HomeMy WebLinkAbout6.e. St. Joseph School Project - Approve the Issuance and Sale of an Educational Facilities Revenue NoteAGENDA ITEM: St. Joseph School Project Approve the
Issuance and Sale of an Educational
Facilities Revenue Note
AGENDA SECTION:
Consent
PREPARED BY: Jeff May, Finance Director
AGENDA NO. 6, e
ATTACHMENTS: Resolution, Loan Agreement
APPROVED BY:
n a.i
RECOMMENDED ACTION: Motion to adopt a Resolution Approving the Issuance and
Sale of an Educational Facilities Revenue Note and Authorizing the Execution of
Documents Relating Thereto (St. Joseph School Project).
4 ROSEMOUNT
CITY COUNCIL
City Council Meeting Date: October 21, 2008
EXECUTIVE SUMMARY
ISSUE
Take the necessary action to complete the financing for the St. Joseph school project.
BACKGROUND
This item is on the agenda for Council to approve the final resolution and authorize the execution of the
necessary documents to complete the financing for the St. Joseph school project. This is the first 2008
financing that the City will have undertaken for these types of notes since the Council adopted a Private
Activity Tax- Exempt Financing Policy on March 6 of 2006. This is the final step involving the financing
for this project for the City. It is important to understand that this approval does not constitute approval
or waiver of any other City regulations or requirements for the project, such as land use regulations.
St. Joseph's is in compliance with the City's Private Activity Tax Exempt Financing Policy at this time.
SUMMARY
Recommend approval of the motion listed under the Recommended Action.
2239887v2
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION 2008-
RESOLUTION APPROVING THE ISSUANCE AND SALE OF
AN EDUCATIONAL FACILITIES REVENUE NOTE
AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATED THERETO
(ST. JOSEPH SCHOOL PROJECT)
BE IT RESOLVED by the City Council of the City of Rosemount, Minnesota (the "City as
follows:
SECTION 1 LEGAL AUTHORIZATION AND FINDINGS.
1.1 Findings. The City hereby finds, determines and declares as follows:
(1) The City is a political subdivision of the State of Minnesota and is authorized under
Minnesota Statutes, Section 469.152 to 469.1651, as amended (the "Act to assist the revenue
producing project herein referred to, and to issue and sell the Note (as hereinafter defined), in the
manner and upon the terms and conditions set forth in the Act and in this Resolution for the
purpose of encouraging the development of economically sound industry and commerce, preventing
so far as possible the emergence of blighted and marginal lands and areas of chronic unemployment,
providing an adequate tax base to finance the increasing cost of governmental services, providing
access to employment opportunities for its population, and promoting the establishment and
retaining quality educational facilities within the City for the general welfare of its inhabitants.
(2) The City has received a proposal that it issue its revenue note in one or more series in a
principal amount not to exceed $4,775,000 to provide funds to be loaned to The Church of St.
Joseph of Rosemount, Minnesota, a Minnesota religious corporation (the "Borrower to finance a
portion of the costs of the construction and equipping of an approximately 46,000 square foot K -8
school to be located at 13900 Biscayne Avenue in the City, which facilities will be owned and
operated by the Borrower (the "Project
(3) As required by the Act and Section 147(f) of the Internal Revenue Code of 1986, as
amended (the "Code the City has heretofore held a public hearing on the issuance of one or more
revenue notes to finance the Project.
(4) On the basis of information available to the City it appears, and the City hereby finds, that
the Project constitutes properties, real and personal, used or useful in connection with a revenue
producing enterprise within the meaning of Subdivision 2(b) of Section 469.153 of the Act; that the
availability of the financing under the Act and the willingness of the City to furnish such financing
will be a substantial inducement to the Company to undertake the Project; and that the effect of the
Project, if undertaken, will be to facilitate the selective development of the community, help to
provide the range of services and employment opportunities required by the population, including
educational facilities, and to help prevent the movement of talented and educated persons out of the
State and to areas within the State where their services may not be as effectively used; and the
Project will assist the City in achieving those objectives and will enhance the image and reputation of
the community.
(5) The issuance and sale of the Educational Facilities Revenue Note, Series 2008A (St. Joseph
School Project) (the "Note by the City, pursuant to the Act, is in the best interest of the City, and
the City hereby determines to issue the Note and to sell the Note to Anchor Bank Saint Paul,
National Association, a national banking association (the "Lender as provided herein. The City
will loan the proceeds of the Note (the "Loan to the Borrower in order to finance the Project.
(6) Pursuant to a Loan Agreement (the "Loan Agreement to be entered into between the City,
the Borrower and the Lender, the Borrower has agreed to repay the Note in specified amounts and
at specified times sufficient to pay in full when due the principal of, premium, if any, and interest on
the Note. In addition, the Loan Agreement contains provisions relating to the expenditure of
proceeds of the Note, the maintenance and operation of the Project, indemnification, insurance, and
other agreements and covenants which are required or permitted by the Act and which the City, the
Borrower and Lender deem necessary or desirable for the financing of the Project. A draft of the
Loan Agreement has been submitted to the City Council.
(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 Construction Loan Funding Agreement (the "Construction Loan Funding
Agreement to be entered into between the Borrower and the Lender and a Construction Loan
Disbursing Agreement (the "Disbursing Agreement to be entered into among the Borrower, the
City, the Lender and Dakota County Abstract Company, as the agent of Old Republic National Title
Insurance Company, the proceeds of the Note and a conventional loan from the Lender in the
principal amount not to exceed $1,825,000 (the "Conventional Loan will be disbursed to the
Borrower to pay the costs of the Project.
(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 of the Project.
SECTION 2 THE NOTE.
RESOLUTION 2008
2.1 Authorized Amount and Form of Note. The Note in substantially the form attached hereto
as Exhibit A is hereby approved, together with such additional details therein as may be necessary
and appropriate and such modifications thereof, deletions therefrom and additions thereto as may
be necessary and appropriate and approved by Bond Counsel prior to the execution and delivery of
the Note. The total principal amount of the Note that may be outstanding hereunder is expressly
limited to $4,775,000, unless a duplicate Note is issued pursuant to Section 2.7. The Note shall beat
interest at the rate set forth therein. The offer of the Lender to purchase the Note at a purchase
price of par is hereby accepted.
2.2 The Note. The Note shall 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 forth therein.
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2.3 Execution. The Note shall be executed on behalf of the City by the signatures of its Mayor
and Clerk and shall be sealed with the seal of the City; provided that the seal may be intentionally
omitted as provided by law. In case any officer whose signature shall appear on the Note shall cease
to be such officer before the delivery of the Note, such signature shall nevertheless be valid and
sufficient for all purposes, the same as if had remained in office until delivery. In the event of the
absence or disability of the Mayor and Clerk such officers of the City as, in the opinion of the City
Attorney, may act in their behalf, shall without further act or authorization of the City Council
execute and deliver the Note.
RESOLUTION 2008
2.4 Delivery of Initial 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 documents:
(f)
the Loan Agreement; and
the Pledge Agreement.
the Construction Loan Funding Agreement;
the Disbursing Agreement.
an opinion of Counsel for the Borrower as prescribed by the Lender and Bond Counsel;
the opinion of Bond Counsel as to the validity and tax exempt status of the Note;
(g) a 501(c)(3) determination letter from the Internal Revenue Service evidencing that the
Borrower is exempt from income taxation under Section 501(c)(3) of the Code;
(h) such other documents and opinions as Bond Counsel may reasonably require for purposes
of rendering its opinion required in subsection (3) above or that the Lender may reasonably require
for the closing.
2.5 Disposition of Note Proceeds. Upon delivery of the Note to Lender, the Lender shall, on
behalf of the City, disburse the proceeds of the Note for payment of Project Costs in accordance
with the terms of the Loan Agreement, the Construction Loan Funding Agreement and the
Disbursing Agreement.
2.6 Registration of Transfer. The City will cause to be kept at the office of the Clerk, a Note
Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide
for the registration of transfers of ownership of the Note. The Note shall be initially registered in
the name of 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 of the Note together with a written
instrument of transfer satisfactory to the Clerk, duly executed by the Lender or its duly authorized
agent. The following form of assignment shall be sufficient for said purpose.
For value received hereby sells, assigns and transfers
unto the within Note of the City of Rosemount,
Minnesota, and does hereby irrevocably constitute and appoint
attorney to transfer said Note on the books
of said City with full power of substitution in the premises. The
2239887v2 3
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.
SECTION 3 MISCELLANEOUS.
2239887v2 4
Registered Owner
RESOLUTION 2008
Dated:
Upon such transfer the Clerk shall note the date of registration and the name and address of the new
Lender in the Note Register and in the registration blank appearing on the Note.
