PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 2, 2017

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1 This Preliminary Official Statement is in a form "deemed final" by the Issuer for purposes of SEC Rule 15c2-12(b)(1), but is subject to revision, amendment and completion in a final Official Statement. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 2, 2017 NEW ISSUE BANK QUALIFIED RATING: Moody's: "A1" See "Bond Rating" herein. In the opinion of Bond Counsel, based upon present laws, regulations, rulings and decisions in effect on the date of delivery of the Bonds, and assuming continuing compliance with certain covenants made by the Issuer and the County, interest on the Bonds is excludable from gross income for federal income tax purposes upon the conditions and subject to the limitations set forth herein under "Tax Exemption". Receipt of interest on the Bonds may result in other federal income tax consequences to certain holders of the Bonds. Interest on the Bonds is exempt from income taxation and the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and any of its political subdivisions. Dated: Date of Issuance $2,370,000* BARREN COUNTY PUBLIC PROPERTIES CORPORATION LEASE REVENUE REFUNDING BONDS (COURT FACILITY PROJECT) SERIES 2017 Due: February 1 as shown below Interest on the Bonds is payable each February 1 and August 1, beginning February 1, The Bonds are issuable in book entry form only, registered initially in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Investors will not receive certificates representing their interest in the Bonds purchased. Individual purchases will be made in book-entry form only, in the denomination of $5,000 or any integral multiple thereof. Principal of and premium, if any, for the Bonds will be payable at the principal corporate trust office of U.S. Bank National Association, Louisville, Kentucky, Trustee, Paying Agent and Registrar (the "Trustee"). The Bonds are subject to redemption prior to maturity as described herein. The Bonds are special and limited obligations of the Barren County Public Properties Corporation (the "Issuer") and do not constitute a debt, liability, or general obligation of the County of Barren, Kentucky (the "County") or the Issuer, or a pledge of the full faith and credit of the County or the Issuer, but are payable solely from rental income derived from an annually renewable lease agreement (see "The Lease" herein). Year of Maturity Amount* $ 65, , , , , ,000 Interest Rate % Price or Yield Year of Maturity Amount* $205, , , , , ,000 Interest Rate % Price or Yield The Bonds are offered when, as and if issued and accepted by the Underwriters, subject to the approval of legality and tax exemption by Rubin & Hays, Bond Counsel, Louisville, Kentucky. Bids on the Bonds will be accepted until 11:00 A.M., E.T., on August 9, 2017 via PARITY in accordance with the Official Terms and Conditions. This Official Statement is deemed final for the purposes of SEC Rule 15c2-12(b)(1). Delivery of the Bonds is expected on or about August 23, *Preliminary, subject to adjustment J.J.B. HILLIARD, W.L. LYONS, LLC Financial Advisor

2 REGARDING USE OF THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of the Barren County Public Properties Corporation (the "Issuer") identified on the cover page hereof. No person has been authorized by the Issuer to give any information or to make any representation other than that contained in the Official Statement, and if given or made such other information or representation must not be relied upon as having been given or authorized by the Issuer, the County or J.J.B. Hilliard, W.L. Lyons, LLC, the Financial Advisor. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Barren County Public Properties Corporation Lease Revenue Refunding Bonds (Court Facility Project), Series 2017 by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer since the date hereof. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency, except the Issuer and the County, will pass upon the accuracy or adequacy of this Official Statement or approve the Bonds for sale. This Official Statement includes the front cover page immediately preceding this page and all Appendices hereto.

3 BARREN COUNTY PUBLIC PROPERTIES CORPORATION Micheal Hale, President Carl Dickerson, Director John Benningfield, Director Gary Gillon, Director Billy Houchens, Director Trent Riddle, Director Jack London, Director Charles Allen, Director COUNTY OF BARREN, KENTUCKY Micheal Hale, County Judge/Executive Carl Dickerson, Magistrate John Benningfield, Magistrate Gary Gillon, Magistrate Billy Houchens, Magistrate Trent Riddle, Magistrate Jack London, Magistrate Charles Allen, Magistrate Jeff Sharp, Esq., County Attorney Nancy Houchens, Deputy County Judge/Executive Denise Riddle, County Treasurer Sherry J. Jones, Fiscal Court Clerk/Finance Officer BOND COUNSEL Rubin & Hays Louisville, Kentucky FINANCIAL ADVISOR J.J.B. Hillard, W.L. Lyons, LLC Louisville, Kentucky TRUSTEE, BOND REGISTRAR AND PAYING AGENT U.S. Bank National Association Louisville, Kentucky

