Ordinance 2007-041 STAT OF ILLINOIgg
COUN�FIIF YNDALL
MAY 15 2007
County Clerk
Kendall County
UNITED CITY OF YORKVILLE
]KENDALL COUNTY
STATE OF ILLINOIS
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ORDINANCE NUMBER 2007 -41
AN AMENDED AND RESTATED ORDINANCE PROVIDING FOR ISSUANCE OF
UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS
SPECIAL SERVICE AREA NUMBER 2006 -113
AD VALOREM TAX BONDS, SERIES 2007
(CANNONBALL /BEECHER ROAD PROJECT)
ADOPTED BY THE
CITY COUNCIL
I
OF THE
UNITED CITY OF YORKVILLE
KENDALL COUNTY
STATE OF ILLINOIS
The 14' day of May, 2007
Published in pamphlet form by authority of the City Council of the United City of Yorkville,
Kendall County, Illinois this 14 day of May, 2007.
CH 12_715664.2
I LED
MAY 15 2007
ORDINANCE NO. 2007-41 County Clerk
Kendall County
AN AMENDED AND RESTATED ORDINANCE PROVIDING FOR ISSUANCE OF
UNITED CITY OF YORKVILLE, ]KENDALL COUNTY, ILLINOIS
SPECIAL SERVICE AREA NUMBER 2006 -113
AD VALOREM TAX BONDS, SERIES 2007
(CANNONBALL/BEECHER ROAD PROJECT)
BE IT ORDAINED BY THE CITY COUNCIL OF THE UNITED CITY OF
YORKVILLE, KENDALL COUNTY, ILLINOIS, AS FOLLOWS:
Section 1. Findings and Declarations. It is found and declared by the City Council of
the United City of Yorkville, Kendall County, Illinois (the " City ") as follows:
a. The City has previously established Special Service Area Number 2006-
113 described more fully in Exhibit A to this Ordinance ' (the "Special Service Area ")
pursuant to Ordinance Number 2007 -26 adopted on March 13, 2007 (the "Establishing
Ordinance "), the provisions of the Special Service Area Tax Law, 35 ILCS 200/27 -5 et
sew., as amended (the "Special Service Area Act ") and the provisions of Section 7 of
Article VII of the 1970 Constitution of the State of Illinois, and has otherwise complied
with all other conditions precedent required by the Special Service Area Act.
b. It is necessary and in the best interests of the City to provide at this time
special services benefiting the Special Service Area consisting of the acquisition,
construction and installation of public improvements including, but not limited to,
engineering, surveying, soil testing and appurtenant work, mass grading and demolition,
storm water management facilities, storm drainage systems and storm sewers, site
clearing and tree removal, public water facilities, sanitary sewer facilities, erosion control
measures, roads, streets, curbs, gutters, street lighting, traffic controls, sidewalks, paths
and related street improvements, and equipment and materials necessary for the
maintenance thereof, landscaping, wetland mitigation, public park improvements and tree
installation, costs for land and easement acquisitions or dedications relating to any of the
foregoing improvements, required tap -on and related fees for water or sanitary sewer
services and other eligible costs to serve the Special Service Area (the " Special
Services "). The City presently estimates the total cost of these Special Services together
with costs of borrowing money for that purpose, funding administrative expenses and
providing for necessary debt service reserves and capitalized interest (collectively, the
"Costs of the Special Services ") to be approximately $15,000,000.
C. The City does not have sufficient funds on hand or available from other
sources with which to pay the costs of the Special Services.
d. It is in the best interests of the City to issue not to exceed $15,000,000
principal amount of its Special Service Area Number 2006 -113 Ad Valorem Tax Bonds,
Series 2007 (Cannonball/Beecher Road Project) (the " Bonds ") as provided in this
Ordinance, to pay or provide funds for a portion of the Costs of the Special Services.
CH12_715664.2
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e. The borrowing of the sum of not to exceed $15,000,000 and the issuance
of the Bonds in that amount are for purposes constituting special services in the Special
Service Area under the Special Service Area Act.
f. After due publication of a notice as required by the Special Service Area
Act, a public hearing to consider the establishment of the Special Service Area, the
issuance of the Bonds for the purpose of paying the costs of the Special Services and the
manner in which the Bonds are proposed to be retired and the proposed tax levy, was
held on October 3, 2006 at 7:00 p.m. No objection petition has been filed with respect to
the establishment of the Special Service Area or the issuance of the Bonds within the
period of time allowed pursuant to the Special Service Area Act.
g. The City previously adopted Ordinance Number 2007 -27 (the " Prior
Ordinance ") on March 27, 2007 authorizing the issuance of the Bonds in an amount not
to exceed $12,500,000.
h. It has become necessary to amend and restate the Prior Ordinance to
authorize the issuance of the Bonds in an amount not to exceed $15,000,000.
Section 2. Issuance of Bonds. The City shall borrow the sum of not to exceed
$15,000,000 by issuing the Bonds as provided in this Ordinance. The Bonds which shall be
designated "United City of Yorkville, Kendall County, Illinois Special Service Area Number
2006 -113 Ad Valorem Tax Bonds, Series 2007 (Cannonball /Beecher Road Project)," and shall
be issued for the purpose of providing a portion of the funds needed for the Costs of the Special
Services. The Bonds shall be issued pursuant to the powers of the City pursuant to Section 7 of
Article VII of the 1970 Constitution of the State of Illinois; the Special Service Area Act; and the
Local Government Debt Reform Act, 30 ILCS 350/1 et se . (the "Debt Act ").
Section 3. Approval of Documents. There have been submitted to the City Council
forms of the following documents relating to the issuance of the Bonds:
a. a form of Trust Indenture (the "Indenture ") between the City and The
Bank of New York Trust Company, N.A., as Trustee, to be dated as of April 1, 2007,
which form of Indenture is attached as Exhibit B to this Ordinance;
b. a form of Bond Purchase Agreement (the "Bond Purchase Agreement")
among the City, William Blair & Company, L.L.C., as Underwriter (the "Underwriter "),
and Cannonball LLC (the "Developer ") to be dated as of the date the offer of the
Underwriter to purchase the Bonds is accepted by the City, which form of Bond Purchase
Agreement is attached as Exhibit C to this Ordinance;
C. a form of Development Agreement between the Developer and the City,
which form of Development Agreement is attached as Exhibit D to this Ordinance; and
d. a form of the preliminary Limited Offering Memorandum (the "Limited
Offering Memorandum ") used by the Underwriter in its initial offering of the Bonds,
which form of Limited Offering Memorandum is attached as Exhibit E to this Ordinance.
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Such documents are approved as to form and substance and the Mayor and the City Clerk
of the City are authorized and directed to execute and deliver and /or authorize the use of such
documents on behalf of the City in the forms submitted with such additions, deletions and
completions of the same (including the establishment of the terms of the Bonds within the
parameters set forth in this Ordinance) as the Mayor and the City Clerk deem appropriate; and
when each such document is executed, attested, sealed and delivered on behalf of the City, as
provided herein, each such document will be binding on the City; from and after the execution
and delivery of each such document, the officers, employees and agents of the City are hereby
authorized, empowered and directed to do all such acts and things and to execute all such
additional documents as may be necessary to carry out, comply with and perform the provisions
of each such document as executed; and each such document shall constitute, and hereby is
made, a part of this Ordinance, and a copy of each such document shall be placed in the official
records of the City, and shall be available for public inspection at the office of the City Clerk.
Either the Mayor or the City Clerk is authorized and directed, subject to the terms of the Bond
Purchase Agreement as executed, to execute the final Limited Offering Memorandum in
substantially the form of the preliminary Limited Offering Memorandum presented hereto with
such changes, additions or deletions as they deem appropriate to reflect the final terms of the
Bonds, the Indenture and other matters.
Section 4. Bond Terms. The Bonds shall be issued as provided in the Indenture and
shall be issued in the principal amount of not to exceed $15,000,000, shall be dated, shall mature,
shall bear interest at the rates (not to exceed in any year seven percent (7 %) per annum) and shall
be subject to redemption at the times and prices as set forth in the Indenture, and shall be sold to
the Underwriter at a purchase price of not less than 98.5% of the principal amount of the Bonds
with an original issue discount of not to exceed 2% of the principal amount of the Bonds, all as
set forth in the Bond Purchase Agreement. The execution and delivery of the Bond Purchase
Agreement by the Mayor and the City Clerk shall evidence their approval of the terms of the
Bonds set forth above.
Section 5. Execution and Delivery of Bonds. The Mayor and the City Clerk are
authorized and directed to execute and deliver the Bonds and, together with other Authorized
Officers (as defined in the Indenture), to take all necessary action with respect to the issuance,
sale and delivery of the Bonds, all in accordance with the terms and procedures specified in this
Ordinance and the Indenture. The Bonds shall be delivered to the Trustee who is directed to
authenticate the Bonds and deliver the Bonds to the Underwriter upon receipt of the purchase
price for the Bonds.
The Bonds shall be in substantially the form set forth in the Indenture. Each Bond shall
be executed by the manual or facsimile signature of the Mayor and the manual or facsimile
signature of the City Clerk and shall have the corporate seal of the City affixed to it (or a
facsimile of that seal printed on it). The Mayor and the City Clerk (if they have not already done
so) are authorized and directed to file with the Illinois Secretary of State their manual signatures
certified by them pursuant to the Uniform Facsimile Signatures of Public Officials Act, as
amended, which shall authorize the use of their facsimile signatures to execute the Bonds. Each
Bond so executed shall be as effective as if manually executed. In case any officer of the City
whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be
such officer before authentication and delivery of any of the Bonds, that signature or facsimile
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CH12_715664.2
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signature shall nevertheless be valid and sufficient for all purposes, the same as if the officer had
remained in office until delivery.
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No Bond shall be valid for any purpose unless and until a certificate of authentication on
that Bond substantially in the form set forth in the bond form in the Indenture shall have been
duly executed by the Trustee. Execution of that certificate upon any Bond shall be conclusive
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evidence that the Bond has been authenticated and delivered under this Ordinance.
Section 6. Bonds are Limited Obligations; Levy of Ad Valorem Tax; Pledge. The
Bonds shall constitute limited obligations of the City, payable from the Ad Valorem Taxes (as
defined below) to be levied on all taxable real property within the Special Service Area as
provided below. The Bonds shall not constitute the general obligations of the City and neither
the full faith and credit nor the unlimited taxing power of the City shall be pledged as security for
payment of the Bonds.
There are hereby levied Ad Valorem Taxes upon all taxable real property within the
Special Service Area sufficient to pay and discharge the principal of and interest on the Bonds at
maturity or mandatory sinking fund redemption dates and to pay interest on the Bonds for each
year at the interest rates to be set forth in Section 2.3 of the Indenture and to pay for the
Administrative Expenses (as defined in the Indenture) of the City and Kendall County, if any, for
each year including specifically the following amounts for the following years, in each case to be
collected in the next succeeding year (the "Ad Valorem Taxes "):
An Amount Sufficient
Year of Levy to Produce the Sum of:
2008 $ 856,750.00
2009 951,750.00
2010 961,287.50
2011 1,094,962.50
2012 1,160,587.50
2013 1,206,612.50
2014 1,243,900.00
2015 1,277,737.50
2016 1,298,125.00
2017 1,335,637.50
2018 1,369,125.00
2019 1,393,587.50
2020 1,414,312.50
2021 1,431,300.00
2022 1,454,550.00
2023 1,468,487.50
2024 1,488,400.00
2025 1,518,712.50
2026 4,203,562.50
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CH 12_715664.2
The City shall take all actions which shall be necessary to provide for the levy, extension,
collection and application of the taxes levied by this Ordinance, including enforcement of such
taxes as provided by law but only as set forth in Section 7(a) below.
The Ad Valorem Taxes levied as provided above shall be deposited in the Debt Service
Fund created pursuant to the Indenture and are appropriated to and are irrevocably pledged to
and shall be used only for the purposes set forth in Section 4.3 of the Indenture.
Section 7. Special Covenants. The City covenants with the holders of the Bonds
from time to time outstanding that it (i) will take all actions which are necessary to be taken (and
avoid any actions which it is necessary to avoid being taken) so that interest on the Bonds will
not be or become included in gross income for federal income tax purposes under existing law,
including without limitation the Internal Revenue Code of 1986, as amended (the " Code "); (ii)
will take all actions reasonably within its power to take which are necessary to be taken (and
avoid taking any actions which are reasonably within its power to avoid taking and which are
necessary to avoid) so that the interest on the Bonds will not be or become included in gross
income for federal income tax purposes under the federal income tax laws as in effect from time
to time; and (iii) will take no action or permit any action in the investment of the proceeds of the
Bonds, amounts held under the Indenture or any other funds of the City which would result in
making interest on the Bonds subject to federal income taxes by reason of causing the Bonds to
be "arbitrage bonds" within the meaning of Section 148 of the Code, or direct or permit any
action inconsistent with the regulations under the Code as promulgated and as amended from
time to time and as applicable to the Bonds. The Mayor, the City Clerk, the City Treasurer and
other Authorized Officers of the City are authorized and directed to take all such actions as are
necessary in order to carry out the issuance and delivery of the Bonds including, without
limitation, to make any representations and certifications they deem proper pertaining to the use
of the proceeds of the Bonds and other moneys held under the Indenture in order to establish that
the Bonds shall not constitute arbitrage bonds as so defined.
The City further covenants with the holders of the Bonds from time to time outstanding
that:
a. it will take all actions, if any, which shall be necessary in order further to
provide for the levy, extension, collection and application of the Ad Valorem Taxes
imposed by or pursuant to this Ordinance;
b. it will not take any action which would adversely affect the levy,
extension, collection and application of the Ad Valorem Taxes; and
C. it will comply with all present and future laws concerning the levy,
extension and collection of the Ad Valorem Taxes; in each case so that the City shall be
able to pay the principal of and interest on the Bonds as they come due and replenish the
Reserve Fund to the Required Reserve and it will take all actions necessary to assure the
timely collection of the Ad Valorem Taxes, including without limitation, the enforcement
of any delinquent Ad Valorem Taxes as described in paragraph (a) above.
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CH12_715664.2
Section 8. Additional Authoritv. The Mayor, the City Clerk and the other officers of
the City are authorized to execute and deliver on behalf of the City such other documents,
agreements and certificates and to do such other things consistent with the terms of this
Ordinance as such officers and employees shall deem necessary or appropriate in order to
effectuate the intent and purposes of this Ordinance, including, without limitation, to make any
representations and certifications they deem proper pertaining to the use of the proceeds of the
Bonds in order to establish that the Bonds shall not constitute arbitrage bonds as defined in
Section 7 above.
Section 9. Filinl7 of Ordinance. The City lerk is directed to file a certified co of
Y copy
this Ordinance, and an accurate map of the Special Service Area, with the County Clerk of
Kendall County.
Section 10. Severabilitv. If any section, paragraph, clause or provision of this
Ordinance (including any section, paragraph, clause or provision of any exhibit to this
Ordinance) shall be held invalid, the invalidity of such section, paragraph, clause or provision
shall not affect any of the other sections, paragraphs, clauses or provisions of this Ordinance (or
of any of the exhibits to this Ordinance).
Section 11. Repealer; Effect of Ordinance. All ordinances, resolutions and orders or
parts of ordinances, resolutions and orders in conflict with this Ordinance are repealed to the
extent of such conflict. Taxes levied pursuant to the Prior Ordinance are hereby abated in their
entirety. The City Clerk shall cause this Ordinance to be published in pamphlet form. This
Ordinance is passed as an emergency measure, as it is urgent that this Ordinance become
effective to permit the immediate issuance of the Bonds and the use of proceeds of the Bonds to
pay expenses which are presently due and payable. Therefore, this Ordinance shall be in full
force and effect immediately upon passage and approval, provided it is passed by the affirmative
vote of at least two - thirds of the members of the City Council. This Ordinance shall be effective
upon its passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE UNITED CITY OF YORKVILLE,
KENDALL COUNTY, ILLINOIS this 14 day of May, 2007.
VOTING AYE:
VOTING NAY: ---
ABSENT: —
ABSTAINED:
NOT VOTING:
APPROVED:
Mayor
ATTEST:
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CH 12_715664.2
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Exhibit A
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UNITED CITY OF YORKVILLE
SPECIAL SERVICE AREA NUMBER 2006 -113
Leaal Description of Propertv
THAT PART OF THE SOUTHEAST QUARTER OF SECTION 19, PART OF THE SOUTH
HALF OF SECTION 20 AND PART OF THE NORTHWEST QUARTER OF SECTION 29,
TOWNSHIP 37 NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL MERIDIAN
DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE
SOUTHEAST QUARTER OF SAID SECTION 19; THENCE NORTH 01 DEGREES 13
MINUTES 53 SECONDS WEST, ALONG THE EAST LINE OF SAID SOUTHEAST
QUARTER 310.20 FEET; THENCE WESTERLY PERPENDICULAR TO SAID EAST LINE
198.00 FEET; THENCE NORTH 16 DEGREES 23 MINUTES 58 SECONDS WEST, 862.81
FEET; THENCE NORTH 46 DEGREES 51 MINUTES 14 SECONDS EAST, 126.15 FEET;
THENCE WESTERLY ALONG A NONTANGENTIAL CURVE TO THE RIGHT WITH A
RADIUS OF 25.00 FEET AND A CHORD BEARING OF NORTH 86 DEGREES 29
MINUTES 53 SECONDS WEST, AN ARC LENGTH OF 40.71 FEET; THENCE
NORTHWESTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 950.00
FEET AND A CHORD BEARING OF NORTH 30 DEGREES 00 MINUTES 26 SECONDS
WEST, AN ARC LENGTH OF 326.41 FEET; THENCE NORTH 67 DEGREES 35 MINUTES
57 SECONDS EAST, 243.73 FEET; THENCE SOUTHEASTERLY ALONG A
NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 500.00 FEET AND A
CHORD BEARING OF SOUTH 31 DEGREES 07 MINUTES 50 SECONDS EAST, AN ARC
LENGTH OF 209.70 FEET; THENCE SOUTH 43 DEGREES 08 MINUTES 45 SECONDS
EAST, 52.80 FEET; THENCE NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST,
287.40 FEET; THENCE SOUTH 43 DEGREES 08 MINUTES 45 SECONDS EAST, 80.00
FEET; THENCE NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 162.29 FEET;
THENCE NORTH 43 DEGREES 08 MINUTES 45 SECONDS WEST, 7.00 FEET; THENCE
NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 60.76 FEET; THENCE
NORTHEASTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET
AND A CHORD BEARING OF NORTH 58 DEGREES 18 MINUTES 15 SECONDS EAST,
AN ARC LENGTH OF 146.68 FEET; THENCE NORTH 69 DEGREES 45 MINUTES 15
SECONDS EAST, 121.97 FEET; THENCE NORTHEASTERLY ALONG A CURVE TO THE
LEFT WITH A RADIUS OF 433.00 FEET AND A CHORD BEARING OF NORTH 37
DEGREES 51 MINUTES 31 SECONDS EAST, AN ARC LENGTH OF 482.09 FEET;
THENCE NORTHEASTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF
25.00 FEET AND A CHORD BEARING OF NORTH 51 DEGREES 23 MINUTES 20
SECONDS EAST, AN ARC LENGTH OF 39.64 FEET; THENCE SOUTH 83 DEGREES 11
MINUTES 08 SECONDS EAST, 763.20 FEET; THENCE SOUTHEASTERLY ALONG A
CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET AND A CHORD BEARING OF
SOUTH 57 DEGREES 07 MINUTES 07 SECONDS EAST, AN ARC LENGTH OF 333.94
FEET; THENCE SOUTH 31 DEGREES 03 MINUTES 05 SECONDS EAST, 123.11 FEET;
THENCE SOUTH 58 DEGREES 56 MINUTES 55 SECONDS WEST, 7.00 FEET; THENCE
SOUTHEASTERLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A
CH 12_715664.2
RADIUS OF 440.00 FEET AND A CHORD BEARING OF SOUTH 42 DEGREES 20
MINUTES 40 SECONDS EAST, AN ARC LENGTH OF 173.45 FEET; THENCE NORTH 32
DEGREES O1 MINUTES 21 SECONDS EAST, 80.28 FEET; THENCE SOUTHEASTERLY
ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 360.00 FEET
AND A CHORD BEARING OF SOUTH 60 DEGREES 42 MINUTES 59 SECONDS EAST,
AN ARC LENGTH OF 101.11 FEET; THENCE SOUTH 68 DEGREES 45 MINUTES 32
SECONDS EAST, 784.84 FEET TO THE CENTER LINE OF CANNONBALL TRAIL;
THENCE SOUTH 21 DEGREES 40 MINUTES 31 SECONDS WEST, ALONG SAID
CENTER LINE, 331.43 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 SECONDS
WEST, ALONG SAID CENTER LINE, 1261.58 FEET; THENCE NORTH 68 DEGREES 45
MINUTES 43 SECONDS WEST, 48.00 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES
17 WEST, 470.00 FEET; THENCE SOUTH 57 DEGREES 14 MINUTES 17 SECONDS
WEST, 74.81 FEET TO THE NORTH LINE OF U.S. ROUTE 34; THENCE NORTH 85
DEGREES 32 MINUTES 10 SECONDS WEST ALONG SAID NORTH LINE, 1983.32 FEET
TO THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 29; THENCE
NORTH O1 DEGREES 14 MINUTES 12 SECONDS WEST ALONG SAID WEST LINE,
378.99 FEET TO THE POINT OF BEGINNING, IN THE UNITED CITY OF YORKVILLE,
KENDALL COUNTY, ILLINOIS, AND CONTAINING 143.40 ACRES OF LAND MORE OR
LESS.
PIN'S
02 -19- 400 -003
02 -29 -100 -001
02-20-351-001
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(51 T (lj F &L DRAFT
03/15/07
TRUST INDENTURE
Between
UNITED CITY OF YORKVILLE, ILLINOIS
and
THE BANK OF NEW YORK TRUST COMPANY, N.A.,
as Trustee
Dated as of April 1, 2007
UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS
SPECIAL SERVICE AREA NUMBER 2006 -113
AD VALOREM TAX BONDS, SERIES 2007
(CANNONBALLBEECHER ROAD PROJECT)
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CH12_650171.5
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATIONS .............. ............................... 2
Section1.1 Definitions .................................................................... ............................... 2
Section 1.2 Rules of Interpretation ............................................... ............................... 11
ARTICLE II AUTHORIZATION, EXECUTION, AUTHENTICATION,
REGISTRATION AND DELIVERY OF BONDS ... ............................... 12
Section 2.1 Authorization of Bonds; Limitation ........................... ............................... 12
Section 2.2 Bonds Limited Obligations ........................................ ............................... 12
Section 2.3 Details of Bonds ......................................................... ............................... 12
Section 2.4 Execution of Bonds .................................................... ............................... 13
Section 2.5 Authentication of Bonds ............................................ ............................... 13
Section 2.6 Form of Bonds ............................................................. .............................13
Section 2.7 Delivery of Bonds ...................................................... ............................... 13
Section 2.8 Registration of Transfer and Exchange of Bonds; Persons Treated
asBondholders ........................................................... ............................... 14
Section 2.9 Temporary Bonds ....................................................... ............................... 14
Section 2.10 Mutilated, Lost or Destroyed Bonds .......................... ............................... 15
Section 2.11 Cancellation and Disposition of Bonds ...................... ............................... 15
Section 2.12 Securities Depository Provisions ............................... ..................:............ 15
ARTICLE III REDEMPTION OF BONDS ..................................... ............................... 17
Section 3.1 Redemption Dates and Prices .................................... ............................... 17
Section 3.2 Mandatory Sinking Fund Redemption of Bonds ....... ............................... 17
Section 3.3 Optional Redemption of Bonds ................................. ............................... 17
Section 3.4 Special Mandatory Redemption from Surplus Bond Proceeds ................. 18
Section 3.5 Selection of Bonds for Redemption ........................... ............................... 18
Section 3.6 Notice of Redemption ................................................ ............................... 18
Section 3.7 Purchase at Any Time ................................................ ............................... 19
ARTICLE IV FUNDS AND ACCOUNTS ...................................... ............................... 20
Section 4.1 Creation of Funds; Deposit of Bond Proceeds ........... ............................... 20
Section 4.2 Improvement Fund ..................................................... ............................... 20
Section 4.3 Debt Service Fund ...................................................... ............................... 21
Section 4.4 Reserve Fund ............................................................. ............................... 22
Section 4.5 Revenues to Be Held for All Bondholders, With Certain
Exceptions.................................................................. ............................... 23
Section4.6 Rebate Fund ............................................................... ............................... 24
Section 4.7 Administrative Expense Fund .................................... ............................... 24
Section 4.8 Special Redemption Fund .......................................... ............................... 24
Section 4.9 Repayment to the Issuer from Amounts Remaining in Any Funds .......... 24
Section 4.10 Additional Funds and Accounts ................................. ............................... 24
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ARTICLE V INVESTMENT OR DEPOSIT OF FUNDS .............. ............................... 25
Section 5.1 Deposits and Security Therefor ................................. ............................... 25
Section 5.2 Investment or Deposit of Funds ................................. ............................... 25
Section 5.3 Valuation of Funds ..................................................... ............................... 26
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ARTICLE VI COVENANTS AND AGREEMENTS OF THE ISSUER ....................... 27
Section 6.1 Covenants and Agreements of the Issuer ................... ............................... 27
Section 6.2 Observance and Performance of Covenants, Agreements,
Authority and Actions ................................................ ............................... 28
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Section 6.3 Tax Covenants ........................................................... ............................... 28
Section 6.4 Limited Obligations ................................................... ............................... 29
Section 6.5 Levy of Ad Valorem Tax; Abatement ....................... ............................... 30
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ............ ............................... 30
Section 7.1 Events of Default Defined ......................................... ............................... 30
Section 7.2 Remedies Upon Default ............................................. ............................... 30
Section 7.3 Additional Remedies .................................................. ............................... 31
Section 7.4 Marshaling of Assets .................................................. ............................... 31
Section 7.5 Trustee May File Proofs of Claim ............................. ............................... 32
Section 7.6 Possession of Bonds Not Required ............................ ............................... 32
Section 7.7 Notice and Opportunity to Cure Certain Defaults ..... ............................... 32
Section 7.8 Priority of Payment Following Event of Default ....... ............................... 33
Section 7.9 Bondholders May Direct Proceedings ....................... ............................... 34
Section 7.10 Limitations on Rights of Bondholders ....................... ............................... 34
Section 7.11 Unconditional Right of Bondholder to Receive Payment ......................... 35
Section 7.12 Restoration of Rights and Remedies .......................... ............................... 35
Section 7.13 Rights and Remedies Cumulative .............................. ............................... 35
Section 7.14 Delay or Omission Not Waiver .................................. ............................... 35
Section 7.15 Waiver of Defaults ..................................................... ............................... 35
Section 7.16 Notice of Events of Default ....................................... ............................... 35
ARTICLE VIII THE TRUSTEE ......................................................... ............................... 36
Section 8.1 Duties and Responsibilities of the Trustee ..:.............. ............................... 36
Section 8.2 Certain Rights of the Trustee ..................................... ............................... 37
Section 8.3 Trustee Not Responsible for Recitals ........................ ............................... 39
Section 8.4 Trustee May Own Bonds ........................................... ............................... 39
Section 8.5 Compensation and Expenses of the Trustee .............. ............................... 40
Section 8.6 Qualifications of Trustee ............................................ ............................... 40
Section 8.7 Resignation or Removal of Trustee; Appointment of Successor
Trustee........................................................................ ............................... 41
Section 8.8 Acceptance of Appointment by Successor Trustee ... ............................... 41
Section 8.9 Merger, Succession or Consolidation of Trustee ....... ............................... 42
Section 8.10 Notices to Bondholders; Waiver ................................ ............................... 42
ARTICLE IX DISCHARGE AND DEFEASANCE ........................ ............................... 44
Section9.1 Discharge ................................................................... ............................... 44
Section 9.2 Defeasance; Deposit of Funds for Payment of Bonds .............................. 44
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Section 9.3 Notice of Defeasance ................................................. ............................... 45
ARTICLE X SUPPLEMENTAL INDENTURES AND AMENDMENTS .................. 45
Section 10.1 Supplemental Indentures Without Bondholders' Consent ........................ 45
Section 10.2 Supplemental Indentures Requiring Bondholders' Consent ..................... 46
Section 10.3 Consents of Bondholders and Opinions ..................... ............................... 47
Section 10.4 Notation on Bonds ..................................................... ............................... 47
Section 10.5 Delivery of Counsel's Opinion with Respect to Supplemental
Indentures................................................................... ............................... 47
Section 10.6 Effect of Supplemental Indentures ............................. ............................... 48
ARTICLE XI MISCELLANEOUS PROVISIONS .......................... ............................... 48
Section 11.1 Security Agreement; Financing Statements ............... ............................... 48
Section 11.2 Limitation of Rights ................................................... ............................... 48
Section11.3 Severability ................................................................ ............................... 48
Section11.4 Notices ....................................................................... ............................... 49
Section11.5 Holidays ..................................................................... ............................... 49
Section11.6 Counterparts ............................................................... ............................... 50
Section 11.7 Applicable Law .......................................................... ............................... 50
Section 11.8 Limitation of Liability of Officials of the Issuer ....... ............................... 50
Section 11.9 Successors and Assigns .............................................. ............................... 50
Section 11.10 Form of Documents Delivered to Trustee ................. ............................... 50
Section 11.11 Consent of Holders .................................................... ............................... 51
Appendix A — Form of Bond
Appendix B — Description of Special Service Area Number 2006 -113
Appendix C — Request for Payment
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TRUST INDENTURE
THIS TRUST INDENTURE (the "Indenture ") dated as of April 1, 2007 is made by and
between the United City of Yorkville (the " Issuer '), a municipal corporation organized and
existing under the laws of the State of Illinois, and The Bank of New York Trust Company, N.A.
(the "Trustee "), a national banking association authorized to exercise corporate trust powers:
WITNESSETH:
WHEREAS, the Issuer has by Ordinance Number 2007- established Special Service
Area Number 2006 -113 (the " SSA "); and
WHEREAS, the Issuer has by Ordinance Number 2007- (the "Bond Ordinance ")
authorized the issuance of its Special Service Area Number 2006 -113 Ad Valorem Tax Bonds,
Series 2007 (Cannonball/Beecher Road Project) (the ` Bonds ") in the aggregate principal amount
of not to exceed $12,500,000 to finance the construction of special services within the SSA (the
"Special Services ") pursuant to the provisions of Article VII; Section 6 of the Illinois
constitution and the Special Service Area Tax Law, 35. ILCS 200/27 -5 et seq. (the "Act "); and
WHEREAS, the Issuer has determined that, in the issuance and sale of the Bonds, it will
be acting to farther the public purposes of the Act; and
WHEREAS, all things necessary to make the Bonds, when issued, executed and
delivered by the Issuer and authenticated by the Trustee, to the extent required pursuant to this
Indenture, the valid, binding and legal limited obligations of the Issuer, and to constitute this
Indenture as a valid assignment and pledge of the revenues herein pledged to the payment of the
principal of, redemption premium, if any, and interest on the Bonds and a valid assignment and
pledge of certain rights of the Issuer has been done and performed, and the creation, execution
and delivery of this Indenture, and the execution, issuance and delivery of the Bonds, subject to
the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH, that to secure the
payment of principal of, redemption premium, if any, and interest on the Bonds according to
their true intent and meaning, and all other amounts due from time to time under this Indenture,
including those due to the Trustee, to secure the performance and observance of all of the
covenants, agreements, obligations and conditions contained in the Bonds and in this Indenture,
and to declare the terms and conditions upon and subject to which the Bonds are and are
intended to be issued, held, secured and enforced and in consideration of the premises and the
acceptance by the Trustee of the trusts created herein and of the purchase and acceptance of the
Bonds by the Bondholders and for other good and valuable consideration, the receipt of which is
acknowledged, the Issuer has executed and delivered this Indenture and absolutely and
irrevocably pledges and assigns to the Trustee and to its successors in trust, on the basis set forth
herein, and its and their assigns, all right, title and interest of the Issuer in and to the Trust Estate
as defined in Article I;
TO HAVE AND TO HOLD unto the Trustee and its successors in trust and its and their
assigns forever;
CH12_650171.5
BUT IN TRUST, NEVERTHELESS, and subject to the provisions hereof,
(a) for the equal and proportionate benefit, security and protection of all
Bonds,
(b) for the enforcement of the payment of the principal of, redemption
premium, if any, and interest on the Bonds, and all other amounts due from time to time
under this Indenture, including those due to the Trustee, when payable, according to the
true intent and meaning thereof and of this Indenture, and
(c) to secure the performance and observance of and compliance with the
covenants, agreements, obligations, terms and conditions of this Indenture and the Bond
Ordinance,
in each case, without preference, priority or distinction, as to lien or otherwise except as provided
herein, of any one Bond over any other by reason of designation, number, date of the Bonds or of
authorization, issuance, sale, execution, authentication, delivery or maturity thereof, or
otherwise, so that each Bond and all Bonds shall have the same right, lien and privilege under
this Indenture and shall be secured equally and proportionately by this Indenture, it being
intended that the lien and security of this Indenture shall take effect from the date hereof, without
regard to the date of the actual issue, sale or disposition of the Bonds, as though upon that date
all of the Bonds were actually issued, sold and delivered to purchasers for value; provided,
however, that, upon satisfaction of and in accordance with the provisions of Article IX, the rights
assigned hereby shall cease, determine and be void to the extent described therein; otherwise,
such rights shall be and remain in full force and effect;
IT IS DECLARED that all Bonds issued under and secured by this Indenture are to be
issued, authenticated and delivered, and that all Revenues assigned or pledged hereby are to be
dealt with and disposed of under, upon and subject to, the terms, conditions, stipulations,
covenants, agreements, obligations, trusts, uses and purposes provided in this Indenture; and the
Issuer has agreed and covenanted, and agrees and covenants with the Trustee and with each and
all Bondholders, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.1 Definitions. Unless the context otherwise requires, the terms defined in
this Article I shall, for all purposes of this Indenture and of any indenture supplemental hereto,
have the meanings herein specified:
"Accounting Date" means January 1 of each year, commencing January 1, 2008.
"Act" means the Special Service Area Tax Law, 35 ILCS 200/27 -5 et M.
"Ad Valorem Tax" or "Ad Valorem Taxes" means the ad valorem property tax or taxes
levied by the Issuer on all taxable property within the SSA to pay for the Special Services.
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CHI2_650171.5
"Administrative Expense Fund" means the Trust Fund so designated which is described
in Section 4.7.
"Administrative Expense Fund Requirement" means, (1) from the Issue Date though
December 31, 2007, $ , (2) for each calendar year beginning on and after January 1,
2008, the Administrative Expense Fund Requirement on December 31 of the previous year plus
an amount equal to 3% of such Administrative Expense Fund Requirement on December 31 of
the previous year.
"Administrative Expenses" means the following actual or reasonably estimated costs
permitted in accordance with the Act and directly related to the administration of the SSA and
the Bonds as determined by the Issuer or a consultant on its behalf: the costs of computing or
abating the Ad Valorem Tax; the costs of collecting the Ad Valorem Tax (whether by the Issuer,
the County or otherwise); the costs of remitting the Ad Valorem Tax to the Trustee; the costs of
the Trustee and any fiscal agent (including its legal counsel) in the discharge of the duties
required of it under this Indenture or any trustee or fiscal agent ,agreement; the costs of any
rebate consultant; the costs of the Issuer or its designee in complying with disclosure
requirements of applicable federal and state securities laws and of the Act, including, but not
limited to, public inquiries regarding the Ad Valorem Tax; and amounts advanced by the Issuer
for any other administrative purposes of the SSA; and the reasonable fees of legal counsel of the
Issuer incurred in connection with the foregoing.
"Attesting Officer" means the Clerk or Assistant Clerk of the Issuer.
"Authorized Denomination" means denominations of $100,000 and any integral multiple
of $5,000 in excess thereof.
"Available Funds" means additional funds of the Issuer available to pay debt service on
the Bonds or abate the Ad Valorem Taxes.
"Bankruntcv Law" means Title 11 of the United States Code, as it is amended from time
to time and any successor to or replacement of such Title and any other applicable federal or
state bankruptcy, insolvency or other similar law.
"Beneficial Owner" means, for any Bond which is held by a nominee, the beneficial
owner of such Bond.
" Bond " or " Bonds " means the Issuer's Special Service Area Number 2006 -113 Ad
Valorem Tax Bonds, Series 2007 (Cannonball/Beecher Road Project) issued under this Indenture
in the aggregate principal amount of $
"Bond Counsel" means, with respect to the Bonds, Foley & Lardner LLP, Chicago,
Illinois, or any other firm of attorneys experienced in the matters covered by the opinion selected
by the Issuer and acceptable to the Trustee.
"Bondholder" or "holder of Bonds" or "Owner of Bonds" means the Person who owns a
Bond, provided that, pursuant to Section 2.8, the Person in whose name a Bond is registered in
the Bond Register shall be regarded for all purposes as such owner.
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"Bond Ordinance" means Ordinance Number 2007- authorizing the Bonds.
"Bond Register" and "Bond Re6strar" shall have the respective meanings specified in
Section 2.8.
"Book Entry Bonds" means those Bonds for which a Securities Depository or its nominee
is the Bondholder.
"Business Day" means any day of the year other than (a) a Saturday or Sunday, (b) any
day on which banks located in the City of Chicago, Illinois or the city in which the Office of the
Trustee is located are required or authorized by law to remain closed, or (c) any day on which the
New York Stock Exchange is closed.
"Business District" means the Kendall Marketplace Business District within the Issuer
created pursuant to the Business District Act and legally described on Exhibit B to the Business
District Revenue Bond Indenture and incorporated by reference therein whose boundaries are
coterminous with the SSA.
"Business District Act" means the Business District Development and Redevelopment
Act, 65 ILCS 5/11 -74.3 et seq.
"Business District Revenue Bond Indenture" means the Trust Indenture dated as of
January 1, 2007, by and between the Issuer and the Business District Revenue Bond Trustee
pursuant to which the Business District Bonds were issued.
"Business District Revenue Bond Trustee" means The Bank of New York Trust
Company, N.A., and its successors and assigns, as trustee for the Business District Revenue
Bonds.
"Business District Revenue Bonds" means the Issuer's Business District Revenue Bonds,
Series 2007 (Storm Water/Water Improvement Project) in the aggregate principal amount of
$ issued by the Issuer to fund all or a portion of certain municipal improvements in
the Business District in accordance with the Business District Act.
"Business District Sales Tax Account" means the Account created and so designated in
Section 5.2 of the Business District Revenue Bond Indenture.
"Business District Sales Taxes" means the one -half of one percent (.5 %) Business
District Sales Tax levied by the Issuer in the Business District on sales by retailers and
servicemen operating in the Business District, and any tax intended to replace the same as
enacted by law or ordinance of the Issuer or any governmental authority.
"Business District Tax Allocation Fund" means the trust fund created and so designated
in Ordinance Number 2006- of the Issuer adopted on December 12, 2006 pursuant to the
Business District Act.
" Code " means the Internal Revenue Code of 1986, as amended, and the Regulations.
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"Conditional Redemption" means a redemption where the Issuer has stated in the
redemption notice to the Trustee that (a) the redemption is conditioned upon deposit of funds or
(b) the Issuer has retained the right to rescind the redemption, as further described in Section 3.9.
"Costs of the Special Services" or " Costs " means any acquisition or construction cost
properly incurred in connection with the Special Services.
"Counsel" means an attorney or law firm (who may be counsel for the Issuer), acceptable
to the Trustee.
"Coun " means Kendall County, Illinois.
"Debt Service Fund" means the trust fund so designated which is described in
Section 4.3.
"Default" means any event which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default.
"Defeasance Obligations" means noncallable, non - redeemable direct obligations of the
United States of America or noncallable obligations which are fully and unconditionally
guaranteed by the United States of America.
"Deposit" shall have the meaning given to such term in Section 6.5.
" Depository Participants" means any Person for which the Securities Depository holds
Bonds as securities depository.
"Developer" means Cannonball LLC, an Illinois limited liability company, and its
successors and assigns.
"Developer's Counsel" means the lawyer or law firm retained from time to time to
represent the Developer in connection with the development of property within the SSA.
"Development Agreement" means the Development Agreement dated as of ,
2007 between the Issuer and the Developer, as the same may be amended, modified, amended
and restated, and supplemented from time to time.
" shall have the meaning given to such term in Section 2.12.
"Eligible Investments" means, to the extent permitted by then applicable Illinois law, the
following:
(a) Governmental Obligations;
(b) bonds, notes, debentures, or other similar obligations of the United States
of America or its agencies, including (i) federal land banks, federal intermediate credit
banks, banks for cooperative, federal farm credit banks, or any other entity authorized to
issue debt obligations under the Farm Credit Act of 1971 (12 U.S.C. 2001 et. seq.); (ii)
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the federal home loan banks and the federal home loan mortgage corporation; and (iii)
any other agency created by Act of Congress; )
(c) interest bearing obligations of any county, township, city, town,
incorporated town, municipal corporation or school district, which obligations are
registered in the name of the Issuer or held under a custodial agreement at a bank, if such
obligations at the time of purchase are in one of the two highest general classifications
established by a rating service of nationally recognized expertise in rating bonds of states
and their political subdivisions;
(d) interest bearing certificates of deposit, interest bearing savings or money
market accounts, interest bearing time deposits, or other investments constituting direct
obligations of any bank as defined by the Illinois Banking Act which are insured by the
Federal Deposit Insurance Corporation; or which are with a bank rated in the highest
short-term rating category established by a national recognized rating service;
(e) repurchase agreements of government securities which are subject to the
Government Securities Act of 1986. The government securities, unless registered or
inscribed in the name of the Issuer, shall be purchased through banks or trust companies
authorized to do business in the State of Illinois;
(f) repurchase agreements (other than those described in clause (e) of the
definition of "Eligible Investments ") meeting the following requirements:
(1) the securities, unless registered or inscribed in the name of the
Trustee, are purchased through banks or trust companies authorized to do business
in the State of Illinois;
(2) an Authorized Officer after ascertaining which firm will give the
most favorable rate of interest, directs the custodial bank to "purchase "' specified
securities from a designated institution. The "custodial bank" is the bank or trust
company, or agency of government, which acts for the Trustee in connection with
repurchase agreements involving the investment of funds by the Trustee. The
State Treasurer may act as custodial bank for the Trustee;
(3) a custodial bank must be a member bank of the Federal Reserve
System or maintain accounts with member banks. All transfers of book -entry
securities must be accomplished on a Reserve Bank's computer records through a
member bank of the Federal Reserve System. These securities must be credited to
the Trustee on the records of the custodial bank and the transaction must be
confirmed in writing to the Trustee by the custodial bank;
(4) trading partners shall be limited to banks or trust companies
authorized to do business in the State of Illinois or to registered primary reporting
dealers;
(5) the security interest must be perfected;
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(6) the Trustee must enter into a written master repurchase agreement
which outlines the basic responsibilities and liabilities of both buyer and seller;
(7) the repurchase agreement shall be for periods of 330 days or less;
I
(8) the Trustee Representative must inform the custodial bank in
writing of the maturity details of the repurchase agreement;
(9) the custodial bank must take delivery of and maintain the securities
in its custody for the account of the Trustee and confirm the transaction in writing
to the Trustee. The Custodial Undertaking shall provide that the custodian takes
possession of the securities exclusively for the Trustee; that the securities are free
of any claims against the trading partner; and any claims by the custodian are
subordinate to the Trustee's claims to rights to those securities;
(10) the obligations purchased by the Trustee may only be sold or
presented for redemption or payment by the fiscal agent bank or trust company
holding the obligations upon the written instruction of the Trustee or Trustee
Representative; and
(11) the custodial bank shall be liable to the Trustee for any monetary
loss suffered by the Trustee due to the failure of the custodial bank to take and
maintain possession of such securities;
(g) short-term obligations of corporations organized in the United States with
assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase in
one of the three highest rating categories by at least two standard rating services and
which mature not later than 180 days from the date of purchase, (ii) such purchases do
not exceed 10% of the corporation's outstanding obligations and (iii) no more than one-
third of the Issuer's funds are invested in short-term obligations of such corporation as
evidenced by a certificate from an Issuer Representative; and
(h) money market mutual funds registered under the Investment Company Act
of 1940 as amended invested solely in obligations listed in paragraph (a) and (b) above
and in agreements to repurchase such obligations, including those for which the Trustee
or an affiliate performs services for a fee, whether as a custodian, transfer agent,
investment advisor or otherwise.;
together with such other investments as shall from time to time be lawful for the investment of
Issuer funds and shall be approved by the holders of fifty -one percent (51 %) of aggregate
principal amount of Bonds outstanding; provided that `Eligible Investments" shall not include a
financial instrument, commonly known as a "derivative," whose performance is derived, at least
in part, from the performance of any underlying asset, including, without limitation, futures,
options on securities, options on futures, forward contracts, swap agreements, structured notes
and participations in pools of mortgages or other assets.
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CH12_650171.5
II
"Event of Bankruptcy" means the filing of a petition in bankruptcy (or other
commencement of a bankruptcy or similar proceedings) by or against the Issuer, as debtor, under
Bankruptcy Law.
"Event of Default" means any of the events specified in Section 7.1 to be an Event of
Default.
"Excess Business District Sales Taxes" means (i) so long as the Business District
i
Revenue Bonds remain outstanding, the Business District Sales Taxes remaining on deposit in
the Business District Sales Tax Account on December 1 of each year after payment pursuant to
Section 5.3 of the Business District Revenue Bond Indenture of debt service on the Business
District Revenue Bonds, administrative expenses and a debt service reserve requirement relating
to the Business District Revenue Bonds, but in no event more than the amount, together with
Available Funds, necessary to fully abate the Ad Valorem Taxes for the following year and (ii)
after the Business District Revenue Bonds are retired or defeased, and so long as the Bonds
remain outstanding, the Business District Sales Taxes, if any, but in no event more than the
amount, together with Available Funds, necessary to fully abate the Ad Valorem Taxes for the
following year.
"Executive" means the Mayor of the Issuer.
" Funds " means the Improvement Fund, the Debt Service Fund, the Reserve Fund, the
Administrative Expense Fund and the Rebate Fund, and (a) any account within each such Fund,
and (b) any other Fund designated as such with respect to the Bonds. 3
"Governmental Obligations" means (a) noncallable, non - redeemable direct obligations of
the United States of America, (b) obligations the timely payment of the principal of, and interest
on which, is fully and unconditionally guaranteed by the United States of America, and (c)
securities or receipts evidencing ownership interests in obligations or specified portions (such as
principal or interest) of obligations described in (a) or (b).
"Immediate Notice" means notice transmitted by electronic means, in writing, by
telecopy or other electronic means or by telephone (promptly confirmed in writing), and received
by the party addressed.
"Improvement Fund" means the trust fund so designated which is described in
Section 4.2.
"Indenture" means this Trust Indenture as amended or supplemented from time to time.
"Interest Pavment Date" means, (a) for the Bonds, the first day of March and September
of each year beginning March 1, 2008, (b) for Bonds subject to redemption in whole or in part on
any date, the date of such redemption, and (c) for all Bonds any date determined pursuant to
Section 7.8.
"Issuance Costs" means costs incurred by or on behalf of the Issuer including, without
limitation, the following: payment of financial, legal, accounting, consultant and appraisal fees,
expenses and disbursements; the Issuer's fees and expenses attributable to the issuance of the
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CH12_650171.5
Bonds; the cost of printing, engraving and reproduction services; legal fees and expenses for
Bond Counsel, Issuer's counsel, Trustee's counsel, Developer's Counsel and Underwriter's
counsel relating to the issuance of the Bonds; the initial or acceptance fee of the Trustee; and all
other fees, charges and expenses incurred in connection with the issuance of the Bonds and the
preparation and filing or recording of this Indenture and of any document relating to the issuance
of the Bonds.
"Issue Date" means the date of issuance and delivery of the Bonds to the Original
Purchaser.
" Issuer " means the United City of Yorkville, Illinois and its successors and assigns.
"Issuer Representative" means the Executive or the Attesting Officer.
"Legislative Authority" means the City Council of the Issuer.
"Letter of Representations" means when all the Bonds are Book Entry Bonds, the Blanket
Letter of Representations previously executed by the Issuer and delivered to the Securities
Depository and any amendments thereto or successor blanket agreements between the Issuer and
any successor Securities Depository, relating to a system of Book Entry Bonds to be maintained
by the Securities Depository with respect to any bonds, notes or other obligations issued by the
Issuer.
"Office of anv Paving Agent" means the office of any Paying Agent designated in writing
to the Trustee.
"Office of the Trustee" means the designated corporate trust office or offices of the
Trustee, which office or offices at the date of acceptance by the Trustee of the duties and
obligations imposed on the Trustee by this Indenture are set out in Section 11.4.
"Officer's Certificate of the Issuer" means a written certificate, statement, request,
direction or order signed in the name of the Issuer by its Executive, Attesting Officer, an Issuer
Representative, or such other person as may be designated and authorized in writing to sign for
the Issuer and forwarded to the Trustee.
"Original Purchaser" means William Blair & Company, L.L.C.
"Outstanding," in connection with Bonds means, as of the date in question, all Bonds
authenticated and delivered under this Indenture, except:
(a) Bonds theretofore cancelled or delivered to the Trustee for cancellation
under Section 2.11;
(b) Bonds which are deemed to be no longer Outstanding in accordance with
Article IX; and
(c) Bonds in substitution for which other Bonds have been authenticated and
delivered pursuant to Article II.
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CH12_650171.5
"Paving Agent" or "Co- Paving Agent" means any national banking association, state
bank, bank and trust company or trust company appointed by the Issuer and meeting the
qualifications of, and subject to the obligations of, the Trustee in Article VIII. Initially, the
Trustee shall be the Paying Agent.
" Person " or " verso n " means an individual, corporation, firm, association, partnership,
j limited liability company, trust, or other legal entity or group of entities, including a
governmental entity or any agency or political subdivision thereof.
"Rating Service" means any nationally recognized securities rating service that shall have
assigned a rating that is then in effect with respect to the Bonds upon application of the Issuer.
"Rebate Amount" has the meaning ascribed in Section 1.148 -3(b) of the Regulations and
generally means the excess as of any date of the future value of all receipts on non purpose
investments over the future value of all payments on nonpurpose investments all as determined
in accordance with Section 1.148 -3 of the Regulations.
"Rebate Fund" means the fund so designated which is described in Section 4.6.
"Record Date" means, (1) in the case of Bonds which are not Book Entry Bonds the
Trustee's close of business on the 15th day of the calendar month next preceding the Interest
Payment Date, regardless of whether such day is a Business Day, and (2) in the case of Book
Entry Bonds the Trustee's close of business on the Business Day preceding the Interest Payment
Date.
"Regulations" means any applicable Internal Revenue Service Regulations promulgated
in proposed, temporary or final form. Proposed regulations are "applicable" only if, in the event
they are adopted in final form, such regulations would apply to the Bonds.
"Reauired Reserve" means an amount equal to $
"Reporting Period" means the period of time covered by a report of the sales taxes in the
Business District.
"Reserve Fund" means the trust fund so designated which is described in Section 4.4.
"Responsible Officer," when used with respect to the Trustee, means any officer in the
corporate trust department (or any successor thereto) of the Trustee, or any other officer or
representative of the Trustee customarily performing functions similar to those performed by any
of such officers and also means, with respect to a particular corporate trust matter, any other
officer of the Trustee to whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Revenues" means (a) the Ad Valorem Taxes as and when received by the Issuer, (b)
Excess Business District Sales Taxes, (c) Available Funds, and (d) investment income with
respect to any moneys held by the Trustee in the Improvement Fund, the Debt Service Fund, the
Reserve Fund and the Administrative Expense Fund. The term "Revenues" does not include any
moneys or investments or investment income in the Rebate Fund.
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"Securities Depositorv" means a person that is registered as a clearing agency under
Section 17A of the Securities Exchange Act of 1934 or whose business is confined to the
performance of the functions of a clearing agency with respect to exempted securities, as defined
in Section 3(a)(12) of such Act for the purposes of Section 17A thereof.
"Special Redemption Fund" means the trust fund so designated which is described in
Section 4.8.
"Special Services" means the improvements benefiting the SSA consisting of
engineering, soil testing and appurtenant work, mass grading and demolition, storm water
management facilities, storm drainage systems and storm sewers, site clearing and tree removal,
public water facilities, sanitary sewer facilities, erosion control measures, roads, streets, curbs,
gutters, street lighting, signalization, bicycle paths, sidewalks and related street improvements,
and equipment and materials necessary for the maintenance thereof, landscaping and tree
installation, costs for land and easement acquisitions relating to any of the foregoing
improvements, other eligible costs of improvements to serve the SSA and reimbursement of
eligible costs incurred prior to the issuance of the Bonds.
" means the Issuer's Special Service Area Number 2006 -113 as described in
Appendix B.
" State " means the State of Illinois.
"Trust Estate" means all right, title and interest of the Issuer in and to (a) Revenues, (b)
Funds (except for the Rebate Fund) and all money and investments therein, and (c) all other
property of every name and nature from time to time hereafter by delivery or by writing
mortgaged, pledged, delivered or hypothecated as and for additional security under this Indenture
by the Issuer or by anyone on its behalf or with its written consent in favor of the Trustee.
" Trustee " means The Bank of New York Trust Company, N.A., a national banking
association and any successor trustee under this Indenture, acting in its trust capacity.
Section 1.2 Rules of Interpretation. For purposes of this Indenture, except as
otherwise expressly provided or the context otherwise requires:
(a) The words "herein," "hereof' and "hereunder" and other similar words
refer to this Indenture as a whole and not to any particular Article, Section or other
subdivision.
(b) The definitions in this Article are applicable whether the terms defined are
used in the singular or the plural.
(c) All accounting terms which are not defined in this Indenture have the
meanings assigned to them in accordance with then applicable generally accepted
accounting principles.
(d) Any pronouns used in this Indenture include both the singular and the
plural and cover both genders.
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(e) Any terms not defined in this Indenture but which are defined in the Bond
Ordinance have the same meaning in this Indenture as are given to them in the Bond
Ordinance.
(f) Any terms defined elsewhere in this Indenture have the meanings
attributed to them where defined.
(g) Words referring to the redemption or calling for redemption of Bonds
shall not be deemed to refer to the payment of Bonds at their stated maturity.
i
(h) The captions or headings herein are for convenience only and in no way
define, limit or describe the scope or intent, or control or affect the meaning or
construction, of any provisions or sections hereof.
(i) Any references to Section numbers are to Sections of this Indenture unless
stated otherwise.
ARTICLE II
AUTHORIZATION, EXECUTION, AUTHENTICATION, REGISTRATION AND
DELIVERY OF BONDS
Section 2.1 Authorization of Bonds: Limitation. The Bonds are hereby authorized to
be issued in the aggregate principal amount of $ designated "Special Service Area
Number 2006 -113 Ad Valorem Tax Bonds, Series 2007 (Cannonball/Beecher Road Proiect)."
