2006-01-09 RM Bond Exhibits
"R4!L't. ~s-.tf
A RESOLUTION
OF THE
NEW HANOVER COUNTY
BOARD OF COMMISSIONERS
WHEREAS, the bond order hereinafter described has taken effect, and it is
desirable to make provIsion for the issuance of bonds authorized by said bond order; NOW,
THEREFORE,
BE IT RESOLVED by the Board of Commissioners of the County of New
Hanover, North Carolina (the "Issuer"), as follows:
1. Pursuant to and in accordance with the school bond order adopted by the
Board of Commissioners on March 14, 2005, the Issuer shall issue its bonds in the aggregate
princIpal amount of $15,000,000. The bonds shall be designated "General Obligation School
Bonds, Series 2006" (hereinafter r.eferred to as the "Bonds"). The period of usefulness of the
capital project to be financed by the issuance of the bonds is a period of forty years, computed
from February 1, 2006.
2. The Bonds shall be dated February 1, 2006 and shall bear interest from
their date at a rate or rates which shall be hereafter determined upon the public sale thereof and
such interest shall be payable on August 1,2006 and semi-annually thereafter on February 1 and
August 1. The Bonds shall mature, subject to the right of prior redemption as hereinafter set
forth, annually on February 1, as follows:
Principal Principal
Year Amount Year Amount I
2007 $750,000 2018 $750,000
2008 750,000 2019 750,000
2009 750,000 2020 750,000
2010 750,000 2021 750,000
2011 750,000 2022 750,000
2012 750,000 2023 750,000
2013 750,000 2024 750,000
2014 750,000 2025 750,000
2015 750,000 2026 750,000
2016 750,000
2017 750,000
Interest will be payable to the registered owners of the Bonds shown on the
records of the hereinafter designated Bond RegIstrar of the Issuer on the record date which shall
be the fifteenth day of the calendar month (whether or not a business day) next preceding an
interest payment date.
3. The Bonds will be issued in fully registered form by means of a book
entry system with no physical distribution of bond certificates made to the public. One bond
certificate for each maturity will be issued to The Depository Trust Company, New York, New
York ("DTC"), and immobilized in its custody. The book entry system will evidence ownership
of the Bonds in principal amounts of $5,000 or whole multiples thereof, with transfers of
beneficial ownership affected on the records of DTC and its participants pursuant to rules and
( procedures established by DTC. Interest on the Bonds will be payable at the times stated in the
preceding paragraph, and principal of the Bonds will be paid annually on February 1, as set forth
in the foregomg maturity schedule, to DTC or its nominee as registered owner of the Bonds.
Transfer of principal and interest payments to participants of DTC will be the responsibility of
DTC; transfer of principal and interest payments to beneficial owners by participants of DTC
will be the responsibility of such participants and other nominees of beneficial owners. The
Issuer will not be responsible or liable for maintaining, supervising or reviewing the records
maintained by DTC, its participants or persons acting through such participants.
In the event that (a) DTC determines not to continue to act as securities depository
for the Bonds, or (b) the Issuer determines that continuation of the book entry system of evidence
and transfer of ownership of the Bonds would adversely affect the interests of the beneficial
owners of the Bonds, the Issuer will discontinue the book entry system with DTC. If the Issuer
fails to identify another qualified securities depository to replace DTC, the Issuer will
authenticate and deliver replacement Bonds in the form of fully registered certificates.
Each Bond shall bear interest from the interest payment date next preceding the
date on which it is authenticated unless it is (a) authenticated upon an interest payment date in
which event it shall bear interest from such interest payment date, or (b) authenticated prior to
the first interest payment date in which event it shall bear interest from its date; provided,
however, that if at the time of authentication interest is in default, such Bond shall bear interest
from the date to which interest has been paid.
The principal of and the interest on the Bonds shall be payable in any coin or
currency of the United States of America which is legal tender for the payment of public and
private debts on the respective dates of payment thereof.
4. The Bonds shall bear the manual or facsimile signatures of the Chairman
or the Vice Chairman and the Clerk to the Board of Commissioners of the Issuer and the official
seal or a facsimile of the official seal of the Issuer shall be impressed or imprinted, as the case
may be, on the Bonds.
The certificate of the Local Government Commission of North Carolina to be
endorsed on all Bonds shall bear the manual or facsimile signature of the Secretary or Acting
Secretary of said Commission or of a representative designated by said Secretary or Acting
Secretary and the certificate of authentIcation of the Bond Registrar to be endorsed on all Bonds
shan be executed as provided hereinafter.
In case any officer of the Issuer or the Local Government Commission of North
Carolina whose manual or facsimile signature shall appear on any Bonds shall cease to be such
officer before the delivery of such Bonds, such manual or facsimile signature shall nevertheless
be valid and sufficient for all purposes the same as if he had remained in office until such
delivery, and any Bond may bear the manual or facsimile signatures of such persons as at the
actual time of the execution of such Bond shall be the proper officers to sign such Bond although
at the date of such Bond such persons may not have been such officers.
No Bond shall be valid or become obligatory for any purpose or be entitled to any
benefit or security under this resolution until it shall have been authenticated by the execution by
the Bond Registrar of the certificate of authentication endorsed thereon.
5.
following form:
The Bonds and the endorsements thereon shall be in substantially the
NO.R-
$
United States of America
State of North Carolina
NEW HANOVER COUNTY
GENERAL OBLIGATION SCHOOL BOND, SERIES 2006
INTEREST
RATE
MATURITY
DATE
DATE OF
ORIGINAL ISSUE
CUSIP
February 1, _
February 1, 2006
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM:
DOLLARS
NEW HANOVER COUNTY (hereinafter referred to as "County"), a political
subdivision of the State of North Carolina, acknowledges itself indebted and for value received
hereby promises to pay to the registered owner named above, on the date specified above, upon
surrender hereof, at the office of the Finance Officer of the County (the "Bond Registrar"), the
principal sum shown above and to pay to the registered owner hereof, at his address as it appears
on the bond registration books of the County, interest on such principal sum from the date of this
bond [or from the February 1 or August 1 next preceding the date of authentication to which
interest shall have been paid, unless such date of authentication is on February 1 or August 1 to
which interest shall have been paid, in which case from such date], such interest to the maturity
hereof being payable on August 1,2006' and semi-annually thereafter on February 1 and August
1 of each year, at the rate per annum specified above, until payment of such principal sum. The
interest so payable on any such interest payment date will be paid to the person in whose name
this bond is registered at the close of business on the record date for such interest, which shall be
the fifteenth day of the calendar month (whether or not a business day) next preceding such
interest payment date. Both the principal of and the interest on this bond shall be paid in any
coin or currency of the United States of America that is legal tender for the payment of public
and private debts on the respective dates of payment thereof.
ThIS bond is issued in accordance with the Registered Public Obhgations Act,
Chapter 159E of the General Statutes of North Carolina, and pursuant to The Local Government
Finance Act of the State of North Carolina, as amended, a bond order adopted by the Board of
CommiSSIOners of the County on March 14, 2005 (the "Bond Order") and a resolution adopted
by Said Board of Commissioners on January 9, 2006 (the IResolutIOn") to provide funds,
together wIth other funds of the County, to pay capital costs of providing additional school
facilities and improvements to existing school facilities for the County. The Issuance of this
bond and the contracting of the indebtedness evidenced thereby have been approved by a
majority of the qualified voters of the County voting at a special election held in the County on
May 10,2005.
The bonds will be issued in fully registered form by means of a book entry system
WIth no physical distribution of bond certificates made to the public. One bond certificate for
each maturity will be Issued to The Depository Trust Company, New York, New York ("DTC")
and immobilized in Its custody. The book entry system will evidence ownership of the bonds in
princIpal amounts of $5,000 or whole multiples thereof, with transfers of beneficial ownership
affected on the records of DTC and its participants pursuant to rules and procedures established
by DTC. Transfer of principal and interest payments to participants of DTC will be the
responsibility of DTC; transfer of principal and interest payments to beneficial owners by
participants of DTC will be the responsibility of such participants and other nominees of
beneficial owners. The County will not be responsible or liable for maintaining, supervising or
reviewing the records maintained by DTC, its participants or persons acting through such
participants.
The bonds maturing on and after February 1, 2017 shall be subject to redemption
prior to their stated maturities at the option of the County on or after February 1, 2016, in whole
or in part at any time, at a redemption price of 100% of such principal amounts plus interest
accrued to the date fixed for redemption. If less than all of the bonds are called for redemption,
the bonds to be redeemed shall be selected in such manner as the County shall determine;
provided, however, that the portion of any bond to be redeemed shall be in the principal amount
of $5,000 or some multiple thereof and that, in selecting bonds for redemption, the Bond
Registrar shall treat each bond as representing that number of bonds which is obtained by
dividing the principal amount of such bond by $5,000. For so long as a book-entry system with
DTC is used for determining beneficial ownership of the bonds, if less than all of the bonds
within a maturity are to be redeemed, DTC and its participants shall determine which of the
bonds within a maturity are to be redeemed.
Not more than forty-five (45) nor less than thirty (30) days before the redemption
date of any bonds to be redeemed, whether such redemption be in whole or in part, the County
shan cause a notice of such redemption to be mailed, postage prepaid, to DTC or its nominee.
On the date fixed for redemption, notice having been given as aforesaid, the bonds or portions
thereof so called for redemption shall be due and payable at the redemption price provided for
the redemption of such bonds or potions thereof on such date. If a portion of this bond shall be
called for redemption, a new bond or bonds in principal amount equal to the unredeemed portion
hereof will be issued to DTC or its nominee upon the surrender hereof.
The Bond Registrar shall keep at her office the books of said County for the
registration and registratIOn of transfer of bonds. The transfer of this bond may be registered
only upon such books and as otherwIse provided m the Resolution upon the surrender hereof to
the Bond Registrar together with an assignment duly executed by the regIstered owner hereof or
his attorney or legal representative in such form as shall be satisfactory to the Bond Registrar.
Upon any such registration of transfer, the Bond Registrar shall deliver in exchange for this bond
a new bond or bonds, registered in the name of the transferee, of authorized denominations, in an
aggregate principal amount equal to the unpaid principal amount of this bond, of the same
maturity and bearing interest at the same rate.
Bonds, upon surrender thereof at the office of the Bond Registrar together with an
assignment duly executed by the registered owner or his attorney or legal representative in such
form as shall be satisfactory to the Bond Registrar, may, at the option of the registered owner
thereof, be exchanged for an equal aggregate principal amount of registered Bonds of the same
maturity, of any denomination or denominations authorized by the Resolution and bearing
interest at the same rate.
The Bond Registrar shall not be required to exchange or register the transfer of
any bond during a period beginning at the opening of business fifteen (15) days before the day of
the mailing of a notice of redemption of bonds or any portion thereof and ending at the close of
business on the day of such mailing or of any bond called for redemption in whole or in part.
It is hereby certified and recited that all conditions, acts and things required by the
Constitution or statutes of the State of North Carolina to exist, be performed or happen precedent
to or in the issuance of this bond, exist, have been performed and have happened, and that the
amount of this bond, together with all other indebtedness of the County, is within every debt and
other limit prescribed by said Constitution or statutes. The faith and credit of the County are
hereby pledged to the punctual payment of the principal of and interest on this bond in
accordance with its terms.
This bond shall not be vahd or become obligatory for any purpose or be entitled
to any benefit or security under the Bond Order or the Resolution mentioned herein until this
bond shall have been endorsed by the authorized representative of the Local Government
Commission of North Carolina and authenticated by the Bond Registrar.
IN WITNESS WHEREOF, the County has caused this bond [to be manually
signed by] [to bear the facsimile signatures of] the [Chairman] [Vice Chairman] and the Clerk to
the Board of Commissioners of the County and [a facsimile of] its official seal to be [imprinted]
[impressed] hereon, and this bond to be dated February 1, 2006.
[Vice] Chairman,
Board of Commissioners
(SEAL)
Clerk,
Board of Commissioners
CERTIFICATE OF LOCAL GOVERNMENT COMMISSION
The issuance of the within bond has been approved under the provisions of The
Local Government Bond Act of North Carolina.
Acting Secretary, Local Government
Commission
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue designated herein and issued under the
provisions of the within-mentioned bond order and resolution.
NEW HANOVER COUNTY
Finance Officer, as Bond Registrar
By
Authorized Signatory
Date of Authentication:
ASSIGNMENT
FOR V ALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto , the within Bond and irrevocably
appoints , attorney-in-fact, to transfer the within Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Bond m every
particular, without any alteration whatsoever.
Signature Guaranteed:
Notice: Signature must be guaranteed by an
institution which is a participant in the
Securities Transfer Agent Medallion
Program (STAMP) or similar program.
6. The Bonds maturing on and after February 1, 2017 shall be subject to
redemption prior to theIr stated maturities at the option of the Issuer on or after February 1, 2016,
in whole or in part at any time, at a redemption price of 100% of such principal amounts plus
interest accrued to the date fixed for redemption. If less than all of the Bonds are called for
redemption, the Bonds to be redeemed shall be selected m such manner as the Issuer shall
determme; provided, however, that the portion of any Bond to be redeemed shall be in the
pnncipal amount of $5,000 or some multIple thereof and that, in selecting Bonds for redemption,
the hereinafter designated Bond Registrar shall treat each Bond as representing that number of
Bonds which is obtamed by dividing the principal amount of such Bonds by $5,000. For so long
as a DTC book-entry system IS used for determining beneficial ownership of the Bonds, if less
than all of the Bonds within a maturity are to be redeemed, DTC and its participants shall
determine which of the Bonds within a matunty are to be redeemed.
Not more than forty-five (45) nor less than thirty (30) days before the redemption
date of any Bonds to be redeemed, whether such redemption be in whole or m part, the Issuer
shall cause a notice of such redemption to be mailed, postage prepaid, to DTC or its nominee.
Each such notice shall identify the Bonds or portions thereof to be redeemed by reference to their
numbers and shall set forth the date designated for redemption, the redemption price to be pald
and the maturities of the Bonds to be redeemed. If any Bond is to be redeemed in part only, the
notice of redemption shall state also that on or after the redemption date, upon surrender of such
Bond, a new registered Bond or Bonds in pnncipal amount equal to the unredeemed portion of
such bond will be issued.
On or before the date fixed for redemption, moneys shall be deposited with the
Bond Registrar to pay the principal of the Bonds or portions thereof called for redemption as
well as the interest accruing thereon to the redemption date thereof. On the date fixed for
redemption, notice having been given in the manner and under the conditions hereinabove
provided, the Bonds or portions thereof called for redemption shall be due and payable at the
redemption price provided therefor, plus accrued interest to such date.
If a portion of a Bond shall be selected for redemption, the registered owner
thereof or his attorney or legal representative shall present and surrender such Bond to the Bond
Registrar for payment of the principal amount thereof so called for redemption and the interest
accruing thereon to the date of redemption, and the Bond Registrar shall authenticate and deliver
to or upon the order of such registered owner or his legal representative, WIthout charge therefor,
for the unredeemed portion of the principal amount of the Bond so surrendered, a registered
Bond or Bonds of the same maturity, of any denomination or denominations authorized by this
resolutIOn and bearing interest at the same rate.
7. Bonds, upon surrender thereof at the office of the Bond Registrar together
with an assignment duly executed by the registered owner or his attorney or legal representative
in such form as shall be satisfactory to the Bond Registrar, may, at the option of the regIstered
owner thereof, be exchanged for an equal aggregate pnncipal amount of registered Bonds of the
same matunty, of any denomination or denominations authonzed by this resolution and bearing
interest at the same rate.
The transfer of any Bond may be registered only upon the registration books of
the Issuer upon the surrender thereof to the Bond Registrar together with an assignment duly
executed by the registered owner or his attorney or legal representative in such form as shall be
satIsfactory to the Bond RegIstrar. Upon any such registration of transfer, the Bond Registrar
shall authenticate and deliver in exchange for such Bond a new Bond or Bonds, registered in the
name of the transferee, of any denomination or denommations authorized by this Resolution, m
an aggregate princIpal amount equal to the unpaid principal amount of such Bond so
surrendered, of the same maturity and beanng interest at the same rate.
In all cases in which Bonds shall be exchanged or the transfer of Bonds shall be
registered hereunder, the Bond RegIstrar shall authenticate and dehver at the earliest practicable
time Bonds in accordance with the provisions of this Resolution. All Bonds surrendered in any
such exchange or regIstration of transfer shall forthwith be cancelled by the Bond Registrar. The
Issuer or the Bond Registrar may make a charge for shipping and out-of-pocket costs for every
such exchange or registration of transfer of Bonds sufficient to reimburse it for any tax or other
governmental charge required to be paid with respect to such exchange or registration of transfer,
but no other charge shall be made for exchanging or registering the transfer of Bonds under this
Resolution. The Bond Registrar shaH not be required to exchange or register the transfer of any
Bond dunng a penod beginnmg at the opening of bus mess fifteen (15) days before the day of the
mailing of a notice of redemption of Bonds or any portIOn thereof and ending at the close of
business on the day of such mailing or of any Bond called for redemption m whole or in part
pursuant to this Resolution.
The Issuer shall appoint such registrars, transfer agents, depositaries or other
agents and make such other arrangements as may be necessary for the registration, registration of
transfer and exchange of Bonds within a reasonable time according to then commercial standards
and for the timely payment of principal and interest with respect to the Bonds. The Issuer's
Finance Officer is hereby appointed the registrar, transfer agent and paying agent for the Bonds
(collectively, the "Bond Registrar"), subject to the right of the governing body of the Issuer to
appoint another Bond Registrar, and as such shall keep at his office in Washington, North
Carolina, the books of the Issuer for the registration, registration of transfer, exchange and
payment of the Bonds as provided in this Resolution.
8. The Local Government Commission of North Carolina is hereby requested
to sell the Bonds and to state in the Notice of Sale of the Bonds that bidders may name one rate
of interest for part of the Bonds and another rate or rates for the balance of the Bonds. The
Bonds shall bear interest at such rate or rates as may be named in the proposal to purchase said
Bonds which shall be accepted by the Local Government Commission, provided that the true
interest cost to the Issuer shall not exceed 5.5%.
9. The Chairman and the Vice Chairman of the Board of CommiSSIOners, the
Clerk to the Board of Commissioners, the County Manager and the Fmance Officer of the Issuer
are hereby authorized and dIrected to cause the Bonds to be prepared and, when they shall have
been duly sold by said Local Government Commission, to execute the Bonds and have the Bonds
endorsed and authenticated as provided herem and to deliver the Bonds to the purchaser or
purchasers to whom they may be sold by sald Local Government Commission.
10. The Issuer covenants that It will not take any action, or fail to take any
actIon, if any such action or failure to take actIOn would adversely affect the exclusion of interest
pald on the Bonds from gross mcome of the owners thereof for federal income tax purposes.
11. The Issuer hereby undertakes, for the benefit of the beneficial owners of
the Bonds, to provide:
(a) by not later than seven months from the end of each fiscal year of the Issuer,
commencing with the fiscal year ending June 30, 2006, to each nationally
recognized municipal securities information repository ("NRMSIR") and to the
state information depository for the State of North Carolina ("SID"), if any,
audited financial statements of the Issuer for such fiscal year, if available,
prepared in accordance with Section 159-34 of the General Statutes of North
Carolina, as It may be amended from time to time, or any successor statute, or, if
such audited financial statements of the Issuer are not available by seven months
from the end of such fiscal year, unaudited financial statements of the Issuer for
such fiscal year to be replaced subsequently by audited financial statements of the
Issuer to be delivered within 15 days after such audited financial statements
become available for distribution;
(b) by not later than seven months from the end of each fiscal year of the Issuer,
commencing with the fiscal year ending June 30, 2006, to each NRMSIR, and to
the SID, if any, (i) the financial and statistical data as of a date not earlier than the
end of such fiscal year for the type of information included under the heading
liThe County - Debt Information and - Tax Information" in the Official Statement
relating to the Bonds (excluding any information on overlapping or underlying
units) and (ii) the combined budget ofthe Issuer for the current fiscal year, to the
extent such items are not included in the audited financial statements referred to
in (a) above;
(c) m a timely manner, to each NRMSIR or to the Municipal Securities Rulemaking
Board ("MSRB "), and to the SID, if any, notice of any of the following events
with respect to the Bonds, if material:
(1) principal and interest payment delinquencies;
(2) non-payment related defaults;
(3) unscheduled draws on debt servIce reserves reflecting financial
difficultIes;
(4) unscheduled draws on credit enhancements reflecting financIal
difficultIes;
(5) substitution of credit or liquidity providers, or their failure to perform;
(6) adverse tax opinions or events affecting the tax-exempt status of the
Bonds;
(7) modIfication to the rights of the beneficial owners of the Bonds;
(8) bond calls;
(9) defeasances;
(10) release, substitution or sale of any property securing repayment of the
Bonds;
(11) rating changes; and
(d) in a timely manner, to each NRMSIR or to the MSRB, and to the SID, if any,
notice of a failure of the Issuer to provide required annual financial mformatIOn
described in (a) or (b) above on or before the date specified.
At present, Section 159-34 of the General Statutes of North Carolina requires the
Issuer's financial statements to be prepared in accordance with generally accepted accounting
principles and to be audited in accordance with generally accepted auditing standards.
If the Issuer fails to comply with the undertaking described above, any beneficial
owner of the Bonds may take action to protect and enforce the rights of all beneficial owners
with respect to such undertaking, including an action for specific performance; provided,
however, that failure to comply with such undertaking shall not be an event of default and shall
not result in any acceleration of payment of the Bonds. All actions shall be instituted, had and
maintained in the manner provided in this paragraph for the benefit of all beneficial owners of
the Bonds.
The Issuer reserves the right to modify from time to time the information to be
provided to the extent necessary or appropriate in the judgment of the Issuer, provided that any
such modification will be done in a manner consistent with Rule 15c2-12 issued under the
Securities Exchange Act of 1934, as it may be amended from time to time ("Rule 15c2-12"), and
provided further that:
(a) any such modification may only be made in connection with a change in
circumstances that arises from a change in legal requirements, change in law, or
change in the identity, nature, or status of the Issuer;
(b) the informatIOn to be provided, as modIfied, would have complied with the
requirements of Rule 15c2-12 as of the date of the Official Statement relating to
the Bonds, after taking into account any amendments or interpretations of Rule
15c2-12, as well as any changes in CIrcumstances; and
(c) any such modIficatIOn does not materially impair the mterests of the beneficial
owners, as determined either by parties unaffiliated wIth the Issuer (such as bond
counsel), or by the approving vote of the registered owners of a majority in
principal amount of the Bonds pursuant to the tenns of this ResolutIOn, as it may
be amended from time to tIme, at the time of the amendment.
To the extent pennitted by the u.s. Securities and Exchange Commission, the
County may dIscharge its undertaking described above by transmitting those documents or
notices electronically to www.disclosureusa.org.
Any annual financial information containing modified operating data or financial
information shall explain, in narrative form, the reasons for the modification and the impact of
the change in the type of operating data or financial information being provided.
The provisions of this SectIOn 11 shall termmate upon payment, or provisions
havmg been made for payment in a manner consistent with Rule 15c2-12, in full of the principal
of and interest on all of the Bonds.
12. The blanket Letter of Representations, as requested by DTC, is hereby
approved and confirmed.
