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RES 2004-17 - 00002242RESOLUTION NO. 2004 -17 RESOLUTION ACCEPTING PROPOSAL ON THE COMPETITIVE NEGOTIATED SALE OF $1,225,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2004C; PLEDGING FOR THE SECURITY THEREOF WATER AND STORM SEWER SYSTEM NET REVENUES, AND THE LEVY OF TAXES WHEREAS, the City Council of the City of Fridley, Minnesota (the "City "), has heretofore issued General Obligation Bonds, Series 1996A, dated November 1, 1996 (the "Prior Bonds ") pursuant to the resolution of the City Council adopted November 4, 1996 (the "Prior Resolution ") for the purpose of providing money to finance the construction of (i) various improvements to the water system (the "Water Project "); (ii) road improvements (the "Improvement Project "); and (iii) various storm sewer improvements (the "Storm Sewer Project "); and WHEREAS, the City owns and operates a municipal water system (the "Water System ") and storm sewer system (the "Storm Sewer System ") as separate revenue producing public utilities (the Water System and the Storm Sewer System are collectively referred to as the "System ") and there are outstanding: (i) General Obligation Water Revenue Bonds, Series 1992B, dated November 1, 1992; (ii) General Obligation Bonds, Series 1994A, dated December 1, 1994; (iii) General Obligation Bonds, Series 1996A, dated November 1, 1996; (iv) General Obligation Water Revenue Refunding Bonds, Series 1998A, dated May 1, 1998; and (v) General Obligation Water Revenue Bonds, Series 2004A, dated March 23, 2004(together, the "Outstanding Obligations "), which are payable from the net revenues of the System and would constitute a prior lien upon the net revenue of the System; and WHEREAS, the portion of the Prior Bonds issued to finance Improvement Project will be paid off on February 1, 2005 with available City funds; and WHEREAS, $1,135,000 in principal amount of the Prior Bonds which mature in the years 2006 and thereafter are subject to redemption and prepayment at the option of the City on February 1, 2005 and on any date thereafter at a price of par plus accrued interest, as provided in the Prior Resolution; and WHEREAS, the City Council deems it desirable and in the best interests of the City to provide moneys for a crossover refunding of the Prior Bonds which mature after February 1, 2006 (the "Refunded Bonds "), in accordance with the Prior Resolution in order to reduce the debt service costs to the City; and WHEREAS, the City Council has heretofore determined and declared that it is necessary and expedient to issue $1,225,000 General Obligation Refunding Bonds, Series 2004C (the "Bonds ") of the City, pursuant to Minnesota Statutes, Chapter 475.67, subdivision 13, to provide funds for a crossover refunding of the Refunded Bonds (the "Refunding "); and WHEREAS, the City has retained Ehlers and Associates, Inc., in Roseville, Minnesota ( "Ehlers "), as its independent financial advisor for the sale of the Bonds and was therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been solicited by Ehlers; and WHEREAS, the proposals set forth on Exhibit A attached hereto were received by the City Manager, or designee, at the offices of Ehlers at 12:00 noon this same day pursuant to the Terms of Proposal established for the Bonds; and WHEREAS, it is in the best interests of the City that the Bonds be issued in book -entry form as hereinafter provided; and Resolution No. 2004 -17 Page 2 NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Fridley, Minnesota, as follows: Acceptance of Offer. The proposal of (the "Purchaser "), to purchase the Bonds in accordance with the Terms of Proposal, at the rates of interest hereinafter set forth, and to pay therefor the sum of $ , plus interest accrued to settlement, is hereby found, determined and declared to be the most favorable proposal received and is hereby accepted, and the Bonds are hereby awarded to the Purchaser. The City Finance Director is directed to retain the deposit of the Purchaser and to forthwith return to the unsuccessful bidders their good faith checks or drafts. Bond Termc Title; Original Issue Date; Denominations; Maturities; Term Bond Option. The Bonds shall be titled "General Obligation Refunding Bonds, Series 2004C ", shall be dated March 23, 2004, as the date of original issue and shall be issued forthwith on or after such date in fully registered form. The Bonds shall be numbered from R -1 upward in the denomination of $5,000 each or in any integral multiple thereof of a single maturity (the "Authorized Denominations "). The Bonds shall mature, on February 1 in the years and amounts as follows: Year Amount Year 2006 $235,000 2007 240,000 2008 140,000 2009 145,000 Amount 2010 $150,000 2011 155,000 2012 160,000 All dates are inclusive. As may be requested by the Purchaser, one or more term Bonds may be issued having mandatory sinking fund redemption and final maturity amounts conforming to the foregoing principal repayment schedule, and corresponding additions may be made to the provisions of the applicable Bond(s). Allocation of Bonds to Prior Bonds: Allocation of Prebavments to Portions of Debt Service. The aggregate principal amount of $ maturing in each of the years and amounts hereinafter set forth are allocable to the costs of crossover refunding the Storm Sewer Project (the "Storm Sewer Revenue Refunding Portion ") and the aggregate principal amount of $ maturing in each of the years and amounts hereinafter set forth are allocable to the costs of crossover refunding the Water Project (the "Water Sewer Refunding Portion "): Storm Sewer Revenue Refunding Year Portion (Amount) 2006 2007 2008 2009 2010 2011 2012 Water Revenue Refunding Portion (Amount) Total (Amount) Resolution No. 2004 -17 Page 3 If Bonds are prepaid, the prepayments shall be allocated to the portions of debt service (and hence allocated to the payment of Bonds treated as relating to a particular portion of debt service) as provided in this paragraph. If the source of prepayment moneys is the general fund of the City, or other generally available source, the prepayment may be allocated to any or all of the portions of debt service in such amounts as the City shall determine. If the source of a prepayment is net revenues of the Storm Sewer System pledged to the Storm Sewer Project, the prepayment shall be allocated to the Storm Sewer Revenue Refunding Portion of the debt service. If the source of a prepayment is net