Section 2.2 Bonds Limited Obligations. The Bonds shall be limited obligations of the
Issuer, payable solely from the Trust Estate. The Bonds shall constitute a valid claim of the
respective owners thereof against the Trust Estate, which is pledged to secure the payment of the
principal of, redemption premium, if any, and interest on the Bonds, and which shall be utilized
for no other purpose, except as expressly authorized in this Indenture. The Bonds shall not
constitute general obligations of the Issuer and under no circumstances shall the Bonds be
payable from, nor shall the holders thereof have any rightful claim to, any income, revenues,
funds or assets of the Issuer other than those pledged hereunder as security for the payment of
the Bonds.
Section 2.3 Details of Bonds. The Bonds shall be issued in Authorized
Denominations, shall be dated the date of delivery thereof, shall be numbered from R -1 upward,
and shall bear interest (calculated on the basis of a 360 -day year of twelve 30 -day months)
payable on September 1, 2007, and thereafter on each Interest Payment Date at the rate per
annum and shall mature on March 1, 2028 as follows:
Amount Rate
$
All Bonds shall bear interest (a) from the Issue Date, if authenticated prior to the first
Interest Payment Date, or (b) otherwise from the Interest Payment Date that is, or that
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immediately precedes, the date on which such Bond is authenticated (unless payment of interest
is in default, in which case such Bond shall bear interest from the date to which interest has been
paid).
The principal of, redemption premium, if any, and interest on the Bonds shall be payable
in lawful money of the United States of America. Principal of and redemption premium, if any,
on the Bonds shall be payable by the Paying Agent upon presentation and surrender of the Bonds
as they become due at the corporate trust office of the Paying Agent. Interest on the Bonds shall
be payable by the Paying Agent to the Bondholders of Bonds by check or draft mailed to such
Bondholders at their addresses as they appear on the Bond Register on the Record Date.
Principal of, redemption premium, if any, and interest payable to any person holding Bonds in
aggregate principal amount of $1,000,000 or more will be paid, upon the written request of any
such Bondholder in form and substance satisfactory to the Paying Agent, by wire transfer of
immediately available funds to an account within the United States of America designated by
such Bondholder on or before the Record Date.
If any principal of, redemption premium, if any, or interest on any Bond is not paid when
due (whether at maturity, by acceleration or call for redemption or otherwise), then the overdue
installments of principal and, to the extent permitted by law, interest and redemption premium, if
any, shall bear interest until paid at the same rate set forth in such Initial Bond.
Section 2.4 Execution of Bonds. The Bonds shall be signed by the manual or
facsimile signature of the Executive of the Issuer and attested by the manual or facsimile
signature of the Attesting Officer of the Issuer. The Bonds shall bear the seal of the Issuer or a
facsimile thereof will be affixed to or imprinted on the Bonds. In case any officer whose
signature or a facsimile of whose signature shall appear on any Bond shall cease to be such
officer before the delivery of such Bond, such signature or facsimile shall nevertheless be valid
and sufficient for all purposes as if such officer had remained in office until such delivery.
Section 2.5 Authentication of Bonds. The Bonds shall bear a certificate of
authentication, substantially in the form set forth in Appendix A. duly executed by the Trustee.
The Trustee shall authenticate each Bond with the manual signature of a Responsible Officer of
the Trustee, but it shall not be necessary for the same Responsible Officer to authenticate all of
the Bonds. Only such authenticated Bonds shall be entitled to any right or benefit under this
Indenture. Such certificate on any Bond issued hereunder shall be conclusive evidence that the
Bond has been duly issued and is secured by the provisions hereof.
Section 2.6 Form of Bonds. The Bonds shall be substantially in the form set forth in
Appendix A with such appropriate variations, legends, omissions and insertions as permitted or
required by this Indenture.
Section 2.7 Delivery of Bonds. The Trustee shall authenticate and deliver the Bonds
when there have been filed with it the following:
(a) A copy certified by the Attesting Officer of the Issuer of the Bond
Ordinance authorizing (1) the execution and delivery of this Indenture, and (2) the
issuance, sale, execution and delivery of the Bonds;
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(b) An original executed counterpart of this Indenture;
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(c) An opinion or opinions of Bond Counsel, addressed to the Issuer and the
Trustee, to the effect that this Indenture and the Bonds have each been validly authorized,
are binding and enforceable against the Issuer, subject to bankruptcy and equitable
principles, that the issuance of the Bonds has been duly authorized and that interest on the
Bonds is not included in gross income for federal income tax purposes under the Code;
and
(d) A request and authorization of the Issuer, signed by its Executive, to the
Trustee to authenticate and deliver the Bonds to such person or persons named therein
upon payment for the account of the Issuer of a specified sum plus accrued interest to the
date of delivery.
Section 2.8 Re1?istration of Transfer and Exchanee of Bonds; - Persons Treated as
Bondholders. The Trustee shall act as initial bond registrar (the "Bond Rep-istrar ") and in such
capacity shall maintain a bond register (the "Bond Re>ister") for the registration and transfer of
Bonds. Upon surrender of any Bonds at the Office of the Trustee, together with an assignment
duly executed by the current Bondholder of such Bonds or such Bondholder's duly authorized
attorney or legal representative in such form as shall be satisfactory to the Trustee, such Bonds
may, at the option of the Bondholder, be exchanged for an equal aggregate principal amount of
Bonds of the same maturity, of Authorized Denominations and bearing interest at the same rate
and in the same form as the Bonds surrendered for exchange, registered in the name or names
requested by the assignee of the then Bondholder; provided the Trustee is not required to
exchange or register the transfer of Bonds after the giving of notice calling such Bond for
redemption, in whole or in part. The Issuer shall execute and the Trustee shall authenticate any
Bonds whose execution and authentication is necessary to provide for exchange of Bonds
pursuant to this Section and the Issuer may rely on a representation from the Trustee that such
execution is required.
Any exchange or registration of transfer of Bonds shall be at the expense of the Issuer
except that the Trustee may make a charge to any Bondholder requesting such exchange or
registration in the amount of any tax or other governmental charge required to be paid with
respect thereto but will not impose any other charge.
Prior to due presentment for registration of transfer of any Bond, the Trustee shall treat
the Person shown on the Bond Register as owning a Bond as the Bondholder and the Person
exclusively entitled to payment of principal thereof, redemption premium, if any, and interest
thereon and, except as otherwise expressly provided herein, the exercise of all other rights and
powers of the owner thereof, and neither the Issuer, the Trustee nor any agent of the Issuer or the
Trustee shall be affected by notice to the contrary.
Section 2.9 Temporary Bonds. Prior to the preparation of definitive Bonds, the Issuer
may issue temporary Bonds in registered form and in such denominations as the Issuer may
determine but otherwise in substantially the form provided for definitive Bonds with appropriate
variations, omissions and insertions. The Issuer shall promptly prepare, execute and deliver to
the Trustee before the first Interest Payment Date for such Bonds, definitive Bonds and, upon
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CH12_650171.5
presentation and surrender of Bonds in temporary form, the Trustee shall authenticate and deliver
in exchange therefor definitive Bonds the same maturity for the same aggregate principal
amount. Until exchanged for definitive Bonds, Bonds in temporary form shall be entitled to the
lien and benefit of this Indenture.
Section 2.10 Mutilated, Lost or Destroyed Bonds. If any Bond has been mutilated, lost
or destroyed, the Issuer shall execute, and the Trustee shall authenticate and deliver to the
Bondholder, a new Bond of like date and tenor in exchange and substitution for, and upon
cancellation of, such mutilated Bond or in lieu of and in substitution for such lost or destroyed
Bond but only if the Bondholder has paid the reasonable expenses and charges of the Issuer and
the Trustee in connection therewith and, in the case of a lost or destroyed Bond, (a) filed with the
Trustee evidence satisfactory to the Trustee that such Bond was lost or destroyed and (b)
furnished to the Trustee and the Issuer indemnity satisfactory to each. If any such Bond has
matured or been called for redemption and is payable, instead of issuing a new Bond the Trustee
may pay the same without issuing a replacement Bond.
If, after the delivery of such replacement Bond, the original Bond in lieu of which such
replacement Bond was issued is presented for payment or registration, the Trustee shall seek to
recover such replacement Bond from the person to whom it was delivered or any person taking
therefrom and shall be entitled to recover from the security or indemnity provided there for to the
extent of any loss, damage, cost or expense incurred by the Trustee or the Issuer in connection
therewith.
Section 2.11 Cancellation and Disposition of Bonds. The Issuer may deliver Bonds to
the Trustee for cancellation at any time and for any reason and the Trustee is hereby authorized
to cancel such Bonds. All Bonds that have been paid (whether at maturity or by acceleration,
upon redemption or pursuant to Section 3.10) or delivered to the Trustee for cancellation shall
not be reissued. Unless otherwise directed by the Issuer, the Trustee shall treat such Bonds in
accordance with its document retention policies or as may be directed by state law.
Section 2.12 Securities Depository Provisions. All Bonds shall be Book Entry Bonds.
All Book Entry Bonds shall be registered in the name of Cede & Co., as nominee of The
Depository Trust Company ( " DTC "). The Issuer and the Trustee acknowledge that they have
executed and delivered a Letter of Representations to DTC. All payments of principal of,
redemption premium, if any, and interest on the Book Entry Bonds and all notices with respect
thereto, including notices of full or partial redemption, shall be made and given at the times and
in the manner set out in the Letter of Representations. The terms and provisions of the Letter of
Representations shall govern in the event of any inconsistency between the provisions of this
Indenture and the Letter of Representations. The Letter of Representations may be amended
without Bondholder consent.
The book -entry registration system for all of the Book Entry Bonds may be terminated
and certificates delivered to and registered in the name of the Beneficial Owners, under either of
the following circumstances:
(a) DTC notifies the Issuer and the Trustee that it is no longer willing or able
to act as Securities Depository for the Book Entry Bonds and a successor Securities
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CH12_650171.5
Depository for the Book Entry Bonds is not appointed by the Issuer at the direction of the
Issuer prior to the effective date of such discontinuation; or 1 i
(b) The Issuer determines that continuation of the book -entry system through
DTC (or a successor securities depository) is not in the best interest of the Owners of the
Book Entry Bonds.
In the event a successor Securities Depository is appointed by the Issuer, the Book Entry Bonds
will. be registered in the name of such successor Securities Depository or its nominee. In the
event certificates are required to be issued to Beneficial Owners, the Trustee and the Issuer shall
be fully protected in relying upon a certificate of DTC or any DTC participant as to the identity
of and the principal amount of Book Entry Bonds held by such Beneficial Owners.
The Beneficial Owners of Bonds will not receive h sical delivery of certificates exce t
p Y rY P
as provided herein. For so long as there is a Securities Depository for Bonds, all of such Bonds
shall be registered in the name of the nominee of the Securities Depository, all transfers of
beneficial ownership interests in such Bonds will be made in accordance with the rules of the
Securities Depository, and no investor or other parry purchasing, selling or otherwise transferring
beneficial ownership of such Bonds is to receive, hold or deliver any certificate. The Issuer and
the Trustee shall have no responsibility or liability for transfers of beneficial ownership interests
in such Bonds.
The Issuer and the Trustee will recognize the Securities Depository or its nominee as the
Bondholder of Book Entry Bonds for all purposes, including receipt of payments, notices and
voting; provided the Trustee may recognize votes by or on behalf of Beneficial Owners as if such
votes were made by Bondholders of a related portion of the Bonds when such votes are received
incompliance with an omnibus proxy of the Securities Depository or otherwise pursuant to the
rules of the Securities Depository or the provisions of the Letter of Representations or other
comparable evidence delivered to the Trustee by the Bondholders or as provided in Sections 8.10
and 11.11 of this Indenture.
With respect to Book Entry Bonds, the Issuer and the Trustee shall be entitled to treat the
Person in whose name such Bond is registered as the absolute owner of such Bond for all
purposes of this Indenture, and neither the Issuer nor the Trustee shall have any responsibility or
obligation to any Beneficial Owner of such Book Entry Bond. Without limiting the immediately
preceding sentence, neither the Issuer nor the Trustee shall have any responsibility or obligation
with respect to (a) the accuracy of the records of any Securities Depository or any other Person
with respect to any ownership interest in Book Entry Bonds, (b) the delivery to any Person, other
than a Bondholder, of any notice with respect to Book Entry Bonds, including any notice of
redemption or refunding, (c) the selection of the particular Bonds or portions thereof to be
redeemed or refunded in the event of a partial redemption or refunding of part of the Bonds
Outstanding or (d) the payment to any Person, other than a Bondholder, of any amount with
respect to the principal of, redemption premium, if any, or interest on Book Entry Bonds.
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ARTICLE III
REDEMPTION OF BONDS
Section 3.1 Redemption Dates and Prices. The Bonds may not be called for
redemption by the. Issuer except as provided in this Article III.
Section 3.2 Mandatory Sinkina Fund Redemption of Bonds. The Trustee shall redeem
Bonds on March 1 in the years and in the principal amounts and at a price of 100% of the
principal amount of the Bonds to be redeemed plus interest accrued to the redemption date, as
follows:
Year Maturity Amount Year Maturitv Amount
When such Bonds have been redeemed as set out above, the balance of $ will mature
on March 1, , unless otherwise previously retired.
On or before the thirtieth (30th) day prior to each such sinking fund redemption date, the
Trustee shall proceed to call the principal amount of the Bonds indicated above for redemption
on the next March 1, and give notice of such call. At its option, to be exercised by delivery of an
Officer's Certificate of the Issuer to the Trustee not more than 360 days nor less than 65 days
preceding the applicable sinking fund redemption date, the Issuer may (a) deliver to the Trustee
for cancellation, Bonds of the applicable maturity date subject to redemption pursuant to the
terms of the mandatory sinking fund provided in this Section in an aggregate principal amount
desired or (b) receive credit in respect of its sinking fund redemption obligation for any Bonds of
the applicable maturity date subject to redemption pursuant to the terms of the mandatory sinking
fund provided in this Section, which prior to said date have been canceled (otherwise than
through the operation of the sinking fund redemption schedule) by the Trustee and not
theretofore applied as a credit against such sinking fund redemption obligation. Each Initial
Bond of the applicable maturity date so delivered or previously redeemed shall be credited by the
Trustee at the principal amount thereof against the obligation of the Issuer on such sinking fund
redemption date, and the principal amount of Bonds to be redeemed by operation of such sinking
fund redemption schedule on such date shall be accordingly reduced; and any excess over the
principal amount of Bonds to be redeemed by operation of the sinking fiend redemption schedule
on any sinking fiord redemption date shall be credited as specified in a certificate of the Issuer or,
in the absence of such certificate against the next scheduled sinking fluid redemption.
Section 3.3 Optional Redemption of Bonds. The Bonds are subject to redemption by
the Issuer on or after March 1, 2017, in whole or in part at any time from any moneys that may
be available for such purpose, upon payment of the following redemption prices (expressed as a
percentage of principal amount of Bonds to be redeemed) plus interest accrued to the redemption
date:
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102% if redeemed on March 1, 2017 and thereafter through February 28, 2018;
101% if redeemed on March 1, 2018 and thereafter through February 28, 2019; and )
100% if redeemed on March 1, 2019 and thereafter prior to maturity.
Section 3.4 Special Mandatory Redemption from Surplus Bond Proceeds. To the
extent that moneys are transferred from the Improvement Fund to the Debt Service Fund
pursuant to Section 4.2(c) for purposes of redeeming the Bonds, the Bonds are subject to special
mandatory redemption in part in Authorized Denominations on the next scheduled Interest
Payment Date at a redemption price equal to 100% of the aggregate principal amount of the
Bonds to be redeemed lus accrued interest to the redemption date.
p p
Section 3.5 Selection of Bonds for Redemption. If less than all of the Bonds are
called for redemption pursuant to Sections 3.3 or 3.4, they shall be redeemed in inverse order of
maturity and in inverse order of sinking fund installments within any maturity (provided,
however, that if an Event of Default has occurred and is continuing any Bonds called for
redemption shall be redeemed in proportion by maturity and within, maturities in inverse order of
sinking fund installments), subject to selection by the Trustee as provided below. The portion of
any Bond to be redeemed shall be an Authorized Denomination or any multiple thereof and in
selecting Bonds for redemption, each Bond shall be considered as representing that number of
Bonds which is obtained by dividing the principal amount of such Bond by the minimum
Authorized Denomination. If a portion of a Bond shall be called for redemption, a new Bond in
principal amount equal to the unredeemed portion thereof shall be issued to the Bondholder upon
the surrender thereof. If for any reason the principal amount of Bonds called for redemption
would result in a redemption of Bonds less than the Authorized Denomination, the Trustee, to
the extent possible within the principal amount of Bonds to be redeemed, is hereby authorized to
adjust the selection of Bonds for such purpose in order to minimize any such redemption.
Notwithstanding the foregoing, the Securities Depository for Book Entry Bonds shall select the
Bonds for redemption within particular maturities according to its stated procedures.
Section 3.6 Notice of Redemption.
(a) When Bonds (or portions thereof) are to be redeemed pursuant to Section 3.3 the
Issuer shall give or cause to be given notice of the redemption of the Bonds to the Trustee no
later than forty-five (45) days prior to the redemption date or such shorter time as may be
acceptable to the Trustee. The notice may state (1) that it is conditioned upon the deposit of
moneys, in an amount equal to the amount necessary to effect the redemption, with the Trustee
no later than the date that is five (5) Business Days prior to the redemption date or (2) that the
Issuer retains the right to rescind such notice on or prior to the scheduled redemption date (in
either case, a "Conditional Redemption "), and such notice and optional redemption shall be of no
effect if such moneys are not so deposited or if the notice is rescinded as described in subsection
(d) of this Section. The Trustee, at the expense of the Issuer, shall send notice of any
redemption, identifying the Bonds or portions thereof to be redeemed, the redemption date and
the method and place of payment and the information required by subsection (b) of this Section,
by first class mail to each holder of a Bond called for redemption to the holder's address listed on
the Bond Register. Such notice shall be sent by the Trustee by first class mail between twenty
(20) and sixty (60) days prior to the scheduled redemption date. With respect to Book Entry
Bonds, if the Trustee sends notice of redemption to the Securities Depository pursuant to the
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CHI2_650171.5
Letter of Representations, the Trustee shall not be required to give the notice set forth in the
immediately preceding sentence. If notice is given as stated in this paragraph (a), failure of any
Bondholder to receive such notice, or any defect in the notice, shall not affect the redemption or
the validity of the proceedings for the redemption of the Bonds.
(b) In addition to the foregoing, the redemption notice shall contain with respect to
each Bond being redeemed, (1) the CUSIP number, (2) the date of issue, (3) the interest rate, (4)
the maturity date, and (5) any other descriptive information determined by the Trustee to be
needed to identify the Bonds. If a redemption is a Conditional Redemption, the notice shall so
state. The Trustee shall also send each notice of redemption at least thirty (30) days before the
redemption date to (A) any Rating Service then rating the Bonds to be redeemed; (B) all of the
registered clearing agencies known to the Trustee' to 'be in the business of holding substantial
amounts of bonds of a type similar to the Bonds; and (C) one or more national information
services that disseminate notices of redemption of bonds such as the Bonds such services to be
identified by the Trustee. Each redemption notice shall also be sent to participants of the
Securities Depository and to Beneficial Owners as provided in Section 8.10.
(c) On or before the date fixed for redemption, subject to the provisions of
subsections (a) and (d) of this Section, moneys shall be deposited with the Trustee to pay the
principal of, redemption premium, if any, and interest accrued to the redemption date on the
Bonds called for redemption. Upon the deposit of such moneys, unless the Issuer has given
notice of rescission as described in subsection (d) of this Section, the Bonds shall cease to bear
interest on the redemption date and shall no longer be entitled to the benefits of this Indenture
(other than for payment and transfer and exchange) and shall no longer be considered
Outstanding.
(d) Any Conditional Redemption may be rescinded in whole or in part at any time
prior to the fifth Business Day prior to the redemption date if the Issuer delivers an Officer's
Certificate to the Trustee instructing the Trustee to rescind the redemption notice. The Trustee
shall give prompt notice of such rescission to the affected Bondholders. Any Bonds subject to
Conditional Redemption where redemption has been rescinded shall remain Outstanding, and the
rescission shall not constitute an Event of Default. Further, in the case of a Conditional
Redemption, the failure of the Issuer to make fiends available in part or in whole on or before the
redemption date shall not constitute an Event of Default, and the Trustee shall give Immediate
Notice to the Securities Depository or the affected Bondholders that the redemption did not occur
and that the Bonds called for redemption and not so paid remain Outstanding.
Section 3.7 Purchase at Any Time. The Trustee, upon the written request of the Issuer
shall purchase Bonds as specified by the Issuer in the open market at a price not exceeding a
price set by the Issuer. Such purchase of Bonds shall be made with funds provided by the Issuer
and not with any portion of the Trust Estate or any Defeasance Obligations. Upon purchase by
the Trustee, such Bonds shall be treated as delivered for cancellation pursuant to Section 2.11.
Nothing in this Indenture shall prevent the Issuer from purchasing Bonds on the open market
without the involvement of the Trustee and delivering such Bonds to the Trustee for cancellation
pursuant to Section 2.11. Bonds purchased pursuant to this Section which are subject to the
mandatory sinking fund redemption schedule in Section 3.2 shall be credited against future
mandatory sinking fund redemption payments in accordance with Section 3.2. The principal
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CH12_650171.5
amount of Bonds to be redeemed by optional redemption under this Indenture may be reduced by
the principal amount of Bonds purchased by the Issuer and delivered to the Trustee for ? I
cancellation at least forty-five (45) days,prior to the redemption date.
ARTICLE IV
FUNDS AND ACCOUNTS
Section 4.1 Creation of Funds; Deposit of Bond Proceeds. The following funds are
hereby created and the proceeds of the Bonds and all Revenues received by the Trustee are,
subject to the provisions of Section 7.8, to be deposited by it in the Funds described herein and
held in trust for the purposes set forth herein:
(a) Improvement Fund, consisting of a Project Account and an Issuance
Expense Account.
(b) Debt Service Fund, including a Capitalized Interest Account.
(c) Reserve Fund.
(d) Rebate Fund.
(e) Administrative Expense Fund.
(f) Special Redemption Fund.
The proceeds of the sale of the Bonds shall, on the Issue Date, be delivered to the Trustee who
shall forthwith deposit $ of such proceeds in the Issuance Expense Account,
$ of such proceeds representing capitalized interest in the Capitalized Interest
Account of the Debt Service Fund, an amount equal to the Required Reserve in the Reserve
Fund, $ of such proceeds in the Administrative Expense Fund, and the balance of
such proceeds in the Project Account.
Section 4.2 Improvement Fund. Payments from the Improvement Fund, shall be made
by the Trustee as follows:
(a) Payments from the Improvement Fund shall be made within three (3)
Business Days only upon receipt by the Trustee of a requisition executed by the Issuer in
the form of Request for Payment set forth in ADDendix C.
(b) Upon the later of six months from the Issue Date or the payment of all
Issuance Costs (as evidenced by a certificate of Issuer delivered to the Trustee), any
moneys remaining in the Issuance Expense Account shall be transferred to the Project
Account.
(c) Upon completion of the Special Services (as evidenced by a certificate of
the Issuer delivered to the Trustee), any moneys remaining in the Improvement Fund
shall be transferred to the Debt Service Fund to redeem Bonds pursuant to Section 3.4,
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unless the Issuer directs that such moneys be deposited into the Reserve Fund, or applied
to any other use, accompanied in either case by an opinion of Bond Counsel to the effect
that such application will not adversely affect any applicable exemption from federal
income taxation of the interest on the Bonds.
(d) Notwithstanding anything to the contrary herein, to the extent an Event of
Default described in clause (a) or (b) of Section 7.1 shall have occurred and be continuing
and no other moneys are available under this Indenture to cure such Event of Default, no
moneys on deposit in the Improvement Fund shall be applied in accordance with
Section 4.2(c). In such event, moneys on deposit in the Improvement Fund shall be
applied by the Trustee in accordance with Article VII.
Section 4.3 Debt Service Fund.
(a) The Trustee shall deposit into the Debt Service Fund (1) all Revenues, (2) all
Available Funds, and (3) all other amounts required or permitted hereunder to be deposited in the
Debt Service Fund.
(b) Moneys on deposit in the Debt Service Fund shall be set aside and applied on
each Accounting Date as follows in the following order of priority:
(i) To the payment, when due on the next two succeeding Interest
Payment Dates of interest, on all Outstanding Bonds, including any accrued
interest due in connection with redemptions of Bonds;
(ii) To the payment, when due on the next succeeding March 1, of the
principal of or redemption premium on the Bonds then payable at maturity or
upon redemption;
I
(iii) To the payments of any deficiencies in the Reserve Fund in
accordance with the requirements of Section 4.4, including for reimbursement to
the provider of any credit facility deposited in the Reserve Fund pursuant to
Section 4.4(d);
(iv) To the Administrative Expense Fund, an amount equal to the
difference, if any, between the Administrative Expense Fund Requirement and the
amount then on deposit in the Administrative Expense Fund;
(v) To the abatement of Ad Valorem Taxes pursuant to Section 6.5 of
this Indenture; and
i
(vi) To the Special Redemption Fund, any surplus remaining on
March 2 of each year after application to the uses set forth in (i) -(v) above.,
(c) Moneys on deposit in the Debt Service Fund shall at all times be invested at a
yield equal to or less than the yield on the Bonds or in obligations issued by any state or political
subdivision the interest on which is exempt from inclusion in gross income of the holder under
Section 103 of the Code, provided that such obligations are rated in one of the two highest
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general classifications established by a rating service of nationally recognized expertise in rating
bonds of states and their political subdivisions. j
Section 4.4 Reserve Fund.
(a) The Trustee initially shall deposit in the Reserve Fund an amount equal to the
Required Reserve on the Bonds from the proceeds of the Bonds. The amount of any withdrawal
j for the purpose of subsections (b)(i) of this Section shall be restored by the Issuer from available
Revenues in the Debt Service Fund after satisfying the requirements of Section 4.3(b)(i) through
(iii). In addition, if the fair market value of the investments in the Reserve Fund is less than the
Required Reserve on any valuation date in accordance with Section 5.3, the difference between
such Required Reserve and the value of the Reserve Fund shall be restored by the Issuer but
solely from the first available surplus Revenues in the Debt Service Fund.
(b) Moneys on deposit in the Reserve Fund shall be applied as follows:
(i) On the date of each required payment from the Debt Service Fund,
moneys in the Reserve Fund shall be applied to cure any deficiency in the Debt
Service Fund with respect to payments of principal of and interest on the Bonds
when due and payable;
(ii) Upon delivery of an Officer's Certificate of the Issuer delivered to
the Trustee, any amount in the Reserve Fund in excess of the Required Reserve
on any valuation date shall be transferred to the Debt Service Fund.
(c) The Issuer shall be permitted to substitute a letter of credit, surety bond or other
credit enhancement (each, a "credit facility ") for funds on deposit in the Reserve Fund, provided
that:
(i) the credit facility (including any replacement credit facility) is
issued by a bank, trust company, national banking association or insurance
company whose unsecured long term debt obligations (in the case of a bank, trust
company or national banking association) or whose claims paying abilities (in the
case of an insurance company) are rated by a Rating Service, at the time the credit
facility is issued and at the time of each extension or renewal thereof, in one of
the two highest rating categories maintained by such Rating Service at the time of
substitution;
(ii) the issuer of the credit facility does not receive as security for any
reimbursement obligation in respect of the credit facility any lien, security interest
or other similar right or interest in any property within the Trust Estate which is
superior to the rights of the Trustee in respect of such property;
(iii) the credit facility (including any replacement credit facility, if
provided by a different issuer) has an initial term of not less than three (3) years
and any extension, renewal or replacement (if provided by the same issuer)
thereof has a term of not less than one year;
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(iv) the Trustee is authorized and has the duty and right to draw on the
credit facility to satisfy the purposes for which the Reserve Fund was established;
and
(v) The Trustee shall receive an opinion of Counsel to the effect that
all of the requirements set forth above have been satisfied and an opinion of Bond
Counsel to the effect that the substitution of the credit facility will not, in and of
itself, adversely affect the tax- exempt status of the Bonds.
Upon such substitution, funds on deposit in the Reserve Fund which, when added
to the face amount of the credit facility, exceed the Required Reserve on all
Outstanding Bonds shall be applied as provided in subsection (b)(ii) above.
Thereafter, the credit facility shall be considered a part of the Reserve Fund and
the amount available thereunder shall be included in any calculation of the
amount required to be retained in the Reserve Fund; provided that, (A) if the sum
of the amount available under the credit facility and the amount of moneys on
deposit in the Reserve Fund exceeds the amount required to be on deposit
pursuant to subsection (a) of this Section, the Issuer shall be permitted to (i) cause
the amount available under the credit facility to be reduced by an amount equal to
such excess, or (ii) direct that the excess moneys be applied as permitted under
subsection (b)(ii) of this Section, and (B) if the credit facility is not extended,
renewed or replaced at least three (3) months prior to its scheduled expiration or
termination date, the Trustee shall, not later than five days prior to such date,
draw on the credit facility for the full amount thereof.
(d) If there are cash and Eligible Investments on deposit in the Reserve Fund in
addition to a credit facility, such cash and Eligible Investments will be drawn on prior to any
draws on such credit facility.
Section 4.5 Revenues to Be Held for All Bondholders, With Certain Exceptions. Until
applied as herein provided and except where moneys have been deposited with or paid to the
Trustee pursuant to an instrument restricting the application of such moneys to particular Bonds,
the moneys and investments held in all Funds (other than amounts required to be on deposit in
the Rebate Fund) established hereunder and the proceeds of any remedies exercised under
Article VII hereof shall be held in trust pursuant to the terms of this Indenture for the equal and
proportionate benefit of the holders of all Outstanding Bonds, except that: (a) on and after the
date on which the interest or redemption premium on or principal of any particular Bond or
Bonds is due and payable from the Debt Service Fund or, with respect to which a call for
redemption has been given and funds for such redemption have been deposited with the Trustee
and, if a Conditional Redemption, the rescission date has passed, the unexpended balance of the
amount deposited or reserved in the Debt Service Fund for the making of such payments shall, to
the extent necessary therefor, be held solely for the benefit of the Bondholder or Bondholders
entitled thereto; and (b) any special redemption fund established in connection with the
defeasance of any Bonds in accordance with Article IX shall be held for the benefit of the
holders of Bonds being defeased.
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Section 4.6 Rebate Fund. The Issuer has covenanted to calculate and pay directly to
the government of the United States of America all amounts due for payment of "arbitrage
rebate" under Section 148(f) of the Code with respect to the Bonds. Accordingly, no amounts are
expected to be deposited in the Rebate Fund. The Issuer may deposit with the Trustee or direct
the Trustee to deposit in the Rebate Fund amounts held in any Fund hereunder for any or all
Bonds (which direction shall specify the procedures for collection and payment of amounts due
in respect of arbitrage rebate) if (a) required under to Section 148(f) of the Code, or (b) the Issuer
determines that the funding of the Rebate Fund prior to the due date of any payment to the
United States of America is desirable and appropriate. The Rebate Fund is a trust fund, but
amounts therein do not constitute part of the Trust Estate. Amounts on deposit in the Rebate
Fund may be used solely to make payments to the United States of America under Section 148 of
the Code and to pay costs related to the calculation of the amounts due. Upon satisfaction of the
Issuer's covenants described above, any amounts remaining in the Rebate Fund shall be applied
in accordance with Section 4.8.
Section 4.7 Administrative Expense Fund. The Administrative Expense Fund shall be
used to pay Administrative Expenses. Moneys on deposit in the Administrative Expense Fund
shall be applied to the payment of any Administrative Expenses requested by the Issuer to be
paid. All amounts in the Administrative Expense Fund in excess of the Administrative Expense
Fund Requirement shall be transferred to, and deposited in, the Debt Service Fund.
Section 4.8 Special Redemption Fund.
(a) When the amount on deposit in the Special Redemption Fund on any date equals
$5,000, such amount shall be used to redeem the Bonds on any date in accordance with Section
3.3. On each such date, the Trustee shall withdraw from the Special Redemption Fund and pay
to the owners of the Bonds the amounts to redeem the Bonds pursuant to Section 3.3.
(b) Any amounts contained in the Special Redemption Fund on the final maturity date
of the Bonds shall be used to pay outstanding debt service on the Bonds.
(c) Moneys on deposit in the Special Redemption Fund shall be invested at a yield
equal to or less than the yield on the Bonds or in obligations the interest on which is exempt from
inclusion in the gross income of the holder under Section 103 of the Code to the extent such
moneys are on deposit or are expected to be on deposit in the Special Redemption Fund for
greater than thirteen (13) months.
Section 4.9 Repavment to the Issuer from Amounts Remainina in Any Funds. Any
amounts remaining in any Funds (a) after all of the Outstanding Bonds shall be deemed paid and
discharged under the provisions of this Indenture, and (b) after payment of all fees, charges and
expenses of the Trustee, the Bond Registrar and any Paying Agents and of all other amounts
required to be paid under this Indenture, shall be paid to the Issuer to the extent that such
amounts are in excess of those necessary to effect the payment and discharge of the Outstanding
Bonds and payment of the Rebate Amount, if any.
Section 4.10 Additional Funds and Accounts. In addition to the funds and accounts
specifically authorized under this Article, the Trustee shall have the authority to create and
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maintain such other funds and accounts as it may deem necessary for proper administration
hereunder.
ARTICLE V
INVESTMENT OR DEPOSIT OF FUNDS
Section 5.1 Deposits and Security Therefor. All moneys received by the Trustee
under this Indenture for deposit in any Fund established hereunder shall be considered trust
funds. All moneys on deposit with the Trustee shall, to the extent not insured, be secured in the
manner required or permitted by State or other applicable law. Subject to the foregoing
requirements as to security, if at any time the commercial department of the Trustee is unwilling
to accept such deposits or unable to secure them as provided above, the Trustee may deposit such
moneys with any other depository which is authorized to receive and secure them as aforesaid
and the deposits of which are insured by the Federal Deposit Insurance Corporation. All security
for deposits shall be perfected in such manner as may be required or permitted under applicable
law in order to grant to the Trustee a perfected lien on or security interest in such security.
Section 5.2 Investment or Deposit of Funds. Moneys on deposit in the Funds
established pursuant to Article IV shall be invested and reinvested by the Trustee as follows:
I
(a) All moneys on deposit in Funds shall be invested in Eligible Investments
which shall mature, or be subject to repurchase, withdrawal without penalty or
redemption at the option of the holder on or before the dates on which the amounts
invested are reasonably expected to be needed for the purposes hereof.
(b) All purchases or sales of Eligible Investments shall be made at the
direction of the Issuer (given in writing or orally, confirmed in writing). If the Issuer
elects to give the Trustee oral investment instructions and the Trustee in its discretion
elects to act upon such oral investment instructions, the Trustee's understanding of such
oral investment instructions shall be deemed controlling. The Trustee shall not be liable
for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance
upon and compliance with such oral investment instructions notwithstanding such oral
investment instructions conflict or are inconsistent with a subsequent written investment
instruction. The Trustee may conclusively rely upon such instructions as to both the
suitability and legality of the directed investments. The Trustee may make any and all
such investments and such investments through its own investment department or that of
its affiliates or subsidiaries, and may charge its ordinary and customary fees for such
trades, including cash sweep account fees.
(c) (1) Any securities or investments held by the Trustee may be transferred
by the Trustee, if required in writing by the Issuer, from any of the Funds or accounts
mentioned in Article IV to any other Fund or account mentioned in Article IV at the then
current market value thereof without having to be sold and purchased or repurchased;
provided, however, that after any such transfer or transfers, the investments in each such
Fund or account shall be in accordance with the provisions as stated in this Indenture; and
(2) whenever any other transfer or payment is required to be made from any particular
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Fund, such transfer or payment shall be made from such combination of maturing
principal, redemption premiums, liquidation proceeds and withdrawals of principal as the
i
Trustee deems appropriate for such purpose.
J (d) Neither the Issuer nor the Trustee shall be accountable for any
depreciation in the value of Eligible Investments or for any losses incurred upon any
authorized disposition thereof.
(e) Subject to the foregoing, the Trustee is expressly authorized to invest
moneys in two or more Funds in a single investment, provided that a portion of the
investment allocable to each such Fund, and all payments received with respect to such
allocable portion, shall be applied in accordance with the applicable provisions governing
such Fund hereunder.
(f) Prior to the completion of the Special Services, investment income on
amounts on deposit in the Reserve Fund, the Debt Service Fund and the Administrative
Expense Fund shall be transferred to the Improvement Fund to the extent that no
deficiency will exist in the Reserve Fund or the Debt Service Fund after such transfer or
shall be applied to such other purpose or purposes as directed by the Issuer with an
opinion of Bond Counsel addressed to the Trustee to the effect that such application will
not cause interest on the Bonds to be includable in gross income for federal income tax
purposes. After completion of the Special Services, investment income on amounts on
deposit in the Reserve Fund shall be transferred to the Debt Service Fund to the extent
that no deficiency will exist in the Reserve Fund after such transfer. In all other
situations, earnings from investment shall remain in the respective Fund where earned.
(g) Although the Issuer recognizes that it may obtain a broker confirmation or
written statement containing comparable information at no additional cost, the Issuer
hereby agrees that confirmations of permitted investments are not required to be issued
by the Trustee for each month in which a monthly statement is rendered. No statement
need be rendered for any fund or account if no activity occurred in such fund or account
during such month.
Section 5.3 Valuation of Funds. The Trustee shall determine the market value of the
assets in each of the Funds established hereunder annually on a date not earlier than three days
prior to December — of each year. As soon as practicable after each such valuation date, the
Trustee shall furnish to the Issuer a report of the status of each Fund as of such date. The Trustee
shall also advise the Issuer at such time of the amount then available in the Debt Service Fund as
a credit against the Issuer's obligation to levy and collect the Ad Valorem Taxes for deposit to
the Debt Service Fund prior to the next valuation date. In computing the value of assets in any
Fund, investments shall be valued at the fair market value thereof and shall include accrued but
unpaid interest on each investment, and all investments (valued as aforesaid) and accrued interest
thereon shall be deemed a part of such Funds. All Eligible Investments that mature within six (6)
months of any valuation date or are payable on demand shall be valued at par plus any accrued
and unpaid interest. Upon the request of the Issuer, the Trustee shall also provide the Issuer with
monthly or other periodic statements showing amounts deposited into and withdrawn from each
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Fund, the investments made with amounts in each Fund and the investment income received
from such investments.
ARTICLE VI
COVENANTS AND AGREEMENTS OF THE ISSUER
Section 6.1 Covenants and Agreements of the Issuer. In addition to any other
covenants and agreements of the Issuer contained in this Indenture or the Bond Ordinance, the
Issuer further covenants and agrees with the Bondholders and the Trustee as follows:
(a) To take all actions, if any which shall be necessary, in order further to
provide for the levy, extension, collection and application of the Ad Valorem Tax
including enforcement of the Ad Valorem Tax by institution of foreclosure proceedings
as provided by law;
(b) To not take any action which would adversely affect the levy, extension,
collection and application of the Ad Valorem Tax levied pursuant to the Bond Ordinance
and Indenture, except to abate the Ad Valorem Tax to the extent permitted by the
Indenture;
(c) To comply with all requirements of the Act, the Bond Ordinance and other
applicable present and future laws concerning the levy extension and collection of the Ad
Valorem Tax levied pursuant to the Bond Ordinance and Indenture, in each case so that
the Issuer shall be able to pay the principal of and interest on the Bonds as they come due
and replenish the Reserve Fund to the Required Reserve and it will take all actions
necessary to assure the timely collection of the Ad Valorem Tax, including without
limitation, the enforcement of any delinquent Ad Valorem Tax by providing Kendall
County with such information as is deemed necessary to enable the County to include any
property subject to delinquent Ad Valorem Tax in the County Collector's annual tax sale
and in the event the tax lien is forfeited at such tax sale, by the commencement and
maintenance of an action to foreclose the lien of any delinquent Ad Valorem Tax, all in
the manner provided by law;
(d) To not encumber, pledge or place any charge or lien upon any of the Ad
Valorem Tax or other amounts pledged to the Bonds superior to, or on a parity with, or
junior to, the pledge and lien created in the Indenture for the benefit of the Bonds, except
as permitted by, or specifically set forth in, the Indenture;
(e) To take all actions which are necessary to be taken (and avoid any actions
which it is necessary to avoid being taken) so that interest on the Bonds will not be or
become included in gross income for federal income tax purposes under existing law;
(f) To keep, or cause the Trustee to keep, proper books of record and
accounts, separate from all other records and accounts of the Issuer, in which complete
and correct entries will be made of all transactions relating to the deposits to and
expenditure of amounts disbursed from the Funds and Accounts created under the
Indenture and the Ad Valorem Tax;
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(g) To take all actions which are necessary to be taken to enforce the Issuer's
rights under the Development Agreement; 1 i
(h) To make the Bond Register available at reasonable times and under
reasonable regulations established by the Bond Registrar, to be inspected and copied by
or delivered to the Issuer, the Trustee, the holders of 25% or more in principal amount of
the Bonds then Outstanding, or a designated representative thereof;
(i) To furnish to the Trustee, the Original Purchaser and the Beneficial Owner
of $500,000 or more in Bonds who so requests, within ten (10) days of receipt by the
Issuer, a copy of each annual audit of the Issuer, the schedule of tenants and lease
expiration dates for each tenant's lease provided to the Issuer by the Developer, any
publicly available information received from the Illinois Department of Revenue of the
Business District Sales Taxes, and any abatement ordinance adopted by the Corporate
Authorities abating any of the Ad Valorem Taxes; and
0) To provide or cause the Trustee to provide to the Original Purchaser and
to the Beneficial Owner of $500,000 or more in Bonds who so requests, copies of any
reports (including quarterly construction progress reports) or disclosure which the
Developer provides to the Issuer or the Trustee pursuant to the terms of the Development
Agreement.
Section 6.2 Observance and Performance of Covenants, Aaeeements, Authoritv and
Actions. The Issuer hereby agrees to observe and perform at all times all covenants, agreements,
authority, actions, undertakings, stipulations and provisions to be observed or performed on its
part under this Indenture, the Bond Ordinance and the Bonds which are executed, authenticated
and delivered under this Indenture, and under all proceedings of its Legislative Authority
pertaining thereto.
The Issuer represents and warrants that:
(a) It is duly authorized by the Constitution and laws of the State, including
particularly and without limitation the Act, to issue the Bonds, to execute and deliver this
Indenture and to provide the security for payment of the principal of, redemption
premium, if any, and interest on the Bonds in the manner and to the extent set forth in this
Indenture.
(b) All actions required on its part to be performed for the issuance, sale and
delivery of the Bonds and for the execution and delivery of this Indenture have been or
will be taken duly and effectively; provided no representation is made as to compliance
with any state securities or "Blue Skv" laws.
(c) The Bonds will be valid and enforceable limited obligations of the Issuer
according to their terms, subject to bankruptcy and equitable principles.
Section 6.3 Tax Covenants.
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(a) The Issuer covenants that it will neither make nor direct the Trustee to
make any investment or other use of the proceeds of the Bonds that would cause such
Bonds to be "arbitrage bonds" as that term is defined in Section 148(a) of the Code, and
that it will comply with the requirements of the Code throughout the term of such Bonds.
The Trustee covenants that in those instances where it exercises discretion over the
investment of funds, it shall not knowingly make any investment inconsistent with the
foregoing covenants.
(b) The Issuer covenants that it (i) will take, or use its best efforts to require to
be taken, all actions that may be required of the Issuer for the interest on the Bonds to be
and remain not included in gross income for federal income tax purposes and (ii) will not
take or authorize to be taken any actions within its control that would adversely affect
that status under the provisions of the Code.
(c) The Issuer further covenants as follows with respect to the requirements of
Section 148(f) of the Code, relating to the rebate of "excess arbitrage profits" (the
"Rebate Reauirement") to the United States:
i
(i) Unless an applicable exception to the Rebate Requirement is
available to the Issuer, the Issuer will meet the Rebate Requirement.
(ii) Relating to applicable exceptions, the Issuer shall make such
elections under the Code as it shall deem reasonable and in the best interests of
the Issuer. If such election may result in a "penalty in lieu of rebate" as provided
in the Code, and such penalty is incurred (the "Penalty "), then the Issuer shall pay
such Penalty.
(iii) The Issuer shall, not less frequently than annually, cause to be
transferred to the Rebate Fund the amount determined to be the accrued liability
under the Rebate Requirement or Penalty. The Issuer shall cause to be paid to the
United States, without further order or direction from the Legislative Authority,
from time to time as required, amounts sufficient to meet the Rebate Requirement
or to pay the Penalty.
(iv) Interest earnings in the Debt Service Fund and the Reserve Fund
are hereby authorized to be transferred, without further order or direction from the
Legislative Authority, from time to time as required, to the Rebate Fund for the
purposes herein provided; and proceeds of the Bonds, investment earnings or
amounts on deposit in any of the other funds and accounts created hereunder and
any other funds of the Issuer are also hereby authorized to be used to meet the
Rebate Requirement or to pay the Penalty, but only if necessary after application
of investment earnings as aforesaid and only as appropriated by the Legislative
Authority.
Section 6.4 Limited Obliszations. The Bonds shall constitute limited obligations of the
Issuer, payable from the Revenues and other moneys deposited in the Funds established pursuant
to Article IV other than the Rebate Fund. The Bonds shall not constitute general obligations of
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the Issuer and neither the full faith and credit nor the unlimited taxing power of the Issuer shall
be pledged as security for payment of the Bonds );
Section 6.5 Lew of Ad Valorem Tax; Abatement. Pursuant to the Bond Ordinance
there has been levied an Ad Valorem Tax upon all taxable real property within the SSA
sufficient to pay and discharge the principal of the Bonds at maturity or mandatory sinking fund
redemption dates and to pay interest on the Bonds for each year at the interest rates set forth in
Section 2.3 of this Indenture. The Clerk of Issuer has been directed to file a certified copy of the
Bond Ordinance, and an accurate map of the SSA, with the County Clerk of the County. The Ad
i
Valorem Tax shall be divided among all taxable real property within the SSA.
On each Accounting Date, the Trustee shall determine the amounts remaining on deposit
in the Debt Service Fund, after application of moneys pursuant to paragraphs (i) through (iv) of
Section 4.3(b) (the "Deposit "). On or before January _ of each year, the Trustee will provide
notification containing the amount of the Deposit to the Issuer and request that the Issuer abate
no later than the last Business Day of February of such year the Ad Valorem Taxes for the
current year in an amount equal to the Deposit. By proper proceedings, the Issuer shall direct the
abatement of such Ad Valorem Taxes as evidenced by the notification provided by the Trustee.
The Issuer shall take all actions which shall be necessary to provide for the levy,
extension, collection and application of the taxes levied by the Bond Ordinance, including
enforcement of such taxes by institution of foreclosure procedures as provided by law.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default Defined. Each of the following is an "Event of Default"
hereunder:
(a) Default in the payment of any installment of interest on any Bond when it
becomes due and payable;
(b) Default in the payment of principal of (or redemption premium, if any, on)
any Bond when it becomes due and payable;
(c) Subject to the provisions of Section 7.7, default in the performance, or
breach, of any covenant, warranty or representation of the Issuer contained in this
Indenture (other than a default under subsections (a) and (b) of this Section);
(d) (1) An Event of Bankruptcy of the Issuer; (2) the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official of
the Issuer or of any substantial portion of its property; or (3) the ordering of the winding
up or liquidation of the affairs of the Issuer.
Section 7.2 Remedies Upon Default.
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(a) If an Event of Default under Section 7.1 occurs and is continuing, the Trustee
may, and upon the written request to the Trustee by the holder or holders of not less than 25% in
aggregate principal amount of the Bonds then Outstanding shall, subject to the requirements of
Section 8.2(e), by written notice to the Issuer, proceed to protect and enforce its rights and the
rights of the holders of the Bonds by a suit, action or special proceeding in equity or at law, by
mandamus or otherwise, either for the specific performance of any covenant or agreement
contained herein or in aid or execution of any power herein granted or for any enforcement of
any proper legal or equitable remedy as the Trustee, being advised by counsel, shall deem most
effective to protect and enforce any of the rights or interests of the holders of the Bonds under
the Bonds or this Indenture.
(b) During the continuance of an Event of Default, all moneys received by the
Trustee under this Indenture from the Issuer or from any other source shall be applied by the
Trustee in accordance with the terms of Section 7.8 hereof. Upon the occurrence of an Event of
Default described in Section 7.1(a) or (b) of this Indenture, which occurs during such time as
amounts remain on deposit in the Improvement Fund, upon the written request of the holders of
25% in principal amount of the outstanding Bonds, the Trustee shall transfer any amounts on
deposit in the Improvement Fund to the Debt Service Fund to be applied by the Trustee in
accordance with Section 7.8 hereof;
(c) Any judgment against the Issuer shall be enforceable only against the amounts
pledged pursuant to this Indenture. There shall not be authorized any deficiency judgment
against any assets of, or the general credit of, the Issuer.
(d) The Bonds shall not be subject to acceleration upon the occurrence of an Event of
Default.
Section 7.3 Additional Remedies. Without limiting the generality of the foregoing
Section 7.2, the Trustee shall at all times have the power to institute and maintain such
proceedings as it may deem expedient: (1) to prevent any impairment of the Trust Estate by any
acts which may be unlawful or in violation of this Indenture, and (2) to protect its interests and
the interests of the Bondholders in the Trust Estate and in the issues, profits, revenues and other
income arising therefrom, including the power to maintain proceedings to restrain the
enforcement of or compliance with any governmental enactment, rule or order which may be
unconstitutional or otherwise invalid, if the enforcement of, or compliance with, such enactment,
rule or order would impair the Trust Estate or be prejudicial to the interests of the Bondholders
or the Trustee.
Section 7.4 Marshaling of Assets. Upon the occurrence of an Event of Default, all
moneys in all Funds (other than moneys in the Rebate Fund) shall be available to be utilized by
the Trustee in accordance with this Article. The rights of the Trustee under Section 8.5 shall be
applicable. During the continuance of any such Event of Default, all provisions of this Indenture
relating to the utilization of Funds, including but not limited to those set out in Article IV, shall
be superseded by this Article. Subsequent to the curing or waiver of any such Event of Default,
the provisions of this Indenture relating to utilization of Funds, including the provisions of
Article IV, shall be reinstated.
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Section 7.5 Trustee May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other judicial
proceeding under the Bankruptcy Code relating to the Issuer or any property of the
Issuer, the Trustee (whether or not the principal of the Bonds shall then be due and
payable by acceleration or otherwise, and whether or not the Trustee shall have made any
demand upon the Issuer for the payment of overdue principal, redemption premium, if
any, and interest) shall be entitled and empowered, by intervention in such proceeding or
other means:
(i) to file and prove a claim for the whole amount of the principal,
redemption premium, if any, and interest owing and unpaid in respect of the
Bonds then Outstanding or for breach of this Indenture and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and Counsel) and of the
holders allowed in such proceeding; and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator or similar official in any such
judicial proceeding is hereby authorized by each holder to make such payments to the
Trustee, and, in the event that the Trustee shall consent to the making of such payments
directly to the holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and
Counsel, and any other amounts due the Trustee under Section 8.5.(b). No provision of
this Indenture empowers the Trustee to authorize or consent to or accept or adopt on
behalf of any holders of the Bonds any plan of reorganization, arrangement, adjustment
or composition affecting any of the Bonds or the rights of any holder thereof, or to
authorize the Trustee to vote in respect of the claim of any holder in any proceeding
described in subsection (a) of this Section.
Section 7.6 Possession of Bonds Not Required. All rights under this Indenture and the
Bonds may be enforced by the Trustee without possession of any Bonds or the production of
them at trial or other proceedings. Any proceedings instituted by the Trustee may be brought in
its name for itself or as representative of the Bondholders without the necessity of joining
Bondholders as parties, and any recovery resulting from such proceedings shall, subject to
Section 7.8, be for the ratable benefit of the Bondholders.
Section 7.7 Notice and Opportunity to Cure Certain Defaults. No default under
Section 7.1(c) shall constitute an Event of Default until written notice of such default shall have
been given to the Issuer by the Trustee or by the holders of at least 25% in aggregate principal
amount of the Bonds Outstanding, and the Issuer shall have had thirty (30) days after receipt of
such notice to correct such default or cause such default to be corrected, and shall have failed to
do so. In the event, however, that the default be such that it cannot be corrected within such
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thirty (30) day period, it shall not constitute an Event of Default if corrective action is instituted
by the Issuer within such period and diligently pursued (as determined by the Trustee) until the
default is corrected.
Section 7.8 Prioritv of Pavment Followins? Event of Default.
(a) If at any time after the occurrence of an Event of Default the moneys held
by the Trustee under this Indenture (other than amounts in the Rebate Fund) shall not be
sufficient to pay the principal of and interest on the Bonds as the same become due and
payable, such moneys, together with any moneys then available or thereafter becoming
available for such purpose, whether through the exercise of remedies in this Article or
otherwise, shall, subject to subsections (b) and (c) of this Section, be applied by the
Trustee as follows:
(i) first, to the payment of all amounts due the Trustee under Section
8.5;
(ii) second, to the payment of all installments of interest on the Bonds
then due and payable in the order in which such installments became due and
payable, and, if the amount available shall not be sufficient to pay in full any
particular installment, then to the payment, ratably, according to the amounts due
on such installments, without discrimination or preference;
(iii) third, to the payment of the unpaid principal amount of any of the
Bonds which shall have become due and payable, in the order of due dates (other
than Bonds called for redemption or contracted to be purchased for the payment
of which moneys are held pursuant to the provisions of this Indenture), with
interest upon the principal amount of the Bonds from the respective dates upon
which they shall have become due and payable, and, if the amount available shall
not be sufficient to pay in full the principal of such Bonds due and payable on any
particular due date, together with such interest, then to the payment first of such
interest, ratably, according to the amount of principal due on such date, without
any discrimination or preference; and
(iv) fourth, to the payment of principal of, interest on and redemption
premium if any, on Bonds called for redemption under Section 3.3, if any.
(b) If the principal of all Bonds shall have become due and payable, whether
by their terms or by a declaration of acceleration, and subject to subsection (a)(1) of this
Section regarding payment to the Trustee, all such moneys shall be applied to the
payment of the principal and interest then due and unpaid upon the Bonds, without
preference or priority of principal over interest or of interest over principal, or of any
installment of interest over any other installment of interest, or of any Bond over any
other Bond, ratably, according to the amounts due respectively for principal and interest,
without any discrimination or preference.
