EDA Resolution 2007-1RESOLUTION NO.2007-1
REVENUE BOND RESOLUTION
$3,595,000 PUBLIC FACILITY LEASE REVENUE BONDS, SERIES 2007A
(CITY OF OTSEGO,1vIINNESOTA
LEASE WITH OPTION TO PURCHASE PROJECT)
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF OTSEGO, MINNESOTA
ADOPTED: February 26, 2007
1989876v3
TABLE OF CONTENTS
Page
ARTICLE ONE DEFINITIONS, EXI-EBITS, LEGAL AUTHORIZATION AND
FINDINGS.................................................................................................. l
1-1. Definitio n s ..............................................................................................................1
1-2. Exhibits...................................................................................................................5
1-3 . Legal Authorization................................................................................................5
1-4. Findings..................................................................................................................5
ARTICLETWO BONDS.......................................................................................................7
2.1. Authorized Amount and Form of Bonds................................................................7
2-2. Initial Issue............................................................................................................15
2-3. Execution..............................................................................................................15
2.4.. Delivery of Initial Issue.....................:..................................................................15
2.5. Issuance of Additional Parity Bonds....................................................................16
2-6. Mutilated, Lost or Destroyed Bonds. . 0 6 0 0 0 a a W a 6 a & 9
2.7. Ownership of Bonds.............................................................................................17
2.8. Delivery of Temporary Bond................................................................................17
24 Registration, Transfer and Exchange of Bonds....................................................17
240. Interest Rights Preserved; Dating of Registered Bonds.......................................18
241. Other Revenue Bonds...........................................................................................18
2.12. Book -Entry Only System.. a a a 0 p 0 0 0 0 0 a W 0 0 a 0 0 * 0 0 0 0 0 a a a * 0 a a * 0 0 0 0 6 a & a 0 9 0 9 6 0 a 6 b a a a W * 0 W 0 0 0 6 0 0 a a 0 6 0 0 0 0 0 0 1 6 18
243. Termination of Book -Entry Only System.... 0 a a * 0 0 a 1 9 0 & 0 6 W 9
244. Insurer's Additional Requirements Relating to the Paying Agent .......................20
ARTICLE THREE REDEMPTION OF BONDS BEFORE MATURITY .............................21
34. Redemption...........................................................................................................21
3.2. Notice of Redemption...........................................................................................22
3-3. Procedure for Redemption....................................................................................22
3.4. Cancellation..........................................................................................................22
ARTICLE FOUR GENERAL COVENANTS......................................................................23
44. Payment of Principal and Interest.................................................................... W 0 0 0 &23
4-2. Performance of and Authority for Covenants.......................................................23
4-3. Title and Instruments of Further Assurance.........................................................23
44. Taxes, Assessments and Charges.........................................................................23
4-5. Maintenance and Repair.......................................................................................23
4-6. Recording and Filing............................................................................................24
4-7. Books and Records...............................................................................................24
44. Names of Bondholders.........................................................................................24
4-9. Nature of Security.................................................................................................24
4-10. Disposition of Pledged Funds...............................................................................24
4-11. Enforcement of Covenants...................................................................................25
4-12. Covenant to Lease, Sell and Operate....................................................................26
4-13. Acceleration..........................................................................................................27
4-14. Tax Exempt Status of Bonds; Designation of QTEO...........................................27
4-15. Conditions to Authority Action............................................................................28
19898760 -i-
TABLE OF CONTENTS
(continued)
ARTICLE FIVE FUNDS AND ACCOUNTS.....................................................................29
54. Deposit of Bond Proceeds....................................................................................29
5-2. Bond Fund............................................................................................................29
5-3. Deposit of Funds with Paying Agent....................................................................29
54. Priority of Payment and Application of Moneys... 0 6 w a w 6 & 0 0 0 6 0 6 0 0 0 0 0 0 6 0 6 s 0 a 0 * 0 0 0 0 0 0 w 0 0 & 0 0 a a 0 a a 6 0 630
ARTICLE SIX POSSESSION, USE AND RELEASE OF PROPERTY .........................32
64. Possession and Use...............................................................................................32
6.2. Easement for Access or Utility Service................................................................32
6-3. Release of Encumbered Equipment......................................................................32
64. Release of Unimproved Land...............................................................................32
ARTICLE SEVEN INVESTMENTS...............* 0 0 0 0 0 0 . 0 0 a 6 6 s a & 0 & a & & 0 & 0 0 & 0 a & 0 0 0 P 0 0 0 0 0 a a 0 a a a a 0 & w 6 a 6 0 6 0 0 6 * 0 0 0 0 a 0 6 6 633
74. Investments by Authority....................................................................................a33
7-2. Return on Investments..........................................................................................33
ARTICLE EIGHT DISCHARGE OF OBLIGATIONS TO BONDHOLDERS ....................34
84. Conditions of Discharge.......................................................................................34
8-2. Payment of Bonds.................................................................................................34
8-3. Cancellation of Surrendered Bonds......................................................................34
84. Defeasance Requirements of Bond Insurer..........................................................35
ARTICLE NINE SUPPLEMENTAL AND AMENDATORY RESOLUTIONS..66.0608606066036
94. Supplemental and Amendatory Resolutions Not Requiring Consent of
Bondholders.........................................................................................................036
9-2. Supplemental and Amendatory Resolution Requiring Consent
ofBondholders.......................................................................................................3 6
9-3. Paying Agent's Discretion....................................................................................37
ARTICLE TEN AMENDMENT TO LEASE.....................................................................3 8
10-1. Amendments Without Bondholder Consent.........................................................38
10-2. Amendments Requiring Bondholder Consent.......................................................38
ARTICLE ELEVEN MISCELLANEOUS.................................................................................39
114. Consent of Bondholders.......................................................................................39
11-2. Notice of Amendments.........................................................................................3 9
11-3. Severability...........................................................................................................39
114. Authentication of Transcript......... ... 0600*60 6088 W0090000 0 Popp 0000*000 be &*of &*as*%* 06 *6 0 0* wpos 00*0 0066*0 66040
11-5. Limitation of Liability..........................................................................................40
11-6. Approval of Lessee...............................................................................................40
11-7. Authorization to Execute Lease, Ground Lease and Incidental Documents ........40
ARTICLE TWELVE ADDITIONAL BOND INSURER REQUIREMENTS ...........................41
12-1. Bond Insurer as Third Party Beneficiary..............................................................41
12-2. Control Rights.......................................................................................................41
12-3. Consent Rights of Bond Insurer...........................................................................41
124. Payment Procedure Under the Policy...................................................................41
19898760 -11-
REVENUE BOND RESOLUTION
BE IT RESOLVED by the Economic Development Authority of the City of Otsego,
Minnesota.
ARTICLE ONE
DEFINITIONS, EXHIBITS, LEGAL AUTHORIZATION AND F1IVDINGS
1-l. Definitions. The term used herein, unless the context hereof shall require
otherwise shall have the following meanings, and any other terms defined in the Lease shall have
the same meanings when used herein as assigned to them in the Lease unless the context or use
thereof indicates another or different meaning or intent.
Act: collectively the Issuer Powers Act and the Lessee Powers Act as amended from
time to time.
Additional Bonds: any additional Bonds issued pursuant to the terms and conditions of
Section 2-5.
Authenticating Agent: the Paying Agent.
Authori :the Economic Development Authority of the City of Otsego, Minnesota, and
any successor public entity.
Beneficial Owner: means the person for which a DTC Participant holds an interest in the
Bonds as shown on the books and records of the DTC Participant.
Bond Closing: the date on which there is delivery of and payment for the Bonds.
Bond Counsel: Briggs and Morgan, Professional Association, of Saint Paul and
Minneapolis, Minnesota, or any other attorney designated by the Authority duly admitted to
practice law before the highest court of any state and nationally recognized in the field of
municipal finance, and any opinion of Bond Counsel shall be a written opinion of such Counsel.
Bond Fund: the Bond Fund created under Section 5-2.
Bond Insurer: Assured Guaranty Corp., or any successor or assign.
Bond Re ig ster: the register maintained by the Bond Registrar pursuant to Section 2-9.
Bond Re igistrar: Northland Trust Services, Inc., in Minneapolis, Minnesota and any duly
appointed successor Bond Registrar.
Bondholder: any Holder of a Bond.
Bonds: the Public Facility Lease Revenue Bonds, Series 2007A (City of Otsego,
Minnesota, Lease With Option to Purchase Project).
1989876v3 4-
Business Day: any day other than a Saturday, Sunday, legal holiday or a day on which
banking institutions in the City were the principal office of the Paying Agent is located are
authorized by law or executive order to close.
Cede & Co.: means, initially, Cede & Co., as nominee of DTC and any successor or
subsequent such nominee designated by DTC respecting DTC's functions as book -entry
depository for the Bonds.
Cam: the City of Otsego, Minnesota.
Condemnation: requison or taking by governmental authority or by a person, firm or
corporation acting under governmental authority and a conveyance made under threat of
Condemnation provided such conveyance is made with the approval of the Authority, which
approval shall not be unreasonably withheld, and Condemnation award shall include payment for
property taken or requisitioned or conveyed under threat of Condemnation.
County Recorder: the County Recorder for Wright County.
DTC: means Depository Trust Company, New York, New York, a limited purpose trust
company organized under the laws of the State of New York, or any successor book -entry
securities depository for the Bonds appointed pursuant to Section 2.12.
DTC Participant: means those broker -dealers, banks and other financial institutions from
time to time for which DTC holds Bonds or Securities as depository.
Financial Journal: Northwestern Financial Review or any other newspaper or journal
devoted to financial news circulated in the English language in Minneapolis and St. Paul,
Minnesota,
Ground Lease: the Ground Lease Agreement dated as of March 1, 2007, between the
Lessee as Lessor, and the Authority as Lessee, whereby the Lessee leases the Land to the
Authority.
Holder: the person in whose name any Bond is registered, as shown on the Bond
Register maintained by the Bond Registrar.
Independent: any person who is not a full time employee of the Authority or the Lessee.
Independent Accountant: a certified public accountant or firm of certified public
accountants registered, Independent and qualified to practice as such under the laws of
Minnesota, and not regularly employed by the Authority or the Lessee except to perform
independent audits of the books and records of either or both of them or to make other similar
periodic reviews.
Independent Counsel: an attorney or firm of attorneys designated by the Authority,
Independent and duly admitted to practice law before the highest court of any state.
1989876v3 -2-
Independent Engineer: an architect or engineer or architectural or engineering firm
designated by the Authority, Independent, and registered and qualified to practice such
profession under the laws of Minnesota.
Internal Revenue Code: the Internal Revenue Code of 1986, as amended.
Issuer Powers Act. Minnesota Statutes, Section 469.090 through 469.1082, as from time
to time amended.
Land: the parcel or parcels or other interests in real estate leased to the Authority under
the Ground Lease and described in Exhibit A to the Lease.
Lease: the Lease with Option to Purchase Agreement dated March 1, 2007, whereby the
Authority proposes to lease, or sublease as to the Land, the Project to the Lessee, a form of
which Lease is on file in the office of the Authority.
Lease.
Lease Payments: Rental Payments payable to the Authority under Section 5.1 of the
Lessee: the City of Otsego, Minnesota, or any successor to its functions.
Lessee Powers Act: Minnesota Statutes, Section 469.041 and 465.71, as from time to
time amended.
Net Proceeds: with respect to any property insurance payment or Condemnation award,
the amount remaining after deduction of all expenses reasonably incurred by the Authority in the
collection thereof, including but not limited to attorneys' fees, witness fees and any extraordinary
expenses of the Authority.
Net Revenues: all sums realized from the operation of all or any part of the Project by
the Authority after deducting all necessary reasonable current costs of operation of the Project
incurred by the Authority determined in accordance with accepted accounting practice,
including, but without limitation, administrative expenses incurred solely with respect to the
operation of the Project; current maintenance and repairs necessary to maintain the Project in
adequate repair and operating condition; labor and the cost of material and supplies necessarily
used for such current operation, maintenance and repairs; insurance of the premises against risks
and in amounts for which insurance is usually carried by prudent owners of like properties,
including but not limited to insurance required by the Lease, insurance of the Authority and its
officers and employees against liability for damage to persons and property incurred in
connection with such operation, in amounts such as are usually carried by prudent operators of
similar enterprises, or in lesser amounts to which Authority's liability may be limited by law; and
charges for the accumulation of appropriate reserves for the payment of operating costs which
recur periodically but in varying amounts. The operating costs of the Project shall also include
the cost of any renewal, replacement or improvement of or additions to capital assets incurred by
the Authority to facilitate the lease, sale or other disposition of the Project after any termination
of the Lease. The operating costs of the Project shall not, however, include any allowance of
payment for depreciation; any portion of the salary or wages paid to any officer or employee of
the Authority, except such portion as represents reasonable compensation for the performance of
19898760 -3-
duties necessary exclusively for the operation of such Project, and not for other operations of the
Authority; or any liability incurred by the Authority or any officer or employee for damage to
persons or property, in excess of the amount of such liability compensated by insurance. The
Net Revenues from the operation of the Project constitute all of the revenues from time to time
received from the operation of the Project, including any improvements thereto, in excess of said
operating costs incurred and payable or to become payable within one month and any reasonable
reserve therefor. In addition Net Revenues shall include all sums realized from the sale of all or
any part of the Project after deducting all necessary reasonable costs of the sale incurred by the
Authority.
