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HomeMy WebLinkAboutResolutions - R-85-55 - 09/04/1985 - Bonds for Cunat BrothersRESOLUTION NO. R-85-55 A RESOLUTION AUTHORIZING AND PROVIDING FOR THE ISSUANCE BY CITY OF McHENRY, ILLINOIS OF ITS $500,000 INDUSTRIAL PROJECT REVENUE BOND (CUNAT BROS., INC. PROJECT), APPROVING THE SALE OF THE BOND, THE BOND PURCHASE AGREEMENT, THE LOAN AGREEMENT AND THE ASSIGNMENT AND AGREEMENT WHEREAS, the City of McHenry (the "Issuer") is authorized and empowered by the provisions of Division 74 of Article 11 of the Illinois Municipal Code, as from time to time supplemented and amended (the "Act") to finance in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any industrial project in order to encourage industrial development of the municipality; and WHEREAS, the Issuer is further authorized by the Act to issue industrial revenue bonds payable solely from payments to be derived by the Issuer from the user of such facilities and secured by a mortgage and a pledge of said payments and the Act provides that such bonds shall be entitled to a mortgage and a pledge of such payments; and WHEREAS, as a result of negotiations between the Issuer and McHenry State Bank, not personally, but solely as Trustee under a Trust Agreement dated March 19, 1985, and known as Trust Number 3263, a land trust created under the laws of the State of Illinois (the "Land Trust") and Elm Street Place Limited Partnership, an Illinois limited partnership (the "Beneficiary"), owner of 100% of the beneficial interest in the Land Trust (the Land Trust and the Beneficiary collectively called the "Borrower") whose address is 5400 West Route 120, McHenry, Illinois 60050, contracts will be entered into for the construction of an office building (the "Project") within the boundaries of the Issuer, and which Project is of the character and accomplishes the purposes provided by the Act and the Issuer is willing to issue its industrial revenue bond to finance the Project upon terms which will be sufficient to pay the cost of construction of the Project as evidenced by such industrial revenue bond, all as set forth in the details and provisions of the Loan Agreement hereinafter identified (the "Agreement"); and WHEREAS, the Project will be leased to Cunat Bros., Inc., an Illinois corporation (the "Company") under the terms of the Lease Agreement dated as of July 1, 1985 (the "Lease Agreement") by and between the Borrower, as lessor and the Company, as lessee and the Project will be subleased by the Company to Family Services and Community Mental Health Center for McHenry County, an Illinois not -for -profit corporation (the "Sublessee") pursuant to the terms of the Sublease Agreement dated as of July 1, 1985 (the "Sublease Agreement") by and between the Company, as sublessor and the Sublessee, as sublessee, (the Lease Agreement and the Sublease Agreement are collectively called the "Leases") and said Leases have been assigned by the Borrower to the Issuer for further assigning to McHenry State Bank (the "Bank"); and WHEREAS, it is estimated that the costs of the Project, including costs relating to the preparation and issuance of the industrial revenue bond, will be not less than $500,000; and -2- WHEREAS, the Project will create employment opportunities and enhance the tax base in the City of McHenry, Illinois; and WHEREAS, the Issuer held a public hearing pursuant to Section 103(k) of the Internal Revenue Code, as amended, on July 17, 1985, and hereby approves the issuance of revenue bonds; and WHEREAS, the Issuer proposes to sell the industrial revenue bond hereinafter authorized and designated "Industrial Project Revenue Bond (Cunat Bros., Inc. Project)" (the "Bond") upon a negotiated basis to the Bank; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCII, OF THE CITY OF MCHENRY, MCHENRY COUNTY, ILLINOIS, AS FOLLOWS: -3- DEFINITIONS Section 1. The following words and terms as used in this Resolution shall have the following meanings unless the con- text or use indicates another or different meaning or intent: "Act" means Division 74 of Article 11 of the Illinois Municipal Code, as amended, "Additional Payments" means all amounts due to the Issuer from the Borrower pursuant to Sections 6.4 and 7.5 of the Agreement. "Agreement" means the Loan Agreement dated as of July 1, 1985 by and between the Issuer and the Borrower, as from time to time amended and supplemented, together with the Note of the Borrower in the form appended thereto. "Assignment" means the Assignment and Agreement dated as of July 1, 1985 by and between the Issuer and the Bank. "Assignment of Leases and Rents" means the Assignment of Leases and Rents dated as of July 1, 1985 from the Borrower to the Issuer. "Bank" means McHenry State Bank, McHenry, Illinois, and its successors and assigns. "Beneficiary" means Elm Street Place Limited Partnership, an Illinois limited partnership, as owner of 100% of the beneficial interest in the Land Trust, and its successors and assigns. "Bond" means the Bond authorized to be issued hereunder. "Bond Fund" means the City of McHenry, Illinois Bond Fund (Cunat Bros., Inc. Project) created by the Borrower. -4- "Bond Purchase Agreement" means the Bond Purchase Agreement dated as of July 1, 1985 between the Issuer and the Bank. "Bond Resolution" means this Resolution. "Borrower" means collectively the Land Trust and the Beneficiary. amended. "Code" means the Internal Revenue Code of 1954, as "Company" means Cunat Bros., Inc., an Illinois corporatin and its successors and assigns. "Construction Fund" means the City of McHenry, Illinois Construction Fund (Cunat Bros., Inc. Project) created by the Borrower. The term "Default" means those defaults, exclusive of any period of grace, specified in and defined in Section 11 hereof. The term "Event of Default" means those