Loss of Tax Exclusion. Borrower understands that the interest rates provided under the Note and this Loan Agreement have been established on the assumption that interest paid on the Bonds will be excludable from the Bondholders’ gross income under Section 103 of the Code and applicable State law (except to the extent that any Bonds are owned by a person or entity which is a “substantial user” of the Property or a “related person” to the Borrower). In the event that (i) Borrower receives notice from Bondowner Representative that Bondowner Representative has discovered any facts or circumstances that would cause interest paid on the Bonds not to be tax-exempt; or (ii) any Bondholder receives notice from the Internal Revenue Service or other governmental authority that interest payable on the Bonds is not tax-exempt, or that the Internal Revenue Service is challenging the tax-exempt status of the Bonds, then the interest rate shall be increased, both prospectively and retroactively, to an annual variable rate equal to the Default Rate. Notwithstanding the foregoing, any change in the interest rate on the Bonds pursuant to this Section 11.41 applicable on and after the Conversion Date shall cause the Note to bear interest at the Default Rate. In the event of an increase in the interest rate under this Section 11.41, Borrower shall pay to the Bondholders promptly upon demand an amount sufficient to adjust previous payments of interest to the increased rate. Borrower shall also indemnify, defend and hold Issuer and Bondowner Representative harmless from any penalties, interest expense or other costs, including reasonable attorneys’ fees (including all charges of Issuer’s and Bondowner Representative’s internal and tax counsel) and accountants’ costs, resulting from any dispute with the Internal Revenue Service concerning the exclusion from gross income for federal income tax purposes of interest on the Bonds and the interest payable to any Bondholder on the Bonds, and upon receipt by Bondowner Representative of the amounts set forth in the foregoing indemnity, Bondowner Representative shall assign to Borrower any claims it may have against third parties for negligent acts or omissions in connection with the failure of interest on the Bonds to be excludable from gross income for federal income tax purposes. The obligations of Borrower under this paragraph shall survive termination of this Loan Agreement and repayment of the Loan.
Loss of Tax Exclusion. Borrower understands that the interest rates provided under this Agreement and the Note are based on the assumption that interest income paid on the Bond and received by Bondholder will be excludable from Bondholder’s gross income under Section 103 of the Code and is exempt from personal income taxation under applicable State law. In the event that (a) Borrower receives notice from Bondowner Representative that Bondowner Representative has discovered any facts, actions or failure to act by Borrower that would cause the interest on the Bond not to be treated as tax-exempt, or
