01-0846R

RESOLUTION PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF $1,075,000 GENERAL OBLIGATION IMPROVEMENT REFUNDING BONDS, SERIES 2001G; ESTABLISHING THE TERMS AND FORM THEREOF; CREATING A DEBT SERVICE FUND THEREFOR; AND AWARDING THE SALE THEREOF.

BY COUNCILOR HOGG:

        BE IT RESOLVED, by the city council of the city of Duluth, Minnesota (the "City"), as follows:

        Section 1.     Bond Purpose and Authorization.
                            1.01     The City has previously issued its $2,495,000 General Obligation Improvement Bonds dated October 1, 1993 (the "1993 Bonds"). The 1993 Bonds were authorized and issued pursuant to the City Charter and Minnesota Statutes, Chapter 475.
                            1.02     Under and pursuant to the provisions of Minnesota Statutes, Chapter 475 (the "Act") and Section 475.67, Subdivisions 1 through 4 of the Act, the City is authorized to issue and sell its general obligation bonds to refund obligations and the interest thereon before the due date of the obligations, if consistent with covenants made with the holders thereof, when determined by the City to be necessary or desirable for the reduction of debt service cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment.
                            1.03     It is necessary and desirable that in order to reduce debt service costs the City issue $1,075,000 General Obligation Improvement Refunding Bonds, Series 2001G (the "Bonds"), to refund that portion of the 1993 Bonds maturing on and after February 1, 2003 (the "Refunded Bonds"), of which $1,055,000 in principal amount is prepayable on February 1, 2002 (the "Redemption Date").
                            1.04     Evensen Dodge, Inc., financial consultant to the City, has given notification by mail to at least five firms determined by Evensen Dodge, Inc. to be prospective bidders on the Bonds at least two days (omitting Saturdays, Sundays and legal holidays) before the date set for receipt of bids on the Bonds. All actions of the mayor, the clerk and Evensen Dodge, Inc. taken with regard to the sale of the Bonds are hereby ratified and approved.
                            1.05     Pursuant to such solicitation for bids for the sale of the Bonds, the city council has received and considered all bids presented pursuant to the official terms of offering and has determined that the most favorable bid is that of ______________ of ______________ (the "Purchaser"), to purchase the Bonds at a cash price of $_____________, plus accrued interest on the total principal amount from December 1, 2001, to the date of delivery of the Bonds and upon condition that the Bonds mature and bear interest at the times and annual rates set forth in Section 2. The City, after due consideration, finds such offer reasonable and proper and the offer of the Purchaser is hereby accepted. The mayor and the city clerk are authorized and directed to execute on the part of the City a contract for the sale of the Bonds in accordance with the Purchaser's bid. The city treasurer is directed to deposit the good faith check of the successful bidder.

        Section 2.     Terms of Bonds.
                            2.01     The Bonds to be issued hereunder shall be dated December 1, 2001, as the date of original issue, shall be issued in the denomination of $5,000 each, or any integral multiple thereof, in fully registered form and lettered and numbered R-1 and upward. The Bonds shall mature on February 1 in the respective years and amounts stated and shall bear interest as follows:
 

Year Amount Interest Rate
2003 $185,000     
2004 185,000     
2005 180,000     
2006 180,000     
2007 175,000     
2008 170,000     

