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cp12-18-85 c•
MEMORA.NDU.?i,
DATE• Decem'Da-li� 13. 19Z,5
TO: Mayor & City Council
FROM: Gary D. Plotz, City Administrator!
SUBJECT: Special City Council Meeting
— — — — — — — — — — — --
Mayor Stearns has called a special City Council meetini, fc.- 11-cd_iesd;IV,
• December 18, 1985 at 5:15 P.I. in City Hall.
The following two items will be acted upon:
/Ms
f
1. Conditional Use Permit for Jerry Ross to T;L-ild An,
Engine House (Going to Planning
2. Final Approval On The Industrial Revenci�,-;
Erickson oil Prod,-,.Cts (December 31, 198-'
(612) 587.5151
I T Y OF HUTCHINSON
✓ASHING TON AVENUE WEST
'HINSON, MINN. 55350
MEM0RANDU14
DATE: December 18, 1985
TO: Hutchinson City Council
FROM: Hutchinson Planning Commission
SUBJECT: Conditional Use Permit as requested by Dakota Rail Incorporated
Pursuant to Section 6.05, C5, of Zoning Ordinance No. 464, the Hutchinson
Planning Commission is hereby submitting its findings of fact and recom-
mendation with respect to the aforementioned request for a conditional use
permit.
HISTORY
On December 4, 1985, Dakota Rail, Inc. submitted an application for a
conditional use permit to allow the construction of a 130' by 24' pole type
building for the purpose of storing diesel locomotives on property located
at Erie Street and 2nd Ave. S.E. A public hearing was held at the regular
meeting of the Planning Commission on Tuesday, December 17, 1985, at which
time Mrs. Delores Brunner, leasee of a salt warehouse located on the property,
stated her concern for fire safety.
FINDINGS OF FACT
1. The required application was submitted and the appropriate fee
paid.
2. Notices were mailed to the surrounding property owners as well as
published in the Hutchinson Leader on December 5, 1985.
3. The proposal is in conformance with the requirements of a conditional
use permit, and is required because the property is in an IC -1 zone.
RECOMMENDATION
It is the recommendation of the Planning Commission that the concept be
approved, with the stipulation that more information be provided for the
City Council prior to their consideration, and contingent upon the applicant
providing a survey showing existing and proposed building sites on the
property prior to a building permit being issued.
Respectfully submitted,
Roland Ebent, Chairman
Hutchinson Planning Commisson
RESOLUTION NO. 8172
RESOLUTION GRANTING CONDITIONAL USE PERMIT UNDER
SECTION 6.07, OF ZONING ORDINANCE NO. 464 TO
ALLOW TAE CONSTRUCTION OF 130' BY 24' DIESEL HOUSE
ON PROPERTY LOCATED "IN AN IC -1 ZONE
BE IT RESOLVED BY THE -CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA:
FINDINGS
1. Dakota Rail, Inc., has made application to the City Council for a
Conditional Use Permit under Section 8.12 of Zoning Ordinance No. 464 to
allow the construction of a 130' by 24' Diesel House on property located on
Erie Street and Second Ave. S.E., which is located in an IC -1 zone, with the
following legal description:
Lots 3, 4; and 5 of Block 17, South Half, City of Hutchinson
2. The City Council has considered the recommendation of the Planning
Commission and the effect of the proposed use on the health, safety, and
welfare of the occupants of the surrounding lands, existing and anticipated
traffic conditions, and the effect on values of properties in the surrounding
area and the effect of the use on the Comprehensive Plan.
3. The Council has determined that the proposed use will not be detri- •
mental to the health, safety, or general welfare of the community nor will it
cause serious traffic congestion nor hazards, nor will it seriously depreciate
surrounding property values, and the proposed use is in harmony with the gener-
al purpose and intent of the Zoning Ordinance and the Comprehensive Plan.
CONCLUSION
The application for a Conditional Use Permit for the purpose designated
is granted based upon the findings set forth above, contingent upon
applicant submitting survey showing location of existing and proposed
buildings prior to the issuance of a building permit.
Adopted by the City Council this 18th day of December, 1985.
Attest: Robert H. Stearns
Mayor
Gary' D. -P1otz •
City Clerk
•
C7
Chairman Ebent opened the hearing at 7:35 p.m. with the reading of
publication #3494 as published in the Hutchinson Leader on
Thursday, December 5, 1985. The request is for 'a variance to
allow the construction of a 30' by 50' addition to an existing
residence, 15' from the sideyard property. line.
After discussion, Mr. Torgerson made a motion to closed the
hearing. Seconded by Mrs. Young, the motion carried unanimously
and the hearing was closed at 7:38 p.rp. Mr. Er.i,ckson made a,motion
to recommend to City Council approval of the variance as requested.
Seconded by Mr. Hwang, the motion carried unanimously.
(c) CONSIDERATION OF CONDITIONAL 'USE PERMIT AS SUBMITTED BY DAKOTA
RAIL, INC.
Chairman Ebent opened the hearing at. ,7:38 p.m, with the re�oing of:
publication #3495 as published in the Hutchinson- Leader on
Thursday, December 5, 1985. The request is - for,-,a- .conditional
permit to allow the construction of a 103' by 24' pole type
building for the purpose of storing diesel„ locomotives on property
located at Erie St. and Second Ave. S.E., which is located in an
IC -1 zone.
City Administrator Plotz explained that in the winter months., a.
diesel locomotive must be housed in a heated building oaf mist 'be,
left running. Putting the locomotive: in a- buildingJs uch•l;ess.
expensive and cuts down on the disturbance (noise, odor to the
neighboring residents.
He noted that the Building Official,wants the applicant,a 4`,
Planning Commission to be aware of the fact ghat a surverr shgwiag
the location of existing buildings and the proposed bu,i, 0- ings..mus�t.
be submitted prior to the issuance of a building permit. This is
necessary because of the close proximity of other buildings and the
distance between the buildings determines what type of wall
construction is required to meet the fire code.
Mr. Michael Ross, representing Dakota Rail, .Inc,,, was ;pres.ent „,to
explain their proposal. He stated that the bui1ding-.wou Td. house-
two locomotives, with littl.e extra room. ,He ,further- .state¢,Athat
basically the building is used for storage, but that there would be
some maintenance work done. inside, the bui- lding. They,.ha-ve, a -
similar building at a location in South Dakota, of which he will
bring pictures for the Council to review.
Mrs. Delores Brunner, 968
located on the property,
safety. They store salt
Hayden, leasee of the the warehouse
stated that their major concern was fire
in the warehouse.
Mr. Ancher Nelsen, 900 Hassan St. South, stated that they
were temporarily leasing a building for the locomotives and were
negotiating to get that time extended. If so, they,rould be able
to look at other sites. However, if 'tfieir lease ":fie - not - -.extended
they would prefer to build at the site as proposed.,,,,.-
Discussion followed. It was the consensus of the Planning
Commission that they approve the concept of the proposal; however,
they felt that they would like more specific information about the
diesel house and the operation of such. Rather than hold the
request up, however, they would approve the concept and requested
that Mr. Ross bring in more specific information before the Council
took final action on the request.
Mr. Erickson made a motion to close the hearing. Seconded by Mr.
Torgerson, the motion carried unanimously and the hearing was
closed at 8:05 p.m. Mr. Torgerson made a motion to recommend to
City Council appproval of the concept, with the stipulation that
Dakota. Rail provide more detailed information to the City Council
before they take action on the request, and with the contingency
that a survey showing the location of existing buildings and the
proposed building be submitted before the building permit is
issued. Seconded by Mrs. Young, the motion carried unanimously.
(d) CONTINUATION OF REZONING HEARING FOR ASSEMBLY OF GOD CHURCH
Chairman Ebent continued the hearing on the rezoning request
submitted by the Assembly of God Church at 8:10 p.m. He stated
that they have withdrawn the request.
Mr:-- Torgerson made a motion to close the hearing at 8 :10 p.m.
Seconded by Mr. Hwang, the motion carried unanimously.
4. OLD BUSINESS ,
(-a.)'- ',REVIEW, OF PRELIMINARY PLAT OF HELLAND'S SEVENTH ADDITION
Chairman'Ebent explained that the plat had been referred back to
the Planning Commission as some required data had not been provided
previously.
City Administrator Plotz stated that he had requested a Certificate
of Approval by the Director of Engineering stating that the
preliminary plat meets all requirements of the Subdivision
Ordinance. The,Certificate was submitted by Director Priebe. City
Administrator Plotz also noted that contour lines had been added to
the plat maps as required.
Mrs. Young made a motion to recommend to City Council approval of
the plat as presented. Seconded by Mr. Hwang, the motion carried
unanimously.
(b) DISCUSSION OF UTILITIES' COMMENTS ON NEW PLATS
Director Priebe explained that proposed plats have been submitted
to the Hutchinson Utilities Commission, Crow River Cable T.V., and
the Hutchinson Telephone company with a request that they make
comments and return them to the Director prior to consideration by
the Planning Commission. The Hutchinson Utilities Commission did
3
%%P ENGINEERING INC.
�� �bHER E ,
ENGINEERING CONSULTANTS. LAND SURVEYING
6 /,wu�' ``0 /0 1 C_ C,
827 PAISLEY LANE
MINNEAPOLIS. MINNESOTA 5"22
612- 645-0069
12 -10 -85
�6 g910�� 'st
1
�rcij j "'t) s8s
.i p
CY) `N ZZZ��o
9Z5Zt�2�
Mr. Gary Plotz, Administrator
City of Hutchinson
Hutchinson, Minnesota 55350
ne: Industrial Spur Tracks Construction
Hutchinson, MN. <
Dear Nit. P1otz:
n In reference to our verbl.l discussion this date while at
gineering Conference at Hutchinson, I would ,appreaiate copy
of Council action ensginC Gopher II neerin ' Inc. as Er ineer and Consultant
} t for the above track construction proposals.
originally advised by 'phone per your previous request i"
it is my intent that I would be designated as Engineer to prepare
,Plans _& Specifications for bidding and contract purpose as,-wel,
t� C ` t as Construction Engineer responsible for en gin su ervs sion,. of t
con rac or's performance.
6
As discussed todai, I feel that a contractor should be-able to
be engaged that could normally perform construction of the Industrial.
Connection Track in a 3 week period and construction of Farmers Elevator Spur
" in a 1 week period after grading is completed by the City and sub - ballast
. installed weather conditions perti.tting.
Nay normal engineering fee is as follows:
835/hr- with a minimum of 4 hours with no penalty for O.T.- Daily rate.
Per Diem zoom $24 Board $12
Auto & Ydleage w10 /da.
Additional Engineer as required $15 /hr. +.Board & Room.
As you know I am proceding on preparation of the Contract Specifications
so as not to further delay the bidding process and I would appreciate
prompt notificat _ _�n of approval of the above engineering- services and terms.
;9-;ak P. .
•'� _ �/ Ciro f ` f"� ����'�'�
0
UN
'7TUIREA5, puu1 iC. nrhland hug srruPil the Till, wr11 as a member of the
:Cihraru 13nard for the Vast six and one-half (L- -1/2) uearB ana fhe Hnnoinu And
RrdrueloVmrnt Authoritu for fhr rust right (3) urars and four (4) mnnths;
T113.TEREA5, T'uul !C. Ari:land has arrurd faifhfullu and diliurnflu uiuinu of
his time and talrnfs tnmard the rnrirhmrnf of the Tritu,
NTT THIREITOFE, I3£ 3e F,15 tVEI) VU rill C 33IJ CCOUNC3C OT THE T3 ,1T
THAT, drrp appreciation is hrrrhu rx #rrssrd to 11aul C. Arkland for his
afnrrmrntinnrj3 seruirrs and the gratitudr of !'utrhinsnn and the ritizrno thereof
is hrrehu expressrd.
Aanutrd hu the (fifu Lounril this lfIth Bail of Drrrmkrr, 1ny5.
0j'aru D. 271otr
Li to Llerk
3'.nhrrt H. Sfrarns
Ciuun r
509N
r�
40
Draft 12/16/85
FINAL NOTE RESOLUTION
CITY OF HUTCHINSON
$500,000 COMMERCIAL DEVELOPMENT REVENUE NOTE OF 1985
(ERICKSON OIL PRODUCTS, INC. PROJECT)
ADOPTED: December 17, 1985
NOTE RESOLUTION
(This Table of Contents is not a part of this .
Resolution, but is included for convenience only)
TABLE OF CONTENTS
SIGNATURES............. ............................... 14
Page
ARTICLE ONE
- DEFINITIONS, LEGAL AUTHORIZATION
AND FINDINGS .....
...............................
1
Section
1 -1.
Definitions ......................
1
Section
1 -2.
Legal Authorization ..............
3
Section
1 -3.
Findings .........................
3
Section
1 -4.
Authorization and Ratification
of Project .......................
4
ARTICLE, TWO
- NOTE
.... ...............................
6
Section
2 -1.
Authorized Amount and Form
ofNote ..........................
6
Section
2 -2.
The Note .........................
6
Section
2 -3.
Execution ........................
6
Section
2 -4.
Delivery of Note .................
6
Section
2 -5.
Disposition of Note Proceeds.....
7
Section
2 -6.
Registration of Transfer.........
7
Section
2 -7.
Mutilated, Lost or Destroyed
•
Note ... .........................
8
Section
2 -8.
Ownership of Note ................
8
Section
2 -9.
Limitation on Vote Transfers.....
9
ARTICLE THREE - GENERAL COVENANTS .....................
10
Section
3 -1.
Payment of Principal and Interest.
10
Section
3 -2.
Performance of and Authority
for Covenants .....................
10
Section
3 -3.
Enforcement and Performance of
Covenants.........................
10
Section
3 -4.
Nature of Security ................
11
Section
3 -5.
Preservation of Tax Exempt
Status of the Note ................
11
ARTICLE FOUR
- MISCELLANEOUS ..........................
13
Section
4 -1.
Severability ......................
13
Section
4 -2.
Authentication of Transcript......
13
Section
4 -3.
Registration of Resolution........
13
Section
4 -4.
Authorization to Execute
Agreements........................
13
SIGNATURES............. ............................... 14
•
•
0
NOTE RESOLUTION
BE IT RESOLVED by the City Council of the City of
Hutchinson, Minnesota, as follows:
ARTICLE ONE
DEFINITIONS, LEGAL AUTHORIZATION AND FINDINGS
1 -1. Definitions.
The terms used herein, unless the context hereof
shall require otherwise shall have the following meanings, and
any other terms defined in the Loan Agreement shall have the
same meanings when used herein as assigned to them in the Loan
Agreement unless the context or use thereof indicates another
or different meaning or intent.
Act: the Minnesota Municipal Industrial Development -Act,
Minnesota Statutes, Chapter 474, as amended;
Bond Counsel: the firm of Briggs and Morgan, Professional
Association, of St. Paul and Minneapolis, Minnesota, and any
opinion of Bond Counsel shall be a written opinion signed by
such Counsel;
Borrower: Erickson Oil Products, Inc., a Wisconsin
corporation, its successors, assigns, and any surviving,
resulting or transferee business entity which may assume its
obligations under the Loan Agreement;
City: the City of Hutchinson, Minnesota, its successors
and assigns;
Construction Loan Agreement: the agreement to be executed
by the City, the Borrower and the Lender, relating to the
disbursement and payment of Project Costs for the construction
and installation of the Improvements;
Improvements: the structures and other improvements,
including any tangible personal property, to be constructed or
installed by the Borrower on the Land in accordance with the
Plans and Specifications;
Land: the real property and any other easements and
rights described in Exhibit A attached to the Loan Agreement;
Lender: Citizens Bank & Trust Co., Hutchinson, Minnesota, .
its successors and assigns;
Loan Agreement: the agreement to be executed by the City
and the Borrower, providing for the issuance of the Note and
the loan of the proceeds thereof to the Borrower, including any
amendments or supplements thereto made in accordance with its
provisions;
Mortgage: the Mortgage, Security Agreement and Fixture
Financing Statement to be executed by the Borrower, as
mortgagor, to the Lender, as mortgagee, securing payment of the
Note and interest thereon;
Note: the $500,000 Commercial Development Revenue Note of
1985 (Erickson Oil Products, Inc. Project), to be issued by the
City pursuant to this Resolution and the Loan Agreement;
Note Register: the records kept by the City Clerk to
provide for the registration of transfer of ownership of the
Note;
Plans and Specifications: the plans and specifications
for the construction and installation of the Improvements on
the Land, together with such modifications thereof and
additions thereto as are reasonably determined by the Borrower
to be necessary or desirable for the completion of the
Improvements and are approved by the Lender;
Pledge Agreement: the agreement to be executed by the
City and the Lender pledging and assigning the Loan Agreement
to the Lender;
Principal Balance: so much of the principal sum on the
Note as has been advanced from time to time and remains unpaid
at any time;
Project: the Land and Improvements as they may at any
time exist;
Project Costs: the total of all "Construction Costs" and
"Loan and Carrying Charges," as those terms are defined in the
Loan Agreement;
Resolution: this Resolution of the City adopted
December 17, 1985, together with any supplement or amendment
thereto.
All references in this instrument to designated
"Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and subdivisions of this
instrument as originally executed. The words "herein,"
"hereof" and "hereunder" and other words of similar import
refer to this Resolution as a whole not to any particular
Article, Section or subdivision.
1 -2. Legal Authorization.
The City is a political subdivision of the State of
Minnesota and is authorized under the Act to initiate the
revenue producing project herein referred to, and to issue'and
sell the Note for the purpose, in the manner and upon the terms
and conditions set forth in the Act and in this Resolution.
1 -3. Findings.
The City Council has heretofore determined, and does
hereby determine, as follows:
(1) The City is authorized by the Act to enter into a
Loan Agreement for the public purposes expressed in the Act;
• (2) The City has made the necessary arrangements with the
Borrower for the establishment within the City of a Project
consisting of certain property all as more fully described in
the Loan Agreement and which will be of the character and
accomplish the purposes provided by the Act, and the City has
by this Resolution authorized the Project and execution of the
Loan Agreement, the Pledge Agreement, the Note and the
Construction Loan Agreement, which documents specify the terms
and conditions of the acquisition and financing of the
Improvements to be included in the Project;
•
(3) in authorizing the Project the City'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
3
to prevent, so far as possible, the emergence of blighted and
marginal lands and areas of chronic unemployment; the develop-
ment of revenue - producing enterprises 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; the halting of the movement of talented,
educated personnel of all ages to other areas thus preserving
the economic and human resources needed as a base for providing
governmental services and facilities; the provision of acces-
sible employment opportunities for residents in the area; the
expansion of an adequate tax base to finance the cost of
governmental services, including educational services for the
school district serving the community in which the Project is
situated;
(4) the amount estimated to be necessary to partially
finance the Project Costs, including the costs and estimated
costs permitted by Section 474.05 of the Act, will require the
issuance of the Note in the principal amount of $500,000 as
hereinafter provided;
(5) it is desirable, feasible and consistent with the
objects and purposes of the Act to issue the Note, for the
purpose of partially financing the Improvements to be included
in the Project;
(6) the Note and the interest accruing thereon do not
constitute an indebtedness of the City within the meaning of •
any constitutional or statutory limitation and do not
constitute or give rise to a pecuniary liability or a charge
against the general credit or taxing powers of the City and
neither the full faith and credit nor the taxing powers of the
City is pledged for the payment of the Note or interest
thereon; and
(7) The Note is an industrial development bond within the
meaning of Section 103(b) of the Internal Revenue Code and is
to be issued within the exemption provided under subparagraph
(A) of Section 103(b)(6) of the Code with respect to an issue
of $1,000,000 or less; provided that nothing herein shall
prevent the City from hereafter qualifying the Note under a
different exemption if, and to the extent, such exemption is
permitted by law and consistent with the objects and purposes
of the Project.
1 -4. Authorization and Ratification of Project.
The City has heretofore and does hereby authorize the
Borrower, in accordance with the provisions of Section
474.03(7) of the Act and subject to the terms and conditions
L]
n
set forth in the Construction Loan Agreement, to provide for
the construction and installation of the Improvements to be
included in the Project pursuant to the Plans and Speci-
46 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 construction
and acquisition of 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 and in compliance with the Plans and Specifications.
•
•
ARTICLE TWO
NOTE
2 -1. Authorized Amount and Form of Note.
The Note issued pursuant to this Resolution shall be
in substantially the form set forth on Exhibit A, 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 principal
amount of the Note that may be outstanding hereunder is
expressly limited to $500,000 unless a duplicate Note is issued
pursuant to Section 2 -7.
2 -2. The Note.
The Note shall be dated as of the date of delivery,
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.
2 -3. Execution.
The Note shall be executed on behalf of the City by
the signatures of its Mayor and Administrator and shall be
sealed with the seal of the City. 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 or the Administrator
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.
2 -4. Delivery of 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:
(A) the Loan Agreement;
(B) the Pledge Agreement;
M
(C) the Mortgage;
16 (D) the Construction Loan Agreement;
(E) a Cost Certificate signed by the Borrower
certifying the use of the proceeds of the Note.
(2) an opinion of Counsel for the Borrower as prescribed
by Bond Counsel;
(3) the opinion of Bond Counsel as to the validity and
tax exempt status of the Note;
(4) 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.
(1) There is hereby established with the Lender a
Construction Fund to be held by the Lender as a separate
account of the City as provided in the Construction Loan
Agreement. Upon delivery of the Note to Lender, the proceeds
of the Note shall be credited to the Construction Fund held by
the Lender on behalf of the City, at which time the entire
principal amount of the Note shall be deemed advanced, and the
. Lender shall, on behalf of the City, disburse funds from the
Construction Fund for payment of Project Costs upon receipt of
such supporting documentation as the Lender may deem reasonably
necessary, including compliance with the provisions of the
Construction Loan Agreement. The Lender or Borrower shall
provide the City with a full accounting of all funds disbursed
for Project Costs.
