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OFFICIAL STATEMENT® NEW ISSUE RATING: Moody's: "Applied For" BOOK-ENTRY ONLY See "RATING" In the opinion of Sherman & Howard L.L. C., Bond Counsel, assuming continuous compliance with certain covenants described herein, interest on the Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date of delivery of the Bonds (the "Tax Code') and interest on the Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code except that such interest is required to be included in calculating the "adjusted current earnings " adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations. The Bonds, together with interest thereon and income therefrom, are exempt from all taxes by the State of Colorado under Colorado laws in effect on the date of delivery of the Bonds. See "TAX MATTERS. " $25,000,000 AVON URBAN RENEWAL AUTHORITY, COLORADO TAX INCREMENT ADJUSTABLE RATE REVENUE BONDS (TOWN CENTER WEST AREA URBAN RENEWAL PROJECT) SERIES 2008 Dated: Date of Delivery Price: 100% Due: June 1, 2032 ® Initial Mode: Weekly CUSIP© Number: The Avon Urban Renewal Authority, Colorado, Tax Increment Adjustable Rate Revenue Bonds (Town Center West Area Urban Renewal Project) Series 2008 (the "Bonds") will be issued by the Avon Urban Renewal Authority (the "Authority") pursuant to an Indenture of Trust dated February 15, 2008, between the Authority and UMB Bank, n.a., Denver, Colorado, as Trustee. The Bonds will be issued as fully registered bonds, initially in denominations of $100,000 or integral multiples of $5,000 in excess thereof, and initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), securities depository for the Bonds. Purchases of the Bonds are to be made in book- entry form only. Purchasers will not receive certificates representing their beneficial ownership interest in the Bonds. See "THE BONDS--Book-Entry Only System." The principal of the Bonds will be payable upon presentation and surrender at the Trustee. See "THE BONDS." The Bonds will bear interest at one or more adjustable interest rates unless converted to a Fixed Rate. The Bonds initially will bear interest at a Weekly Rate, and interest on the Bonds bearing interest at a Weekly Rate will be payable on the first Business Day of each month, commencing the first Business Day of April 2008. Interest will be determined and adjusted as described herein. See "THE BONDS." This Official Statement provides information concerning the Bonds prior to conversion to an Annual Mode, a Flexible Pricing Long-Term Mode of more than 270 days, or a Fixed Mode. The Bonds are subject to redemption prior to maturity at the option of the Authority and ® are also subject to mandatory sinking fund redemption as described in "THE BONDS--Prior Redemption." © Copyright 2008, American Bankers Association. CUSIP data herein is provided by Standard & Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. Under certain circumstances and upon notice to Owners as described herein, the interest rate on the Bonds may be converted from a Weekly Rate to another alternate interest rate or to the Fixed Rate for the remainder of the term of the Bonds; in such a case, the Bonds must be tendered for purchase on each such Adjustment Date at par. The Bonds are subject to mandatory tender for purchase upon the occurrence of certain other events as described herein. See "THE BONDS--Purchase of Bonds." Proceeds of the Bonds will be used to (i) finance the cost of constructing certain traffic, street and pedestrian improvements within the Urban Renewal Project Area (the "Project"); (ii) reimburse the Town for expenses related to the Project; (iii) pay capitalized interest; and (iv) pay the costs of issuing the Bonds. See "SOURCES AND USES OF FUNDS--The Project." Payment of the principal of and up to 46 days' interest on the Bonds and the purchase price of the Bonds upon tender as described herein initially will be supported by an irrevocable direct-pay letter of credit (the "Initial Credit Facility") issued by ~ DEPFA BANK DEPFA BANK plc (the "Initial Credit Facility Provider") for the benefit of the Authority. The Initial Credit Facility terminates on February 21, 2013, (or earlier upon certain conditions described herein). In the Indenture, the Authority covenants to maintain a Credit Facility at all times prior to the date when the outstanding Bonds bear interest at a Fixed Rate. For a description of the terms of the Initial Credit Facility, see "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS--The Initial Credit Facility." The Bonds are being offered solely on the basis of the financial strength of the Bank. The Bonds are not being offered on the financial strength of the Authority and limited information about the Authority is provided in this Official Statement. The information provided about the Authority in this Official Statement is not detailed enough to allow the owners of the Bonds to make a determination as to the financial strength of the Authority in the event the Initial Credit Facility Provider fails to perform its obligations under the Initial Credit Facility. The Bonds will be paid solely from the proceeds of draws under the Initial Credit Facility; the Initial Credit Facility Provider will be reimbursed for such draws from payments made by the Authority to the Trustee from Pledged Revenues (defined herein). The Bonds are special, limited obligations of the Authority payable solely from the Trust Estate established by the Indenture and any other amounts provided in the Indenture. The Trust Estate is comprised of the Trustee's interest in the Initial Credit Facility, certain property tax increment revenues derived by the Authority within the Urban Renewal Project Area, and certain investment income, all as more particularly described herein. The Bonds do not constitute a general obligation debt or indebtedness of the Authority within the meaning of any constitutional or statutory debt limitation. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS." The Bonds do not constitute an obligation or indebtedness of the Town of Avon, Colorado. The Authority has no taxing power and cannot compel any taxing jurisdiction to levy any property taxes. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THIS ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ® ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION, GIVING PARTICULAR ATTENTION TO THE SECTION ENTITLED "CERTAIN RISK FACTORS." The Bonds are offered when, as, and if issued by the Authority and accepted by the Underwriter subject to the approval of legality of the Bonds by Sherman & Howard L.L.C., Denver, Colorado, Bond Counsel, and the satisfaction of certain other conditions. Sherman & Howard L.L.C. also has acted as special counsel to the Authority in connection with this official Statement, and as general counsel to the Authority. Certain legal matters will be passed upon by Chapman and Cutler LLP, Chicago, Illinois, as counsel to the Initial Credit Facility Provider. It is expected that the Bonds will be available for delivery through the facilities of DTC, on or about February 22, 2008. STIFEL, NICOLAUS & COMPANY, INCORPORATED This Official Statement is dated February 20, 2008. • 0 USE OF INFORMATION IN THIS OFFICIAL STATEMENT This Official Statement, which includes the cover page and the appendices, does not constitute an offer to sell or the solicitation of an offer to buy any of the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation, or sale. No dealer, salesperson, or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement in connection with the offering of the Bonds, and if given or made, such information or representations must not be relied upon as having been authorized by the Authority. The information set forth in this Official Statement has been obtained from the Authority and from the other sources referenced throughout this Official Statement which are believed to be reliable. No representation or warranty is made, however, as to the accuracy or completeness of such information received from parties other than the Authority. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions, or that they will be realized. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction but the Underwriter does not guarantee the accuracy or completeness of such information. The information, estimates, and expressions of opinion contained in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the Bonds shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the Bank, or in the information, estimates, or opinions set forth herein, since the date of this Official Statement. This Official Statement has been prepared only in connection with the offering of the Bonds in the following Modes: Daily Mode, Weekly Mode, Monthly Mode, or Flexible Pricing Short-Term Mode, and may not be reproduced or used in whole or in part for any other purpose. The Bonds have not been registered with the Securities and Exchange Commission due to certain exemptions contained in the Securities Act of 1933, as amended. The Bonds have not been recommended by any federal or state securities commission or regulatory authority, and the foregoing authorities have neither reviewed nor confirmed the accuracy of this document. 0 ® AVON URBAN RENEWAL AUTHORITY Authority Board Ronald C. Wolfe, Chairman Brian Sipes, Vice Chairman Richard Carroll, Member David Dantas, Member Kristi Ferraro, Member Amy Phillips, Member Tamra Nottingham Underwood, Member Authority Staff Larry Brooks, Executive Director/Secretary Scott Wright, Treasurer Patty McKenny, Clerk Counsel to the Authority Sherman & Howard, L.L.C. Denver, Colorado ® TRUSTEE UMB Bank, n.a. Denver, Colorado INITIAL CREDIT FACILITY DEPFA BANK plc, Acting through its New York Branch COUNSEL TO INITIAL CREDIT FACILITY Chapman and Cutler LLP Chicago, Illinois BOND AND SPECIAL COUNSEL Sherman & Howard L.L.C. Denver, Colorado 0 UNDERWRITER AND INITIAL REMARKETING AGENT Stifel, Nicolaus & Company, Incorporated Denver, Colorado TABLE OF CONTENTS Page 0 INTRODUCTION 1 General 1 The Authority and the Town Center West Area Urban Renewal Area 1 Purpose 2 The Initial Credit Facility; Security 2 The Bonds; Prior Redemption; Tender for Purchase 4 Authority for Issuance 5 Professionals 5 Tax Status 5 Exemption From Continuing Disclosure 5 Additional Information 5 SOURCES AND USES OF FUNDS 7 Sources and Uses of Funds 7 The Project 7 THE BONDS 8 Description 8 Interest, Bond Modes and Rates 8 Bond Modes, Rate Periods, Interest Payment Dates, Credit Facility and Tender and Redemption Provisions Summary 12 Purchase of Bonds 14 Prior Redemption 18 Book-Entry Only System 21 DEBT SERVICE REQUIREMENTS 22 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS 23 Special, Limited Obligations 23 Bond Reserve Fund 23 Replenishment Resolution 23 Bonds Not a Debt 24 Provisions of the Indenture 24 Future Changes in Laws 24 The Initial Credit Facility 24 Substitute Credit Facility 25 Additional Bonds 25 THE CREDIT AGREEMENT 27 General 27 Reimbursement Obligations 27 Events of Default Under Credit Agreement 27 Remedies for Events of Default Under Credit Agreement 29 CERTAIN RISK FACTORS Initial Credit Facility is Primary Security 30 30 Enforcement of Remedies Against Bank 30 Rating 30 Performance by Trustee 31 -i- Page ® Inability to Obtain Alternate Credit Facility 31 Limitations on Remedies Available to Owners of Bonds 31 Secondary Market 31 TAX MATTERS 32 LEGAL MATTERS 33 Litigation 33 Approval of Certain Legal Proceedings 34 Police Power 34 RATING 34 UNDERWRITING AND REMARKETING AGENT 34 OFFICIAL STATEMENT CERTIFICATION 35 APPENDIX A - Summary of Certain Provisions of the Indenture A-1 APPENDIX B - Form of Opinion of Bond Counsel ................................................................B-1 APPENDIX C - Book-Entry Only System ...............................................................................C-1 APPENDIX D - The Initial Credit Facility Provider D-1 U • -ii- OFFICIAL STATEMENT 0 $25,000,000 AVON URBAN RENEWAL AUTHORITY, COLORADO TAX INCREMENT ADJUSTABLE RATE REVENUE BONDS (TOWN CENTER WEST AREA URBAN RENEWAL PROJECT) SERIES 2008 INTRODUCTION General This Official Statement, including the cover page and appendices, is furnished by the Avon Urban Renewal Authority (the "Authority") to provide information in connection with the issuance of its $25,000,000 Tax Increment Adjustable Rate Revenue Bonds (Town Center West Area Urban Renewal Project), Series 2008 (the "Bonds"). The Bonds will be issued pursuant to an Indenture of Trust dated as of February 15, 2008 (the "Indenture") by and between the Authority and UMB Bank, n.a., Denver, Colorado, as trustee (the "Trustee"). The offering of the Bonds is made only by way of this Official Statement, which supersedes any other information or materials used in connection with the offer or sale of the Bonds. The following introductory material is only a brief description of and is qualified by the more complete information contained throughout this Official Statement. A full review should be made of the entire Official Statement and the documents summarized or described herein, particularly the section entitled "CERTAIN RISK FACTORS. " Detachment or other use of this "INTRODUCTION" without the entire Official Statement, including the cover page and appendices, is unauthorized. Capitalized terms used but not defined herein have the meanings assigned to them in the Indenture, which is summarized in Appendix A. The Authority and the Town Center West Area Urban Renewal Area The Avon Urban Renewal Authority is a body corporate duly organized and existing as an urban renewal authority established by the Town of Avon, Colorado (the "Town" and the "State") pursuant to the Urban Renewal Law of the State of Colorado (Section 31-25-101 et seq., Colorado Revised Statutes ("C.R.S."), as amended (the "Urban Renewal Law" or the "Act")), for the purpose of undertaking certain urban renewal activities within the Town. The boundaries of the Authority are coterminous with the boundaries of the Town. The Town is located in Eagle County (the "County") on Interstate Highway 70. It is located 8 miles west of the Town of Vail and the Vail Ski Resort, 114 miles west of Denver, and 23 miles east of the Town of Eagle. The Town encompasses approximately eight and one-quarter square miles of land. In addition to the Town's role as a center of commercial and retail development for the area, the Town serves as a support base for the Vail, Beaver Creek and Arrowhead resorts, with a number of various types of accommodations for visitors to the area. The Town also is a major residential community within the County. The Authority was created by the Town Council of the Town (the "Town • Council") on June 26, 2007. The Town Council serves as the governing body (the "Board") for the Authority. Pursuant to Bylaws adopted by the Board, the Mayor of the Town serves as ® Chairman to the Authority, the Mayor Pro-Tem of the Town serves as Vice Chairman, the Town Manager serves as the Executive Director and Secretary of the Authority, the Finance Director of the Town serves as the Authority's Treasurer, and the Town Clerk serves as the Authority Clerk. The Town Center West Urban Renewal Project Area (the "Urban Renewal Project Area") encompasses approximately 225 acres of land within the Town. The Urban Renewal Project Area generally includes properties located in the commercial area known as Avon Town Center West. The Urban Renewal Project Area is bounded on the south by the Eagle River and the Denver and Rio Grande Western Railroad tracks, on the west by West Beaver Creek Boulevard, on the east by Avon Road, and on the north by the southern Interstate 70 right-of- way. The Town Council determined that the area comprising the Urban Renewal Project Area was a blighted area in accordance with statutory criteria. On August 14, 2007, the Town Council adopted the Town Center West Area Urban Renewal Plan dated August 2007 (the "Plan") approving one or more urban renewal projects in the Urban Renewal Project Area. The Authority has identified an initial urban renewal project for the Urban Renewal Project Area (the "Project"); the Project is more particularly defined in "SOURCES AND USES OF FUNDS--The Project." The Plan describes a series of activities designed to eliminate existing blight, including, among other activities, creating a new "main street" in the existing pedestrian mall right-of-way, linking pedestrian, bicycle and automobile circulation to and through the Avon Town Center, Nottingham Park, Confluence and the Eagle River, developing a multi-modal transit center, establishing public plazas and other gathering spaces for community interaction and social events, and developing a mix of uses that provides residential and lodging bed base ® supported by community and guest commercial uses. The Plan also authorizes the use of property tax increment financing for a period of 25 years following adoption of the Plan (i.e., through August 2032). Purpose Proceeds of the Bonds will be used to: (i) finance the cost of constructing certain traffic, street and pedestrian improvements within the Urban Renewal Project Area (the "Project"); (ii) reimburse the Town for expenses related to the Project; (iii) pay capitalized interest; and (iv) pay the costs of issuing the Bonds. See "SOURCES AND USES OF FUNDS-- The Project." The Initial Credit Facility; Security The Initial Credit Facility. An irrevocable direct-pay letter of credit (the "Initial Credit Facility") to be issued by DEPFA Bank plc, acting through its New York Branch (the "Initial Credit Facility Provider"), will be delivered to the Trustee on the date of delivery of the Bonds. The Initial Credit Facility will secure the payment of the principal of and interest on the Bonds when due and also will provide funds to pay the purchase price of any Bonds tendered or deemed tendered for purchase which are not successfully remarketed. The Bonds will be paid solely from the proceeds of draws under the Initial Credit Facility. The Authority covenants in the Indenture that it will maintain a Credit Facility at all times prior to the date on which the Bonds bear interest at a Fixed Rate. The Initial Credit Facility will enable the Trustee to draw an amount equal to the principal amount of Bonds Outstanding plus interest on all Outstanding Bonds at a maximum rate of 12% per annum for a period of 46 days. The Initial Credit Facility, unless extended as described herein, will expire on February 21, 2013, unless terminated sooner pursuant to its 2 terms. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS--The Initial Credit Facility." The Initial Credit Facility Provider. Certain information about the Initial Credit Facility Provider is set forth in Appendix D - The Initial Credit Facility Provider. The information in Appendix D has been provided by the Initial Credit Facility Provider for inclusion in this Official Statement. The Bonds are being offered solely on the basis of the financial strength of the Initial Credit Facility Provider. The Bonds are not being offered on the financial strength of the Authority and limited information about the Authority is provided in this Official Statement. The information provided about the Authority in this Official Statement is not detailed enough to allow the owners of the Bonds to make a determination as to the financial strength of the Authority. Owners of the Bonds should look solely to the financial strength of the Initial Credit Facility Provider for repayment of the Bonds and should assume that the Initial Credit Facility is the sole credit support for the Bonds. Reimbursement Obligations. Pursuant to the Reimbursement Agreement dated as of February 15, 2008, by and between the Initial Credit Facility Provider, the Town and the Authority (the "Credit Agreement"), the Authority is obligated to repay the Initial Credit Facility Provider for drawings under the Initial Credit Facility, with any interest due ("Reimbursement Obligations"), and to pay various fees and other obligations under the Credit Agreement. The Reimbursement Obligations are special, limited revenue obligations of the Authority payable solely from and secured by the Trust Estate established pursuant to the Indenture and any other amounts specified in the Indenture. The Trust Estate generally includes: (a) the Pledged Revenues (defined below); (b) all of the moneys and securities in all of the funds and accounts established under the Indenture (except the Rebate Fund and the Bond Purchase Fund, and except for moneys deposited with or paid to the Trustee for the redemption of Bonds, notice of the redemption of which shall have been duly given, which shall be held solely for the payments of those Bonds which are being redeemed); (c) all of the Authority's right under the Amended and Restated Cooperation Agreement between the Town and the Authority dated as of February 15, 2008, as it may be amended from time to time (the "Cooperation Agreement); and all amounts appropriated to the Authority by the Town pursuant to the Replenishment Resolution approved by the Town Council to be approved by the Town on February 12, 2008. The Indenture defines "Pledged Revenues" as the Pledged Property Tax Revenues, and all income derived from the investment and reinvestment of the Funds established by the Indenture, except the Rebate Fund and the Bond Purchase Fund. "Pledged Property Tax Revenues" means, for each Fiscal Year and subject to Section 6.10 of the Indenture, that portion of ad valorem property taxes produced by the levy at the rates fixed each year by or for the governing bodies of the various taxing jurisdictions within or overlapping the Urban Renewal Project Area, but excluding: (i) ad valorem property taxes produced by any mill levy imposed by Confluence Metropolitan District and Avon Station Metropolitan District pursuant to intergovernmental agreement between such districts and the Authority; and (ii) ad valorem proper tY taxes produced by a mill levy of any special district formed after ii) February 22, 2008, pursuant to Title 32, Article 1, Colorado Revised Statutes, if such exclusion is authorized and approved by the Authority, 3 which mill levy is in addition to, and not a replacement for, property taxes levied by taxing entities in existence as of February 22, 2008, upon that portion of the valuation for assessment of all taxable property within the Urban Renewal Project Area which is in excess of the Property Tax Base Amount; provided, however, that such amount shall be reduced by any lawful collection fee charged by the County. "Property Tax Base Amount" means, for the 2008 collection year, $53,235,090, which is the amount certified by the Assessor as the valuation for assessment of all taxable property within the Urban Renewal Project Area prior to the adoption of the Urban Renewal Plan or any modification thereof, and provided, however, that in the event of a general reassessment of taxable property in the Urban Renewal Project Area, the valuation for assessment of taxable property within the Urban Renewal Project Area shall be proportionately adjusted in accordance with such general reassessment in the manner required by the Act. Limited Obligations. Neither the Bonds nor the Reimbursement Obligations constitute a general obligation debt or indebtedness of the Authority, or an obligation or indebtedness of the Town, the State, or any political subdivision thereof within the meaning of any constitutional, statutory, or other debt limitation or provision. The Authority has no taxing power, nor may it compel any taxing jurisdiction to levy any property tax. Additional Bonds. The Authority may issue additional bonds or other obligations with a lien on all or a portion of the Trust Estate that is on a parity with the lien of the Bonds ("Additional Bonds") upon the satisfaction of certain conditions set forth in the Credit Agreement and the Indenture. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS--Additional Bonds." As described in "SOURCES AND USES OF FUNDS--The Project." The Bonds; Prior Redemption; Tender for Purchase The Bonds initially are issued solely as fully registered certificates in the denomination of $100,000 or any integral multiple of $5,000 in excess thereof. The Bonds mature and bear interest and are payable as to principal and interest as described in "THE BONDS--Interest, Bond Modes and Rates" below. The Bonds initially will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), the securities depository for the Bonds. Purchases of the Bonds are to be made in book-entry form only. Purchasers will not receive certificates representing their beneficial ownership interest in the Bonds. See "THE BONDS--Book-Entry Only System." The Bonds are subject to redemption prior to maturity at the option of the Authority and also are subject to mandatory sinking fund redemption as described in "THE BONDS--Prior Redemption." While the Bonds bear interest at a rate other than the Fixed Rate, the Bonds may be tendered for purchase to the Trustee upon demand of the Owner thereof at the times specified in the Indenture. See "THE BONDS--Bond Modes, Rate Periods, Interest Payment Dates, Credit Facility and Tender and Redemption Provisions Summary." The Indenture provides for the remarketing by the Remarketing Agent, initially Stifel, Nicolaus & Company, Incorporated (the "Remarketing Agent"), of the Bonds tendered by the Owner thereof. If the proceeds of remarketing are not sufficient to purchase the Bonds tendered for purchase ("Tendered Bonds"), the Trustee is required to draw on the Credit Facility to pay the applicable purchase price. The 4 Bonds are also subject to mandatory tender for purchase to the Trustee upon the occurrence of certain events. See "THE BONDS--Purchase of Bonds." Authority for Issuance The Bonds are issued in full conformity with the Constitution and laws of the State, particularly the Urban Renewal Law, the Supplemental Public Securities Act (Title 11, Article 57, Part 2, C.R.S.) and pursuant to the Indenture and a resolution to be adopted by the Board prior to the issuance of the Bonds (the "Resolution"). Professionals Sherman & Howard L.L.C., Denver, Colorado, has acted as Bond Counsel and also has acted as special counsel in connection with this Official Statement. The fees to be paid to Sherman & Howard L.L.C. in such capacity are contingent upon the sale and delivery of the Bonds. Sherman & Howard L.L.C. has also acted as counsel to the Authority. Chapman and Cutler LLP, Chicago, Illinois, has acted as counsel to the Initial Credit Facility Provider. The Authority has appointed UMB Bank, n.a., Denver, Colorado, to serve as Trustee. Stifel, Nicolaus & Company, Incorporated, Denver, Colorado, will act as the Underwriter for the Bonds (the "Underwriter") and also will also act as the initial Remarketing Agent. See "UNDERWRITING AND REMARKETING AGENT." Tax Status In the opinion of Sherman & Howard L.L.C., Bond Counsel, assuming continuous .10 compliance with certain covenants described herein, interest on the Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date of delivery of the Bonds (the "Tax Code") and interest on the Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code except that such interest is required to be included in calculating the "adjusted current earnings" adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations. The Bonds, together with interest thereon and income therefrom, are exempt from all taxes by the State of Colorado under Colorado laws in effect on the date of delivery of the Bonds. See "TAX MATTERS." Exemption From Continuing Disclosure No continuing disclosure will be provided in connection with the issuance of the Bonds based on the exemptions from the continuing disclosure requirements as set forth in Rule 15c2-12(c) promulgated under the Securities Exchange Act of 1934, as amended (the "Rule"). However, the Authority has covenanted in the Indenture that if the Bonds are converted to a Fixed Mode, an Annual Mode or a Flexible Pricing Long-Term Mode with an interest rate period in excess of 270 days, or if otherwise required by law, it will enter into a written undertaking for the benefit of the Owners in order to comply with or allow the Underwriter to comply with the Rule. Additional Information This introduction is only a brief summary of the provisions of the Bonds, the Indenture, the Initial Credit Facility and the Credit Agreement; a full review of the entire Official 5 ® Statement should be made by potential investors. Brief descriptions of the Project, the Pledged Revenues, the Bonds, the Indenture, the Initial Credit Facility Provider, the Initial Credit Facility, and the Credit Agreement, and other documents are included in this Official Statement. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of the documents referred to herein are available from the Authority and the Underwriter as provided below: Avon Urban Renewal Authority c/o Town of Avon, Colorado Attn: Finance Director/Authority Treasurer 400 Benchmark Road (or PO Box 975) Avon, Colorado 81620 Phone: 970-748-4020 Stifel, Nicolaus & Company, Incorporated 1125 17th Street, Suite 1600 Denver, Colorado 80202 Telephone: (303) 291-5207. This Official Statement provides information concerning the Bonds prior to conversion to: a Flexible Pricing Long-Term Rate with an interest rate period in excess of 270 days; an Annual Rate; or a Fixed Interest Rate (collectively referred to herein as "Long-Term Interest Rate Modes'). Owners and prospective purchasers of the Bonds should not rely on this Official Statement for information concerning the Bonds in connection with any conversion of the Bonds to such Flexible Pricing Long-Term Interest Rate Mode, Annual Modes or Fixed Modes, but should look solely to the offering document used in connection with any such conversion. E 6 SOURCES AND USES OF FUNDS Sources and Uses of Funds The proceeds from the sale of the Bonds are expected to be applied in the following manner. Sources and Uses of Funds Amount SOURCE: Principal amount of Bonds 25.000.000.00 USES: Deposit to Construction Fund $19,929,728.84 Capitalized Interest 2,660,517.22 Reserve Fund 2,149,753.94 Costs of issuance (1) 260,000.00 Total 25.000.000.00 (1) Includes Underwriter's discount, Initial Credit Facility prorated annual fee, and other fees and expenses. Source: The Underwriter. The Project The Project consists of various public improvements within the Urban Renewal Project Area. The Authority currently expects to complete the Project in several phases; however, the first phase is described in more detail below. However, the Authority may change, re-order, eliminate or add projects to the descriptions below as it deems necessary or desirable in order to complete redevelopment projects within the Urban Renewal Project Area. The Project is expected to consist primarily of the construction of street, traffic and pedestrian improvements in the Urban Renewal Project Area. The Authority expects to apply a portion of the net proceeds of the Bonds to construct the following improvements: (i) Lake Street design and improvements; (ii) Main Street design and easement; (iii) construction of Main Street; (iv) construction of Benchmark Road; and (v) reimbursement to the Town for various expenditures relating to the Project. The Authority anticipates that these improvements will commence upon the issuance of the Bonds and are expected to be completed in 2010. Additional public improvements as contemplated in the Urban Renewal Plan are expected to commence subsequent to the completion of the Project. • 7 ® THE BONDS This Official Statement generally provides information concerning the Bonds prior to conversion to an Annual Mode, Flexible Long-Term Mode in excess of 270 days, or a Fixed Mode. Owners and prospective purchasers of the Bonds should not rely on this Official Statement for information concerning the Bonds in connection with any conversion of the Bonds to such Modes, but should look solely to the offering document used in connection with any such conversion. Description The Bonds will be issued in the principal amount, will be dated, and mature as set forth on the cover page hereof. Provisions regarding payment of principal and interest, registration, exchange, transfer, book entry eligibility, anticipated delivery, and certain other matters are set forth in the "INTRODUCTION." The Bonds will be issued initially in denominations of $100,000 and any integral multiple of $5,000 in excess thereof. The Bonds will be remarketed on each Rate Change Date by the Remarketing Agent. For a complete statement of the details and conditions of the Bond issue, reference is made to the Indenture, copies of which are available from the Underwriter prior to delivery of the Bonds. Capitalized terms used and not otherwise defined in this section and elsewhere in this Official are defined in "APPENDIX A--SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Interest, Bond Modes and Rates For definitions of capitalized terms used and not otherwise defined in this section and elsewhere in this Official Statement see "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" appended hereto. General. The Bonds may bear interest in a Daily Mode, Weekly Mode, Monthly Mode, Annual Mode, Flexible Pricing Short Term Mode, Flexible Pricing Long-Term Mode or Fixed Mode, as elected by the Issuer and as described below. The Bonds shall initially bear interest in the Weekly Mode at a Weekly Rate. The Bonds shall bear interest from and including the Closing Date until payment of the principal or redemption price thereof shall have been made or provided for in accordance with the provisions of the Indenture, whether at Maturity, upon redemption, acceleration or otherwise. Interest accrued on the Bonds during each Rate Period shall be paid in arrears on each Interest Payment Date. Interest on the Bonds shall be computed (i) during any Short Mode (which includes a Flexible Pricing Short-Term Mode, a Daily Mode, a Weekly Mode, or a Monthly Mode) upon the basis of a 365-day or a 366-day year, as applicable, for the number of days actually elapsed and (ii) during any Annual Mode or Flexible Pricing Long-Term Mode or during a Fixed Mode (as each is defined herein), upon the basis of a 360- day year consisting of twelve 30-day months. The Bonds shall initially bear interest at a Weekly Rate until and unless any portion thereof is converted to a different Mode as provided in the Indenture. At no time shall the Bonds bear interest at a rate higher than the Maximum Interest Rate. ® Weekly Mode. The Bonds shall initially be in the Weekly Mode, which Mode constitutes any Adjustment Period of seven days during which Rate Determination Dates occur on the Business Day of each calendar week next preceding the Rate Change Date in such calendar week and shall bear interest at the Weekly Rate, determined on the Rate Determination Date in the following manner: for each such Rate Period, no later than 11:00 a.m., Eastern time, 8 on the Rate Determination Date for each such Rate Period, the Remarketing Agent will determine, and is required to give telephonic notice (confirmed by facsimile) to the Trustee, of the Weekly Rate. Except on an Adjustment Date, in the event that the Weekly Rate is not determined by the Remarketing Agent on a Rate Determination Date, the rate of interest borne by the Bonds bearing interest at a Weekly Rate for the immediately preceding Rate Period shall remain in effect; provided that if such rate is not determined by the Remarketing Agent for two consecutive weeks, the interest rate to be borne by such Bonds shall be equal to the Securities Industry and Financial Markets Association Municipal Swap Index, produced by Municipal Market Data, (the "SIFMA Index") published most recently prior to the Rate Determination Date. If at any time the Remarketing Agent shall determine that, in its judgment, the scheduled Rate Determination Dates or Rate Change Dates during a Weekly Mode have become inappropriate (taking into account general market practice with respect to periodic adjustment of rates on instruments comparable to the Bonds bearing interest at the Weekly Rate, whether based upon the time of compilation or reporting of any interest rate or financial index or indicator or otherwise), the Remarketing Agent may, after consultation with the Authority, designate new scheduled Rate Determination Dates and/or Rate Change Dates, to remain in effect until another redetermination of scheduled Rate Determination Dates or Rate Change Dates in accordance with this paragraph. The Remarketing Agent shall give written notice of any change in scheduled Rate Determination Dates and/or Rate Change Dates, while in the Weekly Mode, to the Trustee, the Bank and the Authority, and such change shall become effective on the first scheduled Rate Determination Date or Rate Change Date, as the case may be, so designated occurring not less than 14 days following the giving of such notice. Promptly upon receipt of such notice, the Trustee shall notify or cause the Remarketing Agent to notify each affected Bondholder of such change in writing. Daily Mode. Bonds in the Daily Mode shall bear interest beginning on the Rate Change Date at the Daily Rate determined on the Rate Determination Date in the following manner for each such Rate Period. No later than 10:30 a.m., Eastern time, on the Rate Determination Date for each such Rate Period, the Remarketing Agent will determine, and is required to give telephonic notice (confirmed by facsimile) to the Trustee of, the Daily Rate. Except on an Adjustment Date, in the event that the Daily Rate is not determined by the Remarketing Agent, the rate of interest borne by the Bonds bearing interest at a Daily Rate for the immediately preceding Business Day will be the Daily Rate for such Bond for the day as of which such determination is not made. If at any time the Remarketing Agent shall determine that, in its judgment, the scheduled Rate Determination Dates or Rate Change Dates during a Daily Mode have become inappropriate (taking into account general market practice with respect to periodic adjustment of rates on instruments comparable to the Bonds bearing interest at the Daily Rate, whether based upon the time of compilation or reporting of any interest rate or financial index or indicator or otherwise), the Remarketing Agent may, after consultation with the Authority, designate new scheduled Rate Determination Dates and/or Rate Change Dates, to remain in effect until another re-determination of scheduled Rate Determination Dates or Rate Change Dates in accordance with this paragraph. The Remarketing Agent shall give written