimbursement Am.ount for any Unqualif ed Bonds
shall be payable within 15 days a.fter Borrower's receipt from the City of written notice as io the
a�nount calculated by the City's f nancial advisor. All fees zncurred by the Cify with respect to
the calculation of the R�irnburse�x�.ent Amount and the collection of amourits due with respect
2208845v4 1 �
thereto from the Borro�cnrer sk�all be the sole obligat�on of the Borrower, payable with �he
Reimbursement Amount.
2208845v4 1 $
ARTICLE V
PREPAYMENT OF LOAN
Section 5.1 Pre a ent at O iion of Borrower. The Borrower �nay at its aption
prepay the Loan, in whale oz in part, on any date, by paying the principal and interest then due,
and without premium or penalty. Any partial prepayment s�all be applied first to amounts which
are neither principal nar interesi, and next to the interest accrued on the Note and finally shall be
applied againsi ihe principal portion of the installments due under �his Agreement in inverse
order of maiurity. At the date fixed for prepayment, funds shall be paid ta ihe Lender at its
registered address appear�ng an the Note. Tn the e�rent the Borrower elecis to prepay the Loan,
the Borrower shall cause to be given in the name of the City notice af redemp�ion or prepaymeni
of the Note �to the Lender by f rst-class mail, addressed to ihe Lender ai its registered address, not
less ihan thirty (30} days pr�or io the date fixed for prepayment, and shall pay ihe prepayrnent
pr�ce when due ta the Lender. The City hereby authorizes the Borrower to give mailed natice af
prepayment and, ii required by lavv, published notice af prepayment of the Note in the name of
the City, fram time to time.
If the Borrawer so requests and if partial prepayxr�ent is in excess of 5.00% of the
outstanding principal balance of the Note on the date of a partial pr�payment of the Note, the
installnrients thereunder wi11 be adjusted to amortize the tl�en outsianding principal amount over
the remaining term of the Note, payable commencing with the next insta�lment due after such
parepayment.
2208$45vA 1 9
ARTTCLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default. Any one ar more af the fol�owing events is an Event of
Default under this Agreement:
(1) If the Borrower shall fail to make (a) any paynr�ents required under
Section 3.4 of this Agreement on the date due or (b) any other payment due under this
Agreement on or be�are the date �iat the payment is due and such default coniinues for ten (10)
days thereafter.
{2) If the Borrower shall fai� io observe and perforn� any other covenant,
condition or agreement on its part under this Agre�ment for a period of thirty (30) days after
vvritten notice, specifying such default and requesting that it be remedied, given to the Borrower
by the City or the Lender, unless the Lender shali agree in writing to an extension of such time
prior to its expiraiion, or %r such longer p�riod as may be reasonably necessary to remedy such
default provided ihat the Borrower is proceeding wiih reasonable diligence to remedy the same,
and provicied that such Ianger period does not place the Project at material risk.
{3) If the Borrower shall file a petition in bankruptcy or for reorganization or
far an arrangement pursuant to any present or future federal ba��kruptcy act ar under any sirnilar
federal or state law, shall consent to the entry of an order for relief pursuant to any present or
future federal bankruptcy act or under any similar %deral or state law, or shall make an
assignment for the benefii of its creditors or shall admzt in writing its znability to pay its debts
generally as they become due, ar if a petition or answer proposing the entry of an arder for r�lief
of the Borrower under any present or future federal bankruptcy act or any sirnilax federal or siate
1aw shall be fzled in any court and such petition or answer shall not be filed in any court and such
petition or answer shall not be discharged ox denied within 90 days after t�e filing thereaf, or a
receiver, trustee or liquidaior of the Bonrower of all or substantially all of the assets of the
Sorrower, or of the Project shall be appoanted in any proceeding brought against the Borrower
and shall not be discharged within 90 days after such appointment ar if ihe Borrower shall
consent to or acquiesce in such appointinent, or if the estate ar interest of the Borrower in the
Project or a part tl�ereof sha11 be levied upon or attached in aray proceeding; or if #he Borrower
shall be dissolved or liquidated or shall be merged with or is acquired by another business entity
in violation of Seciion �.2.
{4} If the articles of incorporation of the Barrower sha11 �xpire or be annulled;
or if the Borrower shall be dissolved or liquidated (oiher than when a new entity assurnes the
obligatipns of the Borrower zander the conditions permitting such aciian contained in Section
4.2).
(5) Tf any representation or warranty made by the Bor�-ower herein, ar by an
o�ficer or representative of the Borrower in any dacument or certificate furnished the Lender or
the City in connection herevcrith or therewith or pursuant her�to oz- thereto, shall prove at any time
to be, in any material respect, incorrect or rnis�eading as of the date mad�.
2208845v4 2�
{6} If �he Borrower shall default or fail to perform any covenant, conditian or
agreement on its part under ihe Mortgage or any other security docuEment securing the Note, and
such failure continues beyond the period set farth in such dacu�nents during which the Borrower
may cure the default.
(7) Any staie or federal tax lien shail �e filed against the Borrower and shali
remain undischarged #'or a period of sixty (64) days.
{8} All or any portion of the Land or the Project, or the legal, equitable or any
other interest �ierein, sha11 be sold, transferred, asszgned, leased, fi�rther encumbered (except as
permitted herein} or otherwise disposed of, unless the pr�ar written consent o� the Lender is first
abtained; pzovided that nothing in �his Agreement prohibits the Borrower from entering into an
agreernent for sale of the Land where the Loan and all other aznounts due under this Agreement
and the other documen#s evidencing the Loan will be paid in full at the closing of the saie.
Section 6.2 R�medies. Whenever any Event of Default referred to in Section 6.I
hereof shall have happened and be subsisting, any one or more af the following remedial steps io
the extent permitted by law may be taken by the City wiih the prior writte� consent of the Lender
or by the Lender itself:
(1) The Lender's obligation to advance any further amounts under the Loan
Agreement and the Disbursing Agreerz�ent shall terminate. Notwithstanding anything to the
contrary contained herein ar in atiy other instrument evidencing or securing the Loan, the Lender
may exercise tb.e foregoing remedy upan the occurrence of an event that wonld constitute such
an Event of Defaul� but for the requiremeni that notice be given or that a period of grace or time
elaps�.
