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HomeMy WebLinkAbout2011-058RESOLUTION NO. 2011-58 BOND RESOLUTION CITY OF STILLWATER TAX INCREMENT REFUNDING NOTES OF 2011 TERRITORIAL SPRINGS, LLC PROJECT SERIES 2003 and 2004 ADOPTED: APRIL 5, 2011 This agreement was drafted by Dave T. Magnuson, #66400 Magnuson Law Firm 324 South Main Street, Suite 260 Stillwater, MN 55082 651/439 -9464 RESOLUTION N0. 2011- 58 A RESOLUTION AMENDING RESOLUTION N0.2003 -230, AND RESOLUTION NO. 2004-188, A RESOLUTION AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF A TAXABLE TAX INCREMENT REVENUE NOTE (TERRITORIAL SPRINGS, LLC PROJECT), SERIES 2003, AND A TAXABLE TAX INCREMENT REVENUE NOTE (TERRITORIAL SPRINGS, LLC PROJECT), SERIES 2004 BE IT RESOLVED by the City Council of the City of Stillwater, Minnesota (the "City "), as follows: SECTION 1. RECITALS 1.01. Authorization The City has heretofore authorized the establishment of a municipal development district designated as Development District No. 1 (the "Development District ") pursuant to Minnesota Statutes, Sections 469.124 - 469.134, as amended. The City has heretofore approved the establishment of Tax Increment Financing District No. 10 (the "TIF District "), pursuant to Minnesota Statutes, Sections 469.174 - 469.179, as amended (the "Tax Increment Act "), within the Development District, and has adopted a tax increment financing plan for the purpose of financing certain improvements within the TIF District and the Development District. SECTION 2. BONDS 2.01 Bonds Pursuant to Minnesota Statutes, Section 469.176, the City was authorized to issue and sell its bonds for the purpose of financing a portion of the capital and administration costs of the Development District. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The City determined that it was in the best interests of the City that it issue and sell a Taxable Tax Increment Revenue Note (Territorial Springs, LLC Project), Series 2003 in an original principal amount of $3,255,000, and (Territorial Springs, LLC Project), Series 2004 in the original principal amount of $2,923,000.00, (collectively the "Notes "), for the purpose of financing certain capital and administration costs of the TIF District. SECTION 3. ISSUANCE. SALE AND TERMS OF THE NOTES. 3.01 Issuance of Notes The Notes were issued in accordance with that certain Contract For Private Redevelopment between the City and Territorial Springs, LLC, a Minnesota limited liability company (the "Developer ") dated August 19, 2003, as amended (the "Agreement "). Dougherty Funding LLC (the "Remarketing Agent ") was retained to arrange the sale of interests in the Notes and pursuant to a Participation Agreement and various participants have purchased and hold undivided interests in the Notes. SECTION 4. PAYMENT AND GUARANTORS 4.01 Payment of principal and interest on the Notes is payable exclusively from certain tax increments derived from Phase I and Phase II of the Project, and payment of principal of and interest on the Notes, and the purchase price of the Notes on the Purchase Dates, is guaranteed, jointly and severally, by David Frauenshuh, Brian Sweeney, Gary Lindstrom, Randy McKay and Richard Wicka (the "Guarantors "), pursuant to Guaranty Agreements, dated as of December 1, 2003, and September 1, 2004, respectively. SECTION 5. MANDATORY TENDER DATE 5. The Notes were subject to mandatory tender for purchase on February 1, 2011 ( the "Purchase Date "). The purchase price of the Notes on the Purchase Date was equal to the then outstanding principal amount of the Notes plus accrued interest to the Purchase Date (the "Purchase Price")- SECTION 6. REFUNDING The City Council (the "City ") has determined that it is necessary and expedient that money be provided for a refunding of the Notes that were subject to the Purchase Date of February 1, 2011. SECTION 7. ACCEPTANCE OF THE OFFER The Offer of Territorial Springs, LLC, a Minnesota limited liability company (the "Purchaser "), to purchase in accordance with the terms and at the rates of interest hereinafter set forth, and to pay therefore the sum of plus interest accrued from February 1, 2011 to settlement, is hereby accepted. SECTION 8. AUTHORIZED AMOUNT AND FORM OF NOTES The Notes issued pursuant to this Resolution shall be in substantially the form set forth herein, with such appropriate variations, omissions and insertions as are permitted or required by this Resolution, and in accordance with the further provisions hereof. The Notes shall be in substantially the form set forth in Exhibit A.1 and A.2 (the "Refunding Notes "). 8.1. THE REFUNDING NOTES. The Refunding Notes 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 other terms and conditions as are set forth therein. 