                            2.02     The Bonds are not subject to redemption prior to maturity.
                            2.03     Interest on the Bonds shall be payable semiannually on February 1 and August 1 in each year (each referred to herein as an "Interest Payment Date"), commencing August 1, 2002. Interest will be computed on the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to the rules of the Municipal Securities Rulemaking Board. The Bond Registrar designated below shall make all interest payments with respect to the Bonds by check or draft mailed to the registered owners of the Bonds shown on the bond registration records maintained by the Bond Registrar at the close of business on the 15th day (whether or not a business day) of the month next preceding the Interest Payment Date at such owners' addresses shown on such bond registration records.
                            2.04     (a)      The Bonds shall be prepared for execution in accordance with the approved form and shall be signed by the manual or facsimile signature of the mayor and attested by the manual or facsimile signature of the city clerk. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be an officer before delivery of the Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, as if he or she had remained in office until delivery.
                                        (b)     The city clerk is authorized and directed to obtain a copy of the proposed approving legal opinion of Fryberger, Buchanan, Smith & Frederick, P.A. of Duluth, Minnesota, which is to be complete and cause the opinion to be attached to each Bond, together with a certificate to be signed by the manual or facsimile signature of the city clerk in substantially the form set forth in Section 2.11. The city clerk is authorized and directed to execute the certificate in the name of the City upon receipt of the opinion, if required by the preceding sentence, and to file the opinion in the City offices.
                            2.05     The City hereby appoints Wells Fargo Bank Minnesota, National Association, in Minneapolis, Minnesota, as registrar, authenticating agent, paying agent and transfer agent for the Bonds (such bank or its successor is herein referred to as the "Bond Registrar"). To provide for the Bond Registrar services, the mayor and the clerk are authorized and directed to execute a bond registrar/paying agent agreement substantially in the form of the agreement currently on file in the office of the city clerk. No Bond shall be valid or obligatory for any purpose until the Bond Registrar's authentication certificate on such Bond, substantially set forth in Section 2.11 hereof, shall have been duly executed by an authorized representative of the Bond Registrar. Authentication certificates on different Bonds need not be signed by the same representative. The manual signature of one officer of the City or the executed authentication certificate on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution.
                            2.06     (a)     In order to make the Bonds eligible for the services provided by The Depository Trust Company, New York, New York ("DTC"), the City has previously agreed to the applicable provisions set forth in the blanket issuer letter of representations which has been executed by the City and DTC (the "Representation Letter").
                                        (b)     All of the Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Payment of interest on and principal of any Bond registered in the name of Cede & Co. shall be made by wire transfer or New York Clearing House or equivalent same day funds by 10:00 a.m. CT or as soon as possible thereafter following the Bond Registrar's receipt of funds from the City on each Interest Payment Date to the account of Cede & Co. on each Interest Payment Date at the address indicated in or pursuant to the Representation Letter.
                                        (c)     Additional matters with respect to, among other things, notices, consents and approvals by Bond holders and payments on the Bonds are set forth in the Representation Letter.
                            2.07     The City shall cause to be kept by the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the City shall provide for the registration of the Bonds and the registration of transfers of the Bonds entitled to be registered or transferred as herein provided. In the event of the resignation or removal of the Bond Registrar or its incapability of acting as such, the bond registration records shall be maintained at the office of the successor Bond Registrar as may be appointed by the City Council. Upon surrender for transfer of any Bond at the principal corporate office of the Bond Registrar, the City shall execute and the Bond Registrar shall authenticate, if required by law or this resolution, and deliver, in the name(s) of the designated transferee or transferees, one or more new Bonds of the like aggregate principal amount, as requested by the transferor.
                            2.08     Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all of the rights to interest, accrued and unpaid and to accrue, which are carried by such other Bond. Each Bond shall be dated by the Bond Registrar as of the date of its authentication. The City and the Bond Registrar shall not be required to make any transfer or exchange of any Bonds called for redemption or to make any such exchange or transfer of the Bonds during the 15 days next preceding the date of the notice of redemption in the case of a proposed redemption of the Bonds.
                            2.09     The City and the 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 interest on such Bond and for all other purposes whatsoever, whether or not such Bond be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary.
                            2.10     The principal of and interest on the Bonds shall be payable by the Bond Registrar, as paying agent, in such funds as are legal tender for the payment of debts due the United States of America. The City shall pay the reasonable and customary charges of the Bond Registrar for the disbursement of principal and interest.
                            2.11     The Bonds shall be printed or typewritten in substantially the following form:

UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF ST. LOUIS

CITY OF DULUTH
GENERAL OBLIGATION IMPROVEMENT REFUNDING BOND
SERIES 2001G


R-__  $_________

 
Interest Rate  Maturity Date Date of Original Issue CUSIP
% February 1, ____ December 1, 2001
 
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:

The City of Duluth, in St. Louis County, Minnesota (the "City"), for value received, promises to pay to the registered owner specified above, or registered assigns, the principal amount specified above on the maturity date specified above, and to pay interest on said principal amount to the registered owner hereof from December 1, 2001, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, until the principal amount is paid or discharged, said interest being at the rate per annum specified above. Interest is payable semiannually on February 1 and August 1 of each year (each referred to herein as an "Interest Payment Date") commencing on August 1, 2002. Both principal and interest are payable in lawful money of the United States of America by check or draft at the office of Wells Fargo Bank Minnesota, National Association, in Minneapolis, Minnesota, as the registrar, paying agent, transfer agent and authenticating agent (the "Bond Registrar"), or at the office of such successor bond registrar as may be designated by the City Council. The Bond Registrar shall make the interest payment with respect to this Bond directly to the registered owner hereof shown on the bond registration records maintained on behalf of the City by the Bond Registrar at the close of business on the 15th day of the month next preceding the Interest Payment Date (whether or not a business day), at such owner's address shown on said bond registration records, without, except for payment of principal on the Bond, the presentation or surrender of this Bond, and all such payments shall discharge the obligations of the City to the extent of the payments so made. Payment of principal shall be made upon presentation and surrender of this Bond to the Bond Registrar when due. For the prompt and full payment of such principal and interest as they become due, the full faith and credit of the City are irrevocably pledged.

This Bond is one of a series issued by the City in the aggregate amount of $1,075,000, all of like date and tenor, except as to number, amount, maturity date and interest rate, pursuant to the authority contained in Minnesota Statutes, Chapter 475 and all other laws thereunto enabling, and pursuant to an authorizing resolution adopted by the governing body of the City on November 29, 2001 (the "Resolution"), and is issued for the purpose of providing money to refund the outstanding principal amount of the $2,495,000 General Obligation Improvement Bonds dated October 1, 1993. The Bonds are payable primarily from special assessments levied against properties specially benefitted by local improvements. The principal and interest on the Bonds will be payable from a special fund of the City entitled "2001 Improvement Refunding Bond Account" in the Special Assessment Debt Service Fund.

The Bonds are not subject to redemption prior to maturity.

The Bonds of this series are issued as fully registered bonds without coupons, in the denomination of $5,000 or any integral multiple thereof. Subject to limitations set forth in the Resolution, this Bond is transferable by the registered owner hereof upon surrender of this Bond for transfer at the principal corporate office of the Bond Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Bond Registrar and executed by the registered owner hereof or the owner's attorney duly authorized in writing. Thereupon the City shall execute and the Bond Registrar shall authenticate, if required by law and this Resolution, and deliver, in exchange for this Bond, one or more new fully registered bonds in the name of the transferee, of an authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of this Bond, of the same maturity and bearing interest at the same rate.

IT IS CERTIFIED AND RECITED that all acts and conditions required by the Charter of the City and by the laws and the Constitution of the State of Minnesota to be done, and to exist precedent to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done and do exist in form, time, and manner as so required; that all taxable property within the corporate limits of the City is subject to the levy of ad valorem taxes to the extent needed to pay the principal hereof and the interest hereon when due, without limitation as to rate or amount; and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional, statutory or charter limitation.

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Bond Registrar's Authentication Certificate hereon shall have been executed by the Bond Registrar by one of its authorized representatives.

IN WITNESS WHEREOF, the City of Duluth, by its City Council, has caused this Bond to be executed in its name by the facsimile signatures of the Mayor and the City Clerk.

Attest:

______________________________ ______________________________
Clerk Mayor
Date of Authentication: _____________________
 
BOND REGISTRAR'S AUTHENTICATION CERTIFICATE

The Bond Registrar confirms that the books reflect the ownership of a Bond registered in the name of the owner named above, in the principal amount stated above, and this Bond is one of the Bonds of the series issued pursuant to the Resolution hereinabove described.

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Bond Registrar

By____________________________
    Authorized Representative

REGISTRATION CERTIFICATE

This Bond must be registered as to both principal and interest in the name of the owner on the books to be kept by Wells Fargo Bank Minnesota, National Association, of Minneapolis, Minnesota, as Bond Registrar. No transfer of this Bond shall be valid unless made on said books by the registered owner or the owner's attorney thereunto duly authorized and similarly noted on the registration books. The ownership of the unpaid principal balance of this Bond and the interest accruing thereon is registered on the books of Wells Fargo Bank Minnesota, National Association as Bond Registrar, in the name of the registered owner last noted below.

