2025.07.07 CC Packet - Laserfiche WebLink

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172981943v5 16 (m) The Borrower shall not otherwise use proceeds of the Note, or take or fail to take any action within its control, the effect of which would be to impair the exemption of interest on the Note from federal income taxation; and (n) The Borrower shall maintain such written procedures as appropriate and applicable to ensure Borrower’s principal responsibility for compliance with the post- issuance requirements necessary to maintain the tax-exempt status of the interest on the Note, including requirements that must be continually monitored, including (i) monitoring the investment (pending expenditure) of Note proceeds (and keep detailed records thereof) in order to assure compliance with the arbitrage requirements applicable to the Note, (ii) monitoring the expenditures of the Note proceeds (and keep detailed records thereof), (iii) monitoring the use of the financed facility in order to ensure that the Note continues to qualify as a qualified 501(c)(3) bond within the meaning of Section 145 of the Code, (iv) periodically consulting with Bond Counsel with respect to arbitrage issues and compliance, and (v) consulting with Bond Counsel as necessary to determine whether, and to what extent, any change in the use or purpose of the financed facility will require any remedial action under the relevant Treasury Regulation; (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 for any reason, including but not limited to the Note failing to qualify as a “qualified tax exempt obligation” within the meaning of Section 265(b)(3) of the Code, 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; and (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 and the Note shall convert to a taxable obligation at the Taxable Rate effective as of the Date of Taxability. The interest rate for interest accruing from the Date of Taxability shall be adjusted to the Taxable Rate on the date of the Determination of Taxability and the Borrower shall pay any interest accruing from the Date of Taxability which is retroactively due as a result of the interest rate adjustment on the next payment date along with regularly scheduled principal payment and interest accruing from the previous payment date at the Taxable Rate in accordance with the Note. Section 4.6 Lease or Sale of Facility. Except as otherwise may be permitted in the Mortgage, the Borrower shall not lease, sell, convey or otherwise transfer the Facility in whole or part, nor sell the Facility in whole or part, without first securing the written consent of the Lender