Help -
Help for Webmasters
« back to results for ""
Below is a cache of http://www.cityofseattle.net/light/bonds/docs/legal_and_tax_information.pdf. It's a snapshot of the page taken as our search engine crawled the Web.
The web site itself may have changed. You can check the current page or check for previous versions at the Internet Archive. Yahoo! is not affiliated with the authors of this page or responsible for its content. LEGAL AND TAX INFORMATION Bond Litigation LEGAL AND TAX INFORMATION Bond Litigation There is no litigation pending with process properly served on the City questioning the validity of the
Bonds or the power and authority of the City to issue the Bonds. Approval of Counsel Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the
approving legal opinion of Foster Pepper & Shefelman PLLC, Bond Counsel. A form of the opinion of
such firm with respect to the Bonds is attached hereto as Appendix B. Bond Counsel will be compensated
only upon the issuance and sale of the Bonds. Tax Exemption Exclusion from Gross Income. In the opinion of Bond Counsel, under existing federal law and assuming
compliance with applicable requirements of the Internal Revenue Code of 1986, as amended (the Code),
that must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds is excluded from
gross income for federal income tax purposes and is not an item of tax preference for purposes of the
alternative minimum tax applicable to individuals. Continuing Requirements. The City is required to comply with certain requirements of the Code after the
date of issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross
income for federal income tax purposes, including, without limitation, requirements concerning the
qualified use of Note proceeds and the facilities financed or refinanced with Note proceeds, limitations on
investing gross proceeds of the Bonds in higher yielding investments in certain circumstances, and the
arbitrage rebate requirement to the extent applicable to the Bonds. The City has covenanted in the Bond
Ordinance to comply with those requirements, but if the City fails to comply with those requirements,
interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Corporate Alternative Minimum Tax. While interest on the Bonds also is not an item of tax preference for
purposes of the alternative minimum tax applicable to corporations, under Section 55 of the Code,
tax-exempt interest, including interest on the Bonds, received by corporations is taken into account in the
computation of adjusted current earnings for purposes of the alternative minimum tax applicable to
corporations (as defined for federal income tax purposes). Under the Code, alternative minimum taxable
income of a corporation will be increased by 75 percent of the excess of the corporations adjusted current
earnings (including any tax-exempt interest) over the corporations alternative minimum taxable income
determined without regard to such increase. A corporations alternative minimum taxable income, so
computed, that is in excess of an exemption of $40,000, which exemption will be reduced (but not below
zero) by 25 percent of the amount by which the corporations alternative minimum taxable income exceeds
$150,000, is then subject to a 20 percent minimum tax. For taxable years beginning after December 31, 1997, the corporate alternative minimum tax is repealed for
a small business corporation that had average gross receipts of less than $5 million for the three-year period
beginning after December 31, 1994, and such a small business corporation will continue to be exempt from
the corporate alternative minimum tax so long as its average gross receipts do not exceed $7.5 million. Tax on Certain Passive Investment Income of S Corporations. Under Section 1375 of the Code, certain
excess net passive investment income, including interest on the Bonds, received by an S corporation (a
corporation treated as a partnership for most federal tax purposes) that has Subchapter C earnings and
profits at the close of the taxable year may be subject to federal income taxation at the highest rate
applicable to corporations if more than 25 percent of the gross receipts of such S corporation is passive
investment income. Foreign Branch Profits Tax. Interest on the Bonds may be subject to the foreign branch profits tax
imposed by Section 884 of the Code when the Bonds are owned by, and effectively connected with a trade
or business of, a United States branch of a foreign corporation. Certain Other Federal Tax Consequences Bonds Not Qualified Tax-Exempt Obligations for Financial Institutions. Section 265 of the Code
provides that 100 percent of any interest expense incurred by banks and other financial institutions for
interest allocable to tax-exempt obligations acquired after August 7, 1986, will be disallowed as a tax
deduction. However, if the tax-exempt obligations are obligations other than private activity bonds, are
issued by a governmental unit that, together with all entities subordinate to it, does not reasonably
anticipate issuing more than $10,000,000 of tax-exempt obligations (other than private activity bonds and
other obligations not required to be included in such calculation) in the current calendar year, and are
designated by the governmental unit as qualified tax-exempt obligations, only 20 percent of any interest
expense deduction allocable to those obligations will be disallowed. The City is a governmental unit that, together with all subordinate entities, reasonably anticipates issuing
more than $10,000,000 of tax-exempt obligations (other than private activity bonds and other obligations
