PRIVATE PLACEMENT MEMORANDUM

Transcription

1 NEW ISSUE PRIVATE PLACEMENT MEMORANDUM NOT RATED IN THE OPINION OF NIXON PEABODY LLP, NEW YORK, NEW YORK, BOND COUNSEL TO THE BUILD NYC RESOURCE CORPORATION, UNDER EXISTING LAW AND ASSUMING COMPLIANCE WITH THE TAX COVENANTS DESCRIBED HEREIN, AND THE ACCURACY OF CERTAIN REPRESENTATIONS AND CERTIFICATIONS MADE BY THE BUILD NYC RESOURCE CORPORATION AND THE COMPANY DESCRIBED HEREIN, INTEREST ON THE SERIES 2012A-1 BONDS AND SERIES 2012A-2 BONDS IS EXCLUDED FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES UNDER SECTION 103 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE ). BOND COUNSEL IS ALSO OF THE OPINION THAT SUCH INTEREST IS NOT TREATED AS A PREFERENCE ITEM IN CALCULATING THE ALTERNATIVE MINIMUM TAX IMPOSED UNDER THE CODE WITH RESPECT TO INDIVIDUALS AND CORPORATIONS. BOND COUNSEL IS FURTHER OF THE OPINION THAT INTEREST ON THE SERIES 2012A-1 BONDS AND SERIES 2012A-2 BONDS IS EXEMPT FROM PERSONAL INCOME TAXES IMPOSED BY THE STATE OF NEW YORK OR ANY POLITICAL SUBDIVISION OF THE STATE OF NEW YORK. INTEREST ON THE 2012A-3 BONDS IS NOT EXCLUDED FROM GROSS INCOME FOR FEDERAL TAX PURPOSES UNDER SECTION 103 OF THE CODE. BOND COUNSEL IS FURTHER OF THE OPINION THAT INTEREST ON THE 2012A-3 BONDS IS NOT EXEMPT FROM PERSONAL INCOME TAXES IMPOSED BY THE STATE OF NEW YORK OR ANY POLITICAL SUBDIVISION OF THE STATE OF NEW YORK. SEE TAX MATTERS HEREIN REGARDING CERTAIN OTHER TAX CONSIDERATIONS. $595,000 Build NYC Resource Corporation Revenue Bonds, Series 2012A-1 (Life s W.O.R.C., Inc. Project) $1,705,000 Build NYC Resource Corporation Revenue Bonds, Series 2012A-2 (Life s W.O.R.C., Inc. Project) $100,000 Build NYC Resource Corporation Taxable Revenue Bonds, Series 2012A-3 (Life s W.O.R.C., Inc. Project) Dated and Delivered: Date of Delivery Due: As shown below The above referenced Bonds (the Bonds ) are dated July 26, 2012 and are issuable in the form of physical bonds without coupons delivered to the Initial Purchaser on or about the Closing Date. The Bonds shall be issued three series, (i) the Series 2012A-1 Revenue Bonds (Life's W.O.R.C., Inc. Project) in the aggregate principal amount of $595,000, (ii) the Series 2012A-2 Revenue Bonds (Life's W.O.R.C., Inc. Project) in the aggregate principal amount of $1,705,000 and (iii) the Series 2012A-3 Taxable Revenue Bonds (Life's W.O.R.C., Inc. Project) in the aggregate principal amount of $100,000 (the "Series 2012A-1 Bonds", "Series 2012A-2 Bonds", and the "Series 2012A-3 Bonds", respectively). The Series 2012A-1 Bonds and the Series 2012A-2 Bonds are sometimes referred to herein as the "Tax-Exempt Bonds" The Series 2012A-3 Bonds are sometimes referred to herein as the "Taxable Bonds". The Taxable Bonds and the Tax-Exempt Bonds are sometimes collectively referred to herein as the "Series 2012A Bonds." The Bonds are issuable in minimum denominations of $100,000 or $100,000 plus any integral multiple of $5,000 thereof; provided, however, smaller authorized denominations may result from redemptions in accord with the Indenture. Principal when due, premium, if any, and, if the Bonds are redeemed prior to maturity, the redemption price and interest accrued to the redemption date, are payable at the office of the hereinafter defined Trustee. The Bonds are special obligations payable solely out of the revenues or other receipts, funds or monies of the Build NYC Resource Corporation (the Issuer ) pledged therefor or otherwise available to the Trustee, for the payment thereof, including those derived under a Loan Agreement, dated as of July 1, 2012 (the Loan Agreement ), by and between the Issuer and Life's W.O.R.C., Inc., a duly organized and validly existing New York not-for-profit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), which is exempt from federal income taxation pursuant to Section 501(a) of the Code (the Company ). The Bonds are being issued for the purposes of providing funds for financing and/or refinancing the costs of (i) current refunding of the outstanding New York City Industrial Development Agency ( Agency ) Bonds (Special Needs Facilities Pooled Program, Series 2000A-1) in the approximate amount currently outstanding of $190,000, the proceeds of which, together with other funds of the Applicant were used, to finance the acquisition and renovation of two sites located at st Road, Queens, New York 11428, and Edgewood Street, Queens, New York 11422; (ii) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2001A-1) in the approximate amount currently outstanding of $625,000, the proceeds of which, together with other funds of the Applicant were used to finance the acquisition and renovation of two sites located at Linden Boulevard, Queens, New York and th Avenue, Queens, New York 11413; (iii) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2002A-1) in the approximate amount currently outstanding of $290,000, the proceeds of which, together with other funds of the Applicant were used to finance the acquisition and renovation of a building located at th Street, Queens, New York 11429; (iv) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2004A-1) in the approximate amount currently outstanding of $85,000, the proceeds of which, together with other funds of the Applicant were used to finance renovations at two sites located at Gaskell Road, Little Neck, New York and Myrtle Avenue, Glendale, New York 11385; (v) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2006A-1), in the approximate amount currently outstanding of $430,000, the proceeds of which, together with other funds of the Applicant were used to refinance an existing State Bank of Long Island interim loan used to finance renovations at Whitelaw Street, Queens, New York 11417; (vi) current refinancing of an existing HSBC mortgage in connection with the facility at Pompeii Avenue, Hollis, New York in the approximate amount currently outstanding of $1,092,000; (vii) funding of any required debt service funds and pay certain costs related to the issuance of the bonds (collectively, the Project ). Capitalized terms used in this private placement memorandum (including this cover page) shall have the meanings ascribed to such terms in Appendix B hereto unless otherwise specified herein. The Bonds are subject to optional, mandatory and extraordinary mandatory redemption prior to their stated maturity as described herein. The Series 2012A-1 Bonds shall bear interest at the rate of 2.00% per annum until their stated maturity date of December 1, Principal and interest on the Series 2012A-1 Bonds shall be payable in arrears on the 1 st calendar day of each month year commencing September1, The Series 2012A-2 Bonds shall bear interest at the rate of 3.00% per annum until their stated maturity date of December 1, Principal and interest on the Series 2012A-2 Bonds shall be payable in arrears on the 1 st calendar day of each month commencing September 1, The Series 2012A-3 Bonds shall bear interest at the rate of 4.25% per annum until their stated maturity date of August 1, Principal and interest on the Series 2012A-3 Bonds shall be payable in arrears on the 1 st calendar day of each month commencing September 1, 2012.

2 The Bonds will be subject to redemption prior to maturity as described herein. See THE SERIES 2012A BONDS Redemption herein. Investment in the Series 2012 Bonds involves certain substantial risks. See the caption BONDHOLDERS RISKS herein. The Bonds are special obligations of the Issuer and neither the State of New York nor any political subdivision thereof (including, without limitation, The City of New York) is obligated to pay, and neither the full faith and credit nor the taxing power of the State of New York nor any political subdivision thereof including, without limitation, The City of New York, is pledged to the payment of the principal of, premium, if any, or interest on the Bonds. The Bonds are payable solely from and secured by receipts and revenues of the Issuer under the Loan Agreement and other moneys available therefor as described herein. The Issuer has no taxing power. Investment in the Bonds involves certain risks. See Risk Factors herein. Subseries Principal Amount Maturity Price CUSIP Series 2012A-1 $595,000 December 1, % 12008E AM8 Series 2012A-2 $1,705,000 December 1, % 12008E AN6 Series 2012A-3 $100,000 August 1, % 12008E AP1 The Bonds (as hereinafter defined) are offered on a best efforts basis by the Placement Agent when, as and if issued by the Build NYC Resource Corporation, subject to prior sale, withdrawal or modification of the offer without notice, and subject to the approval of legality by Nixon Peabody LLP, New York, New York, Bond Counsel. Certain legal matters will be passed upon for the Build NYC Resource Corporation by its counsel, Richard E. Marshall, Esq., Vice President for Legal Affairs for Build NYC Resource Corporation, New York City, New York. Certain legal matters will be passed upon for the Company by its counsel Moritt Hock & Hamroff LLP, Garden City, New York; for the Bank of New York Mellon, as Trustee, by its counsel, Carter Ledyard & Milburn LLP, New York, New York; and for the Placement Agent by its counsel, Moritt Hock & Hamroff LLP, Garden City, New York. It is expected that delivery of the Bonds will to the Initial Bondholder on or about July 26, 2012 in New York City, New York. Dated: July 26, 2012 Gates Capital Corporation

