HomeMy WebLinkAbout03-048 r
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CITY OF LAKEVILLE
RESOLUTION
Date March 17, 2003 Resolution No. 03-48
Motion By Bellows Seconded By xieb
RESOLUTION AUTHORIZING ISSUANCE AND SALE, PRESCRIBING
THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF
GENERAL OBLIGATION EQUIPMENT CERTIFICATES OF
INDEBTEDNESS, SERIES 2003C
BE IT RESOLVED by the City Council of the City of Lakeville, Minnesota (the City), as
follows:
SECTION 1. PURPOSE. It is hereby determined to be in the .best interests of the City to issue
its General Obligation Equipment Certificates of Indebtedness, Series 2003C, in the approximate
principal amount of $2,300,000 (the Certificates), subject to adjustment in accordance with the
terms of this Resolution. The Certificates are being issued pursuant to Minnesota Statutes,
Section 412.301 and Chapter 475. The proceeds of the Certificates will be used to finance the
• costs of acquiring certain items of equipment. Said items of capital equipment have a useful life
not less than the term of the Certificates. The principal amount of the Certificates does .not
exceed .25 percent of the market value of taxable property in the City.
SECTION 2. SOLICITATION OF BIDS. The City has retained Springsted Incorporated, in St.
Paul, Minnesota, as its independent financial advisor for the Certificates. Pursuant to Minnesota
Statutes, Section 475.60, Subdivision 2, paragraph (9), Springsted Incorporated is hereby
authorized to solicit bids for the Certificates on behalf of the City on a negotiated basis.
SECTION 3. AWARD. Upon the recommendation of Springsted Incorporated to accept a
proposal for the purchase of the Certificates, this Council hereby grants authority to the Mayor
and City Administrator to accept such proposal on behalf of the City, and the provisions of such
proposal shall be incorporated herein by reference. The Mayor and City Administrator are also
authorized. to take such other action relating to the Certificates as maybe in the best interests of
the City, including the right to change the principal amount of the Certificates. The Mayor and
City Administrator are hereby authorized and directed to execute a contract on behalf of the City
for the sale of the Certificates in accordance with the terms of this Resolution.
SECTION 4. OBLIGATION TERMS• REGISTRATION• EXECUTION AND DELIVERY.
4.01. Certificate Terms. The Certificates shall be prepared under the supervision of the
City Clerk and shall be dated, mature and bear interest at the rate stated in the contract for the
purchase of the Certificates from the date of issue until paid, and shall be in the denomination of
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• $5,000 or any integral multiple thereof. The Certificates shall be issuable only in fully registered
form, and the ownership of the Certificates shall be transferred only upon the bond register of the
City hereinafter described. Upon presentation and surrender of each Certificate, the principal
amount thereof and the interest thereon shall be payable to the registered owner thereof by check
or draft issued by the registrar, transfer agent and paying agent hereinafter described; provided
that, so long as the Certificates are registered in the name of a securities depository, or a nominee
thereof, in accordance with Section 4.07 hereof, principal and interest shall be payable in
accordance with the operational .arrangements of the securities depository.
4.02. Dates and Interest Payment Dates. Upon initial delivery of the Certificates
pursuant to Section 4.06 and upon any subsequent transfer or exchange pursuant to Section 4.05,
thedate of authentication shall be noted on each Certificate. so delivered, exchanged or
transferred. Interest on the Certificates shall be payable semi-annually commencing on the date
stated in the contract for the purchase of the Certificates, each such date being referred to herein
as an Interest Payment Date, to the person in whose names the Certificates are registered on the
Bond Register, as hereinafter defined, at the Registrar's close of business on the fifteenth day of
the calendar month next preceding such Interest Payment Date, whether or not such day is a
business day. Interest shall be computed on the basis of a 360 day year composed of twelve 30
day months.
4.03. Redemption. Redemption of the: Certificates prior to their stated maturities is
subject to any redemption provisions set forth in the contract for the sale of the Certificates
4.04. Appointment of Initial Re ig strar. The City hereby appoints U.S. Bank National
Association, in St. Paul, Minnesota, as the initial bond registrar, transfer agent and paying agent
(the Registrar). The Mayor and Clerk are authorized to execute and deliver, on behalf of the
City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another
corporation, if the resulting corporation is a bank or trust company authorized by law to conduct
such business, such corporation shall be authorized to act as successor Registrar. The City
agrees to pay the reasonable and customary charges of the Registrar for the services performed.
The City reserves the right to remove the Registrar upon thirty days' notice and upon the
appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all
cash and Certificates in its possession to the successor Registrar and shall deliver the bond
register to the successor Registrar.
