ERMU RES 14-2 EXTRACT OF MINUTES OF MEETING OF THE
ELK RIVER MUNICIPAL UTILITIES COMMISSION
HELD: February 11, 2014
Pursuant to due call and notice thereof, a regular meeting of the Elk River Municipal
Utilities Commission, was duly held in the Utilities Conference Room, 13069 Orono Parkway in
said City on the I 1 th day of February, 2014, at 3:30 P.M., for the purpose, in part, awarding the
sale of$2,125,000 Electric Revenue Refunding Bonds, Series 2014A.
The following members were present: John D iJ
efiv
and the following were absent: 11Pne,
Member A( 1\1 ,q u. introduced the following resolution and moved its adoption:
RESOLUTION AWARDING THE ISSUANCE AND SALE OF$2,125,000 ELECTRIC
REVENUE REFUNDING BONDS, SERIES 2014A AND PLEDGING NET REVENUES FOR
THE SECURITY THEREOF
BE IT RESOLVED by the Elk River Municipal Utilities Commission (the
"Commission"), as follows:
Section 1. Definitions; Interpretation. For all purposes of this Resolution, except as
otherwise expressly provided or unless the context otherwise requires, the terms defined in this
section have the meanings assigned to them in this section. All terms defined in this section
include the plural as well as the singular and the female as well as the male. Except as otherwise
expressly provided herein, accounting terms not otherwise defined herein have the meanings
assigned to them, and all computations herein provided for shall be made, in accordance with
generally accepted accounting principles.
"Accountant" means a Person engaged in the practice of accounting, retained by the
Commission.
"Act" means, collectively, Minnesota Statutes, Sections 412.321 through 412.391, and
Chapters 453 and 475, including any amendment thereof.
"Additional Bonds"means any Bonds issued pursuant to Section 10.
"Audited Fiscal Year" means a Fiscal Year for which the financial statements of the
Commission have been audited,as required by Section 12(g).
438081v3.1SB ELI 85-25
"Bond Counsel" means any attorney or firm of attorneys having a favorable reputation
for matters relating to tax-exempt financing of properties similar to the Electric System, retained
by the Commission.
"Bondholder" means the Person in whose name a Bond is registered in the Bond
Register.
"Bond Register"means the register maintained by the Registrar pursuant to Section 6.01.
"Bonds" means any Outstanding Series 2014A Bonds, the Prior Bonds or Additional
Bonds.
"City"means the City of Elk River,Minnesota,and any successor to its obligations under
this Resolution.
"Code" means the Internal Revenue Code of 1986, including any amendment thereof.
"Commission" means the Elk River Municipal Utilities Commission, and any successor
to its obligations under this Resolution.
"Commission Resolution"means a resolution or other legislative enactment duly adopted
by the Commission.
"Consultant" means a Person having a favorable reputation as experienced in planning
and financing, and evaluating the economic feasibility, of properties similar to the Electric
System,retained by the Commission.
"Debt Service Account"means the account so designated in the Electric Fund.
"Electric Fund" means the Electric Fund maintained on the official books of account of
the City.
"Electric System" means the municipal electric light and power plant and distribution
system of the City, as it may at any time exist, including any replacement, expansion or
improvement thereof.
"Fiscal Year" means the period commencing on January 1 of any year and ending on
December 31 of the same year, or any other period of twelve consecutive months specified by
Commission Resolution as the fiscal year of the Commission.
"Government Obligations"means direct obligations of, or obligations the principal of and
the interest on which are fully and unconditionally guaranteed by the United States of America.
"Gross Revenues" means all revenues and receipts from rates, fees, charges, and rentals
imposed by the Commission for the availability, benefit, use and products of the Electric System
or any part thereof, and any penalties and interest thereon, and income from the investment
thereof. Gross Revenues do not include amounts received from the sale of property which is part
of the Electric System or amounts borrowed with respect to the Electric System.
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438081v3 JSB EL185-25
"Holder"means a Bondholder.
"Interest Payment Date" means a date specified in a Bond as a fixed date for payment of
an installment of interest on the Bond.
"Municipal Utilities Commission"means the governing body of the Commission.
"Net Revenues" means the Gross Revenues of the Electric System for any specified
period, less the Operating Expenses of the Electric System for the same specified period.
"Operating Account"means the account so designated in the Electric Fund.
"Operating Expenses" means the current expenses of operation, maintenance and minor
or current repair of the Electric System for any specified period. Operating Expenses include,
without limitation, administrative expenses of the Commission relating to the Electric System,
franchise fees, premiums for insurance relating to the Electric System, and amounts necessary to
accumulate and maintain the Operating Reserve Requirement. Operating Expenses do not
include depreciation, amortization,or interest expense.
"Operating Reserve Requirement" means an amount equal to the greater of (i) one
month's Operating Expenses, based upon the financial statements of the Commission for the
preceding Audited Fiscal Year,or(ii)a larger amount reasonably determined by the Commission
to be necessary to be maintained as a reserve for payment of Operating Expenses.
"Outstanding" means when used with reference to the Bonds or the Prior Bonds, as the
case may be, as of the date of determination, all Bonds or Prior Bonds, as the case may be,
theretofore issued except Bonds or Prior Bonds, as the case may be,which have been paid or are
deemed to have been paid as provided in Section 16.
"Person" means any individual, corporation, partnership,joint venture, association,joint
stock company, trust, unincorporated organization, or government, or any agency or political
subdivision thereof.
"Prior Bonds" means the $2,875,000 original principal amount of Electric Revenue
Bonds, Series 2007A, dated March 28, 2007, $1,960,000 in principal amount of which are
currently outstanding.
"Prior Resolution" means the resolution duly adopted by the Commission on March 5,
2007.
"Project" means improvements and extensions and other capital improvements to the
Electric System.
"Purchaser"means .
"Refunded Bonds" means the $3,595,000 original principal amount of Electric Revenue
Bonds, Series 2006A, dated March 2, 2006, $2,180,000 in principal amount of which are
currently outstanding.
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438081v3 JSB ELI85-25
"Refunded Resolution" means the resolution duly adopted by the Commission on
February 6,2006.
"Refunding Account" means the Refunding Account established in the Electric Fund
pursuant to Section 13 hereof.
"Registrar" means U.S. Bank National Association, in St. Paul, Minnesota, or its
successor appointed by the Commission pursuant to Section 6.01.
"Repair and Replacement Account" means the account so designated in the Electric
Fund.
"Reserve Account"means the account so designated in the Electric Fund.
"Reserve Requirement"means, as of the date of issuance of a series of Bonds, an amount
equal to the least of(i) 10% of the original principal amount of the Bonds and the Prior Bonds
Outstanding, or (ii) the maximum amount of principal and interest payable during the then
current Fiscal Year or any future Fiscal Year on all Bonds and Prior Bonds Outstanding as of the
date of issuance of a series of such Bonds, or (iii) 125% of the average annual principal and
interest payable on all Bonds and Prior Bonds as of the date of issuance of a series of such
Bonds.
"Resolution" means this Resolution, including any amendment hereof or supplement
hereto adopted in accordance with Section 15.
"Series 2014A Bonds"means the Bonds created by Section 5.
"State"means the State of Minnesota.
Section 2. Recitals.
2.01. Electric System. The City owns and, for financing purposes, operates a municipal
Electric System, hereinafter referred to as the"Electric System."
2.02. Municipal Utilities Commission. The City has established the Commission and
placed the Electric System under the jurisdiction of the Commission pursuant to the Act. The
City has granted to the Commission a non-exclusive franchise to transmit, furnish, deliver or
receive electrical energy within the utility service area. The Commission operates the Electric
System as a public, revenue-producing convenience, providing service to the City and its
inhabitants and residents and other customers in the area surrounding the City, as authorized by
the Act.