notice of any change in scheduled Rate Determination Dates and/or Rate Change Dates during a Daily Mode to the, Trustee, the Bank and the Authority, and such change shall become effective on the first scheduled Rate Determination Date or Rate Change Date, as the case may be, so designated occurring not less than 14 days following the giving of such notice. Promptly upon receipt of 9 such notice, the Trustee shall notify or cause the Remarketing Agent to notify each affected Bondholder of such change in writing. Monthly Mode. Bonds in the Monthly Mode shall bear interest beginning on the Rate Change Date at the Monthly Rate determined on the Rate Determination Date in the following manner for each such Rate Period. No later than 11:00 a.m., Eastern time, on the Rate Determination Date for each such Rate Period, the Remarketing Agent will determine and is required to give notice by telecopy to the Trustee of the Monthly Rate. Except on an Adjustment Date, in the event that the Monthly Rate is not determined by the Remarketing Agent on a Rate Determination Date, the rate of interest borne by Bonds for the immediately preceding Rate Period shall remain in effect. If at any time the Remarketing Agent shall determine that, in its judgment, the scheduled Rate Determination Dates or Rate Change Dates during a Monthly Mode have become inappropriate (taking into account general market practice with respect to periodic adjustment of rates on instruments comparable to the Bonds bearing interest at the Monthly Rate, whether based upon the time of compilation or reporting of any interest rate or financial index or indicator or otherwise), the Remarketing Agent may, after consultation with the Authority, designate new scheduled Rate Determination Dates and/or Rate Change Dates, to remain in effect until another re-determination of scheduled Rate Determination Dates or Rate Change Dates in accordance with this paragraph. The Remarketing Agent shall give written notice of any change in scheduled Rate Determination Dates and/or Rate Change Dates during a Monthly Mode to the Authority, the Trustee, the Bank, and such change shall become effective on the first ® scheduled Rate Determination Date or Rate Change Date, as the case may be, so designated occurring not less than 14 days following the giving of such notice. Promptly upon receipt of such notice, the Trustee shall notify or cause the Remarketing Agent to notify each affected Bondholder of such change in writing. Annual Mode. Bonds in the Annual Mode shall bear interest at a fixed rate per annum at the Annual Rate for each Rate Period of twelve months within an Annual Mode applicable to a Bond. For each Rate Period during any Annual Mode, Bonds in such Mode shall bear interest beginning on the Rate Change Date at the Annual Rate determined on the Rate Determination Date in the following manner for each such Rate Period. No later than 11:00 a.m., Eastern time, on the Rate Determination Date for each such Rate Period, the Remarketing Agent will determine, and is required to give telephonic notice (confirmed by facsimile) to the Trustee, of the Annual Rate. Except on an Adjustment Date, in the event that the Annual Rate is not determined by the Remarketing Agent on a Rate Determination Date, the rate of interest borne by the Bonds bearing interest at an Annual Rate for the immediately preceding Rate Period shall remain in effect. If at any time the Remarketing Agent shall determine that, in its judgment, the scheduled Rate Determination Dates or Rate Change Dates during an Annual Mode have become inappropriate (taking into account general market practice with respect to periodic adjustment of rates on instruments comparable to the Bonds bearing interest at the Annual Rate, whether based upon the time of compilation or reporting of any interest rate or financial index or indicator or otherwise), the Remarketing Agent may, after consultation with the Authority, designate new scheduled Rate Determination Dates and/or Rate Change Dates, to remain in effect until another re-determination of scheduled Rate Determination Dates or Rate Change Dates in accordance with this paragraph. The Remarketing Agent shall give written notice of any change in scheduled Rate Determination Dates and/or Rate Change Dates during an Annual Mode to the 10 Trustee, the Bank and the Authority, and such change shall become effective on the first scheduled Rate Determination Date or Rate Change Date, as the case may be, so designated 40 occurring not less than 30 days following the giving of such notice. Promptly upon receipt of such notice, the Trustee shall notify or cause the Remarketing Agent to notify each affected Bondholder of such change in writing. Flexible Pricing Short-Term Mode. Bonds in the Flexible Pricing Short-Term Mode shall bear interest at a fixed rate per annum at the Flexible Pricing Short-Term Rate for each Rate Period which shall have a duration which is not less than seven days or more than 360 days within a Flexible Pricing Short-Term Mode applicable to a Bond. For each Rate Period during any Flexible Pricing Short-Term Mode, each Bond which will bear interest at a Flexible Pricing Short-Term Rate for such Rate Period shall bear interest beginning on the Rate Change Date at the Flexible Pricing Short-Term Rate determined on the Rate Determination Date in the following manner for each such Rate Period. No later than 11:00 a.m., Eastern time, on the Rate Determination Date for a Bond bearing interest at the Flexible Pricing Short-Term Rate, the Remarketing Agent will determine, and is required to give telephonic notice (confirmed by facsimile) to the Trustee of (i) the duration of the Rate Period for such Bond by specifying the succeeding Rate Change Date (which shall also be the succeeding Rate Determination Date) for such Bond, which Rate Change Date shall be no later than the Business Day prior to the Stated Termination Date (as defined in the Credit Agreement) if a Credit Facility is required to be in place; and (ii) the Flexible Pricing Short-Term Rate applicable to such Bond bearing interest at the Flexible Pricing Short-Term Rate during such Rate Period. The last day of such Rate Period must be a Business Day and the day next succeeding such Business Day must also be a Business Day. Except on an Adjustment Date, in the event that the Flexible Pricing Short-Term Rate for any Bond is not determined by the Remarketing Agent on any Rate Determination Date, such Bond shall bear interest at the same rate of interest borne by such Bond for the immediately preceding Rate Period for a Rate Period of the shortest possible duration. The Remarketing Agent shall determine the duration of Rate Periods during a Flexible Pricing Short-Term Mode as will, in the judgment of the Remarketing Agent, result in the lowest aggregate cost. being payable by the Authority with respect to the Bonds bearing interest at Flexible Pricing Short-Term Rates, taking into account interest and any other determinable fees and expenses. The Remarketing Agent may establish different Rate Periods on the same Rate Change Date for Bonds in the Flexible Pricing Short-Term Mode in order to achieve an average duration of Rate Periods that, in the judgment of the Remarketing Agent, is most likely to achieve the lowest total aggregate cost being payable by the Authority with respect to such Bonds bearing interest at a Flexible Pricing Short-Term Rate, taking into account interest and any other determinable fees and expenses. The Remarketing Agent's determination shall be based upon the market for and the relative yields of the Bonds and other securities that bear interest at a variable rate or at fixed rates that, in the judgment of the Remarketing Agent, are otherwise comparable to the Bonds, or any fact or circumstance relating to the Bonds or affecting the market for the Bonds or affecting such other comparable securities in a manner that, in the judgment of the Remarketing Agent, will affect the market for the Bonds. The Remarketing Agent, in its discretion, may consider such information and resources as it deems appropriate in making the determinations required by this paragraph, but the Remarketing Agent's determination shall be based solely upon the Remarketing Agent's judgment, and the 40 Remarketing Agent's determination shall be conclusive and binding upon all parties. Except on an Adjustment Date, in the event that the Rate Period for any Bond in a Flexible Pricing Short- ® Term Mode is not determined by the Remarketing Agent as provided in this paragraph, the Rate Period for such Bond shall be a Rate Period of the shortest possible duration. Flexible Pricing Long-Term Mode. Bonds in the Flexible Pricing Long-Term Mode shall bear interest at a fixed rate per annum at the Flexible Pricing Long-Term Rate for each Rate Period which shall have a duration of 365 days or more and less than or equal to the remaining term of the Bonds within a Flexible Pricing Long-Term Mode applicable to a Bond. For each Rate Period during any Flexible Pricing Long-Term Mode each Bond which will bear interest at a Flexible Pricing Long-Term Rate for such Rate Period shall bear interest beginning on the Rate Change Date at the Flexible Pricing Long-Term Rate determined on the Rate Determination Date in the manner described in Section 2.03 of the Indenture for such Rate Period. See "APPENDIX A--SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Fixed Rate. From and after the Conversion Date for a Bond, such Bond shall bear interest at the Fixed Rate with respect thereto in the following manner. On any Rate Change Date during a Flexible Pricing Short-Term Mode, an Annual Mode or a Flexible Pricing Long-Term Mode or on any Business Day during a Daily Mode or a Weekly Mode, the interest rate to be borne by all or any portion of the Bonds in such Mode shall be converted to a Fixed Rate, and such Bonds so converted shall thereafter bear interest at such Fixed Rate until payment of the principal or redemption price thereof shall have been made or provided for in accordance with the provisions of the Indenture. See "APPENDIX A--SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."." ® Bond Modes, Rate Periods, Interest Payment Dates, Credit Facility and Tender and Redemption Provisions Summary Set forth in the following table is a general summary of information regarding the Modes, the Rate Period, the Interest Payment Date, the requirement for a credit facility to secure the Bonds, and provisions regarding the tender and optional redemption of the Bonds. See information contained in the subsections thereafter, and in the form of the Indenture appended hereto, for further information. E 12 Bond Modes Modes' Rate Period Interest Payment Datez Daily Each Business First Business Day of Day Each Calendar Month Weekly Thursday to First Business Day of Wednesday Each Calendar Month Monthly I" Business First Business Day of Day of the each Calendar Month calendar month to the day prior to the I" Business Day of the succeeding calendar month Annual Twelve Months Each June 1 and December 1 Flexible Pricing 7 to 360 days Each Rate Change Date Short-Term Credit Facility Purchase on Demand3 Yes Yes Yes Yes Yes Yes Yes Yes Yes On Each Rate Change Date and Adjustment Date, per the requirements of the Indenture Redemption 9 Dates and Redemption Prices Any Business Day at Par Any Business Day at Par Any Rate Change Date at Par Any Rate Change Date Any Rate a Change Date The Bonds may bear interest in different Modes at the same time. z Any Adjustment Date (including a proposed conversion Date, but excluding the Closing Date) for a Bond is also an Interest Payment Date. 3 All Bonds will be purchased on any change of Mode, termination of Credit Facility, failure to reinstate credit draws, or an Event of Default under the Indenture or the Credit Agreement. See "Purchase of Bonds" hereafter. See "Prior Redemption ° herein for the Schedule setting forth the No-Call Periods and the redemption prices. Defaulted Interest. Defaulted Interest with respect to any Bond shall cease to be payable to the Owner of such Bond on the relevant Record Date and shall be payable to the Owner in whose name such Bond is registered at the close of business of the Trustee on the Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Authority shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), and at the same time the Authority shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed. payment, such money when deposited to be held in trust for the benefit of the Bondholders entitled to such Defaulted Interest as provided in this subsection. Following receipt of such funds, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Authority of such Special Record Date and, in the name and at the expense of the Authority, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefore to be mailed, first class postage prepaid, to each Owner of a Bond at the address of such Owner as it appears on the Bond Register not less than ten days prior to • 13 ® such Special Record Date. Such Defaulted Interest shall be paid to the Owners in whose names the Bonds on which such Defaulted Interest is to be paid are registered on such Special Record Date. Information for Bondholders. The Trustee agrees to provide to any Bondholder, upon the written request of such Bondholder, information regarding the Adjustment Periods, Rate Periods, Interest Payment Dates, optional redemption provisions and interest rate or rates applicable to such Bondholder's Bonds. The Trustee may impose a reasonable fee, including recovery of its costs for this service. Notices. The Remarketing Agent agrees to provide to the Authority, the Trustee and the Bank notice of all determinations made by the Remarketing Agent pursuant to the Indenture including, but not limited to, interest rate determinations and duration of Rate Periods, on a timely basis. Purchase of Bonds Purchase on Demand of Owner While Bonds Bear Interest at a Daily Rate, a Weekly Rate, a Monthly Rate or an Annual Rate. (a) Daily Rate. While a Bond (other than an Authority Bond or a Bank Bond) bears interest at a Daily Rate, such Bond (or portion thereof in an Authorized Denomination), shall be purchased on a Demand Date therefor upon the demand of the Owner thereof, at a purchase price equal to 100% of the principal amount thereof plus, if such purchase date is not an Interest Payment Date, accrued interest thereon, if any, to such Demand Date, upon irrevocable telephonic or written notice (which telephonic notice shall be confirmed in writing and which written notice may be given by facsimile) to both the Trustee and the Remarketing Agent, which notice must be received not later than 10:30 a.m., Eastern time, in order to be effective on that date. Any notice received after 10:30 a.m., Eastern time, shall be deemed given on the next succeeding Business Day. The Business Day on which any notice is deemed given will be the Demand Date for the applicable Tendered Bond. Such notice must specify the principal amount and number of such Bond, the name and the address of such Owner and the taxpayer identification number, if any, of such Owner. The Trustee shall give Immediate Notice to the Authority and the Bank as to the contents of any such notices received by it. (b) Weekly Rate or Monthly Rate. While a Bond (other than an Authority Bond or a Bank Bond) bears interest at a Weekly Rate or a Monthly Rate, such Bond (or portion thereof in an Authorized Denomination) shall be purchased on a Demand Date therefor upon the demand of the Owner thereof, at a purchase price equal to 100% of the principal amount thereof plus, if such purchase date is not an Interest Payment Date, accrued interest, if any, to such Demand Date, upon irrevocable written notice (which may be given by facsimile) to the Trustee, which notice must be received by the Trustee not later than 4:00 p.m., Eastern time, in order to be effective on that day. Any notice received after 4:00 p.m., Eastern time, shall be deemed given on the next succeeding Business Day. Such notice must specify (i) the principal amount and number ® of such Bond, the name and the address of such Owner and the taxpayer identification number, if any, of such Owner, and (ii) the Demand Date on which such Bond is to be purchased. The Trustee shall give Immediate Notice to the Remarketing Agent, the Authority and the Bank as to the contents of any such notices received by it. 14 (c) Annual Rate. While a Bond (other than an Authority Bond or a Bank Bond) bears interest at a Annual Rate, such Bond (or portion thereof in an Authorized Denomination) shall be purchased on a Demand Date therefor upon the demand of the Owner thereof, at a purchase price equal to 100% of the principal amount thereof, upon irrevocable written notice (which may be given by facsimile) to the Trustee, which notice must be received by the Trustee not less than fifteen calendar days prior to the Demand Date. Such notice must specify (i) the principal amount and number of such Bond, the name and the address of such Owner and the taxpayer identification number, if any, of such Owner, and (ii) the Demand Date on which such Bond is to be purchased. The Trustee shall give Immediate Notice to the Remarketing Agent, the Authority and the Bank as to the contents of any such notices received.by it. The determination of the Trustee as to whether a notice of tender has been properly delivered pursuant to the foregoing shall be conclusive and binding upon the Owner of such Bond. Any notice received by the Trustee pursuant to the Indenture from any Person reasonably believed by the Trustee to be the Owner of a Bond may be conclusively relied upon by the Trustee as a true, irrevocable notice of demand with respect to such Bond. Purchase While Bonds Bear Interest at a Flexible Pricing Short-Term Rate. While any Bond (other than an Authority Bond or a Bank Bond) bears interest at a Flexible Pricing Short-Term Rate, such Bond shall be purchased pursuant to the Indenture on each Rate Change Date for such Bond, other than the Rate Change Date which is the first day of a Flexible Pricing Short-Term Mode applicable to such Bond, and on the Adjustment Date immediately following the last day of the Flexible Pricing Short-Term Mode at a purchase price equal to 100% of the principal amount thereof. The Owner of such Bond may not elect to retain its Bond. Purchase on Stated Termination Date or Substitution Date. If by the 20th day preceding any Stated Termination Date of the Credit Facility, the Trustee has not received a commitment to issue a Substitute Credit Facility or an extension of the existing Credit Facility in accordance with the terms of the Indenture, all Bonds (other than Authority Bonds, Bank Bonds and Bonds bearing interest at the Fixed Rate) shall be purchased not less than five (5) days prior to the Stated Termination Date of the Credit Facility pursuant to this Section. Not later than 15 days prior to the purchase date, the Trustee shall give Immediate Notice to the owners of the Bonds stating (i) the date the Bonds are required to be purchased, and (ii) that the owners of the Bonds may not elect to retain their Bonds. All Bonds (other than Authority Bonds, Bank Bonds and Bonds bearing interest at the Fixed Rate) shall be purchased on the Substitution Date. Not later than the 15th day preceding a Substitution Date, the Trustee shall give Immediate Notice to the owners of the Bonds stating (i) the Substitution Date, (ii) that the Bonds are required to be purchased on the Business Day prior to the Substitution Date, and (iii) that the owners of the Bonds may not elect to retain their Bonds. A purchase of Bonds pursuant to Section 4.03 of the Indenture shall be at a purchase price equal to 100% of the principal amount of each such Bond purchased plus, if such purchase date is not an Interest Payment Date, accrued interest to the purchase date. The owner of such Bond may not elect to retain its Bond. If the Bonds are required to be tendered pursuant to Section 4.03 of the Indenture, the Trustee shall not take any action in order to terminate such Credit Facility until after it has received the funds sufficient to pay the purchase price of the Tendered Bonds. 15 ® Purchase on Any Adjustment Date. On each Adjustment Date, excluding the Closing Date, with respect to a Bond (other than a Bank Bond or an Authority Bond), including, without limitation, a proposed Conversion Date or a Substitute Adjustment Date, excluding the Closing Date, such Bond shall be purchased pursuant to Section 4.05 of the Indenture at a purchase price equal to 100% of the principal amount thereof, except that a Bond which is to be purchased on an Adjustment Date which immediately follows the last day of a Flexible Pricing Short-Term Mode shall be purchased pursuant to the Indenture and a Bond which is to be purchased on an Adjustment Date which immediately follows the scheduled final day of a Flexible Pricing Long-Term Mode shall be purchased pursuant to the Indenture. Not later than the 15th day next preceding the Adjustment Date for any Bond bearing interest at a Daily Rate or a Weekly Rate, the Trustee shall give Immediate Notice to the Owner of such Bond stating (i) the last day of the Adjustment Period then ending and (ii) that such Bond is required to be purchased on the Adjustment Date. Purchase on Notice of Certain Events. During the period a' Credit Facility is required by the Indenture, the Bonds (other than Authority Bonds, Bank Bonds and Bonds bearing interest at a Fixed Rate) are subject to mandatory tender by the Owners thereof to the Trustee when the Trustee gives Immediate Notice to the Owners of such Bonds of (i) the occurrence and continuation of an event constituting an Event of Default under the Indenture; or (ii) receipt by the Trustee of notice from the Bank that (i) the Bank will not reinstate the interest component of the Credit Facility following a drawing thereunder in respect of the payment of interest because the Authority has failed to reimburse the Bank for such drawing within 5 days; ® or (ii) an event of default under the Credit Agreement has occurred and is continuing and directing the Trustee to give Immediate Notice of a mandatory tender. Upon the giving of such Immediate Notice, such Bonds shall be purchased on a date designated by the Bank which date is a Business Day not more than five days after the date such notice is received by the Trustee and in no event later than two days prior to the last day on which funds will be available under the Credit Facility at a purchase price equal to 100% of the principal amount thereof plus, if such purchase date is not an Interest Payment Date, accrued interest to the purchase date. In such case, the Owner of any such Bond required to be purchased may not elect to retain its Bond and by the acceptance of such Bond shall be deemed to have agreed to sell such Bond to the Trustee on the date specified pursuant to this paragraph. The Trustee shall give such Immediate Notice upon the occurrence and continuation of an Event of Default under the Indenture and receipt by the Trustee of a written notice from the Bank requesting that such Immediate Notice be given. Purchase of Tendered Bonds Delivered to the Trustee; Notices. Tendered Bonds shall be purchased from the Owners thereof at a purchase price equal to 100% of the principal amount thereof, plus, if such purchase date is not an Interest Payment Date, accrued interest thereon, but solely from the following sources in order of priority indicated, neither the Authority, the Trustee nor the Remarketing Agent having an obligation to use funds from any other source: (a) proceeds of the sale of such Tendered Bonds pursuant to the Indenture other than sales to the Authority; is (b) moneys received from the underwriter or purchaser (other than the Authority) of Tendered Bonds upon the conversion of the interest rate thereon to a Fixed Rate; 16 (c) proceeds of a drawing received pursuant to the Credit Facility, to the extent a Credit Facility is available and, with respect to the purchase of Tendered 41 Bonds in a Flexible Pricing Short-Term Mode, interest or other gain realized as a result of any investments or reinvestments of moneys in the Flexible Pricing Short-Term Fund; and (d) moneys furnished by the Authority to the Trustee for the purchase of Tendered Bonds, which moneys shall be segregated by the Trustee in a separate account in the Bond Purchase Fund apart from, and not commingled with, other moneys held by the Trustee in the Bond Purchase Fund. The Trustee shall pay the purchase price specified above of each Tendered Bond from the sources specified above to the Registered Owner thereof by 4:30 p.m., Eastern time, on the purchase date, provided that such Registered Owner has delivered such Tendered Bond (with any necessary endorsements) to the Tender Office of the Trustee no later than 4:00 p.m., Eastern time, on such date; and provided further that failure of the Authority to pay the purchase price of a Tendered Bond on the purchase date shall not constitute a default under the Indenture in the event (i) the failure is the result of a failure of the Remarketing Agent or the Bank to deliver proceeds in accordance with the terms of the Remarketing Agreement or the Credit Facility, respectively, and (ii) such funds are deposited with the Trustee not later than 11:30 a.m., Eastern time, on the next succeeding Business Day after which such Tendered Bonds were required to be purchased, in which case the Trustee shall not be required to pay the purchase price of such Tendered Bond until noon, Eastern time on such next succeeding Business Day. Remarketing of Tendered Bonds by Remarketing Agent. Upon the delivery or deemed delivery of Tendered Bonds by any Owners thereof in accordance with the provisions of the Indenture (including the delivery or deemed delivery of Authority Bonds), the Remarketing Agent shall offer for sale and use its best efforts to remarket such Tendered Bonds pursuant to the Remarketing Agreement, any such remarketing to be made on the date on which such Tendered Bonds are to be purchased, at a price equal to 100% of the principal amount thereof plus accrued interest, if any. If Bonds are delivered or deemed delivered for purchase under 4.01(a) of the Indenture, the Remarketing Agent shall give telephonic notice to the Trustee, the Authority and the Bank no later than 10:45 a.m., Eastern time, on the date on which such Bonds are to be so delivered or deemed delivered, of the aggregate principal amount of such Bonds to be purchased on such date which it has reasonable grounds to expect will not be remarketed on such date. With respect to Bonds delivered or deemed delivered for purchase under Section 4.01(b), 4.02, 4.03, 4.04, 4.05, 4.06 and 4.07 of the Indenture, the Remarketing Agent shall give telephonic notice to the Trustee, the Authority and the Bank no later than 4:30 p.m., Eastern time, on the Business Day next preceding the date on which such Bonds are to be so delivered or deemed delivered, of the aggregate principal amount of such Bonds to be purchased on such date which it has reasonable grounds to expect will not be remarketed on such date. The Remarketing Agent shall remarket any Bank Bonds prior to remarketing of any Tendered Bonds or Authority Bonds and shall remarket Bank Bonds and any Authority 40 Bonds to the extent and subject to the conditions set forth in the Indenture and in the Remarketing Agreement. Upon the remarketing of Bank ,Bonds or Authority Bonds, the Remarketing Agent shall immediately provide telephonic notice, promptly confirmed by 17 ® facsimile or electronic mail, of such remarketing to the Trustee, the Authority and the Bank, and thereupon the Authority or the Trustee, whichever has possession of or beneficial interest in such Bonds, shall, subject to Section 4.09(a)(ii) of the Indenture, immediately deliver or provide for transfer of beneficial interest in such Bonds to the Trustee for delivery to the purchasers thereof. In addition to all other requirements to be met before the remarketing of Bank Bonds, if the Bank Bonds have been purchased as a result of the purchase of Bonds pursuant to Section 4.03 or Section 4.06 of the Indenture, the Remarketing Agent shall not remarket any such Bank Bonds unless it shall have received an Opinion of Bond Counsel to the effect that the remarketing of the Bank Bonds will not adversely affect any exclusion of interest on the Bonds from gross income for federal income tax purposes under Section 103(a) of the Tax Code to which the interest on the Bonds would otherwise be entitled. Prior Redemption Optional Redemption. Any Bond in a Daily Mode or a Weekly Mode shall be subject to redemption prior to maturity at the option of the Authority upon direction of the Authority, with the prior written consent of the Bank, to the extent that moneys are on deposit in the Redemption Fund (excluding amounts on deposit in the Fixed Rate Redemption Account), in whole or in part (and if in part in an Authorized Denomination) on any Business Day during such Daily Mode or Weekly Mode, as applicable, at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date. Any Bond in a Monthly Mode shall be subject to redemption prior to maturity upon direction of the Authority, with prior written consent of the Bank, to the extent that moneys are on deposit in the Redemption Fund (excluding amounts on deposit in the Fixed Rate Redemption Account), in whole or in part (and if in part, in an Authorized Denomination) on any Rate Change Date during such Monthly Mode, at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date, without premium Any Bonds bearing interest at a Flexible Pricing Short-Term Rate or an Annual Rate shall be subject to optional redemption prior to maturity at the option of the Authority, upon direction of the Authority, from moneys on deposit in the Redemption Fund (excluding amounts on deposit in the Fixed Rate Redemption Account), in whole or in part (and if in part in an Authorized Denomination) on any Rate Change Date therefor, at a redemption price equal to 100% of the principal amount thereof. Any redemption of less than all of the Bonds outstanding shall be made first from Bank Bonds. General Provisions Regarding Optional Redemption Including Credits Against Bond Sinking Fund Deposits. No redemption of less than all of the Bonds outstanding shall be made pursuant to the Indenture unless (i) if such redemption is of the Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate, the aggregate principal amount of the Bonds to be redeemed is equal to $100,000 or integral multiples thereof, or (ii) if ® such redemption is with respect to the Bonds bearing interest at a Fixed Rate, the aggregate principal amount of the Bonds to be redeemed is equal to $100,000 or $5,000 multiples in excess thereof. Any redemption of less than all of the Bonds outstanding shall be made in such a manner that all the Bonds outstanding after such redemption are in Authorized Denominations. 18 The Bonds may be called for redemption by the Trustee pursuant to Section 4.11(a) of the Indenture upon receipt by the Trustee at least 45 days prior to the 41 redemption date of a Written Request of the Authority requesting such redemption unless waived by the Bank. Each such Written Request of the Authority shall specify the principal amount of the Bonds so to be called for redemption, the applicable redemption price or prices and the provision or provisions of the Indenture pursuant to which such Bonds are to be called for redemption. In lieu of redeeming the Bonds pursuant to subsection (a) or (c) of Section 4.11 of the Indenture, the Trustee may, at the request of the Authority,.use such funds available under the Indenture for redemption of the Bonds to purchase the Bonds in the open market at a price not exceeding the redemption price then applicable under the Indenture. Any Bond so purchased in lieu of redemption shall be delivered to the Trustee for cancellation and shall be cancelled, all as provided in Section 2.11 of the Indenture. In the case of any optional or purchase and cancellation of the Bonds bearing interest at a Fixed Rate with serial Maturities, the Authority shall receive credit against its required Bond Sinking Fund deposits with respect to such Bonds of such Maturity and in the case of any optional or extraordinary redemption of any of the Bonds in any Mode with a term Maturity, the Authority shall receive credit against its required Bond Sinking Fund deposits in such order as the Authority shall designate prior to the redemption or purchase and cancellation or, if no such election is made prior to such redemption or purchase and cancellation, in the inverse order thereof, provided, however, that following such reduction each such mandatory Bond Sinking Fund redemption payment is made in integral multiples of an Authorized Denomination. Notwithstanding the provisions of Section 4.11 of the Indenture, if the Trustee does not have on deposit funds sufficient to pay the redemption price of the Bonds to be called for redemption, any notice of redemption with respect to redemptions pursuant to Section 4.11 of the Indenture may contain a statement that the redemption is conditioned upon the receipt by the Trustee of funds on or before the date fixed for redemption sufficient to pay the redemption price of the Bonds so called for redemption, and that if such funds are not available, such redemption shall be canceled by written notice to the owners of the Bonds called for redemption in the same manner as the original redemption notice was mailed. Bond Sinking Fund Deposits; Mandatory Redemption. The Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. As and for a sinking fund for the redemption of the Bonds, there shall be redeemed (after any credits provided for in the Indenture) from amounts on deposit in the Bond Sinking Fund on the following dates the following principal amounts of Bonds: 19 Maturity Date Sinking Fund Amount December 1, 2011 $ 355,000 December 1, 2012 690,000 December 1, 2013 725,000 December 1, 2014 755,000 December 1, 2015 790,000 December 1, 2016 825,000 December 1, 2017 860,000 December 1, 2018 900,000 December 1, 2019 940,000 December 1, 2020 985,000 December 1, 2021 1,030,000 December 1, 2022 1,075,000 December 1, 2023 1,120,000 December 1, 2024 1,170,000 December 1, 2025 1,225,000 December 1, 2026 1,280,000 December 1, 2027 1,335,000 December 1, 2028 1,395,000 December 1, 2029 1,460,000 December 1, 2030 1,525,000 December, 2031 June 1, 2032 1,595,000 2,965,000 Payment or redemption of the Bonds through the Bond Sinking Fund shall be without premium. The Bonds shall be redeemed by the Trustee pursuant to the provisions of Section 4.11(c) of the Indenture without any notice from or direction by the Authority or the consent of the Bank. Authority Bonds. Authority Bonds are not subject to redemption. At any time the Authority may surrender any Authority Bonds to the Trustee, which shall promptly cancel such Bonds. Bank Bonds. Bank Bonds are subject to redemption at the time or times required by the Credit Agreement at a redemption price of 100% of the principal amount of the Bank Bonds to be redeemed plus accrued interest, if any, at the rate specified in the Credit Agreement,-to the redemption date. The Bank Bonds shall be redeemed by the Trustee without any notice from or direction by the Authority Notice of Redemption. Except as provided in the Indenture, a copy of the notice of any redemption identifying the Bonds to be redeemed shall be given by Immediate Notice with respect to the Bonds bearing interest at a Short Rate not less than 30 nor more than 60 days prior to the date fixed for redemption, and shall be given by first class mail, postage prepaid, with respect to the Bonds bearing interest at a Annual Rate, a Flexible Pricing Long-Term Rate or a Fixed Rate not less than 30 or more than 60 days prior to the date fixed for redemption, to the Registered Owners of the Bonds to be redeemed at their addresses as shown on the Bond Register. Such notice shall specify the redemption date, the redemption price, the place and manner of payment and that from the redemption date interest will cease to accrue on the Bonds which are the subject of such notice and shall include such other information as the Trustee shall deem appropriate or necessary at the time. The redemption of any Bonds may be contingent or 20 subject to such conditions as may be specified in the applicable notice. Except for mandatory sinking fund redemptions, prior to the date that the redemption notice is first given as aforesaid, (i) funds shall be placed with the Trustee to pay such Bonds, any premium thereon, and accrued interest thereon to the redemption date if the Bonds to be redeemed bear interest at a Fixed Rate or if no Credit Facility is required to be in effect; or (ii) with respect to the Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate while a Credit Facility is required to be in effect, the Bank shall have consented thereto. Prior to the time at which all of the Bonds bear interest at Fixed Rates, Immediate Notice of any such redemption shall also be given to the Bank and the Remarketing Agent promptly following the giving of notice to the Bondholders as aforesaid. Book-Entry Only System The Bonds will be available only in book-entry form in the principal amount of $100,000 or any integral multiple of $5,000 in excess thereof. DTC will act as the initial securities depository for the Bonds. The ownership of one fully registered Bond for each maturity, as set forth on the cover page of this Official Statement, in the aggregate principal amount of such maturity coming due thereon, will be registered in the name of Cede & Co., as nominee for DTC. See Appendix C--Book-Entry Only System. SO LONG AS CEDE & CO, AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE BONDS, REFERENCES IN THIS OFFICIAL STATEMENT TO THE REGISTERED OWNERS WILL MEAN CEDE & CO. AND WILL NOT MEAN THE BENEFICIAL OWNERS. Neither the Authority nor the Trustee will have any responsibility or obligation to DTC's Direct Participants or Indirect Participants (each as defined in Appendix C), or the persons for whom they act as nominees, with respect to the payments to or the providing of notice for the Direct Participants, the Indirect Participants or the beneficial owners of the Bonds as further described in Appendix C to this Official Statement. • 21 ® . DEBT SERVICE REQUIREMENTS • The following table sets forth (i) the estimated debt service requirements for the Bonds, and (ii) the estimated annual amounts of certain annually recurring costs, including Credit Facility fees, Remarketing Agent fees and Trustee fees. Certain of those recurring costs are subject to change during the life of the Bonds; the estimates presented here are calculated using the fees expected to be in effect upon issuance of the Bonds. The debt service set forth in the following table assumes interest at a single interest rate (4.0%) as estimated by the Underwriter to apply over the life of the Bonds, and that the Bonds will remain outstanding at a Weekly Rate the entire time. The Bonds will be issued bearing interest at an Adjustable Rate (which initially will change weekly), accordingly, the interest rate will not remain constant over the life of the Bonds. In addition, the interest rate on the Bonds may be converted to another Adjustable Rate or to the Fixed Rate at any time. To the extent the average annual rate actually paid on the Bonds exceeds the estimated interest rate described above, debt service will be higher than shown here. Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2031 2031 Total Estimated Debt Service Requirements The Bonds (1) Ongoing Principal Interest Total Fees 2 Reserve Total Fund Payments (1) Total estimated principal and interest on the Bonds. Assumes interest at a single interest rate (4.0%) estimated by the Underwriter to apply over the life of the Bonds. The Bonds are variable rate bonds; accordingly, as described above, the interest rate will not remain constant over the life of the Bonds. (2) Includes ongoing Credit Facility fees, Trustee fees and remarketing fees attributable to the Bonds, based upon fees expected to be in effect upon issuance of the Bonds. Source: The Underwriter. 22 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS The Bonds are being offered solely on the basis of the financial strength of the Initial Credit Facility Provider. The Bonds are not being offered on the financial strength of the Authority and limited information about the Authority is provided in this Official Statement. Owners of the Bonds should look solely to the financial strength of the Initial Credit Facility Provider for repayment of the Bonds and should assume that the Initial Credit Facility is the sole credit support for the Bonds. Special, Limited Obligations The Bonds and all payments to be made by the Authority thereon and into the various Funds established under the Indenture are not general obligations of the Authority, but are special obligations payable solely from (i) the Trust Estate (previously defined) and (ii) income from the investment of any of the Funds. Except as otherwise provided in the Indenture and while a Credit Facility is in full force and effect, the principal of and interest on the Bonds not in a Fixed Mode and the purchase price of Tendered Bonds shall be payable from the proceeds of draws under the Credit Facility and, with respect to the purchase of Tendered Bonds in a Flexible Pricing Short-Term Mode, the interest or other gain realized as a result of any investments or reinvestments of moneys in the Flexible Pricing Short-Term Fund prior to the use of funds from any other source. Except as provided in Section 7.05 of the Indenture, all moneys received under the Credit Facility and all Revenues and other deposits thereto from the Authority, as and when received by the Trustee, are deposited into the Revenue Fund established with the Trustee pursuant to the Indenture. Amounts deposited in the Revenue Fund are applied by the Trustee for specified purposes in an established order of priority. See "APPENDIX A--SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Bond Reserve Fund On the Closing Date, there will be deposited in the Bond Reserve Fund an amount equal to $2,149,753.94 (the "Bond Reserve Requirement"). Moneys in the Bond Reserve Fund can be used by the Trustee solely for the payment of the principal of, premium, if any, and interest on the Bonds bearing interest at a Short Rate, an Annual Rate, a Flexible Pricing Long- Term Rate or the Bank Rate when due or to reimburse the Bank pursuant to the Indenture for draws under the Credit Facility. See "APPENDIX A--SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Replenishment Resolution Prior to the issuance of the Bonds, the Town Council of the Town will adopt the Replenishment Resolution providing that the Town Manager shall, upon notice from the Trustee that the Bond Reserve Fund is not funded at the Bond Reserve Requirement, prepare and submit to the Town Council a request for an appropriation of a sufficient amount to replenish the Bond Reserve Fund to the Bond Reserve Requirement. Thereafter, the Town Council may determine in its sole discretion, but cannot be required, to make the appropriation so requested. If the Bond 18 Reserve Fund is at any time not funded at the Bond Reserve Requirement, the Trustee is required, pursuant to the Indenture, to notify the Town Manager to prepare and submit to the Town Council a request for an appropriation of a sufficient amount to replenish the Bond 23 • Reserve Fund to the Bond Reserve Requirement. Any amounts actually advanced by the Town to replenish the Bond Reserve Fund shall be treated as a loan and an obligation of the Authority under the Cooperation Agreement and shall be repaid by the Authority, with interest thereon, in accordance with the Cooperation Agreement. Bonds Not a Debt THE BONDS DO NOT CONSTITUTE A DEBT OR INDEBTEDNESS OF THE TOWN, THE STATE OF COLORADO, OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE MEANING OF ANY CONSTITUTIONAL, STATUTORY, OR TOWN CHARTER DEBT LIMITATION OR PROVISION. SEE "THE BONDS--SECURITY FOR THE BONDS." THE AUTHORITY IS NOT AUTHORIZED TO LEVY OR COLLECT ANY TAXES OR ASSESSMENTS TO PAY THE BONDS OR FOR ANY OTHER PURPOSE. Provisions of the Indenture For the provisions of the Indenture regarding, among other things, the issuance of Additional Bonds and Subordinate Debt, Events of Default, remedies and the rights of Bondholders, the Trustee and Remarketing Agent, supplemental indentures, and general covenants, see "APPENDIX A--SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Future Changes in Laws Various Colorado laws and constitutional provisions apply to the imposition and collection of the Pledged Revenues and the financing of Authority operations in general. Other state and federal laws, constitutional provisions and regulations apply to the obligations created by the issuance of the Bonds. There is no assurance that there will not be any change in, interpretation of, or addition to the applicable laws, provisions and regulations which would have a material effect, directly or indirectly, on the affairs of the Authority. The rights of the owners of Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and by equitable principles, whether considered at law or in equity. The Initial Credit Facility Concurrently with the issuance of the Bonds, and at the request and for the account of the Authority, the Initial Credit Facility Provider will establish in favor of the Trustee for the benefit of the owners of the Bonds an irrevocable direct-pay letter of credit (the "Credit Facility") in the aggregate stated amount of $25,378,083 (the "Original Stated Amount") of which $25,000,000 (the "Principal Portion") will be available to pay the principal of and the portion of the purchase price constituting principal of, and $378,083 (the "Interest Portion") will be available to pay the interest on and the portion of the purchase price constituting interest on, the Bonds. The Original Stated Amount is comprised of the Principal Portion and the Interest Portion, as they may vary from time to time. The Interest Portion is calculated at the rate of ® twelve percent (12%) per annum for at least 46 days on the basis of a 365-day year. The Trustee will draw moneys under the Credit Facility to the extent necessary to make payments of such amounts on the Bonds, including the purchase price of Bonds tendered for purchase and not remarketed. Drawings by the Trustee under the Credit Facility will reduce the amounts available 24 for subsequent drawings under the Credit Facility and with respect to liquidity drawings, subject to reinstatement as provided in the Credit Facility. Drawings on the Credit Facility will be paid from funds of the Initial Credit Facility Provider and not directly or indirectly from funds or collateral on deposit with or for the account of, or pledged with or for the account of, the Initial Credit Facility Provider by the Authority. The Credit Facility will expire at the close of business of the New York Branch of the Initial Credit Facility Provider on the date which is the earliest of. (i) February 22, 2013 (as extended from time-to-time, the "Stated Expiration Date"); (ii) the earlier of (a) the date which is five days following the date that the interest rate borne by the Bonds is converted to a Fixed Rate (as defined in the Indenture) as such date is specified in a certificate in the form of Exhibit A to the Credit Facility (the "Conversion Date") or (b) the date on which the Initial Credit Facility Provider honors a liquidity drawing under the Credit Facility on or after the Conversion Date; (iii) the date which is five days following receipt from the Trustee of a certificate in the form set forth as Exhibit B to the Credit Facility that all Bonds have been paid or that an Alternate Credit Facility has been issued in substitution for the Initial Credit Facility in accordance with the terms of the Indenture and the Credit Agreement; (iv) the date on which an Acceleration Drawing is honored by the Initial Credit Facility Provider; and (v) the date which is 15 days following receipt by the Trustee of a written notice from the Initial Credit Facility Provider specifying the occurrence of an Event of Default under the Credit Agreement dated as of February 15, 2008, among Town, the Authority and the Initial Credit Facility Provider (the "Credit Agreement") and directing the Trustee to cause a mandatory tender or an acceleration of the Bonds (the earliest of such dates herein referred to as the "Termination Date"). Substitute Credit Facility The Authority covenants and agrees that at all times required pursuant to the Indenture, it will maintain a Credit Facility (which includes the initial Credit Facility and each Substitute Credit Facility) in full force and effect. The Indenture permits the use of a Substitute Credit Facility as described hereafter. See the definition of Substitute Credit Facility in "APPENDIX A" appended hereto for the qualifications of a Substitute Credit Facility. Additional Bonds So long as no Default or Event of Default has occurred and is at the time continuing under the Indenture, Additional Bonds may be issued, authenticated and delivered for the purpose of providing the Authority with funds for any lawful purpose of the Authority. The Additional Bonds of each such Series shall be authenticated by the Trustee and, upon payment to the Trustee of the proceeds of said sale of such Additional Bonds, such Additional Bonds shall be delivered by the Trustee to or upon the order of the original purchaser thereof, but only upon there being filed with the Trustee, Bank, such original purchaser, the Original Purchaser and the Authority: (a) original, executed counterparts of an indenture supplemental to the Indenture and a resolution supplementing or amending the Bond Resolution in order to cause the issuance of the Additional Bonds; i (b) a Credit Facility issued by the Bank supporting the payment of the Additional Bonds and the purchase price of the Additional Bonds in an amount equal to the principal of the Additional Bonds plus such number of days of interest on the Additional Bonds 25 ® as may be required by each Rating Agency rating the Additional Bonds; provided that no Credit Facility is required if all of the then Outstanding Bonds and the Additional Bonds bear interest at a Fixed Rate; provided, further, that the Initial Credit Facility Provider's consent shall be required in order to issue Additional Bonds bearing a Fixed Rate of interest if the Initial Credit Facility is outstanding at such time; (c) an Opinion of Bond Counsel to the effect that the issuance of the Additional Bonds and the execution thereof have been duly authorized, all conditions precedent to the delivery thereof have been fulfilled, and that the exclusion from gross income for federal income tax purposes of the interest on the Bonds will not be adversely affected by the issuance of the proposed Additional Bonds; (d) a certificate of the Authority Representative to the effect that the proceeds of the proposed Additional Bonds will be used for a permissible undertaking under the Indenture, the Urban Renewal Plan and the Act; (e) a certificate of the Authority Representative addressed to the Bank, the Trustee and the Original Purchaser establishing to the reasonable satisfaction of the Bank, the Trustee and the Original Purchaser that the Pledged Revenues for (i) the most recent Fiscal Year preceding the date of the issuance of such Additional Bonds for which audited financial statements are available, or (ii) any period of 12 consecutive calendar months out of the 18 calendar months next preceding the date of the issuance of such Additional Bonds were at least 125% of the Average Annual Debt Service of the combination of (1) the Bonds then Outstanding ® and (2) the Additional Bonds proposed to be issued; provided, however, that any Bonds to be refunded with the proceeds of any such Additional Bonds shall be excluded for purposes of such calculation; (f) a copy, duly certified by the Town Clerk of the Town, of a resolution adopted by the Town Council of the Town evidencing the agreement of the Town to the issuance of such Additional Bonds and further evidencing the intent of the Town to subordinate its claims for payment from the Authority to the payment of the Debt Service Requirement on the Additional Bonds being issued; (g) a written order to the Trustee by the Authority to authenticate and deliver the Additional Bonds to the original purchaser therein identified upon payment to the Trustee of a specified sum plus accrued interest; and (h) written evidence from each Rating Agency, if any, then providing a rating for the outstanding Bonds, that such rating or ratings will not be reduced or withdrawn as a result of the issuance of the proposed Additional Bonds. At such time as any Additional Bonds shall be issued, the Authority shall deposit or cause to be deposited in the Bond Reserve Fund an amount sufficient to make the amount on deposit in the Bond Reserve Fund equal to the Bond Reserve Requirement. Each Series of Additional Bonds issued pursuant to the Indenture shall be equally ® and ratably secured under the Indenture with the Bonds and all other Series of Additional Bonds, if any, theretofore issued pursuant to the Indenture, without preference, priority or distinction of any such Bonds over any other thereof. 26 Notwithstanding anything contained in the Indenture to the contrary, the Authority may issue or incur Subordinate Debt from time to time as determined by the Authority without the 40 consent of or notice to the Registered Owners of the Bonds at the time Outstanding or any other Person. Subordinate Debt shall have no claim for payment upon the Trust Estate except for payments to be made pursuant to the Indenture. Payment of such Subordinate Debt shall be subordinate to payment of the Bonds, including the Bank Bonds, the Reimbursement Obligations and all other amounts owed under the Credit Agreement. The Authority shall comply with all requirements in the Credit Agreement with respect to the issuance of any Additional Bonds. THE CREDIT AGREEMENT The following is a brief description of certain provisions of the Credit Agreement. This description does not purport to be comprehensive and reference should be made to the Credit Agreement for a full and complete statement of its provisions. Copies of the Credit Agreement are available from the sources listed in. "INTRODUCTION--Additional Information. " General Subject to the terms and conditions of the Credit Agreement, the Initial Credit Facility Provider agrees to issue the Initial Credit Facility to the Trustee, having a term beginning on the date of issuance of the Bonds and ending on the Expiration Date (unless sooner terminated pursuant to the terms of the Credit Agreement) and having a Stated Amount as set forth therein, as such Stated Amount may be reduced and reinstated from time to time in accordance with the terms of the Initial Credit Facility. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS--The Initial Credit Facility." Reimbursement Obligations The Initial Credit Facility Provider shall be reimbursed by the Authority for all amounts drawn under the Initial Credit Facility. Pursuant to the Indenture, all obligations of the Authority to the Initial Credit Facility Provider under the Initial Credit Facility are limited obligations payable from the Trust Estate as, when and if the same are received by the Trustee. Events of Default Under Credit Agreement Each of the following events, acts or occurrences will constitute an "Event of Default" under the Credit Agreement: (a) any material representation or warranty made by the Issuer or the Town in the Credit Agreement (or incorporated therein by reference) or any material representation or warranty made by the Authority or the Town in any of the other Related Documents or in any certificate, document, instrument, opinion or financial or other statement contemplated by or made or delivered pursuant to or in connection with the Credit Agreement or with any of the other Related Documents, shall prove to have been incorrect, incomplete or misleading in any material respect; 0 (b) any "event of default" shall have occurred under any of the Related Documents (as defined respectively therein); 27 ® (c) failure to pay to the Bank any obligations owed under the Credit Agreement when and as due; (d) default in the due observance or performance by the Authority of any covenant set forth in the Indenture or in Section 5.1 of the Credit Agreement; (e) default in the due observance or performance by the Town of any covenant set forth in Section 5.2 of the Credit Agreement; (f) default in the due observance or performance by the Authority or the Town of any other term, covenant or agreement set forth in the Credit Agreement and the continuance of such default for 30 days after the occurrence thereof, (g) any material provision of the Credit Agreement or any of the Related Documents shall cease to be valid and binding, or the Authority or the Town shall contest any such provision, or the Authority or the Town or any agent or trustee on behalf of the Authority or the Town shall deny that it has any or further liability under the Credit Agreement or any of the Related Documents; (h) the Authority shall fail to pay any Additional Bonds or Subordinate Debt or any other Debt payable from Pledged Revenues or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); ® (i) the Town shall fail to pay any Debt subject to appropriation by the Town Council of Town or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); 0) one or more judgments against the Authority or the Town for the payment of money payable out of Pledged Revenues, or attachments against the property of the Urban Renewal Area or the funds on deposit in the funds estimated under the Indenture shall remain unpaid, unstayed, undischarged, unbonded or undismissed for a period of 30 days; (k) the occurrence of any one or more of the following events: (i) the Authority or the Town shall generally not pay, or shall be unable to pay, or shall admit in writing its inability to pay it Debts as such Debts become due; (ii) the Authority or the Town shall make an assignment for the benefit of creditors, or petition or apply to any tribunal for the appointment of a custodian, receiver, or trustee for it or for a substantial part of its assets; (iii) the Authority or the Town shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; (iv) the Authority or the Town shall have had any such petition or application filed or any such proceeding commenced against it in which an order for relief is entered or an adjudication or appointment is made, and such order, adjudication or appointment shall remain in effect and not be stayed, revoked or dismissed within 30 days after its occurrence; (v) the Authority or the Town shall take any action indicating its consent to, approval of, or acquiescence in any such petition, application, proceeding, or order for relief or the appointment of a custodian, receiver, or trustee for all or any substantial part of its properties; ® (vi) the Authority or the Town shall suffer any such custodianship, receivership, or trusteeship to continue undischarged; or (vii) the taking of any action by the Authority or the Town for the purpose of effecting any of the acts set forth in clauses (i) through (vi) of the Credit Agreement; 28 (1) the Credit Agreement, the Indenture, the Resolution, or any material provision thereof, at any time after its execution and delivery, shall, for any reason, cease to be valid and binding on the Authority or the Town or in full force or effect or shall be declared to be null and void by a court of competent jurisdiction, or the validity or enforceability of the Credit Agreement or any of the Related Documents shall be contested by the Authority, the Town or by any Governmental Authority having jurisdiction over the Authority or the Town; or the Authority or the Town shall deny that it has any further liability under the Credit Agreement or the Related Documents; (m) any pledge or security interest created under any Related Document to secure any Bonds or any amounts due under the Credit Agreement shall fail to be fully enforceable with the priority required under such Related Document by reason of the enactment of or the repeal or amendment of any law applicable to the Authority or by reason of a judgment of a court of competent jurisdiction; Renewal Area; (n) dissolution or termination of the existence of the Authority or the Urban (o) Moody's or S&P shall have downgraded its rating on the long-term general obligation indebtedness of the Town (without regard to any form of credit enhancement) to below "[I" (or its equivalent) or "[I" (or its equivalent), respectively, or either Rating Agency shall have suspended or withdrawn its rating of the same; or (p) the occurrence of any action affecting the zoning for the Urban Renewal Area which would have a material adverse effect upon the Authority's ability to perform its obligations under the Credit Agreement or to repay any indebtedness secured by the Pledged Revenues or the rights and remedies of the Bank under the Related Documents. Remedies for Events of Default Under Credit Agreement ,Upon the occurrence and during the continuance of any Event of Default, the Initial Credit Facility Provider at its option, may, upon notice to the Trustee, the Authority and the Town, do any one or more of the following: (a) give notice of the occurrence of any Event of Default to the Trustee, directing the Trustee to cause a mandatory tender of the Bonds, thereby causing the Credit Facility to expire 15 days thereafter; (b) give notice of the occurrence of any Event of Default to the Trustee, directing the Trustee to cause an acceleration of the Bonds, thereby causing the Credit Facility to expire 15 days thereafter; (c) by written notice to the Authority require that the Issuer immediately prepay to the Bank in immediately available funds an amount equal to the Available Amount (such amounts to be held as collateral security for the Obligations), provided, however, that in the case of an Event of Default described in clause (k) above, such prepayment Obligations shall automatically become immediately due and payable without any notice (unless the coming due of such Obligations is waived in writing by the Bank); (d) by notice to the Authority, declare all Obligations to be, and such amounts shall thereupon become, immediately due and payable without presentment, demand, protest of other notice of any kind, all of which are hereby waived by the Authority, provided that upon the occurrence of an Event of Default described in clause (k) above, such acceleration shall automatically occur (unless automatic acceleration is waived by the Bank in writing); (e) pursue any rights and remedies it may have under the Related Documents; (f) pursue any other action available at law or in equity. 29 ® CERTAIN RISK FACTORS The purchase of the Bonds involves special risks and the Bonds may not be appropriate investments for all types of investors. Each prospective investor is encouraged to read this Official Statement in its entirety and to give particular attention to the factors described below, which, among other factors discussed herein, could affect the payment of debt service on the Bonds and could affect the market price of the Bonds to an extent that cannot be determined at this time. The following does not purport to be an exhaustive listing of risks and other considerations that may be relevant to investing in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of such risks. Initial Credit Facility is Primary Security Draws under the Initial Credit Facility will constitute the primary security for the payment of the principal and interest on the Bonds and the payment of the purchase price of the Tendered Bonds. Therefore, the Owners of the Bonds will be required to look to the Initial Credit Facility Provider for security and will be dependent upon the Initial Credit Facility Provider to honor draws under the Initial Credit Facility. Based upon that requirement, no financial information as to the creditworthiness of the Authority is included in this Official Statement. It is possible, in the event of the insolvency of the Initial Credit Facility Provider, or the occurrence of some other event precluding the Initial Credit Facility Provider from honoring its obligations to make payments as stated in the Initial Credit Facility, that the financial resources of the Authority will be the only source of payment on the Bonds. There can be no ® assurance that the financial resources of the Authority would be sufficient to pay the principal and interest on the Bonds in that event. The Bonds are being offered solely on the basis of the financial strength of the Initial Credit Facility Provider. The Bonds are not being offered on the financial strength of the Authority and limited information about the Authority is provided in this Official Statement. The information provided about the Authority in this Official Statement is not detailed enough to allow Owners to make a determination as to the financial strength of the Authority. Enforcement of Remedies Against Bank Enforcement of remedies provided in the Credit Agreement with respect to payments to be made by the Bank under the Credit Facility or the enforcement of available remedies in the Indenture may be limited by insolvency, bankruptcy or other laws relating to creditors' rights generally. Further, the security provided by the Credit Facility for the payment of the principal of and interest on the Bonds may be impaired in the event of a deterioration of the financial condition of the Bank. The obligation of the Bank to honor draws under the Credit Facility represents a general unsecured claim against the assets of the Bank. The obligation of the Bank to honor draws under the Credit Facility is not secured or otherwise guaranteed by the United States of America or any agency or instrumentality thereof, including the Federal Deposit Insurance Corporation. No assurance can be given by the Authority that the Bank will be able to meet its obligations under the Credit Facility. Rating The initial rating on the Bonds is based solely upon the issuance of the Initial Credit Facility by the Initial Credit Facility Provider. It is possible that the current rating could be downgraded, and such lower rating could affect the market price of the Bonds. See 30 "RATING." The Bonds are not subject to mandatory tender for purchase in the event of any rating downgrade of the Initial Credit Facility Provider. 40 Performance by Trustee Performance by the Initial Credit Facility Provider of its obligations under the Initial Credit Facility is subject to the satisfaction of certain conditions by the Trustee as set forth in the Initial Credit Facility. Owners of the Bonds are therefore dependent upon the Trustee acting to satisfy such conditions before they will receive the benefit of the Initial Credit Facility. In addition, the question of whether the Trustee has properly satisfied such conditions is a question of fact which, if disputed, could delay or defeat the Trustee's rights of enforcement of the Initial Credit Facility. Inability to Obtain Alternate Credit Facility The Initial Credit Facility expires on February 21, 2013, unless extended in the discretion of the Initial Credit Facility Provider or terminated in accordance with its terms as described in "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS--The Initial Credit Facility." No assurances can be given that the Authority will be able to obtain a Alternate Credit Facility to secure the Bonds on the terms required by the Indenture until and including the respective final maturity dates of the Bonds or until the interest rate on the Bonds is converted to a Fixed Interest Rate. The unwillingness of the Initial Credit Facility Provider to extend the Initial Credit Facility or the inability to obtain an Alternate Credit Facility will result in a mandatory purchase of the Bonds prior to maturity at a price of par. The mandatory purchase of the Bonds on such a mandatory bond purchase date may not be waived. See "THE BONDS-- Purchase of Bonds." Limitations on Remedies Available to Owners of Bonds The enforceability of the rights and remedies of the Owners of the Bonds and the obligations incurred in issuing the Bonds are subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles that may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings or the exercise of such powers by the federal, State or local governments, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights. Secondary Market No assurance can be given concerning the future existence of a secondary market for the Bonds. Prospective purchasers of the Bonds should therefore be prepared to bear the risk of the investment represented by the Bonds to maturity. 0 31 ® TAX MATTERS In the opinion of Bond Counsel, assuming continuous compliance with certain covenants described below, interest on the Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date of delivery of the Bonds (the "Tax Code") and interest on the Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code except that such interest is required to be included in calculating the "adjusted current earnings" adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations as described below. Under State laws in effect on the date of delivery of the Bonds, the Bonds, together with interest thereon and income therefrom, are exempt from all taxes by the State. The Tax Code and Colorado law impose several requirements which must be met with respect to the Bonds in'order for the interest thereon to be excluded from gross income and alternative minimum taxable income (except to the extent of the aforementioned adjustments applicable to corporations). Certain of these requirements must be met on a continuous basis throughout the term of the Bonds. These requirements include: (a) limitations as to the use of proceeds of the Bonds; (b) limitations on the extent to which proceeds of the Bonds may be invested in higher yielding investments; and (c) a provision, subject to certain limited exceptions, that requires all investment earnings on the proceeds of the Bonds above the yield on the Bonds to be paid to the United States Treasury. The Authority will covenant and represent in the Indenture that it will take all steps to comply with the requirements of the Tax Code and ® Colorado law (in effect on the date of delivery of the Bonds) to the extent necessary to maintain the exclusion of interest on the Bonds from gross income, alternative minimum taxable income (except to the extent of the aforementioned adjustments applicable to corporations) under such federal income tax laws and Colorado taxation under Colorado laws. Bond Counsel's opinion as to the exclusion of interest on the Bonds from gross income and alternative minimum taxable income (to the extent described above) and Colorado taxation is rendered in reliance on these covenants, and assumes continuous compliance therewith. The failure or inability of the Authority to comply with these requirements could cause the interest on the Bonds to be included in gross income or alternative minimum taxable income, or both, from the date of issuance. Bond Counsel's opinion also is rendered in reliance upon certifications of the Authority and other certifications furnished to Bond Counsel. Bond Counsel has not undertaken to verify such certifications by independent investigation. Section 55 of the Tax Code contains a 20% alternative minimum tax on the alternative minimum taxable income of corporations. Under the Tax Code, 75% of the excess of a corporation's "adjusted current earnings" over the corporation's alternative minimum taxable income (determined without regard to this adjustment and the alternative minimum tax net operating loss deduction) is included in the corporation's alternative minimum taxable income for purposes of the alternative minimum tax applicable to the corporation. "Adjusted current earnings" includes interest on the Bonds. The Tax Code contains numerous provisions which may affect an investor's ® decision to purchase the Bonds. Owners of the Bonds should be aware that the ownership of tax- exempt obligations by particular persons and entities, including, without limitation, financial institutions, insurance companies, recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, foreign corporations doing business in the United States and certain 32 "subchapter S" corporations may result in adverse federal and Colorado tax consequences. • Certain of the Bonds may be sold at a premium, representing a difference between the original offering price of those Bonds and the principal amount thereof payable at maturity. Under certain circumstances, an initial owner of such bonds (if any) may realize a taxable gain upon their disposition, even though such bonds are sold or redeemed for an amount equal to the owner's acquisition cost. Bond Counsel's opinion relates only to the exclusion of interest on the Bonds from gross income, alternative minimum taxable income and Colorado taxation as described above and will state that no opinion is expressed regarding other federal or Colorado tax consequences arising from the receipt or accrual of interest on or ownership of the Bonds. Owners of the Bonds should consult their own tax advisors as to the applicability of these consequences. The opinions expressed by Bond Counsel are based upon existing law as of the delivery date of the Bonds. No opinion is expressed as of any subsequent date nor is any opinion. expressed with respect to any pending or proposed legislation. Amendments to federal and Colorado tax laws may be pending now or could be proposed in the future which, if enacted into law, could adversely affect the value of the Bonds, the exclusion of interest on the Bonds from gross income, alternative minimum taxable income, Colorado taxation or any combination thereof from the date of issuance of the Bonds or any other date, or which could result in other adverse federal or Colorado tax consequences. Bondowners are advised to consult with their own tax advisors with respect to such matters. The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax- exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. No assurances can be given as to whether or not the Service will commence an audit of the Bonds. If an audit is commenced, the market value of the Bonds may be adversely affected. Under current audit procedures, the Service will treat the Authority as the taxpayer and the Owners may have no right to participate in such procedures. The Authority has covenanted in the Indenture not to take any action that would cause the interest on the Bonds to lose its exclusion from gross income for federal income tax purposes or lose its exclusion from alternative minimum taxable income except to the extent described above for the owners thereof for federal income tax purposes. None of the Authority, the Underwriter, or Bond Counsel or Special Counsel is responsible for paying or reimbursing any Registered, Owner or Beneficial Owner for any audit or litigation costs relating to the Bonds. LEGAL MATTERS Litigation Counsel to the Authority states that, as of the date hereof, to the best of its knowledge, there is no pending or threatened litigation which would restrain or enjoin the issuance of the Bonds, the construction of the Project, or the collection of Pledged Revenues; or in any way contesting or affecting the validity of the Bonds or any proceedings of the Authority taken with respect to the issuance or sale thereof, the pledge or application of any moneys or securities provided for the payment of the Bonds, or the corporate existence or the powers of the Authority. 