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97-181
a ~ ~ - ~ Resolution 97-181 CERTIFICATION OF MINUTES RELATING TO $1,400,000 LIQUOR REVENUE BONDS, SERIES 1997 Issuer: City of Lakeville, Minnesota Governing Body: City Council Kind, date, time and place of meeting: A regular meeting held on August 18, 1997, at 7:00 o'clock P.M., at the City Hall, in Lakeville, Minnesota Members present: Holberg, Johnson, Mulvihill, Sindt and P7ayor Zaun Members absent:'.Ione Documents Attached: Minutes of said meeting (pages): • RESOLUTION RELATING TO $1,400,000 LIQUOR REVENUE BONDS, SERIES 1997; AUTHORIZING THE ISSUANCE, AWARDING THE SALE, FIXING THE FORM AND DETAILS, PROVIDING FOR THE EXECUTION AND DELIVERY THEREOF AND THE SECURITY THEREFOR I, the undersigned, being the duly qualified and acting recording officer of the public corporation issuing the bonds referred to in the title of this certificate, certify that the documents attached hereto, as described above, have been carefully compared with the original records of said corporation in my legal custody, from which they have been transcribed; that said. documents are a correct and complete transcript of the minutes of a meeting of the governing body of said corporation, and correct and complete copies of all resolutions and other actions taken and of all documents approved by the governing body at said meeting, so far as they relate to said bonds; and that said meeting was duly held by the governing body at the time and place and was attended throughout by the members indicated above, pursuant to call and notice of such meeting given as required by law. WITNESS my hand officially as such recording officer on this ~ ~ay of August, 1997. City Cler . Y It was reported that s sealed proposals had been received prior • to the time stated in the Terms of Pro osal. The ro osals Navin been o n p p p g pe ed and tabulated, as provided in the Terms of Proposal, were all found to conform to the Terms of Proposal and the purchase price, interest rates and net interest cost under the terms of each proposal were found to be as follows: (See attached) • • 85 E. SEVENTH PLACE, SUITE ]00 SAINT PAUL, MN 5.5101-2143 612-223-3000 FAX:612-223-3002. • SPRINGSTED PublicFuumce Advisors $1,400,000 CITY OF LAKEVILLE, MINNESOTA LIQUOR REVENUE BONDS, SERIES 1997 AWARD: BERNARDI SECURITIES,: INCORPORATED SALE: August 18,1997 Not Rated Interest Netlnteresf True Interest ~idder Rates. Price Cost Rate BERNARDI SECURITIES, 4.20% 1999 -$1,379,070.00 $559,305.42 5..1734% INCORPORATED 4.30% 2000 4.40% 2001 4.50°!° 2002.. .4.60% 2003 .4.70% 2004 4.80% 2005 4.90% 2006 5.00% 2007 5.10% 2008 5.15% 2009 5.20% 2010 CRON'IN & COMPANY, INCORPORATED 4.50% 1999 $1,380,484.00 $596,196.83 5.5129% PIPER JAFFRAYINC. 4.70% ..2000 4.80% 2001 4.90% 2002 5.00% 2003.._ 5.10% 2004 5.20% 2005 5.25% 2006 5,30% 2007 5.40% 2008 • 5.50% 2009 5.55% 2010 (Continued) SAINT PAUL, MN ~ MINNEAPOLIS, MN BROOKFIELD, WI OVERLAND PARK, KS WASHINGTON, DC IOWA CITY, [A Interest Net Interest True Interest Bidder Rates Price Cost Rate DOUGHERTY DAWKINS LLC 4.60% 1999 $1,380,400.00 $603,486.67 5.5858 4.80% 2000 5.00% 2001 5.10% 2002 5.20% `2003 5.25% 2004 5.30% 2005 5.35% 2006 5.40°10 2007 5.45% 2008 5.50% 2009-2010 JOHN G. KINNARD & COMPANY 4.60% 1999 $1,379,000.00 $619,313.54 5.7249% INCORPORATED 4.75%' 2000 R.J; STEICHEN & CO. 4.90% 2001 5..00% 2002 5.10% 2003.. 5.20% 2004 5.30% 2005 5.40°Io 2006 5.50% 2007 5.60% 200$ 5.75% 2D09 5.90% 2010 MILLER& SCHROEDER 1=1NANCIAL, INC. 5.30% 1999-2004 $1,379,000.00 $628,787.50 5.8228 JURAN & MOODY, A DIVISION OF 5.40% 2005 MILLER, JOHNSON & I<UEHN, INC. 5.50% 2006 5.65% ' 2007 5.75% 2008=2010. These Bonds are being reoffered at par. BBI:' 5.42%_ Average Maturity: 7.77 Years Councilmember sindt introduced the following resolution and moved • its adoption, which motion was seconded by Councilmember Mulvihill RESOLUTION RELATING TO $1,400,000 LIQUOR REVENUE BONDS, SERIES 1997; AUTHORIZING THE ISSUANCE; AWARDING THE SALE, FIXING THE FORM AND DETAILS, PROVIDING FOR THE EXECUTION AND DELIVERY THEREOF AND THE SECURITY THEREFOR BE IT RESOLVED by the City Council of the City of Lakeville, (the City), as follows: Section 1. Authorization and Sale. 1.01. Municipal Liquor Store. The City owns and operates one or more municipal liquor stores for the on-sale and off-sale of intoxicating liquor and other merchandise in accordance with the provisions of Minnesota Statutes, Chapter 340A (collectively the Liquor Enterprise). 1.02. Project. It is in the best interest of the City, its residents and customers of the Liquor Enterprise, that the City construct, furnish and equip a new liquor store at the intersection of County Road 46 and Interstate 35 (the Project). The Project is presently estimated to cost approximately $1,400,000. i 1.03. Authorization. The City Council, by resolution duly adopted on July 21, 1997, authorized the issuance and public sale on the date hereof of $1,400,000 Liquor Revenue Bonds, Series 1997 (the Bonds). It is in the best interest of the City, its residents and the customers of the Liquor Enterprise for the City to issue the Bonds upon the terms and conditions hereinafter set forth and to make the Bonds payable solely from the Net Revenues (as hereinafter defined) of the Liquor Enterprise (except to the extent paid from the proceeds of the Bonds). 1.04. Performance of Requirements. The revenues reasonably anticipated to be received from the operation of the Liquor Enterprise as improved by the Project during the period for which the Bonds will be outstanding will be more than sufficient to pay all costs of the operation and maintenance of the Liquor Enterprise and to provide Net Revenues (as hereinafter defined) adequate to meet all payments of principal and interest on the Bonds as they become due. There are no outstanding obligations payable from or constituting a lien or charge upon such Net Revenues and it is in the best interests of the City that the Bonds be made payable solely from the Net Revenues (except to the extent paid from the proceeds of the Bonds). All acts, conditions and things which are required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen and to be performed precedent to and in the valid issuance of the Bonds having been done, existing, having happened and having been performed, it is now necessary to • establish the form and terms of the Bonds, to provide security therefor and to issue the Bonds forthwith. 1.05. Sale and Award of Bonds. Pursuant to the Terms of Proposal and . the Official Statement prepared on behalf of the City by Springsted Incorporated, sealed proposals for the purchase of the Bonds were received at or before the time specified for receipt of proposals. The proposals have been opened, publicly read and considered and the purchase price, interest rates and net interest cost under the terms of each proposal have been determined. The most favorable proposal received is that Of P,ernardi Securities, Incorporated in Chicago Illinois and associates (the Purchaser), to purchase the Bonds at a price of $1 ~ 3 ~ 9 , o ~ o . o o plus accrued interest on all Bonds to the day of delivery and payment, on the further terms and .conditions hereinafter .set forth. The sale of the Bonds is hereby awarded to the Purchaser and the Mayor and City Clerk are hereby authorized and directed to execute a contract on behalf of the City for the sale of the Bonds in accordance with the terms of the proposal. The good faith deposit of the Purchaser shall be retained and deposited by the City until the Bonds have been delivered, and shall be deducted from the purchase price paid at settlement. 