2.03. Parity of Lien Test. All of the payments required to be made into the various
funds and accounts provided for in the Prior Resolution authorizing the issuance of the Prior
Bonds and in the Refunded Bonds in the Refunded Resolution have been made and there is
sufficient money in the Debt Service Account of the Electric Fund to pay all principal and
interest on all obligations payable from the Net Revenues coming due during the 12-month
period next succeeding the issuance of the Series 2014A Bonds.
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438081v3 JSB EL185-25
The gross revenues, expenses of operation and maintenance and Net Revenues of the
Electric System from all sources for the Audited Fiscal Year immediately preceding the issuance
of the Series 2014A Bonds, adjusted for such Fiscal Year as permitted by the Prior Resolution
are as follows:
Audited Fiscal Year Ended 2012
OPERATING REVENUES $30,258,690
OPERATING EXPENSES (25,250,718)
OPERATING PROFIT $ 5,007,972
(Exclusive of Depreciation)
ADD: Non-Operating Revenue $ 262,532
NET REVENUES $ 5.270.504
The Net Revenues of the Electric System for the Audited Fiscal Year immediately
preceding the issuance of the Series 2014A Bonds, adjusted as set forth above, were at least
125% of the average annual principal and interest coming due during the remaining term of the
Prior Bonds plus the Series 2014A Bonds computed to February 1, 2022 (the final maturity date
of the Prior Bonds). The average annual principal and interest requirements, based on the
schedule of maturities herein set forth and a net interest cost on the Series 2014A Bonds of
%per annum for the Prior Bonds and the Series 2014A Bonds, is$ .
Other than the Prior Bonds, the Commission has no other bonds, warrants, certificates or
other obligations or evidences of indebtedness of money borrowed for or on account of the
Electric System or indebtedness for which the Net Revenues of the Electric System have been
appropriated or pledged.
2.04. Sufficiency of Gross Revenues and Net Revenues. The Commission reasonably
anticipates that the Gross Revenues to be received during the period for which the Series 2014A
Bonds will be outstanding will be more than sufficient to pay all costs of the operation and
maintenance of the Electric System and to provide Net Revenues adequate to pay the principal of
and interest on the Series 2014A Bonds and the Prior Bonds when due.
2.05. Authorization of Series 2014A Bonds. The Commission is authorized by law to
borrow money necessary to finance the Project and to pay the related financing costs and fund
the Reserve Account. It is necessary and expedient for the City forthwith to issue its Electric
Revenue Refunding Bonds, Series 2014A, in the principal amount of$2,125,000. All costs of
the Project in excess of the proceeds of the Series 2014A Bonds available for payment of such
costs shall be paid from any other funds legally available to the Commission for such purpose.
2.06. Sale of Series 2014A Bonds. The Commission has retained Springsted
Incorporated ("Springsted"), as its independent financial advisor for the sale of the Bonds and
was therefore authorized to sell the Bonds by private negotiation in accordance with Minnesota
Statutes, Section 475.60, Subdivision 2(9) and proposals to purchase the Bonds have been
solicited by Springsted.
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438081 v3 JSB ELI 85-25
2.07. Receipt and Acceptance of Proposals. Proposals have been received by the
Commission Finance and Office Manager, or designee, at the offices of Springsted on the date
hereof pursuant to the Terms of Proposal established for the Bonds and are set forth in Exhibit A.
The proposal of (the "Purchaser"), to purchase the
Bonds in accordance with the Terms of Proposal, at the rates of interest hereinafter set forth, and
to pay therefor the sum of$ ,plus interest accrued to settlement, is hereby found,
determined and declared to be the most favorable proposal received and is hereby accepted and
the Bonds are hereby awarded to the Purchaser. The Finance and Office Manager is directed to
retain the deposit of the Purchaser and to return to the unsuccessful bidders any good faith
checks or drafts.
2.08. Performance of Requirements. 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 Series 2014A Bonds having been done,
existing, having happened and having been performed, it is now necessary to establish the form
and terms of the Series 2014A Bonds, to provide security therefor and to issue the Series 2014A
Bonds forthwith.
Section 3. Security for Series 2014A Bonds.
3.01. Pledge of Net Revenues. From and after their issuance, the principal of and
interest on the Series 2014A Bonds, as set forth in Section 5, shall be payable solely from and
constitute a parity lien and charge on the respective subaccounts of the Electric Fund, including
but not limited to the Debt Service Account, the Reserve Account, and the Net Revenues of the
Electric System.
3.02. Reserve Account Requirement. Upon issuance of the Series 2014A Bonds, the
Commission shall deposit, from available funds on hand, in the Reserve Account $ , so
that the balance in the Reserve Account shall be not less than the applicable Reserve
Requirement.
3.03. Not General Obligations. The Series 2014A Bonds are not general obligations of
the City or the Commission and the full faith and credit and taxing powers of the City are not
pledged for their payment.
Section 4. Form of Series 2014A Bonds.
4.01. Series 2014A Bond Form. The Series 2014A Bonds shall be prepared in
substantially the following form:
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43808Iv3 JSB EL185-25
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER
ELECTRIC REVENUE REFUNDING BOND, SERIES 2014A
No. $
Interest Rate Maturity Date Date of Original Issue CUSIP
August 1, ,2014
REGISTERED OWNER: CEDE&CO.
PRINCIPAL AMOUNT:
THE CITY OF ELK RIVER, Sherburne County, Minnesota (the "City"), acknowledges
itself to be indebted and, for value received, hereby promises to pay to the registered owner
specified above, or registered assigns,the principal amount specified above, on the maturity date
specified above, with interest thereon from the date of original issue specified above or from the
most recent interest payment date to which interest has been paid or duly provided for, at the
annual rate specified above. Interest hereon is payable on February 1 and August 1 in each year,
commencing August 1, 2014, to the person in whose name this Series 2014A Bond is registered
at the close of business on the 15th day (whether or not a business day) of the immediately
preceding month. The principal of and premium, if any, on this Series 2014A Bond are payable
upon presentation and surrender hereof at the principal office of U.S. Bank National Association,
in St. Paul, Minnesota (the "Bond Registrar"), acting as paying agent, or any successor paying
agent duly appointed by the City. Interest on this Series 2014A Bond will be paid on each
Interest Payment Date by check or draft mailed to the person in whose name this Series 2014A
Bond is registered (the "Holder" or "Bondholder") 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 15th 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 10 days prior to the Special
Record Date. The principal of and premium, if any, and interest on this Series 2014A Bond are
payable in lawful money of the United States of America. So long as this Series 2014A Bond is
registered in the name of the Depository or its Nominee as provided in the Resolution hereinafter
described, and as those terms are defined therein, payment of principal of, premium, if any, and
interest on this Series 2014A Bond and notice with respect thereto shall be made as provided in
the Letter of Representations, as defined in the Resolution, and surrender of this Series 2014A
Bond shall not be required for payment of the redemption price upon a partial redemption of this
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438081 v3 JSB EL185-25
Series 2014A Bond. Until termination of the book-entry only system pursuant to the Resolution,
Series 2014A Bonds may only be registered in the name of the Depository or its Nominee.
This Series 2014A Bond is one of an issue (the "Series 2014A Bonds") in the aggregate
principal amount of $2,125,000, issued pursuant to a resolution adopted by the Elk River
Municipal Utilities Commission(the"Commission")on February 11,2014 (the"Resolution"),to
provide funds to refund the August 1, 2014 through August 1, 2021 maturities of the City's
Electric Revenue Bonds, Series 2006A,dated March 2,2006, the proceeds of which were used to
pay part of the costs of certain capital improvements to the City's electric system (the "Electric
System") and is issued pursuant to and in full conformity with the provisions of the Constitution
and laws of the State of Minnesota thereunto enabling, including Minnesota Statutes, Chapter
475 and Sections 412.321 through 412.391. This Series 2014A Bond and the interest thereon are
payable solely from Net Revenues, as defined in the Resolution, of the Electric System which
have been pledged to the payment thereof, and are issued on a parity of lien with the pledge of
Net Revenues to the $2,875,000 original principal amount of Electric Revenue Bonds, Series
2007A, dated March 28, 2007 (the "Prior Bonds"). The Series 2014A Bonds do not constitute a
debt of the City within the meaning of any constitutional or statutory limitation of indebtedness,
and the full faith and credit and taxing power of the City are not pledged to the payment of the
principal of or interest on the Series 2014A Bonds. Additional Bonds may be issued, which are
payable on a parity of lien from the Net Revenues of the Electric System, upon the terms and
conditions provided in the Resolution.
