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principal and interest (or other payments in the case of <br />Nonpurpose Obligations which require payments in a form not <br />characterized as principal and interest) on a Nonpurpose <br />Obligation or on the Bonds, produces an amount equal to the <br />Purchase Price of such Nonpurpose Obligation or the Bonds, all <br />computed as prescribed in applicable Regulations. For the <br />purpose hereof, the yield on a Nonpurpose Obligation that <br />consists of variable rate Investment Property shall be <br />determined as of the date the Nonpurpose Obligation is acquired <br />and as of the first day of each Bond Year by assuming that the <br />rate of interest will be the weighted average rate of interest <br />for such Investment Property during the preceding one-year <br />period (or portion thereof in which the Nonpurpose Obligation <br />was outstanding). With respect to a Nonpurpose Obligation <br />purchased on its date of issue, the Yield for the first Bond <br />Year shall be determined by assuming that the rate of interest <br />will be the initial rate of interest for such Nonpurpose <br />Obligation as determined under the prescribed formula on such <br />date of issue (without regard to any fixed rate initially <br />applicable to such Nonpurpose Obligation). <br />Section 2. No Arbitrage Covenant. <br />The City shall not take, nor permit nor suffer to be taken by <br />any other person, any action with respect to the Gross Proceeds <br />of the Bonds which if such action had been reasonably expected <br />to have been taken, or had been deliberately and intentionally <br />taken, on the date of the issuance of the Bonds would have <br />caused the Bonds to be "arbitrage bonds" within the meaning of <br />section 148(a) of the Code and Regulations promulgated <br />thereunder. At no time will the amounts deposited in or <br />credited to the Improvement Fund, the Redemption Fund, the <br />Reserve Fund, the Investment Earnings Fund, and the Excess <br />Investment Earnings Fund be invested in any form of investment <br />which produces a yield greater than the bond yield. <br />Section 3. Rebate Covenant. <br />(a) Creation of Funds. There are hereby created, to <br />be held by the Treasurer as separate funds distinct from all <br />other funds and accounts held by the Treasurer under the <br />Resolution, the Investment Earnings Fund and the Excess <br />Investment Earnings Fund. All interest earnings and profits on <br />amounts in all funds established under this Certificate, other <br />than interest earnings on the Redemption Fund and any other <br />4 <br />