13. The Preliminary Official Statement dated on or about December 30,2005,
setting forth financial and statistical data in connection with the offering of the Bonds (the
"Preliminary Official Statement") is hereby approved. In connection with this approval, the
Board of Commissioners of the Issuer has examined copies of the Preliminary Official Statement
and has, to the extent and in the manner it has deemed necessary, discussed the contents thereof
with officers of the administration of the Issuer. The Board of Commissioners of the Issuer does
hereby recite that, upon its examination and diSCUSSIOns, nothing has come to its attentIOn which
would lead it to believe that said Preliminary Official Statement contains any untrue statement of
a material fact or omits to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The Chairman, the Vice
Chairman, the County Manager and the Finance Officer of the Issuer are each hereby authorized
to approve changes in such Preliminary Official Statement and to execute such Prelimlllary
Official Statement and the final Official Statement for and on behalf ofthe Issuer.
14. The Chairman and Vice Chairman of the Board of Commissioners, the
County Manager, the Finance Officer and the Clerk to the Board of Commissioners and the other
officers of the Issuer are hereby authorized and directed to execute and deliver for and on behalf
of the Issuer any and all financing statements, certificates, documents or other papers and to
perform any and all acts they may deem necessary or appropriate in order to carry out the intent
of this Resolution and the matters herem authorized.
This the 9th day of January, 2006.
(SEAL)
ATTEST:
Cl\,:\~ \... ~ c\IJ~
Sheila L. Schult, Clerk to the Board
NE/fJJhC~
Robert G. Greer, Chairman
~JJ. ~q. ~S". S'
't
RESOLUTION PROVIDING FOR THE ISSUANCE OF
$15,000,000 VARIABLE RATE GENERAL
OBLIGATION SCHOOL BONDS, SERIES 2006
*
*
*
*
*
*
WHEREAS, the County of New Hanover, North Carolina (the "Issuer") has considered
and evaluated both fixed and variable rate debt alternatives;
WHEREAS, the Issuer has considered and recognized that the current interest rates on
fixed rate debt instruments are low and has determined that the estImated interest rate at which
fixed rate debt instruments could be issued is 4.50%;
WHEREAS, the Issuer has consIdered and recognized that variable interest rate debt
instruments subject the Issuer to the risk of higher interest rates in the future, that the rate may be
higher than the fixed rates that are currently available to the Issuer, and that in addition to the
variable interest cost, the Issuer must pay the fees of a liquidity provIder and a remarketing
agent, which fees will mcrease the cost of the variable rate debt;
WHEREAS, the Issuer believes that for this issue variable rate debt financing is
preferable because (a) the initial mterest rate is substalltially below the fixed rate indicated
above, (b) a variable rate provides the possibility of substantial cost savings over the life of the
issue, and ( c) the interest rate can be fixed at any time;
WHEREAS, a bond order authorizing $123,000,000 General Obligation School Bonds
(the "Bonds") of the Issuer was adopted by the Board of CommIssioners (the "Board") on March
14, 2005 and was approved by the vote of a majority of the qualified voters of the Issuer who
voted thereon at a special election duly called and held on May 10, 2005;
WHEREAS, none ofthe Bonds mentIOned above have been issued;
WHEREAS, it is necessary at this time to issue $15,000,000 of such Bonds mentioned
above;
WHEREAS, the period of usefulness of the capital proJects to be financed by the
issuance of the bonds is a period of 40 years, computed from the date of the Bonds; and
WHEREAS, copies of the forms of the following documents relatmg to the transactions
described above have been filed with the Issuer and have been made available to the Board of the
Issuer:
(a) the Bond Purchase Agreement to be dated on or about February 8, 2006 (the
"Bond Purchase Agreement"), among the North Carolllla Local Government
Commission, the Issuer and Wachovia Barue, National Association, as underwriter
(the "Underwriter");
NYC585930.2
(b) the Standby Bond Purchase Agreement dated as of February 1, 2006 (the
"Standby Bond Purchase Agreement"), among the County, Wachovia Bank,
National AssocIation, as liquidity provider, and First-Citizens Bank & Trust
Company, as paying agent;
(c) the Remarketing Agreement dated as of February 1, 2006 (the "Remarketing
Agreement"), by and between the Issuer and Wachovia Bank, National
Association, as remarke~ing agent (the "Remarketlllg Agent") for the Bonds;
(d) the Tender Agent Agreement dated as of February 1, 2006 (the "Tender Agent
Agreement"), among the Issuer, the Remarketing Agent and First-Citizens Bank
& Trust Company, as tender agent and paying agent; and
(e) the Official Statement to be dated on or about January 30, 2006 (the "Official
Statement") with respect to the Bonds.
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Issuer:
1. The Bonds to be issued pursuant to the preceding paragraphs shall be designated
"County of New Hanover, North Carolina Variable Rate General Obligation School Bonds,
Series 2006" (hereinafter referred to as the "Bonds"). The Bonds shall be issued pursuant to the
terms of G.S. 159-79. The North Carohna Local Government Commission will specifically
determine pursuant to G.S. 159-79(a)(1) that a Credit Facility in addition to the Standby Bond
Purchase Agreement referred to below is not required.
2. The actions of the County Manager and the Deputy Finance Director of the Issuer
in applying to the North Carolina Local Government Commission to sell the Bonds at private
sale are hereby ratified and approved.
3. The Bonds shall have a final maturity of February 1, 2026 and be issued
substantially in the form and in accordance with the terms and details set forth in Exhibit 1
attached hereto and incorporated herein by reference, together with such changes not inconsistent
with the general tenor hereof and thereof as the County Manager and the Finance Director or the
Interim Finance Director, with the advice of counsel, may deem appropriate, their execution of
closing certificates in connection with the Issuance of the Bonds to evidence conclusively the
authorization and approval thereof by the Board.
4. The Board hereby requests the North Carolina Local Government Commission to
sell the Bonds WIth a variable interest rate at private sale and without advertisement to the
Underwriter and designates the County Manager and the Fmance Director or the Interim Finance
Director as the persons who must approve the pnce or prices at which the Bonds are sold by the
North Carolina Local Government Commission. The purchase price of the Bonds shall be 100%
ofthe par amount ofthe Bonds, and the maximum initIal interest rate shall be 12% per annum.
5. The forms, tenns, provisions and distribution and use by the Underwriter of the
Tender Agent Agreement, the Bond Purchase Agreement, the Standby Bond Purchase Agreement,
the Remarketing Agreement and the Official Statement with respect to the Bonds are hereby
approved m all respects, and each of the officers of the Board, the County Manager and the
Finance Director or Interim Finance Director are hereby authorized and directed to execute and
deliver those documents in substantially the forms presented to thIS meeting, together with such
changes not inconsistent with the general tenor hereof and thereof as they, with the advice of
counsel, may deem necessary and appropriate, such execution and delivery to evidence
conclusively the authorization and approval thereof by the Board. Each of those officers and
employees are also authorized and directed to execute and deliver any certIficates, agreements or
other documents they, wIth the advice of counsel, may deem necessary or appropriate to effect the
transactions contemplated by this resolutIOn and the other documents described above, such
execution and delivery to be conclusive evidence of the approval and authonzatIOn thereof by the
Board.
6. From the adoption of this resolution until the date the bonds are issued, the County
Manager and the Finance Director or the Interim Fmance DIrector of the Issuer are hereby
authorized, empowered and dIrected to make any changes, modifications additions or deletions to
Exhibit I of this resolutIOn as shall to them seem necessary, deSIrable or appropriate that may be
requested by the rating agencies rating the Bonds or other technical changes to the provisions of
the Bonds necessary to implement the intent of this resolution. Such changes, modifications,
additions or deletions to Exhibit 1 of thIS resolution shall be set forth in a certificate executed by
the County Manager and the Finance Director or the Interim Finance Director of the Issuer on the
date the Bonds are Issued.
7. The Issuer covenants that it will not take any action, or fail to take any action, If any
such actIOn or failure to take action would adversely affect the exclusion from gross income of
interest on the Bonds for federal income tax purposes.
8. This resolution shall take effect immediately upon its adoption.
This the 9th day of January, 2006.
(SEAL)
~
Robert G. Greer, Chairman
ATTEST:
~~\~ '-.~~lL\~
Sheila L. Schult, Clerk to the Board
LLGM Draft #2
January 3,2006
EXHIBIT 1
TO
RESOLUTION PROVIDING FOR THE ISSUANCE OF
$15,000,000 COUNTY OF NEW HANOVER, NORTH CAROLINA
VARIABLE RATE GENERAL OBLIGATION SCHOOL BONDS,
SERIES 2006
Adopted on January 9,2006
NYC 582459.356910006041/3/2006 03'01pm
SectlOn 101
SectlOn 102
Section 103
Section 201
Section 202
Section 203
Section 204
SectlOn 205
Section 206
Section 207
Section 208
Section 209
Section 210
SectlOn 211
Section 212
Section 213
Section 214
Section 215
Section 301
Section 302
SectlOn 303
Section 304
Section 305
SectIOn 306
T ABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
Meaning of Certain Words and Terms..................................................................... 1
Rules of Construction..............................................................................................6
Computation of Tilne...............................................................................................6
ARTICLE II.
DETAILS OF BONDS
Maturity of Bonds....................................................................................................6
Form of Bonds.........................................................................................................6
Details of Bonds...............................,.................................................................... .21
Execution of Bonds .............................................................................................. .22
Terms of Bonds ................................................................................................... ..23
Purchase of Bonds.......... ............... ..... ............ ...... ..................... ........ ......... ....... .....31
The Liquidity Facility............................................................................................3 5
Authentication of Bonds ........ ....... ................. ................. .... ...... ...... .................... ...3 7
Exchange of Bonds................................................................................................ 38
Registration and Transfer of Bonds .......................................................................38
Ownership of Bonds..............................................................................................3 9
Initial Dehvery of Bonds.................................................................... ...................39
Delivery of Purchased Bonds.................................................................................3 9
Mutilated, Destroyed, Stolen or Lost Bonds..........................................................40
Early Maturity of Bonds .......................................................................................40
ARTICLE III.
REDEMPTION OF BONDS
Terms of Redemption........................................................................................... .41
Selection of Bonds to be Redeemed ......................... .................................... .........42
ElectIOn to Redeem and Notice to Paying Agent; Redemption Notice .................42
Effect of Calling for Redemption..........................................................................43
Redemption of Portion of Bond ............................ ......................... .......................44
Cancellation ......................................................................................................... .44
ARTICLE IV.
REMARKETING AGENT, TENDER AGENT, AND PURCHASE AND REMARKETING
OF BONDS
SectlOn 401 Remarketing Agent and Tender Agent .................................................................44
NYC 582459.3 56910 006041/3/2006 03"Olpm
1
Section 402
Section 403
Section 404
Section 405
Section 406
Section 407
Qualifications of Remarketing Agent and Tender Agent; ResignatIOn;
Removal ............................................................................................................... .45
Notice of Bonds Dehvered for Purchase; Purchase of Bonds ..............................46
Remarketing of Bonds; Notice ofInterest Rates ..................................................47
Delivery of Bonds . ............................................................................................... .48
Delivery of Proceeds of Sale..................................................................................48
Draws on Liquidity Facility to Pay Purchase Price ofBonds................................48
ARTICLE V.
SUPPLEMENT AL RESOLUTIONS
Section 501 Supplemental Resolutions......................................................................................49
Section 601
Section 602
Section 603
SectIOn 604
SectIOn 605
Section 606
Section 607
Section 608
Section 609
Section 610
ARTICLE VI.
MISCELLANEOUS PROVISIONS
Manner of Giving Notice ........ ............................................................................. .49
Substitute Mailing ................................................................................................ .51
Headings............................................................................................................... .51
Further Authority................................................................................................... 51
Days Other than Busmess Days ........................................................................... .52
Notice to Moody's and S&P ............................................................................... ..52
References to and Rights of Bank...................................................................... ....52
Governing Law.............................................................................. ....................... .52
Severability of Invahd ProvIsions......................................................................... .52
Continuing Disclosure Obhgation ......... ........................ ............ ............. ....... ...... ..52
NYC 582459.3 56910006041/3/2006 03"Olpm
11
ARTICLE I.
DEFINITIONS
Section 101 Meaning of Certain Words and Terms. In addition to words and terms
elsewhere defined in this Exhibit 1, the following words and tenns as used in thIS Exhibit 1 shall
have the followmg meanmgs, unless some other meaning is plamly intended:
"Authorized Denommations" means (1) with respect to any Long-Term Interest Rate
Period, $5,000 and any integral multiple thereof and (ii) wIth respect to any Short-Term Interest
Rate Period or Weekly Interest Rate Period, $100,000 and any integral multiple of $5,000 in
excess of $1 00,000.
"Authorized LiquidIty Termination" means a termination of the Liquidity Facility before
Its expiratIOn date pursuant to provisions in the Liquidity Facihty that allow the Bank to
termmate its obligation to purchase Bonds immediately upon the occurrence of certalll events set
forth therein without gIVmg any advance notice to the Issuer or the Owners.
"Available Moneys" means (i) moneys which have been paid to the Tender Agent by the
Issuer and have been on deposit wIth the Tender Agent for at least 124 days during and prior to
which no Event of Bankruptcy shall have occurred, (ii) any other moneys, if, in the opinion of
nationally recognIzed counsel expenenced in bankruptcy matters, the application of such moneys
WIll not constitute a VOIdable preference in the event of the occurrence of an Event of
Bankruptcy, and (iii) investment emmngs on any of the moneys described in clauses (i) and (ii)
of this definition.
"Bank" means Wachovia Bank, National Assocation in its capacity as party to the
Standby Agreement, until a SubstItute Liquidity Facility is issued and effectIve in accordance
with Section 207 hereof, and thereafter "Bank" shall mean the obligor on such Substitute
Liquidity Facility.
"Bank Bond Interest Rate" means Bank Bond Rate as defined in Section 1.01 of the
Standby Agreement or the equivalent rate charged by the Bank in any Substitute Liquidity
Facility; provided, however, that If no such rate is specified in any Substitute Liquidity Facility
then in effect, then Bank Bonds shall continue to bear mterest and such interest shall accrue and
be payable as specified herein as If such Bank Bonds were not Bank Bonds.
"Bank Bonds" means any Bonds purchased WIth moneys described in Section 403(b )(ii) -
hereof until such Bonds are remarketed, as provided m the Tender Agreement.
"Bankruptcy Code" means Title 11 of the United States Code, as amended, and any
successor statute or statutes having substantially the same function.
"Bond Counsel" means a firm of attorneys knowledgeable and experienced in the law
relating to municipal securities and the law relating to the federal and State of North Carolina
taxatIOn of mterest thereon and retained by the Issuer.
NYC 582459.356910006041/3/2006 Q3'Olpm
"Bond Interest Tenn" means, with respect to any Bond, each period established III
accordance with SectIOn 205(f) hereof dunng which such Bond shall bear interest at a Bond
Interest Term Rate.
"Bond Interest Term Rate" means, with respect to each Bond, a non-variable Illterest rate
on such Bond established periodically in accordance with Section 205(f) hereof.
"Bond Purchase Fund" means the fund so designated which is established with the
Tender Agent pursuant to SectIOn 401 (b)(ii) hereof.
"Bonds" means the Bonds so designated by and Issued under this ResolutIOn.
"Business Day" means any day other than (a) a day on which banks located in New York,
New York or the cities in which the principal office of any of the Paying Agent, the Tender
Agent, the Remarketing Agent or the Bank is located are required or authorized by law to close,
(b) a day on which the New York Stock Exchange is closed, or (c) a day on which the payment
system of the Federal Reserve System is not operatIOnal. For purposes of thIS defimtion, the
Bank's prinCIpal office shall be that office at which demands for payment are to be presented
under the Standby Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Local Government Commission of North Carolina, a division
of the Department of State Treasurer, and any successor or successors thereto.
"Derivative Agreement" means an interest rate swap, cap, collar, floor, forward, option,
put, call or other agreement, arrangement or secunty however denominated, entered into in order
to hedge interest rate fluctuatIOns on all or a portion of the Bonds or to provide debt management
by changing payments to be made by the Issuer with respect to all or a portion of the Bonds.
"Event of Bankruptcy" means the commencement of a case by the Issuer under the U. S.
Bankruptcy Code or under any other domestic bankruptcy act or any similar act which hereafter
may be enacted (other than such proceedmg initiated by the Issuer against third parties other than
the Issuer), unless such case shall have been dismissed and such dismissal shall be final and not
subj ect to appeal.
"Failed Tender Rate" means the lesser of (a) the sum of (i) the bond equivalent yield for
91 day United States Treasury bIlls sold at the last United States Treasury auctIOn occurring prior
to such day, which yield shall be calculated by the Tender Agent in accordance with standard
practices in the banking industry on the basis of the discount rate at which such bills were sold
plus (n) one percent and (b) 12% per annum.
"Favorable Opinion of Bond Counsel" means an opinion of Bond Counsel, addressed to
the Issuer, the Paying Agent, the Tender Agent, the Remarketing Agent and the Bank, to the
effect that the actIOn proposed to be taken is authorized or permItted by the laws of the State, the
ResolutIOn and this Resolution and will not adversely affect any exclusion from gross mcome for
federal income tax purposes, or any exemption from State income taxes, of interest on the Bonds.
2
NYC 582459.3 56910 006041/3/2006 03"01pm
"Fitch" means Fitch Ratings, and if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Fitch" shall be deemed to
refer to any other nationally recognized securities ratmg agency desIgnated by the Issuer with the
approval of the Remarketmg Agent.
"Interest Accrual Date" means (a) as to the Bonds that are not Bank Bonds, (i) WIth
respect to any Weekly Interest Rate Period, the first day thereof and, thereafter, the first Business
Day of each calendar month during that Weekly Interest Rate Period, (n) with respect to any
Long-Tenn Interest Rate Period, the first day thereof and, thereafter, each Interest Payment Date
in respect thereof, other than the last such Interest Payment Date, and (iii) with respect to each
Bond Interest Term w1thm a Short- Tenn Interest Rate Period, the first day thereof and, (b) as to
Bank Bonds, the date such Bank Bonds were purchased WIth moneys described III Section
403(b )(n) hereof and thereafter in accordance with (a) above.
"Interest Payment Date" means (i) WIth respect to any Weekly Interest Rate Penod, the
first Business Day of each calendar month, (i1) with respect to any Long-Term Interest Rate
Period, each February 1 and August 1, or, if any such February 1 or August 1 shall not be a
Business Day, the next succeedmg Business Day, (ni) with respect to any Bond Interest Term,
the day next succeeding the last day thereof, (iv) with respect to each Interest Rate Penod, the
day next succeeding the last day thereof and (v) with respect to Bank Bonds, the dates specified
in the LiquidIty Facility.
"Interest Rate Period" means any Weekly Interest Rate Period, Short-Term Interest Rate
Period or Long-Term Interest Rate Penod.
"Issuer" means the County of New Hanover, North Carolma and any successor or
successors thereto.
"Liquidity Facility" means the Standby Agreement and any SubstItute Liquidity Facility.
"Liquidity Provider Account" means the account bearing such name whIch is created
pursuant to the Tender Agreement.
"Long-Term Interest Rate" means, with respect to each Bond, a non-variable interest rate
on such Bond established in accordance WIth Section 205(e) hereof.
"Long- Term Interest Rate Period" means each period during which a Long-Term Interest
Rate is in effect.
"Moody's" means Moody's Investors ServIce, Inc., a corporation organized and eXIsting
under the laws of the State of Delaware, ItS successors and their 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 ratmg
agency designated by the Issuer with the approval of the Remarketing Agent.
"Opimon of Counsel" means an opmion in wntmg signed by an attorney or firm of
attorneys acceptable to the Paying Agent and the Bank whIch may be counsel for the Issuer or
other counsel.
'l
.J
NYC 582459.356910006041/3/2006 03'01pm
"Owner" means a person in whose nalne a Bond is registered in the registration books
provIded for in Section 210 hereof.
"Paying Agent" means the Paying Agent appointed pursuant to SectIOn 210 hereof and at
the tlme servmg as such under this ExhibIt 2 whether the origmal or a successor Paymg Agent.
"PrincIpal Office" means, with respect to the Tender Agent, the Paying Agent or the
Remarketing Agent, the address for such party set forth m Section 601 hereof, as it may be
changed from time to time pursuant to the proVIsions of SectIOn 601 hereof.
"Rating Agency" means Moody's and S&P.
"Record Date" means, with respect to an Interest Payment Date, (i) in respect of any
Weekly Interest Rate Period or any Bond Interest Term, the Busmess Day immediately
precedmg such Interest Payment Date and (ii) in respect of any Long-Term Interest Rate Period,
the 15th day of the month immediately preceding such Interest Payment Date or, in the event that
an Interest Payment Date shall occur less than 15 days after the first day of a Long-Term Interest
Rate Period, such first day.
"Remarketing Account" means the account bearing such name which is created pursuant
to the Tender Agreement.
"Remarketing Agent" means the initial and any successor remarketing agent appointed in
accordance with Section 401(a) hereof.
"Remarketing Agreement" means the Remarketing and Interest Services Agreement,
dated as of February 1, 2006, between the Issuer and the Remarketing Agent, as the same may be
alllended or supplemented from time to time, or any remarketing agreement entered into with a
successor Remarketing Agent.
"Resolution" means the resolutIOn of the Board of Commissioners of the Issuer adopted
on January 9,2006 providing for the issuance of the Bonds.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., its successors and their aSSIgns, and If S&P shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other natIOnally recognized securities rating agency designated by the Issuer with the
approval of the Remarketing Agent.
"Securities Depository" means The DepOSItory Trust Company, New York, New York or
other recognized securities depOSItory selected by the Issuer, which maintains a book-entry
system in respect of the Bonds, and shall include any substitute for or successor to the securities
depository imtially acting as Securities DepOSItory.
"Secunties DepOSItory Nominee" means, as to any Securities Depository, such Securities
Depository or the nommee of such Securities Depository m whose name there shall be registered
on the regIstratIOn books mamtained by the PaYIllg Agent the Bonds to be delivered to and
4
NYC 582459.3 56910006041/3/2006 03-01pm
1ITunobilized at such Securities Depository, or its desIgnee, during the continuation with such
Securities DeposItory of partIcIpatIon m its book-entry system.
"Short-Term Interest Rate Period" means each period, compnsed of Bond Interest Terms,
during which Bond Interest Term Rates are in effect.
"Sinking Fund ReqUIrement" means, WIth respect to the Bonds, the principal amount
fixed, or computed, as heremafter provided, for the retIrement of such Bonds by redemption on
February 1.
The SInking Fund Requirements are as follows:
Year Amount Year Amount
2007 $750,000 2017 $750,000
2008 750,000 2018 750,000
2009 750,000 2019 750,000
2010 750,000 2020 750,000
2011 750,000 2021 750,000
2012 750,000 2022 750,000
2013 750,000 2023 750,000
2014 750,000 2024 750,000
2015 750,000 2025 750,000
2016 750,000 2026* 750,000
*Final Maturity
The aggregate alllount of such Sinking Fund Requirements, together with the amount due
upon the final maturity of the Bonds, shall be equal to the aggregate principal amount of the
Bonds. The Sinking Fund Requirements for the Bonds shall begin in the year determined as
provided above and shall end with the year immediately preceding the maturity of such Bonds
(such final installment being payable at maturity and not redeemed).
