HomeMy WebLinkAboutS6-83 Ordinance No. S6- 83
An Ordinance authorizing the issuance of $3 , 500,000 aggre-
gate principal amount Economic Development Revenue Bonds,
Series 1983 (Slade Avenue Partnership Project) , the lending
of the proceeds of said Bonds to Slade Avenue Partnership
and the execution and delivery of a Loan Agreement, a Trust
Indenture and a Bond Purchase Agreement; ratifying the
distribution of a Preliminary Official Statement; authoriz-
ing the distribution of a Final Official Statement; approving
the sale of said Bonds; and prescribing other matters relat-
ing thereto.
WHEREAS the City of Elgin, Illinois (the "Issuer" ) is a
home rule unit of local government authorized under the provisions
of Article VII, Section 6(a) of the 1970 Illinois Constitution
and Ordinance No. S2-80, adopted on February 13, 1980 (the "Enabling
Ordinance" ) , to acquire, construct and finance economic development
projects, to lease, sell or finance the same to or for any person,
and to provide for the issuance of revenue bonds in connection
therewith; and
WHEREAS the Issuer proposes to issue $3, 500, 000 aggregate
principal amount Economic Development Revenue Bonds, Series 1983
(Slade Avenue Partnership Project) (the "Series 1983 Bonds" ) ,
pursuant to a Trust Indenture (the "Indenture" ) , by and between
the Issuer and Continental Illinois National Bank and Trust
Company of Chicago, Chicago, Illinois, as Trustee (the "Trustee" ) ;
and
WHEREAS pursuant to a Loan Agreement (the "Loan Agreement" ) ,
by and between the Issuer and Slade Avenue Partnership, an Illinois
general partnership (the "Borrower" ) , the Issuer proposes to lend
the net proceeds from the sale of the Series 1983 Bonds to the
Borrower in order to provide funds to finance a portion of the
costs of constructing a medical office building (the "Project" ) ,
to pay interest on the Series 1983 Bonds during the construction
of the Project, to fund a Debt Service Reserve Fund created
pursuant to the Indenture in an amount equal to the Maximum
Annual Debt Service on the Series 1983 Bonds (as such term is
defined in the Indenture) , and to pay costs incidental thereto
and to the issuance of the Series 1983 Bonds; and
WHEREAS pursuant to the Indenture, as security for the
Series 1983 Bonds, the Issuer will assign to the Trustee all of
the Issuer's right, title and interest in, under and to the Loan
Agreement (except the rights of the Issuer to issue Additional
Bonds under the Indenture, to execute and deliver supplements or
amendments to the Loan Agreement and to be held harmless, reimbursed
and indemnified, which rights are herein collectively referred to
as the "Unassigned Rights" ) ; and
WHEREAS the Project will be located at 934 Center
Street, Elgin, Illinois, and said land will be leased by Sherman
Hospital Association, an Illinois not-for-profit corporation, to
the Borrower; and
WHEREAS the Borrower will be the operator and manager
of the Project and will lease the offices therein to members of
the medical staff of Sherman Hospital Association; and
WHEREAS the Series 1983 Bonds will be sold to Kidder,
Peabody & Co. , Incorporated (the "Underwriter" ) , pursuant to a
Bond Purchase Agreement by and among the Issuer, the Borrower and
the Underwriter; and
WHEREAS forms of the Loan Agreement, the Indenture and
the Bond Purchase Agreement, the Preliminary Official Statement,
relating to the Series 1983 Bonds (the "Preliminary Official
Statement" ) and the form of the Final Official Statement relating
to the Series 1983 Bonds (the "Final Official Statement" ) have
been prepared and presented to this meeting;
NOW THEREFORE, Be It Ordained By the City Council of
the City of Elgin, Illinois, as follows:
Section 1 . The construction of the Project, the payment
of interest on the Series 1983 Bonds during the construction of
the Project, the funding of the Debt Service Reserve Fund and the
payment of costs incidental thereto and to the issuance of the
Series 1983 Bonds, all as aforesaid, are hereby authorized and
determined to be in the public interest and in furtherance of the
public purposes contemplated by the Enabling Ordinance.
Section 2. (a) In order to provide funds to carry out
the public purposes set forth in Section 1. hereof, there are
hereby authorized to be issued the revenue bonds of the Issuer in
the maximum, aggregate principal sum of $3, 500, 000, which bonds
shall be designated Economic Development Revenue Bonds, Series
1983 (Slade Avenue Partnership Project) (the "Series 1983 Bonds" ) .
(b) The Series 1983 Bonds shall be issuable as fully
registered bonds without coupons in the denomination of $5, 000 or
any integral multiple thereof and shall be dated, authenticated
and executed in the manner set forth in the Indenture. ..
(c) The Series 1983 Bonds shall bear interest at the
rate of ten and one-half per cent (10-1/2%) per annum and shall
be issued as term bonds stated to mature on November 1, 2014,
subject to mandatory redemption in accordance with sinking fund
requirements on November 1 of each of the years and in the princi-
pal amounts set forth below, at a redemption price of 100% of the
principal amount thereof plus accrued interest to the redemption
date:
Principal
Year Amount
1985 $ 20, 000
1986 20,000
1987 25,000
1988 25, 000
1989 30, 000
1990 30, 000
1991 35,000
1992 40, 000
1993 45,000
1994 50,000
1995 55, 000
1996 60, 000
1997 65, 000
1998 70, 000
1999 80,000
2000 85,000
2001 95,000
2002 105, 000
2003 115, 000
2004 130,000
2005 145, 000
2006 155, 000
2007 175,000
2008 190, 000
2009 210, 000
2010 235, 000
2011 260, 000
2012 285, 000
2013 315,000
2014 350, 000 (final maturity)
(d) The Series 1983 Bonds and the interest thereon
shall be limited obligations of the Issuer, payable from the
income and revenues to be derived by the Issuer from the" Project
pursuant to the Loan Agreement (except such income and revenues
as may be derived by the Issuer pursuant to the Unassigned Rights) .
The Series 1983 Bonds and the interest thereon shall never consti-
tute an obligation or commitment by the Issuer to expend any of
its funds other than (i) the proceeds of the sale of the Series
1983 Bonds, (ii) the income and revenues derived by the Issuer
from the Project pursuant to the Loan Agreement, and (iii) any
money arising out of the investment or reinvestment of said
proceeds, income, revenues or receipts.
Section 3 . The Series 1983 Bonds shall be issued
pursuant to and in compliance with the provisions of the Enabling
Ordinance, this Ordinance and the Indenture and the foregoing
shall be stated on the face of the Series 1983 Bonds.
Section 4. The forms, terms and provisions of the
proposed Loan Agreement, Indenture and Bond Purchase Agreement
(collectively, the "Instruments" ) are hereby in all respects
approved, and the Mayor and City Clerk are hereby authorized,
empowered and directed to execute and deliver the Instruments in
the name and on behalf of the Issuer. The Instruments, as executed
and delivered, shall be in substantially the forms now before
this meeting and hereby approved or with such changes therein as
shall be approved by the officers of the Issuer executing the
same, their execution thereof to constitute conclusive evidence
of their approval of any and all changes or revisions therein
from the forms of the Instruments now before this meeting; and
from and after the execution and delivery of the Instruments the
officers, agents and employees of the Issuer are hereby-authorized,
empowered and directed to do all such acts and things and to
execute all such documents as may be necessary to carry out the
intent and accomplish the purposes of this Ordinance and to
comply with and make effective the provisions of the Instruments
as executed.
Section 5. The prior distribution of the Preliminary
Official Statement by the Underwriter is hereby authorized,
ratified and approved in all respects. The form of the Final
Official Statement is hereby approved and the Mayor is hereby
authorized and directed to execute and deliver the Final Official
Statement with such changes therein as shall be approved by him,
his execution of the Final Official Statement to constitute
conclusive evidence of his approval of such changes. The printing
and distribution of the Final Official Statement are hereby
approved and authorized.
Section 6. The sale of the Series 1983 Bonds to Kidder,
Peabody & Co. , Incorporated pursuant to the Bond Purchase Agreement,
at a price of 98% of the principal amount thereof plus accrued
interest to the date of delivery, is hereby approved.
Section 7. The Issuer hereby elects to have the provi-
sions as to the $10, 000, 000 limit in Section 103(b) (6) (D) of the
Internal Revenue Code of 1954, as amended, applied to the Series
1983 Bonds; and the Mayor and City Clerk of the Issuer are hereby
authorized, empowered and directed to take any and all further
action which may be required to implement and effectuate such
election, including, without limitation, the preparation and
filing of such statement or statements or other document or
documents as may be deemed by them to be necessary or advisable
in order to comply with the procedure set forth in Section
•
1.103-10(b) (2 ) (vi) of the Income Tax Regulations (26 CFR Part 1)
under Section 103 of the Internal Revenue Code of 1954, as amended;
and all acts heretofore taken by them in this connection are
hereby ratified and confirmed.
Section 8. Pursuant to Section 103(k) of the Internal
Revenue Code of 1954, as amended, this City Council, as an "appli-
cable elected representative" of the Issuer within the meaning of
said Section, hereby approves the issuance of the Series 1983
Bonds.
Section 9. The provisions of this Ordinance are hereby
declared to be separable and if any section, phrase or provision
shall for any reason be declared by a court of competent juris-
diction to be invalid or unenforceable, such declaration shall
not affect the validity or enforceability of the remainder of the
sections, phrases and provisions hereof.
Section 10. All ordinances, orders and resolutions and
parts thereof in conflict herewith are to the extent of such
conflict hereby repealed, and this Ordinance shall take effect
and be in full force immediately upon its adoption.
Adopted October 31 , 1983 .
Approved October 31 , 1983 .
s/ Richard L. Verbic
Mayor
(SEAL)
Attest:
s/ Marie Yearman
City Clerk
*** *** ***
$3 ,500,000
CITY OF ELGIN, ILLINOIS
Economic Development Revenue Bonds, Series 1983
(Slade Avenue Partnership Project)
CONTRACT OF PURCHASE
October 31 , 1983
City of Elgin, Illinois
150 Dexter Court
Elgin, Illinois 60120
Attention: Mayor
Ladies and Gentlemen:
We, Kidder Peabody & Co. Incorporated (the "Under-
writer" ) , hereby offer to enter into this Contract of
Purchase with you (the "City") for the sale by you and the
purchase by the Underwriter of the revenue bonds described
below. Upon your acceptance of this offer, your execution
and delivery of this Contract of Purchase and the written
approvals of this Contract of Purchase by Slade Avenue
Partnership (the "Partnership") and Sherman Hospital Asso-
ciation (the "Corporation" ) , this Contract of Purchase shall
be binding upon you, the Partnership, the Corporation, and
the Underwriter. This offer is made subject to your accept-
ance, evidenced by your execution and delivery of this
Contract of Purchase to the Underwriter, and the written
approvals of the Partnership and the Corporation, at or
prior to o'clock P.M. , Elgin, Illinois time, on the date
hereof, and, if not so accepted will be subject to withdrawal
by the Underwriter upon written notice delivered to you at
any time thereafter prior to acceptance hereof by you.
1 . Purchase and Sale of Bonds. (a) Subject to
the terms and conditions and upon the basis of the repre-
sentations, warranties and covenants hereinafter set forth,
the Underwriter hereby agrees to purchase from you, and you
hereby agree to sell to the Underwriter, all (but not less
than all) of the $3,500,000 aggregate principal amount of
City of Elgin, Illinois Economic Development Revenue Bonds,
,s.
Series 1983 (Slade Avenue Partnership Project) (the "Bonds" ) ,
at the aggregate purchase price set forth in Item 1 of
Exhibit A hereto, plus accrued interest on the Bonds from
their dated date to the Closing Date (as defined in Section
2 hereof) . The date of the Bonds, the date on which the
Bonds mature, the principal amount of the Bonds, the inter-
est rate for the Bonds, and the dates on which interest
on the Bonds is to be paid are set forth in Item 2 of
Exhibit A hereto. The Bonds shall be subject to redemption
as provided in the Official Statement (hereinafter defined) .
(b) The Bonds shall be described in, and shall be
issued and secured under and pursuant to, a Trust Indenture
described in Item 3(a) of Exhibit A hereto (the 'Indenture" ) .
(c) Upon your acceptance, execution, and delivery of
this Contract of Purchase, you shall deliver or cause to
be delivered to us two copies of the Official Statement
described in Item 3(b) of Exhibit A hereto, substantially in
the form of the Preliminary Official Statement described in
Item 3(c) of Exhibit A hereto (the "Preliminary Official
Statement" ) with only such changes as have been approved in
writing by the Underwriter, which approval shall not be
unreasonably withheld, signed on your behalf by the M�ayor
of the City (such Official Statement, including the cover
page and all appendices attached thereto being herein called
the "Official Statement," except that if the Official
Statement has been amended with our approval between the
date thereof and the date upon which the Bonds are delivered
to us, the term "Official Statement" shall refer to the
Official Statement as so amended) . The Underwriter may use,
in accordance with applicable law, copies of the Official
Statement and the information contained therein and copies
of the Indenture, the Loan Agreement described in Item 3(d)
of Exhibit A hereto (the "Loan Agreement") , the Guaranty
Agreement described in Item 3(e) of Exhibit A hereto (the
"Guaranty Agreement" ) , the Ground Lease described in Item
3(f) of Exhibit A hereto (the "Ground Lease" ) , and the Bond
Ordinance described in Item 3(g) of Exhibit A hereto (the
"Bond Ordinance" ) in connection with the public offering and
sale of the Bonds. The City shall not supplement or amend
the Official Statement or cause the Official Statement to be
supplemented or amended without the prior written approval
of the Underwriter, which approval shall not be unreason-
ably withheld. The City ratifies and confirms the use by
the Underwriter, prior to the date hereof, of the Prelimi-
nary Official Statement in accordance with applicable law.
(d) The Underwriter agrees to make a public offering
of the Bonds at the initial offering price or yield set
2.
forth in the Official Statement, except that the Underwriter
may offer and sell the Series 1983 Bonds to certain dealers
(including dealers depositing Series 1983 Bonds into invest-
ment trusts) and others at prices lower than the offering
prices set forth on the cover page. We also reserve the
right to effect transactions that stabilize or maintain the
market price of the Bonds at a level above that which might
otherwise prevail in the open market and to discontinue such
stabilizing, if commenced, at any time.
(e) If between the date hereof and the Closing Date
any event known to the City, the Corporation or the Partner-
ship occurs or any fact becomes known to any of such parties
that might affect the correctness or completeness of any
statement of a material fact contained in the Official
Statement, the party to whom such fact or event is known
shall promptly notify the Underwriter in writing of the
circumstances and details of such event. If, as a result of
such event or any other event, it is necessary, in the
opinion of the Underwriter, to amend or supplement the
Official Statement to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, and the Underwriter shall have so advised the
City, the City shall, subject to Section 1 (c) hereof, forth-
with prepare and furnish to the Underwriter (at the expense
of the Corporation) a reasonable number of copies of an
amendment of or a supplement to such Official Statement that
will amend or supplement such Official Statement so that, as
amended or supplemented, it will not contain any untrue
statement of a material fact or omit to state a material
fact that should be stated therein for the purposes for
which the Official Statement is to be used or that is
necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
2. Closing. At the time and on the date set forth
in Item 4 of Exhibit A hereto or at such other time or on
such earlier or later date as shall have been mutually
agreed upon by the City and the Underwriter (the "Closing
Date") , the City shall deliver, or cause to be delivered,
the Bonds to us at the offices of Kidder, Peabody & Co.
Incorporated, 125 South Wacker Drive, Chicago, Illinois,
and the other documents hereinafter mentioned to us at the
offices of Borge and Pitt, Chicago, Illinois, or at such
other place or places upon which we may mutually agree. The
Underwriter shall accept such delivery and pay the purchase
price of the Bonds as set forth in Section 1 hereof on such
Date by certified or official bank check or draft payable in
Illinois Clearing House funds. Such payment and delivery
is herein called the "Closing. " The Bonds shall be in
3.
definitive form, duly executed on behalf of the City, in
denominations of $5,000 or any integral multiple thereof,
and fully registered in such names and in such amounts as
the Underwriter may request in writing at least five busi-
ness days prior to Closing. The City shall make the Bonds
available to the Underwriter for checking and packaging not
less than 24 hours prior to the Closing at the offices of
Ridder, -Peabody & Co. Incorporated, in Chicago, Illinois or
such other place that is agreed upon by the City and the
Underwriter.
3. Representations, Warranties and Covenants of the
City. The City, by its acceptance hereof, represents,
warrants and covenants to the Underwriter that:
(a) the City was duly organized and is validly
existing under the laws of the State of Illinois (the
"State" ) and is a home rule unit of local government
within the meaning of Article VII, Section 6(a) of the
1970 Illinois Constitution (the "Constitution" ) ,
with powers and authority as are set forth in the
Constitution and in Ordinance No. S2-80 of the City
(the "Enabling Ordinance" ) ;
(b) the City has full legal right, power and
authority ( i) to issue and secure the Bonds in the
manner contemplated by the Indenture, the Bond Ordi-
nance and the Official Statement, (ii) to sell (or
cause to be sold) and deliver (or cause to be deliv-
ered) the Bonds to the Underwriter as provided in
this Contract of Purchase, and ( iii) to carry out and
consummate all transactions contemplated by the Inden-
ture, the Bond Ordinance, the Loan Agreement,Athe
Official Statement, and this Contract of Purchase to
be performed by the City, and the City has complied
with all provisions of applicable law in all matters
relating to such transactions;
(c) the City has full legal right, power and
authority ( i) to pass the Bond Ordinance, and ( ii) to
execute and deliver the Indenture, the Loan Agreement,/
and this Contract of Purchase;
(d) the City has duly (i) authorized the execu-
tion, delivery and performance of this Contract of
Purchase, the Indenture, the Loan Agreement,^and the
Bonds, ( ii) ratified the distribution and use of the
Preliminary Official Statement and authorized the
execution, delivery, and distribution of the Official
4.
Statement, and ( iii) authorized the taking of any and
all such lawful action as may be required on the part
of the City to carry out, give effect to and consummate
the transactions contemplated by this Contract of Pur-
chase, the Indenture, the Loan Agreement and the Official
Statement;
(e) the Bond Ordinance has been duly passed by
the City and is in full force and effect;
(f) when delivered to the Underwriter against
payment therefor, in accordance with the provisions of
this Contract of Purchase, the Bonds will be duly
authorized, executed, issued, and delivered and will
- constitute legal, valid and binding obligations of the
City in accordance with their terms payable solely out
of funds pledged by the City for the payment thereof in
the Indenture;
(g ) prior to the Closing, the City will obtain
all approvals, consents and orders (other than state
Blue Sky or security law clearances) of any government
authority or agency having jurisdiction in the matter
that would constitute a condition precedent to the
performance by the City of its obligations under this
Contract of Purchase, the Indenture, the Loan Agree-
mentAand the Bond Ordinance and to the performance by
the City of the obligations imposed by the Bonds;
(h) the passing of the Bond Ordinance by the City
and the authorization, execution, delivery and perfor-
mance by the City of this Contract of Purchase, the
Indenture, the Loan Agreement,nthe Bonds, and compliance
with the provisions of the same will not conflict with,
or constitute or result in a breach of or a default
under, any agreement or other instrument to which the
City is subject or by which it is or may be bound or
violate any law, rule, regulation, decree or order to
which the City is subject or by which it is bound which
breach or default would materially affect the binding
effect of the Bonds or the ability of the City to make
payment therefor;
( i) the material in the Official Statement relat-
ing to the City does not contain any untrue statement
of a material fact or omit to state a material fact
that is necessary to make the statements made, in the
light of the circumstances under which they were made,
not misleading taking into account the purposes for
which the Official Statement is used;
5.