1.06. Supplemental Resolution for Term Bonds. Should the Purchaser determine that any Bonds be issued in the form of term bonds, this Council shall, by a separate and supplemental resolution, set forth further terms and provisions as necessary to provide for the issuance of the term bonds. Should the Purchaser determine that the Bonds be issued only in the form of serial bonds, no further resolution of the Council shall be required. • Section 2. Bond Terms Execution and Deliver . 2.01. Maturities. Interest Rates Denominations Payment and Dating of Bonds. The Bonds shall be issuable in the denomination of $5,000 each or any integral multiple thereof, shall bear a date of original issue of September 1, 1997, shall mature on February 1 in the years and amounts set forth below, and Bonds maturing in such years and amounts shall bear interest, computed on the basis of a 360-day year consisting of twelve 30-day months, from September 1, 1997 until paid or duly called for redemption at the rates per annum shown opposite such years and amounts as follows: Year Amount Rate Year Amount Rate 1999 $ 35,000 4.2 0~ 2005 $120,000 4 . s o 2000 95,000 4 • ~0 2006 130,000 4.90 2003 10©,000 4.40 2007 135,000 5.00 2002 105,000 4.so 2008 145,000 s.so 2003 110,000 4.bo 2009 150,000 5.15 2004 115,000 4.~0 2010 160,000 5.20 • -2- The Bonds shall be issuable only in fully registered form and may be issued either in book-entry only form or in physical form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, shall be payable by check. or draft issued by the Registrar described herein; provided if the-Bonds are registered in the name of a securities depository, or a nominee thereof, in accordance with Section 2.06 hereof, principal and interest shall be payable in accordance with the operational arrangements of the securities depository. 2.02. Interest Payment Dates. Interest on the Bonds shall be payable on February 1 and August 1 in each year, commencing February 1, 1998, to the owner of record thereof as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. 2.03. Redemption. Bonds maturing in 2008 and later years shall be subject to redemption and prepayment at the option of the City, in whole or in part, in such order of maturity dates as the City may select and within a maturity by lot as selected by the Registrar (or, if applicable, by the bond depository in accordance with its customary procedures) in multiples of $5,000, on February 1, 2007, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. The City Clerk shall cause notice of the call for redemption thereof to be published as required by law, and at least thirty days prior to the designated redemption date, shall cause notice of call for redemption to be mailed, by first class mail, to the registered holders of any Bonds to be redeemed at • their addresses as they appear on the bond register described in Section 2.05 hereof, but no defect in or failure to give such mailed notice of redemption shall affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge, representing the remaining principal amount outstanding. 2.04. Appointment of Initial Registrar. The City hereby appoints First Trust National Association in st. Paul ,Minnesota, as the initial bond registrar, transfer agent and paying agent (the Registrar). Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, such corporation shall be authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove any Registrar upon thirty (30) days notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar shall deliver all cash • -3- and Bonds in its possession to the successor Registrar and shall deliver the Bond Register to the successor Registrar. 2.05. Registration. The effect of registration and the rights and duties of the City and the Registrar with respect thereto shall be as follows: (a) Re ister. The Registrar shall keep at its principal corporate trust office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender to the Registrar for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date. • (c) Exchange of Bonds. Whenever any Bond is surrendered by the registered owner for exchange, the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity, as requested by the registered owner or the owner's attorney duly authorized in writing. (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is 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 Bond is at any time registered in the bond register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments • -4- 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 Bond to the extent of the sum or sums so paid. (g) Taxes. Fees and Charges. For every transfer or exchange of Bonds (except for an exchange upon a partial redemption of a Bond), the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange. (h) Mutilated. Lost. Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be lost, stolen or destroyed, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such 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 Bond lost, stolen or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Bond was lost, stolen or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the City and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be caneeled by it and evidence of such cancellation shall be given to the City. If the mutilated, lost, stolen or destroyed Bond has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a ne~v Bond prior to payment. (i) Authenticating Agent. The Registrar is hereby designated authenticating agent for the Bonds, within the meaning of Minnesota Statutes, Section 475.55, Subdivision 1. 2.06. Securities Depository. The Purchaser may, on or before the date of issue of the .Bonds, direct that the Bonds be issued in book-entry only form and if issued in such form, the following provisions shall apply: (a) For purposes of this section the following terms shall have the following meanings: "Beneficial Owner" shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person's subrogee. "Cede & Co." shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds. -5- • "DTC" shall mean The Depository Trust Company of New York, New York. "Participant" shall mean any broker-dealer, bank or other financial institution for which DTC holds Bonds as securities depository. "Representation Letter" shall mean the Representation Letter pursuant to which the City agrees to comply with DTC's Operational Arrangements. (b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. T'he Registrar and the City may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution, registering the transfer of Bonds, and. for all other purposes whatsoever; and neither the Registrar nor the City shall be affected by any notice to the contrary. Neither the Registrar nor the City shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or .any • other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with .respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as .any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with DTC's Operational Arrangements, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the City to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof. • -b- (c) In the event the City determines that it is in the best interest of the • Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the City may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. In such event, the Bonds will be transferable in accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (e) hereof. (d) The execution and delivery of the Representation Letter to DTC by the Mayor or City Clerk is hereby authorized and directed. {e) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. 