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Res 1998-27 00039 RESOLUTION NO. 27 - 1998 RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF THE CITY'S GENERAL OBLIGATION WATER REVENUE REFUNDING BONDS, SERIES 1998A WHEREAS, the City has received bids for the purchase of its General Obligation Water Revenue Refunding Bonds, Series 1998A. NOW, THEREFORE, BE IT RESOLVED by the City Council (the "Council") of the City of Fridley, Minnesota (the "City") , as follows: 1. Findings. It is hereby determined: (a) The City issued its $1, 615, 000 General Obligation Water Revenue Bonds, Series 1991A, dated January 1, 1991 (the "Prior Bonds") , for the purpose of defraying the expense of the acquisition, construction, furnishing, and betterment of the City's municipal water system and utility. (b) The Council believes it to be in the City's best interest to consider a refunding of the Prior Bonds. (c) The Prior Bonds are subject to prepayment on February 1, 2000, at the option of the City at the redemption price of par plus accrued interest. (d) The refunding of the Prior Bonds is consistent with covenants made with the holders thereof and is necessary and desirable for and will result in the reduction of debt service cost to the City. (e) It is necessary and expedient to issue the City's General Obligation Water Revenue Refunding Bonds, Series 1998A (the "Bonds") , to provide (together with other available funds of the City to be used for such purposes) moneys for a crossover refunding of the $1, 135, 000 of the principal of the Prior Bonds maturing after February 1, 2000 (which Prior Bonds are sometimes referred to herein as the "Refunded Bonds") . (f) There has been presented to the City the form of a certain Escrow Agreement, dated as of May 1, 1998 (the "Escrow Agreement") , which is to be executed and delivered by and between the City and the Escrow Agent thereunder in connection with the issuance of the Bonds and which provides, in accordance with its terms and the terms of this Resolution, for the deposit and investment within the Escrow Account thereunder of proceeds of the Bonds for subsequent disbursement by the Escrow Agent thereunder. (g) The Council desires that the Bonds be issued in Book Entry Only Form, as hereinafter described. 00040 0 Page 2 -- Resolution No. 27 - 1998 2. Acceptance of Offer. The offer of (the "Purchaser") , to purchase the City's General Obligation Water Revenue Refunding Bonds, Series 1998A, dated May 1, 1998 (the "Bonds", or individually a "Bond") , at the rates of interest and upon the other terms set forth in this Resolution, and to pay therefor the sum of $ plus interest accrued to settlement, is hereby accepted. 3. Title; Original Issue Date; Denominations; Maturities; Book Entry Bonds. (a) The Bonds shall be titled "General Obligation Water Revenue Refunding Bonds, Series 1998A, " shall be dated May 1, 1998, as the date of original issue and shall be issued forthwith on or after such date as fully registered bonds. The Bonds shall be numbered from R-1 upward in the denomination of $5, 000 each or in any integral multiple thereof of a single maturity. The Bonds shall mature on February 1 in the years and amounts as follows: Year Amounts Year Amounts 2001 2007 2002 2008 2003 2009 2004 2010 2005 2011 2006 In lieu of the foregoing serial maturity schedule, at the request of the Purchaser, one or more term Bonds may be delivered having mandatory sinking fund redemptions corresponding to the applicable amounts above. (b) Book Entry Only System. The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York, or any of its successors to its functions hereunder (the "Depository") , will act as securities depository for the Bonds, and to this end: (i) The Bonds shall be initially issued and, so long as they remain in book entry form only (the "Book Entry Only Period") , shall at all times be in the form of a separate single fully registered Bond for each maturity of the Bonds; and authorized denominations for each maturity of Bonds shall be deemed to be limited during the Book Entry Only Period to the outstanding principal amount of that maturity. While in such book entry form, the Bonds are sometimes hereinafter referred to as being in "Book 00041 Page 3 -- Resolution No. 27 - 1998 Entry Only Form. " (ii) issuance, ownership of the Bonds shall be registered in a bond register maintained by the Bond Registrar described in this Resolution in the name of CEDE & CO. , as the nominee (it or any nominee of the existing or a successor Depository, the "Nominee") . (iii)With respect to the Bonds, neither the City nor the Bond Registrar shall have any responsibility or obligation to any broker, dealer, bank, or any other financial institution for which the Depository holds Bonds as securities depository (the "Participant") or to the person for which a Participant holds an interest in the Bonds shown on the books and records of the Participant (the "Beneficial Owner") . Without limiting the immediately preceding sentence, neither the City, nor the Bond Registrar, shall have any such responsibility or obligation with respect to (A) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in the Bonds, or (B) the delivery to any Participant, any Beneficial Owner or any other person, other than the Depository, of any notice with respect to the Bonds, including any notice of redemption, or (C) the payment to any Participant, any Beneficial Owner or any other person, other than the Depository, of any amount with respect to the principal of or premium, if any, or interest on the Bonds, or (D) the consent given or other action taken by the Depository as the registered owner of any Bonds (the "Holder") . For purposes of securing the vote or consent of any Holder under this Resolution, the City may, however, rely upon an omnibus proxy under which the Depository assigns its consenting or voting rights to certain Participants to whose accounts the Bonds are credited on the record date identified in a listing attached to the omnibus proxy. (iv) The