revenues of the Water System pledged to the Water Project, the prepayment shall be allocated to the Water Revenue Refunding Portion of debt service. Book Entry OnlyS. sue. The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York or any of its successors or its successors to its functions hereunder (the "Depository ") will act as securities depository for the Bonds, and to this end: The Bonds shall be initially issued and, so long as they remain in book entry form only (the "Book Entry Only Period "), shall at all times be in the form of a separate single fully registered Bond for each maturity of the Bonds; and for purposes of complying with this requirement under paragraphs 5 and 10 Authorized Denominations for any Bond shall be deemed to be limited during the Book Entry Only Period to the outstanding principal amount of that Bond. Upon initial issuance, ownership of the Bonds shall be registered in a bond register maintained by the Bond Registrar (as hereinafter defined) in the name of CEDE & CO., as the nominee (it or any nominee of the existing or a successor Depository, the "Nominee "). With respect to the Bonds neither the City nor the Bond Registrar shall have any responsibility or obligation to any broker, dealer, bank, or any other financial institution for which the Depository holds Bonds as securities depository (the "Participant ") or the person for which a Participant holds an interest in the Bonds shown on the books and records of the Participant (the "Beneficial Owner "). Without limiting the immediately preceding sentence, neither the City, nor the Bond Registrar, shall have any such responsibility or obligation with respect to (A) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in the Bonds, or (B) the delivery to any Participant, any Owner or any other person, other than the Depository, of any notice with respect to the Bonds, including any notice of redemption, or (C) the payment to any Participant, any Beneficial Owner or any other person, other than the Depository, of any amount with respect to the principal of or premium, if any, or interest on the Bonds, or (D) the consent given or other action taken by the Depository as the Registered Holder of any Bonds (the "Holder "). For purposes of securing the vote or consent of any Holder under this Resolution, the City may, however, rely upon an omnibus proxy under which the Depository assigns its consenting or voting rights to certain Participants to whose accounts the Bonds are credited on the record date identified in a listing attached to the omnibus proxy. The City and the Bond Registrar may treat as and deem the Depository to be the absolute owner of the Bonds for the purpose of payment of the principal of and premium, if any, and interest on the Bonds, for the purpose of giving notices of redemption and other matters with respect to the Bonds, for the purpose of obtaining any consent or other action to be taken by Holders for the purpose of registering transfers with respect to such Bonds, and for all purpose whatsoever. The Bond Registrar, as paying agent hereunder, shall pay all principal of and premium, if any, and interest on the Bonds only to the Holder and the Holders of the Bonds as shown on the bond register, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. Upon delivery by the Depository to the Bond Registrar of written notice to the effect that the Depository has determined to substitute a new Nominee in place of the existing Nominee, and subject to the transfer provisions in paragraph 10, references to the Nominee hereunder shall refer to such new Nominee. Resolution No. 2004 -17 Page 4 So long as any Bond is registered in the name of a Nominee, all payments with respect to the principal of and premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, by the Bond Registrar or City, as the case may be, to the Depository as provided in the Letter of Representations to the Depository required by the Depository as a condition to its acting as book -entry Depository for the Bonds (said Letter of Representations, together with any replacement thereof or amendment or substitute thereto, including any standard procedures or policies referenced therein or applicable thereto respecting the procedures and other matters relating to the Depository's role as book -entry Depository for the Bonds, collectively hereinafter referred to as the "Letter of Representations "). 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 procedures by the Depository with the Participants for recording and transferring the ownership of beneficial interests in such Bonds. In connection with any notice or other communication to be provided to the Holders pursuant to this Resolution by the City or Bond Registrar with respect to any consent or other action to be taken by Holders, the Depository shall consider the date of receipt of notice requesting such consent or other action as the record date for such consent or other action; provided, that the City or the Bond Registrar may establish a special record date for such consent or other action. The City or the Bond Registrar shall, to the extent possible, give the Depository notice of such special record date not less than 15 calendar days in advance of such special record date to the extent possible. Any successor Bond Registrar in its written acceptance of its duties under this Resolution and any paying agency/bond registrar agreement, shall agree to take any actions necessary from time to time to comply with the requirements of the Letter of Representations. Termination of Book -Entry Only S sue. Discontinuance of a particular Depository's services and termination of the book -entry only system may be effected as follows: 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 Bond if it determines that the Depository is no longer able to carry out its functions as securities depository or the continuation of the system of book -entry transfers through the Depository is not in the best interests of the City or the Beneficial Owners. 