(2) The City, upon written direction af the Lender, or the Lender may declaxe
all installrnents of the Loan (beira.g an amount equal to that nece�sary fo pay in full the Fnincipal
Balance plus accrued interest thereon and any premium of the Note assuming acceleration of the
Note unc�er the terms thereof and to pay all other indeb�edness thereunder} to be immediately due
and payable, whereupon the same shall become immediaiely due and payable by the Borrower.
(3) The City, upon written direction of the Lender (except as otherwise
provided in Section 7.9 herein), or the Lender (in either case at no expense to the City} may iake
whatever action at lavv or in equity rr�ay appear necessary or appropriate to collect the amounts
then due and thereafter to become due under this Agreement, or to enforce performance and
observance of any obligation, agreement or covenant of tY�e Borrower und�r this Agreement.
{4) The Lender may foreclose the Mortgage and proceed against the collateral
described th�rein.
(5) The Czty, upon written direction of the Lender, or the Lender may exercise
any other remedy permitted under any oiher instruameni evidencing or securing the Loan.
(6} Tn addition to the remedies set forth in this Agreement, upon the
occurrence of any Event of Default and ihereafter while the same be continuing, the Borrower
hereby irrevocably authorizes the Lender to set off all sums owing by #he Borrower to the Lender
220S845v4 2 j
against aIl depasits and credifs of the Borrower with, and any and alI claims of t�ie Borrower
against, the Lender.
The Loan Agreement is a nonrecourse obligation af the Borrower and upon any
occurrence of an Eveni of Deiault, recourse will be available only against the assets of the
Borrovver subject to the Mortgage.
Section 6.3 Disposition of Fund,s. Notwiihstanding anything to the contrazy contained
in this Agreement, any amounts col�ected pursuant to actzon taken und�r Section 6.2 hereof,
except for any amounts collected solely for the benefit o�the City under any of the provisions set
forth in Section 7.9, shall, after c�educting (a} all expenses incurred in caIlecting the sa�ne and {b}
then accrued inter�st on the Note, the rema.znder of such amounts, if any, b� applied as a
prepayment of the Note in accardance witl� Section 5.1.
Section 6.4 Marmer of Exercise. No zemedy herein conferred upon or resezved to the
City or the Lender is intended to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and sha11 be in addition to every atl�er remedy
given under this Agreement or now or hereafter existing at iaw or in equity by statute. No delay
or omission to exercise any right or powez accruing upon any default shall impair any such right
or power or shall be construed to be a waiver thereof, but any s�ch right arid power may be
exercis�d from time to iime and as often as�nay be deemed expedient. In order to entitle the
City or tl�e Lender to exercise any remedy reserved to either of them in this Article, it sk�all not
be r�ecessary to giv� any notice, other ihan such notice as may be herein expressly requiz-ect.
Section 6.5 Attorneys' Fees ,and Expenses. In the event the Borrower should default
under any of the provisians of this Agre�ment and the City or the Lender should eznploy
attorneys or inc�r other expenses for the collection of amounts due hereunder or the enforcement
of per£ormance of any abligation or agreernent on the part of the Bozxower, the Borrower will on
demand pay to the City or the LendEr the reasonable fees and casts of such attorneys and such
other expens�s so incurred.
Section 6.6 Effect of Waiver. Tn the event any ageezxient contained in this Agreement
should be breached by either party and thereafter waived by the other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any ather breach
hereund�r.
2208845v4 2�
ARTICLE VII
GENERAL,
Section 7.1 Notices. All notices, ceriificates or other comrnunications her�under shaTl
be sufficzently given and shall be deemed given when hand delivered or received by certified ar
registered United States mail, return receipt requested, postage prepaid, with proper address as
indicated below. The City, the Borrower and the Lender may, by written notice given by each to
the others, designate any adclress or addresses to which notices, certificates or other
comrnunications to them shall be sent when required as conte�rzplated by this Agreement. Until
atherwise �rovided by the respective parties, a�l notic�s, certificates and cornrnunicaiions to eack�
of them s�all be addressed as fallows:
To the City: City of Arden Hills, Minnesota
124�5 West Hzghway 96
Arden Hills, MN 55113-5743
Attn: City Administrator
To the Bo�xower: Presbyterian Hames Management and Services, Inc.
2845 Hamline Avenue North
Roseville, MN 55113
Attn: Mark Meyer, CFQ
To the Lender: University Bank
20Q University Avenue
St. Paul, MN 55103
Ath�: Bryan Toft
Section '1.2 Bindin� Effec�. This Agreement sha11 inure to the ben�fit of and shall be
binding upon the City and the Borrower and their respective successors and assigns.
Section 7.3 �everabilitv. In the event any provision af this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other pravision hereof.
Section 7.4 Ax�nendments, Chan e�d Modifications. Exc�pt as otherwise provided
in this Agreement or in the Resolution, subsequent to the initial issuance of the Note and before
the Note is saiisfied ar�d discharged in accordance with zts terms, this Agreemeni may not be
effectively amended, changed, modified, altered, or terminated without the written consent of the
Lender.
Section 7.5 E�ecution Counte a.rts. This Agreement may be simultaneously executed
in several counterparts, each of which shall be an original and a�l o�` �r��ch shail constitute bui
one and the same instrument.
Section 7.6 Limitation of Cit 's Liabili . It is understood and agreed by the
Borrower and the Lender that no cov�nant of the City herein shall give rise to a pecuniary
zzossas�a 23
liability of the City or a charge against its general cred�t, or taxing powers. Ii is further
understood and agreed by the Borrower a.nd the Lender t�at the City shall incur no pecuniary
liabiiity hereunder, and shail not be liable for any expenses related hereto, including
administrative expenses and fees and disbursernents of the City's attorney, Bond Caunsel and
fiscal consnitant retained in connection therewith, all of which expenses the Bo�rxower agrees to
pay.