Official Statement: the Official Statement dated March 26, 2007, and the Addendum
thereto, prepared in connection with the Bonds.
Outstanding: used as any particular time with reference to Bonds, means all Bonds
theretofore executed and delivered by the Authority under this Resolution except: (i) Bonds
theretofore canceled by the Authority or surrendered to the Authority for cancellation; (ii) Bonds
Fully paid or otherwise discharged under Article Eight; and (iii) Bonds in lieu of or in
substitution for which other Bonds shall have been executed and delivered by the Authority
pursuant to the terms of Section 2-6 pertaining to replacement of Bonds.
Paying Agent: Northland Trust Services, in Minneapolis, Minnesota, or any other
bank designated pursuant to this Resolution as the agent of the Authority to receive and disburse
the principal and interest on the Bonds.
Polic The financial guaranty insurance policy issued by the Bond Insurer with respect
to the Bonds.
Project Acquisition Fund: the Project Acquisition Fund described in Section 5-1.
Purchaser: Northland Securities, Inc. in Mimieapolis, Minnesota.
Representation Letter: means such letter of representations to DTC or other
documentation required by DTC as a condition to its acting as book -entry depository for the
Bonds together with any replacement thereof or amendment or supplement thereto (and
including any structured procedures or policies referenced therein or applicable thereto)
respecting the procedures and other matters relating to DTC's role as book -entry depository for
the Bonds.
Representative: the President of the Authority or the Mayor of the Lessee, or any other
person at any time designated to act on behalf of the Authority or the Lessee as the case may be,
as evidenced by a written certificate furnished to the other party containing a specimen signature
A such person and signed for the Authority by its President or for the Lessee by its Mayor.
Resolution: this resolution of the Authority. All references in this Resolution to
designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections
and subdivisions of this instrument as originally executed. The words "herein," "hereof' and
"hereunder" and other words of similar import refer to this Resolution as a whole not to any
particular Article, Section or subdivision.
19898760 -4-
Sinking Fund Installment: the amount of money required pursuant to this Resolution to
be paid on any Sinking Fund Installment Date toward the mandatory redemption of Term Bonds.
2008.
Sinking Fund Installment Date: any particular December 1 in the years 2007 through
Term Bonds: the Bonds maturing on December 1, 2008.
1-2. Exhibits. The following Exhibits are attached to and by reference made a part of
this Resolution.
Exhibit A: legal description of the Land; and
Exhibit B: description of the Project.
1-3. Legal Authorization. The Authority is a body corporate and politic organized and
existing under the Issuer Power Act, and is authorized under said laws to initiate the Project
herein referred to, and to issue and sell bonds for that purpose in the manner and upon the terms
and conditions set forth in the Issuer Power Act, and in this Resolution.
1-4. Findings. The Authority has heretofore determined, and does hereby determine,
as follows:
(1) the Authority is authorized by the Issuer Powers Act to acquire the Land for the
public purposes expressed in the Issues Powers Act, provided for installation and construction of
the Project Equipment and Improvements therefor and to lease, or as for the Land sublease, the
Project upon the terms set forth thereon.
(2) the Authority has made the necessary arrangements with the Lessee, for the
establishment within the City of a Project consisting of property to be used as a public works
facility, all as more fully described in the Lease and which will be of the character and
accomplish the purposes provided by the Issuer Powers Act; and the Authority has by this
Resolution authorized the Project and execution of the Lease, specifying the terms and
conditions of the construction and equipping of the Project and of the leasing, or as for the Land
subleasing, of the same to the Lessee,
(3) in authorizing the Project the Authority's purpose is, and in its judgment the effect
thereof will be, to promote economic development of the City and the public welfare by
providing publicly owned facilities required for governmental services needed for: the
attraction, encouragement and development of economically sound industry so as to prevent, so
far as possible, the emergence of blighted and marginal lands and areas of chronic
unemployment; the development of industry to use the available resources of the community in
order to retain the benefit of the community's existing investment in educational and public
service facilities and to halt the movement of talented, educated personnel of mature age to other
areas, thus preserving the economic and human resources needed as a base for providing
governmental services and facilities; the provision of accessible employment opportunities for
residents in the area; and the expansion of an adequate tax base of the City to finance the
19898760 _5_
increase in the amount and cost of governmental services, including educational services for the
School District of the City;
(4) the amount estimated to be necessary to finance the Cost of the Project will
require the issuance, sale and delivery of Bonds in the aggregate principal amount of $3,595,000
as hereinafter provided;
is desirable, feasible and consistent with the objects and purposes of the Issuer
Powers Act to issue the Bonds, for the purpose of acquiring, constructing, improving and
installing the Project,
(6) the Bonds and the interest thereon do not constitute an indebtedness of the
Authority or the City within the meaning of any constitutional or statutory limitation and do not
constitute or give rise to a pecuniary liability or a charge against the general credit or taxing
powers of the Authority or the City and neither the faith and credit nor the taxing powers of the
Authority or the City is pledged for the payment of the Bonds or interest thereon; and
(7) the Purchaser has offered to purchase the Bonds in accordance with the terms and
conditions of this Resolution.
1989876v3 -(-
ARTICLE TWO
Authorized Amount and Form of Bonds. Bonds issued pursuant to this
Resolution shall be in substantially the form set forth herein, with such appropriate variations,
omissions and insertions as are permitted or required by this Resolution, and in accordance with
the further provisions of this article, and the total principal amount of Bonds that may be
outstanding hereunder is expressly limited to $3,595,000 unless Additional Bonds are authorized
as provided in Section 2-5 or duplicate Bonds are issued pursuant to Section 2-6. The Bonds
shall be in substantially the following form:
UNITED STATES OF AMERICA
STATE OF M NNESOTA
COUNTY OF WRIGHT
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF OTSEGO
Public Facility Lease Revenue Bonds, Series 2007A
(City of Otsego, Minnesota, Lease With Option to Purchase Project)
No. R - $
Interest Rate Maturity Date Date of Original Issue CUSIP
December 1, 20_ March 1, 2007
REGISTERED OWNER: CEDE & CO.
THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF OTSEGO, a
public body corporate and politic and a political subdivision in the County of Wright and State of
Minnesota (the "Authority"), for value received, hereby promises to pay, but only from its 2007
Public Facility Lease Revenue Bond Fund (the 'Bond Fund"), to Cede & Co. or registered
assigns, the principal amount specified above, on the maturity date specified above upon the
presentation and surrender hereof, and to pay to the registered owner hereof interest on such
principal sum from the Bond Fund at the interest rate specified above from March 1, 2007, or the
most recent interest payment date to which interest has been paid or duly provided for, as
specified below. Interest shall be payable semiannually on June 1 and December 1 of each year,
commencing on December 1, 2007 until the principal sum is paid. Principal and interest are
payable in lawful money of the United States of America at the office of Northland Trust
Services, Inc., in Minneapolis, Minnesota (the 'Bond Registrar"), as Paying Agent and Bond
Register or any successor named pursuant to the terms of the Bond Resolution hereinafter
described. Interest shall be paid on each June 1 and December I interest payment date by check
or draft mailed to the person in whose name this Bond is registered at the close of business on
19898760 -7-
the fifteenth day of the preceding calendar month (whether or not a business day) at the address
set forth on the registration books maintained by the Bond Registrar. Any such interest not
punctually paid or provided for will cease to be payable on such regular record dates and such
defaulted interest may be paid to the person in whose name this Bond shall be registered at the
close of business on a special record date for the payment of such defaulted interest established
by the Authority pursuant to the Bond Resolution.
So long as this Bond is immobilized in global book -entry form registered in the name of
the nominee of DTC (as defined in the Bond Resolution) payments of principal of, premium, if
any, and interest on this Bond shall be made as provided in the Representation Letter, as defined
in the Bond Resolution and surrender of this Bond shall not be required for payment of the
redemption price upon a partial redemption of this Bond or for optional or mandatory purchases
of this Bond or portions thereof. Until termination of the book -entry only system pursuant to the
Bond Resolution, Bonds may be registered only in the name of DTC or its nominee, and
notwithstanding express provisions of this..Bond providing other or contrary results, the
Representation Letter (which includes the applicable practices and procedures of DTC) shall
apply to this Bond.
Optional Redemption. Bonds maturing on and after December 1, 2016, are subject to
redemption and prepayment, in whole or in part, and if in part, of any maturity designated by the
Lessee and by lot within a maturity, and in integral multiples of principal amount of $5,000, at
the option of the Authority acting at the direction of the Lessee, on December 1, 2015, and on
any date thereafter at a redemption price equal to par plus accrued interest to the date of
redemption.
Extraordinary Redemption of Bonds. If (a) all or any part of the Project is lost, stolen,
condemned, destroyed or damaged beyond repair, (b) Lessee fails to notify the Authority of
which course of action Lessee plans to take as required under Section 6.6 of the Lease and (c)
Lessee pays to the Authority a sum equal to the Casualty Value of the Project under Section 6.6
of the Lease, on the first day of the month next succeeding such payment before which month
timely notice of redemption can be given under Section 3-2 of the Bond Resolution, all Bonds
shall be called for and are subject to redemption and prepayment in whole and not in part, at a
redemption price equal to par plus accrued interest. If an Event of Default should occur and
subsist under the Lease or if the Lease should be terminated on account of a Non -appropriation
pursuant to Section 4.2 of the Lease, all Bonds then outstanding may, at the option of the
Authority, become or be declared due and payable before the stated maturity thereof, together
with interest accrued thereon, all as provided in the Bond Resolution.
Mandatory Redemption. Bonds maturing on December 1, 2008, are subject to mandatory
prepayment and redemption by lot on December 1 in the years and principal amounts stated
below, at the principal amount thereof plus accrued interest to the date fixed for redemption:
1989876v3 -$-
Mandatory Redemption Schedule
December 1, 2008 Term Bond (inclusive)
Year Principal Amount
2007 $70,000
2008 (maturity) 95,000
oI , if less than such amount is then outstanding, an amount equal to the aggregate principal
amount of the Bonds then outstanding.
The Authority may, at its option to be exercised on or before the thirtieth day next
preceding any date specified in the Mandatory Redemption Schedule above, deliver to the Bond
Registrar written notice, which shall (i) specify a.principal. amount of such Term Bonds
previously redeemed (otherwise than pursuant to the above Mandatory Redemption Schedule) or
purchased and cancelled by the Bond Registrar and not theretofore applied as a credit against any
redemption of Bonds pursuant to the above Mandatory Redemption Schedule, and (ii) instruct
the Bond Registrar to apply the principal amount of such Term Bonds so delivered or previously
redeemed or purchased and cancelled for credit against the principal installments to be prepaid
pursuant to the Mandatory Redemption Schedule and selected by the Authority. Each such Term
Bond so delivered or previously redeemed or purchased and cancelled shall be credited by the
Bond Registrar against the principal installments to be prepaid pursuant to the Mandatory
Redemption Schedule and selected by the Authority.
Prior to the date on which any Bond or Bonds are directed by the Authority to be
redeemed in advance of maturity, the Authority will cause notice of the call thereof for
redemption identifying the Bonds to be redeemed to be mailed to the Paying Agent and all
Bondholders, at the addresses shown on the Bond Register. All Bonds so called for redemption
will cease to bear interest on the specified redemption date, provided funds for their redemption
have been duly deposited.