(c) Whenever moneys are to be applied pursuant to the provisions of this
Section, the Trustee may, in its discretion, establish and maintain a reserve for future fees
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and expenses, and may apply moneys to be distributed at such times, and from time to
time, as the Trustee shall determine, having due regard for the amount of such moneys i
available for application and the likelihood of additional moneys becoming available for
such application in the future. Whenever the Trustee shall apply such funds, it shall fix a
date (which shall be an Interest Payment Date unless it shall deem another date more
suitable) upon which such application is to be made and upon such date interest on the
amounts of principal to be paid on such dates, and for which moneys are available, shall
cease to accrue. The Trustee shall also select a Record Date for such payment date if the
payment date is not an Interest Payment Date. The Trustee shall give such notice as it
may deem appropriate of the deposit with it of any moneys and of the fixing of any such
i Record Date and payment date, and shall not be required to make payment to the holder
of any Bond until such Bond shall be presented to the Trustee for appropriate
endorsement or for cancellation if fully paid.
Section 7.9 Bondholders May Direct Proceedings. The owners of a majority in
aggregate principal amount of the Bonds Outstanding shall, subject to the requirements of
Section 8.2(e), have the right, by an instrument or instruments in writing executed and delivered
to the Trustee, to direct the method and place of conducting all remedial proceedings by the
Trustee hereunder, provided that such direction shall not be in conflict with any rule of law or
this Indenture and that the Trustee shall have the right to decline to follow any such direction
which in the opinion of the Trustee would be unduly prejudicial to the rights of Bondholders not
parties to such direction or would subject the Trustee to personal liability or expense.
Notwithstanding the foregoing, the Trustee shall have the right to select and retain Counsel of its
choosing to represent it in any such proceedings. The Trustee may take any other action which is
not inconsistent with any direction under this Section.
Section 7.10 Limitations on Rights of Bondholders.
(a) No Bondholder shall have any right to pursue any other remedy under this
Indenture or the Bonds unless: (1) an Event of Default shall have occurred and is continuing; (2)
the owners of not less than 25% in aggregate principal amount of all Bonds then Outstanding
have requested the Trustee, in writing, to exercise the powers hereinabove granted or to pursue
such remedy in its or their name or names; (3) the Trustee has been offered indemnity
satisfactory to it against costs, expenses and liabilities reasonably anticipated to be incurred; (4)
the Trustee has declined to comply with such request, or has failed to do so, within sixty (60)
days after its receipt of such written request and offer of indemnity; and (5) no direction
inconsistent with such request has been given to the Trustee during such 60 -day period by the
holders of a majority in aggregate principal amount of the Bonds Outstanding.
(b) The provisions of subsection (a) of this Section are conditions precedent to the
exercise by any Bondholder of any remedy hereunder. The exercise of such rights is further
subject to the provisions of Sections 7.9, 7.11 and 7.14. No one or more Bondholders shall have
any right in any manner whatever to enforce any right under this Indenture, except in the manner
herein provided. All proceedings at law or in equity with respect to an Event of Default shall be
instituted and maintained in the manner herein provided for the equal and ratable benefit of the
Bondholders of all Bonds Outstanding.
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Section 7.11 Unconditional Right of Bondholder to Receive Payment. Notwithstanding
any other provision of this Indenture, any Bondholder shall have the absolute and unconditional
right to receive payment of principal of, redemption premium, if any, and interest on the Bonds
on and after the due date thereof, and to institute suit for the enforcement of any such payment.
Section 7.12 Restoration of Rights and Remedies. If the Trustee or any Bondholder has
instituted any proceeding to enforce any right or remedy under this Indenture and any such
proceeding has been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or such Bondholder, then the Trustee and the Bondholders shall, subject
to any determination in such proceeding, be restored to their former positions hereunder, and all
rights and remedies of the Trustee and the Bondholders shall continue as though no such
proceeding had been instituted.
Section 7.13 Rialits and Remedies Cumulative. No right or remedy herein conferred
upon or reserved to the Trustee is intended to be exclusive of any other right or remedy, but each
such right or remedy shall, to the extent permitted by law, be cumulative of and in addition to
every other right or remedy given hereunder or now or hereafter existing at law, in equity or
otherwise. The assertion or employment of any right or remedy hereunder shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 7.14 Delay or Omission Not Waiver. No delay or omission by the Trustee or
any Bondholder to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of such Event of Default. Every right and
remedy given by this Article or by law to the Trustee or the Bondholders may be exercised from
time to time, and as often as may as deemed expedient, by the Trustee or the Bondholders, as the
case may be.
Section 7.15 Waiver of Defaults.
(a) The holders of a majority in aggregate principal amount of the Outstanding Bonds
may, by written notice to the Trustee and subject to the requirements of Section 8.2(e), waive
any existing default or Event of Default and its consequences, except an Event of Default under
Section 7.1(a) or (b). Upon any such waiver, the default or Event of Default shall be deemed
cured and shall cease to exist for all purposes. No waiver of any default or Event of Default shall
extend to or effect any subsequent default or Event of Default or shall impair any right or remedy
consequent thereto.
(b) Notwithstanding any provision of this Indenture, in no event shall any Person,
other than all of the affected Bondholders, have the ability to waive any Event of Default under
this Indenture if such event results or may result, in the opinion of Bond Counsel, in interest on
any of the Bonds becoming includable in gross income for federal income tax purposes.
Section 7.16 Notice of Events of Default. If an Event of Default occurs of which the
Trustee has or is deemed to have notice under Section 8.2(h), the Trustee shall give Immediate
Notice thereof to the Issuer. Within fifteen (15) days thereafter (unless such Event of Default
has been cured or waived), the Trustee shall give notice of such Event of Default to each holder
of Bonds then Outstanding, provided, however, that except in the instance of an Event of Default
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under Section 7.1(a) or (b), the Trustee may withhold such notice to Bondholders if and so long
as the Trustee in good faith determines that the withholding of such notice is in the interests of
Bondholders, and provided, further, that notice to Bondholders of any Event of Default under
Section 7.1(c) shall be subject to the provisions of Section 7.7 and shall not be given until the
grace period has expired.
ARTICLE VIII
THE TRUSTEE
Section 8.1 Duties and Responsibilities of the Trustee.
(a) Prior to the occurrence of an Event of Default of which it has or is deemed
to have notice hereunder, and after the curing or waiver of any Event of Default which
may have occurred:
(i) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the Trustee
that conform to the requirements of this Indenture; but the Trustee is under a duty
to examine such certificates and opinions to determine whether they conform to
the requirements of this Indenture.
(b) In case an Event of Default of which the Trustee has or is deemed to have
notice hereunder has occurred and is continuing, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use in the conduct of such
person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own grossly negligent action, its own grossly negligent failure to act,
or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee is not liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proven that the Trustee was grossly
negligent in ascertaining the pertinent facts;
(iii) the Trustee is not liable with respect to any action it takes or omits
to be taken by it in good faith in accordance with the direction of the Bondholders
under any provision of this Indenture relating to the time, method and place of
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conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture; and
(iv) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it has
reasonable grounds for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(d) The Trustee shall maintain records of all investments and disbursements of
proceeds in the funds and accounts established pursuant to this Indenture through the date
ending six (6) years following the date on which all the Bonds have been retired.
(e) Whether or not expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee is
subject to the provisions of this Section.
(f) To assist the Issuer in complying with its obligations under Section 6.5
hereof, the Trustee shall on or before November 15 of each year notify the Issuer of the
amount of the Deposit and on or before December 10 of each year notify the Issuer of the
amount of Ad Valorem Tax to be abated for the next succeeding year.
(g) The Trustee shall provide to the Original Purchaser and any Beneficial
Owner, upon request, copies of all monthly account statements and any information
provided to the Trustee by the Issuer pursuant to this Indenture and any information
provided to the Trustee by the Developer pursuant to the Development Agreement.
Section 8.2 Certain Ridits of the Trustee. Except as otherwise provided in Section
8.1:
(a) the Trustee may rely and is protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, bond, debenture or other paper or document believed
by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer under this Indenture
shall be sufficiently evidenced by an Officer's Certificate (unless other evidence thereof
is specifically prescribed);
(c) whenever in the administration of this Indenture the Trustee deems it
desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence thereof is specifically prescribed)
may, in the absence of bad faith on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with Counsel and the written advice of such
Counsel or an opinion of Counsel shall be full and complete authorization and protection
for any action taken, suffered or omitted by it in good faith and in accordance with such
advice or opinion;
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(e) the Trustee is under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Bondholders unless
such holders have offered to the Trustee security or indemnity satisfactory to the Trustee
as to its terms, coverage, duration, amount and otherwise with respect to the costs,
expenses and liabilities which may be incurred by it incompliance with such request or
direction, and the provision of such indemnity shall be mandatory for any remedy taken
upon direction of the holders of 25% in aggregate principal amount of the Bonds;
(f) the Trustee is not required to make any inquiry or investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, approval, bond, debenture or other paper
or document but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit and, if the Trustee determines to
make such further inquiry or investigation, it is entitled to examine the books, records and
premises of the Issuer in person or by agent or attorney;
(g) the Trustee may execute any of its trusts or powers or perform any duties
under this Indenture either directly or by or through agents or attorneys, and may in all
cases pay, subject to reimbursement as provided in Section 8.5, such reasonable
compensation as it deems proper to all such agents and attorneys reasonably employed or
retained by it, and the Trustee shall not be responsible for any misconduct, negligence or
gross negligence of any agent or attorney appointed with due care by it;
(h) the Trustee is not required to take notice or deemed to have notice of any
default or Event of Default hereunder, except Events of Default under Section 7.1(a) and
(b), unless a Responsible Officer of the Trustee has actual knowledge thereof or has
received notice in writing of such default or Event of Default from the Issuer or the
holders of at least 25% in aggregate principal amount of the Outstanding Bonds, and in
the absence of any such notice, the Trustee may conclusively assume that no such default
or Event of Default exists;
(i) the Trustee is not required to give any bond or surety with respect to the
performance of its duties or the exercise of its powers under this Indenture;
0) in the event the Trustee receives inconsistent or conflicting requests and
indemnity from two or more groups of holders of Bonds, each representing less than a
majority in aggregate principal amount of the Bonds Outstanding, pursuant to the
provisions of this Indenture, the Trustee, in its sole discretion, may determine what
action, if any, shall be taken;
(k) the Trustee's immunities and protections from liability and its right to
indemnification in connection with the performance of its duties under this Indenture
shall extend to the Trustee's officers, directors, agents, attorneys and employees. Such
immunities and protections and right to indemnification, together with the Trustee's right
to compensation, shall survive the Trustee's resignation or removal, the defeasance or
discharge of this Indenture and final payment of the Bonds;
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(1) the permissive right of the Trustee to take the actions permitted by this
Indenture shall not be construed as an obligation or duty to do so;
(m) except for information provided by the Trustee concerning the Trustee, the
Trustee shall have no responsibility for any information in any offering memorandum or
other disclosure material distributed with respect to the Bonds, and the Trustee shall have
no responsibility for compliance with any state or federal securities laws in connection
with the Bonds; and
(n) the Trustee agrees to accept and act upon instructions or directions
pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other
similar unsecured electronic methods, provided, however, that (a) the Issuer, subsequent
to such transmission of written instructions, shall provide the originally executed
instructions or directions to the Trustee in a timely manner, (b) such originally executed
instructions or directions shall be signed by a person as may be designated and authorized
to sign for the Issuer or in the name of the Issuer, by an authorized representative of the
Issuer, and (c) the Issuer shall provide to the Trustee an incumbency certificate listing
such designated persons, which incumbency certificate shall be amended whenever a
person is to be added or deleted from the listing. If the Issuer elects to give the Trustee e-
mail or facsimile instructions (or instructions by a similar electronic method) and the
Trustee in its discretion elects to act upon such instructions, the Trustee's understanding
of such instructions shall be deemed controlling. The Trustee shall not be liable for any
losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon
and compliance with such instructions notwithstanding such instructions conflict or are
inconsistent with a subsequent written instruction. The Issuer agrees to assume all risks
arising out of the use of such electronic methods to submit instructions and directions to
the Trustee, including without limitation the risk of the Trustee acting on unauthorized
instructions, and the risk of interception and misuse by third parties.
Section 8.3 Trustee Not Responsible for Recitals. The recitals contained in this
Indenture and in the Bonds (other than the certificate of authentication on the Bonds) are
statements of the Issuer, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the value, condition or sufficiency of any assets pledged
or assigned as security for the Bonds, the right, title or interest of the Issuer therein, the security
provided thereby or by this Indenture, the technical or financial feasibility of the Special
Services, the compliance of the Special Services with the Act, or the tax - exempt status of the
Bonds. The Trustee is not accountable for the use or application by the Issuer of any of the
Bonds or the proceeds of the Bonds, or for the use or application of any moneys paid over by the
Trustee in accordance with any provision of this Indenture or the Bond Ordinance.
Section 8.4 Trustee May Own Bonds. The Trustee, in its commercial banking or in
any other capacity, may in good faith buy, sell, own, hold and deal in any of the Bonds and may
join in any action which any Bondholder may be entitled to take with like effect as if it were not
Trustee. The Trustee, in its commercial banking or in any other capacity, may also engage in or
be interested in any financial or other transaction with the Issuer and may act as depository,
trustee or agent for any committee of Bondholders secured hereby or other obligations of the
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Issuer as freely as if it were not Trustee. The provisions of this Section shall extend to affiliates
of the Trustee.
Section 8.5 Compensation and Expenses of the Trustee. The Issuer covenants and
agrees as follows:
(a) to pay to the Trustee compensation for all services rendered by it
hereunder and under the other agreements relating to the Bonds to which the Trustee is a
party in accordance with terms agreed to from time to time, and, subsequent to default, in
accordance with the Trustee's then- current fee schedule for default administration (the
entirety of which compensation shall not be limited by any provision of law regarding
compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with any
provision of this Indenture, any other agreement relating to the Bonds to which it is a
party or in complying with any request by the Issuer or any Rating Service with respect to
the Bonds, including the reasonable compensation, expenses and disbursements of its
agents and Counsel, except any such expense, disbursement or advance attributable to the
Trustee's gross negligence or bad faith; and
(c) to indemnify, defend and hold the Trustee harmless from and against any
loss, liability or expense incurred without gross negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of the office of Trustee
under this Indenture, including the costs of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties hereunder
or thereunder.
In the event the Trustee incurs expenses or renders services in any proceedings under
Bankruptcy Law relating to the Issuer the expenses so incurred and compensation for services so
rendered are intended to constitute expenses of administration under Bankruptcy Law.
As security for the performance of the obligations of the Issuer under this Section, the
Trustee shall have a lien prior to the lien securing the Bonds, which it may exercise through a
right of setoff, upon all property or funds held or collected by the Trustee pursuant to this
Indenture (other than moneys in the Rebate Fund). The obligations of the Issuer to make the
payments described in this Section shall survive discharge of this Indenture, the resignation or
removal of the Trustee and payment in full of the Bonds.
Section 8.6 Oualifications of Trustee. There shall at all times be a trustee hereunder
which shall be a corporation or banking association organized and doing business under the laws
of the United States of America or of any state, authorized under such laws to exercise corporate
trust powers, which has a combined capital and surplus of at least $50,000,000, or is an affiliate
of, or has a contractual relationship with, a corporation or banking association meeting such
capital and surplus requirement which guarantees the obligations and liabilities of the proposed
trustee), and which is subject to supervision or examination by federal or state banking authority.
If such corporation or banking association publishes reports of condition at least annually,
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pursuant to law or the requirements of any supervising or reexamining authority above referred
to, then for purposes of this Section, the combined capital and surplus of such corporation or
banking association shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign promptly in the manner and with
the effect specified in this Article.
Section 8.7 Resianation or Removal of Trustee: Appointment of Successor Trustee.
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of appointment by the
successor Trustee under Section 8.8.
(b) The Trustee may resign at any time by giving written notice to the Issuer. Upon
receiving such notice of resignation, the Issuer shall promptly appoint a successor Trustee by an
instrument in writing. If an instrument of acceptance has not been delivered to the resigning
Trustee within thirty (30) days after the giving of such notice of resignation, the resigning
Trustee or any holder of a Bond then Outstanding may petition a court of competent jurisdiction
for the appointment of a successor Trustee.
(c) Prior to the occurrence and continuance of an Event of Default hereunder, or after
the curing or waiver of any such Event of Default, the Issuer, the holders of a majority in
aggregate principal amount of the Outstanding Bonds, may remove the Trustee and shall appoint
a successor Trustee. In the event there shall have occurred and be continuing an Event of
Default hereunder, the holders of a majority in aggregate principal amount of the Outstanding
Bonds may remove the Trustee and shall appoint a successor Trustee. In each instance such
removal and appointment shall be accomplished by an instrument or concurrent instruments in
writing signed by the Issuer or such holders, as the case may be, and delivered to the Trustee, the
Issuer and holders of the Outstanding Bonds.
(d) If at any time: (1) the Trustee shall cease to be eligible and qualified under
Section 8.6 and shall fail or refuse to resign after written request to do so by the Issuer or the
holder of any Bond, or (2) the Trustee shall become incapable of acting or shall be adjudged
insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer
shall take charge or control of the Trustee, its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then in either such case (A) the Issuer may remove the Trustee and
appoint a successor Trustee in accordance with the provisions of subsection (c) of this Section;
or (B) any holder of a Bond then Outstanding may, on behalf of the holders of all Outstanding
Bonds, petition a court of competent jurisdiction for removal of the Trustee and appointment of a
successor Trustee.
(e) The Issuer shall give written notice of each resignation or removal of the Trustee
and each appointment of a successor Trustee to each holder of Bonds then Outstanding as listed
in the Bond Register. Each such notice shall include the name and address of the applicable
corporate trust office of the successor Trustee.
Section 8.8 Acceptance of Appointment by Successor Trustee.
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(a) Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Issuer and the predecessor Trustee an instrument accepting its appointment. The
resignation or removal of the retiring Trustee shall thereupon become effective, and the
successor Trustee shall, without further act, deed or conveyance become vested with all the
estates, properties, rights, powers and duties of the predecessor Trustee. Upon the request of the
Issuer or the successor Trustee, the predecessor Trustee shall execute and deliver an instrument
transferring to the successor Trustee all the estates, properties, rights, powers and duties of the
predecessor Trustee under this Indenture, and shall duly assign, transfer, deliver and pay over to
the successor Trustee all the Trust Estate and moneys and other property then held under this
Indenture, subject, however, to the lien provided for in Section 8.5. The successor Trustee shall
promptly give written notice of its appointment to the holders of all Bonds Outstanding in the
manner prescribed herein, unless such notice has previously been given.
(b) No successor Trustee shall accept appointment as provided in this Section unless,
as of the date of such acceptance, it is eligible and qualified under the provisions of Section 8.6.
Section 8.9 Mercer, Succession or Consolidation of Trustee. Any corporation or
association: (a) into which the Trustee is merged or with which it is consolidated; (b) resulting
from any merger or consolidation to which the Trustee is a parry; or (c) succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the successor Trustee
without the execution or filing of any document or the taking of any further action. Any such
successor must nevertheless be eligible and qualified under the provisions of Section 8.6.
Section 8.10 Notices to Bondholders; Waiver. Where this Indenture provides for notice
to Bondholders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first -class postage prepaid, to each Bondholder
affected by each event, at his or her address as it appears on the Bond Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the first giving of such notice. In
any case where notice to Bondholders is given by mail, neither the failure to mail such notice,
nor any default in any notice so mailed to any particular Bondholder shall affect the sufficiency
of such notice with respect to other Bondholders. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to received such notice,
either before or after the event, and such waiver shall be the equivalent of such notice. Waivers
of notice by Bondholders shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
For so long as the Bonds are registered solely in the name of the Securities Depository or
its nominee, the Trustee, on behalf of the Issuer, shall maintain a register (the `Beneficial Owner
Register") in which the Trustee shall record the name and address of any person that is identified
to the Trustee as a beneficial owner of an interest in the Bonds and for which the Trustee has: (i)
information sufficient to permit delivery of first class mail and (ii) either:(x) a certificate
executed, as depository or securities intermediary, by any trust company, bank, banker or
member of a national securities exchange (wherever situated), if such certificate is in form
satisfactory to the Trustee, or (y) a certificate or affidavit of the Person executing such
instrument or writing as a beneficial owner if such certificate or affidavit is in form satisfactory
to the Trustee or (z) such other instrument or writing as the Trustee deems sufficient for the
purposes of this Section. The Trustee and the Issuer shall not be responsible for the accuracy of
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the Beneficial Owner Register, and no Person listed in the Beneficial Owner Register shall be
entitled to any rights under this Indenture other than the right to receive notices in the manner
provided in the following paragraph.
For so long as the Bonds are registered solely in the name of the Securities Depository or
its nominee, where this Indenture provides for notice to the Bondholders of the existence of, or
during the continuance of, any Event of Default or at any time upon the written request of the
Issuer, the Trustee, at the expense of the Issuer, shall: (i) establish a record date (the " Record
Date ") for determination of the Persons entitled to receive such notice; (ii) request a securities
position listing from the Securities Depository showing the Depository Participants holding
positions in the Bonds affected by such notice as of the Record Date for such notice; (iii) mail,
first class postage prepaid, copies of the notice as provided above to each Depository Participant
identified in the securities position listing as holding a position in the Bonds as of the Record
Date for the notice, to each Person listed in the Beneficial Owner Register, to each nationally
recognized municipal securities information repository and state information depository (within
the meaning of Rule 15c2 -12 of the United States Securities and Exchange Commission under
the Securities Exchange Act of 1934), and to any Person identified to the Trustee as a
nonobjecting beneficial owner pursuant to the immediately following clause; (iv) request that the
Depository Participant retransmit the notice to all Persons for which it served as nominee on the
Record Date, including nonobjecting beneficial owners, or retransmit the notice to objecting
beneficial owners and provide a listing of nonobjecting beneficial owners for whom the
Depository Participant served as nominee on the Record Date to the Trustee, (v) provide on
behalf of the Issuer and not as its agent, an undertaking of the Issuer to pay to any Depository
Participant or other nominee (other than the Securities Depository) the reasonable costs of
transmitting the notice to Persons for whom the Depository Participant acts as nominee; and (vi)
provide as many copies of the notice as may be requested by any nominee owner of the Bonds.
Any default in performance of the duties required by this paragraph shall not affect the
sufficiency of notice to the Bondholders given in accordance with the first paragraph of this
Section, nor the validity of any action taken under this Indenture in reliance on such notice to
Bondholders.
Where this Indenture provides for notice to the Bondholders of any event, the form of the
notice shall prominently include a title block, separate from the body of the notice, which shall
include the following information: (i) the complete title of the Bonds; (ii) the complete name of
the Issuer; (iii) the entire nine -digit CUSIP number of each affected maturity of the Bonds; (iv)
the Record Date; and (v) a summary that is no more than the maximum number of characters
permitted by the Securities Depository.
Any notice required or permitted by this Indenture to be given to the Securities
Depository shall be given to it in the manner provided by this Section forgiving notice to
Bondholders, and also shall be given in ASCII (or other format requested by the Securities
Depository) format on magnetic medium, and shall be sent to: The Depository Trust Company,
Proxy Department, 55 Water Street, 50th Floor, New York, New York 10041 -0099, (telecopy:
(212) 855 - 5181), or such other address as may be specified by the Securities Depository in
writing to the Trustee.
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ARTICLE IX
DISCHARGE AND DEFEASANCE
Section 9.1 Discharae. If
(a) the principal of any Bonds and the interest due or to become due thereon
together with any redemption premium required by redemption of any of the Bonds prior
to maturity shall be paid, or is caused to be paid, or is provided for under Section 9.2, at
the times and in the manner to which reference is made in the Bonds, according to the
true intent and meaning thereof, or the outstanding Bonds shall have been paid and
discharged in accordance with this Article, and
(b) all of the covenants, agreements, obligations, terms and conditions of the
Issuer under this Indenture shall have been kept, performed and observed and there shall
have been paid to the Trustee, the Bond Registrar and the Paying Agents all sums of
money due or to become due to them in accordance with the terms and provisions hereof,
then the right, title and interest of the Trustee in the Trust Estate shall there upon cease and the
Trustee, on request and at the expense of the Issuer, shall release this Indenture and the Trust
Estate and shall execute such documents to evidence such release as may be reasonably required
by the Issuer and shall turnover to the Issuer, or to such other Person as may be entitled to
receive the same, all balances remaining in any Funds hereunder except for amounts required to
pay such Bonds or held pursuant to Section 4.9.
Section 9.2 Defeasance; Deposit of Funds for Payment of Bonds. If the Issuer
deposits with the Trustee moneys or Defeasance Obligations which, together with the earnings
thereon, are sufficient to pay the principal of and redemption premium on any particular Bond or
Bonds becoming due, either at maturity, by means of mandatory sinking fund redemption or by
call for optional redemption or otherwise, together with all interest accruing thereon to the due
date or Redemption Date, and pays or makes provision for payment of all fees, costs and
expenses of the Issuer and the Trustee due or to become due with respect to such Bonds, all
liability of the Issuer with respect to such Bond or Bonds shall cease, such Bond or Bonds shall
be deemed not to be Outstanding hereunder and the holder or holders of such Bond or Bonds
shall be restricted exclusively to the moneys or Defeasance Obligations so deposited, together
with any earnings thereon, for any claim of whatsoever nature with respect to such Bond or
Bonds, and the Trustee shall hold such moneys, Defeasance Obligations and earnings in trust for
such holder or holders. In dete the sufficiency of the moneys and Defeasance
Obligations deposited pursuant to this Section, the Trustee shall receive, at the expense of the
Issuer, and may rely upon: (a) a verification report of a firm of nationally recognized
independent certified public accountants or other qualified firm acceptable to the Issuer and the
Trustee; and (b) an opinion of Bond Counsel to the effect that (1) all conditions set forth in this
Article have been satisfied and (2) that defeasance of the Bonds will not cause interest on the
Bonds to be includable in gross income for federal income tax purposes. Upon such defeasance
all rights of the Issuer, including its right to provide for optional redemption of Bonds on dates
other than planned pursuant to such defeasance, shall cease unless specifically retained by filing
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a written notification thereof with the Trustee at the time the Defeasance Obligations are
deposited with the Trustee.
At such times as a Bond shall be deemed to be paid hereunder, as aforesaid, it shall no
longer be secured by or entitled to the benefits of this Indenture, except for the purposes of any
such payment from such money or Defeasance Obligations and except for the provisions of this
Section, Section 2.3, 2.4, 2.5, 2.7, 2.8, 2.10, 2.11, 2.12, 4.3, 11.8 and Article X, and the Issuer
shall continue to be subject to the provisions of Section 8.5.
Section 9.3 Notice of Defeasance.
(a) In case any of the Bonds, for the payment of which moneys or Defeasance
Obligations have been deposited with the Trustee pursuant to Section 9.2, are to be redeemed on
any date prior to their maturity, the Issuer shall give to the Trustee in form satisfactory to it
irrevocable instructions to give notice of redemption of such Bonds on the redemption date for
such Bonds as provided in Section 3.6.
(b) In addition to the foregoing notice, in the event such Bonds to be redeemed are
not by their terms subject to redemption within the next succeeding sixty (60) days, the Trustee
shall give further notice to the Bondholders that the deposit required by Section 9.2 has been
made with the Trustee and that said Bonds are deemed to have been paid in accordance with this
Article and stating the maturity or redemption date or dates upon which moneys are to be
available for the payment of the principal of and redemption premium, if any, on said Bonds;
such further notice shall be given promptly following the making of the deposit required by
Section 9.2; and such further notice also shall be given in the manner set forth Section 3.6(b); but
no defect in said further notice nor any failure to give all or any portion of such further notice
shall in any manner defeat the effectiveness of the deposit.
(c) If the Issuer has retained any rights pursuant to the last sentence of Section 9.2,
notice thereof shall be sent to Bondholders of such Bonds as soon as practicable and not later
than any notice required by subsections (a) or (b) of this Section.
ARTICLE X
SUPPLEMENTAL INDENTURES AND AMENDMENTS
Section 10.1 Supplemental Indentures Without Bondholders' Consent. The Issuer and
the Trustee may from time to time and at any time enter into trust indentures supplemental to this
Indenture, without the consent of or notice to any Bondholder, to effect any one or more of the
following:
(a) cure any ambiguity or defect or omission or correct or supplement any
provision herein or in any supplemental indenture;
(b) grant to or confer upon the Trustee for the benefit of the Bondholders any
additional rights, remedies, powers, authority or security that may lawfully be granted to
or conferred upon the Bondholders or the Trustee which are not contrary to or
inconsistent with this Indenture as then in effect or to subject to the pledge and lien of
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this Indenture additional revenues, properties or collateral including Defeasance
Obligations;
i
(c) add to the covenants and agreements of the Issuer in this Indenture other
covenants and agreements thereafter to be observed by the Issuer or to surrender any right
or power herein reserved to or conferred upon the Issuer which are not contrary to or
inconsistent with this Indenture as then in effect;
(d) permit the appointment of a co- trustee under this Indenture;
(e) modify, alter, supplement or amend this Indenture in such manner as shall
permit the qualification of this Indenture, if required, under the Trust Indenture Act of
1939 or, the Securities Act of 1933, as from time to time amended, or any. similar federal
statute hereafter in effect;
(f) make any other change herein that is determined by the Trustee to be not
materially adverse to the interests of the Bondholders; or
(g) if the Bonds are all Book Entry Bonds, amend, modify, alter or replace the
Letter of Representations as provided in Section 2.12 or other provisions relating to Book
Entry Bonds.
The Trustee shall not be obligated to enter into any such supplemental indenture which
adversely affects the Trustee's own rights, duties or immunities under this Indenture.
Section 10.2 Supplemental Indentures Requirina Bondholders.' Consent. The Issuer
and the Trustee, at any time and from time to time, may execute and deliver a supplemental
indenture for the purpose of making any modification or amendment to this Indenture, but only
with the written consent, given as provided in Section 10.3, of the holders of at least two- thirds
in aggregate principal amount of the Bonds Outstanding at the time such consent is given, and in
case less than all of the Bonds then Outstanding are affected by the modification or amendment,
of the holders of at least two - thirds in aggregate principal amount of the Bonds so affected and
Outstanding at the time such consent is given; provided, however, that if such modification or
amendment will, by its terms, not take effect so long as any Bonds so affected remain
Outstanding, the consent of the holders of such Bonds shall not be required and such Bonds shall
not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under
this Section. Notwithstanding the foregoing, no modification or amendment contained in any
such supplemental indenture shall permit any of the following, without the consent of each
Bondholder whose rights are affected thereby: (a) a change in the terms of stated maturity or
redemption of any Bond or of any installment of interest thereon; (b) a reduction in the principal
amount of or redemption premium on any Bond or in the rate of interest thereon or a change in
the coin or currency in which such Bond is payable; (c) the creation of a lien on or a pledge of
any part of the Trust Estate, or the money or assets pledged under this Indenture or any part
thereof; (d) the granting of a preference or priority of any Bond or Bonds over any other Bond or
Bonds; (e) a reduction in the aggregate principal amount of Bonds of which the consent of the
Bondholders is required to effect any such modification or amendment; or (f) a change in the
provisions of Section 7.15. Notwithstanding the foregoing, the holder of any Bond may extend
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the time for payment of the principal of or interest on such Bond; provided, however, that upon
the occurrence of an Event of Default, funds available hereunder for the payment of the principal
of and interest on the Bonds shall not be applied to any payment so extended until all principal
and interest payments which have not been extended have first been paid in full. Notice of any
supplemental indenture executed pursuant to this Section shall be given to the Bondholders
promptly following the execution thereof by the Issuer.
Section 10.3 Consents of Bondholders and Opinions. Each supplemental indenture
executed and delivered pursuant to the provisions of Section 10.2 shall take effect only when and
as provided in this Section 10.3. A copy of such supplemental indenture (or brief summary
thereof or reference thereto in form approved by the Trustee), together with a request to
Bondholders for their consent thereto in form satisfactory to the Trustee, shall be sent by the
Trustee to Bondholders, at the expense of the Issuer, by first class mail, postage prepaid,
provided that a failure to mail such request shall not affect the validity of the supplemental
indenture when consented to as provided hereinafter. Such supplemental indenture shall not be
effective unless and until there shall have been filed with the Trustee (a) the written consents of
Bondholders of the percentage of Bonds specified in Section 10.2 given as provided in
Section 11. 11, and (b) the opinion of Counsel described in Section 10.5. Any such consent shall
be binding upon the Bondholder giving such consent and upon any subsequent holder of such
Bonds and of any Bonds issued in exchange therefore or in lieu thereof (whether or not such
subsequent Bondholder has notice thereof), unless such consent is revoked in writing by the
Bondholder giving such consent or a subsequent holder of such Bonds by filing such revocation
with the Trustee prior to the date the Trustee receives the material required in subsections (a) and
(b) of this Section.
Section 10.4 Notation on Bonds. Bonds authenticated and delivered after the effective
date of any action taken as provided in this Article may, and, if the Issuer so determines, shall
bear a notation by endorsement or otherwise in form approved by the Trustee as to such action,
and in that case upon demand of the holder of any Outstanding Bond at such effective date and
presentation of such Bond for the purpose at the Office of the Trustee, or upon any transfer of
any Bond Outstanding at such effective date, suitable notation shall be made on such Bond or
upon any Bond issued upon any such transfer by the Trustee as to any such action. If the Issuer
shall so determine, new Bonds so modified as in the opinion of the Trustee and the Issuer to
conform to such action shall be prepared, authenticated and delivered, and upon demand of the
holder of any Bond then Outstanding shall be exchanged, without cost to such Bondholder for
Bonds then Outstanding, upon surrender of such Bonds for Bonds of an equal aggregate
principal amount and of the same maturity and interest rate, in any Authorized Denomination.
Section 10.5 Delivery of Counsel's Opinion with Respect to Supplemental Indentures.
Subject to the provisions of Section 8.1, the Trustee in executing or accepting the additional
trusts permitted by this Article or the modifications thereby of the trusts created by this Indenture
may rely, and shall be fully protected in relying, on an opinion of Counsel acceptable to it stating
that (a) the execution of such supplemental indenture is authorized or permitted by this Indenture
and (b) all conditions precedent to the execution and delivery of such supplemental indenture
have been complied with, and an opinion of Bond Counsel that the execution and performance of
such supplemental indenture shall not, in and of itself, adversely affect the federal income tax
status of the Bonds. The Trustee may accept and rely upon such opinion of Counsel as
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conclusive evidence that any supplemental indenture executed pursuant to the provisions of this
Article complies with the requirements of this Article.
Section 10.6 Effect of Supplemental Indentures. Upon the execution and delivery of
any supplemental indenture under this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture for all purposes;
and every holder of any Bond theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Securitv Agreement; Financing Statements. In addition to the assignment
by the Issuer of its rights in the Trust Estate to the Trustee, the Issuer hereby acknowledges that,
in order to more fully protect, perfect and preserve the rights of the Trustee and the Bondholders
in the Trust Estate, the Issuer grants to the Trustee a security interest in the Trust Estate and the
proceeds thereof. The Issuer agrees to cooperate with the Trustee in filing financing statements,
and continuations thereof, in such manner and in such places as may be required by law to
perfect.such security interest; provided that the Trustee shall not be responsible for filing or for
the sufficiency or accuracy of any financing statements initially filed to perfect security interests
granted under this Indenture. At the time of the issuance of the Bonds and at the required
intervals under applicable State law, the Trustee, at the expense of the Issuer, may obtain an
opinion of Counsel setting forth what, if any, actions by the Issuer or Trustee should be taken in
order to protect, perfect and preserve such security interest. The Trustee shall file continuation
statement with respect to each UCC financing statement relating to the Bonds filed at the time of
the issuance thereof, provided that a copy of the filed financing statement is timely delivered to
the Trustee.
The following information is supplied to facilitate filings under the Uniform Commercial
Code of the State:
The secured party is The Bank of New York Trust Company, N.A. Its address from
which information concerning the security interest may be obtained and its mailing address is: 2
North LaSalle Street, Suite 1020, Chicago, Illinois 60602. The debtor is United City of
Yorkville. Its mailing address is: 800 Game Farm Road, Yorkville, Illinois 60560.
Section 11.2 Limitation of Rights. With the exception of rights herein expressly
conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds
is intended or shall be construed to give to any Person other than the parties hereto, and the
Bondholders any legal or equitable right, remedy or claim under or in respect to this Indenture.
This Indenture and all of the covenants, conditions and provisions hereof are intended to be and
are for the sole and exclusive benefit of the parties hereto and the Bondholders as herein
provided.
Section 11.3 Severabilitv. If any term or provision of this Indenture or the Bonds shall
be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or
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CH12_650171.5
jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or for any other reason,
such circumstances shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent whatever, and
such term and provision shall be valid and enforced to the fullest extent permitted by law.
Section 11.4 Notices. Except as otherwise provided herein, all notices, certificates or
other communications hereunder shall be in writing and shall be deemed given upon receipt, by
hand delivery, mail, overnight delivery, telecopy or other electronic means addressed as follows:
Issuer: United City of Yorkville
800 Game Farm Road
Yorkville, Illinois 60560
Attention: Mayor
Trustee: The Bank of New York Trust Company, N.A.
2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
Attention: Corporate Trust Department
Business District The Bank of New York Trust Company, N.A.
Sales Tax Trustee: 2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
Attention: Corporate Trust Department
Sales Tax Revenue The Bank of New York Trust Company, N.A.
Bond Trustee: 2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
Attention: Corporate Trust Department
In case by reason of the suspension of regular mail service, it shall be impracticable to give
notice by first class mail of any event to any Bondholder or the Issuer when such notice is
required to be given pursuant to any provisions of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be sufficient giving of such
notice. The Issuer and the Trustee may, by notice pursuant to this Section, designate any
different addresses to which subsequent notices, certificates or other communications shall be
sent. A duplicate copy of each notice, approval, consent, request, complaint, demand or other
communication given hereunder by the Issuer or the Trustee to any one of the others shall also be
given to the others. For purposes of this Section and the definition of Immediate Notice,
"electronic means" shall mean telecopy or facsimile transmission or other similar electronic
means of communication which produces evidence of transmission.
Notwithstanding the foregoing, notices to the Trustee shall be effective only upon receipt.
Section 11.5 Holidays. If the date for making any payment or the last date for
performance of any act or the exercising of any right, as provided in this Indenture, is not a
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Business Day, such payment may be made or act performed or right exercised on the next
succeeding Business Day with the same force and effect as if done on the nominal date provided
in this Indenture and no interest shall accrue on the payment so deferred during the intervening
period.
Section 11.6 Counterparts. This Indenture may be executed in any number of
counterparts, each of which when so executed and delivered shall constitute an original, but all
of which, when taken together, shall constitute but one and the same instrument, and shall
become effective when copies hereof shall be delivered to each of the parties hereto, which
copies, when taken together, bear the signatures of each of the parties hereto.
Section 11.7 Applicable Law. This Indenture shall be governed in all respects
including validity, interpretation and effect by, and shall be enforceable in accordance with, the
laws of the United States of America and of the State.
Section 11.8 Limitation of Liability of Officials of the Issuer. Notwithstanding
anything to the contrary contained herein, for payment of the obligations of the Issuer under this
Indenture and the Bonds, the Trustee, the Bondholders and any other party entitled to seek
payment from the Issuer under or to enforce this Indenture and the Bonds will be entitled to look
solely to amounts on deposit with and held by the Trustee for the benefit of the Bondholders,
subject to the terms of this Indenture, and no other property or assets of the Issuer or any officer
or director of the Issuer shall be subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies hereunder, or for any payment required to be made under this
Indenture and the Bonds, or for the performance of any of the covenants or warranties contained
herein.
Section 11.9 Successors and Assil?'ns. All the covenants, promises and agreements in
this Indenture contained by or on behalf of the Issuer, or by or on behalf of the Trustee, shall
bind and inure to the benefit of their respective successors and assigns, whether so expressed or
not.
Section 11.10 Form of Documents Delivered to Trustee. In any case where several
matters are required to be certified by, or covered by an opinion of any specified person, it is not
necessary that all such matters be certified by, or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one such person may
certify or give an opinion with respect to some matters and one or more other such persons as to
other matters, and any such person may certify or give an opinion as to such matters in one or
several documents.
Any Officer's Certificate of the Issuer may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, Counsel, unless such official or officer
knows, or in the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or opinion is based
are erroneous. Any opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an official or officials of the Issuer or an
officer or officers of the Issuer stating that the information with respect to such factual matters is
in the possession of the Issuer, unless such Counsel knows, or in the exercise of reasonable care
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should know, that the certificate or opinion or representations with respect to such matters are
erroneous.
Where any person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Section 11.11 Consent of Holders. Any consent, request, direction, approval, objection
or other instrument required by this Indenture to be signed and executed by the Bondholders may
be in any number of concurrent writings of similar tenor and must be signed or executed by such
Bondholders in person or by agent appointed in writing. Proof of the execution of any such
consent, request, direction, approval, objection or other instrument or of the writing appointing
any such agent and of the ownership of Bonds, if made in the following manner, shall be
sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the
Trustee with regard to any action taken by it under such request or other instrument, namely:
(a) The fact and date of the execution by any person of any such writing may
be proved by the certificate of any officer in any jurisdiction who by law has power to
take acknowledgments within such jurisdiction that the person signing such writing
acknowledged the execution thereof, or by an affidavit of any witness to such execution.
(b) The Trustee may establish a Record Date for the purpose of identifying
Bondholders entitled to issue any such consent, 'request, direction, approval or
instrument.
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IN WITNESS WHEREOF, the Issuer has caused this Indenture to be signed in its name
by its Executive and attested by its Attesting Officer, and the Trustee, in acceptance of the trusts 1
created hereunder, has caused this Indenture to be signed in its corporate name by its officer
thereunder duly authorized all as of the day and year first above written.
UNITED CITY OF YORKVILLE, KENDALL
COUNTY, ILLINOIS
By:
Its:
(SEAL)
ATTEST:
By:
Title:
THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee
By:
Its:
(SEAL)
ATTEST:
By:
Authorized Signatory
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APPENDIX A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF ILLINOIS COUNTY OF KENDALL
UNITED CITY OF YORKVILLE
KENDALL COUNTY, ILLINOIS
SPECIAL SERVICE AREA NUMBER 2006 -113
AD VALOREM TAX BOND
SERIES 2007
(CANNONBALL/BEECHER ROAD PROJECT)
Bond No. Principal Amount: $
Date of Bond: , 2006 Interest Rate: %
CUSIP: Date of Maturity:
Registered Owner: Cede & Co.
The United City of Yorkville, Kendall County, Illinois (the "C "), for value received,
promises to pay to the Registered Owner specified above or registered assigns, upon presentation
and surrender of this bond at the office of The Bank of New York Trust Company, N.A., East
Syracuse, New York, as Trustee (the "Trustee ") the Principal Amount of this bond specified
above on the Date of Maturity specified above and to pay the Registered Owner of this bond
interest on that sum at the Interest Rate per year specified above from the Date of Bond specified
above to the Date of Maturity specified above, payable semiannually on March 1 and
September 1, with the first interest payment date being March 1, 2008. Interest shall be
computed on the basis of a 360 -day year of twelve 30 -days months. Interest on this bond shall
be payable on each interest payment date by check or draft of the Trustee mailed to the person in
whose name this bond is registered at the close of business on the 15th day of the month
preceding such interest payment date. During such time as this bond is registered so as to
participate in a securities depository system with The Depository Trust Company ( " DTC "),
principal of and interest on this Bond shall be payable by wire transfer pursuant to instructions
from DTC. The principal of, interest on and redemption premium on this bond are payable in
lawful money of the United States of America. No interest shall accrue on this bond after its Date
of Maturity unless this bond shall have been presented for payment at maturity and shall not then
have been paid.
This bond is one of an authorized issue of bonds in the aggregate principal amount of
$ . This bond and the issue of which it is a part (together, the " Bonds ") are issued
pursuant to the provisions of the "Special Service Area Tax Law," 35 ILCS §200/27 -5 et seq., as
amended, and the provisions of the Local Government Debt Reform Act, 30 ILCS §350/1 et seq.,
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CHI2_650171.5
as amended, and the principal of and interest on the Bonds are payable from ad valorem taxes
(the "Ad Valorem Taxes ") levied on all taxable real property within the United City of Yorkville 3
Special Service Area Number 2006 -113 (the "Special Service Area ").
The Bonds are being issued for the purpose of paying a portion of the costs of special
services to be provided to the Special Service Area, all as more fully described in an ordinance
adopted by the City Council of the City on March 27, 2007 (the "Bond Ordinance ") and a Trust
Indenture dated as of April 1, 2007 between the City and the Trustee (the "Indenture "), to all the
provisions of which the holder by the acceptance of this bond assents. Terms not otherwise
defined herein shall have the meanings ascribed to such terms in the Indenture. The Bonds,
together with the interest thereon, are limited obligations of the City, payable solely from the
collection of the Ad Valorem Taxes and other r
moneys deposited in certain Funds and Accounts
established pursuant to the Indenture. For the prompt payment of the principal of and interest on
this bond the Ad Valorem Taxes are hereby irrevocably pledged. THE BONDS DO NOT
CONSTITUTE GENERAL OBLIGATIONS OF THE CITY AND NEITHER THE FULL
FAITH AND CREDIT NOR THE UNLIMITED TAXING POWER OF THE CITY SHALL BE
PLEDGED AS SECURITY FOR THE PAYMENT OF THE BONDS.
The Bonds are subject to mandatory sinking fund redemption and final payment at a price
of par plus accrued interest, without premium, on March 1, of the years and in the amounts as
follows:
Year Amount
i
2012 $
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
The Bonds are subject to optional redemption prior to maturity at the option of the City,
in whole or in part, on any date on or after March 1, 2017, at a redemption price (expressed as a
percentage of the principal amount of the Bonds to be redeemed), as set forth below, plus
accrued and unpaid interest to the date of redemption:
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I
Redemption Dates Redemption Prices
i
March 1, 2017 through
February 28, 2018 102%
March 1, 2018 through
February 28, 2019 101
March 1, 2019 and thereafter 100
The Bonds are subject to mandatory redemption on any Interest Payment Date, in part, at
a redemption price equal to the principal amount to be redeemed, together with accrued interest
to the date fixed for redemption, without premium, from amounts transferred from the
Improvement Fund to the Bond and Interest Fund.
If less than all the Bonds of any maturity are to be redeemed on any redemption date,
they shall be redeemed in inverse order of maturity and in inverse order of sinking fund
installments within any maturity, except as otherwise provided in the Indenture.
Notice of the redemption of any Bonds, which by their terms shall have become subject
to redemption, shall be given to the Notice Beneficial Owners, as defined in the Indenture, and
the registered owner of each Bond called for redemption in whole or in part not less than 20 or
more than 60 days before any date established for redemption of Bonds, by the Bond Registrar,
on behalf of the City, by registered or certified mail sent to the registered owner's last address, if
any, appearing on the registration books kept by the Bond Registrar.
This bond is negotiable, subject to the following provisions for registration and
registration of transfer. The City maintains books for the registration and registration of transfer
of Bonds at the office of the Trustee, as Bond Registrar. This bond is fully registered on those
books in the name of its owner, as to both principal and interest, and transfer of this bond may be
registered on those books upon surrender of this bond to the Bond Registrar by the registered
owner or his or her attorney duly authorized in writing together with a written instrument of
transfer satisfactory to the Bond .Registrar duly executed by the registered owner or his or her
duly authorized attorney. Upon surrender of this bond for registration of transfer, a new bond or
bonds in the same aggregate principal amount and of the same maturity will be issued to the
transferee as provided in the Indenture.
This bond may be exchanged, at the option of the Registered Owner, for an equal
aggregate principal amount of bonds of the same maturity of any other Authorized
Denominations, upon surrender of this bond at the corporate trust office of the Bond Registrar in
East Syracuse, New York with a written instrument of transfer satisfactory to the Bond Registrar
duly executed by the Registered Owner or his or her duly authorized attorney.
For every exchange or registration of transfer of this bond, the City or the Bond Registrar
may make a charge sufficient to reimburse it for any tax, fee or other governmental charge, other
than one imposed by the City, required to be paid with respect to that exchange or registration of
transfer, and payment of that charge by the person requesting exchange or registration of transfer
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shall be a condition precedent to that exchange or registration of transfer. No other charge may
be made by the City or the Bond Registrar as a condition precedent to exchange or registration of
transfer of this bond.
The Bond Registrar shall not be required to exchange or register the transfer of any Bond
following the close of business on the 15th day of the month preceding any interest payment date
on such Bond, nor to transfer or exchange any Bond after notice calling such Bond for
redemption has been mailed, nor during a period of 15 days next preceding mailing of a notice of
redemption of any Bonds.
The City, the Trustee and the Bond Registrar may deem and treat the registered owner of
this bond as its absolute owner, whether or not this bond is overdue, for the purpose of receiving
payment of the principal of or interest on this bond and for all other purposes, and neither the
City, the Bond Registrar nor the Trustee shall be affected by any notice to the contrary. Payment
of the principal of and interest on this bond shall be made only to its registered owner, and all
such payments shall be valid and effective to satisfy the obligation of the City on this bond to the
extent of the amount paid.
All conditions which by law must have existed or must have been fulfilled in the issuance
of this bond existed and were fulfilled in compliance with law. Provision has been made for the
levy, collection and segregation of the Ad Valorem Taxes sufficient to pay and discharge the
principal of this bond at maturity and to pay interest on this bond as it falls due. The issuance of
the Bonds by the City will not cause the City to exceed or violate any applicable limitation or
condition respecting the issuance of bonds imposed by the law of the State of Illinois or by any 1,
indenture, ordinance or resolution of the City. The Bonds are issued for purposes for which the
City is authorized by law to issue bonds including but not limited to the payment of a portion of
the costs of the. special services to be provided to the Special Service Area making deposits to a
p p p � g p
reserve fund, administrative expense fund and a capitalized interest account, and paying costs of
the City in connection with the issuance of the Bonds.
This bond shall not be valid for any purpose unless and until the certificate of
authentication on this bond shall have been duly executed by the Trustee.
�I
i �I
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CH12_650171.5
IN WITNESS WHEREOF, the United City of Yorkville, Kendall County, Illinois, by its
City Council, has caused this bond to be executed by the manual or facsimile signature of its
Mayor and attested by the manual or facsimile signature of its City Clerk and has caused its
corporate seal to be affixed to this bond (or a facsimile of its seal to be printed on this bond), all
as of the Date of Bond specified above.
UNITED CITY OF YORKVILLE, ILLINOIS
By:
Mayor
(SEAL)
ATTEST:
City Clerk
Date of Authentication:
i
This bond is one of the bonds described in the Indenture authorizing the issuance of
$ United City of Yorkville, Kendall County, Illinois Special Service Area Number
2006 -113 Ad Valorem Tax Bonds, Series 2007 (Cannonball/Beecher Road Project).
THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee
By:
Authorized Signatory
For Value Received, the undersigned sells, assigns and transfers to
this bond and all rights and title under this bond, and irrevocably constitutes and appoints
attorney to transfer this bond on the books kept for registration of
this bond.
Dated:
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CHI2_650171.5
APPENDIX B
DESCRIPTION OF SPECIAL SERVICE AREA NO. 2006-113
Legal Description of Property
THAT PART OF THE SOUTHEAST QUARTER OF SECTION 19, PART OF THE SOUTH
HALF OF SECTION 20 AND PART OF THE NORTHWEST QUARTER OF SECTION 29,
TOWNSHIP 37 NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL MERIDIAN
DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE
SOUTHEAST QUARTER OF SAID SECTION 19; THENCE NORTH 01 DEGREES 13
MINUTES 53 SECONDS WEST, ALONG THE EAST LINE OF SAID SOUTHEAST
QUARTER 310.20 FEET; THENCE WESTERLY PERPENDICULAR TO SAID EAST LINE
198.00 FEET; THENCE NORTH 16 DEGREES 23 MINUTES 58 SECONDS WEST, 862.81
FEET; THENCE NORTH 46 DEGREES 51 MINUTES 14 SECONDS EAST, 126.15 FEET;
THENCE WESTERLY ALONG A NONTANGENTIAL CURVE TO THE RIGHT WITH A
RADIUS OF 25.00 FEET AND A CHORD BEARING OF NORTH 86 DEGREES 29
MINUTES 53 SECONDS WEST, AN ARC LENGTH OF 40.71 FEET; THENCE
NORTHWESTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 950.00
FEET AND A CHORD BEARING OF NORTH 30 DEGREES 00 MINUTES 26 SECONDS
WEST, AN ARC LENGTH OF 326.41 FEET; THENCE NORTH 67 DEGREES 35 MINUTES
57 SECONDS EAST, 243.73 FEET; THENCE SOUTHEASTERLY ALONG A
NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 500.00 FEET AND A
CHORD BEARING OF SOUTH 31 DEGREES 07 MINUTES 50 SECONDS EAST, AN ARC )
LENGTH OF 209.70 FEET; THENCE SOUTH 43 DEGREES 08 MINUTES 45 SECONDS
EAST, 52.80 FEET; THENCE NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST,
287.40 FEET; THENCE SOUTH 43 DEGREES 08 MINUTES 45 SECONDS EAST, 80.00
FEET; THENCE NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 162.29 FEET;
THENCE NORTH 43 DEGREES 08 MINUTES 45 SECONDS WEST, 7.00 FEET; THENCE
NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 60.76 FEET; THENCE
NORTHEASTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET
AND A CHORD BEARING OF NORTH 58 DEGREES 18 MINUTES 15 SECONDS EAST,
AN ARC LENGTH OF 146.68 FEET; THENCE NORTH 69 DEGREES 45 MINUTES 15
SECONDS EAST, 121.97 FEET; THENCE NORTHEASTERLY ALONG A CURVE TO THE
LEFT WITH A RADIUS OF 433.00 FEET AND A CHORD BEARING OF NORTH 37
DEGREES 51 MINUTES 31 SECONDS EAST, AN ARC LENGTH OF 482.09 FEET;
THENCE NORTHEASTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF
25.00 FEET AND A CHORD BEARING OF NORTH 51 DEGREES 23 MINUTES 20
SECONDS EAST, AN ARC LENGTH OF 39.64 FEET; THENCE SOUTH 83 DEGREES 11
MINUTES 08 SECONDS EAST, 763.20 FEET; THENCE SOUTHEASTERLY ALONG A
CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET AND A CHORD BEARING OF
SOUTH 57 DEGREES 07 MINUTES 07 SECONDS EAST, AN ARC LENGTH OF 333.94
FEET; THENCE SOUTH 31 DEGREES 03 MINUTES 05 SECONDS EAST, 123.11 FEET;
THENCE SOUTH 58 DEGREES 56 MINUTES 55 SECONDS WEST, 7.00 FEET; THENCE
SOUTHEASTERLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A
RADIUS OF 440.00 FEET AND A CHORD BEARING OF SOUTH 42 DEGREES 20
MINUTES 40 SECONDS EAST, AN ARC LENGTH OF 173.45 FEET; THENCE NORTH 32
B -1
CHI2_650171.5
DEGREES 01 MINUTES 21 SECONDS EAST, 80.28 FEET; THENCE SOUTHEASTERLY
ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 360.00 FEET
AND A CHORD BEARING OF SOUTH 60 DEGREES 42 MINUTES 59 SECONDS EAST,
AN ARC LENGTH OF 101.11 FEET; THENCE SOUTH 68 DEGREES 45 MINUTES 32
SECONDS EAST, 784.84 FEET TO THE CENTER LINE OF CANNONBALL TRAIL;
THENCE SOUTH 21 DEGREES 40 MINUTES 31 SECONDS WEST, ALONG SAID
CENTER LINE, 331.43 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 SECONDS
WEST, ALONG SAID CENTER LINE, 1261.58 FEET; THENCE NORTH 68 DEGREES 45
MINUTES 43 SECONDS WEST, 48.00 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES
17 WEST, 470.00 FEET; THENCE SOUTH 57 DEGREES 14 MINUTES 17 SECONDS
WEST, 74.81 FEET TO THE NORTH LINE OF U.S. ROUTE 34; THENCE NORTH 85
DEGREES 32 MINUTES 10 SECONDS WEST ALONG SAID NORTH LINE, 1983.32 FEET
TO THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 29; THENCE
NORTH 01 DEGREES 14 MINUTES 12 SECONDS WEST ALONG SAID WEST LINE,
378.99 FEET TO THE POINT OF BEGINNING, IN THE UNITED CITY OF YORKVILLE,
KENDALL COUNTY, ILLINOIS, AND CONTAINING 143.40 ACRES OF LAND MORE OR
LESS.
