$96,705,000 NORTHAMPTON COUNTY GENERAL PURPOSE AUTHORITY College Refunding and Revenue Bonds Series 2008 (Lafayette College)

Transcription

1 NEW ISSUE; BOOK-ENTRY ONLY Ratings: Moody s Investors Service Aa3 Standard & Poor s Ratings Services AA- In the opinion of Bond Counsel, under existing law and assuming continuing compliance by the Authority and the College with the requirements of the Internal Revenue Code of 1986, as amended, and the regulations thereunder that relate to the 2008 Bonds, the interest on the 2008 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. However, for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), interest on the 2008 Bonds is taken into account in determining adjusted current earnings. Bond Counsel is also of the opinion that, under existing law, interest on the 2008 Bonds is exempt from Pennsylvania personal income tax and from Pennsylvania corporate net income tax, and the 2008 Bonds are exempt from personal property taxes in Pennsylvania. See TAX MATTERS herein. $96,705,000 NORTHAMPTON COUNTY GENERAL PURPOSE AUTHORITY College Refunding and Revenue Bonds Series 2008 (Lafayette College) Dated: Date of Delivery Due: November 1, as shown on the inside front cover The $96,705,000 Northampton County General Purpose Authority College Refunding and Revenue Bonds Series 2008 (Lafayette College) (the 2008 Bonds ) will be issued under a Trust Indenture dated as of August 1, 2008 (the Indenture ) between the Northampton County General Purpose Authority (the Authority ) and TD Bank, National Association, as trustee (the Trustee ). The 2008 Bonds will be payable from and secured by certain funds held by the Trustee under the Indenture and payments to the Trustee, as assignee of the Authority under the Loan Agreement dated as of August 1, 2008 (the Loan Agreement ) between the Authority and Lafayette College (the College ). The Loan Agreement is a general, unsecured obligation of the College. See SECURITY AND SOURCES OF PAYMENT FOR THE 2008 BONDS herein. Interest on the 2008 Bonds will accrue at the rates shown on the inside front cover from the date of delivery of the 2008 Bonds and will be payable on each November 1 and May 1, commencing on November 1, Interest on the 2008 Bonds will be computed on the basis of a 360-day year of twelve 30-day months. The 2008 Bonds are subject to optional and extraordinary redemption prior to maturity as described herein. The 2008 Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of and held by Cede & Co., as nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository for the 2008 Bonds. Purchases of beneficial interests in the 2008 Bonds will be made in book-entry form, in denominations of $5,000 and integral multiples thereof. Except as herein described, purchasers will not receive certificates representing their beneficial interests in the 2008 Bonds. So long as DTC or its nominee, Cede & Co., is the registered owner of the 2008 Bonds, payments of principal or redemption price of and interest on the 2008 Bonds will be made directly to DTC or such nominee by the Trustee. Disbursement of such payments to the DTC Participants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of the DTC Participants and the Indirect Participants, as more fully described herein. See THE 2008 BONDS Book-Entry Only System herein. MATURITIES, AMOUNTS, INTEREST RATES AND PRICES (Shown on inside cover) THE 2008 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE SOURCES DESCRIBED HEREIN. NEITHER THE PRINCIPAL NOR THE PREMIUM, IF ANY, OF THE 2008 BONDS, NOR THE INTEREST ACCRUING THEREON, SHALL EVER CONSTITUTE A GENERAL INDEBTEDNESS OF THE AUTHORITY OR AN INDEBTEDNESS OF THE COUNTY OF NORTHAMPTON, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER OR SHALL EVER CONSTITUTE OR GIVE RISE TO A PECUNIARY LIABILITY OF THE COUNTY OF NORTHAMPTON, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF OR A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE COUNTY OF NORTHAMPTON, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF, NOR WILL THE 2008 BONDS BE, OR BE DEEMED TO BE, AN OBLIGATION OF THE COUNTY OF NORTHAMPTON, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF. THE AUTHORITY HAS NO TAXING POWER. The 2008 Bonds are offered, when, as and if issued and accepted by the Underwriters, subject to prior sale, withdrawal or modification of the offer without notice, and to the approval of legality of the 2008 Bonds by Greenberg Traurig, LLP, Philadelphia, Pennsylvania, Bond Counsel. Certain legal matters will be passed upon for the Underwriters by Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania, for the College by Leslie F. Muhlfelder, Esquire, General Counsel of the College and for the Authority by Leeson, Leeson & Leeson, Bethlehem, Pennsylvania. It is expected that the 2008 Bonds will be delivered to DTC in New York, New York on or about August 21, Merrill Lynch & Co. Dated: July 18, 2008 JPMorgan