not required to be included in such calculation) during the current calendar year and has not designated the
Bonds as qualified tax-exempt obligations for purposes of the 80 percent financial institution interest
expense deduction. Therefore, no interest expense of a financial institution allocable to the Bonds is
deductible for federal income tax purposes. Reduction of Loss Reserve Deductions for Property and Casualty Insurance Companies. Under
Section 832 of the Code, interest on the Bonds received by property and casualty insurance companies will
reduce tax deductions for loss reserves otherwise available to such companies by an amount equal to
15 percent of tax-exempt interest received during the taxable year. Effect on Certain Social Security and Retirement Benefits. Section 86 of the Code requires recipients of
certain Social Security and certain Railroad Retirement benefits to take receipts or accruals of interest on
the Bonds into account in determining gross income. Other Possible Federal Tax Consequences. Receipt of interest on the Bonds may have other federal tax
consequences as to which prospective purchasers of the Bonds may wish to consult their own tax advisors. Original Issue Premium. The Bonds maturing on December 1 in the years 2003 through 2012, inclusive,
have been sold at prices reflecting original issue premium (Premium Bonds). An amount equal to the
excess of the purchase price of a Premium Bond over its stated redemption price at maturity constitutes
premium on such Premium Bond. A purchaser of a Premium Bond must amortize any premium over such
Premium Bonds term using constant yield principles, based on the purchasers yield to maturity. The
amount of amortizable premium allocable to an interest accrual period for a Premium Bond will offset a
like amount of qualified stated interest on such Premium Bond allocable to that accrual period, and may
affect the calculation of alternative minimum tax liability described above. As premium is amortized, the
purchasers basis in such Premium Bond is reduced by a corresponding amount, resulting in an increase in
the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition
of such Premium Bond prior to its maturity. Even though the purchasers basis is reduced, no federal
income tax deduction is allowed. Purchasers of Premium Bonds, whether at the time of initial issuance or
subsequent thereto, should consult with their own tax advisors with respect to the determination and
treatment of premium for federal income tax purposes and with respect to state and local tax consequences
of owning such Premium Bonds. Original Issue Discount. The Bonds maturing on December 1 in the years 2013 and 2014 have been sold
at prices reflecting original issue discount (Discount Bonds). Under existing law, the original issue
discount in the selling price of each Discount Bond, to the extent properly allocable to each owner of such
Discount Bond, is excluded from gross income for federal income tax purposes with respect to such owner.
The original issue discount is the excess of the stated redemption price at maturity of such Discount Bond over the initial offering price to the public, excluding underwriters and other intermediaries, at which price
a substantial amount of the Discount Bonds of such maturity were sold. Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound
basis. The amount of original issue discount that accrues to an owner of a Discount Bond during any
accrual period generally equals (i) the issue price of such Discount Bond plus the amount of original issue
discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such Discount Bond
(determined on the basis of compounding at the close of each accrual period and properly adjusted for the
length of the accrual period), less (iii) any interest payable on such Discount Bond during such accrual
period. The amount of original issue discount so accrued in a particular accrual period will be considered
to be received ratably on each day of the accrual period, will be excluded from gross income for federal
income tax purposes, and will increase the owners tax basis in such Discount Bond. Any gain realized by
an owner from a sale, exchange, payment, or redemption of a Discount Bond will be treated as gain from
the sale or exchange of such Discount Bond. The portion of original issue discount that accrues in each year to an owner of a Discount Bond may result
in certain collateral federal income tax consequences. The accrual of such portion of the original issue
discount will be included in the calculation of alternative minimum tax liability as described above, and
may result in an alternative minimum tax liability even though the owner of such Discount Bond will not
receive a corresponding cash payment until a later year. Owners who purchase Discount Bonds in the initial public offering but at a price different from the first
offering price at which a substantial amount of those Discount Bonds were sold to the public, or who do not
purchase Discount Bonds in the initial public offering, should consult their own tax advisors with respect to
the tax consequences of the ownership of such Discount Bonds. Owners of Discount Bonds who sell or
otherwise dispose of such Discount Bonds prior to maturity should consult their own tax advisors with
respect to the amount of original issue discount accrued over the period such Discount Bonds have been
held and the amount of taxable gain or loss to be recognized upon that sale or other disposition of Discount
Bonds. Owners of Discount Bonds also should consult their own tax advisors with respect to state and
