10-42EXTRACT OF MINUTES OF A MEETING
OF THE CITY COUNCIL
CITY OF OTSEGO, MINNESOTA
HELD: October 25, 2010
Pursuant to due call, a regular or special meeting of the City Council of the City of
Otsego, Wright County, Minnesota, was duly held at the City Hall on October 25, 2010, at 6:30
P.M., for the purpose, in part, of authorizing the issuance and awarding the sale of $1,215,000
General Obligation Improvement Refunding Bonds, Series 201 OD.
The following members were present:
and the following were absent:
Member Scharber introduced the following resolution and moved its adoption:
RESOLUTION NO. 2010-42
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $1,215,000
GENERAL OBLIGATION IMPROVEMENT REFUNDING BONDS, SERIES 2010D,
LEVYING A TAX FOR THE PAYMENT THEREOF AND PLEDGING SPECIAL
ASSESSMENTS FOR THE SECURITY THEREOF
A. WHEREAS, the City of Otsego, Minnesota (the "City"), by resolution duly
adopted on August 28, 2006 (the "Prior Resolution"), authorized the issuance and sale of
$5,985,000 original principal amount of General Obligation Improvement Bonds, Series 2006B,
dated September 1, 2006 (the "Prior Bonds"); and
B. WHEREAS, a portion of the proceeds of the Bonds (as defined below) will be
used for the payment from the Escrow Account (as defined below) of (i) $260,000 principal
amount of the Prior Bonds which matures on February 1, 2011, on said date; (ii) $270,000
principal amount of the Prior Bonds which matures on February 1, 2012, on said date; (iii)
$275,000 principal amount of the Prior Bonds which matures on February 1, 2013, on said date;
and (iv) $290,000 principal amount of the Prior Bonds which matures on February 1, 2014, on
said date (collectively, the "Refunded Bonds"); and the refunding of the Refunded Bonds is
consistent with the covenants made with the holders of the Prior Bonds and is necessary and
desirable to restructure the debt service cost to the City and because special assessments pledged
for payment of the Refunded Bonds are not sufficient to pay all principal and interest due or
about to become due thereon; and
C. WHEREAS, the City shall continue to be responsible for payment of $4,400,000
aggregate principal amount of the Prior Bonds which matures on February 1, 2015 through 2028,
inclusive, on said dates, and such payments are also consistent with the covenants made with the
holders of the Prior Bonds; and
2785110vl
D. WHEREAS, the City Council has heretofore determined and declared that it is
necessary and expedient to issue $1,215,000 General Obligation Improvement Refunding Bonds,
Series 2010D (the "Bonds" or individually a 'Bond"), pursuant to Minnesota Statutes, Chapter
475, to provide funds for a partial net cash advance refunding on November 18, 2010 (the
"Refunding") of the Refunded Bonds in accordance with the Prior Resolution; and
E. WHEREAS, the City has retained David Drown Associates, in Minneapolis,
Minnesota, as its independent financial advisor for the sale of the Bonds and was therefore
authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes,
Section 475.60, Subdivision 2(9); and
F. WHEREAS, it is in the best interests of the City that the Bonds be issued in book -
entry form as hereinafter provided; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Otsego,
Minnesota, as follows:
1. Acceptance of Offer. The offer of Northland Securities, Inc. (the "Purchaser"), to
purchase the Bonds in accordance with the terms and at the rates of interest hereinafter set forth
and to pay therefor the sum of $ , plus accrued interest to the settlement date, is
hereby accepted and the acting Administrator and Finance Director are hereby authorized and
directed to execute a contract with the Purchaser on behalf of the City.
2. Bond Terms.
(a) Original Issue Date,• Denominations,• Maturities, Term Bond Option. The Bonds
shall be dated November 1, 2010, as the date of original issue, shall be issued forthwith on or
after such date in fully registered form, shall be numbered from R-1 upward in the denomination
of $5,000 each or in any integral multiple thereof of a single maturity (the "Authorized
Denominations") and shall mature on February 1 in the years and amounts as follows:
Year
Amount
Year
Amount
2016
$80,000
2023
$ 95,000
2017
80,000
2024
100,000
2018
85,000
2025
100,000
2019
85,000
2026
105,000
2020
85,000
2027
110,000
2021
90,000
2028
110,000
2022
90,000
As may be requested by the Purchaser, one or more term Bonds may be issued having mandatory
sinking fund redemption and final maturity amounts conforming to the foregoing principal
repayment schedule, and corresponding additions may be made to the provisions of the
applicable Bond(s).
2
2785 1 iovi
(b) Book Entry Only System. The Depository Trust Company, a limited purpose
trust company organized under the laws of the State of New York or any of its successors or its
successors to its functions hereunder (the "Depository") will act as securities depository for the
Bonds, and to this end:
(i) The Bonds shall be initially issued and, so long as they remain in book entry form
only (the 'Book Entry Only Period"), shall at all times be in the form of a separate
single fully registered Bond for each maturity of the Bonds; and for purposes of
complying with this requirement under paragraphs 5 and 10 Authorized
Denominations for any Bond shall be deemed to be limited during the Book Entry
Only Period to the outstanding principal amount of that Bond.
(ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond
register maintained by the Bond Registrar (as hereinafter defined) in the name of
CEDE & CO., as the nominee (it or any nominee of the existing or a successor
Depository, the "Nominee").
(iii) With respect to the Bonds neither the City nor the Bond Registrar shall have any
responsibility or obligation to any broker, dealer, bank, or any other financial
institution for which the Depository holds Bonds as securities depository (the
"Participant") or the person for which a Participant holds an interest in the Bonds
shown on the books and records of the Participant (the 'Beneficial Owner").
Without limiting the immediately preceding sentence, neither the City, nor the
Bond Registrar, shall have any such responsibility or obligation with respect to
(A) the accuracy of the records of the Depository, the Nominee or any Participant
with respect to any ownership interest in the Bonds, or (B) the delivery to any
Participant, any Owner or any other person, other than the Depository, of any
notice with respect to the Bonds, including any notice of redemption, or (C) the
payment to any Participant, any Beneficial Owner or any other person, other than
the Depository, of any amount with respect to the principal of or premium, if any,
or interest on the Bonds, or (D) the consent given or other action taken by the
Depository as the Registered Holder of any Bonds (the "Holder"). For purposes
of securing the vote or consent of any Holder under this Resolution, the City may,
however, rely upon an omnibus proxy under which the Depository assigns its
consenting or voting rights to certain Participants to whose accounts the Bonds
are credited on the record date identified in a listing attached to the omnibus
proxy.
(iv) The City and the Bond Registrar may treat as and deem the Depository to be the
absolute owner of the Bonds for the purpose of payment of the principal of and
premium, if any, and interest on the Bonds, for the purpose of giving notices of
redemption and other matters with respect to the Bonds, for the purpose of
obtaining any consent or other action to be taken by Holders for the purpose of
registering transfers with respect to such Bonds, and for all purpose whatsoever.