(2) Any surplus in the Construction Fund shall be applied
towards the prepayment of the Note as provided in the
Construction Loan Agreement and shall not be invested to
produce a yield greater than the yield on the Note, as required
by Internal Revenue Service Revenue Procedure 79 -5, Revenue
Procedure 81 -22 and 26 CFR 601.201 (and any subsequent
amendments, modifications or replacements thereof) ; provided
that, if the Lender receives an opinion of Bond Counsel that
the exemption from federal incane taxation of interest on the
Notes will not be jeopardized, the surplus funds may be
invested at a yield greater than the yield on the Note.
7
n
2 -6. Registration of Transfer.
The City will cause to be kept at the office of the .
Clerk- Treasurer 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- Treasurer,
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 Hutchinson,
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 undersigned certifies
that the transfer be made in accordance with
the provisions of Section 2 -9 of the
Resolution authorizing the issuance of the
Note. •
Dated:
Registered Owner
Upon such transfer the Administrator 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 or 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
46 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 issuance; 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 in accordance with an applicable exemption from such
registration requirements.
G]
ARTICLE THREE
GENERAL COVENANTS
0
3 -1. Payment of Principal and Interest.
The City covenants that it will promptly pay or cause
to be paid the principal of and interest on the Note at the
place, on the dates, solely from the source and in the manner
provided herein and in the Note. The principal and interest
are payable solely from and secured by revenues and proceeds
derived from the Loan Agreement, the Pledge Agreement, the
Mortgage and the Construction Loan Agreement which revenues and
proceeds are hereby specifically pledged to the payment thereof
in the manner and to the extent specified in the Note, the Loan
Agreement, the Pledge Agreement, the Mortgage and the
Construction Loan Agreement; and nothing in the Note or in this
Resolution shall be considered as assigning, pledging or
otherwise encumbering any other funds or assets of the City.
3 -2. Performance of and Authority for Covenants.
The City covenants that it will faithfully perform at
all times any and all covenants, undertakings, stipulations and
provisions contained in this Resolution, in the Note executed,
authenticated and delivered hereunder and in all proceedings of
the City Council pertaining thereto; that it is duly authorized
under the Constitution and laws of the State of Minnesota
including particularly and without limitation the Act, to issue
the Note authorized hereby, pledge the revenues and assign the
Loan Agreement in the manner and to the extent set forth in
this Resolution, the Note, the Loan Agreement and the Pledge
Agreement; that all action on its part for the issuance of the
Note and for the execution and delivery thereof has been duly
and effectively taken; and that the Note in the hands of the
Lender is and will be a valid and enforceable special limited
obligation of the City according to the terms thereof.
3 -3. Enforcement and Performance of Covenants.
The City agrees to enforce all covenants and
obligations of the Borrower under the Loan Agreement and
Construction Loan Agreement, upon request of the Lender and
being indemnified to the satisfaction of the Authority for all
expenses and claims arising therefrom, and to perform all
covenants and other provisions pertaining to the City contained
in the Note, the Loan Agreement and the Construction Loan
Agreement and subject to Section 3 -4.
W1
3 -4. Nature of Security.
Notwithstanding anything contained in the Note, the
Mortgage, the Loan Agreement, the Pledge Agreement or any other
document referred to in Section 2 -4 to the contrary, under the
provisions of the Act the Note may not be payable from or be a
charge upon any funds of the City other than the revenues and
proceeds pledged to the payment thereof, nor shall the City be
subject to any liability thereon, nor shall the Note otherwise
contribute or give rise to a pecuniary liability of the City
or, to the extent permitted by law, any of the City's officers,
employees and agents. 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, or to enforce
payment thereof against any property of the City other than the
revenues pledged under the Pledge Agreement; and the Note shall
not constitute a charge, lien or encumbrance, legal or
equitable, upon any property of the City; and the Note shall
not constitute a debt of the City within the meaning of any
constitutional or statutory limitation; but nothing in the Act
impairs the rights of the Lender to enforce the covenants made
for the security thereof as provided in this Resolution, the
Loan Agreement, the Pledge Agreement, the Mortgage, the
Construction Loan Agreement and in the Act, and by authority of
the Act the City has made the covenants and agreements herein
for the benefit of the Lender; provided that in any event, the
agreement of the City to perform or enforce the covenants and
• other provisions contained in the Note, the Loan Agreement, the
Pledge Agreement and the Construction Loan Agreement shall be
subject at all times to the availability of revenues under the
Loan Agreement sufficient to pay all costs of such performance
or the enforcement thereof, and the City shall not be subject
to any personal or pecuniary liability thereon.
•
3 -5. Preservation of Tax Exempt Status of the Note.
(1) In order to preserve the tax exempt status of
the Note, the City covenants that it shall take such actions as
are required and within their reasonable control to prevent the
interest on the Note from becoming taxable for federal income
tax purposes for the owners thereof (other than any owner who
is a "substantial user" or "related person" thereto" within the
meaning of Section 103(b) of the Code) including but not
limited to taking all actions required of it under Section
103(c)(6) of the Code. To this end, the City shall:
11
(A) cause the Borrower to maintain records
identifying all "gross proceeds" attributable to the Note, the
yield at which such gross proceeds are invested, any arbitrage
profit derived therefrom, and any earnings derived from the
investment of such arbitrage profit;
(B) cause the Borrower to make and maintain on file
all annual determinations of the amount, if any, of excess
arbitrage required to be rebated to the United States
(C) cause the Borrower to rebate to the United
States at least once every five years the amount, if any, which
is required to be rebated to the United States, including the
last installment which shall be made no later than 30 days
after the day on which the Note is paid in full;
(D) cause the Borrower to not invest "gross
proceeds" in any acquired nonpurpose obligations so as to
deflect arbitrage otherwise payable to the United States as a
"prohibited payment" to a third party;
(E) cause the Borrower to refrain from investing any
"gross proceeds" allocable to the Note in acquired nonpurpose
obligations at a yield in excess of the yield on the Note to
the extent such gross proceeds exceed in any calendar year more
than 150% of the debt service requirements for the Note in that
calendar year; and
(F) cause the Borrower to retain on file all records •
of the annual determination of the rebate amount until six (6)
years after the retirement of the Note;
(2) The City hereby represents and covenants that
any fees received by it in connection with the issuance of the
Note shall be spent as quickly as practicable and until spent
shall not be invested in acquired nonpurpose obligations the
yield on which exceeds the yield on the Note.
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12
ARTICLE FOUR
0 MISCELLANEOUS
4 -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 or paragraphs in this
Resolution contained shall not affect the remaining portions of
this Resolution or any part thereof.
4 -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.
4 -3. Registration of Resolution.
The Administrator is authorized and directed to cause
a copy of this Resolution to be filed with the County Auditor
of McLeod County, and to obtain from said County Auditor a
certificate that the Note as a bond of the City has been duly
entered upon his bond register.
4 -4. Authorization to Execute Agreements.
The forms of the proposed Loan Agreement, the Pledge
Agreement and the Construction Loan Agreement and 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
13
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 Administrator
of the City are authorized to execute the Loan Agreement, the
Pledge Agreement and the Construction Loan Agreement in the
name of and on behalf of the City and such other documents as
Bond Counsel consider appropriate in connection with the
issuance of the Note. In the event of the absence or
disability of the Mayor or the Administrator 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.
Adopted: December 17, 1985
Attest:
Administrator
Mayor of the City of Hutchinson
14
•
5 09 N
EXHIBIT A
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF MCLEOD
CITY OF HUTCHINSON
Commercial Development Revenue Note of 1985
(Erickson Oil Products, Inc. Project)
R -1 $500,000
FOR VALUE RECEIVED the CITY OF HUTCHINSON, McLeod
County, Minnesota (the "City ") hereby promises to pay to
Citizens Bank & Trust Co. , in Hutchinson, Minnesota, its
successors or registered assigns (the "Lender "), from the
source and in the manner hereinafter provided, the principal
sum of FIVE HUNDRED THOUSAND AND N01100 DOLLARS ($500,000), or
so much thereof as remains unpaid from time to time (the
"Principal Balance "), with interest thereon at the rates set
• forth in paragraph 1(a) hereof (the "Tax Exempt Rates ") or at
such higher rate as hereinafter provided in paragraph 1(c)
hereof (the "Taxable Rates "), in any coin or currency which at
the time or times of payment is legal tender for the payment of
public or private debts in the United States of America, in
accordance with the terms hereinafter set forth.
1. This Note shall bear interest and be payable as
follows:
(a) (i ) Interest shall accrue on the Principal
Balance of this Note:
(A) from and after the date hereof to and
including the first Call Date (as hereinafter
defined) at a Tax Exempt Rate equal to eight and
one - quarter percent (8 1/4 %) per annum, and
(B) from and after each Call Date (commencing
with the first Call Date) to and including the
earlier of the next succeeding Call Date or the Final
Maturity Date (as hereinafter defined) at a Tax
Exempt Rate equal to the Adjusted Rate (as
hereinafter defined) determined as of the Call Date
which begins each such interest accrual period;
provided, however, that if a Rate Adjustment Event (as
hereinafter defined) shall occur, the Tax Exempt Rate in
effect on the date on which such Rate Adjustment Event
occurs and the Tax Exempt Rates which would otherwise be
in effect from time to time thereafter shall be increased
to that percentage of the applicable Tax Exempt Rates
specified in clauses (A) or (B) above, as the case may be,
determined in accordance with the following formula:
(C) from and after the Call Date to and
including the Final Maturity Date (as hereinafter
defined) at a Tax - Exempt Rate equal to the Adjusted
Rate (as hereinafter defined) detennined as of the
Call Date which begins such interest accrual period;
provided, however, that if a Rate Adjustment Event (as
hereinafter defined) shall occur, the Tax - Exempt Rate in
effect on the date on which such Rate Adjustment Event
occurs and the Tax - Exempt Rates which would otherwise be
in effect from time to time thereafter shall be increased
to that percentage of the applicable Tax - Exempt Rates
specified in clauses (A), (B) or (C) above, as the case
may be, determined in accordance with the following
formula:
Ra = [(Rb - (Nb x Tb)) x (1 - Ta)] + (Na x Ta)
1 -Tb
where:
Ra = the increased Tax - Exempt Rate resulting fran the
Rate Adjustment Event;
Rb = the Tax - Exempt Rate which would otherwise have
been in effect if such Rate Adjustment Event had
not occurred;
Tb = the Maximum Marginal Tax Rate (as hereinafter
defined) as in effect immediately prior to the
occurrence of the Rate Adjustment Event;
Ta = the Maximum Marginal Tax Rate as in effect after
the occurrence of the Rate Adjustment Event;
A 2
•
•
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Nb = the Nondeductible Percentage (as hereinafter
defined) as in effect immediately prior to the
46 occurrence of the Rate Adjustment Event;
Na = the Nondeductible Percentage as in effect after
the occurrence of the Rate Adjustment Event; and
If a subsequent Rate Adjustment Event shall occur, the Tax
Exempt Rates then in effect and thereafter to be in effect
(as adjusted on account of the previous Rate Adjustment
Event) shall be readjusted in accordance with the
foregoing formula.
(ii) Interest only shall be payable on February 1,
1986, and on the first day of each month thereafter to and
including August 1, 1986.
(b) (i) Commencing September 1, 1986, and continuing
on the first day of each month thereafter to and including
November 1, 2000, this Note shall be payable in equal
monthly installments of principal and interest the amount
of each of which shall be determined by the Holder on the
basis of an assumed 15 -year amortization with interest
from September 1, 1986, at the Tax Exempt Rate then in
effect, provided that the amount of such monthly
installments shall be adjusted effective as of the first
day of the month following the Call Date and as of the
• first day of the month following the date of any Rate
Adjustment Event based on amortization of the then
principal balance over the remainder of the original
assumed 15 -year amortization period with interest at the
Tax Exempt Rate in effect immediately following such Call
Date or immediately following such Rate Adjustment Event,
as the case may be.
•
(ii) The entire unpaid principal balance of this
Note, together with all accrued but unpaid interest
thereon, and all other indebtedness due hereunder, shall
be due and payable on December 1, 2000 (the "Final
Maturity Date ") .
(c) In the event that the Holder receives a Notice
of Taxability (as hereinafter defined) or interest on this
Note shall became subject to federal income taxation
pursuant to a Determination of Taxability (as hereinafter
defined), the interest rate specified in paragraph 1(a)
hereof shall be increased, retroactively effective from
and after the Date of Taxability (as hereinafter defined)
A 3
to a Taxable Rate equal to two percent ( 2 %) per annum in
excess of the Base Rate (as hereinafter defined) as such _
rate shall change from time to time; provided, however, •
that in no event shall the Taxable Rate be less than the
Tax Exempt Rate which would otherwise be applicable. The
City shall immediately upon demand pay to the holder and
to each prior holder affected by such Notice of Taxability
or Determination of Taxability an amount equal to the
amount by which the interest accrued retroactively at the
Taxable Rate from the Date of Taxability to the date of
payment exceeds the amount of interest actually accrued
and paid to the holder of any such prior holder during
said period. Such obligation of the City shall survive
the payment in full of the principal amount of this Note.
Thereafter (unless the holder shall require prepayment of
the Note pursuant to paragraph 8(b) hereof), all monthly
installments of interest or of principal and interest
shall be based on the Taxable Rate.
(d) As used herein, the following terms have the
following meanings:
"Adjusted Rate" means, as of any Call Date of
reference, a rate per annum equal to 80% of the Base Rate
in effect as of such Call Date;
"Base Rate" means the rate of interest publicly •
announced by the Lender frcm time to time as its Base
Rate;
"Borrower" means Erickson Oil Products, Inc., a
Wisconsin corporation;
"Call Date" means Janaury 1, 1990 ( the "first Call
Date ") and Janaury 1, 1995 (the "second Call Date ");
"Code" means the Internal Revenue Code of 1954, as
amended;
"Date of Taxability" shall have the meaning ascribed
to such term in Section 4.07 of the Loan Agreement;
"Determination of Taxability" shall have the meaning
ascribed to such term in Section 4.07 of the Loan
Agreement;
"Loan Agreement" means the Loan Agreement, dated the
date hereof, between the City and the Borrower;
•
A 4
"Maximum Marginal Tax Rate" means the maximum
marginal rate of taxation imposed on the taxable income of
corporations under the Code as applicable to the Lender
(said maximum marginal rate being 46% as of the date
hereof);
"Nondeductible Percentage" means that portion
(expressed as a percentage of the interest paid or payable
with respect to indebtedness incurred or continued to
purchase or carry Tax Exempt Obligations which is not
deductible by the Lender for federal corporate income tax
purposes (said nondeductible percentage being 20% as of
the date hereof). As used in the foregoing definition,
the term "Tax- Exempt Obligations" means obligations the
interest on which is exempt from federal income taxes;
"Notice of Taxability" shall have the meaning
ascribed to such term in Section 4.07 of the Loan
Agreement;
"Rate Adjustment Event" means either (a) a decrease
in the Maximum Marginal Tax Rate, which event shall be
deemed to have occurred on the effective date of such
decrease, or (b) an increase in the Nondeductible
Percentage, which event shall be deemed to have occurred
on the effective date of such increase.
• 2. In any event, the payments hereunder shall be
sufficient to pay all principal and interest due, as such
principal and interest becomes due, and to pay any premium or
service charge, at maturity, upon redemption, or otherwise.
Interest shall be computed on the basis of a 365 day year, but
charged for the actual number of days elapsed.
3. If the Lender should not receive on the first day
of any month all of the principal and interest then due on the
Note, and if the City should continue to be in arrears through
the tenth (10th) day of such month, then, in addition to all
other sums due hereunder, the Lender shall be entitled to
receive on the eleventh (11th) day of such month a service
charge equal to two percent (2 %) of the delinquent principal
and interest.
4. Principal and interest and premium or service
charge due hereunder shall be payable at the principal office
of the Lender, or at such other place as the Lender may
designate in writing.
0 A5
5. This Note is issued by the City to provide funds
for a project, as defined in Section 474.02, Subdivision la,
Minnesota Statutes, consisting of the construction of a
convenience store and gas station facility, pursuant to the
Loan Agreement and this Note is further issued pursuant to and
in full compliance with the Constitution and laws of the State
of Minnesota, particularly Chapter 474, Minnesota Statutes, and
pursuant to a resolution of the City Council duly adopted on
December 17, 1985 (the "Resolution ") .
6. This Note is secured by a Pledge Agreement of
even date herewith by the City to the Lender (the "Pledge
Agreement ") and a Mortgage, Security Agreement and Fixture
Financing Statement, of even date herewith between the
Borrower, as mortgagor, and the Lender as mortgagee (the
"Mortgage ") . The proceeds of the Note shall be advanced by the
Lender into the Construction Fund created pursuant to the
Construction Loan Agreement of even date herewith among the
City, the Lender and the Borrower and disbursement from the
Construction Fund shall be subject to the terms and conditions
of the Construction Loan Agreement.
7. The City, for itself, its successors and assigns,
hereby waives demand, presentment, protest and notice of
dishonor; and to the extent permitted by law, 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 the Mortgage or to any other security document from the
same, all without notice to or consent of any party liable
hereon or thereon and without releasing any such party from
such liability and whether or not as a result thereof the
interest on the Note is no longer exempt from the Federal
income tax. In no event, however, may the Final Maturity Date
be extended beyond thirty ( 30) years from the date hereof .
8. This Note is subject to prepayment without
premium as follows:
(a) Prepayment in whole or in part at the option of the
Borrower, on the first day of any month upon at least thirty
(30) days' written notice to the Lender (or such shorter period
of notice as may be acceptable to the Lender).
(b) Prepayment in whole, at the option of the Lender, on
any date following a Determination of Taxability upon at least
thirty (30) days' written notice to the Borrower (or such
shorter period of notice as may be acceptable to the Borrower).
A 6
(c) Prepayment in whole, at the option of the Lender, on
any date upon the occurrence of certain "Events of Default" as
defined in the Loan Agreement, Construction Loan Agreement or
the Mortgage.
(d) Prepayment in whole or in part, at the option of the
Borrower, upon the occurrence of certain events of damage,
destruction or condemnation as provided in the Mortgage.
(e) Prepayment in whole, at the option of the Lender, on
any Call Date upon at least sixty (60) days' written notice to
the Borrower and the City (or such shorter period of notice as
the Borrower may approve).
To effect any such prepayment, the City shall pay or
cause to be paid to the Lender an amount equal to the principal
amount being so prepaid and accrued interest on this Note to
the date of such prepayment. Any partial prepayments shall be
applied in inverse order of principal installments payable
under paragraph 1(b) hereof.
9. As provided in the Resolution and subject to
certain limitations set forth therein, this Note is only
transferable upon the books of the City at the office of the
Clerk- Treasurer, by the Lender in person or by his agent duly
authorized in writing, at the Lender's expense, upon surrender
hereof together with a written instrument of transfer
• satisfactory to the Clerk- Treasurer, duly executed by the
Lender or his duly authorized agent. Upon such transfer the
Clerk - Treasurer will note the date of registration and the name
and address of the new registered Lender in the registration
blank appearing below. The City may deem and treat the person
in whose name the Note is last registered upon the books of the
City with such registration noted on the Note, as the absolute
owner hereof, whether or not overdue, for the purpose of
receiving payment of or on the account, of the Principal
Balance or interest and for all other purposes, and all such
payments so made to the Lender or upon his order shall be valid
and effective to satisfy and discharge the liability upon the
Note to the extent of the sum or sums so paid, and the City
shall not be affected by any notice to the contrary.
10. All of the agreements, conditions, covenants,
provisions and stipulations contained in the Resolution, the
Mortgage, the Loan Agreement, the Pledge Agreement and the
Construction Loan Agreement are hereby made a part of this Note
to the same extent and with the same force and effect as if
they were fully set forth herein.
A 7
11. This Note and interest thereon and any service
charge or premium due hereunder are payable solely from the
revenues and proceeds derived from the Loan Agreement and the
Mortgage, and do not constitute a debt of the City within the
meaning of any constitutional or statutory limitation, are not
payable from or a charge upon any funds other than the revenues
and proceeds pledged to the payment thereof, and do not give
rise to a pecuniary liability of the City or, to the extent
permitted by law, of any of its officers, agents or employees,
and no holder of this Note shall ever have the right to compel
any exercise of the taxing power of the City to pay this Note
or the interest thereon, or to enforce payment thereof against
any property of the City, and this Note does not constitute a
charge, lien or encumbrance, legal or equitable, upon any
property of the City, and the agreement of the City to perform
or cause the performance of the covenants and other provisions
herein referred to shall be subject at all times to the
availability of revenues or other funds furnished for such
purpose in accordance with the Loan Agreement, sufficient to
pay all costs of such performance or the enforcement thereof.
12. It is agreed that time is of the essence of this
Note. If an Event of Default (as that term is defined in the
Mortgage, the Construction Loan Agreement or the Loan
Agreement) occurs, then the Lender shall have the right and
option to declare, the Principal Balance and accrued interest
thereon, immediately due and payable, whereupon the same, plus .
any premiums or service charges, shall be due and payable, but
solely from sums made available under the Loan Agreement, the
Construction Loan Agreement, and the Mortgage. Failure to
exercise such option at any time shall not constitute a waiver
of the right to exercise the same at any subsequent time.
13. The remedies of the Lender, as provided herein
and in the Mortgage, the Loan Agreement, the Pledge Agreement
and the Construction Loan Agreement, are not exclusive and
shall be cumulative and concurrent and may be pursued singly,
successively 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 in
no event be construed as a waiver or release thereof.
