Exhibit 10.8.3


 


TAX REGULATORY AGREEMENT


 


AMONG


 


IOWA FINANCE AUTHORITY


 


INTERWEST, L.C.


 


AND


 


WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

as Trustee


 


$5,000,000 VARIABLE RATE DEMAND

INDUSTRIAL DEVELOPMENT REVENUE BONDS

(INTERWEST, L.C. PROJECT), SERIES 2001


 


Dated as of November 15, 2001


 


 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
  ARTICLE I DESCRIPTION OF THE PURPOSE OF THE BONDS
  AND THE PROJECT

  	
  1

  
	
   

  	
   

  
	
  Section 1.1. Purpose of the Bonds

  	
  1

  
	
  Section 1.2. Description of Project

  	
  2

  
	
  Section 1.3. Acquisition, Construction and Equipping
  of the Project

  	
  2

  
	
  Section 1.4. No Replacement Proceeds, Sinking or
  Pledged Funds

  	
  2

  
	
  Section 1.5. Investment of Bond Proceeds

  	
  2

  
	
  Section 1.6 Hedges

  	
  3

  
	
  Section 1.7. Reimbursement

  	
  3

  
	
  Section 1.8. No Excess Proceeds

  	
  4

  
	
  Section 1.9. Representations of the Borrower

  	
  4

  
	
  Section 1.10. Representations of the Issuer

  	
  6

  
	
   

  	
   

  
	
  ARTICLE II USE OF PROCEEDS; DESCRIPTION OF FUNDS

  	
  7

  
	
   

  	
   

  
	
  Section 2.1. Use of Proceeds; Funds Established

  	
  7

  
	
  Section 2.2. Purpose of Bond Fund

  	
  7

  
	
   

  	
   

  
	
  ARTICLE III COMPLIANCE WITH SECTION 148(f) OF THE
  CODE; PERMITTED INVESTMENTS

  	
   

  
	
   

  	
  8

  
	
  Section 3.1. Compliance with Section 148(f) of the
  Code

  	
  8

  
	
  Section 3.2. Records

  	
  8

  
	
  Section 3.3. Permitted Investments; Certificates of
  Deposit and Investment Agreements

  	
  8

  
	
  Section 3.4. Debt Service under the Loan Agreement

  	
  9

  
	
   

  	
   

  
	
  ARTICLE IV YIELD AND YIELD LIMITATIONS

  	
  10

  
	
   

  	
   

  
	
  Section 4.1. Issue Price

  	
  10

  
	
  Section 4.2. Yield Limits

  	
  10

  
	
  Section 4.3. Continuing Nature of Yield Limits

  	
  10

  
	
   

  	
   

  
	
  ARTICLE V
  DEFINITIONS

  	
  11

  
	
   

  	
   

  
	
  ARTICLE VI CERTIFICATE REGARDING THE PROJECT AND THE
  EXPENDITURES OF FUNDS; MISCELLANEOUS

  	
  14

  
	
   

  	
   

  
	
  Section 6.1. Certificate Regarding the Project and
  the Expenditure of Funds

  	
  14

  
	
  Section 6.2. Termination; Interest of Borrower and
  Issuer in Rebate Fund

  	
  14

  
	
  Section 6.3. No Sale of Project

  	
  14

  
	
  Section 6.4. No Federal Guarantee

  	
  14

  
	
  Section 6.5. Future Events

  	
  14

  
	
  Section 6.6. Permitted Changes; Opinion of Bond
  Counsel

  	
  14

  



 


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  Section 6.7. Severability

  	
  15

  
	
  Section 6.8.Counterparts

  	
  15

  
	
  Section 6.9. Notices

  	
  15

  
	
  Section 6.10. Successors and Assigns

  	
  15

  
	
  Section 6.11. Headings

  	
  15

  
	
  Section 6.12. Governing Law

  	
  16

  
	
  Section 6.13. Tax Exempt Status of Bonds

  	
  16

  
	
  Section 6.14. No Common Plan of Financing

  	
  16

  
	
  Section 6.15. Expectations

  	
  16

  
	
  Section 6.16. Expectations

  	
  16

  
	
   

  	
   

  
	
  EXHIBIT A     Sources of
  Funds; Expenditures

  	
  A-l

  
	
  EXHIBIT B     Certificate
  of Underwriter

  	
  B-l

  
	
  EXHIBIT C     Estimated
  Drawdown Schedule

  	
  C-l

  
	
  EXHIBIT D     Calculation
  of Economic Life

  	
  D-l

  
	
  EXHIBIT E     Form 8038
  Information

  	
  E-l

  



 


ii

















 


TAX REGULATORY AGREEMENT


 


This Tax
Regulatory Agreement, dated November 15, 2001 (this “Agreement”), by and among
INTERWEST, L.C., an Iowa domestic limited liability company (the “Borrower”),
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as Trustee (the “Trustee”)
and the IOWA FINANCE AUTHORITY (the “Issuer”), is being executed and delivered
in connection with the issuance by the Issuer of $5,000,000 Iowa Finance
Authority Variable Rate Demand Industrial Development Revenue Bonds (InterWest,
L.C. Project), Series 2001 (the “Bonds”). The Bonds are being issued pursuant
to the Trust Indenture dated as of November 1, 2001 (the “Indenture”) between
the Issuer and the Trustee with respect to the Bonds. The Bonds are being
offered for sale to the public by W.R. Taylor & Company, LLC (the “Underwriter)
at 100% of the principal amount thereof pursuant to a Bond Purchase Agreement
dated as of the date hereof, among the Issuer, the Underwriter and the
Borrower. Certain terms are defined in Article V hereof. Terms used herein and
not defined herein shall have the meanings given to them in the Indenture.


 


One purpose of
executing this Agreement is to set forth various facts regarding the Bonds and
to establish the reasonable expectations of the Issuer and the Borrower as to
future events regarding the Bonds and the use of Bond proceeds. The facts,
estimates and definitions set forth in this Agreement and the expectations of
the Issuer set forth in this Agreement, including, but not limited to, the use,
allocation, investment and yield of proceeds of the Bonds and other moneys
described in this Agreement, the purposes of the Bonds, debt service, tax
related matters, use of the Project and economic life of the Project described
in this Agreement, are based upon and made in reliance upon the following
representations and opinions of others: (a) the representations of the
Underwriter contained in the Certificate of Underwriter attached hereto as Exhibit
B; (b) the representations and covenants of the Borrower contained in (i)
this Agreement and all exhibits hereto, (ii) the Loan Agreement (as hereinafter
defined), (iii) the Bond Purchase Agreement, (iv) the Indenture, (v) the
Preliminary Offering Memorandum used in connection with the sale of the Bonds,
and (vi) the Borrower’s Closing Certificate dated the date hereof; and (c) the
approving opinion of Bond Counsel dated the date hereof. The Issuer is not
aware of any facts or circumstances that would cause it to question the
accuracy of any of the representations, opinions and warranties made herein and
noted above, although the Issuer has made no independent investigation relating
to same. The certifications and representations made herein and expectations
presented herein are intended, and may be relied upon, as a certification of an
officer of the Issuer given in good faith described in Section 1.148-2(b)(2) of
the Regulations.


 


The
certifications, representations and covenants contained herein are made on
behalf of the Issuer, the Trustee and the Borrower, as applicable, for the
benefit of the owners from time to time of the Bonds. The Issuer and the
Borrower do hereby certify and represent, based on their knowledge, information
and belief, and covenant the following on behalf of the Issuer and the Borrower,
respectively, and the Trustee, in connection with Sections 2.3, 3.2 and 3.3,
covenants as follows:


 


ARTICLE I


 


DESCRIPTION OF THE PURPOSE OF THE 

BONDS AND THE PROJECT


 


Section
1.1. Purpose of the Bonds. The proceeds of the Bonds will be
loaned by the Issuer to the Borrower and used by the Borrower to (i) pay or
reimburse the Borrower for payment of the cost of acquiring, constructing and
equipping the soy methyl ester processing facility (the “Project”), and (ii)
pay certain expenses incurred in connection with the issuance of the Bonds.
Such loan will be made to the Borrower pursuant to a Loan Agreement dated as of
November 1, 2001 (the “Loan Agreement”) between the Borrower and the Issuer. A
breakdown of sources and uses of funds is attached hereto as Exhibit A.


