20090115Securities Sales Report.pdf

c ~~~'V'ST4.
Corp.
2009 JAN l 5 AM 8: l 5
ntion: Jean D. Jewell, Secretary
Case No. AVU-U-08-03
We are submitting the following information in compliance with the Commission's Order No.
30674 under Case No. AVU-U-08-03 for the sale of up to $83,700,000 of debt securities.
Avista Corporation issued the $17,000,000 principal amount of debt securities on December 30,
2008 at a variable rate. The maturity remains March 1, 2034. The Underwriter for this issuance was Banc
of America Securities LLC. The series was offered at a price of 100.00%. The underwriter fee for the
issue was 0.25% leaving a net price to the Company of 99.75% or total net proceeds of $16,957,500. The
net proceeds amount does not incorporate other issuance costs such as legal, accounting, ratings and
other. See the enclosed Official Statement for more details on the transaction.
The Company anticipates using the remaining authority under the above order to refund the
remaining $66.7 milion of pollution control bonds sometime in 2009. The Company purchased the bonds
on December 31, 2008 and expects that at a later date, subject to market conditions, the bonds will be
reissued to unaffilated investors.
Please contact Paul Kimball at [phone] if you have any questions.
Sincerely,~~
Diane C. Thoren
Assistant Treasurer
Enclosure
NEW ISSUEBOOK ENTRY ONLY
Subject to compliance by the Issuer and the Company with cerain covennts, in the opinion of Bond Counsel, und present law,
inteest on the Bond is excludable from gross income of the owns theeof for fedeal income tax purposes, except for interest on anyBond for any perod during which such Bond is ownd by a peron who is a substantial user of the Project or any person conidered
to be related to such person (within th meaning of Section 103(b)(13) of the Inte Revenue Code of 1954, as amend), but such
inteest is included as an ite of ta preferene in computing the fedeal altetive minimum tax for individual and corporations.
Bon Counsel is alo of the opinion that, unde th laws of th State of Montana, as presently ented and contrued, interest on th
Bon wül be exempt from the Individua Income Tax imposed pursunt to Titl 15, Chapte 30 of the Montana Code Annotated.
However, interest on th Bond will be subject to the Montana CQrorate Licene and Income Tax imposed under Titl 15, Chpter 31
of the Montana Code Annotated. See "TAX EXEMPTION" heein for a more complete discusion.
c::j ~!:- \.-10 C--;i :i ;0Dated: Date of Initial Delivery ~Ma_l, 2m"t~~
THE BONDS (AS HEREINAFTER DEFINED) ARE LIMITED OBLIGATIONS OF THE CITY OF FOwr, l\AÑ
(THE "ISSUER") AN, EXCEPT TO THE EXTENT PAYABLE FROM BOND PROCEEDS, DRAWS UNER T REWAFW
DESCRIBED LETTER OF CREDIT AN AN OTHER MONEYS PLEDGED THREFOR, WILL BE PAY OLIH FRa
AN SECURED BY A PLEDGE OF PAYMNTS TO BE MAE UNDER A LOAN AGREEMENT (AS HERE R DlFINJm)ENTERED INTO BY THE ISSUER WITH: O:r(') co.. 0u)Avista Corporation Ö -
The Bonds wi be iitialy issued in book-entr form only, registered in the name of Cede & Co., as nOIlnee foi4e Dep~ry Trt
Company ("DTC"), New York, New York, which wi act as securties depository for the Bonds. Beneficial Owners (as defined herein) wi not
receive certcates representing their ownership of the Bonds. Interest on, principal of, and preIlum, if any, on the Bonds ar payable by The
Bank of New York Mellon Trt Company, N.A., Seattle, Washington, as trtee, to Cede & Co., as nOIlnee of DTC. DTC will in tum mae
payments to its diect and indirect parcipants, who will in tum make payments to the Beneficial Owers of the Bonds. See "THE DAILY
INTEREST RATE BONDS-Book-Entry Only System."
The Bonds are Daiy Interest Rate Bonds and will be issued in the denoIlnation of $100,000 or any integral multiple of $5,000 in excess
thereof while they bear interest at a Daily Interest Rate. The Daily Interest Rate Bonds iitially wi bear interest on their date of initial
delivery at the interest rate established by Banc of America Securties LLC prior to such date and thereafer at Daiy Interest Rates established
as described herein durng the Daiy Interest Rate Period. Interest durng the Daily Interest Rat Period wil be payable on the first business
day of each calenda month, commencing Febru 2, 2009. The Bonds may be adusted from a Daiy Interest Rat Period to a different Rate
Period, followig madatory tender for purchase on the adustment date, as described herein.
$17,000,000
CITY OF FORSYT, MONTANA
Pollution Control Revenue Refunding Bonds
(Avista Corporation Colstrip Project)
Series 2008 (AMT)
From the date of initial delivery of the Bonds throug December 30, 2009, uness extended or earlier terrnated or replaced, principal of
and interest on the Bonds, and the purchase price of the Bonds tendered for payment as described herein wi be payable from funds drawn
under an irrvocable diect-pay Letter of Credit issued in favor of the Trtee by
Ban of AIerica, N.A.
The Letter of Credit is the dirct obligation of Bank of America, N.A. (the "Bank") to pay the Trtee, in conformity with the term thereof,
sum up to the principal amount of the Bonds and up to 35 days of accrued interest on the Bonds (calculated at an assumed mamum interest
rate of 12% per anum).
The Bonds are subject to optional and mandatory redemption and to optional and mandatory tender for purchase prior to maturty in the
maers and at the ties described herein.
THE BONDS SHA NOT BE DEEMED TO CONSTIE A DEBT, LIBIL OR GENERA OBLIGATION OF THE ISSUER, THE
STATE OF MONTANA OR OF ANY POLICAL SUBDMSION THEREOF, OR A PLEDGE OF THE FAITH AND CREDIT OF THE ISSUER,
THE STATE OF MONTANA OR OF AN SUCH POLITICAL SUBDMSION, BUT SHA BE PAYABLE SOLELY FROM THE REVENUES AND
PROCEEDS PROVIDED THEREFOR. TH ISSUER SHA NOT BE OBLIGATED TO PAY THE SAME OR INTREST THEREON EXCEPT
FROM THE REVENUES AND PROCEEDS PLEDGED THEREFOR, AND NEITHER THE FAIH AND CREDIT NOR THE TAXNG POWER
OF THE ISSUER, THE STATE OF MONTANA OR OF AN POLICAL SUBDMSION THEREOF is PLEDGED TO THE PAYMENT OF THE
PRINCIPAL OF OR THE INTEREST ON THE BONDS.
Prce: 100%
This cover page contains cerin iriormation for quick referene only. It is not a summary of this issue. Investors must read the
entire OjJal Statement to obtain iriormtion essential to the maing of an iriormed investment deciion.
Th Bon are offered whe, as and if issued by the Issuer and accepted by the Underrite, subject to the apprval of legality by
Chpman and Cutl LLP, Bon Counsel, and cerin othe conitions. Cerain tegal matters wiU be passed upon for the Company by
Marin M. Durkin, Esq., Senior Vice President, Gen Counsel and Chief Compliance Offer of the Company, and Dewey & LeBoeuf LLP,
for the City of Forsyth, Montana by Gary Ryder, Esq., City Attorey,jor the Bank by Moore & Van Allen, PLLC, and for the Undeter
by Kuta Rock LL. It is exected that deliver of the Bond wül be mae in book-entry form through the faclities of DTC in New York,
New York on or about December 30, 2008 against paymt theefor.
Bane of America Securities LLC
December 22, 2008
(THIS PAGE INTENTIONALL Y LEFT BLANK)
Trustee Remarketing Agent
The Bank of New York Mellon Trust Company, N.A.
Two Union Square, Suite 520
601 Union Street
Seattle, WA 98101-2321
Attn: Corporate Trust Administration
No broker, dealer, salesman or other person has been authorized to give any information or to make
any representations other than those contained in this Offcial Statement in connection with the offering
made hereby, and, if given or made, such information or representations must not be relied upon as having
been authorized by the Issuer, Avista Corporation (the "Company"), the Bank or Banc of America Securities
LLC (the "Underwriter"). Neither the delivery ofthis Offcial Statement nor any sale hereunder shall under
any circumstances create any implication that there has been no change in the affairs of the Issuer, the
Company or the Bank since the date hereof. This Offcial Statement does not constitute an offer or
solicitation in any jurisdiction in which such offer er solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such
offer or solicitation. The Issuer has not assumed and wil not assume any responsibilty as to the accuracy or
completeness of the information in this Offcial Statement other than that relating to itself under the caption
"THE ISSUER."
Banc of America Securities LLC
214 North Tryon St.
Charlotte, NC 28255
Attn: Short-Term Desk
The Underwriter has provided the following sentence for inclusion in this Offcial Statement: The
Underwriter has reviewed the information in this Offcial Statement in accordance with, and as part of, its
responsibilties to investors under federal securities laws as applied to the facts and circumstances of this
transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKT. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
INTRODUCTORY STATEMENT ............................................................................................................................. i
THE ISSUER............................................................................................................................................................... 2
THE FACILITIES ...... .............. ........ ................. ............ ............... ............... ....... ............ ...... ........ ......... ......... ............. 3
USE OF PROCEEDS .................................................................................................................................................. 3
THE DAILY INTEREST RATE BONDS .................................................................................................................. 3
THE LETTER OF CREDIT ...................................................................................................................................... i 7
BONDHOLDERS' RISKS........................................................................................................................................20
THE LOAN AGREEMENT ...................................................................................................................................... 23
THE INDENTURE.................................................................................................................................................... 28
CONTINING DISCLOSUR................................................................................................................................. 36
UNDERWRITING ....................................................................................................................................................36
TAX EXEMPTION...................................................................................................................................................37
CERTAIN LEGAL MATTERS ................................................................................................................................38
APPENDIX A AVISTA CORPORATION
APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL
THE BONDS HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE INENT BEEN
QUALIFIED UNER THE TRUST INENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS
CONTAIND IN SUCH ACTS. IN MAKIG AN INSTMNT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND TH TERMS OF THE OFFERIG, INCLUDING THE MERITS AND RISKS
INOLVED. THE BONDS HAVE NOT BEEN RECOMMNDED BY ANY FEDERA OR STATE SECURTIES
COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, TH FOREGOING AUTORITIES HAVE NOT
CONFIRED THE ACCURCY OR DETERMINED THE ADEQUACY OF THIS DOCUMNT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(THIS PAGE INTENTION ALL Y LEFT BLANK)
OFFICIAL STATEMENT
$17,000,000
City of Forsyth, Montana
Pollution Control Revenue Refunding Bonds
(Avista Corporation Colstrip Project)
Series 2008 (AMT)
Due: March 1, 2034
INTRODUCTORY STATEMENT
This Offcial Statement, including the Appendices hereto and the documents incorporated by
reference herein, is provided to furnish certain information with respect to the offer by the Issuer of its
$17,000,000 aggregate principal amount City of Forsyth, Montana Pollution Control Revenue Refunding
Bonds (Avista Corporation Colstrip Project) Series 2008 (the "Bonds").
The Bonds wil be issued under a Trust Ind~nture dated as of December 1,2008 (the "Indenture")
between the City of Forsyth, Montana (the "Issuer") and The Ban of New York Mellon Trust Company,
N.A., as trustee (the "Trustee"), and under a resolution of the governing body of the Issuer. Pursuant to a
Loan Agreement dated as of December 1, 2008 (the "Loan Agreement") between A vista Corporation (the
"Company") and the Issuer, the Issuer wil lend the proceeds from the sale of the Bonds to the Company.
The proceeds from the sale of the Bonds wil be used, together with certain other moneys of the
Company, to refund all of the following outstanding revenue refunding bonds for redemption on
December 31, 2008: $17,000,000 principal amount of City of Forsyth, Montana Pollution Control
Revenue Refunding Bonds, Series 1999B (Avista Corporation Colstrp Project) due March 1, 2034 (the
"Prior Bonds"). The Prior Bonds were used to refinance various pollution control and solid waste
disposal facilities as described herein. See "THE FACILITIES."
The Letter of Credit
Concurrently with the issuance and delivery of the Bonds, the Company wil cause to be
delivered to the Trustee an irrevocable direct-pay letter of credit with respect to the Bonds (the "Letter of
Credit") issued by Bank of America, N.A. (the "Bank"). The Letter of Credit is being issued in an
amount equal to the principal amount of the Bonds plus 35 days of interest computed at the rate of 12%
per annum (the "Stated Amount"). The Trustee is required under the Indenture to draw under the Letter
of Credit in order to provide for the timely payment of the principal of and interest on the Bonds and the
purchase price of such Bonds tendered for purchase. The Letter of Credit wil initially expire on
December 30, 2009, unless earlier terminated or extended as provided herein. The Company wil enter
into a Letter of Credit and Reimbursement Agreement dated as of December 1, 2008 (the
"Reimbursement Agreement"), providing for reimbursement to the Bank of amounts drawn under the
Letter of Credit and the payment of certain fees to the Bank. See "THE LETTER OF CREDIT" herein.
The Bonds wil initially bear interest at an adjustable Daily Interest Rate as described herein
under "THE DAILY INTEREST RATE BONDS." The interest rate on the Bonds can be adjusted from
the Daily Interest Rate to other interest rates following mandatory tender for purchase upon 15 days'
written notice. THIS OFFICIAL STATEMENT DOES NOT PROVIDE ANY INFORMATION
REGARDING THE BONDS AFTER THE DATE, IF ANY, ON WHICH SUCH BONDS ADJUST TO
BEAR INTEREST AT INTEREST RATES OTHER THAN A DAILY INTEREST RATE.
The Bonds shall not be deemed to constitute a debt, liabilty or general obligation of the
Issuer, the State of Montana or of any political subdivision thereof, or a pledge of the faith and
credit of the Issuer, the State of Montana or of any such political subdivision, but shall be payable
solely from the revenues and proceeds provided therefor. The Issuer shall not be obligated to pay
the same or interest thereon except from the revenues and proceeds pledged therefor, and neither
the faith and credit nor the taxing power of the Issuer, the State of Montana or of any political
subdivision thereof is pledged to the payment of the principal of or the interest on the Bonds. The
Bonds shall be payable solely from the receipts and revenues to be received from the Company as
payments under the Loan Agreement and from any other moneys pledged therefor. The Loan
Agreement, such receipts and revenues and all of the Issuer's rights and interests under the Loan
Agreement (except as noted under "THE INDENTURE-Pledge and Security" below) wil be
pledged and assigned to the Trustee as security, equally and ratably, for the payment of the Bonds.
The payments required to be made by the Company under the Loan Agreement wil be suffcient to
pay the principal of, premium, if any, and interest on the Bonds. Under no circumstances will the
Issuer have any obligation, responsibilty or liabilty with respect to the Facilties (as defined
below), the Loan Agreement, the Indenture, the Bonds or this Official Statement (except with
respect to itself under the caption "THE ISSUER" hereunder), except for the special limited
obligation set forth in the Indenture and the Loan Agreement whereby the Bonds are payable solely
from amounts derived from the Company. Nothing contained in the Indenture, the Bonds or the
Loan Agreement, or in any other related documents, shall be construed to require the Issuer to
operate, maintain or have any responsibilty with respect to any of the Facilties. The Facilties do
not and shall not constitute any part of the trust estate or any part of the security for the Bonds.
The Issuer has no liabilty in the event of wrongful disbursement by the Trustee or otherwise. No
recourse shall be had against any past, present or future commissioner, officer, employee, official or
agent of the Issuer under the Indenture, the Bonds, the Loan Agreement or any related document.
Brief descrìptions of the Issuer and the Facilties, and summaries of certain provisions of the
Bonds, the Loan Agreement, the Indenture, the Letter of Credit and the Reimbursement Agreement, are
included in this Offcial Statement, including the Appendices hereto. Information regarding the business,
properties and financial condition of the Company and the Ban are included in and incorporated by
reference in Appendix A hereto and under "THE LETTER OF CREDIT-The Bank," respectively. The
proposed form of opinion of Bond Counsel is included in Appendix B hereto. The descriptions herein of
the Loan Agreement, the Indenture, the Letter of Credit and the Reimbursement Agreement are qualified
in their entirety by reference to such documents, and the descriptions herein of the Bonds are qualified in
their entirety by reference to the forms thereof and the information with respect thereto included in the
aforesaid documents. All such descriptions are fuher qualified in their entirety by reference to laws and
principles of equity relating to or affecting the enforcement of creditors' rights generally. Copies of such
documents may be obtained from the corporate trst offce of the Trustee at Two Union Square, Suite
520, 601 Union Street, Seattle, W A 98101-2321, Attention: Corporate Trust Administration.
THE ISSUER
City of Forsyth, Montana
The City of Forsyth is a municipal corporation and political subdivision duly organized and
existing under the laws of the State of Montana and is authorized and empowered by the provisions of
Sections 90-5-101 through 90-5-114, inclusive, of the Montana Code Annotated, as amended (the
"Montana Act"), to issue the Bonds, to enter into the Indenture and the Loan Agreement to which it is a
part and to secure the Bonds by a pledge to the Trustee of the payments to be made by the Company
under the Loan Agreement.
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THE FACILITIES
The Prior Bonds were issued by the Issuer to refinance the Company's undivided ownership
interest in certain pollution control and solid waste disposal facilties at the coal-fired steam electrc
generating plant known as Colstrip Project Units 3 and 4 in Colstrip, Rosebud County, Montana (the
"Plant").
The pollution control and solid waste disposal facilties at the Plant are referred to herein
collectively as the "Facilties." The Company's undivided ownership interest in the Facilties is referred
to herein as the "Project."
