TAX EXEMPTION AGREEMENT. between. CITY OF MAPLE GROVE, MINNESOTA, as Issuer. U.S. BANK NATIONAL ASSOCIATION as Trustee, and

Transcription

1 DRAFT: 3/21/2017 between CITY OF MAPLE GROVE, MINNESOTA, as Issuer U.S. BANK NATIONAL ASSOCIATION as Trustee, and MAPLE GROVE HOSPITAL CORPORATION as the Corporation Dated as of May 1, 2017 Executed as Part of the Proceedings for the Authorization and Issuance of: $ City of Maple Grove, Minnesota Health Care Facilities Revenue Refunding Bonds (Maple Grove Hospital Corporation) Series 2017

2 TABLE OF CONTENTS PARTIES... 1 RECITALS... 1 ARTICLE I DEFINITIONS...3 Section Definitions...3 Section Reliance on Information...13 ARTICLE II CERTAIN REPRESENTATIONS BY THE CORPORATION...14 Section Status of the Project...14 Section Representations and Covenants as to Private Business Use of the Project...14 Section Representations as to Status of the Corporation...14 Section Change in Ownership of the Project...14 Section Economic Life of the Project...15 Section Representations for Purposes of IRS Form ARTICLE III USE OF BOND PROCEEDS...17 Section Anticipated Use of Proceeds...17 Section Refunding...17 ARTICLE IV ARBITRAGE...18 Section Arbitrage Representations and Elections...18 Section Arbitrage Compliance...19 Section Rebate Fund...19 Section Calculation of Rebate Amount...19 Section Payment to United States...22 Section Recordkeeping...22 Section Rebate Analyst...22 ARTICLE V COMPLIANCE WITH CODE...24 ARTICLE VI TERM OF...27 ARTICLE VII AMENDMENTS...28 ARTICLE VIII EVENTS OF DEFAULT, REMEDIES...29 Section Events of Default...29 Section Remedies for an Event of Default...29 SIGNATURES Page EXHIBIT A-1 EXHIBIT A-2 PROPERTY REFINANCED BY THE BONDS SOURCES AND USES OF FUNDS i

3 THIS (the Tax Exemption Agreement ) is made and entered into as of May 1, 2017, between the CITY OF MAPLE GROVE, MINNESOTA, a municipal corporation and political subdivision organized and existing under the Constitution and laws of the State of Minnesota (the Issuer ), MAPLE GROVE HOSPITAL CORPORATION, a Minnesota nonprofit corporation (the Corporation ), and U.S. BANK NATIONAL ASSOCIATION, as trustee under the Indenture, as defined below (the Trustee ). RECITALS The Issuer is authorized pursuant to the Minnesota Statutes, Sections , as amended (the Act ), to issue revenue bonds to finance, in whole or in part, the cost of acquisition, construction, reconstruction, improvement, betterment, or extension of any properties, real or personal, used or useful in connection with a revenue producing enterprise, whether or not operated for profit, engaged in providing health care services, including, without limitation, hospitals and related medical facilities. On May 25, 2007, the Issuer issued its $143,605,000 Health Care Facilities Revenue Bonds (Maple Grove Hospital Corporation), Series 2007 (the Series 2007 Bonds ) under the Act to finance a portion of the cost of acquisition of land and construction and equipping thereon of hospital facilities in the City of Maple Grove (the Project ); and Pursuant to the Act and an Indenture of Trust, dated as of May 1, 2017 (the Indenture ), between the Issuer and the Trustee, the Issuer is issuing its Health Care Facilities Revenue Refunding Bonds (Maple Grove Hospital Corporation), Series 2017, in the original aggregate principal amount of $ (the Series 2017 Bonds ) for the purpose of refunding the outstanding Series 2007 Bonds. The Issuer has agreed to loan the proceeds of the Series 2017 Bonds to the Corporation for that purpose pursuant to the terms of a Loan Agreement, dated as of May 1, 2017 (the Loan Agreement ), between the Issuer and the Corporation. The obligation of the Corporation to repay the loan made pursuant to the Loan Agreement is evidenced and secured by the Series 2017A Note, dated as of May, 2017, issued pursuant to a Master Trust Indenture, dated as of May 1, 2017 (the Master Indenture ), between the Corporation and U.S. Bank National Association, as master trustee (the Master Trustee ), and Supplemental Indenture No. 1, dated as of May 1, 2017 (the Supplemental Indenture ), between the Corporation and the Master Trustee. Pursuant to the terms of the Loan Agreement, the Corporation has covenanted to make Loan Repayments (as defined in the Indenture) at such times and in such amounts (including principal, interest and premium, if any), so as to provide for payment of the principal of, premium, if any, and interest on the Series 2017 Bonds outstanding under the Indenture. The execution and delivery of the Indenture and the issuance of the Series 2017 Bonds under the Act have been in all respects duly and validly authorized by resolutions duly adopted by the City Council of the Issuer.