2 $96,705,000 NORTHAMPTON COUNTY GENERAL PURPOSE AUTHORITY College Refunding and Revenue Bonds Series 2008 (Lafayette College) MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND PRICES Year (November 1) Amount Interest Rate Initial Offering Yield CUSIP* (66353L) 2009 $ 250, % 1.620% AK , AL , AM , AN , AP , AQ , AR , AS , AT ,410, AU ,740, AV ,850, AW ,455, ** AX5 * Copyright 2003, American Bankers Association. CUSIP data herein are provided by Standard & Poor s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of Bondholders only at the time of issuance of the 2008 Bonds and the Authority does not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2008 Bonds as a result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the 2008 Bonds. ** Yield to first optional call date (November 1, 2018)

3 No dealer, broker, salesman or other person has been authorized by the Authority, the College or the Underwriters to give any information or to make any representations with respect to the 2008 Bonds, other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 2008 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the Authority, the College, DTC and other sources which are believed to be reliable. The information and expressions of opinions herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the 2008 Bonds shall, under any circumstances, create any implication that there has been no change in any of the information set forth herein since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2008 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE 2008 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE 2008 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF CERTAIN STATES, IF ANY, IN WHICH THE 2008 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN CERTAIN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE 2008 BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. * * * * * * * *

4 TABLE OF CONTENTS Page INTRODUCTORY STATEMENT... 1 THE AUTHORITY... 3 THE 2008 BONDS... 3 REDEMPTION OF THE 2008 BONDS... 7 SECURITY AND SOURCES OF PAYMENT FOR THE 2008 BONDS... 8 PLAN OF FINANCE... 9 ESTIMATED SOURCES AND USES OF FUNDS... 9 AGGREGATE ANNUAL DEBT SERVICE OF THE COLLEGE BONDHOLDERS RISKS LITIGATION TAX MATTERS CONTINUING DISCLOSURE UNDERWRITING INDEPENDENT ACCOUNTANTS RATINGS LEGAL MATTERS TRUSTEE RELATIONSHIPS AMONG THE PARTIES MISCELLANEOUS Appendix A Information Concerning Lafayette College... A-1 Appendix B Appendix C Lafayette College Financial Statements for the Years ended June 30, 2007 and June 30, 2006 and Report of Independent Accountants... B-1 Definitions of Certain Terms and Summary of Certain Provisions of the Indenture and Loan Agreement... C-1 Appendix D Form of Bond Counsel Opinion... D-1 i

5 $96,705,000 NORTHAMPTON COUNTY GENERAL PURPOSE AUTHORITY College Refunding and Revenue Bonds Series 2008 (Lafayette College) INTRODUCTORY STATEMENT This Official Statement provides information in connection with the issuance by the Northampton County General Purpose Authority (the Authority ) of $96,705,000 aggregate principal amount of its College Refunding and Revenue Bonds Series 2008 (Lafayette College) (the 2008 Bonds ). The 2008 Bonds will be issued and secured pursuant to a Trust Indenture dated as of August 1, 2008 (the Indenture ) between the Authority and TD Bank, National Association, as trustee (the Trustee ), for the purpose of providing funds to make a loan to the College. Pursuant to a Loan Agreement dated as of August 1, 2008 (the Loan Agreement ), between the Authority and the College, the College is obligated to make loan payments to the Trustee, as assignee of the Authority, at times and in amounts sufficient to pay the principal of and interest on the 2008 Bonds when due. The 2008 Bonds will bear interest at the rates set forth on the inside front cover page of this Official Statement. This Official Statement, including the appendices, contains brief descriptions of the 2008 Bonds, together with summaries of the Indenture and the Loan Agreement. The descriptions and summaries of the Indenture, the Loan Agreement and other documents contained herein do not purport to be comprehensive and are qualified in their entirety by reference to such documents, and all references to the 2008 Bonds are qualified in their entirety by the definitive form thereof included in the Indenture. Copies of such documents will be available upon written request to the Trustee at the expense of the person making such request. Pursuant to a Bond Purchase Agreement dated July 18, 2008, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc. have been appointed as the underwriters (collectively, the Underwriters ) with respect to the 2008 Bonds. This Introductory Statement is subject in all respects to the more complete information appearing elsewhere in this Official Statement, including the cover page and the appendices. This Introductory Statement is to be read and used only with reference to the entire Official Statement. All terms used and not otherwise defined herein shall have the respective meanings set forth in Appendix C hereto. The Authority The Authority was organized by the County Council of the County of Northampton and exists under the Pennsylvania Municipality Authorities Act, as codified at 53 Pa. Cons. Stat et seq. (the Act ). The Authority has full power and authority to issue the 2008 Bonds. See THE AUTHORITY herein. The College The College is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), which operates a private nonsectarian, educational, liberal arts college, located in the City of Easton, County of Northampton, Pennsylvania. The College had an actual enrollment of 2,319 full-time undergraduate students for the 2008 Spring Semester. See Appendix A hereto for additional information about the College. 1

