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06-786Council File #� 7�(.� Green S6eet #� MINNESOTA Presented by � 7 10 11 12 13 14 15 16 WHEREAS: 17 District Heatin� �.i RESOLUTION APPROVING DISTRICT HEATING AND DISTRICT COOLING SUBORDINATION AGREEMENTS AND CONSENTING TO THE ISSUANCE BY THE SAINT PAUL PORT AUTHORITY OF ADDITIONAL BONDS FOR DISTRTCT HEATING AND DISTRTCT COOLING /� 18 19 A. The City of Saint Paul, was awarded an Urban Development Action Grant (No. B-81-AA- 20 0028, the "UDAG") for the purposes of the district heating system (the "District Heating System") owned 21 and operated by District Heating Development Company, d/b/a District Energy 5t. Paul, Ina ("District 22 Heating"); and 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 B. In connection with the development of the District Heating System, the City made a loan to District Heating from the proceeds of the UDAG pursuant to a City Loan Agreement dated as of December 1, 1982 as amended by an Amendment to City Loan Agreement dated December 1, 1985 (collectively, the "City District Heating Loan AgreemenY'), and the City District Heating Loan Agreement also provided for loans to District Heating by the City of Community Development Block Grant and tax increment funds, all of which loans, and the obligations of District Heating under the City District Heating Loan Agreement, are secured by a City Mortgage, Fixture Financing Statement and Security Agreement dated as of December 1, 1982 and amended by an Amendment to City Mortgage, Fixture Financing Statement and Security Agreement dated December 1, 1985 (collectively, the "District Heating City Mortgage"); and C. The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA") has previously issued and has outstanding its $30,500,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 1982 Series A, dated December 22, 1982 (the "1982 District Heating Bonds"), its $2,700,000 Variable Rate District Heating Revenue Bonds, 1997 Series C, dated July 1, 1997 (the "1997 District Heating Bonds"), and its $7,000,000 Vaziable Rate District Heating Revenue Bonds, 1999 Series D and E dated as of October 1, 1999 (the "1999 District Heating Bonds") and has loaned the proceeds thereof to District Heating far the purpose of financing the District Heating System; and . I� � . 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 6A 6> 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 D. The Port Authority of the City of Saint Paul (the "Port Authority") has, pursuant to a Joint Powers Agreement with the HRA dated as of April 1, 2003 (the "District Heating Joint Powers AgreemenY'), previously issued and has outstanding its (i) $4,000,000 Variable Rate District Heating Revenue Bonds, 2003 Series F and $750,000 Variable Rate District Heating Taxable Revenue Bonds, 2Q03 Series G both dated as of Apri123, 2003 and its $2,250,000 Variable Rate District Heating Revenue Bonds, 2003 Series H dated as of May 14, 2003 (the "2003 District Heating Bonds"); and (ii) $4,500,000 Variable Rate District Heating Revenue Bonds, 2005-4 Series I and $2,500,000 Variable Rate District Heating Revenue Bonds, 2005-5 Series J dated April 21, 2005 and May 12, 2005 respectively (the "2005 District Heating Bonds"), and has loaned the proceeds of the 2003 District Heating Bonds and the 2005 District Heating Bonds to District Heating for purposes of financing the District Heating System; and E. District Heating has proposed that the Port Authority issue its Variable Rate District Heating Revenue Bonds, 2006, Series K, L and M(collectively the "2006 District Heating Bonds"), in the aggregate principal amount of $4,500,000 to provide funds to finance improvements to the District Heating System; and F. The 2006 District Heating Bonds are to be issued by the Port Authority pursuant to the District Heating Joint Powers Agreement and on a parity with (i) the 1982 District Heating Bonds, the 1997 District Heating Bonds and the 1999 District Heating Bonds previously issued by the HRA and outstanding under an Amended and Restated Indenture of Trust dated as of July 1, 1947 as amended (the "Master District Heating Indenture") between the HRA and First Trust National Association (now known as U.S. Bank National Association) (the "Trustee"); (ii) the 2003 District Heating Bonds previously issued by the Port Authority and outstanding under a Second Supplemental Indenture of Trust dated as of April 1, 2003 (the "Second Supplemental District Heating Indenture") between the Port Authority and the Trustee; and (iii) the 2005 District Heating Bonds previously issued by the Port Authority and outstanding under a Third Supplemental Indenture of Trust dated as of April 1, 2005 (the "Third Supplemental Distriat Heating Indenture") between the Port Authority and the Trustee; and G. District Heating has secured its obligation to repay the loans of the proceeds of the 1982, 1997, 1999, 2003 and 2005 District Heating Bonds (collectively the "Districting Heating Revenue Bonds"), by granting a first lien leasehold mortgage and security interest in certain real property and assets of District Heating (collectively the "Mortgaged District Heating Property") to the Trustee and executing and delivering a Mortgage, Fixture Financing 5tatement and Security Agreement dated as of December 1, 1982 and subsequent amendments thereto executed in connection with the issuance of each series of Bonds (collectively the "District Heating Sond Mortgage"); and H. In connection with the issuance of other series of revenue bonds pursuant to the Master District Heating Indenture, the City has previously authorized and executed certain subordination agreements pursuant to which the Ciry has subordinated the liens and security interests granted in the District Heating City Mortgage to the rights of the Trustee under the District Heating Bond Mortgage; and I. The loan to be made by the Port Authority from the proceeds of the 2006 District Heating Bonds will require subordination of the City's security interest in the Mortgaged District Heating Property to the interests of the Trustee for the District Heating Revenue Bonds (including the 2006 District Heating Bonds) and the interest of the bank which issues the letter(s) of credit securing the District Heating Revenue Bonds (including the 2006 District Heating Bonds), which subordination will be evidenced by a Db -756 88 Subordination Agreement to be dated as of September 1, 2006 (the "District Heating Subordination 89 Agreement") in the form attached hereto as Exhibit A; and 90 91 District Cooline 92 93 J. District Cooling St. Paul, Ina ("District Cooling") has asked the Port Authority to issue its 94 Variable Rate District Cooling Revenue Bonds, 2006 Series V, W and X in the aggregate principal amount 95 of $6,000,000 of its revenue bonds to be issued in one or more series (collectively, the "2006 District 96 Cooling Bonds"), to finance the costs to be incurred by Dish Cooling in connection with the 97 construction of additional distribution lines and enhancements to the thermal source in the City of Saint 98 Paul, Minnesota (the "District Cooling ProjecY'); and 99 100 K. The 20Q6 District Cooling Bonds are to be issued by the Port Authority pursuant to the 101 terms of a Joint Powers Agreement dated as of Mazch 1, 2002 (the "District Cooling Joint Powers 102 Agreement") by and between the Port Authority and the HRA, and on a parity with District Cooling Bonds 103 previously issued by the HRA and the Port Authority under an Indenture of Trust dated October 1, 1991 104 (the "Original District Cooling Indenture") between the HRA and the Trustee; and 105 106 L. District Cooling has secured its obligation to repay the loans of the proceeds of the 2QQ6 107 District Cooling Bonds and all bonds previously issued under the Original Indenture, by granting a first 108 lien leasehold mortgage and security interest in certain real pzoperty and assets of District Cooling 109 (collectively the "Mortgaged District Cooling Property") to the Trustee and executing and delivering a 110 Leasehold Mortgage, Fixture Financing Statement and Security Agreement dated as of October 1, 1991 111 and subsequent amendments tt�ereto in connection with the issuance of each series of District Cooling 112 Bonds (collectively the "District Cooling Bond Mortgage"); and 113 114 M. The HRA made a loan in the amount of $3,000,000 to District Cooling concurrently with 115 the 1991 issuance of Bonds pursuant to the Original District Cooling Indenture (the "HRA Loan"), and 116 District Cooling has secured its obligations to repay the HRA Loan by granting a leasehold mortgage Lien 117 and security interest in the Mortgaged District Cooling Property and other District Cooling system 118 equipment, by executing and delivering a Mortgage, Fixture Financing Statement and Security Agreement 119 dated as of October 1, 1991 between District Cooling, as Mortgagor, and the HRA as Mortgagee (the 120 "District Cooling HRA Mortgage"); and 121 122 N. The HRA has subordinated the lien and encumbrance of the District Cooling HRA 123 Mortgage to the rights of the Trustee under the District Cooling Bond Mortgage pursuant to the District 124 