4 To ensure that interest on the Series 2017 Bonds will be and remain excludable from gross income for federal income tax purposes pursuant to applicable provisions of the Internal Revenue Code of 1986, as amended (the Code ), and applicable provisions of the Treasury Regulations promulgated thereunder (the Regulations ), the Issuer, the Corporation, and the Trustee have entered into this Tax Exemption Agreement. NOW THEREFORE, the Issuer, the Corporation and the Trustee hereby agree as follows: 2

5 ARTICLE I DEFINITIONS Section Definitions. The following words and phrases shall have the following meanings. Any capitalized word or term used herein but not defined herein shall have the meaning assigned to such term in the Indenture or in the Loan Agreement. Abusive Arbitrage Device means any action which has the effect of: (i) enabling the Issuer or the Corporation to exploit the difference between taxable and tax-exempt interest rates to obtain a material financial advantage; and (ii) overburdening the tax-exempt bond market as defined in Section of the Regulations. Accounting Method means both the overall method used to account for the Gross Proceeds of the Series 2017 Bonds (e.g., the cash method or a modified accrual method) and the method used to account for or allocate any particular item within that overall accounting method (e.g., accounting for Investments, Expenditures, allocations to and from different sources and particular items of the foregoing). Average Economic Life means the average reasonably expected economic life of the Project as defined in Section 147(b) of the Code. Average Maturity means the average maturity of the Series 2017 Bonds as defined in Section 147(b) of the Code. Bond Counsel means any nationally recognized bond counsel requested to deliver its approving opinion that the Series 2017 Bonds are valid and enforceable and that interest on the Series 2017 Bonds is excludable from gross income for federal income tax purposes. Bond Fund means, collectively, the Interest Fund established pursuant to Section 403 of the Indenture and the Bond Sinking Fund established pursuant to Section 404 of the Indenture. Bond Resolution means Resolution No. of the City Council of the Issuer adopted on April 3, Bond Year means, with respect to the Series 2017 Bonds, the period from the Date of Issuance to April 30, 2018, and each subsequent one-year period beginning on each May 1 and ending on April 30 of the subsequent year, although the last Bond Year shall end on the date of final maturity of all Series 2017 Bonds. Bond Yield means the Yield of the Series 2017 Bonds calculated in accordance with Section of the Regulations. Capital Expenditure means any cost of a type that is properly chargeable to a capital account (or would be so chargeable with a proper election or with the application of the definition of placed in service under Section (c) of the Regulations) under general federal income tax principles. For example, costs incurred to acquire, construct or improve land, buildings and equipment generally are capital expenditures whether an expenditure is a capital 3

6 expenditure is determined at the time the expenditure is paid with respect to the property. Future changes in law do not affect whether an expenditure is a capital expenditure. Capital Project means all Capital Expenditures, plus related working capital expenditures to which the de minimis rule under Section (d)(3)(ii)(A) of the Regulations applies, that carry out the governmental purpose of an issue. For example, a Capital Project may include Capital Expenditures for one or more building improvements or equipment, plus related start-up operating costs. Class of Investments means one of the following, each of which represents a different Class of Investments: (a) Each category of yield restricted Purpose Investment and Program Investment, as defined in Section l(b) of the Regulations, that is subject to a different definition of materially higher Yield under Section (d)(2) of the Regulations; (b) (c) Yield restricted Nonpurpose Investments; and All other Nonpurpose Investments. Code means the Internal Revenue Code of 1986, as amended. Date. Computation Date means an Installment Computation Date or the Final Computation Computation Date Credit means on the last day of each Bond Year during which there are Gross Proceeds subject to the rebate requirement of Article IV hereof, and on the Final Computation Date, the amount allowed by applicable Regulations as a credit. Computation Period means the period between Computation Dates. The first Computation Period begins on the Date of Issuance and ends on the first Installment Computation Date. Each succeeding Computation Period begins on the date immediately following an Installment Computation Date and ends on the next Computation Date. Consistently Applied means applied uniformly within a fiscal period and between fiscal periods to account for Gross Proceeds of an issue and any amounts that are in a commingled fund. Corporation means Maple Grove Hospital Corporation, a Minnesota nonprofit corporation. Corporation Tax Certificate means the Corporation Tax Certificate, dated the Date of Issuance, and executed by an authorized representative of the Corporation. Cost of Issuance Fund means the Expense Fund established pursuant to Section 302 of the Indenture. 4

7 Current Outlay of Cash means an outlay reasonably expected to occur not later than five (5) banking days after the date as of which the allocation of Gross Proceeds to the Expenditure is made. Date of Issuance means May, Discharged means, with respect to any Series 2017 Bond, the date on which all amounts due with respect to such Series 2017 Bond are actually and unconditionally due, if cash is available at the place of payment, and no interest accrues with respect to such Series 2017 Bond after such date. Economic Accrual Method (also known as the constant interest method or actuarial method) means the method of computing Yield that is based on the compounding of interest at the end of each compounding period. Exempt Person means any organization described in Section 501(c)(3) of the Code or a State of the United States or a local governmental unit of a State of the United States. Expenditure means a book or record entry which allocates Proceeds of the Series 2017 Bonds in connection with a Current Outlay of Cash. Fair Market Value means the price at which a willing buyer would purchase an Investment from a willing seller in a bona fide, arm s-length transaction. Fair Market Value generally is determined on the date on which a contract to purchase or sell the Nonpurpose Investment becomes binding (i.e., the trade date rather than the settlement date). Except as otherwise provided in this definition, an Investment that is not of a type traded on an established securities market (within the meaning of Section 1273 of the Code), is rebuttably presumed to be acquired or disposed of for a price that is not equal to its Fair Market Value. The Fair Market Value of a United States Treasury obligation that is purchased directly from the United States Treasury is its purchase price. The following guidelines shall apply for purposes of determining the Fair Market Value of the obligations described below: (a) Certificates of Deposit. The purchase of certificates of deposit with fixed interest rates, fixed payment schedules and substantial penalties for early withdrawal will be deemed to be an Investment purchased at its Fair Market Value on the purchase date if the Yield on the certificate of deposit is not less than: (i) the Yield on reasonably comparable direct obligations of the United States; and (ii) the highest Yield that is published or posted by the provider to be currently available from the provider on reasonably comparable certificates of deposit offered to the public. (b) Guaranteed Investment Contracts. A Guaranteed Investment Contract is a Nonpurpose Investment that includes specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate, and also includes any agreement to supply Investments on two or more future dates (e.g., a forward supply contract). The purchase price of a Guaranteed Investment Contract (other than one for a yield-restricted defeasance escrow, which has additional requirements as well) is treated as its Fair Market Value on the purchase date if: 5