6 The Project The 2008 Bonds are being issued to provide funds, together with an equity contribution from the College, for a project (the Project ) consisting of: (i) the refunding of the Northampton County Higher Education Authority College Revenue Bonds - Series of 1997 (Lafayette College Project) (the 1997 Bonds ); (ii) the refunding of the Authority's College Revenue Bonds Series 2004 (Lafayette College Project) (the 2004 Bonds ); (iii) the refunding of the Authority's College Revenue Bonds Second Series 2004 (Lafayette College Project) (the 2004 Second Series Bonds ); (iv) the refunding of the Authority's Lafayette College Revenue Notes Series of 2007 (the 2007 Notes and, together with the 1997 Bonds, the 2004 Bonds and the 2004 Second Series Bonds, the Prior Bonds ); (v) the funding of various capital projects for general College purposes; (vi) the funding of a portion of the cost of the acquisition of certain real estate in the City of Easton; and (vii) the payment of certain costs and expenses in connection with the issuance of the 2008 Bonds. The 2008 Bonds The 2008 Bonds will be dated the date of their delivery. Interest on the 2008 Bonds will accrue at the rates as shown on the inside front cover from the date of delivery of the 2008 Bonds and will be payable on each November 1 and May 1, commencing on November 1, Interest on the 2008 Bonds will be computed on the basis of a 360-day year of twelve 30-day months. See THE 2008 BONDS herein. Security and Sources of Payment for the 2008 Bonds The Bonds are limited obligations of the Authority, payable solely from (1) payments to be made by the College under the Loan Agreement and (2) certain funds held by the Trustee under the Indenture, and not from any other fund or source of the Authority. The obligation of the College to make payments under the Loan Agreement is a general, unsecured obligation of the College. The Bonds will not be secured by a pledge of gross receipts or other specified revenues of the College or by a mortgage lien on or security interest in any College property. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS herein. Bondholders Risks The College s ability to make payments under the Loan Agreement, which the Authority, in turn, will apply to the payment of the principal and redemption price, if any, of and interest, on the 2008 Bonds, is dependent on revenues to be derived by the College. Certain risks inherent in the generation of such revenues and otherwise generally associated with investment in the 2008 Bonds are described in the section entitled BONDHOLDERS RISKS herein. Information regarding the College is included in this Official Statement in Appendix A. Audited financial statements for the fiscal year ended June 30, 2007 for the College are included in this Official Statement in Appendix B. 2

7 THE AUTHORITY General The Authority is a municipal authority existing under the laws of the Commonwealth and was formed pursuant to the Act by an ordinance duly adopted by the County Council (the County Council ) of the County of Northampton (the County ), Pennsylvania and was incorporated on May 10, The Authority is authorized to issue notes for any of the purposes under the Act. The Authority charter provides a term of existence of 50 years, unless the Authority is sooner dissolved according to law. The Authority is governed by a Board of Directors consisting of seven (7) members. These members are appointed by the County Executive of the County and are subject to confirmation by the County Council. The current Board members, their positions within the Authority and their terms of office are set forth below. Members of the Authority Member Office Term Expires John Stoffa Chairman 12/31/12 J. Michael Dowd Vice-Chairman 12/31/11 Shawn K. Langen Secretary 12/31/10 Shawn M. Donahue Treasurer 12/31/11 Peter Gray Assistant Secretary 12/31/09 Lazaro Fuentes Assistant Treasurer 12/31/08 Margaret Ferraro 2nd Assistant Secretary and 2nd Assistant Treasurer 12/31/10 Previous Authority Issues The Authority has previously issued bonds and notes for projects of other entities which are secured by payments from such entities. All prior issues of the Authority s bonds and notes are limited revenue obligations and the revenues associated therewith are not available for payment of debt service on the 2008 Bonds. The Authority may enter into future financing agreements which will provide for the issuance of bonds or notes which will be secured by revenues derived from other projects financed. General THE 2008 BONDS The 2008 Bonds are issuable as fully registered bonds without coupons as set forth on the cover page of this Official Statement. The 2008 Bonds shall be in denominations of $5,000 and integral multiples thereof. The 2008 Bonds are subject to redemption prior to maturity at the option of the College, as well as extraordinary optional redemption as described under the caption REDEMPTION OF THE 2008 BONDS herein. Payment of the principal of and interest on, the 2008 Bonds at stated maturity shall be made upon presentation and surrender thereof. All payments of interest and premium, if any, on, and of principal upon redemption of the 2008 Bonds shall be paid through the securities depository established for the 2008 Bonds. See - Book-Entry Only System below. 3

