01-0244R

RESOLUTION PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF $7,040,000 GENERAL OBLIGATION REFUNDING REVENUE BONDS (DULUTH ENTERTAINMENT CONVENTION CENTER/IMAX® DOME THEATER PROJECT), SERIES 2001C, OF THE CITY OF DULUTH, MINNESOTA; ESTABLISHING THE TERMS AND FORM THEREOF; CREATING A DEBT SERVICE FUND THEREFOR; AND AWARDING THE SALE THEREOF.

BY COUNCILOR HOGG:

        BE IT RESOLVED, by the city council of the city of Duluth, Minnesota (the "City"), as follows:

        Section 1. Bond Purpose and Authorization.

                1.01 Pursuant to Minnesota Statutes, Chapter 475 and Section 471.191, the City previously issued $8,755,000 Gross Revenue Recreation Facility Bonds (Duluth Entertainment Convention Center/IMAX® Dome Theater Project), Series 1994, dated December 1, 1994 (the "1994 Bonds"). The 1994 Bonds were issued under and pursuant to an Indenture of Trust dated as of December 1, 1994 (the "Refunded Bonds Indenture"), between the City and Norwest Bank Minnesota, National Association (now Wells Fargo Bank Minnesota, National Association) as trustee (the "Refunded Bonds Trustee"). The proceeds of the 1994 Bonds were used to finance construction and equipping of a dome theater and IMAX® projection system (the "Project"). As of the date of this resolution, $6,930,000 of the original aggregate principal amount of the 1994 Bonds remain outstanding and matures, or are subject to mandatory sinking fund redemption, on and after December 1, 2001 (the "Refunded Bonds").
                1.02 Under and pursuant to Laws of Minnesota 1999, Chapter 248, Section 21, and the provisions of Minnesota Statutes, Chapter 475 (the "Act"), and specifically, Section 475.67, Subdivisions 1 through 10 of the Act, the City is authorized to issue and sell its general obligation bonds to refund the outstanding maturities of the 1994 Bonds in advance of their scheduled maturity dates, if consistent with covenants made with the holders thereof, when determined by the City to be necessary or desirable for the reduction of debt service cost to the City or for the extension or adjustment of maturities in relation to the resources available for their payment.
                1.03 The city council hereby determines that it is necessary, expedient and in the best interest of the City's residents that the City issue, sell and deliver its $7,040,000 General Obligation Refunding Revenue Bonds (Duluth Entertainment Convention Center/IMAX® Dome Theater Project), Series 2001C (the "Bonds"), to refund in advance of their maturities the Refunded Bonds pursuant to the Escrow Agreement provided for in Section 3.02 hereof. The Escrow Agreement shall provide for payment of principal of and interest on the 1994 Bonds maturing, or subject to mandatory sinking fund redemption, from June 1, 2001 through December 1, 2004, at their stated maturities or sinking fund redemption dates, and shall provide for redemption and prepayment of the 1994 Bonds maturing on or after December 1, 2005, of which $5,005,000 is prepayable on December 1, 2004, at a price equal to par, plus a premium of two percent (2%), plus accrued interest to December 1, 2004, the date of redemption. (December 1, 2004, is herein referred to as the "Redemption Date.")
                1.04. Evensen Dodge, Inc., financial consultant to the City, has given notification by mail to at least five firms determined by Evensen Dodge, Inc. to be prospective bidders on the Bonds at least two days (omitting Saturdays, Sundays and legal holidays) before the date set for receipt of bids on the Bonds. All actions of the mayor, the clerk and Evensen Dodge, Inc. taken with regard to the sale of the Bonds are hereby ratified and approved.
                1.05 Pursuant to such solicitation for bids for the sale of the Bonds, the city council has received and considered all bids presented pursuant to the official terms of offering and has determined that the most favorable bid is that of ____________________________________ of ____________________________ (the "Purchaser"), to purchase the Bonds at a cash price of $_____________, plus accrued interest on the total principal amount from April 1, 2001, to the date of delivery of the Bonds and upon condition that the Bonds mature and bear interest at the times and annual rates set forth in Section 2. The City, after due consideration, finds such offer reasonable and proper and the offer of the Purchaser is hereby accepted. The mayor and the city clerk are authorized and directed to execute on the part of the City a contract for the sale of the Bonds in accordance with the Purchaser's bid. The city treasurer is directed to deposit the good faith check of the successful bidder.