The Series 2014A Bonds are not subject to prepayment prior to their maturity.
The Series 2014A Bonds are issuable solely in fully registered form in Authorized
Denominations (as defined in the Resolution) and are exchangeable for fully registered Series
2014A 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.
This Series 2014A Bond is transferable by the Holder in person or the Holder's attorney
duly authorized in writing at the principal office of the Bond Registrar upon presentation and
surrender hereof to the Bond Registrar, all subject to the terms and conditions provided in the
Resolution and to reasonable regulations of the City contained in any agreement with the Bond
Registrar. Thereupon the City and the Commission shall execute and the Bond Registrar shall
authenticate and deliver, in exchange for this Series 2014A Bond, one or more new fully
registered Series 2014A 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 Series 2014A Bond, of the same maturity
and bearing interest at the same rate.
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 Series 2014A
Bond and any legal or unusual costs regarding transfers and lost Series 2014A Bonds.
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43808 I v3 JSB EL I85-25
The City, the Commission and the Bond Registrar may treat the person in whose name
this Series 2014A Bond is registered as the owner hereof for the purpose of receiving payment as
herein provided(except as otherwise provided herein with respect to the Record Date) and for all
other purposes, whether or not this Series 2014A Bond shall be overdue, and neither the City, the
Commission nor the Bond Registrar shall be affected by notice to the contrary.
This Series 2014A 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.
The Series 2014A Bonds have been designated as "qualified tax-exempt obligations"
pursuant to the provisions of Section 265(b)of the Internal Revenue Code of 1986,as amended.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that the City,
through the Commission, has fixed and established and will collect reasonable rates and charges
for the services and facilities provided by the Electric System; that the City, through the
Commission, will maintain on its books and records an Electric Fund, and will credit to the
Operating Account of the Electric Fund the Gross Revenues of the Electric System as received
and pay all Operating Expenses therefrom, and will credit to the Debt Service Account, once
each month, out of Net Revenues then on hand, an amount equal to 1/12 of all principal payable
on the Series 2014A Bonds and the Prior Bonds during the next 12 months and 1/6 of all interest
payable on the Series 2014A Bonds and the Prior Bonds in the next six months,and will credit to
the Reserve Account an amount necessary to maintain therein a balance equal to the Reserve
Requirement (as defined in the Resolution); that the obligation to credit such amounts to such
accounts is cumulative, and if in any month the money in the Electric Fund is insufficient to
credit the required amount into any account, the deficiency shall be made up in the following
month or months after payment to all other accounts having a claim on such revenues has been
paid in full; that the City, through the Commission, will impose and collect such rates and
charges as necessary to provide in each Fiscal Year Net Revenues at least equal to one hundred
ten percent of the annual principal and interest payable on all bonds payable from the Debt
Service Account in such Fiscal Year; that all provisions for the security of the Series 2014A
Bonds set forth in the Resolution will be punctually and faithfully performed as therein
stipulated; that all acts, conditions and things required by the Constitution and laws of the State
of Minnesota, and the ordinances and resolutions of the City and the Commission to be done, to
exist, to happen, and to be performed in order to make this Series 2014A Bond a valid and
binding special obligation of the City according to its terms have been done, do exist, have
happened and have been performed as so required; and that the issuance of this Series 2014A
Bond does not cause the indebtedness of the City to exceed any constitutional or statutory
limitation.
IN WITNESS WHEREOF, the City of Elk River, Sherburne County, State of Minnesota,
by the Commission, has caused this Series 2014A Bond to be executed by the signatures of the
President and Secretary of the Commission and the Mayor and Clerk of the City and has caused
this Series 2014A Bond to be dated as of the Date of Original Issue set forth above.
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438081v3 JSB EL185-25
Date of Registration: Registrable by: U.S. BANK NATIONAL ASSOCIATION
Payable at: U.S. BANK NATIONAL ASSOCIATION
CITY OF ELK RIVER,
SHERBURNE COUNTY,MINNESOTA
BOND REGISTRAR'S
CERTIFICATE OF /s/Facsimile
AUTHENTICATION Mayor
This Series 2014A Bond is one of the
Series 2014A Bonds described in the /s/Facsimile
Resolution mentioned within. Clerk
U.S. Bank National Association, in St. ELK RIVER MUNICIPAL UTILITIES COMMISSION,
Paul,Minnesota SHERBURNE COUNTY,MINNESOTA
Bond Registrar
/s/Facsimile
President
By:
Authorized Signature
/s/Facsimile
Secretary
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43808I v3 JSB ELI85-25
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Series
2014A 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)
under Uniform Transfers to Minors Act
(State)
TEN ENT--as tenants by the entireties
JT TEN--as joint tenants with right of
survivorship and not as tenants in common
Additional abbreviations may also be used.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Series
2014A Bond and does hereby irrevocably constitute and appoint attorney
to transfer the Series 2014A 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 Series 2014A
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).
fi
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438081v3 JSB EL185-25
The Bond Registrar will not effect transfer of this Series 2014A Bond unless the
information concerning the transferee requested below is provided.
Name and Address:
(Include information for all joint owners if the Series 2014A Bond is held by joint account.)
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438081v3 JSB EL185-25
PREPAYMENT SCHEDULE
This Series 2014A Bond has been prepaid in part on the date(s)and in the amount(s)as follows:
AUTHORIZED
SIGNATURE
DATE AMOUNT OF HOLDER
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438081v3 JSB EL185-25
Section 5. Series 2014A Bond Terms Execution and Delivery.
5.01. Maturities, Interest Rates, Denominations, Payment and Dating of Bonds. The
City shall forthwith issue and deliver the Series 2014A Bonds which shall be in the
denomination of$5,000 each or any integral multiple thereof of a single maturity, shall bear a
date of original issue, shall mature on August 1 in the years and amounts set forth below and
shall bear interest from date of original issue until paid or duly called for redemption at the rates
per annum set forth below:
Interest Interest
Year Amount Rate Year Amount Rate
2014 $430,000 2017 $425,000
2015 420,000 2018 430,000
2016 420,000
As may be requested by the Purchaser, one or more term Series 2014A 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 Series 2014A Bond(s).
The Series 2014A Bonds shall be issuable only in fully registered form. The interest
thereon and, upon surrender of each Series 2014A Bond, the principal amount thereof, shall be
payable by check or draft issued by the Registrar.
5.02. Interest Payment Dates. The Series 2014A Bonds shall bear interest payable
semiannually on February 1 and August 1 of each year, commencing August 1, 2014, calculated
on the basis of a 360-day year of twelve 30-day months to the person in whose name the Series
2014A Bond is registered in the Bond Register at the close of business on the 15th day of the
immediately preceding month,whether or not such day is a business day.
5.03. No Optional Redemption. Series 2014A Bonds will not be subject to prepayment
prior to their maturity.
5.04. Application of Proceeds. Immediately upon delivery of the Series 2014A Bonds
to the Purchaser, the amount received as accrued interest on the Series 2014A Bonds shall be
credited to the Debt Service Account and the remaining proceeds shall be deposited in the
Refunding Account and used to pay costs of issuance of the Series 2014A Bonds and costs of
refunding the Refunded Bonds, as provided in Section 13.
Section 6. Registration; Appointment of Registrar; Book-Entry System.
