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HomeMy WebLinkAboutResolution No. 501-04 CITY OF ROCHESTER COUNTY OF OLMSTED STATE OF MINNESOTA RESOLUTIONNO. RESOLUTION ACCEPTING OFFER ON SALE OF $83,735,000 GENERAL OBLIGATION WASTE WATER REVENUE BONDS, SERIES 2004A AND PROVIDING FOR THEIR ISSUANCE A. WHEREAS, the Common Council of the City of Rochester, Minnesota (the "City") has heretofore determined that it is necessary and expedient to issue $83,735,000 General Obligation Waste Water Revenue Bonds, Series 2004A of the City,pursuant to Minnesota Statutes, Chapters 444 and 475 to finance waste water utility system improvements in the City; B. WHEREAS, offers to purchase the Bonds were solicited on behalf of the City by Springsted Incorporated, in Saint Paul, Minnesota("Springsted"), an independent financial consultant, and therefore the City is authorized to negotiate the sale of the Bonds without compliance with the public sale requirements of Chapter 475; and • C. WHEREAS, the following offers were received, opened and recorded at the offices of Springsted Incorporated at 12:00 Noon, this same day: Bidder Interest Rate Net Interest Cost 1. Goldman, Sachs & Co 4.322987% $55,591,545.52 2. Merrill Lynch & Co 4.325281% $55,543,224.25 3. Lehman Brothers 4.326463% $55,623,670.15 4. Piper Jaffray 4.328737% $55,574,039.00 5. Citigroup Global Market 4.332847% $55,575,764.09 6. JP Morgan Securities, Inc 4.336201% $55,681,708.85 7. RBC Dain Rauscher 4.344916% $55,642,557.02 8. Prager, Sealy& Co 4.358064% $54,947,851.75 9. Legg Mason Wood Walker, Inc 4.359405% $55,918,399.71 10. First Albany Capital, Inc 4.363344% $55,868,128.83 NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Rochester, Minnesota, as follows: 1. Acceptance of Offer. The offer of Goldman, Sachs & Co. in New York, New York (the "Purchaser") to purchase $83,735,000 General Obligation Waste Water Revenue 1686588v] Bonds, Series 2004A of the City(hereinafter referred to as the 'Bonds" or individually as a • 'Bond"), in accordance with the Terms of Proposal at the rates of interest hereinafter set forth, and to pay therefor the sum of$89,421,641.98,plus interest accrued to settlement, is hereby found, determined and declared to be the most favorable offer received and is hereby accepted and the Bonds are hereby awarded to said Purchaser. The Finance Director is directed to retain the deposit of said purchaser and to forthwith return to the others making offers their good faith checks or drafts. 2. Term of Bonds. (a) Title; Original Issue Date; Denominations; Maturities. The Bonds shall be titled "General Obligation Waste Water Revenue Bonds, Series 2004A", shall be dated November 1, 2004, as the date of original issue and shall be issued forthwith on or after such date as fully registered bonds. The Bonds shall be numbered from R-1 upward in the denomination of$5,000 each or in any integral multiple thereof of a single maturity. The Bonds shall mature on February 1 in the years and amounts as follows: Year Amount Year Amount 2006 $ 330,000 2017 $5,125,000 2007 940,000 2018 5,340,000 2008 950,000 2019 5,560,000 2009 965,000 2020 5,795,000 • 2010 985,000 2021 6,050,000 2011 1,050,000 2022 6,320,000 2012 1,355,000 2023 6,600,000 2013 2,560,000 2024 6,905,000 2014 3,820,000 2025 7,225,000 2015 4,735,000 2026 6,195,000 2016 4,930,000 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). (b) Book Entry Only System. The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York or any of its successors or successors to its functions hereunder(the "Depository")will act as securities depository for the Bonds, and to this end: (i) The Bonds shall be initially issued and, so long as they remain in book entry form only(the 'Book Entry Only Period"), shall at all times be in the form of a separate single fully registered Bond for each maturity of the Bonds; and for purposes of complying with this requirement under paragraph 10 (with respect to registration, transfer and exchange) 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. 1686588v1 2 (ii) Upon initial issuance, ownership of the Bonds shall be registered in a bond • register maintained by the City Finance Director of the City of Rochester, Minnesota(the "Registrar") in the name of CEDE & CO., as the nominee (it or any nominee of the existing or a successor Depository, the "Nominee"). (iii) With respect to the Bonds neither the City nor the 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 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 Register 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. (iv) The City and the 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 Registrar, as paying agent hereunder, shall pay all principal of and premium, if any, and interest on the Bonds only to or upon the Holder of the Holders of the Bonds as shown on the register, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. (v) Upon delivery by the Depository to the 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 hereof(with respect to registration, transfer and exchange), references to the Nominee hereunder shall refer to such new Nominee. (vi) So long as any Bond is registered in the name of a Nominee, all payments with respect to the principal of and premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively,by the 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 1686588v1 3 • 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"). (vii) All transfers of beneficial ownership interests in each