To effect a partial redemption of Bonds having a common maturity date, the Bond
Registrar shall assign to each Bond having a common maturity date a distinctive number for each
$5,000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using
such method of selection as it shall deem proper in its discretion, from the numbers assigned to
the Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of
such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were
assigned numbers so selected; provided, however, that only so much of the principal amount of
such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for
each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be
surrendered to the Bond Registrar (with, if the Authority or Bond Registrar so requires, a written
instrument of transfer in form satisfactory to the Authority and Bond Registrar duly executed by
the Holder thereof or the Holder's attorney duly authorized in writing) and the Authority shall
execute (if necessary) and the Bond Registrar shall authenticate and deliver to the Holder of such
Bond, without service charge, a new Bond or Bonds having the same stated maturity and interest
rate and of any authorized denomination or denominations, as requested by such Holder, in
1989876v3 -9-
aggregate principal amount equal to and in exchange for the unredeemed portion of the principal
of the Bond so surrendered.
Acceleration of Bonds. This Bond is one of an issue in the aggregate principal amount of
$3,595,000, all of like date of original issue and tenor, except as to number, interest rate,
maturity, denomination and redemption privilege, issued iith n accordance wan authorizing
resolution (the 'Bond Resolution") duly adopted by the Authority, setting forth the terms upon
which the Bonds are issued and describ the security therefor, to which Bond Resolution
reference is made for a full description of s ch terms, conditions and security. The Bonds are
issued by the Authon for the purpose of cing a project consisting of the construction and
equipping of a muni ipal aquatic ce the "Project") pursuant to Minnesota Statutes, Sections
469.090 through 4 .1082 incju g the payment of all expenses incidental thereto, and the
leasing of the Proje the provisions of a Lease With Option to Purchase Agreement (the
"Lease") between the Authority and the City of Otsego, Minnesota (the "Lessee"), dated March
1, 2007. If an Event of Default should occur and subsist under the Lease or if the Lease should
be terminated on account of a Non -appropriation pursuant to Section 4.2 of the Lease, all Bonds
then outstanding may, at the option of the Authority, become or be declared due and payable
before the stated maturity thereof, together with interest accrued thereon, all as provided in the
Bond Resolution.
The Bonds are equally and ratably secured by the Bond Resolution, and reference is
made to the Lease and Bond Resolution and amendments thereof for a description of the
revenues pledged to secure the payment of the Bonds, the nature and extent of the security
thereby created, the rights of the registered owners of the Bonds, the rights, duties, immunities
and obligations of the Authority and the rights, duties and obligations of the Lessee. The
obligation of the Lessee under the Lease to make Rental Payments sufficient to pay the principal
of and interest on the Bonds when due is a binding and enforceable obligation of the Lessee, but
is subject to a right to terminate the Lease at the end of any fiscal year during its term, as more
fully provided in the Lease.
The Bonds are issued pursuant to and in full compliance with the Constitution and laws
of the State of Minnesota, and pursuant to the Bond Resolution, which authorized the Project and
the issuance of the Bonds as special obligations payable solely from revenues derived by the
Authority from the Project. Rental Payments are to be paid to the Authority and credited to the
Bond Fund as a special trust fund account created by the Authority and have been and are hereby
pledged for that purpose. No Additional Bonds payable from the Bond Fund may be issued on a
parity with the Bonds except as provided in the Bond Resolution. The Bonds do not constitute
an indebtedness of the Authority or the Lessee within the meaning of any constitutional
provision or statutory limitation and do not constitute nor give rise to a pecuniary liability or
moral obligation of the Authority or the Lessee or, to the extent permitted by law, any of their
respective officers, employees and agents, nor a charge against their general credit or taxing
powers of the Authority or the Lessee; and neither the full faith and credit nor the taxing powers
of the Authority or the Lessee is pledged for the payment of the Bonds or interest thereon.
No Holder of any Bond issued under the Bond Resolution shall have the right to institute
any proceedings, judicial or otherwise, for the enforcement of the covenants therein contained
without the written concurrence of the Holders of not less than twenty-five percent in aggregate
19898760 -1 Q-
principal amount of such Bonds which are at that time outstanding, but the Holders of such
principal amount of Bonds may, either at law or in equity, by suit, action, mandamus, application
for appointment of a receiver or other proceeding, protect and enforce the rights of all Holders of
such Bonds, and may enforce the performance of all covenants and duties of the Authority and
its officials as set forth in the Bond Resolution, including, but not limited to, the collection and
proper segregation and application of all funds described in the Bond Resolution. The Holders
of fifty-one percent in principal amount of such outstanding Bonds shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available to the
Bondholders and for the exercise of any power conferred on them, and the right to waive a
default in the performance of any such covenant, and its consequences, except a default in the
payment of the principal of or interest on any Bond when due or required to be redeemed.
However, nothing herein shall impair the absolute and unconditional right of the Holder of each
such Bond to receive payment of the principal thereof and interest thereon at the times, in the
manner and from the sources provided in the Bond Resolution, and to institute suit for the
enforcement of any such payment.
This Bond has been designated by the Authority as a "qualified tax-exempt obligation"
For purposes of Section 265(b) (3) of the Internal Revenue Code of 1986, as amended.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that the Authority has duly
created the Bond Fund and has pledged and appropriated thereto certain rentals from the Project
referred to in the Lease hereinafter defined; that it will promptly give all notices and do all other
acts and things required under the terms of the Lease for the performance of its obligations and
for the enforcement of all obligations of the Lessee and for the collection of all rentals when due;
that this Bond is secured by a pledge of and first lien upon the rentals from the Project as more
fully provided in the Bond Resolution authorizing the Bonds and the Lease, and no additional
revenue bonds or other obligations will be issued and made payable from such rentals and Net
Revenues on a parity herewith except as specifically provided in the Bond Resolution; that all
acts, conditions and things required by the Constitution and laws of the State of Minnesota to be
done, to exist, to happen and to be performed in order to make this Bond a valid and binding
special obligation of the Authority according to its terms have been done, do exist, have
happened and have been performed in regular and due form, time and manner as so required; and
that the issuance of this Bond does not cause the special or general indebtedness of the Authority
to exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, the Economic Development Authority of the City of Otsego,
Minnesota, has caused this Bond to be executed on its behalf by the facsimile signatures of its
President and Executive Director/Secretary, authenticated by the manual signature of a
representative of Northland Trust Services, Inc., as Authenticating Agent, the seal of the
Authority having been intentionally omitted as permitted by law and has caused this Bond to be
dated as of March 1, 2007.
Facsimile Signature President
Attest:
Facsimile Signature Executive Director/Secretary
1989876v3 -11-
NORTHLAND TRUST SERVICES, INC.
Minneapolis, Minnesota
as Authenticating Agent
STATEMENT OF INSURANCE
Assured Guaranty Corp. ("Assured Guaranty"), aMaryland-domiciled insurance
company, has delivered its financial guaranty insurance policy (the "Policy") with respect to the
scheduled payments of principal of and interest on this Bond to Northland Trust Services, Inc., in
Minneapolis, Minnesota, as paying agent on behalf of the holders of the Bonds (the "Paying
Agent"). Such policy is on file and available for inspection at the principal office of the Paying
Agent and a copy thereof may be obtained from Assured Guaranty or the Paying Agent. All
payments required to be made under the Policy shall be made in accordance with the provisions
thereof, The owner of this Bond acknowledges and consents to the subrogation rights of Assured
Guaranty as more fully set forth in the Policy.
1989876v3 _ 12_
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall be
construed as though they were written out in fall according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by entireties
U TEN - as joint tenants with right of survivorship and not as tenants in common
UTA A -
(Gust)
under the
todian for
as cus
(Minor)
Uniform Transfers to Minors Act
(State)
FORM OF ASSIGNMENT
FOR VALUE RECENED, ("Transferor"), the undersigned,
hereby sells, assigns and transfers unto (Social Security or Federal Employer
Identification No. ) the Bond and all rights thereunder, and hereby
irrevocably constitute and appoints ("Transferee") as attorney to
transfer the Bond on the books kept for registration thereof, with full power of substitution in the
premises; provided, however, that if any default with respect to the Bond shall have occurred to
or to the date of this transfer, the Bond shall not be registered and the Transferee shall be entitled
to receive payment with respect to the Bond upon presentation thereof as assignee of the
Transferor.
Date:
NOTICE: No transfer will be registered and no new Bond
will be issued in the name of the Transferee, unless the
signatures) to this assignment correspond(s) with the
name(s) as it (they) appear(s) upon the face of the Bond in
every particular, without alteration or enlargement of any
change whatever and the Social Security or Federal
Employer Identification numbers of the settlor and
beneficiaries of the trust, the date of the trust and the name
of the trustee should be supplied.
Signature Guaranteed:
NOTICE: Signatures) must be granted by a
member firm of the New York Stock Exchange
or a commercial bank or a trust company or any other
"Eligible Guarantor Institution" as defined in
17 CFR 240.17 Ad45(a)(2).
1989876v3 -13-
PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the dates) and in the amounts) asfollows:
Amount
Authorized Signature
of Holder
1989876v3 -14-
2-2. Initial Issue. The Bonds initially issued in the aggregate principal amount of
$3,595,000, shall be dated March 1, 2007, as the original issue date, shall be in the denomination
of $5,000 each or any integral multiple thereof (as requested by the Purchaser), numbered
consecutively from R-1 upwards and shall mature in order of bond numbers on December 1 in
the years and amounts set forth below, with Bonds maturing in such years and amounts bearing
interest from the original issue date until paid or discharged as herein provided at the annual rate
set forth opposite such years and amounts, respectively:
Year Amount Rate Year Amount Rate
2008 $165,000 3.75% 2014 $375,000 4.00%
2009 2005000 4.00 2015 4155000 4.00
2010 295,000 4.00 2016 575,000 4.00
2011 115,000 4.00 2017 600,000 4.00
2012 125,000 4.00 2018 600,000 4.00
2013 130,000 4.00
The Bonds shall be subject to redemption and prior payment at the times and prices and in the
amounts and manner provided in Article Three. Interest on each Bond shall be payable
semiannually on June 1 and December 1 of each year, commencing December 1, 2007, until the
Bond is fully paid or discharged. Both principal and interest shall be payable by check or draft
mailed to the Holder of the Bonds by the Bond Registrar at the last address thereof as shown on
the Bond Register on the fifteenth day of the calendar month next preceding the interest payment
date (whether or not a Business Day) or, if on any interest payment date there are insufficient
funds to pay in full the interest then due on the Bonds, to the Holder as of a special record date
established by the Authority.
2-3. Execution. Each Bond shall be executed on behalf of the Authority by the manual
signature of the Authority's President and by the printed, engraved or lithographed facsimile
signature of the Authority's Executive Director/Secretary; provided that each Bond may at the
Erection of the President of the Authority be attested by the manual signature of the Executive
Director/Secretary or of a person authorized to sign on behalf of the Paying Agent, hereby
designated for such purpose as authenticating agent, in which event the signature of the President
on the Bond may be a facsimile signature. In the event of the disability or resignation or other
absence of either officer, the Bond may be signed by the manual or facsimile signature, as the
case may be, of an officer who under the bylaws of the Authority may act in behalf of the absent
or disabled officer. The Bonds may be sealed with the seal of the Authority; provided the
Authority's seal may be a printed facsimile and provided further that the seal may be omitted. In
case any officer whose signature shall appear on the Bonds shall cease to be such officer before
delivery of the Bonds, the signature or facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if the officer had remained in office until delivery.
24. Delivery of Initial Issue. Before delivery of the Bonds there shall be filed with
the Executive Director/Secretary of the Authority the following items:
19898760 45-
(1) an original of the Lease of which shall be fully executed;
(2) the manually signed opinion of Bond Counsel relating to the legality and tax
exempt status of the Bonds issued pursuant to this Resolution; and
(3) such other documents and opinions as Bond Counsel may reasonably require for
purposes of rendering its opinion; provided, however, that the President or Executive
Director/Secretary of the Authority, with the consent of Bond Counsel, may waive the
requirement that one or more of the foregoing items (except the opinion of Bond Counsel) be
filed on or before Bond Closing upon the Authority receiving adequate assurances that such item
or items will be filed with the Executive Director/Secretary as soon as practicable following
delivery of the Bonds.