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5 TABLE OF CONTENTS Introduction... 1 The County... 2 The Issuer... 2 Administrative Office of the Courts The Bonds The Refunding Program... 9 Estimated Sources and Uses of Funds Security and Sources of Payment... 9 The Lease The Mortgage Litigation Tax Exemption Bank Qualification Disclosure Compliance Financial Advisor Underwriting Bond Rating Concluding Statement Page Estimated Annual Debt Service Requirements Demographic and Economic Data, and Tax Base and Financial Information for the County Audited Financial Statements for the year ended June 30, 2016 Form of Continuing Disclosure Agreement Form of Legal Opinion Appendix A Appendix B Appendix C Appendix D Appendix E

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7 OFFICIAL STATEMENT $2,370,000* BARREN COUNTY PUBLIC PROPERTIES CORPORATION LEASE REVENUE REFUNDING BONDS (COURT FACILITY PROJECT) SERIES 2017 INTRODUCTION The purpose of this Official Statement, which includes the cover page and Appendices hereto, is to set forth certain information pertaining to the Barren County Public Properties Corporation Lease Revenue Refunding Bonds (Court Facility Project), Series 2017 (the "Bonds"). The Barren County Public Properties Corporation (the "Issuer") was established by the County of Barren, Kentucky (the "County") to act as the agency and instrumentality of the County in acquiring, developing and financing public improvements and public projects. The Issuer, at the direction of the Fiscal Court of the County, adopted a resolution on July 18, 2017 (the "Resolution") authorizing the Bonds for the purpose of currently refunding the Issuer s outstanding Barren County Public Properties Corporation Lease Revenue Refunding Bonds (Court Facility Project) Series 2007 (the Series 2007 Bonds?). The proceeds of said Series 2007 Bonds were used to refund certain outstanding indebtedness issued for the purpose acquiring, constructing and furnishing a court facility located in Glasgow, Kentucky (the "Project"). The Bonds are special and limited obligations of the Issuer, being issued at the request of the County, and do not constitute a debt, liability or general obligation of the Issuer or the County within the meaning of the Constitution and laws of the Commonwealth of Kentucky, or a pledge of the full faith and credit or the taxing power of the County. The Bonds will be secured by a first foreclosable mortgage lien on the Project pursuant to a Mortgage Deed of Trust between the Issuer and U.S. Bank National Association, Louisville, Kentucky (the "Trustee") dated as of August 1, 2017 (the "Mortgage"). The Bonds will also be secured by the assignment by the Issuer of all of its right, title and interest to a Lease Agreement among the Issuer, the County and the Kentucky Administrative Office of the Courts (the "AOC") dated as of August 1, 2017 (the "Lease"). This Official Statement should be considered in its entirety, and no one subject discussed should be considered more or less important than any other by reason of its location in the text. Reference should be made to laws, reports or other documents *Preliminary, subject to adjustment

8 referred to in this Official Statement for more complete information regarding their contents. Prior to issuance and delivery of the Bonds, copies of the Mortgage and the Lease may be obtained at the office of the Financial Advisor, J.J.B. Hillard, W.L. Lyons, LLC, 500 West Jefferson Street, Louisville, Kentucky THE COUNTY The County is a political subdivision of the Commonwealth of Kentucky. The County is governed by a Fiscal Court consisting of an elected County Judge/Executive and seven (7) elected County Magistrates. These eight (8) members comprise the Fiscal Court. There is no limitation for succession by any member of the Fiscal Court. Economic, demographic, tax base and financial data regarding the County is included in Appendices B and C. THE ISSUER The Issuer is a nonprofit, non-stock public corporation organized and existing under the laws of the Commonwealth of Kentucky, including particularly Section and Sections to , inclusive, of the Kentucky Revised Statutes. The Issuer's principal purpose is to act as an agency and instrumentality of the County in the planning, promotion, development, financing and acquisition of public improvements and public projects for the County which may properly be undertaken by the County pursuant to the general statutory laws of Kentucky, including Chapter 58 of the Kentucky Revised Statutes (the "Act"). Any bonds, notes or other indebtedness issued or contracted by the Issuer shall, prior to the issuance or incurrence thereon, be specifically approved by the County acting by and through its Fiscal Court as its duly authorized and empowered governing body. The Court of Justice ADMINISTRATIVE OFFICE OF THE COURTS In 1975, Kentucky voters elected to unify the Commonwealth s fragmented judicial system by amending the Constitution to provide for a four (4) tiered court system referred to as the Court of Justice. The tiered system consists of two appellate levels and two trial levels. Appellate courts include the Supreme Court (the State s court of last resort) and the Court of Appeals (an intermediate appellate court). The trial courts are divided into circuit courts (courts which have general jurisdiction) and the district courts (courts with limited jurisdiction). Supreme Court. The Supreme Court consists of seven (7) justices, elected from Kentucky's seven appellate districts and serve eight year terms. A Chief Justice is chosen by the 2

