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Issue Price Proceeds and Investment Proceeds that are nonetheless held in the Rebate Fund must be yield-restricted to the extent that such Issue Price Proceeds and Investment Proceeds exceed the Minor Portion). Issue Price Proceeds and Investment Proceeds held in the Rebate Fund that do not exceed the Minor Portion, together with any other amounts in the Rebate Fund, will be invested without regard to yield. 3.10 Reserve Account. Except for withdrawals because of overfunding, all amounts held in the Reserve Account may be used solely for paying debt service on the 1994 Bonds. At no time will the amount in the Reserve Account exceed the least of (i) 10 percent of the stated principal amount of the 1994 Bonds, (ii) the maximum annual principal and interest requirements on the 1994 Bonds, or (iii) 125 percent of the average annual principal and interest requirements on the 1994 Bonds. For these purposes, if the 1994 Bonds have more than a De Minimis Amount of original issue discount or premium, then the issue price of the 1994 Bonds (net of pre-issuance accrued interest) is used to measure the 10 percent limitation in lieu of its stated principal amount. The amount of the Reserve Requirement is customary for issues of the same type as the 1994 Bonds, as represented by the Underwriters (see ExhibitA hereto) and the Guarantor (see Exhibit B hereto). Amounts held in the Reserve Account will be invested without regard to yield. 3.11 Three-Year Temporary Period. 3.11.1 The City and the Authority reasonably expect that 85 percent or more of the Net Sale Proceeds of the 1994 Bonds will be allocated to expenditures on capital projects within three years after the Closing Date. 3.11.2 The City or the Authority have incurred or expect to incur within six months after the Closing Date a substantial binding obligation to a third party involving an expenditure of at least 5 percent of the Net Sale Proceeds of the 1994 Bonds on capital projects. 3.11.3 The City and the Authority reasonably expect that acquisition and construction of the Project and the allocation of the Net Sale Proceeds of the 1994 Bonds will proceed with due diligence to completion. Amounts deposited in the Acquisition Fund and the Costs of Issuance Fund will be used to reimburse the City and/or the Authority for costs chargeable to the capital accounts of the Project (or that would be so chargeable with a proper election) or to pay certain costs of issuing the 1994 Bonds. All proceeds of the 1994 Bonds deposited in the Acquisition Fund and the Costs of Issuance Fund will be invested without regard to yield until three years after the Closing Date. 3.12 No Abusive Arbitrage Device. The 1994 Bonds are not and will not be part of a transaction or series of transactions (i) that attempts to circumvent the provisions of Section 148 of the Code, or any successor thereto, and the regulations promulgated thereunder or under any predecessor thereto, enabling the City and the Authority or any related person to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, and (ii) that increases the burden on the market for tax-exempt obligations in any manner, including, without limitation, by selling bonds that would not otherwise be sold, or selling more bonds, or issuing bonds sooner, or allowing bonds to remain outstanding longer, than otherwise would be necessary. 3.13 No Expected Sale. It is not expected that the assets comprising Project will be sold or otherwise disposed of before the last scheduled maturity of the 1994 Bonds. LA1-69477.4 10