Section 7.7 Cii�s Attorneys Fees az�d Costs. If, notwithstandix�g the provisions of
Section 7.6 hezeof, the City incurs any expense, or suffers any losses, claims or damages, or
incurs any liabilities in connectian with the transaction conternplated by this Agreement, the
Barrower will indemnify and hold haz-miess the City from the sarne and wi�l reimburse the City
for any reasonable legal or other expenses incurred by ihe City in relation thereto. The Borrower
shall also reimburse ihe City for all other costs and expenses, including without limitation
reasonable attorneys' fees, pa.xd or incurred by th� City in connection wiih (i) the discussion,
negotiation, preparation, approval, execution and delivery of this Agreement, the Series 2408
No�e, the Pledge Agreement and ihe documents and insiruments related hereto or thereto; (ii} any
amendrr�ents or modifications hereto or to the Note, ihe Pledge Agree�ent and any doc�.unent,
instrument or agreement related hereta or thereio, and the discussion, negotiation, preparation,
approval, execution and delivery of any and all docurnents necessary or desirable to effect such
amendments or modifications; and {iii) the enforcement by the City during the tez�m hereof ar
thereafter of any oi the rights or remedies of the City hereunder or under the Note, the Pledge
Agreement or atiy document, instrument or agreement related hereto or thereio, including,
without limitation, costs and expenses of callection in the Event af Default, whether or not suit is
filed with respect thereto.
Sectian 7.$ Release. The Borrower hereby acknowledges and agrees that the City
shall not be liable to the Borrower, and hereby releases and discharges the City from any
liability, for any and all losses, cosis, expenses {incl�zding attorneys' fees), damages, judgr�ents,
clairns and causes of action, paid, incurred or sustained by the Barrower as a result of or relating
to any action, or faiiure or reiusal to act, on ihe �art of the Lende� with respect to this Agreement
ar the documents and transactions related hereto or contemplated hereby, including, without
limitation, the exercise by the Lender of any of its rights ar re�edies pursuant to Article VI, the
Series 2008 Note, the Pledge Agreement, the Mortgage ar any collateral s�curity dacuments.
The Borrower's release of the City pursuant ta the preceding sentence does not extend to ihe
Lender follawing the assignment of the City's rights to the Lender pursuant to the Pledge
Agreemerzi.
Section 7.9 Assi�nment bv City and Siarvivarship of Obli at�. The City rnay
assign its rights under this Agreement and any related docurnents to the Lender to secure
payrnent of the principal of and interest and premium, if any, on the Note, conditioned upon the
Lenc�er's ass�nption of the City's and Lender's obligaiions to the Borrower hereunder, but any
such assignm.ent shail not op�raie to limit or otherwise affec� the following provisions hezeaf to
the extent that #hey run to the City from the Borrower to which extent they shall survive any such
assignment:
2208$45v4 24
_ ___ _ ..
Section 3.5 Section 6.S
Section 4.1 5ection 7.6
Section 4.3 Section 7.7
Section 4.12 Section 7.8
Section 4.13
Upon any such assignment, the provisions irn�ediately above rul�ning to the Ciiy fram the
Borrower for the Czty's benefit shall run jointly and severaily to the City and the Lender (if
appropriate), provided that the City shall have the righ� to enforce any retained rights without the
approval of the Lender but only if the Lender is not enforcing such rights in a manner ta protect
the City ar is otherwise taking action with respect thezeto thai br�ngs adverse consequences to the
City. The obligations of the Borrower running to the City for the purpose of preserving tl�e tax
e�empt status of the Note ox otherwise for the City's benefit under the foregoing Sections shall
survive repayment of the Note and inter�st thereon.
Section 7.10 Required Approvals. Consents and approvals required by this Agreement
to be obtained from the Bozxower, the City or the Lender shall be in writing and shall not be
�nreasonably withheld or delayed.
Section 7.11 Tez-�xiination U on Retirement of Noie. At any time when no principal
balance on the No�e re�nains out�tanding, azid arrangements satisfactory ta the Lender and the
City have b�en made for the discharge of all other accrued Iiabilities, if any, under this Loan
Agreernent, this Loan Agreement shall terminate, except as otherwise expressly provided in
Section 7.9 or otherwise herein.
Seciion 7.12 Ex enses of Lender. The Borrower shall reimburse ihe Lender for any
and all costs and e�penses, including, without limitation, attorneys' fees, paid or incurred by the
Lender in connection wiih {i) review, negotiation, preparation, and approval of this Agr�ement
and any other document or agreemeni related hereto or there�o or the traxisactions conternplaied
hereby; (ii) the review, negotiation, preparation, az�.d approval of any amendmen�s, rnodifications
or extensions �o any oi the foregoing doc�unents, instruments or agreer�ents, and the preparation
and consununation of a�y and all docurnents necessary or desi�able to effect such amendrr�ents,
modifications or extensions; (iii) any appraisals, environmental assessments or other reports
relating to the Land which the Lender is authorized to seek, order or prepare pursuant to this
Agreemeni ar any other instrument evidencing or securing the Loan or is required to seek, order
or prepare pursuant either to applicable laws or regulatians or the Lender's policies or procedures
generally applicable to comrnercial mortgage loans by the Lender; (iv) any reasonable fees or
costs chaxged to the Lender by an architect or vther �esign �rofessional engaged by the Lender
to, ar�ong other things, inspect the construction of any approved i�nprovements to the Land, or
verify co�npliance thereof with app�icable building and zaning laws; (v) all title insurance
premiums, filing and recarding fees and mortgage registratian #ax paid or payable in coru�cctian
with the consumrnatzon of the transaction contemplated hereby; and {vi) the enf'orcement by the
Lender during the term hereof or thereafter of any of the rights or remedies of the Lender under
any of the foregoing documenis, instr�ments or agreEments or under applicable law, whether or
not suit is filed with respect thereto (attorneys fees and costs are Iimited to areasonable fees and
costs).
2208845v4 �5
Section 7.13 Enti_re Agreeament. This Agreement contains the entire agreement of the
parties with respect to ihe subject matter of this Agreement and supersedes any and ali prior
letters, proposals, contracts azad understandings between the parties with respeci to the sarne,
including, but not limited ta, any proposal or commitment letter, and such letiers, propasals,
contracts and understandings are hereby tenminated.