USE OF PROCEEDS
All of the proceeds from the sale of the Bonds, including investment earnings thereon and other
moneys to be provided by the Company prior to the redemption date from other sources of fuds
available to it, wil be applied to the payment of the redemption price of the entire $17,000,000
outstanding principal amount of the Prior Bonds, which redemption price is equal to 100% of the
principal amount thereof, plus accrued interest to, but not including, the redemption date, December 31,
2008.
THE DAILY INTEREST RATE BONDS
The following is a summary of certain provisions of the Bonds. Capitalized terms used herein
and not otherwise defined in this Offcial Statement are used as defined in the Indenture.
THIS OFFICIAL STATEMENT DOES NOT PROVIDE ANY INFORMA nON REGARDING
THE BONDS AFTER THE DATE, IF ANY, ON WHICH SUCH BONDS ADJUST TO BEAR
INTEREST, AS PERMITTED BY THE INDENTURE, AT INTEREST RATES OTHER THAN A
DAILY INTEREST RATE. THE BONDS AR SUBJECT TO MANDATORY TENDER IN THE
EVENT OF ANY SUCH ADJUSTMENT. See "THE DAILY INTEREST RATE BONDS-Mandatory
Tender for Purchase."
General
The Bonds wil be dated their date of original authentication and delivery (the "Issue Date"), wil
matue on March 1, 2034 and initially wil be Daily Interest Rate Bonds in a Daily Interest Rate Period.
The Bonds initially wil bear interest on the Issue Date at the interest rate established by Banc of America
Securities LLC prior to the Issue Date. Thereafter, the Bonds wil bear interest at the Daily Interest Rate
for the Daily Interest Rate Period, unless adjusted to Rate Period other than the Daily Interest Rate Period.
Interest on the Bonds during the Daily Interest Rate Period wil be computed upon the basis of a 365- or
366-day year, as applicable for the number of days actually elapsed, and wil be payable on the first
Business Day of each calendar month, commencing February 2, 2009. The Bonds wil be registered in
the name of Cede & Co., as registered owner and nominee for DTC. The Bonds can be adjusted to Rate
Periods other than Daily Interest Rate Periods. The Bonds wil be issued as fully registered bonds
without coupons and in denominations of $100,000 or any integral multiple of $5,000 in excess thereof
(an "Authorized Denomination") while they bear interest at a Daily Interest Rate.
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Certain Definitions
"Available Moneys" means (a) durng such time as a Credit Facility is in effect, (i) moneys on
deposit in trst with the Trustee as agent and bailee for the Owners of the Bonds for a period of at least
123 days prior to and during which no petition in bankrptcy or similar insolvency proceeding has been
fied by or against the Company or the Issuer (or any subsidiar of the Company, any guarantor of the
Company or any insider (as defined in the United States Bankrptcy Code), to the extent that such
moneys were deposited by any of such subsidiar, guarantor or insider) or is pending (unless such petition
shall have been dismissed and such dismissal shall be final and not subject to appeal) and (ii) (A)
proceeds of the issuance of refunding bonds (including proceeds from the investment thereof), and (B)
any other moneys, if, in the written opinion of nationally recognized counsel experienced in bankrptcy
matters selected by the Company (which opinion shall be in a form acceptable to the Trustee, to Moody's
Investors Service, Inc. ("Moody's"), if the Bonds are then rated by Moody's, and to Standard & Poor's
Ratings Services, a Division of The McGraw-Hil Companies, Inc. ("S&P"), if the Bonds are then rated
by S&P, and shall be delivered to the Trustee at or prior to the time of the deposit of such proceeds with
the Trustee), the deposit and use of such proceeds (referred to in clause (A) above) or other moneys
(referred to in clause (B) above) wil not constitute a voidable preference under Section 547 of the United
States Banptcy Code in the event either the Issuer or the Company were to become a debtor under the
United States Banptcy Code, and (b) at any time that a Credit Facilty is not in effect, any moneys on
deposit with the Trustee as agent and bailee for the Owners of the Bonds and proceeds from the
investment thereof.
"Bond Payment Date" means any Interest Payment Date and any other date on which the
principal of, and premium, if any, and interest on, the Bonds is to be paid to the Owners thereof, whether
upon redemption, at maturity or upon acceleration of maturity of the Bonds.
"Business Day" means any day except a Satuday, Sunday or other day (a) on which commercial
bans located in the cities in which the Principal Offce of the Provider, the Principal Offce of the
Trustee, the Principal Offce of the Company, the Principal Offce of the Remarketing Agent or the
Principal Office of the Paying Agent are located are required or authorized by law to remain closed or are
closed, or (b) on which The New York Stock Exchange is closed.
"Change of Credit Facility" means (a) the delivery of a Credit Facilty (or evidence thereof) to
the Trustee, (b) the termnation of an existing Credit Facility or (c) a combination of (a) and (b), in each
case in accordance with the Loan Agreement, as described herein under "THE LOAN AGREEMENT-
Change of Credit Facilty."
"Credit Facilty" means a facilty provided in accordance with the Loan Agreement to provide
securty or liquidity for the Bonds. The term "Credit Facilty" includes, by way of example and not of
limitation, one or more letters of credit, bond insurance policies, standby bond purchase agreements, lines
of credit, first mortgage bonds, other Company mortgage bonds and other securty instrents or
liquidity devices. A Credit Facilty may have an expiration date earlier than the maturity of the Bonds.
The initial Credit Facility is the Letter of Credit.
"Credit Facilty Agreement" means any agreement between the Company and the Provider and
relating to the Credit Facility then in effect. The initial Credit Facilty Agreement is the Reimbursement
Agreement.
"Delivery Offce" means, initially, The Bank of New York Mellon Trust Company, N.A., Two
Union Square, Suite 520, 601 Union Street, Seattle, Washington 98101-2321, Attn: Corporate Trust
Admnistration, or, with respect to a surrender of the Bonds for puroses of transfer or exchange, or with
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respect to a change in the initial address, such other office designated as such by the Trustee in wrting to
the Remarketing Agent, the Registrar, the Issuer, the Provider and the Company.
"Favorable Opinion of Bond Counsel" means an opinion of Chapman and Cutler LLP or any
other firm of nationally recognized bond counsel selected by the Company, addressed to the Issuer and
the Trustee, to the effect that the proposed action is not prohibited by the Montana Act or the Indenture or
the Loan Agreement, as applicable, and wil not adversely affect the Tax-Exempt status of the Bonds.
"Interest Payment Date" means (with respect to the Daily Interest Rate Period):
(a) the first Business Day of each calendar month; and
(b) the day next succeeding the last day of the Daily Interest Rate Period.
"Maximum Interest Rate" means 18% per anum, provided that in the event a Credit Facilty is in
effect, the "Maximum Interest Rate" wil mean the lesser of 18% per annum or any interest coverage rate
specified in the Credit Facilty, which interest coverage rate is 12% per annum while the Letter of Credit
is in effect.
"Owner" means the registered owner of any Bond; provided, however, when used in the context
of the Tax-Exempt status of the Bonds, the term "Owner" shall include a Beneficial Owner.
"Pledged Bonds" means Bonds purchased with moneys drawn under the Credit Facilty
following the optional or mandatory tender for purchase thereof pursuant to the Indenture to be deemed
owned by the Company for puroses of granting a first priority lien upon Pledged Bonds under the
Indenture, registered in the name of the Provider, as pledgee, or in the name of the Trustee (or its
nominee), as agent for the Provider, delivered to or upon the direction of the Provider pursuant to the
Indentue.
"Provider" and "Provider of the Credit Facility" means the provider of the Credit Facilty. The
initial Provider is the Ban.
"Provider Default' means any of the following events:
(a) the failure of the Provider to make any payment required under the Credit
Facility when the same shall become due and payable or the Credit Facilty shall for any reason
cease to be in full force and effect;
(b) a decree or order for relief shall be entered by a court or insurance regulatory
authority having jurisdiction over the Provider in an involuntary case under an applicable
bankrptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver,
liquidator, custodian, trstee, sequestrator (or similar offcial) of the Provider or for any
substantial part of the propert of the Provider or ordering the winding-up or liquidation of the
affairs of the Provider, and the continuance of any such decree or order shall be unstayed and
remain in effect for a period of 60 consecutive days thereafter; or
(c) the Provider shall commence a volunta case under any applicable federal or
state bankptcy, insolvency or other similar law now or hereafter in effect, or the Provider shall
consent to or acquiesce in the entr of an order for relief in an involuntary case under any such
law, or the Provider shall consent to the appointment of or taking of possession by a receiver,
liquidator, trstee, custodian, sequestrator (or similar official) of the Provider or for any
5
substantial part of its propert, or the Provider shall make a general assignent for the benefit of
creditors, or the Provider shall fail generally or admit in writing its inabilty to pay its debts as
such debts become due, or the Provider shall tae corporate action in contemplation or
furherance of any of the foregoing.
"Rate Period' means any Daily Interest Rate Period or other Rate Period as provided by the
Indenture.
"Record Date" means, with respect to a Daily Interest Rate Period, the Business Day next
preceding each Interest Payment Date.
"Remarketing Agent" means, initially, Banc of America Securties LLC or such other person
serving from time to time as Remarketing Agent under the Indenture.
"SIFMA Swap Index" means, on any date, a rate determned on the basis of the seven-day high
grade market index of tax-exempt variable rate demand obligations, as produced by Municipal Market
Data, Inc., and published or made available by the Securities Industry & Financial Markets Association
(formerly the Bond Market Association) ("SIFMA") or any person acting in cooperation with or under the
sponsorship of SIFMA and effective from such date; provided, however, that if such index is no longer
provided by Municipal Market Data, Inc. or its successor, the "SIFMA Swap Index" shall mean such
other reasonably comparable index selected by the Remarketing Agent.
"Tax-Exempt" means, with respect to interest on any obligations of a state or local governent,
including the Bonds, that such interest is excludable from gross income of the owners of such obligations
for federal income tax puroses, except for any interest on any such obligations for any period during
which such obligations are owned by a person who is a "substantial user" of any facilties financed or
refinanced with such obligations or a "related person" within the meaning of Section 103(b)(13) of the
Internal Revenue Code of 1954, as amended, whether or not such interest is includable as an item of tax
preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilties,
including any alternative minimum tax or environmental tax under the Internal Revenue Code of 1986, as
amended (the "Code").
Payment of Principal and Interest
The principal of and premium, if any, on the Bonds shall be payable to the Owners upon
surender thereof at the principal offce of the Paying Agent. Except when the Bonds are held in
book-entr form (see "THE DAILY INTEREST RATE BONDS-Book-Entry System"), durng any Rate
Period, interest shall be payable (a) by bank check mailed by first-class mail on the Interest Payment Date
to the Owners as of the Record Date or (b) subject to certain conditions specified in the Indentue, in
immediately available funds on the Interest Payment Date (by wire transfer or by deposit to the account of
the Owner of any such Bond if such account is maintained with the Paying Agent).
Interest on each Bond shall be payable on each Interest Payment Date for each such Bond for the
period commencing on the immediately preceding Interest Payment Date (or, if no interest has been paid
thereon, commencing on the Issue Date) to, but not including, such Interest Payment Date.
Rate Periods
Initially, the Bonds shall bear interest at the Daily Interest Rate. The term of the Bonds shall be
divided into consecutive Rate Periods, during which the Bonds shall bear interest at the Daily Interest
6
Rate, or, upon adjustment as described below under "THE DAILY INTEREST RATE BONDS-
Adjustment of Daily Interest Rate Bonds," another interest rate mode as provided by the Indentue.
THIS OFFICIAL STATEMENT DOES NOT PROVIDE ANY INFORMATION REGARDING
THE BONDS AFTER THE DATE, IF ANY, ON WHICH THE BONDS ADJUST TO BEAR
INTEREST AT INTEREST RATES OTHER THAN A DAILY INTEREST RATE.
Daily Interest Rate
Durng the Daily Interest Rate Period, the Bonds shall bear interest at the Daily Interest Rate
determned by the Remarketing Agent on each Business Day for such Business Day. The Daily Interest
Rate shall be the rate determined by the Remarketing Agent (based on an examination of Tax-Exempt
obligations comparable to the Bonds known by the Remarketing Agent to have been priced or traded
under then prevailng market conditions) to be the lowest rate which would enable the Remarketing Agent
to sell the Bonds on the effective date of such rate at a price (without regard to accrued interest) equal to
100% of the principal amount thereof. If the Remarketing Agent shall not have determined a Daily
Interest Rate for any day by 9:30 a.m., New York, New York time, the Daily Interest Rate for such day
shall be the rate that is equal to 100% of the most recent SIFMA Swap Index. The Remarketing Agent
shall notify the Company, the Trustee, the Provider and the Paying Agent of each Daily Interest Rate on
the date of the determination thereof by wrtten notice communicated by electronic mail, by facsimile or
by other means acceptable to the Company, the Trustee, the Provider and the Paying Agent.
If any Bonds constitute Pledged Bonds due to a failure in remarketing such Bonds on a
mandatory tender date as described under "THE DAILY INTEREST RATE BONDS-Remarketing of
Bonds," the Remarketing Agent shall be entitled to determne a new Daily Interest Rate with respect to
such Bonds (under the conditions and subject to the limitations provided by the Indenture), effective on
such date as the Remarketing Agent is able to remarket such Pledged Bonds in whole. Such new rate
with respect to such Bonds shall be established by the Remarketing Agent in its sole judgment having due
regard for prevailng financial market conditions at the lowest rate which wil permit the Pledged Bonds
to be sold at a price of par plus accrued interest to such delivery date. The determination of a new Daily
Interest Rate with respect to such Bonds by the Remarketing Agent shall be conclusive and binding upon
the Issuer, the Company, the Trustee, the Provider and the Owners of the Bonds.
Adjustment of Daily Interest Rate Bonds
Subject to certain conditions established by the Indenture and the Credit Facility Agreement, the
Company may direct that all of the Bonds be adjusted from a Daily Interest Rate Period to a different
Rate Period. In the event of a failed adjustment, the Bonds wil continue to bear interest at Daily Interest
Rates but the Bonds wil be subject to mandatory tender for purchase as specified in the Company's
notice of adjustment.
Optional Tender for Purchase
Durng any Daily Interest Rate Period, any Bond or portion thereof in an Authorized
Denomination shall be purchased at the option of the Owner thereof on any Business Day at a purchase
price equal to 100% of the principal amount thereof plus accrued interest, if any, from the Interest
Payment Date next preceding the date of purchase to the date of purchase (unless the date of purchase
shall be an Interest Payment Date, in which case the purchase price shall be equal to the principal amount
thereof), upon (i) delivery to the Trustee at the Delivery Office of the Trustee and to the Remarketing
Agent at the Principal Offce of the Remarketing Agent, by no later than 10:00 a.m., New York, New
York time, on such Business Day, of an irrevocable written notice (which may be by facsimile or other
7
wrting) which states the principal amount and the certificate number (if the Bonds are not then held in
book-entry form) of such Bond and the date on which the same shall be purchased, and (ii) subject to the
next succeeding paragraph hereof, delivery of such Bond to the Trustee at the Delivery Offce of the
Trustee, accompanied by an instruent of transfer thereof in a form satisfactory to the Trustee, executed
in blan by the Owner thereof with the signatue of such Owner guaranteed by a member or participant in
a "signature guarantee program" as provided in the form of assignment attached to such Bond, at or prior
to 1 :00 p.m., New York, New York time, on the purchase date. See the final paragraph under "THE
DAILY INTEREST RATE BONDS-Mandatory Tender for Purchase," for additional provisions
applicable to optional tenders of the Bonds for purchase.
So long as any Bond is held in book-entr form a Beneficial Owner (though its DTC Participant)
shall give notice to the Trustee to elect to have its Bonds purchased, and shall effect delivery of such
Bonds by causing such DTC Participant to transfer its interest in the Bonds equal to such Beneficial
Owner's interest on the records to DTC to the Trustee's paricipant account with DTC. The requirement
for physical delivery of the Bonds in connection with any purchase shall be deemed satisfied when the
ownership rights in the Bonds are transferred by DTC Participants on the records ofDTC to the Trustee's
participant account.
Mandatory Tender for Purchase
Mandatory Tender Upon Adjustment of Rate Period, Change of Credit Facilty or at the
Direction of the Company. The Daily Interest Rate Bonds are subject to mandatory purchase upon 15
days' notice to the Bondholders at a purchase price equal to 100% of the principal amount thereof, plus
accrued interest, if any, to the purchase date, without premium, on (a) the effective date of any adjustment
from a Daily Interest Rate Period to a different Rate Period with respect to such Bonds, (b) on the
effective date of a Change of Credit Facility, including a change of the Letter of Credit, provided that if
such Change of Credit Facilty consists of the termination of the then existing Credit Facility, the
purchase date shall be the Business Day iinediately preceding such termination, and (c) on any Business
Day designated by the Company, with the consent of the Provider and the Remarketing Agent.
Mandatory Tender Upon Nonreinstatement of Credit Facility or at Direction of Provider. As
long as a Credit Facilty, including the Letter of Credit, is in effect, the Bonds are subject to mandatory
purchase at a purchase price equal to 100% of the principal amount thereof, plus accrued interest, if any,
to the purchase date, without premium, on the second Business Day after the date of receipt by the
Trustee of a notice from the Provider stating that, (i) following a drawing on the Credit Facilty on an
Interest Payment Date for the payment of unpaid interest on the Bonds, the Credit Facilty wil not be
reinstated in accordance with its terms or (ii) an event of default has occurred and is continuing under the
Credit Facility Agreement and directing such mandatory purchase. The Trustee shall, as soon as
practicable, but in no event later than one Business Day prior to the date the Bonds are subject to
mandatory purchase as described in this paragraph, give written notice by electronic mail, by facsimile or
by overnight mail service of a mandatory purchase of Bonds to the Remarketing Agent and to the
Owners.