2-5. Issuance of Additional Parity Bonds. After the delivery of Bonds, the Authority
and the Lessee may from time to time, upon the conditions stated in this section, agree upon and
approve the issuance and delivery of Additional Bonds to complete or improve the Project,
including the refunding of any Bonds, payable equally and ratably from the revenues of the
Project pledged and appropriated hereunder with the Bonds of the initial issue, but bearing such
date or dates and interest rate or rates and with such maturities and redemption dates and
premiums as may be agreed upon. Every series of such Additional Bonds shall be authorized by
an amendment to the Lease and a supplemental bond resolution, establishing the terms thereof,
providing for any additional facilities to be financed by the Additional Bonds as part of the
Project, and providing for additional rents sufficient to pay the interest when due for such
Additional Bonds, and to pay and redeem all such Additional Bonds at or before maturity as
provided in such supplemental resolution. Each series of such Additional Bonds shall be
executed, authenticated and delivered as provided in this article upon filing with the Authority
original executed counterparts of the supplemental resolution and the amendment to the Lease,
together with such additional certificates, opinions and other documents described in Section 24
as Bond Counsel determines to be applicable. No such Additional Bonds, however, shall be
issued unless the following conditions are met:
(1) The Lease shall be in effect, and no "event of default", as such term is defined in
the Lease, shall exist thereunder; and
(2) The Authority and the Bond Insurer shall have been furnished an opinion of Bond
Counsel to the effect that the issuance of the Additional Bonds will not impair the tax exempt
status of the interest on the Bonds; and
(3) There shall have been furnished to the Authority and the Bond Insurer a
supplement to the Lease providing for additional payments of Lease Payments sufficient to pay
the principal of and interest on the Additional Bonds when due; and
(4) There shall have been furnished to the Authority and the Bond Insurer a
certificate of a Lessee Representative to the effect that the proceeds of the Additional Bonds,
together with any additional funds supplied or to be supplied by the Lessee will be sufficient to
complete the Project, the cost of the improvement or the cost of the refunding, as the case may
be.
19898760 -16-
2-6. Mutilated, Lost or Destroyed Bonds. In case any Bond shall become mutilated or
be destroyed or lost, the Authority shall, if not then prohibited by law, cause to be executed and
delivered, a new Bond of like amount, number, maturity date and tenor in exchange and
substitution for and upon cancellation of such mutilated Bond if any, or in lieu of and in
substitution for such Bond, if any, destroyed or lost upon the Holder's or owners paying the
reasonable expenses and charges of the Authority in connection therewith, and in case of a Bond
destroyed or lost, the filing with the Authority of evidence satisfactory to the Authority that the
Bond, if any, were destroyed or lost, and of the ownership thereof, and furnishing the Authority
with indemnity satisfactory to it. If the mutilated, destroyed or lost Bond has already matured or
been called for redemption in accordance with its terms it shall not be necessary to issue a new
Bond prior to payment.
2-7. Ownership of Bonds. The Authority and Paying Agent may deem and treat the
Holder of any Bond whether or not the. Bond shall be overdue, as the absolute owner of the Bond
for the purpose of receiving payment thereof and for all other purposes whatsoever, and the
Authority shall not be affected by any notice to the contrary.
2-8. Delivery of Temporary Bond. In order to facilitate timely delivery of the Bonds,
the Purchaser may elect with respect to the Bonds to receive in lieu of the definitive Bonds, as
set forth in Section 2-2, a single Bond payable to the Purchaser with installments of principal and
interest due as provided for the Bonds; and such single Bond shall upon request of the Purchase
and the printing of the appropriate definitive Bonds be exchanged therefor and canceled.
2-9. Registration Transfer and Exchange of Bonds.
(1) The Authority will cause to be kept at the principal corporate trust office of the
Bond Registrar a Bond Register in which, subject to such reasonable regulations as the Bond
Registrar may prescribe, the Authority shall provide for the registration of transfers of Bonds
entitled to be registered or transferred as herein provided.
(2) Upon surrender for transfer of any Bond at the principal corporate trust office of
the Bond Registrar, the Authority shall execute, and the Authenticating Agent shall authenticate
and deliver, in the name of the designated transferee or transferees, one or more new Bonds of
any denomination or denominations of $5,000 or any integral multiple thereof of a like aggregate
principal amount, having the same stated maturity and interest rate, as requested by the
transferor.
(3) All Bonds surrendered upon any transfer provided for in this Resolution shall be
promptly canceled by the Bond Registrar and thereafter disposed of as directed by the Authority.
(4) All Bonds delivered in exchange for or upon transfer shall be valid special
obligations of the Authority evidencing the same debt, and entitled to the same benefits under
this Resolution, as the Bonds surrendered for such exchange or transfer.
(5) Every Bond presented or surrendered for transfer shall (if so required by the
Authority) be duly endorsed or be accompanied by a written instrument of transfer, in form
satisfactory to the Authority and the Bond Registrar, duly executed by the Holder thereof or the
Holder's attorney duly authorized in writing.
19898760 _ 1']_
(6) No service charge shall be made to the Holder for any transfer, but the Authority
may require payment of a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any transfer or exchange of Bonds, other than exchanges
expressly provided in this Resolution to be made without expense or without charge to
Bondholder, and the cost of printing any new Bonds.
(7) The Authority and the on Registrar shall not be required (i) to transfer or
exchange any Bond for a period of fifteen days next preceding any interest payment date, or (ii)
to transfer or exchange any Bond called or being called for redemption in whole or in part.
2-10. Interest Rights Preserved• Datin og f Registered Bonds. Each Bond delivered
upon transfer of any other Bond shall carry all the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Bond, and each such Bond shall be so dated, that
neither gain nor loss in interest shall result from such transfer.
Each Bond shall be dated by the Bond Registrar as of the last interest payment date
preceding the date of authentication to which the Bond has been paid or made available for
payment, unless the date of authentication is an interest payment date to which interest has been
paid or made available for payment, in which case the Bond shall be dated as of the date of
authentication.
2-11. Other Revenue Bonds. Nothing contained herein shall however prevent the
issuance by the Authority at the request of the Lessee of other bonds without consent of the
Bondholders for any of the purposes authorized under the Act, including any improvement to the
Project, payable from revenues furnished by the Lessee but not pledged and appropriated to the
Bond Fund whether or not the obligation of the Lessee to make such payments is secured by
tangible property or other collateral (except for the Project and revenues derived by the Authority
therefrom under the Resolution), so long as such other bonds are in no way secured by any of the
provisions of the Resolution and an effect thereof would not be to subject the interest payable on
the Bonds and any Additional Bonds to federal or state income taxes.
2-12. Book -Entry Only System. DTC will act as securities depository for the Bonds.
The Bonds shall be issued in the form of a separate single fully registered an for each separate
maturity of the Bonds. Upon initial issuance the ownership of the Bonds shall be registered in
the Bond Register in the name of Cede & Co., as the nominee of DTC.
With respect to Bonds registered in the Bond Register in the name of Cede & Co., as
nominee of DTC, neither the Authority, the Lessee nor the Bond Registrar shall have any
responsibility or obligation to any DTC Participant or to any Beneficial Owner. Without limiting
the immediately preceding sentence, neither the Authority, nor the Bond Registrar shall have any
responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co.,
or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to
any DTC Participant, any Beneficial Owner or any other person, other than DTC, of any notice
with respect to the Bonds, including any notice of redemption, (iii) the payment to any DTC
Participant, any Beneficial Owner or any other person, other than DTC, of any amount with
respect to the principal of or premium, if any, or interest on the Bonds, or (iv) the failure of DTC
to provide any information or notification on behalf of any DTC Participant or Beneficial Owner.
19898760 48-
The Authority and the Bond Registrar may treat as and deem DTC to be the absolute
owner of each Bond for the purpose of payment of the principal of and premium and interest on
the Bond, for the purpose of giving notices of redemption and other matters with respect to the
Bond, for the purpose of registering transfers with respect to the Bonds, and for all other
purposes whatsoever (except for the giving of certain Bondholder consents). The Bond Registrar
shall pay all principal of and premium, if any, and interest on the Bonds only to or upon the order
of the Bondholders as shown on the Bond Register, and all such payments shall be valid and
effective to fully satisfy and discharge the Authority's obligations with respect to the principal of
and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid.
Upon delivery by DTC to the Bond Registrar of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to the transfer
provisions in Section 2-9, references to "Cede & Co." in this Section shall refer to such new
nominee of DTC.
Notwithstanding the provisions of this Resolution to the contrary (including without
limitation surrender of Bonds, registration thereof, and Authorized Denominations), as long as
the Bonds are in book -entry form, full effect shall be given to the Representation Letter and the
procedures and practices of DTC thereunder.
2-13. Termination of Book -Entry Only System. DTC may determine to discontinue
providing its services with respect to the Bonds at any time by giving written notice to the
Authority and discharging its responsibilities with respect thereto under applicable law. The
Authority may terminate the services of DTC with respect to the Bonds if it determines that DTC
is no longer able to carry out its functions as security depository as contemplated herein.
Upon the termination of the services of DTC as provided in the preceding paragraph, the
Authority shall take all reasonable and diligent steps as may be necessary to find an alternate
book -entry depository, but if (and only if) no such substitute securities depository willing to
undertake the functions of DTC hereunder can be found which, in the opinion of the Authority, is
willing and able to undertake such functions upon reasonable or customary terms, then the Bonds
shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co.,
as nominee of DTC, but may be registered in whatever name or names the Bondholders shall
designate at that time, in accordance with Section 2-9. To the extent that the Beneficial Owners
are designated as the transferee by the Bondholders, in accordance with Section 2-9 the Bonds
will be delivered in appropriate form, content and Authorized Denomination to the Beneficial
Owners.
Notwithstanding any other provision of this Resolution to the contrary, so long as any
Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to
the principal of and premium, if any, and interest on such Bond and all notices with respect to
such Bond shall be made and given, respectively, to DTC as provided in the Representation
Letter.
1989876v3 -19-
244. Insurer's Additional Requirements Relating to the Paying Agent.
(1) The Bond Insurer shall receive prior written notice of any name change of the
Paying Agent or the resignation or removal of the Paying Agent.
(2) No removal, resignation or termination of the Paying Agent shall take effect until
a successor, acceptable to the Bond Insurer, shall be appointed.
(3) The Paying Agent may be removed at any time, at the request of the Bond
Insurer, for any breach of its obligations under this Resolution or the Lease.
1989876v3 -20-
ARTICLE THREE
REDEMPTION OF BONDS BEFORE MATURITY
3-l. Redemption.
(1) Optional Redemption of Bonds. Bonds maturing on and after December 1, 2016
are subject to redemption and prepayment, in whole or in part, and if in part, of any maturity
designated by the Lessee and by lot within a maturity, and in integral multiples of principal
amount of $5,000, at the option of the Authority acting at the direction of the Lessor, on
December 1, 2015 and on any date thereafter at a redemption price equal to par plus accrued
interest to the date of redemption.
(2) Mandatory Redemption of Bonds. The Term Bonds shall be subject to mandatory
prepayment and redemption by lot on December 1 in the years and principal amounts stated
below, at a price equal to the principal amount thereof plus accrued interest to the date fixed for
redemption:
MandatolyRedemRtion Schedule
December 1 2008 Term Bond (inclusive)
Year Principal Amount
2007 $70,000
2008 (maturity) 95,000
(a) Selection of Term Bonds to be redeemed pursuant to the above schedule
oI Sinking Fund Installments shall be by lot.
(b) To the extent that Term Bonds have been previously called for optional
redemption under subparagraph (c) in part from the Bond Fund in excess of that portion of the
Term Bonds not subject to Sinking Fund Installments, Sinking Fund Installments shall be
reduced in inverse order of Sinking Fund Installment Dates.
(c) The amount of Term Bonds to be redeemed on any Sinking Fund
Installment Date shall be reduced by the principal amount of Term Bonds (subject to that
Sinking Fund Installment Date) which are purchased by the Authority at least one business day
prior to the date on which the Term Bonds are selected by lot for redemption and which are not
already credited hereunder against Sinking Fund Installments otherwise payable on a prior
Sinking Fund Installment Date.
(3) Extraordinary Redemption of Bonds. If (a) all or any part of the Project is lost,
stolen, condemned, destroyed or damaged beyond repair, (b) Lessee fails to notify the Authority
of which course of action Lessee plans to take as required under Section 6-6 of the Lease and (c)
Lessee pays to the Authority a sum equal to the Casualty Value of the Project under Section 6.6
of the Lease, on the first day of the month next succeeding such payment before which month
19898760 _21-
timely notice of redemption can be given under Section 3-2, all Bonds shall be called for and are
subject to redemption and prepayment in a whole and not in part, at a redemption price equal to
par plus accrued interest thereon to the redemption date.
(4) Except as provided m this section or in Section 4-13, the Bonds shall not be
subject to redemption prior to their stated maturity date.