2.7 Mutilated. Lost or Destroyed Note. In case any Note issued hereunder shall become
mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed
and delivered, a new Note of like outstanding principal amount, number and tenor in exchange and
substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for
such Note destroyed ot lost, upon the Lender's paying the reasonable expenses and charges of the
City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of
evidence satisfactory to the City with indemnity satisfactory to it. If the mutilated, destroyed or lost
Note has already matured or been called for redemption in accordance with its terms it shall not be
necessary to issue a new Note prior to payment.
2.8 Ownership of Note. The City may deem and treat the person in whose name the Note is
last registered in the Note Register and by notation on the Note whether or not such Note shall be
overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account
of the Principal Balance, redemption price or interest and for all other purposes whatsoever, and the
City shall not be affected by any notice to the contrary.
2.9 Limitation on Note Transfers. The Note has been issued without registration under state or
other securities laws, pursuant to an exemption for such registration; and accordingly the Note may
not be assigned or transferred in whole or part, nor may a participation interest in the Note be given
pursuant to any participation agreement, except as an exempt security or as an exempt transaction.
2.10 Issuance of New Notes. Subject to the provisions of Section 2.9, the City shall, at the
request and expense of the Lender, issue new notes, in aggregate outstanding principal amount equal
to that of the Note surrendered, and of like tenor except as to number, principal amount, and the
amount of the monthly installments payable thereunder, and registered in the name of the Lender or
such transferee as may be designated by the Lender.
3.1 Severability. If any provision of this Resolution shall be held or deemed to be or shall, in
fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or
jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any
constitution or statute or rule or public policy, or for any other reason, such circumstances shall not
have the effect of rendering the provision in question inoperative or unenforceable in any other case
or circumstance, or of rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases,
sentences, clauses ot paragraphs in this Resolution contained shall not affect the remaining portions
of this Resolution or any part thereof.
2239887v2 5
RESOLUTION 2008
3.2 Authentication of Transcript. The officers of the City are directed to furnish to Bond
Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or
certificates as to all other matters which are reasonably necessary to evidence the validity of the
Note. All such certified copies, certificates and affidavits, including any heretofore furnished, shall
constitute recitals of the City as to the correctness of all statements contained therein.
3.3 Authorization to Execute Agreements. The forms of the proposed Loan Agreement, the
Pledge Agreement, and Disbursing Agreement are hereby approved in substantially the form
heretofore presented to the City Council, together with such additional details therein as may be
necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto
as may be necessary and appropriate and approved by Bond Counsel prior to the execution of the
documents, and the Mayor and Clerk of the City are authorized to execute the Loan Agreement, the
Pledge Agreement, and Disbursing Agreement, and such other documents as Bond Counsel
considers appropriate in connection with the issuance of the Note, in the name of and on behalf of
the City. In the event of the absence or disability of the Mayor or Clerk such officers of the City as,
in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization
of the City Council do all things and execute all instruments and documents required to be done or
executed by such absent or disabled officers. The execution of any instrument by the appropriate
officer or officers of the City herein authorized shall be conclusive evidence of the approval of such
documents in accordance with the terms hereof.
3.4 Bond Counsel. Briggs and Morgan, Professional Association, acting as bond counsel, is
authorized to assist in the preparation and review of the necessary documents relating to the Project,
to consult with the City, the Borrower, the Lender, and their respective attorneys, as to the
maturities, interest rates and other terms and provisions of the Note and as to the covenants and
other provisions of the revenue agreement and other necessary documents and to submit such
documents to the appropriate officers of the City for execution.
3.5 Miscellaneous. The Borrower has agreed and it is hereby determined that any and all costs
incurred by the City in connection with the financing of the Project whether or not the Project is
carried to completion will be paid by Borrower.
3.6 No Liability of City. Nothing in this resolution or in the documents prepared pursuant
hereto shall authorize the expenditure of any municipal funds on the Project other than the revenues
derived from the Project or otherwise granted to the City for this purpose. The Note shall not
constitute a charge, lien or encumbrance, legal or equitable, upon any property or funds of the City
except the revenues and proceeds pledged to the payment thereof, nor shall the City be subject to
any liability thereon. The holders of the Note shall never have the right to compel any exercise of
the taxing power of the City to pay the outstanding principal on the Note or the interest thereon, or
to enforce payment thereof against any property of the City. The Note shall recite in substance that
the Note, including interest thereon, are payable solely from the revenue and proceeds pledged to
the payment thereof. The Note shall not constitute a debt of the City within the meaning of any
constitutional or statutory limitation.
Adopted by the City Council of the City of Rosemount, Minnesota this 21st day of October, 2008.
ATTEST:
Clerk
2239887v2 6
Mayor
RESOLUTION 2008
STATE OF MINNESOTA
COUNTY OF DAKOTA
CITY OF ROSEMOUNT
duly appointed, acting and qualified Clerk of the City of Rosemount, do
hereby certify that I have examined the City of Rosemount records and the Minute Book of said
Authority for the meeting of the 21st of October, 2008 and that the attached copy of the
RESOLUTION APPROVING THE ISSUANCE AND SALE OF AN EDUCATIONAL
FACILITIES REVENUE NOTE AND AUTHORIZING THE EXECUTION OF
DOCUMENTS RELATED THERETO (ST. JOSEPH SCHOOL PROJECT) was approved and is
a true and correct copy of the City Proceedings relating to said Resolution.
IN WITNESS.WHEREOF, I have hereunto set my hand this day of 2008.
2239887v2
CERTIFICATE
Clerk
City of Rosemount
Except for certain reserved rights, the interest of the City of Rosemount, Minnesota, in this Loan
Agreement has been pledged and assigned to Anchor Bank Saint Paul, National Association
pursuant to a Pledge Agreement of even date herewith.
This instrument drafted by:
Briggs and Morgan, Professional Association (MMD)
W2200 First National Bank Building
332 Minnesota Street
Saint Paul, Minnesota 55101
2239784v1
LOAN AGREEMENT
BETWEEN
CITY OF ROSEMOUNT, MINNESOTA
AND
THE CHURCH OF ST. JOSEPH OF ROSEMOUNT, MINNESOTA
AND ANCHOR BANK SAINT PAUL, NATIONAL ASSOCIATION
Dated November 2008
Page
ARTICLE 1 DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION 1
Section 1.1 Definitions 1
Section 1.2 Rules of Interpretation 5
ARTICLE 2 REPRESENTATIONS 5
Section 2.1 Representations by the Issuer 5
Section 2.2 Representations by the Borrower 6
ARTICLE 3 THE LOAN 9
Section 3.1 Amount and Source of Loan 9
Section 3.2 Documents Required Prior to Disbursement of the Loan 9
Section 3.3 Disbursement of the Loan 10
Section 3.4 Repayment 10
Section 3.5 Borrower's Obligations Unconditional 10
Section 3.6 Fees to Issuer 10
ARTICLE 4 BORROWER'S COVENANTS 10
Section 4.1 Indemnity 10
Section 4.2 Continuing Existence and Qualification 11
Section 4.3 Reports to Governmental Agencies 11
Section 4.4 Security for the Loan 11
Section 4.5 Preservation of Tax Exemption 12
Section 4.6 Lease or Sale of Project 14
Section 4.7 Project Operation and Maintenance Expenses 14
Section 4.8 Notification of Changes 15
Section 4.9 Additional Covenants 15
ARTICLE 5 PREPAYMENT OF LOAN 17
Section 5.1 Prepayment at Option of Borrower 17
ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES 17
Section 6.1 Events of Default 17
Section 6.2 Remedies 18
Section 6.3 Disposition of Funds 19
Section 6.4 Manner of Exercise 19
Section 6.5 Attorneys' Fees and Expenses 19
Section 6.6 Effect of Waiver 19
ARTICLE 7 GENERAL 19
Section 7.1 Notices 19
Section 7.2 Binding Effect 20
Section 7.3 Severability 20
Section 7.4 Amendments, Changes and Modifications 20
Section 7.5 Execution Counterparts 20
Section 7.6 Limitation of Issuer's Liability 20
Section 7.7 Issuer's Attorneys Fees and Costs 21
Section 7.8 Release 21
Section 7.9 Assignment by Issuer and Survivorship of Obligations 21
2239784v1
TABLE OF CONTENTS
-i-
2239784v1
TABLE OF CONTENTS
(continued)
Section 7.10 Required Approvals 22
Section 7.11 Termination Upon Retirement of Note 22
Section 7.12 Lender's Attorneys' Fees and Costs 22
Page
THIS LOAN AGREEMENT dated as of November 2008, between the City of
Rosemount, Minnesota, a municipal corporation organized under the Constitution and laws of
the State of Minnesota (the "Issuer and The Church of St. Joseph of Rosemount, a Minnesota
religious corporation (the "Borrower
WITNESSETH that the Issuer and the Borrower each in consideration of the
representations, covenants and agreements of the other as set forth herein, mutually represent,
covenant and agree as follows:
2239784v1
ARTICLE 1
DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION
Section 1.1 Definitions. In this Agreement the following terms have the following
respective meanings unless the context hereof clearly requires otherwise:
Act: Minnesota Statutes, Sections 469.152 to 469.1651, as amended;
Agreement: this Loan Agreement between the Issuer and the Borrower as the same may
from time to time be amended or supplemented as herein provided;
Bond Counsel: the firm of Briggs and Morgan, Professional Association, of Saint Paul,
Minnesota or another nationally recognized bond counsel selected by the Issuer; any opinion of
Bond Counsel shall be a written opinion signed by Bond Counsel;
Borrower: The Church of St. Joseph of Rosemount, Minnesota, a Minnesota religious
corporation, its successors and assigns, and any surviving, resulting or transferee business entity
which may assume its obligations in accordance with the provisions of this Agreement;
Closing: the date of physical delivery of the Note to the Lender;
Code: the Internal Revenue Code of 1986, as amended, and the temporary, final or
proposed regulations promulgated thereunder;
Commitment for Title Insurance: a commitment or collectively the commitments for a
mortgagee's policy or policies of title insurance in the aggregate amount of the Loan and the
other Conventional Loan, by which Title commits to issue a mortgagee's policy or policies of
title insurance that:
(a) specifically insures that the First Mortgage is a first mortgage lien on the
Mortgaged Property;
(b) specifically insures that the Second Mortgage is a second mortgage lien
(subject only to the First Mortgage) on the Mortgaged Property;
(c) waives the following standard exceptions and insures over (i) facts which
would be disclosed by a comprehensive survey of the Land, (ii) rights and claims of parties in
possession, and (iii) mechanic's, contractor's or materialmen's liens and lien claims;
(d) is subject only to those exceptions specifically approved by Lender and
described in Exhibit B to the Mortgages; and
(e) includes such endorsements as required by Lender and Lender's legal
counsel;
Conventional Loan: the loan to be made by the Lender to the Borrower pursuant to the
Construction Loan Funding Agreement and evidenced by the Conventional Note;
Construction Documents: shall have the same meaning given to such term in the
Construction Loan Funding Agreement.