The Trustee shall by 3:00 p.m., New York, New York time, on the Business Day preceding the
day that the Bonds are subject to mandatory purchase upon a Change of Credit Facilty, draw on the then
existing Credit Facilty in an amount suffcient to pay the principal and interest which wil be due on the
purchase date and hold such amount uninvested and without any liabilty for interest until the purchase
date when such amount shall be applied to pay the amounts due to the Owners of the Bonds on the
purchase date.
8
The Trustee shall (i) immediately following receipt of notice from the Provider of non~
reinstatement of a Credit Facilty or (ii) by 3:00 p.m., New York, New York time, on the Business Day
preceding the day that the Bonds are subject to mandatory purchase, draw on that Credit Facilty in an
amount suffcient to pay the principal and interest which wil be due on the purchase date and hold such
amount uninvested and without any liabilty for interest until the purchase date when such amount shall
be applied to pay the amounts due to the Bondholders on the purchase date.
FOR SO LONG AS THE BONDS ARE HELD IN BOOK-ENTRY FORM, NOTICES OF
MANDATORY PURCHASE OF BONDS SHALL BE GIVEN BY THE TRUSTEE TO DTC ONLY,
AND NEITHER THE ISSUER, THE TRUSTEE, THE COMPANY, THE PROVIDER, NOR THE
UNDERWRITER SHALL HAVE ANY RESPONSIBILITY FOR THE DELIVERY OF ANY SUCH
NOTICES BY DTC TO ANY DIRECT PARTICIPANTS OF DTC, BY ANY DIRECT PARTICIPANTS
TO ANY INDIRECT PARTICIPANTS OF DTC OR BY ANY DIRECT PARTICIPANTS OR
INDIRECT PARTICIPANTS TO BENEFICIAL OWNERS OF THE BONDS. FOR SO LONG AS THE
BONDS ARE HELD IN BOOK-ENTRY FORM, THE REQUIREMENT FOR PHYSICAL DELIVERY
OF THE BONDS IN CONNECTION WITH ANY PURCHASE PURSUANT TO THE PROVISIONS
DESCRIBED ABOVE SHALL BE DEEMED SATISFIED WHEN THE OWNERSHIP RIGHTS IN
THE BONDS ARE TRANSFERRD BY DTC ON THE RECORDS OF DTC. SEE "THE DAILY
INTEREST RATE BONDS-BOOK-ENTRY SYSTEM."
If moneys sufficient to pay the purchase price of Bonds to be purchased as described under "THE
DAILY INTEREST RATE BONDS-0tional Tender for Purchase" and "-Mandatory Tender for
Purchase" shall be held by the Trustee on the date such Bonds are to be purchased, such Bonds shall be
deemed to have been purchased and shall be purchased according to the terms of the Indentue for all
purposes of the Indenture, irrespective of whether or not such Bonds shall have been delivered to the
Trustee, and the former Owner of such Bonds shall have no claim under the Indenture or otherwise, for
any amount due with respect to such Bonds other than the purchase price thereof.
Purchase of Bonds
On the date on which Bonds are to be purchased as specified above under "THE DAILY
INTEREST RATE BONDS-optional Tender for Purchase" and "-Mandatory Tender for Purchase,"
the Trustee shall pay the purchase price of such Bonds but solely from the following sources in the order
of priority indicated, and the Trustee has no obligation to use funds from any other source:
(a) moneys which constitute Available Moneys are fuished by the Company to the
Trustee for the purchase of Bonds;
(b) proceeds of the remarketing and sale of such Bonds (other than Bonds sold to the
Company, any subsidiary or guarantor of the Company, or the Issuer or any "insider" (as defined
in the United States Banptcy Code)) and which proceeds are on deposit with the Trustee prior
to 12:00 noon New York, New York time, on the purchase date;
(c) moneys (which constitute Available Moneys or moneys provided pursuant to the
Credit Facilty for the payment of the purchase price of the Bonds) furnished to the Trustee as
described herein under "THE INDENTURE-Defeasance," such moneys to be applied only to the
purchase of Bonds which are deemed to be paid;
(d) moneys furnished to the Trustee representing moneys provided pursuant to a
Credit Facilty for the payment of the purchase price of the Bonds; and
9
(e) any other moneys fuished by or on behalf of the Company to the Trustee for
purchase of the Bonds;
provided, however, that funds for the payment of the purchase price of defeased Bonds shall be derived
only from the sources described in clause (c) above); provided, further, that if the Credit Facilty then in
effect consists of a direct pay letter of credit, the Trustee shall pay the purchase price of the Bonds, first,
from moneys described in clause (b) above, second, and only to the extent such moneys were provided
pursuant to the Credit Facilty, from moneys described in clause (c) above, third, from moneys described
in clause (d) above, and last, from the remaining sources and in the order of priority of such remaining
sources described above.
There is no assurance that the Remarketing Agent wil be able to remarket Bonds tendered for
purchase.
Remarketing of Bonds
The Remarketing Agent shall offer for sale and use its best efforts to remarket any Bond subject
to purchase pursuant to the optional and mandatory purchase provisions described above, any such
remarketing to be made at a price equal to i 00% of the principal amount thereof plus accrued interest, if
any, to the purchase date. Bonds remarketed by the Remarketing Agent shall be delivered to the
purchasers thereof (or to DTC in the case of Bonds held in book-entr form) upon payment of the
purchase price therefor. However, there is no assurance that the Remarketing Agent wil be able to
remarket Bonds tendered for purchase, and the only sources of funds to purchase Bonds not remarketed
are as described above under "THE DAILY INTEREST RATE BONDS-Purchase of Bonds". No
Beneficial Owner of any Bond shall have any rights or claims against the Issuer, the Trustee or the
Remarketing Agent as a result of the Remarketing Agent not purchasing, or finding a purchaser for, the
Bonds. The Company may, with the consent of the Provider, direct the Remarketing Agent from time to
time to cease and to resume sales efforts with respect to some or all of the Bonds.
Any Bond purchased as described herein under "THE DAILY INTEREST RATE BONDS-
Optional Tender for Purchase" or "-Mandatory Tender for Purchase" from the date notice is given of
redemption through the date of such redemption shall not be remarketed unless the person buying such
Bonds has been given notice in writing by the Trustee that such Bonds are to be redeemed. Furthermore,
in addition to the requirements of the preceding sentence, if the Bonds are subject to redemption upon a
Determination of Taxability (as hereinafter described), the person buying such Bonds shall also be given
notice in writing by the Trustee that a Determination of Taxabilty has occurred and that such Bonds are
subject to mandatory redemption.
There shall be no sales of Bonds pursuant to a remarketing if (a) there shall have occurred and not
have been cured or waived an Event of Default described in clauses (a), (b) or (c) of "THE
INDENTURE-Defaults" of which an authorized officer in the Principal Office of the Remarketing
Agent and an authorized officer of the corporate trst department of the Trustee have actual knowledge or
(b) the Bonds have been declared to be immediately due and payable as described under "THE
INDENTURE-Remedies" and such declaration has not been rescinded.
10
Delivery of Bonds; Delivery of
Proceeds of Remarketing Sale
Delivery of Bonds. Bonds purchased as described herein under "THE DAILY INTEREST RATE
BONDS-optional Tender for Purchase" or "-Mandatory Tender for Purchase" shall be delivered as
follows:
(i) Delivery of Remarketed Bonds. Subject to the Indenture's provisions for
book-entry only Bonds, Bonds remarketed by the Remarketing Agent shall be delivered
to the purchasers thereof upon payment of the purchase price therefor.
(ii) Delivery of Bonds Purchased by the Company. Bonds delivered to the
Trustee and purchased with moneys fuished by the Company shall at the direction of
the Company, be (A) held by the Trustee for the account of the Company, (B) delivered
to the Trustee for cancellation or (C) delivered to the Company.
(iii) Delivery of Pledged Bonds. Bonds delivered to the Trustee and
purchased with moneys provided pursuant to the Letter of Credit shall constitute Pledged
Bonds, and shall be held by the Trustee for the benefit of the Provider in a separate and
segregated account (the "Custody Account"). Notwithstanding anything in the Indenture
to the contrar, if the Trustee holds Pledged Bonds in the Custody Account as agent of
the Provider, the Trustee shall not release to the purchaser thereof or to the Remarketing
Agent Pledged Bonds that the Remarketing Agent has remarketed in accordance with the
Indenture unless the Trustee shall have received written notice (which may be given by
electronic mail or facsimile) from the Provider that it has been paid in full for the Pledged
Bonds and that the Credit Facilty has been reinstated.
(iv) Delivery of Defeased Bonds. Bonds purchased by the Remarketing
Agent with defeasance moneys shall not be remarketed and shall be delivered to the
Trustee for cancellation.
Proceeds of Sale Held for Seller of Bonds. Moneys deposited with the Trustee for the purchase
of Bonds shall be held uninvested in trust in one or more separate accounts, which shall be Eligible
Accounts, and shall be paid to the former Owners of such Bonds upon presentation thereof. The Trustee
shall notify the Company in writing within five days after the date of purchase if the Bonds have not been
delivered, and if so directed by the Company, shall give notice by Mail to each Owner whose Bonds are
deemed to have been purchased stating that interest on such Bonds ceased to accrue on the date of
purchase and that moneys representing the purchase price of such Bonds are available against delivery
thereof at the Delivery Offce of the Trustee. Bonds deemed purchased shall cease to accrue interest on
the date of purchase. The Trustee shall hold moneys deposited for the purchase of Bonds without liabilty
for interest thereon, for the benefit of the former Owner of the Bond on such date of purchase, who shall
thereafter be restricted exclusively to such moneys for any claim of whatever nature on its par under this
Indenture or on, or with respect to, such Bond. Any moneys so deposited with and held by the Trustee
not so applied to the payment of Bonds within six months after such date of purchase shall be paid by the
Trustee to the Company upon the written direction of the Authorized Company Representative, and
thereafter the Trustee shall have no further liabilty with respect to such moneys and the former Owners
shall be entitled to look only to the Company for payment, and then only to the extent of the amount so
repaid to the Company, and the Company shall not be liable for any interest thereon and shall not be
regarded as a trustee of such money.
11
Optional Redemption of Daily Interest Rate Bonds
While the Bonds bear interest at a Daily Interest Rate, the Bonds shall be subject to redemption
upon prepayment of the Loan Payments (as defined by the Loan Agreement), at the option of the
Company, with the prior written consent of the Provider, in whole, or in part by lot, prior to their
matuity, on any Business Day at a redemption price equal to 100% of the principal amount thereof, plus
accrued interest, if any, to the redemption date.
Extraordinary Optional Redemption of Bonds
At any time, the Bonds shall be subject to redemption at the option of the Company in whole, or
in part by lot, at a redemption price equal to 100% of the principal amount plus accrued interest to the
redemption date, upon receipt by the Trustee of a written notice from the Company stating that any of the
following events has occurred and that the Company therefore intends to exercise its option to prepay the
payments due under the Loan Agreement in whole or in part and thereby effect the redemption of the
Bonds in whole or in part to the extent of such prepayments:
(a) The Company shall have determned or concurred in a determination that the
continued operation of the Plant is impracticable, uneconomical or undesirable for any reason;
(b) All or substantially all of the Plant shall have been condemned or taen by
eminent domain;
(c) The operation of the Plant shall have been enjoined or shall have otherwise been
prohibited by, or shall conflct with, any order, decree, rule or regulation of any court or of any
federal, state or local regulatory body, administrative agency or other governmental body;
(d) Unreasonable burdens or excessive liabilties shall have been imposed upon the
Company in respect of all or a part of the Facilties or the Plant including, without limitation,
federal, state or other ad valorem, property, income or other taxes not being imposed on the date
of the Loan Agreement, as well as any statute or regulation enacted or promulgated after the date
of the Loan Agreement that prevents the Company from deducting interest in respect of the Loan
Agreement for federal income tax purposes; or
(e) All or substantially all of the Project shall be transferred or sold to any entity
other than an affiliate of the Company.
Special Mandatory Redemption of Bonds
The Bonds are subject to mandatory redemption in whole on any date at 100% of the principal
amount thereof plus accrued interest, if any, to the redemption date within 180 days following a
"Determination of Taxability" as described in the next sentence, provided that if, in the opinion of Bond
Counsel delivered to the Trustee, the redemption of a specified portion of the Bonds outstanding would
have the result that interest payable on the Bonds remaining outstanding after such redemption would
remain Tax-Exempt, then the Bonds wil be redeemed in part by lot (in Authorized Denominations) in
such amount as Bond Counsel in such opinion shall have determined is necessary to accomplish that
result. A "Determination of Taxability" shall be deemed to have occured if, as a result of the failure of
the Company to observe any covenant, agreement or representation in the Loan Agreement, which failure
results in a final decree or judgment of any federal court or a final action of the Internal Revenue Service
determning that interest paid or payable on any Bond is or was includible in the gross income of an
Owner of the Bonds for federal income tax purposes under the Code (other than an Owner who is a
12
"substantial user" or "related person" within the meaning of Section 103(b )(13) of the Internal Revenue
Code of 1954, as amended). However, no such decree or action wil be considered final for this purpose
unless the Company has been given written notice and, if it so desires and is legally allowed, has been
afforded the opportity to contest the same, either directly or in the name of any Owner of a Bond, and
until conclusion of any appellate review, if sought. If the Trustee receives written notice from any Owner
stating (i) that the Owner has been notified in wrting by the Internal Revenue Service that it proposes to
include the interest on any Bond in the gross income of such Owner for the reasons described therein or
any other proceeding has been instituted against such Owner which may lead to a final decree or action as
described above, and (ii) that such Owner wil afford the Company the opportity to contest the same,
either directly or in the name of the Owner, until a conclusion of any appellate review, if sought, then the
Trustee shall promptly give notice thereof to the Company, the Issuer, the Provider and the Owner of each
Bond then outstanding. If a final decree or action as described above thereafter occurs and the Trustee
has received written notice thereof at least 45 days prior to the redemption date, the Trustee shall make
the required demand for prepayment of the amounts payable under the Loan Agreement and give notice
of the redemption of the Bonds at the earliest practical date, but not later than the date specified in the
Loan Agreement, and in the manner provided by the Indenture.
Procedure for and Notice of Redemption
The Daily Interest Rate Bonds may be redeemed only in the aggregate principal amount of
$100,000 and integral multiples of $5,000 in excess thereof. If less than all of the Bonds are called for
redemption, the particular Bonds or portions thereof to be redeemed shall be selected by the Trustee, by
lot. In selecting Bonds for redemption, the Trustee shall treat each Bond as representing that number of
Bonds which is obtained by dividing the principal amount of each Bond by the minimum Authorized
Denomination. Pledged Bonds shall be redeemed prior to any other Bonds. Any Bonds selected for
redemption which are deemed to be paid in accordance with the provisions of the Indenture wil cease to
bear interest on the date fixed for redemption. Subject to the procedures described below under "THE
DAILY INTEREST RATE BONDS-Book-Entry System" for Bonds held in book-entry form, upon
presentation and surrender of such Bonds at the place or places of payment, such Bonds shall be paid.
Notice of redemption shall be given by first-class mail as provided in the Indenture, not less than 15 days
and not more than 60 days prior to the redemption date, provided that the failure to duly give notice by
mailing to any Owner shall not affect the validity of any proceedings for the redemption of any Bonds in
respect of which no such failure has occurred. While the Bonds are held by DTC as Owner of the Bonds,
notice of redemption shall be given to DTC in accordance with its requirements instead of being given by
first-class maiL. Such notice wil also be sent to the Remarketing Agent.
With respect to notice of any optional redemption of the Bonds as described above, unless, upon
the giving of such notice, such Bonds shall be deemed to have been paid within the meaning of the
Indentue, such notice may state that such redemption is conditional upon the receipt by the Trustee, on or
prior to the date fixed for such redemption, of Available Moneys suffcient to pay the principal of,
premium, if any, and interest on such Bonds to be redeemed. If such Available Moneys are (i) not so
received, (ii) no longer suffcient to pay the principal of, and premium, if any, and interest on, such Bonds
or (iii) no longer considered Available Moneys, in each case, on the redemption date, the redemption shall
not be made and the Trustee shall give notice, in the maner in which the notice of redemption was given,
that such redemption wil not take place.
Book-Entry System
The following information in this section concerning DTC and DTC 's book-entry system has been
obtained from sources (including DTC) that the Company believes to be reliable, but none of the
13
Company, the Issuer, the Underwriter nor the Bank takes any responsibilty for the accuracy of such
information.
Initially, the Bonds wil be available in book-entr form only. Purchasers of the Bonds wil not
receive certificates representing their interests in the Bonds purchased.
The Depository Trust Company ("DTC"), New York, New York, wil act as securities depository
for the Bonds. The Bonds wil be issued as one fully-registered bond registered in the name of Cede &
Co. (DTC's partership nominee) or such other name as may be requested by an authorized representative
ofDTC.
DTC is a limited-purose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearng corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearng agency" registered pursuant to the provisions of Section 17 A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds and provides asset servicing of
U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrments that DTC's
participants ("Direct Paricipants") deposit with DTC. DTC also faciltates the post-trade settlement
among Direct Participants of sales and other securities transactions in deposited securities, through
electronic computerized book-entry transfers and pledges between Direct Paricipants' accounts. Direct
Participants include both U.S. and non-U.S. securities brokers and dealers, bank, trust companies,
clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National
Securties Clearing Corporation, and Fixed Income Clearng Corporation, all of which are registered
clearing agencies. DTCC is owned by users of its regulated subsidiaries. Access to the DTC system is
also available to others, such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The DTC Rules applicable to its
Participants are on fie with the Securities and Exchange Commission (the "Commssion"). More
information about DTC can be found at ww.dtcc.com and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which wil receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond ("Beneficial Owner") is in tu to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners wil not receive wrtten confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Paricipants acting on
behalf of Beneficial Owners. Beneficial Owners wil not receive certificates representing their ownership
interests in the Bonds, except in the event that use of the Book-Entr System for the Bonds is
discontinued.
