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payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Obligations purchased or tendered, through its Participant, to Agent, and shall effect delivery of such Obligations by causing the Direct Participant to transfer the Participant's interest in the Obligations, on DTC's records, to Agent. The requirement for physical delivery of Obligations in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Obligations are transferred by Direct Participants on DTC's records and followed by a book - entry credit of tendered Obligations to Trustee's DTC account. DTC may discontinue providing its services as securities depository with respect to the Obligations at any time by giving reasonable notice to the Issuer or its agent. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book - entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Chapters 475, 429 and 444. Proceeds of the Bonds will be used to refund in advance of maturity the February 1, 2011 through February 1, 2020 maturities (the "Refunded Maturities ") of the City's General Obligation Improvement and Utility Revenue Bonds, Series 2004A, dated November 15, 2004 (the "Series 2004A Bonds "). The refunding is being conducted to achieve debt service savings. The composition of the Bonds is as follows: Improvement Revenue Portion Portion Total Sources of Funds: Principal Amount $475,000 $540,000 $1,015,000 Accrued Interest — Series 2004A Bonds 177 203 380 Total Sources of Funds $475,177 $540,203 $1,015,380 Uses of Funds: Deposit to Current Refunding Fund $457,138 $523,169 $ 980,307 Deposit to Debt Service Fund Accrued Interest — Series 2004A Bonds 177 203 380 Costs of Issuance 14,181 12,646 26,827 Allowance for Discount Bidding 3,681 4,185 7,866 Total Uses of Funds $475,177 $540,203 $1,015,380 The Bonds will constitute a "current" refunding since the Refunded Maturities will be called within 90 days of settlement of the Bonds. The Refunded Maturities will be called and prepaid on July 1, 2010 at a price of par plus accrued interest.