(j ) between the time of your acceptance hereof
and the Closing, the City will not have executed
or issued any bonds or notes or incurred any other
obligations for borrowed money payable from the funds
pledged under the Indenture for the payment of the
Bonds, and there will not have been any adverse change
of a material nature in the financial position or
method of operation of the City;
(k) the City will cooperate with the Underwriter
in the qualification of the Bonds for offering and sale
and the determination of their eligibility for invest-
ment under the laws of such jurisdictions as the
Underwriter shall designate, provided that the City is
not required to consent to any general or special
service of process in any jurisdiction;
(1 ) there is no action, suit, hearing, proceed-
ing, inquiry or investigation, at law or in equity, or
before or by any court, public board, agency or body,
pending or, to the best knowledge of the City, threat-
ened against or affecting the City (or to the best
knowledge of the City any basis therefor) or any of the
City' s officials in their respective capacities as
such, wherein an unfavorable decision, ruling or
finding would, in any way, adversely affect ( i ) the
transactions contemplated by this Contract of Purchase,
the Loan Agreement, the Indenture, or the Official
Statement or ( ii) to validity or enforceability of the
Bonds, the Bond Ordinance, the Official Statement, this
Contract of Purchase, the Loan Agreement,^,the Indenture,
or any other agreement or instrument to which the City
is a party and that is used or contemplated for use in
consummation of the transactions contemplated thereby,
or ( iii) the exemption from federal income taxation of
the interest on the Bonds;
(m) except as required by law the City will
not take or omit to take any action if such action or
omission would under currently existing statutes and
regulations adversely affect the exemption from federal
income taxation of the interest on the Bonds under the
Internal Revenue Code of 1954, as amended;
(n) when issued and sold to the Underwriter in
accordance with this Contract of Purchase, the Bonds
will not be subject to any State issuance, transfer or
other documentary stamp taxes;
6.
(o) any certificate signed by any official of the
City and delivered to the Underwriter in connection with
the delivery of the Bonds shall be deemed to be a repre-
sentation and warranty by the City to the Underwriter
as to the statements made therein; and
(p) the City is not in default in the payment of
principal of, premium, if any, or interest on the Bo p
and, other than the Indenture, the City has not entered
into any contract or arrangement that might give rise to
any lien or encumbrance on the revenues or other assets,
properties, funds or interests pledged pursuant to the
Indenture.
4. Conditions of Sale and Purchase. The obligation of
the City to sell the Bonds to the Underwriter and the
obligation of the Underwriter to purchase the Bonds from
the City shall be subject to the following conditions:
(a) on the date of this Contract of Purchase
the Partnership shall deliver to the City and the
Underwriter, the Letter of Representation, addressed to
the City and the Underwriter, dated the date of this
Contract of Purchase and substantially in the form
attached hereto as Exhibit B (the 'Partnership Letter" ) ;
(b) on the date of this Contract of Purchase the
Corporation shall deliver or cause to be delivered to
the Underwriter the Letter of Representation, addressed
to the City and the Underwriter, dated the date of this
Contract of Purchase and substantially in the form
attached hereto as Exhibit C (the "Corporation Letter" ) ;
and
(c) on the date of this Contract of Purchase the
Corporation and the Partnership shall deliver or cause
to be delivered to the Underwriter ( 1 ) a letter from
Hutton, Nelson & McDonald, dated the date hereof,
addressed to the City and the Underwriter and substan-
tially in the form attached hereto as Exhibit D and
(2) a letter from Hutton, Nelson & McDonald, dated the
date hereof and addressed to the City and the Under-
writer, consenting to the use of their report on the
Corporation's audited financial statements in the
Preliminary Official Statement and the Official State-
ment and to references to them in the Preliminary
Official Statement and the Official Statement.
5. Conditions of Closing. The obligations of the
Underwriter hereunder shall be subject to the performance
7.
s
by the City of its obligations to be performed hereunder at
or prior to the Closing, to the accuracy of and compliance
with the representations, warranties and covenants of the
City herein, in each case as of the time of delivery of
this Contract of Purchase and as of the Closing, and are
also subject to the following further conditions:
(a) at the Closing (i) the Bond Ordinance shall
be in full force and effect and shall not have been
amended, modified or supplemented, except as may have
been agreed to in writing by the Underwriter, and
the City shall have adopted and there shall be in
full force and effect such resolutions And ordinances,
and there shall have been taken in connection teh re-
with and in connection with the issuance of the Bonds all
such action, as in the opinion of Bond Counsel and the
Underwriter, are necessary in connection with the trans-
actions contemplated hereby, (ii) the Bonds shall have
been duly authorized, executed and delivered, (iii) the
Official Statement shall not have been amended, modified
or supplemented, except as may have been approved in
writing by the Underwriter, and ( iv) the City shall
perform or have performed all of its obligations under
or specified in this Contract of Purchase, a licable
law, the Enabling Ordinance, and the Bond r finance to
5' performed at or prior to the Closing; and
(b) at the Closing, the Underwriter shall receive
the following documents:
(1 ) the final approving opinion of Bond
Counsel, dated the Closing Date, .n substantially
the form attached hereto as Exh_th[--E.t
(2) a supplementary opinion of Bond Counsel,
dated the Closing Date and addressed to the Under-
writer, in substantially the form attached hereto
as Exhibit F;
(3) an opinion of Corporation Counsel to the
City, dated the Closing Date, and addressed to the
Underwriter, to the effect that (A) to the best of
his knowledge there is no action, suit, proceeding
or investigation, at law or in equity, before or
by any court, any governmental agency, or any pub-
lic board or body, pending or threatened, against or
affecting the City, challenging the validity of the
transactions contemplated by the Official Statement
or the validity of the Bonds, the Bond Ordinance,
the Indenture, the Loan Agreement, the Guaranty
8.
Agreement, or this Contract of Purchase, (B) the
statements in the Official Statement under the
heading "The Issuer" are true and correct in all
material respects, (C) the fulfillment of the terms
and conditions of, and the carrying out of the
transactions contemplated by, the Bonds, the Inden-
ture,ft he Loan Agreement, the Bond Ordinance, and
this ontract of Purchase do not and will not
conflict with or constitute on the part of the City,
a breach of, or a default under any agreement or
other instrument known to them to which the City is
subject or by which it is or may be bound or violate
any decree or order known to them and by which the
City is bound, (D) the City is a municipal corpora-
tion duly organized and validly existing under the
laws of the State of Illinois and is a home rule
unit of government under the 1970 Illinois Consti-
tution, (E) the Loan Agreement, the Indenture, the
Bonds, this Contract of Purchaser and the Official
Statement have each been duly executed and deliv-
ered by authorized officers of the City, and (F)
the Resolution of the City Council of the Issuer
adopted on August 8, 1983 (pursuant to which the
City Council of the City authorized the execution
and delivery of a Memorandum of Intent by and
between the City and the Corporation) and the Bond
Ordinance have been duly and validly adopted in
compliance wiith any and all applicable procedural
• requirements of the City;
(4) the opinion of Scheflow, Rydell, Travis
& Kirkland, Elgin, Illinois, counsel to the Corpo-
ration and the Partnership, dated the Closing
Date, and addressed to the Underwriter, to the
effect that (A) the Corporation was duly incorpo-
rated, is validly existing as a not-for-profit
corporation under the laws of the State, and has
all corporate power necessary to own and lease
the properties and conduct the operations described
in the Official Statement; (B) the Partnership is
a general partnership duly organized and validly
existing as a general partnership under the laws
of the State, and has all power necessary to
conduct the operations described in the Official
Statement; (C) the Corporation is an organization
described in Section 501 (c) (3) of the Internal
Revenue Code of 1954, as amended, and is exempt
from federal income taxation, except taxation of
unrelated business income under Section 511 of the
9.
.a
Internal Revenue Code of 1954, as amended; (D) the
Loan Agreement,nthe Ground Lease and the Partnership
Letter have been duly authorized, executed and
delivered by the Partnership and constitute valid
and binding agreements of the Partnership enforce-
able in accordance with their terms; (E) the Guar-
anty Agreement, the Ground Lease and the Corporation
Letter have been duly authorized, executed and
delivered by the Corporation and constitute valid
and binding agreements of the Corporation enforce-
able in accordance with their terms; (F) the Cor-
poration and the Partnership have duly ratified the
distribution and use of the Preliminary Official
Statement and have duly approved the Official
Statement and this Contract of Purchase; (G) the
legal information in the Official Statement with
respect to the Corporation, the Partnership, the
Loan Agreement, the Guaranty Agreement, the Ground
Lease, and the Hospital is true and correct in all
material respects and does not omit any matter of
a material nature that is necessary to make the
Statements made, in light of the circumstances
under which they were made, not misleading; (H) to
the best of their knowledge, there in no,action,
suit, proceeding or investigation, at law or in
equity, before or by any court, or any govern-
mental agency, or any public board or body,
pending or threatened against or affecting the
Corporation or the Partnership challenging the
validity of the transactions contemplated by the
Official Statement or the validity of the Guaranty
Agreement, the Ground Lease, the Loan Agreement, A
the Partnership Letter, the Corporation Letter or
this Contract of Purchase or the organization or
existence of the Corporation or the Partnership or
the title of any member of the Corporation's board
to his or her respective office or the ability of
any partner of the Partnership to act in such
capacity or the execution and delivery by the
Corporation of the Guaranty Agreement or the Ground
Lease or the Partnership of the Loan Agreement
or the Ground Lease or by the Corporation or the
Partnership of this Contract of Purchase, and
compliance with the provisions of the foregoing,
under the circumstances contemplated thereby and
hereby, do not and will not in any material respect
conflict with or constitute on the part of the
Corporation or the Partnership a breach of or
default under any agreement or other instrument of
which such counsel has knowledge and to which either
10.
the Corporation or the Partnership is a party, and
do not and will not violate any existing court
order, consent decree, law, or regulation to which
either the Corporation or the Partnership is sub-
ject; (I) the Corporation is a corporation ( i)
organized and operated exclusively for educational
or charitable purposes and not for pecuniary profit
and ( ii) no part of the net earnings of which inures
to the benefit of any person or private individual,
all within the meaning, respectively, of Subsection
3(a) (4) of the Securities Act of 1933, as amended,
and of Subsection 12(g) (2) (D) of the Securities
Exchange Act of 1934, as amendedA(J) the Hospital
is qualified to conduct its business as it is
presently being conducted, and to be reimbursed (to
the extent such reimbursement is available under the
applicable statutes, regulations and administrative
practices) for its costs and expenses under all
third party payor programs accounting for a
significant portion of the Hospital 's patient
service revenues in its 1983 fiscal year, includ-
ing, without limitation, Medicare and Medicaid;
(K) the Hospital has obtained Certificates of
Need, and has obtained or will obtain all required
approvals under applicable zoning ordinances and
all building permits and easements or licenses,
for the acquisition and construction of the
capital expenditures which constitute the Project,
to the extent and as such Project is described in
the Official Statement, and such Certificates
of Need, required approvals under applicable
zoning ordinances, building permits, easements and
licenses constitute all approvals required for
construction of the Project, except as provided in
the Official Statement, and such counsel is aware
of no reason such approvals should not be granted
or should be subject to change by an administra-
tive or judicial body so as to materially adversely
affect such construction; in addition, such coun-
sel shall state that, based upon the examination
that they have made as counsel for the Corporation
and the Partnership, and without having undertaken
to determine independently the accuracy or com-
pleteness of the statements contained in the
Official Statement other than the statements
referred to in clause (G) above, nothing has come
to their attention that would lead them to believe
that the Official Statement (excluding financial
statements, other financial, statistical, or
quantitative information, projections, and esti-
mates, as to which no view need be expressed)
11 .
contains an untrue statement of a material fact or
omits to state a material fact that is necessary
to make the statements therein, in the light of
the circumstances under which they were made, not
misleading; such opinion may state that the enforce-
ability of the Corporation Letter and the Partner-
ship Letter may be limited by applicable securities
laws, and bankruptcy, insolvency, and other laws
affecting the enforcement of creditors' rights
generally and, to the extent that the Corporation
Letter and the Partnership Letter may require
enforcement by a court of equity, by such principles
of equity as the court having jurisdiction may
impose, or may be held to be against public policy,
and that the enforceability of the the Loan Agree-
ment, the Guaranty Agreement and the Ground Lease
may be limited by bankruptcy, insolvency and other
laws affecting the enforcement of creditors'
rights generally and, to the extent that certain
remedies in such instruments require, or may
require, enforcement by a court of equity, by such
principles of equity as the court having jurisdic-
tion may impose;
(5) a certificate of the City, dated as
of the Closing Date, signed on its behalf by the
Mayor, to the effect that (A) no litigation or
offer judicial proceedings are pending or, to the
best of their knowledge, threatened ( i ) restraining
or enjoining or seeking to restrain or enjoin the
issuance, sale, execution or delivery of any of the
Bonds, or ( ii) in any way questioning or affecting
the validity of any provision of the Bonds, the
Indenture, the Loan Agreement,hor this Contract
of Purchase, or ( iii) in any way questioning or
affecting the validity of any of the proceedings or
authority for the authorization, sale, execution or
delivery of the Bonds, or the pledge or application
of any money or security provided for the payment of
the Bonds, or ( iv) questioning or affecting the
organization or existence of the City or the title
of any official of the City to his or her respective
office; (B) the representations and warranties of
the City herein contained are true and correct as
of the Closing Date; (C) the State has complied
with all agreements and satisfied all conditions
on its part to be observed or satisfied hereunder
and under the Indenture and the Loan Agreement at
or prior to the Closing; (D) since the respective
dates as of which information is given in the
12.
Official Statement and except as set forth therein,
there has not been any material adverse change in
the condition, financial or otherwise, of the City;
and (E) such person has no knowledge or reason to
believe that the Official Statement as of the
Closing contains any untrue statement of a material
fact or omits to state a material fact that is
necessary to make the statements made, in light of
the circumstances under which they were made, not
misleading, taking into account the purposes for
which the Official Statement is used;
(6) a certificate, dated Closing Date, signed
by the yzesident or my Vice_Pre_silent of the
Corporation or other officer or employee of the
Corporation satisfactory to us, and in form and
substance satisfactory to us, to the effect that (A)
to the best of his or her knowledge no action, suit,
proceeding, or investigation, at law or in equity,
before or by any court, any governmental agency, or
any public board or body is pending or threatened,
contesting or affecting the validity of the Bonds,
the Indenture, the Loan Agreement, the Guaranty
Agreement or the Ground Lease, or Vontesting the
corporate existence or powers of the Corporation or
the titles of its officers to their respective
offices; (B) to the best of his or her knowledge, no
event affecting the Corporation has occurred since
the date of the Official Statement that is necessary
to disclose therein to make the statements and
information therein, in light of the circumstances
under which they were made, not misleading; and (C)
the representations and warranties of the Corpora-
tion contained in the Corporation Letter are true
and correct in all material respects as of the
Closing Date (for purposes of this certificate,
representations and warranties in respect of the
"Official Statement" shall be deemed to be in
respect of the Official Statement as defined herein) ;
(7) a certificate, dated the Closing Date,
signed by a general partner of the Partnership or
other officer or employee of the Partnership
satisfactory to us, and in form and substance
satisfactory to us, to the effect that (A) to the
best of his or her knowledge no action, suit,
proceeding, or investigation, at law or in equity,
before or by any court, any governmental agency,
or any public board or body is pending or threat-
ened, contesting or affecting the validity of the
Loan Agreementlor the Ground Lease or contesting
13.
•
the existence or powers of the Partnership or the
ability of any of its partners to act in such
capacity; (B) to the best of his knowledge no event
affecting the Partnership has occurred since the
date of the Official Statement that is necessary to
disclose therein to make the statements therein, in
light of the circumstances under which they were
made, not misleading; and (C) the representations
and warranties of the Partnership contained in the
Partnership Letter are true and correct in all
material respects as of the Closing Date (for
purposes of this certificate representations and
warranties in respect of the "Official Statement"
shall be deemed to be in respect of the Official
Statement as defined herein) ;
(8) a letter from Hutton, Nelson & McDonald,
dated the date of Closing, to the effect that such
accountants reaffirm, based on a reading of the
latest available interim unaudited financial
statements of the Corporation as of a date not
more than five days prior to the Closing Date, the
statements made in the letter furnished by such
accountants pursuant to paragraph 4(c) (1 ) hereof;
(9) a letter, dated the Closing Date and
addressed to the Underwriter, from Hutton, Nelson &
McDonald, consenting to the use of their report
on the Corporation's audited financial statements
in the Official Statement and to references to
them therein;
( 10) two copies of the Bond Ordinance, duly
certified, and two copies of the Indenture, the
Loan Agreement, the Guaranty Agreement and the
Ground Lease duly executed by the parties thereto;
( 11 ) two certified copies of resolutions of
(a) the Corporation consenting to the distribution
and use of the Preliminary Official Statement,
approving the Official Statement and this Contract
of Purchase and approving and authorizing the execu-
tion and delivery of the Guaranty Agreement, the
Ground Lease and the Corporation Letter and (b) of
the Partnership, approving and authorizing the
execution and delivery of the Loan Agreement,ithe
Ground Lease and the Partnership Letter;
( 12) two copies of the Articles of Incorpo-
ration of the Corporation, as amended, certified
14.
by the proper State authorities, and two certified
copies of the by-laws of the Corporation;
(13) two certified copies of the Partner-
ship's Agreement of Partnership;
( 14) evidence to the effect that the Corpo-
ration is an organization described in Section
501 (c) (3) of the Internal Revenue Code;
lb
(lal such additional legal opinions, certi-
ficates and other evidence as the Underwriter or
Bond Counsel may deem necessary to evidence the
truth and accuracy as of the Closing of the
representations and warranties of the City, the
Partnership, and the Corporation herein contained
and of the Official Statement and the due perfor-
mance and satisfaction by the City, the Corporation
and the Partnership at or prior to such time of all
agreements then to be performed and all conditions
then to be satisfied by them.
The opinions and certificates and other evidence
referred to above shall be in form and substance satisfac-
tory to the Underwriter.
If the City is unable to satisfy the conditions to the
obligations of the Underwriter contained in this Contract of
Purchase, or if the obligations of the Underwriter are
terminated for any reason permitted by this Contract of
Purchase, this Contract of Purchase shall terminate and the
Underwriter shall not be under any further obligation here-
under, except as provided in Sections 1 and 7 hereof.
6. Termination of Agreement. The Underwriter may
terminate this Contract of Purchase, without liability
therefor subject to Section 7 hereof, by notification to the
City if at any time prior to the Closing:
(a) legislation is enacted by the Congress of the
United States or a bill is introduced (by amendment or
otherwise) in the House of Representatives or the
Senate of the Congress of the United States, or a
decision by a court of the United States or the Tax
Court of the United States is rendered, or a ruling or
regulation is issued or proposed by or on behalf of the
Treasury Department of the United States, the Internal
Revenue Service or other governmental agency having the
purpose or effect of imposing federal taxation upon
15.
• I,
• 1.
interest received on bonds of the general character of
the Bonds, which., in the reasonable opinion of the
Underwriter, adversely affects the market for the Bonds
or the sale, at the contemplated offering price, by the
Underwriter of the Bonds;
(b) any legislation, ordinance, rule or regula-
tion is introduced in, or enacted by, any governmental
body, department or agency of the State, or a decision
by any court of competent jurisdiction within the State
is rendered, that, in the reasonable opinion of the
Underwriter, adversely affects the market price of the
Bonds or the sale, at the contemplated offering price,
by the Underwriter of the Bonds;
(c) any fact exists or any event occurs that, in
the reasonable opinion of the Underwriter, makes the
Official Statement contain an untrue statement of
a material fact or omit to state a material fact
necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading;
(d) in the reasonable judgment of the Under-
writer, the market for the Bonds or the ability of
the Underwriter to sell the Bonds at the contemplated
offering prices shall have been materially and adversely
affected by an amendment of or supplement to the
Official Statement, notwithstanding the Underwriter' s
approval of such supplement or amendment prior to its
distribution;
(e) there shall have occurred any new outbreak
of hostilities or other national or international
calamity or crisis, the effect of which, in the reason-
able opinion of the Underwriter, materially affects
the market for the Bonds or the sale, at the contemplated
offering price, by the Underwriter of the Bonds;
(f) federal legislation is enacted or any action
is taken by, or on behalf of, the Securities and
Exchange Commission, that, in the opinion of the
Underwriter, has the effect of requiring the contem-
plated distribution of the Bonds, the Loan Agreement or
the Guaranty Agreement to be registered under the
Securities Act of 1933, as amended, or the Indenture or
the Bond Ordinance to be qualified under the Trust
Indenture Act of 1939, as amended, or any laws analo-
gous thereto relating to governmental bodies, and
compliance therewith cannot be accomplished prior to
the Closing Date;
16.
i
(g) there shall have occurred a general suspensi
of trading on the New York Stock Exchange, or a genera
banking moratorium is declared by the United States,
New York or State authorities, that, in the reasonable
opinion of the Underwriter, materially affects the
41/ market for the Bonds or the sale, at the contemplated
offering price, by the Underwriter of the Bonds; or
(h) the rating on the Bonds shall have been down-
graded or withdrawn by a national rating service, the
effect of which, in the reasonable opinion of the
Underwriter, adversely affects the market for the
Bonds or the sale, at the contemplated offering price,
by the Underwriter of the Bonds.