Construction Loan Funding Agreement: the Construction Loan Funding Agreement
between the Borrower and Lender pursuant to which the Conventional Loan is made by the
Lender to the Borrower and pursuant to which the proceeds of the Note and Conventional Loan
will be advanced to or for the account of the Borrower to pay the costs of the Project, including
any amendment thereof or supplement thereto;
Conventional Loan Documents: the following documents, as the same from time to time
may be amended or supplemented, each of which shall be satisfactory to Lender in form and
substance:
(0 the Conventional Note;
(g) this Construction Loan Funding Agreement;
(h) the Disbursing Agreement;
(i) the First Mortgage;
(j) UCC -1 Financing Statements covering all personal property owned by
Borrower and used in connection with the Mortgaged Property and/or covered by the Security
Agreement;
(k) the Security Agreement; and
(1) the Environmental and ADA Indemnity Agreement
Conventional Note: the Promissory Note issued by the Borrower to the order of Lender in
the face amount of $1,825,000, including any amendment thereof or supplement thereto;
Counsel: an attorney designated by or acceptable to the Lender, duly admitted to practice
law before the highest court of any state; an attorney for the Borrower or the Issuer may be
eligible for appointment as Counsel;
Date of Taxability: shall have the meaning ascribed to it in Section 4.5(2) hereof;
Determination of Taxability: shall have the meaning ascribed to it in Section 4.5(2)
hereof;
2239784v1 2
Disbursing Agreement: the Construction Loan Disbursing Agreement among the
Borrower, the Lender, the Issuer and Title pursuant to which pursuant to which the proceeds of
the Note and Conventional Loan will be disbursed to or for the account of the Borrower to pay
the costs of the Project, including any amendment thereof or supplement thereto;
Environmental and ADA Indemnity Agreement: the Environmental and ADA Indemnity
Agreement of even date herewith between Borrower and Lender, including any amendment
thereof or supplement thereto;
Equipment: any and all machinery, fixtures, equipment, furniture and other tangible
personal property purchased or to be purchased by the Borrower with the proceeds of the Loan or
the Conventional Loan and all replacements and substitutions therefore;
Event of Default: any of the events described in Section 6.1 hereof;
First Mortgage: the Mortgage and Security Agreement, Fixture Financing Statement and
Assignment of Leases and Rents dated November 2008, securing the Conventional Note,
including any amendment thereof or supplement thereto;
Improvements: any and all buildings, structures or improvements, including without
limitation the Project, now or hereafter located on the Land, as they may at any time exist;
Issuance Expenses: shall mean any and all costs and expenses relating to the issuance,
sale and delivery of the Note, including, but not limited to, any fees of the Lender, all fees and
expenses of legal counsel, financial consultants, feasibility consultants and accountants, any fee
to be paid to the Issuer, the cost of preparation and printing of this Agreement, the Mortgages,
the Resolution, the Pledge Agreement, the Disbursing Agreement, the Conventional Loan
Document and all other related documents, and all other expenses relating to the issuance, sale
and delivery of the Note and any other costs which are treated as "issuance costs" within the
meaning of Section 147(g) of the Code;
Land: the real property and any other easements and rights described in Exhibit A to the
Mortgage;
Lender: Anchor Bank Saint Paul, National Association, a national banking association,
in Apple Valley, Minnesota, its successors and assigns;
Loan: the loan of Note proceeds from the Issuer to the Borrower described in Section 3.1
hereof;
Mortgage and Mortgages: separately and collectively, the First Mortgage and the Second
Mortgage;
Mortgaged Property: the Land, the Improvements, the Equipment and the other land and
property, tangible or intangible, mortgaged pursuant to the Mortgages;
Note: the City of Rosemount, Minnesota Educational Facilities Revenue Note, Series
2008A (St. Joseph School Project);
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Pledge Agreement: the Pledge Agreement of even date herewith between the Issuer and
the Lender pledging and assigning the Issuer's interest in the Loan Agreement to the Lender to
the extent provided therein;
Pledges: all of the Pledges now or hereafter made by the parishioners of Borrower and
others pursuant to Borrower's School Expansion Capital Campaign;
State: the State of Minnesota;
Title: Dakota County Abstract Company, as the agent of Old Republic National Title
Insurance Company.
Treasury Regulations: all proposed, temporary or permanent federal income tax
regulations then in effect and applicable.
Prime Rate: the prime rate of
[Is this definition necessary
Principal Balance: so much of the principal sum on the Note as from time to time
remains unpaid;
Project: the Improvements, including any Equipment and tangible personal property, to
be constructed and installed by the Borrower on the Land, constituting generally (i) the
acquisition, construction and equipping of new school facility located at 13900 Biscayne Avenue
in City of Rosemount. The portion of the Project financed by the Note specifically does not
include any facilities that may be used as a chapel or primarily used for religious instruction or
worship, which sectarian facilities have been financed with other funds available to the Borrower
and not from Note proceeds;
Resolution: the Final Resolution of the Issuer, adopted October 21, 2008, authorizing the
issuance of the Note together with any supplement or amendment thereto;
Second Mortgage: the Mortgage and Security Agreement, Fixture Financing Statement
and Assignment of Leases and Rents dated November 2008, securing the Note and the
Borrower's obligations under this Agreement, including any amendment thereof or supplement
thereto;
Security Agreement: the security agreement of even date herewith between Borrower
and Lender covering the Pledges and all Pledge receipts, and including all accounts, documents,
chattel paper, contract rights, rights to payment of money and general intangibles arising from or
relating to Borrower's capital improvement fund raising and mortgage repayment or debt
reduction campaign's and the Pledges, and other collateral of Borrower (as more fully described
in the Security Agreement), including any amendment thereof or supplement thereto;
School Expansion Capital Campaign: the capital fund raising campaign designated by
Borrower to fund either Project Costs or general capital debt repayment;
2239784v1 4
as published in the Wall Street Journal.
Section 1.2 Rules of Interpretation.
(1) This Agreement shall be interpreted in accordance with and governed by the laws
of the State of Minnesota.
(2) The words "herein" and "hereof' and words of similar import, without reference
to any particular section or subdivision, refer to this Agreement as a whole rather than to any
particular section or subdivision hereof.