6.01. Registration. The City, by the Commission, shall appoint, and shall maintain, a
bond registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and
the rights and duties of the City and the Registrar with respect thereto shall be as follows:
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43808Iv3 JSB EL185-25
(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
Series 2014A Bonds and the registration of transfers and exchanges of Bonds entitled to
be registered,transferred or exchanged.
(b) Transfer of Series 2014A Bonds. Upon surrender to the Registrar for
transfer of any Series 2014A 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 Series 2014A Bonds of a like
aggregate principal amount and maturity, as requested by the transferor. The Registrar
shall not be obligated to transfer or exchange any Series 2014A Bond which has been
selected for redemption.
(c) Exchange of Series 2014A Bonds. Whenever any Series 2014A Bond is
surrendered by the registered owner for exchange, the Registrar shall authenticate and
deliver one or more new Series 2014A Bonds of alike aggregate principal amount and
maturity, as requested by the registered owner or the owner's attorney duly authorized in
writing.
(d) Cancellation. All Series 2014A 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 Series 2014A 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 Series 2014A Bond or separate instrument of
transfer is legally authorized. The Registrar shall incur no liability for its 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 Series 2014A Bond is at any time registered in the Bond Register as
the absolute owner of such Series 2014A Bond, whether such Series 2014A Bond shall
be overdue or not, for the purpose of receiving payment of,or on account of,the principal
of and interest on such Series 2014A 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 of the City upon such Series 2014A
Bond to the extent of the sum or sums so paid.
(g) Taxes Fees and Charges. For every transfer or exchange of Series 2014A
Bonds (except for an exchange upon a partial redemption of a Series 2014A Bond), the
Registrar may impose upon the owner thereof a charge sufficient to reimburse the
Registrar for any tax, fee or other governmental charge required to be paid with respect to
such transfer or exchange.
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43808I v3 JSB EL185-25
(h) Mutilated, Lost, Stolen or Destroyed Series 2014A Bonds. In case any
Series 2014A Bond shall become mutilated or be lost, stolen or destroyed, the City shall
execute and the Registrar shall authenticate and deliver a new Series 2014A Bond of the
same series, of like amount, number, maturity date and tenor, in exchange and
substitution for and upon cancellation of any such mutilated Series 2014A Bond or in lieu
of and in substitution for any such Series 2014A Bond lost, stolen or destroyed, upon the
payment of the reasonable expenses and charges of the Registrar in connection therewith,
and, in the case of a Series 2014A Bond lost, stolen or destroyed, upon the payment of
the reasonable expenses and charges of the Registrar in connection therewith, and, in the
case of a Series 2014A Bond lost, stolen or destroyed, upon filing with the Registrar of
evidence satisfactory to it that such Series 2014A Bond was lost, stolen or destroyed, and
of the ownership thereof, and upon furnishing to the Registrar an appropriate bond or
indemnity in form, substance and amount satisfactory to it, in which the City, the
Commission, and the Registrar shall be named as obligees. All Series 2014A Bonds so
surrendered to the Registrar shall be canceled by it and evidence of such cancellation
shall be given to the Commission. If the mutilated, lost,stolen or destroyed Series 2014A
Bond has already matured or been called for redemption in accordance with its terms, it
shall not be necessary to issue a new Series 2014A Bond prior to payment.
6.02. Appointment of Initial Registrar. U.S. Bank National Association, in St. Paul,
Minnesota, is hereby appointed as the initial 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
30 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
and shall deliver the Bond Register to the successor Registrar. On or before each principal or
interest due date, without further order of this Commission, there shall be transmitted to the
Registrar, from amounts on hand in the Debt Service Account available therefore, an amount
sufficient to pay all principal and interest then due on the Bonds.
6.03. Initial Issue. The Series 2014A Bonds shall be initially issued in the form of a
separate single typewritten or printed fully registered Series 2014A Bond for each of the
maturities set forth in this Resolution. Upon initial issuance, the ownership of each such Series
2014A Bond shall be registered in the registration books kept by the Registrar in the name of
Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its
successors and assigns ("DTC"). Except as provided in this Section, all of the outstanding Series
2014A Bonds shall be registered in the registration books kept by the Registrar in the name of
Cede&Co.,as nominee of DTC.
6.04. DTC. With respect to Series 2014A Bonds registered in the registration books
kept by the Registrar in the name of Cede &Co., as nominee of DTC, the City, the Registrar and
the Paying Agent shall have no responsibility or obligation to any broker dealers, banks and
other financial institutions from time to time for which DTC holds Series 2014A Bonds as
securities depository (the"Participants") or to any other person on behalf of which a Participant
holds an interest in the Series 2014A Bonds, including but not limited to any responsibility Or
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obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant
with respect to any ownership interest in the Series 2014A Bonds, (ii) the delivery to any
Participant or any other person other than a registered owner of Series 2014A Bonds, as shown
by the registration books kept by the Registrar, of any notice with respect to the Series 2014A
Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other
person, other than a registered owner of Series 2014A Bonds, or any amount with respect to
principal of, premium, if any, or interest on the Series 2014A Bonds. The City, the Registrar and
the Paying Agent may treat and consider the person in whose name each Series 2014A Bond is
registered in the registration books kept by the Registrar as the holder and absolute owner of
such Series 2014A Bond for the purpose of payment of principal, premium and interest with
respect to such Series 2014A Bond, for the purpose of registering transfers with respect to such
Series 2014A Bonds, and for all other purposes. The Paying Agent shall pay all principal of,
premium, if any, and interest on the Series 2014A Bonds only to or on the order of the respective
registered owners, as shown in the registration books kept by the Registrar, and all such
payments shall be valid and effectual to fully satisfy and discharge the City's obligations with
respect to payment of principal of, premium, if any, or interest on the Series 2014A Bonds to the
extent of the sum or sums so paid. No person other than a registered owner of Series 2014A
Bonds, as shown in the registration books kept by the Registrar, shall receive a certificated Series
2014A Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City of a
written notice to the effect that DTC has determined to substitute a new nominee in place of
Cede & Co., and the words "Cede & Co.," shall refer to such new nominee of DTC; and upon
receipt of such a notice, the City shall promptly deliver a copy of the same to the Registrar and
Paying Agent, if the Paying Agent is other than the Registrar.
6.05. Transfers Outside Book-Entry System. In the event the City, by resolution of the
Commission, determines that it is in the best interests of the persons having beneficial interest in
the Series 2014A Bonds that they be able to obtain Series 2014A Bond certificates, the City shall
notify DTC, whereupon DTC shall notify the Participants, of the availability through DTC of
Series 2014A Bond certificates. In such event the City shall issue, transfer and exchange Series
2014A Bond certificates as requested by DTC and any other registered owners in accordance
with the provisions of this Resolution. DTC may determine to discontinue providing its services
with respect to the Series 2014A Bonds at any time by giving notice to the City and discharging
its responsibilities with respect thereto under applicable law. In such event, if no successor
securities depository is appointed, the City shall issue and the Registrar shall authenticate Series
2014A Bond certificates in accordance with this resolution and the provisions hereof shall apply
to the transfer, exchange and method of payment thereof.
6.06. Payments to Cede&Co.Notwithstanding any other provision of this resolution to
the contrary, so long as any Series 2014A Bond is registered in the name of Cede & Co., as
nominee of DTC,all payments with respect to principal of, premium, if any, and interest on such
Series 2014A Bond and all notices with respect to such Series 2014A Bond shall be made and
given, respectively in the manner provided in the representation letter executed by the City and
on file with DTC.
Section 7. Notice of Redemption. At least thirty days before the date set for
mandatory redemption of any Series 2014A Bond,the City shall cause notice of such redemption
to be mailed to the registered Holder of each Series 2014A Bond to be redeemed, but no defect
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in or failure to give such mailed notice of redemption shall affect the validity of proceedings for
the redemption of any Series 2014A 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 Series 2014A Bonds to be redeemed and the place at which the Series
2014A Bonds are to be surrendered for payment, which shall be the principal office of the
Registrar. Notice of redemption having been given as aforesaid, the Series 2014A 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 City shall default in
the payment of the redemption price) such Series 2014A Bonds or portions thereof shall cease to
bear interest.