14. The Lender shall not be deemed, by any act of
omission or commission, to have waived any of its rights or
remedies hereunder unless such waiver is in writing and signed
by the Lender and, then only to the extent specifically set
forth in the writing. A waiver with reference to one event
shall not be construed as continuing or as a bar to or waiver
of any right or remedy as to a subsequent event.
W-11
15. This Note has been issued without registration
under state or federal or other securities laws, pursuant to an
exemption for such issuance; and accordingly the Note may not
46 be assigned or transferred in whole or part, nor may a partici-
pation interest in the Note be given pursuant to any
participation agreement, except in accordance with an
applicable exemption from such registration requirements.
IT IS HEREBY CERTIFIED AND RECITED that all
conditions, acts and things required to exist, happen and be
performed precedent to or in the issuance of this Note do
exist, have happened and have been performed in regular and due
form as required by law.
IN WITNESS WHEREOF, the City has caused this Note to
be duly executed in its name by the manual signatures of the
Mayor and Administrator and has caused the corporate seal to be
affixed hereto, and has caused this Note to be dated December
1985.
•
(SEAL)
0
CITY OF HUTCHINSON, MINNESOTA
By
Mayor
By
Administrator
A 9
PROVISIONS AS TO REGISTRATION
The ownership of the unpaid Principal Balance of this
Note and the interest accruing thereon is registered on the
books of the City of Hutchinson in the name of the holder last
noted below.
Date of
Registration
December , 1985
Name and address
Registered Owner
Citizens Bank &
Trust Co.
102 Main Street South
Hutchinson, MN 55350
A 10
Signature of
Clerk- Treasurer
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•
LAW OFFICES
BRIGGS AND MORGAN
PROFESSIONAL ASSOCIATION
2200 FIRST NATIONAL BANK BUILDING
SAINT PAUL, MINNESOTA 55101
TELEPHONE (612) 201 -1215
TELECOPIER (612) 222 -4071
INCLUDING THE FORMER FIRM OF
LEVITT, PALMER, BOWEN, ROTMAN & SHARE
EXPRESS MAIL
Mr. Gary D. Plotz
Mr. James Schaefer
Mr. T. A. Burich
Mr. Gary D. Vander Vorst
Gentlemen:
December 11, 1985
E
RECEIVED
Ile
r J
Re: City of Hutchinson - $500,000 Commercial
Development Revenue Note (Erickson
Oil Products, Inc. Project)
Enclosed for your review and comment in
connection with the above transaction are first drafts
of the closing certificates and forms of opinions.
The City of Hutchinson will consider adoption of the
final resolution at its last meeting in December.
Therefore I need your comments as promptly as possible
on all of the documents.
TJH /ks
Enc.
2200 FIRST NATIONAL BANK BUILDING
SAINT PAUL, MINNESOTA 55101
(612) 291 -1215
Ver truly yours,
1 ta 6z--
Trudy J. Halla
2400 I D S CENTER
MINNEAPOLIS, MINNESOTA 55402
(612) 339 -0601
502I
Mr. Richard Nadeau
Loan and Contract Officer
Minnesota Energy and
Economic Development Authority
9th Floor
American Center Building
150 East Kellogg Boulevard
St. Paul, Minnesota 55101
•
RE: City of Hutchinson - $500,000
Commercial Development Revenue Note of 1985
(Erickson Oil Products, Inc. Project) •
Dear Mr. Nadeau:
Enclosed in connection with the above referenced bond
issue is a copy of the Notice of Issue, which your office has
requested. Please acknowledge receipt by executing the
enclosed copy of this letter and return it in the enclosed
self- addressed, stamped envelope.
Please do not hesitate to give me a call if there are any
questions.
Very truly yours,
Trudy J. Halla
Enclosures
•
502I
City of Hutchinson
10 $500,000 Commercial Development
Revenue Note of 1985
(Erickson Oil Products, Inc. Project)
CERTIFICATION OF THE
CITY OF HUTCHINSON, MINNESOTA
The undersigned, Mayor and Administrator of the City
of Hutchinson, Minnesota, a political subdivision of the State
of Minnesota (the "City "), acting for the City do hereby
certify and declare as follows:
I. The officials of the City and their terms of
office are as follows:
Name Office Ex iration of Term
Robert H. Stearns Mayor December 31, 1985
Gary D. Plotz City Administrator Appointed.
Mike Carls Councilman December 31, 1985
Pat Mikulecky Councilman December 31, 1987
• John Milnar Councilman December 31, 1985
Marlin Torgerson Councilman December 31, 1987
2. A preliminary resolution was duly adopted at a
regular meeting of the City on November 12, 1985, and has not
been rescinded, modified or amended in any respect.
3. The resolution (the "Resolution ") relating to the
issuance of the $500,000 Commercial Development Revenue Note of
1985 (Erickson Oil Products, Inc. Project) (the "Note ") was
adopted at a regular meeting of the City on December 17, 1985,
is in full force and effect as of the date hereof, and has not
been rescinded, modified or amended in any respect.
4. To the best of our knowledge since the date of
adoption of the Resolution, there has not been any change with
respect to any of the findings of the City expressed in Section
1 -3 of the Resolution.
5. The Mayor and Administrator have duly executed on
behalf of the City the Note, the Construction Loan Agreement,
the Loan Agreement and the Pledge Agreement described in the
Resolution.
•
6. The City has authorized by all necessary action
the execution, delivery and due performance of the Note, the
Construction Loan Agreement, the Loan Agreement and the Pledge
Agreement, and any and all such other agreements and documents
as may be required to be executed and delivered by the City in
order to carry out, give effect to and consummate the
transaction contemplated by the Construction Loan Agreement,
the Note, the Loan Agreement, the Pledge Agreement and the
Resolution.
7. There is no litigation of any nature now pending,
or to our knowledge, threatened seeking to restrain or enjoin
the issuance, sale, execution or delivery of the Note, or any
of the documents described in the Resolution, or questioning
the authority or proceedings pursuant to which the Note is
being issued, the validity of the Note or any provision made
for the payment thereof, or the power of the City to assist in
financing the Project as defined in the Loan Agreement.
8. Neither the existence of the City nor the rights
of the present officials of the City to their respective
offices is being contested and no authority or proceeding for
the issuance of the Note or the execution and delivery of the
Pledge Agreement, the Loan Agreement, or the Construction Loan
Agreement have been modified, repealed, revoked or rescinded.
9. Pursuant to the provisions of the Loan Agreement •
and the Construction Loan Agreement, Citizens Bank & Trust Co.
(the "Lender ") is hereby requested to disburse the proceeds
received from the sale of the Note to the Lender directly to
Erickson Oil Products, Inc., a Wisconsin corporation (the
"Borrower ").
10. With respect to the federal arbitrage require-
ments set forth in Section 103(c) of the Internal Revenue Code
of 1954, as amended (the "Code "), and the regulations
promulgated thereunder, and in reliance upon the
representations made by the Borrower in a Certification of
Borrower delivered this day by the Borrower, we hereby certify
and reasonably expect that the following has occurred or will
occur with respect to the Note:
(a) The Note was delivered on the date of
this Certificate.
(b) Pursuant to the terms of the Loan
Agreement and the Construction Loan Agreement the
Improvements to be financed from the proceeds of
the Note are to be acquired, constructed and
installed by the Borrower or its designee, and
•
the proceeds of the Note are to be advanced under
the Construction Loan Agreement by the Lender
during acquisition, construction and installation
of the Project upon the order or certificate of
the Borrower and only for the purpose of paying
directly or reimbursing the Borrower for the
payment of Project Costs theretofore incurred.
Accordingly there is no opportunity to invest any
proceeds of the Note for the benefit of the
Borrower or the City before such proceeds are
spent.
(c) The Borrower has incurred or will incur
within six months hereof a substantial binding
obligation to acquire, construct and install the
Project in the form of construction contracts the
aggregate amounts payable under which are
estimated to be not less than 2 1/2% of the
principal face amount of the Note.
(d) Acquisition, construction and
installation of the Project has proceeded and will
proceed with due diligence to completion.
Completion is expected to occur on or about
. (e) At least 85% of the "spendable proceeds"
of the Note will be expended for the Project Costs
within three years hereof. The term "spendable
proceeds" is understood to mean "original
proceeds" (net amounts, after payment of all
expenses of issuing the Note, received by the City
as a result of the sale of the Note), less the
amounts, if any, of any such proceeds expended
within the three year period for the payment of
the debt service on such Note to the holder
thereof.
(f) Debt service payments to became due
under the Note are made directly by the Borrower
to the Lender, and accordingly no "sinking fund"
is established for the Note.
.7
(g) No cash or securities are pledged either _
directly or indirectly by the Borrower to the .
payment of or as security for the Note, nor is
there any fund of cash or securities which the
Borrower has otherwise set aside and expects to
invest or maintain at a yield greater than the
yeild on the Note for the purpose of paying debt
service on the Note.
The City is not aware of any facts or circumstances that would
cause it to question the accuracy of the foregoing repre-
sentations and on the basis thereof, it is not expected that
the proceeds of the Note will be used in a manner that would
cause the Note to be an arbitrage bond under Section 103(c) of
the Code, and the regulations prescribed under that section,
and to the best of our knowledge and belief, there are no
facts, estimates or circumstances other than those mentioned
above that would materially change the conclusion that it is
not expected that the proceeds of the Note will be used in a
manner that would cause the Note to be an arbitrage bond under
Section 103(c) of the Code, and regulations prescribed under
that section; and the undersigned have not been notified nor do
they have any knowledge to indicate that the City has been
listed or is proposed to be listed by the Internal Revenue
Service as a City whose arbitrage certificates may not be
relied upon. •
The statements in this paragraph 10 are made pursuant
to Sections 1.103 -13, 1.103 -14, and 1.103 -15 of the Income Tax
Regulations under the Code, and the undersigned Mayor and
Administrator are the officers of the City charged by the
Resolution with the responsibility of issuing the Note.
11. Any capitalized terms not defined herein shall
have the meaning given them in the Loan Agreement or
Resolution.
IN WITNESS WHEREOF, the undersigned have hereunto set
their signatures and the official seal of the City this - - --
day of December, 1985.
CITY OF HUTCHINSON, MINNESOTA
By- --------------- - - - --
Its Mayor
By- ------ - - - - --
Its Administrator
(SEAL)
•
502I
City of Hutchinson
46 $500,000 Commercial Development Revenue Note of 1985
(Erickson Oil Products, Inc. Project)
CERTIFICATION OF THE BORROWER
We,
certify and declare that we
acting and _
the date hereof, of Erickso
corporation organized under
(the "Borrower ") and that:
_ and do hereby
are the duly chosen, qualified and
respectively, as of
a Oil Products, Inc., a Wisconsin
the laws of the State of Wisconsin
1. This Certificate relates to the issuance and sale
of a $500,000 Commercial Development Revenue Note of 1985
(Erickson Oil Products, Inc. Project) (the "Note "), being
issued by the City of Hutchinson (the "City "). The proceeds of
the Note are being used to finance a "Project ", as defined
under a Loan Agreement dated December 1985, between the
City and the Borrower (the "Loan Agreement ") and the City's
interest in the Loan Agreement has been assigned to Citizens
Bank & Trust Co., in Hutchinson, Minnesota (the "Lender ")
pursuant to a Pledge Agreement dated December _, 1985 (the
"Pledge Agreement "). The Note is secured by a Mortgage,
• Security Agreement and Fixture Financing Statement dated
December _, 1985, between the Borrower, as mortgagor, and the
Lender, as mortgagee (the "Mortgage "). The disbursement of the
Note proceeds is to be supervised by the Lender pursuant to a
Construction Loan Agreement dated December - f 1985, between
the City, the Borrower and the Lender (the onstruction Loan
Agreement ").
2. The Loan Agreement, the Mortgage .ate -Rem# s` and
the Construction Loan Agreement have been duly signed,
acknowledged and delivered by the undersigned on behalf of the
Borrower.
3. The execution and delivery of the Loan Agreement,
the Mortgage and Construction Loan Agreement and the carrying
out of the terms thereof do not and will not result in
violation of any provision of or in a default under the
Articles of Incorporation and By -laws of the Borrower or any
indenture, mortgage, deed of trust, indebtedness, or other
agreement, to which the Borrower is a party or by which it or
its property is bound or result in the creation of a lien or
encumbrance upon its property in Wisconsin and Minnesota, and
0
do not and will not conflict with any present order, rule or
regulation applicable to the Borrower of any court or of any
Federal or State regulatory body or administrative agency or
other governmental agency having jurisdiction over the
Borrower.
4. There is no litigation pending or, to the best of
the Borrower's knowledge, threatened affecting the right nor in
any way questioning the execution or validity of the Loan
Agreement, Mortgage and the Construction Loan Agreement or the
issuance of the Note.
5. The Borrower is a corporation validly existing
and in good standing under the laws of the State of Wisconsin.
A copy of the Articles of Incorporation and By -laws of the
Borrower is attached hereto as Exhibit A and is a full, true
and correct copy thereof, and such Articles of Incorporation
and By -laws have not been further amended, nor has any action
been taken by the Board of Directors of the Borrower for the
purpose of effecting any further amendment or modification
thereof. Copies of certificates of good standing in Wisconsin
and Minnesota for the Borrower are attached hereto as Exhibit
B, and there has been no change in the good standing of the
Borrower in Wisconsin or Minnesota as of the date of said
certificates, and no proceedings have commenced for the
dissolution or liquidation of the Borrower. A copy of the •
Resolution of the Borrower authorizing the execution and
delivery of the Loan Agreement, Mortgage and Construction Loan
Agreement is attached hereto as Exhibit C and such resolution
has not been modified, amended or rescinded since the date of
its adoption.
6. With respect to the federal arbitrage re-
quirements set forth in Section 103(c) of the Code, and the
regulations pranulgated thereunder (the "Regulations "), and as
substantiation for the City to assure that the Note will not be
deemed an arbitrage bond under said Section 103(c) and
Regulations, we hereby certify and reasonably expect that the
following will occur with respect to the Note:
(a) The Note was delivered on the date of
this Certificate and the proceeds thereof are
expected to be used as follows:
9
Construction Costs $
Equipment Costs $
Commitment Fees $
Capitalized Interest $
Legal Fees $
Architect and Engineer $
TOTAL $
(b) Pursuant to the terms of the Loan
Agreement and the Construction Loan Agreement, the
Project to be financed from the proceeds of the
Note are to be acquired, constructed and installed
by the Borrower or its designee, and the proceeds
of the Note are to be advanced under the
Construction Loan Agreement by the Lender during
acquisition, construction and installation of the
Improvements upon the order or certificate of the
Borrower and only for the purpose of paying
directly or reimbursing for the payment of
"Project Costs ", as defined in the Loan Agreement,
theretofore incurred. Accordingly there is no
opportunity to invest any proceeds of the Note for
the benefit of the Borrower or the City before
such proceeds are spent.
• (c) The Borrower has incurred or will incur
within six months hereof a substantial binding
obligation to acquire, construct and install the
Improvements in the form of construction contracts
the aggregate amounts payable under which are
estimated to be not less than 2 1/2% of the
principal face amount of the Note.
(d) Acquisition, construction and
installation of the Project has proceeded and will
proceed with due diligence to completion.
Completion is expected to occur on or about
(e) At least 85% of the "spendable proceeds"
of the Note will be expended for the Project
Costs, as defined in the Loan Agreement, within
three years hereof. The term "spendable proceeds"
is understood to mean "original proceeds" (net
amounts, after payment of all expenses of issuing
the Note, received by the City as a result of the
sale of the Note), less the amounts, if any, of
any such proceeds expended within the three year
period for the payment of the debt service on such
Note to the holder thereof.
(f) Debt service payments to be came due
under the Note are made directly by the Borrower
to the Lender, and accordingly no "sinking fund"
is established for the Note.
(g) No cash or securities are pledged either
directly or indirectly by the Borrower to the
payment of or security for the Note, nor is there
any fund of cash or securities which the Borrower
has otherwise set aside and expects to invest or
maintain at a yield greater than the yield on the
Note for the purpose of paying debt service on the
Note.
The Borrower is not aware of any facts or circumstances that
would cause it to question the accuracy of the foregoing
representations and on the basis thereof, it is not expected
that the proceeds of the Note will be used in a manner that
would cause the Note to be an arbitrage bond under Section
103(c) of the Code, and the proposed regulations proscribed
under that section, and to the best of our knowledge and
belief, there are no facts, estimates or circumstances other
than that mentioned above that would materially change the
conclusion that it is not expected that the proceeds of the
Note will be used in a manner that would cause the Note to be
an arbitrage bond under Section 103(c) of the Code, and
regulations proscribed under that section. •
8. The representations of the Borrower set forth in
the Loan Agreement are reaf finned as true and correct in all
respects.
9. "Substantially all" of the proceeds of the Note
will be used for the acquisition, construction, reconstruction,
or improvement of land or property of a character subject to
the allowance for depreciation within the meaning of Section
103(b)(6) of the Code.
10. This Certificate is made to induce the sale and
delivery of the Note, and the statements herein are deemed
representations of the Borrower as to the facts recited
therein.
11. The I.R.S. Form 8038 attached hereto as Exhibit D
is true and correct in all respects.
12. Any capitalized terms not defined herein shall
have the meanings given them in the Loan Agreement or
46 Resolution.
IN WITNESS WHEREOF, we have hereunto set our hands
this day of December, 1985.
(SEAL)
.7
is
ERICKSON OIL PRODUCTS, INC.
By
Its
By
Its
Exhibit A - Articles of Incorporation
Exhibit B - Certificates of Good Standing -
Wisconsin and Minnesota
Exhibit C - Resolution
Exhibit D - IRS 8038
•
502I
City of Hutchinson
4) $500,000 Commercial Development Revenue Note of 1985
(Erickson Oil Products, Inc. Project)
CERTIFICATION OF LENDER
I, , do hereby certify and declare that
I am the duly chosen qualified and acting , as of
the date hereof, of Citizens Bank & Trust Co., in Hutchinson,
Minnesota, a Minnesota banking corporation (the "Lender "). In
connection with the execution and delivery of the following
related documents, all of which are dated as of December A, 1985, unless otherwise indicated: a Loan Agreement between the
City of Hutchinson, Minnesota (the "City ") and Erickson Oil
Products, Inc., a Wisconsin corporation (the "Borrower ") (the
"Loan Agreement "), a Mortgage, Security Agreement and Fixture
Financing Statement from the Borrower, as mortgagor, to the
Lender, as mortgagee (the "Mortgage "), a Pledge Agreement from
the City to the Lender (the "Pledge Agreement "), a $500,000
Commercial Development Revenue Note of 1985 (Erickson Oil
Products, Inc. Project) issued by the City (the "Note "), a
Construction Loan Agreement between the City, the Borrower and
the Lender (the "Construction Loan Agreement") and a Resolution
• adopted on December 17, 1985, by the City Council providing for
the issuance and sale of the Note (the "Resolution "), and the
instruments and documents required pursuant to the terms of the
Loan Agreement and the Resolution, I certify that:
(1) I have received the Note from the City.
(2 ) The Lender is a Minnesota banking corporation
organized and existing under the laws of the United States of
America and validly existing and qualified to do business in
the State of Minnesota with adequate power to enter into and
perform or accept, as the case may be, the Note, the Mortgage,
the Construction Loan Agreement and the Pledge Agreement and
has authority to purchase the Note and execute, accept and /or
perform any other instruments and documents required to be
executed by the Lender in connection with the loan.
(3) The Construction Loan Agreement has been duly and
validly authorized, executed and delivered by the Lender and
assuming due authorization, execution and delivery thereof by
the other parties thereto, constitutes a valid, legal and
binding agreement enforceable in accordance with its terms,
LJ
except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting
creditors' rights generally. The Note and the Mortgage have
been duly and validly received and accepted by the Lender.
(4) No approval or prior review by any state or federal
banking agency or other governmental agency having jurisdiction
over the Lender is required with respect to the Lender entering
into or performing the Construction Loan Agreement and
purchasing the Note.
(5 ) The consummation of the transaction contemplated by
the Loan Agreement, the Note, the Mortgage, the Construction
Loan Agreement and the Pledge Agreement and the fulfillment of
the terms thereof will not conflict with any present order,
rule or regulation applicable to the Lender of any court or of
any federal or state banking agency or other governmental
agency having jurisdiction over the Lender.
(6) The Lender represents in order to induce the City to
enter into this transaction:
(a) In entering into this transaction it has
relied solely upon credit investigations and due
diligence reviews conducted by itself and/or its
own advisors.
•
(b) It has been offered copies of or full
access to all Note documents and all records,
reports, financial statements and other
information concerning the Borrower and pertinent
to the source of payment for the Note to which a
reasonable investor would attach significance in
making investment decisions.
(c) It is sufficiently knowledgeable and
experienced in financial and business matters,
including the purchase and ownership of municipal
and other tax exempt obligations and the business
operation of the Borrower, to be able to evaluate
the risks and merits of the investment represented
by the purchase of the Note and it is aware of the
intended use of the proceeds of the Note and the
risks involved therein.
(d) It understands that the Note is not
secured by any pledge of any moneys received or to
be received fran taxation by the State of
•
Minnesota or any political subdivision or taxing
district thereof including, without implied
limitation, the City, and that the Vote will never
represent or constitute a general obligation, debt
or bonded indebtedness of the City, the State of
Minnesota or any political subdivision thereof and
that no right will exist to have taxes levied by
the City, the State of Minnesota or any political
subdivision thereof for the payment of principal
and interest on the Note.
(e) It has been informed that the Note (i)
is not being registered or otherwise qualified for
sale under the "Blue Sky" laws and regulations of
any State, or under federal securities laws or
regulations, (ii) will not be listed on any stock
or other securities exchange, (iii) will carry no
rating from any rating service and (iv) is not
likely to be readily marketable.
