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issuance, sale, execution or delivery of the Note Amendment, or any of the documents described in the Note Resolution, or questioning the authority or proceedings pursuant to which the Note was issued or is being amended, the validity of the Note or any provision made for the payment thereof, or the power of the City to assist in the initial financing of the Project. 12.No Contest. Neither the existence of the City nor the rights of the present officials of the City to their respective offices is being contested and no authority or proceeding for the issuance of the Note or the execution and delivery of the Note Amendment and the Loan Agreement Amendment have been modified, repealed, revoked or rescinded. 13.Arbitrage. With respect to the federal arbitrage requirements set forth in Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder (the "Regulations"), and solely in reliance upon the representations made by the Borrower in the Borrower's Certificate delivered by the Borrower on the date hereof, we hereby certify and reasonably expect that the following has occurred or will occur with respect to the Note: (a)The Note was delivered and paid for on July 31, 2006 and the total proceeds received by the City on the sale of the Note ($1,100,000), together with estimated earnings thereon, did not exceed the total of: (i)the estimated total financeable costs of the Project (excluding items (ii) and (iii) below); (ii)such amounts, if any, of the interest accruing on the Note during the construction of the Project as shall be paid from proceeds of the Note or earnings thereon; and (iii)the expenses anticipated to be incurred in connection with the issuance of the Note plus amounts, if any, of the proceeds of the Note deposited into a reasonably required reserve fund. (b)In addition to the Note Amendment, there are no other obligations of a state or political subdivision which (i) are sold or are to be sold within 15 days of the sale of the Note Amendment, (ii) have been or are to be sold pursuant to the same plan of financing, including obligations for the same facility or related facilities, and (iii) are reasonably expected to be paid from substantially the same source of funds, determined without regard to guarantees from unrelated parties. (c)The Note Amendment was delivered on the date hereof and no new proceeds of the Note were created. (d)The actual work of acquiring, constructing, and equipping the Project has been completed. (e)No cash or securities are pledged either directly or indirectly by the Borrower to the payment of or security for the Note, nor is there any fund of cash or securities which the Borrower has otherwise set aside and expects to invest or maintain at 3 4914665v1