        Section 2. Terms of Bonds.

                2.01 The Bonds to be issued hereunder shall be dated April 1, 2001, as the date of original issue, shall be issued in the denomination of $5,000 each, or any integral multiple thereof, in fully registered form and lettered and numbered R-1 and upward. The Bonds shall mature on December 1 in the respective years and amounts and shall bear interest at the annual rates stated as follows:
 

Year Amount Interest
Rate
2001 $485,000
2002 550,000
2003 565,000
2004 590,000
2005 610,000
2006 635,000
2007 660,000
2008 690,000
2009 720,000
2010 750,000
2011 785,000

                2.02 The Bonds are not subject to redemption and prepayment before maturity.
                2.03 Interest on the Bonds shall be payable semiannually on June 1 and December 1 in each year (each referred to herein as an "Interest Payment Date"), commencing December 1, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to the rules of the Municipal Securities Rulemaking Board. The Bond Registrar designated below shall make all interest payments with respect to the Bonds by check or draft mailed to the registered owners of the Bonds shown on the bond registration records maintained by the Bond Registrar at the close of business on the 15th day (whether or not a business day) of the month next preceding the Interest Payment Date at such owners' addresses shown on such bond registration records.
                2.04 A. The Bonds shall be prepared for execution in accordance with the approved form and shall be signed by the manual or facsimile signature of the mayor and attested by the manual or facsimile signature of the city clerk. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be an officer before delivery of the Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, as if he or she had remained in office until delivery.
                        B. The city clerk is authorized and directed to obtain a copy of the proposed approving legal opinion of Fryberger, Buchanan, Smith & Frederick, P.A. of Duluth, Minnesota, which is to be complete and cause the opinion to be attached to each Bond, together with a certificate to be signed by the manual signature of the city clerk in substantially the form set forth in Section 2.11, but only if the opinion is not manually executed. The city clerk is authorized and directed to execute the certificate in the name of the City upon receipt of the opinion, if required by the preceding sentence, and to file the opinion in the City offices.
                2.05 The City hereby appoints Wells Fargo Bank Minnesota, National Association, in Minneapolis, Minnesota, as registrar, authenticating agent, paying agent and transfer agent for the Bonds (such bank or its successor is herein referred to as the "Bond Registrar"). To provide for the Bond Registrar services, the mayor and the clerk are authorized and directed to execute a bond registrar/paying agent agreement substantially in the form of the agreement currently on file in the office of the city clerk. No Bond shall be valid or obligatory for any purpose until the Bond Registrar's authentication certificate on such Bond, substantially set forth in Section 2.11 hereof, shall have been duly executed by an authorized representative of the Bond Registrar. Authentication certificates on different Bonds need not be signed by the same representative. The manual signature of one officer of the City or the executed authentication certificate on each Bond shall be conclusive evidence that it has been authenticated and delivered under this resolution.
                2.06 A. In order to make the Bonds eligible for the services provided by The Depository Trust Company, New York, New York ("DTC"), the City has previously agreed to the applicable provisions set forth in the Blanket Issuer Letter of Representations which has been executed by the City and DTC (the "Representation Letter").
                        B. All of the Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Payment of interest on and principal of any Bond registered in the name of Cede & Co. shall be made by wire transfer or New York Clearing House or equivalent same day funds by 10:00 a.m. CT or as soon as possible thereafter following the Bond Registrar's receipt of funds from the City on each Interest Payment Date to the account of Cede & Co. on each Interest Payment Date at the address indicated in or pursuant to the Representation Letter.
                        C. Additional matters with respect to, among other things, notices, consents and approvals by bond holders and payments on the Bonds are set forth in the Representation Letter.
                2.07 The City shall cause to be kept by the Bond Registrar a bond register in which, subject to such reasonable regulations as the Bond Registrar may prescribe, the City shall provide for the registration of the Bonds and the registration of transfers of the Bonds entitled to be registered or transferred as herein provided. In the event of the resignation or removal of the Bond Registrar or its incapability of acting as such, the bond registration records shall be maintained at the office of the successor Bond Registrar as may be appointed by the city council. Upon surrender for transfer of any Bond at the principal corporate office of the Bond Registrar, the City shall execute and the Bond Registrar shall authenticate, if required by law or this resolution, and deliver, in the name(s) of the designated transferee or transferees, one or more new Bonds of the like aggregate principal amount, as requested by the transferor.
                2.08 Each Bond delivered upon transfer of or in exchange for or in lieu of any other Bond shall carry all of the rights to interest, accrued and unpaid and to accrue, which are carried by such other Bond. Each Bond shall be dated by the Bond Registrar as of the date of its authentication. The City and the Bond Registrar shall not be required to make any transfer or exchange of any Bonds called for redemption or to make any such exchange or transfer of the Bonds during the 15 days next preceding the date of the mailing of the notice of redemption in the case of a proposed redemption of the Bonds.
                2.09 The City and the Bond Registrar may treat the person in whose name any Bond is registered as the owner of such Bond for the purpose of receiving payment of principal of and interest on such Bond and for all other purposes whatsoever, whether or not such Bond be overdue, and neither the City nor the Bond Registrar shall be affected by notice to the contrary.
                2.10 The principal of and interest on the Bonds shall be payable by the Bond Registrar, as paying agent, in such funds as are legal tender for the payment of debts due the United States of America. The City shall pay the reasonable and customary charges of the Bond Registrar for the disbursement of principal and interest.
                2.11 The Bonds shall be printed or typewritten in substantially the following form:

UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF ST. LOUIS

CITY OF DULUTH
GENERAL OBLIGATION REFUNDING REVENUE BONDS
(DULUTH ENTERTAINMENT CONVENTION CENTER/IMAX® DOME THEATER PROJECT)
SERIES 2001C

R-___ $_________
 
Interest
Rate 
Maturity Date Date of
Original Issue
CUSIP
December 1, ____ April 1, 2001

REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:

The City of Duluth, in St. Louis County, Minnesota (the "City"), for value received, promises to pay to the registered owner specified above, or registered assigns, the principal amount specified above on the maturity date specified above, and to pay interest on said principal amount to the registered owner hereof from April 1, 2001, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, until the principal amount is paid or discharged, said interest being at the rate per annum specified above. Interest is payable semiannually on June 1 and December 1 of each year (each referred to herein as an "Interest Payment Date") commencing on December 1, 2001. Both principal and interest are payable in lawful money of the United States of America by check or draft at the office of Wells Fargo Bank Minnesota, National Association, in Minneapolis, Minnesota, as the registrar, paying agent, transfer agent and authenticating agent (the "Bond Registrar"), or at the office of such successor bond registrar as may be designated by the city council. The Bond Registrar shall make the interest payment with respect to this Bond directly to the registered owner hereof shown on the bond registration records maintained on behalf of the City by the Bond Registrar at the close of business on the 15th day of the month next preceding the Interest Payment Date (whether or not a business day), at such owner's address shown on said bond registration records, without, except for payment of principal on the Bond, the presentation or surrender of this Bond, and all such payments shall discharge the obligations of the City to the extent of the payments so made. Payment of principal shall be made upon presentation and surrender of this Bond to the Bond Registrar when due. For the prompt and full payment of such principal and interest as they become due, the full faith and credit of the City are irrevocably pledged.

