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HomeMy WebLinkAbout1992-06-18 Resolution 56• RESOLUTION NO .; 56 RESOLUTION OF THE SOUTH BEND REDEVELOPMENT AUTHORITY AUTHORIZING THE ISSUANCE OF THE SOUTH BEND REDEVELOPMENT AUTHORITY TAXABLE LEASE RENTAL REVENUE BONDS (PALAIS ROYALE PROJECT) AND REGARDING OTHER RELATED MATTERS WHEREAS, the South Bend Redevelopment Authority (the "Authority") has been created pursuant to I.C. 36-7-14.5 as a separate body, corporate and politic, and as an instrumentality of the City of South Bend to finance local public improvements for lease to the South Bend Redevelopment Commission (the "Commission"); and WHEREAS, the Authority intends to issue bonds in the aggregate amount of One Million Four Hundred Ten Thousand Dollars ($1,410,000) pursuant to I.C. 36-7-14.5-19 to be known as the "South Bend Redevelopment Authority Taxable Lease Rental Revenue Bonds (Palais Royale Project)" (the "Bonds"), the proceeds of which are to be used to finance certain land and public improvements (the "Project") and to pay the costs of ,issuance of the Bonds; and WHEREAS, the Authority intends to lease the Project to the Commission pursuant to a lease dated as of March 1, 1992 (the "Lease"), which Lease was heretofore approved and executed by this Authority; WHEREAS, there has been prepared and submitted to the Authority a form of Trust Agreement to be dated as of June 1, 1992, between the Authority and Norwest Bank Indiana, N.A., as Trustee (the "Trust Agreement") which Trust Agreement provides for, among other things, the issuance of such Bonds to finance the Project; and WHEREAS, an Official Statement dated June 18, 1992, relating to the issuance of the Bonds (the "Official Statement") has been prepared by Evensen Dodge, Inc., as financial advisor to the Authority, and presented to the Authority; NOW, THEREFORE, BE IT RESOLVED, by this South Bend Redevelopment Authority as follows: Section 1. In order to pay and finance the costs of the Project and to pay costs of issuance, there is hereby authorized and there shall be executed, issued, and delivered by and on behalf of the Authority, pursuant to I.C. 36-7-14.5 et sea., the Bonds in the aggregate principal sum of One Million Four Hundred Ten Thousand Dollars ($1,410,000). Section 2. The Bonds shall bear interest at a rate or rates not exceeding ten percent (10%) per annum (or such lesser per annum interest rate as the Authority may establish with the advice of its financial advisor at the time of the publication of the notice of intent to sell the Bonds) and shall mature serially on February 1 in the years and in the amounts as follows: Year Amount Year Amount 1993 $ 35,000 1999 $120,000 1994 85,000 2000 130,000 1995 90,000 2001 140,000 1996 100,000 2002 150,000 1997 105,000 2003 165,000 1998 110,000 2004 180,000 • -2- Section 3. The Bonds maturing on or after February 1, • 2002, may be redeemed prior to maturity, at the option of the Authority in whole or in part in whole multiples of $5,000, in inverse order of maturity and by lot within maturities, on any date not earlier than February 1, 2001, from any moneys made available for that purpose, at face value and without premium plus accrued interest to the date fixed for redemption. Section 4. Said Bonds snarl ne issueu ~~~ a~;~;~iuc..=~~ with and shall be secured by a trust agreement substantially in the form of a Trust Agreement as submitted to this meeting, with such changes as the President and the Secretary of the Authority deem necessary or appropriate to effectuate these resolutions and to consummate the sale of the Bonds, said officers' execution and attestation thereof to be conclusive evidence of their approval of • such changes. Section 5. The Secretary is authorized and directed to place a copy of the Trust Agreement in the minute book immediately following the minutes of this meeting and said Trust Agreement is made a part of this Resolution as if the same were fully set forth herein. Section 6. The Official statement is ner~~y aNNlvvcu in the form presented to the Authority at this meeting, and the Official Statement in the form presented at this meeting is hereby deemed final for purposes of the provisions of Rule 15c2-12 of the Securities and Exchange Commission. Evensen Dodge, Inc., is hereby authorized and directed to cause to be distributed such statement • -3- • substantially in the form presented to this meeting, with such changes which are approved by the Authority's legal counsel as Evensen Dodge, Inc., might recommend to describe adequately the Bonds and information related thereto, to all parties who in their judgment may be interested in bidding on such Bonds; and the Authority shall place a copy of such Official Statement as presented to this meeting with the minutes of this meeting. Section 7. Prior to the sale of the Bonds, the Secretary of the Authority shall cause to be published a notice of intent to sell bonds once each week for two weeks in the Tri- County News, the South Bend Tribune and The Indianapolis Commercial. The notice of such sale or a summary thereof may be published in Credit Markets, a financial journal published in the . City and State of New York and/or in other newspapers, in the discretion of the Secretary. The notice must state that any person interested in submitting a bid for the Bonds may furnish in writing at the address set forth in the notice, the person's name, address, and telephone number, and that any such person may also furnish a telex or facsimile number. The notice must also state: (1) the amount of the Bonds to be offered; (2) the denominations; (3) the dates of maturity; (4) the maximum rate or rates of interest; (5) the place of sale; and (6) the time within which the name, address and telephone number must be furnished, which must not be less than seven days after the last publication of the notice. Each person so registered shall be notified of the date and time bids will be received not less than twenty-four (24) hours before the date and -4- • time of sale. The notification shall be made by telephone at the number furnished by the person, and also by telex or facsimile if the person furnishes a telex or facsimile number. All bids for Bonds shall be sealed and shall be presented to the Secretary at the principal office of the Authority, and the Secretary shall continue to receive all bids offered until the hour fixed for the sale of the Bonds, at which time and place he shall open and consider each bid. Bidders for the Bonds shall be required to name the rate or rates of interest which the Bonds are to bear, not exceeding the maximum rate set forth herein. The interest rate on Bonds of a given maturity must be at least as great as the interest rate on Bonds of any earlier maturity. Bids specifying more than one interest rate shall also specify the amount and maturities of . the Bonds bearing each rate, and all Bonds maturing on the same date shall bear the same single rate of interest. Subject to the provisions contained below, the Secretary shall award the Bonds to the bidder offering the lowest net interest cost to the Authority, to be determined by computing the total interest on all of the Bonds from the date thereof to their maturities and deducting therefrom the premium bid, if any, or adding thereto the amount of any discount, if any. No bid for less than One Million Three Hundred Eighty-Eight Thousand Eight Hundred Fifty Dollars ($1,388,850), plus accrued interest at the rate or rates named to the date of delivery, will be considered. The Secretary shall have full right to reject any and all bids. In the event no acceptable bid is received at the time fixed for the sale of said Bonds, the -5- Secretary shall be authorized to continue to receive bids from day to day thereafter for a period not to exceed thirty (30) days, without readvertising; provided, however, that if said sale be continued, no bid shall be accepted which offers an interest cost which is equal to or higher than the best bid received at the time fixed for the sale of the Bonds. Prior to the delivery of the Bonds, the Secretary shall be authorized to obtain a legal opinion as to the validity of the Bonds from Baker & Daniels, bond counsel for the Authority, and to furnish such opinion to the purchaser or purchasers of the Bonds. The cost of such opinion shall be considered as part of the costs incidental to the issuance of the Bonds and shall be paid out of proceeds of said Bonds. Section 8. If the President and the Treasurer, with the advice of the financial advisor to the Authority, determine that market conditions at the time of the sale of the Bonds are such that the Authority is able to finance the Project by issuing Bonds in an aggregate principal amount which is less than $1,410,000, then the Authority shall issue such lesser principal amount of Bonds. Section 9. After the sale of the Bonds, the President and the Secretary are authorized to complete the Trust Agreement and then to execute the same on behalf of the Authority. Section 10. The President, Vice President, and Secretary-Treasurer of this Authority and each of them is hereby authorized to take all such actions and to execute all such instruments as are desirable to carry out the transactions -6- • contemplated by this Resolution, in such forms as the President, Vice President, and Secretary-Treasurer executing the same shall deem proper, to be evidenced by the execution thereof. Section 11. The provisions of this Resolution and the Trust Agreement shall constitute a contract between the Issuer and the holders of the Bonds, and, after the issuance of the Bonds, this Resolution shall not be repealed or amended in any respect which would adversely affect the rights of such holders so long as the Bonds or the interest thereon remains unpaid. ADOPTED at a meeting of the Authority held on June 18, 1992, in the offices of the Authority, 1200 County-City Building, 227 West Jefferson Boulevard, South Bend, Indiana 46601. CITY OF SOUTH BEND . REDEVELOPMENT AUTHORITY BY: w Jos h Wroblewski, President A ST: -. Donald Fewell, Secretary-Treasurer \rrrompol\palais.roy\luathiss.bon;6/16/92; -7- .~ z 4 S I • TRUST AGREEMENT Between U SOUTH BEND REDEVELOPMENT AUTHORITY AND NORWEST BANK INDIANA, N.A. South Bend, Indiana, Trustee Dated as of June 1, 1992 (Palais Royale Project) CJ t 1 ~ INDEX Paae Parties, Recitals Granting Clauses ARTICLE I. Definitions ARTICLE II. Maturities, Form, Issuance, Delivery and Registration of Bonds ARTICLE III. ARTICLE IV. ARTICLE V. ARTICLE VI. ARTICLE VII. ARTICLE VIII. ARTICLE IX. ARTICLE X. ARTICLE XI. Funds Redemption of Bonds Covenants of the Authority . Insurance Remedies in Case of Default Defeasance, Payment, Release . Concerning the Trustee . Supplemental Agreements Miscellaneous Provisions . • TRUST AGREEMENT THIS AGREEMENT (the "Agreement"), executed and dated as of the 1st day of June, 1992, made and entered into between SOUTH BEND REDEVELOPMENT AUTHORITY, a public body corporate and politic, organized and existing under Indiana Code 36-7-14.5, as amended (hereinafter called the "Authority"), and NORWEST BANK INDIANA, N.A., having its principal office in the City of South Bend, Indiana (hereinafter called the "Trustee"), W I T N E 5 S E T H: WHEREAS, the Authority was created under and pursuant to the provisions of Indiana Code 36-7-14.5 (hereinafter referred to as the "Act"), for the purpose of financing local public improvements for lease to the South Bend Redevelopment Commission (hereinafter referred to as the "Commission"); and WHEREAS, the Authority has determined to borrow the sum of One Million Four Hundred Ten Thousand Dollars ($1,410,000) for the purpose of procuring funds to pay the cost of acquiring the Project (as hereinafter defined) and to execute and issue its Taxable Lease Rental Revenue Bonds in the form and terms as hereinafter provided; and WHEREAS, the Authority intends to lease said Project to the Commission pursuant to a lease dated as of March 1, 1992; and WHEREAS, in order to secure the principal of and premium, if any, and interest on all of said Bonds and the performance of the covenants herein contained, the Authority has in like manner determined to execute and deliver this Agreement; and WHEREAS, all acts, proceedings and things necessary and required by law to make said Bonds, when executed by the Authority and authenticated by the Trustee, the valid, binding and legal obligations of the Authority and to constitute and make this Agreement a valid agreement to secure the payment of the principal of and premium, if any, and interest on the Bonds, have been done, taken and performed, and the issuance, execution and delivery of said Bonds, and the execution, acknowledgment and delivery of this Agreement have, in all .respects, been duly authorized by the Authority in the manner provided and required by law; now therefore, SOUTH BEND REDEVELOPMENT AUTHORITY, in consideration of the premises and the acceptance of such Bonds by the holders thereof, and the sum of One Dollar ($1) in hand paid by the Trustee, receipt of which is hereby acknowledged, and especially in order to secure the punctual payment of the principal of, premium, if any, and • • interest on the Bonds to be issued and at any time outstanding hereunder as the same shall become due, according to the tenor hereof and thereof, and the faithful performance of all the covenants and agreements contained in said Bonds and in this Agreement, and in performance of the authority of every kind and nature which said Authority has or may have, has executed and delivered this Agreement and has pledged and assigned and by these presents does hereby pledge and assign unto Norwest Bank Indiana, N.A. , as Trustee and to its successors in said trust and to its assigns, the Lease (as hereinafter defined) and the Pledged Funds (as hereinafter defined) subject to the provisions of this Agreement requiring or permitting the application thereof for the purposes and on the terms set forth in this Agreement. The pledge herein made is and shall be subject to the provisions of this Agreement for the equal and proportionate benefit, security and protection of all holders of the Bonds issued or to be issued under and secured by this Agreement, without preference, priority or distinction as to lien or otherwise by reason of the date of maturity thereof, or for any other reason whatsoever, subject to the provisions of this Agreement. PROVIDED, HOWEVER, that if the Authority, its successors or its assigns, shall well and truly pay, or cause to be paid, the principal of the Bonds and the premium, if any, and the interest due or to become due thereon, at the times and in the manner as set forth in said Bonds in accordance with the terms hereof, and shall i well and truly keep, perform and observe all covenants and conditions pursuant to the terms of this Agreement to be kept, performed and observed by the Authority, and shall pay to the Trustee all sums of money due, or to become due to it, in accordance with the terms and provisions hereof, then this Agreement and the rights hereby granted shall cease, determine and be void, but otherwise, this Agreement shall remain in full force and effect. All Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all property hereby pledged is to be dealt with and disposed of under,-upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed; and the Authority has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective owners, from time to time, of the said Bonds or any part thereof, as follows: • ARTICLE I. Definitions Sec. 1.01. The terms defined in this Article I shall, for all purposes of this Agreement, and any agreement supplemental hereto, have the meanings herein specified, unless the context otherwise requires: (a) "Agreement" or "this Agreement" means this instrument, either as originally executed or as it may from time to time be supplemented, modified or amended by any supplemental agreement entered into pursuant to the provisions of this Agreement. (b) "Authority" means the South Bend Redevelopment Authority, a body corporate and politic, or any successor entity. (c) "Board" means the Board of Directors of the Authority.. (d) "Bond" or "Bonds" (unless the context shall otherwise require) means any Bond or Bonds, or all the Bonds, as the case may be, authenticated and delivered under this Agreement. (e) "Bondholder," "holder," "owner" and "registered owner" means the registered owner of a Bond. (f) "Code" means the Internal Revenue Code of 1986, as amended. (g) "Commission" means the South Bend Redevelopment Commission, or if said commission shall be abolished, the commission, board, body or agency succeeding to the principal functions thereof. (h) "Costs of Issuance" shall mean any and all costs and expenses relating to the issuance, sale and delivery of the Bonds,. including but not limited to, premiums for municipal bond insurance, all fees and expenses of legal counsel, financial feasibility or other consultants, trustees, underwriters and accountants, the preparation and printing of the Agreement, the preliminary and final official statement and such Bonds. (i) "Expense Fund" means the Expense Fund created and established by Section 3.03. (j) "Government Obligations". means bonds, notes, certificates of indebtedness, treasury bills or other securities constituting direct obligations of, or obligations the timely . -3- payment of the principal of and the interest on which are fully and unconditionally guaranteed by, the United States of America or any agency or instrumentally thereof when such obligations are backed by the full faith and credit of the United States of America. (k) "Lease" means the lease by the Authority to the Commission, dated as of March 1, 1992, as the same may be amended or supplemented. (1) "Operation and Reserve Fund" means the Operation and Reserve Fund created and established by Section 3.02. (m) "Pledged Funds" means (i) the proceeds from the sale of Bonds; (ii) the rentals to be received under the Lease; and (iii) all moneys and securities from time to time held by the Trustee under the terms of this Agreement (except moneys or securities held in accounts to pay for Bonds called for redemption or with respect to which irrevocable instructions to redeem have been given to the Trustee), including without limitation the moneys held in trust funds. (n) "Qualified Securities" means investments in: (i) Government Obligations; (ii) certificates of deposit issued by banks and mutual savings banks incorporated under the laws of the State of Indiana and in national banking associations having their principal banking offices in the State of Indiana, including the Trustee, provided such certificates of deposit do not exceed in the aggregate ten percent (10%) of the combined capital, surplus and undivided profits of any such bank or association and that each such bank or association has a combined capital and surplus of at least $25,000,000; and provided further that such certificates of deposit are insured by the Federal Deposit Insurance Authority or the Federal Savings and Loan Insurance Authority or, to the extent not so insured, collateralized by interest-bearing obligations described in clause (i) above in which the Trustee has a perfected security interest; or (iii) repurchase agreements, entered into with banks and mutual savings banks incorporated under the laws of the State of Indiana and in national banking associations having their principal banking offices in the State of Indiana, including the Trustee, -that are fully collateralized by interest-bearing obligations described in clause (i) above based upon the market value of such obligations on the day such agreement becomes effective, in which the Trustee has a perfected security interest. (o) "Project" means the real estate (including all right-of-way easements contained therein) in South Bend, Indiana, all as described in Exhibit A hereto, acquisition of which Project is to be financed with the proceeds of the Bonds and leased to the Commission, pursuant to the Lease. • -4- • (p) "Redemption Price," with respect to the Bonds outstanding under this Agreement, means the price at which the Bonds are redeemable as set forth in Article IV of this Agreement. (q) "Sinking Fund" means the Sinking Fund created and established by Section 3.01. (r) "Trustee" means and includes not only the Trustee but also its successor or successors in trust. (s) Unless the context shall clearly otherwise indicate, words importing the singular number shall include the plural number in each case, and vice versa, and words importing persons shall include firms and corporations, and terms employed in the disjunctive form shall be deemed to be employed .also in the conjunctive form and vice versa. C • -5- ARTICLE II. Maturities, Form, Issuance, Delivery and Registration of Bonds ,. • Sec. 2.01. The principal amount of all Bonds which may be issued and outstanding under this Agreement shall be One Million Four Hundred Ten Thousand Dollars ($1,410,000) face value. The Bonds shall be originally dated as of 1, 1992, shall be issued in the denomination of Five Thousand Dollars ($5,000) each, or any integral multiple thereof and shall be numbered consecutively. The Bonds shall mature serially on February 1 in the years and amounts and bear interest at the rates as follows: Interest Interest Year Amount Rate Year Amount Rate 1993 $ 35,000 1999 $120,000 1994 85,000 2000 130,000 1995 90,000 2001 140,000 1996 100,000 2002 150,000 1997 105,000 2003 165,000 1998 110,000 2004 180,000 The interest on all of the Bonds is payable semiannually on February 1 and August 1 of each year, beginning February 1, 1993. Interest shall be calculated on the b asis of twelve 30-day months for a 360-day year. The interest on the Bonds shall be payable by check or draft mailed one business day prior to the interest payment date to the person in whose name each Bond is registered on the fifteenth day of the month preceding such interest payment date. The principal of, and premium on, the Bonds shall be payable upon presentment and surrender thereof in lawful money of the United States of America, at the principal office of the Trustee in the City of South Bend, Indiana. All Bonds shall be cancelled upon their payment by the Trustee. The Trustee shall dispose of such Bonds as permitted by law and furnish to the Authority a certificate of their disposal, signed by an authorized officer of the Trustee. Sec. 2.02. The Bonds shall be executed in the name of the Authority by the facsimile signature of the President of its Board and attested by the facsimile signature of the Secretary-Treasurer of the Board. In case any