events specified in and defined in Section 11 hereof. "Guaranty" means the Guaranty Agreement dated as of July 1, 1985 from the general partners of the Beneficiary to the Bank. The words "hereof," "herein," "hereunder" and other words of similar import refer to this Resolution as a whole. "Issuer" means the City of McHenry, Illinois and its successors and assigns. "Land Trust" means McHenry State Bank, not personally, but solely as Trustee under a Trust Agreement dated March 19, 1985, and known as Trust Number 3263, and its successors in trust and assigns. -5- "Leases" means collectively the Lease Agrement and the Sublease Agreement. "Lease Agreement" means Lease Agreement dated as of July 1, 1985 between the Borrower, as lessor and the Company, as lessee. "Mortgage" means the Mortgage and Security Agreement dated as of July 1, 1985 of the Land Trust. "Person" means natural persons, partnerships, associa- tions, corporations and public bodies. "Prime Rate" means the interest rate per annum announced from time to time by The Northern Trust Company at its principal office in Chicago, Illinois, as its prime rate. "Project" means the Building, and the construction thereof to be financed with the proceeds of the Bond, as defined and described in the Agreement and the installation of all off -site utilities and improvements necessary to serve the Project Site. "Purchase Agreement" means the Purchase Agreement dated as of July 1, 1985 between the Borrower and the Bank. "Sublease Agreement" means the Sublease Agreement dated as of July 1, 1985 between the Company and the Sublessee. "Sublessee" means Family Services and Community Mental Health Center for McHenry County, an Illinois not -for -profit corporation. Company. "Title Insurance Company" means McHenr-kor County Title AUTHORIZATION OF THE PROJECT Q� Section 2. That in order to promote the general welfare of the City of McHenry, Illinois and its inhabitants by relieving conditions of unemployment and encouraging the increase of industry and economic development, the Project shall be and is hereby authorized to be financed as described herein. It is hereby found and declared that the financing of the Project and the use thereof by the Borrower as hereinafter provided is necessary to accomplish the public purposes described in the preamble hereto and in the Act. AUTHORIZATION AND PREPAYMENT OF BOND Section 3. That for the purpose of financing the cost of said Project there shall be and there is hereby authorized to be issued by the Issuer its Industrial Project Revenue Bond (Cunat Bros., Inc. Project), in the principal sum of $500,000 dated the date of issuance thereof, bearing interest (based on a 360-day year of 30-day months) from the date of the Bond at the rate per annum equal to 80% (the "Applicable Percentage") of the Prime Rate (the "Applicable Rate") on such date and on each May 1 and November 1 thereafter; provided however said interest thereunder shall not (other than in the event of a Determination of Taxability (as defined in the Agreement) or in the case of a default) be more than 16% per annum. The Bond shall be payable in one hundred eighty (180) monthly installments of principal and interest of $4,778.27 each that become due on October 1, 1985 and on the first day of each month of each year thereafter to and including August 1, 2000 with a final installment of all unpaid principal and interest on September 1, 2000. Notwithstanding the fact that the interest rate on the balance of principal from time -7- to time outstanding shall fluctuate pursuant to the terms of the Bond, payments due thereunder shall be based upon an interest rate of 8% per annum amortized over the term thereof. That portion of each payment attributable to interest based upon an 8% interest rate shall be applied to interest with the remainder to principal. In the event that the interest rate charged thereunder shall, at any time, be greater than 8%, then in addition to the monthly payments due on the Bond, an additional payment shall be due annually on the first day of October of each year during the term thereof which payment shall equal the difference between the interest accrued prior to said payment, based upon the rate of interest charged thereunder, and the interest actually paid pursuant to the monthly payments due on the Bond. In the event that the interest rate charged thereunder shall at any time be less than 8%, then any monies paid in excess of the principal and interest due pursuant to the monthly payment due on the Bond shall be applied to principal. After receipt of notice of a Determination of Taxability, the holder of the Bond shall increase the interest rate per annum payable under the Bond to the Taxable Rate, as defined in the Agreement, from the Effective Date of Taxability, as defined in the Agreement, until said principal is paid in full. In addition, there shall be paid to the holder thereof, in respect of interest on principal of the Bond not outstanding on the date of the Determination of Taxability but which was outstanding on the Effective Date of Taxability an amount equal to the difference between the amount actually paid as interest and the Taxable Rate on the from time to time outstanding principal amounts of the Bond during such ME period including penalties and interest thereon, which the holder thereof has incurred or estimates it will incur by reason of such Determination of Taxability with respect to its current and past tax years. The Bond shall bear interest on any overdue principal and interest at the rate per annum of the Prime Rate plus 2% per annum, until paid, to the maximum extent permitted by law. In the event that at any time or times the maximum marginal tax rate at which the holder thereof could be taxed for federal income tax purposes pursuant to applicable provisions of the