12-19-2007 Council Agenda - Laserfiche WebLink

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(k) No Note proceeds shall be invested in investments which cause the Note to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the moneys in such funds exceed, within the meaning of Section 149(b)(3)(B) of the Code, (i) amounts invested for an initial temporary period until the moneys are needed for the purpose for which the Note were issued, (ii) investments of a bona fide debt service fund, and (iii) investments of a reserve which meet the requirement of Section 148(d) of the Code, such excess moneys shall be invested in only those investments, which are (A) obligations issued by the United States Treasury, (B) other investments permitted under regulations, or (C) obligations which are (I) not issued by, or guaranteed by, or insured by, the United States or any agency or instrumentality thereof or (11) not federally insured deposits or accounts, all within the meaning of Section 149(b) of the Code; and (l) The Project is suitable for use in academic instruction and educational and cultural activities, and no part of the Project is designed for use or will be used primarily for religious instruction or as a place for devotional activities or religious worship; (m) In order to qualify the Note and this Agreement under the "governmental program" provisions of Section 1.148 -1(b) of the Treasury Regulations, the Borrower (and any "related person" thereto) will take no action the effect of which would be to disqualify this Loan Agreement as an "acquired program obligation" under said Section 1.148 -1(b), including but not limited to entering into any arrangement, formal or informal, for the Borrower to purchase bonds or Note of the City in an amount related to the amount of the Note. (n) Not otherwise use Note proceeds, or take or fail to take any action, the effect of which would be to cause interest on the Note to be included in gross income for purposes of federal income taxation. (2) For the purpose of this Section, a "Determination of Taxability" shall mean the issuance of a statutory notice of deficiency by the Internal Revenue Service, or a ruling of the National Office or any District Office of the Internal Revenue Service, or a final decision of a court of competent jurisdiction, or a change in any applicable federal statute, which holds or provides in effect that the interest payable on the Note is includible, for federal income tax purposes under Section 103 of the Code in the gross income of the Lender or any other holder or prior holder of the Note, if the period, if any, for contest or appeal of such action, ruling or decision by the Borrower or Lender or any other interested party has expired without any such contest or appeal having been properly instituted by the Lender, the Borrower or any other interested party. The expenses of any such contest shall be paid by the party initiating the contest, and neither the Lender nor the Borrower shall be required to contest or appeal any Determination of Taxability. The "Date of Taxability" shall mean that point in time, as specified in the determination, ruling, order, or decision, that the interest payable on the Note becomes includible in the gross income of the Lender or any other holder or prior holder of the Note, as the case may be, for federal income tax purposes. (3) If the Borrower receives a Determination of Taxability it will promptly give notice of such Determination of Taxability to the City and the Lender. Upon receipt of a Determination of Taxability, the interest rate on the Note shall be increased to the rate set forth in the Note from and after the Date of Taxability. 2110583v4 1.f.33