To faciltate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC
has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity
of the Direct Participants to whose accounts such Bonds are credited, which mayor may not be the
Beneficial Owners. The Direct and Indirect Participants wil remain responsible for keeping account of
their holdings on behalf of their customers.
14
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Paricipants, and by Direct Participants and Indirect Paricipants to Beneficial
Owners wil be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the
Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For
example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for
their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the Trustee and request that copies of notices
be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds are being redeemed,
DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to
be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) wil consent or vote with respect to
the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under
its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Principal and interest payments, redemption proceeds and distrbutions on the Bonds wil be
made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC.
DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding
detail information from the Issuer or the Trustee, on the payable date in accordance with their respective
holdings shown on DTC's records. Payments by Paricipants to Beneficial Owners wil be governed by
standing instrctions and customary practices, as is the case with Bonds held for the accounts of
customers in bearer form or registered in "street name," and wil be the responsibilty of such Paricipant
and not of DTC, the Trustee, the Company or the Issuer, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments of redemption proceeds, distributions, and
interest payments to Cede & Co. (or such othèr nominee as may be requested by an authorized
representative of DTC) is the responsibilty of the Trustee, disbursement of such payments to Direct
Participants wil be the responsibility of DTC, and disbursement of such payments to Beneficial Owners
wil be the responsibilty of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the Issuer and the Trustee. Under such circumstances, in the event that a
successor depository is not obtained, Bond certificates are required to be printed and delivered as
described in the Indenture.
The Company may at any time elect (i) to provide for the replacement of DTC as the depository
for the Bonds with another qualified securities depository, or (ii) in accordance with the procedures of the
depository to discontinue the maintenance of the Bonds under a Book-Entr System. In such event, the
Trustee wil give 30 days' prior notice of such election to DTC (or such fewer number of days as is
acceptable to DTC).
Upon the discontinuance of the maintenance of the Bonds under a Book-Entr System, the Issuer
wil cause Bond certificates to be issued directly to the Beneficial Owners of Bonds or their designees. In
such event, the Trustee wil make provisions to notify Paricipants and the Beneficial Owners of the
Bonds by mailng an appropriate notice to DTC that Bonds wil be directly issued to the Beneficial
15
Owners of Bonds as of a date set forth in such notice, which wil be a date at least 10 days after the date
of mailng of such notice (or such fewer number of days as is acceptable to DTC).
The foregoing description of the procedures and record keeping with respect to beneficial
ownership interests in the Bonds, payment of principal, redemption proceeds, interest and other payments
on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interests in such Bonds and other related transactions by and between DTC, the DTC
Paricipants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no
representations can be made concerning these matters, and neither the DTC Participants nor the
Beneficial Owners should rely on the foregoing information with respect to such matters, but should
instead confirm the same with DTC or the DTC Participants, as the case may be.
THE ISSUER, THE REGISTRA, THE TRUSTEE, THE PROVIDER, THE COMPANY AND
THE UNDERWRTER, WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO ANY DIRECT
PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER
PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE REGISTRAR AS BEING A
REGISTERED OWNER WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURCY OF ANY
RECORDS MAINTAINED BY DTC OR ANY DIRCT PARTICIPANT OR INDIRECT
PARTICIPANT; (3) THE PAYMENT BY DTC TO ANY DIRECT PARTICIPANT OR BY ANY
DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY
BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL, PURCHASE PRICE OR REDEMPTION
PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY BY ANY DIRECT PARTICIPANT
OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS
REQUIRED OR PERMITTED TO BE GIVEN TO REGISTERED OWNERS UNDER THE TERMS OF
THE INDENTURE; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE
PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY
CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS REGISTERED OWNER.
Each Beneficial Owner for whom a Direct Participant or Indirect Participant acquires an interest
in the Bonds, as nominee, may desire to make arrangements with such Direct Participant or Indirect
Participant to receive a credit balance in the records of such Direct Participant or Indirect Paricipant, to
have all notices of redemption, elections to tender Bonds or other communications to or by DTC which
may affect such Beneficial Owner forwarded in writing by such Direct Paricipant or Indirect Participant,
and to have notification made of all debt service payments.
Beneficial Owners may be charged a sum sufficient to cover any ta, fee, or other governental
charge that may be imposed in relation to any transfer or exchange of their interests in the Bonds.
The Trustee and the Issuer, so long as a Book-Entry-Only System is used for the Bonds, wil send
any notice of redemption or of proposed document amendments requiring consent of registered owners
and any other notices required by the document to be sent to registered owners only to DTC (or any
successor Securities Depository) or its nominee. Any failure of DTC to advise any Direct Participant, or
of any Direct Participant or Indirect Paricipant to notify the Beneficial Owner, of any such notice and its
content or effect wil not affect the validity of the redemption of the Bonds called for redemption, the
document amendment or any other action premised on that notice.
THE ISSUER, THE COMPANY, THE TRUSTEE, THE PROVIDER AND THE
UNDERWRITER CANNOT AND DO NOT GIVE ANY ASSURANCES THAT THE DIRECT
PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL
OWNERS OF THE BONDS (i) PAYMENTS OF PRICIPAL OF, PURCHASE PRICE OF AND
INTEREST ON THE BONDS, (ii) BONDS REPRESENTING AN OWNERSHIP INTEREST OR
16
OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS OR
(ii) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS
THE REGISTERED OWNERS OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY
BASIS OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE
AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRNT
"RULES" APPLICABLE TO DTC AR ON FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION, AND THE CURRNT "PROCEDURES" OF DTC TO BE FOLLOWED IN DEALING
WITH DIRECT PARTICIPANTS ARE ON FILE WITH DTC.
According to DTC, the foregoing information with respect to DTC has been provided by DTC for
information puroses only and is not intended to serve as a representation, waranty or contract
modification of any kind. The information under this caption concerning DTC and DTC's book-entr
system has been obtained from DTC. None of the Issuer, the Company, the Bank or the Underwter
takes any responsibilty for its accuracy.
THE LETTER OF CREDIT
The following is a summary of certain provisions of the Letter of Credit and of the
Reimbursement Agreement. The Letter of Credit and the Reimbursement Agreement contain various
provisions, covenants and conditions, certain of which are summarized below. Various words or terms
used in the following summary are defined elsewhere in this Offcial Statement, the Letter of Credit or the
Reimbursement Agreement. The Letter of Credit provides credit and liquidity support for the Bonds.
This summary does not purport to be comprehensive or definitive and is subject to all of the terms and
provisions of the Letter of Credit or the Reimbursement Agreement, to which reference is made hereby.
Also included under this caption is certain information with respect to the Bank No representation is
made by the Issuer, the Company or the Underwriter as to the accuracy, completeness or adequacy of the
information respecting the Bank or the Letter of Credit contained herein or as to the absence of material
adverse changes in such information or in the condition of the Bank subsequent to the date hereof
The Letter of Credit. The Ban wil deliver the Letter of Credit to the Trustee concurently with
the issuance and delivery of the Bonds. The Letter of Credit constitutes the irrevocable obligation of the
Bank to pay to the Trustee upon timely request up to $17,195,617 (the "Stated Amount", consisting of
$17,000,000 which may be drawn for the purose of paying the principal or the principal portion of the
purchase price of the Bonds (the "Principal Stated Amount") and $195,617 (an amount equal to 35 days'
interest computed at the rate of 12% per annum) for the purpose of paying interest on or the interest
portion of the purchase price of the Bonds (the "Interest Stated Amount"). The Letter of Credit wil
terminate on December 30, 2009 (the "Stated Expiration Date") unless extended or earlier terminated.
The Letter of Credit is also subject to reduction, as hereinafter described.
The Letter of Credit provides that the Bank wil pay to the Trustee up to the Stated Amount
(subject to the Principal Stated Amount and Interest Stated Amount limitations referred to above) upon
presentation by the Trustee to the Bank of payment documents indicating whether such draw is for the
purose of paying principal, interest or the purchase price of the Bonds. Under the Indenture, the Trustee
is directed to draw under the Letter of Credit to pay, when due, the principal of and interest on the Bonds
and to make any necessar payments of the purchase price of the Bonds tendered for payment, by
submitting a draw request to the Bank on or before specified times on the required payment date.
The Stated Amount available under the Letter of Credit wil be reduced automatically by the
amount of any drawing thereunder; provided, however, that the amount of any interest drawing
thereunder, less the amount of the reduction in the Stated Amount attrbutable to interest as specified in a
certificate related to a redemption of the Bonds for reduction of the Principal Stated Amount, shall be
17
automatically reinstated on the same calendar day of any interest drawing if the Trustee shall not have
received notice from the Ban in the form set forth in the Letter of Credit prior to such time that the Bank
has not been reimbursed for such interest drawing or that any Event of Default has occured under the
Reimbursement Agreement and, as a result thereof, the amount of such interest drawing shall not be
reinstated and the Bank shall direct the Trustee to cause either, in the sole discretion of the Bank, a
mandatory tender of the Bonds pursuant to the Indenture or an acceleration of the Bonds pursuant to the
Indenture. After payment by the Bank of a purchase price drawing, the amount available to be drawn
under the Letter of Credit wil automatically reduced by the amount specified in the purchase price
drawing certificate. In addition, prior to the Adjustment Date (as defined below), in the event of the
remarketing of the Bonds (or portions thereof) previously purchased with the proceeds of a purchase price
drawing, the amount available to be drawn under the Letter of Credit wil be automatically reinstated
concurently upon the Trustee providing a certificate in the form set forth in the Letter of Credit to the
Bank and when and to the extent, but only when and to the extent, that the Bank is reimbursed for any
amount drawn under the Letter of Credit pursuant to the purchase price drawing.
The Letter of Credit wil terminate upon the earliest to occur: (i) the Stated Expiration Date, or if
such date is extended, the date so extended, (ii) the date which is two Business Days following the
Adjustment Date with respect to all of the Bonds to a new Rate Period other than a Daily Rate Period or a
Weekly Rate Period (for purposes of this section, the "Adjustment Date"), (iii) the date on which the
Letter of Credit is surrendered by the Trustee to the Ban and is accompanied by the form set forth in the
Letter of Credit, (iv) the date on which the Bank receives from the Trustee a notice of termination in the
form set forth in the Letter of Credit, or (v) the date which is 30 days following receipt by the Trustee of a
written notice from the Bank in the form set forth in the Letter of Credit specifying the occurence of an
Event of Default under the Reimbursement Agreement, and directing the Trustee to cause a mandatory
tender of the Bonds or an acceleration of the Bonds (the earliest of the foregoing dates referred to as the
"Termnation Date").
Prior to its expiration, the Letter of Credit may be extended as provided therein or replaced with a
Credit Facilty in accordance with the provisions of the Indentue. An expiration or termination of the
Letter of Credit, a provision of the Credit Facilty for the Letter of Credit, or an Event of Default under
the Reimbursement Agreement, wil result in a mandatory tender of the Bonds pursuant to the Indenture.
See the caption, "THE BONDS-Mandatory Tender for Purchase" in this Official Statement.
The Reimbursement Agreement. The Letter of Credit wil be issued pursuant to the terms of the
Reimbursement Agreement. Under the Reimbursement Agreement, the Company is obligated to repay,
or cause to be repaid, to the Bank an amount equal to the amounts drawn under the Letter of Credit,
together with interest on such amounts, payable on demand, plus certain fees and expenses in respect of
the Letter of Credit. The Reimbursement Agreement contains certain representations, warranties,
covenants and agreements relating to the Company. These covenants and agreements are for the benefit
of the Bank only.
A failure by the Company to repay the Ban for draws under the Letter of Credit, a breach by the
Company or any Significant Subsidiar of any representation, warranty, covenant or agreement in, or a
default under, the Reimbursement Agreement, the Loan Agreement, the Indenture, the Company
Mortgage, the Credit Agreement, the Bonds, the First Mortgage Bond, the First Mortgage Supplemental
Indenture or certin other documents related to the transactions contemplated therein, a failure to payor
other default with respect to certain other Company indebtedness or indebtedness of a Significant
Subsidiary of the Company, the invalidity of the Bonds, the filing of an involuntary petition against the
Company in bankptcy, seeking reorganization, arrangement or readjustment of its debts or seeking any
relief under the United States Bankrptcy Code, or the Loan Agreement, the Indenture or the Company
18
Mortgage ceases to be in full force and effect, may result in an Event of Default under the Reimbursement
Agreement. At any time thereafter, the Bank may do any or all of the following:
(a) Declare all uneimbursed drawings in respect of the Letter of Credit and any and
all other indebtedness or obligations of any and every kind owing by the Company to the Ban
to be immediately due and payable, without presentment, demand, protest or other notice of any
kind;
(b) Enforce any and all rights and interests created an existmg under the
Reimbursement Agreement or under any of the other related documents identified by the
Reimbursement Agreement and all rights of set-off; or
(c) Direct the Trustee, at the option of the Bank, either to (i) accelerate the principal
and interest due on the Bonds and to draw on the Letter of Credit in accordance with the
Indentue; or (ii) direct a mandatory purchase of the Bonds, as described under "THE DAIL Y
INTEREST RATE BONDS-Mandatory Tender for Purchase-Mandatory Tender Upon
Nonreinstatement o/Credit Facilty or at Direction o/Provider.".
Notwithstanding the foregoing, if the event of default is as a consequence of certain events of
bankptcy, dissolution, liquidation or reorganization of the Company, then all obligations owing to the
Bank under the Reimbursement Agreement shall immediately become due and payable without the giving
of any notice or other action by the Bank.
The Bank
Bank of America, N.A. (the "Bank") is a national banking association organized under the laws
of the United States, with its principal executive offces located in Charlotte, North Carolina. The Ban is
a wholly-owned indirect subsidiary of Bank of America Corporation (the "Corporation") and is engaged
in a general consumer banking, commercial banking and trst business, offering a wide range of
commercial, corporate, international, financial market, retail and fiduciary banking services. As of
September 30, 2008, the Bank had consolidated assets of $1,359 bilion, consolidated deposits of $846
bilion and stockholder's equity of $ 1 14 bilion based on regulatory accounting principles.
The Corporation is a bank holding company and a financial holding company, with its principal
executive offices located in Charlotte, Nort Carolina. Additional information regarding the Corporation
is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2007, together with
its subsequent periodic and current reports filed with the Securties and Exchange Commission (the
"SEC").
Filngs can be inspected and copied at the public reference facilties maintained by the SEC at
100 F Street, N.B., Washington, D.C. 20549, United States, at prescribed rates. In addition, the SEC
maintains a website at http://ww.sec.gov, which contains reports, proxy statements and other
information regarding registrants that fie such information electronically with the SEC.
The information concerning the Corporation and the Bank is furished solely to provide limited
introductory information and does not purport to be comprehensive. Such information is qualified in its
entirety by the detailed information appearing in the documents and financial statements referenced
herein.
The Letter of Credit has been issued by the Bank. Moody's Investors Service, Inc. ("Moody's")
curently rates the Bank's long-term debt as "Aaa" and short-term debt as "P-I." The outlook is stable.
19
Standard & Poor's Ratings Services, a Division of The McGraw-Hil Companies, Inc. ("S&P") curently
rates the Bank's long-term debt as "AA-" and its short-term debt as "A-I +." The outlook is negative.
Fitch Ratings, Inc. ("Fitch") curently rates long-term debt of the Bank as "AA-" and short-term debt as
"F1+." The outlook is stable. Furter information with respect to such ratings may be obtained from
Moody's, S&P and Fitch, respectively. No assurances can be given that the curent ratings of the Ban's
instruments wil be maintained.
The Bank wil provide copies of the most recent Bank of America Corporation Anual Report on
Form 10-K, any subsequent reports on Form 10-Q, and any required reports on Form 8-K (in each case as
fied with the SEC pursuant to the Exchange Act), and the publicly available portions of the most recent
quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each
person to whom this document is delivered, on the wrtten request of such person. Written requests
should be directed to:
Bank of America Corporate Communications
100 North Tryon Street, 18th Floor
Charlotte, North Carolina 28255
Attention: Corporate Communication
PAYMENTS OF PRINCIPAL AND INTEREST ON THE BONDS WILL BE MADE FROM
DRAWINGS UNDER THE LETTER OF CREDIT. PAYMENTS OF THE PURCHASE PRICE OF
THE BONDS WILL BE MADE FROM DRAWINGS UNDER THE LETTER OF CREDIT IF
REMARKTING PROCEEDS AR NOT AVAILABLE. ALTHOUGH THE LETTER OF CREDIT IS
A BINDING OBLIGATION OF THE BANK, THE BONDS AR NOT DEPOSITS OR
OBLIGATIONS OF THE CORPORATION OR ANY OF ITS AFFILIATED BANKS AND AR NOT
GUARANTEED BY ANY OF THESE ENTITIES. THE BONDS ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY AND ARE SUBJECT TO CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF THE PRlCIPAL AMOUNT INVESTED.
The delivery hereof shall not create any implication that there has been no change in the affairs of
the Corporation or the Bank since the date hereof, or that the information contained or referred to under
this caption is correct as of any time subsequent to its date.
Except for the contents under this caption, the Ban assumes no responsibilty for the nature,
contents, accuracy or completeness of the information set fort in this Official Statement.
The foregoing information regarding the Bank has been obtained from Bank of America, N.A.
None of the Issuer, the Company or the Underwriter makes any representations as to the accuracy of
completeness of such information.
