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, � � � <br /> , - ., � <br /> . �. K <br /> r a;, <br /> .. <br /> a <br /> Legal Department Memo 98-06 <br /> March 26, 1998 <br /> Page Two <br /> Cardwell is willing to agree that he would refinance the loan only if (1) he sells <br /> One Main Place, or (2) the interest rate for available commercial loans is at least one <br /> (1) per cent less than the interest rate of this loan. If he does seek to refinance under <br /> either circumstance (and he would not be required to do so), thereby triggering the <br /> need to purchase securities to guarantee repayment of the notes, there is the possibility <br /> that the monies paid to the City by Cardwell in payment of the loan amount (plus <br /> interest) would not purchase securities paying sufficient interest to equal the installment <br /> note interest. This would create the liability that either Cardwell or the City must cover, <br /> and which Cardwell proposes be shared. Cardwell asks that the City assume the first <br /> $50,000 of such extra cost, and that he would pay any costs in excess of$50,000. <br /> As stated, this proposal is different from that originally agreed to by the City, and <br /> does create an exposure for the City that was not there before - $50,000. It is <br /> impossible to calculate the likelihood that the City would be required to pay that <br /> amount, since that is entirely dependent on interest rates, but the City would have to be <br /> prepared to pay it if circumstances so dictate. <br /> A loan agreement between Cardwell and the City has been prepared, <br /> incorporating the shared exposure proposed by Cardwell, and he is asking Council <br /> approval of this agreement. A resolution is presented herewith for such approval. <br /> JWC:ps <br /> cc: Wendy L. Morthland <br /> John T. Robinson <br />