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Name of Recipient Agreement No.: XX-XXX-550 Project No.: C-06-XXXX-XXX 4.3 Governmental Unit. The Recipient is a state or local governmental unit as defined in Section 1.103-1 of the Treasury Regulations or an instrumentality thereof(a"Governmental Unit") and is not the federal government or any agency or instrumentality thereof. 4.4 Financing of a Capital Project. The Recipient will use the Project Funds to finance costs it has incurred or will incur for the construction, reconstruction, installation or acquisition of the Project. Such costs have not previously been financed with the proceeds of any other issue of tax-exempt obligations. 4.5 Ownership and Operation of Project. % The Recipient exclusively owns and, except as provided in Section4.12 hereof, operates the Project. 4.6 Temporary Period. The Recipient reasonably expects that at least eighty-five percent(85%)of the Project Funds will be allocated to expenditures for the Project within three,(3),years of the earlier of the effective date of this Agreement or the date the Bonds are issued ("Applicable?Date"). The,Recipient has incurred, or reasonably expects that it will incur within six (6) months\of the Applicable Date, a substantial binding obligation (i.e., not subject to contingencies within the control of thwRecipient or a related"party)to a third party to expend at least five percent(5%) of.theProject Funds.on4he costs of the Project. The completion of acquisition, construction, improvementand equipping''of the Project and the allocation of Project Funds to expenditures for the Project will proceed with duediligence. \N 4.7 Working Capital. N. V �N • No operational expentl tures of the Recipient or any related entity are being, have been or will be financed or refinanced with Project Funds. 4.8 Expenditure of Proceeds:. - N / Project fundsshall be used'exclusively for the following,purposes: CO Reimbursement Expenditures (as defined in Section 4.20 below);(ii) Preliminary Expenditures (as defined in Section 4.20 below) in an aggregate amount not exceeding twenty percent(20%) of the Project Funds, (iii) capital expenditures relating to the.Pioject originally paid.py the Recipient on or after the date hereof, (iv) interest on the Obligation through'the later of three (3) years`ater the Applicable Date or one (1) year after the Project is placed in service`and'(v) initial operating expenses directly associated with the Project in the aggregate amount not more than five percent(5%)of the Project Funds. 4.9 Private Use and Private Payments. N None of the Project Funds or the Project are, have been or will be used in the aggregate for any activities that constitute a Private Use(as defined below). None of the principal of or interest with respect to the Installment Payments will be secured by any interest in property(whether or not the Project) used for a Private Use or in payments in respect of property used for a Private Use, or will be derived from payments in respect of property used for a Private Use. "Private Use" means any activity that constitutes a trade or business that is carried on by persons or entities, other than a Governmental Unit. The leasing of the Project or the access by or the use of the Project by a person or entity other than a Governmental Unit on a basis other than as a member of the general public shall constitute a Private Use. Use by or on behalf of the State of California or any of its agencies, instrumentalities or subdivisions or by any local governmental unit and use as a member of the general public will be disregarded in determining whether a Private Use exists. Use under an arrangement that conveys priority rights or other preferential benefits 16