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HomeMy WebLinkAboutVarious Purposes 288,900ONE CHASE MANHATTAN pLAZA NEW YORK, NY IOOO5 WWW.HAWKINS.COM The Town Board of the Town of Southold, in the County of Suffolk, New York December 16, 2008 Ladies and Gentlemen: We have examined a record of proceedings relating to the issuance of the $299,800 Bond Anticpation Note for Various Purposes-2008 of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York. Said Note is dated December 16, 2008, matures September 4, 2009, is numbered 1, bears interest at the rate of three per centum (3.00%) per annum, payable at maturity, is of the denomination of $299,800, is payable to bearer without coupons and registrable as to both principal and interest, and is issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York, the bond resolutions adopted by the Town Board their respective dates, authorizing the issuance of serial bonds for various purposes, and the Certificate of Determination executed by the Supervisor on December 16, 2008 Said bond anticipation note is a temporary obligation issued in anticipation of the sale of permanent serial bonds. In our opinion, the Note is a valid and legally binding general obligation of the Town tbr which the Town has validly pledged its faith and credit and, unless paid from other sources, all the taxable real property within the Town is subject to the levy of ad valorem real estate taxes to pay the Note and interest thereon without limitation of rate or amount. The enforceability of rights or remedies with respect to such Note may be limited by bankruptcy, insolvency, or other laws affecting creditors' rights or remedies heretofore or hereafter enacted. The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements that must be met subsequent to the issuance and delivery of the Note in order that interest on the Note be and remain excludable from gross income under Section 103 of the Code. The Town Supervisor, in executing the Arbitrage and Use of Proceeds Certificate, has certified to the effect that the Town will comply with the provisions and procedures set forth therein and that it will do and perform all acts and things necessary or desirable to assure that interest paid on the Note is excludable from gross income under Section 103 of the Code. We have examined such Arbitrage and Use of Proceeds Certificate of the Town delivered concurrently with the delivery of the Note, and in our opinion, such certificate contains provisions and procedures under which such requirements can be met In our opinion, under existing statutes and court decisions, (i) interest on the Note is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code, and (ii) interest on the Note is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In rendering the opinion in this paragraph, we have (i) relied on the representations, certifications of fact, and statements of reasonable expectations made by the Town in the Arbitrage and Use of Proceeds Certificate and other documents in connection with the Note, and (ii) assumed compliance by the Town with certain provisions and procedures set forth in the Arbitrage and Use of Proceeds Certificate relating to compliance with applicable requirements of the Code to assure the exclusion of interest on the Note from gross income under Section 103 of the Code Further, in our opinion, under existing statutes, interest on the Note is exempt from personal income taxes of New York State and its political subdivisions, including The City of New York. Except as stated above, we express no opinion regarding any other federal or state tax consequences with respect to the Note. We render our opinion under existing statutes and court decisions as of the issue date, and we assume no obligation to update our opinion after the issue date to reflect any future action, fact or circumstance, or change in law or interpretation, or otherwise. We express no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for federal income tax purposes of interest on the Note, or on the exemption from state and local tax law of interest on the Note Other than such record of proceedings, we have not been requested to examine or review and have not examined or reviewed the accuracy or sufficiency of any additional proceedings, reports, correspondence, financial statements or other documents, containing financial or other information relative to the Town, which have been or may hereafter be furnished or disclosed to purchasers of said Note, and we express no opinion with respect to any such financial or other information or the accuracy or sufficiency thereo£ The form of said Note is prescribed by Schedule B, 2 of the Local Finance Law of the State of New York, but we have not examined the executed Note This opinion is issued as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any action hereafter taken or not taken, or any facts or circumstances, or changes in law or in interpretations thereof, that may hereafter occur, or for any other reason. Very truly yours, No. I $299,800 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD BOND ANTICPATION NOTE FOR VARIOUS PURPOSES-2008 The Town of Southold, in the County of Suflblk, a municipal corporation of the State of New acknowledges itself indebted and for value received promises to pay to the bearer of this Note, or if it be registered holder, the sum of TWO HUNDRED NINETY-NINE THOUSAND EIGHT HUNDRED DOLLARS ($299,800) on the 4th day of September, 2009, together with interest thereon from the date hereof at the rate of three per centum (3.00%) per annum, payable at maturity Both principal of and interest on this Note will be paid in lawful mone~ America, at Bridgehampton National Bank, Southold, New York At the request of the holder, the Town Clerk shall convert this Note into a registered Note by registering it in the name of the holder in the books of the Town kept in the office of such Town Clerk end endorsing a certificate of such registration hereon, aRer which both principal of end interest on this Note shall be payable only to the registered holder, his legal representatives, successors or transferees. This Note shall then be transferable only upon presentation to such Town Clerk with a written transfar of title end such Town Clerk shall thereupon register this Note in the name of the transferee in his books end shall endorse a certificate of such registration bereon~ Such transfer shall be dated, end signed by the registered holdeL or his legal representatives, end it shall be duly acknowledged or proved, or in the alternative the signature thereto shall be certified as to its genuineness by en officer ora bank or trust company located end authorized to do business in this State. This Note is the only Note ofen authorized issue, the principal mount of which is $299,800. This Note is issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York, two bond resolutions adopted by the Town Board on their respective dates, authorizing the issuance of serial bonds for various purposes in end for the Town end the Certificate of Determination executed by the Supervisor on December 16, 2008. The faith end credit of such Town of Southold are hereby irrevocably pledged for the punctual payment of the principal of and interest on this Note according to its terms. It is hereby certified end recited that all conditions, acts and things required by the Constitution and statutes of the State of New York to exist, to have happened end to have been performed precedent to and in the issuance of this Note, exist, have happened and have been performed, end that this Note, together with all other indebtedness of such Town of Southold, is within every debt end other limit prescribed by the Constitution end laws of such State. IN WITNESS WHEREOF, the Town of Southold has caused this Note to be signed by its Supervisor, end its corporate seal (or a facsimile thereof) to be affixed, imprinted, engraved, or otherwise reproduced hereon and attested by its Town Clerk and this Note to be dated as of the 16th day of December, 2008. (SEAL) ATTEST: ~Town Clerk - TOWN OF SOUTHOLD CERTIFICATE OF DETERMINATION BY THE SUPERVISOR RELATIVE TO AUTHORIZATION, SALE, ISSUANCE, FORM AND CONTENTS OF THE $299,800 BOND ANTICIPATION NOTE FOR VARIOUS PURPOSES-2008 OF THE TOWN OF SOUTHOLD, NEW YORK I, Scott A. Russell, Supervisor of the Town of Southold, New York (herein called the "Town"), HEREBY CERTIFY that pursuant to the powers and duties delegated to me, the chief fiscal officer of the Town, by the Town Board of the Town, pursuant to the bond resolutions duly adopted and as referred to in paragraphs 1 and 2 hereof, and subject to the limitations prescribed in said bond resolutions, I have made the following determinations: 1. A bond anticipation note of the Town in the principal amount of $199,800 shall be issued in anticipation of the sale of serial bonds authorized pursuant to the resolution entitled: Bond Resolution of the Town of Southold, New York, adopted September 9, 2008, appropriating $338,800 for the increase and improvement of facilities of the Mattituck Park District, including the expenditure of $39,000 from the District's operating fund and $100,000 available in the Town's recreation fund to pay a part of said appropriation; and authorizing the issuance of $199,800 serial bonds finance the balance of said appropriation," duly adopted by the Town Board on the date therein referred to. 2. A bond anticipation note of the Town in the principal amount of $100,000 shall be issued in anticipation of the sale of serial bonds authorized pursuant to the resolution entitled: Bond Resolution of the Town of Southold, New York, adopted June 17, 2008, appropriating $590,000 for the increase and improvement of facilities of the Southold Solid Waste Management District, in said Town, and authorizing the issuance of $590,000 serial bonds of said Town to finance said appropriation," duly adopted by the Town Board on the date therein referred to. 3. Said $199,800 note and said $100,000 note shall be combined for the purpose of sale into a single note issue in the aggregate principal amount of $299,800 (hereina~er referred to as the "Note"). 