official whose facsimile signature appears on the Bonds, shall cease to be such officer before the -6- r~ L • r~ U Bonds shall be duly issued and delivered, such Bonds shall, nevertheless, be the Bonds of the Authority and in all respects binding and obligatory upon it to the same extent as if signed by the officers of the Authority at the date of the actual issuance and delivery thereof. Sec. 2.03. Each of the Bonds shall be authenticated by a certificate of the Trustee endorsed thereon substantially in the form hereinafter set forth. Only such Bonds as shall bear thereon the certificate of the Trustee shall be secured by this Agreement or entitled to any lien or benefit hereunder, and the certificate of the Trustee upon any such Bond executed by the Authority shall be conclusive evidence that the Bond so authenticated has been duly issued hereunder and is entitled to the benefits of the trust hereby created. Sec. 2.04. The form of said Bonds, the Trustee's certificate to be endorsed thereon, and the registration endorsement (with appropriate insertions of amounts and distinguishing numbers and letters), shall be substantially as follows: -7- • (Form of Bond) UNITED STATES OF AMERICA State of Indiana County of St. Joseph Registered No. SOUTH BEND REDEVELOPMENT AUTHORITY TAXABLE LEASE RENTAL REVENUE BOND (PALMS ROYALE) Interest Maturity Original Authentication Rate Date Date Date CUSIP Registered Owner: Principal Sum: SOUTH BEND REDEVELOPMENT AUTHORITY, a body corporate and politic, duly organized and existing under the laws of the State of Indiana (hereinafter called the "Authority"), for value received, hereby promises to pay to the Registered Owner (named above) or registered assigns, solely out of the Pledged Funds (hereinafter referred to) the Principal Sum set forth above on the Maturity Date set forth above (unless this Bond is subject to and shall have been duly called for prior redemption and payment made as provided for herein), and to pay interest hereon solely from such Pledged Funds until the Principal Sum shall be fully paid at the rate per annum stated above from the interest payment date next preceding the Authentication Date of this Bond unless this Bond is authenticated after the fifteenth day of the month preceding an interest payment date and on or before such interest payment date in which case it shall bear interest from such interest payment date, or unless this Bond is authenticated on or before 15, 1992, in which case it shall bear interest from the Original Date, which interest is payable on February 1 and August 1 of each year, beginning on February 1, 1993. Interest shall be calculated on the basis of twelve 30-day months for a 360-day year. Interest on this Bond is payable by check or draft mailed one business day prior to the interest payment date to the person in whose name this Bond is registered on the fifteenth day of the month preceding such interest payment date. Principal and premium, if any, of this Bond are payable upon presentment and surrender hereof in lawful money of the United States of America at the principal office of Norwest Bank Indiana, N.A., 112 West Jefferson Boulevard, P.O. Box 112, South Bend, Indiana 46634. INTEREST ON THIS BOND IS NOT EXCLUDABLE FROM GROSS INCOME FOR FEDERAL TAR PURPOSES. . -8 • This Bond shall not be a valid obligation until duly authenticated by the Trustee, or its successors in trust, by the execution of the certificate endorsed hereon. REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF WHICH SHALL FOR ALL PURPOSES HAVE'THE SAME EFFECT AS IF DULY SET FORTH HEREIN. IN WITNESS WHEREOF, the SOUTH BEND REDEVELOPMENT AUTHORITY has caused this Bond to be executed in its name and on its behalf by the facsimile signature of the President of its Board of Directors and attested by the facsimile signature of the Secretary-Treasurer of its Board of Directors. SOUTH BEND REDEVELOPMENT AUTHORITY By (facsimile) President, Board of Directors ATTEST: (facsimile) Secretary-Treasurer, Board of Directors TRUSTEE'S CERTIFICATE This Bond is one of the Bonds described in the within-mentioned Trust Agreement. Trustee By Authorized Officer (Reverse of Bond) This Bond is one of an authorized issue of Bonds of the South Bend Redevelopment Authority, all of_like date, tenor and effect (except as to numbering, denomination, interest rates and dates of maturity), in the aggregate principal amount of One Million Four Hundred Ten Thousand Dollars ($1,410,000), issued under and in accordance with, and all equally and ratably entitled to the benefits of, and ratably secured by, a Trust Agreement (hereinafter called the "Agreement"), dated as of June 1, 1992, executed by the Authority and Norwest Bank Indiana, N.A., as Trustee, to which reference is hereby maded ed as description of the rentals and other income (the "Pledged Funds") p g security for the payment of the Bonds and interest thereon and the rights under said Agreement of the Authority, the holders of the Bonds and the Trustee, to all of which the holders hereof, by the acceptance of this Bond, agree. • -9 The Authority covenants that one business day prior to February 1 and August 1 in each year, beginning with February 1, 1993, it will pay to the Trustee, prior to the due date, solely out of the Pledged Funds, an amount sufficient to pay the principal and all interest as it becomes due until all of the Bonds of this issue shall have been retired. The Bonds of this issue maturing on or after February 1, 2002, may be redeemed prior to maturity at the option of the Authority in whole or in part in whole multiples of $5,000, in inverse order of maturities and by lot within maturities, on any date not earlier than February 1, 2001, from any monies made available for that purpose, at face value and without premium plus accrued interest to the date fixed for redemption; provided notice has been given by first-class mail to the registered owners of all Bonds to be redeemed. If this Bond is so called for redemption, and payment is made to the Trustee in accordance with the terms of the Agreement, this Bond shall cease to bear interest or to be entitled to the lien of the Agreement from and after the date fixed for the redemption in the call. In case an event of default, as defined in the Agreement, occurs, the principal of this Bond may become or may be declared due and payable prior to the stated maturity hereof, in the manner, and with the effect, and subject to the conditions provided in the Agreement. This Bond is transferable by the registered owner hereof at the principal office of Norwest Bank Indiana, N.A., upon surrender and cancellation of this Bond and on presentation of a duly executed written instrument of transfer and thereupon a new Bond or Bonds of the same aggregate principal amount and maturity and in authorized denominations will be issued to the transferee or transferees in exchange therefor. This Bond may be exchanged upon surrender hereof at the principal office of Norwest Bank Indiana, N.A., duly endorsed by the owner for the same aggregate principal amount of Bonds of the same maturity in authorized denominations as the owner may request. The Authority and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof. -10- The following abbreviations, when used in the inscription on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - _ Custodian (Gust) (Minor) under Uniform Gifts to Minors Ac (State) Additional abbreviations may also be used though not in the list above. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto please insert social security or other identifying number of assignee (please print or typewrite name and address of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints Attorney, to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed NOTICE: Signature(s) must be guaranteed by a broker-dealer or a commercial bank or trust company. REGISTERED OWNER NOTICE: The signature to this assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Bond in every particular, without alternation or enlargement or any change whatever. (End of Bond Form) -11- Sec. 2.05. The Bonds. so executed by the Authority and authenticated by the Trustee shall be delivered by the Trustee to the purchasers thereof in the amount, at the time, and upon the payment of the purchase price thereof, as requested in writing by the Authority. Sec. 2.06. In case any Bond issued under this Agreement shall become mutilated or be destroyed, stolen or lost, the Authority, in its discretion, may issue, and thereupon said Trustee shall certify and deliver in exchange for and in place and upon cancellation of the mutilated Bond, or in lieu of and substitution for the same if destroyed, stolen or lost, a new Bond of like denomination and tenor, but which, in the discretion of the Authority or the Trustee,~may bear the same or a different serial number, be marked "Duplicate," or be otherwise distinguished. In case of destruction, theft or loss, the applicant for a substituted Bond shall furnish to the Authority and said Trustee evidence of the destruction of such Bond so destroyed, which evidence must be satisfactory to the Authority and said Trustee, in their discretion, and said applicant shall also furnish indemnity satisfactory to both of them in their discretion. The Authority shall have the right to require the payment of the expense of issuing such replacement prior to the delivery of a new .Bond. Sec. 2.07. The Trustee shall keep, at its principal • office, a record for the registration of Bonds issued hereunder which shall, at all reasonable times, be open for inspection by the Authority. Each registered Bond shall be transferable only on such record at the principal office of the Trustee, at the written request of the registered owner thereof or his attorney duly authorized in writing, upon surrender thereof, together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney. Sec. 2.08. The Authority and the Trustee may deem and treat the person in whose name any Bond issued hereunder shall be registered as the absolute owner of such Bond for the purpose of receiving payment of or on account of the principal of said Bond, and for all other purposes whatsoever. Sec. 2.09. Registered owners of Bonds may, upon surrender thereof at the principal office of the Trustee with a written instrument of transfer satisfactory to the Trustee, exchange a Bond or Bonds for a Bond or Bonds of equal aggregate principal amount of the same maturity and interest rate of any authorized denominations. For every exchange or transfer of Bonds, the • -12- • Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer, which shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. The cost of preparing each new Bond upon each exchange or transfer, and any other expenses of the Trustee incurred in connection therewith (except any applicable tax, fee or other governmental charge) shall be paid by the Authority. The Trustee shall not be obliged to make any transfer or exchange of any Bond called for redemption within thirty days of the redemption date. Sec. 2.10. The accrued interest and premium, if any, received from the sale of the Bonds shall be deposited by the Trustee in the Sinking Fund established and created by Section 3.01 hereof. The sum of One Million Three Hundred Eight Thousand Three Hundred Fourteen Dollars ($1,308,314) received from the sale of such Bonds by the Trustee shall then be applied on behalf of the Authority to the purchase price of the Project. The balance of the proceeds from the sale of the Bonds shall then be deposited to the credit of the Expense Fund. • -13- . ARTICLE III. Funds Sec. 3.01. There is hereby established and created a fund designated as the "South Bend Redevelopment Authority Palais Royale Sinking Fund." The Trustee shall deposit in such Sinking Fund from each rental payment received by the Trustee pursuant to the Lease, an amount equal to the following whichever is less: (a) All of such rental payment; or (b) An amount which, when added to the amount in the Sinking Fund on the deposit date equals the sum of the following amounts: (i) Unpaid interest on the Bonds due on, before or within forty-five (45) days after the date such rental payment becomes due; and (ii) Unpaid principal on the Bonds due on, before- or within eight (8) months from the date such rental payment becomes due. Any portion of a rental payment remaining after such deposit shall be deposited by the Trustee in the Operation and Reserve Fund provided for in Section 3.03. The Trustee shall from time to time withdraw from such Sinking Fund, or if the Sinking Fund is not sufficient, then from the Operation and Reserve Fund by created Section 3.02 below, and shall deposit in a special trust fund the make available to itself, sufficient moneys for paying principal of the Bonds at maturity and to pay the interest on the Bonds as the same falls due. Sec. 3.02. There is hereby established and created a fund designated as the "South Bend Redevelopment Authority Palais Royale Operation and Reserve Fund." The Operation and Reserve Fund shall be used only to pay necessary incidental expenses of the Authority (e.g. required audits, appraisals, meetings and reports), the payment of principal, interest and redemption premiums of the Bonds herein described upon redemption as authorized by Article IV hereof or the purchase price of Bonds purchased as authorized by Section 3.06, and if the amount in the Sinking Fund at any time is less than the required amount, the Trustee shall, without any further authorization, transfer funds from the Operation and Reserve Fund to the Sinking Fund in an amount sufficient to raise the amount in the Sinking Fund to the required amount. Such action by the Trustee shall not constitute a waiver of any other right or remedy the Trustee may have under this Agreement. Incidental expenses shall be paid by the Trustee upon the presentation of an affidavit -14- • executed by any two (2) officers of the Authority, stating the character of the expenditure, the amount thereof, and to whom due, together with the statement of the creditor as to the amount owing. Sec. 3.03. There is hereby established and created a fund designated as the "South Bend Redevelopment Authority Palais Royale Expense Fund." Moneys are being deposited to the credit of the Expense Fund to finance the Costs of Issuance for the Bonds pursuant to Section 2.10 hereof. Moneys on deposit in the Expense Fund shall be paid out from time to time by the Trustee in order to pay or as reimbursement to the Authority for payment made of the Costs of Issuance. After November 1, 1992, the Trustee may transfer any moneys on deposit in the Expense Fund to the Sinking Fund. sec. 3.04. The Trustee shall, at the written direction of the Authority, invest all or so much of the funds as is practicable in Qualified Securities, to the extent and in the manner permitted by law. Investment earnings shall be deposited into and credited to the fund from which the investments were made. The Trustee is authorized to sell any securities so acquired from time to time in order to make the payments authorized in this Agreement. Investment of the Sinking Fund shall mature prior to the time the funds invested will be needed for payment of principal of and interest on the Bonds. Sec. 3.05. Whenever the amounts contained in the Sinking • Fund and the Operation and Reserve Fund are sufficient, together with any other funds deposited with the Trustee by the Authority, to redeem, upon the next redemption date, all Bonds secured hereby then outstanding, the Trustee shall apply the amounts in such Funds to the redemption of such Bonds pursuant to Article IV hereof. Sec. 3.06. At the request of the Authority, expressed by a resolution of the Board of Directors, or a copy thereof certified by the Secretary-Treasurer and delivered to the Trustee, the Trustee may remove funds from the Operation and Reserve Fund to be used for the redemption of Bonds, or for the purchase of Bonds if the Authority determines that redemption or purchase of Bonds would be advantageous to the Authority. Sec. 3.07. A pledge of all moneys paid or deposited into the Sinking Fund, and of all rentals paid pursuant to the Lease other than pursuant to Section 3(b~ thereof, is hereby made, and the same are hereby pledged to the Trustee to secure the payment of the principal and redemption price of and interest on the Bonds, all to the extent herein provided. The rentals so pledged and hereafter received by the Trustee or Authority, shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act; and the lien of such pledge shall be valid • -15- • and binding as against all parties having claims of any kind in tort, contract or otherwise against the Authority, irrespective of whether such parties have notice thereof. . -16- • ARTICLE IV. Redemption of Bonds Sec. 4.01. The Authority shall have the right, at its option, to redeem, according to the procedure hereinafter provided, all or any part of the Bonds secured by this Agreement maturing on or after February 1, 2002, in whole multiples of $5;000, in inverse order of maturities and by lot within maturities, on any date not earlier than February 1, 2001, from any moneys made available for that purpose at face value and without premium plus accrued interest to the date fixed for redemption. Sec. 4.02. To evidence its intention to exercise the right of redemption, the Authority shall, not less than forty-five (45) days prior to the date selected for redemption, file with the Trustee written notice of its intention to redeem, designating the date fixed for redemption, and if less than all of the outstanding Bonds are to be redeemed stating the aggregate principal amount of Bonds which the Authority desires to redeem. If less than all of the outstanding Bonds are to be redeemed, then the Bonds shall be redeemed in inverse order of maturity and by lot (in such manner as the Trustee shall determine) within maturities. No defect in such notice by the Authority to the Trustee shall affect the validity of the redemption of any Bonds. Sec. 4.03. Official notice of such redemption shall be sent first-class mail by the Trustee to the registered owners of all Bonds to be redeemed, not less than thirty (30) days prior to the date fixed for redemption. Said official notice shall be dated and shall, with substantial accuracy: (a) Designate the date and places of redemption, said places to be the offices of the Trustee; (b) If the Bonds to be redeemed are less than the whole amount outstanding, designate the Bonds (or portions thereof) to be redeemed; and (c) .State that on the designated date fixed for said redemption said Bonds shall be redeemed by the payment of the applicable redemption price hereinbefore set forth, and-that from and after the date so fixed for such redemption interest on the Bonds so called for redemption shall cease. In all cases, the cost and expenses of the preparation and mailing of said official notices of redemption shall be paid by the Authority. -17- • In addition to the foregoing notice, further notice may be given by the Trustee as it deems appropriate by mail, publication or otherwise to registered securities depositories, national information services or others containing the above information and such further information as the Trustee may deem appropriate, 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 a call for redemption if notice thereof is given as above described. Sec. 4.04. Such notice having been mailed as above provided, the Bonds designated for redemption shall, on the date specified in such notice, become due and payable at the then applicable redemption price, and on presentation and surrender of such Bonds in accordance with such notice, at the place at which the same are expressed in such notice to be redeemable, such Bonds shall be redeemed by the Trustee on behalf of the Authority by the payment of such redemption price to the registered owners out of funds held by the Trustee for that purpose. From and after the date of redemption so designated, unless default shall be made in the redemption of the Bonds upon presentation, interest on Bonds designated for redemption shall cease. If not so paid on presentation thereof, the Bonds shall continue to bear interest at the rate therein specified. Sec. 4.05. All Bonds so redeemed (or purchased as _ authorized by Sec. 3.06) shall be cancelled and disposed of as provided in Section 2.01. Bonds so redeemed or purchased shall not be reissued, nor shall any Bonds be issued in lieu thereof. Sec. 4.06. If the amount necessary to redeem any Bonds called for redemption, as aforesaid, shall have been deposited with the Trustee for the account of the owner or owners of such Bonds on or before the date specified for such redemption, and if the notice hereinbefore mentioned shall have been duly mailed or provision satisfactory to the Trustee shall have been made for the mailing of such notice, and if all proper charges and expenses of the Trustee in connection with such redemption shall have been paid or provided for, the Authority shall be released from all liability on such Bonds and such Bonds shall no longer be deemed to be outstanding hereunder, and interest thereon shall cease at the date specified for such redemption; and thereafter such Bonds shall not be secured by the lien of this Agreement. The Trustee shall be privileged to give notice of any call for redemption, but shall not be required to do so unless the amount necessary to redeem the Bonds called and to pay all proper charges of the Trustee shall have been deposited with, paid to, or otherwise made available to the Trustee, as aforesaid. In case any question shall arise as to whether any such notice shall have been sufficiently given or any such redemption shall be effective, such question shall be decided -18- . by the Trustee, and the decision of the Trustee shall be final and binding upon all parties in interest. . -19- • ARTICLE V. Covenants of the Authority Sec. 5.01. The Authority covenants and agrees that it will faithfully do and perform, and at all times faithfully observe, any and all covenants, undertakings, stipulations and provisions contained in each and every Bond issued hereunder, and will duly and punctually pay or cause to be paid the principal of said Bonds and the premium, if any, and interest thereon, at the times and places, and in the manner mentioned in said Bonds, according to the true intent and meaning thereof. Except as in this Agreement otherwise provided, the principal, interest and premiums are payable solely from Pledged Funds including the rental derived from the Project, which Pledged Funds are hereby