(f) It will not offer, sell or otherwise
dispose of all or any part of or interest in the
Note, except (i) in full good faith compliance
with all securities registration, broker -
antifraud and other provisions of the applicable
State and Federal laws and (ii) with full and
• accurate disclosure of all material facts to the
prospective purchaser(s) or transferee(s) .
IN WITNESS WHEREOF, I hereunto set my hand this
day of December, 1985.
CITIZENS BANK & TRUST CO.
By
Its
•
502I
46 INDEX
CITY OF HUTCHINSON, MINNESOTA
$500,000 COMMERCIAL DEVELOPMENT REVENUE (VOTE
OF 1985
(ERICKSON OIL PRODUCTS, INC. PROJECT)
PART I BASIC AUTHORIZATIONS
1. Preliminary Resolution
2. Application to and Approval of the
Department of Energy and Economic Development
3. Final Note Resolution
PART II BAS
4.
5.
6.
7.
8.
9.
10.
•
•
IC AGREEMENTS
Form of Note
Loan Agreement
Pledge Agreement
Mortgage, Security Agreement and
Fixture Financing Statement
Construction Loan Agreement
Form of Note
Financing Statements
a. City as Debtor
b. Borrower as Debtor
PART III CLOSING CERTIFICATES
11. County Auditor's Certificate as to
Registration
12. Certification of the City
13. Certification of the Borrower
14. Certification of the Lender
15. Project Closing Statement
16. I.R.S. Informational Statement (Form 8038)
PART IV OPINIONS
17. Opinion of Counsel for the City
18. Opinion of Counsel for the Borrower
19. Opinion of Bond Counsel
PART V MISCELLANEOUS DOCUMENTS
20. Title Insurance Policy
21. Survey
22. UCC Searches
5021
[Opinion of Bond Counsel]
City of Hutchinson
37 Washington Ave. W.
Hutchinson, MN 55350
Citizens Bank & Trust Co.
102 Main St. So.
Hutchinson, MN 55350
Erickson Oil Products, Inc.
1231 Industrial Road
Hudson, WI 54016
Re: City of Hutchinson
$500,000 Commercial Development
Revenue Note of 1985
(Erickson Oil Products, Inc. Project)
Gentlemen:
We have acted as Bond Counsel in connection with the
. issuance and sale by the City of Hutchinson, Minnesota (the
"City ") , of its Commercial Development Revenue Note of 1985
(Erickson Oil Products, Inc. Project) (the "Note "), dated of
even date herewith, in the maximum principal amount of
$500,000. Both principal and interest are payable at the
principal office of the registered holder, or at such other
address as the holder may designate in writing.
In this connection, we have examined various
documents we considered necessary as the basis for this
opinion, including the following documents dated on or about
the date of the Note, unless otherwise specified: a Loan
Agreement (the "Loan Agreement "), between the City and Erickson
Oil Products, Inc., a Wisconsin corporation (the "Borrower ") a
Mortgage, Security Agreement and Fixture Financing Statement
between the Borrower, as mortgagor, and Citizens Bank & Trust
Co., in Hutchinson, Minnesota (the "Lender"), as mortgagee, a
Pledge Agreement from the City to the Lender (the "Pledge
Agreement ") , a Construction Loan Agreement between the
Borrower, the Lender and the City (the "Construction Loan
Agreement "), a preliminary resolution adopted by the City on
November 12, 1985, and a final Note Resolution adopted by the
CJ
City on December 17, 1985, authorizing the issuance of the Note
(the "Resolution ") and certain proceedings of the City taken in
connection with the authorization of these and other documents
and the executed Note.
Based upon such examinations, and assuming the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of
the originals of such documents, and the accuracy of the
statements of fact contained in such documents, and based upon
present Minnesota and federal laws, regulations, rulings and
decisions, it is our opinion that:
(1) the City is duly organized and is
validly existing as a political subdivision of the
State of Minnesota under applicable laws of the
State of Minnesota;
(2) the Loan Agreement, the Pledge Agreement
and the Construction Loan Agreement have been duly
and validly executed and delivered by the City,
and, assuming due authorization and execution by
the other parties thereto, are valid instruments
legally binding on the parties thereto and legally
enforceable in accordance with their terms except
to the extent limited by general principles of
equity and by bankruptcy, insolvency,
reorganization, moratorium or other laws of
teneral application relating to or affecting
enforcement of creditors' rights and subject to
the valid exercise of the sovereign police powers
of the State of Minnesota and of the
constitutional powers of the United States of
America and except to the extent that
enforceability of the indemnification provisions
in the Loan Agreement are limited by state and
federal securities laws;
(3) the proceedings show lawful authority
for issuance of the Note under the Resolution and
under the provisions of the Constitution and laws
of the State of Minnesota now in force, including
the Municipal Industrial Development Act,
Minnesota Statutes, Chapter 474, as amended;
•
40
(4) the Note has been duly and validly
executed and delivered by the City and is a valid
and binding special obligation of the City payable
in accordance with its terms except to the extent
qualified by general principles of equity and by
bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to
or affecting enforcement of creditors' rights and
subject to the valid exercise of the sovereign
police powers of the State of Minnesota and of the
constitutional powers of the United States of
America;
(5) the Note is not a general obligation or
indebtedness of the City within the meaning of any
constitutional or statutory limitation, and does
not constitute or give rise to a pecuniary
liability of the City or charge against its
general credit or taxing powers, but is payable
solely from revenues pledged and assigned to the
payment thereof, pursuant to the Loan Agreement;
and
(6) as of the date of issuance, the Note is
not an arbitrage bond, within the meaning of
Section 103(c) of the Internal Revenue Code of
1954, as amended (the "Code "), is exempt from all
taxation as property by the State of Minnesota,
its subdivisions and municipalities, bears
interest not includible in gross income of the
owner for the purpose of computing any tax imposed
by the provisions of Minnesota Statutes, Chapter
290, other than Minnesota corporate franchise
taxes and bank excise taxes measured by income,
and bears interest exempt from Federal income
taxation under Section 103(a)(1) of the Code
pursuant to the "small issue " exemption provided
in Section 103(b)(6)(A) of the Code, provided that
no opinion is expressed as to the exemption from
Federal incane taxation or fran any tax imposed by
the provisions of Minnesota Statutes, Chapter 290,
for any period during which the owner of the
interest on the Note is a "substantial user" of
the facility financed by the Note or a "related
person" as those terms are used in Section 103(b)
of the Code.
0
In rendering the foregoing opinion we have relied
upon the opinions of even date herewith of
counsel for the Borrower, and James Schaefer, Esq., counsel for
the City as to those matters with respect to which their
opinions are rendered.
Very truly yours,
Professional Association
17j
40
502I
[Opinion of Borrower's Counsel]
[Dated as of Closings
City of Hutchinson
37 Washington Ave. W.
Hutchinson, MN 55350
Citizens Bank & Trust Co.
102 Main St. So.
Hutchinson, MN 55350
Briggs and Morgan, P .A.
2200 West First National Bank Building
St. Paul, MN 55101
Re: City of Hutchinson
$500,000 Commercial Development
Revenue Note of 1985
(Erickson Oil Products, Inc. Project)
Gentlemen:
We have acted as counsel for Erickson Oil Products,
Inc., a Wisconsin corporation (the "Borrower ") in connection
with the execution and delivery of the following related
documents, all of which are dated of even date herewith, unless
otherwise specified: a Loan Agreement between the City of
Hutchinson, Minnesota (the "City ") and the Borrower (the "Loan
Agreement "), a Mortgage, Security Agreement and Fixture
Financing Statement between the Borrower, as mortgagor, and
Citizens Bank & Trust Co., in Hutchinson, Minnesota (the
"Lender "), as mortgagee (the "Mortgage "), a Pledge Agreement
from the City to the Lender (the "Pledge Agreement "), a
$500,000 Commercial Development Revenue Note of 1985 (Erickson
Oil Products, Inc. Project) issued by the City (the "Note "), a
Construction Loan Agreement between the City, the Borrower and
the Lender (the "Construction Loan Agreement ") and an
authorizing resolution of the City adopted on December 17, 1985
(the "Resolution ").
•
Based upon a reasonable investigation of the facts,
including examination of the foregoing documents, as well as
the Articles of Incorporation, By -Laws and Minute Books of the
Borrower, Certificates of Good Standing for the Borrower for
the State of Minnesota and Wisconsin and such other documents
as we have deemed necessary as a basis for the opinion
hereinafter expressed, we are of the opinion that:
1. The Borrower is a corporation legally
organized and validly existing under the laws of
the State of Wisconsin, with adequate power to
enter into and perform the Loan Agreement, the
Mortgage and the Construction Loan Agreement,
respectively, and has authority to execute all
other instruments and documents required to be
executed by the Borrower in connection with the
Loan Agreement and Resolution.
2. The Loan Agreement, the Construction Loan
Agreement and the Mortgage have been duly and
validly authorized, executed and delivered by the
Borrower and assuming due authorization, execution
and delivery thereof by the other parties thereto,
constitute valid, legal and binding agreements of
the Borrower enforceable in accordance with their
terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other
laws relating to or affecting creditors' rights
generally.
3. To the best of our knowledge, no approval
or prior rview is required from any public
regulatory body with respect to the Borrower
entering into or performing the Loan Agreement,
the Construction Loan Agreement and the Mortgage
except for such review and approval as has already
occurred as of the date of this opinion.
4. To the best of our knowledge, the
consummation of the transaction contemplated by
the Loan Agreement, the Construction Loan Agree-
ment and the Mortgage and the fulfillment of the
terms thereof will not conflict with any present
order, rule or regulation applicable to the
Borrower of any court or any federal or state
regulatory body or administrative agency or other
governmental agency having jurisdiction over the
Borrower.
5. The entering into and performance of the
Loan Agreement, the Construction Loan Agreement
and the Mortgage (subject to any written waivers
or consents secured by the Borrower in connection
therewith and filed with and approved by the
Lender) have not and will not result in any breach
of, or constitute a default under the Articles of
Incorporation of the Borrower, or any outstanding
indenture, mortgage, deed of trust, bank loan or
credit agreement or other instruments to which the
Borrower is a party or by which it is bound or
result in the creation of a lien or encumbrance
upon its property other than by such documents.
6. There is no litigation pending or, to the
best of our knowledge, threatened in any way
questioning the execution or validity of any of
the instruments and documents executed by the
Borrower in connection with the transaction con-
templated by the Loan Agreement and the
Resolution, or questioning the validity of the
issuance of the Note pursuant to the Resolution;
and there are no other legal or governmental
proceedings pending or to the best of our
knowledge, threatened or contemplated by
governmental authorities or others, by which the
• Borrower is or may be bound or to which any
property of the Borrower is or may be bound or to
which any property of the Borrower is or may be
subject, which, if determined adversely to the
Borrower would individually or in the aggregate
have a material adverse effect on the financial
position or results of operations of the Borrower.
7. To the best of our knowledge, the
representations made by the Borrower in the Loan
Agreement and in the Certificate of the Borrower
dated as of the date of this opinion are true and
correct in all respects.
We hereby consent to the use of our name and
reference to our firm and our opinion in the opinion of Briggs
and Morgan, Professional Association, of even date herewith.
Very truly yours,
•
502I
4) [Opinion of City Attorney]
[Dated as of Closing]
Citizens Bank & Trust Co.
102 Main St. So.
Hutchinson, MN 55350
Erickson Oil Products, Inc.
1231 Industrial Road
Hudson, WI 54016
Briggs and Morgan, P.A.
2200 West First National Bank Building
St. Paul, MN 55101
Re: City of Hutchinson - $500,000 Commercial
Development Revenue Note of 19885 (Erickson Oil
Products, Inc. Project)
• Gentlemen:
We have acted as City Attorney for the City of
Hutchinson, Minnesota (the "City ") in connection with the
execution and delivery, of the following documents, all of
which are dated of even date herewith, unless otherwise
indicated: a Loan Agreement between the City and Erickson Oil
Products, Inc., a Wisconsin corporation (the "Borrower ") (the
"Loan Agreement), a Pledge Agreement from the City to Citizens
Bank & Trust Co. in Hutchinson, Minnesota (the "Lender ") (the
"Pledge Agreement "), a $500,000 Commerical Development Revenue
Note of 1985 (Erickson Oil Products, Inc. Project) issued by
the City (the "Note "), a Construction Loan Agreement between
the City, the Lender and the Borrower (the "Construction Loan
Agreement ") , a resolution adopted by the City on November 12,
1985, (the "Preliminary Resolution "), and a Resolution adopted
by the City on November 12, 1985, providing for the issuance
and sale of the Note (the "Authorizing Resolution "), and the
instruments and documents required pursuant to the terms of the
Loan Agreement and Authorizing Resolution.
•
Based upon a reasonable investigation of the facts
including examination of the foregoing documents as well as
such other documents as we have deemed necessary as a basis for
the opinion hereafter expressed, we are of the opinion that:
(1) The City is a municipal corporation and
political subdivision of the State of Minnesota,
duly organized and existing under the Constitution
and laws of the State of Minnesota;
(2 ) All proceedings and actions taken by the
City by and through its governing body and its
Mayor and City Administrator in connection with
the issuance and sale of the Note and the
execution and delivery of the Loan Agreement, the
Pledge Agreement, the Construction Loan Agreement
and other applicable documents set forth in the
transcript prepared in connection with the
issuance of the Note, were duly conducted and
adopted in accordance with applicable procedural
requirements imposed by law and as represented in
said documents, and the officials of the City
named in such documents executed the same as
indicated therein and were duly elected or
appointed and qualified to serve as such officers
on the date of such execution;
(3) The adoption of the Preliminary •
Resolution and Authorizing Resolution, and the
execution and delivery of the Note, the Loan
Agreement, the Pledge Agreement, the Construction
Loan Agreement and any other agreements
contemplated thereby will not violate any existing
law relating to any conflict of interest or other
matters pertaining to the interest or
qualifications of the members of the City's
governing body or its officers.
We hereby consent to the use of our name and
reference to our firm and our opinion in the opinion of Briggs
and Morgan, Professional Association, of even date herewith.
Very truly yours,
City Attorney,
City of Hutchinson
n
LJ
509N Draft 12/9/85
• LOAN AGREEMENT
BETWEEN
CITY OF HUTCHINSON, MINNESOTA,
AND
ERICKSON OIL PRODUCTS, INC.
i
Dated as of December, 1985
V�
•
The interest of the City of Hutchinson, Minnesota, in this Loan
Agreement has been pledged and assigned to Citizens Bank &
Trust Co., pursuant to a Pledge Agreement of even date
herewith.
This instrument was drafted by:
BRIGGS AND MORGAN
Professional Association
2200 First National Bank Building
Saint Paul, Minnesota 55101
r �
U
TABLE OF CONTENTS
(Not a Part of the Loan Agreement)
Page
ARTICLE 1 -
DEFINITIONS, EXHIBITS AND RULES
OF INTERPRETATION ........................
1
Section
1.01.
Definitions ......................
1
Section
1.02.
Exhibit ..........................
4
Section
1.03.
Rules of Interpretation..........
4
ARTICLE 2 - REPRESENTATIONS ..........................
6
Section
2.01.
Representations by the City......
6
Section
2.02.
Representations by the Borrower..
7
ARTICLE 3 - THE LOAN .................................
13
Section
3.01.
Amount and Source of Loan........
13
Section
3.02.
Repayment ........................
13
Section
3.03.
Borrower's Obligations Uncondi-
tional...........................
13
Section
3.04.
Borrower's Remedies ..............
13
ARTICLE 4 - BORROWER'S COVENANTS .....................
14
Section
4.01.
Financial Statements .............
14
Section
4.02.
Indemnity ........................
14
Section
4.03.
Continuing Existence and
Qualification ....................
15
Section
4.04.
Reports to Governmental Agencies.
15
Section
4.05.
Security for the Loan............
15
Section
4.06.
Construction of Improvements.....
16
Section
4.07.
Preservation of Tax Exemption....
16
Section
4.08.
Lease or Sale of Project.........
19
Section
4.09.
Project Operation and Maintenance
Expense..........................
19
ARTICLE 5 -
PREPAYMENT OPTIONS .......................
20
Section
5.01.
Prepayment ......................
20
Section
5.02.
Partial Payment .................
20
ARTICLE 6 - EVENTS
OF DEFAULT AND REMEDIES...........
21
Section
6.01.
Events of Default ................
21
Section
6.02.
City's Remedies ..................
22
Section
6.03.
Disposition of Funds .............
23
•
•
Page
Section
6.04.
Manner of Exercise ...............
23
Section
6.05.
Attorneys' Fees and Expenses.....
23
Section
6.06.
Effect of Waiver .................
23
ARTICLE 7 - GENERAL
... ...............................
24
Section
7.01.
Notices ..........................
24
Section
7.02.
Binding Effect ...................
24
Section
7.03.
Severability .....................
24
Section
7.04.
Amendments, Changes and
Modifications ....................
24
Section
7.05.
Execution Counterparts...........
25
Section
7.06.
Limitation of City's Liability...
25
Section
7.07.
City's Attorneys Fees and Costs..
25
Section
7.08.
Release ..........................
26
Section
7.09.
Assignment by City and
Survivorship of Obligations......
26
Section
7.10.
Required Approvals ...............
27
Section
7.11.
Termination Upon Retirement
ofNote ..........................
27
SIGNATURES ............
...............................
27/28
EXHIBIT
•
THIS LOAN AGREEMENT dated as of December , 1985,
between the City of Hutchinson, a political subdivision in the
State of Minnesota, called herein the City, and Erickson Oil
Products, Inc., a Wisconsin corporation, called herein the
Borrower, WITNESSETH that the City 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:
ARTICLE 1
DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION
Section 1.01. Definitions. In this Agreement the
following terms have the following respective meanings unless
the context hereof clearly requires otherwise:
Act: the Minnesota Municipal Industrial Development Act,
Minnesota Statutes, Chapter 474, as amended;
Agreement: this Agreement between the City 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 and Minneapolis, Minnesota, and any
opinion of Bond Counsel shall be a written opinion signed by
such Bond Counsel;
Borrower: Erickson Oil Products, Inc., a Wisconsin
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;
City: the City of Hutchinson, Minnesota, its successors
and assigns;
Code: the Internal Revenue Code of 1954, as amended and
the temporary, final or proposed regulations promulgated
thereunder;
•
•
Construction Costs: all direct costs authorized by the
Act and paid or incurred by the Borrower to construct and
complete the Improvements, including, but not limited to, site
preparation costs, architectural fees, engineering fees,
contractor's fees, and all costs of labor, material and
services;
Construction Loan Agreement: the agreement, of even date
herewith, among the City, the Borrower and the Lender, relating
to construction of the Improvements and payment of the Project
Costs,
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 City may be
eligible for appointment as Counsel;
Date of Taxability: this term shall have the meaning
ascribed to it in Section 4.07(2) hereof;
Determination of Taxability: this term shall have the
meaning ascribed to it in Section 4.07(2) hereof;
Equipment: any and all machinery, equipment, furniture
and other tangible personal property purchased or to be
purchased by the Borrower with the proceeds of the Loan;
• Event of Default: any of the events described in Section
6.01 hereof;
IDBs: "industrial development bonds," within the meaning
of Section 103(b) of the Code;
Improvements: the structures and other improvements,
including any Equipment, to be constructed or installed by the
Borrower on the Land in accordance with the Plans and
Specifications;
Land: the real property and any other easements and
rights described in Exhibit A;
Lender: Citizens Bank & Trust Co., in Hutchinson, its
successors and assigns;
2
Loan: the loan of Note proceeds from the City to the
Borrower described in Section 3.01 of this Agreement;
Loan and Carrying Charges: all loan and carrying charges
paid or incurred by the Borrower in the acquisition and
construction of the Improvements and issuances of the Note and
as authorized by the Act, including, but not limited to,
commitment fees to the Lender, brokerage or finder's fees,
construction period interest charges, service fees, accounting
fees, attorney fees (including attorneys for the City, Lender,
and Bond Counsel), administrative fees, fiscal consultant's
fees, contractor's fees, developer's fees, inspection fees,
title insurance fees and charges, recording fees, registration
taxes, real estate taxes, special assessments, insurance
premiums and utility charges;
Mortgage: the Mortgage, Security Agreement and Fixture
Financing Statement of even date herewith, between the
Borrower, as mortgagor, and the Lender, as mortgagee;
New Ulm Notes the $372,000 Commercial Development Revenue
Note of 1985 (Erickson Oil Products, Inc. Project) to be issued
by the City of New Ulm;
Note: the $500,000 Commercial Development Revenue Note of
1985 Erickson Oil Products, Inc. Project) to be issued by the
City pursuant to the Resolution;
Plans and Specifications: the plans and specifications
for the construction and installation of the Improvements,
together with such modifications thereof and additions thereto
as are reasonably determined by the Borrower to be necessary or
desirable for the completion of the Improvements and are
approved by the Lender;
Pledge Agreement: the pledge agreement of even date
herewith between the City and the Lender pledging and 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
Note as has been advanced from time to time and remains unpaid;
Project: the Land and the Improvements as they may at any
time exist;
3
1]
•
•
Project Costs: the total of all Construction Costs and
Loan and Carrying Charges;
Resolution: the resolution of the City, adopted
December 17, 1985, authorizing the issuance of the Note;
Test - Period Beneficiary: except as provided in
regulations, any person who was an owner or a principal user of
the Project at any time during the three (3) year period
beginning on the later of (i) the date on which the Projects
placed in service, or (ii) the date of the issuance of the
Note, treating all persons who are related to each other within
the meaning of Section 103(b)(6)(C) of the Code as one person,
all within the meaning of Sections 103(b)(15)(D) and (E) of the
Code; and
Working Capital Expense: any Project Costs which the
Internal Revenue Service treats as "working capital" under
Section 103(b) of the Internal Revenue Code.