7. Expenses. (a) The City agrees to pay, to the
extent money is available therefor from Bond proceeds or
from the Partnership or the Corporation, all expenses
incident to the performance of its obligations hereunder,
including but not limited to ( i) the cost of the preparation,
printing or other reproduction (for distribution prior to,
on, or after the date of acceptance of this Contract of
Purchase) of the Bond Ordinance, the Preliminary Official
Statement, the Official Statement, the Indenture and the
Loan Agreement, in reasonable quantities for distribution,
( ii) charges made by rating agencies for the rating of the
Bonds , (iii) the cost of engraving, reproducing and signing
the definitive Bonds, ( iv) the fees and disbursements of
Bond Counsel and any other experts, advisors, or consul-
tants retained by the City, (v) the costs of all paying
agents, transfer agents, and bond registrars, and (vi) the
fees and expenses, including travel expenses, incurred by
representatives of the City in connection with the issuance,
sale, and delivery of the Bonds.
(b) The Underwriter shall pay ( i) the cost of printing
or other reproduction of this Contract of Purchase, ( ii) the
cost of qualifying Bonds for sale in various states chosen
by the Underwriter and ( iii) all other expenses incurred by
them or any of them in connection with their offering and
distribution of the Bonds.
8. Miscellaneous. (a) All notices, demands, and
formal actions hereunder shall be in writing and mailed,
telegraphed or delivered to the following address or such
other address as either of the parties shall specify:
17.
J
The Underwriter:
Ridder Peabody & Co. Incorporated
10 Hanover Square
New York, New York 10005
Attention:
The City:
(b) This Contract of Purchase shall inure to the
benefit of and be binding upon the parties hereto and their
successors and assigns and will not confer any rights upon
any other person. The terms "successors" and "assigns"
shall not include any purchaser of any of the Bonds from the
Underwriter merely because of such purchase.
(c) All representations and warranties of the City
in this Agreement shall remain operative and in full force
and effect regardless of ( i) any investigation made by or
on behalf of the Underwriter, (ii) delivery of and payment
for the Bonds hereunder, and ( iii) termination or cancella-
tion of this Contract of Purchase provided such representa-
tions and warranties need be true only on the date made.
(d) This Contract of Purchase shall not be assigned by
the City or the Underwriter.
(e) If any provision of this Contract of Purchase is
held or deemed to be or is, in fact, inoperative, invalid or
unenforceable as applied in any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions
because it conflicts with any provisions of any Constitu-
tion, statute, rule of public policy, or any other reason,
such circumstances shall not have the effect of rendering
the provision in question inoperable or unenforceable in any
other case or circumstance, or of rendering any other
provision or provisions of this Contract of Purchase invalid,
inoperative or unenforceable to any extent whatever.
(f) This Contract of Purchase shall be governed by and
construed in accordance with the laws of the State.
18.
(g) This Contract of Purchase may be executed in
several counterparts, each of which shall be regarded as an
original and all of which shall constitute one and the same
document.
KIDDER, PEABODY & CO. INCORPORATED
By
Accepted:
CITY OF ELGIN, ILLINOIS
By
By our approval of this Contract
of Purchase, given this date, we
agree to be bound to such provi-
sions of this Contract of Purchase
as relate to us.
SHERMAN HOSPITAL ASSOCIATION
By
1 Attest:
SLADE AVENUE PARTNERSHIP
By
19.
EXHIBIT A
Item
1 . Purchase Price of the Bonds: $ ( % )
2. (a) Date of the Bonds upon issuance: October 15, 1983
(b) Date of maturity: November 1 , 2014
(c) Principal amount: $3,500,000
(d) Interest rate: %
(e) Dates on which interest on the Bonds is to be paid:
May 1 , 1984 and each November 1 and May 1 there-
after.
3. (a) Trust Indenture, dated as of November 1 , 1983,
between the City and Continental Illinois National
Bank and Trust Company of Chicago, Chicago, Illinois
(the "Trustee") .
(b) Official Statement of the City relating to the Bonds,
which Official Statement is dated November _,
1983.
(c) Preliminary Official Statement of the City relating
to the Bonds, which Preliminary Official Statement is
dated October 27, 1983.
(d) Loan Agreement, dated as of November 1 , 1983, between
the City and the Partnership.
(e) Guaranty Agreement, dated as of November 1 , 1983,
between the Corporation and the Trustee.
( f) Ground Lease, dated as of November 1 , 1983, between
the Corporation and the Partnership.
(g) Bond Ordinance, entitled Ordinance No. , adopted
by the City on October 31 , 1983 .
4. Time of Closing: a.m. , Chicago, Illinois time.
Date of Closing: November _, 1983.
A-1
EXHIBIT B
LETTER OF REPRESENTATION
(from the Partnership)
•
October 31 , 1983
City of Elgin
Elgin, Illinois
Kidder, Peabody & Co. Incorporated
Ladies and Gentlemen:
Pursuant to a contract of purchase, dated October_31 .
1983 (the "Contract of Purchase" ) , between Kidder, Peabody &
Co. Incorporated (the "Underwriter" ) and the City of Elgin,
Illinois (the "City" ) , which Sherman Hospital Association (the
"Corporation" ) and Slade Avenue Partnership (the "Partnership" )
have approved, the City proposes to sell $3 ,500,000 principal
amount of its Economic Development Revenue scnas, series 1983
(Slade Avenue Partnership Project) (the "Bonds" ) . The City
proposes to lend a substantial portion of the proceeds of the
Bonds to the Partnership pursuant to the loan agreement, dated
as of November 1 , 1983 , between the City and the Partnership
(the "Loan Agreement") . Payment of the principal of, premium,
if any, and interest on the Bonds will be guaranteed by the
'C po ration pursuant to a guaranty agreement (the "Guaranty
t" ) , dated as of November 1 , 1983, between the Corpora-
ion and Continental Illinois National Bank and Trust Company
of Chicago, Chicago, Illinois, as trustee (the "Trustee") .
As consideration for the issuance and sale of the
Bonds by the City and the City' s payment of the proceeds
thereof to the Partnership pursuant to the Loan Agreement,
the Partnership hereby represents, warrants and agrees with
you as follows:
(a) The statements and information in the Official
Statement, dated , 1983 (the "Official State-
ment") , under the headings "The Partnership, " "The Project, "
and "Estimated Sources and Uses of Funds," "Litigation-
B-1
Affecting the Partnership, " and the statements or informa-
tion contained elsewhere in the Official Statement concern-
ing the Partnership, the Loan Agreement or the ground lease,
dated as of November 1 , 1983, between the Partnership and
the Corporation (the "Ground Lease" ) are, as of the date
thereof, true, correct and complete in all material respects.
With respect to such matters, the Official Statement does
not omit to state any information that is necessary to make
the statements and information relating thereto not mislead-
ing in any material respect. We consent to the use of such
statements and information in the Official Statement.
(b) The Partnership is duly organized and validly
existing in good standing as a general partnership under the
laws of the State of Illinois with power and authority to
own the properties and to conduct its business as described
in the Official Statement and to consummate the transactions
contemplated by the Loan Agreement, the Ground Lease
and the Official Statement.
(c) The Partnership has received and there are
currently in full force and effect all permits, licenses,
accreditations and certificates necessary to conduct its
business as it is presently being conducted and as it is
contemplated to be conducted by the Official Statement.
(d) The Partnership has received and there remain
currently in full force and effect, or will receive prior
to the delivery of the Bonds, all governmental consents
and approvals that could have been received as of the date
hereof or can be received prior to the, date of delivery of
the Bonds and that would constitute a condition precedent
to, or the absence of which would materially adversely
affect, the performance by the Partnership of its obliga-
tions hereunder and under the Loan Agreement and the Ground
Lease.
(e) Pursuant to a resolution adopted at a meeting of
the general partners of the Partnership that was duly called
and at which a quorum was present and acting throughout, the
Partnership ( i ) approved the Contract of Purchase and the
Official Statement and authorized a general partner to evi-
dence such approval by executing the same, (ii) approved the
Loan Agreement,nthe Ground Lease and this Letter of Represent-
ation, and authorized the execution and delivery of the same,
( iii) approved the trust indenture, dated as of November 1 ,
B-2
1983, between the City and_Ihe Trustee, ( iv) ratified the
distribution of the Preliminary Official Statement, dated
Qctober 27, 1983 (the 'Preliminary Official Statement') and
(v) approved the use of the Official Statement, the Loan
Agreement and the Ground Lease, in connection with the
offering and sale of the Bonds. Such resolution remains in
full force and effect and has not been revoked or modified in
any respect.
(f) The approval of the Purchase Agreement and the
execution and delivery of the Loan Agreement,^the Ground
Lease and this Letter of Representation, and compliance with
the provisions thereof and hereof, under the circumstances
contemplated thereby and hereby, do not and will not con-
flict with the Partnership' s Agreement of Partnership and do
not and will not in any material respect conflict with, or
constitute on the part of the Partnership a breach of or
default under, any indenture, deed of trust, mortgage,
agreement, or other instrument to which the Partnership
is a party, or conflict with or violate any existing law,
public rule or regulation, judgment, order, or decree to
which the Partnership is subject.
(g) The Partnership will furnish such information,
execute such instruments and take such other action in
cooperation with the Underwriter as the Underwriter may
reasonably request to qualify the Bonds for offer and sale
under the Blue Sky or other securities laws and regula-
tions of such states and other jurisdictions of the United
States as the Underwriter may designate and to determine
the eligibility of the Bonds for investment under the laws
of such states and other jurisdictions and will use its
best efforts to continue such qualifications in effect so
long as required for the distribution of the Bonds.
(h) There is no claim, action, suit, proceeding, or
investigation, at law or in equity, before or by any court,
governmental agency, or public board of body, pending or, to
the best of its knowledge, threatened ( i) contesting the
existence or powers of the Partnership or the ability of
any of its general partners to act in such capacity, or
( ii) seeking to prohibit, restrain or enjoin (A) the col-
lection of revenues by the Partnership from which the
Partnership is obligated to make payments under the Loan
Agreement or (B) the application of the proceeds of the
Bonds, wherein an unfavorable decision, ruling or finding
would materially adversely affect the financial position of
the Partnership or the operation of the Partnership's
facilities or the validity or enforceability of the Bonds,
the Purchase Agreement, or this Letter of Representation,
or ( iii) contesting or affecting the validity of the Loan
B-3
Agreement, the Ground Lease or this Letter of Representation,
or contes ng the power of the Partnership to execute and
deliver the same or to consummate the transactions con-
templated in such documents or the Official Statement, or
( iv) contesting in any material way the completeness or
accuracy of the Preliminary Official Statement or the
Official Statement.
(i) The Partnership has authorized the use of the
Official Statement, including all amendments and supplements
thereto, by the Underwriter in connection with the public
offering and sale of the Bonds and consented to the use by
the Underwriter prior to the date hereof of the Preliminary
Official Statement in connection with the public offering
and sale of the Bonds.
(j ) If, within 90 days after the delivery of the
Bonds or such shorter period of time as constitutes the
initial offering period for the Bonds, any event occurs
as a result of which it is necessary, in the opinion of
the Underwriter, to amend or supplement the Official
Statement to make the Official Statement not misleading
in any material respect in the light of the circumstances
existing at the time it is delivered to a purchaser, the
Partnership shall forthwith prepare and furnish or request
the City to prepare and furnish to the Underwriter (at the
expense of the Corporation for 90 days from the date of
delivery of the Bonds, and thereafter at the expense of the
Underwriter) a reasonable number of copies of an amendment
of or supplement to the Official Statement ( in form and
substance satisfactory to the Underwriter) that will amend
or supplement the Official Statement so that it will not
contain an untrue statement of a material fact or omit to
state a material fact that is necessary to make the state-
ments therein, in the light of the circumstances existing at
the time the Official Statement is delivered to a purchaser,
not misleading. The Partnership shall notify the City upon
the occurrence of any material event affecting the Partner-
ship, its operations and facilities, the documents and
agreements to which it is a party, its contribution to the
financing, or the Project (as defined in the Official
Statement) , and for purposes of the section shall furnish
to the City such information as may be necessary to amend
the Official Statement.
(k) The Partnership hereby agrees to pay the expenses
described in Paragraph 7(a) of the Contract of Purchase
to the extent that the proceeds of the Bonds is insufficient
or unavailable to pay the same.
B-4
(1 ) The Partnership agrees to indemnify and hold
harmless the City and any member, officer, employee,
or agent thereof and the Underwriter and each person, if
any, who controls (as such term is defined in Section 15 of
the Securities Act of 1933, as amended) the Underwriter
against any and all judgments, losses, claims, damages and
liabilities (i) arising out of any statement or information
in the Official Statement relating to the Partnership, its
present or proposed facilities, the Project, the Loan
Agreement,Aor the Ground Lease that is untrue or incorrect
in any material respect or the omission therefrom of any
statement or information that is necessary to make the
statements therein not misleading; and ( ii) to the extent of
the aggregate amount paid in settlement of any litigation
commenced or threatened arising from a claim based upon any
such untrue statement or omission, if such settlement is
effected with the written consent of the Partnership. If any
claim is made or action is brought against the City or any
official, officer, employee or agent thereof based upon the
Official Statement for which indemnity may be sought against
the Partnership, the City shall promptly notify the Partner-
ship in writing setting forth the particulars of such claim
or action. Failure to so notify the Partnership shall not
relieve it from any liability that it may have otherwise than
on account of this indemnity agreement. The Partnership
shall have the right to assume the investigation and defense
of such action including the employment of counsel chosen by
it, which counsel shall be satisfactory to the indemnified
parties, and the payment of all fees and expenses associated
therewith. Regardless of the assumption of the investigation
and defense by the Partnership and the Partnership's employ-
ment of counsel in connection therewith, the City and any
member, officer, employee, or agent thereof shall have the
right to retain separate counsel in any such action and to
participate in the investigation and defense thereof, and the
Partnership shall pay the fees and expenses of such counsel
in a reasonable and appropriate amount, considering the time
devoted to the matter by such counsel and the responsibili-
ties assumed by such counsel, to the extent that provision
for such payment is not otherwise provided for by applicable
state law. If any claim is made or action is brought against
the Underwriter or any controlling person based upon the
Official Statement for which indemnity may be sought against
the Partnership, as provided above, the Underwriter shall
promptly notify the Partnership in writing setting forth the
B-5
particulars of such claim or action. Failure to so notify
the Partnership shall not relieve it from any liability that
it may have otherwise than on account of this indemnity
agreement. The Partnership may participate at its own
expense in defense of such action, if it so elects within a
reasonable time after receipt of such notice, and the
Partnership may assume the defense of such action with
counsel chosen by it and approved by the indemnified parties
defended in such action, unless such indemnified parties
reasonably object on the ground that there may be legal
defenses available to them that are different from or in
addition to those available to the Partnership, in which
case the indemnified parties shall have the right to
designate and retain separate counsel in such action and
the fees and expenses of such counsel (but not more than
one) so designated and retained shall be paid by the Part-
nership. If, however, no reasonable objection is made by
the indemnified parties and the Partnership assumes the
defense of such action, the Partnership shall not be liable
for the fees and expenses of any counsel for the indemnified
parties incurred thereafter in connection with such action.
In no event shall the Partnership be liable for the fees and
expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, unless
the retaining of additional counsel has been specifically
authorized by the Partnership.
The representations, warranties, agreements and
indemnities contained herein shall survive the Closing
under the Contract of Purchase and any investigation
made by or on behalf of the City or any member, officer,
employee, or agent thereof.
This Letter of Representation shall be binding upon
and inure solely to the benefit of the City, the Partnership,
the Underwriter and to the extent set forth herein, persons
controlling the Underwriter and, to the extent set
forth herein, any member, officer, employee, or agent of
the City, and their respective personal representatives,
successors and assigns, and no other person or firm or
entity shall acquire or have any right under or by virtue of
this Letter of Representation.
If the foregoing is in accordance with your under-
standing of the agreement between us , kindly sign and return
B-6
to the Partnership the enclosed duplicate of this Letter
of Representation, whereupon this will constitute a binding
agreement between us in accordance with the terms hereof.
Very truly yours,
SLADE AVENUE PARTNERESHIP
By
General Partner
Accepted and confirmed
as of the date first above written:
CITY OF ELGIN, ILLINOIS
By
Mayor
KIDDER, PEABODY & CO. INCORPORATED
By
Vice President
B-7
EXHIBIT C
LETTER OF REPRESENTATION
(from the Corporation)
October 31 , 1983
City of Elgin
Elgin, Illinois
Kidder, Peabody & Co. Incorporated
Ladies and Gentlemen:
Pursuant to aPpontract of purchase, dated October 3 4
1983 (the "Contract of Purchase" ) between Ridder, Peabody &
Co. Incorporated (the "Underwriter" ) and the City of Elgin,
Illinois which Sherman Hospital Association (the "Corpora-
tion" ) and Slade Avenue Partnership (the "Partnership") have
approved, the City proposes to sell $ principal
amount of its Economic Development Revenue Bonds, Series 1983
(Slade Avenue Partnership) (the "Bonds") . The City proposes
to lend a substantial portion of the proceeds of the Bonds to
the Partnership pursuant to the loan agreement, dated as of
November 1 , 1983 , between the City and the Partnership (the
"Loan Agreement") . Paymentf the •rinc'
ay, and iattEtal_2n_lls_kaali:Pin be guaranteed by the Cor-
poration pursuant to a guaranty agreement (the "Guaranty
Agreement" ) , dated as of November 1 , 1983, between the Cor-
poration and Continental Illinois National Bank and Trust
Company of Chicago, Chicago, Illinois, as trustee (the
"Trustee") .
As consideration for the issuance and sale of the
Bonds by the City and the payment of the proceeds thereof by
the City to the Partnership pursuant to the Loan Agreement,
the Corporation hereby represents, warrants and agrees
with you as follows:
(a) The statements and information in the Official
Statement, dated _, 1983 (the "Official State-
C-1
ment") , under the headings 'The Project," "Medical Malprac-
tice Considerations, " "Other Pending Litigation," "Illinois
Health Facilities Planning Act, " "Bondholder's Risks" and in
Appendix A and the statements or information contained
elsewhere in the Official Statement concerning the Corpo-
ration, the Guaranty Agreement, the ground lease, dated as
of November 1 , 1983 , between the Corporation and the Part-
nership (the "Ground Lease") , or the Hospital (as defined in
the Official Statement) are, as of the date thereof,
true, correct and complete in all material respects. With
respect to such matters, the Official Statement does not
omit to state any information that is necessary to make the
statements and information relating thereto not misleading
in any material respect. We consent to the use of such
statements and information in the Official Statement.
(b) The Corporation is duly organized and validly
existing in good standing as a not-for-profit corporation
under the laws of the State of Illinois with power and
authority to conduct its business as described in the
Official Statement and to consummate the transactions
contemplated by the Guaranty Agreement, the Ground Lease and
the Official Statement.
(c) The Corporation has received and there are
currently in full force and effect all permits, licenses,
accreditations and certifications necessary to conduct its
business as it is presently being conducted and all neces-
sary approvals for the Project, including Certificates of
Need, have been obtained.
(d ) The Corporation has received and there remain
currently in full force and effect, or will receive prior
to the delivery of the Bonds, all governmental consents
and approvals that could have been received as of the
date hereof or can be received prior to the date of delivery
of the Bonds and that would constitute a condition precedent
to, or the absence of which would materially adversely
affect, the performance by the Corporation of its obliga-
tions hereunder and under the Guaranty Agreement and the
Ground Lease.