The Bond Registrar, as paying agent hereunder, shall pay all principal of and
premium, if any, and interest on the Bonds only to the Holder or the Holders of
the Bonds as shown on the bond register, and all such payments shall be valid and
3
a7ssiiovi
effective to fully satisfy and discharge the City'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.
(v) Upon delivery by the Depository to the Bond Registrar of written notice to the
effect that the Depository has determined to substitute a new Nominee in place of
the existing Nominee, and subject to the transfer provisions in paragraph 10,
references to the Nominee hereunder shall refer to such new Nominee.
(vi) So long as any Bond is registered in the name of a Nominee, 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, by the
Bond Registrar or City, as the case may be, to the Depository as provided in the
Letter of Representations to the Depository required by the Depository as a
condition to its acting as book -entry Depository for the Bonds (said Letter of
Representations, together with any replacement thereof or amendment or
substitute thereto, including any standard procedures or policies referenced
therein or applicable thereto respecting the procedures and other matters relating
to the Depository's role as book -entry Depository for the Bonds, collectively
hereinafter referred to as the "Letter of Representations").
(vii) All transfers of beneficial ownership interests in each Bond issued in book -entry
form shall be limited in principal amount to Authorized Denominations and shall
be effected by procedures by the Depository with the Participants for recording
and transferring the ownership of beneficial interests in such Bonds.
(viii) In connection with any notice or other communication to be provided to the
Holders pursuant to this Resolution by the City or Bond Registrar with respect to
any consent or other action to be taken by Holders, the Depository shall consider
the date of receipt of notice requesting such consent or other action as the record
date for such consent or other action; provided, that the City or the Bond Registrar
may establish a special record date for such consent or other action. The City or
the Bond Registrar shall, to the extent possible, give the Depository notice of such
special record date not less than fifteen calendar days in advance of such special
record date to the extent possible.
(ix) Any successor Bond Registrar in its written acceptance of its duties under this
Resolution and any paying agency/bond registrar agreement, shall agree to take
any actions necessary from time to time to comply with the requirements of the
Letter of Representations.
(x) In the case of a partial prepayment of a Bond, the Holder may, in lieu of
surrendering the Bonds for a Bond of a lesser denomination as provided in
paragraph 5, make a notation of the reduction in principal amount on the panel
provided on the Bond stating the amount so redeemed.
4
z7asiiovi
(c) Termination of Book -Entry Only System. Discontinuance of a particular
Depository's services and termination of the book -entry only system may be effected as follows:
(i) The Depository may determine to discontinue providing its services with respect
to the Bonds at any time by giving written notice to the City and discharging its
responsibilities with respect thereto under applicable law. The City may
terminate the services of the Depository with respect to the Bond if it determines
that the Depository is no longer able to carry out its functions as securities
depository or the continuation of the system of book -entry transfers through the
Depository is not in the best interests of the City or the Beneficial Owners.
(ii) Upon termination of the services of the Depository as provided in the preceding
paragraph, and if no substitute securities depository is willing to undertake the
functions of the Depository hereunder can be found which, in the opinion of the
City, is willing and able to assume such functions upon reasonable or customary
terms, or if the City determines that it is in the best interests of the City or the
Beneficial Owners of the Bond that the Beneficial Owners be able to obtain
certificates for the Bonds, the Bonds shall no longer be registered as being
registered in the bond register in the name of the Nominee, but may be registered
in whatever name or names the Holder of the Bonds shall designate at that time,
in accordance with paragraph 10. To the extent that the Beneficial Owners are
designated as the transferee by the Holders, in accordance with paragraph 10, the
Bonds will be delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (d) shall limit or restrict the provisions of paragraph
10.
(d) Letter of Representations. The provisions in the Letter of Representations are
incorporated herein by reference and made a part of the resolution, and if and to the extent any
such provisions are inconsistent with the other provisions of this resolution, the provisions in the
Letter of Representations shall control.
3. Purpose; RefundingFindiW. The Bonds shall provide funds to finance the
Refunding. It is hereby found, determined and declared that the Refunding is pursuant to
Minnesota Statutes, Section 475.67 and, as a result of the Refunding, the average life of the
maturities is extended by at least three years.
4. Interest. The Bonds shall bear interest payable semiannually on February 1 and
August 1 of each year (each, an "Interest Payment Date"), commencing August 1, 2011,
calculated on the basis of a 360 -day year of twelve 30 -day months, at the respective rates per
annum set forth opposite the maturity years as follows:
5
2785110v1
Maturi , Year
2016
2017
2018
2019
2020
2021
2022
Interest Rate
Maturity Year
2023
2024
2025
2026
2027
2028
Interest Rate
5. Redemption. All Bonds maturing on February 1, 2021, and thereafter, are subject
to redemption on February 1, 2020, and on any date thereafter at the option of the City at a price
of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to
prepayment. If redemption is in part, the maturities and the principal amounts within each
maturity to be redeemed shall be determined by the City; and if only part of the Bonds having a
common maturity date are called for prepayment, the specific Bonds to be prepaid shall be
chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be
due and payable on the redemption date, and interest thereon shall cease to accrue from and after
the redemption date. Mailed notice of redemption shall be given to the paying agent and to each
affected registered holder of the Bonds at least thirty days prior to the stated redemption date.
Prior to the date on which any Bond or Bonds are directed by the City to be redeemed in
advance of maturity, the City will cause notice of the call thereof for redemption identifying the
Bonds to be redeemed to be mailed to the Bond Registrar 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 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 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
City or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the
City and Bond Registrar duly executed by the Holder thereof or the Holder's attorney duly
authorized in writing) and the City shall execute (if necessary) and the Bond Registrar shall
authenticate and 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.
R
z7asiiovi
6. Bond Registrar. Northland Trust Services, Inc., in Minneapolis, Minnesota, is
appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond
Registrar"), and shall do so unless and until a successor Bond Registrar is duly appointed, all
pursuant to any contract the City and Bond Registrar shall execute which is consistent herewith.
The Bond Registrar shall also serve as paying agent unless and until a successor -paying agent is
duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or
record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 12.
7. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of
Authentication, the form of Assignment and the registration information thereon, shall be in
substantially the following form:
UNITED STATES OF AMERICA
STATE OF MINNESOTA
WRIGHT COUNTY
CITY OF OTSEGO
R- $
GENERAL OBLIGATION IMPROVEMENT REFUNDING BOND, SERIES 2010D
Interest Rate Maturi . Date Date of Original Issue CUSIP
February 1, November 1, 2010
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The City of Otsego, Wright County, Minnesota (the "Issuer"), certifies that it is indebted
and for value received promises to pay to the registered owner specified above, or registered
assigns, unless called for earlier redemption, in the manner hereinafter set forth, the principal
amount specified above, on the maturity date specified above, and to pay interest thereon
semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date"),
commencing August 1, 2011, at the rate per annum specified above (calculated on the basis of a
360 -day year of twelve 30 -day months) until the principal sum is paid or has been provided for.