pledged to the payment thereof in the manner and to the extent provided in this Agreement and in said Bonds. Sec. 5.02. The Authority covenants that it will promptly make, execute and deliver all agreements supplemental hereto, or otherwise, and take all such action as may be reasonably be deemed, by the Trustee or by its counsel, necessary or advisable for the better securing of any Bonds issued hereunder, or as may be required to carry out the purposes of this Agreement. Sec. 5.03. The Authority covenants that the Authority has heretofore acquired the Project, subject only to Permitted Encumbrances, defined in the Lease, and such other encumbrances as shall be permitted by the Trustee, and has good right, full power and lawful authority to make this Agreement and to pledge the lease rentals of the Project as herein provided, and that it has and will preserve all of its interest in all such property, subject to Permitted Encumbrances, as such term is defined in the Lease, and such other encumbrances as shall be permitted by the Trustee, and will warrant and defend the same to the Trustee against the claims of all persons whatsoever. Sec. 5.04. The Authority covenants that it will promptly, and before they shall become delinquent, pay or cause to be paid all lawful taxes, charges and assessments at any time levied or assessed upon or against the Project, or any part thereof, or upon the use of the same, or upon the income or profits thereof, and .,all license fees, franchise taxes and other like statutory charges; provided, however, that no such tax, charge or assessment shall be required to be paid so long as the validity of the same shall be in good faith contested by the Authority; further, that it will not suffer any lien or charge to be enforced or to exist against the Project or any part thereof, or upon the Lease or the Pledged Funds, except the lien and charge of the Bonds secured hereby upon such Lease and Pledged Funds, and except for Permitted -20- Encumbrances, as such term is defined in the Lease, and such other encumbrances as shall be permitted by the Trustee; that it will not commit or suffer any waste of said property; and that it will at all times, directly or through other appropriate governmental entities, operate the property and keep and maintain said property and all buildings, structures, apparatus and appurtenances thereon or thereof in good repair, working order and condition, and will from time to time make, or cause to be made, all needful and proper repairs, renewals and replacements. Sec. 5.05. The Authority covenants that until all indebtedness secured by this Agreement is fully paid, it will faithfully observe and comply with the terms of all applicable laws and ordinances of the State of Indiana and any political or municipal subdivision thereof. Sec. 5.06. If the Authority should at any time fail to pay in apt season any tax, assessment or other charge upon the Project, or any part thereof, or fail to pay promptly when payable any license fee, franchise or corporation tax, or like statutory charge, the Trustee may, without obligation to inquire into the validity thereof, pay such tax, assessment, fee or other charge, but without prejudice to the rights of the Trustee arising hereunder in consequence of such default, and the amount of every payment so made at any time by the Trustee, with interest thereon at the highest rate of interest on any one of the Bonds when sold, whether or not then outstanding, from the date of payment, shall constitute an additional indebtedness of the Authority secured by the lien of this Agreement, prior or paramount to the lien hereunder of any of said Bonds and the premium and interest thereon. Sec. 5.07. The Authority covenants that proper books of record and account will be kept in which full, true and correct entries will be made of all dealings or transactions of or in relation to the properties, business affairs of the Authority, and that it will: (a) At such times as the Trustee shall reasonably request, furnish statements in reasonable detail showing the earnings, expenses and financial condition of the Authority. (b) From time to time furnish to the Trustee such information as to the property of the Authority as the Trustee shall reasonably request. (c) On or before the expiration of ninety (90) days after the end of each calendar year, file with the Trustee a certificate signed by its President or Vice President, and its Secretary-Treasurer, stating that all taxes then due on the Project • -21- have been duly paid (unless the Authority shall, in good faith, contest any of said taxes, in which event the facts concerning such contest shall be set forth); also stating that all insurance premiums required by the terms of the Agreement to be paid by the Authority upon the Project have been duly paid. The Authority further covenants that all books, documents and vouchers relating to the properties, business and affairs of the Authority shall at all times be .open to the inspection of such accountants or other agents as the Trustee may from time to time designate. Sec. 5.08. The Authority covenants that it will not guarantee, endorse or otherwise become surety for or upon the indebtedness of others except by endorsement of negotiable instruments for deposit or collection in the ordinary course of business, and that it will not sell its accounts receivable. Sec. 5.09. The Authority covenants that it will not acquire any property, real or personal, subject to an existing mortgage or other encumbrance, except as permitted by Section 5.10. Sec. 5.10. The Authority covenants that it will not incur any indebtedness secured by this Agreement other than the Bonds unless such additional indebtedness is payable solely from income of the Authority other than the rental payments provided for in the • Lease as long as any of the Bonds are outstanding. This section shall not be construed to prohibit the issuance of refunding Bonds and the pledging of lease rentals to be received after the redemption of the Bonds. Sec. 5.11. The Authority covenants that it has entered into a valid and binding Lease of the Project to the Commission, and that a full, true and correct copy of said Lease is on file with the Trustee. The Authority covenants further that it will bring suit to mandate the governing board or officials of the Lessee to levy a tax to pay the rental provided in said Lease, or take such other action to enforce the Lease as is reasonably requested by the Trustee, if such rental is more than sixty (60) days in default. Sec. 5.12. The Authority covenants that it will not agree to any modification of the terms of said Lease which would substantially impair or reduce the security of the holders of the Bonds described herein or agree to a termination thereof, or agree to a reduction of the lease rental provided for therein which would inhibit payment of debt service on the Bonds until all indebtedness secured by this Agreement is fully paid, except upon compliance with the provisions of Section 10.02.. The Authority further -22- covenants that any modification permitted by this paragraph will be made only after a copy thereof has been filed with the Trustee. Sec. 5.13. The Authority covenants that whenever there are sufficient funds held by the Trustee in the Sinking Fund and/or Operation and Reserve Fund to pay the principal, redemption premiums and interest to the next interest payment date on all outstanding Bonds, it will call all outstanding Bonds for redemption and hereby consents and directs the Trustee to call all outstanding Bonds for redemption. Sec. 5.14. (a) The Authority, at its cost and expense, shall obtain on the date of original issuance of the Bonds a commitment for an owner's policy of title insurance insuring the marketable indefeasible fee simple title or of the Authority in the Project in an amount equal to the costs of acquisition of the Project; (b) The Authority hereby assigns to the Trustee all proceeds payable under the owner's policy referred to in this Section 5.14 and all of the insured's rights thereunder, the full amount of which proceeds shall be paid directly to the Trustee by the title insurers referred to above. The Trustee is hereby authorized to demand, collect and receipt for and recover any and all insurance moneys which may become due and payable under the owner's policies and to prosecute all necessary actions in the • courts to recover any such insurance moneys. The Trustee may, however, accept any settlement or adjustment which the Trustee may deem it advisable to make with such title insurers. The Trustee may reimburse itself from any such insurance money for the costs and expenses incurred by the Trustee in connection with (i) demanding, collecting and recovering the insurance moneys and (ii) any related court action, settlement or adjustment, including without limitation, attorney fees (the "Collection Costs"). All insurance moneys collected or recovered under the owner's policies referred to above, less Collection Costs, shall be used, at the Trustee's option, either (i) to cure title defects and/or obtain marketable, indefeasible fee simple title to the Project or (ii) redeem the Bonds or portions thereof on the earliest possible redemption date. • -23- ARTICLE VI. Insurance Sec. 6.01. The Authority covenants that, it will carry or cause to be carried: (a) Insurance on the Project against physical loss or damage thereto, however caused, with such exceptions as are ordinarily required by insurers of buildings or facilities of a similar type, which insurance shall be in an amount at least equal to the greater of (i) the option to purchase price under the Lease, or (ii) one hundred percent (100%) of the full replacement cost of the Project as certified by a registered architect, a registered engineer, or a professional appraisal engineer selected by the Authority with the approval of the Trustee, on the effective date of such insurance and on or before April 1 of each year thereafter (such appraisal may be based on a recognized index of conversion factors); provided that such certification shall not be required so long as the amount of such insurance shall be in an amount at least equal to the option to purchase price under the Lease; such insurance may contain a provision for a deductible in an amount not exceeding $25,000; a blanket public institutional property insurance form may be used if: (i) the insurance on the Project is not less than the amount required by this Section 6.01; (ii) the • Commission subordinates its claim for damage or destruction to other buildings or improvements to claims for damage or destruction of the Project; and (iii) the insurance proceeds related to damage to or destruction of the Project are payable to the Trustee; and (b) Rent or rental value insurance in an amount least equal to the full rental value of the Project for a period of two (2) years against physical loss or damage of the type insured against under Section 6.02(a) above; and (c) Public liability and property damage insurance in amounts customarily carried for similar properties; provided however, that, notwithstanding Section 6.02, such insurance may be provided under the public liability self insurance program of the City of South Bend. Sec. 6.02. Except as provided in Section 6.01(c), such insurance policies shall be maintained in insurance companies rated B+ or better by A.M. Best Company (or a comparable rating service if A.M. Best Company ceases to exist or rate insurance companies), and shall be countersigned by an agent of the insurer who is a resident of the State of Indiana. A copy of such policies referred to in Section 6.01 and the architect's or engineer's certificates referred to in Section 6.01(a) shall be deposited with the Trustee. -24- . A schedule of such policies shall be deposited with the Trustee. Such schedule shall contain the names of the insurers, the amounts of each policy, the character of the risk insured against, the expiration date of each policy, the premium paid thereon, and any other pertinent data. Sec. 6.03. In case the Authority shall at any time refuse, neglect or fail to obtain and furnish such certificate or to effect insurance as aforesaid, the Trustee may, in its discretion, procure such certificate and/or such insurance, and all moneys paid by the Trustee for such certificate and/or insurance, together with interest thereon at the highest rate of .interest on any of the Bonds when sold, whether or not then outstanding, shall be repaid by the Authority upon demand, and shall constitute an additional indebtedness of the Authority secured by the lien of this Agreement, prior and paramount to the lien hereunder of said Bonds and interest thereon. The Trustee, however, shall not be obligated to effect such insurance unless fully indemnified against the expense thereof and furnished with means therefor. Sec. 6.04. The insurance policies required by Section 6.01 shall be for the benefit, as their interests shall appear, of the Trustee, the Authority, and other persons having an insurable interest in the insured property. Such policies shall clearly indicate that any proceeds under the policies shall be payable to .the Trustee, and the Trustee is hereby authorized to demand, collect and receipt for and recover any and all insurance moneys • which may become due and payable under any of said policies of insurance and to prosecute all necessary actions in the courts to recover any such insurance moneys. The Trustee may, however, accept any settlement or adjustment which the officers of the Authority may deem it advisable to make with the insurance companies. Any proceeds of rent or rental value insurance received by the Trustee representing the annual rentals payable .under the Lease shall be deposited by it forthwith to the credit of the Sinking Fund. Sec. 6.05. The proceeds of such insurance received by the Trustee shall be applied to the repair, replacement or reconstruction of the damaged or destroyed property, if in the opinion of an independent registered architect, registered engineer, construction manager or contractor, which architect, engineer, construction manager or contractor shall be acceptable to the Trustee (i) the cost ofsuch repair, replacement or reconstruction shall not exceed the amount of insurance proceeds to be received by reason of such damage or destruction and other amounts available therefor, and (ii) such repair, replacement or reconstruction can be completed within the period covered by the rental value insurance. Such proceeds shall be held and disbursed by the Trustee in the manner and upon the showings provided for in -25- • Section 3.01 hereof, except that the Trustee may release such proceeds, or a part thereof, upon a showing satisfactory to the Trustee that repairs have. been made and paid for. If either or both conditions shall not exist, the proceeds of such insurance received by the Trustee shall be used to redeem Bonds. Sec. 6.06. In the event the Authority shall not commence to repair or replace the portion of the Project so damaged or destroyed within ninety (90) days after any such loss or damage, or the Authority, having commenced such work of repair or replacement, shall abandon or fail diligently to prosecute the same, the Trustee may, in its discretion, make or complete such repairs or replacements, and if it shall elect so to do, may enter upon said premises to any extent necessary for the accomplishment of such purposes, but nothing herein contained shall obligate the Trustee to make or complete any such repairs or replacements unless it shall have been requested to do so by the holders of not less than twenty-five percent (25%) in aggregate principal amount of all Bonds outstanding hereunder, and shall have been indemnified to its satisfaction against all loss, damage and expense which it might thereby incur. Sec. 6.07. In case the Authority shall neglect, fail or refuse to proceed forthwith in good faith with the repair or replacement of the Project which shall have been so destroyed or damaged, and such negligence, failure or refusal shall continue for one hundred twenty (120) days, the Trustee, upon receipt of the insurance moneys, shall (unless the Trustee proceeds to make the repairs or replacements of the destroyed or damage property as above provided) transfer such proceeds to the Sinking Fund. Sec. 6.08. If, at any time, the Project is totally or substantially destroyed and the amount of insurance money received on account thereof by the Trustee is sufficient to redeem all of the then outstanding Bonds hereunder and such Bonds are then subject to redemption, the Authority, with the written approval of the Commission, may direct the Trustee to use said moneys for the purpose of calling for redemption all of the Bonds issued and then outstanding under this Agreement at the then current redemption price. Sec. 6.09. In the event of any reconstruction of all or a portion of the Project .after substantially total destruction of all or a portion thereof, a new building, buildings or improvements or portions thereof may be constructed on the site by the Authority in accordance with plans and specifications which must be satisfactory to the Trustee and the Lessee of such Project, and such new building or buildings or improvements or portions thereof may be wholly different in design or construction. ...~ -26- • Sec. 6.10. The Trustee may accept the statements, affidavits and certificates hereinabove in this Article VI provided to be filed with the Trustee, as conclusive evidence of the facts therein stated, but the Trustee (although under no obligation so to do) may, at the expense of the Authority, require further or other evidence of such matters and may rely on the report or opinion of such architect, engineer, other person, or counsel, as it may select for the purpose of making an investigation thereof. -27- • ARTICLE VII. Remedies in Case of Default Sec. 7.01. If any of the following events occurs, it is hereby defined as and is declared to be and to constitute an "event of default": (a) default in the due and punctual payment of the interest on any Bonds hereby secured and outstanding; (b) default in the due and punctual payment of the principal and premium, if any, of any Bond hereby secured, whether at the stated maturity thereof, or upon proceedings for the redemption thereof, or upon the maturity thereof by declaration as hereinafter provided; (c) default in the performance or observance of any other of the covenants or agreements of the Authority in this Agreement or in any supplemental agreement, or in the Bonds, contained, and the continuance thereof for a period of ninety (90) days after written notice thereof to the Authority by the Trustee; (d) if the Authority: (1) admits in writing its inability to pay its debts generally as they become due; (2) files a petition in bankruptcy; (3) makes an assignment for the benefit of its creditors; or (4} consents to or fails to contest the appointment • of a receiver or trustee for itself or of the whole or any substantial part of the Project or any income therefrom; (e) if the Authority: (1) be adjudged insolvent by a court of competent jurisdiction; (2) on a petition in bankruptcy filed against the Authority be adjudged a bankrupt; or (3) if an order, judgment or decree be entered by any court of competent jurisdiction appointing, without the consent of the Authority, a receiver or trustee of the Authority or of the whole or any substantial part of the Project or any income therefrom, and any of the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within sixty (60) days from the date of entry thereof; (f) if any judgment shall be recovered against the Authority or any attachment or other court process issue that shall become or create a lien upon the Lease or the Pledged Funds, and such judgment, attachment, or court process shall not be discharged or effectually secured within ninety (90) days; (g) if the Authority shall file a petition under the provisions of the U.S. Bankruptcy Code, as amended ("Bankruptcy • -28- • Code"), or file answer seeking the relief provided in said Bankruptcy Code; (h) if a court of competent jurisdiction shall enter an order, judgment or decree approving a petition filed against the Authority under the provisions of said Bankruptcy Code, and such judgment, order or decree shall not be vacated or set aside or stayed within one hundred twenty (120) days from the date of the entry thereof; (i) if, under the provisions of any other law now or hereafter existing for the relief or aid of debtors, any court of competent jurisdiction shall. assume custody or control of the Authority or of the whole or any substantial part of the Project or the income therefrom, and such custody or control shall not be terminated within one hundred twenty (120) days from the date of assumption of such custody or control; (j) failure of the Authority to bring suit to mandate the governing board or officials of the Lessee to levy a tax to pay the rental provided in the Lease referred to in Article V, or take such other action to enforce the Lease as is reasonably requested by the Trustee, if such rental is more than ninety (90) days in default; (k) if the lease rental provided for in said Lease is not paid within ninety (90) days after each date it is due; or . (1) any event of default as defined in Section 15 of the Lease shall occur and be continuing. .Sec. 7.02. In the case of the happening and continuance of any of the events of default specified in Section 7.01, then in any such case the Trustee, by notice in writing mailed to the Authority, may, and upon written request of the holders of twenty-five percent (25%) in principal amount of the Bonds then outstanding hereunder shall, declare the principal of all Bonds hereby secured and then outstanding, and the interest accrued thereon, immediately due and payable, and upon such declaration such principal and interest shall thereupon become and be immediately due and payable;. subject, however, to the right of the holders of a majority in principal amount of all such outstanding Bonds, by written .notice to the Authority and to the Trustee, to annul each declaration and destroy its effect at any time if all agreements with respect to which default shall have been made shall be fully performed and all such defaults be cured, and all arrears of interest upon all Bonds outstanding hereunder and the reasonable expenses and charges of the Trustee, its agents and attorneys, and all other indebtedness secured hereby, except the principal of any Bonds not then due by their terms and interest accrued thereon since the then last interest payment date,. shall be paid or the • -29- amount thereof shall be paid to the Trustee for the benefit of those entitled thereto. Sec. 7.03. