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I I' 'I II . , , ' .01. The City covenants and agrees with the holders from time to time of the Bonds that it will ot take or pemlit to be taken by any of its officers, employees or agents any action which would ause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 986, as amended (the Code), and the Treasury Regulations promulgated thereunder, in effect at he time of such actions, and that it will take or cause its officers, employees or agents to take, all ffinnative action within its power that may be necessary to ensure that such interest will not ecome subject to taxation under the Code and applicable Treasury Regulations, as presently xisting or as hereafter amended and made applicable to the Bonds. .02. The City will comply with requirements necessary under the Code to establish and naintain the exclusion from gross income of the interest on the Bonds under Section 103 of the ode, including without limitation requirements relating to temporary periods for investments, imitations on amounts invested at a yield greater than the yield on the Bonds and the rebate of xcess investment earnings to the United States. .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. .04. In order to qualify the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b )(3) of the Code, the City makes the following factual statements and representations: (a) the Bonds are not "private activity bonds" as defined in Section 141 of the Code; (b) the City designates the Bonds as "qualified tax-exempt obligations" for purposes of ection 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than private ctivity bonds that are not qualified 501(c)(3) bonds) which will be issued by the City (and all ubordinate entities of the City) during calendar year 2004 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the City during calendar year 004 have been designated for purposes of Section 265(b )(3) of the Code. 6.05. The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. Section 7. Book-Entry System: Limited Obligation of City. 7.01. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.03 hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the S18-252 4vl NE 136-1 I: II 1,1