This Bond will bear interest from the most recent Interest Payment Date to which interest has
been paid or, if no interest has been paid, from the date of original issue hereof. The principal of
and premium, if any, on this Bond are payable upon presentation and surrender hereof at the
principal office of Northland Trust Services, Inc., in Minneapolis, Minnesota (the "Bond
Registrar"), acting as paying agent, or any successor paying agent duly appointed by the Issuer
(the "Bond Registrar"), acting as paying agent, or any successor paying agent duly appointed by
the Issuer. Interest on this Bond will be paid on each Interest Payment Date by check or draft
mailed to the person in whose name this Bond is registered (the "Holder" or "Bondholder") on
the registration books of the Issuer maintained by the Bond Registrar and at the address
appearing thereon at the close of business on the fifteenth day of the calendar month next
preceding such Interest Payment Date (the "Regular Record Date"). Any interest not so timely
7
27851100
paid shall cease to be payable to the person who is the Holder hereof as of the Regular Record
Date, and shall be payable to the person who is the Holder hereof at the close of business on a
date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes
available for payment of the defaulted interest. Notice of the Special Record Date shall be given
to Bondholders not less than ten days prior to the Special Record Date. The principal of and
premium, if any, and interest on this Bond are payable in lawful money of the United States of
America. So long as this Bond is registered in the name of the Depository or its Nominee as
provided in the Resolution hereinafter described, and as those terms are defined therein, payment
of principal of, premium, if any, and interest on this Bond and notice with respect thereto shall be
made as provided in the Letter of Representations, as defined in the Resolution, and surrender of
this Bond shall not be required for payment of the redemption price upon a partial redemption of
this Bond. Until termination of the book -entry only system pursuant to the Resolution, Bonds
may only be registered in the name of the Depository or its Nominee.
Optional Redemption. The Bonds of this issue (the "Bonds") maturing on February 1,
2021 and thereafter, are subject to redemption and prepayment at the option of the Issuer on
February 1, 2020, and on any date thereafter at a price of par plus accrued interest. Redemption
may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the
maturities and the principal amounts within each maturity to be redeemed shall be determined by
the Issuer; and if only part of the Bonds having a common maturity date are called for
prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar.
Bonds or portions thereof called for redemption shall be due and payable on the redemption date,
and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of
redemption shall be given to the paying agent and to each affected Holder of the Bonds at least
thirty days prior to the stated redemption date.
Prior to the date on which any Bond or Bonds are directed by the Issuer to be redeemed
in advance of maturity, the Issuer will cause notice of the call thereof for redemption identifying
the Bonds to be redeemed to be mailed to the Bond Registrar 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.
Selection of Bonds for Redemption, Partial Redemption. 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 Issuer or Bond Registrar so requires, a written instrument of transfer in form
satisfactory to the Issuer and Bond Registrar duly executed by the Holder thereof or the Holder's
attorney duly authorized in writing) and the Issuer shall execute (if necessary) and the Bond
Registrar shall authenticate and deliver to the Holder of the Bond, without service charge, a new
27asiiovi
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.
Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal
amount of $1,215,000, all of like date of original issue and tenor, except as to number, maturity,
interest rate and denomination, issued pursuant to and in full conformity with the Constitution
and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council on
October 25, 2010 (the "Resolution"), for the purpose of providing money for an advance
refunding of certain outstanding bonds of the Issuer. This Bond is payable out of the General
Obligation Improvement Refunding Bonds, Series 2010D Fund of the Issuer. This Bond
constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full
payment of its principal, premium, if any, and interest when the same become due, the full faith
and credit and taxing powers of the Issuer have been and are hereby irrevocably pledged.
Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered
form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully
registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the
principal office of the Bond Registrar, but only in the manner and subject to the limitations
provided in the Resolution. Reference is hereby made to the Resolution for a description of the
rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal
office of the Bond Registrar.
Transfer. This Bond is transferable by the Holder in person or the Holder's attorney duly
authorized in writing at the principal office of the Bond Registrar upon presentation and
surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the
Resolution and to reasonable regulations of the Issuer contained in any agreement with the Bond
Registrar. Thereupon the Issuer shall execute and the Bond Registrar shall authenticate and
deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the
transferee (but not registered in blank or to "bearer" or similar designation), of an Authorized
Denomination or Denominations, in aggregate principal amount equal to the principal amount of
this Bond, of the same maturity and bearing interest at the same rate.
Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection with the transfer
or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds.
Treatment of Rei?istered Owners. The Issuer and Bond Registrar may treat the person in
whose name this Bond is registered as the owner hereof for the purpose of receiving payment as
herein provided (except as otherwise provided herein with respect to the Record Date) and for all
other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond
Registrar shall be affected by notice to the contrary.
Authentication. This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security unless the Certificate of Authentication hereon shall have been executed
by the Bond Registrar.
G�
z7ssiiovi
Qualified Tax Exempt Obligations. The Bonds have been designated by the Issuer as
"qualified tax exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Minnesota to be done, to happen and to be
performed, precedent to and in the issuance of this Bond, have been done, have happened and
have been performed, in regular and due form, time and manner as required by law; and that this
Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof
and the date of its issuance and delivery to the original purchaser, does not exceed any
constitutional or statutory limitation of indebtedness.
IN WITNESS WHEREOF, the City of Otsego, Wright County, Minnesota, by its City
Council has caused this Bond to be executed on its behalf by the facsimile signatures of its
Mayor and its Clerk, the corporate seal of the Issuer having been intentionally omitted as
permitted by law.
Date of Registration:
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the
Bonds described in the
Resolution mentioned
within.
NORTHLAND TRUST SERVICES
INC.,
Minneapolis, Minnesota
Bond Registrar
0
Authorized Signature
Registrable by: NORTHLAND TRUST
SERVICES INC.
Payable at: NORTHLAND TRUST
SERVICES INC.
CITY OF OTSEGO,
WRIGHT COUNTY, MINNESOTA
/s/ Facsimile
Mayor
/s/ Facsimile
Clerk
10
27s5iiovi
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 full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in common
UTMA - as custodian for
(Cust) (Minor)
under the Uniform
(State)
Transfers to Minors Act
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond
and does hereby irrevocably constitute and appoint attorney to transfer the
Bond on the books kept for the registration thereof, with full power of substitution in the
premises.
Dated:
Notice: The assignor's signature to this assignment must correspond with
the name as it appears upon the face of the within Bond in every
particular, without alteration or any change whatever.
Signature Guaranteed:
Signature(s) must be guaranteed by a national bank or trust company or by a brokerage firm
having a membership in one of the major stock exchanges or any other "Eligible Guarantor
Institution" as defined in 17 CFR 240.17 Ad -15(a)(2).