 


 

















 


Section
1.2. Description of the Project. The Project consists of
manufacturing facilities and facilities that are directly related and ancillary
to manufacturing facilities. The Project will consist of the acquisition,
construction and equipping of a soy methyl ester processing facility at 506
First Street, Ralston, Iowa. No more than 25%
of the net proceeds of the Bonds will be used to provide such ancillary
facilities.


 


Section
1.3. Acquisition, Construction and Equipping of the Project. The
Borrower reasonably expects that it will, within six months of the Closing,
incur one or more substantial binding obligations (not subject to contingencies
within the control of the Issuer, any agency, department or division of the
Issuer, the Borrower or any related person to the Borrower within the meaning
of Section 144(a)(3) of the Code (a “Related Person”)) to other persons or
entities to expend, for the acquisition, construction or equipping of the
Project, amounts which in the aggregate are not less than Five Percent (5%) of
the Sale Proceeds of the Bonds. The Borrower further reasonably expects that
the work of acquiring, constructing and equipping the Project and the
expenditure of Bond proceeds will continue to proceed with due diligence through
no later than November 1, 2004, at which time it is anticipated that all
original proceeds of the Bonds and investment earnings thereon will have been
spent.


 


It is expected
that the Bond proceeds deposited into the Series 2001 Project Account of the Project
Fund created pursuant to the Indenture (herein the “Project Fund”), including
Investment Proceeds earned from investment of the Project Fund, will be spent
to pay costs of the Project and a portion of the costs of issuing the Bonds in
accordance with the estimated drawdown schedule contained in Exhibit C.


 


Section
1.4. No Replacement Proceeds, Sinking or Pledged Funds. (a)
Except as otherwise provided in Sections 2.1 and 2.2 hereof, and except for the
Loan Agreement, after the issuance of the Bonds on this date, neither the
Issuer, the Borrower nor any Related Person to the Issuer or the Borrower has
on hand any property, including cash and securities (“Property”) that is
legally required or otherwise restricted (no matter where held or the source thereof)
to be used, directly or indirectly, for the purposes for which the Bonds are
being issued.


 


(b) Except as
otherwise provided in Sections 2.1 and 2.2 hereof, neither the Issuer, the
Borrower nor any Related Person to the Issuer or the Borrower has established
or expects to establish any Replacement Proceeds. The Borrower acknowledges
that Gross Proceeds includes any Sale Proceeds and Investment Proceeds of the
Bonds and that the investment of such amounts are subject to certain yield
limitations as described in Section 4.2 hereof.


 


(c) Except as
otherwise provided in Sections 2.1 and 2.2 hereof, no Property has been or is
expected to be pledged or otherwise restricted (no matter where held or the
source thereof) to provide reasonable assurance, in the event the Issuer, the
Borrower or any Related Person to the Issuer or the Borrower encounters
financial difficulty, of its availability to be used, directly or indirectly,
for the payment of amounts due or to become due on the Bonds, the Loan
Agreement or any credit enhancement or liquidity device relating to the
foregoing, and no compensating balance, liquidity account, negative pledge or
similar arrangement exists with respect to, in any way, the Bonds, the Loan
Agreement or any credit enhancement or liquidity device relating to the
foregoing.


 


(d) The term of
the Bonds is not longer than is reasonably necessary for the governmental
purposes of the Bonds, in that the weighted average maturity of the Bonds does
not exceed one hundred twenty percent (120%) of the average reasonably expected
life of the Project financed by the Bonds.


 


Section
1.5. Investment of Bond Proceeds. Except as permitted with
respect to temporary investments, no portion of the Bonds is being issued for
the purpose of investing the proceeds thereof at a yield higher than the Yield
on the Bonds. No more than 50% of the proceeds of the Bonds are or will be
invested in investments having a yield that is substantially guaranteed for
four years or more.


 


2

















 


Section
1.6. Hedges. Neither the Issuer, the Borrower nor any Related
Person to the Issuer or the Borrower has entered into or, without first
obtaining an opinion of Bond Counsel that such hedge will not adversely effect
the tax exempt status of the Bonds, will enter into any hedge entered into to
reduce the risk of interest rate changes with respect to the Bonds or the Loan
Agreement. The Issuer and the Borrower acknowledge that any such swap agreement
could affect the calculation of Bond Yield under the Regulations.


 


Section
1.7. Reimbursement. Except as identified below, none of the
proceeds of the Bonds will be allocated to expenditures paid prior to the date
of Closing.


 


The Issuer and the
Borrower are allocating a portion of the Bond proceeds to expenditures paid by
the Borrower prior to Closing (the “Reimbursed Expenditures”) in connection
with the acquisition, construction and equipping of the Project in the amounts
indicated on the requisition for disbursement of moneys in the Project Fund to
be submitted by the Borrower to the Trustee within 30 days from the date hereof
(the “Requisition”), and will, after such allocation, treat such proceeds as
being spent. In support of such allocation, the Borrower represents and
covenants and the Issuer (as to subparagraph (d) only) represents and covenants
as follows:


 


(a)
Certain Reimbursed Expenditures (the “Preliminary Expenditures”) relate to
architectural, engineering, surveying, soil testing, Bond issuance and similar
costs that were incurred prior to commencement of the acquisition,
construction, installation or equipping of the Project and do not include any
costs related to land acquisition, site preparation and similar costs incident
to commencement of construction.


 


(b)
The amount of Preliminary Expenditures does not exceed 20% of the proceeds
received from the sale of the Bonds (not including any investment earnings
thereon) being used to finance the Project with respect to which the
Preliminary Expenditures were incurred.


 


(c)
Except as described in (i) below, in the case of Reimbursed Expenditures other
than the Preliminary Expenditures, the Issuer declared an official intent to
reimburse such Expenditures not later than 60 days after the date such
Reimbursed Expenditures were paid.


 


(d) At
the time the official intent described in (c) above was declared, the Borrower
and the Issuer reasonably expected (based on information supplied by the
Borrower, upon which the Issuer believed it was reasonable and prudent to rely)
to reimburse the Reimbursed Expenditures related thereto with the proceeds of a
future borrowing.


 


(e)
The Issuer and the Borrower hereby allocate Bond proceeds in the amount
indicated on the Requisition to reimburse the Reimbursed Expenditures (the “Reimbursement
Allocation”). Except as described in (i) below, and except in the case of
Preliminary Expenditures, this Reimbursement Allocation is being made within 18
months after the later of (i) the date on which the Reimbursed Expenditure was
paid, or (ii) the date on which the property relating to the Reimbursed
Expenditure was placed in service or abandoned, but in no event more than three
years after the Reimbursed Expenditure was paid. “Placed in service” for
purposes of this subsection (e) means the date on which, based on all the facts
and circumstances, (i) a facility has reached a degree of completion which
would permit its operation at substantially its design level, and (ii) the
facility is, in fact, in operation at such level.


 


(f)
All Reimbursed Expenditures represent (i) costs of a type that are properly
chargeable to a capital account under the Code (or would be so chargeable with
a proper election) under general federal income tax principles or (ii) costs of
issuance of the Bonds.


 


3

















 


(g)
Funds corresponding to Gross Proceeds used to reimburse a Reimbursed
Expenditure will not be used within one year after making any Reimbursement
Allocation in a manner that results in the creation of Replacement Proceeds of
the Bonds or any other issue. The preceding sentence does not apply to amounts
deposited in a bona fide debt service fund.