9 seven justices for a four-year term. The Chief Justice is the administrative head of the State s court system. Court of Appeals. The Court of Appeals is made up of fourteen (14) judges, two elected from each of Kentucky's seven appellate districts. Each member on the Court of Appeals serves for a term of eight years. Circuit Court. Circuit courts are considered as the court of general jurisdiction and normally hear civil matters involving more than $4,000. Circuit judges have jurisdiction over cases involving capital offenses and felonies, divorces, adoptions, termination of parental rights, land disputes and contested probates of will. Circuit courts have the power to issue injunctions, writs of prohibition, writs of mandamus and hear appeals from district courts and administrative agencies. Currently, there are 97 circuit judges serving Kentucky s circuit court system. Circuit judges serve eight year terms and are assigned to one or more counties depending upon population and caseload. District Court. District courts have limited jurisdiction and are often referred to as the peoples court. District courts hear matters involving civil matters less than $4,000, juvenile offenses, city and county ordinances, traffic offenses, probates of will, felony preliminaries, cases involving guardianship, conservatorship, voluntary or involuntary commitment and domestic violence and abuse. Currently, there are 125 district judges in Kentucky. District judges serve four year terms and are assigned to one or more counties depending upon population and caseload. Administrative Office of the Courts The AOC serves as the staff for the Court of Justice, administered by the Commonwealth s Chief Justice of the Supreme Court. AOC s primary duties involve: - Prepare the biannual budget and administer the funds and accounts of the Court of Justice - Maintain data processing systems for the purpose of publishing statistical reports, evaluating special projects and operating case management systems - Disperse and maintain supplies and equipment - Provide offices and court space for the entire court system - Supervise the State Law Library - Oversee the pretrial and juvenile services programs The Court of Justice is funded through State appropriations from the Kentucky s General Assembly. The Court of Justice budget represents approximately 3% of the total State s General Fund. With the exception of certain fees that are dedicated to specific use and application, fines and all other revenues collected by the Court of Justice are deposited to the State s General Fund. The Court of Justice is funded by four separate appropriations: Court Operations and Administration, Judicial Retirement System, Local Facilities Fund and Capital Projects. A summary of the Court of Justice Budget and the Local Facilities Fund are set forth in Appendix 3

10 D. Rental payments of AOC as provided in the Lease are budgeted each biennium in the Local Facilities Fund of the Court of Justice budget. Under the Supreme Court Rule and KRS 26A.090 through 26A.130, AOC provides for office and court facilities to governmental units through its "Use Allowance" and "Operating Costs Allowance." The Use Allowance is compensation to the governmental unit operating the court facility for capital costs of the facility based upon a statutory formula. Application of the formula results in AOC being obligated for 100% of the debt service requirements for the Bonds once it occupies the Project. See "SECURITY AND SOURCES OF PAYMENT" for more information. The Operating Costs Allowance is compensation for the expenses borne by the governmental unit providing janitorial, insurance, maintenance, repair and upkeep of the court facility. General THE BONDS The Bonds will be dated the date of issuance, will bear interest from that date as described herein, payable semi-annually on February 1 and August 1 of each year commencing February 1, The Bonds will mature on February 1 of each year, in the years and in the principal amounts as set forth on the cover page of this Official Statement. Registration, Payment and Transfer The Bonds are to be issued in denominations of $5,000 and any integral multiple thereof. All Bonds shall be registered as to both principal and interest on the registration books maintained at the principal corporate trust office of U.S. Bank National Association, Louisville, Kentucky, acting as registrar (the "Trustee", the "Paying Agent" or the "Registrar"). No transfer of any Bonds shall be valid unless made on said books at the request of the registered owner in person or by his attorney duly authorized in writing, and similarly noted on such Bond. Bonds may be exchanged for Bonds of other authorized denominations upon surrender of the Bonds to be exchanged to the Registrar with a written request for such exchange, duly executed by the owner thereof or by his duly authorized attorney. The Registrar shall not be required to transfer or exchange any Bond on any date which is after the fifteenth day of the month preceding any interest payment date, or during any period beginning 15 days prior to the selection by the Registrar of the date on which any Bonds are to be redeemed prior to maturity and ending on the date of mailing of notice of any such redemption. The person in whose name a Bond is registered upon the books of the Issuer shall be deemed the owner thereof for all purposes. Interest on each Bond shall be payable to the registered owner thereof as of the fifteenth day of the month immediately preceding that date for payment of such interest at the address shown on the registration books kept by the Registrar. The principal of and premium, if any, on 4