PIN's
02 -19- 400 -003
02 -29- 100 -001
02-20-351-001
I
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CH 12_650171.5
APPENDIX C
REQUEST FOR PAYMENT
TO: The Bank of New York Trust Company, N.A., Trustee
2 North LaSalle Street, Suite 1020
Chicago, Illinois 60603
Attention: Corporate Trust Department
i
RE: $
United City of Yorkville
Kendall County, Illinois
Special Service Area Number 2006 -113
Ad Valorem Tax Bonds, Series 2007 (Cannonball/Beecher Road Project)
Amount Requested:
Total Disbursements to Date:
1. The United City of Yorkville, Kendall County, Illinois (the " Issuer " hereby
requests that The Bank of New York Trust Company, N.A., as trustee (the "Trustee ") under the
Trust Indenture for the above - referenced Ad Valorem Tax Bonds, Series 2007 dated as of April
1, 2007 (the "Indenture "), by and between the Issuer and the Trustee disburse on
the Amount Requested above from the Improvement Fund (as such term is defined in the
Indenture). All capitalized terms herein shall have the meanings assigned to them in the
Indenture.
2. In connection with the requested disbursement, the Issuer hereby certifies as
follows:
(a) This written requisition is for payment of costs in connection with the
issuance of the above - referenced Bonds or the construction of a Special Service or
reimbursement for the costs of construction of Special Services.
(b) The Issuer and the Developer have each complied with all requirements
under the Development Agreement relating to the disbursement request.
(c) The City Engineer has inspected the work for which payment is requested
and has confirmed that the work for which payment is requested has been completed and
payment therefore should be approved.
(d) Payment instructions sufficient to make the requested payment are set
forth in Exhibit A.
(e) No portion of the amount being requested to be disbursed was set forth in
any previous request for payment.
By:
Issuer Representative
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CH12_650171.5
EX44161T ccC
UNITED CITY OF YORKVILLE
KENDALL COUNTY, ILLINOIS
Ad Valorem Tax Bonds, Series 2007
(Cannonball/Beecher Road Project)
BOND PURCHASE AGREEMENT
, 2007
United City of Yorkville, Illinois Cannonball LLC
800 Game Farm Road c/o The Harlem Irving Companies, Inc.
Yorkville, Illinois 60560 4104 N. Harlem Avenue, Suite 220
Chicago, IL 60706
Ladies and Gentlemen:
The undersigned, William Blair & Company L.L.C. (the "Original Purchaser "), offers to
enter into the following agreement (this "Contract ") with the United City of Yorkville, Kendall
County, Illinois (the "City "), which upon acceptance by the City of this offer, and approval of
this Contract by the Developer (as defined below) will be binding upon each of the City, the
Developer and the Original Purchaser. Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Indenture (as hereinafter defined) and the Limited
Offering Memorandum (as hereinafter defined).
This offer is made subject to your mutual acceptance on or before 3:00 P.M., Chicago
time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Original
Purchaser upon notice delivered to the City and the Developer at the addresses set forth above at
any time prior to the acceptance hereof by the City and the Developer. This offer is also subject
to the following provisions:
1. Definitions
For purposes of this Contract, the following terms have the meanings specified in this
section, unless another meaning is plainly intended:
(A) "Act" means the Special Service Area Tax Law of the State of Illinois, 35
ILCS 200/27 -5 et seq., as amended.
(B) "Ancillary Agreements" means the Bond Ordinance, the Indenture, the
Tax Compliance Certificate and Agreement, the Limited Offering Memorandum, the
Development Agreement, and all other agreements and certificates executed and delivered in
connection with the issuance and sale of the Bonds.
(C) "Area" means the City's Special Service Area Number 2006 -113 created
pursuant to the Establishing Ordinance.
(D) "Bond Ordinance" means Ordinance No. 2007- adopted by the
corporate authorities of the City on March 27, 2007, authorizing the issuance of the Bonds.
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14531726 \V -2
(E) "Bonds" means the United City of Yorkville Ad Valorem Tax Bonds,
Series 2007 (Cannonball/Beecher Road Project). ,}
(F) "Business Day" means any day other than a Saturday, Sunday, legal
holiday or a day on which banking institutions are required or authorized by law to be closed in
the City of Chicago or the State of Illinois or a day on which the New York Stock Exchange is
closed.
(G) "City" means the United City of Yorkville, Kendall County, Illinois.
(H) "City Information" means the descriptions and information contained in
the Limited Offering Memorandum under the captions "INTRODUCTORY STATEMENT ";
"THE DEVELOPMENT AGREEMENT "; "THE CITY "; "THE SPECIAL SERVICE AREA
AND AD VALOREM TAX "; "CONTINUING INFORMATION —The City "; "NO
LITIGATION —The City "; "NO RATING ", "AUTHORIZATION" and "MISCELLANEOUS."
(I) "Closing" means the Closing as defined in Section 2(B) herein held on the
Closing Date.
(J) "Closing Date" means April, 2007, or such earlier or later date as the City,
the Developer and the Original Purchaser shall mutually agree upon and refers to the date on
which the City causes the Trustee to deliver the Bonds to the Original Purchaser and the Bonds
are paid for by the Original Purchaser pursuant to this Contract.
(K) "Code" means the Internal Revenue Code of 1986, as amended.
(L) "Contract" means this Bond Purchase Agreement.
(NI) "Developer" means Cannonball LLC, an Illinois limited liability company.
(N) "Development Agreement" means the Development Agreement dated
April _, 2007 between the City and the Developer.
(0) "Developer Information" means the descriptions and information in the
Limited Offering Memorandum under the captions "INTRODUCTORY STATEMENT ", except
the penultimate and ultimate paragraphs therein, "ESTIMATED SOURCES AND USES OF
FUNDS"; "PLAN OF FINANCE"; "THE DEVELOPMENT AGREEMENT "; "SUMMARY OF
THE PROJECT"; "THE DEVELOPER "; "RISK FACTORS;" "CONTINUING
INFORMATION —The Developer "; and "NO LITIGATION —The Developer."
(P) "Establishing Ordinance" means Ordinance No. 2007 - adopted by the
corporate authorities of the City on March 13, 2007, establishing the Area.
(Q) "Governmental Body" means any federal, state, municipal, or other
governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
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14531726\V -2
(R) "Indenture" means the Trust Indenture dated as of April 1, 2007 between
the City and the Trustee pursuant to which the Bonds will be issued.
(S) "Notice Beneficial Holders" has the meaning given in the Indenture.
(T) "Original Purchaser" means William Blair & Company, L.L.C.
(CI) "Plans" means the plans and specifications pursuant to which the Project
will be constructed.
(V) "Preliminary Limited Offering Memorandum" means the Preliminary
Limited Offering Memorandum of the City (including any Appendix thereto) relating to the
Bonds dated March, 2007.
(W) "Project" means the project development as defined in the Limited
Offering Memorandum.
(X) "Revenue" shall have the meaning set forth in the Indenture.
(Y) "Limited Offering Memorandum" means the Limited Offering
Memorandum of the City (including each Appendix thereto) relating to the Bonds dated April,
2007.
(Z) "Special Services" means engineering, soil testing and appurtenant work,
mass grading and demolition, storm water management facilities, potable water storm drainage
systems and storm sewers, site clearing and tree removal, public water facilities, sanitary sewer
facilities, erosion control measures, roads, streets, curbs, gutters, street lighting, signalization,
bicycle paths, sidewalks and related street improvements, and equipment and materials necessary
for the maintenance thereof, landscaping and tree installation, costs for land and easement
acquisitions relating to any of the foregoing improvements and other eligible costs of
improvements to serve the Area, as further described in the Limited Offering Memorandum.
(AA) "Tax Compliance Certificate and Agreement" means the Tax Compliance
Certificate and Agreement dated the Closing Date, executed by the City and the Trustee in
connection with the Bonds.
(BB) "Trustee" means The Bank of New York Trust Company, N.A., as Trustee
under the Indenture.
2. Purchase and Sale of the Bonds.
(A) Sale of Bonds. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements herein, the Original Purchaser hereby agrees to
purchase from the City for a limited offering, and the City hereby agrees to sell to the Original
Purchaser for such purpose, all, but not less than all, of the Bonds for a purchase price of
$ , which reflects an underwriters' discount of $ . The Bonds
shall be issued pursuant to the Bond Ordinance and the Indenture. The Bonds shall be dated,
shall mature on such dates and in such amounts, shall bear interest at such rates, shall be offered
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14531726 \V -2
at the initial offering prices and shall be subject to such other terms and conditions, all as
described in the Limited Offering Memorandum, the Bond Ordinance and the Indenture.
(B) Closing. The purchase and sale of the Bonds shall take place on or before
12:00 p.m. CST on the Closing Date at the offices of Foley & Lardner LLP, Chicago, Illinois.
At the Closing, as defined below, the Original Purchaser will accept the delivery of the Bonds
duly executed by the City, together with other documents herein mentioned, and will make
payment therefor as provided herein by immediately available funds payable to the order of the
Trustee for the account of the City.
j The payment for the Bonds and delivery of the Bonds, as herein described, is herein
called the "Closing."
3. Citv's Pre- Closinv- Deliveries.
(A) Prior to the Closing Date, the City shall have delivered or caused to be
delivered to the Original Purchaser an executed copy of the Limited Offering Memorandum,
executed on behalf of the City by its Mayor.
(B) Prior to the Closing Date, the City shall have delivered or caused to be
delivered to the Original Purchaser a certified copy of the Bond Ordinance and such other
ordinances of the City which shall include the authorization of the execution, delivery and
performance of this Contract, the Bonds and the other Ancillary Agreements to which the City is
a parry, among other things, together with such reasonable number of copies of each of the
foregoing as the Original Purchaser shall request.
(C) The City hereby authorizes any and all of the material described above in
Subsections A and B of this Section 3 and the Ancillary Agreements, the information contained
in the Limited Offering Memorandum (and the Preliminary Limited Offering Memorandum)
and the Bond Ordinance and all other instruments, documents and agreements delivered pursuant
to Section 8 of this Contract or in connection with the transactions contemplated hereby, for use
in connection with the offering and sale of the Bonds. The City hereby ratifies, approves, and
consents to the use and distribution by the Original Purchaser, prior to or after the date hereof, of
the Limited Offering Memorandum (and the Preliminary Limited Offering Memorandum) in
connection with the offering of the Bonds. The City hereby agrees to furnish such information,
execute such instruments and take such other action at the expense of and in cooperation with the
Original Purchaser as the Original Purchaser may deem reasonably necessary in order to qualify
the Bonds for offering and sale under the "Blue Sky" or other securities laws and regulations of
such states and other jurisdictions of the United States as the Original Purchaser may designate;
provided, however, that the City shall not be required to execute a special or general consent to
service of process or qualify as a foreign corporation in connection with any such qualification in
any jurisdiction.
4. Representations and Warranties of the City.
The City represents and warrants to and agrees with the Original Purchaser that:
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14531726 \V -2
(A) Cit
y. The City is a non -home rule unit and a municipal corporation duly
organized, validly existing and in good standing under the laws and the Constitution of the State
of Illinois. The City is authorized and empowered by the Act and the Bond Ordinance and such
other ordinances of the City as have been duly adopted by the City, to enter into the transactions
contemplated by this Contract, each of the Bond Ordinance and Establishing Ordinance, the
Limited Offering Memorandum, and the Ancillary Agreements to which the City is or is to be a
parry. The adoption of the Bond Ordinance and the execution, delivery and performance by the
City of this Contract, the Ancillary Agreements to which the City is or is to be a party and the
issuance of the Bonds are within the legal right, power and authority of the City, have been duly
and validly authorized by all necessary proceedings of the City, and such execution, delivery and
performance by the City as of the date of this Contract and as of the Closing Date do not and will
not contravene, or constitute a breach of or default (with due notice or the passage of time or
both) under, any provision of law, ordinance or regulation applicable to the City, or any
provision of the municipal code or other rules and procedures of the City, or any judgment,
order, decree, agreement or instrument binding on it or, except as described in the Limited
Offering Memorandum, result in the creation of any lien or other encumbrance on any asset of
the City. This Contract and the Bond Ordinance each constitutes, and the Ancillary Agreements
to which the City is or is to be a party, when executed and delivered by the City and any other
parties thereto, will constitute valid and binding agreements of the City enforceable against the
City in accordance with their respective terms, except to the extent limited by bankruptcy,
reorganization, or other similar laws affecting creditors' rights generally and by the availability
of equitable remedies, and the Bonds, when issued and delivered by the City in accordance with
this Contract and the Bond Ordinance will have been duly authorized and issued and will
constitute valid and binding obligations of the City enforceable against the City in accordance
with their terms, except to the extent limited by bankruptcy, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by the availability of equitable
remedies. When delivered to and paid for by the Original Purchaser at the Closing in accordance
with the provisions of this Contract, the Bonds will conform in all material respects to the
description thereof contained in the Limited Offering Memorandum.
(B) Use of Proceeds. The City will not take or omit to take any action which
will in any way cause or result in the proceeds from the sale of the Bonds being applied other
than as provided in the Bond Ordinance, the Indenture and as described in the Limited Offering
Memorandum. Such proceeds will not be used by the City in a manner that would cause the
Bonds to be "arbitrage bonds" within the meaning of the Code, or any successor thereto, and the
applicable regulations promulgated or proposed thereunder.
(C) Governmental Authorization. All authorizations, consents and approvals
of any Governmental Body required in connection with the execution and delivery by the City
of, or in connection with the performance by the City of its obligations under, the Bonds, the
Bond Ordinance, this Contract, or the Ancillary Agreements to which the City is or is to be a
party, have been obtained and are in full force and effect, or will be obtained prior to Closing and
will be in full force and effect as of the Closing Date. To the best knowledge of the City, all
authorizations, consents and approvals of any Governmental Body required in connection with
the construction or operation of the Project by the City have been obtained and are in full force
and effect as of the Closing Date.
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145317261V -2
(D) Limited Offering Memorandum. The City Information is, and as of the -
date of the Closing, will be, true and correct in all material respects and such descriptions and l
information in the Limited Offering Memorandum, as of its date and as of the Closing Date will
not contain an untrue, incorrect or misleading statement of a material fact; and such descriptions
and information in the Limited Offering Memorandum do not, as of its date and as of the Closing
Date will not omit to state a material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(E) No Liens or Encumbrances. Other than as specifically set forth in the
Limited Offering Memorandum, there are no existing liens, claims, charges or encumbrances on
or rights to any funds, revenues or interests pledged pursuant to the Bond Ordinance which are
senior to, or on a parity with, the claims of the holders of the Bonds. Other than as specifically
disclosed in the Limited Offering Memorandum, the City has not entered into any contract or
arrangement of any kind, and there is no existing, pending, threatened, or anticipated event or
circumstance that might give rise to any lien, claim, charge or encumbrance on or right to the
assets, properties, funds, or interests pledged pursuant to the Bond Ordinance which would be
prior to, or on a parity with, the claims of the holders of the Bonds. The City is lawfully entitled
to receive, pledge and assign all amounts or revenues which have been pledged or assigned as
security for the payment of the principal of and interest on the Bonds.
(F) No Litigation. Except as described in the Limited Offering Memorandum,
as of the date of this Contract and as of the Closing Date (i) there is no action, suit, proceeding or
investigation, at law or in equity, before or by any court or any governmental agency or public
board or body, pending against the City or, to the knowledge of the City, threatened against the
City, to restrain or enjoin, or threatening or seeking to restrain or enjoin, the issuance, sale or
delivery of the Bonds or the delivery by the City of any of the Ancillary Agreements to which
the City is a party, or the collection of the Revenue, or in any way contesting or affecting the
validity of the Bonds, or any of the Ancillary Agreements to which the City is a party, or in any
way questioning or affecting (w) the proceedings under which the Bonds are to be issued, (x) the
validity or enforceability of any provision of the Bonds, the Bond Ordinance, the Establishing
Ordinance or this Contract, (y) the authority of the City to collect the Revenue, or to perform its
obligations hereunder or with respect to the Bonds, or to consummate any of the transactions set
forth in the Ancillary Agreements to which it is or is to be a party as contemplated hereby or by
the Bond Ordinance, or the Limited Offering Memorandum, (z) the legal existence of the City, or
the title of its Board of Trustees or officers to their offices, and (ii) there is no action, suit,
proceeding or investigation, at law or in equity, before or by any court or any governmental
agency or public board or body, pending against the City or, to the knowledge of the City,
threatened against the City, involving any of the property or assets within the City which may
result in any material adverse change in the Revenue, assets or the financial condition of the City
or the proposed construction or operation of the Project by the Developer pursuant to the
Development Agreement.
(G) Certificates. Any certificate signed by an authorized officer of the City
and delivered to the Original Purchaser and/or the Trustee shall be deemed a representation and
covenant by the City to the Original Purchaser and/or the Trustee as to the statements made
therein.
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145317261V -2
I
(I� The Ordinances. Each of the Bond Ordinance and the Establishing
Ordinance are in full force and effect, and have not been amended, modified, revoked or
repealed.
5. Representations and Warranties of the Developer.
The Developer represents and warrants to and agrees with the Original Purchaser and the
City that:
(A) Organization and Power. The Developer is a duly organized and validly
existing limited liability company and is in good standing under the laws of the State of Illinois,
and has all powers and authority and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and to enter into and perform its
obligations under this Contract, and all Ancillary Agreements to which it is or is to be a parry.
(B) Authorization of Agreements, Etc. This Contract and the Ancillary
Agreements to which the Developer is a parry have each been duly authorized, executed and
delivered by the Developer and constitute the legal, valid and binding agreement of the
Developer enforceable against the Developer in accordance with their respective terms; provided
that the enforceability of such Agreements may be limited by bankruptcy, reorganization,
insolvency and similar laws affecting the enforcement of creditors' rights and remedies
generally, as applied in the event of bankruptcy, reorganization or insolvency of the Developer
and to equitable remedies. The Developer has duly authorized all necessary action to be taken
by it for (i) approval of the Developer Information and (ii) the execution and delivery of this
Contract and the Ancillary Agreements to which the Developer is or is to be a parry, and any and
all other agreements and documents as may be required to be executed or delivered by the
Developer in order to effectuate the transactions contemplated herein and therein.
(C) Development Agreement. Any and all of the conditions precedent to the
obligations of the Developer arising under the Development Agreement have been satisfied or
waived by the City.
i
(D) No Material Change. Other than as disclosed in the Limited Offering
Memorandum or except as previously disclosed to the Original Purchaser, (i) the Developer has
not incurred any material liabilities or entered into any material transactions other than in the
ordinary course of business and (ii) there has been no material adverse change in the business,
financial position, prospects or results of operations of the Developer, which would affect the
Developer's ability to perform its obligations pursuant to this Contract or the Ancillary
Agreements, to the extent to which the Developer is or is to be a party to such agreement.
(E) Noncontravention. The execution, delivery and performance by the
Developer of its obligations under this Contract and the Ancillary Agreements to which the
Developer is a parry do not, and to the Developer's knowledge, will not contravene, or constitute
a default under, any provision of applicable law or regulation or organizational documents of the
Developer or of any agreement, judgment, injunction, order, decree or other instrument binding
upon the Developer, and will not result in the creation of any lien or other encumbrance upon
any asset of the Developer except as set forth in the Limited Offering Memorandum.
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14531726 \V -2
(F) Governmental or Corporate Consents. No consent or approval is required
to be obtained from, and no action need be taken by, or document filed with, any Governmental
Body or corporate entity in connection with the execution or delivery by the Developer of this
Contract or any Ancillary Agreement to which the Developer is or is to be a party, or, if any such
action is required, the same has been duly taken, is in full force and effect and constitutes valid
and sufficient consent or approval therefor, except for those which are customarily obtained
during construction of the Project. The Developer has no reason to believe any such consent or
approval will not be obtained in due course.
I
(G) No Litigation. Except as described in the Limited Offering Memorandum,
there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or
any governmental agency or public board or body, pending against the Developer, in which the
Developer is a party or, to the knowledge of the Developer overtly threatened in writing against
the Developer, (i) contesting or in any way relating to (a) the construction and development of
the Project, (b) the generation of Revenue or the transactions contemplated by the issuance of the
Bonds or as otherwise described in the Limited Offering Memorandum of (ii) which in any way
contests the existence or power of the Developer or the validity or enforceability of the Bonds,
the Ancillary Agreements, this Contract or the Limited Offering Memorandum or which if
adversely determined could have a material adverse effect on the Developer.
(H) Limited Offerina Memorandum. The Developer Information contained in
the Limited Offering Memorandum is true and correct in all material respects as of the date
hereof and as of the date hereof does not contain any untrue statements of a material fact or omit
to state a material fact necessary to be stated therein in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(I) Use of Proceeds. The Developer will not take or omit to take any action
which will in any way cause or result in the proceeds of the sale of the Bonds being applied in a
manner other than as provided in the Bond Ordinance and the Indenture and as described in the
Limited Offering Memorandum. Such proceeds will not be used by the Developer in a manner
that would cause the Bonds to be "arbitrage bonds" within the meaning of the Code, or any
successor thereto, and the applicable regulations promulgated or proposed thereunder.
(J) No Default. No default or event of default on the part of the Developer
has occurred and is continuing, and no event has occurred and is continuing which with the lapse
of time or the giving of notice, or both, would constitute a default or an event of default on the
part of the Developer under this Contract, the Ancillary Agreements to which the Developer is a
party, or any other material agreement or material instrument to which the Developer is a party
or by which the Developer is or may be bound.
(K) Approvals. The Developer has received and is in good standing with
respect to any applicable certificates, licenses, inspections, franchises, consents, immunities,
permits, authorizations and approvals, governmental or otherwise, necessary to conduct and to
continue to conduct its business as heretofore conducted by it and to own or lease and operate its
properties as now owned or leased by it. Except as set forth in the Limited Offering
Memorandum, the Developer has obtained any applicable certificates, licenses, inspections,
franchises, consents, immunities, permits, authorizations and approvals, governmental or
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otherwise, necessary to construct the Project, except for final platting and engineering to be
completed as part of the Special Services and those the nature of which cannot be given until
construction of the Improvements are sufficiently underway.
(L) Certificates. Any certificate signed by an authorized representative of the
Developer and delivered to the City or the Original Purchaser shall be deemed a representation
and warranty by the Developer to the City and the Original Purchaser as to the statements made
by Developer therein.
(M) Environmental Representation. To the best of the Developer's knowledge,
no toxic or hazardous substances, including without limitation, asbestos, and the group of
organic compounds known as polychlorinated biphenyls, have been generated, treated, stored or
disposed of, or otherwise deposited in or located on the site which includes the Area and no
activity has been undertaken at the site which includes the Area which could:
(i) cause the Project or any part thereof to become a hazardous waste
treatment, storage or disposal facility within the meaning of, or otherwise bring such property
within the ambit of, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq. ( "RCRA "), or any other similar state law or local ordinance;
(ii) cause a release or threatened release of hazardous materials, wastes or
substances from the site or any part thereof within the meaning of, or otherwise bring such
property or any part thereof within the ambit of, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C., Sections 9601 -9657 ( "CERCLA "), or any
similar state law or ordinance or any other environmental law;
(iii) cause the discharge of pollutants or effluents into any water source or
system, or the discharge into the air of any emissions, which would require a permit under the
Federal Water Pollution Control Act, 33 U.S.C., Section 1251 et seq., or the Clean Air Act, 41
U.S.C., Section 7401 et seq., or any similar state law or local ordinance; or
(iv) support a claim or cause of action under RCRA, CERCLA or any other
federal, state or local environmental statutes, regulations, ordinances or other environmental
regulatory requirements.
(N) No Challenges. The Developer agrees that it will not bring any suit,
action or proceeding which challenges the designation of the Area, the imposition and collection
of the Local Sales Taxes, the validity of the Bonds or the proceedings relating to the Bonds.
(0) Development Status. To Developer's knowledge, the legal description
and boundaries of the Area have not changed from those reflected in the Establishing Ordinance.
The Developer has obtained approval from the City for, and intends to develop or cause to be
developed in the Area a shopping center with approximately 820,000 square feet of gross
building area.
(P) Completion of Construction. The Developer has sufficient financial
resources together with the proceeds of the Bonds, including cash, marketable securities, outside
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equity or bank loans, to complete the Special Services an the Project as proposed in the Limited -
Offering Memorandum.
(Q) Form of Bond and Indenture. The Developer approves the form and terms
of the Bonds and the Indenture and agrees that the issuance of such Bonds satisfies the terms and
conditions of the Development Agreement relating to the City's obligation to issue the Bonds.
6. Representations and Warranties and Agreements of the Original Purchaser.
. (A) Limited Offering. The Original Purchaser agrees to make a limited
offering of the Bonds to a limited number of institutional investors at a price or prices (or yield
or yields) not in excess of the offering price or prices (or not lower than the yield or yields) set
forth on the cover page of the Limited Offering Memorandum.
(B) Limited Offering Memorandum. The descriptions and - information
contained in the Limited Offering Memorandum under the captions "UNDERWRITING" and
the first two grammatical sentences under the caption "LIMITED OFFERING" are, and as of the
date of the Closing will be, true and correct in all material respects and such descriptions and
information in the Limited Offering Memorandum, as of its date and as of the Closing Date will
not contain an untrue, incorrect or misleading statement of a material fact; and such descriptions
and information in the Limited Offering Memorandum do not, as of its date and as. of the Closing
Date will not omit to state a material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
7. Termination of the Purchase Contract.
The Original Purchaser shall have the right to cancel its obligation to purchase the Bonds,
if, between the date hereof and the date of Closing, (i) legislation shall be enacted, or actively
considered for enactment, by the Congress or recommended by the President of the United States
to the Congress for passage, or favorably reported for passage to either House of the Congress by
any committee of such House to which such legislation has been referred for consideration, a
decision by a court of the United States or the United States Tax Court shall be rendered, or a
ruling, regulation or official statement by or on behalf of the Treasury Department of the United
States, the Internal Revenue Service or other agency or department of the United States shall be
made or proposed to be made which has the purpose or effect, directly or indirectly, of imposing
federal income taxes upon interest on the Bonds; (ii) any other action or event shall have
transpired which has the purpose or effect, directly or indirectly, of materially adversely
affecting the federal income tax consequences of any of the transactions contemplated in
connection herewith or contemplated by the Limited Offering Memorandum, or, in the
reasonable opinion of the Original Purchaser, such action or event pertaining to the federal
income tax consequences referenced above materially adversely affects the market for the Bonds
or the sale, at the contemplated offering price or prices (or yield or yields), by the Original
Purchaser of the Bonds; (iii) legislation shall be enacted, or actively considered for enactment by
the Congress, with an effective date on or prior to the date of Closing, or a decision by a court of
the United States shall be rendered, or a ruling or regulation by the Securities and Exchange
Commission or other governmental agency having jurisdiction over the subject matter shall be
made, the effect of which is that (A) the Bonds are not exempt from the registration, qualification
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or other requirements of the Securities Act of 1933, as amended and as then in effect, or the
Securities Exchange Act of 1934, as amended and as then in effect, or (B) the Indenture is not
exempt from the registration, qualification or other requirements of the Trust Indenture Act of
1939, as amended and as then in effect; (iv) a stop order, ruling or regulation by the Securities
and Exchange Commission shall be issued or made, the effect of which is that the issuance,
offering or sale of the Bonds, as contemplated herein and in the Limited Offering Memorandum,
is in violation of any provision of the Securities Act of 1933, as amended and as then in effect,
the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture .
Act of 1939, as amended and as then in effect; (v) there shall occur any event which in the
reasonable judgment of the Original Purchaser either (A) makes untrue, incorrect or misleading
in any material respect any statement or information contained in the Limited Offering
Memorandum or (B) is not reflected in the Limited Offering Memorandum but should be
reflected therein in order to make the statements and information contained therein not
misleading in any material respect and, in either such event, the City or the Developer refuse to
permit the Limited Offering Memorandum to be supplemented to correct or supply such
statement or information, or the effect of the Limited Offering Memorandum as so corrected or
supplemented is such as, in the reasonable judgment of the Original Purchaser, would materially
adversely affect the market for the Bonds or the sale, at the contemplated offering price or prices
(or yield or yields), by the Original Purchaser of the Bonds; (vi) there shall occur any outbreak of
hostilities or any regional, national or international calamity or crisis or a financial crisis and the
effect is such as, in the reasonable judgment of the Original Purchaser, would materially
adversely affect the market for or the marketability of the Bonds or obligations of the general
character of the Bonds; (vii) a general suspension of trading on the New York Stock Exchange is
in force; (viii) a general banking moratorium is declared by federal or state authorities; (ix) there
occurs any material adverse change in the affairs, operations or financial conditions of the City,
except as set forth or contemplated in the Limited Offering Memorandum or in the affairs,
operations or financial condition of the Developer; (x) the Limited Offering Memorandum is not
executed, approved and delivered in accordance with Section 3 above; (xi) in the reasonable
judgment of the Original Purchaser, the market price of the Bonds, or the market price generally
of obligations of the general character of the Bonds, might be adversely affected because:
(A) additional material restrictions not in force as of the date hereof shall have been imposed
upon trading in securities generally by any governmental authority or by any national securities
exchange, or (B) the New York Stock Exchange or other national securities exchange, or any
governmental authority, shall impose, as to the Bonds or similar obligations, any material
restrictions not now in force, or increase materially those now in force, with respect to the
extension of credit by, or the charge to the net capital requirements of, underwriters; (xii) a war
involving the United States of America shall have been declared, or any conflict involving the
armed forces of any country shall have escalated, or any other international, national or regional
emergency relating to or affecting the effective operation of government or the financial
community shall have occurred, which, in the reasonable judgment of the Original Purchaser,
materially adversely affects the market for the Bonds or of obligations of the general character of
the Bonds; (xiii) any litigation shall be instituted, pending or threatened to restrain or enjoin the
issuance, sale or delivery of the Bonds or in any way protesting or affecting any authority for or
the validity of the Bonds, the Bond Ordinance, the existence or powers of the City, or any event
described or contemplated by the Limited Offering Memorandum; (xiv) there shall have
occurred a default with respect to the debt obligations of, or the institution of proceedings under
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any federal bankruptcy laws by or against, any state of the United States or any city or political
subdivision of any state, the effect of which, in the reasonable judgment of the Original
Purchaser, would materially adversely affect the ability of the Original Purchaser to market the
Bonds.
8. Conditions of Closing.
The Original Purchaser' obligation to purchase the Bonds under this Contract is subject
to the performance by the City and the Developer of their respective obligations hereunder at and
prior to the Closing Date, to the accuracy in all material respects of the representations and
warranties of the City and the Developer contained herein as of the Closing Date, and to the
following conditions, including the delivery of such documents as are enumerated herein in form
and substance satisfactory to the Original Purchaser and its counsel as of the Closing Date:
(A) Ordinances in Effect and Citv in Compliance Therewith. At the time of
the Closing (i) each of the Bond Ordinance and the Establishing Ordinance shall be in full force
and effect, and shall not have been amended, modified or supplemented since the date hereof,
except as may have been agreed to in writing by the Original Purchaser, and the City shall have
duly adopted and there shall be in full force and effect such additional ordinances or agreements
as shall be, in the opinion of Bond Counsel, necessary in connection with the transactions
contemplated hereby and (ii) the City shall perform or have performed all of its obligations
required under or specified in this Contract with regard to the Bonds or the Bond Ordinance to be
performed at, simultaneously with or prior to the Closing.
(B) Opinion of Bond Counsel. The Original Purchaser shall have received an
unqualified approving legal opinion dated the Closing Date as to the Bonds, addressed to the
Original Purchaser, the Developer, the City and the Trustee, from Foley & Lardner LLP, Bond
Counsel, satisfactory in form and substance to the Original Purchaser.
(C) Opinion of Original Purchaser's Counsel. The Original Purchaser shall
have received a favorable opinion dated the Closing Date, addressed to the Original Purchaser,
from Sonnenschein Nath & Rosenthal LLP, satisfactory in form and substance to the Original
Purchaser.
(D) Opinion of Counsel to the City. The Original Purchaser shall have
received a favorable opinion dated the Closing Date, addressed to the Original Purchaser, Bond
Counsel, the Developer and the Trustee, from John Wyeth, Esq., counsel to the City, satisfactory
in form and substance to the Original Purchaser.
(E) Opinions of Counsel to the Developer. The Original Purchaser shall have
received favorable opinions dated the Closing Date, addressed to the Original Purchaser, the
City, the Trustee and Bond Counsel from the Developer's general counsel and/or from Polsky &
Associates Ltd., special counsel to the Developer, satisfactory in form and substance to the
Original Purchaser.
(F) Performance; No Default. Each of the City and the Developer shall have
performed and complied with all agreements and conditions herein required to be performed or
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complied with by each of them prior to or on the Closing Date, and at the time of the Closing no
event of default or default shall have occurred and be continuing with respect to the Ancillary
Agreements or the Bonds.
(G) Ancillary Agreements. At the Closing Date, (i) all of the Ancillary
Agreements shall be in full force and effect, shall have been duly executed and copies delivered
to the Original Purchaser by, and shall constitute valid and binding agreements of, the parties
thereto, shall not have been amended, modified or supplemented except as may have been agreed
to in writing by the Original Purchaser and there shall be no defaults or events of default
thereunder and (ii) the proceeds of the sale of the Bonds shall be applied or deposited with the
Trustee for application as described in the Bond Ordinance and the Limited Offering
Memorandum.
(H) Closing Certificate of Mayor of the City. The City shall have delivered to
the Original Purchaser a certificate dated the Closing Date, addressed to the Original Purchaser
and the Trustee signed by the Mayor of the City in form, and substance reasonably satisfactory to
the Original Purchaser.
(I) Officer's Certificate of the Developer. The Developer shall have
delivered to the Original Purchaser a certificate dated the Closing Date, addressed to the Original
Purchaser signed by an authorized officer of the Developer and of the manager of the Developer
in form and substance satisfactory to the Original Purchaser.
(J) The Bonds. The Bonds shall have been duly authorized, executed,
authenticated, delivered, and the proceeds from the sale thereof applied, in accordance with the
provisions of the Bond Ordinance.
(K) Trustee's Certificate. The Original Purchaser shall have received a
certificate dated the Closing Date of an authorized officer of the Trustee, addressed to the
Original Purchaser in form and substance satisfactory to the Original Purchaser.
(L) Form 8038 -G. The Original Purchaser shall have received a copy of the
completed Form 8038 -G of the Internal Revenue Service executed by the City.
(M) Officers' Certificates. The Original Purchaser shall have received any and
all certificates required to be furnished by the provisions of any Ancillary Agreement to be
obtained or furnished by the City and the Developer at or prior to Closing.
(N) Specimen Bonds. The Original Purchaser shall have received specimen
Bonds.
(0) Certified Conies of Ordinances. The Original Purchaser shall have
received certified copies of the Bond Ordinance, the Establishing Ordinance. The Bond
Ordinance shall include authorization for execution and delivery of this Contract.
(P) Financing. The Developer shall have delivered evidence, upon the request
of and satisfactory to the Original Purchaser, which may be in the form of financial statements,
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equity commitments, loan commitments, or loan agreements demonstrating that the Developer
has cash, marketable securities, outside equity or bank financing to complete the Project.
(Q) Title Insurance. The Original Purchaser shall have received copies of an
Owner's title insurance policy or policies (or commitments) therefor) issued by a title insurance
company with respect to the Area showing title to the Project in the name of the Developer, and
which policies or commitment(s) and company shall be acceptable to the Original Purchaser in
its reasonable discretion.
(R) Land Sales and Leases. Developer shall have completed such land sales
and entered into such tenant leases with retailers with respect to the Project as the Original
Purchaser shall in its sole discretion require.
(S) Additional Opinions, Certificates, etc. The Original Purchaser shall have
received such additional legal opinions, certificates, proceedings, instruments and other
documents as the Original Purchaser, the City or their respective counsel may deem reasonably
necessary or desirable.
All of the opinions, letters, certificates, instruments and other documents mentioned in
this Contract shall be deemed to be in compliance with the provisions of this Contract only if
they are satisfactory in form and substance to the Original Purchaser.
If there shall be a failure to satisfy the conditions of the Original Purchaser' obligations
contained in this Contract or if the Original Purchaser's obligations to purchase the Bonds shall
be terminated for any reason permitted by this Contract, this Contract shall terminate, and the
Original Purchaser, the City and the Developer shall not have any further obligations hereunder.
9. Chances Affecting the Limited Offerinsz Memorandum.
At any time prior to the Closing, the City and the Developer agree to supplement or
amend the Limited Offering Memorandum whenever requested by the Original Purchaser when,
in the reasonable judgment of the Original Purchaser and the City, such supplement or
amendment is required. No amendment or supplement to the Limited Offering Memorandum
shall be made without the approval of the Original Purchaser. After the Closing and so long as
the Original Purchaser or any participating dealer shall be offering Bonds, but not later than 90
days after the date of this Contract if any event shall occur as a result of which it is necessary to
amend or supplement the Limited Offering Memorandum in order to make the statements
therein, in light of the circumstances under which they are made, not misleading, the City will so
advise the Original Purchaser. In any such case, the City and the Developer shall cooperate in
the preparation, execution and delivery of either amendments to the Limited Offering
Memorandum or supplemental information so that the statements in the Limited Offering
Memorandum, as so amended or supplemented will not, in light of the circumstances under
which such statements were made, be misleading. The cost of providing such amendments or
supplements shall be paid by the City.
II I
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i
10. Pavment of Expenses.
The Original Purchaser shall be under no obligation to pay any expenses incident to the
issuance of the Bonds. All fees, costs and expenses associated with the issuance of the Bonds,
including without limitation, the fees and disbursements of legal counsel, professional fees,
printing and the costs associated with the CUSIP number for the Bonds shall be disbursed and
paid by the Trustee from the proceeds of the Bonds.
11. Notices.
Except as otherwise provided in this Contract, whenever notice is required to be given
pursuant to the provisions of this Contract, such notice shall be in writing and shall be mailed by
first class mail postage prepaid.
12. Law Governing.
This Contract shall be construed in accordance with and governed by the laws of the
State of Illinois.
13. Headinas.
The headings of the paragraphs and subparagraphs of this Contract are inserted for
convenience only and shall not be deemed to constitute a part of this Contract.
14. Counterparts.
This Contract may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same
instrument.
15. Parties and Interests.
This Contract is made solely for the benefit of the City, the Original Purchaser and the
Developer, including the successors and assigns of the Original Purchaser, and no other person,
partnership, association or corporation shall acquire or have any rights hereunder or by virtue
hereof.
16. Indemnification.
(a) The City agrees to indemnify and hold harmless the Original Purchaser, each
director, trustee, member, officer, partner, employee or agent of the Original Purchaser and each
person, if any, who has the power, directly or indirectly, to direct or cause the direction of the
management and policies of the Original Purchaser, pursuant to the Original Purchaser's
regulations or Bylaws, or who controls the Original Purchaser within the meaning of Section 20
of the Exchange Act or Section 15 of the Securities Act, from and against any and all losses,
claims, damages, liabilities or expenses whatsoever caused by any untrue or misleading, or
allegedly untrue or misleading, statement of a material fact contained in that portion of the
Limited Offering Memorandum constituting the City Information, or in any amendment or
15
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supplement thereto with regard to that portion of the Limited Offering Memorandum, or caused
by any omission or alleged omission to state in that portion of the Limited Offering 1;
Memorandum constituting the City Information a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading; the City
shall not be liable under this paragraph if the person asserting any such loss, claim, damage or
liability purchased Bonds from the Original Purchaser, if delivery to such person of the Limited
Offering Memorandum, or any amendment or supplement thereto, would have been a valid
defense to the action from which such loss, claim, damage or liability arose and if the Limited
Offering Memorandum, amendment of or supplement was not delivered to such person by or on
behalf of the Original Purchaser.
In case any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to the preceding
paragraph, such person (the "indemnified party") shall promptly notify the City in writing, and
the City shall promptly assume the defense thereof, including the employment of counsel chosen
by the City and approved by the Original Purchaser and shall pay the reasonable fees and
disbursements of such counsel related to such proceeding. If any of the indemnified parties is
advised by counsel that there may be legal defenses available to such indemnified party which
are adverse to or in conflict with those available to the City or another indemnified party, the
City shall not have the right to assume the defense of such indemnified party, but the City shall
be responsible for the reasonable fees and expenses of counsel retained by such indemnified
parry in assuming its own defense, and provided also that if the City shall have failed to assume
the defense of such action or to retain counsel satisfactory to the Original Purchaser within a
reasonable time after notice of the commencement of such action, the reasonable fees and
expenses of counsel retained by the indemnified parties shall be paid by the City.
Notwithstanding, and in addition to, any of the foregoing, any one or more of the indemnified
parties shall have the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless the City and the indemnified party shall
have mutually agreed to the retention of such counsel. Such firm shall be designated in writing
by the indemnified parry. The City shall not be liable for any settlement of any proceeding
effected without its written consent, but, if settled with such written consent of the City or if
there shall be a final judgment for the plaintiff, the City agrees to indemnify the indemnified
parry from and against any loss, damage, cost, expense or liability by reason of such settlement
or judgment.
(b) The Developer agrees to indemnify, defend and hold harmless (a) the Original
Purchaser, each director, trustee, member, officer, agent or employee and each person, if any,
who has the power, directly or indirectly, to direct or cause the direction of the management and
policies of the Original Purchaser, pursuant to the Original Purchaser's regulations or Bylaws, or
who controls the Original Purchaser within the meaning of Section 20 of the Exchange Act or
Section 15 of the Securities Act, by contract or otherwise, and (b) the City, each director, trustee,
member, officer, agent or employee and each person, if any, who has the power, directly or
indirectly, to direct or cause the direction of the management and policies of the City
(collectively called the "Section 16(b) Indemnified Parties "), from and against any and all losses,
claims, damages, liabilities or expenses to the extent caused by or arising out of any untrue
statement or misleading statement or alleged untrue statement or alleged misleading statement of
a material fact (unless such allegation is (i) made by the Original Purchaser or the City, as the
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145317261V -2
case may be, and (ii) such allegation is proven or otherwise determined to be false) contained in
any of the Developer Information, or caused by any omission or alleged omission to state in the
Developer Information a material fact required to be stated in the Developer Information or
necessary to make the statements in the Developer Information, in the light of the circumstances
under which they were made, not misleading.
In case any claim shall be made or any action shall be brought against one or more of the
Section 16(b) Indemnified Parties desiring to seek indemnification pursuant to this Section 16(b),
the Section 16(b) Indemnified Parties seeking indemnity shall promptly notify the Developer in
writing, and the Developer shall promptly assume the defense thereof, including the employment
of counsel chosen by the Developer and approved by the Original Purchaser and the City, which
approval will not be unreasonably withheld, and the payment of all expenses and disbursements
of such counsel related to such defense. If any of the Section 16(b) Indemnified Parties is
advised by counsel that there may be legal defenses available to it which are adverse to or in
conflict with those available to the Developer or any other Section 16(b) Indemnified Party, or
that the defense of such Section 16(b) Indemnified Party should be handled by separate counsel,
the Developer shall not have the right to assume the defense of such Section 16(b) Indemnified
Party, but shall be responsible for the reasonable fees and expenses of counsel retained by such
Section 16(b) Indemnified Party in assuming its own defense, and provided also that if the
Developer shall have failed to assume the defense of such action or to retain counsel satisfactory
to the Original Purchaser and the City within a reasonable time after notice of the
commencement of such action, the fees and expenses of counsel retained by the Section 16(b)
Indemnified Parties shall be paid by the Developer. Notwithstanding, and in addition to, any of
the foregoing, and subject to the approval of the Developer, which approval will not be
unreasonably withheld, any one or more of the Section 16(b) Indemnified Parties shall have the
right to employ separate counsel in any such action and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Section 16(b) Indemnified
Parry or Parties unless the employment of such counsel has been specifically authorized, in
writing, by the Developer, or unless such retention is specifically authorized herein. The
Developer shall not be liable for any settlement of any proceeding effected without its written
consent, but, if settled with such written consent or if there shall be a final judgment for the
plaintiff, the Developer agree to indemnify the Section 16(b) Indemnified Parties from and
against any loss, damage, cost, expense or liability by reason of such settlement or judgment.
(c) In order to provide for just and equitable contribution in circumstances in which
the indemnification provided for in this Section 16 is due in accordance with its terms but is for
any reason held by a court to be unavailable to the Original Purchaser, the City or the Developer
or unenforceable on grounds of policy or otherwise, the Developer and the Original Purchaser
shall contribute to the aggregate losses, claims, damages, fines and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting
any contribution received by the Developer or the Original Purchaser from persons other than the
Developer or the Original Purchaser who may be liable for contribution, such parties hereby
agreeing to seek contribution from such persons) to which the Developer and the Original
Purchaser may be subject in such proportion so that the Original Purchaser is responsible for that
portion represented by the percentage that the underwriting fee bears to the offering price
appearing on the cover page of the Limited Offering Memorandum, and the Developer is
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14531726W -2
responsible for the balance; provided, however, in no case shall the Original Purchaser be
responsible for any amount in excess of the amount of said underwriting fee received to such l,!
date and provided, further, that no person found guilty of fraudulent misrepresentation, error or
omission shall be entitled to contribution (or costs of defense) from any person who was not
found guilty . of fraudulent misrepresentation, error or omission. For purposes of this Subsection
16(c), each partner, member, associate and employee of the Original Purchaser or the Developer
1 and each person who controls the Original Purchaser or the Developer shall have the same rights
to contribution as the Original Purchaser or the Developer subject to the provisions in the
preceding sentence relating to fraudulent misrepresentations. Any party entitled to contribution
will promptly after receipt of notice of commencement of any action, threatened action, suit or
proceeding against such party or parties under this Subsection 16(c), notify such party or parties
from whom contribution may be sought, but the omission to so notify such party or parties shall
not relieve the party or parties from whom contribution may be sought from any other obligation
it or they may have otherwise under this Subsection 16(c). Any notice given pursuant to
Subsections 16(a) or (b) hereof shall be deemed to include notice under this Subsection 16(c).
17. Further Reports.
(a) The City agrees to provide the financial reports and information described in the
Indenture and the Development Agreement which it has covenanted to provide to the Trustee, to
the Original Purchaser and any Bondholder upon written request.
(b) During construction of the Project, the Developer agrees to provide on a quarterly
basis, an updated report showing all tenants within the portions of the Area owned by the
Developer or an affiliate of the Developer that have signed leases. Such report shall include each
tenant's name, the amount of square feet under lease, and the lease expiration date. In addition,
such report shall provide the aggregate amount of square footage for which there are signed
letters of intent and leases that have been sent out to tenants for execution, as well as a
notification of any sale of any property within the Area that is owned by the Developer or its
affiliates.
(c) The Developer agrees that for so long as the Bonds are outstanding, it will include
and incorporate into any agreement of conveyance or lease for any portion of the Area, the
obligation of any purchaser or lessee thereunder to complete, execute and deliver to the City the
Release Form (attached as Exhibit G to the Development Agreement).
18. Amendment or Assignment.
This Contract may not be amended except through the written consent of all of the parties
hereto and is not assignable.
19. Survival of Representations, Warranties, Agreements and Obligations.
Each respective representation, warranty and agreement of the City, the Developer and
the Original Purchaser shall remain operative and in full force and effect, regardless of any
investigations made by or on behalf of the Original Purchaser, the Developer, and the City and
shall survive the Closing. This Section 19, the obligations of the City under Sections 9, 10, 16
18
14531726 \V -2
and 17 hereof, the obligations of the Original Purchaser under Section 16 hereof and the
obligations of the Developer under Sections 16 and 17 hereof shall survive any termination of
this Contract pursuant to its terms.
20. Severabilitv.
If any provision of this Contract shall be held or deemed to be or shall, in fact, be
inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions,
or in all cases because it conflicts with any other provision or provisions or any constitution or
statute or rule of public policy, or for any other reason, such circumstances shall not have the
effect of rendering the provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases,
sentences, clauses or sections in this Contract shall not affect the validity of the remaining
portions of this Contract, or any part hereof.
[SIGNATURES FOLLOW]
19
14531726 \V -2
I
[Signature Page to Bond Purchase Agreement]
Very truly yours,
WILLIAM BLAIR & COMPANY, L.L.C.
By:
Its:
I
Accepted and agreed to by the undersigned as
of the date first above written.
CANNONBALL, LLC
an Illinois limited liability company
By: THE HARLEM IRVING COMPANIES
By:
Its:
UNITED CITY OF YORKVILLE
By:
Its: Mayor
20
14531726\V -2
Ex fl 16 1 - r
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DEVELOPMENT AGREEMENT
KENDALL MARKETPLACE
Between the
UNITED CITY OF YORKVILLE, IL OIS$`
and
CANNONBALLA,LC
Dated as of
2007
CANNONBALL BEECH_ER ROM ROJECT
A 14
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS ........................................................ ............................... 2
ARTICLE II - DESIGNATION OF DEVELOPER .......................... ............................... 5
ARTICLE III - CONSTRUCTION OF DEVELOPMENT PROJECT ............................... 6
3.1 Construction Schedule .......................................................... ............................... 6
3.2 Developer to Construct the Project ........................................ ............................... 6
3.3 Cannonball Beecher Road Project ......... ............................... - 6
..
3.4 Construction Contracts; Insurance ....... .............................40 ... :...................... 7
3.5 Governmental Approvals
3.6 Concept Site Plan .............................. 7
3.7 Construction Plans ..... .............................. ..........
Certificate of Substantial Completion p _ .......... ....................... 7
3.8
3.9 Fees .......................................... ............................... 8
3.10 Quarterly /Annual Reporting ................... ... ................ 1: ;:.........
. .... .. 8
� :
ARTICLE IV - PAYMENT OF DEVELOPER CO SS ...... :-. ..................... ....:............... 8
�' g Y p er
4.1 City's Obligation to Pa Developer .,
.... . ................. ................. 8
... .. .:
4.2 Reimbursements Limited to Cannonball Beechesoa Proj °ect Costs; Developer's
Right to Substitute ........... ............................... ._ ............ ............................... 8
.....
: > ` Via.
ARTICLE V -SSA BONDS ...............a ..................".._........... ............................... 9
Mt
,
5.1 Bond Ordinance: Pledged Taxes .. y.:, `" 9
�:: .. .............. ... ...............................
5.2 Application of Revenues /Abatemen Lam. = g � .............. 9
5.3 Issuance of Bonds ........................ _ �' .... ............................... 9
__ ..
5.4 Conditions of Issuance.,4%:.74_,............ f ............................... 9
- ............� r� .............
5 .5 City's Bond Expens . ........ , .. ............. .............. ............................... 9
5.6 Disbursements to. Developer ".: ............
. 1 0 ............................ ..............................
5.6.1 Initial Certificate........ ........... ........... ............................... 10
5.6.2 Subsegrtificaof�Cannonall Beecher Road Project Costs........... 10
5.7 Maturity of Bonds ....' :: :.. _ ....... ............................... 10
..
5.8 Cooperatio -n in the Issuance of Bonds ................................. ............................... 11
ARTICLE VI QLT ECTIO� . D USE OF REVENUE .............. ............................... 11
6.1 Crean of Furid ...... ........................... ............................... 11
6.2 C� eration in De e? ining R--venues ................................. ............................... 11
.
ARTICLE, VII -GENE PROVISIONS ................................... ............................... 11
7.1 Successors and Assi s ...................................................... ............................... 11
7.1.1 Bii3ding Affect . ........................................................ ............................... 11
7.1.2 Ass anent rz ale .................................................... ............................... 11
7 .1.3 Targe�` ::............................................................. ............................... 12
7 .2 Remedies. .. ................................................................ ............................... 12
7.3 Force Majeu.. ................................................................... ............................... 13
7.4 Notices ............................................................................ ............................... 13
7.5 Insurance; Damage or Destruction of Project ....................... ............................... 15
7 .6 Inspection ........................................................................... ............................... 16
7 .7 Choice of Law ..................................................................... ............................... 16
7.8 Entire Agreement; Amendment ........................................... ............................... 16
7 .9 Counterparts ...................................................................... ............................... 16
7 .10 Severability ....................................................................... ............................... 17
7.11 Representatives Not Personally Liable ............................... ............................... 17
7 .12 Indemnification ................................................................. ............................... 17
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7.12.1 Invalidity ................................................................. ............................... 17
I
7 .12.2 Damage or Injury ..................................................... ............................... 17
7.12.3 Personal Liability ..................................................... ............................... 17
7.13 Survival ............................................................................ ............................... 17
7 .14 Legal Opinion ................................................................... ............................... 17
7.15 Term
7.16 Conflict ............................................................................ ............................... 18
ARTICLE VIII - REPRESENTATIONS OF THE PARTIES ................ ......... 18
8.1 Representations of the City ........ _ ..
8.2 Representations of the Developer ......... ............................... .. . . .......... ............... 18
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EXHIBITS
EXHIBIT A Legal Description of the Property
EXHIBIT B Legal Description of the Special Service Area
EXHIBIT C Cannonball Beecher Road Project Costs to be Paid with Special Service
Area Bond Proceeds
EXHIBIT D Form of Certificate of Substantial Completion
EXHIBIT E Form of Certificate of Cannonball Beecher RAd Costs
EXHIBIT F Concept Site Plan
EXHIBIT G Target Tract
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l i
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT is made and entered into as of this
day of . 2007, by and between the UNITED CITY OF YORKVILLE, Kendall
County, Illinois, an Illinois Municipal Corporation duly organized and existing as a
non -home rule unit of government under Section 7, Article VII of the 1970
Constitution of the State of Illinois, and CANNONBALL LLC, an Illinois limited liability
company. Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in Article I of this Agreement.
hwt-
RECITALS
A. As a non -home rule unit of government dulyrg -d under Section 7,
Article VII of the 1970 Constitution of the State of Illina s, they has the power to
regulate for the protection of the public health safetA morals and welfare of its
inhabitants, and pursuant thereto, has the power,to encoixrage priva e evelopment in
J� x r
,..4
order to enhance the local tax base, create employment ..opportunities &n ter into
contractual agreements with private parties i der to achieve these goals ir
9 _
B. As a non -home rule unit of governmenCWi they Constitution of the State
of Illinois, under the provisions of the Special Service_re Tax Law, 35 ILCS 200/27 -5
e sea ., and the Local Government D6bt Reform Act, 30 -1LCS 350/ 1 et sea., the City
has the authority to provide special ery s. to an area wlrhln its boundaries and to
levy a tax to pay for such services or the, pay ephn of debt i ccurred for that purpose.