The Bond Registrar will not effect transfer of this Bond unless the information
concerning the transferee requested below is provided.
Name and Address:
(Include information for all joint owners if the Bond is held by joint account.)
11
a7ssiiovi
PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and in the amount(s) as follows:
Date Amount Authorized signature of Holder
12
27ssiiovi
8. Execution. The Bonds shall be in typewritten form, shall be executed on behalf of
the City by the signatures of its Mayor and Clerk and be sealed with the seal of the City;
provided, as permitted by law, both signatures may be photocopied facsimiles and the corporate
seal has been omitted. In the event of disability or resignation or other absence of either officer,
the Bonds may be signed by the manual or facsimile signature of the officer who may act on
behalf of the absent or disabled officer. In case either officer whose signature or facsimile of
whose signature shall appear on the Bonds shall cease to be such officer before the 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.
9. Authentication. No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit under this resolution unless a Certificate of Authentication on
the Bond, substantially in the form hereinabove set forth, shall have been duly executed by an
authorized representative of the Bond Registrar. Certificates of Authentication on different
Bonds need not be signed by the same person. The Bond Registrar shall authenticate the
signatures of officers of the City on each Bond by execution of the Certificate of Authentication
on the Bond and by inserting as the date of registration in the space provided the date on which
the Bond is authenticated, except that for purposes of delivering the original Bonds to the
Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue of
November 1, 2010. The Certificate of Authentication so executed on each Bond shall be
conclusive evidence that it has been authenticated and delivered under this resolution.
10. Registration; Transfer; Exchange. The City will cause to be kept at the principal
office of the Bond Registrar a bond register in which, subject to such reasonable regulations as
the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds
and the registration of transfers of Bonds entitled to be registered or transferred as herein
provided.
Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the
City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of
registration (as provided in paragraph 9) of, and deliver, in the name of the designated transferee
or transferees, one or more new Bonds of any Authorized Denomination or Denominations of a
like aggregate principal amount, having the same stated maturity and interest rate, as requested
by the transferor; provided, however, that no Bond may be registered in blank or in the name of
"bearer" or similar designation.
At the option of the Holder, Bonds may be exchanged for Bonds of any Authorized
Denomination or Denominations of a like aggregate principal amount and stated maturity, upon
surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever
any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the Bond
Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the
Holder making the exchange is entitled to receive.
All Bonds surrendered upon any exchange or transfer provided for in this resolution shall
be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City.
13
2785110v1
All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general
obligations of the City evidencing the same debt, and entitled to the same benefits under this
resolution, as the Bonds surrendered for such exchange or transfer.
Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar,
duly executed by the Holder thereof or the Holder's attorney duly authorized in writing.
The Bond Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the transfer or exchange of any Bond and any
legal or unusual costs regarding transfers and lost Bonds.
Transfers shall also be subject to reasonable regulations of the City contained in any
agreement with the Bond Registrar, including regulations which permit the Bond Registrar to
close its transfer books between record dates and payment dates. The Clerk is hereby authorized
to negotiate and execute the terms of said agreement.
11. Rights Upon Transfer or Exchange. Each Bond delivered upon transfer of or in
exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Bond.
12. Interest Payment; Record Date. Interest on any Bond shall be paid on each
Interest Payment Date by check or draft mailed to the person in whose name the Bond is
registered (the "Holder") on the registration books of the City maintained by the Bond Registrar
and at the address appearing thereon at the close of business on the fifteenth day of the calendar
month next preceding such Interest Payment Date (the "Regular Record Date"). Any such
interest not so timely paid shall cease to be payable to the person who is the Holder thereof as of
the Regular Record Date, and shall be payable to the person who is the Holder thereof at the
close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever
money becomes available for payment of the defaulted interest. Notice of the Special Record
Date shall be given by the Bond Registrar to the Holders not less than ten days prior to the
Special Record Date.
13. Treatment of Registered Owner. The City and Bond Registrar may treat the
person in whose name any Bond is registered as the owner of such Bond for the purpose of
receiving payment of principal of and premium, if any, and interest (subject to the payment
provisions in paragraph 12) on, such Bond and for all other purposes whatsoever whether or not
such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by
notice to the contrary.
14. Delivery; Application of Proceeds. The Bonds when so prepared and executed
shall be delivered by the Clerk to the Purchaser upon receipt of the purchase price, and the
Purchaser shall not be obliged to see to the proper application thereof.
15. Fund and Accounts. There is hereby established a special fund to be designated
"General Obligation Improvement Refunding Bonds, Series 2010D Fund" (the "Fund") to be
administered and maintained by the Finance Director as a bookkeeping account separate and
apart from all other funds maintained in the official financial records of the City. The Fund shall
14
z7ssiiovi
be maintained in the manner herein specified until all of the Bonds and the interest thereon have
been fully paid. There shall be maintained in the Fund separate accounts, to be designated the
"Escrow Account" and the "Debt Service Account".
(a) Escrow Account. The Escrow Account shall be maintained with Northland Trust
Services, Inc., as the Escrow Agent (the 'Escrow Agent"). $ of Bond proceeds
shall be deposited with the Escrow Agent and applied to fund the Escrow Account or to pay
costs of issuance of the Bonds, which amount, together with all investment earnings thereon plus
other available municipal funds (estimated to be $ required to adequately fund the
Escrow Account for the purposes set forth herein, are hereby pledged and appropriated and shall
be credited to the Escrow Account. The Escrow Account shall be invested in securities maturing
or callable at the option of the holder on such dates and bearing interest at such rates as shall be
required to provide sufficient funds, together with any cash or other funds retained in the Escrow
Account, to pay when due the principal amount and accrued interest on each Refunded Bond to
its maturity. The moneys in the Escrow Account shall be used solely for the purposes herein set
forth and for no other purpose, except that any surplus in the Escrow Account may be remitted to
the City, all in accordance with an Escrow Agreement (the 'Escrow Agreement") by and
between the City and the Escrow Agent. A form of the Escrow Agreement is on file in the office
of the Clerk. Any moneys remitted to the City pursuant to the Escrow Agreement shall be
deposited in the Debt Service Account.
(b) Debt Service Account. There are hereby irrevocably appropriated and pledged to,
and there shall be credited to, the Debt Service Account: (i) all accrued interest received upon
delivery of the Bonds; (ii) any sums remitted to the City pursuant to the Escrow Account; (iii)
any collections of all taxes herein or hereafter levied for the payment of the Bonds; (iv) all
investment earnings on funds held in the Debt Service Account; and (v) any and all other moneys
which are properly available and are appropriated by the governing body of the City to the Debt
Service Account. The amount of any surplus remaining in the Debt Service Account when the
Bonds and interest thereon are paid shall be used consistent with Minnesota Statutes, Section
475.6 1, Subdivision 4.
