HomeMy WebLinkAbout07-068 a !
CITY OF LAKEVILLE
RESOLUTION
Date: April 16,.2007 Resolution No, 07-68
RESOLUTION RELATING TO $3,955,000 LIQUOR REVENUE BONDS,
SERIES 2007; 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, Minnesota (the
City), as follows:
SECTION 1. AUTHORIZATION AND SALE.
1.01. Municipal Liquor Enterprise. 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, he 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 acquire land and construct, furnish and equip a new liquor store
in the City (the Project).
1.03. Issuance of Bonds. It is in the best interest of the City, its residents and the
customers of the Liquor Enterprise for the City to issue at this time its Liquor Revenue Bonds,
Series 2007. in the principal amount of $3,955,000 (the Bonds), upon the terms and conditions
hereinafter set forth, to finance the Project. It is in the best interest of the City that the Bonds be
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. Compliance with 1997 Resolution. The City has issued its Liquor Revenue Bonds,
Series 1997, dated September 1, 1997, which are outstanding in the principal amount of
$455,000, with a final maturity in February 1, 2010 (the Prior Bonds). The Prior Bonds
constitute a lien or charge upon such Net Revenues. Section 3.06 of the resolution authorizing
the Prior Bonds sets forth the conditions for issuance of Additional Bonds on a parity with the
Prior Bonds. It is hereby determined that the Net Revenues of the Liquor Enterprise for the last
complete fiscal year (ended December 31, 2006), are $1,318,000, which amount is not less than
125% of the maximum amount of principal and interest to come due in any future fiscal year,
during the remaining term of the Prior Bonds, on all of the outstanding Prior Bonds and on the
Bonds now proposed to be issued. No bonds or indebtedness other than the Prior Bonds are
currently outstanding and payable from the Net Revenues. All acts, conditions and things which
. are required. by the Constitution and laws of the State of Minnesota to be done, to exist, to
1
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 therefore and to issue the Bonds forthwith.
1.05. Sale. A proposal has been received from Piper Jaffray Companies, in Minneapolis,
Minnesota (the Purchaser) to purchase the Bonds at aprice of $3,931,890.10 plus accrued
interest on all Bonds to the day of delivery and payment, on the further terms and conditions
hereinafter set forth.
1.06. Award. 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.
SECTION 2. BOND TERMS• REGISTRATION• EXECUTION AND DELIVERY.
2.01. Maturities;.Interest Rates; Denominations and Payment. The Bonds shall be
originally dated as of May 1, 2007, shall be in the denomination of $5,000 each, or any integral
multiple thereof, of single maturities, shall mature on February 1 in the years and amounts stated
below, and shall bear interest from. date of issue until paid or duly called for redemption at the
annual rates set forth opposite such years and amounts, as follows:
Year Amount Rate Year Amount Rate
2009 $130,000 5.00% 2015 $ 175,000 5.00%
2010. 135,000 5.00 2016 180,000 5.00
2011 145,000 5.00 2017 190,000 5.00
2012. 150,000 5.00 2022 1,110,000 5.00
2013 160,000. 5.00 2027 1,415,000 5.00
2014 165,000 5.00
The Bonds shall be issuable only in fully registered form. Interest shall be computed on the basis
of a 360-day year composed of twelve 30-day months. The interest on and,-upon surrender of
each Bond, the principal amount thereof, shall be payable by check or draft issued by the
Registrar described herein; provided that, so long as the Bonds-axe registered in the name of a
securities depository, or a nominee thereof, in accordance with Section 2.07 hereof, principal and
interest shall be payable in accordance with the operational arrangements of the securities
depository.
2.02. Dates and Interest Payment Dates. Upon initial delivery of the Bonds pursuant to
Section 2.06 and upon any subsequent transfer or exchange pursuant to Section 2.05, the. date of
authentication shall be noted on each Bond so delivered, exchanged or transferred. Interest on
the Bonds shall be payable on February 1 and August 1 in each year, commencing February 1,
2008, each such date being referred to herein as an Interest Payment Date, to the persons in
whose names the Bonds are registered on the Bond Register, as hereinafter defined, at the
Registrar's close of business on the fifteenth day of the calendar month next preceding such
Interest Payment Date, whether or not such day is a business day.
2
l
2.03. Redemption. Bonds maturing on or after February 1, 2018 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, 2017, 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 2.04 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.