C. The Developerptaposes to col 4ct an 1 - proximately 800,000 square
.
foot mix of retail storesr fSta�� ants and spac and in support thereof and on
behalf of the City to delicate cer'fain land t City and the Illinois Department of
Transportation for fg is of way to construc€ 6nnonball Trail Road and Beecher
Road including paving; � triping igx age, acc Yeration /deceleration lanes and other
related improvements an ti'uthfi`es; anci other improvements at the
intersection of_Cannonbal ail and Illiriois Route 34 in the City.
I17In order to - n thy:=, loper to undertake the Project, the City desires to
- ° ;.
createa_a Special Servlce.rea pub uant to the Special Service Area Tax Law, to impose
cerUdir axes within th _ Service Area, to issue the SSA Bonds, to use the
proceed the sale of the SSA Bonds to pay for special services in the Special
Service Area'asld to e the Special Service Area revenues to retire the SSA Bonds.
E. On I3aaxier 12, 2006, the Corporate Authorities adopted Ordinance No.
2006- `An Ordinance Designating United City of Yorkville Kendall
Marketplace Bus ess District and Imposing a Retailer's Occupation Tax and Service
Occupation Tax Therein," making all of the findings required under the Business
District Act to cause the creation of the Business District, and approving the District
Plan, and on , 2006 in furtherance of the District Plan "An
Ordinance of the United City of Yorkville Authorizing the Issuance of
$ - Business District Revenue Bonds Series 2006 (Storm
Water /Water Improvement Project) (collectively the `Business District Ordinances'l.
F. On March 6, 2007, after giving all notices and holding all hearings required
under the Special Service Area Law, the City adopted "Ordinance No. An
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Ordinance Establishing United City of Yorkville Special Service Area Number _ , and )
on 2007 adopted Ordinance No. Authorizing The Issuance of
$ Special Service Area Number Ad Valorem Tax Bonds of
the United City of Yorkville, Illinois (collectively the "SSA Ordinances ").
Now, therefore, in consideration of the premises and promises contained herein and
other good and valuable consideration, the adequacy and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
_.
As used in this Agreement, including the Recitals he_ hich, _; is reference are
incorporated herein, the following words and terms , a1;ave the following meanings:
"Agreement" means this Development i eement, as the same _ _ay be from
time to time modified, amended or supplemex d_. writing by the partie!O ereto.
.,
"Bonds" means the SSA Bonds.
"Bond Counser means Foley `T dner LLP, or >lattorney at law or a firm of
attorneys acceptable to the City o i3' : pally recogrzd standing in matters
pertaining to the tax- exempt nature of interes ion obliga#ons issued by states and
their political subdivisions duly admitted
--
" o the prarof law before the highest court
of any state of the United a:fa L Americ�a-�.or`�the Distft of Columbia.
"Bond Ordinance" me s Ordin - =,ce No. 2007- "An Ordinance
Providing for Issu fq�ej of Unit City of YdWv - ille, Kendall County, Illinois Special
Service Area Revenue _ o °ds -S -2.007 Cinonball Beecher Road Project).
"Bonr�fPrviceeds" m " s the gross cash proceeds from the sale of the Bonds
n. =. ..
before pa77nent of�uance Cn s together with any interest earned thereon.
A r s iness Dist me s a district within the City created pursuant to the
BusinesDistrict Act °gse boundaries are coterminous with the Special Service
Area.
" Busnne-s Di_. met Act' means the Business District Development and
Redevelopment A 3 =5 ILCS 5/11-74.3 et seq
"Business District Ordinance" means Ordinance No. 2006- "An
Ordinance Designating United City of Yorkville Kendall Marketplace Business District
and Imposing a Retailer's Occupation Tax and Service Occupation Tax Therein,"
making all of the findings required under the Business District Act to cause the
creation of the Business District, and approving the District Plan.
"Business District Revenue Bonds" means the United City of Yorkville
Business District Revenue Bonds Series 2007 (Storm Water /Water Improvement
Project) .
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"Business District Revenue Bond Indenture" means the Trust Indenture
ted as of , 2007 by and between the City and the Business District
-venue Bond Trustee pursuant to which the Business District Revenue Bonds were
;ued.
"Business District Sales Tax" means the one half of one percent (.5 %)
lsiness District Sales Tax levied by the City in the Business. District on sales by
:ailers and servicemen operating in the Business District, anrl'a tax intended to
dace the same as enacted by law or ordinance of the Citf" or any governmental
thority during the Term of this Agreement. RO
"Cannonball Beecher Road Project" means t os a impt v mens listed on
:hibit C hereto constituting the improvements to T aid for fra n t ie proceeds of
Bonds and benefiting the Special Service Are `
"Certificate of Cannonball Beecher4Road Project y Costs" mean - document
bstantially in the form of Exhibit E attaced, he_'eioand incorporated herein
)vided by the Developer to the City in ac with this Agreement and
dencing Cannonball Beecher Road�Project Costs irl1ured or to be incurred by the
F veloper and eligible for payment der the terms ofd =his Agreement and the SSA
W. �..
a
t "Certificate of Substantial Co letton m a document substantially in
form of Exhibit D, atta c hereto and - ncorporat d herein by reference, issued by
Developer to the City in "V ordance with this Agreement and evidencing the
veloper's substanti satisfaction of al A- aterial obligations and covenants to
l zstruct the Canno ball Beec1Road Project as set forth in the Concept Site Plan.
.,
"City" means the , U. J . i of orkville, Kendall County, Illinois, an Illinois
lnicipal Q Qaton an � aeon -home rule unit of government duly organized and
sting thed =l 0 Consfi_ Lion of the State of Illinois.
n
City AttornejV' means John Wyeth, or an attorney at law or a firm of attorneys
septa to the City
V
recognized standing in matters of municipal law duly
rlitted €Qrthe practice oYaw before the highest court of the State of Illinois.
l CZosingDatek means 2007 or such earlier date as the City, the
veloper and theFzderwriter of the Bonds shall mutually agree upon and refers to
transaction ixlvhich the Bonds are delivered by the City to the Underwriter, the
1 ►ceeds are available to be paid to the Developer, and this Agreement is fully
t - cuted.
"Concept Site Plan" means, collectively, those documents set forth in Exhibit
attached hereto and incorporated herein by reference, depicting the conceptual
igram for construction of the Project, as modified by the Developer from time to
ie.
t
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"Construction Plans" means plans, drawings, specifications and related )
documents, and construction schedules for the construction of the Project, together
with all supplements, amendments or corrections, submitted by the Developer and
approved by the City in accordance with and as required by this Agreement.
"Corporate Authorities" means the City Council of the City.
"Developer" means CANNONBALL LLC, an Illinois limited.. liability company, or
its permitted successors or assigns in interest.
"Governmental Approvals" means all plat approv zoning or other zoning
changes, the PUD Ordinance, IDOT approvals, site p1 app prQ. ls, conditional use
�P�
permits, variances, building permits, or other subdivision ,�wzoning, similar approvals
required for the implementation of the contemplatect and a ._ istent with the
Concept Site Plan and this Agreement. ,
Indenture means the Special Service 1 -ea Tax Revenue Bond In - enture.
"Issuance Costs" means all costs reasaxby incurred by the City in
furtherance of the issuance of the Bonds, including'[W.* out limitation the fees and
expenses of financial advisors and A it�ants, the City s ttorneys (including issuer's
counsel and Bond Counsel), the City adin- i- nistrative fees and expenses (including
fees and costs of planning consultants, under ter s' dise nts and fees, the costs of
oz
�:
printing any Bonds and any official state . tents rekaO g thereto, the costs of credit
enhancement, if any, ca _ ; _.
rzd interes debt serve reserves and the fees of any
rating agency rating a y Bonds:.
"Local Gover7 tnent DeAW Reform " means the Local Government Debt
Reform Act, 30 ILCS 35QY=1
"Net Pt oceeds" meAr - sthe proceeds derived from the issuance of the Bonds,
. - d4� 4.
net of a M9 R4sts.
Project" means =e construction of approximately 800,000 square feet of retail
space, 1 staurants, an office space and all work incidental thereto for the
conteml Project as =described in this Agreement as approved or amended by the
Concept SitFlan, and other work reasonably necessary to effectuate the intent of
this Agreement
"Propertt, j eans approximately One Hundred Ninety (190) acres of real
property (including without limitation all options held by third parties, fee interests,
leasehold interests, tenant -in- common interests and such other like or similar
interests) and existing improvements necessary for the implementation of the
contemplated Project as legally described on Exhibit A hereto by this reference
incorporated herein.
"PUD Ordinance" means Ordinance No. passed by the Corporate
Authorities of the City granting a special use for planned unit development for the
Property and related matters.
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"Request For Payment" means the document attached to the Indenture as
Exhibit by which the City shall request a payment of Bond Proceeds from the
Trustee in order to reimburse the Developer for the Cannonball Beecher Road Project
Costs.
"Special Service Ared' means the district within the City created pursuant to
the Special Service Area Tax Law and legally described on Exhibit B attached hereto
and incorporated by reference herein.
Special Service Area Tax Law" means the SpecialMe _v_ ice Area Tax Law 35
ILCS 20/27 et seq. also referred to as the "SSA Law." r
"SSA Bonds" means the United City of Y,6&- �, Kendall County, Special
Service Area Revenue Bonds, Series 2007 (Cannon all Beecher Road Pryect)
"SSA Tax" means the ad valorem ta eYied a ally by the City against all
real property in the Special Service Area at a ra�e suffid.' to pay the interest on the
SSA Bonds as it falls due and to discharge the
g p�ipal thereof at maturity, if not
W
otherwise abated.
5-. - � :
"SSA Bonds" means any obl atldri secured by' A SA Tax and authorized
and issued by the City to fund all or aportiothp Canniball Beecher Road Project
costs in accordance with the SSA LaWr_ th_ oc ,W- rnment Reform Act and this
Ap
Agreement.
- '
"SSA Tax Revenue Bo f %l dentIve means the Trust Indenture dated as of
A
2007, by�&h eeg5 City a C- the SSA Tax Revenue Bond Trustee
pursuant to which the =SSA Bgm g- re is su d.
:£
"SS a�e�Revenuel t and Trustee" means The Bank of New York Trust
Comp 1 1.`N: A:, —�ffiits succ ors and assigns, as trustee for the SSA Revenue
Bonds.
get Tract x1} ans that portion of the Property legally described on Exhibit
G hereto.
"Trust N X , can the SSA Tax Revenue Bond Trustee.
"Underwriter" means William Blair & Company, L.L.C. or any firm of
nationally recognized underwriters chosen by the City.
ARTICLE II
DESIGNATION OF DEVELOPER
I
The City hereby acknowledges the construction of the Project by the Developer and
selects the Developer to construct or cause the construction of the Cannonball
Beecher Road Project improvements in accordance with the Concept Site Plan, this
Agreement and all Governmental Approvals. Provided that the Bonds have first been .
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issued and sold, the Developer hereby accepts such designation and agrees to cause
the completion of the Project and the Cannonball Beecher Road Project improvements
in accordance with the terms and conditions hereof.
ARTICLE III
CONSTRUCTION OF DEVELOPMENT PROJECT
3.1 Construction Schedule. The Developer shall commence construction of
the Project within One Hundred Twenty (120) days of the later t`d &�}r of (a) Developer
obtaining all necessary permits and Governmental Approval;, or (b six (6) months
after execution of this Agreement, and shall substantially o`_mMete construction of the
following approximate square feet of retail, restaut.1 " commercial space
_
comprising the Project as follows: �.
;:. ,,�
November, 2007 90,000 square feet of an. hor space;
August, 2008 475,000 square fe including approxima We
280,000
t_
square feet of anchor�space);
October, 2008 45,000 square feet; `=
March, 2009 160,000 square feet; and
October, 2009 30,000 sq�u��ire feet, all suhjecto force majeure as set forth
in Sectioii7 below.
3.2 Developer to Construct Sh e Project The�D'veloper shall commence or
cause the commencement of the cons" c o ofd e roject in accordance with the
terms of this Agreement arde_ -Concepf�,� Plan. T e extent of any inconsistency
among the foregoing, .; ree th the Conc g g
tl��' p artiesxa a.; t Site Plan shall overn so ton
as performance in a4eordam erewith 8_es. not violate Governmental Approvals.
The Developer shil_conplete cause the ; completion of the Protect in accordance
with the terms of and scho- uI set forth rl Section 3.1 of this Agreement.
3.3 - Caftnonball her Road Project. The Developer, on behalf of the
.;
City, shat causae Can _x ball Beecher Road Project improvements to be
construed for the bent of the pecial Service Area, in accordance with the terms of
this The Ci ,acknoedges that by a supermajority vote of the Corporate
Aufhorrts.� it does not tend to design, bid or construct the Cannonball Beecher
Road Projet�mproveme ts. The City agrees that since the Cannonball Beecher Road
Project improv�
ments a -- * o be paid for by the Net Proceeds of the SSA Bonds, that the
Developer shall ons_ti�t the Cannonball Beecher Road Project improvements on
behalf of the Ci sing subcontractors and materialmen selected from time to time by
the Developer, in s sole discretion, without advertising for bids as permitted by the
provisions of 65 ILCS 5/8 -9 -1 of the Illinois Municipal Code. The City, by entering
into this Agreement agrees to waive the requirement to bid any contracts entered into
between the Developer and subcontractors for installation of the Cannonball Beecher
Road Project improvements. All Cannonball Beecher Road Project improvements to
be constructed hereunder shall be constructed in substantial accordance with any
final plans approved by the City. Such Cannonball Beecher Road improvements shall
be all as approved by the City and in accordance with all applicable laws, ordinances,
rules and regulations. The Cannonball Beecher Road Project improvements shall be
constructed in a good, workmanlike and commercially reasonable manner.
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I I
3.4 Construction Contracts; Insurance. The Developer may enter into or
cause to be entered into one or more construction contracts to complete the Project
and the Cannonball Beecher Road Project. Prior to the commencement of
construction of any portion of either Project, the Developer shall obtain or shall require
that any of its contractors obtains workers' compensation, comprehensive public
liability and builder's risk insurance coverage in commercially reasonable amounts
and shall deliver evidence of such insurance to the City.
3.5 Governmental Approvals. The "City agrees tc employ reasonable and
good faith efforts to cooperate with the Developer and to P rZ . F' b
g p p ss and timely consider
...-
and respond to all applications for the Governmental. as received, all in
accordance with the applicable City ordinances and la: A the Std e _of Illinois.
._
3.6 Concept Site Plan. The Concept Site Plan is herel y approved in
accordance with applicable City ordinances and hides. z
3.7 Construction Plans. The Constructaon Pj"aris, for the Project and the
Cannonball Beecher Road Project shall be prepare � y a - professional engineer or
architect licensed to practice in the State of Illinoisan he Construction Plans and all
construction practices and procedu t" th respect to 4 ffl_U` roject and the Cannonball
Beecher Road Project shall be in substa�ifialr- c onformity vii €th all applicable state and
local laws, ordinances and regulations, Iri n� �conjunctio with obtaining a building
permit for the commencement of construction cof Proj ect and the Cannonball
Beecher Road Project, th.. tD per shat bmit Construction Plans for approval by En�
the City in sufficient grpmplete ss and d tail to show that construction will be in
conformance with thefOoncept Site Plan an%this Agreement.
Ilk
3.8 Certifica& of SuS8tant al_ Completion. Promptly after substantial
completion of the Cannor%- Beecher Zo Project, the Developer shall furnish to the
City a Cer a �tn_a f Substai 'al Completion. The City shall, within thirty (30) days
following frd.elivery ' tifi
e C cate of Substantial Completion, carry out such
inspections as it deems necessa o verify to its reasonable satisfaction the accuracy
Of tl� Acertifications ccf�x�ained ?fin the Certificate of Substantial Completion. The
Cer`.ific• of SubstantiCompletion shall be deemed accepted by the City unless,
within thin -(30) days following delivery of the Certificate of Substantial Completion,
_. - V
the City furi Mhes the Developer with specific written objections to the status of the
Cannonball B ether o d Project improvements, describing such objections and the
:�- -
measures require° c` correct such objections in reasonable detail. Upon acceptance of
the Certificate of substantial Completion b the City or upon the lapse of thirty 30
��. p Y tS' p P rtY ( )
days after delivery thereof to the City without any written objections thereto, the
Developer may record the Certificate of Substantial Completion with the Kendall
County Recorder of Deeds, and the same shall constitute evidence of the satisfaction
of the Developer's agreements with regard to construction of the Cannonball Beecher
Road Project. The Certificate of Substantial Completion shall be in substantially the
form attached as Exhibit D, attached hereto and incorporated by reference herein.
The City acknowledges and agrees that it shall not deliver the certificate referred to in
Section 4.2(c) of the SSA Tax Revenue Bond Indenture certifying that the Cannonball
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Beecher Road Project is completed until the Developer has delivered the Certificate of
Substantial Completion and such Certificate has been accepted by the City.
3.9 Fees. Other than customary tap fees, no fee or charge of any description
including, without limitation, building permits, plan review, inspection fees, or other
regulatory fees or charges, shall be imposed on Developer or on the development and
use of the Property unless, as of the date of this Agreement, such fee or charge is an
existence and being collected by the City on a uniform basis from all owners, users,
and petitioners of property within the City. The City shall not irqlease the amount of
<�
any fee or utility fees, application fees, or user fees during the -Term o this Agreement
unless such increases are (i) made generally applicable tntl_..owners and users of
property within the City and (ii) reasonably related to iri ea ecT osts incurred by the
City in providing the services for which such fee is assessed..
3.10 Quarterly /Annual Reporting. Du g construction of't �.PrJect, the
Developer shall deliver quarterly construction ,piro`gress reports to the Tr ? - e and the
Underwriter. After the Certificate of Substant 'G.ompletron is accepted, ie Developer
-• : _�
shall deliver to the Trustee and the Underwrite.- ules of tenants and
lease expiration dates for the Project.
�RICLE IV ,
PAYMENT 6 DVEV LOPER COS'T'S
4.1 City's Obligation to Pay b agrees to pay Developer
for the verified Cannonbaloeeher Roadloject co_ s in the amount as set forth on
Exhibit C, attached he to -Rl , y � rp y
b this reference lnco orated herein as may be
adjusted pursuant to is Artiel "AW. Subject tQthe terms of the Bond Ordinance, the
Indenture and thi lgr ement he City ag� s to issue the Bonds and to pay the
Developer for verifiednon13_ - eeekier� cad Project costs pursuant to Section 3.3
above, from Net Proceeds e orFC -in an amount equal to Eight Million Three
Hundred N ne One Thousand Five Hundred Twenty Two Dollars ($8,391,522) for
verified a:nnonBeecher aad Project costs as provided in Article V of this
Agreement.
Reimburse.... - ents Limited to Cannonball Beecher Road Project Costs;
Develope - I 'ght to Su titute. Nothing in this Agreement shall obligate the City to
issue Bonds to. pay Dev.� oiler for any Cannonball Beecher Road Project cost that does
m
not qualify for yer<i under the SSA Law. The Developer shall, at the City's request,
provide itemize € _, truction loan draws, invoices, or receipts or, in the case of the
acquisition of 1 1 evidence that the Developer has acquired fee title to such land and
evidence of the total acquisition price of such land, reasonably requested by the City to
confirm that any such cost is so incurred and does so qualify. Each such request
shall be in the form of a Certificate of Cannonball Beecher Road Project Costs and
accompanied by a certification by the Developer that such cost is eligible for payment
or reimbursement under the SSA Law. The parties agree that each of the categories of
costs set forth in Exhibit C shall constitute Cannonball Beecher Road Project costs
which are eligible for payment or reimbursement in accordance with the SSA Law and
this Agreement. If the City engineer determines that any cost identified as a
Cannonball Beecher Road Project cost is not a reimbursable cost under the SSA Law,
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I
the City shall so notify the Developer in writing within thirty (30) days as provided in
Section 5.6 of this Agreement, identifying the ineligible cost and the basis for
determining the cost to be ineligible, whereupon the Developer shall have the right to
contest such determination and /or identify and substitute other Cannonball Beecher
Road Project costs with a supplemental application for payment.
ARTICLE V
SSA BONDS
5.1 Bond Ordinance: Pledged Taxes. The City a opted the Bond
Ordinance for the SSA Bonds, subject to the provisions, 5.3, and has
provided for the designation of a Trustee. The SSA Be ds s 1 be retired over a
period not to exceed thirty (30) years and be secured by - pledge =o_the SSA Tax. The
Indenture provides for the segregation and deposit -PA Tax.
169
5.2 Application of Revenues /Abatement of Levy. The SSA :Tx shall be
applied to the retirement of the SSA Bondsia, cord be with the Boid Ordinance
and the Indenture. The City agrees that to th64 -TB tent ht re are revenues from the
.'4T
Business District that are not needed to pay annu . m debt service on the Business
District Revenue Bonds, the City shall annually appR`! l such excess revenues to the
-_
abatement of the SSA Tax levy in ans prit not to exceed the amount of the levy in
that year in accordance with the Bus riess strict RevenukBdnd Indenture.
5.3 Issuance of Bonds. The City grees tussue the Bonds pursuant to the
SSA Law and the Local Gov_nent DeUReform A5tA`in an amount to be determined
by the Underwriter bas(:r on th rrlount o the Net Proceeds projected to be deposited
in the various fundsAGd accounts as pro ded for in the Bond Ordinance and the
Indenture; provided'owever, ir event salt the aggregate Net Proceeds of the SSA
Bonds initially deposlted;ui the npmvemen Fund, as defined in the Indenture, equal
an amount less than Eig I ndred Ninety One Thousand Five Hundred
Twenty Tw2}lars (8,3'3522) from the SSA Bonds unless agreed to by the
-�
Developer "In ace#rfon to such Net Proceeds for Cannonball Beecher Road Project
costs, 4ie amount of e Bonds hall be sufficient to pay for all Issuance Costs
assoc_rated with issuing BoYi s as provided in the Bond Ordinance. The Bonds
d_
shah ria -be general obligations of the City and shall be secured solely by the SSA Tax.
Neither thj#, e ment rlo the Bonds shall constitute a full faith and credit obligation
of the City.
m
5.4 Coif0i s of Issuance. The City's obligation to issue the Bonds
described in Section 5.3 is expressly contingent on a bond opinion from Bond
Counsel opining that the Bonds are being issued in accordance with the SSA Law and
the Local Government Debt Reform Act, and that the interest thereon is exempt from
federal taxation.
5.5 City's Bond Expenses. The administration of the Bonds has resulted
and will result in expenses for the City. Any Trustee's fees or legal fees for a legal
opinion to be relied on by the bond holders, due and owing as of the Closing Date shall
be paid from Bond proceeds.
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5.6 Disbursements to Developer.
5.6.1. Initial Certificate. Ten (10) days prior to the Closing Date, the
Developer may deliver to the City a Certificate of Cannonball Beecher Road
Project Costs covering eligible Cannonball Beecher Road Project improvement
costs incurred by the Developer prior to the Closing Date and to be paid to the
Developer on the Closing Date. The City shall accept or reject such Certificate
within three (3) business days after receipt thereof ar1ti_a11 on the Closing
Date, submit a Request For Payment to the Trustee for `the Bonds with
instructions to reimburse the Developer, or the a 5aty designated by the
Developer in the amount set forth therein upon .e eipt e City's acceptance
or rejection of the initial Certificate shall be in .writing,clin the case of a
rejection, shall specifically state the reason ° such rejec ion. If the City
�
rejects all or any portion of the initial Certificate of Cannonballl3eecher Road
Project Costs, Developer shall have the pght to .i, d entify and subtti u e eligible
Cannonball Beecher Road Project cosh C� fails to accepfor reject the
Certificate of Cannonball Beecher Road Proect Costs?- within such three (3) day
period after submission by Developer, the 1r1It Certificate shall be deemed to
have been accepted by the Ci and payments;;_ all be made by the Trustee to
the Developer. - Aa
5.6.2. Subsequent Certificates ECannonball Beecher Road Project
Costs. Thereafter, the City shal% ; j . ays after acceptance by the
City of each Cert Z CannoRa- I Beech_ . Road Project Costs, submit a
Request For PaMhent v- the TA . ee for he Bonds with instructions to
reimburse the feveloper, .; or the party designated by the Developer, for such
construction-fa civances � the amONA set forth therein (a "Construction
qM
Payment'sTh.ity ce _ reject each Certificate of Cannonball
Beecher Road Pra g' Costs su itn tted by Developer within fifteen (15) days
after ,�submission by .Developer. Such acceptance or rejection by the City of
each Certi e shall: in writing, and in the case of a rejection, shall
A , ecifically t .the reaQ s for such rejection. If the City rejects any
A , ertificate of Cannonball= eecher Road Project Costs submitted by Developer,
ey�loper shall h ve the right to identify and substitute eligible Cannonball
B e ebf
ier Road Prcj t costs. If the City fails to accept or reject the Certificate of
Cannofi all Beecher Road Project Costs within fifteen (15) days after
submis by_Developer, the resulting Construction Payment(s) shall be
deemed t ' ie been accepted by the City on the sixteenth (16th) day after
submissiof the Certificate of Costs by the Developer. Construction Payments
shall be issued no more than once every month until all such Construction
Payments as are required by this Agreement have been paid. The City
covenants to pay or cause to be paid to Developer, or its designee, all amounts
received by the City from the Trustee pursuant to each Request For Payment
relating to a Certificate of Cannonball Beecher Road Project Costs submitted by
the Developer upon receipt thereof.
5.7 Maturity of Bonds. The final maturity of the Bonds shall not exceed the
maximum term permissible under the Local Debt Reform Act. The Bonds shall bear
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interest at such rates, shall be subject to redemption and shall have such terms as the
City shall determine in its sole discretion.
5.8 Cooperation in the Issuance of Bonds. The Developer covenants to
cooperate and take all reasonable actions necessary to assist the City and Bond
Counsel, the Underwriter and the City's financial advisor in the preparation of offering
statements, private placement memorandum or other disclosure documents and all
other documents necessary to market and sell the Bonds.
ARTICLE VI
COLLECTION AND USE OF REVENUE=%?s
6.1 Creation of Funds. The City agrees to cause its I5reetor of Finance or
other financial officer to maintain the funds require by Bond O ?4mance, the SSA
NO
Ordinances and the Indenture including such fur�thdr accounts or sub °accou lts as are
required therein, by this Agreement or as the Mfector otFinance of the C1t may deem
appropriate in connection with the admin f aeon of - th funds pursuant to this
Agreement. Subject to the requirements of thASS L -aid the Local Government
Debt Reform Act, the City will promptly upon recelp Hereof deposit all Bond Proceeds
and SSA Tax in the funds or in suc other accouff s =as required under the Bond
Ordinance and Indenture.
6.2 Cooperation in Determining Re enues. he City and the Developer
..�.. _
agree to cooperate and take all reasona'f le M5 ( s:' ecessary to cause the SSA Tax to R be paid into the fundsA' accounts ...._s' provide W in the Bond Ordinance and
Indenture, including the City'• enforcerri -nt and collection of all such payments
through all reasonab. and ordinary legal mans of enforcement.
T _ _�
4 - ART LE VII
_ GENERAL PROVISIONS
= / 4 771 Successors_ and Assin s.
MAI
7.1.1 Bind th Affect. This Agreement shall be binding on and shall
inueAo the benefit of the parties named herein and their respective heirs,
admlrlisi ators, executors, personal_ .representatives, successors and assigns.
Assignment or Sale. All or any part of the Property or any
interest th mein may be sold, transferred, encumbered, leased, or otherwise
.,-
disposed of at any time, and the rights of the Developer named herein or any
successors in interest under this Agreement or any part hereof may be assigned
at any time before, during or after redevelopment of the contemplated Project,
whereupon the party disposing of its interest in the Property or assigning its
interest under this Agreement shall be thereafter released from further
obligation under this Agreement (although any such Property so disposed of or
to which such interest pertains shall remain subject to the terms and
conditions of this Agreement), provided that until substantial completion of the
contemplated Project, the rights, duties and obligations of the Developer under
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this Agreement shall not be assigned in whole or in part without the prior 1
written approval of the City, which approval shall not be unreasonably
withheld, conditioned or delayed upon a reasonable demonstration by the
Developer of the proposed transferee's or assignee's experience and financial
capability to undertake and complete such portions of the Project and perform
the Developer's obligations under this Agreement, all in accordance with this
Agreement. Notwithstanding anything herein to the contrary, the City hereby
approves, and no prior consent shall be required in connection with: (a) the
right of the Developer to encumber or collaterally assi, ss interest in the
Property or any portion thereof to secure loans, advancer extensions of credit
to finance or from time to time refinance all or any ; ;t �of the Project costs, or
the right of the holder of any such encumbrarnGt; or transferee of any such
collateral assignment (or trustee or agent on its behalfl to trasfer such interest
by foreclosure or transfer in lieu of foreclos re�g su6%acumbrance or
O g p gn Ii Developer's collateral assignment; or b the right ofevelo er to assi
rights, duties and obligations under thi %AA greer ent to any party re° ated to the
Developer by one of the relationships ,,,described ink`-- Section 267(b�' f the United
States Internal Revenue Code of 1986, as amende, rovided that in each such
event (i) the Developer named herein (Cannball LLC) shall remain liable
hereunder for the substantial _ mpletion of tli c ptemplated Project and shall
be released from such liabili ereunder only uip substantial completion of
the contemplated Project an d •' tii4eD.eveloper pr a _ 'des to the City thirty (30)
days' advance written notice of p ro 'sed assigrim nt or transfer; or (c) the
right of Developer to transfer urge xact to Target Corporation, a
Minnesota corpor
7.1.3 T rget Trac bNotwiths and'ng anything to the contrary contained
in this Agredffle`- t, the City acknowled es and agrees that Target Corporation,
`? - - urc ser and owner of the Target Tract, shall
its successors d ,as i °h
not be liable for p6 of Developers obligations under this
Agreem ��ncludin ., , ithout limitation, the obligation to complete any site
work a--...
-imprbverx>ents, po ng s f nancial security, or incurring any costs pursuant
othis Agreemen Up0Developer's completion of its obligations under this
G eement with ect tg the Project, the City agrees to promptly execute, at
no:-charge to Targef a recordable Termination and Release of this Agreement for
th 'get Tract frWm those obligations under this Agreement. Notwithstanding
anyth to the c6 itrary contained in this Agreement, the City consents to the
transfef ti tl from the Developer to Target of the Target Tract and
acknowle ge : at Target may thereafter transfer or convey interests in the
Target Tra in Target's sole and absolute discretion.
7.2 Remedies. Except as otherwise provided in this Agreement and subject
_ to the Developer's and the City's respective rights of termination, in the event of any
default in or breach of any term or conditions of this Agreement by either party, or any
successor, the defaulting or breaching party (or successor) shall, upon written notice
from the other party specifying such default or breach, proceed immediately to cure or
remedy such default or breach, and shall, in any event, within thirty (30) days after
receipt of notice, commence to cure or remedy such default or breach. In the event
that the defaulting or breaching party (or successor) diligently and in good faith
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commences to cure or remedy such default or breach but is unable to cure or remedy
such default or breach within thirty (30) days after receipt of notice, the defaulting or
breaching party (or successor) shall, prior to the end of such thirty (30) days, provide
notice to the other party that it has in good faith commenced to cure or remedy such
default or breach, whereupon the defaulting or breaching party (or successor) shall
have an additional ninety (90) days to cure or remedy such default or breach. In case
such cure or remedy is not taken or not diligently pursued, or the default or breach
shall not be cured or remedied prior to the end of the additional ety (90) - day period,
the remedy to the aggrieved party shall be as set forth below: z
(i) If the Developer is in breach of this Agreemen City's remedy at law
or in equity, shall be to suspend payments = the loper under this
Agreement until the Developer has cured or substantially ce such breach, at
which time payments to the Developer under=.. , Agree men hall resume. If,
however, the Developer is in breach for :fure to compl ete Cannonball
Beecher Road Project and if the Develope -1. all not cure or remedy such breach
within the time period stated abovq��nd suctime period lids not been
extended or such breach excused due to =Brae maju:ere, then the City shall be
entitled, upon written notice to the Developd'to complete, or to cause the
completion of, the Cannonball Beecher Road Proeet.
w -
(ii) If the City is in breach af_ . 15� ree ment, the Developer may pursue any
and all legal and equitable remedie a lable to it-4 as a result of such breach,
including without limitation ter a on of: tLisAgreement or proceedings to
compel specific perfortiaarnce.
7.3 Force Mai ure. Neither the City nor the Developer nor any successor in
interest shall be cd isidered in lireach or deault of their respective obligations under
4 _�,N
this Agreement, and times foeffarnancf obligations hereunder shall be extended
in the event of any dela c se y horce majeure, including without limitation,
damage or coon byfire or casualty; strike; lockout; civil disorder; war;
restrictiv_ government. regul ti_ ns;- lack of issuance of any permits and /or legal
1
authorization by the - g,�o e�rnmen entity necessary for the Developer to proceed with
kg
con
sction of the wor or any :portion thereof; delay in commencement or completion
.
:- s -a
of any xi� all work tolbe performed by others that affects Developer s ability to
commence 6g, complete tb:e Project; shortage or delay in shipment of material or fuel;
acts of Godunusuallydverse weather or wet soil conditions; or other like causes
beyond the pacts ea`sonable control, including without limitation any litigation,
court order or t resulting from any litigation affecting the validity of the SSA
Tax, the contem "I`ated Cannonball Beecher Road Project or the Bonds, the PUD
Ordinance, this greement, or eminent domain actions; provided that such event of
force majeure shall not be deemed to exist as to any matter initiated or sustained by
either party to this Agreement in bad faith, and further provided that the party
claiming the benefits of this Section 7.3 notifies the other in writing within thirty (30)
days of the commencement of such claimed event of force majeure.
7.4 Notices. Any notice, demand or other communication required by this
Agreement to be given by either party hereto to the other shall be in writing and shall
be sufficiently given or delivered if (i) dispatched by certified United States first class
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mail, postage prepaid, (ii) sent by a nationally recognized overnight courier, or (iii) )
delivered personally:
(i) In the case of the Developer, to:
Cannonball LLC
c/o The Harlem Irving Companies, Inc.
Attn: Managing Director of Real state
4104 North Harlem Avenue
Norridge, IL 60706
With a copy to: Cannonball LLC a
c/o The Harlem Irvin. Cdiinpanies
Attn: General Coun
4104 North Harl . enue
Norridge, IL 6Q 06
With a copy to: Polsky & Associates; `.'d
205 N. Michigan Ave�e
41 S?1�o'or �...
Chic o; 1 '-601
(ii) In the case o;h'ty, to:
nited Ci Mof Yorkville, Illinois
office of thayor
006 Gamey arm Road
01Ilinois 60560
An- - nited City of Yorkville, Illinois
affice of the Treasurer
•_.00 Game Farm Road
Yorkville, Illinois 60560
With a co y { ' Foley & Lardner LLP
Attn: Christopher N. Knight
321 N. Clark Street
Suite 2800
Chicago, Illinois 60610
or to such other address(es) with respect to either party as that party may, from time
to time, designate in writing and forward to the other as provided in this paragraph.
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7.5 Insurance; Damage or Destruction of Project. The Developer shall
provide and maintain, or cause to be provided and maintained, at the Developer's own
expense, during the Term of the Agreement (or as otherwise specified below), the
insurance coverages and requirements specified below, insuring all operations related
to the Agreement.
(a) Throughout the Term of the Agreement
f_.,.
(i) Commercial General Liability Insurance (Priliary� and Umbrella)
Commercial General Liability Insurancat.equivalent with limits
OW
of not less than $1,000,000 per eEUrre for bodily injury,
personal injury, and property damage liabiliCoverages shall
include the following: emises d operations,
products/ completed oper tans, lndependericotractors,
separation of insureds, defe se, arxd contractual liabi`liiy (with no
limitation endorsement). City is Q be named as�ran additional
-A,
insured on a primary, no basis for any liability
arising directly or indirectly fro'ine word.
(b) Construction _
- f
W Commercial General. Liab�ik lrisuran ce ('Primary and Umbrella)
v
Comrneb a1AGenerYAL1. lity In ut ance or equivalent with limits
of riot less than $2,0V0,000 per occurrence for bodily injury,
,
personal injy, and prperty damage liability. Coverages shall :._ g P P
dude tk followin All remises and operations,
PAod Ct�sole tedeations (for a minimum of two (2) years
follovg; prolectcoxnpretion), explosion, collapse, underground,
=_
depef da t contractors, separation of insureds, defense, and
cl- itractu�l�liabi_lity (with no limitation endorsement). The City is
U r . � �
t e nam d� -;as an additional insured on a primary, non -
�
cob- butory asis for any liability arising directly or indirectly
`-
from2e work.
w
gr
Builders Risk Insurance
�.e-.
xct. . hen the Developer or its contractor undertakes any
E � construction, including improvements, betterments, and /or
repairs, the Developer shall provide, or cause to be provided All
Risk Builders Risk Insurance at replacement cost for materials,
supplies, equipment, machinery and fixtures that are or will be
part of the permanent facility. Coverages shall include but are not
limited to the following: collapse, boiler and machinery if
applicable. The City shall be named as an additional insured and
loss payee.
(c) Post - Construction
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1�
(i) Post - construction, throughout the Term of the Agreement, All Risk
Property Insurance, including improvements and betterments in
the amount of full replacement value of the Property. Coverage
extensions shall include business interruption /loss of rents, flood
and boiler and machinery, if applicable. The City is to be named
an additional insured on a primary, non - contributory basis.
(d) Other Recauirements.
The Develo will furnish the City original Certificattf Insurance evidencin
the required coverage to be in force on the date of is Ag €rnent, and Renewal
Certificates of Insurance, or such similar evidence, if the overag - .2 e an expiration
or renewal date occurring during the Term of this.eement. receipt of any
certificate does not constitute agreement by the F C that'the insuranequirements
in the Agreement have been fully met or that the insurance policies ind2atied on the
certificate are in compliance with all Agreeme
The insurance shall provide for 60 days prior wrlttexz: rlotice fo be given to the City in
the event coverage is substantially changed, canceled; T :anon- renewed.
Any and all deductibles or self insur`edreten ons on refesced insurance coverages
shall be borne by the Developer.
The Developer shall requirPW _ e ,general d"b'SXactor, d all subcontractors to provide
'`
the insurance required
E V
7.6 Inspection. The° 1ty may caduct such periodic inspections of the
construction of the Pr Et aabegen fly provided in the building code of the
N .
City. The Developer shalot unreasnaly deny the City and its officers, employees,
agents and. . � x ste_ endent ontractors the right to inspect, upon request, all
:� ��
architec rat, engi ng, e onion, construction and other contracts and
docum its pertainingfMa, the c of the Project as the City determines is
reasMoble and necessary to very the Developer's compliance with the terms of this
AgrIement. _
7.7 -Choice of� °aw. This Agreement shall be deemed to have been fully
; N .
executed, madam by the:= parties in, and governed by the laws of the State of Illinois
without regard t `tonflicts of laws provisions for all purposes and intents.
7.8 Entire Agreement; Amendment. The parties agree that this Agreement
constitutes the entire agreement between the parties and that no other agreements or
representations other than those contained in this Agreement have been made by the
parties. This Agreement shall be amended only in writing and effective when signed
by the authorized agents of the parties.
7.9 Counterparts. This Agreement is executed in multiple counterparts,
each of which shall constitute one and the same instrument.
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7. 10 Severability. In the event any term or provision of this Agreement is held
to be unenforceable by a court of competent jurisdiction, the remainder shall continue
in full force and effect, to the extent the remainder can be given effect without the
invalid provision.
7.11 Representatives Not Personally Liable. No elected or appointed
official, agent, employee or representative of the City shall be personally liable to the
Developer in the event of any default or breach by any party under , this Agreement, or
for any amount which may become due to any party or on an 2%
legations under the
terms of this Agreement. This provision shall not apply to the opinion to be given by
the City Attor
`
tY Y• -
7.12 Indemnification. The indemnifications aria covenants; - contained in this
Section shall survive termination or expiration of thi sAgre`ement. Wi
7.12.1 Invalidity. Except. the opinion of the CitKttorney as
provided for in Section 7.14 of this Aeent, the :City and its governing body
members, officers, agents, employees and iidependent contractors shall not be
,;-
liable to the Developer for damages or otherwis' din the event that all or any part
of the SSA Law, the Special Service Area; _ o any ordinance adopted in
connection with the Law, theAe , or this Agreei went, is declared invalid or
arf
v
unconstitutional in whole or iri e final (as -U v°hich all rights of appeal
have expired or have been exhaust6 411 j xdgment Hof any court of competent
;3 ,�.r
jurisdiction, and by reason theredkeither tlegir is prevented from performing
any of the coven ts_.ta -`d agreeme fherein o F. e Developer is prevented from
enjoying the right and p Mleges h8Teof.
74 2-21 Damage or Injury, The City and its governing body
§' 4W� __
members, officers & - a_ e nployees arld independent contractors shall not be
Y da
liable for an m ` " or u oh P property P ersons or ro er tY of the Developer or its
J rY`
officer, Tag _,..,ts, emplo=,.ees, independent contractors or any other persons who
mae`abo he Projid or the Project except for matters arising out of the
g>•oss negligencaor wilIfUU- 4inisconduct of the City and its governing body
embers, officer�gents,#a employees and independent contractors.
7.12.3 personal Liability. All covenants, stipulations, promises,
agreements and o igations of the City contained herein shall be deemed to be
the covei'zants,sflpulations, promises, agreements and obligations of the City
and not 0 , : �i of its governing body members, officers, agents, employees or
independe ,, ntractors in their individual capacities.
7.13 Survival. Notwithstanding the expiration or termination or breach of
this Agreement by either party, the agreements contained in Sections 7.7, 7.8, 7.9,
7.10, 7.13, and 7.16 and Article VIII of this Agreement shall, except as otherwise
expressly set forth herein, survive such expiration or early termination of this
Agreement by either party.
7.14 Legal Opinion. As of the effective date of the City's ordinance
authorizing the execution of this Agreement, the City Attorney shall provide the
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Developer, Developer's Counsel and the City's Bond Counsel with an opinion in a form
mutually agreeable to each of them. If the Special Service Area has not been formed as
of the date of the City Attorney's opinion, then the City Attorney shall also issue one or
more subsequent opinions, in a form acceptable to Developer's Counsel and the City's
Bond Counsel regarding the Special Service Area.
7.15 Term. The term of this Agreement shall commence on the Closing Date
and shall terminate upon the retirement of the Bonds, unless earlier terminated
pursuant to the provisions of this Agreement. L Y
7.16 Conflict. In the event of any inconsistency ooriflict between the terms
of this Agreement and the Bond Ordinance, the terms =_, the 1d Ordinance shall
control.
ja
ARTICLE VIII
REPRESENTATIONS, Olt iTHE PARRTIES
8.1 Representations of the City. The Cif): represents and warrants
that (i) it has full constitutional and lawful right, pow _: d authority, under current
a licable law to execute and delis .._: d perform the{erm and obligations of this
pp . __ r
Agreement, and the Indenture, lnclu �t out limitaMOn the right, power and
authority to issue and sell the Bond (ii) °all -tithe foregoing have been or will be,
=�.
upon adoption of the ordinances
au ' 'tlie =statance of the Bonds, duly and
validly authorized and a ' d by al ecessary 'City proceedings, findings and
actions, (iii) this Agre ent cons itutes IM legal, valid and binding obligation of the
City, enforceable in ccordance Wth its terms, and (iv) it will pay to the Developer, or
its designee, all aA nts rece ed from th 0.11Aastee pursuant to each Request For
Payment in accorda&- the ate _ , 3 of t� Agreement.
- -
8.2 R4gre_ ,entationsof the Developer. The Developer hereby represents
_. _,
and wawa s it �ha_ . full power to s execute and deliver and perform the terms and
obliga o s of this geement all of the foregoing has been duly and validly
authoed by all necessary prop edings. This Agreement constitutes the legal, valid
an(Fb n' ng obligation o 2 _. , a Developer, enforceable in accordance with its terms.
r(Th remainder of this page intentionally left blank.)
18
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IN WITNESS WHEREOF, the City and the Developer have caused this
Agreement to be executed in their respective names and the City has caused its seal to
be affixed thereto, and attested as to the date first above written.
"CITY" UNITED CITY OF YORKVILLE, ILLINOIS
By:
T
Mayor
ft
(SEAL)
Attest:
City Clerk t6
.." W\
Aft
"DEVELOPER" CANNONAAL an Illinois imtted liability company
CY
'
By: The HHarem ies, Inc.
Harem I-.
1 -y
itle: 1 6-m.
J-Z
V
A— Q
-
[SIGNATURE PAGE TO DEVELOPMENT AGREEMENT]
S: \Client Data\Harlern Irving Development\07005\Documents\07-03-15 Development Agreement SSA V4.doc
STATE OF ILLINOIS ) %'
)SS
COUNTY OF KENDALL ) On this _ day of . 200_, before me
appeared , to me personally known, who, being by me duly sworn, did say
that he is the Mayor of the UNITED CITY OF YORKVILLE, ILLINOIS, a political
subdivision of the State of Illinois, and that the seal affixed to the foregoing instrument
is the seal of said City, and said instrument was signed and sealed in behalf of said
City by authority of its City Council, and said acknowledged said
instrument to be the free act and deed of said City. i
IN TESTIMONY WHEREOF, I have hereunto set my hasY affixed my official
V
seal in the County and State aforesaid, the day and year-,il^st above written.
No � ty Public
hl
(SEAL)`
My Commission Expires:
ME
:�- u
x. ' -
S: \Client Data \Harlem Irving Development \07005 \Documents \07 -03 -15 Development Agreement SSA V4.doc
STATE OF )
)SS
COUNTY OF )
On this _ day of , 200_, before me appeared , to me
personally known, who, being by me duly sworn, did say that he is the of
THE HARLEM IRVING COMPANIES, an Illinois corporation, and a of
CANNONBALL LLC, an Illinois limited liability company and that he is authorized to
sign the instrument on behalf of said company, and acknowledgd&to me that he
executed the within instrument as said company's free act andP`cNed_'ka'
IN TESTIMONY WHEREOF, I have hereunto set rry d affixed my official
seal in the County and State aforesaid, the day and years ifst abav�ftritten.
IVY
-
Notary PA' l ic
(SEAL)
ff
My Commission Expires:
Nil t°
z r W .
M .
g
R
't
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EXHIBIT A 1
1 LEGAL DESCRIPTION OF THE PROPERTY
THAT PART OF THE SOUTH EAST 1/4 OF SECTION 19, PART OF THE SOUTH 1/2
OF SECTION 20 AND PART OF THE NORTH WEST 1/4 OF SECTION 29, TOWNSHIP
37 NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS
FOLLOWS: COMMENCING AT THE SOUTH EAST CORNER OF I�D SOUTH EAST
1/4 SECTION 19; THENCE NORTH ALONG THE EAST LINE O 71S ' D48OUTH EAST
1/4 310.20 FEET; THENCE WESTERLY PERPENDICULAR T EAST LINE 198.0
FEET FOR THE POINT OF BEGINNING; THENCE EASTE - =C? G THE LAST
DESCRIBED COURSE 198.0 FEET; THENCE SOUTH AI; G S T BAST LINE 310.20
FEET TO SAID SOUTH EAST CORNER; THENCE SOLIT�i�ALONG TIEWEST LINE OF
SAID NORTH WEST 1/4 OF SECTION 29, 429.15 Effi - H O THE CE N' f R OF
U.S. ROUTE NO. 34; THENCE EASTERLY ALON AID CENTER
T I
CI NE, ]VHL H
FORMS AN ANGLE OF 95 DEGREES, 41 MIN 25 SECONDS WITH ��E LAST
DESCRIBED COURSE, MEASURED CLOCKI TH& HER OM, 2059.30 TO
THE CENTER LINE EXTENDED SOUTHERLY OF Cif, DFF ROAD; THENCE
NORTHERLY ALONG SAID CUT -OFF ROAD CENTEK LE EXTENDED AND SAID
CENTER LINE WHICH FORMS AN ANGLE OF 106 DEGREES, 47 MINUTES, 23
SECONDS WITH THE LAST DESCRIB �GOURSE, MEAS72E CLOCKWISE
.s -
THEREFROM, 1816.44 FEET TO THE'ORI ST CORDER OF OAK KNOLLS
SUBDIVISION; THENCE NORTHERLY AVON `," CIJT -OFF ROAD CENTER LINE
WHICH FORMS AN ANGL&OFk_ -180 DEGREE , 26 MI(3TES, 14 SECONDS WITH THE
LAST DESCRIBED COURSE; EY SURED LOCKWISE THEREFROM, 746.59 FEET;
THENCE NORTHWES RLY ALZG G A LIN _4 WHICH FORMS AN ANGLE OF 86
DEGREES, 39 MINUTES, 00 SECONDS WII` ° -T E CENTER LINE OF CUT -OFF ROAD
GOING NORTHEF : W T AST DESCRIBED POINT. MEASURED COUNTER
CLOCKWISE THEREFR °HENCE NORTHWESTERLY ALONG A
LINE FORMING N ANGL � ° =F 33 DEGREES, 20 MINUTES,
00 SECONDS WITH THE
PROLON A I`ID :_.,O WE LA'T__ ESCRIBED COURSE, MEASURED CLOCKWISE
THEREFROM, 65.90 € ET; THE NORTHERLY ALONG A LINE WHICH FORMS AN
ANGL0OF 38 DEGREES . 44 MI UTES, 00 SECONDS WITH THE PROLONGATION OF
THW_E DESCRIBED _ " 9, MEASURED CLOCKWISE THEREFROM, 138.82
FEET; TCE WESTEF ALONG A LINE WHICH FORMS AN ANGLE OF 271
DEGREES; ,- S MINUTESF SECONDS WITH THE LAST DESCRIBED COURSE,
MEASURED ``ZJNTER,,CLOCKWISE THEREFROM, 2658.89 FEET TO A POINT ON
THE EAST LINEQ : SAID SOUTH EAST 1/4 OF SECTION 12 WHICH IS 147.18 FEET
SOUTH OF THE JCJ, 2 H EAST CORNER OF SAID SOUTH EAST 1/4; THENCE
WESTERLY ALONG PROLONGATION OF THE LAST DESCRIBED COURSE
580.80 FEET; THENCE WESTERLY ALONG A LINE WHICH FORMS AN ANGLE OF
176 DEGREES, 11 MINUTES, 47 SECONDS WITH THE LAST DESCRIBED COURSE,
MEASURED COUNTER CLOCKWISE THEREFROM, 258.97 FEET TO A POINT ON
THE NORTH LINE OF SAID SOUTHEAST 1/4 WHICH IS 1826.22 FEET EASTERLY OF
THE CENTER OF SAID SECTION 19; THENCE SOUTHEASTERLY ALONG A LINE
WHICH FORMS AN ANGLE OF 62 DEGREES, 59 MINUTES, 10 SECONDS WITH THE
LAST DESCRIBED COURSE, MEASURED CLOCKWISE THEREFROM, 2411.25 FEET
TO THE POINT OF BEGINNING, (EXCEPT THAT PART OF THE NORTHWEST 1/4 OF
SECTION 29, TOWNSHIP 37 NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL
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MERIDIAN DESCRIBED AS FOLLOWS: COMMENCING AT THE INTERSECTION OF
THE CENTERLINE OF U.S. ROUTE NO. 34 AND THE CENTERLINE OF CANNONBALL
TRAIL; THENCE NORTH 21 DEGREES, 49 MINUTES, 35 SECONDS EAST ALONG
THE CENTERLINE OF CANNONBALL TRAIL, 555.0 FEET FOR THE POINT OF
BEGINNING; THENCE NORTH 68 DEGREES, 10 MINUTES, 25 SECONDS WEST, 48.0
FEET, THENCE SOUTH 21 DEGREES, 49 MINUTES, 35 SECONDS WEST, PARALLEL
TO SAID CENTERLINE OF CANNONBALL TRAIL, 470.0 FEET; THENCE SOUTH 57
DEGREES, 49 MINUTES, 35 SECONDS WEST, 74.81 FEET TO THE NORTHERLY
RIGHT OF WAY OF SAID U.S. ROUTE NO. 34; THENCE EASTERL,ALONG SAID
NORTHERLY LINE, 96.06 FEET TO THE CENTERLINE OF CA1N:ON9kLL TRAIL;
THENCE NORTH 21 DEGREES, 49 MINUTES, 35 SECOND§_= ST, ALONG SAID
CENTERLINE, 502.78 FEET TO THE POINT OF BEGINN =IW A ! ;EXCEPT THAT
PART OF THE SOUTH HALF OF SECTION 20, TOWNSHIP37 NOR' _ RANGE 7 EAST
OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FsQLLOWS: �C3f IMENCING AT
THE SOUTHEAST CORNER OF THE SOUTHEAST-QUARTER OF SECT 19
TOWNSHIP AND RANGE AFORESAID; THENCFf!36UT114ALONG THE WES' LINE OF
THE NORTHWEST QUARTER OF SECTION 29TflWNSHIP =AND RANGEIFORESAID,
429.15 FEET TO THE CENTERLINE OF U.S. ROQ N0 34 _THENCE EASTERLY
ALONG SAID CENTERLINE, WHICH FORMS AN A9dh OF 61 DEGREES 41
�.' :&`,
MINUTES 25 SECONDS WITH THE LAST DESCRIBED'.
MEASURED
� .
CLOCKWISE THEREFROM, 2059.30k_ n- TO THE CERthRLINE EXTENDED
SOUTHERLY OF CANNONBALL TRAIL= % GE ,LONG THE
CENTERLINE OF SAID CANNONBALL :I�AIL; ICH FORMS AN ANGLE OF 106
DEGREES 47 MINUTES 23 SECONDS � IT�TH ' '. 5T _,' ESCRIBED COURSE,
MEASURED CLOCKWISE.3ftREFROM, ' :Si 6.44 FE 'I' TO THE NORTHWEST
:_ g t-�.