534101 1 030898 CERT 4. The terms, form and details of said Note shall be as follows: Amount and Title: $299,800 Bond Anticpation Note for Various Purposes- 2008 Dated: December 16 2008 Matures: September 4, 2009 Number and Denomination: Number 1, at $299,800 Interest Rate per annum: 3.00% Form of Note: Substantially in accordance with form prescribed by Schedule B, 2 of the Local Finance Law of the State of New York. 5. Said Note is not issued in renewal of any note or notes. 6. The amount of bond anticipation notes originally issued in anticipation of the issuance of serial bonds authorized pursuant to the resolutions referred to in paragraph 1 and 2, hereof, including the Note, are (1) $199,800 and (2) $590,000 and the respective amount of bond anticipation notes which will be outstanding after the issuance of the Note, including said Note, will be (1) $199,800 and (2) $590,000 7. The serial bonds authorized pursuant to the resolution referred to in paragraphs 1 and 2 hereof, are for improvements which are assessable. 8. Pursuant to said powers and duties delegated to me, I DO HEREBY AWARD AND SELL said Note to Bridgehampton National Bank, Southold, New York, for the purchase price of $299,800, plus accrued interest, if any, from the date of said Note to the date of delivery thereof, and I FURTHER DETERMINE that said Note shall be payable as to both principal and interest at Bridgehampton National Bank, Southold, New York, and shall bear interest at the rate of three per centum (3.00%) per annum, payable at maturity. 9. Said Note shall be executed in the name of the Town by its Supervisor and the corporate seal of the Town (or a facsimile thereof) shall be affixed, imprinted, engraved or otherwise reproduced thereon and attested by its Town Clerk I HEREBY FURTHER CERTIFY that the powers and duties delegated to me to issue and sell the Note hereinabove referred to are in full force and effect and have not been modified, amended or revoked. 1N WITNESS WHEREOF, I have hereunto set my hand this 16th day of Supervisor 534101.1 030898 CERT CLERK' S CERTIFICATE I, Elizabeth A. Neville, Town Clerk of the Town of Southold, in the County of Suffolk, New York, HEREBY CERTIFY that I have compared the foregoing copy of the Certificate of Determination executed by the Supervisor and the same is a true and complete copy of the Certificate filed with said Town in the office of the Town Clerk on or before the 16th day of December, 2008; and I FURTHER CERTIFY that no resolution electing to reassume any of the powers or duties mentioned in said Certificate and delegated to the Supervisor by the resolutions cited in said Certificate has been adopted by said Town Board. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said Town as of the 16th day of December, 2008 (SEAL) Town Clerk 534101 1 030898 CERT CERTIFICATES AS TO SIGNATURES, LITIGATION, AND DELIVERY AND PAYMENT WE, the undersigned officers of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York (herein referred to as the "Town"), HEREBY CERTIFY that on or before December 16 2008, we officially signed and properly executed by manual signatures the $299,800 Bond Anticpation Note for Various Purposes-2008 (the "Note") of the Town, payable to bearer and otherwise described in Schedule A annexed hereto and by this reference made a part hereof, and that at the time of such signing and execution and on the date hereof we were and are the duly chosen, qualified and acting officers of the Town authorized to execute said Note and holding the respective offices indicated by the titles set opposite our signatures hereto for terms expiring on the respective dates set opposite such titles. WE FURTHER CERTIFY that no litigation of any nature is now pending or threatened restraining or enjoining the issuance or delivery of said Note or the levy or collection of any taxes to pay the interest on or principal of said Note, or in any manner questioning the authority or proceedings for the issuance of said Note or for the levy or collection of said taxes, or relating to said Note or affecting the validity thereof or the levy or collection of said taxes, that neither the corporate existence or boundaries of the Town nor the title of any of the present officers thereof to their respective offices is being contested, and that no authority or proceedings for the issuance of said Note has or have been repealed, revoked or rescinded. WE FURTHER CERTIFY that the seal which is impressed upon this certificate has been affixed, impressed, imprinted or otherwise reproduced upon said Note and is the legally adopted, proper and only official corporate seal of the Town. And I, Scott A. Russell, Supervisor, HEREBY FURTHER CERTIFY that on December 16 2008, I delivered or caused the delivery of said Note to Bridgehampton National Bank, Southold, New York, the purchaser thereof, and that at the time of such delivery of said Note, I received from said purchaser the amount hereinbelow stated, in full payment for said Note, computed as follows: Price ..................................................................... $299,800.00 Interest on said Note accrued to the date of such delivery ............................................ 0.00 Amount Received .......................................... $299,800.00 534101.1 030898 CERT 1N WITNESS WHEREOF, we have hereunto set our hands and said corporate seal has hereunto been affixed this 16th day of December, 2008. Term of Office Expires Da*r~,"o~-Z -5 zotl Title Supervisor Town Clerk (SEAL) I HEREBY CERTIFY that the signatures of the officers of the above-named Town, which appear above, are true and genuine and that I know said officers and know them to ~/~~pposite their signatures. ~ ! (gig~ture) "' (~le) ' ' ~amdo~Bank) ' 534101 1 030898 CERT ATTORNEY'S CERTIFICATE I, Kieran M. Corcoran, HEREBY CERTIFY that I am a licensed attorney at law of the State of New York, having offices at 53095 Main Road, Southold, New York, and am the duly chosen, qualified and acting Assistant Town Attorney of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York (herein referred to as the "Town"), that no litigation of any nature is now pending or threatened restraining or enjoining the issuance or delivery of the Note of the Town, payable bearer and otherwise described as set forth in Schedule A annexed hereto and by this reference made a part hereof or the levy or collection of any taxes to pay the interest on or principal of said Note, or in any manner questioning the authority or proceedings for the issuance of said Note or for the levy or collection of said taxes, or relating to said Note or affecting the validity thereof or the levy or collection of said taxes, that neither the corporate existence or boundaries of the Town nor the title of any of the present officers thereof to their respective offices is being contested, and that no authority or proceedings for the issuance of said Note has or have been repealed, revoked or rescinded. 