8.2 EXECUTION. The Refunding Notes shall be executed on behalf of the City by the signatures of its Mayor and Clerk and shall be sealed with the seal of the City. In case any officer whose signature shall appear on the Refunding Notes shall cease to be such officer before the delivery of the Refunding Notes, 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 Clerk such officers of the City as, in the opinion of the City Attorney, may act -2- in their behalf, shall without further act or authorization of the City Council execute and deliver the Refunding Notes. following: 8.3 DELIVERY OF NOTES. Before delivery of the Refunding Notes, there shall be filed with the City the (1) An executed copy of each of the following documents: (A) the Guarantee attached as Exhibit `B" (B) a Certificate of Termination of the Remarketing Agreement attached as Exhibit C ". 8.4 DISPOSITION OF NOTE PROCEEDS. Upon delivery of the Notes, the Developer shall on behalf of the City, advance funds to current holders of the Notes and holders of any Participating Interests in the Notes to satisfy and redeem the Notes. All Note proceeds shall be immediately advanced and no Note proceeds shall be invested. EFFECTIVE DATE The Resolution is effective February 1, 2011, nunc pro tunc. SAVING: In all other ways Resolutions 2003 -230 and 2004 -188 remain in full force and effect, as well as the Agreement (already defined in 3.01), and the Covenant of the City to issue tax exempt revenue Bonds to refund the Refunded Notes pursuant to Section §�f the Agreement. Enacted by the City Council of the City of Stillwater this 5th da5'r1611. APPROVED: ATTEST: Larry . H n, City Administrator Mayor -3- EXHIBIT A -1 CITY OF STILLWATER, MINNESOTA TAXABLE TAX INCREMENT AMENDED REVENUE NOTE (TERRITORIAL SPRINGS, LLC PROJECT) SERIES 2003 $3,255,000 REGISTERED OWNER: TERRITORIAL SPRINGS, LLC This agreement was drafted by Dave T. Magnuson, #66400 Magnuson Law Firm 324 South Main Street, Suite 260 Stillwater, MN 55082 651/439 -9464 EXHIBIT A -1 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON No. R -1 $3,255,000 CITY OF STILLWATER, MINNESOTA TAXABLE TAX INCREMENT REFUNDED REVENUE NOTE (TERRITORIAL SPRINGS, LLC PROJECT), SERIES 2003 Interest Rate Maturity Date Date of Original Issue 6.25 % February 1, 2030 December 10, 2003 and Amended August 1, 2008, and further Amended August 1, 2009, and as Refunded February 1 st, 2011 Registered Owner: TERRITORIAL SPRINGS, LLC The City of Stillwater, Minnesota (the "City "), for value received, certifies that it is indebted and hereby promises to pay to the registered owner set forth above or its assigns (the "Registered Owner "), but solely from the Available Tax Increments (defined below) the principal sum of $3,255,000 and to pay interest thereon at the interest rate set forth above, as and to the extent set forth herein. 1. Payments Interest shall accrue on this Note from the Date set forth above at the interest rate set forth above payable first on August 1, 2011 and each August 1 and February 1 thereafter (the "Payment Dates "). The principal amount of this Note is due on the Maturity Date as defined below. Principal of this Note is subject to mandatory redemption and prepayment in accordance with the terms of Section 4 of this Note. In the event the Available Tax Increment, as defined below is not sufficient to pay all principal of this Note (whether pursuant to mandatory redemption or maturity) and accrued interest due on this Note on any Payment Date, the Available Tax Increment shall be applied first to accrued and unpaid interest, and then to principal The term "Maturity Date" means the earlier of (a) the date all principal and accrued interest on this Note have been paid in full; (b) the date the Note is terminated in accordance with Section 6 hereof; or (c) February 1, 2030. Payments are payable by mail to the address of the Registered Owner as set forth in the Authorization and Registration Provisions of this Note, or such other address as the Registered Owner may designate upon thirty (30) days written notice to the City. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest Interest at the rate stated herein shall accrue on the unpaid principal, commencing on the Date of Original Issue, set forth above, until the Purchase Date (defined below) when this Note is tendered by the Registered Owner. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment Payments on this Note are payable on each Payment Date solely from the Available Tax Increment. As defined in the Contract For Private Redevelopment, dated as of August 19, 2003 (the "Agreement ") between the City and Territorial Springs, LLC, a Minnesota limited liability company (the "Developer "), the term "Available Tax Increment" means, on each Payment Date, 95% of the tax increment actually received in the six months preceding each Payment Date from the property legally described in Exhibit A hereto (the "Redevelopment Property "), and received by the City in the six months preceding the Payment Date. The Registered Owner acknowledges that the Tax Increment District includes properties other than the Redevelopment