Cooling HRA Mortgage itself, and HRA District Cooling Subordination Agreements dated as of March 1, 125 1993, September l, 1995, June 1, 1998, March 1, 2001, March 1, 2002, and Octobez 1, 2003 (collectively, 126 the "HRA District Cooling Subordination"); and 127 128 O. The HRA has assigned all of its rights to the repayment of the HRA Loan to the City 129 pursuant to the Special Fund Agreement dated as of January 1, 1998 and entered into by and between the 130 City and the HRA; and 131 � / 132 P. The City has previously recognized that the subordination of the HRA Loan provided by the 133 District Cooling HRA Mortgage and subsequent HRA District Cooling Subordination Agreements has 134 been approved by the City as the assignee of the HRA's rights under the HRA Loan; and 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 I51 152 153 154 155 156 157 158 159 160 161 Q. Pursuant to the March 1, 2002 I-IRA Subordination Agreement, the HRA has agreed that with respect to any future subordinations requested by District Cooling, HRA consent and subordination will not be required so long as consent by the City of Saint Paul (the "City") is obtained. R. It is necessary and desirable for the City to consent to the subordination of the District Cooling HRA Mortgage to the Bonds, and there has been submitted to tl�is City Council a Subordination Agreement, in the form attached hereto as Exhibit B, to accomplish this result; and General S. Minnesota Statutes, Chapter 469.084(11), provides that any issue of revenue bonds authorized by the Por[ Authority shall be issued only with the consent of the City Council of the City of Saint Paul, by resolution adopted in accordance with law; and T. To meet the requirements of state law, the Port Authority has requested that the City Council give its requisite approval to the issuance of the proposed 20Q6 District Heating Bonds and the proposed 2006 District Cooling Bonds by the Port Authority, subject to final approval of the details of said bonds by the Port Authority; and U. A Public hearing on the projects to be financed with the proceeds of the 2006 District Heating Bonds and the proposed 2006 District Cooling Bonds was held by the Port Authority after notice was published, and materials made availabie for public inspection at the offices of the Port Authority, as required by Section 147(� of the Internal Revenue Code of 1986, as amended (the "Code"), at which public hearing all those appearing who so desired to speak were heard. NOW THEREFORE, BE IT RESOLVED by the City Councii of the City of Saint Paul, Minnesota, 162 as follows: 163 164 City Subordination A�reements 165 166 167 168 169 170 171 172 173 174 175 176 1. The City hereby finds that the subordination effected by the HRA District Cooling Subordination Agreement is effective to subordinate the liens and security interests of the City under the District Heating City Mortgage and the Mortgage to the liens and security interests securing all bonds issued under the Master District Heating Indenture or the Original District Cooling Indenture, whether such bonds are issued by the Port Authority or the HRA, including specifically the 2006 District Heating Sonds and the 2006 District Cooling Bonds. 2. The forms of the Subordination Agreements attached hereto as Exhibits A and B are hereby approved. The Subordination Agreements are hereby authorized and directed to be executed by the appropriate officers of the City, subject to approval of the form thereof by the City Attomey. r . ,% � 177 3. The forms of the Subordination Agreements approved hereby aze authorized to be executed 178 with such variations, modifications, additions or deletions as may be necessary and approved by the City 179 Attorney. Any such changes shall be deemed to have been agreed to by virtue of execution of the 180 documents. 181 182 Consent to Issuance of 2006 Bonds 183 184 185 186 187 188 1$9 190 141 192 193 4. In accordance with the requirements of Minnesota Statutes 469.084(il) and Section 147(fl of the Code, the City Council hereby approves the issuance of the aforesaid 2006 Districi heafing and 2006 District Cooling Bonds by the Port Authority for the purposes described in the Port Authority resolution adopted August 22, 200b, the exact details of which, including but not limited to, provisions relating to maturities, interest rates, discount, redemption, and the issuance of additional bonds aze to be determined by the Port Authority, and the City Council hereby authorizes the issuance of any additional bonds (including refunding bonds) by the Port Authority found by the Port Authority to be necessary for canying out the purposes for which the aforedescribed 2006 District Heating Bonds and 2006 District Cooling Bonds are issued. Benanav Bostrom Harris Adopted by Council: Date Adoption Certified by Council Sec�€tary BY� // // ��?�s p � Approve �� f: ate d C� —�(� By: Requested by Deparhnent of: By: ` Form Approve by Ci omey By: Form Approved Mayor for Submission to Council s �,. �--,-C_� �CUal� ' • ,ro� � re�l,sr o �' �1a..��.�. � �� Green Sheet Green Sheet Green�heet Green Sheet Green Sheet Green Sheet � � / PE — P��ing & Economic Development Contac[ Person 8 Phone: David Gontarek Pa'EVkG� ✓:{� = 6-6674 �27. •4^^ �y-$�' V '" Must Be on Couneil Agenda by (Date): 23-AUG-O6 12000000 Date Initiated: \ b � �� ,¢A�� G�en Sheet NO: 3032052 � Assign Number For Routing Orde( ToWI # of Signature Pages _(Clip AII Locations for Signature) Action Requested: Resolution approving Port Authority to issue bonds for Dishict Energy and Subordinarion A�eement to subordinate liens and security interests of the Ciry under the Ciry Mortgage. idations: Approve (A) or Reject (R): Planning Commission CIB Committee Civil Service Commission Personal Answerthe 1. Has this persoNfirm ever worked under a contrad for this department? Yes No 2. Has this person/firm ever been a city employee? Yes No 3. Does this personffirm possess a skill not normally possessed by any current city employee? Yes No Euplain all yes answers on separate sheet and attach to green sheet Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why): Disuict Energy requesu to sell $12,000,000 in conduit revenue bonds for the expansion of their services to St. Paul. AdvantapeslfApproved: The bonds are issued and Disuict Energy expands their system for heating and cooling. DisadvanWpes If Approved: None DisadvanWSles If Not Approved: The heating system is not expanded. t'!��' , N.. ° . �� AU � 14 Z006 ToWI Amount of Transaction: Funtlinq Source: Fi nancial Information: (6xplain) 0 lannio conomi D velo � 1 lann'r & wnomic Deveb artmeni Direcior _ 2• � ancial rvi �c ioaocial ervi 3-' Attorne 6 11 ::'{'1L �`( 4. or's Offi e Ma NAssisfaot 5 � ouncil Ci Council 6• i lerk i lerk Cost/Revenue Butlgeted: rJ Conduit Revenue Bonds ActiviN Number: Port Authority o� - �� EXHIBIT A [District Heating Subordination Agreement] SUBORDINATION AGREEMBNT among CITY OF SAINT PAUL, MINNESOTA, DISTRICT HEATING DEVELOPMENT COMPANY, d/b/a DISTRICT ENERGY ST. PAUL, INC., U.S. BANK NATIONAL ASSOCIATION, as Trustee, AND DEXIA CREDIT LOCAL (New York Branch) Dated as of September 1, 2006 This instrument drafted by: LEONARD, STREET AND DEINARD (RH) Professiona] Association 150 South Sth Street, Suite 2300 Minneapolis, MN 55402 3Jt}9?i3-�F Subordmation Agreement (D�stnct Heahng) � �P � 7��0 SUBQRDINATION AGREEMENT [District Heating] THIS SUBORDINATION AGREEMENT is made and entered into as of the I st day of September, 2006 by and among i) the City of Saint Pau1, Minnesota, a home rule charter city and municipal corporation organized under the laws of the State of Minnesota (the "City"), ii) District Heating Development Company, Inc, d/b(a District Energy St. Paul, Inc., a Minnesota nonprofit corporation ("District Heating"), and iii) U.S. Bank National Association, a national banking association ("U.S. Bank"), as Trustee for the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, $30,500,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 1982 Series A(the "Series A Bonds"), $2,700,000 Vaziable Rate Demand Purchase District Heating Revenue Refunding Bonds, 1997 Series C(the "Series C Bonds"), the $3,500,000 Vaziable Rate Demand Purchase District Heating Revenue Bonds, 1999 Series D(the "Series D Bonds"), the $3,500,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 1999 Series E (the "Series E Bonds"), the $4,000,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 2003-2 Series F(the "Series F Bonds"), the $750,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 2003-3 Series G(the "Series G Bonds") and the $2,250,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 2003-4 Series H(the "Series H Bonds"), the $4,500,000 Variable Rate District Heating Revenue Bonds, 2045-4 Series I(the "Series I Bonds"), the $2,500,000 Variable Rate District Heating Revenue Bonds, 2005-5 Series J(the "Series J Bonds"), the $1 70 00 Variable Rate District Heating Revenue Bonds, 2006-4 Series K(the "Series K Bonds"), the $1 5�0�00 Variable Rate District Heating Taxable Revenue Bonds, 2006-5 Series L(the "Series L Bonds"), and $1 3_,_QQ�0900 Variable Rate District Heating Revenue Bonds, 2006-6 Series M(the Series M Bonds"), the Series K Bonds, the Series L Bonds and the Series M Bonds to be issued on or after the date of the execution hereof; and (iv) Dexia Credit Local (New York Branch) (previously known as Credit Local de France (the `Bank"), as the Bank with respect to the Series A Bonds, the Series C Bonds, the 5eries D Bonds, the Series E Bonds, the Series F Bonds, the Series G Bonds, the Series H Bonds, the Series I Bonds, the Series 3 Bonds, the Series K Bonds, the Series L Bonds, and the Series M Bonds (collectively, the `Bonds") and as a co-mortgagee with the Trustee under the Mortgage (as defined herein) as amended in connection with the Series K Bonds, the 5eries L Bonds and the Series M Bonds. 