CORNER OF OAK KNOLL 'SUBL VISION; THENCE CONTINUING NORTHERLY
ALONG SAID CENTERLINE, WHICH S H FOR AN_ANGLE OF 180 DEGREES 26
MINUTES 14 SECQNIWITH THE LAST DESCRIBED COURSE, MEASURED
CLOCKWISE THEREFROM 74�s� F �ET�F�R THE POINT OF BEGINNING; THENCE
NORTHWESTERLY ALOILIN i]VIIGIORMS AN ANGLE OF 94 DEGREES 29
MINUTES L,SEGONDS WIT !SAID CENTERLINE, MEASURED CLOCKWISE
THEREFROM, 14f10;"EET; THENCE SOUTHERLY ALONG A LINE WHICH FORMS
AN A1�IGE OF 85 DEEES 30`�TES 43 SECONDS WITH THE LAST
DESCRIBED COURSE CLOCKWISE THEREFROM AND PARALLEL WITH
SAID CENTERLINE, 10(:r0 FEET; THENCE EASTERLY ALONG A LINE WHICH
FORMS A_ _ GLE OF 9EGREES 29 MINUTES 17 SECONDS WITH THE LAST
DESCRIBE] COURSE,.., E ASURED CLOCKWISE THEREFROM, 140.00 FEET TO
SAID CENTERLIINE; TIC =ENCE NORTHERLY ALONG SAID CENTERLINE, WHICH
FORMS AN ANaLt' 85 DEGREES 30 MINUTES 43 SECONDS WITH THE LAST
�R, - 9
DESCRIBED COVjZSE, 100.00 FEET TO THE POINT OF BEGINNING), IN BRISTOL
TOWNSHIP, KENDALL COUNTY, ILLINOIS.
Legal Description provided by:
Smith Engineering Consultants, Inc.
2
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EXHIBIT B i )
LEGAL DESCRIPTION OF THE SPECIAL SERVICE AREA
THAT PART OF THE SOUTHEAST QUARTER OF SECTION 19, PART OF THE SOUTH HALF OF
SECTION 20 AND PART OF THE NORTHWEST UARTER OF SECTION 29 TOWNSHIP 37
Q ,
NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF SAID
SECTION 19; THENCE NORTH 01 DEGREES 13 MINUTES 53 SECONDS&- • . ST, ALONG THE
1101, EAST LINE OF SAID SOUTHEAST QUARTER 310.20 FEET; THENCE STEI,Y
PERPENDICULAR TO SAID EAST LINE 198.00 FEET; THENCE NOR- % 6 DEGREES 23
MINUTES 58 SECONDS WEST, 862.81 FEET; THENCE NORTH_ 4fi EtEES 51 MINUTES 14
SECONDS EAST, 126.15 FEET; THENCE WESTERLY ALONG < ONTGENTIAL CURVE TO
THE RIGHT WITH A RADIUS OF 25.00 FEET AND A CHO G 033(QRTH 86
DEGREES 29 MINUTES 53 SECONDS WEST, AN ARC LET 40.71 FEE�'.HENCE
NORTHWESTERLY ALONG A CURVE TO THE RIGH. - TH A RADIUS OF 95Q:00._FEET AND
A
A CHORD BEARING OF NORTH 30 DEGREES 00 _ ' TES 26,SECONDS WEST, A� ARC
LENGTH OF 326.41 FEET; THENCE NORTH 67 DELI TS 35 Nf- , TES 57 SECONDS EAST,
243.73 FEET; THENCE SOUTHEASTERLY ALONG A . ..... 1 AL CURVE TO THE LEFT
WITH A RADIUS OF 500.00 FEET AND A CHORD BE SOUTH 31 DEGREES 07
MINUTES 50 SECONDS EAST, AN ARC LENGTH OF 209.70�EE ,, THENCE SOUTH 43
DEGREES 08 MINUTES 45 SECONDS EAS-02 80 FEET; THENC Q TH 46 DEGREES 51
MINUTES 15 SECONDS EAST, 287.40 FEE TEF�,SOUTH 43 DEGREES 08 MINUTES 45
SECONDS EAST, 80.00 FEET; THENCE NORTH 46REES 51 NIINUTES 15 SECONDS EAST,
162.29 FEET; THENCE NORTH�43DEGREES0811UTES A SECONDS WEST, 7.00 FEET;
THENCE NORTH 46 DEGRE S - TES 15 ECONDS AST, 60.76 FEET; THENCE
NORTHEASTERLY ON G C . %TO THE GHT WITH A RADIUS OF 367.00 FEET AND A
CHORD BEARING OF RTH 58 D REES 18 §� , ES 15 SECONDS EAST, AN ARC
LENGTH OF 146.68 F = THENCEORTH 69 DE(xEES 45 MINUTES 15 SECONDS EAST,
121.97 FEET; THENCE O Kk CURVE TO THE LEFT WITH A RADIUS
OF 433.00 FEET AND A CH F, °QbRTH 37 DEGREES 51 MINUTES 31 SECONDS
EAST, ANA ,. - EN. TH OF 48 =Q_ FEET; THENCE NORTHEASTERLY ALONG A CURVE TO
-
THE RIG T! IUS O 0 FEET AND A CHORD BEARING OF NORTH 51
DEGRED'23 MINUTEST ry- ECOND ` - AST, AN ARC LENGTH OF 39.64 FEET; THENCE
•
SOU8DEGREES 11 TES Q `SECONDS EAST, 763.20 FEET , THENCE
SOOT=BE- Y ALONG s,-.CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET AND A
CHORG OF SOU 3- 57 DEGREES 07 MINUTES 07 SECONDS EAST, AN ARC
LENGTH OF 94 FEET; = NCE SOUTH 31 DEGREES 03 MINUTES 05 SECONDS EAST,
123.11 FEET; #-..
CEi3TH 58 DEGREES 56 MINUTES 55 SECONDS WEST, 7.00 FEET;
THENCE SOU ` - RLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A
RADIUS OF 440.00 )✓T AND A CHORD BEARING OF SOUTH 42 DEGREES 20 MINUTES 40
SECONDS EAST, A ARC LENGTH OF 173.45 FEET; THENCE NORTH 32 DEGREES 01
MINUTES 21 SECONDS EAST, 80.28 FEET; THENCE SOUTHEASTERLY ALONG A
NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 360.00 FEET AND A CHORD
BEARING OF SOUTH 60 DEGREES 42 MINUTES 59 SECONDS EAST, AN ARC LENGTH OF
101.11 FEET; THENCE SOUTH 68 DEGREES 45 MINUTES 32 SECONDS EAST, 784.84 FEET TO
THE CENTER LINE OF CANNONBALL TRAIL; THENCE SOUTH 21 DEGREES 40 MINUTES 31
SECONDS WEST, ALONG SAID CENTER LINE, 331.43 FEET; THENCE SOUTH 21 DEGREES 14
MINUTES 17 SECONDS WEST, ALONG SAID CENTER LINE, 1261.58 FEET; THENCE NORTH
68 DEGREES 45 MINUTES 43 SECONDS WEST, 48.00 FEET; THENCE SOUTH 21 DEGREES 14
MINUTES 17 WEST, 470.00 FEET; THENCE SOUTH 57 DEGREES 14 MINUTES 17 SECONDS
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WEST, 74.81 FEET TO THE NORTH LINE OF U.S. ROUTE 34; THENCE NORTH 85 DEGREES 32
MINUTES 10 SECONDS WEST ALONG SAID NORTH LINE, 1983.32 FEET TO THE WEST LINE
OF THE NORTHWEST QUARTER OF SAID SECTION 29; THENCE NORTH 01 DEGREES 14
MINUTES 12 SECONDS WEST ALONG SAID WEST LINE, 378.99 FEET TO THE POINT OF
BEGINNING, IN THE UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS, AND
CONTAINING 143.40 ACRES MORE OR LESS.
Legal Description provided by:
Smith Engineering Consultants, Inc. -
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EXHIBIT C 1;
CANNONBALL BEECHER ROAD PROJECT COSTS TO BE PAID FROM SSA BOND
PROCEEDS
Cannonball Beecher Road Project improvements include, but area'-
not limited to: (i) land underlying dedicated rights of way for Ul _
City of Yorkville; (ii) land underlying dedicated rights of
the Illinois Department of Transportation (IDOT) along Raute'3:4y.
(iii) construction of Cannonball Trail road including pas ng, road : 4
striping, road signage, creation of acceleration /deceleration "
lanes and curb installation; (iv) construction of B, r Road:' se
including paving, road striping, road signage, creation };
acceleration /deceleration lanes, and curb installation; (v_
improvement of Route 34 including repaving the existing rah_
curb installation, construction of accelera -n� deceleration 1 'e ,
V ia' -
road striping, and road signage; (vi) utilitresaannonball Tr ;
road including water system, storm dr g �m
g , y ai�iage system-,, sanitary Mx
system, relocation of existing fire protectiorisyste 'eo of
gas service utilities, and electrical lighting se� � such1 s�tieet
lighting; (vii) utilities for Beecher R�oa__d include a water system,
:,
storm drainage system, sa�L7 sys tem, fire p ection system,
electrical services suc as street liglit g, and theS installation of a
traffic signal at the oe, of RouteA4 and Beecher -Road; (viii)
utilities for Route 34 inch; " g Mten -nul
lem orm drainage
system, sanitary system, fireliy rarifsinstatton of street
lighting, the n�stallation of arc signal at the South main
entrance one= Ro#eand the enhancement of the existing traffic
signal a e mtersectila Cannoxbrail and Route 34; and
(ix) assMiated s general cori to fees• design fees, Alta survey
fee; geo echnical, landsca ' =desiga land planner fees,
architect and structure= es, and civil design fees; and (xi)
builder's nsl surance.
-
Total Eligible Pr oj c Costs $9,851,232
Total Funded Project Costs
$ 8,391,522
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EXHIBIT D
CERTIFICATE OF SUBSTANTIAL COMPLETION
The undersigned, CANNONBALL, LLC, an Illinois limited liability company
(the "Developer"), pursuant to that certain Development Agreement dated as of
. 2006, between the UNITED CITY OF YORKVILLE, Illinois (the "City's and
the Developer (the "Agreement"), hereby certifies to the City as follows:
1. That as of the construction of the. - cannonball Beecher
Road Project (as that term is defined in the Agreement) .,,,.as been substantially
completed in accordance with the Agreement.
2. The work has been performed in accord the instruction Plans
(as those terms are defined in the Agreemenj."'' =, $
,,
3. The Developer is issuing this Certificate of txbstantial Compl6 ion to the
City in accordance with the Agreement toedenc tk Developer's satisfaction
of all material obligations and covenants wi eectto such Project.
4. The acceptance or the failure of the City 1 in writing to this
Certificate within thirty (30) dayf' b "the date of delivery } of this Certificate to the
City (which written objection, ifuny, ffMjsae delivery Ao the Developer prior to
the end of such thirty (30) days) sallvx'e Qth satisfaction of the
Developer's agreementspand covenants to peffiffifthe work and complete the
Cannonball Beec e Ro PProject. _
Upon such acceptance byhe City, the Developer may record this Certificate in
the office of the Ke d 11 CountyRe or der of D6eds. This Certificate is given without
prejudice to any right cf�pe= which exist as of the date hereof or which
may subsequently come intb�ing. Terms not otherwise defined herein shall have the
meaning a stieil;a teris_in the Agreement.
I I E 7
W�
� 3 -s
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IN WITNESS WHEREOF, the undersigned has hereunto set his /her hand this 1
II
day of ,
CANNONBALL LLC, an Illinois limited liability company
By: THE HARLEM IRVING COMPANIES
BY:
Title:
I
ACCEPTED:
UNITED CITY OF YORKVILLE, ILLINOIS
By:
Name:
Title: = y
(Insert Notary Fm(s) and Legal D_ iption)
s P_ ¢ VN
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EXHIBIT E
CERTIFICATE OF CANNONBALL BEECHER ROAD PROJECT COSTS
TO:
United City of Yorkville, Illinois
Office of Treasurer
Yorkville, Illinois
Attention: -
o- -
Re:
Terms not otherwise defined herein shall have<<erieaning ascribed to such
terms in the Development Agreement dated as of _- y- % , 2006 (the == y`Agre�ement'j,
between the City and CANNONBALL LLC, an Illinois limited liability conipanjy (the
;,
"Developer'. In connection with said AgreemdM the undersigned hereb states and
certifies that:'_.
1. Each item listed on Schedule 1 hereto isareimbursable Cannonball
Beecher Road Project cost ands incurred in caiin with the
construction of the Cannonball"Beeeher -,Road Proj6d
2. These the Cannonball Beec er fcosts have been paid by the
Developer and are pqiiffbursable under the SSAaw, the Bond Ordinance and
�3
the Agreement. �J �'
AW
VI NL
3. Each 3 e m; listed ora:'Schedule 1 I s not previously been paid or
reimbursed �frorn one i e d from_tl e Fund or any money derived from any
fund established piftsuant'16U.' rid Ordinance, and no part thereof has
been�i ch ded in any� er certificate previously filed with the City.
4 There s'izot beenflecf with or served upon the Developer any notice of
,r1y lien, right of °Ten or ata hment upon or claim affecting the right of any
person, firm or corQration to receive payment of the amounts stated in this
re Est, except tole extent any such lien is being contested in good faith.
se` 3
T_
5. 11 ?vork .fd7which payment or reimbursement is requested has been
performe r&: ordance with the Concept Site Plan and the Agreement.
f3
-�S
6. If any cost item to be reimbursed under this Certificate is deemed not to
constitute a reimbursable Cannonball Beecher Road Project cost within the
meaning of the SSA Law, the Developer shall have the right to substitute other
eligible Cannonball Beecher Road Project costs for payment hereunder as are
eligible under the application statutory authority.
7. The Developer is not in default or breach of any material term or
condition of the Agreement beyond the applicable cure period, if any.
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Dated this - day of
By: CANNONBALL LLC, an Illinois limited liability company
By: THE HARLEM IRVING COMPANIES
Name:
Title:
Approved for Payment this day of
Ul- A
UNITED CITY OF YORKVILLE, ILLINOIS
41
-.;-- N P,
By:
Name:
Title:
2
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i
I
SCHEDULEI
CANNONBALL BEECHER ROAD PROJECT COSTS
+ �_ .
j__-.
VM
A A - �
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EXHIBIT F
CONCEPT SITE PLAN
E-7
Y
'� B®
E '1
s
_
LEM
N '
e
i
; � 4 ,���
milli I co
OMER I)EVaOPER: PROJECT. _
$ O 4104 'ruw a ue � a CANNONBALL T —
a+choo. tu�pY aoeaa - �' a YGRCVaLq uHo�s
I $
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EXHIBIT G
TARGET TRACT
LEGAL DESCRIPTION
THAT PART OF THE SOUTHWEST Q UARTER OF SECTION 20 AND THE NORTHWEST
QUARTER OF SECTION 29, TOWNSHIP 37 NORTH, RANGE 7 EAST OF THE THIRD
PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF THE SOUTHWEST QUARTER OF
SAID SECTION 20; THENCE NORTH 01 DEGREES 13 MINUTES 53 "`SECONDS WEST
ALONG THE WEST LINE OF SAID SOUTHWEST QUARTE20.80 FEET; THENCE
NORTH 88 DEGREES 46 MINUTES 07 SECONDS EASTp4gf.811 EET FOR THE POINT
OF BEGINNING; THENCE NORTH 70 DEGREES 57 MFG- UTESflSECONDS EAST,
68.07 FEET; THENCE ALONG A CURVE TO THE RIGHT, HAVING= A RADIUS OF
143.00 FEET AN ARC DISTANCE OF 58.66 FEET AND A CHOI 16 EARING OF
NORTH 82 DEGREES 42 MINUTES 45 SEC ONDS: ..EAST; THENC -SOUTH 85 Te
DEGREES 32 MINUTES 10 SECONDS EAST - 964.10 FEET; THENCEIP SOUTH 04
DEGREES 27 MINUTES 50 SECONDS WEST, S3§ 5 F TO THE SOUTH LINE OF
THE SOUTHWEST QUARTER OF SAID SECTION 2(3ND THE NORTH LINE OF THE
r
NORTHWEST QUARTER OF SAID SECTION 29; THENCE CONTINUING SOUTH 04
DEGREES 27 MINUTES 50 SECONIYS NEST 198. FEE'S; THENCE NORTH 85
DEGREES 32 MINUTES 10 SECOIFlS4ES_T 483.10 FT; THENCE SOUTH 04
_,_.__
DEGREES 27 MINUTES 50 SECONDS_ WES °2$0 00 FEET; THENCE NORTH 85
c =x:8e;
DEGREES 32 MINUTES 10 SECONDS WEST 4 0. -FEET; THENCE NORTH 04
�
DEGREES 27 MINUTES O CONDS =BAST, 280 0 FEET; THENCE NORTH 85
DEGREES 32 MINU'I jV10 SECONDS 1Y ST, 442:70 FEET; THENCE NORTH 01
DEGREES 14 MINWES 12 SE ONDS WEST, 82.46 FEET; THENCE NORTH 01
DEGREES 13 MINUTES 53 SECONDS WEST; =1.77 FEET TO THE NORTH LINE OF
THE NORTHWEST QUARTER ;SAID. SECTION 29 AND THE SOUTH LINE OF THE
SOUTHWEST QUARTER- 40W�SMIT "- ECTION 20; THENCE CONTINUING NORTH 01
DEGREES = 1 , MINUTES 53 SECONDS WEST, 304.59 FEET; THENCE ALONG A
CURVE T_CQTHE LEFD, HAVING A RADIUS OF 1050.00 FEET AN ARC DISTANCE OF
319.34 EET AND AV- HORD �BEAI7ING OF NORTH 09 DEGREES 56 MINUTES 39
SECONDS WEST TOLE POIi OF BEGINNING, ALL IN THE UNITED CITY OF
YOiME KENDALL COUNTY, ILLINOIS.
Legal Descrip 6&provided by:
SEC Group, Inc.4r
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S: \Client Data \Harlem Irving Development \07005 \Documents \07 -03 -15 Development Agreement SSA V4.doc
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PRELBUNARY MUTED OFFERING MEMORANDUM DATED , 2007
s NEW ISSUE BOOK -ENTRY ONLY NOT RATED
° y
° In the opinion of Foley & Lardner LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions
n j a
and, assuming among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax
Y b purposes under Section 103 of the Internal Revenue Code of 1986, as amended. In the opinion of Bond Counsel, interest on the Bonds is not a
S specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although such interest is included in
0.— adjusted current earnings when calculating corporate alternative minimum taxable income. Interest on the Bonds is not exempt from present State
T w of Illinois income taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or
the accrual or receipt of interest on, the Bonds. See the heading "TAX MATTERS "
0 0 �
w
y UNITED CITY OF YORKVILLE
.:
G o Kendall County, Illinois
H Special Service Area Number 2006 -113
o Ad Valorem Tag Bonds, Series 2007
- (Cannonball/Beecher Road Project)
o Dated: Date of Issuance % Due: March 1, 2028
This Limited Offering Memorandum is being furnished solely for consideration by prospective sophisticated purchasers of the United
g A City of Yorkville, Kendall County, Special Service Area Number 2006 -113, Ad Valorem Tax Bonds, Series 2007 (Cannonball/Beecher Road
°' Project) (the "Bonds ") with substantial financial resources and the experience and financial expertise to understand and evaluate the high degree of
L
o b c risk inherent in this investment. Purchase of the Bonds will constitute an investment secured solely by a pledge of the Revenues as defined herein)
8 ° and certain other amounts held in funds established pursuant to the Indenture (as defined herein). The purchase of the Bonds is an investment
W E y subject to a high degree of risk, including the risk of non payment of principal and interest. See "RISK FACTORS" herein.
° d o The Bonds are issuable only as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co.,
i~ as nominee of The Depository Trust Company, New Yor New York DTC . Individual purchases will be made in book en form only, in
4 , g P ry (" " ) P hY Y
p Q principal amounts of $100,000 or integral multiples of $5,000 in excess thereof. Beneficial Owners of the Bonds will not receive physical
c certificates representing their interest in the Bonds purchased. Principal of, premium, if any, and interest (payable on March 1 and September 1 of
each year, commencing September 1, 2007) on the Bonds are payable by The Bank of New York Trust Company, N.A., as Trustee, to DTC, which
y 5 will remit such principal, premium, if any, and interest to DTC's Participants, who in turn will be responsible for remitting such payments to the
Beneficial Owners of the Bonds, as described herein.
y 3 The Bonds are subject to optional, mandatory and special mandatory redemption prior to maturity as set forth herein.
O U
THE BONDS ARE BEING ISSUED PURSUANT TO THE SPECIAL SERVICE AREA TAX LAW OF THE STATE OF ILLINOIS,
o AS AMENDED, AND IN THE OPINION OF FOLEY & LARDNER LLP, CHICAGO, ILLINOIS, BOND COUNSEL, THE BONDS WILL
3 .g CONSTITUTE VALID AND LEGALLY BINDING LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY AND ONLY FROM THE
. REVENUES (AS DEFINED HEREIN) AND AMOUNTS ON DEPOSIT IN CERTAIN OF THE FUNDS ESTABLISHED AND MAINTAINED
'= a ° PURSUANT TO THE INDENTURE, AS SET FORTH HEREIN. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY AND
r- v ' NEITHER THE FULL FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE CITY, KENDALL COUNTY, THE STATE OF
ILLINOIS, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. NO HOLDER OF ANY
° BOND SHALL HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY TAXING POWER OF THE CITY (OTHER THAN THE LEVY
y N OF THE SPECIAL TAX) FOR PAYMENT OF THE PRINCIPAL AMOUNT OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2005
° BONDS.
o w
5 E .S
. .0 o Price — %
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o •'—, The Bonds are offered when, as and if issued, subject to prior sale, withdrawal or modification of the offer without notice, the approving
E legal opinion of Foley & Lardner LLP, Chicago, Illinois, Bond Counsel, and certain other conditions. See "TAX MATTERS" herein. Certain legal
9 o matters will be passed upon for the Underwriter by Sonnenschein Nath & Rosenthal LLP, Chicago, Illinois, for the Developer by Polsky &
° 0 ; Associates Ltd., Chicago, Illinois, and or the City b John eth, Es Yorkville, Illinois. It is expected that the Bonds will be available
° g. f tY Y W Y 9, or
P f
delivery to DTC in New York, New York on or about 2007.
7 � U
OA y
�O o
o The date of this Limited Offering Memorandum is 1 2007.
n � y
p
v �
F U
Preliminary; subject to change.
LD41TED OFFERING MEMORANDUM
This Limited Offering Memorandum is being furnished by the United City of Yorkville, Kendall
County, Illinois (the "City") to a limited number (35 or less) of sophisticated investors or registered
investment companies under the Investment Company Act of 1940 solely for the purpose of each
investor's consideration of the purchase of the Bonds described herein, and is not to be used for any other
purpose or made available to anyone not directly concerned with the decision regarding such purchase.
This Limited Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to
buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for
such person to make such an offer, solicitation or sale. Interested investors are being provided the
opportunity to ask such questions and examine such documents and records as they may desire, and are
advised to contact the Underwriter to secure further information concerning the Bonds.
No dealer, broker, salesman or other person has been authorized to give any information or to
make an representation other than as contained in this Limited Offerin Memorandum in connection
y M
p g
with the limited offering described herein, and, if given or made, such information or representation must
not be relied upon as having been authorized. In accordance with, and as part of, its responsibilities to
investors under the federal securities laws, as applied to the facts and circumstances of this transaction,
the Underwriters have reviewed the information in this Limited Offering Memorandum, but does not
guarantee the accuracy or completeness of such information. Neither the delivery of this Limited
Offering Memorandum nor the sale of any of the Bonds shall imply that the information herein is correct
as of any time subsequent to the date hereof.
This Limited Offering Memorandum should be considered in its entirety and no one factor should
be considered more or less important than any other by reason of its position in this Limited Offering
Memorandum. Where statutes, reports, agreements or other documents are referred to herein, reference
should be made to such statutes, reports, agreements or other documents for more complete information
regarding the rights and obligations of parties thereto, facts and opinions contained therein and the subject
matter thereof.
The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance
upon exemptions contained in such act. The registration or qualification of the Bonds in accordance with
the applicable provisions of securities laws of the states in which the Bonds have been registered or
qualified and the exemption from registration or qualification in other states cannot be regarded as a
recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the
Bonds or the accuracy or completeness of this Limited Offering Memorandum. Any representation to the
contrary may be a criminal offense.
THE BONDS HAVE RISK CHARACTERISTICS WHICH REQUIRE CAREFUL ANALYSIS
AND CONSIDERATION BEFORE A DECISION TO PURCHASE IS MADE. THE BONDS SHOULD
BE PURCHASED BY INVESTORS WHO HAVE ADEQUATE EXPERIENCE TO EVALUATE THE
MERITS AND RISKS OF THE BONDS. PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE
THE CONTENTS OF THIS LIMITED OFFERING MEMORANDUM OR ANY PRIOR OR
SUBSEQUENT COMMUNICATION FROM THE UNDERWRITERS, THEIR AFFILIATES,
OFFICERS AND EMPLOYEES OR ANY PROFESSIONAL ASSOCIATED WITH THIS OFFERING
AS INVESTMENT OR LEGAL ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT
ITS OWN COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO FINANCIAL, LEGAL
AND RELATED MATTERS CONCERNING THE INVESTMENT DESCRIBED HEREIN.
14514220 \V -4
UNITED CITY OF YORKVILLE, ILLINOIS
MAYOR
Arthur F. Prochaska, Jr.
CITY ALDERMEN
Joseph Besco Jason Leslie
Jim Bock Marty Munns
Valerie Burd Rose Spears
Paul James Dean Wolfer
TREASURER
William Powell
CITY ADMINISTRATOR
John Crois
DIRECTOR OF PUBLIC WORKS
Eric Dhuse
FINANCE DIRECTOR
Susan Mika
CITY CLERK
Jacquelyn Milschewski
PROFESSIONAL SERVICES
BOND COUNSEL FINANCIAL ADVISOR
Foley & Lardner LLP Speer Financial, Inc.
Chicago, Illinois Chicago, Illinois
TRUSTEE
The Bank of New York Trust Company, N.A.
Chicago, Illinois
CITY'S COUNSEL
John Justin Wyeth, Esq.
Yorkville, Illinois
14514220 \V -4
TABLE OF CONTENTS
\
I | IN/m/�u'u`�/�/r�z u//�/EaoEa�/---------------------.---.-------.—.-----'
� 7I]E BONDS ................................................................................................................................................. 2
General Description of the Bonds ............................................................................................................. 2
i ^----p-----------------------'-----------'-----------------'~
System .......................................................................................................................... 5
SOURCES AND USES OF FUNDS ..................................................................................... Q
�
PLAN OF FINANCE .................................................................................................................................... 8
DEBT SERVICE REQUIREMENTS --.----------.--.-----------.-----.----..9
�
SECURITY AND SOURCE OF PAYMENT FOR ]]BE BONDS ............................................................... 9
General ...................................................................................................................................................... 9
� Ad Valorem Taxes .................................................................................................................................. lO
� Excess Business District Sales Taxes ..................................................................................................... l0
Projected Excess Business District Sales Taxes ..................................................................................... ll
Flow Funds ......................................................................................................................................... l3
Covenants City ............................................................................... l6
Tax Covenants _---------_---------.—.-------.----------------l7
Investment Funds ................................................................................................................................ l8
Enforcement of Payment of Ad Valorem Taxes ..................................................................................... lg
Representative Property Tax Rates ......................................................................................................... 21
Appraisal ---------.------.-----.------.----.----_-----------..22
Value Lien Ratio ................................................................................................................................. 22
THE ---------------------.—__---------..23
General .................................................................................................................................................... 23
Fees ......................................................................................................................................................... 33 )
Annual and Quarterly Reporting ..----.---_---.---.--.------_------.-----. 24
Payment of Developer [out ---------.--------------------.—'_-------. 24
�ooduuod ��v�uo� � l4
� ^^~.�.. ---_-------------.—.—.---------.-------.--
Revenues ................................................................................................................................................. 24
Assignment ur Sale of Property .--------------.—.—.----------.---------25
8lJNRvLARY PROJECT ................................................................................................................
(]eoeral-------------.----.----------.--.----------.--.-----.—... 26
Site Improvements .-------_--------.---.--------.—.—.-----.-----.--26
Special 8ervicea------.-------------------.------.----------.--.. 26
Zoning .....................................................................................................................................................
'
Construction ............................................................................................................................................ 27
Meubuoival —.-----------.-----------------.--.------.---------... 27
Interior .................................................................................................................................................... 27
IletuilIoline Properties -------------------_—.-------.--------_—.--27
Land Sales ............................................................................................................................................... 20
LeaseTenants .......................................................................................................................................... 28
Small Boutique ]Boolovazd---------.—.------.-------------------. 29
Cuomtnzutioo -------.--------.—.-------.-------.---.------. 29
Property Management —.-----------.---.---.—.--.----.-------_--.---... 29
� Environmental Site Assessment .............................................................................................................. 3O
Project Financing --.------------------------.------.--------.—.--30
Site Plan .................................................................................................................................................. 3l
TBE —.------------------.---.---------------------.32
THE CITY ................................................................................................................................................... 34
City Government and Services ---------------------.---------------..34
Transportation............................................................................................................ .............................34
YorkvillePublic Library ........................................................................................... ..............................3 5
CommunityLife ......................................................................................................... .............................35
Education................................................................................................................... .............................35
SocioeconomicInformation ....................................................................................... .............................36
Housing..................................................................................................................... ..............................3 7
Income...................................................................................................................... ..............................3 8
Wealth Indicators . ...............................
RetailActivity ............................................................................................................ .............................41
THE SPECIAL SERVICE AREA AND AD VALOREM TAX ................................... .............................41
TheAct ...................................................................................................................... .............................41
Establishment of the Special Service Area ................................................................ .............................42
Levy, Abatement and Collection of Ad Valorem Tax ............................................... .............................42
RISKFACTORS ............................................................................................................ .............................43
LimitedSource of Funds ............................................................................................ .............................43
Concentration of Ownership/Lease of Project ........................................................... .............................43
InformationNot Verified ........................................................................................... .............................44
Failureto Develop Project ......................................................................................... .............................44
Riskof Construction .................................................................................................. .............................44
Riskof Occupancy ..................................................................................................... .............................45
Risk of Changes in Market Conditions, Changes in General Economic Conditions and Future
Competition................................................................................................................ .............................45
Riskof Natural Disaster ............................................................................................. .............................45
Risk of Anchor Lease Terminations or Discontinued Operations ............................. .............................45
Local, State and Federal Land Use Regulations ........................................................ .............................45
OverlappingIndebtedness .......................................................................................... .............................46
ZoningApprovals ...................................................................................................... .............................46
Permits....................................................................................................................... .............................46
TaxDelinquencies ..................................................................................................... .............................46
Potential Delay and Limitations in Foreclosure Proceedings .................................... .............................47
Bankruptcy................................................................................................................. .............................47
Limitation on Remedies; No Acceleration ................................................................. .............................48
LimitedSecondary Market ........................................................................................ .............................48
Secondary Market and Prices ..................................................................................... .............................48
Lossof Tax Exemption .............................................................................................. .............................48
Risk of Legislative and Judicial Changes 49
UNDERWRITING....................................................................................................... ............................... 49
LIMITEDOFFERING ................................................................................................... .............................49
LEGALOPINIONS ....................................................................................................... .............................49
_ TAX EXEMPTION ........................................................................................................ .............................49
CONTINUINGINFORMATION .................................................................................. .............................51
TheCity ..................................................................................................................... .............................51
TheDeveloper ............................................................................................................ .............................51
FINANCIALADVISOR ................................................................................................ .............................51
LIMITEDOFFERING ................................................................................................... .............................52
NOLITIGATION .......................................................................................................... .............................52
TheCity ..................................................................................................................... .............................52
TheDeveloper ............................................................................................................ .............................52
NORATING ................................................................................................................ ............................... 52
MISCELLANEOUS..................................................................................................... ............................... 53
AUTHORIZATION..................................................................................................... ............................... 54
ii
APPENDICES i
APPENDIX A - Trust Indenture
APPENDIX B - Development Agreement
APPENDIX C - Bond Opinion
APPENDIX D - - Appraisal
i
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$
UNITED CITY OF YORKVII.LLE
Kendall County, Illinois
Special Service Area Number 2006 -113
Ad Valorem Tax Bonds, Series 2007
(Cannonball/Beecher Road Project)
INTRODUCTORY STATEMENT
This Limited Offering Memorandum, which includes the cover page and Appendices attached
hereto, is provided to furnish information in connection with the issuance and sale by the United City of
Yorkville, Kendall County, Illinois (the "City ") of $ * aggregate principal amount of Special
Service Area Number 2006 -113, Ad Valorem Tax Bonds, Series 2007 (Cannonball/Beecher Road
Project) (the `Bonds "). The Bonds will be issued by the City pursuant to (i) the Special Service Area Tax
Law of the State of Illinois 35 ILCS 200/27 -5 et seq. (the "Act "), (ii) Ordinance Number 2006 -_ of the
City adopted on , 2007 (the "Bond Ordinance ") providing for the issuance of the Bonds; and
(iii) the Indenture dated as of April 1, 2007 (the "Indenture ") between the City and The Bank of New
York Trust Company, N.A., as trustee (the "Trustee "). The Bonds will be issued as fully registered bonds
without coupons in book -entry only form in denominations of $100,000 or any integral multiple of $5,000
in excess thereof. Capitalized terms used but not defined herein shall have the meaning given such terms
in the Indenture. See "APPENDIX A —Trust Indenture."
The proceeds of the Bonds will be used by the City to (i) make a deposit to the Reserve Fund for
the Bonds in the amount equal to 10% of the principal amount of the Bonds (the "Required Reserve ");
(ii) fund certain costs of issuing the Bonds and certain administrative expenses of the City; (iii) pay
capitalized interest on the Bonds through September 1, 2009, and (iv) make a deposit of the balance of
proceeds of the Bonds to the Project Account of the Improvement Fund. See "THE BONDS." The
amount deposited into the Project Account of the Improvement Fund, together with the interest earnings
thereon, will be used to finance the cost of the Special Services (as defined herein) to be constructed by
Cannonball, LLC, an Illinois limited liability company (the "Developer ") which will benefit the City's
Special Service Area Number 2006 -113 ( "SSA "). The SSA is the area created pursuant to the Act within
the City consisting of 143.4 acres located at the northwest corner of the intersection of Illinois Route 34
and Cannonball Trail. The Developer proposes to develop a mix of retail stores, restaurants and office
space within the SSA with 800,000 square feet of gross leasable area (the "Project "). See "SUMMARY
OF THE PROJECT" and "SPECIAL SERVICE AREA AND AD VALOREM TAX."
The Bonds will be secured solely by (i) the ad valorem property tax or taxes levied by the City on
all taxable property within the SSA to pay for the Special Services (the "Ad Valorem Taxes "),
(ii) amounts deposited in the Debt Service Fund from Excess Business District Sales Taxes (as defined
below), (iii) amounts held in the Reserve Fund under the Indenture, and (iv) the investment income
interest, profits and other income derived from the investment thereof, as more fully described herein.
The City intends to abate the Ad Valorem Taxes to the extend of the Excess Business District Sales Taxes
deposited in the Debt Service Fund. See "SECURITY AND SOURCE OF PAYMENT FOR THE
BONDS" and "SPECIAL SERVICE AREA AND AD VALOREM TAX."
Contemporaneously with the issuance of the Bonds, the City will issue its Business District
Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project) (the "Business District Revenue
Bonds ") in the aggregate principal amount of $ to fund all or a portion of certain municipal
improvements in the Kendall Marketplace Business District created by the City pursuant to the Business
* Preliminary; subject to change.
14514220 \V -4
District Act (the "Business District ") whose boundaries are coterminous with the SSA. The Business
District Bonds are secured by the one -half of one percent (.5 %) Business District sales tax (the "Business ) }
District Sales Tax") levied by the City in the Business District on sales by retailers and servicemen
operating in the Business District. "Excess Business District Sales Taxes" means (i) while the Business
District Revenue Bonds remain outstanding, the Business District Sales Taxes that remain after payment
of debt service on the Business District Revenue Bonds, administrative expenses and the debt service
reserve requirement relating to the Business District Revenue Bonds, and (ii) after the Business District
Sales Bonds are retired and defeased, the Business District Sales Taxes.
INVESTORS ARE CAUTIONED THAT THE BONDS ARE BEING MARKE AND
SOLD ON THE BASIS OF THE AD VALOREM TAXES AND NOT ON THE BASIS OF THE
EXCESS BUSINESS DISTRICT SALES TAXES. NO ATTEMPT IS MADE IN THIS LIMITED
OFFERING MEMORANDUM TO ANALYZE THE ADEQUACY OF THE EXCESS BUSINESS
DISTRICT SALES TAXES TO BE AVAILABLE FOR DEBT SERVICE ON THE BONDS.
ACCORDINGLY, IN DECIDING WHETHER TO INVEST IN THE BONDS, POTENTIAL
INVESTORS SHOULD NOT RELY UPON THE AVAILABILITY OF EXCESS BUSINESS
DISTRICT SALES TAX. See "SECURITY AND SOURCE OF PAYMENT FOR THE BONDS ".
THE BONDS ARE BEING ISSUED PURSUANT TO THE SPECIAL SERVICE AREA TAX
LAW OF THE STATE OF ILLINOIS, AS AMENDED, AND IN THE OPINION OF FOLEY &
LARDNER LLP, CHICAGO, ILLINOIS, BOND COUNSEL, THE BONDS WILL CONSTITUTE
VALID AND LEGALLY BINDING LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY
AND ONLY FROM THE REVENUES (AS DEFINED HEREIN) AND AMOUNTS ON DEPOSIT IN
CERTAIN OF THE FUNDS ESTABLISHED AND MAINTAINED PURSUANT TO THE
INDENTURE, AS SET FORTH HEREIN. THE BONDS ARE NOT GENERAL OBLIGATIONS OF
THE CITY AND NEITHER THE FULL FAITH AND CREDIT NOR THE GENERAL TAXIING
POWER OF THE CITY, KENDALL COUNTY, THE STATE OF ILLINOIS, OR ANY POLITICAL
SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. NO HOLDER OF
ANY BOND SHALL HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY TAXING POWER
OF THE CITY (OTHER THAN THE LEVY OF THE SPECIAL TAX) FOR PAYMENT OF THE
PRINCIPAL AMOUNT OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2005 BONDS.
A copy of any document or agreement referred to herein may be obtained upon request from
William Blair & Company, L.L.C. (the "Underwriter").
THE BONDS
General Description of the Bonds
The Bonds shall be issued in denominations of $100,000 and any integral multiple of $5,000 in
excess thereof, shall be dated the date of delivery, and shall bear interest (calculated on the basis of a 360 -
day year of twelve 30 -day months) payable on the first day of each March and September of each year
beginning September 1, 2007 at the rate per annum set forth on the cover page hereof, and shall mature on
March 1, 2028.
The principal of, redemption premium, if any, and interest on the Bonds shall be payable in
lawful money of the United States of America. Principal of and redemption premium, if any, on the
Bonds shall be payable by the Trustee upon presentation and surrender of the Bonds as they become due
at the corporate trust office of the Trustee. Interest on the Bonds shall be payable by the Trustee to the
Bondholders by check or draft mailed to such Bondholders at their addresses as they appear on the Bond
2
I
Register on the Record Date. Principal of, redemption premium, if any, and interest payable to any
person holding Bonds in aggregate principal amount of $1,000,000 or more will be paid, upon the written
request of any such Bondholder in form and substance satisfactory to the Trustee, by wire transfer of
immediately available funds to an account within the United States of America designated by such
Bondholder on or before the Record Date.
If any principal of, redemption premium, if any, or interest on any Bond is not paid when due
(whether at maturity, by acceleration or call for redemption or otherwise), then the overdue installments
of principal and, to the extent permitted by law, interest and redemption premium, if any, shall bear
interest until paid at the same rate set forth on the cover page hereof.
The Depository Trust Company, New York, New York ( "DTC "), will act as securities depository
for the Bonds. Principal of, premium, if any, and interest on the Bonds will be paid by the Trustee
directly to DTC, which will remit such principal, premium, if any, and interest to DTC's Participants,
who, in turn will be responsible for remitting such payments to the Beneficial Owners of the Bonds. See
"THE BONDS — Book -Entry-Only System."
Redemption
Mandatory Sinking Fund Redemption. The Trustee shall redeem Bonds on March 1 in the years
and in the principal amounts and at a price of 100% of the principal amount of the Bonds to be redeemed
plus interest accrued to the redemption date, as follows:
Year Maturity Amount
*Maturity
On or before the thirtieth (30th) day prior to each such sinking fund redemption date, the Trustee
shall proceed to call the principal amount of the Bonds indicated above for redemption on the next March
1, and give notice of such call. At its option, to be exercised by delivery of an Officer's Certificate of the
City to the Trustee not more than 360 days nor less than 65 days preceding the applicable sinking fund
redemption date, the City may (a) deliver to the Trustee for cancellation, Bonds of the applicable maturity
date subject to redemption pursuant to the terms of the mandatory sinking fund in an aggregate principal
amount desired or (b) receive credit in respect of its sinking fund redemption obligation for any Bonds of
the applicable maturity date subject to redemption pursuant to the terms of the mandatory sinking fund
provided in the Indenture, which prior to said date have been canceled (otherwise than through the
operation of the sinking fund redemption schedule) by the Trustee and not theretofore applied as a credit
against such sinking fund redemption obligation. Each Initial Bond of the applicable maturity date so
delivered or previously redeemed shall be credited by the Trustee at the principal amount thereof against
the obligation of the City on such sinking fund redemption date, and the principal amount of Bonds to be
redeemed by operation of such sinking fund redemption schedule on such date shall be accordingly
reduced; and any excess over the principal amount of Bonds to be redeemed by operation of the sinking
Rind redemption schedule on any sinking fund redemption date shall be credited as specified in a
3
certificate of the City or, in the absence of such certificate against the next scheduled sinking fund
redemption.
Optional Redemption. The Bonds are subject to redemption by the City on or after March 1,
2017, in whole or in part at any time from any moneys that may be available for such purpose, upon
payment of the following redemption prices (expressed as a percentage of principal amount of Bonds to
be redeemed) plus interest accrued to the redemption date:
Redemption Dates Redemption Prices
March 1, 2017 through February 28, 2018 102%
March 1, 2018 through February 28, 2019 101%
March 1, 2019 and thereafter 100%
I
Special Mandatory Redemption. To the extent that moneys are transferred from the Improvement
Fund to the Debt Service Fund for purposes of redeeming the Bonds, the Bonds are subject to special
mandatory redemption in part in Authorized Denominations on the next scheduled Interest Payment Date
at a redemption price equal to 100% of the aggregate principal amount of the Bonds to be redeemed plus
accrued interest to the redemption date.
Selection of Bonds for Redemption. If less than all of the Bonds are called for redemption, they
shall be redeemed in inverse order of maturity and in inverse order of sinking fund installments within
any maturity (provided, however, that if an Event of Default has occurred and is continuing any Bonds
called for redemption shall be redeemed in proportion by maturity and within maturities in inverse order
of sinking fund installments), subject to selection by the Trustee as provided below. The portion of any
Bond to be redeemed shall be an Authorized Denomination or any multiple thereof and in selecting Bonds
for redemption, each Bond shall be considered as representing that number of Bonds which is obtained by
dividing the principal amount of such Bond by the minimum Authorized Denomination. If a portion of a
Bond shall be called for redemption, a new Bond in principal amount equal to the unredeemed portion
thereof shall be issued to the Bondholder upon the surrender thereof. If for any reason the principal
amount of Bonds called for redemption would result in a redemption of Bonds less than the Authorized
Denomination, the Trustee, to the extent possible within the principal amount of Bonds to be redeemed, is
hereby authorized to adjust the selection of Bonds for such purpose in order to minimize any such
redemption. Notwithstanding the foregoing, the Securities Depository for Book Entry Bonds shall select
the Bonds for redemption within particular maturities according to its stated procedures.
Notice of Redemption. (a) When Bonds (or portions thereof) are to be optionally redeemed, the
City shall give or cause to be given notice of the redemption of the Bonds to the Trustee no later than
forty-five (45) days prior to the redemption date or such shorter time as may be acceptable to the Trustee.
The notice may state (1) that it is conditioned upon the deposit of moneys, in an amount equal to the
amount necessary to effect the redemption, with the Trustee no later than the date that is five (5) Business
Days prior to the redemption date or (2) that the City retains the right to rescind such notice on or prior to
the scheduled redemption date (in either case, a "Conditional Redemption "), and such notice and optional
redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as
described in paragraph (d) below. The Trustee, at the expense of the City, shall send notice of any
redemption, identifying the Bonds or portions thereof to be redeemed, the redemption date and the
method and place of payment and the information required by paragraph (b), by first class mail to each
holder of a Bond called for redemption to the holder's address listed on the Bond Register. Such notice
shall be sent by the Trustee by first class mail between thirty (30) and sixty (60) days prior to the
scheduled redemption date. With respect to Book Entry Bonds, if the Trustee sends notice of redemption
to the Securities Depository pursuant to the Letter of Representations, the Trustee shall not be required to
give the notice set forth in the immediately preceding sentence. If notice is given as stated in this
4
I
paragraph (a), failure of any Bondholder to receive such notice, or any defect in the notice, .shall not affect
the redemption or the validity of the proceedings for the redemption of the Bonds.
(b) In addition to the foregoing, the redemption notice shall contain with respect to each
Bond being redeemed, (1) the CUSIP number, (2) the date of issue, (3) the interest rate, (4) the maturity
date, and (5) any other descriptive information determined by the Trustee to be needed to identify the
Bonds. If a redemption is a Conditional Redemption, the notice shall so state. The Trustee shall also
send each notice of redemption at least thirty (30) days before the redemption date to (A) any Rating
Service then rating the Bonds to be redeemed; (B) all of the registered clearing agencies known to the
Trustee to be in the business of holding substantial amounts of bonds of a type similar to the Bonds; and
(C) one or more national information services that disseminate notices of redemption of bonds such as the
Bonds such services to be identified by the Trustee. Each redemption notice shall also be sent to
participants of the Securities Depository and to Beneficial Owners as provided in the Indenture.
I
(c) On or before the date fixed for redemption, subject to the provisions of paragraph (a)
above and (d) below, moneys shall be deposited with the Trustee to pay the principal of, redemption
premium, if any, and interest accrued to the redemption date on the Bonds called for redemption. Upon
the deposit of such moneys, unless the City has given notice of rescission as described in paragraph (d)
below, the Bonds shall cease to bear interest on the redemption date and shall no longer be entitled to the
benefits of this Indenture (other than for payment and transfer and exchange) and shall no longer be
considered Outstanding.
(d) Any Conditional Redemption may be rescinded in whole or in part at any time prior to
the fifth Business Day prior to the redemption date if the City delivers an Officer's Certificate to the
Trustee instructing the Trustee to rescind the redemption notice. The Trustee shall give prompt notice of
such rescission to the affected Bondholders. Any Bonds subject to Conditional Redemption where
redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event
of Default. Further, in the case of a Conditional Redemption, the failure of the City to make funds
available in part or in whole on or before the redemption date shall not constitute an Event of Default, and
the Trustee shall give Immediate Notice to the .Securities Depository or the affected Bondholders that the
redemption did not occur and that the Bonds called for redemption and not so paid remain Outstanding.
Purchase of Bonds. The Trustee, upon the written request of the City shall purchase Bonds as
specified by the City in the open market at a price not exceeding a price set by the City. Such purchase of
Bonds shall be made with funds provided by the City and not with any portion of the Trust Estate or any
Defeasance Obligations. Upon purchase by the Trustee, such Bonds shall be treated as delivered for
cancellation. Nothing in this Indenture shall prevent the City from purchasing Bonds on the open market
without the involvement of the Trustee and delivering such Bonds to the Trustee for cancellation. Bonds
purchased which are subject to the mandatory sinking fund redemption shall be credited against future
mandatory sinking fund redemption payments. The principal amount of Bonds to be redeemed by
optional redemption under this Indenture may be reduced by the principal amount of Bonds purchased by
the City and delivered to the Trustee for cancellation at least forty-five (45) days prior to the redemption
date.
Book -Entry -Only System
THE INFORMATION IN THIS SECTION HAS BEEN FURNISHED BY THE DEPOSITORY
TRUST COMPANY. NO REPRESENTATION IS MADE BY THE UNDERWRITERS, THE CITY OR
THE DEVELOPER AS TO THE COMPLETENESS OR ACCURACY OF SUCH INFORMATION OR
AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION
SUBSEQUENT TO THE DATE HEREOF. NO ATTEMPT HAS BEEN MADE BY THE
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UNDERWRITERS, THE CITY OR THE DEVELOPER TO DETERMINE WHETHER DTC IS OR
WILL BE FINANCIALLY OR OTHERWISE CAPABLE OF FULFILLING ITS OBLIGATIONS. )'
NEITHER THE CITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR
OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR THE PERSONS FOR
WHICH THEY ACT AS NOMINEES WITH RESPECT TO THE BONDS, OR FOR ANY PRINCIPAL,
PREMIUM, IF ANY, OR INTEREST PAYMENT THEREOF.
The Depository Trust Company ( "DTC "), New York, New York, will act as securities depository
for the Bonds. The Bonds will be issued as fully- registered securities registered in the name of Cede &
Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative
of DTC. One fully- registered Bond certificate will be issued for the Bonds, in the aggregate principal
amount of such issue, and will be deposited with DTC.
DTC, the world's largest depository, is a limited - purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million
issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market
instruments from over 100 countries that DTC's participants ( "Direct Participants ") deposit with DTC.
DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book -entry transfers and pledges
between Direct Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned
subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC, in turn, is owned by a I
number of Direct Participants of DTC and Members of the National Securities Clearing Corporation,
Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, FICC, and
EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American
Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system
is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust
companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ( "Indirect Participants "). DTC has Standard & Poor's highest
rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond (`Beneficial Owner ") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their-
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
6
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain
steps to augment transmission to them of notices of significant events with respect to the Bonds, such as
redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example,
Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of notices be provided
directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within issue are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the
Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede &
Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice
is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detailed
information from City or Trustee, on payable date in accordance with their respective holdings shown on
DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant and not of DTC nor its
nominee, Trustee, or City, subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or
such other nominee as may be requested by an authorized representative of DTC) is the responsibility of
the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at
any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event
that a successor securities depository is not obtained, Bond certificates are required to be printed and
delivered.
The City may decide to discontinue use of the system of book -entry transfers through DTC (or a
successor securities depository). In that event, Bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book -entry system has been obtained
from sources that the City believes to be reliable, but City takes no responsibility for the accuracy thereof.
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The City may decide to discontinue use of the system of book -entry transfers through DTC (or a
successor securities depository). In that event, the Bond certificates will be printed and delivered.
THE TRUSTEE, THE DEVELOPER AND THE CITY WILL NOT HAVE ANY
i RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANT, ANY PERSON CLA 41NG A
BENEFICIAL OWNERSHIP INTEREST IN ANY BOND UNDER OR THROUGH DTC OR ANY
PARTICIPANT, OR ANY OTHER PERSON THAT IS NOT SHOWN ON THE REGISTRATION
BOOKS OF THE TRUSTEE AS BEING A BONDOWNER, WITH RESPECT TO THE ACCURACY
OF ANY RECORDS MAINTAINED BY DTC OR ANY PARTICIPANT, THE PAYMENT BY DTC
OR ANY PARTICIPANT OF ANY AMOUNT IN RESPECT OF PRINCIPAL OF OR PREMIUM, IF
ANY, OR INTEREST ON ANY BOND, ANY NOTICE THAT IS REQUIRED TO BE GIVEN TO
BONDOWNERS UNDER THE BOND ORDINANCE (EXCEPT IN CONNECTION WITH CERTAIN
NOTICES OF DEFAULT AND REDEMPTION AND ANY NOTICES REQUIRED IN CONNECTION
WITH CONTINUING DISCLOSURE REQUIREMENTS, IF APPLICABLE), THE SELECTION BY
DTC OR ANY PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A
PARTIAL REDEMPTION OF THE BONDS, OR ANY CONSENT GIVEN OR OTHER ACTION
TAKEN BY DTC OR ITS NOMINEE AS THE REGISTERED OWNER OF THE BONDS.
ESTIMATED SOURCES AND USES OF FUNDS
Sources:
Bond Proceeds
Interest Earnings
Total
Uses:
Special Services
Capitalized Interest
Required Reserve
Administrative Expense Fund
Costs of Issuance
Total
( ' ) Interest earnings are calculated assuming earnings of 3% on the Reserve Fund and 1%
on the Improvement Fund.
PLAN OF FINANCE
The proceeds of the Bonds will be used by the City to (i) make a deposit to the Reserve Fund for
the Bonds in the amount of the Required Reserve; (ii) fund capitalized interest on the Bonds through
September 1, 2009, (iii) fund certain costs of issuing the Bonds; and (iv) make a deposit of the balance of
the proceeds of the Bonds to the Improvement Fund. The amount deposited into the Improvement Fund,
together with the interest earnings thereon, will be used to finance the cost of constructing the Special
Services. See "SUMMARY OF THE PROJECT— Special Services."
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DEBT SERVICE REQUIREMENTS
The following table sets forth the debt service schedule for the Bonds based on the maturity and
interest rate set forth on the cover of this Limited Offering Memorandum, assuming no redemptions other
than mandatory sinking fund redemptions are made:
Debt Service Requirements
Bond
Year
Ending Principal Interest Annual
2007
2008
2008
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
SECURITY AND SOURCE OF PAYMENT FOR THE BONDS
General
The Bonds and the interest thereon are limited obligations of the City secured and payable solely
from the Revenues. "Revenues" include (i) the Ad Valorem Taxes as and when received by the City,
(ii) Excess Business District Sales Tax, (iii) any other funds of the City deposited in the Debt Service
Fund, and (iv) investment income with respect to any moneys held by the Trustee in the funds created
pursuant to the Indenture. The term "Revenues" does not include any moneys or investments or
investment income in the Rebate Fund.
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Ad Valorem Taxes
11
Pursuant to the Bond Ordinance there has been levied an Ad Valorem Tax upon all taxable real
property within the SSA sufficient to pay and discharge the principal of the Bonds at maturity or
j mandatory sinking fund redemption dates and to pay interest on the Bonds for each year.
The Clerk of the City has been directed to file a certified copy of the Bond Ordinance, and an
accurate map of the SSA, with the County Clerk of the County. The Ad Valorem Tax shall be divided
among all taxable real property within the SSA.
On February 2 of each year, the Trustee shall determine the amounts on deposit in the Debt
j Service Fund on such February 2, after application on each Accounting Date of moneys under the
Indenture (the "Deposit ").