3-2. Notice of Redemption. Notice of the call for any redemption pursuant to Section
34 shall be mailed by the Authority but at the expense of the Lessee, at least thirty days but not
more than sixty days prior to the redemption date, to the Paying Agent and to the Bondholders, at
the addresses shown on the Bond Register. Each such notice shall refer to the Bonds to be
redeemed by their numbers and maturities and the date on which and the place where they shall
be presented for redemption. On or before the date fixed for redemption, funds sufficient to
redeem such Bonds, including accrued interest thereon to the redemption date, shall be deposited
with the Paying Agent. The Bonds thus called shall not, on or after the specified redemption
date, bear interest.
3-3. Procedure for Redemption. To effect a partial redemption of Bonds having a
common maturity date, the Bond Registrar prior to giving notice of redemption shall assign to
each Bond having a common maturity date a distinctive number for each $5,000 of the principal
amount of such Bond. The Bond Registrar shall then select by lot, using such method of
selection as it shall deem proper in its discretion, from the numbers so assigned to such Bonds, as
many numbers as, at $5,000 for each number, shall equal the principal amount of such Bonds to
be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so
selected; provided, however, that only so much of the principal amount of each Bond of a
denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number
assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to
the Bond Registrar (with, if the Authority or Bond Registrar so requires, a written instrument or
transfer in form satisfactory to the Authority and Bond Registrar duly executed by the Holder
thereof or the Holder's attorney duly authorized in writing) and the Authority shall execute (if
necessary) and the Bond Registrar shall deliver to the Holder of the Bond, without service
charge, a new Bond or Bonds having the same stated maturity and interest rate and of any
authorized denomination or denominations, as requested by the Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of the Bond so
surrendered.
3-4. Cancellation. All Bonds which have been redeemed shall be canceled by the
Authority and shall not be reissued.
1989876v3 -22-
ARTICLE FOUR
GENERAL COVENANTS
4-1. Payment of PrincIpaland Interest. The Authority covenants that it will promptly
pay or cause to be paid the principal of and interest on every Bond issued under this Resolution
at the place, on the dates and in the manner provided herein and in the Bonds, according to the
terms thereof. The principal and interest are payable solely from revenues derived from the
Project (including certain Bond proceeds and other sums appropriated to the Bond Fund), which
revenues are hereby specifically assigned and pledged as a first and prior lien to the payment
thereof for the benefit of the Holders of all Bonds and interest and any premium thereon in the
manner and to the extent herein specified, and nothing in the Bonds or in this Resolution shall be
considered as assigning or pledging any other funds or assets of the Authority. All sums held in
the Bond Fund pursuant to this Resolution shall to the extent permitted by law be deemed
property of the Holders of all Bonds, held in trust for them and subject to the terms and
conditions of this Resolution, including the pledge thereof to the payment of the Bonds and
interest and any premium thereon.
4-2. Performance of and Authority for Covenants. The Authority covenants that it will
faithfully perform at all times any and all covenants, undertakings, stipulations and provisions
contained in this Resolution, in any and every Bond executed, authenticated and delivered
hereunder and in all proceedings of its governing body pertaining thereto; that it is duly
authorized under the Constitution and laws of the State of Minnesota including particularly and
without limitation the Act, to issue the Bonds authorized hereby and to assign and pledge the
revenues in the manner and to the extent herein set forth; that all action on its part for the
issuance of the Bonds and for the execution and delivery thereof has been duly and effectively
taken; and that the Bonds in the hands of the Holders thereof are and will be valid and
enforceable special obligations of the Authority according to the terms thereof.
4-3. Title and Instruments of Further Assurance. The Authority covenants that it has
not made, done, executed or suffered, and will not make, do, execute or suffer, any act or thing
whereby its leasehold estate or interest in and title to the Project or any part thereof is now or at
any time hereafter shall or may be impaired or charged or encumbered in any manner whatsoever
except by Permitted Encumbrances.
44. Taxes Assessments and Charges. The Authority covenants that it will promptly
pay, or cause to be paid, but solely from revenues derived from the Project including payments
required to be made under the Lease, all lawful taxes, assessments, imposts and governmental
charges at any time levied or assessed upon or against the Project, or any part thereof; provided,
however, that nothing contained in this Section shall require the payment of any such taxes,
assessments, imposts or charges so long as the validity thereof is being contested in good faith
and by appropriate legal proceedings.
4-5. Maintenance and Repair. The Authority covenants that it will at all times, but
solely from revenues derived from the Project including payments required to be made under the
1989876v3 -23-
Lease, maintain, preserve and keep in good condition, repair and working order the Project or
cause the same to occur.
4-6. Recording and Filing. The Authority covenants that, at the expense of the Lessee,
it will cause the Lease or a short form thereof and all supplements thereto, and all related
fmancing statements, to be kept, recorded and filed in such manner and in such places as may be
required by law in order to preserve and protect fully the security of the Holders and owners of
the Bonds and the rights of Authority hereunder, and will cause rerecording and refiling of the
Lease, each financing statement and each supplement thereto as is necessary to maintain,
preserve and protect the validity of the Lease and the security of the Holders of the Bonds.
4-7. Books and Records. The Authority covenants that, at the expense of the Lessee,
so long as any Bonds issued hereunder shall be Outstanding and unpaid the Authority will keep,
or cause to be kept, proper books of record and account, in which full, true and correct entries
will be made of all its financial dealings or transactions of and in relation to the Project and the
revenues derived by the Authority therefrom. Such books and records shall be open to
inspection and copying at all reasonable times by the Bond Insurer or the Holder of any Bond or
the Holder's agent or attorney. The Authority will cause said books and records to be audited
annually by an Independent Accountant, within one hundred fifty days after the close of each
fiscal year, and will upon request furnish a copy of such audit without cost to the Bond Insurer
and the original purchasers of any issue of Bonds or Additional Bonds.
4-8. Names of Bondholders. At reasonable times and under reasonable regulations
established by the Authority, the Bond Register may be inspected and copied by Holders (or a
designated representative thereof) of ten percent or more in principal amount of Bonds then
Outstanding hereunder, such authority of any designated representative to be evidenced to the
satisfaction of the Authority.
4-9. Nature of Security. Under the provisions of the Act the Bonds may not be
payable from or be a charge upon any funds of the Authority other than the revenues pledged to
the payment thereof, nor shall the Authority be subject to any liability thereon, nor shall the
Bonds otherwise contribute or give rise to a pecuniary liability of the Authority or the Lessee or,
to the extent permitted by law, any of their respective officers, employees and agents. No Holder
or Holders of the Bonds shall ever have the right to compel any exercise of the taxing power of
the Authority or the Lessee to pay any Bonds or the interest thereon, or to enforce payment
thereof against any property of the Authority other than the revenues derived from the Project.
The Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any
property of the Authority or the Lessee other than the revenues derived from the Project, and no
Bond shall constitute a debt of the Authority or the Lessee within the meaning of any
constitutional or statutory limitation; but nothing in the Act impairs the rights of Holders of
Bonds issued under this Resolution to enforce the covenants made for the security thereof as
provided in this Resolution and in the Act, and by Authority of the Act the Authority has made
the covenants and agreements herein for the equal and proportionate benefit of all Holders of the
Bonds in the manner and to the extent permitted in Section 54.
440. Disposition of Pledged Funds. The Authority covenants that it will cause Lease
Payments and all other revenues pledged to the payment of the Bonds to be accounted for and
19898760 -24-
expended only as prescribed in this Resolution, and will at all times maintain complete and
accurate books of record and account showing all receipts and expenditures thereof and the
segregation of such rentals and other sums in the funds herein provided, and will at no time loan,
invest, use or apply such funds in any manner or for any purpose other than as specifically
prescribed and permitted in this Resolution.
4-11. Enforcement of Covenants. Subject to the provisions in Section
(1) The Authority agrees to enforce all covenants and obligations of the Lessee under
the Lease and to that end exercise all of the Authority's rights in connection therewith, to the
extent and in the manner that the Authority reasonably determines is prudent and necessary to
assure performance of such covenants and obligations and to protect the interests of the
Bondholders; provided however that the Authority shall have the right, with or without
Bondholders consent at its sole discretion, to waive a default in the performance of any such
covenant or obligation, and its consequences, to the extent and in the manner provided in Section
4-11(3).
(2) No Holder of any Bond issued under this Resolution shall have the right to
institute any proceeding, judicial or otherwise, for the enforcement of the covenants herein
contained, without the written concurrence of the Bond Insurer or, if the bond insurance policy is
no longer in effect, the Holders of not less than twenty-five percent in aggregate principal
amount of Outstanding Bonds but the Holders of this principal amount of Bonds may, either at
law or in equity, by suit, action, mandamus, application for appointment of a receiver or other
proceeding, protect and enforce the rights of all Holders of the Bonds, and may enforce the
performance of all covenants and duties of the Authority and its officials as set forth in this
Resolution, including but not limited to the collection and proper segregation and application of
all funds herein described. The Bond Insurer or, if the bond insurance policy is no longer in
effect, the Holders of not less than fifty-one percent in aggregate principal amount of
Outstanding Bonds shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Bondholders and for the exercise of any power
conferred on them, and the right to waive a default in the performance of any such covenant, and
its consequences, except a default in the payment of the principal of or interest on any Bond
when due or required to be redeemed. However, nothing herein shall impair the absolute and
unconditional right of the Holder of each the Bond to receive payment of the principal thereof
and interest thereon at the times provided in this Resolution, and to institute suit for the
enforcement of any such payment except to the extent that the Authority shall have the right to
accelerate payment of the Bonds as provided in Section 4-13.
(3) The Authority may in its discretion waive any Event of Default under the Lease
and its consequences and rescind any declaration of maturity of principal under Section 4-13,
and shall do so upon written request of the Bond Insurer or, if the bond insurance policy is no
longer in effect, the Holders of (1) fifty-one percent in aggregate principal amount of all the
Bonds Outstanding in respect of which default in the payment of principal and/or interest exists,
or (2) fifty-one percent in aggregate principal amount of all the Bonds then Outstanding in the
case of any other Event of Default; provided, however, that there shall not be waived any Event
of Default in the payment of Lease Payments, unless prior to such waiver or rescission (a) all
arrears of Lease Payments with interest equal to at least the amount by which such Lease
19898760 _25_
Payments is less than total amount of unpaid debt service due on the Bonds and (b) all expenses
of the Authority and Paying Agent, in connection with such default shall have been paid or
provided for and in case of any such waiver or rescission or in case any proceeding taken by the
Authority on account of any such default shall have been discontinued or abandoned or
determined adversely then and in every such case the Authority and the Bondholders shall be
restored to their former positions and rights hereunder respectively, but no such waiver or
rescission shall extend to any subsequent or other Event of Default, or impair any right
consequent thereon.
(4) If an Event of Default should occur under the Lease, all moneys received by the
Authority pursuant to any right given or action taken under the provisions of this Section 4-11 or
the Lease shall, after payment of the cost and expenses of the proceedings resulting in the
collection of such moneys and of the expenses, liabilities and advances incurred or made by the
Authority in connection therewith and any other sums due the Authority under the Lease (other
than any interest due on delinquent Lease Payments), be deposited in the Bond Fund or the
Project Acquisition Fund, as appropriate.
(5) The Authority and any Paying Agent shall be entitled to payment and/or
reimbursement for all advances, counsel fees and other expenses reasonably and necessarily
made or incurred in and about the execution of the trusts created by this Resolution and in and
about the exercise and performance of the powers and duties of the Authority hereunder and for
the reasonable and necessary costs and expenses incurred in defending any liability in the
premises of any character whatsoever (unless such liability is adjudicated to have resulted from
the negligence or willful default of the Authority). The Paying Agent shall also be entitled to a
reasonable fee for services hereunder. In this regard the Authority has made provisions in the
Lease for the payment of said fees, advances, counsel fees, costs and expenses and reference is
hereby made to said Lease for the provisions so made. Upon an Event of Default under the
Lease, but only upon such an Event of Default and failure of Lessee to make timely payments
under the Lease, the Authority shall have a lien with right of payment prior to the lien herein
created for the benefit of the Bondholders on all revenues derived from the Project by the
Authority including Lease Payments for said fees, advances, counsel fees, costs and expenses
incurred by it.
(6) The Authority shall give notice to the Bond Insurer and to the Holders of the
Bonds of any Event of Default under the Lease known to the Authority or termination of the
Lease under Section 4.1 of the Lease, within ninety days after such event unless such default
shall have been cured before the giving of such notice; provided that such notice shall be given
within ten days if the event is either (i) a failure to pay when due any Lease Payments and to cure
the same before giving such notice or (ii) termination of the Lease under Section 4.1 thereof; and
provided further that, except in the case of default in the payment of Lease Payments or
termination of the Lease under Section 4.1 thereof, the Authority shall be protected in
withholding such notice if and so long as the governing body of the Authority or its chief
executive officer in good faith determines that the withholding of such notice is in the interest of
the Bondholders.
