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(7) Pursuant to a Pledge Agreement (the "Pledge Agreement") to be entered into between the City and the Lender, the City has pledged and granted a security interest in all of its rights, title, and interest in the Loan Agreement to the Lender (except for certain rights of indemnification and to reimbursement for certain costs and expenses). A draft of the Pledge Agreement has been submitted to the City Council. (8) Pursuant to a Mortgage, Security Agreement and Fixture Financing Statement (the "Mortgage") to be executed by the Borrower in favor of the Lender, the Borrower has secured payment of amounts due under the Loan Agreement and Note by granting to the Lender a mortgage and security interest in the property described therein. A draft of the Mortgage has been submitted to the City Council although the City is not a party to the Mortgage. (9) The Note will be a special limited obligation of the City. The Note shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the City be subject to any liability thereon. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, nor to enforce payment thereof against any property of the City. The Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation. (10) It is desirable, feasible and consistent with the objects and purposes of the Act to issue the Note, for the purpose of financing the costs ofthe Project. 1.2 Authorization and Ratification of Proiect. The City has heretofore and does hereby authorize the Borrower, in accordance with the provisions of the Act and subject to the terms and conditions imposed by the Lender, to provide for the refinancing or acquisition and renovation of the Project by such means as shall be available to the Borrower and in the manner determined by the Borrower, and without advertisement for bids as may be required for the renovation and acquisition of other municipal facilities; and the City hereby ratifies, affirms, and approves all actions heretofore taken by the Borrower consistent with and in anticipation of such authority. SECTION 2 THE NOTE. 2.1 Authorized Amount and Form of Note. The Note issued pursuant to this Resolution shall be in substantially the form submitted to the City Council with such appropriate variations, omissions and insertions as are permitted or required by this Resolution, and in accordance with the further provisions hereof; and the total aggregate principal amount of the Note that may be outstanding hereunder is expressly limited to $1,400,000, unless a duplicate Note is issued pursuant to Section 2.7. The Note shall bear interest at an initial rate through and including the fifth anniversary of the date of closing. On the fifth anniversary of the date of closing and every five years thereafter, the interest rate on the Note will be adjusted. In no event shall the interest rate exceed eight percent (8%) per annum. The offer of the Lender to purchase the Note at a purchase price of $1,400,000 is hereby accepted. 1909189vl 3