The Taconite Capital of the World

City of Mountain Iron, Minnesota



Resolution 12-02 Authorizing Bonding

RESOLUTION NUMBER 12-02

PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF $335,000 GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2002A; ESTABLISHING THE TERMS AND CONDITIONS THEREFORE; DIRECTING THEIR EXECUTION AND DELIVERY; CREATING A DEBT SERVICE FUND THEREFORE; AND AWARDING THE SALE THEREOF

BE IT RESOLVED, by the City Council of the City of Mountain Iron, St. Louis, Minnesota (the “City”), as follows:

Section 1. Bond Purpose, Authorization, and Award.

1.01 Prior Bonds. The City previously issued its $635,000 General Obligation Taxable Tax Increment Bonds, Series 1994, dated November 1, 1994 (the “1994 Bonds”). The 1994 Bonds were authorized and issued pursuant to Minnesota Statutes, Chapter 475, and Section 469.178, to provide funds to finance public development costs in the City in Tax Increment Financing District No. 7 in Redevelopment Project No. 1 (the “TIF District”) created by the Housing and Redevelopment Authority in and for the City (the “HRA”) (the “Project”).

1.02 Authority. Under and pursuant to the provisions of Minnesota Statutes, Section 469.178 and Chapter 475 ( collectively, the “Act”) and Section 475.67, Subdivisions 1 through 3 and 13 of the Act, the City is authorized to issue and sell its general obligation bonds to refund obligations and the interest thereon before the due date of the obligations, if consistent with covenants made with the holders thereof, when determined by the City to be necessary or desirable for the reduction of debt service cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment. The City makes such finding with respect to the 1994 Bonds.

1.03 Amended and Restated Tax Increment Pledge Agreement. Pursuant to the terms of an Amended and Restated Tax Increment Pledge Agreement by and between the HRA and the City (the “Agreement”), the HRA has pledged to the payment of the Bonds as hereinafter defined, tax increment available from the TIF District, which is generated by improvements to real property within the TIF District (the “Tax Increment”). The Agreement has been submitted to the City Council and is made a part of this Resolution as though fully set forth herein, and is hereby approved in substantially the form presented to the Council. The Mayor and the Administrator are authorized and directed to execute, acknowledge and deliver the Agreement with such changes, insertions, and omissions therein as bond counsel may hereafter deem appropriate, such execution to be conclusive evidence of approval of such document in accordance with the terms hereof.

1.04 Refunded Bonds. The City Council has determined that it is necessary, expedient and in the best interest of the citizens of the City that the City issue, sell and deliver its $335,000 General Obligation Tax Increment Refunding Bonds, Series 2002A (the “Bonds”), to refund that portion of the 1994 Bonds maturing on and after February 1, 2004 (the “Refunded Bonds”), of which $320,000 in principal amount is prepayable on February 1, 2003 (the “Redemption Date”).

1.05 Offer for Purchase of the Bonds. The City has received an offer from Juran & Moody, a division of Miller Johnson Steichen Kinnard Inc. of Minneapolis, Minnesota (the “Purchaser”), to purchase the Bonds at a cash price of $328,434.00, plus accrued interest on the total principal amount from March 1, 2002, to the date of delivery upon the terms and conditions hereafter specified in this Resolution.

1.06 Public Sale of Bonds. The Bonds are being sold pursuant to an exception to the requirements for the public sale of bonds set forth in Minnesota Statutes, Section 475.60, Subdivision 1 and the exception thereto set forth in Minnesota Statutes, Section 475.60, Subdivision 2(2), since the City has not sold obligations in an amount exceeding the total sum of $1,200,000 in the 12-month period ending March 31, 2002.

1.07 Award of Sale. The City Council, after due consideration, finds such offer reasonable and proper and the offer of the Purchaser is hereby accepted. The Mayor and the Administrator are authorized and directed to execute on the part of the City a contract for the sale of the Bonds in accordance with the Purchaser�s proposal, and to acknowledge receipt of the check given for the security of the proposal, if any.

Section 2. Terms of the Bonds.