8 (i) The Corporation makes a bona fide solicitation (described below) for a specified Guaranteed Investment Contract and receives at least three bona fide bids from providers that have no material financial interest in the issue (e.g., as underwriters, brokers, financial advisors or their related parties); (ii) at least three bids are from reasonably competitive providers (described below); (iii) if the Corporation uses an agent to conduct the bidding process, the agent did not bid to provide the investment; (iv) The Corporation purchases the highest-yielding Guaranteed Investment Contract for which a qualifying bid is made (determined net of broker s fees); (v) The obligor on the Guaranteed Investment Contract certifies the administrative costs that it is paying (or expects to pay) to third parties in connection with the Guaranteed Investment Contract; and (vi) The Corporation retains the following records with the bond documents until three (3) years after the last outstanding bond is redeemed: (1) a copy of the contract, and (2) the receipt or other record of the amount actually paid by the Corporation for the investments, including a record of any administrative costs paid by the Corporation, and the certification of the provider as to administrative costs; and (3) for each bid that is submitted, the name of the person or entity submitting the bid, the time and date of the bid, and the bid results; and (4) the bid solicitation form and, if the terms of the contract deviated from the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation. A bona fide solicitation must satisfy all of the following requirements: (i) the bid specifications are in writing and are timely forwarded to potential providers; and (ii) the bid specifications include all material terms of the bid; a term is material if it may directly or indirectly affect the yield or the cost of the investment; and (iii) the bid specifications include a statement notifying potential providers that submission of a bid is a representation that the potential provider did not consult with any other potential provider about its bid, that the bid was determined without regard to any other formal or informal agreement that the potential provider has with the issuer or any other person (whether or not in connection with the bond issue), and that the bid is not being submitted solely as a courtesy to the issuer or any other person for purposes of satisfying the regulations; and (iv) the terms of the bid specifications are commercially reasonable (a term is commercially reasonable if there is a legitimate business purpose for the term other than the increase the purchase price or reduce the yield of the investment); and (v) the terms of the solicitation take into account the issuer s reasonably expected deposit and draw-down schedule for the amounts to be invested; and (vi) all potential providers have an equal opportunity to bid (for example, no potential provider is given the opportunity to review other bids, i.e., a last look, before providing a bid); and (vii) at least three (3) reasonably 6

9 competitive providers are solicited for bids; a reasonably competitive provider is a provider that has established an industry reputation as a competitive provider of the type of investments being purchased. Final Computation Date means the date the last Series 2017 Bond is Discharged. Funds and Accounts means all funds and all accounts established by the terms of the Indenture. Future Value means the Value of a Receipt or Payment at the end of any interval as determined by using the Economic Accrual Method and equals the Value of that Payment or Receipt when it is paid or received (or treated as paid or received), plus interest assumed to be earned and compounded over the period at a rate equal to the Bond Yield, using the same compounding interval and financial conventions used to compute the Bond Yield. Gross Proceeds means any Proceeds or Replacement Proceeds of the Series 2017 Bonds. Indenture means the Bond Trust Indenture, dated as of May 1, 2017, between the Issuer and the Trustee, and any amendments and supplements thereto. Installment Computation Date means the last day of the fifth Bond Year and each succeeding fifth Bond Year as stated in Section 4.01(f) hereof. Investment means any Purpose Investment or Nonpurpose Investment, including any other tax-exempt bond. Investment Proceeds means any amounts actually or constructively received from investing Proceeds of the Bands. Investment-Type Property means any property, other than property described in Section 148(b)(2)(A), (B), (C) or (E) of the Code, that is held principally as a passive vehicle for the production of income. Except as otherwise provided, a prepayment for property or services is Investment-Type Property if a principal purpose for prepaying is to receive an Investment return from the time the prepayment is made until the time payment otherwise would be made. A prepayment is not Investment-Type Property if: (i) the prepayment is made for a substantial business purpose other than Investment return and the issuer has no commercially reasonable alternative to the prepayment, or (ii) prepayments on substantially the same terms are made by a substantial percentage of persons who are similarly situated to the issuer but who are not beneficiaries of tax-exempt financing. Issuance Costs means all costs incurred in connection with the issuance of the Series 2017 Bonds, other than fees paid to or on behalf of credit enhancers as fees for qualified guarantees (as defined in Section (f) of the Regulations. Examples of Issuance Costs include (but are not limited to): (i) underwriters spread (whether realized directly or derived through purchase of the Series 2017 Bonds at a discount below the price at which a substantial number of the Series 2017 Bonds are sold to the public); (ii) counsel fees (including bond counsel, underwriter s counsel, issuer s counsel, borrower s counsel, trustee s counsel, and any 7