Bonds maturing February 1, 2022 shall be subject to mandatory redemption .prior to
maturity pursuant to the sinking fund requirements of this Section 2.03 at a redemption price
equal to the stated principal amount thereof plus interest accrued thereon to the redemption date,
without premium. The Registrar .shall select for redemption, by lot or other manner deemed fair,
i on February 1 in each of the following years the following stated principal amounts of such
Bonds:
Year Principal Amount
2018 $200,000
2019 210,000
2020 220,000
2021 23 5,000
The remaining $245,000 stated principal amount of such Bonds shall be paid at maturity on
February 1, 2022.
Bonds maturing on February 1, 2027 shall be subject to mandatory redemption prior to
maturity pursuant to the sinking fund requirements of this Section 2.03 at a redemption price
equal to the stated. principal amount thereof plus interest accrued thereon to the redemption date,
without premium. The Registrar shall select for redemption, by lot or other manner deemed fair,
on February 1 in each of the following years the following stated principal amounts of such
Bonds:
3
Year Principal Amount •
2023 $255,000
2024 270,000
2025 285,000
2026 295,000
The remaining $310,000 stated principal amount of such Bonds shall be paid at maturity on
February 1, 2027.
Notice of redemption shall be given as provided in the preceding paragraph.
2.04. Appointment of Initial Re ig stray. The City hereby appoints U.S. Bank National
Association, in St. Paul, Minnesota, as the initial bond registrar, transfer agent and paying agent
(the Registrar). The Mayor and City Clerk are authorized to execute and deliver, on behalf of the
City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another
corporation, if the resulting corporation is a bank or trust company organized under the laws of
the United States or one of the states of the United States and 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 the Registrar, effective upon not less than thirty days' written notice
and upon the appointment and acceptance of a successor Registrar, in which event the
predecessor Registrar shall deliver all cash and Bonds in its possession to the successor Registrar
and shall deliver the Bond Register to the successor Registrar.
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 ig ster. The Registrar shall keep at its principal corporate trust office a
register (the 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. The term Holder or Bondholderas used herein
shall mean the person (whether a natural person, corporation, association, partnership,
trust, governmental unit, or other legal entity} in whose name aBond is registered in the
Bond Register.
(b) Transfer of Bonds. Upon surrender 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.
4
(c) Exchange of Bonds. Whenever any Bonds are 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 in writing.
(d) Cancellation. All Bonds surrendered for payment, transfer or exchange shall
be promptly canceled by the Registrar and thereafter disposed of. The Registrar shall
furnish the City at least once each year a certificate setting forth the principal amounts
and numbers of Bonds canceled and destroyed.
(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 valid and genuine and
.that the requested transfer is legally authorized. The Registrar shall incur no liability for
the 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 the Bond, whether the Bond shall be overdue or not, for the purpose of receiving
payment of or on account of, the principal of and interest on the Bond and for all other
purposes; and all payments made to any registered owner or upon the owner's order shall
be valid and effectual to satisfy and discharge the liability upon Bond to the extent of the
. sum or sums so paid.
(g) Taxes, Fees and Chaxges. 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 destroyed, stolen or lost, 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 Bond
destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the
Registrar in connection therewith; and, in the. case of a Bond destroyed, stolen or lost,
upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed,
stolen or lost, 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 canceled by it and evidence of such cancellation shall 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 shall not be necessary to issue a new
Bond prior to payment.
5
(i) Authenticating Agent. The Registrar is hereby designated authenticating
agent for the Bonds, within the meaning of Minnesota Statutes, Section 475.55,
Subdivision 1, as amended.
(j) Valid Obligations. All Bonds issued upon any transfer or exchange of Bonds
shall be the valid obligations of the City, evidencing the same debt, and entitled to the
same benefits under this Resolution as the Bonds surrendered upon such transfer or
exchange.
2.06. Execution, Authentication and Deliverv. 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 he
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.
2.07. Securities Depository. (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.
"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
6
• of Cede & Co., as nominee of DTC. The 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.
(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 Registrax 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.
SECTION 3. FORM OF BONDS.
3.01. Bonds Form. The Bonds shall be prepared in substantially the following form:
i
•
g
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF DAKOTA
CITY OF LAKEVILLE
LIQUOR REVENUE BOND, SERIES 2007
R- $
Interest Rate Maturit~Date Date of Original Issue CUSIP No.