Section 1.02. Exhibit. Attached hereto as Exhibit A
and incorporated herein by reference is a legal description of
the Land.
Section 1.03. 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 subdivi-
sion, refer to this Agreement as a whole rather than to any
particular section or subdivision hereof.
•
(3) References herein to any particular section or sub-
division hereof are to the section or subdivision of this in-
strument as originally executed.
(4) Where the Borrower is permitted or required to do or
accomplish any act or thing hereunder, the Borrower 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.
M
(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.
0
•
5
ARTICLE 2
REPRESENTATIONS
• Section 2.01. Representations by the City. The City
makes the following representations as the basis for its
covenants herein:
(1) In authorizing the Project the City'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; the
development of revenue - producing enterprises 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; the halting of the movement of
talented, educated personnel of mature age to other areas thus
preserving the economic and human resources needed as a base
for providing governmental services and facilities; the
provision of accessible employment opportunities for residents
in the area; the expansion of an adequate tax base to finance
the increase in the amount and cost of governmental services,
including educational services for the school district serving
the community in which the Project is situated.
• (2) The Project has been approved by the Energy and
Economic Development Authority of the State of Minnesota as
tending to further the purposes and policies of the Act.
(3) The issuance and sale of the Note, the execution and
delivery of this Agreement, the Pledge Agreement and the
Construction Loan Agreement, and the performance of all
covenants and agreements of the City contained in this Agree-
ment, the Note, the Pledge Agreement and the Construction Loan
Agreement, and of all other acts and things required under the
Constitution and laws of the State of Minnesota to make this
Agreement, the Pledge Agreement and the Construction Loan
Agreement and Note valid and binding obligations of the City in
accordance with their terms, are authorized by the Act and have
been duly authorized by resolutions of the governing body of
the City adopted at meetings thereof duly called and held on
November 12, 1985 and December 17, 1985, by the affirmative
vote of not less than a majority of its members;
R
(4) Pursuant to the Resolution, the City has authorized
and directed the Lender to disburse the proceeds of the Note
directly to the Borrower and such other parties as may be
entitled to payment for Project Costs, upon receipt of such
supporting documentation as the Lender may deem reasonably
necessary, including compliance with all conditions set forth
in the Construction Loan Agreement;
(5) No public official of the City has either a direct or
indirect financial interest in this Agreement nor will any
public official either directly or indirectly benefit
financially from this Agreement within the meaning of Minnesota
Statutes, Sections 412.311 and 471.87;
(6) The aggregate amount of the Note, when added to (i)
the aggregate amount of private activity bonds (as such term is
defined in Section 103(n)(7) of the Code) previously issued by
the City during calendar year 1985 and (ii) the portion, if
any, of such private activity bond limit for calendar year 1985
which the City elected to carry forward to a future year, does
not exceed the City's private activity bond limit for the
calendar year 1985.
Section 2.02. Representations by the Borrower. The
Borrower makes the following representations as the basis for
its covenants herein:
(1) The Borrower is a corporation duly incorporated under .
the laws of the State of Wisconsin, is in good standing and
duly authorized to conduct its business in the State of
Minnesota and all other states where its activities require
such authorization, has power to enter into this Agreement, the
Construction Loan Agreement and the Mortgage, 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 Construction Loan Agreement and
the Mortgage.
(2) The execution and delivery of this Agreement, the
Construction Loan Agreement and the Mortgage, the consummation
of the transactions contemplated thereby, and the fulfillment
of the terms and conditions thereof do not and will not
conflict with or result in a breach of any of the terms or
0
7
conditions of the Borrower's articles of incorporation, its
bylaws, any restriction or any agreement or instrument to which
the Borrower or any of its partners is now a party or by which
• it is bound or to which any property of the Borrower or any of
its partners 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 or any of its partners contrary to the
terms of any instrument or agreement to which the Borrower is a
party or by which it is bound.
(3) The design and plan of the Project comprises real and
personal property useful in connection with operation of a
revenue - producing enterprise as contemplated by Section 474.02,
subdivision la of the Act and the Project does not include any
property to be sold or affixed to or consumed in the production
of property for sale nor does it include any housing facility
to be rented or used as a permanent residence.
(4) Subject to the other provisions of this Agreement, it
is presently intended and reasonably expected that any
Equipment will be permanently located and exclusively used on
the Land and that the Borrower will operate the Improvements
• throughout the term of this Agreement in the normal conduct of
the Borrower's business.
•
(5) There is public access to the Project; and, as of the
date hereof, the use of the Project as designed and proposed to
be operated 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 obtained all
necessary and material approvals of and licenses, permits,
consents and franchises from federal, state, county, municipal
or other governmental authorities having jurisdiction over the
Project to acquire, construct, install, and operate the Project
and to enter into, execute and perform its obligations under
this Agreement and the Mortgage; and no violation of any local,
ordinance, laws, regulation or requirement exists with respect
to the Land.
(6) The proceeds of the Note, together with any other
funds to be contributed to the Project by the Borrower or
otherwise in accordance with this Agreement, will be sufficient
to pay the cost of acquiring and completing the Project in a
manner suitable for use as a convenience store /gasoline outlet,
and all costs and expenses incidental thereto, and the proceeds
of the Note will be used only for the purposes contemplated
hereby and allowable as Project Costs under the Act.
(7) The Note is to be issued within the exemption pro-
vided under Section 103(b)(6)(A) of the Internal Revenue Code
with respect to issues of $1,000,000 or less; provided that
nothing herein shall prevent the City from qualifying the Note
under a different exemption if, and to the extent such
exemption is permitted by law "substantially all" of the
proceeds of the Note will be used for the acquisition,
construction, reconstruction or improvement of land or property
of a character subject to the allowance for depreciation within
the meaning of Section 103(b)(6) of the Code;
(8) Comparable private financing for the Project was not
found by the Borrower to be reasonably available, and the
Project would not have been undertaken but for the availability
of the financing herein authorized.
(9) A major inducement to the Borrower to acquire and
construct the Project was the source of financing provided
under the Act and the assurance the Borrower received from the •
City that such financing would be made available to the
Borrower; and any Project Costs heretofore incurred by the
Borrower for which the Borrower shall hereafter seek
reimbursement from Note proceeds, were incurred in anticipation
of reimbursement from the proceeds of revenue obligations of
the City if such proceeds should become available on terms
acceptable to the Borrower; and the Borrower investigated the
possibility of such financing prior to incurring such Project
Costs; and the Borrower did not commence acquisition or
construction of the Project prior to November 12, 1985, the
date on which the City gave preliminary approval of the Project
and the financing thereof in whole or part through revenue
obligations.
•
9
(10) The entire Cost of the Project is estimated to be at
least equal to the face amount of the Note, but the Borrower
acknowledges that the City has made no warranty or represen-
tation, either express or implied, that the amount of Note
proceeds available to pay such Costs will be sufficient for
such purpose or that the Project will be suitable to the
Borrower's needs.
(11) The Borrower is not in the trade or business of
selling properties such as the Project and is acquiring the
Project for investment purposes only or otherwise for use by
the Borrower in its trade or business, 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.
(12) Neither the Borrower nor any other "principal user"
of the Project nor any "related person" to the Borrower or to
such other "principal user" is a "principal user" of
"facilities ", not constituting any part of the Project, located
in the municipal boundaries of the City, or located in an
adjacent municipality and "integrated" with the Project, and
financed in whole or in part by an issue of IDBs, all within
the meaning of Section 103(b) of the Code.
(13) In addition to the
other obligations have been
103(b) of the Code which are
. time as the Note pursuant to
substantially the same rate
are payable in whole or part
with the Note any common or
debt service thereon.
Note and the New Ulm Note, no
or will be issued under Section
sold at substantially the same
a common plan of marketing and at
of interest as the Note and which
by the Borrower or otherwise have
pooled security for the payment of
(14) 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 business or properties of the Borrower; and the
Borrower is not in default with respect to any order of any
court or governmental agency.
10
(15) 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.
(16) 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.
(17) The Borrower has not paid, nor is it aware of the
payment of, any bribe, gift, gratuity, or direct or indirect
contribution to any political campaign, to or for any public
official of the City or State, in consideration for allocating
to the Note the City's or state's private activity bond limit,
within the meaning of Section 103(n) of the Code; no public
official of the City has either a direct or indirect financial
interest in this Agreement nor will any public official either
directly or indirectly benefit financially from this Agreement
within the meaning of Minnesota Statutes, Section 412.311 and
471.87.
(18) The Borrower has approved the terms and conditions of
the Note.
(29) No portion of the Note proceeds will be used to •
acquire (a) property to be sold or to be affixed to or consumed
in the production of property for sale, (b) property to be
leased to the government of the United States of America or to
any department, agency or instrumentality of the government of
the United States of America, (c) any housing facility to be
rented or used as a permanent residence, within the meaning of
Section 474.01, Subdivision 1(d) of the Act, or or 103(b)(4)(A)
of the Code or (d) any private or commercial golf course,
country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice - skating), racquet
sports facility (including any handball or racquetball court),
hot tub facility, suntan facility or racetrack, and in no event
will more than 25% of the proceeds of the Note, including
interest thereon, be used to provide a facility the primary
purpose of which is either retail food and beverage services,
automobile sales or service, or the provision of recreation or
entertainment, all within the meaning of Section 103(b)(6)(0)
of the Internal Revenue Code.
•
11
•
(20) The maturity of the Note does not exceed 120% of the
average reasonably expected economic life of the Project within
the meaning of Section 103(b)(14) of the Internal Revenue Code.
12
ARTICLE 3
THE LOAN
Section 3.01. Amount and Source of Loan. The City
has authorized the issuance of the Note in the principal amount
of $500,000 to provide funds to the Borrower for its use in the
acquisition and construction of the Project. The City 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 disbursed in accordance with the Resolution and the
Construction Loan .Agreement and upon receipt of the supporting
documentation required therein and such other supporting
documentation as the Lender may deem reasonably necessary.
Section 3.02. Repayment. Subject to the prepayment
provisions set forth in Sections 5.01 and 5.02 and 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 by the City under the Note at the times and
in the amounts provided therein. All payments shall be made
directly to the Lender at its principal office for the account
of the City.
Section 3.03. 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 cir-
cumstances that may constitute failure of consideration, de-
struction or damage to the Project, eviction by paramount
title, commercial frustration of purpose, bankruptcy or
insolvency of the City 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 City to perform and
observe any agreement, whether express or implied, or any duty,
liability or obligation arising out of or connected with this
Agreement.
contained
City from
Agreement.
Section 3.04. Borrower's Remedies. Nothing
in this Article shall be construed to release the
the performance of any of its agreements in this
13
•
0
ARTICLE 4
BORROWER'S COVENANTS
. Section 4.01. Financial Statements. The Borrower
will cause to be prepared annual financial statements of the
Borrower (including a balance sheet, statement of income and
statement of changes in financial position) in accordance with
generally accepted accounting principles, and, within 120 days
of the close of each fiscal year, will furnish a copy to the
Lender.
Section 4.02. Indemnity. The Borrower will, to the
extent permitted by law, pay, and will protect, indemnify and
save the City, 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 City;
• (3) violation of any contract, agreement or restriction
by the Borrower relating to the 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 expendi-
ture of the proceeds of the Note contained in any certificate
or similar document furnished by the Borrower to the City
which, at the time made, is misleading, untrue or incorrect in
any material respect.
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Section 4.03. Continuing Existence and Qualifi-
cation. The Borrower is and throughout the term of this
Agreement will remain duly qualified to do business as a
corporation duly incorporated under the laws of the State of
Wisconsin, 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
business entity or permit any other business entity to consoli-
date with or merge into it unless the consent of the Lender is
first secured. At least thirty days before any merger, consoli-
dation or transfer of assets becomes effective, the Borrower
shall (to the extent permitted by law) give the City and the
Lender written notice of the proposed transaction. Every
surviving, resulting or transferee business entity shall be
bound by all of the covenants and agreements of the Borrower
herein with respect to any further consolidation, merger, sale
or transfer and, if other than the Borrower, shall execute an
appropriate instrument assuming all obligations of the Borrower
under this Agreement, the Construction Loan Agreement and the
Mortgage and shall deliver that instrument to the Lender.
Section 4.04. Reports to Governmental Agencies. The
Borrower will furnish to agencies of the State of Minnesota,
including but not limited to the Commissioner of Energy and
Economic Development, such periodic reports or statements as
are required under the Act, including the employment
information required under Section 474.01, Subdivision 11 of .
the Act, or as they may otherwise reasonably require of the
City 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 City and the Lender.
Section 4.05. Securit� foor the Loan. As additional
security for the Lender, and to induce the City to issue and
deliver the Note, the Borrower agrees to execute and deliver
the Construction Loan Agreement and the Mortgage to the Lender
and agrees to meet all its obligations under the Mortgage which
document shall remain in effect until all payments required
hereunder have been made; and the Borrower will cause to be
recorded and filed the Mortgage, the Pledge Agreement and such
other documents requested by Counsel, in such places and in
such manner as Counsel deems necessary or desirable to perfect
or protect the security interest of the Lender in and to the
Project and other collateral referred to in said documents.
•
15
Section 4.06. Construction of Improvements. The
Borrower will cause the Improvements to be constructed with due
diligence in accordance with the Plans and Specifications and
the provisions of the Construction Loan Agreement.
Section 4.07. Preservation of Tax Exemption. The
Borrower covenants and agrees that:
(1) In order to assure that the interest on the Note
shall at all times be free from federal income taxation, the
Borrower agrees that it will:
(A) fulfill all conditions specified in Section
103(b)(6)(A) of the Code, and applicable federal income tax
regulations, to qualify the Note as a $1,000,000 "small issue"
thereunder;
(B) not (or permit to be used) the Project or use or
invest (or permit to be used or invested) the proceeds of the
Note or any other sums treated as "bond proceeds" under Section
103(c) of the Code and applicable Federal income tax
regulations in such a manner as to cause the Note to be
classified an "arbitrage bond" or a "federally guaranteed
obligation" under Section 103(c) or 103(h), respectively, of
the Code;
(C) not cause any Working Capital Expenses to exceed 10%
of the "net proceeds" of the Note in violation of the
• requirement in Section 103(b) of the Code and the applicable
Federal income tax regulations that substantially all of the
proceeds of the Note be used for the acquisition or improvement
of land or depreciable property;
(D) Neither the Borrower nor any other person who is or
will be entitled to occupy more than ten percent (10 %) of the
Project measured by value or who is or will be a "principal
user" of the Project as that term is used in Section 103(b) of
the Code, including Section 103(b)(6)(I) and (L) of the Code,
has either (a) both (i) guaranteed, arranged, participated in,
or assisted with the issuance or paid any portion of the cost
of issuance of any obligations the proceeds of which are to be
used to finance or refinance any facilities (other than the
Project) financed or to be financed in whole or part from the
proceeds of any IDBs within the meaning of Section 103(b)(2)
16
of the Code issued or sold within three (3) months before or
after issuance of, and commonly secured in whole or in part
with, the Note (the "Note Financed Facilities "), and (ii)
provided any property or any franchise, trademark or tradename
within the meaning of Section 1253 of the Code, which is to be
used in connection with such Note Financed Facilities, or (b)
acquired a proprietary interest in or otherwise become entitled
to occupy more than ten percent (10 %) (measured by value), or
in any other way become a principal user, of such Note Financed
Facilities; nor shall the Borrower, nor any other such
"principal user" of the Project, or any "related person"
thereto, permit such conditions to occur in the future without
first filing with the Lender an opinion of Bond Counsel that
such conditions will not impair the tax exempt status of the
Note. Accordingly, neither the Borrower nor any other such
"principal user" of the Project nor any "related person" to the
Borrower or such other "principal user" the Project is or
will without such prior Bond Counsel opinion, be a "principal
user" of any Note Financed Facilities, other than the Project,
within the meaning of Section 103(b)(6)(K) and (L) of the Code.
(E) The Borrower on behalf of the City shall pay to the
United States, as a rebate, an amount equal to the sum of (i)
the excess of (I) the aggregate amount earned on all nonpurpose
obligatio s : bh
'- r•e } *tri h>>tahl P to an
-e�rrother than investments attributable to an excess
described in this clause), over (II) the amount which would
have been earned if all nonpurpose obligations were invested at •
a rate equal to the yield on the Note, plus (ii) any income
attributable to the excess described in clause (i), at the
times and in the amounts required by Section 103(c)(6)(E) of
the Code, all within the meaning of Section 103(c)(6) of the
Code. The Borrower or Lender shall maintain records of the
interest rate borne by the Note and the investment of any
"gross proceeds" in adequate detail to enable the Borrower to
calculate the amount of any rebate required to be made to the
United States.
(F) not otherwise use Note proceeds, or take or fail to
take any action, the effect of which would be to impair the
exemption of interest on the Note from federal income taxation.
i
17
(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 in the gross income of the Lender or any
other holder or prior holder of the Note for federal income tax
purposes, except on account of the Note being held by a
"substantial user" of the Project or "related person" thereto
within the meaning of Section 103(b) of the Internal Revenue
Code, whether or not 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) A "Notice of Taxability" shall mean receipt by the
City, the Borrower, the Lender or any other holder of the Note
• of notice of the actual issuance of a statutory notice of
deficiency or the actual or proposed issuance of a ruling of
the National Office or any District Office of the Internal
Revenue Service (if the transaction contemplated in the ruling
request is actually consummated), or of the actual or proposed
commencement of a court proceeding or other action, or of the
final enactment of a change in any applicable federal statute,
the effect of which notice of deficiency, ruling, proceeding,
action or statutory change is or would be a Determination of
Taxability. As soon as practicable after receiving, a Notice of
Taxability, but in any event before the right reeving a
Notice, the Borrower, the Lender, or any other holder or prior
holder of the Note, excluding only such person itself, in
writing of the receipt of such Notice of Taxability, but
neither the City nor the Lender will be liable to the Borrower
for damages or othewise in the event of failure to give such
notice.
•
In
(4) The person receiving such Notice of Taxability shall,
to the extent practicable, permit the Borrower to contest,
litigate or appeal the same, or to participate fully in such
person's contest, litigation or appeal of the same, at its sole
expense. In the event any such contest, litigation or appeal
is undertaken, the increased interest provided in the Note
shall, nevertheless, be payable to the holder of the Note and
shall be held by such holder in escrow pending final
disposition of such contest, litigation, or appeal, provided
that the Borrower shall indemnify and hold harmless the holder
and each prior holder from any and all penalties, interest and
other liabilities which they may incur on account of such
contest, litigation or appeal.
Section 4.08. Lease or Sale of Project. The
Borrower shall not lease, sell, convey or otherwise transfer
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 be to cause the Note to be deemed issued
in violation of the requirement under Section 103(b)(6) of the
Internal Revenue Code, and the income tax regulations
promulgated thereunder that substantially all of the net
proceeds of the Note be used for the acquisition or improvement
of land or depreciable property, or under Section 474.02,
Subdivision id, of the Act that no portion of the Project to be
financed from Note proceeds be acquired in whole or part for
sale, nor shall any such transaction 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 4.03
hereof. The Borrower shall promptly notify the City of any
such sale, transfer, assignment or lease.
Section 4.09. Project Operation and Maintenance
Expenses. The Borrower shall pay all expenses of the operation
and maintenance of the Project including, but without
limitation, adequate insurance thereon and insurance against
all liability for injury to persons or property arising from
the operation thereof, and all taxes and special assessments
levied upon or with respect to the Project and payable during
the term of this Loan Agreement, all in conformance with the
provisions of the Mortgage; and 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 474.01, Subsection 11 of the Act.
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•
9
ARTICLE 5
PREPAYMENT OF LOAN
Section 5.01.
option prepay the Loan,
amount of the Principal
under the conditions pr,
prepaid by the Borrower
by the City.
Prepayment. The Borrower may at its
in whole or part, by prepaying a like
Balance of the Note in the manner and
Dvided in the Note and the Loan shall be
if the Note is required to be prepaid
Section 5.02. Partial Prepayment. If the Loan is
prepaid hereunder only in part, the Lender shall apply any
prepayment first against accrued interest due under the Note,
and then against the Principal Balance due under the Note; and
the Borrower shall continue to pay in full the monthly payments
due under the Note until the entire Principal Balance and
accrued interest due on the Note and any other charges or
premiums due hereunder or under the Note have been paid.
20
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. 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 any payments
required under this Agreement on or before the date that the
payment is due.
(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 City 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.
(3) 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 unde 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
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 or 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 appintment 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 60 days after such levy or
attachment.
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(4) 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 4.03.
(5) 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 City 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.
(6) If the Borrower shall default or fail to perform any
covenant, condition or agreement on its part under the
Mortgage, the Construction Loan Agreement, 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.
(7) If foreclosure proceedings are commenced by any third
party with respect to any mortgage or other lien or security
interest on the Project or any other collateral described in
the Mortgage.
Section 6.02. City's Remedies. Whenever any Event
of Default referred to in Section 6.01 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 City with the prior written consent of the Lender or by the
Lender itself:
•
(1) The City, 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; and
22
(2) The City, upon written direction of the Lender
(except as otherwise provided in Section 7.09 herein), or the
Lender (in either case at no expense to the City) 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 6.03. Disposition of Funds. Notwithstanding
anything to the contrary contained in this Agreement, any
amounts collected pursuant to action taken under Section 6.02
hereof, except for any amounts collected solely for the benefit
of the City under any of the provisions set forth in Section
7.09, shall, after deducting all expenses incurred in
collecting the same, be applied as a prepayment of the Note in
accordance with Section 5.01.
