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APPENDIX II
<br /> 3. Interest on the Bonds (a)is not includable in gross income for federal income tax CONTINUING DISCLOSURE COVENANTS
<br /> purposes or in taxable net income of individuals, estates or trusts for Minnesota income tax
<br /> purposes; (b) is includable in taxable income of corporations and financial institutions for In order to permit bidders for the Bonds and other participating underwriters
<br />in the
<br /> purposes of the Minnesota franchise tax; (c)is not an item of tax preference includable in
<br /> alternative minimum taxable income for purposes of the federal alternative minimum tax primary offering of the Bonds to comply with paragraph(b)(5) of Rule 15c2-12 promulgated
<br />by
<br /> applicable to all taxpayers or the Minnesota alternative minimum tax applicable to individuals, the Securities and Exchange Commission under the Securities Exchange Act of
<br />1934 (as in effect
<br /> estates and trusts; and (d) is includable in adjusted current earnings of corporations in and interpreted from time to time,the "Rule"), the City will covenant and agree in
<br />the Bond
<br /> determining alternative minimum taxable income for purposes of the federal alternative Resolutions, for the benefit of the Owners (as hereinafter defined)from time to time
<br />of any
<br /> minimum tax imposed on corporations.
<br /> Bonds which are Outstanding, to provide annual reports of specified information and notice of
<br /> the occurrence of certain events, if material, as hereinafter described (the "Disclosure
<br /> 4. The City has designated the Bonds as "qualified tax-exempt obligations" within the r Covenants"). The City is the only"obligated person"in respect of the Bonds within
<br />the meaning
<br /> meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), of the Rule for purposes of identifying the entities in respect of which continuing
<br />disclosure must
<br /> and, financial institutions described in Section 265(b)(5) of the Code may treat the Bonds for be made. The City has complied in all material respects with any undertaking previously
<br />entered
<br /> purposes of Section 265(b)(2) and 291(e)(1)(B) of the Code as if they were acquired on August 7, into by it under the Rule.
<br /> 1986.
<br /> Breach of the Disclosure Covenants will not constitute a default under the Bond
<br /> The opinions expressed in paragraphs 1 and 2 are subject as to enforceability to the effect Resolutions or the Bonds. A broker or dealer is to consider a known breach of
<br />the Disclosure
<br /> of any state or federal laws relating to bankruptcy, insolvency,reorganization, moratorium or Covenants,however,before recommending the purchase or sale of Bonds in the secondary
<br /> creditors'rights and the exercise of judicial discretion. market. Thus, a failure on the part of the City to observe the Disclosure Covenants may
<br /> adversely affect the transferability and liquidity of the Bonds and their market price.
<br /> The opinions set forth in paragraphs 3 and 4 are subject to the condition that the City
<br /> comply with all the requirements of the Code that must be satisfied subsequent to the issuance of As used herein, "Owner"or"Bondowner" means,in respect of a Bond, the registered
<br /> the Bonds in order that interest thereon be, or continue to be,excluded from gross income for holder or holders thereof appearing in the bond register maintained by the Registrar
<br />or any
<br /> federal income tax purposes, and the Bonds be and continue to be qualified tax-exempt "Beneficial Owner" (as hereinafter defined) thereof,if such Beneficial Owner provides to
<br />the
<br /> obligations. The City has covenanted in the resolution authorizing the issuance of the Bonds to Registrar evidence of such beneficial ownership in form and substance reasonably
<br />satisfactory to
<br /> comply with these continuing requirements. Failure of the City to comply with these the Registrar. As used herein, "Beneficial Owner"means, in respect of a Bond, any person
<br />or
<br /> requirements may result in the inclusion of interest on the Bonds in federal gross income and in entity which (i) has the power,directly or indirectly, to vote or consent
<br />with respect to,or to
<br /> Minnesota taxable net income,retroactive to the date of issuance of the Bonds. Except as stated dispose of ownership of, such Bond (including persons or entities holding Bonds
<br />through
<br /> in this opinion, we express no opinion regarding federal, state or other tax consequences to nominees,depositories or other intermediaries), or(b)is treated as the owner of
<br />the Bond for
<br /> owners of the Bonds. federal income tax purposes.
<br /> We have not been asked, and have not undertaken, to review the accuracy, completeness As used herein, a"Material Fact"is a fact as to which a substantial likelihood
<br />exists that a
<br /> or sufficiency of any offering materials relating to the Bonds,and accordingly, we express no reasonably prudent investor would attach importance thereto in deciding to buy, hold
<br />or sell a
<br /> opinion with respect thereto. Bond or, if not disclosed, would significantly alter the total information otherwise available to an
<br /> investor from the Official Statement, information disclosed under the Disclosure Covenants or
<br /> Dated: March , 2001. information generally available to the public. Notwithstanding the foregoing sentence, a
<br /> ` "Material Fact" is also an event that would be deemed"material" for purposes of the purchase,
<br /> Very truly yours, holding or sale of a Bond within the meaning of applicable federal securities laws, as interpreted
<br /> at the time of discovery of the occurrence of the event.
<br /> i
<br /> Information To Be Disclosed
<br /> The City will provide, in the manner set forth under"Manner of Disclosure" below, either
<br /> directly or indirectly through an agent designated by the City, the following information at the
<br /> following times:
<br /> 1-2
<br /> II-1
<br />
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