1994-05-17 Resolution 91 - Laserfiche WebLink

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ORIGINAL ISSUE DISCOUNT • For federal income tax purposes, the Bonds maturing on (the "Discount Bonds ") will be considered to have "original issue discount" equal to the difference between their respective original issue prices and the amount payable upon their respective maturities. The original issue price of each Discount Bond will be the initial offering price to the public at which a substantial amount of such Discount Bonds are sold, and the issue date will be the date on which such Discount Bonds are first issued to the public. Under existing law, the original issue discount on a Discount Bond accrued in the hands of a holder is treated for federal income tax purposes as interest which is excludable pursuant to Section 103 of the Code from gross income, assuming compliance by the Authority with its Tax Covenants. The holder's basis for determining gain or loss on a sale, maturity or other disposition of a Discount Bond generally will be equal to the holder's cost, increased by the original issue discount that is accrued during the period that the Discount Bond is held by such holder. Generally, any gain or loss recognized by a holder on a sale, exchange or payment at maturity of a Discount Bond (based on the holder's basis) will be taxable as capital gain or loss (assuming the Discount Bond is held as a capital asset). A holder will recognize a taxable gain or loss on a Discount Bond called prior to maturity on the difference between the holder's basis and the call price of the Discount Bond. Owners of the Discount Bonds should consult their own tax advisors with respect to the computation for federal income tax purposes of the amounts of original issue discount which accrue during the period in which such Discount Bonds are held. Owners of the Discount Bonds should also consult their own tax advisors with respect to the state and local tax consequences arising from the original issue discount of the Discount Bonds. LEGAL MATTERS Certain legal matters incident to the authorization and issuance of the Bonds by the Authority are subject to the approval of Baker & Daniels, South Bend, Indiana, Bond Counsel, whose approving opinion will be delivered with the Bonds. A form of the opinion which Bond Counsel proposes to render is attached to this Official Statement • as Appendix B. Bond Counsel will render a further opinion that the Bonds, the Trust Agreement and the Lease conform as to form and tenor with the terms and provisions thereof as summarized in this Official Statement. Bond Counsel has not been requested to review any information contained in this Official Statement or the appendices hereto, and expresses no opinion thereon and assumes no responsibility in connection therewith, other than the information under the headings "INTRODUCTION," "DESCRIPTION OF THE BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," "TAX MATTERS," "ORIGINAL ISSUE DISCOUNT," "APPENDIX B - -FORM OF BOND COUNSEL OPINION" and "APPENDIX C -- SUMMARY OF CERTAIN LEGAL DOCUMENTS ". Certain legal matters will be passed on for the Authority and the Commission by the corporation counsel for the City, and for the Underwriters by their counsel, Barnes & Thornburg, South Bend, Indiana. ENFORCEABILITY OF REMEDIES The remedies available to the Trustee and the owners of Bonds upon a default are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code (the United States Bankruptcy Code), the remedies provided under the Trust Agreement may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights and by the exercise of judicial discretion in appropriate cases. is -13-