Series 2014A Bonds in a denomination larger than $5,000 may be redeemed in part in
any integral multiple of$5,000. The Holder of any Series 2014A Bond redeemed in part shall
receive, upon surrender of such Series 2014A Bond to the Registrar, one or more new Series
2014A Bonds of the same series in authorized denominations equal in principal amount to the
unredeemed portion of the Series 2014A Bond so surrendered.
Section 8. Execution, Authentication and Delivery of Series 2014A Bonds. The
Series 2014A Bonds shall be prepared under the direction of the Secretary and shall be executed
on behalf of the City by the facsimile signatures of the Mayor and the Clerk and on behalf of the
Commission by the facsimile signatures of the President and Secretary of the Commission. In
case any officer whose signature appears on the Series 2014A Bonds shall cease to be such
officer before the delivery of any Series 2014A Bond, such signature shall nevertheless be valid
and sufficient for all purposes, the same as if such officer had remained in office until delivery.
Notwithstanding such execution, no Series 2014A Bond shall be valid or obligatory for any
purpose or entitled to any security or benefit under this Resolution unless a certificate of
authentication on such Series 2014A Bond has been executed by the manual signature of an
authorized representative of the Registrar. Certificates of authentication on different Series
2014A Bonds need not be signed by the same representative. The executed certificate of
authentication on each Series 2014A Bond shall be conclusive evidence that it has been
authenticated and delivered under this resolution. When the Series 2014A Bonds have been so
executed and authenticated, they shall be delivered to the original purchaser thereof 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.
Section 9. Electric Fund and Accounts.
9.01. Electric Fund. For the convenient and proper administration of the Electric
System, including the revenues thereof and proceeds of the Bonds, and to make adequate and
specific security to the purchaser and Holders of the Bonds from time to time, the Commission
agrees that there shall continue to be maintained on the books and records of the City so long as
any Bonds are Outstanding a separate bookkeeping account designated the Electric Fund.
Within the Electric Fund there shall be maintained the separate accounts and subaccounts
described in this section, or in lieu thereof there may be maintained the required balances as
undesignated components of the Electric Fund.
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9.02. Operating Account. There shall be credited to the Operating Account all Gross
Revenues as received. There shall be paid from the Operating Account when due all reasonable,
necessary, and current Operating Expenses of the Electric System. All money on hand in the
Operating Account as of the first day of each month in excess of the sum of (i) Operating
Expenses then due and payable and to become due and payable during such calendar month,plus
(ii) the Operating Reserve Requirement, shall constitute Net Revenues and shall be credited to
other accounts in the Electric Fund as provided in Sections 9.03,9.04, 9.05 and 9.06.
9.03. Debt Service Account. Upon delivery of the Series 2014A Bonds, the
Commission shall credit to the Debt Service Account, from the proceeds of the Series 2014A
Bonds, the accrued interest, if any, received from the Purchaser of the Series 2014A Bonds. As
of the first day of each month there shall be credited to the Debt Service Account out of the Net
Revenues on hand in the Operating Account an amount equal to not less than 1/6 of the interest
due within the next six months on all Outstanding Bonds and 1/12 of the principal due within the
next 12 months on all Outstanding Bonds; provided that the Commission shall be entitled to
reduce a monthly apportionment by the amount of any surplus previously credited and then on
hand in the Debt Service Account. Money on hand in the Debt Service Account shall be
disbursed only to pay principal of and interest on the Outstanding Bonds when due;provided that
on any date when the amount then on hand in the Debt Service Account plus the amount in the
Reserve Account allocable to a series of Bonds, is sufficient with other money available for the
purpose to pay or discharge all Bonds of that series and the interest accrued thereon in full, it
may be used for that purpose. If any payment of principal of or interest on the Outstanding
Bonds becomes due when money in the Debt Service Account is temporarily insufficient
therefor, an amount equal to such deficiency shall be transferred thereto from the Reserve
Account or the Repair and Replacement Account, in that order.
9.04. Reserve Account. Upon delivery of the Series 2014A Bonds the Commission
shall credit to the Reserve Account from available funds on hand, the sum of$ _. If the
balance in the Reserve Account is ever less than the applicable Reserve Requirement, as of the
first day of each month all Net Revenues in the Operating Account remaining after the required
credit to the Debt Service Account shall be credited to the Reserve Account until the balance
therein equals the Reserve Requirement. If the balance in the Reserve Account has not been
restored to the Reserve Requirement from transfers of Net Revenues within six months of the
deficiency, the Commission shall transfer to the Reserve Account from the Repair and
Replacement Account, an amount sufficient to restore the balance therein to the Reserve
Requirement.
If, on any date on which principal or interest is due on the Outstanding Bonds, the
balance then on hand in the Debt Service Account is not sufficient to pay such principal and
interest in full, the Commission shall immediately transfer from the Reserve Account to the Debt
Service Account an amount equal to such deficiency.
If any Additional Bonds are issued, the Commission shall, upon issuance of the
Additional Bonds, increase the balance in the Reserve Fund to the Reserve Requirement,
calculated after giving effect to the issuance of such Additional Bonds.
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Money held in the Reserve Account shall be used only to pay maturing principal and
interest when money in the Debt Service Account is insufficient therefor.
If at any time the balance in the Reserve Account exceeds the Reserve Requirement, the
Commission shall transfer such excess to the Debt Service Account. If an entire issue of Bonds
shall have been paid in full in accordance with its terms or defeased within the meaning of
Section 16 of this Resolution, the Reserve Requirement shall be reduced to that level thereof
which would apply had said issue of Bonds, or said obligation of that Bond, as the case may be,
never been issued; provided, however, that any such reduction shall be subject to the condition
that there shall not at the time be a default continuing with respect to the payment of or security
for any Bond or a default continuing under any resolution, indenture or other document pursuant
to which any Bonds were issued.
9.05. Repair and Replacement Account. The Repair and Replacement Account has
heretofore been established as a separate account within the Electric Fund and there shall be
credited to the Repair and Replacement Account from the Operating Account, on the 1st day of
each month, such portion of the Net Revenues, in excess of the current requirements of the Debt
Service Account and the Reserve Account (which portion of the Net Revenues is referred to
herein as "surplus revenues"), as the Commission shall determine to be required for replacement
or renewal of worn out, obsolete or damaged properties and equipment of the Electric System.
Money in the Repair and Replacement Account shall be used only for the purposes above stated
or, if so directed by the Commission, to pay Operating Expenses, to redeem Bonds which are
subject to redemption according to their terms, to pay principal or interest when due thereon as
required in Section 9.03, to restore a deficiency in the Reserve Account, or to pay the cost of
improvements to the Electric System; provided that in the event additional improvements or
additions to the Electric System are financed other than from Bonds payable from the Debt
Service Account, surplus revenues from time to time received may be segregated and paid into
one or more separate and additional accounts for the repayment of such indebtedness and interest
thereon, in advance of payments required to be made into the Repair and Replacement Account.
9.06. Deposit and Investment of Funds. The Commission shall cause all money
pertaining to the Electric Fund to be deposited as received with one or more depository banks.
The balance in such accounts, except such portion thereof as shall be guaranteed by federal
deposit insurance, shall at all times be secured to its full amount by bonds or securities of the
types authorized by applicable laws. Any such money not necessary for immediate use may be
deposited with such depository banks in savings or time deposits. No money shall at any time be
withdrawn from such deposit accounts except for the purposes of the Electric Fund as authorized
in this Resolution, except that money from time to time on hand in the Electric Fund may at any
time, in the discretion of the Commission, be deposited or invested in accounts or securities
which are permitted by applicable laws of the State. Except as otherwise expressly provided
herein, income received from the deposit or investment of money in said accounts shall be
credited to the account from which the deposit was made or the investment was purchased, and
handled and accounted for in the same manner as other money in that account.