8 TD Bank, National Association is the Trustee under the Indenture and has a corporate trust office in Philadelphia, Pennsylvania. The Trustee shall act as registrar, paying agent and transfer agent for the 2008 Bonds. Interest on the 2008 Bonds The 2008 Bonds of each maturity will bear interest from the date of their initial delivery or from the most recent Interest Payment Date to which interest thereon has been paid or duly provided for to the next succeeding Interest Payment Date, at a fixed rate as shown on the inside front cover. Interest on the 2008 Bonds will be payable on each November 1 and May 1, commencing on November 1, Interest on the 2008 Bonds will be computed on the basis of 360-day year of twelve 30-day months. Book-Entry Only System The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the 2008 Bonds. The 2008 Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity of the 2008 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTC is owned by the users of 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 ). DTC has Standard & Poor s Ratings Services highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of 2008 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2008 Bonds on DTC s records. The ownership interest of each actual purchaser of each 2008 Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 4

9 2008 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in 2008 Bonds except in the event that use of the book-entry system for the 2008 Bonds is discontinued. To facilitate subsequent transfers, all 2008 Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of 2008 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 2008 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such 2008 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 2008 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the 2008 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of 2008 Bonds may wish to ascertain that the nominee holding the 2008 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. Redemption notices shall be sent to DTC. If less than all of the 2008 Bonds within a maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the 2008 Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the 2008 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the 2008 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the Trustee on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with bonds held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC nor its nominee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of and interest on the 2008 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the 2008 Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered. 5

10 The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered to DTC and the provisions set forth in the Indenture would apply. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof. Registration, Transfer and Exchange. The 2008 Bonds may be transferred or exchanged by a holder of a 2008 Bond (the Bondholder ) upon surrender to the Trustee of such 2008 Bonds, accompanied by a written instrument or instruments of transfer in form satisfactory to the Trustee, duly executed by the Bondholder or a duly authorized representative. In all cases of the transfer of a 2008 Bond, the Trustee will enter the transfer of ownership in the 2008 Bond register and will authenticate and deliver in the name of the transferee or transferees a new fully registered 2008 Bond or 2008 Bonds of authorized denominations of the same maturity and interest rate for the aggregate principal amount which such transferee is entitled to receive. No transfer of any 2008 Bond will be effective until entered on the 2008 Bond register. The 2008 Bonds may, at the option of the Bondholder, be exchanged for an equal aggregate principal amount of 2008 Bonds of the same maturity and interest rate in any other authorized denominations, upon surrender of such 2008 Bonds. Upon the transfer or exchange of any 2008 Bond, the Bondholder shall be required to pay any taxes, fees or other governmental charges that may be imposed in relation thereto. Upon surrender of any 2008 Bonds to be transferred or exchanged, the Trustee shall record the transfer or exchange in the 2008 Bond register and shall authenticate and deliver new 2008 Bonds appropriately registered and in appropriate authorized denominations. The Trustee shall not be required to effect any transfer or exchange of any 2008 Bond during the fifteen (15) days immediately preceding the date of mailing of any notice of redemption or at any time following the mailing of any such notice, if the 2008 Bond to be transferred or exchanged has been called for such redemption, except that 2008 Bonds properly surrendered for partial redemption may be exchanged for new 2008 Bonds in authorized denominations equal in the aggregate to the unredeemed portion. No transfer or exchange made other than as described above and in the Indenture shall be valid or effective for any purpose under the Indenture. So long as Cede & Co. is the registered owner of the 2008 Bonds as nominee of DTC, references herein to the Holders, holders, Registered Owners, registered owners, Owners or owners of the 2008 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the 2008 Bonds. 6