Section 6.04. Manner of Exercise. No remedy herein
conferred upon or reserved to the City is intended to be exclu-
sive 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 City 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 6.05. Attorneys' Fees and Expenses. In the
event the Borrower should default under any of the provisions
of this Agreement and the City or the Lender should employ
attorneys or incur other expenses for the collection of amounts
due hereunder or the enforcement of performance of any obli-
gation or agreement on the part of the Borrower, the Borrower
will on demand pay to the City or the Lender the reasonable fee
of such attorneys and such other expenses so incurred.
Section 6.06. 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.
•
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9
ARTICLE 7
GENERAL
Section 7.01. 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 City, 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:
To the City: City of Hutchinson
37 Washington Ave. W.
Hutchinson, MN 55350
Attn: City Administrator
To the Borrower: Erickson Oil Products, Inc.
1231 Industrial Road
Hudson, WI 54016
Attn:
To the Lender: Citizens Bank & Trust Co.
102 Main St. So.
Hutchinson, MST 55350
Attn: President
Section 7.02. Binding Effect. This Agreement shall
inure to the benefit of and shall be binding upon the City and
the Borrower and their respective successors and assigns.
Section 7.03. Severability. In the event any pro-
vision 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 7.04. Amendments, Changes and Modifications.
Except as otherwise provided in this Agreement or in the Resolu-
tion, 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.
24
Section 7.05. Execution Counterparts. This Agree-
ment 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 7.06. Limitation of City's Liability. It is
understood and agreed by the Borrower and the Lender that no
covenant of the City herein shall give rise to a pecuniary
liability of the City or a charge against its general credit,
or taxing powers. It is further understood and agreed by the
Borrower and the Lender that the City shall incur no pecuniary
liability hereunder, and shall not be liable for any expenses
related hereto, including administrative expenses and fees and
disbursements of the City's attorney, Bond Counsel and fiscal
consultant retained in connection therewith, all of which
expenses the Borrower agrees to pay.
Section 7.07 City's Attorneys Fees and Costs. If,
notwithstanding the provisions of Section 7.06 hereof, the City
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 City from the same and will reimburse the
City for any legal or other expenses incurred by the City in
relation thereto. The Borrower shall also reimburse the City
for all other costs and expenses, including without limitation
attorneys' fees, paid or incurred by the City in connection
with (i) the discussion, negotiation, preparation, approval, .
execution and delivery of this Agreement, the Note, the Pledge
Agreement, the Construction Loan Agreement and the documents
and instruments related hereto or thereto; (ii) any amendments
or modifications hereto or to the Note, the Pledge Agreement,
the Construction Loan Agreement 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
City during the term hereof or thereafter of any of the rights
or remedies of the City hereunder or under the Note, the Pledge
Agreement, the Construction Loan Agreement 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.
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25
Section 7.08 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
is 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
Guaranty, the Mortgage, the Construction Loan Agreement or any
collateral security documents.
0
Section 7.09. Assignment by City and Survivorship of
Obligations. The City 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, but any such assignment shall not operate to limit
or otherwise affect the following provisions hereof to the
extent that they run to the City from the Borrower to which
extent they shall survive any such assignment:
Section 2.02
Section 3.03
Section 4.02
Section 4.04
Section 4.07
Section 6.02
Section 6.05
Section 7.06
Section 7.07
Section 7.08
Upon any such assignment, the provisions immediately above
Tanning to the City from the Borrower for the City's benefit
shall run jointly and severally to the City and the Lender (if
appropriate), provided that the City shall have the right to
enforce any retained rights without the approval of the Lender
but only if the Lender is not enforcing such rights in a manner
to protect the City or is otherwise taking action with respect
thereto that brings adverse consequences to the City. The
obligations of the Borrower running to the the City for the
purpose of preserving the tax exempt status of the Note or
otherwise for the City's benefit under the foregoing Sections
shall survive repayment of the vote and interest thereon.
26
Section 7.10 Required Approvals. Consents and
approvals required by this Agreement to be obtained from the
Borrower,the City 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 City have been made for the discharge of all other accrued
liabilities, if any, under this Loan Agreement, this Loan
Agreement shall terminate, except as otherwise expressly
provided in Section 7.09 or otherwise herein.
IN WITNESS WHEREOF, the City and the Borrower have
caused this Agreement to be executed in their respective names
all as of the date first above written.
(SEAL)
CITY OF HUTCHINSON, MINNESOTA
By
Mayor
By
City Administrator
27
:1
fe
(SEAL)
ERICKSON OIL PRODUCTS, INC.
By
Its
By
Its
Loan Agreement dated as of December , 1985, between the City
of Hutchinson and Erickson Oil Products, Inc.
EXHIBIT A
LEGAL DESCRIPTION
•
509N
Draft 12/9/85
• PLEDGE AGREEMENT
This Pledge Agreement is made as of the day of
December, 1985 between the CITY OF HUTCHINSON, MINNESOTA, a
political subdivision of the State of Minnesota (the "City ")
and CITIZENS BANK & TRUST CO., a Minnesota banking corporation
(the "Lender ").
Recitals
WHEREAS, Erickson Oil Products, Inc., a Wisconsin
corporation (the "Borrower ") and the City have entered into a
Loan Agreement (the "Loan Agreement ") of even date herewith,
pursuant to which the City will lend to the Borrower the net
proceeds of the $500,000 Commercial Development Revenue Note of
1985 (Erickson Oil Products, Inc. Project) (the "Note "), dated
as of the date hereof, issued pursuant to the Minnesota
Municipal Industrial Development Act, Chapter 474, Minnesota
Statutes, as amended (the "Act "), and
WHEREAS, the Note is to be payable from and secured
by the loan repayments to be made by the Borrower under the
Loan Agreement; and the Lender, as a condition to the purchase
• of the Note, has required the execution of this Pledge Agree-
ment.
NOW THEREFORE, as an inducement to the Lender to
purchase the Note, and in consideration of the promises and
other good and valuable consideration, the receipt and
sufficiency whereof is hereby acknowledged, the parties hereby
agree as follows:
1. In order to secure the due and punctual payment
of the Note and all other sums due the Lender under the Loan
Agreement, the City does hereby pledge and assign to the Lender
all of the City's right, title and interest in and to the Loan
Agreement, subject to the City's rights under the provisions of
Section 7.09 thereof.
2. The City hereby represents and warrants to the
Lender that the City's right, title and interest in the Loan
Agreement is free and clear of any lien, security interest or
other encumbrance other than that arising under this Pledge
Agreement.
3. The City hereby authorizes the Lender to
exercise, whether or not a default exists under the Note or an
Event of Default has occurred under the Loan Agreement, either •
in the City's name or the Lender's name, any and all rights or
remedies available to the City under the Loan Agreement. The
City agrees, on request of the Lender, to execute and deliver
to the Lender such other documents or instruments 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 appoints the Lender its attorney -in -fact to execute
on behalf of the City, and in its name, any and all such
assignments, financing statements or other documents or
instruments 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 6.02 and 7.09 of the Loan
Agreement, or terminate, modify or accept a
surrender of the same, or by affirmative act,
consent to the creation or existence of any
security interest or other lien in the Loan
Agreement to secure payment of any other
indebtedness; or
(b) receive or collect or permit the receipt •
or collection of any payments, receipts, rentals,
profits or other moneys under the Loan Agreement
(except as allowed under Section 7.09 thereof) or
assign, transfer or hypothecate (other than to the
Lender hereunder) any or the same then due or to
accrue in the future.
5. The City expressly covenants and agrees that the
Lender shall be entitled to receive all payments under the Loan
Agreement (except any payments due the City under Section 7.09
thereof), and hereby authorizes and directs the Borrower to
make such payments directly to the Lender. The Lender
covenants and agrees that all payments received by the Lender
pursuant to the Loan Agreement shall be applied to the payment
of principal and interest on the Note.
6. If an Event of Default (as defined in the Loan
Agreement) shall occur and be continuing, the Lender may
exercise any one or more or all, and in any order, of the
•
E
remedies hereinafter set forth, it being expressly understood
that no remedy herein conferred is intended to be exclusive of
• any other remedy or remedies; but each and every remedy shall
be cumulative and shall be in addition to every other remedy
given herein or now or hereafter existing at law or in equity
or by statute:
(a) The Lender may, without prior notice of
any kind declare the principal of and interest
accrued on the Note immediately due and payable.
(b) The Lender may exercise any rights and
remedies and options of a secured party under the
Uniform Commercial Code as adopted in the State of
Minnesota and any and all rights available to it
under. the Loan Agreement, Construction Loan
Agreement and Mortgage securing payment of the
Note.
7. Whenever any of the parties hereto is referred
to, such reference shall be deemed to include the successors
and assigns of such party; and all the covenants, promises and
agreements in this Pledge Agreement contained by or on behalf
of the City or the Lender shall bind and inure to the benefit
of the respective successors and assigns of such parties
whether so expressed or not.
• 8. The unenforceability or invalidity of any
provision or provisions of this Pledge Agreement shall not
render any other provision or provisions herein contained
unenforceable or invalid.
9. This Pledge Agreement shall in all respects be
construed in accordance with and governed by the laws of the
State of Minnesota. This Pledge Agreement may not be amended
or modified except in writing signed by the City and the
Lender.
10. This Pledge Agreement may be executed,
acknowledged and delivered in any number of counterparts and
each of such counterparts shall constitute an original but all
of which together shall constitute one agreement.
11. The terms used in this Pledge Agreement which are
defined in the Loan Agreement shall have the meanings specified
therein, unless the context of this Pledge Agreement otherwise
requires, or unless such terms are otherwise defined herein.
3
12. No obligation of the City hereunder shall
constitute or give rise to a pecuniary liability of the City or
a charge against its general credit or taxing powers, but shall •
be payable solely out of the proceeds and the revenues derived
under the Loan Agreement.
IN WITNESS WHEREOF, the City and the Lender have
caused this Pledge Agreement to be duly executed as of the day
and year first above written.
(SEAL)
CITY OF HUTCHINSON, MINNESOTA
By
Mayor
By
City Clerk - Administrator
rd
•
•
CITIZENS BANK & TRUST CO.
M
Its
Pledge Agreement between the City of Hutchinson, Minnesota, and
Citizens Bank & Trust Co., dated as of December , 1985.
•
563N Draft 12/9/85
CONSTRUCTION LOAN AGREEMENT
THIS AGREEMENT, made this day of December, 1985, by
and among Erickson Oil Products, Inc., a Wisconsin corporation
(the "Borrower "), Citizens Bank & Trust Co., a Minnesota
banking corporation (the "Lender "), and the CITY OF HUTCHINSON,
Minnesota (the "City "),
WITNESSETH:
WHEREAS, the Borrower has requested the City to issue and
the Lender to purchase a certain $500,000 Commercial
Development Revenue Note of 1985 (Erickson Oil Products, Inc.
Project) (the "Note "), the proceeds of which are to be used for
the purpose of acquiring and constructing and equipping certain
• Improvements (as defined in the Loan Agreement) to the Land and
for paying certain other costs incident thereto; and
WHEREAS, the City has agreed to issue the Note upon the
terms and conditions set forth in that certain final Note
Resolution adopted December 17, 1985 by the City (the
"Resolution ") and in that certain Loan Agreement of even date
herewith between the City and the Borrower (the "Loan Agree-
ment") which Loan Agreement has been pledged to the Lender
pursuant to the terms of that certain Pledge Agreement of even
date herewith between the City and the Lender (the "Pledge
Agreement "); and
WHEREAS, the Lender is willing to make such loan on the
terms hereof; and
WHEREAS, in reliance upon the representations and
warranties contained herein and on the various certificates and
documents delivered herewith or to be delivered by the Borrower
and the City, the Lender has agreed to purchase the Mote (as
defined in the Loan Agreement) from the City and to advance the
proceeds thereof upon the terms and conditions herein set
forth:
1. Definitions. For purposes of this Agreement, all
capitalized terms shall have the meanings assigned to them in
the Loan Agreement except the following terms which shall have
the following meanings:
1.1 Agreement: this Construction Loan Agreement; •
1.2 Architect: ;
1.3 Completion Date:
1.4 Contractor:
1.5 Title:
2. Documents Delivered Herewith: Prior to or
contemporaneously with the execution of this Agreement, the
Borrower has delivered to the Lender executed copies of the
following documents and /or instruments of even date herewith,
unless otherwise noted:
0
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2.1 The Note.
2.2 The Loan Agreement.
2.3 The Pledge Agreement.
2.4 The Mortgage.
2.5 Financing Statements sufficient to create and fully
perfect a first lien security interest in all of the personal
property of the Borrower purchased from the proceeds of the
Note, which property is more fully set forth in the Mortgage
(the "Financing Statements ").
2.6 The Resolution.
2.7 Commitment for Mortgagee's Policy of Title Insurance
in the amount of $500,000 issued by Title, by which Title
commits to issue a mortgagee's policy of title insurance that:
(a) Specifically insures that the Mortgage is a
• first lien upon the Land and Improvements subject only to
:7
encumbrances set forth on Exhibit A to the Mortgage:
(b) Insures that the proposed Improvements and use
of the Project do not violate any zoning or other use
restrictions covering the Land;
(c) Waives the following standard exceptions and
insures over (i) facts which would be disclosed by a
comprehensive survey of the premises, (ii) rights and
claims of parties in possession, and (iii) mechanic's,
contractor's or materialmen's liens and lien claims; and
3
(d) Includes a Form 100 endorsement.
2.8 Current UCC Secured Transactions Search and Federal
Tax Lien Search with the Minnesota Secretary of State.
2.9 Survey prepared by a registered land surveyor
containing a legal description conforming to the legal
description contained in the Commitment for Mortgagee's Policy
of Title Insurance and the Mortgage, detailing all easements,
encroachments, and utility rights of way upon the Land, showing
the location of adjoining public streets so as to affirmatively
show rights of ingress and egress to and from the Land, and
indicating that the location of the Improvements will be within
the boundary lines of the Land.
2.10 Copies of the Plans and Specifications prepared and
certified by the Architect governing the construction of the .
Improvements.
2.11 Copy of executed AIA Standard Form of Agreement
Between Owner and Contractor dated , 198-
2.12 Copy of executed AIA Standard Form of Agreement
Between Owner and Architect dated
198-
2.13 Executed copies of all the prime contracts and
subcontracts covering the work necessary to complete the
Improvements as shown on the Construction Statement (as
described below).
4
2.14 A sworn Construction Statement signed by the Borrower
• and the Contractor which:
(a) Lists all costs of the construction of
the Improvements;
(b) Shows the funds available to the
Borrower are sufficient to assure completion of
construction of the Improvements upon the Land;
and
(c) Includes specimen signatures of those
persons authorized to sign pay orders on behalf of
the Borrower.
2.15 Evidence of "builder's risk" insurance coverage on
the Land and the Improvements in a form and with a company or
companies satisfactory to the Lender in an amount not less than
• the full replacement cost of the Improvements.
:7
2.16 Certificate (Construction Industry Cooperative
Committee of Minnesota Form C1CC 701) of comprehensive general
liability insurance and worker's compensation insurance,
including employer's liability and "all states" endorsement in
a form and amount satisfactory to the Lender.
2.17 A policy of flood insurance naming the Lender as an
additional insured, covering the Project in the maximum amount
available, or proof satisfactory to the Lender that the Project
is not located within a designated flood plain.
5
2.18
Copies of all
building permits,
licenses, and
approvals
required to be
obtained prior to
commencing
is
construction of the Improvements.
2.19 Certificate of the Architect stating that all utility
services necessary for the Improvements and the operation
thereof for their intended purpose are available at the
boundaries of the Land, including water, drainage, storm and
sanitary sewer, electric, gas and telephone facilities.
2.20 Secretary's Certificate of Resolutions of Board of
Directors of the Borrower:
(a) Authorizing the borrowing by the Borrower of
$500,000 pursuant to the terms hereof.
(b) Authorizing the execution and delivery or
delivery by an officer or officers of the Borrower of this •
Agreement, the Mortgage, the Loan Agreement and any and
all other documents or instruments required to be executed
and delivered or delivered in connection herewith; and
(c) Identifying the officer or officers having
authority to execute and deliver or deliver this
.Agreement, the Mortgage, the Loan Agreement and any and
all other documents or instruments required to be executed
and delivered or delivered in connection herewith.
•
M
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2.21 Certificates of Good Standing of the Borrower of
recent date issued by Secretaries of State of Wisconsin and
Minnesota.
2.22 Opinion of
legal counsel
for the Borrower in form and substance satisfactory to the
Lender and Bond Counsel.
2.23 Opinion of Briggs & Morgan, Professional Association,
to the effect that the City has duly authorized the Note and
that the interest thereon is exempt from Federal and State
income taxation except when held by a "substantial user" and
"related person" of the Project.
2.24 Letter from the Minnesota Energy and Economic
Development Authority approving the municipal financing of the
Improvements.
2.25 Appraisal of the Project prepared by a MAI Appraiser.
2.26 Current Financial Statements of the Borrower.
2.27 Payment to the Lender in the amount of $2,500 to pay
for the Lender's commitment fee.
3. Borrower's Representations, Warranties and Covenants.
In order to induce the City and the Lender to enter into this
Agreement, the Borrower hereby represents and warrants that:
7
3.1 The Borrower is the owner of the Land in fee simple,
and of all personal property described in the Mortgage and in
the Financing Statements delivered herewith and has no
knowledge of any unrecorded claims, liens, and encumbrances
against the Land or such personal property.
3.2 It has not, nor has any agent, employee or
contractor, on its behalf, begun any actual visible improvement
upon the Land within the meaning of Minnesota Statutes Chapter
514. Construction of the Improvements has not commenced.
3.3 No Event of Default, as defined in Section 7 hereof,
has occurred and is continuing as of the date hereof and no
event has occurred and is continuing which would be an Event of
Default hereunder were it not for any grace period specified
herein or which would become an Event of Default if notice •
thereof were given to the Lender.
3.4 All utility services necessary for the construction
of the Improvements and the operation thereof for their
intended purpose are available at the boundaries of the Land,
including water, storm and sanitary sewer, drainage, gas,
electric and telephone facilities.
3.5 All financial statements heretofore delivered to the
Lender, are true and correct in all respects, have been
prepared in accordance with generally accepted accounting
principles, and fairly present the respective financial
conditions of the subjects thereof as of the respective dates
thereof; no materially adverse change has occurred in the
• financial conditions reflected therein since the respective
dates thereof, and no additional borrowings have been made by
the Borrower since the date thereof other than the borrowing
contemplated hereby or borrowings previously approved in
writing by the Lender.
4. Commitment, Representations and Covenants of the
Lender and Agreement to Borrow.
4.1 Subject to the terms and conditions hereof and of the
Note, Loan Agreement, Mortgage and other documents delivered
herewith, the Lender agrees to loan the City and the City
agrees to borrow from the Lender Five Hundred Thousand Dollars
($500,000) to be repaid in accordance with the terms and
conditions of the Note. The Lender shall disburse the proceeds
• of the Note upon sale and delivery of the 'tote as set forth in
Section 5 below. Pursuant to the Loan Agreement and Section
474.03(7), Minnesota Statutes, the City has authorized the
Borrower to provide directly for the construction and
installation of the Improvements in such manner as determined
by the Borrower and hereby authorizes the Lender to disburse
the proceeds of the Note directly to or for the order of the
Borrower for the payment of Project Costs in accordance with
Section 5.
01
5. Advances and Disbursements.
5.1 Upon delivery of the Note to the Lender, the Lender •
shall, on behalf of the City, disburse funds thereunder, for
payment of Project Costs as hereinafter provided.
5.2 The Borrower agrees to invest the sum of
$ toward the cost of acquiring the Land and
constructing the Improvements prior to the presentation of any
draw requests for advances under the Note.
5.3 In order to draw funds, the Borrower shall submit to
the Lender and Title, no more often than monthly, written draw
requests and construction cost certifications, signed by the
Borrower and the Contractor, specifying the use to which the
proceeds of the draw will be put and certifying such amounts to
be currently payable (excluding withholdings) for costs
incurred in connection with the construction of the
Improvements for which such draw request is made. The draw
request shall be supported by the Borrower certification to the
effect that:
(a) The construction work to be paid for has been
completed in a workman like manner in accordance with the
Plans and Specifications;
(b) Materials are in place or are being stored on
the Land and work has been completed on the Improvements
which have in the aggregate a value equal to the total of
•
10
the proceeds of the Note which have been and are to be
disbursed with the requested draw;
(c) The funds remaining undisbursed, less interest
payments due to completion of the Improvements on the
Note, are sufficient to fully complete the Improvements in
accordance with the Plans and Specifications and the
Construction Cost Statement; and
(d) The work is progressing in a timely manner.
Each draw request shall also be accompanied by a waiver of
mechanic's lien and /or materialmen's lien executed by each
contractor to whom payment is to be made out of the proceeds of
the requested disbursement covering liens for all work done and
material or equipment supplied up to a date which is not
earlier than the date of the preceding relevant draw request.
• The final draw request shall be accompanied by an appraisal of
•
the Project in form and substance satisfactory to the Lender.
Within five (5) business days from receipt of such draw request
and certifications, the Lender shall disburse to Title amounts
certified by the Borrower to be currently payable provided that
the Lender shall have the right, at its option, to refuse to
make advances should it determine that an Event of Default has
occurred as defined in Section 7 hereof.
11
5.3 Title shall disburse all funds advanced to it in
accordance with this Agreement; provided, however, if Title
shall, in its opinion, be unable to perform its obligations
hereunder, Title shall have the right to refuse to disburse
said advance. In the event Title shall fail to disburse any
advance within five (5) business days after the date of advance
by the Lender, Title shall return said advance to the Lender
and it shall cease to bear interest under the Note.