11 the Bonds shall be payable, without exchange or collection charges, in lawful money of the United States of America upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the designated corporate trust office of the Registrar. Denominations and Places of Payment The Bonds will be issued originally solely in book-entry form to The Depository Trust Company ("DTC"), New York, New York or its nominee, Cede & Co., to be held in DTC's book-entry only system. So long as the Bonds are held in the book-entry only system, DTC (or a successor securities depository) or its nominee will be the registered owner or holder of the Bonds for all purposes of the Mortgage, the Bonds and this Official Statement. See "Book-Entry Only System" below. In the event that the Bonds are not held in a book-entry only system, the principal of and any premium on the Bonds will be payable when due upon presentation and surrender thereof at the principal corporate trust office of the Paying Agent in Louisville, Kentucky. Interest on the Bonds is to be paid on each Interest Payment Date to the persons in whose name the Bonds are registered (the "Bondowners") at the address appearing on the registration books for the Bonds (the "Register") on the fifteenth (15th) day of the month preceding the applicable Interest Payment Date by check or draft which the Paying Agent shall cause to be mailed on such Interest Payment Date. If and to the extent that the Issuer fails to make payment or provision for payment of interest on any Bond on an Interest Payment Date, the Paying Agent will establish a special record date for the payment of that defaulted interest, as described in the Mortgage. Book-Entry Only System The Bonds initially will be issued solely in book-entry form to be held in the book-entry only system maintained by DTC. So long as such book-entry system is used, only DTC will receive or have the right to receive physical delivery of Bonds and, except as otherwise provided therein with respect to Beneficial Owners (as defined below) of Beneficial Ownership Interests (as defined below), Beneficial Owners will not be or be considered to be, and will not have any rights as, owners or holders of the Bonds under the Mortgage. The following information about the book-entry only system applicable to the Bonds has been supplied by DTC. The Issuer, the Paying Agent, the Underwriter or the Financial Advisor makes no representations, warranties or guarantees with respect to its accuracy or completeness. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for the Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. 5

12 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 2 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect 6

13 Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the County or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent, or County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of County or Paying Agent, 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 depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. 7

14 The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. Optional Redemption The Bonds maturing on or after February 1, 2028, are subject to redemption, in whole or in part, by the Issuer prior to their stated maturities, at any time falling on or after August 1, 2027, (less than all Bonds of a single maturity to be selected in such manner as the Registrar may determine) upon payment of 100% of the principal amount to be redeemed plus accrued interest to the date of redemption. The Trustee shall, upon being indemnified to its satisfaction, and receiving funds necessary to redeem such Bonds, unless such optional redemption is conditioned upon the deposit of sufficient moneys as described below, cause notice of the call for any redemption identifying the Bonds or portions thereof (integral multiples of $5,000) to be redeemed to be sent by United States mail, postage prepaid, at least thirty (30) days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the address of the holder of each Bond called for redemption as set forth in the registration books maintained by the Registrar. Failure to give such notice by mailing or any defect therein in respect of any Bond shall not effect the validity of any proceedings for the redemption of any Bond. In the case for an optional redemption pursuant to the Mortgage, the notice of redemption may state (i) that it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Trustee no later than the redemption date or (ii) that the Issuer retains the right to rescind such notice on or prior to the scheduled redemption date (in either case, a "Conditional Redemption"), and such notice and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded in writing, and disseminated to each Owner of the Bonds in accordance with the procedures set forth in the Mortgage, no later than 7 days prior to the redemption date. Defeasance The Issuer reserves the right at all times during the term of the Lease, to make provision for discharge of all Bonds by depositing into the Sinking Fund moneys sufficient to pay all principal and interest requirements on the Bonds to and on the first or next date of redemption, or to the date of maturity, together with sufficient additional moneys to redeem and discharge all outstanding Bonds on such redemption date, or to deposit into the Sinking Fund such principal amount of permissible Investment Obligations as shall, with earnings thereon, produce an identical result. 8