11 REDEMPTION OF THE 2008 BONDS The 2008 Bonds will be subject to optional redemption and extraordinary optional redemption prior to maturity as described herein. Optional Redemption The 2008 Bonds are subject to optional redemption prior to their respective stated maturities, at the option of the Authority, at the written direction of the College, in whole or in part, in such amounts as may be specified by the College on or after November 1, 2018 at a Redemption Price equal to 100% of the principal amount thereof, without premium, plus in each case accrued interest to the date fixed for redemption. Extraordinary Optional Redemption The 2008 Bonds are subject to extraordinary optional redemption prior to maturity, in whole or in part at any time, by the Authority in the event of the exercise by the College of its option to direct that redemption upon receipt of insurance proceeds, condemnation awards or proceeds of conveyances in lieu of condemnation in the event of damage, destruction or condemnation of all or part of the College s property, at a Redemption Price of 100% of the principal amount redeemed plus accrued interest to the redemption date. Notice of Redemption Notice of redemption of 2008 Bonds is required to be mailed not less than 30 days nor more than 60 days prior to a redemption date to each registered owner of 2008 Bonds to be redeemed at the address of such owner recorded in the bond register. If notice of redemption of any 2008 Bond is so given, such 2008 Bond will be due and payable on the redemption date, and, if funds sufficient and available to pay the redemption price therefor are deposited with the Trustee on the redemption date and absent any such revocation or cure, will cease to bear interest after such date. While 2008 Bonds are registered in the name of DTC or its nominee, as nominee for the beneficial owners, the foregoing notice will be given to DTC or such nominee only, which shall alone be responsible for providing such notice to the beneficial owners. See THE 2008 BONDS - Book-Entry Only System. If less than all of the outstanding 2008 Bonds of any series and stated maturity are to be redeemed, the particular 2008 Bonds of such series and stated maturity to be redeemed will be selected not more than 60 days prior to the redemption date by the Trustee, by such method as the Trustee deems fair and appropriate and which may provide for the selection for redemption of portions (in authorized denominations) of the principal of 2008 Bonds of such series and stated maturity of a denomination larger than the minimum authorized denomination for such 2008 Bond. Purchase In Lieu of Redemption The Authority, at the direction of the College, shall have the option to purchase 2008 Bonds callable for redemption (the Callable Bonds ) in lieu of redemption. Such option may be exercised by delivery to the Trustee on or prior to the Business Day preceding the redemption date of written notice from the College specifying that the Callable Bonds shall not be redeemed, but instead shall be purchased as described in this provision. Upon delivery of such notice from the College, the Callable Bonds shall not be redeemed, but shall instead be subject to mandatory tender on the date that would have been the redemption date at a purchase price equal to the redemption price that would have been payable with respect to such Callable Bonds. The Authority's option (at the direction of the College) to purchase 7

12 pursuant to this provision shall be effective whether or not the notice of redemption sent to Holders of the 2008 Bonds indicates that the Authority has exercised, or intends to exercise, such option. No further or additional notice to Holders of the 2008 Bonds shall be required in connection with the purchase in lieu of redemption. The Callable Bonds purchased pursuant to this Section (i) shall not be canceled or retired, but shall continue to be outstanding, (ii) shall be registered in the name of, or as directed by, the Authority, at the direction of the College, and (iii) shall continue to bear interest at the rate provided for in the Indenture. SECURITY AND SOURCES OF PAYMENT FOR THE 2008 BONDS Set forth below is a brief discussion of certain provisions of the Indenture and the Loan Agreement which relate to the security for the 2008 Bonds. For a further discussion of the provisions of the Indenture and the Loan Agreement, see Appendix C hereto. The Indenture The 2008 Bonds are to be issued under the Indenture and will, except as otherwise provided in the Indenture, be equally and ratably secured thereby. No bonds other than the 2008 Bonds are issuable under the Indenture. The Indenture provides that all 2008 Bonds issued thereunder shall be limited obligations of the Authority, payable solely from and secured solely by the following sources: (a) all funds established under the Indenture (including the Debt Service Fund, but excepting the Rebate Fund) and all income derived from the investment of such pledged funds; and (b) the Authority s rights to receive payments from the College under the Loan Agreement (except for the Authority s rights thereunder to receive payments of administrative fees and expenses and indemnification against liabilities). The Loan Agreement The Loan Agreement provides, among other things, that: (a) the Authority will lend the proceeds of the 2008 Bonds to the College; (b) the Loan Agreement is a general unsecured obligation of the College; and (c) the College shall make payments to the Trustee, as the assignee of the Authority, in amounts necessary to provide for the payment as and when due of principal or redemption price of and interest on the 2008 Bonds and, from time to time, additional payments in amounts necessary to make up deficiencies in funds established under the Indenture and to provide for certain other payments required by the Indenture. The Authority will assign certain of its rights under the Loan Agreement, including the right to receive such loan repayments thereunder (but excluding the Authority s right to be paid its administrative fees and expenses and its rights to be indemnified) to the Trustee for the benefit of the Bondholders. No mortgage or other security interest is being granted in the facilities of the College or in revenues of the College to secure the College s obligations under the Loan Agreement. 8