Section 7.14 Further Assurances. At any time and fram time to iime, upon request by
ihe Lend�r, �lie Borrower wiil make, execute and deliver or cause io be made, executed and
delivered, to the Lender, any and all other further instruments, certificates and other dacuments
as may, irz the reasanable apinion of the Lender, b� necessary or desirable in arder to effectuate,
complete, secure, or perfect, or to continue and preserve, the obligations of the Borrower
hereur�der and undez any of the o#her documents related to the Loan. So long as no Event of
Defau�t has occur�-ed and is continuing, and so long as the further assurances are not made
necessary or de�irable by any action or inaction of the Borrower, the Borrower shail not be
responsible for the cost of preparing or recording such fizrther assurances. Upon any #'ailure by
the Borrower so io do after ten (10) days written notice from the L�nder, the Lender may anake,
execute and �-ecord any and all such instrumenis, certif cates and docurnents for and in the name
of the Borrower ana the Borrower h�reby irrevocably appoints ihe Lender its agent and attorney-
in-fact af the Borrower so to do. The Borrower hereby understands, acknowledges and agrees
that the Lender may prepare and file such UCC financing statements or sirnilar instruments as
may be necessaa�y to perfect the Lender's security interest in any real ox personal property
pledged by the Borrower as security for the Loan.
2208$45v4 2,(
_..
IN WITNESS WHEREOk', the City ancF the Borrower have caused this Agreement to be
executed in their respective names all as of the date first above written.
CiTY OF ARDEN HILLS, MINNESOTA
By
Mayor
:
Administza�or
Loan Agreement between the City of Arden Hills, Mi�esata and Presbyterian Harnes
Max�agement and Services, �c.
2208845v4 �-1
_ . ..... .
PRESBYTERIAN HOMES MANAGEMENT
ANll SERVrCES, INC.
By
Its
Loan Agreement beivaeen the City of Arden Hills, Minnesota and Presbyte�az� Homes
Mana�ement and Services, Inc.
2208845v4 S-�
_ .......... .......
UNITED STATES OF AMERICA
STATE OF MINIVESOTA
COUNTY OF RAMSEY
ARDEN HILLS, MINNESOTA
Commercial Facilities Revenue Note, Series �048
{PHM&S Office Building Prvj ect)
$5,500,000
FOR VALUE RECEIVED the CITY OF ARDEN H�LLS, Ramsey County, Minnes�ta
{the "City"} hereby prornises to pay UNIVERSITY BANK, a Minnesota baxzking corporation, in
St. Paul, Minnesota, its successors or registered assigns {the "Lender"), from the source and in
ihe manner hereinafter provided, the principal sum of FIVE MILLION FIVE HUNDRED
THOUSAND DOLLA.RS ($5,500,000), ar so much ihereof as has been advanced and remains
unpaid fram time to time (the "Principal Balance"), with interest thereon from the date hereof
until paid or otherwise discharged as set forth in Paragraph 1 below, in any coin or currency
which at the time or times af payment is legal tender for the payment of public or privaie d�bts in
the United States of America, in accordance with the terms hereinafter set farth.
l. Commencing on ihe date of ihis Note and continuing though September ,
2013 (the "First Adjustrnent Date") interest shall accrue on the outstanding principal balance at
the initial rate of 396% per annum {the "Ynitial Rate"). _
2. On the First Adjustment Daie, and on each five year anniversary thereafter (�ach
an "Adjusirr�ent Date") thraugh September _, 2U28 {the "Final Maturity Date"), the interest
rate or� this Note vvil� be adjusted to a rate per annum equal to 275 basis points plus the then
current rate of the Tzeasury Constant Maturities far f ve year obligations as reported by the
Federal Reserve for the preceding month {the "Adjusted Rate"}. Excepi in the event of a
Deter�nination of Taxability, as def ned in the Loan Agreernent, the annual rate of interest
payable hereunder s�.all not be greater than 6.71 % during the term o£ this Note.
3. Interest only shall be payable on the Principal Balance of this Note each month
commencing October _, 200$ through September �, 2009.
4. Principal and interest on �hi.s Note sha11 be payable in 228 equal monthly
installments on the day of each arzaonth commencing October _, 2009 and continuing
ihereafter until the Final Matur'rty Date in such amounts as are required ta fully amortize the
pr�ncipal balance, together with accrued interest ther�on at the interesi rate then in effect, over
the rernaining tertn of the Nate and monthly payments of principal and interest shaIl be
recornputed as of each Adjustment Date. Payments shall be applied �rst ta amounts which are
neither principal nor interest, next �o interest due on the principal balance and thereafter �o
reduction of the principal balance.
S. In any event, the payments hereunder shall be sufficient to pay all principal and
inierest due, as such principal and interest becomes due, and to pay any pzemium (as defined in
the Loan Agreert�ent described belaw) or service charge, at maturity, upon red�rnption, or
zaoss3o�z
atherwise. Interest shall be computed on the basis ot' a[360 day year of twelve 30-day
months].
6. Principal and interest and premium, if any, due hereunder shall be payable at the
principal office of the Lender, or ai such other place as the Lender may designate in vvriting.
7. This Note is issued by ihe City to provide funds %r a project, as defined in
Minnesota Siatut�s, Section 469.152, cansisiing of the construction and equipping of an
approximately 27,000 square foot addifian to the Borrower's corporate headquarters located at
2845 Hamiine Avenue North (the "Office Facilities") in ihe City of Roseville, Minnesota
("Roseville") (the "Project"), ta be operated by Presbyterian Homes Management and Services,
Inc., a Minnesota nonprofit corporation {the "Borrower"} pursuant to a Loan Agreement dated as
of Septernber _, 2008 by and between the Ciry and the Borrower (�he "Loan Agreernent"), and
this Note is further issued p�xrsuant to and in fizll compliance with tfie Constitution and laws of
the �tate of Minnesota, partzcularly Minnesota Statutes, Sections 469.152 to 469.1651 and
pursuant to a resolution of the Ciiy dnly adapted on August 25, 2008 (the "Resolution").
$. This Note is secured by a Pledge Agreement dated as of Septernber _, 2048
between the City and the Lender (th� "Pledge Agreement") and is further s�cured by a Mortgage,
Security Agreement azid Fixture Financing Statement, dated as of September , 2008 ex�cuted
by the Borrower, as mortgagor, in favor of the Lender, as mortgagee (�lie "Mortgage") and
certain other assign�ents, security agreements, guaranties, financing statements, and otl�er
instruments evidencing or securing the Loan as may be required by the Lender.
