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HomeMy WebLinkAboutResolution No. 2005-070 Bond Sale $1,460,000 Perm Imp Revolving Fund Series 2005E ry CERTIFICATION OF MINUTES RELATING TO $1,460,000 GENERAL OBLIGATION PERMANENT IMPROVEMENT REVOLVING FUND BONDS, SERIES 2005E Issuer: City of Edina,Minnesota Governing Body: City Council Kind, date,time and place of meeting: A regular meeting held on August 16, 2005 at 7:00 o'clock p.m., at the City Hall,Edina,Minnesota. Members present: James Hovland, Scot Housh, Linda Masica and Ann Swenson Members absent: Alice Hulbert Documents Attached: Minutes of said meeting(including): Pages 1 through 21 RESOLUTION NO. 2005-70 RESOLUTION AUTHORIZING ISSUANCE, AWARDING SALE,PRESCRIBING THE FORM AND DETAILS AND • PROVIDING FOR THE PAYMENT OF $1,460,000 GENERAL OBLIGATION PERMANENT IMPROVEMENT REVOLVING FUND BONDS, SERIES 2005E I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the bonds referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of said corporation in my legal custody, from which they have been transcribed; that said documents are a correct and complete transcript of the minutes of a meeting of the governing body of said corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at said meeting, so far as they relate to said bonds; and that said meeting was duly held by the governing body at the time and place and was attended throughout by the members indicated above,pursuant to call and notice of such meeting given as required by law. WITNESS my hand officially as such recording officer on August 16, 2005. Debra Mangen, City Cierk It was reported that five 5 proposals had been received prior to 12:00 Noon, Central Time today for the purchase of the$1,460,000 General Obligation Permanent Improvement Revolving Fund Bonds, Series 2005E of the City in accordance with the Official Statement distributed by the City to potential purchasers of the Bonds. The proposals have been read and tabulated, and the terms of each have been determined to be as follows: Bid for Interest Net Interest Name of Bidder Principal Rates Cost [See attached] • BID TABULATION $1,460,000 General Obligation Permanent Improvement Revolving Fund Bonds, Series 2005E CITY OF EDINA, MINNESOTA SALE:August 16, 2005 AWARD: PIPER JAFFRAY&CO. RATING: Moody's Investors Service, Inc. "Aaa" BBI:4.37% Standard & Poor's Credit Markets"AAA" NET TRUE NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST (February 1) YIELD COST RATE PIPER JAFFRAY&CO. 2007 3.000% 2.800% $1,451,678.85 $299,296.67 3.5841% Minneapolis, Minnesota 2008 3.000% 2.950% 2009 3.250% 3.070% 2010 3.250% 3.200% 2011 3.375% 3.320% 2012 3.500% 3.420% 2013 3.500% 3.500% 2014 3.500% 3.600% 2015 3.625% 3.680% 2016 3.750% 3.750% WONIN &COMPANY, INC. 2007 3.500% $1,462,628.45 $304,651.05 3.6303% Minneapolis, Minnesota 2008 3.500% CIBC WORLD MARKETS 2009 3.500% Chicago, Illinois 2010 3.500% CITIGROUP GLOBAL MARKETS, INC. 2011 3.500% Chicago, Illinois 2012 3.500% CITIZENS BANK 2013 3.500% Flint, Michigan 2014 3.600% 2015 4.000% 2016 4.000% WACHOVIA BANK, NATIONAL ASSOCIATION 2007 2.850% $1,445,400.00 $303,420.46 3.6417% Charlotte, North Carolina 2008 2.950% 2009 3.000% 2010 3.200% 2011 3.300% 2012 3.400% 2013 3.500% 2014 3.600% 2015 3.650% 2016 3.750% • E H L E R S 3060 Centre Pointe Drive, Roseville, MN 55113 651.697.8500 fax 651.697.8555 www.ehiers-inc.com & ASSOCIATES INC Offices in Roseville, MN Brookfield, WI and Lisle, IL -7 $1,460,000 General Obligation Permanent Improvement Revolving Fund Bonds,Series 2005E Pj*2 City of Edina, Minnesota NET TRUE NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST (February 1) YIELD COST RATE RBC DAIN RAUSCHER INC. 2007 3.500% $1,454,322.75 $306,353.00 3.6686% Minneapolis, Minnesota 2008 3.500% 2009 3.500% 2010 3.500% 2011 3.500% 2012 3.500% 2013 3.500% 2014 3.600% 2015 3.700% 2016 3.800% ... ....... .... . . ..... WELLS FARGO BROKERAGE SERVICES, LLC 2007 3.000% $1,458,540.00 $310,152.08 3.6963% Minneapolis, Minnesota 2008 3.000% 2009 3.250% 2010 3.250% 2011 3.500% 2012 3.500% 2013 3.750% 2014 4.000% 2015 4.000% • 2016 4.000% T Councilmember Swenson then introduced the following resolution and moved its adoption: RESOLUTION NO. 2005 -70 RESOLUTION AUTHORIZING ISSUANCE,AWARDING SALE,PRESCRIBING THE FORM AND DETAILS AND PROVIDING FOR THE PAYMENT OF $1,460,000 GENERAL OBLIGATION PERMANENT IMPROVEMENT REVOLVING FUND BONDS, SERIES 2005E BE IT RESOLVED by the City Council of the City of Edina,Minnesota(the City), as follows: SECTION 1. ESTABLISHMENT, AUTHORIZATION AND SALE. 1.01. Permanent Improvement Revolving Fund Establishment. The City has, and will continue to have, a need for substantial improvements to its infrastructure and wishes to establish a system for the financing of those improvements on a consistent basis. Minnesota Statutes, Section 429.091, Subdivision 7a, authorizes the City to establish a revolving fund for the payment of the costs of any improvement described in Minnesota Statutes, Section 429.021, or any waterworks systems, sewer systems, or storm sewer systems described in Minnesota • Statutes, Section 444.075, (all such improvements and systems being referred to herein as Improvements) and for the payment of any obligations issued to pay the costs of Improvements or to refund obligations issued for those purposes. This Council hereby creates a revolving fund as contemplated by Minnesota Statutes, Section 429:091, Subdivision 7a, to be designated as the Permanent Improvement Revolving Fund(the Fund),which shall be maintained as a separate and special bookkeeping account on the official books of the City until all obligations have been fully paid, or the City's obligation with reference to such obligations has been discharged as provided in the resolutions under which such obligations were issued. Within the Fund, the following accounts are created: a Revenue Account and a Debt Service Account. This Council shall, from time to time as necessary, issue and sell general obligation bonds(the Obligations),to finance the cost of various Improvements (the Improvements financed by each series of Obligations are referred to herein as a Project), each series of Obligations to be issued pursuant to a resolution of this Council(the Resolution). No Obligations may be issued for a Project unless either(i) at least 20 percent of the costs of such Project is to be assessed against benefited property or(ii) the Council estimates that the costs will be recovered from the net revenues of the waterworks system, sewer system, or storm sewer system operated by the City, or a combination of net revenues and special assessments. Each series of the Obligations shall be payable primarily from a Debt Service Fund established or designated in the Resolution and the proceeds of each series of Obligations shall be used to defray in whole or in part any expenses incurred or estimated to be incurred in making