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$ . Investment Proceeds from the Construction Account will remain in the Construction <br /> Fund and will be applied to costs of the Project. Investment proceeds from the Costs of Issuance <br /> Account and the Debt Service Reserve Fund will be transferred to the Reserve Fund and applied as <br /> provided in the Indenture. <br /> 4.7. Replacement Proceeds. <br /> (a) General. Under Treas. Reg. § 1.148-1(c), amounts are"replacement <br /> proceeds" of the Bonds if the amounts have a sufficiently direct nexus to the Bonds or the <br /> governmental purpose of the issue(including payment of principal or interest on the Bonds) <br /> to conclude that amounts would have been used for the governmental purpose of the issue <br /> if the proceeds of the Bonds were not used or to be used for that governmental purpose. <br /> Except as otherwise may be described herein, no amounts will arise that would have been <br /> used for the governmental purposes of the Bonds(including in such purpose the expected use <br /> of proceeds to pay debt service on such Bonds) if proceeds of the Bonds were not used for <br /> such purpose, or which will otherwise constitute sinking funds, pledged funds or other <br /> replacement proceeds held or derived from a substantial beneficiary of the Bonds. <br /> (b) Sinking Funds. The following funds or accounts constitute the only <br /> funds or accounts in which amounts other than sale, investment or transferred proceeds are <br /> reasonably expected to be used directly or indirectly to pay principal of or interest on the <br /> Bonds (i.e. the funds and accounts for which it is not unreasonable to expect that amounts <br /> therein will be so used): <br /> (i) the Revenue Fund; <br /> (ii) the Bond Fund and the Accounts therein; <br /> (iii) the Optional Redemption Fund; and <br /> (iv) the Debt Service Reserve Fund. <br /> (c) Pledged Funds. Except as described above as sale proceeds, <br /> investment proceeds, or sinking funds, there are no amounts that are directly or indirectly <br /> pledged to pay principal of or interest on the Bonds for which there is a reasonable assurance <br /> that such amount will be available to pay principal or interest on the Bonds, even if the <br /> Borrower encounters financial difficulties. However,all amounts in the funds,accounts and <br /> subaccounts described in Section 4.2 herein secure the Bonds. <br /> (d) Negative Pledges. With respect to the Bonds,because no amount <br /> is or is expected to be held under an agreement to maintain the amount at a particular <br /> level for the direct or indirect benefit of the bondholders or any guarantor of such Bonds <br /> (except for amounts held in funds created under the Indenture), there are no "negative <br /> pledges" within the meaning of Treas. Reg. § 1.148-1(c)(3)(ii). <br /> (e) Other Replacement Proceeds;Capital Project. The term of the Bonds <br /> is no longer than is reasonably necessary for the governmental purposes of such Bonds. The <br /> -8- <br />