13 PLAN OF FINANCE The 2008 Bonds are being issued to provide funds, together with an equity contribution from the College, for a project consisting of: (i) the refunding of the Northampton County Higher Education Authority College Revenue Bonds - Series of 1997 (Lafayette College Project) (the 1997 Bonds ); (ii) the refunding of the Authority's College Revenue Bonds Series 2004 (Lafayette College Project) (the 2004 Bonds ); (iii) the refunding of the Authority's College Revenue Bonds Second Series 2004 (Lafayette College Project) (the 2004 Second Series Bonds ); (iv) the refunding of the Authority's Lafayette College Revenue Notes Series of 2007 (the 2007 Notes and, together with the 1997 Bonds, the 2004 Bonds and the 2004 Second Series Bonds, the Prior Bonds ); (v) the funding of various capital projects for general College purposes; (vi) the funding of a portion of the cost of the acquisition of certain real estate in the City of Easton; and (vii) the payment of certain costs and expenses in connection with the issuance of the 2008 Bonds. See ESTIMATED SOURCES AND USES OF FUNDS herein. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds relating to the issuance of the 2008 Bonds are as follows: Sources of Funds: Par Amount of 2008 Bonds $96,705, Net Premium/OID 1,933, College s Equity Contribution 1,754, Total Sources $100,392, Uses of Funds: Refunding of Prior Bonds $93,335, Capital Project 6,300, Costs of Issuance (1) 757, Total Uses $100,392, (1) Includes, among other things, Underwriters discount, printing costs, Trustee fees and expenses, legal fees and expenses, fees of the rating agencies, fees to the auditors and Authority-related fees. 9

14 AGGREGATE ANNUAL DEBT SERVICE OF THE COLLEGE The following table shows for each Fiscal Year ending June 30 the principal, interest and sinking fund redemption requirements on the 2008 Bonds and the unrefunded Prior Bonds. Estimated Annual Debt Service Fiscal Year Ending June 30 Unrefunded Prior Bonds* 2008 Bonds All Bonds 2009 $ 3,356,269 $ 3,248,220 $ 6,604, ,356,269 4,923,375 8,279, ,364,866 4,915,250 8,280, ,356,269 4,907,125 8,263, ,356,269 4,899,000 8,255, ,381,913 4,890,563 8,272, ,356,269 4,881,813 8,238, ,364,866 4,873,063 8,237, ,356,269 4,864,313 8,220, ,356,269 4,855,406 8,211, ,356,269 25,230,938 28,587, ,381,913 3,561,000 6,942, ,356,269 3,561,000 6,917, ,364,866 3,561,000 6,925, ,356,269 3,561,000 6,917, ,241,368 3,561,000 16,802, ,918,042 3,561,000 6,479, ,892,399 3,561,000 6,453, ,892,399 3,561,000 6,453, ,892,399 23,941,875 26,834, ,548,262 2,622,750 27,171, ,249,680 2,622,750 26,872, ,767 2,622,750 3,256, ,280 2,622,750 3,245, ,280 2,622,750 3,245, ,280 2,622,750 3,245, ,280 53,766,375 54,388, , , ,311,325-15,311,325 Total $143,123,641 $194,421,814 $337,545,455 * The College has variable rate debt, a portion of which has been hedged with interest rate swaps. The schedule above uses an assumed 4% interest rate for the unhedged variable rate bonds and the fixed swap rate for the hedged variable rate portion. Actual interest expense on the variable rate bonds may vary from the estimates presented above. Estimated debt service costs presented above do not include remarketing fees or fees to the liquidity bank. 10