Property, and that the County remits Tax Increments to the City on the basis of the Captured Tax Capacity of the entire Tax Increment District. Consequently, the City will need to determine the amount of Available Tax Increments received from the entire Tax Increment Financing District that are properly allocable to the Redevelopment Property. The Registered Owner acknowledges and agrees that the Available Tax Increments allocable to the Redevelopment Property, if the Developer has paid the property taxes on the Redevelopment Property in accordance with law, will be calculated by the City by determining the Captured Tax Capacity of the Redevelopment Property and the percentage that such Captured Tax Capacity of the Redevelopment Property bears to the total Captured Tax Capacity of the Tax Increment Financing District excluding parcels on which taxes are delinquent (the "Developer's Percentage "). The Available Tax Increment allocated by the City to the Redevelopment Property will be equal to the total Available Tax Increments received by the City from the Tax Increment Financing District multiplied by the Developer's Percentage. The Registered Owner acknowledges that the amount of Available Tax Increments that are determined by the City to be properly allocable to the Redevelopment Property could be less than the property taxes paid by the Developer on the Captured Tax Capacity of the Redevelopment Property as a result of decreases in valuation of other properties in the Tax Increment District to a valuation that is less than that upon which the original tax capacity was based. The City shall have no obligation to pay principal of and interest on this Note on each Payment Date from any source other than the Available Tax Increment or capitalized interest and the failure of the City to pay all or any portion of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the City pays principal and interest hereon to the extent of the Available Tax Increment and capitalized interest. The City shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the Maturity Date. -2- The City makes no warranty or representation that the Available Tax Increment will be sufficient to pay all or any portion of the principal or interest on this Note. 4. Mandatory Redemption of Note This Note maturing on February 1, 2030, is subject to scheduled mandatory redemption by the City at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, on the dates and in the principal amounts set forth below: Redemption Date August 1, 2011 February 1, 2012 August 1, 2012 February 1, 2013 August 1, 2013 February 1, 2014 August 1, 2014 February 1, 2015 August 1, 2015 February 1, 2016 August 1, 2016 February 1, 2017 August 1, 2017 February 1, 2018 August 1, 2018 February 1, 2019 August 1, 2019 February 1, 2020 August 1, 2020 * Maturity Principal Amount Redemption Date Principal Amount $34,000 February 1, 2021 75,000 36,000 August 1, 2021 78,000 37,000 February 1, 2022 81,000 40,000 August 1, 2022 84,000 41,000 February 1, 2023 87,000 43,000 August 1, 2023 90,000 44,000 February 1, 2024 93,000 47,000 August 1, 2024 97,000 48,000 February 1, 2025 101,000 51,000 August 1, 2025 104,000 53,000 February 1, 2026 108,000 55,000 August 1, 2026 112,000 57,000 February 1, 2027 116,000 60,000 August 1, 2027 120,000 62,000 February 1, 2028 124,000 65,000 August 1, 2028 129,000 67,000 February 1, 2029 133,000 69,000 August 1, 2029 138,000 72,000 February 1, 2030* 142,000 5. Optional Redemption of Note This Note shall be subject to redemption without prior notice, in whole or in part, at a redemption price of one hundred percent (100 %) of the principal amount thereof to be redeemed plus interest accrued to the date of redemption, without premium on the following dates and from the following sources: (i) on any Payment Date on or after August 1, 2011 from the Available Tax Increment in excess of the Available Tax Increment applied to the required payments under this Note on any Payment Date; and (ii) on any date on or -3- after August 1, 2004, from the proceeds of any refunding obligation of the City issued to refund this Note. 6. Termination Except as otherwise provided in Section 10.2.6 of the Agreement, at the City's option, this Note shall terminate and the City's obligation to make any payments under this Note shall be discharged upon the occurrence of certain Events of Default on the part of the Developer as defined in Section 10.1 of the Agreement. 7. Nature of Obligation This Note was issued to aid in financing certain capital and administration costs of a Development District undertaken by the City pursuant to Minnesota Statutes Sections 469.124 through 469.134, as amended, and is issued pursuant to authorizing resolutions (the "Resolutions ") duly adopted by the City on October 28, 2003, and on April 5, 2011, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes Sections 469.174 to 469.179, as amended. This Note is a limited obligation of the City which is payable solely from Available Tax Increment and capitalized interest pledged to the payment hereof under the Resolutions. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of the Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 8. Registration and Transfer This Note is issuable only as a fully registered note without coupons to one (1) Registered Owner. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the City kept for that purpose at the principal office of the City, by the Registered Owner hereof in person or by such Registered Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the City, duly executed by the Registered Owner. Upon such transfer or exchange and the payment by the Registered Owner of any tax, fee, or governmental charge required to be paid by the City with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred, nor may a participation interest in this Note be given pursuant to any participation agreement, to any person, other than the Developer or any guarantor of the principal and interest payments on the Note, unless the City has been provided with an opinion of counsel or a certificate of the transferor or transferee, in a form satisfactory to the City, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. Notwithstanding anything to the contrary contained herein, the City hereby consents to the assignment and pledge by the Registered Owner of this Note to U.S. Bank National Association (the "Lender ") to secure certain obligations of the Registered Owner to the Lender. Until otherwise directed to do so by the Lender, all payments of principal and accrued interest hereunder shall be paid to the Lender at 800 Nicollet Mall, 3` Floor, BC- MN -H03A, 0 Minneapolis Minnesota 55402, or at such other location may be provided by the Lender to the City in writing. 9. Additional Obligations The City shall issue no obligation secured in whole or in part by Available Tax Increment, unless the pledge to such obligation is subordinate to the pledge to the Note issued under the Resolution or the Registered Owner gives its written consent to the issuance of such obligation. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the City according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. (The remainder of this page is intentionally left blank.) -5- IN WITNESS WHEREOF, the City Council of the City of Stillwater has caused this Note to be executed with the manual or facsimile signatures of its Mayor and City Clerk, all as of the 5 day of April, 2011. ATTEST: Larry D. Hansen, City Administrator AUTHENTICATION AND REGISTRATION PROVISIONS This is the Note described in the within mentioned Resolution. The ownership of the unpaid balance of the within Note is registered in the bond register of the City, in the name of the person last listed below. Date of Registration Registered Owner Territorial Springs, LLC Signature of CilyAdministrator r (The remainder of this page is intentionally left blank.) S -1 Exhibit A -1 Legal Description of Redevelopment Property Lot One, Block One and Lot One, Block Two, Lot Three, Block Two, Terra Springs according to the plat thereof, Washington County, Minnesota. A -1 EXHIBIT A -2 CITY OF STILLWATER, MINNESOTA TAXABLE TAX INCREMENT AMENDED REVENUE NOTE (TERRITORIAL SPRINGS, LLC PROJECT) SERIES 2004 $2,923,000 REGISTERED OWNER: TERRITORIAL SPRINGS, LLC This agreement was drafted by Dave T. Magnuson, #66400 Magnuson Law Firm 324 South Main Street, Suite 260 Stillwater, MN 55082 651/439 -9464 EXHIBIT A -2 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WASHINGTON No. R -1 $2,923,000 CITY OF STILLWATER, MINNESOTA TAXABLE TAX INCREMENT AMENDED REVENUE NOTE (TERRITORIAL SPRINGS, LLC PROJECT), SERIES 2004 Interest Rate Maturity Date Date of Original Issue 6.25% February 1, 2030 September 15, 2004, amended August 1, 2007, further amended August 1, 2008, and further amended August 1, 2009, and as Refunded February 1, 2011 Registered Owner: TERRITORIAL SPRINGS, LLC The City of Stillwater, Minnesota (the "City "), for value received, certifies that it is indebted and hereby promises to pay to the registered owner set forth above or its assigns (the "Registered Owner "), but solely from the Available Tax Increments (defined below) the principal sum of $2,923,000 (or such lesser aggregate of the principal amounts of this Note which shall have been advanced by the Registered Owner and duly recorded on the Principal Ledger attached to and made a part of this Note) and to pay interest thereon at the interest rate set forth above, as and to the extent set forth herein. 