No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire
higher yielding investments or to replace funds which were used directly or indirectly to acquire
higher yielding investments, except (1) for a reasonable temporary period until such proceeds are
needed for the purpose for which the Bonds were issued and (2) in addition to the above in an
amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To
this effect, any proceeds of the Bonds and any sums from time to time held in the Operation and
Maintenance Accounts or Debt Service Account (or any other City account which will be used to
pay principal or interest to become due on the bonds payable therefrom) in excess of amounts
which under then applicable federal arbitrage regulations may be invested without regard to yield
shall not be invested at a yield in excess of the applicable yield restrictions imposed by said
arbitrage regulations on such investments after taking into account any applicable "temporary
periods" or "minor portion" made available under the federal arbitrage regulations. Money in the
Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the
United States or any agency or instrumentality thereof if and to the extent that such investment
would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the
Internal Revenue Code of 1986, as amended (the "Code").
15
27ssiiovi
16. Special Assessments. The City has heretofore levied special assessments
pursuant to the Prior Resolution, which were pledged to the payment of the principal and interest
on the Prior Bonds and the uncollected special assessments for the Refunded Bonds are now
pledged to the payment of principal and interest on the Bonds. The special assessments are such
that if collected in full they, together with estimated collections of taxes herein pledged for the
payment of the Bonds, will produce at least five percent in excess of the amount needed to meet
when due the principal and interest payments on the Bonds. The special assessments that are
now pledged to the payment of the Refunded Bonds were levied as provided below, payable in
equal, consecutive, annual installments, with general taxes for the years shown below and with
interest on the declining balance of all such assessments at the rate shown opposite such years:
Improvement Designation Amount
CSAH Project
911
Rate Collection Years
5.20% 2010-2014
17. Tax Levy, Coverage Test,• Cancellation of Certain Tax Levies. To provide
moneys for payment of the principal and interest on the Bonds there is hereby levied upon all of
the taxable property in the City a direct annual ad valorem tax which shall be spread upon the tax
rolls and collected with and as part of other general property taxes in the City for the years and in
the amounts as follows:
Years of Tax Lew Years of Tax Collection Amount
2010-2026 2011-2027 See attached schedule
The tax levies are such that if collected in full they, together with estimated collections of
special assessments and any other revenues herein pledged for the payment of the Bonds and
sums held in the Escrow Account, will produce at least five percent in excess of the amount
needed to meet when due the principal and interest payments on the Bonds. The tax levies shall
be irrepealable so long as any of the Bonds are outstanding and unpaid, provided that the City
reserves the right and power to reduce the levies in the manner and to the extent permitted by
Minnesota Statutes, Section 475.61, Subdivision 3.
18. General Obligation Pledge. For the prompt and full payment of the principal and
interest on the Bonds, as the same respectively become due, the full faith, credit and taxing
powers of the City shall be and are hereby irrevocably pledged. If the special assessments and
taxes appropriated and pledged to the payment of principal and interest on the Bonds, together
with any other funds irrevocably appropriated to the Debt Service Account herein established,
shall at any time be insufficient to pay such principal and interest when due, the City covenants
and agrees to levy, without limitation as to rate or amount an ad valorem tax upon all taxable
property in the City sufficient to pay such principal and interest as it becomes due. If the balance
in the Debt Service Account is ever insufficient to pay all principal and interest then due on the
Bonds and any other bonds payable therefrom, the deficiency shall be promptly paid out of any
other funds of the City which are available for such purpose, and such other funds may be
reimbursed with or without interest from the Debt Service Account when a sufficient balance is
available therein.
T
27ssiiovi
19. Defeasance. When all Bonds have been discharged as provided in this paragraph,
all pledges, covenants and other rights granted by this resolution to the registered holders of the
Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with
respect to any Bonds which are due on any date by irrevocably depositing with the Bond
Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond
should not be paid when due, it may nevertheless be discharged by depositing with the Bond
Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such
deposit. The City may also discharge its obligations with respect to any prepayable Bonds called
for redemption on any date when they are prepayable according to their terms, by depositing
with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full,
provided that notice of redemption thereof has been duly given. The City may also at any time
discharge its obligations with respect to any Bonds, subject to the provisions of law now or
hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a
suitable banking institution qualified by law as an escrow agent for this purpose, cash or
securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest
payable at such times and at such rates and maturing on such dates as shall be required, without
regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if
notice of redemption as herein required has been duly provided for, to such earlier redemption
date.
20. Certificate of Registration. The Clerk is hereby directed to file a certified copy of
this resolution with the County Auditor of Wright County, Minnesota, together with such other
information as the County Auditor shall require and the County Auditor shall issue a certificate
that the Bonds have been entered in the County Auditor's Bond Register and that the tax levy
required by the law has been filed.
21. Continuing Disclosure. The City is the sole obligated person with respect to the
Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2-12 (the "Rule"),
promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the
"Undertaking") hereinafter described to:
(a) Provide or cause to be provided to the Municipal Securities Rulemaking Board
(the "MSRB") by filing at www.emma.msrb.org in accordance with the Rule, certain annual
financial information and operating data in accordance with the Undertaking. The City reserves
the right to modify from time to time the terms of the Undertaking as provided therein.
(b) Provide or cause to be provided, in a timely manner to the MSRB notice of the
occurrence of certain material events with respect to the Bonds in accordance with the
Undertaking.
(c) Provide or cause to be provided, in a timely manner to the MSRB notice of a
failure by the City to provide the annual financial information with respect to the City described
in the Undertaking.
(d) The City agrees that its covenants pursuant to the Rule set forth in this paragraph
and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be
17
zeas 1 iovi
enforceable on behalf of such Holders; provided that the right to enforce the provisions of these
covenants shall be limited to a right to obtain specific enforcement of the City's obligations under
the covenants.
The Mayor and City Clerk, or any other officer of the City authorized to act in their place
(the "Officers") are hereby authorized and directed to execute on behalf of the City the
Undertaking in substantially the form presented to the City Council subject to such modifications
thereof or additions thereto as are (i) consistent with the requirements under the Rule, (ii)
required by the Purchaser of the Bonds, and (iii) acceptable to the Officers.
22. Records and Certificates. The officers of the City are hereby authorized and
directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the
issuance of the Bonds, certified copies of all proceedings and records of the City relating to the
Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates
and information as are required to show the facts relating to the legality and marketability of the
Bonds as the same appear from the books and records under their custody and control or as
otherwise known to them, and all such certified copies, certificates and affidavits, including any
heretofore furnished, shall be deemed representations of the City as to the facts recited therein.
23. Official Statement. The Official Statement relating to the Bonds prepared and
distributed by the Purchaser is hereby approved and the officers of the City are authorized in
connection with the delivery of the Bonds to sign such certificates as may be necessary with
respect to the completeness and accuracy of the Official Statement.