local tax consequences of owning such Discount Bonds. Continuing Disclosure Undertaking Undertaking to Provide Notice of Material Events. To meet the requirements of United States Securities
and Exchange Commission (SEC) Rule 15c2-12(b)(5) (the Rule), the City will undertake in the Note
Resolution (the Undertaking) for the benefit of holders of the Bonds, as follows. Annual Financial Information. The City agrees to provide or cause to be provided to each nationally
recognized municipal securities information repository designated by the SEC in accordance with the Rule
(each NRMSIR) and to a state information depository, if one is established in the State of Washington
and recognized by the SEC (the SID), annual financial information and operating data regarding the
Light System of the type included in this Official Statement as generally described below (annual financial
information): (i) annual financial statements of the Light System prepared in accordance with generally accepted
accounting principles applicable to governmental units (except as otherwise noted therein), as such
principles may be changed from time to time and as permitted by State law; which financial
statements will not be audited, except that if and when audited financial statements are otherwise
prepared and available to the City they will be provided; (ii) a statement of authorized, issued and outstanding bonded debt secured by Gross Revenues of the
Light System; (iii) debt service coverage ratios; (iv) sources of Light System power and the cost thereof; (v) general customer statistics, such as number and type of customer and power consumed, and
revenues by customer class; and (vi) average revenue per kWh of sales for each customer class. Annual financial information described above will be provided to each NRMSIR and the SID, not later than
the last day of the ninth month after the end of each fiscal year of the City, as such fiscal year may be
changed as required or permitted by State law, commencing with the Citys fiscal year ending
December 31, 2002. The annual financial information may be provided in a single or multiple documents,
and may be incorporated by reference from other documents, including official statements of debt issues
with respect to which the City is an obligated person as defined by the Rule, which documents have been
filed with each NRMSIR and the SID. The City has further agreed to provide or cause to be provided to each NRMSIR or the Municipal
Securities Rulemaking Board (MSRB), and to the SID, timely notice of a failure by the City to provide
the required annual financial information on or before the date specified above. Material Events. The City agrees to provide or cause to be provided to each nationally recognized
municipal securities information repository (each a NRMSIR) or the Municipal Securities Rulemaking
Board (MSRB), and to a state information depository, if one is established in the State and recognized by
the SEC (the SID), timely notice of the occurrence of any of the following events, if applicable and
material, with respect to the Bonds, specified by the Rule: (i) principal and interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (vii) modifications to the rights of the holders of the Bonds; (viii) Note calls ; (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi) rating changes. For purposes of this section, Continuing Disclosure Undertaking, the term holders of the Bonds shall
have the meaning intended for such term under the Rule. Amendment of Undertaking. The Undertaking is subject to amendment without the consent of any holder
of any Note, or any broker, dealer, municipal securities dealer, participating underwriter, rating agency,
NRMSIR, the SID or the MSRB, under the circumstances and in the manner permitted by the Rule. The City will give notice to each NRMSIR or the MSRB, and the SID, of the substance (or provide a copy)
of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the
amendment changes the type of annual financial information to be provided, the annual financial
information containing the amended operations data or financial information will include a narrative
explanation of the effect of that change on the type of information to be provided. Termination of Undertaking. The Citys obligations to provide annual financial information and notices
of certain events will terminate upon the legal defeasance, prior redemption or payment in full of all of the
then outstanding Bonds. In addition, the Undertaking, or any provision thereof, will be null and void if the
City obtains an opinion of nationally recognized bond counsel or other counsel familiar with the federal
securities laws to the effect that those portions of the Rule which require the Undertaking, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and so
notifies the SID and either the MSRB or each then existing NRMSIR. Remedy for Failure to Comply with Undertaking. If the City fails to comply with the Undertaking, the
City will proceed with due diligence to cause such noncompliance to be corrected as soon as practicable
after the City learns of that failure. No failure by the City or other obligated person to comply with the Undertaking will constitute a default in
respect of the Bonds. The sole remedy of any holder of a Note will be to take such actions as that holder
deems necessary and appropriate to compel the City or other obligated person to comply with the
Undertaking. Other Continuing Disclosure Undertakings of the City. The City has entered into undertakings to provide
annual information and the notice of the occurrence of certain events with respect to all bonds issued by the
City on and after July 3, 1995, subject to the Rule. The City is in compliance with all such undertakings.