33�?938d,}3A99286_4 Subordmanon Agreement (DistrictHeatin8) a�-7�� WITNESSETH: WHEREAS, District Heating, U.5. Bank and The First National Bank of Saint Paul (the "Original Bank"; U.S. Bank and the Original Bank being hereinafter }ointly referred to as the "Original Mortgagee") have entered into that certain Mortgage, Fixture Financing Statement and Security Agreement dated as of December 1, 1982 (the "Mortgage") which was filed and recorded in Minnesota on the 20�' (abstract} and 20�' (torrens} day of December, 1982 at 430 dclock p.m. as Document No. 2164536 (abstract) and 730850 (torrens); as amended by that certain First Amendment to Mortgage, Fixture Financing Statement and Security Agreement dated as of December 1, 1985 (the "First Amendment") which was filed and recorded in the Office of the County Recorder in and for Ramsey County, Minnesota on the 8`� day of January, 1986 at 1:47 o'clock p.m. as Document No. 2296824 (abstract) and 793908 (torrens); as further amended by that certain Second Amendment to Mortgage, Fixture Financing 5tatement and Security Agreement dated as of September 1, 1990 (the "Second AmendmenY') by and between District Heating, the U.S. Bank and The Sumitomo Bank Limited (Chicago Branch) ("Suznitomo"), which was filed and recarded in the Office of the County Recorder in and for Ramsey County, Minnesota on the 25` day of September, 199Q at 3:51 o'clock p.m. as Document No. 2564397 (abstract) and 932515 (torrens); as further amended by that certain Third Amendment to Mortgage, Fixture Financing Statement and Security Agreement dated as of July 1, 1997 (the "Third Amendment") by and between District Heating, U.S. Bank and the Bank, which was filed and recorded in the Office of County Recorder for Ramsey County, Minnesota on the 23` day of July, 1997 as Document No. 3003909 (abstract) and on August 5, 1997 as Document No. 1160528 (torrens); as fi�rther amended by that certain Fourth Amendment to Mortgage, Fixture Financing Statement and Security Agreement dated as of September 1, 1999 (the "Fourth AmendmenY') by and between District Heating, U.S. Bank and the Bank which was filed and recorded in the Office of County Recorder for Ramsey County, Minnesota on the 8�' day of October, 1999 as Document No. 3276556 (abstract) and on October 19, 1999 as Document No. 1578662 (torrens); as further amended by that certain Fifth Amendment to Mortgage, Fixture Financing Statement and Security Agreement dated as of April 1, 2003 (the "Fifth AmendmenY') by and between District Heating, U.S. Bank and the Bank which was filed and recorded in the Office of County Recorder for Ramsey County, Minnesota on the 12th day of May, 2003 as Document No. 3620641 (abstract) and on May 12, 2003 as Document No. 1750342 (torrens); and as further amended by that certain Sixth Amendment to Mortgage, Fixture Financing Statement and Security Agreement dated as of April 1, 2005 (the "Sixth AmendmenY') by and between District Heating, U.S. Bank and the Bank which was filed and recorded in the Office of County Recorder for Ramsey County, Minnesota on the _ day of , 2005 as Document No. (abstract) and on , 2005 as Document No. (torrens); granting a lien to U.S. Sank and the Bank as co-mortgagees on the real property described on Schedule I annexed hereto and made a part hereof; and WHEREAS, coincident with the execution and recording of the Mortgage, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA") issued and delivered its Series A Bonds and loaned the proceeds thereof (the "Loan") to District Heating pursuant to a Loan Agreement, dated as of December 1, 1982 (the "Loan AgreemenY'); and �.t�%,aa � 2 34992an.4 Subordination Agreemem (District Heahng) ��-7�1� WHEREAS, coincident with the execution and recording of the First Amendment, the HRA issued its District Heating Revenue Bonds, 1985 Series B in the aggregate principal amount of $14,000,000 (the "Series B Bonds") pursuant to a First Supplemental Indenture of Trust dated as of December 1, 1985 (the "First Supplemental Indenture"), and has loaned the proceeds thereof (the "Series B Loan") to District Heating pursuant to a"First Supplemental Loan AgreemenP' dated as of December 1, 1985 (the "First Supplemental Loan AgreemenY'); and WHEREAS, the Original Bank issued its irrevocabie Letter of Credit No. 17082 (the "Original Series A Letter of CrediY') m secure the Series A Bonds; and WHEREAS, coincident with the execution and recording of the Second Amendment, Sumitomo issued its Inevocable Transferable Letter of Credit, No. B/CGO-500339, in the amount of U.S. $31,552,671.17 (the "Sumitomo Letter of CrediY') in substitution for the Original Series A Letter of Credit, pursuant to the terms of that certain Letter of Credit Agreement dated as of September 1, 1990 by and between District Heating and Sumitomo; and WHEREAS, the Original Bank transferred and assigned all of its right, title and interest in the Mortgage and the First Amendment to Sumitomo, pursuant to that certain Assignment dated as of September 1, 1990 (the "Sumitomo Assignment"), which Sumitomo Assignment was filed for record in the office of the County Recorder in the County of Ramsey and Sate of Minnesota on the 25 day of September, 1990 as Document No. 2564396; and WHEREAS, coincident with the execution and recording of the Third Amendment, the Bank issued its Irrevocable Direct-Pay Letter of Credit No. 970735, in the amount of $28,897,535 in substitution for the Sumitomo Letter of Credit; and WHEREAS, Sumitomo transferred and assigned all of its right, title and interest in the Mortgage, the First Amendment and the Second Amendment to the Bank, pursuant to that certain Assignment dated July 1, 1997 (the "AssignmenY'), which Assignment was filed for record in the office of the County Recorder in the County of Ramsey and State of Minnesota on the 23` day of July, 1997 as Document No. 3003908, and on August 5, 1999 as Document No. 1160527 (tonens); and WHEREAS, coincident with the execution and recording of the Third Amendment, the HRA issued the Series C Bonds pursuant to a Fourth Supplemental Indenture of Trust dated as of July 1, 1997 (the "Fourth Supplemental Indenture"), and has loaned the proceeds thereof (the "Series C Loan") to District Heating pursuant tp a"Third Supplemental Loan AgreemenY' dated as of July 1, 1997 (the "Third Supplemental Loan AgreemenY'); and WHEREAS, subsequent to the issuance of the Series C Bonds, and in connection with a replacement of the letter of credit securing the outstanding District Heating Revenue Bonds, the HRA and the Tnzstee entered into an Amended and Restated Indenture dated as of July 1, 1997, and the HRA and District Heating entered into an Amended and Restated Loan Agreement dated as ofJuly 1, 1997; and �'-�°.� 3 74992R4.4 Subordination Agreement (Dismci Heatmg) � c�� WHEREAS, the Bank issued its irrevocable Letter of Credit No. 970736 (the "Series C Letter of CrediY') dated July 22, 1997 in the amount of $2,755,036; and WFIEREAS, coincident with the execution and recording of the Fourth Amendment, the HRA issued its Series D Bonds and Series E Bonds pursuant to a First Supplemental Indenture of Trust dated as of October 1, 1999 (the "1999 Supplemental Indenture") and has loaned the proceeds thereof (the "Series D Loan and Series E Loan") to District Heating pursuant to a First Supplemental Loan Agreement dated as of October 1, 1999 (the "1999 Supplemental Loan AgreemenY'); and WHEREAS, coincident with the execution and recording of the Fifth Amendment, the Port Authority of the City of Saint Paul (the "Port Authority") issued its $4,000,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 2003-2 Series F(the "Series F Bonds"), the $750,000 Taxable Variable Rate Demand Purchase District Heating Revenue Bonds, 2003-3 Series G(the "Series G Bonds") and the $2,250,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 2003-4 Series H(the "Series H Bonds") pursuant to a Second Supplemental Indenture by and between the Port Authority and U.S. Bank dated as of April 1, 2003 (the "2003 Supplemental Indenture"); and the Port Authority agreed to loan the proceeds of the Series F Bonds, the Series G Bonds and the Series H Bonds (the "2003 Loan") to District Heating pursuant to a Second Suppiemental Loan Agreement dated as of April 1, 2003 (the "2003 Supplemental Loan Agreement"); and WHEREAS, the Bank issued its direct pay irrevocable transferable Letter of Credit No. DCL0304130 (the "Series F Letter