 


(h) No
Reimbursement Allocation will employ any action that (A)(i) enables the Issuer,
the Borrower or any Related Person to either of them to exploit the difference
between tax-exempt and taxable interest rates to obtain a material financial
advantage, and (ii) overburdens the tax-exempt bond market to avoid arbitrage
restrictions, or (B) avoids the restrictions under Section 142 through 147 of
the Code.


 


(i)
The restrictions in (c) and (e) above do not apply to (i) costs of issuance of
the Bonds and (ii) an amount not in excess of the lesser of $100,000 or 5% of
the proceeds of the Bonds.


 


(j)
The face amount of the Bonds allocated to the Borrower as a Test-Period
Beneficiary, when increased by other tax-exempt facility related bonds
outstanding at Closing and also allocated to the Borrower as a Test-Period
Beneficiary, does not and will not exceed $40,000,000; and the Borrower will
not permit any other person or entity to become an owner or other “principal
user” of the Project if such person or entity is or will be a Test-Period
Beneficiary to whom is allocated other tax-exempt facility related bonds
outstanding at Closing which other tax-exempt facility related bonds, together
with the face amount of the Bonds allocated to such Test-Period Beneficiary,
exceed $40,000,000, all within the meaning of Section 144(a)(10) of the Code.


 


Section
1.8. No Excess Proceeds. Proceeds of the Bonds are not reasonably
expected to exceed the amount required for the governmental purposes of the
Bonds set forth in Section 1.1 hereof.


 


Section
1.9. Representations of the Borrower. The Borrower makes the
following representations, understanding, after such consultation with such
legal counsel as deemed appropriate, that the exclusion from gross income of
interest on the Bonds for federal income tax purposes is dependent on the
accuracy and truthfulness of such representations:


 


(a) At
least ninety-five percent (95%) of the net proceeds of the Bonds will be used
to pay the costs of acquiring, constructing or equipping the Project.


 


(b)
The Borrower is not a Principal User or a Related Person with respect to any
facilities located in the State of Iowa which were financed with the proceeds
of Tax-Exempt Obligations other than the Bonds pursuant to the Indenture.


 


(c)
The Borrower is the only Principal User for the Project and there are no
Related Persons to the Borrower.


 


(d) As
of the issue date of the Bonds, there are no outstanding qualified small issue
bonds issued by any issuer, the proceeds of which were used primarily for
facilities located in the same municipality as the Project, or in the same
county (but not in any incorporated municipality) as the Project, and the
Principal User of such facilities and the Principal User of the Project are the
same or are Related Persons.


 


4

















 


(e)
The sum of (1) the issue price of the Bonds, plus (2) the capital expenditures
paid or incurred in the three-year period beginning three years before the
issue date of the Bonds does not exceed $10,000,000.


 


(f)
The Borrower covenants not to allow the sum of (1) the face amount of the
Bonds, plus (2) the capital expenditures paid or incurred in the three-year
period beginning three years before the issue date of the Bonds, plus (3) the
capital expenditures to be paid or incurred in the period beginning on the
issue date of the Bonds and ending three years after the Issue Date, to exceed
$10,000,000.


 


(g) As
determined by the Underwriter and certified by the Underwriter in Exhibit B
attached hereto, the average weighted maturity of the Bonds is not greater than
14.96 years. The Borrower represents that the average reasonably expected
economic life (determined as of the date hereof) of those portions of the
Project financed with proceeds of the Bonds is 14.52 years. Thus, the average
maturity of the Bonds does not exceed one hundred twenty percent (120%) of the
average reasonably expected life (determined as provided on Exhibit D
attached hereto as of the date hereof) of the facilities financed with proceeds
of such obligations within the meaning of Section 147(b) of the Code.


 


(h)
Within the meaning of Section 147(c) of the Code, no portion of the proceeds of
the Bonds will be used (directly or indirectly) for the acquisition of land (or
an interest therein) to be used for farming purposes and not more than
twenty-five percent (25%) of the net proceeds of such obligations will be used
(directly or indirectly) for the acquisition of any other land (or interest
therein).


 


(i)
Within the meaning of Section 147(d) of the Code, to the extent any portion of
the proceeds of the Bonds will be used for costs of the acquisition of any
property (or an interest therein) and the first use of such property was not
pursuant to such acquisition, within two years following the date of issuance
of the Bonds rehabilitation expenditures will be incurred with respect to such
property in an amount not less than fifteen percent (15%) (one hundred percent
(100%) in the case of property not constituting a building (and equipment
therefor)) of the portion of such costs financed with proceeds of the Bonds.
(The term “rehabilitation expenditures” means any amount properly chargeable to
the capital account which is incurred by the person acquiring the building or
property (or additions or improvements to property) in connection with the
rehabilitation of the building. In the case of an integrated operation
contained in a building before its acquisition, such terms include
rehabilitating existing equipment in such building or replacing it with
equipment having substantially the same function.)


 


(j) No
portion of the Bond proceeds will be used to provide any airplane, sky box or
other private luxury box, health club facility, facility primarily used for
gambling, or store the principal business of which is the sale of alcoholic
beverages for consumption off premises, all within the meaning of Section
147(e) of the Code.


 


(k) No
portion of the proceeds of the Bonds will be used to provide residential real
property for family units. In addition, no portion of the proceeds of the Bonds
will be used to finance a single building, an enclosed shopping mall, or a
strip of offices, stores, or warehouses using substantial common facilities
that is financed by another tax exempt issue.


 


(1) No
more than two percent (2%) of the proceeds of the Bonds will be used to finance
costs of issuance of the Bonds within the meaning of Section 147(g) of the
Code.


 


(m)
The Borrower will not use the proceeds of the Bonds in such a manner as to
cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of
the Code.


 


5

















 


(n)
The Borrower shall cooperate with the Issuer in filing all informational
returns required by Section 149(e) of the Code.


 


(o) No
portion of the Bond proceeds will be used to provide the following: any private
or commercial golf course, country club, massage parlor, tennis club, skating
facility (including roller skating, skateboard and ice-skating), racquet sport
facility (including handball or racquetball court), hot tub facility, suntan
facility or racetrack, and no more than 25% of the Bond proceeds will be used
to provide a facility the primary purpose of which is one of the following:
retail food and beverage services, automobile sales or service, or the
provision of recreation or entertainment, within the meaning of Section
144(a)(8) of the Code.


 


(p)
Notwithstanding any other provisions of this Agreement to the contrary, the
Borrower shall not otherwise use any of the Bond proceeds or take or fail to
take any action the effect of which would cause interest on the Bonds to be
included in gross income of the holders thereof for federal income tax
purposes.


 


Section
1.10. Representations of the Issuer. The Issuer makes the
following representations, understanding, after such consultation with such
legal counsel as deemed appropriate, that the exclusion from gross income of
interest on the Bonds for federal income tax purposes is dependent on the
accuracy and truthfulness of such representations:


 


(a)
The Issuer has elected to apply Code §144(a)(4) (relating to capital
expenditures and the $10,000,000 limit) to the Bonds.


 


(b) In
connection with the issuance of the Bonds, the Issuer held a public hearing as
required under Code §147(f) regarding the proposed issuance of the Bonds, on
November 7, 2001, after publishing notice of the hearing in The Des Moines
Register on October 24, 2001 and in The Times Herald (of Carroll,
Iowa) on October 24, 2001. The notice advised the public that a public hearing
would be held on November 7, 2001, to discuss the proposed issuance of the
Bonds and that interested parties would have an opportunity to express their
views at that hearing. The hearing was open to the public, and those present
were invited to express their views relating to the issuance of the Bonds and
the proposed use of the Bond proceeds. On November 7,  2001, after the public hearing, the Issuer duly adopted a
resolution authorizing and approving the issuance of the Bonds. On November 13,
2001, after the public hearing, the Governor of the State of Iowa executed his
certificate authorizing and approving the issuance of the Bonds. An affidavit
of publication of the notice of the hearing, minutes of the public hearing, and
a copy of the Bond Resolution are contained in the Transcript.


