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<br />required for Bond interest to be excluded from gross income for federal income tax <br />purposes. The City makes the following specific covenants with respect to the Code: <br /> <br />6.1. The City shall not take any action or omit any action, if it would cause the Bonds <br />to become "arbitrage bonds" under Section 148 of the Code and shall pay any <br />rebates or penalties to the United States which are required by Section 148(t) of <br />the Code. <br /> <br />6.2. The City shall operate the facilities financed with the Bonds so that the Bonds <br />are not "private activity bonds" within the meaning of Section 141 of the Code. <br /> <br />The covenants contained in this Section and any covenants in the closing documents for <br />the Bonds shall constitute contracts with the owners of the Bonds, and shall be <br />enforceable by them. <br /> <br />Section 7. Defeasance. <br /> <br />The City may defease the Bonds by setting aside, with a duly appointed escrow agent, in <br />a special escrow account irrevocably pledged to the payment of the Bonds to be defeased, <br />cash or direct obligations of the United States in an amount which, in the opinion of a <br />certified public accountant satisfactory to the escrow agent, without reinvestment, is at <br />least equal to the principal amount of the Bonds to be defeased, plus interest which will <br />accrue thereon until maturity or any earlier date for which the issuer has given irrevocable <br />instructions for redemption. Such Bonds shall be paid hereunder, and shall cease to be <br />entitled to any lien, benefit or security under this Bond Resolution except the right to <br />receive payment from such special escrow account; such Bonds shall not for any purpose <br />of this Bond Resolution be deemed outstanding. <br /> <br />Section 8. Bank Designation. <br /> <br />The City does not designate the Bonds as "qualified tax-exempt obligations" pursuant to <br />Section 265(b)(3) of the Code. The City and all subordinate entities thereof, reasonably <br />expect to issue more than $10,000,000 of tax-exempt obligations during the current <br />calendar year. <br /> <br />The foregoing Resolution adopted this 20th day of April, 1998. <br /> <br />City of Eugene <br /> <br />11- ?r1y <br /> <br />City Recorder <br />