Code, or any future United States internal revenue or similar law applicable to said holder (hereinafter referred to as the "Tax Rate") is less than forty-six percent (46%), the Applicable Percentage utilized to determine the Applicable Rate during such time or times, unless the interest rate provided for in a Determination of Taxability or an Event of Default is applicable thereto, shall be the percentage arrived at by multiplying the difference between one hundred percent (100%) and the then applicable Tax Rate, by one hundred forty-eight percent (148%). If while a financial institution to which Section 291(a)(3) of the Code, or any successor provision thereto ("Section 291(a)(3)"), applies is the registered owner of the Bond, there is a change ("Change") in the TEFRA Disallowance Deduction (as hereafter defined), the Applicable Rate (as determined by the Applicable Percentage giving effect to any changes required by the preceding sentence) shall automatically be adjusted as of and on the effective date of any such Change by adding thereto a percentage equal to ninety (90) times (the TEFRA Disallowance Deduction in effect after such Change minus the TEFRA 1WM Disallowance Deduction in effect immediately prior to such Change) times the Tax Rate times the Prime Rate, with the TEFRA Disallowance Deduction and the Tax Rate being expressed as decimals and the Tax Rate being that which is in effect on the effective date of such Change. "TEFRA Disallowance Deduction" as used herein shall mean the percentage of reduction set forth in Section 291(a)(3) with respect to any financial institution preference item. The principal installments of the Bond are subject to prepayment at any installment payment date in whole or in part in the inverse order of their maturity in principal amounts not less than $1,000 or any integral multiple thereof, at a prepayment price of par without premium plus accrued interest to the prepayment date upon written notice given by the Borrower on behalf of the Issuer, at least five business days prior to the installment payment date the Borrower shall designate as the prepayment date. If other funds shall become available in the Bond Fund from excess moneys in the Construction Fund, or insurance or condemnation proceeds, and are not otherwise required to be applied to the payment of Bond, the Bank shall, without notice from the Borrower or the Issuer, promptly, but in any event within fifteen business days from the receipt of such funds, apply such funds to the prepayment of the Bond at the prepayment price set forth above, and shall give notice to the Borrower of such prepayment. All principal installments of the Bond or portion thereof designated for prepayment will cease to bear interest on the specified prepayment date, provided funds for -10- their prepayment are on deposit at the place of payment at that time. The principal of and interest on the Bond shall be payable to the order of the Bank or its assigns in lawful money of the United States of America in immediately available funds at the principal office of McHenry State Bank in McHenry, Illinois. The Bank shall note the date and amount of payment of principal and interest then being paid and of interest theretofore paid and not yet noted thereon and upon request of the Borrower or the Issuer, the Bond shall be available for inspection by the Borrower or the Issuer at the offices of the Bank in McHenry, Illinois. The Bond is nontransferable by the Bank, except as a whole and after notice in writing to the Borrower and Issuer of such transfer, provided however that the Bank without such notice may issue participations in the Bond. No transfer shall be effective until noted on the registration blank appearing on the Bond and each transfer and participation shall be registered upon the books of the Issuer kept for that purpose by the Bank and each such transfer or participation shall be in compliance with all provisions of Section 103(j) of the Code, and the regulations promulgated thereunder or proposed regulations published in the Federal Register. The Bank is hereby appointed as registrar for purposes of bond registration. The Bond shall be signed by the Mayor and attested by the City Clerk of the Issuer and the corporate seal of the Issuer shall be affixed thereto. The Bond, together with interest thereon, shall be a limited obligation of the Issuer secured by a mortgage and an -11- assignment and payable solely from the receipts derived from the Agreement (except to the extent paid out of moneys attributable to the Bond proceeds or the income from the temporary investment thereof) and the Leases and shall be a valid claim of the owner thereof only against the Bond Fund and other moneys held by the Bank pursuant to, and the receipts derived from, the Agreement and the Leases, which receipts shall be used for no other purpose than to pay the principal of and interest on the Bond, except as may be otherwise expressly authorized in this Bond Resolution. The Bond and the obligation to pay interest thereon does not now and shall never constitute an indebtedness or a loan of credit of the Issuer, the State of Illinois or any political subdivision thereof, or a charge against their general taxing powers, within the meaning of any constitutional or statutory provisions of the State of Illinois, but shall be secured by a mortgage and an assignment and payable solely from the receipts from the Agreement and the Leases. nmmn rnAM Section 4. That the Bond shall be in substantially the following form: -12- THIS BOND MAY BE TRANSFERRED ONLY AS A WHOLE UNITED STATES OF AMERICA STATE OF ILLINOIS COUNTY OF MCHENRY CITY OF MCHENRY PAYABLE BY THE ISSUER SOLELY AND ONLY FROM RECEIPTS DERIVED FROM THE LOAN AGREEMENT HEREIN DEFINED Industrial Project Revenue Bond (Cunat Bros., Inc. Project) $500,000 The