3 The Bonds may not be sold nor may offers to buy be accepted prior to the time this Private Placement Memorandum is delivered in final form. Under no circumstances shall the Private Placement Memorandum constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any jurisdiction. No person has been authorized to give any information or to make any representations not contained in this Private Placement Memorandum and, if given or made, such information or representations must not be relied upon as having been authorized by the Issuer, the Company, the Trustee or the Placement Agent. This Private Placement Memorandum does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by any person in any jurisdiction in which such offer, solicitation or sale is not authorized or in which it is unlawful to make such offer, solicitation or sale. The information set forth herein has been obtained from the Issuer, the Company, the Trustee and other sources which are believed to be reliable but it is not guaranteed as to its accuracy or completeness and nothing contained in this Private Placement Memorandum is, or shall be relied on as, a representation by the Placement Agent. The information and expressions of opinion herein are subject to change without notice and the delivery of this Private Placement Memorandum shall not, under any circumstances, create any implication that there has been no change in the affairs of the Issuer, the Company or the Trustee since the date hereof. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE INDENTURE HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS CONTAINED IN SUCH ACTS.

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5 PRIVATE PLACEMENT MEMORANDUM $595,000 Build NYC Resource Corporation Revenue Bonds, Series 2012A-1 (Life s W.O.R.C., Inc. Project) $1,705,000 Build NYC Resource Corporation Revenue Bonds, Series 2012A-2 (Life s W.O.R.C., Inc. Project) $100,000 Build NYC Resource Corporation Taxable Revenue Bonds, Series 2012A-3 (Life s W.O.R.C., Inc. Project) INTRODUCTION The purpose of this Private Placement Memorandum, including the cover page, the Table of Contents page and the Appendices hereto, is to set forth certain information in connection with the issuance of the Issuer's (i) Series 2012A-1 Revenue Bonds (Life's W.O.R.C., Inc. Project) in the aggregate principal amount of $595,000, (ii) Series 2012A-2 Revenue Bonds (Life's W.O.R.C., Inc. Project) in the aggregate principal amount of $1,705,000 and (iii) Series 2012A-1 Taxable Revenue Bonds (Life's W.O.R.C., Inc. Project) in the aggregate principal amount of $100,000 (the "Series 2012A-3 Bonds", "Series 2012A-2 Bonds", and the "Series 2012A-3 Bonds", respectively). The Series 2012A-1 Bonds and the Series 2012A-2 Bonds are sometimes referred to herein as the "Tax-Exempt Bonds" The Series 2012A-3 Bonds are sometimes referred to herein as the "Taxable Bonds". The Bonds are being issued pursuant to a certain Indenture of Trust, dated as of July 1, 2012 (the Indenture ), by and between the Build NYC Resource Corporation (the Issuer ) and The Bank of New York Mellon, as trustee (the Trustee ). Reference is hereby made to the Indenture for a description of the property pledged, assigned and otherwise available for the payment of the Bonds issued thereunder, the provisions, among others, with respect to the nature and extent of the security for the Bonds issued thereunder, the rights, duties and obligations of the Issuer, the Trustee and the Owners of the Bonds, and the terms upon which the Bonds are, and additional bonds on a parity therewith may be, issued and secured. Capitalized terms used in this Private Placement Memorandum and not otherwise defined shall have the meanings assigned thereto in APPENDIX B Schedule of Definitions. The Series 2012A Bonds are authorized to be issued pursuant to and in accordance with the provisions of Section 1411 of the New York Not-for-Profit Corporation Law (collectively, the Act ), and a resolution of the Issuer duly adopted on June 12, The Bonds are being issued for the purposes of providing funds for financing and/or refinancing the costs of (i) current refunding of the outstanding New York City Industrial Development Agency ( Agency ) Bonds (Special Needs Facilities Pooled Program, Series 2000A-1) in the approximate amount currently outstanding of $190,000, the proceeds of which, together with other funds of the Applicant were used, to finance the acquisition and renovation of two sites located at st Road, Queens, New York 11428, and Edgewood Street, Queens, New York 11422; (ii) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2001A-1) in the approximate amount currently outstanding of $625,000, the proceeds of which, together with other funds of the Applicant were used to finance the acquisition and renovation of two sites located at Linden Boulevard, Queens, New York and th Avenue, Queens, New York 11413; (iii) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2002A-1) in the approximate amount currently outstanding of $290,000, the proceeds of which, together with other funds of the Applicant were used to finance the acquisition and renovation of a building located at th Street, Queens, New York 11429; (iv) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2004A-1) in the approximate amount currently outstanding of $85,000, the proceeds of which, together with other funds of the Applicant were used to finance renovations at two sites located at Gaskell Road, Little Neck, New York and Myrtle Avenue, Glendale, New York 11385; (v) current refunding of the outstanding Agency Bonds (Special Needs Facilities Pooled Program, Series 2006A-1), in the approximate amount currently outstanding of $430,000, the proceeds of which, together with other funds of the Applicant were used to refinance an existing State Bank of Long Island interim loan used to finance renovations at Whitelaw Street, Queens, New York 11417; (vi) current refinancing of an existing HSBC mortgage in connection with the 1

6 facility at Pompeii Avenue, Hollis, New York in the approximate amount currently outstanding of $1,092,000; (vii) funding of any required debt service funds and pay certain costs related to the issuance of the bonds (collectively, the Project ) Concurrently with the issuance of the Bonds, the Issuer will loan the proceeds of the Bonds to the Company pursuant to a Loan Agreement, dated as of July 1, 2012 (the Loan Agreement ). The Bonds are special obligations of the Issuer and are payable solely from the revenues, receipts and other payments derived from the Loan by the Issuer to the Company pursuant to the Loan Agreement and pledged to the Trustee under the terms of the Indenture and the Pledge and Assignment between the Issuer and the Trustee, dated as of July 1, 2012 (the Pledge and Assignment ). The Bonds will bear interest payable on each Interest Payment Date to the owner in whose name each Bond is registered at the close of business on the Record Date with respect to such Interest Payment Date; provided, however that, payment of interest on redemption of any Bond shall be made only upon presentation and surrender of such Bond as provided in the Indenture, irrespective of any transfer or exchange of such Bond subsequent to such Record Date and prior to such Interest Payment Date. (See THE BONDS. ) Pursuant to the Indenture, all payments due from the Company to the Issuer under its Loan Agreement (except for moneys and investments from time to time in the applicable Rebate Fund) established under the Indenture are assigned to the Trustee to secure the payment of the principal of, Redemption Price of, or interest on the applicable series of Bonds. Payments under the Loan Agreement are to be made by the Company to the Trustee, under the Indenture in amounts sufficient, together with any moneys then held by the Trustee and available for such purpose, to pay the principal of, Redemption Price of, and interest on the applicable series of Bonds as the same become due, whether at maturity, upon redemption or by acceleration or otherwise. Mortgage liens on and security interest in the Facility will be given by the Company to the Issuer and the Issuer shall assign their interests thereunder to the Trustee pursuant to an Assignment of Mortgage (the Assignment ) as additional security for the Bonds. See THE MORTGAGE herein below. Brief descriptions follow of the Issuer, the Bonds, Debt Service Requirements on the Bonds, Security and Sources of Payment for the Bonds, the Company, Application of Bond Proceeds, Risk Factors, Tax Matters, Litigation, the Placement Agent, Legality for Investment, and Approval of Legal Proceedings. Appendix A contains an overview of the Company together with the Company s audited financial statements for fiscal years ended June 30, 2011 and Appendix B contains a Schedule of Definitions which relate to the Series 2012A Bonds. Appendix C contains a form of the opinion of Bond Counsel which Bond Counsel proposes to render upon the delivery of the Bonds. Appendix D contains a form of the Indenture. Appendix E contains a form of the Loan Agreement. The descriptions and summaries previously listed do not purport to be comprehensive or definitive and are qualified in their entirety by reference to the respective documents and to APPENDIX B-Schedule of Definitions. All such descriptions and summaries are further qualified in their entirety by reference to bankruptcy laws, insolvency or other laws or enactments now or hereafter enacted by the State of New York or the United States relating to or affecting generally the enforcement of creditor s rights and the availability of equitable remedies, and to the extent, if any, that enforceability of the indemnification and contribution provisions of the Bond Documents may be limited by law. Copies of the Bond Documents may be obtained, upon written request, from the Placement Agent during the offering period and, after the initial delivery of the Bonds, at the office of the Trustee, 101 Barclay Street, Floor 7W, New York, New York