10 other specialized counsel fees incurred in connection with the issuance of the Series 2017 Bonds); (iii) financial advisor fees incurred in connection with the issuance of the Series 2017 Bonds; (iv) rating agency fees (except for any such fee that is paid in connection with or as a part of the fee for credit enhancement of the Series 2017 Bonds); (v) trustee fees incurred in connection with the issuance of the Series 2017 Bonds; (vi) accountant fees incurred in connection with the issuance of the Series 2017 Bonds; (vii) printing costs (for the Series 2017 Bonds and of the preliminary and final Official Statement); (viii) costs incurred in connection with the required public approval process (e.g., publication costs for public notices generally and costs of the public hearing); and (ix) Issuer administrative fees to cover administrative costs and expenses incurred in connection with the issuance of the Series 2017 Bonds. Issue Price means, except as otherwise provided, issue price as defined in Sections 1273 and 1274 of the Code. Generally, the Issue Price of bonds that are publicly offered is the first price at which a substantial amount of the bonds are sold to the public. Ten percent is a substantial amount. The public does not include bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers. The Issue Price does not change if part of the issue is later sold at a different price. The Issue Price of bonds that are not substantially identical is determined separately. The Issue Price of bonds for which a bona fide public offering is made is determined as of the sale date based upon reasonable expectations regarding the initial public offering price. If a bond is issued for property, the applicable Federal tax-exempt rate is used in lieu of the Federal rate in determining the Issue Price under Section 1274 of the Code. The issue price of bonds may not exceed their Fair Market Value as of the sale date. The issue price of the Bonds is adjusted for amounts paid or received with respect to a Qualified Hedge which is terminated substantially contemporaneously with the issue date of the bonds, as required by Regulation Section (h)(5)(ii)(B). With respect to the Series 2017 Bonds, the Issue Price is $. Issuer Tax Certificate means the Tax Certificate of the Issuer, dated the Date of Issuance, and executed by authorized representatives of the Issuer. Loan Agreement means the Loan Agreement, dated as of May 1, 2017, between the Issuer and the Corporation, and any amendments and supplements thereto. Net Sale Proceeds means Sale Proceeds, less the portion of those Sale Proceeds invested in a reasonably required reserve or replacement fund under Section 148(d) of the Code and as part of a minor portion under Section 148(e) of the Code. Nonexempt Person means any person who is not an Exempt Person or one of the United States of America or a political subdivision thereof. Nonpurpose Investment means any security, obligation, annuity contract or Investment-Type Property as defined in Section 148(b) of the Code, including specified private activity bonds as defined in Section 57(a)(5)(c) of the Code, but excluding all other obligations the interest on which is excludable from federal gross income. The term Nonpurpose Investment does not include the obligation of the Corporation to make payments to the Issuer pursuant to the provisions of the Loan Agreement. 8

11 Official Statement means the Official Statement, dated, 2017, prepared with respect to the offer and sale of the Series 2017 Bonds. Original Indenture means the Bond Trust Indenture, dated as of May 1, 2007, between the Issuer and U.S. Bank National Association, as successor to Wells Fargo Bank, National Association, under which the Series 2007 Bonds were issued. Original Tax Exemption Agreement means the Tax Exemption Agreement, dated as of May 1, 2007, between the Issuer, the Corporation and Wells Fargo Bank, National Association relating to the Series 2007 Bonds. Payments means, for purposes of computing the Rebate Amount: (a) amounts actually or constructively paid to acquire a Nonpurpose Investment (or treated as paid to a commingled fund); (b) for a Nonpurpose Investment that is allocated to an issue on a date after it is actually acquired (e.g., an Investment that becomes allocable to Transferred Proceeds or to Replacement Proceeds) or that becomes subject to the rebate requirement of the Code on a date after it is actually acquired (e.g., an Investment allocated to a reasonably required reserve or replacement fund for a construction issue at the end of the two-year spending period), the Value of that Investment on that date; (c) for a Nonpurpose Investment that was allocated to an issue at the end of the preceding computation period, the Value of that Investment at the beginning of the computation period; (d) on the last day of each Bond Year during which there are amounts allocated to Gross Proceeds of an issue that are subject to the rebate requirement of the Code, and on the final maturity date, a Computation Date Credit; and (e) Yield Reduction Payments on Nonpurpose Investments made pursuant to Section (c) of the Regulations. For purposes of computing the Yield on an Investment (including the Value of the Investment), Payment means amounts to be actually or constructively paid to acquire the Investment; provided, however, that payments made by a conduit borrower, such as the Corporation, are not treated as paid until the conduit borrower ceases to receive the benefit of earnings on those amounts. Payments on Investments, including Guaranteed Investment Contracts, are adjusted for Qualified Administrative Costs of acquiring a Nonpurpose Investment. Pre-Issuance Accrued Interest means amounts representing interest that accrued on an obligation for a period not greater than one year before the Date of Issuance but only if those amounts are paid within one year after the Date of Issuance. Preliminary Expenditures means architectural, engineering, surveying, soil testing, reimbursement bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction, or rehabilitation of a project, other than land acquisition, site preparation, and similar costs incident to commencement of construction. Proceeds means any Sale Proceeds, Investment Proceeds and Transferred Proceeds of an issue. Proceeds do not include, however, amounts actually or constructively received with respect to a Purpose Investment that are properly allocable to the immaterially higher Yield under Section (d) of the Regulations or Section 143(g) of the Code or to qualified administrative costs recoverable under Section (e) of the Regulations. 9