1N WITNESS WHEREOF, I have hereunto set my hand this 16th day of Attorney 534101 1 030898 CERT SCHEDULE A Amount and Title: Dated: Matures: Number and Denomination: Interest Rate per annum: $299,800 Bond Anticipation Note for Various Purposes-2008 December 16 2008 September 4, 2009 Number 1, at $299,800 3.00% 534101 1 030898 CERT AFFIDAVIT AS TO NO CONFLICT OF INTEREST STATE OF NEW YORK COUNTY OF SUFFOLK Elizabeth A. Neville, being duly sworn upon her oath deposes and says: 1. I am the duly elected, qualified and acting Town Clerk of the Town of Southold, in the County of Suffolk, New York (herein and in Schedule A annexed hereto called the "Town!'); 2. That with respect to the contract of sale of the Note of the Town described in the Certificate of Determination executed by the Supervisor on the 16th day of December, 2008, to the financial institution indicated in such Certificate, I have made a careful inquiry of each officer and employee of the Town having the power or duty to (a) negotiate, prepare, authorize or approve the contract or authorize or approve payment thereunder, (b) audit bills or claims under the contract, or (c) appoint an officer or employee who has any of the powers or duties set forth above, as to whether or not such officer or employee has an interest (as defined pursuant to Article 18 of the General Municipal Law) in such contract; 3. That upon information and belief, as a result of such inquiry, no such officer or employee has any such interest in said contract unless otherwise noted in Schedule A annexed hereto and by this reference made a part hereof Town Clerk Subscribed and sworn to before me this /~ day of December, 2008. LYNDA M BOHN NOTARY PUBLIC, State of New York NO. 01BO6020932, Suffolk Cppnty Term Expires March 8, 20./J_ 5341011 030898 CERT SCHEDULE A 1 , is a stockholder of the Purchaser owning or controlling, directly or indirectly, less than five per centum (5%) of the outstanding stock thereof but no disclosure of such interest by said officer is required pursuant to said Law. 2. , has an interest in the Purchaser solely by reason of employment as an officer or employee thereof, but the remuneration of such employment will not be directly affected as a result of said contract and the duties of such employment do not directly involve the procurement, preparation or performance of any such part of such contract. 3. _, has publicly disclosed the nature and extent of such interest in writing to the governing board of the Town. Such written disclosure has been made a part of and set forth in the official record of proceedings of the Town. 534101 1 030898 CERT ARBITRAGE AND USE OF PROCEEDS CERTIFICATE I, Scott A. Russell, Supervisor of the Town of Southold, in the County of Suffolk, New York (the "Issuer"), HEREBY CERTIFY and reasonably expect with respect to the issuance of the Issuer's $299,800 Bond Anticipation Note for Various Purposes-2008 (hereinat'ter referred to as the "Note" or "Notes"), dated and issued on December 16 2008, as follows: Unless the context clearly requires otherwise, all capitalized terms used but not otherwise defined herein shall have the meanings set forth in Article II hereof or in the Resolution, the Code or the Regulations (each as defined below). ARTICLE I GENERAL 1 1 Authority of Signatory. I am an officer of the Issuer charged with the responsibility for the execution, delivery and issuance of the Note and am acting for and on behalf of the Issuer in signing this Arbitrage and Use of Proceeds Certificate (the "Certificate"). 1.2 Description of Notes. The Issuer represents that the Note is sold at the aggregate Issue Price and is further described as set forth in the Certificate of Determination of the Issuer. 1.3 Purpose of Certificate. This Certificate is made for the purpose of establishing evidence of the expectations of the Issuer as of the Issue Date as to future events regarding the amount and use of proceeds of the Note. It is intended and may be relied upon for purposes of Sections 103 and 141 through 150 of the Code, and as a certification described in Section 1.148-2(b)(2) of the Regulations. This Certificate is executed and delivered as part of the record of proceedings in connection with the issuance of the Note. The provisiohs of this Certificate constitute a contractual obligation of the Issuer in consideration for the purchase of and payment for the Note by the purchaser(s) thereof 1.4 No Hedge Bonds. The Issuer reasonably expects that 85% of the Spendable Proceeds of the Note will be expended for governmental purposes within 3 years of the Issue Date In addition, not more than 50% of the Proceeds of the Notes are being invested in investments not acquired to carry out the governmental purposes of the issue at a guaranteed yield for 4 years or more. 1.5 Reasonable Expectations. This Certificate sets forth the facts, estimates and circumstances now in existence which form the basis for the Issuer's expectation that the proceeds of the Note will not be used in a manner that would cause the Note to be an Arbitrage Bond under Section 148 of the Code or a Private Activity Bond under Sections 103 and 141 of the Code. To the best of my knowledge and belief, such expectation is reasonable and there are no other facts, estimates or circumstances that would materially change that expectation. 1 6 No Composite Issue. No other tax-exempt governmental obligations have been sold fewer than 15 days prior to, or will be sold fewer than 15 days after, the sale date of 5341011 030898 CERT the Note, pursuant to the same plan of financing which are expected to be paid from substantially the same source of funds as the Note. 1.7 Registration. The Note will be issued in registered form 1.8 No Federal Guarantee. The Issuer represents and covenants that, except for the gross proceeds of the Note which are: (a) invested during the temporary period referred to in Article III, (b) held in any refunding escrow or (c) invested in obligations of the United States Treasury or in obligations issued pursuant to Section 2In(d)(3) of the Federal Home Loan Bank Act, as amended by Section 511(a) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, or any successor provision to Section 2 lB(d)(3) of the Federal Home Loan Bank Act, as amended: (i) No portion of the payment of principal or interest with respect to the Note is or will be guaranteed directly or indirectly by the United States or any agency or instrumentality thereof (in this Certificate "federally guaranteed"); and (ii) No portion of the Gross Proceeds of the Note in excess of five percent of such Gross Proceeds is or will be (A) used in making loans the payment of principal or interest with respect to which is to be federally guaranteed, or 03) invested directly or indirectly in federally insured deposits or accounts. 1.9 Tax Representation. The Issuer expects to be able to and will comply with all the procedures and provisions set forth in this Certificate, and will do and perform all acts and things necessary and desirable within its reasonable control in order to assure that interest paid on the Note will be excluded from gross income of the owners of the Note for the purpose of federal income taxation. 1.10 Noncompliance. The Issuer shall perform each of the obligations undertaken by it in this Certificate unless, in the written opinion of Bond Counsel, noncompliance with such obligations will not cause interest on the Note to be included in gross income for purposes of Federal income taxation. 1.11 Reliance by Bond Counsel. The representations of the Issuer expressed in this Certificate may be relied upon by Bond Counsel in connection with the rendering of any opinion with respect to the Note. 1.12 IRS Form 8038-G. The Issuer will file IRS Form 8038-G by the 15th day of the second month after the calendar quarter in which the Note is issued, and such IRS Form 8038-G shall be included as part of the record of proceedings relating to the issuance of the Note. 534101 1 030898 CERT ARTICLE II USE OF PROJECT AND PROCEEDS 2 1 Authorization. (a) The Note is authorized to be issued pursuant to applicable provisions of the laws of the State of New York and bond resolutions duly adopted by the Town Board on their respective dates (the "Resolutions"), as referred to in the Certificate of Determination executed by the Supervisor as of December 16, 2008. (b) For purposes of this Article II, the term "Original Proceeds" means the Sale Proceeds received (or deemed to be received) by the Issuer from the sale of the Note, net of the amount used or to be used for the payment of all costs and expenses associated with issuing the Note, and excluding accrued interest. 2.2 Purpose of Issue. The Note is being issued to provide funds for various purposes in and for the Town (referred to herein as the "Project" or "Projects"), as further described in the Resolutions. 2.3 Use of Proceeds. The proceeds of the sale of the Note in the aggregate principal amount of $299,800 will be used to provide original financing for the Project. 