the • Improvements, including every item of cost of the kinds authorized by Minnesota Statutes, Section 475.65, or to refund Bonds previously issued under this Resolution or under Minnesota � r Statutes, Chapter 429, or Sections 115.46 or 444.075. The Obligations shall be general obligations to which the full faith and credit of the City are pledged. If the special assessments to be levied and net revenues estimated to be available for their payment are estimated to be at least 20 percent of the principal amount of the Obligations,the Obligations may be issued without an election and shall not be included in determining the net indebtedness of the City under the provisions of any law limiting net indebtedness. When all conditions exist precedent to the offering for sale of Obligations,this Council may issue and sell temporary Obligations not exceeding the total amount authorized,maturing in not more than three years from the date the temporary Obligations are issued,in anticipation of the issuance of the Obligations. To the extent that the principal of and interest on the temporary bonds cannot be paid when due from other sources pledged or appropriated for the purpose,they shall be paid from the proceeds of permanent Obligations or additional temporary Obligations which this Council shall offer for sale in advance of their maturity;but the indebtedness funded by an issue of temporary Obligations shall not be extended by the issue of additional temporary Obligations for more than six years from the date of the first issue. The holders of any temporary Obligations shall have and may enforce,by mandamus or other appropriate proceedings, all rights respecting the levy and collection of taxes that are granted by law to holders of permanent Obligations, except the right to require the levies to be collected prior to the maturity of the temporary Obligations. If any temporary Obligations are not paid in full at maturity,the holders may require the issuance in exchange for them, at par, of new temporary Obligations maturing within one year from their date of issue but not subject to any other • maturity limitation, and bearing interest at the maximum rate permitted by law. This Council may by resolution adopted prior to the sale of any temporary Obligations pledge the full faith, credit, and taxing power of the City for the payment of the principal and interest, in addition to all provisions made for their security in the authorizing resolution. If it does so,the temporary Obligations will be designated as general obligation temporary Obligations, and this Council shall levy taxes for their payment in accordance with this section. The proceeds of any Obligations received by the City, exclusive of unused discount and accrued interest, shall be deposited in one or more Construction Funds (each a Construction Fund) created or designated in the Resolution and used to pay costs of the Projects or such other Improvements as the Council may designate,or in the case of refunding Obligations,the net proceeds shall be deposited either in an escrow account as provided in Minnesota Statutes, Section 475.67, or in the fund or account from which the refunded Obligations are payable. A special subaccount shall be created within the Construction Fund for each Project, and Bond proceeds,Revenues any other revenues appropriated by the Resolution for that Project shall be held and accounted for therein. When a Project has been completed and its costs paid, or if the Council determines to abandon the Project, any amounts remaining in the subaccount for that Project shall be transferred to the Revenue Account in the Infrastructure Management Fund. All revenues, which shall include all (i) special assessments levied with respect to Improvements financed or refinanced through the Fund; (ii)utility revenues pledged or appropriated to the Fund with respect to Improvements financed or refinanced through the Fund, . (iii)taxes levied with respect to any Obligations or Improvements financed or refinanced through the Fund; (iv)proceeds of any federal or state grants received with respect to, or appropriated for 2 the purpose of, any Improvements financed or refinanced through the Fund; and(v) other moneys at any time pledged or appropriated by this Council for the purpose of the Fund, (the Revenues) are irrevocably pledged and appropriated and shall be credited to the Fund as received. Notwithstanding the foregoing,no taxes levied or amounts appropriated by this Council as a result of a deficiency in the Revenues for the payment of any Obligations(the Deficiency Amounts) shall be considered as part of the Revenues, and any Deficiency Amounts shall be deposited as received to the Debt Service Fund of the Obligations with respect to which such deficiency exists. The Revenue Account is established as a separate and special bookkeeping account within the Fund. All Revenues shall be deposited, as received, into the Revenue Account. On January 1 and July 1 in each year, commencing January 1, 2006,there shall be transferred from the Revenue Account to the Debt Service Account an amount sufficient,with amounts then on hand in the Debt Service Account,to pay the principal of and interest on all Obligations due or to become due through the next succeeding June 30, in the case of a transfer made on any January 1 and December 31, in the case of a transfer made on July 1. If the balance on hand in the Revenue Account is not sufficient on any January 1 or July 1 to make the required transfer to the Debt Service Account in full, all Revenues thereafter received in the Revenue Account shall be immediately transferred to the Debt Service Account until the balance therein reaches the required level. So long as there is no deficiency in amounts required to be transferred to the Debt Service Account, amounts on hand in the Revenue Account may be transferred, as needed, to the sub account for any Project within any Construction Fund. The Debt Service Account is established as a separate and special bookkeeping account within the Fund. On each January 1 or July 1, a transfer shall be made from the Revenue Account, and if the transfer from the Revenue Account is not sufficient,the Revenues thereafter received by the City shall be transferred, as received, to Debt Service Account until the balance on hand in the Debt Service Account equals the sum of(i)the principal and premium, if any, due on any Obligations on and before the next succeeding June 30 or December 31 whether by reason of stated maturity or through operation of the mandatory redemption of any term Obligations under the Resolution,plus(ii) interest due on any Obligations on and before the next succeeding June 30 or December 31. If on any interest payment date there are not sufficient amounts on deposit in the Debt Service Account to pay the total amount of interest and principal coming due on such interest