12 Project means the Capital Project financed with the proceeds of the Series 2007 Bonds and described in EXHIBIT A-1 of this Tax Exemption Agreement. Purpose Investment means an Investment that is acquired to carry out the governmental purpose of an issue. The Loan Agreement constitutes a Purpose Investment. Qualified Administrative Costs means reasonable, direct administrative costs, other than carrying costs, such as separately stated brokerage or selling commissions, but not legal and accounting fees, record-keeping, custody and similar costs. General overhead costs and similar indirect costs of the issuer such as employee salaries and office expenses and costs associated with computing the Rebate Amount are not Qualified Administrative Costs. In general, administrative costs are not reasonable unless they are comparable to administrative costs that would be charged for the same Investment or a reasonably comparable Investment if acquired with a source of funds other than Gross Proceeds of tax-exempt bonds. Qualified Guarantee means a guarantee of the payment of the principal of or interest on bonds of an issue (or a guarantee of payments on a Purpose Investment) that satisfies each of the following: (i) as of the date the guarantee is obtained, the issuer reasonably expects that the present value of the fees for the guarantee will be less than the present value of the expected interest savings on the issue as a result of the guarantee (computed by using the Yield of the issue, determined with regard to guarantee payments, as the discount rate); (ii) the arrangement must create a guarantee in substance by imposing a secondary liability that unconditionally shifts substantially all of the credit risk for all or part of the principal and interest payments on the bonds; and (iii) the fees for a guarantee must not exceed a reasonable, arm s-length charge for the transfer of credit risk. Qualified Hedge means a contract that satisfies each of the following: (i) the contract is entered into primarily to modify the issuer s risk of interest rate changes with respect to a bond (e.g., an interest rate swap); (ii) if entered into with respect to a fixed-rate issue, the contract is entered into no later than fifteen days after the issue date of the issue (or on the expiration of a Qualified Hedge that satisfied this requirement); (iii) if a hedge provider makes a single payment to the issuer in connection with the acquisition of a contract, the issuer may treat a portion of that contract as a hedge provided the hedge provider s payment to the issuer and the issuer s payments under the contract in excess of those that it would make if the contract bore rates equal to the on-market rates for the contract are separately identified in a certification of the hedge provider and the off-market payments are not treated as payments on a hedge; (iv) the contract does not contain a significant investment element; (v) the hedge provider is not related to the issuer or the conduit borrower; (vi) the contract covers, in whole or in part, all of one or more groups of substantially identical bonds in the issue; (vii) the contract is primarily interest based; (viii) the payments received from the hedge provider under the contract correspond closely in time to the specific payments being hedged on the hedged bonds; (ix) the payments to the hedge provider are reasonably expected to be made from the same source of funds that, absent the hedge, would be reasonably expected to be used to pay principal and interest on the hedged bonds; and (x) the contract must be identified by the actual issuer of the bonds on the books and records maintained for the hedged bonds not later than three days after the date on which the issuer and the hedge provider enter into the contract. A contract that is entered into before the 10

13 issue date of the hedged bond must satisfy the conditions of Regulation Section (h)(5)(ii) or (iii) in order to be a Qualified Hedge. Rebate Amount means the excess of the Future Value of all Receipts on Nonpurpose Investments over the Future Value of all the Payments on Nonpurpose Investments. Future Value is computed as of the Computation Date. Rebate Amount additionally includes any penalties and interest on underpayments reduced for recoveries of overpayments. Rebate Analyst shall mean the entity chosen by the Corporation in accordance with Section 4.07 of this Tax Exemption Agreement to determine the amount of required deposits to the Rebate Fund, if any. Rebate Fund means the Rebate Fund established hereunder. Receipts means, for purposes of computing the Rebate Amount: (a) amounts actually or constructively received from a Nonpurpose Investment (including amounts treated as received from a commingled fund), such as earnings and return of principal; (b) for a Nonpurpose Investment that ceases to be allocated to an issue before its disposition or redemption date (e.g., an Investment that becomes allocable to Transferred Proceeds of another issue or that ceases to be allocable to the issue pursuant to the universal cap under Section of the Regulations) or that ceases to be subject to the rebate requirement of the Code on a date earlier than its disposition or redemption date (e.g., an Investment allocated to a fund initially subject to the rebate requirement of the Code but that subsequently qualifies as a bona fide debt service fund), the Value of that Nonpurpose Investment on that date; and (c) for a Nonpurpose Investment that is held at the end of a computation period, the Value of that Investment at the end of that period. For purposes of computing Yield on an Investment, Receipts means amounts to be actually or constructively received from the Investment, such as earnings and return of principal (including the Value of an Investment). Receipts on Investments, including Guaranteed Investment Contracts, are adjusted (reduced) for Qualified Administrative Costs. Recomputation Event means a transfer, waiver, modification, or similar transaction with respect to any right that is part of the terms of the Series 2017 Bonds or with respect to a Qualified Hedge that is entered into, or terminated, in connection with the Series 2017 Bonds. Redemption Instructions means the Redemption Instructions, dated the date hereof, by which the Corporation has irrevocably deposited the Net Proceeds of the Series 2017 Bonds in the Redemption Fund under the Original Indenture to provide for the redemption of the outstanding Series 2007 Bonds on, Refunding Proceeds means the Net Sale Proceeds in excess of the following: (i) the portion of the Net Sale Proceeds to be applied to Issuance Costs; and (ii) the portion of the Net Sale Proceeds to be applied to the fees for a Qualified Guarantee and a Qualified Hedge. Regulation or Regulations means the temporary, proposed or final Income Tax Regulations promulgated by the Department of the Treasury and applicable to the Series 2017 Bonds, including Sections through , Section 1.149, and Sections l and of the Regulations. 11