2.4 Ownership/Lease/Sale. The Project wilt be owned by the Issuer and will not be leased to any person who is not a state or local governmental unit. It will not be sold or othenvise disposed of, in whole or in part, except for incidental sales of surplus items the proceeds of which will not constitute net operating profits or net capital profits to the Issuer, prior to the last maturity date of the Note, 2.5 Private Loans. Not more than the lesser of 5 percent or $5,000,000 of the Proceeds of the Notes will be used directly or indirectly to make loans to persons other than a state or local governmental unit. 2.6 Private Use. Either (a) the aggregate amount of the Proceeds of the Note used directly or indirectly in a trade or business carried on by a person other than a state or local governmental unit ("Private Use") will not exceed 10% of such Proceeds or (b) not more than 10% of the principal and interest due on the Note during the term of the Note, under the terms of the Note or any underlying arrangement, directly or indirectly, (i) will be secured by any interest in property used or to be used for a Private Use or in payments in respect of property used or to be used for a Private Use, or (ii) will be derived from payments, whether or not to the Issuer, in respect of property or borrowed money used or to be used for a Private Use. 2.7 Unrelated/Related Disproportionate Use. None of the Proceeds of the Note will be used directly or indirectly in the trade or business of a person other than a state or local governmental unit that is unrelated or related and disproportionate to the governmental use of the property being financed, including any private loan financing described in Section 2.5 above which meets this test. For purposes of this Certificate, Proceeds of the Note are allocable to an unrelated Private Use if such use is neither directly nor operationally related to a governmental use and Proceeds of the Note are allocable to a disproportionate related Private Use to the extent that the Proceeds of the Note which are to be used to finance property used by a 534101 1 030898 CERT person other than a state or local governmental unit in a trade or business which is related to the governmental use of the property referred to in Section 2.6 above, exceeds the Proceeds of the Note which are to be used for the governmental use to which such Private Use relates 2.8 Private Use Defined. For purposes of Sections 2.6 and 2.7 above, unless otherwise provided in this Certificate, a Private Use consists of any contract or other arrangement including, without limitation, leases, management contracts, guarantee contracts, take or pay contracts, or put or pay contracts, which provides for a use of the Project or any portion of the Project by a person or persons who are not state or local governmental units on a basis different than the general public. The Issuer has not and will not enter into any such contract or arrangement without first consulting with Bond Counsel. 29 Reimbursement. Proceeds of the Note used to reimburse the Issuer for amounts expended in anticipation of the issuance of the Note are considered expended on the date of the reimbursement but only if (i) a declaration of intent to reimburse such expenditure is made prior to or within 60 days after the date of the original expenditure (except for certain preliminary expenditures described in Section 1.150-2(0(2)) of the Regulations), and (ii) the reimbursement is made within 18 months of the later of the placed-in-service date of the Project or the date of the original expenditure (but in no event more than three years after the original expenditure was paid). Any such expenditures to be reimbursed must be Capital Expenditures. The Issuer will not use any Proceeds of the Note for any reimbursement purpose that does not otherwise qualify as an expenditure pursuant to Section 1.150-2 of the Regulations or prior law, as applicable. ARTICLE 11I ARBITRAGE 3.1 Temporary Period. (a) The Issuer has entered into or will enter into within six months from the date of this Certificate, binding commitment(s) for the acquisition, construction or accomplishment of the Project, and the amount of such commitment(s) with respect to such Project will or do exceed the amount equal to 5% of $299,800, being the aggregate amount of obligations to be issued for such Project. (b) In the event the Project has not been completed, work on the acquisition, construction or accomplishment of such Project will proceed or is proceeding with due diligence to completion and the final sales proceeds will be allocated to expenditures with due diligence. (c) It is reasonably expected that at least 85 percent of the net sale proceeds of such Notes will be expended within three years from the date of this Certificate. Accordingly, the sale proceeds and investment proceeds of the Notes may be invested without restriction as to yield for a temporary period of 3 years from the date hereof, subject to the rebate requirements set forth in Article IV of this Certificate. 3.2 cost of the Project No Excess Proceeds. The total proceeds of sale of do not exceed the total 534101 1 030898 CERT 3.3 Source of Repayment Funds. The Notes will be paid from taxes and other revenues of the Issuer. 3.4 Debt Service Fund. The taxes used to pay principal and interest on the Notes, whether or not deposited in a debt service fund, will be expended within 13 months of the date of deposit in such fund, or the date of their accumulation, in the payment of debt service on the Notes. Any amounts received from the investment of such deposit or accumulation will be expended within one year of receipt. The debt service fund, if any, will be used to achieve a proper matching of revenues and debt service and will be depleted at least annually except for a reasonable carryover amount which will not exceed the greater of the earnings on such fund for the immediately preceding bond year or one-twelfth of the debt service on the Notes for the immediately preceding bond year. 3.5 Sinking Funds. Except for the debt service fund described herein the Issuer has not created or established, and does not expect to create or establish, any sinking fund or other similar fund which the Issuer reasonably expects to use to pay principal or interest on the Notes. 3.6 Universal Cap. On each Valuation Date, the Issuer shall value the Universal Cap and the Nonpurpose Investments allocable to the Notes thereunder. Nonpurpose Investments in a bona fide debt service fund such as the Bona Fide Debt Service Fund do not reduce the aggregate value of Nonpurpose Investments that may be allocated to the Notes under the Universal Cap. Nonpurpose Investments cease to be allocated to the Notes to the extent such Nonpurpose Investments have been expended for the governmental purpose of the issue, or to the extent the value thereof exceeds the value permitted to be allocated to the issue under the Universal Cap. To the extent Nonpurpose Investments cease to be allocated to an issue and the value of the Universal Cap exceeds the value of the remaining Nonpurpose Investment allocated to such issue, other Nonpurpose Investments may become allocated to the issue, provided that such Nonpurpose Investments are not already properly allocated to another issue and provided that such allocation does not cause the value of Nonpurpose Investments allocated to the Notes to exceed the Universal Cap. Generally, if Gross Proceeds of the Notes invested in Nonpurpose Investments exceed the Universal Cap on a Valuation Date, such Nonpurpose Investments cease to be allocated to the Notes in the following order: (i) amounts allocable to Replacement Proceeds, (ii) amounts allocable to Transferred Proceeds, (iii) amounts allocable to Sale Proceeds and Investment Proceeds of the Notes. Where a Nonpurpose Investment ceases to be allocated to the Notes, such Nonpurpose Investment is susceptible of re-allocation under the Universal Cap calculated with respect to another bond issue. A Nonpurpose Investment which is reallocated to another bond issue may be valued under the same valuation method pursuant to which it was valued for purposes of applying the Universal Cap with respect to the Notes. 534101.1 030898 CERT Notwithstanding anything herein to the contrary, the failure to perform the determination of Nonpurpose Investments allocable to the Notes as of a Valuation Date shall not be considered a violation of this provision if the value of Nonpurpose Investments allocated to the Notes did not exceed the value of the Notes outstanding on such date. 3.7 Yield. When used in this Certificate, the term "Yield" means the computation as described in Exhibit A and in connection with the Notes, refers to the yield computed by the actuarial or present worth method using a 360-day year and semiannual compounding, and means that discount rate which, when used in computing the present worth of all payments of principal and interest to be paid on an obligation, produces an amount equal to the Issue Price thereof The Yield on the Notes is as shown in Form 8038-G. 3.8 Yield Reduction Payments. The Issuer may make yield reduction payments, as such term is defined in the Regulations, to reduce the yield on investments under certain circumstances. The Issuer will consult with Bond Counsel prior to making any such payments. 