7 THE ISSUER The Issuer was established in accordance with the Act as a local development corporation pursuant to the Act and is authorized by the Act and its Certificate of Incorporation and By-Laws to (i) provide assistance in financing projects of not-for-profit organizations to be located within the City of New York; (ii) relieve and reduce unemployment, promote and provide for additional and maximum employment; (iii) better and maintain job opportunities; and (iv) lessen the burdens of government and act in the public interest. As provided in the Act, the Issuer is authorized and empowered to borrow money and to issue bonds or notes and to apply the proceeds thereof to carry out its corporate purposes. By a resolution adopted on June 12, 2012, the Issuer authorized and approved the issuance of the Bonds. The Issuer has held the required public hearing, in compliance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), with respect to the issuance of the Bonds, following the timely publication of notice of the hearing. By a Certificate of Approval executed by the Applicable Elected Representative (as defined in the Code), the Mayor of the City of New York approved the issuance of the Bonds. THE SERIES 2012A BONDS ARE NEITHER A GENERAL OBLIGATION OF THE ISSUER, NOR A DEBT OR INDEBTEDNESS OF THE CITY OF NEW YORK OR THE STATE OF NEW YORK AND NEITHER THE CITY OF NEW YORK NOR THE STATE OF NEW YORK SHALL BE LIABLE THEREON. THE SERIES 2012A BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE BY THE ISSUER SOLELY FROM THE REVENUES AND FUNDS PLEDGED FOR THEIR PAYMENT UNDER AND PURSUANT TO THE INDENTURE. THE ISSUER HAS NOT VERIFIED, REVIEWED OR APPROVED, AND DOES NOT REPRESENT IN ANY WAY, THE ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION SET FORTH HEREIN OTHER THAN INFORMATION SET FORTH UNDER THIS HEADING AND THE INFORMATION CONCERNING THE ISSUER UNDER THE HEADINGS "INTRODUCTION " AND "LITIGATION". 3

8 THE BONDS The following is a summary of certain provisions of the Bonds and should not be considered a full statement thereof. Reference is made to the Indenture (including the forms of Bonds) for the detailed provisions thereof and the discussion herein is qualified by such reference. In the event of any inconsistency between this description and the Indenture, the Indenture shall be deemed to control. The Series 2012A Bonds General Provisions The Bonds are dated July 26, The Series 2012A Bonds are issuable in the physical form of fully registered bonds in the minimum denomination of $100,000 or $100,000 plus any integral multiple of $5,000. The Bonds will bear interest from July 26, The interest payable on each Initial Bond on any Interest Payment Date shall be paid by the Trustee to the registered owner of such Initial Bond as shown on the bond registration books of the Trustee as Bond Registrar at the close of business on the Regular Record Date for such interest, (1) by check or draft mailed to such registered owner at his address as it appears on the bond registration books or at such other address as is furnished to the Trustee in writing by such owner, or, at the written request addressed to the Trustee by any registered owner of Initial Bonds in the aggregate principal amount of at least $1,000,000 that all such payments be made by wire transfer, by electronic transfer in immediately available funds to the bank for credit to the ABA routing number and account number filed with the Trustee no later than five (5) Business Days before an Interest Payment Date, but no later than a Regular Record Date for any interest payment. Interest on any Initial Bond that is due and payable but not paid on the date due ( Defaulted Interest ) shall cease to be payable to the owner of such Initial Bond on the relevant Regular Record Date and shall be payable to the owner in whose name such Initial Bond is registered at the close of business on a special record date (the Special Record Date ) for the payment of such Defaulted Interest, which Special Record Date shall be fixed in the following manner. It is provided in the Loan Agreement that the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Initial Bond and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), and shall deposit with the Trustee at the time of such notice an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment. Money deposited with the Trustee on account of Defaulted Interest shall be held in trust for the benefit of the owners of the Initial Bonds entitled to such Defaulted Interest as provided in this Section. Following receipt of such funds the Trustee shall fix the Special Record Date for the payment of such Defaulted Interest which shall be not more than fifteen (15) nor less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt of such funds by the Trustee. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each owner of an Initial Bond entitled to such notice at the address of such owner as it appears on the bond registration books not less than ten (10) days prior to such Special Record Date. Subject to the foregoing provisions, each Initial Bond delivered under the Indenture upon transfer of or in exchange for or in lieu of any other Initial Bond shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Initial Bond and each such Initial Bond shall bear interest from such date, so that neither gain nor loss in interest shall result from such transfer, exchange or substitution. The principal of or Redemption Price of the Bonds shall be payable at the Office of the Trustee, or such other address as the Trustee shall designate, or at the corporate trust office of any successor Trustee under the Indenture. Interest Rates The Series 2012A-1 Bonds shall bear interest in the Fixed Rate Mode at a Fixed Rate through Maturity of 2.00% per annum. The Series 2012A-2 Bonds shall bear interest in the Fixed Rate Mode at a Fixed Rate through Maturity of 3.00% per annum. The Series 2012A-3 Bonds shall bear interest in the Fixed Rate Mode at a Fixed Rate 4

9 through Maturity of 4.25% per annum. Principal and interest on the Series 2012A Bonds shall be payable in arrears on the first calendar day of each month commencing September 1, Redemption of Bonds Before Maturity The Bonds are subject to redemption prior to the respective maturities thereof on the terms and at the prices set forth below. Optional Redemption The Series 2012A Bonds shall be subject to redemption, in whole or in part at any time (but if in part with respect to any maturity date, in an amount not less than the full amount coming due on such maturity date) at the option of the Issuer (which option shall be exercised only upon the giving of notice by the Institution of its intention to prepay loan payments due under the Loan Agreement pursuant to Section 4.3(c) thereof), at the Redemption Prices equal to the principal amount of the Initial Bonds to be redeemed plus the Prepayment Premium, plus accrued interest to the date of redemption. The Prepayment Premium shall equal the aggregate of the present values of the streams of payments of all installments of the Initial Bonds being fully or partially prepaid. For each installment, the present value of the stream of payments shall be calculated in accordance with generally accepted practices as determined by the Initial Purchaser, using as bases for calculation (i) the Semiannual Stream of Payments (as hereinafter defined), (ii) the number of whole and partial semiannual periods between the date of prepayment to the due date of such installment (for the purpose of this calculation, any partial period shall be deemed to be the first period), and (iii) the Treasury Yield (as hereinafter defined) adjusted to a semiannual basis. For each installment, the Semiannual Stream of Payments shall mean a stream of payments with each component equal to the product (prorated in the case of a partial semiannual period) of the amount of principal of such installment prepaid and one-half (1/2) of the excess (if any) of the Effective Annual Interest Rate (as hereinafter defined) over the annual yield of United States Treasury obligations offered on the secondary market as of the date of prepayment (the Treasury Yield ) with maturities as close to the aforesaid due date as are reasonably available on a constant maturity yield curve as determined by the Initial Purchaser (if necessary, interpolating such yield on a linear basis). If the Effective Annual Interest Rate does not exceed the Treasury Yield as computed in accordance with the preceding sentence, no Prepayment Premium shall be payable hereunder. The Effective Annual Interest Rate shall mean the stated interest rate applicable to the Initial Bonds being prepaid, adjusted, if necessary, to reflect the same basis of calculation as the Treasury Yield. The Initial Purchaser s calculation of the Prepayment Premium shall be conclusive absent manifest error. In the event that the Prepayment Premium, as computed in accordance with the provisions of this paragraph, shall exceed the maximum amount permissible by law, the amount of the Prepayment Premium shall be reduced to such maximum permissible amount. Extraordinary Optional Redemption The Series 2012A Bonds are subject to redemption prior to maturity, at the option of the Issuer exercised at the direction of the Company (which option shall be exercised only upon the giving of notice by the Company of its intention to prepay loan payments due under the Loan Agreement pursuant to Section 4.3(c) thereof), as a whole on any date, upon notice or waiver of notice as provided in this Indenture, at a Redemption Price of one hundred percent (100%) of the unpaid principal amount thereof plus accrued interest to the date of redemption, if one or more of the following events shall have occurred: The Facility shall have been damaged or destroyed to such extent that, as evidenced by a certificate of an Independent Engineer filed with the Issuer and the Trustee, (A) the Facility cannot be reasonably restored within a period of one year from the date of such damage or destruction to the condition thereof immediately preceding such damage or destruction, (B) the Company is thereby prevented or likely to be prevented from carrying on its normal operation at the Facility for a period of one year from the date of such damage or destruction, or (C) the restoration cost of the Facility would exceed the total amount of all insurance proceeds, including any deductible amount, in respect of such damage or destruction; or Title to, or the temporary use of, all or substantially all of the Facility shall have been taken or condemned by a competent authority which taking or condemnation results, or is likely to result, in the Company being thereby prevented or likely to be prevented from carrying on its normal operation at the 5