(3) References herein to any particular section or subdivision hereof are to the section
or subdivision of this instrument as originally executed.
(4) Where the Borrower is permitted or required to do or accomplish any act or thing
hereunder, the Issuer or the Lender may cause the same to be done or accomplished with the
same force and effect as if done or accomplished by the Borrower.
(5) The Table of Contents and titles of articles and sections herein are for
convenience only and are not a part of this Agreement.
(6) Unless the context hereof clearly requires otherwise, the singular shall include the
plural and vice versa and the masculine shall include the feminine and vice versa.
(7) Articles, sections, subsections and clauses mentioned by number only are those so
numbered which are contained in this Agreement.
(8) References to the Note as "tax exempt" or to the "tax exempt status of the Note"
are to the exclusion of interest on the Note from gross income pursuant to Section 103(a) of the
Code.
ARTICLE 2
REPRESENTATIONS
Section 2.1 Representations by the Issuer. The Issuer makes the following
representations as the basis for its covenants herein:
(1) the Issuer is a municipal corporation duly organized under the Constitution and
the laws of the State of Minnesota;
(2) in authorizing the issuance of the Note, the Issuer's purpose is, and in its judgment
the effect thereof will be, to promote the public welfare by: the attraction, encouragement and
development of economically sound industry and commerce so as to prevent, so far as possible,
the emergence of blighted and marginal lands and areas of chronic unemployment and to aid in
the redevelopment of areas of existing blight, marginal land and persistent unemployment; the
development of industry to use the available resources of the community, in order to retain the
benefit of the community's existing investment in educational and public service facilities;
halting the movement of talented, educated personnel of mature age to other areas and thus
preserving the economic and human resources needed as a base for providing governmental
2239784v1 5
services and facilities; providing accessible employment opportunities for residents in the area;
and provision of educational facilities;
(3) the issuance and sale of the Note, the execution and delivery of this Agreement,
the Disbursing Agreement, the Pledge Agreement, and the performance of all covenants and
agreements of the Issuer contained in this Agreement, the Note, the Pledge Agreement and the
Disbursing Agreement are authorized by the Act and have been duly authorized by a resolution
of the governing body of the Issuer adopted at a meeting thereof duly called and held on October
21, 2008, by the affirmative vote of not less than a majority of its members;
(4) pursuant to the Resolution, the Issuer has authorized and directed the Lender to
disburse the proceeds of the Note to finance a portion of the costs of the Project, upon the receipt
of such supporting documentation and the satisfaction of such conditions as the Lender or Title
may require under the Construction Loan Funding Agreement and the Disbursing Agreement;
(5) this Agreement and the Note is a program investment within the meaning of
Treas. Reg. 1.148 -1 because it is part of a governmental program in which (a) the program
involves the origination or acquisition of purpose investments, (b) at least 95 percent of the cost
of the purpose investments acquired under the program represents one or more loans to 501(c)(3)
organizations, (c) at least 95 percent of the receipts from the purpose investments are used to pay
principal, interest or redemption prices on issues that financed the program, to pay or reimburse
administrative costs of those issues or of the program, to pay or reimburse anticipated future
losses directly related to the program, to finance additional purpose investments for the same
general purposes of the program, or to redeem and retire governmental obligations at the next
earliest possible date of redemption, (d) the program documents prohibit any obligor on a
purpose investment financed by the program or any related party to that obligor from purchasing
bonds of an issue that finance the program in an amount related to the amount of the purpose
investment acquired from that obligor, and (e) the Issuer has not waived the right to treat the
investment as a program investment. The yield on this Agreement includes certain fees payable
by the Borrower as provided herein, but does not exceed the yield on the Note by more than one
and one -half percentage points.
Section 2.2 Representations by the Borrower. The Borrower makes the following
representations as the basis for its covenants herein:
(1) the Borrower is a Minnesota religious corporation duly incorporated and in good
standing under the laws of the State of Minnesota, is duly authorized to conduct its business in
all states where its activities require such authorization, has power to enter into this Agreement,
the Disbursing Agreement, the Mortgages and the Conventional Loan Documents, and to use the
Project for the purpose set forth in this Agreement and by proper corporate action has authorized
the execution and delivery of this Agreement, the Disbursing Agreement, the Mortgages and the
Conventional Loan Documents;
(2) the Borrower is an organization described in Section 501(c)(3) of the Code and is
exempt from tax under Section 501(a) of the Code. The Borrower is not a "private foundation"
as defined in Section 509(a) of the Code. Not more than five percent (5 of the proceeds of the
Note will be used, directly or indirectly, to fmance or refinance property used in an unrelated
2239784v1 6
trade or business of the Borrower determined by applying Section 513(c) of the Code or in the
trade or business of any person other than an organization described in Section 501(c)(3) of the
Code. There is no action, proceeding or investigation pending or threatened by the Internal
Revenue Service or authorities of the State of Minnesota which, if adversely determined, might
result in a modification of the status of the Borrower as an organization described in Section
501(c)(3) of the Code;
(3) the execution and delivery of this Agreement, the Disbursing Agreement, the
Mortgages and the Conventional Loan Documents, the consummation of the transactions
contemplated hereby and thereby, and the fulfillment of the terms and conditions hereof and
thereof do not and will not conflict with or result in a breach of any of the terms or conditions of
the Borrower's articles of incorporation, its bylaws, any restriction or any agreement or
instrument to which the Borrower is now a party or by which it is bound or to which any
property of the Borrower is subject, and do not and will not constitute a default under any of the
foregoing or a violation of any order, decree, statute, rule or regulation of any court or of any
state or federal regulatory body having jurisdiction over the Borrower or its properties, including
the Project, and do not and will not result in the creation or imposition of any lien, charge or
encumbrance of any nature upon any of the property or assets of the Borrower contrary to the
terms of any instrument or agreement to which the Borrower is a party or by which it is bound;
(4) the use of the Project complies, in all material respects, with all presently
applicable development, pollution control, water conservation and other laws, regulations, rules
and ordinances of the federal government and the State of Minnesota and the respective agencies
thereof and the political subdivisions in which the Project is located. The Borrower has all
necessary and material approvals of and licenses, permits, consents and franchises from federal,
state, Issuer, municipal or other governmental authorities having jurisdiction over the Project to
operate the Project and to enter into, execute and perform its obligations under this Agreement,
the Disbursing Agreement, the Mortgages and the Conventional Loan Documents; and no
violation of any local ordinance, laws, regulation or requirement exists with respect to the Land;
(5) the proceeds of the Note and the Conventional Loan, together with any other
funds to be contributed by the Borrower or otherwise in accordance with this Agreement, will be
sufficient to finance the Project, and all costs and expenses incidental thereto, and the proceeds
of the Note will be used only for the purposes contemplated hereby and allowable under the Act;
(6) the Project is economically more feasible with the availability of the long term
financing herein authorized;
(7) the Borrower is not in the trade or business of selling properties such as the
Project and is operating the Project for its charitable purposes only, and therefore the Borrower
has no intention now or in the foreseeable future to voluntarily sell, surrender or otherwise
transfer, in whole or part, its interest in the Project;
(8) there are no actions, suits, or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any property of the Borrower in any
court or before any federal, state, municipal or other governmental agency, which, if decided
adversely to the Borrower would have a material adverse effect upon the Borrower or upon the
2239784v1 7
business or properties of the Borrower; and the Borrower is not in default with respect to any
order of any court or governmental agency;
(9) the Borrower is not in default in the payment of the principal of or interest on any
indebtedness for borrowed money nor in default under any instrument or agreement under and
subject to which any indebtedness for borrowed money has been issued;
(10) the Borrower has filed all federal and state income tax returns which, to the
knowledge of the officers of the Borrower, are required to be filed and has paid all taxes shown
on said returns and all assessments and governmental charges received by the Borrower to the
extent that they have become due;
(11) no public official of the Issuer has either a direct or indirect fmancial interest in
this Agreement nor will any public official either directly or indirectly benefit financially from
this Agreement;
(12) the Borrower has approved the terms and conditions of the Note;
(13) the financial information supplied to the Lender truly and completely discloses
the financial condition of the Borrower as of the date of such information, and there have been
no material adverse changes in the financial condition of the Borrower subsequent to the date of
the most recent financial statement supplied to Lender;
(14) this Agreement, the Disbursing Agreement, the Mortgages, the Conventional
Loan Documents, and the documents and agreements relating to the foregoing, when executed
and delivered by the Borrower, constitute legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms (subject, as to
enforceability, to limitations resulting from bankruptcy, insolvency, and other similar laws
affecting creditors' rights generally);
(15) no proceeds of the Note will be used to refinance any portions of the Project used
for any religious purpose;
(16) that, for so long as the Note is outstanding:
(a) the Borrower shall not impose any qualifications related to religious
beliefs on any of its teaching faculty or staff and shall not consider an applicant's religious
beliefs when hiring teaching faculty or staff (except to the extent based on a bona fide
occupational qualification);
(b) the Borrower's core curriculum shall include instruction in subjects and in
a manner generally consistent with the compulsory instruction report issued by the Minnesota
Department of Education;
(c) the Borrower shall maintain a policy for the Project of enrollment of
students without regard to race, religion, color, sex or national or ethnic origin and a policy of
hiring of faculty and staff without regard to race, religion (except to the extent based on a bona
fide occupational qualification), color, sex or national or ethnic origin; and
2239784v1 8
and
(d) the Borrower shall not require students to participate in religious services;
(17) The Borrower agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect until such time as the Loan shall be
paid in full.