February 1, 20_ May 1, 2007
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: THOUSAND DOLLARS
THE CITY OF LAKEVILLE, MINNESOTA (the City), acknowledges itself to be
indebted and hereby promises to pay to the registered owner named above, or registered assigns,
solely from the Revenue Bond Account or the 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 hereof at the annual rate specified above, payable on
February 1 and August 1 in each year, commencing February 1, 2008, to the person in whose
name this Bond is registered at the close of business on the. fifteenth day (whether or not a
business day) of the immediately preceding month, all subject to the provisions referred. to herein
with respect to the redemption of the principal 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 principal office of the agent of
the Registrar described below, the principal hereof are payable in lawful money of the United
States of America by check or draft at the principal corporate trust office of U.S. Bank National
Association, in St. Paul, Minnesota, as bond registrar, transfer agent and paying agent, or its
successor designated under the Resolution described herein (the Registrar), or its designated
successor under the Resolution described herein.
This Bond is one of an issue (the Bonds) in the aggregate principal amount of
$3,955,000, issued pursuant to a resolution adopted by the City Council on April 16, 2007 (the
Bond Resolution) to provide funds to construct a new municipal liquor store in the City (the
Project), and is issued pursuant to and in full conformity with the Constitution and laws of the
State of Minnesota thereunto enabling, including Minnesota Statutes, Chapters 340A, 426 and
475. Except to the extent paid from the proceeds of the Bonds, said Bonds and the interest
thereon are payable solely and exclusively from the net revenues of the municipal liquor
enterprise of the City pledged to the payment thereof on a parity of lien with certain outstanding
revenue bonds heretofore issued by the City, 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
9
Bonds. Additional revenue obligations may be issued on a parity of lien upon the net revenues
of the Liquor Enterprise with the Bonds, as provided in the Bond Resolution. The Bonds are
issuable only in fully registered form, in denominations of $5,000 or any integral multiple
thereof, of single maturities.
Bonds maturing on or after February 1, 2018 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 (or, if applicable, by
the bond depository in accordance with its customary procedures) in multiples of $5,000 on
February 1, 2017, 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, buf 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 ownerwithout
charge, representing the remaining principal amount outstanding.
Bonds maturing in the years 2022 and 2027 shall be subject to mandatory redemption, at
a redemption price equal to their principal amount plus interest accrued thereon to the
redemption date, without .premium, on February 1 in each of the years .shown below, in an
amount equal to the. following principal amounts:
Term Bonds Maturing in 2022 Term Bonds Maturing in 2027
Sinking Fund Aggregate Sinking Fund Aggregate
Payment Date Principal Amount Payment Date Principal Amount
2018 $200,000 2023 $255,000
2019 210,000 2024 270,000
2020 220,000 2025 285,000
2021 235,000 2026 295,000
2022 245,000 .2027 310,000
Notice of redemption shall be given as provided in the preceding paragraph.
As provided in the Bond 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
10
• 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.
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; and 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 Liquor Enterprise, including .any additions thereto and improvements thereof, periodic
payments to be made at times and. in amounts sufficient to pay from the principal and: interest on
all bonds payable therefrom, including the Bonds of this series, as such payments become due,
and to establish and maintain the required reserve balance therein, and will use the moneys in
said Accounts 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; and that in and by the
Resolutions other covenants, agreements and stipulations are prescribed for the security and
enforcement of the Bonds of this series, each and all of which will be faithfully and promptly
performed by the City and its officers and agents.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Resolutions until the Certificate of 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, 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.
11
CITY OF LAKEVILLE, MINNESOTA
(facsimile signature City Clerk) (facsimile signature Mayor)
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds delivered pursuant to the Bond Resolution mentioned within.
Date of Authentication:
as Registr ar
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)
TEN ENT - as tenants by the entireties under Uniform Transfers to Minors Act
(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.
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.
12
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.
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE:
[end of bond form)
SECTION 4. FUNDS AND ACCOUNTS ADDITIONAL BONDS. For the proper
administration of the moneys so to be borrowed and to make adequate and specific security to
the purchaser of the Bonds and to the owners thereof from time to time, and the owners of any
other bonds issued and made payable on a parity with the Bonds, the City shall, atleast 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 said. 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:
4.01. Capital Expenditures Account. There is hereby established within the Liquor
Enterprise .Fund a Capital Expenditures Account into which shall be paid out of the proceeds of
the Bonds. the sum of $3,636,756.99. 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,
provided that upon completion of the Project any moneys remaining in said Capital Expenditures
Account shall be transferred to the Revenue Bond Account described below.