2.01 Date and Maturities. The Bonds to be issued hereunder shall be dated March 1, 2002, as the date of original issue, shall be issued in the denomination of $5,000 each, or any integral multiple thereof, in fully registered form and lettered and numbered R-1 and upward. The Bonds shall bear interest at the annual rates and shall mature on February 1 in the years and amounts shown below:

Year Amount Interest Rate 
2004 $ 80,000 
2005 80,000 
2006 75,000 
2007 100,000 

2.02 Optional Redemption. The Bonds shall not be subject to optional redemption and prepayment before maturity.

2.03 Interest Payment Dates. The Bonds shall bear interest at the annual rates stated therefor in Section 2.01. The interest shall be payable semiannually on February 1 and August 1 in each year (each referred to herein as an “Interest Payment Date”) commencing on August 1, 2002. Interest will be computed upon the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to the rules of the Municipal Securities Rulemaking Board. The Bond Registrar designated below shall make all interest payments with respect to the Bonds by check or draft mailed to the registered owners of the Bonds shown on the bond registration records maintained by the Bond Registrar at the close of business on the 15th day (whether or not on a business day) of the month next preceding the Interest Payment Date at such owners� addresses shown on such bond registration records.

2.04 Preparation. The Bonds shall be prepared for execution in accordance with the approved form and shall be signed by the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of the Administrator. If the legal opinion of Fryberger, Buchanan, Smith & Frederick, P.A. is not manually signed, the certificate as to legal opinion on each Bond shall be executed by the manual signature of the Administrator. The corporate seal of the City may be omitted from the Bonds as permitted by law. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be an officer before 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.

2.05 Appointment and Duties of Bond Registrar.

A. The City Council hereby appoints U.S. Bank National Association in St. Paul, Minnesota, as registrar, authenticating agent, paying agent and transfer agent for the Bonds (such bank or its successors is herein referred to as the “Bond Registrar”). No Bond shall be valid or obligatory for any purpose unless or until either (i) the Bond Registrar�s authentication certificate on such Bond, substantially set forth in Section 3.01 hereof, shall have been duly executed by an authorized representative of the Bond Registrar or (ii) the Bonds have been manually executed by at least one officer of the City. Authentication certificates on different Bonds need not be signed by the same representative. The executed Authentication Certificate or the manual signature of at least one officer of the City on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution.

B. The City shall cause to be kept by the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the City shall provide for the registration of the Bonds and the registration of transfers of the Bonds entitled to be registered or transferred as herein provided. In the event of the resignation or removal of the Bond Registrar or its incapability of acting as such, the bond registration records shall be maintained at the office of the successor Bond Registrar as may be appointed by the City Council.

C. Upon surrender for transfer of any Bond at the principal corporate office of the Bond Registrar, the City shall execute and the Bond Registrar shall authenticate, if required by law or this Resolution, and deliver, in the name(s) of the designated transferee or transferees, one or more new Bonds of the like aggregate principal amount, as requested by the transferor.

D. Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all of the rights to interest, accrued and unpaid and to accrue, which are carried by such other Bond. Each Bond shall be dated by the Bond Registrar as of the date of its authentication or manual execution, as the case may be. The City and the Bond Registrar shall not be required to make any transfer or exchange of any Bonds called for redemption or to make any such exchange or transfer of the Bonds during the 15 days next preceding the date of the first publication or the mailing (if there is no publication) of notice of redemption in the case of a proposed redemption of the Bonds.

2.06 Book Entry System.

A. In order to make the Bonds eligible for the services provided by The Depository Trust Company, New York, New York (“DTC”), the City has previously agreed to the applicable provisions set forth in the Blanket Issuer Letter of Representations which has been executed by the City and DTC (the “Representation Letter”).

B. All of the Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Payment of interest on and principal of any Bond registered in the name of Cede & Co. shall be made by wire transfer or New York Clearing House or equivalent same day funds by 10:00 a.m. CT or as soon as possible thereafter following the Bond Registrar�s receipt of funds from the City on each Interest Payment Date to the account of Cede & Co. on each Interest Payment Date at the address indicated in or pursuant to the Representation Letter.

C. Additional matters with respect to, among other things, notices, consents and approvals by Bondholders and payments on the Bonds are set forth in the Representation Letter.

2.07 Lost or Damaged Bonds. If a Bond becomes mutilated or is destroyed, stolen, or lost, the Bond Registrar will deliver a new Bond of like amount, number, maturity date, and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen, or lost, upon the payment of the reasonable expenses and charges of the Bond Registrar and the City in connection therewith, including the cost of printing new Bonds; and, in the case of a Bond destroyed, stolen, or lost, upon filing with the Bond Registrar and the City of evidence satisfactory to it and the City that the Bond was destroyed, stolen, or lost, and of the ownership thereof, and upon furnishing to the Bond Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it and the City and as provided by law, in which both the City and the Bond Registrar must be named as obligees. Bonds so surrendered to the Bond Registrar will be canceled by the Bond Registrar and evidence of such cancellation must be given to the City. If the mutilated, destroyed, stolen, or lost Bond has already matured or been called for redemption in accordance with its terms, it is not necessary to issue a new Bond prior to payment.