City and the Bond Registrar may treat as and deem the Depository to be the absolute owner of the Bonds for the purpose of payment of the principal of and premium, if any, and interest on the Bonds, for the purpose of giving notices of redemption and other matters with respect to the Bonds, for the purpose of obtaining any consent or other action to be taken by Holders for the purpose of registering transfers with respect to such Bonds, and for all purpose 00042 Page 4 -- Resolution No. 27 - 1998 whatsoever. The Bond Registrar, as paying agent hereunder, shall pay all principal of and premium, if any, and interest on the Bonds only to or upon the Holder or the Holders of the Bonds, as shown on the Bond Registrar's bond register, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. (v) Upon delivery by the Depository to the Bond Registrar of written notice to the effect that the Depository has determined to substitute a new Nominee in place of the existing Nominee, and subject to the transfer provisions in paragraph 11 hereof, references to the Nominee hereunder shall refer to such new Nominee. (vi) So long as any Bond is registered in the name of a Nominee, all payments with respect to the principal of and premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, by the Bond Registrar or the City, as the case may be, to the Depository as provided in the Blanket Issuer Letter of Representations required by the Depository as a condition to its acting as book-entry Depository for the Bonds (said Blanket Issuer Letter of Representations, together with any replacement thereof or amendment or substitute thereto, including any standard procedures or policies referenced therein or applicable thereto respecting the procedures and other matters relating to the Depository's role as book-entry Depository for the Bonds, are collectively hereinafter referred to as the "Blanket Issuer Letter of Representations") . (vii) All transfers of beneficial ownership interests in each Bond issued in book-entry form shall be limited in principal amount to authorized denominations and shall be effected by the Depository with the Participants for recording and transferring the ownership of beneficial interests in such Bonds. (viii) In connection with any notice or other communication to be provided to the Holders pursuant to this Resolution by the City or the Bond Registrar with respect to any consent or 00043 Page 5 -- Resolution No. 27 - 1998 other action to be taken by Holders, the Depository shall consider the date of receipt of notice requesting such consent or other action as the record date for such consent or other action; provided, that the City or the Bond Registrar may establish a special record date for such consent or other action. The City or the Bond Registrar shall, to the extent possible, give the Depository notice of such special record date not less than 30 calendar days in advance thereof to the extent possible. (ix) Any successor Bond Registrar, in its written acceptance of its duties under this Resolution and any paying agency registrar agreement, shall agree to take any actions necessary from time to time to comply with the requirements of the Blanket Issuer Letter of Representations. (x) In the case of a partial prepayment of a Bond, the Holder may, in lieu of surrendering the Bond for a Bond of a lesser denomination as provided in paragraph 6 hereof, make a notation of the reduction in principal amount on the panel provided on the Bond stating the amount so redeemed. (c) Termination of Book-Entry Only System. Discontinuance of a particular Depository's services and termination of the book-entry only system may be effected as follows: (i) The Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the City and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of the Depository with respect to the Bonds if the City determines that the Depository is no longer able to carry out its functions as securities depository or the continuation of the system of book-entry transfers through the Depository is not in the best interests of the City. (ii) Upon termination of the services of the Depository as provided in the preceding paragraph, and if no substitute securities depository is willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the City, is willing and able to assume such functions upon reasonable or customary terms, or if the City determines that it is in the best interests of the City that the 00044 Page 6 -- Resolution No. 27 - 1998 Beneficial Owners be issued certificates for the Bonds, the Bonds shall no longer be registered in the name of the Nominee, but may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with paragraph 11 hereof. To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 11 hereof, the Bonds will be delivered to the Beneficial Owners. (iii) Nothing in this subparagraph (c) shall limit or restrict the provisions of paragraph 11 hereof. (d) Blanket Issuer Letter of Representations. The City's execution and delivery of the Blanket Issuer Letter of Representations in substantially the form on file in the offices of the City is hereby affirmed and ratified. The provisions in the Blanket Issuer Letter of Representations are incorporated herein by reference and made fully a part of this Resolution to the same extent as if set forth in full herein, and if and to the extent that any provisions of this Resolution are inconsistent or in conflict with the provisions of the Blanket Issuer Letter of Representations, the provisions in the Blanket Issuer Letter of Representations shall control. 