33 ® Approval of Certain Legal Proceedings The approving opinion of Sherman & Howard L.L.C., as Bond Counsel, will be delivered with the Bonds. A form of the Bond Counsel opinion is attached to this Official Statement as Appendix B. The opinion will include a statement that the obligations of the Authority are subject to the reasonable exercise in the future by the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the exercise by the United States of the powers delegated to it by the federal constitution, including bankruptcy. Sherman & Howard L.L.C., Denver, Colorado, has also acted as special counsel to the Authority in connection with this Official Statement. Certain legal matters pertaining to the Authority will be passed upon for the Authority by its counsel, Sherman & Howard L.L.C., Denver, Colorado. Certain legal matters will be passed upon for the Initial Credit Facility Provider by Chapman and Cutler LLP, Chicago, Illinois. Police Power The obligations of the Authority are subject to the reasonable exercise in the future by the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the exercise by the United States of America of the powers delegated to it by the Federal Constitution, including bankruptcy. RATING ® Moody's Investors Service, Inc. ("Moody's"), has assigned the Bonds the ratings shown on the cover page of this Official Statement. The ratings are based solely upon the rating of the Initial Credit Facility Provider. A downgrading on the rating of the Initial Credit Facility Provider or any Substitute Bank could result in a downgrading of the rating of the Bonds. An explanation of the significance of the respective ratings may be obtained from Moody's at 99 Church Street, New York, New York 10007. Such rating reflects only the views of such rating agency, and there is no assurance that the rating will continue for any given period of time or that the rating will not be revised downward or withdrawn entirely by the rating agency if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. The Authority has not undertaken any responsibility to bring to the attention of the owners of the Bonds any proposed change in or withdrawal of such rating once received or to oppose any such proposed revision. UNDERWRITING AND REMARKETING AGENT Stifel, Nicolaus & Company, Incorporated, Denver, Colorado (the "Underwriter") has agreed will agree to purchase the Bonds pursuant to a Bond Purchase Agreement between the Authority and the Underwriter at a purchase price of $24,850,000 (representing the par amount of the Bonds, less an underwriting discount of $150,000). The Underwriter is committed to purchase all of the Bonds if any are purchased. The obligations of the Underwriter to purchase the Bonds will be subject to certain terms and conditions set forth in the Bond Purchase ® Agreement. Stifel, Nicolaus & Company, Incorporated also will act as the Remarketing Agent pursuant to a Remarketing Agreement between the Agency and the Remarketing Agent. 34 OFFICIAL STATEMENT CERTIFICATION The undersigned official of the Authority hereby confirms and certifies that the execution and delivery of this Official Statement and its use in connection with the offering and sale of the Bonds have been duly authorized by the Board. AVON URBAN RENEWAL AUTHORITY By /s/ Larry Brooks Executive Director/Secretary 11 • 35 ® APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE Set forth in this Appendix A are certain definitions used in the Indenture and summaries of certain provisions of the Indenture. These summaries do not purport to be definitive summaries of all of the provisions of the Indenture; these summaries are qualified in their entirety by the provisions of the Indenture. Reference must be made to the actual, complete provisions of the Indenture for a complete recital of its terms. Copies of the Indenture may be obtained from the sources listed in "INTRODUCTION--Additional Information." Certain Definitions "Additional Bonds " means any note, bond, interim certificate or receipt, temporary note, certificate of indebtedness, debenture or other obligation issued by the Authority having a claim upon the Trust Estate on a parity with the Series 2008 Bonds. "Adjustment Date " means (i) the Closing Date, (ii) any date which is the first day of an Adjustment Period designated in the manner set forth in Section 5.01 of the Indenture, (iii) any Substitute Adjustment Date designated in the manner set forth in Section 5.02 of the Indenture and (iv) any proposed Conversion Date designated in the manner set forth in Section 5.03 of the Indenture. "Adjustment Period" means, with respect to each Bond, each period commencing on an Adjustment Date for such Bond to and including the day immediately preceding the immediately succeeding Adjustment Date for such Bond (or the Maturity thereof), during which period such Bond shall operate in one type of Mode. "Alternate Rate " means, on any Rate Determination Date, the rate per annum specified in the index (the "Index") published by the Indexing Agent and in effect on such Rate Determination Date. The Index shall be based upon yield evaluations at par of bonds, the interest on which is excluded from gross income for purposes of federal income taxation, of not less than five "high grade" component issuers selected by the Indexing Agent which shall include, without limitation, issuers of general obligation bonds. The specific issuers included among the component issuers may be changed from time to time by the Indexing Agent in its discretion. The bonds on which the Index is based shall not include any bonds the interest on which is subject to a "minimum tax" or similar tax under the Code, unless the Bonds are subject to such tax. When Bonds are in the Daily Mode, the Weekly Mode, the Monthly Mode or the Flexible Pricing Short-Term Mode with an Adjustment Period of 30 days or less, the yield evaluation period for the Index shall be 30-day yield evaluations. When Bonds are in the Flexible Pricing Short- Term Mode with an Adjustment Period of greater than 30 days but less than or equal to 180 days, the yield evaluation period for the Index shall be 180-day yield evaluations. When Bonds are in the Annual Mode or the Flexible Pricing Long-Term Mode with an Adjustment Period greater than 180 days, the yield evaluation period for the Index shall be one-year yield evaluations. If at any particular time no Indexing Agent publishes an Index satisfying the requirements of the preceding paragraph, the Alternate Rate for an Adjustment Period shall be the rate per annum specified in the most recently published Index for a comparable Adjustment Period. "Annual Expense Account " means the Annual Expense Account of the Revenue Fund created in the Indenture. "Annual Mode" means any Adjustment Period during which Rate Determination Date occurs on the Business Day of each calendar year next preceding the Rate Change Date in such calendar year in the manner set forth in the Indenture and during which Bonds bear interest at the Annual Rate. A- I "Annual Rate " means, for each Rate Period of twelve months within an Annual Mode applicable to a Bond, a fixed per annum interest rate borne by such Bond established pursuant to the Indenture equal to the lowest interest rate which, in the judgment of the Remarketing Agent, would enable such Bond to be remarketed at the principal amount thereof, plus accrued interest thereon, if any, on the Rate Change Date for such Rate Period. "Authority Bond" means any Bond which is registered in the name of the Authority or the Town. "Authority Representative" means the Person at the time designated to act on behalf of the Authority by written certificate furnished to the Trustee containing the specimen signature of such Person and signed on behalf of the Authority by its duly authorized agent. Such certificate may designate an alternate or alternates. "Authorized Denomination" means, prior to the Conversion Date with respect to a particular Bond, $100,000 or any integral multiple of $5,000 in excess thereof, and after the Conversion Date with respect to a particular Bond, $5,000 or any integral multiple thereof. "Available Moneys " means (i) with respect to any payment date for Bonds not in the Fixed Mode occurring while the Credit Facility is in full force and effect, (A) moneys drawn under the Credit Facility or Bond Reserve Credit Enhancement, (B) moneys constituting proceeds of the Bonds, moneys constituting proceeds from the resale by the Remarketing Agent of Bonds referred to in subsections (a) and (b) of Section 3.10 of the Indenture, (C) moneys deposited directly by the Authority with the Trustee, which moneys have been on deposit in the Interest Fund, Bond Sinking Fund, Redemption Fund or Bond Reserve Fund for at least 123 days during and prior to which no petition in bankruptcy (or the other commencement of a bankruptcy or similar proceeding) has been filed by or against the Authority under any applicable bankruptcy, insolvency, reorganization or similar law now or hereafter in effect, (D) the proceeds of the sale of any Additional Bonds or refunding obligations if, in the opinion of nationally recognized counsel experienced in bankruptcy matters in a form acceptable to each Rating Agency then maintaining a rating on the Bonds, the application of such moneys will not constitute a voidable preference in the event a petition in bankruptcy (or other commencement of a bankruptcy or similar proceeding) has been filed by or against the Authority under any applicable bankruptcy, insolvency, reorganization or similar law now or hereafter in effect, and (E) the proceeds from the investment of moneys qualifying as Available Moneys under clauses (A), (B), (C) or (D) above, and (ii) with respect to any payment date occurring while the Credit Facility is not in full force and effect or with respect to Bonds in the Fixed Mode, any moneys held by the Trustee and the proceeds from the investment thereof. Notwithstanding the foregoing, when used with respect to payment of any amounts due in respect of any Bank Bonds or Authority Bonds, the term "Available Moneys" shall mean any moneys held by the Trustee and the proceeds from the investment thereof, except for moneys drawn under the Credit Facility. "Average Annual Debt Service" means for each Fiscal Year, the average annual Debt Service Requirement for the Bonds from time to time Outstanding. "Bank" means DEPFA BANK .plc, acting through its New York Branch, and any Substitute Bank. "Bank Bands " means Tendered Bonds purchased with moneys drawn under the Credit Facility pursuant to the Indenture and registered in the name of the Bank in accordance with the Credit Agreement. "Bank Rate " means the interest rate for the Bank Bonds set forth in the Credit Agreement, but in no event more than the Maximum Interest Rate. A-2 ® "Bond Counsel " means an attorney or firm of attorneys selected by the Authority and experienced in the field of municipal bonds whose opinions are generally accepted by purchasers of municipal bonds. "Bond Purchase Agreement" means the Bond Purchase Agreement dated February 20, 2008, between the Authority and the Original Purchaser with respect to the Series 2008 Bonds. "Bond Purchase Fund " means the Bond Purchase Fund created in Section 3.10 of the Indenture. See "Flow of Funds" and "Bond Fund" below. "Bond Resolution " means the resolution adopted by the Board of Commissioners of the Authority on February 12, 2008, authorizing the execution of the Indenture, the issuance, sale and delivery of the Series 2008 Bonds and certain other matters, and any additional or supplemental resolutions adopted in order to further authorize or validate the Indenture, as from time to time adopted. "Bond Reserve Credit Enhancement" means any insurance policy, surety bond, letter of credit or similar instrument which is issued by any insurance company or financial institution, the long term senior unsecured debt of which is rated in one of the two highest rating categories by a Rating Agency, deposited in or credited to the Bond Reserve Fund, in lieu of or in partial substitution for moneys required to be on deposit therein; provided that the obligation of the Authority to pay any amounts to any such insurance company or financial institution shall be Subordinated Indebtedness or Indebtedness on a parity with the Bonds. "Bond Reserve Fund " means the Bond Reserve Fund created in Section 3.02 of the Indenture. "Bond Reserve Requirement" means upon initial issuance of the Bonds, an amount equal to the least of (a) 10% of the stated principal amount of each series of the Bonds, unless original issue discount or premium on such Bonds exceeds 2%, then 10% of the issue price of the Bonds; (b) 100% of the maximum annual debt service on the Bonds; or (c) 125% of the average annual debt service on the Bonds, or the maximum amount of proceeds of a Series of the Bonds which may be deposited in the Bond Reserve Fund without adversely affecting the exclusion of the interest on such Series from federal income taxation. "Bond Sinking Fund " means the Bond Sinking Fund created in Section 3.02 of the Indenture. "Business Day" means a day which is not (i) a Saturday, Sunday or legal holiday on which banking institutions in the State, the State of New York, or the state in which the office of the Bank at which demands for payment are to be presented is located are authorized by law to close or (ii) a day on which the New York Stock Exchange is closed. "Closing Date " means February 22, 2008, the date of the initial issuance and delivery of any of the Bonds. "Code " means the Internal Revenue Code of 1986, as amended and the regulations, final, proposed and temporary, promulgated thereunder, all as in effect on the date of delivery of any of the Series 2008 Bonds. "Conversion Date " means an Adjustment Date for any Bond on which it begins to bear interest at a Fixed Rate. "Cooperation Agreement " means that certain Amended and Restated Cooperation Agreement dated as of February 15, 2008, between the Town and the Authority, relating to the repayment by the Authority to the Town of amounts advanced to the Authority by the Town pursuant to the Replenishment Resolution, and any supplements or amendments thereto in accordance herewith. A-3 "County" means Eagle County, Colorado. . "Credit Agreement" means the Initial Credit Agreement or in the event of the delivery of a Substitute Credit Facility, the Substitute Credit Agreement pursuant to which such Substitute Credit Facility is issued. "Credit Facility" means the Initial Credit Facility or in the event of the delivery of a Substitute Credit Facility, such Substitute Credit Facility. All references to "Credit Facility" shall be of no effect at any time that none of the Bonds are supported by the Initial Credit Facility or a Substitute Credit Facility and all obligations owing to the Bank or the Substitute Bank shall have been paid. "Daily Mode " means any Adjustment Period of one day during which Rate Determination Dates and Rate Change Dates occur on each Business Day in the manner set forth in Section 2.03(b) of the Indenture and during which Bonds bear interest at the Daily Rate. "Daily Rate" means, for each Rate Period within a Daily Mode applicable to a Bond, a fixed per annum interest rate borne by such Bond established pursuant the Indenture equal to the lowest interest rate which, in the judgment of the Remarketing Agent, would enable such Bond to be remarketed at the principal amount thereof plus accrued interest thereon, if any, on the Rate Change Date for such Rate Period. "Debt Service Requirement" means the difference of (i) the sum of (a) principal of outstanding Bonds payable in such fiscal year, whether by maturity, prepayment or redemption, (b) interest on such outstanding Bonds payable in such fiscal year, (c) all applicable fees required to be paid by the Authority in such fiscal year in connection with the outstanding Bonds, and (d) amounts required to replenish any reserve funds required with respect to such outstanding Bonds in such fiscal year, minus (ii) amounts available in the Interest Fund as capitalized interest, if any, on such outstanding Bonds. To the extent the outstanding Bonds, or any portion thereof, will not bear interest at a rate fixed for at least twelve months, the rate of interest on such outstanding Bonds shall be assumed to be a rate which will produce an amount equal to the average per annum rate of interest on such outstanding Bonds during the preceding twelve month period. "Default" means any event of default as defined in the Credit Agreement. due. "Defaulted Interest" means interest on any Bond which is payable but not duly paid on the date "Demand Date " means (i) with respect to any Bond during a Daily Mode, the Business Day on which the Trustee and the Remarketing Agent receive notice prior to 10:30 a.m., Eastern time, -from the Owner thereof demanding to have such Bond (or any portion thereof in an Authorized Denomination) purchased (or the succeeding Business Day if such notice is received after 10:30 a.m., Eastern time), all as provided in Section 4.01 of the Indenture, (ii) with respect to any Bond during a Weekly Mode, the Business Day specified in the notice received by the Trustee upon which the Owner of such Bond intends to tender such Bond (or any portion thereof in an Authorized Denomination) for purchase as provided in Section 4.01 of the Indenture, which Business Day shall be not less than seven calendar days after the date such notice is received, (iii) with respect to any Bonds during a Monthly Mode, the Rate Change Date specified in the notice received by the Trustee upon which the owner of such Bonds intends to tender such Bonds (or any portion thereof in an Authorized Denomination) for purchase as provided in section 4.01 of the Indenture, which notice shall be given not less than five Business Days prior to such Rate Change Date; and (iv) with respect to any Bond during an Annual Mode, the Rate Change Date which is not less than fifteen calendar days after the date notice is received from the Owner of such Bond of the Owner's intent to tender such Bond (or any portion thereof in an Authorized Denomination) for purchase as provided in Section 4.01 of the Indenture. A-4 "Event of Default " has the meaning specified and defined in Section 7.01 of the Indenture. See "Events of Default and Remedies" below. "Expense Fund" means the Trust Fund by that name established pursuant to Section 3.02 of the Indenture. "Federal Tax Exemption Certificate" or "Tax Compliance Certificate" means the certificate concerning compliance with the requirements of the Code in relation to the Authority's covenants under Section 6.11 of the Indenture, to be delivered at the time of delivery of the Series 2008 Bonds, and including any supplements or amendments thereto. "Fiscal Year" means the fiscal year of the Authority, which currently begins on January 1 of each year and ends on December 31 of such year, or any other fiscal year of the Authority in the event the fiscal year of the Authority shall be modified. "Fixed Mode" means the Adjustment Period commencing on the Conversion Date for a Bond and ending on the Maturity thereof, as established pursuant to Section 5.03 of the Indenture, during which Bonds bear interest at the Fixed Rate. "Fixed Rate " means, for the Fixed Mode applicable to a Bond, a fixed per annum interest rate borne by such Bond established pursuant to Section 2.03(h) of the Indenture equal to the lowest interest rate which, in the judgment of the Remarketing Agent, would enable such Bond to be remarketed at the principal amount thereof plus accrued interest thereon, if any, on the Conversion Date for such Fixed Mode. ® "Fixed Rate Interest Account " means the Fixed Rate Interest Account of the Interest Fund created in Section 3.02 of the Indenture. "Fixed Rate Principal Account" means the Fixed Rate Principal Account of the Bond Sinking Fund created in Section 3.02 of the Indenture. "Fixed Rate Redemption Account" means the Fixed Rate Redemption Account of the Redemption Fund created in Section 3.02 of the Indenture. "Flexible Pricing Long-Term Mode " means any Adjustment Period during which the Rate Determination Date and Rate Change Date for each Rate Period therein (which shall have a duration of 365 days or more and less than or equal to the remaining term of the Bonds) shall be designated by the Remarketing Agent upon the request of the Authority pursuant to Section 5.01 of the Indenture and during which Bonds bear interest at the Flexible Pricing Long-Term Rate. "Flexible Pricing Long-Term Rate " means, for each Rate Period within a Flexible Pricing Long- Term Mode applicable to a Bond, a fixed per annum interest rate borne by such Bond established pursuant to Section 2.03(g), 5.01 or 5.02(b) of the Indenture equal to the lowest interest rate which, in the judgment of the Remarketing Agent, would enable such Bond to be remarketed at the principal amount thereof plus accrued interest thereon, if any, on the Rate Change Date for such Rate Period. "Flexible Pricing Short-Term Fund" means the Flexible Pricing Short-Term Fund created in Section 3.02 of the Indenture. ® 'Flexible Pricing Short-Term Mode" means any Adjustment Period during which the Rate Determination Date and the Rate Change Date for each Rate Period therein (which shall have a duration which is not less than seven days or more than 360 days) shall occur on the first day of such Rate Period which shall be designated by the Remarketing Agent pursuant to Section 2.03(f), 5.01 or 5.02(b) of the Indenture and during which Bonds bear interest at the Flexible Pricing Short-Term Rate. A-5 "Flexible Pricing Short-Term Rate " means, for each Rate Period within a Flexible Pricing Short- Term Mode applicable to a Bond, a fixed per annum interest rate borne by such Bond established pursuant to Section 2.03(f), 5.01 or 5.02(b) of the Indenture equal to the lowest interest rate which, in the judgment of the Remarketing Agent, would enable such Bond to be remarketed at the principal amount thereof on the Rate Change Date for such Rate Period. "Fund" means any of the funds established pursuant to the Indenture. "Immediate Notice" means notice by telephone, telex, telecopier or electronic mail, to such address as the addressee shall have directed in writing, promptly followed by written notice by first class mail, postage prepaid; provided, however, that if any Person required to give an Immediate Notice shall not have been provided with the necessary information as to the electronic mail address, telephone, telex or telecopier number of an addressee, Immediate Notice shall mean written notice by first class mail, postage prepaid. "Independent Counsel" means an attorney duly admitted to practice law before the highest court of any state and who is not a full-time employee or director of the Authority, the Town, the Original Purchaser, the Bank, the Remarketing Agent or the Trustee. "Indexing Agent" means Standard & Poor's Securities Services, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer publish the indices referred to in the definition of Alternate Rate, then the term "Indexing Agent" shall be deemed to refer to any other entity publishing similar indices selected by the Authority and approved by the Bank and the Remarketing Agent (neither of whom shall be under any liability by reason of such approval). "Initial Credit Agreement" means the Reimbursement Agreement dated as of February 15, 2008, among the Authority, the Town and the Bank, as it may be supplemented and amended from time to time. "Initial Credit Facility " means the irrevocable, transferable letter of credit dated the Closing Date issued by the Initial Credit Facility Provider pursuant to the Initial Credit Agreement to the Trustee, as amended from time to time (including without limitation any amendment to extend the expiration date of such letter of credit). Branch. "Initial Credit Facility Provider" means DEPFA BANK p1c, acting through its New York "Interest Fund" means the Interest Fund created in Section 3.02 of the Indenture. "Interest Payment Date" means (i) for each Bond, each Adjustment Date (including without limitation a proposed Conversion Date, but excluding the Closing Date) therefor, (ii) for any Bond in a Daily Mode, Weekly Mode or Monthly Mode, on the first Business Day of each month, (iii) for any Bond in an Annual Mode, each June 1 and December 1, (iv) for any Bond in a Flexible Pricing Long-Term Mode, the first day of the sixth calendar month following the month in which the applicable Rate Period commences, the first day of each sixth month thereafter and each Rate Change Date therefor, (v) for any Bond in a Flexible Pricing Short-Term Mode, each Rate Change Date therefor, (vi) for any Bond in a Fixed Mode, each June 1 and December 1, commencing as provided in Section 5.03 of the Indenture, (vii) for any Bank Bond, the dates set for payment of interest on Bank Bonds as set forth in the Credit Agreement, and (viii) for each Bond, the Maturity thereof. "Interest Rate Agreement" means an interest rate exchange, hedge or similar agreement, expressly identified in a certificate of the Authority Representative delivered to the Trustee as having been entered into in connection with the Bonds, which agreement may include, without limitation, an interest rate swap, a forward or futures contract or an option (e.g. a call, put, cap, floor or collar). A-6 "Issuance Expenses " means the fees and expenses of issuance and sale of the Bonds permitted by the Act, including, but not limited to, the following: (a) Expenses incurred by the Authority in connection with the issuance and sale of the Bonds and in connection with the preparation and execution of the Indenture, the Remarketing Agreement, the Initial Credit Agreement, the Initial Credit Facility and any amendments or supplements thereto, the fees and expenses of the Trustee in connection with the issuance of the Bonds, underwriting discount, credit enhancement fees, and legal, underwriting, consulting and accounting fees and expenses and printing, photocopying and engraving costs. (b) Any sums required to reimburse the Authority for advances made by it for any of the above items. "Maturity" means June 1, 2032, or with respect to each Bond bearing interest at a Fixed Rate which has been assigned a specific serial maturity date pursuant to Section 4.11 (c)(11) of the Indenture, such serial maturity date. "Maximum Interest Rate " means, with respect to Bonds other than Bank Bonds, the lesser of 12% per annum or the maximum rate permitted by law, and with respect to Bank Bonds, means the maximum rate permitted by law. "Mode" means a Daily Mode, Weekly Mode, the Monthly Mode, the Annual Mode, Flexible Pricing Short-Term Mode, Flexible Pricing Long-Term Mode or Fixed Mode. "Monthly Mode " means any Adjustment Period during which the Rate Determination Date occurs on the Business Day of each calendar month preceding the Rate Change Date in such calendar month in the manner set forth in Section 2.03(d) of the Indenture and during which the Bonds bear interest at the Monthly Rate. "Monthly Rate " means, for each Rate Period within a Monthly Mode applicable to thea Bonds, a fixed per annum interest rate borne by such Bonds established pursuant to Section 2.03(d), 5.0 1or 5.02(b) of the Indenture equal to the lowest interest rate which, in the judgment of the Remarketing Agent, would enable such Bonds to be remarketed at the principal amount thereof plus accrued interest thereon, if any, on the Rate Change Date for such Rate Period. "Moody's" means Moody's Investors Service, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Authority by notice to the Trustee, which rating agency then maintains a rating with respect to the Series 2008 Bonds. "No-Call Period" means the period of time during which a Bond in a Flexible Pricing Long- Term Mode or a Fixed Mode may not be called for optional redemption as set forth in Section 4.11(a)(iii) or 4.11(a)(iv) of the Indenture. "Opinion of Bond Counsel" when used with reference to the Indenture means a written opinion of Bond Counsel in form and substance acceptable to the Authority and the Trustee, which opinion may be based on a ruling or rulings of the Internal Revenue Service. ® "Original Purchaser" means, with respect to the Series 2008 Bonds, Stifel, Nicolaus & Company, Incorporated, or its successors, and, with respect to any Additional Bonds, such purchaser or purchasers as the Authority may designate. A-7 "Outstanding, " "Bonds outstanding" or "outstanding Bonds" when used with reference to Bonds means, as of any given date, all Bonds which have been duly authenticated and delivered under the Indenture, except: (a) Bonds cancelled by the Trustee pursuant to Section 2.11 of the Indenture; (b) Bonds for the payment or redemption of which cash or Governmental Obligations shall have been theretofore deposited with the Trustee (whether upon or prior to the Maturity or redemption date of any such Bonds) in accordance with Article X of the Indenture; (c) Bonds deemed to be tendered in accordance with Section 2.08 of the Indenture or no longer deemed to be outstanding as provided in Section 4.11(b)(iii) of the Indenture; and (d) Bonds in lieu of which other Bonds have been authenticated under Section 2.08 or 2.09 of the Indenture. "Participant" means those broker-dealers, banks and other financial institutions reflected on the books of the Securities Depository. "Paying Agent" means the Trustee and such other financial institutions, if any, as are appointed additional Paying Agents pursuant to Section 6.13 of the Indenture. "Permitted Investments " means any of the following which at the time of investment are legal investments for the Authority under the laws of the State for moneys proposed to be invested therein: (a) Direct obligations of the United States of America; (b) Obligations, which are unconditionally guaranteed by the United States of America, of (i) an agency or instrumentality of the United States of America, (ii) Banks for Cooperatives, (iii) Federal Intermediate Credit Banks, (iv) Federal Home Loan Bank Board, (v) Tennessee Valley Authority, (vi) Federal National Mortgage Association, (vii) Small Business Administration, and (viii) any United States of America government-sponsored enterprise; (c) Obligations, which are not unconditionally guaranteed by the United States of America, of (i) Federal Home Loan Mortgage Corporation, (ii) Federal Land Banks, (iii) Federal Intermediate Credit Banks, (iv) Banks for Cooperatives, (v) Federal Home Loan Banks, (vi) Federal National Mortgage Association, and (vii) Student Loan Marketing Association; (d) Pre-refunded securities which are tax-exempt and for which cash or obligations (constituting Federal Securities or obligations described in (a) or (b) above) in an amount sufficient to pay the debt service when due has been irrevocably deposited with a fiscal depository; (e) Municipal debt obligations which are rated in one of the two highest rating categories by Moody's and S&P; (f) Demand or time deposits or negotiable certificates of deposit issued by a bank, trust company or savings and loan association, which maintains a long-term rating of "A3" or better or a short-term rating of "P-2" or better by Moody's or a long-term rating or "A-" or better by S&P; (g) Demand or time deposits or negotiable certificates of deposit issued by any bank, trust company, or savings and loan association (which maintains a rating of a long-term rating of `Baa3" or better or a short-term rating of "P-3" or better by Moody's or a long-term rating of "BBB-" or better by S&P), but only if such deposit is (i) continuously and fully insured by the Federal Deposit Insurance Corporation, or (ii) issued by an institution which has a combined capital and surplus or shareholder's A-8 equity of at least $50,000,000, does not exceed 10% of such capital and surplus or shareholder's equity, and is continuously and fully secured by Federal Securities or obligations described herein (which collateral shall have a market value of at least 105% of the principal amount of the deposit, marked to market at least weekly); (h) Repurchase agreements with a bank, trust company, or savings and loan association (which maintains a long-term rating of "A3" or better or a short-term rating of "P-2" or better by Moody's or a long-term rating or "A-" or better by S&P) or any entity which is recognized as a primary dealer by the Federal Reserve Bank of New York, but only if the repurchase agreement is secured by Federal Securities or obligations described in (a) or (b) above (marked to market weekly) and only if the Trustee shall have received a perfected first security interest in such securities and the Trustee or its appointed agent shall hold such securities free and clear of the claims of third parties; (1) Money market funds (which money market fund may include funds for which the Bank, its affiliates or subsidiaries or the Trustee, or its affiliates or subsidiaries, provide investment advisory or other management services) or investment company shares which fund or company restricts their investments to Federal Securities or obligations described in (a) or (b) above and to repurchase agreements secured by Federal Securities or obligations described in (a) or (b) above, and which are approved by the Bank; 0) Corporate debt obligations which are rated in one of the two highest long term rating categories of Moody's or S&P and which are approved by the Bank; (k) Commercial paper (having original maturities of not more than 365 days) rated in the highest rating category by Moody's or S&P which is approved by the Bank; ® (1) Any guaranteed investment contract, guaranteed interest contract, annuity contract, or funding agreement if, at the time the contract or agreement is entered into, the long-term credit rating, financial obligations rating, claims paying ability rating, or financial strength rating of the party, or of the guarantor of the party, with whom the Authority enters the contract or agreement is, at the time of issuance, rated in one of the two highest rating categories by one or more nationally recognized securities rating agencies that regularly issue such ratings; and (m) Any other investment vehicle requested by the Authority in writing and approved by the Bank; and (n) Any Colorado local government investment pool trust fund created pursuant to Section 24-75-703. "Person " means an individual, partnership, corporation, trust or unincorporated organization, or a government or agency, instrumentality, programs account, fund, political subdivision or corporation thereof. "Pledged Property Tax Revenues" means, for each Fiscal Year and subject to Section 6.10 of the Indenture, that portion of ad valorem property taxes produced by the levy at the rates fixed each year by or for the governing bodies of the various taxing jurisdictions within or overlapping the Urban Renewal Project Area, but excluding: (i) ad valorem property taxes produced by any mill levy imposed by Confluence Metropolitan ® District and Avon Station Metropolitan District pursuant to intergovernmental agreement between such districts and the Authority; and A-9 (ii) ad valorem property taxes produced by a mill levy of any special district formed after February 22, 2008 pursuant to Title 32, Article 1, Colorado Revised Statutes, if such exclusion is authorized and approved by the Authority, which mill levy is in addition to, and not a replacement for, property taxes levied by taxing entities in existence as of February 22, 2008, upon that portion of the valuation for assessment of all taxable property within the Urban Renewal Project Area which is in excess of the Property Tax Base Amount; provided, however, that such amount shall be reduced by any lawful collection fee charged by the County. "Pledged Revenues " or "Revenues " means the Pledged Property Tax Revenues and all income derived from the investment and reinvestment of the Trust Funds. "Project Fund" means the Project Fund created in Section 3.02 of the Indenture. "Property Tax Base Amount" means, for the 2008 collection year, $53,235,090, which is the amount certified by the Assessor as the valuation for assessment of all taxable property within the Urban Renewal Project Area last certified by the Assessor prior to the adoption of the Urban Renewal Plan or any modification thereof, and provided, however, that in the event of a general reassessment of taxable property in the Urban Renewal Project Area, the valuation for assessment of taxable property within the Urban Renewal Project Area shall be proportionately adjusted in accordance with such general reassessment in the manner required by the Act. "Rate Change Date " means for each Rate Period (i) during any Daily Mode, each Business Day, (ii) during any Weekly Mode, Thursday or such other day of the week designated as such by the Remarketing Agent from time to time, in accordance with the provisions of Section 2.03(c)(ii) of the Indenture, (iii) during the Monthly Mode, the first Business Day of each calendar month; (iv) during any Annual Mode, any June 1 or December 1, (v) during any Flexible Pricing Long-Term Mode, the Business Day(s) specified in the notice delivered to the Trustee in accordance with Section 5.01(b) or 5.02(b) of the Indenture, (vi) during any Flexible Pricing Short-Term Mode, the Business Day(s) specified in the notice delivered to the Trustee in accordance with Section 2.03, 5.01(b) or 5.02(b) of the Indenture and (vii) each Adjustment Date. "Rate Determination Date" means for (i) each Rate Period during any Daily Mode, the Rate Change Date for such Rate Period, (ii) each Rate Period during any Weekly Mode, Wednesday or such other day of the week designated as such by the Remarketing Agent from time to time, in accordance with the provisions of Section 2.03(c)(ii) of the Indenture, next preceding the Rate Change Date for such Rate Period (unless such day is not a Business Day, in which case the Rate Determination Date shall be the immediately preceding Business Day), (iii) each Rate Period in a Monthly Mode, a date not later than the sixth Business Day preceding a Rate Change Date; (iv) each Rate Period during any Annual Mode, a Business Day which shall be not less than fifteen Business Days nor more than thirty Business Days (as determined by the Remarketing Agent) before the Rate Change Date for such Rate Period, (v) each Rate Period during any Flexible Pricing Long-Term Mode, the Business Day(s) specified in the notice delivered to the Trustee in accordance with Section 5.01(b) or Section 5.02(b) of the Indenture, which Business Day(s) shall not be less than one calendar day or more than 30 calendar days prior to the first day of such Rate Period, (vi) each Rate Period during any Flexible Pricing Short-Term Mode, the Rate Change Date for such Rate Period specified in the notice delivered to the Trustee in accordance with Section 2.03(f), 5.01(b) or 5.02(b) of the Indenture, (vii) the Rate Period during a Fixed Mode, the date of the firm underwriting or Bond Purchase Agreement referred to in Section 5.03 of the Indenture, (viii) the Rate Period following a proposed Conversion Date in the event of a failed conversion, such proposed Conversion Date and (ix) the Rate Period following a failed Mode conversion pursuant to Section 5.01(e) of the Indenture, the proposed Adjustment Date for the initial Rate Periods commencing on the Closing Date, the Rate Determination Dates shall be the Business Day prior to the Closing Date. A-10 ® "Rate Period " means, with respect to each Bond, each period commencing on a Rate Change Date for such Bond to and including the day immediately preceding the immediately succeeding Rate Change Date for such Bond (or the Maturity or date of redemption thereof) during which period such Bond shall bear interest at one particular interest rate. "Rating Agency" means each nationally recognized securities rating agency then maintaining a rating on the Bonds and initially means S&P and Moody's. "Rebate Fund " means the fund by that name established pursuant to Section 3.02 of the Indenture. "Record Date " means (i) with respect to any Bond during a Daily Mode or a Weekly Mode, the last calendar day of the month (whether or not a Business Day) immediately preceding each Interest Payment Date for such Bond, except for any Interest Payment Date which is an Adjustment Date, (ii) with respect to any Bonds during a Monthly Mode, the Business Day immediately preceding each Interest Payment Date which is an Adjustment Date for such Bonds, (iv) with respect to any Bond during a Flexible Pricing Short-Term Mode, the Business Day immediately preceding each Interest Payment Date for such Bond, (v) with respect to any Bond during a Flexible Pricing Long-Term Mode, the 15th calendar day immediately preceding each Interest Payment Date (whether or not a Business Day) for such Bond, (vi) with respect to any Bond during an Annual Mode, May 15 and November 15 (whether or not a Business Day), and (vii) with respect to any Bond during a Fixed Mode, May 15 and November 15 (whether or not a Business Day); provided, however, that if the Conversion Date shall occur on or after May 15 but prior to June 1 or on or after November 15 but prior to December 1, the Record Date shall be the Conversion Date. ® "Redemption Fund" means the Redemption Fund created in Section 3.02 of the Indenture. "Registered Owner" or "Bondowner" or "Owner" of Bonds or "Bondholder" means the Person or Persons in whose name or names a Bond shall be registered on the records of the Authority kept by the Bond Registrar for that purpose in accordance with the provisions of the Indenture. "Reimbursement Obligations " has the meaning set forth in the Credit Agreement. "Remarketing Agent " means the placement or remarketing agent at the time serving as such under the Remarketing Agreement and designated as the Remarketing Agent for purposes of the Indenture. The initial Remarketing Agent shall be Stifel, Nicolaus and Company, Incorporated, as provided in the Remarketing Agreement. "Remarketing Agreement" means the Remarketing Agreement dated as of February 15, 2008, between the Authority and the Remarketing Agent, as the same may be amended, supplemented or assigned from time to time, or any similar agreement as may be substituted therefor. "Replenishment Resolution " means the resolution adopted by the Town expressing its present intent to lend additional moneys to the Authority to maintain the Bond Reserve Fund at the Bond Reserve Requirement. "Representation Letter" means the blanket issuer letter of representations from the Authority to DTC to induce DTC to accept the Bonds as eligible for deposit at DTC. ® "Revenue Fund" means the Revenue Fund created in Section 3.02 of the Indenture. "Securities Depository" means DTC or any successor securities depository appointed pursuant to Section 2.12 of the Indenture. A-11 "Series " means any series of Bonds designated as such in the proceedings pursuant to which such • Bonds are issued. "Series 2008 Bonds" means the $25,000,000 aggregate principal amount of the Authority's Tax Increment Adjustable Rate Revenue Bonds (Town Center West Area Urban Renewal Project) Series 2008, issued pursuant to the Indenture. "Short Mode " means a Flexible Pricing Short-Term Mode, a Daily Mode, a Weekly Mode or a Monthly Mode. "Short Rate" means a Flexible Pricing Short-Term Rate, a Daily Rate, Weekly Rate, or the Monthly Rate. "SIFMA Index" means the Securities Industry and Financial Markets Association Municipal Swap Index, produced by Municipal Market Data, or if such index is not published, then such other index selected by the Trustee which reflects the yield of tax-exempt seven-day variable rate demand bonds. "S&P" means Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, a corporation duly organized and existing under and by virtue of the laws of the State of New York, its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Authority by notice to the Trustee, which rating agency then maintains a rating with respect to the Series 2008 Bonds. "Special Interest Payment Date" means a special date fixed to pay Defaulted Interest on the Bonds as further provided in Section 2.03(1) of the Indenture. 