Section 10. Additional Bonds. Additional Bonds shall be issued and made payable
from the Net Revenues of the Electric System only as provided in this section. One or more
series of Additional Bonds may be issued on a parity of lien with the Outstanding Bonds, if
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43808Iv3 JSB EL185-25
(except as otherwise provided in this Section 10) the Net Revenues of the Electric System for the
Audited Fiscal Year immediately preceding the issuance of such Additional Bonds, adjusted as
hereinafter provided,were not less than 125%of the average annual principal and interest due on
all Outstanding Bonds and on the Additional Bonds to be issued, during the remaining term of
the Outstanding Bonds. No Additional Bonds shall be issued unless each of the following
conditions is satisfied prior to the issuance thereof, such satisfaction to be shown by a certificate
of the President of the Commission and the resolution authorizing the issuance thereof:
(a) The payments required to be made (at the time of the issuance of such
Additional Bonds) into the various accounts provided for in this Resolution have been
made.
(b) The resolution authorizing such Additional Bonds provides for payment to
the Reserve Account upon delivery of such Additional Bonds, from the proceeds thereof
or any other source,of an amount necessary to cause the aggregate balance in the Reserve
Account to equal the Reserve Requirement.
(c) The proceeds of such Additional Bonds shall be used only for the purpose
of making improvements, additions, extensions, renewals or replacements to the Electric
System, or refunding bonds payable from the Debt Service Account.
For purposes of the coverage test set forth above, the Net Revenues for the last Audited Fiscal
Year immediately preceding the issuance of such Additional Bonds, may be adjusted for such
Fiscal Year as follows: (1)the Gross Revenues for such Audited Fiscal Year may be increased to
reflect the Gross Revenues which would have been received had any rate increase placed in
effect after the commencement of the Audited Fiscal Year been in effect for the entire Audited
Fiscal Year; and (2) by including the additional revenues reasonably determined by the
Commission to be likely to result from the acquisition and construction of the facilities to be
financed by such Additional Bonds, provided that the debt service on the proposed Additional
Bonds is funded until the estimated date of completion of such facilities.
The Commission also reserves the right to cause the issuance of Additional Bonds if and
to the extent needed to refund maturing Bonds payable from the Debt Service Account in case
the money on hand therein is insufficient to pay the same at maturity, which refunding revenue
bonds may be on a parity with the Outstanding Bonds, but shall mature subsequent to all
Outstanding Bonds which are not to be refunded by such Additional Bonds.
The Commission also reserves the right to cause the issuance of Additional Bonds
payable on a parity as to both principal and interest with the Outstanding Bonds to refund Bonds
if the maximum amount of principal and interest payable on the Outstanding Bonds and such
Additional Bonds in the then current or any future calendar year is not increased by more than
5%.
Section 11. Priority of Payments. If the money on hand in the Debt Service Account
shall be insufficient at any time to pay the principal then due and interest then accrued on all
Bonds payable therefrom, said money shall first be applied to the payment pro rata of the
accrued interest on all Bonds, and any balance shall be applied first in payment of maturing
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438081v3 JSB EL185-25
principal; as between Bonds having different maturity dates, the principal of earlier maturing
Bonds shall be paid first; and as between Bonds maturing on the same date, the principal of
Bonds shall be paid pro rata.
Section 12. Covenants. For the protection of the Holders of the Bonds, the City and
the Commission hereby covenant and agree to and with the Holders thereof from time to time as
follows:
(a) They will at all times adequately maintain and efficiently operate the
Electric System. They will from time to time make all needful and proper repairs,
replacements, additions and betterments to the equipment and facilities of the Electric
System so that it may at all times be operated properly and advantageously and so that the
value and efficiency of the facilities shall be at all times fully maintained and its revenues
unencumbered by reason thereof.
(b) In order to ensure the efficient and economical operation of the Electric
System and the proper maintenance thereof, the Commission on behalf of the City will
employ an experienced manager to operate and maintain the Electric System. Such
manager shall be employed on a full-time basis and the compensation shall be paid as an
operating expense of the Electric System.
(c) The rates for all service and the charges for all electricity and services
supplied by the Electric System to the City and its residents and to all consumers shall be
reasonable and just,taking into account the cost and value of the Electric System,the cost
of maintaining and operating the Electric System and the proper and necessary
allowances for depreciation and amounts required for the payment of principal and
interest on the bonds payable from the Net Revenues. Charges to all customers shall be
uniform for all users of the same class. The Commission on behalf of the City will bill its
customers and the City on a monthly basis and, subject to the requirements of State law,
will discontinue service to any customer whose bill remains unpaid 30 days following the
mailing of such bill and service will not be restored until the bill and any penalties have
been paid in full.
(d) They will establish, maintain and collect such charges and rates as will
produce revenues sufficient to pay the reasonable cost of operation and maintenance of
the Electric System and to produce, in each Fiscal Year, Net Revenues at least equal to
110% of the annual interest and principal requirements of the Series 2014A Bonds and
the Prior Bonds in such Fiscal Year. Such rates and charges will be increased from time
to time whenever necessary to carry out the obligations of this Resolution.
(e) The City and the Commission will not sell, lease, mortgage, or in any
manner dispose of all or substantially all of properties of the Electric System until all of
the Outstanding Bonds have been paid in full; provided, however, that the City or the
Commission may sell the Electric System as a whole if, simultaneously with the sale of
the Electric System, there is deposited with the Registrar the amount necessary to retire
all of the Outstanding Bonds payable from the revenues of the Electric System, including
interest to accrue to the date when the Outstanding Bonds are callable, or if the
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438081v3 JSB EL185-25
Outstanding Bonds are then called in accordance with their terms, to the date of
redemption. This covenant shall not be construed to prevent the sale by the City or the
Commission at fair market value of real estate, equipment or other non-revenue-
producing properties which in the judgment of the City or the Commission and a
consulting engineer have become unnecessary, uneconomical or inexpedient to use in
connection with the Electric System, provided suitable facilities are obtained in place
thereof and any cash balance from the transaction is deposited in the Electric Fund.
(f) They will procure and keep in force insurance upon the properties of the
Electric System of a kind and in an amount which would normally be carried by private
companies in a like business, including public liability insurance, with an insurer or
insurers in good standing, and will keep in full force and effect fiduciary bonds on
employees in charge of the Electric System. In the event of any loss, the proceeds from
such insurance (including liability insurance) or bonds shall be used to make good such
loss or to repair or restore the Electric System. Insurance premiums shall be paid as a
cost of operation. The proceeds of insurance, except the proceeds of public liability
insurance,received by the Commission or the City, shall be placed in the Electric Fund.
(g) The Commission, on behalf of the City, shall cause to be kept proper
books, records and accounts adapted to the Electric System, separate from other accounts
of the City and shall cause such books, records and accounts to be audited at the end of
each Fiscal Year by a qualified firm of public accountants. The expense of preparing
such audit shall be paid as a current operating expense of the Electric System. In addition
to whatever other matters are included in the audit, each such audit shall include the
following:
(1) A statement in detail of the income and expenditures of the
Electric System and the component systems thereof for each such Fiscal Year.
(2) A balance sheet as of the end of each such Fiscal Year.
(3) The accountants' comments, if any, regarding the manner in which
the Commission and the City have carried out the requirements of this Resolution
and their recommendations for any changes or improvements in the operation of
the Electric System.
(4) The disposition of any Bond proceeds during such Fiscal Year, and
the amount of Outstanding Bonds at the end of each Fiscal Year.
The Holders of the Outstanding Bonds shall have the right at all reasonable times to
inspect the Electric System and the books, records, accounts and data relating thereto.
