03-60RESOLUTION 2003-60
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
OTSEGO, MINNESOTA
HELD: June 23, 2003
Pursuant to due call and notice thereof, a regular 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
Monday, June 23, 2003, at 6:30 P.M., for the purpose, in part, of authorizing the issuance and
awarding the sale of $460,000 General Obligation Crossover Refunding Bonds, Series 2003C.
The following members were present: Mayor Fournier, Council Members: Virginia
Wendel, Vern Heidner, Jerry Struthers, Dan Scharber
and the following were absent:
Member Heidner introduced the following resolution and moved its adoption:
RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE
OF $460,000 GENERAL OBLIGATION CROSSOVER
REFUNDING BONDS, SERIES 2003C,
PLEDGING FOR THE SECURITY THEREOF SPECIAL
ASSESSMENTS
A. WHEREAS, the City Council of the City of Otsego, Minnesota (the "City"), has
heretofore determined and declared that it is necessary and expedient to provide moneys for a
crossover refunding of the City's General Obligation Improvement Bonds of 1999, Series B
dated July 1, 1999 (the "Prior Bonds"), issued for the purpose of providing money to finance the
construction of various public improvement projects within the City (the "Project") pursuant to
the resolution of the City Council, dated June 14, 1999, authorizing issuance of the Prior Bonds
(the "Prior Resolution"); and
B. WHEREAS, $925,000 of the principal amount of the Prior Bonds which mature
on or after December 1, 2005, are callable on December 1, 2004, at a price of par plus accrued
interest, as provided in the Prior Resolution; and
C. WHEREAS, the refunding of the callable Prior Bonds, is consistent with
covenants made with the holders thereof, and is necessary and desirable for the reduction of debt
service cost to the City; and
D. WHEREAS, the City Council has heretofore determined and declared that it is
necessary and expedient to issue General Obligation Crossover Refunding Bonds, Series 2003C
of the City in the amount of $460,000 (the "Bonds"), pursuant to Minnesota Statutes, Chapter
475, to provide moneys for a crossover refunding of the callable Prior Bonds; and
E. WHEREAS, it is in the best interests of the City that the Bonds be issued in book -
entry forrn as hereinafter provided; and
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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 $450,984.00, plus interest accrued to settlement, is hereby
accepted.
2. Bond Tenns.
(a) Title; Original Issue Date; Denominations; Maturities. The Bonds shall be titled
"General Obligation Crossover Refunding Bonds, Series 2003C", shall be dated July 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
2005
$100,000
2006
95,000
2007-2008
90,000
2009
85,000
All dates are inclusive.
As may be requested by the Purchaser, one or more tenn 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").
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(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 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").
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(vii) All transfers of beneficial ownership interests in each Bond issued in
book -entry fonn 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) Li 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.
(c) Tennination of Book -Entry Onlyystem. Discontinuance of a particular
Depository's services and termination of the book -entry only system maybe effected as follows:
(i) The Depository may detennine 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 tennination 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.
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(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; Refunding Findings. The Bonds shall provide funds for a crossover
refunding of all the City's callable Prior Bonds (the "Refunding"). It is hereby found, determined
and declared that the Refunding is pursuant to Minnesota Statutes, Section 475.67, Subdivision
13, and as of the crossover date of the Bonds, shall result in a reduction of the present value of
the dollar amount of the debt service to the City from a total dollar amount of $1,003,922.18 for
the Prior Bonds to a total dollar amount of $966,740.90 for the Bonds, computed in accordance
with the provisions of Minnesota Statutes, Section 475.67, Subdivision 12, and accordingly the
dollar amount of such present value of the debt service for the Bonds is lower by at least three
percent (3.00%) than the dollar amount of such present value of the debt service for the Prior
Bonds as required in said Subdivision 12.
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:
Maturity Interest
Year Rate
2005
1.35%
2006
1.70
2007
2.00
2008
2.20
2009
2.50
5. No Redemption. The Bonds are not subject to redemption and prepayment prior
to their stated maturity dates.
6. Bond Re ig strar. 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
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 mamler set forth in the form of Bond and paragraph 12 of this
resolution.
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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 fon-n:
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UNITED STATES OF AMERICA
STATE OF MINNESOTA
WRIGHT COUNTY
CITY OF OTSEGO
R- $
GENERAL OBLIGATION CROSSOVER REFUNDING BOND, SERIES 2003C
INTEREST MATURITY DATE OF
RATE DATE ORIGINAL ISSUE CUSIP
JULY 1, 2003
REGISTERED OWNER:
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, in the manner hereinafter set forth, the principal amount specified above, on the maturity
date specified above, without option of prior redemption, and 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 ten -ns 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
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1541178vI
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.