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article VII shall, after payment of the cost and expenses of the proceedings resulting in the collection 'of such moneys and of the expenses, liabilities and advances incurred or made by the Trustee, be deposited in a fund to be created designated as the "South Bend Redevelopment Authority Taxable Lease Rental Revenue Bond (Palais Royale) Default Fund" and all moneys in such fund shall be applied as follows: (a) Unless the principal of all the Bonds shall have become or have been declared due and payable, all such moneys shall be applied: First--To the payment of the persons entitled thereto of all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest 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 installment, of the persons entitle thereto, without any discrimination or privilege; and Second--To the payment of the persons entitled thereto . of the unpaid principal of any of the Bonds which shall have become due (other than Bonds previously called for redemption for the payment of which moneys are held pursuant to the provisions of this Agreement), in the order of their due dates, and if the amount available shall not be sufficient to pay in full all Bonds due on any particular date, then to the payment ratably, according to the amount of principal due on such date, to the persons entitled thereto without any discrimination or privilege. (b) If the principal of the Bonds shall have become due or shall have been declared due and payable, 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 or of 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 amount due respectively for principal and interest, to the persons entitled thereto without any discrimination or privilege. • -30- Sec. 7.04. If default occurs with respect to the payment of principal or interest due hereunder, interest shall be payable on overdue principal and overdue interest both at the highest rate of interest on any of the Bonds when sold, whether or not then outstanding. Sec. 7.05. In case of the happening and continuance of any of the events of default specified in Section 7.01, the Trustee may, and shall upon the written request of the holders of at least twenty-five percent (25%) in principal amount of the Bonds then outstanding hereunder and upon being indemnified to its reasonable satisfaction, proceed to protect and enforce its rights and the rights of the holders of the Bonds by suit or suits in equity or at law, or in any court of competent jurisdiction, whether for specific performance of any covenant or agreement contained herein or in aid of any power herein granted, or for the enforcement of any other appropriate legal or equitable remedy. No remedy by the terms of this Agreement conferred upon or reserved to the Trustee or to the Bondholders is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein; and every such right or power may be exercised from time to time and as often as may be deemed expedient. Sec. 7.06. In case of an event of default hereunder and upon the filing of judicial proceedings to enforce the rights of the Trustee and of the Bondholders hereunder, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the rents, revenues, issues, earnings, income and proceeds thereof pending such proceedings, with such powers as the court making such appointment shall confer. Sec. 7.07. All rights of action under this Agreement or under any of the Bonds, including the right to file and prove a claim in any receivership, insolvency, bankruptcy, or other similar proceedings for the entire amount due and payable by the Authority under this Agreement, may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding relating thereto, and any suit or proceeding instituted by the Trustee shall be brought in its name as Trustee, and any recovery shall be for the equal benefit of the holders of the outstanding Bonds. -31- • Sec. 7.08. It is hereby declared and agreed, as a condition upon which each successive holder of all or any such Bonds receives and holds the same, that no holder or holders of any such Bond shall have the right to institute any proceeding at law or in equity, or for the appointment of a receiver, or (except for filing of claims with the Treasurer of the State of Indiana) for any other remedy under this Agreement, without first giving notice in writing to the Trustee of the occurrence and continuance of an event of default as aforesaid, and unless the holders of at least twenty-five percent (25%) in principal amount of the then outstanding Bonds shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and without also having offered to the Trustee adequate security and indemnity against the costs, expenses and liabilities to be by the Trustee incurred therein or thereby; and such notice, request, and offer of indemnity may be required by the Trustee as conditions precedent to the execution of the powers and trusts of this Agreement or to the institution of any suit, action or proceeding at law or in equity or for the appointment of a receiver, or for any other remedy hereunder, or otherwise, in case of any such default as aforesaid; it being understood and intended that no one or more holders of the Bonds shall have any right in any manner whatsoever, to affect, disturb or prejudice the lien of this Agreement by his or their action, or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in • equity shall be instituted, had and maintained in the manner herein provided, and for the equal benefit of all holders of outstanding Bonds. Notwithstanding any other provisions of this Agreement, the right of any holder of any Bond to receive payment of the principal of and premium, if any, and interest on such Bond on or after the respective due dates therein expressed, or to institute suit for the recovery of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such holder. • -32- . ARTICLE VIII. Defeasance Payment, Release Sec. 8.01. If, when the Bonds secured hereby shall have become due and payable in accordance with their terms or shall have been duly called for redemption or irrevocable instructions to call the Bonds for redemption shall have been given by the Authority to the Trustee, the whole amount of the principal and the interest and the premium, if any, so due and payable upon all of the Bonds then outstanding shall be paid or (i) sufficient moneys, or (ii) direct obligations of, or obligations the principal of any interest on which are unconditionally guaranteed by, the United States of America the principal of and the interest on which when due will provide sufficient moneys, or (iii) time certificates of deposit fully secured as to both principal and interest by obligations of the kind described in (ii) above of a bank or banks the principal of and interest on which when due will provide sufficient moneys, or (iv) any combination of (i), (ii) or (iii) above which will provide sufficient moneys, shall be held by the Trustee for such purpose under the provisions of this Agreement, and provision shall also be made for paying all Trustee's fees and expenses and other sums payable hereunder by the Authority, then and in that case the right, title and interest of the Trustee shall thereupon cease, determine and become void. Upon any such termination of the Trustee's title, on demand of the Authority, the Trustee shall release this Agreement and shall execute such documents to evidence such release as may be reasonably required by the Authority, and shall turn over to the Authority or to such officer, board or body as may then be entitled by law to receive the same any surplus in the Sinking Fund created by Section 3.01 hereof and in the Operation and Reserve Fund created by Section 3.02 hereof and all balances remaining in any other fund or accounts other than moneys and obligations held for the redemption or payment of Bonds; provided, however, that in the event that sufficient moneys, direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or time certificates of deposits shall be deposited with and held by the Trustee as hereinabove provided, in addition to the requirements set forth in Article IV of this. Agreement, the Trustee shall within thirty (30) days after such obligations or time certificates of deposits shall have been deposited with it, cause a notice signed by the Trustee to be published once in the Bond Buyer, in the City of New York, New York, or, if the Bond Buyer is not published, then in a newspaper or financial journal published, and of general circulation in the City of New York, New York, or the City of Chicago, Illinois, setting forth (a) the date designated for the redemption of the Bonds, (b) a description of the obligations so • -33- • held by it, and (c) that this Agreement has been released in accordance with the provisions of this Section. All moneys, and obligations and time certificates of deposit held by the Trustee pursuant to this Section shall be held in trust and said moneys and the principal and interest of said obligations and time certificates of deposit when received, applied to the payment, when due, of the principal and the interest and the premium, if any, of the Bonds so called for redemption. Sec. 8.02. Any Bond not presented at the proper time and place for payment shall, within the meaning of this Agreement, be deemed to be fully paid when due if the money necessary to discharge the principal amount thereof and all interest then accrued and unpaid thereon (and the premium required in case of redemption before maturity) is held by the Trustee when or before the same become due. The holder of any such Bond shall not be entitled to any interest thereon after the maturity thereof nor to any interest upon money so held by the Trustee. -34- • ARTICLE Ix. Concerning the Trustee Sec. 9.01. The Trustee hereby accepts the trusts of this Agreement upon the following terms and conditions, to which the parties and the registered holders of said Bonds agree: (a) The Trustee shall annually prepare a financial report covering disbursements and receipts of all funds of the Authority held by the Trustee hereunder and shall furnish a copy to the Authority. (b) The Trustee shall be under no obligation to see to any filing or recording of this Agreement or any agreement supplemental hereto, and may authenticate and deliver the Bonds in accordance with the provisions hereof prior to any filing or recording of this Agreement. (c) The Trustee shall be entitled to reasonable compensation for all services rendered in the execution of the trusts hereby created, and may employ agents, attorneys and counsel in the execution of such trusts; and the compensation of the Trustee, as well as the reasonable compensation of its attorneys and counsel and of such persons as it may employ in the administration or management of the trusts hereunder, and all other reasonable expenses necessarily incurred or actually disbursed hereunder, the Authority agrees to pay to the Trustee on demand, and for such payment the Trustee shall have a lien on all funds in the hands of the Trustee not held in trust for any specific purpose in priority to the rights and claims of the holders of said Bonds. (d) The Trustee shall not be responsible in any manner for: (1) the validity, execution, acknowledgment, filing or recording of this Agreement or any agreement supplemental hereto, or the refiling or rerecording thereof; (2) for any recitals, covenants or agreements of the Authority in the Bonds or herein contained, except to pay from the Operation and Reserve Fund expenses incurred by the Authority to enable it to comply with its covenants contained herein; (3) for the default or misconduct of any agent or employee appointed by it, if such agent or employee shall have been selected with reasonable care, or for anything done by it in connection with this trust, except for its willful misconduct or gross negligence; -35- (4) for the consequence of any act done in good faith; or (5) for any actions taken by the Trustee in accordance with the opinion of counsel employed by the Trustee. (e) The Trustee shall be under no obligation to keep advised or informed as to whether the Authority is in default under any of the terms or covenants of this Agreement; and unless and until the Trustee shall have received written notice to the contrary from the holders of at least five percent (5%) in principal amount of the Bonds then outstanding hereunder, the Trustee may, for all purposes of this Agreement, assume that the Authority is not in default hereunder and that none of the events hereinbefore defined as "events of default" has happened. (f) The Trustee shall not be required to appear in or defend any suit which may be brought against it respecting the. Project, or by reason of being Trustee hereunder, or to institute any suit or proceeding to enforce any covenant or remedy herein provided, or to take any action toward the execution or enforcement of the (rusts hereby created, which, in the opinion of the Trustee, will be likely to involve the Trustee in expense or liability, unless the holders of said Bonds or some part thereof shall furnish the Trustee with reasonable security and indemnity against such expense or liability. (g) The Trustee shall be fully protected in acting upon or in accordance with any notice or request, consent, certificate, demand, resolution or other instrument or document believed by the Trustee to be genuine and to have been signed, authorized, executed, certified or sealed by the proper person or persons; and the Trustee is authorized to accept the certificate of the Secretary-Treasurer of the Authority, under its corporate seal, if any, to any resolution of the board of directors of the Authority as conclusive evidence that such resolution was duly and lawfully adopted and is binding upon the Authority. (h) The Trustee, or any officer or director of the Trustee, may acquire and hold Bonds issued hereunder or may engage in or be interested in any financial or other transaction in which the Authority may be interested, and the Trustee may be depository, trustee, transfer agent, registrar or agent of the Authority, or for any committee or other body in respect to the bonds, notes, debentures, obligations or securities of the Authority, whether or not issued pursuant hereto. (i) The Trustee may, in relation to any powers or duties imposed upon it by this Agreement, act upon the opinion or advice of an attorney, surveyor, engineer or accountant, whether retained -36- by the Trustee or by the Authority, and for any loss resulting from any action or with any such opinion or advice. • • shall not be responsible non-action in accordance (j) The Trustee is relieved from filing any inventory, or qualifying under the jurisdiction of any court, or otherwise complying with the provisions of the Uni"form Trustees' Accounting Act of 1945, or with any laws amendatory thereof or supplemental thereto, and the provisions of said law are hereby waived. Sec. 9.02. The Trustee agrees to invest funds from time to time held by it as Trustee under this Agreement, and apply the interest earned thereon as provided in Article III, but shall not be under any duty or obligation to pay interest on any funds held by it which cannot practicably be so invested either to the Authority or to the holder of any Bond, or to any other person; any and all such liability for the payment of such interest being hereby expressly waived. Sec. 9.03. In the event that the Trustee, or any successor trustee, shall become legally consolidated or merge with another banking association or corporation, the banking association or corporation resulting from such consolidation or merger shall thereupon become and be the Trustee hereunder with the same titles, rights, powers, benefits, duties and limitations, without the execution or filing or recording of any instrument, and without any action on the part of the Authority or the holders of Bonds hereunder. A purchase of the assets and assumption of the liabilities of the Trustee by another banking association or corporation shall be deemed to be consolidation or merger for the purposes of this section. Sec. 9.04. The Trustee, or any successor trustee, may be removed at any time by an instrument or concurrent instruments in writing filed with the Trustee and signed by the holders of a majority in principal amount of the Bonds then outstanding hereunder, or by their attorneys-in-fact thereunto duly authorized. Sec. 9.05. The Trustee, or any successor trustee, may resign the trust created by this Agreement upon first giving notice of such proposed resignation and specifying the date when such resignation shall .take effect, which notice shall be given to the Authority in writing at least twenty (20) days prior to the date when such resignation shall take effect, and shall be given to the Bondholders by mail at least twenty (20) days prior to the date when such resignation shall take effect. .Such resignation shall take effect on the day so designated in such notice, unless previously a successor trustee shall be appointed as hereinafter provided, in which event such resignation .shall take effect immediately upon the appointment of such successor trustee. -37- • Sec. 9.06. In case at any time the Trustee shall become incapable of acting, or shall be removed, a successor trustee may be appointed by the holders of at least a majority in principal amount of the Bonds hereby secured and then outstanding, by an instrument or instruments in writing signed by such Bondholders or by their duly constituted attorneys-in-fact; but until a new trustee shall be so appointed by the Bondholders, the Authority, by an instrument executed by order of its board of directors, may appoint a trustee to fill such vacancy until a new trustee shall be appointed by the Bondholders as aforesaid, and when any such new trustee shall be appointed by the Bondholders, any trustee theretofore appointed by the Authority shall thereupon and thereby be superseded and retired. Each such successor trustee appointed by any of such methods shall be a bank or trust company authorized by law so to act, and having a capital and surplus of not less than Five Million Dollars ($5,000,000). Sec. 9.07. Any successor trustee appointed hereunder shall execute, acknowledge and deliver to the Authority, and to its predecessor, an instrument accepting such appointment; and thereupon, upon the execution of the same, such successor trustee, without any further act or instruments or deeds of conveyance, shall become vested with all of the assets, powers, rights, duties, trusts and obligations of its predecessor in trust hereunder with like effect as if originally named as trustee herein; but nevertheless, on the written request of the successor trustee, the trustee ceasing to act shall execute and deliver to such successor trustee all conveyances and instruments proper to evidence the vesting in the new trustee of the interest and title of the retiring trustee in the trusts hereby created, subject, however, to any 1 ien which the retiring trustee may have pursuant to any provision hereof; and upon request in writing of any successor trustee, the Authority covenants to make, execute, acknowledge and deliver any and all deeds, conveyances, assignments, or instruments in writing for the more fully and certainly vesting in and confirming to such successor trustee all such assets, property, rights, powers and trusts. -38- ARTICLE X. Supplemental Agreements Sec. 10.01. Without notice to or the consent of any Bondholders, the Authority and the Trustee may, from time to time and at any time, enter into such agreements supplemental hereto as shall not be inconsistent with the terms and provisions hereof (which supplemental agreements shall thereafter form a part hereof): (a) To cure any ambiguity or formal defect or omission in this Agreement, or in any supplemental agreement, which does not adversely affect the rights of the Bondholders; (b) to grant to or confer upon the Trustee, for the benefit of the Bondholders, any additional benefits, rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Bondholders or the Trustee; (c) to modify, amend or supplement this Agreement to permit the qualification of the Bonds for sale under the securities laws of the United States of America or of any of the states of the United States of America or to obtain or maintain bond insurance with respect to payments of principal of and interest on the Bonds; (d) to provide for the refunding or advance refunding of the • Bonds in whole or in part; and (e) to procure or maintain a rating on the Bonds from a nationally recognized securities rating agency designated in such supplemental agreement, if such supplemental agreement will not adversely affect the owners of the Bonds. Sec. 10.02. Subject to the terms and provisions contained in this section, and not otherwise, the holders of not less than sixty-six and two-thirds percent (66-2/3%) in aggregate principal amount of the Bonds then outstanding shall have the right from time to time, anything contained in this Agreement to the contrary notwithstanding, to consent. to and approve the execution by the Authority and the Trustee of such agreement or agreements supplemental hereto as shall be deemed necessary or desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Agreement or in any supplemental agreement; provided, however, that nothing herein contained shall permit or be construed as permitting: (a) an extension of the maturity of the principal or interest on any Bond issued hereunder; or . -39- (b) a reduction in the principal amount of any Bond or the redemption premium or the rate of interest thereon; or (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds; or (d) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental agreement. Nothing herein contained, however, shall be construed as making necessary the approval by the Bondholders of the execution of any supplemental agreement or agreements as authorized in Section 10.01 of this Article. If at any time the Authority shall request the Trustee to enter into any supplemental agreement for any of the purposes of this section, the Trustee shall, at the expense of the Authority, give notice by first-class mail, postage prepaid, to all registered owners of Bonds. Such notice shall briefly set forth the nature of the proposed supplemental agreement and shall state that a copy thereof is on file at the office of the Trustee for inspection by all Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail the notice required by this section, and any such failure shall not affect the validity of such supplemental agreement when consented to and approved as provided in this section. Whenever, at any time within one (1) year after mailing of such notice, the Authority shall deliver to the Trustee an instrument or instruments purporting to be executed by the holders of not less than sixty-six and two-thirds percent (66-2/3%) in aggregate principal amount of the Bonds then outstanding, which instrument or instruments shall refer to the proposed supplemental agreement described in such notice and shall specifically consent to and approve the execution thereof in substantially the form of the copy thereof referred to in such notice as on file with the Trustee; thereupon, but not otherwise, the Trustee may execute such supplemental agreement in substantially such form, without liability or responsibility.to any holder of any Bond, whether or not such holder shall have consented thereto. If the holders of not less than sixty-six and two-thirds percent (66-2/3%) in aggregate principal amount of the Bonds outstanding at the time of the execution of such supplemental agreement shall have consented to and approved the execution thereof as herein provided, no holder of any Bond shall have any right to object to the execution of such supplemental agreement or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to .question the propriety -40- ~~ of the execution thereof, or to enjoin or restrain the Trustee or the Authority from executing the same, or from taking any action pursuant to the provisions thereof. Upon the execution of any supplemental agreement pursuant to the provisions of this section, this Agreement shall be, and shall be deemed, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Agreement of the Authority, the Trustee, and all holders of Bonds then outstanding shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments. Sec. 10.03. The Trustee is authorized to join with the Authority in the execution of any such supplemental agreement and to make the further agreements and stipulations which may. be contained therein. Any supplemental agreement executed in accordance with the provisions of this Article shall thereafter form a part of this Agreement, and all the terms and conditions contained in any such supplemental agreement as to any provision authorized to be contained therein shall be, and shall be deemed to be, part of the terms and conditions of this Agreement for any and all purposes. Sec. 10.04. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, the opinion of any counsel approved by it who may be counsel for the Authority, as . conclusive evidence that any such proposed supplemental agreement complies with the provisions of this Agreement, and that it is proper for the Trustee, under the provisions of this Article, to join in the execution of such supplemental agreement. Sec. 10.05. Notwithstanding anything contained in the foregoing provisions of this Agreement, the rights and obligations of the Authority and of the holders of the Bonds, and the terms and provisions of the Bonds and this Agreement, or any supplemental agreement, may be modified or altered in any respect with the consent of the Authority and the consent of the holders of all the Bonds then outstanding. -41- ARTICLE XI. Miscellaneous Provisions Sec. 11.01. Any covenant of the Authority set forth in this Agreement may be waived or modified in whole or in part with the written consent of the Authority and 'the Trustee without the necessity of obtaining the consent of the Bondholders and without the execution and delivery of a supplemental agreement, provided that the Trustee determines, upon the advice of legal counsel, that any such waiver or modification will not adversely impact the interests of the Bondholders. Sec. 11.02. Any notice or demand which. by any provision of this Agreement is required or permitted to be given or served by the Trustee on the Authority shall be deemed to have been sufficiently given or served for all purposes, by being deposited, postage prepaid, in a United States Post Office letter box, addressed (until another address is filed in writing by the Authority with the Trustee for that purpose) as follows: South Bend Redevelopment Authority 1200 County-City Building 227 West Jefferson Boulevard South Bend, Indiana 46601 Any notice or demand which by any provision of this Agreement • is required or permitted to be given or served by the Authority on the Trustee shall be deemed to have been sufficiently given or served for all purposes, by being deposited, postage prepaid, in a United States Post Office letter box, addressed (until another address is filed in writing by the Trustee with the Authority for that purpose) as follows: Norwest Bank Indiana, N.A. 112 West Jefferson Boulevard P.O. Box 112 South Bend, Indiana 46634 Attn: Warren G. Ransom Sec. 11.03. In any case where the date of payment of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be in the city of payment a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal or the redemption price may be made on the succeeding business day with the same force and effect as if made on the established date of payment of interest or principal or the date fixed for redemption. -42- C • Sec. 11.04. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original, and all of which shall constitute but one and the same instrument. Sec. 11.05. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Agreement or the Bonds is intended or shall be construed to give to any person or company other than the parties hereto and the Bondholders, any legal or equitable right, remedy or claim under or in respect to this Agreement, or any covenants, conditions and provisions herein contained; this Agreement and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the owners of the Bonds as herein provided. Sec. 11.06. If any provisions of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. Sec. 11.07. No member, officer or employee of the Authority or of any department or board thereof, shall be individually or personally liable for the payment of the principal of or interest or redemption premium on any Bond. Nothing herein contained shall, however, relieve any such member, officer or employee from the • performance of any duty provided or required by law. Sec. 11.08. This Agreement shall be construed and enforced in accordance with the laws of the State of Indiana. Sec. 11.09. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction, interpretation or effect of this Agreement. Sec. 11.10. The provisions of this Agreement shall constitute a contract between the Authority and the holders of the Bonds, and after the issuance of any Bonds no change or alteration of any kind in the. provisions of this Agreement may be made until all of the Bonds have been paid in full as to both principal and interest, or provision for such payment has been made in accordance with Article VIII hereof, except in accordance with Article X hereof. -43- ~` • IN WITNESS WHEREOF, SOUTH BEND REDEVELOPMENT AUTHORITY has caused its corporate name to be hereunto subscribed by the President of its Board of Directors, and attested by the Secretary-Treasurer of its Board of Directors, and Norwest Bank Indiana, N.A., as Trustee, has likewise caused these presents to be executed in said Trustee's name and behalf by its Vice President and Trust Officer, and its corporate seal to be hereunto affixed and attested by its , in token of its acceptance of said trust, as of the day and year first hereinabove written. SOUTH BEND REDEVELOPMENT AUTHORITY ATTEST: (Written Signature) Donald Fewell Secretary-Treasurer, Board of Directors (SEAL) ATTEST: (Written Signature) (Printed Signature) (Title) By: (Written Signature) Joseph Wroblewski President, Board of Directors NORWEST BANK INDIANA, N.A. (Written Signature) (Printed Signature) -44- (Title) • • STATE OF INDIANA ) SS: ST. JOSEPH COUNTY ) Before me, the undersigned, a Notary Public in and for said State, personally appeared Joseph Wrobl"ewski and Donald Fewell, personally known to me to be the President and Secretary-Treasurer, respectively, of the Board of Directors of the South Bend Redevelopment Authority, and acknowledged the execution of the foregoing Agreement for and on behalf of said Authority on this day of 1992. Witness my hand and notarial seal. (Written Signature) (SEAL ) (Printed Signature) Notary Public My Commission Expires: My County of Residence is -45- ,; ~. a , ' STATE OF INDIANA ) SS: ST. JOSEPH COUNTY ) Before me, the undersigned, a Notary Public in and for said State, personally appeared and personally known to me to be the _ and respectively, of Society Bank, Indiana, and acknowledged the execution of the foregoing Agreement for and on behalf of said Bank on this day of , 1992. Witness my hand and notarial seal. (Written Signature) (Printed Signature) Notary Public (SEAL) My Commission Expires: My County of Residence is This instrument was prepared by Randolph R. Rompola, BAKER & DANIELS, 205 West Jefferson Boulevard, South Bend, Indiana 46601. \rrrompol\palais.roy\trust.agr;tmg;6/16/92 -46- .A~'~ ~', Rattng'". _ -Moody s ,,.. ,; In the opinion of~aker & ~~~5 Bain Counse7~ the rnrerest on the Bonds is includable in grass income for purposes of Federal income taxation but is excludable from mcome taxation m the State of Indtmw for all ptt~poses except the Indiana fmmtcutl institutions tax and the Indiana inheritance tax See "Tax Matters' m A~pendix D herein for matters concemmg such exemptions and other matters related t° taxation of the Bonds andAppendir B attached hereto. ~- OFFICIAL STATEMENT ' (NEW ISSUE) $1,410,000 Taxably Lease Rental Revenue Bonds of 1992 City of Sout4h Bend, Indiana, Redevelopment Authority Dated: First day of the month of original delivery of the Bonds. Due: February 1,1993/2004 Minimum Bid: $1,388,850 Good Faith Deposit: $14,100 The Bonds are payable from semi-annual lease rental payments to be paid by the South Bend Redevelopment Commission (the "Commission") duectly to Norwest Bank Indiana, N.A., as trustee (the "Trustee") under a trust agreement, dated as of June 1, 1992, between the Authority and the Trustee (the "Trust Agreement") and a lease dated as of March 1, 1992, between the Authority, as lessor, and the Commission, as lessee (the "Lease"). The Trust Agreement creates a continuing pledge by the Authority to the bondholders to pay the debt service on all Bonds, until the principal sum shall by fully paid, from Pledged Funds (as defined in the Trust. Agreement) in accordance with the provisions of the Trust Agreement. (Refer to the "Summary of Selected Provisions of the Trust Agreement" section of this Official Statement). The Bonds are limited obligations of the Authority, payable solely from lease rentals and certain other funds pledged therefor under the Trust Agreement. The Bonds do not constitute an indebtedness, liability or loan of the credit of the City of South Bend or any political subdivision thereof, or a pledge of the faith, credit or taxing power of the City of South Bend or any political subdivision thereof. The Authority has no taxing power. However, funds for the payment of the lease rental will be generated by the -Commission from unlimited ad valorem properiv taxes assessed throughout the District. See "Security" section of this Official Statement. The Bonds are issued pursuant to IC 36-7-14.5. The Bonds are issued as fully registered bonds of single maturities in denominations of $5,000 or integral multiples thereof. Interest on the Bonds is payable initially on February 1, 1993, and thereafter on each February 1 and August 1, and principal of the Bonds is payable annually on each February 1 in the years and amounts as follows: Year Amount Rate* , Yield* Year Amount Rate* Yield* 1993 $ 35,000 % % 1999. $120,000 % % 1994 85,000 % % 2000 130,000 % % 1995 90,000 % % 2001 140,000 % % 1996 100,000 % % 2002 150,000 % 1997 105,000 % % 2003 165,000 % % 1998 110,000 % % 2004 180,000 % % Bonds maturing on or after February 1, 2002 are subject to optional redemption on February 1, 2001 and any .date thereafter at a price of par plus accrued interest. LEGAL OPINION: Baker & Daniels, South Bend, Indiana. DEADLINE FOR BIDDERS TO NOTIFY OF INTENT TO BID: On or before July 13,1992 at 11:00 A.M., E.S.T. (See "Notice of Intent to Sell") BIDS CONSIDERED: -Upon 24 hours notice, anticipated to be July 16,1992. DELIVERY: On or about August 12,1992. The date of this Official Statement is June 18,1992. * Interest rates, reoffering yields or prices and ratings will be set forth in the Final Official Statement described herein. (TIYIS COVER PAGE CONTAIlVS CERTAIN INFORMATION POR QIIICR REFERENCE ONLY. IT 1S NOT A SUMMARY OF 4TIIS ISSUE. NVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT T70 OBTAIN INFORINATTON ESSENTZ4L TO THE MAKING OF AN IIVFORMED INVESTMENT DECISION.) No dealer, broker, salesman or other person has been authorized by the Authority, the Financial Advisor or the Underwriters to give any information or to make any representations other than those contained in this Official Statement or the Final Official Statement and, if given or made, such information and representations must not be relied upon as having been authorized by the Authority, the Financial Advisor or the Underwriters. This Official Statement or the Final Official Statement does not constitute an offer to sell or solicitation of an offer to buy, nor shall there by any sale of the District by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the Authority and other sources which are believed to be reliable, but it is not to be conttined as a representation by the Financial Advisor or Underwriters. The information aad expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement or the Final Official .Statement nor any sale made thereafter shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or in any other information contained herein, since the date hereof. IN CONNECTION WITH TITS OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT' TRt1NSACIIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LE4EL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN IvIARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF CONTENTS Page • Roster of City Officials ............................................iii Introduction to the Official Statement .................. 1 Description of the Securities .................................. 3 Authorization of the Bonds ............................... .. Purpose of the Bonds ......................................... 3 Security ................................................................... 3 Cash Flow ............................................................... 3 Redemption Provisions ........................................ 4 Interest Computation ........................................... 4 Rating ...................................................................... 4 4 Tax Matters ............................................................ . . 5 ... ....... Certification ............................................... Legal Matters ......................................................... 5 Miscellaneous ........................................................ 5 The City ...................:................................................. 6 General Information ............................................ 6 Economic and Demographic Information........... 6 General Information Concerning the City........ 6 Population .............................................................. 9 Retail Sales and Buying Income .....................•• : Building Permits .................................................. 10 Medical Facilities ................................................. 10 Page ........................................ ortation s T it .............. p ran ......................................... Education 11 ..................... .................................... . btedness d I 11 .... ................... e n Direct General Obligation Debt of the City .... 11 Revenue Debt of the City ................................... 12 Capital Leases ...................................................... 12 Lease Rental Revenue Debt Issues by the South Bend Redevelopment Authority......... 13 Overlapping Debt ................................................ 14 Financial Information ............................................. ].4 Financial Reports ................................................. 14 Results of Operations . ....... .......... """"' • Budgetary Process ............................................... 14 Cash and Investments .......................................... 16 Property Valuations and Taxes ............................. 17 Principal Taxpayers ............................................. 19 AppendiA A - Financial Statements Appendix B -Lease Agreement Appendix C - Excerpts of the Trust Agreement Appendix D - Form of Legal Opinion and Tax Matters Appendix E - Notice of Intent to Sell ii • • CITY OF SOUTH BEND, INDIANA MAXOR Joseph E. Kernan CITY CLERK CITY CONTROLLER Irene Gammon Kevin C. Horton COMMON COUNCIL Stephen Luecke President Sean C. Coleman Ann B. Puzzello Loretta Duda Linus K Slavinskas Roland A. Kelly, Jr. Cleophus Washington Gene Ladewski Thomas Zakrzewsla THE REDEVELOPMENT AUTHORITY Joseph W. Wroblewski President Andre B. Gammage Yrce President Donald K Fewell Secretary-?l-easurer BOND COUNSEL Baker & Daniels South Bend; Indiana FINANCIAL ADVISOR Evensen Dodge, Inc. Minneapolis, Minnesota INTRODUCTION TO THE OFFICIAL STATEMENT 's $1,410,000 The following in formation u furnished sdety to provide limited introductory infoo~atwnom ~S~ et All s formation is Taxable Lease Rental Revenue Bonds (the "Bonds") and does not Purport ~ Statementi incheding the qualified in ixs entirety by reference to the more detailed descriptions appearing in Offic' appendices hereto. i. of South Bend, Indiana, Redevelopment Authority. Cit Issuer: y Security: The Bonds are ppayable from lease rental ayments of the ment ofpthe Pa ritt h A n y yy. ut o Commission to the ~ mited ad will be generated by the Commission from valorem property taxes assessed throughout the District. Although not pledged, the Commission expects to make certain tax increment revenues available for the payment of the lease rental. To finance the acquisition of the Palms Royale building. Purpose: Optional Redemption The Bonds .are subject to prior redemption on February 1, t i . nteres 2001, at a price of par plus accrued Denominations: $5,000 or integral multiples thereof. Record Date: The 15th day of the month preceding the payment date. Principal Payments: Annually commencing February 1,1993. Interest Payments: Semiannually on February 1 and Augguusst 1 commencing ft of the Trustee to the d ra February 1, 1993, by check or .owner as of the record date. Tax Status: See "Tax Matters" in Appendix D herein. Professional Consultants: Financial Advisor: Evensen Dodge~,~ Inc. Minneapolis, Minnesota Bond Counsel: n d, Indiana South Be 1 Legal Matters: • Legal matters incident to the autliorization and issuance of the Bonds are subject to the opinion of Baker ~ Daniels, Bond Counsel, as to validity and tax status. The oppinion will be substantially in the form set forth in Appendix D attached 'hereto.. Bond Counsel has not participated in the preparation of this Official Statement except for information under the headings "Legal Matters" and the Notice of Intent to Sell. Authority for Issuance: Conditions Affecting Issuance of Bonds: Delivery: No Litigation: The Bonds are issued pursuant to IC 36-7-14.5 and a resolution of the Redevelopment Authority adopted June 18, 1992. The Bonds are offered when, as and if issued, subject to the approving legal opinion of Baker & Daniels. On or about August 12,1992.. There is no litigation now ppending or, to the knowledge of District officials, threatened, which questions the validity of the Bonds or of any proceedings of the District taken with. respect to the issuance or sale thereof. The Official Statement is in a form deemed final as of its date for purposes of Securities and Exchange Commission -Rule 15c2-12(b)(1) (the "Rule"), but is subject to minor rev~on or amendment in accordance with the Rule. Not later than seven business days following the award of the Bonds, the Authority shall provide copies of the-Final OJj~cial Statement as that term is used in the Rule, to the purchaser of the Bonds The Final Official Statement will be the Official Statement dated June 18,1992 and an addendum which includes the maturity dates and amounts, interest rates and reoffering yields or prices, credit ratings, and any other information required by law. Any such addendum shall on or after the date thereof, be fully incorporated in the Final Official Statement by references The purchaser will be supplied with Final Of j~icial Statements in a quantity su,~cient to meet its request Up to 50 copies of the Final Official Statement will be famished without cosy Questions regarding the Bonds or the Official Statement can be directed to and additional copies of the Official Statement, the City's audited financial reports, which includes .the Authority, and the Resolution may be obtained from Evensen Dodge, inc., 222 South Ninth Street, Suite 3800, Minneapolis, Minnesota 55402, (612/338-3535), the District's financial advisor, or Ms. Ann Kolata, Redevelopment Director, Department of Economic Development, City of South Bend, 227 W. Jefferson Blvd.,l2th Floor, South Bend, Indiana 46601, .(219/284-9371). 2 r i• DESCRIPTION OF THE BONDS Authorization of the Bonds ©n 1~une 18,1992,. the Authority adopted the Bond Resolution (Resolution No. 56) authorizing the issuance of the Bonds to finance the acquisition of the Palms Royale building and related costs. The Lease authorizes the lease of the Palais Royale building to the Commission and obligates the Commission to make lease. rental payments to the Authority (except ~-s provided therein) as well as pay all taxes, insurance and maintenance costs related to the Palms Royale building. The Trust Agreement provides the security to the bondholders. In the Trust Agreement, the Authority .pledges the- Pledged Funds to the repayment of the Bonds and covenants therein to maintain insurance and to pay taxes and other charges related to the Project.- Sources and Uses of the Bonds Table 1 is a summary of the projected Estimated Sources and Uses of Funds for the Bonds. TABLE 1 Estimated Sources and Uses of Funds Sources of Funds: 1410 000 Bond Proceeds . Total Sources 1410 000 Uses of Funds: $1,308,314 Purchase Price 82,000 Costs of Issuance 21,150 Underwriter's Discount ~1.