3.9 No Replacement Proceeds. The weighted average maturity of the Notes, as set forth in the Form 8038-G, does not exceed 120 percent of the average reasonably expected useful life of the Project. 3.10 No Prohibited Payments. The Issuer has not entered into and will not enter into any transaction to reduce the yield on the investment of the proceeds of the Notes in such a manner that the amount to be rebated to the federal government is less than it would have been had the transaction been at arm's length and the yield on the issue not been relevant to either party. 3.11 Rebate Options. With respect to the investment of the proceeds of the Notes, the Issuer will: (a) invest all gross proceeds at all times from the date hereof until expended in investments not constituting investment property for purposes of Section 148 of the Code such as obligations of a state or of a political subdivision of a state, the interest on which is excluded from gross income for purposes of Federal income taxation under Section 103 of the Code and is not a preference item for purposes of the alternative minimum tax imposed by Section 55 of the Code, (b) invest all gross proceeds in obligations having a yield that does not exceed the yield on the Notes, or (c) comply with the provisions regarding rebate described in Article IV below. 534101 1 030898 CERT ARTICLE IV Rebate 4 I Rebate Compliance. The Issuer understands that the continued non- inclusion of interest on the Notes for purposes of federal income taxation depends, in part, upon compliance with the arbitrage limitations imposed by Section 148 of the Code, including the rebate requirements described in Section 42 hereof with respect to the Notes. 4.2 Rebate Requirement for the Notes. Section 148(0 of the Code requires the payment to the United States of the excess of the amount earned on the investment of Gross Proceeds in Nonpurpose Investments over the amount that would have been earned had the amount so invested been invested at a rate equal to the Yield on the Notes, together with any income attributable to such excess. Except as provided below, all Gross Proceeds of the Notes are subject to this requirement. In order to meet the rebate requirement of the Code the Issuer must take the following actions: (a) Record of Investments. The Issuer will record the date of receipt, amount and source of any Gross Proceeds, e.g., proceeds from the sale of the Notes, loan repayments, investment earnings. For each Nonpurpose Investment acquired with or allocated to Gross Proceeds of the Issue, the Issuer will record the purchase date or allocation date of such investment, its purchase price (excluding any broker or dealer's commission or discount), or, if not acquired directly with Gross Proceeds, its Value on the date the Nonpurpose Investment is allocated to Gross Proceeds, accrued interest due on its purchase date or allocation date, its face amount, its coupon rate, its Yield, the frequency of its interest payment, its disposition price (excluding any broker or dealer's commission or discount), the accrued interest due on its disposition date and its disposition date. In addition, the Issuer will record the date and amount of all expenditures of Bond proceeds, including expenditures for rebate, other than expenditures to acquire investments. (b) Computation of Rebate Amount. Subject to the special rules set forth in paragraphs (c), (d), (e) and (f) of this Section, the Issuer will determine the Rebate Amount on each Computation Date. The Rebate Amount as of any Computation Date is the excess of the Future Value of all receipts with respect to Nonpurpose Investments over the Future Value of all payments with respect to the purchase of Nonpurpose Investments or the allocation of such investments to the proceeds of the Notes, determined as of each Computation Date. To the extent amounts received from investments are reinvested, these amounts may be netted against each other and not taken into account in the Computation of Rebate Amount. The Issuer shall determine the nonpurpose receipts and nonpurpose payments as described below. (i) Receipts. Receipts with respect to Nonpurpose Investments include (i) actual receipts, amounts actually or constructively received with respect to an investment, reduced by Qualified Administrative Expenses (ii) disposition receipts, the Fair Market Value of investments deemed to be sold on the date the investment ceases to be allocated to the issue, (except 534101 1 030898 CERT that Present Value may be substituted for Fair Market Value with respect to fixed yield investments, investments required to be yield restricted, and investments transferring by virtue of the universal cap or transferred proceeds rules) and (iii) Computation Date receipts, the Market Value (Present Value, in the case of guaranteed investment contracts and fixed rate investments) of all Nonpurpose Investments allocated to the issue at the close of business on a Computation Date; and (iv) rebate receipts, any recovery of an overpayment of rebate. (ii) Payments. Payments with respect to Nonpurpose Investments include (i) direct payments, the amount of Gross Proceeds of the issue directly used to purchase the investment, including Qualified Administrative Costs; (ii) constructive payments, the Value of an investment allocated to (but not directly purchased with) Gross Proceeds on the date so allocated; (iii) Nonpurpose Investments allocated to an issue at the end of the preceding Computation Period, at the value of the investments at the beginning of the computation period; (iv) rebate payments, payments of rebate amounts when due and yield reduction payments on Nonpurpose Investments and (v) the Computation Date Credit. (c) Exception for Gross Proceeds Entirely Spent Within Six Months. Notwithstanding anything in this Section 4.2 to the contrary, if all of the Gross Proceeds of the Notes (other than amounts on deposit in the Debt Service Fund or a reserve fund), including investment earnings received with respect to all Funds and Accounts comprising such issue except the Debt Service Fund, have been expended for the governmental purpose of the issue within six months after the date of issue, then the only Nonpurpose Investments to be taken into account in the calculation of the Rebate Amount with respect to the Non-Construction Notes are Nonpurpose Investments acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross proceeds arising after such six months which were not reasonably anticipated as of the date of issuance. The existence of sinking fund or pledged fund proceeds or the expectation that such proceeds will arise within six months of the issue date will make the six-month expenditure exception to rebate inapplicable. For purposes of this exception, Gross Proceeds used to pay principal of notes are not treated as expended on the governmental purpose of the issue. (d) Exception for Gross Proceeds Entirely Spent Within Eighteen Months. Notwithstanding anything in this Section 4.2 to the contrary, if all of the Gross Proceeds of the Notes (other than amounts on deposit in the Debt Service Fund or a reserve fund), including investment earnings received with respect to all Funds and Accounts comprising such issue except the Debt Service Fund, have been expended for the governmental purpose of the issue in accordance with the following schedule after the date of issue: 15% within 6 months, 60% within 12 months and 100% within 18 months, then the only Nonpurpose Investments to be taken into account in the calculation of the Rebate Amount with respect to the Non-Construction Notes are Nonpurpose Investments acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross proceeds arising after such eighteen months which were not reasonably anticipated as of 534101 1 030898 CERT the date of issuance. The existence of sinking fund or pledged fund proceeds or the expectation that such proceeds will arise within eighteen months of the issue date will make the eighteen-month expenditure exception to rebate inapplicable. For purposes of this exception, Gross Proceeds used to pay principal of notes are not treated as expended on the governmental purpose of the issue. However, an issue does not fail to satisfy the spending requirement for the third spending period referenced above in this paragraph as a result of a reasonable retainage, as defined in Treas. Reg. 1.148-7(d)(2), if the reasonable retainage is allocated to expenditures within 30 months of the date of issue. (e) Exception for Gross Proceeds Entirely Spent Within Twenty-Four Months. Notwithstanding anything in this Section 4.2 to the contrary, for Construction Bonds, if all of the Gross Proceeds of the Notes (other than amounts on deposit in the Debt Service Fund or a reserve fund), including