In the event Bonds are redeemed at the optIOn of the Issuer pursuant to Section 301(b)
hereof, the Bonds so redeemed may, at the option of the Issuer, be applied as a credit against any
subsequent Sinkmg Fund Requirement with respect to Bonds otherwise to be redeemed thereby,
such credit to be equal to the principal amount of such Bonds redeemed pursuant to SectIOn
301(b) hereof; provided that the Issuer shall have delivered to the Paying Agent not less than 45
days prior to the date of such mandatory Sinking fund redemption the wntten direction of the
Issuer stating the Issuer's electIOn to apply such Bonds as a credIt. Unless the Paying Agent
receives the written dIrection of the Issuer electing to apply Bonds redeemed at the opt~on of the
Issuer pursuant to Section 301(b) hereof as a credit against a particular Sinking Fund
Requirement, the Bonds so redeemed shall be apphed to the Smking Fund Requirements m
chronological order.
5
NYC 582459.356910006041/3/2006 03'01pm
"Standby Agreement" means the Standby Bond Purchase Agreement, dated as of
February 1, 2006, aInong the Issuer, the Bank and the Tender Agent/Paying Agent.
"State" means the State of North Carolina.
"Substitute LiqUIdIty Facility" means a facility meeting the requirements set forth in
Section 207 hereof.
"Tender Agent" means the mitial and any successor tender agent appointed in accordance
wIth Section 401 hereof.
"Tender Agreement" means the Tender Agent Agreement, dated as of February 1, 2006,
among the Issuer, the Tender Agent, the Paying Agent and the Remarketing Agent, as
supplemented or amended.
"Undehvered Bonds" means any Bonds so deSIgnated m accordance wIth the provisions
of Section 206(f)(i) or 206(g)(ii) hereof.
"Weekly Interest Rate" means a variable interest rate on the Bonds established m
accordance with Section 205( d) hereof.
"Weekly Interest Rate Period" means each period dunng which a Weekly Interest Rate is
in effect for the Bonds.
SectIOn 102 Rules of Construction. Words of the masculine gender shall be deemed
and construed to include correlative words of the feminine and neuter genders. Unless the
context shall otherwise indicate, the words "Bond", "Owner" and "person" shall include the
plural as well as the singular number and the word "person" shall mean any individual,
corporation, partnership, joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Section 103 Computation of Time. In this Exhibit 1, in the computation of a period of
time from a specified date to a later specified date, the word "from" means "from and including"
and the words "to" and "until" mean "to but excluding."
ARTICLE II.
DETAILS OF BONDS
SectIOn 201 Maturity of Bonds. The Bonds shall be stated to mature on February 1,
2026.
Section 202 Form of Bonds. The Bonds are Issuable in fully-registered form m
Authorized Denommations, shall be numbered and shall be substantially in the form hereinafter
set forth, with such appropriate variations, omissions and insertions as may be necessary or
appropriate to confonn to the prOVISIOns of this Exhibit 1. All Bonds may have endorsed thereon
such legends or text as may be necessary or appropriate to conform to any applicable rules and
regulations of any goverm11ental authonty or of any secuntIes exchange on which the Bonds may
6
NYC 582459.3 56910 00604 1/3/2006 03.01 pm
be listed or any usage or requirement of law with respect thereto. If at any time an Owner of
Bonds shall not be a Securities Depository or Securities Depository Nominee, the Issuer agrees
that it will deliver pnnted bond certificates for such Bonds to the Paying Agent to be used for
exchanges and transfers of Bonds in accordance with SectIOns 209, 210 and 214 hereof.
[Form of Bonds]
No. R-
United States of Amenca
State of North Carolina
$
COUNTY OF NEW HANOVER, NORTH CAROLINA
VARIABLE RATE GENERAL OBLIGA nON BOND, SERIES 2006
ORIGINAL ISSUANCE DATE
MATURITY DATE
February 1, 2006
February 1, 2026
CUSIP
For Long-Term Interest Rate Penod Only
Type of Interest Rate Period:
Interest Rate for
Long- Term Interest
Rate Period Only:
Mandatory Tender Date for
Long-Term Interest Rate
Period:
For Short-Term Interest Rate Period Only
Interest Rate:
First Day of
Bond Interest
Term and
Interest Accrual
Date:
FIrst Day of
Next Bond
Interest Term
and Interest
Payment Date:
REGISTERED OWNER:
CEDE & CO.
PRINCIP AL AMOUNT:
7
NYC 582459.356910006041/3/2006 03-01pm
Interest Due
on Next
Interest
Payment
Date:
Number of
Days in
Bond
Interest
Term:
The County of New Hanover, North Carolma (the "Issuer"), a county of the State of
North Carolina, is justly indebted and for value received hereby promises to pay, m the manner
hereinafter provided, to the registered owner set forth above or registered assigns or legal
representatIve on the Maturity Date set forth above (or earlier as hereinafter referred to), upon
the presentatIOn and surrender hereof, at the corporate trust office of FIrst-Citizens Bank & Trust
Company, as paying agent (the "Paying Agent") in Raleigh, North Carolina, the principal
amount set forth above. Such payment of pnnc1pal and the payment of any premIUm on this
Bond shall be by check; provIded, however, that princIpal and any premIUm shall be paid by wire
transfer (m the continental Umted States) of immediately avmlable funds to any owner of at least
$1,000,000 in aggregate principal amount of Bonds outstanding, at such owner's option, in each
case according to wire instructions given to the Paying Agent m writing for such purpose in
accordance WIth the procedures prescribed by the Paymg Agent. The Issuer also promises to pay
interest on such principal amount from the Interest Payment Date (as hereunder defined) next
preceding the date on which this Bond is authenticated to which interest shall have been paid
unless it is authenticated on an Interest Payment Date, in which event it shall bear mterest from
such Interest Payment Date, or unless it is authentIcated prior to the first Interest Payment Date,
in which event "It shall bear interest from the original Issuance Date set forth above, payable on
March 1, 2006, and on each Interest Payment Date thereafter until such principal amount is paid,
at the rates per annum determmed as described herein or, if this Bond shall be a Bank Bond (as
defined in Exhibit 1 to the Resolution hereinafter mentIOned), at the greater of (i) the rates per
annum determined as provided herein and (ii) the rate per annum applicable to Bank Bonds
determined pursuant to the LIquidIty Facihty hereinafter mentioned at the times provided in the
LiqUIdIty Facility. The interest so payable or duly provided for on any Interest Payment Date
will be paid to the person in whose name this Bond is registered at the close of business on the
Record Date (as hereinafter defined) for such interest, which shall be, in the case of a Long-Term
Interest Rate Period (as hereinafter defined) for any Bonds (as hereinafter defined), the 15th day
immediately precedmg such Interest Payment Date, or, in the event that an Interest Payment Date
shaD occur less than 15 days after the first day of a Long-Term Interest Rate Period, such first
day and, in the case of any other Interest Rate Period (as hereinafter defined), the Business Day
(as heremafter defined) immediately preceding such Interest Payment Date. All such payments
shall be made m such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and pnvate debts. Interest on this Bond IS payable by (i)
check mailed on the date on which due to the registered owner hereof at the address of such
registered owner shown on the registratIOn books kept by the Paying Agent, as of the close of
busmess on the Record Date in respect of such interest, or (Ii) in the case of (A) Bonds bearing
interest at Bond Interest Term Rates or (B) Bonds beanng interest other than at a Bond Interest
Tenn Rate owned by a person who is the registered owner of Bonds in an aggregate principal
amount of at least $1,000,000 and who, prior to the Record Date next preceding any Interest
Payment Date, shall have provIded the Paymg Agent with WIre transfer instructions, by wire
transfer (in the continental United States) of immediately available funds; provided, however,
that while the Bonds bear interest at Bond Interest Term Rates, mterest payable hereon IS payable
only upon presentatIOn hereof to First-Citizens Bank & Trust Company, as tender agent (the
"Tender Agent"), at its Principal Office (as defined m Exhibit 1 to the Resolution) for the
delivery of Bonds (hereinafter defined). For the prompt payment hereof, as to both pnncIpal and
interest as the same shall become due, the faith and credIt of the Issuer are hereby irrevocably
pledged.
8
NYC 582459.3 56910006041/3/2006 03"01pm
[Printed Bonds shall contain the following statement: REFERENCE IS HEREBY
MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE REVERSE HEREOF
WHICH SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH HEREIN.]
[Bonds Issued pursuant to a book-entry system shall contain the following paragraph: The
Bonds are being issued by means of a book-entry system wIth no physical distribution of bonds
certificates to be made except as provided m Exhibit 1 to the Resolution. One Bond with respect
to each date on WhICh the Bonds are stated to mature, registered in the name of the Securities
Depository Nominee (as defined in ExhibIt 1 to the Resolution), is beIllg issued and reqUIred to
be depoSIted with the Secunties Depository (as defined in Exhibit 1 to the ResolutIOn) and
immobilized in its custody. The book-entry system will evidence positions held in the Bonds by
the Securities Depository's participants, beneficIal ownershIp of the Bonds m Authorized
Denominations thereof being evidenced in the records of such participants. Transfers of
ownership shall be effected on the records of the SecuntIes Depository and Its partIcipants
pursuant to rules and procedures established by the SecuritIes Depository and its participants.
The Issuer, the Paying Agent and the Tender Agent will recognIze the Securities Depository
Nominee, whIle the registered Owner of this Bond, as the owner of this Bond for all purposes.
Transfer of principal and interest payments to partIcIpants of the Securities Depository will be
the responsibility of the Securities DeposItory, and transfer of principal and interest payments to
beneficial owners of the Bonds by participants of the Securities Depository will be the
responsibihty of such participants and other nominees of such beneficial owners. The Issuer will
not be responsible or liable for such transfers of payments or for maintaining, supervising or
reviewing the records maintamed by the Securities Depository, the Secunties Depository
Nominee, ItS partIcipants or persons acting through such partIcIpants.]
This Bond is one of an issue of bonds designated "Variable Rate General Obligation
School Bonds, Series 2006" (the "Bonds") and issued by the Issuer for the purpose of providing
funds, with any other available funds, for providing certain governmental facilities for the Issuer
and effectuating certain public purposes of the Issuer, and this Bond is issued under and pursuant
to The Local Government Bond Act, as amended, Article 7, as amended, of Chapter 159 of the
General Statutes of North Carolina, a bond order duly adopted by the Board of Commissioners
for the Issuer on March 14, 2005, which was approved by the vote of a majority of the qualified
voters of the Issuer who voted thereon at a special referendum duly called and held on May 10,
2005 and a resolution duly passed by SaId Board of Commissioners on January 9, 2006 (the
"Resolution"), many of the terms of which are included in Exhibit 1 thereto ("Exhibit 1 to the
Resolution"). The Bonds will mature, subject to prior redemption, on February 1, 2026.
The Issuer shall cause a Liquidity Facility to be in effect during any Weekly Interest Rate
Period, any Short- Tenn Interest Rate Period and on the first day of any Long- Tenn Interest Rate
Period; provIded, however, if the Bonds are being adjusted from one Long-Term Interest Rate
Penod to another Long-Tenn Interest Rate Period, such reqUIrement for a Liquidity Facility shall
not apply and no LIquidity Facility need be in effect for the mandatory tender for purchase that
will occur on the first day of the Long-Term Interest Rate Period. Subject to certain conditions,
the LiqUIdIty Facihty may be replaced by a Substitute LIquidity Facility aI1d, m such event,
references m this Bond to the Liquidity Facility or the Bank shall refer to such SubstItute
Liquidity Facility or to the provider of such Substitute Liquidity Fac1hty. Under the Liquidity
9
NYC 582459.356910006041/3/2006 0301pm
FacIlIty, the Bank has agreed, subject to the terms and condItIons contained therem, to make
funds available in an amount sufficIent to pay (i) the portion of the purchase price corresponding
to the pnnclpal ofthe Bonds and (Ii) while the Bonds bear interest at a Weekly Interest Rate, the
portion of the purchase price of the Bonds corresponding to accrued interest thereon for a period
not to exceed 35 days at the maximum rate of 12% per annum and, prior to any adjustment of the
Bonds to Bond Interest Tenn Rates, the Issuer shall either cause the Liquidity Facility to be
amended or shall obtain a Substitute Liquidity Facility which shall provide for an amount as
shall be determined to be necessary to pay such interest portion of the purchase pnce in order to
obtain certain ratings on the Bonds satisfied m ExhibIt 1 to the ResolutIOn. Upon the occurrence
of an Authonzed Liquidity Termmation (as defined m Exhibit 1 to the Resolution), the
obligation of the Bank to furnish money for the purchase of Bonds will terminate ImmedIately,
without notice to the registered owners.
The term of the Bonds will be dIVided into consecutive mterest rate periods (each, an
"Interest Rate Period" dUTIng each of which the Bonds shall bear mterest at Weekly Interest
Rates (a "Weekly Interest Rate Period"), a Long-Term Interest Rate (a "Long-Term Interest Rate
Period"), or Bond Interest Term Rates for one or more consecutive Bond Interest Terms (a
"Short-Term Interest Rate Penod"); provided, however, that no Bond (except Bank Bondstmay
bear interest at a rate in excess of 12% per annum. The initial Interest Rate Period shall be a
Weekly Interest Rate Period. The interest rate on the Bonds may be adjusted from time to tIme
to Bond Interest Term Rates or a Long-Term Interest Rate and thereafter again adjusted as
described in Exhibit 1 to the Resolution. As hereinafter described, the Bonds are subject to
maIldatory purchase on the first day of any Interest Rate Period.
During any Weekly Interest Rate Period, interest on the Bonds shall be payable on each
Interest Payment Date for the period commencing on the immediately preceding Interest Accrual
Date (as heremafter defined) and ending on the day immedIately preceding the Interest Payment
Date (or, if sooner, the last day of the Weekly Interest Rate PeTIod). During any Short-Term
Interest Rate Period or Long-Term Interest Rate Period, interest on this Bond shall be payable on
each Interest Payment Date for the period commencing on the immediately preceding Interest
Accrual Date and ending on the day immediately preceding such Interest Payment Date. In any
event, interest on this Bond shall be payable for the final Interest Rate Period to the date on
which this Bond shall have been paid in full. Interest shall be computed, in the case of a
Long-Term Interest Rate Period, on the basis of a 360-day year consisting of twelve 30-day
months, and in the case of any other Interest Rate Period, on the baSIS of a 365 or 366-day year,
as the case may be, for the actual number of days elapsed. The Bonds may be issued m the form
of fully regIstered Bonds in the denominations of (i) with respect to any Long-Term Interest Rate
Period, $5,000 and any mtegral multiple thereof and (ii) $100,000 and any integral multiple of
$5,000 m excess of $100,000 during any Weekly Interest Rate Period or Short-Term Interest
Rate Period (the "Authorized Denommations").
The term "Interest Accrual Date" means (i) with respect to any Weekly Interest Rate
Penod, the first day thereof and, thereafter, the first Business Day of each month dUTIng that
Weekly Interest Rate Period, (ii) with respect to any Long- Tenn Interest Rate Period, the first
day thereof and, thereafter, each Interest Payment Date m respect thereof, other thall the last such
Interest Payment Date, (ii1) with respect to each Bond Interest Term wlthm a Short-Term Interest
Rate Period, the first day thereof, and (IV) as to Bank Bonds, the date such Bank Bonds were
10
NYC 582459.356910006041/3/2006 030lpm
purchased wIth moneys provided under the Liquidity Facihty and thereafter m accordance with
(i) or (iii) above, as applicable. The term "Interest Payment Date" means (i) with respect to any
Weekly Interest Rate Period, the first Business Day of each calendar month, (ii) with respect to
any Long-Term Interest Rate Penod, each August 1 and February 1, (iii) WIth respect to any
Bond Interest Term, the day next succeeding the last day thereof, and (iv) with respect to each
Interest Rate Period, the day next succeeding the last day thereof. The tenn "Business Day"
means any day other than (a) a day on which banks located III New York, New York or the cities
in which the principal office of any of the Paymg Agent, the Tender Agent, the Remarketing
Agent or the Bank is located are reqUIred or authonzed by law to close, (b) a day on which the
New York Stock Exchange IS closed, or (c) a day on whIch the payment system of the Federal
Reserve System is not operatIOnal. For purposes of this defimtIOn, the Bank's principal office
shan be that office at which demands for payment are to be presented under the Liquidity
FacilIty.
The interest rate on the Bonds shall be determined as follows:
(1) Weekly Interest Rate. During each Weekly Interest Rate Period, this
Bond shall bear interest at a Weekly Interest Rate, which shall be determined by the
Remarketing Agent on Wednesday of each week during such Weekly Interest Rate
Penod, or if such day shall not be a Business Day, then the next succeeding Business
Day. The first Weekly Interest Rate determmed for each Weekly Interest Rate Period
shall be determined on or prior to the first day of such Weekly Interest Rate Period and
shall apply to the period commencing on the first day of such Weekly Interest Rate
Period and ending on the next succeeding Wednesday. Thereafter, each Weekly Interest
Rate shall apply to the period commencing on Thursday and ending on the next
succeeding Wednesday, unless such Weekly Interest Rate Period shall end on a day other
than a Wednesday, in which event the last Weekly Interest Rate for such Weekly Interest
Rate Period shall apply to the period commencing on Thursday precedmg the last day of
such Weekly Interest Rate Period and ending on the last day of such Weekly Interest Rate
Period. The Weekly Interest Rate shall be the rate of mterest per annum determined by
the Remarketing Agent (based on the exammation of tax-exempt obligations comparable
to the Bonds and known by the Remarketing Agent to have been priced or traded under
then prevailing market conditions) to be the minimum interest rate WhICh, if borne by the
Bonds, would enable the Remarketmg Agent to sell the Bonds on such Business Day at a
price (without regard to accrued interest) equal to the principal amount thereof. In the
event that the Remarketing Agent fails to establish a Weekly Interest Rate for any week,
then the Weekly Interest Rate for such week shall be the same as the Weekly Interest
Rate for the immediately preceding week if the Weekly Interest Rate for such precedmg
week was determined by the Remarketing Agent. In the event that the Weekly Interest
Rate for the Immediately preceding week was not detennined by the Remarketing Agent,
or in the event that the Weekly Interest Rate determmed by the Remarketing Agent shall
be held to be Illvalid or unenforceable by a court of law, then the mterest rate for such
week shall be equal to 70% of the mterest rate on 30-day hIgh grade unsecured
commercIal paper notes sold through dealers by major corporations as reported in The
Wall Street Journal on the day the Weekly Interest Rate would otherwIse be detennined
as provided m ExhibIt 1 to the ResolutIOn for such Weekly Interest Rate Period.
11
(2) Long-Tenn Interest Rate. During each Long-Term Interest Rate Period,
thIS Bond shall bear interest at a Long-Term Interest Rate. The Long-Term Interest Rate
for the Bonds shall be detennined by the Remarketing Agent on a Business Day no later
than the effective date of such Long-Term Interest Rate Period with respect to the Bonds.
The Long- Tenn Interest Rate shall be the rate of interest per alIDUm determined by the
Remarketing Agent (based on the examination of tax-exempt obligations comparable to
the Bonds and known by the Remarketing Agent to have been priced or traded under
then-prevailmg market condItions) to be the minimum mterest rate whIch, If borne by the
Bonds, would enable the Remarketing Agent to sell the Bonds on such date of
determination at a price equal to the principal amount thereof, plus accrued interest, if
any, plus a premIUm If certam conditIOns are satIsfied so long as the Issuer delivers a
Favorable Opmion of Bond Counsel to the effect that pricing the Bonds to obtain a
premium will not adversely affect the exclusion of mterest on any of the Bonds from
gross income for federal mcome tax purposes. If for any reason a Long-Term Interest
Rate is not so determmed for any Long-Term Interest Rate Penod by the Remarketing
Agent on or prior to the first day of such Long-Term Interest Rate Period and a Liquidity
Facility IS m effect on such date, then the Bonds shall bear interest at a Weekly Interest
Rate as described above and shall continue to bear interest at a Weekly Interest Rate
determined in accordance with the provisions described herem until such time as the
interest rate on the Bonds shall have been adjusted to Bond Interest Term Rates or a
J.,ong-Term Interest Rate as provIded herein, and during such Weekly Interest Rate
Period the Bonds shall be subject to purchase upon notice from the owners thereof as
described below. If for any reason, a Long-Term Interest Rate is not so determined for
any Long-Term Interest Rate Period and no LIquidity Facihty shall then be in effect, then
the Bonds shall be subject to mandatory tender for purchase.
(3) Bond Interest Terms and Bond Interest Term Rates. During each
Short- Term Interest Rate Period, this Bond shall bear interest during each Bond Interest
Term for this Bond at the Bond Interest Term Rate for this Bond. The Bond Interest
Term and Bond Interest Term Rate for thIS Bond shall be determined by the Remarketing
Agent no later than the first day of each Bond Interest Term. The Bond Interest Term
and the Bond Interest Term Rate need not be the same for any two Bonds, even if
determined on the same date. The Bond Interest Term for each Bond shall be a penod of
not more than 180 days determined by the Remarketing Agent to be the period which,
together with all other Bond Interest Terms for all Bonds then outstanding, WIll result m
the lowest overall interest expense on the Bonds over the next succeeding 180 days,
taking into account certain factors set forth in Exhibit 1 to the ResolutIOn. Any Bond
purchased on behalf of the Issuer and remaming unsold by the RemarketIllg Agent as of
the close of business on the first day of the Bond Interest Term for that Bond shall have a
Bond Interest Term of one day or, If that Bond Interest Tenn does not end on a day
immediately preceding a Busmess Day, a Bond Interest Tenn ending on the day
immedIately preceding the next Business Day. If for any reason a Bond Interest Term for
any Bond cannot be so determined by the Remarketmg Agent, or if the detenmnatIOn of
such Bond Interest Term IS held by a court of law to be invahd or unenforceable, then
such Bond Interest Tenn shall be 30 days, or if the last day so detennined shall not be a
day immediately preceding a Busmess Day, shall end on the first day Immediately
preceding the Business Day next succeedmg such last day, or If such last day would be
12
NYC 582459.3 56910 00604 1/3/2006 03.01 pm
after the day immediately preceding the Maturity Date, shall end on the day immediately
preceding the Matunty Date. The Bond Interest Tenn Rate for each Bond Interest Term
for this Bond shall be the rate of interest per annum, determmed by the Remarketmg
Agent (based on the examination of tax-exempt obligations comparable to the Bonds and
known by the Remarketmg Agent to have been priced or traded under then prevaillllg
market condItions) to be the mmimum interest rate which, ifbome by this Bond for such
Bond Interest Term, would enable the Remarketing Agent to sell this Bond on the date
and at the time of such determinatIOn at a price (WIthout regard to accrued interest) equal
to the pnncipal amount thereof. If for any reason a Bond Interest Term Rate for any
Bond is not so estabhshed by the Remarketing Agent for any Bond Interest Term, or such
Bond Interest Term Rate IS determined by a court of law to be invalid or unenforceable,
then the Bond Interest Term Rate for such Bond Interest Term shall be the rate per annum
equal to 70% of the interest rate on high grade unsecured commercial paper notes sold
through dealers by major corporatIOns as reported by The Wall Street Journal on the first
day of such Bond Interest Term and whIch maturity most nearly equals the Bond Interest
Term for which a Bond Interest Term Rate is being calculated.
Wachovia Bank, National Association has been appointed as the initial Remarketing
Agent for the Bonds. First-Citizens Bank & Trust Company has been appointed as the initial
Tender Agent for the Bonds, whose Principal Office for the delivery of Bonds at the date of
issuance of the Bonds is located at First-Citizens Bank & Trust Company, AttentIOn: Corporate
Trust Department, 100 East Tryon Road - DAC 61, Raleigh, North Carolina 27603.