5.4 Title shall not disburse any disbursement hereunder
if there have been any changes in the status of title as set
forth in the mortgagee's policy of title insurance which have
not been consented to in writing by the Lender. Title shall in
any event promptly notify the Lender of any change in the
status of title to the Land or Improvements. •
5.5 If interest has accrued on the Note and is unpaid or
if fees or any of the principal balance of the Note are payable
to the Lender or the City, the Lender shall be, and hereby is,
authorized to disburse to itself or the City, the total amount
of such accrued interest and fees (whether or not a draw
request has been submitted by the Borrower) and the same shall
be deemed to be disbursed under the Note in the same manner and
with the same effect as if disbursed under the provisions of
this Section 5, it being understood and agreed that the Lender
•
12
may make such disbursements to itself or the City for accrued
interest and fees notwithstanding the fact that the total
amount of interest and fees paid to the Lender exceeds the
amount set forth therefor on the Construction Cost Statement
delivered herewith.
5.6 The form of draw request, mechanic's lien waivers,
certificates and any and all other instruments or documents
required to be delivered in connection with a disbursement
hereunder shall be in form and substance satisfactory to the
Lender and Title.
5.7 Notwithstanding anything contained in this paragraph
5 in no event shall any Note proceeds be used to pay any costs
not authorized to be paid from the proceeds of such Note under
Minnesota Statutes, Chapter 474 or to pay any Working Capital
• Expenses in excess of $ in the aggregate.
5.8 The Borrower shall account to the City for all
disbursements of loan proceeds made under this Agreement upon
the request of the City. All sums advanced and disbursed
hereunder shall be advanced or disbursed, as the case may be,
under and secured by the Pledge Agreement, the Mortgage and any
other related documents.
13
6. Affirmative Covenants by the Borrower. To further
induce the Lender to make the requested loan, the Borrower
hereby covenants and agrees that it will:
6.1 Erect and complete in a good workmanlike manner the
Improvements in accordance with the Plans and Specifications
and the Construction Timetable and in any event, complete the
Improvements on or before the Completion Date.
6.2 At all times, insure the Project in the manner set
forth herein, and from time to time, upon the Lender's request,
furnish it evidence of such coverage in form satisfactory to
the Lender and its counsel.
6.3 Promptly pay and discharge all taxes, assessments and
other governmental charges imposed upon it or upon its income
and profits or upon the Land, and any and all claims for labor, •
material or supplies or rental charges or charges of any other
kind which, if unpaid, might by law become a lien or charge
upon the Land, provided, however, that the Borrower shall not
be required to pay any such tax, assessment, charge or claim so
long as the validity thereof shall be contested in good faith,
by appropriate proceedings and the Borrower shall have set
aside on its books adequate reserves therefor.
6.4 Maintain all of its properties in good repair,
working order and condition and from time to time make or cause
all
to be made all needful renewals, replacements and repairs so
• that at all times the Borrower's business can be conducted
efficiently.
6.5 If at any time prior to completion of the Improve-
ments, the amount remaining to be disbursed under the Note
appears to the Lender to be insufficient to pay for completion
of the Improvements, deposit with the Lender within ten (10)
days after the demand therefor, the amount of money which the
Lender, in its discretion, determines is needed to cover such
insufficiency.
6.6 Prior to the final disbursement hereunder, provide
the Lender with the Architect's certificate of completion
certifying that the Improvements have been completed in
accordance with the Plans and Specifications; and upon
• completion, provide the Lender with a certificate of occupancy
of the City, and /or other evidence satisfactory to the Lender
indicating that the Improvements and their intended use comply
with all applicable zoning, building and other governmental
laws and requirements.
6.7 Construct the Improvements within the boundary lines
of the Land and in compliance with all zoning, building codes,
and regulations.
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15
6.8 Construct the Improvements at a cost not to exceed
the amounts set forth in the Construction Cost Statement.
7. Events of Default and Effect Thereof:
7.1 If the Borrower fails to complete the Improvements on
or before the Completion Date; or
7.2 If at any time prior to full completion of, and
payment for, the Improvements, the amount in the Construction
Fund becomes, in the Lender's opinion, insufficient for said
purpose, and the Borrower does not deposit with the Lender
funds in the amount of the insufficiency pursuant to paragraph
6.5 hereof within ten (10) days after the Lender makes demand
therefor; or
7.3 If the Borrower fails to duly and punctually perform
the covenants contained herein, or in any document executed or •
delivered hereunder and such failure to perform continues for a
period of ten (10) days after the Lender gives notice to the
Borrower of such default; or
7.4 If any financial statement, certificate, represen-
tation, or warranty furnished pursuant to or made under this
Agreement proves to be materially false as of the date thereof
or any representation made herein is untrue when made or
becomes untrue with the passage of time; or
0
IV
7.5 If the Borrower fails to pay any installment of
principal or interest pursuant to the Loan Agreement when such
installment becomes due, or, if the Borrower otherwise defaults
under the terms of the Mortgage, the Loan Agreement or any
other documents delivered herewith or executed pursuant to this
Agreement;
then, in any such event, an "Event of Default" shall be deemed
to have occurred and the Lender may, at its option (in addition
to the Lender's rights under the Note, the Mortgage, the Loan
Agreement or any other documents executed and delivered
herewith or pursuant hereto), take any one or more of the
following actions:
(a) terminate the Lender's obligation to disburse
any further sums under the Note pursuant hereto;
• (b) declare the amount of the Note plus interest
thereon to be immediately due and payable and demand
payment in full of the then principal balance plus accrued
interest owing on the Note;
(c) enter the Land and the Improvements to complete
same and use the funds remaining undisbursed under the
Note, together with such other sums as may, in the
Lender's discretion be necessary, to pay for remaining
17
costs of such completion, and in such event Borrower shall
be responsible for all amounts outstanding on the Note
together with all additional amounts advanced by the
Lender to pay for remaining costs of such completion;
(d) disburse any sums remaining undisbursed under
the Note to itself first towards payment of any premiums
or service charges, then accrued interest owing on the
Note and then the principal balance of the Note.
8. Miscellaneous
8.1 The Borrower agrees, whether or not the transaction
hereby contemplated is consummated, to pay the fees, expenses
and disbursements of the City, the City's legal counsel, Bond
Counsel and all of Lender's out -of- pocket expenses, including
attorneys' fees, recording fees, mortgage registration taxes, •
and all title insurance charges, including title insurance,
examination, disbursement and commitment fees and premiums
incurred in connection with the transaction which is the
subject of this Agreement.
8.2 All representations and warranties contained herein
or made in writing by or on behalf of the Borrower in
connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the
disbursements hereunder. All statements contained in any
18
certificate or other instrument delivered by or on behalf of
the Borrower pursuant thereto or in connection with the
transactions contemplated hereby shall constitute
representations and warranties by the Borrower.
8.3 The City agrees that it shall be bound by each and
every one of the terms and conditions herein applicable to it,
but it is agreed by the parties hereto that neither the City,
nor to the extent permitted by law, its officers, employees and
agents shall be subject to any personal or pecuniary liability
thereon.
8.4 It is expressly - understood and agreed that neither
the Lender nor the City assumes any liability or responsibility
for the satisfactory completion of the Improvements, nor for
the adequacy of funds deposited with or disbursed by either of
• them pursuant hereto to complete the Improvements, nor for
inspections during construction, nor for any other acts on the
part of the Borrower or the contractors to be performed in the
installation and construction of the Improvements.
8.5 This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto ex-
cept that the Borrower's rights hereunder are not assignable.
8.6 No amendment, change, or modification of this Agree-
ment shall be valid unless the same be in writing and signed by
all of the parties hereto, and no waiver by Lender of any
S
breach or default by Borrower of any of its obligations,
agreements or covenants under this Agreement shall be deemed to
be a waiver of any subsequent breach of the same, or any other
obligation, agreement or covenant, nor shall any forebearance
by Lender to seek or enforce a remedy for such breach be deemed
a waiver of its rights and remedies with respect to such
breach. Any waiver, amendment, change or modification of any
covenants, requirements, duties or conditions of this Agreement
to be performed by any person or entity other than Lender,
included herein for the benefit of Lender, shall be binding on
Title and shall not relieve title from any of its obligations
to provide insurance and make disbursements as set forth
herein.
8.7 This Agreement may be executed simultaneously in two
•
or more counterparts, each of which shall be an original, but
all of which shall constitute one agreement.
8.8 This Agreement shall be governed by, interpreted, and
construed in accordance with the laws of the State of
Minnesota.
8.9 This Agreement shall remain effective so long as
there are any sums remaining outstanding on the Vote.
8.10 This Agreement from and after the date hereof super-
cedes and has merged into it all prior oral and written
agreements on the same subjects by or between some or all of
the parties hereto with the effect that this Agreement shall
control the subject matter covered herein.
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U
8.11 Any notices required or contemplated hereunder shall
be effective upon the placing thereof in the United States
mails, certified mail, return receipt requested, postage pre-
paid, and addressed as follows:
If to the Borrower:
If to the Lender:
If to the City:
Erickson Oil Products, Inc.
1231 Industrial Road
Hudson, WI 54016
Attn:
Citizens Bank & Trust Co.
102 Main St. So.
Hutchinson, MN 55350
Attn: President
City of Hutchinson
37 Washington Ave. W.
Hutchinson, MN 55350
Attn: City Administrator
IN WITNESS WHEREOF, the parties hereto have caused this
Construction Loan Agreement to be executed the date and year
first above written.
(SEAL)
ERICKSON OIL PRODUCTS, INC.
By
s
By
Its
21
CITIZENS BANK & TRUST CO.
By
Its
•
Construction Loan Agreement dated as of December _, 1985,
among the City of Hutchinson, Erickson Oil Products, Inc., and
Citizens Bank & Trust Co.
•
22
•
0
CITY OF HUTCHINSON, MINNESOTA
By
Mayor
By
City Clerk- Administrator
(SEAL)
Construction Loan Agreement dated as of December 1 1985,
among the City of Hutchinson, Erickson Oil Products, Inc., and
Citizens Bank & Trust Co.
23
process the proceeds of the loan contempla
Construction Loan Agreement in accordance
said Agreement.
By
hereby agrees to
ted by the foregoing
with the terms of
•
Construction Loan Agreement dated as of December 1 1985,
among the City of Hutchinson, Erickson Oil Products, Inc., and
Citizens Bank & Trust Co.
•
24
563N Draft 12/9/85
MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FINANCING STATEMENT
BETWEEN
ERICKSON OIL PRODUCTS, INC.
AS MORTGAGOR
WED
CITIZENS BANK & TRUST CO.
AS MORTGAGEE
Dated: December , 1985
This instrument was drafted by:
BRIGGS AND MORGAN
Professional Association
2200 First National Bank Building
Saint Paul, Minnesota 55101
TABLE OF CONTENTS
(Not a Part of This Mortgage)
Page
PARTIES, RECITALS,
GRANTING CLAUSES
1
ARTICLE I -
COVENANTS OF THE MORTGAGOR
5
Section
1.01.
Payment of Utility Charges,
Taxes and Assessments
5
Section
1.02.
Liens
6
Section
1.03.
Care of Property
6
Section
1.04.
Right of the Mortgagee to Enter_
6
Section
1.05.
Subrogation
7,
Section
1.06.
Right of the Mortgagee to
Perform
7
Section
1.07.
Limited Assumption
7
Section
1.08.
Construction Loan Agreement and
Loan Agreement
8
Section
1.09.
Miscellaneous Rights of the
?Mortgagee
8
Section
1.10.
Assignment of Rents
8
Section
1.11.
Further Assurances
9
Section
1.12.
Expenses
9
Section
1.13.
Books and Records, Financial
Statements
10
Section
1.14.
Final Maturity Date
10
ARTICLE II -
INSURANCE, CONDEMNATION, USE OF PROCEEDS
11
Section
2.01.
Insurance
11
Section
2.02.
Condemnation
11
Section
2.03.
:Mortgagor to Repair, Replace,
Rebuild or Restore
12
Section
2.04.
Use of Proceeds to Prepay Loan
and Note
13
ARTICLE III
- DEFAULT
14
Section
3.01.
Event of Default Defined
14
Section
3.02.
Remedies
14
Section
3.03.
Purchase of Mortgaged Property
15
Section
3.04.
_
Appointment of Receiver
15
Section
3.05.
Proceeds
15
Section
3.06.
Proceedings Discontinued
16
ARTICLE IV -
MISCELLANEOUS
17
Section
4.01.
No Implied Waiver
17
Section
4.02.
Remedies Cumulative
17
•
9
• Section 4.03.
Section 4.04.
Section 4.05.
Section 4.06.
SIGNATURES
ACKNOWLEDGMENT
•
•
Successors
Notices
Headings _
Indemnity
and Assigns
Page
17
17
17
17
18
19
MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FINANCING STATEMENT
•
THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE
FINANCING STATEMENT, (the "Mortgage ") dated as of the day
of December, 1985, made and given by Erickson Oil Products,
Inc. (the "Mortgagor ") a corporation, organized under the laws
of the State of Wisconsin to Citizens Bank & Trust Co., a
Minnesota banking corporation (the "Mortgagee ").
WITNESSETH:
WHEREAS, the City of Hutchinson, Minnesota, a
political subdivision of the State of Minnesota (the "City "),
will issue to the Mortgagee, under and pursuant to Minnesota
Statutes, Chapter 474, as amended (the "Act "), its Commercial
Development Revenue Note of 1985 (Erickson Oil Products, Inc.
Project) (the "Note "), dated as of the date hereof, in the
principal amount of $500,000, with a final maturity date of
December 1, 2000, and bearing interest and maturing as provided
therein; and
WHEREAS, the City will loan the proceeds of the Note
to the Mortgagor pursuant to a Loan Agreement dated as of the
date hereof, between the City and the Mortgagor (the "Loan
Agreement ") for the purpose of financing the construction and •
equipping of a convenience store and gas station facility (the
"Project ") and the Loan Agreement has been assigned to the
Mortgagee by the City; and
WHEREAS, pursuant to the Loan Agreement, the
Mortgagor has covenanted, among other things, to make loan
repayments sufficient to pay amortized installments of
principal and interest on the Note when due; and
WHEREAS, the total principal amount of the Note shall
be disbursed pursuant to the terms of a Construction Loan
Agreement dated as of the date hereof, by and between the City,
the Mortgagor and the Mortgagee (the "Construction Loan
Agreement ");
WHEREAS, the City and the Mortgagee have required, as
a condition for the issuance of the Note by the City and for
the purchase and acceptance of the Note by the Mortgagee, that
the Mortgagor secure the Note by this Mortgage.
NOW, THEREFORE, THIS MORTGAGE FURTHER WITNESSETH,
that in consideration of the aggregate sum of $500,000 made
available to the Mortgagor by the Mortgagee through the
purchase of the Note and other good and lawful consideration,
the receipt and sufficiency of which is hereby acknowledged,
and to secure, and as security for the payment of the principal
of and interest on the Note by the City and Mortgagor to the
Mortgagee and the performance and observance by the Mortgagor
of all of the other covenants, agreements, representations,
warranties and conditions herein or contained in the Loan
Agreement, the Note, and the Construction Loan Agreement, the
Mortgagor does hereby grant, bargain, sell, convey, assign,
transfer, pledge, set over and confirm and grant a lien and
security interest unto the Mortgagee, its successors and
assigns, forever, the tract of land (hereinafter sometimes
called the "Land "), lying and being in the County of and State
of Minnesota, described in Exhibit A attached hereto and made a
part hereof,
Together with (i) all of the buildings, structures
and other improvements now standing or at any time hereafter
constructed or placed upon the Land; (ii) all lighting,
heating, ventilating, air - conditioning, sprinkling and plumbing
fixtures, water and power systems, engines and machinery,
boilers, furnaces, oil burners, elevators and motors,
communication systems, dynamos, transformers, electrical
equipment and all other fixtures of every description located
• in or on, or used, or intended to be used in connection with
the Land or any building now or hereafter located thereon
(excluding, however, fixtures owned by tenants occupying space
in any building now or hereafter located on the Land); (iii)
all hereditaments, easements, appurtenances, riparian rights,
rents, issues, profits, insurance proceeds, condemnation
awards, mineral rights and water rights now or hereafter
belonging or in any way pertaining to the Land or to any
building now or hereafter located thereon and all the estates,
rights and interests of the Mortgagor in the Land; (iv) all
building materials, furniture, furnishings, maintenance
equipment and all other personal property now or hereafter
located in, or on, or used, or intended to be used in
connection with the Land or any building now or hereafter
located thereon and all replacements and additions thereto
financed from the proceeds of the Note; and (v) all proceeds of
all of the foregoing (all of the foregoing, together with the
Land, are hereinafter referred to as the "Mortgaged Property ");
and the filing of this Mortgage shall constitute the filing of
a financing statement in the office wherein it is filed and a
carbon, photographic or other reproduction of this document may
also be filed as a financing statement:
•
2
Name and Address of
Debtor and Record Owner
of the Mortgaged Property:
Names and Addresses of
Secured Party:
Erickson Oil Products, Inc.
1231 Industrial Road
Hudson, WI 54016
Citizens Bank & Trust Co.
102 Main St. So.
Hutchinson, MN 55350
Description of the
Types (or items) of
property covered by
this financing statement: See above
Description of real
estate to which all
or a part of the
collateral is attached
or upon which it is
located:
See Exhibit "A" attached
hereto.
Some of the above described collateral is or is to become
fixtures upon the real estate described on Exhibit "A ", and
this financing statement is to be filed for record in the
public real estate records.
TO HAVE AND TO HOLD the Mortgaged Property unto the
Mortgagee forever.
PROVIDED, NEVERTHELESS, that if the Mortgagor, by
making all payments required of it under the Loan Agreement
hereinafter referred to, shall cause and permit to be paid the
principal sum of Five Hundred Thousand Dollars ($500,000), with
interest at the rate set forth in the Note on the unpaid
principal balance, as computed in accordance with the terms and
conditions of the Note, and any other sums due and owing under
the Note, and shall also pay or cause to be paid all other
sums, with interest thereon, as may be advanced by the
Mortgagee in accordance with this Mortgage either to protect
the lien of this Mortgage, or by way of additional loan or for
any other purpose, and shall also keep and perform all and
singular the covenants herein, in the Construction Loan Agree-
ment and the Loan Agreement, required on the part of the
Mortgagor to be kept and performed, then this Mortgage shall be
null and void, in which event the Mortgagee will execute and
deliver to the Mortgagor in form suitable for recording a full
satisfaction of this Mortgage; otherwise this Mortgage shall
remain in full force and effect.
3
•
•
•
The Mortgagor represents, warrants and covenants to
and with the Mortgagee that it is lawfully seized of the Mort-
gaged Property in fee simple and has the right and lawful
authority to mortgage the same as provided herein; that the
Mortgaged Property is free from all liens and encumbrances
except as otherwise approved by the Mortgagee; that all
buildings, structures and other improvements now or hereafter
located on the Land are, or will be, located entirely within
the boundaries of the Land; and that the Mortgagor will warrant
and defend the title to the Mortgaged Property against all
claims and demands whatsoever not specifically excepted herein.
The Mortgagor further represents, warrants and
covenants that the Note, the Loan Agreement, Construction Loan
Agreement and this Mortgage have been validly executed and
delivered and are valid and enforceable obligations of the
parties thereto in accordance with the terms thereof and
hereof; and that this Mortgage does not, nor do the Note, Loan
Agreement or Construction Loan Agreement, nor does the
performance or observance by the Mortgagor of any of the
covenants, agreements or matters or things in this Mortgage,
the Construction Loan Agreement and the Loan Agreement provided
for, contravene or result in the violation of or default under
any covenant in any indenture or agreement affecting the
Mortgagor or the Mortgaged Property.
M
ARTICLE I
COVENANTS OF THE MORTGAGOR •
The Mortgagor further covenants and agrees as
follows:
Section 1.01. Payment of Utility Charges, Taxes and
Assessments. Mortgagor shall, before any penalty attaches
thereto, pay or cause to be paid all charges made for
electricity, gas, heat, water, or sewer furnished or used in
connection with the Mortgaged Property, and all taxes,
assessments, levies and encumbrances of every nature heretofore
or hereafter assessed against the Mortgaged Property and upon
demand will furnish the Mortgagee receipted bills evidencing
such payment. If demanded by the Mortgagee to secure the pay-
ment of the taxes and assessments referred to herein and the
premiums on the insurance referred to herein, the Mortgagor
will deposit with the Mortgagee on the first day of each and
every month a sum which, in the estimation of the Mortgagee,
shall be equal to one - twelfth of the annual taxes, assessments
and insurance premiums; said deposits to be held by the
Mortgagee, free of interest, and free of any liens or claims on
the part of creditors of the Mortgagor and as part of the
security of the Mortgagee, and to be used by the Mortgagee to
pay current taxes and assessments and insurance premiums on the
Mortgaged Property as the same accrue and are payable. Said •
deposits shall not be, nor be deemed to be, trust funds but may
be commingled with the general funds of the Mortgagee. If said
deposits are insufficient to pay the taxes and assessments and
insurance premiums in full as the same become payable, the
Mortgagor will deposit with the Mortgagee such additional sum
or sums as may be required in order for the Mortgagee to pay
such taxes and assessments and insurance premiums in full.
Upon the happening of an Event of Default hereunder, the
Mortgagee may, at its option, apply any money in the fund
resulting from said deposits to the payment of the indebtedness
secured hereby in such manner as it may elect.