(e) Pursuant to a resolution adopted at a meeting of
the Board of Managers of the Corporation that was duly
called and at which a quorum was present and acting through-
out, the Corporation ( i) approved the Contract of Purchase
and the Official Statement and authorized an appropriate
member of said Board to evidence such approval by executing
the same, ( ii) approved the Guaranty Agreement, the Ground
Lease and this Letter of Representation, and authorized the
execution and delivery of the same, ( iii) approved the trust
indenture, dated as of November 1 , 1983, between the City
C-2
•
and the Trustee, (iv) ratified the distribution of the
Preliminary Official Statement, dated October 27, 1983 (the
"Preliminary Official Statement" ) and (v) approve a use
of the Official Statement, the Guaranty Agreement and the
Ground Lease in connection with the offering and sale of the
Bonds. Such resolution remains in full force and effect and
has not been revoked or modified in any respect.
(f) The approval of the Contract of Purchase, and the
execution and delivery of the Guaranty Agreement, the Ground
Lease and this Letter of Representation, and compliance with
the provisions thereof and hereof, under the circumstances
contemplated thereby and hereby, do not and will not conflict
with the Corporation's Articles of Incorporation or bylaws,
and do not and will not in any material respect conflict
with, or constitute on the part of the Corporation a breach
of or default under, any indenture, deed of trust, mortgage,
agreement, or other instrument to which the Corporation
is a party, or conflict with or violate any existing law,
public rule or regulation, judgment, order, or decree to
which the Corporation is subject.
(g) Subsequent to the date of the financial state-
ments of the Corporation included in the Official Statement,
the Corporation has not incurred any material liabilities,
direct or contingent, nor has there been any material
adverse change in the financial position, results of opera-
tions or condition, financial or otherwise, of the Corpora-
tion that is not described in the Official Statement,
whether or not arising from transactions in the ordinary
course of business.
(h) The Corporation will furnish such information,
execute such instruments and take such other action in
cooperation with the Underwriter as the Underwriter may
reasonably request to qualify the Bonds for offer and
sale under the Blue Sky or other securities laws and regula-
tions of such states and other jurisdictions of the United
States as the Underwriter may designate and to determine
the eligibility of the Bonds for investment under the laws
of such states and other jurisdictions and will use its
best efforts to continue such qualifications in effect so
long as required for the distribution of the Bonds.
(i ) Except as disclosed in the Official Statement,
there is no claim, action, suit, proceeding, or investiga-
tion, at law or in equity, before or by any court, govern-
mental agency, or public board or body, pending or, to
the best of its knowledge, threatened ( i ) contesting the
corporate existence or powers of the Corporation or the
C-3
titles of its officers to their respective offices, or ( ii)
seeking to prohibit, restrain or enjoin (A) the collection
of revenues by the Corporation or the Partnership or (B) the
application of the proceeds of the Bonds, wherein an unfavor-
able decision, ruling or finding would materially adversely
affect the financial position of the Corporation or the
Partnership or the operation of the Corporation's or the
Partnership' s facilities or the validity or enforceability
of the Bonds, the Contract of Purchase, the Loan Agreement,/
the Guaranty Agreement, the Ground Lease or this Letter of
Representation, or ( iii) contesting or affecting the validity
of the Loan Agreement4the the Guaranty Agreement, the Ground
Lease, or this Letter of Representation, or contesting the
power of the Corporation or the Partnership, as the case may
be, to execute and deliver the same or to consummate the
transactions contemplated in such documents or the Official
Statement, or ( iv) contesting in any material way the com-
pleteness or accuracy of the Preliminary Official Statement
or the Official Statement, or (v) challenging the right of
the Corporation to operate the Hospital (as defined in the
Official Statement) or the Partnership to operate the
Project (as defined in the Official Statement) .
(j ) The Corporation has authorized the use of the
Official Statement, including all amendments and supple-
ments thereto, by the Underwriter in connection with
the public offering and sale of the Bonds and consented
to the use by the Underwriter prior to the date hereof
of the Preliminary Official Statement in connection with
the public offering and sale of the Bonds.
(k) If, within 90 days after the delivery of the
Bonds or such shorter period of time as constitutes the
initial offering period for the Bonds, any event shall
occur as a result of which it is necessary, in the opinion
of the Underwriter, to amend or supplement the Official
Statement to make the Official Statement not misleading in
any material respect in the light of the circumstances
existing at the time it is delivered to a purchaser, the
Corporation shall forthwith prepare and furnish or request
the City to prepare and furnish to the Underwriter (at the
expense of the Corporation for 90 days from the date of
delivery of the Bonds, and thereafter at the expense of the
Underwriter) a reasonable number of copies of an amendment
of or supplement to the Official Statement (in form and
substance satisfactory to counsel for the Underwriters) that
will amend or supplement the Official Statement so that it
will not contain an untrue statement of a material fact or
omit to state a material fact that is necessary to make the
C-4
statements therein, in the light of the circumstances
existing at the time the Official Statement is delivered to
a purchaser, not misleading. The Corporation shall notify
the City upon the occurrence of any material event affecting
the Corporation, its operations and facilities, the docu-
ments and agreements to which it is a party, its contribu-
tion to the financing, and the Project (as defined in the
Official Statement ) , and for purposes of the section shall
furnish to the City such information as may be necessary to
amend the Official Statement.
(1 ) The Corporation hereby agrees to pay the expenses
described in Paragraph 7(a) of the Contract of Purchase to
the extent that the proceeds of the Bonds is insufficient or
unavailable to pay the same, and, for the period of time set
forth herein and in the Contract of Purchase, to pay any
expenses incurred in amending or supplementing the Official
Statement.
(m) The Corporation agrees to indemnify and hold harm-
less the City and any member, officer, employee or agent
thereof and the Underwriter and each person, if any, who
controls (as such term is defined in Section 15 of the
Securities Act of 1933, as amended) , against any and all
judgments, losses, claims, damages and liabilities ( i)
arising out of any statement or information in the Official
Statement relating to the Corporation, its operations and
facilities, the Bonds, the Project„(as ciel n d _ in the Offi-
cial Statement) i. the Loan Agreement, the Guaranty Agreemen£',
EETiTE6E0 Lease or the Hospital (as defined in the Offi-
cial Statement) that is untrue or incorrect in any material
respect or the omission therefrom of any statement or infor-
mation that is necessary to make the statements therein not
misleading in any material respect, and ( ii) to the extent of
the aggregate amount paid in settlement of any litigation
commenced or threatened arising from a claim based upon any
such untrue statement or omission, if such settlement is
effected with the written consent of the Corporation. If
any claim made or action is brought against the City or any
official, officer, employee or agent thereof based upon the
Official Statement for which indemnity may be sought against
the Corporation, the City shall promptly notify the Corpora-
tion in writing setting forth the particulars of such claim
or action. Failure to so notify the Corporation shall not
relieve it from any liability that it may have otherwise than
on account of this indemnity agreement. The Corporation
shall have the right to assume the investigation and defense
of such action including the employment of counsel chosen by
it, which counsel shall be satisfactory to the indemnified
parties, and the payment of all fees and expenses associated
C-5
therewith. Regardless of the assumption of the investiga-
tion and defense by the Corporation and the Corporation's
employment of counsel in connection therewith, the City and
any official, officer, employee, or agent thereof shall have
the right to retain separate counsel in any such action and
to participate in the investigation and defense thereof, and
the Corporation shall pay the fees and expenses of such
counsel in a reasonable and appropriate amount, considering
the time devoted to the matter by such counsel and the
responsibilities assumed by such counsel, to the extent that
provision for such payment is not otherwise provided for by
applicable state law. If any claim is made or action is
brought against the Underwriter or any controlling person
based upon the Official Statement for which indemnity may be
sought against the Corporation, as provided above, you shall
promptly notify the Corporation in writing setting forth the
particulars of such claim or action. Failure to so notify
the Corporation shall not relieve it from any liability that
it may have otherwise than on account of this indemnity
agreement. The Corporation may participate at its own
expense in defense of such action or, if it so elects within
a reasonable time after receipt of such notice, the Corpo-
ration may assume the defense of such action with counsel
chosen by it and approved by the indemnified parties de-
fended in such action, unless such indemnified parties
reasonably object on the ground that there may be legal
defenses available to them that are different from or in
addition to those available to the Corporation, in which
case the indemnified parties shall have the right to desig-
nate and retain separate counsel in such action and the fees
and expenses of such counsel (but not more than one) so
designated and retained shall be paid by the Corporation.
If, however, no reasonable objection is made by the indem-
nified parties and the Corporation assumes the defense of
such action, the Corporation shall not be liable for the fees
and expenses of any counsel for the indemnified parties
incurred thereafter in connection with such action. In no
event shall the Corporation be liable for the fees and
expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, unless
the retaining of additional counsel have been specifically
authorized by the Corporation.
The representations, warranties, agreements and indem-
nities contained herein shall survive the Closing under
the Contract of Purchase and any investigation made by or
on behalf of the City or any member, officer, employee,
or agent thereof.
C-6
This Letter of Representation shall be binding upon
and inure solely to the benefit of the City, the Corpora-
tion, the Underwriter and to the extent set forth herein
persons controlling the Underwriter and, to the extent set
forth herein, any member, officer, employee, or agent of the
City and their respective personal representatives, succes-
sors and assigns, and no other person or firm or entity
shall acquire or have any right under or by virtue of this
Letter of Representation.
If the foregoing is in accordance with your understanding
of the agreement between us, kindly sign and return to the
Corporation the enclosed duplicate of this Letter of Repre-
sentation, whereupon this will constitute a binding agreement
between us in accordance with the terms hereof.
Very truly yours,
SHERMAN HOSPITAL ASSOCIATION
By
Authorized Officer
Attest: 1)
Accepted and confirmed
as of the date first above written.
CITY OF ELGIN, ILLINOIS
By
Mayor
KIDDER, PEABODY & CO. INCORPORATED
By
Vice President
C-7
.
EXHIBIT D
[Letterhead of Accountant)
_, 1983
KIDDER, PEABODY & CO. INCORPORATED
Ladies and Gentlemen:
We have examined the consolidated financial statements
of Sherman Hospital Association (the "Corporation" ) as of
April 30, 1983 , 1982 , 1981 , 1980 and 1979 and the related
statements of revenues and expenses, changes in fund bal-
ances, and changes in financial position of unrestricted
funds for each of the years then ended, included in the Pre-
liminary Official Statement dated October 27, 1983, relating
to the $3500,000 principal amount of City of Elgin, Illinois
Economic Development Revenue Bonds, Series 1983 (Slade Avenue
Partnership Project) (the "Bonds" ) . Our report with respect
thereto is also included in such Preliminary Official State-
ment. Such Preliminary Official Statement is herein referred
to as the "Official Statement. " In connection with the
Official Statement:
1 . We are independent certified public accountants
with respect to the Corporation within the meaning of Rule
101 of the Rules of Conduct of the American Institute of
Certified Public Accountants.
2. We have not examined any financial statements
of the Corporation as of any date or for any period sub-
sequent to April 30, 1983 . Although we have made an exami-
nation for the year ended April 30, 1983, the purpose (and
therefore the scope) of such examination was to enable us to
express our opinion on the consolidated financial statements
of the Corporation as of April 30, 1983, and for the year
then ended, but not on the consolidated financial statements
of the Corporation for any interim period within such year.
Therefore, we are unable to and do not express any opinion
D-1
on consolidated financial statements of the Corporation
as of any date or for any period subsequent to April 30,
1983.
3. For purposes of this letter, we have read the
minutes of the Board of Managers of the Corporation as set
forth in the minute books at , 1983 (a date
within five days of the date of the Contract of Purchase for
purposes of the letter delivered on the date of the Contract
of Purchase and a date within five days of the date of
delivery of the Bonds for purposes of the letter delivered
on such date) , officials of the Corporation having advised
us that the minutes of all such meetings through that date
were set forth therein, and have carried out other procedures
to , 1983 (a date within five days of the date
of the Contract of Purchase for purposes of the letter
delivered on the date of the Contract of Purchase and a date
within five days of the date of the delivery of the Bonds
for purposes of the letter delivered on such date) as
follows:
With respect to the four-month periods ending August 31 ,
1982 and August 31 , 1983, we have:
(a) read ( i) the unaudited balance sheet of the
Corporation as of August 31 , 1983, and (ii) the unaudited
statement of revenues and expenses for the four months ended
August 31 , 1982 and August 31 , 1983; and
(b) made inquiries of certain officials and employees
of the Corporation who have responsibility for financial
and accounting matters as to whether the unaudited finan-
cial statements to which reference is made under ( a) above
are fairly presented, and the summary of revenues and
expenses to which reference is made under (a) above is
fairly summarized, in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
contained in the Official Statement.
The foregoing procedures do not constitute an examina-
tion made in accordance with generally accepted auditing
standards. Also, they would not necessarily reveal matters
of significance with respect to the comments in the following
paragraph. Accordingly, we make no representation as to the
sufficiency of the foregoing procedures for your purposes.
4. Nothing came to our attention as a result of
the foregoing procedures, however, that caused us to believe
that: (a) the unaudited statements of revenues and expenses
and summary of revenues and expenses to which reference
D-2
is made in 3(a) above are not fairly presented in accordance
with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited
financial statements contained in the Official Statement or
(b) there was any change at August 31 , 1983 in the unrestric-
ted fund balance, the excess of total current assets over
total current liabilities, or the long-term debt of the
Corporation, as compared with the April 30, 1983 balance
sheet included in the Official Statement or (c) for the
four-month period ended August 31 , 1983, there were any
decreases in amount of total revenues or excess of revenues
over expenses as compared with the corresponding period for
the preceding year, except in all instances for changes or
decreases which the Official Statement discloses have
occurred or may occur.
5. Corporation officials have advised us that no
financial statements as of any date or for any period
subsequent to August 31 , 1983, are available; accordingly,
the procedures carried out by us with respect to changes
in financial statement items after August 31 , 1983, have
of necessity been even more limited than those with respect
to the period referred to in paragraph 3. We have made
inquiries of certain officials of the Corporation who have
responsibility for financial and accounting matters as to
whether (a) there was any change at ,
(insert date within five days of the date of the Contract of
Purchase for purposes of the letter delivered on the date
of the Contract of Purchase and a date within five days of
the date of delivery of the Bonds for purposes of the letter
delivered on such date) , in the unrestricted fund balance,
the excess of total current assets over total current
liabilities, or the long-term debt of the Corporation as
compared with amounts shown in the August 31 , 1983, balance
sheet included in the Official Statement; or (b) for the
period from September 1 , 1983, to
(insert date within five days of the date of the Contract
of Purchase for purposes of the letter delivered on the date
of the Contract of Purchase and a date within five days of
the date of delivery of the Bonds for purposes of the letter
delivered on such date) , there were any decreases, as
compared with the corresponding period in the preceding
year in patient service revenue, total operating revenue, or
in the excess of operating revenues over expenses. On the
basis of these inquiries and our reading of the minutes as
described in paragraph 3, nothing came to our attention that
caused us to believe that there was any such change or
decrease, except in all instances for changes or decreases
which the Official Statement discloses have occurred or may
occur.
D-3
6. For the purposes of this letter, we have also
read the following information and have performed the
additional procedures stated below with respect to such
information.
Item Page Description
"Appendix A-Summary Statement of
Revenues and Expenses"
The table.
"Appendix A-Historical Coverage of
Fixed Payment Requirements"
The information contained in the table.
"Appendix A-Capitalization"
The information contained in the table
under the heading "April 30, 1983-Actual".
"Appendix A-Historical Analysis of
Allowances and Uncollectible Accounts"
The information contained in the table.
"Appendix A-Sources of Revenue"
The information contained in the table.
Our examination of the financial statements for the
period referred to in the introductory paragraph of this
letter comprised audit tests and procedures deemed necessary
for the purpose of expressing an opinion on such financial
statements taken as a whole. For neither the period referred
to therein nor any other period did we perform audit tests
for the purpose of expressing an opinion on individual
balances of accounts or summaries of selected transactions
such as those enumerated above and, accordingly, we express
no opinion thereon.
This letter is solely for the information of, and
assistance to, the Underwriter in conducting and document-
ing their investigation of the affairs of the Corporation
in connection with the bond offering covered by the Official
D-4
-
r I
Statement, and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, including
but not limited to the registration, purchase or sale
of securities, nor is it to be filed with or referred to
as a whole or in part in the Official Statement or any other
document , except that reference may be made to it in the
Contract of Purchase or in any list of closing documents
pertaining to the offering of bonds covered by the Official
Statement.
Very truly yours,
D-5
rr
.
B13369-A
10/26/83
TNH: sp
LOAN AGREEMENT
Dated as of November 1, 1983
By and Between
CITY OF ELGIN, ILLINOIS
and
SLADE AVENUE PARTNERSHIP
The amounts payable to the City of Elgin, Illinois
(other than pursuant to Unassigned Rights, as defined herein) ,
and certain other rights of the Issuer under this Loan Agreement
have been pledged and assigned to Continental Illinois National
Bank and Trust Company of Chicago, Chicago, Illinois, as Trustee
under the Trust Indenture, dated as of November 1, 1983 , by and
between the City of Elgin, and said Trustee.