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 or the Beneficial Owners of the Bond that the Beneficial Owners be able to obtain certificates for the Bonds, the Bonds shall no longer be registered as being registered in the bond register in the name of the Nominee, but may be registered in whatever name or names the Holder of the Bonds shall designate at that time, in accordance with paragraph 10. To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 10, the Bonds will be delivered to the Beneficial Owners. Nothing in this subparagraph (d) shall limit or restrict the provisions of paragraph 10. Letter of Representations. The provisions in the Letter of Representations are incorporated herein by reference and made a part of the resolution, and if and to the extent any such provisions are inconsistent with the other provisions of this resolution, the provisions in the Letter of Representations shall control. Resolution No. 2004 -17 Page 5 Purpose; Refunding Findings. The Bonds (together with other available funds, if any, appropriated in paragraph 15) shall provide funds to finance the Refunding. It is hereby found, determined and declared that the Refunding is pursuant to Minnesota Statutes, Section 475.67, subdivision 13, shall result in a reduction of the present value (as of the crossover date) of the dollar amount of the debt service to the City from a total dollar amount of $ for the Prior Bonds, computed in accordance with the provisions of Minnesota Statutes, Section 475.67, subdivision 12. The dollar amount of such present value of the debt service for the Bonds is lower by at least three percent than the dollar amount of such present value of the debt service for the Prior Bonds as required in Minnesota Statutes, Section 475.67, subdivision 12. 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, 2004, calculated on the basis of a 360 -day year of twelve 30 -day months, at the respective rates per annum set forth opposite the maturity years as follows: Maturity Interest Rate Maturity Interest Rate 2006 2010 2007 2011 2008 2012 2009 No Redemption. The Bonds shall not be subject to redemption and prepayment prior to their maturity. Bond Registrar. U.S. Bank National Association, in St. Paul, Minnesota, is appointed to act as bond registrar and transfer agent with respect to the Bonds (the "Bond Registrar "), and shall do so unless and until a successor Bond Registrar is duly appointed, all pursuant to any contract the City and Bond Registrar shall execute which is consistent herewith. The Bond Registrar shall also serve as paying agent unless and until a successor paying agent is duly appointed. Principal and interest on the Bonds shall be paid to the registered holders (or record holders) of the Bonds in the manner set forth in the form of Bond and paragraph 12 of this resolution. Form of Bond. The Bonds, together with the Bond Registrar's Certificate of Authentication, the form of Assignment and the registration information thereon, shall be in substantially the following form: UNITED STATES OF AMERICA STATE OF MINNESOTA ANOKA COUNTY CITY OF FRIDLEY IM GENERAL OBLIGATION REFUNDING BONDS, SERIES 2004C Interest Rate Maturity Date of Original Issue CUSIP March 23, 2004 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: Resolution No. 2004 -17 Page 6 THE CITY OF FRIDLEY, ANOKA COUNTY, MINNESOTA (the "Issuer "), certifies that it is indebted and for value received promises to pay to the registered owner specified above, or registered assigns, without option of prepayment, in the manner hereinafter set forth, the principal amount specified above, on the maturity date specified above, and to pay interest thereon semiannually on February 1 and August 1 of each year (each, an "Interest Payment Date "), commencing February 1, 2004, at the rate per annum specified above (calculated on the basis of a 360 -day year of twelve 30 -day months) until the principal sum is paid or has been provided for. This Bond will bear interest from the most recent Interest Payment Date to which interest has been paid or, if no interest has been paid, from the date of original issue hereof. The principal of and premium, if any, on this Bond are payable upon presentation and surrender hereof at the principal office of U.S. Bank National Association, in St. Paul, Minnesota (the "Bond Registrar "), acting as paying agent, or any successor paying agent duly appointed by the Issuer. Interest on this Bond will be paid on each Interest Payment Date by check or draft mailed to the person in whose name this Bond is registered (the "Holder" or "Bondholder ") on the registration books of the Issuer maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date (the "Regular Record Date "). Any interest not so timely paid shall cease to be payable to the person who is the Holder hereof as of the Regular Record Date, and shall be payable to the person who is the Holder hereof at the close of business on a date (the "Special Record Date ") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given to Bondholders not less than ten days prior to the Special Record Date. The principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. So long as this Bond is registered in the name of the Depository or its Nominee as provided in the Resolution hereinafter described, and as those terms are defined therein, payment of principal of, premium, if any, and interest on this Bond and notice with respect thereto shall be made as provided in the Letter of Representations, as defined in the Resolution. Until termination of the book -entry only system pursuant to the Resolution, Bonds may only be registered in the name of the Depository or its Nominee. No Redemption. The Bonds of this issue (the "Bonds ") are not subject to redemption and prepayment prior to their maturity. Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal amount of $1,225,000, all of like date of original issue and tenor, except as to number, maturity, interest rate and denomination, issued pursuant to and in full conformity with the charter of the Issuer, Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council on February 23, 2004 (the "Resolution "), for the purpose of providing money for a crossover refunding on February 1, 2005, of the General Obligation Bonds, Series 1996A, dated November 1, 1996, which mature after February 1, 2005. This Bond is payable out of the Escrow Account and the General Obligation Refunding Bonds, Series 2004C Fund of the Issuer. This Bond constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full payment of its principal, premium, if any, and interest when the same become due, the full faith and credit and taxing powers of the Issuer have been and are hereby irrevocably pledged. Denominations; Exchange; Resolution. The Bonds are issuable solely in fully registered form in Authorized Denominations (as defined in the Resolution) and are exchangeable