BONDHOLDERS' RISKS
Investing in the Bonds involves certain risks. Before making a decision to invest in the Bonds,
prospective investors should carefully consider the risk factors described below and the risk factors set
forth in the Company's Annual Report on Form lO-Kfor the year ended December 31,2007, as well as
other information included in this Offcial Statement.
20
General
The Bonds are limited obligations of the Issuer, payable solely from the revenues provided and
pledged therefor in accordance with the Indenture, and from amounts drawn under the Letter of Credit.
The Bonds do not constitute a debt, liabilty of general obligation of the Issuer within any constitutional
or statutory provision and do not give rise to a pecuniar liabilty of the Issuer. The Bonds are equally
and ratably payable solely from moneys received by the Trustee from payments made by the Company
pursuant to the Loan Agreement, from drawings under the Letter of Credit and from amounts held by the
Trustee in the funds and accounts created by the Indentue.
For information concerning the financial condition of the Company, see APPENDIX A to this
Official Statement.
Letter of Credit and Reimbursement Agreement
Concurrently with, and as a condition to, the issuance of the Bonds, the Company wil cause the
Letter of Credit to be issued by the Bank and delivered to the Trustee. Under the initial Letter of Credit,
the Trustee wil be entitled to draw up to an amount suffcient to pay (i) the principal of the Bonds or the
portion of the purchase price corresponding to the principal of the Bonds and (ii) up to 35 days' accrued
interest on the Bonds at a rate of 12% per annum (computed on the basis of a 365-day year). The Letter
of Credit has a stated expiration date of December 30, 2009. The Letter of Credit may be extended
pursuant to its terms. The Letter of Credit may be extended or replaced by a letter of credit of another
commercial ban or branch or agency of a foreign commercial bank as described under the caption "THE
LETTER OF CREDIT-The Letter of Credit."
If the Letter of Credit is not extended, the Bonds wil be subject to mandatory tender for purchase
at the principal amount, without premium, plus accrued interest to the purchase date. See "THE
BONDS-Mandatory Tender for Purchase." There can be no assurance that the Company wil be able to
obtain an extension of the Letter of Credit or any futue Credit Facility. The Bank is under no obligation
to extend the Letter of Credit beyond the scheduled expiration thereof. See "THE LETTER OF
CREDIT." From and after the receipt of a Credit Facilty in substitution for the Letter of Credit, the
Bonds wil be secured by the such Credit Facilty.
The rating on the Bonds is dependent on the ratings of the Bank. The Bank's curent ratings are
predicated upon among other things, a level of reserves required by banking institutions. The level of
reserves maintained by the Bank could change over time and this could result in a downgrading of the
short-term rating on the Bonds. The Bank is not contractually bound to maintain its present level of
reserves in the future nor is it contractually bound to maintain its current credit rating. No provision has
been made for replacement of or substitution for the Letter of Credit in the event of any deterioration in
the financial condition of the Ban.
The Bank is subject to regulation and supervision by the Federal Deposit Insurance Corporation,
the Federal Reserve Board and other regulatory bodies. New regulations could impose restrictions upon
the Bank that would restrict its ability to respond to competitive pressures. Various legislative or
regulatory changes would dramatically impact the banking industry as a whole and the Bank specifically.
The baning industr is highly competitive in many of the markets in which the Bank operates. Such
competition directly impacts the financial pedoriance of the Bank. Any significant increase in such
competition could adversely impact the Bank.
21
Bankruptcy or Insolvency of the Bank
The obligations of the Ban under the Letter of Credit are a general obligation of the Bank and
rank equally in priority of payment and in all other respects with all other unsecured obligations of the
Bank. In the event of a banptcy or insolvency or if for any other reason the Bank fails or is unable to
honor a draw on the Letter of Credit, each Owner would have to depend entirely on the abilty of the
Company to pay the principal of, purchase price and interest on the Bonds pursuant to its obligations
under the Loan Agreement unless a replacement Credit Facility is obtained by the Company.
Mandatory Tender or Acceleration upon
Default under Reimbursement Agreement
The occurrence of an event of default under the Reimbursement Agreernent may cause a
mandatory tender or an acceleration of the Bonds. In such event, an Owner whose Bonds are required to
be tendered or paid may not have the opportnity to hold such Bonds for a time period consistent with
such an Owner's original investment intentions.
Certain Considerations Affecting Sales of Daily Interest Rate Bonds
The Remarketing Agent is Paid by the Company. The Remarketing Agent's responsibilties
include determining the interest rate from time to time and remarketing Bonds that are tendered pursuant
to the optional or mandatory tender provisions of the Indenture by the Owners thereof (subject, in each
case, to the terms of the Remarketing Agreement), all as fuher described in this Official Statement. The
Remarketing Agent is appointed and is paid by the Company for its services. As a result, the interests of
the Remarketing Agent may differ from those of existing Owners and potential purchasers of the Bonds.
The Remarketing Agent Routinely Purchases Bonds for its Own Account. The Remarketing
Agent acts as remarketing agent for a variety of varable rate demand obligations and, in its sole
discretion, routinely purchases such obligations for its own account. The Remarketing Agent is
permitted, but not obligated, to purchase tendered Bonds for its own account and, in its sole discretion,
routinely acquires such tendered Bonds in order to achieve a successful remarketing of the Bonds (i.e.,
because there otherwise are not enough buyers to pUrchase the Bonds) or for other reasons. However, the
Remarketing Agent is not obligated to purchase Bonds, and may cease doing so at any time without
notice. The Remarketing Agent may also make a market in the Bonds by routinely purchasing and sellng
Bonds other than in connection with an optional or mandatory tender and remarketing. Such purchases
and sales may be at or below par. However, the Remarketing Agent is not required to make a market in
the Bonds. The Remarketing Agent may also sell any Bonds it has purchased to one or more affliated
investment vehicles for collective ownership or enter into derivative arrangements with affliates or others
in order to reduce its exposure to the Bonds. The purchase of Bonds by the Remarketing Agent may
create the appearance of greater demand for the Bonds than would otherwise be the case without the
participation of the Remarketing Agent. The practices described above also may result in fewer Bonds
being tendered in a remarketing.
Bonds May be Offered at Diferent Prices on Any Date Including an Interest Rate
Determination Date. Pursuant to the Remarketing Agreement, the Remarketing Agent is required to use
its best efforts to determne the applicable rate of interest that, in its judgment, is the lowest rate that
would permt the sale of the Bonds bearing interest at the applicable rate at par plus accrued interest, if
any, on and as of the applicable interest rate determination date. The interest rate wil reflect, among
other factors, the level of market demand for the Bonds (including whether the Remarketing Agent is
wiling to purchase Bonds for its own account). There mayor may not be Bonds tendered and remarketed
on an interest rate determination date, the Remarketing Agent mayor may not be able to remarket any
22
Bonds tendered for purchase on such date at par and the Remarketing Agent may sell Bonds at varing
prices to different investors on such date or any other date. The Remarketing Agent is not obligated to
advise purchasers in a remarketing if it does not have third part buyers for all of the Bonds at the
remarketing price. In the event that the Remarketing Agent owns any Bonds for its own account, it may,
in its sole discretion in a secondar market transaction outside the tender process, offer such Bonds on
any day, including the day that the rate on the Bonds is set, at a discount to par to some investors.
The Ability to Sell the Bonds other than through Tender Process May be Limited. The
Remarketing Agent may buy and sell Bonds other than through the tender process. However, it is not
obligated to do so and may cease doing so at any time without notice. Holders that wish to tender their
Bonds must tender them to the Trustee with appropriate notice as described in the Indenture. Thus,
investors who purchase the Bonds, whether in a remarketing or otherwise, should not assume that they
wil be able to sell their Bonds other than by tendering the Bonds in accordance with the tender process as
described in the Indenture.
Under Certain Circumstances, the Remarketing Agent May Be Removed, Resign or Cease
Remarketing the Bonds, Without a Successor Being Named. Under certain circumstances, the
Remarketing Agent may be removed or have the abilty to resign or cease its remarketing efforts, without
a successor having been named, subject to the terms of the Remarketing Agreement.
THE LOAN AGREEMENT
The following is a summary of certain provisions of the Loan Agreement. It is not a
comprehensive recitation of each and every provision thereof, and investors seeking such a recitation are
referred to the definitve Loan Agreement, which is available from the Underwriter during the offering
period, and from the Trustee thereafter.
Issuance of the Bonds
The Issuer is issuing the Bonds for the purpose of loaning the proceeds thereof to the Company to
refund the outstanding principal amount of the Prior Bonds.
Loan Payments
As and for repayment of the loan made to the Company by the Issuer, the Company shall pay to
the Trustee, for the account of the Issuer, an amount equal to the aggregate principal amount of, and the
premium, if any, and ihterest on the Bonds when due on the dates, in the amounts and in the manner
provided in the Indenture for the payment of the principal of, premium, if any, and interest on the Bonds,
whether at maturity, upon redemption, acceleration or otherwise (the "Loan Payments"); provided,
however, that the obligation of the Company to make any such Loan Payment wil be reduced by the
amount of any moneys held by the Trustee under the Indenture and available for such payment; and
provided, further, that the obligation of the Company to make any payment under the Loan Agreement
shall be deemed to be satisfied and discharged to the extent of the corresponding payment made by the
Provider to the Trustee under the Credit Facilty (unless the Credit Facilty then in effect shall be an
insurance policy, in which case such obligation of the Company shall not be deemed to be satisfied and
discharged).
In the event the Company fails to make any Loan Payments to the Trustee under the Loan
Agreement with respect to any Bond, the payment so in default wil continue as an obligation of the
Company until the amount in default shall have been fully paid, and the Company wil pay interest on any
23
overdue amount with respect to principal of such Bond at the interest rate then borne by such Bond until
paid.
The Loan Payments to be made by the Company pursuant to the Loan Agreement wil be pledged
under the Indentue by the Issuer to the Trustee, and the Company is to make all Loan Payment
thereunder and thereon directly to the Trustee.
Payment of Purchase Price
The Company wil payor cause to be paid for its account to the Trustee amounts equal to the
amounts to be paid by the Trustee pursuant to the Indenture for the purchase of outstanding Bonds
thereunder (see "THE DAILY INTEREST RATE BONDS-optional Tender for Purchase" and "-
Mandatory Tender for Purchase"), such amounts to be paid to the Trustee as the purchase price for the
Bonds tendered for purchase pursuant to the Indentue on the dates such payments are to be made;
provided, however, that the obligation of the Company to make any such payment under the Loan
Agreement shall be reduced by the amount of any moneys held by the Trustee under the Indenture and
available for such payment.
From the date of delivery of a Credit Facility (including the Letter of Credit) to and including the
Bond Payment Date next preceding a Change of Credit Facilty, the Company shall provide for the
payment of the amounts to be paid by the Trustee upon an optional or mandatory tender for purchase by
the delivery of such Credit Facilty to the Trustee. Under the Loan Agreement, the Company irrevocably
authorizes and directs the Trustee to draw moneys under the Credit Facility (initially, the Letter of Credit)
in accordance with the provisions of the Indenture and such Credit Facilty to obtain the moneys
necessary to pay the purchase price for Bonds upon an optional or mandatory tender for purchase.
Change of Credit Facilty
The Company may provide for a Change of Credit Facilty at any time that the Bonds are subject
to optional redemption as described under "THE DAILY INTEREST RATE BONDS-optional
Redemption of Daily Interest Rate Bonds," provided that the Company delivers to the Trustee and the
Remarketing Agent not less than 30 days before the effective date of the Change of Credit Facilty:
(a) a notice which (i) states the effective date of the Change of Credit Facilty, (ii)
describes the terms of the Change of Credit Facilty, (iii) directs the Trustee to give notice that the
Bonds are subject to mandatory purchase, in whole, on or before the effective date of the Change
of Credit Facilty, and (iv) directs the Trustee to take any other action as shall be necessar for the
Trustee to take to effect the Change of the Credit Facilty; and
(b) on or before the effective date of the Change of Credit Facility, the Company
shall fuish to the Trustee a Favorable Opinion of Bond Counsel with respect to such Change of
Credit Facilty and stating, in effect, that such Change of Credit Facilty is authorized under the
Loan Agreement.
The Company may provide for one or more extensions of a Credit Facilty for any period
commencing after its then-current expiration date without complying with the foregoing provisions.
The Company may rescind its election to make a Change of Credit Facilty at any time prior to
the effective date thereof.
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Obligation Absolute
The Company's obligation to make Loan Payments and payments of purchase price described
under "THE LOAN AGREEMENT-Payment of Purchase Price" wil be absolute, irrevocable and
unconditional and wil not be subject to cancellation, termination or abatement or to any defense other
than payment, or to any right of setoff, counterclaim or recoupment arising out of any breach under the
Loan Agreement or the Indentue or otherwise by the Company, the Trustee, the Remarketing Agent, the
Provider or any other par. The Loan Payments and the other payments due under the Loan Agreement
wil continue to be payable at the times and in the amounts specified whether or not the Project, or any
portion thereof, shall have been destroyed by fire or other casualty, or title thereto, or the use thereof,
shall have been taken by the exercise of the power of eminent domain, and that there shall be no
abatement of or diminution in any such payments by reason thereof, whether or not the Project shall be
used or useful and whether or not any applicable laws, regulations or standards shall prevent or prohibit
the use of the Project or for any other reason. Neither the Plant, the Facilties nor the Project shall
constitute any part of the trust estate or any part of the security for the Bonds.
Tax Covenants; Tax-Exempt Status of Bonds
The Company covenants that the Bond proceeds, the earnings thereon and any other moneys on
deposit with respect to the Bonds wil not be used in such a manner as to cause the Bonds to be "arbitrage
bonds" within the meaning of the Code.
The Company covenants for the benefit of the Owners of the Bonds and the Issuer that it has not
taken, and wil not take, or permt to be taken on its behalf, any action which would adversely affect the
Tax-Exempt status of the Bonds and wil take, or require to be taken, such actions as may, from time to
time, be required under applicable law or regulation to continue to cause the Bonds to be Tax-Exempt.
See "TAX EXEMPTION."
Other Covenants of the Company
Maintenance of Existence; Conditions Under Which Exceptions Permitted. The Company wil
maintain in good standing its corporate existence as a corporation organized under the laws of any state of
the United States or the District of Columbia and wil remain duly qualified to do business in the State of
Montana for so long as the Company has an ownership interest in the Project, wil not dissolve or
otherwise dispose of all or substantially all of its assets and wil not consolidate with or merge into
another corporation; provided, however, that the Company may, without violating the foregoing,
undertake from time to time anyone or more of the following if, prior to the effective date thereof, such
action is approved by all public utility commissions or similar entities that are required by law to approve
such action and there shall have been delivered to the Trustee a Favorable Opinion of Bond Counsel:
(a) consolidate with or merge into another corporation or sell or otherwise transfer to another entity all or
substantially all of its assets as an entirety, provided the resulting, surviving or trsferee entity, as the
case may be, shall be the Company or an entity qualified to do business in the State of Montana as a
foreign corporation or incorporated and existing under the laws of the State of Montana, which shall have
assumed in writing all of the obligations of the Company under the Loan Agreement and the Credit
Facility Agreement and shall deliver to the Trustee an opinion of counsel to the Company that such
consolidation or merger complies with the provisions of this paragraph; or (b) convey all or substantially
all of its assets to one or more wholly owned subsidiaries of the Company so long as the Company shall
remain in existence and primarly liable on all of its obligations under the Loan Agreement and the
subsidiary or subsidiaries to which such assets shall be so conveyed shall guarantee in writing the
performance of all of the Company's obligations under the Loan Agreement, and under the Credit Facilty
Agreement.
25
Assignment. With the Provider's consent, the Company's interest in the Loan Agreement may be
assigned in whole or in part by the Company (a) to another entity, subject, however, to the conditions that
such assignment shall not relieve (other than as described in the preceding paragraph) the Company from
primary liabilty for its obligations to make the Loan Payments or to make payments to the Trustee with
respect to payment of the purchase price of the Bonds or for any other of its obligations under the Loan
Agreement or (b) to an Affliate in connection with the conveyance of the Plant to such Affliate, subject,
however, to the conditions that (i) such Affiiate is a corporation qualified to do business in the State of
Montana as a foreign corporation or incorporated and existing under the laws of the State of Montana,
which shall have assumed in writing all of the obligations of the Company under the Loan Agreement (in
which case the Company shall be relieved of all obligations under the Loan Agreement); (ii) such
conveyance is approved by any public utilty commssions or similar entities that are required by law to
approve such conveyance; and (iii) the Company shall have delivered to the Trustee and the Provider an
opinion of counsel to the Company that such assignment complies with the provisions described in this
paragraph and an Opinion of Bond Counsel to the effect that the proposed assignment wil not impair the
validity of the Bonds under the Montana Act or adversely affect the Tax-Exempt status of the Bonds. The
Company shall, within 30 days after the delivery thereof, fuish to the Issuer, the Provider and the
Trustee a tre and complete copy of the agreements of other documents effectuating any such assignment.
Maintenance and Repair. The Company shall cause the Project to be maintained in good repair,
keep the same insured in accordance with standard industr practice and pay all costs thereof. The
Company wil payor cause to be paid its share of all taxes, assessments, levies, duties, imports and
governental, utility and other charges with respect to the Project.
The Company may at its own expense cause the Project to be remodeled or cause such
substitutions, modifications and improvements to be made to the Project from time to time as the
Company, in its discretion, may deem to be desirable for its uses and puroses, which remodeling,
substitutions, modifications and improvements shall be included under the terms of the Loan Agreement
as part of the Project; provided, however, that the Company shall not exercise any such right, power,
election or option if the proposed remodeling, substitution, modification or improvement would adversely
affect the Tax-Exempt status of the Bonds.
The Company shall be entitled to the proceeds of any condemnation award or portion thereof
made for damage to or taking of the Project or other propert of the Company.