payment date,the City shall transfer any moneys then on deposit to the credit of the Revenue Account, in an amount equal to such deficiency,to the Debt Service Account. There are hereby established two accounts in the Debt Service Account, designated as the "Debt Service Subaccount" and the"Surplus Subaccount." During each Bond Year(i.e., each twelve month period commencing on February 2 and ending on the following February 1), as monies are received into the Debt Service Account, the Treasurer shall first deposit such monies • into the Debt Service Subaccount until an amount has been appropriated thereto sufficient to pay all principal and interest due on the Obligations through the end of the Bond Year. All subsequent monies received in the Debt Service Subaccount during the Bond Year shall be 3 appropriated to the Surplus Subaccount. If at any time the amount on hand in the Debt Service Subaccount is insufficient for the payment of principal and interest then due, the Treasurer shall transfer to the Debt Service Subaccount amounts on hand in the Surplus Subaccount to the extent necessary to cure such deficiency. Investment earnings (and losses)on amounts from time to time held in the Debt Service Subaccount and Surplus Subaccount shall be credited or charged to said accounts. On the business day preceding each date on which principal of or interest on any Obligations are to be paid by the City in accordance with the Resolution, the Clerk shall,without further direction by the Council,transfer from the Debt Service Account to the Debt Service Fund from which such Obligations are payable an amount sufficient to pay such principal and interest. If the aggregate balance in the Debt Service Account is at any time insufficient to pay when due all principal of and interest on all Obligations payable therefrom, the payment shall be made from any fund of the City which is available for that purpose, subject to reimbursement from the Revenue Account when the balance therein is sufficient, and this Council covenants and agrees that it will each year levy a sufficient amount of ad valorem taxes to take care of any accumulated or anticipated deficiency,which levy is not subject to any constitutional or statutory limitation. All Obligation proceeds and Revenues on hand in the Fund shall be deposited or invested in accordance with Minnesota Statutes, Chapter 118A. All securities so purchased shall mature at or before the time when it is estimated that the proceeds thereof will be needed for the purposes of the Account from which funds are withdrawn for the purchase. All income, gain and loss on such investments will be credited or charged, as the case may be,to the Account from which the investment was made. When all of any outstanding Obligations have been discharged as provided in the Resolution, all pledges, covenants and other rights granted herein to the holders of any such Obligations shall cease. At that time the Council may determine to terminate the Fund, and may appropriate any moneys on hand therein for any other City purpose. 1.02. Authorization. The City Council hereby determines that it is in the best interest of the City to issue its $1,460,000 General Obligation Permanent Improvement Revolving Fund Bonds, Series 2005E (the Bonds),to finance from the Permanent Improvement Revolving Fund the cost of various municipal improvements, including Halifax and Grimes, South Harriet Park West, Sunnyslope Neighborhood, Schaefer Road, West 58th Street, Schaefer Circle,Bridge Lane and Shannon Drive (the Projects). 1.03. Sale. The City has retained Ehlers &Associates, Inc., an independent financial advisor,to assist the City in connection with the sale of the Bonds. The interest on the Bonds will not be excluded from gross income for federal income tax purposes. The Bonds are being sold pursuant to Minnesota Statutes, Section 475.60, Subdivision 2,paragraph(9),without meeting the requirements for public sale under Minnesota Statutes, Section 475.60, Subdivision 1. Pursuant to the Terms and Conditions of Sale for the Bonds, five 5 proposals for the purchase of the Bonds were received at or before the time specified for receipt of proposals. The 4 • names the Bonds are registered on the Bond Register, as hereinafter defined, at the Registrar's close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date,whether or not such day is a business day. Interest shall be computed on the basis of a 360 day year composed of twelve 30 day months. 2.04. Redemption. Bonds maturing in the years 2007 through 2012 are payable on their respective stated maturity dates without option of prior payment,but Bonds maturing in 2013 and thereafter are each subject to redemption, at the option of the Issuer and in whole or in part, and if in part, in the maturities selected by the City and,within any maturity, in$5,000 principal amounts selected by the Registrar by lot, on February 1, 2012 and on any date thereafter, at a redemption price equal to the principal amount thereof to be redeemed plus accrued interest to the date of redemption. At least thirty days prior to the date set for redemption of any Bond,the Issuer shall cause notice of the call for redemption to be mailed to the Registrar and to the registered owner of each Bond to be redeemed,but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. The notice of redemption shall specify the redemption date, redemption price,the numbers, interest rates and CUSIP numbers of the Bonds to be redeemed and the place at which the Bonds are to be surrendered for payment,which is the principal office of the Registrar. Official notice of redemption having been given as aforesaid, the Bonds or portions thereof so to be redeemed shall, on the redemption date,become due and payable at the • redemption price therein specified and from and after such date (unless the Issuer shall default in the payment of the redemption price) such Bonds or portions thereof shall cease to bear interest. Bonds in a denomination larger than $5,000 may be redeemed in part in any integral multiple of$5,000. The owner of any Bond redeemed in part shall receive without charge,upon surrender of such Bond to the Registrar, one or more new Bonds in authorized denominations equal in principal amount to be unredeemed portion of the Bond so surrendered. 2.05. Appointment of Initial Registrar. The City hereby appoints U.S. Bank National Association in St. Paul,Minnesota, as the initial Registrar. The Mayor and Finance Director are authorized to execute and deliver, on behalf of the City, a contract with U.S. Bank National Association, as Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove any Registrar upon thirty(3 0) days' notice and upon the appointment of a successor Registrar,in which event the predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar. On or before each principal or interest due date, without further order of this Council,the Finance Director shall transmit to the Registrar from the General Obligation Permanent Improvement Revolving Fund Bonds, Series 2005E Debt Service Account described in Section 4 hereof,moneys sufficient for the payment of all principal and interest then due. • 2.06. Registration. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: 6 proposals have been publicly read and considered, and the purchase price,interest rates and net interest cost under the terms of each proposal have been determined. The most favorable proposal received is that of Piper Jaffray& Co, of MinneNolis,Minnesota(the"Purchaser"),to purchase the Bonds at a price of$1,451,678.85,the Bonds to bear interest at the rates set forth in Section 2.02. 1.04. Award. The sale of the Bonds is hereby awarded to the Purchaser and the Mayor and City Manager are hereby authorized and directed on behalf of the City to execute a contract for the sale of the Bonds in accordance with the terms of the proposal. The good faith deposit of the Purchaser shall be deposited by the City until the Bonds have been delivered and shall be deducted from the purchase price paid at settlement. SECTION 2. BOND TERMS; REGISTRATION; EXECUTION AND DELIVERY. 2.01. Issuance of Bonds. All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done,to exist, to happen and to be performed precedent to and in the valid issuance of the Bonds having been done,now existing, having happened and having been performed, it is now necessary for the City Council to establish the form and terms of the Bonds,to provide security therefor and to issue the Bonds forthwith. 2.02. Maturities; Interest Rates; Denominations and Payment. The Bonds shall be dated • originally as of September 13, 2005, shall be in the denomination of$5,000 each, or any integral multiple thereof, of single maturities, shall mature on February 1 in the years and amounts stated below, and shall bear interest from date of original issue until paid or duly called for redemption at the respective annual rates set forth opposite such years and amounts, as follows: Year Amount Rate Year Amount Rate 2007 $125,000 3.000% 2012 $145,000 3.500% 2008 130,000 3.000% 2013 155,000 3.500% 2009 135,000 3.250% 2014 160,000 3.500% 2010 135,000 3.250% 2015 165,000 3.625% 2011 140,000 3.375% 2016 170,000 3.750% The Bonds shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond at the principal office of the Registrar described herein, the principal amount thereof shall be payable by check or draft issued by the Registrar described herein; provided that, so long as the Bonds are registered in the name of a securities depository, or a nominee thereof, in accordance with Section 2.08 hereof,principal and interest shall be payable in accordance with the operational arrangements of the securities depository. 2.03. Dates and Interest Payment Dates. Upon initial delivery of the Bonds pursuant to Section 2.07 and upon any subsequent transfer or exchange pursuant to Section 2.06, the date of authentication shall be noted on each Bond so delivered, exchanged or transferred. Interest on . the Bonds shall be payable on each February 1 and August 1, commencing February 1, 2006, each such date being referred to herein as an Interest Payment Date,to the person in whose 5 (a) Register. The Registrar shall keep at its principal corporate trust office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may,however, close the books for registration of any transfer after the fifteenth day of the month preceding each Interest Payment Date and until such Interest Payment Date. (c) Exchange of Bonds. Whenever any Bonds are surrendered by the registered owner for exchange the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity, as requested by the registered owner or the owner's attorney in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer,the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith,to make transfers which it,in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of such Bond,whether such Bond shall be overdue or not, for the purpose of receiving payment of,or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (g) Taxes, Fees and Charges. For every transfer or exchange of Bonds (except for an exchange upon a partial redemption of a Bond),the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Bond of like • amount,number,maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such 7 Bond destroyed, stolen or lost,upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and,in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that such Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Bond prior to payment. (i) Authenticating Agent. The Registrar is hereby designated authenticating agent for the Bonds,within the meaning of Minnesota Statutes, Section 475.55, Subdivision 1, as amended. 0) Valid Obligations. All Bonds issued upon any transfer or exchange of Bonds shall be the valid obligations of the City, evidencing the same debt, and entitled to the same benefits under this Resolution as the Bonds surrendered upon such transfer or exchange. 2.07. Execution, Authentication and Delivery. The Bonds shall be prepared under the direction of the City Finance Director and shall be executed on behalf of the City by the signatures of the Mayor and the City Manager,provided that all signatures may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes,the same as if he or she had remained in office until delivery. Notwithstanding such execution,no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication on such Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. When the Bonds have been so prepared, executed and authenticated,the City Finance Director shall deliver them to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser shall not be obligated to see to the application of the purchase price. 2.08. Securities Depository. (a) For purposes of this Section the following terms shall have the following meanings: "Beneficial Owner" shall mean,whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede & Co." shall mean Cede &Co.,the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. 