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RES 97-2 EXTRACT OF MINUTES OF A MEETING OF THE • ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY Pursuant to due call and notice thereof, a regular or special meeting of the Board of Commissioners (the "Board" ) of the Elk River Economic Development Authority (the "EDA" ) was duly held at the Elk River City Hall on October 20, 1997, beginning at 5 : 45 P.M. for the purpose in part of authorizing the competitive negotiated sale of the EDA' s City Hall and Law Enforcement Facility Revenue Refunding Bonds, Series 1997 . The following Boardmembers were present : Dwyer , Thompson, Farber, Holmgren, Bender, and Duitsman and the following were absent : Gongoll • Boardmember Duitsman introduced the following resolution and moved its adoption: EDA RESOLUTION 97-2 RESOLUTION PROVIDING FOR THE COMPETITIVE NEGOTIATED SALE OF THE EDA'S CITY HALL AND LAW ENFORCEMENT FACILITY REVENUE REFUNDING BONDS, SERIES 1997 A. WHEREAS, the Board believes it expedient to issue the EDA' s City Hall and Law Enforcement Facility Revenue Refunding Bonds, Series 1997 (the "Bonds" ) , to refund the EDA' s $2, 740, 000 City Hall and Law Enforcement Facility Revenue Bonds, Series 1997 (City of Elk River Lease Purchase Obligation) , dated November 1, 1991; B. WHEREAS, the Board has retained Springsted Incorporated, in Saint Paul, Minnesota ("Springsted" ) , as its independent financial advisor for this financing and is therefore authorized to sell these obligations by a competitive negotiated sale in accordance. with Minnesota Statutes, Section 475 . 60, Subdivision 2 (9) : • 366825.1 NOW, THEREFORE, BE IT RESOLVED by the Board, as 410 follows : 1 . Authorization; Findings . The Board hereby authorizes Springsted to solicit bids for the competitive negotiated sale of the Bonds . 2 . Meeting; Bid Opening. The Board shall meet at the time and place specified in the Terms of Proposal attached hereto for the purpose of considering sealed bids for, and awarding the sale of, the Bonds . The Secretary of the Board, or designee, shall open bids at the time and place specified in such Terms of Proposal . 3 . Terms of Proposal . The terms and conditions of the Bonds and the negotiation thereof are set forth in the Terms of Proposal attached hereto and hereby approved and made a part hereof . 4 . Official Statement. In connection with said sale, the Secretary and other officers or employees of the Board are hereby authorized to cooperate with Springsted and participate in the preparation of an official statement for the Bonds and to execute and deliver it on behalf of the Board upon its completion. Adopted by Board of Commissioners of the Elk River Economic • Development Authority on October 20, 1997 . The motion for the adoption of the foregoing resolution was duly seconded by Boardmember Thompson and, after full discussion thereof and upon a vote being taken thereon, the following Boardmembers voted in favor thereof : Dwyer, Thompson, Farber, Holmgren, Bender, and Duitsman and the following voted against the same: None 410 366825.1 2 THE AUTHORITY HAS AUTHORIZED SPRINGSTED INCORPORATED TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING • BASIS: TERMS OF PROPOSAL $2,290,000' THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER, MINNESOTA, CITY HALL AND LAW ENFORCEMENT FACILITY REVENUE REFUNDING BONDS, SERIES 1997 (CITY OF ELK RIVER LEASE PURCHASE OBLIGATION) (BOOK ENTRY ONLY) Proposals for the Bonds will be received on Monday, November '10, 1997, until 10:00 A.M., Central Time, at the offices of Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota, after which time they will be opened and tabulated. Consideration for award of the Bonds will be by the Board of Commissioners at 6:00 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Proposals may be submitted in a sealed envelope or by fax (612) 223-3002 to Springsted. Signed Proposals, without final price or coupons, may be submitted to Springsted prior to the time of sale. The bidder shall be responsible for submitting to Springsted the final Proposal price and coupons, by telephone (612) 223-3000 or fax (612) 223-3002 for inclusion in the submitted Proposal. Springsted will assume no liability for the inability of the bidder to reach Springsted prior to the time of sale specified above. Proposals may also be filed electronically via PARITY, in accordance with PARITY Rules of Participation and the Terms of Proposal, within a one-hour period prior to the time of sale established above, but no Proposals will be received after that time. If provisions in the Terms of Proposal conflict with the PARITY Rules of Participation, the Terms of Proposal shall control. The normal fee for use of PARITY may be obtained from PARITY and such fee shall be the responsibility of the bidder. For further information about PARITY, potential bidders may contact PARITY at 500 Main Street, Suite 1010, Fort Worth, TX 76102, telephone (817) 885-8900. Neither the Authority nor Springsted Incorporated assumes any liability if there is a malfunction of PARITY. All bidders are advised that each Proposal shall be deemed to constitute a contract between the bidder and the Authority to purchase the Bonds regardless of the manner of the Proposal submitted. DETAILS OF THE BONDS The Bonds will be dated December 1, 1997, as the date of original issue, and will bear interest payable on February 1 and August 1 of each year, commencing August 1, 1998. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts as follows: 2001 $165,000 2005 $205,000 2009 $260,000 2002 $175,000 2006 $220,000 2010 $280,000 2003 $185,000 2007 $230,000 2011 $130,000 2004 $195,000 2008 $245,000 The Authority reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds offered for sale. Any such increase or reduction will be in a total • amount not to exceed$75,000 and will be made in multiples of$5,000 in any of the maturities. In the event the principal amount of the Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Bonds is increased or reduced. i - • Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds, provided that no serial bond may mature on or after the first mandatory • sinking fund redemption date of any term bond. All term bonds shall be subject to mandatory sinking fund redemption and must conform to the maturity schedule set forth above at a price of par plus accrued interest to the date of redemption. In order to designate term bonds, the proposal must specify "Last Year of Serial Maturities" and "Years of Term Maturities" in the spaces provided on the Proposal Form. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bonds, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of$5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The Authority will name the registrar which shall be subject to applicable SEC regulations. The Authority will pay for the services of the registrar. OPTIONAL REDEMPTION The Authority may elect on February 1, 2006, and on any day thereafter, to prepay Bonds due on or after February 1, 2007. Redemption may be in whole or in part and if in part at the option of the Authority and in such manner as the Authority shall determine. If less than all Bonds of a maturity are called for redemption, the Authority will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest. SECURITY AND PURPOSE The Bonds will be special obligations of the Authority payable solely from lease rental payments received from the City of Elk River pursuant to a Lease Purchase Agreement and shall not constitute a debt for which the faith and credit or taxing powers of the Authority will be pledged. The proceeds will be used to refund the 2001 through 2011 maturities of the Authority's City Hall and Law Enforcement Facility Revenue Bonds, Series 1991. • ii TYPE OF PROPOSALS • Proposals shall be for not less than $2,267,100 and accrued interest on the total principal amount of the Bonds. Proposals shall be accompanied by a Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $22,900, payable to the order of the Authority. If a check is used, it must accompany each proposal. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Minnesota, and preapproved by the Authority. Such bond must be submitted to Springsted Incorporated prior to the opening of the proposals. The Financial Surety Bond must identify each underwriter whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to an underwriter using a Financial Surety Bond, then that purchaser is required to submit its Deposit to Springsted Incorporated in the form of a certified or cashier's check or wire transfer as instructed by Springsted Incorporated not later than 3:30 P.M., Central Time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the Authority to satisfy the Deposit requirement. The Authority will deposit the check of the purchaser, the amount of which will be deducted at settlement and no interest will accrue to the purchaser. In the event the purchaser fails to comply with the accepted proposal, said amount will be retained by the Authority. No proposal can be withdrawn or amended after the time set for receiving proposals unless the meeting of the Authority scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 or 1/8 of 1%. Rates must be in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true . interest cost (TIC) basis. The Authority's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The Authority will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and, (iii) reject any proposal which the Authority determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the underwriter, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the Authority has requested and received a rating on the Bonds from a rating agency, the Authority will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser. Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds. • -iii - CUSIP NUMBERS • If the Bonds qualify for assignment of CUSIP numbers such numbers will berinted on Bonds, but neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser. SETTLEMENT Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser at a place mutually satisfactory to the Authority and the purchaser. Delivery will be subject to receipt by the purchaser of an approving legal opinion of Briggs and Morgan, Professional Association, of Saint Paul and Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement payment for the Bonds shall be made in federal, or equivalent, funds which shall be received at the offices of the Authority or its designee not later than 12:00 Noon, Central Time. Except as compliance with the terms of payment for the Bonds shall have been made impossible by action of the Authority, or its agents, the purchaser shall be liable to the Authority for any loss suffered by the Authority by reason of the purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE On the date of the actual issuance and delivery of the Bonds, the City will execute and deliver a Continuing Disclosure Undertaking whereunder the City will covenant to provide, or cause to be provided, annual financial information, including audited financial statements of the City, and notices of certain material events, as specified in and required by SEC Rule 15c2-12(b)(5). OFFICIAL STATEMENT • The Authority has authorized the preparation of an Official Statement containing information relative to the Bonds, and said Official Statement will serve as a nearly-final pertinent Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the Authority, Springsted Incorporated, 85 East Seventh Place, Suite 100, Saint Paul, Minnesota 55101, telephone (612) 223-3000. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a "Final Official Statement" of the Authority with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting a proposal therefor, the Authority agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 90 copies of the Official Statement and the addendum or addenda described above. The Authority designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter delivering a proposal with respect to the Bonds agrees thereby that if its proposal is accepted by the Authority (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. Dated October 20, 1997 BY ORDER OF THE BOARD OF COMMISSIONERS Patrick Dwyer, President • - iv-