4.05. Registration. The effect of registration and the rights and duties of the City and the
Registrax with respect thereto shall be as follows:
(a) Re ig ster. The Registrar shall keep at its principal corporate trust office a bond
register in which the Registrar shall provide for the registration of ownership of
Certificates and the registration of transfers and exchanges of Certificates entitled to be
registered, transferred or exchanged.
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(b) Transfer of Certificates. Upon surrender for transfer of any Certificate duly
endorsed by the registered owner thereof or accompanied by a written instrument of
transfer, in form satisfactory to the Registrar, duly executed by the registered owner
thereof or by an attorney duly authorized by the registered owner in writing, the Registrar
shall authenticate and deliver, in the name of the designated transferee or transferees, one
or more new Certificates of alike aggregate principal amount and maturity, as requested
by the transferor. The Registrar may, however, close the books for registration of any
transfer after the fifteenth day of the month preceding each interest payment date and
until such interest payment date.
(c) Exchange of Certificates. Whenever any Certificates are surrendered by the
registered owner for exchange the Registrar shall authenticate and deliver one or more
new Certificates of a like aggregate principal amount and maturity, as requested by the
registered owner or the owner's attorney in writing.
(d} Cancellation. All Certificates surrendered upon any transfer or exchange
shall be promptly canceled by the Registrar and thereafter disposed of as directed by the
City.
(e) Improver or Unauthorized Transfer. When any Certificate is presented to the
Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that
the endorsement on such Certificate or separate instrument of transfer is valid and
genuine.. and that the requested transfer is legally authorized. The Registrar shall incur no
liability for the refusal, in good faith, to make transfers which it, in its judgment, deems.
improper or unauthorized.
(f) Persons Deemed Owners. The City and the Registrar may treat the person in
whose name any Certificate is at any time registered in the bond register as the absolute
owner of the Certificate, whether the Certificate shall be overdue or not, for the purpose
of receiving payment of or on account of, the principal of and interest on the Certificate
and for all other purposes; and. all payments made to any registered owner or upon the
owner's order shall be valid and effectual to satisfy and discharge the liability upon
Certificate to the extent of the sum or sums so paid.
(g) Taxes, Fees and Charges. For every transfer or exchange of Certificates
(except for an exchange upon a partial redemption of an Certificate), the Registrar may
impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax,
fee or other governmental charge required to be paid with respect to such transfer or
exchange.
(h) Mutilated, Lost, Stolen or Destroyed Certificates. In case any Certificate
shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new
Certificate of like amount, number, maturity date and tenor in exchange and substitution
for and upon cancellation of any such mutilated Certificate or in lieu of and in
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substitution for any Certificate destroyed, stolen or lost, upon the payment of the
reasonable expenses and charges of the Registrar in connection therewith; and, in the case
of an Certificate destroyed, stolen or lost, upon filing with the Registrar of evidence
satisfactory to it that the. Certificate was destroyed,. stolen or lost, and of the ownership
thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form,
substance and amount satisfactory to it, in which both the City and the Registrar shall be
named as obligees. All Certificates so surrendered to the Registrar shall be canceled by it
and evidence of such cancellation shall be given to the City. If the mutilated, destroyed,
stolen or lost Certificate has already matured or been called for redemption in accordance
with its terms it shall not be necessary to issue a new Certificate. prior to payment.
(i) Authenticating Agent. The Registrar is hereby designated authenticating
agent for the Certificates, within the meaning of Minnesota Statutes, Section 475.55,
Subdivision 1, as amended.
(j) Valid Obli atg ions. All Certificates issued upon any transfer or exchange of
Certificates shall be the valid obligations of the City, evidencing the same debt, and
entitled to the same benefits under this Resolution as the Certificates surrendered upon
such transfer or exchange.
4.06. Execution, Authentication and Delivery. The Certificates shall be prepared under
the direction of the Clerk and shall be executed on behalf of the City by the signatures of the
Mayor and the Clerk, provided that the signatures may be printed, engraved or lithographed
facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature
shall appear on the Certificates shall cease to be such officer before the delivery of any
Certificate, such signature or facsimile shall nevertheless be valid and sufficient for all purposes,
the same as if he had remained in office until delivery. Notwithstanding such execution, no
Certificate shall be valid or obligatory for any purpose. or entitled to any security or benefit under
this Resolution unless and until a certificate of authentication on the Certificate has been duly
executed by the manual signature of an authorized representative of the Registrar. Certificates of
authentication on different Certificates need not be signed by the same representative. The
executed certificate of authentication on each Certificate shall be conclusive evidence that it has
been authenticated and delivered under this Resolution. When the Certificates have been
prepared, executed and authenticated, the Finance Director shall deliver them to the Purchaser
upon payment of the purchase price in accordance with the contract of sale heretofore executed,
and the Purchaser shall not be obligated to see to the application of the purchase price.