No Redemption. All Bonds of this issue (the "Bonds") are not subject to redemption and
prepayment prior to their stated maturity dates.
Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal
amount of $460,000, 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 on June 23, 2003 (the "Resolution"), for the purpose of
providing funds sufficient for a crossover refunding on December 1, 2004, of the Issuer's
General Obligation Improvement Bonds of 1999, Series B, dated July 1, 1999, which mature on
December 1, 2005, and thereafter. This Bond is payable out of the Escrow Account and the Debt
Service Account of the Issuer's General Obligation Crossover Refunding Bonds, Series 2003C
Fund. 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 as fully registered
bonds 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 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
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is4ii7svt
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.
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 fonn, 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.
U. S. BANK NATIONAL
ASSOCIATION
St. Paul, Minnesota
Bond Registrar
By
Authorized Signature
1541178v
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
E
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 Transfers to Minors Act
(State)
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- I5(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:
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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
II
1541178v1
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, photocopies) facsimiles and the
corporate seal may be omitted on the Bonds as perinitted 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 canceled.
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 July 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 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
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Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the
Holder snaking 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.
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 (l 5th) 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
or not such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected
by notice to the contrary.
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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 created a special fund to be designated the
"General Obligation Crossover Refunding Bonds, Series 2003C Fund" (the "Fund") to be
administered and maintained by the Treasurer as a bookkeeping account separate and apart from
all other funds maintained in the official financial records of the City. The Fund shall be
maintained in the maruier herein specified until all of the Bonds and the interest thereon have
been fully paid. There shall be maintained in the Fund two (2) separate accounts, to be
designated the "Escrow Account" and "Debt Service Account", respectively.
(a) Escrow Account. The Escrow Account shall be maintained as an escrow account
with U.S. Bank National Association (the "Escrow Agent"), in St. Paul, Minnesota, which is a
suitable financial institution within or without the State whose deposits are insured by the
Federal Deposit Insurance Corporation and whose combined capital and surplus is not less than
$500,000. All proceeds of the sale of the Bonds shall be received by the Escrow Agent and
applied to fund the Escrow Account or to pay costs of issuing the Bonds. Proceeds of the Bonds
not used to pay costs of issuance are hereby irrevocably pledged and appropriated to the Escrow
Account, together with all investment earnings thereon. 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, (i) to pay when due the interest to accrue on each Bond herein
authorized to and including December 1, 2004; and (ii) to pay when called for redemption on
December 1, 2004, the principal amount of each of the Prior Bonds. The Escrow Account shall
be irrevocably appropriated to the payment of (i) all interest on the Bonds herein authorized to
and including December 1, 2004, and (ii) the principal of the Prior Bonds due by reason of their
call for redemption on December 1, 2004. 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 agreement (the "Escrow
Agreement") by and between the City and Escrow Agent, a form of which agreement is on file in
the office of the Treasurer. Any moneys remitted to the City upon termination of the Escrow
Agreement shall be deposited in the Debt Service Account.
(b) Debt Service Account. To the Debt Service Account there is hereby pledged and
irrevocably appropriated and there shall be credited: (1) after the crossover date, all uncollected
special assessments pledged to the payment of the Prior Bonds; (2) any collections of all taxes
herein or hereafter levied for the payment of the Bonds and interest thereon; (3) any collections
of all taxes heretofore levied for the payment of the Prior Bonds and interest thereon which are
not needed to pay the Prior Bonds as a result of the Refunding; (4) any balance remitted to the
City upon the termination of the Escrow Agreement; (5) any balance remaining on December 2,
2004, in the General Obligation Improvement Bonds of 1999, Series B Fund created by the Prior
Resolution; (6) all investment earnings on funds in the Debt Service Account; and (7) 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.
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The moneys in the Debt Service Account shall be used solely to.pay the principal of and
interest on the Bonds or any other bonds hereafter issued and made payable from the Fund. 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 Fund (or
any other City account which will be sued to pay principal and interest to become due on the
Bonds) in excess of amounts which under the applicable federal arbitrage regulations may be
invested without regard as to yield shall not be invested in excess of the applicable yield
restrictions imposed by the arbitrage regulations on such investments after taking into account
any applicable "temporary periods" or "minor portion" made available under the federal arbitrage
regulations. In addition, the proceeds of the Bonds and 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 federal Internal Revenue
Code of 1986, as amended (the "Code").
16. Prior Bonds; Security. Until retirement of the Prior Bonds, all provisions
theretofore made for the security thereof shall be observed by the City and all of its officers and
agents.
