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RESOLUTION NO. <br />APPROVING EXTENSION AGREEMENT FOR <br />INDUSTRIAL DEVELOPMENT REVENUE BOND <br />(SCHERER LIMITED PARTNERSHIP PROJECT) <br />WHEREAS, pursuant to a Loan and Purchase Agreement dated as of December <br />1, 1985 ( the "Loan Agreement ") , among the City of Elk River ( the "City ") , Scherer <br />Limited Partnership, a Minnesota Limited partnership ( the "Partnership ") , and <br />Highland Bank (formerly Security State Bank of St. Mic]sael) , a Minnesota banking <br />association (the "Bank ") , the City has issued its $1,400,000 City of Elk River <br />Industrial Development Revenue Bond ( Scherer Limited Partnership Project) (the <br />"Bond ") to the Bank and loaned the proceeds of the Borld to the Partnership; and <br />WHEREAS, the Loan Agreement obligates the Partnership to make Loan. <br />Repayments in amounts and at times sufficient to pay principal of and interest on the <br />Bond; and <br />WHEREAS, the Bond bears interest at a variable rate that is adjusted <br />quarterly, on January 1, April 1, July 1 and October 1 of each year, to equal the <br />rate which is one percent per annum above the bond Equivalent yield on United <br />States Treasury bills having maturities of 180 days, as established on the date of <br />each such interest rate adjustment, but which rate shall never be less than 7.00 <br />percent per annum nor greater than 13.00 percent per annum; and <br />WHEREAS, the Bond is payable in monthly installments of principal and <br />interest ( the amount of which is adjusted on each interest rate adjustment date) , <br />based on a twenty -year amortization schedule, which payments commenced on <br />. February 1, 1986; and <br />WHEREAS, the Bond provides for a final payment on January 1, 1996 of all <br />principal of and interest due on the Bond ( the "Balloon Payment ") ; and <br />WHEREAS, the Partnership and the Bank desire to eliminate the Balloon <br />Payment and extend the final maturity of the Bond until January 1, 2006, as <br />provided herein; <br />NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk <br />River, Minnesota, that the form of Extension Agreement presented to this meeting, <br />and the amendments to the Bond and the Loan Agreement contemplated thereby, are <br />hereby approved, and the Mayor and City Administrator are authorized to execute <br />and deliver the Extension Agreement on behalf of the City, substantially in the form <br />on file, but with all such changes therein as may be approved by the officers <br />executing the same, which approval shall be conclusively ,evidenced by the execution <br />thereof. <br />EM696286 <br />=85 -1 <br />