4.07. Securities Depository. (a) For purposes of this section the following terms shall
have the following meanings:
"Beneficial Owner" shall mean, whenever used with respect to a Certificate, the person in
whose name such Certificate is recorded as the beneficial owner of such Certificate by a
Participant on the records of such Participant, or such person's subrogee.
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"Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor nominee
of DTC with respect to the Certificates.
"DTC" shall mean The Depository Trust Company of New York, New York.
"Participant" shall mean any broker-dealer, bank or other financial institution. for which
DTC holds Certificates as securities depository.
"Representation Letter" shall mean the Representation Letter pursuant to which the
sender agrees to comply with DTC's Operational Arrangements.
(b) The Certificates shall be initially issued as separately authenticated fully registered
obligations, and one Certificate shall be issued in the principal. amount of each stated maturity of
the Certificates. Upon initial issuance, the ownership of such Certificates shall be registered in
the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the City
may treat DTC (or its nominee) as the sole and exclusive owner of the Certificates registered in
its name for the purposes of payment of the principal of or interest on the Certificates, selecting
the Certificates or portions thereof to be redeemed, if any, giving any notice permitted or
required. to be given to registered owners of Certificates under this resolution, registering the
transfer of Certificates, and for all other purposes whatsoever; and neither the Registrar nor the
City shall be affectedby any notice to the contrary. Neither the Registrar nor the City shall have
any responsibility or obligation to any Participant, any person claiming a beneficial ownership
interest in the Certificates under or through DTC or any Participant, or any other person which. is
not shown on the bond register as being a registered owner of any Certificates, with respect to
the accuracy of any records maintained by DTC or any Participant, with respect to the payment
by DTC or any Participant of any amount with respect to the principal of or interest on the
Certificates, with respect to any notice which is permitted or required to be given to owners of
Certificates under this resolution, with respect to the selection by DTC or any Participant of any
person to receive payment in the event of a partial redemption of the Certificates, or with respect
to any consent given or other action taken by DTC as registered owner of the Certificates. So
long as any Certificate is registered in the name of Cede & Co., as nominee of DTC, the
Registrar shall pay all principal of and interest on such Certificate, and shall give all notices with
respect to such Certificate, only to Cede & Co. in accordance with DTC's Operational
Arrangements, 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 interest on the Certificates to the extent
of the sum or sums so paid. No person other than DTC shall receive an authenticated Certificate
for each separate stated maturity evidencing the obligation of the City to make payments of
principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that
DTC has determined to substitute a new nominee in place of Cede & Co., the Certificates will be
transferable to such new nominee in accordance with paragraph (e) hereof.
(c) In the event the City determines that it is in the best interest of the Beneficial Owners
that they be able to obtain Certificates in the form of bond certificates, the City may notify DTC
and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC
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ofCertificates in the form of certificates. In such event, the Certificates will be transferable in
accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services
with respect to the Certificates at any time by giving. notice to the City and the Registrar and
discharging its responsibilities with respect thereto under applicable law.. In such event the
Certificates will be transferable in accordance with paragraph (e} hereof.
(d) The execution and. delivery of the Representation Letter to DTC by the Mayor or
Clerk is hereby authorized and directed.
(e) In the event that any transfer or exchange of Certificates is permitted under paragraph
(b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar
of the Certificates to be transferred or exchanged and appropriate instruments of transfer to the
permitted transferee in accordance with the provisions of this resolution. In the event
Certificates in the form of certificates are issued to owners other than Cede & Co., its successor
as nominee for DTC as owner of all the Certificates, or another securities depository as owner of
all the. Certificates, the provisions of this resolution shall also apply to all matters relating
thereto, including, without limitation, the printing of such Certificates in the form of bond
certificates and the method of payment of principal of and interest on such Certificates in the
form of bond certificates.
4.08. Form of Certificates. The Certificates shall be prepared in substantially the
following form:
[The remainder of this page is intentionally left blank.]
UNITED STATES OF AMERICA
STATE OF MINNESOTA
DAKOTA COUNTY
CITY OF LAKEVILLE
GENERAL OBLIGATION EQUIPMENT CERTIFICATE
OF INDEBTEDNESS, SERIES 2003C
6
Interest Rate Maturit Date Date of Original Issue CUSIP No.
