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1. Proposal for Issuance of Bonds. For the purpose of providing funds to finance the acquisition, construction and equipping of a combination multifamily housing and health care • facility, consisting of an approximately 30-unit memory care addition and certain other capital Improvements to the existing 60-umt assisted living facility located at 13439 185th Lane NW m the City (the "Project) there is hereby authorized the issuance, sale and delivery of the Bonds in an aggregate principal amount not to exceed $3,800,000 at an average rate per annum thereon not to exceed 7.00%, the proceeds of which, together with funds provided by the Borrower, shall be used to finance the Project. The proceeds of the Bonds will be disbursed pursuant to a Disbursing Agreement among the Borrower, the Trustee and a disbursing agent (the "Disbursing Agreement"). The Bonds shall be special obligations of the City payable solely from the funds pledged therein. The Bonds are not to be payable from nor charged upon any funds of the City other than the revenues pledged to their payment, nor is the City subject to any liability thereon; no holders of the Bonds shall ever have the right to compel any exercise of the taxing power of the City to pay any of the principal of, premium, if any, or interest on the Bonds; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, and each Bond shall recite that the Bonds, including interest thereon, are payable solely from the revenues pledged to the payment thereof and that no Bond shall constitute a debt of the City within the meaning of any constitutional or statutory limitation. The Bonds shall contain a recital that they are issued pursuant to the Act and such recital shall be conclusive evidence of the validity and regularity of the issuance thereof. 2. Bond Structure. Pursuant to a Loan Agreement, to be dated on or after October 1, 2011, the City will loan the proceeds of the Bonds to the Borrower to finance a portion of the Project (the "Series 2011 Loan Agreement"). The payments to be made by the Borrower under the Series 2011 Loan Agreement are fixed so as to produce revenue sufficient to pay the • principal of, premium, if any, and interest on the Bonds when due. When executed, the right, title and interest of the City in, to and under, among other things, the Series 2011 Loan Agreement (except as therein provided) will be assigned to the Trustee pursuant to the Indenture. It is further proposed that the Borrower will execute a Combination Mortgage, Security Agreement and Fixture Financing Statement and Assignment of Leases and Rents which the City will assign to the Trustee as security for payment of the Bonds and the Series 1998 Bonds (the "Series 2011 Mortgage"). The Borrower's obligations under the Series 2011 Loan Agreement will be secured under the Series 2011 Mortgage equally and ratably with the Borrower's obligations under the Loan Agreement dated as of August 1, 1998 (the "Series 1998 Loan Agreement"), between the City and the Borrower, pursuant to the Intercreditor and Parity Agreement (the "Intercreditor Agreement") among the Borrower, the Trustee and Wells Fargo Bank, National Association (the "Series 1998 Trustee") as trustee under the Trust Indenture dated as of August 1, 1998 between the City and the Series 1998 Trustee (the "Series 1998 Indenture"). The Borrower has determined that the Series 2011 Loan Agreement meets the requirements for Additional Parity Indebtedness pursuant to the Series 1998 Loan Agreement. The Bonds will be further secured by a Guaranty Agreement between Guardian Angels of Elk River, Inc. and the Trustee (the "Guaranty"). The Guaranty does not secure the Series 1998 Bonds. The Bonds will be purchased by the Underwriter pursuant to a Bond Purchase Agreement among the City, the Underwriter and the Borrower (the "Bond Purchase Agreement"). The Bonds shall be in such principal amounts, shall bear interest at the rates, shall be numbered, shall be dated, shall mature, shall be subject to redemption prior to maturity, and shall be in such form and have such other details and provisions as may be prescribed in the • Indenture the form of which is on file with the City. 391851v2 JSB EL185-16 2