Date
Registered Owner Signature of Bond Registrar
12/__/01 Cede & Co.
c/o The Depository Trust Company
55 Water Street
New York, NY 10041
Federal Taxpayer I.D. No.: 13-2555119
______________________
BOND COUNSEL OPINION

I certify that attached hereto is a full, true, and correct copy of the legal opinion rendered by bond counsel on the issuance of the Bonds, dated as of the original date of delivery of and payment for the Bond.

_______________________________
Clerk

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned sells, assigns, and transfers unto


(Name and Address of Assignee)

________________________ Social Security or Other
________________________ Identifying Number of Assignee

the within Bond and all rights thereunder and does hereby irrevocably constitute and appoint ______ attorney to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises.

Dated: ________________

______________________________

______________________________

NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever.

Signature Guaranteed:

____________________________
(Bank, Trust Company, member of
National Securities Exchange)

        Section 3.     Covenants, Accounts and Representations.
                            3.01     (a)     The Bonds are payable from the 2001 Improvement Refunding Bond Account (the "Debt Service Fund") hereby created within the City's Special Assessment Debt Service Fund, and the proceeds of special assessments levied for the projects listed in Section 1.02 of the 1993 Resolution are pledged to the Debt Service Fund.
                                        (b)     The proceeds of the Bonds not including:
                                                (i)     any capitalized interest financed from Bond proceeds;
                                                (ii)    any amount over the minimum purchase price of the Bonds paid by the Purchaser as additional interest pursuant to Minnesota Statutes, Section 475.56;
                                                (iii)   accrued interest; and
                                                (iv)   any proceeds to pay costs of issuance of the Bonds, paid by the Purchaser upon closing and delivery of the Bonds are hereby irrevocably appropriated to the debt service fund heretofore established for the 1993 Bonds(the "1993 Debt Service Fund") in amounts which together with available funds therein shall be used solely to:
                                                        (A)     pay the principal of and interest due on the 1993 Bonds on the Redemption Date and
                                                        (B)     redeem the Refunded Bonds on the Redemption Date. Upon redemption of the Refunded Bonds on the Redemption Date, the 1993 Debt Service Fund shall be terminated, and all monies remaining therein not required to refund the Refunded Bonds shall be transferred to the Debt Service Fund. The city treasurer is authorized to pay the costs of issuance of the Bonds.
                                        (c)     There is hereby appropriated to the Debt Service Fund any amount over the minimum purchase price of the Bonds paid by the Purchaser and all accrued interest paid by the Purchaser upon closing and delivery of the Bonds.
                            3.02     The city council hereby declares that it has assessed against benefitted property not less than 20% of the cost of the projects financed by the 1993 Bonds. The City further declares that it has completed the special assessment process, including any and all supplemental assessments or reassessments that were required to lawfully assess the benefitted property.
                            3.03     It is hereby determined that upon the receipt of proceeds of the Bonds (the "Proceeds") for payment of the Refunded Bonds that an irrevocable appropriation to the 1993 Debt Service Fund shall have been made within the meaning of Section 475.61, Subdivision 3 of the Act and the clerk is hereby authorized and directed to certify such fact to and request the county auditor to cancel any and all tax levies made by the resolution authorizing and approving the Refunded Bonds adopted October 7, 1993 (the "1993 Resolution").
                            3.04     (a)     It is hereby determined that the estimated collections of special assessments levied against benefitted properties pledged for payment of the principal of and interest on the Bonds will produce sums not less than 5% in excess of the amounts needed to meet when due the principal and interest payments on such portion of the Bonds, and accordingly, no tax is levied by this resolution for that purpose.
                                        (b)     All proceeds of said special assessments and taxes set out in Sections 3.04(a) are hereby appropriated and shall be paid when collected into the 2001 Improvement Refunding Bond Account within the Special Assessment Debt Service Fund.
                                        (c)     Under the provisions of Minnesota Statutes, Sections 475.61 and 475.74, the City's liability on the Bonds is not limited to the foregoing sources of payment, and the city council will and shall levy upon all taxable property within the corporate limits of the City, and cause to be extended, assessed and collected, any taxes found necessary for full payment of the principal and interest, without limitation as to the rate or amount. If any payment of principal or interest on the Bonds shall become due when there is not sufficient money in the Debt Service Fund to pay the same, the treasurer shall pay such principal or interest from the general fund of the City, and the general fund shall be reimbursed for such advances out of the proceeds of the taxes levied by this resolution, when collected.