2.08 Payment of Bonds.

A. The City and the 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 interest on such Bond and for all other purposes whatsoever, whether or not such Bond be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary.

B. The principal of and interest on the Bonds shall be payable by the Bond Registrar in such funds as are legal tender for the payment of debts due the United States of America. The City shall pay the reasonable and customary charges of the Bond Registrar for the disbursement of principal and interest.

2.09 Delivery. Delivery of the Bonds and payment of the purchase price shall be made at a place mutually satisfactory to the City and the Purchaser. Printed or typewritten, and executed Bonds shall be furnished by the City without cost to the Purchaser. The Bonds, when prepared in accordance with this Resolution and executed, shall be delivered by or under the direction of the Administrator to the Purchaser upon receipt of the purchase price plus accrued interest.

Section 3. Form of the Bonds.

3.01 The Bonds shall be printed or typewritten in substantially the following form:

UNITED STATES OF AMERICA

STATE OF MINNESOTA

COUNTY OF ST. LOUIS

R-__ $______

CITY OF MOUNTAIN IRON

GENERAL OBLIGATION TAX INCREMENT REFUNDING BOND

Rate 
Maturity Date 

Date of Original Issue 
CUSIP 


March 1, 200_ 

March 1, 2002 

SERIES 2002A

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT:

The City of Mountain Iron, St. Louis County, Minnesota (the “City”), for value received, promises to pay to the registered owner specified above, or registered assigns, the principal amount specified above, on the maturity date specified above, and to pay interest on said principal amount to the registered owner hereof from March 1, 2002, or from the most recent Interest Payment Date (defined below) to which interest has been paid or duly provided for, until the principal amount is paid, said interest being at the rate per annum specified above. Interest is payable semiannually on February 1 and August 1 of each year (each referred to herein as an “Interest Payment Date”) commencing on August 1, 2002. Both principal hereof and interest hereon are payable in lawful money of the United States of America by check or draft at the main office of U.S. Bank National Association, in St. Paul, Minnesota, as bond registrar, authenticating agent, paying agent and transfer agent (the “Bond Registrar”), or at the office of such successor Bond Registrar as may be designated by the governing body of the City. The Bond Registrar shall make all interest payments with respect to this Bond directly to the registered owner hereof shown on the bond registration records maintained on behalf of the City by the Bond Registrar at the close of business on the 15th day of the month next preceding the Interest Payment Date (whether or not a business day) at such owner�s address shown on said bond registration records, without, except for payment of principal of the Bond, the presentation or surrender of this Bond, and all such payments shall discharge the obligation of the City to the extent of the payments so made. Payment of principal shall be made upon presentation and surrender of this Bond to the Bond Registrar when due. For the prompt and full payment of such principal and interest as they become due, the full faith and credit and taxing power of the City are irrevocably pledged. The City has designated the Bonds as “qualified tax-exempt obligations” pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.

This Bond is one of a series issued by the City in the aggregate amount of $335,000, all of like date and tenor, except as to number, maturity date, denomination and interest rate, pursuant to the authority contained in Minnesota Statutes, Chapter 475, Section 475.67, subdivisions 1 through 3 and 13, Section 469.178 and all other laws thereunto enabling, and pursuant to an authorizing resolution adopted by the governing body of the City on February 19, 2002 (the “Resolution”), for the purpose of providing money to refund in advance of maturing the outstanding principal amount of the City�s $635,000 General Obligation Taxable Tax Increment Bonds, Series 1994, dated November 1, 1994, maturing on and after February 1, 2004. The Bonds of this series are payable through February 1, 2003, solely out of the Escrow Account in the City�s 2002 General Obligation Tax Increment Refunding Bonds Debt Service Fund, and after February 1, 2003, from tax increment resulting from increases in the taxable value of real property in Tax Increment Financing District No. 7 in Redevelopment Project No. 1, both created by the Housing and Redevelopment Authority in and for the City of Mountain Iron, Minnesota (the “HRA”) and pledged to payment of the Bonds pursuant to a Tax Increment Pledge Agreement dated as of March 1, 2002, between the City and the HRA, as set forth in the Resolution to which reference is made for a full statement of rights and powers thereby conferred.