10 Facility for a period of one year from the date of such taking or condemnation, as evidenced by a certificate of an Independent Engineer filed with the Issuer and the Trustee; or As a result of changes in the Constitution of the United States of America or of the State or of legislative or executive action of the State or any political subdivision thereof or of the United States of America or by final decree or judgment of any court after the contest thereof by the Company, the Loan Agreement becomes void or unenforceable or impossible of performance in accordance with the intent and purpose of the parties as expressed therein or unreasonable burdens or excessive liabilities are imposed upon the Company by reason of the operation of the Facility. If the Initial Bonds are to be redeemed in whole as a result of the occurrence of any of the events described above, the Company shall deliver to the Issuer and the Trustee a certificate of an Authorized Representative of the Company stating that, as a result of the occurrence of the event giving rise to such redemption, the Company has discontinued, or at the earliest practicable date will discontinue, its operation of the Facility for its intended purposes. Sinking Fund Installment Redemption The Series 2012A-1 Initial Bonds maturing on December 1, 2017 shall be subject to mandatory redemption by the Issuer prior to maturity, in part, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof, together with accrued interest to the date of redemption, from mandatory Sinking Fund Installments on the dates and in the principal amounts set forth in Appendix F attached hereto, provided that the amounts of such Sinking Fund Installments shall be reduced by the credits provided for in Sections 5.05(d) and (f) of the Indenture. The Series 2012A-2 Initial Bonds maturing on December 1, 2024 shall be subject to mandatory redemption by the Issuer prior to maturity, in part, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof, together with accrued interest to the date of redemption, from mandatory Sinking Fund Installments on the dates and in the principal amounts set forth in Appendix F attached hereto, provided that the amounts of such Sinking Fund Installments shall be reduced by the credits provided for in Sections 5.05(d) and (f) of the Indenture. The Series 2012A-3 Initial Bonds maturing on December 1, 2017 shall be subject to mandatory redemption by the Issuer prior to maturity, in part, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof, together with accrued interest to the date of redemption, from mandatory Sinking Fund Installments on the dates and in the principal amounts set forth in Appendix F attached hereto, provided that the amounts of such Sinking Fund Installments shall be reduced by the credits provided for in Sections 5.05(d) and (f) of the Indenture. Redemption Upon Event of Taxability Upon the occurrence of a Determination of Taxability, the Tax-Exempt Bonds shall be redeemed prior to maturity on any date within one hundred twenty (120) days following such Determination of Taxability, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof, together with accrued interest at the Taxable Rate from the occurrence of the Event of Taxability to the date of redemption. The Tax- Exempt Bonds shall be redeemed in whole unless redemption of a portion of the Tax-Exempt Bonds Outstanding would have the result that interest payable on the Tax-Exempt Bonds remaining Outstanding after such redemption would not be includable in the gross income of any Holder of an Tax-Exempt Bond. In such event, the Tax-Exempt Bonds shall be redeemed in such amount as is deemed necessary in the opinion of Nationally Recognized Bond Counsel to accomplish that result. 6

11 Mandatory Redemption From Excess Proceeds The Bonds shall be redeemed at any time in whole or in part by lot prior to maturity in the event and to the extent: (i) excess Bond proceeds shall remain after the completion of the Project,(ii) excess title insurance or property insurance proceeds or condemnation awards shall remain after the application thereof pursuant to the Loan Agreement and this Indenture,(iii) excess proceeds shall remain after the release or substitution of Facility Realty or Facility Personalty, or (iv) certain funds received by the Institution pursuant to any capital campaign which are earmarked for specific Project Costs shall remain with the Institution and shall not be required for completion of the Project or related Project Costs, in each case at a Redemption Price equal to one hundred percent (100%) of the principal amount of the Bonds to be redeemed, together with interest accrued thereon to the date of redemption. Mandatory Redemption Upon Failure to Operate the Facility for the Approved Project Operations, Material Violation of Material Legal Requirements, False Representation or Failure to Maintain Liability Insurance. The Bonds are also subject to mandatory redemption prior to maturity, at the option of the Issuer, as a whole only, in the event (i) the Issuer shall determine that (w) the Company is operating the Facility or any portion thereof, or is allowing the Facility or any portion thereof to be operated, not for the Approved Project Operations, (x) the Company, any Principal of the Company or any Person that directly or indirectly Controls, is Controlled by or is under common Control with the Company has committed a material violation of a material Legal Requirement, (y) any Conduct Representation is false, misleading or incorrect in any material respect at any date, as if made on such date, or (z) a Required Disclosure Statement delivered to the Issuer under any Project Document is not acceptable to the Issuer acting in its sole discretion, or (ii) the Company shall fail to obtain or maintain the liability insurance with respect to the Facility required under the Loan Agreement, and, in the case of clause (i) or (ii) above, the Company shall fail to cure any such default or failure within the applicable time periods set forth in the Loan Agreement following the receipt by the Company of written notice of such default or failure from the Issuer and a demand by the Issuer on the Company to cure the same. Any such redemption shall be made upon notice or waiver of notice to the Bondholders as provided in this Indenture, at the Redemption Price of one hundred percent (100%) of the unpaid principal amount of the Bonds, together with interest accrued thereon to the date of redemption. Notice of Redemption The Trustee shall call the Bonds for redemption as provided under the headings above entitled Optional Redemption and Extraordinary Optional Redemption upon receipt of notice from the Issuer and the Company directing such redemption, which notice shall be sent to the Trustee at least sixty (60) days prior to the Redemption Date and shall specify (i) the principal amount of Bonds and their maturities so to be called for redemption, (ii) the applicable Redemption Price, and (iii) the provision or provisions pursuant to which such Bonds are to be called for redemption. The Trustee shall call the Bonds for redemption as provided under the headings above entitled Redemption Upon Event of Taxability and Mandatory Redemption as soon as practicable (but in no event more than one hundred twenty (120) days following an Event of Taxability) without the need for further direction from the Issuer or the Company. When Bonds are to be redeemed pursuant to the Indenture, the Trustee shall give notice of the redemption of the Bonds in the name of the Issuer stating: (i) the Bonds to be redeemed; (ii) the Redemption Date; (iii) that such Bonds will be redeemed at the Office of the Trustee; (iv) that on the Redemption Date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof, together with interest accrued to the Redemption Date; and (v) that from and after the Redemption Date interest thereon shall cease to accrue. Notice required by the Indenture shall be given by mail at least thirty (30) days and not more than sixty (60) days prior to said redemption to the Owner of each Bond to be redeemed at the address shown on the registration books; but failure to give such notice by mail, or any defect therein, shall not affect the validity of any proceeding for the redemption of Bonds. Partial Redemption In the event of redemption of less than all the Outstanding Bonds of the same Series and maturity, the particular Bonds or portions thereof to be redeemed shall be selected by the Trustee in such manner as the Trustee in its discretion may deem fair, except that (i) Bonds of a Series to be redeemed from Sinking Fund Installments shall 7