2.07. Preparation and Delivery. The Bonds shall be prepared under the direction of the City Clerk and shall be executed on behalf of the City by the signatures of the Mayor and the City Clerk, provided that the signatures may be printed, engraved or lithographed facsimiles of the originals. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if any officer had remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution. When the Bonds have been prepared, executed and authenticated, the City Clerk shall deliver them to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore executed, and the Purchaser shall not be obligated to see to the application of the purchase price. • -7- 2.08. Bond Form. The Bonds shall be prepared in substantially the • following form: UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF DAKOTA CITY OF LAKEVILLE LIQUOR REVENUE BOND, SERIES 1997 Interest Rate Maturity Date Date of Original Issue CUSIP No. September 1, 1997 REGISTERED OWNER PRINCIPAL AMOUNT THE CITY OF LAKEVILLE, Dakota County, Minnesota (the City), acknowledges itself to be indebted and, for value received, hereby promises to pay to the registered owner named above, or registered assigns, solely from the Revenue • Bond Account or Reserve Account in its Liquor Enterprise Fund, as a first lien and charge upon the net revenues from time to time received from the operation of its municipal liquor enterprise, the principal amount specified above, on the maturity date specified above, with interest thereon from the date of original issue specified above, or the most recent interest payment date to which interest has been paid or duly provided for, at the annual rate specified above, payable on February 1 and August 1 in each year, commencing February 1, 1998, to the person in whose name this Bond is registered at the close of business on the 15th day (whether or not a business day) of the immediately preceding month, all subject to the provisions referred to herein with respect to redemption of this Bond before maturity. Interest hereon shall be computed on the basis of a 360-day year composed of twelve 30-day months. The interest hereon and, upon presentation and surrender hereof at the office of , in as Registrar, Transfer Agent and Paying Agent (the Registrar), or its successor designated under the Resolution described herein, the principal hereof, are payable in lawful money of the United States of America by check or draft of the Registrar. This Bond is one of an issue in the total principal amount of $1,400,000, which have been issued for the purpose of providing money to construct a new municipal liquor store. Except to the extent paid from the proceeds of the the Bonds, the Bonds and the interest thereon are payable solely and exclusively from the net • -8- revenues of the municipal liquor enterprise of the City pledged to the payment • thereof and 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 Bonds. Additional revenue obligations may be issued on a parity of lien upon the net revenues of the municipal liquor enterprise with the Bonds of this issue as provided in the authorizing resolution adopted by the City Council on August 18, 1997 (the Resolution). The Bonds are issuable only in fully registered form, in denominations of $5,000 or any multiple thereof, of single maturities. Bonds maturing in 2008 and later years are each subject to redemption and prepayment at the option of the City, in whole or in part, in such order of maturity dates as the City may select and, within a maturity, by lot as selected by the Registrar in multiples of $5,000, on February 1, 2007, and on any date thereafter, at a price equal to the principal amount thereof plus interest accrued to the date of redemption. The City will cause notice of the call for redemption to be published as required by law and, at least thirty days prior to the designated redemption date, will cause notice of the call thereof to be mailed by first class mail to the registered owner of any Bond to be redeemed at the owner's address as it appears on the bond register maintained by the Registrar, but no defect in or failure to give such mailed notice of redemption shall .affect the validity of proceedings for the redemption of any Bond not affected by such defect or failure. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the • redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon partial. redemption of any Bond, a new Bond or Bonds will be delivered to the registered owner without charge, representing the remaining principal amount outstanding. The Bonds are designated by the City as "qualified tax-exempt obligations" pursuant to Section 265(b) of the Internal Revenue Code of 1986, as amended. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Registrar, by the registered owner hereof in person or by the owner's attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or the owner's attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. • -9- The City and the Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. [Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede & Co., as nominee of The .Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the City.] IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be performed in order to make this 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; that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional or statutory limitation of indebtedness; that the City has established and will maintain in its Liquor Enterprise Fund a Revenue Bond Account and Reserve Account and has irrevocably appropriated and pledged • thereto, out of the Net Revenues, as defined in the Resolution, to be received from its ownership and operation of the municipal liquor enterprise, including any additions thereto and improvements thereof, periodic payments to be made at times and in amounts sufficient to pay the principal and interest on all bonds payable therefrom, .including the Bonds, as such payments become due, and to establish and maintain the required reserve balance therein, and will use the moneys in the Revenue Bond Account and Reserve Account solely for said purposes; that the City and its officers and employees will establish and maintain operating policies governing purchase and sale of merchandise and will do all other things necessary and feasible to assure that the gross receipts of the municipal liquor enterprise of the City will at all times be adequate to pay all costs of operation and maintenance thereof and to produce Net Revenues in the amounts so appropriated and pledged; that in and by the Resolution other covenants, agreements and stipulations are .prescribed for the security and enforcement of the Bonds, each and all of which will be faithfully and promptly performed by the City and its officers and agents; and that the opinion printed. hereon is a full, true and correct copy of the legal opinion given by Bond Counsel with reference to the Bonds, dated as of the date of original delivery of the Bonds. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit. under the Resolution until the Certificate of • -10- Authentication hereon shall have been executed by the Registrar by manual • signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Lakeville, Dakota County, Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the facsimile signatures of the Mayor and City Clerk and has caused this Bond to be dated as of the date set forth below. CITY OF LAKEVILLE, MINNESOTA. facsimile signature -City Clerks (facsimile signature - Mayor CERTIFICATE OF AUTHENTICATION Date of Authentication: This is one of the Bonds delivered pursuant to the Resolution mentioned within. as Registrar By Authorized Representative The following abbreviations, when used in the inscription on the face of this .Bond, shall be construed as though they were written out in full according to the applicable laws or regulations: TEN COM as tenants in common UTMA as Custodian for (Gust) (Minor) under Uniform Transfers to Minors Act TEN ENT as tenants by the entireties (State) 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 Bond and all rights thereunder, and does hereby irrevocably constitute and appoint attorney to transfer the. said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. • -11- Dated: NOTICE: The assignor's signature to this assignment must correspond with the name as it appears upon. the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever. Signature Guaranteed: Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in STAMP or such other "signature guaranty program" as may be determined by the Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. [end of form of bond] Section 3. Funds and Accounts and Additional Bonds. For the proper administration of the moneys so to be borrowed and to make adequate and specific security to the Purchaser and to the owners of the Bonds from time to time, and the owners of any other bonds issued and made payable on a parity with the Bonds, the City shall, at least until the Bonds and interest thereon are fully paid, establish and • maintain its Liquor Enterprise Fund and maintain financial records of the receipts and disbursements relating to the Liquor Enterprise Fund in accordance with this resolution. In such records there shall be established and maintained subdivisions of the Liquor Enterprise Fund for the purposes and in the amounts as follows: 3.01. Capital Expenditures Account. There is hereby established within the Liquor Enterprise Fund a Capital Expenditures Account into which shall be paid all of the proceeds of the Bonds with the exception of accrued interest paid by the Purchaser at the time of delivery of the Bonds and any amount deposited in the Reserve Account. There shall be charged to and paid from the Capital Expenditures Account all, but only, the items of capital expenditures to be made for the Project as described in Section 1.02, provided that upon completion of the Project any moneys remaining in the Capital Expenditures Account shall be transferred to the Revenue Bond Account described below. 3.02. Operation and Maintenance Account. There is hereby established within the Liquor Enterprise Fund an Operation and Maintenance Account to which there shall be charged and from which there shall be paid all, but only, those items of disbursement which, by generally accepted accounting principles, constitute normal, reasonable and current costs of operation and maintenance of the Liquor Enterprise, including, compensation of Liquor Enterprise employees, insurance, -12- utility services and costs of maintenance of a reasonable stock of merchandise, but excluding allowance for depreciation, capital improvements, extraordinary repairs and debt service. All moneys received by the City from its ownership and operation of the Liquor Enterprise, including any additions thereto and improvements thereof and including all receipts from the sale of intoxicating liquor and from the sale of other merchandise and services on Liquor Enterprise premises, and from the rental of any portion of the Liquor Enterprise, and from the sale of equipment or furnishings purchased for the Liquor Enterprise and not needed to be retained, are herein called "gross revenues" and shall be paid into the Liquor Enterprise Fund and apportioned monthly to the several accounts therein. Upon each such apportionment there shall be credited to the Operation and Maintenance Account such portion of the gross revenues as shall be needed, together with the balance then on hand therein, to pay all claims then due and to become due within the succeeding month in respect of expenses of operation and maintenance, including a reasonable reserve for emergencies. All gross revenues from time to time received in excess of the amounts hereby appropriated to the Operation and Maintenance Account are herein termed the "Net Revenues." 3.03. Revenue Bond Account. There is hereby established within the Liquor Enterprise Fund a Revenue Bond Account to which there shall be credited all accrued interest received from the Purchaser. To the Revenue. Bond Account there shall also be credited monthly out of the Net Revenues an amount equal to at least one-sixth of the interest to become due on the bonds payable therefrom, including the .Bonds, on the next succeeding interest payment date plus one-twelfth of the principal to become due on the bond payable therefrom, including the Bonds, on the next two succeeding interest payment dates. Moneys in the Revenue Bond Account shall be used only for the payment of such principal and interest when due. So long as the Reserve Account created pursuant to Section 3.04 hereof is fully funded, all Net Revenues remaining after satisfaction of the above requirements may be used for any lawful corporate purpose selected by the City Council. 3.04. Reserve Account. There is hereby established within the Liquor Enterprise Fund a Reserve Account. An initial deposit of .$140,000 from the proceeds of the Bonds shall be made to the Reserve Account upon issuance of the Bonds, which deposit equals the lesser of (i) 10% of the principal amount of the Bonds, (ii) maximum annual debt service due in any future fiscal year on the Bonds or (iii) 125% of average annual debt service on the Bonds. The money in the Reserve Account shall be used to pay principal and interest on the Bonds payable from the Revenue Bond Account whenever the amount on hand in the Revenue Bond Account is insufficient, but if used for such purpose it shall be restored to the required balance as soon as possible out of available Net Revenues. Should additional bonds payable from the Revenue Bond Account be issued pursuant to Section 3.06 hereof, the City shall increase the balance in the Reserve Account to an amount equal to the lesser of (i) 10% of the principal amount of the outstanding -13- bonds (including the additional bonds) payable from the Revenue Bond Account, • (ii) maximum annual debt service due in any future fiscal year on the bonds (including the additional bonds) payable from the Revenue Bond Account or (iii) 125% of average annual debt service on the bonds (including the additional bonds) payable from the Revenue Bond Account. Such increase may be funded from the proceeds of the additional bonds, or from the periodic deposit of available Net Revenues, or from a combination of said sources. 