 


6

















 


ARTICLE II


 


USE OF PROCEEDS;

DESCRIPTION OF FUNDS


 


Section
2.1. Use of Proceeds; Funds Established.


 


(a) The Bond proceeds
will be used as follows:


 


	
  Original Proceeds of

  the Bonds

  	
   

  	
  Application

  
	
   

  	
   

  	
   

  
	
  Sale Proceeds:

  	
   

  	
  $5,000,000 (representing the Sales Proceeds of the
  Bonds) to the Trustee to be deposited in the Project Fund.

  



 


(b) The Bond Fund
created pursuant to the Indenture (herein the “Bond Fund”), the Project Fund
created pursuant to the Indenture, and the Rebate Fund created pursuant to the
Indenture (herein the “Rebate Fund”), are the only funds or accounts created
under the Indenture.


 


(c) No more than
$100,000 (representing two percent (2%) of the proceeds of the Bonds) of
issuance costs will be paid from the Project Fund, which is comprised of Bond
proceeds. All issuance costs, if any, with respect to the Bonds in excess of
such amount will be paid by the Borrower from a source other than tax-exempt
financing.


 


(d) Loan Payments
by the Borrower under the Loan Agreement will be paid either directly by the
Borrower to the financial institution issuing a Credit Facility to reimburse
such financial institution for amounts deposited in the Bond Fund pursuant to
the Credit Facility that it issued, or directly by the Borrower to the Trustee
for deposit into the Reimbursement Account in the Bond Fund.


 


(e) The Borrower’s
obligations to reimburse the financial institution for amounts deposited in the
Bond Fund pursuant to the Credit Facility will be governed by the terms and
conditions of the Reimbursement Agreement and Loan Agreement and will be
secured by collateral described in the Reimbursement Agreement.


 


Section
2.2. Purpose of Bond Fund. The Bond Fund will be used
primarily to achieve a proper matching of revenues and earnings with debt
service in each year ending December 31. Other than any amounts being held to
pay principal of matured Bonds that have not been presented for payment, it is
reasonably expected that any moneys deposited in the Bond Fund will be spent
within the 12-month period beginning on the date of deposit therein (or in any
other fund under the Indenture, if earlier). Other than any amounts being held
to pay principal of matured Bonds that have not been presented for payment, it
is reasonably expected that the Bond Fund will be depleted at least once a
year, except for a reasonable carry over amount not to exceed the greater of
(i) the earnings on the investment of moneys in the Bond Fund for the
immediately preceding bond year, or (ii) one-twelfth (1/12th) of the principal
and interest payments on the Bonds for the immediately preceding bond year. Any
earnings from the investment of amounts in the Bond Fund retained therein will
be spent within a one-year period beginning on the date of receipt of such
investment earnings.


 


7

















 


ARTICLE III


 


COMPLIANCE WITH SECTION 148(f)

OF THE CODE; PERMITTED INVESTMENTS


 


Section
3.1. Compliance with Section 148(f) of the Code.


 


(a) The Borrower
covenants and agrees to take such actions and make, or cause to be made, all
calculations, transfers and payments that may be necessary to comply with the
rebate requirements contained in Section 148(f) of the Code with respect to the
Bonds. The Borrower will make, or cause to be made, rebate payments in
accordance with law with respect to the Bonds.


 


(b) Based in part
upon representations made by the Underwriter in the Certificate of Underwriter
attached hereto as Exhibit B, the Borrower has determined that, for
purposes of computing any rebate payments required to be made with respect to
the Bonds, each of the Letter of Credit and the Confirming Letter of Credit is
a Qualified Guarantee.


 


Section
3.2. Records. The Trustee (to the extent required by the
Indenture and except as hereinbelow limited) and/or the Borrower shall keep and
retain or cause to be kept and retained, until the date six years after the
date of retirement of the Bonds, the following records with respect to the
investment of all Gross Proceeds and amounts in the Rebate Fund, if any: (i)
purchase price, (ii) purchase date, (iii) type of investment, (iv) accrued
interest paid, (v) interest rate (if applicable), (vi) principal amount, (vii)
maturity date, (viii) interest payment date (if applicable), (ix) date of
liquidation, and (x) receipt upon liquidation. If any investment becomes Gross
Proceeds of the Bonds on a date other than the date such investment is
purchased, the records required to be kept by the Trustee shall include the
fair market value of such investment on the date it becomes Gross Proceeds, and
the Trustee shall maintain such records as to fair market value. If any
investment is retained after the date the last Bond is retired, the records
required to be kept by the Trustee shall include the fair market value of such
investment on the date the last Bond is retired. Amounts will be segregated wherever
held in order to maintain these records. Any provisions of the Indenture or
this Agreement to the contrary notwithstanding, the obligations of the Trustee
with respect to the keeping of records shall extend only to amounts which are
on deposit with it under the Indenture or in the Rebate Fund. Upon request by
the Issuer, the Borrower and the Trustee as appropriate, shall provide the
Issuer with a copy of such records.


 


Section
3.3. Permitted Investments; Certificates of Deposit and Investment Agreements. Except
as provided in the next sentence, all amounts that constitute Gross Proceeds
shall be invested at all times to the greatest extent practicable, and no
amounts may be invested in zero yield investments other than obligations of the
United States purchased directly from the United States. In the event moneys
cannot be invested, other than as provided in this sentence, due to the
denomination, price or availability of investments, the Borrower may invest or
direct the investment of all such amounts in an interest bearing deposit of a
bank with a yield not less than that paid to the general public or such amounts
shall be held uninvested as cash to the minimum extent necessary.


 


If the Borrower
shall direct the investment (and the Trustee shall not be obligated to invest
moneys until directed by an Authorized Borrower Representative) of Gross
Proceeds in the following investments, it shall do so only in accordance with
the following provisions:


 


(a) Investments in
certificates of deposit of banks or savings and loan associations that have a
fixed interest rate, fixed payment schedules and substantial penalties for
early withdrawal shall be made only if (A) the yield on the certificate of
deposit (i) is not less than the yield on reasonably comparable direct
obligations of the United States, and (ii) is not less than the highest yield
that is published or posted by the provider to be currently available


 


8

















 


from the provider on
comparable certificates of deposit offered to the public, or (B) the investment
is an investment in a Guaranteed Investment Contract and qualifies under (b)
below.


 


(b) Investments in
Guaranteed Investment Contracts shall be made only if (i) a bona fide
solicitation is made for a specified Guaranteed Investment Contract and at
least three bona fide written bids from different providers that have no
material financial interest in the Bonds (e.g., as Underwriters or brokers) are
received, (ii) the highest-yielding Guaranteed Investment Contract for which a
qualifying bid is made (determined net of broker’s fees) is purchased, (iii)
the yield on the Guaranteed Investment Contract (determined net of broker’s
fees) is not less than the yield then available from the provider on reasonably
comparable Guaranteed Investment Contracts, if any, offered to other persons
from a source of funds other than gross proceeds of tax-exempt bonds, (iv) the
determination of the terms of the Guaranteed Investment Contract takes into
account as a significant factor the Borrower’s reasonably expected drawdown
schedule for the amounts to be invested, exclusive of amounts deposited in debt
service funds and reasonably required reserve or replacement funds, (v) the
terms of the Guaranteed Investment Contract, including collateral security
requirements, are reasonable, and (vi) the obligor on the investment contract
certifies those administrative costs (as defined in Section 1.148-5(e) of the
Regulations) that it is paying or expects to pay to third parties in connection
with the Guaranteed Investment Contract.