9. The City, for itself, its successars and assigns, hereby waives demand,
presentanent, protest and noiice of dishonor; and io the extent permitted by Iaw, the Lender may
extend interest and/or principal of or any service charge or premium due on this Note, including
the Final Maturity Date, or release any part or parts of the property and interest subject to tlie
Mortgage or to any other security document from the same, all without notice to or consent of
any party liable hereon or ihereon and withaut releasing any such party from such �iability arid
whether or not as a result thereof the interest on �he Note is no longer exempt from the federal or
siate income ta�c. In no event, however, r�ay the Final Maturity Date of the Note be extended
beyond thirty (30} years frorri the date hereof.
10. This Note is subject to prepayment in immediately available funds an any date at
the aption of the Borrower, in whole or in part and without penalty as pravided in Section 5.1 of
the Loan Agreement. To exercise this option, the Borrower must give written notica in the name
of �the City to the Holder not less than 34 days prior to the date fixed for prepayment; provided
that the Holder may waive or provide alternative notice requirernents. The prepayrnent price is
equal to the outstanding principal amount of thzs Note to be prepaid plus accrued inierest. At the
date fixed for prepayrnent, funds must be paid to the Holder at its registered add3ress.
If th� Borrower so requests, and if partial prepayment of principal is in excess of 5.00%
of the outstanding principal balance of this Noie on the date of a partiai prepayment of this Note,
the installments l�ereunder will be adjusted to arnortize the then outstanding principal amo�nt
over the rernaining term of this Note, payabl� coznmencing with the next installment due after
such prepayment.
2208830v2 2
_ __ __
11. In the eveni of prepayment of this Note, the Lender shall apply any such
prepayment againsi ihe accrued interesi on the Principal Balar�ce and thean against the fmal
principal aznounts due under the Note. The semiannual payments due under paragraph 3 hereof,
shall continue to be due and payable in full �til the entire Pr�ncipal Balance, accrued interest
and any premium due on this Note have been paid.
12. Upon a Deternlination of Taxability, as deiined in the Loan Agreement axid
Mortgage, this Note shall canvert �o a taxable obiigation and the interest rate for interest payable
comrnencing the � day of the following month shall be adjusted to an interest rate per annu3n
equal to the Initial Rate or the Adjusted Rate in effect plus _ basis poinis {the "Ta�able Rate")
on the date of the Dete�nination of Ta�ability. The interest z-ate shall �hereafter be adjusted on
each Adjustment Date to the T�able Rate in effec� on such date. Ali adjustiments to ih� interest
rate shall be made ar�d become effective as of each Adjusiment Date and the int�rest rate as
adjusted shall remain in effect until and including the day irnmediately preceding the next
Adjust7nent Date.
�3. As provided in the Resoluiion and subject to certain lirnitations sei forth therein,
this Note is only transferable upon the books of the City at the office of the City Adrninistrator,
by the Lender in person or by its agent duly authorized in writing, at the Lender's expense, upon
surrender hereof togeiher with a written instrument of transfer sa�i�factory to ihe City
Administrator, duly ��ecuted by the Lender ar its duly authorized agent. Upon such transfer ihe
Ciiy Adminisiratar will note the date of registration axid the narne and address of the new
registered owner in the registratian blank appearing below. The City may deem and treat the
person in vvhose name the Note is last registered upon the books of the City with such
registration noted on ihe Note, as the absolute owner hereof, whether or noi averdue, far the
purpose oi receiving payment o� or on the accou�� of the Principal Balance, rEdemption price or
interest and for all other purposes, and a11 such payments so made to the L�nder or upon his
order shall be valid and effective to satisfy and discharge the liability upon the Note to the ext�nt
of the sum or sums so paid, and the City shall not be affected by any notice to the contrary.
14. All of the agreements, conditions, covenants, provisions and stipulations
contained in the Resolution, the Mortgage, the Loan Agreement and the Pledge Agreernent are
hereby made a part of this Noie to the sa�ne extent at�d with the same fozce and effect as if they
were fully set forth herein.
15. This Note and interest thereon and any service charge or prezniuin due hereunder
are payable soiely from the revenues and proceeds derived from the Loan Agreement and the
Mortgage and do not constitute a debt of the City within the mea�ing of any constitutional or
statutory limitatian, are not payable from or a charge upon any fi�nds ather than the revenue� and
proceeds pledged to �he payment thereof, and do not give rise to a pecuniary �iability of the City
or any of its offzcers, agents ar employees, and no holder of this Note shall evez- have the right ta
compel any exercise of the taxin.g power of ihe City to pay this Note or the interest ihereon, or to
enforce payment thereof against any property of the City, and ihis Note does not constitute a
charge, lien ar encumbrance, �egal ar equitable, upon any property of the City, and the agreement
of the City to perform or cause the performance of the covenants and ot�er provisions herein
referred io shall be subject at ail iimes io the availabiliiy of revenues ar other funds f�xrnished far
aaosa3ovz 3
_
such purpose in accordarice with the Loan Agreezx�ent, sufficient to pay all costs of such
per%rmance or the enforcement ihereaf.
16. Upon the occurrence of an Event of Deiault, as defined in the Loan Agr�ement
and Mortgage, the Lender shall have the option, azmong other things, of declaring the Principal
Balance and accrued interesi on the Note to be immediately due and payable, whereupon the
same, plus any premiurns or service charges, shall be due and payable, but solely from surr�s
made available under the Loan Agreement and the Mortgage. Failure to exercise such option at
any time shall noi constitute a waiver of the right to exercise the sa�ne at any subsequent time.
17. The remedies of the Lender, as provided herein and in the Loan Agreement and
the Pledge Agreement, are nat e�clusive and shall be cumulative and concurrent and may be
pursued singly, succ�ssively or together, at the sole discretion of the Lender, and may be
exercised as often as occasion therefor shall occur; and the failure to exercise any such right or
remedy shall zn no event be construed as a waiver or release thereof.
18. The Lender shall not be deemed, by any act of ornission or commission, to hav�
waived any o� its rights or remedies hereunder unless such waiver is in writing and signed by the
Lender and, then only to the extent specifically set %rth in the writing. A waiver with reference
to one event sha11 not be construed as continuing or as a bax to or waiver of any right or rernedy
as to a subsequeni event:
19. This Note has been issued without registration under state or federal or other
securities laws, pursuant to an exemption for such issuance; az�d accordingly the Note may not be
assigned ar transferred in whole or part, nor xza.ay a participation interest in the Note be given
pursuani ta any participation agreement, excepi in accordance with an applicable exerza.ption
from such registration requirements.