The web site itself may have changed. You can check the current page or check for previous versions at the Internet Archive. Yahoo! is not affiliated with the authors of this page or responsible for its content. LEGAL AND TAX INFORMATION Bond Litigation LEGAL AND TAX INFORMATION Bond Litigation There is no litigation pending with process properly served on the City questioning the validity of the
Bonds or the power and authority of the City to issue the Bonds. Approval of Counsel Legal matters incident to the authorization, issuance and sale of the Bonds by the City are subject to the
approving legal opinion of Foster Pepper & Shefelman PLLC, Bond Counsel. A form of the opinion of
such firm with respect to the Bonds is attached hereto as Appendix B. Bond Counsel will be compensated
only upon the issuance and sale of the Bonds. Tax Exemption Exclusion from Gross Income. In the opinion of Bond Counsel, under existing federal law and assuming
compliance with applicable requirements of the Internal Revenue Code of 1986, as amended (the Code),
that must be satisfied subsequent to the issue date of the Bonds, interest on the Bonds is excluded from
gross income for federal income tax purposes and is not an item of tax preference for purposes of the
alternative minimum tax applicable to individuals. Continuing Requirements. The City is required to comply with certain requirements of the Code after the
date of issuance of the Bonds in order to maintain the exclusion of the interest on the Bonds from gross
income for federal income tax purposes, including, without limitation, requirements concerning the
qualified use of Note proceeds and the facilities financed or refinanced with Note proceeds, limitations on
investing gross proceeds of the Bonds in higher yielding investments in certain circumstances, and the
arbitrage rebate requirement to the extent applicable to the Bonds. The City has covenanted in the Bond
Ordinance to comply with those requirements, but if the City fails to comply with those requirements,
interest on the Bonds could become taxable retroactive to the date of issuance of the Bonds. Corporate Alternative Minimum Tax. While interest on the Bonds also is not an item of tax preference for
purposes of the alternative minimum tax applicable to corporations, under Section 55 of the Code,
tax-exempt interest, including interest on the Bonds, received by corporations is taken into account in the
computation of adjusted current earnings for purposes of the alternative minimum tax applicable to
corporations (as defined for federal income tax purposes). Under the Code, alternative minimum taxable
income of a corporation will be increased by 75 percent of the excess of the corporations adjusted current
earnings (including any tax-exempt interest) over the corporations alternative minimum taxable income
determined without regard to such increase. A corporations alternative minimum taxable income, so
computed, that is in excess of an exemption of $40,000, which exemption will be reduced (but not below
zero) by 25 percent of the amount by which the corporations alternative minimum taxable income exceeds
$150,000, is then subject to a 20 percent minimum tax. For taxable years beginning after December 31, 1997, the corporate alternative minimum tax is repealed for
a small business corporation that had average gross receipts of less than $5 million for the three-year period
beginning after December 31, 1994, and such a small business corporation will continue to be exempt from
the corporate alternative minimum tax so long as its average gross receipts do not exceed $7.5 million. Tax on Certain Passive Investment Income of S Corporations. Under Section 1375 of the Code, certain
excess net passive investment income, including interest on the Bonds, received by an S corporation (a
corporation treated as a partnership for most federal tax purposes) that has Subchapter C earnings and
profits at the close of the taxable year may be subject to federal income taxation at the highest rate
applicable to corporations if more than 25 percent of the gross receipts of such S corporation is passive
investment income. Foreign Branch Profits Tax. Interest on the Bonds may be subject to the foreign branch profits tax
imposed by Section 884 of the Code when the Bonds are owned by, and effectively connected with a trade
or business of, a United States branch of a foreign corporation. Certain Other Federal Tax Consequences Bonds Not Qualified Tax-Exempt Obligations for Financial Institutions. Section 265 of the Code
provides that 100 percent of any interest expense incurred by banks and other financial institutions for
interest allocable to tax-exempt obligations acquired after August 7, 1986, will be disallowed as a tax
deduction. However, if the tax-exempt obligations are obligations other than private activity bonds, are
issued by a governmental unit that, together with all entities subordinate to it, does not reasonably
anticipate issuing more than $10,000,000 of tax-exempt obligations (other than private activity bonds and
other obligations not required to be included in such calculation) in the current calendar year, and are
designated by the governmental unit as qualified tax-exempt obligations, only 20 percent of any interest
expense deduction allocable to those obligations will be disallowed. The City is a governmental unit that, together with all subordinate entities, reasonably anticipates issuing
more than $10,000,000 of tax-exempt obligations (other than private activity bonds and other obligations
not required to be included in such calculation) during the current calendar year and has not designated the