City of McHenry, Illinois, a municipality of the State of Illinois, created and existing under the laws of the State of Illinois (the "Issuer"), for value received promises to pay solely and only from the source and as hereinafter provided, to the order of McHenry State Bank, McHenry, Illinois (the "Bank"), or its assigns, the principal sum of: FIVE HUNDRED THOUSAND DOLLARS ($500,000) bearing interest (based on a 360-day year of 30-day months) from the date hereof at the rate per annum equal to 80% (the "Applicable Percentage") of the interest rate per annum announced from time to time by The Northern Trust Company at its principal office in Chicago, Illinois as its prime rate (the "Prime Rate") (the "Applicable Rate") on such date and on each Mav 1 and November 1 thereafter; provided however said interest hereunder shall not (other than in the event of a Determination of Taxability, as defined in the hereinafter described Agreement, or in the case of a default) be more than 16% per annum, payable in one hundred -13- eighty (180) monthly installments of principal and interest of $4,778.27 each that become due on October 1, 1985 and on the first day of each month of each year thereafter to and including August 1, 2000 with a final installment of all unpaid principal and interest on September 1, 2000. Notwithstanding the fact that the interest rate on the balance of principal from time to time outstanding shall fluctuate pursuant to the terms of this Bond, payments due hereunder shall be based upon an interest rate of 8% per annum amortized over the term hereof. That portion of each payment attributable to interest based upon an 8% interest rate shall be applied to interest with the remainder to principal. In the event that the interest rate charged hereunder shall, at any time, be greater than 8%, then in addition to the monthly payments due on this Bond, an additional payment shall be due annually on the first day of October of each year during the term hereof which payment shall equal the difference between the interest accrued prior to said payment, based upon the rate of interest charged hereunder, and the interest actually paid pursuant to the monthly payments due on this Bond. In the event that the interest rate charged hereunder shall at any time be less than 8%, then any monies paid in excess of the principal and interest due pursuant to the monthly payment due on this Bond shall be applied to principal. After receipt of notice of a Determination of Taxability, the holder hereof shall increase the interest rate per annum payable under this Bond to the Taxable Rate, as defined in said Loan Agreement, from the Effective Date of Taxability, as defined in the Loan Agreement, until said principal is paid in full. In addition, there shall be paid to the holder hereof, in -14- respect of interest on principal of this Bond not outstanding on the date of the Determination of Taxability an amount equal to the difference between the amount actually paid as interest and the Taxable Rate on the from time to time outstanding principal amounts of this Bond during such period including penalties and interest thereon, which the Issuer has incurred or estimates it will incur by reason of such Determination of Taxability with respect to its overdue principal and interest at the rate per annum of the Prime Rate plus 2% per annum, until paid, to the maximum extent permitted by law. In the event that at any time or times the maximum marginal tax rate at which the holder hereof could be taxed for federal income tax purposes pursuant to applicable provisions of the Code, or any future United States internal revenue or similar law applicable to said holder (hereinafter referred to as the "Tax Rate") is less than forty-six percent (46%), the Applicable Percentage utilized to determine the Applicable Rate during such time or times, unless the interest rate provided for in a Determination of Taxability or an Event of Default is applicable thereto, shall be the percentage arrived at by multiplying the difference between one hundred percent (100%) and the then applicable Tax Rate, by one hundred forty-eight percent (148%). If while a financial institution to which Section 291(a)(3) of the Code, or any successor provision thereto ("Section 291(a)(3)"), applies is the registered owner of the Bond, there is a change ("Change") in the TEFRA Disallowance Deduction (as hereafter defined), the Applicable Rate (as determined by the Applicable Percentage giving effect to any changes required by the preceding -15- sentence) shall automatically be adjusted as of and on the effective date of any such Change by adding thereto a percentage equal to ninety (90) times (the TEFRA Disallowance Deduction in effect after such Change minus the TEFRA Disallowance Deduction in effect immediately prior to such Change) times the Tax Rate times the Prime Rate, with the TEFRA Disallowance Deduction and the Tay: Rate being expressed as decimals and the Tax Rate being that which is in effect on the effective date of such Change. "TEFRA Disallowance Deduction" as used herein shall mean the percentage of reduction set forth in Section 291(a)(3) with respect to any financial institution preference item. Payments of principal and interest, including prepay- ments of principal installments, shall be noted as provided in the Bond Resolution hereinafter identified pursuant to which the Bond is issued. This Bond is issued in the principal sum of $500,000 pursuant to the provisions of Division 74 of Article 11 of the Illinois Municipal Code, as from time to time amended and supplemented (the "Act") and to a Resolution (the "Bond Resolution") duly adopted by the governing body of the Issuer for the purpose of providing funds to finance the cost of constructing an office building (hereinafter called the "Project") and