for fully registered Bonds of other Authorized Denominations in equal aggregate principal amounts at the principal office of the Bond Registrar, but only in the manner and subject to the limitations provided in the Resolution. Reference is hereby made to the Resolution for a description of the rights and duties of the Bond Registrar. Copies of the Resolution are on file in the principal office of the Bond Registrar. Transfer. This Bond is transferable by the Holder in person or by the Holder'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 Issuer contained in any agreement with the Bond Registrar. Thereupon the Issuer shall execute and Resolution No. 2004 -17 Page 7 the Bond Registrar shall authenticate and deliver, in exchange for this Bond, one or more new fully registered Bonds in the name of the transferee (but not registered in blank or to "bearer" or similar designation), of an Authorized Denomination or Denominations, in aggregate principal amount equal to the principal amount of this Bond, of the same maturity and bearing interest at the same rate. Fees upon Transfer or Loss. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of this Bond and any legal or unusual costs regarding transfers and lost Bonds. Treatment of Registered Owners. The Issuer and Bond Registrar may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except as otherwise provided herein with respect to the Record Date) and for all other purposes, whether or not this Bond shall be overdue, and neither the Issuer nor the Bond Registrar shall be affected by notice to the contrary. Authentication. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security unless the Certificate of Authentication hereon shall have been executed by the Bond Registrar. Qualified Tax - Exempt Obli_ag tion. This Bond has been designated by the Issuer as a "qualified tax - exempt obligation" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to happen and to be performed, precedent to and in the issuance of this Bond, have been done, have happened and have been performed, in regular and due form, time and manner as required by law, that the Issuer has covenanted and agreed with the Holders of the Bonds that it will impose and collect charges for the service, use and availability of the municipal water system and storm sewer system (collectively the "System ") at the times and in amounts necessary to produce net revenues, together with other sums pledged to the payment of the Bonds adequate to pay all principal and interest when due on the Bonds; and that the Issuer will levy a direct, annual, irrepealable ad valorem tax upon all of the taxable property of the Issuer, without limitation as to rate or amount, for the years and in amounts sufficient to pay the principal and interest on the Bonds as they respectively become due, if the net revenues from the System, and any other sums irrevocably appropriated to the Debt Service Account are insufficient therefor and that this Bond, together with all other debts of the Issuer outstanding on the date of original issue hereof and the date of its issuance and delivery to the original purchaser, does not exceed any constitutional, charter or statutory 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 facsimile signatures of its Mayor and its Manager, the corporate seal of the Issuer having been intentionally omitted as permitted by law. Date of Registration: Registrable by: U.S. BANK NATIONAL ASSOCIATION St. Paul, Minnesota Payable at: U.S. BANK NATIONAL ASSOCIATION St. Paul, Minnesota Resolution No. 2004 -17 BOND REGISTRAR'S CERTIFICATE OF AUTHENTICATION This Bonds is one of the Bonds described in the Resolution mentioned within. CITY OF FRIDLEY, ANOKA COUNTY, MINNESOTA /s/ Facsimile Mayor U.S. BANK NATIONAL ASSOCIATION St. Paul, Minnesota Facsimile M Bond Registrar Manager L-02 Authorized Signature ABBREVIATIONS Page 8 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) under the (State) Transfers to Minors Act Uniform (Minor) Additional abbreviations may also be used though not in the above list. ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and does hereby irrevocably constitute and appoint attorney to transfer the Bond on the books kept for the registration thereof, with full power of substitution in the premises. Dated: Notice The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: Signature(s) must be guaranteed by a national bank or trust company or by a brokerage firm having a membership in one of the major stock exchanges or any other "Eligible Guarantor Institution" as defined in 17 CFR 240.17 Ad- 15(a)(2). Resolution No. 2004 -17 Page 9 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.) Execution; Temporary Bonds. The Bonds shall be printed (or, at the request of the Purchaser, typewritten) and shall be executed on behalf of the City by the signatures of its Mayor and City Manager and be sealed with the seal of the City; provided, however, that the seal of the City may be a printed (or, at the request of the Purchaser, photocopied) facsimile; and provided further that both of such signatures may be printed (or, at the request of the Purchaser, photocopied) facsimiles and the corporate seal may be omitted on the Bonds as permitted by law. In the event of disability or resignation or other absence of either officer, the Bonds may be signed by the manual or facsimile signature of an officer who may act on behalf of the absent or disabled officer. In case either officer whose signature or facsimile of whose signature shall appear on the Bonds shall cease to be the officer before the delivery of the Bonds, the signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. The City may elect to deliver, in lieu of printed definitive bonds, one or more typewritten temporary bonds in substantially the form set forth above, with such changes as may be necessary to reflect more than one maturity in a single temporary bond. Such temporary bonds may be executed with photocopied facsimile signatures of the Mayor and City Manager. Such temporary bonds shall, upon the printing of the definitive bonds and the execution thereof, be exchanged therefor and cancelled. 