1. Payments Interest shall accrue on said advanced and unpaid principal amounts of this Note from the date set forth above, at the interest rate set forth above, payable first on February 1, 2011 and each August 1 and February 1 thereafter (the "Payment Dates "). The principal amount of this Note is due on the Maturity Date as defined below. Principal of this Note is subject to mandatory redemption and prepayment in accordance with the terms of Section 4 of this Note. In the event the Available Tax Increment, as defined below is not sufficient to pay all principal of this Note (whether pursuant to mandatory redemption or maturity) and accrued interest due on this Note on any Payment Date, the Available Tax Increment shall be applied first to accrued and unpaid interest, and then to principal. The term "Maturity Date" means the earlier of (a) the date all principal and accrued interest on this Note have been paid in full; (b) the date the Note is terminated in accordance with Section 6 hereof; or (c) February 1, 2030. Payments are payable by mail to the address of the Registered Owner as set forth in the Authorization and Registration Provisions of this Note, or such other address as the Registered Owner may designate upon thirty (30) days written notice to the City. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest Interest at the rate stated herein shall accrue on the unpaid principal, commencing on the Date of Original Issue, set forth above, until the Purchase Date (defined below) when this Note is tendered by the Registered Owner. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment Payments on this Note are payable on each Payment Date solely from the Available Tax Increment as defined in the Contract For Private Redevelopment, dated as of August 19, 2003 as amended pursuant to the Addendum No. 1, dated as of June 15, 2004 and as further amended, (the "Agreement ") between the City and the Developer, the term "Available Tax Increment" means, on each Payment Date, 95% of the tax increment actually received in the six months preceding each Payment Date from the property legally described in Exhibit A hereto (the "Redevelopment Property"), and received by the City in the six months preceding the Payment Date. The Registered Owner acknowledges that the Tax Increment District includes properties other than the Redevelopment Property, and that the County remits Tax Increments to the City on the basis of the Captured Tax Capacity of the entire Tax Increment District. Consequently, the City will need to determine the amount of Available Tax Increments received from the entire Tax Increment Financing District that are properly allocable to the Redevelopment Property. The Registered Owner acknowledges and agrees that the Available Tax Increments allocable to the Redevelopment Property, if the Developer has paid the property taxes on the Redevelopment Property in accordance with law, will be calculated by the City by determining the Captured Tax Capacity of the Redevelopment Property and the percentage that such Captured Tax Capacity of the Redevelopment Property bears to the total Captured Tax Capacity of the Tax Increment Financing District excluding parcels on which taxes are delinquent (the "Developer's Percentage "). The Available Tax Increment allocated by the City to the Redevelopment Property will be equal to the total Available Tax Increments received by the City from the Tax Increment Financing District multiplied by the Developer's Percentage. The Registered Owner acknowledges that the amount of Available Tax Increments that are determined by the City to be properly allocable to the Redevelopment Property could be less than the property taxes paid by the Developer on the Captured Tax Capacity of the Redevelopment Property as a result of decreases in valuation of other properties in the Tax Increment District to a valuation that is less than that upon which the original tax capacity was based. The City shall have no obligation to pay principal of and interest on this Note on each Payment Date from any source other than the Available Tax Increment or capitalized interest and the failure of the City to pay all or any portion of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the City pays principal and interest hereon to the extent of the Available Tax Increment and capitalized interest. The City -2- shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the Maturity Date. The City makes no warranty or representation that the Available Tax Increment will be sufficient to pay all or any portion of the principal or interest on this Note. 4. Mandatory Redemption of Note This Note maturing on February 1, 2030, is subject to scheduled mandatory redemption by the City at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, on the dates and in the principal amounts set forth below: Redemption Date Principal Amount Redemption Date Principal Amount August 1, 2011 $30,000 February 1, 2021 $68,000 February 1, 2012 32,000 August 1, 2021 71,000 August 1, 2012 33,000 February 1, 2022 74,000 February 1, 2013 35,000 August 1, 2022 77,000 August 1, 2013 36,000 February 1, 2023 80,000 February 1, 2014 38,000 August 1, 2023 83,000 August 1, 2014 40,000 February 1, 2024 86,000 February 1, 2015 42,000 August 1, 2024 