REGISTERED OWNER: CEDE & CO.
.PRINCIPAL AMOUNT: THOUSAND DOLLARS
THE CITY OF LAKEVILLE, DAKOTA COUNTY, MINNESOTA (the City),
acknowledges itself to be indebted and hereby promises to pay to the registered owner named
above, or registered assigns, the principal amount specified above on the maturity date specified
above, [without option of prior payment,] [all subject to the provisions referred to herein with
respect to the redemption of the principal of this Certificate before maturity,] and promises to
pay interest thereon from the date of original issue specified above or from the most recent
interest payment date to which interest has been paid or duly provided for, at the annual rate
specified above, payable on and of each year, commencing
to the person in whose name this Certificate is registered at the close of business
on the fifteenth day (whether or not a business day) of the immediately preceding month.
Interest hereon shall be computed on the basis of a 360-day year composed of twelve 30-day
.months.. The interest hereon and, upon presentation and surrender hereof at the principal office
of the agent of the Registrar described below, the principal hereof are payable in lawful money
of the United States of America by check or draft drawn on U.S. Bank National Association in
St. Paul, Minnesota, as bond registrar, transfer agent and paying agent, or its successor
designated under the Resolution described herein .(the Registrar), or its designated successor
under the Resolution described herein. For the prompt and full payment of such principal and
interest as the same respectively become due, the full faith and credit and taxing powers of the
City have been and are hereby irrevocably pledged.
This Certificate is one of an issue in the aggregate principal amount of
$ issued pursuant to a resolution adopted by the City Council on March 17,
2003 (the Resolution), to finance the costs of acquisition of capital equipment, and is issued
pursuant to and in full conformity with the Constitution and laws of the State of Minnesota
thereunto enabling, including Minnesota Statutes, Section 412.301 and Chapter 475. The
Certificates are issuable only in fully registered form, in denominations of $5,000 or any integral
multiple thereof, of single maturities.
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{Insert any redemption provisions, if applicable.]
As provided in the Resolution and subject to certain limitations set forth therein, this
Certificate is transferable upon the books of the City at the principal office of the Registrar, by
the registered owner hereof in person or by the owner's. attorney duly authorized in writing upon
surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly
executed by the registered owner or the owner's attorney, and may also be surrendered in
exchange for Certificates of other authorized denominations. Upon such transfer or exchange the
Citywill cause a new Certificate or Certificates to be issued in the name of the transferee or
registered owner, of the same aggregate principal amount, bearing interest at the same rate and
maturing on the same date, subject to reimbursement for any tax, fee or governmental charge
required to be paid with respect. to such transfer or exchange.
Notwithstanding any other provisions of this Certificate, so long as this Certificate is
registered in the name of Cede & Co., as nominee of The Depository Trust Company, or in the
name of any other nominee of The Depository Trust Company or other securities depository, the
Registrar shall pay all principal of and interest on this Certificate, and shall give all notices with
respect to this Certificate, only to Cede & Co. or other nominee in accordance with the
operational. arrangements of The Depository Trust Company or other securities. depository as
agreed to by the City.
The City and the Registrar may deem and Great the person in whose name this Certificate
is registered. as the absolute owner hereof, whether this Certificate is overdue or not, for the
purpose of receiving payment and for all. other purposes, and neither the City nor the Registrar
sha1L be affected by any notice to the contrary..
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts,
conditions and things required by the Constitution and laws of the State of Minnesota to be done,
to exist, to happen and to be performed preliminary to and in the issuance of this Certificate in
order to make it a valid and binding general obligation of the City in accordance with its terms,
have been done, do exist, have happened and have been performed as so required; that, prior to
the issuance hereof, the City Council has levied ad valorem taxes on all taxable property in the
City, which taxes will be collectible for the years and in amounts sufficient to produce sums. not
less than five percent in excess of the principal of and interest on the Certificates when due, and
has appropriated such taxes to its General Obligation Equipment Certificates of Indebtedness,
Series 2003C Bond Fund for the payment of such principal and interest; that if necessary for
payment of such principal and interest, additional ad valorem taxes are required to be levied
upon all taxable property in the City, without limitation as to rate or amount; that the issuance of
this Certificate, together with all other indebtedness of the City outstanding on the date hereof
and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to
exceed any constitutional or statutory limitation of indebtedness and that the opinion printed
hereon is a full and correct copy of the legal opinion given by Bond Counsel with reference to
the Certificates, dated as of the date of original delivery of the Certificates.