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 the 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 March 23, 2004. The Certificate of Authentication so executed on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. Registration; Transfer; Exchange. The City will cause to be kept at the principal office of the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the Bond Registrar shall provide for the registration of Bonds and the registration of transfers of Bonds entitled to be registered or transferred as herein provided. Upon surrender for transfer of any Bond at the principal office of the Bond Registrar, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration (as provided in paragraph 9) of, and deliver, in the name of the designated transferee or transferees, one or more new Bonds of any Authorized Denomination or Denominations of a like aggregate principal amount, having the same stated maturity and interest rate, as requested by the transferor; provided, however, that no Bond may be registered in blank or in the name of "bearer" or similar designation. At the option of the Holder, Bonds may be exchanged for Bonds of any Authorized Denomination or Denominations of a like aggregate principal amount and stated maturity, upon surrender of the Bonds to be exchanged at the principal office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute (if necessary), and the Bond Registrar shall authenticate, insert the date of registration of, and deliver the Bonds which the Holder making the exchange is entitled to receive. Resolution No. 2004 -17 Page 10 All Bonds surrendered upon any exchange or transfer provided for in this resolution shall be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City. All Bonds delivered in exchange for or upon transfer of Bonds shall be valid general obligations of the City evidencing the same debt, and entitled to the same benefits under this resolution, as the Bonds surrendered for such exchange or transfer. Every Bond presented or surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly executed by the Holder thereof or the Holder's attorney duly authorized in writing. The Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the transfer or exchange of any Bond and any legal or unusual costs regarding transfers and lost Bonds. Transfers shall also be subject to reasonable regulations of the City contained in any agreement with the Bond Registrar, including regulations which permit the Bond Registrar to close its transfer books between record dates and payment dates. The Clerk is hereby authorized to negotiate and execute the terms of said agreement. 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. Interest Payment; Record Date. Interest on any Bond shall be paid on each Interest Payment Date by check or draft mailed to the person in whose name the Bond is registered (the "Holder ") on the registration books of the City maintained by the Bond Registrar and at the address appearing thereon at the close of business on the fifteenth (15th) day of the calendar month next preceding such Interest Payment Date (the "Regular Record Date "). Any such interest not so timely paid shall cease to be payable to the person who is the Holder thereof as of the Regular Record Date, and shall be payable to the person who is the Holder thereof at the close of business on a date (the "Special Record Date ") fixed by the Bond Registrar whenever money becomes available for payment of the defaulted interest. Notice of the Special Record Date shall be given by the Bond Registrar to the Holders not less than ten (10) days prior to the Special Record Date. Treatment of Registered Owner. The City and Bond Registrar may treat the person in whose name any Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and premium, if any, and interest (subject to the payment provisions in paragraph 12) 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. Delivery; Application of Proceeds. The Bonds when so prepared and executed shall be delivered by the Clerk to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. Fund; Accounts and Subaccounts. For the convenience and proper administration of the moneys to be borrowed and repaid on the Bonds, and to make adequate and specific security to the Purchaser and holders from time to time of the Bonds, there is hereby created a special fund to be designated the "General Obligation Refunding Bonds, Series 2004C Fund" (the "Fund ") to be administered and maintained by the 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 the Bonds and the interest thereon shall have been fully paid. The Operation and Maintenance Account heretofore established by the City shall continue to be maintained in the manner heretofore provided by the City. All moneys remaining after paying or providing for the items set forth in the resolution establishing the Operation and Maintenance Account shall constitute and are referred to as Resolution No. 2004 -17 Page I I "net revenues" until the Bonds have been paid. There shall be maintained in the Fund the following separate accounts to which shall be credited and debited all net revenues of the System as hereinafter set forth. The City Finance Director and all officials and employees concerned therewith shall establish and maintain financial records of the receipts and disbursements of the System in accordance with this resolution. In such records there shall be established and maintained the following separate accounts, designated the Escrow Account and the Debt Service Account, for the purposes as follows: Escrow Account. The Escrow Account shall be maintained as an escrow account with U.S. Bank National Association, in St. Paul, Minnesota (the "Escrow Agent "), which is a suitable financial institution within or without the State whose deposits are insured by the Federal Deposit Insurance Corporation and whose combined capital and surplus is not less than $500,000. All proceeds of the sale of the Bonds shall be received by the Escrow Agent and applied to fund the Escrow Account or to pay costs of issuing the Bonds. Proceeds of the Bonds not used to pay costs of issuance are hereby irrevocably pledged and appropriated to the Escrow Account, together with all investment earnings thereon. The Escrow Account shall be invested in securities maturing or callable at the option of the holder on such dates and bearing interest at such rates as shall be required to provide sufficient funds, together with any cash or other funds retained in the Escrow Account, (i) to pay when due the interest to accrue on the Bonds to and including February 1, 2005 and (ii) to pay when called for redemption on February 1, 2005, the principal amount of the Refunded Bonds. The Escrow Account shall be irrevocable