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• • Section 7. Tax Covenant. 7.01. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its 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, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure 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. 7.02. The City will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments and limitations on amounts invested at a yield greater than the yield on the Bonds, and the rebate of excess investment earnings to the United States. 7.03. The City further covenants not to use the proceeds of the Bonds or to cause or permit them or any of 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. 7.04. The Bonds are deemed to be "qualified tax- exempt obligations" within the meaning of Section 265(b)(3) of the Code, because the City determines that: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the Refunded Bonds were qualified tax - exempt obligations; (c) the Bonds are not taken into account in determining the status of the City as a "qualified small issuer" within the meaning of Section 265(b)(3) of the Code, because the amount of the Bonds does not exceed the outstanding amount of the Refunded Bonds; (d) the average maturity date of the Bonds is not later than the average maturity date of the Refunded Bonds; and (e) the Bonds have a maturity date which is not later than the date which is 30 years after the date the Refunded Bonds were issued. 299374v2 SJB LN140 -97 14