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This Certificate shall not be valid or become obligatory for any purpose or be entitled to
any security or benefit under the Resolution until the Certificate. of Authentication hereon shall
have been executed by the Registrar by manual signature of one of its authorized representatives.
IN WITNESS WHEREOF,. the City of Lakeville, Dakota County, Minnesota, by its City
Council, has caused this Certificate to be executed on its behalf by the facsimile signatures of the.
Mayor and Clerk and has caused this Certificate to be dated as of the date set .forth below.
CITY OF LAKEVILLE, MINNESOTA
' (facsimile signature - Clerk) (facsimile signature -Mayor)
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates delivered pursuant to the Resolution mentioned within.
Date of Authentication: U.S. BANK NATIONAL ASSOCIATION,
as Registrar
By
Authorized Representative
[insert legal opinion]
The following abbreviations, when used in the inscription on the face of this Certificate, shall be
construed as though they were written out in full according to the applicable laws or regulations:
TEN COM - as tenants in common UTMA as Custodian for
(Gust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Transfers to Minors Act
(State)
JT TEN as joint tenants with right of survivorship and not as tenants in common
Additional abbreviations may also be used.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Certificate and all rights. thereunder, and does hereby irrevocably constitute and
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• appoint attorney to transfer the said Certificate on the books kept for
registration of the within Certificate, 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 Certificate in every particular, without alteration or
enlargement or any change whatsoever.
Signature Guaranteed:
Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements
of the Registrar, which requirements include membership or participation in STAMP or such
other "signature guaranty program" as .maybe determined by the Registrar in addition to or in
substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
.PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE:
[end of certificate form]
SECTION 5. GENERAL OBLIGATION EQUIl'MENT CERTIFICATES OF
INDEBTEDNESS SERIES 2003C BOND FUND. So long as any of the Certificates are
outstanding and any principal of or interest thereon unpaid, the Finance Director shall maintain a
separate debt service fund on the official books and records of the City to be known as the
General Obligation Equipment Certificates of Indebtedness, .Series 2003C Bond Fund (the Bond
Fund), and the principal of and interest on the Certificates shall be payable from the Bond Fund.
The City irrevocably appropriates to the Bond Fund (a) all taxes levied and collected in
accordance with this Resolution; and (b) such other funds as may be appropriated from time to
time by the City Council to the Bond Fund to pay principal and interest on the Certificates. If the
balance in the Bond Fund is at any time insufficient to pay all interest and principal then due on
all Certificates payable therefrom, the payment shall be made from any fund of the City which is
available for that purpose, subject to reimbursement from the Bond Fund when the balance
therein is sufficient, and the City Council covenants and agrees that it will each year levy a
sufficient amount of ad valorem taxes to take care of any accumulated or anticipated deficiency,
which levy is not subject to any constitutional or statutory limitation.
SECTION 6. PLEDGE OF TAXING POWERS. For the prompt and full payment of the
principal of and interest on the Certificates as such payments respectively become due, the full
faith, credit and unlimited taxing powers of the City shall be and are hereby irrevocably pledged.
In order to produce aggregate amounts not less than 5% in excess of the amount needed to meet
when due the principal and interest payments on the Certificates, ad valorem taxes are hereby
levied on all taxable property in the City. The amounts and years of each levy shall be attached
to this resolution and are incorporated herein by reference. The taxes shall be irrepealable as
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• long as any of the Certificates are outstanding and unpaid, provided that the City reserves the
right and power to reduce the tax levies in accordance with the provisions of Minnesota Statutes,
Section 475.61.
SECTION 7. DEFEASANCE. When all of the Certificates have been discharged as provided in
this section, all pledges, covenants and other rights granted by this Resolution to the holders of
the Certificates shall cease. The City may discharge its obligations with respect to any
Certif cafes which are due on any date by depositing with the Registrar on or before that. date a
sum sufficient for the payment thereof in full; or, if any Certificate should not bepaid when due,
it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the
payment thereof in full with interest accrued from the due date to the date of such deposit. The
City may also at any time discharge its obligations with respect to any Certificates, subject to the.
provisions of law now or hereafter authorizing and regulating such action, by depositing
irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or
securities which are authorized by law to be so deposited, bearing interest payable at such time
and at such rates and maturing or callable at the holder's option on such dates as shall be
required to pay all principal and interest to become due thereon to maturity.
SECTION 8. CERTIFICATION OF PROCEEDINGS.