0 "Special Record Date " means a special date fixed to determine the names and addresses of Registered Owners for purposes of paying Defaulted Interest on a Special Interest Payment Date, all as further provided in Section 2.03(1) of the Indenture. "State " means the State of Colorado. "Stated Termination Date " means the stated date upon which the Credit Facility issued pursuant to a Credit Agreement by its term expires, as the same may be extended from time to time. "Subordinate Debt" means (a) the Town Subordinate Debt and (b) any other obligation issued or incurred by the Authority pursuant to Section 2.14 of the Indenture, and payable from the Trust Estate on a basis which is subordinate to the claim thereon which secures any Outstanding Series of the Bonds, including the Bank Bonds, and the Reimbursement Obligations and all other amounts owed under the Credit Agreement. "Substitute Adjustment Date" means (i) any Business Day during any Adjustment Period for Bank Bonds or Authority Bonds and (ii) any Business Day after the No-Call Period for any Bonds in a Flexible Pricing Long-Term Mode set forth in Section 4.11(a)(iii) of the Indenture, in each case designated by the Authority in accordance with Section 5.02 of the Indenture as the first day of a new Adjustment Period. "Substitute Bank" means the commercial bank, trust company or other entity which issues the Substitute Credit Facility under any Substitute Credit Agreement. 0 "Substitute Credit Agreement" means any agreement (other than the Initial Credit Agreement) between the Authority and a Substitute Bank (which agreement shall be reasonably satisfactory in form A-12 and substance to the Authority) as it may from time to time be amended or supplemented, pursuant to which a Credit Facility shall be in effect. "Substitute Credit Facility " means any letter of credit, bank bond purchase agreement, revolving credit agreement, surety bond, insurance policy or other agreement or instrument under which any Person (other than the Authority) undertakes to make or provide funds to pay the principal of, premium, if any (if the Credit Facility being replaced secures premium payable upon an optional redemption of the Bonds), and interest on the Bonds and the purchase price of Tendered Bonds, delivered or deemed delivered to and received by the Trustee (i) replacing the then existing Credit Facility, (ii) dated as of a date prior to the Stated Termination Date of the then existing Credit Facility, (iii) expiring on a date which is at least 15 days after an Interest Payment Date and at least one year from the date of its issuance (unless the Bonds mature prior to that time), (iv) issued on substantially identical terms and conditions as the then existing Credit Facility, except that the Substitute Credit Facility may expire on a date which is later (but not earlier) than the Stated Termination Date of the then existing Credit Facility, and except that the stated amount of the Substitute Credit Facility shall equal the sum of (A) the aggregate principal amount of Bonds at the time outstanding (other than Bonds in the Fixed Mode) (plus, if the Credit Facility being replaced secures premium payable upon an optional redemption of the Bonds, the maximum premium so secured), plus not less than (B) an amount equal to (1) 46 days' interest on all outstanding Bonds in a Daily Mode or Weekly Mode, plus (2) 46 days' interest on all outstanding Bonds in an Annual Mode, Flexible Pricing Short-Term Mode, or a Flexible Pricing Long-Term Mode; provided, however, that the foregoing amounts shall be adjusted as necessary to either maintain a rating then existing on the Bonds, or to obtain a rating on the Bonds by a Rating Agency, (v) accompanied by an Opinion of Bond Counsel to the effect that the delivery thereof is authorized or permitted by the terms of the Indenture and the Act, and will not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes; however, none of the following shall be deemed a Substitute Credit Facility: a change in the Credit Agreement pursuant to which the Credit Facility is issued, or an extension of the Stated Termination Date of the existing Credit Facility. "Substitution Date " means the day on which a Substitute Credit Facility becomes effective, which shall be no later than the Business Day prior to the Stated Termination Date of the Credit Facility which is being replaced. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS-- Substitute Credit Facility" in this Official Statement "Supplemental Public Securities Act " means the Supplemental Public Securities Act, constituting Title 11, Article 57, Part 2, Colorado Revised Statutes. "Tendered Bonds " means Bonds tendered or deemed tendered for purchase pursuant to Sections 4.01, 4.02, 4.03, 4.04, 4.05, 4.06 and 4.07 of the Indenture. (see "THE BONDS--Mandatory Tenders for Purchase" in this Official Statement) "Town " means the Town of Avon, Colorado, and its successors and assigns. "Town Subordinate Debt" means the obligations set forth on Exhibit C to the Indenture and any other obligation issued or incurred by the Authority pursuant to Section 2.14 of the Indenture which is payable from the Trust Estate on a basis which is subordinate to the claim thereon which secures the Bonds and amounts due under the Credit Agreement, and which is payable to the Town. "Trust Estate " means the rights, property and interests pledged and assigned by the Authority under the Indenture to the Trustee and the Bank pursuant to the Granting Clauses of the Indenture and the ® interest of the Trustee in the Credit Facility. "Trust Funds " means all funds and accounts established under Section 3.02 of the Indenture, excluding the Rebate Fund, the Bond Purchase Fund and any escrow fund established to defease any of the Bonds pursuant to Article X of the Indenture. A-13 "Trustee " means UMB Bank, n.a., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, having a principal office in Denver, Colorado, and its successors, and any successor trustee at the time serving as successor trustee under the Indenture. "Urban Renewal Plan " means the "Town Center West Area Urban Renewal Plan" as amended or supplemented from time to time in accordance with the Act and the Indenture. "Urban Renewal Project" means undertakings and activities of the Authority in the Urban Renewal Project Area for the elimination of blight and for the prevention of the development or spread of slums and blight in accordance with the Urban Renewal Plan and the Act. "Urban. Renewal Project Area " means the areas described in Exhibit B attached hereto. "Urban Renewal Project Costs" means the Authority's costs properly attributable to the Urban Renewal Project or any part thereof, including without limitation: (a) the costs of labor and materials, of machinery, furnishings and equipment, and of the restoration of property damaged or destroyed in connection with construction work; (b) the costs of insurance premiums, indemnity and fidelity bonds, financing charges, bank fees, taxes, or other municipal or governmental charges lawfully levied or assessed; (c) periodic fees of the Remarketing Agent, the Rating Agency and the Trustee, and obligations due under the Credit Agreement; (d) the payment of interest on the Bonds, including Bank Bonds; (e) administrative and general overhead costs; (f) the costs of reimbursing funds advanced by the Authority in anticipation of reimbursement from Bond proceeds, including any intrafund or interfund loan; (g) the costs of surveys, appraisals, plans, designs, specifications, and estimates; (h) the costs, fees, and expenses of printers, engineers, architects, financial consultants, legal advisors, or other agents or employees; (i) the costs of publishing, reproducing, posting, mailing, or recording documents; 0) the costs of contingencies or reserves; (k) the costs of preparing or amending any resolution or other instrument relating to the Bonds or the Urban Renewal Project, including without limitation the Indenture; (1) the costs of repaying any short-term financing, construction loans, and other temporary loans, and of the incidental expenses incurred in connection with such loans; (m) the costs of acquiring any property, rights, easements, licenses, privileges, agreements, and franchises; r (n) the costs of demolition, removal, and relocation; and A-14 ® (o) all other lawful costs as determined by the Board of Commissioners of the Authority. "Weekly Mode" means any Adjustment Period of seven days during which Rate Determination Dates occur on the Business Day of each calendar week next preceding the Rate Change Date in such calendar week in the manner set forth in Section 2.03(c) of the Indenture and during which Bonds bear interest at the Weekly Rate. "Weekly Rate " means, for each Rate Period within a Weekly Mode applicable to a Bond, a fixed per annum interest rate borne by such Bond established pursuant to Section 2.03(c), 5.01(b) or 5.02(b) of the Indenture equal to the lowest interest rate which, in the judgment of the Remarketing Agent, would enable such Bond to be remarketed at the principal amount thereof, plus accrued interest thereon, if any, on the Rate Change Date for such Rate Period. "Written Request" means with reference to the Authority, a request in writing signed by the Chairman, Vice-Chairman, the Authority Representative or any other officers designated by the Authority. Source of Payment of Bonds; Pledge The Bonds and all payments to be made by the Authority thereon are not general obligations of the Authority, but are special, limited obligations payable solely from the Trust Estate, as provided in the Indenture. Except as otherwise described in "Establishment of Funds; Trust Funds," "The Revenue Fund," "Flow of Funds" and "Bond Purchase Fund" below, and while the Credit Facility is in full force and effect, the principal of and interest on the Bonds prior to the conversion thereof to the Fixed Mode shall be payable from the proceeds of draws under the Credit Facility prior to the use of funds from any other source. In the Indenture, the Authority irrevocably pledges the Trust Estate to the Trustee as the secured party for the benefit of the Owners for the payment of the Bonds, and to the Bank to secure the Authority's obligations under the Reimbursement Agreement, equally and ratably. The creation, perfection, enforcement, and priority of the pledge of revenues to secure or pay the Bonds and the amounts due under the Reimbursement Agreement as provided in the Indenture shall be governed by Section 11-57-208 of the Supplemental Act and the Indenture. The revenues pledged under the Indenture, as received by or otherwise credited to the Authority, shall immediately be subject to the lien of such pledge without any physical delivery, filing, or further act. The lien of such pledge on the revenues pledged for payment of the Bonds and the amounts due under the Reimbursement Agreement and the obligation to perform the contractual provisions made in the Indenture shall have priority over any or all other obligations and liabilities of the Authority, except as otherwise may be provided in the Indenture. The lien of such pledge shall be valid, binding, and enforceable as against all persons having claims of any kind in tort, contract, or otherwise against the Authority irrespective of whether such persons have notice of such liens. Establishment of Funds; Trust Funds General. The following funds are created in the Indenture, each of which shall be a special trust fund held by the Trustee: (a) the Revenue Fund; (b) the Interest Fund; (c) the Flexible Pricing Short-Term Fund; (d) the Bond Sinking Fund; (e) the Redemption Fund; (0 the Bond Reserve Fund; (g) the Rebate Fund; (h) the Bond Purchase Fund; (i) the Expense Fund; and 0) the Project Fund. Moneys and investments in each of the funds and accounts shall be used only and exclusively as provided in the Indenture. The Rebate Fund and the Bond Purchase Fund shall not be part of the Trust Estate for purposes of the Indenture. All funds and accounts described above shall be in the custody and control of the Trustee, but in the name of the Authority. A-15 Trust Funds. All moneys received by the Trustee under any provision of the Indenture shall be held by the Trustee in trust for the benefit of the Owners of the Bonds and, so long as the Credit Facility is in effect and the Bank is not in default thereunder, the Bank, and such moneys (other than moneys held in the Bond Purchase Fund and in the Rebate Fund) shall, while so held, be subject to the pledge of the Indenture. The Revenue Fund Except as otherwise described below, all moneys received under the Credit Facility and all Pledged Revenues and other deposits thereto from the Authority, as and when received by the Trustee, shall be deposited into the Revenue Fund and shall be held therein until disbursed as provided. The Authority shall transfer the Pledged Property Tax Revenues to the Trustee when, as, and if received. Except as otherwise provided in Sections 3.10 of the Indenture relating to the Bond Purchase Fund and 7.02 of the Indenture relating to acceleration, any amount paid to the Trustee for deposit in the Revenue Fund under the Credit Facility will be segregated from all other moneys in the Revenue Fund and will be transferred to the Interest Fund, the Flexible Pricing Short-Term Fund, the Bond Sinking Fund or the Bond Reserve Fund, as required by the provisions of the Indenture. Flow of Funds Amounts deposited in the Revenue Fund shall be applied by the Trustee for the following purposes in the following order of priority: (i) First, there shall be transferred to the Annual Expense Account of the Revenue Fund, the periodic fees estimated by the Authority in a Written Request from the Authority Representative to the Trustee to be coming due during the Fiscal Year: under the Credit Agreement; of the Remarketing Agent; of the Rating Agency; and of the Trustee. Upon receipt of a Written Request from the Authority Representative, the Trustee shall pay such periodic fees at the times and in the amounts as they become due. (ii) Second, there shall be transferred to the Interest Fund an amount which, together with any other moneys already on deposit therein (excluding proceeds of draws under the Credit Facility) and available to make interest payments, is equal to the amount required by Section 3.04(b) of the Indenture to pay the interest due on each Interest Payment Date during the Fiscal Year. For Bonds bearing interest at the Short Rate, the interest rate on such Bonds shall be assumed to be equal to the 10 year average of the SIFMA Index plus 1%. For Bank Bonds, the interest rate on such Bonds shall be assumed to be equal to the Bank Rate plus 1 (iii) Third, there shall be transferred to the Bond Sinking Fund an amount equal to the amount required by Section 3.06(b) of the Indenture; (iv) Fourth, there shall be transferred to the Bank all amounts due and owing under the Credit Agreement to the extent not paid pursuant to clauses (i), (ii) or (iii) of this Section, and Sections 3.04 and 3.06 of the Indenture. (v) Fifth, there shall be transferred to the Bond Reserve Fund enough moneys so that the amount on deposit in the Bond Reserve Fund shall equal the Bond Reserve Requirement. (vi) Sixth, there shall be transferred to the Rebate Fund an amount equal to the amount required by Section 3.09 of the Indenture. (vii) Seventh, so long as no Event of Default has occurred and is continuing under the Indenture, on the next to the last Business Day of December of each Fiscal Year, the Trustee shall apply moneys, at the request and upon written direction of the Authority, to the payment of the principal of and interest on Subordinate Debt then due and owing. A-16 (viii) Eighth, on and after the last Business Day of December, all remaining moneys in the Revenue Fund, which are not credited to the Annual Expense Account, the Interest Fund, the Bond Sinking Fund, the Bond Reserve Fund, or the Rebate Fund, shall be transferred by the Trustee to the Authority for any legal use in accordance with the Act. If at any time during a Fiscal Year the Authority determines that it has deposited sufficient moneys from the Pledged Property Tax Revenue to provide for the expenditures listed above, the Authority shall no longer be required to transfer such Pledged Property Tax Revenue to the Trustee until the following Fiscal Year; provided that if thereafter during the current Fiscal Year there is a need to make further expenditures described above, the Authority shall resume transferring Pledged Property Tax Revenue to the Trustee for deposit to the Revenue Fund. Any transfers made pursuant to this section are subject to the prior written consent of the Bank, which consent shall not be unreasonably withheld. Interest Fund There shall be deposited into the Interest Fund as and when received (i) all moneys transferred to the Interest Fund from the Bond Reserve Fund and all moneys transferred to the Interest Fund from the Redemption Fund, (ii) all other moneys required to be deposited therein pursuant to the Indenture, (iii) all moneys transferred to the Interest Fund pursuant to Section 7.02 of the Indenture concerning acceleration, and (iii) all other moneys received by the Trustee (other than pursuant to the Credit Facility) when accompanied by directions that such moneys are to be paid into the Interest Fund. There shall also be retained in the Interest Fund interest and other income received on investments of Interest Fund moneys. Unless otherwise specified in the Indenture, all such moneys shall be transferred to the Interest Fund and the Fixed Rate Interest Account pro rata, based upon the amount of outstanding Bonds (A) bearing interest at a Short Rate, an Annual Rate, and a Flexible Pricing Long-Term Rate and (B) bearing interest at a Fixed Rate. Any amount paid to the Trustee for deposit in the Interest Fund pursuant to Section 7.02 under the Credit Facility shall be segregated from all other moneys in the Interest Fund. On or before each Interest Payment Date (or the first Business Day thereafter if such day is not a Business Day) for a Bond bearing interest at a Short Rate, an Annual Rate, the Bank Rate, or a Flexible Pricing Long-Term Rate, the Trustee shall deposit in the Interest Fund from the Revenue Fund and from the Flexible Pricing Short-Term Fund (in the amounts specified in the Indenture) moneys, in an amount which, together with any other moneys already on deposit therein (excluding proceeds of draws under the Credit Facility) and available to make such payment (other than in the Fixed Rate Interest Account), is not less than the interest coming due on such Bond on such Interest Payment Date. Any amount derived from the Credit Facility to be deposited in the Interest Fund shall be segregated from all other moneys in the Interest Fund. Subject to the provisions of Section 3.16 of the Indenture, funds for the payment of interest on the Bonds bearing interest at a Short Rate, an Annual Rate, the Bank Rate, or a Flexible Pricing Long-Tenn Rate (other than interest constituting a portion of the purchase price of Tendered Bonds) shall be made from the following sources in the order of priority indicated: (1) Moneys received by the Trustee under the Credit Facility with respect to interest on the Bonds and transferred from the Revenue Fund and from the Flexible Pricing Short-Term Fund to the Interest Fund, provided that such moneys shall not be used to pay Bank Bonds; and (2) Any other moneys furnished to the Trustee and available for such purpose. After the Bank has honored a drawing under the Credit Facility for the payment of interest on the Bonds, the Trustee shall, on the date required by the Credit Agreement, transfer from the Interest Fund to the Bank an amount necessary to reimburse the Bank for such drawing under the Credit Facility to pay the interest on the Bonds and, to the extent such amount is not paid when due under the Credit Agreement, interest thereon at the rate required under the Credit Agreement. A-17 After the Conversion Date applicable to a Bond, on or before the 20th day of each May and November, commencing with the first of such months following the month in which the Conversion Date applicable to such Bonds occurs, the Trustee shall deposit in the Fixed Rate Interest Account from moneys in the Revenue Fund (other than from moneys drawn under the Credit Facility) an amount which will be not less than the amount of interest to become due on such Bond on such Interest Payment Date; provided, however, that if the Conversion Date for such Bond occurs between May 20 and May 31 or between November 20 and November 30, the deposit in the Fixed Rate Interest Account from moneys in the Revenue Fund (which shall be other than from moneys drawn under the Credit Facility) shall be made on the Conversion Date in an amount which will not be less than the amount of interest to become due on such Bond on the next succeeding June 1 or December 1. No deposit pursuant to this paragraph need be made to the extent that there is a sufficient amount already on deposit in the Fixed Rate Interest Account to pay interest on Bonds bearing interest at a Fixed Rate on each such Interest Payment Date. If the 20th day of any such month is not a Business Day, the deposit herein required shall be made on the next succeeding Business Day. Moneys received under the Credit Facility shall not be deposited in the Fixed Rate Interest Account. Except as provided in this paragraph, in Section 8.02 of the Indenture relating to compensation and expenses of the Trustee and in the Tax Compliance Certificate, moneys in the Interest Fund shall be used solely to pay interest on the Bonds when due or to reimburse the Bank for a drawing under the Credit Facility to pay interest on the Bonds. Payment of interest on Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate shall be made from moneys on deposit in the Interest Fund other than in the Fixed Rate Interest Account. Payment of interest on Bonds bearing interest at Fixed Rate shall be made from moneys on deposit in the Fixed Rate Interest Account. No interest shall be paid on Authority Bonds unless and until the interest on all other Bonds and amounts due to the Bank for drawings under the Credit Facility to pay interest on the Bonds shall be paid and all other obligations owing to the Bank under the Credit Agreement shall be paid. Flexible Pricing Short-Term Fund The Trustee shall maintain so long as any of the Bonds are outstanding, bear interest at a Short Rate, an Annual Rate or a Flexible Pricing Long-Term Rate and a Credit Facility is required to be in full force and effect, a separate account to be known as the "Flexible Pricing Short-Term Fund." The amounts drawn under the Initial Credit Facility and any moneys similarly drawn under a Substitute Credit Facility shall be deposited in the Revenue Fund and then immediately transferred by the Trustee to the Flexible Pricing Short-Term Fund. Except to the extent required to be transferred to other Funds pursuant to this Section, there shall be retained in the Flexible Pricing Short-Term Fund interest on amounts held in the Flexible Pricing Short-Term Fund. No moneys other than amounts drawn under the Initial Credit Facility and any moneys similarly drawn under a Substitute Credit Facility and the interest income thereon shall be deposited in the Flexible Pricing Short-Term Fund. On or before each Interest Payment Date for a Bond bearing interest at a Flexible Pricing Short-Term Rate, the Trustee shall transfer from the Flexible Pricing Short-Term Fund to the Interest Fund an amount which is equal to the interest due on such Bond. On the date (unless such date is an Interest Payment Date) any Bonds are required to be purchased pursuant to Section 4.02 or 4.07 of the Indenture (purchase while bonds bear interest at a Flexible Pricing Short-Term Rate and purchase of tendered bonds delivered to the Trustee), the Trustee shall transfer all amounts in the Flexible Pricing Short-Term Fund to the Bond Purchase Fund. When any such Bonds required to be purchased have been remarketed, proceeds of the remarketing shall be deposited first to the Flexible Pricing Short-Term Fund to restore the balance in the Fund to the amount that was on deposit prior to the transfer of the Bond Purchase Fund and then shall be used to pay any amounts to the Bank. Amounts on deposit in the Flexible Pricing Short-Term Fund shall be irrevocably held in trust for the benefit of (i) the Owners of the Bonds and, (ii) so long as the Credit Facility is in effect and the Bank has not defaulted under its obligations with respect to the Credit Facility, the Bank. Notwithstanding the deposit of such moneys under the Indenture and the subsequent reimbursement to the Bank, the Authority shall have no right, title or interest in such moneys. A-18 ® Bond Sinking Fund. There shall be deposited into the Bond Sinking Fund, as and when received (i) all moneys transferred to the Bond Sinking Fund from the Bond Reserve Fund and all moneys transferred to .the Bond Sinking Fund from the Redemption Fund, (ii) all other moneys required to be deposited therein pursuant to the Indenture and (iii) all other moneys (other than pursuant to the Credit Facility) received by the Trustee when accompanied by directions that such moneys are to be paid into the Bond Sinking Fund. There shall also be retained in the Bond Sinking Fund interest and other income received on investments of Bond Sinking Fund moneys to the extent provided in the Indenture. Unless otherwise specified in the Indenture, all such moneys shall be transferred to the Bond Sinking Fund and the Fixed Rate Principal Account pro rata, based upon the amount of outstanding Bonds (A) bearing interest at a Short Rate, an Annual Rate and a Flexible Pricing Long-Term Rate and (B) bearing interest at a Fixed Rate. On or before November 20, 2008, and on or before each November 20 thereafter to and including November 20, 2031, and May 20, 2032 after making the deposit required by Section 3.03 of the Indenture, the Trustee shall deposit in the Bond Sinking Fund from the Revenue Fund moneys in an amount which, together with any other moneys already on deposit in the Bond Sinking Fund (excluding proceeds of draws under the Credit Facility) and available to make such payment (other than in the Fixed Rate Principal Account), is not less than such principal becoming due on the Bonds bearing interest at a Short Rate, an Annual Rate or a Flexible Pricing Long-Term Rate on the next December 1 or the final maturity on June 1, 2032. Any amount derived from the Credit Facility to be deposited in the Bond Sinking Fund shall be segregated from all other moneys in the Bond Sinking Fund. Subject to the provisions of Section 3.16 of the Indenture, funds for the payment of principal of the Bonds bearing interest at a Short Rate, an Annual Rate or a Flexible Pricing Long-Term Rate (other than principal ® constituting a portion of the purchase price of Tendered Bonds) shall be made from the following sources in the order of priority indicated: (a) Moneys received by the Trustee under the Credit Facility with respect to principal of the Bonds and transferred from the Revenue Fund to the Bond Sinking Fund; and (b) Any other moneys furnished to the Trustee and available for such purpose. After the Bank has honored a drawing under the Credit Facility for the payment of principal on the Bonds, the Trustee shall on the date required by the Credit Agreement transfer from the Bond Sinking Fund to the Bank an amount necessary to reimburse the Bank for such drawing under the Credit Facility to pay the principal of the Bonds. After the Conversion Date applicable to a Bond, on or before the 20th day of each May and November, beginning with the first of such months following the month in which such Conversion Date applicable to such Bond occurs, after making the deposits required by Section 3.03 of the Indenture, the Trustee shall deposit in the Fixed Rate Principal Account from moneys in the Revenue Fund (other than from moneys drawn under the Credit Facility) an amount which, together with an equal amount to be deposited on the 20th day of each such month, if any, occurring before the next succeeding December 1, will not be less than the amount of principal of such Bond to be redeemed pursuant to Section 4.11(c)(i) of the Indenture or paid on the next succeeding December 1; provided, however, that if the Conversion Date for such Bond occurs between May 20 and May 30, the deposit in the Fixed Rate Principal Account from moneys in the Revenue Fund (which shall be other than from moneys drawn under the Credit Facility) shall be made on the Conversion Date in an amount which will not be less than the amount of principal to become due on such Bond on the next succeeding December 1. No deposit pursuant to this ® paragraph need be made if and to the extent that there is a sufficient amount already on deposit in the Fixed Rate Principal Account to pay principal on Bonds bearing interest at a Fixed Rate on the next Maturity or mandatory sinking fund redemption date. If the 20th day of any month is not a Business Day, the deposit herein required to be made shall be made on or before the next succeeding Business Day. Moneys received under the Credit Facility shall not be deposited in the Fixed Rate Principal Account. A-19 Except as provided in this paragraph, in Section 7.05 or 8.02 of the Indenture and in the • Tax Compliance Certificate, moneys in the Bond Sinking Fund shall be used solely for the payment of principal of the Bonds as the same shall become due and payable at Maturity and in accordance with the mandatory sinking fund redemption schedule or to reimburse the Bank for drawings under the Credit Facility to pay principal on the Bonds. Payment of principal of Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate shall be made from moneys on deposit in the Bond Sinking Fund other than in the Fixed Rate Principal Account. Payment of principal of Bonds bearing interest at a Fixed Rate shall be made from moneys on deposit in the Fixed Rate Principal Account. No principal of Authority Bonds shall be paid unless and until the principal due on such date for all other Bonds or for amounts due to the Bank for drawings under the Credit Facility to pay principal on the Bonds shall be paid and all other obligations due under the Credit Agreement shall be paid. In lieu of mandatory sinking fund redemption, the Trustee shall, at the direction of the Authority, use its best efforts to make purchases in the open market of an equal principal amount of Bonds bearing interest at a Short Rate, an Annual Rate or a Flexible Pricing Long-Term Rate of the Maturity to be redeemed at prices not exceeding the principal amount of the Bonds being purchased plus accrued interest, with such interest portion of the purchase price to be paid from the Interest Fund (other than the Fixed Rate Interest Account) and the principal portion of such purchase price to be paid from the Bond Sinking Fund (other than the Fixed Rate Principal Account). The amount of Bonds bearing interest at a Short Rate, an Annual Rate or a Flexible Pricing Long-Term Rate to be redeemed on any date pursuant to the mandatory sinking fund redemption schedule provided in Section 4.11(c)(i) of the Indenture shall be reduced by the principal amount of Bonds bearing interest at a Short Rate, an Annual Rate or a Flexible Pricing Long-Term Rate, as the case may be, which are acquired by the Authority and delivered to the Trustee for cancellation. In lieu of mandatory sinking fund redemption pursuant to the redemption schedule provided in Section 4.11(c)(i) of the Indenture, the Trustee may, at the request of the Authority, purchase in the open market an equal principal amount of Bonds bearing interest at a Fixed Rate of the Maturity and interest rate to be redeemed at prices not exceeding the principal amount of the Bonds being purchased plus accrued interest, with such interest portion of the purchase price to be paid from the Fixed Rate Interest Account and the principal portion of such purchase price to be paid from the Fixed Rate Principal Account. The amount of Bonds bearing interest at a Fixed Rate to be redeemed on any date pursuant to the mandatory sinking fund redemption schedule provided in Section 4.11(c)(1) of the Indenture shall be reduced by the principal amount of Bonds bearing interest at a Fixed Rate of such Maturity and interest rate which are acquired by the Authority and delivered to the Trustee for cancellation. Redemption Fund. In the event of (i) moneys (other than pursuant to the Credit Facility) received by the Trustee when accompanied by directions that such moneys are to be paid into the Redemption Fund, (ii) a transfer of moneys from the Bond Reserve Fund to the Redemption Fund, (iii) moneys received pursuant to Section 6.10 of the Indenture concerning disposition of property, or (iv) a deposit with the Trustee of moneys received under the Credit Facility for redeeming Bonds, except as relating to the Bond Sinking Fund, such moneys shall be deposited in the Redemption Fund or, in the case of any such prepayment, receipt or deposit related to Bonds which bear interest at a Fixed Rate, in the Fixed Rate Redemption Account. Moneys received under the Credit Facility shall not be deposited in the Fixed Rate Redemption Account. Any amount derived from the Credit Facility to be deposited in the Redemption Fund shall be segregated from all other moneys in the Redemption Fund. On or prior to the Conversion Date with respect to a Bond,. payments of the redemption price of such Bond shall be paid, to the extent available from amounts deposited in the Redemption Fund (other than the Fixed Rate Redemption A-20 ® Account). The redemption price of Bonds which bear interest at a Fixed Rate shall be paid from amounts on deposit in the Fixed Rate Redemption Account. Moneys on deposit in the Redemption Fund shall be used first to make up any deficiencies existing in the Interest Fund and the Bond Sinking Fund (in the order listed) and second for the purchase or redemption of Bonds in accordance with the provisions of Article N of the Indenture, or to reimburse the Bank for