24. Negative Covenant as to Use of Bond Proceeds and Project. The City hereby
covenants not to use the proceeds of the Bonds or to use the project financed by the Prior Bonds,
or to cause or permit them to be used, or to enter into any deferred payment arrangements for the
cost of the project financed by the Prior Bonds, in such a manner as to cause the Bonds to be
"private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code.
25. Tax -Exempt Status of the Bonds; Rebate. The City is subject to the rebate
requirement imposed by Section 148(f) of the Code by reason of issuing (together with all
subordinate entities thereof, and all entities treated as one issuer with the City) more than
$5,000,000 of tax-exempt governmental obligations during this calendar year as provided in
Section 148(f)(4)(D) of the Code and Section 1.148-8 of the Regulations.
26. Designation of Qualified Tax -Exempt Obligations. In order to qualify the Bonds
as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Code, the
City hereby makes the following factual statements and representations:
(a) the Bonds are issued after August 7, 1986;
(b) the Bonds are not "private activity bonds" as defined in Section 141 of the Code;
(c) the City hereby designates the Bonds as "qualified tax exempt obligations" for
purposes of Section 265(b)(3) of the Code;
18
27ssiiovi
(d) the reasonably anticipated amount of tax 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 City (and all entities treated as one issuer with the City, and all subordinate
entities whose obligations are treated as issued by the City) during this calendar year 2010 will
not exceed $30,000,000;
(e) not more than $30,000,000 of obligations issued by the City during this calendar
year 2010 have been designated for purposes of Section 265(b)(3) of the Code; and
(f) the aggregate face amount of the Bonds does not exceed $30,000,000.
The City shall use its best efforts to comply with any federal procedural requirements which may
apply in order to effectuate the designation made by this paragraph.
27. Escrow Agreement. On or prior to the delivery of the Bonds, the Mayor and
Clerk shall, and are hereby authorized and directed to, execute on behalf of the City, the Escrow
Agreement. The Escrow Agreement is hereby approved and adopted and made a part of this
resolution and the City covenants that it will promptly enforce all provisions thereof in the event
of default thereunder by the Escrow Agent.
28. Securities; Escrow Agent. Securities purchased from moneys in the Escrow
Accounts shall be limited to securities set forth in Minnesota Statutes, Section 475.67,
Subdivision 8, and any amendments or supplements thereto. Securities purchased from the
Escrow Account shall be purchased simultaneously with the delivery of the Bonds. The City has
investigated the facts and hereby finds and determines that the Escrow Agent is a suitable
financial institution to act as an escrow agent.
29. Purchase of SLGS or Open Market Securities. The Escrow Agent, as agent for
the City, is hereby authorized and directed to purchase on behalf of the City and in its name the
appropriate United States Treasury Securities, State and Local Government Series, and/or open
market securities from the proceeds of the Bonds and, to the extent necessary, other available
funds, all in accordance with the provisions of this resolution and the Escrow Agreement and to
execute all such documents (including the appropriate subscription forms) required to effect such
purchase in accordance with the applicable U.S. Treasury Regulations.
30. Supplemental Resolution. The Prior Resolution is hereby supplemented to the
extent necessary to give effect to the provisions of this resolution.
31. Severability. If any section, paragraph or provision of this resolution shall be held
to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
paragraph or provision shall not affect any of the remaining provisions of this resolution.
32. Headinas. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
Darkenwald and, after a full discussion thereof and upon a vote being taken thereon, the
19
a7asiiovi
following voted in favor thereof: Mayor Stockamp; Councilmembers: Scharber, Darkenwald,
Heidner and Schroeder.
and the following voted against the same: None
Whereupon the resolution was declared duly passed and adopted.
U11
2785110v1
STATE OF MINNESOTA
COUNTY OF WRIGHT
CITY OF OTSEGO
I, the undersigned, being the duly qualified and acting Clerk of the City of Otsego,
Minnesota, do hereby certify that I have compared the attached and foregoing extract of minutes
with the original thereof on file in my office, and that the same is a full, true and complete
transcript of the minutes of a meeting of the City Council, duly called and held on the date
therein indicated, insofar as such minutes relate to authorizing the issuance and awarding the sale
of $1,215,000 General Obligation Improvement Refunding Bonds, Series 2010D.
WITNESS my hand on October 25, 2010.
`% a2
Clerk
21
2785110v1
ESCROW AGREEMENT
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2006B
CITY OF OTSEGO, MINNESOTA
THIS ESCROW AGREEMENT made as of November 1, 2010, by and between
Northland Trust Services, Inc., in Minneapolis, Minnesota (the "Escrow Agent"), and the City of
Otsego, Wright County, Minnesota (the "City"),
WITNESSETH THAT:
A. WHEREAS, pursuant to a resolution adopted on August 28, 2006, the City has
heretofore issued $5,985,000 General Obligation Improvement Bonds, Series 2006B, dated
September 1, 2006 (the "Prior Bonds"). The Prior Bonds maturing on (i) February 1, 2011, in
the principal amount of $260,000, (ii) February 1, 2012, in the principal amount of $270,000,
(iii) February 1, 2013 in the principal amount of $275,000, and (iv) February 1, 2014 in the
principal amount of $290,000, may be paid at maturity on such respective dates (the "Refunded
Bonds"); and
B. WHEREAS, to provide for the partial net cash advance refunding of the Refunded
Bonds in accordance with Minnesota Statutes, Section 475.67, the City has, pursuant to a
resolution adopted on October 25, 2010 (the "Refunding Resolution"), authorized the issuance of
its $1,215,000 General Obligation Improvement Refunding Bonds, Series 2010D, dated
November 1, 2010, as the date of original issue (the "Refunding Bonds") and the City has called
for the payment of the Refunded Bonds on their stated maturity dates as herein provided; all
pursuant to the partial net cash advance refunding accomplished by the issuance of the
Refunding Bonds; and
C. WHEREAS, under the terms of the Refunding Resolution $ of
Refunding Bonds proceeds, shall be held and invested in accordance with the terms and
conditions of this Escrow Agreement as follows: $ shall simultaneously be
invested in securities (the "Initial Escrowed Obligations") as described in the report of Grant
Thornton LLP, dated November 1, 2010, attached hereto as Exhibit C (the "Accountant's
Report"), which Initial Escrowed Obligations, together with the balance of cash in the amount of
$ shall be used for a partial net cash advance refunding of the Refunded Bonds. The
Initial Escrowed Obligations (or evidence of the investment therein and constructive receipt
thereof) and cash are herein called the "Escrow Deposit," provided that the term "Escrow
Deposit" may include due bills reflecting Escrowed Obligations not received by the delivery of
and payment for the Refunding Bonds (the "Bond Closing") so long as such due bills are secured
by the deposit of comparable securities identified as "Substitute Securities" in the Accountant's
Report, or by a cashier's check in an amount equal to either the principal and interest due on the
Escrowed Obligations so due or any deficiency in principal or interest due on the Substitute
Securities (the Initial Escrowed Obligations, said Substitute Securities and any other investments
made hereunder, are referred to collectively as the "Escrowed Obligations"); and
D. WHEREAS, it is desirable and appropriate that $ of Refunding
Bond proceeds to be used to pay issuance expenses be paid by the Escrow Agent for
2785110v1
disbursement in accordance with the schedule of disbursements (the "Issuance Expenses") set
forth in Exhibit A attached hereto and incorporated herein by reference; and
E. WHEREAS, the Escrow Agent is, and hereby represents that it is, a suitable
financial institution within or without the State of Minnesota;
NOW, THEREFORE, in consideration of the premises and of the respective agreements on the
part of the Escrow Agent and City herein contained, the parties hereto hereby agree as follows:
1. Deposits. The City agrees upon delivery of and payment for the Refunding Bonds
at the Bond Closing to forthwith irrevocably deposit with the Escrow Agent the Escrow Deposit,
as an appropriation of the Escrowed Obligations and all payments of principal and interest
thereon, in trust with the Escrow Agent for the security of the holders and owners of the
Refunded Bonds. The City further agrees upon the Bond Closing to deposit with the Escrow
Agent $ in Refunding Bond proceeds and the City authorizes the Escrow Agent
(and the Escrow Agent agrees) to disburse the moneys necessary to pay Issuance Expenses. The
City further authorizes the Escrow Agent to disburse $ in proceeds of the Bonds
received on Bond Closing and any other residual funds in the Escrow Account to the City for
deposit in the Debt Service Account.