Bonds as qualified tax-exempt obligations for purposes of the 80 percent financial institution interest
expense deduction. Therefore, no interest expense of a financial institution allocable to the Bonds is
deductible for federal income tax purposes. Reduction of Loss Reserve Deductions for Property and Casualty Insurance Companies. Under
Section 832 of the Code, interest on the Bonds received by property and casualty insurance companies will
reduce tax deductions for loss reserves otherwise available to such companies by an amount equal to
15 percent of tax-exempt interest received during the taxable year. Effect on Certain Social Security and Retirement Benefits. Section 86 of the Code requires recipients of
certain Social Security and certain Railroad Retirement benefits to take receipts or accruals of interest on
the Bonds into account in determining gross income. Other Possible Federal Tax Consequences. Receipt of interest on the Bonds may have other federal tax
consequences as to which prospective purchasers of the Bonds may wish to consult their own tax advisors. Original Issue Premium. The Bonds maturing on December 1 in the years 2003 through 2012, inclusive,
have been sold at prices reflecting original issue premium (Premium Bonds). An amount equal to the
excess of the purchase price of a Premium Bond over its stated redemption price at maturity constitutes
premium on such Premium Bond. A purchaser of a Premium Bond must amortize any premium over such
Premium Bonds term using constant yield principles, based on the purchasers yield to maturity. The
amount of amortizable premium allocable to an interest accrual period for a Premium Bond will offset a
like amount of qualified stated interest on such Premium Bond allocable to that accrual period, and may
affect the calculation of alternative minimum tax liability described above. As premium is amortized, the
purchasers basis in such Premium Bond is reduced by a corresponding amount, resulting in an increase in
the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition
of such Premium Bond prior to its maturity. Even though the purchasers basis is reduced, no federal
income tax deduction is allowed. Purchasers of Premium Bonds, whether at the time of initial issuance or
subsequent thereto, should consult with their own tax advisors with respect to the determination and
treatment of premium for federal income tax purposes and with respect to state and local tax consequences
of owning such Premium Bonds. Original Issue Discount. The Bonds maturing on December 1 in the years 2013 and 2014 have been sold
at prices reflecting original issue discount (Discount Bonds). Under existing law, the original issue
discount in the selling price of each Discount Bond, to the extent properly allocable to each owner of such
Discount Bond, is excluded from gross income for federal income tax purposes with respect to such owner.
The original issue discount is the excess of the stated redemption price at maturity of such Discount Bond over the initial offering price to the public, excluding underwriters and other intermediaries, at which price
a substantial amount of the Discount Bonds of such maturity were sold. Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound
basis. The amount of original issue discount that accrues to an owner of a Discount Bond during any
accrual period generally equals (i) the issue price of such Discount Bond plus the amount of original issue
discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such Discount Bond
(determined on the basis of compounding at the close of each accrual period and properly adjusted for the
length of the accrual period), less (iii) any interest payable on such Discount Bond during such accrual
period. The amount of original issue discount so accrued in a particular accrual period will be considered
to be received ratably on each day of the accrual period, will be excluded from gross income for federal
income tax purposes, and will increase the owners tax basis in such Discount Bond. Any gain realized by
an owner from a sale, exchange, payment, or redemption of a Discount Bond will be treated as gain from
the sale or exchange of such Discount Bond. The portion of original issue discount that accrues in each year to an owner of a Discount Bond may result
in certain collateral federal income tax consequences. The accrual of such portion of the original issue
discount will be included in the calculation of alternative minimum tax liability as described above, and
may result in an alternative minimum tax liability even though the owner of such Discount Bond will not
receive a corresponding cash payment until a later year. Owners who purchase Discount Bonds in the initial public offering but at a price different from the first
offering price at which a substantial amount of those Discount Bonds were sold to the public, or who do not
purchase Discount Bonds in the initial public offering, should consult their own tax advisors with respect to
the tax consequences of the ownership of such Discount Bonds. Owners of Discount Bonds who sell or
otherwise dispose of such Discount Bonds prior to maturity should consult their own tax advisors with
respect to the amount of original issue discount accrued over the period such Discount Bonds have been
held and the amount of taxable gain or loss to be recognized upon that sale or other disposition of Discount
Bonds. Owners of Discount Bonds also should consult their own tax advisors with respect to state and
local tax consequences of owning such Discount Bonds. Continuing Disclosure Undertaking Undertaking to Provide Notice of Material Events. To meet the requirements of United States Securities