The Bonds shall not be subject to option redemption and prepayment before maturity.

Bracketed paragraphs to be used if term bonds.

[Not less than 30 days prior to the date fixed for redemption and prepayment of any Bonds, notice of redemption shall be mailed to each registered owner of a Bond to be redeemed however, that so long as the Bonds are registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), notice of redemption shall be given in accordance with the terms of the Blanket Issuer Letter of Representations executed by the City and DTC.]

[If less than all the Bonds of a maturity are called for redemption while the Bonds are registered in the name of Cede & Co., the City or the Bond Registrar designated below will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant�s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed. If less than all the Bonds of a maturity are called for redemption and the Bonds are not registered in the name of Cede & Co., the Bond Registrar will determine by lot or other manner deemed fair, the amount of each maturity to be redeemed. All prepayments shall be at a price equal to the principal amount thereof plus accrued interest. If any Bond is redeemed in part, upon surrender of the Bond being redeemed, the City shall deliver or cause to be delivered to the registered owner of such Bond, a Bond in like form in the principal amount equal to that portion of the Bond so surrendered not being redeemed.]

The Bonds of this series are issued as fully registered bonds without coupons, in the denomination of $5,000 or any integral multiple thereof. The City will, at the request of the registered owner, issue one or more new fully registered bonds in the name of the registered owner in the aggregate principal amount equal to the unpaid principal balance of this Bond, all of like tenor except as to number and principal amount. This Bond is transferable by the registered owner hereof upon surrender of this Bond for transfer at the principal corporate office of the Bond Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Bond Registrar and executed by the registered owner hereof or the owner�s attorney duly authorized in writing. Thereupon the City shall execute and the Bond Registrar shall authenticate, if required by law or the Resolution, and deliver, in exchange for this Bond, one or more new fully registered bonds in the name of the transferee of an authorized denomination, an aggregate principal amount equal to the unpaid principal amount of this Bond, of the same maturity, and bearing interest at the same rate. No service charge shall be made for any transfer or exchange hereinbefore referred to, but the City may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

IT IS CERTIFIED AND RECITED that all acts and conditions required by the laws and the Constitution of the State of Minnesota to be done and to exist precedent to and in the issuance of this Bond, in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done and do exist in form, time and manner as so required; that all taxable property within the limits of the City is subject to the levy of ad valorem taxes to the extent needed to pay the principal hereof and the interest hereon when due, without limitation as to rate or amount and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory limitation.

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until either (i) the Bond Registrar�s Authentication Certificate hereon shall have been executed by the Bond Registrar by one of its authorized representatives or (ii) the Bond has been manually executed by at least one officer of the City.

IN WITNESS WHEREOF, the City of Mountain Iron, St. Louis County, Minnesota, by its governing body, has caused this Bond to be executed in its name by the facsimile or manual signature of the Mayor and attested by the facsimile or manual signature of the Administrator.

Date of Authentication:

BOND REGISTRAR�S AUTHENTICATION CERTIFICATE

The Bond Registrar confirms that the books reflect the ownership of the Bond registered in the name of the owner named above in the principal amount and maturing on the date stated above and this Bond is one of the Bonds of the series issued pursuant to the Resolution hereinabove described.

U.S. BANK NATIONAL ASSOCIATION

St. Paul, Minnesota

Bond Registrar

By

Authorized Representative

REGISTRATION CERTIFICATE

This Bond must be registered as to both principal and interest in the name of the owner on the books to be kept by U.S. Bank National Association of St. Paul, Minnesota, as Bond Registrar. No transfer of this Bond shall be valid unless made on said books by the registered owner or the owner�s attorney thereunto duly authorized and similarly noted on the registration books. The ownership of the unpaid principal balance of this Bond and the interest accruing thereon is registered on the books of U.S. Bank National Association in the name of the registered owner last noted below.

Date 
Registered Owner 

Signature of Bond Registrar 
3/__/02 

Cede & Co.

c/o The Depository Trust Company

55 Water Street

New York, NY 10041

Federal Taxpayer I.D.