12 be redeemed by lot, and (ii) to the extent practicable, the Trustee shall select Bonds of a Series for redemption such that no Bond of such Series shall be of a denomination of less than the Authorized Denomination for such Series of Bonds. In the event of redemption of less than all the Outstanding Bonds of the same Series stated to mature on different dates, the principal amount of such Series of Bonds to be redeemed shall be applied in inverse order of maturity of the Outstanding Series of Bonds to be redeemed and by lot within a maturity. The portion of Bonds of any Series to be redeemed in part shall be in the principal amount of the minimum Authorized Denomination thereof or some integral multiple thereof and, in selecting Bonds of a particular Series for redemption, the Trustee shall treat each such Bond as representing that number of Bonds of such Series which is obtained by dividing the principal amount of such registered Bond by the minimum Authorized Denomination thereof (referred to as a "unit") then issuable rounded down to the integral multiple of such minimum Authorized Denomination. Mutilated, Lost, Stolen or Destroyed Bonds In case any Bond shall become mutilated or be destroyed, stolen or lost, the Issuer shall execute, and thereupon the Trustee shall authenticate and deliver, a new Bond of like Series, maturity, unpaid principal amount and interest rate as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond, upon surrender and cancellation of such mutilated Bond, or in lieu of and in substitution for the Bond destroyed, stolen or lost, upon filing with the Trustee evidence reasonably satisfactory to it that such Bond has been destroyed, stolen or lost, and upon furnishing the Issuer and the Trustee with indemnity (an undertaking from an insurance company acceptable to the Trustee and the Issuer) satisfactory to the Trustee and to the Issuer and complying with such other reasonable regulations as the Trustee may prescribe and paying such expenses as the Issuer and the Trustee may incur. All Bonds so surrendered to the Trustee shall be cancelled by it. Every new Bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is destroyed, lost or stolen, shall, with respect to such Bond, constitute an additional contractual obligation of the Issuer whether or not the destroyed, lost or stolen Bond shall be found and shall be enforceable at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Bonds duly issued under eth Indenture. In the event any such destroyed, stolen or lost Bond shall have matured, or be about to mature, the Issuer may, instead of issuing a new Bond, cause the Trustee to pay the same without surrender thereof upon compliance with the condition in the first sentence of this Section out of moneys held by the Trustee and available for such purpose. All Bonds shall be held and owned upon the express condition (to the extent lawful) that the foregoing provisions are exclusive with respect to the replacement or payment of any mutilated, destroyed or lost or stolen Bond and shall preclude any and all other rights and remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. Interchangeability, Transfer and Registry Each Bond shall be transferable only upon compliance with the restrictions on transfer set forth on such Bond and only upon the books of the Issuer, which shall be kept for the purpose at the designated corporate trust office of the Trustee, by the registered owner thereof in person or by his duly authorized attorney-in-fact, upon surrender of such Bond together with a written instrument of transfer in the form appearing on such Bond duly executed by the registered owner or his duly authorized attorney-in-fact with a guaranty of the signature thereon by a member of the Stock Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program in accordance with Securities and Exchange Commission Rule 17Ad-15. Upon the transfer of any Bond the Trustee shall prepare and issue in the name of the transferee one or more new Bonds of the same aggregate principal amount, related Series, maturity and interest rate as the surrendered Bond. Any Bond, upon surrender thereof at the designated corporate trust office of the Trustee in the City with a written instrument of transfer in the form appearing on such Bond, duly executed by the registered owner or his duly authorized attorney-in-fact, with a guaranty of the signature thereon by a member of the Stock Exchange Medallion Program or the New York Stock Exchange, Inc. Medallion Signature Program in accordance with Securities and Exchange Commission Rule 17Ad-15, may, at the option of the owner thereof, be exchanged for an equal aggregate principal amount of Bonds of the same Series, maturity and interest rate of any other Authorized Denominations. However, the Trustee will not be required to (i) transfer or exchange any Bonds during the period between a Record Date and the following Interest Payment Date or during the period of fifteen (15) days next preceding any day for the selection of Bonds to be redeemed, or (ii) transfer or exchange any Bonds selected, called or being called for redemption in whole or in part. 8

13 The Issuer, the Bond Registrar, the Trustee and any Paying Agent may deem and treat the Person in whose name any Bond shall be registered as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal and Redemption Price, if any, of, Sinking Fund Installments for, and interest on such Bond and for all other purposes, and all payments made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Issuer, the Company, the Bond Registrar, the Trustee nor any Paying Agent shall be affected by any notice to the contrary. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Issuer or the Trustee may make a charge sufficient to reimburse it for any expenses and any tax, fee or other governmental charge required to be paid in connection therewith; any such expenses shall be paid by the Company but any such tax, fee or other governmental charge shall be paid by the Holder requesting such transfer or exchange. [Remainder of Page Intentionally Left Blank] 9

14 DEBT SERVICE REQUIREMENTS ON THE BONDS The following table sets forth, for each of the periods indicated, the total amounts required in such period to be made available for payment of scheduled principal and interest of the 2012A Bonds. Twelve Month Period Ending Principal Interest Total 12/1/2012 $70,000 $23, $93, /1/ ,000 63, , /1/ ,000 57, , /1/ ,000 50, , /1/ ,000 43, , /1/ ,000 34, , /1/ ,000 28, , /1/ ,000 23, , /1/ ,000 17, , /1/ ,000 12, , /1/ ,000 9, , /1/ ,000 5, , /1/2024* 120,000 1, , Total $2,400,000 $372, $2,772, *Final Maturity [Remainder of Page Intentionally Left Blank] 10

15 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS The principal or Redemption Price of, and interest on, the Series 2012A Bonds are payable solely from (i) the amounts payable by the Company under the Loan Agreement, (ii) all moneys and obligations which are deposited or required to be deposited in the Bond Fund, the Project Fund, the Renewal Fund or any other fund established under the Indenture (except the Rebate Fund); (iii) a Mortgage and Security Agreement; and (iv) a Pledge and Security Agreement. Pursuant to the Indenture, the Pledge and Security Agreement, the Issuer will pledge and assign to the Trustee and the Initial Purchasers a security interest in any moneys due or to become due, any and all other rights and remedies of the Issuer, under or arising out of the Loan Agreement (except for certain rights special to the Issuer, the Unassigned Rights ). Special Obligations; Limited Recourse The principal of the Bonds, together with premium, if any, and interest thereon, shall constitute special obligations of the Issuer, and, with respect to such Issuer, such special obligations, together with all other charges, expenses or liabilities incurred with respect to obligations under the Indenture and the Loan Agreement, shall be payable solely from the revenues of the Issuer derived and to be derived from the Loan Agreement and any sale or lease of the applicable Facility and as otherwise provided in the Loan Agreement, the Indenture and the related Assignment. THE BONDS ARE NOT OBLIGATIONS OF THE STATE OF NEW YORK OR ANY POLITICAL SUBDIVISION THEREOF (INCLUDING, WITHOUT LIMITATION, THE CITY OF NEW YORK, NEW YORK) AND NEITHER THE STATE OF NEW YORK NOR ANY POLITICAL SUBDIVISION THEREOF (INCLUDING, WITHOUT LIMITATION, THE CITY OF NEW YORK, NEW YORK,) HAS ANY LIABILITY, LEGAL, MORAL OR OTHERWISE THEREUNDER. NEITHER THE FULL FAITH AND CREDIT NOR THE TAKING POWER OF THE STATE OF NEW YORK OR ANY POLITICAL SUBDIVISION THEREOF (INCLUDING, WITHOUT LIMITATION, THE CITY OF NEW YORK, NEW YORK) HAS BEEN PLEDGED TOWARDS THE PAYMENT OF THE BONDS. THE BONDS ARE SPECIAL OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE SOURCES PROVIDED IN THE LOAN AGREEMENT, THE INDENTURE, THE MORTGAGE, AND THE OTHER BOND DOCUMENTS. THE BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE ISSUER. NEITHER THE OFFICERS, MEMBERS OR EMPLOYEES OF THE ISSUER NOR ANY PERSON EXECUTING THE BONDS SHALL BE LIABLE PERSONALLY OR BE SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THE ISSUANCE THEREOF. THE ISSUER HAS NO TAXING POWERS. [Remainder of Page Intentionally Left Blank] 11

16 THE COMPANY An overview of the Company is set forth in Appendix A hereto. The information contained in Appendix A has been provided by the Company and no assurance can be given nor is a representation made by the Issuer, the Trustee, or Agent as to its accuracy or completeness. Financial Statements / Independent Public Accountants Appendix A hereto contains audited financial statements for the fiscal year ending June 30, 2011 and 2010 for the Company. These financial statements have been prepared and certified by the Company s accountants, Loeb & Troper LLP. Neither the Placement Agent nor the Issuer makes any representations as to the accuracy or completeness of such financial statements. Loeb & Troper LLP, the Company s independent auditor, has not been engaged to perform, and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. Loeb & Troper LLP also has not performed any procedures relating to this Private Placement Memorandum. [Remainder of Page Intentionally Left Blank] 12