4,
LOAN AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of this Loan
Agreement and is only for convenience of reference. )
Page
Parties 1
Preambles 1
ARTICLE I
Definitions 2
ARTICLE II
Representations
Section 2 .1. Representations by the Issuer 5
Section 2 .2 . Representations by the Borrower 6
ARTICLE III
Construction of the Project;
Issuance of the Bonds
Section 3 .1. Agreement to Construct the Project. . . . 8
Section 3 .2 . Agreement to Issue Series 1983 Bonds;
Application of Series 1983 Bond •
Proceeds; Additional Bonds 8
Section 3 .3 . Disbursements from the Construction Fund9
Section 3 .4. Establishment of Completion Date 12
Section 3 .5 . Borrower Required to Pay Costs in Event
Construction Fund Insufficient 12
Section 3 .6 . Authorized Borrower and Issuer Represen-
• tatives and Successors 13
Section 3 .7 . Investment of Moneys in the Construction
Fund, the Bond Fund, the Debt Service
Reserve Fund and Other Trust Funds
Permitted 14
Section 3 .8. Arbitrage Covenants 15
ARTICLE IV
Loan and Provisions for Payment
Section 4. 1. Loan 15
Section 4.2 . Loan Payments and Other Amounts Payable 15
Section 4.3 . Credits 16
Section 4.4. Obligations of Borrower hereunder Uncon-
ditional 17
Section 4.5. Payments Pledged and Assigned 18
Section 4. 6. Payment of Trustee' s and Co-Trustee' s
Fees 18
(i)
Page
ARTICLE V
Special Covenants
Section 5 .1 . No Liability of Issuer 19
Section 5 .2 . Issuer' s and Trustee' s Right of Access to
the Project 19
Section 5 .3 . Borrower to Maintain its Partnership
Existence; Conditions Under Which Excep-
tions Permitted 20
Section 5 .4. Release and Indemnification Covenants . 20
Section 5 .5. Records and Financial Statements 21
Section 5 .6. Tax-Exempt Status of the Series 1983
Bonds 22
Section 5 .7. Operation of Project 24
Section 5 .8. Redemption of Bonds 24
Section 5 . 9. Taxes and Governmental Charges 24
ARTICLE VI
Events of Default and Remedies
Section 6.1. Events of Default Defined 24
Section 6.2 . Remedies on Default 26
Section 6 .3 . No Remedy Exclusive 27
Section 6 .4. Agreement to Pay Attorneys' Fees and
Expenses 27
Section 6 .5. No Additional Waiver Implied by One
Waiver; Consents to Waivers 28
ARTICLE VII
Prepayment
Section 7 .1 . Option to Prepay Number 1 28
Section 7 .2 . Option to Prepay Number 2 29
Section 7 .3 . Determination and Event of Taxability . 30
Section 7.4. Manner of Prepayment 31
Section 7.5. Redemption of Bonds with Prepayment
Moneys 32
ARTICLE VIII
Miscellaneous
Section 8 .1 . Binding Effect 32
Section 8.2 . Execution Counterparts 32
Section 8.3 . Amendments, Changes and Modifications . 32
Section 8 .4. Severability 33
Section 8.5. Partners and Employees Exempt from
Personal Liability 33
Section 8.6. Amounts Remaining in Indenture Funds . . 33
Section 8.7. Notices 33
Section 8.8 . Further Assurances 34
(ii)
Page
Section 8 .9. Applicable Law 34
Section 8 .10 . Term of the Agreement 34
Signatures and Seals 35
Acknowledgements 36-37
EXHIBIT A -- Project Description 38
•
(iii)
THIS LOAN AGREEMENT, dated as of -November 1, 1983 , by
and between the CITY OF ELGIN, ILLINOIS, a home rule municipality
in Kane and Cook Counties, duly organized and validly existing
under the Constitution and laws of the State of Illinois, as
lender (the "Issuer" ) , and SLADE AVENUE PARTNERSHIP, an Illinois
general partnership, as borrower (the "Borrower" ) ;
WITNESSET H:
WHEREAS, the Issuer is authorized and empowered by
Article VII , Section 6 of the 1970 Constitution of the State of
Illinois and Ordinance No. S2-80 adopted by the Issuer on February
13, 1980 (the "Enabling Ordinance" ) , as from time to - time supple-
mented and amended; and
WHEREAS, the Issuer is further authorized by the Enabling
Ordinance to issue its revenue bonds, payable solely and only
from the revenues and receipts to be derived by the Issuer from
the renting, leasing, financing or sale of "economic development
projects, " to provide funds to pay in whole or in part the costs
of the acquisition, construction, reconstruction, repair, altera-
tion, improvement, and extension of such economic development
projects; and
WHEREAS, the Enabling Ordinance provides that such
bonds shall be secured by a pledge of, and have a lien upon, the
revenues and receipts derived pursuant to this Agreement, except
the Unassigned Rights, as hereinafter defined; and
WHEREAS, pursuant to and in accordance with the provi-
sions of the Enabling Ordinance and by subsequent ordinance, the
Issuer has authorized and undertaken to issue its Bonds to provide
funds to pay the cost of financing a certain economic development
project which will be constructed by the Borrower; and
WHEREAS, the Borrower has agreed to make payments
pursuant to this Agreement sufficient in the aggregate to fully
pay when due the principal of, premium, if any, and interest on
the Bonds, and related expenses; and
WHEREAS, the Issuer has made the necessary arrangements
with the Borrower for the construction of a medical office building,
constituting an "economic development project" within the meaning
of the Enabling Ordinance (the "Project" ) , to be located in
within the boundaries of the Issuer, the financing of which by
the Issuer will result in the creation of of approximately 30 new
jobs; and by this Agreement the Issuer and the Borrower have
further specified the terms and conditions of the construction of
the Project, and the financing of the same by the Issuer; and
WHEREAS, the Issuer hereby finds and determines that
the financing of the construction of the Project will further the
purposes and policies of the Enabling Ordinance; and
•
WHEREAS, the execution and delivery of a certain Trust
Indenture dated as of November 1, 1983, from the Issuer to Conti-
nental Illinois National Bank and Trust Company of Chicago,
Chicago, Illinois (the "Indenture" ) was authorized by an ordinance
of the City Council of the Issuer, duly adopted and approved; and
WHEREAS, the execution and delivery of this Loan Agree-
ment, and the issuance of $3 , 500, 000 aggregate principal amount
of the Issuer' s Economic Development Revenue Bonds, Series 1983
(Slade Avenue Partnership Project) , (the "Series 1983 Bonds" )
under the Enabling Ordinance have been in all respects duly and
validly authorized by an ordinance of the City Council of the
Issuer, duly adopted and approved;
NOW, THEREFORE, in consideration of the respective re-
presentations and agreements herein contained, the parties hereto
agree as follows, provided that any obligation of the Issuer
created by or arising out of this Agreement shall not impose a
debt or pecuniary liability upon the Issuer, the State of Illinois
or any political subdivision thereof, or a charge upon the general
credit or taxing powers of such bodies, but shall be payable
solely out of the revenues and receipts derived hereunder (except
as provided in the Indenture and in this Agreement, to the extent
paid out of moneys attributable to the proceeds derived from the
sale of the Bonds referred to herein, or the income derived from
the temporary investment thereof) by the Issuer;
ARTICLE I
Definitions
The following terms shall have the meanings specified
in this Article unless the context clearly requires otherwise.
The singular shall include the plural, and the masculine shall
include the feminine. All other terms used herein which are
defined in the Indenture shall have the same meanings assigned to
them in the Indenture, unless the context clearly otherwise
requires.
"Additional Bonds" means the additional parity Bonds
authorized to be issued by the Issuer pursuant to the terms and
conditions of Section 302 of the Indenture.
"Agreement" or "Loan Agreement" means the within-con-
tained Loan Agreement by and between the Issuer and the Borrower,
dated as of November 1, 1983 , as the same may be amended from
time to time in accordance with the provisions hereof.
"Authorized Borrower Representative" means the person
at the time designated to act on behalf of the Borrower by written
certificate furnished to the Issuer and the Trustee containing
the specimen signature of such person, and signed on behalf of
-2-
the Borrower by one of its general partners . Such certificate or
any subsequent or supplemental certificate so executed may desig-
nate an alternate or alternates .
"Authorized Issuer Representative" means the person at
the time designated to act on behalf of the Issuer by written
certificate furnished to the Borrower and the Trustee containing
the specimen signature of such person, and signed on behalf of
the Issuer by its Mayor or City Clerk. Such certificate or any
subsequent or supplemental certificate so executed may designate
an alternate or alternates .
"Bond" or "Bonds" means, collectively, the Series 1983
Bonds and any Additional Bonds .
"Bond Counsel" means an attorney at law or a firm of
attorneys at law (who or which is of nationally recognized stand-
ing in matters pertaining to the tax-exempt nature of interest on
bonds issued by states and their political subdivisions ) duly ad-
mitted to the practice of law before the highest court of any state
of the United States of America or of the District of Columbia.
"Bond Fund" means the trust fund created in Section 402
of the Indenture and referred to herein.
"Bond Ordinance" means Ordinance Number of the
City Council of the Issuer adopted on , 1983 , which Or-
dinance Authorizes the issuance and sale of the Series 1983 Bonds .
"Bond Year" means the 12-month period beginning with
November 2 of each calendar year and ending on November 1 of the
next succeeding calendar year.
"Borrower" means (i ) Slade Avenue Partnership, and (ii )
any successor entity thereto, as provided in Section 5 .3 hereof.
•
"Business Day" means a business day at the principal
corporate trust office of the Trustee.
"Code" means the Internal Revenue Code of 1954, as
amended, and all regulations proposed or promulgated thereunder.
"Completion Date" means the date of completion of the
construction of the Project, as that date shall be certified as
provided in Section 3 .4 hereof.
"Construction Fund" means the trust fund created in
Section 406 of the Indenture and referred to herein.
"Constru-ction Period" means the period between the
beginning of construction of the Project or the date on which
Bonds are first delivered to the purchasers thereof, whichever is
earlier, and the Completion Date.
-3-
"Cost" or "Costs" means any cost incurred with respect
to the Project as permitted in Section 3 .3 hereof.
"Counsel" means an attorney at law or a firm of attor-
neys at law (who or which may be an employee of, or counsel to,
the Issuer or the Borrower) duly admitted to the practice of law
before the highest court of any state of the United States of
America or of the District of Columbia.
"Debt Service Reserve Fund" means the trust fund created
by Section 407 of the Indenture and referred to herein.
"Enabling Ordinance" means Ordinance No. S2-80 duly
adopted by the Issuer on February 13 , 1980, as from time to time
supplemented and amended.
"General Contract" means the Agreement dated August 24,
1983 , by and between the Guarantor and the General Contractor.
"General Contractor" means American Medical Buildings ,
Inc.
"Guarantor" means Sherman Hospital Association, an
Illinois not for profit corporation, as guarantor under the
Guaranty.
"Guaranty" means the Guaranty Agreement dated as of
November 1, 1983 by and between the Guarantor and the Trustee.
"Indenture" means the Trust Indenture by and between
the Issuer and Continental Illinois National Bank and Trust
Company of Chicago, Chicago, Illinois, as Trustee, of even date
herewith, providing the terms and conditions under which the
Bonds will be issued, and pursuant to which the Issuer' s interest
in this Agreement, and the revenues and receipts received by the
Issuer from the Project (except pursuant to the Issuer' s Unassigned
Rights)-, are pledged as security for the payment of the principal
of, premium, if any, and interest on the Bonds, including any
indenture supplemental thereto.
"Independent Architect" means an architect or firm of
architects registered and qualified to practice the profession of
architecture under the laws of the State and who or which is not
a full time employee of either the Issuer or the Borrower and who
or which is satisfactory to the Trustee.
"Issuer" means the City of Elgin, an Illinois home rule
municipality and its successors and assigns .
"Lease" means the Ground Lease dated as of November 1,
1983 , by and between Sherman Hospital Association, an Illinois
not for profit corporation, as lessor, and the Borrower.
"Maximum Annual Debt Service" means, with respect to
the Bonds as to which the computation is made, at any time, the
-4-
•
maximum amount of principal and interest which will be payable on
such Bonds in the then current Bond Year or any succeeding Bond
Year whether, in the case of principal, at maturity' or by manda-
tory redemption or prepayment, assuming all such Bonds which are
subject to mandatory redemption or prepayment are duly redeemed
or prepaid in accordance with the requirements of the Indenture,
and assuming that no such Bond is otherwise redeemed or prepaid
prior to its maturity.
"Plans and Specifications" means the plans and specifi-
cations describing the Project, as amended by the Borrower from
time to time, as duly certified by the Authorized Borrower Repre-
sentative and furnished to the Trustee.
"Principal Installment Date" means any date on which
the principal of any Bonds shall become due, whether by maturity,
redemption or acceleration, or any date on which amounts are
required to be deposited in any sinking fund established under
the Indenture.
"Project" means the buildings, structures., facilities,
systems, fixtures and improvements described in Exhibit A attached
hereto, as said Exhibit A may from time to time be amended or
supplemented.
"Series 1983 Bonds" means the Issuer' s $3 , 500, 000
aggregate principal amount of Economic Development Revenue Bonds,
Series 1983 (Slade Avenue Partnership Project) issued pursuant to
the Indenture.
"Unassigned Rights" means the rights of the Issuer to
issue Additional Bonds, to execute and deliver supplements or
amendments to this Agreement, and all of the rights of the Issuer
to be held harmless, to be reimbursed for its expenses and to be
indemnified hereunder.
The words "hereof, " "herein, " "hereunder" and other
words of similar import refer to this Agreement as a whole.
ARTICLE II
Representations
Section 2 .1. Representations ba the Issuer. The
Issuer makes the following representations as the basis for the
undertakings on its part herein contained:
(a) The Issuer is a a home rule municipality in Kane
and Cook Counties, duly organized and validly existing under
the Constitution and laws of the State of Illinois , is
authorized and empowered by the provisions of the Enabling
Ordinance and Ordinance No. duly adopted by the
Issuer on , 1983, to enter into the transactions
-5-
contemplated by this Agreement and the Indenture and to
carry out its obligations hereunder and thereunder, and by
proper action of its City Council has been duly authorized
to execute and deliver this Agreement and the Indenture.
This Agreement and the Indenture constitute legal, valid,
binding and enforceable obligations of the Issuer.
(b) The Bonds are to be issued under and secured by
the Indenture, pursuant to which certain of the Issuer' s
interests in this Agreement and the revenues and receipts to
be derived by the Issuer pursuant to this Agreement will be
pledged and assigned to the Trustee as security for payment
of the principal of, premium, if any, and interest on the
Bonds. The Issuer covenants that it has not and will not
pledge or assign its interest in this Agreement or the
revenues and receipts derived pursuant to this Agreement,
excepting Unassigned Rights, other than to the Trustee under
the Indenture to secure the Bonds .
(c) Neither the execution and delivery of this Agree-
ment, the consummation of the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms
and conditions of this Agreement conflicts with or results
in a breach of the terms , conditions or provisions of any
restriction or any agreement or instrument to which the
Issuer is a party, or by which it or any of its property is
bound, or constitutes a default under any of the foregoing.
Section 2 .2 . Representations la the Borrower. The
Borrower makes the following representations as the basis for the
undertakings on its part herein contained:
(a) The Borrower is a general partnership, duly orga-
nized and validly existing under the laws of the State of
Illinois and has all necessary power to enter into and
perform its obligations under this Agreement.
(b) Neither the execution and delivery of this Agree-
ment, the consummation of the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms
and conditions of this Agreement will result in a breach of,
or constitute a default under, any of the terms, conditions
or provisions of the partnership agreement under which the
Borrower was formed, any restriction or any agreement or
instrument to which the Borrower is now a party or by which
it is bound, or constitute a default under any of the fore-
going, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of
the property or assets of the Borrower prohibited under the
terms of any instrument or agreement.
(c) The financing of the construction of the Project
by the Issuer through the issuance of the Series 1983 Bonds
will result in the creation of approximately 30 new jobs in
the City of Elgin, Illinois.
-6-
(d) The Borrower intends to operate or cause the Proj-
ect to be operated as a medical office building and an "eco-
nomic development project, " within the meaning of the Enabl-
ing Ordinance, from the Completion Date to the expiration or
earlier termination of the term of this Agreement as provided
herein.
(e) The Project constitutes and will constitute property
of a character subject to the allowance for depreciation under
Section 167 of the Code, and all expenditures for and costs of
the Project may be charged to a capital account for Federal
income tax purposes.
(f) In estimating the costs of the Project, no amount
has been included which, under the Federal income tax laws,
must be deducted by the Borrower in the year in which paid
or incurred, except through an allowance for depreciation.
(g) No substantial part ( as defined in the Code) of the
proceeds of the Bonds will be used to provide working capital
for the Borrower within the meaning of Section 103 (b) of the
Code.
(h) The Project, as designed, will comply with all
presently applicable rules, regulations, resolutions and
laws of the local, State of Illinois and Federal governments.
(i) During the term of this Agreement, the Borrower
will pay directly to the Issuer an amount sufficient in the
aggregate to reimburse the Issuer for all expenses reasonably
incurred by the Issuer hereunder at the request of the
Borrower in connection with the Project, to the extent such
expenses are not paid out of Bond proceeds.
(j ) Construction or acquisition (within the meaning of
the Code) of any portion of the Project was not commenced
prior to August 8, 1983, the date of the taking of official
action by the Issuer with respect thereto.
(k) The Borrower has not taken, will not take and will
not permit to be taken any action which would cause the aver-
age maturity of the Series 1983 Bonds to exceed one hundred
twenty percent (120%) of the average reasonably expected eco-
nomic life of the Project, in violation of Section 103 (b) (14)
of the Code.
(1) The Project is to be located within the corporate
boundaries of the Issuer.
-7-
ARTICLE III
Construction of the Project;
Issuance of the Bonds
Section 3 .1. Agreement to Construct the Project. The
Borrower covenants and agrees to construct the Project entirely
within the corporate limits of the Issuer in accordance with the
Plans and Specifications . Upon written request of the Trustee,
the Borrower agrees to make available to the Trustee for review
and copying, all then current Plans and Specifications for the
Project. The Plans and Specifications shall be submitted by the
Borrower to the Issuer for review and approval in accordance with
applicable statutes and ordinances . The Borrower may supplement
or amend the description of the Project or the Plans and Specifi-
cations (including additions thereto or omissions therefrom) by
written notice furnished to the Issuer and the Trustee, provided
that no such supplement or amendment shall cause the Project, as
described in Exhibit A hereto, to no longer be classifiable as an
"economic development project" within the meaning of the Enabling
Ordinance, or materially change the function of any principal
component described in the Plans and Specifications, unless the
Issuer shall have consented to any amendment of Exhibit A hereto
in writing, and there shall be filed with the Issuer and the
Trustee the written approving opinion of Bond Counsel to the
effect that such supplement or amendment will not result in the
inclusion of interest on any Bond in the gross income of the
owner thereof for Federal income tax purposes. In the event of a
supplement or amendment to the description of the Project, the
Issuer and the Borrower shall amend Exhibit A to this Agreement
to reflect such supplement or amendment. The Borrower may iden-
tify any proprietary information in the Plans and Specifications,
and the Issuer agrees, to the extent permitted by law, to keep
such information confidential .
Subject to the force majeure provisions of Section 6.1
hereof, the Borrower agrees to cause the construction of the
Project to be completed as soon as may be practicable. For such
construction which commences prior to the receipt of the proceeds
to be derived from the sale of the Series 1983 Bonds, the Borrower
agrees to advance all funds necessary for such purpose, which
advances may be reimbursed from the Construction Fund to the
extent permitted by Section 3 .3 hereof. Nothing contained in
this Section shall relieve the Borrower of the obligation on its
part to make the payments required to be paid pursuant to Section
4.2 hereof.
Section 3 .2 . Agreement to Issue Series 1983 Bonds;
Application of Series 1983 Bond Proceeds; Additional
nance a portion of the costs of
the construction of the Project as provided for in Section 3 .3
hereof, (ii) pay the interest on the Series 1983 Bonds through
December 1, 1984, (iii) fund the Debt Service Reserve Fund in an
amount equal to the Maximum Annual Debt Service on the Series
-8-
1983 Bonds, and (iv) pay costs incidental thereto and to the
issuance of the Series 1983 Bonds, the Issuer agrees that it will
sell and cause to be delivered to the purchasers thereof
$3, 500, 000 aggregate principal amount of its Series 1983 Bonds
having the terms specified in the Indenture. Upon receipt of the
proceeds to be derived from the sale of the Series 1983 Bonds ,
the Issuer will (a) deposit in the Bond Fund a sum equal to the
amount required to be so deposited pursuant to Section 403 of the
Indenture, (b) deposit in the Debt Service Reserve Fund a sum
equal to the amount required to be so deposited pursuant to
Section 407 of the Indenture and (c) deposit in the Construction
Fund the balance of the proceeds derived from said sale.
Upon the written request of the Borrower, the Issuer
may, in its sole discretion, authorize the issuance of Additional
Bonds upon the terms and conditions provided in Section 302 of
the Indenture. If authorized by the Issuer, Additional Bonds
shall be issued to provide funds to pay any one or more of the
following: (i) the costs of completing the Project, or (ii) the
costs of refunding, to the extent permitted by law and the Inden-
ture, all or any Bonds, including in each case the costs of the
issuance and sale of Additional Bonds and interest for such
period, any deposit into the Debt Service Reserve Fund required
in connection with the issuance of such Additional Bonds and
other costs reasonably related to the financing as shall be
agreed upon by the Borrower and the Issuer.
If the Borrower is not in default hereunder, the Issuer
may, in its sole discretion and on request of the Borrower, from
time to time, issue the amount of Additional Bonds requested by
the Borrower; provided that the terms of such Additional Bonds,
the purchase price to be paid therefor and the manner in which
the proceeds therefrom are to be disbursed shall have been ap-
proved in writing by the Borrower and the Issuer; and provided
further that the Borrower and the Issuer shall have entered into
an amendment to this Agreement to provide for additional payments
in an amount at least sufficient in the aggregate to pay the
principal of, premium, if any, and interest on the Additional
Bonds when due, and the Issuer and the Borrower shall have other-
wise complied with the provisions hereof and of the Indenture
with respect to the issuance of such Additional Bonds .
Section 3 .3 . Disbursements from the Construction Fund.
Pursuant to the Indenture, the Issuer shall authorize and direct
the Trustee to use moneys deposited in the Construction Fund for
the purposes set forth in the Enabling Ordinance to pay the Cost
of the Project (but, subject to the provisions of Section 3 .8
hereof) , namely: the sum total of all reasonable or necessary
costs incidental to the construction of the Project in accordance
with the Plans and Specifications including without limitation,
the cost of studies and surveys ; plans, specifications, architec-
tural and engineering services; legal, marketing or other special
services; and financing, acquisition, construction and site
development of the Project and interest on the Series 1983 Bonds
-9-
to a date six 16 ) months subsequent to the date of completion
(collectively the "Cost of the Project" ) .
Notwithstanding the provisions of the foregoing sentence
no payments of any portion of the Issuer' s Public Benefit Fee
described in Section 13 of the Enabling Ordinance may be made
(regardless of the source of payment, including but not limited
to proceeds of the Series 1983 Bonds or the Borrower' s or Guaran-
tor's funds ) and no reimbursement to the Borrower, the Guarantor
or any other Person may be made from the proceeds of the Series
1983 Bonds unless, prior to each such payment or reimbursement,
as the case may be, the Borrower shall provide the Trustee an
opinion of Bond Counsel to the effect that the amount of such
payment or reimbursement is permitted under Section 1.103-13(c) (5)
of the Regulations .