8 • "DTC"shall mean The Depository Trust Company of New York,New York. "Participant" shall mean any broker-dealer,bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter from the Issuer to DTC previously executed by the Issuer and on file with DTC. (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede& Co., as nominee of DTC. The Registrar and the Issuer may treat DTC (or its nominee)as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution,registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the Issuer shall be affected by any notice to the contrary. Neither the Registrar nor the Issuer shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant,with respect to the payment by DTC or any Participant of any • amount with respect to the principal of or interest on the Bonds,with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution,with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede &Co., as nominee of DTC,the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede&Co. in accordance with the Representation Letter, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer's obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the Issuer to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph(d)hereof. (c) In the event the Issuer determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the fbrm of bond certificates, the Issuer may notify DTC and the Registrar,whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. In such event, the Bonds will be transferable in accordance with paragraph(d)hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the Issuer and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such • event the Bonds will be transferable in accordance with paragraph(d)hereof. 9 r • (d) In the event that any transfer or exchange of Bonds is permitted under paragraph(b)or(c)hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede& Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including,without limitation,the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. 2.09. Form of Bonds. The Bonds shall be printed in substantially the following form: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF EDINA GENERAL OBLIGATION PERMANENT IMPROVEMENT REVOLVING FUND BOND, SERIES 2005E No. R- $ Rate Maturity Date of Original Issue CUSIP February 1, September 13, 2005 REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: THE CITY OF EDINA, HENNEPIN COUNTY, MINNESOTA(the City), acknowledges itself to be indebted and hereby promises to pay to the registered owner named above,or registered assigns, the principal amount specified above on the maturity date specified above and promises to pay interest thereon from the date of original issue specified above or from the most recent Interest Payment Date(as hereinafter defined)to which interest has been paid or duly provided for, at the annual rate specified above,payable on February 1 and August 1 of each year, commencing February 1, 2006 (each such date, an Interest Payment Date), all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond before maturity. The interest so payable on any Interest Payment Date shall be paid to the person in whose name this Bond is registered at the close of business on the fifteenth day(whether or not a business day)of the calendar month next preceding such Interest Payment Date. Interest hereon shall be computed on the basis of a 360-day year composed of twelve 30-day months. The interest hereon and,upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by U.S. Bank National Association in St. Paul,Minnesota, as Bond Registrar, Transfer Agent and Paying Agent (the 10 • Registrar), or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. This Bond is one of an issue in the aggregate principal amount of$1,460,000 issued pursuant to a resolution adopted by the City Council on August 16,2005 (the Resolution), to maintain the Permanent Improvement Revolving Fund of the City, a permanent fund established for the financing of local improvements for which special assessments may be levied against property specially benefitted thereby, and is issued pursuant to the charter of the City and in full conformity with the Constitution and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapters 429 and 475. The Bonds are issuable only in fully registered form, in denominations of$5,000 or any integral multiple thereof, of single maturities. Bonds maturing in 2013 and later years are each subject to redemption and prepayment at the option of the City, in whole or in part, in such order as the City shall determine and,within a maturity,by lot as selected by the Registrar(or, if applicable,by the bond depository in accordance with its customary procedures)in multiples of$5,000, on February 1,2012, and on any date thereafter, at a price equal to the principal amount thereof plus interest accrued to the date of redemption. The City will cause notice of the call for redemption to be published as required by law and, at least thirty days prior to the designated redemption date,will cause notice of the call thereof to be mailed by first class mail to the registered owner of any Bond to be redeemed at the owner's address as it appears on the bond register maintained by the Registrar, • -but no defect in or_failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid,the Bonds or portions of Bonds so to be redeemed shall, on the redemption date,become due and payable at the redemption price therein specified, and from and after such date(unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal amount outstanding. As provided in the Resolution and subject to certain limitations set forth therein,this Bond is transferable upon the books of the City at the principal office of the Registrar,by the registered owner hereof in person or by the owner's attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of'the transferee or registered owner, of the same aggregate principal amount,bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof,whether this Bond is overdue or not, for the purpose of • receiving payment and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. 11 Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede& Co., as nominee of The Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede&Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City. IT IS HEREBY CERTIFIED,RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist,to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms,have been done, do exist,have happened and have been performed as so required; that prior to the issuance hereof the City has levied or agreed to levy special assessments on property specially benefited by the improvements financed by the Bonds and ad valorem taxes on all taxable property within the City, collectible in the years and amounts required to produce sums not less than five percent in excess of the principal of and interest on the Bonds as such principal and interest respectively become due, and has appropriated such special assessments and ad valorem taxes to the Revenue Account(the Revenue Account) of its Permanent Improvement Revolving Fund established by the Resolution; that, on or before each date the City is obligated to pay principal of or interest on the Bonds,the City will transfer from its Revenue Account to a separate General Obligation Permanent Improvement Revolving Fund Bonds, Series 2005E Debt • Service Account an amount sufficient for the payment of such principal and interest on such date; that if necessary for payment of principal and interest, additional ad valorem taxes are required to be levied upon all taxable property in the City,without limitation as to rate or amount; and that the issuance of this Bond, together with all other indebtedness of the City outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to exceed any constitutional, charter or statutory limitation of indebtedness. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF,the City has caused this Bond to be executed on its behalf by the facsimile signatures of the Mayor and City Manager. CITY OF EDINA City Manager Mayor • 12 r CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. Date of Authentication: U.S. BANK NATIONAL ASSOCIATION, as Registrar By Authorized Representative 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 UTMA ............. as Custodian for.................... (Cust) (Minor) TEN ENT—as tenants by entireties under Uniform Transfers to Minors Act .......... - - -- __ (State) JT TEN—as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. ASSIGNMENT For value received,the undersigned hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration of the within Bond,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 enlargement or any change whatsoever. 13 Signature Guaranteed: Signature(s)must be guaranteed by an"eligible guarantor institution"meeting the requirements of the Registrar,which requirements include membership or participation in STAMP or such other"signature guaranty program" as may be determined by the Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: [end of Bond form] SECTION 3. USE OF PROCEEDS. The proceeds of the Bonds received by the City, exclusive of unused discount,pre-issuance accrued interest and capitalized interest, if any, shall be deposited in the Construction Fund established in Section 4 hereof and used to pay costs of the Projects or such other Improvements as the Council may designate. SECTION 4. CONSTRUCTION FUND. The City hereby establishes the Permanent Improvement Revolving Fund Series 2005E Construction Fund (the Construction Fund) as a separate bookkeeping account on its books and records. There shall be deposited into the Construction Fund,when and as received,the amount specified in Section 3 hereof. There shall be established a separate account within the Construction Fund-to record expenditures for each Improvement. The moneys in the Construction Fund will be disbursed by the City,in accordance with this Resolution and the City's normal procedures,to pay(or reimburse the City for)the costs of the Projects, including also the issuance costs of the Bonds. At such time as the Projects are completed the City shall transfer any remaining balance in the Construction Fund as provided herein. SECTION 5. GENERAL OBLIGATION PERMANENT IMPROVEMENT REVOLVING FUND BONDS, SERIES 2005E BOND FUND. So long as any of the Bonds are outstanding and any principal of or interest thereon unpaid,the City shall maintain a separate debt service fund on its official books and records to be known as the General Obligation Permanent Improvement Revolving Fund Bonds, Series 2005E Bond Fund (the Bond Fund)within the Debt Service Account of the Permanent Improvement Revolving Fund (as described herein,the Debt Service Account), and the principal of and interest on the Bonds shall be payable from the Bond Fund. The City irrevocably appropriates to the Bond Fund(a) any amount received from the Purchaser in excess of the amount required by Section 3 hereof to be deposited in the Construction Fund; (b) all moneys transferred with respect to the Bonds from other accounts within the Permanent Improvement Revolving Fund to the Debt Service Account in accordance with this Resolution; and(c) all other moneys as shall be appropriated by the City Council to the Bond Fund from time to time. On the business day preceding each date on which principal of or interest on the Bonds are to be paid by the City in accordance with this resolution, the City Finance Director shall,without further direction by the Council, transfer from the Debt Service Is Account in the Permanent Improvement Revolving Fund to the Bond Fund an amount sufficient to pay such principal and interest. If the aggregate balance in the Bond.Fund is at any time 14 insufficient to pay all interest and principal then due on all Bonds payable therefrom,the payment shall be made from any fund of the City which is available for that purpose, subject to reimbursement from the Permanent Improvement Revolving Fund when the balance therein is sufficient, and the City Council covenants and agrees that it will each year levy a sufficient amount of ad valorem taxes to take care of any accumulated or anticipated deficiency, which levy is not subject to any constitutional or statutory limitation. SECTION 6. SPECIAL ASSESSMENTS. The City hereby covenants and agrees that, for the payment of the cost of the Projects, the City has done or will do and perform all acts and things necessary for the final and valid levy of special assessments in an amount not less than 20%of the cost of each of the improvements financed by the Bonds. The City estimates it will levy special assessments in the aggregate principal amount of$1,401,920. It is estimated that the principal and interest on such special assessments will be levied and collected in the years and amounts shown on Exhibit II attached hereto. In the event any such assessment shall at any time be held invalid with respect to any lot or tract of land, due to any error,defect or irregularity in any action or proceeding taken or to be taken by the City or by the City Council or by any of the officers or employees of the City, either in the making of such assessment or in the performance of any condition precedent thereto, the City hereby covenants and agrees that it will forthwith do all such further things and take all such further proceedings as shall be required by law to make such assessment a valid and binding lien upon said property. Collections of special assessments shall be deposited into the Permanent Improvement Revolving Fund. • SECTION 7. PLEDGE OF TAXING POWERS. For the prompt and full payment of the principal of and interest on the Bonds as such payments respectively become due, the full faith, credit and unlimited taxing powers of the City shall be and are hereby irrevocably pledged. It is estimated that the special assessments to be levied as provided in Section 6 will be collected in amounts not less than five percent in excess of the amounts needed to meet when due the principal of and interest on the Bonds as required by Minnesota Statutes, Section 475.61. Consequently,no ad valorem taxes are now levied to pay the Bonds or the interest to come due thereon,pursuant to Minnesota Statutes, Section 469.178, subdivision 2. SECTION 8. DEFEASANCE. When all of the Bonds have been discharged as provided in this section, all pledges, covenants and other rights granted by this Resolution to the holders of the Bonds shall cease. The City may discharge its obligations with respect to any Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full; or, if any Bond should not be paid when due,it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued from the due date to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bonds called for redemption on any date when they are prepayable according to their terms,by depositing with the Registrar on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due, provided that notice of such redemption has been duly given as provided herein. 