ARTICLE 3
THE LOAN
Section 3.1 Amount and Source of Loan. The Issuer has authorized the issuance of
the Note in the aggregate principal amount of $4,775,000 to provide funds to the Borrower to
partially finance the Project. The Issuer agrees to lend the Borrower, upon the terms and
conditions set forth herein, the proceeds received from the Note by causing such sums to be
applied and disbursed in accordance with the provisions of this Agreement, the Disbursing
Agreement and the Construction Loan Funding Agreement. Forthwith upon the execution and
delivery of this Agreement and all other documents and instruments necessary to the transactions
contemplated hereby and the recording and filing of such documents as may be required to be
filed or recorded by the Lender or Bond Counsel, the Issuer will execute the Note and cause it to
be delivered to the Lender.
Section 3.2 Documents Required Prior to Disbursement of the Loan. Prior to any
advance of Note proceeds, the Borrower shall deliver to the Lender the following:
(1) The Note.
(2) The Loan Agreement.
(3) The Pledge Agreement.
(4) The Disbursing Agreement.
(5) The Mortgages.
(6) The Conventional Loan Documents.
(7) The opinion of Bond Counsel to the effect that the Issuer has duly authorized the
Note and that the interest thereon is exempt from federal income taxation and subject to other
conditions acceptable to the Lender.
(8) Opinions of counsel for Borrower stating that the Loan Agreement, Mortgages,
and the Conventional Loan Documents to which Borrower is a party have been duly executed
and delivered and are the legal and binding obligations of Borrower, enforceable in accordance
with their respective terms, subject to limitations of State and Federal laws affecting remedies,
and to bankruptcy, insolvency and other laws affecting creditor's rights generally, and addressing
2239784v1 9
such other matters as Lender may require:
(9) The Commitment for Title Insurance Policy in a "marked -up" or "proforma" form
acceptable to the Lender.
Section 3.3 Disbursement of the Loan. Pursuant to this Agreement and the Act, the
Issuer has authorized the Borrower and Lender to apply the proceeds of the Note at Closing to
pay costs of issuance of the Note.
Section 3.4 Repayment. Subject to the prepayment provisions set forth in the Note,
the Borrower agrees to repay the Loan by making all payments of principal, interest and any
premium, penalty or charge that are required to be made under the Note at the times and in the
amounts provided therein. All payments shall be made directly to the Lender at its office
designated in the Construction Loan Funding Agreement. The Borrower represents and
covenants that the source of payment of the Note is from revenues derived from the operation of
the Project and other amounts available to the Borrower.
Section 3.5 Borrower's Obligations Unconditional. All payments required of the
Borrower hereunder shall be paid without notice or demand and without setoff, counterclaim,
abatement, deduction or defense. The Borrower will not suspend or discontinue any payments,
and will perform and observe all of its other agreements in this Agreement, and, except as
expressly permitted herein, will not terminate this Agreement for any cause, including but not
limited to any acts or circumstances that may constitute failure of consideration, destruction or
damage to the Project, eviction by paramount title, commercial frustration of purpose,
bankruptcy or insolvency of the Issuer or the Lender, change in the tax or other laws or
administrative rulings or actions of the United States of America or of the State of Minnesota or
any political subdivision thereof, or failure of the Issuer to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of or connected with
this Agreement.
Section 3.6 Fees to Issuer. The Borrower shall pay to the Issuer at Closing, the sum of
which is equal to one percent (1 of $4,775,000.
ARTICLE 4
BORROWER'S COVENANTS
Section 4.1 Indemnity. The Borrower will, to the extent permitted by law, pay, and
will protect, indemnify and save the Issuer, its officers, agents and employees harmless from and
against all liabilities, losses, damages, costs, expenses (including attorneys' fees and expenses),
causes of action, suits, claims, demands and judgments of any nature arising from:
(1) any injury to or death of any person or damage to property in or upon the Project
or growing out of or connected with the use, non -use, condition or occupancy of the Project or a
part thereof;
(2) violation of any agreement or condition of this Agreement, except by the Issuer or
its assignee;
2239784v1
10
2239784v1
violation of any contract, agreement or restriction by the Borrower relating to the
(3)
Project;
(4) violation of any law, ordinance or regulation affecting the Project or a part thereof
or the ownership, occupancy or use thereof, or arising out of this Agreement, the Note or the
transactions contemplated thereby, including any requirements imposed on the Lender as a
financial institution or any disclosure or registration requirements imposed by any federal or
state securities law; and
(5) any statement or information relating to the expenditure of the proceeds of the
Note contained in the non arbitrage certificate or similar document furnished by the Borrower to
the Issuer which, at the time made, is misleading, untrue or incorrect in any material respect.
Section 4.2 Continuing Existence and Qualification. Throughout the term of this
Agreement the Borrower will remain duly qualified to do business as a nonprofit, religious
corporation in Minnesota, and will continue to operate as an organization described in Section
501(c)(3) of the Code whose income is exempt from taxation under Section 501(a) of the Code,
and will maintain its corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets, and will not consolidate with or merge into another corporation or
other business entity or permit any other corporation or other business entity to consolidate with
or merge into it unless the Lender has consented to such actions in writing and (1) the surviving,
resulting or transferee corporation, or other business entity, as the case may be, shall be a
nonprofit corporation operating under the laws of the United States, any state or the District of
Columbia, and an organization described in Section 501(c)(3) of the Code (provided the Project
will not constitute an unrelated trade or business within the meaning of Section 513(e) of the
Code) or a governmental unit under Section 145 of the Code; (2) the surviving, resulting or
transferee corporation, or other business entity, as the case may be, if other than the Borrower,
assumes in writing all of the obligations of the Borrower under this Agreement, the Mortgages,
the Disbursing Agreement and the Conventional Loan Documents and shall deliver that
instrument to the Lender, and (3) the surviving, resulting or transferee corporation or other
business entity, as the case may be, is duly qualified to do business in Minnesota. Every
surviving, resulting or transferee corporation and other entity referred to in this Section 4.2 shall
be bound by all of the covenants and agreements of the Borrower herein with respect to any
further consolidation, merger, sale or transfer.
Section 4.3 Reports to Governmental Agencies. The Borrower will furnish to
agencies of the State of Minnesota, such periodic reports or statements as are required under the
Act, or as they may otherwise reasonably require of the Issuer or the Borrower throughout the
term of this Agreement in connection with the transaction contemplated herein. Copies of such
reports will be provided to the Issuer and the Lender.
Section 4.4 Security for the Loan. As additional security for the Lender, and to induce
the Issuer to issue and deliver the Note, the Borrower agrees to execute and deliver the Second
Mortgage and the Security Agreement, and agrees to meet all its obligations under the Second
Mortgage and the Security Agreement, which Second Mortgage shall remain in effect until all
payments required hereunder have been made and which Security Agreement shall remain in
effect until all payment required hereunder and under the Conventional Note have been made;
11
and the Borrower will cause to be recorded and filed the Second Mortgage, financing statements
and such other documents requested by the Lender, in such places and in such manner as the
Lender deems necessary or desirable to perfect or protect the security interest of the Lender in
the collateral referred to in said documents.
Section 4.5 Preservation of Tax Exemption.
(1) The Borrower covenants and agrees that, in order to assure that the interest on the
Note shall at all times be free from federal income taxation, the Borrower represents and
covenants with the Issuer and the Lender that it will comply with the applicable provisions of
Section 103 and Sections 141 through 150 of the 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 anyone other than the Borrower.
(b) The Project will not be used by the Borrower in an unrelated trade or
business, determined by the application of Section 513(a) of the Code.