Nothing in this section shall require the payment or
discharge of any obligation imposed upon the Mortgagor so long
as the Mortgagor shall in good faith and at its own expense
contest the same or the validity thereof by appropriate legal
proceeding which shall operate to prevent the collection
thereof or other realization thereon and the sale or forfeiture
of the Mortgaged Property or any part thereof to satisfy the
same; provided that during such contest the Mortgagor shall, at
•
61
the option of the Mortgagee, provide security satisfactory to
the Mortgagee, assuring the discharge of the Mortgagor's obli-
gation under said section and of any additional charge, penalty
or expense arising from or incurred as a result of such
contest; and provided further, that if at any time payment of
any obligation imposed upon the Mortgagor by said section shall
become necessary to prevent the delivery of a tax deed
conveying the Mortgaged Property or any portion thereof because
of nonpayment, then Mortgagor shall pay the same in sufficient
time to prevent the delivery of such tax deed.
Section 1.02. Liens. Except for liens and encum-
brances listed on Exhibit A hereto or consented to in writing
by the Mortgagee, the Mortgagor will keep the Mortgaged
Property free from all liens and encumbrances of every nature
heretofore or hereafter arising which might or could be prior
to or equal to the security interest of this Mortgage; and upon
written demand of the Mortgagee, the Mortgagor will pay and
procure the release of any such lien or encumbrance.
Section 1.03. Care of Property. The Mortgagor will
take good care of the Mortgaged Property, and will maintain the
same in good repair and condition, ordinary depreciation ex-
cepted, and will commit or permit no waste and will not
construct any new buildings, structures or other improvements
on the Land nor add to or alter the design or structural
character of any building, structure or other improvement now
• or hereafter erected upon the Land without the prior written
consent of the Mortgagee, which consent shall not be
unreasonably withheld or delayed, and will not remove or permit
removal of any buildings, structures or other improvements or
fixtures of any kind from the Land nor do any act that would
impair or lessen the value of the Mortgaged Property. The
Mortgagor will promptly comply with all present and future
laws, ordinances, rules and regulations of any governmental
authority affecting the Mortgaged Property.
•
Section 1.04. Right of the Mortgagee to Enter. The
Mortgagor will permit the Mortgagee and its agents to enter and
to authorize others to enter upon any or all of the Mortgaged
Property, at any time and from time to time, to inspect the
same, to perform or observe any covenants, conditions, or terms
which the Mortgagor shall fail to perform, meet or comply with,
or for any other purpose in connection with the protection or
preservation of the Mortgagee's security, without thereby be-
coming liable to the Mortgagor or any person in possession
under the Mortgagor.
L
Section 1.05. Subrogation. If any prior lien is
paid from the proceeds of the Note secured by this Mortgage,
the Mortgagee shall be subrogated to the rights of the holder
of such prior lien as fully as if such lien has been assigned
to the Mortgagee.
Section 1.06. Right of the Mortgagee to Perform. If
the Mortgagor fails to pay all and singular any taxes, assess-
ments or other similar charges heretofore or hereafter assessed
against the Mortgaged Property or fails to obtain the release
of any lien or encumbrance (other than those listed in Exhibit
A hereto or otherwise consented to by the Mortgagee) of any
nature heretofore or hereafter arising upon the Mortgaged Prop-
erty or fails to perform any other covenants and agreements con-
tained in this Mortgage or if any action or proceeding is com-
menced which adversely affects or questions the title to or
possession of the Mortgaged Property or the interest of the
Mortgagor or Mortgagee therein, then the Mortgagee, at the
Mortgagee's option, without notice to the Mortgagor, may per-
form such covenants and agreements, investigate and defend
against such action or proceeding, and take such other action
as the Mortgagee deems necessary to protect the Mortgagee's
interest. Any amounts disbursed by the Mortgagee pursuant to
this section, including court costs and expenses and attorney's
fees, with interest thereon, shall become additional indebted-
ness of the Mortgagor and shall be secured by this Mortgage.
Such amount shall be payable upon notice from the Mortgagee to •
the Mortgagor requesting payment thereof, and shall bear
interest from the date of disbursement at the rate of 2% per
annum in excess of the Base Rate (as defined in the Note).
Nothing contained in this paragraph shall require the Mortgagee
to incur any expense or to do any act hereunder.
Section 1.07. Limited Assumption. The Mortgagor
shall not sell, assign, lease, convey, mortgage or otherwise
encumber the legal or equitable title or both legal and
equitable title to all or any portion of the Mortgaged Property
without the written consent of the Mortgagee. So long as the
Note is outstanding, no sale, assignment, lease, conveyance,
mortgage or other encumbrance shall be made which impairs the
validity of the Note or the exemption of the interest payable
thereon from federal income taxation.
•
7
Section 1.08. Construction Loan Agreement and Loan
Agreement. The Mortgagor shall promptly and faithfully observe
all of the terms and provisions of the Construction Loan
Agreement and the Loan Agreement binding upon it and will not
permit any Event of Default (as defined therein) to occur
thereunder.
Section 1.09. Miscellaneous Rights of the Mortgagee.
The Mortgagee may at any time and from time to time, without
notice, release any person liable for payment of any indebted-
ness secured hereby, extend the time as permitted by law or
agree to alter the terms of payment of any of the indebtedness,
accept additional security of any kind, release any property
securing the indebtedness, consent to the making of any plat or
map of the Land or the creation of any easement thereon or any
covenants restricting use or occupancy thereof, or alter or
amend the terms of this Mortgage in any way. No such release,
modification, addition or change shall affect the liability of
any person other than the person so released for payment of any
indebtedness secured hereby, nor affect the priority and first
lien status of this Mortgage upon any property not released.
Section 1.10. Assignment of Rents. The Mortgagor
hereby bargains, sells, assigns and sets over to the Mortgagee
all rents, issues and profits of the Mortgaged Property, which,
whether before or after foreclosure or during the period of
redemption shall accrue and be owing for the use and occupation
• of the Mortgaged Property or of any part thereof; provided, how-
ever, that until an Event of Default as hereinafter defined
shall have occurred, the Mortgagee hereby authorizes the
Mortgagor to receive all such rents, issues and profits. For
the purpose aforesaid the Mortgagor does hereby constitute and
appoint the Mortgagee its attorney in fact, irrevocably in its
name, to receive, collect and receipt for all sums due or owing
for such use and occupation, as the same may accrue. For the
purpose aforesaid, upon the occurrence of an Event of Default
the Mortgagee may enter and take possession of the Mortgaged
Property and manage and operate the same and take any action
which, in the Mortgagee's judgment, is necessary or proper to
conserve the value of the Mortgaged Property. The right to
enter and take possession of the Mortgaged Property, to manage,
operate and conserve the same, and to collect the rents, issues
and profits thereof, shall be in addition to all other rights
•
0
or remedies of the Mortgagee hereunder or afforded by law, and
may be exercised concurrently therewith or independently
thereof. The expense (including any receiver's fees, attorney's •
fees, costs and agent's compensation) incurred pursuant to the
powers herein contained shall be secured hereby, shall be
payable by the Mortgagor upon demand and shall bear interest
from the date incurred at the rate of 2% per annum in excess of
the Base Rate (as defined in the Mote). The Mortgagee shall
not be liable to account to the Mortgagor for any action taken
pursuant hereto other than to account for any rents actually
received by the Mortgagee.
Section 1.11. Further Assurances. At any time, and
from time to time, upon request by the Mortgagee, the Mortgagor
will make, execute and deliver or cause to be made, executed
and delivered, to the Mortgagee, any and all other further.
instruments, certificates and other documents as may, in the
opinion of the Mortgagee, be necessary or desirable in order to
effectuate, complete, or perfect or to continue and preserve
the obligations of the Mortgagor under the Loan Agreement and
the estate and security interest granted by this Mortgage.
Upon any failure by the Mortgagor so to do, the Mortgagee may
make, execute and record any and all such instruments,
certificates and documents for and in the name of the Mortgagor
and the Mortgagor hereby irrevocably appoints the Mortgagee the
agent and attorney in fact of the Mortgagor so to do.
Section 1.12. Expenses. The Mortgagor will pay or •
reimburse the Mortgagee for all reasonable attorney's fees,
costs and expenses incurred by the Mortgagee in any proceedings
involving the estate of a decedent or an insolvent, or in any
action, legal proceeding or dispute of any kind in which the
Mortgagee is made a party, or appears as party plaintiff or
defendant, affecting the indebtedness secured hereby, this
Mortgage or the interest created herein, or the Mortgaged
Property, including but not limited to the exercise of the
power of sale set forth in this Mortgage, any condemnation
action involving the Mortgaged Property, or collection of
insurance proceeds or any action to protect the security
hereof; and any such amounts paid by the Mortgagee shall be
added to the indebtedness secured by this Mortgage.
•
9
•
Section 1.13. Books and Records, Financial
Statements. The Mortgagor shall keep and maintain full, true
and accurate books of accounts adequate to reflect correctly
the results of the operation of the Mortgaged Property, which
books and the records relating thereto shall be open to
inspection by the Mortgagee or its representative during
ordinary business hours. The Mortgagor shall furnish to the
Mortgagee within one hundred twenty (120) days after the end of
each fiscal year of the Mortgagor, a balance sheet and a
statement of income and expenses, all in reasonable detail, in
form and content satisfactory to the Mortgagee and prepared in
accordance with generally accepted accounting principles,
reflecting all of Mortgagor's assets and liabilities as of the
last day of such fiscal year and the results of the Mortgagor's
operations for such fiscal year.
Section 1.14. Final Maturity Date. The Mortgagor
shall, at the request of the Mortgagee, amend the Mortgage to
reflect any change in the final maturity date of the debt
secured by the Mortgage as set forth in the Mortgage if such
date is either accelerated or extended as provided in the Note.
However, in no case may the final maturity date be extended
beyond thirty years from the date of the Note.
10
ARTICLE II
INSURANCE, CONDEMNATION, USE OF PROCEEDS
Section 2.01. Insurance. The Mortgagor shall keep
the buildings, structures, fixtures and other improvements now
existing or hereafter erected on the Land insured against loss
by fire, vandalism and malicious mischief, perils of extended
coverage, and such other hazards, casualties and contingencies
as may be reasonably specified by the Mortgagee. All insurance
shall be carried in companies approved by the Mortgagee and the
policies and renewals thereof shall (i) contain a waiver of
defense based on coinsurance, (ii) be constantly assigned and
pledged to and held by the Mortgagee as additional security for
the indebtedness secured by this Mortgage, (iii) have attached
thereto loss - payable clauses in favor of and in form acceptable
to the Mortgagee, and (iv) shall provide that Mortgagee shall
receive thirty (30) days notice in advance of cancellation or
substantial modification of the policy. In default thereof,
the Mortgagee may effect such insurance and the amount paid
therefor shall become immediately due and payable with interest
at the rate of 2% per annum in excess of the Rase Rate (as
defined in the Note) and shall be secured by this Mortgage. In
event of loss the Mortgagor will give immediate notice by mail
to the Mortgagee, who may make proof of loss if not made
promptly by the Mortgagor. The Mortgagor hereby authorizes the
Mortgagee to settle and compromise all claims on such policies •
and hereby authorizes and directs each insurance company
concerned to make payment for any such loss directly to the
Mortgagee instead of to the Mortgagor and the Mortgagee
jointly. In event of foreclosure of this Mortgage, all right,
title and interest of the Mortgagor in and to any property
insurance policies then in force shall pass to the purchaser at
the foreclosure sale. The Mortgagor shall also maintain
insurance against all liability for injury to persons or
property arising from the operation of the Mortgaged Property;
and the Mortgagee shall be named as insured.
Section 2.02. Condemnation. The Mortgagor shall
give the Mortgagee immediate notice of the actual or threatened
commencement of any proceedings under condemnation or eminent
domain affecting all or any part of the Mortgaged Property or
any easement therein or appurtenance thereof. If all or any
part of the Mortgaged Property is damaged, taken or acquired,
either temporarily or permanently, in any condemnation
proceeding, or by exercise of the right of eminent domain, the
amount of any award or other payment for such taking,
acquisition or damages made in consideration thereof, to the
11
extent of the full amount of the remaining unpaid indebtedness
secured by this instrument, is hereby assigned to the
Mortgagee, who is empowered to collect and receive the same and
to give proper receipts therefor in the name of the Mortgagor
and the same shall be paid forthwith to the Mortgagee, to be
held and applied as set forth in Section 2.03 hereof.
Section 2.03. Mortgagor to Repair, Replace, Rebuild
or Restore. If any principal amount of the Note is outstanding
when all or any part of the Mortgaged Property is taken by emi-
nent domain, or destroyed or damaged, unless the Mortgagor ex-
ercises its right to prepay all or a portion of the Note
pursuant to Section 2.04 hereof:
(1) The Mortgagor shall proceed promptly, subject to the
provisions of subsection (2), to replace, repair, rebuild and
restore the Mortgaged Property to substantially the same condi-
tion as existed before the taking or event causing the damage
or destruction, with such changes, alterations and modifica-
tions (including substitution or addition of other property) as
may be desired by the Mortgagor, and approved by the Mortgagee,
and will be suitable for continued operation of the Mortgaged
Property for the business purposes of the Mortgagor.
(2) All proceeds of any condemnation award or property
insurance claim shall be paid directly to the Mortgagee.
Subject to the option of Section 2.04 hereof, the Mortgagee
shall apply the proceeds, less such sum, if any, required for
• payment of all expenses incurred in collecting the same, ( "Net
Proceeds "), to payment of the costs of repair, replacement,
rebuilding or restoration of the Mortgaged Property upon
compliance with such construction and disbursement terms as the
Mortgagee may deem reasonably necessary, including deposit with
the Mortgagee of such funds of the Mortgagor as may be required
to insure payment of all costs of rebuilding and restoration.
If such deposit is not made when requested by the Mortgagee, or
if any other Event of Default should occur while the Mortgagee
is retaining the Net Proceeds, the Mortgagee, on behalf of the
City, may apply said Net Proceeds on the indebtedness of the
Mortgagor under the Loan Agreement and the balance of Net
Proceeds remaining after payment of all costs of any repair,
rebuilding, replacement or restoration of the Mortgaged
Property shall be applied against the unpaid principal balance
of the Note.
12
(3) The Mortgagor shall not, by reason of the payment of
any costs of repair, rebuilding, replacement or restoration, be
entitled to any reimbursement from the City or any abatement or •
diminution of the amounts payable under Article 3 of the Loan
Agreement.
Section 2.04. Use of Proceeds to Prepay Loan and
Note. In the event the Mortgagor does not elect to rebuild and
restore the Mortgaged Property pursuant to Section 2.03, the
Mortgagor may elect to apply the Net Proceeds of any property
insurance or condemnation award without penalty against the
outstanding principal balance due under the Note, which
prepayment shall be applied by the Mortgagee against the
outstanding principal balance of the Note as provided therein.
Any excess remaining after such application shall be returned
to the Mortgagor. If the Net Proceeds are insufficient to pay
the Note and accrued interest in full the Mortgagor shall pay
such additional amounts as shall be necessary to pay such
amounts in full.
C]
0
13
ARTICLE III
DEFAULT
Section 3.01. Event of Default Defined. An Event of
Default under the Loan Agreement shall constitute an Event of
Default hereunder.
Section 3.02. Remedies. Subject to the provisions
of Section 3.07, upon the occurrence of an Event of Default or
at any time thereafter until such Event of Default is cured to
the satisfaction of the Mortgagee, the Mortgagee may, at its
option, exercise any and all of the following rights and
remedies (and any other rights and remedies available to it
including, without limitation, the rights and remedies provided
to the City under Section 6.02 of the Loan Agreement):
(1) The Mortgagee may, without notice to the Mortgagor or
City, declare immediately due and payable all indebtedness
secured by this Mortgage, the same shall thereupon be immedi-
ately due and payable (subject to the limited liability of the
City on the Note as set forth therein), and
(2) The Mortgagee may foreclose this Mortgage by action
or advertisement, and the Mortgagor hereby authorizes the Mort-
gagee to do so, power being herein expressly granted to sell
the Mortgaged Property at public auction without any prior
• hearing or notice thereof and to convey the same to the
purchaser, in fee simple, pursuant to the statutes of Minnesota
in such case made and provided and, out of the proceeds arising
from such sale, to pay all indebtedness secured hereby with
interest, and all legal costs and charges of such foreclosure
and the maximum attorney's fees permitted by law, which costs,
charges and fees the Mortgagor herein agrees to pay; and
(3) The Mortgagee may exercise any of the remedies made
available under the Uniform Commercial Code.
In the event of a sale under the Mortgage, whether by
virtue of judicial proceedings or otherwise, the Mortgaged
Property may, at the option of the Mortgagee, be sold as one
parcel and as an entirety or in such parcels, manner and order
as the Mortgagee in its sole discretion may elect.
14
Section 3.03. Purchase of Mortgaged Property. In
case of any sale of the Mortgaged Property pursuant to any
judgment or decree of any court or otherwise in connection with
the enforcement of any of the terms of this Mortgage, the
Mortgagee, its successors and assigns, may become the
purchaser, and for the purpose of making settlement for or
payment of the purchase price, shall be entitled to turn in and
use the Note and any claims for interest matured and unpaid
thereon, together with additions to the mortgage debt, if any,
accrued in order that there may be credited as paid on the
purchase price the sum then due under the Note, including
principal and interest thereof, and any accrued additions to
the mortgage debt.
Section 3.04. Appointment of Receiver. After the
happening of any Event of Default and during its continuance or
upon the commencement of any proceedings to foreclose this
Mortgage or to enforce the specific performance hereof or in
aid thereof or upon the commencement of any other judicial
proceeding to enforce any right of the Mortgagee, the Mortgagee
shall be entitled, as a matter of right, if it shall so elect,
without the giving of notice to any other party and without
regard to the adequacy or inadequacy of any security for the
mortgage indebtedness, forthwith either before or after
declaring the unpaid principal of the Note to be due and
payable, to the appointment of a receiver or receivers.
Section 3.05. Proceeds. The purchase money proceeds •
and avails of any sale of the Mortgaged Property or any part
thereof, and the proceeds and avails of any other remedy
hereunder, shall be paid to and applied as follows:
(a) First, to the payment of costs and expenses of
foreclosure and of such sale and of all proper expenses
(including maximum attorney's fees permitted by law), liability
and advances incurred or made hereunder by the Mortgagee, and
of all taxes, assessments or liens superior to the lien of this
Mortgage.
(b) Second, to the payment to the Mortgagee of the
amount then owing or unpaid under the Note and this Mortgage
for principal and interest and in case any such proceeds shall
be insufficient to pay the whole amount so due, then first to
final payments of principal and then to the payment of interest
thereon; and
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(c) Third, to the payment of any excess to the
Mortgagor, its successors and assigns, or to whomsoever may be
lawfully entitled to receive the same.
Section 3.06. Proceedings Discontinued. In case the
Mortgagee shall have proceeded to enforce any right under this
Mortgage by foreclosure, sale, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely, then and in
every such case the Mortgagor and Mortgagee shall be restored
to their former positions and rights hereunder with respect to
the property subject to the lien hereof.
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ARTICLE IV
MISCELLANEOUS
Section 4.01. No Implied Waiver. Any delay by the
Mortgagee in exercising or any failure by the Mortgagee to
exercise any right or remedy hereunder, or afforded by law,
shall not be a waiver of or preclude the exercise of any right
or remedy hereunder, whether on such occasion or any future
occasion.
Section 4.02. Remedies Cumulative. Each remedy of
the Mortgagee is distinct and cumulative to each other right or
remedy under this Mortgage or afforded by law and may be
exercised concurrently or independently.
Section 4.03. Successors and Assigns. The covenants
and agreements herein contained shall bind, and the rights here-
under shall inure to, the respective successors and assigns of
the Mortgagor and the Mortgagee, including among the
Mortgagor's assigns any purchasers or transferees of the
Mortgaged Property.
Section 4.04. Notices. Any notice, request, demand
or other communication pe-r-mi-t-t-e-d or required hereunder shall be
in writing and shall be deemed duly given if deposited in the
United States mails, first class postage prepaid and addressed •
as follows:
If to the Mortgagor: Erickson Oil Products, Inc.
1231 Industrial Road
Hudson, WI 54016
Attn :
If to the Mortgagee: Citizens Bank & Trust Co.
102 Main St. So.
Hutchinson, MN 55350
Attn: President
or at such other address as either party shall notify the other
of as aforesaid.
Section 4.05. Headings. The headings of the
sections contained herein are for convenience only and are not
to be construed to be a part of or limit or affect the terms
hereof.
Section 4.06. Indemnity. The Mortgagor shall
indemnify Mortgagee and save the Mortgagee harmless from all
costs and expenses, including reasonable attorneys' fees,
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incurred by Mortgagee in any proceedings or disputes of any
kind in which the Mortgagee is made a party, or appears, and
which affects the indebtedness secured hereby, this Mortgage,
the interest created herein, or the Mortgaged Property.
Proceedings and disputes shall include, but shall not be
limited to, exercise of the power of sale provided for in
Section 3.02(2), condemnation action involving the land and any
action to protect the security provided for herein. Any
amounts paid by the Mortgagee, for which the Mortgagee is
entitled to indemnity, may, at the Mortgagee's option, be added
to the indebtedness secured by this Mortgage.
IN WITNESS WHEREOF, the Mortgagor has caused this
Mortgage to be duly executed as of the day and year first above
written.
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[SEAL]
LJ
ERICKSON OIL PRODUCTS, INC.
By
By
Its
Its
STATE OF MINNESOTA )
SS
COUNTY OF )
The foregoing instrument was acknowledged before me
this day of December, 1985, by the
, and , the , of
Erickson Oil Products, a Wisconsin corporation, on behalf of
said corporation.
Notary Public
[Notarial Stamp]
Wel
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EXHIBIT A
Legal Description
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