The Paying Agent shall give notice by first class mail of an adjustment in the Interest
Rate Penod not less than 12 days (15 days if the then current Interest Rate Period is a Long-Term
Interest Rate Period) prior to the effective date of the new Interest Rate Period, or, in the case of
an adjustment to a Long-Term Interest Rate Period, not less than 25 days prior to the effective
date of such Long-Term Interest Rate Period. In the event of an adjustment in the Interest Rate
Period applicable to the Bonds, the Bonds shall be subject to mandatory tender for purchase as
heremafter described.
In connection with any adJustment of the Interest Rate Period on the Bonds, the Issuer is
obligated to satisfy certain conditions precedent as described in Exhibit 1 to the Resolution.
Purchase of Bonds During Weekly Interest Rate Period. During any Weekly Interest
Rate Period and if a LiquidIty FacIlity is in effect, this Bond shall be purchased in whole (or in
part if both the amount to be purchased and the amount remaining unpurchased shall consist of
Authonzed Denominations) at the option of the regIstered owner on any Business Day at a
purchase price equal to the principal amount hereof plus accrued interest, if any, from the
Interest Accrual Date immediately preceding the date of purchase through the day immediately
preceding the date of purchase, unless the date of purchase shall be an Interest Accrual Date, in
which case at a purchase price equal to the princIpal amount thereof, payable in immedIately
aVaIlable funds, upon delivery to the Tender Agent at its Principal Office for delivery of notIces
and to the Remarketing Agent of an mevocable written notice WhICh states the principal amount
of tl1lS Bond and the date on whIch the same shall be purchased, which date shall be a Busmess
Day at least seven days after the date of delivery of such notice to the Tender Agent. Any notice
dehvered to the Tender Agent and the Remarketing Agent after 11 :00 a.m., New York City time,
13
NYC 582459.356910006041/3/2006 03'01pm
shall be deemed to have been received on the next succeeding Business Day. In the event a
registered owner shall deliver a notIce to the Tender Agent of such registered owner's election to
have this Bond purchased as herein described, and such registered owner shall not deliver this
Bond to the Tender Agent on the date of such purchase, then this Bond shall nevertheless be
deemed to have been purchased on such date and shall no longer be deemed to be outstandmg
under Exhibit 1 to the ResolutIOn and mterest shall no longer accrue wIth respect thereto, and the
registered owner of such Bond shall have no right other than to receive payment of the purchase
price therefor. Moneys held by the Tender Agent for such registered owner shall not be invested.
Mandatory Tender for Purchase on Day Next Succeeding the Last Day of Each Bond
Interest Tenn. On the day next succeedmg the last day of each Bond Interest Term for thIS
Bond, this Bond shall be purchased from its regIstered owner at a purchase price equal to the
pnnc1pal amount hereof, payable m Immediately available funds.
Mandatory Tender for Purchase on First Day of Each Interest Rate Period. This Bond
shall be subject to mandatory tender for purchase on the first day of each Interest Rate Period, or
on the day which would have been the first day of an Interest Rate Period in the event that one of
the conditions precedent to the adjustment to a new Interest Rate Period shall not be met as
described in Exhibit 1 to the ResolutIOn, at a purchase price, payable in lmmediately available
funds, equal to the prinCIpal amount hereof, or in the case of a purchase on the first day of an
Interest Rate Period which shall be preceded by a Long-Term Interest Rate Period and which
shall commence pnor to the day originally established as the last day of such preceding
Long- Term Interest Rate Period, at a purchase price equal to the optional redemption price then
applicable to this Bond on such purchase date.
Mandatory Tender for Purchase Upon Cancellation, TerminatIOn or Expiration of
Liquidity Fac11itv. So long as the Bonds shall not have been adjusted to a Long-Term Interest
Rate, if at any time the Paying Agent shall give notice that the Bonds shall, on the date specified
in such notice, cease to be subJect to purchase pursuant to the Liquidity Facility (other than
because of an Authorized Liquidity Termination), the Bonds shall be subject to mandatory tender
for purchase at a purchase price equal to the principal amount thereof, plus accrued interest, if
any, to the date of purchase (i) on the fifth Business Day preceding the date on which a LiqUIdity
Facility then m effect is stated to expIre, terminate or be cancelled (unless extended) other than a
termmatIOn on account of any Authorized Liquidity Termination and (ii) If the Liquidity Facility
then in effect will terminate or be cancelled prior to its stated expiration date on account of
delivery of a SubstItute Liquidity Facility, on the proposed effective date of the Substitute
Liquidity Facility. Notwithstandmg anythmg in this paragraph to the contrary, in the event that
m connection with any such termmation, cancellatIOn or expiration of an existIllg Liquidity
FaCIlIty and substitution therefor WIth a Substitute Liquidity FacIlity, the Issuer delivers to the
Tender Agent, the Paying Agent and the Remarketing Agent prior to the date that notice of such
termmation, cancellatIOn or expiration and substitution is required to be given by the Tender
Agent as provided in Exhibit 1 to the Resolution, written eVIdence from each rating agency then
ratmg the Bonds to the effect that such termination, cancellation or expiration and substitution in
and of itself Will not result in the withdrawal or reduction of any rating then applicable to the
Bonds, then the Bonds WIll not be subject to mandatory tender for purchase as provided in this
paragraph solely as a result of such cancellation or expiration and substItutIOn.
14
NYC 582459.3 56910 006041/3/2006 03"01pm
Mandatory Tender for Purchase at Option of the Issuer. At the option of the Issuer,
dunng any Weekly Rate Penod, the Bonds shall be subject to mandatory tender for purchase on
any Interest Payment Date at a purchase price, payable m Immediately available funds, equal to
the princIpal amount of the Bonds, plus accrued interest, if any.
For payment of the purchase price of any Bond required to be purchased as described
above on the date specified, such Bond must be delivered, at or prior to 10:00 a.m., New York
CIty tIme, on the date specIfied m applicable notIce, to the Tender Agent at its PrinCIpal Office
for delIvery of Bonds, accompanied by an instrument of transfer thereof, in form satisfactory to
the Tender Agent, executed in blank by the registered owner thereof or his duly authorized
attorney, WIth such SIgnature guaranteed by a commercial bank, trust company or member firm
of the New York Stock Exchange. In the event any such Bond is delivered after 10:00 a.m. on
such date, payment of the purchase price of such Bond need not be made until the Business Day
following the date of delivery of such Bond, but such Bond shall nonetheless be deemed to have
been purchased on the date specified m such notice and no interest shall accrue thereon after
such date.
The Tender Agent may refuse to accept delivery of any Bond for which a proper
instrument of transfer has not been provided. In the event that any registered owner of a Bond
who shall have gIVen notice of such owner's election to have hIS Bond purchased during a
Weekly Interest Rate Period hereof, or who shall have been mailed the notice of a mandatory
tender for purchase of his Bond in connection with the end of a Bond Interest Term, a
cancellation, termination, expiration or substItutIOn of the Liquidity Facility or the
commencement of a new Interest Rate Period, shall fail to deliver such Bond to the Tender
Agent at the place and on the apphcable date and time specified, or shall fail to deliver such
Bond properly endorsed, such Bond shall constitute an Undelivered Bond. If funds m the
amount of the purchase price of any Undelivered Bond are available for payment to the
registered owner thereof on the date and at the time specified, then from and after the date and
tIme of that required delivery, (A) such Undelivered Bond shall be deemed to be purchased and
shall no longer be deemed to be outstandmg; (B) interest shall no longer accrue thereon; and (C)
funds in the amount of the purchase price of the Undelivered Bond shall be held by the Tender
Agent for the benefit of the registered owner thereof (provided that the registered owner shall
have no right to any investment proceeds derived from such funds), to be paid upon delivery (or
proper endorsement) of the Undelivered Bond to the Tender Agent at Its Principal Office for
dehvery of Bonds. Any funds held by the Tender Agent for the purchase of Undelivered Bonds
shall be held umnvested.
On any Interest Payment Date dunng a Weekly Interest Rate Penod, the Bonds shall be
subj ect to optional redemption by the Issuer, in whole or in part, at a redemption price equal to
100% of the pnnclpal amount thereof to be redeemed plus accrued mterest, if any, to the
redemption date.
On the day succeeding the last day of any Bond Interest Term WIth respect to any Bond,
such Bond shall be subJ ect to optional redemptIOn by the Issuer, m whole or in part, at a
redemption pnce equal to 100% of the pnnclpal amount thereof to be redeemed.
15
NYC 582459.356910006041/3/2006 03.01pm
The Bonds are subject to mandatory redemption in part wIthout premium on each
February 1 m the followmg amount of the SInking Fund Requirements per year at a redemptIOn
pnce equal to 100% of the prinCIpal amount of the Bonds to be redeemed plus accrued interest
thereon to the date fixed for redemption:
Year Amount Year Amount
2007 $750,000 2017 $750,000
2008 750,000 2018 750,000
2009 750,000 2019 750,000
2010 750,000 2020 750,000
2011 750,000 2021 750,000
2012 750,000 2022 750,000
2013 750,000 2023 750,000
2014 750,000 2024 750,000
2015 750,000 2025 750,000
2016 750,000 2026* 750,000
*Final Matunty
During any Long-Term Interest Rate Period, the Bonds shall be subject to optional
redemption by the Issuer on the first day thereof, in whole or in part, at a redemptIOn price of par,
and thereafter, during the periods specIfied below or, if approved by Bond Counsel (as defined in
Exhibit 1 to the Resolution) as provided in Section 205(e)(ii) of Exhibit 1 to the Resolution,
during the periods specified in the notice of the Issuer to the Paying Agent pursuant to SectIOn
205(e)(ii)(A) of Exhibit 1 to the Resolution, in whole or in part at any time, at the redemption
prices (expressed as a percentage of the prinCIpal amount of Bonds to be redeemed) heremafter
indicated or specified in the notice of the Issuer to the Tender Agent pursuant to Section
205( e )(ii)(A) of Exhibit 1 to the Resolution, plus accrued interest, if any, to the redemption date:
Length of Long- Term Interest Rate Period
(expressed in years)
Redemption Price
Greater than 15
after 10 years at 100%
Less than or equal to 15
And greater than 10
after 7 years at 1 00%
Less than or equal to 10
And greater than 7
after 5 years at 100%
16
NYC 582459.356910006041/3/2006 03-01pm
Length of Long- Tenn Interest Rate Penod
(expressed in years)
Redemption Pnce
Less than or equal to 7 and
Greater than 4
after 3 years at 100%
Less than or equal to 4
after 2 years at 100%
Bank Bonds are subject to mandatory redemption prior to maturity m whole or in part on
any date specified in the Liquidity FacIlity in any manner directed by the LIquidIty FacilIty for
such Bank Bonds at a redemption pnce equal to 100% of the principal amount of the Bank
Bonds to be redeemed plus accrued interest thereon to the date fixed for redemption.
In the event any of the Bonds or portIOns thereof are called for redemptIOn as aforesaid,
notIce of the call for redemption, Identifying the Bonds or portions thereof to be redeemed, shall
be given by the Issuer by mailing a copy of the redemptIOn notice by first class, registered or
certIfied mail at least 30 days but not more than 45 days prior to the date fixed for redemption to
the regIstered owner of each Bond to be redeemed m whole or in part at the address shown on
the registration books.
If payment of the purchase price of any Bond shall not be made to any registered owner
within five Busmess Days after a purchase date following an Authonzed LiqUIdIty Termination
(unless a Substitute LIquidIty Facility is then in effect), the principal of all outstanding Bonds
shall become and be Immediately due and payable on the next succeeding Business Day. In such
case, the Bonds shall bear mterest at the lesser of (a) the sum of (i) the bond equivalent yield for
91 day United States Treasury bills sold at the last Umted States Treasury auction occurring pnor
to such day, WhICh yield shall be calculated by the Tender Agent in accordance with standard
practices m the banking industry on the basis of the discount rate at which such bills were sold
plus (ii) one percent and (b) 12% per annum, in either case begInning after such five Business
Days until such princIpal IS paid.
If payment of the purchase price of any Bond shall not be made to any regIstered owner
within 75 days after a purchase date (unless a Substitute Liquidity Facility is then in effect), the
principal of all outstanding Bonds shall become and be immediately due and payable on the next
succeeding Business Day. In such case, the Bonds shall bear interest at the lesser of (a) the sum
of (i) the bond equivalent yield for 91 day Umted States Treasury bills sold at the last United
States Treasury auction occurring prior to such day, which Yield shall be calculated by the
Tender Agent in accordance with standard practices in the banking industry on the basis of the
discount rate at which such bIlls were sold plus (Ii) one percent and (b) 12% per annum, in either
case beginning on such Business Day until such prinCIpal is paid.
With respect to the two' preceding paragraphs, for the period beginning on the purchase
date on which the purchase pnce IS not paid to a registered owner and ending on the day before
the Bonds become immedIately due and payable (or, the effectiveness of a Substitute LIquidIty
FacilIty whIch prevents such acceleratIOn from occumng), the Bonds shall bear interest at a rate
per mmum equal to 70% of the interest rate on high grade unsecured commercial paper notes
17
NYC 582459.356910006041/3/2006 03'01pm
sold through dealers by major corporations as reported in The Wall Street Journal on such
purchase date.
The Bonds are issuable in fully-registered form and in Authorized Denominations.
Bonds may be exchanged at the Principal Office of the Paying Agent, in the manner and subject
to the limitations and conditions provided in Exhibit 1 to the Resolution, for an equal aggregate
principal amount of Bonds of the same maturity and of any Authorized Denominations.
The transfer of this Bond is registrable by the registered owner hereof in person or by his
attorney or legal representative at the Principal Office of the Paying Agent, but only in the
manner and subject to the limitations and conditions provided in Exhibit 1 to the Resolution and
upon surrender and cancellation of this Bond. Upon any such registration of transfer, the Issuer
shall cause to be executed and the PaYing Agent shall authenticate and deliver in exchange for
this Bond a new Bond or Bonds, registered in the name of the transferee, of any Authorized
Denominations, in an aggregate principal amount equal to the principal amount of this Bond and
ofthe same maturity.
Exhibit 1 to the Resolution may be amended or supplemented only to the extent and in
the circumstances permitted thereby.
It is hereby certified and recited that all acts, conditions and things required by the
ConstitutIOn and laws of North Carolina to happen, exist and be performed precedent to and in
the issuance of this Bond have happened, exist and have been performed in regular and due form
and time as so required; that proviSIOn has been made for the levy and collection of a direct
annual tax upon all taxable property within the Issuer sufficient to pay the principal of and the
interest on this Bond as the same shall become due; and that the total indebtedness of the Issuer,
including this Bond, does not exceed any constitutional or statutory limitation thereon.
This Bond shall not be vahd or become obligatory for any purpose or be entitled to any
benefit or security under the Resolution until this Bond shall have been authenticated by the
execution by the Paying Agent of the certificate of authentication endorsed hereon.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be manually signed by its
[Vice] Chairman and Clerk to the Board and its corporate seal to be impressed hereon, all as of
the Original Issuance Date set forth above.
[Vice] Chairman of the Board of Commissioners
[SEAL]
Clerk to the Board of Commissioners
18
NYC 582459.3 56910006041/3/2006 03:01pm
CERTIFICATE OF LOCAL GOVERNMENT COMMISSION
The issuance of the within Bond has been approved under the provisions of The Local
Government Bond Act of North Carolma.
Actmg Secretary, Local Government Commission
19
NYC 582459.3 56910 006041/3/2006 03"01pm
,.'
CERTIFICATE OF AUTHENTICATION
ThIS Bond is one of the Bonds of the series designated herem and Issued under the
provIsions of the within-mentIOned Resolution.
First-CItIzens Bank & Trust Company,
as Paymg Agent
By:
Authorized Signatory
Date of authentication:
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assIgns and transfers unto
[please print or typewrite name and address of assignee] the wIthin Bond and all rights and title
thereunder, and hereby irrevocably constItutes and appoints
attorney to transfer the within Bond on the books kept for registratIOn thereof, wIth full power of
substItutIOn in the premises.
Date:
NOTICE: Signature must correspond with the name of the registered owner as it appears on the
face of the within Bond III every particular, without alteration or enlargement or any change
whatever.
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by an institution whIch is a participant III the
Securities Transfer Agent Medallion Program (STAMP) or sImilar program.
20
NYC 582459.3569]000604 ]/3/2006 03'01pm
..'
Section 203 Details of Bonds. The Bonds shall be dated the date of the original
issuance thereof and shall bear interest at a rate or rates determined pursuant to Section 205
hereof and not exceeding 12% per annum or, m the case of Bonds that are Bank Bonds, at the
greater of (i) the rate or rates determmed pursuant to SectIOn 205 hereof and (ii) the rate per
annum determined pursuant to the LIqUldity Facility (the Bank Bond Interest Rate), which
mterest shall be payable on March 1, 2006 and on each Interest Payment Date thereafter until
payment of their pnncipal sum, except that interest on Bank Bonds shall be paid as provIded in
the LiqUldlty Facihty.
Each Bond shall bear interest from the Interest Payment Date next preceding the date on
which it is authenticated unless it is (a) authentIcated upon an Interest Payment Date in whIch
event it shall bear interest from such Interest Payment Date or (b) authenticated pnor to the first
Interest Payment Date in which event it shall bear mterest from Its date; provided, however, that
if at the time of authentication of any Bond mterest IS m default, such Bond shall bear interest
from the date to which interest has been paid or, if no interest has been paid, from its date.
Interest on the Bonds shall be computed as described in SectIOn 205(b) hereof.
The principal of and the interest and any redemptIOn premium on the Bonds shall be
payable in any coin or currency of the United States of America which is legal tender for the
payment of public and pnvate debts on the respective dates of payment thereof.
The principal of and any redemption premium on each such Bond shall be payable to the
person appearing on the registration books of the Issuer hereinafter proVIded for as the Owner of
such Bond or hIS registered assigns or legal representative at such office of the Paying Agent or
such other place as the Issuer may determme upon the presentation and surrender thereof as the
Saine shall become due and payable. Such payment of prinCIpal and any redemption premium
shall be by check; provided, however, that pnncIpal of and any redemption premIUm on Bonds
shall be paid by wire transfer (in the contmental United States) of immedIately available funds to
any Owner of at least $1,000,000 in aggregate prinCIpal amount of the Bonds outstanding, at its
option, in each case accordmg to wire instructions given to the Paying Agent in writing for such
purpose in accordance with the procedures prescribed by the PaYlllg Agent. Payment of interest
on Bonds shall be made in the manner specified III Section 205(h) hereof.
Subject to the foregoing provisions of this Section, each Bond delivered under this
Exhibit 1 upon registration of transfer of or in exchange for or in lieu of any other Bond shall
carryall the rights to interest accrued and unpaid, and to accrue, which were carried by such
other Bond and each such Bond shall bear lllterest from such date, so that neither gain nor loss in
interest shall result from such registration, transfer, exchange or substitution.
The Bonds will be issued by means of a book-entry system with no physical dIstribution
of bond certIficates to be made except as hereinafter provided. One bond certIficate for each
matunty of the Bonds, III the aggregate pnncipal amount of such matunty and registered m the
nalne of Cede & Co., as nominee of The Depository Trust Company, New York, New York
("DTC"), WIll be issued and required to be deposited WIth DTC and Immobilized in Its custody.
The book-entry system will eVIdence ownership of the Bonds in Authorized DenominatIOns,
WIth transfers of ownershIp effected on the records of DTC and its partIcipants pursuant to rules
21
NYC 582459.3 569 J 0 00604 1/3/200603-01 pm
and procedures established by DTC and its participants. The principal of and any redemption
premium on each Bond and interest wIth respect thereto shall be payable to Cede & Co. or any
other person appearing on the registration books of the Issuer as the registered owner of such
Bond or Its regIstered assigns or legal representatives. Transfer of principal, interest, purchase
price and any redemption premIUm payments to participants of DTC will be the responsibility of
DTC, and transfer of pnnclpal, interest, purchase price and any redemptIOn premIUm payments
to benefiCIal owners of the Bonds by partIcIpants of DTC WIll be the responsibIlity of such
participants and other nominees of such beneficial owners. The Issuer, the Remarketing Agent,
the Tender Agent and the Paymg Agent will not be responsible or liable for such transfers of
payments or for maintaimng, supervising or reVIewing records maintained by DTC, its
participants or persons acting through such participants.
In the event that (a) DTC determines not to contmue to act as Securities Depository for
the Bonds or (b) the Issuer determines that contmuation of the book-entry system of evidence
and transfer of ownership of the Bonds would adversely affect the interests of the beneficial
owners of the Bonds, the Issuer will discontinue the book-entry system with DTC in accordance
with DTC's rules and procedures. If the Issuer identifies another quahfied Securities Depository
to replace DTC, the Issuer will make arrangements with DTC and such other Securities
Depository to effect such replacement and deliver replacement bonds registered in the name of
such other Securities Depository or its Securities Depository Nominee in exchange for the
outstanding Bonds, and the references to DTC or Cede & Co. in this Exhibit 1 shall thereupon be
deemed to mean such other Securities Depository or its SecuntIes DeposItory Nominee. If the
Issuer fails to identify another qualified Securities DeposItory to replace DTC, the Issuer will
deliver replacement bonds in fully registered form in Authonzed DenominatIOns in exchange for
the outstanding Bonds as required by DTC.
The Issuer may enter into amendments to any agreement between the Issuer and DTC or
any successor Secunties Depository relating to the book-entry system to be maintained with
respect to the Bonds without the consent of the Owners or beneficial owners of the Bonds.
Notwithstanding anything herein to the contrary, principal and interest on Bank Bonds
shall be payable at the rates, times and in the manner provided in the LiqUIdity Facility.
Section 204 Execution of Bonds. The Bonds shall bear the manual or faCSImile
signatures of the Chairman or Vice ChaIrman of the Board of Commissioners and the Clerk to
the Board of CommISSIOners or their designees and the corporate seal or a facsimIle of the
corporate seal of the Issuer shall be impressed or printed, as the case may be, on the Bonds.
The certificate of the CommISSIOn to be endorsed on all Bonds shall bear the manual or
facsimile signature of the Secretary of the Commission and the certificate of authentication of the
Paying Agent to be endorsed on all Bonds shall be executed as provIded heremafter.
In case any officer of the Issuer or the Commission whose manual or facsimile SIgnature
shall appear on any Bonds shall cease to be such officer before the delivery of such Bonds, such
manual or facsulllle signature shall nevertheless be valid and suffiCIent for all purposes the same
as If he had remained in office until such dehvery, and any Bonds may bear the manual or
facslmile signatures of such persons as at the actual tune of the executIOn of such Bonds shall be
22
NYC 582459.3 56910006041/3/2006 03-01pm
the proper officers to sign such Bonds although at the date of such Bonds such persons may not
have been such officers.
SectIOn 205 Terms of Bonds.
(a) For any Weekly Interest Rate Penod, interest on the Bonds shall be payable on
each Interest Payment Date for the penod commencing on the immediately preceding Interest
Accrual Date and ending on the day immediately preceding the Interest Payment Date (or, if
sooner, the last day of the Weekly Interest Rate Period). For any Short-Term Interest Rate
Period or Long-Term Interest Rate Penod, mterest on the Bonds shall be payable on each Interest
Payment Date for the period commencing on the Immediately precedmg Interest Accrual Date
and ending on the day immediately preceding such Interest Payment Date. In any event, interest
on the Bonds shall be payable for the final Interest Rate Period to the date on which the Bonds
shall have been paid m full
(b) Interest on the Bonds shall be computed, in the case of a Long-Term Interest Rate
Period, on the basis of a 360-day year consisting of twelve 30-day months, and in the case of any
other Interest Rate Period, on the basis of a 365- or 366-day year, as appropnate, for the actual
number of days elapsed.