paying expenses incidental thereto, to the end that the Issuer may be able to relieve conditions of unemployment and encourage the increase of industry and economic development within the City of McHenry, Illinois. The proceeds of this Bond will be used by the Issuer to pay or reimburse McHenry State Bank, not personally, but solely as Trustee under a Trust Agreement dated March 19, 1985, -16- and known as Trust Number 3263, an Illinois land trust (the "Land Trust") and Elm Street Place Limited Partnership, an Illinois limited partnership (the "Beneficiary"), owner of 100% of the beneficial interest in the Land Trust (the Land Trust and the Beneficiary collectively called the "Borrower") for the costs of construction of the Project, under the terms of a Loan Agreement dated as of July 1, 1985 (which agreement, as from time to time supplemented and amended, is hereinafter referred to as the "Agreement") and the Project will be leased by the Borrower to Cunat Bros., Inc., an Illinois corporation (the "Company") under the terms of the Lease Agreement dated as of July 1, 1985 (the "Lease Agreement") by and between the Borrower, as lessor and the Company, as lessee and said Project will be subleased by the Company to Family Services and Community Mental Health Center for McHenry County, an Illinois not -for -profit corporation (the "Sublessee") under the terms of a Sublease Agreement dated as of July 1, 1985 (the "Sublease Agreement") by and between the Company, as sublessor and the Sublessee, as sublessee. (The Lease Agreement and the Sublease Agreement are collectively called the "Leases"). This Bond is secured by a pledge and assignment of receipts derived by the Issuer pursuant to the Agreement and a mortgage on the Project pursuant to an Assignment and Agreement dated as of July 1, 1985 (the "Assignment") from the Issuer to the Bank, as more fully described in the Bond Resolution passed by the City Council of the Issuer on . 1985. Reference is made to the Bond Resolution for a description of the provisions, among others, with respect to the nature and extent of the -17- security, the rights, duties and obligations of the Issuer, the rights of the owners of this Bond, and the terms on which this Bond is or may be issued and to all the provisions of which the owner hereof by the acceptance of this Bond assents. Upon five days' prior written notice given by the Borrower on behalf of the Issuer the principal installments of this Bond are subject to prepayment on any installment payment date in whole or in part in the inverse order of their maturity at in principal amounts not less than $1,000 or any integral multiple thereof a prepayment price of par plus accrued interest to the prepayment date, without premium, as provided in the Bond Resolution. If other funds shall become available in the Bond Fund from excess moneys in the Construction Fund, or insurance or condemnation proceeds, and are not otherwise required to be applied to the payment of Bond, such funds shall, without notice from the Borrower or the Issuer, be promptly applied to such prepayment on any installment payment date. All principal installments of this Bond or portion thereof designated for prepayment will cease to bear interest on the specified prepayment date, provided funds for their prepayment are on deposit at the place of payment at that time. This Bond is issued pursuant to and in full compliance with the Constitution and laws of the State of Illinois, particularly the Act and the Bond Resolution. This Bond and the obligation to pay interest hereon are limited obligations of the Issuer, secured by a mortgage and assignment and payable solely out of the receipts derived by the Issuer from the Agreement and the Leases and otherwise as provided in the Bond Resolution and !M the Agreement. This Bond and the obligation to pay interest hereon shall not be deemed to constitute an indebtedness or a loan of credit of the Issuer, the State of Illinois or any political subdivision thereof, or a charge against their general taxing powers, within the meaning of any constitutional or statutory provision of the State of Illinois, but shall be secured by a mortgage and payable solely from the receipts derived by the Issuer from the Agreement and the Leases. Pursuant to the provisions of the Agreement, payments sufficient for the prompt payment when due of the principal of and interest on this Bond are to be paid by the Borrower to the Bank for the account of the Issuer and deposited in a special account created by the Borrower and designated "City of McHenry, Illinois Bond Fund - Cunat Bros., Inc. Project)," and all receipts under the Agreement and the Leases have been duly pledged and assigned (other than Additional Payments as defined in the Agreement) to the Bank pursuant to the Assignment for that purpose, under the Bond Resolution to secure payment of such principal and interest. In certain events, on the conditions, in the manner and with the effect set forth in the Bond Resolution, the principal installments of this Bond may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon. This Bond shall be fully registered as to both principal and interest in the name of the holder in accordance with the Bond Resolution, after which it shall be transferable only upon presentation to the Bank as Registrar with a written transfer duly acknowledged by the registered holder or his attorney, and such -19- transfer shall not be effective until it is noted upon this Bond and upon the books of the Issuer kept for that purpose by the Bank and is in compliance with all provisions of Section 103(j) of the Internal Revenue Code of 1954, as amended, and the regulations promulgated thereunder or proposed regulations published in the Federal Register. The Bank has been appointed as Registrar for purposes of bond registration. Modifications, alterations or amendments of the provisions of the Bond Resolution may be made only to the extent and in the circumstances permitted by the Bond Resolution. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by the Constitution and laws of Illinois and the Act to happen, exist and be performed precedent to and in the issuance of this Bond have happened, exist and have been performed in due time, form and manner as required by law. IN WITNESS WHEREOF, the City of McHenry, Illinois, by its governing body, has caused this Bond to be signed on its behalf by its Mayor and attested by its City Clerk and the corporate seal of said Issuer to be affixed hereto, all as of . 1985. (SEAL) Attest: City Clerk CITY OF McHENRY, ILLINOIS By Mayor -20- PROVISIONS FOR REGISTRATION The Bond shall be registered on the books of the City of McHenry kept for that purpose by McHenry State Bank, McHenry, Illinois, as Bond Registrar. The principal and interest on this Bond shall be payable only to or upon the order of the registered holder or his legal representative. REGISTRATION Date of Signature of Registration Name of Registered Owner Registrar McHenry State Bank McHenry, Illinois -21- CUSTODY AND APPLICATION OF PROCEEDS OF BOND: CONSTRUCTION FUND Section 5. The proceeds from the sale of the Bond shall be deposited in the Construction Fund which shall be held in a separate account by Bank for the benefit of the Borrower. Moneys in the Construction Fund shall be expended in accordance with the provisions of the Agreement, and particularly Section 3.6 thereof; Issuer shall have no obligation to see to the proper application of said moneys. Any moneys thereafter remaining in the Construction Fund shall be applied in accordance with the Purchase Agreement; Issuer shall have no obligation to see to the proper application of said moneys. PAYMENT OF AMOUNTS UNDER THE AGREEMENT Section 6. The corporate authorities of the Issuer hereby approve the Agreement in substantially the form which has been presented to the Issuer and which is now on file in the official records of the Issuer. The Mayor is hereby authorized and directed to execute and acknowledge said Agreement for and on behalf of the Issuer, and the City Clerk is hereby authorized and directed to attest same and to affix thereto the corporate seal of the Issuer. Said Agreement and the receipts thereof, including all moneys received under its terms and conditions, are hereby pledged and ordered paid into the Bond Fund. The Agreement provides that the Borrower shall remit the required payments thereunder directly to the Bank for the account of the Issuer for deposit in said Bond Fund and such provision is hereby expressly approved. -22- REVENUES: BOND FUND Section 7. The Bond and all payments required of the Issuer hereunder are not general obligations of the Issuer but are special and limited obligations secured by a mortgage and an assignment and payable by the Issuer solely and only out of the receipts derived from the Agreement and the Leases as provided herein. There shall be deposited by the Borrower into the Bond Fund, as and when received, (a) all prepayments paid by the Borrower specified in Article IV of the Agreement; (b) all payments and other amounts paid by the Borrower pursuant to Section 3.3 of the Agreement; and (c) all other moneys received by the Bank under and pursuant to any of the provisions of the Agreement. The Bank is authorized and directed to apply amounts available therefor in the Bond Fund to the payment when due of the principal of and interest on the Bond. The Issuer covenants and agrees that should there be an Event of Default or event that with the passing of time or otherwise may become an Event of Default under the Agreement, the Issuer shall fully cooperate with the Bank and with the owners of the Bond to the end of fully protecting the rights and security of such owners. Nothing herein shall be construed as requiring the Issuer to use any funds or revenues from any source other than funds and revenues derived from the Agreement and the Leases. Any amounts remaining in the Bond Fund, after payment in full of the principal of and interest on the Bond (or provision for payment thereof as provided in this Bond Resolution) and the reasonable charges and expenses of the Bank and of the Issuer, -23- shall be paid to the Borrower upon the expiration or sooner termination of the term of the Agreement. Notwithstanding anything herein to the contrary, reference to the Bond Fund shall not preclude direct payment of funds to the Bank for direct application for the purposes for which payments are made. ASSIGNMENT Section 8. As security for the due and punctual payment of the principal of and interest on the Bond hereby authorized the Issuer hereby and pursuant to the Assignment assigns and pledges to the Bank all receipts derived by the Issuer pursuant to the Agreement (except any payment made pursuant to Sections 6.4 and 7.5 of the Agreement relating to indemnification of the Issuer by the Borrower and rights of the Issuer to payment of expenses as provided in the Mortgage), and the Leases and all rights and remedies of the Issuer under the Agreement, the Note and the Mortgage to enforce payment thereof including a mortgage of the Project and in evidence of such assignment and pledge and in consideration of the agreement of the Bank to accept its responsibilities with respect to the Bond Fund created pursuant to Section 7 hereof, the Mayor is hereby authorized and directed to execute for and on behalf of the Issuer the Assignment and the City Clerk is hereby authorized and directed to attest the same and to affix thereto the corporate seal of the Issuer, with the Assignment to be in substantially the form which has been presented to and is hereby approved by the governing body of the