J  O  I  N  T     R  E  S  O  L  U  T  I  O  N

APPROVING THE ISSUANCE OF REVENUE BONDS BY THE RHODE ISLAND ECONOMIC DEVELOPMENT CORPORATION FOR THE FM GLOBAL PROJECT

WHEREAS, The Rhode Island Economic Development Corporation (the "EDC") is a public instrumentality of the State of Rhode Island (the "State"), created by the General Assembly pursuant to Rhode Island General Laws Section 42-64-1 et seq. (as enacted, reenacted and amended, the "Act"); and

WHEREAS, It is the policy of the state to retain existing industries and to induce, encourage and attract new industries through the acquisition, construction, reconstruction and rehabilitation of industrial, manufacturing, recreational, and commercial facilities, as well as transportation, residential, environmental, utility, public service, institutional and civic and community facilities, and to develop sites for such facilities; and

WHEREAS, The Act provides that the EDC shall have the power to purchase, take, receive, lease or otherwise acquire, own, hold, improve, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated; and

WHEREAS, The Act also provides that the EDC shall have the power to sell, mortgage, lease, exchange, transfer or otherwise dispose of or encumber any project, (or in the case of a sale, to accept a purchase money mortgage in connection therewith) or to grant options for any such purposes with respect to any real or personal property or interest therein, all of the foregoing for such consideration as the EDC shall determine. Any lease by the EDC to another party may be for such part of the EDC's property, real or personal, for such period, upon such terms or conditions, with or without an option on the part of the lessee to purchase any or all of the leased property for such consideration, at or after the retirement of all indebtedness incurred by the EDC on account thereof, as the EDC shall determine; and

WHEREAS, The Act authorizes the EDC to borrow money and issue bonds for any of its corporate purposes; and

WHEREAS, Pursuant to Rhode Island General Laws Sections 35-18-3 and 35-18-4, the EDC has requested the approval of the General Assembly of the EDC's issuance of not more than $35,000,000 Taxable Economic Development Revenue Bonds (the "Bonds") for the purpose of providing funds to FM Global for financing the construction, renovation, furnishing and equipping of global administrative headquarters and fire and loss research and development facilities for FM Global and its affiliates (formerly Allendale Insurance Company) in Johnston, Rhode Island and Glocester, Rhode Island (the "Project"); and

WHEREAS, The Project began in 1998; and

WHEREAS, FM Global annual gross payroll for the calendar year 1998 was $23,650,288; and

WHEREAS, The cost of the Project is anticipated to be not less than $50,000,000; and

WHEREAS, In order to qualify as a Project of the EDC entitled to Payroll Rent Credits as set forth below, FM Global must comply with certain requirements to be set forth in a Development Agreement between FM Global and the EDC which shall include the following requirements (the "Requirements"); (i) capital investment of not less than $50,000,000 in its physical plant in Rhode Island no later than December 31, 2005; (ii) a commitment to increase annual gross payroll by $20,000,000 from calendar year 1998 by December 31, 2001; (iii) a commitment to increase annual gross payroll from calendar year 1998 by 100% by approximately June 30, 2002; (iv) maintain an average employee salary of $60,000 or more beginning in calendar 2001 for the duration of the project; (v) a commitment to maintain a minimum of 500 employees in the State; and (vi) a commitment to maintain its corporate headquarters in the State; and

WHEREAS, The financing of the Project will be accomplished through a lease purchase financing between the EDC and FM Global pursuant to a Ground Lease, such Ground Lease to require that FM Global make rent payments in an amount equal to the debt service on the Bonds; and

WHEREAS, The EDC is authorized pursuant to Section 42-64-18 to the Act to create and establish one or more special reserve funds ("capital reserve funds") which fund shall be used solely for the payment of debt service on any bonds; and

WHEREAS, Such capital reserve funds create a moral obligation of the State of Rhode Island; and

WHEREAS, FM Global intends to increase Rhode Island payroll to approximately $100,000,000, which would result in over $2,000,000 in new Rhode Island income tax revenue per year; and

WHEREAS, The EDC, through the use of the capital reserve fund mechanism under the Act, will provide FM Global with Payroll Rent Credits. The Payroll Rent Credits will be used to offset the rental payments required under the Ground Lease, up to a maximum fiscal year obligation of the State of Rhode Island of $858,000; and

WHEREAS, Payroll Rent Credits will be equal to one percent (1%) of new annual gross payroll (adjusted for inflation) above the Requirements, commencing in the fiscal year in which FM Global fulfills the Requirements.

WHEREAS, In the event that not all of the Bond proceeds are used to carry out the specified Project, the EDC will use any remaining funds to pay debt service on the Bonds;

NOW, THEREFORE, BE IT RESOLVED,

THAT this General Assembly hereby approves the EDC's issuance of not more than $35,000,000 Bonds and the issue of the capital reserve fund mechanism for the purposes outlined herein;

THAT the Bonds will be special obligations of the EDC payable from rental payments under the Ground Lease in an amount equal to the debt service on the bonds and thus the EDC's maximum liability will be limited to rental payments received under the Ground Lease. Total debt service on the Bonds is estimated to be $3,573,500 per year or $71,470,000 in the aggregate based on level debt service, an average interest rate of 8.15% and a 20 year maturity;

THAT the Bonds will not constitute indebtedness of the State or any of its subdivisions or a debt for which the full faith and credit of the State or any of its subdivisions is pledged except to the extent that the State pays the Payroll Rent Credits in an amount not to exceed $858,000 per year subject to annual budget appropriations; and

BE IT FURTHER RESOLVED,

THAT this Joint Resolution shall take effect immediately upon its passage by this

General Assembly, provided that the delivery of the Bonds shall be not later than one (1) year from the date of such passage.