 


The Borrower shall
direct the Trustee to buy and sell all investments of Gross Proceeds at fair
market value. The fair market value of an investment is the price at which a
willing buyer would purchase the investment from a willing seller in a bona
fide, arm’s length transaction. Except as described in (a) or (b) above and
except for United States Treasury obligations that are purchased directly from
the United States Treasury, no investment of a type that is not traded on an
established securities market, within the meaning of Section 1273 of the Code,
will be purchased with Gross Proceeds. In general, an “established securities
market” includes: (i) property that is listed on a national securities
exchange, an interdealer quotation system or certain foreign exchanges, (ii)
property that is traded on a Commodities Futures Trading Commission designated
board of trade or an interbank market, (iii) property that appears on a
quotation medium, and (iv) property for which price quotations are readily
available from dealers and brokers. A debt instrument is not treated as traded
on an established market solely because it is convertible into property which
is so traded.


 


An investment of
Gross Proceeds in an External Commingled Fund shall be made only to the extent
that such investment is made without an intent to reduce the amount to be
rebated to the United States Government or to create a smaller profit or a
larger loss than would have resulted if the transaction had been at arm’s
length and had the rebate or Yield restriction requirements not been relevant.
An investment of Gross Proceeds shall be made in a Commingled Fund other than
an External Commingled Fund only if the investments made by such Commingled
Fund satisfy the provisions of this Section 3.3.


 


Section
3.4. Debt Service under the Loan Agreement. Loan Payments
under the Loan Agreement exactly equal debt service payments on the Bonds. The
earnings and profits of any temporary investment of proceeds of the Bonds held
under the Indenture will accrue to the Borrower and not to the Issuer. It is
not expected that the Borrower will make any deposits sooner than necessary
under the Indenture.


 


Except for (a) the
receipt of payments under the Loan Agreement as described above, (b) the
payment of the costs of issuance relating to the Bonds, (c) the payment of fees
and expenses of the Trustee, (d) the payment of the fees of the Issuer, and (e)
the payment of remarketing fees, no consideration, in cash or in kind, is being
or will be paid by any person to any person in connection with or relating to
issuing, carrying or redeeming the Bonds or issuing, carrying or repaying the
amounts owing under the Loan Agreement.


 


9

















 


ARTICLE IV


 


YIELD AND YIELD LIMITATIONS


 


Section
4.1. Issue Price. The Underwriter has certified in Exhibit
B, among other things, that the first offering price at which it sold at
least ten percent of each maturity of the Bonds is 100% of the principal amount
thereof, plus accrued interest, if any.


 


Section
4.2. Yield Limits.


 


(a) All Gross
Proceeds, to the extent not exempted in (b) below, shall be invested at market
prices and at a yield (after taking into account any yield reduction payments
to the extent permitted by and made pursuant to Section 1.148-5(c) of the
Regulations) not in excess of the Yield on the Bonds.


 


(b) Subject to
Section 4.2(c), any and all of the following may be invested without yield
restriction:


 


(i)
amounts invested in Tax Exempt Obligations (to the extent permitted by the
Indenture);


 


(ii)
amounts held in the Bond Fund (including any investment earnings derived from
such amounts) that have not been on deposit under the Indenture for more than
13 months, so long as the Bond Fund continues to qualify as a bona fide debt
service fund as described in Section 2.2 hereof;


 


(iii)
amounts in the Project Fund prior to the earlier of payment of all expenses to
be paid from that fund or three years from the Closing;


 


(iv)
all amounts derived from the investment of Gross Proceeds held in the Bond
Fund, other than amounts derived from investment of proceeds held in the Bond
Fund and the Project Fund during the periods described in (ii) and (iii) above,
for a period of one year after the date received;


 


(v)
all other amounts not described in (i) through (iv) above for the first 30 days
after they become Gross Proceeds; and


 


(vi)
an amount not to exceed the lesser of 5% of the proceeds of the Bonds or
$100,000.


 


(c) At no time
during any bond year may the amount of Gross Proceeds (except for amounts
described in Sections 4.2(b)(i), (ii) and (iii) of this Agreement) invested
with a yield higher than the yield on the Bonds exceed 150 percent of the debt
service on the Bonds for the bond year. The aggregate amount of Gross Proceeds
(except for amounts described in Section 4.2(b)(i), (ii) and (iii) of this
Agreement) invested at a yield higher than the yield on the Bonds must be
promptly and appropriately reduced (as described in the Regulations) as the amount
of outstanding Bonds is reduced.


 


Section
4.3. Continuing Nature of Yield Limits. Subject to Section
6.5, once moneys are subject to the yield limits of Section 4.2, they remain
yield restricted until they cease to be Gross Proceeds.


 


10

















 


ARTICLE V


 


DEFINITIONS


 


“Agreement” means
this Tax Regulatory Agreement.


 


“Bond Counsel”
means Hemmer, Spoor, Pangburn, DeFrank & Kasson PLLC, or any other
nationally recognized firm of attorneys experienced in the field of municipal
bonds whose opinions are generally accepted by purchasers of municipal bonds
which is acceptable to the Issuer, the Borrower and the Trustee.


 


“Closing” means
the date of this Agreement, which is the date on which the Issuer is receiving
the purchase price for the Bonds and is not earlier than the date on which
interest is beginning to accrue on the Bonds for federal income tax purposes.


 


“Code” means the
Internal Revenue Code of 1986, as amended.


 


“Commingled Fund”
means any fund or account containing both Gross Proceeds and an amount in
excess of $25,000 that are not Gross Proceeds if the amounts in the fund or
account are invested and accounted for, collectively, without regard to the
source of funds deposited in the fund or account. An open-ended regulated
investment company under Section 851 of the Code is not a Commingled Fund.


 


“Confirming Letter
of Credit” means an irrevocable letter of credit issued by Bayerische Hypo- und
Vereinsbank AG, New York Branch (the “Confirming Bank”) under the terms of
which the Trustee will be entitled to draw, in accordance with its terms, an
amount sufficient to pay (a) principal of the Bonds when due or the portion of
the purchase price of Project Bonds corresponding to the principal amount
thereof, and (b) interest on the Bonds or the portion of the purchase price of
Bonds corresponding to accrued interest thereon.


 


“Control” means
the possession, directly or indirectly through others, of either of the
following discretionary and non-ministerial rights or powers over another
entity:


 


(a) to
approve and to remove without cause a controlling portion of the governing body
of a Controlled Entity; or


 


(b) to
require the use of funds or assets of a Controlled Entity for any purpose.


 


“Controlled Entity”
means any entity or one of a group of entities that is subject to Control by a
Controlling Entity or group of Controlling Entities.


 


“Controlled Group”
means a group of entities directly or indirectly subject to Control by the same
entity or group of entities, including the entity that has the Control of the
other entities.


 


“Controlling
Entity” means any entity or one of a group of entities directly or indirectly
having Control of any entities or group of entities.


 


“External
Commingled Fund” means a Commingled Fund in which the Issuer, the Borrower and
all Related Persons to the Issuer and the Borrower own, in the aggregate, not
more than ten percent of the beneficial interests.


 


“Gross Proceeds”
means (a) amounts actually or constructively received from the sale of the
Bonds, including amounts used to pay Underwriters’ discount or compensation and
accrued interest (other than accrued interest for a period not greater than one
year before Closing and paid within one year after the Closing), (b) all
amounts in the Bond Fund and the Project Fund, (c) any amounts derived from the
sale of any right that is part of the terms of a Bond or is otherwise
associated with a Bond, (d) any other Replacement Proceeds, and (e) amounts
actually or constructively received from the investment and reinvestment of
amounts described above.