8.01. Registration of Certificates and Levy of Taxes. The Clerk is hereby authorized and
directed to file a certified copy of this resolution with the County Treasurer-Auditor of Dakota
County and obtain a certificate that the Certificates have been duly entered upon the Treasurer-
Auditor's bond register and the tax required by law has been levied.
8.02. Authentication of Transcript. The officers of the City. and the County Treasurer-
Auditor are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey
& Whitney LLP, Bond Counsel, certified copies of all proceedings and records relating to the
.Certificates and such other affidavits, certificates and information as maybe required to show the
facts relating to the legality and marketability of the Certificates, as the same appear from the
books and records in their custody and control or as otherwise known to them, and all such
certified copies, affidavits and certificates, including any heretofore furnished, shall be deemed
representations of the City as to the correctness of all statements contained therein.
SECTION 9. TAX COVENANTS• ARBITRAGE MATTERS• REIMBURSEMENT AND
CONTINUING DISCLOSURE.
9.01. General Tax Covenant. The City covenants and agrees with the registered owners
from time to time of the Certificates that it will not take, or permit to be taken by any of its
officers, employees or agents, any actions that would cause interest on the Certificates to become
includable in gross income of the recipient under the Internal Revenue Code of 1986 (the Code)
and applicable Treasury Regulations (the Regulations), and covenants to take any and all actions
within its powers to ensure that the interest on the Certificates will not become includable in
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gross income of the recipient under the Code and the Regulations. In particular, the City
covenants and agrees that all proceeds of the Certificates will be expended solely for the
payment of the costs of acquisition and installation of capital. equipment to be owned and
maintained by the City and used in the City's general governmental operations. The City shall
not enter into any lease, use or other agreement with any non-governmental person relating to the
use of the equipment or security for the payment of the Certificates which might cause the
Certificates to be considered "private activity bonds" or "private loan bonds" pursuant to Section
141 of the Code.
9.02.. Arbitrage Certification. The Mayor and Clerk being the officers of the City
charged with the responsibility for. issuing the Certificates pursuant to this resolution, are
authorized and directed to execute and deliver to the Purchaser a certificate in accordance with
the provisions of Section 148 of the Code, and Section 1.148-2(b) of the Regulations, stating the
facts, estimates and circumstances in existence on the date of issue and delivery of the
Certificates which make it reasonable to expect that the proceeds of the Certificates will not be
used in a manner that would cause the Certificates to be arbitrage bonds within the meaning of
the Code and Regulations.
9.03. Arbitrage Rebate. The City acknowledges that the Certificates are subject to the
rebate requirements of Section 148(f) of the Code. The City covenants and agrees to retain such
records, make such determinations, file such reports and documents and pay such amounts. at
such times as are required under said Section 148(f) and applicable Regulations to preserve the
exclusion of interest on the Certificates from gross income for federal income tax purposes,.
unless the Certificates qualify for an exception from therebate requirement pursuant to one of
the spending exceptions set forth in Section 1.148-7 of the Regulations and no "gross proceeds"
of the Certificates (other than amounts constituting a "bona fide debt service fund").arise during
or after the expenditure of the original proceeds thereof.
9.04. Not Qualified Tax-Exempt Obli atg ions. The Certificates are not "qualified tax-
exempt obligations" for purposes of Section 265(b)(3) of the Code relating to the disallowance of
interest expense for financial institutions.
9.05. Reimbursement. The City certifies that the proceeds of the Certificates will not be
used by the City to reimburse itself for any expenditure with respect to the equipment which the
City paid or will have paid more than 60 days prior to the issuance of the Certificates unless,
with respect to such prior expenditures, the City. shall have made a declaration of official intent
which complies with the provisions of Section 1.150-2 of the Regulations; provided that this
certification shall not apply (i) with respect to certain de minimis expenditures, if any, with
respect to the equipment meeting the requirements of Section 1.150-2(f)(1) of the Regulations, or
(ii) with respect to "preliminary expenditures" for. the equipment as defined in Section 1.150-
2(f)(2) of the Regulations which in the aggregate do not exceed 20% of the "issue price" of the
Certificates.