        Section 4.     Refunding, Findings, Prepayment of Refunded Bonds.
                            4.01     It is hereby found and determined that based upon information presently available from the City's financial advisers, the issuance of the Bonds is consistent with covenants in the 1993 Resolution and is necessary and desirable for the reduction of debt service cost to the City.
                            4.02     It is hereby found and determined that the Proceeds and other available funds of the City will be sufficient to prepay all of the principal of and interest on the 1993 Bonds due on the Redemption Date and the principal of the Refunded Bonds on the Redemption Date.
                            4.03     The Refunded Bonds shall be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the form of notice of call for redemption attached hereto as Attachment A, which terms and conditions are hereby approved and incorporated herein by reference. The clerk or his designee is hereby authorized and directed to forthwith, no later than 30 days prior to the Redemption Date, to send written notice of call to the registered owners and paying agent of the Refunded Bonds and to publish notice as provided in the 1993 Resolution.
                            4.04     When the principal of the Refunded Bonds and all interest thereon have been discharged as provided in this section, all pledges, covenants and other rights granted by this Resolution to the holders of the Refunded Bonds shall cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal and interest on the Refunded Bonds shall remain in full force and effect. The City may discharge all Refunded Bonds by depositing with the Bond Registrar on or before the Redemption Date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it shall nevertheless be discharged by depositing with the Bond Registrar a sum sufficient for the payment thereof in full with interest accrued to the Redemption Date.

        Section 5.     Continuing Disclosure. The City acknowledges that the Bonds are subject to the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12) (the "Rule"). The Rule governs the obligations of certain underwriters to require that issuers of municipal bonds enter into agreements for the benefit of the bondholders to provide continuing disclosure with respect to the Bonds. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit underwriters of the Bonds to comply with the Rule, which will enhance the marketability of the Bonds, the mayor and the clerk are hereby authorized and directed to execute a continuing disclosure certificate substantially in the form of the certificate currently on file in the office of the city clerk.

        Section 6.     Tax Covenants.
                            6.01     The City covenants and agrees with the holders of the Bonds that the City will:
                                        (i)     take all action on its part necessary to assure that the interest on the Bonds will be excluded from gross income for federal income taxes including, without limitations, restricting, to the extent necessary, the yield on investments made with the proceeds of the Bonds and investment earnings thereon, making required payments to the federal government, if any, and maintaining books and records in a specified manner, where appropriate, and
                                        (ii)    refrain from taking any action which would cause interest on the Bonds to be subject to federal income taxes, including, without limitation, refraining from spending the proceeds of the Bonds and investment earnings thereon on certain specified purposes.
                            6.02     (a)     The proceeds of the 1993 Bonds have been totally expended for the governmental purpose for which issued; the gross proceeds of the Bonds will, within 90 days of the date of issuance of the Bonds, have been totally expended for the purpose of refunding the outstanding principal amount of the Refunded Bonds and interest thereon and paying costs of issuance of the Bonds. Therefore, no rebate of arbitrage profit is required under the Internal Revenue Code of 1986, as amended (the "Code").
                                        (b)     In addition, the proceeds of the Bonds and money in the Debt Service Funds 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 Code.
                                        (c)     The City hereby covenants not to use the proceeds of the Bonds, or to cause or permit them to be used, 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.
                                        (d)     The City expects that all proceeds of the Bonds will be expended within six months of the date of issue of the Bonds.



STATEMENT OF PURPOSE:  This resolution establishes the terms and form and awards the sale of the $1,075,000 General Obligation Improvement Refunding Bonds, Series 2001G, to ________________________________________, at a true interest cost of ________%.