17. Special Assessments. The City has heretofore levied special assessments
pursuant to the Prior Resolution, which assessments were pledged to the payment of the principal
and interest on the Prior Bonds and, after the crossover date, all uncollected special assessments
are now pledged to the payment of principal and interest on the Bonds herein authorized.
18. 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:
Year of Tax Levy Year of Tax Collection Amount
(See attached)
The tax levies are such that if collected in full they, together with estimated collections of
special assessments and other revenues herein pledged for the payment of the Bonds and sums
held in the Escrow Account, will produce at least five percent (5%) in excess of the amount
needed to meet when due the principal and interest payments on the Bonds. The tax levies shall
be irreparable 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 pennitted by
Minnesota Statutes, Section 475.6 1, Subdivision 3.
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Upon payment of the Prior Bonds, the uncollected taxes levied in paragraph 17 of the
Prior Resolution authorizing the issuance of the Prior Bonds which are not needed to pay the
Prior Bonds as a result of the Refunding shall be canceled.
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. General Obligation Pledge. For the prompt and full payment of the principal of
and interest on the Bonds as the salve respectively become due, the full faith, credit and taxing
powers of the City shall be and are hereby irrevocably pledged. If the balance in the Escrow
Account or 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 Escrow Account or Debt Service Account when a sufficient balance is available
therein.
21. Securities; Escrow Agent. Securities purchased from moneys in the Escrow
Account shall be limited to securities set forth in Mirmesota 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
Council has investigated the facts and hereby finds and determines that the Escrow Agent is a
suitable financial institution to act as escrow agent.
22. Redemption of Prior Bonds. The Prior Bonds which mature in 2005 and
thereafter shall be redeemed and prepaid on December 1, 2004, in accordance with the terms and
conditions set forth in the Notice of Call for Redemption, substantially in the form attached to
the Escrow Agreement, which terms and conditions are hereby approved and incorporated
herein by reference. Said Notice of Call for Redemption shall be given pursuant to the Escrow
Agreement.
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23. 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 an 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.
24. Purchase of SLGS or Open Market Securities. Northland Securities, Inc., as agent
for the Council, is hereby authorized and directed to purchase on behalf of the Council and in its
name the appropriate United States Treasury Securities, State and Local Government Series
and/or open market securities as provided in paragraph 22 above, 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 form) required to effect such purchase in accordance with the applicable
U.S. Treasury Regulations.
25. 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.
26. 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
re furnished, shall be deemed representations of the City as to the facts recited therein.
27. 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 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.
28. Tax -Exempt Status of the Bonds; Rebate. 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 if the Bonds (together with other obligations reasonably expected to
be issued and outstanding at one time in this calendar year) exceed the small -issuer exception
amount of $5,000,000.
For purposes of qualifying for the exception to the federal arbitrage rebate requirements
for governmental units issuing $5,000,000 or less of bonds, the City hereby finds, determines and
declares that (1) the Bonds are issued by a governmental unit with general taxing powers, (2) no
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Bond is a private activity bond, (3) ninety-five percent (95%) or more of the net proceeds of the
Bonds are to be used for local governmental activities of the City (or of a govermnental unit the
jurisdiction of which is entirely within the jurisdiction of the City), and (4) the aggregate face
amount of all tax-exempt bonds (other than private activity bonds) issued by the City (and all
subordinate entities thereof, and all entities treated as one issuer with the City) during the
calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000, all
within the meaning of Section 148(0(4)(D) of the Code.
Furthermore:
(i) each of the Prior Bonds was issued as part of an issue which was treated as
meeting the rebate requirements by reason of the exception for governmental units
issuing $5,000,000 or less of bonds;
(ii) the average maturity of the Bonds does not exceed the remaining average
maturity of the Prior Bonds; and
(iii) no maturity of the Bonds has a maturity date which is later than the date
which is thirty (30) years after the dates the Prior Bonds were issued.
29. 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;
(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 2003 will
not exceed $10,000,000;
(e) not more than $10,000,000 of obligations issued by the City during this calendar
year 2003 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 $10,000,000.
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.
30. Supplemental Resolution. The Prior Resolution is hereby supplemented to the
extent necessary to give effect to the provisions of this resolution.
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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. 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
Scharber and, after a full discussion thereof and upon a vote being taken thereon, the following
voted in favor thereof. Mayor Fournier, Council Members: Virginia Wendel, Vern Heidner,
Jerry Struthers, Dan Scharber
and the following voted against the salve: None
Whereupon the resolution was declared duly passed and adopted.
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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 considering proposals for and awarding
the competitive negotiated sale of $460,000 General Obligation Crossover Refunding Bonds,
Series 2003C.
WITNESS my hand this 23rd day of June, 2003.
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