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i 9.06. Continuing Disclosure. (a) Purpose and Beneficiaries. To provide for the public
availability of certain. information relating to the Certificates and the security therefor and to
permit the Purchaser and other participating underwriters in the primary offering of the
Certificates to comply with amendments to Rule 15c2-12 promulgated by the SEC under the
Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12), relating to continuing disclosure (as
in effect and interpreted from time to time, the Rule), which will enhance the marketability of the
Certificates, the City hereby makes the following covenants and agreements for the benefit of the
Owners (as hereinafter defined) from time to time of the Outstanding Certificates. The City is
the only obligated person in respect of the Certificates within the meaning of the Rule for
purposes of identifying the entities in respect of which continuing disclosure must be made. The
City has complied in all material respects with any undertaking previously entered into by it
under the Rule. If the City fails to comply with any provisions of this section, any person
aggrieved thereby, including the Owners of any Outstanding Certificates, may take whatever
action at law or in equity may appear necessary or appropriate to enforce performance and
observance of any agreement or covenant contained in this section, including an action for a writ
of mandamus or specific performance. Direct, indirect, consequential and punitive damages
shall not be recoverable for any default hereunder to the extent permitted by law.
Notwithstanding anything to the contrary contained herein, in no event shall a default under this
section constitute a default under the Certificates or under any other provision of this resolution.
As used in this section, Owner_or Certificateowner means, in respect of a Certificate, the
registered owner or owners thereof appearing in the bond register maintained by the Registrar or
any Beneficial Owner (as hereinafter defined) thereof, if such Beneficial Owner provides to the
Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to
the Registrar. As used herein, Beneficial Owner means, in respect of a Certificate, any person or
entity which. (i) has the power, directly or indirectly, to vote or consent with respect to, or to
dispose of ownership of, such Certificate (including persons. or entities holding- Certificates
through nominees, depositories or other intermediaries), or (b) is treated as the owner of the
Certificate for federal income tax purposes.
(b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection
(c) hereof, either directly or indirectly through an agent designated by the City, the following
information at the following times:
(1) on or before 365 days after the end of each fiscal year of the City, commencing with
the fiscal year ending December 31, 2003, the following financial information and
operating data in respect of the City (the Disclosure Information):
(A) .the audited financial statements of the City for such fiscal year, containing
balance sheets as of the end of such fiscal year and a statement of operations,
changes in fund balances and cash flows for the fiscal year then ended, showing
in comparative form such figures for the preceding fiscal year of the City,
prepared in accordance with generally accepted accounting principles
promulgated by the Financial Accounting Standards Board as modified in
accordance with the governmental accounting standards promulgated by the
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i Governmental Accounting Standards Board or as otherwise provided under
Minnesota law, as in effect from time to time, or, if and to the extent such
financial statements have not been prepared in accordance with such generally
accepted accounting principles for reasons beyond the reasonable control of the
City, noting the discrepancies therefrom and the effect thereof, and certified as
to accuracy and completeness in all material respects by the fiscal officer of the
City; and
(B) to the extent not included in the financial statements referred to in paragraph (A)
hereof, the information for such fiscal year or for the period most recently
available of the type contained in the Official Statement under headings: City
Property Values; City Indebtedness; and City Tax Rates, Levies and
Collections.
Notwithstanding the foregoing paragraph, if the audited financial statements are not available by
the date specified, the City shall provide on or before such date unaudited financial statements in
the format required for the audited financial statements as part of the Disclosure Information and,
within 10 days after the receipt thereof, the City shall provide the audited financial statements.
Any or all of the Disclosure Information maybe incorporated by reference, if it is updated as
required hereby, from other documents, including official statements, which have been submitted
to each of the repositories hereinafter referred to under subsection (c) or the SEC. If the
document incorporated by reference is a final official statement, it must be available from the
• Municipal Securities Rulemaking Board. The City shall clearly identify in the Disclosure
Information each document so incorporated by reference. If any part of the Disclosure
Information can no longer be generated because the operations of the City have materially
changed or been discontinued, such Disclosure Information need no longer be provided if the
City includes in the Disclosure Information a statement to such effect; provided, however, if such
operations have been replaced by other City operations in respect of which data is not included in
the Disclosure Information and the City determines that certain specified data regarding such
replacement operations would be a Material Fact (as defined in paragraph (2) hereof), then, from
and after such determination, the Disclosure Information shall include such additional specified
data regarding the replacement operations. If the Disclosure Information is changed or this
section is amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall
include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an
explanation of the reasons for the amendment and the effect of any change in the type of
financial information or operating data provided.
(2) In a timely manner, notice of the occurrence of any of the following events which is
a Material Fact (as hereinafter defined):
(A) Principal and interest payment delinquencies;
(B) Non-payment related defaults;
(C) Unscheduled draws on debt service reserves reflecting financial difficulties;
(D) Unscheduled draws on credit enhancements reflecting financial difficulties;
• 14
(E) Substitution of credit or liquidity providers, or their failure to perform;
(F) Adverse tax opinions or events affecting the tax-exempt status of the security;
{G) Modifications to rights of security holders;
{H) Bond calls;
(I) Defeasances;
(J} Release, substitution, or sale of property securing repayment of the securities;
and
(K) Rating changes.