4.02. 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, 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 addition thereto and improvement 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,
13
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."
4.03. Revenue Bond Account. (a) There is hereby established within-the Liquor
Enterprise Fund a Revenue Bond Account to which there shall be credited all amounts received
from the Purchaser remaining after the. deposits required by Sections 4.01 and 4.04 hereof. 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 next succeeding interest
payment date plus one-twelfth of the principal to become due on the next two succeeding interest
payment dates on the Bonds and any other obligations which may, in accordance with the
provisions of this resolution, be issued and made payable from the Revenue Bond Account.
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 4.04 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.
(b) The City Finance Director shall ascertain monthly the amount on deposit. in the Revenue
Bond Account. If the amount on deposit therein ever exceeds the aggregate amount of principal
and interest due and payable from the Revenue Bond Account through the next following
February 1 plus a reasonable carryover as permitted by the Regulations, such excess. shall be
used to prepay and redeem Bonds or be invested at a yield less than or equal to the yield on the
Bonds, based upon their amounts, maturities and interest rates on their date of issue, computed
by the actuarial method.
4.04. Reserve Account. A deposit in the amount of $295,133.11 from the proceeds of
the Bonds shall be made to the Reserve Account upon issuance of the Bonds.. That deposit
represents the amount necessary to increase the balance in the Reserve Account to an amount
equal to the lesser of (i) 10% of the principal amount of the outstanding bonds (including the
Bonds) payable from the Revenue Bond Account, (ii) maximum annual debt service due in any
future fiscal year on the bonds (including the Bonds) payable from the Revenue Bond Account,
or (iii) 125% of average annual debt service on the bonds (including the Bonds) payable from the
Revenue Bond Account. 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 4.06 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 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 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.
14
4.05. Issuance of Refundin Bg onds. 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 form 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 bonds to accept a
refunding obligation in exchange therefor.
4.06. Additional Bonds.. The City hereby agrees that it will not issue any additional
obligations payable from the Net Revenues or constituting a lien or charge thereon superior to or
on a parity with the Bonds unless it has first retired, or placed in escrow with a depository bank,
moneys or securities sufficient to discharge the outstanding. Bonds pursuant to Section 7 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% 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 then payable from the Revenue Bond Account and on 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.
4.07. Deposit and Investment of Funds. All revenues and Bond proceeds appropriated to
the Liquor Enterprise. Fund shall be kept on deposit with one or more depository banks duly.
qualified under the laws of the State, with the security therein required, except that such revenues
and funds may be invested and reinvested in securities which are authorized by Chapter 118A,
Minnesota Statutes, or any successor chapter or section. All securities purchased shall mature at
or before the time when it is estimated that the proceeds thereof will be needed. for the purposes
of the account from which funds are withdrawn for the purchase. All income, gain or loss on
such investments, shall be credited or charged, as the case may be, to the account from which the
investment was made; provided that so long as the balance in the Reserve Account is fully
funded, as provided in Section 4.04, investment earnings and profits shall be transferred as
receivedto the Liquor Enterprise Fund and accounted for as a part of the gross revenues.
SECTION 5. COVENANTS. The. City hereby certifies and represents. to and covenants
and agrees with the purchaser and holder from time to time of each bond payable from the
Revenue Bond Account as follows:
5.01. Ownership and O erp ation. 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 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
15
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 reserve 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.
5.02. Disposition of Pro e~rtX. 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.
5.03. 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, flood, 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 axe 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, save the owners of all bonds
payable from the Revenue Bond Account harmless from any and all such claims.
5.04. Application of Revenues. The gross revenues and Net Revenues of the Liquor
Enterprise will be used and applied only as prescribed in Section 4 hereof and its subdivisions.
The City will at all times maintain operating. policies concerning the purchase and sale of
merchandise and do and perform all other acts and things necessary to assure that the Net
Revenues collected 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.
5.05. 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.
5.06. 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
16
fiscal year by an independent certified public accountant. Copies of such. audit when available
shall be mailed to the Purchaser and provided upon request to the owner of any bonds payable
from the Revenue Bond Account.
5.07. Rights of Owners. The owner of any bond payable from the Revenue Bond
Account may, either at law or inequity, 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 6. AMENDMENTS. The City reserves the right to amend the provisions of
this resolution, on the following conditions:
6.01. 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) claxifying any
ambiguity, 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
i prescribed in Sections 4.05 and 4.06. 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.