This Bond is one of a series issued by the City in the aggregate amount of $7,040,000, all of like original issue date and tenor, except as to number, maturity date, redemption privilege, denomination and interest rate, pursuant to: (i) Laws of Minnesota 1999, Chapter 248, Section 21; (ii) the authority contained in Minnesota Statutes, Chapter 475, Section 475.67, Subdivisions 1 through 10 and all other laws thereunto enabling; and (iii) Ordinance No. 9477 approved January 29, 2001, and an authorizing resolution adopted by the governing body of the City on March 22, 2001 (the "Resolution"), for the purpose of providing money to refund in advance of maturity the outstanding principal amount of the City's Gross Revenue Recreation Facility Bonds (Duluth Entertainment Convention Center/IMAX® Dome Theater Project), Series 1994, dated December 1, 1994. The Bonds are payable from net revenues of the Duluth Entertainment and Convention Center Authority facilities, as set forth in the Resolution to which reference is made for a full statement of rights and powers thereby conferred. The Bonds are not subject to redemption and prepayment before maturity.

The Bonds of this series are issued as fully registered bonds without coupons, in the denomination of $5,000 or any integral multiple thereof. Subject to limitations set forth in the Resolution, this Bond is transferable by the registered owner hereof upon surrender of this Bond for transfer at the principal corporate office of the Bond Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Bond Registrar and executed by the registered owner hereof or the owner's attorney duly authorized in writing. Thereupon the City shall execute and the Bond Registrar shall authenticate, if required by law and this Resolution, and deliver, in exchange for this Bond, one or more new fully registered bonds in the name of the transferee, of an authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of this Bond, of the same maturity and bearing interest at the same rate.

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

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Bond Registrar's Authentication Certificate hereon shall have been executed by the Bond Registrar by one of its authorized representatives.

IN WITNESS WHEREOF, the city of Duluth, by its city council, has caused this Bond to be executed in its name by the signatures of the mayor and the city clerk.

Attest:
_______________________________
City Clerk
_______________________________
Mayor

Date of Authentication: __________________

BOND REGISTRAR'S AUTHENTICATION CERTIFICATE

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

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Bond Registrar

By__________________________________
    Authorized Representative

REGISTRATION CERTIFICATE

This Bond must be registered as to both principal and interest in the name of the owner on the books to be kept by Wells Fargo Bank Minnesota, National Association, as Bond Registrar. No transfer of this Bond shall be valid unless made on said books by the registered owner or the owner's attorney thereunto duly authorized and similarly noted on the registration books. The ownership of the unpaid principal balance of this Bond and the interest accruing thereon is registered on the books of the City in the name of the registered owner last noted below.
Date Registered Owner Signature of
Bond Registrar
4/__/01
Cede & Co.
c/o The Depository Trust Company
55 Water Street
New York, NY 10041
Federal Taxpayer I.D. No.: 13-2555119
_______________________

BOND COUNSEL OPINION

I certify that attached hereto is a full, true, and correct copy of the legal opinion rendered by bond counsel on the issuance of the Bonds, dated as of the original date of delivery of and payment for the Bond.
______________________________
City Clerk

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned sells, assigns, and transfers unto __________________________________

(Name and Address of Assignee)

____________________ Social Security or Other

____________________ Identifying Number of Assignee

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

Dated: ________________________.
______________________________

______________________________

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

Signature Guaranteed:

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

        Section 3. Revenues, Accounts and Covenants.