As used herein, a Material Fact is a fact as to which a substantial likelihood exists that a
reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a
Certificate or, if not disclosed, would significantly alter the total information otherwise available
to an investor from the Official Statement, information disclosed hereunder or information
generally available to the public. Notwithstanding the foregoing sentence, a Material Fact is also
an event that would be deemed material for purposes of the purchase, holding or sale of a
Certificate within the meaning of applicable federal securities laws, as interpreted at the time of
discovery of the occurrence of the event.
(3) In a timely manner, notice of the occurrence of any. of the following events or
conditions:
(A) .the failure of the .City to provide .the Disclosure Information required under
paragraph (b)(1);at the time specified thereunder;
(B) the amendment or supplementing of this section pursuant to subsection (d),
together with a copy of such amendment or supplement and any explanation
..provided by the City under subsection (d)(2);
(C) the termination of the obligations of the City under this section pursuant to
subsection (d);
(D) any change in the accounting principles pursuant to which the financial
statements constituting a portion of the Disclosure Information are prepared;
and
(E) any change in the fiscal year of the City.
(c) Manner of Disclosure. The City agrees to make available the information described in
subsection (b) to the following entities by telecopy, overnight delivery, mail or other means, as
appropriate:
(1) the information described in paragraph (1) of subsection (b), to each then nationally
recognized municipal securities information repository under the Rule and to any
state information depository then designated or operated by the State of Minnesota
as contemplated by the Rule (the State Depository), if any;
(2) the information described in paragraphs (2) and (3) of subsection (b), to the
Municipal Securities Rulemaking Board and to the State Depository, if any; and
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(3) the information described in subsection (b), to any rating agency then maintaining a
rating of the Certificates at the request of the City and, at the expense of such
Certificateowner, to any Certificateowner who requests in writing such information,
at the time of transmission under paragraphs (1) or (2) of this subsection (c), as the
case maybe, or, if such information is transmitted with a subsequent time of release,
at the time such information is to be released.
•
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. (d) Term; Amendments; Interpretation.
(1) The covenants of the City in this section shall remain in effect so long as any
Certificates are Outstanding. Notwithstanding the preceding sentence, however, the
obligations of the City under this section shall terminate and be without further
effect as of any date on which the City delivers to the Registrar an opinion of Bond
Counsel to the effect that, because of legislative action or final judicial or
administrative actions or proceedings,. the failure of the City to comply with the
requirements of this section will not cause participating underwriters in the primary
offering of the Certificates to be in violation of the Rule or other applicable
requirements of the Securities Exchange Act of 1934, as amended, or any statutes or
laws successory thereto or amendatory thereof.
{2) This section (and the form and requirements of the Disclosure Information) maybe
amended: or supplemented by the City from time to time, without notice to (except as
provided in paragraph (c)(3) hereof) or the consent of the Owners of any
Certificates, by a resolution of this Council filed in the office of the recording. officer
of the City accompanied by an opinion of Bond Counsel, who may rely on
certificates of the City and others and the opinion maybe subject to customary
qualifications, to the effect that: (i) such amendment or supplement (a) is made. in
connection with a change in circumstances that arises from a change in law or
regulation or a change in the identity, nature or status of the City or the type of
operations conducted by the City, or (b) is required by, or better complies with, the
provisions of paragraph (b)(5) of the Rule; (ii) this section as so amended or
supplemented would have complied with the requirements of paragraph (b)(5) of the
Rule at the time of the primary offering of the Certificates, giving effect to any
change in circumstances applicable under clause (i)(a) and assuming that the Rule as
in effect and interpreted at the time of the amendment or supplement was in effect at
the time of the primary offering; and (iii) such amendment or supplement does not
materially. impair the interests of the Certificateowners under the Rule.
If the. Disclosure Information is so amended, the City agrees to provide,
contemporaneously with the effectiveness of such amendment, an explanation of the
reasons. for the amendment and the effect, if any, of the change in the type of
financial information or operating data being provided hereunder.
(3) This section is entered into to comply with the continuing disclosure provisions of
the Rule and should be construed so as to satisfy the requirements of paragraph
(b)(5) of the Rule.
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• APPROVED AND ADOPTED this 1 Th day of March, 2003.
CITY OF LAKEVILLE,
By:
Robert D. John„ ,Mayor
AT ST:
harlene Friedges, Ci Jerk
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