14 Replacement Proceeds means amounts which have a sufficiently direct nexus to the Series 2017 Bonds or to the governmental purpose of the Series 2017 Bonds to conclude that the amounts would have been used for that governmental purpose if the proceeds of the Series 2017 Bonds were not used or to be used for that governmental purpose, as more fully defined in Section l(c) of the Regulations. Sale Proceeds means any amounts actually or constructively received from the sale of the Series 2017 Bonds, including amounts used to pay underwriter s discount or compensation and accrued interest other than Pre-Issuance Accrued Interest. Series 2007 Bonds means the Issuer s outstanding Health Care Facilities Revenue Bonds (Maple Grove Hospital Corporation), Series SLGS means United States Treasury Certificates of Indebtedness, Notes and Bonds State and Local Government Series. State means the State of Minnesota. Tax Exemption Agreement means this Tax Exemption Agreement. Transferred Proceeds means Proceeds which become transferred proceeds of a refunding issue and cease to be Proceeds of a prior issue when Proceeds of the refunding issue discharge any of the outstanding principal amount of the prior issue. The amount of Proceeds of the Series 2007 Bonds that become transferred proceeds of the Series 2017 Bonds is an amount equal to the Proceeds of the Series 2007 Bonds on the date of that discharge, multiplied by a fraction: (i) the numerator of which is the principal amount of the Series 2007 Bonds discharged with Proceeds of the Series 2017 Bonds on the date of that discharge; and (ii) the denominator of which is the total outstanding principal amount of the Series 2007 Bonds on the date immediately before the date of that discharge. Underwriter Certificate means the Certificate of the Underwriter, dated May, 2017, executed by Piper Jaffray & Co., as original purchaser of the Series 2017 Bonds. Universal Cap means the Value of all outstanding Series 2017 Bonds. Value means Value as determined under Section (e) of the Regulations for a Series 2017 Bond and as determined under Section (d) of the Regulations for an Investment. Yield means, for purposes of determining the Yield on the Series 2017 Bonds, the Yield computed under the Economic Accrual Method using consistently applied compounding intervals of not more than one year. A short first compounding interval and a short last compounding interval may be used. Yield is expressed as an annual percentage rate that is calculated to at least four decimal places (e.g., percent). Other reasonable, standard financial conventions, such as the thirty (30) days per month/360 days per year convention, may be used in computing Yield but must be consistently applied. The Yield on an issue that would be a Purpose Investment (absent Section 48(b)(3)(A) of the Code) is equal to the Yield on the conduit financing issue that financed that Purpose Investment. 12

15 The Yield on a fixed yield issue is the discount rate that, when used in computing the present Value as of the issue date of all unconditionally payable payments of principal, interest and fees for qualified guarantees on the issue and amounts reasonably expected to be paid as fees for qualified guarantees on the issue, produces an amount equal to the present Value, using the same discount rate, of the aggregate issue price of bonds of the issue as of the issue date. The Yield on a variable yield issue is computed separately for each Computation Period. The Yield for each Computation Period is the discount rate that, when used in computing the present Value as of the first day of the Computation Period of all the payments of principal and interest and fees for qualified guarantees that are attributable to the Computation Period, produces an amount equal to the present Value, using the same discount rate, of the aggregate issue price of the bonds of the issue as of the first day of the Computation Period. In the case of obligations purchased or sold at a substantial discount or premium, the Regulations prescribe certain special Yield calculation rules. For purposes of determining the Yield on an Investment, the Yield computed under the Economic Accrual Method, using the same compounding interval and financial conventions used to compute the Yield on the Series 2017 Bonds. Fees properly allocable to payments for a Qualified Guarantee for an issue are treated as additional interest on that issue. Payments made or received by an issuer under a Qualified Hedge relating to bonds of an issue are taken into account to determine the yield on the issue. The Yield on an Investment allocated to the Series 2017 Bonds is the discount rate that, when used in computing the present Value as of the date the Investment is first allocated to the Series 2017 Bonds, of all unconditionally payable receipts from the Investment, produces an amount equal to the present Value of all unconditionally payable payments for the Investment. The Yield on an Investment shall not be adjusted by any hedging transaction entered into in connection with such Investment unless the Issuer, the Trustee, and the Corporation have received an opinion of Bond Counsel that such an adjustment is permitted by the Regulations. Yield shall be calculated separately for each Class of Investments. Yield Reduction Payment means a payment to the United States with respect to an Investment which is treated as a Payment for that Investment that reduces the Yield on that Investment in accordance with Section (c) of the Regulations. Yield Reduction Payments include Rebate Amounts paid to the United States. Section Reliance on Information. Bond Counsel and the Issuer shall be permitted to rely, after due inquiry, upon the contents of any certification, document or instructions provided pursuant to this Tax Exemption Agreement and shall not be responsible or liable in any way for the accuracy of their contents or the failure of the Corporation to deliver any required information. 13