15 THE REFUNDING PROGRAM The Bonds are being issued to (i) currently refund the outstanding Series 2007 Bonds; and (ii) paying the costs of issuing the Bonds (the "Refunding Program"). The Series 2007 Bonds will be called for redemption on, The proceeds of the Bonds will be deposited in the 2007 Sinking Fund and will be used to redeem all of the Series 2007 Bonds at a price of 100% of the principal amount thereof plus accrued interest on said Series 2007 Bonds on the redemption date. The Refunding Program is being undertaken to provide interest cost savings to the County and the AOC. ESTIMATED SOURCES AND USES OF FUNDS The table below shows the estimated sources and uses of Bond proceeds and other funds: Estimated Sources of funds: Par amount of Bonds $ Total Estimated Sources of Funds $ Estimated Use of funds: Refunding of the Series 2007 Bonds $ Underwriter s Discount Costs of Issuance 2 Rounding Total Estimated Uses of Funds $ 1 Includes Financial Advisor, Bond Counsel, Trustee, rating, printing and advertising. Security SECURITY AND SOURCES OF PAYMENT The Bonds will, upon their issuance, be secured by a first foreclosable mortgage lien on the Project. The Bonds will also be secured by the assignment by the Issuer to the Trustee of all of its right, title and interest in and to the Lease pursuant to which agreement the Project is leased by the Issuer to the County and the AOC for automatically renewable periods to the final maturity date of the Bonds. Payments by the County and the AOC to the Issuer under the Lease are equal to the payments of principal and interest on the Bonds (for a further descriptions of such payments, see "The Lease" herein). 9

16 Sources of Payment The only source of funds expected by the Issuer to meet the debt service on the Bonds are the rental payments of the County and the AOC for the Project. AOC must appropriate certain available revenues each biennium from its budget to meet the rental payments for its leasing of the Project, which rental payments are then assigned to the Trustee to meet 100% of the debt service requirements on the Bonds. AOC is legally obligated only for the rental period ending each June 30 of an even numbered year so long as any of the Bonds remain outstanding, and AOC has covenanted in the Lease that it will request a biennial appropriation at least equal to the Use Allowance and Operating Costs Allowance from the Kentucky General Assembly in order to continue to meet the rental payments and pay for the insurance, utilities, repair and upkeep of the Project. Rental payments from the County and the AOC shall be payable semiannually on or before each Interest Payment Date directly to the Trustee of the Bonds in ample amounts and in ample time to allow the Issuer to pay the interest and principal requirements of the Bonds as same fall due. THE LEASE The following is a summary of certain of the terms and provision of the Lease. Terms not otherwise defined herein shall have the meanings given in the Lease and/or the Mortgage. Lease Period and Amount The Lease provides that the County and the AOC shall lease from the Issuer, the Project and the Project Site, together with all of the improvements thereon at an agreed and stipulated rental equal to (i) 100% (the "AOC's Proportional Share") of the annual principal and interest of the Bonds which are due and payable during any lease period (the "Use Allowance") and (ii) the annual expenses borne by the Issuer or County for utilities, janitorial services, property insurance and necessary maintenance, repair and upkeep of the judicial center, which does not increase the permanent value or expected life of the judicial center, but keep the judicial center in efficient operating condition, including, at the election of the AOC, capital costs of interior or mechanical renovations for the benefit of the County (the "Operating Allowance"). Following the respective initial terms of the Lease, nothing in the Lease shall be construed as binding the County and the AOC for the payment of rentals beyond the rental for the current term of one year for the County and two years for the AOC, but the County and the AOC shall in each year become indebted to the Issuer for the rentals stipulated for such year only upon the exercise of its option to renew. 10

