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(b) The City will not take any action or fail to take any action with respect to the investment of the proceeds of the Bonds or any other funds of the City, including amounts received from the investment of any of the foregoing, if such action or inaction, based upon the facts, estimates, and circumstances known on the Closing Date, would result in constituting the Bonds "arbitrage bonds," within the meaning of Section 148 ofthe Code, and the City will not take any deliberate action motivated by arbitrage that would have such result. (c) The City will not take any action or fail to take any action which action or omission would (i) result in the interest on the Bonds being includable in gross income for federal tax purposes; (ii) result in the Bonds being treated as "private activity bonds" within the meaning of Section 141(a) of the Code; (iii) result in the Bonds being treated as "federally guaranteed" within the meaning of Section 149(b) ofthe Code; or (iv) result in the Bonds being treated as "hedge bonds" within the meaning of Section 149(g) ofthe Code. (d) The City will comply with the provisions of Section 148(t) of the Code (relating to paying certain excess earnings of investment proceeds of the Bonds to the United States) and the regulations promulgated thereunder. This covenant includes the maintenance of records regarding investments acquired with the proceeds by or on behalf of the City adequate to calculate the City's rebate liability. ( e) It is the understanding of the City that the covenants contained herein are intended to assure compliance with the regulations and rulings issued by the Internal Revenue Service. In the event that regulations or rulings are hereafter issued which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally-recognized bond counsel, will not adversely affect the exclusion from gross income of interest on the Bonds under Section 103 of the Code. In the event that regulations or rulings are hereafter issued which impose additional requirements which are applicable to the Bonds, the City agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the exclusion from gross income of interest on the Bonds for federal tax purposes under Section 103 of the Code. (t) Proper officers of the City charged with the responsibility of issuing the Bonds are hereby directed to make, execute and deliver certifications as to facts, estimates and circumstances in existence as ofthe Closing Date and stating whether there are any facts, estimates or circumstances that would materially change the City's current expectations. (g) The covenants and representations made or required by this Section are for the benefit of the Owners and may be relied upon by the Owners and Bond Counsel for the City. (h) The covenants set forth in subsections (b), (c), (d) and (e) of this Section shall survive the later of the defeasance or discharge of the Bonds. ARTICLE XI DEF AUL T AND REMEDIES Section 11.01. Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an "Event of Default," to-wit: (i) the failure to make payment of the principal of or interest on any ofthe Bonds when the same becomes due and payable; or R:\SANMARIWWSS.OOIDOCSlFinal\ORDWWSS. WPD 33