of CrediP') to secure the Series F Bonds, its direct pay irrevocable transferable Letter of Credit No. DCL0304131 (the "Series G Letter of CrediY') to secure the Series G Bonds; and its direct pay irrevocable transferable Letter of Credit No. DCL0304132 (the "Series H Letter of CrediP') to secure the Series H Bonds; and WHEREAS, coincident with the execution and recording of the Sixth Amendment, the Port Authority issued its $4,500,000 Vaziable Rate Demand Purchase District Heating Revenue Bonds, 2005-4 Series I(the "Series I Bonds") and the $2,500,000 Variable Rate Demand Purchase District Heating Revenue Bonds, 2�05-5 Series J(the "Series J Bonds") pursuant to a Third Supplemental Indenture by and between the Port Authority and U.S. Bank dated as of April 1, 2005 (the "2005 Supplemental Indenture") and the Port Authority agreed to loan the proceeds of the Series I Bonds and the Series J Bonds (the "2005 Loan") to District Heating pursuant to a Third Supplemental Loan Agreement dated as of April 1, 2005 (the "2005 Supplemental Loan AgreemenY'); WHEREAS, the Bank issued its direct pay irrevocable transferable Letter of Credit No. DCL0503160 (the "Series I Letter of CrediY') to secure the Series I Bonds; and its direct pay irrevocable transferable Letter of Credit No. DCL0503161 (the "Series J Letter of CrediP') to secure the Series J Bonds; and WHEREAS, simultaneously with the execution and delivery of the Series A Bonds, the City made a loan in the amount of $9,800,000 to District Heating (the "City Loan"), pursuant to �� 4 31992R4 4 Subordmation Agreement (Distrmt Heabng) D�-7g� a City Loan Agreement dated December i, 1982, as amended (the "City Loan AgreemenY') between the City and District Heating; and WHBREAS, District Heating secured its obligation to repay the City Loan by granting a mortgage lien and security interests in the Mortgaged Properry and other district heating system equipment, by executing and delivering a Mortgage, Fixture Financing Statement and Security Agreement dated as of December I, 1982 between District Heating, as mortgagor and debtor, and the Ciry, as mortgagee and recorded in the Office of the County Recorder in and for Ramsey County, Minnesota on the 21st day of December, 1982 as Document No. 2164537; as amended as of December 1, 1985 in connection with the issuance of the Series B Bonds, which amendment was recorded in the Office of the County Recorder in and for Ramsey County, Minnesota on the 8th day of January, 1986 as Document No. 2296843 and as further amended as of September 25, 1990 by a subordination letter in connection with the issuance of the Sumitomo Letter of Credit, which subordination letter was recarded in the Office of the County Recorder in and for Ramsey County, Minnesota on the 25th day of September, 1990 as Document No. 2564398 (the "City Mortgage"); and WHEREAS, the lien and encumbrance of the City Mortgage is subordinated to the lien and encumbrance of the Original Mortgage, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the 5ixth Amendment (defined below) (the "Bond Mortgage"), but only to the extent of the principal amount, and interest thereon, represented by the Series A Bonds, the Series C Bonds, the Series D Bonds, the Series E Bonds, the Series F Bonds, the Series G Bonds, the Series H Bonds, the Series I Bonds and the Series J Bonds and the consent of the City is required as a condition to the issuance of Additional Bonds under the Indenture; and WHEREAS, District Heating has now requested, and the Port Authority has agreed, that the Port Authority should issue its $1 7 00 Variable Rate District Heating Revenue Bonds, 2006-4 Series K(the "Series K Bonds"), its $15�90.606 Variable Rate District Heating Revenue Bonds, 2006-5 Series L(the "Series L Bonds"), and the $13 0��0 Variable Rate District Heating Revenue Bonds, 2006-6 Series M(the "Series M Bonds") pursuant to a Fourth Supplemental Indenture by and between the Port Authority and U.S. Bank dated as of September 1, 2006 (the "2006 Supplemental Indenture"); and the Port Authority has agreed to loan the proceeds of the Series K Bonds, the Series L Bonds and the Series M Bonds (the "2006 Loan") to District Heating pursuant to a Fourth Supplemental Loan Agreement dated as of September l, 2�06 (the "20Q6 Supplemental Loan AgreemenY') for the purpose of funding the expansion of the d'astrict energy system; and WHEREAS, the Bank has agreed to issue its direct pay irrevocable transferable Letter of Credit No. (the "Series K Letter of CrediY') to secure the Series K Bonds, its direct pay irrevocable transferable Letter of Credit No. (the "Series L Letter of CrediY') to secure the Series L Bonds, and its direct pay irrevocable transferable Letter of Credit No. (the "Series M Letter of CrediP') and (together with the Series K Letter of Credit and Series L Letter of Credit, the "Letter of Credit") to secure the Series M Bonds, and Dislxict Heating and the Bank have entered into a Letter of Credit Reimbursement Agreement dated as of ��'a'-'�* � 5 .�a� 9�Ra a Subordinahon Agreement (DistrictHeating) / � �� September 1, 2006 (the "Reimbursement AgreemenY') to provide for the reimbursement by District Heating to the Bank for any amounts drawn under the Letter of Credit; and WHEREAS, the obligation of District Heating to repay the 2006 Loan and all amounts due under the Reimbursement Agreement will be secured by the Bond Mortgage, through the execution of a Seventh Amendment to Mortgage, Fixture Financing Statement and Security Agreement dated as of September 1, 2006 (the "Seventh Amendment") between District Heating, as mortgagee and debtor, U.S. Bank (as Trustee) and the Bank, as co-mortgagees and co-secured parties; which amendment shall increase the aggregate principal indebtedness secured by the Bond Mortgage by $4 50 000; and WHEREAS, District Heating has requested the City to subordinate its lien and encumbrance under the City Mortgage to the lien and encumbrance of the Bond Mortgage as amended by the Sixth Amendment. NOW THEREFORE, in consideration of these presents and other good and valuable consideration, the receipt and sufficiency of which aze hereby acknowledged, the parties to this Subordination Agreement agree as follows: (1) Subordination and Consent. Subject to the provisions of Section (2), the City Mortgage and all liens, rights, titles, and interests created in favor of the City thereunder or any subsequent holder of the debt secured thereby, are hereby made subordinate, junior and inferior in all respects to the security interests in the Mortgaged Property (as defined in the Original Mortgage) created by the Bond Mortgage, as amended by the Seventh Amendment. The City hereby consents to the making of the 2006 Loan and the increase in the amount of indebtedness secured by the Bond Mortgage as amended by the Seventh Amendment. (2) Term of A�reement. This Agreement shall be a continuing agreement, and it shali remain in fuil force and effect with respect to the parties until such time as the loans of the proceeds of the Series A Bonds, the Series C Bonds, the Series D Bonds, the Series E Bonds, the Series F Bonds, the Series G Bonds, the Series H Bonds, the Series I Bonds, the Series J Bonds, the Series K Bonds, the 5eries L Bonds, the Series M Bonds and the City Loan are repaid in full and all amounts due and owing to the Bank under the Reimbursement Agreement aze paid in full. (3) Representations and Warranties. The City represents and warrants to U.S. Bank, as Trustee for the Series A Bonds, the Series C Bonds, the Series D Bonds, the Series E Bonds, the Series F Bonds, the Series G Bonds, the Series H Bonds, the Series I Bonds, the Series J Bonds, the Series K Bonds, the Series L Bonds, and the Series M Bonds and to the Bank, that it is the sole holder and owner of the security interest and mortgage subordinated by this Agreement and the sole holder of the debt inshuinent secured by the City Mortgage, and that it has not transferred such security interest and mortgage, or the instrument evidencing the debt secured by the City Mortgage, without such assignment or transfer being made expressly subject to the terms of this Agreement. Each party warrants to the other parties to this Agreement that they have full right, power and authority to enter into this Agreement, and that this Agreement has been duly authorized, executed and delivered, and that this Agreement is valid, binding and enforceable in accordance with its terms upon each of the parties to this Agreement, except only �"'a' 6 34992R4.4 Subordmation Agreemem (DistnciHtating) D l�-?8f� as such enforceability may be lunited by bankniptcy, moratorium, reorganization or other laws, or principles of equity affecting creditor's rights. (4) Notice. The parties to this Agreement agree to give each other at least ten days written notice prior to initiating foreclosure upon any of the Mortgaged Properiy, provided, however, that the failure to give such notice shall in no way adversely affect the enforceability of this Agreement or the subordination of the City Mortgage. All notices required to be given under this Agreement shall be deemed given upon the deposit of written notice in the United States mail, certified mail, return receipt requested and postage prepaid, addressed to the party to whom notice is being given at the address set forth for the receipt of notice in this Agreement, or at such other address as the party to whom notice is being given has notified the other parties as to where such party wishes to receive notices pursuant to this Agreement. To U.S. Bank: U.S. Bank National Association U.S. Bank Trust Center 60 Livingston Avenue, Third Floor St. Paul, MN 55107 Attn: Corporate Trust Department To the City: City of Saint Paul I S West Kellogg Boulevard St. Paul, MN 55102 Attn: Director, Office of Financial Services To the Port Authority: Port Authority of the City of Saint Paul 345 St. Peter Street 1900 Landmazk Towers Saint Paul, MN 55102 Attn: President To District Heating: District Energy St. Paul, Inc. Hans O. Nyman Energy Center 76 West Kellogg Boulevard St. Paul, MN 55102-1611 Attn: President To the Bank: Dexia Credit Local (New York Branch) 445 Pazk Avenue New York, NY 10022 Attn: Senior Vice President and Manager, Public Finance (5) Successors and Assie�s, Choice of Law, Entire A¢reement. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective heirs, legal representatives, successors and assigns. This Agreement shall be governed by the laws of the State of Minnesota, and the parties to this agreement consent to the exclusive �„�sa k 7 34992R4.4 Subord�nahon Agreemem (Dimict Aeatmg) b��l.� jurisdiction of the courts of the State of Minnesota and the United States District Court for the District of Minnesota. T`his Agreement constitutes the entire agreement between the parties. (6) Counterparts. This Agreement may be simultaneously executed in a number of identical countetparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one and the same agreement; but in making proof of this agreement, it shall not be necessary to produce or account for more than one such counterpart. a-ut�u+ g :a�nzxa.a Su6ordinanon Agreement (D�strst Heahng) � p1��7�L� IN WITNESS WHEREOF, the parties to this Agreement have hereby caused this Subordination Agreement to be executed and delivered as of the date and yeaz first written: CITY OF SAINT PAUL, MINNESOTA (SEAL}: By Its Mayor By Its Director, Office of Financial Services Approved as to form: Assistant City Attomey STATE OF MINNESOTA COUNTY OF RAMSEY ) ) ss. ) By Tts City Clerk The foregoing insriwnent was acknowledged before me this day of September, 2006 by , the Mayor of the City of Saint Paul, Minnesota, on behalf of said public body. Notary Public (SEAL) T1111�� 34992R4.4 S-1 Subordmanon Agreement (Dismct Heating) � ��7t�� STATE OF MINNESOTA COUNTY OF RAMSEY The foregoing instrument was acknowledged before me this day of September, 2006 by Maithew Smith, the Director, Office of Financial Services, of the City of Saint Paul, Minnesota, on behalf of said public body. Notary Public (SEAL) STATE OF MINNESOTA COUNTY OF RAMSEY ) ) ss. ) ) ) ss. ) The foregoing instrument was acknowledged before me this day of September, 2006 by , the City Clerk of the City of Saint Paul, Minnesota, on behalf of said public body. Notary Public (SEAL) :�u�?tu:+ Z"992RC-1 S-2 Subord�nanon Agreement (Distnct Heafing) � Dl� - 7�Co U.S. BANK NATIONAL ASSOCIATION By Its Assistant Vice President STATE OF MINNESOTA COUNTY OF RAMSEY ) ) ss. ) The foregoing instrument was acknowledged before me this 2006 by the National Association, a national banking association. Notary Public (SEAL) �� 34992R4_4 S-3 day of September, of U.S. Bank Subordmanon Agreement (D�strmt Heanvg) � � l LP "��t0 STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) DISTRICT HEATING DEVELOPMENT COMPANY, d/b/a DISTRICT ENERGY ST. PAUL, INC. By Its President The foregoing instrument was acknowledged before me this day of September, 2006 by , the of District Heating Development Company, a Minnesota nonprofit corporation organized under the laws of the State of Minnesota. ��+ �A99 R4 4 Notary Public (SEAL) � Subordmation Agreement (Distnct Heanng) �� STATE OF NEW YORK ) ) ss. COUNTY OF ) DEXIA CREDIT LOCAL, acting through its New York Branch By James N. Beck, Vice President The foregoing instrument was acknowledged before me this day of September, 2006 by James N. Beck, the Vice President of the New Yark Branch of Dexia Credit Local, a banking institution organized under the laws of the Republic of France. Notary Public (SEAL) _ „-�"� S-5 iA992R4.4 Subordinahon Agreement (D�smct Heatmg) / / ♦ / SCHEDULEI LEGAL DESCRIPTION Lots i, 2, 3, 4, and the Easterly 25 feet of Lot 5, Block 21, Rice and Irvine's Addition to St. Paul. .�as�++ 1 34992R4 4 Subordma[wn Agreement (District Heating) EXHIBIT B [District Cooling Subordination Agreement] SUBORDINATION AGREEMENT between CITY OF SAINT PAUL, MINNESOTA, PORT AUTHORITY OF THE CITY OF 5AINT PAUL, DISTRICT COOLING ST. PAUL, INC., U.S. BANK NATIONAL ASSOCIATION, as Trustee, I:�i> DEXIA CREDIT LOCAL (New York Agency) Dated as of September I, 2006 This instrument drafted by: LEONARD, STREET AND DEINARD (RH) Professional Association 150 South Fifth Street, Suite 2300 Minneapolis, Minnesota 55402 (612)335-1500 �*_ 95�'� � S�a i'i7�F.'E! F! �� :� Subordination Agreement (Dismct CooOng) 0�-781� SUBORDINATION AGREBMENT [District Cooling] THIS SUBORDINATION AGREEMENT is made and entered into as of the lst day of October, 2003 by and among i) City of Saint Paul, Minnesota, a body corporate and politic duly organized and existing under the laws of the State of Minnesota (the "City"), as assignee of the rights of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA"), ii) the Port Authority of the City of Saint Paul, a body corporate and politic duly organized and existing under the laws of the State of Minnesota (the "Port Authority"), iii) District Cooling St. Paul, Inc., f/k/a District Energy Services, Inc., a Minnesota nonprofit corporation ("District Cooling"), iv} U.S. Bank National Association, a national banking association (formerly known as First Trust National Association and U.S. Bank Trust National Association) (the "Trustee"), as Trustee for the District Cooling Revenue Bonds issued prior to the date hereof by the HRA andJor the Port Authority, and the $1,200,000 2006-7 Series V Bonds, the $2,&OO,OQQ 2006-8 Series W Bonds and the $2,000,000 2006- 9 Series X Bonds (collectively the "2006 Bonds") to be issued on or after the date of execution hereof by the Port Authority; and (v) Dexia Credit Loca1 (New York Agency) (previously known as Credit Local de France and Dexia Public Finance Bank) (the `Bank"), as the Credit Provider with respect to the 2003 Bonds and as a co-mortgagee with the Trustee under the Mortgage (as defined herein) as amended in connection with the 2003 Bonds. WITNESSETH: WHEREAS, the HRA has previously issued its District Cooling Revenue Bonds, $2,365,000 Series 1991A, $795,000 Taacable Series 1991B, and $2,640,000 Series 1991C (collectively, the "1991 Bonds") pursuant to an Indenture of Trust dated as of October 1, 1991, (the "Original Indenture") and a Supplemental Indenture of Trust dated as of November I, 1991 by and between the HRA and First Trust National Association ("First TrusY'), the predecessor of the Trustee, as tnxstee; and the HRA loaned the proceeds of the 1991 Bonds to District Cooling pursuant to a Loan Agreement dated as of October 1, 1991 and a Supplemental Loan Agreement dated as of November I, 1991 between the HRA and District Cooling for the purpose of financing the development of a local district cooling system; and WHEREAS, the HRA has previously issued its District Cooling Revenue Bonds, $6,000,000 1943 Series D, $3,000,000 1993 Taxable Series E, and $1,000,000 1993 Series F 379432{.k} Subordinanon Agceemenc (Distnct CooaLng) Ol��?��' 1948 Bonds and to partially refund the Series N Bonds; and WHEREAS, the Port Authority has previously issued its District Cooling Revenue Bonds, $3,000,000 2003-13 Series T and $1,000,000 2003-14 Series U(the "2003 Bonds") pursuant to a Tenth Supplemental Indenture of Trust dated as of October 1, 2003 (the "Tenth Supplemental Indenture") by and between the Port Authority and the Trustee, and the Port Authority loaned the proceeds of the 2003 Bonds to District Cooling pursuant to a Ninth Supplementai Loan Agreement dated as of October 1, 2003 (the "Supplemental Loan AgreemenY') for the purpose of financing an expansion to the local district cooling system financed by the 1991 Bonds, the 1993 Bonds, the 1995 Bonds, the 1998 Bonds, 2001 Bonds and the 2003 Bonds; and WHEREAS, District Cooling secured its obligation to repay the loans of the proceeds of the 1991 Bonds, the 1993 Bonds, the 1995 Bonds, the 1998 Bonds, the 2001 Bonds, the 2002 Bonds and the 2003 Bonds by granting a first lien leasehold mortgage and a security interest in certain rea] property and assets of District Cooling (collectively, the "Mortgaged Property") to the Trustee, as trustee for the 1441 Bonds, the 1493 Bonds, the 1495 Bonds, the 1498 Bonds, the 2001 Bonds, the 2002 Bonds and the 2003 Bonds and executing and delivering a Leasehold Mortgage, Fixture Financing Statement and Security Agreement dated as of October 1, 1991 and subsequent amendments