3.05. Issuance of Refunding Bonds. The City reserves the right and privilege of issuing and selling refunding certificates or bonds if and to the extent needed to refund maturing bonds payable from the Revenue Bond Account, if moneys in the Liquor Enterprise Fund are at any time insufficient for the payment in full of the principal and interest due thereon, which refunding obligations shall be payable from the Revenue Bond Account on a parity with the outstanding bonds payable therefrom, but shall not mature earlier than the final maturity of all bonds then outstanding. Nothing herein shall require the holder of any bond to accept a refunding bond in exchange therefor. 3.06. Additional Bonds. The City hereby agrees that it will not issue any additional obligations payable from the Revenue Bond Account on a parity with the Bonds unless it has first retired, or placed in escrow within a depository bank, moneys or securities sufficient to discharge the outstanding Bonds pursuant to Section 6 hereof prior to the issuance of such additional obligations or unless the • Net Revenues of the Liquor Enterprise in the last complete fiscal year immediately preceding the issuance of such additional obligations shall have been at least equal to 125°i° of the maximum amount of principal and interest to come due in any future fiscal year, during the remaining term of the outstanding Bonds, on all of the outstanding Bonds and an the additional obligations then proposed to be issued. Notwithstanding the above provisions, nothing in this resolution shall be construed to preclude the City from issuing additional bonds, whether constituting a general obligation of the City or payable solely from liquor enterprise revenues, for construction, reconstruction or improvement of the Liquor Enterprise, provided such additional bonds are expressly made a lien and charge on the Net Revenues of the Liquor Enterprise subordinate and junior to that of the bonds payable from the Revenue Bond Account. Section 4. Covenants. The City hereby certifies and represents to and covenants and agrees with the Purchaser and holders from time to time of each bond payable from the Revenue Bond Account as follows: 4.01. Ownership and Operation. As long as any bonds payable from the Revenue Bond Account are outstanding, the City will continue its ownership and operation of the Liquor Enterprise as arevenue-producing utility and convenience, in the manner authorized and subject to the restrictions imposed by the statutes and • -14- laws of the State of Minnesota. The City will maintain the buildings, furnishings, • equipment and merchandise constituting the Liquor Enterprise in good condition, and free from all liens, provided that purchase money liens may be created on merchandise acquired for resale, or such merchandise may be acquired subject to liens existing at the time of acquisition. The City will not authorize the establishment or operation of any other facility within the City for the off-sale of intoxicating liquors at retail, except as may be required by law. The City reserves the right to issue .licenses for the establishment and operation of one or more facilities within the City for the on-sale of intoxicating liquors at retail. 4.02. Disposition of Property. If any properties constituting capital assets of the Liquor Enterprise shall be sold and disposed of, it shall be only at their fair market value, and the proceeds of such sale or disposition shall be used either to procure other equivalent capital assets or deposited in the Revenue Bond Account and applied to pay principal of and interest on bonds payable therefrom. No such sale or sales shall be made at times or prices such as the imperil the prompt and full payment of bonds payable from the Revenue Bond Account and the interest thereon. 4.03. Insurance. The City will procure and keep in force insurance on all buildings constituting the Liquor. Enterprise and the equipment and furnishings thereof and all stocks of merchandise, protecting against loss or damage by fire, tornado, windstorm, theft and all other causes customarily insured against for like properties, in amounts sufficient to cover total loss thereof, and will procure and keep in force suitable fidelity bonds covering all employees handling moneys of the Liquor Enterprise. In the event of loss covered by said insurance policies or bonds, the proceeds shall be used to repair or restore the damage compensated thereby or to retire bonds payable from the Revenue Bond Account. The City will also procure and keep in force insurance protecting against liability of the City to any person under Minnesota Statutes, Section 340A.801 and any laws amendatory thereof or supplemental thereto, in such amounts as are reasonably available and are reasonably determined by the Council to be adequate to protect against the contingency of any claim becoming a lien in any manner whatsoever upon the Net Revenues of the Liquor Enterprise, and will by such insurance and by diligent enforcement of all provisions of law relating to the operation of the Liquor Enterprise, use its best efforts to save the owners of all bonds payable from the Revenue Bond Account harmless from any and all such claims. 4.04. Application of Revenues. The gross revenues and Net Revenues of the Liquor Enterprise will be used and applied only as prescribed in Section 3 hereof. The City will at all times endeavor to maintain operating policies concerning the purchase and sale of merchandise and to undertake and perform all other acts and things reasonably necessary to assure that the Net Revenues collected • -15- from time to time will always be sufficient to meet all payments of principal and interest on bonds payable from the Revenue Bond Account as the same become due. 4.05. Application of Payments. In the event that moneys in the Revenue Bond Account shall at any time be insufficient to pay principal and interest then due on all obligations payable therefrom, said moneys shall first be applied to pay the accrued interest on all such obligations then outstanding, and the balance shall be applied in payment of maturing principal in order of maturities, and pro rata as to obligations of the same maturity. 4.06. Books of Account. The City shall at all times keep proper and adequate books of account showing all receipts and disbursements of moneys derived from the operation of the Liquor Enterprise, which books shall show the segregation and application of revenues in accordance with the provisions of this resolution. It will cause said books to be audited for each fiscal year by an independent certified public accountant. 