No.: 13-2555119

(Certificate as to Legal Opinion)

I certify that attached hereto is a full, true, and correct copy of the legal opinion rendered by Bond Counsel on the issuance of the $335,000 General Obligation Tax Increment Refunding Bond, Series 2002A, of the City of Mountain Iron, Minnesota, which includes the within Bond, dated as of the original date of delivery of and payment for the Bonds.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto (Name and Address of Assignee)

Social Security or Other

Identifying Number of Assignee

the within Bond and all rights thereunder and does hereby irrevocably constitute and appoint attorney to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises.

NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever.

Signature Guaranteed:

(Bank, Trust Company, member of National Securities Exchange)

Section 4. Escrow Agreement; Escrow Agent.

4.01 Designation of Escrow Agent. U.S. Bank National Association of St. Paul, Minnesota, which is a suitable financial institution within the State of Minnesota whose deposits are insured by the Federal Deposit Insurance Corporation whose combined capital and surplus is not less than $500,000, is hereby designated escrow agent (the “Escrow Agent”) with respect to the Bonds.

4.02 Escrow Agreement. On or prior to the delivery of the Bonds, the Mayor and the Administrator are hereby authorized and directed to execute on behalf of the City an escrow agreement (the “Escrow Agreement”) with the Escrow Agent in substantially the form now on file with the Administrator. The execution and delivery of the Escrow Agreement by the Mayor and the Administrator, in the form presented to the City Council with such changes, omissions, insertions and revisions as the Mayor and the Administrator deem advisable is hereby approved, and the execution by such officers shall be conclusive evidence of such approval. All essential terms and conditions of the Escrow Agreement, including payment by the City of reasonable charges for the services of the Escrow Agent, are hereby approved and adopted and made a part of this Resolution, and the City covenants that it will promptly enforce all provisions thereof in the event of default thereunder by the Escrow Agent.

Section 5. Covenants, Accounts and Tax Levies.

5.01 A. Debt Service Fund. For the convenience and proper administration of the monies to be borrowed and repaid on the Bonds and to provide adequate and specific security for the Purchaser and holders from time to time of the Bonds, there is hereby created a special fund to be designated the 2002 Tax Increment Refunding Bonds Debt Service Fund (“Debt Service Fund”) to be administered and maintained by the Treasurer as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The Debt Service Fund shall be maintained in the manner herein specified until all of the Bonds and interest thereon have been fully paid. There shall be maintained in the Debt Service Fund two separate accounts, to be designated the Escrow Account and the Debt Service Account.

B. Debt Service Account. To the Debt Service Account there is hereby pledged and irrevocably appropriated and there shall be credited: (i) any balance remitted to the City upon termination of the Escrow Agreement; (ii) any balance remaining on the respective Redemption Dates in the Debt Service Fund created in the City�s resolution authorizing the issuance and sale of the 1994 Bonds (the “Prior Resolution”) after payment of principal and interest on the Refunded Bonds on the Redemption Date; (iii) any collections of ad valorem taxes hereafter levied for the payment of the Bonds and interest thereon; (iv) all investment earnings on funds in the Debt Service Account; (v) accrued interest, if any, received from the Purchaser upon delivery of the Bonds to the extent not required to fund the Escrow Account (the “Accrued Interest”); (vi) any amount of additional interest permitted by Section 475.56 of the Act paid by the Purchaser (the “Additional Interest”), to the extent not required to fund the Escrow Account; (vii) all taxes pledged to repayment of the 1994 Bonds in the Prior Resolution collected after the Redemption Date pursuant to levies made in the Prior Resolution which levies shall not be cancelled except as permitted by Section 475.61, Subdivision 3 of the Act; (ix) the Tax Increment and (x) any and all other monies which are properly available and are appropriated by the City to the Debt Service Account including taxes levied in Section 5.02 hereof. The amount of any surplus remaining in the Debt Service Account when the Bonds and interest thereon are paid shall be used as provided in Section 475.61, Subdivision 4 of the Act.

C. Escrow Account.

(i) To the Escrow Account there is hereby pledged and irrevocably appropriated and there shall be credited: (a) the proceeds of the Bonds received from the Purchaser which are not appropriated to the Debt Service Account or are not to be used for payment of costs of issuance of the Bonds; (b) Accrued Interest; (c) Additional Interest [amounts referenced in clauses (a), (b) and (c) are herein referred to as the “Proceeds”]; (d) funds of the City in an amount sufficient to meet the requirements of the Escrow Account (the “Funds”); and (e) investment earnings on such monies referenced in clauses (a), (b), (c) and (d), for the payment of interest due on the Bonds through the Redemption Date and the principal of the Refunded Bonds on the Redemption Date.