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 bank qualified by law as an escrow agent for this purpose, cash or securities which are authorized by law to be so deposited,bearing interest payable at such time and at such rates and maturing or callable at the holder's option on such dates as shall be required to pay all principal, 15 • interest and redemption premiums to become due thereon to maturity or earlier designated redemption date. SECTION 9. CERTIFICATION OF PROCEEDINGS. 9.01. Registration of Bonds. The Clerk is hereby authorized and directed to file a certified copy of this Resolution with the County Auditor of Hennepin County, together with such additional information as the Auditor may require, and to obtain from the Auditor a certificate that the Bonds have been duly entered upon the Auditor's bond register and the tax required by law has been levied. 9.02. Authentication of Transcript. The officers of the City and the County Auditor are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey&Whitney LLP, Bond Counsel, certified copies of all proceedings and records relating to the Bonds and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in their custody and control or as otherwise known to them, and all such certified copies, affidavits and certificates,including any heretofore furnished, shall be deemed representations of the City as to the correctness of all statements contained therein. 9.03. Official Statement. The Official Statement relating to the Bonds, dated August 5, 2005, and the supplement thereto,relating to the Bonds prepared and distributed by Ehlers & • Associates, Inc., the financial advisor for the_City, is hereby approved. Ehlers&Associates, Inc., is hereby authorized on behalf of the City to prepare and distribute to the Purchaser within seven business days from the date hereof, a supplement to the Official Statement listing the offering price,the interest rates, selling compensation, delivery date, the underwriters and such other information relating to the Bonds required to be included in the Official Statement by Rule 15c2-12 adopted by the Securities and Exchange Commission(the SEC)under the Securities Exchange Act of 1934. The officers of the City are hereby authorized and directed to execute such certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. 9.04. Authorization of Payment of Certain Costs of Issuance of the Bonds. Authorization of Payment of Certain Costs of Issuance of the Bonds. The Issuer authorizes the Purchaser to forward the amount of Bond proceeds allocable to the payment of issuance expenses to Resource Bank&Trust Company,Minneapolis, Minnesota, on the closing date for further distribution as directed by the Issuer's financial advisor,Ehlers &Associates,Inc. SECTION 10. TAX COVENANTS,• ARBITRAGE MATTERS, REIMBURSEMENT AND CONTINUING DISCLOSURE. 10.01. General Tax Covenant. The City covenants and agrees with the registered owners of the Bonds,that it will not take, or permit to be taken by any of its officers, employees or agents, any action which would cause the interest payable on the Bonds to become subject to taxation under the Code and applicable Treasury Regulations (the Regulations), and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income of the recipient under the Code and the Regulations. The 16 • Projects financed by the Bonds shall at all times during the term of the Bonds be owned and maintained by the City as part of its infrastructure and the City shall not enter into any lease, use agreement,management agreement, capacity agreement or other agreement or contract with any nongovernmental person relating to the use of the Projects,or any of them, or security for the payment of the Bonds which might cause the Bonds to be considered"private activity bonds"or "Private loan bonds"pursuant to Section 141 of the Code. 10.02. Arbitrage Certification. The Mayor and Manager being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and applicable Regulations, stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of the Code and Regulations. 10.03. Arbitrage Rebate. The Issuer shall take such actions as are required to comply with the arbitrage rebate requirements of paragraphs (2) and(3) of Section 148(f)of the Code. 10.04. Reimbursement. The City certifies that the proceeds of the Bonds will not be used by the City to reimburse itself for any expenditure with respect to the Projects which the City paid or will have paid more than 60 days prior to the issuance of the Bonds unless,with respect to such prior expenditures, the City shall have made a declaration of official intent which • complies with the provisions of Section 1.150-2 of the Regulations;provided that this certification shall not apply(i)with respect to certain de minimis expenditures, if any, with respect to the Projects meeting the requirements of Section 1.150-2(f)(1) of the Regulations, or (ii)with respect to "preliminary expenditures" for the Projects as defined in Section 1.150-2(f)(2) of the Regulations, including engineering or architectural expenses and similar preparatory expenses,which in the aggregate do not exceed 20%of the"issue price"of the Bonds. 10.05 Continuing Disclosure. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the original purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2-12 promulgated by the Securities and Exchange Commission(the SEC)under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12), relating to continuing disclosure(as in effect and interpreted from time to time,the Rule),which will enhance the marketability of the Bonds,the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The City is the only"obligated person"in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. The City has complied in all material respects with any undertaking previously entered into by it under the Rule. If the City fails to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds,may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this section, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and . punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein, in no event shall a default under 17 w this section constitute a default under the Bonds or under any other provision of this resolution. As used in this section, "Owner"or`Bondowner"means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any "Beneficial Owner"(as hereinafter