(c) No more than five percent (5 of the net proceeds of the Note are to be
used for any private business use as defined in Section 141(b)(6) of the Code.
(d) The payment of the principal of, or interest on, no more than five percent
(5 of the net proceeds of the Note is (under the terms of the Note or any underlying
arrangement) directly or indirectly (a) secured by any interest in (i) property used or to be used
for a private business use, or (ii) payments in respect of such property, or (b) to be derived from
payments (whether or not to the Issuer) in respect of property, or borrowed money, used or to be
used for a private business use.
(e) The weighted average maturity of the Note will not exceed the estimated
economic life of the Project by more than twenty percent (20 all within the meaning of
Section 147(b) of the Code.
(f) While the Note remains outstanding, no portion of the proceeds of the
Note will be used to provide any airplane, skybox or other private luxury box, any facility
primarily used for gambling, or a store, the principal business of which is the sale of alcoholic
beverages for consumption off premises.
(g) Any Issuance Expenses financed by the Note shall not exceed two percent
(2 of the aggregate amount actually advanced on the Note.
(h) The Borrower agrees it will not use the proceeds of the Note in such a
manner as to cause the Note to be an "arbitrage bond" within the meaning of Section 148 of the
Code and applicable Treasury Regulations. The Borrower shall:
(i) maintain records identifying all "gross proceeds" and "replacement
proceeds" (as defined in Section 148(f)(6)(B) of the Code attributable to the Note, the
yield at which such gross proceeds are invested, any arbitrage profit derived therefrom
(earnings in excess of the yield on the Note) and any earnings derived from the
2239784v1
12
investment of such arbitrage profit;
(ii) make, or cause to be made as of the end of each fifth bond year,
the annual determinations of the amount, if any, of excess arbitrage required to be paid to
the United States (the "Rebate Amount
(iii) pay, or cause to be paid, to the United States at least once every
fifth bond year the amount, if any, which is required to be paid to the United States,
including the last installment which shall be made no later than 60 days after the day on
which the Note are paid in full;
(iv) not invest, or permit to be invested, "gross proceeds" of the Note in
any acquired nonpurpose obligations so as to deflect arbitrage otherwise payable to the
United States as a "prohibited payment" to a third party; and
(v) retain all records of the annual determination of the foregoing
amounts until six (6) years after the Note have been fully paid.
(i) The Borrower has not leased, sold, assigned, granted or conveyed and will
not lease, sell, assign, grant or convey all or any portion of the Project or any interest therein to
the United States or any agency or instrumentality thereof within the meaning of Section 149(b)
of the Code.
(j) In addition to the Note, no other obligations have been or will be issued
under Section 103 of the Code which are sold at substantially the same time as the Note pursuant
to a common plan of marketing and at substantially the same rate of interest as the Note and
which are payable in whole or part by the Borrower or otherwise have with the Note any
common or pooled security for the payment of debt service thereon, or which are otherwise
treated as the same "issue of obligations" as the Note as described in Treasury Regulations
Section 1.150- 1(c)(1);
(k) No Note proceeds shall be invested in investments which cause the Note
to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the
moneys in such funds exceed, within the meaning of Section 149(b)(3)(B) of the Code, (i)
amounts invested for an initial temporary period until the moneys are needed for the purpose for
which the Note were issued, (ii) investments of a bona fide debt service fund, and (iii)
investments of a reserve which meet the requirement of Section 148(d) of the Code, such excess
moneys shall be invested in only those investments, which are (A) obligations issued by the
United States Treasury, (B) other investments permitted under regulations, or (C) obligations
which are (I) not issued by, or guaranteed by, or insured by, the United States or any agency or
instrumentality thereof or (II) not federally insured deposits or accounts, all within the meaning
of Section 149(b) of the Code; and
(1) The Project is suitable for use in academic instruction and educational and
cultural activities, and no part of the Project is designed for use or will be used primarily for
religious instruction or as a place for devotional activities or religious worship;
2239784v1
13
(m) In order to qualify the Note and this Agreement under the "governmental
program" provisions of Section 1.148 -1(b) of the Treasury Regulations, the Borrower (and any
"related person" thereto) will take no action the effect of which would be to disqualify this Loan
Agreement as an "acquired program obligation" under said Section 1.148 -1(b), including but not
limited to entering into any arrangement, formal or informal, for the Borrower to purchase bonds
or Note of the Issuer in an amount related to the amount of the Note.
(n) Not otherwise use Note proceeds, or take or fail to take any action, the
effect of which would be to cause interest on the Note to be included in gross income for
purposes of federal income taxation.
(2) For the purpose of this Section, a "Determination of Taxability" shall mean the
issuance of a statutory notice of deficiency by the Internal Revenue Service, or a ruling of the
National Office or any District Office of the Internal Revenue Service, or a final decision of a
court of competent jurisdiction, or a change in any applicable federal statute, which holds or
provides in effect that the interest payable on the Note is includible, for federal income tax
purposes under Section 103 of the Code in the gross income of the Lender or any other holder or
prior holder of the Note, if the period, if any, for contest or appeal of such action, ruling or
decision by the Borrower or Lender or any other interested party has expired without any such
contest or appeal having been properly instituted by the Lender, the Borrower or any other
interested party. The expenses of any such contest shall be paid by the party initiating the
contest, and neither the Lender nor the Borrower shall be required to contest or appeal any
Determination of Taxability. The "Date of Taxability" shall mean that point in time, as specified
in the determination, ruling, order, or decision, that the interest payable on the Note becomes
includible in the gross income of the Lender or any other holder or prior holder of the Note, as
the case may be, for federal income tax purposes.
(3) If the Borrower receives a Determination of Taxability it will promptly give
notice of such Determination of Taxability to the Issuer and the Lender. Upon receipt of a
Determination of Taxability, the interest rate on the Note shall be one percent (1.00 in excess
of the rate of interest payable under the Note, as such rate shall change from time to time.
Section 4.6 Lease or Sale of Project. The Borrower shall not lease, sell, convey or
otherwise transfer the Project in whole or part, nor sell the Project in whole or part, without first
securing the written consent of the Lender; provided that in no event shall such lease, transfer,
assignment or sale be permitted if the effect thereof would otherwise be to impair the validity or
the tax exempt status of the Note, nor shall any such transaction release the Borrower of any of
its obligations under this Agreement, unless the assignee transferee is a surviving, resulting or
transferee entity as permitted under Section 4.2 hereof. The Borrower shall promptly notify the
Issuer of any such sale, transfer, assignment or lease.
Section 4.7 Project Operation and Maintenance Expenses. The Borrower shall pay all
expenses of the operation and maintenance of the Project including, but without limitation, fire
and other risk insurance, public liability insurance, and such other insurance as Lender may
require with respect to Borrower's properties and operations, in form, amounts, coverages and
with insurance companies reasonably acceptable to the Lender, and all taxes and special
assessments levied upon or with respect to the Project and payable during the term of this
2239784v1
14
Agreement, all in conformance with the provisions of the Mortgages. Upon request of the
Lender from time to time, the Borrower will deliver policies or certificates of insurance in form
satisfactory to the Lender, evidencing compliance with the foregoing requirement. The
Borrower shall, to the extent practicable, exercise its best efforts to target any employment
opportunities created by the Project to qualified individuals who are unemployed or
economically disadvantaged as contemplated in Section 469.152 of the Act.
The Borrower will not use any Note proceeds to pay any costs of, or attributable to, the
refinancing of any facilities used primarily for religious instruction or worship; all such costs will
be paid from the Conventional Loan or with the Borrower's funds. The Borrower agrees that it
will not use the portion of the Project or any part thereof financed by the proceeds of the Note (a)
for sectarian instruction or study or primarily as a place for devotional activities or religious
worship or as a facility used primarily in connection with any part of a program of a school or
department of divinity for any religious denomination or the training of ministers, priests, rabbis
or other similar persons in the field of religion or (b) in a manner which would violate the First
Amendment to the Constitution of the United States of America, including the decisions of the
United States Supreme Court interpreting the same, or any comparable provisions of the
Constitution of the State of Minnesota, including the decisions in the Supreme Court of the State
interpreting the same.
Section 4.8 Notification of Changes. The Borrower covenants and agrees that it will
promptly notify the Lender of:
(1) any litigation which might materially and adversely affect the Borrower and any
of its properties;
(2) the occurrence of any Event of Default under this Agreement or under any other
loan agreement, debenture, note, purchase agreement or any other agreement providing for the
borrowing of money by the Borrower or any event of which the Borrower has knowledge and
which, with the passage of time or giving of notice, or both, would constitute an Event of Default
under this Agreement or under such other agreements;
(3) any future event that would cause the representations and warranties contained in
this Agreement to be untrue when applied to the Borrower's circumstances as of the date of such
event; and
(4) any material adverse change in the operations, business, properties, assets or
conditions, financial or otherwise, of the Borrower.