The Commission agrees to furnish copies of such audit to any Holder who holds
Outstanding Bonds upon request within ninety days after the close of each Fiscal Year.
(h) They will faithfully and punctually perform all duties with respect to the
Electric System required by the Constitution and laws of the State and this Resolution.
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Section 13. Refunding Account.
13.01. There is hereby established within the Electric Fund a Refunding Account,
into which the Commission shall deposit the proceeds of the Series 2014A Bonds, net of
amounts deposited in the Debt Service Account and the Reserve Account, as provided in Section
9 hereof. Moneys on deposit in the Refunding Account may be disbursed by the Commission to
pay costs of issuance of the Series 2014A Bonds and costs of refunding the Refunded Bonds.
Pending such disbursement, moneys on deposit in the Refunding Account may be invested in
Government Obligations maturing or subject to redemption at the option of the holder thereof not
later than the date on which such moneys are expected to be needed.
13.02. The pledges and covenants of the City made by the resolution awarding the
sale of the Refunded Bonds, are restated and confirmed in all respects until the date the
Refunded Bonds are no longer Outstanding. The provisions of such Refunded Resolution are
hereby supplemented to the extent necessary to give full effect to the provisions of this
Resolution.
Section 14. Refunding; Findings; Redemption of Refunded Bonds.
14.01. Purpose of Refunding. The Refunded Bonds are callable on February 1, 2014 and
on the date thereafter. It is hereby found and determined that based upon information presently
available from Springsted, the issuance of the Bonds is consistent with covenants made with the
holders thereof and is necessary and desirable for the reduction of debt service cost to the City.
14.02. Application of Proceeds of Bonds. It is hereby found and determined that the
proceeds together with other funds of the City irrevocably appropriated hereunder, including any
outstanding balance in the debt service fund for the Refunded Bonds, will be sufficient to prepay
all of the principal of, interest on and redemption premium(if any)on the Refunded Bonds.
14.03. Redemption, Date of Redemption, Notice of Redemption. The Refunded Bonds
maturing on August 1, 2014 and thereafter will be redeemed and prepaid on May 1, 2014. The
Refunded Bonds will be redeemed and prepaid in accordance with their terms and in accordance
with the terms and conditions set forth in the forms of Notice of Call for Redemption attached
hereto as Exhibit B which terms and conditions are hereby approved and incorporated herein by
reference. The Registrar for the Refunded Bonds is hereby authorized and directed to send a
copy of the Notice of Redemption to the registered holder of the Refunded Bonds.
Section 15. Amendments. The provisions of this Resolution shall constitute a contract
between the City, the Commission and the Holders of the Outstanding Bonds and after the
issuance of any of the Series 2014A Bonds, no change, variation or alteration of any kind in the
provisions of this Resolution shall be made in any manner, except as herein provided, until such
time as all of the Series 2014A Bonds and interest thereon have been paid in full. However, the
Holders of a majority in principal amount of the Outstanding Bonds shall have the right to
consent to, and approve the adoption of resolutions or other proceedings modifying or amending
any of the terms or provisions contained in this Resolution, except that without the consent of
100% of the Holders of Outstanding Bonds this Resolution shall not be modified or amended in
any manner that may adversely affect the rights of any Holders of the Outstanding Bonds or
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reduce the percentage of the number of Holders whose consent is required to effect a further
modification.
Section 16. Defeasance. When any Bond has been discharged as provided in this
section, all pledges, covenants and other rights granted by this Resolution to the Holder of such
Bond shall cease, and such Bond shall no longer be deemed to be Outstanding under this
Resolution. The obligations with respect to any Bond which is due on any date may be
discharged 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 to the date of such deposit. The obligations with respect to any Bond which is
subject to redemption according to its terms may also be discharged by depositing with the
Registrar on or before that date an amount equal to the principal, interest and redemption
premium, if any, which will then be due, provided that notice of such redemption has been duly
given or provided for. The obligations with respect to any Bonds may also be discharged at any
time, subject to the provisions of law now or hereafter authorizing and regulating such action, by
depositing irrevocably in escrow, with the Registrar or any bank qualified by law as an escrow
agent for this purpose, cash or Government Obligations which are authorized by law to be so
deposited,bearing interest payable at such times and at such rates and maturing on such dates as
shall be required to pay all principal, interest and redemption premiums to become due on the
Bonds to their maturity or redemption date, provided that if any of such Bonds are to be
redeemed, notice of redemption has been given or provided for, and provided that such
defeasance shall not impair the exemption of interest on any Bonds from federal income
taxation.
Section 17. Compliance With Reimbursement Bond Regulations. The provisions of
this section are intended to establish and provide for the Commission's compliance with United
States Treasury Regulations Section 1.150-2 (the "Reimbursement Regulations") applicable to
the "reimbursement proceeds" of the Series 2014A Bonds, being those portions thereof which
will be used by the Commission to reimburse itself for any expenditure which the Commission
paid or will have paid prior to the Closing Date(a"Reimbursement Expenditure").
The Commission 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 the Commission (or person designated to do so on behalf of the
City or the Commission) has made or will have made a written declaration of the
Commission's official intent (a "Declaration") which effectively (i) states the
Commission'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 Commission 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
Commission for the purpose of financing the Project; provided, however, that no such
Declaration shall necessarily have been made with respect to: (i) "preliminary
25
438081v3 JSB EL185-25
Ii
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 Series 2014A
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 Series 2014A Bonds.
(b) Each Reimbursement Expenditure is a capital expenditure or a cost of
issuance of the Series 2014A 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 Series 2014A 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.
(d) Each such reimbursement allocation will be made in a writing that
evidences the Commission's use of Bond proceeds to reimburse the Reimbursement
Expenditure and, if made within 30 days after the Series 2014A Bonds are issued, shall
be treated as made on the day the Series 2014A Bonds are issued.
Provided, however,that the Commission may take action contrary to any of the foregoing
covenants in this section upon receipt of an opinion of its Bond Counsel for the Series 2014A
Bonds stating in effect that such action will not impair the tax-exempt status of the Series 2014A
Bonds.
Section 18. Continuing Disclosure. With respect to the continuing disclosure
requirements under Rule 15c2-12(b)(5) (the "Rule") of the Securities and Exchange
Commission, on the date of actual issuance and delivery of the Bonds, the Commission and the
City will execute and deliver a Continuing Disclosure Certificate (the "Undertaking")
whereunder the Commission and the City will covenant to provide certain information specified
in the Undertaking. The proposed form of the Undertaking which has been submitted to the
Commission for its consideration is hereby approved, and the President and Secretary of the
Commission and the Mayor and Clerk of the City, or any other officer of the Commission or the
City authorized to act in their place (the"Officers") are hereby authorized to execute and deliver
that Undertaking in the proposed form or in such final form thereof reflecting such modifications
thereof as are consistent with the Rule, requested by the Purchasers of the Bonds and acceptable
to the Officers who shall execute the Undertaking (which consent shall be conclusively
evidenced by their execution and delivery thereof). The Undertaking, as so executed and
delivered by the Officers, shall be as much a part of this Resolution as if set forth in full herein
and shall be for the benefit of the owners from time to time of the Series 2014A Bonds.
Section 19. Records and Certificates. The officers of the Commission and the City are
hereby authorized and directed to prepare and furnish to the Purchaser, and to the attorneys
approving the legality of the issuance of the Series 2014A Bonds, certified copies of all
proceedings and records of the Commission and the City relating to the Series 2014A Bonds and
26
438081 v3 JSB EL185-25
to the financial condition and affairs of the Commission and the City, and such other affidavits,
certificates and information as are required to show the facts relating to the legality and
marketability of the Series 2014A 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 Commission and the City as to the facts recited therein.
