Agmt 94 State of CA DOT Fund Transfer Agmt FTA04A39 Jefferson Ave grade sep

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4- • Agreement No. FTA04A39 Sheet 12 of 13 Section 4. RECIPIENT shall request, in writing, STATE's advance approval if grant funds are to be allocated to any NUP, except"incidental use" property described below. If property, the costs of which have previously been allocated to grant funds; is to become NUP before the State bond funds are fully paid or redeemed, then RECIPIENT may allocate the costs of such property to another funding source as provided in Section 3 of this Article VI, or obtain STATE's approval that the allocation of the costs of such property to the grant funds may remain. It is anticipated that STATE approval will be granted if, taking into account the existing and expected uses of the proceeds of the State bonds, the STATE determines that the continued tax-exempt status of the State bonds will not be adversely affected and that the use of the property is consistent with the Project and its described purpose. For purposes of these Articles VI Section 3 fund source allocations, RECIPIENT does not have to take into account as NUP those "incidental uses" of the Project(such as, for example, advertising billboards, vending machines, telephones, etc.) which meet requirements of federal tax regulations (IRS Notice 87-69 or any successor thereto). In general such Notice requires that the incidental use not be physically separated from the rest of the Project and not comprise in the aggregate more than 2-1/2% of the costs of the Project. Section 5. If RECIPIENT enters into a management contract with a private party (including AMTRAK) for operation of rail, ferry or other transportation services in connection with the Project, it will either (a) obtain approval from Bond Counsel acceptable to STATE that the terms of the management contract meet the requirements of Internal Revenue Service Revenue Procedure 82-14 (as supplemented or amended) or any successor thereto (dealing generally with guidelines for when management contracts may be deemed not to create a "private use" of bond-financed property) or are otherwise acceptable; or (b) be prepared to certify upon request of STATE that the revenues which RECIPIENT (or its manager) will receive directly from the operation of transportation services in connection with the Project(but not including any subsidy of the transportation operation from taxes or other outside fund sources) are for any fiscal year less than the ordinary and necessary expenses directly attributable to the operation and maintenance of the transportation system (excluding any overhead or administrative costs of RECIPIENT). In any year for which option (b) will not be true, RECIPIENT shall consult Bond Counsel acceptable to the State Treasurer's Office to obtain approval of the management contract or an opinion that the circumstances present will not adversely affect the tax-exempt status of the bonds. Section 6. If RECIPIENT receives any revenues or profits from any NUP allowed pursuant to this Article VI(whether approved at this time or hereafter approved by STATE), RECIPIENT agrees that such revenues or profits shall be