17 APPLICATION OF BOND PROCEEDS The following table sets forth the approximate anticipated uses for the proceeds of the Bonds. All amounts set forth below are preliminary and subject to change. Series 2012A Bonds Sources of Funds Bond Proceeds: Par Amount Series 2012A-1 $595, Series 2012A-2 1,705, Series 2012A-3 100,000 Subtotal $2,400, Other Sources of Funds Release of Debt Service Reserve Fund $216, Release of Bond Fund 2, Release of Other Trustee Balances 128, Release of Construction Fund 1, Release of DSRF (Wells GIC Portion) 106, Release of DSRF (BofA GIC Portion) $49, $504, Total: $2,904, Uses: Refunding Escrow Deposits: Cash Deposit $2,053, SLGS Purchases 516, Delivery Date Expenses Cost of Issuance:* $141, Prepayment Fee due HSBC Bank 166, Issuer Fee: 20, Additional Proceeds: 5, Total: $2,904, * The Placement Agent s fee should be included in costs of issuance for purposes of the 2% rule. All costs of issuance in excess of 2% of the par amount of the Bonds shall be paid by the Company from the proceeds of certain Taxable Bonds. [Remainder of Page Intentionally Left Blank] 13

18 RISK FACTORS Prospective purchasers of the Bonds should give careful consideration to the matters referred to in the following summary and in the financial statements of the Company (Appendix A hereto), which should not be considered exhaustive. Reimbursement by Government Agencies Since the Company derives a material portion of its gross revenues pursuant to arrangements, agreements and contracts with the United States, New York State, and other local municipalities, both the ability of the Company to meet its payment requirements and the ability of the Issuer to make payments due on the Bonds are subject to certain risks regarding reimbursement or appropriation by such governmental bodies. If sufficient funds are not appropriated, or government policies regarding (i) the eligibility and entitlement of the people served by the Company to receive services provided by the Company, (ii) the type, frequency and duration of services authorized by governmental authorities to be provided for the consumers and clients served by the Company or (iii) the methodologies adopted by governmental authorities for reimbursement of programs operated by the Company are modified, the ability of the Company to pay debt service on the Bonds may be materially and adversely affected. No Credit Enhancement The Bonds are not enhanced or secured by any credit facility, liquidity facility, bond insurance or other credit source. Thus, payment of the principal of, premium, if any, and interest on the Bonds is subject solely to the financial condition of the Company and the availability and value of the collateral securing the Bonds. No representation is made as to the value, liquidity or accuracy of any collateral securing the Bonds. No Rating No application has been made for a rating on the Bonds from any rating agency. Lack of Secondary Market No assurance can be given that any secondary market will exist for the Bonds or that an Owner of Bonds will be able to sell, transfer or assign any Bond. The Placement Agent is under no obligation to make a market for any Bonds. Subsequent Occurrences Eliminating Federal Tax Exemption In the opinion of Bond Counsel, interest on the Tax Exempt Bonds will be excludable from gross income for federal income tax purposes under the law existing as of the date of issuance. (See Tax Matters. ) The exclusion of the interest on the Tax Exempt Bonds from gross income for federal income tax purposes may be lost if certain events subsequently occur that violate the requirements and limitations prescribed by the Code. Although the Company has agreed not to violate the requirements and limitations of the Code, there can be no assurance that these events will not occur. If certain requirements are violated, the interest on the Tax Exempt Bonds may be deemed to be taxable from the date of issuance. In the event that interest payable on the Tax Exempt Bonds becomes taxable for federal income tax purposes, the Bonds are subject to redemption at par. Use of Certain Funds to Redeem Bonds Moneys on deposit from time to time in the Renewal Fund as a result of damage, destruction or condemnation of all or part of the Facilities shall be used to redeem all or a portion of the Bonds unless used to repair or replace all or part of the Facilities. See The Indenture -- Renewal Fund and The Bonds -- Redemption of Bonds. No Appraisal of Collateral 14

19 No part of the property constituting the Facility has been the subject of a valuation or appraisal. No representation is made as to the value, liquidity or accuracy of such collateral. THE INDENTURE The following is a summary of the Indenture and should not be considered a full statement thereof. Reference is made to the Indenture for the detailed provisions thereof and the discussion herein is qualified by such reference. The Bonds will be issued under and secured by the Indenture. The Bond proceeds will be deposited, held and disbursed by the Trustee in accordance with the terms of the Indenture. Pursuant to the Indenture, the Issuer will pledge and assign to the Trustee and grant a security interest in any and all moneys due and to become due and all other rights and remedies of the Issuer under or arising out of the Loan Agreement (except for Unassigned Rights and except for moneys and investments from time to time in the Rebate Fund). Appendix D contains the form of the Indenture to be executed and delivered in connection with the issuance of the Series 2012A Bonds. Reference is made to the Indenture for complete details of the terms thereof. THE LOAN AGREEMENT Concurrently with the issuance of the Bonds, the Issuer will loan the proceeds of its Series of Bonds to the Company pursuant to the Loan Agreement, dated as of July 1, The Company will be obligated under and pursuant to the Loan Agreement to make payments to the Trustee in amounts sufficient to pay the principal or Redemption Price, if any, of, and Purchase Price and interest on, the Bonds together with other fees and expenses as the same become due. The obligation of the Company to pay such payments under the Loan Agreement will be an absolute, unconditional and general obligation of the Company. Subsequent to the date of delivery of the Bonds, the Company shall be entitled to use the Facility in any manner not otherwise prohibited by the Security Documents, provided such use causes the Facility to qualify or continue to qualify as a "project" under the Act; and, provided, further, that at no time shall any such use be other than as a "project" and uses in furtherance of its tax-exempt purposes. Appendix E contains the form of Loan Agreement to be executed and delivered in connection with the issuance of the Bonds. Reference is made to the Loan Agreement for its terms and conditions. THE SECURITY AGREEMENT The Company shall execute and deliver to the Initial Purchaser a lien and security interest in substantially all of the Company s gross revenues, limited to one year's maximum annual debt service on the Bonds, and other assets, as set forth therein. The Security Agreement is subject to certain limitations and subordination in favor of the Company's line of credit lenders. Upon the earlier to occur of (i) the payment in full of all Obligations, or (ii) the Initial Purchaser is no longer the holder of the Series 2012 Bonds and/or Counterparties, then the Parties thereto shall release in writing the Company from its obligations thereunder, and, upon the written request of the Company, execute such termination statements under the Uniform Commercial Code of the State and take such other action, at the expense of the Company, as shall be necessary to effect the release of the Parties interest in the Collateral. THE MORTGAGES The following is a summary of certain provisions of the Mortgages. This summary is qualified in its entirety by reference to the each document itself. The Company shall execute and deliver to the Issuer a Mortgage and Security Agreement with respect to the project, pursuant to which they will grant to the Issuer a lien and security interest in the respective projects comprising the Series 2012A Bonds and certain leases, rents, insurance proceeds and condemnation awards (the "Series 2012A Mortgage"). The Mortgages shall encumber fee interests and leasehold interests, as the case maybe. The priority of such instrument shall be as set forth in the Mortgage and Security Agreement. The Issuer will assign 15