                3.01 Wells Fargo Bank Minnesota, National Association of Minneapolis, Minnesota, which is a suitable financial institution within the state of Minnesota whose deposits are insured by the Federal Deposit Insurance Corporation whose combined capital and surplus is not less than $500,000, and is the Refunding Bonds Trustee, is hereby designated escrow agent (the "Escrow Agent") with respect to the Refunded Bonds.
                3.02 On or prior to the delivery of the Bonds, the mayor and the clerk are hereby authorized and directed to execute on behalf of the City an escrow agreement (the "Escrow Agreement") with the Escrow Agent in substantially the form now on file with the clerk. The execution and delivery of the Escrow Agreement by the mayor and the clerk, in the form presented to the city council with such changes, omissions, insertions and revisions as the mayor and the clerk deem advisable is hereby approved, and the execution by such officers shall be conclusive evidence of such approval. All essential terms and conditions of the Escrow Agreement, including payment by the City of reasonable charges for the services of the Escrow Agent, are hereby approved and adopted and made a part of this resolution, and the City covenants that it will promptly enforce all provisions thereof in the event of default thereunder by the Escrow Agent.
                3.03 A. The City hereby pledges and irrevocably appropriates and there shall be credited to the debt service fund under the Refunded Bonds Indenture and the Escrow Agreement: (a) the proceeds of the Bonds received from the Purchaser which are not appropriated to the Debt Service Account; (b) Accrued Interest; (c) Additional Interest [amounts referenced in clauses (a), (b) and (c) are herein referred to as the "Proceeds"]; (d) funds of the City held pursuant to the Refunding Bonds Indenture(the "Funds"); and (e) investment earnings on such monies referenced in clauses (a), (b), (c) and (d), for the payment of (i) interest due on the Refunded Bonds through the Redemption Date; (ii) principal of the Refunded Bonds, at their stated maturities or mandatory sinking fund payment dates, through the Redemption Date; and (iii) the principal of and the premium on the Refunded Bonds called for prepayment and redemption on the Redemption Date.
                        B. The escrowed monies shall be maintained with the Escrow Agent pursuant to the Escrow Agreement and this resolution. The escrowed monies shall be invested in accordance with the Act, the Escrow Agreement and this Section, in securities specified in Section 475.67, Subdivision 8 of the Act or in an investment contract or similar agreement with a bank or insurance company meeting the requirements of Minnesota Statutes, Section 118A.05, Subdivision 5, which investments will provide sufficient funds, together with any cash or other funds retained under the Escrow Agreement, for the payment of (i) interest due on the Refunded Bonds through the Redemption Date; (ii) principal of the Refunded Bonds, at their stated maturities or mandatory sinking fund payment dates, through the Redemption Date; and (iii) the principal of and the premium on the Refunded Bonds called for prepayment and redemption on the Redemption Date.
                        C. From the Escrow Agreement there shall be paid: (i) interest due on the Refunded Bonds through the Redemption Date; (ii) principal of the Refunded Bonds, at their stated maturities or mandatory sinking fund payment dates, through the Redemption Date; and (iii) the principal of and the premium on the Refunded Bonds called for prepayment and redemption on the Redemption Date.
                        D. The monies held under the Escrow Agreement are irrevocably appropriated to the payment of (i) interest due on the Refunded Bonds through the Redemption Date; (ii) principal of the Refunded Bonds, at their stated maturities or mandatory sinking fund payment dates, through the Redemption Date; and (iii) the principal of and the premium on the Refunded Bonds called for prepayment and redemption on the Redemption Date. The monies under the Escrow Agreement shall be used solely for the purposes herein set forth and for no other purpose, except that any surplus under the Escrow Agreement may be remitted to the City all in accordance with the Escrow Agreement. Any monies remitted to the City upon termination of the Escrow Agreement shall be deposited in the Debt Service Account.
                        E. Securities purchased under the Escrow Agreement shall be purchased simultaneously with the delivery of and payment for the Bonds. The mayor and clerk or their designee are authorized and directed to purchase such securities.
                        F. The Project has been completed and all funds in the construction fund under the Refunded Bonds Indenture have been fully expended.

        Section 4. Covenants, Revenues, Accounts and Tax Levies.