~1 Miscellaneous Total Uses 1410 000 Security The Bonds are payable from lease rental payments of the Commission paid to the Trusteefor the account of Authority as provided in the Lease Agreement and secured by the Trust Agreement. The Authority. has no taxing power. The Trust Agreement creates a continuing pledge by the Authority to the bondholders to pay the debt service on all Bonds, until the principal sum shall be fully paid, from Pledged Funds (as defined in the Trust Agreement) in accordance with the provisions of the -Trust Agreement. (Refer to the "Trust Agreement" section of this Official Statement). The Bonds do not constitute a corporate obligation of the City of South Bend for which the full faith and credit or taxing powers of the City are pledged. However, funds for the payment of the lease rental will be generated by the .Commission from unlimited ad valorem yr~ertx taxes assessed .throughout the District. Each August, the Commission will levy a tax on the District equal to the lease payments due in the following year. The Commission reserves the right to reduce the levy by funds on hand available at the time of certification of the levy. The Commission intends to reduce tax levies to the. extent funds are available from surplus tax increment revenues of the South Bend Central Development Area. Sufficient funds are projected to be available from these primary sources to make all lease rental payments.. However, the Commission s taxing power will be required to make any lease rental payments in the event the primary revenues are insufficient to meet required lease payments. Summary of Selected Provisions of the Lease Agreement The Lease Agreement entered into as of March 1, 1992, between the Authority and the Commission (the "Lease") sets forth the terms and provisions under which the Authority .will lease .the Project to the Commission. The term of the Lease is 13 years beginning on the date the Project is acquired. The term of the Lease may terminate at the earlier of (a) the exercise of the purchase option and payment of the option price, or (b) the payment or defeasance of all obligations of the Authority incurred to finance the Project, to refund .such obligations or refunding obligations, or to improve the ProjecK. The first semiannual lease rental payment of $110,000 will be due on the day the Project is complete or January 28, 1993,. whichever is later. Thereafter, the rentals will be payable in advance in semiannual installments of $110,000 on January 28 and July 28 of each year. After the sale of the. Bonds, the lease rentals will be reduced as provided in the Lease. The Lease will be what is known as a Net Lease meaning the rent shall be absolutely net to the Authority and all other expenses in connection with the Project shall be those of the Commission. The Commission shall be obligated to pay as its expenses, without reimbursement from the Authority, all costs of taxes and assessments, if any, and maintenance and use in connection with the ProjecK. The Commission, at its own expense, will carry. insurance for physical loss or damage in an amount equal to the greater of the purchase option price or 100% of the full replacement cost of the Project, insurance for public liability and property damage, and rental value insurance which is equal to the full rental for two years. The Authority grants the Commission the right and option, on any rental payment date, upon 30 days written notice, to purchase the Project at a price that will enable the Authority to redeem all outstanding Bonds, all premiums payable at the time of redemption, and accrued and unpaid interest. At the end of the term of the Lease and the full discharge of all obligations pertaining thereto, the Authority will convey title to the Project to the Commission. For greater detail please refer to the actual Lease Agreement provided in Appendix B of this Official Statement. 4 Summary of Selected Provisions of the Trust Agreement A Trust Agreement is to be executed between the Authority and the Trustee, in which Agreement the Authority pledges and assigns the Lease and the Pledged Funds {as defined in Appendix C of this Official Statement) to the Trustee. The Trustee Agreement creates a continuing pledge by the Authority to the bondholders to pay the debt service on all Bonds from the Pledged Funds until the principal sum is fully paid. The Authority additionally pledges to keep and perform all covenants and conditions pursuant to the terms of the Trust Agreement. The Authority covenants that it has and will preserve its interest in all property to be leased, subject only to Permitted Encumbrances as defined in the Lease. The Authority covenants that all lawful taxes, charges, and assessments levied upon the Palms Royale building (the "Project") will be paid and that the Project will be operated and maintained in good repair, working order and condition. Under the Lease, the Commission is obligated to actually pay, as its expense, all costs of taxes and assessments, and maintenance and use related to the Project. If the Authority, via the Commission, fails to pay any tax, assessment, or other charge, the Trustee may pay such charges which shall constitute an additional indebtedness of the Authority secured by the line of the Trust Agreement, prior and paramount to the lien of the Bonds and interest thereon. For any such charges paid by the- Trustee, the Authority will pay interest to the Trustee at the highest rate of interest on any of the Bonds when sold. The Authority covenants further that it will bring suit to mandate the Commission to levy a tax to pay the rental provided in the Lease if such rental is more thin 60 days in default. The Authority covenants that it will carry insurance on the Project equal to the greater of (a) the purchase option. price under the Lease or (b)1(10% of the full replacement cost of the Project and will carry rental value insurance equal to the-full rental value of the Project for two years against physical loss or damage. Under the Lease, the Commission is obligated to carry sufficient insurance to meet all the aforementioned requirements. If the Authority neglects to obtain such insurance, the Trustee may procure such insurance which shall be repaid by the Authority upon demand and shall constitute an additional indebtedness of the Authority secured by the- line of the Trust Agreement, prior and paramount to the lien of the Bonds and interest • thereon. However, the Trustee is not obligated to procure such insurance unless fully indemnified against this expense and furnished with the means to incur such expenses. For any such charges paid by the Trustee, the Authority will pay interest to the Trustee at the highest rate of interest on any of the Bonds when sold. The insurance policies will clearly indicate that any proceeds under the policies will be payable to the Trustee. In the event the Improvements should be destroyed so as to render them unfit for their intended use, the Trustee will apply the insurance proceeds to the reconstruction of the destroyed Improvements if (i) the costs of reconstruction does not exceed the insurance proceeds and (ii) such reconstruction can be completed within the period covered by rental value insurance. If either or both conditions shall not exist, the insurance proceeds shall be used to redeem all the outstanding Bonds. . The Authority covenants to keep proper books of record and account which will be furnished to the Trustee upon request. If any of the "events of default" (as defined in Article VII, Section 7.01 of the Trust Agreement) occurs, the Trustee-may, upon request of the holders of 25% of the then outstanding Bonds, by notice in writing to the Authority, declare the outstanding principal and interest immediately due and payable, subject to the right of the holders of a majority of the outstanding Bonds, by written notice to the Authority and. Trustee, to annul each declaration at any time if the defaults have been cured. In the case of an event of default, the Trustee may protect its and the bondholders' rights by suit or by suits in equity or at law in any court of competent jurisdiction whether for specific performance of any covenantor for the enforcement of any other appropriate legal or equitable remedy. Each and every such remedy will be cumulative. The Authority covenants that whenever there are sufficient funds held by the Trustee to pay principal, redemption premiums .and interest to the next interest payment date on all outstanding Bonds, it will direct the Trustee to call all outstanding Bonds for redemption. 5 A summary of the funds and accounts established in the Trust Agreement is provided in the following section of this Official Statement. Excerpts from the Trustee Agreement are found in Appendix C of this Official Statement. Persons interested in obtaining the full Trust Agreement may request a copy from Baker & Daniels, Attn: Richard L. Hill, Esq., First Bank Building, 205 West Jefferson, South Bend, Indiana, 46601, (219) 234-4149. Funds and Accounts Per the Trust Agreement The Trust Agreement establishes the following funds and accounts. (This information is presented in summary form.. For greater detail, please refer to Appendix C). South Bend Redevel~ment Authoriy Palais Rovale 5inkine Fund. The Trustee shall deposit into the Sinking Fund from each rental payment received an amount equal to the lessor of i) all of such rental payment received; or ii) an amount which when added to the amount in the Sinking Fund equals the sum of the unpaid interest on the Bonds due on, before, or within 45 days after the rental payment becomes due,. and the unpaid principal on the Bonds due within 8 months from the date the rental payment becomes due. Any portion of a rental payment remaining after such deposit, shall be deposited in the Operation and Reserve Fund. The Trustee shall, from time to time, withdraw sufficient money from the Sinking Fund to pay principal and interest on the Bonds when due. South Bend Redevelopment Authon_'ty Palais Royale Expense Fund. This fund is established to pay the costs of issuance of the Bonds. After November 1, 1992, the Trustee may transfer any moneys on deposit in this fund to the Sinking Fund. South Bend Redevelovment Authority Palais Rovale Operation and Reserve Fund. This fund is established ' to pay necessary incidental expenses of the Authonty (e.g. audits, appraisals, and reports); to pay principal, interest, and redemption. premiums upon redemption of the Bonds, if any; and to contribute money to the • Sinking Fund if it should ever be deficient. The Trustee shall invest all funds, or so much as is practicable in Qualified Securities as permitted by law. Whenever the amounts contained in the Funds are sufficient to redeem all outstanding Bonds, the Trustee shall apply the amounts in the Funds to the redemption of the Bonds. Risk Factors to be Considered by Investors Prospective investors in the Bonds should be aware of the following risk factors: 1. The Bonds are payable solely from, and secured by, lease rental payments from the Commission to the Authority and other Pledged Funds as defined in the Trust Agreement. The Authority has no taxing power. 2. In the event the Leased Property should ever be totally or substantially. destroyed, the lease rental will be abated during the period in which the Leased Property is unfit for its intended use. However, rental value insurance will be available to make bond payments during the time the lease rental is .abated, for a period of up to two years. If either (i) the cost of reconstruction of the Leased Property would -exceed the amount of insurance proceeds or (ii) such reconstruction cannot be completed within the period of time covered by rental value insurance, the: insurance proceeds will be applied to the redemption of all outstanding Bonds and the full discharge of all obligattons pertaining thereto. 3. In the event of delayed billing, collection or distribution of property taxes by the county auditor, sufficient funds may not be available to the Redevelopment Commisston m time to make lease rental payments when due. • 6 Redemption Provisions Bonds maturing on February 1,.2002 and thereafter are subject to prior redemption on February 1,.2001 and on any date thereafter at a price of par plus accrued interest. Interest Computation Interest on the Bonds will be computed on a 360~iay year, 30-day month basis. Rating A rating review has been. requested from Moody's Investors Service, Inc. for the Bonds. A rating is' subject to withdrawal at any time; withdrawal of a rating mgy have an adverse affect otr the marketability og tig ~ ds. For an explanation at the significance of the satin , an investor should communicate with the satin a en Certification As of the date of the settlement of the Bonds, the Purchaser will be furnished with a Certificate signed by the appropriate officers of the City and the Authority. The Certificate will state that as of the date of the Official Statement, the Official Statement did not and does not as of the date of the Certificate contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made. therein, in light of circumstances under which they were made, not misleading. Legal Matters • Legal matters incident to the authorization and issuance of the Bonds are subject to the opinion of Bond Counsel,. as to validity and tax status. The opinion will be in the form as set forth in Appendix D herein. Bond Counsel has not participated in the preparation of this Official Statement except for the Notice of Intent to Sell Bonds. Miscellaneous Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so .expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement has been duly authorized by the Redevelopment Authority. SOUTH BEND REDEVELOPMENT AUTHORITY By: ;°f Josevh W Wroblewski President, Redevelopment Authority 7 ^ THE CITY OF SOUTH BEND General Information South Bend is located in northern Indiana approximately 90 miles east of Chicago and 140 miles north of Indianapolis. In the past five years, new growth has been occurring in manufacturing and light industries, retail, professional services, the health care industry, and private educational facilities. For the calendar year 1991, the average total employment was 118,978 out of a total labor force of 126,160, with an unemployment - rate of 5.7°10. The City has aMayor-Council. form of government, with the Mayor and nine Common Council members elected to concurrent four-year terms of office. The Mayor is the City's chief executive officer. Other key administrative positions include City Controller, City Attorney and City Clerk. Municipal services include police and fire protection, code enforcement, garbage collection, storm sewer, sanitary sewer and water utilities, street maintenance, parks, and economic development. THE REDEVELOPMENT AUTHORITY The Redevelopment Authority The Authority, a body corporate and politic, duly organized and existing under the provisions of LG 36-7-14.5, was created for the .purpose of financmg local public improvements for lease to the Commission. The Authority is comprised of three members appointed by the Mayor. Current members of the Authority are listed below: Joseph W. Wroblewslq President Andre B. Gammage, Ytce President Donald K Fewell, Secretary-TYeasurer The Redevelopment Commission The South Bend Redevelopment Commission exists and operates under the provisions of Indiana Code 36-7- 14, asamended, and is the governing body of the District and the City's Department of Redevelopment. The Commission is comprised of five members, three of whom are appointed by the Mayor and two of whom are appointed by the Common Council Commissioners are appointed to one year terms from January 1 through December 31, or until their successors are appointed and sworn in. Vacancies are filled in the same manner as the original appointments and the successor serves the remainder of the vacated term. Pursuant to State laws, the Commission. may, by resolution, issue bonds for redevelopment purposes. The Commission must. certify its resolution authorizing the issuance of such bonds to the City's fiscal officer, who is then directed by law to prepare the bonds, publish notice of sale, and award the bonds. The Allocation Area The Allocation Area generally encompasses the City's downtown central business district and the immediate periphery. The Allocation Area comprises what had previously been three separate legally declared redevelopment areas: The Central Downtown Urban Renewal Area, first declared m 1968; the East Bank Development Area, declared in 1980; and the Monroe-Sample Development. Area, declared in 1981. In order to coordinate redevelopment activities in the three separate areas, the Commission adopted Resolution Number 737 on May 10, 1985, which expanded and merged the three into a single redevelopment area designated the. South Bend Central Development Area (the "Development Area"). The boundanes of the Development Area are coterminous with those of the Allocation Area. 8 The Allocation Area has a base assessed value of $26,131,717. The base assessment year varies for certain parts of tY.e Area, rangingg from March 1,1980 to March 1,1989. The estimated 1991 net assessed value (for taxes payable in 1992) is $43,473,160 providing a captured assessed value of $17,341,443. The estimated 1992 net assessed value (for taxes payable in 1993) is $44,073,160 providing a captured assessed value of $17,941,443. The Development Plan for the Area has as its overall goal the economic revitalization and physical development of the Area. Related goals include: creating a multi-use regional center for North Central Indiana and South Central Michigan for business and consumer services, speciality retail, governmental and medical services, cultural, entertainment, recreational, and. convention .uses;. strengthening the residential component of the Area by increasing the number and type of middle income .housing units; increasing the level of private investment and reinvestment in the Area; increasing the tax base in the Area; retaining and .increasing jobs in the Area; and increasing functions and facilities within the Area to make it an attractive and competitive option for living, working and enjoying recreational activities. Specific objectives of the Development Plan are outlined for each of the three originally designated. components of the Development District:. the Central Business District, the East Bank, and Monroe Park. The objectives seek to develop the unique character of each of the three segments while focus~mgeach is overall redevelopment goals. A brief description of each area and the development occurring , found in the following section. Central Business District Located primarily: along the west bank of the St. Joseph River, the Central Business District includes commercial, retail, entertainment, government and convention facilities. More than .1,750,000 s.f. of office space is currently located in the Central Business District making it the largest concentration of office space in the region. A significant.impetus for additional downtown development was created'by the construction of the Stanley Coveleski Regional Stadium which opened in 1987. The multi-purpose stadium is designed for a variety of recreational activities and is the home of a Class A baseball team affiliated with the Chicago White Sox. This $6.25 million municipal facility, financed through alease-purchase agreement, is expected to • generate additional development within the Central Business District. Monroe Park Originally residential in character, this area had a rapid loss of population and housing units during the 1960's and 1970's and an increase in nonresidential land use. Redevelopment activities have focused on restoring the residential character of a .portion of Monroe Park, creating a light industrial park in the remainder of the. area and establishing traffic patterns and landscaping to separate the two types of development.. Since 1982 a total of six residential- structures were moved into the neighborhood to fill vacant lots, four new houses have been constructed and a number of houses have been renovated. In the industrial area thirteen new buildings were constructed at a cost of $8,480,000. These buildings contain approximately 290,000 s.f. and the businesses located there created 397 new jobs and 108 spin-off jobs in the area. East Bank Located across the St. Joseph River from the Central Business District, this area is being developed around parks and recreation opportunities, residential development, and. related retail and commercial enterprises. This area contains the East Race Waterway, an Olympic lass whitewater course for kayaks and canoes which opened in 1984. A significant portion of the City's lineal park system along the river is on the East Bank. Paved biking, running and walking paths with decorative hghting and landscaping have been developed throughout most of the East Bank area. Approximately 100,000 s.f. of office space has been developed in the East Bank since 1988. In addition, 202 units of market rate apartments were constructed in 1989 along the St. Joseph River on a key site in the East Bank. • 9 J • ECONOMIC AND DEMOGItAPI3IC INFORMATION Demographic Statistics The population of the City and St. Joseph County in the last three censuses is presented in Table 2. -TABLE 2 Population Statisticsc City of St. Joseph South Bend Coun 247 052 199a U.S. Census 105,511 727 109 241,617 , 1980 U.S. Census 1970 U.5. Census 125,580 244,827 Source: U.S. Census Bureau ..Retail Sales -.The median household effective buying income (EBI) h and per capita retail sales for the South Annual Sales and Marketing Management's i own Bend/Mishawaka MSA and the State of Indiana as s . n "Survey of Buying Power" are presented in Table. 3. TABLE 3 Retail SalesBuring Income Median Effective Buying Income Per Capita Retail Sales South South Bend MSA Indiana Bend MSA Indiana, $25,982 .1990.. $26,366 $7,639 $6,672 811 6,612 7 1989 24,722 24,562 1988(1) 23,641 23,277 , 7,241 6,309 152 79 6 1987 25,562: 482 2480 , 7,0 6,629 5,952 1986 (1,) The 1988 figures for Median Household EBI reflect adjustments in the calculation of Effective Buying Income statisttcs. 10 ^ 1 U • 1 1i Building Permits TABLE 4 Building Permits New Residential Permits(3) Total Permits ~mcludin_„g Apartment Buildinesl Number Value Number Value 1991(1) N/A $37,855,390 N/A N/A 1990 7,640 (2) 55,000,000 .131 $20,533,780 1989 6,302_ (2) 80,500,000 147 24,400,000 1988 6,263 (2) 67,380,000 140 14,856,385 1987 6,571 (2) 48,100,000 80. 9,315,232 1986 1,661 61,291,112. 