4.07. Rights of Owners. The owner of any bond payable from the Revenue Bond Account may, either at law or in equity, by suit, action or other proceedings protect and enforce the rights of all owners of bonds, or enforce and compel the performance of any and all of the covenants and duties herein specified to be performed by the City or its officers and agents. Section 5. Amendments. The City reserves the right to amend the prov~s~cns of this resolution, on the follativing conditions: 5.01. Amendments Without Consent of Bondholders. The City reserves the right to amend this resolution from time to time and at any time for the purpose of (a) clarifying any ambiguity or curing, correcting or supplementing any defective provision, (b) making such provisions with regard to matters or questions arising hereunder as the City Council may deem necessary or desirable and are not inconsistent with this resolution, and which shall not, in the judgment of the City Council, adversely affect the interest of the owners of the bonds payable from the Revenue Bond Account, (c) adding to the covenants and agreements herein contained, or to the revenues herein pledged, other .covenants and agreements thereafter to be observed and additional revenues thereafter appropriated to the Liquor Enterprise Fund, (d) surrendering any right or power herein reserved to or conferred upon the City, and (e) authorizing the issuance of refunding bonds or additional bonds in the manner and subject to the terms and conditions prescribed in Sections 3.05 and 3.06. Any such amendment may be adopted by resolution, without the consent of the owners of any of the bonds payable from the Revenue Bond Account. • -16- 5.02. Amendments With Consent of Bondholders. With the consent • of owners of bonds payable from the Revenue Bond Account as provided in Section 5.03, the City may from time to time and at any time amend this resolution by adding any provisions hereto or changing in any manner or eliminating any of the provisions hereof, or of any amending resolution except that no amendment shall be adopted at any time without the consent of the owners of all bonds payable from the Revenue Bond Account affected thereby which are then outstanding if it would (a) extend the maturities of any such bonds, (b) reduce the rate or extend. the time of payment of interest thereon, (c) reduce the amount or extend the time of payment of the principal or redemption premium thereof, (d) give to any bond or bonds any privileges over any other bond or bonds, (e) reduce the sources of revenues appropriated to the Liquor Enterprise Fund, (f) authorize the creation of a pledge of said revenues prior to or on a parity with the bonds (except as is authorized by Sections 3.05 and 3.06), or (g) reduce the percentage in principal amount of such bonds required to authorize or consent to any such amendment. 5.03. Consents. Any amendment adopted pursuant to Section 5.02 shall be made by resolution, mailed to the registered owners. of all outstanding bonds payable from the Revenue Bond Account, and shall become effective only upon the filing of written consents with the City Clerk, signed by the owners of not less than a majority in principal amount of the bonds which are then outstanding or, in the cause of an amendment not affecting all outstanding bonds, by the owners of not less than a majority in principal amount of the bonds affected by such amendment. Any written consent to an amendment may be embodied in and evidenced by one or any number of concurrent written instruments of substantially similar tenor signed by bondholders in person or by agent duly appointed in writing, and shall become effective when delivered to the City Clerk. Any consent by the owner of any bond shall bind the owner and every future owner of the same bond with respect to any amendment adopted by the City pursuant to such consent, provided that any bondholder may revoke consent with reference to any bond by written notice received by the City Clerk before the amendment has become effective. In the event that unrevoked consents of the owners of the required amount of bonds have not been received by the City Clerk within one year after the mailing of any amendment, the amendment and all consents theretofore received shall be of no further notice and effect. 5.04. Proof of Consent. Proof of the execution of any consent, or of a writing appointing any agent to execute the same, or of the ownership by any person of bonds, shall be sufficient for any purpose of this resolution and shall be conclusive in favor of the City if made in the manner provided in this section. The fact and date of the execution by any person of any such consent or appointment may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the person signing it acknowledged to him the execution • -17- thereof. The amount of bonds held by any person by or for whom a consent is given, and the distinguishing numbers of such bonds, and the date of the person holding the same, shall be proved by the Bond Register. Section 6. Defeasance. When any Bond has been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of such Bonds shall cease, and such Bonds shall no longer be deemed to be outstanding under this Resolution. The City may discharge its obligations with respect to any Bond thereto which is due on any date by depositing with the paying agent 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 paying agent a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also discharge its obligations with respect to any prepayable Bond according to its terms, by depositing with the paying agent on or before that date an amount equal to the principal, interest and redemption premium, if any, which are then due, provided that notice of such redemption has been duly given as provided herein. The City may also at any time discharge its obligations with respect to any Bonds, subject to the provisions of law now or hereafter authorizing and regulating such action, by depositing irrevocably in escrow, with a bank qualified by law as an escrow agent for this purpose, cash or securities which are authorized by law to be so deposited, bearing interest payable at such 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 thereon to maturity or said redemption date. Section 7. Certification of Proceedings. 7.01. County Auditor Registration. The City Clerk is hereby authorized and directed to file a certified copy of this resolution with the County Auditor of Dakota County, together with such other information as the County Auditor shall require, and to obtain from the County Auditor a certificate that the Bonds have been entered on the bond register as required by law. 7.02. Certification of Proceedings. The officers of the City and. the County Auditor of Dakota County are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records of the City, and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates and affidavits, including any heretofore furnished, shall be deemed representations of the City as to the facts recited therein. • -18- 7.03. Official Statement. The Official Statement relating to the Bonds, • dated August 4, 1997, and the supplement thereto, relating to the Bonds prepared and distributed. by Springsted Incorporated is hereby approved. Springsted Incorporated, is hereby authorized on behalf of the City to prepare and distribute to the Purchaser within seven business days from the date hereof, a supplement to the Official Statement listing the offering price, the interest rates, selling compensation, delivery date, the underwriters and such other information relating to the Bonds required to be included in the Official Statement by Rule 15c2-12 adopted by the Securities and Exchange Commission (the SEC) under the Securities Exchange Act of 1934. The officers of the City are hereby authorized and directed to execute such. certificates as may be appropriate concerning the accuracy, completeness and sufficiency of the Official Statement. Section 8. Tax Covenants; Arbitrage Matters• Reimbursement and Continuing Disclosure. 