17 Option to Renew On July 1 of each even numbered year, the Lease may be renewed by the AOC for another biennial period of two years, provided that if the Lease is so renewed the rentals for each such biennial period during which the Lease remains in effect, as regards AOC, shall be a sum equal to the Use Allowance. The Lease renewal shall automatically be considered to have been affirmatively exercised each even numbered year by AOC, unless notice of its election not to exercise the option for the biennial period be given by AOC to the Issuer, the Trustee and the County in writing at least 60 days prior to the renewal date thereof. Pursuant to the terms of the Lease Agreement, the County is not an obligated party with respect to the principal and interest on the Bonds, nor does the County have the right to lease any of the Project or Project Site. The County is, however, obligated to fulfill the requirements of the Lease Agreement in compliance with the AOC Act. The AOC is required to reimburse the County pursuant to the Lease Agreement and the AOC Act. On July 1 of each year, the County's obligations under the Lease Agreement shall automatically be considered to have been affirmatively renewed unless the County shall provide notice of its election not to renew its obligations for another period of one year, such notice to be given to the Issuer and the Trustee, in writing, at least 60 days prior to the renewal date therein. The County hereby expresses its present intention to renew its obligations under the Lease Agreement in accordance with its terms and in accordance with its obligations under the AOC Act on a year to year basis, until all of the Bonds, to be issued by the Issuer, are fully paid, canceled and retired, whether at maturity or by call for redemption, but such expression of intention shall not be construed as a present election on the part of the County. Intent to Renew In the Lease, the County and the AOC express the intention to renew the Lease in accordance with its terms, and in accordance with the options to renew as set forth therein, until all of the Bonds to be issued by the Issuer at the direction of the County are fully paid, cancelled and retired, whether at maturity or by call for redemption, but such expression of intention shall not be construed as a present election on the part of the County or the AOC to extend the Lease beyond the original term. Operation, Maintenance and Repair The Lease, provides among other things, that the County and the AOC agree to take good care of the Project, to maintain and repair the same at the expense of the County and the AOC, to keep all of the lease premises and improvements thereon in good repair, working order and condition, and to return the same in as good condition as when received by the County, ordinary wear and tear, accident, damage by fire and the elements, and other unavoidable casualties excepted. 11

18 Insurance The Lease provides that the County will, during the original term of the Lease and during each extended term of one year, keep all insurable improvements presently existing, and all insurable improvements to be constructed and located upon the Project Site, insured to the full insurable value thereof against fire, flood and windstorm to the extent such insurance is obtainable (with standard comprehensive coverage endorsement) in good and solvent insurance companies, to be approved by the Trustee; and the County will make said policies payable to the County, the Issuer, and the Trustee as their respective interests may appear, or cause said policies to be endorsed in an appropriate manner so that in the event of loss the proceeds thereof will be payable to the County, the Issuer, and the Trustee, as their respective interests may appear. Release of Land The Issuer may cancel the Lease with respect to certain portions of the Project Site under the circumstances and subject to the conditions set forth in the Mortgage. Amendments The parties may supplement or make any amendment or change in the Lease (i) to cure any formal defect or ambiguity as permitted by the Mortgage, (ii) to conform the provisions of the Lease to any amended provisions of the Mortgage, (iii) to make necessary or advisable amendments in connection with the issuance of renewal bonds or additional bonds in accordance with the terms of the Mortgage or any supplemental Mortgage, (iv) to achieve compliance with any federal tax law, (v) to maintain or improve any rating on the Bonds, (vi) to provide for the release of land pursuant to and subject to the conditions specified in the Mortgage or any supplemental mortgage, (vii) to achieve compliance with any applicable statutory change, case law or Kentucky Supreme Court Mandate, or (viii) to amend the AOC's Proportionate Share. Amendment of AOC Proportionate Share for Change in Occupancy. The parties to the Lease reserve the right to amend the provisions of the Lease to reduce the AOC Rental Payments, upon satisfaction of each of the following conditions: (a) the amended Lease shall provide for the County's assumption of the AOC Rental Payments which are to be reduced; and (b) Moody's and any other rating agency then rating the Bonds shall have confirmed in writing that the rating on the Bonds in effect immediately preceding such amendment shall not be withdrawn or lowered as a result of the amendment of the Lease; and (c) if required, the State Local Debt Officer of the Commonwealth of Kentucky shall have approved in writing the amendments to the Lease and the County's 12