Bond issued in book-entry form shall be limited in principal amount to Authorized Denominations and shall be effected by procedures by the Depository with the Participants for recording and transferring the ownership of beneficial interests in such Bonds. (viii) In connection with any notice or other communication to be provided to the Holders pursuant to this Resolution by the City or 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 Registrar may establish a special record date for such consent or other action. The City or the 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. (ix) Any successor Registrar in its written acceptance of its duties under this Resolution and any paying agency registrar agreement, shall agree to take any actions necessary from time to time to comply with the requirements of the Letter of Representations. (c) Termination of Book-Entry Only System. Discontinuance of a particular Depository's services and termination of the book-entry only system may be effected as follows: (i) The Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the City and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of the Depository with respect to the 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. (ii) Upon termination of the services of the Depository as provided in the preceding paragraph, and if no substitute securities depository is willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the City, is willing and able to assume such functions upon reasonable or customary terms, or if the City determines that it is in the best interests of the City 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 hereof(with respect to registration, transfer and exchange). To the extent that the Beneficial Owners are designated as the transferee by the Holders, in accordance with paragraph 10 hereof(with 1686588v1 4 . respect to registration, transfer and exchange), the Bonds will be delivered to the Beneficial Owners. (iii) Nothing in this subparagraph (iii) shall limit or restrict the provisions of paragraph 10 hereof(with respect to registration, transfer and exchange). 3. Purpose. The Bonds shall provide funds to finance waste water utility system improvements in the City(the "Project"). The total cost of the Project,which shall include all costs enumerated in Minnesota Statutes, Section 475.65, is estimated to be at least equal to the amount of the Bonds. Work on the Project shall proceed with due diligence to completion. 4. Interest. The Bonds shall bear interest payable semiannually on February 1 and August 1 of each year commencing August 1, 2005, 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 Maturity Interest Year Rate Year Rate 2006 3.00% 2017 5.00% 2007 3.00 2018 5.00 2008 3.00 2019 5.00 • 2009 3.00 2020 5.00 2010 3.00 2021 5.00 2011 5.00 2022 5.00 2012 5.00 2023 5.00 2013 5.00 2024 5.00 2014 5.00 2025 5.00 2015 5.00 2026 5.00 2016 5.00 5. Redemption. All Bonds maturing in the years 2016 through 2026, shall be subject to redemption and prepayment at the option of the City on February 1, 2015, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the City shall determine the maturities and principal amounts within each maturity to be prepaid; and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of redemption shall be given to the paying agent and to each affected registered holder of the Bonds. To effect a partial redemption of Bonds having a common maturity date, the Bond Registrar prior to giving notice of redemption shall assign to each Bond having a common maturity date a distinctive number for each$5,000 of the principal amount of such Bond. The • Bond Registrar shall then select by lot, using such method of selection as it shall deem proper in 1686588vl 5 • its discretion, from the numbers so assigned to such Bonds, as many numbers as, at$5,000 for each number, shall equal the principal amount of such Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided, however, that only so much of the principal amount of each such Bond of a denomination of more than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. If a Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar(with, if the City or the Bond Registrar so requires, a written instrument of transfer in form satisfactory to the City and the Bond Registrar duly executed by the holder thereof or his attorney duly authorized in writing) and the City shall execute and the Bond Registrar shall authenticate and deliver to the holder of such Bond, without service charge, a new Bond or Bonds of the same series having the same stated maturity and interest rate and of any authorized denomination or denominations, as requested by such holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. 6. Bond Registrar. The City Finance Director, in Rochester, 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 holder) of the Bonds in the manner set forth in the form of Bond and paragraph 12 of this resolution (with respect to interest payment and record date). • 7. Form of Bond. The Bonds to be issued hereunder, 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: 1686588v1 6 UNITED STATES OF AMERICA STATE OF MINNESOTA OLMSTED COUNTY CITY OF ROCHESTER R- $ GENERAL OBLIGATION WASTE WATER REVENUE BOND, SERIES 2004A INTEREST MATURITY DATE OF RATE DATE ORIGINAL ISSUE CUSIP November 1, 2004 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS KNOW ALL PERSONS BY THESE PRESENTS that the City of Rochester, Olmsted 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, in the manner • hereinafter set forth, the principal amount specified above, on the maturity date specified above, unless called for earlier redemption, and to pay interest thereon semiannually on February 1 and August 1 of each year(each, an "Interest Payment Date"), commencing August 1, 2005, 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 officer of the City Finance Director, in Rochester, 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. Redemption. All Bonds of this issue(the 'Bonds") maturing in the years 2016 through 2026, are subject to redemption and prepayment at the option of the Issuer on February 1686588v1 7 • 1, 2015, and on any date thereafter at a price of par plus accrued interest. Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the Issuer shall determine the maturities and principal amount within each maturity to be prepaid; and if only part of the Bonds having a common maturity date are called for prepayment, the specific Bonds to be prepaid shall be chosen by lot by the Bond Registrar. Bonds or portions thereof called for redemption shall be due and payable on the redemption date, and interest thereon shall cease to accrue from and after the redemption date. Mailed notice of redemption shall be given to the paying agent and to each affected Holder of the Bonds. Issuance; Purpose; General Obligation. This Bond is one of an issue in the total principal amount of$83,735,000, all of like date of original issue and tenor, except as to number, maturity, interest rate, denomination, and redemption privilege which Bond has been issued pursuant to and in full conformity with the Constitution and laws of the State of Minnesota and pursuant to a resolution adopted by the City Council on October 4, 2004 (the "Resolution"), for the purpose of providing money to finance waste water utility system improvements in the City. This Bond is payable out of the debt service account of the Sewer Revenue Fund of the City. This Bond constitutes a general obligation of the Issuer, and to provide moneys for the prompt and full payment of the 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 as fully registered bonds in the 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 his, her or its 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 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 provided above with respect to the Record Date) and for 1686588v1 8 all other purposes, whether or not fii.s Bone shall be overdue, and neither the Issuer nor the Bond Registrar shall be affected by notice to the ::)ntrarv. 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. Not Qualified Tax-Exempt Obligations. This Bond has not 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 and Charter of the Issuer, 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 its waste water utility at the times and in amounts necessary to produce net revenues 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 of this issue as they respectively become due, if the net revenues from the waste water utility and any other revenues irrevocably appropriated to the debt service account of the Bond Fund 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,statutory or charter limitation of indebtedness. 1686588vl 9 IN WITNESS WHEREOF, the City of Rochester, Olmsted 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 Clerk, the corporate seal of the Issuer having been intentionally omitted as permitted by law. Date of Registration: Registrable by: CITY FINANCE DIRECTOR ROCHESTER, MINNESOTA Payable at: CITY FINANCE DIRECTOR ROCHESTER,MINNESOTA BOND REGISTRAR'S CITY OF ROCHESTER, CERTIFICATE OF OLMSTED COUNTY, MINNESOTA AUTHENTICATION This Bond is one of the Bonds described in the Isl Facsimile Resolution mentioned Mayor within. Isl Facsimile Clerk CITY FINANCE DIRECTOR Rochester,Minnesota Bond Registrar By Authorized Signature 1686588v1 10 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UTMA- as custodian for (Cust) (Minor) under the Uniform Transfers to Minors Act (State) Additional abbreviations may also be used though not in the above list. i • 1686588vl 1 1 • 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). 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.) 1686588v1 12 • Use only for Bonds when they are Registered in Book Entry Only System PREPAYMENT SCHEDULE This Bond has been prepaid in part on the dates) and in the amount(s) as follows: AUTHORIZED SIGNATURE DATE AMOUNT OF HOLDER • 1686588vl 13 8. Execution; Temporary Bonds. The Bonds shall be printed(or, at the request of the Purchaser, typewritten) shall be executed on behalf of the City by the signatures of its Mayor and Clerk 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 such officer, the Bonds may be signed by the manual or facsimile signature of that officer who may act on behalf of such absent or disabled officer. In case either such officer whose signature or facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of the Bonds, 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. 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. The temporary bonds may be executed with photocopied facsimile signatures of the Mayor and Clerk. Such temporary bonds shall, upon the printing of the definitive bonds and the execution thereof,be exchanged therefor and canceled. 9. Authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this resolution unless a Certificate of Authentication on such Bond, substantially in the form hereinabove set forth, shall have been duly executed by an authorized representative of the Bond Registrar. Certificates of Authentication on different Bonds need not be signed by the same person. The Bond Registrar shall authenticate the signatures of officers of the City on each Bond by execution of the Certificate of Authentication on the Bond and by inserting the date of authentication in the space provided, except that for purposes of the Bonds delivered to the Purchaser, the Bond Registrar shall insert as a date of authentication the date of original issue, which date is November 1, 2004. The executed Certificate of Authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. 10. 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 with respect to authentication) 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 1686588vl 14 • 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 authentication of, and deliver the Bonds which the holder making the exchange is entitled to receive. All Bonds surrendered upon any exchange or transfer provided for in this resolution shall be promptly canceled by the Bond Registrar and thereafter disposed of as directed by the City. All Bonds delivered in exchange for or upon transfer of Bonds shall be valid 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 his 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 Issuer 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. 11. 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. 12. 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 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. 13. 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 above with respect to interest payment and record date) 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. 1686588v1 15 14. Delivery; Application of Proceeds. The Bonds when so prepared and executed shall be delivered by the Finance Director to the Purchaser upon receipt of the purchase price, and the Purchaser shall not be obliged to see to the proper application thereof. 15. Fund and Accounts. There has heretofore been created a special fund designated the"Sewer Revenue 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 all of the Bonds hereinafter issued have been fully paid. There shall be established and maintained in the Fund the following three(3) separate accounts, to which shall be credited and debited all income and disbursements of the Fund as hereinafter set forth. The Finance Director and all municipal officials and employees concerned therewith shall establish and maintain financial records of the receipts and disbursements of the municipal waste water utility system in accordance with this resolution. In such records there shall be established and maintained accounts of the Fund for the purposes and in the amounts as follows: (i) Construction Account. To the Construction Account there shall be credited the proceeds of the sale of the Bonds, less accrued interest received thereon, and less any amount paid for the Bonds in excess of$83,065,120, and less capitalized interest in the amount of$2,025,000 (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay principal and interest due on the Bonds through August 1, 2006 and a portion of the principal and interest due on February 1, 2007). From the Construction Account shall be paid all costs . and expenses of the Project, including the cost of construction contracts heretofore let or to be let and all other costs incurred and to be incurred of the kind authorized in Minnesota Statutes, Section 475.65. Any balance remaining in the fund after completion of the costs shall be transferred to the Debt Service Account. (ii) Operation and Maintenance Account. To the Operation and Maintenance Account there shall be credited all gross revenues and earnings derived from the operation of the municipal waste water system, including all charges for service, use and availability of and connection to said system, when collected, and all moneys received from the sale of any facilities or equipment of said system or any by-products thereof. From this account there shall be paid all the normal, reasonable and current costs of operating and maintaining the system. Current expenses shall include the reasonable and necessary costs of operating, maintaining and insuring the system, salaries, wages, costs of materials and supplies, necessary legal, engineering and auditing services, and all other items which, by sound accounting practices, constitute normal, reasonable and current costs of operation and maintenance, but excluding any allowance for depreciation, extraordinary repairs and payments into the Debt Service Account. All moneys remaining in the Operation and Maintenance Account after paying or providing for the foregoing items shall constitute, and are referred to in this resolution as, "Net Revenues". (iii) Debt Service Account. There is hereby pledged and there shall be credited to the Debt Service Account: (a)the Net Revenues of the waste water utility in • an amount, together with other funds which may herein or hereafter from time to time be 1686588v1 16 • 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 this issue; (b) all accrued interest received upon delivery of the Bonds; (c) all funds paid for the Bonds in excess of$83,065,120; (d) all collections of taxes which may hereafter be levied in the event that net revenues and other funds herein pledged to the payment of the principal and interest of the Bonds of this issue are