(c) In the manner hereinafter provided, the term of the Bonds shall be divided mto
consecutIve Interest Rate Periods during each of which the Bonds shall bear interest at a Weekly
Interest Rate, Bond Interest Term Rates or a Long-Term Interest Rate; provided, however, that at
any time, all Bonds shall bear interest at a Weekly Interest Rate, a Long-Term Interest Rate or
Bond Interest Term Rates and no Bond (except Bank Bonds) shall bear interest at a rate in excess
of 12% per annum. The fIrst Interest Rate Period shall commence on the date of original
issuance of the Bonds and shall be a Weekly Interest Rate Period. On or prior to such date of
original issuance, the mitial Weekly Interest Rate borne by the Bonds shall be determined in the
manner provIded in this Section 205 by the Underwriter.
(d) (i) Determination of Weekly Interest Rate. During each Weekly Interest Rate
Period, the Bonds shall bear mterest at a Weekly Interest Rate, which shall be determined by the
Remarketing Agent on Wednesday of each week during such Weekly Interest Rate Period, or if
such day shall not be a Busmess Day, then on the next succeeding Business Day. The first
Weekly Interest Rate detennined for each Weekly Interest Rate Penod shall be determined on or
prior to the first day of such Weekly Interest Rate Period and shall apply to the period
commencing on the first day of such Weekly Interest Rate Period and endmg on and mcluding
the next succeedmg Wednesday. Thereafter, each Weekly Interest Rate shall apply to the period
commencing on Thursday and ending on and including the next succeeding Wednesday, unless
such Weekly Interest Rate Period shall end on a day other than Wednesday, in which event the
last Weekly Interest Rate for such Weekly Interest Rate Period shall apply to the penod
commencing on Thursday preceding the last day of such Weekly Interest Rate Period and ending
on and mc1uding the last day of such Weekly Interest Rate Period. The Weekly Interest Rate
shall be the rate of mterest per annum determmed by the Remarketmg Agent (based on the
examination of tax-exempt obligations comparable in the Judgment of the Remarketmg Agent to
the Bonds and known by the Remarketmg Agent to have been priced or traded under then
prevmlmg market conditions) to be the m1mmum interest rate which, If borne by the Bonds,
?'"
-,)
NYC 582459.3 569]0 00604 ]/3/2006 03:0]pm
would enable the Remarketing Agent to sell the Bonds on such date of determinatIOn at a pnce
(without regarding accrued interest) equal to the principal amount thereof. In the event that the
Remarketing Agent fails to establIsh a Weekly Interest Rate for any week dunng a Weekly
Interest Rate Penod, then the Weekly Interest Rate for such week shall be the same as the
Weekly Interest Rate for the Immediately preceding week If the Weekly Interest Rate for such
precedmg week was determined by the Remarketing Agent. In the event that a Weekly Interest
Rate for the immediately preceding week was not determined by the Remarketmg Agent, or in
the event that the Weekly Interest Rate determmed by the Remarketmg Agent shall be held to be
invalid or unenforceable by a court of law, then the interest rate for such week shall be a rate per
annum equal to 70% of the interest rate on 30-day high grade unsecured commercial paper notes
sold through dealers by maJor corporations as reported m The Wall Street Journal on the day the
Weekly Interest Rate would otherwIse be detennined as provided herein for such Weekly
Interest Rate Period. The Remarketing Agent shall furnish to the Issuer and the Tender Agent on
the date of determination the Weekly Interest Rate so determmed by telex, telephone or telecopy,
promptly confirmed in writmg or shall make the Weekly Interest Rate available to the Issuer and
the Tender Agent by readily accessible electronic means.
(n) Adiustment to Weekly Interest Rate. Subject to Sections 205G)
and 205(k) hereof, the Issuer may adjust the Bonds to bear interest at a Weekly Interest
Rate by written dIrection to the Paying Agent, the Tender Agent, the Bank and the
Remarketing Agent at least 30 days prior to the effective date of such adjustment. Such
dIrection of the Issuer shall specify (1) the effectIve date of such adjustment to a Weekly
Interest Rate, which shall be (A) a Business Day not earlier than the 30th day following
receipt by the Paying Agent of such directIOn, (B) in the case of an adjustment from a
Long- Term Interest Rate Penod, the day immediately following the last day of the
then-current Long-Term Interest Rate Period or a day on WhICh the Bonds would
otherwise be subject to optional redemptIOn pursuant to SectIOn 301(b )(iii) hereof if such
adjustment did not occur, and (C) in the case of an adjustment from a Short-Term Interest
Rate Period, the day immediately following the last day of the Short-Term Interest Rate
Period; and (2) the date of delivery for such Bonds to be purchased. In addition, the
direction of the Issuer shall be accompanied by a Favorable Opilllon of Bond Counsel.
Dunng each Weekly Interest Rate Period commencing on a date so specified and ending
on the day immediately preceding the effective date of the next succeeding Interest Rate
Period, the interest rate borne by the Bonds shall be a Weekly Interest Rate.
(iii) Notice of Adiustment to Weekly Interest Rate. The Paying Agent
shall gIVe notlce by first-class mail of an adjustment to a Weekly Interest Rate Period to
the Owners of the Bonds not less than 12 days (15 days if the then current Interest Rate
Period shall be a Long-Term Interest Rate Penod) prior to the effective date of such
Weekly Interest Rate Period. Such notice shall state (1) that the interest rate on the
Bonds will be adjusted to a Weekly Interest Rate unless Bond Counsel shall have failed
to deliver to the Issuer, the Paymg Agent, the Bank and the RemarketIllg Agent a
Favorable Opinion of Bond Counsel as to such adjustment on the effective date of such
adjustment in the Interest Rate Period, in which case the Bonds, if being adjusted from a
Short-Term Interest Period, shall contmue to bear interest at Bond Interest Term Rates as
m effect immedIately pnor to such proposed adJustment in the Interest Rate Period, or if
the Bonds are bemg adjusted from a Long-Term Interest Rate Period, the Bonds shall be
24
NYC 582459.356910006041/3/2006 03-01pm
adjusted to bear interest at a Weekly Interest Rate for the period commencing on the date
which would have been the effective date of such proposed Interest Rate Period, (2) the
effectIve date of such Weekly Interest Rate Penod, and (3) that the Bonds are subJect to
mandatory tender for purchase on such effectIve date and shall set forth the applicable
purchase price.
(e) (i) DetenninatlOn of Long-Term Interest Rate. Dunng each Long-Term
Interest Rate Penod, the Bonds shall bear interest at a Long- Tenn Interest Rate. The Long-Term
Interest Rate for the Bonds for any Long-Term Interest Rate Period shall be determined by the
Remarketing Agent on a Business Day no earlier than two weeks before the effectIve date of
such Long-Term Interest Rate Period and no later than 10 a.m. on the effective date of such
Long- Term Interest Rate Period. The Long-Term Interest Rate shall be the rate of mterest per
armum determmed by the Remarketing Agent (based on the examination of tax-exempt
obligations comparable in the judgment of the Remarketing Agent to the Bonds and known by
the Remarketing Agent to have been priced or traded under then-prevailing market conditions) to
be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent
to sell the Bonds on such effectIve date at a price equal to the principal amount thereof, plus
accrued interest thereon, If any, plus a premium so long as the Issuer dehvers a Favorable
Opinion of Bond Counsel to the effect that pricing to obtain such a premium will not adversely
affect the exclusion of interest on any of the Bonds from gross income for federal income
purposes.
If, for any reason, a Long-Term Interest Rate IS not so determined for any Long-Term
Interest Rate Period by the Remarketing Agent on or prior to the first day of such Long-Term
Interest Rate Period and a LiquidIty Facility shall be in effect on such date, then the Bonds shall
bear interest at a Weekly Interest Rate as provided in SectlOn 205( d) hereof, and shall continue to
bear interest at a Weekly Interest Rate determined in accordance with Section 205(d) until such
time as the interest rate on the Bonds shall have been adjusted to Bond Interest Term Rates or a
Long-Term Interest Rate as prOVIded herein, and the Bonds shall be subject to purchase upon
notice from the Owners thereof as described in Section 206(a) hereof. If, for any reason, a Long-
Tenn Interest Rate IS not so determined for any Long-Term Interest Rate Period by the
Remarketing Agent on or prior to the first day of such Long-Term Interest Rate Period and no
Liquidity Facility shall be in effect on such date, then the Bonds shall be subject to mandatory
tender for purchase as described in Section 206(c) hereof and if the purchase price of any Bond
shall not be made to any Owner, SectIOn 215(b) shall apply.
(ii) Adiustment to or Contmuation of Long- Tenn Interest Rate.
(A) Subject to Sections 205(j), 205(k) and 205(1) hereof, the Issuer may adjust
the Bonds to bear interest, or continue to bear interest, at a Long-Term Interest Rate by
written direction to the Paymg Agent, the Tender Agent, the Bank and the Remarketing
Agent at least 30 days pnor to the effective date of such adjustment. The direction of the
Issuer required by the first sentence of this paragraph (A), (1) shall speCIfy the duration of
the Long- Tenn Interest Rate Period during WhICh the Bonds shall bear interest at a
Long-Tenn Interest Rate; (2) shall speCIfy the effective date of such Long-Term Interest
Rate Penod, WhICh date shall be (aa) a Business Day not earlIer than the 30th day
followmg receIpt by the Paying Agent of such dIrection, (bb) in the case of an adjustment
25
NYC 582459.356910006041/3/2006 03'OIpm
tel
from a Long-Term Interest Rate Period to another Long-Term Interest Rate Period, the
day immediately following the last day of the then-current Long-Term Interest Rate
Period or a day on which the Bonds would otherwise be subject to optional redemption
pursuant to SectIOn 301(b)(in) hereof if such adJustment dId not occur, and (cc) in the
case of an adjustment from a Short-Term Interest Rate Penod, the day Immediately
following the last day of the Short-Term Interest Rate Period; (3) shall specify the last
day of such Long-Term Interest Rate Period (which last day shall be either the day
Immediately pnor to the matunty date of the Bonds, or a day whIch both immedIately
precedes a Business Day and is at least 181 days after the effective date thereof); (4) shall
specify a date on or pnor to which Owners are required to dehver such Bonds to be
purchased (if other than such effective date) and (5) wIth respect to any such Long-Term
Interest Rate Period, may specify redemption pnces greater, and after periods longer,
than those set forth m Section 301(b)(iii) hereof If the reqUIrement of (B) below IS
satisfied.
(B) Such direction of the Issuer shall be accompanied by a Favorable Opinion
of Bond Counsel.
(C) If, by the tenth Business Day precedmg the 29th day prior to the last day
of any Long-Term Interest Rate Period, the Paymg Agent shall not have received (1)
notice of the Issuer's election that, dunng the next succeeding Interest Rate Period, the
Bonds shall bear interest at a Weekly Interest Rate or Bond Interest Term Rates and (2) a
commitment for a LiquidIty Facility to take effect prior to the end of the Long-Term
Interest Rate Penod as reqUIred by SectIOn 207(a) hereof, then the next succeeding
Interest Rate Period shall be a Long- Tenn Interest Rate Period and the Bonds will be
subject to mandatory tender for purchase as provided in SectIOn 206(c) hereof on the first
day of such Long-Term Interest Rate Period.
(D) In the event that the Issuer shall dehver to the Bank, the Remarketing
Agent, the Tender Agent and the Paying Agent, on or prior to the date that the interest
rate for any Long-Term Interest Rate Period is determined, (1) a notice to the effect that
the Issuer elects to rescind its election to have the Bonds bear interest at a Long-Term
Interest Rate and (2) a commitment for a Liquidity Facility to be in effect as required by
Section 207(a) hereof, then the interest rate on the Bonds shall not be adjusted to a
Long- Term Interest Rate, and the Bonds shall bear interest at a Weekly Interest Rate or
Bond Interest Term Rates as in effect prior to such election, or if the Bonds were to be
adjusted from a Long-Tenn Interest Rate, then the Bonds shall bear mterest at a Weekly
Interest Rate for the penod commencmg on the date which would have been the effective
date of such proposed Long-Term Interest Rate Penod, and the Bonds shall continue to
be subject to mandatory purchase as provided in SectIOn 206(c) hereof on the day whIch
would have been the effectIve date of such proposed Long- Tenn Interest Rate Period. In
the event that the Issuer shall rescind its electIOn to adjust the interest rate on the Bonds
to a Long-Term Interest Rate as described m this clause (D) and shall have provided a
commitment for a LiqUIdIty FacilIty to be III effect as reqUIred by SectIOn 207(a) hereof,
then the Paymg Agent, promptly upon receivmg notification thereof, shall mail notIce to
the Owners of the Bonds that the Bonds shall not be adjusted to a Long- T enn Interest
Rate but shall bear mterest at a Weekly Interest Rate or Bond Interest Term Rates as in
26
NYC 582459.356910006041/3/2006 03"01pm
'0
effect pnor to such event, or if the Bonds were to be adjusted from a Long- Tenn Interest
Rate, then the Bonds shall bear mterest at a Weekly Rate on such date and shall be
subject to mandatory tender as provided herein and in Section 206( c) hereof on the day
that would have been the effectIve date of such proposed Long-Term Interest Rate
Period.
(ili) Notice of Adjustment to or Contmuation of Long-Term Interest
Rate. The Paying Agent shall gIve notice by first-class mail of an adjustment to a (or the
establishment of another) Long-Term Interest Rate Period to the Owners ofthe Bonds not
less than 25 days prior to the effective date of such Long-Term Interest Rate Period.
Such notice shall state: (1) that the interest rate on the Bonds shall be adjusted to, or
continue to be, a Long-Term Interest-Rate unless (x) Bond Counsel shall have failed to
deliver to the Issuer, the Paymg Agent, the Bank and the Remarketmg Agent a Favorable
Opilllon of Bond Counsel as to such adjustment in the Interest Rate Penod on the
effective date of such adjustment, or (y) the Issuer shall elect, on or pnor to the date of
determination of such Long-Term Interest Rate, to rescind Its election to cause the
adJustment of the mterest rate on the Bonds to a Long-Term Interest Rate, in which case
the Bonds, ifbeing adjusted from a Weekly Interest Rate Period or a Short-Term Interest
Rate Period shall continue to bear interest at a Weekly Interest Rate or Bond Interest
Term Rates as 111 effect immediately prior to such proposed adjustment in the Interest
Rate Period, or if the Bonds are being adjusted from a Long-Term Interest Rate Penod,
the Bonds shall be adjusted to bear interest at a Weekly Interest Rate, for the period
commencing on the date which would have been the effective date of such proposed
Interest Rate Period, (2) the effectIve date and the last day of such Long-Term Interest
Rate Penod and (3) that the Bonds are subject to mandatory tender for purchase on such
effective date and the purchase price applicable thereto.
(iv) AdJustlnent from Long-Term Interest Rate Period. In addition to
an adjustment from a Long-Term Interest Rate Period on the day immediately following
the last day of the Long-Term Interest Rate Period, at any time dunng a Long Term
Interest Rate Period (subject to the provisions set forth in this paragraph (iv)), the Issuer
may elect, subject to Sections 205(j) and 205(k) hereof, that the Bonds no longer shall
bear interest at a Long-Term Interest Rate and shall mstead bear interest at a Weekly
Interest Rate, Bond Interest Term Rates or a new Long-Term Interest Rate, as speCIfied m
such election. In the notIce of such election, the Issuer shall also specify the effective
date of the new Interest Rate Period, which date shall be (1) a Business Day no earlier
than the 30th day following receipt by the Paymg Agent ofthe notice of election from the
Issuer, and (2) a day on which the Bonds shall be subject to optIOnal redemption III
accordance with Section 301(b)(ill) hereof. The Bonds shall be subject to mandatory
tender for purchase on the effective date of the new Interest Rate Penod thereof in
accordance with SectIOn 206(c) hereof, at a purchase price equal to the optIOnal
redemptIOn price set forth in Section 301 (b)(m) hereof whIch would be applicable on that
date.
27
NYC 5824593569]0006041/3/2006 03'01pm
<I'
(f)
(i)
Determination of Bond Interest Terms and Bond Interest Term Rates.
(A) During each Short-Term Interest Rate Period, each Bond shall bear
mterest dunng each Bond Interest Term for such Bond at the Bond Interest Term Rate for
such Bond. The Bond Interest Tenn and the Bond Interest Term Rate for each Bond
need not be the same for any two Bonds, even If determined on the same date. Each of
such Bond Interest Terms and Bond Interest Term Rates for each Bond shall be
detennmed by the Remarketing Agent no later than 12:00 noon New York City tIme on
the first day of each Bond Interest Term. Except for any Bond purchased by the Bank or
the Issuer and remaining unsold by the Remarketing Agent at the close of business on the
first day of the Bond Interest Term, each Bond Interest Term shall be for a period of days
w1thm the range or ranges announced as possible Bond Interest Terms no later than 9:00
a.m., New York City time, on the first day of each Bond Interest Tenn by the
Remarketing Agent. Each Bond Interest Term for each Bond shall be a period of not less
than one and not more thaIl 180 days, determmed by the Remarketing Agent to be the
penod which, together WIth all other Bond Interest Terms for all Bonds then outstanding,
will result in the lowest overall lllterest expense on the Bonds over the next succeeding
180 days. Any Bond purchased on behalf of the Issuer and remaining unsold by the
Remarketmg Agent as of the close of business on the first day of the Bond Interest Term
for that Bond shall have a Bond Interest Tenn of one day or, if that Bond Interest Term
would not end on a day Immediately preceding a Business Day, a Bond Interest Term
ending on the day immediately preceding the next Business Day. Each Bond Interest
Term shall end on either a day whIch immedIately precedes a Business Day or on the day
immedIately precedmg the maturity date of the Bonds. If for any reason a Bond Interest
Term for any Bond cannot be so determined by the Remarketing Agent, or if the
determination of such Bond Interest Term is held by a court of law to be invalid or
unenforceable, then such Bond Interest Term shall be 30 days, but if the last day so
determined shall not be a day immediately preceding a Business Day, shall end on the
first day immediately preceding the Business Day next succeeding such last day, or if
such last day would be after the day immediately preceding the maturity date of the
Bonds, shall end on the day immediately precedmg the maturity date. In determining the
number of days in each Bond Interest Term, the Remarketing Agent shall take into
account the following factors: (I) eXlstmg short-term tax-exempt market rates and indices
of such short-term rates, (II) existmg market supply and demand for short-term
tax-exempt securities, (III) existing yield curves for short-term and long-term tax-exempt
securitIes for obligatioJ)s of credIt quahty comparable to the Bonds, (IV) general
economIC condItions, (V) economic and financial conditions that may affect or be
relevant to the Bonds, (VI) the Bond Interest Terms of other Bonds and (VII) such other
facts, circumstances and conditions pertamlllg to financial markets as the Remarketing
Agent, in Its sole dIscretion, shall determine to be relevant. The last day of any Bond
Interest Term shall be no later than the date the Bonds are subject to mandatory tender for
purchase pursuant to SectIOn 206( d) hereof as a result of the expIratIOn or tennination of
the LiquidIty Facility other than on account of an Authorized LiqUIdity TenninatlOn.
(B) The Bond Interest Term Rate for each Bond Interest Term for each Bond
shall be the rate of mterest per annum detennined by the Remarketing Agent (based on
the examlllatIOn of tax-exempt obligations comparable m the judgment of the
28
NYC 582459.3 56910006041/3/2006 0301pm
Remarketing Agent to the Bonds and known by the Remarketing Agent to have been
priced or traded under then-prevailing market condItions) to be the minimum interest rate
whIch, If borne by such Bond for such Bond Interest Term, would enable the
Remarketmg Agent to sell such Bond on the date and at the time of such determIllatIOn at
a price (wIthout regard to accrued interest) equal to the principal amount thereof. If for
any reason a Bond Interest Tenn Rate for any Bond is not so estabhshed by the
Remarketing Agent for any Bond Interest Term, or such Bond Interest Term Rate IS
determmed by a court of law to be mvalid or unenforceable, then the Bond Interest Tenn
Rate for such Bond Interest Term shall be the rate per annum equal to 70% of the interest
rate on high grade unsecured commercIal paper notes sold through dealers by major
corporations as reported by The Wall Street Journal on the first day of such Bond Interest
Term and which maturity most nearly equals the Bond Interest Term for whIch a Bond
Interest Term Rate is being calculated.
(i1) Adjustment to Bond Interest Term Rates. Subject to
Sections 205(j), 205(k) and 205(1) hereof, the Issuer may adJust the Bonds to bear
interest, or contmue to bear interest, at Bond Interest Term Rates by written dIrection to
the Paying Agent, the Tender Agent, the Bank and the Remarketmg Agent at least 30
days prior to the effective date of such adjustlnent. Such direction of the Issuer shall
specify (1) the effective date of the Short-Term Interest Rate Period (during which the
Bonds shall bear interest at Bond Interest Term Rates), which shall be (A) a Busmess
Day not earher than the 30th day followlllg receipt by the Paying Agent of such direction,
(B) in the case of an adjustment from a Long-Term Interest Rate Period, the day
immediately following the last day of the then current Long- Tern1 Interest Rate Period or
a day on which the Bonds would otherwise be subJect to optIOnal redemptIOn pursuant to
SectIOn 301(b )(iii) hereof If such adjustlnent did not occur; proVIded that, If prior to the
Issuer's making such election any Bonds shall have been called for redemption and such
redemption shall not have theretofore been effected, the effective date of such
Short- Term Interest Rate Period shall not precede such redemption date, and (C) in the
case of an adjustment from a Weekly Interest Rate Period, the day immediately following
the last day of such Interest Rate Period; and (2) the date of delivery of such Bonds to be
purchased. In addition, the direction of the Issuer shall be accompanied by a Favorable
Opinion of Bond Counsel. During each Short-Term Interest Rate Period commencing on
the date so specified and ending, with respect to each Bond, on the day immediately
precedmg the effective date of the next succeeding Interest Rate Period with respect to
such Bond, each Bond shall bear mterest at a Bond Interest Term Rate during each Bond
Interest Term for such Bond.
(iii) Notice of Adjustment to Bond Interest Term Rates. The Paying
Agent shall gIve notice by first-class mail of an adJustment to a Short-Term Interest Rate
Penod to the Owners of the Bonds not less than 12 days (15 days if the then-current
Interest Rate Penod shall be a Long-Term Interest Rate Period) prior to the effective date
of such Short-Term Interest Rate Period. Such notice shall state (1) that the Bonds shall
bear interest at Bond Interest Tenn Rates unless Bond Counsel shall have fmled to deliver
to the Issuer, the Trustee and the Remarketing Agent a Favorable Opinion of Bond
Counsel as to such adjustment on the effective date of such adjustment in the Interest
Rate Period, m which case the Bonds, if bemg adJusted from a Weekly Interest Rate
29
NYC 582459.356910006041/3/2006 03'01pm
Period, shall continue to bear interest at a Weekly Interest Rate as m effect immediately
prior to such proposed adjustment m the Interest Rate Period, or if the Bonds are bemg
adJusted from a Long-Term Interest Rate Period, the Bonds shall be adJusted to bear
interest at a Weekly Interest Rate, and that during such Short-Term Interest Rate Period,
each Bond WIll have one or more consecutive Bond Interest Terms during each of which
such Bond WIll bear a Bond Interest Term Rate for the period commenclllg on the date
which would have been the effective date of such proposed Interest Rate Period, (2) the
effective date of such Short-Term Interest Rate Period, (3) that the Bonds are subject to
mandatory tender for purchase on the effective date of such Short-Term Interest Rate
Period and shall set forth the applicable purchase price and (4) that a Bond Interest Term
and a Bond Interest Term Rate for each Bond will be determmed not later than the first
day of such Bond Interest Term.