On or before February _ of each year, the Trustee will provide notification containing the
amount of the Deposit to the City and request that the City abate, no later than February 28 of each year,
the Ad Valorem Taxes for the current year in an amount equal to the Deposit. By proper proceedings, the
City shall direct the abatement of such Ad Valorem Taxes as evidenced by the notification provided by
the Trustee.
The City shall take all actions which shall be necessary to provide for the levy, extension,
collection and application of the taxes levied by the Bond Ordinance, including enforcement of such taxes
by institution of foreclosure procedures as provided by law.
Excess Business District Sales Taxes
I ,
The Business District Act, 65 ILCS 5/11- 74.3 -1 et seq. (the "Business District "), permits an
Illinois municipality to create and maintain business districts to provide opportunities for development or
redevelopment and to attract sound and stable commercial development. In carrying out a business
district development or redevelopment plan, the corporate authorities of a municipality has the power,
among other things, to borrow funds as it may be deemed necessary for the purpose of business district
development and redevelopment, and issue such obligation or revenue bonds as it deems necessary, such
to applicable statutory limitations.
The corporate authorities of a municipality that has established a business district under the
Business District Act may, by ordinance or resolution, impose a Business District Retailers' Occupation
Tax upon all persons engaged in the business of selling tangible personal property, other than an item of
tangible personal property titled or registered with an agency of this State's government, at retail in the
business district at a rate not to exceed 1% of the gross receipts from the sales made in the course of such
business, to be imposed only in 0.25% increments.
If a Business District Retailers' Occupation Tax has been imposed, a Business District Service
Occupation Tax shall also be imposed upon all persons engaged, in the business district, in the business of
making sales of service, who, as an incident to making those sales of service, transfer tangible personal
property within the business district, either in the form of tangible personal property or in the form of real
estate as an incident to a sale of service. The tax shall be imposed at the same rate as the Business District
Retailers' Occupation Tax and shall not exceed 1% of the selling price of tangible personal property so
transferred within the business district, to be imposed only in 0.25% increments.
The Business District Retailers' Occupation Tax and the Business District Service Occupation
Tax may not be imposed on food for human consumption that is to be consumed off the premises where it
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is sold (other than alcoholic beverages, soft drinks, and food that has been prepared for immediate
consumption), prescription and nonprescription medicines, drugs, medical appliances, modifications to a
motor vehicle for the purpose of rendering it usable by a disabled person, and insulin, urine testing
materials, syringes, and needles used by diabetics, for human use.
On , the City created the Kendall Marketplace Business District (the "Business
District ") pursuant to the Business District Act. The boundaries of the Business District are coterminous
with the SSA. On , 2007, the City issued its Business District Revenue Bonds to fund all or a
portion of certain municipal improvements in the Business Distict. The Business District Revenue Bonds
are secured by the one -half of one percent (.5 %) Business District sales tax (the "Business District Sales
Tax ") levied by the City in the Business District on sales by retailers and servicemen operating in the
Business District.
Projected Excess Business District Sales Taxes
The information set forth under the column entitled "Projected Business District Sales Taxes" in
the following table is based upon the Estimate of Revenues (the "Report") prepared by Ehlers &
Associates, Inc., Chicago, Illinois, a copy of which is available upon request from the Underwriter.
THE REPORT DOES NOT PROVIDE ANY CONCLUSIONS AS TO THE ADEQUACY OF
THE EXCESS BUSINESS DISTRICT SALES TAX TO PAY THE PRINCIPAL OF OR INTEREST ON
THE BONDS.
i
I
11
Projected Excess Business District Sales Taxes Available for Bonds
Projected Projected
Projected Business Excess Business
Revenue Bond Business District District Sales
Year Year District Revenue Bond Administrative Taxes Available
Ending 12/1 Ending 3/1 Sales Tax Debt Service Expenses (2) For Bonds
2006 2008
2007 2009
2008 2010
2009 2011
2010 2012
2011 2013
2012 2014
2013 2015
2014 2016
2015 2017
2016 2018
2017 2019
2018 2020
2019 2021
2020 2022
2021 2023
2022 2024
2023 2025
2024 2026
2025 2027
2026 2028
(1) Based on the projections as provided to the Developer by Ehlers & Associates, Inc. showing projected Business
District Sales Taxes.
(2) As required pursuant to the Indenture and the indenture for the Business District Revenue Bonds.
INVESTORS ARE CAUTIONED THAT THE BONDS ARE BEING MARKE AND
SOLD ON THE BASIS OF THE AD VALOREM TAXES AND NOT ON THE BASIS OF THE
EXCESS BUSINESS DISTRICT SALES TAX. NO ATTEMPT IS MADE IN THIS LIMITED
OFFERING MEMORANDUM TO ANALYZE THE AVAILABILITY OR ADEQUACY OF THE
EXCESS BUSINESS DISTRICT SALES TAX TO BE AVAILABLE FOR DEBT SERVICE ON
THE BONDS. ACCORDINGLY, IN DECIDING WHETHER TO INVEST IN THE BONDS,
POTENTIAL INVESTORS SHOULD NOT RELY UPON THE AVAILABILITY OF EXCESS
BUSINESS DISTRICT SALES TAX.
Flow of Funds
The Trustee will establish the following funds and accounts under the Indenture: Improvement
Fund, consisting of a Project Account and an Issuance Expense Account; Debt Service Fund, including a
Capitalized Interest Account; Reserve Fund; Administrative Expense Fund; Special Redemption Fund;
and Rebate Fund. Until applied as provided in the Indenture and except where moneys have been
deposited with or paid to the Trustee pursuant to an instrument restricting the application of such moneys
to particular Bonds, the moneys and investments held in all Funds (other than amounts required to be on
12
deposit in the Rebate Fund) established under the Indenture and the proceeds of any remedies exercised
under Article VII of the Indenture shall be held in trust pursuant to the terms of the Indenture for the equal
and proportionate benefit of the holders of all Outstanding Bonds.
Bond Proceeds. The proceeds of the sale of the Bonds shall be delivered to the Trustee who shall
deposit $ of such proceeds in the Issuance Expense Account, $ representing
capitalized interest in the Capitalized Interest Account of the Debt Service Fund, an amount equal to the
Required Reserve in the Reserve Fund, $ in the Administrative Expense Fund, and the
balance of such proceeds in the Project Account.
Improvement Fund. Payments from the Improvement Fund shall be made by the Trustee as
follows:
(a) Payments from the Improvement Fund shall be made only upon receipt by the Trustee of
a requisition executed by the City in the form of Request for Payment set forth as an appendix to the
Indenture.
(b) Upon the later of six months from the Issue Date or the payment of all Issuance Costs (as
evidenced by a certificate of Issuer delivered to the Trustee), any moneys remaining in the Issuance
Expense Account shall be transferred to the Project Account.
(c) Upon completion of the Special Services (as evidenced by a certificate of the City
delivered to the Trustee), any moneys remaining in the Improvement Fund shall be transferred to the Debt
Service Fund to redeem Bonds pursuant to the Indenture, unless the City directs that such moneys be
deposited into the Reserve Fund, or applied to any other use, accompanied in either case by an opinion of
Bond Counsel to the effect that such application will not adversely affect any applicable exemption from
federal income taxation of the interest on the Bonds.
(d) To the extent an Event of Default due to the nonpayment of principal or interest on the
Bonds shall have occurred and be continuing and no other moneys are available under the Indenture to
cure such Event of Default, moneys on deposit in the Improvement Fund shall be applied by the Trustee
in accordance with Article VII of the Indenture.
Debt Service Fund. (a) The Trustee shall deposit into the Debt Service Fund (1) all Revenues,
and (2) all other amounts required or permitted hereunder to be deposited in the Debt Service Fund.
(b) Moneys on deposit in the Debt Service Fund shall be set aside and applied on each
Accounting Date as follows in the following order of priority:
(i) To the payment, when due on the next two succeeding Interest Payment Dates of
interest, on all Outstanding Bonds, including any accrued interest due in connection with
redemptions of Bonds;
(ii) To the payment, when due on the next succeeding March 1 of the principal of or
redemption premium on the Bonds then payable at maturity or upon redemption;
(iii) To the payments of any deficiencies in the Reserve Fund in accordance with the
requirements of the Indenture, including for reimbursement to the provider of any credit facility
deposited in the Reserve Fund;
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(iv) To the Administrative Expense Fund, an amount equal to the difference, if any,
between the Administrative Expense Fund Requirement and the amount then on deposit in the
Administrative Expense Fund;
a
(v) to the abatement of Ad Valorem Taxes pursuant to the Indenture; and
(vi) To the Special Redemption Fund, any surplus remaining on March 2 of each year
after application to the uses set forth in (i) -(v) above.
Reserve Fund. (a) The Trustee initially shall deposit in the Reserve Fund an amount equal to the
Required Reserve on the Bonds from the proceeds of the Bonds. The amount of any withdrawal for the
purpose of described in paragraph (b)(i) below shall be restored by the City from available Revenues in
the Debt Service Fund after satisfying the requirements of (b)(i) through (iii) under the caption " —Flow
of Funds —Debt Service Fund" above. In addition, if the fair market value of the investments in the
Reserve Fund is less than the Required Reserve on any valuation date, the difference between such
Required Reserve and the value of the Reserve Fund shall be restored by the City but solely from the first
available surplus Revenues in the Debt Service Fund.
,
(b) Moneys on deposit in the Reserve Fund shall be applied as follows:
(i) On the date of each required payment from the Debt Service Fund, moneys in the
Reserve Fund shall be applied to cure any deficiency in the Debt Service Fund with respect to
payments of principal of and interest on the Bonds when due and payable;
(ii) Upon delivery of an Officer's Certificate of the City delivered to the Trustee, any
amount in the Reserve Fund in excess of the Required Reserve on any valuation date shall be
transferred to the Debt Service Fund.
(c) The City shall be permitted to substitute a letter of credit, surety bond or other credit
enhancement (each, a "credit facility ") for funds on deposit in the Reserve Fund, provided that:
(i) the credit facility (including any replacement credit facility) is issued by a bank,
trust company, national banking association or insurance company whose unsecured long term
debt obligations (in the case of a bank, trust company or national banking association) or whose
claims paying abilities (in the case of an insurance company) are rated by a Rating Service, at the
time the credit facility is issued and at the time of each extension or renewal thereof, in one of the
two highest rating categories maintained by such Rating Service at the time of substitution;
(ii) the issuer of the credit facility does not receive as security for any reimbursement
obligation in respect of the credit facility any lien, security interest or other similar right or
interest in any property within the Trust Estate which is superior to the rights of the Trustee in
respect of such property;
(iii) the credit facility (including any replacement credit facility, if provided by a
different issuer) has an initial term of not less than three (3) years and any extension, renewal or
replacement (if provided by the same issuer) thereof has a term of not less than one year;
(iv) the Trustee is authorized and has the duty and right to draw on the credit facility
to satisfy the purposes for which the Reserve Fund was established; and
14
(v) The Trustee shall receive an opinion of Counsel to the effect that all of the
requirements set' forth above have been satisfied and an opinion of Bond Counsel to the effect that
the substitution of the credit facility will not, in and of itself, adversely affect the tax- exempt
status of the Bonds.
Upon such substitution, funds on deposit in the Reserve Fund which, when added to the face
amount of the credit facility, exceed the Required Reserve on all Outstanding Bonds shall be applied as
provided in paragraph (b)(ii) above. Thereafter, the credit facility shall be considered a part of the
Reserve Fund and the amount available thereunder shall be included in any calculation of the amount
required to be retained in the Reserve Fund; provided that, (A) if the sum of the amount available under
the credit facility and the amount of moneys on deposit in the Reserve Fund exceeds the amount required
to be on deposit pursuant to paragraph (a) above, the City shall be permitted to (i) cause the amount
available under the credit facility to be reduced by an amount equal to such excess, or (ii) direct that the
excess moneys be applied as permitted under paragraph (b)(ii) above, and (B) if the credit facility is not
extended, renewed or replaced at least three (3) months prior to its scheduled expiration or termination
date, the Trustee shall, not later than five days prior to such date, draw on the credit facility for the full
amount thereof.
(d) If there are cash and Eligible Investments on deposit in the Reserve Fund in addition to a
credit facility, such cash and Eligible Investments will be drawn on prior to any draws on such credit
facility.
Rebate Fund. The City has covenanted to calculate and pay directly to the government of the
United States of America all amounts due for payment of "arbitrage rebate" under Section 148(f) of the
Code with respect to the Bonds. Accordingly, no amounts are expected to be deposited in the Rebate
Fund. The City may deposit with the Trustee or direct the Trustee to deposit in the Rebate Fund amounts
held in any Fund hereunder for any or all Bonds (which direction shall specify the procedures for
collection and payment of amounts due in respect of arbitrage rebate) if (a) required under to Section
148(f) of the Code, or (b) the City determines that the funding of the Rebate Fund prior to the due date of
any payment to the United States of America is desirable and appropriate. The Rebate Fund is a trust
fund, but amounts therein do not constitute part of the Trust Estate. Amounts on deposit in the Rebate
Fund may be used solely to make payments to the United States of America under Section 148 of the
Code and to pay costs related to the calculation of the amounts due. Upon satisfaction of the City's
covenants described above, any amounts remaining in the Rebate Fund shall be applied as described
under the caption " —Flow of Funds— Special Redemption Fund" below.
Administrative Expense Fund. The Administrative Expense Fund shall be used to pay
Administrative Expenses. Moneys on deposit in the Administrative Expense Fund shall be applied to the
payment of any Administrative Expenses requested by the City to be paid. All amounts in the
Administrative Expense Fund in excess of the Administrative Expense Fund Requirement shall be
transferred to, and deposited in, the Debt Service Fund.
Special Redemption Fund. (a) When the amount on deposit in the Special Redemption Fund on
any date equals $5,000, such amount shall be used to optionally redeem the Bonds as described under
"THE BONDS— Redemption— Optional Redemption" above. On each such date, the Trustee shall
withdraw from the Special Redemption Fund and pay to the owners of the Bonds the amounts to redeem
the Bonds.
(b) Any amounts contained in the Special Redemption Fund on the final maturity date of the
Bonds shall be used to pay outstanding debt service on the Bonds.
15
(c) Moneys on deposit in the Special Redemption Fund shall be invested at a yield equal to
or less than the yield on the Bonds or in obligations the interest on which is exempt from inclusion in the
gross income of the holder under Section 103 of the Code to the extent such moneys are on deposit or are
expected to be on deposit in the Special Redemption Fund for greater than thirteen (13) months.
Covenants of the City
In addition to any other covenants and agreements of the City contained in the Indenture or the
Bond Ordinance, the City further covenants and agrees with the Bondholders and the Trustee as follows:
(a) To take all actions, if any which shall be necessary, in order further to provide for the
levy, extension, collection and application of the Ad Valorem Tax including enforcement of the Ad
Valorem Tax by institution of foreclosure proceedings as provided by law;
(b) To not take any action which would adversely affect the levy, extension, collection and
application of the Ad Valorem Tax levied pursuant to the Bond Ordinance and Indenture, except to abate
the Ad Valorem Tax to the extent permitted by the Indenture;
(c) To comply with all requirements of the Act, the Bond Ordinance and other applicable
present and future laws concerning the levy extension and collection of the Ad Valorem Tax levied
pursuant to the Bond Ordinance and Indenture, in each case so that the City shall be able to pay the
principal of and interest on the Bonds as they come due and replenish the Reserve Fund to the Required
Reserve and it will take all actions necessary to assure the timely collection of the Ad Valorem Tax,
including without limitation, the enforcement of any delinquent Ad Valorem Tax by providing Kendall
County with such information as is deemed necessary to enable the County to include any property
subject to delinquent Ad Valorem Tax in the County Collector's annual tax sale and in the event the tax
lien is forfeited at such tax sale, by the commencement and maintenance of an action to foreclose the lien
of any delinquent Ad Valorem Tax, all in the manner provided by law;
(d) To not encumber, pledge or place any charge or lien upon any of the Ad Valorem Tax or
other amounts pledged to the Bonds superior to, or on a parity with, or junior to, the pledge and lien
created in the Indenture for the benefit of the Bonds, except as permitted by, or specifically set forth in,
the Indenture;
(e) To take all actions which are necessary to be taken (and avoid any actions which it is
necessary to avoid being taken) so that interest on the Bonds will not be or become included in gross
income for federal income tax purposes under existing law;
(f) To keep, or cause the Trustee to keep, proper books of record and accounts, separate from
all other records and accounts of the City, in which complete and correct entries will be made of all
transactions relating to the deposits to and expenditure of amounts disbursed from the Funds and
Accounts created under the Indenture and the Ad Valorem Tax;
(g) To take all actions which are necessary to be taken to enforce the City's rights under the
Development Agreement;
(h) To make the Bond Register available at reasonable times and under reasonable
regulations established by the Bond Registrar, to be inspected and copied by or delivered to the City, the
Trustee, the holders of 25% or more in principal amount of the Bonds then Outstanding, or a designated
representative thereof;
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(i) To furnish to the Trustee, the Original Purchaser and the Beneficial Owner of $500,000
or more in Bonds who so requests, within ten (10) days of receipt by the City, a copy of each annual audit
of the City, the schedule of tenants and lease expiration dates for each tenant's lease provided to the City
by the Developer, any publicly available information received from the Illinois Department of Revenue of
the Business District Sales Taxes, and any abatement ordinance adopted by the Corporate Authorities
abating any of the Ad Valorem Taxes; and
(j) To provide or cause the Trustee to provide to the Original Purchaser and to the Beneficial
Owner of $500,000 or more in Bonds who so requests, copies of any reports (including quarterly
construction progress reports) or disclosure which the Developer provides to the City or the Trustee
pursuant to the terms of the Development Agreement.
Tax Covenants
(a) The City covenants that it will neither make nor direct the Trustee to make any
investment or other use of the proceeds of the Bonds that would cause such Bonds to be "arbitrage bonds"
as that term is defined in Section 148(a) of the Code, and that it will comply with the requirements of the
Code throughout the term of such Bonds. The Trustee covenants that in those instances where it exercises
discretion over the investment of funds, it shall not knowingly make any investment inconsistent with the
foregoing covenants.
(b) The City covenants that it (i) will take, or use its best efforts to require to be taken, all
actions that may be required of the City for the interest on the Bonds to be and remain not included in
gross income for federal income tax purposes and (ii) will not take or authorize to be taken any actions
within its control that would adversely affect that status under the provisions of the Code.
(c) The City further covenants as follows with respect to the requirements of Section 148(f)
of the Code, relating to the rebate of "excess arbitrage profits" (the "Rebate Requirement ") to the United
States:
(i) Unless an applicable exception to the Rebate Requirement is available to the
City, the City will meet the Rebate Requirement.
(ii) Relating to applicable exceptions, the City shall make such elections under the
Code as it shall deem reasonable and in the best interests of the City. If such election may result
in a "penalty in lieu of rebate" as provided in the Code, and such penalty is incurred (the
"Penalty "), then the City shall pay such Penalty.
(iii) The City shall, not less frequently than annually, cause to be transferred to the
Rebate Fund the amount determined to be the accrued liability under the Rebate Requirement or
Penalty. The City shall cause to be paid to the United States, without further order or direction
from the Legislative Authority, from time to time as required, amounts sufficient to meet the
Rebate Requirement or to pay the Penalty.
(iv) Interest earnings in the Debt Service Fund and the Reserve Fund are hereby
authorized to be transferred, without further order or direction from the Legislative Authority,
from time to time as required, to the Rebate Fund for the purposes herein provided; and proceeds
of the Bonds, investment earnings or amounts on deposit in any of the other funds and accounts
created hereunder and any other funds of the City are also hereby authorized to be used to meet
the Rebate Requirement or to pay the Penalty, but only if necessary after application of
investment earnings as aforesaid and only as appropriated by the Legislative Authority.
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Investment of Funds
Moneys on deposit in the Funds established under the Indenture shall be invested and reinvested
by the Trustee as follows:
(a) All moneys on deposit in Funds shall be invested in Eligible Investments which shall
mature, or be subject to repurchase, withdrawal without penalty or redemption at the option of the holder
on or before the dates on which the amounts invested are reasonably expected to be needed for the
purposes hereof.
(b) All purchases or sales of Eligible Investments shall be made at the direction of the City
(given in writing or orally, confirmed in writing). If the City elects to give the Trustee oral investment
instructions and the Trustee in its discretion elects to act upon such oral investment instructions, the
Trustee's understanding of such oral investment instructions shall be deemed controlling. The Trustee
shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's
reliance upon and compliance with such oral investment instructions notwithstanding such oral
investment instructions conflict or are inconsistent with a subsequent written investment instruction. The
Trustee may conclusively rely upon such instructions as to both the suitability and legality of the directed
investments. The Trustee may make any and all such investments and such investments through its own
investment department or that of its affiliates or subsidiaries, and may charge its ordinary and customary
fees for such trades, including cash sweep account fees.
(c) (1) Any securities or investments held by the Trustee may be transferred by the Trustee,
if required in writing by the City, from any of the Funds or accounts mentioned in Article IV to any other
Fund or account mentioned in Article IV at the then current market value thereof without having to be
sold and purchased or repurchased; provided, however, that after any such transfer or transfers, the
investments in each such Fund or account shall be in accordance with the provisions as stated in this
Indenture; and (2) whenever any other transfer or payment is required to be made from any particular
Fund, such transfer or payment shall be made from such combination of maturing principal, redemption
premiums, liquidation proceeds and withdrawals of principal as the Trustee deems appropriate for such
purpose.
(d) Neither the City nor the Trustee shall be accountable for any depreciation in the value of
Eligible Investments or for any losses incurred upon any authorized disposition thereof.
(e) Subject to the foregoing, the Trustee is expressly authorized to invest moneys in two or
more Funds in a single investment, provided that a portion of the investment allocable to each such Fund,
and all payments received with respect to such allocable portion, shall be applied in accordance with the
applicable provisions governing such Fund hereunder.
(f) Prior to the completion of the Special Services, investment income on amounts on deposit
in the Reserve Fund, the Debt Service Fund and the Administrative Expense Fund shall be transferred to
the Improvement Fund to the extent that no deficiency will exist in the Reserve Fund or the Debt Service
Fund after such transfer or shall be applied to such other purpose or purposes as directed by the City with
an opinion of Bond Counsel addressed to the Trustee to the effect that such application will not cause
interest on the Bonds to be includable in gross income for federal income tax purposes. After completion
of the Special Services, investment income on amounts on deposit in the Reserve Fund shall be
transferred to the Debt Service Fund to the extent that no deficiency will exist in the Reserve Fund after
such transfer. In all other situations, earnings from investment shall remain in the respective Fund where
earned.
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(g) Although the City recognizes that it may obtain a broker confirmation or written
statement containing comparable information at no additional cost, the City hereby agrees that
confirmations of permitted investments are not required to be issued by the Trustee for each month in
which a monthly statement is rendered.. No statement need be rendered for any fund or account if no
activity occurred in such fund or account during such month.
The Trustee shall determine the market value of the assets in each of the Funds established
hereunder annually on a date not earlier than three days prior to December of each year. As soon as
practicable after each such valuation date, the Trustee shall furnish to the City a report of the status of
each Fund as of such date. The Trustee shall also advise the City at such time of the amount then
available in the Debt Service Fund as a credit against the City's obligation to levy and collect the Ad
Valorem Taxes for deposit to the Debt Service Fund prior to the next valuation date. In computing the
value of assets in any Fund, investments shall be valued at the fair market value thereof and shall include
.accrued but unpaid interest on each investment, and all investments (valued as aforesaid) and accrued
interest thereon shall be deemed a part of such Funds. All Eligible Investments that mature within six (6)
months of any valuation date or are payable on demand shall be valued at par plus any accrued and
unpaid interest. Upon the request of the City, the Trustee shall also provide the City with monthly or
other periodic statements showing amounts deposited into and withdrawn from each Fund, the
investments made with amounts in each Fund and the investment income received from such investments.
Enforcement of Payment of Ad Valorem Taxes
The Kendall County Clerk intends to incorporate the Ad Valorem Tax into the regular ad valorem
property tax bill of property owners in the SSA. In Illinois, general ad valorem property taxes are levied
in one year and become payable during the following year. At the end of each collection year, the
Kendall County Treasurer applies to the Circuit Court of Kendall County, for a judgment for all unpaid
general ad valorem property taxes. The Circuit Court of Kendall County order resulting from that
application for judgment provides for a sale of all property with unpaid general ad valorem property
taxes. A public sale is held, at which time successful bidders pay the unpaid general ad valorem property
taxes plus penalties. The annual tax sale is usually held during November of any given year in Kendall
County. Unpaid general ad valorem property taxes accrue penalties at the rate of 1 -1/2% per month from
their due date until the date of sale. Taxpayers can redeem their property by paying the purchaser of the
delinquent taxes on the property at the general tax sale the amount paid at the sale, plus a penalty. If
redemption does not occur within two and one half years, the purchaser of the property at the tax sale can
receive a deed to the property which has been sold for delinquent taxes. Any delinquent Ad Valorem Tax
for any given year would be included in this general tax sale. Alternatively, as indicated above, a
municipality may seek enforcement of unpaid Ad Valorem Tax through foreclosure proceedings by
seeking adjudication of the existence of a lien and a finding of a failure to pay Ad Valorem Tax when
due. Upon making such a finding, a court having jurisdiction would enter a foreclosure decree
authorizing the sale of the property subject to the lien of the Ad Valorem Tax.
If a delinquency in the payment of the Ad Valorem Tax occurs, the City is authorized by the Act
to order institution of an action pursuant to Article 9 of the Illinois Municipal Code (65 ILCS 5/9 1 1, et
seq.) to foreclose any lien therefor securing the Ad Valorem Tax. In such action the real property subject
to the lien of the Ad Valorem Tax may be sold at a judicial foreclosure sale. The ability of the City to
foreclose the lien of delinquent unpaid Ad Valorem Tax may be limited in certain instances and may
require prior consent of the property owner in the event that the property is owned by any receivership of
the Federal Deposit Insurance Corporation (the "FDIC "). See "RISK FACTORS — Bankruptcy" and
"RISK FACTORS —Tax Delinquencies."
19
Such judicial foreclosure proceedings are not mandatory under the Act. However, in the
Indenture the City has covenanted with the holders of the Bonds to take all actions, all in the manner T ip
provided by law, if any, which shall be necessary to provide for the levy and extension, collection and
application of the Ad Valorem Tax, and to assure the timely collection of Ad Valorem Tax, by providing
the County with such information as is deemed necessary to enable the County to include any property
subject to delinquent Ad Valorem Tax in the County Collector's annual tax sale and in the event the tax
lien is forfeited at such tax sale, by the commencement and maintenance of an action to foreclose the lien
of any delinquent Ad Valorem Tax, all in the manner provided by law. For a description of this covenant,
as well as other events of default and remedies under the Indenture, see "APPENDIX A —Trust
Indenture."
No assurances can be given that a judicial foreclosure action, once commenced, will be
completed or that it will be completed in a timely manner. See "RISK FACTORS— Potential Delay and
Limitation in Foreclosure Proceedings" below. Article 9 of the Illinois Municipal Code provides that the
municipality or its assignee may file a complaint to foreclose a special service area tax lien in the same
manner that foreclosures are permitted by law in case of delinquent general taxes. The "law in case of
delinquent general taxes" to which the Illinois Municipal Code refers is the Illinois Revenue Code. Under
such foreclosure proceedings, the court adjudicates the existence of a default in the payment obligation
and authorizes a foreclosure sale; the sale is conducted and the proceeds distributed according to the
respective priorities; the successful bidder is given a certificate of sale; and, if the redemption period
expires without a redemption of the special service area taxes, the certificate of sale may be converted to a
deed. Although the municipality holds the lien for the local improvement and is therefore the proper
party to commence foreclosure procedures, bondholders with bonds secured by special service area taxes
may compel the municipality to perform its duty and use all lawful means, including foreclosure, to
collect the taxes out of which the bondholders are to be paid. Special service area taxes create a lien that
is superior to other liens and encumbrances, and when general property taxes and Ad Valorem Tax are
both delinquent, the proceeds of any foreclosure action, if insufficient to pay each in full, are divided
between them on a pro rata basis. If special service area taxes are not paid in full at a foreclosure sale,
and the lien amounts are bid in at such foreclosure sale, then unless the special service area taxes are then
redeemed through payment of the amount of the special service area taxes plus interest, the certificate of
sale can be converted into a deed to the property only after expiration of the applicable redemption period.
The Illinois Constitution prescribes certain minimum redemption periods for unpaid taxes on property,
including special service area taxes, but the Illinois General Assembly may create longer redemption
periods.
No assurances can be given that the real property subject to sale or foreclosure and sale will be
sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent installment of special
service area taxes. Neither the Act nor Article 9 of the Illinois Municipal Code requires the City to
purchase or otherwise acquire any lot or parcel of property offered for sale or subject to foreclosure if
there is no other purchaser at such sale. Article 9 of the Illinois Municipal Code does specify that the
special service area taxes will have the same lien priority in the case of delinquency as the priority of the
lien of ad valorem property taxes.
If the Reserve Fund is depleted and delinquencies in the payment of Ad Valorem Tax exist, there
could be a default or delay in payments to the Bondowners pending prosecution of foreclosure
proceedings and receipt by the City of foreclosure sale proceeds, if any. The amounts of the Maximum
Ad Valorem Tax are sufficient to pay the amounts required by the Indenture to be paid on the Bonds
(except with respect to a Mandatory Prepayment); however, there are no assurances that the taxes levied
will always be collected in their entirety.
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Representative Property Tax Rates
The following tables show the representative property tax rates for the City from 2001 through
2005 and the amount of tax extensions and collections for the levy year 1999 through 2005.
Representative Tax Rates Per $100 Equalized Assessed Valuation
Representative Tax Rates(1)
(Per $100 EAV)
Levy Year 2001 2002 2003 2004 2005
The City:
Corporate $ 0.2205 $ 0.1990 $ 0.1012 $ 0.0239 $ 0.0120
MRF 0.0481 0.0480 0.0612 0.0796 0.0617
Police Protection 0.0750 0.0713 0.0750 0.0750 0.0750
Police Pension 0.1302 0.1083 0.1028 0.0973 0.0819
Garbage 0.1211 0.1151 0.1228 0.1332 0.1220
Audit 0.0119 0.0113 0.0098 0.0062 0.0077
Liability Insurance 0.0520 0.0613 0.0562 0.0525 0.0390
Social Security 0.0970 0.0982 0.1000 0.1069 0.1048
Social Cross Guard 0.0035 0.0034 0.0047 0.0042 0.0062
Unemployment Insurance 0.0093 0.0089 0.0058 0.0038 0.0033
Library 0.1500 0.1426 0.1500 0.1500 0.1500
MW - Library 0.0032 - - - -
Social Security - Library 0.0068 - - - -
Total City Rates (2) $ 0.9286 $ 0.8674 $ 0.7895 $ 0.7326 $ 0.6636
Kendall County 0.7433 0.6920 0.6481 0.6194 0.6156
Kendall County Forest Preserve 0.0243 0.0219 0:0403 0.0369 0.0335
Bristol Township 0.4436 0.4253 0.3886 0.3800 0.3500
Bristol - Kendall Fire District 0.4450 0.4231 0.4011 0.5940 0.5468
Yorkville- Bristol Sanitary District 0.0711 0.0631 0.0547 0.0486 0.0385
Unit School District Number 115 4.7168 4.4780 4.2383 4.0829 4.3156
Community College District Number 0.4239 0.4043 0.4105 0.4104 0.3968
518
Total Tax Rates (3) $ 7.7966 $ 7.3751 $ 6.9711 $ 6.9048 $ 6.9604
Notes: (1) Source: Kendall County Clerk.
(2) Statutory tax rate limits for the City are as follows: Corporate ($0.3300); Police Protection ($0.0750);
Garbage ($0.2000); School Crossing Guard ($0.0200); and Library (0.1500).
(3) Representative tax rates for other government units are from Bristol Township tax code 005.
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Tax Extensions and Collections(1)
(Excludes Road and Bridge Levy)
Levy Col Taxes Taxes Collected(3)
Year Year Extended(2) Amount Percent
i
1999 2000 1,083,917 1,087,444 100.33%
j 2000 2001 1,142,869 1,144,706 100.16%
2001 2002 1,255,485 1,251,975 99.72%
! 2002 2003 1,429,114 1,424,626 99.69%
2003 2004 1,589,368 1,587,197 99.86%
2004 2005 1,388,670 1,386,431 99.84%
J 2005 2006 2,027,918 1,565,055 77.18 %(4)
Notes: (1) Source: Kendall County Treasurer.
(2) Tax extensions have been adjusted for abatements.
(3) Total collections include back taxes, taxpayer refunds, interest, etc.
(4) At December 21, 2060.
The City has no control over the amount of additional debt payable from taxes or assessments on
all or a portion of the property within the SSA, that may be issued in the future by other governmental
entities or districts. Nothing prevents the owners of land within the SSA from consenting to the issuance
of additional debt by other public agencies which would be secured by taxes or assessments on the same
property subject to the Ad Valorem Tax. To the extent such indebtedness is payable from assessments,
and other Ad Valorem Taxes levied pursuant to the Act or other taxes, such assessments, Ad Valorem
Taxes and other taxes may have a lien on the property within the SSA in addition to and on a parity with
the lien of the Ad Valorem Tax. Accordingly, the liens on the property within the SSA could increase
without any corresponding increase in the value of the property within the SSA and thereby reduce the
ratio that exists at the time the Bonds are issued between the value of the property and the debt secured by
the taxes and assessments thereon. The imposition of such additional indebtedness could also reduce the
willingness and ability of the property owners within the SSA to pay the Ad Valorem Tax when due. See
"RISK FACTORS — Overlapping Indebtedness."
Moreover, in the event of a delinquency in the payment of a Ad Valorem Tax, no assurance can
be given that the proceeds of any foreclosure sale would be sufficient to pay the delinquent Ad Valorem
Tax and any other delinquent Ad Valorem Taxes, assessments or taxes.
Appraisal
A market value appraisal of the Project was performed by Holcer & Company Inc. (the
"Appraiser ") as of November 1, 2006. It is the opinion of the Appraiser that the prospective market value
of the Project to a single purchaser is $29,135,000 subject to the satisfactory completion of the requisite
off and on -site improvements.
Value to Lien Ratio
The following table sets forth the appraised value -to -lien ratio with respect to the Project, based
on $ aggregate principal amount of the Bonds:
22
Appraised Value of Project ........................:.................. ............................... $29.135,000
BondsOutstanding ........................................................ ............................... $
Value -to -Lien Ratio ...................................................... ............................... to I
This value -to -lien ratio is based on the Appraisal. No assurance can be given that the foregoing
ratio can or will be maintained during the period of time the Bonds are outstanding both because property
values could drop and because other public entities, over which the City has no control, could issue
additional indebtedness secured by a lien on a parity with the lien securing payment of the Ad Valorem
Taxes or payable through the levy or imposition of a tax on a parity with the Ad Valorem Taxes. See
APPENDIX D - Appraisal.
THE DEVELOPMENT AGREEMENT
Set forth below is a description of certain of the terms of Development Agreement between the
City and the Developer. Such description of any such terms does not purport to be comprehensive or
definitive and is qualified in its entirety by reference to the complete form of the Development Agreement
included as APPENDIX B to this Limited Offering Memorandum. Capitalized terms that are used but not
defined in this section "THE DEVELOPMENT AGREEMENT" have the meanings set forth in the
Development Agreement included as APPENDIX B to this Limited Offering Memorandum.
General
The Developer is required to commence construction of the Project within 120 days of the later to
occur of (a) Developer obtaining all necessary permits and Governmental Approvals; or (b) 6 months
after execution of the Development Agreement, and is obligated to substantially complete construction of
the following approximate square feet of retail, restaurant and commercial space comprising the Project
as follows:
November, 2007 90,000 square feet of anchor space
August, 2008 475,000 square feet (including approximately 280,000
square feet of anchor space)
October, 2008 45,000 square feet
March, 2009 160,000 square feet
October, 2009 30,000 square feet
The Project is to be constructed in accordance with the terms of the Development Agreement and
the Concept Site Plan included as part of the Development Agreement. The Developer may enter into or
cause to be entered into one or more construction contracts to complete the Project.
Fees
Other than customary tap fees, no fee or charge of any description including, without limitation,
building permits, plan review, inspection fees, or other regulatory fees or charges, will be imposed on the
Developer or on the development and use of the Property unless, as of the date of the Development
Agreement, such fee or charge is in existence and being collected by the City on a uniform basis from all
owners, users, and petitioners of property within the City. The City will not increase the amount of any
fee or utility fees, application fees, or user fees during the term of the Development Agreement unless
such increases are (i) made generally applicable to all owners and users of property within the City and
23
(ii) reasonably related to increased costs incurred by the City in providing the services for which such fee
is assessed. )
Annual and Quarterly Reporting
The Developer agrees to deliver quarterly construction progress reports to the Trustee and the
Underwriter. The Developer will also deliver to the Trustee and the Underwriter annual schedules of
tenants and lease expiration dates for the Project.
Payment of Developer Costs
The City agrees to pay the Developer for the verified costs of the Special Services in the amount
set forth in the Development Agreement. Subject to the terms of the Bond Ordinances, the Development
Agreement and the Indenture, the City agrees to issue the Bonds and to pay the Developer net proceeds in
an estimated amount equal to $8,391,522 (unless otherwise agreed to by the Developer) for verified costs
of the Special Services as provided the Development Agreement. Nothing in the Development
Agreement will obligate the City to issue Bonds to pay the Developer for any Special Services cost that
does not qualify for payment under the Business District Act. The Developer will, at the City's request,
provide itemized construction loan draws, invoices, or receipts or, in the case of the acquisition of land,
evidence that the Developer has acquired fee title to such land and evidence of the total acquisition price
of such land, reasonably requested by the City to confirm that any such cost is so incurred and does so
qualify.
Bonds and Ad Valorem Taxes
The Bonds will be secured by a pledge of the Ad Valorem Taxes. The Indenture provides for the j
segregation and deposit of the Ad Valorem Taxes. The Ad Valorem Taxes will be applied to the
retirement of the Bonds in accordance with the Bond Ordinance and the Indenture. The City agrees that
to the extent there are revenues from the Business District that are not needed to pay annual debt service
on the Business District Revenue Bonds, the City shall annually apply all such excess revenues to the
abatement of the Ad Valorem Taxes in accordance with the indenture for Business District Revenue
Bonds.
Revenues
The City agrees to cause its Director of Finance or other financial officer to maintain the funds
required by the Bond Ordinance and Indenture including such further accounts or sub - accounts as are
required in the Development Agreement, by the Development Agreement or as the Director of Finance of
the City may deem appropriate in connection with the administration of the fund pursuant to the
Development Agreement. Subject to the requirements of the Act, the City will promptly upon receipt
thereof deposit all Revenue in the fund or in such other accounts as required under the Bond Ordinances
and Indenture.
The City and the Developer agree to cooperate and take all reasonable actions necessary to cause
the Special Taxes to be paid into the funds and accounts as provided in the Bond Ordinance, including the
City's enforcement and collection of all such payments through all reasonable and ordinary legal means
of enforcement.
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�
Assignment or Sale of Property
All or any part of the Property or any interest in the Development Agreement may be sold,
transferred, encumbered, leased, or otherwise disposed of at any time, and the rights of the Developer or
any successors in interest under the Development Agreement may be assigned at any time before, during
or after redevelopment of the Project, whereupon the parry disposing of its interest in the Property or
assigning its interest under the Development Agreement will be released from further obligation under the
Development Agreement (although any such Property so disposed of or to which such interest pertains
will remain subject to the terms and conditions of the Development Agreement), provided that until
substantial completion of the Project, the rights, duties and obligations of the Developer under the
Development Agreement cannot be assigned in whole or in part without the prior written approval of the
City, which approval will not be unreasonably withheld, conditioned or delayed upon a reasonable
demonstration by the Developer of the proposed transferee's or assignee's experience and financial
capability to undertake and complete such portions of the Project and perform the Developer's obligations
under the Development Agreement, all in accordance with the Development Agreement. Notwithstanding
anything above to the contrary, no prior consent will be required in connection with: (a) the right of the
Developer to encumber or collaterally assign its interest in the Property or any portion thereof to secure
loans, advances or extensions of credit to finance or from time to time refinance all or any part of the
Project costs, or the right of the holder of any such encumbrance or transferee of any such collateral
assignment (or trustee or agent on its behalf) to transfer such interest by foreclosure or transfer in lieu of
foreclosure under such encumbrance or collateral assignment; (b) the right of Developer to assign the
Developer's rights, duties and obligations under the Development Agreement to certain related parties;
provided that in each such event (i) the Developer will remain liable for the substantial completion of the
Project and will be released from such liability hereunder only upon substantial completion of the Project
and (ii) the Developer provides to the City 30 days' advance written notice of the proposed assignment or
transfer; or (c) the right of Developer to transfer a portion of the Property (the "Target Tract ") to Target
Corporation, a Minnesota corporation ( "Target ").
Notwithstanding anything to the contrary contained in the Development Agreement, the City
agrees that Target, its successors and assigns, as purchaser and owner of the Target Tract, shall not be
liable for the performance of Developer's obligations under the Development Agreement, including
without limitation, the obligation to complete any site work improvements, posting financial security, or
incurring any costs pursuant to the Development Agreement. Upon Developer's completion of its
obligations under the Development Agreement with respect to the Project, the City agrees to promptly
execute at no charge to Target, a recordable Termination and Release of the Development Agreement for
the Target Tract from these obligations under the Development Agreement. Notwithstanding anything to
the contrary contained in the Development Agreement, the City consents to the transfer of title from the
Developer to Target of the Target Tract and acknowledges that Target may thereafter transfer or convey
interests in the Target Tract in Target's sole and absolute discretion.
SUNEVIARY OF THE PROJECT
The information provided in this section "SUMMARY OF THE PROJECT" has been included
because it may be considered relevant to an informed evaluation and analysis of the Bonds. No assurance
can be given that the development of the Project will occur as described below. No assurance can be
given that the development of the Project will be completed or that it will occur in a timely manner or in
the configuration described herein. The Bonds and Revenues are not personal obligations of any land
owners or the Developer. The Bonds are secured solely by the Revenues and certain other amounts on
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deposit with the Trustee. See "SECURITY AND SOURCE OF PAYMENT FOR THE BONDS." The
Bonds will finance a portion of the construction of the Special Services necessary for the Project.
General
The Project will be located at the northwest corner of Route 34 (Veterans Parkway) and
Cannonball Trail in Yorkville, Illinois. The site is generally rectangular in shape and consists of
approximately 190 acres or 8,276,400 square -feet. Kendall Marketplace is the commercial component of
the Project that will contain an approximately 800,000 square -foot regional shopping center, which is part
of the larger mixed -use commercial and residential site. The residential portion of the proposed
development will consist of single family homes and town homes on approximately 33 acres of land. The
residential portion of the proposed development is not included within the SSA.
Overall, the topography of the subject property is level and at grade with the surrounding
roadways. The soil is or will be of sufficient load bearing capacity to support the proposed structures.
Existing drainage of the site is to the east and currently no public utilities are available to the site.
The Illinois Department of Transportation has announced plans to construct the Prairie
Parkway —a state highway connecting I -88 to I -80. The Prairie Parkway will have a future interchange
west of the Marketplace at Route 34. Traffic patterns suggest that the intersection of Route 34 and Route
47 is the busiest intersection in Kendall County with 64,850 vehicles per day. As a result, access is
considered good.
Site Improvements
Kendall Marketplace shopping center is expected to accommodate more than 60 commercial
users including fashion retailers, specialty shops, a bookstore, an electronics store, and a sporting goods
store, in addition to three national anchors. The shopping center will also offer a variety of fast -food and
sit -down restaurants.
Site improvements will include the re- construction and widening of Cannonball Trail to include
turning lanes and deceleration lanes; the widening of Route US 34, new traffic signalization, the
relocation of water and sanitary and storm sewers; the construction of Beecher Road, including grading,
paving, striping, new traffic signalization and the relocation of water, storm and sanitary sewers and
electrical service. Land will also be developed for civic and park use, water and fire protection services
for the shopping center, and detention, including retaining walls and railings.
Kendall Marketplace will also include approximately 3,650 parking spaces, excluding spaces
included on the outlots, with a combination of in -line, lifestyle center and outlot retail properties. Outlot
space will include both fast -food and sit -down restaurants located along Route 34 and Cannonball Trail
and a variety of retail and service uses.
The Developer is currently in negotiations with two sit -down restaurants for two of the outlots.
Significant interest has been received from other restaurants and banks for the outlot space and from a
number of retailers for the inline space.
Special Services
The Developer will be paid from the amounts deposited into the Improvement Fund under the
Indenture from the proceeds of the Bonds for the construction of the Special Services. "Special Services"
means the improvements benefiting the SSA consisting of engineering, soil testing and appurtenant work,
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mass adin and demolition, storm water management facilities, storm drainage systems and storm
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sewers, site clearing and tree removal, public water facilities, sanitary sewer facilities, erosion control
measures, roads, streets, curbs, gutters, street lighting, signalization, bicycle paths, sidewalks and related
street improvements, and equipment and materials necessary for the maintenance thereof, landscaping and
tree installation, costs for land and easement acquisitions relating to any of the foregoing improvements,
other eligible costs of improvements to serve the SSA and reimbursement of eligible costs incurred prior
to the issuance of the Bonds..
Zoning
On October 24, 2006, the Village adopted Ordinance No. 2006 -_ granting approval of the PUD
Plan, special use, site plan, and appearance approval for the development of the Project and surrounding
retail uses. The underlying new zoning is B -3, Business District.
Construction
Site development for the Kendall Marketplace began in October 2006. The Kohl's store is
projected to open in November 2007. Most retailers project an opening in the spring or fall of 2008 and
restaurant facilities anticipate openings between the spring 2008 and the fall of 2009.
The fagade of the center will be constructed of masonry and exterior finish system. The average
building height will be one story. The main center will have concrete footings and steel joist beams. The
marketplace buildings will have steel columns. Floors will be concrete. The exterior walls will be
masonry and exterior fmish system. The buildings that make up Kendall Marketplace will have a flat
membrane roof system. The window system will be an aluminum window wall system. The Developer
will sell and deliver anchor pads and some outlot pads. It is anticipated that outlot parcels will be both
sold and/or leased.
Mechanical
The Kendall Marketplace will have a roof top air handling unit systems. Electrical service will be
provided by Commonwealth Edison and is assumed to be adequate. There will be hardwired smoke
detectors in the buildings. The Marketplace will be fully sprinklered. Emergency lighting will be located
throughout the Project.
Interior
The Kendall Marketplace buildings will have concrete flooring. As proposed, the ceilings will be
drywall or lay -in ceiling tiles. It is anticipated that there will be a combination of lighting throughout the
Kendall Marketplace.
Retail Inline Properties
Kendall Marketplace will be anchored by Super Target, Home Depot, and a Kohl's store. These
anchors will comprise approximately 370,000 square -feet. Several mid -size retailers, such as Michaels,
Petsmart and T.J. Maxx, are expected to be tenants of the shopping center. Additional retail tenants are
expected to include an office supply store, fashion retailers, specialty shops, a bookstore, an electronics
store, a sporting goods store and several restaurants. Building plans have not yet been completed, but the
facades will be more decorative than a typical community or neighborhood shopping center.
Each retail building will be constructed to the anchor specifications. For in -line space,
construction will range from 60 to 250 feet in depth and width, per end - users' needs. Beecher Road,
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Route 34, and Cannonball Trail will provide access to Kendall Marketplace and the outlots.
Land Sales
Land sales will be made to the three large anchors: SuperTarget, Home Depot, and Kohl's. These
land sales are expected to occur simultaneously with the issuance of the Bonds. These anchor stores are
projected to open in the fall 2007 and spring or summer of 2008. The Developer has entered into a land
purchase contract with Home Depot and has signed letters of intent with each of SuperTarget and Kohl's.
The Developer is negotiating definitive land purchase agreements with each of SuperTarget and Kohl's.
SuperTarget will occupy an approximately 178,000 square -foot store within Kendall
Marketplace. Target Corporation operates more than 1,300 Target stores in 47 states, including
over 140 SuperTarget stores that include an upscale grocery shopping experience. In addition to
the photo processing, pharmacy and restaurants found in almost every Target, SuperTarget
includes in -store bakery, deli, meat and produce sections.
Home Depot will occupy an approximately 103,000 square -foot store within Kendall
Marketplace. Today, on average, Home Depot offers 40,000 home and industrial improvement
products and is a nationally recognized retailer with more than 2,000 stores throughout the United
States, Canada and Mexico. Home Depot also owns EXPO Design Center, an upscale home
remodeling supply and design store, and The Home Depot Supply, which provides services for
commercial use.
Kohl's will occupy an approximately 90,000 square -foot store within Kendall
Marketplace. Kohl's is a retail department store that sells apparel, shoes & accessories for
women, children and men, plus home products such as small appliances, bedding, luggage and
more. Kohl's Department Stores operate over 800 stores throughout the United States.
Lease Tenants
The base lease term varies by tenant with mid -size retailers generally signing initial leases for ten
years (typically with two -four 5 year extension options), smaller retailers generally signing leases for 5
years, and restaurant leases generally lasting between 15 and 20 years. The annual rent typically would
remain the same for five to ten years and would escalate 5% to 10% every 5 years as extension options
are exercised.
The Developer has signed letters of intent with a number of prospective tenants for leased space.
These include:
Petsmart will occupy an approximately 20,000 square -foot store within Kendall
Marketplace. PetSmart, Inc. is the largest specialty retailer of services and solutions for the
lifetime needs of pets. The company operates more than 860 pet stores in the United States and
Canada.
Payless ShoeSource will occupy an approximately 3,000 square -foot store within
Kendall Marketplace. Payless ShoeSource is the largest specialty family footwear retailer in the
Western Hemisphere. The Company sold more than 182 million pairs of shoes in fiscal 2005,
generating $2.7 billion in net sales. Payless ShoeSource operates stores in all 50 U.S. states and
has stores in Asia and across South America.
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The Developer expects to attract a variety of other potential retailers to Kendall Marketplace,
including craft supply stores, cosmetic stores, shoe stores, salons, fashion retailers, and fast food outlets.
Potential retailers range in size from 1,200 square -feet to approximately 22,000 square -feet per store.
Small-shop Boutique Boulevard
The small -shop boutique boulevard portion of Kendall Marketplace will resemble a lifestyle
center and include approximately 165,000 square -feet of retail, electronics, bookstore and restaurant
space. The retail spaces range in size from 6,000 square -feet to 30,000 square -feet.
Approximately three sit -down restaurants are expected to be located in the lifestyle portion with
each approximately 6,000 square -feet in size. In addition, proposed stores include a sporting goods store
of 15,000 square -feet, an electronics store of approximately 30,000 square -feet, a bookstore of
approximately 20,000 square -feet, and various retail, cafe and spa vendors.
The boutique boulevard will also include a water feature, grassy promenade, and an appropriate
number of parking spaces.
Potential tenants of Kendall Marketplace's lifestyle center include national electronic and media
retailers as well as a coffee chain, spa, and jewelry store. Potential retailers range in size from 1,200
square -feet to approximately 30,000 square -feet per store. The lifestyle center will also include various
fast food restaurants and casual, sit down dining restaurants, which will offer a variety of family oriented
menus and atmospheres, and.
Outlot Properties
There are 17 outlots proposed for Kendall Marketplace totaling approximately 70,000 square -feet
of developable building area. The lots range in size from 1 acre to 2.65 acres with proposed users
developing 3,000 to 6,500 square foot buildings per lot.
Up to three of the outlots will be developed into 5,000 square -foot sites for bank use.
Approximately 50,000 square -feet will be developed for sit -down and fast food restaurants that will cater
to retail shoppers and the surrounding community.
Construction Manager
The Developer will be the construction manager for the Project. The Developer expects to retain
one or more qualified construction contractors to construct the Special Services. Additional construction
contractors will be engaged to provide other construction services with respect to various aspects of the
Project.
Property Management
The Harlem Irving Companies, Inc, will be the property manager for the Project. Harlem Irving
currently manages 15 properties, encompassing more than 2.5 million square feet of retail space. In
addition to Kendall Marketplace, the company is currently developing approximately 400,000 square feet
of retail space, which it intends to manage upon completion of construction. The company consists of a
seasoned team of professionals with more than 200 years of combined experience in developing, leasing,
managing and marketing properties. See "THE DEVELOPER."
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Environmental Site Assessment
it
A Phase I Environmental Site Assessment dated December 7, 2005 for the area comprising the
Business District was prepared for The Harlem Irving Companies, Inc., by Pioneer Engineering &
Environmental Services, Inc. No recognized environmental conditions were identified in the report in
connection with the subject property.
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Project Financing
The total cost of the Project is estimated to be approximately $132 million. The Developer will
enter in a three -year loan agreement with one or more lenders for up to approximately $69.1 million in
loans to fund the construction and development of the Project. The construction and development loans
will be used primarily to acquire land and construct the Project. The Developer will obtain additional
funding for the Project from the sale of outlots, land sales to anchor tenants and the residential developer
and site work reimbursement from anchor tenants and the residential developer.
1
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Site Plan
[TO BE INSERTED]
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THE DEVELOPER
Cannonball LLC ( "Cannonball ") is an Illinois limited liability company established for
the purpose of developing and owning Kendall Marketplace. Cannonball has three managers: MidAm
Yorkville LLC, which is managed by principals of Mid - America Development Partners, LLC; The
Harlem Irving Companies, Inc., of which Michael Marchese is President; and NF6 LLC, which is
managed by New Frontier Developments Co.
Mid,4m Yorkville LLC managed by Mid America Development Partners LLC
i
MidAm Yorkville LLC, is managed by Mid - America Development Partners, LLC ("Mid -
America"). Mid - America is a real estate development firm headquartered in Oak Brook, Illinois
employing 25 real estate professionals. The furn was founded in 2001 by David P. Bossy and Michael D.
The firm is committed to creating functional attractive developments that enhance their
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communities and deliver an exceptional level of tangible value to both the partners and municipalities
they serve. Currently, Mid -Am has more than 30 projects in various stages of development, including
retail, hospitality and mixed -use projects that span more than seven million combined square -feet. Mid -
Am generally is involved in the complete development of a project, beginning with the acquisition of land
through the entitlement process and completion of construction.
David Bossy was the President and co- founded Mid - America Real Estate Corporation in 1984.
Since 1977, he has provided leadership and strategic direction for commercial/retail brokerage and asset
management operations as well as the acquisition, development and construction of approximately 35
million square -feet of shopping centers throughout the Midwest. In 1997 The Chicago Sun -Times named
Mr. Bossy its Retail Broker of the Year. He has also assisted third party retail clients in developing and
executing expansion plans of several nation chains such as Office Max, Comp USA, Old Country Buffet,
Famous Footwear and Golfsmith. Additionally, he has been involved in the marketing and property
disposition for several national retail chains including the Home Depot, TJX and New York Carpet
World.