                4.01 On or prior to the delivery of the Bonds, the mayor and the clerk are hereby authorized and directed to execute on behalf of the City a pledge agreement (the "Pledge Agreement") with the Duluth Entertainment and Convention Center Authority (the "Authority") in substantially the form now on file with the clerk. The execution and delivery of the Pledge Agreement by the mayor and the clerk, in the form presented to the city council with such changes, omissions, insertions and revisions as the mayor and the clerk deem advisable, is hereby approved, and the execution by such officers shall be conclusive evidence of such approval. All essential terms and conditions of the Pledge Agreement, including the Authority's pledge of its net revenues for payment of principal of and interest on the Bonds when due, are hereby approved and adopted and made a part of this resolution. The Bonds are issued for the refinancing of the Project which is a part of a public convenience from which revenues are derived, within the meaning of Minnesota Statutes, Section 475.51, Subd. 4(5).
                4.02 A. Debt Service Fund. For the convenience and proper administration of the monies to be borrowed and repaid on the Bonds and to provide adequate and specific security for the Purchaser and holders from time to time of the Bonds, there is hereby created a special account to be designated the 2001 DECC Refunding Bonds Debt Service Account ("Debt Service Account") within the City's Debt Service Fund created by Section 54(a) of the City Charter to be administered and maintained as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The Debt Service Account shall be maintained in the manner herein specified until all of the Bonds and interest thereon have been fully paid.
                        B. Debt Service Account. To the Debt Service Account there is hereby pledged and irrevocably appropriated and there shall be credited: (i) any balance remitted to the City upon termination of the Escrow Agreement; (ii) all the net revenues received from the Authority pursuant to the Pledge Agreement; (iii) any collections of ad valorem taxes hereafter levied for the payment of the Bonds and interest thereon; (iv) all investment earnings on funds in the Debt Service Account; (v) accrued interest, if any, received from the Purchaser upon delivery of the Bonds to the extent not required to fund the Escrow Agreement (the "Accrued Interest"); (vi) any amount of additional interest permitted by Section 475.56 of the Act paid by the Purchaser (the "Additional Interest"), to the extent not required to fund the Escrow Agreement; and (vii) any and all other monies which are properly available and are appropriated by the City to the Debt Service Account. The amount of any surplus remaining in the Debt Service Account when the Bonds and interest thereon are paid shall be used as provided in Section 475.61, Subdivision 4 of the Act.
                4.03 If the balance in the Debt Service Account is ever insufficient to pay all principal and interest then due on the Bonds, the treasurer shall nevertheless provide sufficient money from any other funds of the City which are available for that purpose, and such other funds shall be reimbursed from the Debt Service Account when the balance therein is sufficient. It is estimated that the net revenues herein pledged and appropriated from the Pledge Agreement to said Debt Service Account will be received at the times and in amounts not less than 5% in excess of the amounts needed to meet when due the principal and interest payments thereon and, accordingly, no tax is presently levied for this purpose. It is recognized, however, that the City's liability on the Bonds is not limited to the revenues so pledged, and the City Council covenants and agrees that it will levy upon all taxable property within the City, and cause to be extended, levied and collected, any taxes found necessary for full payment of the principal of and interest on the Bonds, without limitation as to rate or amount.

        Section 5. Refunding; Findings; Redemption of Refunded Bonds.

