Allocating Authority - the governmental entity in each state responsible for allocating the state's private activity bond volume cap. IDBs are a type of private activity bond.

Annual All-In Interest Rate - the stated annual rate plus all annual fees.

Authorizing Resolution - the adoption by the governmental entity that will be issuing a tax-exempt bond of a formal resolution approving the organization's request for financing. The resolution is typically adopted at a regularly scheduled meeting of the governmental entity (i.e., city council meeting).

Bond Counsel - a lawyer or law firm qualified to deliver an opinion regarding the validity of the private activity bond and the extent to which interest on the bond is exempt from federal income taxes.

Capital Expenditure - any cost required for the acquisition, construction, reconstruction or improvement of assets subject to depreciation by the company.

Capital Expenditure Test - an IRS requirement that the amount of the current IDB financing - plus the capital expenditures of the company for the three years immediately preceding and three years following the issuance of the current IDB - plus the principal outstanding of any other IDBs, not exceed $10 million in the government jurisdiction where the project is located. It is important to note that while the current capital expenditure limitation is $10 million, Congress has recently authorized an increase to $20 million, which will be implemented for deals issued after December 31, 2006. Please contact your local GE Government Finance representative for more details.

Conduit Issuance - bonds issued by a governmental entity on behalf of a non-governmental entity, where the bond proceeds are loaned or otherwise made available to that entity, and the governmental entity has no obligation for the repayment of the debt. For example, an IDB issued by a City Economic Development Agency on behalf of XYZ Manufacturing, Inc.

Conduit Issuer - a governmental issuer of bonds or other municipal securities on behalf of a non-governmental entity.

Costs of Issuance - all fees, expenses and other amounts attributable to the bond issue.

Covenants - restrictions or requirements placed on a company during the term of the financing.

Depreciation Method - all property financed with IDBs - equipment and real estate - must be depreciated using the straight line method over the appropriate asset period for federal tax purposes.

Direct Purchaser of Bond - a bond purchaser that negotiates directly with the conduit issuer and the obligated company for the purchase of the bond, without the use of an underwriter or placement agent. GE Government Finance is a direct purchaser of bonds.

Effective Interest Rate - the interest rate determined by adding the costs of issuance, amortized over the bond term, to the annual all-in interest rate.

Eligible Issuer - the governmental entity which is authorized by state statute to issue private activity bonds. Eligible issuers vary state to state, including cities, statewide agencies, counties and / or local development authorities.

$40 Million Test - an IRS requirement that limits the outstanding principal amount of certain types of tax-exempt bonds to $40,000,000 per taxpayer. Tax-exempt bonds subject to this limitation include IDBs, qualified redevelopment bonds and outstanding exempt facility bonds. A new issue exempt facility bond may not be subject to this test.

Inducement - the adoption by the governmental entity that will be issuing a tax-exempt IDB of a formal resolution supporting the company's request for IDB financing. The resolution is typically adopted at a regularly scheduled meeting of the governmental entity (i.e. city council meeting). Inducements are valid up to a specific date as determined by the governmental entity.

Industrial Development Bond (IDB) - bond issued by a state or local governmental entity on behalf of a manufacturing or processing company to finance qualified capital projects. The interest on the bond may be tax-exempt or taxable, depending on the situation.

Industrial Revenue Bond (IRB) - a term used interchangeably with Industrial Development Bond.

Issuer - a governmental entity that issues bonds or other municipal securities, whether or not that entity receives any of the proceeds of the bonds.

Manufacturing Facility - defined in the Internal Revenue Code as "any facility that is used in the manufacturing or production of tangible personal property (including the processing resulting in the change of such property)."

Private Activity Bond (PAB) - a term used in the Internal Revenue Code to describe bonds in which the proceeds are used in a trade or business of a private entity or secured revenues from the private entity. IDBs and qualified 501(c)(3) bonds are types of PABs.

Public Hearing - an opportunity for the public to ask questions about the company's project and the bond financing.

Qualified Capital Project - a project used in the manufacture or production of tangible personal property such that it qualifies for tax-exempt financing in accordance with the IRS guidelines.

Qualified Small Issue - a term used interchangeably with Industrial Development Bond.

Rehabilitation Expenditures - defined in the Internal Revenue Code as "any amount properly chargeable to capital account which is incurred by person acquiring the building property (or additions or improvements to property) in connection with the rehabilitation of a building." Tax-exempt bond financing of an existing building requires the borrower to spend 15% of the bond proceeds as "rehabilitation expenditures."

Tax Lease Product - a lease that permits the lessor to claim the tax benefits of ownership on the leased equipment and generally qualifies as an "operating lease" for the lessee's financial statement accounting purposes. Tax leases are often used for the acquisition of equipment over the $10 million capital expenditure limitation associated with IDBs.

Tax Regulatory Agreement (Tax Certificate) - an agreement between the conduit issuer, the obligated company and the bond purchaser which states that all of the IRS requirements for IDB financing have been met and sets forth the ongoing requirements of the company to maintain the tax-exempt status of the bonds.

TEFRA Hearing - a public hearing established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). This hearing is held in the issuer's jurisdiction to allow the public to ask questions about the pending project and IDB financing. The public must be notified 14 days prior to the date of the TEFRA hearing.

Volume Cap - the aggregate amount of private activity bonds annually issued by all eligible issuers within a state. In 2006, this amount is the greater of $246.61 million or $80 per capita. These amounts are adjusted annually for inflation.