 


11

















 


“Guaranteed
Investment Contract” means (i) any investment that has specifically negotiated
withdrawal or reinvestment provisions and a specifically negotiated interest
rate, and (ii) any agreement to supply investments on two or more future dates
(e.g., a forward supply contract).


 


“Investment
Proceeds” means any amounts actually or constructively received from investing
any proceeds of the Bonds.


 


“Letter of Credit”
means the letter of credit issued by CoBank, ACB on the date of Closing
guaranteeing the payment of principal, premium and interest on the Bonds.


 


“Loan Agreement”
means the Loan Agreement, dated as of November 1, 2001, between the Issuer and the
Borrower with respect to the loan of the proceeds of the Bonds.


 


“Permitted
Proceeds” means all payments pursuant to the Loan Agreement to pay principal of
and premium, if any, and interest on the Bonds.


 


“Principal User”
means (a) a principal owner, defined as a person who holds more than a 10%
ownership interest (by value) in the Project, or, if no person owns more than
10%, then the person who holds the largest ownership interest in the Project;
(b) a principal lessee, defined as a person who leases more than 10% of the
Project (disregarding portions used under a short-term lease of one year or
less), determined by reference to the fair rental value of the Project; or (c)
any other principal user, such as a principal customer, or any person who enjoys
a use of the Project (other than short-term use) in a degree comparable to the
enjoyment of a principal owner or principal lessee. Regarding the fair rental
value in clause (b) above, fair rental value may be measured in terms of leased
area.


 


“Project Certificate”
means the Project Certificate, dated the date hereof, executed by the Borrower
in connection with the Bonds.


 


“Qualified
Guarantee” means a guarantee of the payment of principal and interest payable
on the Bonds with respect to which all of the following requirements are
satisfied:


 


(a) As
of the date the guarantee is obtained, it is reasonably expected that the
present value of the fees to be paid for the guarantee is less than the present
value of the expected interest savings on the Bonds resulting from the
guarantee. For this purpose, present value is computed using the yield on the
Bonds, determined with regard to guarantee payments, as the discount rate.


 


(b)
The guarantee is a guarantee in substance, and imposes a secondary liability
that unconditionally shifts to the guarantor substantially all of the credit
risk for all or part of the payments on the Bonds. For this purpose, a
guarantee is not treated as being conditional if (i) the guarantee is subject
to reasonable procedural or administrative requirements or (ii) in the case of
a guarantee against failure to remarket a qualified tender bond, such guarantee
is subject to commercially reasonable limitations based on credit risk, such as
limitations on payment in the event of default by the primary obligor or the
bankruptcy of a long-term credit guarantor.


 


(c)
The guarantor (i) is not a co-obligor on the Bonds and (ii) does not expect to
make any payments pursuant to the guarantee other than under a direct-pay
letter of credit or similar arrangement for which the guarantor will be
reimbursed immediately.


 


12

















 


(d)
Neither the guarantor nor any Related Person to the guarantor will use more
than ten percent (10%) of the Project.


 


(e)
The guarantee fees constitute a reasonable, arm’s-length charge for the
transfer of credit risk.


 


(f)
Any fees paid to the guarantor for services other than the transfer of credit
risk must be separately stated, reasonable and excluded from the guarantee fee.


 


“Rebate Fund”
means the fund, if any, created in order to ensure compliance with Section
148(f) of the Code.


 


“Regulations”
means United States Treasury Regulations dealing with the tax-exempt bond
provisions of the Code.


 


“Related Person”
means (i) in the case of the Issuer, a member of the same Controlled Group as
the Issuer, and (ii) in the case of the Borrower, a related person to the
Borrower within the meaning of Section 144(a)(3) of the Code.


 


“Replacement
Proceeds” means (a) amounts in debt service funds, redemption funds, reserve
funds, replacement funds or any similar funds, to the extent reasonably
expected to be used directly or indirectly to pay principal or interest on the
Bonds, (b) any amounts for which there is provided, directly or indirectly, a reasonable
assurance, in substance, that the amount will be available to pay principal or
interest on the Bonds or the obligations under any credit enhancement or
liquidity device with respect to the Bonds or the Loan Agreement, even if the
Issuer or the Borrower encounters financial difficulties, including any
liquidity device or negative pledge to the extent described in Section
1.148-1(c)(3)(ii) of the Regulations, and (c) any other amounts treated as
replacement proceeds under Section 1.148-1(c) of the Regulations.


 


“Sale Proceeds”
means any amounts actually or constructively received from the sale of the
Bonds, other than pre-issuance accrued interest.


 


“Tax Exempt
Obligations” means (i) obligations described in Section 103(a) of the Code, the
interest on which is not includable in the gross income of any owner thereof
for federal income tax purposes, (ii) interests in regulated investment
companies to the extent that at least 95 percent of the income to the holder of
the interest is interest which is not includable in the gross income of any
owner thereof for federal income tax purposes, and (iii) certificates of
indebtedness issued by the United States Treasury pursuant to the Demand
Deposit States and Local Government Series described in 31 C.F.R. part 344.


 


“Test-Period
Beneficiary” means any person who at any time during the “test period” is a
Principal User of the Project, including a person who is a Related Person to
such Principal User; provided, that a person is treated as a Related Person
only if that person is related to the Principal User at any time during the
test period, and such Principal User has not ceased to use the Project before
the persons became related. A Test-Period Beneficiary does not cease to be a
Test-Period Beneficiary if he ceased to use the facility; the portion of the
issue allocated to the Test-Period Beneficiary continues to be so allocated
until the issue is no longer outstanding. The “test period” for the Bond is the
three-year period beginning on the later of the date the Project is placed in
service or the Issue Date.


 


“Yield” or “yield”
means that discount rate which when used in computing the present value of all
payments of principal and interest paid and to be paid on an obligation (using
semi-annual compounding on the basis of a 360-day year or a 365-day year;
provided, however, the same convention must be used in computing Yield on the
Bonds and yield on all investments) produces an amount equal to its purchase
price, including accrued


 


13

















 


interest. For purposes of
computing yield on the Bonds, fees paid and reasonably expected to be paid for
any Qualified Guarantee on the Bonds shall be taken into account in the same
manner as payments of principal and interest on the Bonds, as set forth in
Section 1.148-4(b)(1) of the Regulations. For purposes of computing yield on an
investment, administrative costs may be taken into account to the extent
permitted by Section 1.148-5(e) of the Regulations, and yield reduction payments
may be taken into account to the extent permitted by Section 1.148-5(c) of the
Regulations.


 


ARTICLE VI


 


CERTIFICATE REGARDING THE PROJECT AND

THE EXPENDITURES OF FUNDS;  MISCELLANEOUS


 


Section
6.1. Certificate Regarding the Project and the Expenditure of Funds. The
Borrower covenants that it will take all actions that may be necessary to cause
all representations and covenants made by Borrower herein with respect to
future events to be true.


 


Section
6.2. Termination; Interest of Borrower and Issuer in Rebate Fund. This
Agreement shall terminate if (a) the Issuer shall have filed with the Trustee
and the Borrower a written notice of termination of this Agreement, which
notice shall contain a certification that the Bonds have been fully paid and
retired, and (b) all amounts remaining on deposit in the Rebate Fund, if any,
and any other amounts required to be paid to satisfy the requirements of
Section 148(f) of the Code shall have been paid to or upon the order of the
United States; provided, however, that if the amount then on deposit in the
Rebate Fund exceeds the amount required to be paid therefrom to the United
States, such excess amount shall be paid over and distributed, to the Borrower.
Notwithstanding the foregoing, the provisions of Section 3.2 hereof shall not
terminate until the sixth anniversary of the date the Bonds are fully paid and
retired.


 


The parties hereto
recognize that amounts, if any, on deposit in the Rebate Fund are held for
payment to the United States Treasury. The foregoing notwithstanding, the
Borrower and the Issuer shall be deemed to have an interest in such amounts to
the extent such amounts represent amounts available to satisfy the obligation
of the Issuer and the Borrower to rebate certain amounts to the United States
Treasury.