15 BONDHOLDERS RISKS General The 2008 Bonds are limited obligations of the Authority and are payable solely from payments made by the College pursuant to the Loan Agreement and from certain funds held by the Trustee pursuant to the Indenture. No representation or assurance can be given to the effect that the College will generate revenues or other available monies sufficient to meet the College s payment obligations under the Loan Agreement. Future legislation, regulatory actions, economic conditions, legal matters, changes in the number of students in attendance at the College or other factors could adversely affect the College s ability to generate such revenues or other available monies. Neither the Underwriters nor the Authority has made any independent investigation of the extent to which any such factors could have an adverse impact on the revenues or available monies of the College. Covenant to Maintain Tax-Exempt Status of the 2008 Bonds The tax-exempt status of the 2008 Bonds is based on the continued compliance by the Authority and the College with certain covenants contained in the Tax Certificate (the Tax Certificate ), to be delivered by the Authority and the College in connection with the issuance of the 2008 Bonds. These covenants relate generally to restrictions on use of facilities financed with proceeds of the 2008 Bonds, arbitrage limitations, and rebate of certain excess investment earnings to the federal government. Failure to comply with such covenants could cause interest on the 2008 Bonds to become subject to federal income taxation retroactive to the date of issuance of the 2008 Bonds. Enforceability of Remedies The remedies available to Bondholders in the event the 2008 Bonds are not paid when due are in many respects dependent upon judicial action which is subject to discretion or delay. Under existing law and judicial decisions, including specifically the Bankruptcy Code, remedies may not be readily available or may be limited. The various legal opinions to be delivered with the original delivery of the 2008 Bonds will be qualified as to enforceability of the 2008 Bonds by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws or legal or equitable principles affecting creditors rights. State and Federal Legislation In recent years, the activities of non-profit tax-exempt corporations have been subjected to increasing scrutiny by federal, state, and local legislative and administrative agencies (including the United States Congress, the Internal Revenue Service, the Pennsylvania General Assembly and local taxing authorities). Various proposals either have been considered previously or are presently being considered at the federal, state, and local level which would restrict the definition of tax-exempt or nonprofit status, impose new restrictions on the activities of tax-exempt non-profit corporations, and/or tax or otherwise burden the activities of such corporations (including proposals to broaden or strengthen federal and local tax law provisions respecting unrelated business income of non-profit corporations). There can be no assurance that future changes in the laws, rules, regulations, interpretations, and policies relating to the definition, activities, and/or taxation of non-profit tax-exempt corporations will not have material adverse effects on the future operations or costs of the College. 11

16 Other Risk Factors In the future, the following factors, among many others, may adversely affect the operations or the available monies of the College to an extent that cannot be determined at this time. (a) Employee strikes and other adverse labor actions that could result in a substantial reduction in revenues without corresponding decreases in costs. (b) Increased costs and decreased availability of public liability insurance. (c) Changes in the demand for higher education in general or for programs offered by the College in particular. (d) (e) expenditures. Cost and availability of energy. High interest rates, which could strain cash flow or prevent borrowing for needed capital (f) A decrease in student loan funds or other aid that permits many students the opportunity to pursue higher education. (g) An increase in the costs of health care benefits, retirement plan, or other benefit packages offered by the College to its employees. (h) A significant decrease in the value of the College s investments caused by market or other external factors. (i) Unknown litigation. (j) A significant increase in any other costs or expenses of the College without offsetting revenues or other available monies. (k) Natural, technological or other disasters or other catastrophic incidents, which could result in a substantial impact on the operations of the College and a corresponding reduction in revenues. Potential Effects of Bankruptcy If the College were to file a petition for relief under Title 11 of the United States Code, as amended (the Bankruptcy Code ), the filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the College and its property. If the bankruptcy court so ordered, the College s property, and its revenues, could be used for the benefit of the College despite the claims of its creditors (including the Bondholders). In a bankruptcy proceeding, the College could file a plan for the adjustment of its debts which modifies the rights of creditors generally or the rights of any class of creditors, secured or unsecured. The plan, when confirmed by the court, would bind all creditors who had notice or knowledge of the plan and discharges all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interest of creditors, is feasible and has been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its 12