All proceeds of the Series 1983 Bonds, including moneys
earned pursuant to the provisions of Section 3 .7 hereof, remain-
ing in the Construction Fund on the Completion Date, established
pursuant to Section 3 .4 hereof, and after payment of all other
items provided for in the preceding paragraph, then due and pay-
able shall at the direction of the Authorized Borrower Represen-
tative be, to the extent permitted by law, used by the Trustee:
(i ) first, for the payment or reserve for payment of
any Cost of the Project not then due and payable; and
(ii ) second, for such other purposes (including, but
not limited to, the payment of other Costs of the Project
and the principal of and interest on the Series 1983 Bonds)
as in the opinion of Bond Counsel are permitted hereunder
and under the Enabling Ordinance and will not under app-
licable statutes and regulations impair the exemption from
Federal income tax of the interest on the Series 1983 Bonds .
Each of the payments referred to in this Section 3 .3
(except payments of interest on the Series 1983 Bonds ) shall be-
made only upon receipt by the Trustee of a completed Application
and Certificate for Payment, American Institute of Architects
Document G702, April, 1978 edition, signed by the General Contrac-
tor. Payments of interest on the Series 1983 Bonds shall be made
only upon receipt by the Trustee of a written requisition signed
by the Authorized Borrower Representative certifying the amount
of such interest and naming the Trustee, as payee.
Each such requisition may state that it is given without
prejudice to any rights against third parties which exist at the
date of such certificate or which may subsequently come into
being. Each requisition will be consecutively numbered and ac-
companied by copies of invoices or other appropriate documentation
supporting the payments or reimbursements therein requested.
In the case of any contract providing for the retention
of a portion of the contract price, there shall be paid from the
-10-
Construction Fund prior to the Completion Date only the net
amount remaining after deduction of any such portion until such
retention is payable, in which event payment may be made therefor
from the Construction Fund.
In addition to any other requirements set forth in this
Loan Agreement, the receipt by the Trustee of the following shall
be deemed conditions precedent to the first and/or each and every
disbursement from the Construction Fund, as set forth below:
A. Prior to the first disbursement:
1. Copies of the Plans and Specifications .
2 . A survey of the Project Real Estate, prepared by a
registered Illinois land surveyor, showing all recorded
utility, access and other easements and rights-of-way.
3 . A copy of the General Contract.
4. Executed counterparts of the Indenture, the Lease
and the Bond Ordinance.
5 . A bond in the amount of 100% of the contract sum
covering the faithful performance of work and the payment of
all obligations under the General Contract.
6. A building permit for the Project issued by the
Issuer and any other assurances, licenses, approvals, and
permits relating to the construction of the Project from any
and all applicable Governmental Authorities and utilities as
the Guarantor may reasonably require.
B. Prior to each and every disbursement:
1. Written advice from the General Contractor and any
Independent Architect acceptable to the Guarantor that the
Project complies with all laws, statutes, ordinances, rules
and regulations of any Governmental Authority; that the
Plans and Specifications have been approved by them and by
all applicable Governmental Authorities; that the General
Contract is acceptable to them and satisfactory to provide
for the construction of the Project; that the installed or
proposed roads are or shall be sufficient for the full
utilization of the Project for the intended purpose, and the
extent of completion thereof; and that the amounts set forth
for the Project as set forth on the cost analysis provided
the Trustee by the Borrower will be sufficient to complete
the construction of the Project.
2 . Partial waiver from the General Contractor in the
amount of the draw.
-11-
3 . At the time of the final payment, which shall be
at least in the amount of ten percent (10%) of the Contract
Price under the General Contract, there shall be presented a
contractor' s affidavit and a complete release of all liens
arising out of the General Contract or receipts in full
covering all labor and materials for which a lien could be
filed or a bond providing indemnification against any such
lien.
4. Prior to final pay-out, the Trustee shall receive
a certification of occupancy issued by the Issuer.
5. A certificate signed by the Authorized Borrower
Representative that all of the funds being requisitioned are
being used in compliance with Section 103(b) of the Code and
the Regulations thereunder and that "substantially all"
(i.e. , 90%) of the funds requisitioned thereby, plus any
other funds previously disbursed from the Construction Fund
plus any future disbursements from the Construction Fund are
being or will be used for the acquisition, construction,
reconstruction or improvement of property of a character
subject to allowance for depreciation as prescribed by
Section 103 (b) (6) (A) of the Code and Regulations thereunder.
In making any such payments from the Construction Fund,
the Trustee may rely on any such requisitions delivered to it
pursuant to this Section 3 .3 .
Section 3 .4. Establishment of Completion Date. The
Completion Date shall be established by the date of issuance of a
certificate of occupancy by the Issuer and shall be further
evidenced to the Trustee and the Issuer by a certificate signed
by the Authorized Borrower Representative stating that, except
for amounts retained by the Trustee for Costs not then due and
payable, or the liability for which the Borrower is in good faith
contesting or disputing, (i ) construction of the Project has been
completed to the satisfaction of the Borrower in accordance with
the Plans and Specifications, and all labor, services, materials
and supplies used in such construction have been paid for, (ii )
the Project as so constructed is suitable and sufficient for the
efficient operation of the Project as an "economic development
project, " as defined in the Enabling Ordinance, and (iii) substan-
tially all (i .e. , at least 90%) of the proceeds derived from the
sale of the Ser es 1983 Bonds have been used to provide land or
property of a character subject to the allowance for depreciation
under Section 167 of the Code.
Section 3 . 5 . Borrower Required to Pay Costs in Event
Construction Fund Insufficient. In the event the moneys in the
Construction Fund available for payment of the Costs of the
Project should not be sufficient to make such payments in full,
the Borrower agrees to pay directly, or to deposit moneys in the
Construction Fund for the payment of, such Costs of completing
the Project as may be in excess of the moneys available therefor
-12-
in the Construction Fund. THE ISSUER DOES NOT MAKE ANY WARRANTY
OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, THAT THE MONEYS
WHICH WILL BE DEPOSITED INTO THE CONSTRUCTION FUND AND WHICH,
UNDER THE PROVISIONS OF THIS AGREEMENT, WILL BE AVAILABLE FOR
PAYMENT OF THE COSTS OF THE PROJECT, WILL BE SUFFICIENT TO PAY
ALL OF THE COSTS WHICH WILL BE INCURRED IN THAT CONNECTION. The
Borrower agrees that if after exhaustion of the moneys in the
Construction Fund the Borrower should pay, or deposit moneys in
the Construction Fund for the payment of, any portion of the said
Costs of the Project pursuant to the provisions of this Section,
it shall not be entitled to any reimbursement therefor from the
Issuer, except from the proceeds of Additional Bonds issued pur-
suant to Section 302 of the Indenture, if any, from the Trustee,
or from the owners of any of the Bonds, nor shall it be entitled
to any diminution of the amounts payable under Section 4.2 hereof.
Section 3 .6. Authorized Borrower and Issuer Representa-
tives and Successors . Prior to the in—it a sale of the Series
1983 Bonds, the Borrower and the Issuer shall appoint an Authorized
Borrower Representative and an Authorized Issuer Representative,
respectively, for the purpose of taking all actions and making
all certificates required to be taken and made by the Authorized
Borrower Representative and the Authorized Issuer Representative
under the provisions of this Agreement, and shall appoint alternate
Authorized Borrower Representatives and alternate Authorized
Issuer Representatives to take any such action or make any such
certificate if the same is not taken or made by the Authorized
Borrower Representative or the Authorized Issuer Representative.
In the event any of said persons, or any successor appointed pur-
suant to the provisions of this Section, should resign or become
unavailable or unable to take any action or make any certificate
provided for in this Agreement, another Authorized Borrower
Representative or alternate Authorized Borrower Representative,
or another Authorized Issuer Representative or alternate Autho-
rized Issuer Representative, shall thereupon be appointed by the
Borrower or the Issuer, respectively. If the Borrower or the
Issuer fails to make such designation within ten (10 ) business
days following the date when the then incumbent Authorized Borrower
Representative or Authorized Issuer Representative resigns or
becomes unavailable or unable to take any of the said actions, or
any general partner of the Borrower, or the Mayor or the Clerk of
the Issuer, shall serve as the Authorized Borrower Representative
or the Authorized Issuer Representative, respectively.
Whenever under the provisions of this Agreement the
approval of the Borrower is required, or the Issuer is required
to take some action at the request of the Borrower, such approval
or such request shall be made by the Authorized Borrower Represen-
tative unless otherwise specified in this Agreement, and the
Issuer or, subject to Section 1001(j ) of the Indenture, the
Trustee shall be authorized to act on any such approval or request,
and the Borrower shall have no complaint against the Issuer or
the Trustee as a result of any action so taken.
-13-
Section 3 .7 . Investment of Moneys in the Construction
Fund, the Bond Fund, the Debt Service Reserve Fund and Other
Trust Funds Permitted. Any moneys held as a part of the Construc-
tion Fund, the Bond Fund and any other Trust Fund (except the
Debt Service Reserve Fund) established by the Trustee under the
Indenture shall , at the written request and direction of the
Authorized Borrower Representative (as described in Section 601
of the Indenture) , be invested or reinvested by the Trustee, to
the extent permitted by the Enabling Ordinance and law, in any of
the following, or any combination thereof: (a) any bonds or
other obligations which as to principal and interest constitute
direct obligations of, or the full and timely payment of which
are unconditionally guaranteed by, the United States of America,
(b) obligations of the Federal National Mortgage Association, (c)
obligations of the Federal Intermediate Credit Corporation, (d)
obligations of Federal Banks for Cooperatives, (e) obligations of
Federal Land Banks, (f) obligations of Federal Home Loan Banks
and (g) certificates of deposit, time deposits or other similar
banking arrangements issued by any bank organized under the laws
of the United States of America or any state thereof and having a
combined capital surplus and undivided profits of not less than
$50, 000, 000 (i ) which bank (which may include the Trustee) is
rated by Standard & Poor' s Corporation not lower than the rating
on the Series 1983 Bonds or (ii ) the deposits of which bank
(which may include the Trustee) are insured by the Federal Deposit
Insurance Corporation, provided that, to the extent not so insured,
such certificates, deposits or other banking arrangements are
fully secured by investments described in (a) through (f) above.
Any moneys held as a part of the Debt Service Reserve Fund estab-
lished .by the Trustee under the Indenture shall, at the written
request and direction of the Authorized Borrower Representative,
be invested or reinvested by the Trustee, to the extent permitted
by the Enabling Ordinance and law in only those bonds, obligations
or certificates of deposit described in clauses (a) and (g) of
this Section 3 . 7 .
Any such securities may be purchased at the offering or
market price thereof at the time of such purchase. Such invest-
ments shall mature in such amounts and at such times , or shall be
readily marketable prior to their maturities, as the Authorized
Borrower Representative may direct.
The Trustee may make any and all such investments
through its own bond department. Prior to the Completion Date
any interest accruing on or profit realized from the investment
of any moneys held as a part of the Debt Service Reserve Fund or
the Bond Fund shall be credited to the Construction Fund, and
after the Completion Date, any interest accruing on or profit
realized from the investment of any moneys held as a part of the
Construction Fund or Debt Service Reserve Fund shall be credited
to the Bond Fund, except that, so long as there is a deficiency
in the Debt Service Reserve Fund, all interest accruing on or
profit realized from the investment of any moneys held as a part
of the Debt Service Reserve Fund shall be retained in the Debt
Service Reserve Fund. Any loss resulting from any investment
-14-
made pursuant to this Section shall be charged to the appropriate
fund and reimbursed by the Borrower from its own moneys . For the
purposes of this Section, any interest bearing deposits, including
certificates of deposit, issued by or on deposit with the Trustee
shall be deemed to be investments and not deposits .
Section 3 .8 . Arbitrage Covenants . The Borrower cove-
nants with the Issuer and with the owners of the Bonds from time
to time outstanding that, as long as any of the Bonds remain
outstanding, moneys on deposit in any fund maintained in connec-
tion with the Bonds , whether or not such moneys were derived from
the proceeds of the sale of the Bonds or from any other source,
will not be used in any manner which will cause the Bonds to be
deemed to be "arbitrage bonds" within the meaning of Section 103 (c)
of the Code. The Borrower reserves the right, however, to make any
investment of such moneys permitted by the Enabling Ordinance and
the laws of the State of Illinois if, when and to the extent that
said Section 103 (c) or the regulations promulgated or proposed
thereunder shall be repealed, relaxed or held void by final judg-
ment of a court of competent jurisdiction, but only if any invest-
ment made by virtue of such repeal, relaxation or decision would
not, in the written opinion of Bond Counsel, result in making the
interest on any Bonds subject to Federal income taxation.
ARTICLE IV
Loan and Provisions for Payment
Section 4. 1 . Loan. In order to finance the Project,
the Issuer hereby loans to the Borrower, and the Borrower hereby
borrows, the proceeds to be derived from the sale of the Bonds .
Such proceeds shall be disbursed and applied in accordance with
Article III hereof.
Section 4.2 . Loan Payments and Other Amounts Payable.
The Borrower hereby covenants and agrees to pay to the Trustee
for the account of the Issuer as repayment of the loan of the
proceeds of the Series 1983 Bonds the following amounts on the
following dates :
(a) Interest: On December 1, 1983 (or on the first
Business Day thereafter if such date is not a Business Day)
an amount equal to one-third (1/3 ) of the interest to become
due on the Series 1983 Bonds on May 1, 1984; and on the
first (1st) day of each month of each year thereafter (or on
the first Business Day thereafter if any of such dates is
not a Business Day) commencing with January, 1984, an amount
which will not be less than one-sixth (1/6 ) of the amount of
interest to become due on the Series 1983 Bonds on the next
succeeding semi-annual interest payment date of the Series
1983 Bonds; provided, however, that the Borrower may be
entitled to certain credits on such payments as permitted
under Section 4.3 hereof.
-15-
(b) Principal : On November 1, 1984, and on the first
(1st) day of each month of each year thereafter (or on the
first Business Day thereafter if any of such dates is not a
Business Day) an amount equal to not less than one-twelfth
(1/12 ) of the next installment of principal becoming due on
the Series 1983 Bonds by maturity or by mandatory redemption
pursuant to sinking fund requirements under the Indenture;
provided, however, that the Borrower may be entitled to
certain credits on such payments as permitted under Section
4.3 hereof.
(c) Debt Service Reserve Fund Deposits : In the event
that moneys are transferred by the Trustee from the Debt
Service Reserve Fund to the Bond Fund pursuant to Section
407 of the Indenture, then the Borrower will (unless otherwise
directed in writing by the holders of not less than fifty-one
percent (51%) in principal amount of the Series 1983 Bonds
then outstanding) pay the Trustee for deposit into the Debt
Service Reserve Fund the amount of any such transfer in 12
substantially equal monthly installments on the first day of
each of the next succeeding 12 months . In the event that
any annual valuation provided for by Section 407 of the
Indenture shall demonstrate that the amount then on deposit
in the Debt Service Reserve Fund is less than the Maximum
Annual Debt Service of the Series 1983 Bonds, then the
Borrower will (unless otherwise directed in writing by the
holders of not less than fifty-one percent (51%) principal
amount of the Series 1983 Bonds then outstanding) pay to the
Trustee for deposit in the Debt Service Reserve Fund no
later than the next succeeding April 1 an amount or amounts
sufficient to cause the amount in the Debt Service Reserve
Fund to be equal to the Maximum Annual Debt Service of the
Series 1983 Bonds .
Upon a declaration of acceleration by the Trustee under
Section 902 of the Indenture, an amount equal to the aggregate
principal amount of all then Outstanding Bonds, together with the
redemption premium, if any, and the interest accrued thereon,
shall become immediately due and payable.
In the event that the Borrower shall fail to make any
of the payments required of it in this Section 4.2 to be made
with respect to the Bonds, the payment so in default shall con-
tinue as an obligation of the Borrower until the amount in default
shall have been fully paid, and the Borrower will pay on demand
interest on any overdue principal and, to the extent permitted by
law, on any overdue interest at the rate per annum which is equal
to the rate per annum borne by the Bonds in respect of which such
default shall have occurred.
Section 4.3 . Credits. Notwithstanding any provision
contained in this Loan Agreement or the Indenture to the contrary:
(a) The accrued interest on the Series 1983 Bonds and
the amount of one year' s capitalized interest deposited by
-16-
the Trustee in the Bond Fund pursuant to Section 403 of the
Indenture at the time of the delivery of the Series 1983
Bonds shall be credited against the obligation of the Bor-
rower to pay interest on the loan of the proceeds of the
Series 1983 Bonds made hereunder as the same becomes due;
(b) The principal amount of Series 1983 Bonds delivered
to the Trustee or previously redeemed or purchased (otherwise
than through the operation of the sinking fund described in
Section 702 of the Indenture) shall be credited against the
obligation of the Borrower to pay the principal of the loan
of the proceeds of the Series 1983 Bonds hereunder; provided,
however, that the deposit of a Series 1983 Bond of one
maturity may not be credited against a payment of the prin-
cipal of the loan of the proceeds of the Series 1983 Bonds
made hereunder which would be used, in the normal course, to
retire a Series 1983 Bond of another maturity; and
(c) The amount of any moneys transferred by the Trustee
from the Debt Service Reserve Fund to the Bond Fund shall be
credited against the obligation of the Borrower to pay the
principal of or the interest on the loan of the proceeds of
the Series 1983 Bonds made hereunder as the same become due.
Section 4.4. Obligations of Borrower hereunder Uncondi-
tional . The obligations of the Borrower to make the payments
required in Section 4.2 hereof, and to perform and observe the
other obligations on its part contained herein, shall be absolute
and unconditional; and failure of the Borrower to observe or
perform any such obligation shall not be subject to any defense
(other than payment) or any right of set-off, counterclaim or
abatement. Until such time as the principal of, premium, if any,
and interest on the Bonds shall have been fully paid, or provision
for the payment thereof shall have been made in accordance with
the Indenture, the Borrower (i) will not suspend or discontinue,
or permit the suspension or discontinuance of, any payments due
hereunder, (ii) will perform and observe all of its other obliga-
tions contained in this Agreement, and (iii ) will not suspend the
performance of such obligations for any cause, including, without
limiting the generality of the foregoing, failure to complete the
Project, any act or circumstance that may constitute failure of
consideration, failure of, or a defect in, title to the Project
or any part thereof, eviction or constructive eviction, destruc-
tion of or damage to or taking in condemnation of the Project,
commercial frustration of purpose, any change in the tax or other
laws or administrative rulings of, or administrative actions by,
the United States of America or the State of Illinois, or any
political subdivision of either, or any failure of the Issuer to
perform and observe any agreement, whether express or implied, or
any duty, liability or obligation arising out of or connected
with this Agreement. Nothing contained in this Section shall be
construed to release the Issuer from the performance of any of
the agreements on its part herein contained, and in the event the
Issuer shall fail to perform any such agreement on its part
herein contained, the Borrower may institute such action against
-17-
the Issuer as the Borrower may deem necessary to compel perfor-
mance or recover damages for nonperformance thereof, provided
that no such action shall (i) violate the agreements on the part
of the Borrower contained in the foregoing provisions of this
Section 4.3 , or (ii) diminish the amounts required to be paid by
the Borrower pursuant to Section 4.2 hereof. The Borrower may,
however, at its own cost and expense, and in its own name or in
the name of the Issuer (provided the Issuer is a necessary party) ,
prosecute or defend any action or proceeding, or take any other
action, involving third persons which the Borrower deems reason-
ably necessary in order to secure or protect its rights hereunder,
and in such event the Issuer will, and hereby agrees to, cooperate
fully with the Borrower and to take all actions necessary to
effect the substitution of the Borrower for the Issuer in any
such action or proceeding, if the Borrower shall so request.
The Borrower hereby waives, to the extent permitted by
law, any and all rights which it may now have or which at any
time hereafter may be conferred upon it, by statute or otherwise,
to terminate or cancel, or to limit its liability under, this
Agreement, except in accordance with the express terms hereof.
