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Discount Bonds at a constant interest rate compounded periodically. A purchaser who acquires 'such Discount Bonds in the initial offering at a price equal to the initial offering price thereof to the public will be treated as receiving an amount of interest excludable from gross income for federal income tax purposes equal to the original issue discount accruing during the period he holds such Discount Bonds, and will increase his adjusted basis in such Discount Bonds by the amount of such accruing discount for purposes of determining taxable gain or loss on the sale or other disposition of such Discount Bonds. The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of the Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those above. Owners of such Discount Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of interest accrued upon sale, redemption or other disposition of Discount Bonds and with respect to the state and local tax consequences of owning and disposing of such Discount Bonds. Tax Treatment of Bond Premium It is anticipated that the Series 2006 Bonds maturing in years through inclusive, will be offered at prices in excess of the principal amount thereof to achieve a yield based upon the earlier of the call date or the maturity date (the "Callable Premium Bonds"). Under the Code, the excess of the cost basis of a Callable Premium Bond over the amount payable at the earlier of the call date or the maturity date of the Callable Premium Bond that minimizes the yield to a purchaser of a Callable Premium Bond (other than for a bondholder who holds a bond as inventory, stock in trade, or for sale to customers in theordinary course of business) is generally characterized as "bond premium". For federal income tax purposes, bond premium is amortized over the period to the earlier of the call or maturity date of a Callable Premium Bond. A bondholder will therefore be required to decrease his basis in the Callable Premium Bond by the amount of the amortizable bond premium attributable to each taxable year he holds such Callable Premium Bond. The amount of the amortizable bond premium attributable to each taxable year is determined on an actuarial basis at a constant interest rate compounded on each interest payment date. The amortizable bond premium attributable to each taxable year is not deductible for federal income tax purposes. Holders of the Callable Premium Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of the 30