17 favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly. LITIGATION As of the date hereof, there is no litigation of any nature, pending or, to the knowledge of the officers of the Authority, threatened against the Authority, seeking to restrain or enjoin the issuance, sale, execution or delivery of the 2008 Bonds, or in any way contesting or affecting the validity of the 2008 Bonds or any proceedings of the Authority with respect to the issuance or sale thereof, or the pledge or application of any money or security provided for the payment of the 2008 Bonds or the existence of the Authority, or any of the transactions contemplated by the 2008 Bonds, the Indenture or the Loan Agreement. For certain information regarding litigation related to the College, see Appendix A - Litigation. TAX MATTERS In the opinion of Bond Counsel, assuming compliance with certain covenants of the Authority and the College, interest on the 2008 Bonds is excludable from gross income of the owners of the 2008 Bonds for federal income tax purposes under existing law, as currently enacted and construed. Interest on the 2008 Bonds is not an item of tax preference under the Internal Revenue Code of 1986, as amended (the Code ), for purposes of determining the alternative minimum tax imposed on individuals and corporations; however, interest on a 2008 Bond held by a corporation (other than an S corporation, regulated investment company, real estate investment trust or real estate mortgage investment conduit) may be indirectly subject to alternative minimum tax because of its inclusion in the earnings and profits of the corporate holder. Interest on 2008 Bonds held by a foreign corporation may be subject to the branch profits tax imposed by the Code. The Code sets forth certain requirements which must be met subsequent to the issuance and delivery of the 2008 Bonds for interest thereon to remain excludable from the gross income of the owners of the 2008 Bonds for federal income tax purposes. The Authority has covenanted in the Indenture and the College has covenanted in the Loan Agreement to comply with such requirements. Noncompliance with such requirements may cause the interest on the 2008 Bonds to be required to be included in the gross income of the owners of the 2008 Bonds for federal income tax purposes, retroactive to the date of issue of the 2008 Bonds. The opinion of Bond Counsel assumes compliance with these covenants and Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the 2008 Bonds may affect the tax status, of interest on the 2008 Bonds. Bond Counsel is of the opinion that under the laws of the Commonwealth of Pennsylvania, as currently enacted and construed, the 2008 Bonds are exempt from personal property taxes in Pennsylvania and the interest on the 2008 Bonds is exempt from Pennsylvania personal income tax and Pennsylvania corporate net income tax. Ownership of the 2008 Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain S corporations with excess net passive income, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the 2008 Bonds. Bond Counsel will express no opinion as to such 13

18 collateral tax consequences, and prospective purchasers of the 2008 Bonds should consult their own tax advisers. CONTINUING DISCLOSURE In accordance with the requirements of Rule 15c2-I2 (the Rule ) promulgated by the Securities and Exchange Commission, the College (being an obligated person with respect to more than $10 million of outstanding securities, including the 2008 Bonds, within the meaning of the Rule) has covenanted in the Loan Agreement to provide to each nationally recognized municipal securities information repository designated by the Securities and Exchange Commission (each a NRMSIR ), and to each state information depository (as defined in the Rule), if any, for the Commonwealth of Pennsylvania ( SID ), not later than 180 days after the end of each fiscal year of the College, commencing with the fiscal year ending June 30, 2008, certain financial information and other operating data with respect to the College (collectively, the Annual Report ), as follows: (a) The financial statements of the College for the most recent fiscal year, with information of the type presented in Appendix B hereto and prepared in accordance with generally accepted accounting principles applied on a consistent basis, and audited by the College s public accountants in accordance with generally accepted auditing standards; (b) A summary, as of the date of each Annual Report, of all full-time and part-time employment at the College (with information of the type set forth under the heading Faculty in Appendix A hereto); (c) A summary, as of the date of the Annual Report, of the full-time and part-time enrollment at the College for the current academic year of the College (with information of the type set forth under the heading Student Enrollment in Appendix A hereto); (d) A summary, as of the date of the Annual Report, of applications, acceptances and matriculating students at the College for the current academic year of the College, including comparative information for the immediately preceding academic year (with information of the type set forth under the heading Student Applications in Appendix A hereto); (e) A summary of undergraduate full-time tuition and fees for the current academic year of the College (with information of the type set forth under the heading Tuition and Fees in Appendix A hereto); (f) A summary of the availability of subsidized and non-subsidized loans to College students for the current academic year (with information of the type set forth under the heading Student Financial Aid in Appendix A hereto); (g) A summary of the outstanding indebtedness of the College as of the end of the most recently completed fiscal year (with information of the type set forth under the heading Outstanding Indebtedness in Appendix A hereto); and (h) party, if any. A summary of any significant and financially material litigation to which the College is a The College is required under the Loan Agreement to notify each NRMSIR, SID and the Municipal Securities Rule Making Board of any failure by the College to provide any of the annual financial information and operating data described above, within 180 days of the end of each fiscal year 14