19 assumption of the AOC Rental Payments which are to be reduced as a result of an amendment to the Lease; and (d) if the Bonds are, at the time of such proposed reduction of the AOC Rentals, insured with a municipal bond insurance policy and the reduction is to result in the AOC Proportionate Share being reduced below 85%, the issuer of the municipal bond insurance policy shall have consented in writing to such reduction. Procedures Upon Default of the County or AOC In the event AOC shall elect not to renew the Lease at any time, or fail to pay the stipulated AOC Rentals, or the County shall elect not to renew the Lease at any time, or fail to pay the stipulated County Proportionate Share, then and in that event and upon any ensuing default in the payment of the principal of or interest on the Bonds, the Mortgage, as the case may be, shall be enforced, which enforcement may, under the terms of the Mortgage, include foreclosure of the liens created by the Mortgage and sale of the Project. No such sale or foreclosure, however, shall give rise to any right to a deficiency judgment against the County or AOC or the Issuer in any sum, and until such sale the County may at any time, by payment of all costs of action and charges of Trustee, and by discharge of principal of and interest on the Bonds, receive unencumbered fee simple title to the Project. In the event of any such enforcement by the Trustee (whether occasioned by the default of AOC or the County or by the failure of the Issuer to apply the Use Allowance to the payment of the Bonds and interest) from the proceeds of any operation of the Project or foreclosure and sale of the Project by the Trustee there shall first be paid all expenses incident to said enforcement, as provided in the Mortgage, and thereafter the Bonds and interest then outstanding shall be paid and retired, and if there shall remain any excess after paying such expenses and the claims of Owners, the entire amount of such excess shall be paid over in cash to the County. Notwithstanding the foregoing, as an alternative remedy, the Trustee is entitled to enter upon the premises, evict AOC and the County and relet the Project under such terms and conditions as it deems prudent; the proceeds of such reletting to be applied to the payment of the principal and interest requirements on the Bonds. Rights of the AOC and the County Survive Events of Default Should AOC fail to pay the stipulated Rentals due under the Lease, or during any year for which it is renewed, and the County fails to cure such default by AOC within 30 days, at the times therein stipulated, all rights of AOC and all future options therein granted to the AOC or County in respect of payments in whole of the Bonds shall in any event remain in full force and effect; provided that the Trustee under the Mortgage shall, upon the occurrence of an event of default, be entitled to take certain actions for the benefit of the Owners of the Bonds, including foreclosure of the mortgage lien on the Project Site and sale thereof, but no such sale shall result or give rise to a deficiency judgment of any type or in any amount against AOC or the County or the Issuer, and until such sale AOC or the County may at any time discharge the Bonds and the 13

20 interest thereon, in which event the County shall receive unencumbered fee simple title to the Project Site and the Project. Rights of AOC Survive Defaults by Others If AOC shall renew the Lease from biennium to biennium, in the manner herein provided, and shall promptly pay in each year the AOC Use Allowance therein stipulated for each year, and shall well and truly keep and perform each and every covenant and condition herein stipulated for performance by them, or cause same to be well and truly kept and performed, then it is specifically agreed that the Lease and all rights of AOC under the terms thereof shall continue in full force and effect the AOC shall have the right to the possession and use of the Project therein described, and AOC shall have the right to continue renewing the Lease as therein provided, notwithstanding any failure on the part of the Issuer to apply the Use Allowance so paid to it by AOC to the retirement of the principal and interest of the Bonds, and notwithstanding any default in the payment of the Bonds or interest resulting from such failure on the part of the Issuer, even though the rights securing the Bonds may be enforced by the Trustee for the benefit of the Owners of the Bonds; and such enforcement, either voluntary or involuntary, shall not be cause for cancellation or avoidance of the Lease by the AOC, the County or the Issuer. Conveyance of the Project If the AOC renews the Lease from biennium to biennium and pays the rentals for each year as therein provided and when from such rentals the Issuer shall have fully paid and retired all of the Bonds, then the Issuer covenants and agrees that it will immediately procure the release, on the records of the Clerk of the County, of the Mortgage, as the case may be, securing the Bonds, and the Issuer further covenants and agrees that it will thereupon convey the Project Site and the Project to the County free and clear of all liens and encumbrances created by and under the Mortgage, as the case may be, such steps to be taken at the expense of the County; all subject to the rights of the Owners of any Additional Bonds. Assignment of Rights to Trustee The Issuer has assigned (i) the Lease, (ii) the lease rentals and all other rights, title and interest of the Issuer arising under the terms of the Lease and (iii) the pledged receipts to the Trustee for the Bondholders, as additional security for the Bonds. The County and/or the AOC have agreed to make its rental payments in the amounts stipulated, directly to the Trustee, for application in strict accordance with the terms and provisions of the Mortgage. THE MORTGAGE The following is a summary of certain of the terms and provisions of the Mortgage entered into by the Issuer and the Trustee, in order to secure the payment of principal and interest on the Bonds. The Mortgage imposes a foreclosable first mortgage lien on the Project and Project Site. 14