4 . Purpose; Refunding Findings. The Bonds shall provide moneys for a crossover refunding of the City's Refunded Bonds. It is hereby found, determined and declared that such refunding is necessary or desirable for the reduction of debt service cost to the City and/or the adjustment of the maturities of the Prior Bonds in relation to the sources for their repayment, and will result in a reduction of debt service cost to the City. All of the proceeds, including all investment earnings thereon, of the Prior Bonds have heretofore been expended by the City for the types of uses and purposes for which the City issued said Prior Bonds. The current and anticipated balances in the separate debt service account heretofore established by the City for the payment of the principal of and interest on the Prior Bonds have been taken into account in appropriately sizing the Bonds. The present value of the dollar amount of the debt service on the Bonds is lower by at least 3% than the present value of the dollar amount of the debt service on the Refunded Bonds, as provided in Minnesota Statutes, Section 475. 67, Subdivision 12. The City has observed and complied with all of its obligations and covenants made by the City in connection with the issuance of the Prior Bonds. 5 . Interest. The Bonds shall bear interest payable semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date") , commencing August 1, 1998, calculated on the basis of a 360-day year consisting of twelve 30-day months, at the 00045 Page 7 -- Resolution No. 27 - 1998 respective rates per annum set forth opposite the maturity years, as follows: Maturity Interest Maturity Interest Year Rate Year Rate 2001 % 2007 % 2002 2008 2003 2009 2004 2010 2005 2011 2006 6. Redemption. All Bonds maturing after February 1, 2008, shall be subject to redemption and prepayment at the option of the City on said date and on any date thereafter at a price of par plus accrued interest to date of redemption. Redemption may be in whole or in part of the Bonds subject to prepayment. If less than all Bonds are to be prepaid, the City shall select the amounts of each maturity to be prepaid. If only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Published notice of redemption shall in each case be given if and to the extent required by applicable law, and mailed notice of redemption shall be given to the paying agent and to each affected registered owner of the Bonds. To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar, prior to giving notice of redemption, shall assign to each Bond of that maturity a distinctive number for each $5, 000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers so assigned to such Bonds, as many numbers as, at $5, 000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of each such Bond of a denomination of more than $5, 000 shall be redeemed as shall equal $5, 000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the City or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the City or Bond Registrar duly executed by the registered owner thereof or by the registered owner's attorney, duly authorized in writing) and the City shall execute (if necessary) III and the Bond Registrar shall authenticate and deliver to the registered owner of such Bond, without service charge, a new Bond or Bonds of the same series having the same stated maturity and interest rate and of any authorized denomination or 00046 Page 8 -- Resolution No. 27 - 1998 denominations, as requested by such registered owner, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. 7 . Bond Registrar. , in , is appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond Registrar") and shall do so unless and until a successor Bond Registrar is duly appointed, all pursuant to any contract which the City and Bond Registrar may execute and which is consistent herewith. The Bond Registrar shall also serve as paying agent unless and until a successor paying agent is duly appointed. The principal of and interest on the Bonds shall be paid to the registered owners (or record owners) of the Bonds in the manner set forth in the form of Bond and paragraph 13 of this Resolution. 8 . Form of Bond. The Bonds shall be substantially the following form: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA CITY OF FRIDLEY R- $ GENERAL OBLIGATION WATER REVENUE REFUNDING BOND, SERIES 1998A INTEREST MATURITY DATE OF RATE DATE ORIGINAL ISSUE CUSIP REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Fridley, Anoka County, Minnesota (the "City") , hereby acknowledges itself to be indebted and, for value received, promises to pay to the registered owner specified above, or registered assigns, in the manner hereinafter set forth, the principal amount specified above on the maturity date specified above, unless duly called for earlier redemption, and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date") , commencing August 1, 1998, at the rate per annum specified above (calculated on the basis of a 360-day year consisting of twelve 30-day months) until the principal sum is paid or has been provided for. This Bond will bear interest from the most recent Interest Payment Date to which interest has been paid or, if C0047 Page 9 -- Resolution No. 27 - 1998 no interest has been paid, from the date of original issue hereof. The principal of and premium, if any, on this Bond are payable upon presentation and surrender hereof at the principal office of , in , (the "Bond Registrar") , acting as paying agent, or at the principal office of any successor paying agent duly appointed by the City. Interest on this Bond will be paid on each Interest Payment Date by check or draft mailed to the person in whose name this Bond is registered (the "Registered Owner") on the registration books of the City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth day of the calendar month preceding such Interest Payment Date (the "Regular Record Date") . Any interest not so timely paid shall cease to be payable to the person who is the Registered Owner hereof as of the Regular Record Date, and shall be payable to the person that is the Registered Owner hereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given to Registered Owners not less than ten days prior to the Special Record Date. The principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH HERE. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota and the Home Rule Charter of the City to be done, to have happened and to be performed, precedent to and in the issuance of this Bond, have been done, have happened and have been performed in regular and due form, time and manner as required by law, and that this Bond, together with all other indebtedness of the City outstanding on the date of original issue hereof and the date of its actual issuance and delivery to the original purchaser, does not exceed any constitutional, statutory or Home Rule Charter limitation of indebtedness. IN WITNESS WHEREOF, the City of Fridley, Anoka County Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the manual or facsimile signatures of its Mayor and its City Manager; has caused the corporate seal of the City to be intentionally omitted herefrom, as permitted by law; and has caused this Bond to be executed manually by the Bond Registrar, acting as the City's duly appointed authenticating agent for the Bonds. Date of Registration: Registrable by: Payable at: 00048 Page 10 -- Resolution No. 27 - 1998 BOND REGISTRAR'S CITY OF FRIDLEY, CERTIFICATE OF ANOKA COUNTY, MINNESOTA AUTHENTICATION This Bond is one of the Bonds described in the /s/ Facsimile Resolution mentioned Mayor within. /s/ Facsimile City Manager Bond Registrar By Authorized Signature Redemption. All Bonds of this issue maturing after February 1, 2008, are subject to redemption and prepayment at the option of the City on said date and on any date thereafter at a price of par plus accrued interest to date of redemption. If less than all Bonds are to be prepaid, the City shall select the amounts of each maturity to be prepaid. Redemption may be in whole or in part of the Bonds subject to prepayment. If only part of the Bonds having a common maturity date are called for prepayment, the Bonds of that maturity to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Published notice of redemption shall in each case be given if and to the extent required by applicable law, and mailed notice of redemption shall be given to the paying agent and to each affected registered owner of the Bonds. Selection of Bonds for Redemption; Partial Redemption. To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar shall assign to each Bond of that maturity a distinctive number for each $5, 000 of the principal amount of such Bond. The Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in its discretion, from the numbers assigned to the Bonds, as many numbers as, at $5, 000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of such Bond of a denomination of more than $5, 000 shall be redeemed as shall equal $5, 000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar (with, if the City or Bond Registrar so requires, a written instrument of transfer in form satisfactory to the City or Bond Registrar duly executed by the registered owner thereof or the registered owner's attorney duly authorized in writing) , and the City shall execute (if necessary) and 000 411) Page 11 -- Resolution No. 27 - 1998 the Bond Registrar shall authenticate and deliver to the registered owner of such Bond, without service charge, a new Bond or Bonds of the same series having the same stated maturity and interest rate and of any authorized denomination or denominations, as requested by such registered owner, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal amount of $1, 615, 000, all of like date of original issue and tenor, except as to registration number, maturity, interest rate, denomination and redemption privilege, which Bond has been issued pursuant to and in full conformity with the Home Rule Charter of the City and the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council on April 20, 1998 (the "Resolution") , for the purpose of providing money to finance certain costs of refunding certain prior bonded indebtedness of the City. This Bond constitutes a general obligation of the City, and to provide moneys for the prompt and full payment of its principal, premium, if any, and interest when the same become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. [For Bonds in Book Entry Only Form, the following paragraph shall be added, and this Bond form (1) may be rearranged so that the signature blocks hereof appear at the end of the main text of this form or (2) may otherwise be amended to conform to book entry requirements and the Blanket Issuer Letter of Representations. ] Book Entry Only Form; Blanket Issuer Letter of Representations. Pursuant to the Resolution, the Bonds may be issued in Book Entry Only Form, and during any period in which Bonds are in such form, the provisions applicable to the Bonds pursuant to the Blanket Issuer Letter of Representations shall apply, notwithstanding any contrary or inconsistent provision herein or in the Resolution. Denominations; Exchange; Resolution. The Bonds are issuable solely as fully registered bonds in the denominations of $5, 000 and integral multiples thereof of a single maturity and are exchangeable for fully registered bonds of other authorized denominations in equal aggregate principal amounts at the principal office of the Bond Registrar, but only in the manner and subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal office of the Bond Registrar. Transfer. This Bond is transferable by the Registered Owner in person or by the Registered Owner's attorney duly authorized in writing at the principal office of the Bond Registrar upon presentation and surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the Resolution and to reasonable regulations of the City contained in any agreement with COQ O Page 12 -- Resolution No. 27 - 1998 the Bond Registrar. Thereupon the City shall execute and the Bond Registrar shall authenticate and deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the transferee (but not registered in blank or to "bearer" or similar designation) , of an authorized denomination or denominations, in aggregate principal amount equal to the principal amount of this Bond, of the same maturity and bearing interest at the same rate. Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds. Treatment of Registered Owners. The City and Bond Registrar may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except as otherwise provided on the reverse side hereof with respect to the Record Date) and for all other purposes, whether or not this Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary. Authentication. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Certificate of Authentication hereon shall have been executed by the Bond Registrar. No Designation of Bonds as Qualified Tax-Exempt Obligations. The Bonds have NOT been designated by the City as "qualified tax-exempt obligations" for purposes of Section 265 (b) (3) of the Internal Revenue Code of 1986, as amended. ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UTMA - as custodian for (Cust) (Minor) under the Uniform (State) Transfers to Minors Act Additional abbreviations may also be used though not in the above list. OOO i Page 13 -- Resolution No. 27 - 1998 ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and does hereby irrevocably constitute and appoint as attorney to transfer the Bond on the books kept for the registration thereof, with full power of substitution in the premises. Dated: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: Signature (s) must be guaranteed by a national bank or trust company, by a brokerage firm having a membership in one of the major stock exchanges or by any other "Eligible Guarantor Institution" as defined in 17 CFR 240. 17 Ad-15 (a) (2) . The Bond Registrar will not effect transfer of this Bond unless the information concerning the transferee requested below is provided. Name and Address: (Include information for all joint owners if the Bond is held by joint account. ) 9. Execution; Temporary Bonds. The Bonds shall be executed on behalf of the City by the signatures of its Mayor and City Manager and be sealed with the seal of the City; provided, however, that the seal of the City may be a printed facsimile; and provided further that both of such signatures may be facsimiles and the corporate seal may be omitted on the Bonds as permitted by law, unless otherwise provided in the applicable form of Bond. In the event of disability or resignation or other absence of either such officer, the Bonds may be signed by that officer who may act on behalf of such absent or disabled officer. In case either such officer whose signature shall appear on the Bonds shall cease to be such officer before the delivery of the 00062 Page 14 -- Resolution No. 27 - 1998 Bonds, such signature shall nevertheless be valid and sufficient for all purposes, the same as if he or she had remained in office until delivery. The City may elect to deliver, in lieu of definitive bonds, one or more typewritten temporary bonds in substantially the form set forth above, with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Such temporary bonds shall, upon the preparation of the definitive bonds and the execution thereof, be exchanged therefor and canceled. 10. Authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Resolution unless a Certificate of Authentication on such Bond, substantially in the form hereinabove set forth, shall have been duly executed by an authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and by inserting as the date of registration in the space provided the date on which the Bond is authenticated, except that for purposes of delivering the original Bonds to the Purchaser, the Bond Registrar shall insert as a date of registration the date of original issue, which date is May 1, 1998. The Certificate of Authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. 11. Registration; Transfer; Exchange. The City will cause to be kept at the principal office of the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds and the registration of transfers of Bonds entitled to be registered or transferred as herein provided. Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the City shall execute (if necessary) , and the Bond Registrar shall authenticate, insert the date of registration (as provided in paragraph 10) of, and deliver, in the name of the designated transferee or transferees, one or more new Bonds of any authorized denomination or denominations of a like aggregate principal amount, having the same stated maturity and interest rate, as requested by the transferor; provided, however, that no Bond may be registered in blank or in the name of "bearer" or similar designation. At the option of the registered owner of a Bond, Bonds may be exchanged for Bonds of any authorized denomination or denominations of a like aggregate principal amount and stated maturity, upon surrender of the Bonds to be exchanged at the CQ® 3 Page 15 -- Resolution No. 27 - 1998 principal office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute (if necessary) , and the Bond Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the registered owner making the exchange is entitled to receive. All Bonds surrendered upon any exchange or transfer provided for in this Resolution shall be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City. All Bonds delivered in exchange for or upon transfer of Bonds shall be valid obligations of the City evidencing the same debt, and entitled to the same benefits under this Resolution, as the Bonds surrendered for such exchange or transfer. Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly executed by the registered owner thereof or his, her or its attorney duly authorized in writing. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of any Bond and any legal or unusual costs regarding transfers and lost Bonds. Transfers shall also be subject to reasonable regulations of the City contained in any agreement with, or notice to, the Bond Registrar, including regulations which permit the Bond Registrar to close its transfer books between record dates and payment dates. 12. Rights Upon Transfer or Exchange. Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond. 13. Interest Payment; Record Date. Interest on any Bond shall be paid on each Interest Payment Date by check or draft mailed to the person in whose name the Bond is registered on the registration books of the City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth (15th) day of the calendar month preceding such Interest Payment Date (the "Regular Record Date") . Any such interest not so timely paid shall cease to be payable to the person who is the registered owner thereof as of the Regular Record Date, and shall be payable to the person who is the registered owner thereof at the close of business on a date (the "Special Record Date") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given by the Bond Registrar to the registered owners not less than ten (10) days prior to the Special Record Date. Page 16 -- Resolution No. 27 - 1998 14. Treatment of Registered Owner. The City and Bond Registrar may treat the person in whose name any Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and premium, if any, and interest (subject to the payment provisions in paragraph 13 above) on, such Bond and for all other purposes whatsoever whether or not such Bond shall be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary. 15. Delivery; Application of Proceeds. The Bonds shall be delivered by the City to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 16. Fund and Accounts. For the convenience and proper administration of the moneys to be borrowed and repaid on the Bonds and the Refunded Bonds, and to make adequate and specific security to the Purchaser and registered owners from time to time of the Bonds and the Refunded Bonds, there is hereby created a special fund to be designated the "General Obligation Water Revenue Refunding Bonds, Series 1998A Fund" (the "Fund") to be administered and maintained by the City Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The Fund shall be maintained in the manner herein specified until all of the Refunded Bonds and the Bonds herein authorized and the interest thereon shall have been fully paid. There shall be maintained in the Fund two separate accounts, to be designated the "Escrow Account" and the "Debt Service Account, " respectively. (i) Escrow Account. The proceeds of the sale of the Bonds, less such proceeds of the Bonds (if any) as may be used to pay issuance expenses or hereinafter directed for deposit into the Debt Service Account, plus any other available municipal funds ("Other Funds") , if any, as may be required to adequately fund the Escrow Account (under the Escrow Agreement) to accomplish its purposes, are hereby pledged and appropriated and shall be credited to the Escrow Account. The Escrow Account shall be maintained as an escrow account with the Escrow Agent which is and shall be a suitable financial institution within the State of Minnesota whose deposits are insured by the Federal Deposit Insurance Corporation and whose combined capital and surplus is at least $500, 000. All proceeds of the sale of the Bonds to be received by the Escrow Agent shall be applied to fund the Escrow Account or to pay costs of issuing the Bonds. Such proceeds of the Bonds (together with the Other Funds, if any) which are not used by the 00055 Page 17 -- Resolution No. 27 - 1998 Escrow Agent to pay costs of issuance of the Bonds are hereby irrevocably pledged and appropriated to the Escrow Account, together with all investment earnings thereon. The Escrow Account shall be invested in securities maturing or callable at the option of the holder thereof on such dates and bearing interest at such rates as shall be required to provide funds sufficient, together with any cash or other funds retained in the Escrow Account, to pay (1) when called for redemption on February 1, 2000, the principal amount of each of the Refunded Bonds and (2) the regularly-scheduled interest due on the Bonds on or before February 1, 2000. The moneys in the Escrow Account shall be used solely for the purposes herein set forth and for no other purpose, except that any surplus in the Escrow Account shall be remitted to the City, all in accordance with the terms of the Escrow Agreement. The City's share of such Other Funds, if any, as may be required to fully fund the Escrow Account as described above is hereby appropriated for said purpose and the investment and disbursement thereof provided in the Escrow Agreement are hereby authorized and approved. (ii) Debt Service Account. To the Debt Service Account there are hereby pledged and irrevocably appropriated and there shall be credited: (1) all accrued interest received upon delivery of the Bonds which is not then deposited into the Escrow Account; (2) all collections of any ad valorem taxes hereafter levied by the City for the payment of the Bonds; (3) appropriate amounts of the "Net Revenues" (hereinafter defined) of the City's municipal water system and utility, but only in such amounts as shall be necessary, together with other monies in the Debt Service Account and available for such purposes, to pay, when due, the principal of and interest on the Bonds; (4) all investment earnings on funds held in the Debt Service Account; and (5) any amounts received by the City upon termination of the Escrow Account. The foregoing funds are hereby pledged to the Debt Service Account, but only in such amounts and at such times as may be necessary, together with other available funds therein (and the same shall be used solely) , to pay the principal of and interest on the Bonds, when due. As used in this paragraph, Net Revenues of the City's municipal water system shall mean the gross revenues derived by the City from the operation OOfj 6 Page 18 -- Resolution No. 27 - 1998 of said system, including all charges for service, use, availability, and connection to that system, and all monies received from the sale of any facilities or equipment of said system or any by-products thereof, less all normal, reasonable, or current costs of owning, operating, and maintaining said system. If any payment of principal or interest on the Bonds shall become due when there are not sufficient funds