Michael Firsel was a practicing attorney from 1973 to 1999, having formed his own firm in
1982. During that time, he concentrated on all types of real estate transactions, representing numerous
developers in varying capacities and becoming especially familiar with tax increment financing issues and
other areas of municipal finance. He acted as special counsel to several municipalities including the
Village of Palatine, and the Village of La Grange during their respective redevelopment projects. In
1999, he left the full time practice of law to become a developer, founding Firson Investment and
Development Company, LLC with Gerald W. Fogelson. From 1999 to 2001, Firson worked on the
development of several projects including the Central Station project in downtown Chicago, Illinois as
well as co- developing the LaGrange Triangle redevelopment project. Additionally, Mr. Firsel previously
acted as Special Consultant in Downtown Redevelopment for the Village of Palatine. In 2001, Mr. Firsel
came together with David Bossy to form Mid - America Development Partners, LLC which is currently
involved in numerous developments.
The Harlem Irving Companies, Inc.
The Harlem Irving Companies, Inc. ( "Harlem Irving ") brings more than 50 years of Chicago -area
retail development, management and leasing experience to the proposed Kendall Marketplace. Harlem
Irving is the 79 member of the International Council of Shopping Centers, established in 1957, which
currently has over 61,000 members. Harlem Irving's experience in facility planning and market
repositioning is best illustrated by its completed retail and residential projects including Harlem Irving
Plaza shopping center, one of Chicago's first major shopping centers.
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The Harlem Irving Companies' keen vision and effective management has enabled Harlem Irving
Plaza to be developed into over 650,000 square -feet of gross leasable facilities consisting of
approximately 125 tenants on its 21 -acre site. Other Chicago area developments Harlem Irving lists to its
credit are as follows:
Mixed Use
Lincoln Park Commons Chicago, IL
University Village * Chicago, IL
The Emerald ** Chicago, IL
Residential
The Cascades Condominiums Norridge, IL
Glenlake Condominiums Chicago, IL
Merrimac Square Condominiums Chicago, IL
River's Edge Condominiums Chicago, IL
Retail — Shopping Centers
Dunning Square Chicago, IL
Ninth & North Avenue Melrose Park, IL
Twin Ponds Crystal Lake, IL
Northlake Commons Northlake, IL
Washington Square Chicago, IL
Patriot Marketplace Glenview, IL
Sutton Park Streamwood, IL
Charter Oaks Peoria, IL
Deerfield Depot Deerfield, IL
Hickory Creek Marketplace Frankfort, IL
Willowbrook Town Center ** Willowbrook, IL
119 & Cicero ** Alsip, IL
* In 2002, the Chicago Sun Times honored University Village with the "City Development of the
Year" award.
* * Currently being developed.
Harlem Irving currently manages 15 properties, including stand -alone outparcels, that encompass
approximately than 2.4 million square -feet of retail space. In addition to Kendall Marketplace, the
Company is currently developing approximately 400,000 square -feet of retail space in several other
shopping center developments, which it intends to manage upon completion of construction. Harlem
Irving has forged relationships with national and regional retailers such as Home Depot, Jewel/Osco,
Target, Kohl's, The Limited, Carson Pirie Scott, T.J. Maxx and Best Buy.
Michael Marchese is the Chief Executive Officer and President of The Harlem Irving
Companies, Inc., a company his father founded in 1954, which remains wholly owned by Mr. Marchese's
family today. In Mr. Marchese's 36 years of dedication to Harlem Irving, he has been instrumental in
formulating and implementing the company's growth and holdings. Current responsibilities as President
include actively managing all financial, leasing, development, marketing and operations efforts. Mr.
Marchese's involvement in various projects has been vital to the growth of Harlem Irving and the overall
success of the company.
Rick Filler is the Executive Vice President and Chief Operating Officer of the Harlem Irving
Companies. In this role, Mr. Filler oversees the entire development process and its staff. His scope of
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responsibility includes land purchase, negotiations of anchor tenant leases, financing and construction.
Over the past 23 years, Mr. Filler has cultivated a solid real estate background through his involvement in + )
various aspects of development including office space, enclosed retail centers, strip shopping centers,
high -end residential developments and golf course communities. Before arriving at The Harlem Irving
Companies, Mr. Filler held the title of Property Manager for RKKK Management, Lowry Development
Company and HSW Investments, Inc.
NF6 LLC managed b New Frontier Developments Co.
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NF6 LLC is managed by New Frontier Developments Co. ( "New Frontier "). New Frontier is a
co- developer of retail centers in the Chicago area with The Harlem Irving Companies. Founded in 1975
by William F. Cellini and Lawrence Haddad, New Frontier plans and develops residential and
commercial real estate projects. New Frontier - related companies have constructed and currently manage
approximately two million square -feet of single and multi- tenant commercial properties for nationally
recognized businesses, agencies and institutions, including Ameritech and PacificCorp. The New
Frontier group of companies has twenty years of experience managing a portfolio of 17,500 residential
units, such as multi - family developments, luxury high -rise condominiums, and conventionally financed
housing, located throughout the United States.
THE CITY
The United City of Yorkville (the "City ") was established in 1834, and has been the county seat
of Kendall County since 1859. It is located in northeastern Illinois on the Fox River approximately 45
miles southwest of Chicago. Nearby communities include Oswego, Bristol, Plano, Millbrook, Helmar,
Newark, Plattville, Montgomery, Sugar Grove and Plainfield. According to the 2000 Census, the City
had a population of 6,189. A special census in December of 2003 resulted in a population total of more
than 8,500. Subsequently, a special census completed in May of 2006 showed an increase in that total of
31.8% when the population increased to 11,204.
City Government and Services
The City follows a Mayor /City Council form of government in which the Mayor, Aldermen, City
Clerk and City Treasurer are each elected to a four -year term. The City Council is comprised of the
Mayor and eight Alderman (two Alderman elected from each of the City's four wards).
The City is served by the Bristol/Kendall Fire Protection District which carries a Protection Class
6. It maintains a 24 hour paramedics unit and is a member of the Mutual Aid Box Alarm System. The
Police Department employs twenty full -time officers, and emergency medical service is available 24
hours a day.
Transportation
The City is approximately 15 miles west of Interstate 55 (I -55); almost 20 miles north of
Interstate 80 (1 -80); and nearly 12 miles south of Interstate 88 (I -88). Illinois Routes 47 and 34 intersect
the City.
O'Hare International Airport is approximately 40 miles northeast of the City and Midway Airport
is about 40 miles to the east in Chicago. Aurora Municipal Airport, approximately ten miles to the north
provides lighted runways and aircraft tiedowns, hangar, power plant repair, air frame repair and navigator
aids. Additionally it offers freight, charter and helicopter services.
The Burlington Northern Sante Fe Railroad in nearby Aurora provides commuter rail service.
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Yorkville Public Library
Yorkville Public Library (the "Library ") serves the residents of the City and is a member of the
Heritage Trail Library System. The Library began as a "Reading Room" in the 1800's and was actively
used by the Yorkville Women's Club who in 1915 formally established it as a library. In 1965, the
Library was turned over to the City of Yorkville. Over the years, it has occupied three locations and has
had its growth funded through state programs, monetary gifts from businesses as well as individuals, and
volunteer labor. It has recently undergone improvements with the addition of a CD -ROM full -text
magazine index, and a referendum was passed in 2004 to authorize the sale of bonds to expand the
facility.
In addition to its extensive collection of books, Library resources include dial -a -story, local
history, newspapers, sheet music, audio books, large print books, paperbacks, magazines, and videos and
DVD's. Services available to the community are homebound service, interlibrary loan, kit for brothers
and sisters of new babies, kits for sick kids, loft meeting area, photocopier, computers, tax forms, talking
books, typewriter and voter registration. The Library offers the following online resources: animals and
the environment; arts and crafts; children's book and screen characters; children's books and stories
online; educational resources; exploration and museums; history and geography; holidays and
celebrations; literature online; math and science; music and poetry; reference tools and homework help;
space; and sports and recreation.
Community Life
The City contains approximately 60 acres of parks with picnic areas, a gazebo and recreational
fields. Programs offered include aerobics, basketball, bus trips, bowling, Country/Western dance, crafts,
dance, fishing, golf, soccer, sports club, street hockey, tee ball, tennis and tumbling. Residents also enjoy
a golf course and forest preserves which are nearby but outside the City boundaries.
Medical services are available at Rush/Copley Medical Center and Provena -Mercy Center, both
located in Aurora. Additional facilities are provided by Sandwich Community Hospital in Sandwich,
Illinois. These institutions are about fifteen miles from the City.
Education
Community Unit School District Number 115 (the "District ") meets the elementary and
secondary educational requirements of the City with two elementary schools, one junior high school and
one high school. The District has a staff of approximately 200 teachers and administrators and
approximately 3,200 students. The District has implemented a new computer curriculum, innovative
interdisciplinary projects and advanced team building and support programs for students and staff.
Higher education opportunities are offered by Aurora University in nearby Aurora and Northern Illinois
University in DeKalb.
In addition, Waubonsee Community College District No. 516 (the "College ") offers a wide
variety of transfer, vocational, continuing and community education, children's and corporate
development and training classes. It has 24 programs designed for transfer to senior institutions, and also
offers occupational- oriented programs ranging in length from one semester to two years. The College
recently opened a state -of -the -art academic computing center that houses eight classrooms and a 120
personal computer work station open lab.
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Socioeconomic Information
Following are lists of large employers located in the City and in the surrounding area.
Major City Employers(1)
Approximate
Name Product/Service Employment
Wrigley Manufacturing Co., LLC Sugar Confections, Bubble Gum, & Candy 400
XPAC Tractor Radiators and Engines 150
Newly Weds Foods Food Seasonings, Cures and Binders 115
Brenart Eye Clinic Eyeglasses 50
Cascade Water Works Mfg. Co., Inc. Sewer & Piping Systems Repair Products 40
C.J. Insulation, Inc. Insulation Installation 40
G.H. Haws & Assocs. Plastic Molding Parts 25
Alpha Precision, Inc. Photographic Equipment & Supplies 20
Meadowvale, Inc. Ice Cream, Custard, Soft Serve and Shake Mixes 20
Alpha Precision, Inc. Photographic Equipment & Supplies 20
Note: (1) Source: 2007 Illinois Manufacturers Directory and 2007 Illinois Services Directory.
Major Area Employers(1)
Approximate
Location Name Business or Product Emnlovment
Sugar Grove Waubonsee Community College #516 Education 1,460
Oswego Coldwell Banker Primus Realty Residential Real Estate 550
Mopt Lyons Workspace Products, L C Steel Storage Equipment 400
Plaingeld CB &I Constructors, Inc. Elevated Water Storage Tanks, Pressure Vessels 400
Montgomery Eby -Brown Co. Wholesale Tobacco & Confectionery 400
Montgomery The Dial Corp. Soap, Glycerin, & Fatty Acids 400
Montgomery Fox River Foods Inc. Wholesale Food 340
Plainfield CB &I Constructors, Inc. Storage Tank Insulation Equipment 300
Montgomery Processed Plastic Co. Plastic Toys 300
Plainfield Diageo North America, Inc. Gin and Vodka Distilling 300
Plainfield Diageo North American, Inc. Gin & Vodka Distilling 300
Plainfield Van Drunen & Sons, Inc. R.J. Corporate Headquarter, Freeze -Dried Herbs 200
Plainfield R.A. Bright Construction, Inc. Concrete, Excavating, Underground Utilities 200
Plainfield Flexi -Mat Corp. Foam Rubber & Sponge Pillows 180
Plainfield Fox Valley Press Newspaper Printing 170
Plano Fox Valley Molding, Inc. Compression Transfer & Injection Molding 150
Plano Plano Molding Co. Plastic Injection Molding Headquarters 150
Oswego Radiac Abrasives, Inc. Diamond Grinding Wheels 150
Montgomery Weyerhaeuser Co. Corrugated Cartons 150
Note: (1) Source: 2007 Illinois Manufacturers Directory and 2007 Illinois Services Directory and a
selective telephone survey.
The following tables show employment by industry and by occupation for the City, Kendall
County (the "County ") and the State of Illinois (the "State ") as reported by the 2000 Census.
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Employment By Industry(])
The City The Countv The State
Classification Number Percent Number Percent Number Percent
Agriculture, Forestry, Fishing, Hunting, and Mining........... 47 1.45% 380 1.32% 66,481 1.14%
Construction .......................................... ............................... 332 10.23% 2,586 8.97% 334,176 5.73%
Manufacturing ....................................... ............................... 564 17.38% 5,337 18.50% 931,162 15.96%
Wholesale Trade .................................... ............................... 145 4.47% 1,187 4.12% 222,990 3.82%
Retail Trade ........................................... ............................... 434 13.37% 3,416 11.84% 643,472 11.03%
Transportation and Warehousing, and Utilities .................... 201 6.19% 1,657 5.75% 352,193 6.04%
Information ............................................ ............................... 67 2.06% 774 2.68% 172,629 2.96%
Finance, Insurance, Real Estate, and Rental and Leasing .... 216 6.65% 2,463 8.54% 462,169 7.92%
Professional, Scientific, Management, Administrative,
and Waste Management Services ......... ............................... 287 8.84% 2,369 8.21% 590,913 10.13%
Educational, Health and Social Services .............................. 443 13.65% 4,691 16.26% 1,131,987 19.41%
Entertainment and Recreation Services, Accommodation
and Food Services ................................ ............................... 244 7.52% 1,740 6.03% 417,406 7.16%
Other Services (except Public Administration ) .................... 118 3.64% 1,246 4.32% 275,901 4.73%
Public Administration ............................ ............................... 148 4.56% 996 3.45% 231.706 3.97%
Total .......................... ............................... ..........................3,246 100.00% 28,842 100.00% 5,833,185 100.00%
Note: (1) Source: U. S. Bureau of the Census.
Employment By Occupation(])
The Citv The County The State
Classification Number Percent Number Percent Number Percent
Management and Professional .................... ..........................1,140 35.12% 9,817 34.04% 1,993,671 34.18%
Service Occupations .............................. ............................... 416 12.82% 3,216 11.15% 813,479 13.95%
Sales and Office Occupations ................ ............................... 858 26.43% 8,310 28.81% 1,609,939 27.60%
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Farming, Forestry and Fishing .............. ............................... 0 0.00% 66 0.23% 17,862 0.31%
Construction, Extraction, and Maintenance .......................... 300 9.24% 2,997 10.39% 480,418 8.24%
Production, Transportation, and Material Moving ............... 532 16.39% 4,436 15.38% 917.816 15.73%
Total 3 100.00% 28 100.00% 5 100.00%
Note: (1) Source: U.S. Bureau of the Census.
Annual Average Unemployment Rates(])
Calendar The The The
Year C� Coun State
1996 .....................5.9% 3.9% 5.3%
1997 ..................... 4.7% 3.1% 4.7%
1998 .....................4.3% 2.9% 4.5%
1999 .....................4.1% 2.8% 4.3%
2000 .....................2.1% 2.8% 4.4%
2001 2.8% 4.0% 5.4%
2002 ..................... 3.6% 5.6% 7.1%
2003 .....................3.6% 6.0% 6.7%
2004 .....................3.4% 5.0% 6.2%
2005 .....................3.2% 5.2% 5.7%
2006(2) ................N/A 3.6% 4.1%
Notes: (1) Illinois Department of
Employment Security.
(2) Preliminary rates for the month
of December 2006.
Housing
The 2000 Census reported that the median value of the City's owner- occupied homes was
$157,700, which compares with $154,900 for the County and $130,800 for the State. The 2000 market
I
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value of specified owner- occupied units for the City, the County and the State was ds follows:
i
j Specified Owner - Occupied Units(1)
The Citv The Countv The State
Value Number Percent Number Percent Number Percent
j Less than $50,000 ............. 0 0.00% 93 0.65% 230,049 9.31%
$50,000 to $99,999 ........... 150 9.35% 1,137 7.90% 651,605 26.38%
$100,000 to $149,999 ....... 520 32.40% 5,485 38.12% 583,409 23.62%
$150,000 to $199,999 ....... 657 40.93% 4,168 28.97% 429,311 17.38%
$200,000 to $299,999 ....... 260 16.20% 2,873 19.97% 344,651 13.95%
$300,000 to $499,999....... 18 1.12% 492 3.42% 163,254 6.61%
$500,000 to $999,999 ....... 0 0.00% 128 0.89% 55,673 2.25%
$1,000,000 or more........... 0 0.00% 12 0.08% 12386 0.50%
Total ...... ..........................1,605 100.00% 14,388 100.00% 2,470,338 100.00%
Note: (1) Source: U.S. Bureau of the Census.
Income
Per Capita Personal Income
for the Ten Highest Income Counties in the State(1)
Rank 2000
1 ........................ ...........................Lake County......................... $32,102
2 .......................... .........................DuPage County.................... 31,315
3 ........................... ........................McHenry County ................. 26,476
4 ........................... ........................Kendall County 25,188
5 .................... ............................... Will County .......................... 24,613
6 .................... ............................... Kane County ........................ 24,315
7 ........................ ...........................Cook County........................ 23,227
8 ............................ .......................Sangamon County................ 23,173
9 .......................... .........................Monroe County .................... 22,954
10 ........................ .........................Grundy County .................... 22,591
Note: (1) Source: U.S. Bureau of the Census.
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The following shows a ranking of median family income for the Chicago metropolitan area
among 102 Illinois counties from the 2000 Census.
Ranking of Median Family Income(1)
Ill. Family Ill.
Coun Income Rank
DuPage County ................ $79,314 1
Lake County ..................... 76,424 2
McHenry County .............. 71,553 3
Will County ...................... 69,608 4
Kendall County .............. 69,383 5
Kane County .................... 66,558 6
Cook County .................... 53,784 14
Note: (1) Source: U.S.
Bureau of the Census.
According to the 2000 Census, the City had a median family income of $67,521. This compares
to $69,383 for the County and $55,545 for the State. The following table represents the distribution of
family incomes for the City, the County and the State at the time of the 2000 Census.
Median Family Income(1)
The Citv The Countv The State
Income Number Percent Number Percent Number Percent
Under $10,000 .................. 7 0.42% 117 0.78% 156,205 5.00%
$10,000 to $14,999 ........... 0 0.00% 169 1.13% 105,747 3.38%
$15,000 to $24,999 ........... 79 4.79% 609 4.07% 273,712 8.76%
$25,000 to $34,999 ........... 131 7.94% 966 6.45% 331,907 10.62%
$35,000 to $49,999 ........... 284 17.21% 2,226 14.86% 506,429 16.20%
$50,000 to $74,999 ........... 536 32.48% 4,492 29.99% 736,897 23.58%
$75,000 to $99,999 ........... 328 19.88% 3,215 21.46% 445,390 14.25%
$100,000 to $149,999 ....... 206 12.48% 2,372 15.84% 356,068 11.39%
$150,000 to $199,999 ....... 35 2.12% 506 3.38% 101,955 3.26%
$200,000 or more .............. 44 2.67% 306 2.04% 111.008 3.55%
Total . ............................... 1,650 100.00% 14,978 100.00% 3,125,318 100.00%
Note: (1) Source: U.S. Bureau of the Census.
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According to the 2000 Census, the City had a median household income of $60,391. This
compares to $64,625 for the County and $46,590 for the State. The following table represents the ) j
distribution of household incomes for the City, the County and the State at the time of the 2000 Census.
Median Household Income(1)
The Citv The Countv The State
Income Number Percent Number Percent Number Percent
Under $10,000 .................. 70 3.10% 435 2.32% 383,299 8.35%
$10,000 to $14,999 ........... 54 2.39% 378 2.01% 252,485 5.50%
$15,000 to $24,999 ........... 175 7.76% 1,308 6.96% 517,812 11.27%
$25,000 to $34,999 ........... 193 8.55% 1,553 8.27% 545,962 11.89%
$35,000 to $49,999 ........... 405 17.95% 2,771 14.75% 745,180 16.23%
$50,000 to $74,999 ........... 652 28.90% 5,234 27.86% 952,940 20.75%
$75,000 to $99,999 ........... 382 16.93% 3,635 19.35% 531,760 11.58%
$100,000 to $149,999 ....... 246 10.90% 2,567 13.66% 415,348 9.04%
$150,000 to $199,999....... 35 1.55% 563 3.00% 119,056 2.59%
$200,000 or more .............. 44 1.95% 345 1.84% 128.898 2.81%
Total ...... ..........................2,256 100.00% 18,789 100.00% 4,592,740 100.00%
Note: (1) Source: U.S. Bureau of the Census.
Wealth Indicators
The private publication "Sales & Marketing Management" has developed a wealth indicator
termed "effective buying income" (EBI) defined as money income less personal tax and non -tax
payments, which is considered by the publication to be a bulk measurement of market potential. At
December 31, 2004 (the latest data available), the County reportedly had a total EBI of $1,603,723,000
and a median household EBI of $55,275. The trend in median household EBI relative to the State and
Kendall County, is shown below. Data for the City is not available.
Effective Buying Income(1)
2000 2001 2002 2003 2004
Kendall County $53,508 $52,516 $55,183 $55,290 $55,275
State of Illinois 45,381 41.976 40,780 41,216 42,182
County as Percent of State 117.91% 125.11% 135.32% 134.15% 131.04%
Note: (1) Source: "Sales & Marketing Management'.
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Retail Activity
Following is a summary of the City's sales tax receipts as collected and disbursed by the State.
Retailers' Occupation, Service Occupation and Use Tax(1)
State Fiscal Year State Sales Tax Annual Percent
Endina June 30 Distributions(2) Chance + ( -)
1997 453,818 (3.91 %)(3)
1998 850,072 87.32%
1999 936,217 10.13%
2000 1,024,813 9.46%
2001 1,003,021 (2.13 %)
2002 1,203,279 19.98%
2003 1,558,831 29.55%
2004 1,982,218 27.16%
2005 . 2,320,546 17.07%
2006 2,649,888 14.19%
Growth from 1997 to 2006 483.91%
Notes: (1) Source: Illinois Department of Revenue.
(2) Tax distributions are based on records of the Illinois
Department of Revenue relating to the 1% municipal
portion of the Retailers' Occupation, Service Occupation
and Use Tax, collected on behalf of the City, less a State
administration fee. The municipal l% includes tax
receipts from the sale of food and drugs which are not
taxed by the State.
(3) The 1997 percentage is based on a 1996 sales tax of
$472,289.
THE SPECIAL SERVICE AREA AND AD VALOREM TAX
The Act
Section 6 of Article VII of the Illinois Constitution of 1970 permits a home rule unit to levy or
impose additional taxes upon areas within its boundaries to provide special services to those areas and to
pay debt incurred in order to provide those special services in the manner provided by law. Such areas
are established pursuant to the provisions of the Act. Under the Act, the corporate authorities of the
municipality within which the special service area lies constitute the governing body of such special
service area.
The Act provides that bonds may be issued to provide for the special services. Such Bonds do
not constitute indebtedness of the municipality in which the special service area is situated for the purpose
of any limitation imposed by any law. Such Bonds shall be retired by a tax such as the Ad Valorem Tax.
The Act further provides that the lien and foreclosure remedies provided in Article 9 of the Illinois
Municipal Code shall apply on nonpayment of any Ad Valorem Tax.
The Act contains a provision that allows residents of a special service area to petition the circuit
court having jurisdiction to disconnect territory from the special service area if, among other things, such
territory was not, is not, and is not intended by the corporate authorities which created the special service
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area to be benefited or served by services then existing or authorized, and that such territory constitutes
less than 1 1/2% of the special service area's total equalized assessed valuation. The Developer and the 1 1
City have represented that no parcel within the Area currently meets this test.
Establishment of the Special Service Area
Pursuant to the Act, the corporate authorities of the City adopted Ordinance No. - on
2007 proposing to establish the SSA. Pursuant to a notice published in on ,
2007 and pursuant to notice by mail to each person in whose name general taxes for the last proceeding
year were paid on each parcel of land within the SSA, a public hearing was held on March 13, 2007 to
further consider establishment of the SSA. On _, 2007, the City Board adopted Ordinance No.
(the "Establishing Ordinance "), which established the SSA to provide certain special services, and
authorized the City to levy and collect Ad Valorem Taxes to pay principal of and interest on the bonds
secured by the Ad Valorem Taxes in an aggregate principal amount not to exceed $12,500,000 with the
maximum rate of taxes to be extended in any year for special services within the proposed SSA to not
exceed the amount necessary to produce an annual tax levy of $1,865,000. Pursuant to the Act, if a
petition signed by at least 51% of the electors residing within the SSA and by at least 51% of the owners
of record of land included within the boundaries of the SSA was filed with the municipal clerk within 60
days following the final adjournment of the public hearing objecting to the creation of the SSA, the
issuance of the Bonds or the provision of the Special Services, then the SSA could not be created. No
such petition was filed objecting to the creation of the SSA. The City has caused the Establishing
Ordinance to be recorded in the Office of the Recorder of Deeds of Kendall County.
Levy, Abatement and Collection of Ad Valorem Tax
In Illinois, property taxes levied in one year become payable during the following year as 1
provided in said levy. Pursuant to the Bond Ordinance the City has levied the Ad Valorem Tax upon all
taxable real property within the SSA and will abate such tax each year to the extent it exceeds the Ad
Valorem Tax Requirement. On November 1 of each year, the Trustee shall determine the amount of the
Ad Valorem Tax Requirement for the next succeeding March 1, September 1 and March 1 (of the
following year) less amounts already on deposit in the Bond Fund on such November 1 (the
"Deficiency "). The Ad Valorem Tax authorized to be levied by the Bond Ordinance shall be abated each
year to the extent the taxes levied pursuant to the Bond Ordinance exceed the Ad Valorem Tax
Requirement as calculated by the Trustee.
At the end of each collection year, the Kendall County Treasurer applies to the Circuit Court of
Kendall County, for a judgment for all unpaid taxes. The Circuit Court of Kendall County order resulting
from that application for judgment provides for a sale of all property with unpaid taxes. A public sale is
held, at which time successful bidders pay the unpaid taxes plus penalties. The annual tax sale is usually
held during November in Kendall County. Unpaid taxes accrue penalties at the rate of 1 1/2% per month
from their due date until the date of sale. Taxpayers can redeem their property by paying the purchaser of
the property at the tax sale the amount paid at the sale, plus a penalty. If redemption does not occur
within two and one half years, the purchaser of the property at the tax sale can receive a deed to the
property which has been sold for delinquent taxes. Alternatively, a municipality may seek enforcement of
unpaid Ad Valorem Tax through foreclosure proceedings by seeking in a court an adjudication of the
existence of a lien and a finding of a failure to pay Ad Valorem Tax when due. Upon making such a
finding, a court having jurisdiction would enter a foreclosure decree authorizing the sale of the property
subject to the lien of the Ad Valorem Tax. See "SECURITY AND SOURCE OF PAYMENT FOR THE
BONDS — Foreclosure of Liens" herein.
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The City has levied a Ad Valorem Tax upon all taxable real property within the SSA sufficient to
pay and discharge the principal of the Bonds at maturity or mandatory sinking fund redemption dates and
to pay interest on the Bonds for each year, to pay for the Administrative Expenses of the City for each
year and to replenish the Reserve Fund to an amount equal to the Required Reserve.
RISK FACTORS
Investment in the Bonds involves risks which may not be appropriate for certain investors. The
following is a discussion of certain risk factors which should be considered, in addition to other matters
set forth in this Limited Offering Memorandum, in evaluating the Bonds which are not rated by a
recognized rating agency. This discussion does not purport to be comprehensive or definitive. The
occurrence of one or more of the events discussed herein could adversely affect the ability or willingness
of property owners in the SSA to pay their Ad Valorem Tax when due. Such failures to pay Ad Valorem
Tax could result in the inability of the SSA to make full and punctual payments of debt service on the
Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect
the value of the property in the SSA.
Limited Source of Funds
The Bonds, together with the interest thereon, are limited obligations of the City, payable solely
from the Revenues and the amounts on deposit in the various funds and accounts established and
maintained under the Indenture, all as more fully set forth therein. The Bonds are not general obligations
of the City and do not constitute an indebtedness of the City within the meaning of any constitutional or
statutory limitation. No holder of the Bonds shall have the right to compel the exercise of any taxing
power of the City for payment of principal thereof or interest or premium, if any, thereon (other than the
levy of the Ad Valorem Tax or the pledge of the Business District Sales Taxes and as provided in the
Bond Ordinance and the Indenture). See "SECURITY AND SOURCE OF PAYMENT FOR THE
BONDS --- General' herein.
Concentration of Ownership/Lease of Project
All of the land within the SSA is expected to be owned by a limited number of owners including
the Developer. The Developer currently intends to develop the land within the SSA as set forth in this
Limited Offering Memorandum. There are expected to be leases entered into with several lessees of
property within the SSA prior to completion of the Project: Because of the current concentration of
ownership in the Developer, the timely payment of the Bonds depends upon the willingness and ability of
the Developer to pay the Ad Valorem Tax levied even if the Project is not adequately leased. A
slowdown or stoppage in the continued lease of the Project could reduce the willingness and ability of the
property owners to make Ad Valorem Tax payments and could greatly reduce the value of such property
in the event of any foreclosure proceedings against the Developer. The entities comprising the Developer
are Illinois limited liability companies and an Illinois corporation and have a limited source of funds. A
failure to make payments when due could result in the rapid, total depletion of the Reserve Fund and
other pledged funds prior to replenishment from the resale of property upon a foreclosure or otherwise. In
that event, there could be a default in payments of the principal of, and interest on, the Bonds. See "THE
DEVELOPER" above and "RISK FACTORS — Potential Delay and Limitation in Foreclosure
Proceedings" below.
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Information Not Verified
�i
Information concerning the SSA and the proposed development has been obtained from the City,
the Developer and other sources believed to be reliable, but much of that information involves predictions
of future events, such as leasing ability of the Developer or other property owners to pay their share of the
Ad Valorem Tax; such information is, by its nature, not subject to verification.
Failure to Develop Project
Development of land is subject to economic considerations affecting the Developer and
prospective purchasers of developed property including interest rates and the general economic climate of
the region surrounding the SSA. The failure to complete development of the required infrastructure or
substantial delays in the completion of the Project due to litigation or the inability to obtain required
funding by the Developer, such failure or delay may affect the willingness and ability of the owners of
property within the SSA to pay the Ad Valorem Tax when due. There can be no assurance that the
Special Services will be constructed or will be constructed in time for development to proceed as
currently expected. See "SUMMARY OF THE PROJECT." The City may terminate the Development
Agreement if the Developer does not comply with ,its terms and provisions. There can be no assurance
that the Developer will comply with the terms of the Development Agreement or that the City will not
terminate such agreement if the Developer fails to comply with its terms. See "SUMMARY OF THE
DEVELOPMENT AGREEMENT ".
Only a portion of all of the development costs are being provided by the Bonds. Private financing
will be necessary in order to complete the Project. There is no guarantee that the Developer will obtain
such financing.
I
The cost of the Special Services plus the public and private in tract, on site and off site
improvements can be expected to increase the public and private debt encumbering the land within the
SSA. The Ad Valorem Tax, on a parity with all other property taxes, has priority over all existing and
future private liens, imposed on property in the SSA except, possibly, for liens or security interests held
by the Federal Deposit Insurance Corporation. See "RISK FACTORS — Bankruptcy," and "— Potential
Delay and Limitations in Foreclosure Proceedings." Although liens securing private debt are subordinate
to the lien of the Ad Valorem Tax securing the Bonds, this increased private debt could reduce the ability
or desire of the property owners to pay the Ad Valorem Tax imposed against their property. See
"SECURITY AND SOURCE OF PAYMENT FOR THE BONDS —Ad Valorem Tax." If property
owners in the SSA failed to pay the Ad Valorem Tax, and if the Reserve Fund is depleted prior to
collection of such delinquent Ad Valorem Tax through foreclosure sale or otherwise, there could be a
default in the payment of principal of, and interest on, the Bonds. See "RISK FACTORS — Bankruptcy"
herein.
Development within the SSA is contingent upon the construction and acquisition of the Special
Services as well as the necessary on -site improvements. A slowdown or stoppage of the development
process could adversely affect land values and reduce the ability or desire of property owners to pay the
Ad Valorem Tax. In that event, there could be a default in the payment of principal of, and interest on,
the Bonds.
Risk of Construction
The generation of Business District Sales Taxes is dependent upon the completion of Phase II as
well as additional Phases within the Area. Delays in the construction of the retail stores and the delay in
opening the retail stores could adversely affect the generation of Excess Business District Sales Tax.
44
Construction delays could occur for reasons outside the control of the Developer such as material or labor
shortages.
Risk of Occupancy
There is no assurance that the leasing of the retail space within the SSA will achieve or maintain
the projected occupancy to generate sales taxes as set forth under "Security and Source of Payment for the
Bonds — Projected Excess Business District Sales Tax Available for Bonds Debt Service ". There are
anticipated to be numerous small tenants in the Area with various lease terms and various provisions in
their leases, and there can be no assurance that, when a lease expires or is terminated for any reason, the
lease will be extended or that the tenant's space will be re-leased.' A failure to re -lease space could
adversely affect the Excess Business District Sales Tax generated from the SSA.
Risk of Changes in Market Conditions, Changes in General Economic Conditions and Future
Competition
Sales by the stores in the SSA, and the subsequent generation of Excess Business District Sales
Tax, could be significantly impaired as a result of changes in market conditions, changes in general
economic conditions and competition from existing facilities or facilities developed in the future.
Risk of Natural Disaster
In the event of a natural disaster severely damaging the facilities in the SSA, there can be no
assurance that such facilities will be rebuilt. In such case, generation of Excess Business District Sales
Tax would be adversely affected.
Risk of Anchor Lease Terminations or Discontinued Operations
The generation of Excess Business District Sales Tax could be significantly impaired if any one
or more of the anchor tenants within the SSA terminates its lease of space and is not replaced by a
comparable tenant. Certain leases grant certain anchor tenants the right to terminate their respective
leases under a number of different conditions. In addition, tenants may have the right to terminate their
respective leases in the event of fire or other casualty, condemnation, a breach by the landlord of its
obligations under the lease, or the existence of hazardous wastes not caused by the tenant. The
bankruptcy or insolvency of any tenant may also result in the termination of such tenant's lease. There
can be no assurance that any of the circumstances under which any one or more of the leases w ill or may
be terminated will not occur.
No assurance can be given that Target, Home Depot or Kohl's or other owners of retail property
within the SSA will continue to be viable businesses. In such case, the availability of Excess Business
District Sales Tax could be negatively affected.
Local, State and Federal Land Use Regulations
There can be no assurance that land development operations within the SSA will not be adversely
affected by future government policies, including, but not limited to, governmental policies which directly
or indirectly restrict or control development. The Development Agreement cannot limit the application of
state or federal laws and regulations which have preemptive effect on local land use regulations. During
the past several years, state and federal regulatory agencies have significantly expanded their involvement
in local land use matters through increased regulatory enforcement of various environmental laws,
including the Endangered Species Act, the Clean Water Act and the Clean Air Act, among others. Such
45
regulations can substantially impair the rate and amount of development without requiring just
compensation unless the effect of the regulation is to deny all economic use of the affected property. }
Bondowners should assume that any event that significantly impairs the ability to develop land in the
SSA could cause the land values within the SSA to decrease substantially and could affect the willingness
and ability of the owners of land to pay the Ad Valorem Tax when due or to proceed with development of
land in the SSA. See "RISK FACTORS Failure to Develop Properties" herein.
Overlapping Indebtedness
The Ad Valorem Tax and any penalties assessed for failure to pay such taxes will constitute a lien
against the parcels of land on which they will be levied until such taxes are paid. Such lien will be on a
parity with all Ad Valorem Taxes and special assessments which may be levied by other agencies and is
co equal to and independent of the lien for general ad valorem real property taxes regardless of when they
are imposed upon the same property. The City, however, has no control over the ability of other entities
and districts to issue indebtedness secured by Ad Valorem Taxes or assessments payable from all or a
portion of the property within the SSA.
The ability of an owner of land within the SSA to pay the Ad Valorem Tax could be adversely
affected if additional debt is issued or additional taxes or assessments are levied which are payable by the
owners of land within the SSA. The imposition of additional liens, whether public or private, may reduce
the ability or willingness of the landowners to pay the Ad Valorem Tax and increases the possibility that
foreclosure proceeds will not be adequate to pay delinquent Ad Valorem Tax.
Zoning Approvals
Pursuant to the City Zoning Ordinance, any outstanding approvals involve, to a certain degree,
the exercise of discretion on the part of the City. While the Development Agreement contains certain
covenants regarding the SSA's zoning, such discretionary action may not always be exercised in amanner
that is favorable to the Developer.
Permits
The Developer has not applied for all building permits necessary to construct the Special Services
and the other improvements that make up the Project. Failure to obtain the necessary permits on a timely
basis could adversely affect the completion of the Project.
Tax Delinquencies,
In order to pay debt service on the Bonds, it is necessary that the Ad Valorem Tax within the SSA
be paid in a timely manner. Under provisions of the Act, the Ad Valorem Tax, from which funds
necessary for the payment of principal of, and interest on, the Bonds are derived, are customarily billed to
the property owners within the SSA on the regular general ad valorem property tax bills sent to owners of
such properties. Such Ad Valorem Tax installments are due and payable, and bear the same penalties and
interest for non payment, as do general ad valorem property tax installments. The unwillingness or
inability of a property owner to pay ad valorem property tax bills as evidenced by general ad valorem tax
delinquencies may also indicate an unwillingness or inability to make general ad valorem tax payments
and Ad Valorem Tax installment payments in the future. If the Developer or future owners fail to pay the
Ad Valorem Tax when due there could be significant Ad Valorem Tax delinquencies. See "RISK
FACTORS— Concentration of Ownership/Lease of Project."
46
See "SECURITY AND SOURCE OF PAYMENT FOR THE BONDS Foreclosure of Liens"
for a discussion of the provisions which apply, and procedures which the City is obligated to follow under
the Indenture, in the event of delinquencies in the payment of Ad Valorem Tax. See "RISK FACTORS —
Potential Delay and Limitation in Foreclosure Proceedings" and " Bankruptcy" below, for a discussion of
limitations on the City's ability to foreclose the lien of delinquent unpaid Ad Valorem Tax in certain
circumstances.
Potential Delay and Limitations in Foreclosure Proceedings
The payment of Ad Valorem Tax and the ability of the Kendall County on behalf of the City to
foreclose the lien of a delinquent unpaid Ad Valorem Tax may be limited by bankruptcy, insolvency and
other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure.
See "RISK FACTORS — Bankruptcy." In addition, the prosecution of a foreclosure could be delayed due
to many reasons, including crowded local court calendars or lengthy procedural delays.
The ability of the City to foreclose the lien of a delinquent unpaid Ad Valorem Tax payment may
be limited with regard to properties in which the Federal Deposit Insurance Corporation ( "FDIC ") or any
successor to the FDIC may acquire an interest. The FDIC currently does not have an interest in the land
within the SSA. However, if a lender takes a security interest in property in the SSA and becomes
insolvent, such a lender could fall under the jurisdiction of the FDIC. The FDIC could assert federal
preemptive power to challenge any prior taxes, Ad Valorem Taxes and assessments where it is in their
interest to do so, including the requirement that local agencies obtain the consent of the FDIC in order to
foreclose the lien of delinquent unpaid Ad Valorem Taxes.
If the City is required to obtain the consent of the FDIC to foreclose on property located in the
SSA, such consent could be denied and the City might be unable to pursue foreclosure proceedings.
Additionally, obtaining such consent could delay the foreclosure proceedings. Any delay in foreclosure
proceedings or the inability of the City to foreclose on property in the SSA in which the FDIC has an
interest could result in a delay or default in payment of the Bonds.
In addition, potential investors should be aware that judicial foreclosure proceedings are not
summary remedies and can be subject to significant procedural and other delays caused by crowded court
calendars and other factors beyond the control of the SSA or the City. In addition, the Illinois
Constitution prescribes certain minimum redemption periods, which may be as long as three years, in the..
event of foreclosure. See "SECURITY AND SOURCE OF PAYMENT FOR THE BONDS —
Foreclosure of Liens." It should be assumed that, under current conditions, it is estimated that a judicial
foreclosure of the lien of the Ad Valorem Tax could take several years from initiation of litigation to the
lien foreclosure sale.
Delays and uncertainties in the Ad Valorem Tax lien foreclosure process create significant risks
for Bondowners. High rates of Ad Valorem Tax payment delinquencies which continue during the
pendency of protracted Ad Valorem Tax lien foreclosure proceedings, could result in the rapid, total
depletion of the Reserve Fund prior to replenishment. In that event, there could be a default in payments
of the principal of, and interest on, the Bonds. See "RISK FACTORS — Concentration of
Ownership/Lease of Project" above.
Bankruptcy
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including
Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal
i
47
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I
instruments, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the
rights of creditors generally.
Although a bankruptcy proceeding would not cause the Ad Valorem Tax to become extinguished,
the amount and priority of any Ad Valorem Tax lien could be modified if the value of the property falls
below the value of the lien. If the value of the property is less than the lien, such excess amount could be
treated as an unsecured claim by a bankruptcy court having jurisdiction. In addition, bankruptcy of a
property owner could result in a delay in commencement and completion of foreclosure proceedings.
Such delay would increase the likelihood of a delay or default in payment of the principal of, and interest
on, the Bonds and the possibility of delinquent tax Ad Valorem Tax installments not being paid in full.
Limitation on Remedies; No Acceleration
Remedies available to holders of the Bonds may be limited by a variety of factors and may be
inadequate to assure the timely payment of principal of and interest on the Bonds, or to preserve the tax -
exempt status of the Bonds. Bond Counsel has limited its opinions to the extent that enforceability may
be limited by bankruptcy, insolvency, or similar laws affecting generally the enforcement of creditors'
rights. Additionally, the Bonds are not subject to acceleration in the event of the breach of any covenant
or duty under the Indenture, including payment default. Lack of remedies may entail risks of delay,
limitation, or modification of the rights of the holders of the Bonds. Judicial remedies, such as
foreclosure and enforcement of covenants, are subject to exercise of judicial discretion.
Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary
market exists, that such Bonds can be sold for any particular price. Neither the City nor the Developer
has committed to provide any financial and/or operating information on a going forward basis.
Occasionally, because of general market conditions, lack of current information, the absence of a credit
rating for the Bonds or because of adverse history or economic prospects connected with a particular
issue, secondary marketing practices in connection with a particular issue are suspended or terminated. In
addition, prices of issues for which a market is being made will depend on then prevailing circumstances.
Such prices could be substantially different from the original purchase price.
Secondary Market and Prices
The Underwriter presently does not intend to engage in secondary market trading of the Bonds.
The Underwriter is not obligated to engage in secondary trading or to repurchase any of the Bonds at the
request of the Owners thereof. No assurance can be given that a secondary market for any of the Bonds
will be available and no assurance can be given that the initial offering prices for the Bonds will continue
for any period of time.
Loss of Tax Exemption
Interest on the Bonds could become includible in gross income for federal income tax purposes
retroactive to the date of issuance of the Bonds as a result of a failure of the City to comply with certain
provisions of the Code. Should such an event of taxability occur, the Bonds are not subject to early
redemption and will remain outstanding to maturity or until redeemed under the optional redemption or
mandatory redemption provisions of the Indenture.
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Risk of Legislative and Judicial Changes
Future legislation, regulations, governmental or judicial interpretation of regulations or legislation
or practices and procedures related to property tax assessment, levy, collections or distribution could have
a material effect on the calculation or availability of the Ad Valorem Tax. There is no assurance that
legislation will not be considered or enacted in the future, and unless provision is made in such legislation
for special service areas generally in Illinois, the generation of the Ad Valorem Tax could be materially
adversely affected.
UNDERWRITING
The Underwriter has agreed, subject to certain customary conditions precedent to closing, to use
its best efforts to offer for sale and to sell at par all, but not less than all, of the Bonds. The Underwriter
will receive an Underwriter's discount equal to _% of the issued amount of the Bonds
($ ) in consideration of their services. The Bonds may be offered and sold to certain
dealers and others at prices lower than the initial public offering price, and such public offering price may
be changed, from time to time, without notice by the Underwriters.
LEMTED OFFERING
The Bonds are being offered only to a limited number (35 or less) of sophisticated investors.
Each prospective purchaser of the Bonds is being furnished a copy of this Limited Offering
Memorandum, together with any supplements to this Limited Offering Memorandum. In addition, each
prospective purchaser is hereby offered the opportunity, prior to purchasing any Bonds and at any time
the Bonds are outstanding, to ask questions of, and receive answers from the Underwriter, the City and
the Developer concerning the terms and conditions of the offering, and to obtain any additional relevant
information, to the extent either possesses the same or can acquire it without unreasonable effort or
expense. Inquiries concerning additional information should be directed in writing to the Underwriter at
William Blair & Company, L.L.C., 222 W. Adams St., Chicago, Illinois 60606, Attention: Municipal
Bond Department.
LEGAL OPINIONS
Legal matters incident to the authorization, issuance and sale of the Bonds are subject to the
approving legal opinion of Foley & Lardner LLP, Chicago, Illinois, Bond Counsel. The proposed form of
the opinion of Bond Counsel is included herein as "APPENDIX C Bond Opinion." Certain legal
matters will be passed upon for the Underwriter by its counsel, Sonnenschein Nath & Rosenthal LLP,
Chicago, Illinois; for the City, by its counsel, John Wyeth Esq., Yorkville, Illinois, and for the Developer
by their counsel, Polsky & Associates Ltd., Chicago, Illinois.
TAX EXEMPTION
In the opinion of Foley & Lardner LLP, Bond Counsel, based upon an analysis of existing laws,
regulations, rulings and court decisions, and assuming, among other matters, compliance with certain
covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under the
Code and is not a specific preference item for purposes of determining an individual's or corporation's
federal alternative minimum taxable income. However, Bond Counsel observes that interest on the Bonds
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is included in adjusted current earnings in calculating federal corporate alternative minimum taxable
income. Interest on the Bonds is not exempt from State of Illinois income taxes.
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Bonds purchased, whether at original issuance or otherwise, for an amount greater than their
principal amount payable at maturity (or, in some cases, at their earlier call date) ( "Premium Bonds ") will
be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond
premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross
income for federal income tax purposes. However, the amount of tax exempt interest received, and a
purchaser's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium
properly allocable to such purchaser. Thus, the amortization of Bond premium may have an effect on a
Bondholder's recognition of gain or loss when a Premium Bond is sold or paid off. Beneficial Owners of
Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable
bond premium in their particular circumstances.
To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at
maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the
term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the
extent properly allocable to each Bondholder, is treated as interest on the Bonds which is excluded from
gross income for federal income tax purposes. For this purpose, the issue price of a particular maturity of
the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the
public (excluding bond houses, brokers, or persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds
accrues daily over the term to maturity of such Bond on the basis of a constant interest rate compounded
semiannually (with straight -line interpolations between compounding dates). The accruing original issue
discount is added to the adjusted basis of such Bond to determine taxable gain or loss upon disposition
(including sale, redemption, or payment on maturity) of Bonds. Beneficial Owners of the Bonds should
consult their own tax advisors with respect to the tax consequence of ownership of Bonds with original
issue discount, including the treatment of purchasers who do not purchase such Bonds in the original
offering to the public at the first price at which a substantial amount of such Bond was sold to the public.
Section 103 of the Code imposes various restrictions, conditions and requirements relating to
exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds.
The City has covenanted to comply with certain restrictions designed to insure that interest on the Bonds
will not be included in a Bondholder's gross income for federal income tax purposes. Failure to comply
with these covenants may result in interest on the Bonds being included in gross income for federal
income tax purposes, possibly from the original issue date of the Bonds. The opinion of Foley &
Lardner LLP assumes compliance with these covenants. Foley & Lardner LLP has not undertaken to
determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not
occurring) after the date of issuance of the Bonds may adversely affect the value of or the tax- exempt
status of interest on the Bonds. Further, Foley & Lardner LLP does not give assurance that pending or
further legislation or amendments to the Code, if enacted into law, will not adversely affect the value of or
the tax exempt status of interest on the Bonds. Beneficial Owners are encouraged to consult their own tax
advisors with respect to proposals to restructure the federal income tax.
Certain requirements and procedures contained or referred to in the Indenture, the Bond
Ordinance, the Tax Agreement and other relevant documents may be changed and certain actions
(including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstance
subject to the terms and conditions set forth in such documents. Foley & Lardner LLP expresses no
opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted
upon advice or approval of bond counsel other than Foley & Lardner LLP.
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Although Foley & Lardner LLP is of the opinion that interest on the Bonds is excluded from
gross income for federal income tax purposes, the ownership or disposition of, or the accrual or receipt of
interest on, the Bonds may otherwise affect a Beneficial Owner's federal or state tax liability. The nature
and extent of these other tax consequences will depend upon the particular tax status of the Beneficial
Owner or the Beneficial Owner's other items of income or deduction. Foley & Lardner LLP expresses no
opinion regarding any such other tax consequences.
No assurance can be given that any future legislation or clarifications or amendments to the Code,
if enacted into law, will not cause the interest on the Bonds to be subject, directly or indirectly, to federal
or state income taxation, or otherwise prevent the Bondholders from realizing the full current benefit of
the tax status of the interest thereon. Further, no assurance can be given that any such future legislation,
or any actions of the IRS, including, but not limited to, selection of the Bonds for audit examination, or
the course or result of any examination of the Bonds, or other bonds which present similar tax issues, will
not affect the market price for the Bonds.
CONTINUING INFORMATION
The Bonds are being initially issued in authorized denominations of $100,000 and integral
multiples of $5,000 in excess thereof and are being offered to less than thirty-five (35) institutional
investors. Accordingly, the Bonds will be exempt from the continuing disclosure requirements of Rule
15c2 12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended. Notwithstanding the City and the Developer have agreed to provide certain continuing
information described below.
The City
The City has covenanted in the Indenture to furnish to the Trustee, the Underwriter and the
Beneficial Owner of $500,000 or more in Bonds who so requests, within ten (10) days of receipt by the
City, a copy of each annual audit of the City, the schedule of tenants and lease expiration dates therefor
provided to the City by the Developer, any publicly available information received from the Illinois
Department of Revenue of the Business District Sales Taxes and any abatement ordinance adopted by the
City abating any of the Ad Valorem Taxes. The City will also provide to cause the Trustee to provide to
the Underwriter or and to the Beneficial Owner of $500,000 or more in bonds who so requests, copies of
any reports (including quarterly construction progress reports) or disclosure which the Developer provides
to the City pursuant to the terms of the Development Agreement.
The Developer
Pursuant to the Development Agreement, the Developer obligated to provide certain information
to the Trustee and the Underwriter. During construction of the Project, the Developer is required to
deliver to the Trustee and the Underwriter quarterly construction progress reports. After construction of
the Project has been completed, the Developer is required to furnish annually to the Trustee and the
Underwriter a schedule of tenants and lease expiration dates for the Project properties.
FINANCIAL ADVISOR
Speer Financial, Inc., Chicago, Illinois ( "Speer Financial "), is serving as financial advisor to the
City with respect to the sale of the Bonds. Speer Financial provides certain other financial and economic
development consulting services to the City.
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LIMITED OFFERING
The Bonds are being offered only to sophisticated investors. Each prospective purchaser of the
Bonds is being furnished a copy of this Limited Offering Memorandum, together with any supplements to
this Limited Offering Memorandum. In addition, each prospective purchaser is hereby offered the
opportunity, prior to purchasing any Bonds and at any time the Bonds are outstanding, to ask questions
of, and receive answers from the Underwriter, the City and the Developer concerning the terms and
conditions of the offering, and to obtain any additional relevant information, to the extent either possesses
the same or can acquire it without unreasonable effort or expense. Inquiries concerning additional
information should be directed in writing to the Underwriter at William Blair & Company, 222 West
Adams Street, Chicago, Illinois 60606, Attention: Municipal Bond Department.
NO LITIGATION
The City
At the time of delivery of and payment for the Bonds, the City will certify that there is no action,
suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency,
public board or body, pending with respect to which the City has been served with process or is otherwise
aware, or, to the knowledge of the officer of the City executing such certificate, threatened against the
City affecting the existence of the City, the SSA or the titles of its officers to their respective offices or
seeking to restrain or to enjoin the sale or delivery of the Bonds, the application of the proceeds thereof in
accordance with the Bond Ordinance and/or the Indenture, or the collection or application of the Ad
Valorem Tax, or in any way contesting or affecting the validity or enforceability of the Bonds, the Bond
Ordinance, the Indenture, the Development Agreement, or any action of the City contemplated by any of
the said documents, or the collection or application of the Ad Valorem Tax, or in any way contesting the
completeness or accuracy of the Bond Ordinance, the Indenture or any amendments or supplements
hereto, or contesting the powers of the City contemplated by any of said documents, nor, to the
knowledge of the officer of the City executing such certificate, is there any basis therefor.
The Developer
At the time of delivery- of and payment for the Bonds, the Developer will certify that there is no
action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government
agency, public board or body, pending or threatened by or against the Developer: (i) in any way
questioning the due formation and valid existence of the Developer; (ii) in any way questioning or
affecting the validity of the Development Agreement or the consummation of the transactions
contemplated thereby; (iii) in any way questioning or contesting the validity of any governmental
approval of the Project or any aspect thereof, or (iv) which would have a material adverse effect upon the
financial condition of the Developer or the ability of the Developer to develop the Project.
NO RATING
The City has not made, and does not currently contemplate making, an application to any rating
agency for the assignment of a rating to the Bonds.
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MISCELLANEOUS
The references, excerpts, and summaries of documents and statutes contained in this Limited
Offering Memorandum do not purport to be complete statements of the provisions of such documents and
statutes, and reference is made to all such documents and statutes for full and complete statements of their
terms and provisions.
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The estimates, assumptions, statistical and financial information, and all other information
contained in this Limited Offering Memorandum have been compiled from official and other sources
believed by the underwriter to be reliable; however, none of such estimates, assumptions, or information
is guaranteed by the City, the Developer, the Ad Valorem Tax Consultant, or the Underwriter as to
completeness or accuracy.
Any statement made in this Limited Offering Memorandum involving matters of opinion or of
estimates, whether or not so expressly stated, is set forth as such and not as a representation of fact; no
representation is made that any of the estimates contained herein will be realized. The information and
expressions of opinion contained herein are subject to change without notice, and neither the delivery of
this Limited Offering Memorandum nor any offer or sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the City or the Project since the date
hereof.
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AUTHORIZATION
Both the City and the Developer have authorized the execution and distribution of this Limited
Offering Memorandum.
UNITED CITY OF YORKVILLE,
an Illinois municipal corporation
By:
Arthur Prochaska, Mayor
THE HARLEM IRVING COMPANIES, INC.
By:
Michael Marchese, President
MID- AMERICAN INVESTMENT AND
DEVELOPMENT
BY:
Michael Fersel, President
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APPENDIX A
Trust Indenture
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APPENDIX B
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Development Agreement
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APPENDIX C
Bond Opinion
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APPENDIX D
Appraisal
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