20 its rights and obligations under the Series 2012A Mortgage to the Trustee pursuant to the terms of a certain Assignment of Mortgage, from the Issuer to the Trustee. SIMULTANEOUS OFFERING On the Closing Date (i) the Town of Hempstead Local Development Corporation is also issuing under a separate Indenture of Trust its $11,075,000 Series 2012B Revenue Bonds (Life's W.O.R.C., Inc. Project) and (ii) the Suffolk County Economic Development Corporation is also issuing under a separate Indenture of Trust its $2,345,000 Series 2012C Revenue Bonds (Life's W.O.R.C., Inc. Project) in each case for the purposes financing and/or refinancing certain of the Company's projects. TAX MATTERS TAX MATTERS REGARDING SERIES 2012A-1 AND SERIES 2012A-2 BONDS Federal Income Taxes The Internal Revenue Code of 1986, as amended (the Code ), imposes certain requirements that must be met subsequent to the issuance and delivery of the Series 2012A-1 and Series 2012A-2 Bonds for interest thereon to be and remain excluded from gross income for Federal income tax purposes. Noncompliance with such requirements could cause the interest on the Series 2012A-1 and Series 2012A-2 Bonds to be included in gross income for Federal income tax purposes retroactive to the date of issue of the Series 2012A-1 and Series 2012A-2 Bonds. Pursuant to the Indenture, the Loan Agreement and the Tax Compliance Agreement, the Issuer and the Company have covenanted to comply with the applicable requirements of the Code in order to maintain the exclusion of the interest on the Series 2012A-1 and Series 2012A-2 Bonds from gross income for Federal income tax purposes pursuant to Section 103 of the Code. In addition, the Issuer and the Company have made certain representations and certifications in the Indenture, the Loan Agreement and the Tax Compliance Agreement. Bond Counsel to the Issuer will also rely on the opinion of counsel to the Company as to all matters concerning the status of the Company as an organization described in Section 501(c)(3) of the Code and exempt from federal income tax under Section 501(a) of the Code Bond Counsel will not independently verify the accuracy of those representations and certifications or that opinion. In the opinion of Nixon Peabody LLP, Bond Counsel to the Issuer, under existing law and assuming compliance with the aforementioned covenants, and the accuracy of certain representations and certifications made by the Issuer and the Company described above, interest on the Series 2012A-1 and Series 2012A-2 Bonds is excluded from gross income for Federal income tax purposes under Section 103 of the Code. Bond Counsel to the Issuer is also of the opinion that such interest is not treated as a preference item in calculating the alternative minimum tax imposed under the Code with respect to individuals and corporations. Interest on the Series 2012A-1 and Series 2012A-2 Bonds is, however, included in the adjusted current earnings of certain corporations for purposes of computing the alternative minimum tax imposed on such corporations. State Taxes Bond Counsel to the Issuer is further of the opinion that interest on the Series 2012A-1 and Series 2012A-2 Bonds is exempt from personal income taxes imposed by the State of New York or any political subdivision of the State of New York. Bond Counsel to the Issuer expresses no opinion as to other state or local tax consequences arising with respect to the Series 2012A-1 and Series 2012A-2 Bonds nor as to the taxability of the Series 2012A-1 and Series 2012A-2 Bonds or the income therefrom under the laws of any state other than New York. Ancillary Tax Matters Ownership of the Series 2012A-1 and Series 2012A-2 Bonds may result in other federal tax consequences to certain taxpayers, including, without limitation, certain S corporations, foreign corporations with branches in the United States, property and casualty insurance companies, individuals receiving Social Security or Railroad Retirement benefits, and individuals seeking to claim the earned income credit. Ownership of the Series 2012A-1 and Series 2012A-2 Bonds may also result in other federal tax consequences to taxpayers who may be deemed to have incurred or continued indebtedness to purchase or to carry the Series 2012A-1 and Series 2012A-2 Bonds. Prospective investors are advised to consult their own tax advisors regarding these rules. 16

21 Interest paid on tax-exempt obligations such as the Series 2012A-1 and Series 2012A-2 Bonds is subject to information reporting to the Internal Revenue Service (the IRS ) in a manner similar to interest paid on taxable obligations. In addition, interest on the Series 2012A-1 and Series 2012A-2 Bonds may be subject to backup withholding if such interest is paid to a registered owner that (a) fails to provide certain identifying information (such as the registered owner s taxpayer identification number) in the manner required by the IRS, or (b) has been identified by the IRS as being subject to backup withholding. Bond Counsel to the Issuer is not rendering any opinion as to any Federal tax matters other than those described in the opinions attached as Appendix C. Prospective investors, particularly those who may be subject to special rules described above, are advised to consult their own tax advisors regarding the federal tax consequences of owning and disposing of the Series 2012A-1 and Series 2012A-2 Bonds, as well as any tax consequences arising under the laws of any state or other taxing jurisdiction. Changes in Law and Post Issuance Events Legislative or administrative actions and court decisions, at either the federal or state level, could have an adverse impact on the potential benefits of the exclusion from gross income of the interest on the Series 2012A-1 and Series 2012A-2 Bonds for Federal or state income tax purposes, and thus on the value or marketability of the Series 2012A-1 and Series 2012A-2 Bonds. This could result from changes to Federal or state income tax rates, changes in the structure of Federal or state income taxes (including replacement with another type of tax), repeal of the exclusion of the interest on the Series 2012A-1 and Series 2012A-2 Bonds from gross income for Federal or state income tax purposes, or otherwise. For example, the President recently released legislative proposals that would, among other things, subject interest on tax-exempt bonds (including the Series 2012A-1 and Series 2012A-2 Bonds) to a Federal income tax for taxpayers with incomes above certain thresholds for tax years beginning after It is not possible to predict whether any legislative or administrative actions or court decisions having an adverse impact on the Federal or state income tax treatment of holders of the Series 2012A-1 and Series 2012A-2 Bonds may occur. Prospective purchasers of the Series 2012A-1 and Series 2012A-2 Bonds should consult their own tax advisors regarding the impact of any change in law on the Series 2012A-1 and Series 2012A-2 Bonds. Bond Counsel to the Issuer has not undertaken to advise in the future whether any events after the date of issuance and delivery of the Series 2012A-1 and Series 2012A-2 Bonds may affect the tax status of interest on the Series 2012A-1 and Series 2012A-2 Bonds. Bond Counsel to the Issuer expresses no opinion as to any Federal, state or local tax law consequences with respect to the Series 2012A-1 and Series 2012A-2 Bonds, or the interest thereon, if any action is taken with respect to the Series 2012A-1 and Series 2012A-2 Bonds or the proceeds thereof upon the advice or approval of other counsel. TAX MATTERS REGARDING SERIES 2012A-3 BONDS Federal Income Taxes The following is a summary of certain anticipated United States federal income tax consequences of the purchase, ownership and disposition of bonds bearing interest which is included in the gross income of the holders thereof for Federal income tax purposes, such as and including the 2012A-3 Bonds (the Taxable Bonds ). The summary is based upon the provisions of the Code, the regulations promulgated thereunder and the judicial and administrative rulings and decisions now in effect, all of which are subject to change. The summary generally addresses Taxable Bonds held as capital assets and does not purport to address all aspects of federal income taxation that may affect particular investors in light of their individual circumstances or certain types of investors subject to special treatment under the federal income tax laws, including but not limited to financial institutions, insurance companies, dealers in securities or currencies, persons holding such Bonds as a hedge against currency risks or as a position in a straddle for tax purposes, or persons whose functional currency is not the United States dollar. Potential purchasers of the Taxable Bonds, including the Series 2012A-3 Bonds, should consult their own tax advisors in determining the federal, state or local tax consequences to them of the purchase, ownership and disposition of the Taxable Bonds. 17

22 IRS Circular 230 Disclosure The advice set forth in this section was not intended or written by Bond Counsel to the Issuer to be used and cannot be used by an owner of the Series 2012A-3 Bonds for the purpose of avoiding penalties that may be imposed on the owner of the Series 2012A-3 Bonds. The advice set forth herein is written to support the promotion or marketing of the Series 2012A-3 Bonds. Each owner of the Series 2012A-3 Bonds should seek advice based on its particular circumstances from an independent tax advisor. Generally In the opinion of Nixon Peabody LLP, Bond Counsel to the Issuer, interest on the Series 2012A-3 Bonds is not excluded from gross income for federal income tax purposes and so will be fully subject to federal income taxation. Purchasers other than those who purchase Taxable Bonds, including the Series 2012A-3 Bonds in the initial offering at their principal amounts will be subject to federal income tax accounting rules affecting the timing and/or characterization of payments received with respect to such bonds. In general, interest paid on the Taxable Bonds, including the Series 2012A-3 Bonds, and recovery of accrued original issue and market discount, if any, will be treated as ordinary income to a bondholder and, after adjustment for the foregoing, principal payments will be treated as a return of capital. Market Discount Any owner who purchases a Taxable Bond at a price which includes market discount in excess of a prescribed de minimis amount (i.e., at a purchase price that is less than its adjusted issue price in the hands of an original owner) will be required to recharacterize all or a portion of the gain as ordinary income upon receipt of each scheduled or unscheduled principal payment or upon other disposition. In particular, such owner will generally be required either (a) to allocate each such principal payment to accrued market discount not previously included in income and to recognize ordinary income to that extent and to treat any gain upon sale or other disposition of such a Taxable Bond as ordinary income to the extent of any remaining accrued market discount (under this caption) or (b) to elect to include such market discount in income currently as it accrues on all market discount instruments acquired by such owner on or after the first day of the taxable year to which such election applies. The Code authorizes the Treasury Department to issue regulations providing for the method for accruing market discount on debt instruments the principal of which is payable in more than one installment. Until such time as regulations are issued by the Treasury Department, certain rules described in the legislative history of the Tax Reform Act of 1986 will apply. Under those rules, market discount will be included in income either (a) on a constant interest basis or (b) in proportion to the accrual of stated interest. An owner of a Taxable Bond who acquires such Bond at a market discount also may be required to defer, until the maturity date of such Taxable Bonds or the earlier disposition in a taxable transaction, the deduction of a portion of the amount of interest that the owner paid or accrued during the taxable year on indebtedness incurred or maintained to purchase or carry a Taxable Bond in excess of the aggregate amount of interest (including original issue discount) includable in such owner s gross income for the taxable year with respect to such Taxable Bond. The amount of such net interest expense deferred in a taxable year may not exceed the amount of market discount accrued on the Taxable Bond for the days during the taxable year on which the owner held the Taxable Bond and, in general, would be deductible when such market discount is includable in income. The amount of any remaining deferred deduction is to be taken into account in the taxable year in which the Taxable Bond matures or is disposed of in a taxable transaction. In the case of a disposition in which gain or loss is not recognized in whole or in part, any remaining deferred deduction will be allowed to the extent gain is recognized on the disposition. This deferral rule does not apply if the bondowner elects to include such market discount in income currently as described above. Sale or Redemption of Taxable Bonds A bondowner s tax basis for a Taxable Bond is the price such owner pays for the Taxable Bond plus the amount of any original issue discount and market discount previously included in income, reduced on account of any payments received (other than qualified periodic interest payments) and any amortized bond premium. Gain or loss recognized on a sale, exchange or redemption of a Taxable Bond, measured by the difference between the amount realized and the Taxable Bond basis as so adjusted, will generally give rise to capital gain or loss if the Taxable Bond is held as a capital asset (except as discussed above under Market Discount ). The defeasance of the 18