Anything in the Loan Agreement to the contrary notwithstanding, the Company shall have the
right at any time to cause the operation of the Plant to be terminated if the Company shall have
determned or concurred in a determination that the continued operation of the Plant is uneconomical for
any reason.
Defaults
Each of the following events wil constitute an "Event of Default" under the Loan Agreement:
(a) a failure by the Company to make when due any Loan Payment or any payment
required to be made to the Trustee for the purchase of Bonds, which failure results in an "Event of
Default" as described herein in paragraph (a), (b) or (c) under "THE INDENTUR-Defaults;"
(b) a failure by the Company to pay when due any amount required to be paid under
the Loan Agreement or to observe and perform any other covenant, condition or agreement on the
Company's part to be observed or performed under the Loan Agreement (other than a failure
described in clause (a) above), which failure continues for a period of 90 days (or such longer
26
period as the Issuer and, if so directed by the Owners of a majority in aggregate principal amount
of the Bonds, the Trustee may agree to in wrting) after written notice, specifying such failure and
requesting that it be remedied, shall have been given to the Company by the Trustee or to the
Company and the Trustee by the Issuer; provided, however, that if such failure is other than for
the payment of money and is of such natue that it cannot be corrected within the applicable
period, such failure shall not constitute an Event of Default under the Loan Agreement so long as
the Company institutes corrective action within the applicable period and such action is being
dilgently pursued, or
(c)
Company.
certain events of bankptcy, dissolution, liquidation or reorganization of the
The Loan Agreement provides that, with respect to any Event of Default described in clause (b)
above if, by reason of acts of God; strikes, lockouts or other industral disturbances; acts of public
enemies, orders of political bodies; certain natural disasters; civil distubances and certain other events
specified in the Loan Agreement, or any cause or event not reasonably within the control of the Company,
the Company is unable, in whole or in part, to carr out anyone or more of its agreements or obligations
contained in the Loan Agreement (other than certain obligations specified in the Loan Agreement,
including its obligations to make when due. Loan Payments, to make payments to the Trustee for the
purchase of Bonds, to pay certain expenses and taxes, to indemnify the Issuer, the Trustee and others
against certain liabilties, to discharge liens and to maintain its existence), the Company shall not be
deemed in default by reason of not carring out such agreement or agreements or performing such
obligation or obligations during the continuance of such inabilty. The Company shall make reasonable
effort to remedy with all reasonable dispatch the cause or causes preventing it from carring out its
agreements, provided that the settlement of strikes, lockouts and other industrial distubances shall be
entirely within the discretion of the Company, and the Company shall not be required to make settlement
of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing par or
parties when such course is in the judgment of the Company unfavorable to the Company, except to the
extent that the Company's abilty to pay when due any amount under the Credit Facilty Agreement wil
be jeopardized by the Company's failure to make such a settlement.
Remedies
Upon the occurrence and continuance of any Event of Default described in clauses (a) or (c) in
the second preceding paragraph, and fuher upon the condition that, in accordance with the terms of the
Indenture, the Bonds shall have been declared to be immediately due and payable pursuant to any
provision of the Indentue, the Loan Payments shall, without fuher action, become and be immediately
due and payable. Any waiver of any Event of Default under the Indenture and a rescission and annulment
of its consequences wil constitute a waiver of the corresponding Event or Events of Default under the
Loan Agreement and a rescission and annulment of the consequences thereof. See "THE
INDENTURE-Defaults. "
Upon the occurence and continuance of any Event of Default under the Loan Agreement, the
Issuer may take any action at law or in equity to collect any payments then due and thereafter to become
due or to seek injunctive relief or specific performance of any obligation, agreement or covenant of the
Company under the Loan Agreement and with respect to any Credit Facility.
Any amounts collected from the Company upon an Event of Default under the Loan Agreement
wil be applied in accordance with the Indenture.
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Amendments
The Loan Agreement may be amended by the Issuer and the Company subject to the limitations
contained in the Indenture. See "THE INDENTURE-Amendment of the Loan Agreement."
THE INDENTURE
The following is a summary of certain provisions of the Indenture. It is not a comprehensive
recitation of each and every provision thereof, and investors seeking such a recitation are referred to the
definitve Indenture, which is available from the Underwriter during the offering period, and from the
Trustee thereafter.
Pledge and Security
Pursuant to the Indentue, the Letter of Credit wil be pledged by the Issuer to the Trustee to
secure the payment of the principal of, and premium, if any, and interest on, the Bonds. The Issuer wil
also pledge and assign to the Trustee all its rights and interests under the Loan Agreement (other than its
rights to indemnification and reimbursement of expenses and certain other rights), and has pledged to the
Trustee all moneys and obligations deposited or to be deposited in the Bond Fund established with the
Trustee, provided that the Trustee wil have a prior claim on the Bond Fund (except for moneys received
under the Credit Facilty and except for moneys on deposit therein for the redemption or payment of the
Bonds) for the payment of its compensation and expenses and for the repayment of any advances (plus
interest thereon) made by it to effect performance of certain covenants in the Indenture if the Company
has failed to make any payment which results in an Event of Default under the Loan Agreement. The
Facilities do not and shall not constitute any par of the trust estate or any part of the security for the
Bonds.
Application of Proceeds; Bond Fund
The proceeds from the sale of the Bonds, excluding accrued interest, if any, wil be deposited
with the Trustee for the Prior Bonds and used, together with moneys to be provided by the Company prior
to December 31, 2008, to refund and redeem the Prior Bonds. See "USE OF PROCEEDS."
There is created under the Indenture a Bond Fund to be held by the Trustee and therein
established a Principal Account and an Interest Account. Payments made by the Company under the
Loan Agreement in respect of the principal of, and premium, if any, and interest on, the Bonds and certain
other amounts specified in the Indenture are to be deposited in the appropriate account in the Bond Fund.
While any Bonds are outstanding and except as provided in the Indenture and a Tax Exemption
Certificate and Agreement among the Trustee, the Issuer and the Company (the "Tax Certificate"),
moneys in the Bond Fund wil be used solely for the payment of the principal of, and premium, if any,
and interest on, the Bonds as the same shall become due and payable at matuty, upon redemption or
upon acceleration of maturity, subject to the prior claim of the Trustee, to the extent described above in
"THE INDENTURE-Pledge and Security."
The Trustee shall apply moneys in the Principal Account and the Interest Account to the payment
of the principal of and interest on the Bonds on any Bond Payment Date in the following order of priority
while the Credit Facilty is the Letter of Credit or another direct pay letter of credit:
(i) Moneys drawn under the Credit Facilty;
(ii) Any other Available Moneys; and
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(iii) Any other moneys paid by the Company pursuant to the Agreement or any other
moneys in the Bond Fund.
Investment of Funds
Subject to the provisions of the Tax Certificate, moneys in the Bond Fund wil, at the specific
written direction of the Company, be invested in securties or obligations specified in the Indenture.
Gains from such investments wil be credited, and any loss wil be charged, to the particular fud or
account from which the investments were made.
Defaults
Each of the following events wil constitute an "Event of Default" under the Indenture:
(a) a failure to pay the principal of or premium, if any, on any of the Bonds when the
same becomes due and payable at maturity, upon redemption or otherwise;
(b) a failure to pay an installment of interest on any of the Bonds bearing interest at
the Daily Interest Rate, which failure shall continue for a period of two Business Days after the
date interest has become due and payable;
(c) a failure to pay amounts due in respect of the purchase price of Bonds as provided
under the caption "THE DAILY INTEREST RATE BONDS-0tional Tender for Purchase" and
"-Mandatory Tender for Purchase;"
(d) a failure by the Issuer to observe and perform any covenant, condition, agreement
or provision contained in the Bonds or the Indentue (other than a failure described in clause (a),
(b) or (c) above), which failure shall continue for a period of 90 days after wrtten notice,
specifying such failure and requesting that it be remedied, shall have been given to the Issuer and
the Company by the Trustee which may give such notice in its discretion and shall give such
notice at the written request of the Owners of not less than 33-1/3% in principal amount of the
Bonds then Outstanding, unless the Trustee, or the Trustee and the Owners of a principal amount
of Bonds not less than the principal amount of Bonds the Owners of which requested such notice,
as the case may be, shall agree in writing to an extension of such period prior to its expiration;
provided, however, that the Trustee, or the Trustee and the Owners of such principal amount of
Bonds, as the case may be, wil be deemed to have agreed to an extension of such period if
corrective action is initiated by the Issuer or the Company on behalf of the Issuer within such
period and is being dilgently pursued;
(e) an "Event of Default" under the Loan Agreement; or
(f) The Trustee's receipt of written notice (which may be given by facsimile) from the
Provider of an event of default under and as defined in the Credit Facilty Agreement, and
directing acceleration.
Remedies
If an Event of Default described in clause (a), (b), (c) or (f) of the preceding paragraph has
occurred and has not been cured or waived, or an Event of Default described in clause (e) of the preceding
paragraph resulting from an "Event of Default" under paragraphs (a) or (c) as described under "THE
LOAN AGREEMENT-Defaults" has occured and has not been cured or waived, then (i) the Trustee
29
may, with the consent of the Provider (unless a Provider Default shall have occured and be continuing)
or (ii) the Trustee shall (A) upon the wrtten direction of the Provider (unless a Provider Default shall
have occurred and be continuing), or (B) upon the written request of the Owners of not less than 33-1/3%
in principal amount of the Bonds then Outstanding and with the consent of the Provider (unless a Provider
Default shall have occurred and be continuing), by written notice by registered or certified mail to the
Issuer, the Company and the Provider, declare the Bonds to be immediately due and payable and, during
the period the Credit Facilty is in effect, with accrued interest on the Bonds payable on the Bond
Payment Date fixed in accordance with the Indentue, anything in the Indenture or in the Bonds to the
contrary notwithstanding, and the Trustee shall give notice thereof to the Issuer, the Company, the
Remarketing Agent and the Provider and shall give notice thereof by first-class mail to all Owners of
Outstanding Bonds, and the Trustee shall as promptly as practicable draw moneys under the Credit
Facilty to the extent available thereunder, in an amount suffcient to pay principal of and accrued interest
on the Bonds payable on such Bond Payment Date.
The provisions described in the preceding paragraph are subject further to the condition that if, so
long as no Credit Facilty is in effect, after the principal of the Bonds shall have been so declared to be
due and payable and before any judgment or decree for the payment of the moneys due shall have been
obtained or entered, the Issuer shall cause to be deposited with the Trustee a sum sufficient to pay all
matued installments of interest upon all Bonds, any unpaid purchase price and the principal of any and
all Bonds which shall have become due otherwise than by reason of such declaration (with interest upon
such principal and, to the extent permssible by law, on overdue installments of interest, at the rate per
annum then borne by the Bonds) and such amount as shall be sufficient to cover reasonable compensation
and reimbursement of expenses payable to the Trustee and all Events of Default (other than nonpayment
of the principal of Bonds which shall have become due by said declaration) shall have been remedied,
then, in every such case, such Event of Default shall be deemed waived and such declaration and its
consequences rescinded and annulled, and the Trustee shall promptly give written notice of such waiver,
rescission or anulment to the Issuer and the Company, and shall give notice thereof by first-class mail to
all Owners of Outstanding Bonds; provided, however, that no such waiver, rescission and annulment shall
extend to or affect any other Event of Default or subsequent Event of Default or impair any right, power
or remedy consequent thereon.
The provisions of the second preceding paragraph are, fuher, subject to the condition that, if an
Event of Default described in clause (t) of such paragraph shall have occured and if the Trustee shall
thereafter have received written notice from the Provider (i) that the notice which caused such Event of
Default to occur has been withdrawn and (ii) that the amounts available to be drawn on the Credit Facilty
to pay (A) the principal of the Bonds or the portion of purchase price equal to the principal and
(B) interest on the Bonds and the portion of purchase price equal to accrued interest have been reinstated
to an amount equal to the principal amount of the Bonds Outstanding plus accrued interest thereon in the
amount calculated in accordance with the Indentue, then, in every such case, such Event of Default shall
be deemed waived and its consequences rescinded and annulled, and the Trustee shall promptly give
written notice of such waiver, rescission and annulment to the Issuer, the Company, the Provider and the
Remarketing Agent, and, if notice of the acceleration of the Bonds shall have been given to the Owners of
Bonds, shall give notice thereof by first-class mail to all Owners of Outstanding Bonds; but no such
waiver, rescission and annulment shall extend to or affect any subsequent Event of Default or impair any
right or remedy consequent thereon.
Upon the occurrence and continuance of any Event of Default under the Indentue, the Trutee
may, with the consent of the Provider (unless a Provider Default shall have occured and be continuing),
and upon the written request of the Owners of not less than 33-1/3% in principal amount of the Bonds
then Outstanding and with the consent of the Provider (unless a Provider Default shall have occured and
be continuing) and receipt of indemnity to its satisfaction (except against negligence or wilful
30
misconduct) shall in its own name and as the Trustee of an express trust, pursue any available remedy to
enforce all rights of the Owners under, and require the Issuer, the Company or the Provider to carr out
any agreements with or for the benefit of the Owners of Bonds and to perform its or their duties under the
Montana Act, the Loan Agreement, the Indentue, the Credit Facilty and the Credit Facility Agreement;
provided that any such remedy may be taken only to the extent permitted under the applicable provisions
of the Loan Agreement or the Indentue, as the case may be; bring suit upon the Bonds; require the Issuer
to account as if it were the trustee of an express trust for the Owners of Bonds; or enjoin any acts or things
which may be unlawful ôr in violation of the rights of the Owners of Bonds. The Trustee is not required
to take any action in respect of an Event of Default (other than, in certain circumstances, to declare the
Bonds to be immediately due and payable, to make certin payments with respect to the Bonds or to
enforce the trusts created by the Indentue) except upon the written request of the Owners of not less than
33-1/3% in principal amount of the Bonds then outstanding and receipt of indemnity satisfactory to it.
The Trustee wil waive any Event of Default and its consequences and rescind any declaration of
acceleration of principal upon (a) the wrtten direction of the Provider (unless a Provider Default shall
have occurred and be continuing) and (b) the wrtten request of the Owners of (i) more than a majority in
principal amount of all Outstanding Bonds in respect of which default in the payment of principal or
purchase price of or interest on the Bonds exists or (b) more than a majority in principal amount of all
Outstanding Bonds in the case of any other Event of Default; provided, however, that any Event of
Default under paragraph (t) under "THE INDENTURE-Defaults" shall be waived only as described in
the second preceding paragraph; provided further, that (x) there wil not be waived any Event of Default
specified in paragraphs (a), (b) or (c) under the caption "THE INDENTURE-Defaults" unless prior to
such waiver or rescission the Issuer shall have caused to be deposited with the Trustee a sum sufficient to
pay all matured installments of interest upon all Bonds and the principal and purchase price of any and all
Bonds which shall have become due otherwise than by reason of such declaration of acceleration (with
interest upon such principal and, to the extent permissible by law, on overdue installments of interest, at
the rate per annum then borne by the Bonds), (y) in the event that the Credit Facilty has been drawn upon
to pay the principal of and interest on the Bonds upon acceleration, no Event of Default shall be waived
unless (in addition to the applicable conditions as aforesaid) the Trustee shall have received wrtten notice
from the Provider that the amounts available to be drawn on the Credit Facilty to pay (A) the principal of
the Bonds or the portion of purchase price equal to principal and (B) interest on the Bonds and the portion
of purchase price equal to accrued interest have been reinstated to an amount equal to the principal
amount of the Bonds Outstanding plus accrued interest thereon equal in amount, while the Letter of
Credit is in effect, to the Interest Stated Amount and (z) no Event of Default wil be waived unless (in
addition to the applicable conditions as aforesaid) there shall have been deposited with the Trustee such
amount as wil be sufficient to cover reasonable compensation and reimbursement of expenses payable to
the Trustee. In case of any waiver or rescission described above, or in case any proceeding taken by the
Trustee on account of any such Event of Default shall have been discontinued or concluded or determned
adversely, then and in every such case the Issuer, the Trustee and the Owners of Bonds wil be restored to
their former positions and rights under the Indenture, provided, however, that no such waiver or rescission
wil extend to any subsequent or other Event of Default or impair any right consequent thereon.
Nothing in the Indentue shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Owner of Bonds any plan of reorganization, arrangement, adjustment, or
composition affecting the Bonds or the rights of any Owner of Bonds thereof, or to authorize the Trustee
to vote in respect of the claim of any Owner of Bonds in any such proceeding without the approval of the
Owners of Bonds so affected.
The Provider (provided that a Provider Default shall not have occured and be continuing) or the
Owners of a majority in principal amount of the Bonds then Outstanding, with the consent of the Provider
(provided that a Provider Default shall not have occured and be continuing), wil have the right to direct
31
the time, method and place of conducting all remedial proceedings available to the Trustee under the
Indenture or exercising any trust or power conferred on the Trustee upon furnishing satisfactory
indemnity to the Trustee (except against negligence or wilful misconduct) and provided that such
direction wil not be other than in accordance with the provisions of law and the Indenture and wil not
result in any personal liabilty of the Trustee.
No Owner wil have any right to institute any suit, action or proceeding in equity or at law for the
execution of any trst or power of the Trustee or any other remedy under the Indenture or in the Bonds
unless such Owner has previously given the Trustee written notice of an Event of Default and unless the
Owners of not less than 33-1/3% in principal amount of the Bonds then Outstanding have made written
request of the Trustee so to do, and unless satisfactory indemnity (except against negligence or wilful
misconduct) has been offered to the Trustee and the Trustee has not complied with such request within a
reasonable time.
Notwithstanding any other provision in the Indenture, the right of any Owner to receive payment
of the principal or purchase price of, and premium, if any, and interest on the Owner's Bond, on or after
the respective due dates expressed therein, shall not be impaired or affected without the consent of such
Owner.