Section 4.9 Additional Covenants. In addition to the covenants and agreements of the
Borrower set forth herein and contained in the Mortgages, the Conventional Loan Documents
and the documents related hereto or thereto, the Borrower hereby covenants and agrees, so long
as the Note remains unpaid, as follows:
(1) To permit the Lender, acting by and through the Lender's officers, employees and
agents, to examine all books, records, contracts, plans, drawings, permits, bills and statements of
account pertaining to the Project and to make extracts therefrom and copies thereof;
2239784v1
15
(2) To furnish to the Lender as soon as possible and in any event within seven (7)
days after the Borrower has obtained knowledge of the occurrence of an Event of Default, or an
event which with the giving of notice or lapse of time or both would constitute an Event of
Default, a statement signed by the Borrower setting forth details of such Event of Default or
event and the action which the Borrower has taken, is taking or proposes to take to correct the
same;
(3) To pay and discharge any real estate taxes prior to the attachment of penalties
with respect thereto and installments of special assessments payable therewith, and insurance
premiums with respect to the insurance required to be maintained by the Borrower under the
terms of any of the Conventional Loan Documents, and utility charges incurred by the Borrower
prior to or during the term of this Agreement, except if such taxes, assessments and premiums
are being contested in good faith by appropriate proceedings and provided that, if requested by
the Lender, the Borrower shall have deposited into escrow with the Lender an amount equal to
such taxes, assessments or premiums plus penalties accrued thereon;
(4) To cause to be prepared as soon as practicable as requested by the Lender, the
required financial statements /documentation of the Borrower and operating statements for the
Project and to furnish copies thereof to the Lender;
(5) To promptly give notice in writing to the Lender of any and all litigation
involving the Borrower where the amount in dispute exceeds $20,000.00 and is not covered by
insurance, and of any and all litigation if the aggregate amount in dispute in connection with
such litigation exceeds $20,000.00 and is not covered by insurance, and of any and all material
proceedings commenced against the Borrower by or before any court or governmental or
regulatory agency;
(6) To comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, a breach of which would materially and adversely affect
the business or credit of the Borrower, except where diligently contested in good faith and by
proper proceedings;
(7) To comply with all existing and future registration, notification and other
requirements of the Minnesota Petroleum Tank Cleanup Act, including, but not limited to, the
notification of the Minnesota Pollution Control Agency of the existence of any underground and
above ground storage tanks and the age, size, type, location, use and content and of any future
removal or conveyance of such tanks;
(8) To preserve and maintain all of the Borrower's rights, privileges and franchises
necessary or desirable in the normal conduct of the Borrower's business, and not to suspend
business operations or convey, transfer, encumber or pledge any of the Borrower's properties or
assets;
(9) To keep all of the assets and properties necessary in the Borrower's businesses in
good working order and condition, ordinary wear, tear and casualty excepted;
(10) To obtain all necessary state, federal, local and private clearances, authorizations,
permits and licenses with respect to the business operations of the Borrower, including, without
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limitation, any export and other trade licenses or permits required by law for the present or future
business operations of the Borrower; and,
(11) Not to undertake or permit without prior written approval of the Lender any other
or additional construction on the Land or on any site or sites adjacent thereto owned by the
Borrower, or any parties related to the Borrower.
Any capitalized terms in this Section 4.9 not defined in this Agreement shall have the
meaning set forth in the Conventional Loan Documents.
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(3)
ARTICLE 5
PREPAYMENT OF LOAN
Section 5.1 Prepayment at Option of Borrower. The Borrower may at its option
prepay the Loan, in whole or in part, at par plus accrued interest, without premium or penalty as
set forth in the Note. Any partial prepayment shall be applied first against the interest accrued on
the Note and shall be applied against the principal portion of the installments due under this
Agreement in inverse order of maturity. In the event the Borrower elects to prepay the Loan, the
Borrower shall cause to be given due notice of redemption or prepayment of the Note as required
by the Note, and shall pay the prepayment price when due to the Lender. The Issuer hereby
authorizes the Borrower to give mailed notice of prepayment and, if required by law, published
notice of prepayment of the Note, from time to time.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default. Any one or more of the following events is an Event of
Default under this Agreement:
(1) *If the Borrower shall fail to make (a) any payments required under Section 3.4 of
this Agreement on the date due, or (b) any other payment due under this Agreement on or before
the date that the payment is due and such default continues for ten (10) days after written notice
given to the Borrower by the Issuer or the Lender as provided in the Note.
(2) If the Borrower shall fail to observe and perform any other covenant, condition or
agreement on its part under this Agreement for a period of thirty (30) days after written notice,
specifying such default and requesting that it be remedied, given to the Borrower by the Issuer or
the Lender, unless the Lender shall agree in writing to an extension of such time prior to its
expiration, or for such longer period as may be reasonably necessary to remedy such default
provided that the Borrower is proceeding with reasonable diligence to remedy the same.
The occurrence of a Determination of Taxability.
C ross Default with Convention Loan? Should the Events of Default be revised to be
consistent the Conventional Loan Documents.
17
(4) If the Borrower shall file a petition in bankruptcy or for reorganization or for an
arrangement pursuant to any present or future federal bankruptcy act or under any similar federal
or state law, shall consent to the entry of an order for relief pursuant to any present or future
federal bankruptcy act or under any similar federal or state law, or shall make an assignment for
the benefit of its creditors or shall admit in writing its inability to pay its debts generally as they
become due, or if a petition or answer proposing the entry of an order for relief of the Borrower
under any present or future federal bankruptcy act or any similar federal or state law shall be
filed in any court and such petition or answer shall not be discharged or denied within 90 days
after the filing thereof, or a receiver, trustee or liquidator of the Borrower of all or substantially
all of the assets of the Borrower, or of the Project shall be appointed in any proceeding brought
against the Borrower and shall not be discharged within 90 days after such appointment or if the
Borrower shall consent to or acquiesce in such appointment, or if the estate or interest of the
Borrower in the Project or a part thereof shall be levied upon or attached in any proceeding and
such process shall not be vacated or discharged within 90 days after such levy or attachment; if
the Borrower shall be dissolved or liquidated or shall be merged with or is acquired by another
business entity in violation of Section 4.2.
(5) If the articles of incorporation of the Borrower shall expire or be annulled; or if
the Borrower shall be dissolved or liquidated (other than when a new entity assumes the
obligations of the Borrower under the conditions permitting such action contained in
Section 4.2).
(6) If any representation or warranty made by the Borrower herein, or by an officer or
representative of the Borrower in any document or certificate furnished the Lender or the Issuer
in connection herewith or therewith or pursuant hereto or thereto, shall prove at any time to be,
in any material respect, incorrect or misleading as of the date made.
(7) If the Borrower shall default or fail to perform any covenant, condition or
agreement on its part under the Mortgage or any other security document securing the Note, and
such failure continues beyond the period set forth in such documents during which the Borrower
may cure the default.
(8) Failure of the Borrower to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between the Lender and the Borrower,
including, without limitation, the Conventional Loan.
Section 6.2 Remedies. Whenever any Event of Default referred to in Section 6.1
hereof shall have happened and be subsisting, any one or more of the following remedial steps to
the extent permitted by law may be taken by the Issuer with the prior written consent of the
Lender or by the Lender itself:
(1) The Issuer, upon written direction of the Lender, or the Lender may declare all
installments of the Loan (being an amount equal to that necessary to pay in full the Principal
Balance plus accrued interest thereon of the Note assuming acceleration of the Note under the
terms thereof and to pay all other indebtedness thereunder) to be immediately due and payable,
whereupon the same shall become immediately due and payable by the Borrower.
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18
(2) The Issuer, 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 Issuer) may take whatever
action at law or in equity may appear necessary or appropriate to collect the amounts then due
and thereafter to become due under this Agreement, or to enforce performance and observance of
any obligation, agreement or covenant of the Borrower under this Agreement.
Section 6.3 Disposition of Funds. Notwithstanding anything to the contrary contained
in this Agreement, any amounts collected pursuant to action taken under Section 6.2 hereof,
except for any amounts collected solely for the benefit of the Issuer under any of the provisions
set forth in Section 7.9, shall, after deducting all expenses incurred in collecting the same, be
applied as a prepayment of the Note in accordance with Section 5.1.
Section 6.4 Manner of Exercise. No remedy herein conferred upon or reserved to the
Issuer is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient. In order to entitle the Issuer or the
Lender to exercise any remedy reserved to either of them in this Article, it shall not be necessary
to give any notice, other than such notice as may be herein expressly required.