Section 4. 5 . Payments Pledged and Assigned. It is
understood and agreed that all payments to be made by the Borrower
pursuant to Section 4.2 hereof, and all rights of the Issuer
hereunder, except for Unassigned Rights, are pledged and assigned
to the Trustee pursuant to the Indenture. The Borrower hereby
assents to such pledge and assignment. The Issuer hereby directs
the Borrower, and the Borrower hereby agrees, to pay directly to
the Trustee for the account of the Issuer all amounts payable by
the Borrower hereunder (except those amounts payable to the
Issuer pursuant to its Unassigned Rights ) , in particular, but not
limited to, those amounts payable by the Borrower pursuant to
Section 4.2 hereof.
Section 4 .6 . Payment of Trustee' s and Co-Trustee' s
Fees . The Borrower agrees to pay to the Trustee and any Co-
Trustee for their own account, until the principal of, premium,
if any, and interest on the Bonds shall have been fully paid, or
provision for the payment thereof shall have been made in accor-
dance with the provisions of the Indenture, (i ) an amount equal
to the annual fee of the Trustee and any Co-Trustee for the
Ordinary Services rendered by them, and the Ordinary Expenses
incurred by them, under the Indenture, as and when the same shall
become due, (ii ) the reasonable fees, charges and expenses of the
Trustee and any Co-Trustee as bond registrar and paying agent for
acting as bond registrar and paying agent as provided in the
Indenture, and of any other paying agent for the Bonds for acting
as paying agent as provided in the Indenture, as and when the
same shall become due, and (iii ) the reasonable fees, charges and
expenses of the Trustee and any Co-Trustee for the necessary
Extraordinary Services rendered by them, and the necessary Extra-
ordinary Expenses incurred by them, under the Indenture, as and
when the same shall become due.
-18-
ARTICLE V
Special Covenants
Section 5. 1. No Liability of Issuer. Any obligation
of the Issuer created by or arising out of—this Agreement, includ-
ing the Bonds, shall not impose a debt or pecuniary liability
upon the Issuer, the State of Illinois or any political subdivi-
sion thereof, or constitute a charge upon the general credit or
taxing powers of any of the foregoing, but shall be payable
solely out of the revenues and receipts derived hereunder, except
(as provided in• the Indenture and in this Agreement) to the
extent paid out of moneys attributable to the proceeds derived
from the sale of the Bonds, or the income from the temporary
investment thereof.
Neither the issuance of the Bonds nor the delivery of
this Agreement shall directly, indirectly or contingently obligate
the Issuer, the State of Illinois or any political subdivision
thereof to levy any form of taxation therefor, or to make any
appropriation for their payment. Nothing in the Bonds, the In-
denture, this Agreement, the proceedings of the Issuer authoriz-
ing the Bonds or the Enabling Ordinance shall be construed to to
create a debt of the Issuer, the State of Illinois or any politi-
cal subdivision thereof within the meaning of any constitutional
or statutory provision of the State of Illinois . The principal
of, premium, if any, and interest on the Bonds shall be payable
solely from the funds pledged for their payment in accordance
with the Indenture. Neither the State of Illinois nor any poli-
tical subdivision thereof shall in any event be liable for the
payment of the principal of, premium, if any, or interest on the
Bonds, or for the performance of any pledge, obligation or agree-
ment of any kind whatsoever which may be undertaken by the Issuer.
No breach of such pledge, obligation or agreement may impose any
pecuniary liability upon the State of Illinois or any political
subdivision thereof, or constitute a charge upon the general
credit or against the taxing power of the State of Illinois or
any political subdivision thereof.
Section 5.2 . Issuer' s and Trustee' s Right of Access to
the Project. The Borrower agrees that during the term off thh sisi
Agreement the Issuer and the Trustee and their duly authorized
agents shall have the right at reasonable times to enter upon and
examine and inspect the Project, including such rights of access
to the Project as may be reasonably necessary to determine whether
the Borrower is diligently pursuing the completion of the Project
or has completed the Project, in accordance with the provisions
of Article III hereof, and to determine whether the Borrower is
using the Project or causing the Project to be used for the
purposes set forth in Section 2.2(d) hereof. The foregoing shall
not be construed in any manner to limit the Issuer' s continuing
authority under the police powers to make inspections to determine
compliance with applicable statutes and ordinances . Nothing
-19-
contained in this Loan Agreement shall be construed to entitle
the Issuer or the Trustee to access to any confidential materials
of the Borrower or any of its partners .
Section 5 .3 . Borrower to Maintain its Partnership
Existence; Conditions Under Which Excepts ns Permitted. The
Borrower agrees that during the term of this Agreement it will
maintain its partnership existence, will not dissolve or other-
wise dispose of all or substantially all of its assets, either in
a single transaction or in a series of related transactions;
provided, however, that the Borrower may, without violating the
agreement contained in this Section, sell or otherwise transfer
to another domestic entity all or substantially all of its assets
as an entirety and thereafter dissolve, provided that the result-
ing, surviving orr transferee entity, as the case may be, has a
net worth (computed in accordance with generally accepted accoun-
ting principles ) , after giving effect to such sale or transfer,
equal to or greater than the net worth (computed in accordance
with generally accepted accounting principles) of the Borrower
immediately preceding such sale or transfer; and irrevocably and
unconditionally assumes in writing, by means of an instrument
which is satisfactory and delivered (prior to any such sale or
transfer of assets ) to the Issuer and the Trustee, and agrees to
perform, all of the obligations of the Borrower herein contained
and the Issuer and the Trustee shall thereby release the Borrower
from all of its obligations herein contained; and further provided
that no "Event of Taxability" (as defined in Section 7.3 hereof)
has theretofore occurred, or will occur or result from such sale
or transfer; and further provided that no event of default has
occurred and is occurring hereunder. Prior to any such merger .or
sale or transfer of assets, an opinion of Bond Counsel (which
opinion may be based upon published or private letter rulings of
the Internal Revenue Service) , a private letter ruling of the
Internal Revenue Service or a certificate of a firm of independent
certified public accountants satisfactory to the Trustee (who may
be the Borrower' s regular accountants ) shall be delivered to the
Trustee stating that such merger, sale or transfer of assets will
not cause interest on the Outstanding Bonds to become includable
in the gross income of the recipients thereof for Federal income
tax purposes, provided that the Borrower shall not have violated
this covenant if the interest on any Outstanding Bonds becomes
taxable to a person who is a substantial user of the Project, or
a related person, pursuant to the provisions of Section 103(b) (13 )
of the Code. At least thirty (30 ) days before any sale or transfer
of assets becomes effective, the Borrower shall give the Issuer
and the Trustee written notice of the proposed transaction. Any
technical dissolution of the Borrower under local law caused by
the death or incompetency of one of its partners shall not consti-
tute a violation of this covenant if the Borrower is promptly
reconstituted and continues to be bound by the terms of this
Agreement.
Section 5.4. Release and Indemnification Covenants.
The Borrower releases the Issuer (including any person at any
time serving as a member, officer or employee of the Issuer) and
-20-
the Trustee from, agrees that the Issuer and the Trustee shall
not be liable for, and agrees to indemnify and hold the Issuer
and the Trustee harmless from, to the fullest extent permitted by
law, (i) any liability for any loss or damage to property, or any
injury to or death of any person, that may be occasioned by any
cause whatsoever pertaining to the Project, and (ii ) any liabili-
ties, losses or damages, or claims therefor, arising out of the
failure, or claimed failure, of the Borrower to comply with its
covenants contained in this Agreement, including, in each such
case, any attorneys' fees. The Borrower agrees to indemnify and
hold the Issuer (including any person at any time serving as a
member, officer or employee of the Issuer) harmless to the fullest
extent permitted by law from any losses, costs, charges, expenses
(including attorneys' fees) , judgments and liabilities incurred
by it or them, as the case may be, in connection with any action,
suit or proceeding instituted or threatened in connection with
the transactions contemplated by this Agreement. If any such
claim is asserted, the Issuer, the Trustee or any individual
indemnified herein, as the case may be, shall give prompt notice
to the Borrower. The Borrower will assume the defense of any
• such claim and retain counsel who shall be reasonably satisfactory
to the Issuer, the Trustee or any individual indemnified herein,
as the case may be. Notwithstanding the provisons of the fore-
going sentence, the Issuer, the Trustee or any individual indemni-
fied herein, as the case may be, shall also have the right to
defend any such claim and retain counsel of its own choice, and
the Borrower hereby covenants and agrees to pay all fees and
expenses (including attorneys ' fees) so incurred by the Issuer,
the Trustee or any such indemnified individual . No settlement of
any such claim shall be made without prior approval of the Issuer,
the Trustee or any such indemnified individual affected by such
claim. The obligation of the parties under this Section 5 .4
shall survive the termination of this Agreement.
The Borrower agrees to pay to the Issuer for its own
account such reasonable costs and expenses, including legal fees,
as may be incurred by the Issuer in performing its obligations
under this Agreement and under the Indenture, to the extent such
are not paid from the proceeds derived from the sale of any
Bonds.
Section 5.5 . Financial Statements. So long as any
Bonds remain O sut tanding under the Indenture, the Borrower shall
furnish to the Trustee or cause to be furnished to the Trustee
the following financial statements, prepared in accordance with
generally accepted accounting principles :
(a) Within 120 days after the end of each fiscal year
of the Guarantor, the audited financial statements of the
Guarantor for such fiscal year;
(b) Within 60 days after the end of each fiscal quarter
of the Guarantor, its unaudited financial statements for
such quarter; and
-21-
(c) Within 120 days after the end of each fiscal year
of the Borrower, the unaudited financial statements of the
Borrower for such fiscal year.
Section 5 .6 . Tax-Exempt Status of the Series 1983
Bonds. The Borrower covenants and agrees that it has not taken
or permitted or omitted, and will not take or permit to be taken
or omit to take, and the Issuer covenants and agrees that it has
not taken or permitted or omitted, and will not take or permit to
be taken, any action which would result in interest paid on the
Series 1983 Bonds being included in the gross income of the
owners of the Series 1983 Bonds for purposes of Federal income
taxation, provided that the Borrower and the Issuer shall not
have violated this covenant if the interest on any of the Series
1983 Bonds becomes taxable to a person who is a substantial user
of the Project, or a related person, pursuant to the provision of
Section 103(b) (13 ) of the Code; provided, however, that such
covenant and agreement shall not require either the Borrower or
the Issuer to enter an appearance in or intervene in any adminis-
trative, legislative or judicial proceeding in connection with
any changes in applicable laws, rules, regulations or decisions
of any court, administrative agency or other governmental body
affecting the taxation of interest on the Series 1983 Bonds .
The Borrower covenants and agrees to notify the Trustee
and the Issuer of the occurrence of any event of which the Borrower
has knowledge, which would require the Borrower to prepay the
indebtedness hereunder in accordance with Section 706 of the
Indenture.
The Issuer covenants that it shall, prior to the issu-
ance of the Series 1983 Bonds, duly elect to have the provisions
of Section 103 (b) (6 ) (D) of the Code apply to such issue, and such
election shall be made in accordance with the procedure set forth
in Section 1.103-10(b) (2 ) (vi ) of the regulations promulgated
thereunder. In order to effectuate such election and to continue
the same in full force and effect as long as any of the Series
1983 Bonds shall remain outstanding, the Borrower agrees to: (1)
attach a copy of the Issuer' s statement of election to the Bor-
rower's income tax return for the taxable year during which the
election is made, in accordance with Section 1.103-10(b) (2 ) (vi) (a)
of the regulations promulgated under the Code; (2 ) file or cause
to be filed the supplemental statements required by Section
1 .103-10(b) (2 ) (vi) (C) of the regulations promulgated under the
Code; and (3 ) take such further action and file or cause to be
filed such further instruments, documents, statements or reports
with the United States Treasury Department - Internal Revenue
Service or other authorized governmental agencies, and at such
office or offices, as may from time to time be required by appli-
cable law or regulation in connection therewith.
The Borrower understands that the term "capital expendi-
tures" as used in this Agreement and in the Indenture, as of the
date of the execution of this Agreement, means any expenditure
-22-
made by any person which, under any rule or election under the
Code, may be treated as a capital expenditure (whether or not
such expenditure is so treated) , and determined without regard to
any rule of the Code which permits expenditures properly charge-
able to a capital account to be treated as current expenses, un-
less such expenditure is an "excluded expenditure" under Section
1.103-10 of the regulations promulgated under the Code.
If, at any time before the third anniversary of the
date of issuance of the Series 1983 Bonds, the Borrower or any
"related person" (as defined in Section 103(b) (6 ) (C) of the Code
and Section 1.103-10(e) of the regulations promulgated thereunder)
proposes to (a) pay or incur any "section 103(b) (6) (D) capital
expenditure" (as defined in Section 1.103-10(b) (2 ) (ii ) of the
regulations promulgated under the Code) which will cause the
total capital expenditures made by the Borrower, during the
three-year period beginning with the issuance of the Series 1983
Bonds, to exceed $5, 500, 000 with respect to the Project or any
other property or facilities located or treated as being located
in the City of Elgin, Illinois, or (b) be the principal user (or
a principal user) of any property or facilities located or treated
as being located in the City of Elgin, Illinois, with respect to
which any capital expenditure is paid or incurred, or to be paid
or incurred, by others, the Borrower will, prior to the payment
or incurrence of such capital expenditure, or the commencement of
such principal use, file with the Trustee and the Issuer an
opinion of Bond Counsel (which opinion may be based upon published
or private letter rulings of the Internal Revenue Service) , a
private letter ruling of the Internal Revenue Service or a certifi-
cate of a firm of independent certified public accountants satis-
factory to the Trustee (who may be the Borrower' s regular accoun-
tant) to the effect that such capital expenditure or such princi-
pal use, as the case may be, would not have the effect of causing
the interest on the Series 1983 Bonds (other than those held or
owned by a substantial user of the Project or any related person,
within the meaning of Section 103(b) (13 ) of the Code) to be
included in the gross income of the recipient thereof for Federal
income tax purposes .
The Borrower covenants that (a) the proceeds of the
Series 1983 Bonds are to be used primarily with respect to facil-
ities to be located in the City of Elgin, Illinois; (b) that the
Borrower will be the principal user of the facilities to be
constructed with the proceeds of the Series 1983 Bonds, within
the meaning of Section 103(b) (6) of the Code; and (c) that there
are no outstanding obligations which are classified as "exempt
small issues" under Section 103 (b) (6 ) of the Code, and any regula-
tions promulgated with respect to Section 103(b) (6) of the Code,
issued subsequent to April 30, 1968, of any state, territory or
possession of the United States of America, or any political
subdivision of the foregoing or of the District of Columbia, the
proceeds of which have been or are to be issued primarily with
respect to facilities located or treated as being located in the
City of Elgin, Illinois, and which are to be used primarily by
-23-
•
the Borrower (including any person related to the Borrower,
within the meaning of Section 103(b) (13 ) of the Code) other than
the Series 1983 bonds .
Section 5 .7. Operation of Project. The Borrower
agrees that, st,b�ect to the force eajeure provisions of Section
6.1 hereof, it will commence operation of the Project promptly
after its completion, as certified in accordance with Section 3 .4
hereof. The Borrower shall operate the Project or cause the
Project to be operated for the term of this Agreement as an "eco-
nomic development project, " within the meaning of the Enabling
Ordinance, except that, in the case of emergency or need for
repairs or maintenance, the Borrower may temporarily discontinue
operation of the affected portions of the Project for the purpose
of making necessary repairs or maintenance, which repairs or
maintenance shall be diligently effected.
Section 5 .8 . Redemption of Bonds . If the Borrower is
not in default n the payments to be made under Section 4.2
hereof, the Issuer, upon reasonable assurance from the Borrower
that the Borrowershall make sufficient funds available, at the
request at any time of the Borrower and if the same are then
callable, shall forthwith take all steps that may be necessary
under the provisions of the Indenture to effect redemption of all
or any part of the then Outstanding Bonds, as may be specified by
the Borrower, on the earliest redemption date on which redemption
may be made under such applicable provisions; all subject to, and
in accordance with, the terms and provisions of the Indenture.
Section 5 .9. Taxes and Governmental Charges. The
Borrower will pay, as the same become due, all taxes and govern-
mental charges of any kind whatsoever that may at any time be
lawfully assessed or levied against or with respect to the Project
or any machinery, equipment or other property installed by the
Borrower thereon (including, without limiting the generality of
the foregoing, any taxes levied upon or with respect to the in-
come and revenues of the Issuer pursuant to this Loan Agreement) ,
all utility and other charges incurred in the operation, mainte-
nance, use, occupancy and upkeep of the Project and all assessments
and charges lawfully made by any governmental body for public
improvements that may be secured by a lien on the Project; pro-
vided, that with respect to special assessments or other govern-
mental charges that may lawfully be paid in installments over a
period of years, the Borrower shall be obligated to pay only such
installments as are required to be paid during the term of this
Loan Agreement.
ARTICLE VI
Events of Default and Remedies
Section 6.1. Events of Default Defined. The following
shall be "events of default" under thi Agreement, and the term
_)d_
"event of default" shall mean, whenever it is used in this Agree-
ment, any one or more of the following:
(a) Failure of the Borrower to pay any installments of
interest or principal, or any premium, on the indebtedness
hereunder or any other installment required by Section 4 .2
hereof when the same shall become due and payable, whether
at maturity, upon any date fixed for prepayment or by accel-
eration or otherwise, but subject to any credits to which
the Borrower may be entitled pursuant to Section 4.3 hereof.
(b) Any material breach by the Borrower of any repre-
sentation or warranty made in this Agreement, or any failure
by the Borrower to observe and perform any covenant, condi-
tion or agreement -on its part to be observed or performed,
other than as referred to in subsection (a) of this Section,
for a period of thirty (30 ) days after receipt of written
notice specifying such failure and requesting that it be
remedied, given to the Borrower by the Trustee or the Issuer,
unless (i) the Trustee and the Issuer shall agree in writing
to an extension of such time prior to its expiration, or
(ii) if the default be such that it cannot be corrected
within said thirty (30 ) day period, but can be corrected
with due diligence, corrective action is instituted by the
Borrower within the applicable period and diligently pursued
until the default is corrected.
(c) The dissolution or liquidation of the Borrower;
the filing by the Borrower of a voluntary petition in bank-
ruptcy; failure by the Borrower promptly to lift any execu-
tion, garnishment or attachment of such consequence as will
impair its ability to carry out its obligations hereunder;
adjudication of the Borrower as a bankrupt, or if a petition
or answer proposing the adjudication of the Borrower as a
bankrupt or its reorganization under any present or future
federal bankruptcy act, or any similar Federal or state law,
shall be filed in any court, and such petition or answer
shall not be discharged or denied within ninety (90) days
after the filing thereof; if the Borrower shall commit any
act of bankruptcy, or shall generally fail to pay its debts
as they become due; if a receiver, trustee, conservator or
liquidator of the Borrower shall be appointed in any proceed-
ing brought against the Borrower, and shall not be discharged
within ninety (90) days after such appointment, or if the
Borrower shall consent to or acquiesce in such appointment;
assignment by the Borrower for the benefit of its creditors;
or entry by the Borrower into an agreement of composition,
arrangement or debt adjustment with its creditors. The term
"dissolution or liquidation of the Borrower, " as used in
this subsection, shall not be construed to include the
cessation of the existence of the Borrower resulting either
from a dissolution or liquidation of the Borrower following
a transfer of all or substantially all of its assets as an
entirety to another, under the conditions permitting such
actions contained in Section 5 .3 hereof.