 


Section
6.3. No Sale of Project. No portion of the Project is
expected to be sold or otherwise disposed of prior to maturity of the Bonds,
except as otherwise contemplated or permitted by the Loan Agreement.


 


Section
6.4. No Federal Guarantee. Except as permitted by Section
149(b) of the Code, the Bonds will not be federally guaranteed within the
meaning of Section 149(b) of the Code.


 


Section
6.5. Future Events. The Issuer and the Borrower acknowledge
that any changes in facts or expectations from those set forth herein may
result, in different yield restrictions or rebate requirements and agree that
Bond Counsel will be contacted if such changes do occur.


 


Section
6.6. Permitted Changes; Opinion of Bond Counsel. The yield
restrictions contained in Section 4.2 or any other restriction or covenant
contained herein need not be observed or may be changed if the Issuer, the
Trustee and the Borrower receive an opinion of Bond Counsel to the effect that
such nonobservance or change will not adversely affect the exclusion of
interest on the Bonds from gross income for federal income tax purposes.


 


14

















 


Section
6.7. Severability. If any clause, provision or section of
this Agreement is ruled invalid by any court of competent jurisdiction, the
invalidity of such clause, provision or section shall not affect any of the
remaining clauses, sections or provisions hereof.


 


Section
6.8. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.


 


Section
6.9. Notices. All notices, demands, communications and
requests which may or are required to be given hereunder or by any party hereto
shall be deemed given on the date on which the same shall have been mailed by
registered or certified mail, postage prepaid, addressed as follows:


 


If to the Issuer:


 


Iowa Finance Authority

100 East Grand Avenue, Suite 250

Des Moines, Iowa 50309

Attn: Mr. Michael L. Tramontina

Fax: (515) 242-4957


 


If to the
Borrower:


 


InterWest, L.C.

506 First Street

Ralston, Iowa 51459

Attn: Ms. Linda Buss

Fax: (712) 667-3215


 


If to the Trustee:


 


Wells Fargo Bank
Northwest, National Association

Corporate Trust Department

1300 SW Fifth Avenue, 11th Floor

MAC P6101-114

Portland, Oregon 97201

Attn: Ms. Doreen K. Rowe

Fax: (503) 886-3300


 


Notice given by facsimile
will be effective immediately. Notice given by regular U.S. mail will be
effective two (2) days from the date of posting. The Issuer and the Borrower
may, by notice given to the other, designate any different addresses to which
subsequent notices, demands, requests or communications shall be sent.


 


Section
6.10. Successors and Assigns. The terms, provisions,
covenants and conditions of this Agreement shall bind and inure to the benefit
of the respective successors and assigns of the Issuer, the Borrower and the
Trustee.


 


Section
6.11. Headings. The headings of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part of this
Agreement.


 


15

















 


Section
6.12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Iowa.


 


Section
6.13. Tax Exempt Status of Bonds. The Issuer and the Borrower
shall take all steps necessary to comply with the requirements hereunder in
order to ensure that interest on the Bonds is not includable in the gross
income of owners thereof for federal income tax purposes under the Code;
provided, however, compliance with any such requirement shall not be required
in the event the Issuer and the Borrower receive an opinion of Bond Counsel to
the effect that either (i) compliance with such requirement is not required to
maintain the exclusion from gross income of interest on the Bonds, or (ii)
compliance with some other requirement will meet the requirements of the Code.
In the event the Issuer and the Borrower receive such opinion of Bond Counsel,
the Issuer and the Borrower agree to take such actions necessary to comply with
the requirements set forth in such opinion.


 


Section
6.14. No Common Plan of Financing. Except for the Bonds, no
bonds or other obligations issued by or on behalf of a state or political
subdivision which are reasonably expected to be paid out of substantially the
same source of funds as the Bonds or will be paid directly or indirectly from
the proceeds of the Bonds were or will be sold (within the meaning of Section
1.150T-1(c) of the Regulations) during the period commencing fifteen days prior
to November 15, 2001 and ending fifteen days after that date.


 


Section
6.15. Expectations. The facts, estimates and circumstances
presented by the Borrower and other persons, together with the expectations of
the Borrower as to future events, as set forth in this Agreement, are true and
are not incomplete in any material respect. On the basis of the facts and
estimates contained herein, the undersigned have adopted the expectations
contained herein. On the basis of such facts, estimates, circumstances and
expectations, and based on the knowledge, information and belief of the
undersigned, it is not expected that the proceeds from the sale of the Bonds or
any other moneys or property will be used in a manner that will cause the Bonds
to be arbitrage bonds within the meaning of Section 148 of the Code and the
Regulations. Such expectations are reasonable and there are no other facts,
estimates and circumstances that would materially change such expectations. The
representations set forth in this Section 6.15 are representations of the
Borrower only and not of the Issuer or the Trustee. Furthermore, the
representations, covenants and agreements elsewhere herein are not
representations, covenants or agreements of the Issuer or the Trustee unless
specifically so stated. Neither the Issuer nor the Trustee shall be bound to
make any investigation into the facts of matters stated in any such documents
referred in this Agreement, and shall perform only such duties and take only
such actions as are expressly set forth herein.


 


Section
6.16. Form 8038 Information. The Borrower understands that
the tax exempt status of the Bonds is maintained only if the Issuer files the
Information Return for Private Activity Note Issues (Form 8038) with the
Internal Revenue Service with respect to the Bonds. The information requested
on Exhibit E attached hereto is needed for the purpose of making such
filing. The Borrower confirms that the information on Exhibit E is true
and correct.


 


16

















 


IN WITNESS
WHEREOF, the parties hereto have caused this Tax Regulatory Agreement to be
executed in their respective names by their duly authorized officers, all as of
the day first above written.


 


	
   

  	
   

  	
  INTERWEST, L.C.,

  
	
   

  	
   

  	
  an Iowa domestic
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ NILE RAMSBOTTOM

  	
   

  
	
   

  	
   

  	
   

  	
   Nile
  Ramsbottom

  
	
   

  	
   

  	
   

  	
   President

  



 


17

















 


	
   

  	
   

  	
  IOWA FINANCE AUTHORITY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ MICHAEL L.
  TRAMONTINA

  	
   

  
	
   

  	
   

  	
   

  	
   Michael
  L. Tramontina 

  
	
   

  	
   

  	
   

  	
   Executive
  Director

  



 


18

















 


	
   

  	
   

  	
  WELLS FARGO BANK
  NORTHWEST, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DOREEN K. ROWE

  	
   

  
	
   

  	
   

  	
   

  	
   Doreen
  K. Rowe 

  
	
   

  	
   

  	
   

  	
   Vice
  President

  



 


19

















 


EXHIBIT A


 


SOURCES OF FUNDS; EXPENDITURES


 


	
  SOURCES:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Principal of
  Bonds

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXPENDITURES:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Construction
  Costs of Project

  	
   

  	
  $

  	
  4,900,000

  	
   

  
	
  Costs of
  Issuance

  	
   

  	
  100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  5,000,000

  	
   

  



 


A-1

















 


EXHIBIT B

(to the Tax Exemption Certificate and Agreement)


 


CERTIFICATE OF UNDERWRITER


 


The undersigned,
on behalf of and for W.R. Taylor & Company, LLC (the “Underwriter”), does
hereby certify as follows:


 


1. The
Underwriter, Iowa Finance Authority (the “Issuer”) and InterWest, L.C. (the “Borrower”)
have executed a placement agreement (the “Bond Purchase Agreement”) on the date
hereof (the “Sale Date”), concerning the sale by the Issuer of its $5,000,000
Iowa Finance Authority Variable Rate Demand Industrial Development Revenue
Bonds (InterWest, L.C. Project), Series 2001 (the “Bonds”).


