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Regulations. The rules contained in this Part V shall apply to the investment of Gross Proceeds,
as defined below, in any security, obligation, annuity contract or any other investment-type
property (as such term is defined in Section 1.148-1(b) of the Treasury Regulations) that is not
acquired to carry out the governmental purpose of the Bonds ("Nonpurpose Investments").
Nonpurpose Investments shall not include Tax-Exempt Bonds (as herein defined). For purposes
of this Tax Certificate, the term "Tax-Exempt Bonds" shall include (i) obligations the interest on
which is excludable from gross income for federal income tax purposes, (ii) stock in a regulated
investment company to the extent that at least 95% of the income to the holder of the interest is
excludable from gross income under Section 103 of the Code, and (iii) certificates of indebtedness
issued by the United States Treasury pursuant to the Demand Deposit State and Local Government
Series program described in 31 CFR Part 344.
Section 5.3 Gross Proceeds. For purposes of this Tax Certificate, the term "Gross
Proceeds" means:
(a) Sales Proceeds derived from the sale of the Bonds;
(b) amounts that are reasonably expected to be or are in fact used to pay debt
service on the Bonds;
(c) amounts pledged as security for the payment of debt service with respect to
the Bonds;
(d) amounts treated as "transferred proceeds" of the Bonds, within the
meaning of Section 1.148-1(b) of the Treasury Regulations, if any;
(e) amounts treated as "replacement proceeds" of the Bonds, within the
meaning of Section 1.148-1(c) of the Treasury Regulations, if any; and
(f) investment earnings on amounts described in subparagraphs (a)-(e) above.
Section 5.4 Yield. Yield, for purposes of complying with the Rebate Requirement, is to
be calculated pursuant to Section 4.5 of this Tax Certificate. For purposes of calculating the yield
on a Nonpurpose Investment, the purchase price will be the amount paid for such investment or,
if different, the fair market value of such investment on the date it becomes Gross Proceeds.
Section 5.5 Fair Market Price. For purposes of this Tax Certificate, the purchase price
and disposition price of a Nonpurpose Investment will be the fair market value of the investment
("Fair Market Value"). This means that a premium may not be paid to adjust the yield on an
investment, a lower interest rate than is usually paid may not adjust the yield on an investment and
no transaction may result in a smaller profit or larger loss than would have resulted if the
transaction had been at arm's length and had the yield on the Bonds not been relevant to either
party. An investment that is not of a type traded on an established market, within the meaning of
Section 1273 of the Code, is rebuttably presumed to be acquired or disposed of at a price that is
not its fair market value. In determining payments and receipts on Nonpurpose Investments,
qualified administrative costs are taken into account. Qualified administrative costs are
reasonable, direct administrative costs, other than carrying costs, such as separately stated
brokerage or selling commissions, but not legal and accounting fees, recordkeeping, custody, and
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