03-57EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
OTSEGO, MINNESOTA
HELD: May 27, 2003
Pursuant to due call and notice thereof, a re ular meeting of the City Council of
the City of Otsego, Wright County, Minnesota, was duly called and held at the City Hall in said
City on Tuesday, the 27`h day of May, 2003, at 6:30 P.M., for the purpose, in part, of considering
proposals for, and awarding the sale of, $11,370,000 General Obligation Water and Sewer
Revenue Bonds, Series 2003B of the City.
The following members were present: Mayor Fournier, and Council members
Wendel, Struthers, Heidner, and Scharber
and the following were absent: None
Member Scharber introduced the following resolution and moved its adoption:
2003-57
RESOLUTION ACCEPTING PROPOSAL ON
SALE OF $11,370,000 GENERAL OBLIGATION
WATER AND SEWER REVENUE BONDS, SERIES 2003B, PROVIDING
FOR THEIR ISSUANCE, AND PLEDGING FOR THE
SECURITY THEREOF NET REVENUES
A. WHEREAS, on April 28, 2003, the City Council of the City of Otsego,
Minnesota (the "City"), adopted a resolution (the "Preliminary Resolution"), which provided for
the private negotiation of $11,370,000 General Obligation Water and Sewer Revenue Bonds,
Series 2003B (the "Bonds"); and
B. WHEREAS, proposals to purchase the Bonds have been solicited by
Northland Securities, Inc. ("Northland") in accordance with the Preliminary Resolution; and
C. WHEREAS, the proposals set forth on Exhibit A attached hereto were
received and opened pursuant to the Official Terms of Bond Sale established for the Bonds in the
presence of the Clerk, or designee, at the offices of Northland at 11:00 A.M., Central Time, this
same day; and
D. WHEREAS, the City owns and operates a municipal water and sewer
system (the "System") as a combined revenue producing public utility; and
E. WHEREAS, there are outstanding General Obligation Sewer and Water
Revenue Bonds of 1998, Series A, dated August 1, 1998 and General Obligation Sewer and
Water Revenue Bonds of 1999, Series A, dated July 1, 1999 (combined the "Outstanding
Bonds") of the City which are payable from the net revenues of the System; and
1528411v1
F. WHEREAS, the City Council has heretofore determined and declared that
it is necessary and expedient to issue the Bonds of the City, pursuant to Minnesota Statutes,
Chapter 475 and Minnesota Statutes, Section 444.075, to finance the construction of various
improvements to the System (the "Project"); and
G. 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 Proposal. The proposal of U S Bancorp Piper Jaffray (the
"Purchaser"), to purchase the Bonds of the City (or individually, a "Bond"), in accordance with
the Official Terms of Bond Sale, at the rates of interest hereinafter set forth, and to pay therefor
the sum of $11,153,970.00, plus interest accrued to settlement, is hereby found, determined and
declared to be the most favorable proposal received and is hereby accepted and the Bonds are
hereby awarded to said proposal maker. The City Clerk is directed to retain the deposit of said
proposal maker and to forthwith return to the unsuccessful proposal makers their good faith
checks and drafts.
2. Bond Terms.
(a) Title; Original Issue Date; Denominations; Maturities; Term Bond Option.
The Bonds shall be titled "General Obligation Water and Sewer Revenue Bonds, Series 2003B",
shall be dated June 1, 2003, as the date of original issue and shall be issued forthwith on or after
such date as fully registered bonds. The Bonds 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"). The Bonds shall mature on December 1 in the years and amounts
as follows:
Year
Amount
Year
Amount
2004
$400,000
2014
$550,000
2005
410,000
2015
575,000
2006
415,000
2016
600,000
2007
430,000
2017
630,000
2008
440,000
2018
660,000
2009
455,000
2019
690,000
2010
470,000
2020
725,000
2011
490,000
2021
760,000
2012
505,000
2022
795,000
2013
530,000
2023
840,000
All dates are inclusive.
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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).
(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
1528411v1 3
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 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 hereof,
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
15 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
hereof, make a notation of the reduction in principal amount on the panel provided on the
Bond stating the amount so redeemed.
152841M 4
(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 hereof. To the extent that
the Beneficial Owners are designated as the transferee by the Holders, in accordance with
paragraph 10 hereof, the Bonds will be delivered to the Beneficial Owners.
(iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of
paragraph 10 hereof.
(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. The Bonds shall provide funds to finance the Project. The total
cost of the Project, which shall include all costs enumerated in Minnesota Statutes, Section
475.65, is estimated to be at least equal to the amount of the Bonds. The City covenants that it
shall do all things and perform all acts required of it to assure that work on the Project proceeds
with due diligence to completion and that any and all permits and studies required under law for
the Project are obtained.
4. Interest. The Bonds shall bear interest payable semiannually on June 1
and December 1 of each year (each, an "Interest Payment Date"), commencing December 1,
2003, 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:
1528411x1
Maturity
Interest
Maturity
Interest
Year
Rate
Year
Rate
2004
2.00%
2014
3.30%
2005
2.00
2015
3.40
2006
2.00
2016
3.50
2007
2.00
2017
4.00
2008
2.50
2018
4.00
2009
2.75
2019
4.00
2010
3.00
2020
4.00
2011
3.00
2021
4.00
2012
3.00
2022
4.00
2013
3.10
2023
4.00
5. Redemption. All Bonds maturing in the years 2012 to 2023, inclusive,
shall be subject to redemption and prepayment at the option of the City on December 1, 2011 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, those Bonds remaining unpaid
which have the latest maturity date shall be prepaid first; 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 (30) days prior to the date fixed 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 sucl 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 his, her or its attorney duly
authorized in writing) and the City 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 of the same series having the same stated maturity and interest rate and of any Authorized
Denomination or Denominations, as requested by such Holder, in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered.
6. Bond Registrar. U.S. Bank National Association, in St. Paul, Minnesota,
is appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond
1528411x1 6
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 of this
resolution.
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:
1528411x1 7
UNITED STATES OF AMERICA
STATE OF MINNESOTA
WRIGHT COUNTY
CITY OF OTSEGO
R- $
GENERAL OBLIGATION WATER AND SEWER REVENUE
BONDS, SERIES 2003B
INTEREST MATURITY DATE OF
RATE DATE ORIGINAL ISSUE CUSIP
JUNE 1, 2003
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
KNOW ALL PERSONS BY THESE PRESENTS that 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, in the manner hereinafter set
forth, the principal amount specified above, on the maturity date specified above, unless called
for earlier redemption, to pay interest thereon semiannually on June 1 and December 1 of each
year (each, an "Interest Payment Date"), commencing December 1, 2003, 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 U.S. Bank National Association,
in St. Paul, Minnesota (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 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
1528411v1 Q
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.]*
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL
FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH HERE.
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; that the
Issuer has covenanted and agreed with the Holders of the Bonds that it will impose and collect
charges for the service, use and availability of its municipal sewer and water system at the times
and in amounts necessary to produce net revenues together with other sums pledged to the
payment of the Bonds adequate to pay all principal and interest when due on the Bonds; and that
the Issuer will levy a direct, annual, irrepealable ad valorem tax upon all of the taxable property
of the Issuer, without limitation as to rate or amount, for the years and in amounts sufficient to
pay the principal and interest on the Bonds of this issue as they respectively become due, if the
net revenues from the municipal sewer and water system and any other sums irrevocably
appropriated to the Debt Service Account are insufficient therefor; 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.
Include only until termination of the book -entry only system under paragraph 2 hereof.
1528411 v1
Date of Registration:
BOND REGISTRAR'S
CERTIFICATE OF
AUTHENTICATION
This Bond is one of the
Bonds described in the
Resolution mentioned
within.
U.S. BANK NATIONAL
ASSOCIATION
St. Paul, Minnesota
Bond Registrar
By
Authorized Signature
1528411v1 10
Registrable by: U.S. BANK NATIONAL
ASSOCIATION
Payable at: U.S. BANK NATIONAL
ASSOCIATION
CITY OF OTSEGO,
WRIGHT COUNTY, MINNESOTA
/s/ Facsimile
Mayor
/s/ Facsimile
Clerk
ON REVERSE OF BOND
Redemption. All Bonds of this issue (the "Bonds") maturing in the years 2012 to
2023, inclusive, are subject to redemption and prepayment at the option of the Issuer on
December 1, 2011, 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, those
Bonds remaining unpaid which have the latest maturity date shall be prepaid first; 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 (30) days prior to the date
fixed for redemption.