Issuer and which is now on file in the official records of the Issuer. -24- INVESTMENTS; ARBITRAGE Section 9. The Issuer hereby covenants with the Bank and the owners of the Bond that so long as any principal of the Bond remains unpaid, the governing body of the Issuer will not knowingly take or authorize the taking of any action which will cause the Bond to be classified as an "arbitrage bond" within the meaning of Section 103(c) of the Code and any regulations promulgated thereunder, including Section 1.103-13 and Section 1.103-14 of the Income Tax Regulations (26 CFR Part 1) as the same presently exist. For purposes of certifying as to matters of arbitrage, the Mayor is hereby designated an officer responsible for issuing the Bond. GENERAL COVENANTS Section 10. The Bond and the obligation to pay interest thereon are limited obligations of the Issuer, secured by a mortgage and pursuant to the Assignment are payable solely out of the receipts derived by the Issuer from the Agreement and the Leases and otherwise as provided herein and in the Agreement. The Bond and the obligation to pay interest thereon shall not be deemed to constitute an indebtedness or a loan of credit of the Issuer, the State of Illinois or any political subdivision thereof, or a charge against their general taxing powers, within the meaning of any constitutional or statutory provision of the State of Illinois. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in the Bond Resolution, in the Bond and in all proceedings of its governing body pertaining thereto, provided -25- that the party requesting such action will guaranty in a manner satisfactory to the Issuer all expenses of such action. Subject however to an allocation letter of the Governor of the State of Illinois, the Issuer covenants that it is duly authorized under the Constitution and laws of the State of Illinois, including particularly the Act, to issue the Bond authorized hereby, and to pledge and assign the receipts hereby pledged and assigned in the manner and to the extent herein set forth; that all action on its part for the issuance of the Bond has been duly taken. The Issuer covenants and agrees that, except as herein and in the Agreement provided, it will not sell, convey, mortgage, encumber or otherwise dispose of any part of the receipts derived from the Agreement or the Leases or of its rights under the Agreement. EVENTS OF DEFAULT AND REMEDIES Section 11. Any Event of Default under Section 7.1 of the Agreement is hereby defined as and declared to be and to constitute an "Event of Default". Upon the occurrence of an Event of Default and so long as such Event is continuing, the Bank by notice in writing delivered to the Issuer and the Borrower, may declare the principal installments of the Bond and the interest accrued thereon immediately due and payable, and such principal installments and interest shall thereupon become and be immediately due and payable. Upon any such declaration all payments under the Agreement from the Borrower immediately shall become due and payable as provided in Section 7.2 of the Agreement. -26- No remedy by the terms of the Bond Resolution conferred upon or reserved to the Bank is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Bank or to the owner hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right, power or remedy accruing upon any event of default shall impair any such right, power or remedy or shall be construed to be a waiver of any such event of default or acquiescence therein; and every such right, power or remedy may be exercised from time to time as often as may be deemed expedient. All moneys received pursuant to any right given or action taken under the provisions of this Section or under the provisions of Article VII of the Agreement (after payments of the costs and expenses of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Issuer, the Bank or the owners of the Bond) and all such moneys in the Bond Fund shall be applied to the payment of the principal of and interest on the Bond then due and unpaid to the person entitled thereto. Whenever moneys are to be applied pursuant to the provi- sions of this Section, such moneys shall be applied at such times, and from time to time, as the Bank shall determine, but in any event within fifteen business days after deposit of such moneys in the Bond Fund. The Bank shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment MMM to the owner of any Bond until such Bond shall be presented to the Bank for appropriate endorsement or for cancellation if fully paid. Whenever all principal of and interest on the Bond have been paid under the provisions of this Section and all expenses of the Bank and the Issuer have been paid, any balance remaining in the Bond Fund shall be paid to the Borrower. With regard to any Default concerning which notice is given to the Borrower under the provisions of the Bond Resolution, the Issuer hereby grants the Borrower full authority for account of the Issuer to perform or observe any covenant or obligation alleged in said notice not to have been performed or observed, in the name and stead of the Issuer with full power to do any and all things and acts to the same extent that the Issuer could do in order to remedy such default. SALE OF THE BOND; APPROVAL AND EXECUTION OF DOCUMENT Section 12. (a) The sale of the Bond to the Bank at a price of $500,000 pursuant to the Bond Purchase Agreement, in substantially the form which has been presented to it, and which is now on file in the official records of the Issuer, is hereby in all respects authorized, approved and confirmed. The Mayor is hereby authorized and directed to execute said Bond Purchase Agreement for and on behalf of the Issuer, and the City Clerk is hereby authorized to attest the same and to affix thereto the corporate seal of the