appropriated to the payment of (i) all interest on the Bonds to and including February 1, 2005 and (ii) the principal of and interest on the Refunded Bonds due by reason of their call for redemption on February 1, 2005. The moneys in the Escrow Account shall be used solely for the purposes herein set forth and for no other purpose, except that any surplus in the Escrow Account may be remitted to the City, all in accordance with an agreement (the "Escrow Agreement ") by and between the City and Escrow Agent, a form of which agreement is on file in the office of the Clerk. Any moneys remitted to the City upon termination of the Escrow Agreement shall be deposited in the Debt Service Account. Debt Service Account. There shall be maintained the following separate subaccounts in the Debt Service Account to be designated the "Storm Sewer Revenue Debt Service Subaccount" and the "Water Revenue Debt Service Subaccount ". There are hereby irrevocably appropriated and pledged to, and there shall be credited to the separate subaccounts of the Debt Service Account: Storm Sewer Revenue Debt Service Subaccount. To the Net Revenue Debt Service Subaccount there is hereby pledged and irrevocably appropriated and there shall be credited: (1) after February 1, 2005, the net revenues of the Storm Sewer System not otherwise pledged and applied to the payment of other obligations of the City, in an amount, together with other funds which may herein or hereafter from time to time be irrevocably appropriated to the account sufficient to meet the requirements of Minnesota Statutes, Section 475.61 for the payment of the principal and interest of the Storm Sewer Revenue Refunding Portion of the Bonds; (2) any collections of all taxes which are herein or hereafter levied; (3) a pro rata share of accrued interest received upon delivery of the Bonds; (4) a pro rata share of any balance remitted to the City upon termination of the Escrow Agreement; (5) any funds remaining after February 1, 2005 in the Debt Service Account of the General Obligation Bonds, Series 1996A Fund established by the Prior Resolution; (6) all investment earnings on funds in the Debt Service Account; and (7) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Debt Service Account. The amount of any surplus remaining in the Debt Service Account when the Storm Sewer Revenue Refunding Portion of the Bonds and interest thereon are paid shall be used consistent with the Minnesota Statutes, Section 475.6 1, Subdivision 4. Water Revenue Debt Service Account. To the Water Revenue Debt Service Account there is hereby pledged and irrevocably appropriated and there shall be credited: (1) after February 1, 2005, the net revenues of the Water System not otherwise pledged and applied to the payment of other obligations of the City, in an amount, together with other funds which may herein or hereafter from time to time be irrevocably appropriated to the account sufficient to meet the requirements of Minnesota Statutes, Section Resolution No. 2004 -17 Page 12 475.61 for the payment of the principal and interest of the Water Revenue Refunding Portion of the Bonds; (2) any collections of all taxes which may hereafter be levied in the event that the net revenues of the Water System herein pledged to the payment of the principal and interest on the Water Revenue Refunding Portion of the Bonds are insufficient therefor; (3) a pro rata share of accrued interest received upon delivery of the Bonds; (4) a pro rata share of any balance remitted to the City upon termination of the Escrow Agreement; (5) any funds remaining after February 1, 2005 in the Debt Service Account of the General Obligation Bonds, Series 1996A Fund established by the Prior Resolution; (6) all investment earnings on funds in the Water Revenue Debt Service Account; and (7) any and all other moneys which are properly available and are appropriated by the governing body of the City to the Water Revenue Debt Service Account. The amount of any surplus remaining in the Water Revenue Debt Service Account when the Water Revenue Refunding Portion of the Bonds and interest thereon are paid shall be used consistent with the Minnesota Statutes, Section 475.6 1, Subdivision 4. The moneys in the Debt Service Account shall be used solely to pay the principal of and interest on the Bonds or any other bonds hereafter issued and made payable from the Fund. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (1) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued, and (2) in addition to the above, in an amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Fund (or any other City account which will be sued to pay principal and interest to become due on the Bonds) in excess of amounts which under the applicable federal arbitrage regulations may be invested without regard as to yield shall not be invested in excess of the applicable yield restrictions imposed by the arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. In addition, the proceeds of the Bonds and money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the federal Internal Revenue Code of 1986, as amended (the "Code "). Tax Levies. To provide moneys for payment of the principal of and interest on the Storm Sewer Refunding Portion, there is hereby levied upon all of the taxable property in Stoney Brook Creek Sub - Watershed District in the City a direct annual ad valorem tax which shall be spread upon the tax rolls and collected with and as part of other general property taxes in the City for the years and in the amounts as follows: Year of Tax Year of Tax Lever Collection Amount 2004 2005 2005 2006 The tax levies shall be irrepealable so long as the Bonds described in this paragraph are outstanding and unpaid, provided that the City reserves the right and power to reduce the levies in the manner and to the extent permitted by Minnesota Statutes, Section 475.61, Subdivision 3. Upon payment of the Prior Bonds, the uncollected taxes levied in paragraph 18 of the Prior Resolution authorizing the issuance of the Prior Bonds which are not needed to pay the Prior Bonds as a result of the Refunding shall be cancelled. Sufficiency of Net Revenues; Coverage Test. It is hereby found, determined and declared that the net revenues of the System and the tax levy for the Storm Sewer Refunding Portion are sufficient in amount to pay when due the principal of and interest on the Bonds and a sum at least five percent in excess Resolution No. 2004 -17 Page 13 