(IV) Adjustment from Short-Term Interest Rate Period. At any time
dunng a Short-Term Interest Rate Period, the Issuer may elect upon at least 30 days'
notice, pursuant to Section 205(d)(ii) or 205(e)(1l) hereof, but subject to Sections 205(j)
and (k) hereof, that the Bonds no longer shall bear interest at Bond Interest Term Rates
and shall instead bear mterest at a Weekly Interest Rate or a Long-Term Interest Rate, as
specified m such election.
The date on which all Bond Interest Terms determined shall end shall be the last day of
the then-current Short-Term Interest Rate Penod and the day next succeeding such date shall be
the effectIve date of the Weekly Interest Rate Period or Long-Term Interest Rate Period elected
by the Issuer.
(g) The determination of the Weekly Interest Rate and Long-Term Interest Rate and
each Bond Interest Term and Bond Interest Term Rate by the Remarketmg Agent shall be
conclusive and bmding upon the Remarketing Agent, the Paying Agent, the Tender Agent, the
Issuer, the Bank and the Owners ofthe Bonds.
(h) Interest on the Bonds shall be payable on each Interest Payment Date by the
Paying Agent during any Weekly Interest Rate Period or Long-Term Interest Rate Period, by
check mailed on the date on wmch interest IS due to the Owners of the Bonds at the close of
business on the Record Date m respect of such Interest Payment Date at the addresses of Owners
as they shall appear on the registration books maintained pursuant to this Exhibit 1. In the case
of (i) Bonds bearing interest at a Bond Interest Term Rate, or (ii) any Owner of Bonds bearing
interest at other than a Bond Interest Term Rate in an aggregate pnncipal amount in excess of
$1,000,000 as shown on the registration books kept by the Paying Agent who, prior to the
Record Date next preceding any Interest Payment Date, shall have provided, or caused to be
provided, the Paying Agent WIth wire transfer instructions, interest payable on such Bonds shall
be paid in accordance with the wire transfer instructions proVIded by the Owner of such Bonds
(or by the Remarketmg Agent on behalf of such Owner); provided, however, that during any
Short- Tenn Interest Rate Penod, mterest on any Bond shall be payable only upon presentation
and surrender of such Bond to the Tender Agent at its Principal Office
(i) In the event that the Issuer shall elect to convert the interest rate on the Bonds to a
Weekly Interest Rate, Bond Interest Term Rates or a Long-Term Interest Rate as proVIded in
30
NYC 582459.3 56910 00604 1/3/2006 03-0lpm
Sections 205(d)(ii), 205(e)(ii) or 205(f)(ii) hereof, then the written dIrectIOn furnished by the
Issuer to the Paying Agent, the Bank, the Tender Agent and the Remarketing Agent as reqUIred
by such sectIOns shall be made by regIstered or certified mail, or by telex or telecopy, confirmed
by registered or certified mail.
(j) NotWIthstanding anythmg in this SectIOn 205 to the contrary, in connection with
any adjustment of the Interest Rate Period on the Bonds, the Issuer shall cause to be provIded to
the Paymg Agent, the Bank and the Remarketing Agent a Favorable Opilllon of Bond Counsel
on the effective date of such adJustment. In the event that Bond Counsel shall have failed to
dehver a Favorable OpmIOn of Bond Counsel on any such date, then the Interest Rate Penod on
the Bonds shall not be adjusted, and the Bonds shall contmue to bear mterest at a Weekly Interest
Rate or Bond Interest Term Rates, as the case may be, as in effect immedIately prior to such
proposed adJustment in the Interest Rate Penod; provided, however, that in the event that the
Bonds are being adjusted from a Long-Term Interest Rate Period, and Bond Counsel shall have
failed to deliver such Favorable Opinion of Bond Counsel on the effective date of such
adjustment, then the Bonds nevertheless shall be adjusted to bear interest at a Weekly Interest
Rate as provIded m Section 205( d) hereof; proVIded, however, the Bonds will be adJusted to bear
interest at a Long- Tenn Interest Rate in the event a LiqUIdity Facility will not be in effect on the
date that would have been the effectIve date of the proposed Interest Rate Period. In any event,
if notice of such adjustment has been mailed to the Owners of the Bonds as provided m this
Section 205 and Bond Counsel shall have faIled to deliver a Favorable Opinion of Bond Counsel
on the effectIve date as herem described, the Bonds shall continue to be subject to mandatory
purchase on the date which would have been the effectIve date of such adjustment as prOVIded in
SectIOn 206( c) hereof.
(k) Notwithstandmg anything in thIS SectIOn 205 to the contrary, if a LIquidity
Facility IS required to be in effect with respect to the Bonds pursuant to SectIOn 207(a) hereof, in
connection WIth the adjustment of any Interest Rate Period which would require the mandatory
tender for purchase of Bonds at a purchase pnce (exclusive of accrued interest) greater than the
principal amount thereof as provided in Section 206(c) hereof, the Issuer, as a condition to
exercIsing ItS optIOn to cause an adjustment in the Interest Rate Period applicable to the Bonds,
shall deliver to the Paying Agent prior to the mailing by the Paying Agent of notice of such
adjustment in the Interest Rate Period, Available Moneys for the purpose of paying such
premium, unless the Liquidity Facility then m effect WIth respect to the Bonds proVIdes for the
payment of such premium.
(1) Notwithstanding anythmg in this Section 205 to the contrary, in connection with
the converSIOn to Bond Interest Tenn Rates, the Issuer, as a condition to exercising its option to
cause such a conversion, shall dehver to the Paying Agent a commitment for a LIquidity FaCIlity
to be in effect after such converSIOn that will satisfy the reqUIrements of SectIOn 207(a)(ii).
Section 206 Purchase of Bonds.
(a) OptIOnal Tender for Purchase Dunng Weekly Interest Rate Penod. During any
Weekly Interest Rate Period al1d if a Liquidity Facihty is in effect, any Bond shall be purchased
m whole (or in part If both the amount to be purchased and the amount remaming unpurchased
shall conSIst of Authonzed DenommatIOns) from its Owner at the option of the Owner on any
31
NYC 582459.3 56910 00604 1/3/2006 03"01 pm
Business Day at a purchase price equal to the principal amount thereof plus accrued interest, if
any, from and includmg the Interest Accrual Date Immediately precedmg the date of purchase
through and mcludmg the day immediately preceding the date of purchase, unless the date of
purchase shall be an Interest Accrual Date, in which case at a purchase price equal to the
pnnclpal amount thereof, payable m immedIately aVailable funds, upon dehvery to the Tender
Agent at its Principal Office and to the Remarketing Agent of an Irrevocable wntten notice
which states the principal amount of such Bond and the date on which the same shall be
purchased, which date shall be a Busmess Day at least seven days after the delivery of such
notIce to the Tender Agent. Any notIce dehvered to the Tender Agent and Remarketmg Agent
after 11 :00 a.m., New York City time, shall be deemed to have been received on the next
succeedmg Busmess Day.
(b) Mandatory Tender for Purchase on Day Next Succeeding the Last Day of Each
Bond Interest Term. On the day next succeeding the last day of each Bond Interest Term for a
Bond, unless such day IS the first day of a new Interest Rate Period (in which event such Bond
shall be subJect to mandatory purchase pursuant to Section 206(c)), such Bond shall be
purchased from its Owner at a purchase price equal to the princIpal amount thereof payable in
immediately available funds. The purchase price of any Bond so purchased shall be payable
only upon surrender of such Bond to the Tender Agent at its Principal Office, accompanied by an
instrument of transfer thereof, III form satisfactory to the Tender Agent, executed in blank by the
Owner thereof or his duly authorized attorney, with such SIgnature guaranteed by a bank, trust
company or member firm of the New York Stock Exchange.
(c) Mandatory Tender for Purchase on First Day of Each Interest Rate Period. The
Bonds shall be subject to mandatory tender for purchase on the first day of each Interest Rate
Period, or on the day which would have been the first day of an Interest Rate Period had one of
the events specified m Sections 205(e)(ii)(D) or 205(j) hereof not occurred which resulted m the
interest rate on the Bonds not being adjusted, at a purchase price, payable in immediately
available funds, equal to the principal amount of the Bonds or, m the case of a purchase on the
first day of an Interest Rate Period which shall be preceded by a Long-Term Interest Rate Period
and which shall commence prior to the day origmally established as the last day of such
preceding Long-Term Interest Rate Penod, at a purchase price equal to the optIOnal redemption
price set forth m Section 301(b )(iii) hereof which would have been applicable to the Bonds on
such mandatory purchase date if such preceding Long- Tenn Interest Rate Period had continued
to the day ongmally established as ItS last day, plus accrued interest, if any.
(d) Mandatory Tender for Purchase upon ExpIratIOn, Cancellation or Tennination of
the LiquidIty Facility. So long as the Bonds shall not have been adjusted to a Long-Term
Interest Rate, If at any time the Paying Agent shall give notice in accordance with Section 207(f)
hereof that the Bonds shall, on the date specified in such notice, cease to be subject to purchase
pursuant to the Liquidity Facility (other than because of an Authonzed LiqUIdity TenninatIOn),
the Bonds shall be subj ect to mandatory tender for purchase at a purchase pnce equal to the
principal amount thereof, plus accrued mterest, if any, to the date of purchase:
(i) on the fifth Business Day next preceding the date on whIch the
LiqUIdIty Facihty then in effect is stated to expIre, termmate or be cancelled (unless
32
NYC 582459.356910006041/3/2006 03-01pm
extended), other than a tenmnation of a LiqUIdity FaCIlity on account of an Authorized
Liquidity Tenmnation; and
(ii) if the Liquidity Facihty then in effect will terminate or be
cancelled pnor to its stated expIration date on account of dehvery of a Substitute
Liquidity Facihty, on the proposed effectIve date of the Substitute LiqUIdity FacilIty.
Notw1thstandmg anythmg in this SectIOn 206(d) to the contrary, in the event that m
cOill1ection WIth any such expiration, cancellation or termination of an eXIsting LiqUIdity FacilIty
and replacement thereof by a Substitute Liquidity Facility, the Issuer delivers to the Paying
Agent, the Tender Agent and the Remarketmg Agent, prior to the date that notIce of such
tenninatIOn, cancellation or expIratIOn and substitution is gIVen by the PaYIllg Agent as provided
in Section 207(f) hereof, written eVIdence from each Rating Agency then rating the Bonds to the
effect that such termmatIon, cancellatIOn or expiration and substItutIOn in and of itself wIll not
result in the withdrawal or reduction of any ratmg then apphcable to the Bonds, then the Bonds
shall not be subject to mandatory tender for purchase as proVIded in this Section 206(d) solely as
a result of such terminatIOn, cancellation or expiration and substitutIOn.
(e) Mandatorv Tender for Purchase at OptIOn of the Issuer. At the optIOn of the
Issuer, during any Weekly Rate Penod, the Bonds shall be subject to mandatory tender for
purchase on any Interest Payment Date at a purchase price, payable m immediately available
funds, equal to the pnnc1pal amount of the Bonds, plus accrued mterest, if any.
(f) Notice of Mandatory Tender for Purchase; Dehverv of Bonds to be Purchased;
Notice of Authonzed LiqUId1tv TermmatIOn. (i) In connection with any mandatory tender for
purchase of Bonds in accordance WIth Section 206(c) or 206(d) hereof, the Paying Agent shall
give notice of a mandatory tender for purchase as a part of the notice given pursuant to
Section 205(d)(iii), 205(e)(iii), 205(f)(ili) or 207(f) hereof. In connection with any mandatory
tender for purchase of Bonds in accordance with Section 206(e), the Paying Agent shall give
notice by first-class mail to the Owners ofthe Bonds not less than 12 days prior to the mandatory
tender date. Such notice shall state (A) m the case of a mandatory tender for purchase pursuant
to SectIOn 206(c) hereof, the type of Interest Rate Period to commence on such mandatory
purchase date; (B) in the case of a mandatory tender for purchase pursuant to SectIOn 206( d)
hereof, that the Liquidity Facility will expIre, be cancelled, be substituted for or termmate and
that the Bonds shall no longer be subject to purchase from the Liquidity Facility then in effect
and that any rating applicable thereto will be reduced or withdrawn; (C) that the purchase price
of any Bond so subject to mandatory purchase shall be payable only upon surrender of such
Bond to the Tender Agent at its Principal Office for delivery of Bonds, accompanied by an
instrument of transfer thereof, in fonn satIsfactory to the Tender Agent, executed in blank by the
Owner thereof or hIS duly-authorized attorney, with such signature guaranteed by a bank, trust
company or member finn of the New York Stock Exchange; (D) that all Bonds so subject to
mandatory tender for purchase shall be purchased on the mandatory purchase date, and that if the
Owner of a Bond subject to mandatory tender for purchase shall not surrender such Bond to the
Tender Agent for purchase on such mandatory purchase date, then such Bond shall be deemed to
be an Undelivered Bond, and that no mterest shall accrue thereon on and after such mandatory
purchase date and that the Owner thereof shall have no rights under thIS ResolutIOn other than to
receIve payment ofthe purchase price thereof.
"''''
:):)
NYC 582459.3 56910 00604 1/3/2006 03"01pm
",
(ii) For payment of the purchase price of any Bond required to be
purchased pursuant to this Section 206 on the purchase date specified in the apphcable
notice, such Bond must be delivered, at or prior to 10:00 a.m., New York City tIme, on
the date specified in such notice, to the Tender Agent at its Principal Office, accompanied
by an mstrument of transfer thereof, m form satisfactory to the Tender Agent, executed in
blank by the Owner thereof or hIS duly authorized attorney, WIth such signature
guaranteed by a commercIal bank, trust company or member firm ofthe New York Stock
Exchange. In the event any such Bond is delIvered after 10:00 a.m. on such date,
payment of the -purchase price of such Bond need not be made until the BUSIlless Day
following the date of delivery of such Bond, but such Bond shall nonetheless be deemed
to have been purchased on the date specified in such notice and no mterest shall accrue
thereon after such date.
(iii) The Bonds shall not be subJect to mandatory tender as a result of
the occurrence of an Authorized LiqUIdity Termination. If the Paying Agent shall receive
notice of the occurrence of an Authorized LiqUIdIty Termmation, it shall notify the
Commission and the Owners that an Authorized LiqUIdity Termination has occurred
within one Business Day following its receIpt of such notice.
(g) Irrevocable Notice Deemed to be Tender of Bond; Undelivered Bonds.
(i) The giving of notice by an Owner of any Bond as provided m
Section 206(a) hereof shall constItute the irrevocable tender for purchase of each such
Bond with respect to whIch such notice shall have been given, regardless of whether such
Bond is delivered to the Tender Agent for purchase on the relevant purchase date as
provided in this SectIOn 206.
(ii) The Tender Agent may refuse to accept delivery of a Bond for
which a proper instrument of transfer has not been proVIded; such refusal, however, shall
not affect the validity of the purchase of such Bond as herein described. If any Owner of
a Bond who shall have given notice of tender of purchase pursuant to Section 206(a)
hereof shall fail to deliver such Bond to the Tender Agent at the place and on the
apphcable date and at the time specified, or shall fail to deliver such Bond properly
endorsed, such Bond shall constitute an Undelivered Bond. If funds in the amount of the
purchase pnce of the Undehvered Bonds (including the Undelivered Bonds referred to m
Section 206(f) hereof) are avaIlable for payment to the Owner thereof on the date and at
the time specified, from and after the date and time of that required delivery, (1) each
Undelivered Bond shall be deemed to be purchased and shall no longer be deemed to be
outstandmg under this Exhibit 1; (2) interest shall no longer accrue thereon; and (3) funds
in the amount of the purchase price of each such Undelivered Bond shall be held by the
Tender Agent for the benefit of the Owner thereof (provided that the Owner shall have no
right to any investment proceeds derived from such funds), to be paid on delivery (and
proper endorsement) of such Undehvered Bond to the Tender Agent at its Pnnc1pal
Office for dehvery of Bonds. Any funds held by the Tender Agent as described m clause
(3) of the precedmg sentence shall be held uninvested and not commlllgled.
34
NYC 582459.356910006041/3/2006 03-0lpm
'(1
(h) InsufficIent Funds for Purchases. (a) If the moneys available for the purchase of
the Bonds pursuant to this Article are madequate for the purchase of all such Bonds that are
tendered on any purchase date specified herem, all such Bonds subject to such purchase shall be
returned to the Owners thereof and shall contmue to bear mterest at the Failed Tender Rate from
such purchase date to the date on which the earhest of the following occurs:
(i) the date that such Bonds are converted to a Long-Term Interest Rate to
matunty (whIch shall not be more than mnety (90) days from the date of such failed purchase);
(Ii) the date on which any default by the Bank under the terms of the LIquidIty
Facihty has been cured; or
(i1i) the date on which a Substitute LiqUIdIty Facility meetmg the requirements
of Section 207 hereof has been obtamed.
(b) If paragraph (a) hereof becomes applicable, the Tender Agent shall immediately
(but no later than the end of the next succeeding Busmess Day) (i) return all tendered Bonds to
the Owners thereof, (ii) return all moneys received for the purchase of such Bonds to the persons
who provided such moneys and (iii) notify all such Owners in writing of the interest rate to be
effectIVe pursuant to the preceding paragraph.
(c) If paragraph (a) hereof becomes applicable, the purchase pnce of all Bonds
subj ect to such purchase shall be deemed not to be due until the date on which the earliest of the
events described in clauses (i), (ii) or (iii) of paragraph (a) hereof shall occur.
(i) Book-Entry Tender and Delivery Procedures. Notwithstanding anything to the
contrary contallled m thIS ExhibIt 1, for so long as a Secunties Depository Nominee is the sole
registered owner of the Bonds, all tenders for purchase and deliveries of Bonds tendered for
purchase or subject to mandatory tender under the provisions of this Exhibit 1 shall be made
pursuant to the Securities Depository's procedures as in effect from time to time and neither the
Issuer, the Tender Agent, the Paying Agent nor the Remarketing Agent shall have any
responsibihty for or liability with respect to the implementation of such procedures.
Section 207 The Liquidity Facility.
(a) The Issuer shall cause a Liquidity Facility to be in effect during any Weekly
Interest Rate Penod, any Short-Term Interest Rate Period and on the first day of any Long-Term
Interest Rate Period, provided, however, if the Bonds are being adjusted from one Long-Term
Interest Rate Period to another Long-Tenn Interest Rate Period, such requirement for a LiquidIty
Faclhty shall not apply and no LIquidity Facility need be in effect for the mandatory tender for
purchase that will occur on the first day of the Long-Term Interest Rate Period pursuant to
Section 206(c) hereof. The Standby Agreement and any Substitute LiqUIdity Facihty shall be an
obhgatIOn of the Bank to pay, subject to the conditions set forth in the Liquidity Faclhty, to the
Tender Agent upon request made WIth respect to the Bonds related thereto and in accordance
with the terms thereof
(i) an amount not exceedmg the aggregate pnncipal amount of such
Bonds to pay the portion of the purchase price of such Bonds equal to the principal
35
NYC 582459.3 5691000604 1/3/2006 03.01pm
amount of such Bonds delivered or required to be delivered to the Tender Agent for
purchase; and
(ii) while such Bonds bear mterest at a Weekly Interest Rate, an
amount equal to the interest on such Bonds for 35 days computed at the rate of 12% per
annum, to pay the portion of the purchase price of such Bonds equal to interest on such
Bonds dehvered or required to be delivered to the Tender Agent for purchase and, if the
Bonds are converted to bear interest at Bond Interest Term Rates, an amount as shall be
detennined to be necessary to provide for the payment pursuant to the applIcable
Liquidity Faclhty of such interest portion of such purchase pnce in order to obtain
short-term ratings on such Bonds from S&P of not less than A-I, and from Moody's of
not less than VMIG-1.
(b) If at any time the Issuer shall deliver to the Tender Agent (i) a Substitute
Liquidity Facility, (ii) an Opinion of Counsel stating that the delivery of such Substitute
Liquidity Facility IS authorized under this Exhibit 1 and complies with the terms hereof, (iii) a
Favorable Opilllon of Bond Counsel, (iv) one or more Opinions of Counsel, addressed to the
Tender Agent and the Remarketing Agent to the effect, singly or together, that the SubstItute
Liquidity Facility is a legal, valid and binding obligation of the Bank, enforceable against the
Bank m accordance with its terms, except as hmited by applicable reorganIzatIOn, insolvency,
hquidation, readJustment of debt, moratorium or other similar laws affectmg the enforcement of
the rights of creditors generally as such laws may be apphed m the event of a reorganization,
insolvency, liquidation, readjustment of debt or other SImilar proceeding of or moratorium
applicable to the Bank or the Issuer and by general pnnciples of equity (regardless of whether
such enforceabihty IS considered in a proceeding in equity or at law), and (v) written evidence
that notice of mandatory tender as required by Section 206(f) hereof has been sent to the Owners
prior to such substitution, then the Tender Agent shall, so long as such Substitute Liquidity
Facility shall contain administrative procedures which are acceptable to the Tender Agent in its
reasonable discretion, accept such Substitute Liquidity Facility, enforce payment of any amounts
due under the existing Liquidity FaCIlity to the extent required by this Exhibit 1 and promptly
surrender the existing Liquidity Facihty to the issuer thereof.
(c) Any Substitute LiqUIdity Facility shall be a purchase agreement, letter of credit or
other liqUIdity facility, or any combination thereof, issued by one or more commercial banks or
savings and loan assocIations, or other financial instItutIOns, the terms of which shall in all
respects material to the mterests of the Owners be the same as the Standby Agreement, except
that the amount available under such SubstItute Liquidity Facility to pay the interest portion of
the purchase price of the Bonds pursuant to such Substitute Liquidity Facility may change in
accordance WIth SectIOn 207(a) hereof and that the expIration date of such Substitute Liquidity
FacilIty may be later than the expiration date for the eXIsting LiqUIdIty Facility. Any Substitute
Liquidity Facility must prOVIde for the purchase of all Bank Bonds from the Bank. No Substitute
LiqUIdity Facility shall become effective WIthout the approval of the Commission.
(d) If a LiqUIdIty Faclhty IS in effect with respect to the Bonds, the Tender Agent
shall present all drafts, demands, and other documents reqUIred by such Liquidity FaCIlity (in the
manner therein penmtted and by the tIme reqUIred thereby) for the payment of funds thereunder
36
NYC 582459.356910006041/3/2006 03.01pm
(after taking into account funds from remarketing as herem provided then held by the Tender
Agent) sufficient to pay, on each purchase date, the purchase price for such Bonds tendered.
( e) In connectIOn with the tenmnation, expiration or cancellation or substitution of
the LiquidIty Facility, the Paymg Agent is hereby directed to give notice to the Owners of the
Bonds as provided in SectIOn 207(f) hereof.