                5.01 A. It is hereby found and determined that the refunding of the Refunded Bonds pursuant to the Escrow Agreement is consistent with the Refunding Bonds Indenture and covenants and agreements, contained therein, with the holders of the Refunded Bonds.
                        B. No referendum is required to issue the Bonds, as general obligations of the City, pursuant to Laws of Minnesota 1999, Chapter 248, Section 21.
                        C. It is hereby found and determined, based upon information presently available from the City's financial advisers, that as of the date of issuance of the Bonds, the issuance of the Bonds will result in a reduction of debt service cost to the City. In accordance with Section 475.67 of the Act, as of the date of issuance of the Bonds, the present value of the dollar amount of the debt service on the Bonds, computed to their stated maturity dates, after deducting any premium, is lower by at least three percent than the present value of the dollar amount of debt service on the Refunded Bonds, exclusive of any premium, computed to their stated maturity dates.
                        D. It is hereby found and determined that the Proceeds and Funds available and appropriated to the Escrow Agreement will be sufficient, together with the permitted earnings on the investment under the Escrow Agreement, to pay (i) interest due on the Refunded Bonds through the Redemption Date; (ii) principal of the Refunded Bonds, at their stated maturities or mandatory sinking fund payment dates, through the Redemption Date; and (iii) the principal of and the premium on the Refunded Bonds called for prepayment and redemption on the Redemption Date the principal of and interest due on the Refunded Bonds through the Redemption Date and the principal of and premium on the Refunded Bonds called for prepayment on the Redemption Date.
                5.02 The Refunded Bonds shall be redeemed and prepaid in accordance with their terms and in accordance with the terms and conditions set forth in the form of notice of call for redemption on file with the city clerk, which terms and conditions are hereby approved and incorporated herein by reference. The clerk or the designee thereof is hereby authorized and directed to publish the notice of call for redemption in a publication qualified under Section 475.54 of the Act and to send written notice of the call for redemption to the Refunded Bonds Trustee in accordance with the terms of the Refunded Bonds Indenture within 30 days of the issuance of the Bonds.

        Section 6. Defeasance.

                6.01 When all Bonds and all interest thereon have been discharged as provided in this paragraph, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds shall cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds shall remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Bond Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Bond Registrar designated in Section 2.05 hereof a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. The City may also at any time discharge and cause defeasance of the Bonds in their entirety by complying with the provisions of Section 475.67 of the Act, except that the funds deposited in escrow in accordance with said provisions may (to the extent permitted by law) but need not be, in whole or in part, proceeds of bonds as therein provided, without the consent of any bondholders.

        Section 7. Certificate of Proceedings.

                7.01 The clerk is directed to file with the county auditor a certified copy of this resolution and such other information as the county auditor may require, and to obtain from the county auditor a certificate stating that the Bonds have been duly entered on his register.
                7.02 The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to bond counsel certified copies of all proceedings and records of the City relating to the authorization and issuance of the Bonds and other affidavits and certificates as may reasonably be requested to show the facts relating to the legality and marketability of the Bonds as such facts appear from the official books and records of the officers' custody or otherwise known to them. All of such certified copies, certificates and affidavits, including any heretofore furnished, constitute representations of the City as to the correctness of facts recited therein and the actions stated therein to have been taken.
                7.03 The mayor and clerk are hereby authorized and directed to certify that they have examined the official statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement.

        Section 8. Tax Covenants.