Defeasance
All or any portions of Bonds (in Authorized Denominations) shall, prior to the matuty or
redemption date thereof, be deemed to have been paid for all purposes of the Indenture when:
(a) the Bonds or portions thereof have been selected for redemption and the Trustee
shall have given, or the Company shall have given to the Trustee in form satisfactory to it,
irrevocable instructions to give notice of redemption of such Bonds or portions thereof;
(b) there shall have been deposited with the Trustee moneys, which shall be
Available Moneys or moneys drawn on the Credit Facilty, in an amount suffcient (without
relying on any investment income) to pay when due the principal of, and premium, if any, and
interest due and to become due (which amount of interest to become due shall be calculated at the
Maximum Interest Rate unless the interest rate borne by all of such Bonds is not subject to
adjustment prior to the maturity or redemption thereof, in which case the amount of interest shall
be calculated at the rate borne by such Bonds) on such Bonds or portions thereof on and prior to
the redemption date or maturity date thereof, as the case may be; provided, however, that if such
payment is to be made upon redemption, such payment shall be made from Available Moneys;
(c) in the event such Bonds or portions thereof do not mature and are not to be
redeemed within the next succeeding 60 days, the Issuer at the direction of the Company shall
have given the Trustee in form satisfactory to it irrevocable instrctions to give, as soon as
practicable in the same maner as a notice of redemption is given pursuant to the Indenture, a
notice to the Owners of such Bonds or portions thereof that the deposit required by clause (b)
above has been made with the Trustee and that such Bonds or portions thereof are deemed to have
been paid and stating the matuty or redemption date upon which moneys are to be available for
the payment of the principal of, and premium, if any, and interest on such Bonds or portions
thereof;
(d) the Issuer, the Company, the Trustee and the Provider shall have received
written evidence from Moody's, if the Bonds are then rated by Moody's, and S&P, if the Bonds
32
are then rated by S&P, that such action wil not result in a reduction, suspension or withdrawal of
the rating; and
(e) the Issuer, the Company, the Trustee, Moody's, if the Bonds are then rated by
Moody's, S&P, if the Bonds are then rated by S&P, and the Provider shall have received a
Favorable Opinion of Bond Counsel with respect to such deposit.
In the event the requirements of the next succeeding paragraph can be satisfied, the preceding
paragraph shall not apply, and the following two paragraphs shall be applicable (the final two paragraphs
under this caption shall apply in either case).
Any Bond shall be deemed to be paid within the meaning of the Indentue when: (a) payment of
the principal of and premium if any, on such Bond, plus interest thereon to the due date thereof (whether
such due date is by reason of maturity or acceleration or upon redemption as provided in the Indenture)
either (i) shall have been made or caused to be made in accordance with the term thereof or (ii) shall
have been provided for by irrevocably depositing with the Trustee in trst and irrevocably set aside
exclusively for such payment (A) moneys, which shall be Available Moneys or moneys drawn on the
Credit Facility, suffcient to make such payment and/or (B) Government Obligations (defined below)
purchased with Available Moneys or moneys drawn under the Credit Facilty and maturing as to principal
and interest in such amount and at such time as wil insure, without reinvestment, the availabilty of
sufficient moneys to make such payment; provided, however, that if such payment is to be made upon an
optional redemption, such payment shall be made from Available Moneys or from Government
Obligations purchased with Available Moneys; (b) all necessar and proper fees, compensation and
expenses of the Issuer, the Trustee, the Remarketing Agent, the Provider, the Paying Agent and the
Registrar pertining to the Bonds with respect to which such deposit is made shall have been paid or the
payment thereof provided for to the satisfaction of the Trustee; and (c) an accountant's opinion to the
effect that such moneys and/or Government Obligations wil insure, without reinvestment, the availabilty
of suffcient moneys to make such payment, and a Favorable Opinion of Bond Counsel with respect to
such deposit shall have been delivered to the Trustee. The foregoing provisions shall apply only if (x) the
Bond with respect to which such deposit is made is to mature or be called for redemption prior to the next
date on which such Bond is subject to purchase as described herein under the caption "THE DAILY
INTEREST RATE BONDS-optional Tender for Purchase" or "- Mandatory Tender for Purchase" and
(y) the Company has waived, to the satisfaction of the Trustee, its right to adjust the interest rate borne by
such Bond.
No deposit under clause (a)(ii) of the immediately preceding paragraph shall be deemed a
payment of such Bonds as aforesaid until: (a) proper notice of redemption of such Bonds shall have been
previously given in accordance with the Indentue, or in the event such Bonds are not to be redeemed
within the next succeeding 60 days, until the Company shall have given the Trustee on behalf of the
Issuer, in form satisfactory to the Trustee, irrevocable instrctions to notify, as soon as practicable, the
Owners of the Bonds in accordance with the Indenture that the deposit required by clause (a)(ii) above
has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with the
Indentue and stating the maturity or redemption date upon which moneys are to be available for the
payment of the principal of and the applicable redemption premium, if any, on such Bonds, plus interest
thereon to the due date thereof; or (b) the maturity of such Bonds.
Moneys deposited with the Trustee as described above shall not be withdrawn or used for any
purpose other than, and shall be held in trust for, the payment of the principal of, premium, if any, and
interest on said Bonds or portions thereof, or for the payment of the purchase price of Bonds in
accordance with the Indentue, provided that such moneys, if not then needed for such purose, shall, to
the extent practicable, be invested and reinvested in direct obligations of, or obligations the principal of
33
and interest on which are unconditionally guaranteed as to full and timely payment by, the United States
of America, which are not subject to redemption or prepayment prior to stated maturty ("Governent
Obligations") maturng on or prior to the earlier of (i) the date moneys may be required for the purchase
of Bonds or (ii) the Interest Payment Date next succeeding the date of investment or reinvestment, and
interest earned from such investments shall be paid over to the Company, as received by the Trustee, free
and clear of any trust, lien or pledge.
Notwithstanding that all or any portion of the Bonds are deemed to be paid, the provisions of the
Indenture relating to (i) the registration and exchange of Bonds, (ii) the delivery of Bonds to the Trustee
for purchase and the related obligations of the Trustee with respect thereto, (iii) replacement of mutilated,
lost, destroyed or stolen Bonds, (iv) payment of the Bonds from such moneys and (v) payment,
compensation, reimbursement and indemnification of the Trustee, shall remain in full force and effect
with respect to all Bonds until the maturity date of the Bonds or the last date fixed for redemption of all
Bonds prior to maturity and, in the case of clause (v), until payment, compensation, reimbursement or
indemnification, as the case may be, of the Trustee.
Removal of Trustee
The Trustee may be removed at any time by filing with the Trustee so removed and with the
Issuer, the Company, the Registrar, the Provider and the Remarketing Agent, an instrent or
instruments in writing executed by (i) the Provider, if no Provider Default or Event of Default shall have
occurred and be continuing and if the Trustee has acted or failed to act hereunder in any manner that is
contrary to the standard of care of the Trustee provided for herein, or (ii) the Owners of not less than a
majority in principal amount of the Bonds then Outstading and, if no Provider Default shall have
occured and be continuing, the Provider. The Trustee may also be removed by the Issuer under certain
circumstances. In no event shall a removal take effect earlier than the date on which a successor Trustee
has been appointed and has accepted its appointment.
Modifcations and Amendments
The Indentue may be modified or amended by the Issuer and the Trustee by supplemental
indentues without the consent of the Owners of the Bonds for any of the following puroses: (a) to cure
any formal defect, omission, inconsistency or ambiguity in the Indentue; (b) to add to the covenants and
agreements of the Issuer contained in the Indentue or of the Company or of the Provider contained in any
document, other covenants or agreements thereafter to be observed, or to assign or pledge additional
security for any of the Bonds, or to surrender any right or power reserved or conferred upon the Issuer or
the Company; (c) to confirm, as further assurance, any pledge of or lien on any Revenues or any other
moneys, securities or funds subject or to be subjected to the lien of the Indenture; (d) to comply with the
requirements of the Trust Indenture Act of 1939, as from time to time amended, if applicable to the
Indentue; (e) to implement an adjustment of the interest rate on the Bonds; (f) to provide for a Change of
Credit Facilty; (g) to provide for a depository to accept Bonds in lieu of the Trustee; (h) to modify or
eliminate the book-entr registration system for any of the Bonds; (i) to provide for uncertificated Bonds
or for the issuance of coupons and bearer Bonds or Bonds registered only as to principal, but only to the
extent that such would not adversely affect the Tax-Exempt status of the Bonds; (j to secure or maintain
ratings for the Bonds from Moody's and/or S&P; (k) to provide demand purchase obligations to cause the
Bonds to be authorized purchases for investment companies; (1) to provide for the appointment of a
Remarketing Agent or a successor Trustee, Registrar, Paying Agent or Remarketing Agent; (m) to
provide the procedures required to permit any Owner to separate the right to receive interest on the Bonds
from the right to receive principal thereof and to sell or dispose of such right as contemplated by
Section 1286 of the Code; (n) to provide for any additional procedures, covenants or agreements
necessary to maintain the Tax-Exempt status of the Bonds; (0) to modify, alter, amend or supplement the
34
Indentue in any other respect, if the effective date of such supplement or amendment is a date on which
all Bonds affected thereby are subject to mandatory purchase or if notice by first-class mail of the
proposed amendment or supplement is given to Owners of the Bonds at least 30 days before the effective
date thereof and, on or before such effective date, such Owners have the right to require purchase of their
Bonds; (p) to provide for any additional collateral and the release of any additional collateral in
accordance with the Loan Agreement; and (q) to modify, alter, amend or supplement the Indenture or any
Supplemental Indentue in any other respect, provided that such modification, alteration, amendment or
supplement shall not adversely affect the interests of the Owners of the Bonds in any material respect, as
evidenced by a certificate of an authorized Company representative.
Before the Issuer and the Trustee shall enter into any Supplemental Indenture as described above,
(l) in the case of a Supplemental Indenture entered into pursuant to clauses (1), (n) or (P) of the preceding
paragraph and provided that no Provider Default shall have occured and be continuing, there shall have
been delivered to the Trustee and the Company, the written consent of the Provider, and (2) in all cases,
there shall have been delivered to the Trustee, the Provider and the Company a Favorable Opinion of
Bond Counsel with respect to such Supplemental Indenture and further stating that such Supplemental
Indenture is authorized or permtted by this Indenture and wil, upon the execution and delivery thereof,
be valid and binding upon the Issuer in accordance with its terms.
The Trustee shall provide written notice of any Supplemental Indenture to Moody's, S&P, the
Provider, the Remarketing Agent and the Owners of all Bonds then Outstanding at least 15 days prior to
the effective date of such Supplemental Indenture. Such notice shall state the effective date of such
Supplemental Indenture and shall briefly describe the nature of such Supplemental Indentue and shall
state that a copy thereof is on fie at the Principal Offce of the Trustee for inspection by the parties
mentioned in the preceding sentence.
Except for any Supplemental Indenture entered into for the puroses described in the third
preceding paragraph, the Indenture wil not be modified, altered, amended, supplemented or rescinded
without the consent of the Provider, together with the Owners of not less than 60% in aggregate principal
amount of Bonds outstanding, which shall have the right to consent to and approve any Supplemental
Indenture, provided that, unless approved in wrting by the Provider (unless a Provider Default shall have
occurred and be continuing) and the Owners of all the Bonds then affected thereby, there wil not be
permtted (a) a change in the times, amounts or currency of payment of the principal of, or premium, if
any, or interest on any Bond, a change in the terms of the purchase thereof by the Trustee, or a reduction
in the principal amount or redemption price of an Outstanding Bond or the rate of interest thereon; (b) the
creation of a claim or lien on, or a pledge of, the Revenues raning prior to or on a parity with the claim,
lien or pledge created by the Indentue; or (c) a reduction in the aggregate principal amount of Bonds the
consent of the Owners of which is required to approve any such Supplemental Indentue or which is
required to approve any modification, alteration, amendment or supplement to the Loan Agreement. No
amendment of the Indentue shall be effective without the prior wrtten consent of the Company.
Amendment of the Loan Agreement
Without the consent of or notice to the Owners, the Issuer and the Company may, with the
consent of the Provider (unless a Provider Default shall have occurred and be continuing), modify, alter,
amend or supplement the Loan Agreement, and the Trustee may consent thereto, as may be required
( a) by the provisions of the Loan Agreement and the Indenture; (b) for the purpose of curing any formal
defect, omission, inconsistency or ambiguity therein; (c) to secure or maintain ratings for the Bonds from
Moody's and/or S&P; (d) to add to the covenants and agreements of the Issuer contained in the Loan
Agreement or of the Company or of the Provider contained in any document, other covenants or
agreements thereafter to be observed, or to assign or pledge additional security for any of the Bonds, or to
35
surrender any right or power reserved or conferred upon the Issuer or the Company, which shall not
materially adversely affect the interest of the Owners of the Bonds, as evidenced by a certificate of an
authorized Company representative; (e) to provide demand purchase obligations to cause the Bonds to be
authorized purchases for investment companies; (t) to provide the procedures required to permt any
Owner to separate the right to receive interest on the Bonds from the right to receive principal thereof and
to sell or dispose of such right as contemplated by Section 1286 of the Code; (g) to provide for any
additional procedures, covenants or agreements necessar to maintain the Tax-Exempt status of interest
on the Bonds; (h) to implement an adjustment of the interest rate on the Bonds or in connection with the
appointment of a Remarketing Agent; (i) to provide for a Change of Credit Facility; CD to modify, alter,
amend or supplement the Loan Agreement in any other respect, including amendments which would
otherwise be described in the next succeeding paragraph, if the effective date of such supplement or
amendment is a date on which all of the Bonds affected thereby are subject to mandatory purchase or if
notice by first-class mail of the proposed amendment or supplement is given to Owners of the Bonds at
least 30 days before the effective date thereof and, on or before such effective date, such Owners have the
right to demand purchase of their Bonds; (k) in connection with the delivery and substitution of any
additional collateral and the release of any additional collateral in accordance with the Loan Agreement;
and (1) in connection with any other change therein which does not materially adversely affect the
interests of the Owners in any material respect, as evidenced by a certificate of an authorized Company
representative.
The Issuer wil not enter into, and the Trustee wil not consent to, any other amendment, change
or modification of the Loan Agreement without the written approval or consent of the Provider (unless a
Provider Default shall have occured and be continuing) and the Owners of not less than 60% in
aggregate principal amount of the Bonds then Outstanding; provided, however, that, unless approved in
wrting by the Provider (unless a Provider Default shall have occurred and be continuing) and the Owners
of all Bonds affected thereby, nothing in the Indentue shall permit, or be constred as permitting, a
change in the obligations of the Company to make Loan Payments or payments to the Trustee for the
purchase of Bonds.
Before the Issuer shall enter into, and the Trustee shall consent to, any modification, alteration,
amendment or supplement to the Loan Agreement as described in the two immediately preceding
paragraphs, there shall have been delivered to the Issuer, the Provider and the Trustee a Favorable
Opinion of Bond Counsel and fuher stating that such modification, alteration, amendment or supplement
is authorized or permtted by the Loan Agreement or the Indentue, and wil, upon the execution and
delivery thereof, be valid and binding upon the Issuer in accordance with its terms.
CONTINUING DISCLOSURE
The Bonds are exempt from the continuing disclosure requirements of paragraph (b)(5) of
Rule 15c2-12 (the "Rule") adopted by the Securities and Exchange Commission under the Securties
Exchange Act of 1934, as amended, while they bear interest at a Daily Interest Rate. The Company
covenants in the Loan Agreement that in the event the Bonds are adjusted to an interest rate that would
subject the Bonds to the continuing disclosure requirements of the Rule, the Company wil comply with
the requirements of the Rule and execute a continuing disclosure undertaking for the benefit of the
Beneficial Owners of the Bonds to provide continuing information in accordance with the Rule.
UNDERWRITING
Pursuant to and subject to the conditions set forth in a Bond Purchase Contract to be dated
December 29,2008, Banc of America Securties LLC, as Underwriter, wil agree to purchase the Bonds
from the Issuer at a purchase price of 100% of the principal amount of the Bonds. The Underwiter wil
36
be committed to purchase all of the Bonds if any are purchased. The Company wil agree to pay a fee to
the Underwriter equal to $42,500 in consideration of its services and to reimburse it for its reasonable
expenses in connection therewith. The Company wil also agree to indemnify the Underwriter against
certin liabilties, including liabilties under the federal securities laws, or to contribute to payments the
Underwriter may be required to make in respect thereof. The Underwter may offer and sell the Bonds to
certain dealers and others at prices lower than the initial offering price stated on the cover page hereof.
After the initial public offering, the public offering price and concessions to dealers may be changed from
time to time by the Underwriter.
In the ordinary course of business, the Underwriter has provided investment banking services to
the Company, its subsidiaries or affliates in the past for which it has received customar compensation
and expense reimbursement and may do so again in the futue.
TAX EXEMPTION
Federal tax law contains a number of requirements and restrictions which apply to the Bonds,
including investment restrictions, periodic payments of arbitrage profits to the United States, requirements
regarding the proper use of bond proceeds and the facilties financed therewith and certain other matters.
The Issuer and the Company have covenanted to comply with all requirements that must be satisfied in
order for the interest on the Bonds to be excludable from gross income for federal income ta purposes.
Failure to comply with certain of such covenants could cause interest on the Bonds to become includable
in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds.
Subject to compliance by the Issuer and the Company with the above-referenced covenants, under
present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from gross income of the
owners thereof for federal income tax puroses, except after a failed remarketing as described below and
except for interest on any Bond for any period during which such Bond is owned by a person who is a
substantial user of the Project or any person considered to be related to such person (within the meaning
of Section 103(b)(13) of the Internal Revenue Code of 1954, as amended). Interest on the Bonds is
included, however, as an item of tax preference in computing the federal alternative minimum tax for
individuals and corporations. Bond Counsel wil express no opinion concerning the exclusion from gross
income of interest on any Bond while the Bond is held by a liquidity provider after a failed remarketing of
the Bonds.