drawings under the Credit Facility to pay the redemption price of the Bonds. Funds for the payment of the redemption price of the Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate in accordance with Article N of the Indenture shall be made from the following sources in the order of priority indicated: (a) Moneys received by the Trustee under the Credit Facility for redemption of the Bonds and transferred from the Revenue Fund to the Redemption Fund; and (b) Any other moneys furnished to the Trustee and available for such purposes. On or as soon as possible after each date on which the Bank has honored a drawing under the Credit Facility, after the redemption price of the Bonds has been paid with such drawing, the Trustee shall transfer from the Redemption Fund to the Bank an amount necessary to reimburse the Bank for such drawing under the Credit Facility to pay the redemption price of the Bonds. Bond Reserve Fund On the Closing Date, there shall be deposited in the Bond Reserve Fund an amount equal to the Bond Reserve Requirement for the Bonds then Outstanding. There shall be deposited into the Bond Reserve Fund (i) all moneys to be transferred to the Bond Reserve Fund from other Funds pursuant to Section 3.13 of the Indenture, (ii) all other moneys required to be deposited therein pursuant to the Indenture and (iii) all other moneys received by the Trustee (other than pursuant to the Credit Facility) when accompanied by directions that such moneys are to be paid into the Bond Reserve Fund. On or before May 15 and November 15 of each year, the Trustee shall determine the value of the amount on deposit in the Bond Reserve Fund as of the first Business Day in May or November, as appropriate, such value to be determined in accordance with the provisions of Section 3.13 of the Indenture concerning the investment of funds The Authority may at any time satisfy its obligations to fund the Bond Reserve Fund by depositing a Bond Reserve Credit Enhancement into the Bond Reserve Fund and may at any time substitute (i) cash or Permitted Investments for a Bond Reserve Credit Enhancement or (ii) a Bond Reserve Credit Enhancement for cash or Permitted Investments, so long as the amount on deposit in the Bond Reserve Fund after such substitution is not less than the Bond Reserve Requirement for the Bonds then outstanding. In calculating the amount in the Bond Reserve Fund, any Bond Reserve Credit Enhancement shall be valued at the amount available to be paid thereunder. Moneys in the Bond Reserve Fund shall be used by the Trustee solely for the payment of the principal of, premium, if any, and interest on the Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate or the Bank Rate or to reimburse the Bank for draws under the Credit Facility in the event moneys in the Interest Fund, Bond Sinking Fund or Redemption Fund are insufficient to make such payments when due or in the event moneys in the Fixed Rate Interest Account, Fixed Rate Principal Account or Fixed Rate Redemption Account are insufficient to make such payments when due with respect to Bonds bearing interest at a Fixed Rate, in either case whether on an Interest Payment Date, mandatory sinking fund redemption date, Maturity or otherwise; provided that such ® moneys may also be deposited in the Rebate Fund if necessary to enable the Authority to comply with Section 6.11 of the Indenture concerning tax covenants. At Maturity of the Bonds any moneys in the Bond Reserve Fund may be transferred to the Interest Fund, the Fixed Rate Interest Account, the Bond Sinking Fund and the Fixed Rate Principal Account to pay the principal of and interest on the Bonds or to reimburse the Bank for drawings under the Credit Facility with respect thereto, or may be deposited in the A-21 Rebate Fund if necessary to enable the Authority to comply the tax covenants of the Indenture. Upon the • occurrence of an Event of Default under the Indenture and the acceleration of the Bonds, any moneys in the Bond Reserve Fund, after any transfer to the Rebate Fund so as to enable the Authority to comply with Section 6.11 of the Indenture shall be transferred by the Trustee to the Interest Fund and the Fixed Rate Interest Account, as applicable, and with respect to any moneys in excess of the amount required to be transferred to the Interest Fund and the Fixed Rate Interest Account, to the Bond Sinking Fund and the Fixed Rate Principal Account, as applicable. In the event of the redemption of the Bonds in whole or upon making provision for the payment of the Bonds in whole, any moneys in the Bond Reserve Fund shall, at the direction of the Authority, be transferred (i) to the Rebate Fund so as to enable the Authority to comply with Section 6.11 of the Indenture, (ii) to the Redemption Fund and the Fixed Rate Redemption Account to pay the redemption price of the Bonds or to reimburse the Bank for drawings under the Credit Facility to pay the redemption price of the Bonds, or (iii) to an escrow fund established in connection with the provision for payment of the Bonds pursuant to Article X of the Indenture. Unless otherwise specified in the Indenture, all such moneys shall be transferred to the Interest Fund and the Fixed Rate Interest Account, to the Bond Sinking Fund and the Fixed Rate Principal Account or to the Redemption Fund and Fixed Rate Redemption Account, as the case may be, pro rata, based upon the amount of outstanding Bonds (A) bearing interest at a Short Rate, an Annual Rate, and a Flexible Pricing Long-Term Rate and (B) bearing interest at a Fixed Rate. If, at any time, the Bond Reserve Fund is not funded at the Bond Reserve Requirement by December 2 of each year, the Trustee shall notify the Town Manager of any deficiency and, pursuant to the Replenishment Resolution, the Town Council has agreed to consider but is not obligated to, replenish the Bond Reserve Fund immediately thereafter. Prior to any request to the Town to replenish the Bond Reserve Fund, Revenues of the Authority shall be deposited into the Bond Reserve Fund to the extent available and as provided the Indenture. While the Town Council has agreed to consider funding the Bond Reserve Fund so that it will be funded at the Bond Reserve Requirement, the Town Council's decision not to so fund the Bond Reserve Fund shall not constitute an Event of Default under the Indenture. In addition, any Town replenishment of the Bond Reserve Fund shall constitute a loan from the Town to the Authority, to be repaid in accordance with the Cooperation Agreement. The Trustee shall provide notice to the Bank and the Remarketing Agent if the balance of the Reserve Fund does not equal or exceed the Bond Reserve Requirement as of December 2 of each year and as of the succeeding January 31. Rebate Fund There shall be deposited into the Rebate Fund amounts transferred from the Revenue Fund and the Bond Reserve Fund as required to comply with Section 148(f) of the Code. In addition, notwithstanding any other provision of the Indenture, upon the Written Request of the Authority, any investment income or other gain on moneys in any of the Funds may be transferred to the Rebate Fund to enable the Authority to satisfy the requirements of Section 148(f) of the Code. Moneys in the Rebate Fund shall be paid to the United States in the amounts and at the times required by the Code. Any excess moneys contained in the Rebate Fund shall, at the written direction of the Authority, be transferred to the Interest Fund and the Bond Sinking Fund. Upon payment of all amounts due to the United States pursuant to Section 148 of the Code, any moneys remaining in the Rebate Fund shall be paid by the Trustee to the Authority. Bond Purchase Fund The Bond Purchase Fund shall be maintained so long as any Bonds are outstanding which have not been converted to a Fixed Rate. There shall be deposited into the Bond Purchase Fund from • time to time the following: A-22 (a) the moneys received upon the remarketing of Tendered Bonds to any Person pursuant to the Remarketing Agreement (other than Tendered Bonds sold to the Authority); (b) the moneys received from the underwriter or purchaser (other than the Authority) of Tendered Bonds upon the conversion of the interest rate thereon to a Fixed Rate; (c) moneys received by the Trustee as proceeds of a drawing made pursuant to the Credit Facility to be applied to pay the purchase price of Tendered Bonds and transferred from the Revenue Fund to the Bond Purchase Fund; and (d) moneys received by the Trustee from the Authority to the extent that moneys obtained pursuant to (a), (b) or (c) above are insufficient on any date to pay the purchase price of Tendered Bonds. Any amounts received by the Trustee for deposit in the Bond Purchase Fund which do not constitute Available Moneys when paid shall not be commingled with any other moneys held by the Trustee until such time as they constitute Available Moneys. Any amount derived from the Credit Facility to be deposited in the Bond Purchase Fund shall be segregated from all other moneys in the Bond Purchase Fund. Moneys in the Bond Purchase Fund shall be held in trust exclusively for the payment of the purchase price of Tendered Bonds; provided, however under no circumstances shall proceeds of a drawing made pursuant to the Credit Facility be used to purchase Authority Bonds and provided further that any excess moneys contained in the Bond Purchase Fund shall be paid by the Trustee to the Bank to the extent any amounts are owed to the Bank under the Credit Agreement. Moneys on deposit in the Bond Purchase Fund shall not be invested. Amounts held to pay the purchase price for more than six years shall be applied in the same manner as provided under Section 13.10 of the Indenture concerning unclaimed money with respect to unclaimed payments of principal and interest. Expense Fund Moneys on deposit in the Expense Fund shall be disbursed by the Trustee, at the direction of the Authority, to pay all Issuance Expenses. When the Authority certifies to the Trustee that all Issuance Expenses have been paid, the Trustee shall transfer the balance in the Expense Fund to the Project Fund to pay the Urban Renewal Project Costs. Project Fund There shall be deposited to the Project Fund the proceeds of the Series 2008 Bonds specified in Section 2.07 of the Indenture. The Authority may thereafter deposit amounts in the Project Fund at such times and in such amounts as it may elect. At the direction of the Authority, the Trustee may establish accounts within the Project Fund as necessary to facilitate the administration thereof. Amounts on deposit in the Project Fund shall be disbursed by the Trustee to pay the Urban Renewal Project Costs upon receipt of a requisition signed by the Authority Representative (i) stating with respect to each disbursement to be made: (1) the requisition number, (2) the name and address of the Person to whom payment is due, (3) the amount to be disbursed and (4) that each obligation mentioned therein has been properly incurred, constitutes an Urban Renewal Project Cost and is a proper charge against the Project Fund and has not been the basis of any previous disbursement; (ii) specifying in reasonable detail the nature of the obligation; and (iii) accompanied by a bill or statement of ® account for such obligation; provided, however, that no bill or statement of account shall be required for the requisition of any amount for payment of the day to day operating costs incurred in the administration of the Authority. In the event the Project Fund does not contain sufficient funds to pay the amount requested in any requisition, no, payment shall be made from the Project Fund. A-23 Upon completion of the Urban Renewal Project, there shall be delivered to the Trustee a certificate signed by the Authority Representative stating that except for amounts retained by the Trustee for any amount of the Urban Renewal Project Costs not then due and payable, (i) the Urban Renewal Project has been completed in accordance with the plans and specifications therefor, and all labor, services, materials and supplies used in connection with the Urban Renewal Project have been paid and the Urban Renewal Project conforms with all applicable zoning, planning and building regulations and is suitable and sufficient for efficient operation, and (ii) all other facilities necessary in connection with the Urban Renewal Project have been acquired, constructed and installed in accordance with the plans and specifications therefor and all costs and expenses incurred in connection therewith have been paid. Notwithstanding the foregoing, such certificate shall be and shall state that it is given without prejudice to any right of the Authority against third parties which exist at the date of such certificate or which may subsequently come into being. Upon receipt of such certificate the Trustee shall retain in the Project Fund an amount necessary for the payment of the Urban Renewal Project Costs not then due and payable (as set forth in such certificate). All other amounts (including investment earnings earned pursuant to the provisions of Section 3.13 of the Indenture) remaining in the Project Fund after completion of the Project and after payment of the Urban Renewal Project Costs then due and payable, shall be transferred to (i) the Bond Reserve Fund to such extent as shall not cause the amount in the Bond Reserve Fund to exceed the Bond Reserve Requirement and (ii) the Bond Sinking Fund to the extent of any remaining balance of such moneys to be applied against the next principal payment or payments coming due on the Series 2008 Bonds. Notwithstanding any other provision of the Indenture other than Sections 3.13 and 10.01 of the Indenture (concerning Investment of Funds and Defeasance), moneys in the Project Fund shall not be used for any purpose other than as specified in the Indenture. Non-Presentment of Tendered Bonds If funds sufficient to pay the purchase price of Tendered Bonds are held in the Bond Purchase Fund and such Tendered Bonds are not presented for purchase, the Trustee shall segregate and hold such funds in trust without liability for interest thereon, for the benefit of, and subject to a security interest in favor of, the Owners of such Tendered Bonds who shall, except as provided in the last paragraph of the previous section, thereafter be restricted exclusively to such funds for the satisfaction of any claim of whatever nature on their part under the Indenture or on, or with respect to, said Tendered Bonds. Unclaimed Moneys Any moneys deposited with the Trustee by the Authority in accordance with the terms and provisions of the Indenture in order to pay the principal of or interest on a Bond, and remaining unclaimed by the Owner of the Bond for four years after the Maturity Date thereof or redemption or the Interest Payment Date of the Bonds as the case may be, shall be repaid by the Trustee to the Authority; and thereafter the Owner of the Bond shall be entitled to look only to the Authority for payment thereof. Investment of Funds r 1 Subject to the limitations provided in this Section, upon the oral direction of the Authority Representative (confirmed in writing), moneys on deposit in the Funds shall be invested in Permitted Investments (i) with respect to the Revenue Fund, Interest Fund, Bond Sinking Fund, Redemption Fund, Project Fund and Expense Fund, maturing in the amounts and at the times necessary to provide funds to make the payments to which such moneys are applicable as determined by the Trustee, and (ii) with respect to the Rebate Fund, maturing in the amounts and at the times necessary to provide funds to make payments to the United States of America from the Rebate Fund at the times estimated by the Authority. Moneys on deposit in the Bond Reserve Fund, upon the oral direction of the Authority A-24 ® Representative (confirmed in writing), shall be invested in (i) Permitted Investments which mature in not more than twelve (12) months from the date of purchase, or (ii) obligations of the type described in subparagraphs (h), (1) and (n) of the definition of "Permitted Investments" which permit draws of amounts invested without penalty at any time for purposes of complying with the provisions of this Section, or (iii) any other Permitted Investment approved in writing by the Bank. Moneys on deposit in the Flexible Pricing Short-Term Fund, amounts in the Bond Purchase Fund, and all drawings on the Credit Facility shall be held uninvested. The Trustee shall sell and reduce to cash a sufficient portion of such investments whenever the cash balance in a Fund or the Rebate Fund is insufficient for the purposes thereof. The Trustee, when authorized by the Authority, may trade with itself in the purchase and sale of securities for such investment; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained herein and in the Tax Compliance Certificate. The Trustee shall not be liable or responsible for any loss resulting from any such investments. In computing for any purpose under the Indenture the amount in any Fund on any date, the value of any investments shall be calculated as follows: (1) the Trustee, using a recognized pricing service, will determine the market value. If no price is available, the Trustee shall be authorized to price any investment by contacting any dealer designated as a "primary dealer" by the Federal Reserve Bank of New York and relying upon any price quoted by such "primary dealer" as if it were quoted by a recognized pricing service or Trustee may price such investment in accordance with the methodology utilized by the Trustee for such purpose in the ordinary course of its business. (2) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; and ® (3) as to any investment not specified above: the value thereof established by prior agreement between the Authority and the Trustee and, if a Credit Facility is in effect, the Bank. Any moneys in any Fund may be commingled with any moneys in any other Fund for investment purposes; provided that (i) moneys derived from the Credit Facility shall not be commingled with any other moneys, (ii) moneys in the Bond Purchase Fund which are Available Moneys shall not be commingled with moneys which are not Available Moneys and (iii) moneys in the Rebate Fund shall not be commingled with any other moneys. Any investments shall be held by or under the control of the Trustee and shall be deemed at all times a part of the Fund or the Rebate Fund from which the investment was made. Any loss resulting from such investments shall be charged to such Fund or the Rebate Fund. Any interest or other gain from any Fund or the Rebate Fund from any investment or reinvestment thereof shall be allocated and transferred as follows: Except as provided above, any interest or other gain as a result of any investments or reinvestments of moneys in any Fund shall be retained in the respective Fund unless a deficiency exists in the Bond Reserve Fund, in which case such interest or other gain shall be paid into the Bond Reserve Fund forthwith. Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Flexible Pricing Short-Term Fund shall be credited to the Flexible Pricing Short-Term Fund. Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Bond Reserve Fund shall be credited to the Bond Reserve Fund if the amount therein is ® less than the Bond Reserve Requirement with respect to the Bonds then outstanding. If the amount in the Bond Reserve Fund at that time is equal to or greater than the Bond Reserve Requirement with respect to the Bonds then outstanding, such interest or other gain realized shall be paid into the Interest Fund at least semiannually. A-25 Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Rebate Fund shall be credited to the Rebate Fund. The Trustee shall furnish the Authority with monthly reports of all moneys invested and all Permitted Investments held by the Trustee pursuant to the Indenture, which reports shall be in a form satisfactory to the Authority. In the event that the Authority fails to direct the Trustee as to investments as required herein, the Trustee shall invest any such funds in obligations of the type described in subparagraphs (i) of the definition of "Permitted Investments." Drawings under the Credit Facility In the Indenture, the Authority authorizes and directs the Trustee to draw on the Credit Facility pursuant to its terms, in the amounts and at the times necessary to pay the principal of and interest on the Bonds and the purchase price of Tendered Bonds as described in this section; provided, however, that the Trustee shall not draw on the Credit Facility to pay the principal of or interest on any Bank Bonds. During the term of the Credit Facility, the Trustee shall draw moneys under the Credit Facility in accordance with the terms thereof and in the time and manner required by Article W of the Indenture (i) to pay when due (whether on an Interest Payment Date or by reason of Maturity, redemption, acceleration or otherwise) the principal of and interest on the Bonds, other than interest on Bonds in the Flexible Pricing Short-Term Mode, and (ii) to the extent moneys described in subsections (a) and (b) of Section 3.10 of the Indenture are not available therefore and on deposit with the Trustee at the time of such draw, to pay when due the purchase price of Tendered Bonds (other than the interest portion of the purchase price of Tendered Bonds in the Flexible Pricing Short-Term Mode). Notwithstanding any provision to the contrary which may be contained in the Indenture, (i) in computing the amount to be drawn under the Credit Facility on account of the payment of the principal of or interest on the Bonds and the purchase price of Tendered Bonds, the Trustee shall exclude any such amounts in respect of any Bonds bearing interest at a Fixed Rate or which are Bank Bonds or Authority Bonds on the date such payment is due, and (ii) amounts drawn by the Trustee under the Credit Facility shall not be applied to the payment of the principal of or interest on any Bonds or the purchase price of Tendered Bonds which bear interest at a Fixed Rate or are Bank Bonds or Authority Bonds on the date such payment is due. During the term of the Credit Facility, on the Business Day prior to the first Business Day of each month on which any Bond (other than a Bank Bond or an Authority Bond) bears interest at a Flexible Pricing Short-Term Rate, the Trustee shall draw moneys under the Credit Facility in the amount of the interest which has accrued and not been paid on such Bond bearing interest at a Flexible Pricing Short-Term Rate from the first Business Day of the immediately preceding month or, if such Bond was not in the Flexible Pricing Short-Term Mode on such date, from the Rate Change Date which was the first day of the Rate Period for such Bond bearing interest at such Flexible Pricing Short-Term Rate. In addition, the Trustee shall draw moneys under the Credit Facility on (A) on the Business Day prior each Interest Payment Date (if other than the first Business Day of a month) for each Bond (other than a Bank Bond or Authority Bond) in the Flexible Pricing Short-Term Mode and (B) on the Business Day prior to any other date when interest on Bonds in a Flexible Pricing Short-Term Mode is due (whether by reason of redemption, tender, acceleration or otherwise) in the amount of interest accrued on such Bond bearing interest at a Flexible Pricing Short-Term Rate from the first Business Day of such month, or if such Bond was not in the Flexible Pricing Short-Term Mode on such date, from the Rate Change Date which was the first day of the Rate Period for such Bond bearing interest at such Flexible Pricing Short- Term Rate. There shall be credited against the amounts required to be drawn under the Credit Facility pursuant to this subsection all investment income and other gain earned on amounts contained in the • Flexible Pricing Short-Term Fund and then available to pay interest on the Bonds in the Flexible Pricing Short-Term Mode. A-26 11 Repayment of Moneys from the Funds Any amounts remaining in the Funds after payment, or provision of payment in accordance with the Indenture, in full of the Bonds, the fees and expenses of the Trustee and all other amounts required to be paid under the Indenture shall be paid immediately to the Bank to the extent of any indebtedness of the Authority to the Bank under the Credit Agreement and shall be applied by the Bank in accordance with the provisions of the Credit Agreement, and after payment of all such indebtedness, to the Authority. Any amounts remaining in the Rebate Fund after payment in full of the Bonds and after payment in full of all amounts due to the United States of America under Section 148(f) of the Code shall be paid to the Authority; provided, however, that if the amounts referred to in the first sentence of this Section are not sufficient to pay the full indebtedness of the Authority to the Bank under the Credit Agreement, any amounts remaining in the Rebate Fund after payment of the amounts referred to above (other than payments to the Authority) shall be promptly paid by the Trustee to the Bank for the account of the Authority and shall be applied by the Bank in accordance with the provisions of the Credit Agreement. Remarketing of Bonds Upon the delivery or deemed delivery of Tendered Bonds by any Owners thereof in accordance with the provisions of the Indenture (including the delivery or deemed delivery of Authority Bonds), the Remarketing Agent shall offer for sale and use its best efforts to remarket such Tendered Bonds pursuant to the Remarketing Agreement, any such remarketing to be made on the date on which such Tendered Bonds are to be purchased, at a price equal to 100% of the principal amount thereof plus ® accrued interest, if any. If Bonds are delivered or deemed delivered for purchase under Section 4.01(a) of the Indenture, the Remarketing Agent shall give telephonic notice to the Trustee, the Authority and the Bank no later than 10:45 a.m., Eastern time, on the date on which such Bonds are to be so delivered or deemed delivered, of the aggregate principal amount of such Bonds to be purchased on such date which it has reasonable grounds to expect will not be remarketed on such date. In addition, with respect to Bonds delivered or deemed delivered for purchase under Section 4.01(b) (purchase while Bonds bear interest at a Weekly Rate), 4.02 (purchase while Bonds bear interest at a Flexible Pricing Short-Term Rate), 4.03 (purchase on a stated termination date or substitution date), 4.04 (purchase while Bonds bear interest at a Flexible Pricing Long-Term Rate), 4.05 (purchase on any Adjustment Date), 4.06 (purchase on notice of certain events) and 4.07 (purchase of Tendered Bonds delivered to the Trustee) of the Indenture, the Remarketing Agent shall give telephonic notice to the Trustee, the Authority and the Bank no later than 4:30 p.m., Eastern time, on the Business Day next preceding the date on which such Bonds are to be so delivered or deemed delivered, of the aggregate principal amount of such Bonds to be purchased on such date which it has reasonable grounds to expect will not be remarketed on such date. The Remarketing Agent shall deliver the proceeds of the remarketing of any of the Tendered Bonds to the Trustee no later than 12:45 p.m., Eastern time. The Remarketing Agent shall remarket any Bank Bonds prior to remarketing of any Tendered Bonds or Authority Bonds and shall remarket Bank Bonds and any Authority Bonds to the 40 extent and subject to the conditions set forth in the Indenture and in the Remarketing Agreement. Upon the remarketing of Bank Bonds or Authority Bonds, the Remarketing Agent shall immediately provide telephonic notice, promptly confirmed by telecopy or electronic mail, of such remarketing to the Trustee, the Authority and the Bank, and thereupon the Authority or the Trustee, whichever has possession of or beneficial interest in such Bonds, shall, subject to Section 4.09(a)(11) of the Indenture, immediately deliver A-27 or provide for transfer of beneficial interest in such Bonds to the Trustee for delivery to the purchasers thereof. In addition to all other requirements to be met before the remarketing of Bank Bonds, if the Bank Bonds have been purchased as a result of the purchase of Bonds pursuant to Section 4.03 (purchase on a Stated Termination Date or Substitution Date) or Section 4.06 (purchase on notice of certain events) of the Indenture, the Remarketing Agent shall not remarket any such Bank Bonds unless it shall have received an Opinion of Bond Counsel to the effect that the remarketing of the Bank Bonds will not adversely affect any exclusion of interest on the Bonds from gross income for federal income tax purposes under Section 103(a) of the Code to which the interest on the Bonds would otherwise be entitled. Delivery of Purchased Bonds and Remarketing of Bank Bonds Subject to Section 4.11 of the Indenture setting forth redemption dates and prices, Bonds remarketed by the Remarketing Agent pursuant to Section 4.08 of the Indenture (remarketing of Tendered Bonds by the Remarketing Agent) shall be delivered by the Trustee as directed by the Remarketing Agent by 3:30 p.m., Eastern time, on the date of purchase against payment therefor. The Trustee shall take all such actions as shall be necessary to remove Bank Bonds from the Book-Entry-Only System and to register such Bank Bonds in the name of the Bank. Bank Bonds shall be held by the Trustee on behalf, and for the benefit, of the Bank. At such time as all Bank Bonds have been remarketed such that no Bank Bonds remain Outstanding and the Trustee has received written notice from the Bank that the Credit Facility has been reinstated to its Commitment amount (as such term is defined in the Credit Agreement), the Trustee shall take all such actions as shall be necessary to return the Bonds to the Book-Entry-Only System. Once Bank Bonds have been remarketed and the Trustee has received written notice from the Bank that the Credit Facility has been fully reinstated, such Bank Bonds shall no longer be considered Bank Bonds under the Indenture. The Trustee shall take such actions as are necessary to draw or obtain funds under the Credit Facility in accordance with the Indenture. If surplus moneys from the Bank remain after the payment in full of all Tendered Bonds, the Trustee shall provide Immediate Notice to the Bank of the amount of funds made available by the Bank on such date which are not required for the payment of Tendered Bonds and shall immediately return such excess funds to the Bank. Additional Bonds So long as no Default or Event of Default has occurred and is at the time continuing under the Indenture, Additional Bonds may be issued, authenticated and delivered for the purpose of providing the Authority with funds for any lawful purpose of the Authority. The Additional Bonds of each such Series shall be authenticated by the Trustee and, upon payment to the Trustee of the proceeds of said sale of such Additional Bonds, such Additional Bonds shall be delivered by the Trustee to or upon the order of the original purchaser thereof, but only upon there being filed with the Trustee, Bank, such original purchaser, the Original Purchaser and the Authority: (a) original, executed counterparts of an indenture supplemental to the Indenture and a resolution supplementing or amending the Bond Resolution in order to cause the issuance of the Additional Bonds; (b) a Credit Facility issued by the Bank supporting the payment of the Additional Bonds and the purchase price of the Additional Bonds in an amount equal to the principal of the Additional Bonds plus such number of days of interest on the Additional Bonds as may be required by each Rating Agency rating the Additional Bonds; provided that no Credit Facility is required if all of the then Outstanding Bonds and the Additional Bonds bear interest at a Fixed Rate; provided, further, that the A-28 Initial Credit Facility Provider's consent shall be required in order to issue Additional Bonds bearing a Fixed Rate of interest if the Initial Credit Facility is outstanding at such time; (c) an Opinion of Bond Counsel to the effect that the issuance of the Additional Bonds and the execution thereof have been duly authorized, all conditions precedent to the delivery thereof have been fulfilled, and that the exclusion from gross income for federal income tax purposes of the interest on the Bonds will not be adversely affected by the issuance of the proposed Additional Bonds; (d) a certificate of the Authority Representative to the effect that the proceeds of the proposed Additional Bonds will be used for a permissible undertaking under the Indenture, the Urban Renewal Plan and the Act; (e) a certificate of the Authority Representative addressed to the Bank, the Trustee and the Original Purchaser establishing to the reasonable satisfaction of the Bank, the Trustee and the Original Purchaser that the Pledged Revenues for (i) the most recent Fiscal Year preceding the date of the issuance of such Additional Bonds for which audited financial statements are available, or (ii) any period of 12 consecutive calendar months out of the 18 calendar months next preceding the date of the issuance of such Additional Bonds were at least 125% of the Average Annual Debt Service of the combination of (1) the Bonds then Outstanding and (2) the Additional Bonds proposed to be issued; provided, however, that any Bonds to be refunded with the proceeds of any such Additional Bonds shall be excluded for purposes of such calculation; (f) a copy, duly certified by the Town Clerk of the Town, of a resolution adopted by the Town Council of the Town evidencing the agreement of the Town to the issuance of such ® Additional Bonds and further evidencing the intent of the Town to subordinate its claims for payment from the Authority to the payment of the Debt Service Requirement on the Additional Bonds being issued; (g) a written order to the Trustee by the Authority to authenticate and deliver the Additional Bonds to the original purchaser therein identified upon payment to the Trustee of a specified sum plus accrued interest; and (h) written evidence from each Rating Agency, if any, then providing a rating for the outstanding Bonds, that such rating or ratings will not be reduced or withdrawn as a result of the issuance of the proposed Additional Bonds. At such time as any Additional Bonds shall be issued, the Authority shall deposit or cause to be deposited in the Bond Reserve Fund an amount sufficient to make the amount on deposit in the Bond Reserve Fund equal to the Bond Reserve Requirement. Each Series of Additional Bonds issued pursuant the Indenture shall be equally and ratably secured under the Indenture with the Bonds and all other Series of Additional Bonds, if any, theretofore issued pursuant to the Indenture, without preference, priority or distinction of any such Bonds over any other thereof. Notwithstanding anything contained in the Indenture to the contrary, the Authority may issue or incur Subordinate Debt from time to time as determined by the Authority without the consent of or notice to the Registered Owners of the Bonds at the time Outstanding or any other Person. Subordinate Debt shall have no claim for payment upon the Trust Estate except for payments to be made pursuant to Section 3.03(b)(vii) of the Indenture. Payment of such Subordinate Debt shall be subordinate to payment of the Bonds, including the Bank Bonds, the Reimbursement Obligations and all other amounts owed under the Credit Agreement. A-29 The Authority shall comply with all requirements in the Credit Agreement with respect to the issuance of any Additional Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS--Additional Bonds" in this Official Statement for a description of the Credit Agreement requirements. General Covenants of the Authority In the Indenture, the Authority makes the following covenants, among others: Payment of Debt Service Requirement. The Authority covenants that it shall promptly pay the Debt Service Requirement on every Bond issued under the Indenture at the place, on the dates and in the manner provided herein and in said Bonds according to the true intent and meaning thereof. The principal of, premium, if any, and interest on the Bonds and the purchase price of Tendered Bonds and the purchase price of Tendered Bonds shall not constitute an indebtedness of Town, the State or any political subdivision thereof, and neither the Town, the State nor any political subdivision thereof shall be liable thereon. Further, the Bonds shall not constitute a debt or an indebtedness within the meaning of any constitutional, statutory or charter debt limitation or provision applicable to the Town. Performance of Covenants. The Authority shall faithfully perform at all times any and all covenants, undertakings, stipulations and provisions set forth in the Indenture, in any and every Bond executed, authenticated and delivered under the Indenture and in all of its proceedings pertaining thereto. Instruments of Further Assurance. The Authority shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such indentures supplemental thereto and such further acts, instruments and transfers as the Trustee, the Bank, or the Original Purchaser may. reasonably require for the better assuring, transferring, conveying, pledging, assigning and confirming unto the Trustee and the Bank all and singular the amounts pledged to the payment of the Debt Service Requirement on the Bonds. The Authority, except as specifically provided herein, shall not encumber or otherwise dispose of all or any part of the Trust Estate. Recording and Filing. The Trustee, on behalf of the Authority, will cause all financing statements related to the Indenture, and such other documents as may be necessary, in the opinion of counsel acceptable to the Trustee and the Authority, to be kept and filed in such manner and in such places as may be required by law in order to preserve and protect fully the security of the Owners of the Bonds and the Bank and the rights of the Trustee and the Bank under the Indenture; provided that (a) the Trustee may rely upon counsel acceptable to the Trustee for the preparation (in form and substance) and the filing of all initial financing statements relating to the Trust Estate, and all supplements thereto, and (b) on a date not more than 60 days prior to the termination of any such financing statement, the Trustee shall request that the Authority file all continuation statements necessary to continue the effectiveness of all financing statements that shall have been filed with respect to the