15 7,948,700 1985 1,954 63,011,520 27 3,694,000 1984 1,653 38,101,370 20 4,923,806 1983 .1,503 50,721,450. 26 4,256,784 1982 1,486 25,667,709 29 4,814,000 1981 1,516 19,460,393 40 3,859,200 (1) Through 3rd Quarter 1991, total value increased by 127.2% from third quarter 1990. (2) The total number of permits included signage, utilities, and miscellaneous permits in addition to building permits. (3) The total number of residential permits only includes one permit for each single and multifamily building and does not include one-for each unit within building. Employment Statistics Table 5 below summarizes the total labor force and the. unemployment rate for the South Bend/Mishawaka MSA for-the past 5 years. TABLE 5 Average Annual Unemplovment Statistics (in thousands) State of South Bend/Mishawaka MSA Indiana Labor Rate .Force Rate 1991 126.1 5.7% 5.9% 1990 130.7 5.4% 5.3% 1989 133.6 4.5% ~ . 4.7% 1988. 130.8 4.9% 5.3% 1987. 127.2 5.5% 6.4% Source: Indiana Department of Employment and Training.5ervices. 11 ^ Major Employers The followmg table presents the largest employers in the City of South Bend as of May 1992, TABLE 6 Largest Employers City of South Bend Approximate Coom~anv , Product • University of Notre Dame(1) Education Allied Signal, Ina Airplane & Auto Parts Memorial Hospital of South Bend Medical Care South Bend Community School Corp. Education SL Joseph's Care Group, Ina Medical Care City of South Bend Government AM General Corp. Military Vehicles St. Joseph County Government Automatic Molded Plastics Automobile Plastic Parts 1stSource Bank Financial Services U.S. Post Office Mail Service RACO, Ina Electrical Switches & Boxes Indiana University at South Bend Education Associates Bancorp Financial Services Indiana Bell Telephone Telephone Services South Bend Medical Foundation Medical Care Holy Cross Care Services Health Care Michiana Community Hospital Health Care Preston Trucking Co. Transportation The Signature Group Financial Service (1) Located outside the City, in Notre Dame, Indiana. Source: South Bend.-Mishawaka Area Chamber of Commerce. Medical Facilities Number of Em,~loyees 2,600 2,500 2,400 2,300 1,900 1,300 1,100 900 .650 - 649 628 626 600 500 465 -456 400 -400 375 355 There are four general acute care hospitals in the South Bend area, the two largest of which are. located in the downtown area. Memorial Hospital of South Bend has 526 beds; St. Joseph Medical Center has 339 beds; Michiana Community Hospital has 107 beds; Saint Joseph Hospital of Mishawaka has 177- beds. The hospitals offer a wide variety of medical specialties and have the entire Michiana region as their primary service area. There are 13 nursing homes in the South Bend/Mishawaka area. Other special health facilities include Healthwin Hospital, four urgent care centers, the Northern Indiana State Hospital and the. South Bend Medical Foundation. Transportation In addition to its location near Indiana Tollroad (I-90-80), U.S. Highways 20, 31 and 33 go through the City, as do State Highways 2, 23, and 331. Six rail lines and nearty 50 trucking Imes serve the City and surrounding area. Four bus companies provide inter-city transport in the area, while Transpo, the municipal bus line, provides .service within the. area. Chicago's O'Hare Airport is approximately 100 miles from the City. Michiana Regional Airport in South Bend provides commercial, chartered and commuter services and is the second busiest airport in Indiana. :~ 12 • ^ education The South Bend Community School Corporation serves all of the City and some of the surrounding area, and has a current enrollment of approximately 21,427 students in grades kindergarten through high school An estimated 4,168 students attend parochial schools within the City. The following institutions of higher education and technical training are located within South Bend or in the surrounding area: TABLE 7 Area School Enrollment Fall 1991 Co eves: University of Notre Dame ~-~ Indiana University at South Bend (IUSB) St. Mary's College 1,675 S00 Bethel College 414 - Holy Cross Junior College 231 Purdue Program (IUSB) Technical Colleees: Indiana Vocational Technical College 2' Davenport College 365 305 Michiana College DEBT STRUCTURE General Obligation Debt Table 8 provides details of general obligation debt. The park improvement bonds are general obligations of ment bonds are general obligations of the District. l d op eve the City of South Bend Park District. The re TABLE 8 General Obligation Debt by Issue (As of July 1,1992) Principal Year Original Interest nt Spread A Final Outstanding Maturi as of 7192 mou of Issue Pu os 1982 Park Improvements $3,500,000 10.25% 000 6.9-8.0% 900 4 1/01/93 $ 350,000 2/01/06 4.900.000 , , 1990 Redevelopment . 5 250 000 13 ~~ Revenue Debt A summary of revenue supported. debt by issue is shown in Table 9. The Tax Increment Revenue Bonds will be repaid solely from allocated incremental property taxes collected on property located in the District and do not constitute a debt of the City. TABLE 9 Revenue Debt by Issue (As of July 1,1992) • i• Principal Year Original of Issue Amount. Purpose Final Maturi Outstanding as of 6192 1985 $4,200,000 000 750 1986 1 Tax Increment Revenue Bonds 2/01/03 Tax Increment Revenue Bonds 2/01/04 $ 3,875,000 (1) 1,700,000 (1) , , 1988 1,800,000- Tax Increment Revenue Bonds 2/01/05 1,800,000 9 225 1989 9,500,000 Sewage Revenue Bonds 2/01/09 . • $16.600.000 (1) The South Bend Redevelopment District has proposed a bond issue to refund $4,225,000 of the District's outstanding Tax Increment Revenue Bonds of 1985 and 1986. Capital Leases Table 10 provides a listing of capital leases of the City outstanding as of December 31,199E TABLE 10 Capital Leases (As of December 31,1991) Expiration Payment Periodic purpose Date Frequency Pa ment .Studebaker Museum 4/1/95 12/1/92 Monthly Semiannual $ 5,824 207,545 Various Fire Equipment 12/8/92 8/31/95 Semiannual Monthly 10,985 19,603 Computers Computer Aided Dispatch System 12/31/92 Monthly l 19,812 180 49 Leaf Loaders Municipal Services Facility 12/8/92 12/27/00 Semiannua Monthly , . 14,332 Fire Pumpers 3/1/96 3/1/96 Mon ~y Monthly 6620 Street Sweepers Parking Garage Facilities 11/15/01 Monthly $20,391-48,538 103 40 Trucks .Water and Sewage Facilities 7/1/92 .3/1/01 Semiannual Semiannual , 101,718 • I• The following is a schedule of minimum future lease payments and present values of the net minimum lease payments under these capital leases as of December 31,199E TABLE 11 Future Minimum Lease Pa yments (As of December 31,1991) Enterprise General Fund Long-Term Supported Year Debt Debt Total 1992 $1,177,303 $ 557,200 $1,734,503 1993 659,155 476,994 1,136,149 1994 657,252 476,994 1,134,246 1995 532,248 466,994 999,242 1996 352,126 554,204 906,330 1996+ 1.093.184. 2.493,923 3.587.10? Total Minimum Lease Payments $4,471,268 $5,026,309 $9,497,577 Less Amount Representing Interest 890.234 1.158.024 2.408.258 Present Value of Net Minimum Lease Payments 3 581034 3 508 285 7 089 319 Lease Rental Revenue Debt -TABLE 12 Redevelopment Authority Lease Rental Revenue Debt (As of July 1,1992) Principal Date Original of Issue Amount Purpose Final Maturi Outstanding as of 7192 1988 1990 $4,575,000 4,895,000 Parking Facility Construction Public Improvement in the South 2009 2012 $ 4,380,000 (1) 4,895,000 1991 000 200 4 Bend Central Development Area Airport Economic Development Area 2012 4,200,000 . 1991 , , 2,355,000. Airport Economic Development Area 2012 1997 2,355,000 000 885 3 1991 1992 4,280,000 1,410,000 Stadium Facility Acquisition Palais Royale Acquisition 2004 , , 1,410.000 Total 21125 000 (1) The Authority has proposed a bond issue to refund $4,250,000 of the Authority's outstanding Lease Rental Revenue Bonds dated August 1,1988. 15 Overlapping. Debt TABLE 13 Indirect General Obligation and Lease Debt Debt Applicable to Valuation in Ciri Total Principal Outstanding 2292 St. Joseph County South Bend Community School Corp. $ 7,100,000 2,450,000 South Bend Middle School Building Corp. 3,905,000 (]:.ease Debt) South Bend Elementary School Public Library 9,250,000 (Lease Debt) St. Joseph County Public Library 7,380,000 St. Joseph County PublicLibrary Leasing Corp. 2,010,000 5t. Joseph County Airport Authority Penn Harris Madison School Corp. 650,000 64,362,239 Mishawaka Penn Township Public Library 2,115,000 Total Percent Amount 42.6% $ 3,024,600 64.0% 1,568,000 64.0% 2,499,200 64.0% 5,920,000 ..62.6% 4,619,880 62.6% 1,258,260 42.6% 276,900 3.9% 2,510,128 3.5% 74.025 21750 993 Future Financing The Authority anticipates it will sell Lease Rental Refunding Bonds in June, 1992 in the estimated amount of $4,600,000.. The City of South Bend Redevelopment District anticipates the issuance of approximately $4,745,000 Tax Increment Revenue Refunding Bonds in June of 1992, and approximately $5,000,000 of lease purchase obligations for the construction of a golf course in the Airport Economic Development Area later • this summer. FINANCIAL INFORMATION Financial Reports .The general purpose financial statements of the City of South Bend have been prepared in conformity with .generally accepted accounting principles (GAAP) as applied to government units. .The Governmental Accounting Standard Board (GA5B) u the accepted standard-setting body for establishing governmental accounting and financial re~ortmg principles. The City uses fund and account groups to report on its financial position and the xesults of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. Results of Operations The modified accrual basis of accounting is used by all governmental fund types,. expendable trust funds and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to 5 0 3 Daccrual (i.e., when they become both measurably and available). The government considers the governmental fund revenues as available as they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred. The accrual basis of accounting is utilized by proprietary fund types and pension trust funds. Table 14 on the following page presents statements of revenues, expenditures and changes in fund balance for the years ending December 31,.1988 through 1990 for the General Fund of the City. 16 r 1 LJ i• i• TABLE 14 Statement of Revenges, Expenditures and Chances in Fund Balance (For the Years Ended December 31) ' 1991 1 1990 1989 1988 Revenues: Taxes $25,801,516 $22,909,065 931 07 $23,464,694 407 302 $22,188,696 294 270 Licenses and Permits Intergovernmental 248,369 1,420,234 , 3 468,034 , 474,723 , 565,629 7 Charges for Services i 327,449 556 15 .1,154,970 99,466 1,008,768 61,860 1 996,1 28,198 tures Fines and Forfe Miscellaneous , 2,018,813 1,519.266 2.022.989 1,700.598 Total Revenues 29 831937 $26.458.732 $27,335.441 $25.749.586 Ex nditures: went: General Government 870 $12,006, 914 841 15 $10,393,573 15,141,019 $10,700,188 14,548,541 $ 9,313,954 14,197,163 Public Safety Highways and Streets , , 850,997 000 50 908,673 50,000 767,510 50,011 726,915 40,000 Welfare Culture and Recreation , 36,000 36,000 36,000 36,000. Urban Redevelopment & Housing 491,712 743,417. Debt Service: Principal Retirement 180,g26 881 47 340,700 111.864 341,341 150.199 Interest and Fiscal Changes . . Total Expenditures. 29 277 493 $27.501.389 $26.554.814 $2A.805,572 Excess ficiency) of Revenues Over nder) Expenditures: 104 65 (~ ~ ~ $ 780,627 $ 944,014 Net Other Financing Sources (Uses):. 1.090.653 -0- 64.238 Excess ficiency) of Revenues Over nder) Expenditures and Other Sources (Uses) 47,996 780,627 1,008,252 Fund Balances (Deficit) at Beginning 427 (2) 839 421,266. (586,986) of Year, January l , Residual Equity Transfer 8.958 Fund Balance End of Year, December 31 1$~ 4 (1) Unaudited, Non-GAAP Basis. anying financial statements included as Appendix A herein. te 18 in the accom N d S o ee . (2) Restate p 17 Budgetary Process Budgets are adopted on a cash basis which is not consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the general, special revenue, debt service, capital project, ets for the 1990/91 and 1991/92 fiscal years. 15 shows the bud Tabl d e s. internal service and pension trust fun g TABLE 15 Budget and Tax Levu by Fund 1.991. & 1992 1991 1990/1991 1992 1992 Bud¢et Tax Lew Bu eet Tax Lew General Fund $29,621,986 210 433 5 $23,811,192 849 075 4 $32,103,239 5,420,421 $25,253,984 3,537,799 Park Maintenance , , , , Street De artment Motor ~ehicle Highway 2,371,703 ~ 2,734,555 - Liability Insurance Premium and Reserve 1,331,227 856 558 5 ~ 477,368 1 1,307,489 5,904,742 ~ .2,398,854 Police and Fire Pension Cumulative Capital Dev't , , 925,804 , 722,135 807,173 747,159 Cumulative Capital Impr. 646,232 275. 649 ~ 416,431 605,600 408,175 349,920 Park Bond Studebaker Bond . , 414,882 000 1,000 592,704 1,099,782. 355,803 953,600 383,618 752,140 Coveleski Bond Morris Civic , 383,165 226,269. 382,547. 263,996 Enterprise Fund Century Center 2.045.736 _ 2.113.260 Total 50 382 086 32 421730 53071814 33 687 470 i• 18 ..PROPERTY VALUATIONS AND TAXES Prnperty Assessment Tax Levy and Collection Rea]. Property in the State is assessed each year as of March 1. On or before August 1 each year, the County Auditor must submit to each underlying unit a statement of (i) the estimated assessed value of the- unit as of March 1 of that year, and (ii) an estimate of the taxes to oe 6istn'6uted to the unit during the -last six months of the current budget year. The estimated assessed value is based on abstracts delivered. to the Auditor by the Township Assessor or his designee on or before July 15. The estimated value is used when the Common Council meets to establish its budget for the next fiscal year (January 1 through December 31), and to set tax rates and levies. By statute, this must be done not later than the last Monday in August. The budget, tax levy and tax rate is subject to review and revision by the State Board of Tax Commissioners. Table 16 below summarizes tax rates in the City for the last six years. TABLE 16 Tax Rates in South Bend -(Per $100 of Assessed Values) 1986 87 1987 88 1988 89 1989 1990 1 1991 State of Indiana .0100 .0100 .0100 .0100 .0100 0.0100 St. Joseph County 2.3639 2.3304 2.4917. 2.183 1.977 2.5393 Portage Township .5627 - .7180 .0768 .0539 .0632 0.0659 South Bend School Corp. 5.2825 5.8177 5.6317 4.0765 4.925 5.2089 Library District .4952 .5169 .6571 .4798 .5147 0.6234 City of South Bend 5.9662 6.2989 6.8209 4.8271 5.1064 5.2106 Transportation/Airport .3976 .4223 .3999 .3485. .3273 0.3374 Redevelopment Distnct - -.2813 0.1586 • Total 15.0781 16.1142 16.0881 11.6307.13.2053 14.1441 ~~ ~~ ~ ~'~ On or before I~eecember 31, the. County Auditor prepares and delivers the final abstract. The County Treasurer mails .tax statements the following April Property taxes are due and payable to the County Treasurer in two installments on May 10 and November 10. If an installment of taxes is not completely paid on or before the due date, a penalty of 10% of the amount delinquent is added to the amount due. On May 10 and November 10 of each year thereafter, an additional penalty equal to 10% of any taxes remaining unpaid is added. The penalties are imposed only on the principal amount of the delinquency. Property becomes subject to tax sale procedures after 15 months of delinquency. Table 171ists historical tax collections for the last ten years. TABLE 17 Tax Levies and Collection • LevyJCollect 1990/91 1989/90 1988/89 1987/88 1986/87 1985/86 1984/85 1983/84 1982/83 1981/82 Amount of Lew $29,901,654 30,166,432 29,787,812 26,832,369 25,500,623 24,524,300 24,246,149 23,147,657 22,090,568 20,944,113 19 Percent Collected 98.2% 94.5% 98.0% 102.5% 101.0% 96.0% 98.0% 100.0% 99.5% 97.0% Pursuant to State law, real property is valued. for assessment. purposes at its "true cash value" as defined in • rules and regulations promulgated by the State Board of Tax Commissioners. "True cash value does not mean fair market value. Current regulations define the true cash value, generally, as the reproduction value of property based on actual material and labor costs prevalent in the State of Indiana in 1985. -The local assessor may subtract from the reproduction value, an amount for normal depreciation, as provided in the regulations, as well as amounts for functional or economic obsolescence, as the assessor deems appropriate in accordance with the regulations. The "gross assessed value" is equal to 33-1/3% of the tnae cash value, as defined above. "Net assessed value" represents the gross assessed value less certain deductions .for mortgages, veterans, the aged, the blind, economic revitalization, and tax~xempt property. The net assessed value is the value used for taxing purposes in the determination of tax rates. TABLE 18 Trend of Assessed Values Assessment Year Net Assessed March 1 Value 1 1991 $617,573,087 1990 614,580,764 1989(2) 605,780,608 1988 435,047,732 1987 434,055,735 1986 429,698,477 1985 433,033,280 1984 407,023,834 . 1983 417,959,626 1982 J 422,886,626 • 1981 415,809,579 1980 410,626,715 (1) The assessed valued shown are net figures after subtracting all deductions for mortgages, veterans, the aged, the blind, and tax-exempt property. The net assessed values shown also do not include. valuation of the City's Urban Enterprise Zone and abated valuations. The assessed value of personal property in the Urban Enterprise Zone totals $22,848,700 in 1991, $22,786,780 for 1990, $24,468,820 for 1989, $24,660,040 for 1988, $24,437,827 for 1987 and $23,940,420 for 1986. This valuation is removed from the tax rolls for a period of ten years beginning March 1,1984. The Urban Enterprise Zone is part of a State program which offers various State tax credits for businesses in targeted areas. Abatement of real and personal property valuation reduced the taxable valuation of property by deceasing amounts over a term of up to ten years in accordance with State law and local ordinance. The total abated valuation (not included in the net assessed value figure above) for real-and personal property was $18,215,175 in 1991, $18,212,420 in 1990, $32,848,630 in 1989, $22,532,170 in 1988, $22,822,340 in 1987 and $19,595,830 in 1986. The net assessed values for 1984 through 1988 also do not include tax incremental assessed valuation, which totalled $40,661,442 in 1991, $38,558,867 in 1990, $28,447,694 in 1989, $12,718,975 in 1988 and $6,930,155 in 1987. (2) The assessed value for 1989 was $646,730,745, but was reduced by approximately $40,950,137 due to assessment appeals. No other year listed reflects appeals, but it is believed- that the size of the 1989 appeals is an aberration due to the general reassessment and not to reflect its effect would distort the historical trend. 20 Property Tax Replacement Credit Indiana Code 6-1.1-21-5 provides that each year taxpayers will receive a credit for property tax replacement, known as the "property tax replacement credit" (PTRC), in the amount of twenty percent (20%) of their tax liability for taxes as defined under IC 6-1.1-22-9 which are due and payable in May and November. of that year. The credit is applied to each installment of taxes. However, the tax liability of a taxpayer does not include the amount of any property tax owed by the taxpayer attnbutable to certain specified components of the tax levy. Among the tax levy components not receiving the PTRC are the property taxes that will be used to pay for principal and interest due on debt entered into after December 31,1983. The State Tax Board has ruled that this exclusion applies to all property taxes and incremental valuation in a tax allocation area. however, recent legislation affecting tax increment financing, under IC 36-7-1439.5(f), allows a property tax credit on incremental value to taxpayers in a tax allocation area in an amount equal to the State-paid PTRC, but such credit is not paid by the State. As a result, taxpayers receive the credit on their tax bills, and since the amount of the credit is not paid by the State, the revenues received by the allocation area are decreased by the amount of the credit. Tax Abatements The Indiana Code 6-1.1-12.1 provides a mechanism by which a governmental unit may authorize a property tax deduction for real property and for new manufacturing equipment within an economic revitalization area. The City of South Bend has chosen to use this tax abatement mechanism to encourage economic development in targeted areas. Most of the recent projects in .the Allocation Area have received tax abatements. By ordinance, the Common Council sets the standards and procedures by which petitions for tax abatements are considered by the Council and establishes eligibility criteria. Pursuant to State law, the Council may grant the tax abatement for real property for a period of (i) three, six or ten years, if the petition is filed after January 1,1986, or (ii) ten years >f filed after December 31,1978 but .before January 1,.1986. The deduction is equal to the increase in assessed value resulting from the rehabilitation or redevelopment, multiplied by the percentages prescribed in the following table. TABLE 19 Tax Abatement Deductions 3-Year 6-Year 10-Year Deduction Period Period Period 1st 100% 100% 100% 2nd 66 8S 95 3rd 33 66 80 4th 50 65 5th ~ 50 6th 17 `~ 7th ~ 8th ~ 20 ~ 10 10th S 21 ^ Principal Taxpayers • The following is a list of large taxpayers in the City of-South Bend as shown by the St. Joseph County Auditor's Office and the State Board of Tax Commissioners. Net assessed valuations are for taxes payable in 1991. • TABLE 20 F.arQest Taxpayers 1990 % of Total Assessed Assessed - Taxpayer. Type of Business Value Value Indiana Michigan Power Company ation C i Electric Utility Airplane & Auto Parts $ 29,780,520 24,588,650 4.85% 4.00% orpor ~ Allied/Bend Indiana Bell Telephone Communications 19,697,590 - 3.20% 2 x°1 Northern Indiana Public Service Co. y d C Gas Utility Military Trucks 12,671,080 12,476,510 • 0 2.03°10 ompan AM General & Amlan New Energy Company Ethanol Plant 11,562,720. 1.88°10 Edward Rose of Indiana Real Estate Communications 11,003,300 6,725,150 1.79% 1.09% Ameritech Marriott Hotel 5,012,450 .82% 57% RACO, Inc. Electrical Switches & Boxes 3.494.110. . 137 012 080 22.29% Total- • APPENDIX A Financial Statements ^ . ~~ ~pp p -E y~ . .. 1 I FiRq i~ ~~~~i ~i ~, ', .. . .......... ..... ~ . ~~ ,=;i ~~~; ~ '~° ~ M I N 4 f l ! I~ I I I j 1 I I i 1 I i I 1 t I 1 I I ~ •,l '~ 0 ~ ]~f R~ ww I~~ ~~ ~I ~i~f iii ^i AI~IZ~~'1~ 11-,SY ,. ~~ a '»^ ~" ' _ ~~~ ~~ ~ 1 ~~~ 1~ 1~ 1 I I~ t I I 1. 1. 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W ~ y L ~ 'a ~ C ~~ C L C ~ Ngr>>e'-~ E r. ~E^H o € ~_$~ R~ ~ c A ° o ~w ~ a~ ~pU e m ~•; ~ F V U ~ o ~~ e , LLr u a~ o v 3 ° a p` u ~° Q ~ • o+ u c ° Z ~ F O u `~ e ° y xD uv ~ ~ F ~ o c e~ ~? o ~S ~ 'p , y v OG y y m u ~l u~ . C C C V .Q y C F F C {1 y y> u L L 1 'vi $ 9 n C O 6 6 O FF F~ t t 0 O z .