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ARTICLE X INTE RNAL RE VE NUE CODE, SECTION 103 Section 10.l Covenant with Respect to Section 103(c) of the Code. 'I'he parties hereto recognize that the Bonds are being sold on the basis that the interest payable on the Bonds is excludable from gross income of the holder thereof under Section 103 of the Code. The Issuer and the Borrower do each hereby covenant and agree for the benefit of the Trustee and the holders of the Bonds that the proceeds of t 1e Oonds or the Revenues, as defined in the Indenture, shall not be used or applied in such manner. as to constitute any Bond an "arbitrage bond" as that term is defined in Section 103(c) of t he Code, Section 10.2 Requirements of Tax Exemption, The Bonds ~,11 l be an exempt smal 1 issue as described in the Code. The Oorrower covenants and agrees that, unless no Oonds shall remain Outstanding under the terms of the Indenture, the Borrower will not make or permit any capital expenditures t o be made or, along with the Issuer, will not per.nit any action to be taken by the Oorrower or another Per son which ~ill cause th~ interest on the Oonds t o be inc luded in the gross income of the holders of the Bonds (other than a h older who is a "substantial user:-" or "related person" as such terms are used in Section lOJ(b)(9) of the Code ). The Borrower agr~es tha t it will prepare and file, with cop ies to the Trustee, any sta teme nts required from time to time bf tha Code to be filed by it in o rder to maintain the tax exempt status of the interest o n the OoncJs, including, if applicable, the supplemental stateme nts required to be fil eu by Treasury Reyulations Section l.103-10(b)(2)(vi)(c), until such requirement is withdrawn or modified, l\n ev e nt. of taxahility ("Event") sl1<1.ll mean (a) if applicable, the incurring of capital expencJitures in excess of those permitted in Sec tion 103('o)(6}(D) of the Code, or (bl the taking of any other action, or the omission of any ac tion, by the Issuer, the i3or:-rower or any other Person which has the ef fect of causin,i th e interest paya ble on thP-Uonds to become includable in the gro~s income of the holder s ~f the nonds (o ther than a hold er ..,ho is a "substantial u~er" or a "relnterl perso n" as such term::. are uscJ in Section 10J(b){9) of the Code). ,'\ "De t.<!rminatio n of Tax.ability" shall me,111 (a) the receipt by the nor rower o f notice of the issuance by the Interna l Revc,1Ue Service of d technical adv i.c::e memorandum or a st 'ltutory -45-