89,000 August 1, 2015 43,000 February 1, 2025 92,000 February 1, 2016 45,000 August 1, 2025 96,000 August 1, 2016 47,000 February 1, 2026 99,000 February 1, 2017 50,000 August 1, 2026 103,000 August 1, 2017 51,000 February 1, 2027 107,000 February 1, 2018 54,000 August 1, 2027 111,000 August 1, 2018 56,000 February 1, 2028 115,000 February 1, 2019 58,000 August 1, 2028 119,000 August 1, 2019 60,000 February 1, 2029 123,000 February 1, 2020 63,000 August 1, 2029 128,000 August 1, 2020 65,000 February 1, 2030* 132,000 * Maturity 5. Optional Redemption of Note This Note shall be subject to redemption upon 30 days prior written notice, in whole or in part, at a redemption price of one hundred percent (100 %) of the principal amount thereof to be redeemed plus interest accrued to the date of redemption, without premium on the following dates and from the following sources: (i) on any Payment Date on or after August 1, 2011 from the Available Tax Increment in excess of the -3- Available Tax Increment applied to the required payments under this Note on any Payment Date; and (ii) on any date on or after February 1, 2011, from the proceeds of any refunding obligation of the City issued to refund this Note or otherwise at the option of the City. 6. Termination Except as otherwise provided in Section 10.2.6 of the Agreement, at the City's option, this Note shall terminate and the City's obligation to make any payments under this Note shall be discharged upon the occurrence of certain Events of Default on the part of the Developer as defined in Section 10.1 of the Agreement. 7. Nature of Obligation This Note was issued to aid in financing certain capital and administration costs of a Development District undertaken by the City pursuant to Minnesota Statutes, Sections 469.124 through 469.134, as amended, and is issued pursuant to authorizing resolutions (the "Resolutions ") duly adopted by the City on September 15, 2004, and on April 5, 2011, pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179, as amended. This Note is a limited obligation of the City which is payable solely from Available Tax Increment and capitalized interest pledged to the payment hereof under the Resolutions. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except out of the Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Note or other costs incident hereto. 8. Registration and Transfer This Note is issuable only as a fully registered note without coupons to one (1) Registered Owner. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the City kept for that purpose at the principal office of the City, by the Registered Owner hereof in person or by such Registered Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer satisfactory to the City, duly executed by the Registered Owner. Upon such transfer or exchange and the payment by the Registered Owner of any tax, fee, or governmental charge required to be paid by the City with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred, nor may a participation interest in this Note be given pursuant to any participation agreement, to any person, other than the Developer or any guarantor of the principal and interest payments on the Note, unless the City has been provided with an opinion of counsel or a certificate of the transferor or transferee, in a form satisfactory to the City, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. Notwithstanding anything to the contrary contained herein, the City hereby consents to the assignment and pledge by the Registered Owner of this Note to U.S. Bank National Association (the "Lender ") to secure certain obligations of the Registered Owner to the Lender. Until otherwise directed to do so by the Lender, all payments of principal and accrued interest 0 hereunder shall be paid to the Lender at 800 Nicollet Mall, 3 rd Floor, BC- MN -HO3A, Minneapolis Minnesota 55402, or at such other location may be provided by the Lender to the City in writing. 9. Additional Obligations The City shall issue no obligation secured in whole or in part by Available Tax Increment, unless the pledge to such obligation is subordinate to the pledge to the Note issued under the Resolution or the Registered Owner gives its written consent to the issuance of such obligation. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this Note a valid and binding limited obligation of the City according to its terms, have been done, do exist, have happened, and have been performed in due form, time and manner as so required. (The remainder of this page is intentionally left blank.) -5- IN WITNESS WHEREOF, the City Council of the City of Stillwater has caused this Note to be executed with the manual or facsimile signatures of its Mayor and City Clerk, all as of the 5th day of April, 2011. CITY OF STILL ATTEST: 4"/ W., -- - Larry D. sen, City Administrator Mayor AUTHENTICATION AND REGISTRATION PROVISIONS This is the Note described in the within mentioned Resolution. The ownership of the unpaid balance of the within Note is registered in the bond register of the City, in the name of the person last listed below. Date of Registration Originally on September 15, 2004, as amended August 1, 2007 and as amended August 1, 2008, and as amended August 1, 2009, and Refunded February 1, 2011 Registered Owner Territorial Springs, LLC Minneapolis, Minnesota Signature of City Administrator (The remainder of this page is intentionally left blank.) S -1 Exhibit A -2 Legal Description of Redevelopment Property Lot Two, Block Two and Lot One, Block Three, Terra Springs according to the plat thereof, Washington County, Minnesota. A -1 EXHIBIT B AFFIRMATION OF GUARANTY BETWEEN CITY OF STILLWATER, MINNESOTA a�Zi7 TERRITORIAL SPRINGS, LLC Dated as of April _, 2011 This agreement was drafted by Dave T. Magnuson, #66400 Magnuson Law Firm 324 South Main Street, Suite 260 Stillwater, MN 55082 651/439 -9464 EXHIBIT B AFFIRMATION OF GUARANTY L A Guaranty, dated as of December 1, 2003 (the "Guaranty ") was made to induce Dougherty Funding, LLC, a limited liability company under the laws of the State of Delaware, and its successors and assigns including any future registered owners of the Note (defined below) (collectively or individually, the "Registered Owner ") to purchase the Taxable Tax Increment Revenue Note (Territorial Springs, LLC Project), Series 2003, in the original aggregate principal amount of $3,255,000, issued by the City of Stillwater, Minnesota (the "City "), dated as of October 28,2003 (the "Note "), pursuant to Resolution No. 2003 -230 of the City dated as of October 28,2003 (the "Resolution "). 2. A Guaranty, dated as of September 1, 2004 (the "Guaranty ") was made to induce Dougherty Funding, LLC, a limited liability company under the laws of the State of Delaware, and its successors and assigns including any future registered owners of the Note (defined below) (collectively or individually, the "Registered Owner ") to purchase the Taxable Tax Increment Revenue Note (Territorial Springs, LLC Project), Series 2004, in the original aggregate principal amount of $2,923,000, issued by the City of Stillwater, Minnesota (the "City "), dated as of September 15, 2004 (the "Note "), pursuant to Resolution No. 2004 -188 of the City dated as of September 15, 2004 (the "Resolution "); (collectively, "the "Guarantee. ") 3. At the request of U.S. Bank National Association as Lender, the City will consider adopting a Resolution authorizing the Refunding of the Notes on the condition that the Guaranty remain in effect and that the Refunding not be considered a waiver by the Holders of a Note, the Lender or any other party benefited by the Guarantee of a right to act pursuant the Guaranty. 4. The Guarantors, therefore, by this instrument and to induce the City to enact its Refunding Resolution and hereby affirm the Guaranty as if restated verbatim and acknowledge and agree that the increase in the interest rate and extension of the Refunding shall not be considered a waiver by the Holders of a Note or any other party benefited by the Guarantee of a right to act pursuant to the Guarantee. IN WITNESS WHEREOF, this Affirmation of Guaranty has been duly executed by the Guarantors as of this day of April, 2011. David Frauenshuh Brian Sweeney Gary Lindstrom Randy McKay Richard Wicka -2- EXHIBIT C TERMINATION OF REMARKETING AGREEMENTS Between THE CITY OF STILLWATER, MINNESOTA And TERRITORIAL SPRINGS, LLC And DOUGHERTY FUNDING LLC This agreement was drafted by Dave T. Magnuson, #66400 Magnuson Law Firm 324 South Main Street, Suite 260 Stillwater, MN 55082 651/439 -9464 TERMINATION OF REMARKETING AGREEMENT A REMARKETING AGREEMENT, dated as of December 1, 2003 (the 2003 Remarketing Agreement), and a Remarketing Agreement dated as of September 1, 2004, (the "2004 Remarketing Agreement ") (collectively the Remarketing Agreements) made by and between the CITY OF STILLWATER, MINNESOTA, a municipal corporation and political subdivision organized and existing under the laws of the State of Minnesota (the "City "), TERRITORIAL SPRINGS, LLC, a Minnesota limited liability company organized under the laws of the state of Minnesota (together with its successors and assigns, the "Developer "), and DOUGHERTY FUNDING LLC, as remarketing agent (together with its successors and assigns, the "Remarketing Agent "), are hereby terminated by this instrument effective upon the issuance of the Refunding Notes. The City and the Developer both waive the right to the notice of their intent to terminate the Remarketing Agreements contained in Section 12(b) of the Remarketing Agreements. IN WITNESS WHEREOF, the parties have executed this Termination of Remarketing Agreement by their duly authorized officers as of the 5 day of April, 2011. CITY OF STILLWX MINNESOTA Re arycki, Mayor Larry DAlansen, City Administrator TERRITORIAL SPRINGS, LLC i Its DOUGHERTY FUNDING, LLC as Remarketing Agent Its