investment earnings received with respect to all funds and accounts comprising such issue except the Debt Service Fund, have been expended for the governmental purpose of the issue in accordance with the following schedule after the date of issue: 10% within 6 months, 45% within 12 months, 75% within 18 months and 100% within 24 months, then the only Nonpurpose Investments to be taken into account in the calculation of the Rebate Amount with respect to the Non-Construction Notes are Nonpurpose Investments acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross proceeds arising after such twenty-four months which were not reasonably anticipated as of the date of issuance. The existence of sinking fund or pledged fund proceeds or the expectation that such proceeds will arise within twenty-four months of the issue date will make the twenty-four expenditure exception to rebate inapplicable. For purposes of this exception, Gross Proceeds used to pay principal of notes are not treated as expended on the governmental purpose of the issue. However, an issue does not fail to satisfy the spending requirement for the third spending period referenced above in this paragraph as a result- of a reasonable retainage, as defined in Treas. Reg. 1.148-7(d)(2), if the reasonable retainage is allocated to 'expenditures within 30 months of the date of issue. (f) $100,000 Debt Service Fund Gross Earnings Exception. Notwithstanding anything in this Section 4.2 to the contrary, if the gross earnings from the investments held in a debt service fund for the Bond Year in question, as determined under paragraph (c), are less than $100,000 then any amount earned on such debt service fund shall not be taken into account in determining the Rebate Amount. In this regard, the $100,000 earnings limitation is deemed satisfied if the annual debt service on the issue does not exceed $2,500,000. For purposes of this paragraph (f), the term "gross earnings" means the aggregate amount earned on the Nonpurpose Investment in which the Gross Proceeds deposited to the debt service fund are invested, including amounts earned on such amounts if allocated to the debt service fund. (g) Debt Service Fund Exception. If the average maturity of the Notes is at least 5 years and the rates of interest do not vary during the term of the issue, then any amount earned on a debt service fund (other than amounts representing accrued interest or capitalized interest) shall not be taken into account in determining the Rebate Amount. 534101 1 030898 CERT 43 Payment to United States (a) Unless the Notes are redeemed prior to such time, the Issuer will pay to the United States, not later than 60 days after each Installment Computation Date, an amount which, when added to previous rebate payments made with respect to the Notes, is equal to not less than 90 percent of the Rebate Amount, less the Computation Date Credit. The Issuer will pay to the United States, not later than 60 days after the Notes are fully paid or redeemed, 100 percent of the Rebate Amount, less the Computation Date Credit. If the final rebate payment is made within 60 days after the Final Computation Date, interest on the Rebate Amount will be deemed to accrue at the underpayment rate under Section 6201 of the Code, beginning on the date the Rebate Amount is due and ending on the date 10 days before it is paid. (b) The Issuer will mail each payment to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255. Each payment shall be accompanied by the copy of the Form 8038-T and the Form 8038-G or 8038-GC filed with respect to the Bond issue and a statement identifying the issuer and the issue, including the CUSiP number for the Bond with the latest maturity for which there is a CUSIP number. 4.4 Recordkeeping In connection with rebate requirement the Issuer will maintain the following records: (a) The Issuer will retain records of the determinations made pursuant to Section 42 until six years alter the retirement of the last obligation of the issue~ (b) The Issuer will record all amounts paid to the United States pursuant to Section 43. .4.5 Fair Market Value. The Issuer will not acquire Nonpurpose Investments at other than an arm's length, Fair Market Value price unless regulations addressing imputed receipts have been promulgated by the Treasury. (SEAL) 1NWITNESSWHEREOF, I have hereunto set my hand and affixed the corporate seal of said Town as of the 16th day of December, 200~ SupC~-lsor - ~ 534101.1 030898 CERT Exhibit A Definitions (This exhibit includes definitions of certain terms which may not be used in the Issuer's Arbitrage and Use of Proceeds Certificate) "Available Construction Proceeds" means the Issue Price of the Construction Bonds (i) plus earnings on the Issue Price and on amounts in any reserve fund not funded from bond proceeds, and earnings on such earnings and (ii) less the amount of the Issue Price representing a reasonably required reserve or replacement fund and costs of issuance funded with proceeds received from the sale of the Note. For purposes of this definition earnings include earnings on any tax-exempt bond. If only a portion of the Note constitutes Construction Bonds, a pro-rata portion of the above-described amount will constitute available construction proceeds. Pre-issuance accrued interest and earnings thereon may be disregarded. "Bona Fide Debt Service Fund" means a fund, which may include proceeds of an issue, that is used primarily to achieve a proper matching of revenues with principal and interest payments within each Bond Year and is depleted at least once each Bond Year except for a reasonable carry over amount (not in excess of the earnings on the fund for the immediately preceding Bond Year or one-twelfth of the principal and interest payments on the issue for the immediately preceding Bond Year). "Bond Counsel" means any nationally recognized attorney or firm of attorneys, knowledgeable in the requirements of the Code, and the Regulations, and retained by the Issuer. "Bond Year" means each one-year period (or shorter period) from the date of issue that ends at the close of business on the day in the calendar year selected by the Issuer which day is no later than the last day within one year of the issue date of the Bonds. "Capital Expenditure" means any costs ora type that is properly chargeable to capital account (or would be so chargeable with a proper election or by virtue, based on all the facts and circumstances, of a facility having reached a degree of completion which would permit its operation at substantially its design level and the facility is, in fact, in operation at such level) under general federal income tax principles, e.g., costs incurred to acquire, construct or improve land, buildings, and equipment are generally capital expenditures. Whether an expenditure is a capital expenditure is determined at the time the expenditure is paid with respect to the property. Future changes in law do not affect whether an expenditure is a capital expenditure. "Code" means the Internal Revenue Code of 1986, as amended. "Computation Date" means any Installment Computation Date or the Final Computation Date. "Computation Date Credit" means, for any issue of obligations, an amount equal to the Future Value of $1,000 for each Bond Year during which there are gross proceeds of the Notes on a Computation Date other than the Final Computation Date, and $1,000 on the Final Computation Date. "Computation Period" means the period beginning on the day following a Computation Date (or in the case of the first period, the date of issuance of the Notes) and ending on the next succeeding Computation Date. "Construction Bonds" means an issue in which all of the bonds are either (i) Governmental Bonds; (ii) Qualified 501(c)(3) bonds or (iii) Private Activity Bonds to finance property owned by a governmental unit or a 501(c)(3) organization, if at least 75 percent of the Available Construction Proceeds of the issue are to be used, or are expected to be used for Construction Expenditures for property which is owned by a governmental entity or a 501(c)(3) organization. "Construction Expenditures" means Capital Expenditures which are properly chargeable to or may be capitalized as part of the basis of (a) real property other than expenditures for the acquisition of any interest in land or any interest in real property other than land, (b) Constructed Personal Property; or (c) specially developed computer software that is functionally related and subordinate to real property or Constructed Personal Property. Construction Costs may include the acquisition of an interest in real property (other than land) if such acquisition is pursuant to a contract which requires the seller to build or install the property (e.g., a "turnkey" contract) and the property has not been built or installed at the time the parties enter into