thereto between Disuict Cooling, as mortgagor and debtor, and the Trustee Trust, as trustee for the 1991 Bonds, the 1993 Bonds, the 1995 Bonds, 1998 Bonds, the 2001 Bonds, the 2002 Bonds and the 2003 Bonds and the Bank, as letter of credit provider for the 1993 Bonds, the 1995 Bonds, the 1998 Bonds, the 2001 Bonds, the 2002 Bonds and the 2003 Bonds as co-mortgagees and secured parties and recorded in the Office of the County Recorder in and for Ramsey Counry, Minnesota on the 18th day of Qctober, 1991 as Document No. 2620688, and on the 31 day of March, 1993 as Document No. 2711317, and on 7th day of September, 1995 as Document No. 2886532, and on the 4�' day of June, 1998 as Document No. 3062091, and on the 1 day of March, 2001 as Document No. 3376381 and on the 8th day of April, 2002 as Document No. 3488443 and on the 23rd day of October, 2003 as Document No. 3691080 respectively (collectively, the °Bond Mortgage"); and WHEREAS, the HR.A made a loan in the amount of $3,000,000 to District Cooling concurrently with the issuance of the 1941 Bonds (the "HRA Loan"), pursuant to an HRA Loan Agreement dated October 1, 1991 (the "HRA Loan AgreemenY') between the HRA and District Cooling and has subsequently assigned all of its rights to the repayment of the HRA Loan to the City pursuant to the Special Fund Agreement dated as of Januazy 1, 1998 and entered into by and between the HRA and the City of Saint Paul; and WHEREAS, District Cooling secured its obligation to repay the HRA Loan by granting a leasehold mortgage lien and security interests in the Mortgaged Property and other district cooling system equipment, by executing and delivering a Mortgage, Fixture Financing Statement and Security Agreement dated as of October 1, 1991 between District Cooling, as mortgagar and debtor, and the HRA as mortgagee and recorded in the Office of the County Recorder in and for Ramsey County, Minnesota on the 18th day of October, 1991 as Document No. 2620689 (the "HRA Mortgage"); and �� 34992R4A 3 Subord�nation Ageement (District Caoling) � Ol�� VJIIEREAS, the lien and encumbrance of the IIRA Mortgage, by its terms, is subordinated to the lien and encumbrance of the Bond Mortgage, but only to the extent of the principal amount, and interest thereon, represented by the 1991 Bonds; and WHEREAS, the lien and encumbrance of the HRA Mortgage was also subordinated to the Bond Mortgage, to the extent of the principal and interest thereon represented by the 1993 Bonds, 1995 Bonds and the 1998 Bonds, pursuant to IIRA Subordination Agreements dated as of Mazch l, 1993, September l, 1995 and June 1, 1998, all by and among the HRA, District Cooling, the Trustee and the Bank, and recorded in the Office of the County Recorder in and for Ramsey County, Minnesota on the 31 day of Mazch, 1993 as Document No. 2711318, the 7th day of September, 1995 as Document No. 2886533, and the 4� day of June, 1998 as Document No. 3062092 respectively; and WHEREAS, the lien and encumbrance of the HRA Mortgage was also subordinated to the Bond Mortgage, to the extent of the principal and interest thereon represented by the 2001 Bonds and the 2002 Bonds, pursuant to HRA Subordination Agreements dated as of Mazch 1, 2001 and Mazch 1, 2002 by and among the HRA, District Cooling, the Trustee, the Port Authority and the Bank, recorded in the Office of the County Recorder in and for Ramsey County, Minnesota on the l of Mazch, 2001 as Document No. 33776382 and on the 8th day of April, 2002 as Document No. 3488444 and on the 23rd day of October, 2003 as Document No. 3691081 respectively; and WHEREAS, the City of Saint Paul, as the assignee to the HRA's interest in the HRA Loan and HRA Mortgage, consented in its Resolution Nos. 01-177, 02-147 and 03-904 to the subordination of the HRA Loan and HRA Mortgage to the 1993 Bonds, the 1995 Bonds, the 1998 Bonds, the 2001 Bonds, the 2002 Bonds; and WHEI2EAS, the HRA Subordination Agreement entered into on March 1, 2002 provided that since the HRA has assigned all of its rights to repayment of the HRA Loan to the City as referenced above, no further HRA subordination or consent would be required for future subordinations so long as the City consented to such subordination; WHEREAS, District Cooling has requested, and the HRA has agreed, that the Port Authority should issue the 2006 Bonds pursuant to a Eleventh Supplemental Indenture of Trust dated as of September 1, 2006 (the "Eleventh Supplemental Indenture") by and between the Port Authority and the Trustee, and the HRA has agreed that the Port Authority can then loan the proceeds of the 2006 Bonds to District Cooling pursuant to a Tenth Supplemental Loan Agreement dated as of September 1, 2006 (the "Tenth Supplemental Loan AgreemenY') for the purpose of financing the expansion of the local district cooling system financed by the 1991 Bonds, the 1993 Bonds, the 1995 Bonds, the 1998 Bonds, the 2001 Bonds, the 2002 Bonds and the 2003 Bonds; and WHEREAS, the Bank has agreed to issue three separate direct pay irrevocable transferable letters of credit no. DCL , DCL and DCL (together, the "Letter of CrediY') to secure the 2006 Bonds; and District Cooling and the Bank have entered into a Letter of Credit Reimbursement Agreement (the "Reimbursement AgreemenY') dated as of �� 4 34992R4.4 Subordmatwn Ageement (D�smct CooLng) < b�P'?�� September I, 2006 to provide for the rennbursement by District Cooling to the Bank for any amounts drawn under the Letter of Credit; and WFIEREAS, District Cooling wili secure its obligation to repay the loan of the proceeds of the 2006 Bonds and its obligations under the Reimbursement Agreement by granting to the Bank a first lien mortgage interest in the leasehold estate, together with the Trustee, under the Bond Mortgage through the execution of a Eighth Amendment to Mortgage, Fixture Financing Statement and Security Agreement (the "Eighth Amendment to Mortgage") dated as of \September 1, 2006 between District Cooling, as mortgagor and debtor, U.S. Bank National Association (as Trustee) and the Bank, as co-mortgagees and co-secured parties; which amendment shall increase the aggregate principal indebtedness secured by the Bond Mortgage by $6,000,000; and WHEREAS, the Mortgaged Property is located in part in premises leased by District Heating Development Company, d/b/a District Energy St. Paul, Ina ("District Heating") to District Cooling pursuant to that certain Lease dated as of October 1, 1991 by and between District Heating and District Cooling (the "Lease") which premises (the "Leased Premises") are described in Schedule A to this Agreement; and WHEREAS, District Heating and District Cooling entered into a First Amendment to Lease dated as of March 1, 1993 (the "Lease AmendmenY') for the purpose of adding to the Leased Premises certain real property legally described in the Lease Amendment for the purpose of installing a chilled water storage tank thereon, which chilled water storage tank is used as part of the Distribution Network. WHEREAS, the Leased Premises constitute the real property described in the Bond Mortgage, as amended, and the HRA Mortgage; and NOW THEREFORE, in consideration of thesa presents and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Subordination Agreement agree as follows: (1) Subordination. Subject to the provisions of Section (2), the HRA Mortgage and all liens, rights, titles, and interests created in favor of the HRA thereunder or any subsequent holder of the debt secured thereby, are hereby made subordinate, junior and inferior in all respects to the security interests in the Mortgaged Property created by the Bond Mortgage, as amended by the Eighth Amendment to Mortgage. The subordination expressed herein extends to subordination to the interests of the Bank, as a co-mortgagee and co-secured party, under the Bond Mortgage as provided in the Eighth Amendment to Mortgage and to the interests of any other Credit Provider which issues a Substitute Letter of Credit and succeeds, by assignment or otherwise, to the interests of the Bank (ar any successor Credit Provider). (2) Timin of Subordination. The subordination of the HRA Mortgage provided for in Section (I) above shall be effective only up to the dollaz amount of funds that have been deposited in the Funds and Accounts pursuant to the Eleventh Supplemental Indenture and the Tenth Supplemental Loan Agreement (except with regazd to funds deposited in the Series V, W �9s�=_n•x:+ 5 34992R4.4 Subordmatwn Agreement (D�emat Coohng) o�-��u (collectively, the "1993 Bonds") pursuant to a Second Supplemental Indenture of Trust dated as of March, 1, 1993, and a Third Supplemental Indenture of Trust dated as of May 1, 1993 by and between the HRA and First Trust, as trustee; and the HRA loaned the proceeds of the 1993 Bonds to District Cooling pursuant to a Second Supplemental Loan Agreement dated as of Mazch 1, 1993 and a Third Supplemental Loan Agreement dated as of May l, 1993 between the HRA and District Cooling for the purpose of adding improvements to the central thermal energy plant, construction of a chilled water storage tank and the construction of additional distribution lines; and WHEREAS, the HRA has previously