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spent by the end of the spending period, less the amount actually allocated to expenditures for the governmental purposes of the 1994 Bonds by that date). The Penalty must be paid to the United States no later than 90 days after the end of the spending period to which it relates. The Penalty continues to apply at the end of each spending period and each semiannual period thereafter until the earliest of the following: (A) the termination of the Penalty under Treasury Regulations Section 1.148- 7(l); (B) the expenditure of all the Available Construction Proceeds; or (C) the last stated final maturity date of bonds that are part of the 1994 Bonds and any bonds that refund those bonds. (ii) Termination of the Penalty After the End of the Initial Temporary Period. The City and the Authority may terminate the Penalty after the initial temporary period (a "Post-Temporary Period Termination") if-- (A) Not later than 90 days after the earlier of the end of the initial temporary period or the date construction is substantially completed, the City and the Authority elect to terminate the Penalty; provided that solely for this purpose, the initial temporary period may be extended by the City and the Authority to a date ending 5 years after the Closing Date; (B) Within 90 days after the end of the initial temporary period, the City and the Authority pay a penalty equal to 3 percent of the unexpended available construction proceeds determined as of the end of the initial temporary period, multiplied by the number of years (including fractions of years computed to 2 decimal places) in the initial temporary period; (C) For the period beginning as of the close of the initial temporary period, the unexpended Available Construction Proceeds are not invested in higher yielding investments; and (D) On the earliest date on which the 1994 Bonds may be called or otherwise redeemed, with or without a call premium, the unexpended Available Construction Proceeds as of that date (not including any amount earned after the date on which notice of the redemption was required to be given) must be used to redeem the 1994 Bonds. Amounts used to pay any call premium are treated as used to redeem bonds. This redemption requirement may be met by purchases of bonds by the City and the Authority on the open market at prices not exceeding fair market value. A portion of the annual principal payment due on serial bonds of a construction issue may be paid from the unexpended amount, but only in an amount no greater than the amount that bears the same ratio to the annual principal due that the total unexpended amount bears to the issue price of the construction issue. (iii) Termination of the Penalty Before the End of the Initial Temporary Period. If the Project is substantially completed before the end of the initial temporary period, the City and the Authority may elect to terminate the Penalty before the end of the initial temporary period (a "Pre-Temporary Period Termination") if-- (A) Before the close of the initial temporary period and not later than 90 days after the date the construction is substantially completed, the City and the Authority elect to terminate the Penalty; (B) The election identifies the amount of Available Construction Proceeds that will not be spent for the governmental purposes of the 1994 Bonds; and (C) The City and the Authority have met all of the conditions for a Post-Temporary Period Termination, applied as if the initial temporary period ended as of the date the required election for a Pre-Temporary Period Termination is made. That penalty termination election satisfies the required election for a Post-Temporary Period Termination. LA1-69477.4 14