16 ARTICLE II CERTAIN REPRESENTATIONS BY THE CORPORATION Section Status of the Project. The Corporation hereby represents and warrants for the benefit of the Issuer, the Trustee, and the registered owners and beneficial owners of the Series 2017 Bonds that the description of the sources and uses of funds in the Original Tax Exemption Agreement and the description of the Project set forth in EXHIBIT A-2 to this Tax Exemption Agreement are true and accurate. The Project was completed as contemplated by the Original Tax Exemption Agreement. All Proceeds of the Series 2007 Bonds have been spent. Section Representations and Covenants as to Private Business Use of the Project. The Corporation hereby represents and warrants that: (i) the Project is owned by an Exempt Person; (ii) none of the activities to be conducted by the Corporation with respect to the Project have or will constitute an unrelated trade or business of the Corporation (within the meaning of Section 513(a) of the Code); and (iii) over the life of the Series 2017 Bonds, less than an amount of Proceeds of the Bonds equal to five percent (5%) of the principal amount of the Series 2017 Bonds, reduced by the principal amount of the Series 2017 Bonds applied to the payment of Issuance Costs, will finance property used for a private business use (as such term is used in Section 141(b) of the Code), and less than five percent (5%) of the Series 2017 Bonds will be secured directly or indirectly by any interest in property used for a private business use or will be paid from money derived from a private business use. Section Representations as to Status of the Corporation. The Corporation makes the following representations regarding the status of the Corporation. As of the date of this Tax Exemption Agreement, the Corporation is a nonprofit corporation organized and existing under the laws of the State of Minnesota and is qualified to do business in the State of Minnesota. The Corporation: (i) is an organization described in Section 501(c)(3) of the Code; (ii) is exempt from federal income taxation under Section 501(a) of the Code; (iii) is not a private foundation as defined in Section 509(a) of the Code; (iv) has received a determination letter from the Internal Revenue Service to the effect that clauses (i), (ii), and (iii) are applicable to the Corporation; (v) such determination letter has not been modified, limited, or revoked, and the Corporation is in compliance with all terms, conditions, and limitations, if any, contained in such determination letter; and (vi) the facts and circumstances which form the basis of such determination letter, as represented to the Internal Revenue Service, continue substantially to exist. The Corporation will take no action nor suffer any action to be taken by others which will alter, change or destroy the status of the Corporation as an organization described in Section 501(c)(3) of the Code and exempt from federal income taxation under Section 501(a) of the Code (or any successor sections of a subsequent federal income tax statute or code). Section Change in Ownership of the Project. The Corporation represents that the Corporation will hold title to the Project and the Project will be owned by the Corporation for federal income tax purposes. The Project will be used in pursuit of the purposes for which the Corporation has been determined by the Internal Revenue Service to be described in Section 501(c)(3) of the Code. The Corporation recognizes that a change in use of the Project, or a change in the ownership of the Project, could result in interest on the Series 2017 Bonds 14

17 becoming includable in gross income for federal income tax purposes, gross income to the Corporation from an unrelated trade or business, or the denial of an interest deduction under Section 150 of the Code. This Section 2.04 shall not apply to any portion of the Project which may be sold or otherwise disposed of by the Corporation as a result of the normal wear and tear or obsolescence of such property. Section Economic Life of the Project. The Underwriter has certified that the average maturity of the Series 2017 Bonds is not more than years. The Corporation hereby certifies that the remaining average reasonably expected economic life of the Project is expected to be not less than years, determined as of the Date of Issuance of the Series 2007 Bonds. Therefore, the average maturity of the Series 2017 Bonds does not exceed years, which is 120 percent of the remaining average reasonably expected economic life of the Project. For this purpose, land, if any, was acquired with less than twenty-five percent (25%) of the proceeds of the Series 2007 Bonds and, therefore, was not taken into account in determining the average economic life of the Project. The average reasonably expected economic life of the Project was calculated as set forth in EXHIBIT A-4 of the Original Tax Exemption Agreement entered into in connection with the Series 2007 Bonds was years and years have elapsed since the date of issuance of the Series 2007 Bonds. Section Representations for Purposes of IRS Form Section 149(e) of the Code provides that interest on the Series 2017 Bonds will not be excluded from gross income for federal income tax purposes unless the Issuer provides to the Secretary of the United States Department of the Treasury certain information with respect to the Series 2017 Bonds and the application of the Proceeds of the Series 2017 Bonds. The following representations of the Corporation will be relied upon by the Issuer and Bond Counsel in satisfying this information reporting requirement. Accordingly, the Corporation hereby represents, covenants and warrants to the best of its knowledge, for the benefit of the Issuer, Bond Counsel, and the registered owners and beneficial owners of the Series 2017 Bonds, the truth and accuracy of (b) through (i) below: (a) Issuer s federal employer identification number: (b) With respect to the Series 2017 Bonds: (i) (ii) (iii) (iv) (v) the final maturity date: ; the issue price: $ ; the stated redemption prices at maturity: $ ; the weighted average maturity: years; the Yield: percent. (c) Proceeds of the Series 2017 Bonds used for Accrued Interest: $-0-. (d) Proceeds of the Series 2017 Bonds used for Issuance Costs: $. 15

18 (e) Proceeds of the Series 2017 Bonds used to currently refund the Series 2007 Bonds: $. (h) follows: The federal employer identification numbers of the Corporation is as Maple Grove Hospital Corporation

