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together with the equity of the Borrower and the proceeds of the Series 2013 Note, if issued by the City of
<br />Fridley, to finance the acquisition, construction, and equipping of the Project.
<br />1.11. From and after the date of issuance of the Subordinate Note, the proceeds of the
<br />Subordinate Note are to be disbursed to the Borrower in accordance with the terms of a Disbursing
<br />Agreement, dated on or after November 1, 2013 (the "Disbursing Agreement"), between the Borrower,
<br />the Servicer, and a disbursing agent selected by the Borrower and acceptable to the Servicer, and applied
<br />to the payment of the costs of the acquisition, construction and equipping of the Project.
<br />1.12. In consideration of the loan by the City of the proceeds of the Subordinate Note to the
<br />Borrower and to secure the payment of its obligations under the Loan Agreement and the principal of,
<br />premium, if any, and interest on the Subordinate Note when due, BHS, as the designated agent of the
<br />Obligated Group consisting of St. Gertrude's Health Center, a Minnesota nonprofit corporation ("St.
<br />Gertrude's"), Steeple Pointe Senior Living Community, a Minnesota nonprofit corporation ("Steeple
<br />Pointe"), and City of Lakes Care Center, a Minnesota nonprofit corporation ("City of Lakes," and
<br />collectively with St. Gertrude's and Steeple Pointe, the "Obligated Group"), will deliver to the Servicer a
<br />Guaranty Agreement, dated on or after November 1, 2013 (the "Guaranty"), to guarantee the payment of
<br />the principal of and the interest on the Subordinate Note.
<br />1.13. The Subordinate Note will be subordinate in right of repayment to the Series 2013 Note.
<br />1.14. The loan repayments required to be made by the Borrower under the terms of the Loan
<br />Agreement will be assigned to the Servicer under the terms of the Loan Agreement and the Servicing
<br />Agreement.
<br />1.15. The principal of, premium, if any, and interest on the Subordinate Note (i) shall be
<br />payable solely from the revenues pledged and otherwise available therefor (i.e., excess revenues
<br />generated by the Project not used to pay principal of and interest on the Series 2013 Note, as they become
<br />due); (ii) shall not constitute a debt of the City within the meaning of any constitutional or statutory
<br />limitation; (iii) shall not constitute nor give rise to a pecuniary liability of the City or a charge against its
<br />general credit or taxing powers; and (iv) shall not constitute a charge, lien, or encumbrance, legal or
<br />equitable, upon any property of the City other than the City's interest in the Loan Agreement and the
<br />Servicing Agreement.
<br />Section 2. The Subordinate Note.
<br />2.01. For the purposes set forth above, there is hereby authorized the issuance, sale and
<br />delivery of the Subordinate Note in an aggregate principal amount not to exceed $3,000,000. The
<br />Subordinate Note shall bear interest at rates designated by the terms of the Servicing Agreement and the
<br />Subordinate Note, and shall be designated, shall be numbered, shall be dated, shall mature, shall be
<br />subject to redemption prior to maturity, shall be in such form, and shall have such other terms, details, and
<br />provisions as are prescribed in the Servicing Agreement, in the form now on file with the City, with the
<br />amendments referenced herein. The City hereby authorizes the Subordinate Note to be issued as a
<br />"tax-exempt bond" the interest on which is not includable in gross income for federal and State of
<br />Minnesota income tax purposes.
<br />2.02. All of the provisions of the Subordinate Note, when executed as authorized herein, shall
<br />be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein
<br />and shall be in full force and effect from the date of execution and delivery thereof. The Subordinate
<br />Note shall be substantially in the form set forth in the Servicing Agreement, which form is hereby
<br />approved, with such necessary and appropriate variations, omissions, and insertions (including changes to
<br />433887vl JAE MU210-222
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