(f) The Paying Agent shall gIVe notIce by mail to the Owners of the Bonds on or
before the 30th day precedmg the expiration of any Liquidity FacIlity in accordance WIth its
terms, or any cancellation, terminatIOn or substitution of the Liquidity Facihty which will cause
the Bonds to cease to be subject to purchase from the Liquidity FaCIlity (except upon the
occurrence of an Authorized LiquidIty Termination in which case notIce WIll be gIven as
described in SectIOn 206(f)(lii) hereof), whIch notice shall, to the extent apphcable, (1) describe
generally the Liquidity Facility in effect prior to such cancellation, termination or expiration and
the Substitute LiquidIty Facihty in effect or to be in effect upon such cancellation, termmation or
expiration, (2) state the date of such cancellation, termmation, expiration or proposed
substitution of the Substitute Liquidity Facility, (3) describe any termination of the Liquidity
Facility and the effective date thereof, (4) specify the rating, if any, to be applicable to Bonds
after such cancellation, termination, expiration or substItution of the Liquidity Facility or state
that no ratings have been obtained with respect to the Bonds for the period subsequent to such
cancellatIOn, termination, expiration or substitution of the Liquidity Facility, and (5) unless the
Liquidity Facility has been replaced by a Substitute Liquidity Facility in respect of such Bonds
as described in the last paragraph of Section 206( d) hereof, state (A) that the Bonds will be
purchased pursuant to Section 206(d) and (B) the date of such purchase, which date shall be a
Business Day that is not less than ten days after the giving of such notice and at least five days
prior to such cancellation, expiratIOn or termination. The Issuer shall give the Tender Agent, the
Remarketing Agent and the PaYIllg Agent wntten notificatIOn of any cancellation, termination,
expiration or substitution of the Liquidity Facility as soon as practicable after receiving
knowledge thereof. The Issuer shall provide the Tender Agent and the Paying Agent with
written notice of any information required to enable the Paying Agent to give the foregoing
notice and shall provide the Paying Agent with the form of such notice; provided, however, that
in the event the Issuer shall fail to provide such notice, the Tender Agent shall provide such
notice to the Paying Agent.
(g) Following the conversion of all of the Bonds to a Long-Term Interest Rate until
their maturity, the Bonds shall no longer be subject to tender for purchase.
Section 208 Authentication of Bonds. Only such Bonds as shall have endorsed thereon
a certIficate of authentication substantially in the fonn hereinabove set forth, duly executed by
the Paying Agent, shall be entitled to any benefit or security under this Exhibit 1. No Bond shall
be vahd or obligatory for any purpose unless and until such certificate of authentication on the
Bond shall have been duly executed by the Paymg Agent, and such certificate of the Paying
Agent upon any such Bond shall be conclUSIve evidence that such Bond has been duly
authenticated and dehvered under this Exhibit 1. The Paying Agent's certificate of
authentication on any Bond shall be deemed to have been duly executed if signed by the PaYIllg
Agent or his designee, but it shall not be necessary that the same person sign the certificate of
authenticatIOn on all of the Bonds that may be issued hereunder at anyone time
37
NYC 582459.3 56910 006041/3/2006 03"Olpm
Section 209 Exchange of Bonds. Bonds, upon surrender thereof at the Principal Office
of the Paying Agent, together wIth an assIgnment duly executed by the Owner or his attorney or
legal representative in such form as shall be satisfactory to the Paying Agent, may, at the option
of the owner thereof, be exchanged for an equal aggregate principal amount of Bonds of the
same maturity, of any Authonzed DenommatIOns and 111 the same form as the Bonds surrendered
for exchange.
The Issuer shall make proVISIOn for the exchange of Bonds at the Principal Office of the
Paying Agent.
SectIOn 210 RegIstration and Transfer of Bonds. The Issuer shall appoint such
registrars, transfer agents, paying agents, depositaries or other agents as may be necessary for the
registration, registration of transfer and exchange of Bonds withm a reasonable time according to
then current commercIal standards and for the timely payment of principal, interest and any
redemption premium with respect to the Bonds. FIrst-Citizens Bank & Trust Company is hereby
appointed as the Paymg Agent for the Bonds, subject to the right of the Board of Commissioners
of the Issuer to appomt a successor Paying Agent at any time. The Paying Agent shall keep the
books of the Issuer for regIstration, registration of transfer, exchange and payment of the Bonds
as provided in this Exhibit 1. Such registration books shall be available at all reasonable times
for mspection by the Issuer, and the Paying Agent shall provide to the Issuer, upon its wntten
request, an accurate copy of the names and addresses of the Owners set forth on such books. The
Paymg Agent may at any time resign and be discharged of the duties and obhgations created by
this Exhibit 1 by gIvmg at least 60 days' notice to the Tender Agent, the Issuer, the Bank and the
Remarketing Agent. Any resignation or removal of the Paying Agent shall take effect on the day
a successor Paying Agent shall have been appointed by the Issuer and shall have accepted such
appointment. If no Paymg Agent IS appointed within 60 days after a notice of resignation, the
resigning party may appoint a successor or petition any court of competent jurisdiction to appoint
a successor.
The transfer of any Bond may be registered only upon the books kept for the registration
of and registration of transfer of Bonds upon surrender thereof to the Paying Agent together with
an assignment duly executed by the Owner or his attorney or legal representative in such form as
shall be satisfactory to the Paying Agent. Upon any such registration of transfer the Issuer shall
cause to be executed and the Paying Agent shall authenticate and dehver m exchange for such
Bond a new Bond or Bonds, registered m the name of the transferee, of any Authonzed
DenominatIOns, in an aggregate principal amount equal to the principal amount of such Bond
surrendered and ofthe same matunty.
In all cases in which Bonds shall be exchanged or the transfer of Bonds shall be
registered hereunder, the Issuer shall cause to be executed and the Paying Agent shall
authenticate and delIver at the earhest practicable time Bonds m accordance with the proVIsions
of thIS Exhibit 1. All Bonds surrendered in any such exchange or registration of transfer shall
forthWIth be cancelled by the Paying Agent. No servIce charge shall be made for any
regIstratIOn of transfer or exchange of Bonds, but the Issuer and the Paying Agent may require
payment of a sum sufficient to cover any tax or other governmental charge that may be nnposed
m COlmectIOn with any registratIOn of transfer or exchange of Bonds. Except m connectIOn WIth
a purchase of any Bond upon remarketmg and except for the unredeemed pOliion of any Bond
38
NYC 582459.3 56910006041/3/2006 03"OIpm
which has been called for redemption in part, neIther the Paying Agent nor the Issuer shall be
obligated to exchange or register the transfer of any Bond which has been called or selected for
call for redemption in whole or m part. Except in connection with a purchase of any Bond upon
remarketing, neIther the Paying Agent nor the Issuer shall be obhgated to exchange or register
the transfer of any Bond during a period of 15 days precedmg the giving of a notIce of
redemption. If the transfer of any Bond which has been called or selected for call for redemption
in whole or in part is reqmred by this Exhibit 1, any notice of redemption which has been gIven
to the transferor shall be bmdmg upon the transferee and a copy of the notice of redemptIOn shall
be delivered to the transferee by the Paying Agent along with the Bond or Bonds.
SectIOn 211 Ownership of Bonds. The Issuer, the Paymg Agent, the Tender Agent and
any agent of the Issuer, the Paymg Agent or the Tender Agent shall treat the person in whose
name any Bond is regIstered as the owner of such Bond for the purpose of receivmg payment of
prinCIpal of and premIUm, If any, and interest on, such Bond, and for all other purposes
whatsoever, whether or not such Bond be overdue, and, to the extent permItted by law, neither
the Issuer, the Paying Agent, the Tender Agent nor any such agent shall be affected by notice to
the contrary.
Section 212 Initial Delivery of Bonds. The Bonds shall be executed substantially in
the forms and in the manner hereinabove set forth, shall be deposited with the Paying Agent for
authenticatIOn and shall be dehvered by the Paying Agent to or upon the order of the State
Treasurer of the State for delivery to or upon the order of the purchasers thereof, but before the
Bonds shall be delivered to or upon the order of the purchasers thereof, there shall be filed or
deposIted with the Commission the following:
(a) a copy, certified by the Secretary or any Deputy Secretary of the Commission to
be a true and correct copy, of the resolution or resolutions of the CommIssion approving the
issuance of and awarding or providing for the award of the Bonds and approving the Standby
Agreement;
(b) a copy, certified by the Clerk to the Board of Commissioners of the Issuer to be a
true and correct copy, of this Exhibit 1; and
(c) fully executed counterparts of the Remarketing Agreement, the Standby
Agreement and the Tender Agreement.
When the documents mentioned in paragraphs (a) to (c), inclusive, of this Section shall
have been filed or deposIted with the CommISSIOn and when the Bonds shall have been executed
and authenticated as reqmred by the ResolutIOn and this Exhibit 1, the State Treasurer shall
deliver the Bonds at one time to or upon the order of the purchasers thereof, but only upon
payment to or upon the order of the State Treasurer of the purchase price of the Bonds.
SectIOn 213 Deliverv of Purchased Bonds. Each Bond purchased by the Tender Agent
shall be delivered by the Tender Agent to the Paying Agent, and the Paymg Agent shall register
the transfer of such Bond upon the books kept for the registration of and registratIOn of transfer
of Bonds. Thereupon the Issuer shall cause t,o be executed and the Paying Agent shall
authenticate and delIver a new registered Bond or Bonds, registered m the name of the purchaser
39
NYC 582459.3 56910 006041/3/2006 03"OIpm
or purchasers thereof, in an aggregate princIpal amount equal to the princIpal alnount of the
purchased Bond, m Authorized DenominatIOns, of hke date, tenor and matunty, m exchange for
such Bond.
SectIOn 214 Mutilated, Destroved, Stolen or Lost Bonds. In case any Bond shall
become mutilated or be destroyed, stolen or lost, the Issuer shall cause to be executed, and the
Paying Agent shall authenticate and deliver, a new Bond of like date, tenor and maturity in
exchange and substitution for and upon the cancellatIOn of such mutilated Bond or III lieu of and
in substItution for such Bond destroyed, stolen or lost, and the Owner shall pay the reasonable
expenses and charges of the Issuer and the Paymg Agent in connection therewith and, in case of
a Bond destroyed or lost, the Owner shall file WIth the Paymg Agent evidence satisfactory to It
and to the Issuer that such Bond was destroyed or lost, and of his ownershIp thereof, and shall
furnish the Issuer and the Paying Agent mdemnity satisfactory to them.
Every Bond issued pursuant to the proviSIOns of this SectIOn 214 in exchange or
substitution for any Bond whIch IS mutilated, destroyed, lost or stolen shall constitute an
additional contractual obligation of.the CommIssion, whether or not the destroyed, lost or stolen
Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the
benefits hereof equally and proportIOnately with any and all other Bonds duly issued under this
Exhibit 1. All Bonds shall be held and owned upon the express condition that the foregoing
proVIsions are exclUSIve with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Bonds, and shall preclude any and all other nghts or remedIes, notw1thstandmg any law
or statute existing or hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without theIr surrender.
Section 215 Early Maturity of Bonds.
(a) If payment of the purchase price of any Bond shall not be made to any Owner
within five BusIlless Days after a purchase date following an Authorized Liquidity Termination
(unless a Substitute Liquidity Facility is then in effect), the principal of all outstanding Bonds
shall become and be llnmed1ately due and payable on the next succeeding Business Day. In such
case, the Bonds shall bear interest at the lesser of (a) the sum of (i) the bond equivalent yield for
91 day United States Treasury bIlls sold at the last United States Treasury auctIOn occurring prior
to such day, which yield shall be calculated by the Tender Agent in accordance with standard
practices in the banking industry on the basis of the discount rate at whIch such bIlls were sold
plus (ii) one percent and (b) 12% per annum, in either case beginning after such five Business
Days until such principal is paid.
(b) If payment of the purchase price of any Bond shall not be made to any Owner
WIthin 75 days after a purchase date (unless a Substitute LiqUIdity Facihty is then in effect), the
pnncipal of all outstanding Bonds shall become and be Immediately due and payable on the next
succeeding Business Day. In such case, the Bonds shall bear interest at the lesser of (a) the sum
of (i) the bond equivalent yield for 91 day Umted States Treasury bills sold at the last United
States Treasury auctIOn occurnng prior to such day, which YIeld shall be calculated by the
Tender Agent in accordance WIth standard practIces in the banking industry on the basis of the
dIscount rate at whIch such bIlls were sold plus (Ii) one percent and (b) 12% per aIliUm, in either
case beglllimg on such Busmess Day untIl such prmc1palis paId.
40
NYC 582459.3 56910 006041/3/2006 03.01pm
( c) With respect to Section 2l5( a) and Section 215(b), for the period beginnmg on the
purchase date on which the purchase price is not paid to an Owner and ending on the day before
the Bonds become immediately due and payable (or the date of the effectiveness of a SubstItute
Liquidity FaCIlity which prevents such acceleration from occurring), the Bonds shall bear Illterest
at a rate per annum equal to 70% of the interest rate on hIgh grade unsecured commercial paper
notes sold through dealers by major corporations as reported in The Wall Street Journal on such
purchase date.
ARTICLE III.
REDEMPTION OF BONDS
Section 301 Terms of Redemption.
(a)
ArtIcle III.
The Bonds shall not be subject to prior redemption except as provided in this
(b)
Optional Redemption.
(i) During a Weekly Interest Rate Period, the 'Bonds shall be subject
to optional redemption by the Issuer, in whole on any Business Day or in part on any
Interest Payment Date, at a redemption price equal to 100% of the principal amount
thereof to be redeemed plus accrued interest, if any, to the redemption date.
(ii) On the day succeeding the last day of any Bond Interest Term with
respect to any Bond, such Bond shall be subject to optIOnal redemption by the Issuer, in
whole or in part, at a redemption price equal to 100% of the pnnc1pal amount thereof to
be redeemed.
(iii) During any Long-Term Interest Rate Period, the Bonds shall be
subject to optional redemption by the Issuer on the first day thereof, in whole or in part,
at a redemption price equal to 100% of the principal amount thereof to be redeemed, and
thereafter, during the periods specified below or, if approved by Bond Counsel as
provided in Section 205(e)(ii) hereof, during the periods specified in the notice of the
Issuer to the Paymg Agent pursuant to Section 205(e)(ii)(A) hereof, in whole or in part at
any time, at the redemptIOn prices (expressed as a percentage of principal amount)
hereinafter mdlcated or specified in the notice of the Issuer to the Paying Agent pursuant
to Section 205(e)(li)(A) hereof, plus accrued interest, if any, to the redemption date:
Length of Long- Tenn Interest Rate Penod
(expressed m years)
Redemption Prices
greater than 15
after 10 years at 100%
less than or equal to 15
greater than 10
and after 7 years at 100%
41
NYC 582459.3 56910 00604 1/3/2006 03-01pm
Length of Long- Tenn Interest Rate Period
(expressed m years)
Redemption Prices
less than or equal to 10 and
greater than 7
after 5 years at 100%
less than or equal to 7 and
greater than 4
after 3 years at 100%
less than or equal to 4
after 2 years at 100%
(c) Mandatory RedemptIOn of Bank Bonds. Bank Bonds are subject to mandatory
redemption pnor to maturity m whole or in part on any date specified in the Liquidity Facility in
any manner dIrected by the LiquidIty Facility for such Bank Bonds at a redemptIOn price equal to
100% of the principal amount of the Bank Bonds to be redeemed plus accrued mterest thereon to
the date fixed for redemptIOn.
(d) Mandatory Sinking Fund Redemption. The Bonds are reqUIred to be redeemed to
the extent of any Sinking Fund ReqUIrement therefor on February 1 of each year in which there
is a SInking Fund Requirement, at a redemptIOn price equal to 100% of the principal amount of
the Bonds to be redeemed plus accrued interest thereon to the date fixed for redemption.
Section 302 Selection of Bonds to be Redeemed. If less than all the Bonds are to be
redeemed, the particular Bonds to be redeemed shall be determined by the Issuer. If less than all
of the Bonds of anyone maturity are to be redeemed, the particular Bonds to be redeemed shall
be selected by the Paymg Agent by lot in such manner as the Paying Agent in his or its discretion
may determine; provIded, however, that any Bonds or portions thereof that have not been so
called for redemption shall be in Authorized Denominations, and, for so long as the Owner is a
Securities Depository Nominee, such selection shall be made by the Securities DeposItory. Bank
Bonds shall be redeemed before any other Bonds are redeemed.
For all purposes of this Exhibit 1, unless the context otherwise requires, all provisions
relating to the redemption of Bonds shall relate, m the case of any Bond redeemed or to be
redeemed only in part, to the portion of the principal of such Bond which has been or is to be
redeemed.
Section 303 Election to Redeem alld NotJce to Paying Agent; RedemptIOn Notice.
(a) In case of any redemption pursuant to Section 301 hereof, the Issuer shall, at least
15 days prior to the date that notIce of redemption is required to be given by the Paying Agent
(unless a shorter notice shall be satisfactory to the Paying Agent), notify the Paying Agent in
writing of such redemption date and of the principal amount of Bonds to be redeemed. A copy
of such notice to the Paymg Agent shall be sent by first class mail, postage prepaid, to the Bank
by the Issuer at the same tIme it IS sent to the Paying Agent.
(b) Not more than 45 nor less than 30 days before the redemptIOn date of any Bonds,
whether such redemption be in whole or in part, the Issuer shall cause a notice of such
redemptIOn, SIgned by the Paymg Agent, to be mmled, first-class postage prepaid, to Moody's,
42
NYC 582459.3 56910 00604 1/3/2006 0301 pm
Fitch and S&P, the Remarketing Agent and all Owners of Bonds to be redeemed in whole or in
part at their addresses appearing upon the registration books kept by the Paying Agent; provided
that any such notice to any Securities DeposItory shall be gIven by facsimile followed by
certified or registered mail. Failure to mall any such notice to Moody's, Fitch and S&P or the
Remarketing Agent or any defect III the notice so mailed shall not affect the validity of the
proceedings for the redemption of the Bonds and failure to mail any such notice to any Owner or
any defect in any notice so mailed shall not affect the vahdlty of the proceedmgs for the
redemption of the Bonds of any other Owners to whom such notice was given as required
hereby. Each such notice shall set forth the date fixed for redemption, the redemption price to be
paid and, if less than all of the Bonds of any matunty then outstandmg shall be called for
redemption, the d1stmctive numbers and letters, if any, of such Bonds to be redeemed and, in the
case of any Bond to be redeemed in part only, the portIOn of the principal amount thereof to be
redeemed. Each such notice shall also state that pursuant to Section 304 hereof Illterest on the
Bonds to be redeemed shall cease to accrue on the date fixed for redemption and that, if any
Bond IS to be redeemed in part only, on or after the redemptIOn date, upon surrender of such
Bond, a new Bond or Bonds in principal amount equal to the unredeemed portion of such Bond
WIll be issued.
(c) At least 35 days before the redemption date, the Paying Agent shall give such
notice by (i) registered or certified mall, postage prepaid, (ii) telephonically confirmed facsimile
transmIssion or (iii) overnight delivery servIce to the following securities depository (or its
successor) if then in existence at the address and transmission numbers given, or such other
address or transmISSIOn number as may have been dehvered m writmg to the Paying Agent for
such purpose not later than the close of business on the day before such notice is gIVen:
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530
Facsimile transmission: (516) 227-4039
(516) 227-4190
(d) At least 35 days before the date of redemption, such notice shall be given by (i)
registered or certified mail, postage prepaid, or (ii) overnight delivery service to the Commission
and at least two ofthe then-exIsting natIOnal information services by the PaYIllg Agent.
Failure by the Paying Agent to give notice pursuant to paragraph (c) or (d) of thIS
SectIOn 303 to anyone or more of the securities depositories or mformation services named
therein or any defect therein shall not affect the sufficiency ofthe proceedings for redemption.
SectIOn 304 Effect of Calling for Redemption. On or before the date fixed for
redemptIOn, moneys shall be deposited WIth the Paying Agent suffiCIent to pay the redemptIOn
price of the Bonds or portIOns thereof called for redemption as well as the interest accrumg
thereon on the redemption date thereof.
On the date fixed for redemption, notice havmg been gIVen in the manner and under the
conditions hereinabove provided, the Bonds or portions thereof called for redemptIOn shall be
due and payable at the redemptIOn pnce provided therefor, plus accrued interest to such date. If
43
NYC 582459.3 5691000604 1/3/2006 03-01pm
money sufficient to pay the redemption pnce of the Bonds or portions thereof to be redeemed,
plus accrued mterest thereon to the date fixed for redemption, are held by the Paying Agent in
trust for the Owners of Bonds or portions thereof to be redeemed, interest on the Bonds or
portions thereof called for redemptIOn shall cease to accrue; such Bonds or portions thereof shall
cease to be entitled to any benefits or security under thIS Exhibit 1 or to be deemed outstanding;
and the Owners of such Bonds or portIOns thereof shall have no rights in respect thereof except
to receive payment of the redemptIOn price thereof, plus accrued interest to the date of
redemption.
Section 305 RedemptIOn of Portion of Bond. If a portion of an outstanding Bond shall
be selected for redemption, the Owner thereof or his attorney or legal representative shall present
and surrender such Bond to the Paymg Agent for payment of the pnncipal amount thereof so
called for redemption and the redemption premium, If any, on such prinCIpal amount, and the
Issuer shall cause to be executed and the Paying Agent shall authenticate and delIver to or upon
the order of such Owner or his legal representative, WIthout charge therefor, for the unredeemed
portion of the principal amount of the Bond so surrendered, a Bond or Bonds of the same form
and maturity and of any Authorized Denominations; provided, however, that if the Owner is a
Securities Depository Nominee, the Secunties Depository, in ItS discretion, (a) may surrender
such Bond to the Paymg Agent and request that the Issuer and the Paying Agent issue and
authenticate a new Bond for the unredeemed portion of the principal amount of the Bond so
surrendered or (b) shall make an appropriate notation on the Bond indIcating the dates and
amounts of such reduction in pnnc1pal.
Section 306 Cancellation. Bonds so redeemed, presented and surrendered shall be
cancelled upon the surrender thereof.
ARTICLE IV.
REMARKETING AGENT, TENDER AGENT, AND PURCHASE
AND REMARKETING OF BONDS
Section 401 Remarketing Agent and Tender Agent.
(a) The initial Remarketmg Agent for the Bonds shall be Wachovla Bank, National
ASSOCIation. The Issuer shall appoint any successor Remarketing Agent for the Bonds, subject to
the conditions set forth in Section 402(a) hereof and the approval of the Bank and the
Commission. Each Remarketing Agent shall designate its PrinCIpal Office (other than the initial
Remarketing Agent whose Principal Office IS listed in Section 601 hereof) and SIgnify its
acceptance of the duties and obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Issuer and the Bank under WhICh the Remarketing Agent will agree,
partIcularly, to 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 Issuer and the Bank at all
reasonable times.