19 ARTICLE III USE OF BOND PROCEEDS Section Anticipated Use of Proceeds. The Corporation covenants, represents, and warrants for the benefit of the Issuer, the Trustee, and the registered owners and beneficial owners of the Series 2017 Bonds that the proceeds of the Series 2017 Bonds will be used in the manner set forth in EXHIBIT A-2 of this Tax Exemption Agreement. Section Refunding. The Series 2017 Bonds are qualified 501(c)(3) bonds within the meaning of the Code. Proceeds of the Series 2017 Bonds in the amount of $ will be applied to payment of the redemption price of the outstanding Series 2007 Bonds on,

20 ARTICLE IV ARBITRAGE Section Arbitrage Representations and Elections. In connection with the issuance of the Series 2017 Bonds, the Corporation hereby represents, certifies, and warrants as follows: (a) The Corporation will use a reasonable, Consistently Applied Accounting Method to account for Gross Proceeds, Investments and Expenditures for the Series 2017 Bonds. The Corporation shall additionally use a Consistently Applied Accounting Method for allocating Proceeds of the Series 2017 Bonds to Expenditures, subject to the Current Outlay of Cash rule. (b) The Corporation shall not commingle Proceeds of the Series 2017 Bonds with any other funds, except amounts deposited by the Corporation in the Cost of Issuance Fund. (c) In connection with the Series 2017 Bonds, there has not been created or established and the Corporation does not expect that there will be created or established, any sinking fund, pledged fund, or similar fund (other than as specifically identified in the Indenture), including, without limitation, any arrangement under which money, securities, or obligations are pledged directly or indirectly to secure the Series 2017 Bonds or any contract securing the Series 2017 Bonds or any arrangement providing for compensating or minimum balances to be maintained by the Corporation with any owner or credit enhancer of the Series 2017 Bonds. (d) All Funds and Accounts established pursuant to the Indenture will be invested pursuant to the Issuer Tax Certificate and the Investment instructions delivered to the Trustee by the Corporation on the Date of Issuance. (e) The Corporation will not enter into and will not direct the Trustee to engage in any Abusive Arbitrage Devices. (d) The Corporation hereby makes, and the Issuer hereby accepts, the following elections and other choices pursuant to the Regulations with respect to the Series 2017 Bonds: (i) Bond Year; The Corporation elects the bond year stated in the definition of (ii) The Corporation elects to avail itself of all unrestricted yield investments granted in the Regulations for temporary period investments, the investment of money deposited in a reasonably required reserve fund, and minor portion investments; (iii) The Corporation elects to treat the last day of the fifth Bond Year ( ) as the initial Installment Computation Date and the initial rebate payment date. The Corporation elects to treat the last day of each 18

21 subsequent fifth Bond Year as subsequent Installment Computation Dates and subsequent rebate payment dates. The Corporation may change or adjust such dates as permitted by the Regulations. (iv) With respect to the Universal Cap, the Corporation as of the Date of Issuance does not expect that the operation of the Universal Cap will result in a reduction or reallocation of Gross Proceeds of the Series 2017 Bonds and that the Corporation: (A) does not expect to pledge funds (other than those described in the Indenture) to the payment of the Series 2017 Bonds; (B) expects to expend Proceeds of the Series 2017 Bonds within the temporary periods permitted by the Regulations, as set forth in the Issuer Tax Certificate and the Corporation Tax Certificate; and (C) does not expect to retire any of the Series 2017 Bonds earlier than shown in the Yield computations for the Series 2017 Bonds pursuant to this Article IV of this Tax Exemption Agreement. Section Arbitrage Compliance. The Corporation and the Issuer acknowledge that the continued exclusion of interest on the Series 2017 Bonds from gross income of the recipients thereof for purposes of federal income taxation depends, in part, upon compliance with the arbitrage limitations imposed by Section 148 of the Code, including the rebate requirement described in Section 4.04 below. The Corporation and the Issuer hereby agree and covenant that they shall not permit at any time or times any of the proceeds of the Series 2017 Bonds or other funds of the Corporation to be used, directly or indirectly, to acquire any asset or obligation, the acquisition of which would cause the Series 2017 Bonds to be arbitrage bonds for purposes of Section 148 of the Code. The Corporation further agrees and covenants that it shall do and perform all acts and things necessary in order to ensure that the requirements of Section 148 of the Code and the applicable Regulations promulgated thereunder are met. To that end, the Corporation shall retain, at the expense of the Corporation, a Rebate Analyst to make such determinations and calculations as may be necessary in order to ensure that the Corporation takes the actions described in Sections 4.02 through 4.07 hereof with respect to the Investment of Gross Proceeds on deposit in the Funds and Accounts established under the Indenture. If the Corporation fails to retain such a Rebate Analyst, the Trustee shall, at the expense of the Corporation, retain such a Rebate Analyst. The Rebate Analyst shall direct the Trustee to make the required transfers and dispositions described in Section 4.05 hereof, and the Trustee may rely upon information provided by the Rebate Analyst. Section Rebate Fund. There is hereby created a Rebate Fund to be held and administered by the Trustee to provide for the payment of any Rebate Amount to be paid with respect to the Series 2017 Bonds. The Rebate Fund shall not be considered a part of the trust estate created by the Indenture. Section Calculation of Rebate Amount. (a) Section 148(f) of the Code requires the payment to the United States of the Rebate Amount. Except as provided below, the Cost of Issuance Fund and the Rebate Fund, and all other Funds and Accounts treated as containing Gross Proceeds (excluding the Bond Fund), are subject to this rebate requirement. 19