                8.01 The City covenants and agrees with the holders of the Bonds that the City will (i) take all action on its part necessary to cause the interest on the Bonds to be exempt from federal income taxes including, without limitation, restricting, to the extent necessary, the yield on investments made with the proceeds of the Bonds and investment earnings thereon, making required payments to the federal government, if any, and maintaining books and records in a specified manner, where appropriate, and (ii) refrain from taking any action which would cause interest on the Bonds to be subject to federal income taxes, including, without limitation, refraining from spending the proceeds of the Bonds and investment earnings thereon on certain specified purposes.
                8.02 A. No portion of the proceeds of the Bonds shall be used directly or indirectly to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments, except (i) for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds were issued, and (ii) in addition to the above, in an amount not greater than the lesser of five percent of the proceeds of the Bonds or $100,000. To this effect, any proceeds of the Bonds and any sums from time to time held in the Debt Service Account (or any other City account which will be used to pay principal and interest to become due on the Bonds) in excess of amounts which under the applicable federal arbitrage regulations may be invested without regard as to yield shall not be invested at a yield in excess of the applicable yield restrictions imposed by the arbitrage regulations on such investments after taking into account any applicable temporary periods or minor portion made available under the federal arbitrage regulations.
                        B. The proceeds of the Bonds and money in the Debt Service Account shall not be invested in obligations or deposits issued by, guaranteed by or insured by the United States or any agency or instrumentality thereof if and to the extent that such investment would cause the Bonds to be federally guaranteed within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended (the "Code").
                        C. The City hereby covenants not to use the proceeds of the Bonds, or to cause or permit them to be used, in such a manner as to cause the Bonds to be "private activity bonds" within the meaning of Sections 103 and 141 through 150 of the Code.
                8.03 A. The City covenants and certifies to and for the benefit of the owners of the Bonds that no use will be made of the proceeds of the Bonds, which will cause the Bonds to be arbitrage bonds within the meaning of Section 148(a) of the Code and the Treasury Regulations promulgated thereunder. Pursuant to such covenant, the City hereby agrees to comply throughout the term of the issue of the Bonds with the requirements of Section 148 of the Code and any Treasury Regulations promulgated thereunder; to this end, the City shall:
                                (1) maintain records identifying all "gross proceeds" (as defined in Section 148(f)(6)(B) of the Code) attributable to the Bonds, the yield at which such gross proceeds are invested, any arbitrage profit derived therefrom (earnings in excess of the yield on the Bonds) and any earnings derived from the investment of such arbitrage profit;
                                (2) make, or cause to be made as of the end of each Bond Year, the annual determinations of the amount, if any, of excess arbitrage required to be paid to the United States by the City (hereinafter, the "Rebate Amount");
                                (3) pay, or cause to be paid, to the United States at least once every five Bond Years the amount, if any, which is required to be paid to the United States, including the last installment which shall be made no later than 60 days after the day on which the Bonds are paid in full;
                                (4) not invest, or permit to be invested, "gross proceeds" in any acquired non-purpose obligations so as to deflect arbitrage otherwise payable to the United States as a "prohibited payment" to a third party;
                                (5) retain all records of the annual determinations of the foregoing amounts until six years after the Bonds have been fully paid; and
                                (6) in order to comply with the foregoing paragraph, the City shall determine the Rebate Amount within 30 days after the close of each Bond Year and upon payment in full of the Bonds; upon each such determination, the City shall deposit in the Rebate Fund the Rebate Amount so determined; the City shall separately account for the earnings from the investment of the Rebate Amount and such earnings shall become part of the Rebate Amount.
                        B. For purposes of this section, "Bond Year" shall mean the 12-month period beginning on the date of issuance of the Bonds or such other 12-month period designated by the Board which is permitted by the Code or any Treasury Regulation promulgated thereunder.

        Section 9. Continuing Disclosure. The City acknowledges that the Bonds are subject to the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (17 C.F.R. § 240.15c2-12) (the "Rule"). The Rule governs the obligations of certain underwriters to require that issuers of municipal bonds enter into agreements for the benefit of the bondholders to provide continuing disclosure with respect to the bonds. To provide for the public availability of certain information relating to the Bonds and the security therefor and to permit underwriters of the Bonds to comply with the Rule, which will enhance the marketability of the Bonds, the mayor and the clerk are hereby authorized and directed to execute a continuing disclosure certificate substantially in the form of the certificate currently on file in the office of the City.


STATEMENT OF PURPOSE:  This resolution establishes the terms and form and awards the sale of the $7,040,000 General Obligation Refunding Revenue Bonds (Duluth Entertainment Convention Center/IMAX® Dome Theater Project), Series 2001C, to _____________________________________________ at a true interest cost of _____________%. These bonds provide funds to refinance the city's Gross Revenue Recreation Facility Bonds (Duluth Entertainment Convention Center/IMAX® Dome Theater Project), Series 1994, dated December 1, 1994, and provide net present value savings of $_____________.