(ii) The Escrow Account shall be maintained with the Escrow Agent pursuant to the Escrow Agreement and this Resolution. The Escrow Account shall be invested in accordance with the Act, the Escrow Agreement and this Section, in securities specified in Section 475.67, Subdivision 8 of the Act or in an investment contract or similar agreement with a bank or insurance company meeting the requirements of Minnesota Statutes, Section 118A.05, Subdivision 5, which investments will provide sufficient funds together with any cash or other funds retained in the Escrow Account for the payment of interest due on the Bonds through the Redemption Date and the principal of the Refunded Bonds on the Redemption Date.

(iii) From the Escrow Account there shall be paid: (a) all interest paid or to be paid on the Bonds to and including the Redemption Date; and (b) the principal of the Refunded Bonds due by reason of redemption on the Redemption Date.

(iv) The Escrow Account is irrevocably appropriated to the principal and interest payments described in subparagraph (iii) above. The monies in the Escrow Account shall be used solely for the purposes herein set forth and for no other purpose, except that any surplus in the Escrow Account may be remitted to the City all in accordance with the Escrow Agreement. Any monies remitted to the City upon termination of the Escrow Agreement shall be deposited in the Debt Service Account.

(v) Securities purchased for the Escrow Account shall be purchased simultaneously with the delivery of and payment for the Bonds. The Mayor and Administrator or their designee are authorized and directed to purchase such securities.

D. Construction Fund; Restriction on Yield on Investment. The construction fund created in the Prior Resolution is hereby terminated and any monies remaining therein shall be transferred to the Debt Service Fund established in such resolution.

5.02 Tax Levy. To provide monies for payment of principal and interest on the Bonds when due, there is hereby levied a direct annual irrepealable ad valorem tax upon all taxable property in the territory of the City as direct, annual ad valorem taxes to be spread upon the tax rolls and collected with and as part of other general property taxes in the territory of the City. Said levies are for the years and in the amounts set forth in Attachment B hereto, which is incorporated by reference as though fully set forth herein. The tax levies are such that if collected in full, they together with Tax Increment, estimated collections of investment earnings and, prior to the Redemption Date, amounts available from the Escrow Account, will produce at least five percent in excess of the amount needed to meet when due the principal and interest payments on the Bonds. The tax levies shall be irrepealable so long as any of the Bonds are outstanding and unpaid; provided, however, that on November 30 of each year, while any Bonds remain outstanding, the City shall reduce or cancel the above levies to the extent of funds available in the Debt Service Account to pay principal and interest due during the ensuing year, and shall direct the County Auditor to reduce the levy for such calendar year by that amount.

Section 6. Refunding; Findings; Redemption of Refunded Bonds.

6.01 Finding.

A. It is hereby found and determined, based upon information presently available from the City�s financial advisers, that as of the Redemption Date, the issuance of the Bonds will result in a reduction of debt service cost to the City on the Refunded Bonds. In accordance with Section 475.67 of the Act, as of the Redemption Date, the present value of the dollar amount of the debt service on the Bonds, computed to their stated maturity dates, after deducting any premium, is lower by at least three percent than the present value of the dollar amount of debt service on the Refunded Bonds, respectively, exclusive of any premium, computed to their stated maturity dates. (Present value of the dollar amount of debt service means the dollar amount of debt service to be paid, discounted to the nominal date of the Bonds at a rate equal to the yield on the Bonds.)

B. It is hereby found and determined that the Proceeds and Funds available and appropriated to the Escrow Account will be sufficient, together with the permitted earnings on the investment of the Escrow Account, to pay (i) all interest paid or to be paid on the Bonds to and including the Redemption Date; and (ii) the principal of the Refunded Bonds due by reason of redemption on the Redemption Date.

C. It is hereby determined that upon the receipt of proceeds of the Bonds as described in Section 5.01 for payment of the Refunded Bonds that an irrevocable appropriation to the Prior Debt Service Fund shall have been made within the meaning of Section 475.61, Subdivision 3 of the Act and the Administrator is hereby authorized and directed to certify such fact to and request the County Auditor to cancel any and all tax levies made by the Prior Resolution, except for the levy for taxes payable in 2002, if any, which shall be deposited in the Debt Service Fund.