4-12. Covenant to Lease, Sell and Operate. Subject to the provisions of Section 4-15,
the Authority agrees that if an Event of Default occurs under the Lease or Lessee terminates the
19898760 -26-
Lease under Section 4.1 thereof, the Authority will use its best efforts while any Bonds remain
Outstanding to lease or operate the Project to provide Net Revenues sufficient to pay the
principal, interest and call premium, if any, on the Bonds and in the event of sale, to obtain the
best price obtainable so that to the extent the Authority determines it reasonably possible all of
the Bonds and the interest thereon are paid in full. This covenant, to the extent that it may
obligate the Authority to re -lease or sell the Project for the benefit of the Bondholders, may be
enforced against the Authority only to the extent that at such time the Authority is permitted by
law to sell the property or to the extent that any consent required for releasing the property has
been given.
4-13. Acceleration. Subject to the provisions in Section 4-15, upon the occurrence of
an Event of Default under the Lease or termination of the Lease on account of a Non -
appropriation under Section 4.2 of the Lease, the Authority may (with the prior written consent
of the Bond Insurer), and upon the written request of the Bond Insurer or, if the bond insurance
policy is no longer in effect, the Holders of not less than fifty-one percent in aggregate principal
amount of Outstanding Bonds shall, by notice in writing delivered to the Lessee, declare the
principal of all Bonds then Outstanding and the interest accrued thereon immediately due and
payable, and such principal and interest shall thereupon become and be immediately due and
payable. The Authority shall promptly give mailed notice of acceleration to the Bondholders.
4-14. Tax Exempt Status of Bonds; Designation of QTEO. The Authority shall not
knowingly take, nor fact to take, any action the effect of which would be to impair the tax-
exempt status of the Bonds.
In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of
Section 265(b)(3) of the Code, the Authority hereby makes the following factual statements and
representations:
(1) the Bonds are issued after August 7, 1986;
(2) the Bonds are not "private activity bonds" as defined in Section 141 of the Code,
treating "qualified 501(c)(3) bonds" as not being private activity bonds;
(3) the Authority hereby designates the Bonds as "qualified tax-exempt obligations"
for purposes of Section 265(b)(3) of the Code;
(4) the reasonably anticipated amount oftax-exempt obligations (other than private
activity bonds, treating qualified 501(c)(3) bonds as not being private activity bonds) which will
be issued by the Authority (and all entities treated as one issuer with the Authority, and all
subordinate entities whose obligations are treated as issued by the Authority) during this calendar
year 2007 will not exceed $10,000,000,
(5) not more than $10,000,000 of obligations issued by the Authority during this
calendar year 2007 have been designated for purposes of Section 265(b)(3) of the Code.
The Authority shall use its best efforts to comply with any federal procedural
requirements which may apply in order to effectuate the designation made by this section.
1989876v3 _2']_
445. Conditions to Authority Action. Before taking any specific action under Sections
441, 4425 4-13, or 4-14 or the last paragraph in Section 54, the Authority may at its sole
discretion:
(1) Require that it be furnished an indemnity bond satisfactory to it for the
reimbursement of all expenses to which it may be put and to protect it against all liability, except
liability which is adjudicated to have resulted from the negligence or willful default of the
Authority;
(2) Act upon the opinion or advice of any Independent Counsel, Independent
Engineer or Independent Accountant selected by the Authority in the exercise of reasonable care,
or upon the direction of the Bond Insurer or, if the bond insurance policy is no longer in effect,
the Holders of a fifty-one percent in aggregate principal amount of Outstanding Bonds; and the
Authority shall not be responsible for any loss or damage resulting from any action or nonaction
taken in good faith in reliance upon such opinion or advice or Bondholder direction; and
(3) Require the consent to the action of the Bond Insurer or, if the bond insurance
policy is no longer in effect, the Holders of not less than fifty-one percent in principal amount of
Outstanding Bonds.
1989876v3 _28_
ARTICLE FIVE
FUNDS AND ACCOUNTS
5-1. Deposit of Bond Proceeds. The Authority shall deposit, or shall direct the
Purchaser to deposit, with the Lessee all of the net proceeds of the sale of the Bonds (including
accrued interest thereon paid by the purchaser; less capitalized interest; and any unused discount)
for deposit in the Project Acquisition Fund as provided in Section 3.1 of the Lease.
5-2. Bond Fund. The Authority hereby establishes and shall maintain, so long as any
of the Bonds are Outstanding, a separate trust account for the benefit of the Bondholders to be
designated "2007 Public Facility Lease Revenue Bonds Bond Fund" into which the following
deposits shall be made:
(1) All payments by the Lessee as Lease Payments under the Lease or any Purchase
Option Price (unless held in escrow to discharge Bonds under Article Eight).
(2) All other moneys received by the Authority from the Lessee when accompanied
by directions of the Lessee that such moneys are to be paid into the Bond Fund or used for
purposes for which moneys in the Bond Fund may be used. If the Lessee so directs, such monies
shall be credited against Lease Payments due or to become due.
(3) If the Lease is terminated, all Net Revenues derived from the Project.
(4) All other moneys required to be deposited in the Bond Fund pursuant to any
provision of this Resolution or the Lease.
The moneys and investments in the Bond Fund are irrevocably pledged to and shall be
used by the Authority, from time to time, to the extent required, for the payment of principal of,
and interest and any premium on the Bonds as more fully provided in Section 54; and shall be
used for no other purpose, provided that the Authority may use sums in the Bond Fund to be
used to pay principal on Bonds of a particular maturity (and interest thereon) to instead purchase
the Bonds at a price not to exceed par and accrued interest.
5-3. Deposit of Funds with Paving Agent. The Authority shall transfer and remit sums
from the Bond Fund to the Paying Agent in advance of each interest and principal due date and
redemption date, from the balance then on hand in the Bond Fund, sufficient to pay all principal,
interest and redemption premiums then due on Bonds. The Paying Agent shall hold in trust for
the Holders of such Bonds representing such interest all sums so transferred to it until paid to
such Holders or otherwise disposed of as herein provided. Any money deposited with the Paying
Agent in trust for the Holder of any Bond and remaining unclaimed for six years after the
principal, premium, if any, or interest owing to the Holder becomes due and payable, shall be
paid to the Lessee upon request and shall be discharged from the trust, and the Holder of the
Bond shall thereafter, as an unsecured general creditor look only to the Lessee for the payment
thereof, and all liability of the Paying Agent, or the Authority with respect to such trust money
shall cease.
1989876v3 -19-
5.4. Priories of Payment and Application of Moneys. All Bonds issued hereunder and
secured hereby shall be equally and ratably secured by and payable from the Bond Fund, without
priority of one Bond over any other, except as otherwise expressly provided herein.
Accordingly, all moneys credited to the Bond Fund, shall be applied as follows:
(1) Unless the principal of all the Bonds shall have become or shall have been
declared due and payable, all such moneys shall be applied:
FIRST: To the payment to the persons entitled thereto of all installments of interest then
due on the Bonds, in the order of the maturity of the installments of such interest, and, if the
amount available shall not be sufficient to pay in full any particular installment, then to the
payment ratably, according to the amounts due on such installment, to the persons entitled
thereto, without any discrimination or privilege;
SECOND: To the payment to the persons entitled thereto of the unpaid principal of any
of the Bonds which shall have become due (other than Bonds called for redemption for the
payment of which moneys are held pursuant to the provisions of this Resolution), in the order of
their due dates, and, if the amount available shall not be sufficient to pay in full Bonds due on
any particular date, then to the payment ratably, according to the amount of principal due on such
date, to the persons entitled thereto without any discrimination or privilege; and
THIRD: To the payment of interest and premium, if any, on and the principal of the
Bonds, and to the redemption of Bonds, as thereafter may from time to time become due, all in
accordance with the provisions of Article Five.
(2) If the principal of all Bonds shall have become due or shall have been declared
due and payable, all such moneys shall be applied to the payment of the principal and interest
then due and unpaid upon the Bonds, without preference or priority of principal over interest or
of interest over principal, or of any installment of interest over any other installment of interest,
or of any Bond over any other Bond, ratably, according to the amounts due respectively for
principal and interest, to the persons entitled thereto without any discrimination or privilege.
(3) If the principal of all the Bonds shall have been declared due and payable, and if
such declaration shall thereafter have been rescinded and annulled under the provisions of this
Resolution, then, subject to the provisions of subparagraph (2) of this section, in the event that
the principal of all the Bonds shall later become due or be declared due and payable, the moneys
shall be applied in accordance with the provisions of paragraph (1) of this section.
Subject to the provisions in Section 4-15, whenever moneys are to be applied by the
Authority pursuant to the provisions of this Section and there are insufficient sums in the Bond
Fund to pay principal and/or interest then due on the Bonds, the Authority shall apply such
moneys at such times, and from time to time, as the Authority shall determine, having due regard
to the amount of such moneys available for application and the likelihood of additional moneys
becoming available for such application in the future. Whenever the Authority shall apply such
fiends, it shall fix the date (which shall be an interest payment date unless it shall deem another
date more suitable) upon which such application is to be made and upon such date interest on the
amounts of principal to be paid on such dates shall cease to accrue. The Authority shall give
19898760 -3 Q-
such notice as it may deem appropriate of the deposit with the Paying Agent of any such moneys
and of the fixing of any such date, and shall not be required to make payment to the Holder of
any Bond until such Bond shall be presented to the Paying Agent for appropriate endorsement or
for cancellation if fully paid.
1989876v3 -31-
ARTICLE SIX
POSSESSION, USE AND RELEASE OF PROPERTY
64. Possession and Use. Subject to the terms hereof and to the pledge of rentals and
profits under the Lease, until the happening of an Event of Default under the Lease or
termination of the Lease under Section 4.2 thereof, the Lessee shall be permitted to possess, use
and enjoy the Project (except cash or other personal property deposited or pledged or determined
by the terms hereof to be deposited or pledged to the Authority) and to receive and use the issues
and profits of the Project.
6-2. Easement for Access or Utility Service. The Authority is authorized, without
notice to or consent of the Holders of any Bonds (but upon prior written notice to the Bond
Insurer), to join in the execution of a conveyance for access or utility service and certain other
easements and to subordinate the Lease to such easement pursuant to Section 8.6 of the Lease or
if the Lease has been terminated at the Authority's own initiative, but only upon satisfaction of
the applicable conditions set forth in said Section.
6-3. Release of Encumbered Equipment. The Authority is authorized, without notice
to or consent of any Bondholders but with the prior written consent of the Bond Insurer, to
remove Project Equipment from time to time, provided that the applicable conditions set forth in
Section 3-2 of the Lease are met. If the Lessee or the Authority desires to sell any Project
Equipment that Authority has a fair market value in excess of the fair market value of Project
Equipment to be substituted therefor, the Authority may sell, or permit such sale, without notice
to or consent of any bondholders if the removed Project Equipment is in good faith sold for cash
and the net proceeds from the sale are deposited in the Bond Fund.
6-4. Release -PT nimproved Land. The Authority is hereby authorized, without notice
to or consent of any Bondholders, to join in the execution of such instruments as may be
necessary to release from the terms of the Lease unimproved Land, but only upon the satisfaction
of the applicable conditions set forth in Section 8.7 of the Lease.
1989876v3 -3 2-
ARTICLE SEVEN
INVESTMENTS
7-1. Investments by Authority. Subject to the provisions of Section 7-2, moneys held
for the credit of the Funds established by Article Five shall, to the extent practicable and
permitted by the Act, be invested as received and reinvested by the Authority in such securities
as are authorized by the Act after taking into consideration any recommendation made by the
Lessee. The Authority shall sell and reduce to cash funds a sufficient portion of investments
under the provisions of this Section whenever the cash balance in the Fund for which the
investment was made is insufficient for its current requirements. Securities so purchased as an
investment of moneys shall be paid by the Authority and shall be deemed at all times a part of
the applicable Fund, and the interest accruing thereon and any profit realized from such
investments shall be deemed at all times a part of the applicable Fund, and the interest accruing
thereon and any profit realized from such investments shall be credited to the Fund from which
the investment was made. Any loss resulting from such investment shall be charged to the Fund
from which the investment was made.