20. This Note is a"qualified t�-exempt obligation" under Section 265{b} of the
Tnternal Revenue Code oi 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all ca�.ditians, acts and things
required to exisi to happen and to be performed precedent to or in ihe issuance of this Note do
exist, have happened and have been pez'fa�nr�ed in regular and due form as required by law.
zzosssovz 4
IN WITNESS WHEREQF, the City has caused this Nate to be duly executed in iis name
by the xnanual signatures of the Mayor and City Administrator the corporate seal of the City
having been intentionally amitted as permitted by law, and has caused this Note to be dated as of
September , 2008.
CITY OF ARDEN HILLS, MINNE,50TA
Mayor
City Adminisirator
Zaass3o�z s-�
PROVIS�ONS AS TO REGISTRATION
The ovcmership of tl�e unpaid Principal Balance of this Note and the int�rest accruing
thereon is registered an the b�oks of the Arden Hills, Minnesota in the name o�' the holder last
noted below.
Date of
Re�istration
Narne and Address
Re�,istered Owner
Signature of
Citv Administ�rator
Septernber , 2008
University Bank
200 University Avenue
5t. Paul, MN 55143
2208$30v2 ,S-2
PLEDGE AGREEMENT
This Pledge Agreement is made as a� the Septernber _, 2008 between the CITY OF
AKi7EN HILLS, MINNESOTA, a rnunicipal co�poration organized under th� laws oi the State
of Minnesota (the "Czty") and LTNNERSITY BANK, a Minnesota banking coxporation (ihe
"Lender").
Reciials
WHEREAS, Presbyt�rian Hornes Management and Services, Inc. (the "Borrower"} and
ti3e City have entered into a Loan Agreement (the "Loan Agreement") of even date herewith,
pursuant to which tha City will Iend to the Borrower the proceeds of the $5,500,000 Commercial
Facilities Revenue Nate, Series 200$ {PHM&S Office Building Project) (the "Note"); and
WHEREAS, the Note is to 3�e payable from and secured by the loan repayrrients to be
made by the Borrower under the Loan Agreement; and the Lender, as a condition to the purchase
of the Nate, has required the execuiion of this Pledge Agreement.
NOW THEREFQRE, as an inducement to ihe Lender to purchase the Note, and in
consideration oi the pro�zises and other good and valuable consideration, the receipt and
sufficiency whereof is hereby acknowledged, the parties hereby agree as follows:
1. In arder to secwre the due and punctual �ayment of the Note and all other sums
due the Lender under the Loan Agreement, the Ciiy does hereby pledge and assign to the Lender
a11 o�the City's right, title and interest in and to the Loan Agreerz�ent, subject io the City's rights
under the provisions of Section 7.9 thereof.
2. The Ciiy hereby represents and vvarrants to the Lender that the City's right, title
and interest in the Loan Agreement is free and clear af any lien, security interest pr other
encurnbrance other than that arising under this Piedge Agxeement.
3. The City hereby authorizes ihe Lender to exercise, whether or not a default exists
under the Note ar an Event af Default has accurred under the Loan Agreement, either in the
City's name or ihe Lender's name, any and all righ#s or rerr�edies available to the City under the
Loan Agreement. The City agrees, an request of the Lender, to execute and deliver to the Lender
such other docurnents or insir�ments as shall be deemed necessary or appropriate by the Lender
at any time to confirm or perfect the security interest hereby granted. The City hereby appoin#s
the Lender its attorney-in-fact to execute on behalf of the City, and in its name, any and all suck�
assignments, financing statements or other docurnents or insh uznents which the Lender may
deem necessary or appropriate to perfect, protect or enforce the security interest hereby granted.
4. The City will not:
{a} exercise or attempt to exercise any remedies under the Loan Agreement
except as permitted by Sections 6.2 a�d 7.9 of the Loan Agreernent, or terminate, modify ar
accept a surrender of the same, or by aff rma�ive act, consent to the creation or existence oi any
zzoas3s�1
_ _ _ _
_ _ _ .. ..
security interest or other lien in the Loan Agreement to secure payment of any o�her
indebtedzaess; ar
(b} receive or collect or permit ihe receipt ar collection of any payrnents,
receipts, rentals, profits ar other moneys under the Loan Agreerz�ent {except as aIlowed under
Section 79 thereo fl or assign, transfer or hypothecat� (other than to the Lender hereunder) any
or the saane then due or to accrue in the future.
5. The City expressly covenants and agrees that the Lender sha11 be entitled ta
receive all payments under the Loan Agr�ement (except any payments due the City under
Section 7.9 ther�of}, and hereby authorizes and directs the Borrower to make such payments
directly to ihe Lender. The Lender covenants and agrees that all payments received by the
Lender pursuant to t�ie Loan Agreemeni shall be applied as �rovided in the Loan Agreernent.
6. The Lender agrees to advance the purchase price of the Note direcily to the
Borrower as �rovided in the Note and the Loan Agreement, In accordance with Section 7.9 of
the Loan Agreement the Lender hereb� assumes the Ciiy's and Lender's obligations to the
Borrower there�der.
7. If an Event of Default (as defined in ihe Loan Agreement) shall occur ax�d he
continuing, the Lender may exercise any one or �are or a11, and in ar�y order, of the reznedies
hereinafter set forth, in addiiion ta any other remedy at 1aw or i� equity or specified in the Loan
Agreement, it being expressly understaod that no remedy herein conferred is intended to be
exclusive of any other remedy or remedies; but each arfd every zemedy shall be curnuiative and
shall be in addition to every ather remedy given herein or now or hereafter existing at law ar in
equity or by statute:
{a) The Lender may, without prior notice of any kind declare the principal of
and interest accrued and any premium (as defined in the Loan Agreernent} on the Note
immediately due and payabie.
(b) The Lender may exercise any rights and remedies and options of a secured
party under the Uniform Commercial Co�e as adopted in the Sia�e of Minnesota ar�d any and alI
rights available to it undez- the Loa� Agreem�nt arid Mortgage securing payment of the Note.