-25-
The foregoing provisions of Section 6 .1(b) are subject to the
following limitations : If by reason of force majeure the Borrower
is unable in whole or in part to carry out the agreements on its
part herein contained, other than the obligations on the part of
the Borrower contained in Article IV and Sections 5.4 and 5 .6
hereof, the Borrower shall not be deemed in default during the
continuance of such inability. The term "force majeure" as used
herein shall mean, without limitation, the following: acts of
God; strikes, lockouts or other industrial disturbances; acts of
public enemies; orders of any kind of the government of the
United States of America or of the State of Illinois, or of any
of their departments, agencies or officials, or of any civil or
military authority; insurrections; riots; epidemics ; landslides;
lightning; earthquake; fire; tornadoes; storms; floods; washouts;
droughts; arrests; restraint of government and people; civil
disturbances; explosions; breakage or accident to machinery,
transmission lines, pipes or canals; partial or entire failure of
utilities; failure of suppliers; or any other cause or event not
reasonably within the control of the Borrower. The Borrower
agrees, however, to remedy with all reasonable dispatch the cause
or causes preventing the Borrower from carrying out its agree-
ments; provided that the settlement of strikes, lockouts and
other industrial disturbances shall be entirely within the discre-
tion of the Borrower, and the Borrower shall not be required to
make settlement of strikes, lockouts and other industrial distur-
bances by acceding to the demands of the opposing party or parties
when such course is, in the judgment of the Borrower, unfavorable
to the Borrower.
Section 6 .2 . Remedies on Default. Whenever any event
of default referred to ill-Tea-Ea 6 .1 hereof shall have happened
and be continuing, the Trustee or the Issuer, as the case may be,
may take any one or more of the following remedial steps :
(a) Whenever the Trustee shall have declared the prin-
cipal of all Bonds then outstanding to be due and payable
pursuant to Section 902 of the Indenture, the Issuer shall,
by prior written notice, declare all unpaid indebtedness
hereunder to be immediately due and payable. The term "all
unpaid indebtedness" shall mean an amount equal to the prin-
cipal of and premium, if any, on all Bonds then outstanding,
and interest accrued thereon and to accrue thereon to the
date of receipt by the Trustee of such moneys, and other
payments due or to become due hereunder, including, without
limitation, any unpaid fees, charges and expenses of the
Trustee and other paying agents, if any, of the Bonds , or of
the Issuer, which are then or will become due prior to the
time that the Bonds are paid in full . In the event of any
such declaration, the Trustee may pursue any available
remedy to collect the payments then due thereafter to become
due hereunder, or to enforce performance and observance of
any obligation, agreement or covenant of the Borrower under
this Agreement. If the Bonds shall become due and payable
under this Section after an "Event of Taxability" shall have
•
occurred, as provided in Section 7.3 hereof, the amount due
and payable hereunder shall be the amount set forth in
Section 7.3 hereof; and this covenant shall survive this
Agreement.
(b) In the event that any of the Bonds shall at the
time be outstanding and unpaid, the Issuer and the Trustee
may have access to and inspect, examine and make copies of
the books and records, and any and all accounts, data and
income tax and other tax returns, of the Borrower, as the
Issuer or the Trustee may reasonably request, but only,
however, insofar as they pertain to the Project.
(c) The Issuer, with the prior written consent of the
Trustee, or the Trustee may take whatever action as at law
or in equity may appear necessary or desirable to collect
the amounts then due and thereafter to become due, or enforce
performance and observance of any obligation, agreement or
covenant of the Borrower set forth herein.
Any amounts collected pursuant to .action taken under
this Section shall be paid into the Bond Fund and applied in
accordance with the provisions of the Indenture, or if the Bonds
shall have been fully paid (or provision for the payment thereof
shall have been made in accordance with the provisions of the
Indenture) , to the Borrower.
Section 6 .3 . No Remedy Exclusive. No remedy herein
conferred upon or reserved to the Issuer or the Trustee is inten-
ded to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be
in addition to every other remedy given under this Agreement or
now or hereafter existing at law, in equity or by statute. No
delay or omission to exercise any right or power accruing upon
any event of default shall impair any such right or power, or
shall be construed to be a waiver thereof, but any such right or
power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Issuer or the Trustee
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. Such rights and
remedies as are given the Issuer hereunder shall also extend to
the Trustee, and the Trustee and the owners of the Bonds, subject
to the provisions of the Indenture, are intended by the parties
hereto to be third-party beneficiaries of this Agreement, and, as
such, shall be entitled to the benefit of all covenants, represen-
tations, warranties and agreements herein contained. Except as
provided in the Indenture, the Trustee may exercise any available
remedy, at law or in equity, in the case of a default in the
performance or observance of such covenants and agreements,
whether or not such default constitutes an event of default.
Section 6.4. Agreement to Pay Attorneys ' Fees and
Expenses. If an event of default should have occurred under the
provisions of this Agreement, and the Issuer or the Trustee
should employ attorneys or incur other expenses for the collection
of the indebtedness incurred hereunder, or for the enforcement of
performance or observance of any obligation or agreement on the
part of the Borrower herein contained, the Borrower agrees that
it will on demand therefor pay to the Trustee, the Issuer or, if
so directed by the Issuer or the Trustee, to the attorneys for
the Issuer or the Trustee the reasonable fees of such attorneys,
and such other expenses so incurred by or on behalf of the Issuer
or the Trustee.
Section 6.5 . No Additional Waiver Implied by One
Waiver; Consents to Waivers . In the event that any covenant,
agreement representation o warranty 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. No waiver shall be effective unless it shall
be made in writing, signed by the party making the waiver and
mention with specificity the breach being waived. The Issuer
shall have no power to waive any event of default hereunder by
the Borrower without the written consent of the Trustee to such
waiver. Notwithstanding the foregoing, if, after the accelera-
tion of the maturity of the Outstanding Bonds by the Trustee, any
event of default under the Indenture shall be waived pursuant to
Section 902 or Section 909 of the Indenture, then any event of
default hereunder which may have resulted in such event of default
shall be deemed to have been waived by the Issuer and the Trustee.
ARTICLE VII
Prepayment
•
Section 7. 1. Option to Prepay Number 1 . The Borrower
shall have, and is hereby granted, the option to prepay the
indebtedness hereunder in whole but not in part at any time
within one year after the occurrence of any one of the following
events:
(a) The Project has been damaged or destroyed to such
an extent that, as evidenced by a written certificate of the
Authorized Borrower Representative filed with the Issuer and
the Trustee, it is not practicable or desirable to rebuild,
repair or restore the Project within the six month period
following such damage or destruction and the Borrower is or
will be thereby prevented from carrying out its normal
operations at the Project Real Estate for a six month period;
or
(b) Title to or the temporary or permanent use of all
or substantially all of the Project is taken under the
exercise of the power of eminent domain to the extent that,
-28-
as evidenced by the written certificate of the Authorized
Borrower Representative filed with the Issuer and the Trustee,
such taking has resulted or is likely to result in the Borro-
wer being thereby prevented from carrying on its normal opera-
tions at the Project Real Estate for a six month period; or
(c) Any court or administrative body shall enter a
judgment, order or decree requiring the Borrower to cease
all or any substantial part of its operations at the Project
to such an extent that, as evidenced by the written certifi-
cate of the Authorized Borrower Representative filed with
the Issuer and the Trustee, the Borrower is or will be
thereby prevented from carrying on its normal operations at
the Project for a six month period.
Such option shall be exercisable in the manner provided
in Section 7 .4 hereof. The amount payable by the Borrower in the
event of its exercise of the option granted in this Section shall
be the sum of the following:
(1 ) An amount of money which will be sufficient to
redeem all of the then Outstanding Series 1983 Bonds on the
redemption date at a redemption price of 100% of the princi-
pal amount thereof plus accrued interest to the redemption
date and without premium, and
(2 ) An amount of money sufficient to pay the expenses
incurred or to be incurred by the Issuer and the Trustee in
connection with the prepayment of the indebtedness hereunder
and the redemption of the Series 1983 Bonds and to discharge
all other liabilities of the Borrower under this Agreement.
Section 7 .2 . Option to Prepay Number 2 . The Borrower
shall have, and is hereby granted, the option to prepay the
indebtedness hereunder on any interest payment date of the Series
1983 Bonds on or after November 1, 1993 in whole or in part in
multiples of $5, 000, at theprices (expressed as percentages of
the principal amount of the indebtedness hereunder being prepaid
and the corresponding Series 1983 Bonds to be redeemed) set forth
in the table below plus accrued interest to the redemption date
of the Series 1983 Bonds to be redeemed:
Redemption Dates Redemption Price
November 1, 1993 and
May 1, 1994 102%
November 1, 1994 and
May 1, 1995 101
November 1, 1995 and
thereafter 100
In addition to amounts described above, if the Borrower
shall exercise its option to prepay the indebtedness hereunder in
-29-
•
accordance with the provisions of this Section, the Borrower
shall also pay amount of money sufficient to pay the expenses
incurred or to be incurred by the Issuer and the Trustee in
connection with the portion of the indebtedness hereunder to be
prepaid and the redemption of the Series 1983 Bonds to be redeemed,
and if all of the then Outstanding Series 1983 Bonds are to be
redeemed, the Borrower shall also pay an amount of money suffi-
cient to discharge all other liabilities of the Borrower under
this Agreement.
Such option shall be exercisable in the manner provided
in Section 7 .4 hereof.
Any partial prepayment of the indebtedness hereunder
pursuant to this Section shall be made in inverse order of the
principal installments thereof.
Section 7 .3 . Determination and Event of Taxability.
Should there occur a Determination of Taxability, the Borrower
shall be obligated, and hereby covenants and agrees, to prepay
the indebtedness hereunder in whole but not in part in the manner
provided in Section 7.4 hereof.
The amount payable by the Borrower upon the occurrence
of a Determination of Taxability shall be the sum of the following:
(1) The principal amount of all Series 1983 Bonds then
outstanding, plus accrued interest to the date of redemption,
plus a premium equal to the interest borne by such Series
1983 Bonds for the period elapsed between the "Event of
Taxability, " as such term is hereinafter defined, and the
date of redemption. If upon the date of redemption there
shall be on deposit in the Bond Fund the total amount required
by this paragraph (1 ) of Section 7 .3 , such amount shall
constitute total compensation due the owners of the Series
1983 Bonds then outstanding as a result of the occurrence of
an Event of Taxability; and
(2 ) An amount equal to the interest borne by each
Series 1983 Bond not then outstanding, but which was outstand-
ing at the time of the occurrence of the Event of Taxability,
for the period elapsed between the occurrence of the Event
of Taxability and the date that such Series 1983 Bond was
paid or redeemed. Such amount shall be held and disbursed
by the Trustee, and shall constitute total compensation due
such Bond and the owners of the Series 1983 Bonds not then
outstanding but which were outstanding at the time of the
occurrence of the Event of Taxability as a result of the
occurrence of an Event of Taxability and in satisfaction of
the Borrower's obligation to make payments hereunder.
(3 ) An amount sufficient to pay the expenses incurred
or to be incurred by the Issuer and the Trustee in connection
with the prepayment of the indebtedness hereunder and the
-30-
redemption of the Series 1983 Bonds and to discharge all
other liabilities of the Borrower under this Agreement.
An "Event of Taxability" shall mean the occurrence of
the circumstances described in Section 103 (b) (6 ) (D) of the Code,
which circumstances the Determination of Taxability shall have
found to have occurred, with the result that the interest payable
on any of the Series 1983 Bonds becomes includible in the gross
income of a holder thereof for Federal income tax purposes (other
than a holder who is a "substantial user" of the Project or
"related person, " as such terms are defined in the Code) .
A "Determination of Taxability" shall mean (a) the
issuance of a statutory notice of deficiency by the Internal
Revenue Service, or a ruling of the National Office or any Dis-
trict Office of the Internal Revenue Service, or a final decision
of court of competent jurisdiction which holds in effect that the
interest payable on any of the Series 1983 Bonds is includible in
the gross income of a holder thereof for Federal income tax
purposes (other than a holder who is a "substantial user" of the
Project or a "related person, " as such terms are defined in the
Code) as a result of the limitations prescribed in Section 103 (b) (6 )
of the Code having been exceeded, if the period, if any, of
contest or appeal of such action, ruling or decision by the
Borrower or the holder of any of the Series 1983 Bonds has expired
without any such contest or appeal having been properly instituted
by such holder or the Borrower or (b) the delivery by the Borrower
to the Trustee of a certificate of its Authorized Borrower Repre-
sentative or an opinion of Bond Counsel to the effect that an Event
of Taxability has occurred or will occur, and setting forth such
date. Such a Determination of Taxability shall be deemed, for all
purposes of this Agreement, to have occurred on the date borne by
said statutory notice of deficiency, ruling, opinion or certificate.
The covenants made by the Borrower in this Section, and
the Borrower' s obligations hereunder, shall survive the termina-
tion of this Agreement and the payment or redemption of the
Bonds .
Section 7 .4. Manner of Prepayment. To prepay the
indebtedness hereunder pursuant to Sections 7 . 1, 7 .2 or 7 .3
hereof, the Borrower shall give written notice to the Issuer and
the Trustee within 30 days after the event or determination
authorizing or requiring the prepayment, and shall specify there-
in the date of redemption, which date shall be not less than 30
days nor more than 180 days from the date the notice is mailed.
In the event of the Borrower' s failure to give the notice within
such 30 day period with respect to an obligation to prepay the
indebtedness hereunder pursuant to Section 7.3 hereof, the Trustee
shall give written notice to the Issuer and the Borrower specify-
ing a date of redemption not less than 180 days nor more than 30
days from the date the notice is mailed.
On the date of any partial prepayment of the indebted-
ness hereunder, the Borrower shall deliver to the Issuer and the
-31-
Trustee a copy of an amortization schedule setting forth the
amounts of the installments of principal and interest to be paid
hereunder after the date of such partial prepayment.
Section 7 .5 . Redemption of Bonds with Prepayment
Moneys . By virtue of the assignment of the rights of the Issuer
under this Loan Agreement to the Trustee as provided in Section
4.4 hereof, the Borrower shall pay any amount required to be paid
by it under this Article VII for the payment of the principal of,
premium, if any, and the interest on the indebtedness hereunder
directly to the Trustee. The Trustee shall use the moneys so
paid to it by the Borrower to redeem the Series 1983 Bonds in
whole or in part, as the case may be, on the redemption date. If
on the redemption date any portion of the Series 1983 Bonds to be
redeemed shall then be unpaid or provision for payment thereof
shall not have been made in accordance with the provisions of the
Indenture, the Borrower shall pay to the Trustee such additional
moneys as shall be required to pay or redeem Series 1983 Bonds or
portions thereof to be redeemed in accordance with the provision
of the Indenture.
The Issuer, at the request at any time of the Borrower
and if the same are then callable, shall forthwith take all steps
that may be necessary under the applicable redemption provisions
of the Indenture to effect redemption of the Series 1983 Bonds in
whole or in part, as the case may be, on the earliest redemption
date on which such redemption may be made under such applicable
provisions .
ARTICLE VIII
Miscellaneous
Section 8. 1. Binding Effect. This Agreement shall
inure to the benefit of, and shall be binding upon, the Issuer,
the Borrower and their respective successors and assigns, subject,
however, to the limitations contained in Section 5 .3 and Section
5. 9 hereof.
Section 8 .2 . Execution Counterparts . This Agreement
may be executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the
same instrument.
Section 8.3 . Amendments, Changes and Modifications.
Subsequent to the initial issuance of the Bonds, and prior to
payment or provision for the payment of the Bonds in full (includ-
ing interest and premium, if any, thereon) in accordance with the
provisions of the Indenture, this Agreement may not be amended,
changed, modified, altered or terminated, except as provided in
Article XII of the Indenture.
-32-
Section 8.4. Severability. All rights, remedies and
powers provided by this Agreement may be exercised only to the
extent that the exercise thereof does not violate any applicable
provision of law in the premises and all the provisions of this
Agreement are intended to be subject to all applicable mandatory
provisions of law which may be controlling in the premises and to
be limited to the extent necessary so that they will not render
this Agreement invalid or unenforceable under the provisions of
any applicable law. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unen-
forceable any other provision hereof.
Section 8 . 5 . Partners and Employees Exempt from Personal
Liability. To the extentpermitted by the laws in force at the
time, no recourse under or upon any obligation, covenant or
agreement in this Agreement contained, or for any claim based
thereon or otherwise in respect thereof, shall be had against any
partner or employee, as such, past, present or future, of the
Borrower or of any predecessor or successor entity, either directly
or through the Borrower, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment
or penalty, or otherwise; it being expressly understood that this
Agreement is solely a partnership obligation, and that no such
personal liability whatever shall attach to, or is or shall be
incurred by, the partners or employees, as such, of the Borrower
or of any predecessor or successor entity, or any of them, under
or by reason of the obligations, covenants or agreements contained
in this Agreement or to be implied herefrom; and any and all such
personal liability, either at common law, in equity, by constitu-
tion or statute of, and any and all such rights and claims against,
every partner or employee, as such, under or by reason of the
obligations, covenants or agreements contained in this Agreement,
or to be implied herefrom, are to the extent permitted by the
laws in force on the date of the execution of this Agreement,
hereby expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement.
Section 8 .6. Amounts Remaining in Indenture Funds .
Any amounts remain ni g in the various funds established under the
Indenture after payment in full of the Bonds (or provision for
payment thereof having been made in accordance with the provisions
of the Indenture) , and of the fees, charges and expenses of the
Issuer, the Trustee and any other paying agent, and all other
amounts required to be paid under this Agreement and the Inden-
ture, shall be paid to the Borrower by the Trustee.
Section 8.7 . Notices. All notices, certificates or
other communications shall be sufficiently given and shall be
deemed to have been given on the second day following the day on
which the same have been mailed by registered or certified mail,
postage prepaid, addressed as follows :
-33-
If to the Issuer: City of Elgin, Illinois
150 Dexter Court
Elgin, Illinois 60120
Attention: City Clerk
If to the Borrower: Slade Avenue Partnership
c/o Sherman Hospital Association
934 Center Street
Elgin, Illinois 60120
If to the Trustee: Continental Illinois National Bank
and Trust Company of Chicago
30 North LaSalle Street
Chicago, Illinois 60697
Attention: Corporate Trust Department
If to the Guarantor: Sherman Hospital Association
934 Center Street
Elgin, Illinois 60120
Attention: President
A duplicate copy of each notice, certificate or other communi-
cation given hereunder by either the Issuer or the Borrower to
the other shall also be given to the Trustee and the Guarantor.
The Issuer, the Borrower, the Trustee and the Guarantor may, by
notice given hereunder, designate any further or different addres-
ses to which subsequent notices, certificates or other communica-
tions shall be sent.
Section 8 .8 . Further Assurances . The Borrower agrees
and undertakes to perform any and all obligations of the Issuer
under and pursuant to Section 804 of the Indenture, and the
Issuer agrees to cooperate with the Borrower, to execute any
documents and to take any other action reasonably requested by
the Borrower in order to enable the Borrower to perform such
obligations.
Section 8 .9 . Applicable Law. This Agreement shall be
governed exclusively by, and be construed in accordance with, the
laws of the State of Illinois .
Section 8.10. Term of the Agreement. Except as other-
wise provided herein, this Agreement shall be in full force and
effect from its date to and including the date upon which the
principal of, premium, if any, and interest on the Bonds shall
have been paid in full, or provision for payment thereof shall
have been duly made, and the Indenture shall have been discharged
in accordance with its terms .
-34- •
IN WITNESS WHEREOF, the Issuer has caused this Agreement
to be executed in its corporate names, and its corporate seals to
be hereunto affixed and attested, by its duly authorized officers,
and the Borrower has caused this Agreement to be executed in its
name by one of its general partners all as of the date first
above written.
CITY OF ELGIN, ILLINOIS
By
Mayor
(SEAL)
Attest:
City Clerk
SLADE AVENUE PARTNERSHIP
By: Sherman Hospital Association,
a general partner
By
Title:
nr
STATE OF ILLINOIS )
ss:
COUNTY OF )
The foregoing instrument was acknowledged before me
this day of November, 1983 , by and
, who are Mayor and City Clerk, respectively,
of the City of Elgin, Illinois, an Illinois municipal corporation,
on behalf of said municipal corporation.
Notary Public in and for
County, Illinois
(SEAL)
My commission expires:
-36-
STATE OF ILLINOIS )
) ss :
COUNTY OF )
The foregoing instrument was acknowledged before me
this day of November, 1983 , by who is
of Sherman Hospital Association, a general
partner of Slade Avenue Partnership, an Illinois general partner-
ship, on behalf of said partnership.
Notary Public in and for
County, Illinois
(SEAL)
My commission expires :
EXHIBIT A
Exhibit A to the Loan Agreement, dated as of November
1, 1983, by and between the City of Elgin, and Slade Avenue
Partnership.
PROJECT DESCRIPTION
•
-38-