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 his, her or its attorney duly authorized in writing) and the Issuer 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 of the same series having the same stated maturity and interest rate
and of any Authorized Denomination or Denominations, as requested by such 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 $11,370,000, all of like date of original issue and tenor, except as to number,
maturity, interest rate, denomination and redemption privilege, which Bond has been 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 of the Issuer on May 27, 2003 (the
"Resolution"), for the purpose of providing money to finance the construction of various
improvements to the municipal sewer and water system within the jurisdiction of the Issuer.
This Bond is payable out of the General Obligation Water and Sewer Revenue Bonds, Series
2003B 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.
1528411v1 I I
Transfer. This Bond is transferable by the Holder in person or by his, her or its
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 Registered 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 on the reverse side hereof 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.
Qualified Tax -Exempt Obligation. This Bond has been designated by the Issuer
as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue
Code of 1986, as amended.
1528411vi 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 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.
1528411v1 13
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within
Bond and does hereby irrevocably constitute and appoint
transfer the Bond on the books kept for the registration thereof,
the premises.
Dated:
attorney to
with full power of substitution in
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.)
152841M 14
1528411v1
[Use only for Bonds when they are
Registered in Book Entry Only System]
PREPAYMENT SCHEDULE
This Bond has been prepaid in part on the date(s) and in the amount(s) as follows:
AUTHORIZED SIGNATURE
DATE AMOUNT OF HOLDER
15
8. Execution; Temporary Bonds. The Bonds shall be printed (or, at the
request of the Purchaser, typewritten) and 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, however, that
the seal of the City may be a printed (or at the request of the Purchaser, photocopied) facsimile;
and provided further that both of such signatures may be printed (or at the request of the
Purchaser, photocopied) facsimiles and the corporate seal may be omitted on the Bonds as
permitted by law. In the event of disability or resignation or other absence of either such officer,
the Bonds may be signed by the manual or facsimile signature of that officer who may act on
behalf of such absent or disabled officer. In case either such 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, such signature or facsimile shall nevertheless be valid and sufficient for all purposes,
the same as if he or she had remained in office until delivery. The City may elect to deliver, in
lieu of printed definitive bonds, one or more typewritten temporary bonds in substantially the
form set forth above, with such changes as may be necessary to reflect more than one maturity in
a single temporary bond. Such temporary bonds may be executed with photocopied facsimile
signatures of the Mayor and Clerk. Such temporary bonds shall, upon the printing of the
definitive bonds and the execution thereof, be exchanged therefor and cancelled.
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 such 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,
which date is June 1, 2003. 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 registr:.:on of transfers of Bonds entitled to be registered o:
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
1528411vl 16
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 cancelled by the Bond Registrar and thereafter disposed of as
directed by the City.
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 his, her or its 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 (15th) 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 (10) 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 above) on, such Bond and for all other purposes whatsoever whether
1528411v1 17
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 Treasurer 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 Water and Sewer Revenue Bonds, Series 2003B Fund" (the
"Fund"). The Fund shall be maintained in the manner herein specified until all of the Bonds and
the interest thereon have been fully paid. The Operation and Maintenance Account heretofore
established by the City shall continue to be maintained in the manner heretofore provided by the
City. All moneys remaining after paying or providing for the items set forth in the resolution
establishing the Operation and Maintenance Account shall constitute and are referred to as "net
revenues" until the Bonds and the Outstanding Bonds have been paid. There shall be maintained
in the Fund the following separate accounts to which shall be credited and debited all income and
disbursements of the System as hereinafter set forth. The Treasurer of the City and all officials
and employees concerned therewith shall establish and maintain financial records of the receipts
and disbursements of the System in accordance with this resolution. In such records there shall
be established and maintained accounts of the Fund for the purposes and in the amounts as
follows:
(a) Construction Account. To the Construction Account there shall be
credited the proceeds of the sale of the Bonds, less accrued interest received thereon, less any
amount paid for the Bonds in excess of $11,153,970, and less capitalized interest in the amount
of $-0.00- (together with interest earnings thereon and subject to such other adjustments as are
appropriate to provide sufficient funds to pay interest due on the Bonds on or before N/A ).