thereof, and the net revenues of the System and the tax levy for the Stoney Brook Creek Sub - watershed District are hereby pledged for the payment of the Bonds and shall be applied for that purpose, but solely to the extent required to meet the principal and interest requirements of the Bonds as the same become due. Nothing contained herein shall be deemed to preclude the City from making further pledges and appropriations of the net revenues of the System for the payment of other or additional obligations of the City, provided that it has first been determined by the City Council that the estimated net revenues of the System will be sufficient, in addition to all other sources, for the payment of the Bonds and such additional obligations and any such pledge and appropriation of the net revenues may be made superior or subordinate to, or on a parity with the pledge and appropriation herein. Covenant to Maintain Rates and Charges. In accordance with Minnesota Statutes, Section 444.075, the City hereby covenants and agrees with the Holders of the Bonds that it will impose and collect charges for the service, use, availability and connection to the System at the times and in the amounts required to produce net revenues, together with the tax levy for the storm sewer refunding portion, adequate to pay all principal and interest when due on the Bonds. Excess Net Revenues. Net revenues of the System in excess of those required for the foregoing may be used for any proper purpose. General Obligation Pledge. For the prompt and full payment of the principal of and interest on the Bonds as the same respectively become due, the full faith, credit and taxing powers of the City shall be and are hereby irrevocably pledged. If the net revenues of the System appropriated and pledged to the payment of the principal and interest on the Bonds, together with other funds irrevocably appropriated to the Escrow Account or the Storm Sewer Revenue Debt Service Subaccount or Water Revenue Debt Service Subaccount, whichever is appropriate, shall at any time be insufficient to pay the principal and interest when due, the City covenants and agrees to levy, without limitation as to rate or amount an ad valorem tax upon all taxable property in the City sufficient to pay such principal and interest as it becomes due. If the balance in the Escrow Account or the Net Revenue Debt Service Subaccount is ever insufficient to pay all principal and interest then due on the Net Revenue Portion of the Bonds payable therefrom, the deficiency shall be promptly paid out of any other accounts of the City which are available for such purpose, and such other funds may be reimbursed without interest from the Escrow Account or the Net Revenue Debt Service Subaccount when a sufficient balance is available therein. Securities; Escrow Agent. Securities purchased from moneys in the Escrow Account shall be limited to securities set forth in Minnesota Statutes, Section 475.67, Subdivision 8, and any amendments or supplements thereto. Securities purchased from the Escrow Account shall be purchased simultaneously with the delivery of the Bonds. The City Council has investigated the facts and hereby finds and determines that the Escrow Agent is a suitable financial institution to act as escrow agent. Escrow Agreement. On or prior to the delivery of the Bonds the Mayor and Manager shall, and are hereby authorized and directed to, execute on behalf of the City an Escrow Agreement. The Escrow Agreement is hereby approved and adopted and made a part of this resolution, and the City covenants that it will promptly enforce all provisions thereof in the event of default thereunder by the Escrow Agent. Purchase of SLGS or Open Market Securities. Ehlers, as agent for the Council, is hereby authorized and directed to purchase on behalf of the Council and in its name the appropriate United States Treasury Securities, State and Local Government Series and/or open market securities from Bond proceeds and, to the extent necessary, other available funds, all in accordance with the provisions of this resolution and the Escrow Agreement and to execute all such documents (including the appropriate subscription form) required to effect such purchase in accordance with the applicable U.S. Treasury Regulations. Resolution No. 2004 -17 Page 14 Redemption of Prior Bonds. The Prior Bonds which mature in 2006 and thereafter shall be redeemed and prepaid on February 1, 2005, in accordance with the terms and conditions set forth in the Notice of Call for Redemption attached to the Escrow Agreement, which terms and conditions are hereby approved and incorporated herein by reference. The Notice of Call for Redemption shall be mailed to the paying agent for the Prior Bonds prior to said redemption date and to the registered owner of each Prior Bond at the address shown on the registration books kept by the registrar for the Prior Bonds pursuant to the provisions of the Escrow Agreement. Prior Bonds Security. Until retirement of the Prior Bonds, all provisions theretofore made for the security thereof shall be observed by the City and all of its officers and agents. Defeasance. When all Bonds have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this resolution to the registered Holders of the Bonds shall, to the extent permitted by law, cease. The City may discharge its obligations with respect to any Bonds which are due on any date by irrevocably depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full; or if any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Bond Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a suitable banking institution qualified by law as an escrow agent for this purpose, cash or securities described in Minnesota Statutes, Section 475.67, Subdivision 8, bearing interest payable at such times and at such rates and maturing on such dates as shall be required, without regard to sale and/or reinvestment, to pay all amounts to become due thereon to maturity. Certificate of Registration. The Clerk is hereby directed to file a certified copy of this resolution with the Director of the Anoka County Property Records and Taxation's Office, together with such other information as the Director shall require, and to obtain the Director of Anoka County Property Records and Taxation's certificate that the Bonds have been entered in the Director of Anoka County Property Records and Taxation's Bond Register. Records and Certificates. The officers