7-2. Return on Investments. The Authority will not cause any use to be made of the
proceeds of the Bonds to be issued which would cause such obligations to be arbitrage bonds
within the meaning of Section 148 of the Internal Revenue Code and any applicable and valid
temporary, proposed or final regulations from time to time promulgated thereunder if and to the
extent such provisions remain in full force and effect; and the Authority will comply with the
requirements of said Section 148 and with all such applicable regulations pertaining thereto
while the Bonds to be issued hereunder remain Outstanding.
1989876v3 -3 3 -
ARTICLE EIGHT
DISCHARGE OF OBLIGATIONS TO BONDHOLDERS
8-1. Conditions of Discharge. When all of the Bonds issued and secured hereunder
have been discharged as provided in Section 8-2, and if all fees and expenses of the Authority
and Paying Agent required by this Resolution to be paid (other than sums deposited in escrow for
such purpose) have been paid, all pledges, covenants and other rights granted by this Resolution
shall cease as to the Holders of the Bonds, the Bonds shall no longer be considered Outstanding,
and the lien herein created upon any revenues derived from the Project may be discharged.
8-2. Payment of Bonds. (1) Bonds for the payment or redemption of which sufficient
cash shall have been deposited with the Paying Agent shall be deemed to be paid and discharged
within the meaning of this Section, provided, however, that if such Bonds are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been duly given and sufficient
cash shall also be deposited with the Paying Agent to pay any redemption premium.
(2) The Authority may also pay and discharge at any time any and all of the Bonds
and pay all future Paying Agent fees and expenses with respect thereto by irrevocably depositing
in escrow for the benefit of the Holders of the Bonds and the Paying Agent in a suitable banking
institution a sum of cash and securities in such aggregate face amount, bearing interest at such
rates and maturing or callable at the option of the holder thereof on such dates as shall be
required to provide amounts sufficient to pay when due (i) all redemption premiums, if any, on
the Bonds, (ii) all principal and interest due on the Bonds to their stated maturity dates or any
earlier permissible date upon which they may be redeemed prior to maturity in accordance with
their terms, (so long as notice of such redemption shall have been duly given as herein required),
and (iii) all such future Paying Agent fees and expenses; and provided further that the securities
deposited for this purpose shall be limited to securities which may be purchased for an escrow
account under the provisions of Section 475.67, Minnesota Statutes, or any amendments or
supplements thereto.
(3) All liability of the Authority to the Holders of any Bonds for the payment of
principal and interest and any premium thereon shall forthwith cease, terminate and be
completely discharged upon payment and discharge of the Bonds as provided in this section, and
the Holders shall have a claim therefor solely upon the cash or cash and securities so deposited
with the Paying Agent or in escrow and shall not be entitled thereafter to any other benefit of or
security under this Resolution or the Lease.
(4) Any Bonds paid and discharged as provided in this section shall no longer be
deemed outstanding for the purposes of this Resolution.
8-3. Cancellation of Surrendered Bonds. The Authority may at any time surrender to
the Paying Agent for cancellation by it any Bonds previously authenticated and delivered
hereunder, which the Authority acquired in any manner whatsoever, and such Bonds, upon such
surrender and cancellation, shall be deemed to be paid and retired.
1989876�3 -34-
84. Defeasance Requirements of Bond Insurer. In the event that the principal and/or
interest due on the Bonds shall be paid by the Bond Insurer pursuant to the Policy, the Bonds
shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be
considered paid by the Authority, and the assignment and pledge of the trust estate and all
covenants, agreements and other obligations of the Authority to the registered Owners shall
continue to exist and shall run to the benefit of the Bond Insurer, and the Bond Insurer shall be
subrogated to the rights of such registered Owners including, without limitation, any rights that
such Owners may have in respect of securities law violations arising from the offer and sale of
the Bonds.
In addition, the Bond Insurer requires the following items:
(a) An opinion of counsel that refunding and defeasance will not adversely impact the
exclusion from gross income for federal income tax purposes of interest on the Bonds or the
refunded bonds.
(b) An escrow agreement and an opinion of counsel regarding the validity and
enforceability of the escrow agreement.
(c) Opinion of counsel that (A) the escrow deposit will not constitute a voidable
preference or transfer under the Federal Bankruptcy Code or any other similar state or federal
statute in the event the Issuer becomes a debtor within the meaning of the Federal Bankruptcy
Code or comes within the protection of such similar state or federal statute ("Insolvency Event"),
and (B) in such Insolvency Event, the escrow deposit will not be treated as part of the estate of
the Issuer.
(d) The escrow agreement shall provide that:
(1) Any substitution of securities shall require a verification of an independent
certified public accountant and the prior written consent of the on
Insurer.
(2) The Authority will not exercise any optional redemption of Bonds secured
by the escrow agreement or any other redemption other than mandatory
sinking fund redemptions unless (i) the right to make any such redemption
has been expressly reserved in the escrow agreement and such reservation
has been disclosed in detail in the official statement for the refunding
bonds, and (ii) as a condition of any such redemption there shall be
provided to the Bond Insurer a verification of an independent certified
public accountant as to the sufficiency of escrow receipts without
reimbursement to meet the escrow requirements remaining following such
redemption.
(3) The Authority shall not amend the escrow agreement or enter into a
forward purchase agreement or other agreement with respect to rights in
the escrow without the prior written consent of the Bond Insurer.
1989876v3 -3 $-
ARTICLE NINE
SUPPLEMENTAL AND AMENDATORY RESOLUTIONS
9-1. Supplemental and Amendatory Resolutions Not Requiring Consent of
Bondholders. The Authority may, from time to time and at any time, without the consent of or
notice to any of the Bondholders provided prior written notice has been given to the Bond
Insurer and when so required by this Resolution shall adopt a resolution or resolutions
supplemental to or amendatory of this Resolution as shall not be inconsistent with the terms and
provisions hereof (which supplemental or amendatory resolution or resolutions shall thereafter
form a part hereof), so as to thereby (1) permit the issuance of Additional Bonds as provided in
Section 2-5, or duplicate Bonds as provided in Section 2.6, (2) cure any ambiguity or formal
defect or omission in this Resolution or in any supplemental resolution, (3) grant for the benefit
of the Bondholders any additional rights, remedies powers, authority or security that may
lawfully be granted to or conferred upon the Bondholders, (4) substitute or add additional
equipment, machinery or land or to release land or property in the manner specifically provided
herein (subject to the prior written consent of the Bond Insurer) or to more precisely identify any
equipment or machinery forming a part of the Project and generally described in Exhibit B and
any other property, real or personal which may become apart of the Project, (5) modify,
eliminate and/or add to the provisions of this Resolution to such extent as shall be necessary to
prevent any interest on the Bonds from becoming taxable under the Federal income tax laws or
to allow the Bonds to be qualified under a different exemption under Section 103 of the Internal
Revenue Code, (6) make any other change determined by the Authority necessary to reconcile
the Resolution with the Lease or any amendment thereto or (7) make any other change to the
Resolution which in the reasonable judgment of the Authority is not to the prejudice of any
Holders of the Bonds who have not consented to the change.
9-2. Supplemental and Amendatory Resolution Requiring Consent of Bondholders.
Exclusive of supplemental and amendatory resolutions covered by Section 9-1 and subject to the
terms and provisions contained in this Section, and not otherwise, the Authority upon receipt of
an instrument evidencing the consent to the below -mentioned supplemental or amendatory
resolution by the Bond Insurer or, if the bond insurance policy is no longer in effect, the Holders
of not less than fifty-one percent of the aggregate principal amount of the Bonds outstanding,
secured in accordance with the provisions of Sections 114 and 1-2, shall adopt such other
resolution or resolutions supplemental or amendatory thereto as shall be deemed necessary and
desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any
particular, any of the terms or provisions contained in this Resolution or in any supplemental or
amendatory resolution; provided, however, that nothing herein contained shall permit or be
construed as permitting (1) an extension of the maturity of any Bond of a nonconsenting Holder
thereof, or (2) a reduction in the principal amount of any Bond of a nonconsenting Holder
thereof, or (3) a privilege or priority of any Bond or Bonds over any other Bond or Bonds of a
nonconsenting Holder thereof, or (4) a reduction in the aggregate principal amount of the Bonds
required for consent to such supplemental or amendatory resolution or (5) the subordination or
release of the Authority's title to and security interest in the Project except as otherwise permitted
herein, without the consent of the Bond Insurer and the Holders of one hundred percent of the
1989876v3 -36-
principal amount of the Bonds then outstanding (hereinafter 1009/o Bondholder Consent")
secured in accordance with Section 11-1.
Anything herein to the contrary notwithstanding, a supplemental or amendatory
resolution under this Article Nine which adversely affects the right of the Lessee under the Lease
shall not become effective unless and until the Lessee shall have consented in writing to the
adoption and delivery of such resolution, except supplemental or amendatory resolutions adopted
after any termination of the Lease. In this regard, the Authority shall cause notice of the
proposed adoption of any such supplemental or amendatory resolution, together with a copy of
the proposed amendatory resolution, to be mailed by certified or registered mail to the Lessee at
least fifteen days prior to the proposed date of adoption and delivery of any such resolution. The
Lessee shall be deemed to have consented to the adoption and delivery of any such resolution if
the Authority does not receive a letter signed by a Representative of the Lessee of protest or
objection thereto on or before 4:30 o'clock P.M., Central Standard or Central Daylight time,
whichever is then in effect, of the fifteenth day after the mailing of the notice and a copy of the
proposed resolution to the Lessee unless such fifteenth day falls on a Business Day in which
event the letter of objection must be received on the next succeeding Business Day.
9-3. Paving Agent's Discretion. Notwithstanding any other provision of this
Resolution, in determining whether the rights of Bondholders will be adversely affected by any
action taken pursuant to the terms and provisions hereof, the Paying Agent shall consider the
effect on the Bondholders as if there were no Policy.
1989876v3 _3']_
ARTICLE TEN
AMENDMENT TO LEASE
10-1. Amendments Without Bondholder Consent, The Authority and the Lessee may
without the consent of or notice to any of the Bondholders, but with the prior consent of the
Bond Insurer, consent to any amendment, change or modification of the Lease or the Ground
Lease:
(1) to facilitate, (i) the conveyance of an easement for access or utility services and
the subordination of the rights of the Lessee, and the Authority under the Lease or the Ground
Lease to such easement as provided in Section 6-2, (ii) the release of equipment and unimproved
land as provided in Sections 6-3 and 64, or (Ili) the issuance of Additional Bonds without
Bondholders' consent as provided by Section 2-5 or duplicate Bonds as provided in Section 2-6;
(2) which may be required by the provisions of the Lease, the Ground Lease or this
Resolution;
(3) for the purpose of curing any ambiguity or formal defect or omission;
(4) in connection with any property or equipment acquired and which constitutes a
part of the Project, including the Project Equipment described in Exhibit B, so as to more
precisely identify the same or substitute or add additional equipment supplied pursuant to the
Lease or the Ground Lease;
(5) to reconcile the Lease or the Ground Lease with any supplement to the
Resolution; or
(6) to effect any other change therein which in the reasonable judgment of the
Authority is not to the prejudice of any Holders of the Bonds.
10-2. Amendments Requiring Bondholder Consent. Except for amendments, changes
or modifications as provided in Section 10-1 of this Resolution, neither the Authority nor the
Lessee shall consent to any other amendment, change or modification of the Lease or the Ground
Lease without publication of notice and the written approval or consent of the Bond Insurer or, if
the bond insurance policy is no longer in effect, the Holders of not less than fifty-one percent in
aggregate principal amount of the Bonds at the time outstanding given and procured as provided
in Sections 11-1 and 11-2. If at any time the Lessee shall request the consent of the Authority to
any such proposed amendment, change or modification of the Lease or the Ground Lease, the
Authority shall in the absence of 100% Bondholder Consent, upon being satisfactorily
indemnified with respect to expenses, cause notice of such proposed amendment, change or
modification to be published in the same manner as provided in Section 11-2.
1989876v3 _3 g_
ARTICLE ELEVEN
MISCELLANEOUS
11-1. Consent of Bondholders. Any consent, request, direction, approval, objection or
other instrument required by this Resolution to be signed and executed by the Bondholders may
be in any number of concurrent writings of similar tenor and must be signed or executed by such
Bondholders in person or by agent appointed in writing. Proof of the execution of any such
consent, request, direction, approval, objection or other instrument or of the writing appointing
any agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for
any of the purposes of this Resolution, and shall be conclusive in favor of the Authority with
regard to any action taken by it under such request or other instrument, namely.