insufficient therefore; (e) capitalized interest in the amount of$2,025,000 (together with interest earnings thereon and subject to such other adjustments as are appropriate to provide sufficient funds to pay principal and interest due on the Bonds through August 1, 2006 and a portion of the principal and interest due on February 1, 2007); (f) all funds remaining in the Construction Account after completion of the Project and payment of the costs thereof; (g) all investment earnings on funds held in the Debt Service Account; and(h) 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 Debt Service Account shall be used solely to pay the principal and interest and any premiums for redemption of the Bonds and any other general obligation bonds of the City hereafter issued by the City and made payable from said account as provided by law. 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(5%) 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 Construction Account, Operation and Maintenance Account or Debt Service Account(or any other City account which will be used to pay principal or interest to become due on the bonds payable therefrom) in excess of amounts which under the applicable federal arbitrage regulations may be invested without regard to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by said arbitrage regulations on such investments after taking into account any applicable "temporary periods" or "minor portion" made available under the federal arbitrage regulations. Money in the Fund shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the federal Internal Revenue Code of 1986, as amended(the "Code"). 16. Sufficiency of Net Revenues. It is hereby found, determined and declared that the Net Revenues of the waste water utility system are sufficient in amount to pay when due the principal of and interest on the Bonds herein authorized, and the Net Revenues of the waste water utility system 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 this issue as the same become due. Excess Net Revenues may be used for any proper purpose. Nothing contained herein shall be deemed to preclude the City from making further pledges and appropriations of the Net Revenues of the waste water utility 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 waste water utility system will be sufficient in addition to all other sources, for the payment of the Bonds heretofore authorized and made payable from 1686588v1 17 . such Net Revenues, 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. 17. Excess Net Revenues. Net Revenues in excess of those required for the foregoing may be used for any proper purpose. 18. 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 waste water utility system at the times and in the amounts required to produce Net Revenues adequate to pay all principal and interest when due on the Bonds. 19. General Obligation Pledge. For the prompt and full payment of the principal 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 irrevocably pledged. If the Net Revenues of the waste water utility system appropriated and pledged to the payment of principal and interest on the Bonds, together with other funds irrevocably appropriated to the Debt Service Account herein established, shall at any time be insufficient to pay such 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 Debt Service Account is ever insufficient to pay all principal and interest then due on 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 Debt Service Account when a sufficient balance is available therein. 20. Coverage Test. The Net Revenues are such that if collected in full they, together with all other funds herein pledged for the payment of the Bonds, will produce at least five percent(5%)'in excess of the amount needed to meet when due the principal and interest payments on the Bonds. 21. Certificate of Registration. The Administrator is hereby directed to file a certified copy of this resolution with the County Auditor of Olmsted County, Minnesota, together with such other information as he or she shall require, and to obtain the Auditor's certificate that the Bonds have been entered in the Auditor's Bond Register. 22. 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, 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. • 1686588v1 18 • 23. Investment Limitations; 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. 24. Compliance with Reimbursement Bond Regulations. The provisions of this paragraph are intended to establish and provide for the City's compliance with United States Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to the "reimbursement proceeds" of the Bonds,being those portions thereof which will be used by the City to reimburse itself for any expenditure which the City paid or will have paid prior to the Closing Date(a "Reimbursement Expenditure"). The City hereby certifies and/or covenants as follows: (a) Not later than 60 days after the date of payment of a Reimbursement Expenditure, the City(or person designated to do so on behalf of the City)has made or will have made a written declaration of the City's official intent (a "Declaration") which effectively(i) states the City's reasonable expectation to reimburse itself for the payment of the Reimbursement Expenditure out of the proceeds of a subsequent borrowing; (ii) gives a general and functional description of the property,project or program to which the Declaration relates and for which the • Reimbursement Expenditure is paid, or identifies