Trust Estate; if the Trustee does not receive written confirmation that all such continuation statements have been duly filed before the date that is 30 days prior to the termination of any such financing statement, the Trustee shall file such continuation statements at the expense of the Authority. Inspection of Records. All books and records in the possession of the Authority relating to the Urban Renewal Project, the Urban Renewal Plan, the Pledged Revenues, the Cooperation Agreement and the Trust Estate shall at all reasonable times be open to inspection by such accountants or other agents as the Trustee, the Bank or the Original Purchaser may from time to time designate. List of Bondowners. The Trustee shall keep the registration records of the Authority as Bond Registrar, together with the principal amounts and numbers of such Bonds. At reasonable times and under reasonable regulations established by the Trustee (including with respect to the imposition of a reasonable fee), the registration records may be inspected and copied by the Authority, the Bank or the Registered Owners (or a designated representative thereof) of 15% or more in principal amount of Bonds A-30 then Outstanding, such Ownership and the authority of such designated representative to be evidenced to the satisfaction of the Trustee. Complete Urban Renewal Proiect, Amendment to Urban Renewal Plan; Compliance With Cooperation Agreement. The Authority covenants and agrees that the Authority shall diligently and in a sound and economical manner carry out and continue to completion, with all practicable dispatch, the Urban Renewal Project in accordance with its duty so to do under and in accordance with the Act, the Urban Renewal Plan and the Cooperation Agreement. The Urban Renewal Plan may be amended, but the Authority shall not request that an amendment be made unless the Authority shall have received an opinion of counsel to the Authority and reasonably acceptable to the Trustee, the Bank and the Original Purchaser to the effect that such amendment would not result in a failure of the Urban Renewal Plan, as so amended, to comply with the requirements of the Indenture or adversely and materially affect the security for the Bonds or the obligations to the Bank under the Indenture. The Authority covenants and agrees that the Authority shall comply with the Act and the terms and provisions of the Cooperation Agreement from time to time in effect, and shall promptly notify the Trustee and the Bank whenever the Authority shall have reason to believe that any material provision of the Cooperation Agreement shall have been violated by the Authority or any other party thereto. Books and Accounts; Financial Statements. The Authority covenants and agrees that it shall at all times keep, or cause to be kept, proper and current books and accounts (separate from all other records and accounts) in which complete and accurate entries shall be made of all transactions relating to the Urban Renewal Project, Pledged Revenues, Trust Funds and other funds and accounts relating to the Urban Renewal Project, and shall prepare within 180 days after the close of each Fiscal Year a complete ® financial statement or statements for such year in reasonable detail covering the Urban Renewal Project, Pledged Revenues, Trust Funds and other funds or accounts, certified by a certified public accountant or firm of certified public accountants selected by the Authority, and shall furnish a copy of such statement or statements to the Trustee, the Original Purchaser, and the Bank and to any Registered Owner upon written request therefor. Eminent Domain Proceedings. The Authority covenants and agrees that if all or any part of the Urban Renewal Project should be taken from it, by eminent domain proceedings or other proceedings authorized by law, for any public or other use under which the property will be exempt from ad valorem property taxes, the net proceeds realized by the Authority therefrom shall be deposited in the Revenue Fund. Disposition of Property. The Authority covenants and agrees that it shall not dispose of more than 15% of the land area in the Urban Renewal Project Area (except property not currently on the tax rolls or which is shown in the Urban Renewal Plan as planned for public use, including without limitation property to be used for public streets, public off-street parking, water, sewage or drainage facilities, parks, easements or rights of way for public utilities or other similar uses) to public bodies or other Persons or entities whose property is exempt from ad valorem property taxes, unless the Authority shall receive written consent of the Bank so long as the Credit Facility is in effect, or, if the Credit Facility is not in effect, an opinion of Independent Counsel to the effect that such disposition would not substantially impair the security for the Bonds or the obligations to the Bank under the Indenture or under the Credit Agreement or the rights of the Registered Owners of the Bonds or the Bank. Protection of Security and Rights of Bondowners, Tax Covenants. The Authority covenants and agrees to preserve and protect the security of the Bonds and the obligations to the Bank under the Indenture or under the Credit Agreement and the rights of the Registered Owners and the Bank and to defend their rights under all claims and demands of all Persons. Without limiting the generality of the foregoing, the Authority covenants and agrees to contest or cause to be contested by court action or otherwise (a) any claim made in any action or proceeding to which the Authority is a party that the Act is A-31 unconstitutional or that the Pledged Revenues or Trust Funds pledged under the Indenture cannot be paid to or by the Authority for the debt service on the Bonds or payment of amounts due under the Credit Agreement, or any other action affecting the validity of the Bonds or the obligations of the Bank under the Indenture or under the Credit Agreement or diluting the security therefor, and (b) any assertion by the United States of America or any department or agency thereof or any other Person that the interest received by the Bondowners is includible in gross income for federal income tax purposes. The Authority covenants and agrees to knowingly take no action which would result in (i) the Pledged Revenues being withheld from the Trustee, or (ii) the interest received by the Registered Owners on the Bonds becoming includible in gross income for federal income tax purposes. The Authority covenants for the benefit of the Registered Owners of the Bonds that it will not take any action or omit to take any action with respect to the Bonds, the proceeds thereof, any other funds of the Authority or any facilities financed or refinanced by the Bonds if such action or omission (i) would cause the interest on the Bonds to lose its exclusion from gross income for federal income tax purposes under Section 103 of the Code, (ii) would cause interest on the Bonds to lose its exclusion from alternative minimum taxable income as defined in Section 55(b)(2) of the Code except to the extent such interest is required to be included in the adjusted net book income and adjusted current earnings adjustments applicable to corporations under Section 56 of the Code in calculating corporate alternative minimum taxable income, or (iii) would subject the Authority to any penalties under Section 148 of the Code. The foregoing covenant shall remain in full force and effect notwithstanding the payment in full or defeasance of the Bonds until the date on which all obligations of the Authority in fulfilling the above covenant under the Code and the law of the State have been met. In addition, the Authority covenants that its direction of investments pursuant to Article III of the Indenture shall be in compliance with the procedures established by the Federal Tax Exemption Certificate to the extent required to comply with its covenants contained in the foregoing provisions and, to the extent required to comply with its covenants contained in the foregoing provisions, the investment earnings on any moneys held by the Trustee or the Authority under the Indenture, or other Pledged Revenues, or other legally available moneys of the Authority, shall be deposited from time to time in the Rebate Fund for timely payment of all amounts due and owing to the United States Treasury. The Authority shall provide to the Trustee at least annually from the date of delivery of the Bonds a certificate of the Authority Representative to the effect that (i) all requirements of the Indenture with respect to the Rebate Fund have been met on a continuing basis, (ii) the proper amounts have been and are on deposit in the Rebate Fund, and (iii) timely payment of all amounts due and owing to the United States Treasury have been made. If the certifications required by either (ii) or (iii) above cannot be made, the certificate shall so state and shall be accompanied either by Pledged Revenues or other legally available moneys of the Authority, together with a direction to the Trustee to either deposit such moneys to the Rebate Fund or to pay such moneys over to the United States Treasury, as appropriate, or by directions to the Trustee to transfer investment income available in any fund held by the Trustee under the Indenture to the Rebate Fund or to the United States Treasury, as appropriate. The covenants set forth above concerning federal tax matters shall apply only to those Bonds which are issued with the intention and expectation that interest payable thereon shall be excludible from gross income for federal income tax purposes. Maintenance of Existence. The Authority covenants and agrees to take no action to terminate its existence as a public body corporate and politic so long as any Bonds remain Outstanding. Designation of Trustee as Bond Registrar and Paving Agent Designation of Anv Additional Paving Agents. Under the Indenture, the Trustee is designated and agrees to act as Bond Registrar and Paying Agent for and in respect to the Bonds. The Authority covenants and agrees to cause the necessary arrangements to be made through the Trustee and to be thereafter continued for the designation of any additional Paying Agents as may from time to time be designated under the Indenture A-32 ® and for the making available of funds under the Indenture for the payment of such of the Bonds as shall be presented when due. Credit Facility. (a) The Authority covenants and agrees that at all times prior to the date when all outstanding Bonds shall bear interest at a Fixed Rate the Authority will maintain a Credit Facility in full force and effect. (b) The Credit Facility shall be reduced in whole or in part, as provided in the Credit Agreement, upon the receipt by the Bank of a Written Request from the Authority Representative requesting that a specified amount of the Credit Facility be reduced. The Authority shall not request a reduction in the Credit Facility to an amount less than the principal amount of the Bonds outstanding which bear interest at other than a Fixed Rate plus interest thereon in an amount equal to not less than (i) the number of days interest on all outstanding Bonds as may be required by each Rating Agency then maintaining a rating on the Bonds to continue its rating, in each case computed at the Maximum Interest Rate unless the Authority has deposited a Substitute Credit Facility with the Trustee in accordance with the terms of this Section. (c) Prior to the date on which all outstanding Bonds bear interest at a Fixed Rate, a Substitute Credit Facility may become effective on any Business Day, which shall be a Substitution Date. The Authority shall give written notice to the Trustee and the Bank that it intends to deliver a Substitute Credit Facility (which notice shall include the name of the Substitute Bank) at least 25 days prior to a proposed Substitution Date. The Authority Representative shall cause a draft of any Substitute Credit Facility in substantially final form and a commitment letter with respect thereto, together with written evidence from each Rating Agency rating the Bonds prior to the Substitution Date of the rating on the Bonds after the Substitution Date, to be delivered to the Trustee, with a copy to the Authority, not less than 15 days prior to the proposed Substitution Date. On each Substitution Date the Authority and the Trustee shall also receive (i) an opinion of counsel for the Substitute Bank regarding the enforceability of the Substitute Credit Facility in substantially the form delivered to the Trustee upon execution and delivery of the Credit Facility then in effect, and (ii) an Opinion of Bond Counsel to the effect that the substitution of the Credit Facility then in effect will not adversely affect the validity of the Bonds or any exclusion of interest on the Bonds from gross income for federal income tax purposes under Section 103(a) of the Code to which the interest on the Bonds would otherwise be entitled. Any amounts due and owing the existing Bank under a Credit Agreement shall be shall be paid prior to any Substitution Date. (d) On any Substitution Date on which a Substitute Credit Facility becomes effective in accordance with the provisions of this Section, the Trustee and the Authority upon the Written Request of the Authority Representative shall consent to the cancellation of the Credit Facility then in effect, and the Trustee shall return such cancelled Credit Facility to the Bank; provided, however, that the Trustee shall not surrender the existing Credit Facility until all draws under such existing Credit Facility have been honored. (e) Immediate Notice shall be given by the Trustee to the Bank or Substitute Bank, the Authority and each Rating Agency then maintaining a rating on the Bonds if no satisfactory Substitute Credit Facility shall be furnished to the Trustee in accordance with this Section on or prior to the Stated Termination Date of the then current Credit Facility. (f) Upon the Stated Expiration Date of the Credit Facility and payment of all amounts due under or cancellation of the Credit Facility pursuant to its terms, the Trustee shall immediately return the Credit Facility to the Bank or Substitute Bank in accordance with the terms thereof. Rule 15c2-12 Compliance. The Authority covenants and agrees to enter into a written agreement or contract constituting an undertaking to provide ongoing disclosure as required by Securities A-33 and Exchange Commission Rule 15c2-12 (17 C.F.R. § 240.15c2-12) on or before the Conversion Date, for the benefit of the Owners of the 2008 Bonds bearing interest at a Fixed Rate, an Annual Rate or a Flexible Pricing Long-Term Rate with an interest rate period in excess of 270 days. Events of Default and Remedies the Indenture: Events of Default. Each of the following events is declared an "Event of Default" under (a) payment of any installment of interest payable on any of the Bonds (other than Authority Bonds) shall not be made when the same shall become due and payable; or (b) payment of the principal of or the premium, if any, payable on any of the Bonds (other than Authority Bonds) shall not be made when the same shall become due and payable, either at Maturity, by proceedings for redemption, upon acceleration, through failure to make any payment to any Fund under the Indenture or otherwise; or (c) payment of any amount due in respect of the purchase price of Tendered Bonds shall not be made when the same shall become due and payable; or (d) the Authority shall for any reason be rendered incapable of fulfilling its obligations under the Indenture; or (e) an order or decree shall be entered appointing a receiver, receivers, custodian or custodians for any of the revenues of the Authority, or approving a petition filed against the Authority seeking reorganization of the Authority under the federal bankruptcy laws or any other similar law or statute of the United States of America or any state thereof, or if any such order or decree, having been entered without the consent or acquiescence of the Authority, shall not be vacated or discharged or stayed on appeal within 60 days after the entry thereof, or (f) any proceeding shall be instituted, with the consent or acquiescence of the Authority, or any plan shall be entered into by the Authority, for the purpose of effecting a composition between the Authority and its creditors or for the purpose of adjusting the claims of such creditors pursuant to any federal or State statute now or hereafter enacted, if the claims of such creditors are under any circumstances payable from any part or all of the Trust Estate, including the Revenues; or (g) the Authority (i) files a petition in bankruptcy or under Title 11 of the United States Code, as amended, (ii) makes an assignment for the benefit of its creditors, (iii) consents to the appointment of a receiver, custodian or trustee for itself or for the whole or any part of the Trust Estate, including the Revenues or (iv) is generally not paying its debts as such debts become due; or (h) under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property, and such custody or control shall not be terminated within 30 days from the date of assumption of such custody or control; or (i) the Bank gives notice that an "Event of Default" as set forth in Section 6.1 of the Credit Agreement shall have occurred and directing the acceleration of the Bonds; or 0) the Authority shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds, the Cooperation Agreement or in the Indenture to be performed on the part of the Authority, and such default shall continue for 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority by the Trustee; provided that the Trustee may give such notice in A-34 its discretion and shall give such notice at the written request of the Bank, or the Owners of not less than 10% in aggregate principal amount of the Bonds then outstanding under the Indenture with the consent of the Bank; provided that if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Authority to remedy such default within such 30-day period shall not constitute a default under the Indenture if the Authority shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch. If on the date payment of principal of or interest on the Bonds is due, or if on the date on which payment of the purchase price of Tendered Bonds is to be made, sufficient moneys are not available to make such payment, the Trustee shall give telephonic notice of such insufficiency to the Authority and the Bank. Acceleration. (i) Upon the occurrence of an Event of Default specified in subsection (d), (e), (f), (g), (h), (i) or 0) above (of which the Trustee shall be deemed to have notice pursuant to the provisions of Section 8.01(g) of the Indenture) the Trustee shall upon the request of the Bank, without any action on the part of the Bondholders, or (ii) upon the occurrence of an Event of Default specified in subsection (d), (e), (f), (g), (h), (i) or 0) above (of which the Trustee shall be deemed to have notice pursuant to the provisions of Section 8.01(g) of the Indenture) and the written request of the Owners of not less than 25% in aggregate principal amount of the Bonds then outstanding under the Indenture (exclusive of Authority Bonds and upon being indemnified to its satisfaction as provided in Section 8.01(k) of the Indenture), the Trustee shall, with the prior written consent of the Bank, or (iii) upon the occurrence and continuance of an Event of Default specified in subsection (a), (b) or (c) above, the ® Trustee shall, with the prior written consent of the Bank, by notice in writing delivered to the Authority not later than the next Business Day succeeding such request, request and consent or Event of Default, as the case may be, declare the entire principal amount of the Bonds then outstanding under the Indenture and the interest accrued thereon immediately due and payable, and the entire principal and interest shall thereupon become and be immediately due and payable, subject, however, to the provisions of Section 7.09 of the Indenture with respect to waivers of Events of Default. The Trustee shall give notice thereof by first class mail, postage prepaid, to all Owners of outstanding Bonds; provided, however, that the giving of such notice shall not be considered a precondition to the Trustee declaring the entire principal amount of the Bonds then outstanding and the interest accrued thereon immediately due and payable. The Bonds shall cease to accrue interest on the date of acceleration whether or not they are paid on such date. Immediately following a declaration of an acceleration pursuant, the Trustee shall draw upon the Credit Facility in accordance with its terms in an amount which equals the total amount of principal of and interest on the Bonds coming due and payable; provided that no such draw shall be made to pay any Bank Bond, Authority Bond or Bonds bearing interest at a Fixed Rate. All amounts derived by the Trustee with respect to the Credit Facility shall be deposited in the Revenue Fund upon receipt thereof by the Trustee, shall be transferred by the Trustee to the Interest Fund to the extent required to pay the interest on the Series 2008 Bonds or the Bond Sinking Fund to the extent required to pay the principal of the Series 2008 Bonds, shall not be commingled with any other moneys and shall be applied as provided in the Indenture. A-35 Remedies; Rights of Bondholders. Upon the occurrence and continuance of any Event of Default under the Indenture and the receipt of written consent of the Bank, the Trustee may, without any action on the part of the Bondholders, or upon the occurrence and continuance of any Event of Default under the Indenture and the receipt of written consent of the Bank and the written request of the Owners of not less than 25% in aggregate principal amount of the Bonds then outstanding under the Indenture (exclusive of Authority Bonds and upon being indemnified to its satisfaction as provided in Section 8.01(k) of the Indenture) the Trustee shall: (a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Owners under, and require the Authority, the Bank to carry out any agreements with or for the benefit of the Owners of Bonds and to perform its or their duties under the Act, the Credit Facility, the Credit Agreement and the Indenture; (b) bring suit upon the Bonds; (c) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Owners of Bonds, but any such judgment against the Authority shall be enforceable only against the Trust Estate and no recovery of any judgment by the Trustee shall in any manner or to any extent affect the lien of the Indenture or any rights, powers or remedies of the Trustee or the Bank under the Indenture, or any lien, rights, powers or remedies of the Owners of the Bonds or the Bank, but such lien, rights, powers and remedies of the Trustee or the Bank and of the Bondholders shall continue unimpaired as before; provided, however, that the Trustee shall have the right to decline to comply with any such request or direction if the Trustee shall be advised by counsel (who may be its own counsel) that the action so requested may not lawfully be taken or the Trustee in good faith shall determine that such action would be unjustly prejudicial to the Owners of Bonds not parties to such request. • Upon the occurrence and continuance of any Event of Default under the Indenture and upon the request of the Bank, the Trustee shall give Immediate Notice of the mandatory tender of the Bonds pursuant to the Indenture. Upon the filing of a bill in equity or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bondholders, the Trustee shall be entitled as a matter of right to the appointment of a receiver or receivers of the Trust Estate, and of the rents, revenues, income, product and profits thereof, pending such proceedings, but, notwithstanding the appointment of any receiver, trustee or other custodian, the Trustee shall be entitled to the possession and control of any cash, securities or other instruments at the time held by, or payable or deliverable under the provisions of the Indenture to, the Trustee. No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Owners of Bonds or the Bank) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or the Bank or to the Owners of Bonds now or hereafter existing at law or in equity or by statute; provided, however, that any conditions set forth herein to the taking of any remedy to enforce the provisions of the Indenture or the Bonds shall also be conditions to seeking any remedies under any of the foregoing. No delay or omission of the Trustee or the Bank or any Owner of Bonds to exercise any right or power accruing upon any default or Event of Default under the Indenture shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default, or acquiescence therein; and every such right and power given by this Article to the Trustee and the Bank and the Owners of Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. A-36 ® No waiver of any default or Event of Default under the Indenture, whether by the Trustee or by the Owners of Bonds, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon. Direction. of Proceedintis by Bondholders. The Owners of not less than a majority in aggregate principal amount of Bonds then outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee and the Bank, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture, including the appointment of a receiver or any other proceedings under the Indenture; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of the Indenture; and provided, further, that, if the Bank has not failed to honor a properly presented and conforming drawing under the Credit Facility, no such direction shall be followed by the Trustee without the prior written consent of the Bank. Application of Moneys. Subject to the provisions of the Tax Compliance Certificate, all moneys received by the Trustee or any receiver pursuant to any right given or action taken under the provisions the Indenture shall (after payment of the costs and expenses of the proceedings resulting in the collection of such moneys and the expenses, liabilities and advances incurred or made by the Authority or the Trustee, it being understood that such payment shall not be made from the proceeds of any draw under the Credit Facility or any moneys already held for the benefit of the Bondholders) be deposited in the Bond Sinking Fund and all moneys so deposited during the continuance of an Event of Default (other than moneys for the payment of Bonds which have previously matured or otherwise become payable prior to such Event of Default or for the payment of interest due prior to such Event of Default), together with all moneys in the Funds maintained by the Trustee under Articles III and IV of the Indenture other than ® the Bond Purchase Fund, shall be applied as follows: Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied: FIRST: To the payment of amounts, if any, payable to the United States Treasury pursuant to the Tax Compliance Certificate; SECOND: To the payment to the Persons entitled thereto of all installments of interest then due on the outstanding Bonds (other than Authority Bonds), or to reimburse the Bank for payments of any interest drawing, with interest on overdue installments, if lawful, at the rate per annum borne by the Bonds, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment of interest, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto without any discrimination or privilege; THIRD: To the payment to the Persons entitled thereto of the unpaid principal of any of the outstanding Bonds which shall have become due (other than Authority Bonds or Bonds called for redemption and for the payment of which moneys are held pursuant to the provisions of the Indenture), or to reimburse the Bank for payments of any principal drawing, with interest on such Bonds at their rate from the respective dates upon which they became due, in the order of their due dates, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal and interest due on such date, to the Persons entitled thereto without any discrimination or privilege; ® FOURTH: To the payment of all amounts owed to the Bank pursuant to the Credit Agreement; and A-37 FIFTH: To the payment to the Persons entitled thereto of unpaid principal and interest due and owing on any Bonds, the payment of principal and interest of which has been extended in the manner described in Section 7.01 of the Indenture. If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied: FIRST: To the payment of amounts, if any, payable to the United States Treasury pursuant to the Tax Compliance Certificate; SECOND: To the payment of the principal and interest then due and unpaid upon the Bonds (other than Authority Bonds), or to reimburse the Bank for such payments, with interest on overdue interest and principal, as aforesaid, without preference or priority of principal over interest or of interest over principal or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege and thereafter to the payment of the principal and interest then due and owing on any Bonds, the payment of principal and interest of which has been extended in the manner described in Section 7.01 of the Indenture; and THIRD: To the payment of all amounts owed to the Bank pursuant to the Credit Agreement. Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such moneys, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to commence and upon such date interest on the amounts of principal and interest to be paid on such date shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date and of the Special Record Date in accordance with Section 2.03(1) of the Indenture. The Trustee shall not be required to make payment to the Owner of any unpaid Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Notwithstanding anything in the Indenture to the contrary, amounts deposited in the Bond Sinking Fund which are derived from the Credit Facility shall only be applied to the payment of the principal of and interest on the Bonds (other than Bonds bearing interest at a Fixed Rate). Remedies Vested in Trustee. All rights of action including the right to file proof of claims under the Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any Owners of the Bonds and the Bank, and any recovery of judgment shall be for the equal benefit of the Owners of the then outstanding Bonds or, if applicable, the Bank, subject to the provisions of the Indenture. Rights and Remedies of Bondholders. No Owner of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Indenture or for the execution of any trust of the Indenture or for the appointment of a receiver or any other remedy under the Indenture, unless a default shall have become an Event of Default and the Owners of not less than 25% in aggregate principal amount of Bonds then outstanding shall have made written request to the Trustee and shall have offered the Trustee reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and unless also such A-38 ® Bondholders have offered to the Trustee indemnity as provided in Section 8.01(k) of the Indenture, and unless the Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name and unless the Bank has given its prior written consent thereto; and such notification, request, offer of indemnity and consent are declared in every case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of the Indenture and to any action or cause of action for the enforcement of the Indenture, or for the appointment of a receiver or for any other remedy under the Indenture, it being understood and intended that no one or more Owners of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Indenture by any action or to enforce any right under the Indenture except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the Owners of all Bonds outstanding. Nothing in the Indenture contained shall, however, (i) affect or impair the right of any Owner to enforce the payment of the principal of and interest on any Bond at and after the Maturity thereof or (ii) affect or impair the obligation of the Authority to pay the principal of and interest on each of the Bonds issued under the Indenture to the respective Owners thereof at the time and place, from the source and in the manner in said Bonds expressed. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under the Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every case the Authority, the Bank and the Trustee shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Indenture with respect to the Trust Estate, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. Waiver of Events of Default. The Trustee may, with the prior written consent of the Bank, and shall, at the written direction of the Bank, but in either event, only after the Bank has rescinded notice of termination of the Credit Facility, and without any action on the part of the Bondholders, waive any Event of Default under the Indenture and its consequences and rescind any declaration of acceleration of principal. In the event the Bank has failed to honor a properly presented and conforming drawing under the Credit Facility, the Trustee shall waive any Event of Default under the Indenture and its consequences and rescind any declaration of acceleration of principal (without a requirement of Authority approval) upon being indemnified to its satisfaction and upon the written request of the Owners of (i) at least a majority in aggregate principal amount of all the Bonds outstanding in respect of which default in the payment of principal and/or interest exists, or (ii) at least a majority in aggregate principal amount of all the Bonds outstanding in the case of any other Event of Default; provided, however that there shall not be waived without the consent of the Bondholders affected thereby (A) any Event of Default in the payment of the principal of any outstanding Bonds when due whether by mandatory redemption through the Bond Sinking Fund, at the dates of Maturity specified therein or otherwise, (B) any default in the payment when due of the interest on any such Bonds or (C) any Event of Default in the requirement referred to in Section 6.14 of the Indenture to maintain a Credit Facility and provided further that there is a full reinstatement of amounts available to be drawn under the Credit Facility following any draw thereunder in connection with such Event of Default. In case of any such waiver or rescission or in case any proceeding taken by the Trustee on account of any such default shall have been discontinued or abandoned or determined adversely, then and in every such case the Authority, the Bank, the. Trustee and the Bondholders shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Indenture respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereon. Notice of Default. In the event of any default under the Indenture, the Trustee will promptly give written notice thereof to the Trustee, the Remarketing Agent, the Authority and the Bank, setting forth the nature of such default. The foregoing notwithstanding, the giving of such notice shall not A-39 be considered a precondition to the Trustee declaring the entire principal amount of the Bonds then outstanding and the interest accrued thereon immediately due and payable. Certain Provisions Related to the Trustee The Indenture contains provisions that set forth the express terms and conditions regarding the duties and liabilities of the Trustee. Certain of those provisions are summarized below. Intervention by Trustee. In any judicial proceeding to which the Authority is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Owners of the Bonds, the Trustee may intervene on behalf of Bondholders and, subject to the provisions of Section 8.01(1) of the Indenture, shall do so if requested in writing by the Owners of at least 25% in aggregate principal amount of all Bonds then outstanding. The rights and obligations of the Trustee under this Section are subject to the approval of a court of competent jurisdiction. Successor Trustee by Merger or Consolidation. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided such corporation or association is otherwise eligible under Section 8.08 of the Indenture, shall be and become successor Trustee under the Indenture, vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor under the Indenture without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto other than taking such action as required under the Credit Facility to transfer the Credit Facility to the successor Trustee, anything herein to the contrary notwithstanding. Trustee Required; Eligibility. There shall at all times be a Trustee under the Indenture which shall (i) be a commercial bank or trust company within the State organized under the laws of the United States of America or the State, authorized to exercise corporate trust powers, subject to supervision or examination by federal or state authorities and having its Principal Office in the State and (ii) have a reported combined capital and surplus of not less than $50,000,000. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner provided in Section 8.09 of the Indenture. No resignation or removal of the Trustee and no appointment of a successor Trustee shall become effective until the successor Trustee has accepted its appointment under Section 8.13 of the Indenture. Resignation by the Trustee. The Trustee and any successor Trustee may at any time resign from the trusts created by the Indenture by executing an instrument in writing resigning such trusts and specifying the date when such resignation shall take effect, and filing the same with the Authority, the Remarketing Agent and the Bank not less then 45 days before the date specified in such instrument when such resignation shall take effect, and by giving notice of such resignation by first class mail, postage prepaid, not less than 20 days prior to such resignation date, to each Registered Owner of Bonds then outstanding, as shown by the Bond Register. Removal of the Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, then a vacancy shall forthwith and as a result thereof exist in the office of Trustee and a successor shall be appointed, with the approval of the Bank, by the Authority so long as no Event of Default has occurred and is continuing under this Indenture, by filing with the Bank and the Remarketing Agent an instrument or concurrent instruments in writing signed by Authority Representative. After any appointment by the Authority as provided herein, the Authority shall cause A-40 notice of such appointment to be given to the Bank, the Remarketing Agent and each Rating Agency and to be given by first class mail, postage prepaid, to all Owners of Bonds. In the event that the Authority is in default under the Indenture or fails to appoint a successor Trustee as provided above, a successor Trustee shall be appointed, with the approval of the Bank, by the Owners of a majority in aggregate principal amount of Bonds then outstanding by filing with the Authority, the Bank and the Remarketing Agent an instrument or concurrent instruments in writing signed by such Owners' or by their attorneys in fact duly authorized. After any appointment by the Owners as provided herein, the successor Trustee shall cause notice of such appointment to be given to the Bank, the Remarketing Agent and each Rating Agency and to be given by first class mail, postage prepaid, to all Owners of Bonds. Appointment of Successor Trustee In case the Trustee under the Indenture shall resign or be removed, or be dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting under the Indenture, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, then a vacancy shall forthwith and as a result thereof exist in the office of Trustee and a successor may be appointed, with the approval of the Bank and the Authority, by the Owners of a majority in aggregate principal amount of Bonds then outstanding by filing with the Authority, the Bank and the Remarketing Agent an instrument or concurrent instruments in writing signed by such Owners' or by their attorneys in fact duly authorized; provided, nevertheless, that in case of such vacancy the Authority by an instrument executed and signed by the Authority Representative, may appoint a temporary Trustee, who has been approved by the Bank, to fill such vacancy until a successor Trustee shall be appointed by the Bondholders in the manner above provided; provided further, that if no permanent successor Trustee shall have been appointed by the Bondholders within the six calendar months next succeeding the month during which the Authority appoints such a temporary Trustee, such temporary Trustee shall without any further action on the part of the Authority or the Bondholders become the permanent successor Trustee. After any appointment by the Authority as provided herein, the Authority shall cause notice of such appointment to be given to the Bank, the Remarketing Agent and each Rating Agency and to be given by first class mail, postage prepaid, to all Owners of Bonds. The foregoing notwithstanding, any such temporary Trustee so appointed by the Authority shall immediately and without further act be superseded by any successor Trustee so appointed by such Bondholders, with the consent of the Bank and the Authority, as provided above within the six calendar months next succeeding the month during which such temporary Trustee is appointed. Judicial Appointment of Successor Trustee. In case at any time the Trustee shall resign and no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Article prior to the date specified in the notice of resignation as the date when such resignation is to take effect, the resigning Trustee may forthwith apply to a court of competent jurisdiction for the appointment of a successor Trustee. All costs, fees and expenses related to such application to any court shall be paid by the Authority. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Article within six calendar months after a vacancy shall have occurred in the office of Trustee, any Owner of Bonds may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Trustee. Concernine Any Successor Trustees. Every successor Trustee appointed under the Indenture shall execute, acknowledge and deliver to its predecessor and also to the Authority an instrument in writing accepting such appointment under the Indenture, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of the Authority or of its successor, execute and deliver an instrument transferring to such successor Trustee all the estates, properties, rights, powers and trusts of such predecessor under the Indenture and on the written request of the Bank, execute and deliver an instrument transferring to A-41 such successor Trustee all estates, properties, rights, powers and trusts of such predecessor under the Indenture; and every predecessor Trustee shall transfer the Credit Facility and shall deliver all securities and moneys held by it as Trustee under the Indenture to its successor and shall transfer the Bank Bonds, or if the Bonds are in the Book-Entry-Only System beneficial interest therein, held under the Indenture to its successor. Should any instrument in writing from the Authority be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor under the Indenture, together with all other instruments provided for in this Article shall be filed and/or recorded by the successor Trustee in each recording office, if any, where the Indenture shall have been filed and/or recorded. Successor Trustee as Trustee of Funds, Paving Agent and Registrar. In the event of a change in the office of Trustee, the predecessor Trustee which has resigned or been removed shall cease to be Trustee of the Funds and any other funds provided under the Indenture and shall cease to be the registrar and paying agent for principal of, premium, if any, and interest on the Bonds, and the successor Trustee shall become such Trustee, registrar and paying agent. Provisions Related to the Remarketing Agent The Authority appointed Stifel, Nicolaus & Company, Incorporated, to act as the Remarketing Agent. The Remarketing Agent shall designate its Principal Office to the Trustee and the Authority, and shall signify its acceptance of the duties and obligations imposed upon it under the Indenture by a written instrument of acceptance delivered to the Authority and the Trustee under which the Remarketing Agent will agree, particularly: (a) to hold all moneys delivered to it for the purchase of Bonds for the account of and for the benefit of the Person which shall have so delivered such moneys until the Bonds purchased with such moneys shall have been delivered to or for the account of such Person; and (b) o keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection by the Authority and the Trustee at all reasonable times. The Authority shall cooperate with the Trustee to cause the necessary arrangements to be made and to be thereafter continued whereby funds from the sources specified herein will be made available for the purchase of Bonds presented at the Principal Office of the Trustee and whereby Bonds executed by the Authority and authenticated by the Trustee shall be made available to the Remarketing Agent to the extent necessary for delivery pursuant to Section 4.10 of the Indenture. The Remarketing Agent may at any time resign and be discharged of the duties and obligations created by the Indenture by giving at least 30 days' notice to the Authority, the Bank and the Trustee. The Remarketing Agent may be removed at any time upon three days' notice, at the direction of the Authority with the written consent of the Authority and the Bank, by an instrument signed by the Authority and the Bank and filed with the Remarketing Agent and the Trustee. In the event of the resignation or removal of the Remarketing Agent, the Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held by it in such capacity to its successor or, if there be no successor, to the Trustee. In the event that the Authority shall fail to appoint a Remarketing Agent under the Indenture, or in the event that the Remarketing Agent shall resign or be removed, or be dissolved, or if the property or affairs of the Remarketing Agent shall be taken under the control of any state or federal court or administrative body because of bankruptcy or insolvency, or for any other reason, and the Authority shall not have appointed its successor as Remarketing Agent, the Trustee shall be deemed to be the A-42 ® Remarketing Agent for all purposes of the Indenture until the appointment by the Authority of the successor Remarketing Agent with the consent of the Bank; provided, however, that the Trustee, in its capacity as Remarketing Agent, shall not be required to remarket Bonds, or to determine the interest rate on the Bonds except in the manner provided in Article II of the Indenture. The Remarketing Agent for its own account or as broker or agent for others may deal in Bonds and may do anything any other Bondholder may do to the same extent as if the Remarketing Agent were not serving as such. The Remarketing Agent will not be entitled to any compensation from the Trustee or have any claim or rights with respect to any property, rights or interests constituting a part of the Trust Estate or otherwise held under the Indenture, but must make separate arrangements with the Authority for compensation. Oualifications of Remarketing Agent. The Remarketing Agent shall have a capitalization of at least $5,000,000 or have a line of credit with a commercial bank or clearing organization in the amount of at least $5,000,000 and shall be authorized by law to perform all the duties contemplated by the Indenture to be performed by the Remarketing Agent and shall have knowledge and experience in the remarking of securities such as the Bonds and a remarketing portfolio (at the time of such appointment) of at least $100,000,000. Defeasance If the Authority shall pay or provide for the payment of the entire indebtedness on all Bonds outstanding in any one or more of the following ways: (a) by paying or causing to be paid the principal of (including premium, if any) and interest on all Bonds outstanding, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before Maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Bonds outstanding (including the payment of premium, if any, and interest payable on such Bonds to the Maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in United States Governmental Obligations which are not repayable or callable prior to the date the moneys therefrom are anticipated to be required in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds outstanding at or before their respective Maturity dates, it being understood that the investment income on such United States Governmental Obligations may be used for any other purpose under the Act; (c ) by delivering to the Trustee, for cancellation by it, all Bonds outstanding; or (d) by irrevocably depositing with the Trustee, in trust, Govermmental Obligations (which have been purchased with Available Moneys) which are not repayable or callable prior to the date the moneys therefrom are anticipated to be required in such amount as the Trustee shall determine (based upon a verification report delivered by a nationally recognized independent certified public accountant or firm of nationally recognized independent certified public accountants) will, together with the income or revenue to accrue thereon, without consideration of any reinvestment thereof, and with any uninvested cash, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds at or before their respective Maturity dates; ® and if the Authority shall pay or cause to be paid all other sums payable under the Indenture and under the Credit Agreement by the Authority, and the Credit Facility has been returned to the Initial Credit Facility Provider, then and in that case the Indenture and the estate and rights granted under the Indenture shall cease, determine and become null and void, and thereupon the Trustee shall, upon Written Request of the A-43 Authority, and upon receipt by the Trustee of a certificate of the Authority Representative and an opinion of Independent Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of the Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging the Indenture and the lien thereof. No such discharge shall take place unless the Trustee has received a written notice from the Rating Agency that such discharge will not result in a reduction or withdrawal of the current rating assigned to the Bonds. In such event, the Trustee shall assign, transfer and turn over the Trust Estate, including, without limitation, any surplus in the Bond Sinking Fund and any balance remaining in any other fund created under the Indenture (other than said United States Governmental Obligations or other moneys deposited in trust as above provided) as provided in Section 3.16 of the Indenture provided that the Credit Facility shall be surrendered to the Bank for cancellation. The satisfaction and discharge of the Indenture shall be without prejudice to the rights of the Trustee to charge and be reimbursed by the Authority for any fees and expenditures which it may thereafter incur in connection herewith. The Authority may at any time surrender to the Trustee for cancellation by it any Bonds previously authenticated and delivered, which the Authority may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. Liability of Authority Not Discharud. Upon the deposit with the Trustee, in trust, at or before Maturity, of moneys or United States Governmental Obligations in the necessary amount to pay or redeem all outstanding Bonds (whether upon or prior to Maturity or the redemption date of such Bonds) and compliance with the other payment requirements of Section 10.01 of the Indenture, provided that if such Bonds are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been given as in Article IV of the Indenture provided, or provisions satisfactory to the Trustee shall have been made for the giving of such notice, and subject to the provisions of Section 10.04 of the Indenture, the Indenture may be discharged in accordance with the provisions thereof but the liability of the Authority in respect of such Bonds shall continue provided that the Owners thereof shall thereafter be entitled to payment only out of the moneys or the United States Governmental Obligations deposited with the Trustee as aforesaid. Provision for Payment of a Portion of Bonds. If the Authority shall pay or provide for the payment of the entire indebtedness on any portion of the Bonds outstanding, in one or more of the following ways: (a) by paying or causing to be paid the principal of (including premium, if any) and interest on such portion of the Bonds as and when the same shall become due and payable; (b) by depositing with the Trustee, in trust, at or before Maturity, moneys in an amount sufficient to pay or redeem (when redeemable) such portion of the Bonds (including the payment of premium, if any, and interest payable on such portion of the Bonds to the Maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in United States Governmental Obligations which are not repayable or callable prior to the date the moneys therefrom are anticipated to be required in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Bonds at or before their respective Maturity dates, it being understood that the investment income on such Governmental Obligations may be used for any other purpose under the Act; (c) by delivering to the Trustee, for cancellation by it, any such portion of the Bonds outstanding; or A-44 ® (d) by depositing with the Trustee, in trust, United States Governmental Obligations which are not repayable or callable prior to the date the moneys therefrom are anticipated to be required in such amount as the Trustee shall determine (based upon a verification report delivered by a nationally recognized independent certified public accountant or firm of nationally recognized independent certified public accountants) will, together with the income or revenue to accrue thereon, without consideration of any reinvestment thereof, and with any uninvested cash, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Bonds at or before their respective Maturity dates; and if the Authority shall also pay or cause to be paid all other sums payable under the Indenture and under the Credit Agreement by the Authority with respect to such portion of the Bonds, and, if such portion of the Bonds is to be redeemed prior to the Maturity thereof, notice of such redemption shall have been given as in Article IV of the Indenture provided, or provisions satisfactory to the Trustee shall have been made for the giving of such notice, such portion of the Bonds shall cease to be entitled to any lien, benefit or security under the Indenture. In such event, the Trustee shall reduce the Credit Facility as provided in Section 6.14 of the Indenture. The liability of the Authority in respect of such Bonds or such portion thereof shall continue but the Owners thereof shall thereafter be entitled to payment (to the exclusion of all other Bondholders) only out of the moneys or Governmental Obligations deposited with the Trustee as aforesaid. Supplemental Indentures Supplemental Indentures Not ReauirinL- Consent of Bondholders. Subject to the limitation set forth in Section 9.02 of the Indenture with respect to this Section, the Authority and the ® Trustee may, without the consent of, or notice to, any of the Bondholders but with written consent of the Bank, enter into an indenture or indentures supplemental to the Indenture for any one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in the Indenture; (b) to grant to or confer upon the Trustee for the benefit of the Bondholders or the Bank any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders, the Bank or the Trustee, or any of them; (c) to assign and pledge under or subject to the Indenture additional revenues, properties or collateral; (d) to evidence the appointment of a separate Trustee or the succession of a new Trustee under the Indenture; (e) to permit the qualification of the Indenture under the Trust Indenture Act of 1939, as then amended, or any similar federal statute hereafter in effect or to permit the qualification of the Bonds for sale under the securities laws of any state of the United States; (f) to permit continued compliance with the Tax Compliance Certificate; (g) to provide for certificated Bonds; (h) to provide for the refunding or advance refunding of any Bonds, including the right to establish and administer an escrow fund and to take related action in connection therewith; A-45 (i) to implement a conversion of the interest rate on all or any portion of the Bonds to a Fixed Rate, a Flexible Pricing Long-Term Rate, an Annual Rate or a Short Rate, all as provided in Articles II and V of the Indenture, including but not limited to modifying, amending or supplementing the form of Bond to reflect, among other things, a change in the designated title of the Bonds, the fixing of an annual rate of interest, the termination of the rights of any Owner of Bonds to tender such Bonds for purchase and the fact that the purchase price of, or the principal of or interest on, the Bonds is no longer payable out of moneys drawn under the Credit Facility; 0) to evidence or give effect to or facilitate the delivery and administration under the Indenture of a Substitute Credit Agreement and/or a Substitute Credit Facility, including but not limited to such provisions as are necessary to permit the issuer of such a Substitute Credit Agreement to provide credit support relating to payment of principal of and interest on the Bonds and a separate issuer of another Substitute Credit Agreement to provide liquidity support relating to payment of the purchase price of Bonds delivered or deemed delivered under the Indenture for purchase; (k) to secure or maintain ratings from any Rating Agency in the highest short-term or commercial paper debt rating category and the highest long-term debt rating categories of such Rating Agency which are available for the Bonds, whether or not a Credit Facility secures the Bonds, which changes will not restrict, limit or reduce the obligation of the Authority to pay the principal of and premium, if any, and interest on the Bonds as provided in the Indenture or otherwise adversely affect the Owners of the Bonds under the Indenture; (1) to effect a change in the optional redemption schedule for Bonds in a Fixed Mode or a Flexible Pricing Long-Term Mode pursuant to Section 4.11(a)(iii) or Section 4.11(a)(iv) of the Indenture; (m) to appoint a successor Securities Depository; and (n) to make any change that, in the judgment of the Trustee and upon opinion of counsel, does not materially adversely affect the rights of any Bondholders; provided that no change shall be materially adverse if it is made in connection with a purchase described in Sections 4.02, 4.03, 4.04, 4.05 4.06, or 4.07 of the Indenture and such change is not effective until the Tendered Bonds are purchased or deemed purchased pursuant to Section 4.08 of the Indenture. Supplemental Indentures Requiring Consent of Bondholders. (a) In addition to supplemental indentures covered by Section 9.01 of the Indenture and subject to the terms and provisions contained in this Section, and not otherwise: (i) the Bank (or if the Credit Facility is not in effect and no obligations remain unpaid under the Credit Agreement or if the Bank has failed to honor a properly presented and conforming drawing under the Credit Facility, the Owners of not less than a majority in aggregate principal amount of the Bonds which are outstanding under the Indenture at the time of the execution of such indenture or supplemental indenture), or (ii) in case only outstanding Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate are affected thereby, the Bank (or if the Credit Facility is not in effect and no obligations remain unpaid under the Credit Agreement or if the Bank has failed to honor a properly presented and conforming drawing under the Credit Facility, the Owners of not less than a majority in aggregate principal amount of the Bonds bearing interest at a Short Rate, an Annual Rate, or a Flexible Pricing Long-Term Rate which are outstanding at the time of such execution), or (iii) in case only outstanding Bonds bearing interest at a Fixed Rate are affected thereby, the Bank, (or if the Credit Facility is not in effect and no obligations remain unpaid under the Credit Agreement or if the Bank has failed to honor a properly presented and conforming drawing under the Credit Facility, the Owners of not less than a majority in aggregate principal amount of the Bonds bearing interest at a Fixed Rate which are outstanding at the time of such execution), with the consent of the Bank, shall have the right, from time to time, anything contained in the Indenture to the contrary notwithstanding, to consent to and approve the execution by the Authority and the Trustee of such other indenture or indentures supplemental hereto as shall be deemed necessary and desirable by the A-46 Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Indenture or in any supplemental indenture; provided, however, that nothing in this Section contained or in Section 9.01 of the Indenture shall permit, or be construed as permitting, a supplemental indenture to effect: (i) an extension of the Maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying interest on, or reduction of any premium payable on the redemption of, any Bonds, without the consent of the Owners of such Bonds; (ii) a reduction in the amount or extension of the time of any payment required to be made to or from the Interest Fund or the Bond Sinking Fund; (iii) the creation. of any lien prior to or on a parity with the lien of the Indenture on the Trust Estate or the deprivation of any Bondholders of the lien created by the Indenture on such Trust Estate, without the consent of the Owners of all the Bonds at the time outstanding; (iv) a reduction in the aforesaid aggregate principal amount of Bonds the Owners of which are required to consent to any such supplemental indenture, without the consent of the Owners of all the Bonds at the time outstanding which would be affected by the action to be taken; (v) a modification of the rights, duties or immunities of the Trustee, without the written consent of the Trustee; or (vi) a change in the purchase price of a Tendered Bond. (b) If at any time the Authority shall request the Trustee to enter into any such supplemental indenture for any of the purposes of this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be mailed by first class mail, postage prepaid to the Registered Owners of the Bonds at their addresses as the same shall appear on the Bond Register. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the Principal Office of the Trustee for inspection by all Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure ® shall not affect the validity of such supplemental indenture when consented to and approved as provided in this Section. If the Bank and the Owners of the requisite principal amount of Bonds which are outstanding under the Indenture at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this Section permitted and provided, the Indenture shall be and be deemed to be modified and amended in accordance therewith. Consent of the Bank. Subject to the provisions set forth in Section 13.12 of the Indenture, so long as the Bank has not failed to honor a properly presented and conforming drawing under the Credit Facility, a supplemental indenture under this Article IX shall not become effective unless and until the Bank shall have consented in writing to the execution and delivery of such supplemental indenture. In this regard, the Trustee shall cause notice of the proposed execution and delivery of any such supplemental indenture to which the Bank has not already consented, together with a copy of the proposed supplemental indenture and a written consent form to be signed by the Bank, to be mailed by first class mail, postage prepaid to the Bank at least 30 days prior to the proposed date of execution and delivery of any such supplemental indenture. Certain Provisions Related to the Bank A-47 Bank Deemed Sole Owner. So long as the Credit Facility or Substitute Credit Facility is in effect or any Bank Bonds remain outstanding, the Bank shall at all times be deemed the sole and 40 exclusive Owner of the Outstanding Bonds for the purposes of all approvals, consents, waivers, institution of any action, and the direction of all remedies pursuant to the Indenture, the Bond Resolution and the Cooperation Agreement, including but not limited to approval of or consent to any amendment of or supplement to the Indenture, the Bond Resolution and the Cooperation Agreement which requires the consent or approval of the Owners. References to Bank and Substitute Bank. References in the Indenture to the Bank or Substitute Bank shall be effective only so long as the Bank or Substitute Bank has not failed to honor a properly presented and conforming drawing under the Credit Facility and a Credit Facility is required by the provisions of Section 6.14 of the Indenture or otherwise remains in effect or any Bank Bonds remain outstanding. 0 • A-48 • APPENDIX B FORM OF OPINION OF BOND COUNSEL [Closing Date] Avon Urban Renewal Authority 40 Benchmark Road P. O. Box 975 Avon, Colorado 81620 $25,000,000 Avon Urban Renewal Authority, Colorado Tax Increment Adjustable Rate Revenue Bonds (Town Center West Area Urban Renewal Project) Series 2008 Ladies and Gentlemen: We have acted as bond counsel to the Avon Urban Renewal Authority, Colorado (the "Authority") in connection with its issuance of the above-captioned bonds (the "Bonds") pursuant to an authorizing resolution of the Board of Commissioners of the Authority adopted on February 20, 2008 (the "Resolution") and an Indenture of Trust dated as of February 15, 2008 (the "Indenture") between the Authority and UMB Bank, n.a.., as Trustee. In such capacity, we have examined the Authority's certified proceedings, the Indenture and such other documents and such law of the State of Colorado and of the United States of America as we have deemed necessary to render this opinion letter. Capitalized terms not used otherwise defined herein shall have the meanings ascribed to them by the Resolution or the Indenture. Regarding questions of fact material to our opinions, we have relied upon the Authority's certified proceedings and other representations and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based upon such examination, it is our opinion as bond counsel that: 1. The Bonds are valid and binding special, limited obligations of the Authority payable solely from the Pledged Revenues and other moneys legally available from the Trust Estate, including the funds and accounts pledged therefor under the Indenture. 2. The Indenture has been duly authorized by the Authority, duly executed and delivered by authorized officials of the Authority, and, assuming due authorization, execution and delivery by the Trustee, constitutes a valid and binding obligation of the Authority. 3. The Indenture creates a valid lien on the Pledged Revenue pledged therein for the security of the Bonds on a parity with the Authority's obligations to the Bank under the B-1 Credit Agreement and on a parity with Additional Bonds (if any) to be issued. Except as described in this paragraph, we express no opinion regarding the priority of the lien on the Pledged Revenues or on funds and accounts created by the Indenture. 4. Interest on the Bonds is excluded from gross income under federal income tax laws pursuant to Section 103 of the Internal Revenue Code of 1986, as amended to the date hereof (the "Tax Code"), interest on the Bonds is excluded from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code, except that such interest is required to be included in calculating the adjusted current earnings adjustment applicable to corporations for purposes of computing the alternative minimum taxable income of corporations. The opinions expressed in this paragraph assume continuous compliance with the covenants and representations contained in the Authority's certified proceedings and in certain other documents or certain other certifications furnished to us. 5. Under the laws of the State of Colorado in effect as of the date hereof, the Bonds, together with interest thereon and income therefrom, are exempt from all taxes by the State of Colorado. The opinions expressed in this opinion letter are subject to the following: The obligations of the Authority pursuant to the Bonds, the Resolution and the Indenture are subject to the application of equitable principles, to the reasonable exercise in the future by the State of Colorado and its governmental bodies of the police power inherent in the sovereignty of the State of Colorado, and to the exercise by the United States of America of the powers delegated to it by the Federal Constitution, including without limitation, bankruptcy powers. We understand that DEPFA BANK, plc, acting through its New York Branch, has issued an irrevocable direct-pay letter of credit relating to the Bonds. We express no opinion as to the validity or enforceability of such letter of credit or the security afforded thereby. In this opinion letter issued in our capacity as bond counsel, we are opining only upon those matters set forth herein, and we are not passing upon the accuracy, adequacy or completeness of the Official Statement or any other statements made in connection with any offer or sale of the Bonds or upon any federal or state tax consequences arising from the receipt or accrual of interest on or the ownership of the Bonds, except those specifically addressed herein. This opinion letter is issued as of the date hereof and we assume no obligation to revise or supplement this opinion letter to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Respectfully submitted, • B-2 0 APPENDIX C BOOK-ENTRY ONLY SYSTEM DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose.trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the N.A. of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.oru. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC C-1 and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, interest and redemption proceeds on the Bonds will be made to Cede& Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Authority or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, its nominee, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, interest or redemption proceeds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Tender/Remarketing Agent, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's interest in the Bonds, on DTC's records, to the Tender/Remarketing Agent. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied C-2 ® when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Bonds to the Tender/Remarketing Agent's DTC account. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof. SO LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE BONDS, REFERENCES IN THIS OFFICIAL STATEMENT TO THE REGISTERED OWNERS OF THE BONDS WILL MEAN CEDE & CO. AND WILL NOT MEAN THE BENEFICIAL OWNERS. The Authority and the Trustee may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purpose of payment of the principal of or interest or premium, if any, on the Bonds, giving any notice permitted or required to be given to registered owners under the Indenture, including any notice of redemption, registering the transfer of Bonds, obtaining any consent or other action to be taken by registered owners and for all other purposes whatsoever, and will not be affected by any notice to the contrary. The Authority and the Trustee will not have any responsibility or obligation to any DTC Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC Direct Participant, Indirect Participant or other person not shown on the records of the Trustee as being a registered owner with respect to: the accuracy of any records maintained by DTC, any DTC Direct Participant or Indirect Participant regarding ownership interests in the Bonds; the payment by DTC, any DTC Direct Participant or Indirect Participant of any amount in respect of the principal of or interest or premium, if any, on the Bonds; the delivery to any DTC Direct Participant, Indirect Participant or any Beneficial Owner of any notice which is permitted or required to be given to registered owners under the Indenture, including any notice of redemption; the selection by DTC, any DTC Direct Participant or any Indirect Participant of any person to receive payment in the event of a partial redemption of the Bonds; or any consent given or other action taken by DTC as a registered owner. As long as the DTC book-entry system is used for the Bonds, the Trustee will give any notice of redemption or any other notices required to be given to registered owners of Bonds only to DTC or its nominee. Any failure of DTC to advise any DTC Direct Participant, of any DTC Direct Participant to notify any Indirect Participant, of any DTC Direct Participant or Indirect Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Bonds called for redemption or of any other action premised on such notice. C-3 APPENDIX D THE INITIAL CREDIT FACILITY PROVIDER The following information has. been provided by the Bank (at times referred to hereinafter as "DEPFA') for use in this Official Statement. Such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Authority, the Town or the Underwriter. This information has not been independently verified by the Authority, the Town or the Underwriter. No representation is made by the Authority, the Town or the Underwriter as to the accuracy or adequacy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof DEPFA BANK plc ("DEPFA") is the parent company of the DEPFA BANK plc group of companies comprising DEPFA and its consolidated subsidiaries (the "Group"). DEPFA will act through its New York Branch, which is licensed by the Banking Department of the State of New York as an unincorporated branch of DEPFA BANK plc, Dublin. DEPFA is based in Dublin and has a banking license issued under the Irish Central Bank Act, 1971 (as amended) and is supervised by the Financial Regulator. It is registered in the Irish companies Registration Office with company number 348819. DEPFA is a wholly owned subsidiary of Hypo Real Estate AG whose shares are listed on the Frankfurt Stock Exchange. DEPFA has a network of subsidiaries, branches and offices across many European countries, as well as in North America and Asia. The Group provides a broad range of products and services to public sector entities, from governmental budget financing and financing of infrastructure projects to placing of public sector assets and investment banking and other advisory services. The Group has direct client contacts with many state entities and focuses on those public sector entities involved in large volume business. The Group advises individual public sector borrowers on their international capital market transactions and preparations for the ratings process. As of December 31, 2006, DEPFA had total consolidated assets of Euro 222.9 billion, shareholders' equity of Euro 2.7 billion and consolidated net income of Euro 526 million, determined in accordance with International Financial Reporting Standards (IFRS). DEPFA maintains its records and prepares its financial statements in Euro. At December 31, 2006, the exchange rate was 1.0000 Euro equals 1.32027 United States dollars. Such exchange rate fluctuates from time to time. On July 23, 2007, it was announced that Hypo Real Estate Holding AG (HRE) and DEPFA had agreed to a merger of the two businesses by way of a recommended acquisition by HRE of the entire issued share capital of DEPFA to be effected under Irish statutory procedures. The merger was completed on 2"d October 2007 following which DEPFA became a wholly-owned subsidiary of HRE. HRE is headquartered in Munich, Germany and is one of Europe's largest providers of commercial real estate financing. Further information on HRE may be found on the HRE website at www.hyporealestate.com DEPFA is rated "Aa3" long-term and "P-1" short-term by Moody's. On July 23, 2007, Moody's affirmed DEPFA's long term and short term rating, with a stable outlook. DEPFA is rated "AA-" long-term and "F1+" short-term by Fitch. On July 23, 2007, Fitch affirmed DEPFA's long term and short term rating, with a stable outlook. On July 23, 2007, S&P lowered its rating for DEPFA to "A+" long-term and "A- 1" short-term and confirmed that the outlook is stable. DEPFA will provide without charge a copy of its most recent publicly available annual report. Written requests should be directed to: DEPFA BANK plc, New York Branch, 623 Fifth Avenue, 22"d Floor, New York, New York 10022, Attention: General Manager. The delivery of this information shall not create any implication that the information contained or referred to herein is correct as of any time subsequent to its date. In addition, updated financial information may be found from the DEPFA website at: www.depfa.com. D-1