pledged for such purposes in the Debt Service Account to pay the same, the City Finance Director shall pay such principal or interest from the general fund or other available fund of the City, and such fund shall be reimbursed for such advances from the proceeds of the applicable Net Revenues, when collected. The City hereby covenants that it will impose and collect charges for the service, use, and availability of and connection to the City's municipal water system at the times and in the amounts required to produce such Net Revenues adequate, together with other sources of funding available for such purposes, to pay in a full and timely manner all principal of and interest on the Bonds, and on any and all other obligations which are or may become payable in whole or in part from such Net Revenues. Provided such debt service coverage is found to exist (and the Council hereby makes said finding with respect to the Bonds) , the City may issue additional obligations secured in whole or in part from such Net Revenues, whose pledge to any such new obligations may be made superior or subordinate to, or on a parity with, the pledges of such Net Revenues made herein to the Bonds. The City has heretofore issued and currently has outstanding certain general obligations of the City which are payable from certain of the Net Revenues of the municipal water system and the Council hereby determines that the estimated Net Revenues will be sufficient, in addition to all other sources available for such purposes, for the payment of the Bonds payable therefrom, and all such additional obligations, and accordingly the pledges and appropriations of Net Revenues to the payment of the Bonds pursuant to this Resolution are hereby made on a parity with any and all such prior pledges of Net Revenues. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire 00057 Page 19 -- Resolution No. 27 - 1998 higher yielding investments, except (1) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued and (2) in addition to the above in an amount not greater than any applicable "minor portion" which may be available for the Bonds. To this effect, any proceeds of the Bonds and any sums from time to time held in the Debt Service Account in excess of amounts which under then-applicable federal arbitrage regulations may be invested without regard to yield shall not be invested at ;a yield in excess of the applicable yield restrictions imposed by said arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. Money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds or any Additional Bonds to be "federally guaranteed" within the meaning of Section 149 (b) of the federal Internal Revenue Code of 1986, as amended (the "Code") . 17 . 105% Debt Service Coverage. It is hereby determined that the estimated collections of the revenues dedicated to the Debt Service Account pursuant to paragraph 16 (ii) of this Resolution would produce at least 5% in excess of the amount needed to meet, when due, the principal of and interest on the Bonds. The City Clerk is hereby directed to file a certified copy of this Resolution with the County Auditor of Anoka County and to obtain the certificate of said office required by Minnesota Statutes, Section 475. 63. 18 . General Obligation Pledge. The full faith and credit and taxing powers of the City are hereby pledged to the payment of the principal of and interest on the Bonds, and in the event of any current or anticipated deficiency of funds in the Debt Service Account of amounts needed to make any such payment, when due, the Council shall levy ad valorem taxes on all taxable property in the City in the amount of such deficiency. If the balance in the Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable there from, the deficiency shall be promptly paid out of any other funds of the City which are available for such purpose, and such other funds may be reimbursed with or without interest from the Debt Service Account when a sufficient balance is available therein. 00058 Page 20 -- Resolution No. 27 - 1998 19. Prior Bonds; Security. Until retirement and full payment of the Prior Bonds, all provisions heretofore made for the security thereof shall be observed by the City; provided, however, that the Council hereby finds and determines that the proceeds of the sale of the Bonds to be used to refund the Refunded Bonds, together with other funds available and appropriated to the Escrow Account for said purpose, will be sufficient, together with the earnings on the investment of such funds in the Escrow Account, to pay all principal of and interest on the Refunded Bonds. 20. Redemption of Refunded Bonds. The Prior Bonds which mature in 2001 and thereafter shall be redeemed and prepaid on February 1, 2000, and the paying agent/registrar for the Prior Bonds is hereby authorized and directed to cause notice of said redemption to be given to the owners of the Prior Bonds in the manner required by law and by the terms of the Prior Bonds. 21. Escrow Agreement. On or prior to the date of delivery of the Bonds the Mayor and City Manager are hereby authorized to execute, on behalf of the City, the Escrow Agreement substantially in the form heretofore presented to the City but with such insertions and modifications as shall be deemed by them to be necessary to accomplish its purposes, as evidenced by their execution and delivery thereof. All terms and conditions of such Escrow Agreement, as so executed and delivered, are hereby approved and adopted and made a part of this Resolution. 22. Purchase of Securities. Springsted Incorporated, the City's public finance advisor for the Bonds, is hereby authorized, in consultation and coordination with the City Finance Director to solicit sufficient bids and to purchase or cause to be purchased for and on behalf of the City and/or the Escrow Agent the appropriate securities (including United States Treasury Securities) to be placed in the Escrow Account and to execute all such documents (including the appropriate subscription forms, if applicable) required to effect such purchase. 