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"Yield of <br /> (1) any Investment shall be computed in accordance with section 1.148-5 of <br /> the Regulations, and <br /> (2) the Certificates shall be computed in accordance with section 1.148-4 of <br /> the Regulations. <br /> (b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use <br /> of or omit to use Gross Proceeds or any other amounts (or any property the acquisition, <br /> construction or improvement of which is to be financed directly or indirectly with Gross <br /> Proceeds) in a manner which, if made or omitted, respectively, would cause the interest on any <br /> Certificates to become includable in the gross income, as defined in section 61 of the Code, of <br /> the owner for federal income tax purposes. Unless and until the City has received a written <br /> opinion of counsel nationally recognized in the field of municipal bond law to the effect that <br /> failure to comply with such covenant will not adversely affect the exemption from federal <br /> income tax of the interest on any Certificate, the City shall comply with the specific covenants in <br /> this Section. <br /> (c) No Private Use or Private Payments. Except as permitted by section 141 of the <br /> Code and the regulations and rulings relating to section 141 of the Code, the City shall, at all <br /> times prior to the last stated maturity of the Certificates, <br /> (1) exclusively own, operate, and possess all property the acquisition, <br /> construction, or improvement of which is to be financed directly or indirectly with Gross <br /> Proceeds of the Certificates and not use or permit the use of such Gross Proceeds or any <br /> property acquired, constructed, or improved with such Gross Proceeds in any activity <br /> carried on by any person or entity other than a state or local v.:ovemment, unless such use <br /> is solely as a member of the general public, or <br /> (2) not directly or indirectly impose or accept any charge or other payment for <br /> use of Gross Proceeds of the Certificates or any property the acquisition, construction or <br /> improvement of which is to be financed directly or indirectly with such Gross Proceeds <br /> other than taxes of general application and interest earned on investments acquired with <br /> such Gross Proceeds pending application for their intended purposes. <br /> (d) No Private Loan. Except to the extent permitted by section 141 of the Code and <br /> the regulations and rulings relating to section 141 of the Code, the City shall not use Gross <br /> Proceeds of the Certificates to make or finance loans to any person or entity other than a state or <br /> local government. For purposes of the foregoing covenant, Gross Proceeds are considered to be <br /> "loaned" to a person or entity if (1) property acquired, constructed or improved with Gross <br /> Proceeds is sold or leased to such person or entity in a transaction which creates a debt for <br /> federal income tax purposes, (2) capacity in or service from such property is committed to such <br /> person or entity under a take or pay, output, or similar contract or arrangement, or (3) indirect <br /> benefits, or burdens and benefits of ownership, of such Gross Proceeds or such property are <br /> otherwise transferred in a transaction which is the economic equivalent of a loan. <br /> 14 <br /> HOU:3589513.1 <br />