Section 6.5 Attorneys' Fees and Expenses. In the event the Borrower should default
under any of the provisions of this Agreement and the Issuer or the Lender should employ
attorneys or incur other expenses for the collection of amounts due hereunder or the enforcement
of performance of any obligation or agreement on the part of the Borrower, the Borrower will on
demand pay to the Issuer or the Lender the reasonable fee of such attorneys and such other
expenses so incurred.
Section 6.6 Effect of Waiver. In the event any agreement contained in this Agreement
should be breached by either party and thereafter waived by the other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any other breach
hereunder.
2239784v1
ARTICLE 7
GENERAL
Section 7.1 Notices. All notices, certificates or other communications hereunder shall
be sufficiently given and shall be deemed given when mailed by certified or registered mail,
postage prepaid, with proper address as indicated below. The Issuer, the Borrower and the
Lender may, by written notice given by each to the others, designate any address or addresses to
which notices, certificates or other communications to them shall be sent when required as
contemplated by this Agreement. Until otherwise provided by the respective parties, all notices,
certificates and communications to each of them shall be addressed as follows:
19
To the Issuer: City of Rosemount, Minnesota
2875 145 Street West
Rosemount, Minnesota 55068 -4941
Attn: City Administrator
To the Borrower: The Church of St. Joseph of Rosemount, Minnesota
13900 Biscayne Avenue
Rosemount, Minnesota 55068
Attn:
With a copy to: Catholic Finance Corporation
5826 Blackshire Path
Inver Grove Heights, MN 55076
Attn: Michael P. Schaefer
To the Lender: Anchor Bank Saint Paul, National Association
14665 Galaxie Avenue
Apple Valley, Minnesota 55124
Attn: Bradley J. Cartie
Section 7.2 Binding Effect. This Agreement shall inure to the benefit of and shall be
binding upon the Issuer and the Borrower and their respective successors and assigns.
Section 7.3 Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
Section 7.4 Amendments, Changes and Modifications. Except as otherwise provided
in this Agreement or in the Resolution, subsequent to the initial issuance of the Note and before
the Note is satisfied and discharged in accordance with its terms, this Agreement may not be
effectively amended, changed, modified, altered, or terminated without the written consent of the
Lender.
Section 7.5 Execution Counterparts. This Agreement may be simultaneously executed
in several counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.
Section 7.6 Limitation of Issuer's Liability. No agreements or provisions contained in
this Agreement nor any agreement, covenant, or undertaking by the Issuer in connection with the
issuance, sale and delivery of the Note shall give rise to any pecuniary liability of the Issuer or a
charge against its general credit, or shall obligate the Issuer financially in any way, except as
may be payable from the revenues pledged hereby for the payment of the Note and their
application as provide herein. No failure of the Issuer to comply with any term, covenant, or
agreement contained herein or in the Note, or in any document executed by the Issuer in
connection with the issuance and sale of the Note, shall subject the Issuer to liability for any
claim for damages, costs, or other financial or pecuniary charge, except to the extent that the
same can be paid or recovered from the revenues pledged for the payment of the Note. Nothing
herein shall preclude a proper party in interest from seeking and obtaining, to the extent
2239784v1
20
permitted by law, specific performance against the Issuer for any failure to comply with any
term, condition, covenant or agreement contained in, or any obligations imposed upon the Issuer,
or the breach thereof. In making the agreements and provisions set forth in this Agreement, the
Issuer has not obligated itself, except with respect to the application of the revenues pledged for
the payment of the Note hereunder.
Section 7.7 Issuer's Attorneys Fees and Costs. If, notwithstanding the provisions of
Section 7.6 hereof, the Issuer incurs any expense, or suffers any losses, claims or damages, or
incurs any liabilities in connection with the transaction contemplated by this Agreement, the
Borrower will indemnify and hold harmless the Issuer from the same and will reimburse the
Issuer for any reasonable legal or other expenses incurred by the Issuer in relation thereto. The
Borrower shall also reimburse the Issuer for all other costs and expenses, including without
limitation reasonable attorneys' fees, paid or incurred by the Issuer in connection with (i) the
discussion, negotiation, preparation, approval, execution and delivery of this Agreement, the
Note, the Pledge Agreement, the Disbursing Agreement, the Mortgages, the Conventional Loan
Documents, and the documents and instruments related hereto or thereto; (ii) any amendments or
modifications hereto or to the. Note, the Pledge Agreement, the Disbursing Agreement, the
Mortgages, the Conventional Loan Documents, and any document, instrument or agreement
related hereto or thereto, and the discussion, negotiation, preparation, approval, execution and
delivery of any and all documents necessary or desirable to effect such amendments or
modifications; and (iii) the enforcement by the Issuer during the term hereof or thereafter of any
of the rights or remedies of the Issuer hereunder or under the Note, the Pledge Agreement, the
Disbursing Agreement, the Mortgages, the Conventional Loan Documents, or any document,
instrument or agreement related hereto or thereto, including, without limitation, costs and
expenses of collection in the Event of Default, whether or not suit is filed with respect thereto.
Section 7.8 Release. The Borrower hereby acknowledges and agrees that the Issuer
shall not be liable to the Borrower, and hereby releases and discharges the Issuer from any
liability, for any and all losses, costs, expenses (including attorneys' fees), damages, judgments,
claims and causes of action, paid, incurred or sustained by the Borrower as a result of or relating
to any action, or failure or refusal to act, on the part of the Lender with respect to this Agreement
or the documents and transactions related hereto or contemplated hereby, including, without
limitation, the exercise by the Lender of any of its rights or remedies pursuant to Article 6, the
Note, the Pledge Agreement, the Mortgages, the Disbursing Agreement, the Conventional Loan
Documents, or any collateral security documents. The Borrower's release of the Issuer pursuant
to the preceding sentence does not extend to the Lender following the assignment of the Issuer's
rights to the Lender pursuant to the Pledge Agreement.
Section 7.9 Assignment by Issuer and Survivorship of Obligations. The Issuer may
assign its rights under this Agreement and any related documents to the Lender to secure
payment of the principal of and interest and premium, if any, on the Note, conditioned upon the
Lender's assumption of the Issuer's and Lender's obligations to the Borrower hereunder, but any
such assignment shall not operate to limit or otherwise affect the following provisions hereof to
the extent that they run to the Issuer from the Borrower to which extent they shall survive any
such assignment:
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21
2239784v1
Section 3.6
Section 4.1
Section 4.3
Section 6.5
Section 7.6
Section 7.7
Section 7.8
The Issuer shall have the right to enforce any retained rights without the approval of the Lender.
The obligations of the Borrower running to the Issuer for the purpose of preserving the tax
exempt status of the Note or otherwise for the Issuer's benefit under the foregoing Sections shall
survive repayment of the Note and interest thereon.
Section 7.10 Required Approvals. Consents and approvals required by this Agreement
to be obtained from the Borrower, the Issuer or the Lender shall be in writing and shall not be
unreasonably withheld or delayed.
Section 7.11 Termination Upon Retirement of Note. At any time when no principal
balance on the Note remains outstanding, and arrangements satisfactory to the Lender and the
Issuer have been made for the discharge of all other accrued liabilities, if any, under this
Agreement, this Agreement shall terminate, except as otherwise expressly provided in
Section 7.9 or otherwise herein.
Section 7.12 Lender's Attorneys' Fees and Costs. The Borrower agrees to pay upon
demand all of the Lender's out -of- pocket expenses, including reasonable attorneys' fees, incurred
in connection with this Agreement, the Loan, the Note, the Mortgages, the Disbursing
Agreement and the Conventional Loan Documents. The Lender may pay someone else to help
collect the Loan and the Conventional Loan, and to enforce this Agreement, the Note, the
Mortgages, the Disbursing Agreement and the Conventional Loan Documents, and the Borrower
will pay all such amounts incurred by the Lender in connection therewith. This includes, subject
to any limits under applicable law, Lender's attorneys' fees and legal expenses, whether or not
there is a lawsuit, including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated post judgment
collection services. The Borrower also will pay any court costs, in addition to all other sums
provided by law.
[Signature Pages Follow]
22
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Agreement to
be executed in their respective names all as of the date first above written.
2239784v2
Signature page to Loan Agreement.
S 1
CITY OF ROSEMOUNT, MINNESOTA
By
Its: Mayor
By
Its: Clerk
2239784v2
Signature page to Loan Agreement.
S -2
THE CHURCH OF ST. JOSEPH OF
ROSEMOUNT, MINNESOTA
By
Its
By
Its