23. Records and Certificates. The officers of the City are hereby authorized and directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the issuance of the Bonds, certified copies of all proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates and information as are required to show the facts relating to the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. 24 . Negative Covenant as to Use of Proceeds and Improvements. The City hereby covenants not to use the project which was financed 00059 Page 21 -- Resolution No. 27 - 1998 by the issuance of the Prior Bonds (the "Improvements" or the "Project") or to cause or permit the Improvements to be used, or to enter into any deferred payment arrangements for the cost of the Improvements, in such a manner as (or to take any action or permit any other circumstance to exist or any action to be taken, the effect to which would be) to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. In particular, but without limitation, the City covenants to forebear the implementation, effectuation or enforcement of any and all contracts or other agreements respecting the Improvements or any property benefitted thereby or assessed with respect thereto, which it may now or in the future have with developers, contractors, owners, lessees, managers, or any other person or parties to the extent that such implementation, effectuation or enforcement would (individually or in the aggregate) cause the Bonds to become such "private activity bonds, " and to said limited extent the City would and hereby does (solely for the benefit of the owners of the Bonds) disavow any and all such provisions, entitlements and enforcements which would or could become so offending. 25 Tax-Exempt Status of the Bonds; Rebate. (a) The City shall comply with requirements necessary under the Code to establish and maintain the exclusion from gross income under Section 103 of the Code of the interest on the Bonds, including without limitation but only if and to the extent applicable (1) requirements relating to temporary periods for investments, (2) limitations on amounts invested at a yield greater than the yield on the Bonds, and (3) the rebate of excess investment earnings to the United States. (b) For purposes of qualifying for the small issuer exception to the federal arbitrage rebate requirements provided in Section 148 (f) (4) (D) of the Internal Revenue Code of 1986, as amended (the "Code") , the City hereby finds, determines and declares that (1) the City is, and the Bonds are issued by, a governmental unit with general taxing powers, (2) no Bond is a private activity bond, (3) 95% or more of the net proceeds of the Bonds are to be used for local governmental activities of the City (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the City) , and (4) the sum of the principal amount of the Bonds plus the aggregate face amount of all other tax-exempt obligations (other than private activity bonds) issued by the City (and all entities subordinate to, or treated as one issuer with, the City) during the 1998 calendar year is not reasonably expected to exceed $5, 000, 000, all within the meaning of Section 148 (f) (4) (D) of the Code. 00060 Page 22 -- Resolution No. 27 - 1998 (c) For purposes of substantiating the determination that the Bonds, being refunding bonds, are eligible for exception from rebate pursuant to the above, in particular because they meet the applicable requirements set out in Section 148 (f) (4) (D) (v) of the Code, the City hereby represents and determines that (1) the Prior Bonds were issued in 1991 by the City, which was at that time and is now a governmental unit with general taxing powers; (2) the Prior Bonds were not private activity bonds under Sections 103 and 141 through 150 of the Code, and the City qualified the Bonds within the "small-issuer" exception of Section 148 (f) (4) (D) of the Code; (3) 95% or more of the net proceeds of the Prior Bonds were used for local governmental activities of the City; (4) the City, together with all issuers subordinate to or treated as one issuer with the City, did not issue in excess of $5, 000, 000 of bonds (other than private activity bonds) during calendar year 1991; (5) the average maturity date of the Bonds is not later than the average maturity date of the Refunded Bonds; and (6) none of the Bonds has a maturity date which is later than 30 years after the date on which the Prior Bonds were issued. 26 No Designation of the Bonds as Qualified Tax-Exempt Obligations. The City is not designating the Bonds as "qualified tax-exempt obligations" for purposes of Section 265 (b) (3) of the Code. 27 Supplemental Resolution. The December 10, 1990, resolution of the Council authorizing the issuance of the Prior Bonds is hereby supplemented to the extent necessary to give effect to the provisions of this Resolution. 28 Defeasance. When any obligation of a Bond has been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this Resolution to the registered owner of that Bond (with respect to the obligation thereof so defeased) shall, to the extent permitted by law, cease. The City may at any time discharge any or all of such obligation(s) with respect to any Bond, subject to the provisions of law now or hereafter authorizing or regulating such action, by depositing irrevocably in escrow, with a suitable institution qualified by law as an escrow agent for this purpose, cash or securities which are backed by the full faith and credit of the United States of America, bearing interest payable at such times and at such rates and maturing on such dates and in such amounts as shall be required and sufficient, subject to sale and/or reinvestment in like securities, to pay said obligation(s) , which may include any interest payment on such Bond and/or principal amount due thereon at a stated maturity (or if irrevocable provision shall have been made for permitted prior redemption of such principal amount, at such earlier redemption date) .