 


2. The
Underwriter hereby confirms that the initial price at which more than ten
percent of each maturity of the Bonds have been sold to the public (not
including bond houses and brokers or similar persons or organizations acting in
the capacity of Underwriters or wholesalers) is equal to 100% of the principal
amount thereof.


 


3. All
of the Bonds have been sold to the public (excluding bond houses, brokers or
similar persons or organizations acting in the capacity of Underwriters,
Underwriters or wholesalers) at 100% of the principal amount thereof. The sale
price of the Bonds, i.e. 100% of the principal amount thereof, is not greater
than the fair market value of the Bonds as of the Sale Date.


 


4. The
Underwriter will receive an underwriting fee of $62,500 with respect to or
related to the issuance of the Bonds.


 


5. The
present value of the fees to be paid for the transfer of credit risk to CoBank,
ACB (the “Bank”) and Bayerische Hypo- und Vereinsbank AG, New York Branch (the “Confirming
Bank”), as providers of an irrevocable direct-pay letter of credit and an
irrevocable confirming letter of credit which guarantee the payment of
principal and interest on the Bonds, or to any successor guarantor, is less
than the present value of the interest savings on the Bonds resulting from such
guarantee, using the yield on the Bonds (determined with regard to such
guarantee fee payments) as the discount rate for purposes of determining such
present values.


 


6. In
the experience of the Underwriter, the fees to be paid to the Bank and the
Confirming Bank represent a reasonable, arm’s-length charge for the transfer of
credit risk with respect to the Bonds.


 


7. The
weighted average maturity (determined in accordance with Section 147(b) of the
Code) of the Bonds is 14.96 years.


 


	
   

  	
   

  	
  W.R. TAYLOR &
  COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated: November 15,
  2001

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Robbins
  Taylor, Jr. 

  
	
   

  	
   

  	
   

  	
  President

  



 


B-1

















 


EXHIBIT C


 


ESTIMATED DRAWDOWN SCHEDULE


 




	
  Quarter/Year

  	
   

  	
  Costs

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fourth Quarter,
  2001

  	
   

  	
  $

  	
  800,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Quarter,
  2002

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Second Quarter,
  2002

  	
   

  	
  $

  	
  2,100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Third Quarter,
  2002

  	
   

  	
  $

  	
  600,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  5,000,000

  	
   

  






 


C-1

















 


EXHIBIT
D


 


COMPUTATION
OF AVERAGE REASONABLY EXPECTED LIFE OF THE PROJECT


 


	
  Bond Proceeds

  	
   

  	
  5,000,000

  	
   

  	
   

  	
   

  
	
  less Costs of
  Issuance

  	
   

  	
  100,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Funds available for
  Project

  	
   

  	
  4,900,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assets being
  financed with Bond Proceeds

  	
   

  	
   

  	
   

  	
  Useful Life

  	
   

  
	
  Building

  	
   

  	
  220,000

  	
   

  	
  20 years

  	
   

  
	
  Interior
  structure & equipment installation

  	
   

  	
  350,000

  	
   

  	
  20

  	
   

  
	
  Electrical

  	
   

  	
  900,000

  	
   

  	
  20

  	
   

  
	
  Controls

  	
   

  	
  185,000

  	
   

  	
   7

  	
   

  
	
  Main Process

  	
   

  	
  1,700,000

  	
   

  	
   7

  	
   

  
	
  Mechanical
  (Process Piping)

  	
   

  	
  100,000

  	
   

  	
   7

  	
   

  
	
  Tank Farm

  	
   

  	
  350,000

  	
   

  	
  20

  	
   

  
	
  Tank Farm piping
  and insulation

  	
   

  	
  80,000

  	
   

  	
  20

  	
   

  
	
  Piping to and
  from loadout

  	
   

  	
  150,000

  	
   

  	
  20

  	
   

  
	
  Rail Scale and
  building

  	
   

  	
  300,000

  	
   

  	
  20

  	
   

  
	
  Track Site

  	
   

  	
  75,000

  	
   

  	
  20

  	
   

  
	
  Lab and lab
  equipment

  	
   

  	
  80,000

  	
   

  	
   7

  	
   

  
	
  Site preparation

  	
   

  	
  60,000

  	
   

  	
  20

  	
   

  
	
  Process Heat
  Trace and insulation

  	
   

  	
  200,000

  	
   

  	
  20

  	
   

  
	
  Cooling Tower
  and system

  	
   

  	
  150,000

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Assets
  being financed with Project Funds

  	
   

  	
  4,900,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assets being
  financed outside Bond Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mechanical
  (Process Piping)

  	
   

  	
  900,000

  	
   

  	
   7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Cost of
  Project

  	
   

  	
  5,800,000

  	
   

  	
   

  	
   

  



 


Weighted-Average
Useful Life Calculation


	
  20
  Year Property 

  	
  2,835,000 

  	
  x

  	
  20

  	
  =

  	
  56,700,000 

  
	
  7
  Year Property

  	
  2,065,000

  	
  x

  	
  7

  	
  =

  	
  14,455,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4,900,000

  	
   

  	
   

  	
   

  	
  71,155,000

  



 


	
  Weighted Average Useful Life:

  	
   

  	
   

  	
  71,155,000   ̧
   4,900,000
  

  	
  =  14.5214
  years

  
	
   

  	
   

  	
   

  	
   

  
	
  120% of the
  Weighted Average Useful Life:

  	
   

  	
   

  	
  14.5214  x  1.20 = 17.4257 years

  



 


D-1

















EXHIBIT E


 


1.         The total cost of all property financed
by the Bond proceeds is expected to be classified as:


 


 


	
  a.

  	
  Land

  	
  $

  	
  -0- 

  	
   

  
	
  b.

  	
  Buildings and Structures

  	
  $

  	
  2,835,000

  	
   

  
	
  c.

  	
  Equipment with a recovery period of more than 5
  years

  	
  $

  	
  2,065,000

  	
   

  
	
  d.

  	
  Equipment with a recovery period of 5 years or less

  	
  $

  	
  -0-

  	
   

  
	
  e.

  	
  Other

  	
  $

  	
  -0-

  	
   

  



 


For recovery
period for equipment, use the Accelerated Cost Recovery System of Section 168
of the Code.


 


2.         State the North American Industrial
Classification System (NAICS) code and corresponding face amount of the Project
to be financed with the Bonds:


 


	
  NAICS Code

  	
   

  	
  Amount

  
	
  311225

  	
   

  	
  $

  	
  4,900,000

  



 


3.         Are any of the proceeds of the Bonds
being used to refund a prior issue?


 


Yes o                                                      No
x


 


(If
Yes, state the amount of Bond proceeds being used to refund a prior issue)


 


4.         State the following amounts:


 


	
  a.

  	
  Issue Price of the Bonds

  	
  $

  	
  5,000,000.00

  
	
   

  	
   

  	
   

  	
   

  
	
  b. 

  	
  Bond Issuance Costs (being) paid from Bond proceeds)
  

  	
  $

  	
  100,000.00

  
	
   

  	
   

  	
   

  	
   

  
	
  c. 

  	
  Proceeds used for credit enhancement 

  	
  $

  	
   

  	
  -0- 

  
	
   

  	
   

  	
   

  	
   

  
	
  d.

  	
  Amounts Allocated to Reserve

  	
  $

  	
  -0-

  
	
   

  	
   

  	
   

  	
   

  
	
  e. 

  	
  Proceeds Used to Refund Prior Issue 

  	
  $

  	
   

  	
  -0- 

  
	
   

  	
   

  	
   

  	
   

  
	
  f. 

  	
  Lendable Proceeds (net amount available to the
  Borrower) 

  	
  $

  	
   

  	
  4,900,000.00