2. Acknowledgment of Deposit. Receipt of the Escrow Deposit and Refunding
Bonds proceeds to pay Issuance Expenses shall be acknowledged on behalf of the Escrow Agent
at the Bond Closing by execution of an Acknowledgment in the form attached hereto as Exhibit
B by a duly authorized officer of the Escrow Agent.
3. Compensation; Waiver of Lien. The Escrow Agent hereby acknowledges receipt
of the sum of $1,575.00 as and for its full compensation for services to be performed by it as
agent under this Agreement. There will be no future billings for services rendered by the Escrow
Agent. The Escrow Agent expressly waives any lien upon or claim against the moneys and
investments in the Escrow Account (as defined in Section 7).
4. Collection and Remittance; Payment of Interest, Principal and Premium, if any,
on Refunded Bonds; Substitute Securities. The Escrow Agent will collect all remittances of
interest on the Escrowed Obligations in the Escrow Account as and when such interest becomes
due and payable. The Escrow Agent will cause such Escrowed Obligations to be presented for
payment and converted into cash on their respective maturity or due dates in accordance with the
schedule of cash payments included in the Accountant's Report, and will remit from the Escrow
Account to the paying agent for the Refunded Bonds, the funds required from time to time for
the payment when due, on each interest and principal payment date, the principal and interest on
the Refunded Bonds. If the delivery of any Escrowed Obligations is secured at the Bond Closing
by Substitute Securities and/or a cashier's check as hereinabove provided and delivery of the
Initial Escrowed Obligations is not made within thirty days after the Bond Closing, the Escrow
Agent shall in accordance with the terms of such security arrangement substitute the Substitute
Securities and/or cashier's check for the Initial Escrowed Obligations to assure that such schedule
of cash payments can be complied with.
5. Sufficiency of Escrow Deposit; Further Deposits. In reliance upon the
Accountant's Report, the City represents, and the Escrow Agent acknowledges, that the Escrow
2
a7ssiiovi
Deposit, if the principal of and interest on the Initial Escrowed Obligations are paid in
accordance with their terms, is sufficient to produce cash in such amounts to enable the Escrow
Agent to make full and timely payments as provided in paragraph 4. If at any time it shall appear
to the Escrow Agent that the money in the Escrow Account allocable for such use hereunder will
not be sufficient to make any payment due to the holders of any of the Refunded Bonds, the
Escrow Agent shall immediately notify the City. The City thereupon shall forthwith deposit in
the Escrow Account from funds on hand and legally available such additional funds as may be
required to meet fully the amount to become due and payable and, if necessary, levy for such
purpose an ad valorem property tax on all real property in the City subject to such limitations as
may be prescribed by law. Included in the Accountant's Report is a statement that such cash and
Escrowed Obligations are sufficient to comply with the requirements set forth in paragraph 4.
6. No Repeal of Refunding Resolution. The City will not repeal, revoke or amend
the Refunding Resolution calling for payment of the Refunded Bonds on their stated maturity
dates.
7. Title to Moneys, Trust; Remission of Remaining Moneys. It is recognized that
title to the Escrowed Obligations and money held in the Escrow Account from time to time shall
remain vested in the City but subject always to the prior charge and lien thereon of this Escrow
Agreement and the use thereof required to be made by the provisions of this Escrow Agreement.
The Escrow Agent shall hold all such money and obligations in a special trust fund and account
(the "Escrow Account") separate and wholly segregated from all other funds and securities of the
Escrow Agent or deposited with the Escrow Agent, and shall never commingle such money or
securities with other money or securities, provided that nothing herein contained shall be
construed as requiring the Escrow Agent to keep the identical moneys, or any part thereof,
received for the Escrow Account, on hand, but moneys of an equal amount, except to the extent
such are investments permitted under this Escrow Agreement, shall always be maintained on
hand as funds held by the Escrow Agent as trustee, belonging to the City, and a special account
thereof evidencing such fact shall at all times be maintained on the books of the Escrow Agent,
together with such investments. In the event of the Escrow Agent's failure to account for any
money or obligations held by it in the Escrow Account, such money and obligations shall be and
remain the property of the City, and if for any reason such money or obligations cannot be
identified, all other assets of the Escrow Agent shall be impressed with a trust for the amount
thereof and the City shall be entitled to a preferred claim upon such assets. All moneys
remaining in the Escrow Account after payment therefrom of all sums required to be paid under
this Agreement shall be promptly remitted to the City.
8. Sale and/or Reinvestment. The Escrow Agent may sell and/or reinvest all or a
part of the Escrowed Obligations, or the proceeds thereof in (a) direct, non -callable United States
obligations or obligations unconditionally guaranteed by the United States government, or (b)
any governmental bond which bears the highest or next highest rating of Moody's Investor's
Services, Standard and Poor's Corporation, or a similarly nationally recognized rating agency, if
and only if (a) such sales and/or reinvestment is approved by the City and otherwise permitted by
the laws of Minnesota; (b) an opinion of a certified public accounting firm is first obtained to the
effect that such sale and/or reinvestment will not prevent the Escrow Agent from making all of
the payments to the paying agent for the Refunded Bonds as required in paragraph 5; and (c) an
opinion of nationally recognized bond counsel or tax counsel recognized as having an expertise
3
in the area of tax exempt bonds is first obtained to the effect that such sale and/or reinvestment
will not cause the interest on the Refunded Bonds to become includible in the gross income of
the owners thereof for federal income tax purposes.