the contract. For purposes of this definition, real property means land improvements, buildings, other inherently permanent structures, including items that are structural components of such buildings or structures, wiring in a building, plumbing systems, central heating or central air-conditioning systems, pipes or ducts, elevators or escalators installed in a building, paving parking areas, roads, wharves and docks, bridges, and sewage lines. "Fair Market Value" of an Investment shall have the following meanings: (a) In General. Except as elsewhere specifically stated below, the Fair Market Value of an Investment is the price at which a willing buyer would purchase the Investment from a willing seller in a bona fide, arm's-length transaction. (b) United States Treasury_ Obligation. The Fair Market Value of a United States Treasury Obligation that is purchased directly from the United States Treasury is its purchase price. (c) Certificate of Deposit. The Fair Market Value of a certificate of deposit with a fixed interest rate, a fixed payment schedule, and a substantial penalty for early withdrawal is its purchase price provided, the Yield on the certificate of deposit is not less than (i) the Yield on reasonably comparable direct obligations of the United States and (ii) the highest Yield published by the provider and currently available from the provider on reasonably comparable certificates of deposit offered to the public. (d) Guaranteed Investment Contracts. The Fair Market Value of a guaranteed investment contract is its purchase price, provided (i) the Issuer makes a bona fide solicitation for such contract and receives at least three bona fide bids from providers with no material interest in the issue; (ii) the Issuer purchases the highest-yielding guaranteed investment contract for which a qualifying bid is made (determined net of broker's fees); (iii) the Yield on such contract (determined net of broker's fees) is not less than the Yield then available from the provider on reasonably comparable investment contracts, if any, offered to other persons from a source of funds other than gross proceeds of tax-exempt bonds; (iv) the determination of the terms of a guaranteed investment contract takes into account as a significant factor the Issuer's reasonably expected drawdown schedule for amounts to be invested, exclusive of float and reserves, (v) the terms of the contract, including collateral security requirements are reasonable, and (vi) the obligor certifies the administrative costs it is paying to third parties in connection with the contract. To the extent that the administrative cost does not exceed the lesser of a reasonable amount based on what would be charged for the same or comparable investment acquired with a source of funds other than Gross Proceeds of tax exempt bonds or the Present Value of annual payments equal to five one-hundredths of one percent (0.05%) of the weighted average amount reasonably expected to be invested each year of the contract, it may be taken into account in determining Yield, with the effect that it will increase the payments for, or decrease the receipts from, Investments. For this purpose, Present Value is to be computed using the taxable discount rate used by the parties to compute the commission or, if not readily ascertainable, a reasonable taxable discount rate. "Final Computation Date" means the day the last Bond that is part of the Bonds is discharged. "Future Value" or "FV" of a payment or receipt means the amount, determined by using the economic accrual method (the method of computing yield based on the compounding of interest at the end of each compounding period), equal to the value of such payment or receipt at the time it is paid or received (or treated as paid or received), plus interest assumed to be earned and compounded over the period at a rate equal to the yield on the issue, using the same compounding interval and financial conventions used to compute yield. "Governmental Bonds" means bonds which are not Private Activity Bonds. "Gross Proceeds" means Sale Proceeds, Transferred Proceeds, Investment Proceeds and Replacement Proceeds. "Issue Date" means December 16 2008, the date on which the Notes are delivered to the underwriters and payment of the purchase price of the Notes is received by the Issuer "Issue Price" when used in connection with an issue of publicly offered obligations (determined separately for obligations included in the issue that are not substantially identical) is the first price at which at least ten percent of each maturity of each series of the obligations are sold to the public. Bond house, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers are not included in the definition of "public" for purposes of the preceding sentence. If the obligations are privately placed, the Issue Price is the price paid for them by the first buyer. The Issue Price of obligations that are publicly offered in a bona fide public offering is determined on the basis of actual facts and reasonable circumstances existing on the sale date unadjusted for subsequent occurrences. "Installment Computation Date" means the last day of the fifth Bond Year and the last day of each succeeding fifth Bond Year (until and excluding the Final Computation Date) and, if the Issuer so elects, the last day of any Bond Year. "Investment" means (i) any security (within the meaning of Section 165(g)(2)(A) or (B) of the Code, (ii) any obligation (other than tax-exempt obligations which are not "specified private activity bonds" within the meaning of Section 57(a)(5)(C) of the Code), (iii) any annuity contract within the meaning of Section 72 of the Code, (iv) any residential real property for family units not located within the jurisdiction of the Issuer and which is not required to implement a court-ordered or approved housing desegregation plan or (v) any investment-type property that is held as a passive vehicle for the production of income, including any prepayment for property or services if a principal purpose of prepayment is to receive an investment return from the time the prepayment is made until the time payment would otherwise have been made. "Investment Proceeds" means any amounts actually or constructively received from investing proceeds of the Notes. "Issuer" means Town of Southold, in the County of Suffolk, New York. "Multipurpose Issue" means an issue the proceeds of which are used for two or more separate purposes determined in accordance with Section 1.148-9(h) of the Regulations. "Net Sale Proceeds" means sale proceeds less the portion of those sale proceeds invested in a reasonably required reserve or replacement fund or as part of a minor portion. "Nonpurpose Investment" means any Investment in which Gross Proceeds are invested and which is not acquired to carry out the governmental purpose of the issue. "Note" or "Notes" means the $299,800 Bond Anticipation Note for Various Purposes-2008, dated December 16 2008. "Official Statement" means the Official Statement of the Issuer relating to the Note, if any Official Statement has been prepared. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereo£ "Plain Par Note" means a qualified tender bond or a bond that (i) is issued with original issue discount equal to not more than 2 percent of the stated redemption price at maturity plus the amount of original issue premium attributable exclusively to underwriters' compensation, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest, (iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation under Section 1275 of the Code,, in either case, that pays interest unconditionally payable at least annually, and (iv)has a lowest stated redemption price not less than its outstanding stated principal amount. "Plain Par Investment" means an investment that is an obligation that (i)is issued with original issue discount (or if acquired on a date other than the issue date, acquired with market discount or premium) equal to not more than 2 percent of the stated redemption price at maturity, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest, (iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation under Section 1275 of the Code that pays interest unconditionally payable at least annually, and (iv) has a lowest stated redemption price not less than its outstanding stated principal amount. "Present Value" or "PV' means the amount determined by using the following formula: PV= FV n (l+i) where FV equals Future Value, as defined herein, i equals the discount rate divided by the number of compounding intervals in a year and n equals the sum of (i) the number of whole compounding intervals for the period beginning on the date as of which Present Value is computed and ending on the date the amount is to be received or paid or on a Computation Date and (ii) a fraction the numerator of which is the