and Exchange Commission (SEC) Rule 15c2-12(b)(5) (the Rule), the City will undertake in the Note
Resolution (the Undertaking) for the benefit of holders of the Bonds, as follows. Annual Financial Information. The City agrees to provide or cause to be provided to each nationally
recognized municipal securities information repository designated by the SEC in accordance with the Rule
(each NRMSIR) and to a state information depository, if one is established in the State of Washington
and recognized by the SEC (the SID), annual financial information and operating data regarding the
Light System of the type included in this Official Statement as generally described below (annual financial
information): (i) annual financial statements of the Light System prepared in accordance with generally accepted
accounting principles applicable to governmental units (except as otherwise noted therein), as such
principles may be changed from time to time and as permitted by State law; which financial
statements will not be audited, except that if and when audited financial statements are otherwise
prepared and available to the City they will be provided; (ii) a statement of authorized, issued and outstanding bonded debt secured by Gross Revenues of the
Light System; (iii) debt service coverage ratios; (iv) sources of Light System power and the cost thereof; (v) general customer statistics, such as number and type of customer and power consumed, and
revenues by customer class; and (vi) average revenue per kWh of sales for each customer class. Annual financial information described above will be provided to each NRMSIR and the SID, not later than
the last day of the ninth month after the end of each fiscal year of the City, as such fiscal year may be
changed as required or permitted by State law, commencing with the Citys fiscal year ending
December 31, 2002. The annual financial information may be provided in a single or multiple documents,
and may be incorporated by reference from other documents, including official statements of debt issues
with respect to which the City is an obligated person as defined by the Rule, which documents have been
filed with each NRMSIR and the SID. The City has further agreed to provide or cause to be provided to each NRMSIR or the Municipal
Securities Rulemaking Board (MSRB), and to the SID, timely notice of a failure by the City to provide
the required annual financial information on or before the date specified above. Material Events. The City agrees to provide or cause to be provided to each nationally recognized
municipal securities information repository (each a NRMSIR) or the Municipal Securities Rulemaking
Board (MSRB), and to a state information depository, if one is established in the State and recognized by
the SEC (the SID), timely notice of the occurrence of any of the following events, if applicable and
material, with respect to the Bonds, specified by the Rule: (i) principal and interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (vii) modifications to the rights of the holders of the Bonds; (viii) Note calls ; (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi) rating changes. For purposes of this section, Continuing Disclosure Undertaking, the term holders of the Bonds shall
have the meaning intended for such term under the Rule. Amendment of Undertaking. The Undertaking is subject to amendment without the consent of any holder
of any Note, or any broker, dealer, municipal securities dealer, participating underwriter, rating agency,
NRMSIR, the SID or the MSRB, under the circumstances and in the manner permitted by the Rule. The City will give notice to each NRMSIR or the MSRB, and the SID, of the substance (or provide a copy)
of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the
amendment changes the type of annual financial information to be provided, the annual financial
information containing the amended operations data or financial information will include a narrative
explanation of the effect of that change on the type of information to be provided. Termination of Undertaking. The Citys obligations to provide annual financial information and notices
of certain events will terminate upon the legal defeasance, prior redemption or payment in full of all of the
then outstanding Bonds. In addition, the Undertaking, or any provision thereof, will be null and void if the
City obtains an opinion of nationally recognized bond counsel or other counsel familiar with the federal
securities laws to the effect that those portions of the Rule which require the Undertaking, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and so
notifies the SID and either the MSRB or each then existing NRMSIR. Remedy for Failure to Comply with Undertaking. If the City fails to comply with the Undertaking, the
City will proceed with due diligence to cause such noncompliance to be corrected as soon as practicable
after the City learns of that failure. No failure by the City or other obligated person to comply with the Undertaking will constitute a default in
respect of the Bonds. The sole remedy of any holder of a Note will be to take such actions as that holder
deems necessary and appropriate to compel the City or other obligated person to comply with the
Undertaking. Other Continuing Disclosure Undertakings of the City. The City has entered into undertakings to provide
annual information and the notice of the occurrence of certain events with respect to all bonds issued by the
City on and after July 3, 1995, subject to the Rule. The City is in compliance with all such undertakings.
