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• 6.03. Covenant. The City covenants and agrees with the holders from time to <br /> time of the Bonds that it will not take or permit to be taken by any of its officers, employees or <br /> agents any action which would cause the interest on the Bonds to become subject to taxation <br /> under the Internal Revenue Code of 1986, as amended (the "Code"), and Regulations <br /> promulgated thereunder(the Regulations), as such are enacted or promulgated and in effect on <br /> the date of issue of the Bonds, and covenants to take any and all actions within its powers to <br /> ensure that the interest on the Bonds will not become subject to taxation under such Code and <br /> Regulations. The Improvements are public improvements available for use by members of the <br /> general public on a substantially equal basis. The City will not enter into any lease, use <br /> agreement or other contract respecting the Improvements or security for the payment of the <br /> Bonds which would cause the Bonds to be considered "private activity bonds" or"private loan <br /> bonds"pursuant to Section 141 of the Code. <br /> 6.04. Arbitrage Rebate. For purposes of complying with the requirements of <br /> Section 148(f)(4)(C) of the Code relating to the exemption of certain small governmental units <br /> from the rebate requirements of the Code, the City represents that: <br /> (i) the City is a governmental unit with general taxing powers; <br /> (ii) the Bonds are not"private activity bonds"as defined in Section 141 of the <br /> Code (Private Activity Bonds); <br /> • (iii) ninety-five percent of the net proceeds of the Bonds are to be used for the <br /> local governmental purposes of the City; and <br /> (iv) the aggregate face amount of all tax-exempt bonds (other than Private <br /> Activity Bonds) issued by the City in calendar year in which the Bonds are <br /> to be issued is not reasonably expected to exceed $5,000,000. <br /> Therefore,pursuant to the provisions of Section 148(f)(4)(C) of the Code, the City shall not be <br /> required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of Section <br /> 148(f) of the Code. <br /> 6.05. Arbitrage Certification. The Mayor and the City Manager,being the <br /> officers of the City charged with the responsibility for issuing the Bonds pursuant to this <br /> resolution, are authorized and directed to execute and deliver to the Purchaser a certification in <br /> accordance with the provisions of Section 148 of the Code, and the Regulations, stating the facts, <br /> estimates and circumstances in existence on the date of issue and delivery of the Bonds which <br /> make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that <br /> would cause the Bonds to be arbitrage bonds within the meaning of the Code and Regulations. <br /> 6.06. Interest Disallowance. The City hereby designates the Bonds as "qualified <br /> tax—exempt obligations" for purpose of Section 265(b) of the Code relating to the disallowance <br /> of interest expenses for financial institutions. The City represents that in calendar year 2000 it <br /> • does not reasonably expect to issue tax—exempt obligations which are not private activity bonds <br /> -17- <br />