Issuer. (b) The Agreement in substantially the form in which it has been presented to the governing body of the Issuer and which Mm is now on file in the official records of the Issuer is hereby in all respects authorized, approved and confirmed. The Mayor is hereby authorized and directed to execute the Agreement for and on behalf of the Issuer, and the City Clerk is hereby authorized and directed to attest the same and to affix thereto the corporate seal of the Issuer. PERFORMANCE PROVISIONS Section 13. The Mayor and City Clerk, for and on behalf of the Issuer be, and each of them hereby is, authorized and directed to do any and all things necessary to effect the performance of all obligations of the Issuer under and pursuant to the Bond Resolution, the execution and delivery of the Bond and the performance of all other acts of whatever nature necessary to effect and carry out the authority conferred by the Bond Resolution. The Mayor and City Clerk be, and they are hereby, further authorized and directed for and on behalf of the Issuer, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of the authority conferred by this Resolution or to evidence said authority, including without limitation the signing of IRS Form 8038 and the filing thereof as therein required, and to exercise and otherwise take all necessary action to the full realization of the rights, accomplishments and purposes of the Issuer under the Agreement, the Assignment and the Bond Purchase Agreement and to discharge all of the obligations of the Issuer thereunder. Section 14. Approval of the issuance of the Bond pursuant to Section 103(k) of the Internal Revenue Code of 1954, as amended, is hereby granted. -29- NOTICES Section 15. It shall be sufficient service of any notice or other paper on the Issuer if the same shall be duly mailed to the Issuer by registered or certified mail, postage pre- paid, return receipt requested, addressed to the Issuer at 1111 N. Green Street, McHenry, Illinois 60050, Attention: Mayor, or to such other address as the Issuer may from time to time file with the Bank and the Borrower. It shall be sufficient service of any notice or other paper on the Land Trust if the same shall be duly mailed to the Land Trust by registered or certified mail, postage prepaid, return receipt requested, addressed to the Land Trust at P.O. Box 398, 3510 West Elm Street, McHenry, Illinois 60050, Attention: Trust Department, with a copy to the Beneficiary at 5400 West Route 120, McHenrv, Illinois 60050, or to such other address as the Land Trust or the Beneficiary may from time to time file with the Issuer and the Bank. It shall be sufficient service of any notice or other paper on the Bank if the same shall be duly mailed to the Bank by registered or certified mail, postage prepaid, return receipt requested, addressed to the Bank at P.O. Box 398, 3510 West Elm Street, McHenry, Illinois 60050, Attention: Commercial Loan Department or to such other address as the Bank may from time to time file with the Issuer and the Borrower. RESOLUTION A CONTRACT: PROVISIONS FOR MODIFICATIONS, ALTERATIONS AND AMENDMENTS Section 16. The provisions of this Resolution shall constitute a contract between the Issuer and the owner or owners of the Bond hereby authorized; and after the issuance of the Bond no modification, alteration, or amendment or supplement to the -30- provisions of this Resolution shall be made in any manner except with the written consent of the owner or owners of the Bond until such time as all principal of and interest on the Bond shall have been paid in full. SATISFACTION AND DISCHARGE Section 17. All rights and obligations of the Issuer and the Borrower under the Agreement, the Assignment, the Bond, the Note, the Mortgage, the Leases, the Bond Purchase Agreement and the Bond Resolution shall terminate and such instruments shall cease to be of further effect, and the Bank shall cancel the Bond, deliver it to the Issuer, and deliver a copy of the cancelled Bond to the Borrower, and shall assign and deliver to the Borrower any moneys in the Bond Fund required to be paid to the Borrower under Section 7 hereof (except moneys held by the Bank for the payment of principal of or interest on the Bond) when: (a) all expenses of the Issuer and the Bank shall have been paid; (b) the Issuer and the Borrower shall have performed all of their covenants and promises in the Agreement, the Assignment, the Bond, the Note, the Mortgage, the Leases, the Bond Purchase Agreement and in the Bond Resolution; and (c) all principal of and interest on the Bond have been paid, provided however that the obligation of the Borrower under Sections 6.4 and 7.5 of the Agreement shall survive such payment. SEVERABILITY Section 18. If any section, paragraph, clause or pro- vision of this Bond Resolution shall be ruled by any court of -31- competent jurisdiction to be invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the remaining provisions hereof. CAPTIONS Section 19. The captions or headings of the Bond Resolution are for convenience only and in no way define, limit or describe the scope or intent of any provision of the Bond Resolution. PROVISIONS IN CONFLICT REPEALED Section 20. All ordinances, resolutions, and orders, or parts thereof, in conflict with the provisions of this Bond Resolution, are, to the extent of such conflict, hereby repealed, and this Bond Resolution shall be in full force and effect upon its approval. Presented at a regular meeting of the governing body of the City of McHenry, Illinois held on the 4th day of September 1985. This Resolution passed and approved on roll call vote this 4th day of September 1995. ATTEST: Mayor City Clerk (SEAL) Ayes: Bolger, Lieder, McClatchey, Nolan, Serritella, Smith, Snell, Teta Nays. None Absent: None Not Voting by Virtue of Conflict of Interest: None —32—