issued its District Cooling Revenue Bonds, $1,400,000 1995 Series G, $2,600,000 1995 Ta�cabie Series H, and $1,000,000 1995 Series I (collectively, the "1995 Bonds") pursuant to a Fourth Supplemental Indenture of Trust dated as of September 1, 1995, and a Fifth Supplemental Indenture of Trust dated as of September 1, 1995 by and between the HRA and First Trust, as Trustee; and the HRA loaned the proceeds of the 1995 Bonds to District Cooling pursuant to a Fourth Supplemental Loan Agreement dated as of September 1, 1995 and a Fifth Supplemental Loan Agreement dated as of September 1, 1995 between the HRA and District Cooling for the construction of additional distribution lines; and WHEREAS, the HRA has previously issued its District Cooling Revenue Bonds, $b,825,000 1998 Series J, $1,800,000 1998 Taxable Series K, and $1,000,000 1998 Series L(the "1998 Bonds") pursuant to a Seventh Supplemental Indenture of Tnxst dated as of June 1, 1998 (the "Seventh Supplemental Indenture") by and between the HRA and the Trustee, and the HRA loaned the proceeds of the 1998 Bonds to District Cooling pursuant to a Sixth Supplemental Loan Agreement dated as of June 1, 1998 (the "Supplemental Loan AgreemenY') for the purpose of financing an expansion to the local district cooling system financed by the 1991 Bonds, the 1993 Bonds and the 1995 Bonds, and to cross-over refund the Series C Bonds; and WHEREAS, the Port Authority has previously issued its District Cooling Revenue Bonds, $5,300,000 2001-1 Series M Bonds, $2,900,000 2001-2 Taacable Series N Bonds, $2,260,000 2001-3 Series O Bonds and $790,000 2001-4 Taxable Series P Bonds (the "2001 Bonds") pursuant to an Eighth Supplemental Indenture of Trust dated as of March l, 2001 (the "Eighth Supplemental Indenture") by and between the Port Authority and the Trustee, and the Port Authority loaned the proceeds of the 2001 Bonds to District Cooling pursuant to a Seventh Supplemental Loan Agreement dated as of March 1, 2001 (the "Supplemental Loan Agreement") for the purpose of financing an expansion to the local district cooling system financed by the 1991 Bonds, the 1993 Bonds, the 1995 Bonds, the 1998 Bonds, and to refund the Series A Bonds and Series B Bonds; and WHEREAS, the Port Authority has previously issued its District Cooling Revenue Bonds, $1,750,000 2002-1 Series Q Bonds, $7,595,000 2002-2 Series R Bonds and $3,665,000 2002-3 Series S Bonds (the "2002 Bonds") pursuant to a Ninth Supplemental Indenture of Trust dated as of March 1, 2002 (the "Ninth Supplemental Indenture") by and between the Port Authority and the Tnxstee, and the Port Authority loaned the proceeds of the 2002 Bonds to District Cooling pursuant to an Eighth Supplemental Loan Agreement dated as of March 1, 2002 (the "Supplemental Loan AgreemenY') for the purpose of financing an expansion to the local district cooling system Financed by the 1991 Bonds, the 1993 Bonds, the 1995 Bonds and the 3+9�u_sa,a 2 249� Subordination A$eemwt (D�strict Cooling) � � DC� �� and X Accounts within the Escrow Fund created under Section 63 of the Eleventh Supplemental Indenture, as to which the subordination shall be effective only up to the dollaz amount of funds that have been released from such accounts within the Escrow Fund, to pay debt service on the Series V, W and X Bonds), and interest thereon, plus advances made pursuant to the Bond Mortgage. The subordination provided for in Section (1) shall not be deemed a subordination to the Bond Mortgage, as amended, to the extent proceeds of the 2006 Bonds remain in the Series V, W and X Escrow Accounts within such Escrow Fund. (3) Term of Agreement. This Agreement shall be a continuing agreement, and it shall remain in full force and effect with respect to the parties until such time as the loans of the proceeds of the 2006 Bonds and the HRA Loan aze repaid in full and all amounts due and owing to the Bank under the Reimbursement Agreement relating to the 2006 Bonds are paid in full. (4) Representations and Wananties. The City represents and warrants to the Trustee, as trustee for the 2006 Bonds, and to the Bank that, other than the HRA, it is the sole hoider and owner of the security interest and mortgage subordinated by this Agreement and the sole holder of the debt instrument secured by the HRA Mortgage, and that it has not transfened such security interest and mortgage, or the instrument evidencing the debt secured by the HRA Mortgage without such assignment or transfer being made expressly subject to the terms of this Agreement. Each party waziants to the other parties to this Agreement that they have full right, power and authority to enter into this Agreement, and that this Agreement has been duly authorized, executed and delivered, and that this Agreement is valid, binding and enforceable in accordance with its terms upon each of the parties to this Agreement, except only as such enforceability may be limited by baukruptcy, moratorium, reorganization or other laws, or principles of equity affecting creditor's rights. (5) Notice. The parties to this Agreement agree to give each other at least ten (10) days written notice prior to initiating foreclosure upon any of the Mortgaged Property, provided, however, that the failure to give such notice shall in no way adversely affect the enforceability of this Agreement or the subordination of the HRA Mortgage. All notices required to be given under this Agreement shall be deemed given upon the deposit of written notice in the United States mail, certified mail, return receipt requested and postage prepaid, addressed to the party to whom notice is being given at the address set forth for the receipt of notice in this Agreement, or at such other address as the party to whom notice is being given has notified the other parties as to where such parry wishes to receive notices pursuant to this Agreement. To the Trustee: U.S. Bank National Association Corporate Trust Services 60 Livingston Avenue St. Paul, MN 55107 Attn: Corporate Trust Department To the City: City of Saint Paul City Hall 15 West Kellogg Boulevazd Saint Paul, MN 55102 ��+k R4992RA 4 � Subordinahon Agreement (Dismct Cool�ng) Attn: Treasurer To the Port Authority: Port Authority of the City of Saint Paul 345 St. Peter Street 900 Landmark Towers Saint Paul, MN 55102 Attn: President To District Cooling: District Cooling St. Paul, Inc. Hans O. Nyman Energy Center 76 West Kellogg Boulevazd St. Paul, MN 55102-1611 Attn: President To the Bank: Dexia Credit Local (New York Agency) 445 Park Avenue, Eighth Fioor New York, NY 10022 Attn: General Manager p�-7� With a copy to the Original Purchaser: U.S. Bancorp Piper Jaffray Inc. Piper Jaffray Tower 800 Nicollet Mall, 13` Floor Minneapolis, MN 55402 Attn: Fixed Income (6) Successors and Assi�ns. Choice of Law, Entire Aereement. This Agreement sha11 be binding upon and inure to the benefit of the parties to this Agreement and their respective heirs, lega] representatives, successors and assigns. This Agreement shall be governed by the la�vs of the State of Minnesota, and the parties to this agreement consent to the exclusive jurisdiction of the courts of the State of Minnesota and the United States District Court for the District of Minnesota. This Agreement constitutes the entire agreement between the parties. (7) Counterparts. This Agreement may be simultaneously executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one and the same agreement; but in making proof of this agreement, it shall not be necessary to produce or account for more than one such counterpart. �� 3a9ezxa.a 7 Subordmanon Agreement (DiSCnct CoOhng) � L � � �� IN WITNESS WIIEREOF, the parties to this Agreement have hereby caused this Subordination Agreement to be executed and delivered as of the date and yeaz first written: (SEAL) THE CITY OF SAINT PAUL, MINNESOTA By Deputy Mayor Approved as to form: By _ Clerk Assistant City Attorney STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) By Director, Office of Financial Services The foregoing instrument was acknowledged before me this day of September, 2006 by , the Deputy Mayor of the City of Saint Paul, Minnesota on behalf of said public body. � ��. 