(1) The fact and date of the execution by any person of any such writing maybe
proved by the certificate of any officer in any jurisdiction who by law has power to take
acknowledgments within said jurisdictions that the person signing such writing acknowledged
before him the execution thereof, or by an affidavit of any witness to such execution.
(2) The fact of the holding by any person of Bonds and the amounts and numbers of
such Bonds, and the date of the holding of the same, shall be proved by reference to the Bond
Register.
11-2. Notice of Amendments. If at any time the Authority desires to adopt any
supplemental or amendatory resolution and/or amend the Lease as herein provided without 100%
Bondholder Consent, unless consent of and notice to the Bondholders is not required, the
Authority shall cause notice of the proposed resolution or amendment to be published at least
once in a financial periodical or newspaper of general circulation published in a Minnesota city
A the first class or its metropolitan area. Such notice shall briefly set forth the nature of the
proposed resolution or amendment and shall state that copies thereof are on file at the principal
office of the Authority for inspection by all Bondholders. The Authority shall not, however, be
subject to any liability to any Bondholder by reason of its failure to publish such notice, and any
such failure shall not affect the validity of such resolution or amendment when consented to and
approved as herein provided. If the Holders of not less than fifty-one percent in aggregate
principal amount of the Bonds Outstanding hereunder at the time of the adoption of such
resolution or amendment shall have consented to and approved the adoption thereof as herein
provided, no Holder of any Bond shall have any right to object to any of the terms and provisions
contained therein, or the operation thereof or in any manner to question the propriety of the
adoption thereof, or to enjoin or restrain the Authority or the Lessee from adopting or executing
the same or from taking any action pursuant to the provisions thereof.
11-3. Severability. If any provision of this Resolution shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction
or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of
any constitution or statute or rule or public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or provisions herein
19898760 -3 9-
contained invalid, inoperative or unenforceable to any extent whatever. The invalidity of any
one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not
affect the remaining portions of this Resolution or any part thereof.
Authentication of Transcript. The officers of the Authority are directed to furnish
to the attorneys approving the legality thereof, certified copies of this Resolution and all
documents referred to herein, and affidavits or certificates as to all other matters which are
reasonably necessary to evidence the validity and marketability of the Bonds. All such certified
copies, certificates and affidavits, including any heretofore furnished, shall constitute recitals of
the Authority as to the correctness of all statements contained therein.
11-5. Limitation of Liability. To the extent permitted by law, no provision, covenant
nor agreement contained in this Resolution shall give rise or impose upon the Lessee or the
Authority or any of its officers, employees or agents any pecuniary liability.
11-6. Approval of Lessee. The Lessee has examined and given approval of this
Resolution and all terms hereof and approves the sale of the Bonds as provided for herein for the
price and terms set forth herein.
11-7. Authorization to Execute Lease, Ground Lease and Incidental Documents. The
forms of the proposed Lease and Ground Lease between the Authority and Lessee are hereby
approved and the President and Executive Director/Secretary of the Authority are authorized to
execute the same, the official statement to be used by the Purchaser in marketing the Bonds, and
such other documents as Bond Counsel or Independent Counsel consider appropriate for Bond
Closing, in the name of and on behalf of the Authority.
1989876v3 _q.�_
ARTICLE TWELVE
ADDITIONAL BOND INSURER REQUIREMENTS
124. Bond Insurer as Third Party Beneficiary. To the extent that this Resolution or the
Lease confer upon or give or grant to Bond Insurer any right, remedy or claim under or by reason
of this Resolution or the Lease, the Bond Insurer is hereby explicitly recognized as being a third
party beneficiary hereunder and under the Lease and may enforce any such right, remedy or
claim conferred, given or granted hereunder and under the Lease.
12-2. Control Ri ts. Bond Insurer shall be deemed to be the holder of all of the Bonds
for purposes of (a) exercising all remedies and directing the Paying Agent to take actions or for
any other purposes following an Event of Default, and (b) granting any consent, direction or
approval or taking any action permitted by or required hereunder or under the Lease as the case
may be, to be granted or taken by the Holders of such Bonds.
Anything herein or the Lease to the contrary notwithstanding, upon the occurrence and
continuance of an Event of Default, the Bond Insurer shall be entitled to control and direct the
enforcement of all rights and remedies granted to the Bondholders or the Paying Agent for the
benefit of the Bondholders hereunder or under the Lease.
12-3. Consent Rights of Bond Insurer.
(a) Consent of Bond Insurer. Any provision of this Resolution or the Lease expressly
recognizing or granting rights in or to Bond Insurer may not be amended in any manner that
affects the rights of Bond Insurer hereunder without the prior written consent of Bond Insurer.
(b) Consent of Bond Insurer in Addition to Bondholder Consent. Wherever this
Resolution or the Lease require the consent of Bondholders, Bond Insurer's consent shall also be
required.
(c) Consent of Bond Insurer in the Event of Insolvency. Any reorganization or
liquidation plan with respect to the Authority must be acceptable to Bond Insurer. In the event of
any reorganization or liquidation, Bond Insurer shall have the right to vote on behalf of all
Bondholders who hold Bonds guaranteed by Bond Insurer, absent a default by Bond Insurer
under the Policy.
124. Payment Procedure Under the Policy.
(a) At least two (2) business days prior to each payment date on the Bonds, the
Paying Agent will determine whether there will be sufficient funds to pay all principal of and
interest on the Bonds due on the related payment date and shall immediately notify Bond Insurer
or its designee on the same business day by telephone or electronic mail, confirmed in writing by
registered or certified mail, of the amount of any deficiency. Such notice shall specify the
amount of the anticipated deficiency, the Bonds to which such deficiency is applicable and
whether such Bonds will be deficient as to principal or interest or both. If the deficiency is made
up in whole or in part prior to or on the payment date, the Paying Agent shall so notify Bond
Insurer or its designee.
19898760 _41 _
(b) The Paying Agent shall, after giving notice to Bond Insurer as provided above,
make available to Bond Insurer and, at Bond Insurer's direction, to any fiscal agent, the
registration books of the Authority maintained by the Paying Agent, and all records relating to
the funds maintained under this Resolution.
(c) The Paying Agent shall provide Bond Insurer and any fiscal agent with a list of
registered owners of Bonds entitled to receive principal or interest payments from Bond Insurer
under the terms of the Policy, and shall make arrangements with Bond Insurer, the fiscal agent or
another designee of Bond Insurer to (i) mail checks or drafts to the registered Owners of Bonds
entitled to receive full or partial interest payments from Bond Insurer and (ii) pay principal upon
Bonds surrendered to Bond Insurer, the fiscal agent or another designee of Bond Insurer by the
registered Owners of Bonds entitled to receive full or partial principal payments from Bond
Insurer.
(d) The Paying Agent shall, at the time it provides notice to Bond Insurer of any
deficiency pursuant to Section 12.04 (a), notify registered Owners of Bonds entitled to receive
the payment of principal or interest thereon from Bond Insurer (1) as to such deficiency and its
entitlement to receive principal or interest, as applicable, (ii) that Bond Insurer will remit to them
all or a part of the interest payments due on the related payment date upon proof of its
entitlement thereto and delivery to Bond Insurer or any fiscal agent, in form satisfactory to Bond
Insurer, of an appropriate assignment of the registered owner's right to payment, (iii) that, if they
are entitled to receive partial payment of principal from Bond Insurer, they must surrender the
related Bonds for payment first to the Paying Agent, which will note on such Bonds the portion
of the principal paid by the Paying Agent and second to Bond Insurer or its designee, together
with an appropriate assignment, in form satisfactory to Bond Insurer, to permit ownership of
such Bonds to be registered in the name of Bond Insurer, which will then pay the unpaid portion
of principal, and (iv) that, if they are entitled to receive full payment of principal from Bond
Insurer, they must surrender the related Bonds for payment to Bond Insurer or its designee,
rather than the Paying Agent, together with an appropriate assignment, in form satisfactory to
Bond Insurer, to permit ownership of such Bonds to be registered in the name of Bond Insurer.
(e) In addition, if the Paying Agent has notice that any Holder of the Bonds has been
required to disgorge payments of principal or interest on the Bonds previously Due for Payment
pursuant to a final non -appealable order by a court of competent jurisdiction that such payment
constitutes an avoidable preference to such holder within the meaning of any applicable
bankruptcy laws, then the Paying Agent shall notify Bond Insurer or its designee of such fact by
telephone or electronic notice, confirmed in writing by registered or certified mail.
(f) The Paying Agent will be hereby irrevocably designated, appointed, directed and
authorized to act as attorney -in -fact for holders of the Bonds as follows:
(1) If and to the extent there is a deficiency in amounts required to pay interest
on the Bonds, the Paying Agent shall (a) execute and deliver to Bond Insurer, in form
satisfactory to Bond Insurer, an instrument appointing Bond Insurer as agent for such holders in
any legal proceeding related to the payment of such interest and an assignment to Bond Insurer
of the claims for interest to which such deficiency relates and which are paid by Bond Insurer,
(b) receive as designee of the respective holders (and not as Paying Agent) in accordance with
19898760 42_
the tenor of the Policy payment from Bond Insurer with respect to the claims for interest so
assigned, and (c) disburse the same to such respective Holders; and
(2) If and to the extent of a deficiency in amounts required to pay principal of
the Bonds, the Paying Agent shall (a) execute and deliver to Bond Insurer, in form satisfactory to
Bond Insurer, an instrument appointing Bond Insurer as agent for such holder in any legal
proceeding related to the payment of such principal and an assignment to Bond Insurer of the
Bond surrendered to Bond Insurer in an amount equal to the principal amount thereof as has not
previously been paid or for which moneys are not held by the Paying Agent and available for
such payment (but such assignment shall be delivered only if payment from Bond Insurer is
received), (b) receive as designee of the respective Holders (and not as Paying Agent) in
accordance with the tenor of the Policy payment therefore from Bond Insurer, and (c) disburse
the same to such holders.
(g) Payments with respect to claims. for .interest on and principal of Bonds disbursed
by the Paying Agent from proceeds of the Policy shall not be considered to discharge the
obligation of the Authority with respect to such Bonds, and Bond Insurer shall become the owner
of such unpaid Bond and claims for the interest in accordance with the tenor of the assignment
made to it under the provisions of this subsection or otherwise.
(h) Irrespective of whether any such assignment is executed and delivered, the
Authority and the Paying Agent hereby agree for the benefit of Bond Insurer that:
(i) they recognize that to the extent Bond Insurer makes payments directly or
indirectly (e.g. by paying through the Paying Agent), on account of principal of or
interest on the Bonds, Bond Insurer will be subrogated to the rights of such
holders to receive the amount of such principal and interest from the Authority,
with interest thereon as provided and solely from the sources stated in the
Resolution and the Bonds; and
they will accordingly pay to Bond Insurer the amount of such principal and
interest, with interest thereon as provided herein and the Bonds, but only from the
sources and in the manner provided herein for the payment of principal of and
interest on the Bonds to Holders, and will otherwise treat Bond Insurer as the
owner of such rights to the amount of such principal and interest.
(i) Bond Insurer shall be entitled to pay principal or interest on the Bonds that shall
become Due for Payment but shall be unpaid by reason of Nonpayment by the Authority (as such
terms are defined in the Policy) and any amounts due on the Bonds as a result of acceleration of
the maturity thereof in accordance with this agreement, whether or not Bond Insurer has received
a Notice (as defined in the Policy) of Nonpayment or a claim upon the Policy.
(j) In addition, Bond Insurer shall to the extent it makes any payment of principal or
interest on the Bonds become subrogated to the rights of the recipients of such payments in
accordance with the terms of the Policy, and to evidence such subrogation (i) in the case of
claims for interest, the Paying Agent shall note Bond Insurer's rights as subrogee on the
registration books of the Authority maintained by the Paying Agent upon receipt of proof of
19898760 _G1.3 _
payment of interest thereon to the registered Holders of the Bonds, and (ii) in the case of claims
for principal, the Paying Agent shall note Bond Insurer's rights as subrogee on the registration
books of the Authority maintained by the Paying Agent, upon surrender of the Bonds together
with receipt of proof of payment of principal thereof.
1989876v3 _44._
Adopted; February 20, 2uu /4
Attest:
Executive Director/Secretary
1989876v7
LEGAL DESCRIPTION OF REAL ESTATE
Lot 2, Block 1
Otsego City Campus Addition
Wright County, Minnesota
1989876v3 A- I
M�4XIMl.__
The acquison and equipping of a public works facility.
1989876v3 $-1