23 Taxable Bonds may result in a deemed sale or exchange of such Bonds under certain circumstances; owners of such Bonds should consult their tax advisors as to the Federal income tax consequences of such an event. Backup Withholding A bondowner may, under certain circumstances, be subject to backup withholding (currently the rate of this withholding tax is 28%) with respect to interest or original issue discount on the Taxable Bonds. This withholding generally applies if the owner of a Taxable Bond (a) fails to furnish the Trustee or other payor with its taxpayer identification number; (b) furnishes the Trustee or other payor an incorrect taxpayer identification number; (c) fails to report properly interest, dividends or other reportable payments as defined in the Code; or (d) under certain circumstances, fails to provide the Trustee or other payor with a certified statement, signed under penalty of perjury, that the taxpayer identification number provided is its correct number and that the holder is not subject to backup withholding. Backup withholding will not apply, however, with respect to certain payments made to bondowners, including payments to certain exempt recipients (such as certain exempt organizations) and to certain Nonresidents (as defined below). Owners of the Taxable Bonds, including the Series 2012A-3 Bonds should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining the exemption. The amount of reportable payments for each calendar year and the amount of tax withheld, if any, with respect to payments on the Taxable Bonds will be reported to the bondowners and to the Internal Revenue Service. Nonresident Bondowners Under the Code, interest and original issue discount income with respect to Taxable Bonds held by nonresident alien individuals, foreign corporations or other non-united States persons ( Nonresidents ) generally will not be subject to the United States withholding tax (or backup withholding) if the Issuer (or other person who would otherwise be required to withhold tax from such payments) is provided with an appropriate statement that the beneficial owner of the Taxable Bond is a Nonresident. Notwithstanding the foregoing, if any such payments are effectively connected with a United States trade or business conducted by a Nonresident bondowner, they will be subject to regular United States income tax, but will ordinarily be exempt from United States withholding tax. ERISA The Employees Retirement Income Security Act of 1974, as amended ( ERISA ), and the Code generally prohibit certain transactions between a qualified employee benefit plan under ERISA or tax-qualified retirement plans and individual retirement accounts under the Code (collectively, the Plans ) and persons who, with respect to a Plan, are fiduciaries or other parties in interest within the meaning of ERISA or disqualified persons within the meaning of the Code. All fiduciaries of Plans, in consultation with their advisors, should carefully consider the impact of ERISA and the Code on an investment in any Taxable Bonds, including the Series 2012A-3 Bonds. In all events, all investors should consult their own tax advisors in determining the federal, state, local and other tax consequences to them of the purchase, ownership and disposition of the Series 2012A-3 Bonds. State Taxes Bond Counsel to the Issuer is further of the opinion that interest on the Series 2012A-3 Bonds is not exempt from personal income taxes imposed by the State of New York or any political subdivision of the State of New York. ERISA The Employees Retirement Income Security Act of 1974, as amended ( ERISA ), and the Code generally prohibit certain transactions between a qualified employee benefit plan under ERISA or tax-qualified retirement plans and individual retirement accounts under the Code (collectively, the Plans ) and persons who, with respect to a Plan, are fiduciaries or other parties in interest within the meaning of ERISA or disqualified persons within the meaning of the Code. All fiduciaries of Plans, in consultation with their advisors, should carefully consider the impact of ERISA and the Code on an investment in any Series 2012A-3 Bonds. 19

24 In all events, all investors should consult their own tax advisors in determining the federal, state, local and other tax consequences to them of the purchase, ownership and disposition of the Series 2012A-3 Bonds. LITIGATION There is no known pending action against or, to the knowledge of the Issuer or the Company, no threatened litigation against the Issuer or the Company, respectively, which in any way questions or affects the validity of the Bonds, or any proceedings or transactions relating to their issuance, sale or delivery or the making and entering into any of the Company Documents or the Bond Documents, or the existence or powers of the Issuer or the Company. As of the date of this Private Placement Memorandum, the Company does not know of any fact or set of facts from which liability would arise which would materially adversely affect the business of the Company or the acquisition, construction, equipping or operation of the Facility or the ability of the Bonds to be paid in full. No representations or warranties are made by either Issuer or the Placement Agent as to the accuracy or completeness of the information, financial or otherwise, set forth in Appendix A which Appendix was supplied in its entirety by the Company. No representations or warranties are made by either Issuer with respect to any information regarding the other Issuer. POTENTIAL CONFLICT OF INTEREST The Company has retained Seth P. Stein, Esq. as counsel in connection with and the issuance of the Bonds. Mr. Stein is a Partner in the law firm of Moritt Hock & Hamroff LLP, which is acting as counsel to the Placement Agent. The Placement Agent and the Company have executed letter agreements waiving the potential conflict of interest and have been represented by separate attorneys within the firm. PLACEMENT AGENT The Bonds are being privately placed by Gates Capital Corporation (the Placement Agent ). The Placement Agent has agreed to place the Bonds for compensation equal to one and a quarter percent (1.25%) of the principal amount of the Bonds. The Placement Agent s services are being rendered on a best efforts basis. LEGALITY FOR INVESTMENT The Bonds are securities in which all public officers and bodies of the State of New York and all municipalities and municipal subdivisions, all insurance companies and associations and all other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on banking business, may properly and legally invest funds including capital in their control or belonging to them. 20

25 APPROVAL OF LEGAL PROCEEDINGS Certain legal matters incident to the authorization and issuance of the Series 2012A Bonds are subject to the approving opinion of Nixon Peabody LLP, New York, New York, Bond Counsel, to the Issuer, in substantially the form of Appendix C to this Private Placement Memorandum. Copies of such opinion will be available at the time of the delivery of the Bonds. Certain legal matters will be passed upon for the Issuer by its counsel, Richard E. Marshall, Esq., Vice President for Legal Affairs for Build NYC Resource Corporation, New York City, New York. Certain legal matters will be passed upon for the Company, by its counsel, Moritt Hock & Hamroff LLP, Garden City, New York; for the Bank of New York Mellon, as trustee, by its counsel, Carter Ledyard & Milburn LLP, New York, New York and for the Placement Agent by its counsel, Moritt Hock & Hamroff LLP, Garden City, New York. BUILD NYC RESOURCE CORPORATION By: /s/ Jeffrey T. Lee Name: Jeffrey T. Lee Title: Executive Director LIFE'S W.O.R.C., INC. By: /s/ Peter Smergut Name: Peter Smergut Title: Executive Director

26 APPENDIX A OVERVIEW OF THE COMPANY FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED June 30, 2011 and 2010 Certain information appearing herein relating to the Company, OPWDD, the State of New York and its various departments and offices, and the Projects have been furnished by the Company, and other sources deemed reliable and neither the Issuer nor the Placement Agent make any representation or warranty with respect to the accuracy or completeness of such information. OVERVIEW OF THE COMPANY Life s WORC is a private not-for-profit organization providing comprehensive, quality care to individuals with mental retardation, developmental disabilities, and traumatic brain injury. Life s WORC is committed to providing all supports necessary to enable individuals with severe disabilities to participate fully as members of their community. Life s WORC operates under the auspices of the Office of Mental Retardation and Developmental Disabilities. Founded in 1971, Life s WORC serves over 1200 individuals and their families and maintains 36 homes and 14 nonresidential programs throughout Nassau, Queens, and Suffolk Counties. The organization s mission is to provide alternative residential settings for individuals with multiple handicaps so that they may remain in the community. Life s WORC s history of providing such care has served as a nationwide model for providing the effective care of a special population.

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