8. Whenever any of the parties hereto is refezxed to, such reference shall be deemed
to include the successars and assigns of such party; and all th� covenanis, promises and
agreemenis in this Pledge Agreement contained by or on behalf oi the Ciiy or the Lende�- shall
bind and inure to the benefii of the respective successors and assig�s of such parties whether so
expressed or not.
9. The unenforceabiliiy or invalidity of any provision or provisions of this Pledge
Agreemeni shall not re�.der any oiher provision oz- provisions herein contained unenforceable or
invalid.
10. This Pledge Agreement shal� in all respects be consirued in accoz-dance with and
govez�ed by the laws of the State of Minnesota. This Pledge Agreement may not be amended or
a�x�.odified except in vvritxng signed by the City arxd the Lender.
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11. This Pledge Agreement may be executed, acknowledged and delivered in ax�y
number of counterparts and each of such counterparts shall constitute an original but all of wl�ich
together shail constitute one agree�nent.
12. TI�e terms used in this Pledge Agreement which are defined in the Loan
Agreement shall have the meanings specified therein, unless �the context of ihis Pledge
Agreement otherwise requires, or unless such terrns aare atherwise defined herein.
13. No obligation of the City hereunder shall consiitute or give rise to a pecuniary
liability of tlie City or a charge against its g�neral credii or taxing powers, but shall be payable
solely out of the proceeds and the revenues derzved under the Loan Agreement.
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II�T WITNE�S WHEREOF, the Ciiy and the Lender have caused this Pledge Agreement
to be duly executed as of the day and year first abave wz-�itten.
CITY OF ARDEN HILLS, MINNE�OTA
By
Mayor
By
City Administrator
Pledge Agreement betweean the City of Arden Hills, Mixulesota and University Bank
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1�i�1��1�1:i. : : ►I.
By
rts
Pledge Agre�rnent between the City of Arden Hills, Minnesota and University Bank
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__
_ _ _
� DEN �I ILL S
Augttst 25, 2408
Mr. Mark Lofthus
Mi�esota Depar�nent of
Err�ployrr�ent and Econorziic Developrnent
151 National Bank Buiiding
332 MinnesoEa �treet, Suite E200
St. Paul, Minnesota 55101-1351
Re: City of Arden Hills, Minr�esota -$5,500,000 Comrnercial Development Revenue
Note, Series 2008 {PHM&S Offic� Buitding Proj�ct}
Dear Mr. Lofthus:
Attached hereto in duplicate is the applicai�on of the City of Arden Hi�ls, Mir�nesota, for
approvai of the above referenc� praject (th� "Project"} including a copy of the Resalution
approving the issuance of t�e Note adopted by the City Council.
As indicated in fhe attached Resalution, we believe that this Aroject fuIly rneets the pubizc
pu�pose rec�uirements af Mir�nesota Staiutes, Sections 469. � 52 to 469.1651 (ihe "Aci").
Presbyter�an Hort�es Mar�agement and Se�rvices, Inc_, a Minnesota nonprofit carporation, (i) owns
and operates health care facilities that pravide skii�ed nursing, convalescent and rehabilitative
care to the eiderty, (ii) owns and operates assisted living and indepen�ent lzving senior �ousing
fa.cilities, {iii) �rovides managernent serviees, and (iv) operates home health. car� and other
cha�-itabie s�nior and residential care services. The City Council desires ta help promate
provision of necessary health care service to seniar citizens and believes ti�at the fir�ancing of the
Project by the issuance of the revenue Note will accomplish that objective. R�ference is rnade to
the Resoiution for a rnare definitive statement of the pub(ic pur�oses served by the financing.
The Prajec� daes nat cor�tain any property to be sold or a�fixed or consumed in the
production af property for sale, and does not include aa�y housing facility to be zented or used as
a pertnanent residence.
The City has connplied wi�h the notice and hearing r�quirements of Minnestita Statutes,
Section 469.154, subdivision 4, and agrees it will comply with the r�porting requirements set
fortt� in Minnesota Staiutes, Section 4b9.154, subc�ivisions 5 and 7. The public hearing was held
on August 25, 2008, at the City Hall in the City of Arden Hills, a draft capy of the enclosed
appiicati�n with aIl attachr�ents was available #'or pub�ic inspection and all interested pa�ies
were afForded an opportunity ta �xpress their views.
City of Arde� Hi11s � 1245 West Highway 96 ♦ Arden Hills,lV1N + 55112-�743
Phone 651.792_78a� • Fax 651_634.5137 • wr�-w.ci.arden-�tills.mn.us
The City will undertake to encourage that t�e ernployment opportunities made availa��e
by the Froject will, if f�asible, be offered to individuals who are �xnemployed or who are
economicaily disadvantage�.
We respecifully request prampt approval by t�e Miru�esata Degartnne�t of Etnployrr►ent
and E�ono�ic Developmen# af the Project under tY►e provisior�s of the Act.
Sincerely,
C�TY OF A1tDEN H�LLS, MINNESOTA
Revised May, 2008
STAT� OF MINNESOTA
MINN�SOTA DEPARTMENT OF E[v�LOYMENT AND ECONOMIC DEVELOPMENT'
BUSINESS AND COMMUNT�'Y DEVELOPMENT DNISION
APP�.ICAT[ON FOR APPROVAL OI' �NDUSTRIA�, DEVELOPMENT QOND
PROJECT PURSUA.NT TO MINNESO�'A �TATUTES, �ECTION 469.152 THROUGH 4b9.165
{Please submit this forpn i� duplicate - ai1 sapporting dafa in s'r�gle capy onlyj
Date: Au�ust 25, 2008
The governing body of Cit of Arden Hi�ls Mir�nesota, hereby applies to the Minnesata
De�artzz�ent of Employ�nent ar�d Ecanomic Develop�nent (Departmentj for approval af a
proposed Tndustrial Developmertt Bot�d issue as required by Mitu�. Sta.t. § 4b9.1S2 - 469.165.
Address o� issuer. Cit of Arden Hiils, Mir�c�esota, Citv Hall, 1245 W Highway 96
Arden Hi�ls MN 551 I2-5743 �
Atiin: Ron Moarse Administrator
Telepho�e: 651-792-78fl0 Fax: 65 �-634-5137
We have eniered inta pr�liminary discussions wi1h:
Fir�r�: Presbyterian Horr�es Mana�ement anc! Attorney: ,�anna Severar�ce, Esq�__
Serv�ces Inc. �
Address: 2845 Hamline Avenue No. Address: 2845 Harn�ine Avenue No.