In rendering its opinion, Bond Counsel wil rely upon certifications of the Issuer and the
Company with respect to certain material facts solely within the Issuer's and the Company's knowledge
relating to the Facilties and the application of the proceeds of the Bonds and the Prior Bonds. Bond
Counsel's opinion represents its legal judgment based on its review of the law and the facts that it deems
relevant to render such opinion and is not a guarantee of results.
Ownership of the Bonds may result in collateral federal income tax consequences to certain
taxpayers, including, without limitation, corporations subject to the branch profits tax, financial
institutions, certain insurance companies, certin S corporations, individual recipients of Social Security
or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued)
indebtedness to purchase or car tax-exempt obligations. Prospective purchasers of the Bonds should
consult their tax advisors as to the applicability of any such collateral consequences.
The issue price (the "Issue Price") for the Bonds is the price at which a substantial amount of the
Bonds is first sold to the public. The Issue Price of a matuity of the Bonds may be different from the
price set forth, or the price corresponding to the yield set fort, on the cover page hereof.
37
Owners of Bonds who dispose of Bonds prior to the stated matuity (whether by sale, redemption
or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price or
purchase Bonds subsequent to the initial public offering should consult their own tax advisors.
If a Bond is purchased at any time for a price that is less than the Bond's stated redemption price
at maturity, the purchaser wil be treated as having purchased a Bond with market discount subject to the
market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount
is treated as taxable ordinar income and is recognized when a Bond is disposed of (to the extent such
accrued discount does not exceed gain realized) or, at the purchaser's election, as it accrues. The
applicabilty of the market discount rules may adversely affect the liquidity or secondary market price of
such Bond. Purchasers should consult their own tax advisors regarding the potential implications of
market discount with respect to the Bonds.
There are or may be pending in the Congress of the United States legislative proposals, including
some that car retroactive effective dates, that, if enacted, could alter or amend the federal tax matters
referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in
what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior
to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any
pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending
or proposed federal tax legislation.
The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt
obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is
includable in the gross income of the owners thereof for federal income tax purposes. It cannot be
predicted whether or not the Service wil commence an audit of the Bonds. If an audit is commenced,
under current procedures the Service may treat the Issuer as a taxpayer and the Bondholders may have no
right to participate in such procedure. The commencement of an audit could adversely affect the market
value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome.
Payments of interest on, and proceeds of the sale, redemption or matuty of, tax-exempt
obligations, including the Bonds, are in certain cases required to be reported to the Service. Additionally,
backup withholding may apply to any such payments to any Bond owner who fails to provide an accurate
Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical
form, or to any Bond owner who is notified by the Service of a failure to report any interest or dividends
required to be shown on federal income tax returns. The reporting and backup withholding requirements
do not affect the excludabilty of such interest from gross income for federal tax purposes.
Under the laws of the State of Montana, as presently enacted and constred, interest on the Bonds
wil be exempt from the Individual Income Tax imposed pursuant to Title 15, Chapter 30 of the Montana
Code Annotated. However, interest on the Bonds wil be subject to the Montana Corporate License and
Income Tax imposed under Title 15, Chapter 31 of the Montana Code Annotated. Bond Counsel has
expressed no opinion with respect to taxation of interest on the Bonds under any other provision of
Montana Law. Ownership of the Bonds may result in other Montana consequences to certain taxpayers.
Prospective investors should consult their tax advisors as to the applicabilty of any such collateral
consequences.
CERTAIN LEGAL MATTERS
The validity of the Bonds wil be passed upon by Chapman and Cutler LLP, Bond Counsel, and
the Underwriter's obligation to purchase the Bonds is subject to the issuance of Bond Counsel's opinion
with respect thereto. Certain legal matters wil be passed upon for the Company by Marian M. Durkin,
Esq., Senior Vice President, General Counsel and Chief Compliance Offcer of the Company, and
38
Dewey & LeBoeuf LLP. Certain legal matters wil be passed upon for the Bank by Moore & Van Allen,
PLLC. Certain legal matters wil be passed upon for the Underwriter by Kutak Rock LLP. Certin legal
matters wil be passed upon for the City of Forsyth, Montana by Gary Ryder, Esq., City Attorney.
Chapman and Cutler LLP acted as Bond Counsel for the Prior Bonds.
39
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APPENDIX A
AVISTA CORPORATION
Thefollowing information has been obtainedfrom A vista Corporation. Neither the Issuer nor the
Underwriter makes any representation as to the accuracy or completeness of such information.
General
A vista Corporation ("A vista Corporation" or "A vista"), which was incorporated in the Terrtory
of Washington in 1889, is an energy company engaged in the generation, transmission and distribution of
energy and, through its subsidiaries, in other energy related businesses. Our corporate headquarters are in
Spokane, Washington, the hub of the Inland Northwest geographic region. Agrculture, mining and
lumber were the primary industries in the Inland Northwest for many years; today health care, education,
finance, electronic and other manufacturing, toursm and service sectors are growing in importance.
We have two reportable business segments, as follows:
· Avista Utilties-an operating division of Avista Corporation that comprises our regulated
utilty operations. A vista Utilties generates, transmits and distributes electricity and
distributes natural gas. It also engages in wholesale purchases and sales of electricity and
natural gas.
· Advantage IQ-an indirect subsidiar of Avista Corporation that provides facilty
information and cost management services for multi-site customers throughout North
America. Advantage IQ's primary product lines include consolidated biling, resource
accounting, energy analysis and loan profiling services.
A vista Corporation has other businesses, including sheet metal fabrication, ventue fund
investments and real estate investments, as well as certain natural gas storage facilties and a power
purchase agreement held by Avista Energy, Inc. ("Avista Energy"), an indirect wholly-owned subsidiary.
These activities do not represent a reportable business segment.
Advantage IQ, Avista Energy and various other companies are subsidiaries of Avista Capital, Inc.
("A vista Capital"), which is a wholly owned subsidiary of Avista Corporation.
Our mailng address is P.O. Box 3727, Spokane, Washington 99220, Attention: Treasurer, and
our general telephone number is [phone].
A vista Utilties
A vista Utilties provides electric distribution and transmission as well as natural gas distribution
services in pars of eastern Washington and northern Idaho. It also provides natural gas distrbution
service in pars of northeast and southwest Oregon. At September 30, 2008, A vista Utilties supplied
retail electric service to approximately 351,000 customers and retail natural gas service to approximately
310,000 customers across its entire service territory.
In addition to providing electrc transmission and distrbution services, A vista Utilties generates
electricity from its generating facilties, which had a total net capabilty of approximately 1,771 MW at
September 30, 2008. Avista Utilties owns and operates hydroelectrc projects having a total net
capabilty of approximately 979 MW, gas-fired generating facilties having a total net capability of 520
MW, an undivided interest in a coal-fired generating station with entitlement to 222 MW of net capabilty
and a wood-waste fueled generating station having a net capabilty of 50 MW. In addition to its own
resources, A vista Utilties is pary to a number of long-term power purchase and exchange contracts that
increase its available resources.
Advantage IQ
Advantage IQ's invoice processing, auditing, payment services and comprehensive reporting
services are designed to provide companies with critical and easy-to-access information that enables them
to proactively manage and reduce their utilty, telecom and waste management expenses.
Effective July 2, 2008, Advantage IQ acquired Cadence Network, an energy and expense
management company.
Other
A vista's other businesses include, in addition to A vista Energy, several other indirect
subsidiaries, including Avista Ventures, Inc., Pentzer Corporation, Avista Development, Inc. and
Advanced Manufacturing and Development.
Over time as opportities arise, A vista plans to dispose of assets and phase out operations that
do not fit with its overall corporate strategy. However, Avista may invest incremental funds to protect its
existing investments and invest in new businesses that fit with its overall corporate strategy.
Until June 30, 2007, Avista Energy comprised the majority of operations in our Energy
Marketing Resource Management segment. Upon the sale of substantially all of A vista Energy and
Avista Energy Canada's contracts and ongoing operations to a third part on June 30, 2007, the majority
of this segment's operations were ended.
AVAILABLE INFORMATION
General
A vista is subject to the informational reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Avista files annual, quarerly and special reports, proxy
statements and other documents with the Securities and Exchange Commission (the "SEC") (File
No. 1-3701). These documents contain important business and financial information. You may read and
copy any materials Avista fies with the SEC at the SEC's public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for fuher information on the public
reference room. Avista's SEC fiings are also available to the public from the SEC's website at
http://www.sec.gov. Other than those documents or portions of documents incorporated by reference into
this prospectus, information on this website does not constitute a part of this prospectus.
Incorporation of Documents by Reference
We are incorporating into this Official Statement by reference:
. Annual Report on Form lO-K for the year ended December 31, 2007;
. Quarterly Reports on Form 10-Q for the quarers ended March 31, 2008, June 30, 2008 and
September 30, 2008;
A-2
· Current Reports on Form 8-K fied on Februar 20,2008 (to the extent that such information
has been fied and not furished), March 6, 2008, March 19,2008, March 31, 2008, April 8,
2008, May 14,2008, June 30, 2008, August 11,2008, August 18,2008, September 18, 2008,
November 19, 2008, December 1, 2008 (to the extent that such information has been fied
and not furnished), December 16, 2008 and December 18, 2008; and
· all other documents fied by Avista with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Offcial Statement and prior to the termination of
the offering made by this Offcial Statement.
We refer to the documents incorporated into this Offcial Statement by reference as the
"Incorporated Documents". Any statement contained in an Incorporated Document may be modified or
superseded by a statement in this Offcial Statement (if such Incorporated Document was fied prior to the
date of this prospectus) in any prospectus supplement or in any subsequently filed Incorporated
Document.
You may request any of these filings, at no cost, by contacting us at the address or telephone
number shown above. Avista maintains an Internet site at htt://ww.avistacorp.com which contains
information concerning Avista and its affliates. The information contained at Avista's Internet site is not
incorporated in this Offcial Statement by reference and you should not consider it a part of this Offcial
Statement.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of A vista Corporation and subsidiaries as of December
31, 2007 and 2006, and for each of the thee years in the period ended December 3 I, 2007, and the
effectiveness of internal control over financial reporting as of December 31, 2007, incorporated by
reference in this Offcial Statement have been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their reports appearing therein (which reports (1) express an
unqualified opinion on the financial statements and include an explanatory paragraph referrng to certain
changes in accounting and presentation resulting from the impact of recently adopted accounting
standards, and (2) express an unqualified opinion on the effectiveness of internal control over financial
reporting).
A-3
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APPENDIXB
PROPOSED FORM OF OPINION OF BOND COUNSEL
(To BE DATED THE CLOSING DATE)
Re:$17,000,000
City of Forsyth, Montana
Pollution Control Revenue Refuding Bonds
(A vista Corporation Colstrp Project) Series 2008
We hereby certify that we have examined certified copy of the proceedings of record of the City
Council of the City of Forsyth, Montana (the "Issuer"), a municipal corporation and political subdivision
under the laws of the State of Montana, preliminar to the issuance by the Issuer of $17,000,000
aggregate principal amount of its Pollution Control Revenue Refuding Bonds (Avista Corporation
Colstrp Project) Series 2008 (the "Bonds "). The Bonds are being issued pursuant to the provisions of
Sections 90-5-101 to 90-5-114, inclusive, of the Montana Code Annotated, as amended and supplemented
(the "Act").
The Bonds are being issued for the purpose of refunding $17,000,000 aggregate principal amount
of the Issuer's Pollution Control Revenue Refuding Bonds (Avista Corporation Colstrip Project) Series
2008 (the "Refunded Bonds"). The Refunded Bonds were issued for the purose of refinancing varous
portions of the cost of the undivided interest (the "Project") of Avista Corporation, a Washington
corporation (the "Company"), in certain pollution control and solid waste disposal facilties (the
"Pollution Control Facilities") acquired and improved as par of Units 3 and 4 of the Colstrip Plant
located in Rosebud County, Montana.
The proceeds of the Bonds have been deposited in trust with the trustee for the Refunded Bonds
(the "Trustee for the Refunded Bonds "), to be used, together with other funds to be supplied by the
Company to the Trustee for the Refunded Bonds in accordance with the indentue of trst pursuant to
which the Refunded Bonds were issued, to provide for the redemption of the Refuded Bonds on
December 31,2008.
The Bonds matue on March 1, 2034, bear interest from time to time, computed as set forth in
each of the Bonds, and are subject to purchase and redemption prior to maturity at the times, in the
manner and upon the terms set fort in the Bonds. The Bonds are issuable only as fully-registered bonds
without coupons in authorized denominations as provided in the hereinafter-defined Indenture.
From such examination of the proceedings of the City Council of the Issuer referred to above and
from an examination of the Act, we are of the opinion that such proceedings show lawful authority for
said issue of Bonds under the laws of the State of Montana now in force.
Pursuant to a Loan Agreement by and between the Company and the Issuer, dated as of
December 1, 2008 (the "Loan Agreement"), the Issuer has agreed to loan the proceeds of sale of the
Bonds to the Company to provide the moneys necessary, together with other fuds to be provided by or
on behalf of the Company as described in the Loan Agreement, for the refunding of the Refunded Bonds.
The Loan Agreement (an executed counterpart of which has been examined by us) has, in our opinion,
been duly authorized, executed and delivered by the Issuer and, assuming the due authorization, execution
and delivery by the Company, is a valid and binding obligation of the Issuer enforceable in accordance
with its terms, subject to the qualification that the enforcement thereof may be limited by bankrptcy,
insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights generally
or usual equitable principles in the event equitable remedies should be sought.
We have also examined an executed counterpart of the Trust Indentue, dated as of December 1,
2008 (the "Indenture"), by and between the Issuer and The Ban of New York Mellon Trust Company,
N.A., as trustee (the "Trustee"), securing the Bonds and setting forth the covenants and undertakngs of
the Issuer in connection with the Bonds. Under the Indenture, the Revenues (as defined in the Indentue)
of the Issuer from the Loan Agreement, together with certain additional rights of the Issuer thereunder,
are pledged and assigned to the Trustee as security for the Bonds. From such examination, we are of the
opinion that the proceedings of the City Council of the Issuer referred to above show lawful authority for
the execution and delivery of the Indenture, that the Indentue is a valid and binding obligation of the
Issuer, enforceable in accordance with its terms, subject to the qualification that the enforcement thereof
may be limited by bankptcy, insolvency, reorganization and other similar laws relating to the
enforcement of creditors' rights generally or usual equitable principles in the event equitable remedies
should be sought, that the Bonds have been validly issued under the Indentue and that all requirements
under the Indenture precedent to delivery of the Bonds have been satisfied.
We further certify that we have examined the form of bond prescribed in the Indenture and find
the same to be in due form of law and in our opinion the Bonds, to the amount named, are valid and
legally binding upon the Issuer according to the import thereof and, as provided in the Indenture and the
Bonds, the principal of and premium, if any, and interest on the Bonds are payable by the Issuer solely out
of Revenues of the Issuer from the Loan Agreement and all moneys and investments held by the Trustee
under the Indenture or otherwise available to the Trustee for the payment thereof.
It is our opinion that, subject to compliance by the Company and the Issuer with certin
covenants, under present law, interest on the Bonds is excludable from gross income of the owners
thereof for federal income tax purposes, except after a failed remarketing as described below and except
for interest on any Bond for any period durng which such Bond is owned by a person who is a substantial
. user of the Project or any person considered to be related to such person (within the meaning of
Section 103(b)(13) of the Internal Revenue Code of 1954, as amended); however, such interest on the
Bonds is included as an item of tax preference in computing the federal alternative minimum tax for
individuals and corporations under the Internal Revenue Code of 1986, as amended (the "Code"). Failure
to comply with certain of such Company and Issuer covenants could cause the interest on the Bonds to be
includable in gross income for federal income tax purposes retroactively to the date of issuance of the
Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we
express no opinion regarding any such collateral consequences arsing with respect to the Bonds. We
express no opinion concerning the exclusion of interest from gross income on any Bond while the Bond is
held by the liquidity provider after a failed remarketing of the Bonds.
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It is our opinion that, under the laws of the State of Montana, as presently enacted and construed,
interest on the Bonds wil be exempt from the Montaa Individual Income Tax imposed pursuant to
Title 15, Chapter 30 of the Montana Code Anotated, as amended and supplemented. However, interest
on the Bonds wil be subject to the Montana Corporate License and Income Tax imposed pursuant to
Title 15, Chapter 31 of the Montana Code Anotated, as amended and supplemented. We express no
opinion with respect to taxation of interest on the Bonds under any other provision of Montana law.
Ownership of the Bonds may result in other Montana tax consequences to certain taxpayers, and we
express no opinion regarding such collateral consequences arising with respect to the Bonds.
We express no opinion concerning (a) the obligations of the Company under the Loan
Agreement, (b) the title to, the description of, or the existence of any liens, charges or encumbrances on
the Pollution Control Facilties or the Project of which they are a part or (c) the application of the
proceeds of sale of the Bonds to the payment and cancellation of the Refunded Bonds.
As Bond Counsel, we express no opinion herein as to the accuracy, adequacy or completeness of
any information furnished to any person in connection with any offer or sale of the Bonds.
In rendering this opinion, we have relied upon certifications of the Issuer and the Company with
respect to certain material facts within the Issuer's and Company's knowledge. Our opinion represents
our legal judgment based upon our review of the law and the facts that we deem relevant to render such
opinion, and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no
obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter
come to our attention or any changes in law that may hereafter occur.
Respectfully submitted,
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