6.02 Redemption.

A. The Refunded Bonds shall be redeemed and prepaid in accordance with: (i) their terms; and (ii) the terms and conditions set forth in the form of Notice of Call for Redemption attached hereto as Attachment A, all of which terms and conditions are hereby approved and incorporated herein by reference.

B. The Administrator or the designee thereof is hereby authorized and directed to send written Notice of Call for Redemption to the paying agent or bond registrar, as the case may be, bond insurance companies (if any), for the Refunded Bonds in accordance with their terms.

Section 7. Defeasance. When all Bonds and all interest thereon have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this Resolution to the holders of the Bonds shall cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds shall remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Bond Registrar designated in Section 2.06 hereof a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also at any time discharge and cause defeasance of the Bonds in their entirety by complying with the provisions of Section 475.67 of the Act, except that the funds deposited in escrow in accordance with said provisions may (to the extent permitted by law) but need not be, in whole or in part, proceeds of bonds as therein provided, without the consent of any bondholders.

Section 8. Certificate of Proceedings.

8.01 Filing with County Auditor. The Administrator is directed to file with the County Auditor a certified copy of this Resolution and such other information as the County Auditor may require, and to obtain from the County Auditor certificates stating that the Bonds have been duly entered on his or her register.

8.02 Additional Proceedings. The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to bond counsel certified copies of all proceedings and records of the City relating to the authorization and issuance of the Bonds and other affidavits and certificates as may reasonably be requested to show the facts relating to the legality and marketability of the Bonds as such facts appear from the official books and records of the officers� custody or otherwise known to them. All of such certified copies, certificates and affidavits, including any heretofore furnished, constitute representations of the City as to the correctness of facts recited therein and the actions stated therein to have been taken.

8.03 Investment Letter. No official statement or prospectus has been prepared or circulated by the City in connection with the sale of the Bonds, and the Purchaser has made its own investigation concerning the City as set forth in an investment letter dated as of the date of this Resolution.

8.04 Absent or Disabled Officers. In the event of the absence or disability of the Mayor or Administrator, such officers or members of the City Council as in the opinion of the City�s attorney, may act in their behalf, shall without further act or authorization, execute and deliver the Certificates, and do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers.

Section 9. Tax Covenants.

9.01 General. The City covenants and agrees with the holders of the Bonds that the City will (i) take all action on its part necessary to cause the interest on the Bonds to be exempt from federal income taxes including, without limitation, restricting, to the extent necessary, the yield on investments made with the proceeds of the Bonds and investment earnings thereon, making required payments to the federal government, if any, and maintaining books and records in a specified manner, where appropriate, and (ii) refrain from taking any action which would cause interest on the Bonds to be subject to federal income taxes, including, without limitation, refraining from spending the proceeds of the Bonds and investment earnings thereon on certain specified purposes.

9.02 No Artifice or Device. 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 (i) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued, and (ii) in addition to the above, in an amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Debt Service Fund (or any other City account which will be used to pay principal and interest to become due on the Bonds) in excess of amounts which under the applicable federal arbitrage regulations may be invested without regard as to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by the arbitrage regulations on such investments after taking into account any applicable temporary periods of minor portion made available under the federal arbitrage regulations. In addition, the proceeds of the Bonds and money in the Debt Service 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 Internal Revenue Code of 1986, as amended (the “Code”).

9.03 Arbitrage Rebate.

A. The City Council covenants and certifies to and for the benefit of the owners of the Bonds that no use will be made of the proceeds of the Bonds, which will cause the Bonds to be arbitrage bonds within the meaning of Section 148(a) of the Code and the Treasury Regulations promulgated thereunder. Pursuant to such covenant, the City Council hereby agrees to comply throughout the term of the issue of the Bonds with the requirements of Section 148 of the Code and any Treasury Regulations promulgated thereunder; to this end, the City Council shall:

(1) maintain records identifying all “gross proceeds” (as defined in Section 148(f)(6)(B) of the Code) attributable to the Bonds, the yield at which such gross proceeds are invested, any arbitrage profit derived therefrom (earnings in excess of the yield on the Bonds) and any earnings derived from the investment of such arbitrage profit;

(2) make, or cause to be made as of the end of each Bond Year, the annual determinations of the amount, if any, of excess arbitrage required to be paid to the United States by the City (hereinafter, the “Rebate Amount”);