defined)thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial-ownership in form and substance reasonably satisfactory to the Registrar. As used herein, "Beneficial Owner"means,in respect of a Bond, any person or entity which(i)has the power,directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond(including persons or entities holding Bonds through nominees, depositories or other intermediaries), or(ii)is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. The City will provide, in the manner set forth in subsection (c)hereof, either directly or indirectly through an agent designated by the City,the following information at the following times: (1) on or before 365 days after the end of each fiscal year of the City, commencing with the fiscal year ending December 31, 2005, the following financial information and operating data in respect of the City(the Disclosure Information): (A) the audited financial statements of the City for such fiscal year, accompanied by the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Minnesota, • _ containing balance sheets as of the end of such fiscal year and a statement of operations, changes in fund balances and cash flows for the fiscal year then ended, showing in comparative form such figures for the preceding fiscal year of the City,prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles'for reasons beyond the reasonable control of the City,noting the discrepancies therefrom and the effect thereof, and certified as to accuracy and completeness in all material respects by the fiscal officer of the City; and (B) to the extent not included in the financial statements referred to in paragraph(A) hereof,the information for such fiscal year or for the period most recently available of the type contained in the Official Statement under headings: Current Property Valuations,Direct Debt, Tax Levies and Collections, Population Trend and Employment/Unemployment, which information may be unaudited. Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified,the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof,the City shall provide the audited financial statements. 18 14 Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements,which have been submitted to each of the repositories hereinafter referred to under subsection(b)or the SEC. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify in the Disclosure Information each document so incorporated by reference. If any part of the Disclosure Information can no longer be generated because the operations of the City have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect;provided,however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact (as defined in paragraph(2)hereof),then, from and after such determination,the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph(b)(1),then the City shall include in the next Disclosure Information to be delivered hereunder,to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner,notice of the occurrence of any of the following events which is a Material Fact(as hereinafter defined): • (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions or events affecting the tax-exempt status of the security; (G) Modifications to rights of security holders; (H) Bond calls; (I) Defeasances; (J) Release, substitution,or sale of property securing repayment of the securities; and (K) Rating changes. As used herein, a"Material Fact"is a fact as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy,hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement,information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, a"Material Fact"is also an event that would be deemed"material"for purposes of the purchase, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted at the time of discovery of the occurrence of the event. • (3) In a timely manner,notice of the occurrence of any of the following events or conditions: 19 (A) the failure of the City to provide the Disclosure Information required under paragraph(b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection(d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection(d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection(d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information or the audited financial statements, if any, furnished pursuant to subsection(b)(2)or(3) are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection(b)to the following entities by telecopy, overnight delivery,mail or other means, as appropriate: (1) the information described in paragraphs (1), (2) and(3) of subsection(b),to each then nationally recognized municipal securities information repository under the Rule and to any state information depository then designated or operated by the State of Minnesota as contemplated by the Rule(the State Depository), if any; and (2) the-information-described in subsection(b), to any rating agency then maintaining a rating of the Bonds and, at the expense of such Bondowner,to any Bondowner who requests in writing such information, at the time of transmission under paragraphs (1) or(2)of this subsection(c), as the case may be, or,if such information is transmitted with a subsequent time of release, at the time such information is to be released. (d) Term; Amendments; Interpretation. (1) The covenants of the City in this section shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence, however,the obligations of the City under this section shall terminate and be without further effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that,because of legislative action or final judicial or administrative actions or proceedings,the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This section(and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time,without notice to(except as provided in paragraph(c)(3)hereof)or the consent of the Owners of any Bonds,by a . resolution of this Board filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel,who may rely on certificates of the 20 City and others and the opinion may be subject to customary qualifications,to the effect that: (i) such amendment or supplement(a)is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity,nature or status of the City or the type of operations conducted by the City, or(b)is required by,or better complies with, the provisions of paragraph(b)(5) of the Rule; (ii)this section as so amended or supplemented would have complied with the requirements of paragraph(b)(5)of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and(iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended,the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. Adopted this 16th_day of August, 2005. Mayor Attest: Clerk Upon vote being taken thereon, the following voted in favor thereof Housh,Masica, Swenson and Hovland and the following voted against the same: none. whereupon the resolution was declared duly passed and adopted. • 21