21 Funds and Accounts Upon delivery of the Bonds to the purchaser or purchasers thereof and receipt of the purchase price, the same shall forthwith in each case be deposited with the Trustee, as trust funds, and the Trustee shall hold, treat and disburse the same, as follows: (1) Cost of Issuance Fund. There shall be deposited in the Cost of Issuance Fund the amount of moneys necessary to pay the cost of issuance of the Bonds from the proceeds of the Bonds. The Trustee shall disburse amounts for the payment of such costs at the direction of the Issuer Representative. Amounts remaining on deposit in the Costs of Issuance Fund upon the payment of all such costs shall be transferred to the Construction Fund. Moneys in the Costs of Issuance Fund shall not be invested. (2) Sinking Fund. The Trustee shall deposit in the Sinking Fund upon receipt all funds received pursuant to payments made by the County or the AOC pursuant to the Lease and any other amounts which, under the terms of this Mortgage are to be applied to the payment of principal and interest on the Bonds. Except as provided in the Mortgage, the Sinking Fund and the moneys and investments therein shall be used solely and exclusively for the payment of principal and interest on the Bonds as they fall due at stated maturity, or by redemption or pursuant to any mandatory sinking fund requirements or upon acceleration, all as provided therein. Moneys in the Sinking Fund shall be invested and reinvested by the Trustee in Permitted Investments at the direction of the Issuer. The investments of funds may be made or transacted by the Trustee through the Trustee's or its affiliate's investment department. Investment of moneys in the Sinking Fund shall mature or be redeemable at the times and in the amounts necessary to provide moneys to pay principal of and interest on the Bonds as they become due at stated maturity, by redemption or pursuant to any mandatory sinking fund requirements. An investment made from moneys credited to the Sinking Fund shall constitute part of the Sinking Fund, including but not limited to all proceeds of sale and income from investment of moneys credited thereto. The Sinking Fund shall be used solely and only and, pursuant to the Mortgage, is pledged for the payment of the interest on and principal of the Bonds. (3) Rebate Fund. From and after the issuance of the Bonds, the Rebate Fund shall be held and maintained by the Trustee as a trust fund. There shall be deposited in the Rebate Fund such amounts as are required to prevent the Bonds to be classified as "arbitrage bonds" within the meaning of Sections 103(b)(2) and 148 of the Code. 15

22 Investment of Funds Moneys held in any of the aforementioned funds (other than the Costs of Issuance Fund and Rebate Fund) may be invested until required for the purposes intended in one or more of the following "Permitted Investments": (a) (b) Obligations of the United States and of its agencies and instrumentalities, including obligations subject to repurchase agreements, if delivery of these obligations subject to repurchase agreements is taken either directly or through an authorized custodian. These investments may be accomplished through repurchase agreements reached with sources including, but not limited to, national or state banks chartered in Kentucky; Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency, including but not limited to: (a) (b) (c) (d) (e) United States Treasury; Export-Import Bank of the United States; Farmers Home Administration; Government National Mortgage Corporation; and Merchant Marine bonds; (c) Obligations of any corporation of the United States government, including but not limited to: (a) (b) (c) (d) (e) (f) (g) (h) Federal Home Loan Mortgage Corporation; Federal Farm Credit Banks; Bank for Cooperatives; Federal Intermediate Credit Banks; Federal Land Banks; Federal Home Loan Banks; Federal National Mortgage Association; and Tennessee Valley Authority; (d) (e) Certificates of deposit issued by or other interest bearing accounts of any bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity, including the Trustee or any of its affiliates, or which are collateralized, to the extent uninsured, by any obligations, including surety bonds, permitted by KRS (4); Uncollateralized certificates of deposit issued by any bank or savings and loan institution, including the Trustee or any of its affiliates, rated in one (1) of the three (3) highest categories by a nationally recognized rating agency; 16