(b) The imtial Tender Agent for the Bonds shall be FIrst-CItizens Bank & Trust
Company. The Issuer shall appomt any successor Tender Agent for the Bonds, subject to the
conditions set forth m Section 402(b) hereof. Each Tender Agent shall designate Its Prmclpal
44
NYC 582459.3 56910006041/3/2006 0301pm
Office(s) for delivery of notices and delivery of Bonds (except for the Principal Office of the
initial Tender Agent whIch IS hsted in SectIOn 601 hereof) and SignIfy Its acceptance of the
duties and obhgations Imposed upon It hereunder by a wntten instrument of acceptance delivered
to the Paying Agent, the Issuer and the Remarketing Agent. By acceptance of its appointment
herew1der, the Tender Agent agrees:
(i) to hold all Bonds delivered to it pursuant to SectIOn 206 hereof, as
agent and bailee of, and in escrow for the benefit of, the respective Owners which shall
have so delivered such Bonds until moneys representing the purchase price of such
Bonds shall have been dehvered to or for the account of or to the order of such Owners;
(ii) to establish and maintain a separate segregated trust fund
designated as "County of New Hanover Variable Rate General Obligation Bonds, Series
2006 Bond Purchase Fund" (the "Bond Purchase Fund") until such time as it has been
discharged from Its duties as Tender Agent hereunder;
(ui) to hold all moneys (WIthout investment thereof) delivered to it
hereunder m the Bond Purchase Fund for the purchase of Bonds pursuant to Section 206
hereof, as agent and bailee of, and in escrow for the benefit of, the person or entity which
shall have so delivered such moneys until the Bonds purchased with such moneys shall
have been dehvered to or for the account of such person or entity;
(iv) to hold all moneys delivered to it by the Issuer for the purchase of
Bonds pursuant to SectIOn 206 hereof, as agent and bailee of, and in escrow for the
benefit of, the Owners or former Owners who shall deliver Bonds to it for purchase until
the Bonds purchased WIth such moneys shall have been delivered to or for the account of
the Issuer;
(v) to hold all Bonds registered in the name ofthe new Owners thereof
which have been delivered to it by the Paymg Agent for delivery to the Remarketing
Agent in accordance with the Tender Agreement;
(vi) to hold Bonds for the account of the Issuer as contemplated by
Section 405(c) hereof; and
(VIi) to 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
Issuer, the Paying Agent, the Bank and the Remarketing Agent at all reasonable times.
The Issuer shall cause the necessary arrangements to be made and to be thereafter
contmued to enable the Tender Agent to perform its duties and obligations described above.
Section 402 QuahficatIOns of Remarketing Agent and Tender Agent; Resignation;
Removal.
(a) The Remarketing Agent shall be a financial instItution member of the National
Association of Securities Dealers, havmg combined capItal stock, surplus and undivided profits
of at least $75,000,000 and authonzed by law to perform all the dutIes Imposed upon It by this
45
NYC 582459.3 56910 00604 1/3/2006 03"01pm
ExhibIt 1. The Remarketing Agent may at any time resign and be dIscharged of the duties and
obhgations created by thIS Exhibit 1 by gIving notIce to the Issuer, the PaYIllg Agent, the Tender
Agent and the Bartle Such resIgnation shall take effect no earlier than the 45th day after the
receipt by the Issuer and the Paymg Agent of the notice of resignation. The Remarketing Agent
may be removed at any time on 45 days' ,prior wntten notice, by an instrument SIgned by the
Issuer and filed with the Remarketmg Agent, the Paying Agent, the Tender Agent and the Bank.
(b) The Tender Agent shall be a bank with trust powers or a trust company duly
organized under the laws of the Umted States of America or any state or territory thereof, and
having a combmed capital stock, surplus and undivided profits of at least $100,000,000 and
authorized by law to perform all the duties imposed upon it by thIS Exhibit 1 and the Tender
Agreement. The Tender Agent may at any time resign and be discharged of the duties and
obhgations created by this Exhibit 1 by giving at least 60 days' notIce to the Paying Agent, the
Issuer, the Bank and the Remarketmg Agent. The Tender Agent may be removed at any time by
an instrument signed by the Issuer, filed with the Tender Agent, the Paymg Agent, the Bank and
the Remarketing Agent. Such resignatIOn or removal shall take effect on the day a successor
Tender Agent shall have been appointed by the Issuer and shall have accepted such appointment.
If no Tender Agent IS appointed withm 60 days after a notice of resignatIOn, the resignmg party
may appolllt a successor or petition any court of competent jurisdIctIOn to appoint a successor.
Upon the effectIve date of reSIgnation or removal of the Tender Agent, the Tender Agent shall
deliver moneys held by it in such capacity and the LIquidity Facility to its successor.
Section 403 Notice of Bonds Delivered for Purchase; Purchase of Bonds.
(a) The Tender Agent shall determme timely and proper delivery of Bonds pursuant
to this Exhibit 1 and the proper endorsement of such Bonds. Such determination shall be bmdmg
on the Owners of such Bonds, the Issuer, the Remarketing Agent and the Paying Agent, absent
manifest error. In accordance with the provisions of the Tender Agreement, the Tender Agent
shall give notice by telephone, telecopy or telex promptly confirmed by a written notice, to the
Paying Agent, the Remarketing Agent and the Bank specifying the principal amount of Bonds, if
any, as to which It has received notIce of tender for purchase m accordance with Section 206(a)
hereof.
(b) Bonds required to be purchased in accordance with SectIOn 206 hereof shall be
purchased from the Owners thereof, on the date and at the purchase price at which such Bonds
are reqUired to be purchased. Funds for the payment of such purchase price shall be derived
from the following sources in the order of prionty indicated:
(i) proceeds of the sale of such Bonds remarketed to any person
pursuant to Section 404 hereof and furnished to the Tender Agent by the Remarketing
Agent for deposit mto the Remarketing Account of the Bond Purchase Fund;
(ii) moneys furnished by the Bank to the Tender Agent pursuant to the
LiqUidity Facihty for deposIt into the Liquidity Provider Account of the Bond Purchase
Fund; and
46
NYC 582459.356910006041/3/2006 Q3'Olpm
(iii) moneys furnIshed by the Issuer to the Tender Agent pursuant to
SectIOn 205(k) or 206(h) hereof for deposit mto the Bond Purchase Fund. In the event
that a premIUm is required to be paid upon the purchase of any Bond as provIded in
Section 206 hereof, and the LIquidIty FacIlity then in effect wIth respect to the Bonds
shall not proVIde for the payment of a premIUm upon the purchase of Bonds, then moneys
denved from draws on the LIqUIdity Facility shall be applied solely to the payment of
purchase price equal to principal of and mterest on the Bonds and not to the payment of
any such premium.
The Tender Agent may establish separate accounts or sub accounts withm the Bond
Purchase Fund for such purposes as the Tender Agent may deem appropnate.
(c) (i) The Paymg Agent shall authenticate a new Bond or Bonds m an aggregate
principal amount equal to the pnnc1pal amount of Bonds purchased m accordance WIth Section
403(b) hereof, whether or not the Bonds so purchased are presented by the Owners thereof,
bearing a number or numbers not contemporaneously outstanding. Every Bond authenticated
and delivered as provided in this Section shall be entitled to all the benefits of the Resolution and
this Exhibit 1 equally and proportionately WIth any and all other Bonds duly issued hereunder.
(n) In the event any Bonds purchased as provided m this Section 403
shall not be presented to the Tender Agent, the Tender Agent shall segregate and hold the
moneys for the purchase pnce of such Bonds in trust for the benefit of the former Owners
of such Bonds, who shall, except as provided in the following sentence, thereafter be
restricted exclusively to such moneys for the satisfaction of any claim for the purchase
price of such Bonds. Any money that is so set aSIde and that remains unclaimed by the
Owners for a period of five years after the date on which such Bonds have become
payable shall be treated as abandoned property pursuant to the provisions of SectIOn
116B-53 of the General Statutes of North Carolina, and the Paying Agent shall report and
remit this property to the Escheat Fund established by, according to the requirements of,
Article 4 of Chapter l16B of the General Statutes of North Carolina, and thereafter the
Owners shall look only to the Escheat Fund for payment and then only to the extent of
the amounts so received, without any mterest thereon, and the Paying Agent, the Tender
Agent, and the Issuer shall have no responsibihty with respect to such money.
SectIOn 404 Remarketing of Bonds; Notice ofInterest Rates.
(a) Upon notice of the tender for purchase of Bonds, the Remarketmg Agent shall
offer for sale and use its best efforts to sell such Bonds, provided that after such sale a LIqUIdity
FaCility shall be in effect. The Remarketmg Agent shall not sell the Bonds to the County or any
affilIate of the County. All such sales will be at a price equal to the principal amount thereof
plus accrued mterest thereon, If any, except for a sale at a Long-Term Interest Rate m which a
premIUm may apply as described m Section 205(e)(i) hereof. Any Bond whIch is tendered for
purchase pursuant to SectIOn 206(a) hereof after such Bond has become subject to mandatory
tender for purchase pursuant to Section 206(c), 206(d) or 206(e) hereof shall be sold by the
Remarketmg Agent only to a purchaser who agrees to (i) refrain from sellmg that Bond other
than under the tenns of thIS ExhibIt 1, or (ii) hold that Bond only to the date of mandatory
purchase.
47
NYC 582459.3569]0006041/3/2006 03"01pm
(b) The Remarketing Agent shall determine the rate of interest to be borne by the
Bonds during each Interest Rate Period and by each Bond during each Bond Interest Term for
such Bond and the Bond Interest Terms for each Bond during each Short-Term Interest Rate
Penod as provided m SectIOn 205 hereof and shall furnIsh to the Issuer and the Paying Agent on
the Business Day of determmatlOn each rate of interest and Bond Interest Term so determined by
telex, telephone or telecopy, promptly confirmed m writing, or shall make such information
available to such partIes by readily accessible electronic means.
(c) The Remarketing Agent shall give telephomc or telegraphic notice, promptly
confinned by a wntten notice, to the Issuer, the Paying Agent, and the Tender Agent on each
date on which Bonds shall have been purchased pursuant to Section 403(b )(i) hereof, specifying
the pnncipal amount of Bonds, if any, sold by it pursuant to SectIOn 404(a) hereof along with a
list of such purchasers showmg the names and Authonzed DenommatIOns in which such Bonds
shall be registered, and the addresses and social secunty or taxpayer identification numbers of
such purchasers.
SectIOn 405 Delivery of Bonds.
(a) Bonds purchased with moneys described in clause (i) of SectIOn 403(b) hereof
shall be made available by the Paying Agent to the Remarketing Agent for delivery to the
purchasers thereof agamst payment therefor in accordance wIth the Tender Agreement.
(b) Bonds purchased wIth moneys described m clause (Ii) of Section 403(b) hereof
shall be regIstered and delivered or held as provided in the Liquidity Faclhty. Bank Bonds shall
not be delivered to purchasers thereof until the Bank has provided written evidence that the
Liquidity Facility WIll be reinstated to cover such remarketed Bonds.
( c) Bonds purchased with moneys described in clause (iii) of Section 403(b) hereof
shall be held by the Tender Agent for the account of the Issuer.
(d) Bonds delivered as provided in this Section 405 shall be registered in the manner
dIrected by the recipient thereof or in the Tender Agreement.
Section 406 Deliverv of Proceeds of Sale. The proceeds of the sale by the
Remarketing Agent of any Bonds delivered to it by, or held by it for the account of, the Paying
Agent or the Issuer, or delivered to it by any other Owner, shall be turned over to the Tender
Agent as provided in the Tender Agreement.
Section 407 Draws on LiqUIdity Facilitv to Pay Purchase Pnce of Bonds. The Tender
Agent, on each day on which Bonds are required to be purchased pursuant to Section 206 hereof,
IS hereby dIrected to make drawings under the LiquidIty Faclhty by such times and m such
manner as shall be required in order for it to receive Immediately available funds on such date to
pay the purchase price plus accrued interest, if any, of Bonds then payable from the LiqUIdity
Facility tendered for purchase or reqUIred to be purchased pursuant to the provisions of this
Exhibit 1 at the times, on the dates, to the extent, and m the manner herein and in the Tender
Agreement provided and to depOSIt the proceeds of such drawmgs or cause such proceeds to be
deposited in the LiqUIdIty Provider Account of the Bond Purchase Fund pendIllg apphcation of
such moneys to the payment of the purchase price of the Bonds. In determining the amount of
48
NYC 582459.3569]0006041/3/2006 03'Olpm
any such purchase price then due, the Tender Agent shall not take mto consideration any
purchase price due on Bank Bonds or Bonds held by the Issuer and no drawings under the
LiqUIdity Facihty shall be made or be used to pay the purchase price of any Bank Bonds or
Bonds held by the Issuer or any affiliate thereof. If moneys in the Liquidity Provider Account of
the Bond Purchase Fund are not used to purchase tendered Bonds on the day of the drawing on
the Liquidity Facility, such moneys shall be Immediately returned to the Bank. Funds in the
Liquidity Provider Account of the Bond Purchase Fund shall be held uninvested.
ARTICLE V.
SUPPLEMENTAL RESOLUTIONS
Section 501 Supplemental ResolutIOns. The Issuer may, from time to time and at any
time, with the prior written consent of the provider of the Liquidity Facility, which WIll not be
unreasonably withheld, pass resolutions amending or supplementing this Exhibit 1:
(1) to cure any ambiguity, supply any omission, or cure or correct any defect
or inconsistent provision relating to the Bonds herein or in such Bonds;
(2) to insert such provIsions clarifying matters or questions with respect to the
Bonds as are necessary or deSIrable and are not contrary to or inconsIstent with such
Bonds and this Exhibit 1 theretofore in effect;
(3) to change the maximum interest rate that the Bonds may bear, provided
that such change is approved by the Commission; or
(4) to make changes necessary in connectIOn with the delivery of a Substitute
LiquidIty FaCIlity hereunder;
provided, however, that, in the judgment of the Issuer, such amendments or supplements do not
materially and adversely affect the Owners.
Each such resolutIOn is conditioned upon delivery to the Issuer of a Favorable Opinion of
Bond Counsel.
ARTICLE VI.
MISCELLANEOUS PROVISIONS
Section 601 Manner of Giving NotIce. All notices, demands and requests to be gIVen
to or made hereunder by the Issuer, the CommIssion or the Paying Agent shall be given or made
in writmg and shall be deemed to be properly given or made if sent by Umted States certified or
registered mail, return receipt requested, postage prepaid, addressed as follows:
49
NYC 582459.356910006041/3/2006 03-01pm
(a) As to the Issuer--
County of New Hanover
320 Chestnut Street
Wilmington, North Carolma 28401
Attention: Finance Director
(b) As to the Comm1ssIOnn
State Treasurer's Office
325 North Salisbury Street
Raleigh, North Carolina 27603-1385
Attention: Secretary
(c) As to the Paying Agent--
First-Citizens Bank & Trust Company
100 East Tryon Road, DAC 61
RaleIgh, North Carolina 27603
AttentIOn: Corporate Trust Department
(d) As to the Remarketmg Agent--
Wachovia Bank, National Association
301 South College Street, TW9/NC0612
Charlotte, North Carohna 28202
Attention: Remarketing Desk
(e) As to the Tender Agent--
First-Citizens Bank & Trust Company
100 East Tryon Road, DAC 61
Raleigh, North Carolina 27603
Attention: Corporate Trust Department
(f) As to Moody's--
Moody's Investors Service
Public Finance Department
99 Church Street
New York, New York 10007
Attention: Public Finance Rating Desk/VRDO
50
NYC 5824593 56910006041/3/2006 03-01pm
(g) As to S&P--
Standard & Poor's Ratings Services,
a division of The McGraw-HIll Companies, Inc.
Public Finance Department
55 Water Street
New York, New York 10041
(h) As to the Bank--
Wachovia Bank, National AssociatIOn
150 Fayetteville Street Mall, Suite 600
RaleIgh, North Carolina 27602
AttentIOn: N. Page Hornaday, Jr., Senior Vice President
Any notice required to be gIVen by or to the Issuer shall be prOVIded to the Bank so long
as a LiquidIty Facihty is in effect.
Any such notice, demand or request may also be transmitted to the appropriate
above-mentioned party by telegram or telephone and shall be deemed to be properly gIVen or
made at the time of such transmission if, and only if, such transmission of notice shall be
confirmed m wntmg and sent as specified above.
Any of such addresses may be changed at any time upon wntten notice of such change
sent by United States registered mail, postage prepaid, to the other parties by the party effectmg
the change.
Section 602 Substitute Mailing. If, because of the temporary or permanent suspension
of postal servIce, the Issuer or the Paying Agent shall be unable to mail any notice required to be
given by the prOVISIOns of this Exhibit 1, the Issuer or the Paying Agent shall give notice in such
other manner as in the judgment of the Issuer or the Paying Agent shall most effectively
approXImate maIling, and the giving of notice III such manner shall for all purposes of this
Exhibit 1 be deemed to be in compliance with the requirement for the maIling thereof.
Section 603 Headings. Any headmg preceding the text of the several articles hereof,
and any table of contents or margmal notes appended to copies hereof, shall be solely for
convenience of reference and shall not constitute a part of this ExhibIt 1, nor shall they affect Its
meaning, construction or effect.
SectIOn 604 Further Authonty. The County Manager, the Fmance Director, the
County Attorney and the Clerk to the Board and such other officers or employees of the Issuer as
are designated by any of them are hereby authorized to do all acts and things required of them by
or in connectIOn WIth this Exhibit 1, the Remarketing Agreement, the Standby Agreement and all
other agreements or documents entered into or executed by the Issuer in connectIOn WIth the
issuance of the Bonds (collectively the "Issuer Documents") for the full, punctual and complete
performance of all of the tenns, covenants and agreements contained in the Bonds and the Issuer
Documents.
51
NYC 582459.356910006041/3/2006 03-0lpm
.'l \ II '
Section 605 Days Other than Business Days. Any actIOn required to be taken
hereunder on a day other than a Business Day shall be deemed to be tImely if such action is
taken on the next succeeding Business Day.
Section 606 NotIce to Moody's and S&P. Moody's and S&P shall receive notice from
the Paying Agent of the followmg Items: (a) any change of the Paying Agent, Tender Agent or
Remarketing Agent, (b) any supplement or amendment to the ResolutIOn, this Resolution, the
Liquidity Facility, the Remarketmg Agreement, the Tender Agreement or the Bonds, (c) any
expiration, substitutIOn, termmation or renewal of the LiqUIdity Facility, (d) any conversion from
one Interest Rate Period to another and (e) any mandatory tender, redemption or defeasance of
Bonds.
Section 607 References to and Rights of Bank. At such tIme as the LiqUIdity FacilIty
shall have terminated or expIred and not been replaced by a Substitute Liquidity Facility, all
references to the Bank and the LIqUIdity Facility shall have no applicability. If the Bank shall be
in default under the Liquidity Facility the rights of the Bank hereunder shall be suspended until
such time as the Bank ceases to be in default thereunder.
Section 608 Governing Law. This Exhibit 1 shall be construed and governed m
accordance with the laws of the State.
Section 609 SeverabIlity of Invahd ProvIsions. In case anyone or more of the
provIsions contained in this ExhibIt 1 or m the Bonds shall be held to be invahd, illegal or
unenforceable in any respect and for any reason, then such invalidity, illegality or
unenforceability shall not affect any other proviSIOn of this Exhibit 1, and thIS Exhibit 1 shall be
construed as if such invalid or illegal or unenforceable provision had never been contained
herein.
Section 610 Continuing Disclosure Obhgation. Dunng any Long-Term Interest Rate
Period and while the Bonds are otherwise subject to Rule 15c-12 issued under the Securities
Exchange Act of 1934, as amended ("Rule 15c2-12"), the Issuer hereby undertakes, for the
benefit of the beneficial owners of the Bonds, to provide:
(a) by not later than seven months from the end of each fiscal year of the
Issuer, to each nationally recognized muniCIpal securities information repository
("NRMSIR") and to the state mformation depOSItory for the State of North
Carolina ("SID"), if any, audIted financial statements of the Issuer for such fiscal
year, if available, prepared in accordance with Section 159-34 of the General
Statutes of North Carolma, as it may be amended from time to time, or any
successor statute, or, if such audIted financial statements of the Issuer are not
available by seven months from the end of such fiscal year, unaudIted finanCIal
statements of the Issuer for such fiscal year to be replaced subsequently by
audited financIal statements of the Issuer to be delivered within 15 days after such
audited finanCIal statements become available for dIstributIOn;
(b) by not later than seven months from the end of each fiscal year of the
Issuer, to each NRMSIR, and to the SID, if any, (i) the finanCial and statistical
52
NYC 582459.356910006041/3/2006 03-01pm
1\ ,r !I of
data as of a date not earher than the end of the preceding fiscal year for the type of
information included under headmg "The County - Debt Information and - Tax
Information" m the Official Statement relating to the Bonds (excluding any
information on overlapping or underlying umts) and (ii) the combmed budget of
the Issuer for the current fiscal year, to the extent such items are not included m
the financial statements referred to in (a) above;
(c) in a timely manner, to each NRMSIR or to the Municipal Secunties
Rulemaking Board ("MSRB"), and to the SID, If any, notice of any of the
following events wIth respect to the Bonds, If matenal:
(1) principal and lllterest payment delinquencies;
(2) non-payment related default;
(3) unscheduled draws on debt service reserves reflecting financial
diffi culti es;
(4) unscheduled draws on any credit enhancements reflecting financial
difficulties;
(5) substItution of any credit or liquidity providers, or their failure to
perform;
(6) adverse tax opmions or events affecting the tax-exempt status of
the Bonds;
(7) modification to the rights of the beneficial owners of the Bonds;
(8) bond calls;
(9) defeasances;
(10) release, substitution or sale of any property securing repayment of
the Bonds;
(11) ratmg changes; and
(d) in a timely manner, to each NRMSIR or to the MSRB, and to the SID, if
any, notice of a faIlure of the Issuer to provide required ammal financial
information described in (a) or (b) above on or before the date specified.
To the extent permitted by the U. S. Secunties and Exchange CommissIOn, the obligation
to file any of the above documents with NRMSIRs and SIDs may be discharged by transmitting
those documents electronically to www.DlsclosureUSA.org.
If the Issuer falls to comply with the undertaking described above, any beneficial owner
of the Bonds may take action to protect and enforce the rights of all beneficial owners with
53
NYC 582459.356910006041/3/2006 03-0lpm
II .:t ,f'.,
respect to such undertakmg, including an action for specific performance; provided, however,
that failure to comply with such undertaking shall not be an event of default and shall not result
in any acceleration of payment of the Bonds. All actions shall be instituted, had and maintamed
in the manner provided m this paragraph for the benefit of all beneficial owners of the Bonds.
The Issuer reserves the nght to modify from time to tIme the information to be provIded
to the extent necessary or appropriate in the judgment of the Issuer, provided that:
(2) any such modificatIOn may only be made in connectIOn with a change in
CIrcumstances that arises from a change in legal reqUIrements, change in law, or change
in the identify, nature, or status of the Issuer;
(3) the informatIOn to be provided, as modified, would have complied with
the requirements of Rule l5c2-12 as of the date of the Official Statement relating to the
Bonds, after taking into account any amendments or interpretations of Rule 15c2-12, as
well as any changes m CIrcumstances; and
(4) any such modIfication does not materially impair the Illterest of the
beneficial owners, as determmed eIther by parties unaffiliated with the Issuer (such as
bond counsel), or by the approvmg vote of the registered owners of a majority in
prinCIpal amount of the Bonds pursuant to the terms of this bond resolution, as it may be
alllended from time to time, at the time of the alllendment.
Any annual financial information contailllng modified operating data or financial
information shall explain, in narrative form, the reasons for the modIfication and the Impact of
the change in the type of operating data or financial information being provided.
The provisions of thIS Section shall terminate upon payment, or provision having been
made for payment in a manner consistent WIth Rule 15c2-12, in full of the principal of and
mterest on all of the Bonds.
54
NYC 582459.3 56910006041/3/2006 03-01pm