From the Construction Account shall be paid all costs and expenses of the Project. Any balance
remaining in the account after completion of the costs shall be transferred to 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) net revenues not
otherwise pledged and applied to the payment of other obligations of the City, in an amount,
together with other funds which may herein or hereafter from time to time be irrevocably
appropriated to the account, sufficient to meet the requirements of Minnesota Statutes, Section
475.61 for the payment of the principal and interest of this issue; (ii) all accrued interest received
upon delivery of the Bonds; (iii) all funds paid for the Bonds in excess of $11,153,970; (iv)
capitalized interest in the amount of $-0.00- (together with interest earnings thereon and subject
to such other adjustments as are appropriate to provide sufficient funds to pay interest due on the
bonds on or before N/A ); (v) all collections of taxes which may hereafter be levied in the event
that net revenues of the System and other funds herein pledged to the payment of the principal
and interest of the Bonds of this issue are insufficient therefore; (v) all funds remaining in the
Construction Account after completion of the Project and payment of the costs thereof; (vi) all
investment earnings on funds held in the Debt Service Account; and (vii) any and all other
moneys which are properly available and are appropriated by the governing body of the City to
1528411v1 18
the Debt Service Account. The Debt Service Account shall be used solely to pay the principal
and interest and any premiums for redemption of the Bonds and any other general obligation
bonds of the City hereafter issued by the City and made payable from said account as provided
by law.
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 (5%) 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 Construction Account, Operation and Maintenance Account 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").
16. Excess Net Revenues. Net revenues in excess of those required for the
foregoing may be used for any proper purpose.
17. Sufficiency of Net Revenues. It is hereby found, determined and declared
that the net revenues are sufficient in amount to pay when due the principal of and interest on the
Bonds herein authorized and the Outstanding Bonds and a sum at least five percent (5%) in
excess thereof, and the net revenues are hereby pledged on a parity with the Outstanding Bonds
for the payment of the Bonds of this issue and shall be applied for that purpose, but solely to the
extent required to meet the principal and interest requirements of this issue as the same become
due. Nothing contained herein shall be deemed to preclude the City from making further pledges
and appropriations of the net revenues for the payment of other or additional_ obligations of the
City, provided that it has first been determined by the City Council that the estimated net
revenues will be sufficient in addition to all other sources, for the payment of the Bonds herein
authorized and such additional obligations and any such pledge and appropriation of the net
revenues may be made superior or subordinate to, or on a parity with the pledge and
appropriation herein.
18. Covenant to Maintain Rates and Charges. In accordance with Minnesota
Statutes, Section 444.075, the City hereby covenants and agrees with the Holders of the Bonds
that it will impose and collect charges for the service, use, availability and connection to the
System at the times and in the amounts required to produce net revenues adequate to pay all
principal and interest when due on the Bonds and the Outstanding Bonds. Minnesota Statutes,
Section 444.075, Subdivision 2, provides as follows: "Real estate tax revenues should be used
1528411v1 19
only, and then on a temporary basis, to pay general or special obligations when the other
revenues are insufficient to meet the obligations".
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. Compliance With Reimbursement Bond Regulations. The provisions of
this paragraph are intended to establish and provide for the City's compliance with United States
Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the
"reimbursement proceeds" of the Bonds, being those portions thereof which will be used by the
City to reimburse itself for any expenditure which the City paid or will have paid prior to the
Closing Date (a "Reimbursement Expenditure").
The City hereby certifies and/or covenants as follows:
(a) Not later than 60 days after the date of payment of a Reimbursement
Expenditure, the City (or person designated to do so on behalf of the City) has made or will have
made a written declaration of the City's official intent (a "Declaration") which effectively (i)
states the City's reasonable expectation to reimburse itself for the payment of the Reimbursement
Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a general and functional
description of the property, project or program to which the Declaration relates and for which the
Reimbursement Expenditure is paid, or identifies a specific fund or account of the City and the
general functional purpose thereof from which the Reimbursement Expenditure was to be paid
(collectively the "Project"); and (iii) states the maximum principal amount of debt expected to be
issued by the City for the purpose of financing the Project; provided, however, that no such
Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for
the Project, defined in the Reimbursement Regulations to include engineering or architectural,
surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not
exceed 20% of the "issue price" of the Bonds, and (ii) a de minimis amount of Reimbursement
1528411 v I 20
Expenditures not in excess of the lesser of $100,000 or 5% of the proceeds of the Bonds.