Any excess funds created in the Escrow Fund as a result of such sale and/or reinvestment
(i.e. funds not required to pay when due, principal of and interest on the Refunded Bonds, as
shown on the certified public accountants' opinion required in subsection 9(b) shall be withdrawn
from the Escrow Fund and paid by the Escrow Agent to the City, free of any lien of this Escrow
Agreement, within ten business days of receipt of the City's written request to withdraw such
excess funds.
9. Annual Statement. For as long as any of the Refunded Bonds are outstanding, in
January of each year until termination of this Escrow Agreement, commencing January 2011, the
Escrow Agent shall render a statement for the preceding year to the City, which statement shall
set forth the cash on hand and Escrowed Obligations which have matured and the amounts
received by the Escrow Agent by reason of such maturity, the interest earned on any of such
Escrowed Obligations, a list of any investments or reinvestments made by the Escrow Agent in
other Escrowed Obligations and the interest and/or principal derived therefrom, the amounts of
cash paid for the principal and interest on the Refunded Bonds as the principal and interest
payments became due and payable, and any other transactions of the Escrow Agent pertaining to
its duties and obligations as set forth herein.
10. Trust; Safekeeping. All Escrowed Obligations, moneys and investment income
deposited with or received by the Escrow Agent pursuant to this Escrow Agreement shall be
subject to the trust created by this Escrow Agreement, and the Escrow Agent shall be liable for
the preservation and safekeeping thereof; provided, however, that it shall not be responsible for
any depreciation in value of any of the Escrowed Obligations or for the reinvestment of the same
except as herein provided.
11. Duties, Obligations and Liabilities. The duties and obligations of the Escrow
Agent shall be as prescribed by the provisions of this Escrow Agreement, and the Escrow Agent
shall not be liable hereunder except for failure to perform its duties and obligations as
specifically set forth herein or to act in good faith in the performance thereof, and no implied
duties or obligations shall be incurred by the Escrow Agent other than those specified herein.
The Escrow Agent may consult with counsel of its choice, and except as provided in paragraph
9, the opinion of such counsel shall be full and complete authorization and protection with
respect to any action taken or not taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
12. Resignation; Successor. The Escrow Agent may at any time resign and be
discharged of its obligations hereunder by giving to the City written notice of such resignation
and by refunding to the City a pro rata portion of the escrow fee set forth in paragraph 3, not less
than sixty days before the date when the same is to take effect. Such resignation shall take effect
upon the appointment and qualification of a successor agent. In the event of receipt of notice of
such resignation, a successor shall promptly be appointed by the City, and the City shall
immediately give written notice thereof to the predecessor agent. If in a proper case no
appointment of a successor agent is made within forty five days after the receipt by the City of
notice of such resignation, the Escrow Agent or the holders of a majority in aggregate principal
4
27851100
amount of the Refunded Bonds, by an instrument or concurrent instruments in writing signed by
such holders, or by their attorney in fact duly authorized, may appoint a successor Escrow Agent.
Any successor agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor agent and to the City a written acceptance of such appointment, and shall thereupon
without any further act, deed or conveyance become fully vested with all moneys, properties,
duties and obligations of its predecessor, but the predecessor shall nevertheless pay over,
transfer, assign and deliver all moneys, securities or other property held by it to the successor
agent, shall execute, acknowledge and deliver such instruments of conveyance and do such other
things as may reasonably be required to vest and confirm more fully and certainly in the
successor agent all right, title and interest in and to the property held by it hereunder. Any bank
into which the Escrow Agent may be merged or with which it may be consolidated or any bank
resulting from any merger or consolidation to which it shall be a party or any bank to which it
may sell or transfer all or substantially all of its corporate trust business shall, if the City
approves, be the successor agent without the execution of any document or the performance of
any further act.
13. Successors and Assigns; Beneficiaries. This Escrow Agreement shall be
irrevocable and binding upon and shall inure to the benefit of the City and the Escrow Agent and
their respective successors and assigns. In addition, this Escrow Agreement shall constitute a
third party beneficiary contract for the benefit of the holders at any time of the Refunded Bonds.
Said third party beneficiaries shall be entitled to enforce performance and observance by the City
and the Escrow Agent of the respective agreements and covenants herein contained as fully and
completely as if said third party beneficiaries were parties hereto.
14. Supplemental Agreements. For any one or more of the following purposes, the
City and Escrow Agent may enter into any supplemental agreements to this Escrow Agreement
as shall not adversely affect the rights of the holder or holders of the Refunded Bonds and as
shall not be inconsistent with the terms and provisions of this Escrow Agreement, without the
consent of or notice to the holder or holders of the Refunded Bonds:
(a) To cure any ambiguity or formal defect or omission in this Escrow
Agreement;
(b) To grant to, or confer upon, the Escrow Agent for the benefit of the holder
or holders of the Refunded Bonds any additional rights, remedies, powers or authority
that may lawfully be granted to, or conferred upon, such holder or holders; and
(c) To provide additional funds, securities or properties under this Escrow
Agreement.
15. Consent Otherwise to Amendments. Except as expressly provided in paragraph
14, this Escrow Agreement may not be repealed, revoked, altered or amended without the
unanimous written consent of the City and the holder or holders of the Refunded Bonds and the
written consent of the Escrow Agent.
16. Headings. Headings in this Escrow Agreement are for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
z7s5iiovi
IN WITNESS WHEREOF, the City and Escrow Agent have caused this Escrow
Agreement to be executed in their respective names and have caused this Escrow Agreement to
be dated as of the date above first written.
CITY OF OTSEGO, MINNESOTA
By
Its Mayor
By
Its Clerk
6
a7ssiiovi
NORTHLAND TRUST SERVICES, INC.
By
Its Chief Operating Officer/Cashier
EXHIBIT A
ISSUANCE EXPENSES
A-1
EXHIBIT B
ACKNOWLEDGMENT
The undersigned officer, being duly authorized to execute this acknowledgment on behalf
of Northland Trust Services, Inc., as Escrow Agent (the "Escrow Agent"), do hereby
acknowledge that the City of Otsego, Minnesota (the "City"), has this date irrevocably deposited
with the Escrow Agent in trust for the security of the holders and owners of the City's
outstanding General Obligation Improvement Bonds, Series 2006B, dated September 1, 2006,
that mature on February 1, 2011 through 2014, inclusive, that certain Escrow Deposit required to
be deposited with the Escrow Agent at the Bond Closing in accordance with the Escrow
Agreement, dated November 1, 2010, by and between the Escrow Agent and the City; and the
City has in addition deposited $ to pay the Issuance Expenses set forth on
Exhibit A to the Escrow Agreement.
Dated November 18, 2010.
NORTHLAND TRUST SERVICES, INC.
By
Its Chief Operating Officer/Cashier
In
27ssilovl
EXHIBIT C
ACCOUNTANT'S REPORT
[to be supplied by Grant Thornton LLP]
C -I
z7ssiiovi