(3) pay, or cause to be paid, to the United States at least once every five Bond Years the amount, if any, which is required to be paid to the United States, including the last installment which shall be made no later than 60 days after the day on which the Bonds are paid in full;

(4) not invest, or permit to be invested, “gross proceeds” in any acquired non-purpose obligations so as to deflect arbitrage otherwise payable to the United States as a “prohibited payment” to a third party;

(5) retain all records of the annual determinations of the foregoing amounts until six years after the Bonds have been fully paid; and

(6) in order to comply with the foregoing paragraph, the City Council shall determine the Rebate Amount within 30 days after the close of each Bond Year and upon payment in full of the Bonds; upon each such determination, the City Council shall deposit in the Rebate Fund the Rebate Amount so determined; the City Council shall separately account for the earnings from the investment of the Rebate Amount and such earnings shall become part of the Rebate Amount.

B. For purposes of this Section, “Bond Year” shall mean the 12-month period beginning on the date of issuance of the Bonds or such other 12-month period designated by the Board which is permitted by the Code or any Treasury Regulation promulgated thereunder.

9.04 Bank Qualification. In order to qualify the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code, the City hereby makes the following factual statements and representations:

A. the Bonds are not “private activity bonds” as defined in Section 141 of the Code;

B. the City hereby designates the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code;

C. 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 by issued by the City (and all entities whose obligations will be aggregated with those of the City) during this calendar year in which the Bonds were issued will not exceed $10,000,000; and

D. not more than $10,000,000 of obligations issued by the City during the calendar year in which the Bonds were issued have been designated for purposes of Section 265(b)(3) of the Code.

DULY ADOPTED BY THE CITY COUNCIL THIS 19TH DAY OF FEBRUARY, 2002.

ATTACHMENT A

NOTICE OF CALL FOR REDEMPTION $635,000 GENERAL OBLIGATION TAXABLE TAX INCREMENT BONDS, SERIES 1994 DATED NOVEMBER 1, 1994 MOUNTAIN IRON, MINNESOTA

NOTICE IS HEREBY GIVEN that, by order of the City of Mountain Iron, St. Louis County, Minnesota, there have been called for redemption and prepayment on February 1, 2003 all outstanding obligations of the Issuer designated as $635,000 General Obligation Taxable Tax Increment Bonds, Series 1994, dated November 1, 1994, having stated maturity dates of February 1 in the years 2004 through 2007, both inclusive, totaling $320,000 in outstanding principal amount, and with the following CUSIP numbers:

Maturity Amount CUSIP 
2004 $70,000 624131-5 
2005 75,000 624131-0 
2006 85,000 624131-8 
2007 90,000 624131-6 

The Bonds are being called at a price of par plus accrued interest to February 1, 2003 (the “Redemption Date”); 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 office of U.S. Bank National Association (formerly American Bank National Association), 180 East Fifth Street, Suite 200, St. Paul, Minnesota 55101, on or before the Redemption Date. It is recommended that you mail your bond registered or certified mail to guard against loss.

Important Notice: In compliance with the Interest and Dividend Compliance Act of 1983 and Broker Reporting Requirements, the redeeming institutions are required to withhold 31% of the principal amount of your holdings redeemed unless they are provided with your social security number or federal employer identification number, properly certified. This requirement is fulfilled through the submitting of a W-9 Form, which may be obtained at a bank or other financial institution.

Neither the City nor the Bond Registrar/Paying Agent shall be responsible for the selection of or use of the CUSIP number, and no representation is made as to its correctness indicated in the Notice of Call for Redemption. CUSIP numbers are included solely for the convenience of the Holders.

Dated: February 19, 2002.

ATTACHMENT B

$335,000 GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 2002A CITY OF MOUNTAIN IRON, MINNESOTA

TAX LEVY SCHEDULE

Levy Year Collection Year Tax Levy 
2002 2003 
2003 2004 
2004 2005 
2005 2006 

STATE OF MINNESOTA )

) ss.

COUNTY OF ST. LOUIS )

I, the undersigned, the duly qualified and acting Administrator of the City of Mountain Iron, Minnesota (the “City”), do hereby certify that I am the official custodian of the records of the City, and that I have compared the attached copy with the original records of the City, and that it is a true and correct transcript taken from the records of a meeting of the City Council, held at the City of Mountain Iron in said State, on February 19, 2002.

IN WITNESS WHEREOF I have hereunto set my hand as Administrator on February 19, 2002.

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