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Section 10. Tax Covenant: Arbitrage Certificate. (a) The Issuer covenants and agrees with the holders from tune to time of the Bonds herein authorized, that it will not take, or pemut to be taken by any of its officers, employees or agents, any action which would cause the interest payable oa the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the "Code") and regulations issued thereunder, in effect at the time of such action, and that it will take, or will cause its officers,. employees or agents to take, all affirmative actions within its powers which may be necessary to insure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. (b} The Mayor aad City Administrator being the officers of the Issuer charged with the responsibility for issuing the Bonds pursuant to this Resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Code, and Sections 1.148-0 throagh I.I48-1 I of the Regulations, stating that on the basis of facts, estimates and circumstances in existence on the daze of issue and delivery of the Bonds, it is reasonably expected 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 the applicable regulations. Section 1 i. Arbitrage Rebate Exemption. It is hereby found that the Issuer has general taxing powers, that none of the Bonds is a "private activity bond" within the meaning of Section 141 of the Code, that 95% or more of the net proceeds of the Bonds are to be used for local governmental activities of the Issuer, and that the aggregate face amount of all tax-exempt • obligations (other than private activity bonds) issued by the issuer and all subordinate entities thereof during the year 1999 is not reasonably expected to exceed $5,000,000. Therefore, pursuant to the provisions of Section 148(f)(4)(C) of the Code, the Issuer shall not be required to comply with the arbitrage rebate requirements of paragraphs (Z) and (3) of Section 148(f} of the Code. Section 12. Oualified Tax-Exempt Obli 'ons. The City Council hereby designates the Bonds as "qualified tax-exempt obligations" for purposes of Section 265(bx3) of the Code relating to the disallowance of interest expense for financial institutions, and hereby finds that the reasonably anticipated amount of qualified tax-exempt obligations (wiihia the meaning of Section 265(b)(3} of the Code) which will be issued by the Issuer and all subordinate entities during calendar year 1999 does not exceed $10,000,000. Section 13. Official Statemenrt. The Official Statement rcIating to the Bonds, dated . 1999, prepared and delivered on behalf of the Issuer by Springsted Incorporated, is hereby approved, and the officers of the Issuer are hereby authorized and directed to execute such certificates as maybe appropriate concerning the accuracy, completeness and sut~ciency thereof. Mayor Attest: City Administrator ]796687.Oj . 17