length of any short compounding interval during such period and the denominator of which is the length of a whole compounding interval. "Private Activity Bonds" means bonds which meet the definition contained in Section 141(a) of the Code and that are not "qualified bonds" as defined in Section 141(e) of the Code. "Project" means the projects referred to in the Resolution, which is being financed by the Note. "Qualified 501(c)(3) Bonds" means bonds which meet the definition contained in Section 145 of the Code. "Qualified Guarantee" means, with respect to a bond, an unconditional transfer, in any form, of substantially all of the credit risk for all or part of the payments, such as payments for principal and interest, redemption prices or tender prices, on the guaranteed bonds. The guarantor must not expect to make any payments other than those pursuant to a direct-pay letter of credit or similar arrangement for which the guarantor will be immediately reimbursed. Reasonable procedural or administrative requirements or, in the case of a guarantee against failure to remarket a qualified tender bond, commercially reasonable limitations based on credit risk, will not cause the guarantee to be conditional. The guarantor may not be a co-obligor, nor may the obligor and any related parties combined use more than 10 percent of proceeds of the guaranteed portion of the bonds The guarantee fee must not exceed a reasonable arm's-length charge solely for the transfer of the credit risk. A guarantee will not be qualified unless, as of the date the guarantee is obtained, the issuer reasonably expects that the present value of all fees for the guarantee will be less than the present value of the expected interest savings on the issue as a result of the guarantee. For this purpose, present value is computed using the yield on the issue, determined with regard to the guarantee fees, as the discount rate. "Rebate Amount" means with respect to the Notes, the amount computed as described in Section 4.3 of the Certificate. "Regulations" means the Income Tax Regulations promulgated under Sections 103 and 141 to 150 of the Code by the Department of the Treasury from time to time, including the Regulations published on June 18, 1993 in the Federal Register, as they may be amended from time to time. "Replacement Proceeds" means amounts with a sufficiently direct nexus to the Notes or Project to conclude that such amounts would have been used for the Project if the proceeds of the Notes were not so used to the extent held by or derived from the Issuer or a controlled entity of the Issuer, including: sinking funds, pledged funds (including negative pledges), certain other amounts if the term of the issue is longer than necessary for the governmental purposes of the Notes, and a bond-funded working capital reserve unless the Notes qualify for one of the exceptions provided in the Regulations. "Resolution" means the bond resolutions of the Issuer, as referred to in the Certificate. "Sale Proceeds" means any amounts actually or constructively received from the sale of an issue, including amounts used to pay underwriters' discount or compensation, accrued interest other than Pre-Issuance Accrued Interest, or derived from the sale of a right associated with a bond as further described in Section 1.148-4(b)(4) of the Regulations. "SLG" means a U.S. Treasury Book Entry Security, State and Local Government Series. "Spendable Proceeds" means sale proceeds, less the portion of those sale proceeds invested in a reasonably required reserve or replacement fund under Section 148(d) of the Code and as part of a minor portion under Section 148(e) of the Code. "Transferred Proceeds" means unexpended original or investment proceeds of a refunded issue which transfer and become proceeds of the refunding issue when proceeds of the refunding issue are applied to pay principal of the refunded issue. "Treasury" means the United States Department of Treasury. "Universal Cap" means the maximum value of Nonpurpose Investments which may be allocated to the Notes and is determined by reference to the Value of all outstanding Notes of the issue. Nonpurpose Investments shall be taken into account as Nonpurpose Receipts at their Value on a Valuation Date. "Valuation Date" means the date on which the value of the Universal Cap and the Nonpurpose Investments allocable to the Notes thereunder are determined. With respect to new money issues, the first Valuation Date shall be the second year anniversary date of the date of issuance of the Notes; thereafter, the first day of each Note Year shall constitute a Valuation Date. With respect to a refunding issue, each date on which proceeds of the refunded issue would become transferred proceeds of the refunding issue, e.g each date on which principal of the refunded issue is paid with proceeds of the refunding bonds, shall constitute a Valuation Date. In addition, the first date of each Note Year shall also be a Valuation Date. "Value" means, in the case of a Note, the Value of a Note and in the case of an Investment, the Value of an Investment. "Value of the Note" means, in the case of a Plain Par Note, its outstanding stated principal amount, plus accrued unpaid interest or in the case of a Plain Par Note actually redeemed, or treated as redeemed, its stated redemption price on the redemption date plus accrued unpaid interest. In the case of a bond other than a Plain Par Note, the value on a date of such a bond is its Present Value on that date, using the yield on the issue of which the bonds are a part as the discount factor. In determining the Present Value of a variable rate bond, the initial interest rate on the bond established by the index or other rate setting mechanism is used to determine the interest payments on that bond. "Value of an Investment" means, as of any date, unless the Investment is required invested as a restricted yield, for any Investment, Fair Market Value as of that date; for any fixed rate investment, Present Value on that date; and for any Plain Par Investment, the outstanding stated principal amount, plus accrued unpaid interest, as of that date. Yield restricted investments must be valued at Present Value, amounts allocated or that cease to be allocated to an issue must be allocated at Fair Market Value, except in cases in which such Nonpurpose Investments are allocated as a result of the Universal Cap or Transferred Proceeds rules in which case they may be valued at Present Value, and amounts allocated to Transferred Proceeds may not be valued in excess of the value used for arbitrage restrictions applicable to the Refunded Issue "Working Capital Expenditure" means any cost of a type that does not constitute a Capital Expenditure. "Yield" means, as of any Computation Date, that discount rate that, when used in computing the Present Value of (i) all unconditionally payable payments of principal and interest of or on the bonds included in such fixed yield issue, (ii) all unconditionally payable fees for Qualified Guarantees and Qualified Hedges on such bonds and (iii) all fees expected to be paid for Qualified Guarantees and Qualified Hedges, produces an amount equal to the sum of the Present Value of the aggregate Issue Prices of the bonds comprising the issue (determined using the same discount rate used to determine the Present Value of payments for principal, interest and Qualified Hedges and Qualified Guarantees). The Yield is computed as of the issue date of the fixed yield issue by treating each bond included in the issue that is either subject to mandatory or contingent early redemption or to certain optional redemption provisions as being redeemed on its expected early redemption date for an amount equal to its Value on that date. If a fixed yield bond (i) is subject to optional redemptions within 5 years of its issue date and the Yield not taking into account the optional redemption is more than 1/8 of 1% above its Yield assuming the early redemption, (ii) is issued at an Issue Price that exceeds the stated redemption price at maturity by more than 1/4 of 1% multiplied by the product of the stated redemption price to maturity and the number of complete years to the first optional redemption date for the bond, or (iii) bears interest at increasing interest rates, the Yield on the issue including such fixed yield bond is computed by treating the fixed yield bond as redeemed at its stated redemption price on the optional redemption date that produces the lowest Yield on the issue. No adjustment will be made on any Computation Date to the Yield on a fixed yield issue as computed on its issue date unless redemption rights are subsequently transferred to a third party or termination payments are received with respect to Qualified Hedges. The Yield on a fixed yield bond is calculated in the same manner as Yield on a fixed yield issue.