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(b) certificates of deposit of banks insured by the FDIC or <br /> (W collateralized as required by law. <br /> Section 7 . (a) The City covenants that it shall not take <br /> any action or suffer or permit any action to be taken or condition <br /> to exist which causes or may cause the interest payable on the <br /> Bonds to be subject to federal income taxation. Without limiting <br /> the generality of the foregoing, the City represents and covenants <br /> that the proceeds of the Bonds and System Revenues will not be used <br /> directly or indirectly in such manner as to cause the Series 2005 <br /> Bonds to be treated as "arbitrage bonds" within the meaning of <br /> Section 148 of the Internal Revenue Code of 1986, as amended (the <br /> "Code" ) . The City covenants to pay to the United States Treasury <br /> any arbitrage rebate due under Section 148 of the Code at the times <br /> required by Section 148 of the Code, if any be required. <br /> (b) The City shall assure that (1) not in excess of ten <br /> percent (10%) of the Net Proceeds of the Series 2005 Bonds is used <br /> for Private Business Use if, in addition, the payment of more than <br /> ten percent (10%) of the principal or ten percent (100-8) of the <br /> interest due on the Series 2005 Bonds during the term thereof is, <br /> under the terms of the Series 2005 Bonds or any underlying <br /> arrangement , directly or indirectly secured by any interest in <br /> property used or to be used for a Private Business Use or in <br /> payments in respect of property used or to be used for a Private <br /> Business Use or is to be derived from payments, whether or not to <br /> the City, in respect of property or borrowed moneys used or to be <br /> used for a Private Business Use; and (ii) that, in the event that <br /> both (A) in excess of five percent (5%) of the Net Proceeds of the <br /> Series 2005 Bonds are used for a Private Business Use, and (B) an <br /> amount in excess of five percent (5%) of the principal or five <br /> percent (5%) of the interest due on the Series 2005 Bonds during <br /> the term thereof is, under the terms of the Series 2005 Bonds or <br /> any underlying arrangement, directly or indirectly, secured by any <br /> interest in property used or to be used for a Private Business Use <br /> or in payments in respect of property used or to be used for a <br /> Private Business Use or is to be derived from payments, whether or <br /> not to the City, in respect of property or borrowed money used or <br /> to be used for a Private Business Use, the excess over such five <br /> percent (5%) of Net Proceeds of the Series 2005 Bonds used for a <br /> Private Business Use shall be used for a Private Business Use <br /> related to the governmental use of the System. <br /> The City shall assure that not in excess of five percent <br /> (5%) of the Net Proceeds of the Series 2005 Bonds is used, directly <br /> or indirectly, to make or finance a loan to persons other than <br /> state or local governmental units . <br /> As used in this subsection (b) , the following terms shall <br /> have the following meanings : <br /> 4 <br /> 9 <br />