Notwithstanding the foregoing, with respect to any Declaration made by the City between
January 27, 1992 and June 30, 1993, with respect to a Reimbursement Expenditure made prior to
March 2, 1992, the City hereby represents that there exists objective evidence, that at the time
the Expenditure was paid the City expected to reimburse the cost thereof with the proceeds of a
borrowing (taxable or tax-exempt) and that expectation was reasonable.
(b) Each Reimbursement Expenditure is a capital expenditure or a cost of
issuance of the Bonds or any of the other types of expenditures described in Section 1.150-
2(d)(3) of the Reimbursement Regulations.
(c) The "reimbursement allocation" described in the Reimbursement
Regulations for each Reimbursement Expenditure shall and will be made forthwith following
(but not prior to) the issuance of the Bonds and in all events within the period ending on the date
which is the later of three years after payment of the Reimbursement Expenditure or one year
after the date on which the Project to which the Reimbursement Expenditure relates is first
placed in service.
(d) Each such reimbursement allocation will be made in a writing that
evidences the City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if
made within 30 days after the Bonds are issued, shall be treated as made on the day the Bonds
are issued.
Provided, however, that the City may take action contrary to any of the foregoing
covenants in this paragraph 20 upon receipt of an opinion of its Bond Counsel for the Bonds
stating in effect that such action will not impair the tax-exempt status of the Bonds.
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 each nationally recognized municipal
securities information repository ("NRMSIR") and to the appropriate state information
depository ("SID"), if any, for the State of Minnesota, in each case as designated by the
Commission 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 (i) each NRMSIR
or to the Municipal Securities Rulemaking Board ("MSRB") and (ii) the SID, notice of the
occurrence of certain material events with respect to the Bonds in accordance with the
Undertaking.
1528411 v1 21
(c) Provide or cause to be provided, in a timely manner, to (i) each NRMSIR
or to the MSRB and (ii) the SID, 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 21 and in the Undertaking is intended to be for the benefit of the Holders of the Bonds
and shall be 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 Clerk of the City, or any other officer of the City authorized to act in their
place with "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. 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 irrevocably pledged. If the net revenues of the
System appropriated and pledged to the payment of principal and interest on the Bonds, together
with 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 payable therefrom, the deficiency shall be promptly paid out of any other accounts of the
City which are available for such purpose, and such other funds may be reimbursed without
interest from the Debt Service Account when a sufficient balance is available therein.
23. 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 he or she shall require, and to obtain the County Auditor's certificate that the
Bonds have been entered in the County Auditor's Bond Register.
24. 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.
25. Negative Covenant as to Use of Proceeds and Project. The City hereby
covenants not to use the proceeds of the Bonds or to use the Project, or to cause or permit them
to be used, or to enter into any deferred payment arrangements for the cost of the Project, in such
1528411 v1 22
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.
26. Tax -Exempt Status of the Bonds; Rebate; Elections. The City shall
comply with requirements necessary under the Code to establish and maintain the exclusion from
gross income under Section 103 of the Code of the interest on the Bonds, including without
limitation (1) requirements relating to temporary periods for investments, (2) limitations on
amounts invested at a yield greater than the yield on the Bonds, and (3) the rebate of excess
investment earnings to the United States. The City expects to satisfy the twenty-four (24) month
expenditure exemption for gross proceeds of the Bonds as provided in Section 1.148-7(e)(1) of
the Regulations. If any elections are available now or hereafter with respect to arbitrage or
rebate matters relating to the Bonds, the Mayor, Administrator, or either of them, are hereby
authorized and directed to make such elections as they deem necessary, appropriate or desirable
in connection with the Bonds, and all such elections shall be, and shall be deemed and treated as,
elections of the City.
27. No Designation as Qualified Tax -Exempt Obligations. The City will not
qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)
of the Code.
28. 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.
29. Headings. 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 Heidner and, after a full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof. Wendel, Struthers, Heidner, Scharber, and Fournier
and the following voted against the same: None
Whereupon said resolution was declared duly passed and adopted.
ayor
23
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 of said City, duly called
and held on the date therein indicated, insofar as such minutes relate to considering proposals
for, and awarding the sale of, $11,370,000 General Obligation Water and Sewer Revenue Bonds,
Series 2003B of said City.
WITNESS my hand this 27th day of May, 2003.
i' lfft Qu&on
152841 Iii 24