8.01. Tax Covenant. The City covenants and agrees with the holders from time to time of the Bonds that they will not take or permit to be taken by any of their officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the Code), and the Treasury Regulations promulgated thereunder (the Regulations), and covenants to take any and all actions within their powers to ensure that the interest on the Bonds will not become subject to taxation under the • Code and the Regulations. :The City represents and covenants that the City is and will be the owner of all facilities financed by the Bonds and will use such facilities to conduct its municipal liquor business. So long as any Bonds are outstanding, the City will not enter into any lease, or any operating, use, management or other agreement or contract respecting said facilities which would cause the Bonds to be considered "private activity bonds" or "private loan bonds" pursuant to Section 141 of the Code. 8.02. Arbitrage Certification. The Mayor and City Clerk, being the officers of the City charged with the responsibility for issuing the Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and the applicable Regulations, stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of the Code and Regulations. 8.03. Arbitrage Rebate. The City acknowledges that the Bonds are subject to the rebate requirements of Section 148(f) of the Code. The City covenants and agrees to retain such records, make such determinations, file such reports and documents and pay such amounts at such times as are required under said Section • -19- 148(f) and applicable Regulations to preserve the exclusion of interest on the Bonds • from gross income for federal income tax purposes. 8.04. Qualified Tax-Exempt Obli ations. The City Council hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code relating to the disallowance of interest expense for financial institutions, and hereby finds that the reasonably anticipated amount of qualified tax-exempt obligations (within the meaning of Section 265(b)(3) of the Code) which will be issued by the City and all subordinate entities during calendar year 1997 does not exceed $10,000,000. 8.05. Reimbursement. The City certifies that the proceeds of the Bonds will not be used by the City to reimburse itself for any expenditure with respect to the Project which the City paid or will have paid more than 60 days prior to the issuance of the Bonds unless, with respect to such prior expenditures, the City shall have made a declaration of official intent which complies with the provisions of Section 1.150-2 of the Regulations; provided that this certification shall not apply (i) with respect: to certain de minimis expenditures, if any, with respect to the Project meeting the requirements of Section 1.150-2(f)(1) of the Regulations, or (ii) with respect to "preliminary expenditures" for the Project as defined in Section 1.150- 2(f)(2) of the Regulations, including engineering or architectural expenses and similar preparatory expenses, which in the aggregate do not exceed 20% of the "issue price" of the Bonds. 8.06. Continuing Disclosure. (a) Purpose and Beneficiaries. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit the Purchaser and other participating underwriters in the primary offering of the Bonds to comply with amendments to Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934 (17 C.F.R. ~ 240.15c2-12), relating to continuing disclosure (as in effect and interpreted from time to time, the Rule), which will enhance the marketability of the Bonds, the City hereby makes the following covenants and agreements for the benefit of the Owners (as hereinafter defined) from time to time of the Outstanding Bonds. The Liquor Enterprise is the only "obligated person" in respect of the Bonds within the meaning of the Rule for purposes of identifying the entities in respect of which continuing disclosure must be made. If the City fails. to comply with any provisions of this section, any person aggrieved thereby, including the Owners of any Outstanding Bonds, may take whatever action at law or in equity may appear necessary or appropriate to enforce performance and observance of any agreement or covenant contained in this Section, including an action for a writ of mandamus or specific performance. Direct, indirect, consequential and punitive damages shall not be recoverable for any default hereunder to the extent permitted by law. Notwithstanding anything to the contrary contained herein, in no event shall a default under this section constitute a default under the Bonds or under any other • -20- provision of this resolution. As used in this section, "Owner" or "Bondowner" • means, in respect of a Bond, the registered owner or owners thereof appearing in the bond register maintained by the Registrar or any "Beneficial Owner" (as hereinafter defined) thereof, if such Beneficial Owner provides to the Registrar evidence of such beneficial ownership in form and substance reasonably satisfactory to the Registrar. As used herein, "Beneficial Owner" means, in respect of a Bond, any person or entity which (i) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, such Bond (including persons or entities holding Bonds through nominees, depositories or other intermediaries), or (ii) is treated as the owner of the Bond for federal income tax purposes. (b) Information To Be Disclosed. (1) The City will provide, in the manner set forth in subsection (c) hereof, either directly or indirectly through an agent designated by the City, the following information at the following times: on or before 365 days after the end of each fiscal year of the Liquor Enterprise, commencing with the fiscal year ending December 31, 1997, the following financial information and operating data in respect of the Liquor Enterprise (the Disclosure Information): audited financial statements of the City (which will include financial statements relating to the Liquor Enterprise) and the audit report and opinion of the accountant or government auditor relating thereto, as permitted or required by the laws of the State of Minnesota. Such financial statements shall be prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting • standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under Minnesota law, as in effect from time to time. If and to .the extent such financial statements have not been prepared in accordance with such generally accepted accounting principles for reasons beyond the reasonable control of the City, the statements shall note the discrepancies therefrom and the effect thereof. The City may, if it believes that such financial statements are immaterial or misleading, in whole or in part, to the security of the Bonds, deliver a statement to that effect to be forwarded with the financial statements to the Repositories. Notwithstanding the foregoing paragraph, if the audited financial statements are not available by the date specified, the City shall provide on or before such date unaudited financial statements in the format required for the audited financial statements as part of the Disclosure Information and, within 10 days after the receipt thereof,. the City shall provide the audited financial statements. Any or all of the Disclosure Information may be incorporated by reference, if it is updated as required hereby, from other documents, including official statements, which have been submitted to each of the repositories hereinafter referred to under subsection (b) or the SEC. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify in the Disclosure Information each document so incorporated by • -21- reference. If any part of the Disclosure Information can no longer be generated because the operations of the Liquor Enterprise have materially changed or been discontinued, such Disclosure Information need no longer be provided if the City includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other City operations in respect of which data is not included in the Disclosure Information and the City determines that certain specified data regarding such replacement operations would be a Material Fact (as defined in paragraph (3) hereof), then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or this section is amended as permitted by this paragraph (b)(1) or subsection (d), then the City shall include in the next Disclosure Information to be delivered hereunder, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided. (2) In a timely manner, notice of the occurrence of any of the following events which is a Material Fact (as hereinafter defined): (A) Principal and interest payment delinquencies, (B) Non-payment related defaults; (C) Unscheduled draws on debt service reserves reflecting financial difficulties; • (D) Unscheduled draws on credit enhancements reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions or events affecting the tax-exempt status of the security; (G) Modifications to rights of security holders; (H) Bond calls; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the securities; and (K) Rating changes. As used herein, a "Material Fact" is a fact as to which a substantial likelihood exists that a reasonably prudent investor would attach importance thereto in deciding to buy, hold or sell a Bond or, if not disclosed, would significantly alter the total information otherwise available to an investor from the Official Statement, information disclosed hereunder or information generally available to the public. Notwithstanding the foregoing sentence, a "Material Fact" is also an event that would be deemed "material" for purposes of the purchase, • -22- holding or sale of a Bond within the meaning of applicable federal securities laws, as • interpreted at the time of discovery of the occurrence of the event. (3) In a timely manner, notice of the occurrence of any of the following events or conditions: (A) the failure of the City to provide the Disclosure Information required under paragraph (b)(1) at the time specified thereunder; (B) the amendment or supplementing of this section pursuant to subsection (d), together with a copy of such amendment or supplement and any explanation provided by the City under subsection (d)(2); (C) the termination of the obligations of the City under this section pursuant to subsection (d); (D) any change in the accounting principles pursuant to which the financial statements constituting a portion of the Disclosure Information or the audited financial statements, if any, furnished pursuant to subsection (b)(1) are prepared; and (E) any change in the fiscal year of the City. (c) Manner of Disclosure. The City agrees to make available the information described in subsection (b) to the following entities by telecopy, . overnight delivery, mail or other means, as appropriate: (1) the information described in paragraph (1) of subsection (b) to each then nationally recognized municipal securities information repository under the Rule and to any state information depository then designated or operated by the State of Minnesota as contemplated by the Rule (the State Depository), if any; (2) the information described in paragraphs (2) and (3) of subsection (b) to the Municipal Securities Rulemaking Board and to the State Depository, if any; and (3) the information described in subsection (b), to any rating agency then maintaining a rating of the Bonds and, at the expense of such Bondowner, to any Bondowner who requests in writing such information, at the time of transmission under paragraphs (1) or (2) of this subsection (c), as the case may be, or, if such information is transmitted with a subsequent time of release, at the time such information is to be released. (d) Term; Amendments; Interpretation. (1) The covenants of the City in this section shall remain in effect so long as any Bonds are Outstanding. Notwithstanding the preceding sentence, however, the -23- obligations of the City under this section shall terminate and be without further • effect as of any date on which the City delivers to the Registrar an opinion of Bond Counsel to the effect that, because of legislative action or final judicial or administrative actions or proceedings, the failure of the City to comply with the requirements of this section will not cause participating underwriters in the primary offering of the Bonds to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended, or any statutes or laws successory thereto or amendatory thereof. (2) This section (and the form and requirements of the Disclosure Information) may be amended or supplemented by the City from time to time, without notice to (except as provided in paragraph (c)(3) hereof) or the consent of the Owners of any Bonds, by a resolution of this Council filed in the office of the recording officer of the City accompanied by an opinion of Bond Counsel, who may rely on certificates of the City and others and the opinion may be subject to customary qualifications, to the effect that: (i) such amendment or supplement (a) is made in connection with a change in circumstances that arises from a change in law or regulation or a change in the identity, nature or status of the Liquor Enterprise or the type of operations conducted by the Liquor Enterprise, or (b) is required by, or better complies with, the provisions of paragraph (b)(5) of the Rule; (ii) this section as so amended or supplemented would have complied with the requirements. of paragraph (b)(5) of the Rule at the time of the primary offering of the Bonds, giving effect to any change in circumstances applicable under clause (i)(a) and assuming that the Rule as in effect and interpreted at the time of the amendment or supplement was in effect at the time of the primary offering; and (iii) such amendment or supplement does not materially impair the interests of the Bondowners under the Rule. If the Disclosure Information is so amended, the City agrees to provide, contemporaneously with the effectiveness of such amendment, an explanation of the reasons for the amendment and the effect, if any, of the change in the type of financial information or operating data being provided hereunder. (3) This section is entered into to comply with the continuing disclosure provisions of the Rule and should be construed so as to satisfy the requirements of paragraph (b)(5) of the Rule. (e) Further Limitation of Liability of City. In and to the extent the limitations of liability contained in subsection (a) are not effective, anything contained in this section to the contrary notwithstanding, in making the agreements, provisions and covenants set forth in this section, the City has not obligated itself except with respect to the Net Revenues of the Liquor Enterprise. None of the agreements or obligations of the City contained herein shall be construed to constitute an indebtedness of the City within the meaning of any . -24- constitutional or statutory provisions whatsoever or constitute a pledge of the • general credit or taxing powers of the City. Upon vote being taken thereon, the following voted in favor thereof: Holberg, Johnson, Mulvihill, Sindt and Zaun and the following voted against the same: None whereupon the resolution was declared duly passed and adopted. • • -25-