6.02. Amendments With Consent of Bondholders. With the consent of owners of bonds
payable from the Revenue Bond Account as provided in Section 6.03., 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 4.05 and 4.06), or (g) reduce the percentage. in principal amount of
such bonds required to authorize or consent to any such amendment..
6.03. Consents. Any amendment adopted pursuant to Section 6.02. 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
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
17
of concurrent written instruments of substantially similar tenor signed by Bondholders in person
or by an agent duly appointed in writing, and shall become effective when delivered to the Clerk.
Any consent by the owner of any bond shall bind him 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 his consent with reference to any bond by written notice received by the
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 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.
6.04. 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 6.04. 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 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 his holding the same, shall be proved by the Bond
Register.
SECTION 7. DEFEASANCE. When any Bonds 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 Bonds 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 Bonds 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 Bonds 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 8. CERTIFICATION OF PROCEEDINGS.
8.01. 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 said County
Auditor certificates that the Bonds have been entered on his Bonds register as required by law. •
18
8.02. 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 of the
Bonds and to Dorsey & Whitney LLP, Bonds 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.
8.03. Official Statement. The Official Statement relating to the Bonds, dated Apri12,
2007, 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 9. TAX COVENANTS• ARBITRAGE MATTERS• REIMBURSEMENT.
9.01. 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 will cause to be filed with the Secretary of Treasury an
information reporting statement in the form and at the time prescribed by the Code. 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 respecting said facilitieswhich would cause the Bonds to be considered "private
activity Bonds" or "private loan Bonds" pursuant to Section 141 of the Code.
9.02.. 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 thereof 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 makes 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.
9:03. 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
19
such times as are required under said Section 148(f) and applicable Regulations to preserve the
exclusion of interest on the Bonds from gross income for federal income tax purposes, unless the
Bonds qualify for an exception from the rebate requirement pursuant to one of the spending
exceptions set forth in Section 1..148-7 of the Regulations and no "gross proceeds" of the Bonds
(other than amounts constituting a "bona fide debt service fund") arise during or after the
expenditure of the original proceeds thereof.
9.04. Not Qualified Tax-Exempt Obligations. The Bonds are not "qualifiedtax-exempt
obligations" for purposes of Section 265(b)(3) of the Code relating to the disallowance of interest
expense for financial institutions.
9.05. 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 Projects 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.
SECTION 10. 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 City 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. The City has
complied in all material respects with any undertaking previously entered into by it under the
Rule. 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 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, •
20
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 (b) is treated as the owner of the. Bond for federal income tax purposes.
(b) Information To Be Disclosed. The City will provide, in the manner set forth insubsection
(c) hereof, either directly or indirectly through an agent. designated by the City, the following
information at the. following times:
(l) on or before 365 days after the end of each fiscal year of the City, commencing with
the fiscal year ending December 31, 2006, the following financial information and
operating data in respect of the City (the Disclosure Information):
(A) the audited financial statements of the City for such fiscal year, containing
balance sheets as of the end of such fiscal year and a statement of operations,
changes in fund balances and cash flows for the fiscal year then ended, showing
in comparative form such figures for the preceding fiscal year of the City,
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, or, 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, noting the discrepancies therefrom and the effect thereof, and certified as
to accuracy and completeness in all material respects by the fiscal officer of the
City; and
(B) to the extent not included in the financial statements referred to in paragraph (A)
hereof, the information for such fiscal year or for the period most recently
available of the type contained in the Official Statement under headings: Liquor
Enterprise and Pro Forma Debt Service Coverage.
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 maybe 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 (c) 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 reference. If any part of the Disclosure
Information can no longer be generated because the operations of the City have materially
changed or been discontinued, such Disclosure Information need no longer be provided ifthe
. City includes in the Disclosure Information a statement to such effect; provided, however, if such
21
{
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 (2) 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, 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);
•
22
. ,
(D) any change in the accounting .principles pursuant to which the financial
statements constituting a portion of the Disclosure Information 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 at the request of the City 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 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 City or the type of operations conducted by the
23
City, 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.
24
APPROVED AND ADOPTED this 16~` day of April, 2007.
CITY OF KEVILLE,
By:
of ahl, ayor
ATTEST: -
Charlene Friedges, City. rk
•
25