34992Rb.d Notary Public SEAL S-1 Su6ordinanon Agreement (Distrm[ Coohng) . ��Q'�6�P STATE OF MINNESOTA COUNTY OF RAMSEY ) ) ss. ) The foregoing instrument was acknowledged before me this day of September, 2006 by , the Clerk of the City of Saint Paul, Minnesota on behalf of said public body. Notary Public Ym7s11 STATE OF MINNESOTA COUNTY OF RAMSEY ) ) ss. ) The foregoing instrument was acknowledged before me this day of September, 2006 by , the Director, Office of Financial Services, of the City of Saint Paul, Minnesota on behalf of said public body. Notary Public SEAL �� i4992R4.4 S-2 Subordmanon Ageement (D�sinci Coohng) o�-�� STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) PORT AiJTHORITY OF THE CITY OF SA1NT PAUL By Its Chair By Its Secretary The foregoing instrument was acknowledged before me this day of September, 2006 by Michael Goldner, the Chair and Kathy Lantry, the Secretazy of the Port Authority of the City of Saint Paul, Minnesota on behalf of said public body. Notary Public �� 34992R4.4 S-3 Subordmanon Ageement (Disvrict Coolmg) o�-� �c� STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) U.S. BANK. NATIONAL ASSOCIATION By Its The foregoing instrument was acknowledged before me this day of September, 2006 by , the of U.S. Bank National Association, a national banking association. aws�+:+ 34992R6 4 Notary Public (SEAL) S-4 Subordinahon Agreement (D�sttict Cooling) - � , ��Y"�� STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) DISTRICT COOLING ST. PAUL, INC. Its President The foregoing instrument was acknowledged before me this day of September, 2006 by Anders Rydaker, the President of District Cooling St. Paul, Inc., a non-profit corporation arganized under the laws of the State of Minnesota. ��v�e �� Notary Public (SEAL) S-5 Subordmation Agreement (D�striq Cool�ng) ,. � �f' "� O�/ STATE OF NEW YORK ) ) ss. COUNTY OF ) DEXIA CREDIT LOCAL (New York Agency) Its Vice President The foregoing instnxment was acknowledged before me this day of September, 2006 by James Beck, the Vice President of the New York Agency of Dexia Credit Local, a specialized financial institution organized under the laws of the Republic of France. ��+ sa9ezxa.a Notary Public (SEAL) �� Subordma[ion Agreement (D�shictCOOhng) 4 � V �� SCHEDULE A Legal Description of Real Property Parcel 1 That part of Lots 1, 2, 3, all in Block 21, RICE AND IRVINE'S ADDITION TO ST. PAUL according to the plat thereof on file in the office of the County Recorder, Ramsey County, Minnesota, described as follows: Commencing at the southeast corner of said Lot 1; thence northwesterly, at a right angle to the southerly line of said Lot 1, 103.00 feet; thence southwesterly, at a right angle, 1.00 foot to the point of beginning; thence northwesterly, at a right angle, 40.00 feet; thence southwesterly, at a right angle, 73.00 feet; thence southeasterly at a right angle 40.00 feet; thence northeasterly, at a right angle, 73.00 feet to the point of beginning. Said azea is situated between 742.17 feet and 774.17 feet above mean sea level, National Geodetic Vertical Datuxn 1929. Parcel2 That part of Lots 1, 2, 3, all in Block 21, RICE AND IRVINE'S ADDITION TO ST. PAUL according to the plat thereof on file in the office of the County Recorder, Ramsey County, Minnesota, described as follows: Commencing at the southeast corner of said Lot 1; thence northwesterly, at a right angle, to the southerly line of said Lot 1, 19.00 feet; thence southwesteriy, at a right angle, 1.00 foot to the point of beginning; thence northwesterly, at a right angle, 84.00 feet; thence southwesterly, at a right angle, 73.00 feet; thence southeasterly, at a right angle 84.00 feet; thence northeasterly, at a right angle, 73.00 feet to the point of beginning. Said area is situated 774.17 feet above mean sea level, National Geodetic Vertical Datum 1929. Parcel3 That part of Lots 1, 2, 3, all in Block 21, RICE AND IRVINE'S ADDITION TO ST. PAUL according to the plat thereof on file in the office of the County Recorder, Ramsey County, Minnesota, described as follows: ai"9'-�=F A-1 34992R4.A Subordinanon Agreement (District Cooling) 4 � �� Commencing at the southeast corner of said Lot 1; thence northwesterly, at a right angle to the southerly line of said Lot 1, 105.50 feet; thence southwesteriy, at a right angle, 17.00 feet to the point of beginning; thence northwesterly, at a right angle, 8.00 feet; thence southwesterly, at a right angle, 8.00 feet; thence southeasterly at a right angle 8.00 feet; thence northeasterly, at a right angle, 8.00 feet to the point of beginning. Said azea is situated between 717.17 feet and 742.17 feet above mean sea level, National Geodetic Vertical Datum 1929. Parcel4 That part of Lots 1, 2, 3, all in Block 21, RICE AND IRVINE'S ADDITION TO ST. PAUL according to the plat thereof on file in the office of the County Recorder, Ramsey County, Minnesota, described as follows: Commencing at the southeast corner of said Lot 1; thence northwesterly, at a right angle to the southerly line of said Lot 1, 103.00 feet; thence southwesterly, at a right angle, 20.00 feet to the point of beginning; thence northwesterly, at a right angie, 14.OQ feet; thence southwesterly, at a right angle, 54.00 feet; thence southeasterly at a right angie 14.00 feet; thence northeasterly, at a right angle, 54.00 feet to the point of beginning. Said area is situated between 774.17 feet and 787.17 feet above mean sea level, National Geodetic Vertical Datum 1929. Parcel 5 That part of Lots 1, 2, and 3, Block 21, RICE AND IRVINE'S ADDITION TO ST. PAUL according to the plat thereof on file in the office of the County Recorder, Ramsey County, Minnesota, described as follows: Commencing at the southeast corner of said Lot 1; thence southwesterly, along the southerly line of said Lot 1, 75.13 feet to the point of beginning; thence northwesterly, at a right angle to said southerly line, 17.40 feet; thence southwesterly, at a right angle, 5.10 feet; thence northwesterly, at a right angle, 3.00 feet; thence southwesterly, at a right angle, 22.90 feet; thence southeasterly, at a right angle, 20.40 feet to the southerly line of said Lot I; thence northeasterly, along said southerly line, 28.00 feet to the point of beginning. z�on�� i 34992R4A A-Z Subordmation Agreement (Disn�ct CooLng) / /�. J b�'��' 1993 Added Parcel That part of Lots 5, 6 and 7, Block 21, RICE AND IRVINE'S ADDITION TO ST. PAUL, according to the recorded plat thereof, Ramsey County, Minnesota, which lies within the circumference of a cucle having a radius of 41.00 feet. The center of said circle is a point 60.00 feet southerly of the northerly line of said L,ots 5, 6 and 7 as measured at a right angle to said northerly line and 57.00 feet westerly of the west line of the easterly 25.00 feet of said Lot 5 as measured at a right angle to said west line. 2002 Added Parcel That part of the following described tract lying Northeasterly of the Southwesterly 103.00 feet thereof: That part of Lots 3 through 6, BORUP'S ADDITION, according to the recorded plat thereof, Ramsey County, Minnesota, that part of Lots 2 through 8, Block 14, HOYT'S ADDITION TO SAINT PAUL, according to the recorded plat thereof, Ramsey County, Minnesota, that part of vacated Sibley Sueet abutting said BORUP'S ADDITION and HOYT'S ADDITION TO SAINT PAUL, and that part of the Southeast quarter of Section 31, Township 29, Range 22, Ramsey County, Minnesota, lying 7.50 feet Southeasterly of and adjoining the Southeasterly line of said Lot 3, BORUP'S ADDITION, described as commencing at the most Easterly corner of said Lot 7, Block 14, HOYT'S ADDITION TO SAINT PAUL; thence Northwesterly, along the Northeasterly line of said Lot 7, to its intersection with a line 33.00 feet Northwesterly of and parallel with the Southeasterly line of said Block 14, HOYT'S ADDITION TO SAINT PAUL and the point of beginning of the parcel to be described; thence south 55 degrees 11 minutes 12 seconds West, along said parallel line and its Southwesterly extension, a distance of 256.40 feet to a point on the Southeasterly extension of a line 5.00 feet Southwesterly of and para11e1 with the Northeasterly line of said Lot 3, BORUP'S ADDITION; thence North 37 degrees 03 minutes 48 seconds West, parallel with said Northeasterly line of said Lots 3, 4, 5 and 6, BORUP'S ADDITION, a distance of 229.21 feet; thence North 67 degrees 55 minutes 26 seconds East a distance of 56.90 feet, to the Southwesterly line of said Block 14, HOYT'S ADDITION TO SAINT PAUL; thence North 89 degrees OS minutes 19 seconds East a distance of 330.92 feet to the Northeasterly line of said Block 14, HOYT'S ADDITION TO SAINT PAUL; thence south 28 degrees 57 minutes 22 seconds East a distance of 72.20 feet to the point of beginning. Together with an 11.00 foot wide easement for access over and across Lot 5, Block 14, HOYT'S ADDITION TO SAINT PAUL, according to the recorded plat thereof, Ramsey Counry, Minnesota, and vacated Sibley Street abutting said Lot 5. The centerline of said easement is described as commencing at the most Southerly corner of said Block 14; thence Northwesterly along the Southwesterly line of said Block 14 to the intersection with a line 33.00 feet Northwesterly of and parallel with the Southeasterly line of said Block 14; thence on an assumed bearing of South 55 degrees 11 minutes 12 seconds West, along said parallel line and its southwesterly extension, a distance of 14.86 feet to the point of beginning of the centerline to be described; thence North 37 degrees 03 minutes 48 seconds West a distance 3W93A3.4 34992R4.4 A-3 Subordma[�on Ageement (Distnet Coolmg) t ✓ � > ln b ��P of 36.02 feet; thence North 52 degrees 56 minutes 12 seconds East a distance of 6328 feet to a line lying 98.00 feet northeasterly of and para11e1 with the northeasterly line of Lot 3, BORUP'S ADDITION, according to the recorded plot thereof, Ramsey County, Minnesota, and said centerline there terminating. The sidelines of said easement aze to be prolonged or shortened to terminate at said southwesterly extension of a line 33 feet Northwesterly of and paraliel with the Southeasterly line of said Block 14. �� R4 4 GE� Subordinahon Agreement (Distr¢t Cooling)