of the City are hereby authorized and directed to prepare and furnish to the Purchaser, and to the attorneys approving the legality of the issuance of the Bonds, certified copies of all proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other affidavits, certificates and information as are required to show the facts relating to the legality and marketability of the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. Negative Covenant as to Use of Proceeds and Project. The City hereby covenants not to use the proceeds of the Bonds or to use the Project, or to cause or permit them to be used, or to enter into any deferred payment arrangements for the cost of the Project, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code. Tax - Exempt Status of the Bonds; Rebate. The City shall comply with requirements necessary under the Code to establish and maintain the exclusion from gross income under Section 103 of the Code of the interest on the Bonds, including without limitation (1) requirements relating to temporary periods for investments, (2) limitations on amounts invested at a yield greater than the yield on the Bonds, and (3) the rebate of excess investment earnings to the United States if the Bonds (together with other obligations reasonably expected to be issued and outstanding at one time in this calendar year) exceed the small - issuer exception amount of $5,000,000. Resolution No. 2004 -17 Page 15 For purposes of qualifying for the exception to the federal arbitrage rebate requirements for governmental units issuing $5,000,000 or less of bonds, the City hereby finds, determines and declares that (1) the Bonds are issued by a governmental unit with general taxing powers, (2) no Bond is a private activity bond, (3) ninety -five percent 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 aggregate face amount of all tax- exempt bonds (other than private activity bonds) issued by the City (and all subordinate entities thereof, and all entities treated as one issuer with the City) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000, all within the meaning of Section 148(f)(4)(D) of the Code. FURTHERMORE: the Prior Bond was issued as part of an issue which was treated as meeting the rebate requirements by reason of the exception for governmental units issuing $5,000,000 or less of bonds; The average maturity of the Bonds does not exceed the remaining average maturity of the Prior Bonds; and No maturity of the Bonds has a maturity date which is later than the date which is thirty years after the date the Prior Bond was issued. Designation of Qualified Tax - Exempt Obligations. In order to qualify the Bonds as "qualified tax exempt obligations" within the meaning of Section 265(b)(3) of the Code, the City hereby makes the following factual statements and representations: The Bonds are issued after August 7, 1986; The Bonds are not "private activity bonds" as defined in Section 141 of the Code; The City hereby designates the Bonds as "qualified tax exempt obligations" for purposes of Section 265(b)(3) of the Code; The reasonably anticipated amount of tax exempt obligations (other than private activity bonds, treating qualified 501(c)(3) bonds as not being private activity bonds) which will be issued by the City (and all entities treated as one issuer with the City, and all subordinate entities whose obligations are treated as issued by the City) during this calendar year 2004 will not exceed $10,000,000; and Not more than $10,000,000 of obligations issued by the City during this calendar year 2004 have been designated for purposes of Section 265(b)(3) of the Code. The City shall use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designation made by this paragraph. Continuing Disclosure. The City is the sole obligated person with respect to the Bonds. The City hereby agrees, in accordance with the provisions of Rule 15c2 -12 (the "Rule "), promulgated by the Securities and Exchange Commission (the "Commission ") pursuant to the Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the "Undertaking ") hereinafter described to: Provide or cause to be provided to each nationally recognized municipal securities information repository ( "NRMSIR ") and to the appropriate state information depository ( "SID "), if any, for the State of Minnesota, in each case as designated by the Commission in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertaking. The City reserves the right to modify from time to time the terms of the Undertaking as provided therein. Provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the Municipal Securities Rulemaking Board ( "MSRB ") and (ii) the SID, notice of the occurrence of certain material events with respect to the Bonds in accordance with the Undertaking. Resolution No. 2004 -17 Page 16 Provide or cause to be provided, in a timely manner, to (i) each NRMSIR or to the MSRB and (ii) the SID, notice of a failure by the City to provide the annual financial information with respect to the City described in the Undertaking. The City agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be enforceable on behalf of such Holders; provided that the right to enforce the provisions of these covenants shall be limited to a right to obtain specific enforcement of the City's obligations under the covenants. The Mayor and Manager of the City, or any other officer of the City authorized to act in their place (the "Officers ") are hereby authorized and directed to execute on behalf of the City the Undertaking in substantially the form presented to the City Council subject to such modifications thereof or additions thereto as are (a) consistent with the requirements under the Rule, (b) required by the Purchaser of the Bonds, and (c) acceptable to the Officers. Payment of Issuance Expenses. The City authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to U.S. Trust Company, N.A., Minneapolis, Minnesota on the closing date for further distribution as directed by the City's financial advisor, Ehlers. Severability. If any section, paragraph or provision of this resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this resolution. Headings. Headings in this resolution are included for convenience of reference only and are not a part hereof, and shall not limit or define the meaning of any provision hereof. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 23RD DAY OF FEBRUARY, 2004. SCOTT J. LUND — MAYOR ATTEST: "gAelj DEBRA A. SKOGENU CITY CLERK