Section 20. Negative Covenant as to Use of Bond Proceeds and Project. The
Commission and the City hereby covenant not to use the proceeds of the Series 2014A Bonds or
to use the Project, or to cause or permit them to be used, or to enter into any deferred payment
arrangements for the cost of the Project,in such a manner as to cause the Series 2014A Bonds to
be"private activity bonds"within the meaning of Sections 103 and 141 through 150 of the Code.
Section 21. Tax-Exempt Status of the Series 2014A Bonds; Rebate. The Commission
and 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 Series
2014A Bonds, including without limitation (a) requirements relating to temporary periods for
investments, (b) limitations on amounts invested at a yield greater than the yield on the Series
2014A Bonds, and (c) the rebate of excess investment earnings to the United States, if the Series
2014A Bonds (together with other obligations reasonably expected to be issued and outstanding
at one time in this calendar year)exceed the small-issuer exception amount of$5,000,000.
Section 22. Designation of Qualified Tax-Exempt Obligations. In order to qualify the
Series 2014A Bonds as "qualified tax exempt obligations" within the meaning of Section
265(b)(3) of the Code, the Commission hereby makes the following factual statements and
representations:
(a) the Series 2014A Bonds are issued after August 7, 1986;
(b) the Series 2014A Bonds are not "private activity bonds" as defined in
Section 141 of the Code;
(c) the Refunded Bonds were designated as "qualified tax-exempt
obligations" for purposes of Section 265(b)(3) of the Code, the proposed average
maturity of the Series 2014A Bonds is not longer than the average maturity of the
Refunded Bonds and the Series 2014A Bonds are proposed to mature not later than 30
years after the date the Refunded Bonds were issued and therefore the Series 2014A
Bonds issued to refund the outstanding principal amount of the Refunded Bonds are
deemed designated as "qualified tax-exempt obligations" for purposes of Section
265(b)(3)of the Code;
(d) the aggregate face amount of the issue of the Series 2014A Bonds is not
greater than$10,000,000;
(e) the Commission hereby designates the Series 2014A Bonds as "qualified
tax exempt obligations"for purposes of Section 265(b)(3)of the Code;
27
438081 v3 JSB EL185-25
(f) the reasonably anticipated amount of tax exempt obligations (other than
private activity bonds, treating qualified 501(c)(3) bonds as not being private activity
bonds) which will be issued by the City (and all entities treated as one issuer with the
City, and all subordinate entities whose obligations are treated as issued by the City)
during this calendar year 2014 will not exceed$10,000,000; and
(g) not more than $10,000,000 of obligations issued by the City during this
calendar year 2014 have been designated for purposes of Section 265(b)(3) of the Code.
The Commission shall use its best efforts to comply with any federal procedural requirements
which may apply in order to effectuate the designation made by this section.
Section 23. Official Statement. The Official Statement relating to the Series 2014A
Bonds, prepared and distributed by Springsted is hereby approved and the officers of the
Commission are authorized in connection with the delivery of the Series 2014A Bonds, to sign
such certificates as may be necessary with respect to the completeness and accuracy of the
Official Statement.
Section 24. Effective Date. This Resolution, having been concurred in by the City
Council by resolution adopted on February 11,2014, shall be effective immediately.
28
438081v3 JSB ELI85-25
STATE OF MINNESOTA
COUNTY OF SHERBURNE
ELK RIVER MUNICIPAL UTILITIES COMMISSION
I, the undersigned, being the duly qualified and acting Secretary of the Elk River
Municipal Utilities Commission of the City of Elk River, Minnesota, DO HEREBY CERTIFY
that I have carefully compared the attached and foregoing extract of minutes of a meeting of the
Board of Commissioners, held on the date therein indicated, with the original thereof on file and
of record in my office and that the same is a full,true and complete transcript insofar as the same
relates to the $2,030,000 Electric Revenue Refunding Bonds, Series 2014A of the City of Elk
River, Minnesota.
WITNESS my hand on February 11`h,2014.
Secretary
Elk River Municipal Utilities Commission
29
438081v2 JSB EL185-25
EXHIBIT A
BIDS
A-I
438081v3ISB EL185-25
EXHIBIT B
NOTICE OF CALL FOR REDEMPTION
$3,595,000
ELECTRIC REVENUE BONDS,SERIES 2006A
CITY OF ELK RIVER
SHERBURNE COUNTY,MINNESOTA
NOTICE IS HEREBY GIVEN that, by order of the City Council of the City of Elk River,
Sherburne County,Minnesota,there have been called for redemption and prepayment on
May 1,2014
all outstanding bonds of the City designated as Electric Revenue Bonds, Series 2006A,dated March
2, 2006, having stated maturity dates of August 1 in the years 2014 through 2021, both inclusive,
totaling$2,180,000 in principal amount,and with the following CUSIP numbers:
Year Amount CUSIP Number
2014 $235,000 287423 AT4
2015 245,000 287423 AU1
2016 255,000 287423 AV9
2017 265,000 287423 AW7
2018 275,000 287423 AX5
2019 290,000 287423 AY3
2020 300,000 287423 AZO
2021 315,000 287423 BA4
************
The bonds are being called at a price of par plus accrued interest to May 1,2014, on which
date all interest on said bonds will cease to accrue. Holders of the bonds hereby called for
redemption are requested to present their bonds for payment at the main office of U.S. Bank
National Association, in the City of St. Paul,Minnesota,on or before May 1,2014, at the following
address:
438081 v3 JSB EL 185-25 B-1
If by mail: If by hand:
U.S. Bank National Association U.S. Bank National Association
Corporate Trust Operations 60 Livingston Avenue
60 Livingston Avenue 3`d Floor—Bond Drop Window
EP-MN-WS3C St. Paul,MN 55107
St. Paul,MN 55107
****************************
Important Notice: In compliance with the Jobs Growth and Tax Relief Reconciliation Act
of 2003, federal backup withholding tax will be withheld at the applicable backup withholding rate
in effect at the time the payment by the redeeming institutions if they are not provided with your
social security number or federal employer identification number, properly certified. This
requirement is fulfilled by submitting a W-9 Form, which may be obtained at a bank or other
financial institution.
The Registrar will not be responsible for the selection or use of the CUSIP number, nor is
any representation made as to the correctness indicated in the Redemption Notice or on any Bond.
It is included solely for convenience of the Holders.
Dated: February 11,2014.
438081v3 JSB EL185-25 B-2
UBS Financial Services Inc. - New York, NY's Bid ., AIFUNTY'
City of Elk River. Minnesota
$24267000$2,030,000 Electric Revenue Refunding Bonds, Series 2014A
For the aggregate principal amount of$2428,000,00$2,030,000.00,we will pay you$2,89,031.49
52,091,436.75,plus accrued interest from the date of issue to the date of delivery.The Bonds are to bear
interest at the following rates):
FAiiUrity Date I ..Amoiirit:$ �_ C.oOpon%: Yleld'h . Dollar:Price
08r /01/2014 430M 405M 4.0000 0.2500 [101.435
08/01/2015 4201,4 390M 3.0000 0.3500 103.653
1 08/01/2016 420M 405M I 2.0000 I 0.4500 103.670
1 08/01/2017 425M 410M 2.0000 0.6000 104.681
1 08101/2018 1 4204 420M 2.0000 0.90:00 104.718 •
Total Interest Cost: $4401491133 $106,263.33
Premium: $64;034:40 $61,436.75
Net Interest Cost: $46,466,93 $44,826.58
TIC: 0.897374 0.8977953%
Total Insurance Premium: $0.00
Time Last Bid Received On:02/11/2014 9:05:33 CST
This proposal is made subject to all of the terms and conditions of the Official Bid Form,the Official Notice
of Sale,and the Preliminary Official Statement,all of which are made a part hereof.
Bidder: UBS Financial Services Inc., New York,NY
Contact: Jerry Orellana
Title: Director
Telephone:212-373-6466
Issuer Nam . City • N Company Name: UBS Financi s Inc.
Accepted By: Accepted By:
Date: ebru 11,201 Date: ebruary 1,2014