Suite 200
City: Rosevilie State MN Zip 55 � 13 City: Rosvilie State MN Zip 55113
, Name af Projeci: PHM&S Office Buildin Pra�ect
This �rin is �ngaged pri�narily in (nature of busin�ss): �i� owning_and a e� ratir�g healt�t care
facilities that rovide skilled nursin convalescent and re�abilitative care to eideri ersons ii
ownin anci o eratin assistsd tivin facilities and inde endent senior housin facilities iii
rovidin mana etnent services rimaril vc�ith res ect to abav�-descri�ed faciiities and iv
rovidin hame heaith care and other charitabie senior a�d residential care setvices.
The proceeds from the sate of the Industriai Development Bor�ds will be used to {descr�be the
project): eonstruct arid e ui ar� a roximat�l 27 OOp s uaze foot addition to the Barrower's
co orate head uarters located at 2845 Hamiine Avenue No. Roseville MN "Office
Facilities"), and fiiZreiinance �he_remaining_outsta�din� de�t the proceeds of which were used
b t�e Borrower to ac uire tl�e Office Faci�ities_ � �
Addresses of Project: 2845 Hamline Avenue No_ Roseviile MN
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Acquisition of land
New canstruction. (�prove�ter�ts io existing building)
Demoti#ior� a�d site preparation:
Acquisition and Instal�alion af Equiprr�ent:
Fees: Architectural, engincering, inspection, �scal, legal,
administration, or printing
Construction Interest:
Initiat Band Reserve:
Contingencies:
Other: (Refinancing)
Total:
$0
3,324,Q00
120,OOa
�50,000
ssa,000
0
0
0
8b0,00d
$S,S00,000
Ii is presently estimated that constntctian wil� begin on or about Se iember t 5 , 2008, and
wilt be co�npiete on or about .iune 3� , 2009_ When ca�npleted, t�ere wili be
appraximately N/A new jobs created by the project at an annual �ayrol� of approxitnateiy $ N!A
based upo�t cur�-ently prevailing wages. (i� applica�ie} There are 75 existing jobs pxovided by
business.
(If applicabie) There will l�e N/A �obs creaied by const�uction of the pro�ect. N�rnber o� hours
NIA . Average wage level $ N/A
RepaymenE af the proposed issue will be amortized over a pe�iod of 296 r�ontl�s.
The following �xhibits are furnished with this appiication and are a�cotporated herein by
reference:
�_ An opinion of bond cau��sel that the proposal cor�stituies a}�raject u�der Minn_ Stai.
§ 4b9.153, subd. 2.
2_ A copy o�the resoiution by th� govez-ciing bady of the issuer giving preiiminary approvat for
the issuance of its revenue bonds and stating that the pto�ec�, except Eor a project ur�der Minn.
Stat. § 459_ 153, subd_ 2(g} or (j) wouid nat be u�dertaken but for the availability of Indust�-ial
Devetoprr�ent Bond financing.
3_ A eompzehensive staten�ent by the municipality indicating haw the project satisfies the
pubiic or purpose and poticies of Mitin. Stat.§ 469. i52 - 469.165.
4_ A Letter of inlent to purchase the boad issue or a letter confirming t�e feasi6i(ity of ihe
project fram a financial standpvin#.
5. A staiement signed by the principal representative of the issuing authority to the e�fect that
upon enteri�.g into t�e revet�ue agreement, ��te it�formation required by Minr�_ Stat. § 459_ �54,
subd. 5 will be subr►iitted to the Depar�rr�ent (not appiicabl� to prvje�ts under Mi�n. Stat.
§ 469.153, subd 2ig) ac {�)•
220$7S7v1 �
b. A state�ent signed by t�e principal representative of the issuing authority that the project
does r�ot include any property to be sald or affixed to or consum�d in the production of
proper�y for saie, and does nat incl�de any housing facility to be rented or used as a
permanent residence.
7. A staternent signed by a representative of the issuing authority that a public hearing was
conducied pursuant to Minn. �tat. § 469.154, subd. 4. The statemeztt shaI� incltide the date,
iime a.nd p(aee of the �neeting and certify that a dra#�t copy of t�is appiication with a11
attacl�ments was available far public inspection and that ali interestec� parties were af%rded
an oppor�.inity to express their views.
$. Copi�s of notice(s} as published which indicate the date{s) aC publication and the
newspaper(s) i� which the �otice(s) were publis�ed.
9_ Pravide a plan for campiiance of employment pre�erence of ecor�o�n�cally disadvantaged �r
unempioyed individuals. (See Mirui_ Stat. § 469.15�, subd. 7.)
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We, tl�e undersigned, are duly eiected represet�tatives of �he Cit. ��Arden Hills Minnesoia
and solicit your approval o�this praject at yo�r ear�iest convenience so #hat we rnay carry it to a
final canciusion.
Sigr�ed by: (Principa� Off�cers or Representatives of Issuing Authority; tYpe or print
official's name on ihe line to the left of tl�e si ature lir�e. Thanlc you.)
Sta� Ha stead
Mayor Signature
Ma�ling Address: Cit Hall 1245 West Hi hwa 96
City_ Arden Hills State MN Zip 55112-5743
Ron Maorse
Administrator Siguature
Mai�ing Address: Cit Hal1 1245 West Hi hwa 96
City: Ard�r� Hi�ls State �VIN Zip 55 ��2-5743
This approvat shall not be deemed to be an ap�roval by the Department af the State of the
feasibiiity of the project or the terms of t�e revenue ab eemenl to be executed or the bor�ds to be
issued therefor.
Autho�ized Signature, Minnesota Departzxient af Date af Approval
E�nployment and Economic Development
Please returr� to: Mi�nesata Departtr�ent of Ernploymer�t and
Eco�a�r►ic Deve�opme�t
Maric Lofthus
Busir�ess and Commt�ity Deve�opment Direcior
I S` National Bank Building
332 Minnesota Street, Suite E200
Si. Paui, Mir�esota SSI4i-13�1
Phon.e: 65 i-259-7432 Fax: 65 i-296-5287
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