a specific fund or account of the City and the general functional purpose thereof from which the Reimbursement Expenditure was to be paid(collectively the "Project"); and(iii) states the maximum principal amount of debt expected to be issued by the City for the purpose of financing the Project; provided,however, that no such Declaration shall necessarily have been made with respect to: (i) "preliminary expenditures" for the Project, defined in the Reimbursement Regulations to include engineering or architectural, surveying and soil testing expenses and similar prefatory costs, which in the aggregate do not exceed 20% of the "issue price" of the Bonds, and (ii) a de minimis amount of Reimbursement Expenditures not in excess of the lesser of$100,000 or 5% of the proceeds of the Bonds. (b) Each Reimbursement Expenditure is a capital expenditure or a cost of issuance of the Bonds or any of the other types of expenditures described in Section 1.150- 2(d)(3) of the Reimbursement Regulations. (c) The "reimbursement allocation" described in the Reimbursement Regulations for each Reimbursement Expenditure shall and will be made forthwith following (but not prior to) the issuance of the Bonds and in all events within the period ending on the date which is the later of three years after payment of the Reimbursement Expenditure or one year after the date on which the Project to which the Reimbursement Expenditure relates is first placed in service. • 1686588vl 19 a • (d) Each such reimbursement allocation will be made in a writing that evidences the City's use of Bond proceeds to reimburse the Reimbursement Expenditure and, if made within 30 days after the Bonds are issued, shall be treated as made on the day the Bonds are issued. Provided,however, that the City may take action contrary to any of the foregoing covenants in this paragraph 24 upon receipt of an opinion of its Bond Counsel for the Bonds stating in effect that such action will not impair the tax-exempt status of the Bonds. 25. Continuing Disclosure. (a) 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: (1) 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. • (2) 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. (3) 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 Issuer to provide the annual financial information with respect to the Issuer described in the Undertaking. (4) The City agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking are intended to be for the benefit of the holders and any other beneficial owners of the Bonds and shall be enforceable on behalf of such holders and beneficial owners; 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. (b) The Mayor and Clerk 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 Common Council, subject to such modifications thereof or additions thereto as are (i) consistent with the requirements under the Rule, (ii) required by the purchaser of the Bonds and (iii) acceptable to the Officers. • 1686588v1 20 • 26. No Designation of Qualified Tax-Exempt Obligations. The Bonds have not been designated as "qualified tax-exempt obligations"within the meaning of Section 265(b)(3) of the Code. 27. 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 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 Bond Registrar on or before that date a sum sufficient for the payment thereof, in full, provided that notice of redemption thereof has been given. 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, subject to sale and/or reinvestment, to pay all amounts to become due thereon to maturity or, if notice of redemption as herein required has been duly provided for, to such earlier redemption date. • 28. 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. 29. 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. • 1686588v1 2 1 • PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS 'NTH DAY OF OCTOBER, 2004. IDENT OF SAID COMMON COUNCIL ATTEST: CITY CL R Approved this day of , 2004 MAYOR OF SAID CITY (Seal of the City of • Rochester, Minnesota) 1686588v1 22 • CERTIFICATION I,the undersigned City Clerk of the City of Rochester,Minnesota, do hereby certify the following: The foregoing is true and correct copy of a Resolution on file and of record in the offices of the City,which Resolution relates to the issuance by the City of its General Obligation Waste Water Revenue Bonds, Series 2004A. Said Resolution was duly adopted by the Rochester Common Council at a regular or special meeting of the Council held on October 4, 2004. Said .meeting was duly called and regularly held and was,open to the public and was held at the place at which meetings of the Council are regularly held, a quorum of the Council being present and acting throughout: Councilmember Marcoux moved the adoption of the Resolution, which motion was seconded by Councilmember Stobaugh - . A vote being taken on the motion, the following members of the Council voted in favor of the Resolution: president John-Hunzi-ker, Councilmembers Dennis Hanson, Marcia Marcoux, Jean McConnell , Sandra Means, Bob Nowicki , Walter Stobaugh and the following voted against the same: None Whereupon said Resolution was declared duly passed and adopted. The Resolution is in full force and effect and no action has been taken by the Council which would in any way alter or amend the Resolution.- WITNESS MY HAND officially as the City Clerk of the City of Rochester, Minnesota, this 7'z�;( day of October, 2004. City Clerk City of Rochester, Minnesota 1686588vi 23