- V v NOTICE OF INTENT TO SELL $1,410,000 SOUTH BEND REDEVELOPMENT AUTHORITY TAXABLE LEASE RENTAL REVENUE BONDS (PALAIS ROYALE PROJECT) Upon not less than twenty-four (24) hours' notice given by telephone by or on behalf of the South Bend Redevelopment Authority (the "Authority") prior to the sale date, the Secretary- Treasurer of the Authority will receive in the office of the Authority, 1200 County-City Building, South Bend, Indiana, and consider sealed bids for the purchase of the taxable lease rental revenue bonds of the Authority designated as "South Bend Redevelopment Authority Taxable Lease Rental Revenue Bonds ("Palais Royale Project") (the "Bonds"), in the estimated aggregate principal amount of One Million Four Hundred Ten Thousand Dollars ($1,410,000), bearing interest at a rate or rates not exceeding ten percent (10~) per annum (the exact rate or rates to be deter- mined by bidding), which interest shall be payable on February 1, 1993, and semiannually thereafter on August 1 and February 1 of each year. The Bonds will be issued in fully registered form in the denominations of $5,000 or an integral multiple thereof not exceeding ,the aggregate principal amount of the Bonds maturing in any year, will be originally dated as of the first day of the month in which they are originally delivered, will be numbered consecu- tively, and will mature serially on February 1, in the years and amounts as follows: • Year Amount Year Amount 1993 $ 35,000 1999 $120,000 1994 85,000 2000 130,000 1995 90,000 2001 140,000 1996 100,000 2002 150,000 199'7 105,000 2003 165,000 lggg 110,000 2004 180,000 Principal payments on the Bonds will be payable at the principal office of Norwest Bank Indiana, N.A., South Bend, Indiana, as Trustee under the Trust Agreement (defined below) (the "Trustee"). Payments of interest on the Bonds will be paid by check or draft mailed one business day prior to the interest payment date to the person in whose name each Bond is registered on the fifteenth day of the month immediately preceding the interest payment date. Bonds maturing on or after February 1, 2002, may be • redeemed prior to maturity at the option of the Authority in whole or in part, in whole multiples of $5,000, in inverse order or maturities and by lot within maturities, on any date not earlier than February 1, 2001, at face value and without premium plus accrued interest to the date fixed for redemption. The Bonds may be transferred or exchanged at the principal office of the Trustee --~ subject to the terms and conditions of the Trust Agreement dated as of the first day of June, 1992 (the "Trust Agreement"), pursuant to which the Bonds are being issued. Any person interested in submitting a bid for the Bonds must furnish in writing to the Authority, c/o Mr. Richard Treptow, Evensen Dodge, Inc., 222 South Ninth Street, Suite 3800, -2- \rrrompol\PALAIS.RpY\notice.int\fc\June 17, 1992 Minneapolis, Minnesota 55402, telephone (612) 338-3535, facsimile • (612) 338-7264, on or before 11:00 a.m. (EST), July 13, 1992, the person's name, address and telephone number. The person may also furnish a telex or facsimile number. The undersigned Secretary- Treasurer will cause each person so registered to be notified of the date and time bids will be received not less than 24 hours before the date and time of sale. The notification shall be made by telephone at the number furnished by such person and also by telex of facsimile if a telex or facsimile number has been furnished. Each bid must be for all of the Bonds and must state the rate or rates of interest therefor, not exceeding ten percent (10~) per annum. All bids for the Bonds shall be sealed in an envelope • marked "Bid for South Bend Redevelopment Authority Taxable Lease Rental Revenue Bonds (Palais Royale Project)," and shall be presented to the Secretary-Treasurer at the principal office of the Authority, and the Secretary-Treasurer shall continue to receive all bids offered until the hour fixed for the sale of the Bonds, at which time and place he shall open and consider each bid. .Bidders for the Bonds shall be required to name the rate or rates -*~=~ of interest which the Bonds are to bear, not exceeding ten percent (10~) per annum. The interest rate on Bonds of a given maturity must be at least as great as the interest rate on Bonds of the preceding maturity. Bids specifying more than one interest rate must also specify the maturity year of the Bonds bearing each rate, and all Bonds maturing on the same date shall bear the same single -3- \rrrompol\PALAIS.ROY\notice.int\fc\June 17, 1992 rate of interest. Subject to the provisions contained below, the Secretary-Treasurer shall award the Bonds to the bidder offering the lowest net interest cost to the Authority on the principal amounts of the Bonds indicated hereinabove, to be determined by computing the total interest on all Bonds from the date thereof to their maturities and deducting therefrom the premium bid, if any, or adding thereto the amount of any discount, if any. Although not a term of sale, it is requested that each bid show the net dollar interest cost to final maturity and the net effective average interest rate on the entire issue. No conditional bid or bids for less than ninety-eight and one-half percent (98.5$) of the par value of the Bonds, plus accrued interest at the rate or rates named to the date of delivery, will be considered. If the • principal amount of the Bonds is adjusted, the purchase price of the Bonds shall be adjusted accordingly. The Secretary-Treasurer shall have full right to reject any and all bids. In the event no acceptable bid is received at the time fixed for the sale of the Bonds, the Secretary-Treasurer shall be authorized to continue to receive bids from day to day thereafter for a period not to exceed thirty (30) days, without readvertising; provided, however, that -~~ if said sale be continued, no bid-will be accepted which offers an interest cost which is equal to or higher than the best bid received at the time fixed for the sale of the Bonds. Each bid must be accompanied by a certified or cashier's check in the amount of Fourteen Thousand One Hundred-Ten Dollars ($14,110), drawn on a bank or trust company which is insured by the r: -4- \rrrampol\PALAIS.gpY\notice.int\fc\Jtme 17, 1992 Federal Deposit Insurance Corporation and made payable to "The South Bend Redevelopment Authority," to be held as a guarantee of the good faith of the bidder. In the event the bidder to whom said Bonds are awarded shall fail or -refuse to comply with the provisions of the bid and this notice, such check and the proceeds thereof shall become the property of the Authority and shall be taken and considered as liquidated damages of the Authority on account of such failure or refusal. The checks of unsuccessful bidders will be returned immediately following the award of the Bonds. The successful bidder will be required to make payment for the Bonds in Federal Reserve or other immediately available funds and accept delivery of the Bonds within five (5) days after being notified that the Bonds are ready for delivery, at a bank designated by the Authority. Any premium bid and accrued interest must be paid in cash at the time of delivery as a part of the purchase price for the Bonds. The Bonds will be ready for delivery within sixty (60) days after the date on which the award is made, and if not deliverable within that period, the successful bidder will be entitled to rescind ,the sale and the good faith deposit ~~ _. will be returned. Any notice of rescission must be in writing. At the request of the Authority, the successful bidder shall. furnish to the Authority, before delivery of the Bonds, a certificate in form satisfactory to the Authority as to the initial public offering price of the Bonds. • -5- \rrranpol\PpI,AIS.ROY\notice.int\fc\June 17, 1992 It is anticipated that CUSIP identification numbers will • be printed on the Bonds (at the expense of the Purchaser), but neither the failure to print such numbers on any Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the successful bidder to accept delivery of and pay for the Bonds. At the time of delivery of the Bonds the approving legal opinion of Baker & Daniels, bond counsel, of South Bend, Indiana, as to the validity of the Bonds, together with a transcript of Bond proceedings, the printed Bonds with such legal opinion printed thereon, and closing certificates in the customary form showing no litigation, will be furnished to the successful bidder at the expense of the Authority. The Authority was organized in compliance with IC 36-7- 14.5, for the purpose of financing local public improvements, including the Project (as defined in the Trust Agreement) for lease to the South Bend Redevelopment Commission (the "Commission"). All actions have been taken in compliance with the provisions of IC 36- 7-14 and IC 36-7-14.5. The Bonds will be secured by the Trust Agreement, and the Bonds will be issued pursuant to the terms and -*~~ - provisions of said Trust Agreement and a resolution of the Authority entitled "Resolution of the South Bend Redevelopment. Authority Authorizing the Issuance of the South Bend Redevelopment Authority Taxable Lease Rental Revenue Bonds (Palais Royale Project) and Regarding Other Related Matters" -(the "Bond Resolution"). -6- \rrrompol\PALAIS.ROY\notice.int\fc\June 17, 1992 The property referred to in the Trust Agreement has been leased for a term not to exceed thirteen (13) years to the Commission at the rental amounts set forth in such lease, payable on such dates and subject to the terms as set forth in the lease. The funds for the payment of the lease rental will be generated by the Redevelopment District of the City of South Bend from unlimited ad valorem property taxes assessed throughout said District. After the sale of the Bonds, the lease shall be amended to reduce the annual rental as set forth in the lease, and the term of the lease may also be shortened as described in the Official Statement. All bidders shall be deemed to be advised as to the provisions of the above-mentioned Trust Agreement, Bond Resolution and lease and the provisions of the aforesaid Indiana Code. The Bonds constitute an indebtedness only of the Authority, payable in accordance with the terms of the above- mentioned Trust Agreement and Bond Resolution and the provisions of the aforesaid Indiana Code. The Authority has authorized the preparation of an Official Statement dated June 18, 1992, containing pertinent information relative to the Bonds, and said Official Statement will ~~ serve as an Official Statement "deemed final" as of the date thereof pursuant to Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement and the Official Bid Form or for any additional information prior to sale, any prospective purchaser is referred to the Financial'Advisor to the Authority, Evensen Dodge, Inc., 222 South Ninth Street, Suite 3800, n LJ -7- \rrrompol\PALAIS.gpY\notice.int\fc\June 17, 1992 • Minneapolis, Minnesota 55402, telephone (612) 338-3535, facsimile (612) 338-7264. The Official Statement, when further supplemented by an CJ addendum or addenda specifying the interest rates of the Bonds, and any other information referred to in paragraph (b)(1) of Rule 15c2-12 of the Securities and Exchange Commission, shall constitute a "Final Official Statement" of the Authority with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting an Official Bid Form therefor, the Authority agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 50 copies of the Official Statement and the addendum described above. The Authority designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Bonds agrees thereby that if its bid is accepted by the Authority (i) it shall accept such designation and (ii) it -~~ - shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. \rrrompol\PALAIS.ROY\notice.int\fc\Jnne 17, 1992 -8- The Bonds have not been designated as "qualified tax- • exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. If bids are submitted by mail, they should be addressed to the Authority, attention of Donald Fewell, Secretary-Treasurer, South Bend Redevelopment Authority, 1200 County-City Building, South Bend, Indiana 46601. Dated this 26th day of June, 1992. SOUTH BEND REDEVELOPMENT AUTHORITY Donald Fewell, Secretary-Treasurer [To be taken to The South Bend Tribune, the Tri-County News, and The Indianapolis Commercial by no later than 12:00 noon on Tuesday, June 23, 1992, for publication two times on June 26 and July 3, 1992.] • -^~ - -9- \rrrompol\PAypIS.gpY\notice.int\fc\June 17, 1992 APPENDIX B Lease Agreement . - ~ j t F i FORM OF ADDENDUM TO LEASL Addendum to Lease Between the South Bend Redevelopment Authority, as Lessor, and the South Bend Redevelopment Commission, as Lessee (Palais Royale Project) THIS ADDENDUM, made and entered into as of this day of , 1992, by and between the South Bend Redevelopment Authority, a body corporate and politic organized and existing under Indiana Code 36-7-14.5 (hereinafter. with its successors and assigns referred to as the "Authority"), and the South Bend Redevelopment Commission, the governing body of the South Bend IIepartment of Redeye-lopment and the Redevelopment District of South Bend, Indiana (hereinafter called the "Lessee"), WITNESSETH: • In consideration of the mutual covenants herein contained, it is agreed that the lease (Palais Royale Project) previously entered into between said parties as of the first day of March, 1992 (the "Lease"), shall be amended as follows: 1. The following definitions in Section 1 of the Lease are amended to read as follows: "Lease Resolut<i~on"' means Resolution No. 1067 of the Commission passed on June 5, 1992, establishing funds for the payment of lease rentals for the Project, as defined herein. "Trust Agreement" means the Trust Agreement dated as of June 1, 1992, between the Authority and the Trustee, securing the bonds. "Trustee" means Norwest Bank Indiana,``N.A. , 112 West Jefferson Boulevard, Post Office Box 1512.; South Bend, Indiana 46634, as trustee pursuant to the Trust Agreement, and any successor trustee. 2. Section 4 of the Lease is amended to read as follows: .~ - ~ Section ~t. Rental Payment Dates and Amounts. The first semiannual rental installment in the amount of Dollars ($ ) shall be due on the day that the Project is completed and ready for use, or January 28, 1993, whichever is later. If completion is later than January 28, 1993, the first installment shall be in an amount which. provides for rental at the rate of for the semiannual period in which the Project is completed and ready for use, prorated from the date of completion until the first July 28 or January 28 following such date of completion. Thereafter such rentals shall be payable in advance in semiannual installments of on July 28 and January 28 of each year. 7. The parties hereto acknowledge that all remaining terms, covenants and conditions as set forth in the Lease between the parties hereto and executed as of the first day of March, 1992 shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Addendum to Lease to be executed for and on their behalf on the day and year first hereinabove written. SOUTH BEND REDEVELOPMENT AUTHORITY By: Joseph W. Wroblewski, President ATTEST: Donald K. Fewell, Secretary-Treasurer -~~ - SOUTH BEND REDEVELOPMENT COMMISSION By: Paula N. Auburn, President ATTEST: Michael Donoho, Secretary -2- ~ .. ~' w STATE OF INDIANA ) SS: COUNTY OF ST. JOSEPH ) Before me, the undersigned, a Notary Public in and for said State, personally appeared Joseph W. Wroblewski and Donald K. Fewell, personally known by me to be the President and Secretary- Treasurer, respectively, of the South Bend Redevelopment Authority, and acknowledged the execution of the foregoing Addendum to Lease for and on behalf of said Authority. WITNESS my hand and Notarial Seal this day of 1992. (Written Signature) (SEAL) (Printed Signature) My commission expires: I am a resident of County, Indiana. STATE OF INDIANA ) SS: COUNTY OF ST. JOSEPH ) Before me,-the undersigned, a Notary Public in and for said State, personally appeared Paula N. Auburn and Michael Donoho, personally known by me to be the President and Secretary, respectively, of the South Bend Redevelopment Commission, and acknowledged the execution of the foregoing Addendum to Lease for and on behalf of said Commission. WITNESS my hand and Notarial Seal this day of _, 1992 . (SEAL) ~~ (Written Signature) .(Printed Signature) My commission expires: I am a resident of County, Indiana.,. This instrument prepared by Randolph R. Rompola, BAKER & DANIELS, • 205 West Jefferson Boulevard, South Bend, Indiana 46601 \rrrompol\palais.roy\addendum;6/ 17/ 9 2 -3- APPEi~tDIX C Excerpts of the Trust Agreement I• /~ APPENDIX D Form of Legal Opinion and Tax Matters I FORM OF LEGAL OPINION Re: South Bend Redevelopment Authority Taxable Lease Rental Revenue Bonds tPalais Royale Project) Gentlemen: We have acted as bond counsel in connection with the . issuance by the South Bend Redevelopment Authority (the "Issuer"), of One Million Four Hundred Ten Thousand Dollars ($1,410,000) aggregate principal amount of South Bend Redevelopment Authority Taxable Lease Rental Revenue Bonds (Palais Royale Project) originally dated 1, 1992 (the "Bonds"), pursuant to a Trust Agreement (the "Trust Agreement") between the Issuer and Norwest Bank Indiana, N.A., as Trustee (the "Trustee"), dated as of June 1, 1992. We have examined a certified transcript of proceedings and such other certificates and documents and have reviewed such other proceedings and such questions of law as we -have deemed necessary as a basis for this opinion. It is understood that the rights of the holders of the Bonds, the Issuer and the Tria~tee~ and the enforceability of the Bonds, the Trust Agreement and the Lease (as defined below), may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. As to questions of fact material to our opinion, we have relied, without undertaking to verify the same by independent investigation, upon representations, covenants and certifications of the Issuer and public officials contained.in the Trust Agreement and in the certified transcript of proceedings and other certificates furnished to us. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of t- . any offering materials relating to the Bonds, and we express no opinion relating thereto. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The Issuer is duly created and validly existing as a separate body corporate and politic and as an instrumentality of the City of South Bend, Indiana, with the power to enter into the Trust Agreement and the Lease described below, perform the agreements on its part contained therein and issue the Bonds. 2. The lease between the Issuer, as lessor, and the South Bend Redevelopment Commission (the "Commission"), as lessee, dated as of March 1, 1992, and as amended by the Addendum to Lease between the Issuer and the. Commission dated as of 1992 (the lease as so amended shall be referred to herein as the "Lease"), has been duly entered into in accordance with the provisions of Indiana Code 36-7-14 (the "Act") and is a valid and binding Lease. All taxable property in the City of South Bend Redevelopment District is subject to ad valorem taxation without limitation as to rate or amount to pay the Lease rental. The Commission is required by the Act and the Lease annually to levy and appropriate an amount sufficient to pay the Lease rentals during the term of the Lease. • 3. The Issuer has duly authorized, sold, executed and .delivered the Bonds and has duly authorized and executed the Trust Agreement. The Bonds are the valid and binding obligations of the Issuer secured by the-Trust Agreement. 4. The interest on the Bonds is exempt from taxation in the State of Indiana for all purposes except the Indiana financial institutions tax and the Indiana inheritance tax. Very truly yours, ~:~ _ • ~.~ TAR. MATTERS In the opinion of Baker & Daniels, South Bend, Indiana, Bond Counsel, interest on the Taxable Lease Rental Revenue Bonds is exempt from taxation in the State of Indiana for all purposes except the Indiana financial institutions tax and the Indiana inheritance tax. INTEREST ON THE TAXABLE LEASE RENTAL REVENUE BONDS IS NOT EXCLUDABLE FROM GROSS INCOME OF THE OWNERS THEREOF FOR FEDERAL INCOME TAX PURPOSES UNDER SECTION 103 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. The foregoing does not purport to be a comprehensive discussion of the tax consequences of owning the Taxable Lease Rental Revenue Bonds. Prospective owners of the Bonds should consult their own tax advisors with respect to the foregoing and other tax consequences of owning the .Taxable Lease Rental Revenue Bonds. ~~ y APPENDIX ~ Notice of Intent to Sell i• ~• OFFICIAL BID FORM $1,410,000 City of South Bend Redevelopment Authority Taxable Lease Rental Revenue Bonds of 1992. ~~ Secretary-Treasurer Sale Date: July ~ l~J"L City of South Bend, Indiana, Redevelopment Authority Secretary-Treasurer: For the principal amount of $1,410,000 Taxable Lease Rental Revenue Bonds of 1992 (the "Bonds") of the City of South Bend, Redevelopment Authority (the "Authority"), legally issued and as descn~bed in the Notice of Intent to Sell, we will pay the City of South Bend Redevelopment Authority $ (not less than $1,388,850) plus accrued interest on the total principal of $1,410,000 to date of delivery, provided the Bonds. bear the following interest rates: Interest Interest Year Total Rate Year Total Rate 1993 $ 35,000 % 1999 $120,000 % 1994 85,000 % 2000 130,000 % 1995 90,000 % 2001 140,000 % 1996 100,000. % 2002 150,000 % 1997 105,000 % 2003 165,000 % 1998 110,000. % 2004 180,000 % The Bonds mature on February 1, in each of the years as indicated above and interest is payable February 1,1993, and semiannually thereafter on February 1 and August 1 of each year.: In making this offer, we accept the terms and conditions as defined in the Notice of Intent io Sell published in the Official Statement dated , 1992. All blank spaces of this offer are intentional and are not to be construed as an omission. NOT PART OF THIS BID: Respectfully submitted, Explanatory Note: According to our computation, this bid involves the following: Net Interest Cost Net Interest Rate Syndicate Manager By (A list of the firms associated with us in this bid is on the reverse side of this proposal) The foregoing offer is hereby accepted by and on behalf of the City of South Bend Redevelopment Authority, this day of ,1992. (Title) I hereby acknowledge receipt of the deposit required by the Notice of Intent to Se1L